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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 |
TIDMMIG4
RNS Number : 9123L
Mobeus Income & Growth 4 VCT PLC
16 September 2021
Hot Features
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MOBEUS INCOME & GROWTH 4 VCT PLC
LEI: 213800IFNJ65R8AQW943
UNAUDITED HALF-YEAR RESULTS FOR THE SIX MONTHS TO 30 JUNE 2021
Mobeus Income & Growth 4 VCT plc ("the Company") today announces its
Half-Year results for the six months to 30 June 2021.
You may, in due course, view the Half-Year Report, comprising the
Unaudited Condensed Financial Statements of the Company by visiting
www.mig4vct.co.uk.
Financial Highlights
As at 30 June 2021:
Net assets: GBP87.32 million
Net asset value ("NAV") per share: 104.76 pence
Results for the six months to 30 June 2021:
* Net asset value ("NAV") total return(1) per share was 28.5%.
* Share price total return(1) per share was 34.1%.
* The Board declared an interim dividend in respect of
the current year of 5.00 pence per share, paid to
Shareholders on 6 August 2021. Payment of this
dividend has increased cumulative dividends paid(1)
since inception to 139.20 pence per share.
* The Company made four new investments totalling
GBP2.53 million and five follow-on investments
totalling GBP1.30 million.
* GBP18.81 million of unrealised gains were achieved
for the six months from strong portfolio performance.
* The Company realised investments totalling GBP5.42
million of cash proceeds and generated net realised
gains of GBP1.14 million for the six months.
(1) Definitions of key terms and alternative performance measures
("APMs") / Key performance indicators ("KPIs") shown above and throughout
this Report are shown in the Glossary of terms within the Half-Year
Report.
PERFORMANCE SUMMARY
The longer-term trend of performance based upon cumulative total return
per share (NAV basis) is shown in the chart below:-
Reporting date NAV per Cumulative dividends Cumulative total return
Share paid per share to shareholders
per share (NAV Basis)
As at (p) (p) (p)
30 June 2021 104.76(1) 134.20(1) 238.96
31 December 2020 81.50 134.20 215.70
31 December 2019 74.90 124.20 199.10
31 December 2018 84.79 105.20 189.99
31 December 2017 86.57 101.20 187.77
31 December 2016 107.57 73.20 180.77
(1) These figures exclude the impact of a 5.00 pence per share dividend
paid after the period-end on 6 August 2021. Payment of this dividend
will reduce the Company's NAV per share and increase cumulative dividends
paid to date by 5.00 pence per share.
The chart 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 Investor Performance Appendix at 30 June 2021 on
the Company's website at: www.mig4vct.co.uk where they can be accessed
by clicking on the word "table" under "Reviewing the performance of
your investment" heading on the home page.
On 1 August 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 Company's Half-Year Report for the six
months to 30 June 2021.
Overview
The first six months of the Company's financial year have shown strong
performance for Shareholders with a NAV total return per share of
28.5% for the period.
In the Company's Annual Report for the year ended 31 December 2020,
I reported on the resilience of the portfolio and the Company's robust
recovery from the initial shock of COVID-19. I am pleased to say that
this momentum has been sustained into the new financial year with
a period of unprecedented value growth, driven by strong trading performances
across the portfolio coupled with a number of landmark transactions
for the VCT.
This performance, despite initial teething issues following Brexit,
is very encouraging. However, some indirect effects of COVID-19 are
starting to be felt by portfolio businesses, for example, in the emergence
of a broad range of supply-side shortages, from cardboard packaging
through to electronic components and freight space. As restrictions
are being further eased, there does remain much uncertainty around
these secondary and potentially longer-term effects of the pandemic
which will demand continued close monitoring. Nevertheless, most of
the investee companies in the portfolio have thus far proven their
ability to adapt well in a rapidly changing environment and have avoided
any significant direct impact from COVID-19. Your Board has been encouraged
by their adeptness in facing challenges by swiftly identifying new
opportunities and capitalising on them. In particular, favourable
trading conditions continue for a number of technology-related companies
in the portfolio, particularly those businesses operating direct-to-consumer
models.
During the period under review and despite considerable COVID-19 related
restrictions, M&A activity has remained buoyant and the Investment
Adviser continues to see a healthy deal flow. The Company added four
new investments to its portfolio, deployed follow-on funding into
five existing portfolio companies and supported the successful admission
to AIM of a further two of its investments.
Finally, I would like to draw Shareholder's attention to a positive
development in respect of the Company's Investment Adviser, Mobeus
Equity Partners LLP. Please refer to 'Change in management arrangements'
later in my Statement.
Performance
The Company's NAV total return per share was 28.5% for the six months
to 30 June 2021 (2020: fall of (0.4)%), and the share price total
return was 34.1% (2020: a fall of (5.7)%). This represents an exceptional
uplift for the period and contrasts markedly with that recorded through
the height of the COVID-19 pandemic for the same period last year.
The positive NAV total return for the period was principally the result
of significant unrealised gains in the value of investments still
held, as well as realised gains achieved via partial realisations
of several portfolio companies.
The valuations at the half-year point reflect the continued beneficial
impact of changes in UK consumer and business behaviour, brought on
by the pandemic and lockdown restrictions. In the case of two direct-to-consumer
portfolio companies, whose shares were admitted to public trading
on AIM in March 2021, the Company has benefited from the market's
recognition of this rapidly developing channel, evidenced in the substantial
investor appetite for the offers of shares. Nonetheless, the Board
remains vigilant in monitoring the economic uncertainty and increased
concentration of risk associated with holding a significant portion
of the portfolio's value in a small number of public market investments,
which accounted for 14.8% of NAV at 30 June 2021.
At the period-end, the Company was ranked 7th out of 30 Generalist
VCTs over ten years and 5th out of 39 over five years, in the Association
of Investment Companies' analysis of NAV Cumulative Total Return.
Shareholders should note that these figures do not reflect the increased
NAV at 31 March 2021, disclosed in this Report.
Investment portfolio
The portfolio has performed very strongly in the first six months
of the Company's financial year. The overall value increased by GBP19.95
million (2020: fall of GBP(0.47) million), or 47.9% (2020: fall of
(1.2)%) on a like-for-like basis, compared to the start of the year.
This increase comprised a net unrealised uplift in portfolio valuations
of GBP18.81 million, and GBP1.14 million in net realised gains over
the period. The portfolio was valued at GBP60.04 million at the period-end
(31 December 2020: GBP41.68 million).
Two notable events supported unrealised returns for Shareholders during
the period. The flotation of both Virgin Wines and Parsley Box on
the AIM market in March 2021 resulted in significant uplifts in valuation.
As part of the Virgin Wines transaction, the Company received repayment
of its remaining loan stock, leaving Virgin Wines ungeared. As part
of the IPO of Parsley Box, the Company realised part of its equity
holding, securing a 4.0x return on the cost of the shares sold. There
were further substantial valuation increases from MyTutor, MPB and
Vian Marketing (trading as Red Paddle), partially offset by valuation
falls at Andersen EV and Kudos Innovations. Although a minority of
portfolio companies have been disadvantaged by the COVID-19 pandemic,
principally as a result of staff shortages, closure of retail sites
and interrupted supplies, these factors have only had a modest impact
on overall shareholder returns.
Within the net realised gains, the principal contributors were the
partial exits of Parsley Box (GBP0.54 million) and MPB (GBP0.41 million)
as well as the full exit of Omega Diagnostics (GBP0.16 million), the
latter having secured a multiple of original cost over the life of
the investment of 5.9x. Proceeds generated from these gains, combined
with loan repayments and other capital receipts, totalled GBP5.42
million received by the Company in the period.
During the six months under review, the Company invested a total of
GBP2.53 million into four new investments: an AI and Urban Traffic
Control system (Vivacity Labs), a provider of UK leisure and experience
breaks (Caledonian Leisure), an SaaS LegalTech software business (Legatics)
and a veterinary clinics and pet food provider (Vet's Klinic).
In addition, five follow-on investments totalling GBP1.30 million
were made into: a provider of ambient ready meals targeting the over
60s (Parsley Box), a hair colourants brand (Bleach London), a regulatory
and reporting requirement service provider (Arkk Consulting), a Spanish
restaurant chain (Tapas Revolution) and a premium frozen raw dog food
provider (Bella & Duke). We expect follow-on investments to continue
to be a feature of these growth capital situations as they seek to
achieve scale.
Since the period-end, the Company has also made one follow-on investment
of GBP0.70 million into a digital tutoring marketplace (MyTutor);
The business has exhibited strong growth as screen-based educational
tools become integrated into schools' delivery of lessons to pupils.
In the following days, the Company sold part of its original equity
holding in MyTutor to a strategic investor generating a GBP0.51 million
realised gain for the Company over the original cost of the equity
shares sold. In isolation, the impact of this partial sale is a 0.10
pence uplift in NAV per share compared to the 30 June 2021 NAV per
share contained within this Half Year Report.
Details of this investment activity and the performance of the portfolio
are contained in the Investment Adviser's Review and the Investment
Portfolio Summary below.
Revenue account
The results for the period are set out in the Unaudited Condensed
Income Statement on pages 16 and 17 of the Half-Year Report and show
a revenue return (after tax) of 0.11 pence per share (2020: 1.28 pence
per share). The revenue return for the period of GBP0.09 million has
decreased from last year's comparable figure of GBP1.06 million. This
is mainly due to significant investment income received on the disposal
of Auction Technology Group which inflated the prior year's figure.
Shareholders should note that medium term income returns are expected
to be lower than in prior years as the portfolio evolves to comprise
a higher proportion of younger growth capital investments which are
less likely to provide income to the VCT until they have achieved
significant scale and/or are sold.
Dividends
The Board was pleased to declare an Interim dividend of 5.00 pence
per share on 30 June 2021 in respect of the current financial year.
This dividend was paid on 6 August 2021, to Shareholders on the Register
on 9 July 2021, and has brought cumulative dividends paid per share
since inception to 139.20 pence per share.
Following the payment of this recent dividend, the Company has now
met or exceeded the Board's dividend target of paying at least 4.00
pence per share in respect of each financial year in each of the last
eleven years. While the Board has not changed the dividend target,
ordinary dividend payments are more likely to be volatile and, at
least over the medium-term, may be lower than have been paid in the
recent past. The continued move of the portfolio to growth capital
investments may make the target more difficult to achieve in future
financial years without recourse to the Company's reserves. Shareholders
should note that the majority of the NAV total return for the current
year to date relates to the unrealised gains of the portfolio, which
are not yet distributable.
To the extent that the Company is required to pay dividends in order
to maintain its regulatory status as a VCT, for example, to stay above
the minimum percentage of assets required to be held in qualifying
investments, such dividends may cause the Company's NAV per share
to reduce by a corresponding amount.
Dividend Investment Scheme
The Company's Dividend Investment Scheme ("DIS") provides Shareholders
with the opportunity to reinvest their cash dividends into new shares
in the Company at the latest published NAV per share. New VCT shares
attract the same tax reliefs as shares purchased through an Offer
for Subscription. As part of the 5.00 pence per share dividend paid
on 6 August 2021, 695,052 Ordinary shares were allotted to participants
of the DIS at an average price of 92.24 pence per share.
Shareholders wishing to take advantage of the scheme for any future
dividends can opt-in to the DIS by completing a mandate form available
on the Company's website, under the 'Dividends' heading, at: www.mig4vct.co.uk.
An election to participate must be registered at least 15 days prior
to a dividend payment. Existing participants may opt-out by contacting
Link Group, using their details provided under Shareholder Information
on page 28 of the Half-Year Report
Fundraising
The Board, with the Investment Adviser, continues to monitor the Company's
liquidity levels and cashflow requirements alongside investment activity,
market movements, regulatory obligations and costs. With these in
mind and under regular review, the Board considers future fundraising
requirements and will notify Shareholders of any intention to raise
further funds for the Company through an Offer for Subscription.
Liquidity
Cash and near cash resources held by the Company as at 30 June 2021
amounted to GBP27.53 million, or 31.5% of net assets. After the period-end,
following the payment of a 5.00 pence per share dividend, the pro-forma
level of liquidity will be GBP24.00 million (28.6% of net assets)
Share buy-backs
During the six months ended 30 June 2021, the Company bought back
and cancelled 649,944 of its own shares, representing 0.8% (2020:
1.2%) of the shares in issue at the beginning of the period, at a
total cost of GBP0.60 million (2020: GBP0.42 million), inclusive of
expenses.
It is the Company's policy to cancel all shares bought back in this
way. The Board regularly reviews its buyback policy, where its priority
is to act prudently and in the interest of remaining Shareholders,
whilst considering other factors, such as levels of liquidity and
reserves, market conditions and applicable law and regulations. Under
this policy, the Company seeks to maintain the discount at which the
Company's shares trade at no more than 5% below the latest published
NAV.
Shareholder communications
May I remind you that the Company has its own website which is available
at: www.mig4vct.co.uk
The Investment Adviser last held its annual Shareholder Event on behalf
of all Mobeus-advised VCTs in early 2020. Last year's event was well
received and the Investment Adviser plans to hold an event later in
2021. Further details will be circulated to Shareholders and shown
on the Company's website in due course.
Fraud Warning
We have been made aware of an increase in the number of Shareholders
being contacted in connection with sophisticated but fraudulent financial
scams which purport to come from the Company or to be authorised by
it. This is often by a phone call or an email usually originating
from outside of the UK, claiming or appearing to be from a corporate
finance firm offering to buy your shares at an inflated price.
The Board strongly recommends Shareholders take time to read the Company's
Fraud warning section, including details of who to contact, contained
within the Information for Shareholders section in the Half-Year Report.
Environmental, Social and Governance ("ESG")
Whilst the requirements under company law to detail ESG matters are
not applicable to the Company at the current time, the Board is conscious
of the Company's potential impact on the environment as well as its
social and corporate governance responsibilities. The Investment Adviser
has presented its ESG strategy to the Board and is providing regular
updates regarding ESG developments.
Your Board would like to assure Shareholders that ESG matters form
a key consideration in investment decisions. The future FCA reporting
requirements consistent with the Task Force on Climate-related Financial
Disclosures commencing from 1 January 2021 do not currently apply
to the Company although will be kept under review in light of any
recommended changes.
Change of management arrangements
Shareholders will have received a letter or email explaining that
the Investment Adviser for the Company, Mobeus Equity Partners LLP
("Mobeus") has agreed to a sale of its VCT and investment management
business to a subsidiary of Gresham House plc. The Board, alongside
the Boards of the other Mobeus advised VCTs, have agreed to the novation
of the investment advisory arrangements from Mobeus to Gresham House.
Gresham House is a fast-growing specialist fund group with a long-term
commitment to the VCT Industry and is the existing investment manager
of the two Baronsmead VCTs. The entire core management, investment
and operational teams involved with the Mobeus-advised VCTs will all
transfer to Gresham House in connection with this transaction to form
a significantly enlarged team. This integration will create one of
the largest teams in the sector with the coverage, experience and
contacts to access more and higher quality investment opportunities.
The Board is confident that the team will continue to build the Company's
portfolio and enhance their value. The Board considers that this change
is in the interests of Shareholders and looks forward to working with
Gresham House to achieve a continued strong investment performance
for the Mobeus-advised VCTs. The Board can confirm that no material
changes are being made to the investment advisory arrangements. Shareholders
can also be assured that the Boards' track record of governance and
independence will be maintained. For further details, please refer
to the Company's website, under 'Shareholder literature' at www.mig4vct.co.uk
.
Outlook
Both the direct and indirect impacts of COVID-19 have been, and will
continue to be, wide reaching. Nevertheless, your Board considers
that your Company is well positioned to continue to respond and adapt
in most likely scenarios that can presently be foreseen. The strong
liquidity arising from successful realisations and previous fundraisings
underpins the Company's ability not only to support the existing portfolio,
but also to capitalise on opportunities which may arise for new investment.
Activity has been positive in the first six months of the year and
the Board is confident in the Investment Adviser's ability to identify
attractive new potential investments.
COVID-19 uncertainties and, in particular, the emerging supply-side
concerns may cause continuing instability and fuel inflationary pressures
going forward. UK and European businesses will also continue to operate
in an uncertain trading environment for the near future as the new
UK/EU trade agreement beds down. However, the Companies in the portfolio
prepared for a considerable time for the impact of Brexit and those
preparations appear to be working well. Although there are signs that
the UK's successful vaccination programme is beginning to bear fruit,
there remains a risk of potential future restrictions. Notwithstanding
these uncertainties, both the Investment Adviser and portfolio companies
remain well positioned to not only respond but to prosper in the future.
I would like to take this opportunity once again to thank all Shareholders
for their continued support.
Jonathan Cartwright
Chairman
15 September 2021
Investment Policy
The investment policy is designed to meet the Company's objective.
Investments
The Company invests primarily in a diverse portfolio of UK unquoted
companies. Investments are made selectively across a number of sectors,
principally in established companies. Investments are usually structured
as part loan stock and part equity in order to produce a regular income
stream and to generate capital gains from realisations.
There are a number of conditions within the VCT legislation which
need to be met by the Company and which may change from time to time.
The Company will seek to make investments in accordance with the requirements
of prevailing VCT legislation.
Asset allocation and risk diversification policies, including the
size and type of investments the Company makes, are determined in
part by the requirements of prevailing VCT legislation. No single
investment may represent more than 15% (by VCT tax value) of the Company's
total investments at the date of investment.
Liquidity
The Company's cash and liquid funds are held in a portfolio of readily
realisable interest bearing investments, deposit and current accounts,
of varying maturities, subject to the overriding criterion that the
risk of loss of capital be minimised.
Borrowing
The Company's Articles of Association permit borrowings of amounts
up to 10% of the adjusted capital and reserves (as defined therein).
However, the Company has never borrowed and the Board would only consider
doing so in exceptional circumstances.
Investment Review
Portfolio review
More than one year on from a low point in March 2020 marked by value
reductions and market volatility, it is apparent that the overall
portfolio has adapted well and generally remains robust. Having recovered
from the COVID-19 related decline by the start of 2021, and with the
economic uncertainty now dissipating to some extent, the portfolio
has returned to a more positive trajectory.
It should be noted that, whilst markets helped deliver a buoyant recovery
in 2020, the main driver of value growth in 2021 has been a continuation
of strong underlying trading performance across the portfolio. This
has been bolstered by a small number of significant re-ratings resulting
from flotations or sizeable fundraisings during the period.
Whilst there have been a few portfolio companies which have experienced
disruption as a result of the UK lockdowns, a significant proportion
have actually benefited from a structural change in consumer purchasing
habits and are now trading above their pre COVID-19 levels.
Overall, the majority of the portfolio has demonstrated a high degree
of resilience, with over 90% of companies by number showing revenue
and/or earnings progression over the previous two years. Investments
classified as Retailers now comprise over 51% of the portfolio by
value, all of which demonstrating the success of the direct-to-consumer
business model, with only one retaining any physical presence at all.
In the case of both Virgin Wines UK PLC and Parsley Box Group PLC,
this strong performance led to successful AIM flotations in March
2021.
Whilst the portfolio has limited exposure to more challenging sectors
such as hospitality and travel, software and other technology-enabled
businesses have performed strongly, with both MPB and Bella & Duke
attracting sizeable equity investments from third party equity investors
in further funding rounds. A small number of companies have struggled,
though they are in the minority and their impact on overall shareholder
return is minimal. Furthermore, some of these companies, such as Media
Business Insight and RDL, have seen a recent uplift in business which
suggests a potentially more positive outlook, though it is still early
days in their recovery.
Whilst the exposure to Retailers is very well diversified across the
most attractive business models, it is noted that 21.6% of the invested
portfolio value is now concentrated in the two recently AIM-listed
investments. The AIM market has witnessed some volatility as of late,
though the Company's investments retain their strong position and
Mobeus remains confident in their prospects. In line with market practice,
in both cases the Company's shareholdings are subject to lock-up arrangements
for a period post-flotation which is normal for a transaction of this
type.
Strong trading activity levels have created investment opportunities
for the Company as portfolio companies sought to enhance their positions
by building capability in light of demand. A number of further investments
were therefore made into the portfolio during the period. Mobeus continues
to review the opportunities for follow-on investments and is in a
good position to capitalise on these due to the Company's strong liquidity.
M&A sentiment also remained buoyant with a continuing stream of attractive
realisations throughout the period. The outlook for both follow-on
investment and realisations continues to be positive.
The Company made investments totalling GBP3.83 million (2020: GBP1.96
million), comprising GBP2.53 million (2020: GBP0.81 million) into
four new investments and GBP1.30 million (2020: GBP1.15 million) into
five existing investments. This level of new and follow-on investment
is pleasing given the continued uncertainty and lockdown restrictions
over the period under review.
It is reassuring to see that the traditional investments, as well
as the growth investments, are continuing to make good progress overall.
A strong track record for the growth investments is now emerging which
validates the strategic change arising from the change in VCT rules
in 2015.
The portfolio's valuation changes in the six-month period to 30 June
are summarised as follows:
Investment Portfolio Capital Movement 2021 2020
GBPm GBPm
--------------------------------------- ------- -------
Increase in the value of unrealised
investments 19.12 3.77
Decrease in the value of unrealised
investments (0.31) (5.82)
--------------------------------------- ------- -------
Net increase/(decrease) in the value
of unrealised investments 18.81 (2.05)
--------------------------------------- ------- -------
Realised gains 1.20 1.62
Realised losses (0.06) (0.04)
--------------------------------------- ------- -------
Net realised gains in the period 1.14 1.58
--------------------------------------- ------- -------
Net investment portfolio movement in
the period 19.95 (0.47)
--------------------------------------- ------- -------
The portfolio movements in the same period are summarised as follows: 2021 2020
GBPm GBPm
--------------------------------- ------- -------
Opening portfolio value 41.68 38.54
New and follow-on investments 3.83 1.96
Disposal proceeds (5.42) (6.75)
Net realised gains 1.14 1.58
Unrealised v aluation movements 18.81 (2.05)
--------------------------------- ------- -------
Portfolio value at 30 June 60.04 33.28
--------------------------------- ------- -------
New investments during the period
The Company made four new investments totalling GBP2.53 million during
the period, as detailed below:
Company Business Date of Investment Amount of new
investment (GBPm)
Artificial intelligence
& urban traffic
Vivacity control system February 2021 0.91
Vivacity (vivacitylabs.com) develops camera sensors with on-board
video analytics software that enables real-time anonymised data
gathering of road transport system usage. It offers city transport
authorities the ability to manage their road infrastructure more
effectively, enabling more efficient monitoring of congestion
and pollution levels as well as planning for other issues, such
as the changing nature of road usage (e.g. the increasing number
of cyclists). The technology and software represent a significant
leap forward for local planning authorities which have traditionally
relied upon manual data collection methods. The growth capital
funding will allow the management team to achieve deeper penetration
of the UK transport management sector, explore opportunities internationally
and commercialise its new Smart Junction offering. Revenues have
grown 350% over the last three years and it has exceeded its most
recent year's budget despite the onset of the COVID-19 pandemic.
In April 2021, Vivacity won the Queen's Award for Enterprise:
Innovation 2021.
UK leisure and March/April/May
Caledonian Leisure experience breaks 2021 0.33
------------------------------ --------------------- ------
Caledonian Leisure works with accommodation providers, coach businesses
and other experienced providers (such as entertainment destinations
and theme parks) to deliver to its customers UK-based leisure
and experience breaks. It comprises two brands, Caledonian Travel
(caledoniantravel.com) and UK Breakaways (ukbreakaways.com). The
very difficult impact that COVID-19 had on UK travel created an
opportunity to invest in a business that is well positioned to
expand as lockdown and travel restrictions are eased. The series
of planned investment tranches will help the company prepare for
and capitalise on what is expected to be strong demand for UK
holidays.
SaaS LegalTech
Legatics software business June 2021 0.66
------------------------------ --------------------- ------
Legatics (legatics.com) transforms legal transactions by enabling
deal teams to collaborate on and close deals in an interactive
online environment. Designed by lawyers to improve legacy working
methods and solve practical transactional issues, the legal transaction
management platform increases collaboration, efficiency and transparency.
As a result, Legatics has been used by around 1,500 companies,
and has been procured by more than half of the top global banking
and finance law firms, spanning 50 countries. With this new funding
round, Legatics will be looking to double the size of its team
over the next 18 months and further develop its technology to
deliver new features and use cases for a wider range of practice
areas within new and existing customers.
Vet's Klinic Veterinary clinics June 2021 0.63
------------------------------ --------------------- ------
Pets' Kitchen (trading as Vet's Klinic) is an established and
profitable veterinary clinic providing veterinary services (vetsklinic.co.uk)
as well as a premium pet food provider (vetskitchen.co.uk). Its
primary Swindon 'super clinic' is a first opinion veterinary practice
where pet owners can schedule consultations online and obtain
real time feedback of in-patient care through its own technology
platform. Without compromising on quality of care, this model
enables a significantly higher transaction per vet compared to
the industry average. This new investment will be used to roll
out its unique clinic model to other sites along the M4 corridor.
Follow-on investments during the period
The Company made further investments into five existing portfolio
companies in the period, totalling GBP1.30 million, as detailed below: Company Business Date of Investment Amount of further
investment (GBPm)
Ambient ready
meals targeting January/March
Parsley Box the over 60s 2021 0.27
------------------------ -------------------- -------------------
Parsley Box (parsleybox.com) is a UK direct to consumer supplier
of home delivered, ambient ready meals for the over 60s. Founded
in 2017, Parsley Box has grown rapidly and has developed a unique
meal delivery solution for its customers. The company supplies
a diverse range of ambient meals via next day delivery which are
easy to store and aim to contribute to a more independent and
healthier lifestyle. The company has seen a strong benefit from
the COVID-19 pandemic with revenues nearly eight times that at
the time of the original VCT investment. This further investment
will scale the company's marketing strategy, enable it to process
larger order volumes and continue to build out its team. The company's
shares were admitted to trading on AIM on 31 March 2021.
Hair colourants
Bleach London brand February 2021 0.11
------------------------ -------------------- -------------------
Bleach London Holdings ("Bleach") (bleachlondon.com) is an established
branded, fast-growing business which manufactures a range of haircare
and colouring products. Bleach has made sound commercial progress
since the VCTs invested in 2019 with its direct-to-consumer channels
benefiting greatly from the COVID-19 pandemic. Revenues have grown
over 90% ahead of the previous year. This further investment,
along with strong support from existing investors, will be used
to invest in marketing and infrastructure to enable the business
to accelerate its direct-to-consumer channel.
Regulatory and
reporting requirement
Arkk Consulting service provider February 2021 0.48
------------------------ -------------------- -------------------
Arkk Consulting (trading as Arkk Solutions) (arkksolutions.com)
provides services and software to enable organisations to remain
compliant with regulatory reporting requirements. Arkk was established
in 2009 and currently has over 800 clients across 20 countries.
These include more than 80 of the FTSE 350, and half of the largest
20 accountancy firms in the UK. This further investment is to
enable continued development of its software in order to capitalise
on HMRC's 'Making Tax Digital' campaign. The company has incorporated
artificial intelligence into its product and recurring revenues
are now over 50% higher than at the point of the original investment
in May 2019.
Spanish restaurant
Tapas Revolution chain March/June 2021 0.18
------------------------ -------------------- -------------------
Spanish Restaurant Group (trading as Tapas Revolution) (tapasrevolution.com)
is a leading Spanish restaurant chain in the casual dining sector.
At initial investment in January 2017, it was operating five sites
and, subsequent to a further investment round in March 2018, had
grown to 12 sites. Tapas was trading well and had a strong outlook
up until the onset of COVID-19 which mandated the closure of much
of its estate during the course of 2020 in response to the varying
patterns of government restrictions. Costs have been controlled
well under the circumstances and this further investment is to
provide financial headroom through the remaining lockdown period
and to capitalise on new site acquisition opportunities as restrictions
are eased.
Frozen raw dog
Bella & Duke food provider May 2021 0.26
------------------------ -------------------- -------------------
Bella & Duke (bellaandduke.com) is a direct-to-consumer subscription
service, providing premium frozen raw dog food to pet owners in
the UK. Founded in 2016, the business provides an alternative
to standard meal options for dog owners by focusing on the well
documented health benefits of a raw food diet. This area is a
growing niche in the large and established pet food market and
is being driven by the premiumisation of dog food. Alongside a
co-investment by the British Growth Fund ("BGF") and existing
shareholders, this follow-on investment from the Company will
provide additional working capital enabling Bella & Duke to continue
to scale.
Portfolio valuation movements
The portfolio generated significant net unrealised gains of GBP18.81
million in the first half of its financial year. The scale of the
valuation increases was underpinned by the Company's growth portfolio,
many of which have direct-to-consumer business models which, as mentioned
previously, have thrived in the remote working conditions necessitated
by COVID-19. Although some normalisation is anticipated, Mobeus believes
that this has accelerated an existing trend and, in many cases, companies
have now moved to a higher operating base. Over this period, some
older style MBO portfolio companies with similar business practices
have also benefited. A few companies have struggled in this environment,
and while there remains a possibility such businesses could fail,
their value has already been reduced to modest levels, reducing the
risk to shareholder value.
Total valuation increases were GBP19.12 million. The main valuation
increases were:
Virgin Wines GBP6.22 million
MyTutor GBP2.33 million
MPB Group GBP1.84 million
Vian Marketing (trading as Red GBP1.77 million
Paddle)
Virgin Wines, My Tutor, MPB and Vian Marketing (trading as Red Paddle)
have generated record revenues and earnings over the lockdown periods
and beyond. They have all significantly increased their customer base
and each have strong growth prospects.
Total valuation decreases were GBP(0.31) million. The main valuation
decreases were:
Andersen EV GBP(0.17) million
Kudos Innovations GBP(0.08) million
Andersen EV has been operating in a fast-developing industry beset
with regulatory hurdles that have challenged its progress over the
period, whilst Kudos Innovations has been impacted by contract delays.
The majority of the increase in portfolio value lies in the top ten
companies which represent nearly 70% of the portfolio by value. Year-on-year
growth by either revenues or earnings has been seen in all of the
top ten companies and it is pleasing to note that seven of these are
from the younger, growth portfolio made after the VCT rule change
in 2015.
Realisations during the period
The Company realised its remaining investment in Omega Diagnostics
plc during the period, as detailed below: Company Business Date of Investment Amount of further
investment (GBPm)
Omega Diagnostics December 2010 GBP1.17 million
In Vitro diagnostics to February 2021
for food intolerance, 5.9x cost
auto-immune diseases
and infectious
diseases
----------------------- ------------------- -------------------
Following a further significant increase in the share price, the
Company sold its remaining investment in Omega Diagnostics Group
plc for GBP0.42 million (realised gain in the period: GBP0.16
million). Total proceeds received over the eleven-year life of
the investment were GBP1.17 million compared to an original investment
cost of GBP0.20 million, which is a multiple on cost of 5.9x and
an IRR of 19.9%.
Loan stock repayments and other gains/(losses) in the period
During the Half-Year and following the admission of its shares to
AIM, the Company received GBP1.25 million from the partial realisation
of its holding in Parsley Box, generating a realised gain of GBP0.54
million. Over the two years to date that this investment has been
held, this partial sale generated a multiple of cost of 4.0x on the
cost of the shares sold. The Company also received GBP1.26 million
from the partial realisation of MPB Group, generating a realised gain
of GBP0.41 million. This partial realisation generated a 7.8x multiple
of cost on the cost of the shares sold and was the result of a large
private equity investor taking a sizeable equity investment in the
company.
Proceeds of GBP2.46 million were received via loan repayments from
Virgin Wines, MPB Group, Vian Marketing (trading as Red Paddle) and
BG Training. Finally, deferred proceeds totalling GBP0.09 million
in realised gains were received in respect of the realisation of investments
in Blaze Signs and Vectair, in a previous year. A small realised loss
of GBP(0.06) million was also recognised in respect of transaction
costs for Virgin Wines due to stamp duty paid upon the listing of
shares to AIM.
Portfolio income and yield 2021 2020
GBPm GBPm
-------------------------------------------------------- --------- --------
Interest received in the period 0.42 1.57
Dividends received in the period 0.07 0.07
Total portfolio income in the period(1) 0.49 1.64
Portfolio Value at 30 June 60.04 33.28
Portfolio Income Yield (Income as a % of
Portfolio Value at 30 June) 0.8% 4.9%
-------------------------------------------------------- --------- --------
(1) Total portfolio income in the period is generated solely
from investee companies within the portfolio. The fall in interest
received is due to a significant interest receipt from the realisation
of Auction Technology Group in 2020.
Further investments made after the period-end
The Company made one further investment into the existing portfolio,
after the period-end, as detailed below: Company Business Date of Investment Amount of further
investment (GBPm)
Digital marketplace
connecting school
pupils seeking
MyTutor one-to-one tutoring August 2021 0.70
----------------------- --------------------- --------------------
MyTutorweb (trading as MyTutor) 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.
This further investment, combined with a subsequent large investment
from a listed strategic investor seeks to build upon the structural
shift to online tutoring accelerated by the COVID-19 pandemic
whilst looking to grow its retention rates and unit economics.
In 2020, the company was chosen as a Tutoring Partner for the
National Tuition Programme where they will directly support 30,000
students in catching up on lost learning because of the COVID-19
pandemic.
Following the period-end, the Company sold part of its original equity
investment made in 2017 to a large strategic investor generating a
GBP0.51 million realised gain compared to an original equity investment
cost of GBP0.19 million.
Environmental, Social, Governance considerations
The Investment Adviser believes that the consideration of environmental,
social and corporate governance ("ESG") factors throughout the investment
cycle will contribute towards enhanced Shareholder value. This position
is fully endorsed by the VCT board.
When seeking new investment opportunities, it operates with a list
of exclusions which preclude it from investing in any businesses operating
in areas perceived to be unsustainable or detrimental to wider society,
or any businesses that have committed purposeful breaches of regulation
or have engaged in unlawful activity. Once identified, each potential
new investment is then subject to a comprehensive due diligence process
that encompasses commercial, financial and ESG principles. This process
helps in the formulation and agreement of strategic objectives at
the stage of business planning and investment. The Investment Adviser
then continues to work closely with each portfolio company board to
support them in addressing their particular ESG challenges and opportunities,
which are diverse across the entire portfolio.
Mobeus Equity Partners LLP is a signatory of the United Nations Principles
of Responsible Investment
("PRI"), considered to be the world's leading proponent of responsible
investing. As a signatory, it must report to the PRI on an annual
basis and is held accountable to worldwide ESG standards. As such,
the Investment Adviser continues to develop its policies and procedures
with the professional advice of specialist ESG consultants and reports
on the development of this ESG framework to the Board on a regular
basis.
Change of management arrangements
As Shareholders' may be aware, Mobeus has recently agreed to a sale
of its investment advisory business to Gresham House. The entire investment
and operations team at Mobeus will be joining Gresham House with the
integration forming one of the largest and most experienced teams
in the VCT sector. This substantial scale should enable the investment
team to compete effectively amid rising demand for early-stage growth
capital and target enhanced returns for shareholders. The existing
team at Gresham House is culturally aligned with Mobeus and has similar
investment philosophies. It is expected that this combined investment
team will be a major force in the supply of capital to the VCT sector
and it is expected that the team's enhanced market position should
attract strong deal flow in order to produce attractive investment
returns.
Outlook
The growth strategy implemented in 2015 is clearly showing signs of
bearing fruit with many companies beginning to achieve significant
scale and attract the interest of public markets and larger secondary
investors. The portfolio is in a healthy position with many companies
trading well throughout the COVID-19 related lockdowns, and several
at record levels. It continues to evolve, offering a balance of fast-growing
investments at various stages of maturity and scale across a range
of diverse market sectors. There is a significant exposure to businesses
operating a direct-to-consumer business model which has underpinned
performance during the period. This also gives confidence about the
future strength of the portfolio and its ability to cope with the
challenges and opportunities associated with Brexit, the macro-economic
outlook and the ongoing impact of COVID-19. The new investment pipeline
is recovering to levels seen pre-COVID-19 and the prospects for capital
deployment are encouraging.
There have been some strong portfolio uplifts underpinned by some
large equity transactions, flotations and trading. The exceptional
performance experienced since the impact of COVID-19 in March 2020,
is likely to moderate over the next 12 months as the level of activity
normalises. There remains much uncertainty around the wider impact
of the pandemic on the economy going forward. However, the portfolio
is in a robust shape and the investment activity levels are promising.
Mobeus is therefore cautiously optimistic for the future.
Mobeus Equity Partners LLP
Investment Adviser
15 September 2021
INVESTMENT PORTFOLIO SUMMARY as at 30 June 2021
Total Total Total % of % of
cost valuation valuation equity portfolio
at 30
at 30 June at 31 December June by
2021 2020 2021 held value
Mobeus Equity Partners
LLP GBP GBP GBP
------------------------ ----------- --------------- ----------- ------- ----------
Virgin Wines UK plc
(formerly
Virgin Wines Holding
Company Limited)
(1) 45,915 6,312,889 10,643,075 8.3% 17.7%
Online wine retailer
------------------------ ----------- --------------- ----------- ------- ----------
My TutorWeb Limited
(trading as
MyTutor) 2,023,042 2,476,581 4,807,147 8.2% 8.0%
Digital marketplace
connecting
school pupils seeking
one to one
online tutoring
------------------------ ----------- --------------- ----------- ------- ----------
MPB Group Limited 1,095,252 4,126,952 4,783,657 3.2% 8.0%
Online marketplace for
photographic
and video equipment
------------------------ ----------- --------------- ----------- ------- ----------
Preservica Limited 2,152,042 3,611,144 4,094,695 13.3% 6.8%
Seller of proprietary
digital archiving
software
------------------------ ----------- --------------- ----------- ------- ----------
EOTH Limited (trading
as Equip
Outdoor Technologies) 951,471 2,400,632 3,807,443 1.7% 6.3%
Branded outdoor
equipment and clothing
(including the RAB and
Lowe Alpine
brands)
------------------------ ----------- --------------- ----------- ------- ----------
Vian Marketing Limited
(trading
as Red Paddle Co) 623,903 1,465,304 2,999,657 10.9% 5.0%
Design, manufacture and
sale of
stand-up paddleboards
and windsurfing
sails
------------------------ ----------- --------------- ----------- ------- ----------
End Ordinary Group
Limited (trading
as Buster and Punch) 1,496,785 2,646,272 2,914,144 7.8% 4.9%
Industrial inspired
lighting and
interiors retailer
------------------------ ----------- --------------- ----------- ------- ----------
Manufacturing Services
Investment
Limited (trading as
Wetsuit Outlet) 2,333,102 2,331,110 2,331,427 6.4% 3.9%
Online retailer in the
water sports
market
------------------------ ----------- --------------- ----------- ------- ----------
Parsley Box Group plc
(formerly
Parsley Box Limited)
(2) 631,003 1,937,571 2,309,496 3.1% 3.8%
Home delivered ambient
ready meals
targeting the over 60s
------------------------ ----------- --------------- ----------- ------- ----------
Media Business Insight
Holdings
Limited 2,722,760 1,013,748 2,209,964 15.7% 3.7%
A publishing and events
business
focused on the creative
production
industries
------------------------ ----------- --------------- ----------- ------- ----------
Data Discovery
Solutions Limited
(trading as Active
Navigation) 1,100,500 2,201,000 2,201,000 6.3% 3.7%
Provider of global
market leading
file analysis software
for information
governance, security
and compliance
------------------------ ----------- --------------- ----------- ------- ----------
Bella & Duke Limited 877,381 836,042 1,998,146 4.4% 3.3%
A premium frozen raw
dog food provider
------------------------ ----------- --------------- ----------- ------- ----------
Proactive Group
Holdings Inc 755,340 1,900,421 1,900,421 2.5% 3.2%
Provider of media
services and
investor conferences
for companies
primarily listed on
secondary public
markets
------------------------ ----------- --------------- ----------- ------- ----------
Master Removers Group
2019 Limited
(trading as Anthony
Ward Thomas,
Bishopsgate and Aussie
Man & Van) 348,641 1,044,971 1,843,033 6.6% 3.0%
A specialist logistics,
storage
and removals business
------------------------ ----------- --------------- ----------- ------- ----------
Arkk Consulting Limited
(trading
as Arkk Solutions) 1,599,445 1,178,143 1,662,214 7.2% 2.8%
Provider of services
and software
to enable organisations
to remain
compliant with
regulatory reporting
requirements
------------------------ ----------- --------------- ----------- ------- ----------
Tharstern Group Limited 1,091,886 1,037,390 1,293,136 12.2% 2.2%
Software based
management information
systems to the print
sector
------------------------ ----------- --------------- ----------- ------- ----------
Connect Childcare Group
Limited 846,007 846,007 1,029,003 3.0% 1.7%
Nursery management
software provider
------------------------ ----------- --------------- ----------- ------- ----------
Vivacity Labs Limited 914,754 - 914,754 4.4% 1.5%
Provider of artificial
intelligence
& urban traffic control
systems
------------------------ ----------- --------------- ----------- ------- ----------
Bleach London Holdings
Limited 629,772 832,878 889,588 3.1% 1.5%
Hair colourants brand
------------------------ ----------- --------------- ----------- ------- ----------
Rota Geek Limited 874,000 726,667 778,570 4.4% 1.3%
Workforce management
software
------------------------ ----------- --------------- ----------- ------- ----------
Legatics Limited 663,011 - 663,011 6.0% 1.1%
SaaS LegalTech software
provider
------------------------ ----------- --------------- ----------- ------- ----------
Pets' Kitchen Limited
(trading
as Vet's Klinic) 631,120 - 631,120 4.5% 1.1%
Veterinary clinics
------------------------ ----------- --------------- ----------- ------- ----------
IPV Limited 619,487 619,487 619,487 5.5% 1.0%
Provider of media asset
software
------------------------ ----------- --------------- ----------- ------- ----------
CGI Creative Graphics
International
Limited 1,449,746 390,849 571,514 6.3% 1.0%
Vinyl graphics to
global automotive,
recreation vehicle and
aerospace
markets
------------------------ ----------- --------------- ----------- ------- ----------
Caledonian Leisure
Limited 328,502 - 328,502 6.6% 0.5%
Provider of UK leisure
and experience
breaks
------------------------ ----------- --------------- ----------- ------- ----------
RDL Corporation Limited 1,000,000 151,247 317,560 8.9% 0.5%
Recruitment consultants
within
the pharmaceutical,
business intelligence
and IT industries
------------------------ ----------- --------------- ----------- ------- ----------
Northern Bloc Ice Cream
Limited 304,050 304,050 315,096 0.7% 0.5%
Supplier of premium
vegan ice cream
------------------------ ----------- --------------- ----------- ------- ----------
Spanish Restaurant
Group Limited
(trading as Tapas
Revolution) 1,219,096 139,317 309,420 6.7% 0.5%
Spanish restaurant
chain
------------------------ ----------- --------------- ----------- ------- ----------
Kudos Innovations
Limited 328,950 152,488 72,037 3.0% 0.1%
Online platform that
provides and
promotes academic
research dissemination
------------------------ ----------- --------------- ----------- ------- ----------
Jablite Holdings
Limited (in members'
voluntary liquidation) 376,083 49,597 49,597 9.1% 0.1%
Manufacturer of
expanded polystyrene
products
------------------------ ----------- --------------- ----------- ------- ----------
Muller EV Limited
(trading as Andersen
EV) 195,200 217,904 48,800 0.5% 0.1%
Provider of premium
electrical
vehicle (EV) chargers
------------------------ ----------- --------------- ----------- ------- ----------
Veritek Global Holdings
Limited 1,620,086 - 1,262 15.4% 0.0%
Maintenance of imaging
equipment
------------------------ ----------- --------------- ----------- ------- ----------
BookingTek Limited 582,300 - - 3.5% 0.0%
Direct booking software
for hotels
------------------------ ----------- --------------- ----------- ------- ----------
Oakheath Limited
(trading as Super
Carers) (in members'
voluntary
liquidation) 485,730 - - 4.3% 0.0%
Online platform that
connects people
seeking home care from
experienced
independent carers
------------------------ ----------- --------------- ----------- ------- ----------
Racoon International
Group Limited 484,347 - - 0.0% 0.0%
Supplier of hair
extensions, hair
care products and
training
------------------------ ----------- --------------- ----------- ------- ----------
CB Imports Group
Limited (trading
as Country Baskets)
(in members'
voluntary liquidation) 175,000 - - 5.8% 0.0%
Importer and
distributor of
artificial
flowers, floral
sundries and home
decor products
Disposals in period
------------------------ ----------- --------------- ----------- ------- ----------
Omega Diagnostics Group
plc (3) - 266,680 - 0.0% 0.0%
In-vitro diagnostics
for food intolerance,
auto-immune diseases
and infectious
diseases
------------------------ ----------- --------------- ----------- ------- ----------
BG Training Limited - 7,969 - 0.0% 0.0%
City-based provider of
specialist
technical training
Total 33,575,709 41,225,310 59,337,976 98.8%
Former Elderstreet
Private Equity
Limited Portfolio
------------------------ ----------- --------------- ----------- ------- ----------
Cashfac Limited 260,101 451,386 702,252 2.9% 1.2%
Provider of virtual
banking application
software solutions to
corporate
customers
------------------------ ----------- --------------- ----------- ------- ----------
Sift Group Limited 135,391 - - 1.3% 0.0%
Developer of
business-to-business
internet communities
Total 395,492 451,386 702,252 1.2%
Total Investment
Portfolio 33,971,201 41,676,696 60,040,228 100.0%
======================== =========== =============== =========== ======= ==========
Total Investment
Portfolio by type
Growth focused
portfolio (3) 25,005,378 32,713,007 44,954,120 74.8%
MBO focused portfolio
(3) 8,965,823 8,963,689 15,086,108 25.2%
Investment Adviser's
Total 33,971,201 41,676,696 60,040,228 100.0%
------------------------ ----------- --------------- ----------- ------- ----------
Notes
(1) - Admitted to AIM during the period. Ahead of the Admission to
AIM of Virgin Wines on 2 March 2021, the Company's equity investment
in Virgin Wines Holding Company Ltd ("VWHCL") had been exchanged for
an equity investment in Rapunzel Newco Limited ("RNL"), a company
owned by the four Mobeus advised VCTs pro rata to each VCT's share
of its investment in Virgin Wines. Immediately prior to Admission,
RNL exchanged its equity investment in VWHCL for an equity investment
in Virgin Wines UK plc ("VWUK"). The Company is beneficially interested
in VWUK, through its holding in RNL. RNL is the legal owner of the
shares in VWUK, but each VCT is the beneficial holder. As part of
Virgin Wines' admission to AIM, the Company received repayment of
its loan stock generating proceeds of GBP1.88 million.
(2) - Admitted to AIM during the period. On 7 January 2021, a GBP0.26
million follow-on investment was made into Parsley Box Limited. The
enlarged shareholding was admitted to AIM on 31 March 2021. Ahead
of the admission to AIM, the Company's equity investment in Parsley
Box Limited had been exchanged for an equity investment in Parsley
Box Group UK plc. Upon admission to AIM, the Company invested a further
GBP0.01 million and realised proceeds of GBP1.25 million.
(3) - The growth focused portfolio contains all investments made after
the change in the VCT regulations in 2015 plus some investments that
are growth in nature made before this date. The MBO focused portfolio
contains investments made prior to 2015 as part of the previous MBO
strategy.
Statement of the Directors' Responsibilities
Responsibility statements
In accordance with Disclosure and Transparency Rule (DTR) 4.2.10,
Jonathan Cartwright (Chairman), Graham Paterson (Chairman of the Audit
Committee and Nomination and Remuneration Committee), Helen Sinclair
(Chairman of the Investment Committee) and Christopher Burke, being
the Directors of the Company confirm that to the best of their knowledge:
a) the condensed set of financial statements, which has been prepared
in accordance with Financial Reporting Standard 104 "Interim Financial
Reporting" gives a true and fair view of the assets, liabilities,
financial position and profit of the Company, as required by DTR 4.2.10;
b) the Half-Year Management Report which comprises the Chairman's
Statement, Investment Policy, Investment Review and the Investment
Portfolio Summary includes a fair review of the information required
by DTR 4.2.7, being an indication of the important events that have
occurred during the first six months of the financial year and their
impact on the condensed set of financial statements;
c) a description of the principal risks and uncertainties facing the
Company for the remaining six months is set out below, in accordance
with DTR 4.2.7; and
d) there were no related party transactions in the first six months
of the current financial year that are required to be disclosed, in
accordance with DTR 4.2.8.
Principal risks and uncertainties
In accordance with DTR 4.2.7, the Board confirms that the principal
risks and uncertainties facing the Company have not materially changed
from those identified in the Annual Report and Financial Statements
for the year ended 31 December 2020 ("the Annual Report") and are
not expected to change ahead of the year-end.
The principal risks faced by the Company are:
* Loss of approval as a Venture Capital Trust;
* economic and political risk;
* investment risk;
* regulatory risk;
* financial and operating risk;
* market risk;
* asset liquidity risk; and
* environmental, social and governance risk.
A detailed explanation of the principal risks can be found in the
Annual Report on page 31 and 32, and in Note 15 on pages 69 to 76
of the Annual Report and Financial Statements for the year ended 31
December 2020, copies of which are available on the Investment Adviser's
website, www.mobeus.co.uk or by going directly to the VCT's website,
www.mig4vct.co.uk.
Going concern
The Board has assessed the Company's operation as a going concern.
The Company's business activities, together with the factors likely
to affect its future development, performance and position are set
out in the Half-Year Management Report. The Directors have satisfied
themselves that the Company continues to maintain a significant cash
position and is adequate for the Company to continue to operate as
a going concern under any plausible stress scenario. The majority
of companies in the portfolio continue to trade well and the portfolio
taken as a whole remains resilient and well-diversified. The major
cash outflows of the Company (namely investments, buybacks and dividends)
are within the Company's control.
The Board's assessment of liquidity risk and details of the Company's
policies for managing its financial risks and capital are shown in
Note 15 on pages 69 to 76 of the Annual Report and Financial Statements
for the year ended 31 December 2020. Accordingly, the Directors continue
to adopt the going concern basis of accounting in preparing the half-year
report and annual financial statements.
Cautionary statement
This report may contain forward looking statements with regards to
the financial condition and results of the Company, which are made
in the light of current economic and business circumstances. Nothing
in this report should be construed as a profit forecast.
For and on behalf of the Board:
Jonathan Cartwright
Chairman
15 September 2021
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Unaudited Condensed Income Statement for the six months to 30 June
2021
Six months ended Six months ended Year ended 31
30 June 2021 30 June 2020 December 2020
(unaudited) (unaudited) (unaudited)
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP GBP GBP GBP
---------------- --- ---------- ----------- ----------- ---------- ---------- ---------- ---------- ----------- ------------
Net investment
portfolio
gains/(losses) 10 - 19,952,419 19,952,419 - (468,108) (468,108) - 13,307,684 13,307,684
Income 4 496,873 - 496,873 1,704,058 - 1,704,058 2,868,103 - 2,868,103
Investment
Adviser's
fees 5 (194,595) (583,787) (778,382) (155,891) (467,674) (623,565) (309,827) (929,481) (1,239,308)
Other expenses (208,965) - (208,965) (257,857) - (257,857) (426,422) (426,422)
Profit/(loss)
on
ordinary
activities
before
taxation 93,313 19,368,632 19,461,945 1,290,310 (935,782) 354,528 2,131,854 12,378,203 14,510,057
Tax on
profit/(loss)
on ordinary
activities 6 (4,371) 4,371 - (230,920) 88,858 (142,062) (280,053) 176,602 (103,451)
Profit/(loss)
and
total
comprehensive
income 88,942 19,373,003 19,461,945 1,059,390 (846,924) 212,466 1,851,801 12,554,805 14,406,606
================ === ========== =========== =========== ========== ========== ========== ========== =========== ============
Basic and
diluted
earnings per
ordinary
share 7 0.11p 23.08p 23.19p 1.28p (1.02)p 0.26p 2.22p 15.05p 17.27p
---------------- --- ---------- ----------- ----------- ---------- ---------- ---------- ---------- ----------- ------------
The revenue column of the Income Statement includes all income and
expenses. The capital column accounts for the net investment portfolio
gains/(losses) (unrealised gains/(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")
issued by the Association of Investment Companies ("AIC") and updated
in April 2021, supplementary information which analyses the Income
Statement between items of a revenue and capital nature has been presented
alongside the Income Statement. The revenue column of profit attributable
to equity shareholders is the measure the Directors believe appropriate
in assessing the Company's compliance with certain requirements set
out in Section 274 Income Tax Act 2007.
All the items in the above statement derive from continuing operations
of the Company. No operations were acquired or discontinued in the
period/year.
Unaudited Condensed Balance Sheet as at 30 June 2021
------------------------------------------------------------------------------------------------------------------------------------
30 June 30 June 31 December
2021 2020 2020
(unaudited) (unaudited) (audited)
Notes GBP GBP GBP
-------------------------------- ------ ------------ ------------ ------------
Fixed assets
Investments at fair value 10 60,040,228 33,283,495 41,676,696
Current assets
Debtors and prepayments 148,101 205,896 403,568
Current asset investments 9 24,529,923 18,794,483 22,634,956
Cash at bank 9 3,001,675 2,733,689 4,053,536
-------------------------------- ------
27,679,699 21,734,068 27,092,060
Creditors: amounts falling due
within one year (400,219) (446,720) (307,561)
Net current assets 27,279,480 21,287,348 26,784,499
Net assets 87,319,708 54,570,843 68,461,195
-------------------------------- ------ ------------ ------------ ------------
Capital and reserves
Called up share capital 833,540 844,831 840,040
Share premium reserve 12,495,262 12,495,261 12,495,262
Capital redemption reserve 27,012 15,722 20,512
Revaluation reserve 27,540,590 343,483 10,205,933
Special distributable reserve 25,380,699 27,245,898 26,563,547
Realised capital reserve 19,355,977 12,649,873 16,738,215
Revenue reserve 1,686,628 975,775 1,597,686
Equity shareholders' funds 87,319,708 54,570,843 68,461,195
================================ ====== ============ ============ ============
Basic and diluted net asset
value:
Basic and diluted net asset
value per share 11 104.76p 64.59p 81.50p
The financial information for the six months ended 30 June 2021 and the
six months ended 30 June 2020 has not been audited.
------------------------------------------------------------------------------------------------------------------------------------
Unaudited Condensed Statement of Changes in Equity
for the six months to 30 June 2021
Non-distributable reserves Distributable reserves
Called
up Share Capital Special Realised
share premium redemption Revaluation distributable capital Revenue
capital reserve reserve reserve reserve reserve reserve Total
(Note (Note (Note
a) b) b)
Notes GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ------ -------- ----------- ----------- ------------ -------------- ----------- ------------ ------------
At 1 January
2021 840,040 12,495,262 20,512 10,205,933 26,563,547 16,738,215 1,597,686 68,461,195
Comprehensive
income for the
period
Profit for the
period - - - 18,812,482 - 560,521 88,942 19,461,945
--------------- ------ -------- ----------- ----------- ------------ -------------- ----------- ------------ ------------
Total
comprehensive
income for
the period - - - 18,812,482 - 560,521 88,942 19,461,945
--------------- ------ -------- ----------- ----------- ------------ -------------- ----------- ------------ ------------
Contributions
by and
distributions
to owners
Shares bought
back (Note c) (6,500) - 6,500 - (603,432) - - (603,432)
Dividends paid 8 - - - - - - - -
Total
contributions
by and
distributions
to owners (6,500) - 6,500 - (603,432) - - (603,432)
--------------- ------ ----------- ----------- -------------- -----------
Other
movements
Realised
losses
transferred
to special
reserve (Note
a) - - - - (579,416) 579,416 - -
Realisation of
previously
unrealised
gains - - - (1,477,825) - 1,477,825 - -
Total other
movements - - - (1,477,825) (579,416) 2,057,241 - -
--------------- ------ ----------- ----------- -------------- -----------
At 30 June
2021 833,540 12,495,262 27,012 27,540,590 25,380,699 19,355,977 1,686,628 87,319,708
=============== ====== ======== =========== =========== ============ ============== =========== ============ ============
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. The transfer of GBP579,416 to the special
reserve from the realised capital reserve above is the total of realised
losses incurred by the Company in the period. As at 30 June 2021, the
Company has a special reserve of GBP25,380,699, GBP23,801,586 of which
arises from shares issued more than three years after the end of the financial
year in which they were issued. Reserves originating from share issues
are not distributable under VCT rules if they are within three years of
the end of an accounting period in which the shares were issued.
b): The Realised capital reserve and the Revenue reserve together comprise
the Profit and Loss Account of the Company.
c): During the period, the Company repurchased 649,944 of its own shares
at the prevailing market price for a total cost (including stamp duty)
of GBP603,432, which were subsequently cancelled. The difference between
the figure shown above of GBP603,432 and that per the Unaudited Condensed
Statement of Cash Flows of GBP556,183 is GBP47,249 which is a creditor
at the period-end.
Unaudited Condensed Statement of Changes in Equity
for the six months to 30 June 2020
Non-distributable reserves Distributable reserves
Called
up Share Capital Special Realised
share premium redemption Revaluation distributable capital Revenue
capital reserve reserve reserve reserve reserve reserve Total
Notes GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ------ -------- ----------- ----------- ------------ -------------- ----------- ------------ ------------
At 1 January
2020 667,991 - 8,056 3,713,586 35,514,889 8,935,662 1,195,130 50,035,314
Comprehensive
income for the
period
(Loss)/profit
for the
period - - - (2,050,190) - 1,203,266 1,059,390 212,466
-------- ----------- ----------- -------------- ----------- ------------ ------------
Total
comprehensive
income for
the period - - - (2,050,190) - 1,203,266 1,059,390 212,466
--------------- ------ -------- ----------- ----------- ------------ -------------- ----------- ------------ ------------
Contributions
by and
distributions
to owners
Shares issued
via Offer for
Subscription 184,506 12,815,494 - - - - - 13,000,000
Issue costs
and
facilitation
fees on Offer
for
Subscription - (320,233) - - (145,330) - - (465,563)
Shares bought
back (7,666) - 7,666 - (424,429) - - (424,429)
Dividends paid 8 - - - - (6,508,200) - (1,278,745) (7,786,945)
------------
Total
contributions
by and
distributions
to owners 176,840 12,495,261 7,666 - (7,077,959) - (1,278,745) 4,323,063
--------------- ------ ----------- ----------- -------------- ----------- ------------
Other
movements
Realised
losses
transferred
to special
reserve - - - - (1,191,032) 1,191,032 - -
Realisation of
previously
unrealised
gains - - - (1,319,913) - 1,319,913 - -
Total other
movements - - - (1,319,913) (1,191,032) 2,510,945 - -
--------------- ------ ----------- ----------- -------------- -----------
At 30 June
2020 844,831 12,495,261 15,722 343,483 27,245,898 12,649,873 975,775 54,570,843
=============== ====== ======== =========== =========== ============ ============== =========== ============ ============
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.
Capital redemption reserve - The nominal value of shares bought back
and cancelled is held in this reserve, so that the Company's capital is
maintained.
Share premium reserve - This reserve contains the excess of gross proceeds
less issue costs over the nominal value of shares allotted under recent
Offers for Subscription and the Company's Dividend Investment Scheme.
Revaluation reserve - Increases and decreases in the valuation of investments
held at the period-end are accounted for in this reserve, except to the
extent that the diminution is deemed permanent.
In accordance with stating all investments at fair value through profit
and loss, all such movements through both revaluation and realised capital
reserves are shown within the Income Statement for the period.
Special distributable reserve - This reserve is created from cancellations
of the balances upon the Share premium reserve, which are transferred
to this reserve from time to time. The cost of share buybacks and any
realised losses on the sale or impairment of investments (excluding transaction
costs) are charged to this reserve. 75% of the Investment Adviser fee
expense, and the related tax effect, that are charged to the realised
capital reserve are transferred to this reserve. This reserve will also
be charged any facilitation payments to financial advisers, which arose
as part of an Offer for Subscription.
Realised capital reserve - The following are accounted for in this reserve:
-- Gains and losses on realisation of investments;
-- Permanent diminution in value of investments;
-- Transaction costs
incurred in the
acquisition and
disposal of
investments;
-- 75% of the Investment Adviser fee expense and 100% of any performance
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, as well as 25% of the Investment Adviser's
fee together with the related tax effect, as well as income dividends
paid that are classified as revenue in nature.
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
Unaudited Condensed Statement of Cash Flows
for the six months ended 30 June 2021
------------------------------------------------------------------------------------
Six months Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
Notes (unaudited) (unaudited) (audited)
GBP GBP GBP
Cash flows from operating
activities
Profit for the financial period 19,461,945 212,466 14,406,606
Adjustments for:
Net investment portfolio
(gains)/losses (19,952,419) 468,108 (13,307,684)
Tax charge for the current
period 6 - 142,062 103,451
Decrease/(increase) in debtors 255,467 (22,721) (220,393)
Increase/(decrease) in
creditors
and accruals 45,409 (4,123) (2,616)
--------------------------------
Net cash (outflow)/inflow from
operations (189,598) 795,792 979,364
Corporation tax paid - - (35,383)
Net cash (outflow)/inflow from
operating activities (189,598) 795,792 943,981
Cash flows from investing
activities
Sale of investments 10 5,424,072 6,751,676 14,974,305
Purchase of investments 10 (3,835,185) (1,964,998) (4,805,036)
Net cash inflow from investing
activities 1,588,887 4,786,678 10,169,269
Cash flows from financing
activities
Share issued as part of Offer
for Subscription - 13,000,000 13,000,000
Issue costs and facilitation
fees as part of Offer for
subscription - (465,563) (465,563)
Equity dividends paid 8 - (7,786,945) (7,786,946)
Purchase of own shares (556,183) (357,757) (728,216)
-------------------------------- ------ ------------- ------------ -------------
Net cash (outflow)/inflow from
financing activities (556,183) 4,389,735 4,019,275
Net increase in cash and cash
equivalents 843,106 9,972,205 15,132,525
Cash and cash equivalents at
start of period 24,688,492 9,555,967 9,555,967
-------------------------------- ------ ------------- ------------ -------------
Cash and cash equivalents at
end of period 25,531,598 19,528,172 24,688,492
Cash and cash equivalents
comprise:
Cash at bank and in hand 9 3,001,675 2,733,689 4,053,536
Cash equivalents 9 22,529,923 16,794,483 20,634,956
The notes to the unaudited financial statements below form
part of these Half-Year Financial Statements.
Notes to the Unaudited Condensed Financial Statements
1. Company information
Mobeus Income and Growth 4 VCT plc is a public limited company
incorporated in England, registration number 3707697. The registered
office is 30 Haymarket, London, SW1Y 4EX.
2. Basis of preparation of the Financial
Statements
These Financial Statements have been prepared in accordance with
accounting policies consistent with Financial Reporting Standard
102 ("FRS102"), Financial Reporting Standard 104 ("FRS104") - Interim
Financial Reporting, with the Companies Act 2006 and the 2014 Statement
of Recommended Practice, 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' ('the SORP') (updated in
April 2021) issued by the Association of Investment Companies.
The Half-Year Report has not been audited, nor has it been reviewed
by the auditor pursuant to the Financial Reporting Council's (FRC)
guidance on Review of Interim Financial Information.
3. Principal accounting policies
The accounting policies have been applied consistently throughout
the period. Full details of principal accounting policies will
be disclosed in the Annual Report, while the policy in respect
of investments is included within an outlined box at the top of
note 10 on investments.
4. Income
Six months
Six months ended ended Year ended
31 December
30 June 2021 30 June 2020 2020
(unaudited) (unaudited) (audited)
Income from investments GBP GBP GBP
---------------------------------------- ----------------- ------------- ------------
Dividends 70,309 74,942 657,891
Loan stock interest 415,674 1,572,242 2,113,964
Money-market funds 758 37,071 42,612
Bank deposit interest 10,132 17,489 29,451
Interest on preference share dividend
arrears - 129 17,770
Other income - 2,185 6,415
Total Income 496,873 1,704,058 2,868,103
---------------------------------------- ----------------- ------------- ------------
5. Investment Adviser's fees and performance fees
In the Income Statement, 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 would be charged against the
capital column of the Income Statement, as it is based upon the
achievement of capital growth.
Six months
Six months ended ended Year ended
31 December
30 June 2021 30 June 2020 2020
(unaudited) (unaudited) (audited)
GBP GBP GBP
Allocated to revenue return: Investment
Adviser's fees 194,595 155,891 309,827
Allocated to capital return: Investment
Adviser's fees 583,787 467,674 929,481
Total Investment Adviser's Fees 778,382 623,565 1,239,308
---------------------------------------- ----------------- ------------- ------------
Between 1 July 2020 and 30 June 2021, the Investment Adviser's
fee upon the net funds raised from the use of the over-allotment
facility of GBP5 million under the 2019/20 Offer was reduced to
1% from 2% per annum, for one year.
6. Taxation
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP GBP GBP GBP
a) Analysis of tax
charge:
UK Corporation tax
on profits/(losses)
for the period 4,371 (4,371) - 230,920 (88,858) 142,062 280,053 (176,602) 103,451
--------------------- --------- ------------ ------------ ---------- ---------- ------------ ---------- ------------
Total current tax
charge/(credit) 4,371 (4,371) - 230,920 (88,858) 142,062 280,053 (176,602) 103,451
--------------------- --------- ------------ ------------ ---------- ---------- ------------ ---------- ------------ ------------
Corporation tax is
based on a rate of
19.0% (2020: 19.0%)
b) Profit/(loss) on
ordinary activities
before tax 93,313 19,368,632 19,461,945 1,290,310 (935,782) 354,528 2,131,854 12,378,203 14,510,057
Profit/(loss) on
ordinary activities
multiplied by rate
of corporation
tax in the UK of
19.0% (2020: 19.0%) 17,729 3,680,041 3,697,770 245,159 (177,799) 67,360 405,052 2,351,859 2,756,911
Effect of:
UK dividends (13,358) - (13,358) (14,239) - (14,239) (124,999) - (124,999)
Net investment
portfolio
(gains)/losses not
(taxable)/allowable - (3,790,961) (3,790,961) - 88,941 88,941 - (2,528,461) (2,528,461)
Losses not utilised - 106,549 106,549 - - - - - -
Actual current tax
charge 4,371 (4,371) - 230,920 (88,858) 142,062 280,053 (176,602) 103,451
--------------------- --------- ------------ ------------ ---------- ---------- ------------ ---------- ------------ ------------
7. Basic and diluted earnings and return per share
Basic and diluted earnings per share
The basic earnings, revenue earnings and capital earnings per share shown
below for each period are respectively based on numerators i)-iii), each
divided by the weighted average number of shares in issue in the period
- see iv) below:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
(unaudited) (unaudited) (audited)
GBP GBP GBP
------------------------------------------- ------------ ------------ ------------
i) Total earnings after taxation 19,461,945 212,466 14,406,606
Basic and diluted earnings per share (Note
a) 23.19p 0.26p 17.27p
ii) Net revenue from ordinary activities
after taxation 88,942 1,059,390 1,851,801
Basic and diluted revenue earnings per
share (Note b) 0.11p 1.28p 2.22p
Net investment portfolio gains 19,952,419 (468,108) 13,307,684
Capital Investment Adviser's fees less
taxation (579,416) (378,816) (752,879)
-------------------------------------------- ------------ ------------ ------------
iii) Total capital earnings 19,373,003 (846,924) 12,554,805
Basic and diluted capital return per share
(Note c) 23.08p (1.02)p 15.05p
iv) Weighted average number of shares in
issue in the period 83,932,807 82,552,958 83,426,755
8. Dividends paid
Six
months Six months Year
ended ended ended
31
30 June 30 June December
2021 2020 2020
(unaudited) (unaudited) (audited)
For the
year
ended Pence
31 per Date
Dividend Type December share paid GBP GBP GBP
10
January
Interim Capital* 2019 4.00p 2020 - 2,671,965 2,671,965
7 May
Interim Income 2020 1.70p** 2020 - 1,278,745 1,449,245
7 May
Interim Capital* 2020 4.30p** 2020 - 3,836,235 3,665,736
Total Dividends Paid - 7,786,946 7,786,946
------------ ------------ ----------
* - These dividends were paid out of the Company's special distributable
reserve.
** - The split of the 2020 dividend shown in the 2020 Annual Report reflected
an increase in the amount allocated to income and a reduction in the amount
allocated to capital by 0.20p from those provisionally allocated in the
2020 Unaudited Half-Year Report.
The Board declared an interim dividend in respect of the year ending 31
December 2021 of 5.00 pence per share which was paid to Shareholders on
6 August 2021.
9. Current asset investments and cash at bank
as at as at as at
31 December
30 June 2021 30 June 2020 2020
(unaudited) (unaudited) (audited)
GBP GBP GBP
OEIC Money market funds 22,529,923 16,794,483 20,634,956
-------------------------------------------- ------------- ------------- ------------
Cash equivalents per Statement of Cash
Flows 22,529,923 16,794,483 20,634,956
Bank deposits that mature after three
months 2,000,000 2,000,000 2,000,000
-------------------------------------------- ------------- ------------- ------------
Current asset investments 24,529,923 18,794,483 22,634,956
-------------------------------------------- ------------- ------------- ------------
Cash at Bank 3,001,675 2,733,689 4,053,536
-------------------------------------------- ------------- ------------- ------------
10. Summary of movement on investments during the period
The most critical estimates, assumptions and judgements relate to the
determination of the carrying value of investments at "fair value through
profit and loss" (FVTPL). All investments held by the Company are classified
as FVTPL and measured in accordance with the International Private Equity
and Venture Capital Valuation ("IPEV") guidelines, as updated in December
2018 (as updated by Special Valuation guidance issued in March 2020).
This classification is followed as the Company's business is to invest
in financial assets with a view to profiting from their total return in
the form of capital growth and income.
Purchases and sales of unlisted investments are recognised when the contract
for acquisition or sale becomes unconditional. For investments actively
traded on organised financial markets, fair value is generally determined
by reference to Stock Exchange market quoted bid prices at the close of
business on the balance sheet date. Purchases and sales of quoted investments
are recognised on the trade date where a contract of sale exists whose
terms require delivery within a time frame determined by the relevant
market. Where the terms of a disposal state that consideration may be
received at some future date and, subject to the conditionality and materiality
of the amount of deferred consideration, an estimate of the fair value
discounted for the time value of money may be recognised through the Income
Statement. In other cases, the proceeds will only be recognised once the
right to receive payment is established and there is no reasonable doubt
that payment will be received.
Unquoted investments are stated at fair value by the Directors at each
measurement date in accordance with appropriate valuation techniques,
which are consistent with the IPEV guidelines:-
(i) Each investment is considered as a whole on a 'unit of account' basis,
i.e. that the value of each portfolio company is considered as a whole,
alongside consideration of:-
The price of new or follow on investments made, if deemed to be made as
part of an orderly transaction, are considered to be at fair value at
the date of the transaction. The inputs that derived the investment price
are calibrated within individual valuation models and at subsequent quarterly
measurement dates are reconsidered for any changes in light of more recent
events or changes in the market performance of the investee company. The
valuation bases used are the following:
- a multiple basis. The enterprise value of the investment may be determined
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, depreciation and amortisation, or revenue, or gross profit (the
ratio used being based on a comparable sector but the resulting value
being adjusted to reflect points of difference identified by the Investment
Adviser compared to the sector including, inter alia, scale and liquidity).
or:-
- where a company's underperformance against plan indicates a diminution
in the value of the investment, provision against the price of a new investment
is made, as appropriate.
(ii) Premiums, to the extent that they are considered capital in nature,
and that they will be received upon repayment of loan stock investments
are accrued at fair value when the Company receives the right to the premium
and when considered recoverable.
(iii) Where a multiple or the price of recent investment less impairment
basis is not appropriate and overriding factors apply, a discounted cash
flow, net asset valuation, realisation proceeds or a weighted average
of these bases may be applied.
Capital gains and losses on investments, whether realised or unrealised,
are dealt with in the profit and loss and revaluation reserves and movements
in the period are shown in the Income Statement.
All investments are initially recognised and subsequently measured at
fair value. Changes in fair value are recognised in the Income Statement.
A key judgement made in applying the above accounting policy relates to
investments that are permanently impaired. Where the value of an investment
has fallen permanently below the price of recent investment, the loss
is treated as a permanent impairment and as a realised loss, even though
the investment is still held. The Board assesses the portfolio for such
investments and, after agreement with the Investment Adviser, will agree
the values that represent the extent to which an investment loss has become
realised. This is based upon an assessment of objective evidence of that
investment's future prospects, to determine whether there is potential
for the investment to recover in value.
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.
Traded Unquoted Unquoted Unquoted Total
Loan
on AIM equity preference Stock
shares shares
Level Level Level
1 3 Level 3 3
GBP GBP GBP GBP GBP
-------------------- ------------- ------------- ------------ ------------- ---------------
Valuation at 31
December 2020 266,680 31,006,710 969,399 9,433,907 41,676,696
Purchases at cost - 2,857,550 - 977,635 3,835,185
Reclassification at
value (Note b) 6,638,097 (6,638,097) - - -
Sales - proceeds (1,611,332) (1,281,182) (63,709) (2,467,849) (5,424,072)
- realised gains
(Note a) 641,268 432,421 63,591 2,657 1,139,937
Unrealised gains on
investments in the
period (Note a) 7,017,858 10,806,686 31,449 956,489 18,812,482
Valuation at 30 June
2021 12,952,571 37,184,088 1,000,730 8,902,839 60,040,228
Book cost at 30 June
2021 676,918 20,860,141 905,214 11,528,928 33,971,201
Unrealised
gains/(losses) at
30 June 2021 12,275,653 17,730,895 95,743 (2,561,701) 27,540,590
Permanent impairment
of investments - (1,406,948) (227) (64,388) (1,471,563)
Valuation at 30 June
2021 12,952,571 37,184,088 1,000,730 8,902,839 60,040,228
Gains on investments 1,251,389 1,119,829 63,591 182,953 2,617,762
Less amounts
recognised as
unrealised gains in
previous years (610,121) (687,408) - (180,296) (1,477,825)
------------- ------------- ------------ ------------- ---------------
Realised gains based
on carrying value
at 31 December 2020 641,268 432,421 63,591 2,657 1,139,937
Net movement in
unrealised gains in
the period 7,017,858 10,806,686 31,449 956,489 18,812,482
Gains on investments
for the six months
ended 30 June 2021 7,659,126 11,239,107 95,040 959,146 19,952,419
--------------------- ------------- ------------- ------------ ------------- ---------------
Note a) Net realised gains on investments of GBP1,139,937 together with
net unrealised gains of GBP18,812,482 equal net investment portfolio gains
of GBP19,952,419 as disclosed in the Income Statement.
Note b) The Company's equity investments in Virgin Wines and Parsley Box
were admitted to AIM during the period. The amount transferred from Level
3 to Level 1 of GBP6,638,097 reflects the combined equity value held at
the start of the period.
Level 3 unquoted equity and loan investments are valued in accordance
with IPEV guidelines as follows:
as at as at as at
30 June 30 June 31 December
2021 2020 2020
(unaudited) (unaudited) (audited)
GBP GBP
------------ ------------ ------------
Valuation methodology
Multiple of earnings, revenues or gross
margin, as appropriate 45,057,207 31,214,307 39,839,162
Recent investment price 1,622,633 195,200 1,150,057
Net asset value 309,420 1,476,718 363,231
Estimated and discounted realisation
proceeds 49,597 52,253 57,566
Recent investment price (reviewed for
impairment) 48,800 -
47,087,657 32,938,478 41,410,016
=================================================================================================
-------------------------------------------------------------------------------------------------------------------
11. Net asset value per
share
As at As at As at
30 June 30 June 31 December
2021 2020 2020
(unaudited) (unaudited) (audited)
Net assets GBP87,319,708 GBP54,570,843 GBP68,461,195
Number of shares in
issue 83,354,074 84,483,074 84,004,018
Net asset value per
share (pence) 104.76p 64.59p 81.50p
12. Post balance sheet events
On 5 August 2021, the Company made a further GBP0.70 million new
equity investment into MyTutor.
On 6 August 2021, the Company partially sold its equity holding
in MyTutor to a large strategic investor generating proceeds of
GBP0.70 million and a gain of GBP0.51 million over the cost of
the original investment made in 2017 of GBP0.19 million.
13. The financial information for the six months ended 30 June 2021
does not comprise statutory accounts within the meaning of Section
434 of the Companies Act 2006. The financial statements for the
year ended 31 December 2020 have been filed with the Registrar
of Companies. The auditor has reported on the financial statements
for the year ended 31 December 2020 and that report was unqualified
and did not contain a statement under section 498(2) or (3) of
the Companies Act 2006.
14. This Half-Year Report will shortly be made available on our website:
www.mig4vct.co.uk and will be circulated by post to those shareholders
who have requested copies of the Report. Further copies are available
free of charge from the Company's registered office, 30 Haymarket,
London SW1Y 4EX or can be downloaded via the website.
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END
IR SFMFIIEFSEDU
(END) Dow Jones Newswires
September 16, 2021 01:59 ET (05:59 GMT)
1 Year Mobeus Income & Growth 4... Chart |
1 Month Mobeus Income & Growth 4... Chart |
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