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RNS

Annual Results for the year ended 31 December 2018

Released 17:52 27-Mar-2019

RNS Number : 2420U
Mobeus Income & Growth VCT PLC
27 March 2019
 

mobeus Income & Growth VCT plc

 

Annual Financial Results of the Company for the Year ended 31 December 2018

 

Mobeus Income & Growth VCT plc (the "Company") today announces its final results for the year ended 31 December 2018.  These results were approved by the Board of Directors on 27 March 2019.

 

You may, in due course, view the Annual Report & Financial Statements, comprising the statutory accounts of the Company by visiting www.migvct.co.uk.

 

 

Financial Highlights

 

As at 31 December 2018:

Net assets: £75.08 million

Net asset value ("NAV") per share: 70.25 pence

 

 

-

Net asset value ("NAV") total return per share for the year was 4.9%*.

-

Share price total return per share was 6.3% for the year*.

-

Dividends paid and proposed in respect of the year total 7.00 pence per share. The proposed final dividend of 5.00 pence per share, if approved, will bring cumulative dividends paid to shareholders in respect of the past five years to 71.50 pence per share*.

-

The Company realised investments for a total of £2.94 million, a realised gain over original investment cost of £0.17 million.

-

The Company invested a total of £7.24 million into five new growth capital investments and five follow-on investments during the year.

 

 

*

Further details on these alternative performance measures ("APMs") are contained in the Strategic Report within the Annual Report.

 

PERFORMANCE SUMMARY

 

The table below shows the recent past performance of the Company's existing class of shares for each of the last five years.

 

 Reporting date

Net
assets

 

NAV
per
share

Share

price1

 

Cumulative dividends

 paid per
share

Cumulative total return per share to shareholders2

Dividends paid and proposed per share in respect of each year

 

 

as at

31 December

 

 

 

 

(NAV basis)

(Share price basis)

 

 

 

 

(£m)

(p)

(p)

(p)

(p)

(p)

(p)

 

 

2018

75.08

70.25

62.00

113.80

184.05

175.80

7.00

3

 

2017

69.90

71.75

63.00

108.80

180.55

171.80

16.00

 

 

2016

63.15

83.53

74.75

89.80

173.33

164.55

14.50

 

 

2015

74.11

97.54

86.50

74.30

171.84

160.80

10.00

 

 

2014

60.41

99.44

86.00

64.30

163.74

150.30

24.00

 

 

 

 

 

 

 

 

 

 

 

 

1

Source: Panmure Gordon & Co. (mid-market price).  The discount on the Company's shares at 31 December 2018 was 10.0%, as the share price was based on the NAV per share at 30 September 2018 of 68.88 pence per share, which was the latest published figure at that time.  

 

 

2

Cumulative total return per share comprises the NAV per share (NAV basis) or the mid-market price per share (share price basis) plus cumulative dividends paid since launch in October 2004.

 

 

3

This figure of 7.00 pence includes the proposed final dividend of 5.00 pence per share referred to in the Financial Highlights above, payment of which, if approved, will reduce the net assets per share from the 31 December 2018 figure of 70.25 pence by the amount of the dividend.

 

 

                     

 

CHAIRMAN'S STATEMENT

I am pleased to present the annual results of Mobeus Income & Growth VCT plc for the year ended 31 December 2018.

 

Overview

This has been another year of solid performance by the Company. Returns to shareholders have again been positive, principally due to a strong income return and a rise in the value of the unrealised portfolio. During the year, the Company made investments into five new companies, provided follow-on funding to five existing portfolio companies and realised its investment in three portfolio companies. Further details of this investment activity can be found under the 'Investment portfolio' section of my Statement below and in the Investment Adviser's Review.

 

The Company and the Investment Adviser have responded well to the changes in the VCT Rules introduced by the Finance (No2) Act 2015. Fourteen growth capital investments totalling £16.30 million have been completed since this change.  Shareholders should note that, at the year end, 65.7% (2017: 75.4%) of the value of the investment portfolio was held in more mature investments made before the rules changed and 34.3% (2017: 24.6%) was held in younger growth capital investments. 

 

The Investment Adviser continues to report an interesting pipeline of further growth capital opportunities.  Meanwhile the existing, more mature portfolio constructed under the previous rules continues to provide a healthy yield.

 

As mentioned in my half-year statement, we are delighted with the strong support from investors for our last fundraising, which closed fully subscribed in March 2018.  The Board appreciates the continued support from existing shareholders and extends a warm welcome to new shareholders.

 

Performance

As explained more fully in the Strategic Report in the Annual Report, the Company's NAV total return per share for the year ended 31 December 2018 was 4.9% (2017: 8.6%) (being the closing NAV plus dividends paid in the year, divided by the opening NAV) while the share price total return was 6.3% (2017: 9.7%). As a result of this performance, the NAV cumulative total return per share (being the closing NAV plus total dividends paid to date since launch in 2004) rose during the year by 1.9% from 180.55 pence to 184.05 pence.

 

This NAV return for the year was primarily attributable to good revenue returns arising principally from income from loan stock investments, as well as an increase in value of the portfolio of investee companies. Further information is contained in the Investment Adviser's Review and the Strategic Report in the Annual Report.

 

Dividends

Your Board is proposing a final dividend in respect of the year ended 31 December 2018 of 5.00 pence per share (2017: 3.00 pence per share).

 

The dividend, comprising 3.25 pence from capital (special) and 1.75 pence from income, will be proposed to shareholders at the Annual General Meeting of the Company to be held on 8 May 2019, to shareholders on the register on 26 April 2019, for payment on 17 May 2019. This final dividend is in addition to an interim capital (special) dividend of 2.00 pence paid on 21 September 2018.

 

If approved by shareholders, this forthcoming final dividend will bring total dividends paid in respect of the year ended 31 December 2018 to 7.00 pence (2017: 16.00 pence) per share, bringing cumulative dividends paid since inception in 2004 to 118.80 pence (2017: 111.80 pence) per share.

 

The Company's target of paying a dividend of at least 4.00 pence per share in respect of each financial year has been exceeded in each of the last nine years. While the Board still believes in the attainment of the dividend target, the gradual move of the portfolio to younger growth capital investments may make it harder to achieve from income and capital returns alone ('ordinary dividends') in any given year.

 

To the extent that dividends have been, or continue to be, paid from special distributable reserves ('special' above), either to enhance dividends or to enable the Company to comply with its regulatory requirements, shareholders should note this will reduce the Company's NAV per share.

 

A full dividend history is contained in the Performance Data appendix in the Annual Report and on the Company's website.

 

Investment portfolio

The portfolio was valued at £48.20 million (2017: £41.52 million) at the year end representing 103.1% of cost (2017: 98.3%).

 

During the year, £7.24 million was invested in five new growth capital investments and five existing portfolio companies (analysed in the Investment Adviser's Review and explained within Note 8 to the Financial Statements).

 

The new growth capital investments totalling £3.10 million were made into the following companies:

•           Proactive Investors, a provider of investor media services;

•           Super Carers, an online platform connecting people seeking home care;

•           Hemmels, a restorer of classic cars;

•           Rotageek, a provider of workforce management software; and

•           Grow Kudos, a digital platform for dissemination of research.

 

In addition, five follow-on growth capital investments totalling £4.14 million were made into:

 

•           MPB, an online marketplace for used camera and video equipment;

•           Tapas Revolution, a leading Spanish restaurant chain in the casual dining sector;

•           MyTutor, a digital marketplace connecting people seeking online tutoring;

•           Preservica, a seller of proprietary digital archiving software; and

•           Biosite, a provider of biometric access control and software-based workforce management solutions for the construction sector.

 

We expect these follow-on investments to continue to be a feature of the growth capital investments as they achieve scale.

 

Cash proceeds totalling £2.94 million for the year were received from portfolio companies that were either sold, repaid loans or settled other capital proceeds. Of this total, £2.13 million was received as cash proceeds from the sale of Fullfield (trading as Motorclean), Hemmels and Lightworks, with a further £0.81 million being received as loan, share capital repayments and deferred consideration.

 

For the year under review, the portfolio generated a net loss of £0.13 million on investments realised. Within this, the principal gains were from the sale of Lightworks (which was realised at a profit over opening valuation of £0.78 million) and receipts from companies realised in a prior year, which were more than offset by losses incurred from the sale of Fullfield (trading as Motorclean) (£0.78 million) and Hemmels (£0.33 million). The loss on the sale of Hemmels is explained further in the Investment Adviser's Review. It serves to remind shareholders that an inherent risk of investing in relatively early stage smaller companies (as required by the terms of the new VCT regulations), is that not all companies will succeed.

 

The portfolio also achieved a net increase of £2.80 million on investments still held, with positive increases from Plastic Surgeon, EOTH (Rab and Lowe Alpine) and CGI Creative Graphics, partially offset by valuation falls at BookingTek, Wetsuit Outlet and Veritek.

 

Review of longer-term performance

Shareholders who invested in 2004 at the launch of the Company have seen a NAV cumulative total return of 184.05 pence per share compared with their initial investment cost of 100 pence per share, or a net cost of 60 pence per share (after initial income tax relief of 40 pence of their investment).  As part of this return 113.80 pence per share has been paid to shareholders in dividends.  This represents an average annual yield on the initial 100 pence investment of 8.0% and 13.3% on the adjusted investment cost of 60 pence.  The balance of the total return is the closing NAV of 70.25 pence per share.

 

The Board also regularly reviews the Company's total (income and capital) return performance on both a NAV and Share Price basis compared to its peer group.  Based on the statistics prepared by Morningstar at 31 December 2018, the Company was ranked 8th on a NAV total return basis and 4th on a Share Price total return basis out of 37 generalist (including planned exit) VCTs monitored by the Association of Investment Companies ("AIC") over the last five years.  The Company was ranked 3rd on a NAV total return basis and 13th on a Share Price total return basis out of 32 generalist (including planned exit) VCTs monitored by the AIC over the last ten years. The Board believes this to be a satisfactory performance.

 

Industry and regulatory developments

During the year under review, a number of additional changes to the VCT Scheme were introduced with the enactment of the Finance Act 2018 on 15 March 2018. These changes were designed to exclude tax-motivated investments where capital is not at risk (that is, principally seeking to preserve investors' capital) and to encourage VCTs to put their money to work more quickly. They also place further restrictions on the way investments are able to be structured. A summary of current VCT regulation is included in the Annual Report.

 

Share buybacks

During the year ended 31 December 2018, the Company made six purchases of its shares, buying back a total of 1,715,113 shares, allowing shareholders who wanted to sell their shares to do so. The buybacks represented 1.8% of the issued share capital of the Company at the beginning of the year. Further details are included in the Strategic Report in the Annual Report. The shares bought back were subsequently cancelled.

 

Shareholder Event

This year's annual shareholder event was held on Tuesday, 5 February 2019 at the Royal Institute of British Architects in Central London. Separate day time and evening sessions included presentations on the Mobeus advised VCTs' investment activity and performance. We have received positive feedback from many of the circa 350 people who attended the event and were pleased to hear that overall they found the day informative and worthwhile. The next shareholder event will be held in the first quarter of 2020.

 

Annual General Meeting

The next Annual General Meeting of the Company will be held at 2:00 p.m. on Wednesday, 8 May 2019 at The Clubhouse, 8 St James's Square, London SW1Y 4JU. Both the Board and the Investment Adviser look forward to welcoming shareholders to the meeting which will include a presentation from the Investment Adviser on the investment portfolio. Shareholders are encouraged to attend and to ask questions of the Board and the Investment Adviser. The Notice of the meeting and an explanation of the resolutions to be proposed can be found in the Annual Report.

 

Outlook

Your Board considers that your Company is well positioned to take advantage of the strong demand for growth capital investment, although currently entry valuations can be quite full for the most interesting opportunities.  While the new growth capital element of the portfolio is still young, both your Board and the Investment Adviser will seek to assess, balance and diversify the risks within the growing proportion of the overall portfolio that these investments will represent.  Your Board cautions that investing in such earlier stage companies does involve increased risk and those that succeed often take longer to achieve scale. Returns may, therefore, take longer to emerge and may be more volatile. Unfortunately, the least successful investments are likely to emerge before the most successful. Thus, we might anticipate a slower rate of financial progress in the earlier years for the growth capital portfolio, hopefully offset by more significant longer-term gains.

 

Meanwhile, the portfolio retains a solid foundation of investments made before the 2015 rule change, the majority of which are mature and profitable companies providing attractive income returns, and some of which may be realised at a worthwhile profit in the future when circumstances permit.

 

The Board and Investment Adviser have carried out an analysis of the possible impact of Brexit on the investment portfolio. This will be kept under review.

 

The successful fundraising in 2017/18 provides the Company with sufficient funds to meet its cash needs and to continue the current investment rate in the short to medium-term. Your Board is also pleased to note that the Investment Adviser continues to expand and strengthen its investment team to source and manage investments that complement the portfolio.

 

Finally, I would like to take this opportunity once again to thank all Shareholders for their continued support.

 

Clive Boothman

Chairman

 

 

INVESTMENT POLICY

The Company's policy is to invest primarily in a diverse portfolio of UK unquoted companies. Investments are generally structured as part loan and part equity in order to receive regular income, to generate capital gains upon sale and to reduce the risk of high exposure to equities.  To spread the risk further, investments are made in a number of businesses across different industry sectors.

 

The Company's cash and liquid resources are held in a range of instruments which can be of varying maturities, subject to the overriding criterion that the risk of loss of capital be minimised.

 

The Company seeks to make investments in accordance with the requirements of VCT regulation.  The full text of the Company's Investment Policy is available in the Strategic Report section of the Annual Report.

 

 

Investment ADVISER'S Review

Demand for growth capital investment remains strong and there is a significant pipeline of investment opportunities. It is expected that the current pace and quantum of new and follow-on investments will continue in the short to medium-term.

 

Portfolio review

The portfolio's activity in the year is summarised as follows:

 

 

2018

£m

 

2017

£m

Opening portfolio value

41.52

 

51.68

New and further investments

7.24

 

2.34

Disposal proceeds

(2.94)

 

(17.18)

Net realised (losses)/gains

(0.13)

 

5.25

Valuation movements

2.51

1

(0.57)

Portfolio value at 31 December

48.20

 

41.52

 

1 This figure is less than Unrealised gains/(losses) on investments per the Income Statement due to an amount of deferred consideration of £0.28 million now recognised, from an investment realised in a prior year which no longer forms part of the portfolio - see Note 8 of the Notes to the Financial Statements for further details.

 

This has been a year of further solid progress building the growth capital portfolio with five investments into new growth businesses totalling £3.10 million and five existing growth portfolio companies receiving follow-on funding totalling £4.14 million. Net cash proceeds of £2.94 million were received, primarily from three realisations.

 

Since the change in the VCT rules in 2015, the Company has invested £16.30 million in younger growth capital investments, bringing the proportion of the portfolio held in growth capital investments made after the rule change in 2015 to 34.3% by value at the year end.

 

Details of these movements for each investee company are provided at the end of this Investment Adviser's Review.

 

The portfolio's contribution to the overall results of the VCT is summarised as follows:

 

Investment Portfolio Capital Movement

2018

£m

 

2017

£m

Increase in the value of unrealised investments

6.37

 

3.74

Decrease in the value of unrealised investments

(3.86)

 

(4.31)

Net increase/(decrease) in the value of unrealised investments

2.51

1

(0.57)

 

 

 

 

Realised gains

0.98

 

5.25

Realised losses

(1.11)

 

-

Net realised (losses)/gains in the year

(0.13)

 

5.25

 

 

 

 

Net investment portfolio movement in the year

2.38

 

4.68

 

1 This figure is less than Unrealised gains/(losses) on investments per the Income Statement due to an amount of deferred consideration of £0.28 million now recognised, from an investment realised in a prior year which no longer forms part of the portfolio - see Note 8 of the Notes to the Financial Statements for further details.

 

Valuation changes of portfolio investments still held

Within the valuation increases of £6.37 million, the principal contributors were Plastic Surgeon £849k, EOTH (Rab and Lowe Alpine) £780k and CGI Creative Graphics £439k. Plastic Surgeon continues to trade strongly having now achieved three years of profit growth. EOTH achieved a record year of profitability, underpinned by continued growth in its Rab brand. CGI Creative Graphics has seen an improvement in trading, principally arising from the growth in the UK and European caravan market.

 

A small number of new growth investments have shown initial uplifts from cost, due in large part to the structure of the Company's investment, but, in some cases, also due to the underlying investee company performance.

 

Within total valuation decreases of £(3.86) million, the main reductions were BookingTek (£833k), Wetsuit Outlet (£802k) and Veritek Global (£679k). BookingTek has experienced delays to the roll out of its software which has resulted in turnover being lower than budget. Wetsuit Outlet has had a disappointing year post investment, with growth in profitability not being achieved as envisaged. Management has since implemented several measures to restore margins. Finally, Veritek has experienced a challenging trading environment in its sector but is restructuring its operations accordingly.

 

Realised gains and losses from sales of investments

The largest gain was (£0.78) million from the sale of Lightworks to Siemens PLM Software, a business of Siemens AG.

 

The largest loss was £0.78 million from the sale of Fullfield (trading as Motorclean) back to management, whilst a loss of (£0.33) million resulted from the sale of Hemmels to its largest customer. Although the Hemmels loss was modest, it was unexpected, arising shortly after the initial investment, and illustrates the inherent higher risk of investing in early stage growth companies.

 

The Company also realised a gain in the year from deferred consideration receipts of £0.20 million arising from past realisations during the year.

 

Investment portfolio yield and capital repayments

During the year under review, the Company received the following amounts in loan interest and dividend income:

 

Investment Portfolio Yield

2018

£m

2017

£m

Loan interest received in the year

2.32

2.72

Dividends received in the year

0.70

0.36

Total portfolio income in the year1

3.02

3.08

Portfolio value at 31 December

48.20

41.52

Portfolio Income Yield (Income as a % of Portfolio value at 31 December)

6.3%

7.4%

 

1 Total portfolio income in the period is generated solely from investee companies within the portfolio. See Note 3 of the Financial Statements for all income receivable by the Company.

 

The Company also received loan stock repayments of £0.42 million and preference share repurchases of £0.19 million, both at cost.

 

New investment in the year

A total of £3.10 million was invested into five new investments during the year as detailed below:

 

Company

Business

Date of investment

Amount of new investment (£m)

Proactive Investors

Investor media services

January, June and October 2018

0.93

Proactive Investors specialises in timely multi-media news provision, events organisation, digital services and investor research. Proactive provides breaking news, commentary and analysis on hundreds of small-cap listed companies and pre-IPO businesses across the globe. The investment will enable Proactive to expand its services into the US market, which is the largest global market for investor media services. The company's accounts for the year ended 30 June 2017 show turnover of £3.99 million and a profit before interest, tax and amortisation of goodwill of £0.53 million.

 

Super Carers

Online care platform

March 2018

0.58

Super Carers provides an online platform connecting people seeking home care, typically for their elderly relatives, with experienced independent carers. Carers and care-seekers manage care directly, thus reducing the administrative burden and the need for care managers, enabling care to be delivered with greater flexibility and more cost effectively. The company's accounts for the year ended 31 March 2018 show revenues of £0.38 million and a loss before interest, tax and amortisation of goodwill of £(1.28) million.

Hemmels

Classic car restoration

March 2018

0.60

Hemmels commenced trading in September 2016 and specialised in the sourcing, restoration, selling and servicing of high value classic cars. Hemmels focused on classic Mercedes-Benz and planned to expand into the Porsche marque under a separate brand. The investment was made to enable Hemmels to proceed with its expansion plans and secure sufficient development stock. After a short period following the completion of the investment, it became clear that the company's financial situation and prospects were significantly at variance to expectations and the investment has since been realised at a loss, as reported within 'Realisations during the year', below.

Rotageek

Workforce management software

August 2018

0.57

Rotageek is a provider of cloud-based enterprise software to help larger retail and leisure organisations predict and meet demand to schedule staff effectively. This investment will be used for further technology development and to grow sales from enterprise clients. The company's unaudited accounts for the year ended 31 December 2017 show revenues of £0.90 million and a loss before interest, tax and amortisation of goodwill of £(1.57) million.

Grow Kudos

Platform for the dissemination of academic research

November 2018

0.42

Grow Kudos is an online platform which provides and promotes academic research dissemination. The Kudos product was developed to allow researchers to increase the impact and readership of their work and to track and analyse distribution both within academia and across broader audiences. The investment will be used principally to increase its head count to support sales growth. The company's unaudited accounts for the year ended 31 December 2017 show revenues of £0.53 million and a loss before interest, tax and amortisation of goodwill of £(0.59) million.

 

Further investments in existing portfolio companies in the year

The Company made further investments totalling £4.14 million into five existing portfolio companies during the year under review, as detailed below:

 

Company

Business

Date of investment

Amount of new investment (£m)

MPB Group

Online marketplace for used camera and video equipment

February, October and December 2018

0.57

MPB is Europe's leading online marketplace for used camera and video equipment. Based in Brighton, its custom-designed pricing technology enables MPB to offer both buy and sell services through the same platform and offers a one-stop shop for all its customers. Having expanded into the US (opening a New York office) and German markets as part of the initial VCT investment round, this follow-on investment, alongside funds provided by the Proven VCTs, is to support its continued growth plan. Having doubled its sales over the last year, this investment will give the company sufficient capital to achieve its next phase of expansion. The company's latest audited accounts for the year ended 31 March 2018 show turnover of £21.71 million and a loss before interest, tax and amortisation of goodwill of £(2.00) million.

Tapas Revolution

Restaurant chain

March 2018

0.55

Based in London, Tapas Revolution is a leading Spanish restaurant chain in the casual dining sector focusing on shopping centre sites with high footfall. Having opened its first restaurant in Shepherd's Bush Westfield, the business now operates seven established restaurants, with the support of the initial VCT investment in 2017. This follow-on investment is to finance the opening of several new locations around England. The company's latest unaudited accounts for the year ended 31 October 2017 show turnover of £5.84 million and a £(0.68) million loss before interest, tax and amortisation of goodwill.

MyTutor

Online tutoring

May 2018

0.99

My Tutor is a digital marketplace that connects school pupils who are seeking private one-to-one tutoring with university students. The business is satisfying a growing demand from both schools and parents to improve pupils' exam results to enhance their academic and career prospects. This investment supports an opportunity to consolidate the sizeable £2bn UK tutoring market, grow My Tutor's market presence and drive technological development within the company. The company's latest unaudited accounts for the year ended 31 December 2017 show turnover of £0.56 million and a loss before interest, tax and amortisation of goodwill of £(1.40) million.

Preservica

Seller of proprietary digital archiving software

September 2018

1.20

Preservica has developed market leading software for the long-term preservation of digital records ensuring that digital content can remain accessible, irrespective of future changes in technology. Previously a division of the Company's former portfolio company Tessella, Preservica was demerged prior to the sale of Tessella in December 2015. The investment provided additional growth capital to finance the development of the business. The Company's latest audited accounts for the year ended 31 March 2018 show turnover of £2.85 million and a loss before interest, tax and amortisation of goodwill of £(1.93) million.

Biosite

Workforce management and security services

October 2018

0.83

Based in the Midlands, Biosite is a provider of biometric access control and software-based workforce management solutions for the construction sector. The business is growing significantly and this investment will support the further development of software and hardware products. The company's latest unaudited accounts for the year ended 31 July 2017 show turnover of £6.38 million and a loss before interest, tax and amortisation of goodwill of £(0.45) million.

 

Realisations during the year

The Company realised its investments in Fullfield (trading as Motorclean), Hemmels and Lightworks during the year, generating an aggregate net realised loss of £(0.33) million. Net cash proceeds received from the sale of these investments totalled £2.13 million, as detailed below:

 

Company

Business

Period of investment

Total cash proceeds over the life of the investment/
Multiple over cost

Fullfield (Motorclean)

Vehicle cleaning and valet services

July 2011 to August 2018

£3.38 million

1.2 x cost

The Company sold its investment in Fullfield (trading as Motorclean) back to management in August 2018, receiving cash proceeds of £0.92 million (realised loss in the year: £(0.78) million). This realisation contributed to a return of 1.2 times the original investment cost and an IRR of 5.0% in the seven years that this investment was held.

Hemmels

Classic car restorer

March 2018 to September 2018

£0.29 million

0.5 x cost

The Company sold its investment in Hemmels to the business's largest customer for £0.27 million in September 2018, resulting in a realised loss of £(0.33) million on the original investment cost over the six months the investment was held.  The investment was realised six months after the original investment, for reasons already explained under new investments.

Lightworks

Provider of software for CAD and CAM vendors

March 2011 to September 2018

£0.96 million

21.7 x cost

The Company sold its investment in Lightworks to Siemens PLM Software for £0.94 million (realised gain in the year: £0.78 million) in September 2018, generating a realised a gain over the life of the investment of £0.92 million. This equates to a multiple of 21.7 times the investment cost of £0.04 million and an IRR of 56%.

 

The Company also received loan repayments totalling £0.42 million (notably Plastic Surgeon: £0.28 million), deferred consideration from investments realised in a previous year of £0.20 million and preference share repurchases of £0.19 million.

 

Net realised losses on the three disposals above of (£0.33) million, partially reduced by deferred consideration gains of £0.20 million, equal the total loss for the year of (£0.13) million, as shown at the start of this review.

 

Mobeus Equity Partners LLP

Investment Adviser

 

 

Market sector

Date of investment

Total book cost

 

£'000

Valuation

 

 

£'000

Like for like valuation increase/ (decrease) over year

% value of net assets

% of equity held by funds advised by Mobeus

 

 

 

 

 

 

 

 

Qualifying investments

 

 

 

 

 

 

Unquoted investments 

 

 

 

 

 

Tovey Management Limited (trading as Access IS)

Provider of data capture and scanning hardware

Electronic and electrical equipment

Oct-15

2,979

3,699

9.2%

4.9%

43.4%

ASL Technology Holdings Limited

Printer and photocopier services

 

Support services

Dec-10

 

2,942

3,542

13.6%

4.7%

Virgin Wines Holding Company Limited

Online Wine retailer

General retailers

Nov-13

2,439

2,997

9.1%

4.0%

42.0%

Preservica Limited

Seller of proprietary digital archiving software

Software and computer services

 

Dec-15

 

2,099

2,756

26.6%

 

3.6%

 

EOTH Limited (trading as Equip Outdoor Technologies)

Branded outdoor equipment and clothing (Rab and Lowe Alpine)

General retailers

Oct-11

1,000

2,373

40.7%

3.2%

Pattern Analytics Limited (trading as Biosite)

Workforce management and security services for the construction industry

Software and computer services

 

Nov-16

 

1,584

2,341

33.4%

 

3.1%

 

Turner Topco Limited (trading as Auction Technology Group (formerly ATG Media))

SaaS based online auction marketplace platform

Media

Oct-08

2,494

2,053

(2.9)%

2.7%

17.1%

Vectair Holdings Limited

Designer and distributor of washroom products

Support services

Jan-06

138

2,018

18.8%

2.7%

24.0%

Manufacturing Services Investment Limited (trading as Wetsuit Outlet)

Online retailer in the water sports market

General retailers

Jul-17

2,174

1,372

(29.2)%

1.8%

27.5%

Vian Marketing Limited (trading as Red Paddle Co)

Design, manufacture and sale of stand-up paddleboards and windsurfing sails

Leisure goods

Jul-15

1,189

1,823

(2.7)%

2.4%

31.5%

MPB Group Limited

Online marketplace for used photographic and video equipment

General retailers

 

Jun-16

 

1,324

1,798

37.1%

 

2.4%

 

25.1%

 

CGI Creative Graphics International Limited

Vinyl graphics to global automotive, recreational vehicle and aerospace markets

General Industrials

Jun-14

1,808

1,795

32.4%

2.4%

26.9%

Master Removers Group Limited (trading as Anthony Ward Thomas, Bishopsgate and Aussie Man & Van)

A specialist logistics, storage and removals business

Support services

Dec-14

614

1,712

21.5%

2.3%

20.1%

The Plastic Surgeon Holdings Limited (formerly TPSFF Holdings Limited)

Supplier of snagging and finishing services to the domestic and commercial property markets

Support services

Apr-08

39

1,695

64.8%

2.3%

38.0%

My Tutorweb Limited

Digital marketplace connecting school pupils seeking one-to-one tutoring

Support services

 

May-17

 

1,534

1,534

-

2.0%

 

30.8%

 

Ibericos Etc. Limited (trading as Tapas Revolution)

Spanish restaurant chain

Travel and leisure

 

Jan-17

 

1,245

1,353

15.5%

1.8%

 

25.0%

 

Media Business Insight Holdings Limited

A publishing and events business focused on the creative production industries

Media

 

Jan-15

 

2,518

1,380

12.5%

 

1.8%

 

67.5%

 

Tharstern Group Limited

Software based management information systems

Software and computer services

 

Jul-14

1,377

1,350

(23.6)%

1.8%

52.5%

Proactive Group Holdings Inc.

Provider of media services and investor conferences for companies primarily listed on secondary public markets

General financial

Jan-18

926

1,301

40.5%

1.7%

11.4%

Blaze Signs Holdings Limited

Manufacturer and installer of signs

Support services

 

Apr-06

 

492

1,040

48.1%

 

1.4%

 

52.5%

 

Rota Geek Limited

Workforce management software

Support services

Aug-18

571

895

56.7%

1.2%

17.1%

Buster and Punch Holdings Limited Industrial inspired lighting and interiors retailer

General retailers

 

Mar-17

 

668

866

29.6%

1.2%

 

20.0%

 

RDL Corporation Limited

Recruitment consultant for the pharmaceutical, business intelligence                               and IT industries

Support services

 

Oct-10

 

1,558

746

(24.3)%

 

1.0%

 

45.2%

 

Redline Worldwide Limited

Provider of security services to the aviation industry and other sectors

Support services

 

Feb-16

 

1,088

677

(41.8)%

 

0.9%

 

30.0%

 

Super Carers Limited

Online platform that connects people seeking home care from experienced independent carers

Support services

Mar-18

580

435

25.0%

0.6%

18.7%

Kudos Innovations Limited

Online platform that provides and promotes academic research dissemination

Support services

Nov-18

421

421

New investment

0.6%

14.6%

BookingTek Limited

Direct booking software for hotels

Software and computer services

Oct-16

771

193

(81.2)%

0.3%

14.9%

Jablite Holdings Limited

Manufacturer of expanded polystyrene products

Construction and materials

 

Apr-15

 

503

163

(46.7)%

 

0.2%

 

40.1%

 

Veritek Global Holdings Limited

Maintenance of imaging equipment

Support services

 

Jul-13

 

2,045

13

(98.1)%

 

0.0%

 

50.8%

 

CB Imports Group Limited (trading as Country Baskets)

Importer and distributor of artificial flowers and floral sundries

General retailers

 

Dec-09

 

350

-

-

 

0.0%

 

23.2%

 

Racoon International Group Limited

Supplier of hair extensions, hair care products and training

Personal goods

 

Dec-06

 

1,214

-

-

 

0.0%

 

-

 

Total qualifying investments

 

 

40,684

44,341

 

59.0%

 

Non-qualifying investments

 

 

 

 

 

 

 

Media Business Insight Limited

As above

Media

Jan-15

764

876

-

1.2%

67.5% 

Hollydale Management Limited

Company seeking to carry on a business in the food sector

Company preparing to trade

 

Mar-15

 

938

586

-

 

0.8%

 

50.0%

 

Manufacturing Services Investment Limited (trading as Wetsuit Outlet)

As above

General retailers

Jul-17

571

571

-

0.8%

27.5%

EOTH (trading as Equip Outdoor Technologies)

As above

General retailers

Oct-11

298

324

-

0.4%

8.0%

Backhouse Management Limited

Company seeking to carry on a business in the motor sector

Company preparing to trade

 

Apr-15

 

787

303

-

 

0.4%

 

50.0%

 

Barham Consulting Limited

Company seeking to carry on a business in the catering sector

Company preparing to trade

 

Apr-15

 

787

303

-

 

0.4%

 

50.0%

 

Creasy Marketing Services Limited

Company seeking to carry on a business in the textile sector

Company preparing to trade

 

Apr-15

 

787

303

-

 

0.4%

 

50.0%

 

McGrigor Management Limited

Company seeking to carry on a business in the pharmaceutical sector

Company preparing to trade

 

Apr-15

 

787

303

-

 

0.4%

 

50.0%

 

Tovey Management Limited (trading as Access IS)

As above

Electronic and electrical equipment

Oct-15

285

285

-

0.4%

43.4% 

Hemmels Limited

Company specialising in sourcing, selling and servicing of high price classic cars

Automobiles & parts

Mar-18

27

-

(100.0)%

0.0%

-

Newquay Helicopters (2013) Limited (in liquidation)

Helicopter service operator

Support services

Jun-06

18

-

-

0.0%

-

Turner Topco Limited (trading as Auction Technology Group (formerly ATG Media))

As above

Media

Oct-08

7

-

-

0.0%

17.1%

Total non-qualifying investments

 

 

6,056

3,854

 

5.2%

 

 

 

 

 

 

 

 

 

Total investment portfolio

 

 

46,740

48,195

64.2%

 

Current asset investments and cash at bank

 

 

26,492

26,492

 

35.3%

 

Total investments

 

 

73,232

74,687

 

99.5%

 

Other assets

 

 

 

794

 

1.0%

 

Current liabilities

 

 

 

(403)

 

(0.5)%

 

Net assets

 

 

 

75,078

 

100.0%

 

 

For further information on the Investment Portfolio, please see the Annual Report and Financial Statements

 

PRINCIPAL RISKS, management and regulatory environment

The Directors acknowledge the Board's responsibilities for the Company's internal control systems and have instigated systems and procedures for identifying, evaluating and managing the significant risks faced by the Company. This includes a key risk management review which takes place at each quarterly Board meeting. The principal risks identified by the Board, a description of the possible consequences of each risk and how the Board manages each risk are set out below:

 

Risk

Possible consequence

How the Board manages risk

Economic

Events such as the impact of the EU Referendum vote and the subsequent exit negotiations, an economic recession, a movement in sterling or in interest rates, could affect trading conditions for smaller companies and consequently the value of the Company's qualifying investments.

·   The Board monitors (1) the portfolio as a whole to ensure that the Company invests in a diversified portfolio of companies; and (2) developments in the macro-economic environment such as movements in interest rates.

Loss of approval as a Venture Capital Trust

A breach of the VCT Rules, which change on a frequent basis, may lead to the Company losing its approval as a VCT, which would inter alia result in: (1) qualifying shareholders who have not held their shares for the designated period having to repay the income tax relief they obtained; (2) future dividends paid by the Company being subject to tax; and (3) the Company losing its exemption from corporation tax on capital gains.

·   The Company's VCT qualifying status is continually reviewed by the Board and the Investment Adviser.

·   The Board receives regular reports from its VCT Status Adviser who has been retained by the Board to monitor the VCT's compliance with the VCT Rules.

Investment and strategic

Investment in unquoted small companies involves a higher degree of risk than investment in fully listed companies. Smaller companies often have limited product lines, markets or financial resources and may be dependent for their management on a smaller number of key individuals.

·   The Board regularly reviews the Company's Objective and Investment Policy.

·   Investments are made across a number of diverse sectors to mitigate risk. Investee companies are carefully selected by the Investment Adviser for recommendation to the Board. The investment portfolio is reviewed by the Board on a regular basis.

 

Regulatory

The Company is required to meet its legal and regulatory obligations as a VCT, a listed company and its own AIFM. Failure to comply might result in suspension of the Company's Stock Exchange listing, financial penalties, a qualified audit report or loss of its VCT status.

 

·   Regulatory and legislative developments are kept under review by the Company's solicitors, its VCT Status Adviser and the Board. Please see the Chairman's Statement for the latest details of the impact of recent VCT legislation.

Financial and operating

Failure of the systems at any of the third-party service providers that the Company has contracted with could lead to inaccurate reporting or monitoring. Inadequate controls could lead to the misappropriation or insecurity of assets.

 

·    The Board carries out an annual review of the internal controls in place and reviews the risks facing the Company at each quarterly Board meeting and receives reports by exception.

·    It reviews the performance of the service providers annually.

 

Market

Movements in the valuations of the VCT's investments will, inter alia, be connected to movements in UK Stock Market indices.

 

·    The Board receives quarterly valuation reports from the Investment Adviser.

·    The Investment Adviser alerts the Board about any adverse movements.

 

Asset liquidity

The Company's unquoted investments cannot be realised in a short timescale. Under-performing unquoted investments may be difficult to realise on any timescale.

·    The Board receives reports from the Investment Adviser and reviews the portfolio at each quarterly board meeting. It carefully monitors investments where a particular risk has been identified.

 

Market liquidity

As a result of the limited secondary market in VCT shares, shareholders may find it difficult to sell their shares at a price which is close to the net asset value. Whilst demand has always been met to date, it may not be possible for the Company to buy back large percentages of the share capital, other than over several years.

·   The Board has a share buyback policy which seeks to mitigate market liquidity risk. This policy is reviewed at each quarterly Board meeting.

Counterparty

A counterparty may fail to discharge an obligation or commitment that it has entered into with the Company.

·   The Board regularly reviews and agrees policies for managing these risks. Further details can be found under 'credit risk' in Note 15 to the Financial Statements in the Annual Report.

 

Key staff

A partner or key member of staff at the Investment Adviser may leave the organisation or the Investment Adviser may fail to maintain adequate levels of experience and expertise in its team. This may have an adverse effect on the standard of service that the Company receives from the Investment Adviser and therefore the performance of the Company.

·   The Board maintains regular dialogue with the Investment Adviser to ensure that (1) the team is adequately resourced; and (2) Partners and staff are well-incentivised and trained.

 

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.

 

Company law requires the Directors to prepare Financial Statements for each financial year and the Directors have elected to prepare the Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

 

In preparing these Financial Statements, the Directors are required to:

 

•           select suitable accounting policies and then apply them consistently;

•           make judgements and accounting estimates that are reasonable and prudent;

•           state whether the Financial Statements have been prepared in accordance with United Kingdom accounting standards, subject to any material departures disclosed and explained in the Financial Statements;

•           prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business;

•           prepare a Strategic Report, a Director's Report and Directors' Remuneration Report which comply with the requirements of the Companies Act 2006.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Website publication

The Directors are responsible for ensuring the Annual Report and the Financial Statements are made available on a website. Financial Statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of Financial Statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the Financial Statements contained therein.

 

Directors' responsibilities pursuant to Disclosure and Transparency Rule 4 of the UK Listing Authority

The Directors confirm to the best of their knowledge that:

 

(a)        The Financial Statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice, give a true and fair view of the assets, liabilities, financial position and the profit of the Company.

 

(b)        The Annual Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

 

Having taken advice from the Audit Committee, the Board considers the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

 

Neither the Company nor the Directors accept any liability to any person in relation to the Annual Report except to the extent that such liability could arise under English law.

 

For and on behalf of the Board

 

Clive Boothman

Chairman

 

 

FINANCIAL STATEMENTS

 

 

Income Statement for the year ended 31 December 2018

 

 

 

 

 

 

Year ended 31 December 2018

Year ended 31 December 2017

 

 

 

 

 

 

 

 

 

Notes

Revenue

Capital

Total

Revenue

Capital

Total

 

 

£

£

£

£

£

£

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealised gains/(losses) on investments

8

-

2,796,306

2,796,306

-

(572,662)

(572,662)

 

 

 

 

 

 

 

 

Realised (losses)/gains on investments

8

-

(129,014)

(129,014)

-

5,248,859

5,248,859

 

 

 

 

 

 

 

 

Income

3

3,219,294

-

3,219,294

3,131,481

-

3,131,481

 

 

 

 

 

 

 

 

Investment Adviser's fees

4a

(390,531)

(1,171,593)

(1,562,124)

(350,079)

(1,050,237)

(1,400,316)

 

 

 

 

 

 

 

 

Other expenses

4c

(387,232)

-

(387,232)

(385,417)

-

(385,417)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit on ordinary activities before taxation

 

2,441,531

1,495,699

3,937,230

2,395,985

3,625,960

6,021,945

 

 

 

 

 

 

 

 

Taxation on profit on ordinary activities

5

(331,416)

222,603

(108,813)

(392,180)

202,170

(190,010)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year and total comprehensive income

 

2,110,115

1,718,302

3,828,417

2,003,805

3,828,130

5,831,935

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per ordinary share

7

1.98p

1.62p

3.60p

2.52p

4.82p

7.34p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the unrealised gains/(losses) and realised (losses)/gains on investments and the proportion of the Investment Adviser's fee charged to capital.

 

The total column is the Statement of Total Comprehensive Income of the Company prepared in accordance with Financial Reporting Standards ("FRS"). In order to better reflect the activities of a VCT and in accordance with the 2014 Statement of Recommended Practice ("SORP") (updated in January 2017) by the Association of Investment Companies ("AIC"), supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The revenue column of profit attributable to equity shareholders is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 274 Income Tax Act 2007.

 

All the items in the above statement derive from continuing operations of the Company. No operations were acquired or discontinued in the year.

 

 

 

Balance Sheet as at 31 December 2018

 

 

 

 

 

 

 

Notes

31 December 2018

31 December 2017

 

 

 

£

£

 

 

 

 

 

Fixed assets

 

 

 

Investments at fair value

8

48,195,051

41,515,308

Current assets

 

 

 

Debtors and prepayments

 

793,953

3,976,235

Current asset investments

9

23,310,315

21,803,276

Cash at bank and in hand

9

3,181,475

3,027,719

 

 

27,285,743

28,807,230

 

 

 

 

Creditors: amounts falling due within one year

 

(402,812)

(422,761)

 

 

 

 

Net current assets

 

26,882,931

28,384,469

 

 

 

 

Net assets

 

75,077,982

69,899,777

 

 

 

 

Capital and reserves

 

 

 

Called up share capital

 

1,068,659

974,257

Capital redemption reserve

 

32,191

15,040

Share premium reserve

 

43,644,698

35,856,430

Revaluation reserve

 

5,285,632

2,786,782

Special distributable reserve

 

12,681,614

19,058,094

Realised capital reserve

 

8,818,475

8,147,387

Revenue reserve

 

3,546,713

3,061,787

 

 

 

 

Equity shareholders' funds

 

75,077,982

69,899,777

 

 

 

 

Basic and diluted net asset value per ordinary share

 

70.25p

71.75p

 

 

 

Statement of Changes in Equity for the year ended 31 December 2018

 

 

 

 

 

 

 

 

 

 

Distributable Reserves

Non-Distributable Reserves

 

 

 

 

 

 

 

 

 

 

 

Called up

share

capital

Capital

redemption

reserve

Share

premium

reserve

Revaluation

reserve

Special

distributable

reserve

(Note a)

Realised

capital

reserve

(Note b)

Revenue

Reserve

(Note b)

Total

 

£

£

£

£

£

£

£

£

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2018 Comprehensive income for the year

974,257

15,040

35,856,430

2,786,782

19,058,094

8,147,387

3,061,787

69,899,777

 

 

 

 

 

 

 

 

 

Profit/(loss) for the year

-

-

-

2,796,306

(1,078,004)

2,110,115

3,828,417

Total comprehensive income for the year

-

-

-

2,796,306

-

(1,078,004)

2,110,115

3,828,417

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued under Offer for Subscription (note c)

111,553

-

7,788,268

-

(82,001)

-

-

7,817,820

 

 

 

 

 

 

 

 

 

Shares bought back (note d)

(17,151)

17,151

-

-

(1,058,135)

-

-

(1,058,135)

 

 

 

 

 

 

 

 

 

Dividends paid

-

-

-

-

(541,730)

(1,625,189)

(5,409,897)

Total contributions by and distributions to owners

94,402

17,151

7,788,268

-

(4,383,114)

(541,730)

(1,625,189)

1,349,788

Other movements

 

 

 

 

 

 

 

 

Realised losses transferred to special reserve (note a)

-

-

-

-

(1,993,366)

1,993,366

-

-

Realisation of previously unrealised appreciation

-

-

-

(297,456)

297,456

-

-

Total other movements

-

-

-

(297,456)

2,290,822

-

-

At 31 December 2018

1,068,659

32,191

43,644,698

5,285,632

12,681,614

8,818,475

3,546,713

75,077,982

 

Note a: The purpose of this reserve is to fund market purchases of the Company's own shares, to write off existing and future losses and for any other corporate purpose. All of this reserve arose from shares issued before 5 April 2014. The transfer of £1,993,366 to the special reserve from the realised capital reserve above is the total of realised losses incurred by the Company in the year.

 

Note b: The realised capital reserve and the revenue reserve together comprise the Profit and Loss Account of the Company shown on the Balance Sheet.

 

Note c: Under the 2017/18 Offer for Subscription, 11,155,262 ordinary shares were allotted raising net funds of £7,817,820 for the Company.  This figure is net of issue costs of £204,683.

 

Note d: During the year, the Company purchased 1,715,113 of its own shares at the prevailing market price for a total cost of £1,058,135, which were subsequently cancelled. This differs to the figure shown in the Statement of Cash Flows of £982,450 by £75,685 due to £122,542 included in creditors at the year end, offset by £46,857 which was a creditor from the previous year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Changes in Equity for the year ended 31 December 2017

 

 

 

 

 

 

 

 

 

 

Distributable Reserves

Non-Distributable Reserves

 

 

 

 

 

 

 

 

 

 

 

Called up

share

capital

Capital

redemption

reserve

Share

premium

reserve

Revaluation

reserve

Special

distributable

reserve

Realised

capital

reserve

Revenue

reserve

Total

 

£

£

£

£

£

£

£

£

 

 

 

 

 

 

 

 

At 1 January 2017

755,975

9,440

19,463,849

3,523,180

35,605,335

2,733,792

1,057,982

63,149,553

 

 

 

 

 

 

 

 

 

Comprehensive income for the year

 

 

 

 

 

 

 

 

(Loss)/profit for the year

-

-

-

(572,662)

4,400,792

2,003,805

5,831,935

Total comprehensive income for the year

-

-

-

(572,662)

4,400,792

2,003,805

5,831,935

 

 

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued under Offer for Subscription

223,882

-

16,392,581

-

(91,557)

-

-

16,524,906

 

 

 

 

 

 

 

 

 

Shares bought back

(5,600)

5,600

-

-

(374,695)

-

-

(374,695)

 

 

 

 

 

 

 

 

 

Dividends paid

-

-

-

-

-

-

(15,231,922)

Total contributions by and distributions to owners

218,282

5,600

 

 

 

 

 

16,392,581

-

 

 

 

 

 

(15,698,174)

 

 

 

 

 

-

-

 

 

 

 

 

918,289

Other movements

 

 

 

 

 

 

 

 

Realised losses transferred to special reserve

-

-

-

-

(849,067)

849,067

-

-

Realisation of previously unrealised appreciation

-

-

-

(163,736)

163,736

-

-

Total other movements

-

-

-

(163,736)

1,012,803

-

-

At 31 December 2017

974,257

15,040

35,856,430

2,786,782

19,058,094

8,147,387

3,061,787

69,899,777

 

The composition of each of these reserves is explained below:

 

Called up share capital

The nominal value of shares originally issued, increased for subsequent share issues either via an Offer for Subscription or reduced due to shares bought back by the Company.

 

Capital redemption reserve

The nominal value of shares bought back and cancelled is held in this reserve, so that the company's capital is maintained.

 

Share premium reserve

This reserve contains the excess of gross proceeds less issue costs over the nominal value of shares allotted under recent Offers for Subscription.

 

Revaluation reserve

Increases and decreases in the valuation of investments held at the year end are accounted for in this reserve, except to the extent that the diminution is deemed permanent.

 

In accordance with stating all investments at fair value through profit and loss (as recorded in note 8), all such movements through both revaluation and realised capital reserves are shown within the Income Statement for the year.

 

Special distributable reserve

The cost of share buybacks is charged to this reserve. In addition, any realised losses on the sale or impairment of investments (excluding transaction costs), and 75% of the Investment Adviser fee expense, and the related tax effect, are transferred from the realised capital reserve to this reserve. This reserve will also be charged any facilitation payments to financial advisers, which arose as part of the Offer for Subscription.

 

Realised capital reserve

The following are accounted for in this reserve:

 

• Gains and losses on realisation of investments;

• Permanent diminution in value of investments;

• Transaction costs incurred in the acquisition and disposal of investments;

• 75% of the Investment Adviser fee expense and 100% of any performance fee payable, together with the related tax effect to this reserve in accordance with the policies; and                                                                              

• Capital dividends paid.

 

Revenue reserve

Income and expenses that are revenue in nature are accounted for in this reserve together with the related tax effect, as well as income dividends paid that are classified as revenue in nature.

 

 

Statement of Cash Flows for the year ended 31 December 2018

 

 

 

Year ended 31 December 2018

Year ended December 2017

 

 

£

£

 

 

 

 

Cash flows from operating activities

 

 

 

Profit after tax for the financial year

 

3,828,417

5,831,935

Adjustments for:

 

 

 

Net unrealised losses on investments

 

(2,796,306)

572,662

Net gains on realisations of investments

 

129,014

(5,248,859)

Tax charge for current year

5

108,813

190,010

Decrease/(increase) in debtors

 

12,155

(197,500)

(Decrease)/increase in creditors

 

(14,106)

92,991

Net cash inflow from operations

 

1,267,987

1,241,239

 

 

 

 

Corporation tax paid

 

(190,374)

(109,090)

Net cash inflow from operating activities

 

1,077,613

1,132,149

 

 

 

 

Cash flows from investing activities

 

 

 

Acquisitions of investments

8

(7,238,337)

(1,649,533)

Disposals of investments

8

6,396,046

13,821,745

(Increase)/decrease in bank deposits with a maturity over three months

 

(130)

1,715

Net cash (outflow)/inflow from investing activities

 

(842,421)

12,173,927

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Shares issued as part of Offer for subscription

 

7,817,820

16,524,906

Equity dividends paid

6

(5,409,897)

(15,231,922)

Share capital bought back

 

(982,450)

(327,838)

Net cash inflow from financing activities

 

1,425,473

965,146

 

 

 

 

Net increase in cash and cash equivalents

 

1,660,665

14,271,222

Cash and cash equivalents at start of year

 

23,825,443

9,554,221

Cash and cash equivalents at end of year

 

25,486,108

23,825,443

 

 

 

 

Cash and cash equivalents comprise:

 

 

 

Cash equivalents

9

22,304,633

20,797,724

Cash at bank and in hand

9

3,181,475

3,027,719

 

 

 

Notes to the Financial Statements for the year ended 31 December 2018

 

1

Company Information

 

 

Mobeus Income and Growth VCT plc is a public limited company incorporated in England, registration number 5153931. The registered office is 30 Haymarket, London, SW1Y 4EX.

 

 

2

Basis of preparation of the Financial Statements

 

A summary of the principal accounting policies, all of which have been applied consistently throughout the year are set out at the start of the related disclosure throughout the Notes to the Financial Statements. All accounting policies are included within an outlined box at the top of each relevant note.

 

These financial statements have been prepared in accordance with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 ("FRS102"), with the Companies Act 2006 and the 2014 Statement of Recommended practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ('the SORP') issued by the Association of Investment Companies. The Company has a number of financial instruments which are disclosed under FRS102 s11/12 as shown in Note 15 in the Financial Statements in the Annual Report.

 

3

Income

 

Dividends receivable on quoted equity shares are brought into account on the ex-dividend date.  Dividends receivable on unquoted equity shares are brought into account when the Company's right to receive payment is established and there is no reasonable doubt that payment will be received.

 

Interest income on loan stock is accrued on a daily basis. Provision is made against this income where recovery is doubtful or where it will not be received in the foreseeable future. Where the loan stocks only require interest or a redemption premium to be paid on redemption, the interest and redemption premium is recognised as income or capital as appropriate once redemption is reasonably certain. When a redemption premium is designed to protect the value of the instrument holder's investment rather than reflect a commercial rate of revenue return the redemption premium is recognised as capital. The treatment of redemption premiums is analysed to consider if they are revenue or capital in nature on a company by company basis. Accordingly, the redemption premium recognised in the year ended 31 December 2018 has been classified as capital and has been included within gains on investments.

 

 

2018

2017

 

£

£

Income from bank deposits

23,663

17,793

 

 

 

Income from investments

 

 

-      from equities

699,029

358,684

-      from OEIC funds

132,832

23,657

-      from loan stock

2,321,462

2,723,814

-      from interest on preference share dividend arrears

40,205

337

 

3,193,528

3,106,492

 

 

 

Other income

2,103

7,196

Total income

3,219,294

3,131,481

 

 

 

Total income comprises

 

 

Dividends

831,861

382,341

Interest

2,385,330

2,741,944

Other income

2,103

7,196

 

3,219,294

3,131,481

 

 

 

Total loan stock interest due but not recognised in the year was £905,181 (2017: £389,352). The increase over the year is due to the provision of interest of one investee company and another investee company utilising an agreed payment holiday for part of the year.

 

4

Investment Adviser's fees and Other expenses

 

All expenses are accounted for on an accruals basis

 

 

a)

Investment Adviser's fees and performance fees

 

25% of the Investment Adviser's fee is charged to the revenue column of the Income Statement, while 75% is charged against the capital column of the Income Statement. This is in line with the Board's expected long-term split of returns from the investment portfolio of the Company.

 

100% of any performance incentive fee payable for the year is charged against the capital column of the Income Statement, as it is based upon the achievement of capital growth.

 

 

Revenue

Capital

Total

Revenue

Capital

Total

 

2018

2018

2018

2017

2017

2017

 

£

£

£

£

£

£

 

 

 

 

 

 

 

Mobeus Equity Partners LLP

 

 

 

 

 

 

Investment Adviser's fees

390,531

1,171,593

1,562,124

350,079

1,050,237

1,400,316

 

Under the terms of a revised investment management agreement dated 20 May 2010, Mobeus Equity Partners LLP

("Mobeus") provides investment advisory, administrative and company secretarial services to the Company, for a fee of 2% per annum of closing net assets, paid in advance, calculated on a quarterly basis by reference to the net assets at the end of the preceding quarter, plus a fixed fee of £134,168 per annum, the latter inclusive of VAT and subject to annual increases in RPI. In 2013, Mobeus agreed to waive such further increases due to indexation, until otherwise agreed with the Board.

 

The Investment Adviser's fee includes provision for a cap on expenses excluding irrecoverable VAT and exceptional items set at 3.6% of closing net assets at the year end. In accordance with the Investment Management Agreement, any excess expenses are borne by the Investment Adviser. The excess expenses during the year amounted to £nil (2017: £nil). With effect from 1 April 2018, the Investment Adviser's fee upon the net funds raised from use of the over-allotment facility of £10 million under the 2017/18 offer has been reduced from 2% to 1% per annum for one year.

 

The Company is responsible for external costs such as legal and accounting fees, incurred on transactions that do not proceed to completion ("abort expenses") subject to the cap on total annual expenses referred to above.

 

In line with common practice, Mobeus retains the right to charge arrangement and syndication fees and directors' or monitoring fees to companies in which the Company invests. The Investment Adviser received fees totalling £402,777 during the year ended 31 December 2018 (2017: £377,188), being £128,406 (2017: £118,381) for arrangement fees and £274,371 (2017: £258,807) for acting as non-executive directors on a number of investee company boards. These fees attributable to the Company are in proportion to the Company's investment directly in each investment held by the four Mobeus VCTs, and they are charged directly to the investee companies.  Hence, they are excluded from these financial statements.

 

Incentive Agreement

 

Under the Incentive Agreement dated 9 July 2004, and a variation of this agreement dated 20 May 2010, the Investment Adviser is entitled to receive an annual performance-related incentive fee of 20% of the dividends paid in a year in excess of a "Target Rate" comprising firstly, an annual dividend paid in a year target which started at 6.00 pence per share on launch (indexed each year for RPI) and secondly a requirement that any shortfall of cumulative dividends paid in each year beneath the cumulative annual dividend target is carried forward and added to the Target Rate for the next accounting period. Any excess of cumulative dividends paid above the cumulative annual dividend target is not carried forward, whether an incentive fee is payable for that year or not. Payment of a fee is also conditional upon the daily weighted average Net Asset Value ("NAV") per share throughout such year equaling or exceeding the daily weighted average Base NAV per share throughout the same year. The performance fee will be payable annually.

 

At 31 December 2018, the annual dividend target is 7.84 pence per share, but cumulative dividends paid of 5.00 pence were 2.84 pence less than the target. Also, the average NAV per share was 70.04 pence for the year, which was less than the average base NAV per share for the year of 91.76 pence. Accordingly, no performance incentive fee is payable for the year.

 

b)

Offer for subscription fees

 

2018

2017

 

£m

£m

 

 

 

Funds raised across the four Mobeus VCTs

19.64

60.36

of which the funds raised by MIG VCT were

8.10

16.90

Offer costs payable to Mobeus at 3.25% of funds raised by MIG VCT

0.26

0.55

 

Under the terms of an Offer for Subscription, with the other Mobeus advised VCTs, launched on 6 September 2017, Mobeus was entitled to fees of 3.25% of the investment amount received from investors. This amount totalled £638,236 for the final two allotments during the year across all four VCTs, out of which all the costs associated with the allotment were met, excluding any payments to advisers facilitated under the terms of the Offer.

 

c)

Other expenses

 

Expenses are charged wholly to revenue, with the exception of expenses incidental to the acquisition or disposal of an investment, which are written off to the capital column of the Income Statement or deducted from the disposal proceeds as appropriate.

 

 

2018

2017

 

£

£

 

 

 

Directors' remuneration (including NIC of £8,002 (2017: £8,110)) - note a)

113,002

113,110

IFA trail commission

81,025

87,580

Broker's fees

14,400

14,400

Auditor's fees - Audit of Company (excluding VAT)

24,088

23,832

-    Audit related assurance services - note b) (excluding VAT)

4,613

4,562

-    tax compliance services - note b) (excluding VAT)

1,922

1,358

Registrar's fees

55,030

48,045

Printing

28,084

27,299

Legal & professional fees

10,422

7,918

VCT monitoring fees

9,000

9,000

Directors' insurance

7,630

8,153

Listing and regulatory fees

29,526

30,114

Sundry

8,490

10,046

Other expenses

387,232

385,417

 

 

 

Note a): See analysis in the Directors' Remuneration Report in the Annual Report, which excludes the NIC above. The key management personnel are the three non-executive Directors. The Company has no employees.

 

Note b): The audit related assurance services are in relation to the review of the Financial Statements within the Company's Half Year Report. The Audit Committee reviews the nature and extent of these services to ensure that auditor independence is maintained. In this regard, while iXBRL services are carried out by the auditor, the majority of compliance tax services are carried out by another firm, so are included within legal and professional fees.

 

 

5

Taxation on profit/(loss) on ordinary activities

 

 

The tax expense for the year comprises current tax and is recognised in profit or loss. The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date.

 

Any tax relief obtained in respect of adviser fees allocated to capital is reflected in the realised capital reserve and a corresponding amount is charged against revenue. The tax relief is the amount by which corporation tax payable is reduced as a result of these capital expenses.

 

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the Company's taxable profits and its results as stated in the Financial Statements that arise from the inclusion of gains and losses in the tax assessments in periods different from those in which they are recognised in the Financial Statements.

               

Deferred tax is measured at the average tax rates that are expected to apply in the years in which the timing differences are expected to reverse based on tax rates and laws that have been enacted or substantively enacted at the balance sheet date. Deferred tax is measured on a non-discounted basis.

 

A deferred tax asset would be recognised only to the extent that it is more likely than not that future taxable profits will be available against which the asset can be utilised.

 

Tax relief relating to Investment Adviser fees is allocated between revenue and capital where such relief can be utilised. The Company is an Investment Trust and Investment Trust companies are exempt from tax on capital gains if they meet the HMRC criteria set out in section 274 of the ITA.

 

 

 

2018

2018

2018

2017

2017

2017

 

Revenue

Capital

Total

Revenue

Capital

Total

 

£

£

£

£

£

£

 

 

 

 

 

 

 

a)  Analysis of tax charge:

 

 

 

 

 

 

UK Corporation tax on profits/(losses) for the year

331,416

(222,603)

108,813

392,180

(202,170)

190,010

Total current tax charge/(credit)

331,416

(222,603)

108,813

392,180

(202,170)

190,010

Corporation tax is based on a rate of 19% (2017: 19.25%)

 

 

 

 

 

 

 

 

 

 

 

 

 

b) Profit on ordinary activities before tax

2,441,531

1,495,699

3,937,230

2,395,985

3,625,960

6,021,945

 

 

 

 

 

 

 

Profit on ordinary activities multiplied by main company rate of corporation tax in the UK of 19% (2017: 19.25%)

463,892

284,182

748,074

461,227

697,997

1,159,224

 

 

 

 

 

 

 

Effect of:

 

 

 

 

 

 

UK dividends

(132,816)

-

(132,816)

(69,047)

-

(69,047)

Unrealised (gains)/losses not taxable

-

(531,298)

(531,298)

-

(110,237)

(110,237)

Realised losses/(gains) not taxable

-

24,513

24,513

-

(1,010,404)

(1,010,404)

Unrelieved expenditure

9

-

9

-

-

-

Underprovision in prior period

331

-

331

-

-

-

Actual current tax charge

331,416

(222,603)

108,816

392,180

(202,170)

190,010

 

 

 

 

 

 

 

Deferred taxation

No provision for deferred taxation has been made on potential capital gains due to the Company's current status as a VCT under section 274 of the ITA and the Directors' intention to maintain that status.

 

6

Dividends paid and payable

 

 

 

 

 

 

 

Dividends payable are recognised as distributions in the Financial Statements when the Company's liability to pay them has been established. This liability is established for interim dividends when they are paid, and for final dividends when they are approved by the shareholders, usually at the Company's Annual General Meeting.

 

A key judgement in applying the above accounting policy is in determining the amount of minimum dividend to be paid in respect of a year. The Company's status as a VCT means it has to comply with Section 259 of the ITA, which requires that no more than 15% of the income from shares and securities in a year can be retained from the revenue available for distribution for the year.

 

 

 

 

 

 

 

Amounts recognised as distributions to equity shareholders in the year:

 

 

 

 

 

 

 

 

 

Dividend

Type

For year ended 31 December

Pence per share

Date Paid

2018

2017

£

£

 

 

 

 

 

 

 

Second Interim

Capital

2016

6.00p*

31 Mar 2017

-

4,535,848

Interim

Capital

2017

9.00p*

13 Sep 2017

-

6,796,071

Second Interim

Capital

2017

4.00p*

8 Dec 2017

-

3,900,003

Final

Capital

2017

1.50p

17 May 2018

1,625,190

-

Final

Capital

2017

0.50p

17 May 2018

541,730

-

Final

Capital

2017

1.00p*

17 May 2018

1,083,459

-

Interim

Capital

2018

2.00p*

21 Sep 2018

2,159,518

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,409,897

15,231,922

 

 

 

 

 

 

 

Proposed distributions to equity holders at the year end:

 

 

 

 

 

 

 

 

 

 

 

 

 

Date Payable

 

 

 

 

 

 

 

 

 

Final

Income

2017

1.50p

17 May 2018

 

1,628,715

Final

Capital

2017

1.00p*

17 May 2018

 

1,085,810

Final

Capital

2017

0.50p

17 May 2018

 

542,905

Final

Income

2018

1.75p

17 May 2019

1,870,153

-

Final

Capital

2018

3.25p*

17 May 2019

3,473,140

-

 

 

 

 

 

5,343,293

3,257,430

 

*These dividends were and will be paid out of the Company's special distributable reserve.

 

Set out below are the total income dividends payable in respect of the financial year, which is the basis on which the requirements of Section 259 of the ITA concerning the Company not retaining more than 15% of its income from shares and securities, is considered.

 

Recognised income distributions in the financial statements for the year:

 

Dividend

Type

For year ended 31 December

Pence per share

Date paid/payable

2018

2017

£

£

 

 

 

Revenue available for distribution by way of dividends for the year

2,110,115

2,003,805

 

 

 

 

 

 

 

 

 

 

Final

Income

2017

1.50p

17 May 2018

-

1,628,715

Final

Income

2018

1.75p

17 May 2019

1,870,153

-

 

 

 

 

 

 

 

Total income dividends for the year

1,870,153

1,628,715

 

7

Basic and diluted earnings per share

 

2018

2017

 

£

£

 

Total earnings after taxation:

3,828,417

5,831,935

Basic and diluted earnings per share (note a)

3.60p

7.34p

Revenue earnings from ordinary activities after taxation

2,110,115

2,003,805

Basic and diluted revenue earnings per share (note b)

1.98p

2.52p

 

 

 

Net unrealised capital gains/(losses) on investments

2,796,306

-572,662

Net realised capital (losses)/gains on investments

-129,014

5,248,859

Capital Investment Adviser fees less taxation

-948,990

-848,067

Total capital earnings

1,718,302

3,828,130

Basic and diluted capital earnings per share (note c)

1.62p

4.82p

Weighted average number of shares in issue in the year

106,350,801

79,475,780

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes                                                                    

a) Basic earnings per share is total earnings after taxation divided by the weighted average number of shares in issue.

 

b)  Revenue earnings per share is the revenue earnings after taxation divided by the weighted average number of shares in issue.

 

c)  Capital earnings per share is the total capital earnings after taxation divided by the weighted average number of shares in issue.

 

d)  There are no instruments that will increase the number of shares in issue in future. Accordingly, the above figures currently represent both basic and diluted earnings per share.

 

 

8

Investments at fair value

 

The most critical estimates, assumptions and judgements relate to the determination of the carrying value of investments at "fair value through profit and loss" (FVTPL). All investments held by the Company are classified as FVTPL and measured in accordance with the International Private Equity and Venture Capital Valuation ("IPEV") guidelines, as updated in December 2018. This classification is followed as the Company's business is to invest in financial assets with a view to profiting from their total return in the form of capital growth and income.

 

Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional. For investments actively traded on organised financial markets, fair value is generally determined by reference to Stock Exchange market quoted bid prices at the close of business on the balance sheet date. Purchases and sales of quoted investments are recognised on the trade date where a contract of sale exists whose terms require delivery within a time frame determined by the relevant market where the terms of the disposal state that consideration may be received at some future date and, subject to the conditionality and materiality of the amount of deferred consideration, an estimate of the fair value, discounted for the true value of money, may be recognised through the Income Statement. In other cases, the proceeds will only be recognised once the right to receive payment is established and there is no reasonable doubt that payment will be received.

 

Unquoted investments are stated at fair value by the Directors at each measurement date in accordance with appropriate valuation techniques, which are consistent with the IPEV guidelines:

 

(i)  Each investment is considered as a whole on a 'unit of account' basis, i.e. that the value of each portfolio company is considered as a whole, alongside consideration of:

 

The price of new investments made, if deemed to be made as part of an orderly transaction, are considered to be at fair value at the date of the transaction. The inputs that derived the investment price are calibrated within individual valuation models and at subsequent measurement dates, are reconsidered for any changes in light of more recent events or changes in the market performance of the investee company such that the valuation bases used are the following:

 

-      a multiple basis. The shares may be valued by applying a suitable price-earnings ratio, revenue or gross profit multiple to that company's historic, current or forecast post-tax earnings before interest and amortisation, or revenue, or gross profit (the ratio used being based on a comparable sector but the resulting value being adjusted to reflect points of difference identified by the Investment Adviser compared to the sector including, inter alia, a lack of marketability).

 

or:

 

-      where a company's underperformance against plan indicates a diminution in the value of the investment, provision against the price of a new investment is made, as appropriate.

 

(ii)   Premiums, to the extent that they are considered capital in nature, and that they will be received upon repayment of loan stock investments are accrued at fair value when the Company receives the right to the premium and when considered recoverable.

 

(iii)   Where a multiple or the price of recent investment less impairment basis is not appropriate and overriding factors apply, a discounted cash flow, net asset valuation or realisation proceeds basis may be applied.

 

Capital gains and losses on investments, whether realised or unrealised, are dealt with in the profit and loss and revaluation reserves and movements in the period are shown in the Income Statement.

 

All investments are initially recognised and subsequently measured at fair value. Changes in fair value are recognised in the Income Statement.

 

A key judgement made in applying the above accounting policy relates to investments that are permanently impaired. Where the value of an investment has fallen permanently below the price of recent investment, the loss is treated as a permanent impairment and as a realised loss, even though the investment is still held. The Board assesses the portfolio for such investments and, after agreement with the Investment Adviser, will agree the values that represent the extent to which an investment loss has become realised. This is based upon an assessment of objective evidence of that investment's future prospects, to determine whether there is potential for the investment to recover in value.

 

Accounting standards classify methods of fair value measurement as Levels 1, 2 and 3.  This hierarchy is based upon the reliability of information used to determine the valuation.  All of the unquoted investments are Level 3, i.e. fair value is measured using techniques using inputs that are not based on observable market data.

 

Movements in investments during the year are summarised as follows:

 

 

Unquoted ordinary shares

Unquoted preference shares

Unquoted Loan stock

Total

 

£

£

£

£

 

 

 

 

 

Cost at 31 December 2017

18,094,736

27,744

24,109,079

42,231,559

 

 

 

 

 

Net unrealised gains at 31 December 2017

243,148

718,633

1,825,001

2,786,782

 

 

 

 

 

Permanent impairment in value of investments as at 31 December 2017

(3,503,033)

-

-

(3,503,033)

 

 

 

 

 

 

 

 

 

 

Valuation at 31 December 2017

14,834,851

746,377

25,934,080

41,515,308

 

 

 

 

 

Purchases at cost

4,509,556

-

2,728,781

7,238,337

 

 

 

 

 

Sale proceeds (note a) (note b)

(1,143,994)

(185,711)

(1,613,449)

(2,943,154)

 

 

 

 

 

Net realised gains/(losses) on investments (note a)

827,043

-

(956,057)

(129,014)

 

 

 

 

 

Net unrealised gains/(losses) on investments (note c)

3,136,799

(1,459)

(621,766)

2,513,574

 

 

 

 

 

 

 

 

 

 

Valuation at 31 December 2018

22,164,255

559,207

25,471,589

48,195,051

 

 

 

 

 

Cost at 31 December 2018

21,631,195

27,663

25,080,727

46,739,585

 

 

 

 

 

Net unrealised gains at 31 December 2018

4,053,584

531,544

417,772

5,002,900

 

 

 

 

 

Permanent impairment in cost of investments as at 31 December 2018 (note f)

(3,520,524)

-

(26,910)

(3,547,434)

 

 

 

 

 

 

 

 

 

 

Valuation at 31 December 2018

22,164,255

559,207

25,471,589

48,195,051

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note a) Disposals of investment portfolio companies during the year were:

 

 

Type

Investment cost

Disposal proceeds

Valuation at 31 December 2017

Realised gain in year

 

 

£

£

£

£

 

 

 

 

 

 

Fullfield Limited (Motorclean)

Full Exit

1,625,672

917,491

1,703,367

(785,876)

 

 

 

 

 

 

Lightworks Software Limited

Full Exit

222,584

941,737

160,446

781,291

 

 

 

 

 

 

Hemmels Limited1

Partial Exit and permanent impairment

571,568

271,792

598,478

(326,686)

 

 

 

 

 

 

The Plastic Surgeon Holdings Limited (formerly TPSFF Holdings Limited)

Loan repayments and repurchase of preference shares

153,589

465,957

465,957

-

 

 

 

 

 

 

MPB Group

Loan repayment

143,920

143,920

143,920

-

 

 

 

 

 

 

Other

 

12,977

202,257

-

202,257

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,730,310

2,943,154

3,072,168

(129,014)

 

 

Net unrealised gains above of £2,513,574 differ from that shown in the Income Statement of £2,796,306. The difference of £282,732 is the estimated fair value of contingent consideration due in relation to the sale of Entanet Holdings in the prior year, recognised at the balance sheet date which has been included within other debtors in note 10 to the financial statements. The £282,732 contingent consideration also explains the difference between unrealised gains at 31 December 2018 above of £5,002,900 and that shown within the Revaluation Reserve on the balance sheet of £5,285,632. A further sum of £314,146 is potentially payable on 1 August 2019. There are conditions attached to this deferred consideration such that the amount receivable is uncertain and so has not been recognised in the current year's financial statements.

 

1 New investment in year.

 

Note b) Investment proceeds shown above of £2,943,154 differs from the sale proceeds shown in the Statement of Cash flows of £6,396,046 by £3,452,892. This difference arises because of proceeds relating to the disposal of Gro Group Holdings Limited that were held in debtors at the start of the year.

 

Note c) The major components of the increase in unrealised valuations of £2,513,574 in the year were increases of £849,191 in The Plastic Surgeon Holdings Limited (formerly TPSFF Holdings Limited), £779,549 in EOTH Limited, £438,945 in CGI Creative Graphics International Limited, £423,681 in ASL Technology Holdings Limited, and £378,668 in Pattern Analytics Limited (trading as Biosite). This increase was partly offset by falls of £(833,001) in BookingTek Limited, £(802,114) in Manufacturing Services Investment Limited (trading as Wetsuit Outlet), £(679,012) in Veritek Global Holdings Limited, £(488,271) in Redline Worldwide Limited and £416,641 in Tharstern Group Limited.

 

The decrease in unrealised valuations of the loan stock investments above reflects the changes in the entitlement to loan premiums, and/or in the underlying enterprise value of the investee company. The decrease does not arise from assessments of credit risk or market risk upon these instruments.

 

Note d) During the year, permanent impairments of the cost of investments have increased from £3,503,033 to £3,547,434. The increase of £44,401 is due to the impairments of two investee companies, offset slightly by the disposal of a company that had previously been impaired.

 

 

9

Current asset investments and Cash at bank

 

Cash equivalents, for the purposes of the Statement of Cash flows, comprises bank deposits repayable on up to three months' notice and funds held in OEIC money-market funds. Current asset investments are the same but also include bank deposits that mature after three months. Current asset investments are disposable without curtailing or disrupting the business and are readily convertible into known amounts of cash at their carrying values at immediate or up to three months' notice. Cash, for the purposes of the Statement of Cash Flows is cash held with banks in accounts subject to immediate access. Cash at bank in the Balance Sheet is the same.

 

 

2018

2017

£

£

 

 

 

OEIC Money market funds

22,304,633

20,797,724

Cash equivalents per Statement of Cash Flows

22,304,633

20,797,724

Bank deposits that mature after three months but are not immediately repayable

1,005,682

1,005,552

Current asset investments

23,310,315

21,803,276

Cash at bank

3,181,475

3,027,719

 

10

Post balance sheet events

 

On 31 January 2019, The Plastic Surgeon Holdings Limited (formerly TPSFF Holdings Limited) carried out a repurchase of preference shares in which £0.09 million of proceeds were received by the Company.

 

On 7 February 2019, £0.31 million of contingent consideration was received in relation to the sale of Entanet Holdings in August 2017.

 

11

Statutory information

 

The financial information set out in these statements does not constitute the Company's statutory accounts for the year ended 31 December 2018 but is derived from those accounts.  Statutory accounts will be delivered to the Registrar of Companies after the Annual General Meeting.  The auditors have reported on these accounts and their report was unqualified and did not contain a statement under section 498(2) of the Companies Act 2006.

 

12

Annual Report

 

 

The Annual Report will be published on the Company's website at www.migvct.co.uk shortly and shareholders who have not requested a hard copy of the report will shortly receive notification from the Company on how to download a pdf of the Report from the website.  Shareholders and members of the public who wish to receive a hard copy of the Annual Report, may request a copy by writing to the Company Secretary, Mobeus Equity Partners LLP, 30 Haymarket (4th floor), London SW1Y 4EX or by email: vcts@mobeus.co.uk.

 

13

Annual General Meeting

 

The Annual General Meeting of the Company will be held at 2.00 p.m. on Wednesday, 8 May 2019 at The Clubhouse, 8 St James's Square, London, SW1Y 4JU.

 

Contact details for further enquiries:

 

Robert King or Robert Brittain of Mobeus Equity Partners LLP (the Company Secretary) on 020 7024 7600 or by e-mail to vcts@mobeus.co.uk.

 

Mark Wignall at Mobeus Equity Partners LLP (the Investment Adviser) on 020 7024 7600 or by e-mail to info@mobeus.co.uk.

 

DISCLAIMER

 

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

                                                                     

 

 

 

 

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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Annual Results for the year ended 31 December 2018 - RNS