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RNS

Half-year Report

Released 10:20 13-Aug-2019

RNS Number : 8590I
Mobeus Income & Growth VCT PLC
13 August 2019
 

 

MOBEUS INCOME & GROWTH VCT PLC

 

 

 

HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

 

Mobeus Income & Growth VCT plc ("the Company") today announces its half-year results for the six months ended 30 June 2019.

 

As at 30 June 2019:

Net assets: £77.13 million

Net asset value ("NAV") per share: 73.00 pence

 

 

Financial Highlights

 

Results for the six months ended 30 June 2019

 

·      Net asset value total return per share was 11.0% for the six months. 

 

 

·      Share price total return per share was 7.3% for the six months.

 

 

·      The Company has declared an interim dividend in respect of the current year of 4.00 pence per share to be paid to shareholders on 20 September 2019.

 

 

·     The Company realised investments for a total of £10.08 million, a gain of £2.33 million for the six months.

 

 

·      The Company invested £2.30 million into two new growth capital investments.

 

 

Performance summary

 

The table below shows the recent past performance of the original fundraising launched in 2004. Performance data for all fundraising rounds and for former Matrix Income & Growth 3 VCT plc ("MIG3 VCT") shareholders are shown in an appendix to the published Half-Year Report and will be available on the Company's website.

 

 

Reporting date

 

 

 

 

Net
assets

 

 

NAV per Share

 

 

Share

 Price

 (mid-market price)1

 

Cumulative dividends paid

per share

 

 

 

Cumulative total return per share to shareholders2

Dividends

per share declared in

respect of the period

 

 

 

(NAV

basis)

 

(Share price basis)

 

As at

(£m)

(p)

(p)

(p)

(p)

(p)

(p)

30 June 2019

77.13

73.00

61.50

118.80

191.80

180.30

4.003

31 December 2018

75.08

70.25

62.00

113.80

184.05

175.80

7.00

30 June 2018

75.38

69.69

62.00

111.80

181.49

173.80

2.00

 

 

 

 

1

Source: Panmure Gordon (mid-price).

 

2

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

 

3

The Directors have declared an interim dividend of 4.00 pence per share in respect of the six months ended 30 June 2019. The dividend will be paid to shareholders on 20 September 2019.

 

Chairman's Statement

I am pleased to present the Company's Half-Year Report for the six months ended 30 June 2019.

 

Overview

The half-year has again seen good progress and a very positive return for the period.  This is detailed in the Performance and the Investment Portfolio sections of my statement below.

 

During the period under review, the Company achieved two profitable realisations and made two new growth capital investments.  Sixteen growth capital investments have now been completed since the 2015 VCT Rule change totalling £18.60 million.

 

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

 

As detailed in the Summary of VCT regulation in the Half Year Report, for accounting periods beginning on or after 1 January 2020 the percentage in VCT qualifying holdings which the Company is required to meet will increase from 70% to 80%.  The Board is confident that this higher threshold requirement will be met through a combination of new qualifying investments and further dividends to shareholders.

 

Performance

The Company's NAV total return per share was 11.0% for the six months to 30 June 2019 (2018:1.3%), which principally reflects a strong underlying performance by the investment portfolio.  The total share price return was 7.3% (2018: 3.2%).  At 30 June 2019, and before taking into account this half year result, your Company was ranked 11th out of 40 generalist VCTs, over the last five years, in the Association of Investment Companies' ("AIC") analysis of NAV Cumulative Total Return, which is considered to be a creditable performance.

 

Dividends

On 17 May 2019, following shareholder approval at the annual general meeting, the Company paid a final dividend of 5.00 pence per ordinary share, in respect of the financial year ended 31 December 2018.

 

The Board has declared an interim dividend of 4.00 pence per share in respect of the current financial year, payable to shareholders, whose names appear on the register on 23 August 2019, on 20 September 2019.

 

Although the Board has achieved the 4.00 pence per share annual dividend target in respect of the current financial year, the gradual move of the portfolio to growth capital investments may make it more difficult to achieve in future financial years without recourse to the Company's reserves.

 

Investment portfolio

The portfolio achieved a net increase of £5.26 million in unrealised gains and £2.33 million in realised gains over the six-month period. The portfolio was valued at £48.30 million at the period end (31 December 2018: £48.20 million), of which £27.23 million relates to investments made prior to the 2015 rule change and £21.07 million relates to investments made afterwards.

 

During the six-months under review, the Company invested a total of £2.30 million, (2018: £3.66 million) into two (2018: six) investments. These investments were: Arkk Consulting, a regulatory and reporting requirement service provider; and Parsley Box, a supplier of home delivered ambient ready meals for the elderly. Shortly after the period end, a follow-on investment of £0.58 million was made into existing portfolio company MPB Group, which is a leading online marketplace for used camera and video equipment. The investment was part of a £9.00 million funding round led by Acton Capital at a higher valuation which reflects the considerable growth already achieved by this business as well as its future growth potential.

 

The Company also realised its investments in Plastic Surgeon and ASL Technology during the six months under review.  £2.23 million was received from the realisation of Plastic Surgeon, generating a gain in the period of £0.63 million and contributing to a multiple on cost of 5.6x over the life of the investment. £5.18 million was received from the realisation of ASL Technology, generating a gain in the period of £1.64 million and a multiple on cost of 2.2x.

 

The Company also received cash proceeds of £2.67 million during the period, comprising a part disposal of Master Removers Group generating £0.46 million, loan stock repayments from investee companies of £1.80 million, deferred consideration of £0.31 million arising from realisations which occurred in a previous year, and preference share repurchases of £0.10 million.

 

Details of this investment activity and the performance of the portfolio are contained in the Investment Review and the Investment Portfolio Summary.

 

Revenue account

The results for the period are set out in the Unaudited Condensed Income Statement and show a revenue return (after tax) of 0.92 pence per share (2018: 0.83 pence per share). The revenue return for the period of £0.98 million has increased from last year's comparable figure of £0.87 million. This is mainly due to an increase in income receivable from loans made to new investee companies as well as some investee companies resuming interest payments.

 

Planned fundraising

As announced recently, the Board intends to launch an offer for subscription for new ordinary shares in the 2019/20 tax year.  The Board expects to convene a general meeting of shareholders to seek the necessary authority to allot shares and disapply pre-emption rights in connection with the fundraising and will send shareholders a circular in September confirming the amount to be raised and the purposes for which the funds will be used in advance of that meeting for consideration.

 

If shareholder approval is obtained, the Board expects to be in a position to launch the offer for subscription in October, full details of which will be contained in the prospectus that will be sent to all registered shareholders.

 

Share buybacks

During the six months under review, the Company bought back and cancelled 1,245,237 of its own shares, representing 1.2% (2018: 0.4%) of the shares in issue at the beginning of the period, at a total cost of £0.76 million (2018: £0.26 million) inclusive of expenses.

 

After the period end, with effect from 1 August 2019, the Board changed its share buyback policy objective of maintaining the discount to NAV at which the Company's shares may trade in the market from approximately 10% or less, to approximately 5% or less.

 

In pursuing this policy, the Board's priority will remain to ensure that it is acting prudently and in the interests of the remaining shareholders of the Company.  Share buybacks will continue to be entirely at the Board's discretion and will be subject to the Company having sufficient funds and distributable reserves available for such a purpose.  They will also continue to be subject to the Listing Rules and any applicable law and regulatory restrictions at the relevant time.  Shares bought back in the market will ordinarily be cancelled.

 

Liquidity

Cash or near cash resources held by the Company as at 30 June 2019 was £28.98 million or 37.6% of net assets.  After the period end, following the investment into MPB and the payment of the interim dividend in September 2019, the pro forma level of liquidity will be £24.17 million or 33.2% of net assets.

 

Shareholder communications

May I remind you that the Company has its own website which is available at www.migvct.co.uk.

 

The Investment Adviser held its most recent annual Shareholder Event in February 2019 which, from the feedback submitted, was well received by Shareholders. The event included presentations on the investment activity and performance of all the Mobeus VCTs. I would like to thank those shareholders who attended for helping to make it a success. The next event will take place in February 2020 and shareholders will be sent an invitation.

 

Outlook

Your Board considers that your Company is well positioned, with the portfolio being comprised of a strong foundation of more mature investments providing an income return, and a younger, growth capital portfolio seeking to achieve scale.  The strong result achieved during the period reflects growth and valuation increases in both elements of the portfolio, underpinned by two profitable realisations. 

 

While the demand for growth capital investment is strong,  the amount of capital available for investment in the sector is substantial. This is causing increased competition and higher entry valuations for the most attractive investment opportunities. 

 

The Board and Investment Adviser have carried out an analysis of the possible impact of Brexit on the investment portfolio. The portfolio as a whole is predominantly UK-centric and the greatest risk from Brexit is from the broader impact on the UK economy.  Some value impact is possible over time, but Mobeus believes that the portfolio companies have appropriate plans in place and are as well prepared for Brexit as they can be at this point. 

 

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

 

 

Clive Boothman

Chairman

13 August 2019

 

 

Investment Policy

The Investment Policy is designed to meet the Company's objective.

 

Investments

The Company invests primarily in a diverse portfolio of UK unquoted companies. Investments are made selectively across a number of sectors, principally in established companies. Investments are usually structured as part loan stock and part equity in order to produce a regular income stream and to generate capital gains from realisations.

 

There are a number of conditions within the VCT legislation which need to be met by the Company and which may change from time to time. The Company will seek to make investments in accordance with the requirements of prevailing VCT legislation.

 

Asset allocation and risk diversification policies, including the size and type of investments the Company makes, are determined in part by the requirements of prevailing VCT legislation. No single investment may represent more than 15% (by VCT tax value) of the Company's total investments at the date of investment.

 

Liquidity

The Company's cash and liquid funds are held in a portfolio of readily realisable interest bearing investments, deposit and current accounts, of varying maturities, subject to the overriding criterion that the risk of loss of capital be minimised.

 

Borrowing

The Company's articles of association permit borrowings of amounts up to 10% of the adjusted capital and reserves (as defined therein). However, the Company has never borrowed and the Board would only consider doing so in exceptional circumstances.

 

 

Investment Review

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 six months to 30 June 2019 is summarised as follows:

 

 

2019

£m

2018

£m

Opening portfolio value

48.49*

41.52

New and follow-on investments

2.30

3.66

Disposal proceeds

(10.08)

(0.61)

Net realised gains

2.33

0.60

Valuation movements

5.26

0.18

Portfolio value at 30 June

48.30

45.35

*- Adjusted for deferred consideration recognised in a previous period.

 

The six months to 30 June 2019 has seen further good progress. The Company made two new growth capital investments of £1.45 million into Arkk Consulting and £0.85 million into Parsley Box during the period.  Arkk Consulting is a regulatory and reporting requirement service and product provider and Parsley Box is a supplier of home delivered ambient ready meals for the elderly. 

 

The Company also realised its investments in Plastic Surgeon and ASL Technology during the period, receiving a total of £7.41 million in proceeds from these realisations, which contributed to total receipts of £10.08 million during the period.

 

The investment and divestment activity during the period has increased the proportion of the portfolio comprised of investments made since the 2015 VCT rule change to 43.6% by value at the period end (31 December 2018: 34.3%).

 

After the period end, the Company invested £0.58 million into MPB Group, an existing portfolio company.  MPB is Europe's leading online marketplace for used camera and video equipment and has more than doubled revenue every year since your Company invested in 2016. This brings the total invested in those growth capital investments made since the introduction of the new VCT regulations in 2015 to £19.18 million.

 

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

 

Investment Portfolio Capital Movement

2019

£m

2018

£m

Increase in the value of unrealised investments

6.54

3.83

Decrease in the value of unrealised investments

(1.28)

(3.23)

Net increase in the value of unrealised investments

5.26

0.60

Realised gains

2.33

0.18

Realised losses

-

-

Net realised gains in the period

2.33

0.18

Net investment portfolio movement in the period

7.59

0.78

 

Valuation changes of portfolio investments still held

The principal contributors to the valuation increases of £6.54 million were Auction Technology Group: £1.76 million; MPB Group: £1.15 million; and Proactive Group: £1.03 million.

 

Auction Technology Group, which the VCT part realised in 2014, is trading well ahead of budget with growth showing in all areas of its business.  MPB Group has grown its revenues substantially and, in July, secured a £9.0 million further investment at a higher valuation, of which £2.0 million was provided by the Mobeus advised VCTs. 

 

A small number of new growth investments, including Proactive Group, 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. 

 

The main reductions within total valuation decreases of (£1.28) million, were Wetsuit Outlet £(0.44) million; SuperCarers £(0.29) million and Virgin Wines £(0.20) million. Wetsuit Outlet continues to have a disappointing period post investment, although it is anticipated that measures recently implemented to restore margins will soon begin to improve profitability.  SuperCarers is performing behind plan and in response is undertaking a restructure of its cost base.  Finally, Virgin Wines is trading on budget, but a reduction in the benchmark sector in which it operates has impacted its valuation for the quarter.

 

Realised gains and deferred consideration receipts

The Company realised its investments in ASL Technology and Plastic Surgeon during the period under review, generating gains in the period of £1.64 million and £0.63 million respectively from these realisations.  These contributed to a multiple of cost of 2.2x for ASL Technology and 5.6x for Plastic Surgeon over the life of the investments.  The Company also made a part disposal of Master Removers Group realising £0.46 million proceeds and a gain of £0.03 million.  Finally, the Company received a gain of £0.03 million from deferred consideration receipts of £0.31 million arising from disposals in a previous year.

 

Investment portfolio yield and capital repayments

In the period under review, the Company received the following amounts in interest and dividend income:

Investment Portfolio Yield

2019

£m

2018

£m

Loan interest received in the period

1.20

1.06

Dividends received in the period

0.26

0.28

Total portfolio income in the period1

1.46

1.34

Portfolio Value at 30 June

48.30

45.35

Portfolio Income Yield (Income as a % of Portfolio value at 30 June)

3.0%

3.0%

1Total portfolio income in the period is generated solely from investee companies within the portfolio. See Note 4 of the Financial Statements for all income receivable by the Company.

 

In addition to realisation proceeds and deferred consideration receipts outlined earlier, the Company also received loan stock repayments of £1.80 million (as the investments in the five companies preparing to trade repaid the final loan stock sums still payable), and preference share repurchases of £0.10 million, both at cost.

 

New investments in the half year

The Company made two new investments totalling £2.30 million during the period, as detailed below:

 

 

Company

Business

Date of Investment

Amount of new investment (£m)

Arkk Consulting

Regulatory and reporting requirements service provider

May 2019

1.45

Arkk Consulting (trading as Arkk Solutions) provides services and software to enable organisations to remain compliant with regulatory reporting requirements. Arkk was established in 2009 and currently has over 800 clients across 20 countries.  These include more than 80 of the FTSE 350, and half of the largest 20 accountancy firms in the UK. The investment will build on Arkk's reputation and customer base, to target the cloud based period end reporting market by building the sales and marketing team. The company's audited accounts for the year ended 31 December 2017 show turnover of £3.18 million and a profit before interest, tax and amortisation of goodwill of £0.52 million.

Parsley Box

Home delivered ambient ready meals for the elderly

May 2019

0.85

Parsley Box is a UK direct to consumer supplier of home delivered ambient ready meals for the elderly. Founded in 2017, Parsley Box has grown rapidly and has developed a unique meal delivery solution for its customers. The company supplies a diverse range of ambient meals via next day delivery which are easy to store and aim to contribute to a more independent and healthier lifestyle. The investment will scale the company's marketing strategy, enable it to process larger order volumes and continue to build out its team. The company's unaudited accounts for the period ended 31 March 2018 show revenues of £0.25 million and a loss before interest, tax and amortisation of goodwill of £(0.21) million.

 

 

 

Realisations in the half year

The Company realised two investments during the period, as detailed below:

 

Company

Business

Period of investment

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

Plastic Surgeon

Supplier of snagging and finishing services

April 2008 to May 2019

£4.15 million

5.6 times cost

The Company sold its remaining investment in Plastic Surgeon to Polygon Group for £2.23 million.  Over the eleven years this investment was held, it generated proceeds of £4.15 million compared to an original investment cost of £0.74 million, which is a multiple on cost of 5.6x and an IRR of 20.5%.

ASL Technology

Printer and photocopier services

December 2010 to June 2019

£6.42 million

2.2 times cost

The Company sold its investment in ASL Technology for £5.18 million.  Over the eight and a half years this investment was held, it generated proceeds of £6.42 million compared to an original investment cost of £2.94 million, which is a multiple on cost of 2.2x and an IRR of 12.6%.

 

 

 

 

Follow-on investment made after the period end

The Company made one follow-on investment of £0.58 million into an existing portfolio company during the period, as detailed below:

Company

Business

Date of investment

Amount of new investment (£m)

MPB Group

Online marketplace for used camera and video equipment

July 2019

0.58

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 prior year, this investment will help drive the company's objective to create a £100m+ revenue, internationally diverse and profitable re-commerce business. 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.

 

 

 

 

Mobeus Equity Partners LLP

Investment Adviser

 

13 August 2019

 

 

Investment Portfolio Summary

as at 30 June 2019

 

 

Market
sector

Date of investment

Total book
cost

 

Valuation

 

Like for like

valuation

increase/

(decrease) over period1

% value
of net assets

Qualifying investments

 

 

£'000

£'000

 

 

Tovey Management Limited (trading as Access IS)
Provider of data capture and scanning hardware

Electronics & electrical equipment

Oct-15

2,979

3,664

(0.9)%

4.8%

Preservica Limited
Seller of proprietary digital archiving software

Software and Computer Services

Dec-15

2,099

3,125

13.4%

4.1%

MPB Group Limited
Online marketplace for used photographic and video equipment

General retailers

Jun-16

1,324

2,944

63.7%

3.8%

Virgin Wines Holding Company Limited
Online wine retailer

General retailers

Nov-13

2,439

2,798

(6.6)%

3.6%

EOTH Limited

(trading as Equip Outdoor Technologies)
Branded outdoor equipment and clothing

General retailers

Oct-11

1,000

2,479

3.9%

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

2,434

4.0%

3.2%

Vectair Holdings Limited

Designer and distributor of washroom products

Support services

Jan-06

138

2,362

17.0%

3.1%

Proactive Group Holdings Inc

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

General financial

Jan-18

926

2,331

79.2%

3.0%

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

1,997

9.5%

2.6%

CGI Creative Graphics International Limited
Vinyl graphics to global automotive, recreational vehicle and aerospace markets

General Industrials

Jun-14

1,808

1,795

-

2.3%

Master Removers Group 2019 Limited (formerly Master Removers Group) (trading as Anthony Ward Thomas, Bishopsgate and Aussie Man & Van)

A specialist logistics, storage and removals business

Support services

Dec-14

419

1,588

19.9%

2.1%

Media Business Insight Holdings Limited
A publishing and events business focused on the creative production industries

Media

Jan-15

2,518

1,586

7.1%

2.1%

My Tutorweb Limited

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

Support services

May-17

1,534

1,534

-

2.0%

Tharstern Group Limited

Software based management information systems

Software and computer services

Jul-14

1,377

1,452

7.6%

1.9%

Arkk Consulting Limited Provider of services and software to enable organisations to remain compliant with regulatory reporting requirements

Software and computer services

May-19

1,447

1,447

New investment

1.8%

Ibericos Etc. Limited

(trading as Tapas Revolution)

Spanish restaurant chain

Travel & Leisure

Jan-17

1,245

1,195

(11.7)%

1.5%

Manufacturing Services Investment Limited (trading as Wetsuit Outlet)
Online retailer in the water sports market

General retailers

Jul-17

2,174

933

(22.6)%

1.2%

Buster and Punch Holdings Limited

Industrial inspired lighting and interiors retailer

General retailers

Mar-17

668

1,081

24.8%

1.4%

Blaze Signs Holdings Limited
Manufacturer and installer of signs

Support services

Apr-06

492

1,016

(2.3)%

1.3%

Rota Geek Limited

Workforce management software

Support services

Aug-18

571

903

0.9%

1.2%

RDL Corporation Limited

Recruitment consultants for the pharmaceutical, business intelligence and IT industries

Support services

Oct-10

1,558

900

20.6%

1.2%

Parsley Box Limited

Supplier of home delivered ambient ready meals for the elderly

General retailers

May-19

854

854

New investment

1.1%

Kudos Innovations Limited

Online platform that provides and promotes research dissemination

Support services

Nov-18

421

841

100.0%

1.1%

Redline Worldwide Limited
Provider of security services to the aviation industry and other sectors

Support services

Feb-16

1,088

541

(20.1)%

0.7%

BookingTek Limited

Direct booking software for hotel groups

Software and computer services

Oct-16

771

193

-

0.3%

Veritek Global Holdings Limited
Maintenance of imaging equipment

Support services

Jul-13

2,045

168

1192.3%

0.2%

Jablite Holdings Limited

Manufacturer of expanded polystyrene products

Construction and materials

Apr-15

502

163

-

0.2%

Super Carers Limited

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

Support services

Mar-18

580

145

(66.7)%

0.2%

Racoon International Group Limited

Supplier of hair extensions, hair care products and training

Personal goods

Dec-06

350

-

-

0.0%

CB Imports Group Limited (trading as Country Baskets)
Importer and distributor of artificial flowers and floral sundries

General retailers

Dec-09

1,213

-

-

0.0%

Total qualifying investments

 

37,313

42,469

 

55.2%

Non-qualifying investments

 

 

 

 

 

 

Turner Topco Limited (trading as Auction Technology Group)
Saas based online auction marketplace platform

Media

Oct-08

2,501

3,817

85.9%

4.9%

Media Business Insight Limited

A publishing and events business focused on the creative production industries

Media

Jan-15

765

830

7.1%

1.1%

Manufacturing Services Investment Limited (trading as Wetsuit Outlet)

Online retailer in the water sports market

General retailers

Jul-17

571

571

-

0.7%

EOTH Limited (trading as Equip Outdoor Technologies)

Branded outdoor equipment and clothing

General retailers

Oct-11

298

324

-

0.4%

Tovey Management Limited (trading as Access IS)

Provider of data capture and scanning hardware

Electronics and electronic equipment

Oct-15

285

285

-

0.4%

Hollydale Management Limited2

Company seeking to carry on a business in the food sector

Company preparing to trade

Mar-15

586

-

-

0.0%

Backhouse Management Limited2

Company seeking to carry on a business in the motor sector

Company preparing to trade

Apr-15

605

-

-

0.0%

Barham Consulting Limited2

Company seeking to carry on a business in the catering sector

Company preparing to trade

Apr-15

605

-

-

0.0%

Creasy Marketing Services Limited2

Company seeking to carry on a business in the textile sector

Company preparing to trade

Apr-15

605

-

-

0.0%

McGrigor Management Limited2

Company seeking to carry on a business in the pharmaceutical sector

Company preparing to trade

Apr-15

605

-

-

0.0%

H Realisations (2018) Limited (formerly Hemmels Limited) (In administration)

Company that specialised in the sourcing, restoration, selling and servicing of high price, classic cars

Automobiles and parts

Mar-18

27

-

-

0.0%

Total non-qualifying investments

 

 

7,453

5,827

 

7.5%

Total investment portfolio

 

 

44,766

48,296

 

62.7%

Current asset investments and Cash at bank and in hand3

 

 

 

28,977

 

37.6%

Total investments

 

 

44,766

77,273

 

100.3%

Other assets

 

 

 

243

 

0.3%

Current liabilities

 

 

 

(387)

 

(0.6)%

Net assets

 

 

 

77,129

 

100.0%

Portfolio split by type:

 

 

 

 

 

 

Investments made prior to 2015 VCT rule change

 

 

26,882

27,223

 

56.4%

Investments made after 2015 VCT rule change

 

 

17,884

21,073

 

43.6%

 

 

 

44,766

48,296

 

100.0%

 

 

1 - This percentage change in 'like for like' valuations is a comparison of the 30 June 2019 valuations with the 31 December 2018 valuations having adjusted for partial disposals, loan stock repayments or new investments in the period.

 

2 - An application to strike off each of these companies from the Register of Companies has been submitted, as each has been unable to identify suitable opportunities in which to invest.

 

3 - Disclosed as Current asset investments and Cash at bank and in hand within Current assets in the Balance Sheet.

 

Statement of the Directors' Responsibilities 

 

Responsibility statements

In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Clive Boothman (Chairman), Bridget Guérin (Chairman of the Nomination & Remuneration and Management Engagement Committees), and Catherine Wall (Chairman of the Audit Committee), being the Directors of the Company, confirm that, to the best of their knowledge:

 

a)   the condensed set of financial statements, which has been prepared in accordance with Financial Reporting Standard 104 "Interim Financial Reporting" gives a true and fair view of the assets, liabilities, financial position and profit of the Company, as required by DTR 4.2.10;

 

b)   the Half-Year Management Report which comprises the Chairman's Statement, Investment Policy, Investment Review and Investment Portfolio Summary includes a fair review of the information required by DTR 4.2.7, being an indication of the important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements;

 

c)   a description of the principal risks and uncertainties facing the Company for the remaining six months is set out below, in accordance with DTR 4.2.7; and

 

d)   there were no related party transactions in the first six months of the current financial year that are required to be disclosed in accordance with DTR 4.2.8.

 

Principal risks and uncertainties

In accordance with DTR 4.2.7, the Board confirms that the principal risks and uncertainties facing the Company have not changed materially since the publication of the Annual Report and Financial Statements for the year ended 31 December 2018. The Board acknowledges that there is regulatory risk and continues to manage the Company's affairs in such a manner as to comply with section 274 of the Income Tax Act 2007.

 

The principal risks faced by the Company are:

 

·      Economic;

·      Loss of approval as a Venture Capital Trust;

·      Investment and strategic;

·      Regulatory;

·      Financial and operating;

·      Market;

·      Asset liquidity;

·      Market liquidity;

·      Counterparty; and

·      Key staff.

 

A detailed explanation of these risks can be found in the Strategic Report on pages 24 to 25 and in Note 15 on pages 60 - 66 of the Annual Report and Financial Statements for the year ended 31 December 2018, copies of which can be viewed or downloaded from the Company's website: www.migvct.co.uk.

 

Going concern

The Board has assessed the Company's operation as a going concern. The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Half-Year Management Report. The Directors have satisfied themselves that the Company continues to maintain an adequate cash position. The portfolio taken as a whole remains resilient and well-diversified. The major cash outflows of the Company (namely investments, buy-backs and dividends) are within the Company's control.

 

The Board's assessment of liquidity risk and details of the Company's policies for managing its capital and financial risks are shown in Notes 15 and 16 on pages 60 - 67 of the Annual Report and Financial Statements for the year ended 31 December 2018. Accordingly, the Directors continue to adopt the going concern basis of accounting in preparing the half-year report and annual financial statements.

 

Cautionary statement

This report may contain forward looking statements with regards to the financial condition and results of the Company, which are made in the light of current economic and business circumstances. Nothing in this report should be construed as a profit forecast.

 

For and on behalf of the Board:

 

Clive Boothman

Chairman

13 August 2019

 

 

Unaudited Condensed Income Statement

for the six months ended 30 June 2019

 

 

 

Six months ended 30 June 2019

(unaudited)

Six months ended 30 June 2018

 (unaudited)

 

Notes

Revenue

Capital

Total

Revenue

Capital

Total

 

 

£

£

£

£

£

£

Unrealised gains on investments

9

-

5,262,037

5,262,037

-

599,601

599,601

Realised gains on investments

9

-

2,332,254

2,332,254

-

181,297

181,297

Income

4

1,561,649

-

1,561,649

1,410,023

-

1,410,023

Investment Adviser's fees

5

(201,020)

(603,058)

(804,078)

(197,296)

(591,886)

(789,182)

Other expenses

-

(205,390)

-

(205,390)

(206,876)

-

(206,876)

Profit on ordinary activities before taxation

 

1,155,239

6,991,233

8,146,472

1,005,851

189,012

1,194,863

Tax on profit on ordinary activities

6

(171,952)

114,581

(57,371)

(137,808)

112,458

(25,350)

Profit and total comprehensive income

 

983,287

7,105,814

8,089,101

868,043

301,470

1,169,513

Basic and diluted earnings per share

7

0.92p

6.69p

7.61p

0.83p

0.28p

1.11p

 

 

 

Year ended 31 December 2018

(audited)

 

Notes

Revenue

Capital

Total

 

 

£

£

£

Unrealised gains on investments

 

-

2,796,306

2,796,306

Realised (losses) on investments

 

-

(129,014)

(129,014)

Income

4

3,219,294

-

3,219,294

Investment Adviser's fees

5

(390,531)

(1,171,593)

(1,562,124)

Other expenses

 

(387,232)

-

(387,232)

Profit on ordinary activities before taxation

 

2,441,531

1,495,699

3,937,230

Tax on profit on ordinary activities

6

(331,416)

222,603

(108,813)

Profit for the year and total comprehensive income

 

2,110,115

1,718,302

3,828,417

Basic and diluted earnings per share

7

1.98p

1.62p

3.60p

 

The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the unrealised gains and realised gains/(losses) 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 period.

 

 

Unaudited Condensed Balance Sheet

as at 30 June 2019

 

 

As at 30 June 2019

(unaudited)

 

As at 30 June 2018

(unaudited)

 

As at 31 December 2018

 

 

 

 

(audited)

 

Notes

£

 

£

 

£

Fixed assets

 

 

 

 

 

 

Investments at fair value

9

48,296,028

 

45,346,808

 

48,195,051

Current assets

 

 

 

 

 

 

Debtors and prepayments

 

243,315

 

231,749

 

793,953

Current asset investments

10 

19,902,109

 

26,933,900

 

23,310,315

Cash at bank and in hand

10 

9,074,632

 

3,332,817

 

3,181,475

 

 

29,220,056

 

30,498,466

 

27,285,743

Creditors: amounts falling due within one year

 

(387,090)

 

(466,012)

 

(402,812)

Net current assets

 

28,832,966

 

30,032,454

 

26,882,931

 

Net assets

 

77,128,994

 

75,379,262

 

75,077,982

Capital and reserves

 

 

 

 

 

 

Called up share capital

 

1,056,569

 

1,081,709

 

1,068,659

Capital redemption reserve

 

44,644

 

19,141

 

32,191

Share premium reserve

 

43,669,335

 

43,644,698

 

43,644,698

Revaluation reserve

 

7,777,490

 

3,259,646

 

5,285,632

Special distributable reserve

 

7,984,414

 

17,155,736

 

12,681,614

Realised capital reserve

 

13,920,908

 

7,913,691

 

8,818,475

Revenue reserve

 

2,675,634

 

2,304,641

 

3,546,713

Equity Shareholders' funds

 

77,128,994

 

75,379,262

 

75,077,982

Basic and diluted net asset value per share

11 

73.00p

 

69.69p

 

70.25p

                 

 

 

Unaudited Condensed Statement of Changes in Equity

for the six months ended 30 June 2019

 

 

Non-distributable reserves

Distributable reserves

Total

 

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)

 

 

£

£

£

£

£

£

£

£

At 1 January 2019

1,068,659

32,191

43,644,698

5,285,632

12,681,614

8,818,475

3,546,713

75,077,982

Comprehensive income for the period

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

5,262,037

-

1,843,777

983,287

8,089,101

Total comprehensive income for the period

-

-

-

5,262,037

-

1,843,777

983,287

8,089,101

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

Shares issued pursuant to application (Note c)

363

-

24,637

-

-

-

-

25,000

Shares bought back (Note d)

(12,453)

12,453

-

-

(764,900)

-

-

(764,900)

Dividends paid

-

-

-

-

(3,443,823)

-

(1,854,366)

(5,298,189)

Total contributions by and distributions to owners

(12,090)

12,453

24,637

-

(4,208,723)

-

(1,854,366)

(6,038,089)

Other movements

 

 

 

 

 

 

 

 

Realised losses transferred to special reserve (Note a and e)

-

-

-

-

(488,477)

488,477

-

-

Realisation of previously unrealised gains

-

-

-

(2,770,179)

-

2,770,179

-

-

Total other movements

-

-

-

(2,770,179)

(488,477)

3,258,656

-

-

At 30 June 2019

1,056,569

44,644

43,669,335

7,777,490

7,984,414

13,920,908

2,675,634

77,128,994

 

Note a): The cancellation of the share premium reserve and capital redemption reserve (as approved at the annual general meeting held on 22 February 2014 and by order of the Court dated 12 March 2014) has increased the Company's special distributable reserve.  The purpose of this reserve is to fund market purchases of the Company's own shares, write off any existing and future losses and for any other corporate purpose, including dividend distributions.  All of this reserve arose from shares issued before 5 April 2014.

 

Note b): The Realised capital reserve and the Revenue reserve together comprise the Profit and Loss Account of the Company.

 

Note c): 36,295 shares were allotted during the period, raising net funds of £25,000 for the Company.

 

Note d): During the period, the Company repurchased 1,245,237 of its own shares at the prevailing market price for a total cost of £764,900, which were subsequently cancelled. This figure is greater than that shown in the Statement of Cash Flows of £887,442 by £122,542. This difference arises from a creditor held at the previous year end of £122,542, which was settled during the period.

 

Note e): The transfer of £488,477 to the special distributable reserve from the realised capital reserve above is the total of realised losses incurred by the Company this period.

 

 

Unaudited Condensed Statement of Changes in Equity

for the six months ended 30 June 2018

 

Non-distributable reserves

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 2018

974,257

15,040

35,856,430

2,786,782

19,058,094

8,147,387

3,061,787

69,899,777

Comprehensive income for the period

 

 

 

 

 

 

 

 

Profit/(loss) for the period

-

-

-

599,601

-

(298,131)

868,043

1,169,513

Total comprehensive income for the period

-

-

-

599,601

-

(298,131)

868,043

1,169,513

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

Shares issued via Offer for Subscription

111,553

-

7,788,268

-

(82,001)

-

-

7,817,820

Shares bought back

(4,101)

4,101

-

-

(257,469)

-

-

(257,469)

Dividends paid

-

-

-

-

(1,083,460)

(541,730)

(1,625,189)

(3,250,379)

Total contributions by and distributions to owners

107,452

4,101

7,788,268

-

(1,422,930)

(541,730)

(1,625,189)

4,309,972

Other movements

 

 

 

 

 

 

 

 

Realised losses transferred to special reserve

-

-

-

-

(479,428)

479,428

-

-

Realisation of previously unrealised gains

-

-

-

(126,737)

-

126,737

-

-

Total other movements

-

-

-

(126,737)

(479,428)

606,165

-

-

At 30 June 2018

1,081,709

19,141

43,644,698

3,259,646

17,155,736

7,913,691

2,304,641

75,379,262

 

 

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 period-end are accounted for in this reserve, except to the extent that the diminution is deemed permanent.       

In accordance with stating all investments at fair value through profit and loss, all such movements through both revaluation and realised capital reserves are shown within the Income Statement for the period.

 

Special distributable reserve - The cost of share buybacks is charged to this reserve. In addition, any realised losses on the sale or impairment of investments (excluding transaction costs), and 75% of the Investment Adviser fee expense, and the related tax effect, are transferred from the realised capital reserve to this reserve. The cost of any IFA facilitation fee payable as part of the Offer for Subscription is also charged to this reserve.

 

Realised capital reserve - The following are accounted for in this reserve:

• Gains and losses on realisation of investments;

• Permanent diminution in value of investments;

• Transaction costs incurred in the acquisition of investments;

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

• Capital dividends paid.

 

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

 

Unaudited Condensed Statement of Cash Flows

for the six months ended 30 June 2019

 

Notes

Six months ended 30 June 2019 (unaudited)

Six months ended 30 June 2018 (unaudited)

Year ended 31 December 2018 (audited)

 

 

£

£

£

Cash flows from operating activities

 

 

 

 

Profit after tax for the financial period

 

8,089,101

1,169,513

3,828,417

Adjustments for:

 

 

 

 

Net unrealised gains on investments

 

(5,262,037)

(599,601)

(2,796,306)

Net (gains)/losses on realisations of investments

 

(2,332,254)

(181,297)

129,014

Tax charge for current period

6

57,371

25,350

108,813

Decrease in debtors

 

331,692

291,594

12,155

Increase/decrease in creditors

 

49,449

13,147

(14,106)

Net cash inflow from operations

 

933,322

718,706

1,267,987

 

 

 

 

 

Corporation tax paid

 

-

-

(190,374)

Net cash inflow from operating activities

 

933,322

718,706

1,077,613

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Purchases of investments

9

(2,300,908)

(3,656,065)

(7,238,337)

Disposals of investments

9

10,013,168

4,058,356

6,396,046

Decrease/(increase) in bank deposits with a maturity over three months

 

24

19

(130)

Net cash inflow/(outflow) from investing activities

 

(7,712,284)

402,310

(842,421)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Shares issued net of costs as part of Offer for Subscription

 

25,000

7,817,820

7,817,820

Equity dividends paid

8

(5,298,189)

(3,250,379)

(5,409,897)

Share capital bought back

 

(887,442)

(252,716)

(982,450)

Net cash (outflow)/inflow from financing activities

 

(6,160,631)

4,314,725

1,425,473

Net increase in cash and cash equivalents

 

2,484,975

5,435,741

1,660,665

Cash and cash equivalents at start of period

 

25,486,108

23,825,443

23,825,443

Cash and cash equivalents at end of period

 

27,971,083

29,261,184

25,486,108

Cash and equivalents comprise:

 

 

 

 

Cash at bank and in hand

10

9,074,632

3,332,817

3,181,475

Cash equivalents

10

18,896,451

25,928,367

22,304,633

 

 

 

Notes to the Unaudited Condensed Financial Statements

for the six months ended 30 June 2019

 

 

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

 

These Financial Statements prepared in accordance with accounting policies consistent with Financial Reporting Standard 102 ("FRS102"), Financial Reporting Standard 104 ("FRS104") - Interim Financial Reporting, with the Companies Act 2006 and the 2014 Statement of Recommended Practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ('the SORP') (updated in January 2017) issued by the Association of Investment Companies. The Financial Statements have been prepared on the historical cost basis except for the modification to a fair value basis for certain financial instruments as specified in note 9.

 

The Half-Year Report has not been audited, nor has it been reviewed by the auditor pursuant to the Financial Reporting Council's (FRC) guidance on Review of Interim Financial Information.

 

3.

Principal accounting policies

 

The accounting policies have been applied consistently throughout the period. Full details of principal accounting policies will be disclosed in the Annual Report, while the policy in respect of investments is included within an outlined box at the top of note 9 on investments.

 

4.

Income

 

 

Six months ended 30 June 2019 (unaudited)

Six months ended 30 June 2018 (unaudited)

Year ended 31 December 2018 (audited)

 

£

£

£

Income

 

 

 - Dividends

260,215

           280,543

699,029

 - Money-market funds

81,840

53,552

132,832

 - Loan stock interest

1,196,940

1,064,680

2,321,462

 - Bank deposit interest

15,776

11,248

23,663

- Interest on preference share dividend arrears

6,878

-

40,205

- Other income

-

-

2,103

Total Income

1,561,649

1,410,023

3,219,294

 

 

 

 

 

5.

Investment Adviser's fees

In accordance with the policy statement published under "Management and Administration" in the Company's prospectus dated 9 July 2014, the Directors have charged 75% of the Investment Adviser's fees to the capital reserve.  This is in line with the Board's expectation of the long-term split of returns from the investment portfolio of the Company.  For further details, see note 4a on page 50 of the 2018 Annual Report and Financial Statements.

 

Between 1 April 2018 and 31 March 2019, 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 was reduced from 2% to 1% for one year.

 

 

6.

Taxation

 

There is a tax charge for the period as the Company has taxable income in excess of deductible expenses.

 

Six months ended

30 June 2019

(unaudited)

Six months ended

30 June 2018

(unaudited)

Year ended

31 December 2018

(audited)

 

Revenue

Capital

Total

Revenue

Capital

Total

Revenue

Capital

Total

 

£

£

£

£

£

£

£

£

£

a)  Analysis of tax charge:

 

 

 

 

 

 

 

 

 

UK Corporation tax on profit for the period

171,952

(114,581)

57,371

137,808

(112,458)

25,350

331,416

(222,603)

108,813

Total current tax charge/(credit)

171,952

(114,581)

57,371

137,808

(112,458)

25,350

331,416

(222,603)

108,813

Corporation tax is based on a rate of 19.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

b) Profit on ordinary activities before tax

1,155,239

6,991,233

8,146,472

1,005,851

189,012

1,194,863

2,441,531

1,495,699

3,937,230

Profit on ordinary activities multiplied by rate of corporation tax in the UK of 19.0%

219,495

1,328,334

1,547,829

191,112

35,912

227,024

463,892

284,182

748,074

Effect of:

 

 

 

 

 

 

 

 

 

UK dividends

(49,441)

-

(49,441)

(53,304)

-

(53,304)

(132,816)

-

(132,816)

Unrealised gains not taxable

-

(999,787)

(999,787)

-

(113,924)

(113,924)

-

(531,298)

531,298

Realised (gains)/losses not taxable/allowable

-

(443,128)

(443,128)

-

(34,446)

(34,446)

-

24,513

24,513

Unrelieved expenditure

1,898

-

1,898

-

-

-

9

-

9

Underprovision in prior period

-

-

-

-

-

-

331

-

331

Actual current tax charge

171,952

(114,581)

57,371

137,808

(112,458)

25,350

331,416

(222,603)

108,813

 

 

7.

Basic and diluted earnings per share

 

The basic and diluted earnings, revenue return and capital return per share shown below for each period are respectively based on numerators i)-iii), each divided by the weighted average number of share in issue in the period - see iv) below.

 

 

Six months ended 30 June 2019

(unaudited)

Six months ended 30 June 2018

(unaudited)

Year ended31 December 2018

(audited)

 

 

£

£

 

£

 

i)

Total earnings after taxation:

8,089,101

1,169,513

3,828,417

 

Basic and diluted earnings per share (Note a)

7.61p

1.11p

3.60p

ii)

Revenue earnings from ordinary activities after taxation

983,287

868,043

2,110,115

 

Basic and diluted revenue earnings per share (Note b)

0.92p

0.83p

1.98p

 

Net unrealised capital gains on investments

5,262,037

599,601

2,796,306

 

Net realised capital gains/(losses) on investments

2,332,254

181,297

(129,014)

 

Capitalised Investment Adviser's fees less taxation

(488,477)

(479,428)

(948,990)

iii)

Total capital earnings

7,105,814

301,470

1,718,302

 

Basic and diluted capital earnings per share (Note c)

6.69p

0.28p

1.62p

iv)

Weighted average number of shares in issue in the period

 

 

 

 

106,355,772

104,969,255

106,350,801

Notes:

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

 

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

 

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

 

8.

Dividends paid

 

 

Dividend

Type

For the year ended 31 December

Pence per share

Date paid

Six months ended 30 June 2019 (unaudited)

£

Six months ended 30 June 2018 (unaudited)

£

Year ended 31 December 2018

(audited)

£

 

 

 

 

 

 

 

 

Final

Income

2017

1.50p

17 May 2018

-

1,625,189

1,625,190

Final

Capital

2017

0.50p

17 May 2018

-

541,730

541,730

Final

Capital

2017

1.00p*

17 May 2018

-

1,083,460

1,083,459

Interim

Capital

2018

2.00p*

21 September 2018

-

-

2,159,518

Final

Income

2018

1.75p

17 May 2019

1,854,366

-

-

Final

Capital

2018

3.25p*

17 May 2019

3,443,823

-

-

 

 

 

 

 

5,298,189

3,250,379

5,409,897

* - These dividends were paid out of the Company's special distributable reserve.

 

9.

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 pre-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 period are summarised as follows:

 

 

 

Unquoted

Unquoted

Unquoted

Total

 

equity

preference

Loan

 

 

shares

shares

stock

 

 

Level 3

Level 3

Level 3

 

 

£

£

£

£

Valuation at 1 January 2019

22,164,255

559,207

25,471,589

48,195,051

Purchases at cost

1,722,308

578,600

-

2,300,908

Sales -proceeds

(4,797,443)

(532,089)

(4,747,421)

(10,076,953)

         - realised gains

1,613,454

-

718,800

2,332,254

Unrealised gains on investments in the period

4,616,317

302

928,149

5,544,768

Valuation at 30 June 2019

25,318,891

606,020

22,371,117

48,296,028

 

 

 

 

 

Book cost at 30 June 2019

22,576,852

605,708

21,583,721

44,766,281

Permanent impairment in value of investments

(4,220,833)

-

(26,910)

(4,247,743)

Unrealised gains at 30 June 2019

6,962,872

312

814,306

7,777,490

Valuation at 30 June 2019

25,318,891

606,020

22,371,117

48,296,028

 

 

 

 

 

Gains on investments

 

 

 

 

Net realised gains based on historical cost

3,320,484

531,534

1,250,415

5,102,433

Less amounts recognised as unrealised gains in previous years

(1,707,030)

(531,534)

(531,615)

(2,770,179)

Net realised gains based on carrying value at 31 December 2018

1,613,454

-

718,800

2,332,254

 

 

 

 

 

Net movement in unrealised gains in the period

4,616,317

302

928,149

5,544,768

 

 

 

 

 

Gains on investments for the six months ended 30 June 2019

6,229,771

302

1,646,949

7,877,022

 

Reconciliation to Condensed Statement of Cash Flows

Net unrealised gains above of £5,544,768 differ from that shown in the Income Statement of £5,262,037.  The difference of £282,731 is deferred consideration in relation to the sale of Entanet Holdings that was recognised in the previous year and was included as a debtor in those year end accounts.  It was subsequently received during this half year.  A further sum of £314,146 was received after the period end on 2 August 2019.  The conditions attached to this sum were not satisfied at the period end date and so this amount has not been recognised in the current period's financial statements.

 

Sales proceeds above of £10,076,953 are more than that shown in the Statement of Cash Flows od £10,013,168 by £63,785.  This amount is deferred cash proceeds arising from the partial realisation of Master Removers Group which is held within debtors at the period end.

 

There has been no significant change in the risk analysis as disclosed in Note 15 of the Financial Statements in the Company's 2018 Annual Report. The increase in unrealised valuations of the loan stock investments above reflect the changes in the entitlement to loan premiums, and/or in the underlying enterprise value of the investee company.  The increase does not arise from assessments of credit or market risk upon these instruments.

 

Level 3 unquoted equity and loan investments are valued in accordance with IPEV guidelines as follows:

 

 

As at 30 June 2019

As at

30 June 2018

As at

31 December 2018

 

(unaudited)

(unaudited)

(audited)

 

 

£

£

Multiple of earnings, revenue, or gross margin, as appropriate

45,494,032

38,121,718

45,186,321

Recent investment price

2,300,908

6,393,397

2,217,600

Recent investment price (reviewed for impairment)

145,005

525,014

627,740

Net asset value

163,390

306,679

163,390

Estimated realisation proceeds

192,693

-

-

 

 

 

 

 

48,296,028

45,346,808

48,195,051

 

 

 

 

 

10.

Current asset investments and Cash at bank

 

 

 

As at 30 June 2019 (unaudited)

As at 30 June 2018 (unaudited)

As at  31 December 2018

       (audited)

 

£

£

£

OEIC Money market funds

18,896,451

25,928,367

22,304,633

Cash equivalents per Statement of Cash Flows

18,896,451

25,928,367

22,304,633

Bank deposits that mature after three months

1,005,658

1,005,533

1,005,682

Current asset investments

19,902,109

26,933,900

23,310,315

Cash at bank

9,074,632

3,332,817

3,181,475

 

 

 

11.

Basic and diluted net asset value per share

 

 

 

As at 30 June 2019

(unaudited)

As at 30 June 2018

(unaudited)

As at 31 December 2018

(audited)

 

 

 

 

Net assets

£77,128,994

£75,379,262

£75,077,982

 

 

 

 

Number of shares in issue

105,656,926

108,170,944

106,865,868

 

 

 

 

Net asset value per share - basic and diluted

73.00p

69.69p

70.25p

 

 

 

12.

Post balance sheet events

 

On 10 July 2019, a further £0.58 million was invested into MPB Group Limited, an existing portfolio company.

 

On 30 July 2019, by the order of the Court at that date, the Company cancelled its share premium reserve and capital redemption reserve.  The balance on these reserves has been transferred to the Company's special reserve.

 

On 2 August 2019, £0.31 million of contingent consideration was received as part of the sale of Entanet Holdings in August 2017.

 

13.

Statutory information

 

The financial information contained in this Half-Year results announcement does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The Financial Statements for the year ended 31 December 2018 have been filed with the Registrar of Companies.  The auditor has reported on these Financial Statements and that report was unqualified and did not contain a statement under either Section 498(2) or 498(3) of the Companies Act 2006.

 

14.

Half-Year Report

 

This Half-Year Report will be sent to shareholders and will shortly be made available on the Company's website: www.migvct.co.uk. Further copies are available free of charge from the Company's registered office, 30 Haymarket, London, SW1Y 4EX.

 

Contact details for further enquiries:

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

 

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

 

DISCLAIMER

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

 

       

 


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