Half-yearly Report

Matrix Income & Growth 4 VCT plc ("the Company") Half-yearly results for the six months ended 31 July 2008 Investment objective The objective of Matrix Income & Growth 4 VCT plc ("the Company" or "MIG4") is to provide shareholders with an attractive investment return, principally by maximising the stream of dividend distributions from the income and capital gains generated by a portfolio of investments in a wide variety of unquoted companies in the UK. The portfolio comprises a number of diverse investments over a wide range of different business sectors, thus spreading risk by avoiding over-concentration in any one sector. Financial Highlights As at 31 July 2008 * Net Asset Value per Ordinary Share was 112.43p - a decrease of 3.2% over the six month period if the 1.25p dividend paid in the period is excluded * An interim income dividend of 1p per Ordinary Share has been declared for the year ended 31 January 2009 * Since 1 August 2006, the date of appointment of Matrix Private Equity Partners as sole Investment Manager: * Share Price Total Return has increased by 25.3% * Net Asset Value Total Return has increased by 2.1%. Performance Summary - Ordinary Shares of 1 penny Period Net assets Net asset NAV total Share price Share price value (NAV) return to (p)1 total return (£000s) per share shareholders to (p) since launch shareholders (p)2 since launch per share (p)2 Six months ended 31 July 2008 22,843 112.4 125.1 105.0 117.7 Year ended 31 January 2008 24,067 117.4 128.9 109.0 120.4 31 January 2007 9,772 116.3 125.2 91.0 101.7 31 January 2006 9,287 106.6 115.0 85.0 93.9 31 January 2005 10,108 110.3 118.5 85.0 93.4 31 January 2004 9,868 103.8 111.5 89.0 97.2 1 Source: London Stock Exchange 2 Total returns to Shareholders include dividends paid Chairman's Statement and Management Report I am pleased to present the Company's Half-yearly Report for the six months ended 31 July 2008. Performance At 31 July 2008 the Company's NAV per Ordinary Share was 112.4 pence (31 January 2008: 117.4 pence), a decrease of 3.2 per cent over the six month period if the 1.25p dividend paid in the period is excluded. This compares with a decline of 10.3% in the SmallCap Index, and a decline of 14.5% in the AIM Index during the same period. Cumulative dividends paid to date amount to 12.7 pence per Ordinary Share. Portfolio All UK investment portfolios are being affected by the much harsher economic conditions which now exist. Financial and property markets are volatile, the UK is moving into recession, and the Government has already created a public sector spending boom which cannot continue indefinitely. If the mining and commodities sectors, including oil, are excluded, UK sector price earnings multiples have changed significantly during the period, and this does and will continue to impact on our portfolio valuation. Within the portfolio, a partial loan stock repayment was made by VSI Holdings Limited in April 2008. No exits were realised during the period. A new investment of £458,837 was made in April 2008 in The Plastic Surgeon Holdings Limited to support the Management Buy Out ("MBO") of Plastic Surgeon Fine Finishers, which is engaged in the snagging and finishing of domestic and commercial properties. Cash and liquidity fund balances as at 31 July 2008 amounted to £14,612,926. Revenue account At 31 July 2008, revenue reserves available for distribution to Ordinary Shareholders as income dividends were £274,721 (31 July 2007: £240,367). The Board proposes to declare an interim income dividend of 1 penny per share for the period ended 31 January 2009, payable on 7 November 2008 to Shareholders on the register on 10 October 2008. As in previous years, the Board expects to be able to propose a final dividend for the year ended 31 January 2009. Now that the Company has revoked investment company status, the Board will in the future also give consideration to the payment of capital dividends arising from gains realised upon the sale of investments. Contingent asset As you will be aware HMRC recently confirmed that with effect from 1 October 2008 management fees for VCTs will be exempt from VAT. HMRC has also announced it will accept applications to reclaim at least part of the VAT charged in recent years. The Board is currently in discussions with the Investment Manager to quantify any potential repayment that might be due. However the amounts to be refunded and the time scale for receipt are uncertain and hence the Company has made no provision in these financial statements for any such repayment. Share buy-backs During the six months ended 31 July 2008, the Company bought back 181,274 Ordinary Shares (representing 0.9 per cent of the Ordinary Shares in issue at the beginning of the period) at a total cost of £189,736 (net of expenses). These shares were subsequently cancelled by the Company. Outlook It is possible that the much tougher economic conditions now being experienced could last for some time. Smaller companies are inevitably tested in such an environment. However many portfolio companies are continuing to trade positively and the Company has significant liquid resources available for investment. This is important at a time when commercial banks have taken losses and are pursuing much more cautious lending policies. Furthermore, it places the Company in an excellent position to take advantage of what are expected to be increasingly attractive purchase opportunities which should become available as this recession continues. Therefore while short term valuations may be subject to continuing pressures, your Board looks to the mid-term future with confidence. MIG 4 website May I remind you that the Company has its own website which is available at www.mig4vct.co.uk In conclusion, may I again thank Shareholders for their continued support. Colin Hook Chairman Responsibility Statement The Directors confirm that to the best of their knowledge: a. the condensed set of financial statements, which has been prepared in accordance with applicable accounting standards in the United Kingdom and with the ASB's Statement on Half Yearly Financial Reports, give a true and fair view of the assets, liabilities, financial position and loss of the Company, as required by D.T.R 4.2.4; and b. the Chairman's Statement and Management Report includes a fair review of the information required by D.T.R 4.2.7 and in accordance with D.T.R 4.2.10 c. there were no relevant Related Party Transactions to be reported as required by D.T.R 4.2.8 Principal risks and uncertainties In accordance with D.T.R 4.2.7, the Board confirms that the principal risks and uncertainties facing the Company have not materially changed since the publication of the Annual Report and Accounts for the year ended 31 January 2008. 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 Income Tax Act 2007. Other risks relate to credit risk, market price risk, interest rate risk and currency risk. A more detailed explanation of these can be found in Note 19 on pages 50 to 54 of the 2008 Annual Report and Accounts - copies are available on the VCT's website, www.mig4vct.co.uk. 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 announcement should be construed as a profit forecast. On behalf of the Board Colin Hook Chairman Investment Manager's Review The climate for new investment has continued to be difficult over the past six months. We have maintained our selective approach towards potential investments in the face of continued deterioration in the UK economic background and we remain of the view that the market has not yet re-established the equilibrium necessary for high quality businesses to be sold at prices acceptable to private equity-backed management teams. We now expect new investment activity to remain at its current low level for the next few months but that market conditions may then enter a cycle providing excellent investment opportunities at more realistic prices which will provide the potential for significant returns in due course. Private equity returns tend to be substantially greater when investments are made at low points in the economic cycle. During the period one new investment was completed: in April 2008, £458,837 was invested in The Plastic Surgeon Holdings Limited to support the MBO of Plastic Surgeon Fine Finishers, an Exeter-based business which provides snagging and cosmetic repair services to the residential and commercial housing market. At 31 July 2008, the MPEP-invested portfolio comprised investments in twenty three companies at an aggregate cost of £8.1 million and is valued at that date, in accordance with International Private Equity & Venture Capital Valuation ("IPEVCV") guidelines, at £8.2 million, an uplift of 2 per cent. This is a reduction from the 14 per cent uplift prevailing at 31 January 2008, and reflects both the tightening trading conditions being experienced by portfolio companies and, more significantly, material reductions in FTSE Sector PE ratios, by reference to which your Company's portfolio investments are valued. We believe that, with a few exceptions, the companies in the portfolio are trading reasonably given the sharp adjustment in economic conditions seen generally across the UK economy. Amongst the portfolio highlights include continued strong trading performances from Blaze Signs Holdings Limited, PastaKing Holdings Limited, Tottel Publishing Limited and Vectair Holdings Limited, all of whom have produced record profits in the period. VSI Limited, too, is benefiting from increased customer acceptance of its software. DiGiCo Europe Limited is also trading well, having successfully launched a new product during the period, and its increased valuation reflects this. Elsewhere, British International Holdings Limited has disposed of its non-core operations in Cardiff and continues to show robust earnings. Despite the well-publicised problems in the construction sector, PXP Holdings Limited is trading better than anticipated; however Youngman Group Limited has been hit by low demand from key customers and the valuations of both companies show significant downward movements. Focus Pharma Holdings Limited has met its investment expectations to date and whilst Monsal Holdings Limited's trading has disappointed so far, it is well positioned to generate significant revenue from a number of forthcoming major contracts in both its existing and new markets in water and waste management. Stortext FM Limited has recently won a major new contract which is already having a significant effect on profitability; Higher Nature Limited's profits declined as it invested in additional capacity and its valuation also reflects more difficult trading conditions. Racoon International Limited continues to suffer from disappointing sales revenue although new product development initiatives are promising. Disappointingly, Inca Interiors Limited, having struggled against poor demand for some time, was placed in administration in June 2008. Campden Media Limited's expansion into the US market is taking longer to implement than had been hoped and this has had a major effect on profitability. BG Consulting Group Limited, after a strong 2007, is consolidating despite weakening demand from its financial services clients. The depth and longevity of the economic slowdown and stock market turmoil will inevitably be reflected in the value of the VCT's investments. However, we continue to believe that the long-term prospects for the portfolio are excellent. Your Company has the liquidity to take full advantage of the attractive buying opportunities which will emerge, which should enhance longer term performance. Investment Portfolio Summary at 31 July 2008 Total cost at Total valuation Additional Total valuation % of equity % of at investments in at 31-Jul-08 held portfolio by 31-Jul-08 the period value 31-Jan-08 £ £ £ £ Matrix Private Equity Partners LLP DiGiCo Europe Limited 1,000,000 1,000,000 - 1,277,992 6.52% 15.34% Design and manufacture of audio mixing desks Higher Nature Limited 500,127 1,243,246 - 1,009,331 10.69% 12.11% Supplier of mineral, vitamin and food supplements Youngman Group Limited 500,026 1,439,740 - 873,901 4.29% 10.49% Manufacturer of ladders and access towers Blaze Signs Holdings 610,016 776,914 - 776,914 5.70% 9.33% Limited Manufacturer and installer of signs Focus Pharma Holdings 772,451 772,451 - 772,451 3.10% 9.27% Limited Licensor and distributor of generic pharmaceuticals Monsal Holdings Limited 634,296 634,296 - 634,296 8.75% 7.61% Supplier of engineering services to water and waste sectors Plastic Surgeon Holdings 458,837 - 458,837 458,837 6.88% 5.51% Limited Snagging and finishing of domestic and commercial properties Tottel Publishing Limited 235,200 382,173 - 396,355 6.27% 4.76% Publisher of specialist legal and taxation titles PastaKing Holdings Limited 133,055 351,877 - 379,847 2.10% 4.56% Manufacturer and supplier of fresh pasta meals Stortext FM Limited 561,820 375,968 - 375,968 4.60% 4.51% Software based solutions for document management PXP Holdings Limited 584,088 485,818 - 328,424 4.98% 3.94% (Pinewood Structures) Designer, manufacturer and supplier of timber frames for buildings VSI Limited 111,928 346,034 - 321,762 4.56% 3.86% Provider of software for CAD and CAM vendors British International 250,000 251,075 - 248,170 2.50% 2.98% Holdings Limited Operator of helicopter services Vectair Holdings Limited 100,000 140,749 - 157,310 2.14% 1.89% Designer and distributor of washroom products BG Consulting Group 230,796 101,162 - 85,179 See note 3 1.02% Limited/Duncary 4 Limited below Provider of financial training services SectorGuard plc 1 150,102 75,044 - 64,323 1.08% 0.77% Manned guarding, patrolling and alarm response services Campden Media Limited 152,620 113,785 - 33,036 1.69% 0.40% Magazine publisher and conference organiser Munro Global Limited - - - 28,702 0.00% 0.34% Marketing services Racoon International 406,805 203,403 - 19,523 5.70% 0.23% Limited Supplier of hair extensions, hair care products and training. Inca Interiors Limited 350,000 50,000 - - 14.75% 0.00% Designer, supplier and installer of contract kitchens Other investments in the 333,804 - - - - 0.00% portfolio 2 --------------- --------------- ---------------- --------------- ----------- ------------- Total 8,075,971 8,743,735 458,837 8,242,321 - 98.92% --------------- --------------- ---------------- --------------- ----------- ------------- Former Elderstreet Private Equity Limited Portfolio Cashfac Limited 260,101 86,372 - 73,581 3.42% 0.88% Provider of virtual banking application software Expansys plc 31,001 46,923 4,872 16,423 0.58% 0.20% (Formerly Mobile and Wireless Group Limited) 1 Online retailer of digital devices Other investments in the 1,148,061 - - - 0.00% portfolio 2 --------------- --------------- ---------------- --------------- ----------- ------------- Total 1,439,163 133,295 4,872 90,004 - 1.08% --------------- --------------- ---------------- --------------- ----------- ------------- Investment Managers' 9,515,134 8,877,030 463,709 8,332,325 - 100.00% totals --------------- --------------- ---------------- --------------- ----------- ------------- 1 Quoted on AIM 2 Other investments in the portfolio comprises those investments that have been valued at nil and from which the Directors only expect to receive small recoveries ie FH Ingredients Limited (of which the principal operating subsidiary, FHL Realisations Limited is in administration) and Letraset Limited in the MPEP portfolio and ComponentSource Holding Corporation, Sapphire International Limited (in liquidation), Sift Group Limited, Sparesfinder and Shopcreator plc in the former Elderstreet portfolio. 3 The % of equity held in BG Consulting Group Limited is 2.6% and in Duncary 4 Limited is 6.64%. Unaudited Profit and Loss Account for the six months ended 31 July 2008 Six months ended 31 July 2008 Six months ended 31 July 2007 (unaudited) (unaudited) Notes Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Unrealised (losses)/ - (881,725) (881,725) - 686,833 686,833 gains on investments held at fair value Realised (losses)/ - (50,000) (50,000) - (53,625) (53,625) gains on investments held at fair value Income 5 574,389 20,610 594,999 477,065 - 477,065 Investment management 3 (65,290) (195,870) (261,160) (59,109) (177,327) (236,436) fees Other expenses (180,317) - (180,317) (161,902) - (161,902) ------------- -------------- ----------- --------------- ----------- ------------- Profit/(loss) on 328,782 (1,106,985) (778,203) 256,054 455,881 711,935 ordinary activities before taxation Taxation on ordinary 6 (66,801) 66,801 - (15,687) 15,687 - activities ------------- -------------- ----------- --------------- ----------- ------------- Profit/(loss) 261,981 (1,040,184) (778,203) 240,367 471,568 711,935 attributable to equity shareholders ------------- -------------- ----------- --------------- ----------- ------------- Basic and diluted 7 1.24p (4.93)p (3.69)p 1.37p 2.69p 4.06p earnings per share Year ended 31 January 2008 (audited) Notes Revenue Capital Total £ £ £ Unrealised - (36,523) (36,523) (losses)/gains on investments held at fair value Realised - 463,591 463,591 (losses)/gains on investments held at fair value Income 5 1,039,725 - 1,039,725 Investment 3 (132,146) (396,439) (528,585) management fees Other expenses (356,711) - (356,711) ------------- -------------- ----------- Profit/(loss) on 550,868 30,629 581,497 ordinary activities before taxation Taxation on 6 (128,247) 128,247 - ordinary activities ------------- -------------- ----------- Profit/(loss) 422,621 158,876 581,497 attributable to equity shareholders ------------- -------------- ----------- Basic and 7 2.21p 0.83p 3.04p diluted earnings per share The total column is the profit and loss account of the Company. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period. There were no other gains or losses in the period. Unaudited Note of Historical Cost Profits and Losses for the six months ended 31 July 2008 Six months ended Six months ended Year ended 31 July 2008 31 July 2007 31 January 2008 (unaudited) (unaudited) (audited) Total Total Total £ £ £ (Loss)/ profit on (778,203) 711,935 581,497 ordinary activities before taxation Add/(less): unrealised 881,725 (686,833) 36,523 losses/(gains) on investments. Realisation of (293,471) 307,206 327,627 revaluation (losses)/ gains of previous years ------------------ ------------------ ------------------ Historical cost (loss)/ (189,949) 332,308 945,647 profit on ordinary activities before taxation Historical cost (loss)/ (444,798) 178,320 636,627 profit on ordinary activities after taxation and dividends Unaudited Balance Sheet as at 31 July 2008 31 July 2008 31 July 2007 31 January 2008 (unaudited) (unaudited and (audited and restated) restated) Notes £ £ £ Non-current assets Investments at 10 8,332,325 8,224,849 8,877,030 fair value Current assets Debtors and 123,885 115,754 221,203 prepayments Investments at 11 14,595,298 16,349,280 15,124,308 fair value Cash at bank 17,628 - 23,865 ------------------ ------------------ ------------------ 14,736,811 16,465,034 15,369,376 Creditors: amounts (225,948) (156,273) (179,089) falling due within one year ------------------ ------------------ ------------------ Net current assets 14,510,863 16,308,761 15,190,287 ------------------ ------------------ ------------------ Net assets 22,843,188 24,533,610 24,067,317 ------------------ ------------------ ------------------ Capital and 13 reserves Called up share 203,179 206,710 204,992 capital Capital redemption 881,642 878,111 879,829 reserve Share premium - 14,739,562 - reserve Revaluation 154,845 530,010 743,099 reserve Special 17,090,348 15,582,836 30,141,575 distributable reserve Profit and loss 4,513,174 (7,403,619) (7,902,178) account ------------------ ------------------ ------------------ Equity 22,843,188 24,533,610 24,067,317 shareholders' funds ------------------ ------------------ ------------------ Net asset value 9 112.43p 118.69p 117.41p per share Unaudited Reconciliation of Movements in Shareholders' Funds for the six months ended 31 July 2008 Six months ended Six months ended Year ended 31 July 2008 31 July 2007 31 January 2008 (unaudited) (unaudited) (audited) Notes £ £ £ Opening 24,067,317 9,772,148 9,772,148 Shareholders' Funds Net share capital - 14,869,624 14,869,624 subscribed Net share capital (191,077) (666,109) (846,932) bought back (Loss)/profit for (778,203) 711,935 581,497 the period Dividends paid in 8 (254,849) - (155,032) period Dividends ratified 8 - (153,988) (153,988) in year ------------------ ------------------ ------------------ Closing 22,843,188 24,533,610 24,067,317 shareholders' funds ------------------ ------------------ ------------------ Unaudited Cash Flow Statement for the six months ended 31 July 2008 Six months ended Six months ended Year ended 31 July 2008 31 July 2007 31 January 2008 (unaudited) (unaudited) (audited) Notes £ £ £ Interest income 151,551 321,858 265,744 received Dividend income 444,692 32,314 722,262 Investment (279,281) (216,993) (509,142) management fees paid Cash payments for (144,499) (131,575) (276,845) other expenses ------------------ ------------------ ------------------ Net cash inflow 12 172,463 5,604 202,019 from operating activities Investing activities Sale of 198,912 428,655 1,225,594 investments Purchase of 10 (458,837) (1,005,252) (2,857,505) investments ------------------ ------------------ ------------------ Net cash outflow (259,925) (576,597) (1,631,911) from investing activities ------------------ ------------------ ------------------ Cash outflow before financing and liquid resource management (87,462) (570,993) (1,429,892) Dividends Equity 8 (254,849) - (155,032) dividends paid Management of liquid resources Decrease/ 529,010 (15,654,754) (14,429,782) (increase) in monies held in money market funds Financing Share capital - 14,869,624 14,869,624 subscribed Purchase of (192,936) (694,948) (871,495) own shares ------------------ ------------------ ------------------ Cash (outflow) (192,936) 14,174,676 13,998,129 /inflow from financing ------------------ ------------------ ------------------ Decrease in (6,237) (2,051,071) (2,016,577) cash ------------------ ------------------ ------------------ Reconciliation of net cash flow to movement in net funds Decrease in (6,237) (2,051,071) (2,016,577) cash for the period Net funds at 23,865 2,040,442 2,040,442 the start of the period ------------------ ------------------ ------------------ Net funds at 17,628 10,629 23,865 the end of the period ------------------ ------------------ ------------------ The notes below form part of these unaudited half-yearly financial statements. Notes to the Unaudited Financial Statements 1. Principal accounting policies The following accounting policies have been applied consistently throughout the period. Full details of principal accounting policies will be disclosed in the Annual Report. a) Basis of accounting The unaudited results cover the six months to 31 July 2008 and have been prepared under UK Generally Accepted Accounting Practice (UK GAAP), consistent with the accounting policies set out in the statutory accounts for the year ended 31 January 2008 and the Statement of Recommended Practice, `Financial Statements of Investment Trust Companies', issued by the Association of Investment Trust Companies in January 2003 and reviewed in 2005 ("the SORP"). The Half-Yearly Report has not been audited, nor has it been reviewed by the auditors pursuant to the Auditing Practices Board (APB)'s guidance on Review of Interim Financial Information. As a result of the Directors' decision to distribute capital profits by way of a dividend, the Company revoked its investment company status as defined under section 266 (3) of the Companies Act 1985, on 28 July 2008. Consequently, the financial statements have been drawn up to include a statutory profit and loss account in accordance with Schedule 4 of the Companies Act 1985 and Financial Reporting Standard 3 "Reporting Financial Performance" and the comparatives have been re-stated on a consistent basis. This has no effect on total returns or net assets per share. These statements, however, differ from the Income Statement previously presented in that unrealised gains on investments are now reported within the revaluation reserve in the balance sheet, rather than included in a separate unrealised capital reserve and realised gains are included within the profit and loss reserve rather than a separate realised capital reserve. b) Presentation of the Profit and Loss Account In order to better reflect the activities of a VCT and in accordance with the SORP, supplementary information which analyses the Profit and Loss Account between items of a revenue and capital nature has been presented alongside the Profit and Loss Account. 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. c) Investments Investments are recognised on a trade date basis. All investments held by the Company are classified as "fair value through profit and loss", in accordance with the International Private Equity Venture Capital Valuation (IPEVCV) guidelines published in 2005. For investments actively traded in 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. Unquoted investments are stated at fair value by the Directors in accordance with the following rules, which are consistent with the IPEVCV guidelines: (i) Investments which have been made in the last twelve months are at fair value which, unless another methodology gives a better indication of fair value, will be at cost; (ii) Investments in companies at an early stage of their development are valued at fair value which, unless another methodology gives a better indication of fair value, will be at cost; (iii) Where investments have been held for more than twelve months or have gone beyond the stage in their development in (i) or (ii) above, the shares may be valued by applying a suitable price-earnings ratio to that company's historic, current or forecast earnings (the ratio used being based on a comparable listed company or sector but the resulting value being discounted to reflect points of difference by the Investment Manager compared to the sector as well as lack of marketability). Where overriding factors apply, alternative methods of valuation will be used. These will include the application of a material arms-length transaction by an independent third party, cost less provision for impairment, discounted cash flow, or a net asset basis; iv) Where a value is indicated by a material arms-length transaction by a third party in the shares of a company, this value will be used. v) Unquoted investments will not normally be re-valued upwards for a period of at least twelve months from the date of acquisition. Where a company's underperformance against plan indicates a diminution in the value of the investment, provision against cost is made, as appropriate. Where the value of an investment has become permanently impaired below cost, the loss is treated as a permanent impairment and as a realised loss, even though the investment is still held. The Board assess the portfolio for such investments, and after agreement with the Investment Manager, will agree the values that represent the extent to which an investment has become permanently impaired. 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. (vi) Premium on loan stock investments are accrued at fair value when the Company receives the right to the premium and when considered recoverable. 2. Although the Company holds more than 20% of the equity of certain companies, it is considered that the investments are held as part of an investment portfolio. Accordingly, and as permitted by FRS 9 `Associate and Joint Ventures', their value to the Company lies in their marketable value as part of that portfolio. It is not considered that any of our holdings represents investments in associated companies. 3. In accordance with the policy statement published under "Management and Administration" in the Company's prospectus dated 8th February 1999, the Directors have charged 75% of the investment management expenses to the capital account. This is in line with the Board's expectation of the long-term split of returns from the investment portfolio of the Company. 4. Earnings for the six months to 31 July 2008 should not be taken as a guide to the results for the full year. 5. Income Six months ended Six months ended Year ended 31 July 2008 31 July 2007 31 January 2008 (unaudited) (unaudited) (audited) £ £ £ Income from investments Dividends 36,176 31,527 49,861 Money-market funds 408,448 256,752 716,677 Loan stock interest 148,383 177,862 260,576 Bank deposit 1,992 10,924 12,611 interest ---------------- ---------------- ---------------- Total Income 594,999 477,065 1,039,725 6. Taxation There is no tax charge for the period, as there are taxable losses brought forward from previous years utilised to offset taxable profits in the period. 7. Earnings and return per share The basic 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 shares in issue in the period - see iv) below Six months ended Six months ended Year ended 31 July 2008 31 July 2007 31 January 2008 (unaudited) (unaudited) (audited) £ £ £ i) Total earnings (778,203) 711,935 581,497 after taxation Basic earnings per (3.69)p 4.06p 3.04p share (pence) ii) Net revenue from 261,981 240,367 422,621 ordinary activities after taxation Revenue return per 1.24p 1.37p 2.21p share (pence) Net unrealised (881,725) 686,833 (36,523) capital (losses)/ gains Net realised capital (50,000) (53,625) 463,591 (losses)/gains Capital expenses net (129,069) (161,640) (268,192) of taxation Capital dividend 20,610 - - ---------------- ---------------- ---------------- iii) Capital (loss)/ (1,040,184) 471,568 158,876 gain Capital (loss)/gain (4.93)p 2.69p 0.83p per share (pence) iv) Weighted average 21,103,034 17,548,791 19,094,986 number of shares in issue in the period 8. Dividends paid Six months ended Six months ended Year ended 31 July 2008 31 July 2007 31 January 2008 (unaudited) (unaudited) (audited) £ £ £ Final dividend for 254,849 - - the year ended 31 January 2008 of 1.25 pence per Ordinary Share. Interim dividend for - - 155,032 the year ended 31 January 2008 of 0.75 pence per Ordinary Share. Interim dividend - 153,988 153,988 ratified in year for the year ended 31 January 2007 of 1.8 (restated) pence per Ordinary Share. ---------------- ---------------- ---------------- 254,849 153,988 309,020 9. Net asset value per share As at As at As at 31 July 2008 31 July 2007 31 January 2008 (unaudited) (unaudited) (audited) £ £ £ Net assets 22,843,188 24,533,610 24,067,317 Number of shares in 20,317,925 20,670,941 20,499,199 issue Net asset value per 112.43p 118.69p 117.41p share (pence) 10. Summary of non current asset investments at fair value during the period Traded Ordinary Preference Qualifying Total on AIM shares shares loans £ £ £ £ £ Valuation at 121,967 4,349,595 23,926 4,381,542 8,877,030 31 January 2008 Purchases at - 45,884 228 412,725 458,837 cost Sales - - - (71,817) (71,817) - proceeds - realised - - - (50,000) (50,000) losses Unrealised (41,221) (517,130) (1,068) (322,306) (881,725) losses ----------------- ----------------- ----------------- ----------------- ----------------- Valuation at 80,746 3,878,349 23,086 4,350,144 8,332,325 31 July 2008 Book cost at 181,102 4,036,580 125,597 5,171,855 9,515,134 31 July 2008 Unrealised (100,356) 703,028 (1,649) (446,177) 154,846 (losses)/gains at 31 July 2008 Permanent - (861,259) (100,862) (375,534) (1,337,655) impairment of investments ----------------- ----------------- ----------------- ----------------- ----------------- Valuation at 80,746 3,878,349 23,086 4,350,144 8,332,325 31 July 2008 Losses on - (50,000) (100,000) (193,471) (343,471) investments Less amounts - 50,000 100,000 143,471 293,471 recognised as unrealised losses in previous years ----------------- ----------------- ----------------- ----------------- ----------------- Realised losses - - - (50,000) (50,000) based on carrying value at 31 January 2008 Net movement in (41,221) (517,130) (1,068) (322,306) (881,725) unrealised depreciation in the period ----------------- ----------------- ----------------- ----------------- ----------------- Losses on (41,221) (517,130) (1,068) (372,306) (931,725) investments for the period ended 31 July 2008 ----------------- ----------------- ----------------- ----------------- ----------------- 11. Current investments at fair value These comprise investments in 6 Dublin based OEIC money market funds managed by Royal Bank of Scotland, Blackrock Investment Management (UK) Ltd, Goldman Sachs, Barclays Global Investors, Scottish Widows Investment Management and Fidelity Investment Management. £14,585,294 (31 July 2007: £16,214,958, 31 January 2008: £15,114,381) of this sum is subject to same day access, whilst £10,004 (31 July 2007: £134,322, 31 January 2008: £9,927) is subject to two-day access. 12. Reconciliation of (loss)/profit on ordinary activities before taxation to net cash inflow from operating activities Six months ended Six months ended Year ended 31 31 July 2008 31 July 2007 January 2008 (unaudited) (unaudited) (audited) £ £ £ (Loss)/profit on (778,203) 711,935 581,497 activities before taxation Unrealised losses/ 881,725 (686,833) 36,523 (gains) on investments held at fair value Realised losses/ 50,000 53,625 (463,591) (gains) on investments held at fair value Increase in debtors (29,775) (46,670) (24,995) Increase in creditors 48,716 43,520 72,689 Transaction costs - (74) (104) charged to capital Other non cash - (69,899) - movements ---------------- ---------------- ---------------- Net cash inflow from 172,463 5,604 202,019 operating activities ---------------- ---------------- ---------------- 13. Capital and reserves for the six months ended 31 July 2008 Called up Capital Revaluation Special Profit and Total share redemption reserve distributable loss capital reserve reserve reserve £ £ £ £ £ £ At 1 February 2008 204,992 879,829 743,099 30,141,575 (7,902,178) 24,067,317 Shares bought back (1,813) 1,813 - (191,077) - (191,077) (Loss)/profit for - - (881,725) - 103,522 (778,203) the period Realised losses - - - (12,860,150) 12,860,150 - transferred to special reserve Realisation of - - 293,471 - (293,471) - previously unrealised depreciation Dividend - final - - - - (254,849) (254,849) paid for year ended 31 January 2008 ------------- --------------- --------------- ----------------- --------------- ------------- At 31 July 2008 203,179 881,642 154,845 17,090,348 4,513,174 22,843,188 ------------- --------------- --------------- ----------------- --------------- ------------- 14. Contingent asset The Board is aware of the recent announcement from HMRC that at least part of the VAT charged on fund management fees incurred by VCTs in recent years can be reclaimed. The Board is currently in discussions with the Investment Manager to quantify any potential repayment that might be due. However, the amounts to be refunded and the timing of such receipts are uncertain. Hence there is no recognition in these financial statements for any such amounts that may be refunded. 15. The financial information contained in this half-yearly financial report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The information for the year ended 31 January 2008 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The auditors have reported on these financial statements and that report was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. 16. Copies of this statement are being sent to all Shareholders. Further copies are available free of charge from the Company's registered office, One Vine Street, London W1J 0AH or can be downloaded via the Company's website at www.mig4vct.co.uk.

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Mobeus Income & Growth 4 Vct (MIG4)
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