Final Results
Matrix Income & Growth VCT plc
Annual Results Announcement for the year ended 31 December 2008
12 March 2009
Investment Objective
Matrix Income & Growth VCT plc ("the VCT" or "MIG VCT") is a Venture Capital
Trust ("VCT") listed on the London Stock Exchange. Its investment portfolio,
which invests primarily in established and profitable unquoted companies, is
managed by Matrix Private Equity Partners LLP ("MPEP").
The Company's objective is to provide investors with a regular income stream,
by way of tax free dividends, and to generate capital growth which, following
portfolio realisations, can be distributed by way of additional tax free
dividends.
Financial Highlights
Ordinary Shares (listed on 8 October 2004)
Initial net asset value per share 94.5 pence
Initial net assets £20,933,124
31 December 2008 31 December 2007
Net assets £17,998,562 £25,727,915
Net asset value per share 86.5 p 116.9 p
Net cumulative dividends paid 15.3 p 4.2 p
Total return per share to Shareholders 101.8 p 121.1 p
since launch*
Share price (mid-market price) 74.5 p 100.5 p
Total expense ratio 3.8 % 3.4 %
* Net asset value per share plus cumulative dividends paid per share. This
compares with an original investment cost of 60 pence per share after allowing
for income tax relief of 40 pence per share.
A final income dividend of 1 penny per share will be recommended to
Shareholders at the AGM on 6 May 2009 to be paid on 15 May 2009, thereby
increasing net cumulative dividends paid since launch to 16.3 pence per share.
Chairman's Statement
I am pleased to present the annual results of Matrix Income & Growth VCT plc
for the year to 31 December 2008 and to report on a year of satisfactory
progress in the context of the very challenging economic and market conditions
in the period.
Overview
2008 has been a year in which the economic environment has seriously and
sharply deteriorated and these difficult conditions are expected to persist for
some time. The collapse in confidence within the banking system and the extreme
deterioration in bank balance sheets has significantly curtailed bank lending
which is now adversely affecting the wider economy. As yet the measures taken
by the Government to counter these problems, particularly the drought of
lending, have yet to yield any signs of improvement. The UK smaller companies
sector in which your Company invests is clearly affected by this poor
environment.
As your Company had already achieved the level of investment required by the
VCT regulations, our strategy has been to retain healthy liquidity. This has
been a year in which the Investment Manager has considered that few attractive
new investment opportunities have presented themselves. The Board has supported
the Investment Manager's view that most opportunities generally remained
over-priced in 2008 and that it was more advantageous to maintain the Company's
high cash balances until investment opportunities look reasonably priced. The
Company has adopted a patient stance, in the expectation that better
opportunities to add longer term value for Shareholders should start to come
forward later as vendors realign their price expectations with the current
economic climate. Nevertheless, your Company chose to make two new investments
in 2008, and one follow-on investment, representing £1.6 million in aggregate.
Disposal proceeds from one sale, and one partial divestment represented £1.2
million and therefore the Company's total investment in qualifying companies
remained broadly neutral in the year.
The Company's qualifying portfolio has seen a number of valuations reduced in
response to falls in quoted markets and worsening trading conditions. However,
the trading performance of a number of investee companies remains encouraging.
Full details of these companies and the year's transactions are contained in
the Investment Manager's Review which follows below.
Review of results
Inevitably, the investment portfolio has not been immune to the factors
outlined above, but value has held up reasonably well. The qualifying
investment portfolio is currently valued at 92.4% of cost. Net asset value
("NAV") per share at 31 December 2008 is 86.5 pence (2007: 116.9 pence), a fall
over the year of 30.4 pence (26.0%). However, 11.1 pence of this fall is due to
dividends paid to shareholders. Excluding dividends paid, the NAV has fallen by
16.5%. The total NAV return per share, including dividends paid to date, is now
101.8 pence (2007: 121.1 pence), compared with the initial NAV per share, net
of initial costs, of 94.5 pence. This represents a positive total return per
share since inception of 7.7% (2007: 28.1%).
Income from the Company's loan stock investments was running at an aggregate
annualised rate of 5.8% at 31 December 2008 (2007: 8.0%). The annual running
yield on the qualifying investment portfolio as a whole was 3.6% (2007: 4.0%),
while the yield on all assets was 3.4% (2007: 4.6%). These figures have
declined from last year as certain investee companies are not currently fully
servicing loans the Company has made to them while those assets linked to
variable interest rates are now yielding considerably lower levels of income,
most notably the Company's holdings in OEIC money-market funds. Together, these
factors have and will continue to reduce income dividends from the level the
Company has been able to pay in recent periods.
Shareholders should note that income in this year has been increased by the
anticipation of recoverable VAT. Legislation has been introduced exempting VCTs
from paying VAT on investment management fees and enabling them to pursue
reclaims for VAT previously paid. At this juncture, the Board is unable to
quantify precisely the amount of VAT that will eventually be recovered, but has
recognised a prudent amount that should be recoverable. An amount of £200,000
has therefore been recognised in these accounts for VAT paid in the past.
Dividends
The revenue account generated a decreased net revenue return (after tax) for
the year of £433,944 (2007: £567,323) and your Directors will be recommending a
final income dividend of 1 penny per share, making a total of 2.0 pence per
share in respect of the current year compared with the total income dividend of
2.4 pence per share paid in respect of the year ended 31 December 2007.
It should be noted that Shareholders have also received 8.7 pence per share in
capital dividends in 2008, which mainly related to the profits realised upon
the disposals of the investments in Ministry of Cake (Holdings) Limited in 2007
and BBI Holdings plc this year.
This final income dividend will be recommended to Shareholders at the AGM on 6
May 2009 to be paid on 15 May 2009 to Shareholders on the Register on 17 April
2009. If approved, dividends paid since inception will increase to 16.3 pence.
Investment in qualifying holdings
The Company has continued to meet the target set by HM Revenue & Customs of
investing 70% of total funds raised in qualifying unquoted and AiM quoted
companies ("the 70% test"). At 31 December 2008, the Company was 78% invested
in qualifying companies (based upon the tax values, which differ from the
Investment Portfolio Summary below).
Communication with shareholders
We aim to communicate regularly with our Shareholders. In addition to the
half-yearly and annual reports, an Investment Manager's Newsletter, approved by
the Board, is circulated twice-yearly. The May AGM will provide a useful
platform for the Board to meet Shareholders and exchange views. Your Board
welcomes your attendance at General Meetings to give you the opportunity to
meet your Directors and representatives of the Investment Manager.
Share buy-backs
The Company bought back 1,210,827 Ordinary Shares during the year under review
at an average price of 87.3 pence per share and at discounts to the latest
published NAVs of between 10% and 15%. These shares, representing 5.5% of the
issued share capital at the beginning of the year, were subsequently cancelled
by the Company. The Board regularly reviews its share buy back policy,
considering a number of factors, including the Company's liquidity, and seeks
to balance the interests of both continuing and departing shareholders.
Awards for Matrix Private Equity Partners and PastaKing
I am pleased to inform you that our Investment Manager, Matrix Private Equity
Partners, won the award for "VCT Investment Manager of the Year" at the recent
unquote" British Private Equity Awards 2008. We were also pleased to hear that
one of our investee companies, PastaKing, won the "The Small to Medium Sized
Business of the Year" award at the 2008 National Business Awards.
Outlook
Stock markets are experiencing extreme volatility, uncertainty and low levels
of confidence, reflecting significant concerns over the prospects for the
global economy and the extent and length of the recession in the UK. Your
Company's fortunes will be affected by this wider context, but nevertheless, we
consider the Company to be in relatively good health and with a well
diversified portfolio of investee companies.
Our strategy of preserving strong cash balances means the Company should be
able to support its existing portfolio where required and justified and, in
addition, capitalise on what are expected to be attractive new investment
opportunities going forward.
In the foreseeable future, the Company's ability to pay dividends as high as
those paid to date will be adversely affected by the ability of certain
investee companies to service the Company's loans to them, the lower interest
rate environment and the lack of profitable exit opportunities. However, the
Board still remains confident that the Company should continue to provide
Shareholders with an attractive long term combination of capital growth and
income.
Finally, I would like to express my thanks to all Shareholders for their
continuing support of the Company.
Keith Niven
Chairman
Responsibility Statement of the Directors in respect of the Annual Financial
Report
The Directors confirm that to the best of their knowledge:
a. The financial statements, which have been prepared in accordance with UK
Generally Accepted Accounting Practice (UK GAAP) and the Statement of
Recommended Practice, `Financial Statements of Investment Trust Companies'
issued by the Association of Investment Trust Companies in 2003 and revised
in 2005, give a true and fair view of the assets, liabilities, financial
position and loss of the Company; and
b. The management report, comprising the Chairman's Statement, Investment
Policy, Statement of Principal Risks, Management and Regulatory
Environment, Investment Portfolio Summary and the Investment Manager's
Review, includes a fair review of the development and performance of the
business and the position of the Company, together with a description of
the principal risks and uncertainties that they face.
On behalf of the Board
Keith Niven
Chairman
Principal risks, management and regulatory environment
The Board believes that the principal risks faced by the VCT are:
Economic risk - events such as an economic recession and movement in interest
rates could affect trading conditions for smaller companies and consequently
the value of the VCT's qualifying investments.
Loss of approval as a Venture Capital Trust - the VCT must comply with Section
274 of the Income Tax Act 2007 which allows it to be exempted from capital
gains tax on investment gains. Any breach of these rules may lead to the VCT
losing its approval as a VCT, qualifying shareholders who have not held their
shares for the designated holding period having to repay the income tax relief
they obtained and future dividends paid by the VCT becoming subject to tax. The
VCT would also lose its exemption from corporation tax on capital gains.
Investment and strategic risk - inappropriate strategy or consistently weak VCT
qualifying investment recommendations might lead to under performance and poor
returns to shareholders.
Regulatory risk - the VCT is required to comply with the Companies Acts, the
rules of the UK Listing Authority and United Kingdom Accounting Standards.
Breach of any of these might lead to suspension of the VCT's Stock Exchange
listing, financial penalties or a qualified audit report.
Financial and operating risk- inadequate controls might lead to
misappropriation of assets. Inappropriate accounting policies might lead to
misreporting or beaches of regulations. Failure of the Investment Manager's and
Administrator's accounting systems or disruption to its business might lead to
an inability to provide accurate reporting and monitoring.
Market risk - Investment in unquoted companies, by its nature, involves a
higher degree of risk than investment in companies traded on the London Stock
Exchange main market. In particular, smaller companies often have limited
product lines, markets or financial resources and may be dependent for their
management on a smaller number of key individuals.
Asset liquidity risk - The VCT's investments may be difficult to realise
especially in the current economic climate.
Market liquidity risk - Shareholders may find it difficult to sell their shares
at a price which is close to the net asset value.
Credit/counterparty risk - A counterparty may fail to discharge an obligation
or commitment that it has entered into with the Company.
The Board seeks to mitigate the internal risks by setting policy and by
undertaking a key risk management review at each quarterly Board meeting.
Performance is regularly reviewed and assurances in respect of adequate
internal controls and key risks are sought and received from the Investment
Manager and Administrator on a six monthly basis. In the mitigation and
management of these risks, the Board applies rigorously the principles detailed
in the AIC Code of Corporate Governance. The Board also has a Share Buy Back
policy to try to mitigate the Market Liquidity risk. This policy is reviewed at
each quarterly Board Meeting.
Investment Policy
The VCT's policy is to invest primarily in a diverse portfolio of UK unquoted
companies. Investments are structured as part loan and part equity in order to
receive regular income and to generate capital gains from trade sales and
flotations of investee companies.
Investments are made selectively across a number of sectors, primarily in
management buyout transactions (MBOs) i.e. to support incumbent management
teams in acquiring the business they manage but do not own. Investments are
primarily made in companies that are established and profitable.
Uninvested funds are held in cash and lower risk money market funds.
UK Companies
The companies in which investments are made must have no more than £15 million
of gross assets at the time of investment to be classed as a VCT qualifying
holding.
VCT regulation
The investment policy is designed to ensure that the VCT continues to qualify
and is approved as a VCT by HMRC. Amongst other conditions, the VCT may not
invest more than 15% of its investments in a single company and must have at
least 70% by value of its investments throughout the period in shares or
securities comprised in Qualifying Holdings, of which a minimum overall of 30%
by value must be ordinary shares which carry no preferential rights. In
addition, although the VCT can invest less than 30% of an investment in a
specific company in ordinary shares it must have at least 10% by value of its
total investments in each Qualifying Company in ordinary shares which carry no
preferential rights.
Asset Mix
The VCT initially holds its funds in a portfolio of readily realisable interest
bearing investments and deposits. The investment portfolio of qualifying
investments is built up over a three year period with the aim of investing and
maintaining 80% of net funds raised in qualifying investments.
Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses across
different industry sectors. To reduce the risk of high exposure to equities,
each qualifying investment is structured using a significant proportion of loan
stock (up to 70% of the total investment in each VCT qualifying company.)
Initial investments in VCT qualifying companies are generally made in amounts
ranging from £200,000 to £1 million at cost. No holding in any one company will
represent more than 10% of the value of the VCT's investments at the time of
investment. Ongoing monitoring of each investment is carried out by the
Investment Manager generally through taking a seat on the Board of each VCT
qualifying company.
Co-investment
The VCT aims to invest in larger more mature unquoted companies through
investing alongside four other Income and Growth VCTs advised by the Investment
Manager with a similar investment policy. This enables the VCT to participate
in combined investments by the Investment Manager of up to £5 million.
Borrowing
The VCT has no current plans to undertake any borrowing.
Management
The Board has overall responsibility for the Company's affairs including the
determination of its investment policy. Investment and divestment proposals are
originated, negotiated and recommended by the Investment Manager and are then
subject to formal approval by the Directors. Matrix Securities provides Company
Secretarial and Accountancy services to the VCT.
Investment Manager's Review
Over the year, one disposal and one partial divestment were made. The
investment in BBI was realised in January 2008 through the sale of that company
to Inverness Medical Innovations Inc. The proceeds of £842,889 produced a £
460,889 profit on the Company's investment cost of £382,000. In April, an early
repayment of loan stock was received from VSI. Proceeds of £250,474 produced a
profit from the premium of £22,770 on the Company's investment cost of £227,704
During 2008, the Company has pursued a very cautious approach to new
investment. This was based on our view that vendors' price expectations would
prove unsustainable. We also avoided transactions requiring high levels of bank
borrowing, believing that economic conditions were deteriorating and that this
would make over-leveraged companies much too vulnerable in a tougher
environment.
A part of this strategy has been our Operating Partner programme. This involves
establishing acquisition companies alongside experienced entrepreneurs well
known to us. Using the operating partner's specialised knowledge and business
contacts they offer additional opportunities to access prospective investments
that might not otherwise be sourced. This programme has met the twin aims of
maintaining at least 70% of the monies raised in VCT qualifying investments
while at the same time, importantly, maintaining significant cash balances for
the VCT over a period we judged unattractive for new investment. This has been
possible because these acquisition companies, which are structured as VCT
qualifying investments, have two years in which to invest in established VCT
qualifying businesses. We believe this strategy has proved to be extremely
beneficial in protecting the value of the Company's asset base in difficult
market conditions.
Just two new investments were completed during the year; the first was in
April, when £390,289 was invested in the MBO of Plastic Surgeon for loan stock
and a 5.9% equity holding. The company offers snagging and finishing services
to domestic and commercial properties and is based in Bovey Tracey, Devon.
The second was in ATG Media in October. This was the first target company and
MBO transaction to be sourced and completed under our Operating Partner
programme. Derringfield, the acquisition company in which the Company had
invested £1 million in July, was renamed ATG Media and acquired the publisher
of the leading weekly newspaper serving the UK antiques trade, the Antiques
Trade Gazette, via a MBO. This London-based business also offers an on-line
auction capability. The Company now holds an £859,640 investment in ATG Media
by way of loan stock and 7.6% of the equity (the balance of £141,315 from the
original investment in Derringfield having been repaid to the Company).
Our other Operating Partners' companies have been active during 2008, with Aust
Construction Investors, Barnfield Management Investments and Calisamo
Management all seeking investments in the sectors of expertise relevant to the
partners. However, we were unable to identify sufficiently attractive targets
in the period and they therefore remained invested in liquid funds.
The qualifying investment portfolio has not been immune to the wider
deteriorating trading environment and appropriate provisions have been applied
against those investments where the investee company's trading has been
affected. A number of valuations have also had to be reduced in response to
falls in the value of comparable quoted companies. However, other investments
have continued to trade well. Of a total of eighteen investments, four are
currently held at cost, eight valued at below cost and six above cost.
The Company's investments in PXP, Youngman Group and Plastic Surgeon each have
exposure to the house building and construction markets and all have suffered
from the rapid decline of this sector during the year. Youngman has seen a
sharp fall in revenues from its trade customers in particular although it has
remained profitable and expects to continue to do so. PXP carried forward a
strong order book into the year but the outlook for next year is more
uncertain. In anticipation of this, the Company invested a further £163,436 as
part of a £1 million funding round to provide capital to support PXP in what is
expected to remain a difficult market. Plastic Surgeon has made strong progress
in reducing its dependence on the new housing market and has diversified into
the commercial property and insurance markets and has substantially reduced its
direct and indirect cost base. Nevertheless, in view of the continuing
difficult conditions in this sector we have deemed it appropriate to apply a
50% impairment provision against the Company's investment.
Blaze Signs, having had a record year in 2007-8, is seeing the effects of a
number of major retail clients deferring work which has reduced revenue. Monsal
too, has suffered from delays in new contract awards and a resultant deferral
of construction work on both water and waste contracts; accordingly an
impairment provision of 25% has been made. However, it enters 2009 with an
encouraging level of contracted revenue and since the year end shareholders
have advanced a further £500k, including £68,433 from the Company, to provide
additional working capital. Campden also has suffered from the uncertainties of
the financial services clients of its growing US conference business which has
led to a disappointing year. Racoon again continued to struggle to grow
revenues although it remains profitable. British International's helicopter
service to the Scilly Isles from Penzance experienced possibly the worst summer
weather in two decades which decimated the day trip market, but it has
benefited from the solidity of its long-term military contract revenue.
Nevertheless, there have continued to be portfolio highlights. DiGiCo Europe
has enjoyed a strong first year post-investment following the successful launch
of its new digital audio mixing desk. PastaKing has posted its highest ever
profits of £2.7 million, a year-on-year increase greater than 20%, despite
increasing pressure on ingredient prices. Focus Pharma has also had a good
first year since its MBO.
Vectair had an outstanding year, producing record profits and making inroads
into potentially significant markets in India and the US. VSI is strongly
profitable and cash-generative and is benefiting from the relative weakness of
sterling as well as seeing increased customer demand. ATG Media is performing
in line with expectations, whilst SectorGuard has now been substantially
re-organised following the acquisition of Manguard, a manned guarding business,
earlier in 2008; its share price recovered somewhat towards the year end.
The investment portfolio at 31 December 2008 comprises eighteen investments
with a cost of £14.7 million and valued at £13.6 million (92.4% of cost). £3.0
million of the investment cost is held in cash in the three acquisition
companies in the Operating Partner programme. Whilst the fall in valuations
over the year is disappointing, the adverse movement in public market indices
has made some decreases inevitable. It is important to recognise that all of
the reduction in the year has been in unrealised valuations as opposed to any
actual realised investment losses. This offers the prospect of significant
future recovery as we continue to believe that the portfolio, taken as a whole,
is resilient and of high quality.
Over the coming period, the need for additional investment to support portfolio
companies may become a focus. We also anticipate much more attractive buying
conditions emerging as the year progresses. Having retained significant
uninvested cash, we feel the Company is well placed to cover both the portfolio
needs that may arise and the new investment opportunities presented.
Investment Portfolio Summary
as at 31 December 2008
Date of Total book Valuation % value % of
initial cost of net equity
investment assets held by
funds
managed
by MPEP*
£'000 £'000
Qualifying investments
AIM quoted investments
SectorGuard plc Aug-05 150 64 0.4% 4.32%
Provider of manned
guarding, mobile
patrolling, and alarm
response services
----------- ------------- ---------
150 64 0.4%
Unquoted investments
Blaze Signs Holdings Apr-06 1,574 1,520 8.4% 52.50%
Limited
Manufacturer and installer
of signs
PastaKing Holdings Limited Jun-06 464 1,457 8.1% 27.50%
Manufacturer and supplier
of fresh pasta meals
VSI Limited Apr-06 390 1,082 6.0% 48.91%
Provider of software for
CAD and CAM vendors
DiGiCo Europe Limited Jul-07 1,000 1,045 5.8% 30.00%
Manufacturer of digital
sound mixing consoles
Aust Construction Investors Oct-07 1,000 1,000 5.6% 49.00%
Limited
Company seeking to acquire
businesses in the
construction sector
Barnfield Management Oct-07 1,000 1,000 5.6% 49.00%
Investments Limited
Company seeking to acquire
businesses in the food
sector
Calisamo Management Limited Dec-07 1,000 1,000 5.6% 49.00%
Company seeking to acquire
businesses in the
healthcare sector
Youngman Group Limited Oct-05 1,000 985 5.5% 29.70%
Manufacturer of ladders and
access towers
Vectair Holdings Limited Jan-06 560 965 5.4% 24.00%
Designer and distributor of
washroom products
British International May-06 1,000 943 5.2% 34.93%
Holdings Limited
Helicopter service
operators
ATG Media Holdings Limited Oct-08 860 860 4.8% 40.00%
Publisher of the leading
newspaper serving the UK
antiques trade and on-line
platform operator
Focus Pharma Holdings Oct-07 657 646 3.6% 13.00%
Limited
Licensor and distributer of
generic pharmaceuticals
Monsal Holdings Limited Dec-07 616 462 2.6% 46.51%
Supplier of engineering
services to water and waste
sectors
PXP Holdings Limited Dec-06 1,164 254 1.4% 37.33%
(Pinewood Structures)
Designer, manufacturer and
supplier of timber-frames
for buildings
The Plastic Surgeon Apr-08 390 195 1.1% 30.00%
Holdings Limited
Supplier of snagging and
finishing services to the
domestic and commercial
property markets
Campden Media Limited Jan-06 975 79 0.4% 28.44%
Magazine publisher and
conference organiser
Racoon International Dec-06 874 - 0.0% 49.00%
Holdings Limited
Supplier of hair
extensions, hair care
products and training
------------ ------------- --------
14,524 13,493 75.1%
------------ ------------- --------
14,674 13,557 75.5%
------------ ------------- --------
Non-qualifying investments
Fidelity Institutional Cash 1,241 1,241 6.9%
Fund plc**
Global Treasury Funds plc 1,094 1,094 6.1%
(Royal Bank of Scotland)**
SWIP Global Liquidity Fund 563 563 3.1%
plc (Scottish Widows)**
Institutional Cash Series 510 510 2.8%
plc (BlackRock)**
GS Funds plc (Goldman 422 422 2.3%
Sachs)**
Insight Liquidity Funds plc 409 409 2.2%
(HBOS)**
Barclays Global Investors 137 137 0.8%
Cash Selection Funds plc**
------------ ------------- --------
Total non-qualifying 4,376 4,376 24.2%
investments
------------ ------------- --------
------------ ------------- --------
Total investments 19,050 17,933 99.7%
Other assets 445 444 2.4%
Current liabilities (378) (378) (2.1)%
------------ ------------- --------
Net assets 19,117 17,999 100.0%
------------ ------------- --------
* The other funds managed by MPEP include Matrix Income & Growth 2 VCT plc
(MIG2), Matrix Income & Growth 3 VCT plc (MIG3), Matrix Income & Growth 4 VCT
plc (MIG4) and The Income & Growth VCT plc (I & G VCT).
** Disclosed as Investments at fair value within Current assets in the Balance
Sheet.
Profit and Loss Account
for the year ended 31 December 2008
Year ended 31 December 2008 Year ended 31 December 2007
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Realised gains on - 86,979 86,979 - 1,433,612 1,433,612
investments
Unrealised - (4,848,208) (4,848,208) - 2,386,239 2,386,239
(losses)/gains on
investments
Income 973,787 179,725 1,153,512 1,231,117 - 1,231,117
Recoverable VAT 35,893 107,680 143,573 - - -
Investment (88,810) (266,428) (355,238) (137,119) (411,357) (548,476)
manager's fees
Other expenses (336,510) - (336,510) (337,887) - (337,887)
------------ ------------ ------------ ------------ ------------ ------------
Profit/(loss) on 584,360 (4,740,252) (4,155,892) 756,111 3,408,494 4,164,605
ordinary
activities before
taxation
Tax on ordinary (150,416) 42,319 (108,097) (188,788) 132,958 (55,830)
activities
------------ ------------ ------------ ------------ ------------ ------------
Profit/(loss) for 433,944 (4,697,933) (4,263,989) 567,323 3,541,452 4,108,775
the year
------------ ------------ ------------ ------------ ------------ ------------
Basic and diluted 2.02p (21.91) p (19.89) p 2.58 p 16.07 p 18.65 p
earnings per
ordinary share
The total column is the profit and loss account of the Company. All the above
items in the above statement derive from continuing operations. There were no
other recognised gains or losses in the year. Other than revaluation movements
arising on investments held at fair value through the Profit and Loss Account,
there were no differences between the profit/(loss) as stated above and at
historical cost.
Balance Sheet
as at 31 December 2008
31 December 2008 31 December 2007
£ £
Fixed assets
Investments at fair value 13,556,878 17,998,075
Current assets
Debtors and prepayments 372,816 147,575
Current investments 4,375,724 7,747,608
Cash at bank 71,812 51,562
4,820,352 7,946,745
Creditors: amounts falling due within (378,668) (216,905)
one year
Net current assets 4,441,684 7,729,840
---------------- ----------------
Net assets 17,998,562 25,727,915
---------------- ----------------
Capital and reserves
Called up share capital 207,989 220,097
Capital redemption reserve 13,449 1,341
Revaluation reserve (1,117,216) 4,127,530
Special distributable reserve 18,388,358 19,561,655
Profit and loss account 505,982 1,817,292
---------------- ----------------
Equity shareholders' funds 17,998,562 25,727,915
---------------- ----------------
Net asset value per Ordinary share 86.54p 116.89p
Reconciliation of Movements in Shareholders' Funds
for the year ended 31 December 2008
Year ended 31 December Year ended31 December 2007
2008
£ £
As at 1 January 2008 25,727,915 22,244,902
Purchase of own shares (1,056,868) (95,275)
(Loss)/profit for the (4,263,989) 4,108,775
year
Dividends paid in year (2,408,496) (530,487)
--------------- ---------------
Closing shareholders' 17,998,562 25,727,915
funds
Cash Flow Statement
for the year ended 31 December 2008
Year ended Year ended
31 December 2008 31 December 2007
£ £ £ £
Operating activities
Investment income received 1,226,543 1,227,519
Investment management fees (498,733) (548,476)
paid
Other cash payments (345,255) (399,250)
--------------- -------------- -------------- ---------------
Net cash inflow from 382,555 279,793
operating activities
Investing activities
Acquisitions of investments (1,554,680) (6,272,922)
Disposals of investments 1,234,678 2,499,490
--------------- -------------- -------------- ---------------
Net cash outflow from (320,002) (3,773,432)
investing activities
Taxation
Taxation paid (63,695) (46,000)
Equity dividends
Payment of dividends (2,408,496) (530,487)
-------------- ---------------
Cash outflow before (2,409,638) (4,070,126)
financing and liquid
resource management
Management of liquid
resources
Decrease in current 3,371,884 4,158,713
investments
Financing
Purchase of own shares (941,996) (95,275)
-------------- ---------------
Increase/(decrease) in cash 20,250 (6,688)
for the year
-------------- ---------------
Reconciliation of loss on ordinary activities before taxation to net cash
inflow from operating activities
2008 2007
£ £
(Loss)/profit on ordinary activities before (4,155,892) 4,164,605
taxation
Net gains on realisations of investments (87,009) (1,508,876)
Net unrealised losses/(gains) on investments 4,848,208 (2,386,239)
Increase in debtors (225,241) (5,060)
Increase in creditors and accruals 2,489 15,363
----------- -----------
Net cash inflow from operating activities 382,555 279,793
Analysis of changes in net funds
Cash Liquid Total
resources
£ £ £
At beginning of year 51,562 7,747,608 7,799,170
Cash flows 20,250 (3,371,884) (3,351,634)
----------- ----------- -----------
At 31 December 2008 71,812 4,375,724 4,447,536
Notes
1. Basis of accounting
This announcement of the annual results of the Company for the year ended 31
December 2008 has been prepared using accounting policies consistent with those
adopted in the full audited annual accounts which have been prepared under UK
Generally Accepted Accounting Practice (UK GAAP) and the Statement of
Recommended Practice, `Financial Statements of Investment Trust Companies'
("SORP") issued by the Association of Investment Trust Companies in January
2003, revised December 2005 ("the SORP").
2. Income
2008 2007
£ £
Income from bank deposits 5,317 4,342
Income from investments
- from equities 209,009 63,834
- from overseas based OEICs 331,739 583,935
- from loan stock 607,447 579,006
1,148,195 1,226,775
-------------- --------------
Total income 1,153,512 1,231,117
Total income comprises
Dividends 540,748 647,769
Interest 612,764 583,348
-------------- --------------
1,153,512 1,231,117
Income from investments comprises
Listed overseas securities 331,739 583,935
Unlisted UK securities 209,009 63,834
Loan stock interest 607,447 579,006
-------------- --------------
1,148,195 1,226,775
3. Net asset value per Ordinary Share
Net asset value per Ordinary Share is based on net assets at the end of the
year, and on 20,798,925 (2007: 22,009,752) Ordinary Shares, being the number of
Ordinary Shares in issue on that date.
4. Return per Ordinary Share
The revenue return per Ordinary Share is based on the net revenue profit from
ordinary activities after taxation of £433,944 (2007 £567,323) and on
21,443,415 (2007: 22,031,665) Ordinary Shares, being the weighted average
number of Ordinary Shares in issue during the year.
The capital return per Ordinary Share is based on a capital loss of £4,697,933
(2007: return of £3,541,452) which includes the net of tax portion of the
Investment Manager's fees charged to the capital reserve of £224,109 (2007: £
278,399) and on 21,443,415 (2007: 22,031,665) Ordinary Shares, being the
weighted average number of Ordinary Shares in issue during the year.
5. Investment Manager's Fees
In accordance with the policy statement published under "Management, Expenses
and Administration" in the Company's Prospectus dated 9 July 2004, the
Directors have charged 75% of the investment management expenses to the
realised capital reserve.
6. Taxation
Although the Company incurred a loss in the year, a tax charge arises
principally because the unrealised losses for the year are disallowed for
taxation purposes.
7. Dividends
The Company proposes to pay a final dividend of 1 penny per Ordinary Share from
income. The dividend will be recommended to members at the Annual General
Meeting and, if approved, will be paid on 15 May 2009 to shareholders on the
Register on 17 April 2009.
8. Related party transactions
Bridget Guérin is a director and shareholder (2.0%) of Matrix Group Limited,
which owns 100% of the equity of MPE Partners Limited. MPE Partners Limited has
a 50% interest in Matrix Private Equity Partners LLP ("MPEP"), the Company's
Investment Manager. The fee arrangements and the fees payable are set out in
Note 4 of the full accounts. £12,481 (2007: £nil) was payable to the Manager at
the year-end, while £99,550 (2007:£nil) is recoverable from the Manager in
respect of the expense cap for the year. Bridget Guérin is also a director of
Matrix-Securities Limited who provided Company Secretarial and Accountancy
Services to the Company under agreements dated 9 July 2004, disclosed in Note 5
of the full accounts as administration fees. The agreements with MPEP and with
Matrix-Securities Limited became effective from 5 October 2004. £21,119 was due
to Matrix-Securities Limited at the end of the year (2007: £21,579).
Matrix Group Limited also holds a significant interest in Matrix Corporate
Capital LLP ("MCC"), who became the Company's brokers shortly before the
year-end. One share buyback was undertaken by MCC on the Company's instruction,
costing £114,301, which was owed to MCC at the year-end. No fees were payable
to MCC for the period up to the year-end.
9. Financial Information
The financial information set out in these statements does not constitute the
Company's statutory accounts for the year ended 31 December 2008 in terms of
section 240 of the Companies Act 1985 but is derived from those accounts.
Statutory accounts for the year ended 31 December 2008 will be delivered to
Companies House following the Company's Annual General Meeting. The auditors
have reported on those accounts: their report was unqualified and did not
contain a statement under Section 237 (2) or (3) of the Companies Act 1985.
10.Annual Report
The Annual Report for the year ended 31 December 2008 will shortly be made
available on our website: www.migvct.co.uk. and will be circulated by post to
those Shareholders who have requested to receive copies of the Report. Copies
will be available thereafter to members of the public from the Company's
registered office.
11.Annual General Meeting
The Annual General Meeting will be held at 11.00 am on Wednesday, 6 May 2009 at
the offices of Matrix Group Limited, One Vine Street, London W1J 0AH.
Contact details for further enquiries:
Sarah Penfold of Matrix-Securities Limited (the Company Secretary) on 020 3206
7000 or by e-mail to mig@matrixgroup.co.uk
Mark Wignall or Mike Walker at Matrix Private Equity Partners LLP (the
Investment Manager), on 020 3206 7000 or by e-mail to info@matrixpep.co.uk.
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