Half-year results for the six months ended 30 J...

6 August 2008 Matrix Income & Growth VCT plc ("the Company") Half-yearly results for the six months ended 30 June 2008 Investment Objective Matrix Income & Growth VCT plc ("MIG VCT" or the "Company") 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" or "the Investment Manager"). The Company's objective is to provide investors with an 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 Half-yearly results for the six months ended 30 June 2008 30 June 2008 30 June 2007 31 December 2007 Total return per share* 112.01p 110.49p 121.10p Net cumulative dividends 12.00p 3.20p 4.20p paid** Net asset value (NAV) per 100.01p 107.29p 116.89p share Share price (mid-market 89.50p 91.50p 100.50p price) * Net asset value per share plus cumulative dividends per share. This compares with an original investment cost of 100 pence per share, which after allowing for income tax relief of 40 pence per share, equates to 60 pence per share. ** For a breakdown of recent dividends paid, please see Note 8 of the Notes to the Unaudited Financial Statements below. Net assets as at 30 June 2008 were Â£21,281,357 (30 June 2007: Â£23,715,873). An interim income dividend of 1 penny per share and an interim capital dividend of 2.3 pence per share have been declared and are payable on 11 September 2008 to Shareholders on the Register on 15 August 2008, thereby increasing net cumulative dividends paid to 15.3 pence per share. Chairman's Statement I am pleased to present this Half-yearly Report covering the six month period ended 30 June 2008. Results and dividend In light of the economic uncertainty and turmoil in financial markets during the last six months this has been a challenging period for investment companies. Against this background, your Company has performed reasonably well; however, the value of its qualifying investment portfolio has not been immune to earnings' disappointments, or, more importantly, to the impact of the significant downward pressure on the valuations of comparable quoted companies, which are benchmarked for valuation purposes. Total shareholder (NAV) return declined by 7.5% in the period from 121.10 pence per share to 112.01 pence per share. The revenue account generated a net return (after tax) for the period of Â£ 331,785 (2007: Â£306,813). The Board has declared an interim income dividend of 1 penny per share (2007: 1 penny per share), and an interim capital dividend of 2.3 pence per share, both of which will be paid on 11 September 2008 to Shareholders on the Register on 15 August 2008. The capital dividend is particularly pleasing, arising principally from the sale of BBI Holdings plc, which I reported to you in the Annual Report for the year to 31 December 2007. Net asset value The net asset value at 30 June 2008 was 100.01 pence per share (30 June 2007: 107.29 pence per share) compared with a NAV of 109.09 pence per share at the beginning of the period, after deducting the dividends of 7.80 pence per share paid to Shareholders in the period. This fall of 8.3% compares with a decline of 14.9% in the FTSE SmallCap Index over the same period. Investment portfolio In January, the disposal of the investment in BBI Holdings realised proceeds of Â£0.8 million, an overall gain over cost of Â£0.5 million. MPEP believes that the price expectations on the part of most vendors of smaller companies still to be generally too high and has therefore pursued a very selective approach to investing in new businesses. Only one small investment of Â£0.4 million was completed during the period in the Management Buy-Out ("MBO") of Plastic Surgeon Fine Finishers. Since the end of the period, an investment of Â£1.0 million has been completed in Derringfield, a company seeking to acquire businesses in the IT sector. For further information on the investment portfolio please see the Investment Manager's Review below. Income Income was derived from two main sources. Firstly, the investments made by your Investment Manager usually include a substantial component of interest-bearing loan stocks. The interest earned upon these loan stocks continues to make a significant contribution and at 30 June 2008 these fixed interest securities were generating an annualised yield of 8.3%. Secondly, income from money market funds generated an average annualised yield of approximately 5.6% over the period. As at the end of the period, the annualised running yield on the qualifying investment portfolio as a whole was 4.8%, compared to 5.0% on all the investments taken as a whole. Investment in qualifying holdings The Company is required to meet the target set by HM Revenue & Customs of investing 70% of the funds raised in qualifying unquoted and AIM quoted companies, which it has achieved throughout the period. The Company was 74.5% invested in qualifying companies (based on VCT cost as defined in tax legislation) at the period-end, with the balance of the portfolio invested in a selection of readily realisable, money market funds with AAA credit ratings. Share buy-backs 730,581 Ordinary Shares came onto the market during the six months to 30 June 2008. The Company bought back 134,037 of these shares at a price of 102.29 pence per share, which represented a discount of 12.5% to the then published NAV, and 596,544 of these shares at a price of 89.05 pence, which represented a discount of 15% to the then published NAV, adjusted for dividends payable. These shares, representing 3.3% of the issued share capital at the beginning of the period, were subsequently cancelled by the Company. The Board regularly reviews its share buy-back policy. VAT on management fees With effect from 1 October this year, the Company will no longer have to pay VAT on the management fees charged from that date. The Board is also aware of the recent announcement that VAT already paid to HMRC for at least the last three years may also become reclaimable. The precise amounts involved are as yet uncertain, but both these developments should provide a boost to Shareholders' income and capital returns. Communicating with shareholders The Company maintains a programme of regular communication with Shareholders through newsletters and a dedicated website: www.migvct.co.uk, supplementing the half-yearly and annual reports. The Board welcomes the opportunity to meet Shareholders at the Company's General Meetings during which representatives of the Investment Manager are present to discuss the progress of the portfolio. The next AGM of the Company will be held in May 2009. Outlook The economic environment is continuing to deteriorate and these conditions may challenge our existing portfolio companies' earnings and valuations further. However your Company has substantial liquid resources which will provide the Investment Manager with scope to add to the qualifying investment portfolio at attractive valuations as opportunities present themselves. Your Board, therefore, remains relatively optimistic about the medium to long term prospects for the Company. Keith Niven Chairman Directors' 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, gives 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 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. Related Party Transactions Details of related party transactions in accordance with D.T.R. 4.2.8. can be found in Note 13 to the Unaudited Financial Statements below. Principal Risks and Uncertainties In accordance with DTR 4.2.7, the Board confirms that the principal risks and uncertainties facing the Company have not materially changed since the publication of the Annual Report and Accounts for the year ended 31 December 2007. 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 43 - 47 of the 2007 Annual Report and Accounts - copies of which are available on the VCT's website, www.migvct.co.uk. Cautionary Statement This Statement 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 Keith Niven, 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 to analysing potential new 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 for MIG VCT from the beginning of 2009. 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 Â£390,000 was invested to support the MBO of Plastic Surgeon Fine Finishers, an Exeter-based business which provides snagging and cosmetic repair services to the residential housing market and commercial properties. Since the period-end a further Â£1 million has been invested in Derringfield, a company formed specifically to seek acquisitions in the IT sector. As previously reported, the investment in BBI Holdings was realised by the sale of that company to Inverness Medical Innovations Inc. in January 2008. The proceeds of Â£842,000 produced a Â£460,000 profit on the Company's investment cost of Â£382,000. At 30 June 2008, the portfolio comprised investments in eighteen companies at a total current cost of Â£13.9 million, valued in accordance with International Private Equity and Venture Capital Valuation (IPEVCV) Guidelines at Â£15 million, representing an uplift of 8% above cost. This is a reduction from the 28% uplift prevailing at 31 December 2007, 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. Blaze Signs has successfully integrated its major acquisition and ended its financial year very strongly. Youngman, after another excellent year in 2007, has suffered from the well-publicised problems of the construction sector and a downward adjustment in valuation has been made. PXP, which is directly exposed to the housing market, has continued to trade below its investment plan. More positively, PastaKing, Vectair and VSI have all continued to grow profits, with Vectair benefiting from strong export markets both in Europe and the US. VSI's strong cash generation enabled it to prepay Â£228,000 of its loan stock at a 10% premium. British International has enjoyed solid trading, buoyed by its high levels of contracted revenue. Trading at Campden Media and Racoon has continued to disappoint, with both experiencing levels of profitability much lower than anticipated at the time of investment and their reduced valuations reflect this. Performance of the newer MBOs is generally satisfactory, with DiGiCo, originally affected by a slow start caused by product launch delays, now trading well; Focus has met expectations to date and although Monsal's trading has disappointed so far, it is well placed to generate significant revenue from a number of forthcoming major contracts in both its existing and new markets in water and waste management. Whilst SectorGuard has made acquisitions, its commercial progress has not yet been reflected in its share price. Aust Construction Investors, Barnfield Management Investments and Calisamo Management, have all been actively seeking attractive investment opportunities in their chosen sectors of construction and related services, food manufacturing and healthcare respectively, but have not found investment transactions at the right price. The depth and longevity of the current 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 and that attractive buying opportunities will emerge to enhance longer term performance. Matrix Private Equity Partners LLP Investment Portfolio Summary as at 30 June 2008 Date of Total book Valuation % value of initial cost net assets investment Â£'000 Â£'000 Qualifying investments AIM quoted investments SectorGuard plc Aug-05 150 86 0.40% Provider of manned guarding, mobile patrolling, and alarm response services -------------- -------------- ------------- 150 86 0.40% Unquoted investments Blaze Signs Holdings Limited Apr-06 1,574 2,156 10.13% Signwriter Youngman Group Limited Oct-05 1,000 1,751 8.23% Manufacturer of ladders and access towers PastaKing Holdings Limited Jun-06 464 1,381 6.49% Supplier to the educational and food service market VSI Limited Apr-06 390 1,094 5.14% Developer and marketer of 3D software Aust Construction Investors Oct-07 1,000 1,000 4.70% Limited Company seeking to acquire businesses in the construction sector Barnfield Management Oct-07 1,000 1,000 4.70% Investments Limited Company seeking to acquire businesses in the food sector Calisamo Management Limited Oct-07 1,000 1,000 4.70% Company seeking to acquire businesses in the healthcare sector DiGiCo Europe Limited Jul-07 1,000 1,000 4.70% Designer and manufacturer of audio mixing desks British International Holdings Jun-06 1,000 944 4.44% Limited Supplier of helicopter services Vectair Holdings Limited Jan-06 560 943 4.43% Designer and distributor of washroom products Focus Pharma Holdings Limited Oct-07 657 657 3.09% Licensor and distributor of generic pharmaceuticals Monsal Holdings Limited Dec-07 616 616 2.89% Supplier of engineering services to water and waste sectors PXP Holdings Limited (Pinewood Dec-06 1,000 575 2.70% Structures) Designer, manufacturer, supplier and installer of timber-frames for buildings Campden Media Limited Jan-06 975 414 1.95% Magazine publisher and conference organiser Plastic Surgeon Holdings Apr-08 390 390 1.83% Limited (The) Snagging and finishing of domestic and commercial properties Racoon International Holdings Dec-06 874 36 0.17% Limited Supplier of hair extensions, hair care products and training FH Ingredients Limited Feb-05 213 - 0.00% Processor and distributor of frozen herbs to the food processing industry -------------- -------------- ----------- 13,713 14,957 70.29%* -------------- -------------- ----------- Total qualifying investments 13,863 15,043 70.69% -------------- -------------- ----------- Non-qualifying investments Global Treasury Funds plc 1,509 1,509 7.09% (Royal Bank of Scotland)** Fidelity Institutional Cash 1,212 1,212 5.70% Fund plc** GS Funds plc (Goldman Sachs)** 1,086 1,086 5.10% SWIP Global Liquidity Fund plc 1,045 1,045 4.91% (Scottish Widows)** Barclays Global Investors Cash 630 630 2.96% Selection Funds plc** Institutional Cash Series plc 496 496 2.33% (BlackRock)** Insight Liquidity Funds plc 398 398 1.87% (HBOS)** -------------- -------------- ----------- Total non-qualifying 6,376 6,376 29.96% investments -------------- -------------- ----------- Total investments 20,239 21,419 100.65% -------------- -------------- ----------- Other assets 224 224 1.05 % Current liabilities (362) (362) (1.70)% -------------- -------------- ----------- Net assets 20,101 21,281 100.00% -------------- -------------- ----------- * As at 30 June 2008, the Company held 74.5% of its total investments in qualifying holdings, and therefore complied with the VCT investment test. For the purposes of the VCT investment tests, the Company is permitted to disregard disposals of investments for six months from the date of disposal. ** Disclosed as Investments at fair value within Current assets in the Balance Sheet. Unaudited Profit and Loss Account for the six months ended 30 June 2008 Six months ended 30 June 2008 Six months ended 30 June 2007 (restated) Revenue Capital Total Revenue Capital Total Notes Â£ Â£ Â£ Â£ Â£ Â£ Unrealised (losses)/ - (2,338,608) (2,338,608) - 1,607,124 1,607,124 gains on investments held at fair value Realised gains/ - 86,966 86,966 - (148) (148) (losses) on investments held at fair value Income 5 649,235 - 649,235 625,023 - 625,023 Investment management 3 (69,547) (208,643) (278,190) (65,423) (196,271) (261,694) fees Other expenses (164,161) - (164,161) (160,711) - (160,711) ----------- -------------- ----------- ----------- ------------ ----------- Return on ordinary 415,527 (2,460,285) (2,044,758) 398,889 1,410,705 1,809,594 activities before taxation Tax on ordinary (83,742) 60,160 (23,582) (92,076) 62,904 (29,172) activities ----------- -------------- ----------- ----------- ------------ ----------- Return attributable 331,785 (2,400,125) (2,068,340) 306,813 1,473,609 1,780,422 to equity shareholders ----------- -------------- ----------- ----------- ------------ ----------- Return per share 7 1.53p (11.06)p (9.53)p 1.39p 6.66p 8.05p Year ended 31 December 2007 (audited) Revenue Capital Total Notes Â£ Â£ Â£ Unrealised (losses) - 2,386,239 2,386,239 /gains on investments held at fair value Realised gains/ - 1,433,612 1,433,612 (losses) on investments held at fair value Income 5 1,231,117 - 1,231,117 Investment 3 (137,119) (411,357) (548,476) management fees Other expenses (337,887) - (337,887) ----------- -------------- ----------- Return on ordinary 756,111 3,408,494 4,164,605 activities before taxation Tax on ordinary (188,788) 132,958 (55,830) activities ----------- -------------- ----------- Return attributable 567,323 3,541,452 4,108,775 to equity shareholders ----------- -------------- ----------- Return per share 7 2.58p 16.07p 18.65p 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 30 June 2008 Six months ended Six months ended Year ended 30 June 2008 30 June 2007 31 December 2007 (restated) (audited) Total Total Total Â£ Â£ Â£ (Loss)/ profit on (2,044,758) 1,809,594 4,164,605 ordinary activities before taxation Less: Unrealised (2,338,608) 1,607,124 2,386,239 (losses)/gains on investments Realisation of 396,538 - (9,385) revaluation gains/ (losses) of previous years ------------------ ------------------ ----------------- Historical cost 690,388 202,470 1,768,981 profit/(loss) on ordinary activities before taxation ------------------ ------------------ ----------------- Historical cost (1,039,484) (136,153) 1,182,664 (loss)/profit on ordinary activities after taxation and dividends Unaudited Balance Sheet as at 30 June 2008 As at 30 June 2008 As at 30 June 2007 As at 31 December 2007 (restated) (audited) Notes Â£ Â£ Â£ Non-current assets 1c, 10 Investments at fair value 15,043,401 1,936,670 17,998,075 ------------------------- ----------------------- --------------------------- Current assets Debtors and prepayments 174,610 124,753 147,575 Investments at fair value 11 6,375,857 11,797,408 7,747,608 Cash at bank 49,740 121,289 51,562 ------------------------- ----------------------- --------------------------- 6,600,207 12,043,450 7,946,745 Creditors: amounts ( 362,251) ( 264,247) ( 216,905) falling due within one year ------------------------- ----------------------- --------------------------- Net current assets 6,237,956 11,779,203 7,729,840 ------------------------- ----------------------- --------------------------- Net assets 21,281,357 23,715,873 25,727,915 ------------------------- ----------------------- --------------------------- Capital and reserves 12 Called up share capital 212,791 221,038 220,097 Capital redemption 8,647 400 1,341 reserve Revaluation reserve 1,392,384 3,339,030 4,127,530 Special distributable 18,741,244 20,676,105 19,561,655 reserve Profit and loss account 926,291 ( 520,700) 1,817,292 ------------------------- ----------------------- --------------------------- Equity shareholders' 21,281,357 23,715,873 25,727,915 funds (equity interests) ------------------------- ----------------------- --------------------------- Net asset value per 9 100.01p 107.29p 116.89p Ordinary Share Unaudited Reconciliation of Movements in Shareholders' Funds for the six months ended 30 June 2008 Six months ended Six months ended Year ended 30 June 2008 30 June 2007 31 December 2007 (audited) Â£ Â£ Â£ Opening Shareholders' 25,727,915 22,244,902 22,244,902 funds Ordinary Shares bought (671,928) - (95,275) back Expenses of issues - - - (Loss)/gain for the (2,068,340) 1,780,422 4,108,775 period before dividends Dividends paid in (1,706,290) (309,451) (530,487) period ------------------------ ----------------------- ------------------------ Closing Shareholders' 21,281,357 23,715,873 25,727,915 funds ------------------------ ----------------------- ------------------------ Unaudited Summarised Cash Flow Statement for the six months ended 30 June 2008 Six months ended Six months ended Year ended 30 June 2008 30 June 2007 31 December 2007 (audited) Â£ Â£ Â£ Operating activities Investment income 639,694 644,916 1,227,519 received Investment management ( 296,267) ( 261,694) ( 548,476) fees paid Other cash payments ( 139,331) ( 119,627) ( 399,250) ------------------------ ----------------------- ------------------------ Net cash inflow from 204,096 263,595 279,793 operating activities Investing activities Acquisitions of ( 390,289) ( 18) ( 6,272,923) investments Disposals of 1,093,351 - 2,499,491 investments ------------------------ ----------------------- ------------------------ Net cash inflow/(o 703,062 ( 18) ( 3,773,432) utflow) from investing activities Dividends Equity dividends paid ( 1,706,290) ( 309,451) ( 530,487) Taxation Taxation repaid/(paid) 587 - ( 46,000) ------------------------ ----------------------- ------------------------ Cash outflow before ( 798,545) ( 45,874) ( 4,070,126) financing and liquid resource management Management of liquid resources Decrease in current 1,371,751 108,913 4,158,713 investments Financing Share capital bought ( 575,028) - ( 95,275) back ------------------------ ----------------------- ------------------------ (Decrease)/increase in ( 1,822) 63,039 ( 6,688) cash for the period ------------------------ ----------------------- ------------------------ Reconciliation of Loss on Ordinary Activities before Taxation to Net Cash Inflow from Operating Activities for the six months ended 30 June 2008 Six months ended Six months ended Year ended 30 June 2008 30 June 2007 31 December 2007 Â£ Â£ (Loss)/profit on (2,044,758) 1,809,594 4,164,605 ordinary activities before taxation Net unrealised losses/ 2,338,608 (1,607,124) (2,386,239) (gains) on investments Net (gains)/losses on (86,966) 148 (1,433,612) realisations of investments Transaction costs (30) (148) ( 75,264) (Increase)/decrease in (27,035) 17,762 (5,060) debtors Increase in creditors 24,277 43,363 15,363 ------------------------ ----------------------- ------------------------ Net cash inflow from 204,096 263,595 279,793 operating activities ------------------------ ----------------------- ------------------------ The Notes below form part of these 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 30 June 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 December 2007 and Statement of Recommended Practice, `Financial Statements of Investment Trust Companies' issued by the Association of Investment Trust Companies in January 2003 ("SORP") and reviewed in 2005. 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. 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 and 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. Capital gains and losses on investments, whether realised or unrealised, are dealt with in the capital reserve and movements in the period are shown in the Profit and Loss Account. 3. In accordance with the policy statement published under "Management and Administration" in the Company's prospectus dated 9 July 2004, the Directors have charged 75% of the investment management expenses to the capital reserve. 4. Earnings for the six months ended 30 June 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 30 June 2008 30 June 2007 31 December 2007 Â£ Â£ Â£ Income from investments Dividends 93,304 56,247 63,834 Money-market funds 215,531 311,604 583,935 Loan stock interest 336,052 255,628 579,006 Bank deposits 4,348 1,544 4,342 ---------------------- ---------------------- ------------------------ Total Income 649,235 625,023 1,231,117 6. Taxation The tax charge for the period is caused by capital losses not being tax deductible, leaving taxable profits chargeable at 20.75%. 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 30 June 2008 30 June 2007 31 December 2007 Â£ Â£ Â£ i) Total earnings (2,068,340) 1,780,422 4,108,775 after taxation Basic earnings per (9.53)p 8.05p 18.65p share (pence) ii) Net revenue from 331,785 306,813 567,323 ordinary activities after taxation Revenue return per 1.53p 1.39p 2.58p share (pence) Net unrealised capital (2,338,608) 1,607,124 2,386,239 (losses)/gains Net realised capital 86,966 (148) 1,433,612 gains/(losses) Capital expenses (148,483) (133,367) (278,399) --------------------- --------------------- --------------------- iii) Capital gain/ ( 2,400,125) 1,473,609 3,541,452 (loss) Capital gain/(loss) (11.06)p 6.66p 16.07p per share (pence) iv) Weighted average 21,705,974 22,103,821 22,031,665 number of shares in issue in the period 8. Dividends paid Six months ended Six months ended Year ended 30 June 2008 30 June 2007 31 December 2007 Â£ Â£ Â£ Final income - 309,451 309,451 dividend paid for year ended 31 December 2006 of 1.4p per share Interim income - - 221,036 dividend for the year ended 31 December 2007 of 1.0p per share Final income 306,257 - - dividend paid for year ended 31 December 2007 of 1.4p per share Final capital 1,400,033 - - dividend paid for year ended 31 December 2007 of 6.4p per share ---------------------- ---------------------- ------------------------ 1,706,290 309,451 530,487 9. Net asset value per share As at As at As at 30 June 2008 30 June 2007 31 December 2007 Â£ Â£ Â£ Net assets 21,281,357 23,715,873 25,727,915 Number of shares in issue 21,279,171 22,103,821 22,009,752 Net asset value per share 100.01p 107.29p 116.89p (pence) 10. Summary of non-current investments at fair value during the period Traded Ordinary Preference Qualifying Total on AIM shares shares loans Â£ Â£ Â£ Â£ Â£ Valuation at 1 January 852,366 7,545,246 43,307 9,557,156 17,998,075 2008 Purchases at cost - 39,029 195 351,065 390,289 Sales - proceeds (842,877) - - (250,474) (1,093,351) - realised gains 86,996 - - - 86,996 Decrease in unrealised (10,721) (1,384,878) (1,829) (941,180) (2,338,608) gains ---------------- ---------------- ---------------- ---------------- ---------------- Valuation at 30 June 85,764 6,199,397 41,673 8,716,567 15,043,401 2008 Book cost at 30 June 150,106 4,038,507 45,749 9,629,548 13,863,910 2008 Unrealised (losses)/ (64,342) 2,205,132 (3,078) (745,328) 1,392,384 gains at 30 June 2008 Permanent impairment in - (44,242) (998) (167,653) (212,893) value of investments ---------------- ---------------- ---------------- ---------------- ---------------- Valuation at 30 June 85,764 6,199,397 41,673 8,716,567 15,043,401 2008 Gains on investments Unrealised gains/ 320,147 3,590,010 (1,249) 218,622 4,127,530 (losses) at 1 January 2008 Permanent impairment in - (44,242) (998) (167,653) (212,893) value of investments Realised gains from the (373,768) - - (22,770) (396,538) prior period Net movement in (10,721) (1,384,878) (1,829) (941,180) (2,338,608) unrealised appreciation in the period ---------------- ---------------- ---------------- ---------------- ---------------- Unrealised gains/ (64,342) 2,160,890 (4,076) (912,981) 1,179,491 (losses) on investments at 30 June 2008 11. Current investments at fair value These comprise investments in seven Dublin based OEIC money market funds managed by Royal Bank of Scotland, Blackrock Investment Management, Goldman Sachs, Insight Investment Management, Barclays Global Investors, Scottish Widows Investment Management and Fidelity Investment Management. Â£6,372,366 (30 June 2007: Â£10,101,315; 31 December 2007: Â£7,744,215) of this sum is subject to same day access, whilst Â£3,491 (30 June 2007: Â£1,696,093; 31 December 2007: Â£3,393) is subject to 2 day access. 12. Capital and reserves Called up Capital Revaluation Special Profit Total share redemption reserve distributable and loss capital reserve reserve account Â£ Â£ Â£ Â£ Â£ Â£ At 1 January 2008 220,097 1,341 4,127,530 19,561,655 1,817,292 25,727,915 Shares bought (7,306) 7,306 - (671,928) - (671,928) back Written off to - - - (148,483) 148,483 - special reserve Realisation of - - (396,538) - 396,538 - previously unrealised depreciation Dividend - final - - - - (1,706,290) (1,706,290) for year ended 31 December 2007 Profit/(loss) for - - (2,338,608) - 270,268 (2,068,340) the period ---------- ------------- -------------- --------------- ------------ ------------- At 30 June 2008 212,791 8,647 1,392,384 18,741,244 926,291 21,281,357 13. Related party transactions Bridget GuÃ©rin 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. Bridget GuÃ©rin is also a director of Matrix-Securities Limited who provided Company Secretarial and Accountancy Services to the Company under agreements dated 9 July 2004 for a fee of Â£43,157 (30 June 2007: Â£41,158; 31 December 2007: Â£85,031) in the period. The agreements with MPEP and with Matrix-Securities Limited became effective from 5 October 2004. 14. The information for the year ended 31 December 2007 does not comprise full financial statements within the meaning of Section 240 of the Companies Act 1985. The financial statements for the year ended 31 December 2007 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 237(2) of the Companies Act 1985. 15. The Half-yearly Report 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. Further copies are available free of charge from the Company's registered office, One Vine Street, London W1J 0AH. Contact details for further enquiries: Robert Brittain of Matrix-Securities Limited (the Company Secretary) on 020 3206 7000 or by e-mail on MIG@matrixgroup.co.uk. Matrix Private Equity Partners LLP (the Investment Manager), on 020 3206 7000 or by e-mail on info@matrixpep.co.uk.

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