Annual Financial Report

RNS Number : 6818I

Mobeus Income & Growth 4 VCT PLC

27 March 2015

Mobeus Income & Growth 4 VCT plc ("MIG4" or the "Company" or the "VCT")

Annual Results Announcement for the year ended 31 December 2014

FINANCIAL HIGHLIGHTS

-	Net Asset Value ("NAV") Total Return per share of 13.6% for the year.
-	Share Price Total Return per share of 15.0% for the year.
-	An interim dividend in respect of 2014 of 14.00 pence per share has been paid. A second interim dividend of 8.00 pence per share has been declared, to be paid on 6 May 2015. This will bring dividends paid in respect of 2014, to 22.00 pence per share.
-	Strong liquidity has been further enhanced by two successful fundraisings, in which the Company has raised a further £14.06 million (net of costs).
-	This has been an exceptional year for disposals. A total of £11.87 million was received as net cash proceeds from seven major realisations, compared with an original cost of £2.80 million.
-	Nine new investments totalling £8.95 million during the year, plus a further £2.67 million invested after the year-end.

Note: The above data does not reflect the benefit of income tax relief.

Cumulative total return per share (NAV basis)*

As at	Net asset value (NAV) per share	Cumulative dividends paid per share	Cumulative total shareholder return per share (NAV basis)*
	(p)	(p)	(p)
31 December 2014	118.21	52.20	170.41
31 December 2013	119.92	34.20	154.12
31 December 2012	117.31	26.70	144.01
31 January 2012	116.73	21.70	138.43
31 January 2011	112.87	18.70	131.57

*Cumulative NAV total shareholder return is net asset value plus cumulative dividends paid since 1999 to date.

The net asset value (NAV) per share as at 31 December 2014 was 118.21 pence.

The table above shows the recent past performance of the Original funds raised in 1999. The original subscription price in 1999 was equivalent to 200p per share before the benefit of income tax relief. Subsequent subscription prices from subsequent fundraisings and historic performance data from 2008 for this fundraising are shown in the Annual Report and Accounts (the "Annual Report").

CHAIRMAN'S STATEMENT

I am pleased to present the annual results of Mobeus Income & Growth 4 VCT plc for the year ended 31 December 2014.

Overview

It is gratifying to report on a very positive year for the VCT. This is principally due to the sale of seven investments at substantial gains over cost. A total of nine new investments have also been completed. Prospects for future performance remain encouraging with one sizable investment already made in 2015.

Based on 2014 realisations, the Company paid a substantial interim dividend of 14.00 pence per share on 12 September 2014. A second interim dividend of 8.00 pence per share has now been declared. 2014 has been a very active and profitable year for the Company. Shareholders should not expect that this level of distributions will be maintained in 2015 or be repeated unless an equally successful sequence of realisations occurs.

Performance

The NAV total return per share was 13.6% for the year to 31 December 2014 (2013: 8.6%). The share price total return was 15.0% (2013: 9.6%). For details of these calculations, please refer to the Strategic Report on performance. There were two contributing factors: firstly, seven profitable realisations, namely: ATG Media (a partial sale), MachineWorks, Monsal, DiGiCo Global, EMaC, Focus Pharma, and Youngman, and secondly, net unrealised valuation gains within the portfolio, notably ASL Technology and Entanet.

The recent performance of your Company has improved markedly. An investor who invested £100 five years ago on 1 January 2010 has earned a NAV Total Return of £147.62 by the year-end. For an explanation of performance since inception, please see the Strategic Report.

Looking to the future, each of the Mobeus Companies have independent Boards who may make different decisions including, possibly, investing different amounts into new opportunities or maintaining different liquidity levels. However, it would still be reasonable to expect that the four Mobeus companies will tend to have more similar performances in the future because of a preponderance of the same investee companies in each of the four investment company portfolios.

For more details on the performance of your investment in the Company please consult the Investor Performance Appendix in the Annual Report.

Dividends

Your Directors are pleased to declare a second interim dividend in respect of 2014 of 8.00 pence (2013: final 4.00 pence) per share comprising 7.00 pence (2013: final 2.75 pence) per share from capital and 1.00 pence (2013: final 1.25 pence) per share from income. This dividend will be paid on 6 May 2015 to shareholders on the Register on 10 April 2015. This will bring dividends paid in respect of the year ended 31 December 2014 to 22.00 pence (2013: 6.00 pence) per share and cumulative dividends paid since inception to 60.20 pence (2013: 38.20 pence) per share. The 2014 dividends are comprised of 3.00 pence of income dividends and 19.00 pence of capital dividends.

Shareholders are reminded that there is a Dividend Investment Scheme available for those shareholders wishing to re-invest their dividends in new shares of the Company. These shares have generally been issued at a discount of approximately 10% to the latest NAV. The amount so invested attracts income tax relief.

Investment Portfolio

The VCT has maintained a steady rate of new investment, investing a total of £8.95 million (including £1.00 million which was previously held in an acquisition vehicle) during the year under review in nine companies.

During the year the value of the opening portfolio increased by £4.91 million in realised gains net of transaction costs and £1.12 million in unrealised gains. This represents a total increase of 25.8% in the valuation of the portfolio over the year on a like for like basis. Realised gains over the original cost of the investment were £9.34 million. The portfolio under management at the year-end was valued at £25.00 million representing 99.8% of cost.

Full details of all of these transactions and of a substantial new investment following the year-end are included in the Investment Review.

Cash proceeds totalling £13.55 million were received from 15 companies, which were either sold or repaid loans. Of this total, £11.87 million was received as cash proceeds from the seven disposals referred to above.

Fundraising and Liquidity

The Company participated with the other three Mobeus advised VCTs in a successful 2013/14 joint fundraising which closed on 30 May 2014. Your Company raised £8.43 million gross of issue costs (£8.19 million after costs).

The four Mobeus advised VCTs launched new offers for subscription for the 2014/15 tax year on 10 December 2014 ("the Offers"). For the first time, each of the VCTs is making separate Offers to investors. This enabled investors to choose which Mobeus VCT(s) they would invest in, and how much to place in each, subject to the Offer(s) of their choice remaining open.

Your Company successfully raised the full £6.00 million it sought under its Offer and the Offer closed on 18 February 2015. Annual fundraisings by the Company have grown the fund to an economic size and have provided it with a comfortable level of liquidity that enabled it to maintain prudent levels of funds raised before 5 April 2012 to pursue MBO opportunities. Funds raised since 5 April 2012 are used to fund other investment opportunities as well as to meet the Company's running costs, fund dividend payments and support its share buyback policy.

The Board continues to investigate alternative investment options to secure greater returns on the Company's liquid assets, although the risk of a loss of capital remains a paramount consideration. Although the liquid assets are held in a range of credit worthy financial institutions it is recognised that the return on such assets is currently lower than wished due to the current government's low interest rate policies.

Share buybacks

During the year ended 31 December 2014, the Company bought back 1.5% of the issued share capital of the Company at the beginning of the year, as calculated by reference to the issued share capital on 1 January 2014.

Further details of the purchases are included in the Directors' Report of the Annual Report.

Industry award for the Adviser

Your Board is pleased to report that the Adviser has been named VCT House of the Year 2014 for the third consecutive year at the unquote" British Private Equity Awards 2014. The award recognised the high level of consistency achieved by the Adviserduring the year in maintaining high standards in all areas of its activity including deals, exits, portfolio management and fundraising.

Strategic Report

The Strategic Report is becoming a more familiar section of the Annual Report and Accounts. The aim of this report is to provide readers with a useful overview of the Company's performance during the year and an assessment of how the Board have worked towards achieving the Company's Objective. I would again welcome your views on this section of the Annual Report and Accounts in particular.

Annual General Meeting

The Annual General Meeting of the Company will be held at 11.00 am on Thursday, 14 May 2015 at 33 St James's Square, London SW1Y 4JS. Both the Board and the Adviser look forward to welcoming shareholders to the meeting which will include a presentation from the Adviser on the investment portfolio and the opportunity to ask questions of the Board and the Adviser. The Notice of the meeting and an explanation of the resolutions to be proposed can be found in the full Annual Report published on the Company's website.

Shareholder Communications

The annual shareholder event was held on Tuesday, 27 January 2015 at the Royal Institute of British Architects in central London. This annual event included presentations on the Mobeus advised VCTs' investment activity and performance. There were separate day-time and evening sessions, and feedback from those who attended found it informative and worthwhile.

Future prospects

The challenge for both the Adviser and the Company is maintaining performance, including investment and realisation levels, over the longer term.

The UK economy is now growing. Confidence and market activity have returned. However there is a UK election in May 2015, uncertainties persist over the performance of the Eurozone, and quantitative easing and artificially low interest rates cannot continue for ever. Government debt is still far too high and still increasing.

We aim to invest in well-run, profitable companies, operating mainly in niche markets, which we believe have the potential to grow under a range of economic conditions. Currently, the rate of dealflow continues to be encouraging and a significant new investment has already been completed in January 2015. The rate of growth of some investee companies within the portfolio may provide opportunities for further investment within the portfolio. The Board believes that continued application of its relatively low risk investment strategy should produce further good returns for shareholders over the medium term.

Finally, I would like to express my thanks to all shareholders for their continuing support of the Company.

Christopher Moore

Chairman

26 March 2015

STRATEGIC REPORT

Introduction

The Directors present the Strategic Report of the Company for the year ended 31 December 2014. The purpose of this Report is to inform shareholders and to help them assess how the Directors have performed their duty to promote the success of the Company.

The Report has been prepared by the Directors in accordance with section 414A of the Companies Act 2006 (the "Act").

Objective of the Company

The Objective of the Company is to provide investors with a regular income stream by way of tax-free dividends and to generate capital growth through portfolio realisations which can be distributed by way of additional tax-free dividends.

Summary of Investment Policy

The VCT's policy is to invest primarily in a diverse portfolio of UK unquoted companies in order to generate regular income from existing investments and capital gains from realisations.

Investments are usually structured as part loan and part equity to reduce the risk of investing in smaller companies.

Risk is further spread by investing in a number of different businesses across different industry sectors. Investments are made selectively, primarily in management buyout transactions (MBOs) in companies that are established and profitable. The VCT aims to invest in larger, more mature, unquoted companies through investing alongside three other VCTs advised by Mobeus with similar investment policies.

The Company aims to maintain around 80% of net funds raised in qualifying investments. Uninvested funds are held in a portfolio of readily realisable interest-bearing investments and deposits.

The full text of the Company's Investment Policy is available in the Annual Report.

Business Model

The Company is a Venture Capital Trust (VCT ). Its objective and its full Investment Policy above, are designed to ensure that the VCT continues to qualify and is approved as a VCT by HM Revenue & Customs (HMRC) whilst maximising returns to shareholders from both income and capital returns. One of the rules to remain a VCT is that it must remain a fully listed company on the London Stock Exchange, and thus must also comply

with the listing rules governing such companies.

The Company is an externally advised fund with a Board comprising non-executive Directors. 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 Adviser and are then subject to review and approval by the Directors. Investment management and operational support are outsourced to external service providers (including registrars and brokers), with the key strategic and operational framework and key policies set and monitored by the Board.

Private individuals invest in the Company to benefit from both income and capital returns on good investment performance. By investing in a VCT they also receive immediate income tax relief (currently 30% of the amount subscribed by an investor), as well as tax-free dividends received from the Company and no capital gains tax upon the eventual sale of the shares.

The Company's investee companies are primarily unquoted businesses and operate in the UK. These businesses fulfil the criteria and characteristics as set out in the Investment Policy.

Industry Developments

The Finance Act 2014 ("the Finance Act") introduced two measures that affect VCTs which apply to shares issued after 6 April 2014. Firstly, shareholders who sell their existing shares within six months before or after the date of subscribing for such shares in the same VCT will not retain income tax relief on their new investment, to the extent of the sale proceeds realised on the shares sold.

Secondly, VCTs are now prevented, in respect of these shares, from returning capital to investors within three years of the end of the accounting period in which the VCT issued the shares. Distributions made from realised profits are not affected by this change. Your Board does not expect these return of capital measures to affect the Company's dividend policy or practice.

The Company and the Adviser have contributed to the consultation by HMRC on the impact of the VCT schedule and the appropriateness of its rules as part of the European Union's review of the rules on State Aid. The process of the EU review and re-approval of the VCT scheme is scheduled to be completed shortly. The UK Budget announcement on 18 March 2015 contained proposals relating to investment levels, for example, but also stated that these proposals remain subject to EU State Aid approval. The Board is awaiting clarification of this position.

Performance

The Board has identified six key performance indicators that are used in its own assessment of the Company's progress. It is intended that these will provide shareholders with sufficient information to assess how the Company has performed against its Objective in the year to 31 December 2014, and over the longer term, through the application of its investment and other principal policies.

1. Annual and cumulative returns per share for the year

Total shareholder returns per share for the year

The Net Asset Value (NAV) and share price total return per share for the year ended 31 December 2014 were 13.6% and 15.0% respectively, as shown below:

Total Return (p)

NAV basis		Share price basis
(p)		(p)
Closing NAV per share	118.21	Closing share price	102.50
Plus: dividends paid in year	18.00	Plus: dividends paid in year	18.00
Total for year	136.21	Total for year	120.50
Less: opening NAV per share at 1 January 2014	(119.92)	Less: share price at 1 January 2014	(104.75)
Return for year per share	16.29	Return for year per share	15.75
Return for year	+13.6%	Return for year	+15.0%

Cumulative returns per share (p)

NAV basis		Share price basis
(p)		(p)
Closing NAV per share	118.21	Closing share price	102.50
Plus: cumulative dividends paid to date	52.20	Plus: cumulative dividends paid to date	52.20
Cumulative total return	170.41	Cumulative total return	154.70
Less: opening cumulative total return	(154.12)	Less: opening cumulative total return	(138.95)
Increase in cumulative return for year	16.29	Increase in cumulative return for year	15.75
Return for year	+10.6%	Return for year	+11.3%

Taking into account initial income tax relief, founder shareholders who invested in 1999 have seen, as at 31 December 2014, an overall gain over net investment cost of 6.5% (2013: loss 3.7%) since the launch of the Company. This is on a NAV return basis and assumes a net investment cost of 160 pence per share after initial income tax relief of 40 pence per share (both figures restated for the 2 for 1 share consolidation in 2006). Original shareholders who also took advantage of the enhanced buyback offer made in 2013 have now seen an overall gain over net investment cost on this basis of 37.8%.

Although the initial performance of the Company was disappointing, recent performance has been much better. There are two main reasons for the earlier results. The Fund started with three managers. Unfortunately two of those managers performed very poorly. Neither of the two portfolios produced any significant dividends or capital returns. To remedy this, your Board terminated their management contracts and appointed Mobeus Equity Partners LLP as the sole adviser during 2006. The second factor was that, as a result, the Fund became sub-scale. To address this, the Board decided to expand the size of the Fund so that it could participate in an active investment programme, achieve a reasonable spread of risks within the portfolio, and operate with economic cost ratios. This has now been achieved, but the very low interest rates over the last few years have had an adverse impact on returns during the scaling up process. The Fund has now achieved reasonable scale, and shareholders will have noted that as a result the Company sought to raise only £6 million in the 2014/15 fundraising which was achieved by mid-February 2015.

The figures quoted in the table shown at the beginning of this announcement and above are for the shares subscribed in the original offer for subscription in 1999/2000. Both NAV and share price returns for the year are considered to be satisfactory by the Board, while the cumulative returns are now on an improving trend. The Chairman has already commented in his Statement on more recent performance, so it is not further elaborated upon here.

For performance data for each allotment in each fundraising since the inception of the Company, please see the Investor Performance Appendix of the Annual Report.

2. The VCT's performance compared with its peer group (Benchmarking)

The Board places emphasis on the Company's performance against a peer group of VCTs. Using the benchmark of NAV total return on an investment of £100, the VCT is ranked 26 out of 56 over three years, and 20 out of 47 over five years amongst generalist VCTs by the Association of Investment Companies (AIC) (based on statistics prepared by Morningstar) as at 28 February 2015. The Board considers this performance to be satisfactory after taking account of the adverse short term consequences of increasing funds and liquidity.

In addition to its Investment Policy, the Board also monitors the Company's performance in relation to its dividend policy, compliance with the VCT qualifying investment tests, its share buyback policy and its management of costs.

3. Dividend policy

The Company has an annual target dividend of paying not less than 4.00 pence per share in respect of each financial year. It has met or exceeded this target in respect of its last five financial years.

During the year the Company paid an interim dividend of 14.00 pence per share, comprising an interim exceptional capital dividend of 12.00 pence per share and an interim income dividend of 2.00 pence per share. Following the payment of this interim dividend, cumulative dividends paid to shareholders since launch total 52.20 pence per share.

The ability of the Company to pay dividends in the future cannot be guaranteed and will be subject to performance and available cash and reserves.

The second interim dividend declared of 8.00 pence per share, to be paid on 6 May 2015, will bring the total dividends paid in respect of the year to 22.00 pence per share and will increase cumulative dividends paid to 60.20 pence per share.

4. Compliance with VCT regulation

In order to comply with VCT tax legislation, the Company must meet a number of tests set by HMRC as detailed in the Annual Report under VCT regulation within the Investment Policy. For the year ended 31 December 2014, the Company continued to meet these tests.

5. Share buybacks and discount policy

Subject to the Company having sufficient available funds and distributable reserves, it is the Board's current intention to pursue a buyback policy with the objective of maintaining the discount to the latest published NAV per share at which the shares trade at approximately 10% or less. It has succeeded in carrying out this objective in the year.

The Board considers that a 10% discount represents a fair balance between assisting investors who wish to sell shares and the majority of investors who wish to continue to invest in a portfolio of investments in unquoted shares.

Any future repurchases will be subject to the Company having appropriate authorities from shareholders and sufficient funds available for this purpose. Share buybacks will also be subject to the Listing Rules and any applicable law at the relevant time. Shares bought back in the market are always cancelled.

During the year ended 31 December 2014, shareholders holding 514,303 shares expressed their desire to sell their investments. The Company instructed its brokers, Panmure Gordon, to purchase these shares at prices representing discounts of approximately 10% to the previously announced NAV per share. The Company subsequently purchased these shares at prices of between 100.25 and 108.25 pence per share and cancelled them.

In total, the Company bought back 1.5% of the issued share capital of the Company at the beginning of the year, as calculated by reference to the issued share capital on 1 January 2014.

Continuing shareholders benefit from the difference between the net asset value and the price at which the shares are bought back and cancelled.

6. Costs

The Board monitors costs using the Ongoing Charges Ratio* which is as follows:

	2014	2013
Ongoing charges	2.8%	2.9%
Performance fee	0.0%	0.0%
Ongoing charges plus accrued performance fee	2.8%	2.9%

*The Ongoing Charges Ratio has been calculated, using the AIC recommended methodology. This figure shows shareholders the annual percentage reduction in shareholder returns as a result of recurring operational expenses, assuming markets remain static and the portfolio is not traded. Although the Ongoing Charges figure is based upon historic information, it provides shareholders with an indication of the likely level of costs that will be incurred in managing the fund in the future.

The Ongoing Charges Ratio replaces the Total Expense Ratio reported previously for several years. The Total Expense Ratio still forms the basis of any expense cap that may be borne by the Adviser. For the purpose of calculating this ratio, actual running costs are capped at 3.4% of closing net assets but exclude any irrecoverable VAT and exceptional costs. There was no breach of the expense cap for the year ended 31 December 2014 (31 December 2013: £nil).

Investment Adviser fees and other expenses

In line with the rise in net assets, Investment Adviser fees have increased from £0.92 million to £1.10 million. Other expenses have risen slightly from £0.37 million to £0.38 million, due partially to rises in printing costs resulting from a higher number of shareholders and professional fees involved with AIFMD compliance. These were offset by lower trail commissions as a cap was reached in the year.

Further details of these are contained in the Financial Statements.

INVESTMENT REVIEW

This has been an excellent year for the portfolio in which the number and value of divestments have been

exceptional.

Dealflow has remained healthy, resulting in a high level of quality new investment activity. Nine new investments were completed in 2014 and we expect this level of activity to be maintained in the current year. The Adviser believes the healthy level of dealflow reflects both improved business confidence and the continued perception that the UK banking industry remains unable to meet the funding needs of smaller businesses.

The portfolio as a whole has continued to perform strongly in the year. The valuation of the portfolio has increased by 25.8% during the year on a like-for-like basis as a result of the good trading performance at several companies, and the profitable disposals referred to in Realisations below.

New Investment

During the year, nine new investments had been completed for a total of £8.95 million. Three of these transactions were in support of the MBOs of Entanet International, Creative Graphics International and Tharstern. A fourth and fifth investments were made in Leap New Co Limited and Aussie Man & Van, in support of a corporate restructuring of the Ward Thomas Group. The sixth new investment provided development capital to Bourn Bioscience. In addition, two new acquisition vehicles also received investment, South West Services Investment (utilised following the year-end to invest in MBI as explained later), and Manufacturing Services Investment.

A further investment was made in ASL Technology in support of its buy and build strategy and to eliminate bank borrowings.

Following the partial disposal of ATG Media earlier in the year, the Company retained a £1.53 million loan and 3.8% equity investment in Turner Topco, the acquirer.

Investments remain diversified across a number of sectors primarily in support services, general retailers, media and fixed line telecommunications. Valuations of the investments still held increased slightly, principally reflecting solid progress by a number of companies.

Principal new investments in the year

Company	Business				Date of Investment			Amount of new investment (£m)
Bourn Bioscience	In vitro fertilisation clinics				January 2014			1.13
Bourn Bioscience owns and manages the Bourn Hall infertility clinics in the East of England. The investment will support the geographic expansion of this internationally renowned IVF clinic. The initial investment is supplemented by a commitment to invest significant follow-on finance as part of a buy and build strategy. The Company's latest audited accounts for the year ended 31 December 2013 show annual sales of £10.56 million and profit before interest, tax and goodwill of £0.51 million.
Entanet			Wholesale provider of internet connectivity solutions		February 2014			1.37*
Entanet is one of the UK's leading independent wholesale voice and data communications providers. Headquartered in Telford and with over 80 staff, the company provides a diverse portfolio of business class data and voice services via a network of over 2,000 wholesale and reseller channel partners in the UK. The Company's latest audited accounts for the year ended 31 December 2013 show annual sales of £29.42 million and profit before interest, tax and goodwill of £2.78 million.
* The investment into Entanet utilised £1 million from Ackling Management, one of the Company's acquisition vehicles, which is included in the above figures.
Creative Graphics International			Producer of adhesive decorative graphics for vehicles		June 2014			1.06
CGI Creative Graphics International is a leading specialist provider of adhesive decorative graphics to the automotive, recreational vehicle and airline markets. It operates from two centres, in Bedford and South Africa. The Company's latest audited accounts for the year ended 30 November 2012 show annual sales of £12.64 million and profit before interest, tax and goodwill of £2.49 million.
Tharstern		Software based management information systems				July 2014	1.16
Tharstern is a leading UK supplier of software-based management information systems to the print sector. The Company's latest audited accounts for the year ended 31 January 2014 show annual sales of £3.87 million and profit before interest, tax and goodwill of £0.80 million.
Ward Thomas		Specialist logistics, storage and removals business		December 2014			1.69
Ward Thomas is a brand-led specialist logistics, storage and removals business. The group comprises three distinct businesses operating under a common management structure with common shareholders. Separate investments were made into Leap New Co Limited, which owns the Anthony Ward Thomas and Bishopsgate businesses, of £1.17 million and into Aussie Man & Van Limited of £0.52 million. The latest audited accounts for Ward Thomas Removals Limited for the year ended 30 September 2013 show annual sales of £12.17 million and profit before interest, tax and goodwill of £1.96 million.
The VCT also invested a further £1.82 million into two new acquisition vehicle investments in the year, namely South West Services Investment ("SWSI") and Manufacturing Services Investment.

Further investment into existing portfolio companies in the year

Company	Business	Date of investment	Amount of new investment (£m)
ASL Technology	Printer and photocopier services	December 2014	0.68
ASL Technology is a printer and photocopier services business based in Cambridge and focused on SME customers, primarily based in East Anglia and the northern Home Counties. The VCT completed a further investment into the company of £0.68 million in December 2014, to provide capital to refinance the bank and support the company's buy and build strategy. ASL has a £13.27 million turnover and has generated NPBIT&A in the year ended 30 September 2014 of £1.18 million.

The Company also invested a further £0.04 million in the form of a loan to Gro-Group Holdings Limited.

New investments after the year-end

Company	Business	Date of investment	Amount of new investment (£m)
Media Business Insight	Events and publishing	January 2015	2.72*
Media Business Insight is a publishing and events business focused on the creative production industries; specifically advertising, TV production and film. Based in Shoreditch, East London, the company comprises four distinct brands. The investment represented an attractive opportunity to invest in a sector leading company underpinned by strong recurring revenues from subscriptions and events. The company's latest audited accounts for the year ended 31 December 2013 show annual sales of £8.24 million and profit before interest, tax and goodwill of £1.06 million.

*A further £1.14 million was invested into SWSI adding to the Company's earlier investment of £0.91 million. This enabled SWSI to acquire Media Business Insight Limited ("MBIL"). The Company has also advanced a non-qualifying loan of £0.67 million to MBIL. SWSI changed its name after the year-end to Media Business Insight Holdings Limited.

The Company also made a modest additional investment of £0.06 million in Racoon International Holdings Limited, a hair products business, in January 2015. It is hoped this further investment will add value to a previously unsuccessful investment. The Company wished to back a successful sales-orientated Mobeus operating partner who has joined the management team of the business.

In February 2015, the Company also made a follow on loan investment of £0.80 million into Entanet Holdings Limited.

Realisations

The year has been marked by a number of sizeable, profitable realisations which have all generated attractive returns for the Company. The Company completed the partial sale of ATG Media and the full sales of each of MachineWorks, Monsal, and DiGiCo Global in the first half of the year, followed by Focus Pharma, Youngman and EMaC in the second half, for total net cash proceeds of £11.87 million compared to their original cost of £2.80 million. As part of the ATG Media transaction, the Company also received anon-cash consideration of £1.53 million by way of loan stock and equity investments in Turner Topco Limited, the acquirer. As a result, the Company retains a 3.8% shareholding in the business.

Other realisations were £0.06 million including a post-sale receipt relating to Iglu.Com Holidays. With the loan repayments of £1.62 million, as set out below, total net proceeds amounted to £15.08 million.

Principal disposals in the year

Company	Business	Period of investment	Total cash proceeds over the life of the investment/Multiple over cost
MachineWorks	Software for CAM and Machine tool vendors	April 2006 - April 2014	£0.56 million
			4.16 times cost
MachineWorks' core software products are used by manufacturers of machine tool controllers to simulate real life manufacturing situations. It was de-merged from the Company's original investment in VSI in March 2011 and was sold to Westec Holding Company Limited for £0.33 million. The original investment of £0.14 million has returned £0.56 million in cash over its life.
ATG Media	Publisher and online auction platform operator	October 2008 - present	£3.75 million
			1.87 times cost to date
A partial sale of ATG Media via a secondary MBO to a mid-market private equity house, ECI Partners, has realised net proceeds of £4.63 million, being cash of £3.10 million, with the balance being a new loan stock investment and a minority 3.8% equity stake, together valued at £1.56 million. The original investment cost was £2.00 million.
Monsal	Supplier of engineering services to the water and waste sectors	December 2007 - June 2014	£1.44 million
			1.87 times cost
The sale of Monsal, a renewable energy consultancy, to the US conglomerate General Electric, realised £1.01 million. The 1.87x return on total original cost of £0.77 million represents a return on an investment originally made in 2007 which required support from further funding rounds in 2009 and 2011.
DiGiCo	Audio mixing desks	July 2007 - July 2014	£5.50 million
			5.50 times cost
The VCT realised its remaining investment through a sale to a new professional audio group backed by Electra Partners. The business has demonstrated strong and consistent growth since investment. Turnover has grown threefold from £8 million to £24 million over the period of the VCT's investment. This final sale realised £1.73 million. It followed a partial realisation in December 2011, through a secondary buyout by Living Bridge (formerly ISIS Equity Partners). The Company's original investment was £1.00 million.
Focus Pharma	Generic pharmaceutical products	October 2007 - October 2014	£2.93 million
			3.79 times cost
The VCT realised its investment in Focus Pharma through a trade sale to Cinven-backed Amdipharm Mercury Group for £1.57 million. Focus is engaged in the distribution of generic pharmaceuticals both for third parties, and on its own account, where it develops and licenses the drug for its own benefit. The business has demonstrated strong growth throughout the investment period with turnover increasing three-fold to just under £40 million per annum. The original investment of £0.77 million has returned cash of £2.93 million to date.
Youngman	Access towers and ladders	October 2006 - October 2014	£1.23 million
			2.46 times cost
The VCT realised this investment through a sale to Werner Co (US) for £0.83 million. Based in Essex, Youngman, was established in the 1920s and today produces access equipment including specialist step and loft ladders, access and work platforms, and extension and combination ladders. The investment of £0.50 million has returned £1.23 million in cash over its life.
EMaC	Service plans for the motor trade	October 2011- December 2014	£3.89 million
			3.08 times cost
The VCT sold its investment in EMaC to Innovation Group plc for £3.30 million. EMaC is one of the UK's leading providers and administrators of outsourced service plans to car manufacturers and franchised dealers in the motor trade. During the period of this investment, EMaC consistently outperformed expectations and increased turnover by 60% post investment. The original investment of £1.26 million has returned £3.89 million in cash to date.

Loan stock repayments

Loan stock repayments totalled £4.47 million for the year, including £2.85 million as part of the proceeds from the companies realised above. Positive cashflow at seven other companies contributed to the balance of £1.62 million. These proceeds are summarised below:-

Company	Business	Month	Amount (£000's)
Country Baskets	Artificial flowers, floral sundries and home décor products	June/December	1,000
Motorclean	Vehicle cleaning and valeting services	June/October	256
Westway	Air conditioning services	January/August	133
Tessella	Consultancy services	Various	100
Virgin Wines	Online wine retailer	July	69
Newquay Helicopters	Helicopter services	April	42
Monsal	Engineering service to the water and waste sectors	May (before sale in June)	24
		Total	1,624

Adviser's investment outlook

This has been a significant year for the portfolio, both in terms of the number of new investments made and the returns earned from seven major realisations.

We are pursuing a number of opportunities which we hope will materialise over the coming months. Dealflow remains healthy, reflecting our perception that the level of merger and acquisition activity in the UK small company sector continues to be solid. Our intention is to maximise the opportunities presented by these current favourable market conditions to steer new investment deals through to completion, to meet our aims of sustaining current investment levels and securing continued good returns to shareholders.

Ten Largest investments in the portfolio at 31 December 2014 by valuation

Entanet Holdings Limited		ASL Technology Holdings Limited (non-qualifying)		Virgin Wines Holding Company Ltd Limited
www.enta.net		www.aslh.co.uk		www.virginwines.co.uk
Cost	£1,369,000	Cost	£1,934,000	Cost	£1,931,000

Valuation	£2,335,000	Valuation	£2,192,000	Valuation	£2,032,000

Basis of valuation		Basis of valuation		Basis of valuation
Earnings multiple		Earnings multiple		Earnings multiple

Equity % held		Equity % held		Equity % held
9.6%		9.5%		9.7%

Income receivable in year		Income receivable in year		Income receivable in year
£131,029		£9,642		£187,259

Business		Business		Business
Wholesale communications provider		Printer and photocopier services		Online wine retailer

Location		Location		Location
Telford Shropshire		Cambridge		Norwich

Original transaction		Original transaction		Original transaction
Management buyout		Management buyout		Management buyout

Audited financial information		Audited financial information		Audited financial information

Period ended	31 December 2013¹	Year ended	30 September 2014	Period ended	27 June 2014¹
Turnover	£29,415,000	Turnover	£13,266,000	Turnover	£35,695,000
Operating profit	£2,782,000	Operating profit	£1,176,000	Operating profit	£1,580,000
Net assets	£2,332,000	Net liabilities	£(3,123,000)	Net assets	£6,175,000

Year ended	30 November 2012¹	Year ended	30 September 2013	Period ended	28 June 2013¹
Turnover	£25,853,000	Turnover	£14,484,000	Turnover	£34,475,000
Operating profit	£2,431,000	Operating profit	£1,296,000	Operating profit	£2,010,000
Net assets	£5,691,000	Net liabilities	£(1,214,000)	Net assets	£4,952,000
¹The financial information quoted above is for Entanet International Limited prior to the MBO which completed in February 2014.				¹ The financial information quoted above relates to the operating subsidiary, Virgin Wine Online Limited and includes figures relating to the performance of this company prior to the MBO which completed in November 2013.
Movements during the year		Movements during the year		Movements during the year
MBO investment made in February 2014.		Further investment of £0.68 million.		A loan repayment of £0.07 million has been received.

Fullfield Limited			Veritek Global Holdings Limited		Turner Topco Limited
www.motorclean.net			www.veritekglobal.com		www.antiquestradegazette.com
Cost		£1,537,000	Cost	£1,620,000	Cost	£1,529,000

Valuation		£1,630,000	Valuation	£1,629,000	Valuation	£1,540,000

Basis of valuation			Basis of valuation		Basis of valuation
Earnings multiple			Earnings multiple		Earnings multiple

Equity % held			Equity % held		Equity % held
9.8%			10.3%		3.8%

Income receivable in year			Income receivable in year		Income receivable in year
£161,324			£181,170		£91,910

Business			Business		Business
Provider of vehicle cleaning and valet services			Maintenance of imaging equipment		Publisher and on-line auction platform operator

Location			Location		Location
Laindon, Essex			Eastbourne, East Sussex		London

Original transaction			Original transaction		Original transaction
Management buyout			Management buyout		Secondary buyout

Audited financial information			Audited financial information		Audited financial information

Year ended	31 March 2014		Year ended	31 March 2014¹	Year ended	30 September 2014
Turnover	£38,155,000		Turnover	£14,443,000	Turnover	£4,126,000
Operating profit	£2,554,000		Operating profit	£249,000	Operating loss	£(539,000)
Net assets	£2,567,000		Net liabilities	£(804,000)	Net liabilities	£(834,000)

Year ended	31 March 2013		Year ended	31 March 2013²	Year ended	30 September 2013¹
Turnover	£24,537,000		Turnover	£24,684,000	Turnover	£13,783,000
Operating profit	£1,234,000		Operating profit	£1,506,000	Operating profit	£3,161,000
Net assets	£2,576,000		Net assets	£6,245,000	Net assets	£5,764,000
			¹The financial information quoted above is for eight months only, after the acquisition of Veritek Global Limited in July 2013		¹The financial information quoted above for 2013 is for ATG Media Holdings Limited prior to the secondary MBO which completed in June 2014.
			²The financial information quoted above for 2013 is for Veritek Global Limited prior to the MBO which completed in July 2013
Movements during the year
Fullfield made loan repayments totalling £0.26 million during the year.			None.		The partial disposal of the Company's investment in ATG Media to Turner TopCo resulted in the above investment in the acquirer, in June 2014.

Tessella Holdings Limited			Gro-Group		Leap New Co Limited (trading as Ward Thomas Removals)
www.tessella.com			www.gro.co.uk		www.ward-thomas.co.uk
Cost		£1,078,000	Cost	£1,578,000	Cost	£1,175,000

Valuation		£1,433,000	Valuation	£1,429,000	Valuation	£1,175,000

Basis of valuation			Basis of valuation		Basis of valuation
Earnings multiple			Earnings multiple		Cost

Equity % held			Equity % held		Equity % held
5.4%			8.4%		6.2%

Income receivable in year			Income receivable in year		Income receivable in year
£116,934			£121,067		£4,113

Business			Business		Business
Provider of science powered technology and consulting services			Manufacturer and distributor of baby sleep products		Logistics, removal and storage

Location			Location		Location
Abingdon, Oxfordshire			Ashburton, Devon		London

Original transaction			Original transaction		Original transaction
Management buyout			Management buyout		Corporate restructuring

Audited financial information			Audited financial information		Audited financial information

Year ended	31 March 2014		Year ended	30 June 2013¹	Year ended	30 September 2013
Turnover	£23,146,000		Turnover	£11,444,000	Turnover	£12,169,000
Operating profit	£3,652,000		Operating profit	£775,000	Operating profit	£1,995,000
Net assets	£4,213,000		Net assets	£1,178,000	Net assets	£7,597,000

Year ended	31 March 2013		Year ended	30 June 2012¹	Year ended	30 September 2012
Turnover	£14,443,000		Turnover	£10,945,000	Turnover	£10,983,000
Operating profit	£2,064,000		Operating profit	£663,000	Operating profit	£1,559,000
Net assets	£4,306,000		Net assets	£1,080,000	Net assets	£6,807,000
			¹The financial information quoted above is for Gro-Group Holdings Limited's only active subsidiary and includes figures prior to the MBO which completed in March 2013
Movements during the year
Tessella made quarterly loan stock repayments totalling £0.10 million.			A further loan of £0.04 million was made in October.		New investment made in December 2014.

Tharstern Group Limited
www.tharstern.com
Cost		£1,150,000

Valuation		£1,150,000

Basis of valuation
Cost

Equity % held
12.2%

Income receivable in year
£43,719

Business
Software-based Management Information Systems to the print sector

Location
Colne, Lancashire

Original transaction
Management buyout

Audited financial information

Year ended	31 January 2014
Turnover	£3,871,000
Operating profit	£799,000
Net assets	£885,000

Year ended	31 January 2013
Turnover	£3,358,000
Operating profit	£690,000
Net assets	£770,000

Movements during the year
Investment made in July 2014.

The remaining 24 investments in the portfolio have a current cost of £10.15 million and were valued at 31 December 2014 at £8.45 million.

Further details of the investments in the portfolio may be found on the Mobeus website: www.mobeusequity.co.uk.

Principal risks, management and regulatory environment

The Directors acknowledge the Board's responsibilities for the Company's internal control systems and have instigated systems and procedures for identifying, evaluating and managing the significant risks faced by the Company. This includes a key risk management review which takes place at each quarterly Board meeting. Further details of these are contained in the section of the corporate governance section of the Director's Report in the Annual Report. The principal risks identified by the Board are set out below:

Risk	Possible consequences	How the Board manages risk
Economic	Events such as an economic recession and movement in interest rates could affect trading conditions for smaller companies and consequently the value of the Company's qualifying investments.	-	The Board monitors the portfolio as a whole to (1) ensure that the Company invests in a diversified portfolio of companies and (2) ensure that developments in the macro-economic environment such as movements in interest rates are monitored.
Loss of approval as a Venture Capital Trust	The Company must comply with section 274 of the Income Tax Act 2007 ("ITA") which allows it to be exempted from capital gains tax on investment gains. Any breach of these rules may lead to the Company losing its approval as a Venture Capital Trust (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 Company becoming subject to tax. The Company would also lose its exemption from corporation tax on capital gains.	-	The Company's VCT qualifying status is continually reviewed by the Investment Adviser.
Loss of approval as a Venture Capital Trust		-	The Board receives regular reports from Robertson Hare LLP who has been retained to undertake an independent VCT status monitoring role.
Investment	Investment in unquoted small companies involves a higher degree of risk than investment in fully listed companies. Smaller companies often have limited product lines, markets or financial resources and may be dependent for their management on a smaller number of key individuals.	-	The Board regularly reviews the Company's investment strategy.
Investment		-	Careful selection and review of the investment portfolio on a regular basis.
Regulatory	The Company is required to comply with the Companies Act, the listing rules of the UK Listing Authority and United Kingdom Accounting Standards. Changes to and breach of any of these might lead to suspension of the Company's Stock Exchange listing, financial penalties or a qualified audit report.	-	Regulatory and legislative developments are kept under review by the Board.
Financial and operating	Failure of the systems at any of the third party service providers that the Company has contracted with could lead to inaccurate reporting or monitoring. Inadequate controls could lead to the misappropriation or insecurity of assets.	-	The Board carries out an annual review of the Internal controls in place and reviews the risks facing the Company at each quarterly Board meeting.
Financial and operating		-	It reviews the performance of the service providers annually.
Market	Movements in the valuations of the VCT's investments will, inter alia, be connected to movements in UK Stock Market indices.	-	The Board receives quarterly valuation reports from the Adviser.
Market		-	The Adviser alerts the Board about any adverse movements.
Asset liquidity	The Company's investments may be difficult to realise.	-	The Board receives reports from the Adviser and reviews the portfolio at each quarterly Board meeting. It carefully monitors investments where a particular risk has been identified.
Market liquidity	Shareholders may find it difficult to sell their shares at a price which is close to the net asset value.	-	The Board has a share buyback policy which seeks to mitigate market liquidity risk. This policy is reviewed at each quarterly Board meeting.
Counterparty	A counterparty may fail to discharge an obligation or commitment that it has entered into with the Company.	-	The Board regularly reviews and agrees policies for managing these risks.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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

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

In preparing these financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

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

· state whether the financial statements have been prepared in accordance with the United Kingdom

accounting standards, subject to any material departures disclosed and explained in the financial statements;

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that

the Company will continue in business;

· prepare a Strategic Report, a Directors' Report, Directors' Remuneration Report which comply with the

requirements of the Companies Act 2006.

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

Website publication

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

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

The Directors confirm to the best of their knowledge that:

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

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

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

Neither the Company nor the Directors accept any liability to any person in relation to the Annual Report except to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90A and schedule 10A of the Financial Services and Markets Act 2000.

For and on behalf of the Board:

Christopher Moore

Chairman

NON STATUTORY ACCOUNTS

PRIMARY FINANCIAL STATEMENTS

Income Statement

for the year ended 31 December 2014

		Year ended			Year ended
		31 December 2014			31 December 2013
	Note
		Revenue	Capital	Total	Revenue	Capital	Total
		£	£	£	£	£	£
Unrealised gains on investments	7	-	1,123,572	1,123,572	-	2,785,539	2,785,539
Realised gains on investments	7	-	4,911,818	4,911,818	-	258,724	258,724
Income	2	2,415,923	-	2,415,923	1,737,504	-	1,737,504
Investment adviser's fees	3	(275,054)	(825,163)	(1,100,217)	(228,977)	(686,932)	(915,909)
Other expenses		(380,120)	-	(380,120)	(373,788)	-	(373,788)
Profit on ordinary activities before taxation		1,760,749	5,210,227	6,970,976	1,134,739	2,357,331	3,492,070

Taxation on ordinary activities	4	(169,152)	169,152	-	(133,343)	133,343	-

Profit for the year		1,591,597	5,379,379	6,970,976	1,001,396	2,490,674	3,492,070

Basic and diluted earnings per ordinary share	6	3.91p	13.21p	17.12p	2.96p	7.35p	10.31p

All the items in the above statement derive from continuing operations of the Company. No operations were acquired or discontinued in the year. The total column is the Profit and Loss Account of the Company. There were no other recognised gains and 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 return as stated above and at historical cost.

Balance Sheet

As at 31 December 2014

	Note
		31 December 2014	31 December 2013
		£	£
Fixed assets
Investments at fair value	7	24,999,290	24,569,769

Current assets
Debtors and prepayments		244,103	305,234
Current investments		15,869,534	14,318,103
Cash at bank		9,445,843	3,125,287
		25,559,480	17,748,624

Creditors: amounts falling due within one year		(267,733)	(194,670)
Net current assets		25,291,747	17,553,954

Net assets		50,291,037	42,123,723


Capital and reserves
Called up share capital	8	425,434	351,272
Share premium reserve	8	5,985,042	13,374,724
Capital redemption reserve	8	5,143	969,753
Revaluation reserve	8	1,214,933	4,518,594
Special distributable reserve	8	33,748,039	17,418,387
Profit and loss account	8	8,912,446	5,490,993
Equity shareholders' funds	8	50,291,037	42,123,723

Basic and diluted net asset value per ordinary share	9	118.21p	119.92p

Reconciliation of Movements in Shareholders' Funds

for the year ended 31 December 2014

	Note	Year ended 31 December 2014	Year ended 31 December 2013
		£	£
Opening shareholders' funds		42,123,723	33,537,271
Share capital subscribed for in the year - net of expenses	8	9,243,918	15,358,285
Share capital bought back in the year - including expenses	8	(538,384)	(7,634,821)
Profit for the year		6,970,976	3,492,070
Dividends paid in year	5	(7,509,196)	(2,629,082)
Closing shareholders' funds		50,291,037	42,123,723

Cash Flow Statement

for the year ended 31 December 2014

	Year ended		Year ended
	31 December 2014		31 December 2013
	Note	£		£
Interest income received		1,955,201		1,419,008
Dividend income		563,092		166,382
Other income		10,516		-
Investment adviser fees paid		(1,100,218)		(850,830)
Cash payments for other expenses		(302,777)		(364,197)
Net cash inflow from operating activities		1,125,814		370,363


Investing activities
Sale of investments	7	14,017,378		2,514,504
Purchase of investments	7	(8,467,543)		(2,201,941)
Net cash inflow from investing activities		5,549,835		312,563


Dividends
Equity dividends paid	5	(7,509,196)		(2,629,082)

Cash outflow before liquid resource management and financing		(833,547)		(1,946,156)

Management of liquid resources
Increase in monies held in current investments		(1,551,431)		(5,297,959)

Financing
Shares issued as part of joint fundraising offer for subscription and dividend investment scheme	8	9,243,918		8,434,913
Shares issued as part of the Enhanced Buyback Facility		-		250,000
Shares bought back as part of Enhanced Buyback Facility (including expenses)		-		(375,149)
Purchase of own shares	8	(538,384)		(586,300)
Net cash inflow from financing		8,705,534		7,723,464
Increase in cash for the year		6,320,556		479,349

The notes below form part of these financial statements.

NOTES TO THE ACCOUNTS

1. Accounting policies

A summary of the principal accounting policies, all of which have been applied consistently throughout the year, is set out below.

a) Basis of accounting

The accounts have been prepared under UK Generally Accepted Accounting Practice (UK GAAP) and the Statement of Recommended Practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ("the SORP") issued by the Association of Investment Companies in January 2009. The financial statements are prepared under the historical cost convention except for the measurement of certain financial instruments at fair value, in accordance with FRS26.

b) Presentation of the Income Statement

In order to better reflect the activities of a VCT and in accordance with the SORP, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The revenue column of profit attributable to equity shareholders is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 274 Income Tax Act 2007.

c) Investments

All investments held by the Company are classified as "fair value through profit and loss", and measured in accordance with the International Private Equity and Venture Capital Valuation ("IPEVCV") guidelines, as updated in September 2009. This classification is followed as the Company's business is to invest in financial assets with a view to profiting from their total return in the form of capital growth and income.

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. Purchases and sales of quoted investments are recognised on the trade date where a contract of sale exists whose terms require delivery within a time frame determined by the relevant market. Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional.

Unquoted investments are stated at fair value by the Directors in accordance with the following rules, which are consistent with the IPEVCV guidelines:

All investments are held at the price of a recent investment for an appropriate period where there is considered to have been no change in fair value. Where such a basis is no longer considered appropriate, the following factors will be considered:

(i) Where a value is indicated by a material arms-length transaction by an independent third party in the shares of a company, this value will be used.

(ii) In the absence of i), and depending upon both the subsequent trading performance and investment structure of an investee company, the valuation basis will usually move to either:-

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

or:-

b) 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 fallen permanently below cost, the loss is treated as a permanent impairment and as a realised loss, even though the investment is still held. The Board assesses the portfolio for such investments and, after agreement with the Investment Adviser, will agree the values that represent the extent to which an investment loss has become realised. This is based upon an assessment of objective evidence of that investment's future prospects, to determine whether there is potential for the investment to recover in value.

(iii) Premiums that will be received upon repayment of loan stock investment are accrued at fair value when the Company receives the right to the premium and when considered recoverable.

(iv) Where an earnings multiple or cost less impairment basis is not appropriate and overriding factors apply, discounted cash flow or net asset valuation bases may be applied.

d) Cash and liquid resources

Cash, for the purposes of the cash flow statement, comprises cash in hand and deposits repayable on demand. Liquid resources are current asset investments which are disposable without curtailing or disrupting the business and are either readily convertible into known amounts of cash at their carrying values. Liquid resources comprise term deposits of less than one year (other than cash) and investments in money managed funds.

e ) Income

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

Interest income on loan stock is accrued on a daily basis. Provision is made against this where recovery is doubtful or where it will not be received in the foreseeable future. Where the loan stocks require interest or a redemption premium to be paid on redemption, the interest and redemption premium is recognised as income once redemption is reasonably certain. Until such date interest is accrued daily and included within the valuation of the investment, where appropriate.

f) Capital reserves

(i) Realised (included within the Profit and Loss Account reserve)

The following are accounted for in this reserve:

• Gains and losses on realisation of investments;

• Permanent diminution in value of investments;

• Transaction costs incurred in the acquisition of investments; and

• 75% of management fee expense, together with the related tax effect to this reserve in accordance with the policies.

(ii) Revaluation reserve (Unrealised capital reserve)

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

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

(iii) Special distributable reserve

The cost of share buybacks is charged to this reserve. In addition, any realised losses on the sale or impairment of investments, and 75% of the adviser fee expense, and the related tax effect, are transferred from the Profit and Loss Account reserve to this reserve.

(iv) Share premium reserve

This reserve contains the excess of gross proceeds less issue costs over the nominal value of shares allotted under recent Offers for Subscription and the Company's dividend investment scheme.

(v) Capital Redemption reserve

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

g) Expenses

All expenses are accounted for on an accruals basis.

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

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

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

h) Taxation

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

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

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

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

2 Income

	2014	2013
	£	£
Income from bank deposits	118,350	147,949

Income from investments
- from equities	456,510	220,304
- from overseas based OEICs	26,884	25,216
- from loan stock	1,797,666	1,344,035
- from interest on preference share dividend arrears	5,997	-
	2,287,057	1,589,555

Other income	10,516	-

Total income	2,415,923	1,737,504

Total income comprises
Dividends	483,394	245,520
Interest	1,922,013	1,491,984
Other income	10,516	-
	2,415,923	1,737,504
Income from investments comprises
Listed overseas securities	26,884	25,216
Unlisted UK securities	462,507	220,304
Loan stock interest	1,797,666	1,344,035
	2,287,057	1,589,555

Total loan stock interest due but not recognised in the year was £112,212 (2013: £177,912).

3 Investment Adviser's fees

	2014			2013
	Revenue	Capital	Total	Revenue	Capital	Total
	£	£	£	£	£	£
Mobeus Equity Partners LLP	275,054	825,163	1,100,217	228,977	686,932	915,909

Under the terms of a revised investment management agreement dated 12 November 2010, Mobeus Equity Partners LLP ("Mobeus LLP") provides investment advisory, administrative and company secretarial services to the Company, for a fee of 2% per annum of closing net assets, calculated on a quarterly basis by reference to the net assets at the end of the preceding quarter, plus a fixed fee of £112,518 per annum, the latter being subject to indexation, if applicable. In 2013, Mobeus has agreed to waive such further increases due to indexation, until otherwise agreed with the Board.

The investment adviser fee includes provision for a cap on expenses, excluding irrecoverable VAT and exceptional items, set at 3.4% of closing net assets at the year-end. In accordance with the investment management agreement, any excess expenses are borne by the Investment Adviser. The excess expenses during the year amounted to £nil (2013: £nil).

Under the terms of a separate agreement dated 1 November 2006, from the end of the accounting period ending on 31 January 2009 and in each subsequent accounting period throughout the life of the Company, the Investment Adviser will be entitled to receive a performance related incentive fee of 20% of the dividends declared and paid in excess of a target rate of 6% of the net asset value per share at 5 April 2007 (indexed each year for RPI) provided that the average Net Asset Value ("NAV") per share for each such year is maintained at Base NAV or above. The performance fee will be payable annually, with any cumulative shortfalls below the annual dividend target having to be made up in later years. The incentive payment will be shared between the Investment Adviser 75% and the Promoter 25%. At 31 December 2014, the annual dividend target is 8.12 pence per share. There is a shortfall of 15.93 pence per share between the actual dividends paid since 5 April 2007 and the cumulative target to 31 December 2014. The base NAV is 120.34 pence at 31 December 2014. No incentive fee is payable to date.

The Company is responsible for external costs such as legal and accounting fees, incurred on transactions that do not proceed to completion ("abort expenses") subject to the cap on total annual expenses referred to above. In accordance with general market practice, the Investment Adviser earned arrangement fees and fees for supplying Directors and/or monitoring services from investee companies. The share of such fees attributable to the investments made by the Company were £150,030 (2013: £145,507) and £134,927 (2013: £108,284) respectively. The fees for supplying directors and/or monitoring services were from 30 (2013: 24) investee companies during the year.

Under the terms of the Mobeus advised VCT's Linked Offer for Subscription launched on 28 November 2013, and which closed on 30 May 2014, Mobeus was entitled to fees of 3.25% of the investment amount received from investors. This amount totalled £1,096,156 across all four VCTs involved in the Offer, out of which all of the costs associated with the Offer were met, excluding any payments to advisers facilitated under the terms of the Offer.

Under the terms of Offers for Subscription with the other Mobeus advised VCTs launched on 10 December 2014, Mobeus are entitled to fees of 3.25% of the investment amount received from investors. The Company's Offer closed on18 February 2015, fully subscribed. Based upon fully subscribed Offers of £39 million across all four VCTs, this equalled £1,267,500, out of which all costs associated with the Offers were met, excluding any payments to advisers facilitated under the terms of the Offer.

4 Taxation on profit on ordinary activities

	2014			2013
	Revenue	Capital	Total	Revenue	Capital	Total
	£	£	£	£	£	£
a) Analysis of tax charge:
UK Corporation tax on profits for the year	169,152	(169,152)	-	133,343	(133,343)	-
Total current tax charge	169,152	(169,152)	-	133,343	(133,343)	-
Corporation tax is based on a rate of 20% (2013: 20%)

b) Profit on ordinary activities before tax	1,760,749	5,210,227	6,970,976	1,134,739	2,357,331	3,492,070
Profit on ordinary activities multiplied by small company rate of corporation tax in the UK of 20% (2013: 20%)	352,150	1,042,045	1,394,195	226,948	471,466	698,414
Effect of:
UK dividends not taxable	(91,302)	-	(91,302)	(44,061)	-	(44,061)
Unrealised gains not taxable	-	(224,714)	(224,714)	-	(557,108)	(557,108)
Realised gains not taxable	-	(982,364)	(982,364)	-	(51,745)	(51,745)
Marginal relief	4,119	(4,119)	-	(4,044)	4,044	-
Losses brought forward	(97,761)	-	(97,761)	(45,500)	-	(45,500)
Unrelieved expenditure	1,946	-	1,946	-	-	-
Actual current tax charge	169,152	(169,152)	-	133,343	(133,343)	-

Tax relief relating to investment adviser fees is allocated between revenue and capital where such relief can be utilised.

No asset or liability has been recognised for deferred tax in relation to capital gains or losses on revaluing investments as the Company is exempt from corporation tax in relation to capital gains or losses as a result of qualifying as a Venture Capital Trust.

There is no potential liability to deferred tax (2013 : £nil). There is an unrecognised deferred tax asset of £159,755 (2013 : £272,720).

5 Dividends paid and payable

	2014	2013
	£	£
Amounts recognised as distributions to equity holders in the year:
Interim income dividend for the 11 months ended 31 December 2012 of 1.00 pence per ordinary share paid 10 May 2013	-	349,878
Interim capital dividend for the 11 months ended 31 December 2012 of 4.50 pence per ordinary share paid 10 May 2013	-	1,574,452
Interim income dividend for the year ended 31 December 2013 of 1.25 pence per ordinary share paid 20 September 2013	-	440,471
Interim capital dividend for the year ended 31 December 2013 of 0.75 pence per ordinary share paid 20 September 2013	-	261,281
Final income dividend for the year ended 31 December 2013 of 1.25 pence per ordinary share paid 16 May 2014	514,726	-
Final capital dividend for the year ended 31 December 2013 of 2.75 pence per ordinary share paid 16 May 2014	1,132,396	-
Interim income dividend for the year ended 31 December 2014 of 2.00 pence per ordinary share paid 12 September 2014	837,439	-
Interim capital dividend for the year ended 31 December 2014 of 12.00 pence per ordinary share paid 12 September 2014	5,024,635	-
	7,509,196*	2,626,082*

* Of this amount £1,050,003 (2013: £342,378) of new shares were issued as part of the DIS scheme.

Distributions to equity holders after the year-end:
Second interim income dividend declared for the year ended 31 December 2014 of 1.00 pence (year ended 31 December 2013: final 1.50 pence) per ordinary share	477,113	568,247
Second interim capital dividend declared for the year ended 31 December 2014 of 7.00 pence (year ended 31 December 2013: final 2.50 pence) per ordinary share	3,339,790	947,078
	3,816,903	1,515,325

Any proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

Set out below are the total income dividends payable in respect of the financial year, which is the basis on which the requirements of section 274 of the Income Tax Act are considered.

	2014	2013
	£	£
Revenue available for distribution by way of dividends for the year	1,591,597	1,001,396

Interim dividend for the year ended 31 December 2014 of 2.00 pence (year ended	837,439	440,471
31 December 2013: 1.25 pence) per ordinary share
Second interim income dividend for the year ended 31 December 2014	477,113	568,247
of 1.00 pence (year ended 31 December 2013: final 1.50 pence) per ordinary share
Total income dividends	1,314,552	1,008,718

6 Basic and diluted earnings per share

	2014	2013
	£	£
Total earnings after taxation:	6,970,976	3,492,070
Basic and diluted earnings per share (note a)	17.12p	10.31p
Net revenue from ordinary activities after taxation	1,591,597	1,001,396
Basic and diluted revenue return per share (note b)	3.91p	2.96p

Net unrealised capital gains	1,123,572	2,785,539
Net realised capital gains	4,911,818	258,724
Capital expenses (net of taxation)	(656,011)	(553,589)
Total capital return	5,379,379	2,490,674
Basic and diluted capital return per share (note c)	13.21p	7.35p

Weighted average number of shares in issue in the year	40,720,836	33,875,228

Notes:

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

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

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

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

7 Investments at fair value

Movements in investments during the year are summarised as follows:

	Traded on AIM	Unquoted equity Shares	Unquoted preference Shares	Loan stock	Total
	£	£	£	£	£
Cost at 31 December 2013	199,998	5,853,676	25,070	16,070,641	22,149,385
Unrealised gains/(losses) at 31 December 2013	91,666	2,988,303	(7,302)	618,549	3,691,216
Permanent impairment in value of investments	-	(701,697)	(1,649)	(567,486)	(1,270,832)
Valuation at 31 December 2013	291,664	8,140,282	16,119	16,121,704	24,569,769

Purchases at cost	30	2,546,184	2,724	6,927,681	9,476,619
Sale proceeds	-	(9,372,908)	(10,513)	(6,000,606)	(15,384,027)
Reclassified at value	-	(418,408)	391,263	27,145	-
Realised gains in the year	-	4,545,654	7,142	660,561	5,213,357
Unrealised gains / (losses) in the year	8,321	(299,977)	(195,438)	1,610,666	1,123,572
Valuation at 31 December 2014	300,015	5,140,827	211,297	19,347,151	24,999,290

Cost at 31 December 2014	200,028	7,070,909	26,006	17,758,246	25,055,189
Unrealised gains/(losses) at 31 December 2014	99,987	(1,228,385)	186,940	2,156,391	1,214,933
Permanent impairment in value of investments	-	(701,697)	(1,649)	(567,486)	(1,270,832)
Valuation at 31 December 2014	300,015	5,140,827	211,297	19,347,151	24,999,290

The major components of the increase in unrealised valuations of £1,123,572 in the year were increases of £966,449 in Entanet Holdings Limited, £623,866 in ASL Technology Holdings Limited, and £293,335 in Westway Services (2014) Limited. These gains were partly offset by falls of £450,933 in Blaze Signs Holdings Limited, £275,601 in Bourn Bioscience Limited and £176,330 in Fullfield Limited (Motorclean).

Details of investment transactions such as disposal proceeds, valuation movements, cost and carrying value at the end of previous year are contained in the Investment Portfolio Summary in the Acounts.

Reconciliation of investment transactions to cash flow and income statement movements

The cash flow investment proceeds shown above of £15,384,027 differs from the sale proceeds shown in the cash flow statement of £14,017,378, by £1,366,649. This is due to new equity and loan stock instruments of £1,529,075 received as non-cash consideration for the partial sale of ATG Media but included above, £519,999 of cash received relating to the restructuring of the investment in Westway Services*, £56,034 of deferred cash proceeds not received until after the year-end and transaction costs paid of £301,539, not deducted from proceeds above. These transaction costs also account for the difference in realised gains between £5,213,357 shown above and £4,911,818 disclosed in the Income Statement.

Purchases above of £9,476,619 differ to that shown in the Cash Flow Statement of £8,467,543 by £1,009,076. This is made up of the accounting cost of ATG Media Holdings Limited sale proceeds, received in the form of the acquirer's equity and loan stock of £1,529,075, less £519,999 invested as cash as part of the Westway Services* restructure.

*-Although the cash movements above of £519,999 relating to the restructuring of the investment in Westway Services Limited are included in the Cash Flow Statement, they have been netted off each other in the movements on investments reported above.

8 Movement in share capital and reserves

	Called up Share capital	Share Premium reserve	Capital redemption reserve	Revaluation reserve	Special distributable reserve* (note a)	Profit and loss account* (note b)	Total
	£	£	£	£	£	£	£

At 1 January 2014	351,272	13,374,724	969,753	4,518,594	17,418,387	5,490,993	42,123,723

Share buybacks	(5,143)	-	5,143	-	(538,384)	-	(538,384)
Shares issued via Dividend Investment Scheme	10,233	1,039,770	-	-	-	-	1,050,003
Shares issued via Offer for Subscription	69,072	8,128,331	-	-	(3,488)	-	8,193,915
Transfer of realised losses to Special distribution reserve (note a)	-	-	-	-	(656,012)	656,012	-
Cancellation of Share premium account and capital redemption reserve (note a)	-	(16,557,783)	(969,753)	-	17,527,536	-	-
Realisation of previously unrealised gains	-	-	-	(4,427,233)	-	4,427,233	-
Dividends paid	-	-	-	-	-	(7,509,196)	(7,509,196)
Profit for the year	-	-	-	1,123,572	-	5,847,404	6,970,976

As at 31 December 2014	425,434	5,985,042	5,143	1,214,933	33,748,039	8,912,446	50,291,037

*- These reserves total £42,660,485 (2013: £22,909,380) and are regarded as distributable reserves for the purpose of assessing the Company's ability to pay dividends to shareholders. All of the special distributable reserve originates from funds raised prior to 6 April 2014.

Note a: The cancellation of £16,557,783 from the share premium account and £969,753 from the capital redemption reserve (as approved at the general meeting held on 22 February 2014 and by order of the Court dated 12 March 2014) has increased the Company's special distributable reserve out of which it can fund share buybacks as and when it is considered by the Board to be in the interests of the shareholders, and to absorb any existing and future realised losses. As a result, the Company has a special reserve of £33,748,039. The transfer of £656,012 to the special reserve from the realised capital reserve above is the total of realised losses incurred by the Company this year.

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

9 Basic and diluted net asset value per share

Net asset value per ordinary share is based on net assets at the end of the year, and on 42,543,360 (2013: 35,127,218) ordinary shares, being the number of ordinary shares in issue on that date.

There are no instruments that will increase the number of shares in issue in future. Accordingly, the figures currently represent both basic and diluted net asset value per share.

10 Management of capital

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns for shareholders and to provide an adequate return to shareholders by allocating its capital to assets commensurate with the level of risk.

By its nature, the Company has an amount of capital, at least 70% (as measured under the tax legislation) of which is and must remain, invested in the relatively high risk asset class of small UK companies within three years of that capital being subscribed. The Company accordingly has limited scope to manage its capital structure in the light of changes in economic conditions and the risk characteristics of the underlying assets. Subject to this overall constraint upon changing the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets if so required to maintain a level of liquidity to remain a going concern.

Although, as the Investment Policy implies, the Board would consider levels of gearing, there are no current plans to do so. It regards the net assets of the Company as the Company's capital, as the levels of liabilities are small and the management of them is not directly related to managing the return to shareholders. There has been no change in this approach from the previous year.

11 Segmental analysis

The operations of the Company are wholly in the United Kingdom, from one class of business.

12 Post balance sheet events

Since the year-end, under the Offer for Subscription launched on 10 December 2014, a total of 5,167,929 new ordinary shares were allotted at effective offer prices ranging between 113.53 - 122.13 pence per share raising net funds of £5.87 million. The Offer closed on 18 February 2015, fully subscribed.

On 30 January 2014, the Company invested a further £1.14 million in the acquisition vehicle South West Services Investment Limited ("SWSI"), adding to its further investment of £0.91 million. This enabled SWSI to acquire Media Business Insight Limited ("MBIL"). The Company has also advanced a non-qualifying loan of £0.67 million to MBIL. MBIL is a publishing and events business focused on the creative production industries, specifically advertising, TV production and film media.

On 20 February 2015, the Company invested a further £0.80 million into Entanet Holdings Limited as loan stock.

13 Dividends

The Directors have declared a second interim dividend of 8.00 pence per share. The dividend will be paid on 6 May 2015 to shareholders on the Register on 10 April 2015. Shareholders who wish to have dividends paid directly into their bank account rather than sent by cheque to their registered address can complete a mandate for this purpose. Mandates can be obtained by telephoning the Company's Registrars, Capita Asset Services on 0871 664 0300, (lines are open 8.30 am - 5.30 pm Mon - Fri, calls cost 10p per minute plus network extras - if calling from overseas please ring +44 208 639 2157) or by writing to them at Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU. Alternatively you may visit their website, www.capitaregistrars.com/shareholders.

14 Statutory information

The financial information set out in these statements does not constitute the Company's statutory accounts for the year ended 31 December 2014 in terms of section 434 of the Companies Act 2006 but is derived from those accounts. Statutory accounts for the year ended 31 December 2014 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 498 of the Companies Act 2006.

15 Annual Report

The Annual Report for the year ended 31 December 2014 will shortly be made available on the Company's website: www.mig4vct.co.uk. and Shareholders will be notified of this by email or post or sent a hard copy in the post in accordance with their instructions. Copies will be available thereafter to members of the public from the Company's registered office.

16 Annual General Meeting

The Annual General Meeting of the Company will be held at 11.00 am on Thursday, 14 May 2015 at 33 St James's Square, London SW1Y 4JS.

Contact details for further enquiries:

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

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

DISCLAIMER

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

This information is provided by RNS

The company news service from the London Stock Exchange

END

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