MOBEUS Income & Growth VCT plc
Annual Financial Results of the Company for the Year ended 31 DECEMBER 2014
Financial Highlights
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Net asset value ("NAV") total return per share for the year was 17.1% while the share price total return per share for the year was 21.4%. |
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Shareholders received an interim dividend of 17.00 pence per share in September 2014. A second interim dividend of 7.00 pence per share has been declared, payable on 30 April 2015. This will bring total dividends paid per share in respect of the year to 24.00 pence and cumulative dividends paid per share since launch in 2014 to date to 71.30 pence. |
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This has been an exceptional year for disposals. A total of £20.69 million was received as net cash proceeds from seven major realisations, compared with a total cost of £4.85 million. |
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The Company invested a total of £9.89 million into new investments during the year. |
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The cash position has been enhanced as a result of the Mobeus VCT Offer in 2014, which raised £8.43 million (before costs) for the Company and this year's fundraising which closed on 10 March 2015, having raised the full £15 million offered (before costs) for subscription. |
Performance Summary
The net asset value per share of the Company at 31 December 2014 was 99.44 pence
The table below shows the recent past performance of the original funds raised in 2004/05. Performance data for all fundraising rounds and for former Matrix Income & Growth 3 VCT shareholders are shown in a table entitled "Performance Data at 31 December 2014", which is published on the Company's website and as an appendix to the Company's annual and half-yearly reports.
Reporting date as at |
Net assets |
NAV per share |
Share price (mid-market price)1 |
Cumulative dividends paid per share |
Cumulative total return per share since launch 2 |
Dividends per share in respect of the year |
|
(NAV basis) |
(Share price basis) |
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|
(£m) |
(p) |
(p) |
(p) |
(p) |
(p) |
(p) |
31 December 2014 |
60.41 |
99.44 |
86.00 |
64.30 |
163.74 |
150.30 |
24.003 |
31 December 2013 |
54.27 |
102.18 |
87.50 |
44.05 |
146.23 |
131.55 |
7.25 |
31 December 2012 |
43.29 |
94.22 |
80.50 |
38.05 |
132.27 |
118.55 |
7.00 |
31 December 2011 |
40.73 |
95.59 |
78.75 |
26.80 |
122.39 |
105.55 |
6.75 |
31 December 2010 |
38.45 |
96.66 |
84.00 |
21.30 |
117.96 |
105.30 |
5.00 |
1 Source: London Stock Exchange.
2 Cumulative total return per share comprises either the NAV per share (NAV basis) or the mid-market price per share (share price basis), plus
cumulative dividends paid since launch in October 2004.
3 This figure of 24.00 pence includes the second interim dividend of 7.00 pence per share referred to in the financial highlights above which will
reduce the net assets per share from the 31 December 2014 position
Discount of share price to NAV -The discount on the Company's shares at 31 December 2014 was 9.9% based on the NAV per share at 30 September 2014 of 95.40 pence, which was the latest published NAV per share at that time.
Chairman's Statement
I am pleased to present the annual results of Mobeus Income & Growth VCT plc for the year ended 31 December 2014.
Performance
This has been an extremely good year for the VCT. The NAV total return per share for the year to 31 December 2014 was 17.1% (2013: 14.8%) while the share price total return was 21.4% (2013: 16.2%). For a detailed explanation of how these total return figures have been calculated, please see the Strategic Report below. As a result of this performance, the cumulative NAV total return per share (being the closing NAV plus total dividends paid to date since launch) rose during the year by 12.0% from 146.23 pence to 163.74 pence.
This strong performance was attributable to one principal factor: the number of realisations in this period has been exceptional and these sales achieved returns markedly in excess of their valuations at the start of the year.
Dividends
As a consequence of the significant profits realised during the year, your Company was able to pay a substantial interim dividend of 17.00 pence per share to shareholders on 17 September 2014. The Directors have declared a sizeable second interim dividend in respect of 2014 of 7.00 pence (2013: final 3.25 pence) per share, comprising 5.80 pence (2013: final 1.50 pence) per share from capital and 1.20 pence (2013: final 1.75 pence) per share from income. This dividend will be paid on 30 April 2015 to shareholders on the Register on 7 April 2015.
Once this payment has been made, total dividends in respect of the year will be 24.00 pence (2013: 7.25 pence) per share, bringing cumulative dividends paid since inception in 2004 to 71.30 pence (2013: 47.30 pence) per share.
Shareholders should not expect this level of distributions to be repeated unless an equally successful run of realisations occurs in such a short period of time.
The Company's target of paying a dividend of at least 4.00 pence per share in respect of each financial year has been exceeded in each of the last five years. A full dividend history is available on the Company's website and is published as an appendix to each annual and half-yearly report.
Investment portfolio
The VCT has maintained a steady rate of new investment, investing a total of £9.89 million (including £1.00 million which was previously held in an acquisition vehicle) during the year under review. Full details of all of these transactions and of a substantial new investment following the year-end of £3.28 million (including £1.14 million from an acquisition vehicle) are included in the Investment Adviser's Review below.
The Company received cash proceeds in the year of £23.93 million from fifteen companies which were either sold or repaid loans. Within this figure, the six full realisations and the partial sale of ATG Media realised proceeds of £20.69 million, which was £8.04 million greater than their aggregate value at the beginning of the year. Realised gains over the original cost of the seven investments sold (£4.85 million) totalled £15.84 million.
Performance also benefitted from net unrealised valuation gains in the year, reflecting progress within the portfolio generally. The investment portfolio was valued at £33.36 million at the year-end representing 103.4% of cost.
Review of longer term performance
Shareholders who invested in 2004 at the launch of the Company have seen a cumulative total return of 163.74 pence per share compared with their initial investment cost of 100 pence per share, or a net cost (after initial income tax relief of 40 pence) of 60 pence per share. As part of this return 64.30 pence in dividends have been received. This is an average annual dividend yield upon the initial 100 pence investment of 6.3% and 10.5% upon the same investment of 60 pence (net of 40 pence of initial income tax relief). The balance of the total return, the underlying NAV, is 99.44 pence per share.
As noted in the Strategic Report below, the Board also regularly reviews the Company's relative performance compared with its peer group again using, as a benchmark, NAV cumulative total returns. Among generalist (including planned exit) VCTs monitored by the Association of Investment Companies ("AIC") and based on the latest statistics prepared by Morningstar, the Company was ranked seventh out of the 32 VCTs monitored over the 10 years to 28 February 2015.
Performance incentive fee
Under the current performance incentive agreement, the Adviser is entitled to receive performance incentive fees of an amount equal to 20% of subsequent cash distributions made to the Company's shareholders in each financial year (whether by dividend or otherwise from 20 May 2010) over and above a target return of dividends declared and paid in a financial year, currently 7.07 pence per share per annum subject to the maintenance of a target NAV per share, currently 98.52 pence. The performance incentive fee is payable annually and any cumulative shortfalls against the annual target return have to be made up before any entitlement arises. The cumulative dividend shortfall is currently 1.81 pence. No performance incentive fee has been paid to date.
Towards the end of last year, given the relatively small shortfall then projected against the target return of dividends as at 30 September 2014, and the possibility of a final dividend for the financial year ending 31 December 2014, the Board, together with the Company's current legal adviser and Mobeus, began to focus on the implications of the current performance incentive agreement. The parties believe that the existing agreement, the basis of which dates back to the original launch of the Company, has a number of shortcomings. Mobeus believes the target return for dividends was intended to refer to dividends paid in respect of a financial year and not dividends declared and paid in a financial year. Additionally, the Board believes that the definition of the NAV hurdle is also ambiguous. No specific allowance is made for excluding dividends subsequently paid out of net assets in the calculation of NAVs and reference is made to the average net asset value in the financial year without defining how this is to be calculated.
Depending on how the performance incentive agreement is interpreted, and also taking into account performance based on dividends paid in respect of a year rather than dividends declared and paid in a year, it was considered, at that time, that a performance incentive fee payment might have been due to Mobeus for 2014 ranging between nothing and around £1.00 million. The latter figure is an example only and was based on a final dividend being paid in respect of 2014 in the region of 10.00 pence per share and the NAV hurdle being satisfied.
In light of the above, and giving consideration to the absolute and relative performance of the Company in terms of total returns driven by a strong level of profitable realisations over the last eighteen months, the Board agreed to:
· make a bonus payment to Mobeus of £250,000 (inclusive of VAT, if any), subject to the approval of shareholders and the requirements of the Listing Rules of the Financial Conduct Authority; and
· consider implementing a revised performance incentive agreement with Mobeus, such agreement to be similar to that currently in place, reflective of total return performance and effective from 1 January 2015, such revised agreement to be proposed to shareholders for approval and subject to the requirements of the Listing Rules of the Financial Conduct Authority
In consideration of the above, Mobeus has agreed that, in respect of the current arrangements, no performance incentive fee will be payable in respect of the financial year ended 31 December 2014.
A notice convening the general meeting referred to above will be sent to shareholders on or before 10 June 2015, this being three months following the close of the recent Offer.
Appointment of a new board director
Following a review of the composition of the Board by the Nomination and Remuneration Committee, the Board appointed Catherine Wall as a Director of the Company with effect from 1 July 2014. Catherine has 30 years' experience in the private equity industry, principally gained at Barclays Private Equity (now Equistone Partners Europe), where she led and managed numerous investments in management buy-outs. Later, as the firm's UK portfolio director, she supervised the management of all the firm's UK investments and held numerous non-executive directorships as part of this role. Shareholders will have the opportunity to ratify her appointment at the Annual General Meeting.
Buybacks of the Company's own shares
During the year ended 31 December 2014 the Company bought back 536,729 ordinary shares, representing 1.0% of the issued share capital of the Company at the beginning of the year.
Legislative and regulatory developments
The Company and the Adviser have contributed to a consultation by HM Revenue & Customs ("HMRC") on the impact of the VCT Scheme and the appropriateness of its rules as part of the European Union's ("EU") review of the rules on State Aid. The process of the EU review and re-approval of the Scheme is scheduled to be completed shortly. We remain hopeful that the eventual outcome will not have any significant impact on the VCT industry.
Fundraising
The Company raised £8.43 million gross of issue costs (£8.19 million after costs) in the Mobeus VCT 2013/14 fundraising, which closed on 30 May 2014.
The Company launched a further fundraising with the other three Mobeus VCTs on 10 December 2014 to raise up to £39 million in aggregate ("the Offers"), including £15 million for the Company ("the Offer"). For the first time this year, each of the VCTs made a separate offer to investors. Investors were able to choose which of the Mobeus VCTs they wanted to invest in and how much to place in each, subject to the Offer(s) of their choice remaining open. This Company's Offer was well supported and closed on 10 March 2015 having raised the full amount offered for subscription of £15 million.
Annual fundraisings by the Company provide it with a comfortable level of liquidity that enhances its ability to use funds raised prior to April 2012 to continue to pursue its Investment Policy of primarily investing in management buyouts ("MBOs"). Monies raised post April 2012 are used to fund other types of investment opportunities, as well as to meet the Company's running costs, fund dividend payments and support its share buyback policy. Funds raised also allow the Company's fixed running costs to be spread over a larger asset base.
Annual General Meeting
The next Annual General Meeting of the Company will be held at 2.00 pm on Wednesday, 6 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 will be included in the Annual Report to be circulated to shareholders shortly which also includes an explanation of the resolutions to be proposed in the Directors' Report.
Shareholder event
The Adviser held another successful shareholder event on 27 January 2015 at the Royal Institute of British Architects. In a much larger event this year, 270 shareholders heard presentations from the Adviser and from the Managing Director of Virgin Wines and the Chairman of each of Tessella and Tharstern. This is an annual event and all shareholders will receive an invitation later this year, to attend the next event to be held in January 2016.
Industry award for the Adviser
We are pleased to report to shareholders that the Adviser was named VCT Manager of the Year in 2014, for the third consecutive year, at the unquote" British Private Equity Awards 2014. The award recognised the continuing high level of consistency achieved by the Adviser during the year in maintaining high standards in all areas of its activity including deals, exits, portfolio management and fundraising.
Future prospects
It is pleasing to report on a successful year of strong performance for the Company in which it has completed a high number of transactions. The challenge for both the Adviser and the Company will be to maintain this performance and investment levels over the longer term. Current deal flow is encouraging, enabling the Adviser to assess a number of promising opportunities now and over the coming months, some of which should convert into investments in the future.
We aim to invest only in well-run, profitable companies, operating mainly in niche markets which we believe have the potential to grow and which can thrive across a range of economic conditions. Many of our investee companies continue to trade profitably and grow and the Adviser is also considering opportunities for further investment to support such companies within the portfolio.
Finally, I would like to express my thanks to all shareholders for their continuing support of the Company.
Keith Niven
Chairman
Investment Portfolio
Investment Adviser's Review
This has been an excellent year for the portfolio in which the number and value of divestments have been exceptional.
Deal flow has remained healthy, resulting in a high level of quality new investment activity. Four new investments were completed in 2014 and we expect this level of activity to be maintained in the current year. We believe the healthy level of deal flow 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 performance of the investment portfolio for the year has greatly benefited from the sizeable profitable disposals in the year, detailed in the section on Realisations below. We are satisfied with the overall progress made in the year by investments in the portfolio held at the year-end, where a slight increase in valuations has occurred over the year.
Investments remain diversified across a number of sectors primarily in support services (which spans a number of different businesses), general retailers, media and fixed-line telecommunications.
New investment
A total of £9.89 million was invested during the year under review. This included new investments to support the MBOs of Entanet, Creative Graphics International and Tharstern and the corporate restructuring of the Ward Thomas Group.
Principal new investments in the year
Company |
Business |
Date of investment |
Amount of new investment (£m) |
|
Entanet |
Wholesale provider of internet connectivity solutions |
February 2014 |
1.71* |
|
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. |
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* The investment utilised £1.00 million from Ackling Management, one of the Company's acquisition vehicles, which is included in the above figure. |
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Creative Graphics International |
Producer of adhesive decorative graphics for vehicles |
June 2014 |
1.32 |
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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, UK and Cape Town, 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. |
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Tharstern |
Software-based management information systems |
July 2014 |
1.46 |
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Tharstern is a leading UK supplier of software-based management information systems to the print sector. Tharstern's Primo system sits within a print business and manages its processes, from sales to procurement, production and fulfilment. 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. |
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Ward Thomas |
Specialist logistics, storage and removals business |
December 2014 |
2.03 |
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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 which owns the Anthony Ward Thomas and Bishopsgate businesses of £1.41 million and into Aussie Man & Van Limited of £0.62 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. |
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The VCT also invested a further £2.29 million into two new acquisition vehicle investments in the year, namely South West Services Investment (SWSI) and Manufacturing Services Investment. SWSI was used following the year-end to support the new investment into Media Business Insight (see below) and subsequently changed its name to Media Business Insight Holdings. For further details please see the Investment Portfolio Summary below.
Further investments into existing portfolio companies in the year
Company |
Business |
Date of further investment |
Amount of new investment (£m) |
ASL Technology |
Printer and photocopier services |
December 2014 |
1.03 |
ASL Technology is a printer and photocopier services business based in Cambridge and focussed on SME customers primarily in East Anglia and the northern Home Counties. The VCT completed a further investment into the company in December 2014, to provide capital to refinance the bank and support the company's buy and build strategy. ASL has a £13 million turnover and has generated profit before interest, tax and goodwill in the year ended 30 September 2014 of £1.18 million. |
In addition to ASL above, the Company also invested a further £0.05 million into Gro-Group in November 2014 in the form of a loan agreed at the time of the original investment in March 2013.
New investment post year-end
Company |
Business |
Date of investment |
Amount of new investment (£m) |
MBI |
Events and publishing |
February 2015 |
3.28* |
MBI (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 period ended 31 December 2013 show annual sales of £8.24 million and profit before interest, tax and goodwill of £1.06 million. |
* A further £1.38 million was invested into SWSI adding to the Company's earlier investment of £1.14 million. This enabled SWSI to acquire Media Business Insight Limited ("MBIL"). The Company has also advanced a non-qualifying loan of £0.76 million to MBIL. SWSI subsequently changed its name to Media Business Insight Holdings.
The VCT also invested a further £1.00 million into Entanet in February 2015 as loan stock.
Realisations
The year has been marked by a number of sizeable, profitable realisations which have all generated attractive returns for the Company. The VCT 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, Youngman and EMaC in the second half, for total net cash proceeds of £20.69 million compared to cost of £4.85 million. As part of the ATG Media transaction, the Company also received non-cash consideration of £2.50 million by way of loan stock and equity investments in Turner Topco Limited, the acquirer. As a result, the Company retains a 6.2% shareholding in the business.
Other realisations were £0.10 million, including a post-sale receipt relating to Iglu.com Holidays Limited, a previous investment. With the loan repayments of £3.14 million set out below, total net proceeds realised in the year, amounted to £26.43 million.
Company |
Business |
Period of investment |
Total cash proceeds over the life of investment/ |
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Multiple over cost |
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MachineWorks |
Software for CAM and machine tool vendors |
April 2006 - April 2014 |
£2.69 million |
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4.16 times cost |
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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 £1.60 million. The original investment of £0.65 million has returned £2.69 million in cash over its life. |
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ATG Media |
Publisher and online auction platform operator |
October 2008 -present |
£6.13 million to date |
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1.87 times cost to date |
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A partial sale of ATG Media via a secondary MBO to a mid-market private equity house, ECI Partners, realised net proceeds of £7.57 million, being cash of £5.07 million, with the balance being a new loan stock investment and a minority 6.2% equity stake, together valued at £2.52 million (cost: £2.50 million). The investment cost in ATG Media was £3.27 million. |
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Monsal |
Supplier of engineering services to the water and waste sectors |
December 2007 - |
£2.65 million |
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June 2014 |
1.87 times cost |
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The sale of Monsal, a renewable energy consultancy, to the US conglomerate General Electric, realised £1.86 million. The 1.87x return on the total amount invested of £1.42 million represents a return on an investment originally made in 2007, which required support from further funding rounds in 2009 and 2011. |
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DiGiCo Global |
Audio mixing desks |
July 2007 - July 2014 |
£10.71 million |
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5.50 times cost |
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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 £8.00 million to £24.00 million over the period of the Company's investment. This final sale realised £3.37 million and followed a partial realisation in December 2011 through a secondary buyout by Living Bridge (formerly ISIS Equity Partners). The Company's original investment was £1.95 million. |
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Focus Pharma |
Generic pharmaceutical products |
October 2007 - October 2014 |
£4.74 million |
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3.79 times cost |
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The VCT realised its investment in Focus Pharma through a trade sale to Cinven-backed Amdipharm Mercury Group for £2.54 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 £40.00 million per annum. The original investment of £1.25 million has returned cash of £4.74 million. |
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Youngman |
Access towers and ladders |
October 2006 - October 2014 |
£2.46 million |
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2.46 times cost |
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The VCT realised this investment through a sale to Werner Co (US) for £1.66 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 £1.00 million has returned £2.46 million in cash over its life. |
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EMaC |
Service plans for the motor trade |
October 2011 - December 2014 |
£5.42 million |
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3.08 times cost |
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The VCT sold its investment in EMaC to Innovation Group plc for £4.59 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 £1.76 million has returned £5.42 million in cash. |
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Loan Stock Repayments
Loan stock repayments totalled £8.08 million for the year, including £4.94 million as part of the proceeds from the companies realised above. Positive cash flow at seven other companies contributed to the balance of £3.14 million. These proceeds are summarised below:-
Company |
Business |
Month |
Amount (£'000s) |
Country Baskets |
Artificial flowers, floral sundries and home décor products |
June/December |
2,000 |
Motorclean |
Vehicle cleaning and valeting services |
June |
368 |
Newquay Helicopters |
Helicopter Services |
April |
293 |
Westway |
Air conditioning systems |
January |
216 |
Tessella |
Consultancy |
Various |
132 |
Virgin Wines |
Online wine retailer |
July |
87 |
Monsal |
Engineering services to the water and waste sectors |
May (before sale in June) |
44 |
Total |
|
|
3,140 |
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. Deal flow 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.
Mobeus Equity Partners LLP
principal Investments in the Portfolio at 31 December 2014 by valuation
ASL Technology Holdings Limited |
Entanet Holdings Limited |
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Virgin Wines Holding Company Limited |
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Cost |
£2,942,000 |
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Cost |
£1,714,000 |
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Cost |
£2,439,000 |
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Valuation |
£3,336,000 |
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Valuation |
£2,923,000 |
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Valuation |
£2,567,000 |
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Basis of valuation |
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Basis of valuation |
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Basis of valuation |
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Earnings multiple |
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Earnings multiple |
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Earnings multiple |
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Equity % held |
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Equity % held |
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Equity % held |
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14.4% |
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12.0% (fully diluted) |
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12.2% |
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Income receivable in year |
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Income receivable in year |
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Income receivable in year |
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£14,673 |
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£163,996 |
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£236,580 |
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Business |
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Business |
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Business |
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Printer and photocopier services |
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Wholesale communications provider |
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Online wine retailer |
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Location |
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Location |
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Location |
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Cambridge |
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Telford, Shropshire |
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Norwich |
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Original transaction |
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Original transaction |
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Original transaction |
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Management buyout |
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Management buyout |
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Management buyout |
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Audited financial information |
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Audited financial information |
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Audited financial information |
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Year ended |
30 Sept 2014 |
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Period ended |
31 Dec 2013 1 |
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Period ended |
27 Jun 20141 |
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Turnover |
£13,266,000 |
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Turnover |
£29,415,000 |
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Turnover |
£35,695,000 |
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Operating profit |
£1,176,000 |
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Operating profit |
£2,782,000 |
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Operating profit |
£1,580,000 |
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Net liabilities |
£(3,123,000) |
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Net assets |
£2,332,000 |
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Net assets |
£6,175,000 |
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Year ended |
30 Sept 2013 |
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Year ended |
30 Nov 2012 1 |
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Period ended |
28 Jun 20131 |
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Turnover |
£14,484,000 |
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Turnover |
£25,853,000 |
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Turnover |
£34,475,000 |
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Operating profit |
£1,296,000 |
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Operating profit |
£2,431,000 |
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Operating profit |
£2,010,000 |
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Net liabilities |
£(1,214,000) |
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Net assets |
£5,691,000 |
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Net assets |
£4,952,000 |
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|
|
|
|
|
|
|
|
|
|
|
|
1 - The 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 |
|
|||
Further investment of £1.03 million made in December 2014. |
|
MBO investment made in February 2014. |
|
A loan repayment of £0.09 million has been received. |
|
Turner TopCo Limited (trading as ATG Media) |
|
Fullfield Limited (trading as Motorclean) |
|
Veritek Global Holdings Limited |
|||
|
www.motorclean.net |
|
|||||
|
|
|
|
|
|
|
|
Cost |
£2,501,000 |
|
Cost |
£2,208,000 |
|
Cost |
£2,045,000 |
Valuation |
£2,519,000 |
|
Valuation |
£2,342,000 |
|
Valuation |
£2,056,000 |
|
|
|
|
|
|
|
|
Basis of valuation |
|
Basis of valuation |
|
Basis of valuation |
|||
Earnings multiple |
|
Earnings multiple |
|
Earnings multiple |
|
||
|
|
|
|
|
|
|
|
Equity % held |
|
Equity % held |
|
Equity % held |
|
||
6.2% (fully diluted) |
|
14.1% |
|
|
13.0% (fully diluted) |
||
|
|
|
|
|
|
|
|
Income receivable in year |
|
Income receivable in year |
|
Income receivable in year |
|||
£143,528 |
|
|
£228,717 |
|
|
£228,718 |
|
|
|
|
|
|
|
|
|
Business |
|
|
Business |
|
Business |
|
|
Publisher and on-line auction platform operator |
|
Provider of vehicle cleaning and valet services |
|
Maintenance of imaging equipment |
|||
|
|
|
|
|
|
|
|
Location |
|
|
Location |
|
|
Location |
|
London |
|
|
Laindon, Essex |
|
|
Eastbourne, East Sussex |
|
|
|
|
|
|
|
|
|
Original transaction |
|
Original transaction |
|
Original transaction |
|||
Secondary buyout |
|
Management buyout |
|
Management buyout |
|||
|
|
|
|
|
|
|
|
Audited financial information |
|
Audited financial information |
|
Audited financial information |
|||
|
|
|
|
|
|
|
|
Period ended |
30 September 2014 |
|
Year ended |
31 March 2014 |
|
Year ended |
31 March 20141 |
Turnover |
£4,126,000 |
|
Turnover |
£38,155,000 |
|
Turnover |
£14,443,000 |
Operating loss |
£(539,157) |
|
Operating profit |
£2,554,000 |
|
Operating profit |
£249,000 |
Net liabilities |
£(833,649) |
|
Net assets |
£2,567,000 |
|
Net liabilities |
£(804,000) |
|
|
|
|
|
|
|
|
Year ended |
30 September 20131 |
|
Year ended |
31 March 2013 |
|
Year ended |
31 March 20132 |
Turnover |
£13,783,000 |
|
Turnover |
£24,537,000 |
|
Turnover |
£24,684,000 |
Operating profit |
£3,161,000 |
|
Operating profit |
£1,234,000 |
|
Operating profit |
£1,506,000 |
Net assets |
£5,764,000 |
|
Net assets |
£2,576,000 |
|
Net assets |
£6,245,000 |
|
|
|
|
|
|
|
|
1 - The financial information quoted above for 2013 is for ATG Media Holdings Limited prior to the secondary MBO which completed in June 2014. |
|
|
|
|
1- The financial information quoted above is for eight months only, after the acquisition of Veritek Global Limited in July 2013. |
||
|
|
|
|
|
2 - The financial information quoted above for 2013 is for Veritek Global Limited prior to the MBO which completed in July 2013. |
||
Movements during the year |
|
Movements during the year |
|
Movements during the year |
|||
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. |
|
Fullfield made loan repayments totalling £0.37 million during the year. |
|
None |
|
Tessella Holdings Limited |
|
Gro-Group Holdings Limited |
|
Tharstern Group Limited |
|
|||
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
Cost |
£1,426,000 |
|
Cost |
£1,975,000 |
|
Cost |
£1,450,000 |
|
Valuation |
£1,897,000 |
|
Valuation |
£1,788,000 |
|
Valuation |
£1,450,000 |
|
|
|
|
|
|
|
|
|
|
Basis of valuation |
|
Basis of valuation |
|
Basis of valuation |
|
|||
Earnings multiple |
|
Earnings multiple |
|
Cost |
|
|
||
|
|
|
|
|
|
|
|
|
Equity % held |
|
Equity % held |
|
|
Equity % held |
|
|
|
7.2% |
|
|
10.5% (fully diluted) |
|
15.3% (fully diluted) |
|
||
|
|
|
|
|
|
|
|
|
Income receivable in year |
|
Income receivable in year |
|
Income receivable in year |
|
|||
£154,782 |
|
|
£150,612 |
|
|
£55,117 |
|
|
|
|
|
|
|
|
|
|
|
Business |
|
|
Business |
|
|
Business |
|
|
Provider of science powered technology and consulting services |
|
Manufacturer and distributor of baby sleep products |
|
Software-based Management Information Systems to the print sector |
|
|||
|
|
|
|
|
|
|
|
|
Location |
|
|
Location |
|
|
Location |
|
|
Abingdon, Oxfordshire |
|
Ashburton, Devon |
|
Colne, Lancashire |
|
|
||
|
|
|
|
|
|
|
|
|
Original transaction |
|
Original transaction |
|
Original transaction |
|
|||
Management buyout |
|
Management buyout |
|
Management buyout |
|
|||
|
|
|
|
|
|
|
|
|
Audited financial information |
Audited financial information |
|
Audited financial information |
|
||||
|
|
|
|
|
|
|
|
|
Year ended |
31 March 2014 |
|
Year ended |
30 June 20131 |
|
Year ended |
31 January 2014 |
|
Turnover |
£23,146,000 |
|
Turnover |
£11,444,000 |
|
Turnover |
£3,871,000 |
|
Operating profit |
£3,652,000 |
|
Operating profit |
£775,000 |
|
Operating profit |
£799,000 |
|
Net assets |
£4,213,000 |
|
Net assets |
£1,178,000 |
|
Net assets |
£885,000 |
|
|
|
|
|
|
|
|
|
|
Year ended |
31 March 2013 |
|
Year ended |
30 June 20121 |
|
Year ended |
31 January 2013 |
|
Turnover |
£14,443,000 |
|
Turnover |
£10,945,000 |
|
Turnover |
£3,358,000 |
|
Operating profit |
£2,064,000 |
|
Operating profit |
£663,000 |
|
Operating profit |
£690,000 |
|
Net assets |
£4,306,000 |
|
Net assets |
£1,080,000 |
|
Net assets |
£770,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 - The 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 |
|
Movements during the year |
|
Movements during the year |
|
|||
Tessella made quarterly loan stock repayments totalling £0.13 million. |
|
A further loan of £0.05 million was made in November 2014. |
|
Investment made in July 2014 |
|
EOTH Limited (trading as Rab and Lowe Alpine) |
|
Leap New Co Limited (trading as Anthony Ward Thomas and Bishopsgate) |
|
Westway Services Holdings (2014) Limited |
|||
|
|
||||||
|
|
|
|
|
|
|
|
Cost |
£1,299,000 |
|
Cost |
£1,411,000 |
|
Cost |
£214,000 |
Valuation |
£1,411,000 |
|
Valuation |
£1,411,000 |
|
Valuation |
£1,355,000 |
|
|
|
|
|
|
|
|
Basis of valuation |
|
Basis of valuation |
|
Basis of valuation |
|||
Earnings multiple |
|
Cost |
|
|
Earnings multiple |
||
|
|
|
|
|
|
|
|
Equity % held |
|
|
Equity % held |
|
Equity % held |
||
2.3% |
|
|
7.5% |
|
|
6.1% |
|
|
|
|
|
|
|
|
|
Income receivable in year |
|
Income receivable in year |
|
Income receivable in year |
|||
£124,261 |
|
|
£4,938 |
|
|
£13,153 |
|
|
|
|
|
|
|
|
|
Business |
|
|
Business |
|
|
Business |
|
Branded outdoor equipment and clothing |
|
Logistics, removal and storage |
|
Installation, service and maintenance of air conditioning systems |
|||
|
|
|
|
|
|
|
|
Location |
|
|
Location |
|
|
Location |
|
Alfreton, Derbyshire |
|
London |
|
|
Greenford, Middlesex |
||
|
|
|
|
|
|
|
|
Original transaction |
|
Original transaction |
|
Original transaction |
|||
Acquisition capital |
|
Corporate restructuring |
|
Management buyout |
|||
|
|
|
|
|
|
|
|
Audited financial information |
|
Audited financial information |
|
Audited financial information |
|||
|
|
|
|
|
|
|
|
Year ended |
31 January 2014 |
|
Year ended |
30 September 2013 |
|
Year ended |
28 February 2014 |
Turnover |
£34,811,000 |
|
Turnover |
£12,169,000 |
|
Turnover |
£30,018,000 |
Operating profit |
£3,417,000 |
|
Operating profit |
£1,955,000 |
|
Operating profit |
£4,087,000 |
Net assets |
£9,436,000 |
|
Net assets |
£7,597,000 |
|
Net assets |
£6,865,000 |
|
|
|
|
|
|
|
|
Year ended |
31 January 2013 |
|
Year ended |
30 September 2012 |
|
Year ended |
28 February 2013 |
Turnover |
£27,266,000 |
|
Turnover |
£10,983,000 |
|
Turnover |
£22,273,000 |
Operating profit |
£2,464,000 |
|
Operating profit |
£1,559,000 |
|
Operating profit |
£2,619,000 |
Net assets |
£7,657,000 |
|
Net assets |
£6,807,000 |
|
Net assets |
£4,565,000 |
|
|
|
|
|
|
|
|
Movements during the year |
|
Movements during the year |
|
Movements during the year |
|||
|
|
New investment made in December 2014 |
|
Secondary buyout in November 2014 |
|||
|
|
|
|
|
|
|
|
The remaining 16 investments in the portfolio (including two acquisition vehicles) had a cost of £10.64 million and were valued at £8.30 million at 31 December 2014.
Further details of the investments in the portfolio may be found on the Mobeus website: www.mobeusequity.co.uk.
Operating profit is stated before charging amortisation of goodwill where appropriate for all investee companies.
Investment Portfolio Summary |
as at 31 December 2014 |
|
Market sector |
Date of investment |
|
Total book cost |
|
Valuation |
Like for like valuation increase/(decrease) over year 1 |
% value of net assets |
|
% of equity held by funds advised by Mobeus2 |
Investment Portfolio |
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unquoted investments |
|
|
|
|
|
|
|
|
|
|
ASL Technology Holdings Limited |
Support services |
Dec-10 |
|
2,942 |
|
3,336 |
69.9% |
5.5% |
|
47.5% |
Printer and photocopier services |
|
|
|
|
|
|
|
|
|
|
Entanet Holdings Limited3 (formerly Ackling Management Limited |
Support services |
Feb-14 |
|
1,714 |
|
2,923 |
70.5% |
4.8% |
|
42.0% |
Wholesale communications provider |
|
|
|
|
|
|
|
|
|
|
Virgin Wines Holding Company Limited (formerly Culbone Trading Limited) |
General retailers |
Nov-13 |
|
2,439 |
|
2,567 |
5.1% |
4.2% |
|
42.0% |
Online Wine retailer |
|
|
|
|
|
|
|
|
|
|
Turner Topco Limited (trading as ATG Media)4 |
Media |
Oct-08 |
|
2,501 |
|
2,519 |
12.0% |
4.2% |
|
17.1% |
Publisher and on-line auction platform operator |
|
|
|
|
|
|
|
|
|
|
Fullfield Limited (trading as Motorclean) |
Support services |
Jul-11 |
|
2,208 |
|
2,342 |
(8.5)% |
3.9% |
|
46.0% |
Provider of vehicle cleaning and valet services |
|
|
|
|
|
|
|
|
|
|
Veritek Global Holdings Limited (formerly Madacombe Trading Limited) |
Support services |
Jul-13 |
|
2,045 |
|
2,056 |
0.5% |
3.4% |
|
44.0% |
Maintenance of imaging equipment |
|
|
|
|
|
|
|
|
|
|
Tessella Holdings Limited |
Support services |
Jul-12 |
|
1,426 |
|
1,897 |
(2.8)% |
3.1% |
|
24.0% |
Technology consultancy |
|
|
|
|
|
|
|
|
|
|
Gro-Group Holdings Limited |
General retailers |
Mar-13 |
|
1,975 |
|
1,788 |
(9.7)% |
3.0% |
|
37.6% |
Baby sleep products |
|
|
|
|
|
|
|
|
|
|
Tharstern Group Limited |
Software and computer services |
Jul-14 |
|
1,450 |
|
1,450 |
New investment |
2.4% |
|
52.5% |
Software based management information systems |
|
|
|
|
|
|
|
|
|
|
Leap New Co Limited (trading as Anthony Ward Thomas Removals and Bishopsgate) |
Support services |
Dec-14 |
|
1,411 |
|
1,411 |
New investment |
2.3% |
|
26.4% |
A specialist logistics, storage and removals business |
|
|
|
|
|
|
|
|
|
|
Westway Services Holdings (2014) Limited |
Support services |
Jun-09 |
|
214 |
|
1,355 |
43.2% |
2.2% |
|
15.6% |
Installation, service and maintenance for air conditioning systems |
|
|
|
|
|
|
|
|
|
|
CGI Creative Graphics International Limited |
Support services |
Jun-14 |
|
1,322 |
|
1,322 |
New investment |
2.2% |
|
26.9% |
Vinyl graphics to global automotive, recreational vehicle and aerospace markets |
|
|
|
|
|
|
|
|
|
|
Media Business Insight Holdings Limited (formerly South West Services Investment Limited) |
Media |
Jan-14 |
|
1,143 |
|
1,143 |
New investment |
1.9% |
|
50.0% |
Former acquisition vehicle used to support the MBO of Media Business Insight following the year-end |
|
|
|
|
|
|
|
|
|
|
Manufacturing Services Investment Limited |
Acquisition vehicles |
Feb-14 |
|
1,142 |
|
1,142 |
New investment |
1.9% |
|
50.0% |
Company seeking to acquire businesses in the manufacturing sector |
|
|
|
|
|
|
|
|
|
|
EOTH Limited (trading as Rab and Lowe Alpine) |
General retailers |
Oct-11 |
|
1,000 |
|
1,087 |
8.10% |
1.8% |
|
8.0% |
Branded outdoor equipment and clothing |
|
|
|
|
|
|
|
|
|
|
Blaze Signs Holdings Limited |
Support services |
Apr-06 |
|
492 |
|
974 |
(62.7)% |
1.6% |
|
52.5% |
Manufacturer and installer of signs |
|
|
|
|
|
|
|
|
|
|
The Plastic Surgeon Holdings Limited |
Support services |
Apr-08 |
|
478 |
|
924 |
43.3% |
1.5% |
|
30.0% |
Supplier of snagging and finishing services to the domestic and commercial property markets |
|
|
|
|
|
|
|
|
|
|
RDL Corporation Limited |
Support services |
Oct-10 |
|
1,558 |
|
836 |
16.3% |
1.4% |
|
45.2% |
Recruitment consultant for the pharmaceutical, business intelligence and IT industries |
|
|
|
|
|
|
|
|
|
|
Aussie Man & Van Limited |
Support services |
Dec-14 |
|
621 |
|
621 |
New investment |
1.0% |
|
26.4% |
Domestic removals and storage |
|
|
|
|
|
|
|
|
|
|
Vectair Holdings Limited |
Support services |
Jan-06 |
|
139 |
|
423 |
(34.0)% |
0.7% |
|
24.0% |
Designer and distributor of washroom products |
|
|
|
|
|
|
|
|
|
|
Newquay Helicopters (2013) Limited |
Support services |
Jun-06 |
|
226 |
|
396 |
- |
0.7% |
|
34.9% |
Helicopter service operator |
|
|
|
|
|
|
|
|
|
|
Lightworks Software Limited |
Software and computer services |
Apr-06 |
|
223 |
|
64 |
(67.5)% |
0.1% |
|
45.0% |
Provider of software for CAD vendors |
|
|
|
|
|
|
|
|
|
|
Racoon International Holdings Limited |
Personal goods |
Dec-06 |
|
1,213 |
|
1 |
- |
0.0% |
|
49.0% |
Supplier of hair extensions, hair care products and training |
|
|
|
|
|
|
|
|
|
|
PXP Holdings Limited (trading as Pinewood Structures) |
Construction and building materials |
Dec-06 |
|
1,278 |
|
- |
- |
0.0% |
|
32.9% |
Designer, manufacturer and supplier of timber-frames for buildings |
|
|
|
|
|
|
|
|
|
|
CB Imports Group Limited (trading as Country Baskets) |
General retailers |
Dec-09 |
|
350 |
|
- |
14.5% |
0.0% |
|
24.0% |
Importer and distributor of artificial flowers and floral sundries. |
|
|
|
|
|
|
|
|
|
|
Legion Group plc (in liquidation) |
Support services |
Aug-05 |
|
150 |
|
- |
- |
0.0% |
|
N/A |
Provider of manned guarding, mobile patrolling and alarm response services |
|
|
|
|
|
|
|
|
|
|
Watchgate Limited |
Support services |
Nov-11 |
|
1 |
|
- |
- |
0.0% |
|
100.0% |
Holding company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total unquoted investments |
|
|
|
31,661 |
|
32,577 |
|
53.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
AIM quoted investments |
|
|
|
|
|
|
|
|
|
|
Omega Diagnostics Group plc |
Health care equipment and services |
Dec-10 |
|
305 |
|
458 |
2.7% |
0.8% |
|
6.0% |
In-vitro diagnostics for food intolerance, autoimmune diseases and infectious diseases |
|
|
|
|
|
|
|
|
|
|
Total AIM quoted investments |
|
|
|
305 |
|
458 |
|
0.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total qualifying investments |
|
|
|
31,966 |
|
33,035 |
|
54.6% |
5 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualifying investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EOTH Limited (trading as Rab and Lowe Alpine) |
General retailers |
Oct-11 |
|
299 |
|
324 |
|
0.5% |
|
- |
|
|
|
|
|
|
|
|
|
|
|
Total investment portfolio |
|
|
|
32,265 |
|
33,359 |
24.4% |
55.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current investments and cash at bank |
|
|
|
|
|
|
|
|
|
|
Cash at NatWest Bank plc 6 |
|
|
|
7,852 |
|
7,852 |
|
13.0% |
|
|
Barclays Bank plc 7 |
|
|
|
3,517 |
|
3,517 |
|
5.8% |
|
|
HSBC Bank plc 7 |
|
|
|
3,512 |
|
3,512 |
|
5.8% |
|
|
Lloyds Bank plc 7 |
|
|
|
3,508 |
|
3,508 |
|
5.8% |
|
|
Nationwide Building Society 7 |
|
|
|
3,500 |
|
3,500 |
|
5.8% |
|
|
Santander UK plc 7 |
|
|
|
3,500 |
|
3,500 |
|
5.8% |
|
|
GS Funds plc (Goldman Sachs) 7 |
|
|
|
428 |
|
428 |
|
0.7% |
|
|
GS Funds plc (Goldman Sachs) (formerly Global Treasury Funds plc (Royal Bank of Scotland) ) 7 |
|
|
|
387 |
|
387 |
|
0.7% |
|
|
Insight Liquidity Funds plc (Insight Investment Management) 7 |
|
|
|
271 |
|
271 |
|
0.5% |
|
|
Institutional Cash Series plc (BlackRock) 7 |
|
|
|
256 |
|
256 |
|
0.4% |
|
|
AAM Global Liquidity Fund plc (Aberdeen Asset Management) (formerly SWIP Global Liquidity Fund plc (Scottish Widows) 7 |
|
|
|
176 |
|
176 |
|
0.3% |
|
|
Fidelity Institutional Cash Fund plc (FIL Fund Management) 7 |
|
|
|
114 |
|
114 |
|
0.2% |
|
|
Total current investments and cash at bank |
|
|
|
27,021 |
|
27,021 |
|
44.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments |
|
|
|
59,286 |
|
60,380 |
|
99.9% |
|
|
Other assets |
|
|
|
|
|
346 |
|
0.6% |
|
|
Current liabilities |
|
|
|
|
|
(316) |
|
(0.5)% |
|
|
Net assets |
|
|
|
|
|
60,410 |
|
100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 - This percentage change in 'like for like' valuations is the result of dividing the total of the closing valuation of the investment plus any proceeds in the year from partial disposals, with the valuation at the start of the year or, for a new investment, with the cost of that new investment. |
2 - The other funds advised by Mobeus include Mobeus Income & Growth 2 VCT plc, Mobeus Income & Growth 4 VCT plc and The Income & Growth VCT plc. |
3 - £1,000,000 of this investment into Entanet Holdings Limited was provided by Ackling Management Limited, one of the Company's acquisition vehicles. |
4 - Shares and loan stock in Turner Topco Limited arose as non-cash proceeds from the part realisation of ATG Media Holdings Limited. |
5 - At 31 December 2014, the Company held more than 70% of its total investments in qualifying holdings, and therefore complied with the VCT qualifying investment test. For the purposes of the VCT qualifying investment test, the Company is permitted to disregard disposals of investments for six months from the date of disposal. It also has up to three years to bring in new funds raised, before these need to be included in the qualifying investment test. |
6 - Disclosed as Cash at bank within Current assets in the Balance Sheet. |
7 - Disclosed as Current Investments within Current assets in the Balance Sheet. |
STRATEGIC REPORT
(EXTRACTED INFORMATION)
Introduction
The Directors are pleased to present the Strategic Report of the Company for the year ended 31 December 2014. The purpose of this Report is to inform shareholders and help them to 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 Companies Act").
The Company's independent auditor is required to report on whether the information given in the Strategic Report is consistent with the financial statements.
Company Objective
The Objective of the Company is to provide investors with a regular income stream, by way of tax-free dividends generated from income and capital returns.
The Company and its business model
The Company's Investment Policy is designed to ensure that it continues to qualify and is approved as a VCT by HMRC whilst maximising returns to shareholders from both income and capital. 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 advice and operational support are outsourced to external service providers (including the Investment Adviser, Company Secretary and Administrator and Registrar), with the key strategic and operational framework and key policies set and monitored by the Board. Investment and divestment proposals are originated, negotiated and recommended by the Adviser and are then subject to comment and approval by the Directors.
The Company invests alongside three other VCTs advised by Mobeus (see the Investment Policy below for further details).
Private individuals invest in the Company to benefit from both income and capital returns generated by investment performance. By investing in a VCT they also receive immediate income tax relief (currently 30% of the amount subscribed for new shares 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.
Summary of Investment Policy
The VCT's policy is to invest primarily in a diversified portfolio of UK unquoted companies. Investments are usually structured as part loan and part equity to reduce the risk of investing in smaller companies and in order to generate regular income from existing investments and capital gains from realisations.
Risk is further spread by investing in a number of different businesses across different industry sectors. Investments are made selectively, primarily in MBO transactions 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. This enables the VCT to participate in combined investments by the Adviser of up to £5 million in aggregate.
The Company aims to maintain around 80% of total investments (investments and cash) in qualifying investments. Uninvested funds are held in a portfolio of low risk and readily realisable, interest-bearing investments and deposits.
The full text of the Company's Investment Policy is set out later in this report.
Performance
The Board has identified six key performance indicators that it uses in its own assessment of the Company's progress. These are intended to provide shareholders with sufficient information to assess how the Company has performed in 2014 and over the longer term against its Objective, resulting from the application of its investment and other principal policies:
1. Annual and cumulative returns per share for the year
1.1 Total shareholder returns per share for the year
The NAV and share price total shareholder returns per share for the year ended 31 December 2014 were 17.1% and 21.4% respectively, as shown below.
NAV basis
|
|
Share price basis
|
||
|
(p)
|
|
|
(p)
|
Closing NAV per share at 31 Dec 2014
|
99.44
|
|
Closing share price at 31 Dec 2014
|
86.00
|
Plus: dividends paid in year
|
20.25
|
|
Plus: dividends paid in year
|
20.25
|
|
---------
|
|
|
----------
|
Total
|
119.69
|
|
Total
|
106.25
|
Less: NAV per share at 1 January 2014
|
(102.18)
|
|
Less: share price at 1 January 2014
|
(87.50)
|
|
----------
|
|
|
----------
|
Return for year
|
+17.51
|
|
Return for year
|
+18.75
|
% return for year
|
+17.1%
|
|
% return for year
|
+21.4%
|
The Board considers both the NAV and share price returns for the year to be very satisfactory.
1.2 Review of annual post-tax profits for the year
The source of shareholder returns for the year can be analysed further, as below:
For the year ended 31 December |
2014 |
2013 |
|
|||
|
£(m) |
Pence per share* |
£(m) |
Pence per share* |
||
Capital return |
8.27 |
13.94 |
|
4.90 |
9.41 |
|
Revenue return |
2.46 |
4.15 |
|
2.38 |
4.56 |
|
Total profit after tax |
10.73 |
18.09 |
|
7.28 |
13.97 |
|
* The data in pence per share in the above table is based on the average number of shares in issue in the year. The 2014 profit of 18.09 pence per share therefore differs from the figure of 17.51 pence reported in the table in section 1.1 above principally because the latter is based on the closing net assets divided by the closing number of shares in issue at 31 December 2014.
The positive capital return of £8.27 million for the year was due to gains realised in the year from disposals of £8.38 million and a net uplift in portfolio valuations of £0.70 million on investments held at the year-end. Management fees charged to capital returns were £1.03 million (£0.81 million net of corporation tax relief).
The revenue return for the year was £2.46 million, which was a small increase of £0.08 million on the previous year. This was due to a small rise in income of £0.16 million, from £3.46 million to £3.62 million, (explained in the table below) and a fall in the tax charge of £0.07 million, offset by rises in fees and other expenses of £0.15 million (further explained in section 4 below):
Analysis of changes in income for the year
Year ended 31 December |
2014 |
2013 |
% Change |
Reason |
|
£'000 |
£'000 |
||||
Loan interest |
2,553 |
2,724 |
(6.3)% |
Reduction due to an exceptionally large number of realisations in the period, partially offset by new loan stock investments |
|
|
|
|
|
|
|
Dividend income |
902 |
577 |
56.3% |
A large preference dividend was received from Focus Pharma upon realisation |
|
|
|
|
|
|
|
Returns on cash |
123 |
158 |
(22.2)% |
Lower returns on cash held |
|
|
|
|
|
|
|
Other Income |
46 |
- |
n/a |
Interest on overdue preference dividends |
|
Totals |
3,624 |
3,459 |
4.8% |
|
|
Income received from investee companies
In addition to capital returns from increases in valuations and gains on realisations of investee companies, the portfolio is structured to generate regular income from loan stocks and dividends from equity investments. A five year history of these shows a marked rise in loan stock interest, as larger sums have been held in these loan instruments, alongside the increase in the size of the Company. As noted above, the slight fall in loan interest in 2014 was due to the exceptionally large number and value of loan disposals made during the year.
1.3 Cumulative total shareholder return per share (NAV basis)
The longer term trend of performance on this measure over the last five years is shown in the table below:
Year End |
Net Asset Value (p) |
Cumulative dividends paid to date (p) |
Cumulative NAV total shareholder return (p)1 |
31/12/2014 |
99.44 |
64.30 |
163.74 |
31/12/2013 |
102.18 |
44.05 |
146.23 |
31/12/2012 |
94.22 |
38.05 |
132.27 |
31/12/2011 |
95.59 |
26.80 |
122.39 |
31/12/2010 |
96.66 |
21.30 |
117.96 |
1 Cumulative NAV total shareholder return is NAV plus cumulative dividends paid to date, per share. It thereforeexcludes dividends declared but not yet paid.
2 The Directors have declared a second interim dividend of 7.00 pence per share for the year ended 31 December 2014. The dividend will be paid to shareholders on 30 April 2015, bringing cumulative dividends paid to date to 71.30 pence per share and the NAV pershare will reduce by a corresponding 7.00 pence per share.
Longer-term performance can also be demonstrated by:-
Internal rate of return since inception in 2004
Founder shareholders have earned internal rates of return on their investment since 2004/05 as summarised in the table below. The internal rate of return is the annual discount rate that equates the original investment cost per share of 100 pence (without the benefit of initial income tax relief) and 60 pence (with the benefit of initial income tax relief) at the date of the original investment, with the value of subsequent dividends received and the latest NAV and share price per share. Shareholders should note that the share price at the year-end was at a 10% discount to the NAV at 30 September 2014 of 95.40 pence not 99.44 pence as at 31 December 2014, so the share price data are not directly comparable to the NAV data.
|
|
|
Internal Rate of Return per annum |
||||
|
|
NAV return basis |
Share price basis |
||||
|
|
|
(mid-market) |
||||
For the year ended 31 December |
2014 |
2013 |
2014 |
2013 |
|||
|
|
% |
% |
% |
% |
||
Without benefit of initial income tax relief |
5.7 |
4.8 |
4.7 |
3.5 |
|||
With benefit of initial income tax relief |
12.2 |
11.8 |
11.3 |
10.5 |
|||
The internal rates of return have improved on both bases from last year, due to the Company's strong performance in 2014.
The figures quoted above are for the shares subscribed in the original offer for subscription in 2004/05, taken to be the launch date of the offer on 8 October 2004.
Shareholder returns for each fundraising
The chart below shows the amounts that shareholders who invested in the first allotment of each fundraising round have received to date in dividends together with the mid-market share price at 31 December 2014, compared with the amount invested. It also shows the income tax relief received as a separate component of that amount invested.
Year of fundraising |
Cash invested net of income tax relief (p) |
Income tax relief (p) |
Total amount invested (p) |
Cumulative dividends paid per share (p) |
Mid-market share price (p) |
Total shareholder return (share price basis)(p) |
2014 (Linked Offer) |
70.01 |
28.38 |
98.39 |
20.25 |
86.00 |
106.25 |
2013 (Linked Offer) |
66.22 |
28.38 |
94.60 |
26.25 |
86.00 |
112.25 |
2012 (Linked Offer) |
70.84 |
30.36 |
101.20 |
37.50 |
86.00 |
123.50 |
2011 (Linked Offer) |
68.60 |
29.40 |
98.00 |
43.00 |
86.00 |
129.00 |
2006 (MIG3 VCT) |
60.00 |
40.00 |
100.00 |
55.36 |
91.63 |
146.99 |
2004 (MIG VCT) |
60.00 |
40.00 |
100.00 |
64.30 |
86.00 |
150.30 |
The returns for shareholders include:
- Initial income tax relief received treated as a cash return at the time of the initial investment and shown as a component of the amount then invested. The amount returnedwas 40% of the initial investment for the taxyears 2004/05 and 2005/06 and 30% for the tax years 2006/07onwards;
- Tax-free dividendsreceived as further cash returns since that initial investment;
- The closing mid-market share price.
Data for the second oldest fundraising above are for Matrix Income & Growth3 VCT ("MIG 3 VCT"), which merged with the Company in May 2010. Dividendspaid to former MIG 3 VCTshareholders, and the share price, have been adjusted to reflect that a MIG 3 VCT shareholder received 1.0655 shares in the Company for each MIG 3 VCT share they owned, at the date of the merger.
2. The VCT's performance compared with its peer group
The Board places emphasis on benchmarking the Company's performance against its peer group of VCTs. The table below compares the NAV cumulative total return of the Company to an index of all VCTs and an index of generalist VCTs, which are members of the Association of Investment Companies ("AIC") over the last five years based on figures published by Morningstar.
As at |
Mobeus Income & Growth VCT plc NAV cumulative Total Return |
AIC Generalist VCTs NAV cumulative Total Return (p) |
AIC all VCTs NAV cumulative Total Return (p) |
(p) |
|||
31 December 2014 |
113.20 |
105.15 |
103.61 |
31 December 2013 |
114.80 |
109.41 |
111.73 |
31 December 2012 |
110.30 |
106.78 |
107.69 |
31 December 2011 |
104.60 |
105.00 |
101.83 |
31 December 2010 |
122.00 |
109.36 |
109.70 |
31 December 2009 |
100.00 |
100.00 |
100.00 |
Statistics produced by the AIC demonstrate that the Company's cumulative total return per share on a NAV basis is in the first quartile of the VCT's peer group on a one, three and five year basis. The performance of the Adviser was recognised in the unquote" British Private Equity Awards 2014, where Mobeus was named VCT House of the Year in 2014 for the third consecutive year.
3. Compliance with VCT legislation
In order to comply with VCT tax legislation, the Company must meet a number of tests set by HMRC. In particular, the Company is required to maintain not less than 70% of its total investments (investments and cash) in qualifying investments in unquoted and AIM quoted companies. The calculation of this percentage is arrived at using tax values, based on the cost of the most recent purchase of an investment instrument in a particular company, which will differ from the actual cost of each investment shown in the Investment Portfolio Summary. Furthermore, the test permits a period of approximately three years to pass before funds raised need to be brought into consideration for the purposes of this test. Further information on this and some of the other tests is detailed under VCT Regulation within the Investment Policy. At 31 December 2014 and at the date of this report, the Company continued to meet these tests.
4. Costs
The Board monitors costs using the Ongoing Charges Ratio which is as set out in the table below.
|
2014 |
2013 |
Ongoing charges |
2.7% |
2.7% |
Performance fee |
0.0% |
0.0% |
Ongoing charges plus accrued performance fee |
2.7% |
2.7% |
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 historical 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 3.6% 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 (2013: £nil)
Management fees and other expenses
In line with the rise in net assets, Adviser fees have increased from £1.15 million to £1.37 million, charged to both revenue (increase of £0.05 million) and capital (increase of £0.17 million) returns. Other expenses (all charged to revenue) have risen from £0.29 million to £0.39 million due principally to rises in trail commission, directors' fees and professional fees (the increase in the latter being related to AIFM compliance and the recruitment fee for a non-executive director).
In addition to its Investment Policy, the Board monitors the key performance indicators arising from applying its Dividend and Discount Policies. The indicators are respectively dividends paid in respect of each year and the discount to NAV at which shares are bought back by the Company.
5. Dividends paid and comparison to dividend policy
The Company has a target of paying an annual dividend of at least 4.00 pence per share in respect of each financial year. It has comfortably exceeded this target in each of its last five financial years. However, 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.
|
Dividends paid and declared in respect of the financial year (pence per share) |
31/12/2010 |
5.00 |
31/12/2011 |
6.75 |
31/12/2012 |
7.00 |
31/12/2013 |
7.25 |
31/12/2014 |
24.00 |
Dividends per share paid and declared in respect of the financial year ended 31 December 2014 are 24 pence.
A second interim dividend of 7.00 pence per share for the year ended 31 December 2014, which has been declared and will be paid to shareholders on 30 April 2015, has been included in the 24.00 pence for 2014.
6. Maintenance of discount policy for share buybacks
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 NAV to the latest published NAV at which the shares trade at approximately 10%. The discount of approximately 10% has been maintained for the last four years, since the Board stated its intent to pursue such a discount level.
Continuing shareholders benefit from the difference between the NAV and the price at which the shares are bought back and cancelled. During the year ended 31 December 2014, shareholders holding 536,729 shares, representing 1.0% of the issued share capital of the Company at the beginning of the year, expressed their desire to sell their investments. The Company instructed its brokers, Panmure Gordon (UK) Limited ("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 80.00 and 87.00 pence per share and cancelled them.
Key Policies
The Board has put in place the following policies to be applied to meet the Company's overall Objective and to cover specific areas of the Company's business.
Investment policy
The VCT's policy is to invest primarily in a diversified portfolio of UK unquoted companies. Investments are usually structured as part loan and part equity in order to receive regular income and to generate capital gains from realisations.
Investments are made selectively across a number of sectors, principally in MBOs i.e. to support incumbent management teams in acquiring the business they manage but do not own. Investments are principally made in companies that are established and profitable.
Uninvested funds are held in cash and lower risk money market funds.
VCT regulation
The Investment Policy is designed to ensure that the VCT continues to qualify and is approved as a VCT by HMRC. Amongst other conditions, the VCT may not invest more than 15% of its investments in a single company or group of companies and must have at least 70% by value of its investments throughout the period in shares or securities in VCT qualifying holdings, of which a minimum overall of 30% by value (70% for funds raised on or after 6 April 2011) must be in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules). The VCT can invest less than 30% by value (70% for funds raised on or after 6 April 2011) of an investment in a specific company in ordinary shares. It must however, have at least 10% by value of its total investments in each VCT qualifying company in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules).
UK companies
The companies in which investments are made must have no more than £15 million of gross assets at the time of investment and £16 million immediately following the investment to be classed as a VCT qualifying holding.
Asset mix
The VCT holds its liquid funds in a portfolio of readily realisable interest-bearing investments and deposits. The investment portfolio of qualifying investments has been built up over time with the aim of investing and maintaining 80% of net funds raised in qualifying investments.
Risk diversification and maximum exposures
Risk is reduced by investing in a number of different businesses across different industry sectors. To reduce the risk of high exposure to equities, each qualifying investment is structured to maximise the amount which may be invested in loan stock.
Co-investment
The VCT aims to invest in larger, more mature, unquoted companies through investing alongside three other VCTs advised by Mobeus with a similar investment policy. This enables the VCT to participate in combined investments by the Adviser of up to £5 million in aggregate.
Borrowing
The VCT's articles of association permit borrowings of amounts up to 10% of the adjusted capital and reserves (as defined therein). The VCT has never borrowed and the Board has no current plans to undertake any borrowing.
Management
The Board has overall responsibility for the Company's affairs including the determination of its Investment Policy. Investment and divestment proposals are originated, negotiated and recommended by the Investment Adviser and are then subject to formal approval by the Directors.
Other key policies
● Cash available for investment and liquidity
The Company's cash and liquid resources are held in a range of instruments of varying maturities including liquid, low risk Money Market Funds and bank deposits, subject to the overriding criterion that the risk of loss of capital be minimised. The Company has participated in the Mobeus VCTs' annual fundraisings since 2010 in order to maintain a sufficient level of funds that can be deployed in meeting the day-to-day expenses of the Company, dividends and purchases of the Company's own shares. This enables money raised prior to 6 April 2012 to be allocated for future MBO investment.
●Diversity
The Directors have considered diversity in relation to the composition of the Board and have concluded that its membership is diverse in relation to gender and breadth of experience. The Board currently comprises equal numbers of men and women. The Company does not have any senior managers or employees. The Board has made a commitment to consider diversity in making future appointments.
Further policies
In addition to the Investment Policy above and the policies on payment of dividends and share buybacks which are discussed earlier in this section, the Company has also adopted a number of further policies relating to:
-Human rights
-Anti-bribery
-Environmental and social responsibility
-Global greenhouse gas emissions
-Whistleblowing
These are set out in the Directors' Report included in the full Annual Report to be published shortly.
Principal risks
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. The principal risks identified by the Board are set out below.
Risk
|
Possible consequence
|
How the Board manages risk
|
|
Economic
|
Events such as an economic recession and movements in interest rates could affect trading conditions for smaller companies and consequently the value of the Company's investments.
|
The Board monitors (1) the portfolio as a whole to ensure that the Company invests in a diversified portfolio of companies and (2) developments in the macro-economic environment such as movements in interest rates. |
|
Loss of approval as a Venture Capital Trust
|
A breach of the VCT tax rules may lead to the Company losing its approval as a VCT, which would, inter alia, result in (1) qualifying shareholders who have not held their shares for the designated period having to repay the income tax relief they obtained; (2) future dividends paid by the Company being subject to tax; and (3) the Company losing its exemption from corporation tax on capital gains.
|
The Company's VCT qualifying status is continually reviewed by the Adviser. |
|
The Board receives regular reports from its VCT Status Adviser who has been retained by the Board to monitor the VCT's compliance with the VCT tax rules (specifically s 274 of the ITA).
|
|
||
Investment and strategic
|
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 Objective and Investment Policy. |
|
Investments are made across a number of diverse sectors to mitigate risk. Investee companies are carefully selected by the Adviser for recommendation to the Board. The investment portfolio is reviewed by the Board on a regular basis. |
|
||
Regulatory
|
The Company is required to meet its legal and regulatory obligations as a VCT and listed company. Failure to comply might result in 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 Company's solicitors and 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. |
|
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. |
|
The Adviser alerts the Board about any adverse movements. |
|
||
Asset liquidity
|
The Company's unquoted investments cannot be realised in a short timescale. Underperforming unquoted investments may bedifficultto realise in any timescale.
|
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. Whilst demand has always been met to date, it may not be possible for the Company to buy back large percentages of the share capital, other than over several years.
|
The Board has a share buy-back 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. |
|
Future prospects
For a discussion of the Company's future prospects, please see the Chairman's Statement.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Strategic Report, the Directors' Report, the Directors' Remuneration 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. Under that law, 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 applicable 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 and 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 have been prepared in accordance with UK Generally Accepted Accounting Practice and 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.
Having taken advice from the Audit Committee, the Board considers 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.
The names and functions of the Directors are:
Keith Niven (Chairman)
Tom Sooke (Chairman of the Audit Committee and Senior Independent Director)
Bridget Guerin (Chairman of the Nomination & Remuneration and Management Engagement Committees)
Catherine Wall (Director)
For and on behalf of the Board
Keith Niven
Chairman
FINANCIAL STATEMENTS
INCOME STATEMENT
for the year ended 31 December 2014
|
|
Year ended 31 December 2014 |
Year ended 31 December 2013 |
||||||
|
|
|
|
|
|
|
|||
Notes |
Revenue |
Capital |
|
Total |
Revenue |
Capital |
|
Total |
|
|
|
£ |
£ |
|
£ |
£ |
£ |
|
£ |
|
|
|
|
|
|
|
|
|
|
Unrealised gains on investments |
7 |
- |
698,348 |
|
698,348 |
- |
4,832,261 |
|
4,832,261 |
|
|
|
|
|
|
|
|
|
|
Realised gains on investments |
7 |
- |
8,379,750 |
|
8,379,750 |
- |
725,905 |
|
725,905 |
|
|
|
|
|
|
|
|
|
|
Income |
2 |
3,624,232 |
- |
|
3,624,232 |
3,459,318 |
- |
|
3,459,318 |
|
|
|
|
|
|
|
|
|
|
Investment adviser's fees |
3 |
(342,773) |
(1,028,318) |
|
(1,371,091) |
(286,839) |
(860,517) |
|
(1,147,356) |
|
|
|
|
|
|
|
|
|
|
Other expenses |
|
(389,175) |
|
|
(389,175) |
(290,635) |
|
|
(290,635) |
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities before taxation |
|
2,892,284 |
8,049,780 |
|
10,942,064 |
2,881,844 |
4,697,649 |
|
7,579,493 |
|
|
|
|
|
|
|
|
|
|
Tax on profit on ordinary activities |
4 |
(429,911) |
221,088 |
|
(208,823) |
(504,213) |
200,070 |
|
(304,143) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
|
2,462,373 |
8,270,868 |
|
10,733,241 |
2,377,631 |
4,897,719 |
|
7,275,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per ordinary share |
6 |
4.15p |
13.94p |
|
18.09p |
4.56p |
9.41p |
|
13.97p |
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET
as at 31 December 2014
Company No. 5153931
|
|
31 December 2014 |
31 December 2013 |
|
|
|
|
|
Notes |
£ |
£ |
|
|
|
|
Fixed assets |
|
|
|
Investments at fair value |
7 |
33,358,706 |
39,317,184 |
|
|
|
|
Current assets |
|
|
|
Debtors and prepayments |
8 |
346,127 |
609,464 |
Current investments |
9 |
19,169,158 |
9,642,587 |
Cash at bank |
|
7,852,487 |
5,157,499 |
|
|
27,367,772 |
15,409,550 |
|
|
|
|
Creditors: amounts falling due within one year |
|
(316,401) |
(458,366) |
|
|
|
|
Net current assets |
|
27,051,371 |
14,951,184 |
|
|
|
|
|
|
|
|
Net assets |
|
60,410,077 |
54,268,368 |
|
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
Called up share capital |
10 |
607,500 |
531,126 |
Capital redemption reserve |
10 |
5,367 |
186,520 |
Share premium reserve |
10 |
4,938,201 |
15,361,612 |
Revaluation reserve |
10 |
3,734,981 |
9,867,216 |
Special distributable reserve |
10 |
41,911,188 |
25,580,251 |
Profit and loss account |
10 |
9,212,840 |
2,741,643 |
Equity shareholders' funds |
10 |
60,410,077 |
54,268,368 |
Basic and diluted net asset value per ordinary share |
11 |
99.44p |
102.18p |
|
|
|
|
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended 31 December 2014
|
|
Year ended |
Year ended |
|
|
31 December 2014 |
31 December 2013 |
|
|
|
|
|
Notes |
£ |
£ |
|
|
|
|
Opening shareholders' funds |
|
54,268,368 |
43,288,523 |
Net share capital subscribed for in the year - net of expenses |
10 |
8,193,915 |
17,393,270 |
Net share capital bought back in the year - including expenses |
10 |
(480,472) |
(10,474,734) |
Profit for the year |
10 |
10,733,241 |
7,275,350 |
Dividends paid in year |
5 |
(12,304,975) |
(3,214,041) |
Closing shareholders' funds |
10 |
60,410,077 |
54,268,368 |
CASH FLOW STATEMENT
For the year ended 31 December 2014
|
|
Year ended |
Year ended |
|
|
31 December 2014 |
31 December 2013 |
Notes |
£ |
£ |
|
Operating activities |
|
|
|
Investment income received |
|
3,970,647 |
3,066,706 |
Other income |
|
15,719 |
3,615 |
Investment adviser fees paid |
|
(1,371,091) |
(1,147,356) |
Other cash payments |
|
(309,266) |
(286,453) |
Net cash inflow from operating activities |
|
2,306,009 |
1,636,512 |
|
|
|
|
Investing activities |
|
|
|
Acquisitions of investments |
7 |
(9,731,308) |
(4,765,043) |
Disposals of investments |
7 |
24,670,194 |
5,863,541 |
Net cash inflow from investing activities |
|
14,938,886 |
1,098,498 |
|
|
|
|
Taxation |
|
|
|
Corporation tax paid |
|
(402,098) |
- |
Net cash outflow from taxation |
|
(402,098) |
- |
|
|
|
|
Equity dividends |
|
|
|
Payment of dividends |
5 |
(12,304,975) |
(3,214,041) |
Cash inflow/(outflow) before liquid resource management and financing |
|
4,537,822 |
(479,031) |
|
|
|
|
Management of liquid resources |
|
|
|
Increase in current investments |
9 |
(9,526,571) |
(6,009,919) |
|
|
|
|
Financing |
|
|
|
Shares issued as part of joint fundraising offer for subscription |
10 |
8,193,915 |
8,092,536 |
Shares issued as part of Enhanced Buyback Facility |
|
- |
250,000 |
Shares bought back as part of Enhanced Buyback Facility (including expenses) |
|
- |
(388,289) |
Share capital bought back |
|
(510,178) |
(1,020,806) |
Net cash inflow from financing |
|
7,683,737 |
6,933,441 |
Increase in cash for the year |
|
2,694,988 |
444,491 |
|
|
|
|
Notes
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' ("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 which are 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 on organised financial markets, fair value is generally determined by reference to Stock Exchange market quoted bid prices at the close of business on the balance sheet date. Purchases and sales of quoted investments are recognised on the trade date where a contract of sale exists whose terms require delivery within a time frame determined by the relevant market. 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 market 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 and dividends on preference shares are accrued on a daily basis. Provision is made against this income where recovery is doubtful or where it will not be received in the foreseeable future. Where the loan stocks only 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 adviser fee expense, together with the related tax effect, to this reserve in accordance with the policies in 'Expenses' below.
· 100% of performance incentive fees.
(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 now 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, 75% of the management 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 share allotted under recent offers for subscription.
(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 Adviser's 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 period 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 management 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 |
116,879 |
152,013 |
|
|
|
Income from investments |
|
|
- from equities |
902,426 |
577,422 |
- from overseas based OEICs |
6,414 |
6,146 |
- from loan stock |
2,552,507 |
2,723,737 |
- from interest on preference share dividend arrears |
30,287 |
- |
|
3,491,634 |
3,307,305 |
|
|
|
Other income |
15,719 |
- |
|
|
|
Total income |
3,624,232 |
3,459,318 |
|
|
|
Total income comprises |
|
|
Dividends |
908,840 |
583,568 |
Interest |
2,699,673 |
2,875,750 |
Other income |
15,719 |
- |
|
3,624,232 |
3,459,318 |
Income from investments comprises |
|
|
Listed overseas securities |
6,414 |
6,146 |
Unlisted UK securities |
902,426 |
577,422 |
Loan stock interest |
2,552,507 |
2,723,737 |
|
3,461,347 |
3,307,305 |
Total loan stock interest due but not recognised in the year was £267,271 (2013: £412,387).
3 Investment adviser's fees
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
2014 |
2014 |
2014 |
2013 |
2013 |
2013 |
|
£ |
£ |
£ |
£ |
£ |
£ |
Mobeus Equity Partners LLP |
342,773 |
1,028,318 |
1,371,091 |
286,839 |
860,517 |
1,147,356 |
Under the terms of a revised investment management agreement dated 20 May 2010, Mobeus Equity Partners LLP ("Mobeus") provides investment advisory, administrative and company secretarial services to the Company, for a fee of 2% per annum of closing net assets, paid in advance, calculated on a quarterly basis by reference to the net assets at the end of the preceding quarter, plus a fixed fee of £126,225 per annum, the latter inclusive of VAT and subject to annual increases in RPI. In 2013, Mobeus has agreed to waive such further increases due to indexation, until otherwise agreed with the Board.
The Investment Adviser's fee includes provision for a cap on expenses, excluding irrecoverable VAT and exceptional items, set at 3.6% of closing net assets at the year-end. In accordance with the Investment Management Agreement, any excess expenses are borne by the Adviser. The excess expenses during the year amounted to £nil (2013: £nil).
Under an incentive agreement dated 9 July 2004, and a variation of this agreement dated 20 May 2010, the Adviser is entitled to receive an annual performance-related incentive fee of 20% of the excess above an agreed hurdle rate in the annual dividends paid to shareholders. At 31 December 2014, this hurdle rate had become 7.07 pence per share (2013: 6.95 pence) and the cumulative shortfall of dividends paid below the annual hurdle rate was 1.81 (2013: 14.99) pence per share at the year end. In addition, the performance fee will only be payable if the average net asset value per share over the period relating to the payment has remained at or above the base NAV of 98.52 pence per share (2013: 97.55 pence). The base NAV may change, as a result of any change in share capital, such as the allotment of new shares in any period.
No performance incentive fee is payable to date.
Under the terms of the Mobeus advised VCTs' 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 the costs associated with the Offer were met, excluding any payments to advisers facilitated under the terms of the Offer.
Under the terms of an Offer 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 Offer closed on 10 March 2015, being fully subscribed. Based upon fully subscribed Offers of £39 million across all four VCTS, this equalled £1,267,500, out of which all the costs associated with the Offers will be met, excluding any payments to advisers facilitated under the terms of the Offers.
4 Tax on profit/(loss) on ordinary activities
|
2014 |
2014 |
2014 |
2013 |
2013 |
2013 |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
£ |
£ |
£ |
£ |
£ |
£ |
a) Analysis of tax charge: |
|
|
|
|
|
|
UK Corporation tax on profits/(losses) for the year |
429,911 |
(221,088) |
208,823 |
504,213 |
(200,070) |
304,143 |
Total current tax charge/(credit) |
429,911 |
(221,088) |
208,823 |
504,213 |
(200,070) |
304,143 |
Corporation tax is based on a rate of 21.5% (2013: 23.25%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
b) Profit on ordinary activities before tax |
2,892,284 |
8,049,780 |
10,942,064 |
2,881,844 |
4,697,649 |
7,579,493 |
Profit on ordinary activities multiplied by main company rate of corporation tax in the UK of 21.5% (2013: 23.25%) |
621,841 |
1,730,703 |
2,352,544 |
670,029 |
1,092,204 |
1,762,233 |
Effect of: |
|
|
|
|
|
|
UK dividends |
(194,022) |
- |
(194,022) |
(134,251) |
- |
(134,251) |
Unrealised gains not taxable |
- |
(150,145) |
(150,145) |
- |
(1,123,501) |
(1,123,501) |
Realised gains not taxable |
- |
(1,801,646) |
(1,801,646) |
- |
(168,773) |
(168,773) |
Unrelieved expenditure |
2,092 |
- |
2,092 |
- |
- |
- |
Losses brought forward |
- |
- |
- |
(31,565) |
- |
(31,565) |
Actual current tax charge |
429,911 |
(221,088) |
208,823 |
504,213 |
(200,070) |
304,143 |
Tax relief relating to investment advisory fees is allocated between revenue and capital where such relief can be utilised.
Investment Trust companies are exempt from tax on capital gains if they meet the HMRC criteria set out in section 274 of the ITA.
Deferred taxation
No provision for deferred taxation has been made on potential capital gains due to the Company's current status as a VCT under section 274 of the ITA and the Directors' intention to maintain that status.
5 Dividends paid and payable
|
2014 |
2013 |
|
£ |
£ |
Amounts recognised as distributions to equity holders in the year: |
|
|
Final dividend for the year ended 31 December 2013 of 1.75p (income) (2012: 1.50p); 1.50p (capital) (2012: 0.50p) per ordinary share |
1,960,470 |
1,073,757 |
|
|
|
Interim dividend for the year ended 31 December 2014 of 2.00p (income) (2013: 2.00p); 15.00p (capital) (2013: 2.00p) per ordinary share) |
10,344,505 |
2,140,284 |
|
12,304,975 |
3,214,041 |
|
|
|
Distributions to equity holders at the year-end: |
|
|
|
|
|
Second interim dividend declared for the year ended 31 December 2014 of 1.20p (income) (2013: nil p); 5.80p (capital) (2013: nil p) per ordinary share |
5,320,327 |
- |
Final dividend for the year ended 31 December 2014 of nil p (income) (2013: 1.75p); nil p (capital) (2013: 1.50p) per ordinary share |
- |
1,960,470 |
|
5,320,327 |
1,960,470 |
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 259 of the Income Tax Act 2007 are considered.
|
2014 |
2013 |
|
|
|
|
£ |
£ |
Revenue available for distribution by way of dividends for the year |
2,462,373 |
2,377,631 |
|
|
|
Interim income dividend of 2.00p (2013: 2.00p) paid during the year |
1,217,001 |
1,070,141 |
Second interim dividend for the year ended 31 December 2014 of 1.20p (income) (2013: nil p) per ordinary share |
912,056 |
|
Final income dividend proposed for the year ended 31 December 2014 of nil p (2013: 1.75p) per ordinary share |
- |
1,055,637 |
|
2,129,057 |
2,125,778 |
6 Basic and diluted earnings per share
|
2014 |
2013 |
|
£ |
£ |
Total earnings after taxation: |
10,733,241 |
7,275,350 |
Basic and diluted earnings per share (note a) |
18.09p |
13.97p |
Revenue profit from ordinary activities after taxation |
2,462,373 |
2,377,631 |
Basic and diluted revenue earnings per share (note b) |
4.15p |
4.56p |
|
|
|
Net unrealised capital gains on investments |
698,348 |
4,832,261 |
Net realised capital gains on investments |
8,379,750 |
725,905 |
Capital adviser fees less taxation |
(807,230) |
(660,447) |
Total capital earnings |
8,270,868 |
4,897,719 |
Basic and diluted capital earnings per share (note c) |
13.94p |
9.41p |
|
|
|
Weighted average number of shares in issue in the year |
59,331,055 |
52,090,673 |
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 profit 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 earnings per share.
7 Investments at fair value
Movements in investments during the year are summarised as follows:
|
Traded on AIM |
Unquoted ordinary shares |
Unquoted preference shares |
Loan stock |
Total |
|
£ |
£ |
£ |
£ |
£ |
Cost at 31 December 2013 |
305,000 |
8,028,849 |
47,766 |
24,213,431 |
32,595,046 |
Net unrealised gains/(losses) at 31 December 2013 |
139,789 |
7,911,329 |
(8,720) |
217,137 |
8,259,535 |
Permanent impairment in value of investments |
- |
(701,362) |
(3,078) |
(832,957) |
(1,537,397) |
Valuation at 31 December 2013 |
444,789 |
15,238,816 |
35,968 |
23,597,611 |
39,317,184 |
|
|
|
|
|
|
Purchases at cost |
30 |
2,874,292 |
3,405 |
8,512,870 |
11,390,597 |
Sale proceeds |
- |
(16,363,263) |
(19,526) |
(10,573,389) |
(26,956,178) |
Realised gains |
- |
7,637,692 |
14,286 |
1,256,777 |
8,908,755 |
Reclassification at value |
- |
(703,034) |
552,897 |
150,137 |
- |
Net unrealised gains/(losses) for the year |
12,696 |
(1,266,279) |
(285,597) |
2,237,528 |
698,348 |
Closing valuation at 31 December 2014 |
457,515 |
7,418,224 |
301,433 |
25,181,534 |
33,358,706 |
|
|
|
|
|
|
Cost at 31 December 2014 |
305,030 |
8,513,697 |
80,258 |
23,365,601 |
32,264,586 |
Net unrealised gains/(losses) at 31 December 2014 |
152,485 |
497,318 |
224,253 |
2,860,925 |
3,734,981 |
Permanent impairment in value of investments |
- |
(1,592,791) |
(3,078) |
(1,044,992) |
(2,640,861) |
Valuation at 31 December 2014 |
457,515 |
7,418,224 |
301,433 |
25,181,534 |
33,358,706 |
Within net unrealised gains of £698,348 for the year, the significant gains were £1,208,999 in Entanet Holdings Limited, £949,310 in ASL Technology Holdings Limited, £474,916 in Westway Services Holdings (2014) Limited, £278,871 in The Plastic Surgeon Holdings Limited, and £127,578 in Virgin Wines Holding Company Limited; the significant unrealised losses were as follows: £1,638,910 in Blaze Signs Holdings Limited, £253,353 in Fullfield Limited (trading as Motorclean), £217,943 in Vectair Holdings Limited, and £187,032 in Gro-Group Holdings Limited.
£1,103,464 of the cost of certain investments were treated as permanently impaired in the year.
Reconciliation of investment transactions to cash flow and income statement movements
The cash flow from investment proceeds shown above of £26,956,178 differs from the sale proceeds shown in the cash flow statement of £24,670,194, by £2,285,984. This is due to new equity and loan stock instruments of £2,501,087 received as non-cash consideration for the partial sale of ATG Media but included above, £841,798 of cash received relating to the restructuring of the investment in Westway Services*, £97,690 of deferred cash sale proceeds not received until after the year end and transaction costs paid of £529,005, not deducted from proceeds above. These transaction costs also account for the difference in realised gains between £8,908,755 shown above and £8,379,750 disclosed in the Income Statement.
Purchases above of £11,390,597 differ to that shown in the Cash Flow Statement of £9,731,308 by £1,659,289. 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 £2,501,087, less £841,798 invested as cash as part of the Westway Services* restructure.
* - Although the cash movements above of £841,798 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 Debtors
|
2014 |
2013 |
|
£ |
£ |
Amounts due within one year: |
|
|
Accrued income |
231,137 |
593,273 |
Prepayments |
17,141 |
16,032 |
Other debtors |
97,849 |
159 |
|
346,127 |
609,464 |
9 Current Investments
|
2014 |
2013 |
|
|
|
|
£ |
£ |
|
|
|
Monies held pending investment |
19,169,158 |
9,642,587 |
|
|
|
|
|
|
|
|
|
This comprises cash invested in six Dublin based OEIC money market funds and in five bank deposits. £1,633,516 (2013: £1,633,110) of this sum is in OEIC money market funds and £7,017,054 (2013: £4,004,253) is held in bank deposits, both subject to immediate access and £10,518,588 (2013: £4,005,224) is in bank deposits, repayable within one year. These sums are regarded as monies pending investment and are treated as liquid resources in the Cash Flow Statement.
10 Movement in share capital and reserves
|
Called up share capital |
Capital redemption reserve |
Share Premium reserve |
Revaluation reserve |
Special distributable reserve* |
Profit and loss account * |
Total |
(note b) |
|||||||
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
|
At 1 January 2014 |
531,126 |
186,520 |
15,361,612 |
9,867,216 |
25,580,251 |
2,741,643 |
54,268,368 |
|
|
|
|
|
|
|
|
Shares issued via Offer for Subscription |
81,741 |
- |
8,115,662 |
- |
(3,488) |
- |
8,193,915 |
Shares bought back |
(5,367) |
5,367 |
- |
- |
(480,472) |
- |
(480,472) |
Cancellation of share premium account and capital redemption reserve (note a) |
- |
(186,520) |
(18,539,073) |
- |
18,725,593 |
- |
- |
Write off to special reserve (note a) |
- |
- |
- |
- |
(1,910,696) |
1,910,696 |
- |
Realisation of previously unrealised gains |
- |
- |
- |
(6,830,583) |
- |
6,830,583 |
- |
Dividends paid |
- |
- |
- |
- |
- |
(12,304,975) |
(12,304,975) |
Profit for the year |
- |
- |
- |
698,348 |
- |
10,034,893 |
10,733,241 |
|
|
|
|
|
|
|
|
As at 31 December 2014 |
607,500 |
5,367 |
4,938,201 |
3,734,981 |
41,911,188 |
9,212,840 |
60,410,077 |
*These reserves total £51,124,028 (2013: £28,321,894) and are regarded as distributable reserves for the purpose of assessing the Company's ability to pay dividends to shareholders.
Note a: The cancellation of £18,539,073 from the share premium account and £186,520 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 buy-backs of shares as and when it is considered by the Board to be in the interests of the shareholders, and to absorb existing and future realised losses. As a result, the Company has a special reserve of £41,911,188. The transfer of £1,910,696 to the special reserve from the realised capital reserve above is the total of realised losses incurred by the Company this year. All of the special distributable reserve originates from funds raised prior to 6 April 2014.
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.
Net asset value per ordinary share is based on net assets at the end of the year and on 60,750,032 (2013: 53,112,565) ordinary shares, being the number of ordinary shares in issue on that date.
12 Contingent liability
The Board currently intends to propose to shareholders that a payment of £250,000 should be made to the Investment Adviser.
13 Post balance sheet events
Under the Offer for Subscription launched on 10 December 2014, a total of 15,254,642 new ordinary shares were allotted at effective offer prices ranging from 95.40 - 102.62 pence per share, raising net funds of £14.55 million. The Offer closed on 10 March 2015, fully subscribed.
On 30 January 2015, the Company invested a further £1.38 million in the acquisition vehicle South West Services Investment Limited ("SWSI"), adding to its earlier investment of £1.14 million. This enabled SWSIL to acquire Media Business Insight Limited ("MBIL"). The Company has also advanced a non-qualifying loan of £0.76 million to MBIL. MBIL is a publishing and events business focussed on the creative production industries, specifically advertising, TV production and film media.
On 20 February 2015, the Company invested a further £1.00 million into Entanet Holdings Limited as loan stock.
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.migvct.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 2.00pm on Wednesday, 6 May 2015 at 33 St James' 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.