Annual Financial Report

Mobeus Income & Growth VCT PLC

15 April 2024

 

MOBEUS INCOME & GROWTH VCT PLC

LEI:  213800HKOSEVWS7YPH79

Annual Report & Financial Statements for the Year Ended 31 December 2023

Results Announcement

The Company announces the Annual Report and Financial Statements for the year ended 31 December 2023 have been published on its website www.migvct.co.uk.  The results were approved by the Board of Directors on 12 April 2024.

The highlights Include:

As at 31 December 2023:

Net assets: £95.99 million

Net asset value ("NAV") per share: 58.43 pence

➤         Net asset value ("NAV") total return¹ per share was 6.1%².

➤         Share price total return¹ per share was 5.7%³.

➤         Dividends paid and declared in respect of the financial year totalled 9.50 pence per share. Cumulative dividends paid to date since inception in 2004 stand at 166.30 pence per share.

➤        £5.72 million was invested into eight new growth capital investments and four existing portfolio companies during the year.

➤         Net unrealised gains were £6.03 million in the year.

➤        The Company realised investments totalling £2.70 million of cash proceeds and generated net realised gains in the year of £0.39 million.

¹ Definitions of key terms and alternative performance measures shown above and throughout this report are shown in the Glossary of terms.

² Further details on the NAV total return are shown in the Performance and Key Performance Indicators section of the Strategic Report.

³ The difference in NAV and share price total returns arises principally due to the timing of NAV announcements.

Strategic Report

Chair's Statement

I am pleased to present the annual results for the Mobeus Income & Growth VCT plc for the year ended 31 December 2023.

Overview

The UK economic environment has been challenging for the Company and its portfolio companies during this financial year. High rates of inflation and resulting raised interest rates have both impacted consumer and business confidence, causing a general softening of trading performance. Worldwide, central banks have been assessing the impact of their having raised rates and there are tentative signs that this may allow reductions in rates as the year progresses. Compared to last year's material de-rating of growth stock multiples, over the course of the current year these appear to have stabilised. Despite the uncertain economic environment, a number of the portfolio's companies have nevertheless experienced good growth in the year. Building on a positive NAV performance in the first six months of the year, further strong performance by a number of companies combined with a degree of resilience within the remainder of the portfolio meant that the Company's NAV total return increased by 6.1% (2022: fall of 15.8%).

The Company has been an active investor and provided funding to eight new companies during the year: Connect Earth, Cognassist, Dayrize, Mable Therapy, Branchspace, Ozone API, Azarc and CitySwift. Follow-on investment activity also continued with further investments made during the year into Legatics, Orri, RotaGeek and FocalPoint. It also delivered a highly successful exit from Tharstern Group in March 2023.

Overall, the portfolio remains diversified and well-funded, however there is a degree of concentration in that the top ten assets now represent c.75% of portfolio value. As is the nature of growth assets, the risk of company failures is ever present. However, the upside for successful investments can be significant which is resulting in value concentration amongst these larger and more stable assets. The Company has strong liquidity to support the Investment Adviser's team who are actively seeking new deals and further investment opportunities within the existing portfolio.

The Board and Investment Adviser were pleased with the Chancellor's confirmation in the Autumn Budget, held on 22 November 2023, of the intention to extend the sunset clause to 6 April 2035 meaning that future investors will still benefit from the tax reliefs available to VCTs, subject to EU approval.

Performance

The Company's NAV total return per share increased by 6.1% (2022: a fall of 15.8%) after adding back a total of 9.50 pence per share in dividends paid during the year. The increase was principally the result of positive valuation movements across three of the five largest investments by value, particularly Preservica, together with higher interest income generated on cash held awaiting investment. In addition, the successful portfolio exit of Tharstern Group generated a positive net realised gain for the Company.

At the year-end, the Company was ranked 16th out of 37 Generalist VCTs over three years, 3rd out of 36 Generalist VCTs over five years and 1^st out of 30 over ten years in the Association of Investment Companies' ("AIC") analysis of  NAV Total Return (assuming dividends are reinvested). Shareholders should note that, due to the lag in the disclosed performance figures available each quarter, the AIC ranking figures do not fully reflect the final NAV uplift to 31 December 2023, or those of our peers.

Dividends

The Board seeks to meet the Company's annual dividend target of at least 4.00 pence per share and provide an attractive tax-free income stream to Shareholders. The Board was therefore pleased to be able to declare two interim dividends of 5.00 and 4.50 pence per share, totalling 9.50 pence per share in respect of the year ended 31 December 2023 to reflect gains and income generated as well as ensuring compliance with the VCT regulations. This was more than double the Company's annual target of 4.00 pence per share which has been achieved, and often exceeded, in each of the last thirteen financial years.

The first interim dividend was paid on 26 May 2023, to Shareholders on the Register on 21 April 2023 and the second interim dividend was paid on 8 November 2023 to those Shareholders on the Register on 29 September 2023. These dividend payments have brought cumulative dividends paid per share since inception to 166.30 pence.

The majority of the portfolio now consists of younger growth capital investments. By their nature this results in greater risk than the historic Management Buy-Out portfolio and can result in increased volatility in the returns Shareholders receive in any given year. Shareholders should also note that there may continue to be circumstances where the Company is required to pay dividends in order to maintain its regulatory status as a VCT, for example, to stay above the minimum percentage of assets required to be held in qualifying investments. Such dividends paid in excess of net income and capital gains achieved will cause the Company's NAV per share to reduce by a corresponding amount.

On 20 June 2023, the Board obtained Court approval to cancel the Company's share premium reserve and capital redemption reserve. Subject to HMRC's Return of Capital rules, this will enable additional distributable reserves to be available for dividends and will help the Company to meet its dividend target in future years.

Investment Portfolio

The portfolio movements across the year were as follows:

	2023 £m	2022 £m
Opening portfolio value	54.69	79.81
New and further investments	5.72	4.71
Disposal proceeds	(2.70)	(11.27)
Net realised gains	0.40	0.96
Valuation movements: unrealised	6.03	(19.52)
Net investment portfolio gains/(losses)	6.43	(18.56)
Portfolio value at 31 December	64.14	54.69

During the year, the Company invested a total of £5.72 million into eight new and four existing portfolio companies (2022: £4.71 million; four new, eight existing).  New investments totalling £4.79 million were made into:

Connect Earth	£0.30 million	Environmental data provider
Cognassist	£0.59 million	Education and neuro-inclusion solutions business
Dayrize	£0.55 million	Provider of a rapid sustainability impact assessment tool
Mable Therapy	£0.49 million	Therapy & counselling for children and young adults
Branchspace	£0.48 million	Digital retailing consultancy and software provider to the aviation and travel industry
Ozone	£1.28 million	Open banking software developer
Azarc	£0.45 million	Cross-border customs automation software provider
CitySwift	£0.65 million	Passenger transport data and scheduling software provider

Additional funding totalling £0.93 million (2022: £2.27 million) was provided across four existing portfolio companies during the year:

Legatics	£0.41 million	SaaS LegalTech software provider
Orri	£0.15 million	Intensive day care provider for adults with eating disorders
RotaGeek	£0.22 million	Provider of cloud-based enterprise software
FocalPoint	£0.15 million	GPS enhancement software provider

Notwithstanding the current challenging environment, the majority of investee companies have shown positive revenue growth over the year (e.g. Preservica, MPB, Active Navigation and Veritek Global). Alongside the improvements in market multiples used as the basis of the Company's valuations, this has driven the portfolio value increase compared to last year. Against this, three investments experienced significant falls: MyTutor, Bleach and AIM quoted Virgin Wines. Despite these falls, the overall value of the portfolio increased by £6.43 million, or 11.8%, on a like for like basis (adjusting for new investments and disposals in the year) compared to the opening value of the portfolio at 1 January 2023 of £54.69 million (2022: fall of £18.56 million, or 23.2%).

At the year-end, the portfolio was valued at £64.14 million (31 December 2023: £54.69 million). The portfolio's value is now substantially comprised of growth capital investments. Over 59% of the portfolio is concentrated in the Company's largest five assets by value, with Preservica accounting for c.31%.

The Investment Adviser closely monitors these higher value assets as part of its risk mitigation measures. The VCT's portfolio valuation methodology has continued to be applied consistently and in line with IPEV guidelines. During the year, this was triangulated with independent valuations, which were commissioned for Preservica and Buster & Punch. The intention is that the valuation of the larger investee companies will be externally benchmarked over the course of the next year.

The Company received £2.70 million in proceeds from the realisation of Tharstern Group, generating a realised gain of £0.62 million. Over the life of this investment, the Company has received total proceeds of £3.79 million which equates to a multiple on cost of 2.6x and an IRR of 15.0%. Against this, realised losses were recognised totalling £0.22 million arising from permanent write downs of two investee companies, SEC Group Limited (formerly RDL Corporation Limited), (resulting from a restructuring) and Spanish Restaurant Group (trading as Tapas Revolution), which unfortunately entered administration during the year.

Following the year-end, a further follow-on investment of £0.55 million was made into MyTutor in January 2024 and a further follow-on investment of £0.08 million was made into Orri in March 2024. A new investment was made in March 2024 into SciLeads, based in Belfast, of £0.71 million. Also following the year-end, in February 2024, the sale of Master Removers Group was completed securing a 3.3x return against cost over the life of the investment which could increase to 3.4x if further potential proceeds are received.

I reported in the Half-Year Report on HMRC's recent stricter interpretation of the Financial Health Test. Additional guidance has since been published on this matter which outlines that each potential new VCT investment will be assessed independently based on the specific financial circumstances of the investee company. Although it will take time to see these assessments in action, this updated guidance and expected increased flexibility is a welcome development. The Board, AIC and Venture Capital Trust Association will continue to monitor this.

Revenue account

The results for the year are set out in the Income Statement and show a revenue return (after tax) of 0.73 pence per share (2022: 1.03 pence per share). The revenue return for the year of £1.22 million has fallen slightly from last year's figure of £1.42 million. This fall in revenue return is due to a higher revenue tax charge incurred in the year resulting from a higher proportion of taxable income received on the Company's cash and liquidity OEIC balances.

Liquidity & Fundraising

Cash and liquidity fund balances as at 31 December 2023 amounted to £31.99 million representing 33.3% of net assets. The majority of cash resources are held in liquidity funds with AAA credit ratings, the returns on which have benefitted from the increases in interest rates over the past year which will help support future returns to Shareholders. The Board continues to monitor credit risk in respect of all its cash and near cash resources and still prioritises the security and protection of the Company's capital.

Following the success of the two fundraises launched in 2022, the Company has sufficient levels of liquidity to continue to take advantage of new investment opportunities and fund further expansion of the businesses in its investment portfolio, helping to further diversify the portfolio and create opportunities for future growth. The current level of funds also allows the Company to deliver attractive returns for its Shareholders by way of the payment of dividends over the medium term and buy back its shares from those Shareholders who may wish to sell. The Board therefore agreed not to fundraise in the 2023/2024 tax year.

Share buybacks

During the year, the Company bought back and cancelled 4,413,159 of its own shares (2022: 1,663,597), representing 2.8% of the shares in issue at the beginning of the year (2022: 1.3%), at a total cost of £2.55 million, inclusive of expenses (2022: £ 1.07 million). It is the Company's policy to cancel all shares bought back in this way. The Board regularly reviews its buyback policy and seeks to maintain the discount at which the Company's shares trade at no more than 5% below the latest published NAV.

Shareholder Communications & Annual General Meeting

May I remind you that the Company has its own website: www.migvct.co.uk.

The Investment Adviser held another shareholder event on 1 March 2024, showcasing some exciting portfolio company growth journeys as well as a presentation by the Investment Adviser and representatives of the four Mobeus VCTs, a recording of which is available on the Company's website.

Your Board is pleased to be able to hold the next Annual General Meeting ("AGM") of the Company in person at 1.00 pm on Monday, 20 May 2024 on the 2^nd floor, Central Point, 35 Beech Street, London EC2Y 8AD which is a three minute walk from Barbican Tube Station on the Circle, Metropolitan and Hammersmith & City tube lines. The Board is aware that a number of Shareholders hold shares in the Company and another Mobeus VCT, Mobeus Income & Growth 4 VCT plc (MIG4), which shares a 31 December year end. Many shareholders will also own The Income & Growth VCT plc and Mobeus Income and Growth 2 VCT plc shares but they are not included because they do not share our year end. As successfully initiated last year, a joint presentation by the Investment Adviser to the Company's and Mobeus Income & Growth 4 VCT plc Shareholders will take place at 1.30 pm and a light lunch will be available. The MIG4 AGM will be held following the presentation at 2.30 pm.

A webcast will also be available at the same time for those Shareholders who cannot attend in person. However, please note that you will not be able to vote via this method and you are encouraged to return your proxy form before the deadline of 17 May 2024.

Information setting out how to join the meeting by virtual means will be shown on the Company's website a few days before the AGM. For further details, please see the Notice of the Meeting which can be found at the end of the Annual Report.

Mobeus VCTs Merger Discussions

As per the announcement on 28 February 2024, the Company entered into discussions to merge the four Mobeus VCTs into two VCTs (Mergers) to achieve, amongst other things, cost savings, administration efficiency and simplicity. If the Mergers do proceed, the current intention is that the Company would merge with Mobeus Income & Growth 2 VCT plc ("MIG2") under a scheme of reconstruction (s110 of the Insolvency Act 1986) with the assets and liabilities of MIG2 being transferred to the Company in consideration for shares being issued to the MIG2 Shareholders on a relative net asset basis. It is also proposed that The Income & Growth VCT plc and Mobeus Income & Growth 4 VCT plc should merge. Please note that a merger solely on this basis would be outside the provisions of The City Code on Takeovers and Mergers. If the Boards agree, Shareholder approval of a merger would be sought from Shareholders in both companies at a General Meeting of each company. 

Board Composition & Succession

The Board comprised three directors throughout the year. After considering and reviewing its composition, the Board agreed that the directors have the breadth and depth of relevant knowledge and experience plus the appropriate skill sets. The Board consists of one male and two female directors.

Bridget Guerin has advised of her wish to retire as a director of the Company immediately following the proposed merger of the Company or during the course of the year if a merger does not take place. Bridget has provided an invaluable contribution to the Board whilst a director of the Company, for which we are very grateful.

Change of Registrar

On 4 December 2023, the Company, along with the three other Mobeus VCTs, changed its Registrar to City Partnership (UK) Limited ("City") bringing all four VCTs under one Registrar for the first time. The Board believes the move has brought additional benefits to Shareholders including the ability to access multiple Mobeus and Baronsmead VCT shareholdings in one place using City's online portal, the Hub.

Shareholders are encouraged to register their email address with City via the Hub portal or by calling them to reduce the printing/posting costs of the Company. Further details can be found in the Corporate Information section of the Annual Report.

Co-investment Scheme

The Board is keen to ensure that the Investment Adviser retains a motivated and incentivised investment team which can generate attractive future returns for the Company. To improve the alignment of interests with shareholders, on 26 July 2023, the Boards of the four Mobeus VCTs released a joint announcement detailing the adoption of a Co-investment incentive scheme ("the Scheme") under which members of the Investment Adviser's VCT investment and administration team will invest their own money into a proportion of the ordinary shares of each investment made by the Mobeus VCTs (the co-investment under the Scheme will represent 8% of the four VCTs' overall ordinary share investment in an investee company).

The Scheme will apply to investments made on or after 26 July 2023, such co-investment to be at the same time and on substantially the same terms as the investment by the Mobeus VCTs. The Board will keep the Scheme arrangements under regular review.

Acquisition of Investment Adviser, Gresham House

Further to the announcement on 17 July 2023 on the acquisition of the Investment Adviser by Searchlight Capital Partners L.P., the acquisition has now completed, and Gresham House plc delisted from the London Stock Exchange on 20 December 2023, to become a privately owned company. The acquisition is expected to have minimal impact on the Company and business is continuing as usual.

For further information please visit the website link: https://greshamhouse.com/ about/

Consumer Duty

The Financial Conduct Authority's (FCA) new Consumer Duty regulation came into effect on 31 July 2023. Consumer Duty is an advance on the previous concept of 'treating customers fairly', which sets higher and clearer standards of consumer protection across financial services and requires all firms to put their customers' needs first.

As previously notified, the Company is not regulated by the FCA and does not therefore directly fall into the scope of Consumer Duty. However, Gresham House, as the Investment Adviser, and any IFAs or financial platforms used to distribute future fundraising offers are subject to Consumer Duty.

The Board will ensure that the principles behind Consumer Duty are upheld and worked with the Investment Adviser on the information now available to assist consumers and their advisers to discharge their obligations under Consumer Duty.

Environmental, Social and Governance ("ESG")

The Board and the Investment Adviser believe that the consideration of environmental, social and corporate governance ("ESG") factors throughout the investment cycle will contribute towards enhanced Shareholder value.

Gresham House has a dedicated sustainable investment team which conducts an annual survey of our unquoted portfolio companies to understand how they are responding to relevant ESG risks and opportunities. The results of the November 2023 survey of investee companies highlighted that the portfolio companies who participated were taking more action on implementing a range of sustainability initiatives within their businesses. Each portfolio company in the survey identified areas for improvement over the next 12 months which are being monitored by the Investment Adviser and their progress tracked throughout 2024.

The future FCA reporting requirements consistent with the Task Force on Climate-related Financial Disclosures, which commenced on 1 January 2021, do not currently apply to the Company but will be kept under review, the Board being mindful of any recommended changes.

Fraud Warning

Shareholders continue to be contacted in connection with sophisticated but fraudulent financial scams which purport to come from or to be authorised by the Company. This is often by a phone call or an email usually originating from outside of the UK, claiming or appearing to be from a corporate finance firm offering to buy your shares at an inflated price.

The Board strongly recommends Shareholders take time to read the Company's Fraud warning section, including details of who to contact, contained within the Information for Shareholders section.

Outlook

The uncertain geopolitical and economic context for the next year is likely to be challenging for the Company and its portfolio. However, with inflation and rate rises now moderating, the coming year should also provide opportunities for the Company to make high quality investments and build strategic stakes in businesses with great potential for the future.

Notwithstanding the recent exit of Master Removers Group, the exit environment will most likely continue to be subdued in comparison to recent years. However, the company continues to make returns through income and unrealised gains. The Company has a large and diverse portfolio, a professional and capable investment team, and the portfolio is well funded. The Company is therefore well placed to face the uncertainties of the year ahead and to capitalise on the opportunities that arise.

I would like to take this opportunity once again to thank all Shareholders for their continued support.

Clive Boothman

Chair

12 April 2024

      Investment Adviser's Report

        Portfolio Review 

The difficult UK and worldwide economic conditions are creating challenging circumstances for our growth companies although some stability is now being seen in market multiples compared to the previous year. Inflation is proving more stubborn than hoped and has since ticked up again since the year-end in the US, UK and eurozone fuelled by wage settlements, oil prices and supply chain issues stemming from geo-political tensions in the Gulf. Such macro-economic conditions have not been faced by management teams in a generation, however Gresham House's experienced non-executive directors and consultants continue to support the portfolio's companies during these turbulent times.

Strong cash management and capital efficiency is the key focus for our portfolio directors' management teams. With ample liquidity following the fundraises in 2022/23, the Company is very well placed to support portfolio companies with follow-on funding where it is appropriate and can be structured on attractive terms. Strong liquidity also benefits the new investment environment for the Company which, in our view, is strong as we are seeing several interesting investment propositions, albeit mainly in competition with other VCTs who face similar deployment challenges in a market which is generally accepted to be c. 35% down as regards new investment opportunities.

Trading conditions for the portfolio remain tough across most sectors as both companies and consumers continue to restrain their spending. Certain sectors remain under particular pressure, be it end product or as part of the supply chain. In terms of portfolio assets, this is seen mainly in areas such as products (e.g. Wetsuit Outlet, Buster & Punch) and software and services (e.g. Bidnamic, Proximity) in so far as they relate to the consumer sector. The direct impact of high interest rates on the Company's portfolio is appropriately limited because most portfolio companies do not have any significant third-party debt. The outlook is therefore mixed, with the emphasis on robust funding structures and preparation for all circumstances.

                The current environment poses particular challenges for the smallest companies who are attempting to prove nascent business models. Against this backdrop, most of the recent cohort of earlier stage investments are behind original investment case but continue to make slow but steady progress. They are steadily building out their pipelines and capability as they balance investment with the rate of commercial development. After several quarters of slippage, it is pleasing to see several of this group starting to secure cornerstone contracts. At this stage of their development Gresham House is still hopeful that the majority will deliver the relevant commercial proof points, albeit it will take longer and probably require additional capital earlier than had originally been envisioned. In our view, this is not necessarily a bad thing in terms of deployment and amassing more significant stakes on potentially more advantageous terms. Though there may be some pain points to work through, with this should come enhanced influence and control.

        The portfolio movements in the year are summarised as follows:

	2023 £m	2022 £m
Opening portfolio value	54.69	79.81
New and follow-on investments	5.72	4.71
Disposal proceeds	(2.70)	(11.27)
Net investment portfolio movement in the year	6.43	(18.56)
Portfolio value at 31 December	64.14	54.69

Despite concerns about the wider trading environment, the portfolio's largest investments have experienced some strong revenue growth, which has underpinned a positive return over the second half of the Company's financial year. Preservica continues to see strong trading and is outperforming its budget, giving a material uplift in its valuation. MPB Group continues to grow its revenue line and there are potentially material developments expected at Active Navigation. Veritek Global, an historic MBO investment, has started to see material traction having pivoted its business model in recent years.

During the year, the Tharstern exit gave a return of 2.6x and an IRR of 15.0%. The successful exit of Master Removers Group after the year-end will also provide up to a 3.4x multiple of cost and an IRR of over 26% over the life of the investment. Unless there is a change in market dynamics, it is likely that portfolio companies will be held for longer periods although looking forward, there are a number of assets starting to plan for exit in 2024/25. Gresham House believes that these are realistic prospects which could deliver significant realised value to the Company.

By contrast however, there were also some larger portfolio value falls such as MyTutor, Bleach, and Wetsuit Outlet which continue to experience challenging trading conditions. The portfolio companies are now more focussed on establishing a path to profitability. AIM-listed Virgin Wines continues to be at the behest of market movements despite releasing results in line with expectations. Disappointingly, after experiencing very difficult trading conditions, Tapas Revolution entered administration during the year with no expected recovery for the Company.

The Company made eight new growth capital investments during the year totalling £4.79 million and four follow-on investments totalling £0.93 million. Further details of these investments are on the next pages. After the year-end, further follow-on investments were made into MyTutor and Orri and a new investment was made into SciLeads.

                The investment and divestment activity during the year has further increased the proportion of the portfolio comprised of investments made since the 2015 VCT rule change to 86% by value at the year-end (31 December 2023: 80.3%).

        The portfolio's valuation changes in the year are summarised as follows:

Investment Portfolio Capital Movement	2023 £m	2022 £m
Increase in the value of unrealised investments	11.40	0.98
Decrease in the value of unrealised investments	(5.37)	(20.50)
Net increase/(decrease) in the value of unrealised investments	6.03	(19.52)
Realised gains	0.62	1.57
Realised losses	(0.22)	(0.61)
Net realised gains in the year	0.40	0.96
Net investment portfolio movement in the year	6.43	(18.56)

New Investments during the year

The Company made eight new investments totalling £4.79 million during the year, as detailed below:

Company	Business	Date of Investment	Amount of new investment (£m)
Connect Earth	Environmental data provider	March 2023	0.30

Founded in 2021, Connect Earth (https://connect.earth/) is a London-based environmental data company that seeks to facilitate easy access to sustainability data. With its carbon tracking API technology, Connect Earth supports financial institutions in offering their customers transparent insights into the climate impact of their daily spending and investment decisions. Connect Earth's defensible and scalable product platform suite has the potential to be a future market winner in the nascent but rapidly growing carbon emission data market, for example, by enabling banks to provide end retail and business customers with carbon footprint insights of their spending. This funding round is designed to facilitate the delivery of the technology and product roadmap to broaden the commercial reach of a proven product development as well as international growth.

Cognassist	Education and neuro-inclusion solutions	March 2023	0.59

Cognassist (https://cognassist.com/) is an education and neuro-inclusion solutions company that provides a Software-as-a- Service (SaaS) platform focused on identifying and supporting individuals with hidden learning needs. The business is underpinned by extensive scientific research and an extensive cognitive dataset. Cognassist has scaled its underlying business within the education market. This investment will empower Cognassist to continue its growth within education and penetrate the enterprise market, where demand for neuro-inclusive employee support solutions is rapidly emerging.

Dayrize	A provider of a rapid sustainability impact assessment tool	May 2023	0.60

Founded in 2020, Amsterdam-based Dayrize (https://dayrize.io/) has developed a rapid sustainability impact assessment tool that delivers product-level insights for consumer goods brands and retailers, enabling them to be leaders in sustainability. Its proprietary software platform and methodology bring together an array of data sources to provide a single holistic product-level sustainability score that is comparable across product categories in under two seconds. This funding round is to drive product development and develop its market strategy to build on an opportunity to emerge as a market leader in the industry.

Mable Therapy

Digital health platform for speech therapy and counselling for children and young adults

July 2023

0.49

Based in Leeds, Mable (https://www.mabletherapy.com/) is the UK's leading digital health platform for speech therapy and counselling for children and young adults. All sessions are undertaken live with qualified paediatric therapists, and Mable uses gamification (games, activities and other interactive resources) to provide improved therapeutic outcomes in a child-friendly environment. This is a significant and growing area of need, with 1.4 million children in the UK with long-term speech, language or communication needs - Mable has the potential to transform the lives of children in their crucial early stages of development. The funding will be used to accelerate growth in existing B2C and B2B customer groups as well as capitalising on new, potentially significant, routes to market.

Branchspace	Digital retail software provider to aviation and travel industry	August 2023	0.48

Branchspace (https://www.branchspace.com/) is a well-established specialist digital retailing consultancy and software provider to the aviation and travel industry. Branchspace's offering helps customers to transform their technology architecture to unlock best-in-class digital retailing capabilities, driving distribution efficiencies and an improved customer experience. Across two complementary service offerings, Branchspace can effectively cover the entire airline tech stack and has carved a defensible position as sector experts, serving clients including IAG, Lufthansa and Etihad. This funding round will seek to accelerate product development, increasing the customer reach of their SaaS offering to establish itself as the leading choice for airline digital retailing solutions.

Ozone API	Open banking software developer	December 2023	1.28

Ozone Financial Technology Limited (https://ozoneapi.com) is a software developer providing banks and financial institutions with a low cost, out-of-the-box solution enabling them to deliver open APIs which comply with open banking and finance standards globally. The software goes beyond compliance and enables customers to monetise open banking and finance opportunities which are growing significantly following regulatory & market development. This funding is the first equity investment into Ozone and enables the team to invest into their product and go-to-market teams as they look to capitalise on the large and fast-growing global market.

Azarc	Cross-border customs automation software provider	December 2023	0.45

Azarc.io (https://azarc.io) specialises in business process automation using distributed ledger technology. Its Verathread® product has been applied to automating cross-border customs clearances, albeit it has wider supply chain applications. Founded in 2021, Azarc successfully secured British Telecom as a customer and a long-term strategic partner in the UK and aims to improve inefficiencies over traditional paper-based customs clearances for import and export trade. This investment will support the company's growth trajectory with BT and expedite its expansion into international import/export hubs through new partnerships.

CitySwift

Passenger transport data and scheduling software provider

December 2023

0.65

Huddl Mobility Limited (trading as CitySwift) (https://cityswift.com) is a software business that works with bus operators and local authorities to aggregate, cleanse and access insight from complex data sources from across their networks, enabling them to optimise schedules and unlock revenue generating or cost reduction opportunities. This investment will be used to accelerate new customer acquisition and unlock significant opportunities within the existing customer base - CitySwift already works with major bus operators and local transport authorities including National Express, Stagecoach and Transport for Wales.

        Further investments during the year

                A total of £0.93 million was invested into four existing portfolio companies during the year, as detailed below:

Company	Business	Date of Investment	Amount of new investment (£m)
Legatics	SaaS LegalTech software	July 2023	0.41

Legatics (https://www.legatics.com/) transforms legal transactions by enabling deal teams to collaborate and close deals in an interactive online environment. Designed by lawyers to improve legacy working methods and solve practical transactional issues, the legal transaction management platform increases collaboration, efficiency and transparency. As a result, Legatics has been used by around 1,500 companies, and has been procured by more than half of the top global banking and finance law firms, with collaborations having been hosted in over 60 countries. This funding round will provide headroom to further accelerate growth in sales via marketing as well as increasing product development.

Orri	Specialists in eating disorder support	August 2023	0.15

Orri Limited (https://www.orri-uk.com/) is an intensive daycare provider for adults with eating disorders. Orri provides an alternative to expensive residential in-patient treatment and lighter-touch outpatient services by providing highly structured day and half day sessions either online or in-person, together with outpatient services. Orri currently operates two sites in central London.

RotaGeek	Provider of cloud-based enterprise software	November 2023	0.22

RotaGeek (https://www.rotageek.com/) is a provider of cloud-based enterprise software to help larger retail, leisure and healthcare organisations to schedule staff effectively. RotaGeek has proven its ability to solve the scheduling issue for large retail clients, competing due to the strength of its technologically advanced proposition. Since investment it has also diversified and started to prove its applicability in other verticals such as healthcare and hospitality. This investment will help the company focus on operational delivery and continue sales and client contract win momentum.

FocalPoint

GPS enhancement software provider

December 2023

0.15

Focal Point Positioning Limited (https://focalpointpositioning.com/) is a deeptech business with a growing IP and software portfolio. Its proprietary technology applies advanced physics and machine learning to dramatically improve the satellite-based location sensitivity, accuracy, and security of devices such as smartphones, wearables, and vehicles and reduce costs. The further investment was agreed at the time of the original funding in September 2022.

Valuation changes of portfolio investments still held

The total valuation increases were: £11.40 million, with the main increases being:

Preservica: £4.99 million

MPB Group: £2.18 million

Active Navigation: £0.78 million

Veritek Global: £0.76 million

Preservica continues to perform well and is improving recurring revenues. MPB's revenue growth continues alongside demand for its platform. Active Navigation is gaining traction for its incident response offering. Veritek has pivoted its business model and is now generating material growth in its revenues.

The main reductions within total valuation decreases of £5.37 million were:

MyTutor: £(1.60) million

Virgin Wines: £(1.05) million

Bleach London: £(1.04) million

Wetsuit Outlet: £(0.56) million

MyTutor has been impacted by declining sector multiples combined with slower than anticipated growth over the year. Virgin Wines has been impacted by a disappointing market reaction to as expected trading results. Bleach is trading behind budget, but has recently received third party funding to support its cash position. Wetsuit Outlet is being materially impacted by the decline in consumer spending.

The Company's investment values have been partially insulated from market movements and lower revenue growth by the preferred investment structures utilised in the financing of many of the portfolio companies. This acts to moderate valuation swings and the net result can be more modest falls when portfolio values decline.

Growth capital investing involves companies which often have not achieved profitability and as a result, have to be measured on other metrics. The table below shows the proportion of the portfolio that is represented by pre-profit companies (often valued by reference to revenue multiple), compared with more mature, established companies with a history of profitability and which are therefore valued on an earnings multiple:

Valuation methodology	2023 £m	2023 % of total investments	2022 £m	2022 % of total investments
Revenue multiple	44.57	69.5%	38.60	70.6%
Earnings multiple	9.33	14.5%	10.90	19.9%
Recent investment price (reviewed for impairment)	4.88	7.6%	0.60	1.1%
Bid price	2.24	3.5%	3.32	6.1%
Cost less impairment	1.02	1.6%	0	0%
Other	2.10	3.3%	1.27	2.3%
Total	64.14	100%	54.69	100%

Other gains/(losses) during the year

The Company realised a £0.62 million gain from the exit of Tharstern Group. Two companies were written down to nil. These were SEC Group Limited (formerly RDL Corporation Limited), resulting from a restructuring and Spanish Restaurant Group which entered administration during the year.

Portfolio Realisations during the year

The Company completed one exit during the year, as detailed below:

Company	Business	Period of Investment	Total cash proceeds over the life of the investment/ Multiple over cost
Tharstern	Software based management information systems	July 2014 to March 2023	£3.79 million 2.6x cost

The Company realised its investment in Tharstern Group for £2.70 million (realised gain in period: £0.62 million). Total proceeds received over the life of the investment were £3.79 million compared to an original cost of £1.46 million, representing a multiple on cost of 2.6x and an IRR of 15.0%.

Portfolio income and yield

In the year under review, the Company received the following amounts in loan interest and income:

Investment Portfolio Yield	2023 £m	2022 £m
Interest received in the year	0.54	0.91
Dividends received in the year	0.09	1.24
OEIC and bank interest in the year	2.03	0.44
Total income in the year	2.66	2.59
Net Asset Value at 31 December	95.99	100.32
Portfolio Income Yield (Income as a % of Net Asset Value at 31 December)	2.8%	2.6%

Investments after the year-end

The Company made one new investment and two follow-on investments, as detailed below:

New:

Company	Business	Date of investment	Amount of new Investment (£m)
SciLeads	Data intelligence platform	March 2024	0.71

SciLeads Limited (https://scileads.com) Based in Belfast, SciLeads is a data and lead generation platform operating within life science verticals, allowing customers to identify, track and convert potential leads. SciLeads has grown ARR to £4.4mn (+50% this year) and this investment will be used to accelerate new customer acquisition and professionalise the product and customer success functions to unlock up and cross-sell opportunities within the existing customer base.

Further:

Company	Business	Date of investment	Amount of further Investment (£m)
Orri	Specialists in eating disorder support	March 2024	0.08

Orri Limited (https://www.orri-uk.com/) is an intensive daycare provider for adults with eating disorders. Orri provides an alternative to expensive residential in-patient treatment and lighter-touch outpatient services by providing highly structured day and half day sessions either online or in-person, together with outpatient services. Orri currently operates two sites in central London.

Company	Business	Date of investment	Amount of further Investment (£m)
MyTutor	Digital marketplace for online tutoring	January 2024	0.55

MyTutorweb (trading as MyTutor) (https://www.mytutor.co.uk/) is a digital marketplace that connects school age pupils who are seeking private online tutoring with university students. The business is satisfying a growing demand from both schools and parents to improve pupils' exam results. This further investment, alongside other existing shareholders and Australian strategic co-investor, SEEK, aims to build and reinforce its position as a UK category leader in the online education market. This additional funding will give the business extra headroom to support its more focused product and growth strategy.

Realisations after the year-end

Company	Business	Period of investment	Total cash proceeds over the life of the investment / Multiple over cost
Master Removers Group	A specialist logistics, storage and removals business	December 2014 to February 2024	£6.63 million 3.3x cost

The Company sold its investment in Master Removers Group (2019) Limited ("MRG") to Elanders AB and alongside this, sold its shares in MRG's domestic removals business to management. The Company received £3.49 million from the sale. Further sale and contingent proceeds of up to £0.66 million are receivable at a later date under the terms of the transaction. Total proceeds received to date over the life of the investment are £6.63 million compared to an original investment cost of £1.69 million, representing a multiple on cost of 3.3x and an IRR of 26.2%. This may increase to 3.4x as further proceeds are received.

Environmental, Social and Governance considerations

The Board and the Investment Adviser believe that the consideration of environmental, social and corporate governance ("ESG") factors throughout the investment cycle should contribute towards enhanced shareholder value. More ESG information can be found in the Chair's Statement and the Directors Report in the Annual Report.

The Investment Adviser has a dedicated team which is focused on sustainability as well as the Investment Adviser's Sustainability Executive Committee who provide oversight and accountability for the Investment Adviser's approach to sustainability across its operations and investment practices. This is viewed as an opportunity to enhance the Company's existing protocols and procedures through the adoption of the highest industry standards. Each investment executive is responsible for setting and achieving their own individual ESG objectives in support of the wider overarching ESG goals of the Investment Adviser.

The Investment Adviser's Private Equity division has its own Sustainable Investment Policy, in which it commits to:

·    Ensure its team understands the imperative for effective ESG management and is equipped to carry this out through management support and training.

·    Incorporate ESG into the monitoring processes of the unquoted portfolio companies.

·    Engage with the dedicated sustainable investment team and conduct regular monitoring of ESG risks, sustainability initiatives and performance in its investments.

Further detail on ESG can be found in the Chair's statement above and in the Director's Report in the Annual Report.

Outlook

As geo-political tensions persist into 2024, much of the world prepares for elections and the "higher for longer" mantra is again being applied to interest rates, the number of UK businesses experiencing financial stress is set to increase. This will impact all sectors and businesses to varying degrees and may present attractive opportunities for a selective investor with the advantage of being able to take a longer-term view, such as your Company. However, the economic backdrop will also impact our existing portfolio companies and would present a challenge to less experienced management teams and their advisers. Markets are volatile and uncertain and business planning is acutely difficult. As such, the experience of seasoned investment managers will be increasingly important in the coming year as they seek to support their portfolio management teams in navigating through some particularly challenging short-term trading conditions. In this respect, Gresham House feels well placed in having one of the largest and most experienced portfolio teams in the industry with an average of over 18 years' relevant industry experience. The Company has ample liquidity to provide further support to its portfolio businesses through this period and is keen to make such investments where there is a commercial case to do so over the medium to long-term.

Gresham House Asset Management Limited

Investment Adviser

12 April 2024

Annual General Meeting

The AGM will be held at 1.00 pm on Monday, 20 May 2024 on the 2^nd floor, Central Point, 35 Beech Street, London EC2Y 8AD and will also be webcast for those Shareholders who are unable to attend in person. Details of how to join the meeting by virtual means will be shown on the Company's website. Shareholders joining virtually should note you will not be able to vote at the meeting and therefore you are encouraged to lodge your proxy form.  For further details, please see the Notice of the Meeting which can be found at the end of the Annual Report & Financial Statements.

Further Information

The Annual Report and Accounts for the year ended 31 December 2023 will be available shortly on the Company's website: www.migvct.co.uk

It will also be submitted shortly in full unedited text to the Financial Conduct Authority's National Storage Mechanism and will be available for inspection at data.fca.org.uk/#/nsm/nationalstoragemechanism in accordance with DTR 6.3.5(1A) of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

Contact:

Gresham House Asset Management Limited

Company Secretary

[e-mail]

[phone]

 

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