Final Results

Matrix Income & Growth VCT PLC 08 March 2006 Matrix Income & Growth VCT plc 8 March 2006 Preliminary Results for the fifteen months ended 31 December 2005 Investment Objective Matrix Income & Growth VCT plc is a Venture Capital Trust (VCT) managed by Matrix Private Equity Partners Limited (MPEP) investing primarily in established profitable unquoted companies. The Company's objective is to provide investors with a regular and growing income stream, by way of tax free dividends, and to generate capital growth through portfolio realisations, which can be distributed by way of additional tax free dividends. Financial highlights Ordinary Shares (listed on 8 October 2004) Initial net asset value per share 94.5 pence Initial net assets £20,933,124 31 December 2005 Net assets £20,728,204 Net asset value per share 93.6 pence Total dividends per share for the period 1.0 penny Total return to shareholders since launch per share* 94.6 pence Share price (mid market price) 99.0 pence * Net asset value per share plus cumulative dividends per share. This compares to an original investment cost of 60 pence per share after allowing for income tax relief of 40 pence per share. Chairman's Statement Overview I am pleased to present to Shareholders the annual results of Matrix Income & Growth VCT plc for the period from 1 October 2004 to 31 December 2005 and to report good progress. The Company changed its accounting reference date from 30 September to 31 December on 21 April 2005. This Report therefore covers the fifteen month period since 30 September 2004, the date of its last audited accounts. The first issue of shares under the Offer for Subscription was made on 5 October 2004 and the shares were admitted to the Official List of the UK Listing Authority and to trading on 8 October 2004. Your Company has raised £20.9 million, net of all costs, from 1,634 Shareholders. The Company was one of only 11 VCTs launched in the 2004/2005 tax year to raise in excess of £20 million. An encouraging start has been made in constructing the portfolio of qualifying investments and the Company's revenue return has enabled your Directors to recommend a final dividend of 0.7 of a penny per share, making a total of 1.0 penny per share for the period. The net asset value (NAV) per Ordinary Share at 31 December 2005 was 93.6 pence per share, after providing for total dividends of 1.0 penny per share, compared with the initial NAV of 94.5 pence per share. In line with the strategy set out in the Prospectus, the Board has invested the majority of the funds in a portfolio of interest bearing investments which are readily available for investment to meet the Investment Manager's qualifying investment programme as it unfolds. Investment portfolio In this period under review and in the period since 31 December 2005, six investments were completed by the Investment Manager. As reported in the Interim Report, the Company invested £212,893 into FH Ingredients in February 2005 and £150,000 into Sectorguard in August 2005. More recently, an investment of £1,000,000 was made in September 2005 into Ministry of Cake (previously Maynard Scotts), a manufacturer and seller of frozen desserts to the food service industry. In October 2005 an investment of £1,000,000 was made to support the Management Buy Out (MBO) of Youngman Group, a leading manufacturer of ladders and access towers. Since 31 December 2005, £560,302 was invested to support the MBO of Vectair Holdings, a producer of air-care and sanitary products and a further £975,000 was invested to support the MBO of Campden Media, a publisher of titles in the healthcare and wealth management sectors. In line with our objective, all six qualifying investments have been made in profitable companies and 96% of the qualifying portfolio is represented by unquoted investments. Results and dividend The revenue account generated a net revenue return (after tax) for the period of £288,940 and your Directors will be recommending a final dividend of 0.7 of a penny per share to Shareholders at the Annual General Meeting to be held on 27 April 2006. The dividend will be paid on 16 May 2006 to Shareholders on the Register on 18 April 2006 making a total of 1.0 penny per share for the period ended 31 December 2005. This is in line with the Company's objective to provide investors with a regular and growing income stream. Investment in qualifying holdings The change of the accounting reference date to 31 December has maximised the amount of time available to the Investment Manager to meet the target set by HM Revenue & Customs of investing 70% of the funds raised in qualifying unquoted and AIM quoted companies. The key date in this respect is 31 December 2007. At 7 March, the Company is 19% invested in qualifying companies which is in line with expectations. Communication with Shareholders The Company intends to communicate regularly with Shareholders. The April AGM will provide a useful platform for the Board to meet Shareholders and exchange views. Your Board welcomes active attendance at General Meetings to give Shareholders the opportunity to meet your Directors and representatives of the Investment Manager. Our second newsletter providing further information on the progress of the Company was sent out in December 2005. In this your Board was pleased to report that your Investment Manager had gained recognition amongst its peers, winning the award for the Venture Capital Trust Manager of the Year at the Investor AllStars 2005 Awards ceremony in November 2005. Changes to UK accounting rules Shareholders may be aware that there have been some recent changes to UK accounting rules. These will apply to the Company for the first time in the current financial year to 31 December 2006 and further details will be set out in the 2006 Interim Report. One change which will have a direct impact on the NAV of the Company is the requirement to value quoted investments at the bid price as opposed to using the mid market price. However, had bid prices been used for the period-end valuations, this would not have resulted in a material difference to the NAV per share at 31 December 2005. Outlook Despite a better than expected showing over the Christmas period, recent figures suggest that the slowdown in consumer spending may have further to run. In a number of areas retailers are cutting prices in order to try and stimulate demand. However, very high levels of consumer debt by historical standards combined with the effects of markedly higher domestic energy bills on incomes may continue to exert downward pressure on retail spending. Under this scenario, economic growth is unlikely to rebound sharply and inflation, even allowing for higher energy prices, is likely to remain benign. This suggests that interest rates are likely to stay low for the foreseeable future. Nevertheless, outside of the high street, business confidence in the service and manufacturing sectors remains relatively robust reflecting healthy profits' growth and strong cash flows. Low interest rates and inflation together with steady economic growth should continue to support these favourable trends. The Investment Managers are continuing to witness a good deal flow. Moreover, although the amount of private equity money chasing investment opportunities is raising alarm in some quarters, our Managers report that, despite the increasing competition for mandates, deals remain attractively priced in that part of the market in which your Company operates. Against this background, the Board remains confident that the Manager will be able, within the planned timescale, to construct a broadly based portfolio of investments within the UK smaller companies sector. This will be designed to provide Shareholders with a regular and growing stream of income together with the prospects of capital growth. I would like to take this opportunity to thank all Shareholders for their continuing support of the Company. Keith Niven Chairman Investment Manager's Review The Company's strategy is to invest principally in established profitable unquoted companies. Typically these investee companies will be cash-generative and therefore capable of producing income as well as capital returns to Shareholders on their ultimate sale or flotation. The Company focuses primarily on investments in MBOs. Progress has been made towards the target of investing 70% of the Fund in qualifying investments by 31 December 2007. The Fund is benefiting from a strong flow of MBO opportunities. We anticipate this continuing and expect to reach the target for investing in qualifying companies comfortably over the course of the next two years. We have completed four investments during the period under review. Two investments into FH Ingredients in February 2005 of £212,893 and into Sectorguard in August 2005 of £150,000 were reported in the Interim Report. We have since made two additional investments, both MBOs of £1,000,000 each, into Ministry of Cake (previously Maynard Scott Limited) a manufacturer and seller of frozen desserts to the food service industry and into Youngman Group, a leading manufacturer of ladders and access towers in September and October 2005 respectively. Since the period-end two further investments have been completed totalling £1.5 million, bringing the amount invested to £3.9 million, some 19% of the Fund. In January £560,302 was invested to support the MBO of Vectair Holdings, a Basingstoke based producer of air-care and sanitary products used primarily in office and commercial washrooms. More recently, £975,000 was invested in Campden Media, a London based publisher of magazines and yearbooks and arranger of conferences aimed at the healthcare and private wealth management markets. The business was bought by its management from private shareholders in January 2006. Qualifying Investments The qualifying investments in the portfolio as at 31 December 2005 are detailed below: FH Ingredients Limited Cost: £212,893 Valuation: £212,893 Basis of valuation: Cost Equity % held: 9.3% Business: Processor and distributor of frozen herbs to the food processing industry Location: Eye, Suffolk History: Management buy-in/buy-out from Harrington Food Group Other MPEP funds investing: TriVen VCT plc, TriVest VCT plc Income generated for the fund £17,142 in period: Audited financial information: First annual audited accounts will be for the year ending 28 February 2006 Ministry of Cake Limited Cost: £1,000,000 Valuation: £1,000,000 Basis of valuation: Cost Equity % held: 17.1% Business: Manufacturer of frozen cakes and desserts for the food services industry Location: Taunton, Somerset History: Management buy-in/buy-out from private ownership Other MPEP funds investing: TriVen VCT plc, TriVest VCT plc Income generated for the fund £15,406 in period: Audited financial information: First annual audited accounts will be for the period ending 30 June 2006 Sectorguard plc Cost: £150,000 Valuation: £150,000 Basis of valuation: Mid market less marketability discount (AIM quoted) Equity % held: 1.5 % Business: Provision of manned guarding, mobile patrolling and alarm response services Location: Waltham Cross, Essex History: Expansion finance as part of a £3 million capital raising Other MPEP funds investing: TriVen VCT plc, TriVest VCT plc, Matrix income & Growth 2 VCT plc Income generated for the fund in £nil period: Audited financial information: For the year ended 30 September 2005 Turnover £16,375,000 Operating profit stated before goodwill amortisation £1,155,000 Net Assets £8,169,000 Youngman Group Limited Cost: £1,000,000 Valuation: £1,000,000 Basis of valuation: Cost Equity % held: 8.6% Business: Manufacturer of ladders and access towers Location: Maldon, Essex History: Management buy-in/buy-out from SGB Group Other MPEP funds investing: TriVen VCT plc, TriVest VCT plc, Matrix Income & Growth 2 VCT plc Income generated for the fund £17,470 in period: Audited financial information: First annual audited accounts will be for the period ending 31 December 2006 Further details of the investments in the portfolio may be found on the Matrix website: www.matrixgroup.co.uk/portfolio Statement of Total Return for the Fifteen months ended 31 December 2005 (incorporating the Revenue Account of the Company) Fifteen months ended Period from 15 June to 31 December 2005 30 September 2004 Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Income 842,724 - 842,724 - - - Investment managers' fees (110,779) (332,337) (443,116) - - - Other expenses (375,313) - (375,313) (3,231) - (3,231) --------- --------- --------- ---------- ------- ---------- Return on ordinary activities 356,632 (332,337) 24,295 (3,231) - (3,231) before taxation Tax on ordinary activities (67,692) 63,144 (4,548) - - - --------- --------- --------- ---------- ------- ---------- Return attributable to equity 288,940 (269,193) 19,747 (3,231) - (3,231) shareholders Dividends in respect of equity (221,436) - (221,436) - - - shares --------- --------- --------- ---------- ------- ---------- Transfer to/(from) reserves 67,504 (269,193) (201,689) (3,231) - (3,231) ======== ======== ======= ======== ======= ======= Return per share 1.86p (1.73)p 0.13p (1,615.50)p 0.00p (1,615.50)p The revenue column is the profit and loss account of the Company. All revenue and capital items in the Statement of Total Return derive from continuing operations. No operations were acquired or discontinued in the period. Balance Sheet As at 31 December 2005 31 December 2005 30 September 2004 £ £ Fixed assets Investments 2,362,893 - ------------- -------------- 2,362,893 - Current assets Debtors and prepayments 1,657,859 37,502 Current investments 17,109,025 - Cash at bank 19,090 12,500 ------------- ------------- 18,785,974 50,002 Creditors: amounts falling due within one (420,663) (3,231) year ------------- ------------ Net current assets 18,365,311 46,771 ======== ======== Net assets 20,728,204 46,771 ======== ======== Capital and reserves Called up share capital 221,438 50,002 Share premium account 20,711,686 - Capital reserve - realised (269,193) - Revenue reserve 64,273 (3,231) ======== ======== Shareholders' funds 20,728,204 46,771 ======== ======== Equity interests 20,728,204 (3,229) Non Equity Interests - 50,000 ======== ======= 20,728,204 46,771 ======== ======= Net asset value per Ordinary Share 93.61p (1,614.50)p Net asset value per Preference Share - 100.00p Cash Flow Statement for the fifteen months ended 31 December 2005 Fifteen months ended 31 Period from 15 June to 30 December 2005 September 2004 £ £ Operating activities Investment income received 758,659 - Investment management fees paid (319,543) - Other cash payments (254,499) - ----------- ------------ Net cash inflow from operating activities 184,617 - Investing activities Acquisitions of investments (2,362,893) - - Dividends Interim equity dividends paid (66,431) - ------------ ----------- Cash outflow before financing and liquid (2,244,707) - resource management Management of liquid resources Increase in liquid resources (18,669,327) - Financing Share capital raised 22,131,121 12,500 Issue costs of Ordinary Shares (1,210,497) - --------------- --------------- 20,920,624 12,500 ========= ========= Increase in cash for the period 6,590 12,500 ========= ========= Notes 1. Net asset value per Ordinary Share Net asset value per Ordinary Share is based on net assets at the end of the period, and on 22,143,821 Ordinary Shares, being the number of Ordinary Shares in issue on that date. 2. Return per Ordinary Share The revenue return per Ordinary Share is based on the net profit from ordinary activities after taxation of £288,940 and on 15,498,387 Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period of fifteen months. The capital loss per Ordinary Share is based on a capital loss of £269,193 which includes the net portion of the Investment Manager's fees charged to the capital reserve of £332,337 and 15,498,387 Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period of fifteen months. 3. Investment Manager's Fees In accordance with the policy statement published under 'Management, Expenses and Administration' in the Company's Prospectus dated 9 July 2004, the Directors have charged 75% of the investment management expenses to capital reserve. 4. Financial Information The financial information set out in these statements does not constitute the Company's statutory accounts for the fifteen months ended 31 December 2005 but is derived from those accounts. Statutory accounts for the fifteen months ended 31 December 2005 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts: their reports were unqualified and did not contain statements under Section 237 (2) or (3) of the Companies Act 1985. 5. Annual Report The Annual Report will be circulated by post to all Shareholders shortly and copies will be available thereafter to members of the public from the Company's registered office. 6. Annual General Meeting The Annual General Meeting will be held at 11.00 am on Thursday 27 April 2006 at the offices of Matrix Group Limited, One Jermyn Street, London SW1Y 4UH. Contact details for further enquiries: Sarah Penfold of Matrix-Securities Limited (the Company Secretary) on 020 7925 3300 or by e-mail on mig@matrixgroup.co.uk Mark Wignall or Mike Walker at Matrix Private Equity Partners Limited (the Investment Manager), on 020 7925 3300 or by e-mail on info@matrixpep.co.uk This information is provided by RNS The company news service from the London Stock Exchange

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