Half-yearly Report
THE INCOME & GROWTH VCT PLC
Half-Year Results for the six months ended 31 March 2012
Investment Objective
The objective of The Income & Growth VCT plc ("I&G VCT" or "the Company") is
to provide investors with an attractive return, by maximising the stream of
dividend distributions from the income and capital gains generated by a
diverse and carefully selected portfolio of investments.
The Company invests in companies at various stages of development. In some
instances this may include investments in new and secondary issues of
companies which may already be quoted on the Alternative Investment Market
("AiM") or PLUS.
Financial Highlights
Six months to 31 March 2012
- Dividends totalling 24.0 pence per share have been paid to shareholders during
the period.
- Increase of 23.8% in total return (share price basis) to Shareholders
- Increase of 6.9% in total return (net asset value (NAV) basis) to Shareholders
- Strong liquidity has been further enhanced by a successful fundraising, in
which the Company has raised an additional £4.9 million (including £1.7
million allotted during the period).
Performance Summary
The net assets of the `O' and 'S' Share Funds were merged to form one share
class of Ordinary Shares on 29 March 2010. At that date, the net assets of the
merged VCT were £35.7 million, which have increased to £45.7 million at 31
March 2012. The merger was effected by converting the relevant `O' Shares into
`S' Shares using a conversion ratio of 0.7578. All the issued and unissued
former `S' Shares were subsequently redesignated as Ordinary Shares on a 1 for
1 basis.
To help shareholders in each former share class understand the trend in
performance of their investment, comparative data for each former share class
is shown below:-
Net NAV Cumulative Total return Share Total return
assets per dividends (NAV basis) price 1 (share price
Share paid per to (p) basis) to
(p) Share (p) shareholders shareholders
since launch (p)
(£m) per Share (p)
Ordinary Shares raised 2007/08 (`S' Shares until 29 March 2010)
As at 31 March 2012 45.77 105.4 28.5 133.9 90.5 119.0
As at 30 September 2011 49.2 120.8 4.5 125.3 91.6 96.1
As at 30 September 2010 36.6 99.0 0.5 99.5 87.0 87.5
As at 30 September 2009 11.0 93.2 0.0 93.2 94.5 94.5
As at 30 September 2008 11.2 94.6 0.0 94.6 100.0 100.0
Former `O' Share Fund raised 2000/01
As at 31 March 2012 - 79.9 43.7 123.6 - -
As at 30 September 2011 - 91.5 25.5 117.0 - -
As at 30 September 2010 - 75.0 22.5 97.5 - -
As at 30 September 2009 24.9 71.5 20.5 92.0 54.8 75.3
As at 30 September 2008 29.6 83.6 16.5 100.1 79.5 96.0
83.6
Note:
The data for all periods shows the return on an initial subscription price of
100p at the date of inception of each Fund. Data as at 31 March 2012 is
supported by the table below divided by £10,000.
1 Source: London Stock Exchange.
Return before and after tax relief
The table below shows the total returns (NAV basis) at 31 March 2012 for a
shareholder in each original class that invested £10,000 at £1 a share at each
Fund's inception.
Ordinary Former `O'
Shares Shares
2007/08 1 2000/2001
Original investment (10,000 shares at £1 each) (£) 10,000 10,000
Number of shares held post merger 10,000 7,578
Rate of income tax relief % 30% 20% 2
Cost net of income tax relief (£) 7,000 8,000
NAV at 31 March 2012 (£) 10,542 7,987
Dividends paid to Shareholders since subscription (£) 2,850 4,367
Total return (NAV basis) to Shareholders since subscription (£) 13,392 12,354
Profit before income tax relief 3 (£) 3,392 2,354
Profit after income tax relief 4 (£) 6,392 4,354
1 Formerly,`S' Shares
2 Additional capital gains tax deferral relief of up to £4,000 available to
qualifying shareholders
3 NAV total return minus initial investment cost (before applicable income tax
relief)
4 NAV total return minus cost net of income tax relief
Chairman's Statement
I am pleased to present the Company's Half-Year Report for the six months
ended 31 March 2012.
The persisting uncertainty in the UK and global economies has continued to
impact on the Company during this six month period under review and we are now
experiencing once again some resurgence of the earlier volatility, primarily
as a result of continuing unresolved debt problems in several of the Eurozone
countries. However, there are some positive economic indicators coming out of
the United States. Nevertheless, most commentators are predicting a long road
to recovery for the UK economy.
Many of the companies in the portfolio continue to make good progress in spite
of the challenging conditions that have prevailed in recent months. In this
six month period under review, news from the portfolio was dominated by the
announcement that the Company had sold its shareholding in App-DNA Group
Limited realising net proceeds of £14,542,468. This resulted in a special
interim dividend of 20p per Share being paid to all Shareholders in January of
this year.
Net asset value and total return to shareholders
As at 31 March 2012 the Company's NAV per share was 105.4 pence (30 September
2011: 120.8 pence or 96.8 pence after deducting dividends of 24.0 pence per
share paid to Shareholders during the period). The NAV total return per share
(being the closing net asset value plus total dividends paid to date) has
risen to 133.9 pence compared to 125.3 pence at the year-end representing an
increase of 6.9% over the period, explained below. This is an increase of
41.7% over the NAV per share of 94.5 pence at inception of the Fund.
For Shareholders who held the former `O' Share class, the NAV total return is
now 123.6 pence per share, representing an increase of 30.8% over the NAV per
share of 94.5 pence at inception. Further details are contained in the tables
showing the performance of both share classes in the Financial Highlights set
out above.
The above increase in NAV total return of 6.9% for the period compares with an
increase of 13.9% in the FTSE SmallCap Index and a rise of 16.2% in the FTSE
AiM All-Share Index, both on a total return basis, over the same period. It
should be noted however that the recent growth in the AiM index has been
largely driven by oil related stocks, which are outside the investment mandate
for most VCTs. The Board is satisfied that the performance of the VCT compares
favourably with its peers.
The NAV per share has benefited in this half-year from recognising the gains
arising from the sales of App-DNA and DiGiCo and the net increase in the value
of the remaining portfolio companies.
Shareholders should note that a performance incentive fee could be payable for
the current financial year ending 30 September 2012 in respect of the
realisation of App-DNA. This sum has been accrued in the Accounts at 31 March
2012 and the NAV per share reported above therefore includes this provision of
approximately 6 pence per Share.
Investment portfolio
As reported in the Annual Report, the substantial disposal of App-DNA and the
partial disposal of DiGiCo towards the end of 2011 have contributed to net
cash proceeds of £16,629,038 from portfolio realisations, which also included
a number of smaller loan stock repayments.
There were two new investments during the six month period to finance the MBOs
of Equip (including the Rab and Lowe Alpine brands) and EMaC (a provider of
outsourced service plans in the automotive sector) totalling some £3.3m whilst
a further £6m was invested into a number of companies preparing to trade. A
small follow-on investment of £6,710 was made into Data Continuity Group.
There were two partial loan stock repayments made during the period by
Fullfield and Focus Pharma totalling some £275k and the VCT accepted £254,000
from NexxtDrive in full repayment of this company's outstanding loan stock and
arrears of interest.
Details of all these transactions are contained in the Investment Manager's
Review below.
The MPEP invested portfolio generally had an encouraging period and the value
of that portfolio has increased by 8.9% on a like for like basis, mainly due
to the uplift from the partial sale of DiGiCo. PXP continues to give cause for
concern although it is hoped that a restructuring will benefit this business.
In contrast, ATG Media, DiGiCo and Iglu.com continue to trade well with Iglu's
valuation seeing an improvement of £548k over the period. The difficulties at
Image Source Group were the largest negative contributor to the value of this
part of the portfolio.
The ex-Foresight portfolio had a positive period with the portfolio up by some
£1,321k (excluding the realisation of App-DNA referred to above). Alaric
Systems and Aquasium Technology both saw good uplifts in their respective
valuations. Since the period-end the Company has sold its interest in Camwood
for £942,947 giving a further boost to realised gains of some £762,190
compared to cost.
Revenue Account
The net revenue return for the period has increased by £36,352 over the
comparable period last year, to £268,220. Income has continued to benefit from
a higher level of loan stock interest, up by £98,103 (including interest
received from recent loan stock investments) and higher dividends, up by
£38,627 compared to last year.
Against this, fund management fees have risen by £155,149, due to the higher
net assets at the start of the year. Running costs have increased by £104,133
including a rise in trail commission payments of £38,637 reflecting the level
of net assets at the start of the year. Higher directors' fees of £34,725
which include a one-off payment of £10,000 made to each of the Directors in
respect of additional work carried out on specific projects for the Company
have also contributed to this increase.
Dividends
The Company has paid total dividends of 24.0 pence per share since the
year-end. An interim capital dividend in respect of the year ended 30
September 2011 of 20.0p pence per share was paid on 30 January 2012 and a
final dividend of 4 pence per share (comprising 2.0 pence from capital and 2.0
pence from income) was approved by Shareholders at the Annual General Meeting
held on 9 February 2012 and paid on 28 March 2012. The Company's Dividend
Investment Scheme applied to both of these dividends using an issue price
equal to the average of the middle market price for the Shares taken from the
London Stock Exchange Daily Official List for the five business days
immediately preceding the payment date. It is pleasing to note that £1.26
million of dividends were re-invested through the Scheme.
Cumulative dividends per share paid to date amount to 28.5 pence (pre-merger:
0.5 pence; post-merger: 28.0 pence) for the current share class (former `S'
Shares) and 43.67 pence (pre-merger: 22.45 pence; 21.22 pence post merger) for
the former `O' Shares.
The Board remains firmly committed to providing an attractive dividend stream
to Shareholders as and when circumstances allow. Accordingly, the Board will
consider the level of dividends at the year-end.
Dividend Investment Scheme
The Company's Dividend Investment Scheme ("the Scheme") is a convenient, easy
and cost effective way to build up your shareholding in the Company. Instead
of receiving cash dividends you can elect to receive new shares in the
Company. By opting to receive your dividend in this manner, there are three
benefits to you:
- The dividend is tax free to you;
- Shareholders are allotted new ordinary shares which will, subject to your
particular circumstances, attract VCT tax reliefs applicable for the tax year in
which the shares are allotted. The tax relief currently available to investors in
new VCT shares is 30% for the 2012/13 tax year for investments up to £200,000 in
any one tax year; and
- The Scheme also has one unique advantage. Under its terms, a member is able to
re-invest at an advantageous price, being the average market price of the shares
for the five business days prior to the dividend being paid. This price is likely
to be at a discount of 10% to the underlying net asset value.
Elections under the Scheme may be received by the Scheme Administrator, Capita
Registrars, at any time, but no later than 15 days prior to a dividend payment
date should you wish your election to be used in respect of that particular
dividend.
Linked Offer for Subscription
A Linked Offer for Subscription was launched on 20 January 2012 across three
Matrix VCTs, of which the Company was one, to raise £7 million each. To date
the Company has raised £4.9 million gross. The Offer will remain open until 30
June 2012.
Cash available for investment
During this economic downturn, both the Board and the Manager have continued
to work to ensure that the Company's cash deposits continue to remain as
secure as possible. We have for some time been spreading cash deposits between
a number of the leading global cash funds and depositing directly to carefully
selected individual banks, thereby limiting our exposure to any one particular
bank. The Board and Manager both continue to believe strongly that at this
time the security and protection of the Company's capital is more important
than striving for a small increase in deposit rates at the cost of much higher
risk.
Cash and liquidity fund balances as at 31 March 2012 amounted to £16.0
million. In addition, a further £6 million has been invested into a series of
acquisition vehicles pending further investment (and a further £1 million
after the period-end). As at the date of this Report, cash and liquidity fund
balances had increased to £18.3 million as a result of the subscriptions under
the Joint Offer.
Share buy-backs
During the six months ended 31 March 2012 the Company bought back 449,818
(2011: 904,909) Shares (representing 1.11% (2011: 2.45%) of the Shares in
issue at the beginning of the year) at a total cost of £399,876 (2011:
£805,142) (inclusive of expenses). These shares were subsequently cancelled by
the Company.
The Board regularly reviews its buyback policy and, given the less volatile
outlook for the valuation of the portfolio, has undertaken to reduce the
discount to NAV to allow the Company's shares to trade at around 10% below the
published NAV.
Shareholder communications
May I remind you that the Company continues to have its own website which is
available at www.incomeandgrowthvct.co.uk.
The Investment Manager held a successful and well attended Shareholder
workshop in January 2012. The Board understands that the Manager intends to
hold this as an annual event.
Outlook
Equity markets around the world, most notably in Europe, have recently
suffered sharp falls. The trigger for the latest sell-off was the news that
the European Central Bank had suspended its lending to Greek banks at the same
time as many depositors were looking to withdraw their money. It has felt like
a long two years since 25 March 2010 when Greece received its first bailout
package from the EU and the IMF. Much has happened since but little seems to
have been achieved. However, the coming months look crucial for Europe and for
the future of the single currency. The UK, like many member states of the EU,
is in or close to recession and is facing strict austerity measures. The
recent political changes within Europe merely add to the uncertainty. As at
the date of publication of this Report, it is unclear whether Greece will
leave the Eurozone, either voluntarily or by being pushed.
As a result of this economic scenario, the Company has continued to retain a
significant cash position. Moreover, the recent fundraising will enable the
Company to be able to use its substantial cash balance to better advantage.
However, amid all this political and economic uncertainty, the Manager has
seen a surge in enquiries for funding and, indeed, interest in investments in
the Company's portfolio. This places the Company in an excellent position to
take advantage of what are expected to be increasingly attractive purchase
opportunities which should become available as and when the economy climbs out
of recession. Therefore, your Board still expects to see attractive investment
opportunities with the potential for improved performance and portfolio values
over the longer term.
Once again, I would like to take this opportunity to thank Shareholders for
their continued support.
Colin Hook
Chairman
Principal risks and uncertainties, Responsibility Statement and Going Concern
and Cautionary Statement
Principal risks and uncertainties
In accordance with Disclosure and Transparency Rule (DTR) 4.2.7, the Board
confirms that the principal risks and uncertainties facing the Company have
not materially changed since the publication of the Annual Report and Accounts
for the year ended 30 September 2011. The Board acknowledges that there is
regulatory risk and continues to manage the Company's affairs in such a manner
as to comply with section 274 Income Tax Act 2007. The principal risks faced
by the Company are:
- economic risk;
- risk of loss of approval as a Venture Capital Trust;
- investment and strategic risk;
- regulatory risk;
- financial and operating risk;
- market risk;
- asset liquidity risk;
- market liquidity risk;
- counterparty risk.
A detailed explanation of these risks can be found in the Directors' Report on
pages 28 - 29 and in Note 20 on pages 67 - 74 of the Annual Report and
Accounts of the Company for the year ended 30 September 2011 ("the Annual
Report") copies of which are available on the Company's website:
www.incomeandgrowthvct.co.uk.
Responsibility Statement
In accordance with DTR 4.2.10 the Directors confirm that to the best of their
knowledge:
(a) the condensed set of financial statements, which has been prepared in
accordance with the statement, "Half-Yearly Reports", issued by the Accounting
Standards Board, gives a true and fair view of the assets, liabilities,
financial position and profit of the Company, as required by DTR 4.2.4; and
(b) the interim management report, included within the Chairman's Statement,
Investment Portfolio Summary and the Investment Manager's Review includes a
fair review of the information required by DTR 4.2.7 being an indication of the
important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements.
(c) There are no related party transactions that are required to be disclosed in
accordance with DTR 4.2.8.
Going Concern
The Board has assessed the Company's operation as a going concern. The
Company's business activities, together with the factors likely to affect its
future development, performance and position are set out in the Management
Report which is included within the Chairman's Statement, the Investment
Portfolio Summary, the Investment Manager's Review and in the equivalent
sections, including the Directors' Report, of the Annual Report. The Directors
have satisfied themselves that the Company continues to maintain a significant
cash position and is currently raising additional funds. The majority of
companies in the portfolio continue to trade profitably and the portfolio
taken as a whole remains resilient and well diversified. The major cash
outflows of the Company (namely investments, buy-backs and dividends) are
within the Company's control. The Board's assessment of liquidity risk and
details of the Company's policies for managing its capital and financial risks
are shown in Note 20 on pages 67 - 74 of the Annual Report. Accordingly, the
Directors continue to adopt the going concern basis of accounting in preparing
the annual financial statements.
Cautionary Statement
This report may contain forward looking statements with regards to the
financial condition and results of the Company, which are made in the light of
current economic and business circumstances. Nothing in this report should be
construed as a profit forecast.
On behalf of the Board
Colin Hook
Chairman
Investment Policy
The Company's policy is to invest primarily in a diverse portfolio of UK
unquoted companies. Investments are structured as part loan and part equity in
order to receive regular income and to generate capital gains from trade sales
and flotations of investee companies.
Investments are made selectively across a number of sectors, primarily in
management buy-out transactions (MBOs) i.e. to support incumbent management
teams in acquiring the business they manage but do not yet own. Investments
are primarily made in companies that are established and profitable.
The Company has a small legacy portfolio of investments in companies from its
period prior to 30 September 2008, when it was a multi-manager VCT. This
includes investments in early stage and technology companies and in companies
quoted on the AiM or PLUS.
Uninvested funds are held in cash and lower risk money market funds.
UK companies
The companies in which investments are made must have no more than £15
million, in the case of funds raised under the original prospectus in 2000/01,
and £7 million, in the case of funds raised after 6 April 2006, (including the
former `S' Share Fund raised in 2007/08) of gross assets at the time of
investment to be classed as a VCT qualifying holding.
VCT regulation
The investment policy is designed to ensure that the Company continues to
qualify and is approved as a VCT by HM Revenue & Customs ("HMRC"). Amongst
other conditions, the Company may not invest more than 15% of its investments
in a single company and must have at least 70% by value of its investments
throughout the period in shares or securities comprised in VCT qualifying
holdings, of which a minimum overall of 30% by value must be in ordinary
shares which carry no preferential rights (save as may be permitted under VCT
rules). In addition, although the Company can invest less than 30% of an
investment in a specific company in ordinary shares it must 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).
The VCT regulations in respect of funds raised after 6 April 2011 will change,
such that 70% of such funds must be invested in equity.
Asset mix
The Company initially holds its funds in a portfolio of readily realisable
interest-bearing investments and deposits. The investment portfolio of
qualifying investments is built up over a three year period with the aim of
investing and maintaining at least 70% of net funds raised in qualifying
investments.
Risk diversification and maximum exposures
Risk is spread 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. Initial investments in VCT qualifying companies are
generally made in amounts ranging from £200,000 to £1 million at cost. No
holding in any one company will represent more than 10% of the value of the
Company's investments at the time of investment. Ongoing monitoring of each
investment is carried out by the Investment Manager, generally through taking
a seat on the board of each VCT qualifying company.
Co-investment
The Company aims to invest in larger, more mature unquoted companies through
investing alongside the three other VCTs advised by the Investment Manager
with a similar investment policy. This enables the Company to participate in
combined investments advised on by the Investment Manager of up to £5 million.
Borrowing
The VCT has never borrowed and 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 Manager and are then subject
to formal approval by the Directors.
Impact of possible changes to the VCT tax rules on the VCT's investment policy
Changes to the VCT tax legislation, which may be introduced with effect from 6 April
2012 were published in the Finance Bill 2012 on 29 March 2012. The proposals are
being considered by Parliament and will be subject to EU state aid approval, but are
expected to be approved. The current proposals could impact on the Company's
Investment Policy as follows:
(1) The size of companies in which investment can be made is proposed to be increased
back to pre 6 April 2006 levels of £15 million immediately before and £16 million
immediately after the investment.
(2) The maximum number of permitted employees for an investee company at the time of
investment is proposed to be increased from 50 to 250 (this limit does not apply to
VCT funds raised before 6 April 2007).
(3) The £1 million limit on the amount of investment a VCT may make into a particular
company within a tax year is to be abolished. A new rule will require that an
investee company should not receive more than £5 million from State Aid sources,
including VCTs, within any twelve month rolling period.
(4) If the proposals are adopted in their current form it will no longer be possible for
the Manager to carry out certain types of MBO transactions using funds raised after
5 April 2012. If this turns out to be the case, the Company still intends to use
other types of MBO transactions and therefore does not anticipate that this change
will have a significant impact on the Company's investment policy.
Investment Portfolio Summary
as at 31 March 2012
Additional
Total cost at Valuation at 30 investments Valuation at
31 March September in the 31 March
2012 2011 period 2012
(unaudited) (audited) (unaudited)
£ £ £ £
IDOX plc 872,625 1,796,667 - 2,409,167
Provider of document storage
systems
Ingleby (1879) Limited (EMaC) 1,878,124 - 1,878,124 1,878,124
Provider of service plans for the
motor trade
ATG Media Holdings Limited 888,993 1,675,368 - 1,790,091
Publisher and online auction
platform operator
Fullfield Limited (Motorclean) 1,603,643 1,718,189 - 1,782,645
Provider of vehicle cleaning
and valet services
Iglu.com Holidays Limited 152,326 888,657 - 1,437,057
Online ski and cruise travel
agent
Blaze Signs Holdings Limited 1,338,500 1,354,238 - 1,422,207
Manufacturer and installer
of signs
EOTH Limited (Rab and Lowe 1,383,313 - 1,383,313 1,383,313
Alpine)
Provider of branded outdoor
equipment and clothing
ASL Technology Holdings 1,769,790 1,674,630 - 1,318,602
Limited
Printer and photocopier services
RDL Corporation Limited 1,441,667 1,383,792 - 1,310,775
Recruitment consultants for the
pharmaceutical, business
intelligence and IT industries
CB Imports Group Limited 1,000,000 1,025,448 - 1,089,194
(Country Baskets)
Importer and distributor of
artificial flowers, floral sundries
and home decór products
Ackling Management Limited 1,000,000 - 1,000,000 1,000,000
Company preparing to trade
in the food manufacturing,
distribution and brand
management sectors
Almsworthy Trading Limited 1,000,000 - 1,000,000 1,000,000
Company preparing to trade
in the specialist construction,
building support services,
building products and
related sectors
Culbone Trading Limited 1,000,000 - 1,000,000 1,000,000
Company preparing to trade
in the outsourced services
sector
Fosse Management Limited 1,000,000 - 1,000,000 1,000,000
Company preparing to trade in
the brand management, consumer
products and retail sectors
Madacombe Trading Limited 1,000,000 - 1,000,000 1,000,000
Company preparing to trade in the
engineering sector
Peddars Management Limited 1,000,000 - 1,000,000 1,000,000
Company preparing to trade in
the database management,
data mapping and management
services to the legal and building
industries
Camwood Enterprises Limited 180,757 499,182 - 942,947
Provider of software repackaging
services
Aquasium Technology Limited 700,000 486,319 - 893,108
Design, manufacture and marketing
of bespoke electron beam welding
and vacuum furnace equipment
Newincco 1124 Limited 876,497 - 876,497 876,497
(DiGiCo Europe)
Designer and manufacturer of
audio mixing desks
Image Source Group Limited 1,754,558 238,977 1,449,558 730,722
Royalty free picture library
Youngman Group Limited 1,000,052 682,203 - 700,992
Manufacturer of ladders and
access towers
British International Holdings 590,909 646,718 - 679,283
Limited
Helicopter service operator
Duncary 8 Limited 634,923 535,699 - 641,605
City-based provider of specialist
technical training
Westway Services Holdings 353,589 928,577 - 628,150
(2010) Limited
Installation, service and
maintenance of air conditioning
systems
Brookerpaks Limited 55,000 576,042 - 608,314
Importer and distributor of
garlic and vacuum-packed
vegetables
Alaric Systems Limited 595,802 167,114 - 590,281
Software development,
implementation and support
in the credit/debit card
authorisation and payments
market
Original Additions Topco 25,696 537,948 - 537,948
Limited
Manufacturer and distributor of
beauty products
Machineworks Software 20,471 407,310 - 431,349
Limited
Software for CAM and machine
tool vendors
Focus Pharma Holdings 405,407 628,706 - 405,654
Limited
Licensor and distributor of
generic pharmaceuticals
Tikit Group plc 132,017 458,094 - 386,866
Provider of consultancy
services and software
solutions for law firms
Letraset Limited 650,010 234,385 - 300,381
Manufacturer and distributor
of graphic art products
Faversham House 487,744 487,744 - 291,984
Publisher, exhibition organiser
and operator of websites for
the environmental, visual
communications and building
services sectors
Omega Diagnostics Group plc 279,996 291,663 - 233,330
In-vitro diagnostics for food
intolerance, autoimmune
diseases and infectious
diseases
The Plastic Surgeon Holdings 406,082 101,521 - 214,033
Limited
Supplier of snagging and
finishing services to the
property sector
Racoon International Holdings 550,852 157,755 - 151,050
Limited
Supplier of hair extensions,
hair care products and training
Vectair Holdings Limited 53,400 139,125 - 150,837
Designer and distributor of
washroom products
ANT plc 462,816 144,451 - 137,885
Provider of embedded
browser/email software
for consumer electronics
and internet appliances
Lightworks Software Limited 20,471 54,138 - 83,184
Software for CAD vendors
Oxonica plc 2,524,527 69,624 - 69,624
International nanomaterials
group
Corero plc 600,000 35,363 - 55,991
Provider of e-business
technologies
Monsal Holdings Limited 468,610 42,446 - 42,446
Supplier of engineering services
to water and waste sectors
Sarantel Group plc 1,881,252 39,485 - 40,847
Developer and manufacturer of
antennae for mobile phones
and other wireless devices
Data Continuity Group Limited 90,034 - 6,710 38,749
(formerly DCG Group Limited)
Design, supply and integration
of data storage solutions
NexxtDrive Limited 487,014 162,500 - -
Developer and exploiter of
patented transmission technologies
PXP Holdings Limited 920,176 - - -
(Pinewood Structures)
Designer, manufacturer and
supplier of timber frames for
buildings
Aigis Blast Protection Limited 272,120 - - -
Specialist blast containment
materials company
Legion Group plc 150,000 - - -
(in administration)
Provision of manned guarding,
mobile patrols, and alarm
response services
Biomer Technology Limited 137,170 - - -
Developer of biomaterials for
medical devices
Watchgate Limited 1,000 - - -
Holding company
Realised investments
-
App-DNA Group Limited - 11,633,974 -
Provider of software -
repackaging services
DiGiCo Europe Limited - 1,258,330 - -
Designer and manufacturer
of audio mixing desks
Backbarrow Limited - 1,000,000 - -
Company that was preparing to
trade in food manufacturing,
distribution and brand
management sectors
Bladon Castle Management - 1,000,000 - -
Limited
Company that was preparing
to trade in brand management,
consumer products and retail
sectors
Rusland Management Limited - 1,000,000 - -
Company that was preparing to
trade in brand management,
consumer products and retail
sectors
Torvar Limited - 1,000,000 - -
Company that was preparing
to trade in database management,
mapping, data mapping and
management services to the
legal and building industries.
-------- -------- -------- --------
Total 36,097,933 37,162,382 11,594,202 32,685,232
-------- -------- -------- --------
Investment Manager's Review
The period began with two new investments and two significant realisations
which are described in more detail below. We are continuing to see good
quality, realistically priced investment opportunities and are finding that
management buy-out ("MBO") teams are increasingly turning to us as a source of
deliverable, long-term finance as an alternative to bank funding. We are
therefore pleased with and encouraged by the current level of deal flow,
enabling us to pursue a number of deals which we expect to come to fruition
over the coming months. We are also discussing a number of interesting
realisation opportunities with both trade and private equity investors.
Investment activity
As referred to in the Annual Report, two new investments were completed
shortly after the year-end in October and November 2011, financing the MBOs of
Equip Outdoor Technologies (EOTH Limited) and EMaC. In the first of these I&G
VCT made an investment of £1,383,313 to provide mezzanine finance as part of a
£7.8m transaction to support the acquisition of the international intellectual
property and assets of Lowe Alpine Srl from administration in Italy by Equip
Outdoor Technologies Limited, a company specialising in owning and
distributing brands focused on the outdoor sector including the Rab brand. The
second was a new investment of £1,878,124 to support the MBO of EMaC Limited,
the UK's leading provider of outsourced service plans to franchised dealers in
the automotive sector.
Four of the Company's investments in companies preparing to trade were
realised during the period as in our view insufficient progress was being made
in negotiating suitable, attractive opportunities. Nevertheless the Operating
Partner programme as a whole has continued to generate successful investments
for the Company and accordingly seven new investments have been made (one of
which was completed after the period-end).
Image Source was the only company in the portfolio to require significant
further investment during the six months to 31 March 2012. A further
investment in the form of a loan of £1,449,558 was made in December 2011 to
help support the resolution of a legal dispute with a former employee and
shareholder in that company. This company continues to suffer from challenging
market conditions.
The Company accepted a repayment of £254,000 from NexxtDrive in full repayment
of this company's outstanding loan stock (held at a cost of £325,000) and
arrears of interest. Two partial loan stock pre-payments were received in
January 2012 from Focus Pharma (£111,493 plus a premium of £50,039 totalling
£161,532) and Fullfield (£114,546).
As also referred to in the last Annual Report, I&G VCT made two major
realisations following the year-end, in November and December 2011. In the
first of these, I&G VCT realised in full its investment in AppDNA by way of a
trade sale to Citrix Systems Inc in November 2011. The total cash
consideration from the sale of £14,542,468 contributed to total proceeds to
the Company over the life of the investment of £15,054,113, which represented
a 29 times return on the Company's original investment of £514,090. This
figure increases to 32 times if approximately £1.8 million of potential
deferred consideration is also brought into the calculation. In December 2011,
I&G VCT made a partial disposal of its investment in DiGiCo in a transaction
financed by ISIS Equity Partners. I&G VCT received cash proceeds of £1,405,642
representing a 3 times cash return on this investment to date. In addition,
I&G VCT received a loan stock and equity (1.57%) investment in Newincco 1124
(the company that has acquired DiGiCo) with a valuation of £876,497, bringing
the total return on this investment to 4.4 times the original investment cost.
The Company sold an additional 49,985 shares in Tikit Group plc during the
period realising a 2.7 times return on the original cost of these shares.
Following the period-end in April 2012, I&G VCT sold its investment in Camwood
Enterprises to this company's management team for a cash consideration of
£942,947 compared to a year-end valuation of £499,182. Total proceeds to I&G
VCT over the life of the investment amounted to £1,458,302 representing a 2.8x
return on I&G VCT's investment cost of £514,090.
Portfolio review
Overall, the portfolio as 31 March 2012 is valued at £32.7 million (September
2011: £37.2) million against a cost of £36.1 million (September 2011: £29.6
million). The MPEP portfolio accounts for 78% of the cost which now represents
91.5% of the portfolio value.
The portfolio's performance as a whole continues to be robust. DiGiCo,
Iglu.com Holidays and ATG Media have once again produced the strongest
performances and this is reflected in their valuations. Many other portfolio
companies have also continued to increase sales and profits despite the
challenges of the economic environment. Focus Pharma continues to trade well
and expects to progress further with several additional product launches
planned for 2012. PXP continues to be affected by the depressed state of
trading in the construction and house building sectors. The original
investment has been written down to nil although a small additional investment
into this company has been approved which is expected to generate a positive
return. Plastic Surgeon has made considerable inroads into new markets which
have driven growth in profitability and are expected to continue to develop.
Elsewhere the position is more mixed. Blaze Signs continues to consolidate its
recovery and is starting to benefit from some contract gains whilst
profitability remains well below peak levels. Westway suffered from lower
revenues last year but is now growing profits again and has strong customer
relationships. RDL had a disappointing first year with a net reduction in
contract staff placements in its core pharmaceuticals and IT markets. Of the
new investments made during the twelve months prior to 31 March 2012,
Fullfield (Motorclean Group) and Ingleby (EMaC) have both made promising
starts whilst EOTH (Rab and Lowe Alpine) has grown revenues in a more
problematic market for outdoor performance wear.
The performance of the remaining ex-Foresight investments has been
encouraging, primarily reflecting the record levels of profitability achieved
by Aquasium and Alaric.
Outlook
We believe that the portfolio overall is resilient and is creating value which
will be realised in the medium to long term. The Company is very well placed
to cover both any portfolio needs and funding for attractive new investment
opportunities that may arise and its cash position has been further enhanced
by the current fundraising.
Unaudited Income Statement
for the six months ended 31 March 2012
Six months ended 31 March 2012 Six months ended 31 March 2011
(unaudited) (unaudited)
Notes Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Unrealised gains
on investments 8 - 2,273,414 2,273,414 - 1,541,682 1,541,682
Net realised gains
on investments 8 - 3,155,198 3,155,198 - 379,561 379,561
Income 2 751,588 - 751,588 576,851 - 576,851
Investment
management
expense 3 (148,768) (3,306,304) (3,455,072) (110,981) (332,942) (443,923)
Other expenses (293,755) - (293,755) (189,622) - (189,622)
Provision for
litigation costs
no longer
required/(charged) 4 - 1,337,456 1,337,456 - - -
-------- -------- -------- -------- -------- --------
Profit on ordinary
activities before
taxation 309,065 3,459,764 3,768,829 276,248 1,588,301 1,864,549
Tax on profit/(loss)
on ordinary
activities 5 (40,845) 40,845 - (44,380) 44,380 -
-------- -------- -------- -------- -------- --------
Profit/(loss) on
ordinary activities
after taxation 268,220 3,500,609 3,768,829 231,868 1,632,681 1,864,549
-------- -------- -------- -------- -------- --------
Basic and diluted
earnings per
Ordinary Share 6 0.65p 8.48p 9.13p 0.62p 4.36p 4.98p
Year ended 30 September 2011
(audited)
Notes Revenue Capital Total
£ £ £
Unrealised gains
on investments 8 - 10,870,219 10,870,219
Net realised gains
on investments 8 - 343,231 343,231
Income 2 1,654,663 - 1,654,663
Investment
management
expense 3 (237,946) (713,837) (951,783)
Other expenses (375,837) - (375,837)
Provision for
litigation costs
no longer
required/(charged) 4 - (1,337,456) (1,337,456)
-------- -------- --------
Profit on ordinary
activities before
taxation 1,040,880 9,162,157 10,203,037
Tax on profit/(loss)
on ordinary
activities 5 (176,808) 176,808 -
-------- -------- --------
Profit/(loss) on
ordinary activities
after taxation 864,072 9,338,965 10,203,037
-------- -------- --------
Basic and diluted
earnings per
Ordinary Share 6 2.21p 23.83p 26.04p
The total column of this statement is the Profit and Loss Account of the
Company. All revenue and capital items in the above statement derive from
continuing operations. There were no other recognised gains or losses in the
period. Other than revaluation movements arising on investments held at fair
value through profit and loss, there were no differences between the
profit/(loss) as stated above and at historical cost.
Unaudited Balance Sheet
as at 31 March 2012
31 March 2012 31 March 2011 30 September 2011
(unaudited) (unaudited) (audited)
Notes £ £ £
Non-current assets
Investments at fair value 8 32,685,232 28,756,485 37,162,382
Current assets
Debtors and prepayments 9 350,297 1,718,335 280,709
Current asset investments 10 13,917,141 6,768,945 11,682,461
Cash at bank 2,056,750 2,566,232 1,577,420
-------- -------- --------
16,324,188 11,053,512 13,540,590
Creditors: amounts falling
due within one year (3,307,167) (291,383) (212,717)
-------- -------- --------
Net current assets 13,017,021 10,762,129 13,327,873
Provision for liabilities and
charges 4 - - (1,337,456)
-------- -------- --------
Net assets 45,702,253 39,518,614 49,152,799
-------- -------- --------
Capital and reserves 11
Called up share capital 433,544 394,792 406,920
Share premium account 8,584,454 3,728,433 5,669,141
Capital redemption reserve 191,807 179,860 187,309
Revaluation reserve 2,882,155 2,563,342 12,350,858
Special reserve 14,101,218 21,307,003 17,139,273
Profit and loss account 19,509,075 11,345,184 13,399,298
-------- -------- --------
Equity shareholders' funds 45,702,253 39,518,614 49,152,799
-------- -------- --------
Basic and diluted net asset
value:
Basic net asset value per
Ordinary Share 12 105.42p 100.10p 120.79p
Unaudited Reconciliation of Movements in Shareholders' Funds
for the six months ended 31 March 2012
Six months ended Six months ended Year ended
31 March 2012 31 March 2011 30 September 2011
(unaudited) (unaudited) (audited)
Notes £ £ £
Opening shareholders' funds 49,152,799 36,604,696 36,604,696
Share capital bought back
in the period 11 (399,876) (805,142) (1,475,019)
Share capital subscribed in
the period 11 2,946,435 3,393,424 5,353,709
Profit for the period 3,768,830 1,864,549 10,203,037
Dividends paid in period 7 (9,765,934) (1,538,913) (1,533,624)
-------- -------- --------
Closing shareholders' funds 45,702,253 39,518,614 49,152,799
-------- -------- --------
Unaudited Cash Flow Statement
for the six months ended 31 March 2012
Six months ended Six months ended Year ended 30
31 March 2012 31 March 2011 September 2011
(unaudited) (unaudited) (audited)
£ £ £
Operating activities
Investment income received 614,011 424,952 1,571,454
Investment management fees paid (599,772) (653,033) (1,160,893)
Recoverable VAT and interest received thereon - 34,370 34,370
Other income - 3,582 3,647
Other cash payments (264,049) (136,645) (480,615)
-------- -------- --------
Net cash outflow from operating activities (249,810) (326,774) (32,037)
Investing activities
Acquisitions of investments (11,465,139) (1,559,531) (2,739,946)
Disposals of investments 21,499,964 2,835,173 4,907,493
-------- -------- --------
Net cash inflow from investing activities 10,034,825 1,275,642 2,167,547
Dividends
Equity dividends paid (8,509,703) (1,538,914) (1,533,624)
-------- -------- --------
Cash inflow/(outflow) before financing
and liquid resource management 1,275,312 (590,046) 601,886
Management of liquid resources
(Increase)/decrease in current
investments (2,234,680) 1,939,628 (2,973,888)
Financing
Issue of Ordinary shares 1,690,204 1,950,890 5,353,709
Purchase of own shares (251,506) (840,776) (1,510,823)
-------- -------- --------
1,438,698 1,110,114 3,842,886
-------- -------- --------
Increase in cash for the period 479,330 2,459,696 1,470,884
-------- -------- --------
Reconciliation of profit on ordinary activities before taxation to net cash
outflow from operating activities
for the six months ended 31 March 2012
Six months ended Six months ended Year ended
31 March 2012 31 March 2011 30 September 2011
£ £ £
Profit on ordinary activities
before taxation 3,768,829 1,864,549 10,203,037
Net unrealised gains on
investments (2,273,414) (1,541,682) (10,870,219)
Net gains on realisations of
investments (3,155,198) (379,561) (343,231)
Increase in debtors (143,661) (108,138) (118,633)
Increase/(decrease) in creditors 1,593,634 (161,942) 1,097,009
-------- -------- --------
Net cash outflow from
operating activities (249,810) (326,774) (32,037)
-------- -------- --------
The notes below form part of these half-year financial statements
Notes to the Unaudited Financial Statements
1. Principal accounting policies
The following accounting policies have been applied consistently throughout
the period. Full details of principal accounting policies will be disclosed in
the Annual Report.
a) Basis of accounting
The unaudited results cover the six months to 31 March 2012 and have been
prepared under UK Generally Accepted Accounting Practice (UK GAAP), consistent
with the accounting policies set out in the statutory accounts for the year
ended 30 September 2011 and the 2009 Statement of Recommended Practice,
`Financial Statements of Investment Trust Companies and Venture Capital Trusts'
("the SORP").
The Half-Year Report has not been audited, nor has it been reviewed by the
auditor pursuant to the Auditing Practices Board (APB)'s guidance on Review of
Interim Financial Information.
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", in accordance with the International Private Equity and
Venture Capital Valuation ("IPEVCV") guidelines, as updated in September 2009.
This classification is followed as the Company's business is to invest in
financial assets with a view to profiting from their total return in the form
of capital growth and income.
For investments actively traded in organised financial markets, fair value is
generally determined by reference to Stock Exchange market quoted bid prices
at the close of business on the balance sheet date. Purchases and sales of
quoted investments are recognised on the trade date where a contract of sale
exists whose terms require delivery within a time frame determined by the
relevant market. Purchases and sales of unlisted investments are recognised
when the contract for acquisition or sale becomes unconditional.
Unquoted investments are stated at fair value by the Directors in accordance
with the following rules, which are consistent with the IPEVCV guidelines:
All investments are held at the price of a recent investment for an
appropriate period where there is considered to have been no change in fair
value. Where such a basis is no longer considered appropriate, the following
factors will be considered:
(i) Where a value is indicated by a material arms-length transaction by an
independent third party in the shares of a company, this value will be
used.
(ii) In the absence of i), and depending upon both the subsequent trading
performance and investment structure of an investee company, the
valuation basis will usually move to either:-
a) an earnings multiple basis. The shares may be valued by applying a
suitable price-earnings ratio to that company's historic, current
or forecast post-tax earnings before interest and amortisation (the
ratio used being based on a comparable sector but the resulting
value being adjusted to reflect points of difference identified by
the Investment Manager 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 Manager, will agree the
values that represent the extent to which an investment 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 on loan stock investments are accrued at fair value when the
Company receives the right to the premium and when considered
recoverable.
(vi) 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.
2. Income
Six months ended Six months ended Year ended
31 March 2012 31 March 2011 30 September 2011
(Unaudited) (Unaudited) (Audited)
£ £ £
Dividends 104,973 66,346 365,331
Income from money-market 57,529 22,226 56,580
funds
Loan stock interest 577,445 479,342 1,212,795
Bank deposit interest 11,641 5,356 16,309
Other Income - 3,581 3,648
---------- ---------- ----------
Total Income 751,588 576,851 1,654,663
---------- ---------- ----------
3. Investment Management Expense
Six months ended Six months ended Year ended
31 March 2012 31 March 2011 30 September 2011
£ £ £
Investment management fee 595,072 443,923 951,783
Performance incentive fee 2,860,000 - -
---------- ---------- ----------
3,455,072 443,923 951,783
---------- ---------- ----------
The Directors have charged 75% of the fees payable under the investment
adviser's agreement, and 100% of the amounts payable under the Incentive
Agreement, to the capital reserve. The Directors believe it is appropriate to
charge the incentive fee wholly against the capital return, as any fee payable
depends on capital performance, as explained below.
After the merger, the Investment Mangaer's Incentive Agreement for the former
`O' Share Fund has been continued while the former 'S' Share Fund's Incentive
Agreement has been terminated. Under the terms of the pre-merger 'O' Share
Fund Incentive Agreement, each of the ongoing Investment Manager, Matrix
Private Equity Partners LLP ("MPEP") and a former Investment Manager,
Foresight Group LLP ("Foresight") are entitled to a performance fee equal to
20% of the excess of the value of any realisation of an investment made after
30 June 2007, over the value of that investment in an Investment Manager's
portfolio at that date ("the Embedded Value"), which value is itself uplifted
at the rate of 6% per annum, subject to a High-watermark test.
However, two amendments were made to this agreement for MPEP, the ongoing
Investment Manager. Firstly, the High Watermark was increased by £811,430,
being the 'S' Share Fund's shortfall in total net assets from net asset value
of £1 per 'S' Share, at 31 December 2009. Secondly, only 70% of any new
investment made by MPEP after the merger will be added to the calculation of
the Embedded Value and value of the Investment Manager's portfolio, for the
purposes of assessing any excess.
The charge for the year is an estimated amount payable in respect of the
current year.
4. Provision for litigation costs no longer required
Six months ended Six months ended Year ended
31 March 2012 31 March 2011 30 September 2011
£ £ £
Income/(charge) for period 1,337,456 - (1,337,456)
As explained in the year-end accounts, at 30 September 2011 the Company had a
prima facie obligation to meet the costs of an action brought by a former
director and shareholder in Image Source Group Limited ("IMSG").
Under an agreement between the Company and IMSG dated 6 December 2012, IMSG
met the cost of the settlement including the Company's pro rata share of the
legal fees incurred in defending the action up to 30 September 2011 and all
the legal costs incurred since. To facilitate the settlement, the Company has
lent approximately £1.45 million to IMSG on commercial terms and repayable in
5 years. The plaintiff to the action will also be entitled to a small
percentage share of the net proceeds over and above £5 million attributable to
the ordinary shareholders from any sale of IMSG up to 31 December 2016, after
all loans and any outstanding interest costs and prior charges have been
repaid. This loan therefore forms part of the Company's investments in note 8
and has a value of £730,722 as shown in the Investment Portfolio Summary set
out above. Accordingly, the obligation has been discharged by the loan to IMSG
in the period, to allow IMSG to settle the claim, so the provision at 30
September 2011 is no longer required at 31 March 2012 and has been credited to
the Income Statement.
5. Taxation
There is no tax charge for the period as the Company has incurred tax losses,
as its expenses exceed its income.
6. Basic and diluted earnings and return per share
Six months ended Six months ended Year ended
31 March 2012 31 March 2011 30 September 2011
£ £ £
i) Total earnings after taxation: 3,768,829 1,864,549 10,203,037
Basic earnings per share 9.13 p 4.98 p 26.04 p
ii) Net revenue from ordinary activities
after taxation 268,220 231,868 864,072
Basic revenue return per share 0.65 p 0.62 p 2.21 p
iii) Net unrealised capital gains 2,273,414 1,541,682 10,870,219
Net realised capital gains 3,155,198 379,561 343,231
Provision for litigation costs no
longer required/(charged) 1,337,456 - (1,337,456)
Capital expenses (net of taxation) (3,265,459) (288,562) (537,029)
---------- ---------- ----------
Total capital return 3,500,609 1,632,681 9,338,965
Basic capital return per share 8.48 p 4.36 p 23.83 p
iv) Weighted average number of
shares in issue in the period 41,301,622 37,412,969 39,182,112
Other than the performance related incentive, there are no instruments in
place that will increase the number of shares in issue in future. If shares
are issued, no dilution of earnings per share will occur, as the estimated
incentive fee payable has been charged in these accounts.
7. Dividends on equity shares paid and payable
Six months ended Six months ended Year ended
31 March 2012 31 March 2011 30 September 2011
£ £ £
Ordinary shares (formerly `S' Shares)
Interim paid of 20p capital (2011 :
2p capital) pence per share 8,138,245 776,342 765,916
Final paid of 2p capital and 2p
revenue (2011 : 2p capital)
per share 1,627,689 762,571 767,708
-------- -------- --------
9,765,934* 1,538,913* 1,533,624*
* Of this amount £1,256,231 (31 March 2011: £117,370; 30 September 2011:
£117,370) of new shares were issued as part of the DRIS scheme.This explains
the difference between the amount of £9,765,934 above, and the £8,509,703
shown in the Cash Flow Statement.
8. Summary of movement on investments during the period
Traded Unlisted Preference Qualifying Total
on AiM Shares Shares loans
£ £ £ £ £
Valuation at 1 October 2011 2,765,723 20,166,018 70,045 14,160,596 37,162,382
Purchases at cost - 3,110,049 3,119 8,481,034 11,594,202
Sales - proceeds (154,776) (16,775,867) (14,376) (4,598,797) (21,543,816)
- realised gains 15,818 1,499,732 - 1,683,500 3,199,050
Unrealised gains/(losses) 637,321 1,540,012 (5,000) 101,081 2,273,414
-------- -------- -------- -------- --------
Valuation at 31 March 2012 3,264,086 9,539,944 53,788 19,827,414 32,685,232
-------- -------- -------- -------- --------
Book cost at 31 March 2012 4,228,706 12,195,249 75,509 19,598,469 36,097,933
Unrealised (losses)/gains at
31 March 2012 (964,620) 2,764,625 (21,721) 228,945 2,007,229
Permanent impairment of
valuation of investments - (5,419,930) - - (5,419,930)
-------- -------- -------- -------- --------
Valuation at 31 March 2012 3,264,086 9,539,944 53,788 19,827,414 32,685,232
Gains on investments -------- -------- -------- -------- --------
Realised gains based on
historical cost 97,293 13,652,585 (1,446) 1,192,735 14,941,167
Less amounts recognised as
unrealised gains/(losses) in
previous years 81,475 12,152,853 (1,446) (490,765) 11,742,117
-------- -------- -------- -------- --------
Realised gains based on
carrying value at 30
September 2011 15,818 1,499,732 - 1,683,500 3,199,050
Net movement in unrealised
gains/(losses) in the period 637,321 1,540,012 (5,000) 101,081 2,273,414
-------- -------- -------- -------- --------
Gains/(losses) on
investments
for the period ended 31
March
2012 653,139 3,039,744 (5,000) 1,784,581 5,472,464
-------- -------- -------- -------- --------
Transaction costs of £43,852 were incurred in the period and are treated as
realised gains on investments in the Income Statement. Deducting these from
realised gains above gives £3,155,198 of gains as shown in the Income
Statement.
Proceeds above of £21,543,816 differ from the Cash Flow Statement figure of
£21,499,964 by £43,852 relating to transaction costs. Purchases at cost above
of £11,594,202 differ from the Cash Flow Statement figure of £11,465,139 by
£129,063. This difference relates to £129,063 of costs funded by the Company
in a previous period subsequently treated as a loan.
9. Debtors
31 March 2012 31 March 2011 30 September 2011
£ £ £
Accrued Income 329,170 260,350 191,592
Prepayments 15,090 9,865 15,044
Other debtors 6,037 5,594 74,073
Share allotment proceeds receivable - 1,442,526 -
------- ------- -------
350,297 1,718,335 280,709
------- ------- -------
10. Current asset investments
31 March 2012 31 March 2011 30 September 2011
£ £ £
Royal Bank of Scotland
Sterling Liquidity Fund 3,662,549 120,079 2,881,254
Blackrock Investment
Management (UK) Institutional
Sterling Fund 2,427,674 969,186 2,102,821
Fidelity Institutional Cash
Fund 1,941,050 2,690,056 2,696,550
Prime Rate Capital Management
LLP Sterling Liquidity Fund
(UK based) 2,409,220 1,560,346 2,567,767
Scottish Widows Investment
Partnership Sterling
Liquidity Fund 3,476,648 1,429,278 1,434,069
------- ------- -------
Monies held pending
investment 13,917,141 6,768,945 11,682,461
------- ------- -------
These comprise investments in four Dublin based OEIC money market funds and
one UK based as shown in the table above. All of this sum is subject to same
day access (31 March 2011: £6,768,945; 30 September 2011: £11,682,461).
11. Capital and reserves for the six months ended 31 March 2012
Called
up Share Capital Profit and
share premium redemption Revaluation Special loss
capital account reserve reserve reserve account Total
£ £ £ £ £ £ £
At 1 October
2011 406,920 5,669,141 187,309 12,350,858 17,139,273 13,399,298 49,152,799
Shares bought
back (4,498) - 4,498 - (399,876) - (399,876)
Shares issued 16,773 1,673,431 - - - - 1,690,204
Dividends
re-invested
into new shares
issued 14,349 1,241,882 - - - - 1,256,231
Dividends paid - - - - - (9,765,934) (9,765,934)
Loss
transferred
between
reserves - - - - (2,638,179) 2,638,179 -
Other expenses
net of taxation - - - - - (3,265,459) (3,265,459)
Net unrealised
gains on
investments - - - 2,273,414 - - 2,273,414
Net realised
gains on
investments - - - - - 3,155,198 3,155,198
Writeback of
provision for
settlement of
litigation
costs (note 4) - - - - - 1,337,456 1,337,456
Realisation of
previously
unrealised
gains - - - (11,742,117) - 11,742,117 -
Profit for the
period - - - - - 268,220 268,220
------- ------- ------- ------- ------- ------- -------
At 31 March
2012 433,544 8,584,454 191,807 2,882,155 14,101,218 19,509,075 45,702,253
------- ------- ------- ------- ------- ------- -------
12. Net asset value per share
31 March 2012 31 March 2012 30 September 2011
£ £ £
Net assets £45,702,253 £39,518,614 £49,152,799
Number of shares in issue 43,354,355 39,479,195 40,692,048
Net asset value per share - basic and diluted 105.42p 100.10p 120.79p
Diluted NAV per share assumes that the Investment Manager's incentive fee is
satisfied by the issue of additional shares. If shares are issued, no dilution
of NAV per share will occur, as the estimated incentive fee payable is already
held as a creditor in these accounts.
13. Post balance sheet events
On 4 and 5 April and 10 May, the Company allotted a further 2,965,714 ordinary
shares under the Matrix VCTs' Linked Offer launched on 20 January 2012,
raising net funds of £2,985,810.
14. The financial information for the six months ended 31 March 2012 and the
six months ended 31 March 2011 has not been audited.
The financial information contained in this half-year report does not
constitute statutory accounts as defined in Section 434 of the Companies Act
2006. The financial statements for the year ended 30 September 2011 have been
filed with the Registrar of Companies. The auditor has reported on these
financial statements and that report was unqualified and did not contain a
statement under either section 498(2) or 498(3) of the Companies Act 2006.
15. Copies of this statement are being sent to all shareholders. Further
copies are available free of charge from the Company's registered office, One
Vine Street, London, W1J OAH.
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