Final Results
Chairman's Statement
I am pleased to present the results of the Company for the year ended 30 April
2008.
Overview of performance for the year ended 30 April 2008
In light of the economic uncertainty and turmoil in financial markets during
the last twelve months, this has been a challenging period for investment
companies. This is clearly evidenced by the stock market indices discussed
below, all of which fell significantly. Several of our VCT peers have seen
annual reductions of between 10% and 20% in their net asset values.
In contrast, the performance of your Company has been relatively stable, with
some encouraging results. Our Ordinary Shareholders have seen a small decrease
in net asset value, but a healthy 6 pence per share dividend has been
maintained. Our C shareholders have seen a small increase in net asset value
and an increased 2.5 pence per share dividend.
The Company's total Ordinary Shareholder (NAV) return declined by 3.6% in the
year, from 122.03 pence per share to 117.70 pence per share. An interim
capital dividend of 4.5 pence and an interim income dividend of 1.5 pence for
the year have been declared and will be paid in July.
The Company's total C Shareholder (NAV) return showed an increase of 2.9% from
97.15 pence per share to 99.98 pence per share. An interim income dividend of
2.5 pence for the year has been declared and will be paid in July.
By comparison, during the twelve-month period ended 30 April 2008 the FTSE
All-Share Index fell by 7.6%, the SmallCap Index by 23% and the AIM Index by
17.3%.
Revenue and Capital returns for the year ended 30 April 2008
The results for the year ended 30 April 2008 are set out in the following
pages. The total return (after tax) attributable to the Ordinary Shareholders
for the year was a loss of £633,730 (2007: Profit of £2,378,445) and the net
asset value ("NAV") per Ordinary Share at 30 April 2008 was 96.91 pence
compared with 107.24 pence as at 30 April 2007. This fall is mainly explained
firstly, by a dividend of 6p in respect of the year ended 30 April 2007 having
been paid on 19 September 2007 and secondly, a fall in valuations of
unrealised investments. The after tax revenue return before net capital gains
was 1.82 pence per Ordinary Share for the year to 30 April 2008 (2007: 1.54
pence).
The total return (after tax) attributable to the C Shareholders for the year
was £259,528 (2007: £258,730) and the NAV per C Share at 30 April 2008 was
98.48 pence compared with 97.15 pence as at 30 April 2007. The after tax
revenue return before net capital gains was 2.65 pence per Ordinary Share for
the year to 30 April 2008 (2007: 2.30 pence).
This year's macro-economic environment has been considerably tougher than the
previous year's and the Board is encouraged by these results. In the case of
Ordinary Shareholders, the performance continues to reflect the benefits of
the change in investment strategy pursued since September 2005, which has
begun to deliver stronger income flows to the Ordinary Share Fund, and now the
C fund. This has been combined with some net increases in the valuations of
both Funds over that time, although the valuation of the Ordinary Share Fund
has reduced slightly at this year-end, mainly in response to the falls in
quoted markets.
New Investment Activity
This year has seen the Ordinary Share Fund invest £1.3 million in
two new investments, and one follow-on investment alongside the C Share Fund,
which co-invested £1.1 million. The C Share Fund also invested a further £1.4
million in two other new investments, when the Ordinary Share Fund was
temporarily fully invested and hence unable to co-invest. Thus, the C Share
Fund invested a total of £2.5 million in the year. All of these investments
were in management buy-out ("MBO") transactions by your Investment Manager,
Matrix Private Equity Partners ("MPEP").
A feature of MBO investments is their ability to generate income to
the Funds by investing in loan stocks as well as ordinary shares. The
annualised yield from loan stocks at valuation is now running at 9.2% and 9.0%
to the Ordinary and C Share Funds respectively. During the year interest and
dividend income totalled £0.575 million, an increase of 34% over the previous
year.
Portfolio Activity
In January and February of this year, the Ordinary Share Fund
realised its investments in Gyro International for £2.4 million, against
original cost of £750,000, and a return of over 3 times the original
investment in 3 years, BBI Holdings plc for £262,000 against cost of £119,000
and Clarity Commerce Solutions plc for proceeds of £162,000 against a cost of
£510,000. In April, part of the loan stock held in VSI Limited was redeemed
for £148,000, being a premium on cost of £13,000.
This Fund now holds twelve investments made since the change of
investment strategy in 2005, accounting for almost 56% by cost and almost 68%
by valuation of the Fund's assets. Eleven of these investments are MBOs.
The C Share Fund currently holds investments in ten companies,
showing valuations at this early stage of this portfolio's life which are 5.4%
above cost. Although at an earlier stage of development, this fund realised
its investment in BBI Holdings plc, realising £183,000 against a cost of
£83,000, and also received proceeds of £50,000 at a premium on cost of £5,000
upon part of its loan stock investment in VSI Ltd.
All investments held by the Company continue to be valued in
accordance with International Private Equity Venture Capital Valuation
("IPEVCV") guidelines. We will, in any event, always follow a consistent and
prudent valuation policy. The investments quoted on AIM and the money market
securities are carried at market value.
Dividends
The revenue account generated a net revenue return for the year of
£214,894 for the Ordinary Share Fund (2007: (£190,379)) causing the Ordinary
Share Fund's revenue reserve to become positive by the end of the year, and
£242,682 for the C Share Fund (2007: £210,137). The dividends declared as
interims for the year ended 30 April 2008 will be paid on 23 July 2008 to
Shareholders on the register on 27 June 2008. Your Directors will not be
recommending a final income or capital dividend for Ordinary or C
Shareholders.
New capital raising
Your Board has decided to seek to raise additional capital in the C
Share Fund by launching an offer of new shares towards the end of this
calendar year. We anticipate that there will be significant opportunities to
invest over the medium term and intend the Company to have adequate liquidity
to participate fully in these opportunities, alongside other MPEP-advised
VCTs. Such a fund-raising will enable the Company to achieve better economies
of scale by spreading its running costs across a larger capital base and will
give existing and new shareholders the opportunity to invest further at what
may be an advantageous point in the economic cycle.
The Board will be seeking shareholders' permission to issue this
additional share capital through resolutions to be tabled at the Annual
General Meeting on 10 September 2008. We consider that these resolutions are
in the best interests of the Company and its Shareholders as a whole and
recommend Shareholders to vote in favour of them, as they intend to do in
respect of their own beneficial holdings totalling 40,900 Ordinary shares
(0.36 per cent of the issued Ordinary share capital) and 47,475 C Shares (0.51
per cent of the issued C Share capital).
Outlook
In my Statement in the Half-Yearly Report to shareholders, I
emphasised that the Board and the Investment Manager are paying close
attention to current economic indicators. The scale of economic and market
downturn is as yet uncertain, but there is clearly a heightened risk to the
smaller company sector in which your VCT invests. Your Board continues to
believe that the Investment Manager's strategy of investing in MBOs is
appropriate, and that, looking forward, good opportunities will present
themselves for new investment. The current portfolio is still performing
satisfactorily, and there remains scope for further attractive returns to
shareholders in the medium term.
Conclusion
I would like to express my thanks to all Shareholders for your
continuing support of the Company. I hope to have the opportunity of meeting
you at the Annual General Meeting on 10 September 2008.
Nigel Melville
Chairman
14 July 2008
Responsibility Statement
The Directors confirm that to the best of their knowledge:
(a) the financial statements, which have been prepared in accordance with
applicable accounting standards in the United Kingdom, give a true and fair
view of the assets, liabilities, financial position and profit or loss of the
Company; and
(b) the Chairman's Statement and Investment Policy include a fair review of
the development and performance of the business and the position of the
Company, together with a description of the principal risks and uncertainties
that it faces.
Investment Policy
The VCT's policy is to invest primarily in a diverse portfolio of
UK established, profitable, unquoted companies to generate capital gains from
trade sales and flotations.
Investments are structured as part loan and part equity in order to
receive regular income and to provide downside protection in the event of
under-performance.
Investments are made selectively across a number of sectors,
primarily in management buyout transactions (MBOs) i.e. to support incumbent
management teams in acquiring the business they manage but do not own.
Investments are primarily made in companies that are established and
profitable.
Uninvested funds are held in cash and low risk money market funds.
UK Companies
The companies in which investments are made must have no more than
£15 million 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 VCT continues
to qualify and is approved as a VCT by HMRC. Amongst other conditions, the VCT
may not invest more than 15% of its investments in a single company and must
achieve at least 70% by value of its investments throughout the period in
shares or securities in qualifying holdings, of which a minimum overall of 30%
by value must be ordinary shares which carry no preferential rights. In
addition, although the VCT 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 qualifying company in ordinary shares which carry no
preferential rights.
Asset mix
The Investment Manager aims to hold approximately 80% by value of
the VCT's investments in qualifying holdings. The balance of the portfolio is
held in readily realisable interest bearing investments and deposits.
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 using a significant
proportion of loan stock (up to 70% of the total investment in each VCT
qualifying company). 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
VCT's investments, based on cost, at the time of investment. Ongoing
monitoring of each investment is carried out by the Manager generally through
taking a seat on the Board of each VCT qualifying company.
Co-investment
The VCT aims to invest alongside four other Income and Growth VCTs
advised by the Manager with a similar investment policy. This enables the VCT
to participate in combined investments by the Investment Manager of up to £5
million.
Borrowing
The VCT has no borrowing and does not have any current plans for
future borrowings.
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. Matrix Securities
provides Company Secretarial and Accountancy services to the VCT.
Principal risks, management and regulatory environment
The Board believes that the principal risks faced by the VCT are:
- Economic risk - events such as an economic recession and movement
in interest rates could affect trading conditions for smaller companies and
consequently the value of the VCT's qualifying investments.
- Loss of approval as a Venture Capital Trust - the VCT must comply
with Section 274 of the Income Tax Act 2007 which allows it to be exempted
from capital gains tax on investment gains. Any breach of these rules may lead
to the VCT losing its approval as a VCT, qualifying shareholders who have not
held their shares for the designated holding period having to repay the income
tax relief they obtained and future dividends paid by the VCT becoming subject
to tax. The VCT would also lose its exemption from corporation tax on capital
gains.
- Investment and strategic - inappropriate strategy or consistently
weak VCT qualifying investment recommendations might lead to under performance
and poor returns to shareholders. Investment in unquoted small companies by
its nature involves a higher degree of risk than investment in companies
traded on the London Stock Exchange main market. Smaller companies often have
limited product lines, markets or financial resources and may be dependent for
their management on a smaller number of key individuals. This may make them
more risk-prone and volatile investments.
- Regulatory - the VCT is required to comply with the Companies
Acts, the rules of the UK Listing Authority and United Kingdom Accounting
Standards. Breach of any of these might lead to suspension of the VCT's Stock
Exchange listing, financial penalties or a qualified audit report.
- Financial and operating risk- inadequate controls might lead to
misappropriation of assets. Inappropriate accounting policies might lead to
misreporting or breaches of regulations. Failure of the Manager's and
Administrator's accounting systems or disruption to its business might lead to
an inability to provide accurate reporting and monitoring.
- Market risk - movements in the valuations of the VCT's
investments will, inter alia, be connected to movements in UK Stock Market
indices.
- Asset liquidity risk - The VCT's investments may be difficult to
realise.
- Market liquidity risk - Shareholders may find it difficult to
sell their shares at a price which is close to the net asset value.
The Board seeks to mitigate the internal risks by setting policy
and by undertaking a key risk management review at each quarterly Board
meeting. Performance is regularly reviewed and assurances in respect of
adequate internal controls and key risks are sought and received from the
Manager and Administrator on a six monthly basis. In the mitigation and
management of these risks, the Board applies rigorously the principles
detailed in the AIC Code of Corporate Governance. The Board also has a Share
Buy Back policy to try to mitigate the Market Liquidity risk. This policy is
reviewed at each quarterly Board Meeting.
Investment Portfolio Summary
as at 30 April 2008
% of net
assets by
Ordinary Share Fund value
Date of Total
first Book cost Valuation
investment
£ £
Qualifying investments
AIM quoted investments
August 150,000 107,143 0.9%
SectorGuard plc 2005
Provision of manned guarding, mobile
patrolling, and alarm response services
Vphase plc (formerly Flightstore Group plc) March 2001 254,586 9,504 0.1%
Development of energy saving devices for
domestic use
404,586 116,647 1.0%
Unquoted investments
October 1,000,052 1,670,564 15.0%
Youngman Group Limited 2005
Manufacturer of ladders and access towers
Blaze Signs Holdings Limited April 2006 791,608 1,136,072 10.2%
Sign writer
British International Holdings Limited June 2006 832,827 904,172 8.1%
Supplier of helicopter services
PastaKing Holdings Limited June 2006 274,624 829,135 7.4%
Supplier to the educational and food
service market
VSI Limited April 2006 231,020 656,004 5.9%
Developer and marketer of 3D software
DiGiCo Europe Limited July 2007 588,886 588,886 5.3%
Design and manufacture of audio mixing
desks
January 975,000 490,131 4.4%
Campden Media Limited 2006
Magazine publisher and conference organiser
PXP Holdings Limited (Pinewood Structures) December 588,886 481,971 4.3%
2006
Designer, manufacturer and supplier of
timber frames for housing
Vectair Holdings Limited January 243,784 374,418 3.4%
2006
A provider of air care and sanitary
washroom products
The Plastic Surgeon Holdings Limited April 2008 230,986 230,986 2.1%
Snagging and finishing of domestic and
commercial properties
Racoon International Holdings Limited December 517,350 57,644 0.5%
2006
Supplier of hair extensions, hair care
products and training
Award International Holdings plc March 2004 250,000 - 0.0%
Sales promotion activities
August 1,000,000 0.0%
Recite Limited 2003 -
Sales support software
7,525,023 7,419,983 66.6%
Total qualifying investments 7,929,609 7,536,630 67.6% 1
Non-qualifying investments
Money market funds 2 3,373,809 3,373,809 30.3%
Cash 54,863 54,863 0.5%
SectorGuard plc 106 62 0.0%
Total non-qualifying investments 3,428,778 3,428,734 30.8%
Debtors 289,975 289,975 2.6%
Creditors (119,809) (119,809) (1.0%)
Net assets 11,528,553 11,135,530 100.0%
1 At 30 April 2008, the Company (comprising both share classes)
held more than 70% of its total investments in qualifying holdings, and
therefore complied with the VCT Investment test. For the purposes of the VCT
Investment tests, the Company is permitted to disregard disposals of
investments for 6 months from the date of disposal.
2 Disclosed within Non-current assets as Monies held pending
Investment in the Balance Sheet
Investment Portfolio Summary
as at 30 April 2008
C Share Fund
Total
Date of Book cost Valuation % of net
assets by
value
first £ £
investment
Qualifying investments
Unquoted investments
Monsal Holdings Limited December 769,000 769,000 8.5%
2007
Engineering services to water and
waste sectors
Blaze Signs Holdings Limited April 2006 606,890 666,686 7.4%
Sign writer
Focus Pharma Holdings Limited October 2007 660,238 660,238 7.4%
Licensing and distribution of generic
pharmaceuticals
PastaKing Holdings Limited June 2006 191,720 578,836 6.4%
Supplier to the educational and food
service market
DiGiCo Europe Limited July 2007 411,114 411,114 4.6%
Design and manufacture of audio
mixing desks
PXP Holdings Limited (Pinewood December 411,114 336,474 3.8%
Structures) 2006
Designer, manufacturer and supplier
of timber frames for housing
VSI Limited April 2006 77,623 220,419 2.4%
Developer and marketer of 3D software
British International Holdings June 2006 167,173 181,524 2.0%
Limited
Supplier of helicopter services
The Plastic Surgeon Holdings Limited April 2008 161,278 161,278 1.8%
Snagging and finishing of domestic
and commercial properties
Racoon International Holdings Limited December 361,177 40,242 0.4%
2006
Supplier of hair extensions, hair
care products and training
3,817,327 4,025,811 44.7%
Total qualifying investments 3,817,327 4,025,811 44.7% 1
Non-qualifying investments
Money market funds 2 4,984,365 4,984,365 55.3%
Cash 34,891 34,891 0.4%
Total non-qualifying investments 5,019,256 5,019,256 55.7%
Debtors 62,354 62,354 0.7%
Creditors (100,060) (100,060) (1.1%)
Net assets 8,798,877 9,007,361 100.0%
1 At 30 April 2008, the Company (comprising both share classes)
held more than 70% of its total investments in qualifying holdings, and
therefore complied with the VCT Investment test. For the purposes of the VCT
Investment tests, the Company is permitted to disregard disposals of
investments for the 6 months from the date of disposal.
2 Disclosed within Non-current assets as Monies held pending
Investment in the Balance Sheet
The other Funds managed by MPEP include Matrix Income & Growth VCT
plc (MIG VCT), Matrix Income & Growth 3 VCT plc (MIG3), Matrix Income & Growth
4 VCT plc (MIG4) and The Income and Growth VCT plc (I&G). All of these Funds
have co-invested alongside the Company in Blaze Signs Holdings Limited,
British International Holdings Limited, Campden Media Limited, PastaKing
Holdings Limited, PXP Holdings Limited, Racoon International Holdings Limited,
VSI Limited, DiGiCo Europe Limited, Monsal Holdings Limited, Focus Pharma
Holdings Limited and Plastic Surgeon Holdings Limited. All of these Funds with
the exception of MIG3 have also co-invested alongside the Company in Campden
Media Limited, SectorGuard plc, Vectair Holdings Limited and Youngman Group
Limited.
Non-Statutory analysis between the Ordinary Share and C Share Funds
Profit and Loss Accounts
for the year ended 30 April 2008
Ordinary Share Fund C Share Fund
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Unrealised (losses)/gains on
investments held at fair value - (1,388,204) (1,388,204) - 76,422 76,422
Realised gains on
investments held at fair value - 688,893 688,893 - 64,374 64,374
Income 536,833 - 536,833 490,190 - 490,190
Investment management fees (73,410) (220,231) (293,641) (51,700) (155,098) (206,798)
Other expenses (204,418) - (204,418) (137,853) - (137,853)
Return on ordinary
activities before taxation 259,005 (919,542) (660,537) 300,637 (14,302) 286,335
Tax on ordinary activities (44,111) 70,918 26,807 (57,955) 31,148 (26,807)
Return attributable to
equity shareholders 214,894 (848,624) (633,730) 242,682 16,846 259,528
Return per share 1.82 p (7.20)p (5.38)p 2.65 p 0.19 p 2.84 p
Average number of shares in issue 11,789,161 9,145,990
Balance Sheets
as at 30 April 2008
Adjustments
C Share Fund Total
Ordinary Share Fund (see note below)
£ £ £ £
Non-current assets
Assets held at fair value
through profit and loss - investments 7,536,692 4,025,811 11,562,503
Monies held pending investment 3,373,809 4,984,365 8,358,174
10,910,501 9,010,176 19,920,677
Current assets
Debtors and prepayments 289,975 62,354 (74,403) 277,926
Cash at bank 54,863 34,891 89,754
344,838 97,245 (74,403) 367,680
Creditors: amounts
falling due within one year (119,809) (100,060) 74,403 (145,466)
Net current assets/(liabilities) 225,029 (2,815) 222,214
Net assets 11,135,530 9,007,361 20,142,891
Capital
Called up share capital 114,910 91,460 206,370
Capital redemption reserve 16,896 - 16,896
Capital reserve - unrealised 856,977 208,484 1,065,461
Special distributable reserve 2,596,431 8,285,217 10,881,648
Profit and loss account 7,550,316 422,200 7,972,516
Equity shareholders' funds 11,135,530 9,007,361 20,142,891
Number of shares in issue: 11,491,008 9,145,990
Net asset value per 1p share: 96.91p 98.48p
Note: the adjustment above nets off the inter-fund debtor and creditor
balances, so that the "Total of Both Funds" balance sheet agrees to the
Statutory Balance Sheet below.
Reconciliation of Movements in Shareholders' Funds
for the year ended 30 April 2008
Ordinary Share Fund C Share Fund
£ £
Opening shareholders' funds 12,912,394 8,885,025
Net share capital bought back in the year (420,667) -
(Loss)/profit for the year (633,730) 259,528
Dividends paid in year (722,467) (137,192)
Closing shareholders' funds 11,135,530 9,007,361
Statutory Information
Profit and Loss Account
For the year ended 30 April 2008
Year ended 30 April 2008 Year ended 30 April 2007
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Unrealised (losses)/gains
on investments held at fair value - (1,311,782) (1,311,782) - 2,712,523 2,712,523
Realised gains/(losses) on investments
held at fair value - 753,267 753,267 - (205,547) (205,547)
Income 1,027,023 - 1,027,023 906,689 - 906,689
Investment management fees (125,110) (375,329) (500,439) (119,557) (358,668) (478,225)
Other expenses (342,271) - (342,271) (298,265) - (298,265)
Profit/(loss) on ordinary activities
before taxation 559,642 (933,844) (374,202) 488,867 2,148,308 2,637,175
Taxation on ordinary activities (102,066) 102,066 - (88,351) 88,351 -
Profit/(loss) on ordinary activities
after taxation 457,576 (831,778) (374,202) 400,516 2,236,659 2,637,175
Basic and Diluted earnings per share:
Ordinary Shares 1.82p (7.20)p (5.38)p 1.54p 17.66p 19.20p
C Shares 2.65p 0.19p 2.84p 2.30p 0.53p 2.83p
All the items in the above statement derive from continuing operations. No
operations were discontinued in the year. There were no other gains or losses
in the year.
The total column of this statement is the profit and loss account of the
Company.
Note of Historical Cost Profits and Losses
For the year ended 30 April 2008
Year ended 30 April 2008 Year ended 30 April 2007
£ £
(Loss)/profit on ordinary
activities before taxation (374,202) 2,637,175
Add/(less) unrealised
losses/(gains) on investments 1,311,782 (2,712,523)
Less realisation of revaluation
losses of previous years (1,359,061) (1,596,829)
Historical cost loss on
ordinary activities before taxation (421,481) (1,672,177)
Historical cost loss for the year
after taxation and dividends (1,281,140) (1,672,177)
Balance Sheet
As at 30 April 2008
30 April 2008 30 April 2007
£ £
Non-current assets
Assets held at fair value through profit and loss - investments 11,562,503 11,529,046
Monies held pending investment 8,358,174 10,289,021
19,920,677 21,818,067
Current assets
Debtors and prepayments 277,926 147,304
Cash at bank 89,754 327,479
367,680 474,783
Creditors: amounts falling due within one year (145,466) (495,431)
Net current assets/(liabilities) 222,214 (20,648)
Net assets 20,142,891 21,797,419
Capital and reserves
Called up share capital 206,370 211,871
Capital redemption reserve 16,896 11,395
Revaluation reserve - unrealised 1,065,461 3,268,178
Special distributable reserve 10,881,648 14,089,778
Profit and loss account 7,972,516 4,216,197
Equity shareholders' funds 20,142,891 21,797,419
Net asset value per share
Ordinary Shares 96.91p 107.24p
C Shares 98.48p 97.15p
Cash flow Statement
For the year ended 30 April 2008
Year ended Year ended
30 April 2008 30 April 2007
£ £
Net cash inflow from operating activities 15,964 100,740
Capital expenditure and financial investment
Purchase of investments - equities and loan stock (3,821,514) (3,546,925)
Disposals of equities and loan stock 3,131,438 2,016,346
Net cash outflow from investing activities (690,076) (1,530,579)
Dividends
Equity dividends paid (859,659) -
Net cash outflow before financing and liquid (1,533,771) (1,429,839)
resource management
Financing
Purchase of own shares (634,801) (167,592)
Net cash outflow from financing (634,801) (167,592)
Management of liquid resources
Movement in money market investments 1,930,847 (537,585)
Net cash outflow as at 30 April 2008 (237,725) (2,135,016)
Notes:
1. Reconciliation of loss before taxation to net cash inflow from operating
activities
2008 2007
£ £
Loss before taxation (374,202) 2,637,175
Unrealised losses/(gains) for the year 1,311,782 (2,712,523)
Realised (gains)/losses (753,267) 205,547
Transaction costs (14,996) (609)
Decrease/(Increase) in debtors 22,571 (58,361)
(Decrease)/increase in creditors and accruals (175,924) 29,511
Net cash inflow from operating activities 15,964 100,740
2. Analysis of changes in net funds
Cash Liquid resources Total
£ £ £
At 30 April 2007 327,479 10,289,021 10,616,500
Cash flows (237,725) (1,930,847) (2,168,572)
At 30 April 2008 89,754 8,358,174 8,447,928
3. Related party transactions
Kenneth Vere Nicoll is a director and shareholder of Matrix Group
Limited, which owns Matrix-Securities Limited, MPE Partners Limited and has a
51% interest in Prime Rate Capital Management LLP.
MPE Partners Limited has a 50% interest in Matrix Private Equity
Partners LLP, the Company's Investment Manager. He is also a director of
Matrix-Securities Limited who provided accountancy and company secretarial
services to the Company for which it received payment of £93,493 (2007:
£89,551) including VAT during the year. £nil (2007: £22,202) was payable to
Matrix Securities Limited at the year-end. Matrix Private Equity Partners LLP
is the Company's Investment Manager in respect of venture capital investments
and earned fees of £512,111 (2007: £478,225), including VAT for the year.
£11,672nil (2007: £nil) was due from Matrix Private Equity Partners LLP at the
year-end, in respect of the expense cap for the year. The Company has invested
£1 million in a liquidity fund managed by Prime Rate Capital Management LLP,
and earned income of £4,628 from this fund in the year.
4. Segmental analysis
The operations of the company are wholly in the United Kingdom, and, in the
opinion of the Directors, from one class of activity namely the making of
investments in unquoted or AIM-quoted companies in the UK.
5. The accounts have been prepared under UK Generally Accepted
Accounting Practice (UK GAAP) and, to the extent that it does not conflict
with the Companies Act 1985, the 2003 Statement of Recommended Practice,
`Financial Statements of Investment Trust Companies' (SORP), revised December
2005.
As a result of the Directors' decision to distribute capital
profits by way of a dividend, the Company revoked its investment company
status as defined under section 266 (3) of the Companies Act 1985, on 7
September 2005.
6. The net asset value per Ordinary Share is based on net assets at
the end of the year, and on 11,491,008 Ordinary Shares (2007: 12,041,147),
being the number of Ordinary Shares in issue on that date.
The net asset value per C Share is based on net assets at the end
of the year, and on 9,145,990 C Shares (2007: 9,145,990), being the number of
C Shares in issue on that date.
7. The revenue return per Ordinary Share is based on the return
attributable to equity Shareholders of £214,894 and is based on 11,789,161
Ordinary Shares, being the weighted average number of Ordinary Shares in issue
during the period.
The revenue return per C Share is based on the return attributable
to equity Shareholders of £242,682 and is based on 9,145,990 C shares, being
the weighted average number of C Shares in issue during the period.
8. 75% of the fees payable to the Investment Manager are charged against
realised capital reserve. This is in line with the Board's intended long-term
split of returns from the investment portfolio of the Company.
9. The financial information set out in these statements does not constitute
the Company's statutory accounts, in terms of section 240 of the Companies Act
1985, for the year ended 30 April 2008 but is derived from those accounts.
Statutory accounts will be delivered to the Registrar of Companies after the
Annual General Meeting. The auditors have reported on those accounts: their
report was unqualified and did not contain a statement under Section 237 (2)
or (3) of the Companies Act 1985. The accounting policies set out in the most
recently published set of accounts have been followed.
10. The Annual Report will shortly be made available on our website:
www.mig2vct.co.uk and will be circulated by post to all Shareholders. Copies
will be available thereafter to members of the public from the Company's
registered office.
11. The Annual General Meeting of the Company will be held at 4.00
pm on 10 September 2008 at One Vine Street, London W1J 0AH. The Annual General
Meeting will be followed by separate class meetings of the holders of Ordinary
Shares and C Shares.