Final Results
Matrix Income & Growth 4 VCT plc
Annual Results for the year ended 31 January 2009
Strategy
Matrix Income & Growth 4 VCT plc ("MIG4") is a tax efficient company listed on
the London Stock Exchange. It invests primarily in established and profitable
unquoted companies.
Investment Objective
The VCT's objective is to provide investors with a regular income stream by way
of tax free dividends and to generate capital growth through portfolio
realisations which can be distributed by way of additional tax free dividends.
Dividend Policy
The VCT seeks to pay income dividends half-yearly. Subject to fulfilling
certain regulatory requirements, the VCT also seeks to pay capital dividends at
the year-end following portfolio realisations.
Financial Highlights
* Increase of 15.7% in year in cumulative dividends (paid and proposed)
* Within this, dividends paid and proposed in respect of 2009 have remained
constant compared to the previous year
* Increase of 12.6% in shareholder total return (share price basis) in period
since MPEP took over sole management of the Fund from 1 August 2006
* Decrease of 3.4% in total shareholder return (net asset value basis) in
period since MPEP took over sole management of the Fund from 1 August 2006
Dividends paid
Year ended Dividends per share paid and Cumulative dividends per share
proposed in respect of each
year paid since launch
(p) (p) per share
31 January 2009 2.00 * 14.70 *
31 January 2008 2.00 12.70
31 January 2007 1.80 10.70
31 January 2006 0.50 8.90
31 January 2005 0.20 8.40
Dividends paid include distributions from both income and capital.
* Dividends proposed
A final proposed dividend of 1 penny per share will be recommended to
Shareholders at the AGM of the Company to be held on 21 May 2009 to be paid on
10 June 2009 and has been included in the above figures.
Performance Summary
Year ended Net Net asset NAV total return Share Share price total
assets value per per share to price 1 return per share
share shareholders to shareholders
(£ since launch (p) (p) since launch (p)
million) (p)
31 January 2009 21.0 104.6 118.3 92.0 105.7
31 January 2008 24.1 117.4 128.9 109.0 120.5
31 January 2007 9.8 116.3 125.2 91.0 101.7
31 January 2006 9.3 106.6 115.0 85.0 93.9
31 January 2005 10.1 110.3 118.5 85.0 93.4
1 Source: London Stock Exchange
The share price and net asset value (NAV) total return comprise the share price
and NAV respectively per share assuming the dividends paid were re-invested on
the date on which the shares were quoted ex-dividend in respect of each
dividend.
Figures for the years ended 31 January 2005, 2006 and 2007 have been restated
to take account of the restructuring of the share capital that took place on 18
October 2006.
Chairman's Statement
I am pleased to present to Shareholders the Annual Results of the Company for
the year ended 31 January 2009.
Performance
As at 31 January 2009, the Net Asset Value (NAV) per share (including current
year income) was 104.6 pence (2008: 117.4 pence). Adjusted for the dividends
totalling 2.25 pence paid to shareholders in the year, this represents a
decrease of 9.0% over the period. The NAV total return per share fell in the
year by 8.2% from 128.9 pence at 31 January 2008 to 118.3 pence at 31 January
2009.
In the light of the current economic uncertainty and turmoil in financial
markets during the last twelve months, possibly the worst in the last fifty
years, this has definitely not been an easy period for investment companies.
This is clearly evidenced by the relevant stock market indices shown below, all
of which fell significantly. In marked contrast, the outcome for the year, at a
time when the Company's net assets per share have fallen only slightly, is
encouraging given the difficult economic climate.
This encouraging outcome is supported by the fact that some 70% of our investee
companies by value enjoyed profit growth in excess of 5% over the previous year
(based on the latest annual accounts of each investee company). May I temper
this, however, by sounding a note of caution as a number of our investee
companies, late in this financial period, have now started to notice the effect
of the recession.
The stock market
During the same twelve-month period referred to above the total return of the
FTSE All-Share Index fell by 27.8%, the FTSE Small Cap Index by 40.9% and the
FTSE AiM All-Share Index by 57.6%.
It is helpful to observe the impact of the changes in the FTSE Sector Price
Earnings Ratios over the past financial year in those sectors in which the
Company is invested. Under the International Private Equity and Venture Capital
Valuation (IPEVCV) guidelines, the Company is required to value its unquoted
investments using, where appropriate, the most comparable sector multiple. As
can be seen from the table shown below, even if an investment is trading
equally as profitably as a year ago, it is likely that the investment will be
reduced in value because of the generally significantly lower comparable price
earning ratios.
One Year Change 31 January 2009 31 January 2008 % +/-
Construction and materials 7.54 12.29 -39
Food producers 11.18 12.21 -8
Media 9.97 16.16 -38
Personal goods 12.43 24.22 -49
Pharmaceuticals and 15.19 13.59 12
biotechnology
Software and computer services 14.08 24.79 -43
Support services 10.81 15.69 -31
Technology, hardware and 11.60 24.63 -53
equipment
Economic background
All UK investment portfolios have been and are being affected by the much
harsher economic conditions which now exist. These are predicted to continue
for the remainder of this calendar year. If the problems in the global
financial community are not resolved and if confidence is not restored in our
financial system quickly, the recession is likely to be very severe indeed.
Today's economic and financial problems can be attributed to excessive lending
by most banks and to the Government's imprudent growth in public spending and
by its insatiable borrowing, both on and off balance sheet, over more than a
decade. I cover our views below on the outlook for the economy and the
Company's portfolio.
Inevitably this general climate has affected sentiment across all sectors of
the economy. There are two important aspects of this which are related to the
Company's business: whilst divestments have proved to be difficult to achieve
over the past year, we do nevertheless expect acquisition prices to become more
attractive. No exits have been achieved in the current financial year, but
nevertheless the Board and the Investment Manager remain confident about the
trading performances of most of our investments.
The portfolio
When considered by stage of development, the portfolio continues to be
dominated by investments in management buy-out situations ("MBOs"), which has
risen to 84.7% with 14.7% invested in development capital companies and the
remaining 0.6% of the portfolio being invested in early stage investments. The
portfolio is now invested in a wide range of market sectors with the largest of
those being support services at 24.2%. Media at 20.9% is the next largest
investment sector. This spread of investments reflects the current investment
strategy of spreading risks whilst trying to maintain a steady, if not
increasing, dividend yield.
Within the portfolio, a partial loan stock repayment of £71,819 was made by VSI
Holdings Limited in April 2008, but regrettably no realisations were achieved
during the period.
A new investment of £458,837 was made in April 2008 in The Plastic Surgeon
Holdings Limited to support the MBO of Plastic Surgeon Fine Finishers, which is
engaged in the snagging and finishing of domestic and commercial properties. In
October 2008, a new investment was also made into ATG Media Holdings Limited of
£1 million to support the MBO of Metropress, publishers of the Antiques Trade
Gazette. A further loan stock investment of £95,461 was made in November 2008
into PXP Holdings Limited and a further loan stock investment of £70,475 was
made into Monsal Holdings Limited in January 2009. Inca Interiors Limited went
into administration on 2 June 2008 and FH Ingredients was dissolved on 9
December 2008.
Cash available for investment
Cash and liquidity fund balances as at 31 January 2009 amounted to some £13.1
million. During this economic turmoil, the Board has worked hard to ensure that
our cash deposits have remained as secure as possible. We have for some time
been spreading our significant cash deposits with a number of the leading
global cash funds rather than depositing directly with individual banks,
thereby reducing our exposure to any one particular bank.
Revenue account
The revenue account rose by £56,042 due to three main factors. First, total
income rose by £28,922, being the net increase across the three main categories
of income. There has been a further rise in loan stock interest of £49,193, as
these loan stock investments yielded additional such income. Against this,
income from liquidity funds fell by £20,483, due mainly to the sharp fall in
interest rates over the final four months of the year, a trend which is
continuing in the current year.
Secondly, revenue return was boosted by £13,500 of VAT recoverable as a result
of the recent HM Revenue & Customs ("HMRC") ruling that means some of the past
VAT on management fees can be recovered.
Finally, fund management fees charged to the revenue return have fallen by £
31,843 as net assets have fallen and because the Investment Manager bears the
expense cap that applies once running costs exceed 3.4% of closing net assets.
Other costs have remained broadly constant.
Although there is no tax suffered overall by the Company, the higher revenue
income increased the notional tax charge allocated to revenue by £24,066.
Dividend
The Company's revenue return per Ordinary Share was 2.35 pence (2008: 2.21
pence). Your Board will be recommending a final income dividend of 1 penny per
Ordinary Share in respect of the year under review at the Annual General
Meeting to be held on 21 May 2009. The dividend will be paid on 10 June 2009 to
Shareholders on the Register on 15 May 2009.
In the light of present interest rate levels, dividends arising from revenue
are likely to be severely limited in the forthcoming year.
Valuation Policy
As quoted stocks are valued at bid prices, rather than mid-market prices, it is
worth commenting that the Fund does hold a small number of relatively early
stage AiM-quoted stocks with limited marketability. In such cases, the price at
which a sizeable block of shares could be traded, if at all, may vary
significantly from the market price used.
VAT
Shareholders may be aware of recent HMRC announcements that could permit VCTs
to recover VAT previously charged on fund management fees for at least the past
three years. These accounts have recognised VAT recoverable of £85,459, based
upon available information supplied by the Company's current and past
Investment Managers, including £31,459 which has been set off against the
current year's management expense. This figure contains a degree of estimation
and it is possible that additional amounts of such VAT will be recoverable in
due course although the Directors are unable at this stage to quantify such
further amounts. £54,000 of this amount has been disclosed as a separate item
of income in the Profit and Loss Account.
Appointment of corporate broker
On 13 October 2008, the London Stock Exchange announced that Landsbanki
Securities (UK) Limited (Landsbanki) would no longer be able to act as a market
maker. Landsbanki was therefore unable to quote prices or make a market in the
Company's shares. The Directors understand that this action by the London Stock
Exchange related to the Administration of Landsbanki's parent company,
Landsbanki Islands hf, and resultant regulatory actions arising therefrom. I
apologise for the inconvenience this may have caused to any shareholders.
The Board is pleased, therefore to have been able to announce the appointment
of Matrix Corporate Capital LLP (MCC) as corporate broker to the Company on 3
December 2008. The team at MCC includes the core Investment Funds team who were
formerly at Landsbanki.
Share buy-backs
During the year ended 31 January 2009 the Company continued to implement its
buy-back policy and bought back 391,399 Ordinary Shares, representing 1.91% of
the shares in issue at 1 February 2008 at a total cost of £376,481 (excluding
expenses). These shares were subsequently cancelled by the Company.
MIG 4 Website
May I remind you that the Company continues to have its own website which is
available at www.mig4vct.co.uk.
unquote" British Private Equity 2008 Awards
I am delighted to inform you that our Investment Manager, Matrix Private Equity
Partners, won the award for "VCT Manager of the Year" at the recent unquote"
British Private Equity Awards 2008. May I congratulate the team on this well
earned reward and for their hard work on behalf of the Company throughout the
year.
Outlook
It is highly probable that the current tougher economic conditions could endure
for some time. Relatively small, early stage growth businesses will inevitably
be tested in such an environment. However, many of our portfolio companies,
which are in later stages of development, are continuing to trade positively
and, in some cases, above the levels seen more than a year ago.
The Company has significant cash resources and this is crucially important at a
time when many commercial banks have been announcing losses and are pursuing
more cautious lending policies. Furthermore, it places the Company in an
excellent position to take advantage of what are expected to be increasingly
attractive purchase opportunities which are expected to become available later
in the year. We have already recently seen one example where economic
conditions enabled a renegotiation of the terms of investment.
Therefore, while short term valuations are likely to be subject to continuing
pressure your Board looks to the mid-term future with more confidence.
Once again, I would like to take this opportunity to thank Shareholders for
their continued support.
Colin Hook
Chairman
Responsibility Statement of the Directors in respect of the Annual Financial
Report
The Directors confirm that to the best of their knowledge:
a. The financial statements, which have been prepared in accordance with UK
Generally Accepted Accounting Practice (UK GAAP) and the Statement of
Recommended Practice, `Financial Statements of Investment Trust Companies'
issued by the Association of Investment Companies in 2003 and revised in
2005, give a true and fair view of the assets, liabilities, financial
position and loss of the Company; and
b. The management report, comprising the Chairman's Statement, Investment
Policy, Statement of Principal Risks, Management and Regulatory
Environment, Investment Portfolio Summary and the Investment Managers'
Review, includes a fair review of the development and performance of the
business and the position of the Company, together with a description of
the principal risks and uncertainties that they face.
On behalf of the Board
Colin Hook
Chairman
Principal Risks, Management and Regulatory Environment
The Board believes that the principal risks faced by the Company 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 Company's qualifying investments.
* Loss of approval as a Venture Capital Trust - the Company must comply with
section 274 of the Income Tax Act 2007 ("ITA") which allows it to be
exempted from capital gains tax on investment gains. Any breach of these
rules may lead to the Company losing its approval as a Venture Capital
Trust (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 Company becoming subject to tax.
The Company 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 underperformance and
poor returns to shareholders.
* Regulatory - the Company is required to comply with the Companies Acts 1985
and 2006 ("the Companies Acts"), the listing rules of the UK Listing
Authority and United Kingdom Accounting Standards. Breach of any of these
might lead to suspension of the Company's Stock Exchange listing, financial
penalties or a qualified audit report.
* Financial and operating risk - inadequate controls that might lead to
misappropriation of assets. Inappropriate accounting policies might lead to
misreporting or breaches of regulations. Failure of the Investment
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 - Investment in unquoted companies, by its nature, involves a
higher degree of risk than investment in companies traded on the London
Stock Exchange main market. In particular, 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.
* Asset liquidity risk - The Company's investments may be difficult to
realise, especially in the current economic climate.
* Market liquidity risk - Shareholders may find it difficult to sell their
shares at a price which is close to the net asset value.
* Counterparty risk - A counterparty may fail to discharge an obligation or
commitment that it has entered into with the Company.
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 Investment
Manager and Administrator on a six monthly basis. In mitigation and the
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 which seeks to mitigate the Market Liquidity risk. This policy is
reviewed at each quarterly Board Meeting.
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 buyout 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 1 August 2006, when it was a multi-manager VCT. This includes
investments in early stage and technology companies.
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
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 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 ordinary shares which carry no preferential rights. 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.
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 80% 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 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 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 four 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 Company has no current plans to undertake any borrowing.
Management
The Board has overall responsibility for the Company's affairs including the
determination of its investment policy. Investment and divestment proposals are
originated, negotiated and recommended by the Investment Manager and are then
subject to formal approval by the Board of Directors. Matrix-Securities Limited
provides Company Secretarial and Accountancy services to the Company.
Investment Manager's Review
The opportunity to sell businesses at attractive prices peaked early on in the
Company's financial year driven by changes to the rules on capital gains tax
for owner managers. Thereafter, the market stalled and it has not been
generally possible to secure attractive realisations.
Over the year, deferred consideration was received from one previous investment
and one partial divestment was made. In August, Munro Global, which acquired
Maven Management in 2007, repaid £29k of a conditional loan stock after Maven
successfully achieved a revenue target during the year. A further and final
payment may be made during the current year. In April, an early repayment of
loan stock was received from VSI. Proceeds of £71,819 produced a profit from
the loan premium of £6,530 on the Company's investment cost of £65,289
During 2008, the Company has pursued a highly cautious approach to new
investment. This was based on our view that vendors' price expectations would
prove unsustainable. We also avoided transactions requiring high levels of bank
borrowing, believing that economic conditions were deteriorating and that this
would make over-leveraged companies much too vulnerable in a tougher
environment.
Just two new investments were completed during the year; the first was in
April, when £458,837 was invested in the MBO of Plastic Surgeon for loan stock
and a 6.9% equity holding. The company offers snagging and finishing services
to domestic and commercial properties and is based in Bovey Tracey, Devon.
The second was in ATG Media in early October. ATG Media acquired the publisher
of the leading weekly newspaper serving the UK antiques trade, the Antiques
Trade Gazette, via a MBO. This London-based business also offers an on-line
auction capability. The Company now holds a £1,000,000 investment in ATG Media
by way of loan stock and 8.9% of the equity.
The investment portfolio has not been immune to the wider deteriorating trading
environment and appropriate provisions have been applied against those
investments that have had to be reduced in response to falls in the value of
comparable quoted companies. Some valuations have also been reduced where the
investee company's trading has been affected. However, other investments have
continued to perform well. Of a total of twenty-one investments in the MPEP
portfolio, one is currently held at cost, thirteen valued at below cost and
seven above cost.
The Company's investments in PXP, Youngman Group and Plastic Surgeon each have
exposure to the house building and construction markets and all have suffered
from the rapid decline of this sector during the year. Youngman has seen a
sharp fall in revenues from its trade customers in particular although it has
remained profitable and expects to continue to do so. PXP carried forward a
strong order book into the year but the outlook for next year is more
uncertain. In anticipation of this, the Company invested a further £95,461 as
part of a £1 million funding round to provide capital to support PXP in what is
expected to remain a difficult market.
Plastic Surgeon has made strong progress in reducing its dependence on the new
housing market and into commercial property markets and has substantially
reduced its direct and indirect cost base. Nevertheless, in view of the
continuing difficult conditions in this sector we have deemed it appropriate to
apply a 50% impairment provision against the Company's investment. Blaze Signs,
having had a record year in 2007-8, is seeing the effects of a number of major
retail clients deferring work.
Monsal too, has suffered from delays in new contract awards and a resultant
deferral of construction work on both water and waste contracts; accordingly an
impairment provision of 25% has been made. However, Monsal enters 2009 with an
encouraging level of contracted revenue and in January shareholders advanced a
further £500k, including £70,476 from the Company, to provide additional
working capital.
Campden has also suffered from the uncertainties of the financial services
clients of its growing US conference business which has led to a disappointing
year. Racoon continued to struggle to grow revenues although it remains
profitable. British International's helicopter service to the Scilly Isles from
Penzance experienced possibly the worst summer weather in two decades which
decimated the day trip market, but it has benefited from the solidity of its
long-term military contract revenue.
Nevertheless, there have continued to be portfolio highlights. DiGiCo Europe
has enjoyed a strong first year post-investment following the successful launch
of its new digital audio mixing desk. PastaKing has posted its highest ever
profits of £2.7 million for the year ended 30 June 2008, a year-on-year
increase greater than 20%, despite increasing pressure on ingredient prices.
Focus Pharma has also had a good first year since its MBO.
Vectair had an outstanding year, producing record profits and making inroads
into potentially significant markets in India and the US. VSI is strongly
profitable and cash-generative and is benefiting from the relative weakness of
sterling as well as seeing increased customer demand for its software. ATG
Media is performing in line with expectations, whilst SectorGuard has now been
substantially re-organised following the acquisition of Manguard, a manned
guarding business, in early 2008. SectorGuard's share price has recovered
somewhat towards the year-end.
BG Consulting Group saw its profits fall in 2008 as a result of the
difficulties experienced by its investment banking clients but continues to be
profitable. Disappointingly, Inca Interiors went into administration in June,
having failed to stem its losses over the past two years; no proceeds are
expected to accrue to the Fund, The investment had been fully provided against.
Letraset continues to struggle to halt its gradual revenue decline of marker
pen sales. FH Ingredients was dissolved in December 2008.
Higher Nature has also suffered from lower consumer demand for its natural
medicine products and has posted reduced profits. Stortext FM, however, has
moved into profit on the back of a large contract with a new customer which
looks set to continue through 2009. Finally, Tottel continues to perform
strongly, recording its third year of increased profitability; the current year
looks set to continue this trend.
The MPEP investment portfolio at 31 January 2009 comprises twenty-one
investments with a cost of £9.1 million and valued at £7.8 million (85.7% of
cost). Whilst the fall in valuations over the year is disappointing, the
adverse movement in public market indices has made some decreases inevitable.
It is important to recognise that all of the reduction in the year, with the
exception of one small investment, has resulted from falls in unrealised
valuations as opposed to any actual realised investment losses. This offers the
prospect of significant future recovery as we continue to believe that the
portfolio, taken as a whole, is resilient and of high quality.
Over the coming period, the need for additional investment to support portfolio
companies may become a focus. We also anticipate much more attractive buying
conditions emerging as the year progresses. Having retained significant
uninvested cash, we believe the Company is well placed to cover both the
portfolio needs that may arise and the new investment opportunities presented.
Investment Portfolio Summary
as at 31 January 2009
Cost at Valuation at Additionalinvestments Valuationat % of % of
31-Jan-09 31-Jan-08 31-Jan-09 equity portfolio
held by value
£ £ £ £
Matrix Private Equity Partners portfolio
DiGiCo Europe Limited 1,000,000 1,000,000 - 1,091,100 6.52% 13.98%
Manufacturer of audio mixing
desks
ATG Media Holdings Limited 1,000,000 - 1,000,000 1,000,000 8.90% 12.81%
Publisher and online auction
platform operator
Focus Pharma Holdings Limited 772,451 772,451 - 758,440 3.10% 9.73%
Licensor and distributer of
generic pharmaceuticals
Higher Nature Limited 500,127 1,243,246 - 708,597 10.69% 9.08%
Mail order distributor of
vitamins and natural medicines
Tottel Publishing Limited 235,200 382,173 - 616,173 6.27% 7.89%
Publisher specialising in legal
and tax titles
Blaze Signs Holdings Limited 610,016 776,914 - 593,471 5.70% 7.60%
Manufacturer and installer of
signs
Monsal Holdings Limited 704,771 634,296 70,476 528,578 9.80% 6.77%
Supplier of engineering
services to the water and waste
sectors
Youngman Group Limited 500,026 1,439,740 - 476,523 4.24% 6.11%
Manufacturer of ladders and
access towers
Pastaking Holdings Limited 133,055 351,877 - 409,344 2.10% 5.24%
Manufacturer and supplier of
fresh pasta meals
Stortext FM Limited 561,820 375,968 - 375,968 4.60% 4.82%
Provider of document management
software and services
VSI Limited 111,928 346,034 - 305,699 4.56% 3.92%
Provider of software for CAD
and CAM vendors
British International Holdings 250,000 251,075 - 247,338 2.50% 3.17%
Limited
Helicopter service operator
The Plastic Surgeon Holdings 458,837 - 458,837 229,419 6.88% 2.94%
Limted
Snagging and finishing of
domestic and commercial
properties
Vectair Holdings Limited 100,000 140,749 - 141,884 2.14% 1.82%
Designer and distributor of
washroom products
PXP Holdings Limited 679,549 485,818 95,461 139,086 4.98% 1.78%
Designer, manufacturer and
supplier of timber frames for
buildings
SectorGuard plc 1 150,102 75,044 - 64,323 1.08% 0.82%
Provider of manned guarding,
patrolling and alarm response
services
BG Consulting Group Limited/ 230,796 101,162 - 53,064 See 0.68%
Duncary 4 Limited note 2
below
Provider of financial training
services
Campden Media Limited 152,620 113,785 - 18,319 1.69% 0.23%
Magazine publisher and
conference organiser
Racoon International Holdings 406,805 203,403 - 0 5.70% 0.00%
Limited
Supplier of hair extensions,
hair care products and training
Letraset Limited 150,000 0 - 0 17.35% 0.00%
Manufacturer and distributor of
graphic art products
Inca Interiors Limited (in 350,000 50,000 - 0 9.75% 0.00%
liquidation)
Designer, supplier and
installer of contract kitchens
------------- ------------- ------------- ------------- -----------
Total 9,058,103 8,743,735 1,624,774 7,757,326 99.39%
------------- ------------- ------------- ------------- -----------
Former Elderstreet Private Equity Portfolio
Cashfac Limited 260,101 86,372 - 38,168 3.42% 0.49%
Provider of virtual banking
application software
solutions to corporate
customers
Expansys plc 1 31,000 46,923 - 9,971 0.58% 0.12%
Retailer of handheld
electrical products
Sparesfinder Limited 250,000 0 - 0 2.19% 0.00%
Supplier of industrial spare
parts on-line
Other investments in the 374,973 0 - 0 - 0.00%
portfolio 3
------------- ------------- ------------- ------------- -----------
Total 916,074 133,295 - 48,139 0.61%
------------- ------------- ------------- ------------- -----------
======== ======== ======== ======== ========
Investment Managers' Total 9,974,177 8,877,030 1,624,774 7,805,465 - 100.00%
======== ======== ======== ======== ========
1 Quoted on AiM
2 The % of equity held in BG Consulting Group Limited is 2.6% and in Duncary 4
Limited is 6.64%.
3 Other investments in the Elderstreet portfolio comprise those investments
that have been valued at nil and from which the Directors only expect to
receive small recoveries i.e. ComponentSource Holding Corporation, and Sift
Group Limited.
Profit and Loss Account
for the year ended 31 January 2009
Year ended 31 January 2009 Year ended 31 January 2008
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Unrealised losses - (2,574,520) (2,574,520) - (36,523) (36,523)
on investments held
at fair value
Realised (losses)/ - (21,299) (21,299) - 463,591 463,591
gains on
investments held at
fair value
Income 1,068,647 30,915 1,099,562 1,039,725 - 1,039,725
Recoverable VAT 13,500 40,500 54,000 - - -
Investment (100,303) (300,909) (401,212) (132,146) (396,439) (528,585)
management fees
Other expenses (350,868) - (350,868) (356,711) - (356,711)
------------ ------------ ------------ ------------ ------------ ------------
Profit/(loss) on 630,976 (2,825,313) (2,194,337) 550,868 30,629 581,497
ordinary activities
before taxation
Taxation on (152,313) 152,313 - (128,247) 128,247 -
ordinary activities
======= ======= ======= ======= ======= =======
Profit/(loss) for 478,663 (2,673,000) (2,194,337) 422,621 158,876 581,497
the year
======= ======= ======= ======= ======= =======
Basic and diluted 2.35p (13.14)p (10.79)p 2.21p 0.83p 3.04p
earnings per
ordinary share
The total column is the profit and loss account of the Company.
All the items in the above statement derive from continuing operations.
There were no other recognised gains or losses in the year.
Other than revaluation movements arising on investments held at fair value
through the Profit and Loss Account, there were no differences between the
profit/(loss) as stated above and at historical cost.
Balance Sheet
as at 31 January 2009
as at 31 January 2009 as at 31 January 2008
£ £
Fixed assets
Investments at fair value 7,805,465 8,877,030
Current assets
Debtors and prepayments 240,016 221,203
Investments at fair value 13,113,111 15,124,308
Cash at bank 15,256 23,865
------------- -------------
13,368,383 15,369,376
Creditors: (138,150) (179,089)
amounts falling due within one
year
------------- -------------
Net current assets 13,230,233 15,190,287
------------- -------------
Net assets 21,035,698 24,067,317
------------- -------------
Capital and reserves
Called up share capital 201,078 204,992
Capital redemption reserve 883,743 879,829
Revaluation reserve (1,537,950) 743,099
Special distributable reserve 16,968,144 30,141,575
Profit and loss account 4,520,683 (7,902,178)
------------- -------------
Equity shareholders' funds 21,035,698 24,067,317
------------- -------------
Net asset value per Ordinary 104.61p 117.41p
Share
Reconciliation of Movements in Shareholders' Funds
for the year ended 31 January 2009
Year ended Year ended
31 January 2009 31 January 2008
£ £
Opening shareholders' funds 24,067,317 9,772,148
Share capital subscribed - 14,869,624
Share capital bought back (379,254) (846,932)
(Loss)/profit for the year (2,194,337) 581,497
Dividends paid in year (458,028) (309,020)
------------- -------------
Closing shareholders' funds 21,035,698 24,067,317
------------- -------------
Cash Flow Statement
for the year ended 31 January 2009
Year ended Year ended
31 January 2009 31 January 2008
£ £
Interest income received 304,782 265,744
Dividend income 814,332 722,262
Other income 5,098 -
Investment management fees paid (516,689) (509,142)
Cash payments for other expenses (386,878) (276,845)
------------- -------------
Net cash inflow from operating 220,645 202,019
activities
Investing activities
Sale of investments 227,615 1,225,594
Purchase of investments (1,624,774) (2,857,505)
------------- -------------
Net cash outflow from investing (1,397,159) (1,631,911)
activities
Dividends
Equity dividends paid (458,028) (155,032)
------------- -------------
Cash outflow before financing and (1,634,542) (1,584,924)
liquid resource management
Management of liquid resources
Decrease/(increase) in monies 2,011,197 (14,429,782)
held in money market funds
Financing
Issue of own shares - 14,869,624
Purchase of own shares (385,264) (871,495)
------------- -------------
(385,264) 13,998,129
------------- -------------
Decrease in cash for the year (8,609) (2,016,577)
------------- -------------
Reconciliation of loss on ordinary activities before taxation to net cash
inflow from operating activities
2009 2008
£ £
(Loss)/profit on ordinary activities (2,194,337) 581,497
before taxation
Net losses/(gains) on realisations 21,299 (463,591)
of investments
Net unrealised losses on investments 2,574,520 36,523
Increase in debtors (145,908) (24,995)
(Decrease)/increase in creditors and (34,929) 72,689
accruals
Transaction costs charged to capital - (104)
Net cash inflow from operating 220,645 202,019
activities
Analysis of changes in net funds
Cash Liquid resources Total
£ £ £
At beginning of 23,865 15,124,308 15,148,173
year
Cash flows (8,609) (2,011,197) (2,019,806)
At 31 January 2009 15,256 13,113,111 13,128,367
Notes
1. Basis of accounting
This announcement of the annual results of the Company for the year ended 31
January 2009 has been prepared using accounting policies consistent with those
adopted in the full audited annual accounts which have been prepared under UK
Generally Accepted Accounting Practice (UK GAAP) and the Statement of
Recommended Practice, `Financial Statements of Investment Trust Companies'
("SORP") issued by the Association of Investment Companies in January 2003,
revised December 2005 ("the SORP").
2. Income
2009 2008
£ £
Income from bank deposits 2,605 12,611
Income from investments
- from equities 85,896 49,861
- from overseas based OEICs 696,194 716,677
- from loan stock 309,769 260,576
------------- -------------
1,091,859 1,027,114
Other income 5,098 -
------------- -------------
Total income 1,099,562 1,039,725
Total income comprises
Dividends 782,090 766,538
Interest 312,374 273,187
Other 5,098 -
------------- -------------
1,099,562 1,039,725
Income from investments comprises
Listed overseas securities 696,194 716,677
Unlisted UK securities 85,896 49,861
Loan stock interest 309,769 260,576
------------- -------------
1,091,859 1,027,114
3. Net asset value per Ordinary Share
Net asset value per Ordinary Share is based on net assets at the end of the
year and on 20,107,800 Ordinary Shares of 1 pence (2008: 20,499,199), being the
number of Ordinary Shares in issue on that date. There is no difference between
basic net asset value per Ordinary Share and diluted net asset value per
Ordinary Share as there are no instruments that are potentially dilutive.
4. Return per Ordinary Share
The revenue return per Ordinary Share is based on the net revenue profit from
ordinary activities after taxation of £478,663 (2008: £422,621) and on
20,338,366 (2008: 19,094,986) Ordinary Shares, being the weighted average
number of Ordinary Shares in issue during the year.
The capital return per Ordinary Share is based on a capital loss of £2,673,000
(2008: return of £158,876) which includes the portion of the Investment
Manager's fees charged to the capital reserve of £300,909 (net of tax) (2008: £
396,439) and on 20,338,366 (2008: 19,094,986) Ordinary Shares, being the
weighted average number of Ordinary Shares in issue during the year.
5. Investment Manager's Fees
In accordance with the policy statement published under "Management, Expenses
and Administration" in the Company's Prospectus dated 2 November 2006, the
Directors have charged 75% of the investment management expenses to the
realised capital reserve.
6. Dividends
The Company proposes to pay a final dividend of 1 penny per Ordinary Share from
income. The dividend will be recommended to members at the Annual General
Meeting and, if approved, will be paid on 10 June 2009 to shareholders on the
Register on 15 May 2009.
7. Related party transactions
Matrix Group Limited has a significant interest in Matrix Corporate Capital LLP
("MCC"), who became the Company's brokers shortly before the year-end. Three
share buybacks were undertaken by MCC on the Company's instruction, costing £
116,135 (2008: nil). An amount of £35,811 (2008: nil) was due to MCC at the
year-end.
8. Financial Information
The financial information set out in these statements does not constitute the
Company's statutory accounts for the year ended 31 January 2009 in terms of
section 240 of the Companies Act 1985 but is derived from those accounts.
Statutory accounts for the year ended 31 January 2009 will be delivered to
Companies House following the Company's Annual General Meeting. The auditors
have reported on those accounts: their report was unqualified and did not
contain a statement under Section 237 (2) or (3) of the Companies Act 1985.
9. Annual Report
A Summary Annual Report will be circulated by post to all Shareholders shortly
and copies will be available thereafter to members of the public from the
Company's registered office. Shareholders who wish to receive a copy of the
full Annual Report may request a copy by writing to the Company Secretary,
Matrix-Securities Limited, One Vine Street, London W1J 0AH. Alternatively
copies may be downloaded via the Company Secretary's web site at
www.mig4vct.co.uk.
10. Annual General Meeting
The Annual General Meeting of the Company will be held at 12.00 noon on
Thursday, 21 May 2009 at the offices of Matrix Group Limited, One Vine Street,
London W1J 0AH.
Contact details for further enquiries:
Sarah Penfold of Matrix-Securities Limited (the Company Secretary) on 020 3206
7000 or by e-mail on mig4@matrixgroup.co.uk
Mark Wignall or Mike Walker at Matrix Private Equity Partners LLP (the
Investment Manager), on 020 3206 7000 or by e-mail on info@matrixpep.co.uk.
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