Final Results

RNS Number : 2299Q

Mobeus Income & Growth 2 VCT PLC

15 June 2015

Mobeus Income & Growth 2 VCT plc

Results announcement for the year ended 31 March 2015

Mobeus Income & Growth 2 VCT plc, ("MIG 2", the "Company" or the "Fund") is a Venture Capital Trust ("VCT") advised by Mobeus Equity Partners LLP ("Mobeus"), investing primarily in established, profitable, unquoted companies.

OBJECTIVE OF COMPANY

The objective of the Company is to provide investors with a regular income stream, arising both from the income generated by companies selected for the portfolio and from realising any growth in capital.

VENTURE CAPITAL TRUST STATUS

Mobeus Income & Growth 2 VCT has satisfied the requirements for full approval as a Venture Capital Trust under section 274 of the Income Tax Act 2017 ("ITA"). It is the Directors intention to continue to manage the Company's affairs in such a manner as to comply with section 274 of the ITA.

FINANCIAL HIGHLIGHTS

Results for the year ended 31 March 2015

§ -	Net Asset Value ("NAV") and Share price Total Return per share for the year of 11.4% and 19.3% respectively.
§ -	Net assets rose to £42.10 million.
§	This has been an exceptional year for disposals. A total of £12.45 million was received as net cash proceeds from seven major realisations, compared with an original cost of £4.58 million.
§ -	Two interim dividends were paid in respect of the 2015 financial year, of 14.00 pence per share paid on 20 October 2014, and 5.00 pence per share paid on 20 March 2015. This brings total dividends paid to date since inception of the current share class* to 42.00 pence per share.
§	Seven new and four follow-on investments totalling £9.30 million have been made during the year, plus a further £7.90 million invested after the year-end.
§ -	Liquidity has been increased by two successful fundraisings, raising a total of £10.58 million in the year, bringing liquidity at the year-end to £19.74 million.

Note: The above data does not reflect the benefit of income tax relief.

*The first allotment of the former "C" share class, now the current share class, took place on 5 January 2006.

The NAV per share as at 31 March 2015 was 115.45 pence

The table below shows the recent past performance of the current share class, first raised in 2006 at an original subscription price of 100p per share before the benefit of income tax relief. Performance data for all fundraising rounds are shown in tables in the Annual Report and Accounts (the "Annual Report").

Reporting date as at	Net assets (£ m)	Net asset value (NAV) per share (p)	Share price (mid-market price) (p)¹	Cumulative dividends paid per share (p)	Cumulative total return per share since launch
					(NAV basis)	(Share price basis)
					(p)²	(p)³
31 March 2015	42.10	115.45	104.50	42.00	157.45	146.50
31 March 2014⁴	33.88	120.73	103.50	23.00	143.73	126.50
30 April 2013	25.70	106.75	70.30	18.00	124.75	88.30
30 April 2012	24.53	98.71	67.00	14.00	112.71	81.00
30 April 2011	24.86	96.16	62.00	10.00	106.16	72.00
30 April 2010	23.29	87.47	41.50	5.00	92.47	46.50

¹ Source: London Stock Exchange

² NAV as at the reporting date plus cumulative dividends paid since fund launch.

³ Mid-market share price as at the reporting date plus cumulative dividends paid since fund launch.

⁴Data relates to an 11 month period, as the Company shortened its accounting period by one month during the year.

The data in the table above excludes the benefit of any income tax relief.

Chairman's Statement

I am pleased to present the annual results of Mobeus Income & Growth 2 VCT plc for the year ended 31 March 2015. References to the 2014 comparatives in my Statement cover the 11 months ended 31 March 2014, when the Company brought forward its year-end.

Overview of performance

It has been a very positive year for the Company. The Net Asset Value ("NAV") Total Return of 11.4% (2014:17.8%) for the year was ahead of the Board's minimum average return target of 8% per annum.

These returns were the result of two contributing factors: firstly, there were seven profitable realisations, namely: ATG Media (a part sale), MachineWorks, Monsal, DiGiCo Global, EMaC, Focus Pharma and Youngman, for total cash proceeds of £12.45 million, delivering substantial gains over cost of £4.58 million. These contributed to overall realisations in the year of £14.47 million. Secondly, the Company achieved another year of good revenue returns.

At the end of 2014, your Company was rated 1st, 2nd and 1st over the previous 1, 3 and 5 years respectively in the Association of Investment Companies' ("AIC") analysis of NAV Cumulative Total Return for all Generalist VCTs. This was achieved largely as a result of the profitable realisations listed above and relatively low levels of liquidity held during those periods.

Further details of the calculations demonstrating the Company's performance for the year are contained in the Strategic Report.

Dividends

As a result of the substantial realisations during the year, the Company was able to pay a significant first interim capital dividend of 14.00 pence per share on 20 October 2014. A second interim dividend of 5.00 pence (2014: 5.00 pence), comprising 2.25 pence (2014: 0.20 pence) per share from capital and 2.75 pence (2014: 4.80 pence) per share from income was also paid on 20 March 2015, bringing the total dividends paid during the year to 19.00 pence (2014: 5.00 pence) per share.

The Company's dividend target set last year is 5.00 pence per share. Shareholders should note that the first interim dividend of 14.00 pence per share paid for 2015 arose from an exceptional phase of profitable realisations.

Accordingly, the Board's target for future dividends will be by reference to the second interim dividend of 5.00 pence per share paid this year.

Investment portfolio

The portfolio has experienced a busy and highly successful year, marked by the profitable realisations but also substantial levels of new investment.

Cash proceeds totalling £13.15 million were received from 12 companies, which were either sold or repaid loans. Of this total, £12.45 million was received as cash proceeds from the seven substantial disposals referred to in the Performance Overview above. The balance of £0.70 million comprised loan repayments from companies held within the portfolio. Realised gains over the original cost of all the investments sold (£5.27 million) were £9.20 million.

The VCT has also maintained a steady rate of new investment, investing a total of £9.30 million (including £0.61 million which was previously held in an acquisition vehicle) during the year under review in 11 new and existing companies.

Full details of all of these transactions, and of substantial new investments following the year-end, are included in the Investment Review.

A number of companies in the portfolio continue to perform strongly, although several also experienced lower earnings. The performance of the portfolio as a whole remains good, demonstrating the success of the Company's strategy of investing in profitable companies run by proven management teams. The current portfolio at the year-end was valued at £22.35 million (2014: £24.53 million).

At 31 March 2015, net assets were £42.10 million, comprising £19.97 million of investments (47.4% of net assets) and liquidity of £22.12 million (52.5% of net assets). £2.38 million of this liquidity was invested in three acquisition vehicles.

Share buybacks

During the year ended 31 March 2015, the Company bought back 2.2% (2014: 3.1%) of its share capital in issue at the beginning of the year maintaining an average discount of 10%. Further details are included in the Strategic Report and the Directors' Report.

Fundraising

The four Mobeus advised VCTs launched new offers for subscription for the 2014/15 tax year on 10 December 2014 ("the Offers"). For the first time, each of the VCTs made separate Offers to investors. This enabled investors to choose which Mobeus VCTs they wished to invest in, and how much to place in each, subject to the Offer(s) of their choice remaining open. I am pleased to report that the Company successfully raised the full £8 million amount offered earlier than anticipated, with the Offer closing on 10 March 2015.

The two recent fundraisings in 2014 and 2015 were undertaken, on the basis of expected cash flows over the following two years, to give the Company sufficient liquidity to fund new investments, dividends, expenses and share buybacks. This has resulted in a significantly higher level of liquidity than in previous years. This will initially have an adverse effect on the investment returns because interest income will be lower than the 2% Investment Adviser fee payable on the Company's net assets.

Industry awards for the Investment Adviser

Your Board is pleased to report that the Investment Adviser was once again named VCT House of the Year for the third consecutive year at the unquote" British Private Equity Awards 2014. The award recognised the high level of consistency achieved by the Investment Adviserduring the year in maintaining high standards in all areas of its activity including deals, exits, portfolio management and fundraising.

Annual General Meeting

The Annual General Meeting of the Company will be held at 12 noon on Thursday, 10 September 2015 at 33 St James's Square, London SW1Y 4JS. Both the Board and the Investment Adviser look forward to welcoming shareholders to the meeting which will provide shareholders with the opportunity to ask questions and to receive a presentation from the Investment Adviser on the investment portfolio. The Notice of the meeting is included in the Annual Report.

Shareholder Communications

May I remind you that the Company continues to have its own website which is available at www.mig2vct.co.uk .

The Investment Adviser held its fifth annual shareholder event in January 2015, which was well received. The event provided a forum for around 270 shareholders from the four Mobeus VCTs to hear presentations from the Investment Adviser and to learn more about the investment activity in greater depth from the chairman of both Tharstern and Tessella and the managing director of Virgin Wines.

Future prospects

Prospects over the near term remain positive with two sizeable investments in Jablite and CGI Creative Graphics International being completed after the year-end. The Investment Adviser has a healthy pipeline of prospective investment opportunities available. The Investment Adviser believes that conditions for both investment and divestment remain favourable.

The Budget in March this year introduced some further amendments to the VCT legislation, most of which are specifically aimed at enabling the scheme to gain continued approval under the European Commission's new State Aid guidelines.

The proposals remain subject to approval by the European Commission so the date when these proposals become legislation is uncertain, but is expected to be later in 2015. The precise details and full implications for the VCT's future investment programme will only be fully clear once the legislation is enacted. However, in the longer term, the Investment Adviser does anticipate some reduction to the current range of companies that the VCT considers as potential qualifying investments.

These uncertainties in timing and implication apply to new investments made by VCTs on or after 6 April 2015. Being mindful of protecting shareholders' interests, the Board has moved to preserve the Company's existing successful investment strategy. Following discussions with the Company's advisers, the VCT made separate investments into a further nine new acquisition vehicles prior to 6 April 2015. Our projections show that this will provide sufficient funds to meet the Company's estimated requirements for investment for the next two years at least. These companies have been established by the Investment Adviser to acquire target businesses on behalf of the Company and the other Mobeus VCTs. One of these acquisition vehicles, Duncary 16, has already been used to support the investment into Jablite following the year-end.

The Board continues to believe that its relatively low-risk investment strategy of investing only in profitable companies with strong cash flows mitigates some of the risks inherent when investing in smaller businesses and should continue to deliver attractive returns to shareholders over the medium to long term.

Finally, I would like to express my thanks to all shareholders for their continuing support of the Company. I look forward to speaking with some of you at the AGM and at the annual shareholder event in the first quarter of 2016.

Nigel Melville

Chairman

15 June 2015

Strategic Report

Introduction

The Directors are pleased to present the Strategic Report of the Company for the year ended 31 March 2015. The purpose of this Report is to inform shareholders and help them to assess how the Directors have performed their duty to promote the success of the Company.

The Report has been prepared by the Directors in accordance with section 414A of the Companies Act 2006 ("the Act").

Company Objective

The Objective of the Company is to provide investors with a regular income stream, arising both from the income generated by the companies selected for the portfolio and from realising any growth in capital.

Summary of investment Policy

The VCT's policy is to invest primarily in a diverse portfolio of UK unquoted companies.

Investments are usually 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 own. Investments are primarily made in companies that are established and profitable.

The Company's cash and liquid resources may be invested to maximise income returns of instruments of varying maturities, subject to the overriding criterion that the risk of loss of capital is minimised.

Risk is further spread by investing in a number of different businesses across different industry sectors. Investments are made selectively, primarily in management buyout transactions (MBOs) in companies that are established and profitable. The VCT aims to invest in larger, more mature, unquoted companies through investing alongside three other VCTs advised by Mobeus with similar investment policies. This enables the VCT to participate in combined investments by the Investment Adviser of up to £5 million into each business per year.

The Company aims to maintain around 70% of net funds raised in qualifying investments. Uninvested funds are held in a portfolio of readily realisable interest-bearing investments and deposits.

The full text of the Company's Investment Policy is available in the Annual Report.

Business Model

The Company is a Venture Capital Trust (VCT). It's Objective and Investment Policy is designed to ensure that the VCT continues to qualify and is approved as a VCT by HM Revenue & Customs ("HMRC") whilst maximising returns to shareholders from both income and capital. One of the rules to remain a VCT is that it must remain a fully listed company on the London Stock Exchange, and thus must also comply with the listing rules governing such companies.

The Company is an externally advised fund with a Board comprising non-executive Directors. 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 Adviser and are then subject to review and approval by the Directors. Investment management and operational support are outsourced to external service providers (including registrars and brokers) with the key strategic and operational framework and key policies set and monitored by the Board.

Individuals invest in the Company to benefit from both income and capital returns generated by investment performance. By investing in a VCT they also receive immediate income tax relief (currently 30% of the amount subscribed for new shares by an investor), as well as tax-free dividends received from the Company and are not liable for any capital gains tax upon the eventual sale of the shares.

The Company's investee companies are primarily unquoted businesses and operate in the UK. These businesses fulfil the criteria and characteristics as set out in the Investment Policy.

Performance

Key Performance Indicators used to measure performance

The Board has identified six key performance indicators that it uses in its own assessment of the Company's progress. These are intended to provide shareholders with sufficient information to assess how the Company has performed against its Objective in the year to 31 March 2015 and over the longer term, through the application of its investment and other principal policies:

1. Annual and cumulative returns per share for the year

Total shareholder returns per share for the year

The Net Asset Value ("NAV") and share price total return per share for the year ended 31 March 2015 were 11.4% and 19.3% respectively, as shown below:

NAV basis		Share price basis
	(p)		(p)
Closing NAV per share	115.45	Closing share price	104.50
Plus: dividends paid in year	19.00	Plus: dividends paid in year	19.00
Total for year	134.45	Total for year	123.50
Less: opening NAV per share	120.73	Less: opening share price	103.50
Return for year per share	+13.72	Return for year per share	+20.00
% return for year	11.4%*	% return for year	19.3%*

*The share price return differs from the NAV return, due to the following. The year-end share price is at an approximate discount of 10% to the NAV announced for the Company's previous quarter, not the year-end NAV. Last year, there was a more substantial increase in the final quarter's NAV than occurred this year. This increase was not reflected in the opening share price.

Review of financial results for the year ended 31 March 2015

For the year/period ended	31 March 2015 £(m)	31 March 2014 £(m)
Capital profit	3.06	3.30
Revenue profit	1.24	1.53
Total Profit	4.30	4.83

The capital profit of £3.06 million for the year is mainly due to a number of realisations during the year.

The revenue profit for the year of £1.24 million is a fall from the previous year, mainly due to a fall in dividend income from £0.49 million to £0.29 million.

2. The VCT's performance compared with its peer group

The Board places emphasis on benchmarking the Company's performance against a peer group of VCTs.

3. Dividend policy

The Board has set a target of paying a consistent and over time an increasing dividend in respect of each financial year, whilst maintaining the net asset value of the Company. In the absence of unforeseen circumstances, the Board will maintain or increase the dividend paid in the previous year (currently 5.00 pence). However, the ability of the Company to pay dividends in the future cannot be guaranteed and will be subject to performance and available cash and reserves.

4. Compliance with VCT legislation

In order to comply with VCT tax legislation, the Company must meet a number of tests set by HMRC as detailed in the Annual Report and Accounts under VCT Regulation within the Investment Policy. At 31 March 2015, the Company continued to meet these tests.

5. Share buyback and discount policy

Subject to the Company having sufficient available funds and distributable reserves, it is the Board's current intention to pursue a buyback policy with the objective of maintaining the discount to the latest published NAV at which the shares trade at approximately 10% or less. It has succeeded in carrying out this objective during the year.

The Board considers that a 10% discount represents a fair balance between assisting investors who wish to sell shares and the majority of investors who wish to continue to invest in a portfolio of investments in unquoted shares. Any future purchases will be subject to the Company having appropriate authorities from shareholders and sufficient funds available for this purpose. Share buybacks will also be subject to the Listing Rules and any applicable law at the relevant time. Shares bought back in the market are always cancelled.

Continuing shareholders benefit from the difference between the NAV and the price at which the shares are bought back and cancelled.

During the year ended 31 March 2015, shareholders holding 0.62 million shares, expressed their desire to sell their investments. The Company instructed its brokers, Panmure Gordon (UK) Limited ("Panmure Gordon"), to purchase these shares at prices representing discounts of 10.0% to the previously announced NAV per share. The Company subsequently purchased these shares at prices between 103.0-108.5 pence per share and cancelled them.

In total, during the period the Company has bought back 2.2% of the issued share capital of the Company at the beginning of the year.

6. Costs

The Board monitors costs using the Ongoing Charges Ratio which was 3.04% for the year (2014: 3.05%). In both years, these ratios were before and after performance fees, as there were no such fees in either year. The Ongoing Charges Ratio has been calculated using the Association of Investment Companies' ("AIC") recommended methodology. This figure shows shareholders the annual percentage reduction in shareholder returns as a result of recurring operational expenses, assuming markets remain static and the portfolio is not traded. Although the Ongoing Charges figure is based upon historical information, it provides shareholders with an indication of the likely level of costs that will be incurred in managing the fund in the future.

The Ongoing Charges Ratio replaces the Total Expense Ratio previously reported, although the latter will still form the basis of any expense cap, which may be borne by the Investment Adviser. There was no breach of the expense cap for the year ended 31 March 2015 (11 months ended 31 March 2014: £nil).

The slight fall in the ratio from 3.05% to 3.04% over the year reflects the benefit of spreading the element of costs that are fixed across a larger asset base.

Investment Adviser fees and other expenses

In line with the rise in net assets, Investment Adviser fees have increased from £0.67 million to £0.89 million (on a comparable basis). As the cumulative performance hurdle has not been met, no performance fee was payable to the Investment Adviser. Other expenses have also increased slightly from £0.26 million to £0.29 million (actual basis).

Further details of these are contained in the financial statements in the Annual Report.

Investment Review

This has been a good year for the portfolio in which the number and value of divestments have been exceptional.

Deal flow has remained healthy, resulting in a high level of quality new investment activity. Seven new investments were completed during the year under review and we expect this level of activity to be maintained in the current year. The Investment Adviser believes the healthy level of deal flow reflects both improved business confidence and the continued perception that the UK banking industry remains unable to meet the funding needs of smaller businesses.

The portfolio as a whole has continued to perform strongly in the year. The valuation of the portfolio has increased by 16.0% during the year on a like-for-like basis, as a result of the good trading performance at several companies, and the profitable disposals referred to in Realisations.

Investment Adviser's investment outlook

The environment continues to be good for making new investments and for opportunities to provide further finance to existing portfolio companies. This should sustain the level of attractive new investment activity. The market to sell good businesses profitably also continues to be strong. However, having concluded seven significant realisations over the past 12 months, the overall maturity of the investment portfolio has inevitably reduced. In the immediate future we would therefore expect the level of realisations to be at a lower level and the size of the portfolio to grow.

New investment

During the year, seven new investments and four follow-on investments were completed for a total of £9.30 million. Three of these new transactions were in support of the MBOs of CGI Creative Graphics International, Tharstern and Media Business Insight. New investments were also made in Leap New Co Limited and Aussie Man & Van, in support of a corporate restructuring of the Ward Thomas Group. In addition, two new acquisition vehicles also received investment, being Hollydale Management Limited and Knighton Management Limited.

Four follow-on investments were made in:

ASL Technology in support of its buy and build strategy and to eliminate bank borrowings;

Entanet Holdings to help develop its growth plans;

Racoon International in support of the appointment of a Mobeus operating partner to run the company; and

Gro-Group by way of a small further loan.

Following the partial disposal of ATG Media earlier in the year, the Company retained a loan and 3.3% equity investment of £1.32 million in Turner Topco, the acquirer.

Principal new investments in the year

Company		Business	Date of Investment	Amount of new Investment (£m)
CGI Creative Graphics International		Producer of adhesive decorative graphics for vehicles	June 2014	0.73
CGI Creative Graphics International is a leading specialist provider of adhesive decorative graphics to the automotive, recreational vehicle and airline markets. It operates from two centres, in Bedford and in Cape Town, South Africa. The Company's latest audited accounts for the year ended 30 November 2012 show annual sales of £12.64 million and profit before interest, tax and amortisation of goodwill of £2.49 million.
Tharstern		Software based management information systems	July 2014	0.84
Tharstern is a leading UK supplier of software-based management information systems to the print sector based in Colne, Lancashire. The Company's latest audited accounts for the year ended 31 January 2014 show annual sales of £3.87 million and profit before interest, tax and amortisation of goodwill of £0.80 million.
Ward Thomas		Specialist logistics, storage and removals business	December 2014	1.22
Ward Thomas is a brand-led specialist logistics, storage and removals business based in London. The Group comprises three distinct businesses operating under a common management structure with common shareholders. Separate investments were made into Leap New Co Limited, which owns the Anthony Ward Thomas and Bishopsgate businesses (£0.85 million), and into Aussie Man & Van Limited (£0.37 million). The latest audited accounts for Ward Thomas Removals Limited for the year ended 30 September 2013 show annual sales of £12.17 million and profit before interest, tax and amortisation of goodwill of £1.96 million.
Media Business Insight		Events and publishing	January 2015	2.01*
Media Business Insight Holdings Limited is a publishing and events business focused on the creative production industries, specifically advertising, TV production and film. Based in London, the company comprises four distinct brands. The investment represented an attractive opportunity to invest in a sector leading company underpinned by strong recurring revenues from subscriptions and events. The company's latest audited accounts for the period ended 31 December 2013, show annual sales of £8.24 million and profit before interest, tax and amortisation of goodwill of £1.06 million.
	*A further £0.84 million was invested into South West Services Investment Limited ("SWSI") adding to its earlier investment of £0.61 million. This enabled SWSI to acquire Media Business Insight Limited ("MBI"). The Company has also advanced a non-qualifying loan of £0.56 million to MBI. SWSI subsequently changed its name to Media Business Insight Holdings Limited.

The VCT also invested a further £1.77 million into two new acquisition vehicle investments, Hollydale Management and Knighton Management, just before the year-end on 31 March 2015.

Further Investment into existing portfolio companies in the year

Company			Business		Date of Investment	Amount of new Investment (£m)
ASL Technology			Printer and photocopier services		December 2014	0.73
ASL Technology is a printer and photocopier services business based in Cambridge and focused on SME customers, primarily based in East Anglia and the northern Home Counties. The VCT completed a further investment into the company of £0.73 million in December 2014, to provide capital to refinance the bank and support the company's buy and build strategy. ASL had a £13.27 million turnover and generated profits before interest, tax and amortisation of goodwill for the year ended 30 September 2014 of £1.18 million.
Racoon			Hair extension, hair care products and training		January 2015	0.12
Racoon International is a premier supplier of ethically sourced hair for hair extensions based in Southam, Warwickshire. A small further investment was made with the expectation that this, together with the appointment of a successful sales-orientated Mobeus operating partner to the management team of the business, will add value to a previously unsuccessful investment. Racoon has a £1.94 million turnover and has generated profit before interest, tax and amortisation of goodwill in the year ended 31 March 2014 of £0.09 million.
Entanet			Wholesale provider of internet connectivity solutions		February 2015	0.53
Entanet is one of the UK's leading independent wholesale voice and data communications providers based in Telford. The VCT made a further loan stock investment in February 2015 as negotiated at the time of the original investment in February 2014. Entanet had a turnover of £29.42 million and generated a profit before interest, tax and amortisation of goodwill of £2.78 million during the year to 31 December 2013.
In addition to the three further investments above, the Company also invested a further £0.03 million in the form of a loan to Gro-Group in November 2014, agreed at the time of the original investment in March 2013.
	Further Investment after the year-end
Company			Business		Date of Investment	Amount of new Investment (£m)
Jablite			Expanded polystyrene products		April 2015	0.84 *
Jablite is the UK's largest domestic manufacturer of Expanded Polystyrene ("EPS") products operating under two divisions producing packaging (Styropack) and construction (Jablite) products. The business was bought out from its Dutch parent and operates from five production sites in the UK. For the year ended 31 December 2013, for Jablite Limited and Styropack (UK) Limited, annual sales were £27.43 million and £15.33 million respectively and profit/(loss) before interest, tax and amortisation of goodwill was £0.66 million and (£0.001) million respectively.
* £0.84 million was invested into the acquisition vehicle Duncary 16 on 2 April 2015. This enabled Duncary 16 to acquire Jablite on 23 April 2015. Duncary 16 has subsequently changed its name to Jablite Holdings Limited. The VCT also invested a further £6.79 million into eight other new acquisition vehicle investments on 1 April 2015. For further information, please see the Future prospects section of the Chairman's Statement. A further investment in CGI Creative Graphics International Limited was made on 3 June 2015, for £0.27 million, agreed at the time of the original investment in June 2014. Realisations The year has been marked by a number of sizeable, profitable realisations which have all generated attractive returns for the Company. The Company completed the partial sale of ATG Media and the full sales of each of MachineWorks, Monsal, and DiGiCo Global in the first half of the year, followed by Focus Pharma, Youngman and EMaC in the second half, for total cash proceeds of £12.45 million compared to cost of £4.58 million. As part of the ATG Media transaction, the Company also received a non-cash consideration of £1.32 million by way of loan stock and equity investments in Turner Topco Limited, the acquirer. The Company retains a 3.3% shareholding in the business. With loan repayments of £0.69 million, as set out below, and other realisations of £0.01 million, being a repayment for shares from Tharstern, total net proceeds amounted to £14.47 million.
Company		Business		Period of investment		Total cash proceeds over the life of investment Multiple over cost
MachineWorks		Software for CAM and Machine tool vendors		April 2006 - April 2014		£1.55 million 4.16 times cost
MachineWorks' core software products are used by manufacturers of machine tool controllers to simulate real life manufacturing situations. It was de-merged from the Company's original investment in VSI in March 2011 and was sold to Westec Holding Company Limited for £0.93 million. The original investment of £0.37 million has returned £1.55 million in cash over its life.
ATG Media		Publisher and online auction platform operator		October 2008 - present		£3.24 million 1.87 times cost to date
A partial sale of ATG Media via a secondary MBO to a mid-market private equity house, ECI Partners, has realised net proceeds of £4.00 million, being cash of £2.68 million, with the balance being a new loan stock investment and a minority 3.3% equity stake, now valued at £1.32 million. The original investment cost in ATG was £1.73 million.
Monsal		Supplier of engineering services to the water and waste sectors		December 2007 - June 2014		£1.74 million 1.87 times cost
The sale of Monsal, a renewable energy consultancy, to the US conglomerate General Electric, realised £1.22 million. The 1.87x return on total original cost of £0.93 million represents a return on an investment originally made in 2007 which required support from further funding rounds in 2009 and 2011.
DiGiCo		Audio mixing desks		July 2007 - July 2014		£5.50 million 5.50 times cost
The VCT realised its remaining investment through a sale to a new professional audio group backed by Electra Partners. The business has demonstrated strong and consistent growth since investment. Turnover has grown threefold from £8 million to £24 million over the period of the VCT's investment. This final sale for £1.77 million, which followed a partial realisation in December 2011, was through a secondary buyout by Living Bridge (formerly ISIS Equity Partners). The Company's original investment was £1.00 million.
Focus Pharma		Generic pharmaceutical products		October 2007 - October 2014		£2.50 million 3.79 times cost
The VCT realised its investment in Focus Pharma through a trade sale to Cinven-backed Amdipharm Mercury Group for £1.34 million. Focus is engaged in the distribution of generic pharmaceuticals both for third parties, and on its own account, where it develops and licenses drugs for its own benefit. The business demonstrated strong growth throughout the investment period with turnover increasing three-fold to just under £40 million per annum. The original investment of £0.66 million has returned cash of £2.50 million to date.
Youngman		Access towers and ladders		October 2006 - October 2014		£2.52 million 2.52 times cost
The VCT realised this investment through a sale for £1.72 million to Werner Co (US). Based in Essex, Youngman, was established in the 1920s and today produces access equipment including specialist step and loft ladders, access and work platforms, and extension and combination ladders. The investment of £1.00 million has returned £2.52 million in cash over its life.
EMaC		Service plans for the motor trade		October 2011- December 2014		£3.38 million 3.08 times cost
The VCT sold its investment in EMaC to Innovation Group plc for £2.86 million. EMaC is one of the UK's leading providers and administrators of outsourced service plans to car manufacturers and franchised dealers in the motor trade. During the period of this investment, EMaC consistently outperformed expectations and increased turnover by 60% post investment. The original investment of £0.87 million has returned £3.38 million in cash to date.
Loan stock repayments Loan stock repayments totalled £5.30 million for the year, including £4.61 million as part of the proceeds from the companies realised above. Strong cashflow at five other companies contributed to the balance of £0.69 million. These proceeds are summarised below:-

Company	Business	Amount (£000's)
Motorclean	Vehicle cleaning and valeting services	348
Newquay Helicopters	Helicopter services	168
Tessella	Consultancy services	71
Tharstern	Software for printing industry	60
Virgin Wines	Online wine retailer	46
		693

Twelve largest investments in the portfolio by valuation

ASL Technology Holdings Limited			Entanet Holdings Limited			Media Business Insight Holdings Limited (formerly South West Services Investment Limited)
www.aslh.co.uk			www.enta.net			www.mb-insight.com

Cost		£2,092,000	Cost		£1,444,000	Cost		£1,447,000
Valuation		£2,395,000	Valuation		£2,180,000	Valuation		£1,447,000
Basis of valuation			Basis of valuation			Basis of valuation
Earnings multiple			Earnings multiple			Recent investment price

Equity % held			Equity % held			Equity % held
10.3%			6.4%			11.6%

Income receivable in year			Income receivable in year			Income receivable in year
£53,582			£104,296			£28,733

Business			Business			Business
Printer and photocopier services			Wholesale communications provider			Events and publishing


Location			Location			Location
Cambridge			Telford, Shropshire			London


Original transaction			Original transaction			Original transaction
Management buyout			Management buyout			Management buyout

Audited financial information			Audited financial information			Audited financial information

Year ended	30 September 2014		Period ended	31 December 2013¹		Period ended	31 December 2013¹
Turnover	£13,266,000		Turnover	£29,415,000		Turnover	£8,238,000
Operating profit	£1,176,000		Operating profit	£2,782,000		Operating profit	£1,456,000
Net liabilities	£(3,123,000)		Net assets	£2,332,000		Net assets	£1,588,000

Year ended	30 September 2013		Year ended	30 November 2012¹
Turnover	£14,484,000		Turnover	£25,853,000		No relevant comparable data is available for the 2012 year.
Operating profit	£1,296,000		Operating profit	£2,431,000
Net liabilities	£(1,214,000)		Net assets	£5,691,000
			¹- The financial information quoted above is for Entanet International Limited prior to the MBO which completed in February 2014.			¹- The financial information quoted above is for Media Business Insight Limited prior to the MBO which completed in January 2015.

Movements during the year			Movements during the year			Movements during the year
Further investment of £0.73 million made in December 2014.			Further investment of £0.53 million made in February 2015.			New investment made in January 2015.

Virgin Wines Holding Company Limited				Turner TopCo Limited			Tessella Holdings Limited
www.virginwines.co.uk				www.antiquestradegazette.com			www.tessella.com

Cost			£1,284,000	Cost		£1,321,000	Cost		£757,000
Valuation			£1,375,000	Valuation		£1,317,000	Valuation		£1,180,000
Basis of valuation				Basis of valuation			Basis of valuation
Earnings multiple				Earnings multiple			Earnings multiple

Equity % held				Equity % held			Equity % held
6.4%				3.3%			3.9%

Income receivable in year				Income receivable in year			Income receivable in year
£123,539				£49,803			£82,433

Business				Business			Business
Online wine retailer				Publisher and on-line auction platform operator			Provider of science powered technology and consulting services


Location				Location			Location
Norwich				London			Abingdon, Oxfordshire

Original transaction				Original transaction			Original transaction
Management buyout				Secondary buyout			Management buyout

Audited financial information				Audited financial information			Audited financial information

Period ended		27 June 2014¹		Period ended	30 September 2014		Year ended	31 March 2014
Turnover	£35,695,000			Turnover	£4,126,000		Turnover	£23,146,000
Operating profit	£1,580,000			Operating loss	£(539,000)		Operating profit	£3,652,000
Net assets	£6,175,000			Net liabilities	£(834,000)		Net assets	£4,213,000

Period ended	28 June 2013¹			Year ended	30 September 2013¹		Year ended	31 March 2013
Turnover	£34,475,000			Turnover	£13,783,000		Turnover	£14,443,000
Operating profit	£2,010,000			Operating profit	£3,161,000		Operating profit	£2,064,000
Net assets	£4,952,000			Net assets	£5,764,000		Net assets	£4,306,000
¹-The financial information above relates to the operating subsidiary Virgin Wine Online Limited and includes figures relating to the performance of this company prior to the MBO which completed in November 2013.				¹-The financial information quoted above for 2013 is for ATG Media Holdings Limited prior to the secondary MBO which completed in June 2014.
Movements during the year				Movements during the year			Movements during the year
A loan repayment of £0.05 million was received during the year.				The partial disposal of the Company's investment in ATG Media to Turner TopCo, resulted in the above investment in the acquirer, in June 2014.			Tessella made quarterly loan stock repayments totalling £0.07 million.

Veritek Global Holdings Limited			Fullfield Limited			EOTH Limited (trading as Rab and Lowe Alpine)
www.veritekglobal.com			www.motorclean.net			www.equipuk.com

Cost		£968,000	Cost		£1,277,000	Cost		£817,000
Valuation		£1,090,000	Valuation		£931,000	Valuation		£916,000
Basis of valuation			Basis of valuation			Basis of valuation
Earnings multiple			Earnings multiple			Earnings multiple

Equity % held			Equity % held			Equity % held
6.2%			8.9%			1.5%

Income receivable in year			Income receivable in year			Income receivable in year
£108,224			£139,333			£78,229

Business			Business			Business
Maintenance of imaging equipment			Provider of vehicle cleaning and valet services			Branded outdoor equipment and clothing


Location			Location			Location
Eastbourne, East Sussex			Laindon, Essex			Alfreton, Derbyshire


Original transaction			Original transaction			Original transaction
Management buyout			Management buyout			Acquisition capital

Audited financial information			Audited financial information			Audited financial information

Year ended	31 March 2014¹		Year ended	31 March 2014		Year ended	31 January 2014
Turnover	£14,443,000		Turnover	£38,155,000		Turnover	£34,811,000
Operating profit	£249,000		Operating profit	£2,554,000		Operating profit	£3,417,000
Net liabilities	£(804,000)		Net assets	£2,567,000		Net assets	£9,436,000

Year ended	31 March 2013²		Year ended	31 March 2013		Year ended	31 January 2013
Turnover	£24,684,000		Turnover	£24,537,000		Turnover	£27,266,000
Operating profit	£1,506,000		Operating profit	£1,234,000		Operating profit	£2,464,000
Net assets	£6,245,000		Net assets	£2,576,000		Net assets	£7,657,000
¹ - The financial information quoted above is for eight months only, after the acquisition of Veritek Global Limited in July 2013. ²-The financial information quoted above for 2013 is for Veritek Global Limited prior to the MBO which completed in July 2013.
Movements during the year			Movements during the year			Movements during the year
None			Fullfield made loan repayments totalling £0.35 million during the year.			None

Leap New Co Limited (trading as Ward Thomas Removals)			Blaze Signs Holdings Limited		Tharstern Group Limited
www.ward-thomas.co.uk			www.blaze-signs.com		www.tharstern.com
Cost		£849,000	Cost	£437,000	Cost		£790,000
Valuation		£849,000	Valuation	£816,000	Valuation		£790,000
Basis of valuation			Basis of valuation		Basis of valuation
Recent investment price			Earnings multiple		Recent investment price

Equity % held			Equity % held		Equity % held
4.5%			13.5%		8.8%

Income receivable in year			Income receivable in year		Income receivable in year
£14,594			£nil		£48,668

Business			Business		Business
Logistics, removal and storage			Manufacture and installation of signs		Software-based Management Information Systems to the print sector

Location			Location		Location
London			Broadstairs, Kent		Colne, Lancashire

Original transaction			Original transaction		Original transaction
Corporate restructuring			MBO from private ownership		Management buyout

Audited financial information			Audited financial information		Audited financial information

Year ended	30 September 2013		Year ended	31 March 2014	Year ended	31 January 2014
Turnover	£12,169,000		Turnover	£31,284,000	Turnover	£3,871,000
Operating profit	£1,995,000		Operating profit	£5,127,000	Operating profit	£799,000
Net assets	£7,597,000		Net assets	£5,614,000	Net assets	£885,000

Year ended	30 September 2012		Year ended	31 March 2013	Year ended	31 January 2013
Turnover	£10,983,000		Turnover	£22,741,000	Turnover	£3,358,000
Operating profit	£1,559,000		Operating profit	£2,301,000	Operating profit	£690,000
Net assets	£6,807,000		Net assets	£3,323,000	Net assets	£770,000

Movements during the year			Movements during the year		Movements during the year
New investment made in December 2014.			None		Investment made in July 2014. A partial loan repayment of £0.06 million was made in March 2015.

Operating profit in the above tables is stated before charging amortisation of goodwill where appropriate for all investee companies.

Investment Portfolio Summary

as at 31 March 2015

	Date of first investment/ Sector	Total book cost at 31 March 2015	Valuation at 31 March 2014	Additions at cost	Disposals at valuation	Valuation at 31 March 2015	Change in valuation for year	% of net assets by value
		£	£	£	£	£	£
Qualifying investments
Unquoted investments
ASL Technology Holdings Limited	December 2010	2,092,009	1,356,148	731,879	-	2,394,873	306,846	5.7%
Printer and photocopier services	Support services
Entanet Holdings Limited (formerly Ackling Management Limited)	February 2014	1,444,090	912,057	532,033	-	2,180,042	735,952	5.2%
Wholesale voice and data communications provider	Fixed line Telecommunications
Media Business Insight Holdings Limited (formerly South West Services Investment Limited)¹	January 2015	1,447,188	606,000	841,188	-	1,447,188	-	3.4%
A publishing and events business focused on the creative production industries	Media
Virgin Wines Holding Company Limited	November 2013	1,284,333	1,330,202	-	45,869	1,374,970	90,637	3.3%
Online wine retailer	General retailers
Turner TopCo Limited (trading as ATG Media)	October 2008	1,320,963	3,732,310	1,320,963	3,732,310	1,317,247	(3,716)	3.1%
Publisher and online auction platform operator	Media
Tessella Holdings Limited	July 2012	757,143	1,149,818	-	71,506	1,179,963	101,651	2.8%
Provider of science powered technology and consulting services	Support services
Veritek Global Holdings Limited	July 2013	967,780	967,780	-	-	1,089,947	122,167	2.6%
Maintenance of imaging equipment	Support services
Fullfield Limited (trading as Motorclean Limited)	July 2011	1,276,604	1,879,839	-	348,165	930,735	(600,939)	2.2%
Vehicle cleaning and valet services	Support services
EOTH Limited (trading as Equip Outdoor Technologies Limited)	October 2011	817,185	922,695	-	-	915,779	(6,916)	2.2%
Branded outdoor equipment and clothing	General retailers
Hollydale Management Limited	March 2015	885,000	-	885,000	-	885,000	-	2.1%
Company seeking to acquire businesses in the food sector	Support services
Knighton Management Limited	March 2015	885,000	-	885,000	-	885,000	-	2.1%
Company seeking to acquire businesses in the engineering sector	Support services
Leap New Co Limited (trading as Ward Thomas Removals and Bishopsgate)	December 2014	848,500	-	848,500	-	848,500	-	2.0%
A specialist logistics, storage and removals business	Support services
Blaze Signs Holdings Limited	April 2006	437,030	2,052,255	-	-	816,333	(1,235,922)	1.9%
Manufacturing and installation of signs	Support services
Tharstern Group Limited	July 2014	789,815	-	838,000	48,185	789,815	-	1.9%
MIS & Commercial print software solutions	Software and Computer Services
CGI Creative Graphics International Limited	June 2014	731,032	-	731,032	-	731,032	-	1.7%
Vinyl graphics to global automotive, recreation vehicle and aerospace markets	General Industrials
Gro-Group Holdings Limited	March 2013	1,123,088	1,027,009	26,986	-	695,892	(358,103)	1.7%
Baby sleep products	General retailers
Manufacturing Services Investment Limited	February 2014	608,000	608,000	-	-	608,000	-	1.4%
Company seeking to acquire businesses in the manufacturing sector	Support services
Bourn Bioscience Limited	January 2014	757,101	757,101	-	-	607,329	(149,772)	1.4%
In-vitro fertilisation clinic	Healthcare Equipment & Services
RDL Corporation Limited	October 2010	1,000,000	588,078	-	-	607,325	19,247	1.4%
Recruitment consultants for the pharmaceutical , business intelligence and IT industries	Support services
The Plastic Surgeon Holdings Limited	April 2008	392,264	376,825	-	-	511,002	134,177	1.2%
Snagging and finishing of domestic and commercial properties	Support services
Aussie Man & Van Limited	December 2014	373,341	-	373,341	-	373,341	-	0.9%
A specialist logistics, storage and removals business	Support services
Newquay Helicopters (2013) Limited	June 2006	226,000	226,000	-	-	226,000	-	0.5%
Helicopter service operators	Support services
Vectair Holdings Limited	January 2006	60,293	312,238	-	-	190,542	(121,696)	0.5%
Design and sale of washroom products	Support services
Racoon International Holdings Limited	December 2006	998,140	1,000	119,613	-	119,613	(1,000)	0.3%
Supplier of hair extensions, hair care products and training	Personal goods
Lightworks Software Limited	April 2006	25,727	67,873	-	-	60,279	(7,594)	0.1%
Software for CAD vendors	Software and Computer Services
PXP Holdings Limited (trading as Avebury Projects)	December 2006	1,220,579	57,143	-	-	-	(57,143)	0.0%
Architectural design	Construction
Legion Group plc (in liquidation)	August 2005	150,000	-	-	-	-	-	0.0%
Provision of manned guarding, mobile patrolling, and alarm response services	Support Services
Monsal Holdings Limited	December 2007	-	51,265	-	51,265	-	-	0.0%
Supplier of engineering services to the water and waste sectors	Engineering
Focus Pharma Holdings Limited	October 2007	-	740,093	-	740,093	-	-	0.0%
Licensor and distributer of generic pharmaceuticals	Support services
Youngman Group Limited	October 2005	-	699,966	-	699,966	-	-	0.0%
Manufacturer of ladders and access towers	Support services
EMaC Holdings Limited (formerly Ingleby (1879) Limited)	October 2008	-	1,489,972	-	1,489,972	-	-	0.0%
Service plans for the motor trade	Support services
Machineworks Software Limited	April 2006	-	902,986	-	902,986	-	-	0.0%
Software for CAM and machine tool vendors	Software and Computer Services
		22,918,205	22,814,653	8,133,535	8,130,317	21,785,747	(1,032,124)	51.6%
AIM quoted investments
Iafyds plc (formerly Vphase plc)	March 2001	254,586	-	-	-	-	-	0.0%
Development of energy saving devices for domestic use	Electronic and electrical equipment
		254,586	-	-	-	-	-	0.0%
Total qualifying investments		23,172,791	22,814,653	8,133,535	8,130,317	21,785,747	(1,032,124)	51.6%²
Non-qualifying investments
Media Business Insight Limited¹	as above	561,884	-	561,884	-	561,884	-	1.3%
Century 3370 plc (in liquidation)	March 2004	250,000	-	-	-	-	-	0.0%
Promotional goods and services agency	Support Services
Legion Group plc (in liquidation)	as above	106	-	-	-	-	-	0.0%
DiGiCo Global Limited	December 2011	-	1,549,846	-	1,549,846	-	-	0.0%
Design and manufacture of audio mixing desks	Technology, hardware and equipment
Newquay Helicopters (2013) Limited	as above	-	167,647	-	167,647	-	-	0.0%
ATG Media Holdings Limited	as above	-	779	-	779	-	-	0.0%
Total non-qualifying investments		811,990	1,718,272	561,884	1,718,272	561,884	-	1.3%
Total investments		23,984,781	24,532,925	8,695,419	9,848,589	22,347,631	(1,032,124)	52.9%
Cash		8,503,568	3,158,216	-	-	8,503,568		20.2%
Current investments³		11,235,859	3,727,300	-	-	11,235,859		26.7%
Total investments including money market funds and cash		43,724,208	31,418,441	8,695,419	9,848,589	42,087,058	(1,032,124)	99.8%
Debtors		180,065	2,596,972			180,065		0.5%
Creditors		(164,306)	(137,034)			(164,306)		(0.3)%
Totals		43,739,967		8,695,419	9,848,589
Net assets at the year-end			33,878,379			42,102,817		100.0%

¹ - A further £0.84 million was invested into South West Services Investment Limited ("SWSI") adding to an earlier investment of £0.61 million. This enabled SWSI to acquire Media Business Insight Limited ("MBI"). The Company is not a shareholder in MBI but it has also advanced a non-qualifying loan of £0.56 million to MBI. SWSI subsequently changed its name to Media Business Insight Holdings Limited.

² - As at 31 March 2015, the Company held more than 70% of its total investments in qualifying holdings, and therefore complied with the VCT Qualifying Investment test. For the purposes of the VCT qualifying test, the Company is permitted to disregard disposals of investments for six months from the date of disposal. It also has up to three years, before new funds raised need to be included in the qualifying investment test.

³- Disclosed within current assets as current investments in the Balance Sheet.

Key policies

The Board has put in place the following policies to be applied to meet the Company's overall objective and to cover specific areas of the Company's business.

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 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's cash and liquid resources may be invested to maximise income returns, subject to the overriding criterion that the risk of loss of capital be minimised.

UK Companies

The companies in which investments are made must have no more than £15 million of gross assets at the time of investment and £16 million immediately following the 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 per cent. of its investments in a single company or group of companies and must have at least 70 per cent. by value of its investments throughout the period in shares or securities comprised VCT qualifying holdings, of which a minimum overall of 30% by value (70% for funds raised from 6 April 2011) must be in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules). The VCT can invest less than 30% by value (70% for funds raised from 6 April 2011) of an investment in a specific company in ordinary shares. It must, however, 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).

Asset Mix

The Investment Adviser aims to hold approximately 80 per cent. of net assets by value in the Company's qualifying investments. The balance is held in readily realisable interest bearing investments and deposits and in some non-qualifying holdings in the same investee companies in which qualifying investments have been made.

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.

Co-investment

The Company aims to invest in larger, more mature unquoted companies through investing alongside the three other VCTs advised by Mobeus with a similar investment policy. This enables the Company to participate in combined investments advised on by Mobeus up to £5 million.

Borrowing

The Company's articles permit borrowings of amounts up to 10% of the adjusted capital and reserves (as defined therein). The Company has never borrowed and the Board has no current plans to undertake any borrowing.

Cash available for investment and liquidity

The Company's cash and liquid resources are held in range of instruments of varying maturities including liquid, low risk Money Market Funds and bank deposits, subject to the overriding criterion that the risk of loss of capital be minimised.

The Company has participated in the Mobeus VCTs' annual linked fundraising since 2014 in order to maintain a sufficient level of funds that can be deployed in meeting the day-to-day expenses of the Company and dividend distributions and purchases of the Company's own shares. This enables money raised prior to 6 April 2012 to be allocated for future MBO investment.

Diversity

The Directors have considered diversity in relation to the composition of the Board and have concluded that its membership is diverse in relation to gender and breadth of experience. The Board comprises three men and one woman. The Company does not have any senior managers or employees. The Board has made a commitment to consider diversity in making future appointments.

Further policies

In addition to the Investment Policy and Diversity Policy above and the policies on payment of dividends and share buybacks which are discussed earlier in the Strategic Report, the Company has adopted a number of further policies relating to:

· Human rights

· Anti-bribery

· Environmental and social responsibility

· Global greenhouse gas emissions

· Whistleblowing

These are set out in the Directors' Report in the Annual Report.

Principal risks

The Directors acknowledge the Board's responsibilities for the Company's internal control systems and have instigated systems and procedures for identifying, evaluating and managing the significant risks faced by the Company. This includes a key risk management review which takes place at each quarterly Board meeting. Further details of these are contained in the Corporate Governance section in the Annual Report. The principal risks identified by the Board are set out below:

Risk	Possible consequence	How the Board manages risk
Economic	Events such as an economic recession and movements in interest rates could affect trading conditions for smaller companies and consequently the value of the Company's qualifying investments.	· The Board monitors the portfolio as a whole to ensure that (1) the Company invests in a diversified portfolio of companies and (2) developments in the macro-economic environment such as movements in interest rates are monitored.
Investment and strategic	Investment in unquoted small companies can involve a higher degree of risk than investment in larger, and/or fully listed companies. 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.	· The Board regularly reviews the Company's investment strategy. · Investee companies are carefully selected by the Investment Adviser for recommendation to the Board. The investment portfolio is reviewed by the Board on a regular basis.
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 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.	· The Board receives regular reports from Robertson Hare LLP ("RH") who has been retained to undertake an independent VCT status monitoring role. · The Company's VCT qualifying status is continually reviewed by the Investment Adviser.
VCT Regulatory changes	The Company is required to comply with frequent changes to VCT specific regulations relating to European state Aid regulations as enacted by the UK Government. Non-compliance would result in a loss of VCT status.	· The Board receives advice from RH in respect of these requirements and conducts its affairs in order to comply with these requirements.
Regulatory	The Company is required to comply with the Companies Act, the listing rules of the UK Listing Authority and United Kingdom Accounting Standards. Changes to and breaches of any of these might lead to suspension of the Company's Stock Exchange listing, financial penalties or a qualified audit report.	· Regulatory and legislative developments are kept under review by the Board.
Financial and operating	Failure of the systems at any of the third party service providers that the Company has contracted with could lead to inaccurate reporting or monitoring. Inadequate controls could lead to the misappropriation or insecurity of assets.	· The Board carries out an annual review of the internal controls in place and reviews the risks facing the Company at each quarterly Board meeting. · It reviews the performance of the service providers annually.
Market	Movements in the valuations of the VCT's investments will, inter alia, be connected to movements in UK Stock Market indices.	· The Board receives quarterly valuation reports from the Investment Adviser. · The Investment Adviser alerts the Board about any adverse movements.
Asset liquidity	The Company's investments may be difficult to realise.	· The Board receives reports from the Investment Adviser and reviews the portfolio at each quarterly Board meeting. It carefully monitors investments where a particular risk has been identified.
Market liquidity	Shareholders may find it difficult to sell their shares at a price which is close to the net asset value.	· The Board has a share buyback policy which seeks to mitigate market liquidity risk. This policy is reviewed at each quarterly Board meeting.
Counterparty	A counterparty may fail to discharge an obligation or commitment that it has entered into with the Company.	· The Board regularly reviews and agrees policies for managing these risks. Further details can be found under 'credit risk' in the Report and Accounts.

Future prospects

For a discussion of the Company's future prospects, please see the Chairman's Statement.

Nigel Melville

Chairman

15 June 2015

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year and the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss for the Company for that period.

In preparing these financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and accounting estimates that are reasonable and prudent;

· state whether the financial statements have been prepared in accordance United Kingdom accounting standards,,subject to any material departures disclosed and explained in the financial statements;

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business;

· prepare a Strategic Report, a Directors' Report and Directors' Annual Remuneration Report which comply with the requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Website publication

The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Directors' responsibilities pursuant to Disclosure and Transparency Rule 4 of the UK Listing Authority

The Directors confirm to the best of their knowledge that:

a) The financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice give a true and fair view of the assets, liabilities, financial position and profit of the Company.

b) The Annual Report includes a fair review of the development and performance of the business and the position of the Company, together with a description or the principal risks and uncertainties that it faces.

The Board considers that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

Neither the Company not the Directors accept any liability to any person in relation to the Annual Report except to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90A and schedule 10A of the Financial Services and Markets Act 2000.

The names and functions of the Directors are stated in the Annual Report and Accounts.

For and on behalf of the Board:

Nigel Melville

Chairman

15 June 2015

NON STATUTORY ACCOUNTS

PRIMARY FINANCIAL STATEMENTS

Income Statement

for the year ended 31 March 2015

		Year ended			11 months ended
		31 March 2015			31 March 2014
	Note	Revenue	Capital	Total	Revenue	Capital	Total
		£	£	£	£	£	£
Unrealised (losses)/gains on investments	7	-	(1,032,124)	(1,032,124)	-	3,625,328	3,625,328
Realised gains on investments	7	-	4,618,332	4,618,332	-	24,286	24,286
Income	2	1,901,055	-	1,901,055	2,047,564	-	2,047,564
Investment adviser's fees	3	(222,228)	(666,684)	(888,912)	(152,635)	(457,906)	(610,541)
Other expenses		(293,602)	-	(293,602)	(255,016)	-	(255,016)
Profit on ordinary activities before taxation		1,385,225	2,919,524	4,304,749	1,639,913	3,191,708	4,831,621

Taxation on profit on ordinary activities	4	(140,960)	140,960	-	(106,850)	106,850	-
Profit on ordinary activities after taxation		1,244,265	3,060,484	4,304,749	1,533,063	3,298,558	4,831,621

Basic and diluted earnings per share:
Ordinary shares	6	4.02p	9.88p	13.90p	6.28p	13.52p	19.80p

All the items in the above statement derive from continuing operations.

There were no other gains and losses in the year/period.

The total column of this statement is the profit and loss account of the Company.

Other than revaluation movements arising on investments held at fair value through the profit and loss, there were no differences between the return as stated above and historical cost.

Balance Sheet

as at 31 March 2015

Company number: 03946235

	Note
		31 March 2014 £	31 March 2014 £
Fixed assets
Investments at fair value	7	22,347,631	24,532,925

Current assets
Debtors and prepayments		180,065	2,596,972
Current investments		11,235,859	3,727,300
Cash at bank		8,503,568	3,158,216
		19,919,492	9,482,488

Creditors: amounts falling due within one year		(164,306)	(137,034)
Net current assets		19,755,186	9,345,454

Net assets		42,102,817	33,878,379

Capital and reserves
Called up share capital	8	364,686	280,621
Capital redemption reserve	8	79,621	73,413
Share premium reserve	8	15,901,497	5,363,551
Revaluation reserve	8	1,116,647	5,930,144
Special distributable reserve	8	9,537,078	11,565,499
Profit and loss reserve	8	15,103,288	10,665,151
Equity shareholders' funds		42,102,817	33,878,379

Basic and diluted net asset value per ordinary share	9	115.45p	120.73p

Reconciliation of Movements in Shareholders' Funds

for the year ended 31 March 2015

	Note	Year ended 31 March 2015	11 months ended 31 March 2014
		£	£
Opening shareholders' funds		33,878,379	25,695,376
Net share capital issued in the year/period (net of expenses)	8	10,582,348	5,410,938
Share capital bought back	8	(652,628)	(740,347)
Profit for the year/period		4,304,749	4,831,621
Dividends paid in year/period	5	(6,010,031)	(1,319,209)
Closing shareholders' funds		42,102,817	33,878,379

Cash Flow Statement

for the year ended 31 March 2015

	Year ended		11 months ended
	31 March 2015		31 March 2014
	Note	£		£
Operating activities
Interest income received		1,594,079		1,510,256
Dividend income		522,340		298,109
Other income		2,418		-
Investment adviser fees paid		(888,912)		(610,541)
Cash payments for other expenses		(239,851)		(286,518)
Net cash inflow from operating activities		990,074		911,306

Investing activities
Purchase of investments	7	(7,374,456)		(2,341,072)
Disposals of investments	7	13,145,958		3,246,670
Net cash inflow from investing activities		5,771,502		905,598

Dividends
Equity dividends paid	5	(6,010,031)		(1,319,209)

Cash inflow before financing and liquid resource management		751,545		497,695

Financing
Purchase of own shares		(680,302)		(761,518)
Shares capital raised (net of expenses)	8	12,782,668		3,210,619
Net cash inflow from financing		12,102,366		2,449,101

Management of liquid resources (Increase)/ no change in monies held in current investments		(7,508,559)		-

Increase in cash for the year/period		5,345,352		2,946,796

Notes to the Accounts

for the year ended 31 March 2015

1 Accounting policies

A summary of the principal accounting policies, all of which have been applied consistently throughout the year/period, is set out below:

a) Basis of accounting

The accounts have been prepared under UK Generally Accepted Accounting Practice (UK GAAP) and the Statement of Recommended Practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ("SORP") issued by the Association of Investment Companies in January 2009. The financial statements are prepared under the historical cost convention except for the measurement of certain financial instruments at fair value, which are in accordance with FRS26.

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 the 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) Comparatives

In the previous period, the Company changed its financial year end to 31 March and, therefore the comparatives in these financial statements and notes to the accounts relate to the 11 month period ended 31 March 2014.

d) Investments

All investments held by the Company are classified as "fair value through profit and loss", and are measured 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 on 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 measured 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 Adviser 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 Adviser, will agree the values that represent the extent to which an investment loss 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 that will be received upon repayment of loan stock investment are accrued at fair value when the Company receives the right to the premium and when considered recoverable.

(iv) 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.

e) Cash and liquid resources

Cash, for the purposes of the cash flow statement, comprises cash in hand and deposits repayable on demand. Liquid resources are current asset investments which are disposable without curtailing or disrupting the business and are readily convertible into known amounts of cash at their carrying values. Liquid resources comprise term deposits of less than one year (other than cash) and investments in money market funds.

f) Income

Dividends receivable on quoted equity shares are brought into account on the ex-dividend date. Dividends receivable on unquoted equity shares are brought into account when the Company's right to receive payment is established and there is no reasonable doubt that payment will be received.

Interest income on loan stock and dividends on preference shares are accrued on a daily basis. Provision is made against this income where recovery is doubtful or where it will not be received in the foreseeable future. Where the loan stocks only require interest or a redemption premium to be paid on redemption, the interest and redemption premium is recognised as income once redemption is reasonably certain. Until such date interest is accrued daily and included within the valuation of the investment, where appropriate.

g) Capital reserves

(i) Realised (included within the Profit and Loss Account reserve)

The following are accounted for in this reserve:

· Gains and losses on realisation of investments;

· Permanent diminution in value of investments;

· Transaction costs incurred in the acquisition of investments; and

· 75% of Investment Adviser fee expense, together with the related tax effect to this reserve in accordance with the policies in 'Expenses' below.

(ii) Revaluation reserve (Unrealised capital reserve)

Increases and decreases in the valuation of investments held at the year-end are accounted for in this reserve, except to the extent that the diminution is deemed permanent.

In accordance with stating all investments at fair value through profit and loss, all such movements through both revaluation and realised capital reserves are shown within the Income Statement for the year/period.

(iii) Special distributable reserve

The cost of share buybacks are charged to this reserve. In addition, any realised losses on the sale or impairment of investments, and 75% of the adviser fee expense, and the related tax effect, are transferred from the Profit and Loss Account reserve to this reserve.

(iv) Share premium reserve

This reserve contains the excess of gross proceeds less issue costs over the nominal value of shares allotted under recent Offers for Subscription.

(v) Capital redemption reserve

The nominal value of shares bought back and cancelled is held in this reserve, so that the Company's capital is maintained.

h) Expenses

All expenses are accounted for on an accruals basis.

25% of the Investment Adviser's fees are charged to the revenue column of the Income Statement, while 75% is charged against the capital column of the Income Statement. This is in line with the Board's expected long-term split of returns from the investment portfolio of the Company.

100% of any performance incentive fee payable for the year/period is charged against the capital column of the Income Statement, as it is based upon the achievement of capital growth.

Expenses are charged wholly to revenue, with the exception of expenses incidental to the acquisition or disposal of an investment, which are written off to the capital column of the Income Statement or deducted from the disposal proceeds as appropriate.

i) Taxation

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the Company's taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in the tax assessments in years different from those in which they are recognised in the financial statements.

Deferred tax is measured at the average tax rates that are expected to apply in the years in which the timing differences are expected to reverse based on tax rates and laws that have been enacted or substantively enacted at the balance sheet date. Deferred tax is measured on a non-discounted basis.

A deferred tax asset is recognised only to the extent that it is more likely than not that future taxable profits will be available against which the asset can be utilised.

Any tax relief obtained in respect of adviser fees allocated to capital is reflected in the capital reserve - realised and a corresponding amount is charged against revenue. The tax relief is the amount by which corporation tax payable is reduced as a result of these capital expenses.

2 Income

	Year ended 31 March 2015	11 months ended 31 March 2014
	£	£
Income from bank deposits	29,815	3,344

Income from investments
- from equities	286,492	492,984
- from overseas based OEICs	10,873	9,101
- from UK based OEICs	4,811	4,283
- from loan stock	1,566,646	1,519,044
	1,868,822	2,025,412

Other income	2,418	18,808

Total income	1,901,055	2,047,564

Total income comprises
Dividends	302,176	506,368
Interest	1,596,461	1,522,388
Other	2,418	18,808
	1,901,055	2,047,564
Income from investments comprises
Listed overseas securities	10,873	9,101
Unlisted UK securities	291,303	497,267
Loan stock interest	1,566,646	1,519,044
	1,868,822	2,025,412

Total loan stock interest due but not recognised in the year was £103,565 (11 months ended 31 March 2014: £210,897).

3 Investment Adviser's fees

	Year ended 31 March 2015			11 months ended 31 March 2014
	Revenue	Capital	Total	Revenue	Capital	Total
	£	£	£	£	£	£
Mobeus Equity Partners LLP	222,228	666,684	888,912	152,635	457,906	610,541

Under the terms of a revised investment management agreement dated 10 September 2010, Mobeus Equity Partners LLP ("Mobeus") provides investment advisory, administrative and company secretarial services to the Company, for a fee of 2% per annum calculated on a quarterly basis by reference to the net assets at the end of the preceding quarter, plus a fee of £113,589 per annum, the latter being subject to changes in the retail prices index each year. In 2013, Mobeus has agreed to waive such further increases due to indexation, until otherwise agreed by the Board. In accordance with the policy statement published under "Management and Administration" in the Company's prospectus dated 10 May 2000, the Directors have charged 75% of the investment adviser expenses to the capital account. This is in line with the Board's expectation of the long-term split of returns from the investment portfolio of the Company. For the year ended 31 March 2015, the expense cap hasn't been breached (11 months ended 31 March 2014: £nil).

The Company is responsible for external costs such as legal and accounting fees, incurred on transactions that do not proceed to completion ("abort expenses") subject to the cap on total annual expenses referred to above.

The former C fund performance incentive fee agreement dated 20 September 2005 continues to be in place, and operated as detailed below:

New Ordinary and former C share fund shares

· upon the merger of the two former share classes on 10 September 2010, the performance incentive fee payable is calculated as an amount equivalent to 20% of the excess of annual dividends paid to the holders of New Ordinary Shares, over the annual dividend target and any dividend shortfall brought forward, as long as the average NAV per share equals or exceeds base NAV, both for that year. This amount is then reduced to the proportion which the C Shares' aggregate merger net asset value represents of the entire merger net asset value of the Company, and that ordinary shares more recently issued* also represent, of the total number of shares in issue at each year-end; and

· the dividend shortfall per former C Share and per recently issued ordinary share at 31 March 2015 is 5.05p (£1,462,354 in aggregate, being 79.4% of the total shortfall at the year-end (where 79.4% is the proportion of the total of former C shares and ordinary shares recently issued* in 2014 and 2015, to the total number of shares in issue at the year-end date).

*During the year, the above incentive fee calculations were updated to include the impact of the new shares issued under the fundraising Offers in 2014 and 2015. These new shares also form part of the estimated proportion of shares that rank for the share of any shortfall or excess of annual dividends paid over the annual dividend target and any dividend shortfall brought forward.

The 6p annual dividend target (7.21p at the year-end) (as adjusted for RPI) and the £1 base NAV maintenance provisions will continue to apply in respect of shares in issue and funds raised at the date of the Share Merger. The £1 base NAV provision is adjusted for shares issued since the share merger, and was 107.51p at the year-end.

In accordance with general market practice, the Investment Adviser earned arrangement fees and fees for supplying Directors and/or monitoring services from investee companies. The share of such fees attributable to the investments made by the Company were £150,817 (11 months ended 31 March 2014: £74,984) and £136,277 (11 months ended 31 March 2014: £105,067) respectively. The fees for supplying directors and/or monitoring services were from 30 (11 months ended 31 March 2014: 23) investee companies during the year/period.

Under the terms of an Offer for Subscription with the other Mobeus advised VCTs launched on 10 December 2014, Mobeus was entitled to fees of 3.25% of the investment amount received from investors. The Offer closed on 10 March 2015, being fully subscribed. Based upon fully subscribed Offers of £39 million across all four VCTS, this equalled £1,267,500, out of which all the costs associated with the Offer were met, excluding any payments to advisers facilitated under the terms of the Offers.

4 Taxation on ordinary activities

	Year ended 31 March 2015			11 months ended 31 March 2014
	Revenue	Capital	Total	Revenue	Capital	Total
	£	£	£	£	£	£
a) Analysis of tax charge:
UK Corporation tax on profits for the year/period	140,960	(140,960)	-	106,850	(106,850)	-
Total current tax charge	140,960	(140,960)	-	106,850	(106,850)	-
Corporation tax is based on a rate of 20% (2014: 20%)

b) Profit on ordinary activities before tax	1,385,225	2,919,524	4,304,749	1,639,913	3,191,708	4,831,621
Profit on ordinary activities multiplied by small company rate of corporation tax in the UK of 20% (2014: 20%)	277,045	583,905	860,950	327,983	638,342	966,325
Effect of:
UK dividends	(57,298)	-	(57,298)	(98,597)	-	(98,597)
Unrealised gains not allowable	-	206,425	206,425	-	(725,066)	(725,066)
Realised gains not taxable	-	(923,666)	(923,666)	-	(4,857)	(4,857)
Marginal rate relief	7,624	(7,624)	-	15,269	(15,269)	-
Losses utilised	(86,411)	-	(86,411)	(137,805)	-	(137,805)
Actual current tax charge	140,960	(140,960)	-	106,850	(106,850)	-

Tax relief relating to investment adviser fees is allocated between revenue and capital where such relief can be utilised.

No asset or liability has been recognised for deferred tax in relation to capital gains or losses on revaluing investments as the Company is exempt from corporation tax in relation to capital gains or losses as a result of qualifying as a Venture Capital Trust.

There is no potential liability to deferred tax (2014: nil). There is an unrecognised deferred tax asset of £90,934 (2014: £203,946). This unrecognised deferred tax asset relates to taxable losses arising from expenses exceeding taxable income. In the directors' opinion, these are unlikely to be recovered for the foreseeable future and therefore have not been recognised.

5 Dividends paid and payable

	Year ended 31 March 2015	11 months ended 31 March 2014
	£	£
Amounts recognised as distributions to equity holders in the year/period:

Ordinary shares
Second Interim income dividend paid for the year ended 31 March 2014 of nil p (year ended 30 April 2013: 0.10p) per share	-	26,384
Interim capital dividend paid for the year ended 31 March 2015 of 14.00p (11 months ended 31 March 2014: nil p) per share	4,215,829	-
Interim income dividend paid for the year ended 31 March 2015 of 2.75p (11 months ended 31 March 2014: 4.70p) per share	986,811	1,240,056
Interim capital dividend paid for the year ended 31 March 2015 of 2.25p (11 months ended 31 March 2014: 0.20p) per share	807,391	52,769
Total paid	6,010,031	1,319,209

Any proposed final dividend is subject to approval by Shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

Set out below are the total income dividends payable in respect of the financial year/period, which is the basis on which the requirements of section 274 of the Income Tax Act 2007 are considered.

	Year ended 31 March 2015	11 months ended 31 March 2014
	£	£
Ordinary shares
Revenue available for distribution by way of dividends for the year/period	1,244,265	1,533,063

Interim income dividend for the year ended 31 March 2015 paid of 2.75p (11 months ended 31 March 2014: 4.70p) per share	986,811	1,240,056

6 Basic and diluted earnings and return per share

	Year ended 31 March 2015	11 months ended 31 March 2014
	£	£
Total earnings after taxation:	4,304,749	4,831,621
Basic and diluted earnings per share (note a)	13.90p	19.80p
Net revenue earnings from ordinary activities after taxation	1,244,265	1,533,063
Basic and diluted revenue earnings per share (note b)	4.02p	6.28p

Net unrealised capital (losses)/gains	(1,032,124)	3,625,328
Net realised capital gains	4,618,332	24,286
Capital expenses (net of taxation)	(525,724)	(351,056)
Total capital earnings	3,060,484	3,298,558
Basic and diluted capital earnings per share (note c)	9.88p	13.52p

Weighted average number of shares in issue in the year/period	30,966,734	24,404,368

Notes:

a) Basic earnings per share is total earnings after taxation divided by the weighted average number of shares in issue.

b) Revenue earnings per share is the revenue return after taxation divided by the weighted average number of shares in issue.

c) Capital earnings per share is the total capital return after taxation divided by the weighted average number of shares in issue.

d) There are no instruments that will increase the number of shares in issue in future. Accordingly, the above figures currently represent both basic and diluted returns.

7 Investments at fair value

Movements in investments during the year are summarised as follows:

	Traded on AIM	Unquoted equity shares	Unquoted preference shares	Loan Stock	Total
	£	£	£	£	£

Cost at 31 March 2014	254,586	6,258,157	41,271	14,825,743	21,379,757
Permanent impairment at 31 March 2014	(254,586)	(883,876)	(739)	(810,398)	(1,949,599)
Unrealised gains/(losses) at 31 March 2014	-	4,478,353	(15,997)	640,411	5,102,767
Valuation at 31 March 2014	-	9,852,634	24,535	14,655,756	24,532,925

Purchases at cost	-	2,305,418	1,138	6,388,863	8,695,419
Sale proceeds	-	(9,478,637)	(17,191)	(5,299,593)	(14,795,421)
Reclassified at valuation	-	1,000	-	(1,000)	-
Realised gains on investments	-	4,175,690	14,286	756,856	4,946,832
Unrealised (losses)/gains on investments	-	(911,030)	20,430	(141,524)	(1,032,124)
Closing valuation at 31 March 2015	-	5,945,075	43,198	16,359,358	22,347,631
Cost at 31 March 2015	254,586	7,914,104	23,963	15,792,128	23,984,781
Permanent impairment at 31 March 2015	(254,586)	(1,688,074)	(739)	(810,398)	(2,753,797)
Unrealised (losses)/gains at 31 March 2015	-	(280,955)	19,974	1,377,628	1,116,647
Valuation at 31 March 2015	-	5,945,075	43,198	16,359,358	22,347,631

A breakdown of the increases and the decreases in unrealised valuations of the portfolio is shown in the Investment Portfolio Summary in the Annual Report.

£804,198 of the cost of certain investment was treated as permanently impaired in the year.

Reconciliation of investment transactions to cash and income statement movements

The difference between sales proceeds above of £14,795,421 and disposals of investments shown by the Cash Flow Statement of £13,145,958, is £1,649,463. This is due to new equity and loan stock instruments of £1,320,963, received as non-cash consideration for the partial sale of ATG Media but included above, and transaction costs of £328,500, not deducted from proceeds above. These transaction costs also account for the difference between realised gains above of £4,946,832 and that shown in the Income Statement of £4,618,332.

The difference between investment purchases above of £8,695,419 and that shown by the Cash Flow Statement of £7,374,456 is £1,320,963, which is the accounting cost of ATG Media Holdings Limited sale proceeds, received in the form of the acquirer's equity and loan stock.

8 Movement in share capital and reserves

	Called up Share capital	Capital redemption reserve	Share Premium	Revaluation reserve	Special distributable reserve *	Profit and loss account*	Total
	£	£	£	£	£	£	£

At 31 March 2014	280,621	73,413	5,363,551	5,930,144	11,565,499	10,665,151	33,878,379

Shares issued under Offers for Subscription (note a)	90,273	-	10,811,491	-	-	-	10,901,764
Expenses of share offers (note a)	-	-	(273,545)	-	(45,871)	-	(319,416)
Share buybacks	(6,208)	6,208	-	-	(652,628)	-	(652,628)
Transfer of realised losses to Special distributable reserve (note b)	-	-	-	-	(1,329,922)	1,329,922	-
Realisation of previously unrealised gains	-	-	-	(3,781,373)	-	3,781,373	-
Dividends paid	-	-	-	-	-	(6,010,031)	(6,010,031)
Profit for the year	-	-	-	(1,032,124)	-	5,336,873	4,304,749

As at 31 March 2015	364,686	79,621	15,901,497	1,116,647	9,537,078	15,103,288	42,102,817

* - These reserves total £24,640,366 (2014: £21,976,064) and are regarded as distributable reserves for the purpose of assessing the Company's ability to pay dividends to shareholders. All of the special distributable reserve originates from funds raised before 6 April 2014.

The Company's revaluation reserve represents the capital reserve (unrealised) upon investments held at the year- end.

Note a: Shares issued as part of Offers for Subscription (net of expenses) per the Cash Flow Statement of £12,782,668 differ to that shown as shares issued above of £10,582,348 (net of expenses of £319,416) by £2,200,320, being net funds due to the Company arising from shares issued on 31 March 2014, which was a debtor at the previous period-end, since received.

Note b: The cancellation of the formerly named C Share Fund's share premium account (as approved at the Extraordinary General meeting held on 10 September 2008 and by the order of the Court dated 28 October 2009), together with the previous cancellation of the share premium account attributable to the former Ordinary Share Fund and C Shares, has provided the Company with a special distributable reserve. The purpose of this reserve is to fund market purchases of the Company's own shares as and when it is considered by the Board to be in the interests of the shareholders, and to write-off existing and future losses as the Company must take into account capital losses in determining distributable reserves. The total transfer of £1,329,922 from the special distributable reserve to the profit and loss account is the total of realised losses incurred by the Company in the year.

9 Basic and diluted net asset value per share

Net asset value per ordinary share is based on net assets at the end of the year/period, and on 36,468,632 (2014: 28,062,140) ordinary shares, being the number of ordinary shares in issue on that date.

10 Management of capital

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns for shareholders and to provide an adequate return to shareholders by allocating its capital to assets commensurate with the level of risk.

By its nature, the Company has an amount of capital, at least 70% (as measured under the tax legislation) of which is and must be, and remain, invested in the relatively high risk asset class of small UK companies within three years of that capital being subscribed. The Company accordingly has limited scope to manage its capital structure in the light of changes in economic conditions and the risk characteristics of the underlying assets. Subject to this overall constraint upon changing the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets if so required to maintain a level of liquidity to remain a going concern.

Although, as the Investment Policy implies, the Board would consider levels of gearing, there are no current plans to do so. It regards the net assets of the Company as the Company's capital, as the level of liabilities are small and the management of them is not directly related to managing the return to shareholders. There has been no change in this approach from the previous period.

11 Segmental analysis

The operations of the Company are wholly in the United Kingdom, from one class of business.

12 Post balance sheet events

On 1 April 2015, the Company invested £848,500 into each of eight acquisition vehicles, namely Backhouse Management Limited, Barham Consulting Limited, Chatfield Services Limited, Creasy Marketing Services Limited, McGrigor Management Limited, Pound FM Consultants Limited, Tovey Management Limited and Vian Marketing Limited.

On 2 April 2015, the Company also invested £840,015 into acquisition vehicle Duncary 16 Limited. On 23 April 2015, Duncary 16 Limited was used to support the MBO of Synbra UK Limited, the UK's largest domestic manufacturer of expanded polystyrene products. Duncary 16 has since changed its name to Jablite Holdings Limited.

On 21 May 2015, a further £56,698 of proceeds were received in respect of the sale of Youngman Group Limited.

On 29 May 2015, the Company received a partial loan repayment from Jablite Holdings Limited (formerly Duncary 16 Limited) realising proceeds of £169,700 including premium of £46,927.

On 3 June 2015, the Company made a further investment in CGI Creative Graphics International Limited of £268,536.

13 Statutory information

The financial information set out in these statements does not constitute the Company's statutory accounts for the year ended 31 March 2015 in terms of section 434 of the Companies Act 2006 but is derived from those accounts. Statutory accounts for the year ended 31 March 2015 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 498 of the Companies Act 2006.

14 Annual Report

The Annual Report for the year ended 31 March 2015 will shortly be made available on the Company's website: www.mig2vct.co.uk. and Shareholders will be notified of this by email or post or sent a hard copy in the post in accordance with their instructions. Copies will be available thereafter to members of the public from the Company's registered office.

15 Annual General Meeting

The Annual General Meeting of the Company will be held at 12 noon on Thursday, 10 September 2015 at 33 St James's Square, London SW1Y 4JY.

Contact details for further enquiries:

Robert Brittain of Mobeus Equity Partners LLP (the Company Secretary) on 020 7024 7600 or by e-mail to vcts@mobeusequity.co.uk.

Mark Wignall or Mike Walker at Mobeus Equity Partners LLP (the Investment Adviser) on 020 7024 7600 or by e-mail to info@mobeusequity.co.uk.

DISCLAIMER

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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