Annual Financial Report

RNS Number : 9488J

Mobeus Income & Growth 4 VCT PLC

16 April 2020

 

mobeus Income & Growth 4 VCT plc

Annual Financial Results of the Company for the Year ended 31 December 2019

Mobeus Income & Growth 4 VCT plc (the "Company") today announces the final results for the year ended 31 December 2019.  These results were approved by the Board of Directors on 16 April 2020. You may, in due course, view the Annual Report & Financial Statements, comprising the statutory accounts of the Company by visiting www.mig4vct.co.uk .

Financial Highlights

As at 31 December 2019: Net assets: £ 50.04 million Net asset value ("NAV") per share: 74.90 pence

-	Net asset value ("NAV") total return per share of 10.7% for the year.
-	Share price total return per share of 17.9% for the year.
-	Dividends paid and declared in respect of the financial year in review total 19.00 pence per share. Cumulative dividends paid stand at 128.20 pence per share.
-	£4.48 million was invested into five new growth capital investments and one existing portfolio company during the year.
-	A total of £8.14 million of cash proceeds was received, primarily consisting of £5.90 million from three realisations.

Cumulative total shareholder return per share (NAV basis)

The longer-term trend of performance on this measure is shown in the table below:

Reporting date as at 31 December	Net assets	NAV per share	Cumulative dividends  paid per share	Cumulative total return per share to shareholders (NAV basis)1
	(£m)	(p)	(p)	(p)
2019	50.04	74.901	124.201	199.101
2018	57.90	84.79	105.20	189.99
2017	58.41	86.57	101.20	187.77
2016	52.76	107.57	73.20	180.77
2015	57.01	117.89	62.20	180.09

1	These figures exclude the impact of a dividend of 4.00 pence per share paid after the year-end on 10 January 2020. Payment of these dividends will reduce the Company's NAV per share and increase cumulative dividends paid to date by 4.00 pence per share.

The chart above shows the recent past performance of the original funds raised in 1999.  The original subscription price was 200 pence per share before the benefit of income tax relief.  Subscription prices from subsequent fundraisings and historic performance data from 2008 are shown in the Investor Performance Appendix on the Company's website, www.mig4vct.co.uk , where they can be downloaded by clicking on table under "Reviewing the performance of your investment" on the home page.

On 1 July 2006, Mobeus became sole Investment Adviser to the Company.  The cumulative NAV total return at this date was 122.51 pence.

CHAIRMAN'S STATEMENT I am pleased to present the annual results of Mobeus Income & Growth 4 VCT plc for the year ended 31 December 2019. Overview The Company has made significant progress in all areas this year. New investments, realisations of investments and valuations of the existing portfolio can all report positive developments. The Company has made investments into five new companies, provided follow-on funding to one existing portfolio company and has realised its holdings in three portfolio companies, including the Company's first profitable exit of a younger growth capital investment. Furthermore, after the year-end, the Company achieved its most successful exit to date, Auction Technology Group. At the time of writing there remains significant uncertainty with regard to the lasting effects on the world economy of COVID-19 although it is clear that UK economic growth will reduce this year. Further information is contained within the Outlook, the Investment Adviser's Review, and Note 10 - Post Balance Sheet Events. Further details of the investment activity can be found under the 'Investment portfolio' section of my Statement and in the Investment Adviser's Review. Mobeus Equity Partners LLP, ("the Investment Adviser"), continues to report an attractive pipeline of further growth capital opportunities. Meanwhile, the former MBO portfolio constructed under the previous rules continues to provide a healthy income yield, although the absolute amount of that yield earned by the Company is declining as these investments are sold. Only growth capital investments are allowed under the 2015 VCT rules, so they are replacing the MBO investments that are no longer permitted. As the growth capital investments are in younger businesses, they are unlikely to deliver the income yields of the more mature MBO businesses. We are delighted with the strong support from investors for our recent fundraising, which was launched on 25 October 2019 and became fully subscribed in January 2020. The Board appreciates the continued support from existing Shareholders and extends a warm welcome to new Shareholders. Performance The Company's NAV total return per share for the year was a commendable 10.7% (2018: 2.6%) (being the closing NAV plus dividends paid in the year, divided by the opening NAV), while the share price total return was 17.9% (2018: 4.6%). This total NAV return was primarily attributable to strong gains in the value of the portfolio of investee companies, the profitable exit of MBO investments, The Plastic Surgeon and ASL, and growth capital investment, Redline Worldwide. The Company's NAV at 31 December 2019 was 74.90 pence. After the year-end, the Company realised its holding in Pattern Analytics Limited (trading as Biosite) generating an overall return of 1.5x the original cost. Shortly afterwards, Turner Topco Limited (trading as Auction Technology Group), an MBO portfolio company, was realised generating a very high overall return of 4.5x the original cost. After allowing for tax on the income portion of proceeds, this sale represents the best realisation since the Company's inception, at an uplift in isolation of 2.63 pence over the 31 December 2019 NAV per share of 74.90 pence. Further information is contained in the Investment Adviser's Review. For more information on the longer-term performance of your investment in the Company, please consult the Investor Performance Index on the Company's website www.mig4vct.co.uk . Investment portfolio The portfolio was valued at £38.54 million (2018: £36.30 million) at the year-end representing 109.1% of cost (2018: 98.4%). During the year, £4.48 million was invested in five new growth capital investments and one existing portfolio company (analysed in the Investment Adviser's Review and explained within Note [x] to the Financial Statements). The five new growth capital investments, at a cost of £4.03 million, are: · Arkk Consulting, a regulatory and reporting requirement service provider; · Parsley Box, home delivered, ambient ready meals for the elderly; · Active Navigation, a provider of enterprise-level file analysis software; · IPV, a developer of media asset management software; and · Bleach, an established and trusted brand in the hair colourants market. In addition, one follow-on growth investment totalling £0.45 million was made into MPB Group, an online marketplace for used camera and video equipment; We expect follow-on investments to continue to be a feature of the growth capital investments as they require further capital to achieve scale. After the year-end, £0.62 million was invested into Bella & Duke Limited, a premium frozen raw dog food provider. Shareholders should note that, at the year-end, 38.0% by value of the investment portfolio was held in MBO type investments and 62.0% was held in growth capital investments. £17.77 million has been invested in growth capital investments since the 2015 VCT rule changes. Cash proceeds totalling £8.14 million for the year were received from portfolio companies that were either sold, repaid loans or settled other capital proceeds. Of this total, £5.90 million was received as cash proceeds from the sales of The Plastic Surgeon, ASL and Redline. Proceeds of £0.39 million were received from the partial realisation of Master Removers, and a further £1.85 million was received as loan repayments and consideration arising from companies sold in the previous year. For the year under review, the portfolio generated a net gain of £2.31 million on investments realised. Within this, the principal gains were from the Plastic Surgeon, ASL and Redline sales (which were realised at a profit over opening valuations of £0.39 million, £1.08 million and £0.54 million respectively). Redline was the first growth capital investment to be realised profitably. Further gains of £0.30 million were achieved by the receipt of proceeds relating to Entanet, an investment sold in a previous year, as well as the partial exit from Master Removers Group. The portfolio also achieved a net increase in unrealised valuations of £3.36 million for the year on investments still held, with positive increases from Auction Technology Group (subsequently realised as noted below), MPB Group and Proactive partially offset by valuation falls at Wetsuit Outlet, Supercarers and Master Removers Group. After the year-end, the Company realised its holding in Pattern Analytics Limited (trading as Biosite), another of its growth capital investments. The Company received £1.98 million in cash from the sale and generated a return on original cost of 1.5x in the three years that this investment was held. These proceeds were the same as the value of this investment held at the year-end. Also after the year-end, the Company achieved a substantial gain over cost upon the sale of Auction Technology Group, receiving capital proceeds of £4.18 million compared to a value at the year-end of £3.03 million. This further appreciation in capital value of £1.15 million upon sale reflects the strategic premium paid by the acquirer of the business. The Company also received interest owed on completion of £1.09 million that has not been recognised in these 2019 accounts. Over the 11.5 years' life of the investment, total proceeds of £9.03 million have been received, an overall multiple over cost of 4.5x and an IRR of 29%. These transactions and valuation movements are explained further in the Investment Review. Dividends Your Board has declared and paid three interim dividends in respect of the year ended 31 December 2019 of 13.00, 2.00 and 4.00 pence paid on 20 September 2019, 30 December 2019 and 10 January 2020, respectively. The dividends paid in respect of the year ended 31 December 2019 of 19.00 pence per share (2018: 8.00 pence) per share, bring cumulative dividends paid since inception to 128.20 pence (2018: 109.20 pence) per share. The Company's target of paying a dividend of at least 4.00 pence per share in respect of each financial year has been achieved in each of the last nine years, and often exceeded. Whilst the Board still believes this dividend target is attainable, it should be noted that the move of the portfolio to an increased proportion of younger growth capital investments may lead to increased volatility, which could offset the return in any one year. A chart showing the dividends paid in respect of each of the last five years and cumulative dividends on the same basis is included in the Strategic Report. A full dividend history is contained in the Performance Overview on the Company's website: www.mobeus.co.uk/investor-area/vct-investors On 2 April 2020, the Board declared a 6.00 pence per share interim dividend in respect of the year ending 31 December 2020 which will be payable on 7 May 2020 to Shareholders on the Register on 14 April 2020. Dividend investment scheme As announced on 14 August 2018, the Board decided to suspend the Company's Dividend Investment Scheme ("the Scheme") and since this date all dividends have been paid in cash. The Scheme had historically been considered a practical and cost effective way for the Company to retain cash for investment and operating purposes. However, as both current and projected liquidity levels were deemed to be sufficient over the medium-term, the Board considered in August 2018 that the Scheme should be suspended. Following a further review, the Board believes that it would be beneficial for the Company and for Shareholders for the Scheme to be reinstated as of the close of the Company's Annual General Meeting on 2 June 2020. From this date onwards, all those participants who remain registered on the Scheme will have any of their future dividends automatically reinvested to purchase new shares in the Company at the latest announced per share NAV price. Shareholders can view the details of the Scheme and opt-in or out by visiting www.mig4vct.co.uk or contacting [e-mail] with any queries. As part of the Board's consideration in recommencing the Scheme, it has carried out a review of the Scheme terms and conditions ("Scheme Rules"). The Board has decided to amend the Scheme Rules so that any new shares will be issued at the latest published NAV per share, as is current market practice, rather than as previously, at the higher of 70% of NAV per share or the mid-market price per share which, in practice, resulted in shares being issued at an effective discount to NAV of around 10%. In addition, there are a number of other technical, regulatory and clarificatory changes being made to the Scheme Rules. These changes will apply to new participants from today and from the close of the Company's Annual General Meeting on 2 June 2020 in respect of existing participants. All existing Scheme participants will be notified of the changes and given the opportunity to remain or withdraw from the Scheme. Any Shareholders not currently participants of the Scheme may visit www.mig4vct.co.uk and sign up to the Scheme or existing members can opt-out. Fundraising On 25 October 2019, the Company launched an offer for subscription of £8 million with an over-allotment facility of an additional £5 million, alongside offers from the other Mobeus advised VCTs. I am pleased to report that the Offer experienced strong demand such that the Company received subscriptions amounting to the full amount sought shortly after the Company's year-end in January 2020. In accordance with the Offer's prospectus, the first allotment under the Offer took place on 8 January 2020, which included all applications received up to 20 December 2019 totalling £10.67 million. The balance of subscriptions of £2.33 million were allotted before the end of the tax year on 2 April 2020. Share buybacks On 1 August 2019, the Board changed its share buyback policy objective of maintaining the discount to NAV at which the Company's shares may trade in the market from approximately 10% or less, to approximately 5% or less. This change has in part contributed to the share price total return of 17.9%, and was made to reflect current industry practice. During the year, the Company made five purchases of its shares, buying back a total of 1,483,865 shares. The buybacks represented 2.2% (2018: 1.7%) of the issued share capital of the Company at the beginning of the year. Further details are included in the Annual Report. The shares bought back were subsequently cancelled. Shareholder Communications This year's annual Shareholder event was held on Tuesday, 4 February 2020 at the National Gallery in central London. Separate daytime and evening sessions included presentations on the Mobeus advised VCTs' investment activity and performance. We have received positive feedback from many of the circa 400 people who attended the event and were pleased to hear that overall they found the day informative and worthwhile. Environmental, Social and Governance (ESG) Your Board would like to assure Shareholders that it is taking these issues seriously, and future annual reports will be covering them in more detail. Further reporting and procedural requirements for these increasingly important issues required by current and future regulation should enable the Board to provide concise information and implement further processes, both relevant to the Company and correspondingly useful to stakeholders. These objectives do require that regulations are measured, proportionate and cost effective to introduce. Fraud Warning Boiler Room fraud and unsolicited communications to Shareholders. We have been made aware of an increase in the number of Shareholders being contacted in connection with sophisticated but fraudulent financial scams which purport to come from the Company or to be authorised by it. This is often by a phone call or an email usually originating from outside of the UK, often claiming or appearing to be from a corporate finance firm and typically offering to buy your VCT shares at an inflated price. Further information on boiler room scams and fraud advice plus who to contact, can be found first in the answer to a question "What should I do if I receive an unsolicited offer for my shares?" within the VCT Investor area of the Investment Adviser's website in the A Guide to VCTs section: www.mobeus.co.uk/investor-area and secondly, in a link to the FCA's ScamSmart site: www.fca.org.uk/ scamsmart We strongly recommend that you seek financial advice before taking any action if you remain in any doubt. You can also contact the Investment Adviser on 0207 024 7600, or email [e-mail] to check whether any claims made by a caller are genuine. Shareholders are also encouraged to ensure their personal data is always held securely and that data held by the Registrars of the Company is up to date, to avoid cases of identity fraud. Annual General Meeting The next Annual General Meeting of the Company will be held at 11:30 am. on Tuesday, 2 June 2020 at The Clubhouse, 8 St James's Square, London SW1Y 4JU. However, this is subject to Government advice and the impact of COVID-19 to allow physical meetings of two or more people currently prohibited under the Stay at Home Measures. It is likely that these measures will still be in place at the time of the AGM and Shareholders will not be allowed to attend the AGM meeting in person. The Board encourages Shareholders to submit their vote by proxy either by completing and returning the form enclosed or proxy votes may also be submitted electronically via the Link Shareholder Portal www.signalshares. com. Shareholders are also advised to appoint the Chairman of the Meeting as their proxy as another nominated proxy may not be able to attend the meeting. Any updates will be announced to the London Stock Exchange and on the website: www.migvct.co.uk which Shareholders intending to attend should consult. Shareholders are encouraged to return their proxy forms to submit their vote either by completing and returning the proxy form enclosed or electronically via the Registrar's Shareholder portal at: www. signalshares.com. The Notice of the meeting is included towards the end of the Annual Report and an explanation of the resolutions to be proposed can be found in the Directors' Report, also within the Annual Report. Outlook The market sectors in which the Company operates have been very active. There has been considerable competition for good propositions, so entry pricing has been an issue in some cases. With regard to the UK generally the arrival of a government with a clear majority and a more focused view on Brexit, and on other important issues, is a clear positive. On the other hand, the effects of the COVID-19 outbreak and its recent impact on world economies generally and the UK specifically cannot, as at this date, be fully assessed either from a duration or severity point of view.  However, it has already proved itself to be an event of major significance for all economic activity.The Board and the Investment Adviser will need to assess the consequences carefully and will be working through these issues as they arise.  Further details can be found in the Investment Adviser's Review of this report. I draw Shareholders' attention to the announcement of an unaudited NAV at 24 March 2020 of 64.16 pence per share made on 26 March 2020. While the short-term outlook for the UK economy is unpredictable, your Board considers that your Company is well positioned, with a portfolio still including some relatively mature investments providing an income return and an increasing proportion of younger, growth capital companies seeking to achieve scale. The strong result achieved for the year reflects the growth and valuation increases in both elements of the portfolio, underpinned by three profitable realisations. It is particularly pleasing to report the Company's first profitable realisation of a portfolio company investment made since the VCT rule change in 2015 and a second after the year-end. Your Board again cautions that investing in growth capital investments in younger businesses involves increased risk and that returns from them may take longer to emerge and may be more volatile. Shareholders should expect these companies to take time to achieve their desired objectives and scale, but there also exists the potential for significant gains in some cases. The successful fundraising in 2019/20 provides the Company with adequate funds to meet its cash needs (bolstered by the sales of Biosite and Auction Technology Group) and to continue the current investment rate in the short to medium-term. Recent developments are likely to make the next 1-2 years more difficult, but will also provide opportunities that should benefit the longer term. The Board As mentioned in my statement last year, the issue of Board refreshment continues. Graham Paterson was appointed to the Board on 10 May 2019. He also took over the roles of Chairman of the Audit Committee, and of the Nomination and Remuneration Committee. Christopher Burke was appointed to the Board on 26 November 2019. Christopher has enjoyed a very successful career in the technology sector, and his advice will be an important additional asset to the Board as the proportion of the portfolio invested in younger growth capital businesses increases. I shall be stepping down as Chairman later this year. A recruitment process is progressing well in identifying my successor. I joined the Board of the Company in 2002. At that time the Company was suffering from very poor performance by two of its managers, and as a result was sub scale and unloved by the market. The management arrangements were changed and over the years performance has moved from being fourth quartile to climbing towards first quartile, and the Fund was built up to an economic size. My thanks go to all the Mobeus team, and to all the Company's hard working Directors for putting up with me for so long. I am sure they will deliver good results for Shareholders in the future. Finally, I would like to take this opportunity once again to thank all Shareholders for their continued support. Christopher Moore Chairman

INVESTMENT POLICY The Company invests primarily in a diverse portfolio of UK unquoted companies. Investments are made selectively across a number of sectors, principally in established companies. Investments are usually structured as part loan stock and part equity in order to produce a regular income stream and to generate capital gains from realisations. There are a number of conditions within the VCT legislation which need to be met by the Company and which may change from time to time. The Company will seek to make investments in accordance with the requirements of prevailing VCT legislation. Asset allocation and risk diversification policies, including the size and type of investments the Company makes, are determined in part by the requirements of prevailing VCT legislation. No single investment may represent more than 15% (by VCT tax value) of the Company's total investments at the date of investment. The Company's cash and liquid funds are held in a portfolio of readily realisable interest bearing investments, deposit and current accounts, of varying maturities, subject to the overriding criterion that the risk of loss of capital be minimised. The Company's Articles of Association permit borrowings of amounts up to 10% of the adjusted capital and reserves (as defined therein). However, the Company has never borrowed and the Board would only consider doing so in exceptional circumstances. Investment ADVISER'S Review COVID-19 update after the year-end After the year-end, the world has been in the midst of a COVID-19 pandemic. Many of the VCTs' portfolio companies are encountering very challenging trading conditions, the full extent and impact of which will emerge only over time. The Investment Adviser has reviewed and evaluated the impact of COVID-19 on each sector exposure and upon the value of the portfolio. The Investment Adviser is fully engaged with the portfolio companies to ensure that all steps are being taken to assist each to trade through this crisis and restore and grow value thereafter. As part of this, Mobeus is reviewing the implications for new and follow-on investments with the recent fundraising and relatively high liquidity levels providing a solid foundation for such assessments. Mobeus continually reviews a significant pipeline of investment opportunities. Only the companies with sufficient potential will be taken towards investment. It is expected that the current pace and quantum of new and follow-on investments will continue in the short to medium-term. Nonetheless the extent of the negative impact of the COVID-19 pandemic upon the UK and world economy cannot yet be fully evaluated.  Mobeus is carefully assessing possible consequences, both for each investee company and their implications for new and follow-on investment. Portfolio review The portfolio's activity in the year is summarised as follows: 2019 2018 £m £m Opening portfolio 36.53 1 31.48 value New and further 4.48 5.88 investments Disposal proceeds (8.14) (1.77) Net realised gains/ 2.31 (0.36) (losses) Valuation movements 3.36 1.07 1 Portfolio value at 38.54 36.30 31 December 1  - These figures have been adjusted due to £0.23 million of contingent consideration recognised as a debtor at the 2018 year-end but received this year. See Note 8 of the Notes to the Financial Statements for further details. This has been a year of good progress building the growth capital portfolio with five investments into new growth businesses totalling £4.03 million, and one existing growth portfolio company receiving follow-on funding of £0.45 million, and net cash proceeds received of £8.14 million, primarily from three realisations. This brings the total invested in growth capital investments to £17.77 million since the introduction of the VCT regulations in 2015. The past year's investment and divestment activity has increased the proportion of the portfolio regarded as growth capital investments by value to 62.0% (including AIM and legacy) at the year-end. After the year-end, £0.62 million was invested in Bella & Duke Limited, a premium frozen raw dog food provider. Detail of these movements for each investee company are provided in the Investment Portfolio Summary at the end of this Investment Review. As mentioned in the Chairman's Statement, investing in growth capital investments in younger businesses does involve increased risk. Returns from these companies are expected to take longer to materialise and may be more volatile. The portfolio's contribution to the overall results of the Company is summarised in the table in the next column as follows: Investment Portfolio 2019 2018 Capital Movement £m £m Increase in the 5.30 4.45 value of unrealised investments Decrease in the (1.94) (3.38) value of unrealised investments Net increase in the 3.36 1.07 1 value of unrealised investments Realised gains 2.31 0.47 Realised losses - (0.83) Net realised gains/ 2.31 (0.36) (losses) in the year Net investment 5.67 0.71 portfolio capital movement in the year 1  - This figure has been adjusted due to £0.23 million of contingent consideration recognised as a debtor at the 2018 year-end but received this year. See Note 8 of the Notes to the Financial Statements for further details. Valuation changes of portfolio investments still held Within the net valuation increases of £5.30 million, the principal contributors were: Auction Technology Group - £1.77 million, MPB Group - £0.85 million and Proactive Group - £0.84 million. Auction Technology Group, which the Company part realised in 2014, traded well ahead of budget with growth showing in all areas of its business. The sale of this business after the year-end concluded an 11½ year partnership with the Company. MPB Group has grown its revenues substantially. In July, it secured £9.00 million of further investment at a higher valuation, of which the Company contributed £0.45 million of a total of £2.00 million that was provided by the Mobeus VCTs. A small number of new growth investments (such as Proactive Group) have shown initial uplifts from cost, due in large part to the structure of the Company's investment, but, in some cases, also due to the underlying investee company performance. Proactive Group has made consistent positive progress in all its markets since investment. The principal driver of the value increase over the period however is the preference structure of the investment which allocates a greater share of economic value to the Company at the current stage of the business' development. Within total valuation decreases of £(1.94) million, the main reductions were: Wetsuit Outlet - £(0.64) million, Supercarers - £(0.36) million and Master Removers Group - £(0.28) million. Wetsuit Outlet continues to disappoint post investment, although it is anticipated that measures recently implemented to restore margins will soon begin to improve profitability. Supercarers is performing well behind plan and in response is undertaking a restructure of its cost base. Finally, whilst Master Removers Group remains very profitable and cash generative, Brexit uncertainties over the last few months has impacted recent performance. Realised gains and losses from sales of investments The Company achieved net realised gains on the sale of investments of £2.31 million over their value at the start of the year mainly comprising three significant and profitable exits. In May, the Company realised its long held investment in Plastic Surgeon generating a gain in the year of £0.39 million which contributed to a multiple of cost over the life of the investment of 5.6x. Shortly afterwards, in June, ASL Technology Group was sold generating a gain in the year of £1.08 million and, including all proceeds received since investment, an overall multiple of cost of 2.2x. In December, the Company realised its first growth capital investment made under the new VCT rules, Redline Worldwide, generating a gain of £0.54 million in the year. Over the period that this investment was held, a multiple of 1.6x cost has been achieved to date with further proceeds potentially payable in due course.  £0.06 million of these proceeds were received following the year-end, bringing the multiple on cost achieved to 1.7x. Finally, the Company achieved a gain of £0.27 million arising from the disposal of Entanet in 2017, increasing the final return on cost to 2.8x, while the partial realisation of Master Removers Group during the year generated a gain of £0.03 million. After the year-end, in February, the Company exited investments held in Pattern Analytics (trading as Biosite) and Auction Technology Group ("ATG"). Pattern Analytics (trading as Biosite) was realised generating proceeds of £2.07 million over the life of the investment and an overall gain over original cost of 1.5x. The realisation of ATG has generated proceeds over the life of the investment of £9.03 million compared to an original cost of £2.00 million, a multiple on cost of 4.5x over the 11½ years this investment was held - an exceptional return for Shareholders. Investment portfolio yield and capital repayments During the year under review, the Company received the following amounts in interest and dividend income: Investment Portfolio 2019 2018 Yield £m £m Interest received in 1.72 1.84 the year Dividends received in 0.24 0.29 the year Total portfolio income 1.96 2.13 in the year 1 Portfolio value at 38.54 36.30 31 December Portfolio Income Yield (Income as a % of Portfolio value at 31 December) 5.1% 5.9% 1 Total portfolio income in the year is generated solely from investee companies within the portfolio. See Note 3 to the Financial Statements for all income receivable by the Company. The Company also received loan stock repayments of £1.35 million, at cost. New investment in the year A total of £4.03 million was invested into five new investments during the year as detailed below:

Company	Business	Date of investment	Amount of new investment (£m)
Parsley Box	Home delivered, ambient ready meals for the elderly	May 2019	0.67
Parsley Box is a UK direct to consumer supplier of home delivered, ambient ready meals for the elderly. Founded in 2017, Parsley Box has grown rapidly and has developed a unique meal delivery solution for its customers. The company supplies a diverse range of ambient meals via next day delivery which are easy to store and aim to contribute to a more independent and healthier lifestyle. The investment will scale the company's marketing strategy, enable it to process larger order volumes and continue to build out its team. The company's unaudited accounts for the year ended 31 March 2019 show revenues of £3.08 million and a loss before interest, tax and amortisation of goodwill of £(0.50) million.
Arkk Consulting	Regulatory and reporting requirement service provider	May 2019	1.12
Arkk Consulting (trading as Arkk Solutions) provides services and software to enable organisations to remain compliant with regulatory reporting requirements. Arkk was established in 2009 and currently has over 800 clients across 20 countries. These include more than 80 of the FTSE 350, and half of the largest 20 accountancy firms in the UK. The investment will build on Arkk's reputation and customer base, to target the cloud-based period end reporting market by building the sales and marketing team. The company's audited accounts for the year ended 31 December 2018 show turnover of £3.36 million and a loss before interest, tax and amortisation of goodwill of £(0.34) million.
Active Navigation	File analysis software	November 2019	1.10
Data Discovery Solutions, trading as Active Navigation, is a file analysis software solution which makes it easier for companies to clean up network drives, respond to new data protection laws and dispose of redundant and out dated documents. Active Navigation's solution is used by significant blue chip customers, particularly those in highly regulated industries such as energy and professional services, as well as government entities in the USA, Canada, Australia and the UK. Active Navigation will seek to drive continued growth from its file analysis platform with the recruitment of experienced sales and professional services staff. The company's audited accounts for the year ended 30 June 2018 show revenues of £5.02 million and a profit before interest, tax and amortisation of goodwill of £1.45 million.
IPV	Media asset software	November 2019	0.62
IPV Limited ("IPV") has developed a media asset management software product called 'Curator', enabling enterprise level customers to receive and search hours of video footage, edit into multiple short clips and broadcast to online video platforms (such as YouTube) and company intranets, in a very short time. IPV's impressive list of blue-chip clients, such as Turner Sports, NASA and Sky, are looking to improve efficiency in managing their video content. The company has built an impressive senior management team of proven operators and is targeting a media asset management market in the US and UK, worth an estimated £1 billion per annum. The investment will be used to build out a sales and marketing team and to fund lead generation for new direct and partner channels as well as supporting the existing partner network. The company's audited accounts for the year ended 31 December 2018 show revenues of £2.25 million and a loss before interest, tax and amortisation of goodwill of £(1.28) million.
Bleach	Hair colourants brand	December 2019	0.52
Bleach London Holdings ("Bleach") is an established branded, fast growing business which manufactures a range of haircare and colouring products. Bleach is regarded as a leading authority in the hair colourant market having opened one of the world's first salons focused on colouring and subsequently launched its first range of products in 2013. The investment was part of a wider £5.60 million investment round alongside Burda Principal Investments and angel investors. The funds will be used to drive continued growth in sales through retailers as well as capitalise on its strong social media presence whilst accelerating its growing direct to consumer channel. The company's unaudited accounts for the year ended 31 December 2018 show revenues of £3.75 million and a loss before interest, tax and amortisation of goodwill of £(0.01) million.

Further investments in existing portfolio companies in the year

The Company made a further investment totalling £0.45 million into one existing portfolio company during the year under review, as detailed below:

Company	Business	Date of investment	Amount of new investment (£m)
MPB Group	Online marketplace for used camera and video equipment	July 2019	0.45
MPB Group is Europe's leading online marketplace for used camera and video equipment. Based in Brighton, its custom-designed pricing technology enables MPB Group to offer both buy and sell services through the same platform and offers a one-stop shop for all its customers. Having expanded into the US (opening a New York office) and German markets as part of the initial VCT investment round, this follow-on investment, alongside funds provided by two other third-party investors, is to support its continued growth plan. As it has more than doubled its sales over the last two years, this investment will also help drive the company's objective to create a £100m+ turnover internationally diverse and profitable re-commerce business. The company's audited accounts for the year ended 31 March 2019 show turnover of £31.91 million and a loss before interest, tax and amortisation of goodwill of £(1.73) million.

Realisations during the year

The Company realised its investments in ASL, Plastic Surgeon and Redline during the year, generating an aggregated net realised gain for the year of £2.01 million. Net cash proceeds received from the sale of these investments totalled £5.90 million, as detailed below:

Company	Business	Period of investment	Total cash proceeds over the life of the investment/ Multiple over cost
Plastic Surgeon	Supplier of snagging and finishing services to the property sector	April 2008 to May 2019	£2.56 million 5.6 x cost
The Company sold its remaining investment in Plastic Surgeon to Polygon Group for £1.44 million (realised gain in the year: £0.39 million), including a preference share repayment of £0.06 million in January 2019. Over the eleven years this investment was held, it generated proceeds of £2.56 million compared to an original investment cost of £0.46 million which is a multiple on cost of 5.6x and an IRR of 20.5%.
ASL Technology	Printer and photocopier services	December 2010 to June 2019	£4.22 million 2.2 x cost
The Company sold its investment in ASL Technology for £3.40 million (realised gain in the year: £1.08 million). Over the eight and a half years this investment was held, it generated proceeds of £4.22 million compared to an original investment cost of £1.93 million, which is a multiple on cost of 2.2x and an IRR of 12.6%.
Redline	Provider of security services to the aviation industry and other sectors	February 2016 to December 2019	£1.37 million 1.6x cost
The Company sold its investment in Redline Worldwide for £1.06 million (realised gain in the year: £0.54 million). Since investment in 2016, the investment has generated proceeds to date of £1.37 million compared to an original investment cost of £0.84 million, which is a multiple on cost to date of 1.6x and an IRR of 16.0%. Further proceeds may be receivable in due course.

There was a partial realisation of Master Removers Group ("MRG") which generated proceeds of £0.39 million and a realised gain of £0.03 million in the year. This occurred following a reorganisation of MRG's share capital resulting in the Company increasing its equity share in MRG from 4.7% to 7.2%.

Realisations after the year-end

After the year-end, the Company realised its investments in Pattern Analytics Limited (trading as Biosite) and Turner Topco Limited (trading as Auction Technology Group), as detailed below:

Company	Business	Period of investment	Total cash proceeds over the life of the investment/ Multiple over cost
Biosite	Workforce management and security services	November 2016 to February 2020	£2.07 million 1.5 x cost
The Company sold its investment in Pattern Analytics Limited (trading as Biosite) to ASSA ABLOY for £1.98 million. Since investment in 2016, the investment has generated proceeds of £2.07 million compared to an original investment cost of £1.34 million, which is a multiple on cost of 1.5x and an IRR of 21.0%.
Auction Technology Group	SaaS based online auction marketplace platform	October 2008 to February 2020	£9.03 million 4.5 x cost
The Company sold its investment in Turner Topco Limited (trading as Auction Technology Group) to TA Associates for £5.27 million (including £1.09 million loan interest due on completion). This investment generated proceeds over the life of the investment of £9.03 million (including proceeds received following a partial realisation from a sale to ECI Partners in June 2014) compared to an original cost of £2.00 million, which is a multiple on cost of 4.5x and an IRR of 28.9%.

New investments after the year-end

The Company made one new investment after the year-end, as detailed below:

Company	Business	Date of investment	Amount of new investment (£)
Bella & Duke	Premium frozen raw dog food provider	February 2020	0.62
Bella & Duke is a direct to consumer subscription service, providing premium frozen raw dog food to pet owners in the UK. Founded in 2016, the business provides an alternative to standard meal options for dogs by focusing on the well documented health benefits of a raw food diet. This area is a growing niche in the large and established pet food market and is being driven by the premiumisation of dog food. The investment will seek to optimise its production and supply facilities, expand and enhance its team and develop alternative products (such as cat food). The company's unaudited accounts for the year ended 31 March 2019 show revenues of £2.68 million and a loss before interest, tax and amortisation of goodwill of £(0.61) million.

Loan stock repayments and other receipts

The Company also received loan repayments totalling £1.35 million (most notably Hollydale Management Limited (£0.44 million)), and proceeds from an investment realised in a previous year of £0.50 million.

In addition to net realised gains for the year on the three disposals above of £2.01 million, there were also gains on proceeds arising from an investments in a previous year of £0.27 million and MRG's realised gain of £0.03 million, to equal the total realised gains for the year of £2.31 million, as shown in both tables of this review.

Funds available for investment

Cash and other liquid investments available for investment amounted to £11.56 million at the year-end. Of this amount, £2.63 million is held as cash in bank accounts, and the balance is placed in AAA rated money market funds. The returns on these funds are relatively low, but the Board retains its policy of seeking above all to preserve capital for its uninvested funds. This figure has increased by £19.78 million after the year-end following the receipt of net funds of £12.53 million arising under the allotments of shares under the Company's Offer for Subscription on 8 January 2020, and the receipt of proceeds from two realisations after the year-end referred to above.

Mobeus Equity Partners LLP

Investment Adviser

INVESTMENT PORTFOLIO SUMMARY

				% of	% of
	Cost at	Valuation at	Valuation at	equity	portfolio
	31-Dec-19	31-Dec-18	31-Dec-19	held	by value
	£	£	£
Mobeus Equity Partners Portfolio
Tovey Management Limited (trading as Access IS)	2,469,013	3,013,724	3,571,056	9.7%	9.3%
Provider of data capture and scanning hardware
Turner Topco Limited (trading as Auction Technology Group)	1,529,075	1,255,082	3,029,777	3.5%	7.9%
SaaS based online auction marketplace platform
MPB Group Limited	1,480,993	1,402,016	2,701,332	5.3%	7.0%
Online marketplace for used photographic equipment
Virgin Wines Holding Company Limited	1,930,813	2,372,306	2,475,731	9.7%	6.4%
Online wine retailer
EOTH Limited (trading as Equip Outdoor Technologies)	951,471	1,976,902	2,148,792	1.7%	5.6%
Distributor of branded outdoor equipment and clothing (Rab and Lowe Alpine)
Preservica Limited	1,585,773	2,082,403	2,043,873	11.0%	5.3%
Seller of proprietary digital archiving software
Pattern Analytics Limited (trading as Biosite)	1,338,539	1,978,710	1,978,710	5.6%	5.1%
Workforce management and security services for the construction industry
Proactive Group Holdings Inc	755,340	1,060,873	1,900,421	2.6%	4.9%
Provider of media services and investor conferences for companies primarily listed on secondary public markets
Media Business Insight Holdings Limited	2,722,760	1,871,714	1,893,907	15.7%	4.9%
A publishing and events business focused on the creative production industries
CGI Creative Graphics International Limited	1,449,746	1,439,959	1,344,908	6.3%	3.5%
Vinyl graphics to global automotive, recreation vehicle and aerospace markets
Vian Marketing Limited (trading as Red Paddle Co)	899,074	1,378,902	1,337,175	7.1%	3.5%
Design, manufacture and sale of stand-up paddleboards and windsurfing sails
My Tutorweb Limited	1,307,644	1,307,644	1,307,644	7.2%	3.4%
Digital marketplace connecting school pupils seeking one-to-one online tutoring
Ibericos Etc. Limited (trading as Tapas Revolution)	1,044,869	1,135,102	1,274,306	5.8%	3.3%
Spanish restaurant chain
Arkk Consulting Limited	1,118,490	-	1,142,351	7.5%	3.0%
Provider of services and software to enable organisations to remain compliant with regulatory reporting requirements
Tharstern Group Limited	1,091,886	1,070,871	1,106,429	12.2%	2.9%
MIS & Commercial print software solutions
Data Discovery Solutions Limited (trading as Active Navigation)	1,100,500	-	1,100,500	6.3%	2.9%
Provider of global market leading file analysis software for information governance, security and compliance
Manufacturing Services Investment Limited (trading as Wetsuit Outlet)	2,333,102	1,651,280	1,015,878	6.4%	2.6%
Online retailer in the water sports market
Buster and Punch Holdings Limited	530,392	687,347	925,639	4.5%	2.4%
Industrial inspired lighting and interiors retailer
Rota Geek Limited	437,000	685,092	816,619	3.7%	2.1%
Workforce management software
Master Removers Group 2019 Limited (formerly Master Removers Group Limited) (trading as Anthony Ward Thomas, Bishopsgate and Aussie Man & Van)	348,641	1,426,419	785,346	7.2%	2.0%
A specialist logistics, storage and removals business
Parsley Box Limited	668,400	-	704,359	4.9%	1.8%
Supplier of home delivered, ambient ready meals for the elderly
IPV Limited	619,487	-	619,487	5.5%	1.6%
Provider of media asset software
Bourn Bioscience Limited	1,132,521	687,046	606,708	7.7%	1.6%
Management of In-vitro fertilisation clinics
Vectair Holdings Limited	24,732	360,155	522,139	2.1%	1.4%
Designer and distributor of washroom products
Bleach London Holdings Limited	519,672	-	519,672	3.4%	1.3%
Hair colourants brand
Kudos Innovations Limited	328,950	328,950	515,372	3.2%	1.3%
Online platform that provides and promotes academic research dissemination
RDL Corporation Limited	1,000,000	478,719	293,708	9.1%	0.8%
Recruitment consultants for the pharmaceutical and IT industries
Blaze Signs Holdings Limited	190,631	286,967	291,039	5.7%	0.8%
Manufacturer and installer of signs
Omega Diagnostics Group plc2	200,028	208,344	233,345	1.1%	0.6%
In-vitro diagnostics for food intolerance, auto-immune diseases and infectious diseases
Jablite Holdings Limited	376,083	122,422	94,021	9.1%	0.2%
Manufacturer of expanded polystyrene products
BG Training Limited	10,625	5,313	5,313	0.0%	0.0%
City-based provider of specialist technical training
Supercarers Limited	485,730	364,298	-	4.3%	0.0%
Online platform that connects people seeking care home from experienced independent carers
BookingTek Limited	652,137	163,034	-	3.5%	0.0%
Software for hotel groups
Veritek Global Holdings Limited	1,620,086	9,953	-	11.9%	0.0%
Maintenance of imaging equipment
Racoon International Group Limited	484,347	-	-	8.0%	0.0%
Supplier of hair extensions, hair care products and training
CB Imports Group Limited (trading as Country Baskets)	175,000	-	-	5.8%	0.0%
Importer and distributor of artificial flowers, floral sundries and home décor products
H Realisations (2018) Limited (formerly Hemmels Limited) (in liquidation)	23,250	-	-	0.0%	0.0%
Company specialising in sourcing, selling and servicing of high price classic cars
Disposals in year
ASL Technology Holdings Limited	-	2,327,966	-	0.0%	0.0%
Printer and photocopier services
The Plastic Surgeon Holdings Limited	-	1,046,666	-	0.0%	0.0%
Snagging and finishing of domestic and commercial properties
Redline Worldwide Limited	-	521,616	-	0.0%	0.0%
Provider of security services to the aviation industry and other sectors
Hollydale Management Limited (dissolved)	-	438,200	-	0.0%	0.0%
Company seeking to carry on a business in the food sector
Backhouse Management Limited (dissolved)	-	226,800	-	0.0%	0.0%
Company seeking to carry on a business in the motor sector
Creasy Marketing Services Limited (dissolved)	-	226,800	-	0.0%	0.0%
Company seeking to carry on a business in the textile sector
McGrigor Management Limited (dissolved)	-	226,800	-	0.0%	0.0%
Company seeking to carry on a business in the pharmaceutical sector
Barham Consulting Limited (dissolved)	-	226,800	-	0.0%	0.0%
Company seeking to carry on a business in the catering sector
Total	34,936,800	36,053,195	38,305,557		99.4%
Former Elderstreet Private Equity Portfolio
Cashfac Limited	260,101	245,465	232,724	2.9%	0.6%
Provider of virtual banking application software solutions to corporate customers
Sift Group Limited	135,391	-	-	1.3%	0.0%
Developer of business-to-business internet communities
Total	395,492	245,465	232,724		0.6%
Total Investment Portfolio	35,332,292	36,298,660	38,538,281		100.0%
Total Investment Portfolio split by type
Growth focused portfolio ⁵	20,257,495	19,291,443	23,910,253		62.0%
MBO focused portfolio ⁵	15,074,797	17,007,217	14,628,028		38.0%

Notes

1  'Other investments' comprise principally loan stock instruments and/or relatively small amounts of preference shares.

2  £501,987 was received in respect of Entanet Holdings Limited, a company realised in 2017.

3  This figure is less than Unrealised gains/(losses) on investments per Note 8 due to an amount of  contingent consideration of £225,894 recognised in the prior year, which has now been received.

4  Unrealised gains/(losses) in the year of £3,362,520 and Net realised gains/(losses) in year of £2,312,644 total Net investment portfolio gains of £5,675,164 per the Income Statement.

5  The growth focused portfolio contains all investments made after the change in the VCT regulations in 2015 plus some investments that are growth in nature made before this date. The MBO focused portfolio contains investments made prior to 2015 as part of the previous MBO strategy.

For further information on the Investment Portfolio, please see the Annual Report and Financial Statements

Principal risks, management and regulatory environment 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 of the Directors' Report in the Annual Report. The principal risks identified by the Board are set out below: Risk Possible consequence How the Board manages risk 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 exempt from capital gains tax on investment gains. Any breach of these rules may lead to the Company losing its approval as a Venture Capital Trust, 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 Company's VCT qualifying status is continually reviewed by the Investment Adviser. ● The Board receives regular reports from its VCT Status Adviser who has been retained by the Board to monitor the Company's compliance with the VCT Rules. Economic and political Events such as an economic recession, Brexit negotiations, movement in interest rates and the impact of COVID-19 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 (1) ensure that the Company invests in a diversified portfolio of companies and (2) ensure that developments in the macro-economic environment such as movements in interest rates are monitored. ● The Board and Investment Adviser have carried out an analysis of the possible impact of Brexit on the portfolio which will be kept under review. Investment Investment in VCT qualifying earlier stage unquoted small companies involves a higher degree of risk than investment in fully listed companies. Smaller companies often have limited product lines, markets or financial resources, may not be profitable at the point of investment and may be dependent for their management on a smaller number of key individuals. This may lead to variable investment returns and the use of more subjective valuation methodologies. Following the introduction of the new VCT Rules in 2015 the Company is no longer permitted to invest in MBOs. The focus of investment has therefore moved to providing growth capital investment to younger companies. ●● The Board regularly reviews the Company's investment strategy. ● Careful selection and review of the investment portfolio on a regular basis. ● The Investment Adviser has provided a growing pipeline of compliant investment opportunities following a continuing strengthening of its investment team. ● The valuation of the investment portfolio and valuation methodologies are reviewed by the Board each quarter. 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 breach of any of these might lead to suspension of the Company's Stock Exchange listing, financial penalties, a qualified audit report or the loss of the Company's status as a VCT. Furthermore, changes to the UK VCT legislation or the State-aid rules could have an adverse effect on the Company's ability to achieve satisfactory investment returns. ● Regulatory and legislative developments are kept under review by the Company's solicitors and the Board. Please see the Chairman's Statement for the latest details of the impact of recent VCT legislation. 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 and receives reports by exception. ● It reviews the performance of the service providers annually. Market Movements in the valuations of the Company'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 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. liquidity The risk profile of the Company has changed as a result of changes to VCT legislation. As the Company is required to focus its new investment activity on growth capital investments in younger companies it is anticipated that investment returns will be more volatile and have a higher risk profile. The Board remains confident that the Investment Adviser has adapted to these changing investment requirements, although the early stage investment process remains largely unproven. The combination of high liquidity levels in the Company and the challenge of new VCT rules may also result in continuing high liquidity which may be a drag on performance. The Board continues to manage excess liquidity through dividend distributions where appropriate. These issues will be monitored by the Board during the year. 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 with the 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' 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 the 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 of the principal risks and uncertainties that it faces. Having taken advice from the Audit Committee, the Board considers the Annual Report and Financial Statements, taken as a whole, as 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 nor 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. For and on behalf of the Board: Christopher Moore Chairman

FINANCIAL STATEMENTS

Income Statement for the year ended 31 December 2019
		Year ended 31 December 2019				Year ended 31 December 2018
	Notes	Revenue	Capital	Total		Revenue	Capital	Total
		£	£	£		£	£	£
Net investment portfolio gains	8	-	5,675,164	5,675,164		-	930,576	930,576
Income	3	2,107,357	-	2,107,357		2,263,918	-	2,263,918
Investment Adviser's fees	4a	(309,641)	(928,923)	(1,238,564)		(311,111)	(933,333)	(1,244,444)
Other expenses	4d	(451,261)	-	(451,261)		(378,431)	-	(378,431)
Profit/(loss) on ordinary activities before
taxation		1,346,455	4,746,241	6,092,696		1,574,376	(2,757)	1,571,619
Taxation on profit/(loss) on ordinary activities	5	(211,879)	176,496	(35,383)		(243,837)	177,334	(66,503)
Profit for the year and total comprehensive
income		1,134,576	4,922,737	6,057,313		1,330,539	174,577	1,505,116
Basic and diluted earnings per ordinary share	6	1.67p	7.28p	8.95p		1.95p	0.25p	2.20p

The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the unrealised gains and realised gains/(losses) on investments and the proportion of the Investment Adviser's fee charged to capital.

The total column is the Statement of Total Comprehensive Income of the Company prepared in accordance with Financial Reporting Standards ("FRS"). In order to better reflect the activities of a VCT and in accordance with the Statement of Recommended Practice ("SORP") issued in November 2014 (updated in October 2019) by the Association of Investment Companies, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The revenue column of profit attributable to equity shareholders is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 274 Income Tax Act 2007.

All the items in the above statement derive from continuing operations of the Company. No operations were acquired or discontinued in the year.

Balance Sheet as at 31 December 2019			Company No. 03707697
			31 December 2019		31 December 2018
Fixed assets	Notes		£		£
Investments at fair value	8		38,538,281		36,298,660
Current assets
Debtors and prepayments			183,175		529,190
Current investments	9		8,928,456		18,830,389
Cash at bank	9		2,627,511		2,541,058
			11,739,142		21,900,637
Creditors: amounts falling due within one year			(242,109)		(303,513)
Net current assets			11,497,033		21,597,124
Net assets			50,035,314		57,895,784
Capital and reserves
Called up share capital			667,991		682,830
Share premium reserve			-		31,474,977
Capital redemption reserve			8,056		26,257
Revaluation reserve			3,713,586		1,848,472
Special distributable reserve			35,514,889		14,784,518
Realised capital reserve			8,935,662		6,815,730
Revenue reserve			1,195,130		2,263,000
Equity shareholders' funds			50,035,314		57,895,784
Basic and diluted net asset value per ordinary share			74.90p		84.79p

The Financial Statements were approved and authorised for issue by the Board of Directors on 16 April2020 and were signed on its behalf by:

Christopher Moore

Chairman

			Non-distributable reserves				Distributable reserves
		Called up	Share	Capital			Special	Realised	Revenue
		share	premium	redemption	Revaluation		distributable	capital	reserve
Notes		capital	reserve	reserve	reserve		reserve	reserve			Total
							(note a)	(note b)	(note b)
		£	£	£	£		£	£	£		£
At 1 January 2019		682,830	31,474,977	26,257	1,848,472		14,784,518	6,815,730	2,263,000		57,895,784
Comprehensive
income for the year
Profit for the year		-	-	-	3,362,520		-	1,560,217	1,134,576		6,057,313
Total comprehensive
income for the year		-	-	-	3,362,520		-	1,560,217	1,134,576		6,057,313
Contributions by and
distributions to owners
Shares bought back
(note c)		(14,839)	-	14,839	-		(1,071,326)	-	-		(1,071,326)
Dividends paid	7	-	-	-	-		(8,953,893)	(1,690,118)	(2,202,446)		(12,846,457)
Total contributions
by and distributions
to owners		(14,839)	-	14,839	-		(10,025,219)	(1,690,118)	(2,202,446)		(13,917,783)
Other movements
Cancellation of Share
premium reserve
(note d)		-	(31,474,977)	(33,040)	-		31,508,017	-	-		-
Realised losses
transferred to special
reserve (note a)		-	-	-	-		(752,427)	752,427	-		-
Realisation of
previously unrealised
appreciation		-	-	-	(1,497,406)		-	1,497,406	-		-
Total other movements		-	(31,474,977)	(33,040)	(1,497,406)		30,755,590	2,249,833	-		-
At 31 December 2019		667,991	-	8,056	3,713,586		35,514,889	8,935,662	1,195,130		50,035,314

Note a: The Special distributable reserve also provides the Company with a reserve to absorb any existing and future realised losses and, when considered by the Board to be in the interests of Shareholders, to fund share buybacks and for other corporate purposes. The transfer of £752,427 to the special reserve from the realised capital reserve above is the total of realised losses incurred by the Company in the year. As at 31 December 2019, the Company has a special reserve of £35,514,889, £16,437,335 of which relates to reserves from shares issued on or before 5 April 2014, or that arise from shares issued more than three years ago. Share issues are not distributable under VCT rules if they are within three years of the end of an accounting period in which shares were issued.

Note b: The realised capital reserve and the revenue reserve together comprise the Profit and Loss Account of the Company.

Note c: During the year, the Company purchased 1,483,865 of its own shares at the prevailing market price for a total cost of £1,071,326, which were subsequently cancelled. This differs to the figure shown in the Statement of Cash Flows of £1,134,829 by £63,503 which was a creditor from the previous year.

Note d: The cancellation of £31,474,977 from the Share Premium Reserve and £33,040 from the Capital Redemption Reserve (as approved at the General Meeting on 10 May 2019 and by the court order dated 30 July 2019) has increased the Company's special reserve out of which it can fund buybacks of shares as and when it is considered by the Board to be in the interests of the Shareholders, and to absorb any existing and future realised losses, or for other corporate purposes.

		Non-distributable reserves				Distributable reserves
	Called up	Share	Capital			Special	Realised	Revenue
	share	premium	redemption	Revaluation		distributable	capital	reserve
	capital	reserve	reserve	reserve		reserve	reserve			Total
	£	£	£	£		£	£	£		£
At 1 January 2018	674,751 29,895,865		14,589	517,952		20,029,787	6,346,235	932,461		58,411,640
Comprehensive
income for the year
Profit/(loss) for the year	-	-	-	1,294,148		-	(1,119,571)	1,330,539		1,505,116
Total comprehensive
income for the year	-	-	-	1,294,148		-	(1,119,571)	1,330,539		1,505,116
Contributions by and
distributions to owners
Shares issued via Offer for
Subscription	11,862	1,003,505	-	-		(10,787)		-		1,004,580
Dividends re-invested
into new shares	7,885	575,607	-	-		-		-		583,492
Shares bought back	(11,668)	-	11,668	-		(874,700)		-		(874,700)
Dividends paid	-	-	-	-		(2,734,344)	-	-		(2,734,344)
Total contributions
by and distributions
to owners	8,079	1,579,112	11,668	-		(3,619,831)	-	-		(2,020,972)
Other movements
Realised losses
transferred to special
reserve	-	-	-	-		(1,625,438)	1,625,438	-		-
Realisation of previously
unrealised depreciation	-	-	-	36,372		-	(36,372)	-		-
Total other movements	-	-	-	36,372		(1,625,438)	1,589,066	-		-
At 31 December 2018	682,830	31,474,977	26,257	1,848,472		14,784,518	6,815,730	2,263,000		57,895,784

The composition of each of these reserves is explained below:

Called up share capital - The nominal value of shares originally issued increased for subsequent share issues either via an Offer for Subscription or Dividend Investment Scheme or reduced due to shares bought back by the Company.

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 and the Company's Dividend Investment scheme.

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.

Revaluation 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 (as recorded in Note 8), all such movements through both revaluation and realised capital reserves are shown within the Income Statement for the year.

Special distributable reserve - This reserve is created from cancellations of the balances upon the Share premium reserve, which are transferred to this reserve from time to time. The cost of share buybacks and any realised losses on the sale or impairment of investments (excluding transaction costs) are charged to this reserve. 75% of the Investment Adviser fee expense, and the related tax effect, that are charged to the realised capital reserve are transferred to this reserve. This reserve will also be charged any facilitation payments to financial advisers, which arose as part of the Offer for Subscription.

Realised capital 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 and disposal of investments;

• 75% of the Investment Adviser fee expense and 100% of any performance incentive fee payable, together with the related tax effect to this reserve in accordance with the policies; and

• Capital dividends paid.

Revenue reserve - Income and expenses that are revenue in nature (all other expenses and 25% of the Investment Adviser's fee) are accounted for in this reserve together with the related tax effect, as well as income dividends paid that are classified as revenue in nature.

Statement of Cash Flows for the year ended 31 December 2019

				Year ended		Year ended
			Notes	31 December 2019		31 December 2018
				£		£
Cash flows from operating activities
Profit for the financial	year			6,057,313		1,505,116
Adjustments for:
Net investment portfolio gains				(5,675,164)		(930,576)
Tax charge for the current year				35,383		66,503
Decrease in debtors				120,121		104,935
Increase/(decrease) in creditors				33,245		(35,677)
Net cash inflow from	operations			570,898		710,301
Corporation tax paid				(66,529)		(117,456)
Net cash inflow from	operating	activities		504,369		592,845
Cash flows from investing activities
Sale of investments			8	8,136,792		4,531,646
Purchase of investments			8	(4,475,355)		(5,882,806)
Net cash inflow/(outflow) from investing activities				3,661,437		(1,351,160)
Cash flows from financing activities
Shares issued as part of Offer for		Subscription		-		1,042,499
Issue costs as part of Offer for Subscription				-		(37,919)
Equity dividends paid			7	(12,846,457)		(2,150,852)
Purchase of own shares				(1,134,829)		(1,066,736)
Net cash outflow from financing		activities		(13,981,286)		(2,213,008)
Net decrease in cash and cash equivalents				(9,815,480)		(2,971,323)
Cash and cash equivalents at start of year				19,371,447		22,342,770
Cash and cash equivalents at end of year				9,555,967		19,371,447
Cash and cash equivalents comprise:
Cash at bank and in hand			9	2,627,511		2,541,058
Cash equivalents			9	6,928,456		16,830,389

Notes to the Accounts for the year ended 31 December 2019

1   Company Information

Mobeus Income & Growth 4 VCT plc is a public limited company incorporated in England, registration number 03707697.

The registered office is 30 Haymarket, London, SW1Y 4EX.

2   Basis of preparation

A summary of the principal accounting policies, all of which have been applied consistently throughout the year are set out next to the related disclosure throughout the Notes to the Financial Statements. All accounting policies are included at the top of each relevant Note.

These Financial Statements have been prepared in accordance with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 ("FRS102"), with the Companies Act 2006 and the 2014 Statement of Recommended practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ('the SORP') (updated in October 2019) issued by the Association of Investment Companies.

3   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 is 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 or capital as appropriate once redemption is reasonably certain.

When a redemption premium is designed to protect the value of the instrument holder's investment rather than reflect a commercial rate of revenue return, the redemption premium is recognised as capital. The treatment of redemption premiums is analysed to consider if they are revenue or capital in nature on a company by company basis. Accordingly, the redemption premium recognised in the year ended 31 December 2019 has been classified as capital and has been included within gains on investments.

	2019		2018
		£		£
Income from bank deposits		40,298		34,179
Income from investments
- from equities		243,975		290,937
- from OEIC funds		106,151		101,193
- from loan stock		1,714,938		1,824,903
- from interest on preference share dividend arrears		1,995		11,061
		2,067,059		2,228,094
Other income		-		1,645
Total income		2,107,357		2,263,918
Total income comprises
Dividends		350,126		392,130
Interest		1,757,231		1,870,143
Other income		-		1,645
		2,107,357		2,263,918

Total loan stock interest due but not recognised in the year was £422,063 (2018: £638,642).

4   Investment Adviser's fees and other expenses

All expenses are accounted for on an accruals basis.

a) Investment Adviser's fees

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 is charged against the capital column of the Income Statement, as it is based upon the achievement of capital growth.

	Revenue	Capital	Total		Revenue	Capital	Total
	2019	2019	2019	2018		2018	2018
	£	£	£		£	£	£
Mobeus Equity Partners LLP	309,641	928,923	1,238,564		311,111	933,333	1,244,444

Under the terms of a revised investment management agreement dated 12 November 2010 (as amended and restated on 10 November 2016), Mobeus Equity Partners LLP ("Mobeus LLP") provides investment advisory, administrative and company secretarial services to the Company, for a fee of 2% per annum of closing net assets, calculated on a quarterly basis by reference to the net assets at the end of the preceding quarter, plus a fixed fee of £115,440 per annum, the latter being subject to indexation, if applicable. In 2013, Mobeus agreed to waive such further increases due to indexation, until otherwise agreed with the Board.

The Investment Adviser fee includes provision for a cap on expenses excluding irrecoverable VAT and exceptional items set at 3.4% of closing net assets at the year-end. In accordance with the investment management agreement, any excess expenses are borne by the Investment Adviser. The excess expenses during the year amounted to £nil (2018: £nil). With effect from 1 April 2018, the Investment Adviser's fee upon the net funds raised from use of the over-allotment facility of £5 million under the 2017/18 offer was reduced from 2% to 1% per annum for one year.

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. No such costs have been incurred in the current or previous year.

In line with common practice, Mobeus Equity Partners LLP retain the right to charge arrangement and syndication fees and Directors' or monitoring fees to companies in which the Company invests. The Investment Adviser received fees totalling £327,776 (2018: £351,713) during the year ended 31 December 2019, being £111,884 (2018: £146,450) for arrangement fees, and £215,892 (2018: £205,263) for acting as non-executive directors on a number of investee company boards. These fees attributable to the Company are based upon the investment allocation to the Company which applied at the time of each investment. These figures are not part of these financial statements.

b) Incentive fee agreement

Under the terms of a separate agreement dated 1 November 2006, from the end of the accounting period ending on 31 January 2009 and in each subsequent accounting period throughout the life of the Company, the Investment Adviser will be entitled to receive a performance related incentive fee of 20% of the dividends paid in excess of a "Target Rate" comprising firstly, an annual dividend target of 6% of the net asset value per share at 5 April 2007 (indexed each year for RPI) and secondly a requirement that any cumulative shortfalls below the 6% hurdle must be made up in later years, while any excess is not carried forward, whether a fee is payable for that year or not. Payment of a fee is also conditional upon the average Net Asset Value ("NAV") per share for each such year equalling or exceeding the average Base NAV per share for the same year. The performance fee will be payable annually. No incentive fee is payable to date.

c) Offer for Subscription fees

	2019		2018
		£m		£m
Funds raised by the Company		-		1.04
Offer costs payable to Mobeus at 3.25% of funds raised by the  Company		-		0.03

Under the terms of an Offer for Subscription, with the other Mobeus advised VCTs, launched on 6 September 2017, Mobeus was entitled to fees of 3.25% of the investment amount received from investors. This amount (for 2018 only) totalled £0.64 million for the final two allotments which took place between January and March 2018 across all four VCTs, out of which all the costs associated with the allotments were met, excluding any payments to advisers facilitated under the terms of the Offer.

d) Other expenses

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.

	2019		2018
		£		£
Directors' remuneration (including NIC of £9,733 (2018: £9,099) (note i)		114,686		105,349
IFA trail commission		60,201		61,863
Broker's fees		12,000		12,000
Auditor's fees - Audit of Company (excluding VAT)		27,932		24,088
- audit related assurance services (excluding VAT) - note ii)		5,638		4,613
- tax compliance services (excluding VAT) note ii)		1,845		1,922
Registrar's fees		47,668		39,252
Printing		48,530		48,085
Legal & professional fees		24,831		10,590
VCT monitoring fees		9,600		9,600
Directors' insurance		7,921		7,631
Listing and regulatory fees		29,230		38,874
Sundry		61,179		14,564
Other expenses		451,261		378,431

Note i): See analysis in Directors' Remuneration table in the Annual Report, which excludes the NIC above. The key management personnel are the four non-executive directors. The Company has no employees.

Note ii): The audit related assurance services are in relation to the review of the Financial Statements within the Company's Half Year Report. The Audit Committee reviews the nature and extent of these services to ensure that auditor independence is maintained. In this regard, while iXBRL services are carried out by the auditor, the majority of compliance tax services are carried out by another firm, so are included within legal and professional fees.

5   Taxation on profit on ordinary activities

The tax expense for the year comprises current tax and is recognised in profit or loss. The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date.

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.

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 periods 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 would be 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.

		2019		2019	2019	2018		2018	2018
			Revenue	Capital	Total		Revenue	Capital	Total
			£	£	£		£	£	£
a) Analysis of tax charge:
UK Corporation tax on profits/(losses) for
the year			211,879	(176,496)	35,383		243,837	(177,334)	66,503
Total current tax charge			211,879	(176,496)	35,383		243,837	(177,334)	66,503
Corporation tax is based on a rate of 19%
(2018: 19%)
b) Profit/(loss)	on ordinary activities
before tax			1,346,455	4,746,241	6,092,696		1,574,376	(2,757)	1,571,619
Profit/(loss) on	ordinary activities  multiplied
by company rate of corporation tax in the
UK of 19% (2018: 19%)			255,826	901,786	1,157,612		299,131	(523)	298,608
Effect of:
UK dividends not taxable			(46,355)	-	(46,355)		(55,278)	-	(55,278)
Net investment portfolio gains not taxable			-	(1,078,282)	(1,078,282)		-	(176,811)	(176,811)
Overprovision in prior period			-	-	-		(26)	-	(26)
Expenditure not allowable for tax
purposes			2,408	-	2,408		10	-	10
Actual tax charge			211,879	(176,496)	35,383		243,837	(177,334)	66,503

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 (2018: £nil). There is no unrecognised deferred tax asset in 2019 (2018: £nil).

6   Basic and diluted earnings per share

	2019		2018
		£		£
Total earnings after taxation:		6,057,313		1,505,116
Basic and diluted earnings per share (note a)		8.95p		2.20p
Net revenue from ordinary activities after taxation		1,134,576		1,330,539
Basic and diluted revenue earnings per share (note b)		1.67p		1.95p
Net investment portfolio gains		5,675,164		930,576
Capital expenses (net of taxation)		(752,427)		(755,999)
Total capital return		4,922,737		174,577
Basic and diluted capital earnings per share (note c)		7.28p		0.25p
Weighted average number of shares in issue in the year		67,649,790		68,499,583

Notes:

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

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

c)  Basic 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   Dividends paid and payable

Dividends payable are recognised as distributions in the financial statements when the Company's liability to pay them has been established. This liability is established for interim dividends when they are paid, and for final dividends when they are approved by the Shareholders, usually at the Company's Annual General Meeting.

A key judgement in applying the above accounting policy is in determining the amount of minimum income dividend to be paid in respect of a year. The Company's status as a VCT means it has to comply with Section 259 of the Income Tax Act 2007, which requires that no more than 15% of the income from shares and securities in a year can be retained from the revenue available for distribution for the year.

Amounts recognised as distributions to equity shareholders in the year:

		For year ended	Pence			2019	2018
Dividend	Type	31 December	per share	Date Paid		£		£
Interim	Capital*	2018	4.00p	19/06/2018		-		2,734,344
Final	Income	2018	1.75p	28/05/2019		1,188,375		-
Final	Capital*	2018	2.25p	28/05/2019		1,527,911		-
Interim	Income	2019	1.50p	20/09/2019		1,014,071		-
Interim	Capital	2019	2.50p	20/09/2019		1,690,118		-
Interim	Capital*	2019	9.00p	20/09/2019		6,084,426		-
Interim	Capital*	2019	2.00p	30/12/2019		1,341,556		-
						12,846,457		2,734,344**

*  - Paid out of the Company's special distributable reserve.

** - For the year ended 31 December 2018, £2,734,344 disclosed above differs to that shown in the Statement of Cash Flows of £2,150,852 due to £583,492 of new shares issued as part of the Dividend Investment Scheme. The Scheme was suspended on 14 August 2018. The Chairman's Statement  provides details on the recommencement of the Scheme.

Distributions to equity holders after the year-end:

		For year ended	Pence			2019	2018
	Type	31 December	per share	Date Payable		£		£
Final	Income	2018	1.75p	28/05/2019		-		1,188,375
Final	Capital*	2018	2.25p	28/05/2019		-		1,527,911
Interim	Capital*	2019	4.00p	10/01/2020		2,671,965		-
						2,671,965		2,716,286

* - Paid out of the Company's special distributable reserve.

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.

On 2 April 2020, the Board declared a 6.00 pence per share interim dividend in respect of the year ending 31 December 2020 which will be payable on 7 May 2020 to Shareholders on the Register on 14 April 2020.

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

Recognised income distributions in the financial statements for the year

		For year ended	Pence			2019	2018
Dividend	Type	31-Dec	per share	Date paid/payable		£		£
Revenue available for distribution by way of dividends for the year						1,134,576		1,330,539
Final	Income	2018	1.75p	28/05/2019		-		1,188,375
Interim	Income	2019	1.50p	20/09/2019		1,014,071		-
Total income dividends for the year						1,014,071		1,188,375

8   Investments at fair value

The most critical estimates, assumptions and judgements relate to the determination of the carrying value of investments at "fair value through profit and loss" (FVTPL). All investments held by the Company are classified as FVTPL and measured in accordance with the International Private Equity and Venture Capital Valuation ("IPEV") guidelines, as updated in December 2018. 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.

Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional. 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. Where the terms of the disposal state that consideration may be received at some future date and, subject to the conditionality and materiality of the amount of deferred consideration, an estimate of the fair value, discounted for the true value of money, may be recognised through the Income Statement. In other cases, the proceeds will only be recognised once the right to receive payment is established and there is no reasonable doubt that payment will be received.

Unquoted investments are stated at fair value by the Directors at each measurement date in accordance with appropriate valuation techniques, which are consistent with the IPEV guidelines:-

(i)  Each investment is considered as a whole on a 'unit of account' basis, alongside consideration of:-

The price of new investments made, if deemed to be made as part of an orderly transaction, are considered to be at fair value at the date of the transaction. At subsequent measurement dates, the inputs that derived the investment price are reconsidered for any changes in light of more recent events or changes in the market performance of the investee company such that the valuation bases used are the following: -

-  a multiple basis. The shares may be valued by applying a suitable price-earnings ratio, revenue or gross profit multiple to that company's historic, current or forecast post-tax earnings before interest and amortisation, or revenue, or gross profit (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, scale and liquidity).

or:-

-  where a company's underperformance against plan indicates a diminution in the value of the investment, provision against the price of a new investment is made, as appropriate.

(ii)  Premiums, to the extent that they are considered capital in nature, and that they will be received upon repayment of loan stock investments are accrued at fair value when the Company receives the right to the premium and when considered recoverable.

(iii)  Where a multiple or the price of recent investment less impairment basis is not appropriate and overriding factors apply, a discounted cash flow, net asset valuation or realisation proceeds basis may be applied.

Capital gains and losses on investments, whether realised or unrealised, are dealt with in the profit and loss and revaluation reserves and movements in the period are shown in the Income Statement.

All investments are initially recognised and subsequently measured at fair value. Changes in fair value are recognised in the Income Statement.

A key judgement made in applying the above accounting policy relates to investments that are permanently impaired. Where the value of an investment has fallen permanently below the price of recent investment, 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.

The methods of fair value measurement are classified into hierarchy based on the reliability of the information used to determine the valuation.

-  Level 1 - Fair value is measured based on quoted prices in an active market.

-  Level 2 - Fair value is measured based on directly observable current market prices or indirectly being derived from market prices.

-  Level 3 - Fair value is measured using valuation techniques using inputs that are not based on observable market data.

Movements in investments during the year are summarised as follows:

	Traded on	Unquoted	Unquoted	Unquoted	Total
	AIM	equity shares	preference	Loan stock
		£	shares
	£		£		£
				£
Cost at 31 December 2018	200,028	16,903,109	13,382	19,786,223	36,902,742
Unrealised gains at 31 December 2018	8,316	1,048,683	326,001	239,578	1,622,578
Permanent impairment in value of investments as at
31 December 2018	-	(2,139,022)	-	(87,638)	(2,226,660)
Valuation at 31 December 2018	208,344	15,812,770	339,383	19,938,163	36,298,660
Purchases at cost	-	4,475,355	-	-	4,475,355
Sale proceeds (Note a)	-	(3,749,886)	(328,654)	(4,058,252)	(8,136,792)
Net realised gains in the year	-	2,060,376	-	252,268	2,312,644
Unrealised gains in the year (Note b)	25,001	3,204,319	-	359,094	3,588,414
Valuation at 31 December 2019	233,345	21,802,934	10,729	16,491,273	38,538,281
Cost at 31 December 2019	200,028	18,299,196	12,871	16,820,197	35,332,292
Unrealised gains/(losses) at 31 December 2019	33,317	3,923,697	(2,142)	(241,286)	3,713,586
Permanent impairment in value of investments at
31 December 2019 (Note c)	-	(419,959)	-	(87,638)	(507,597)
Valuation at 31 December 2019	233,345	21,802,934	10,729	16,491,273	38,538,281

Details of investment transactions such as disposal proceeds, valuation movements, cost and carrying value at the end of previous year are contained in the Investment Portfolio Summary.

Net realised gains in the year of £2,312,644 and unrealised gains in the year of £3,588,414 equal net investment portfolio gains of £5,910,058. This figure is more than that shown in the Income Statement of £5,675,164.

The difference of £225,894 is the estimated fair value of consideration in relation to the sale of Entanet Holdings that was recognised at the previous year-end. The full undiscounted value of £250,994 was subsequently received. A further sum of £250,994 was received on 2 August 2019.

Note a) Disposals of investment portfolio companies during the year were:

Company	Type	Investment	Disposal	Valuation at	Realised
		cost	proceeds	31 December	gain in year
				2018
		£	£	£	£
ASL Technology Holdings Limited	Realisation	1,933,591	3,403,138	2,327,966	1,075,172
The Plastic Surgeon Holdings Limited	Realisation	46,160	1,435,184	1,046,666	388,518
Redline Worldwide Limited	Realisation	838,377	1,064,768	521,616	543,152
Entanet Holdings Limited	Contingent Consideration	-	501,987	-	276,093
Master Removers Group 2019 Limited	Part Realisation	163,214	386,315	356,606	29,709
Backhouse Management Limited	Realisation	589,680	226,800	226,800	-
Barham Consulting Limited	Realisation	589,680	226,800	226,800	-
Creasy Marketing Services Limited	Realisation	589,680	226,800	226,800	-
Hollydale Management Limited	Realisation	701,120	438,200	438,200	-
McGrigor Management Limited	Realisation	589,680	226,800	226,800	-
Newquay Helicopters (2013) Limited	Realisation	4,623	-	-	-
		6,045,805	8,136,792	5,598,254	2,312,644

Note b) The major components of the net increase in unrealised valuations of £3,588,414 in the year were increases of £1,774,695 in Turner Topco Limited (trading as Auction Technology Group), £850,510 in MPB Group Limited, £839,548 in Proactive Group Holdings Inc, £557,332 in Tovey Management Limited (trading as Access IS), and £238,292 in Buster & Punch Holdings Limited. This increase was partly offset by the falls of £635,402 in Manufacturing Services Investment Limited (trading as Wetsuit Outlet), £364,298 in Supercarers Limited, £284,467 in Master Removers Group 2019 Limited, £185,011 in RDL Corporation Limited, and £163,034 in BookingTek Limited.

The increase in unrealised valuations of the loan stock investments above reflects the changes in the entitlement to loan premiums, and/or in the underlying enterprise value of the investee company. The increase does not arise from assessments of credit risk or market risk upon these instruments.

Note c) During the year, permanent impairments of the cost of investments have reduced from £2,226,660 to £507,597 due to the disposal of six investee companies.

9 Cash at bank and Current Investments

Cash equivalents, for the purposes of the Statement of Cash Flows, comprises bank deposits repayable on up to three months' notice and funds held in OEIC money-market funds. Current asset investments are the same but also include bank deposits that mature after three months. Current asset investments are disposable without curtailing or disrupting the business and are readily convertible into known amounts of cash at their carrying values at immediate or up to three months' notice. Cash, for the purposes of the Statement of Cash Flows is cash held with banks in accounts subject to immediate access. Cash at bank in the Balance Sheet is the same.

	2019			2018
	£				£
OEIC Money market funds	6,928,456				16,830,389
Cash equivalents per Statement of Cash Flows	6,928,456				16,830,389
Bank deposits that mature after three months	2,000,000				2,000,000
Current asset investments	8,928,456				18,830,389
Cash at bank	2,627,511				2,541,058

10 Post balance sheet events

On 8 January 2020, 14,967,956 new Ordinary Shares were allotted under the Company's Offer for Subscription for applications received and accepted up to and including 20 December 2019, raising net funds of £10.30 million.

On 7 February 2020, Pattern Analytics Limited (trading as Biosite) was sold by the Company realising £1.98 million of proceeds.

On 13 February 2020, cash proceeds of £5.27 million were received upon the sale of Turner Topco Limited (trading as Auction Technology Group) by the Company.

On 28 February 2020, a new investment of £0.62 million was made into Bella & Duke Limited, a provider of premium frozen raw dog food to pet owners in the UK.

On 2 April 2020, the Board has declared an interim dividend of 6.00 pence per share for the year ending 31 December 2020, payable to shareholders on the register on 14 April 2020, on 7 May 2020.

On 2 April 2020, a further 3,482,579 new Ordinary Shares were allotted under the Company's Offer for Subscription raising further net funds of £2.23 million. Following this allotment, the Offer for Subscription was closed. In total, net funds raised from the Offer are £12.53 million.

COVID-19 Impact

Since the Balance sheet date, the scale of the COVID-19 pandemic began to affect the UK and most other world economies significantly. In line with countries whose infection rates took hold earlier, the UK Government has now prohibited most non-essential movement of people, goods and services. This has severely affected UK trade and business but it remains too early to predict when these restrictions may be eased and thus what the eventual impact of these restrictions will be.

The VCT Board and Investment Adviser have nonetheless evaluated the extent of the impact on the Company, its portfolio of investee companies and their future to date. On 26 March 2020, the Company announced an unaudited net asset value ("NAV") based upon an evaluation of available information held as at 24 March 2020, which is shown below:

	31 December 2019	24 March 2020	%
NAV per share	70.90 pence1	64.16 pence	(9.5)%

1  The NAV per share at 31 December 2019 has been reduced from that reported on the Balance sheet by a dividend of 4.00 pence per share paid on 10 January 2020.

Due to the rapidly evolving nature of the impact of COVID-19, there will be further information that emerges, while the impact of known information evaluated at 24 March 2020 may have since changed.  Both known and as yet unknown information may affect the portfolio companies further in ways that cannot be predicted with any certainty by the Board or the Investment Adviser. As a result, any further movements in NAV per share from that reported above may occur but the Board is unaware of any matter that will have caused NAV per share to have changed significantly since 24 March 2020.

11  Statutory information

The financial information set out in these statements does not constitute the Company's statutory accounts for the year ended 31 December 2019 but is derived from those accounts.  Statutory accounts will be delivered to the Registrar of Companies after the Annual General Meeting.  The auditors have reported on these accounts and their report was unqualified and did not contain a statement under section 498(2) of the Companies Act 2006.

12  Annual Report

The Annual Report will be published on the Company's website at www.mig4vct.co.uk shortly and shareholders who have not requested a hard copy of the report will shortly receive notification from the Company on how to download a pdf of the Report from the website.  Shareholders and members of the public who wish to receive a hard copy of the Annual Report, may request a copy by writing to the Company Secretary, Mobeus Equity Partners LLP, 30 Haymarket (4th floor), London SW1Y 4EX or by email: [e-mail].

13  Annual General Meeting

The Company's next Annual General Meeting will be held at 11.30 am on Tuesday, 2 June 2020 at, The Clubhouse, 8 St James's Square, London SW1Y 4JU. Shareholders should note that the impact of the COVID-19 and the Stay at Home Measures currently in place could mean that they are not physically allowed to attend the AGM on 2 June 2020. If this is the case, the Company will make an RNS announcement advising of any changes, which will also be added to the Company's website: www.mig4vct.co.uk to which Shareholders should refer. A copy of the notice of the meeting can be found on pages 75 to 76. Shareholders are encouraged to submit their votes by proxy rather than attend the meeting in person, and to appoint the Chairman of the Meeting as their proxy. A proxy form for the meeting is included with Shareholders' copies of this Annual Report or is available electronically at www. signalshares.com.

Contact details for further enquiries:

Robert Brittain or Trish Standaloft of Mobeus Equity Partners LLP (the Company Secretary) on 020 7024 7600 or by email to [e-mail].

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, of forms part of, this announcement.

 

END

 

 

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