Annual Financial Results year ended 31 December 16

RNS Number : 0425B

Mobeus Income & Growth VCT PLC

30 March 2017

 

MOBEUs Income & Growth VCT plc

Annual Financial Results of the Company for the Year ended 31 DECember 2016

Financial Highlights

-	Net asset value total return per share of the Company for the year was 1.5% while the share price total return per share for the year was 4.3%.
-	Shareholders received an interim dividend of 8.50 pence per share in September 2016. A second interim dividend in respect of 2016 of 6.00 pence per share has been declared, payable on 31 March 2017. This dividend will bring total dividends paid per share in respect of the year to 14.50 pence. Cumulative dividends paid per share from inception of the Company will increase to 95.80 pence.
-	The Company invested a total of £3.95 million into four new growth capital investments and one existing portfolio company.

PERFORMANCE SUMMARY

The net asset value per share of the Company at 31 December 2016 was 83.53 pence.

The table below shows the recent past performance of the original fundraising launched in October 2004.

	Net assets	NAV Per share	Share price1	Cumulative dividends paid per share	Cumulative total return per share to shareholders2		Dividends paid and declared per share in respect of each year
					(NAV basis)	(Share price basis)
Reporting date as at	(£m)	(p)	(p)	(p)	(p)	(p)	(p)
31 December 2016	63.15	83.53	74.75	89.80	173.33	164.55	14.503
31 December 2015	74.11	97.54	86.50	74.30	171.84	160.80	10.00
31 December 2014	60.41	99.44	86.00	64.30	163.74	150.30	24.00
31 December 2013	54.27	102.18	87.50	44.05	146.23	131.55	7.25
31 December 2012	43.29	94.22	80.50	38.05	132.27	118.55	7.00
1 Source: Panmure Gordon & Co (mid-market price).
2 Cumulative total return per share comprises either the NAV per share (NAV basis) or the mid-market price per share (Share Price basis), plus cumulative dividends paid since launch in October 2004.
3 This figure of 14.50 pence includes the second interim dividend of 6.00 pence per share referred to in the Financial Highlights above, payment of which will reduce the net assets per share from the 31 December 2016 figure of 83.53 pence by the amount of the dividend.

Detailed performance data for all fundraising rounds and for former Matrix Income & Growth 3 VCT shareholders are shown in the Performance Data appendix which will be published in the Annual Report. The tables, which give information by allotment date on NAVs and dividends paid per share, are also available on the Company's website at www.migvct.co.uk where they can be downloaded by clicking on "table" under "Reviewing the performance of your investment" on the home page.

Discount of share price to NAV - The discount of the Company's shares to NAV at 31 December 2016 was 10.0%, as the share price at that date was based on the NAV per share at 30 September 2016 of 83.02 pence, which was the latest published figure at that time.

Chairman's Statement

I am pleased to present the annual results of Mobeus Income & Growth VCT plc for the year ended 31 December 2016.

This has been a stable year for the Company, due to steady portfolio performance overall and continued income returns. Six new investments have been made under the Company's new Investment Policy, which is an encouraging start.

Shareholders approved a new Investment Policy at last year's annual general meeting in May 2016, in response to the new VCT measures introduced by the Finance (No 2) Act 2015 ("New VCT Rules") in November 2015. I report upon the Company's progress in adapting to these changes under Investment portfolio below.

Performance

The NAV total return per share for the year ended 31 December 2016 was 1.5% (2015: 8.1%) (being the closing NAV plus dividends paid in the year, divided by opening NAV) while the share price total return was 4.3% (2015: 12.2%). As a result of this performance, the NAV cumulative total return per share (being the closing NAV plus total dividends paid to date since launch) rose during the year by 0.9% from 171.84 pence to 173.33 pence.

The small rise in NAV return over the year was principally due to continued revenue returns maintained from the previous year supported by stable capital returns on the investment portfolio.

Dividends

Your Company paid an interim dividend of 8.50 pence per share to shareholders on 20 September 2016, being 2.00 pence from income and 6.50 pence from capital of which 5.00 pence was paid from the Company's Special Distributable Reserve. The Directors have also declared a second interim capital dividend in respect of 2016 of 6.00 pence per share, also payable from the Company's Special Distributable Reserve. This dividend will be paid on 31 March 2017 to shareholders on the Register on 3 March 2017.

Once this payment has been made, total dividends in respect of the year will be 14.50 pence (2015: 10.00 pence) per share, bringing cumulative dividends paid since inception in 2004 to 95.80 pence (2015:

81.30 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 exceeded in each of the last seven years. While the Board still believes in the attainment of the target dividend, the gradual move of the portfolio to growth capital investments may make it harder to achieve in a given year without recourse to the Company's reserves. A full dividend history is contained in the Performance Data appendix which will be published in the Annual Report and on the Company's website.

Investment portfolio

Partly as a consequence of the move towards investing in younger and smaller growth capital companies to comply with the New VCT Rules, the amount of new investment completed by the Company was lower in 2016 than 2015. These New VCT Rules contain more restrictive investment criteria, which caused a pause in new investment by the Company in the first half of the year (and across the whole of the VCT generalist sector), whilst the Board and the Investment Adviser assimilated the changes.

It was thus pleasing that the last quarter of the year saw a significant pick up in the pace of new investment such that a total of £3.95 million (2015: £10.72 million) was invested in five (2015: six) companies during the year, plus £0.69 million in another company just after the year-end. While this level of investment is lower than in previous years, it compares favourably to levels achieved elsewhere, as the Mobeus advised VCTs invested around a sixth of the total invested by the VCT generalist sector in the year. These investments were made into Redline, MPB, BookingTek, Pattern Analytics (Biosite), Preservica (an existing portfolio company) and finally, into Tapas Revolution just after the year end. The average transaction size of these new investments is less than half that of last year, reflecting the change in focus to younger, smaller companies required by the New VCT Rules. Further details of all of these transactions are included in the Investment Adviser's Review below.

In addition to these new investments, the Investment Adviser is reporting a growing pipeline of opportunities, from which we expect the rate of new investment to increase. The Board remains of the view that the changes in the VCT legislation clearly restrict the universe of companies that the Company can invest in, but has been encouraged by the number and quality of the opportunities identified by the Investment Adviser so far. As these are smaller, younger businesses, the Board believes that such investments carry higher risk alongside potentially higher, but more variable, returns and are less likely to yield income returns. Transactions to date have been structured to seek to mitigate these factors.

Shareholders should note that, at the year-end, 92.3% of the value of the investment portfolio (excluding companies preparing to trade) is still held in investments made under the previous MBO focused strategy. Overall, performance of this principal portion of the portfolio remained solid, and should continue to yield annual income returns to shareholders, supplemented by capital returns as investments are realised over time. The Company received cash proceeds in the year of £2.97 million, mostly as partial loan repayments, from nine companies held in this portion of the portfolio. Unless a compelling case for an exit opportunity is presented, the Board and the Investment Adviser would prefer to develop this portfolio to further maturity.

On a like-for-like basis, the value of the total portfolio increased by 0.8% over the year. Including companies preparing to trade, it is valued at £51.68 million (2015: £51.36 million) at the year-end, representing 104.2% (2015: 102.6%) of cost.

Review of longer term performance

Shareholders who invested in 2004 at the launch of the Company have seen a NAV cumulative total return of 173.33 pence per share compared with their initial investment cost of 100 pence per share, or a net cost (after initial income tax relief of 40 pence of their investment) of 60 pence per share. As part of this return 89.80 pence per share in dividends has been paid to shareholders. This represents an average annual dividend yield on the initial 100 pence investment, of 7.3% and 12.2% on the adjusted investment cost of 60 pence (net of 40 pence of initial income tax relief). The balance of the total return is the closing NAV of 83.53 pence per share.

The Board also regularly reviews the Company's total (income and capital) return performance on both an NAV and Share Price basis compared to its peer group. Based on statistics prepared by

Morningstar at 31 December 2016, the Company was ranked 6th on a NAV total return basis and 8th on a Share Price total return basis out of 29 generalist (including planned exit) VCTs monitored by the Association of Investment Companies ("AIC") over the last ten years. The Board believes this to be a satisfactory performance.

Buybacks of the Company's own shares

During the year ended 31 December 2016, the Company made three purchases of its shares, buying back a total of 375,480 shares, allowing shareholders who wanted to sell their shares to do so. The buyback represented 0.5% of the issued share capital of the Company at the beginning of the year. Further details are included in the Strategic Report in the Annual Report. The shares bought back were subsequently cancelled by the Company.

Industry and regulatory developments

HMRC published its guidance on the New VCT Rules in May 2016 which has provided further information on the new requirements at a detailed level. There remain several areas where further clarity is still required and the Company, the Investment Adviser and the VCT industry as a whole, are continuing to work constructively with Government departments, through its industry bodies, to develop an improved practical approach. Notwithstanding the EU Referendum result, the Board is working on the assumption that there will be no further changes to the existing VCT legislation in the near future.

A summary of the current VCT regulations is included in the Strategic Report which is part of the Annual Report.

Fundraising and Liquidity

The Company held cash or near cash resources of £21.66 million, including the liquidity held in companies preparing to trade ("CPTs"), at 31 December 2016, representing 34.3% of net assets. This results partly from the impact of the unexpected changes to the VCT Rules which led to a lower than anticipated amount of new investment in the short term. However, the increasing pipeline of prospective deals since the introduction of the New VCT Rules should reduce this liquidity over time. The second interim dividend of 6.00 pence per share, to be paid to shareholders on 31 March 2017, will have a similar effect.

The Board considers that the Company's liquidity is currently at an adequate level, but it is considering a further fundraising in the 2017/18 tax year.

Audit tender

New legislation has been introduced in the UK on audit firm rotation, resulting from the new European Audit Regulation Directive, making it mandatory for listed companies to undergo a tender process for the audit of their company at least every ten years. An audit firm can, however be appointed for up to twenty years provided a public tender process has been carried out after ten years. The Company, therefore, held an audit tender process in August-September 2016. As a result of this, the Board, on the recommendation of the Audit Committee, has decided to recommend the reappointment of BDO LLP as the Company's external auditor. For further information on the audit tender, please see the Audit Committee section of the Directors' Report in the Annual Report.

Shareholder Event

This year's annual shareholder event was held on Tuesday, 24 January 2017 at the Royal Institute of British Architects in Central London. Separate day time and evening sessions included presentations on the Mobeus advised VCTs' investment activity and performance. We have received positive feedback from many of those who attended the event and were pleased to hear that the overall impression of attendees was that they found the day informative and very worthwhile. If shareholders were unable to attend, some short portfolio company videos shown on the day, as well as those shown in previous years, are available on the Mobeus website (www.mobeusequity.co.uk /portfolio).

Annual General Meeting

The next Annual General Meeting of the Company will be held at 2.00 pm on Wednesday, 10 May 2017 at a new venue, The Clubhouse, 8 St James's Square, London SW1Y 4JU. Both the Board and the Investment Adviser look forward to welcoming shareholders to the meeting which will include a presentation from the Investment Adviser on the investment portfolio. Shareholders are encouraged to attend and to ask questions of the Board and the Investment Adviser. The Notice of the meeting is included on the Company's website and in the Annual Report and an explanation of the resolutions to be proposed can be found in the Directors' Report in the Annual Report.

Board directors

As noted in the Half Year Report, Keith Niven retired as Chairman and director from the Board during the year, as did Tom Sooke, retiring as Chairman of the Audit Committee and director. On behalf of the Board, I would like to reiterate our thanks and appreciation for their substantial contribution and leadership since the inception of the Company in 2004. We wish them well for the future.

Future prospects

In the context of a global economy that is facing some uncertainty following the UK's Referendum vote and the US Presidential Election, the outlook for the UK economy in 2017 remains unclear and may remain so beyond 2017, until the outcome of the     EU exit negotiations becomes evident. We will continue our measured and cautious approach to investment appraisal and with our active engagement with existing portfolio companies.

The portfolio has a solid foundation of investments made under the previous MBO strategy, the majority of which are mature and profitable companies providing attractive income returns. Over the coming years, the portfolio mix will change towards growth capital companies. In spite of the global political and economic uncertainties mentioned above, the Board and the Investment Adviser remain optimistic regarding the future prospects of the Company.

Finally, I would like to take this opportunity to thank all shareholders for their continued support.

Clive Boothman

Chairman

INVESTMENT POLICY

The investment policy is designed to meet the Company's objective.

Investments

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.

Liquidity

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.

Borrowing

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

This has been a year of continued progress within the portfolio. The exceptional level of disposals in 2014 and 2015 has reduced the age of the remaining portfolio such that 53% by value (48% by number) of the current portfolio comprises investments made since the start of 2014. The year has seen investment in five (plus one just after the year-end) new growth capital opportunities, which represent 11.3% of the portfolio. Many of the MBO portfolio companies are generating cash and have made repayments of their loan stock and are trading well.

Having experienced an unprecedented number of profitable realisations in 2014 and 2015, the Investment Adviser does not anticipate this level to be repeated in the near to medium term. Shareholders will note that the year-end valuation of the portfolio is only just above its cost. As the portfolio now has a younger profile, time is required for these more recent investments to grow in value. Unless a compelling offer is made for one of our investments, we plan to hold those that are performing, that are generating income and that show potential to grow in value further.

Investments by market sector at valuation

Investments remain spread across a number of sectors, primarily in support services, software and computer services and general retailers.

Impact of Changes in VCT Rules

The amendments to VCT legislation were a significant change for the VCT industry and required all VCTs to reconsider the type of investments that they can make in future.  We have responded to this by adding experienced growth capital investment resource to our existing team. Along with other investment advisers in the industry, we have focused on gaining familiarity with the practical implications of the rules on the types of investment opportunities we can now consider for VCT investment. That process is continuing, including discussions with HMRC in response to their draft Guidance to the legislation. We are also gaining additional practical experience from assessing prospective opportunities at a detailed level and from continuing to seek HMRC Advance Assurance in respect of each new investment proposal.

There has been an inevitable initial slowdown in new deal activity, resulting from both the more restrictive criteria for VCT investment under the new VCT rules and delays at HMRC in processing applications for Advance Assurance.

Independent research shows that as at 31 December 2016 the amount of completed new investment across the generalist VCT Industry for 2016 had fallen by 31% and 49% compared to the same periods in 2015 and 2014 respectively.

Impact of Brexit

It is too early to comment on the eventual impact of the UK leaving the EU upon the portfolio, whatever form that departure takes. Whilst the SME sector will not be immune to any general downturn in the UK economy, the portfolio has historically proved to be resilient and we believe will continue to be so. Portfolio companies with foreign currency exposure routinely cover this exposure and any negative effects of a longer term adjustment in exchange rate will not emerge for some months. Some portfolio companies will be beneficiaries of a weaker pound.

New Investment

Against this background we are therefore pleased to have made six new investments under the New VCT Rules. A total of £3.95 million (including £1.09 million from a company preparing to trade) was invested during the year under review. This comprised new investments into Redline, MPB,  BookingTek, Pattern Analytics (Biosite) and Preservica, an existing portfolio company. Just after the year-end, the Company made another new investment of £0.69 million into Tapas Revolution. Further details are set out below.

Principal new investments in the year

Company	Business	Date of Investment		Amount of new investment (£m)
Redline	Provision of security products and services	February 2016		1.09*
Redline is a market leader in the provision of security consultancy and training services to airlines, governments, airports and global distribution companies. Redline currently operates predominantly in the aviation security market and is at the forefront of counter-terrorism training and services. The investment is being applied to enable the Company to grow in its core aviation market and in other sectors. The company's latest accounts for the year ended 31 March 2016 show turnover of £5.01 million and underlying profit before interest, tax and amortisation of goodwill of £1.04 million. * £1.51 million previously held in Pound FM Consultants Limited, a company preparing to trade, was used for this investment. This resulted in a net repayment of £0.42 million.  Pound FM Consultants Limited has subsequently changed its name to Redline Worldwide Limited.
MPB Group	Online marketplace for used photo and video equipment	June 2016		0.60
MPB is Europe's leading online marketplace for used photo and video equipment. Based in Brighton, their custom-designed pricing technology enables MPB to offer both buy and sell services through the same platform and offers a one-stop shop for all its customers. The investment is to fund expansion of its platform globally, with launches into both the US and German markets. The company's latest audited accounts for the year ended 31 March 2016 show turnover of £8.37 million and profit before interest, tax and amortisation of goodwill of £0.001 million.
BookingTek	Direct booking software for hotels	October 2016		0.60
Based in London, BookingTek has developed software that enables hotels to reduce their reliance on third-party booking systems by means of a real-time booking platform for meeting rooms and restaurant reservations. The investment is to support further growth. The company's latest audited accounts for the year ended 31 July 2015 show turnover of £2.19 million and loss before interest, tax and amortisation of goodwill of £0.33 million.
Biosite	Workforce management	November 2016	0.76
Based in the Midlands, Pattern Analytics (Biosite) is a fast growing provider of biometric access control and software-based workforce management solutions for the construction sector. The investment will support the expansion of the team to facilitate the development of new site-management tools to enable managers to oversee all aspects of a construction project. The company's latest accounts for the year ended 31 July 2016 show turnover of £4.69 million and profit before interest, tax and amortisation of goodwill of £0.49 million.

Further investment into existing portfolio companies in the year

Company	Business	Date of investment	Amount of new investment (£m)
Preservica	Sellers of proprietary digital archiving software	December 2016	0.90
Preservica has developed the world's leading software for the long-term preservation of digital records ensuring that long-term digital content remains accessible, irrespective of changes in future technology. Previously a subsidiary of Tessella it was demerged prior to the sale of Tessella in December 2015. The new investment provided additional growth capital to finance the development of the business. The company's latest accounts for the year ended 31 March 2016 show turnover of £1.78 million and profit before interest, tax and amortisation of goodwill of £0.16 million.

New investment post year-end

Company	Business	Date of investment	Amount of new investment (£m)
Tapa Revolution	Restaurant	January 2017	0.69
Based in London, Ibericos Etc. Limited (which trades as Tapas Revolution) is a leading Spanish restaurant chain in the casual dining sector focusing on shopping centres sites with high footfall. Having opened its first restaurant in Shepherd's Bush Westfield, the business has since opened a further four restaurants. The investment provided growth capital to a high-calibre team with significant restaurant roll-out experience who have spent the past five years building and refining their offer and are now well placed to capitalise on a strong pipeline of new sites. The company's latest accounts for the year ended 25 October 2015 show a turnover of £2.37 million and loss before interest, tax and amortisation of goodwill of £0.16 million.

Realisations

There have been no full realisations during the year ended 31 December 2016 (2015: £6.92 million from two realisations), although the Company received total cash proceeds of £2.97 million (2015: £10.28 million). This was in the form of loan stock repayments (£1.95 million) detailed below, deferred consideration (£0.62 million) from Focus Pharma and Westway, both realised in a previous period, and finally, other receipts of £0.40 million.

After the year-end, the Company sold the balance of its AIM quoted investment in Omega Diagnostics Group plc, realising proceeds of £0.37 million.

Loan stock repayments

Positive cash flow at a number of companies contributed to £1.95 million received as partial and full loan stock repayments during the year. These proceeds are summarised below:-

Company	Business	Month	Amount (£000's)
Ward Thomas	Logistics, storage and removals business	January	1,005
Barham	Company preparing to trade	December	605
Pound FM	Company preparing to trade	February	170
Motorclean	Vehicle cleaning and valeting services	February	92
Jablite	Expanded polystyrene products	April	76
Total			1,948

After the year-end, the Company received partial loan repayments totalling £5.12 million from Backhouse Management Limited, McGrigor Management Limited, Barham Consulting Limited, Hollydale Management Limited and Creasy Marketing Services Limited, all being companies preparing to trade.

Mobeus Equity Partners LLP

29 March 2017

INVESTMENT PORTFOLIO SUMMARY

As at 31 December 2016

	Market sector			Date of investment	Total book cost				Valuation	Like for like valuation increase/ (decrease)		% value of net assets	% of equity held by funds advised by Mobeus2
					£'000				£'000	over year1
Qualifying investments
Unquoted investments
Virgin Wines Holding Company Limited Online Wine retailer	General retailers			Nov-13	2,439				3,393	(3.6)%		5.4%	42.0%
ASL Technology Holdings Limited Printer and photocopier services	Support services			Dec-10	2,942				3,170	(6.8)%		5.0%	47.5%
Tovey Management Limited (trading as Access IS) Provider of data capture and scanning hardware	Software and computer services			Oct-15	2,979				3,153	5.8%		5.0%	45.0%
Entanet Holdings Limited Wholesale communications provider	Fixed line Telecommunications			Feb-14	2,713				2,820	(32.5)%		4.5%	57.5%
Turner Topco Limited (trading as ATG Media) Publisher and on-line auction platform operator	Media			Oct-08	2,501				2,177	60.7%		3.4%	16.4%
Fullfield Limited (trading as Motorclean) Provider of vehicle cleaning and valet services	Support services			Jul-11	1,626				2,097	10.4%		3.3%	46.0%
Media Business Insight Holdings Limited A publishing and events business focused on the creative production industries	Media			Jan-15	2,518				1,910	(3.9)%		3.0%	67.5%
Gro-Group Holdings Limited Baby sleep products	General retailers			Mar-13	1,975				1,704	19.6%		2.7%	48.0%
CGI Creative Graphics International Limited Vinyl graphics to global automotive, recreational vehicle and aerospace markets	General Industrials			Jun-14	1,808				1,635	11.1%		2.6%	28.1%
Veritek Global Holdings Limited Maintenance of imaging equipment	Support services			Jul-13	2,045				1,620	(22.6)%		2.6%	44.0%
Vian Marketing Limited	Leisure goods			Jul-15	1,189				1,572	32.2%		2.5%	31.5%
Design, manufacture and sale of stand-up paddleboards and windsurfing sails
Tharstern Group Limited Software based management information systems		Software and computer services		Jul-14		1,377		1,535		(19.8)%	2.4%			52.5%
Manufacturing Services Investment Limited Company seeking to carry on a business in the manufacturing sector		Company preparing to trade		Feb-14		1,524		1,524		-	2.4%			50.0%
Backhouse Management Limited Company seeking to carry on a business in the motor sector		Company preparing to trade		Apr-15		1,514		1,514		-	2.4%			50.0%
Chatfield Services Limited Company seeking to carry on a business in the retail sector		Company preparing to trade		Apr-15		1,514		1,514		-	2.4%			50.0%
Creasy Marketing Services Limited Company seeking to carry on a business in the textile sector		Company preparing to trade		Apr-15		1,514		1,514		-	2.4%			50.0%
McGrigor Management Limited Company seeking to carry on a business in the pharmaceutical sector		Company preparing to trade		Apr-15		1,514		1,514		-	2.4%			50.0%
Hollydale Management Limited Company seeking to carry on a business in the food sector		Company preparing to trade		Mar-15		1,465		1,465		-	2.3%			50.0%
The Plastic Surgeon Holdings Limited Supplier of snagging and finishing commercial property markets		Support services		Apr-08		478		1,461		7.3%	2.3%			49.5%
RDL Corporation Limited Recruitment consultant for the pharmaceutical, business intelligence and IT industries		Support services		Oct-10		1,558		1,443		48.9%	2.3%			45.2%
EOTH Limited (trading as Rab and Lowe Alpine) Branded outdoor equipment and clothing		General retailers		Oct-11		1,000		1,310		24.6%	2.1%			8.0%
Redline Worldwide Limited (formerly Pound FM Consultants Limited)3 Provider of security services to the aviation industry and other sectors		Support services		Feb-16		1,088		1,088		-	1.7%			30.0%
Vectair Holdings Limited Designer and distributor of washroom products		Support services		Jan-06		139		1,029		49.1%	1.6%			24.0%
Blaze Signs Holdings Limited Manufacturer and installer of signs		Support services	Apr-06				492	1,018		(21.2)%	1.6%			52.5%
Barham Consulting Limited Company seeking to carry on a business in the catering sector		Company preparing to trade	Apr-15				1,150	908		-	1.4%			50.0%
Preservica Limited4 Seller of proprietary digital archiving software		Software and computer services	Dec-15				900	900		New investment	1.4%			20.2%
Master Removers Group Limited (trading as Anthony Ward Thomas, Bishopsgate and Aussie Man & Van) A specialist logistics, storage and removals business		Support services	Dec-14				614	881		5.7%	1.4%			18.5%
Jablite Holdings Limited Manufacturer of expanded polystyrene products		Construction and materials	Apr-15				502	810		(39.5)%	1.3%			40.1%
Pattern Analytics Limited (trading as Biosite) Workforce management and security services for the construction industry		Software and computer services	Nov-16				757	757		New investment	1.2%			20.4%
BookingTek Limited Direct booking software for hotels		Software and computer services	Oct-16				606	606		New investment	1.0%			14.7%
MPB Group Limited Online marketplace for used photographic and video equipment		General retailers	Jun-16				604	604		New investment	1.0%			23.5%
Lightworks Software Limited Provider of software for CAD vendors		Software and computer services	Apr-06				223	165		39.5%	0.3%			45.0%
Newquay Helicopters (2013) Limited (in creditors' voluntary liquidation) Helicopter service operator		Support services	Jun-06				49	-		(58.4)%	0.0%			34.9%
CB Imports Group Limited Importer and distributor of artificial flowers and floral sundries.		General retailers	Dec-09				350	-		-	0.0%			23.2%
Racoon International Holdings Limited Supplier of hair extensions, hair care products and training		Personal goods	Dec-06				1,213	-		-	0.0%			47.5%
Total unquoted investments							46,880	48,811			77.3%
AIM quoted investments
Omega Diagnostics Group plc In-vitro diagnostics for food intolerance, autoimmune diseases and infectious diseases		Health care equipment and services		Dec-10			245	357		13.2%	0.6%			5.6%
Total AIM quoted investments							245	357			0.6%
Total qualifying investments							47,125	49,168			77.9%5
Non-qualifying investments
Manufacturing Services Investment Limited		Company preparing to trade		Feb-14			1,142	1,142			1.8%			50.0%
Media Business Insight Holdings Limited		Media		Jan-15			764	764		-	1.2%			67.5%
EOTH Limited (Rab and Lowe Alpine)		General retailers		Oct-11			298	324		-	0.5%			8.0%
Tovey Management Limited (trading as Access IS)		Software and computer services		Oct-15			285	285		-	0.5%			45.0%
Watchgate Limited Holding company		Support services		Nov-11			1	-		-	0.0%			100.0%
Total non-qualifying investments							2,490	2,515			4.0%
Total investment portfolio							49,615	51,683			81.9%
Current asset investments and cash at bank6							10,562	10,562			16.7%
Total investments							60,177	62,245			98.6%
Other assets								1,154			1.8%
Current liabilities								(249)			(0.4)%
Net assets								63,150			100.0%

¹  This percentage change in 'like for like' valuations is a comparison of the 31 December 2016 valuations with the 31 December 2015 valuations having adjusted for any partial disposals, loan stock repayments or new investments in the period.

²  The other funds advised by Mobeus that also hold these investments are Mobeus Income & Growth 2 VCT plc, Mobeus  Income & Growth 4 VCT plc and The Income & Growth VCT plc.

³  £1,513,500 invested in Pound FM Consultants Limited, a company preparing to trade, was used for the investment into  Redline Assured Security Limited ("Redline").  This resulted in a net repayment to the Company of £425,871.  Pound FM  Consultants subsequently changed its name to Redline Worldwide Limited.

⁴ A further £899,613 was invested into Preservica Limited, adding to the Company's existing shareholding that was received as part of the disposal of Tessella Holdings Limited in December 2015.

⁵  At 31 December 2016, the Company held more than 70% of its total investments in qualifying holdings, and therefore complied with the VCT qualifying investment test. For the purposes of the VCT qualifying investment test, the Company is permitted to disregard disposals of investments for six months from the date of disposal. It also has up to three years to bring in new funds raised, before these need to be included in the qualifying investment test.

⁶  Disclosed as Current asset investments and Cash at bank within Current assets in the Balance sheet.

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. Under that law, 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 applicable 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 have been prepared in accordance with UK Generally Accepted Accounting Practice and 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 that the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

Neither the Company 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.

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

For and on behalf of the Board

Clive Boothman

Chairman

FINANCIAL STATEMENTS

Income Statement

for the year ended 31 December 2016

			Year ended 31 December 2016			Year ended 31 December 2015
		Notes	Revenue	Capital	Total	Revenue	Capital	Total
			£	£	£	£	£	£
Unrealised (losses)/gains on investments		8	-	(196,760)	(196,760)	-	1,766,616	1,766,616
Realised gains on investments		8	-	628,948	628,948	-	4,538,894	4,538,894
Income		3	2,650,934	-	2,650,934	2,820,521	-	2,820,521
Investment Adviser's fees		4a	(383,672)	(1,151,015)	(1,534,687)	(391,279)	(1,173,838)	(1,565,117)
	Investment Adviser's bonus payment	4a	-	-	-	-	(250,000)	(250,000)
Other expenses		4c	(349,892)	-	(349,892)	(462,989)	-	(462,989)
	Profit/(loss) on ordinary activities before
	taxation		1,917,370	(718,827)	1,198,543	1,966,253	4,881,672	6,847,925
Taxation on profit/(loss) on ordinary activities		5	(339,532)	230,203	(109,329)	(369,305)	289,531	(79,774)
	Profit/(loss) for the year and total
	comprehensive income		1,577,838	(488,624)	1,089,214	1,596,948	5,171,203	6,768,151
	Basic and diluted earnings per ordinary share	7	2.08p	(0.64)p	1.44p	2.16p	6.98p	9.14p

The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the unrealised (losses)/gains and realised gains 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 January 2017) by the Association of Investment Companies ("AIC"), 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 2016

		31 December 2016	31 December 2015
	Notes	£	£
Fixed assets
Investments at fair value	8	51,682,768	51,355,611
Current assets
Debtors and prepayments		1,154,144	848,390
Current asset investments	9	5,246,949	14,946,274
Cash at bank and in hand	9	5,314,539	7,221,793
		11,715,632	23,016,457
Creditors: amounts falling due within one year		(248,847)	(266,218)
Net current assets		11,466,785	22,750,239
Net assets		63,149,553	74,105,850
Capital and reserves
Called up share capital		755,975	759,730
Capital redemption reserve		9,440	5,685
Share premium reserve		19,463,849	19,463,849
Revaluation reserve		3,523,180	3,785,072
Special distributable reserve		35,605,335	40,625,822
Realised capital reserve		2,733,792	7,716,009
Revenue reserve		1,057,982	1,749,683
Equity shareholders' funds		63,149,553	74,105,850
Basic and diluted net asset value per ordinary share		83.53p	97.54p

Statement of changes in equity

for the year ended 31 December 2016

				Non-distributable reserves				Distributable reserves
			Called up	Capital	Share	Revaluation		Special	Realised	Revenue
	Notes		share	redemption	premium			distributable	capital	reserve		Total
			capital	reserve	reserve	reserve		reserve	reserve	(note b)
								(note a)	(note b)
			£	£	£	£	£		£	£	£
At 1 January 2016			759,730	5,685	19,463,849	3,785,072		40,625,822	7,716,009	1,749,683		74,105,850
Comprehensive income
for the year
(Loss)/profit for the year			-	-	-	(196,760)		-	(291,864)	1,577,838		1,089,214
Total comprehensive
income for the year			-	-	-	(196,760)		-	(291,864)	1,577,838		1,089,214
Contributions by and
distributions to owners
Shares bought back			(3,755)	3,755	-	-		(318,277)	-	-		(318,277)
Dividends paid		6	-	-	-	-		(3,781,398)	(5,676,297)	(2,269,539)		(11,727,234)
Total contributions by
and distributions to
owners			(3,755)	3,755	-	-		(4,099,675)	(5,676,297)	(2,269,539)		(12,045,511)
Other movements
Realised losses
transferred to special
reserve (note a)			-	-	-	-		(920,812)	920,812	-		-
Realisation of
previously unrealised
appreciation			-	-	-	(65,132)		-	65,132	-		-
Total other movements			-	-	-	(65,132)		(920,812)	985,944	-		-
At 31 December 2016			755,975	9,440	19,463,849	3,523,180		35,605,335	2,733,792	1,057,982		63,149,553

Note a: The purpose of this reserve is to fund market purchases of the Company's own shares, to write off existing and future losses and for any other corporate purpose. All of this reserve arose from shares issued before 5 April 2014. The transfer of £920,812 to the special distributable reserve from the realised capital reserve above is the total of realised losses incurred by the Company in the year.

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

Statement of changes in equity

for the year ended 31 December 2015

		Non-distributable reserves				Distributable reserves
	Called up	Capital	Share			Special	Realised	Revenue
	share redemption		premium Revaluation			distributable	capital	reserve		Total
	capital	reserve	reserve	reserve		reserve	reserve
	£	£	£	£	£		£	£	£
At 1 January 2015	607,500	5,367	4,938,201	3,734,981		41,911,188	7,388,319	1,824,521		60,410,077
Comprehensive income for
the year
Profit for the year	-	-	-	1,766,616		-	3,404,587	1,596,948		6,768,151
Total comprehensive income
for the year	-	-	-	1,766,616		-	3,404,587	1,596,948		6,768,151
Contributions by and
distributions to owners
Shares issued under Offer for
Subscription	152,548	-	14,525,648	-		(124,753)	-	-		14,553,443
Shares bought back	(318)	318	-	-		(26,306)	-	-		(26,306)
Dividends paid	-	-	-	-		-	(5,927,729)	(1,671,786)		(7,599,515)
Total contributions by and
distributions to owners	152,230	318	14,525,648	-		(151,059)	(5,927,729)	(1,671,786)		6,927,622
Other movements
Realised losses transferred to
special reserve	-	-	-	-		(1,134,307)	1,134,307	-		-
Realisation of previously
unrealised appreciation	-	-	-	(1,716,525)		-	1,716,525	-		-
Total other movements	-	-	-	(1,716,525)		(1,134,307)	2,850,832	-		-
At 31 December 2015	759,730	5,685	19,463,849	3,785,072		40,625,822	7,716,009	1,749,683		74,105,850

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 reduced due to shares bought back by the Company.

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.

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.

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 - The cost of share buybacks is charged to this reserve. In addition, any realised losses on the sale or impairment of investments (excluding transaction costs), and 75% of the Investment Adviser fee expense, and the related tax effect, are transferred from the realised capital reserve to this reserve. Capital dividends may also be payable from this reserve.

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 and 100% of any performance 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 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 2016

		Year ended	Year ended
	Notes	31 December 2016	31 December 2015
		£	£
Cash flows from operating activities
Profit after tax for the financial year		1,089,214	6,768,151
Adjustments for:
Net unrealised losses/(gains) on investments		196,760	(1,766,616)
Net gains on realisations of investments		(628,948)	(4,538,894)
Tax charge for current year		109,329	79,774
Increase in debtors		(38,554)	(85,867)
(Decrease)/increase in creditors		(82,593)	38,304
Net cash inflow from operations		645,208	494,852
Corporation tax paid		(44,108)	(146,884)
Net cash inflow from operating activities		601,100	347,968
Cash flows from investing activities
Acquisitions of investments	8	(3,559,180)	(21,970,561)
Disposals of investments	8	3,397,012	9,862,770
Decrease in bank deposits with a maturity over three months		2,003,484	489,249
Net cash inflow/(outflow) from investing activities		1,841,316	(11,618,542)
Cash flows from financing activities
Shares issued as part of Offer for subscription		-	14,553,443
Equity dividends paid	6	(11,727,234)	(7,599,515)
Share capital bought back		(318,277)	(47,683)
Net cash (outflow)/inflow from financing activities		(12,045,511)	6,906,245
Net decrease in cash and cash equivalents		(9,603,095)	(4,364,329)
Cash and cash equivalents at start of year		19,157,316	23,521,645
Cash and cash equivalents at end of year		9,554,221	19,157,316
Cash and cash equivalents comprise:
Cash equivalents	9	4,239,682	11,935,523
Cash at bank and in hand	9	5,314,539	7,221,793

1   Company Information

Mobeus Income and Growth VCT plc is a public limited company incorporated in England, registration number 5153931. The registered office is 30 Haymarket, London, SW1Y 4EX.

2   Basis of preparation of the Financial Statements

A summary of the principal accounting policies, all of which have been applied consistently throughout the year are set out at the start of the related disclosure throughout the Notes to the Financial Statements. All accounting policies are included within an outlined box 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') issued by the Association of Investment Companies (updated in January 2017). The Company has a number of financial instruments which are disclosed under FRS102 s11/12 as shown in Note 15 of the Annual Report.

3   Income

			2016		2015
			£		£
Income from bank deposits			60,115		79,780
Income from investments
- from equities			220,910		144,711
- from overseas based OEICs			31,429		8,297
- from loan stock			2,338,480		2,586,788
- from interest on preference share dividend arrears			-		945
			2,590,819		2,740,741
Total income	2,650,934			2,820,521
Total income comprises
Dividends	252,339			153,008
Interest	2,398,595			2,667,513
		2,650,934		2,820,521
Income from investments comprises
Listed overseas securities		31,429		8,297
Unlisted UK securities		220,910		144,711
Loan stock interest		2,338,480		2,586,788
		2,590,819		2,739,796

Total loan stock interest due but not recognised in the year was £602,221 (2015: £297,027).

4   Investment Adviser's fees and Other expenses

a)  Investment Adviser's fees and performance fees

	Revenue	Capital	Total	Revenue	Capital	Total
	2016	2016	2016	2015	2015	2015
	£	£	£	£	£	£
Mobeus Equity Partners LLP
Investment Adviser's fees	383,672	1,151,015	1,534,687	391,279	1,173,838	1,565,117
Investment Adviser's bonus
payment	-	-	-	-	250,000	250,000
	383,672	1,151,015	1,534,687	391,279	1,423,838	1,815,117

Under the terms of a revised investment management agreement dated 20 May 2010, Mobeus Equity Partners LLP ("Mobeus") provides investment advisory, administrative and company secretarial services to the Company, for a fee of 2% per annum of closing net assets, paid in advance, calculated on a quarterly basis by reference to the net assets at the end of the preceding quarter, plus a fixed fee of £134,168 per annum, the latter inclusive of VAT and subject to annual increases in RPI. In 2013, Mobeus agreed to waive such further increases due to indexation, until otherwise agreed with the Board.

The Investment Adviser's fee includes provision for a cap on expenses excluding irrecoverable VAT and exceptional items set at 3.6% 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 (2015: £nil).

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

In line with common practice, Mobeus retains 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 £326,660 during the year ended 31 December 2016 (2015: £486,396), being £98,881 (2015: £268,246) for arrangement fees and £227,779 (2015: £218,150) for acting as non-executive directors on a number of investee company boards. These fees attributable to MIG VCT are based upon the investment allocation applicable to MIG VCT which applied at the time of each investment. These figures are not part of these financial statements.

Incentive agreement

Under the Incentive Agreement dated 9 July 2004, and a variation of this agreement dated 20 May 2010, the Investment Adviser is entitled to receive an annual performance-related incentive fee of 20% of the dividends paid in a year in excess of a "Target Rate" comprising firstly, an annual dividend paid in a year target which started at 6.00 pence per share on launch (indexed each year for RPI) and secondly a requirement that any shortfall of cumulative dividends paid in each year beneath the cumulative annual dividend target is carried forward and added to the Target Rate for the next accounting period. Any excess of cumulative dividends paid above the cumulative annual dividend target is not carried forward, whether an incentive fee is payable for that year or not. Payment of a fee is also conditional upon the daily weighted average Net Asset Value ("NAV") per share throughout such year equalling or exceeding the daily weighted average Base NAV per share throughout the same year. The performance fee will be payable annually.

At 31 December 2016, the annual dividend target is 7.33 pence per share and there was an excess of cumulative dividends paid over the cumulative annual dividend target of 7.13 pence per share. However, the average NAV per share is 91.56 pence for the year, which was less than the average base NAV per share for the year of 98.53 pence. Accordingly, no performance incentive fee is payable for the year and the excess of cumulative dividends paid over the cumulative annual dividend target of 7.13 pence will not be carried forward.

For the year ended 31 December 2014, depending upon the interpretation of the terms contained in the original Incentive Agreement, a performance fee was potentially payable to the Investment Adviser. In light of the absence of sufficient clarity in several parts of the Incentive Agreement, and to recognise the particularly strong returns achieved by the Investment Adviser for the Company during the preceding eighteen months, the Board recommended the payment of an ex-gratia bonus of £250,000 to the Investment Adviser. This payment was approved by shareholders at a general meeting on 3 September 2015 and subsequently made on 30 September 2015. A contribution of £17,325 to the costs of the Circular sent to shareholders before the general meeting was made by the Investment Adviser.

b) Offer for subscription fees

No funds were raised by an offer by the VCT in the year (2015: £15 million). Accordingly, no subscription fees were payable to Mobeus in the year (2015: £0.49 million where all costs associated with the offer were met out of these fees by Mobeus, excluding any payments to financial advisers facilitated under the terms of the offer).

c)  Other expenses

	2016	2015
	£	£
Directors' remuneration (including NIC of £8,755 (2015: £7,449)) - note a)	132,780	137,866
IFA trail commission	53,684	90,116
Broker's fees	14,400	14,400
Auditor's fees - Audit of Company (excluding VAT)	23,575	23,063
- audit related assurance services - note b) (excluding VAT)	4,203	4,100
- tax compliance services - note b) (excluding VAT)	3,393	6,132
Registrar's fees	33,121	33,796
Printing	20,495	27,475
Legal & professional fees	8,544	19,578
VCT monitoring fees	9,000	9,300
Directors' insurance	8,349	9,248
Listing and regulatory fees	29,176	30,229
Sundry	9,172	10,100
Running costs	349,892	415,403
Provision against loan interest receivable (note c)	-	47,586
Other expenses	349,892	462,989
a)  See analysis in the Directors' Remuneration Report on page 31 of the Annual Report, which excludes            the NIC above. The key management personnel are the three non-executive Directors. The Company            has no employees.
b) The Directors consider the Auditor was best placed to provide the audit-related services and tax                     compliance services disclosed above. The Audit Committee reviews the nature and extent of               these services to ensure that auditor independence is maintained.
c) Provision against loan interest receivable of £nil (2015: £47,586) is a provision made against loan stock         interest recognised in previous years.

5  Taxation on profit/(loss) on ordinary activities

	2016	2016	2016	2015	2015	2015
	Revenue	Capital	Total	Revenue	Capital	Total
	£	£	£	£	£	£
a) Analysis of tax charge:
UK Corporation tax on profits/(losses)
for the year	339,532	(230,203)	109,329	369,305	(289,531)	79,774
Total current tax charge/(credit)	339,532	(230,203)	109,329	369,305	(289,531)	79,774
Corporation tax is based on a rate of 20%
(2015: 20.08%)
b) Profit/(loss) on ordinary activities
before tax	1,917,370	(718,827)	1,198,543	1,966,253	4,881,672	6,847,925
Profit/(loss) on ordinary activities multiplied
by main company rate of corporation tax in
the UK of 20% (2015: 20.08%)	383,474	(143,765)	239,709	394,867	980,347	1,375,214
Effect of:
UK dividends	(44,182)	-	(44,182)	(29,061)	-	(29,061)
Unrealised losses/(gains) not taxable	-	39,352	39,352	-	(354,775)	(354,775)
Realised gains not taxable	-	(125,790)	(125,790)	-	(911,510)	(911,510)
Under/(over) provision in prior period	240	-	240	(94)	-	(94)
Marginal rate	-	-	-	3,593	(3,593)	-
Actual current tax charge	339,532	(230,203)	109,329	369,305	(289,531)	79,774

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

The Company is an Investment Trust and Investment Trust companies are exempt from tax on capital gains if they meet the HMRC criteria set out in section 274 of the ITA.

Deferred taxation

No provision for deferred taxation has been made on potential capital gains due to the Company's current status as a VCT under section 274 of the ITA and the Directors' intention to maintain that status.

6   Dividends paid and payable

Amounts recognized as distributions to equity shareholders in the year:

		For year ended	Pence		2016	2015
Dividend	Type	31 December	per share	Date Paid	£	£
Second Interim	Income	2014	1.20p	30 April 2015	-	912,056
Second Interim	Capital	2014	5.80p	30 April 2015	-	4,408,271
Interim	Income	2015	1.00p	17 September 2015	-	759,730
Interim	Capital	2015	2.00p	17 September 2015	-	1,519,458
Final	Income	2015	1.00p	31 May 2016	756,980	-
Final	Capital	2015	6.00p	31 May 2016	4,541,877	-
Interim	Income	2016	2.00p	20 September 2016	1,512,559	-
Interim	Capital	2016	1.50p	20 September 2016	1,134,420	-
Interim	Capital	2016	5.00p	20 September 2016	3,781,398*	-
					11,727,234	7,599,515
Distributions to equity holders after the year-end:				Date Payable
Second interim	Capital	2016	6.00p	31 March 2017	4,535,848*	-

* These dividends were and will be payable out of the Company's special distributable reserve.

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 259 of the ITA concerning the Company not retaining more than 15% of its income from shares and securities, is considered.

Recognised income distributions in the financial statements for the year
		For year ended	Pence		2016	2015
Dividend	Type	31 December	per share	Date paid/payable	£	£
Revenue available for distribution by way of dividends for the year					1,577,838	1,596,948
Interim	Income	2015	1.00p	17 September 2015	-	759,730
Final	Income	2015	1.00p	31 May 2016	-	759,730
Interim	Income	2016	2.00p	20 September 2016	1,512,559	-
Total income dividends for the year					1,512,559	1,519,460

7  Basic and diluted earnings per share

	2016	2015
	£	£
Total earnings after taxation:	1,089,214	6,768,151
Basic and diluted earnings per share (note a)	1.44p	9.14p
Revenue earnings from ordinary activities after taxation	1,577,838	1,596,948
Basic and diluted revenue earnings per share (note b)	2.08p	2.16p
Net unrealised capital (losses)/gains on investments	(196,760)	1,766,616
Net realised capital gains on investments	628,948	4,538,894
Capital Investment Adviser fees less taxation	(920,812)	(884,307)
Investment Adviser's bonus payment	-	(250,000)
Total capital earnings	(488,624)	5,171,203
Basic and diluted capital earnings per share (note c)	(0.64)p	6.98p
Weighted average number of shares in issue in the year	75,741,214	74,063,445

Notes

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

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

c)  Capital earnings per share is the total capital earnings 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 earnings per share.

8  Investments at fair value

Movements in investments during the year are summarised as follows:

	Traded on	Unquoted	Unquoted	Loan	Total
	AIM	ordinary	preference	stock
		shares	shares
	£	£	£	£	£
Cost at 31 December 2015	305,030	15,950,645	29,850	33,775,769	50,061,294
Net unrealised gains at 31 December 2015	88,941	1,360,322	5,081	2,330,728	3,785,072
Permanent impairment in value of investments as at
31 December 2015	-	(1,442,685)	(3,078)	(1,044,992)	(2,490,755)
Valuation at 31 December 2015	393,971	15,868,282	31,853	35,061,505	51,355,611
Purchases at cost (note a)	-	2,723,364	-	143,920	2,867,284
Sale proceeds (note b)	(89,548)	(935,432)	-	(1,947,335)	(2,972,315)
Net realised gains (note c)	12,049	374,739	-	242,160	628,948
Net unrealised gains/(losses) for the year (note d)	40,834	(3,700,030)	(2,905)	3,465,341	(196,760)
Closing valuation at 31 December 2016	357,306	14,330,923	28,948	36,965,591	51,682,768
Cost at 31 December 2016	245,012	17,104,478	29,850	32,235,441	49,614,781
Net unrealised gains at 31 December 2016	112,294	(2,366,432)	2,176	5,775,142	3,523,180
Permanent impairment in cost of investments as at 31
December 2016 (note e)	-	(407,123)	(3,078)	(1,044,992)	(1,455,193)
Valuation at 31 December 2016	357,306	14,330,923	28,948	36,965,591	51,682,768

Reconciliation of investment transactions to Statement of Cash flows

Note a: Purchases above of £2,867,284 are less than that shown as Acquisitions of investments in the Statement of Cash flows of £3,559,180. This difference of £691,896 relates to an investment into Ibericos Etc. Limited (trading as Tapas Revolution) that completed after the year end. This amount is shown as held in a solicitor's client account within debtors at the year end.

Note b: The cash flow from investment proceeds shown above of £2,972,315 differs from the Disposals of investments shown in the Statement of Cash flows of £3,397,012 by £424,697. This is due to £89,548 of deferred cash sale proceeds not received until after the year-end, against which £514,245 of deferred cash sale proceeds were received during the year relating to a prior year.

Major movements in investments

Note c: Disposals of investment portfolio companies during the year were:

	Type	Investment	Disposal	Valuation at	Realised
		cost	proceeds	31 December	gain
				2015	in year
		£	£	£	£
Master Removers Group Limited	Loan repayment	1,004,547	1,004,547	1,004,547	-
Barham Consulting Limited	Loan repayment	363,240	605,400	605,400	-
Focus Pharma Holdings Limited	Deferred consideration	-	601,630	-	601,630
Pound FM Consultants Limited	Loan repayment and share buyback	425,871	425,871	425,871	-
Others	Loan payments/deferred consideration	242,417	334,867	307,549	27,318
		2,036,075	2,972,315	2,343,367	628,948

Note d: Within net unrealised losses of £196,760 for the year, the significant falls in value compared to last year were as follows: £1,357,565 in Entanet Holdings Limited, £578,850 in Jablite Holdings Limited, £474,707 in Veritek Global Limited, and £379,931 in Tharstern Group Limited. These losses were partially set off by significant unrealised gains in valuation compared to last year, being: £820,861 in Turner Topco Limited (trading as ATG Media), £473,686 in RDL Corporation Limited, £382,661 in Vian Marketing Limited (trading as Tushingham Sails) and £339,822 in Vectair Holdings 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 e: During the year, permanent impairments of the cost of investments have reduced from £2,490,755 to £1,455,193. The net reduction of £1,035,562 is due to a) an investee company being dissolved in the year, which removes the cost and related impairment of this investment from these Financial Statements, and b) an impairment of equity of one investee company.

9  Current asset investments and Cash at bank

	2016	2015
	£	£
OEIC Money market funds	4,239,682	9,434,251
Bank deposits that mature within up to three months	-	2,501,272
Cash equivalents per Statement of Cash Flows	4,239,682	11,935,523
Bank deposits that mature after three months but are not immediately repayable	1,007,267	3,010,751
Current asset investments	5,246,949	14,946,274
Cash at bank	5,314,539	7,221,793

10 Post balance sheet events

On 4 January 2017, the Company invested £0.69 million into Ibericos etc. Limited (trading as Tapas Revolution). This sum was held in a solicitor's client account at the year-end, and was included as part of debtors in the year-end balance sheet.

In January and February 2017, the Company sold its entire holding in Omega Diagnostics Group plc, realising £0.37 million of proceeds.

In January and February 2017, the Company received a further £0.13 million of deferred consideration as a result of the realisation of Focus Pharma Holdings Limited in a previous year.

Since the year-end, the Company has received partial loan repayments totalling £5.12 million from Backhouse Management Limited, McGrigor Management Limited, Barham Consulting Limited, Hollydale Management Limited and Creasy Marketing Services Limited, all being companies preparing to trade.

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 2016 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.migvct.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 Annual General Meeting of the Company will be held at 2.00 pm on Wednesday, 10 May 2017 at The Clubhouse, 8 St James's Square, London, SW1Y 4JU.

Contact details for further enquiries:

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

Mark Wignall or Mike Walker at Mobeus Equity Partners LLP (the Investment Adviser) on 020 7024 7600 or by e-mail 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, or forms part of, this announcement.

 

END

 

 

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