TIDMIGV
RNS Number : 1466I
Income & Growth VCT (The) PLC
10 December 2020
THE INCOME & GROWTH VCT PLC
LEI: 213800FPC15FNM74YD92
ANNUAL FINANCIAL RESULTS OF THE COMPANY FOR THE YEARED 30 SEPTEMBER
2020
The Income & Growth VCT plc (the "Company") announces the final results
for the year ended 30 September 2020. These results were approved by
the Board of Directors on 9 December 2020.
You may, in due course, view the Annual Report & Financial Statements,
comprising the statutory accounts of the Company by visiting www.incomeandgrowthvct.co.uk
.
FINANCIAL HIGHLIGHTS
As at 30 September 2020:
Net assets: GBP83.13 million
Net asset value ("NAV") per share: 70.06 pence
- Net asset value ("NAV") total return(1) per share was 11.9%.
- Share price total return(1) per share was 3.3%(2) .
- Dividends paid in respect of the year total 14.00 pence per share.
This brings cumulative dividends paid(1) to Shareholders in respect of
the past five years to 57.00 pence per share.
- The Company realised investments totalling GBP17.60 million of cash
proceeds and generated net realised gains in the year of GBP6.42 million.
- GBP8.39 million was invested into five new companies and four follow-on
investments.
1 - Definitions of key terms and alternative performance measures shown
above and throughout this report are provided in the Glossary of terms
within the Annual Report & Financial Statements.
2 - Further details on the share price total return are shown in the
Performance section of the Strategic Report within the Annual Report
& Financial Statements.
PERFORMANCE SUMMARY
The table below shows the recent past performance of the Company's existing
class of shares for each of the last five years.
R Net NA V Share Cumulative Cumulative Dividends
eporting assets per price dividends total paid and
date share 1 paid per return per proposed
share
to
Shareholders
2
share (NA V (Share per share
As at basis) price in
basis) respect of
each year
--------------- ------------- ------------- ---------------- -------------------- -----------------------
30 September (GBPm) (p) (p) (p) (p) (p) (p)
------------- ------------- ---------------- -------------------- -----------------------
201.56 191.
2020 83. 13 70.06 59.50 131.50 00 14. 00
------------- ------------- ---------------- -------------------- -----------------------
75.50 192. 12
2019 81.73 79 .12 3 113. 00 188.50 6. 00
------------- ------------- ---------------- -------------------- -----------------------
186.32 177
2018 82.58 78.32 69.50 108. 00 .50 6. 00
------------- ------------- ---------------- -------------------- -----------------------
183.74
2017 64.35 81.24 73.00 102.50 175.50 21. 00
------------- ------------- ---------------- -------------------- -----------------------
179 . 01
2016 70.84 98.51 88.80 80.50 169 .30 1 0.0 0
------------- ------------- ---------------- -------------------- -----------------------
1 Source: Panmure Gordon & Co (mid-market price).
2 Cumulative total return per share comprises the NAV per share (NAV
basis) or the mid-market price per share (share price basis) plus cumulative
dividends paid since launch of the current share class. The details of
the share price total return per share calculation are shown within the
Annual Report & Financial Statements.
3 The share price at 30 September 2019 has been adjusted to add back
the dividend of 4.50 pence per share paid on 18 October 2019, as the
listed share price was quoted ex this dividend at this year-end.
Detailed performance data for each of the VCT's fundraisings is provided
in the Performance Data Appendix within the Annual Report. The tables,
which give cumulative total return per share information for each allotment
date on both a NAV and share price basis, are also available on the Company's
website at www.incomeandgrowthvct.co.uk where they can be downloaded
by clicking on "table" in "Reviewing the performance of your investment".
CHAIRMAN'S STATEMENT
I am pleased to present the Annual Report of the Company for the financial
year ended 30 September 2020.
Chairman's Introduction
This is my first Statement to Shareholders since succeeding Jonathan
Cartwright as Chairman on 1 July 2020. I would like to thank Jonathan
on your behalf, for the excellent service he provided to Shareholders
during his tenure as a Director and latterly as interim Chairman.
Overview
This year has been a positive one for Shareholders, despite the significant
and exceptional challenges caused by the outbreak of COVID-19 since late
February 2020. Your Company's NAV total return per share increased in
the year by 11.9%.
Before this outbreak, the Company completed a timely and successful fundraising
ensuring the Company remained well-funded. In the same period, performance
had started strongly, as the portfolio made further progress and three
profitable realisations were achieved. One exit was from one of the most
successful investments the Company has made while the two others were
the first profitable exits of growth capital investments (which have
been the only permitted category of investment the VCT can make since
the VCT rule changes in 2015).
Shortly before the mid-point of the Company's year, the COVID-19 pandemic
and the UK Government's lockdown measures provoked substantial uncertainty
and instability. There was a significant decline in consumer and business
confidence and public markets saw a sharp fall in March.
The immediate impact of the COVID-19 crisis for Shareholders was a fall
in portfolio values at the end of March, based on best knowledge at that
uncertain time. These adjustments were partly market related, but mainly
in response to the Investment Adviser's assessment of COVID-19's actual
and potential impact on specific market segments and investee companies.
As the year progressed, greater clarity has emerged. The environment
for most of our investee companies has been less volatile and less uncertain
than initially assumed last March, but critically, also more robust and
favourable trading conditions emerged, such that the valuation of the
portfolio has recovered strongly over the six months to 30 September
from its March low point. Whilst the second lockdown and potential further
restrictions may impact the portfolio going forward, overall, your Board
is pleased with how well so many portfolio companies have been able to
capitalise on opportunities presented and with the performance achieved.
Despite the considerable COVID-19 related restrictions on its ability
to process transactions efficiently, the Company remained an active investor
during the year. Several profitable realisations occurred, being the
primary driver of shareholder value for the year. New and follow-on investment
activity was strong considering the circumstances and resulted in nine
transactions to support further growth in these companies. Both the portfolio
valuation changes and investment movements are discussed in the Investment
Portfolio section below and further details are also provided in the
Investment Adviser's Review.
Performance
The year's key events summarised above saw an overall increase in the
Company's NAV total return per share of 11.9% (2019: 7.4%). This was
due to a strong revenue return, substantial realised gains on disposals
and net gains in portfolio valuations for the year. These factors are
explained in further detail in the Company's Strategic Report and Investment
Adviser's Review.
The Board believes that the Company's performance has demonstrated resilience
in a volatile year and that the valuations at the year-end reflect the
responses to the pandemic and the potential to continue making progress,
despite continued uncertainty in respect of the pandemic's impact.
The share price total return for the year was 3.3% (2019: 15.8%), compared
to the NAV return of 11.9%. This difference arises principally due to
the timing of NAV announcements and is explained more fully in the Strategic
Report within the Annual Report & Financial Statements, under Performance.
At the year-end, your Company was ranked 1st out of 31 Generalist VCTs
over ten years and 16th out of 42 Generalist VCTs over five years, in
the Association of Investment Companies' analysis of NAV Cumulative Total
Return. Shareholders should note that these figures do not reflect the
NAV per share disclosed in this Report. For further details on the performance
of the Company, please refer to the Investment Adviser's Review within
the Annual Report & Financial Statements.
Dividends and Dividend Investment Scheme
A total of 18.50 pence has been paid in dividends during the year although
4.50 pence related to a dividend declared for the previous financial
year. The two interim dividends paid of 3.00 and 11.00 pence per share
in respect of the current year were paid on 10 July and 28 September
2020 respectively.
The Company's Dividend Investment Scheme ("DIS") was re-activated following
the Annual General Meeting ("AGM") held in February 2020 and Shareholders
wishing to take advantage of this seamless method of continuing investment,
and the resultant tax relief, can elect to join the DIS at any time by
instructing the Registrar, Link Asset Services, whose details are contained
within the Annual Report & Financial Statements or by completing the
mandate form available on the Company's website: www. incomeandgrowthvct.co.uk.
Shareholders should note that an election must be registered at least
15 days prior to a dividend payment, for inclusion in the DIS. A total
of 4,277,951 new Ordinary shares were allotted under the DIS scheme,
subject to listing, throughout the year.
The Company's target of paying a dividend of at least six pence per share
in respect of each financial year has been reached or exceeded in each
of the last nine years. As Shareholders have been advised previously,
both the gradual move of the portfolio to younger growth capital investments,
and the realisations of older companies that have provided a good yield,
are likely to make dividends harder to achieve from income and capital
returns alone in any given year. Accordingly, the Board continues to
monitor the sustainability of this target. Also, Shareholders should
note that there may continue to be circumstances where the Company is
required to pay dividends in order to maintain its regulatory status
as a VCT, for example, to stay above the minimum percentage of assets
required to be held in qualifying investments. Such dividends may cause
the Company's NAV per share to reduce by a corresponding amount.
Investment portfolio
In the context of the continuing challenging business environment, the
portfolio has performed strongly. The overall value has increased by
GBP9.85 million (2019: increase of GBP4.93 million), or 19.6% (2019:
increase of 10.0%) on a like-for-like basis, compared to the start of
the year. This increase was comprised of GBP6.42 million in realised
gains over the year and a net unrealised increase in valuations of GBP3.43
million. The portfolio was valued at GBP50.86 million at the year-end
(30 September 2019: GBP50.22 million).
Clearly, COVID-19 has been the dominant influence on the portfolio and
its valuations over the second half of the year. During this unprecedented
time, the Board liaised closely with the Investment Adviser, who ensured
that all practical steps were taken to enable each portfolio company
to trade through the crisis where possible and return to growth in value
thereafter. All investee companies were alerted to, and some utilised,
the available government support packages. The Company has also provided
loan interest payment holidays to some portfolio companies, generating
vital cash headroom for certain companies in the portfolio over the subsequent
half-year.
The sudden imposition of lockdown on UK business created immediate volatility
and uncertainty. However, once the immediate impact subsided, its continuing
influence on business generally and portfolio companies specifically
was able to be far better understood. It is pleasing that this impact
has been far less negative than was initially expected. This, combined
with trading levels achieved by some companies, has caused many valuations
to achieve not just a substantial recovery, but in some cases to reach
higher valuations. Several portfolio companies have greatly benefited
from a structural change in activity, behaviour and consumer purchasing
habits, and are now trading at or above their pre COVID-19 levels. The
majority of the portfolio has demonstrated a strong degree of resilience
with over two-thirds of the portfolio value showing year to date growth
in revenue and/or earnings over the previous year. A further beneficial
factor is the portfolio's relatively limited exposure to the travel and
hospitality sectors with the great majority of the retail sector exposure
being to online business models (of the nine investments in retail, only
the smallest, held at nil value, has a physical presence).
Although quoted markets have also been rallying since March, it is noteworthy
that the principal driver of the rise in valuations over the recent half-year
reflects strong earnings growth at many investee companies. On the other
hand, some companies have clearly struggled, although they are in the
minority and their impact on overall shareholder return is modest.
The portfolio movements across the year were as follows:
GBPm
P ortfolio value at 30 September
2019 50.22
---------
New and follow-on investments 8.39
---------
Disposal proceeds (17. 60)
---------
Net realised gains 6.42
---------
V aluation movements 3.43
---------
Portfolio value at 30 September
2020 50.86
---------
During the year, the Company invested a total of GBP8.39 million (2019:
GBP5.08 million) into five new (2019: three) and four existing (2019:
three) portfolio investments.
The new investments were:
Active Navigation GBP1.54 million
A provider of en t er pri se-
l evel fil e analysis so ft w
ar e
IPV GBP0.95 million
A developer of media asset man
agement so ft w ar e
B leach London GBP0.72 million
Direct to consumer h air care
brand
B ella & Duke GBP0.93 million
A premium fr o z e n raw d og
food provider
Andersen E V GBP 0.32 million
An el ec tri c vehicl e charge
point business
and f o ll ow-o n amounts into
e xisting inv es tments:
Rot ageek GBP0.63 million
A workforce management so ft w
ar e pr ovider
MyTutor GBP 0.98 million
A digital marketplace for school
tutoring
Bust er & Punch GBP1.54 million
A lightin g and interiors brand
Preservica GBP0.78 million
A seller of p ropri e t a r y
digital archi ving so ft w ar
e
These businesses may present opportunities for further investment in
the future as they may require further capital to realise their plans
to expand.
The Company realised investments in Redline, Biosite, Auction Technology
Group, Access IS and Blaze Signs during the year which, combined with
loan repayment and other capital receipts, generated total proceeds of
GBP17.60 million. The first half of the year saw the realisations of
two growth capital investments, Redline Worldwide and Biosite, generating
proceeds of GBP1.53 million and GBP2.65 million respectively, realising
a combined gain in the year of GBP0.98 million. Over the life of these
investments, Redline generated a multiple on cost of 1.7x and an IRR
of 17.7% and Biosite generated a multiple on cost of 1.5x and an IRR
of 21.0%.
In addition, the sale of Auction Technology Group ("ATG") achieved a
substantial gain over cost and represented proceeds of GBP4.19 million
and a gain of GBP1.56 million for the year. Over the life of the investment,
total proceeds of GBP9.04 million have been received, an overall multiple
of over 4.5x original cost and an IRR of 28.9%, an outstanding result
for Shareholders.
The second half of the year saw the realisations of Access IS and Blaze
Signs. Access IS generated cash of GBP8.38 million, a return of 2.5x
and an IRR of 23.4% over the life of the investment and its completion
resulted in a gain of GBP3.00 million in the year. Blaze Signs generated
GBP3.39 million over the life of the investment, a 2.5x return and an
IRR of 13.1% and its completion resulted in a gain of GBP0.13 million.
After the year-end, the sale of Vectair realised cash receipts of GBP1.10
million which over the nearly 15 year life of the investment contributed
to a multiple on cost of 8.3x and an IRR of 22.2%. In isolation, this
would result in an uplift of 0.07 pence per share over the 30 September
2020 NAV of 70.06 pence per share. Further proceeds may be receivable
in due course.
Other loan repayments and other capital proceeds of GBP1.34 million and
net realised gains of GBP0.75 million were principally generated from
Omega Diagnostics, which was partially realised in several phases during
the year.
Revenue account
The results for the year are set out in the Income Statement within the
Financial Statements and show a revenue return (after tax) of 2.07 pence
per share (2019: 1.80 pence per share). The revenue return of GBP2.32
million for the year has increased from last year's comparable figure
of GBP1.87 million. This increase is mainly due to a significant receipt
of loan interest arising from the sale of ATG, partially offset by a
number of provisions against loan interest.
Industry and Regulatory Changes
Although no further changes have emerged in the year, a previous change,
already announced, whereby 80% (previously 70%) of the Company's total
investments must now be in qualifying investments, applied to the Company
from 1 October 2019. The Board has therefore ensured that this requirement
has been met throughout the year under review.
Fundraising
The Board was pleased with the response to the Company's Offer for Subscription
("the Offer") which was launched during this financial year on 25 October
2019. This Offer became fully subscribed within two months and raised
GBP10 million in total, made up of the initial GBP5 million limit, and
the GBP5 million over-allotment facility. In accordance with the Offer's
prospectus, all the shares in the Company were allotted under the Offer
on 8 January 2020. The Board thanks Shareholders for their continued
support and extends a warm welcome to all new investors.
Share buy-backs
During the year, the Company bought back and cancelled 1,858,177 (2019:
2,135,527) of its own shares, representing 1.8 % (2019: 2.0%) of the
shares in issue at the beginning of the year, at a total cost of GBP1.24
million (2019: GBP1.47 million) inclusive of expenses. It is the Company's
policy to cancel all shares bought back in this way. The Board regularly
reviews its buyback policy and currently seeks to maintain the discount
at which the Company's shares trade at no more than 5% below the latest
published NAV.
Liquidity
Following the Company's successful fundraising, the re-introduction of
the DIS and realisation proceeds, cash or near cash resources held by
the Company as at 30 September 2020 were GBP32.19 million or 38.7% of
net assets.
At the date of this report pro forma cash and liquid assets amount to
GBP33.50 million or 40.3% of net assets, following post year-end disposals.
The Board considers the Company to have the advantage of a strong cash
position.
Shareholder communications
May I remind you that the Company has its own website containing useful
information for Shareholders. The Investment Adviser held the annual
Shareholder event on 4 February 2020 and is planning to hold a virtual
event later during 2021. Details will be notified to Shareholders once
finalised and will be shown on the Company's website: www.incomeandgrowthvct.co.uk
.
Fraud Warnings
Boiler Room Fraud
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 offering to buy your VCT shares at an inflated price.
Further information and fraud advice plus details of who to contact,
can be found in the Information for Shareholders section within the Annual
Report & Financial Statements.
Protect against identity fraud
Shareholders are also encouraged to ensure their personal data is always
held securely and that data held by the Registrar of the Company is up
to date, to avoid cases of identity fraud.
Environmental, Social and Governance
Your Board would like to reassure Shareholders that it takes these issues
seriously, and future reporting will cover 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.
Annual General Meeting
The next Annual General Meeting of the Company will be held at 11.00
am on Wednesday, 10 February 2021. Shareholders should note that it is
likely that physical meetings may still not be permitted due to the UK
Government's COVID-19 restrictions and therefore Shareholders would not
be allowed to attend the AGM in person. In planning our AGM we have sought
to prioritise the safety and wellbeing of our Shareholders and all attendees.
In light of the current COVID-19 measures in England, and the legislative
measures that have been proposed to allow companies to hold general meetings
safely, the AGM will, therefore, be held as a closed virtual meeting
with Shareholders able to join the meeting as attendees by electronic
means via MS Teams with the Board and Investment Adviser shown on the
screen. A link to attend the meeting is available on pages 36, 76 and
78 of the Annual Report & Financial Statement and on the Company's website
at www.incomeandgrowthvct.co.uk under the AGM bubble on the front page.
You do not need to download MS Teams or have a MS Teams account to access
the event. The meeting will also be accessible by telephone conference
call for those without a suitable device and/or WiFi connection. Once
the formal business of the meeting is concluded, a presentation by the
Investment Adviser will commence followed by Shareholders' questions.
Shareholders will not be able to vote at the meeting. Voting will be
conducted by way of a poll, by the quorum of members, of all the valid
proxy votes lodged. 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 at: www.signalshares.com . Votes must arrive at the Registrar
48 hours before the meeting to be valid. The Notice of the meeting is
included within the Annual Report & Financial Statements and an explanation
of the resolutions to be proposed can be found in the Directors' Report.
Shareholders can also submit any questions about the resolutions to be
passed at the AGM by using the agm@mobeus.co.uk email address and a response
will be provided prior to the deadline for lodging proxy votes. You can
also register any questions for the AGM using the same email address
or using the question facility during the meeting.
Outlook
The impact of COVID-19 was and will continue to be immediate and wide
reaching. Nevertheless, your Board considers that your Company is well
positioned to continue to respond and adapt in most likely scenarios
in so far as they can presently be foreseen. The successful realisations
and earlier fundraising have given the Company strong liquidity not only
to support the existing portfolio as appropriate, but also to capitalise
on opportunities which may arise for new investment. The portfolio still
retains a foundation of mature investments that are providing an income
return, but also an increasing proportion of younger, growth capital
investments seeking to achieve further scale, higher levels of profitability
and value. The year-end valuations reflect strong performance by many
investees in the second half of the year and a robust and well-funded
portfolio, well equipped to meet an uncertain environment.
The results achieved for the year reflect the growth and valuation increases
across the portfolio, underpinned by the successful realisations. The
Investment Adviser is seeing a good pipeline of interesting new investment
opportunities. Furthermore, as BREXIT negotiations continue unresolved
they cause global market economies to be nervous and volatile. UK and
European businesses in particular will therefore continue to operate
in an uncertain trading environment for the foreseeable future. Although
the degree and frequency of future lockdown and other restrictions to
the UK economy is unclear, both the Investment Adviser and portfolio
companies are well equipped to respond accordingly. On all fronts, we
have cause to be cautiously optimistic.
I would like to take this opportunity once again to thank all Shareholders
for their continued support and hope you and your families remain healthy
and well.
Maurice Helfgott
Chairman
9 December 2020
INVESTMENT POLICY
The Company's policy is to invest primarily in a diverse portfolio of
UK unquoted companies.
Asset Mix and Diversification
The Company will seek to make investments in UK unquoted companies in
accordance with the requirements of prevailing VCT legislation.
Investments are made selectively across a wide variety of sectors, principally
in established companies.
Investments are generally structured as part loan and part equity in
order to receive regular income and to generate capital gain from realisations.
There are a number of conditions within the VCT legislation which need
to be met by I&G and which may change from time to time.
No single investment may represent more than 15% (by VCT tax value) of
the Company's total investments at the date of investment.
Save as set out above, the Company's other investments are held in cash
and liquid funds.
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 borrowing of 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 Pandemic
The Company's year started well with strong portfolio performance and
some high-quality realisations being seen. Six months into the year,
in March 2020, the UK Government introduced lockdown and social distancing
measures in response to the COVID-19 pandemic.
These measures had an immediate adverse impact on UK businesses, with
many companies experiencing a significant reduction in consumer and business
demand, restrictions on employees' working practices and disruption to
their supply chains. Global markets fell significantly as a result.
Following the low point in March, there has been a significant and pleasing
bounce-back with recovery in portfolio trading levels. There are still
uncertainties ahead, particularly the second wave of the COVID-19 pandemic
and BREXIT, but the portfolio is in robust shape, following the experience
gained and the opportunities taken over the last six months, to withstand
and respond to these as yet uncertain developments in future.
At all times during the pandemic, the Investment Adviser has reviewed
and evaluated the impact of COVID-19 on each sector exposure and on the
value of the portfolio, and appropriate action taken. Mobeus has and
continues to review the opportunities for new and follow-on investments
and is in a position to capitalise as and when needed via the Company's
relatively high liquidity levels. Over the most recent months, investment
in new opportunities has been relatively low as entrepreneurs temporarily
deferred fundraising but there is now a healthy pipeline of suitable
opportunities which are being evaluated.
The level of portfolio follow-on investment has indicated there are
opportunities to back proven portfolio companies that are achieving strong
relative performance. The realisation activity outlook continues to be
positive with approaches received from trade and financial investors
to several investee companies.
Overall, the portfolio is robust and the Investment Adviser is mindful
of the uncertain future but remains optimistic on the basis of recent
evidence of trading performance and potential growth within the portfolio.
Portfolio review
Prior to the emergence of the COVID-19 pandemic, there was some very
positive progress within the portfolio, particularly with respect to
exits such as Auction Technology Group, Redline Worldwide and Biosite.
At the half-year stage, and at the height of the pandemic uncertainty,
many valuation reductions were applied to the portfolio which reflected
the initial drop in revenues, stock market movements and included COVID-19
specific adjustments given the uncertain outlook. In the second half
of the year, the portfolio experienced a significant bounce-back such
that for the year as a whole the value of the portfolio increased by
GBP9.85 million, comprising an increase of GBP3.43 million in the unrealised
portfolio and gains of GBP6.42 million through realisations.
It is important to note that the usual approach to portfolio valuation
by the Investment Adviser continued to be applied throughout this uncertain
period. The second half-year recovery is attributable to trading improvement
achieved by many portfolio companies, against a backdrop of improved
market sentiment. The removal of unused COVID-19 related adjustments
that were put in place during March, and improved cash generation, were
also contributing factors. Some portfolio companies, often with online
business models, have traded strongly throughout the latter half of the
year. Whilst it is still early to be certain, there is evidence that
a degree of structural change to consumer purchasing habits has occurred,
which should underpin strong performance in future under the "new normal".
The second half of the year, benefited from further valuation increases
and continued a strong run of realisations with further gains generated
from the exits of Access IS and Blaze.
Activity in the year is summarised as follows:
2020 2019
GBPm GBPm
Opening portfolio value 50 .22 49.40
--------------------------------- --------- -------
New and further 8.39 5.08
investments
Disposal proceeds (17. 60) (9.19)
Net realised gains 6.42 3.15
V aluation movements 3.43 1.78
--------------------------------- --------- -------
Portfolio value at 30 September 50.86 50.22
--------------------------------- --------- -------
The Company made new and follow-on investments totalling GBP8.39 million,
which is particularly pleasing given that there was effectively a temporary
pause in new investment going into the summer months. The Company invested
GBP4.46 million into five new growth companies, including one since the
onset of the COVID-19 pandemic. GBP3.93 million was invested into four
existing portfolio companies to allow them to capitalise on further growth
opportunities. The details of these investments are shown within the
Investment Review section of the Annual Report & Financial Statements.
The Company realised its investments in Redline, Biosite, Auction Technology
Group, Access IS and Blaze Signs during the year, receiving a total of
GBP16.25 million in proceeds, and contributing to total receipts of GBP17.60
million during the year. The details are set out below:
In December, the Company realised GBP1.53 million from its first growth
capital investment made under the new VCT rules, Redline Worldwide, generating
a gain of GBP0.98 million in the year. Over the time that this investment
was held, a multiple of proceeds over cost of 1.7x and an IRR of 17.7%
has been achieved to date.
In February, Auction Technology Group was sold and generated proceeds
over the life of the investment of GBP9.04 million compared to an original
cost of GBP2.00 million, a multiple on cost of 4.5x and an IRR of 28.9%
over the 11 1/2 years this investment was held - an exceptional return
for Shareholders.
Also in February, the investment in Biosite was realised, generating
proceeds of GBP2.77 million over the life of the investment, representing
a profit over cost of GBP0.98 million and contributing to a gain over
original cost of 1.5x and an IRR of 21.0%.
In August, the realisation of Access IS provided total proceeds over
the life of the investment of GBP8.38 million representing a profit over
cost of GBP5.06 million and a gain over original cost of 2.5x with an
IRR of 23.4%.
Finally, in September, the Blaze Signs exit contributed to total proceeds
of GBP3.39 million over the life of the holding, contributing to a gain
over cost of GBP2.06 million, representing 2.5x and an IRR of 13.1%.
Following the year-end, the realisation of Vectair contributed to total
proceeds received over the life of the investment of GBP1.79 million,
generating a multiple over cost of 8.3x and an IRR of 22.2%.
Also during the year and following a significant increase in its share
price, the Company received GBP1.05 million from the partial realisations
of its holding in Omega Diagnostics. This represented a realised gain
of GBP0.85 million for the year and contributed to an attractive return
to date of 5.3x multiple on cost and based upon the valuation at the
year-end has achieved an IRR to that date of 19.1%.
This investment has secured a strong positive return to date but maintains
a degree of potential upside through the residual holding.
The investment and divestment activity during the year increased the
proportion of the portfolio regarded as growth capital investments by
value to 74.6% at the year-end (30 September 2019: 59.2%). The portfolio
(including legacy and AIM investments) had decreased from 41 to 40 investments
at the year-end.
The portfolio's contribution to the overall results of the Company is
summarised below:
Investment Portfolio Capital Movement 2020 2019
GBPm GBPm
------------------------------------------- -------- --------
Increase in the value of 10.16 6.69
unrealised investments
------------------------------------------- -------- --------
Decrease in the (6.73) (4.91)
value of unrealised
investments
Net increase in the value of unrealised
investments 3.43 1 .7 8
------------------------------------------- -------- --------
Realised gains 6.53 3 . 1 5
Realised losses (0 .11) -
------------------------------------------- -------- --------
3 . 1
Net realised gains in the year 6.42 5
------------------------------------------- -------- --------
Net investment portfolio capital movement
in the year 9.85 4.93
------------------------------------------- -------- --------
Valuation changes of portfolio investments still held
The strength of the valuation increases in the second half-year was primarily
driven by the Company's growth portfolio, many of which have Direct-to-Consumer
business models that have been ideally suited to the more physically
remote business environment under COVID-19. Mobeus believes that this
has accelerated an existing trend and in many cases the shift in behaviours
will prove permanent. Over this period, some older style MBO portfolio
companies with similar business practices have also benefited.
Despite much of the portfolio performance being positive, a few companies
have struggled in this environment, although in most cases, these businesses
were already struggling pre-COVID-19. While there remains a possibility
such businesses will fail, their value has already been reduced to modest
levels, reducing their risk to future shareholder value. The details
of valuation increases and reductions are explained below.
Within total valuation decreases of GBP(6.73) million, the main reductions
were CGI Creative Graphics International - GBP(1.59) million, Tapas Revolution
- GBP(1.33) million, and Media Business Insight (MBI) - GBP(1.25) million.
These companies saw some of the most significant impact of a sudden decline
in demand for their products or services which, even when restrictions
are eased, may take time for value to recover.
By contrast some investee companies' trading has benefited greatly from
the lockdown. The main valuation increases include Virgin Wines - GBP3.04
million, Active Navigation - GBP1.54 million, Parsley Box - GBP1.24 million
and MPB Group- GBP0.84 million. Virgin Wines, Parsley Box and MPB have
generated record earnings and revenues over the lockdown period and beyond.
All have significantly increased their customer base and there is evidence
that these new customers are continuing to be at least as active and
profitable as their pre-COVID-19 customers. Active Navigation has benefited
from its strong levels of recurring revenues.
The majority of the increase in portfolio value lies in the top 10 companies
which represent nearly 70% of the portfolio by value. Year-on-year growth
by either revenues or earnings has been seen in nine of the top ten companies
and it is pleasing to note that eight of these are from the younger,
growth portfolio. The significant value and performance growth has contributed
to the resilience of the portfolio, reflecting investment by the Company
in strong Direct-to- Customer business models or those that have adapted
to them.
The year also saw portfolio companies, Jablite and Oakheath (formerly
Super Carers) entering voluntary liquidation. These two companies were
struggling before the impact of COVID-19. Valuation reductions for these
companies had already been made, so there has been little impact on shareholder
value from these administration processes.
Investment portfolio yield
During its financial year, the Company received the following amounts
in interest and dividend income:
Investment Portfolio Yield 2020 2019
GBPm GBPm
--------------------------------------- ------ ------
Interest received in the year 2.66 2.64
Dividends received in the year 0 .84 0.26
--------------------------------------- ------ ------
Total portfolio income in the year(1) 3.50 2.90
--------------------------------------- ------ ------
Portfolio value at 30 September 50.86 50.22
--------------------------------------- ------ ------
Portfolio Income Yield (Income as a
% of Portfolio value at
30 September) 6.9% 5.8%
1 Total portfolio income in the year is generated solely from investee
companies within the portfolio. See Note 3 of the Financial Statements
for all income receivable by the Company. The increase in income was
mainly due to interest of GBP1.09 million received on the loan instruments
in Auction Technology Group being paid, as part of the sale transaction,
which had not previously been recognised. Portfolio yield is expected
to fall for the foreseeable future, as the growth portfolio's returns
are likely to be more capital in nature.
Environmental, Social, Governance considerations
The Investment Adviser and the Board have discussed an appropriate framework
within which to assess progress on these matters within the existing
portfolio. The Investment Adviser is encouraging this matter to be a
standing agenda item at investee company board meetings. It will continue
to be an important consideration in our assessment of new investment
opportunities.
Outlook
The portfolio is in a good position with many companies trading well
during lockdown and several at record levels. This gives confidence about
the future prosperity of the portfolio and its ability to cope with other
uncertainties, challenges and opportunities associated with BREXIT and
the second national lockdown. The new investment pipeline is recovering
to levels seen pre-COVID-19 and capital deployment should continue at
an encouraging rate. The Investment Adviser, although cautious in its
approach, is confident that the portfolio is in robust shape to cope
with whatever the short to medium-term holds.
New investments in the year
A total of GBP4.46 million was invested into five new investments during
the year as detailed below:
Company Business Date of Investment Amount of new
investment
(GBPm)
Ac ti ve Nav
igati Data analysis so November 20 1
o n ft w ar e 9 1 . 5 4
------------------- ------------------- -------------------
Data Discovery Solutions (trading as "Active Navigation") is a data
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. Since 2014 revenues have
grown from GBP1.50 million to GBP6.00 million in its financial year
to 30 June 2019.
M edia asset s
I P V o ft wa r e November 2019 0.95
------------------- ------------------- -------------------
IPV has developed a media asset management software product called
'Curator'. This enables enterprise level customers to retrieve and
search hours of video footage quickly, edit into multiple short
clips and broadcast to online video platforms (such as YouTube)
and company intranets. This enables IPV's impressive list of blue-chip
clients, such as NASA , Sky and Turner Sports 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 GBP1
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.
From 2016 to 2019 recurring revenues grew over 60% annually and
represented approximately 70% of total revenues in 2019.
Direct to consumer
Bleach London hair care brand December 2019 0.72
------------------- ------------------- -------------------
Bleach London Holdings (trading as "Bleach London") is an established
branded, fast growing business which manufactures a range of haircare
and colouring products. Bleach London 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 GBP5.60
million investment round alongside trade 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. Bleach London
delivered an impressive three times revenue growth between 2017
and 2019.
Premium frozen
raw dog food
Bella & Duke provider February 2020 0.93
------------------- -------------------- -------------------
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 dog owners 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 broaden its
product range. The company has grown revenues over 300% between
2018 and 2019.
Electric vehicle
Andersen EV chargers June 2020 0.32
------------------- -------------------- -------------------
Muller EV Limited (trading as Andersen EV) is a design led manufacturer
of premium electric vehicle (EV) chargers. Incorporated in 2016,
this business has secured high profile partnerships with Porsche
and Jaguar Land Rover, establishing an attractive niche position
in charging points for the high end EV market. The Company's funds
will be used to scale the business through investment in further
products and software, sales and marketing and electric vehicle
manufacturer partnerships. Andersen is well positioned in a nascent
sector experiencing significant growth and has increased sales by
over 350% for its most recent financial year.
Further investments in existing portfolio companies in the year
The Company made further investments totalling GBP3.93 million into four
existing portfolio companies during the year under review, as detailed
below:
Company Business Date of Investment Amount of new
investment (GBPm)
Workforce
management
Rotageek software May 2020 0.63
-------------------- ------------------- -------------------
Rotageek is a provider of cloud-based enterprise software to help
larger retail, leisure and healthcare organisations predict and
meet demand to schedule staff effectively. This investment, alongside
funds from a new VCT investor and existing shareholders, will be
used to capitalise on opportunities that will emerge as the retail
sector recovers from lockdown restrictions. Rotageek will also
be expanding its presence in healthcare to help address the workforce
management issues of a sector that is chronically overburdened
at present. For the year ended 31 December 2019, revenues have
grown over 45% on the prior year.
Digital marketplace
connecting school
pupils seeking
one-to-one online
MyTutor tutoring May 2020 0.98
-------------------- ------------------- -------------------
MyTutorweb (trading as MyTutor) is a digital marketplace that connects
school pupils who are seeking private one-to-one tutoring with
university students. The business is satisfying a growing demand
from both schools and parents to improve pupils' exam results to
enhance their academic and career prospects. This further investment,
alongside other existing shareholders, seeks to build and reinforce
its position as a UK category leader in the online education market
as well as to begin to develop a broader, personalised learning
product offering. MyTutor has performed strongly over the last
18 months with 70% growth in 2019 and in excess of 100% in the
last six months. The company has been chosen as Tutoring Partner
for the National Tuition Programme where they will directly support
30,000 students in catching up on lost learning as a result of
the COVID-19 pandemic.
Lighting and
interiors
Bu s ter & P unch brand September 2020 1 . 5 4
-------------------- ------------------- -------------------
Buster and Punch is a well-established, premium branded, fast growing
business which designs and manufactures a complete range of high-quality
functional fittings (lighting, electrical and hardware and other
accessories) for the home. The Company first invested in 2017 and
since then, the business has delivered consistent high growth across
its ranges, with revenues growing in excess of 65%, and reaching
nearly GBP10 million in 2020. Buster and Punch's products are now
sold in 99 countries via both its highly invested ecommerce platform
and direct services to consumers, trade and retailers across the
world. Buster and Punch also operates flagship showrooms in London,
Stockholm and Los Angeles. The new funding will be used to drive
the global business plans of this fast-growing luxury interior
fashion label with further international expansion into the US
and Asia Pacific markets.
Seller of
proprietary
digital
archiving
Preservica software September 2020 0.78
-------------------- -------------------- -------------------
Preservica is a SaaS software business with blue chip customers
of strong recurring revenues and has developed market leading software
for the long-term preservation of digital records, ensuring that
digital content can remain accessible, irrespective of future changes
in technology. This latest investment is to provide additional
growth capital to finance the further development of the business.
The year to 31 March 2020 saw record bookings growth of 68% and
many key customer wins.
Realisations during the year
The Company realised its investments in Redline Worldwide, Biosite, Auction
Technology Group, Access IS and Blaze Signs, as detailed below:
Company Business Period of investment Total cash proceeds
over the life
of the investment
/ Multiple over
cost
P r ov id er o f Fe bru a r y 2016 GBP 1 . 95
Redline security services to milli
t o the aviation December 2019 on
in dustry and other
sectors 1.7 x cost
-------------------------- --------------------- ----------------------
The Company sold its investment in Redline Worldwide for GBP1.53
million (realised gain in the year of GBP0.98 million including
proceeds received after completion). Since investment in 2016,
the investment has generated proceeds to date of GBP1.95 million
compared to an original investment cost of GBP1.13 million, which
is a multiple on cost to date of 1.7x and an IRR of 17.7% to date.
Further proceeds may be receivable in due course.
Workforce management November 2016
Biosite and secu rit y ser to GBP2.77 million
v i ces February 2020 1.5 x cost
-------------------------- --------------------- ----------------------
The Company sold its investment in Pattern Analytics Limited (trading
as "Biosite") to ASSA ABLOY AB for GBP2.65 million. Since investment
in 2016, the investment has generated proceeds of GBP2.77 million
compared to an original investment cost of GBP1.79 million, which
is a multiple on cost of 1.5x and an IRR of 21.0%.
Auction Techno SaaS based online October 2008 to GBP9.04 million
l ogy Group auction ma rk February 2020 4.5 x cost
e t place platform
---------------------- --------------------- ----------------------
The Company sold its investment in Turner Topco Limited (trading
as Auction Technology Group) to TA Associates for GBP5.28 million
(including GBP1.09 million loan interest due on completion; realised
gain in the year: GBP1.56 million). This investment generated proceeds
over the life of the investment of GBP9.04 million (including proceeds
received following a partial realisation from a sale to ECI Partners
in June 2014) compared to an original cost of GBP2.00 million,
which is a multiple on cost of 4.5x and an IRR of 28.9%.
Access IS Data capture and October 2015 to GBP8.38 million
scanning hardware August 2020 2.5 x cost
---------------------- --------------------- ----------------------
The Company sold its investment in Tovey Management Limited (trading
as Access IS) to ASSA ABLOY AB for GBP7.15 million (realised gain
in the year: GBP3.00 million). Since investment in 2015, the investment
has generated cash proceeds of GBP8.38 million compared to an original
investment cost of GBP3.31 million, which is a multiple on cost
of 2.5x and an IRR of 23.4%.
Blaze Signs Manufacturer and April 2006 to GBP3.39 million
installer of signs September 2020 2.5 x cost
---------------------- --------------------- ----------------------
The Company sold its investment in Blaze Signs Holdings Limited
via a secondary buy out backed by Elaghmore Advisor LLP and has
received cash proceeds of GBP1.20 million (including dividends)
(realised gain: GBP0.13 million). Over the 14 years this investment
was held, cash proceeds of GBP3.39 million have been received compared
to an original cost of GBP1.34 million, which is a multiple of
cost of 2.5x and an IRR of 13.1%.
Realisations after the year-end
After the year-end, the Company realised one investment, as detailed
below: Company Business Period of investment Total cash proceeds
over the life
of the investment
/ Multiple over
cost
Designer and distributor January 2006 to GBP1.79 million
Vectair of washroom products November 2020 8.3 x cost
------------------------- --------------------- --------------------
The Company sold its investment in Vectair Holdings Limited to
a consortium of US investment funds, including Oxbow Industries
and Arcspring, and has received cash proceeds (including dividends)
of GBP1.10 million. This investment generated proceeds over the
life of the investment of GBP1.79 million compared to original
cost of GBP0.22 million, which is a multiple of cost of 8.3x and
an IRR of 22.2%.
Loan stock repayments and other receipts
During the year, there were two partial realisations of Omega Diagnostics
Group plc which generated proceeds of GBP1.05 million and a realised
gain of GBP0.85 million. A GBP0.08 million loan repayment was received
from BookingTek, generating a nominal loss of GBP0.01 million. Finally,
following the decision of Jablite Holdings to enter a voluntary liquidation,
the Company recognised a realised loss of GBP0.09 million on that investment,
with some recovery still anticipated.
Mobeus Equity Partners LLP
Investment Adviser
9 December 2020
Investment Portfolio Summary
for the year ended 30 September 2020
Total Total Additional Total % of
cost at Valuation investments valuation portfolio
at at
30-Sep-20 30-Sep-19 30-Sep-20 by value
GBP GBP GBP GBP
-------------------------- ---------- ---------- ------------ ---------- ----------
Virgin Wines Holding
Company Limited 2,745,503 3,421,474 - 6,458,434 12.7%
Online wine retailer
-------------------------- ---------- ---------- ------------ ---------- ----------
MPB Group Limited 2,043,137 3,858,515 - 4,698,745 9.2%
Online marketplace for
used photographic
equipment
-------------------------- ---------- ---------- ------------ ---------- ----------
Preservica Limited 2,960,899 3,053,749 779,233 4,303,532 8.5%
Seller of proprietary
digital archiving
software
-------------------------- ---------- ---------- ------------ ---------- ----------
Data Discovery Solutions
Limited
(trading as Active
Navigation) 1,543,500 - 1,543,500 3,087,000 6.1%
Provider of global market
leading
file analysis software
for information
governance, security and
compliance
-------------------------- ---------- ---------- ------------ ---------- ----------
EOTH Limited (trading as
Equip Outdoor
Technologies) 1,383,313 2,939,441 - 2,986,028 5.9%
Distributor of branded
outdoor equipment
and clothing including
the Rab and
Lowe Alpine brands
-------------------------- ---------- ---------- ------------ ---------- ----------
My Tutorweb Limited 2,759,335 1,783,566 975,769 2,972,638 5.8%
Digital marketplace
connecting school
pupils seeking one-to-one
online
tutoring
-------------------------- ---------- ---------- ------------ ---------- ----------
Buster and Punch Holdings
Limited 2,046,612 1,176,202 1,536,496 2,740,635 5.4%
Industrial inspired
lighting and
interiors retailer
-------------------------- ---------- ---------- ------------ ---------- ----------
Proactive Group Holdings
Inc 988,390 2,486,769 - 2,486,769 4.9%
Provider of media
services and investor
conferences for companies
primarily
listed on secondary
public markets
-------------------------- ---------- ---------- ------------ ---------- ----------
Manufacturing Services
Investment
Limited (trading as
Wetsuit Outlet) 3,205,182 1,656,308 - 2,371,375 4.7%
Online retailer in the
water sports
market
-------------------------- ---------- ---------- ------------ ---------- ----------
Parsley Box Limited 925,800 925,800 - 2,168,135 4.3%
Supplier of home
delivered ambient
ready meals for the
elderly
-------------------------- ---------- ---------- ------------ ---------- ----------
I-Dox plc(1) 453,881 1,312,563 - 1,895,924 3.7%
Developer and supplier of
knowledge
management products
-------------------------- ---------- ---------- ------------ ---------- ----------
Vian Marketing Limited
(trading
as Red Paddle Co) 1,207,437 1,883,950 - 1,881,880 3.6%
Design, manufacture and
sale of
stand-up paddleboards and
windsurfing
sails
-------------------------- ---------- ---------- ------------ ---------- ----------
Media Business Insight
Holdings
Limited 3,666,556 2,661,708 - 1,407,127 2.8%
A publishing and events
business
focussed on the creative
production
industries
-------------------------- ---------- ---------- ------------ ---------- ----------
Arkk Consulting Limited
(trading
as Arkk Solutions) 1,526,007 1,546,354 - 1,348,963 2.7%
Provider of services and
software
to enable organisations
to remain
compliant with regulatory
reporting
requirements
-------------------------- ---------- ---------- ------------ ---------- ----------
Bleach London Holdings
Limited 721,452 - 721,452 1,232,358 2.4%
Hair colourants brand
-------------------------- ---------- ---------- ------------ ---------- ----------
Master Removers Group
2019 Limited
(trading as Anthony Ward
Thomas,
Bishopsgate and Aussie
Man & Van) 464,658 1,196,408 - 1,175,977 2.3%
A specialist logistics,
storage
and removals business
-------------------------- ---------- ---------- ------------ ---------- ----------
Rota Geek Limited 1,250,800 1,122,456 625,400 1,170,582 2.3%
Provider of cloud based
enterprise
software that uses
data-driven technologies
to help retail and
leisure organisations
schedule staff
-------------------------- ---------- ---------- ------------ ---------- ----------
Tharstern Group Limited 1,454,278 1,534,444 - 1,137,147 2.2%
Software based management
Information
systems for the printing
industry
-------------------------- ---------- ---------- ------------ ---------- ----------
Vectair Holdings Limited 53,400 935,546 - 1,020,351 2.0%
Designer and distributor
of washroom
products
-------------------------- ---------- ---------- ------------ ---------- ----------
IPV Limited 954,674 - 954,674 954,674 1.9%
Provider of media asset
software
-------------------------- ---------- ---------- ------------ ---------- ----------
Bella & Duke Limited 931,499 - 931,499 931,499 1.8%
A premium frozen raw dog
food provider
-------------------------- ---------- ---------- ------------ ---------- ----------
Bourn Bioscience Limited 1,610,379 349,376 - 552,130 1.1%
Management of In-vitro
fertilisation
clinics
-------------------------- ---------- ---------- ------------ ---------- ----------
Omega Diagnostics Group
plc 70,011 263,674 - 449,180 0.9%
In-vitro diagnostics for
food intolerance,
autoimmune diseases and
infectious
diseases
-------------------------- ---------- ---------- ------------ ---------- ----------
Muller EV Limited
(trading as Andersen
EV) 317,000 - 317,000 352,473 0.7%
Provider of premium
electric vehicle
(EV) chargers
-------------------------- ---------- ---------- ------------ ---------- ----------
CGI Creative Graphics
International
Limited 1,943,948 1,930,826 - 337,590 0.7%
Vinyl graphics to global
automotive,
recreation vehicle and
aerospace
markets
-------------------------- ---------- ---------- ------------ ---------- ----------
Kudos Innovations Limited 472,500 945,000 - 329,354 0.6%
Online platform that
provides and
promotes academic
research dissemination
-------------------------- ---------- ---------- ------------ ---------- ----------
Spanish Restaurant Group
Limited
(formerly Ibericos Etc.
Limited)
(trading as Tapas
Revolution) 1,397,386 1,512,372 - 186,300 0.4%
Spanish restaurant chain
-------------------------- ---------- ---------- ------------ ---------- ----------
RDL Corporation Limited 1,441,667 695,008 - 137,899 0.3%
Recruitment consultants
within the
pharmaceutical, business
intelligence
and IT industries
-------------------------- ---------- ---------- ------------ ---------- ----------
BookingTek Limited 779,155 87,233 - - 0.0%
Software for hotel groups
-------------------------- ---------- ---------- ------------ ---------- ----------
Oakheath Limited (trading
as Super
Carers) (in members'
voluntary liquidation) 649,528 - - - 0.0%
Online platform that
connects people
seeking home care from
experienced
independent carers
-------------------------- ---------- ---------- ------------ ---------- ----------
Aquasium Technology
Limited (3) 166,667 176,951 - - 0.0%
Manufacturing and
marketing of bespoke
electron beam welding
and vacuum
furnace equipment
-------------------------- ---------- ---------- ------------ ---------- ----------
Jablite Holdings Limited (in
members'
voluntary liquidation) 498,790 162,366 - 65,779 0.1%
Manufacturer of expanded
polystyrene
products
------------------------------------ ------------- ----------- ------------ ----------- ---------
BG Training Limited 53,125 26,563 - 13,281 0.0%
Technical training business
------------------------------------ ------------- ----------- ------------ ----------- ---------
Corero Network Security plc(4) 600,000 2,458 - 7,374 0.0%
Provider of e-business technologies
------------------------------------ ------------- ----------- ------------ ----------- ---------
Veritek Global Holdings Limited 2,289,859 - - - 0.0%
Maintenance of imaging equipment
------------------------------------ ------------- ----------- ------------ ----------- ---------
CB Imports Group Limited (trading
as Country Baskets) 175,000 - - - 0.0%
Importer and distributor of
artificial
flowers, floral sundries and home
decor products
------------------------------------ ------------- ----------- ------------ ----------- ---------
Racoon International Group Limited 655,851 - - - 0.0%
Supplier of hair extensions, hair
care products and training
------------------------------------ ------------- ----------- ------------ ----------- ---------
Oxonica Limited(4) 2,524,527 - - - 0.0%
International nanomaterials group
------------------------------------ ------------- ----------- ------------ ----------- ---------
NexxtDrive Limited/Nexxt E-drive
Limited(5) 487,014 - - - 0.0%
Developer and exploiter of
mechanical
transmission technologies
------------------------------------ ------------- ----------- ------------ ----------- ---------
Biomer Technology Limited (6) 137,170 - - - 0.0%
Developer of biomaterials for
medical
devices
0.0%
Disposed in year
------------------------------------ ------------- ----------- ------------ ----------- ---------
Tovey Management Limited (trading
as Access IS) - 4,144,573 - - 0.0%
Provider of data capture and
scanning
hardware
------------------------------------ ------------- ----------- ------------ ----------- ---------
Pattern Analytics Limited (trading
as Biosite) - 2,648,952 - - 0.0%
Workforce management and security
services for the construction
industry
------------------------------------ ------------- ----------- ------------ ----------- ---------
Turner Topco Limited (trading as
Auction Technology Group)(2) - 2,634,378 - - 0.0%
SaaS based online auction market
place platform
------------------------------------ ------------- ----------- ------------ ----------- ---------
Redline Worldwide Limited - 550,430 - - 0.0%
Provider of security services to
the aviation industry and other
sectors
------------------------------------ ------------- ----------- ------------ ----------- ---------
Blaze Signs Holdings Limited - 599,314 - - 0.0%
Manufacturer and installer of signs
------------------------------------ ------------- ----------- ------------ ----------- ---------
H Realisations (2018) Limited
(formerly
Hemmels Limited) - - - - 0.0%
Company specialising in the
sourcing,
restoration, selling and servicing
of high price, classic cars
Total 49,555,890 50,224,727 8,385,023 50,861,133 100.0%
------------------------------------ ------------- ----------- ------------ ----------- ---------
Portfolio split by type
Growth focused portfolio 30,138,643 37,931,047 74.6%
MBO focused portfolio 19,417,247 12,930,086 25.4%
Total 49,555,890 50,861,133 100.0%
Notes
(1) Investment formerly managed by Nova Capital
Management Limited until 31 August 2007.
(2) Shares and loan stock in Turner Topco Limited arose as proceeds
from the part realisation of ATG Media Holdings Limited in 2014.
(3) Investment formerly managed by Foresight Group LLP up to various
dates ending on or before 10 March 2009.
(4) Investment formerly managed by Nova Capital Management Limited
until 31 August 2007 and by Foresight Group until various dates ending
on or before 10 March 2009.
For further information on the Investment Portfolio, please see the Annual
Report and Financial Statements.
PRINCIPAL RISKS
The Directors acknowledge the Board's responsibilities for the Company's
internal control systems and have instigated systems and procedures for
identifying, evaluating and managing the principal risks faced by the
Company. This includes a key risk management review which takes place
at each quarterly Board meeting. The principal risks identified by the
Board, a description of the possible consequences of each risk and how
the Board manages each risk are set out below.
The risk profile of the Company changed as a consequence of the VCT regulations
introduced in 2015. As the Company is required to focus its investment
on growth capital investments in younger companies it is anticipated
that investment returns will be more volatile and will have a higher
risk profile. The Board remains confident that the Company and the Investment
Adviser has adapted to these new requirements and put in place appropriate
resource to identify and make suitable investments.
The Board regularly sets and reviews policies for financial risk management
and full details of these can be found in Note 16 to the Financial Statements.
Risk Possible How the Board manages risk
consequence
Investment Investment in VCT
and qualifying earlier * Th e Board regularly reviews the Company's Strategy
strategic stage unquoted including it s Investment Policy.
small companies
involves a higher
degree * Careful se l ec ti o n and review of the Investment
of risk than po rtfoli o on a regular basis.
investment in fully
listed companies.
Smaller companies * Th e Board seeks to ensure the Company has an ad
often have limited equate level of liquidity at all times.
product
lines, markets or
financial resources
and may be
dependent for their
management on a
smaller
number of key
individuals and may
also be more
impacted by
external events or
factors outside
their control.
Furthermore, as the
securities of such
smaller companies
held by the Company
are unquoted,
they less liquid,
which may cause
difficulties in
valuing and
realising these
securities.
-------------------- -----------------------------------------------------------
Loss of A breach of the VCT
approval Tax Rules may lead * T he Company's VCT qualifying status is continually
as a to the Company reviewed by the Board and the Inv estment Adviser.
Venture losing its approval
Capital as a VCT, which
Trust would result in * Th e Board receives regular r e p o rt s from it s
qualifying VCT Status Ad vi se r who has been retained by the
Shareholders who Board to monitor the VCT's compliance with the VCT
have not held their Rules.
shares for the
designated
period having to
repay the income
tax relief they
obtained and future
dividends paid by
the
Company being
subject to tax. The
Company would also
lose its exemption
from corporation
tax
on capital gains.
-------------------- -----------------------------------------------------------
Regulatory The Company is
required to meet * Regulatory and legislative developments are kept
its legal and under review by the Board.
regulatory
obligations as a
VCT, a listed
company
and its own
Alternative
Investment Fund
Manager (AIFM).
Failure to comply
might result in
suspension of the
Company's Stock
Exchange listing,
financial penalties
or a qualified
audit
report or a 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.
-------------------- -----------------------------------------------------------
Economic Factors such as the
and COVID-19 pandemic * The Board monitors
political and resulting
and other restrictions
external imposed by
risks government, the (i)the portfolio as a whole to ensure that the
impact of BREXIT, Company invests in a diversified portfolio
an economic of companies;
recession and
movements in (ii) developments in the macro-economic environment
interest rates such as movements in interest rates or
could affect general fluctuations in stock markets; and
trading
conditions for (iii) with regards to COVID-19, the Investment
smaller companies Adviser holds ongoing discussions with all
and consequently the portfolio companies to ascertain where support is
the value of the required. Cash comprises a significant
Company's proportion of net assets of the Company, further to
qualifying the successful exits and the fund-raise
investments. in the year giving the Company a strong liquidity
Movements in UK position. The portfolio has minimal exposure
Stock Market to sectors such as leisure, hospitality, retail and
indices may affect travel which are currently more at risk.
the valuation of
the VCT's
investments, as
well as affecting
the Company's own
share price and its
discount to net
asset value.
The COVID-19
pandemic is the
current risk to the
Company, the wider
population and
economy.
-------------------- -----------------------------------------------------------
Financial Failure of the
and systems (including * The Board carries out an annual review of the
operating breaches of cyber internal controls in place, reviews the risks facin
security) at any of g
the third-party the Company at each quarterly Board meeting and
service receives reports by exception.
providers that the
Company has
contracted with * It reviews the performance of the service providers
could lead to annually and has obtained assurance that such
inaccurate providers have controls in place to reduce the risk
reporting or of breaches of their cyber security.
monitoring.
Inadequate controls
could lead to the
misappropriation or
insecurity of
assets. Outsourcing
and the increase in
remote working
could give rise to
cyber and data
security risk and
internal
control risk.
-------------------- -----------------------------------------------------------
Market Shareholders may
liquidity find it difficult * The Board has a share buyback policy which seeks to
to sell their mitigate market liquidity risk for shareholders. Th
shares at a price is
which is close to policy is reviewed at each quarterly Board meeting.
the net
asset value.
-------------------- -----------------------------------------------------------
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 of 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 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 Director ' s 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; and
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, 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.
For and on behalf of the Board
Maurice Helfgott
Chairman
9 December 2020
Financial Statements
Income Statement
For the year ended 30 September 2020
Year ended 30 September Year ended 30 September
2020 2019
Notes Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
Net investment
portfolio
gains 9 - 9,848,433 9,848,433 - 4,932,113 4,932,113
Income 3 3,660,837 - 3,660,837 3,130,823 - 3,130,823
Investment
Adviser's
fees 4a (458,619) (1,375,856) (1,834,475) (446,274) (1,338,822) (1,785,096)
Other expenses 5 (528,481) - (528,481) (426,840) - (426,840)
Profit on
ordinary
activities
before
taxation 2,673,737 8,472,577 11,146,314 2,257,709 3,593,291 5,851,000
Tax on profit
on ordinary
activities 6 (348,948) 348,948 - (381,993) 381,993 -
Profit for
the year and
total
comprehensive
income 2,324,789 8,821,525 11,146,314 1,875,716 3,975,284 5,851,000
--- ---------- ------------ ------------ ---------- ------------
Basic and
diluted
earnings per
ordinary
share: 7 2.07p 7.87p 9.94p 1.80p 3.80p 5.60p
--------------- --- ---------- ------------ ------------ ---------- ------------ --------------
The revenue column of the Income Statement includes all income and
expenses. The capital column accounts for the net investment portfolio
gains (unrealised gains and realised gains on investments) and the
proportion of the Investment Adviser's fee and performance 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 2014 Statement of Recommended Practice ("SORP")
(updated in October 2019) 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.
The Notes below form part of these Financial Statements.
Balance sheet
as at 30 September 2020
Company number: 4069483
as at 30 September 2020 as at 30 September 2019
Notes
GBP GBP GBP GBP GBP GBP
Fixed assets
Investments at
fair value 9 50,861,133 50,224,727
Current assets
Debtors and
prepayments 11 398,489 263,116
Current asset
investments 12 30,449,213 29,964,187
Cash at bank
and in hand 12 1,739,602 1,498,030
----------- -----------
32,587,304 31,725,333
Creditors:
amounts
falling due
within
one year 13 (315,007) (221,981)
----------- -----------
Net current
assets 32,272,297 31,503,352
Net assets 83,133,430 81,728,079
=============== === =========== =========== =========== =========== =========== ===========
Capital and
reserves
Called up
share
capital 14 1,186,617 1,033,029
Capital
redemption
reserve 23,827 5,245
Share premium
reserve 12,283,303 -
Revaluation
reserve 6,862,342 4,652,457
Special
distributable
reserve 54,626,873 63,751,255
Profit and
loss
account 8,150,468 12,286,093
Equity
Shareholders'
funds 83,133,430 81,728,079
=============== === =========== =========== =========== =========== =========== ===========
Basic and
diluted
net asset
value
per share
Ordinary
shares 15 70.06p 79.12p
The Notes below form part of these Financial Statements.
The Financial Statements were approved and authorised for issue by
the Board of Directors on 9 December 2020 and were signed on its behalf
by:
Maurice
Helfgott
Chairman
--------------- --- ----------- ----------- ----------- ----------- ----------- -----------
Statement of Changes in Equity for the year ended 30 September 2020
Non-distributable reserves Distributable reserves
Called
up Capital Share Special Realised
share redemption premium Revaluation distributable capital Revenue
capital reserve reserve reserve reserve reserve reserve Total
For the year
ended 30 September (Note (Note (Note
2020 a) b) b)
Notes GBP GBP GBP GBP GBP GBP GBP GBP
-------------------- ---------- ----------- ------------- ------------ -------------- ------------- ------------ -------------
At 1 October
2019 1,033,029 5,245 - 4,652,457 63,751,255 9,864,455 2,421,638 81,728,079
Comprehensive
income for
the year
Profit for
the year - - - 3,425,711 - 5,395,814 2,324,789 11,146,314
Total
comprehensive
income for
the year - - - 3,425,711 - 5,395,814 2,324,789 11,146,314
--- ----------- ------------- -------------- -------------
Contributions
by and
distributions
to owners
Shares issued
via Offer
for
Subscription
(Note d) 11 129,391 - 9,870,609 - - 10,000,000
Issue costs
and
facilitation
fees on Offer
for
Subscription
(Note d) 11 - - (245,176) - (99,106) - (344,282)
Dividends
re-invested
into new
shares 11 42,779 - 2,657,870 - - - 2,700,649
Shares bought
back (Note
e) 11 (18,582) 18,582 - - (1,243,530) - (1,243,530)
Dividends
paid 8 - - - - (5,497,299) (12,822,541) (2,533,960) (20,853,800)
Total
contributions
by and
distributions
to owners 153,588 18,582 12,283,303 - (6,839,935) (12,822,541) (2,533,960) (9,740,963)
--- ----------- ------------- -------------- -------------
Other
movements
Realised
losses
transferred
to special
reserve (Note
a) - - - - (2,284,447) 2,284,447 -
Realisation
of previously
unrealised
gains - - - (1,215,826) - 1,215,826 -
Total other
movements - - - (1,215,826) (2,284,447) 3,500,273 - -
--- ----------- ------------- -------------- -------------
At 30
September
2020 1,186,617 23,827 12,283,303 6,862,342 54,626,873 5,938,001 2,212,467 83,133,430
--- ----------- ------------- -------------- -------------
Notes
a) The Company's special reserve is available to fund buybacks of shares
as and when it is considered by the Board to be in the interests of
Shareholders, and to absorb any existing and future realised losses
and for other corporate purposes. At 30 September 2020, the Company
has a special reserve of GBP54,626,873, GBP26,463,573 of which arises
from shares issued more than three years after the end of the financial
year in which they were issued. Reserves originating from share issues
are not distributable under VCT rules if they are within three years
of the end of an accounting period in which the shares were issued.
The total transfer of GBP2,284,447 from the realised capital reserve
to the special distributable reserve above is the total of realised
losses incurred by the Company in the year.
b) The realised capital reserve and the revenue reserve together comprise
the Profit and Loss Account of the Company shown in the Balance Sheet.
c) The shareholders authorised the Company to purchase its own shares
for cancellation pursuant to section 701 of the Companies Act 2006
at the Annual General Meeting held on 12 February 2020. The authority
was limited to a maximum number of 15,485,098 shares (this being approximately
14.99% of the issued share capital at the date of the Notice of the
meeting). The minimum price which may be paid for a share is 1 penny
per share, the nominal value thereof. The maximum price that may be
paid for a share is an amount that is not more than 5% above the average
of the middle market quotations of the shares as derived from the Daily
Official List of the London Stock Exchange for the five business days
preceding such purchase. The authorities provide that the Company may
make a contract or contracts to purchase its own shares prior to the
expiry of the authority which may be executed in whole or part after
the expiry of such authority, and may purchase its shares in pursuance
of any such contract.
d) Under the Company's Offer for Subscription launched on 25 October
2019, 12,939,080 Ordinary Shares were allotted on 8 January 2020, raising
net funds of GBP9,655,718 for the Company. This figure is net of issue
costs of GBP245,176 and facilitation fees of GBP99,106.
e) During the year, the Company repurchased 1,858,177 of its own shares
at the prevailing market price for a total cost of GBP1,243,530, which
were subsequently cancelled. The difference between the figure shown
above of GBP1,243,530, and that per the Statement of Cash Flows of
GBP1,189,858 is due to an opening share buyback creditor of GBP40,379
offset by a share buyback creditor of GBP94,051 at the year-end.
Statement of Changes in Equity for the year ended 30 September
2019
--------------------------------------------------------------------------------------------------------- ------------ -------------
Non-distributable reserves Distributable reserves
Called
up Capital Share Special Realised
share redemption premium Revaluation distributable capital Revenue
capital reserve account reserve reserve reserve reserve Total
GBP GBP GBP GBP GBP GBP GBP GBP
-------------------- ---------- ----------- ------------- ------------ -------------- ------------- ------------ -------------
At 1 October
2018 1,054,384 33,490 46,473,760 4,102,002 19,655,855 8,627,792 2,636,431 82,583,714
Comprehensive
income for
the year
Profit for
the year - - - 1,785,897 - 2,189,387 1,875,716 5,851,000
Total
comprehensive
income for
the year - - - 1,785,897 - 2,189,387 1,875,716 5,851,000
--- ----------- ------------- -------------- -------------
Contributions
by and
distributions
to owners
Shares bought
back (21,355) 21,355 - - (1,471,131) - (1,471,131)
Dividends
paid - - - - - (3,144,995) (2,090,509) (5,235,504)
Total
contributions
by and
distributions
to owners (21,355) 21,355 - - (1,471,131) (3,144,995) (2,090,509) (6,706,635)
--- ----------- ------------- -------------- -------------
Other
movements
Cancellation
of Share
Premium
account - (49,600) (46,473,760) - 46,523,360 - -
Realised
losses
transferred
to special
reserve - - - - (956,829) 956,829 -
Realisation
of previously
unrealised
gains - - - (1,235,442) - 1,235,442 -
Total other
movements - (49,600) (46,473,760) (1,235,442) 45,566,531 2,192,271 - -
--- ----------- ------------- -------------- -------------
At 30
September
2019 1,033,029 5,245 - 4,652,457 63,751,255 9,864,455 2,421,638 81,728,079
=============== === ========== =========== ============= ============ ============== ============= ============ =============
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.
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
and the Company's Dividend Investment Scheme.
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
9), all such movements through both revaluation and realised capital
reserves are shown within the Income Statement for the year.
In accordance with stating all investments at fair value through profit
and loss (as recorded in Note 9), 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 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. The cost of any IFA facilitation fee
payable as part of the Offer for Subscription is also charged to 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;
and
-- 75% of the Investment Adviser fee expense 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.
The Notes below form part of these Financial Statements.
------------------------------------------------------------------------------------------------------------------------------------------------
Statement of Cash Flows
For the year ended 30 September
2020 Year ended Year ended
30 September 30 September
2020 2019
Notes GBP GBP
Cash flows from operating activities
Profit for the financial year 11,146,314 5,851,000
Adjustments for:
Net investment portfolio gains (9,848,433) (4,932,113)
(Increase)/decrease in debtors (135,373) 117,537
Increase/(decrease) in creditors
and accruals 39,354 (2,124)
-------------------------------------- ------ -------------
Net cash inflow from operating
activities 1,201,862 1,034,300
Cash flows from investing activities
Purchase of investments 9 (8,385,023) (5,004,960)
Disposal of investments 9 17,597,050 9,186,966
-------------------------------------- ------
Net cash inflow from investing
activities 9,212,027 4,182,006
Cash flows from financing activities
Shares issued as part of Offer
for subscription 10,000,000 -
Issue costs and facilitation fees
as part of Offer for subscription (344,282) -
Equity dividends paid 8 (18,153,151) (5,235,504)
Purchase of own shares 14 (1,189,858) (1,430,752)
-------------------------------------- ------ -------------
Net cash outflow from financing
activities (9,687,291) (6,666,256)
Net increase/(decrease) in cash
and cash equivalents 726,598 (1,449,950)
Cash and cash equivalents at start
of year 28,310,448 29,760,398
Cash and cash equivalents at end
of year 29,037,046 28,310,448
====================================== ====== ============= =============
Cash and cash equivalents comprise:
Cash at bank and in hand 12 1,739,602 1,498,030
Cash equivalents 12 27,297,444 26,812,418
The Notes below form part of these
Financial Statements.
-------------------------------------- ------ ------------- -------------
------------------------------------------------------------------------------------------------------------------------------------------------
Notes to the Financial Statements
for the year ended 30 September 2020
1 Company information
The Income and Growth VCT plc is a public limited company incorporated
in England, registration number 4069483. 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 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 on a Going Concern
basis and 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. The Company has a number
of financial instruments which are disclosed under FRS102 s11/12
as shown in Note 16 of the Annual Report & Financial Statements.
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 stock
instruments 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 30 September
2020 has been classified as capital and has been included within
realised gains on investments.
2020 2019
GBP GBP
Income from bank deposits 43,410 48,292
Income from investments
- from equities 837,168 259,666
- from OEIC funds 112,575 179,705
- from loan stock 2,625,570 2,623,375
- from interest on preference share dividend arrears 38,987 17,423
3,614,300 3,080,169
Other income 3,127 2,362
------------------------------------------------------ ---------- ----------
Total income 3,660,837 3,130,823
------------------------------------------------------ ---------- ----------
Total income comprises
Revenue dividends received 949,743 439,371
Interest 2,707,967 2,689,090
Other income 3,127 2,362
------------------------------------------------------ ---------- ----------
Total Income 3,660,837 3,130,823
------------------------------------------------------ ---------- ----------
Income from investments comprises
Listed UK securities - -
Listed overseas securities 112,575 179,705
Unlisted UK securities 3,501,725 2,900,464
Total investment income 3,614,300 3,080,169
----------
Total loan stock interest due but not recognised in the year was
GBP1,005,705 (2019: GBP630,147) due to uncertainty over its recoverability.
The increase is due to a number of investee company provisions in
light of COVID-19 offset by the realisation of one investee company
whose interest was only recognised upon exit.
4 Investment Adviser's fees and performance 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.
a) Investment Adviser's fees
Revenue Capital Total Revenue Capital Total
2020 2020 2020 2019 2019 2019
GBP GBP GBP GBP GBP GBP
Mobeus Equity
Partners LLP 458,619 1,375,856 1,834,475 446,274 1,338,822 1,785,096
------------------ -------- ---------- ---------- -------- ---------- ----------
Under the terms of a revised investment management agreement dated
29 March 2010, Mobeus Equity Partners LLP ("Mobeus") (formerly Matrix
Private Equity Partners LLP ("MPEP")) provides investment advisory,
administrative and company secretarial services to the Company, for
a fee of 2.4% per annum of closing net assets, calculated on a quarterly
basis by reference to the net assets at the end of the preceding
quarter. One sixth of this fee is subject to minimum and maximum
limits of GBP150,000 (2019: GBP150,000) and GBP170,000 (2019: GBP170,000)
per annum respectively.
The Investment Adviser fees disclosed above are stated after applying
a cap on expenses excluding IFA trail commission and exceptional
items set at 3.25% of closing net assets at the year end. In accordance
with the Investment Management Agreement any excess expenses are
wholly borne by the Investment Adviser. The excess expenses during
the year attributable to the Investment Adviser amounted to GBPnil
(2019: GBPnil).
With effect from 1 April 2018, the Investment Adviser's fee upon
the net funds raised from the over-allotment facility of GBP10 million
under the 2017/18 Offer was reduced to 1.4% from 2.4%, for one year.
From 1 April 2020, the Investment Adviser's fee upon the net funds
raised under the 2019/2020 Offer for Subscription from the use of
the over-allotment facility of GBP5 million is reduced to 1.4% from
2.4%, for one year.
b) Investment Adviser's performance fees
Under a Deed of Termination and Variation relating to Performance
Incentive Agreements dated 29 March 2010, the Investment Adviser's
Incentive Agreement for the former 'O' Share Fund was continued,
while the former 'S' Share Fund's Incentive Agreement was terminated.
Under the terms of the pre-merger 'O' Share Fund Incentive Agreement,
each of the ongoing Investment Adviser, Mobeus Equity Partners LLP
and a former Investment Adviser, Foresight Group LLP ("Foresight")
are entitled to a performance fee equal to 20% of the excess of the
value of any realisation of an investment made after 30 June 2007,
over the value of that investment in an Investment Adviser's portfolio
at that date ("the Embedded Value"), which value is itself uplifted
at the rate of 6% per annum subject to a High Watermark test.
On 30 September 2014, a new incentive fee agreement was signed between
the Board and Mobeus, with effect from 1 October 2013, to amend and
replace the previous agreement. The previous agreement remained in
force, but only with the former adviser, Foresight Group LLP. The
agreement expired on 10 March 2019. Mobeus waived their right to
their portion of the fee, under the previous agreement.
Any payment under the new incentive agreement is now 15% of net realised
gains for each year, payable in cash. It is payable only if Cumulative
Net Asset Value (NAV) total return per share (being the closing NAV
at a year-end plus cumulative dividends paid to that year end, since
1 October 2013) equals or exceeds a Target Return. The Target Return
is the greater of two targets, being:
i) compound growth of 6% per annum (but 5% per annum for the year
ended 30 September 2014 only), before deducting any incentive fee
payable (for the year of calculation only) under both this amended
agreement and the existing incentive agreement with Foresight Group
LLP in Cumulative NAV total return per share; or
ii) the cumulative percentage change in the Consumer Prices Index
since 1 October 2013 to the relevant financial year end, the resultant
figure then being multiplied by (100+A)/100, where A is the number
of full 12 month periods (or part thereof) that have passed between
1 October 2013 and the relevant financial year end.
Both measures of Target Return are applied to the same opening base,
being NAV per share as at 30 September 2013 of 113.90 pence. The
objective of this Target Return is to enable Shareholders to benefit
from a cumulative NAV return of at least 6% per annum (5% in the
financial year ended 30 September 2014), before any incentive fee
is payable. Once a payment has been made, cumulative NAV total return
is calculated after deducting past years' incentive fees paid and
payable.
Under this amended agreement, any fee payments to Mobeus are subject
to an annual cap of an amount equal to 2% of the net assets of the
Company as at the immediately preceding year end. Any excess over
the 2% remains payable to Mobeus in the following year(s), subject
to the 2% annual cap in such subsequent year(s) and after any payment
in respect of such subsequent year(s).
The Target Return for the year ended 30 September 2020 was a 6% uplift
on the previous year's Target Return of 160.05 pence, being 169.65
pence. As Cumulative Total NAV return is 161.06 pence per share at
the year-end, the Target Return has not been met and therefore no
fee is payable (2019: GBPnil).
c) Offer for Subscription fees
2020 2019
GBPm GBPm
Funds raised by I&G VCT 9.66 -
------------------------------------------------------------------ ----- -----
Offer costs payable to Mobeus at 3.00% of funds raised by I&G VCT 0.30 -
------------------------------------------------------------------ ----- -----
Under the terms of an Offer for Subscription, with the other Mobeus
advised VCTs, launched on 25 October 2019, Mobeus was entitled to
fees of 3.00% of the investment amount received from investors. This
amount totalled GBP1.74 million across all four VCTs, out of which
all the costs associated with the allotment were met, excluding any
payments to advisers facilitated under the terms of the Offer.
5 Other Expenses
All expenses are accounted for on an accruals basis. 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.
2020 2019
GBP GBP
Directors' remuneration (including NIC of GBP8,277 (2019: GBP9,710)
(Note
a) 137,204 127,710
IFA trail commission 82,314 70,169
Broker's fees 3,000 12,000
Auditor's fees - Audit of company (excluding VAT) 30,089 29,213
- tax compliance (Note b) (excluding VAT) - 1,845
- audit related assurance services (Note B) (excluding VAT) 5,248 5,125
VCT monitoring fees 10,800 10,800
Registrar's fees 54,836 48,215
Printing 46,246 43,426
Legal & professional fees (Note b) 18,448 18,916
Directors' insurance 7,769 7,565
Listing and regulatory fees 64,885 32,321
Sundry 42,791 19,535
-------------------------------------------------------------------- -------- --------
Running costs 503,630 426,840
Provision against loan interest receivable (Note c) 24,851 -
Other expenses 528,481 426,840
--------
Notes:
a) See analysis in Directors' Remuneration table in the Remuneration
Report within the Annual Report & Financial Statements, which excludes
the NIC above. The key management personnel are the three non-executive
directors. The Company has no employees.
b) 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,
compliance tax services are carried out by another firm, so are included
within legal and professional fees.
c) Provision against loan interest receivable above relates to an
amount of GBP24,851 (2019: GBPnil), being a provision made against
loan stock interest regarded as collectable in previous years.
6 Taxation 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.
2020 2020 2020 2019 2019 2019
Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
a) Analysis of tax
charge:
UK Corporation tax
on profits/(losses)
for the year 348,948 (348,948) - 381,993 (381,993) -
--------------------- ---------- ------------ ------------ ---------- ---------- ----------
Total current tax
charge/(credit) 348,948 (348,948) - 381,993 (381,993) -
--------------------- ---------- ------------ ------------ ---------- ---------- ----------
Corporation tax is
based on a rate of
19.0% (2019: 19.0%)
b) Profit on
ordinary activities
before tax 2,673,737 8,472,577 11,146,314 2,257,709 3,593,291 5,851,000
Profit on ordinary
activities
multiplied by main
company rate of
corporation
tax in the UK of
19.0% (2019: 19.0%) 508,010 1,609,790 2,117,800 428,965 682,725 1,111,690
Effect of:
UK dividends (159,062) - (159,062) (49,337) - (49,337)
Net investment
portfolio gains not
taxable - (1,871,202) (1,871,202) - (937,101) (937,101)
Unrelieved
expenditure - - - 2,365 - 2,365
Losses utilised - (87,536) (87,536) - (127,617) (127,617)
--------------------- ----------
Actual current tax
charge 348,948 (348,948) - 381,993 (381,993) -
--------------------- ---------- ------------ ------------ ---------- ----------
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 (2019: GBPnil). There
is an unrecognised deferred tax asset of GBP768,000 (2019: GBP766,000).
The deferred tax assets relates to unrelieved management expenses
and is not recognised because the Company may not generate sufficient
taxable income in the foreseeable future to utilise these expenses.
7 Basic and diluted earnings and return per share
2020 2019
GBP GBP
Total earnings after taxation: 11,146,314 5,851,000
Basic and diluted earnings per share (Note a) 9.94p 5.60p
------------------------------------------------------------ ------------ ------------
Revenue earnings from ordinary activities after taxation 2,324,789 1,875,716
Basic and diluted revenue earnings per share (Note b) 2.07p 1.80p
------------------------------------------------------------ ------------ ------------
Net investment portfolio gains 9,848,433 4,932,113
Capitalised Investment Adviser fees and performance fees
less taxation (1,026,908) (956,829)
------------------------------------------------------------ ------------ ------------
Total capital earnings 8,821,525 3,975,284
Basic and diluted capital earnings per share (Note c) 7.87p 3.80p
------------------------------------------------------------ ------------ ------------
Weighted average number of shares in issue in the year 112,120,361 104,575,505
------------------------------------------------------------ ------------ ------------
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.
8 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.
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. Accordingly,
the Board is required to determine the amount of minimum income dividend.
Amounts recognised as distributions to Equity Shareholders in the year:
Dividend Type For the Pence Date Paid 2020 2019
year per
ended 30 share
September
---------- ---------- ------------ ------ ----------- ------------- ------------
15
February
Final Income 2018 1.00p 2019 - 1,049,870
15
February
Final Capital 2018 2.50p 2019 - 2,624,676
12 July
Interim Income 2019 1.00p 2019 - 1,040,639
12 July
Interim Capital 2019 0.50p 2019 - 520,319
18 October
Interim Income 2019 0.50p 2019 519,137 -
18 October
Interim Capital 2019 4.00p 2019 4,153,095 -
10 July
Interim Income 2020 1.50p 2020 1,725,492 -
10 July
Interim Capital 2020 1.50p 2020 1,725,492 -
28
September
Interim Income 2020 0.25p 2020 289,331 -
28
September
Interim Capital 2020 6.00p 2020 6,943,954 -
28
September
Interim Capital* 2020 4.75p 2020 5,497,299 -
20,853,800 5,235,504
---------------------------------- ------ ----------- ------------- ------------
* - This dividend was paid out of the Company's Special distributable
reserve.
For the year ended 30 September 2020, GBP20,853,800 disclosed above
differs to that shown in the Statement of Cash Flows of GBP18,153,151
due to GBP2,700,649 of new shares allotted subject to listing under
the Company's Dividend Investment Scheme.
2020 2020 2020 2019 2019 2019
Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
Proposed distribution
to equity holders at
the year-end
Second interim
dividend for the year
ended 30 September
2019 of 0.50p
(income), 4.00p
(capital) per
ordinary share - - - 519,137 4,153,095 4,672,232
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.
2020 2019
GBP GBP
----------------------------------------------------------------
Revenue available for distribution by way of dividends for the
year 2,324,789 1,875,716
---------------------------------------------------------------- ----------
Interim income dividend for the year - 1.50p (2019: 1.00p) 1,725,492 1,040,639
Second interim income dividend for the year - 0.25p (2019:
0.50p) 289,331 519,137
----------------------------------------------------------------
Total income dividends for the year 2,014,823 1,559,776
---------------------------------------------------------------- ----------
9 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 (as updated by Special Valuation guidance
issued in March 2020). 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 a 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 time
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, i.e. that the value of each portfolio company is considered
as a whole, 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. The inputs that derived the investment price
are calibrated within individual valuation models and at subsequent
measurement dates, are reconsidered for any changes in light of more
recent events or changes in light of more recent events or changes
in the market performance of the investee company. 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, a lack of marketability).
or:-
where a company's underperformance against plan indicates a diminution
in the value of the investment, provision against cost 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, realisation proceeds or a weighted
average of these bases 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 cost, the loss is treated
as a permanent impairment and as a realised loss, even though the
investment is still held. The Board assesses the portfolio for such
investments and, after agreement with the Investment Adviser, will
agree the values that represent the extent to which an investment
loss has become realised. This is based upon an assessment of objective
evidence of that investment's future prospects, to determine whether
there is potential for the investment to recover in value.
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.
2020 2019
GBP GBP
Traded on AIM 2,352,478 1,578,695
Unquoted equity shares 34,894,706 25,772,163
Unquoted preference shares 1,168,593 19,247
Loan stock 12,445,356 22,854,622
Total 50,861,133 50,224,727
-----------
Brought forward net unrealised gains now realised 1,215,826 1,235,442
Net realised gains during the year 6,750,740 3,185,889
Transaction costs (328,018) (39,673)
Total realised gains over cost 7,638,548 4,381,658
Unrealised gains for the year 3,425,711 1,785,897
Total realised and unrealised gains 11,064,259 6,167,555
-----------
Movements in investments during the year are summarised as follows:
Unquoted Unquoted
Traded equity preference Unquoted
on AIM shares shares Loan Stock Total
GBP GBP GBP GBP GBP
------------------ ------------ ------------ ----------- ------------ -------------
Cost at 30
September 2019 1,333,907 25,155,824 24,138 23,388,141 49,902,010
Permanent
impairment at 30
September 2019
(Note c) (500,000) (3,712,373) - (117,367) (4,329,740)
Unrealised
gains/(losses)
at 30 September
2019 744,788 4,328,712 (4,891) (416,152) 4,652,457
-------------
Valuation at 30
September 2019 1,578,695 25,772,163 19,247 22,854,622 50,224,727
Purchases at cost - 7,320,490 623,400 441,133 8,385,023
Sale proceeds
(Note a) (1,047,904) (9,441,565) (16,731) (7,090,850) (17,597,050)
Reclassification
at value - (630,747) 630,747 - -
Net realised
gains/(losses)
on investments
(Note a) 850,153 5,072,418 (602) 500,753 6,422,722
Net unrealised
gains/(losses)
on investments
(Note b) 971,534 6,801,947 (87,468) (4,260,302) 3,425,711
Valuation at 30
September 2020 2,352,478 34,894,706 1,168,593 12,445,356 50,861,133
------------ ------------ ----------- ------------
Cost at 30
September 2020 1,123,892 29,017,445 1,240,906 18,173,647 49,555,890
Permanent
impairment at 30
September 2020
(Note c) (500,000) (4,969,611) (301) (87,187) (5,557,099)
Unrealised
gains/(losses)
at 30 September
2020 1,728,586 10,846,872 (72,012) (5,641,104) 6,862,342
Valuation at 30
September 2020 2,352,478 34,894,706 1,168,593 12,445,356 50,861,133
------------ ------------ ----------- ------------
Net realised gains on investments of GBP6,422,722 together with net
unrealised gains on investments of GBP3,425,711 equal net investment
portfolio gains of GBP9,848,433.
A full breakdown of the increases and decreases in unrealised valuations
of the portfolio is seen in the Investment Portfolio Summary in the
Annual Report & Financial Statements.
Major movements in investments
Note a) Disposals of investment portfolio companies during the year
were:
Company Type Investment Disposal Valuation Realised
Cost Proceeds at 30 gain/(loss)
September in year
2019
GBP GBP GBP GBP
Tovey Management
Limited (trading as
Access IS) Realisation 3,313,932 7,145,832 4,144,573 3,001,259
Pattern Analytics
Limited (trading as
Biosite) Realisation 1,791,938 2,648,952 2,648,952 -
Turner Topco Limited
(trading as Auction
Technology Group) Realisation 1,529,075 4,190,494 2,634,378 1,556,116
Redline Worldwide
Limited Realisation 1,129,121 1,533,940 550,430 983,510
Blaze Signs Holdings
Limited Realisation 418,281 733,788 599,314 134,473
Buster and Punch Loan
Holdings Limited Repayment 215,110 215,110 215,110 -
Omega Diagnostics Part
Group plc Realisation 210,015 1,047,904 197,751 850,154
Loan
BookingTek Limited Repayment 93,491 78,377 87,233 (8,856)
H Realisations
(2018) Limited
(formerly Hemmels) Realisation 30,180 2,653 - 2,653
Jablite Holdings Permanent
Limited impairment - - - (96,587)
---------------------- -------------
8,731,143 17,597,050 11,077,741 6,422,722
------------------------------------ ----------- ----------- -----------
Note b) Within net unrealised gains of GBP3,425,711 for the year,
the significant increases in value compared to last year were as
follows: GBP3,036,960 in Virgin Wines Holding Company Limited, GBP1,543,500
in Data Discovery Solutions Limited (trading as Active Navigation),
GBP1,242,335 in Parsley Box Limited, GBP840,230 in MPB Group Limited
and GBP715,067 in Manufacturing Services Investment Limited (trading
as Wetsuit Outlet). These gains were partially offset by unrealised
falls in valuation compared to last year, including: GBP1,593,236
in CGI Creative Graphics International Limited, GBP1,326,072 in Spanish
Restaurant Group Limited (formerly Ibericos Etc. Limited) (trading
as Tapas Revolution), GBP1,254,581 in Media Business Insight Holdings
Limited, GBP615,646 in Kudos Innovations Limited, GBP577,274 in Rota
Geek Limited, GBP557,109 in RDL Corporation Limited and GBP397,297
in Tharstern Group Limited.
The decrease in unrealised valuations of the loan stock investments
above reflect the changes in the entitlements to loan premiums, and/or
in the underlying enterprise value of the investee company. The decrease
does not arise from assessments of credit risk or market risk upon
these investments.
Note c) During the year, permanent impairments of the cost of investments
have increased from GBP4,329,740 to GBP5,557,099. This write-off
of GBP1,227,359 is due to the permanent impairment of three investee
companies in the period and the removal of one investee company which
had been liquidated during the year and which had been permanently
impaired previously.
Provisions and write-offs against unlisted investments
The amounts provided below cost at the end of the year or written-off
against unlisted investments were as follows:
Net write-offs/(write-backs)
Total Provisions at end of year in year
Financial Year GBP GBP
2020 18,123,280 1,227,359
2019 16,001,495 (2,307,326)
2018 16,029,509 38,426
2017 13,528,607 2,403,079
2016 11,500,860 (1,115,371)
---------------- -------------------------------- -----------------------------
10 Current asset investments and Cash at bank
Cash equivalents, for the purposes of the Statement of Cash Flows,
comprise 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 one
year's 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.
Current asset investments and Cash at bank
2020 2019
GBP GBP
OEIC Money market funds 27,297,444 26,812,418
Cash equivalents per Statement of Cash Flows 27,297,444 26,812,418
Bank deposits that mature after three months 3,151,769 3,151,769
---------------------------------------------- ----------- -----------
Current asset investments 30,449,213 29,964,187
---------------------------------------------- ----------- -----------
Cash at bank 1,739,602 1,498,030
---------------------------------------------- ----------- -----------
11 Called up share capital
2020 2019
GBP GBP
Allotted, called-up and fully paid:
Ordinary Shares of 1p each: 118,661,711 (2019: 103,302,857) 1,186,617 1,033,029
1,186,617 1,033,029
Under the Offer for Subscription launched on 25 October 2019 a total
of 12,939,080 (2019: nil) ordinary shares were allotted at an average
effective offer price of 77.29 pence per share, raising net funds
of GBP9,655,718 (2019: GBPnil).
During the year, the Company purchased 1,858,177 (2019: 2,135,527)
of its own ordinary shares for cash (representing 1.8% (2019: 2.0%)
of the ordinary shares in issue at the start of the year) at the
prevailing market price for a total cost of GBP1,243,530 (2019: GBP1,471,131).
The shares bought back were subsequently cancelled. This figure is
higher than that shown in the Statement of Cashflows of GBP1,189,858
by GBP53,672. This is due to an opening share buyback creditor of
GBP40,379 offset by a share buyback creditor of GBP94,051 at the
year end.
Under the terms of the Dividend Investment Scheme, a total of 4,277,951
ordinary shares were allotted during the year ended 30 September
2020, subject to listing, for a total consideration of GBP2,700,649.
12 Basic and diluted net asset value per share
2020 2019
GBP GBP
Net assets 83,133,430 81,728,079
Number of shares in issue 118,661,711 103,302,857
Basic and diluted net asset value per share 70.06p 79.12p
13 Post balance sheet events
On 16 October 2020, the Company received a loan repayment from Vian
Marketing Limited (trading as Red Paddle) totalling GBP0.21 million
(including premium of GBP0.06 million).
On 27 November 2020, the Company realised its investment in Vectair
Holdings Limited generating cash proceeds of GBP1.10 million.
14 Statutory information
The financial information set out in these statements does not constitute
the Company's statutory accounts for the year ended 30 September
2020 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.
15 Annual Report
The Annual Report will be published on the Company's website at www.incomeandgrowthvct.co.uk
shortly and, following the adoption of electronic communications
by the Company, shareholders 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: vcts@mobeus.co.uk.
16 Annual General Meeting
The Company's next Annual General Meeting will be held on Wednesday,
10 February 2021 as a closed virtual meeting using the link: www.incomeandgrowthvctAGM.co.uk,
the link if also available on the Company's website at: www.incomeandgrowthvct.co.uk.
Contact details for further enquiries
Mobeus Equity Partners LLP (the Company Secretary) on 020 7024 7600
or by email to info@mobeus.co.uk .
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END
FR FSLEEUESSEFE
(END) Dow Jones Newswires
December 10, 2020 03:08 ET (08:08 GMT)
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