Mobeus Inc&Gwth - Annual Financial Report
31/03/2022 18:27
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RNS Number : 8567G Mobeus Income & Growth VCT PLC 31 March 2022
MOBEUS INCOME & GROWTH VCT PLC
LEI: 213800HKOSEVWS7YPH79
ANNUAL FINANCIAL RESULTS OF THE COMPANY
FOR THE YEAR ENDED 31 DECEMBER 2021
Mobeus Income & Growth VCT plc (the "Company") announces the final results
for the year ended 31 December 2021. These results were approved by the
Board of Directors on 31 March 2022.
You may, in due course, view the Annual Report & Financial Statements,
comprising the statutory accounts of the Company by visiting www.migvct.co.uk
(http://www.migvct.co.uk) .
FINANCIAL HIGHLIGHTS
As at 31 December 2021:
Net assets: £112.96 million
Net asset value ("NAV") per share: 90.31 pence
➤ Net asset value ("NAV") total return(1) per share was
42.2%(2).
➤ Share price total return(1) per share was 47.8%.
➤ Dividends paid and declared in respect of the financial year
totalled 9.00 pence per share. Cumulative dividends paid to date since
inception in 2004 stand at 148.80 pence per share.
➤ £7.54 million was invested into four new growth capital
investments and eight existing portfolio companies during the year.
➤ £30.91 million of unrealised gains were achieved in the year
from strong portfolio performance.
➤ The Company realised investments totalling £15.23 million of
cash proceeds and generated net realised gains in the year of £5.45 million.
1 Definitions of key terms and alternative performance measures shown
above and throughout this report are shown in the
Glossary of terms at the end of the Annual Report & Financial Statements.
2 Further details on the NAV total return are shown in the Performance
section of the Strategic Report within the Annual Report & Financial
Statements.
PERFORMANCE SUMMARY
Cumulative NAV Total return(1) performance over the last 3, 5 and 10 years is
63%, 66% and 111% respectively.
The table below shows the recent cumulative performance since launch as at the
end of each of the last five years.
Reporting date as at Net assets NAV Share Cumulative total return per share to
per share price(2) Cumulative dividends paid per share(1) Shareholders(1) Dividends paid and proposed in respect of each year
(p)
(£m) p p (NAV Basis) (Share Price Basis)
(p) (p)
31 December 2021 112.96 90.31 80.00(3) 144.80 235.11 224.80 9.00
31 December 2020 84.69 67.03 57.50 139.80 206.83 197.30 11.00
31 December 2019 71.89 68.78 63.75 124.80 193.58 188.55 10.00
31 December 2018 75.08 70.25 62.00 113.80 184.05 175.80 7.00
31 December 2017 69.90 71.75 63.00 108.80 180.55 171.80 16.00
1 Definitions of key terms and alternative performance measures shown
above and throughout this report are shown in the Glossary of terms on at the
end of the Annual Report & Financial Statements.
2 Source: Panmure Gordon & Co (mid-market price). The discount on the
Company's shares at 31 December 2021 was 4.2% as the share price was based on
the NAV per share at 30 September 2021 of 83.47 pence.
3 The share price at 31 December 2021 has been adjusted for a 4.00 pence
dividend paid after the year-end on 7 January 2022 which was ex-dividend at 31
December 2021.
Dividends paid post year-end in respect of the year ended 31 December 2021
A second interim dividend of 4.00 pence per share comprised of 0.25 pence
(income) and 3.75 pence (capital) was paid to Shareholders on 7 January 2022.
Change in Management Arrangements
Following the communication to all Shareholders sent by the Chairmen of each
of the VCTs advised by Mobeus Equity Partners LLP ("Mobeus") on 10 September
2021, I am pleased to report the sale of the Mobeus VCT fund and investment
management business to a subsidiary of Gresham House plc completed with effect
from 30 September 2021. As a result, the Mobeus-advised VCTs' investment
advisory arrangements have been novated from Mobeus to Gresham House Asset
Management Limited ("Gresham House").
The Board believes that the agreement to the novation of the investment
advisory arrangements was in the interests of the Mobeus VCTs' Shareholders
and that the Company will benefit from scale advantages, continuity, portfolio
diversification and investment in additional skilled staff at Gresham House.
The Board is pleased that Clive Austin and Trevor Hope, the two leading
partners involved with managing the Mobeus VCTs' investment portfolios, remain
responsible for the investment, portfolio and fund management of the Mobeus
VCTs, along-side the investment and operations teams.
CHAIRMAN'S STATEMENT
I am pleased to present the annual results of Mobeus Income & Growth VCT
plc for the year ended 31 December 2021.
Overview
In last year's Annual Report, I was able to report on the Company's resilient
performance over a time of material global uncertainty and market volatility.
Twelve months later, I am pleased to say that it has been a year of continued
strong trading and portfolio value growth to 31 December 2021. The Company
achieved an exceptional NAV total return per share of 42.2% for the year
(2020: 19.3%).
Although this period has been marked by continued challenges, the portfolio
has proven to be resilient and adaptive in facing them. The way in which
businesses have been able to identify and capitalise on new opportunities in
the changing UK consumer and business environment has been satisfying. The
threat of impacts from the war in Ukraine and global supply chain issues in
logistics, materials and labour is expected to remain for some months,
although for the most part, trading for the Company's largely service and
software-based portfolio has not been significantly impacted to date.
Despite Brexit concerns and considerable COVID-19 related restrictions across
the year, M&A activity has remained buoyant and the Investment Adviser
continues to see a healthy deal flow. The Company deployed £7.54 million of
investment capital and generated £15.23 million in realisation proceeds from
investment activity during the year. In that time, it added four new
investments to its portfolio, provided follow-on funding into eight existing
portfolio companies and supported the successful admission to AIM of a further
two of its investments.
Shareholders should note that the portfolio now features some value
concentration in two of its stocks: Preservica and Virgin Wines (13.0% and
10.6% of net assets respectively as at 31 December 2021), the latter of which
was listed on AIM during the year. With this additional AIM exposure, there is
the natural potential for a higher level of volatility in the value of the
Company's portfolio and subsequent NAV returns. Following an initial uplift in
value following the two IPOs in March 2021, the value of these quoted assets
has been volatile over the rest of the year as the companies were impacted by
unfavourable trading announcements and negative market sentiment. The
remainder of the portfolio, on the whole, exhibited strong performance and
growth over the same period.
We are witnessing a clear demonstration of the benefits of what is now a
diverse and maturing portfolio. Following the 2015 VCT rule change, the
revised investment strategy is now bearing fruit as more young growth
investments are starting to achieve significant scale and value. This view has
been validated by third-party investment transactions which have brought
significant positive re-rating in values of portfolio businesses, such as MPB
and MyTutor, whilst the Company has also been able to support the scaling of
investments such as Preservica, to which the Company provided significant
further funding in November 2021.
Performance
The Company's NAV total return per share was 42.2% for the year to
31 December 2021 (2020: 19.3%), and the share price total return was 47.8%
(2020: 13.7%). This difference in returns arises principally due to the timing
of NAV announcements and is explained more fully under Performance in the
Strategic Report within the Annual Report & Financial Statements. The
positive NAV total return for the year was principally the result of
significant unrealised gains in the value of investments still held, as well
as realised gains achieved via exits and partial realisations of several
portfolio companies.
At the year-end, the Company was ranked 3rd out of 38 Generalist VCTs over
five years and 1st out of 31 Generalist VCTs over ten years, in the
Association of Investment Companies' analysis of NAV Total Return (dividends
are reinvested). Shareholders should note that the AIC's rankings are based on
the latest available published NAVs and therefore do not reflect the NAV per
share increase achieved by the Company up to 31 December 2021. For further
details on the performance of the Company, please refer to the Strategic
Report within the Annual Report & Financial Statements.
Dividends
The Board continues to be committed to providing an attractive dividend stream
to Shareholders and is pleased to have announced a second interim dividend of
4.00 pence per share, which was paid on 7 January 2022 to Shareholders on the
register on 10 December 2021.
This second interim dividend, together with a first interim dividend of 5.00
pence per share paid on 12 July 2021, to Shareholders on the register on 21
May 2021, brings dividends paid and proposed in respect of the financial year
ended 31 December 2021 to 9.00 pence per share. To date, cumulative dividends
paid since inception are 148.8 pence per share.
The Company has always met, and often exceeded, the annual dividend payment
target of at least 4.00 pence per share in respect of each financial year.
As Shareholders have been advised previously, the gradual move of the
portfolio to younger growth capital investments as well as the realisations of
older, more mature companies that have provided a good income yield are likely
to make dividends harder to achieve from income and capital returns in any
given year and thus, the Board continues to monitor the sustainability of the
annual dividend target. Shareholders should also note that there may continue
to be circumstances where the Company is required to pay dividends in excess
of income and capital gains 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 paid in excess of net income
and capital gains achieved will cause the Company's NAV per share to reduce by
a corresponding amount.
Investment portfolio
The portfolio movements across the year were as follows:
2021 2020
£m £m
Opening portfolio value 51.14 51.70
New and further investments 7.54 5.43
Disposal proceeds (15.23) (20.80)
Net realised gains 5.45 4.34
Valuation movements 30.91 10.47
Portfolio value at 31 December 79.81 51.14
During the year, the Company invested a total of £7.54 million into four new
and eight existing portfolio companies (2020: £5.43 million; three new, four
existing).
New investments totalling £3.15 million were made into Vivacity Labs (an
artificial intelligence and Urban Traffic Control system), Caledonian Leisure
(a provider of UK experience and leisure breaks), Legatics (a SaaS LegalTech
software business) and Vet's Klinic (a veterinary clinic roll out).
Additional funding of £4.39 million was provided across eight existing
portfolio companies, including Parsley Box (an ambient meals provider), Bleach
London (hair colourants brand), Arkk Consulting (a reporting requirements
service provider), Tapas Revolution (a Spanish restaurant chain), MyTutor (an
online tutoring marketplace), Andersen EV (a producer of premium EV chargers),
ActiveNav (a provider of enterprise-level file analysis software) and
Preservica (a seller of proprietary digital archiving software).
The Company generated £7.23 million in proceeds from the realisation of its
investments in Proactive Group and Vian Marketing Limited (trading as Red
Paddle) during the year. In addition to £3.96 million of proceeds received
from the partial realisations of Virgin Wines and Parsley Box (upon the
admission of their shares to AIM as mentioned previously), the partial
realisations of MPB Group and MyTutor, together with loan repayments and other
capital receipts of £4.04 million, the Company generated total proceeds of
£15.23 million in the year to 31 December 2021.
The portfolio has performed very strongly over the Company's financial year.
The overall value increased by £36.36 million (2020: £14.81 million), or
71.1% (2020: 28.7%) on a like-for-like basis, compared to the start of the
year. This increase comprised a net unrealised uplift in portfolio valuations
of £30.91 million and £5.45 million in net realised gains over the year. The
portfolio was valued at £79.81 million at the year-end (31 December 2020:
£51.14 million).
Within net realised gains, the principal contributors were the full realised
gains of Red Paddle (£3.28 million) as well as gains from the partial
realisations of Parsley Box (£0.69 million), MPB Group (£0.53 million) and
MyTutor (£0.45 million).
The portfolio's valuation at the year-end reflects the continued beneficial
impact of changes in UK consumer and business behaviour brought on by the
pandemic and lockdown restrictions, particularly for those businesses
operating direct-to-consumer models. This also underscores the success of
portfolio companies in adapting to a rapidly changing environment,
diversifying their product offering in order to take advantage of
opportunities that have arisen.
Since the year-end, the first joint investment by the VCTs under Gresham House
took place into Proximity Insight, a retail software provider. The Company
contributed £0.73 million towards a total investment of £5.00 million which
completed on 10 February 2022. The Company also invested further funding
totalling £0.27 million into Caledonian Leisure in January and February 2022.
The flotation of both Virgin Wines and Parsley Box on the AIM market in March
2021 resulted in significant uplifts in valuation, as well as generating an
element of realised returns. As part of the Virgin Wines transaction, the
Company received repayment of its remaining loan stock, leaving Virgin Wines
ungeared and, as part of the IPO of Parsley Box, the Company realised part of
its equity holding, securing a 4.0x return on the cost of the shares sold. As
was expected, these quoted stocks are subject to stock market movements and
have brought an additional level of volatility to a portion of the portfolio.
In the second half of the year, Parsley Box in particular saw a subsequent
value decline in the face of changing market sentiment and an announcement of
results which were below market expectations. Virgin Wines has experienced
similar volatility, but had returned to its float price at the year end.
In contrast, there have been substantial unquoted valuation increases,
supported by a sizeable further investment from the Mobeus VCTs in the case of
Preservica, and by third-party investment transactions in the cases of
MyTutor, and MPB. It is gratifying that some growth investment companies in
the portfolio have now started to achieve a scale that is attracting interest
from larger private equity investors.
Although a minority of portfolio companies have been disadvantaged by the
COVID-19 pandemic, principally as a result of staff shortages, closure of
retail sites and interrupted supplies, these factors have only had a modest
impact on overall shareholder returns over the course of the Company's
financial year.
Further details of the Company's investment activity and the performance of
the portfolio are contained in the Investment Adviser's Review and the
Investment Portfolio Summary below.
Revenue account
The results for the year are set out in the Income Statement within the
Financial Statements below and show a revenue return (after tax) of 0.54 pence
per share (2020: 2.76 pence per share). The revenue return for the year of
£0.68 million has decreased from last year's comparable figure of £3.47
million. This decrease is mainly due to the receipt of significant loan
interest income in the previous year upon the sale of the Auction Technology
Group.
Liquidity & Fundraising
Cash and cash equivalents held by the Company as at 31 December 2021 amounted
to £32.97 million, or 29.2% of net assets. Following the payment of a 4.00
pence dividend shortly after the year-end, liquidity reduced to £27.95
million, or 25.9% of net assets.
On 20 January 2022, the Company launched an offer for subscription of
£10 million, alongside offers from the other Mobeus-advised VCTs ("Offers").
I am pleased to report that the Offers experienced unprecedented demand such
that the Company received subscriptions amounting to the full amount sought
within 24 hours of launching and closed to any further subscriptions on 21
January 2022. In accordance with the Offer's prospectus, the allotment of all
shares under the offer took place on 9 March 2022, generating net funds (after
offer costs) of £9.69 million. In consideration of the environmental factors
and cost savings, the Company elected to release the Prospectus digitally,
with hard copies only available upon request, and invited applications to be
submitted online via a digital portal. This method provided increased security
and efficiency in the application process and the Board strongly recommends
that Shareholders wishing to subscribe to any future offers opt to submit
their applications via the online facility.
Share buybacks
During the year, the Company bought back and cancelled 1,259,139 of its own
shares (2020: 1,423,180), representing 1.0% of the shares in issue at the
beginning of the year (2020: 1.4%), at a total cost of £0.92 million,
inclusive of expenses (2020: £0.76 million). 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.
Shareholder Communications & Annual General Meeting
May I remind you that the Company has its own website which is available at:
www.migvct.co.uk (http://www.migvct.co.uk) .
The Investment Adviser held a virtual Shareholder Event on the morning of
25 February 2022. A presentation was provided by representatives of each of
the Mobeus VCT Boards as well as the Investment Adviser and the founders of
two portfolio companies, Virgin Wines and MBI. A recording of the event is
available here: https://mvcts.connectid.cloud/
Your Board is pleased to be able to hold the next Annual General Meeting
("AGM") of the Company in person at 2.00 pm on Thursday, 26 May 2022 at the
offices of the Company's solicitors, Shakespeare Martineau, at 60 Gracechurch
Street, London EC3V 0HR. A webcast will also be available at the same time for
those Shareholders who cannot attend in person. However, please note that you
will not be able to vote via this method and you are encouraged to return your
proxy form before the deadline of 24 May 2022. Information setting out how to
join the meeting by virtual means will be shown on the Company's website. For
further details, please see the Notice of the Meeting which can be found at
the end of the Annual Report & Financial Statements.
Board Succession
Catherine Wall announced her retirement from the Board, effective from 1
January 2022. Catherine brought an enormous wealth of experience and breadth
to the Company during her six and a half years as a director and Chairman of
the Audit Committee, for which the Board is very grateful. The Board
considered its composition and succession in light of this and has been
engaged in a recruitment process to appoint a director to the Board who will
also fulfil the role of Chairman of the Audit Committee. When recruiting
prospective candidates, the Board took into consideration the range of
requisite skills, experience and qualifications needed to carry out the role
as well as diversity and, on 1 March 2022 the Company announced the
appointment of Lucy Armstrong, which was effective immediately.
Fraud Warning
We have been made aware of a 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, claiming or appearing
to be from a corporate finance firm offering to buy your shares at an inflated
price.
The Board strongly recommends Shareholders take time to read the Company's
Fraud warning section, including details of who to contact, contained within
the Information for Shareholders section at the end of the Annual Report &
Financial Statements.
Environmental, Social and Governance ("ESG")
The Board and the Investment Adviser believe that the consideration of
environmental, social and corporate governance ("ESG") factors throughout the
investment cycle will contribute towards enhanced Shareholder value.
Following the novation of the investment advisory agreement to Gresham House
Asset Management Limited, who have a team which is focused on sustainability,
the Board views this as an opportunity to enhance the Company's existing
protocols and procedures through the adoption of the highest industry
standards. Under the new enlarged investment team, each investment executive
is responsible for setting and achieving their own individual ESG objectives
in support of the wider overarching ESG goals of the Investment Adviser.
Outlook
The year under review can be characterised as a continuation of the trying
environment created for businesses in light of the COVID-19 pandemic and
Brexit in 2020. However, much in the same way that we were able to report on
its remarkable recovery one year ago, the Company has continued to achieve
success in creating opportunities and building on them. This has been
exemplified by strong trading performances and value growth across the
portfolio and in exceeding expectations for the level of investment activity.
Whilst the immediate threat of further lockdowns from new variants of the
virus appears to have lessened to some extent as we move into 2022, we
anticipate that the indirect effects of the COVID-19 pandemic and Brexit will
continue to impact the UK economy and bring an element of uncertainty for some
time to come, most notably in the form of supply chain and inflationary
pressures. More recently, the distressing invasion of Ukraine has sent
shockwaves through global financial markets. Portfolio valuations may
therefore remain volatile, particularly those of AIM-listed companies. Whilst
the portfolio has limited direct exposure to these geographies, this action is
expected to exacerbate risk factors in the short-term.
Nonetheless, following the successful fundraising in January 2022, the Board
considers that your Company is well positioned to adapt as necessary.
The Board was very pleased to have witnessed such a positive response to the
launch of the Company's offer for subscription in January and would like to
thank all Shareholders for their interest in applying for the Company's
shares. The Board has been satisfied with the Company's ability to maintain a
high rate of investment in quality opportunities over the year. It believes
that the additional fundraising will provide the necessary capital to continue
to create value growth for Shareholders in what has, to date, proven to be a
successful investment strategy.
I would like to take this opportunity once again to thank all Shareholders for
your continued support.
Clive Boothman
Chairman
31 March 2022
INVESTMENT POLICY
The Company's policy is designed to meet the Company's Objective.
Investments
The Company invests primarily in a diverse portfolio of UK unquoted companies.
Investments are made selectively across a 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 gains from realisations.
There are a number of conditions within the VCT legislation which need to be
met by the Company and which may change from time to time. The Company will
seek to make investments in accordance with the requirements of prevailing VCT
legislation.
Asset allocation and risk diversification policies, including the size and
type of investments the Company makes, are determined in part by the
requirements of prevailing VCT legislation. No single investment may represent
more than 15% (by VCT tax value) of the Company's total investments at the
date of investment.
Liquidity
The Company's cash and liquid funds are held in a portfolio of readily
realisable interest-bearing investments, deposit and current accounts, of
varying maturities, subject to the overriding criterion that the risk of loss
of capital be minimised.
Borrowing
The Company's Articles of Association permit 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
Change in Management Arrangements
As Shareholders will be aware, Gresham House Asset Management Limited
("Gresham House") acquired the VCT investment advisory business of Mobeus
Equity Partners LLP ("Mobeus") and, as a result, the entire investment and
operations teams of Mobeus joined Gresham on 1 October 2021.
At the time of writing, the integration has been well underway for just over
six months. Having formed one of the largest and most experienced teams in the
VCT sector, the team recently completed its first combined investment into
Proximity Insight, a retail software provider. It is hoped that this combined
investment team will be a major force in the supply of capital to the VCT
sector and the team's enhanced market position should attract strong deal flow
in order to produce attractive investment returns.
Portfolio Review
Having recovered from the COVID-19 related decline in value by the start of
the Company's financial year, the portfolio has made further positive progress
over the past 12-months.
Whilst markets helped deliver a strong recovery in 2020, the main driver of
value in 2021 has been a continuation of buoyant underlying trading
performance across the portfolio. This has been bolstered by a small number of
significant re-ratings during the year.
A limited number of portfolio companies have experienced disruption as a
result of the UK lockdowns, but it is pleasing to report that a significant
proportion have benefited from what appears to be a structural change in
consumer purchasing habits and, indeed, the majority of the portfolio
companies are now trading above their pre COVID-19 levels.
Overall, the majority of the portfolio has demonstrated a high degree of
resilience, with the vast majority of companies by number showing revenue
and/or earnings progression over the previous two years. Investments
classified as Retailers now comprise over 43% of the portfolio by value, all
of which are demonstrating the success of the direct-to-consumer business
model. In the case of both Virgin Wines UK plc and Parsley Box Group plc, this
strong performance led to successful AIM flotations in March 2021.
Significant up-ratings in the unquoted portfolio have been a consistent
feature across the year, with third-party investment driving value uplifts in
MPB and MyTutor, and a sizeable further investment from the Mobeus VCTs doing
the same in the case of Preservica. Whilst the portfolio has limited exposure
to more challenging sectors such as hospitality and overseas travel, software
and other technology-enabled businesses have performed strongly. A small
number of companies have struggled, though they are in the minority and their
impact on overall shareholder return is minimal. Furthermore, some of these
companies, such as Media Business Insight and RDL, have fundamentally
re-engineered their businesses, which should provide a more positive outlook.
It is worth noting that Virgin Wines and Preservica currently account for a
significant proportion of the invested portfolio's value (33.3% of the
portfolio value, 23.6% of net assets), whilst 15.7% of the portfolio now held
in AIM-listed investments (which equates to 11.1% of net assets). The AIM
market has witnessed some volatility over the Company's financial year, with
market sentiment reducing the initial value uplifts of the IPOs of Virgin
Wines and Parsley Box in March. Whilst Virgin Wines had recovered its value by
the year-end, Parsley Box was further impacted by its announcements of tougher
trading conditions, supply constraints and further fundraising. In line with
market practice, in both cases the Company's shareholdings are subject to
lock-in arrangements for a period post-flotation.
Strong trading activity levels have created investment opportunities for the
Company as portfolio companies sought to enhance their positions by building
capability in light of demand. A number of further investments were therefore
made into the portfolio during the year. Gresham House continues to review the
opportunities for follow-on investments. M&A sentiment also remained
buoyant with a continuing stream of attractive realisations throughout the
period. The outlook for both follow-on investment and realisations continues
to be positive.
The Company made investments totalling £7.54 million (2020: £5.43 million),
comprising £3.15 million (2020: £1.86 million) into four new investments and
£4.39 million (2020: £3.57 million) into eight existing investments. This
level of new and follow-on investment is pleasing given the continued
uncertainty and lockdown restrictions during the year under review.
A strong track record for the growth investments is now emerging which
validates the strategic change arising from the change in VCT rules in 2015.
Overall, it is reassuring to see that the more traditional investments, as
well as the new growth investments, are continuing to make good progress.
Portfolio review
The portfolio's movements and valuation changes in the year are summarised
below:
Investment Portfolio Capital Movement 2021 2020
£m £m
Increase in the value of unrealised investments 32.82 15.54
Decrease in the value of unrealised investments (1.91) (5.07)
Net increase in the value of unrealised investments 30.91 10.47
Realised gains 5.53 4.63
Realised losses (0.08) (0.29)
Net realised gains in the year 5.45 4.34
Net investment portfolio capital movement in the year 36.36 14.81
2021 2020
£m £m
Opening portfolio value 51.14 51.70
New and further investments 7.54 5.43
Disposal proceeds (15.23) (20.80)
Net realised gains 5.45 4.34
Valuation movements 30.91 10.47
Portfolio value at 31 December 79.81 51.14
New investments during the year
The Company made four new investments totalling £3.15 million during the
year, as detailed below:
Company Business Date of Investment Amount of new investment (£m)
Vivacity Artificial intelligence & urban traffic control system February 2021 1.16
Vivacity (vivacitylabs.com) develops camera sensors with on-board video
analytics software that enables real-time anonymised data gathering of road
transport system usage. It offers city transport authorities the ability to
manage their road infrastructure more effectively, enabling more efficient
monitoring of congestion and pollution levels as well as planning for other
issues, such as the changing nature of road usage (e.g. the increasing number
of cyclists). The technology and software represent a significant leap forward
for local planning authorities which have traditionally relied upon manual
data collection methods. The growth capital funding will allow the management
team to achieve deeper penetration of the UK transport management sector,
explore opportunities internationally and commercialise its new Smart Junction
offering. Revenues have grown 350% over the last three years and it has
exceeded its most recent year's budget despite the onset of the COVID-19
pandemic. In April 2021, Vivacity won the Queen's Award for Enterprise:
Innovation 2021.
Caledonian Leisure UK leisure and experience breaks March-May 2021 0.41
Caledonian Leisure works with accommodation providers, coach businesses and
other experienced providers (such as entertainment destinations and theme
parks) to deliver UK-based leisure and experience breaks to its customers. It
comprises two brands, Caledonian Travel (caledoniantravel.com) and UK
Breakaways (ukbreakaways.com). The domestic leisure and experience travel
market has been devastated by the COVID-19 pandemic, but the company is
well-placed to expand as lockdown and travel restrictions are eased. A series
of planned investment tranches, has helped the company prepare for and
capitalise on the strong demand for UK staycation holidays.
Legatics SaaS LegalTech software business June 2021 0.82
Legatics (legatics.com) transforms legal transactions by enabling deal teams
to collaborate and close deals in an interactive online environment. Designed
by lawyers to improve legacy working methods and solve practical transactional
issues, the legal transaction management platform increases collaboration,
efficiency and transparency. As a result, Legatics has been used by around
1,500 companies, and has been procured by more than half of the top global
banking and finance law firms, with collaborations having been hosted in
approximately 50 countries. With this new funding round, Legatics will be
looking to double the size of its team over the next 18 months and further
develop its technology to deliver new features and use cases for a wider range
of practice areas within new and existing customers.
Vet's Klinic Veterinary clinics June 2021 0.76
Pets' Kitchen (trading as Vet's Klinic) is an established and profitable
veterinary clinic providing veterinary services (vetsklinic.co.uk) as well as
apremium pet food provider (vetskitchen.co.uk). Its primary Swindon 'super
clinic' is a first opinion veterinary practice where pet owners can schedule
consultations online and obtain real time feedback on in-patient care through
its own technology platform. Without compromising on quality of care, this
model enables a significantly higher price point compared to the industry
average. This new investment will be used to roll out its unique clinic model
to other sites along the M4 corridor.
Further investments during the year
A total of £4.39 million was invested into eight existing portfolio companies
during the year, as detailed below:
Company Business Date of Investment Amount of further investment (£m)
Parsley Box Ambient ready meals targeting the over 60s January/March 2021 0.35
Parsley Box (parsleybox.com) is a UK direct to consumer supplier of home
delivered, ambient ready meals for the over 60s. Founded in 2017, Parsley Box
has grown rapidly and has developed a unique meal delivery solution for its
customers. The company supplies a diverse range of ambient meals via next day
delivery which are easy to store and contribute to a more independent and
healthier lifestyle. The company has seen a strong benefit from the COVID-19
pandemic with revenues nearly eight times that at the time of the original VCT
investment. This further investment enabled the company to scale its marketing
strategy and to process larger order volumes and continue to build out its
team. Parsley Box's shares were admitted to trading on AIM on 31 March 2021.
As part of the transaction, the Company also partially realised a portion of
its investment, as detailed in the "Loan stock repayments and other
gains/(losses) during the year" section of this report below.
Bleach London Hair colourants brand February 2021 0.14
Bleach London Holdings ("Bleach") (bleachlondon.com) is an established
branded, fast-growing business which manufactures a range of haircare and
colouring products. Bleach has made sound commercial progress since the VCTs
invested in 2019 with its direct-to-consumer channels benefiting from the
COVID-19 pandemic. Revenues have grown over 90% ahead of the previous year.
This further investment, along with strong support from existing investors, is
being used to invest in marketing and infrastructure to enable the business to
accelerate its development in the United States of America.
Arkk Consulting Regulatory and reporting requirement service provider
February 2021 0.62
Arkk Consulting (trading as Arkk Solutions) (arkksolutions.com) provides
services and software to enable organisations to remain compliant with
regulatory reporting requirements. Arkk was established in 2009 and currently
has over 800 clients across 20 countries. These include more than 80 of the
FTSE 350, and half of the largest 20 accountancy firms in the UK. This further
investment is to enable continued development of its software in order to
capitalise on HMRC's 'Making Tax Digital' campaign. The company has
incorporated artificial intelligence into its product and recurring revenues
are now over 50% higher than at the point of the original investment in May
2019.
Tapas Revolution Spanish restaurant chain June 2021 0.21
Spanish Restaurant Group (trading as Tapas Revolution) (tapasrevolution.com)
is a leading Spanish restaurant chain in the casual dining sector. At initial
investment in January 2017, it was operating five sites and, subsequent to a
further investment round in March 2018, had grown to 12 sites. Tapas was
trading well and had a strong outlook up until the onset of COVID-19 which
mandated the closure of much of its estate during the course of 2020 in
response to the varying patterns of government restrictions. Costs were
controlled well under the circumstances and this further investment provided
financial headroom whilst the business re-opened its estate.
MyTutor Digital marketplace for online tutoring August 2021 0.82
MyTutorweb (trading as MyTutor) (mytutor.co.uk) 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. This further investment,
alongside other existing shareholders and Australian strategic co-investor,
SEEK, who invested £30 million, aims 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. The company has been chosen
as a Tutoring Partner for the National Tuition Programme where they will
directly support 30,000 students in catching up on lost learning because of
the COVID-19 pandemic.
Andersen EV Provider of premium electric vehicle (EV) chargers September 2021 0.20
Muller EV Limited (trading as Andersen EV) (andersen-ev.com) 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. This follow-on funding is to further support its
premium brand and product positioning whilst ensuring all new and existing
products meet the most recent and highest safety and compliance standards.
Andersen has continued its strong trading performance with revenue up over
300% year on year.
Preservica Seller of proprietary digital archiving software October/ November 2021 1.65
Preservica (preservica.com) is a SaaS software business with blue chip
customers and strong recurring revenues. It 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 business has seen annual
recurring revenues nearly double over the last two financial years.
ActiveNav A provider of enterprise-level file analysis software December 2021 0.40
Data Discovery Solutions, trading as ActiveNav (activenav.com), is a file
analysis software solution which makes it easier for companies to clean up
network drives, respond to new data protection laws and dispose of redundant
and out dated documents. ActiveNav'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. This further funding is to market its nascent Hubble
platform in order to generate further company value.
Portfolio valuation movements
The portfolio generated net unrealised gains of £30.91 million in the year.
The scale of the valuation increases was underpinned by the Company's growth
portfolio, many of which have direct-to-consumer business models which have
grown significantly since the onset of the COVID-19 pandemic. In the first
half of the year, the Company generated significant unrealised gains,
exemplified by the successful flotations of two investments on AIM. Despite
ongoing uncertainties relating to COVID-19, Gresham House believes that the
pandemic has accelerated existing trends in consumer behaviour and, in many
cases, companies have experienced significant growth in demand. Over this
period, some older style MBO portfolio companies with similar business
practices have also benefited. A few companies have struggled in this
environment, but their value has already been reduced to modest levels,
reducing the risk to shareholder value.
Total valuation increases were £32.82 million. The main valuation increases
were:
Preservica £8.21 million
Virgin Wines £6.39 million
MPB Group £3.62 million
Media Business Insight (MBI) £3.42 million
EOTH £3.34 million
Virgin Wines, EOTH (Equip) and MPB Group generated record revenues and
earnings over the lockdown periods and beyond. They have all significantly
increased their customer base and each have strong growth prospects. Strong
trading and recurring revenues at Preservica have attracted third-party
investment interest which has led to a sizeable re-rating. MBI has recovered
very strongly having developed its capability to provide both virtual and
physical events.
Total valuation decreases were £(1.91) million. The main valuation decreases
were:
Parsley Box £(1.39) million
Andersen EV £(0.23) million
Bleach London £(0.20) million
Following a strong IPO in March, the value of Parsley Box subsequently
experienced a significant decline over the year in light of market sentiment
compounded by company announcements of slower than anticipated sales growth
and supply disruption. The business intends to carry out a further fundraising
soon. Andersen EV has been operating in a fast-developing industry beset with
regulatory hurdles that have challenged its progress over the period albeit,
these are now resolved. Bleach has had a challenging period having had to
delay its US launch and having experienced normalised D2C revenues post UK
lockdown. The US launch has now taken place after the Company's year-end.
The majority of the increase in portfolio value lies in the top 10 companies
which represent over 70% of the portfolio by value. Year-on-year growth by
either revenues or earnings has been seen in all of the top ten companies and
it is pleasing to note that eight of these are from the younger, growth
portfolio.
Growth capital investing involves companies which often have not achieved
profitability, and as a result, have to be measured on other metrics. The
table below shows the proportion of the portfolio that is represented by high
growth pre-profit companies (often valued by reference to revenue or gross
profit multiple), compared with more mature, established companies with a
history of profitability and which are therefore valued on an earnings
multiple:
Valuation methodology 2021 2020
£m £m
Revenue multiple 41.28 25.55
Earnings multiple 25.67 23.50
Bid Price 12.52 -
Recent investment price (reviewed for impairment) 0.27 -
Other 0.07 0.50
Recent investment price - 1.59
Total 79.81 51.14
Portfolio Realisations
The Company realised two of its investments during the year, as detailed
below:
Company Business Period of investment Total cash proceeds over the life of the investment / Multiple over cost
Provider of media services and investor conferences January 2018 to
Proactive Group September 2021 £2.38 million
2.6x cost
On 29 September 2021, the Company sold its investment in Proactive Group
Holdings Inc ("Proactive"). The Company received £2.32 million in cash
following the disposal of its equity and loan notes, contributing to a
realised gain over cost over the life of the investment of £1.46 million
(realised loss in the year: £(0.01) million). Total proceeds received over
the nearly four-year life of the investment were £2.38 million, compared to
an original cost of £0.93 million, which is a multiple on cost of 2.6x and an
IRR of 33.0%.
Red Paddle October 2008 to £5.87 million
Design and manufacturer of stand up paddleboards February 2020 4.9x cost
The Company sold its investment in Vian Marketing (trading as Red Paddle) to
the Myers Family Office for £4.91 million (realised gain in the year: £3.19
million). Total proceeds received to date over the six-year life of the
investment were £5.87 million compared to an original investment cost of
£1.19 million, which is a multiple on cost of 4.9x and an IRR of 31.5%.
Further proceeds of £0.53 million were received after the year end.
Loan stock repayments and other gains/(losses)
During the year and following the admission of its shares to AIM, the Company
received £1.59 million from the partial realisation of its holding in Parsley
Box, generating a realised gain of £0.69 million. Over the two years to date
this investment has been held, this partial sale generated a multiple of cost
of 4.0x on the cost of the shares sold. The Company also received £1.62
million from the partial realisation of MPB Group generating a realised gain
of £0.39 million. This partial realisation generated a 7.8x multiple of cost
on the cost of the shares sold and was the result of Vitruvian Partners, a
large private equity investor, taking a sizeable equity investment in the
company. There was a further partial realisation of MyTutor which generated
£0.82 million proceeds for the Company and a realised gain in the year of
£0.45 million.
repayments from Virgin Wines, Media Business Insight, Vian Marketing (trading
as Red Paddle) and MPB Group, generating realised gains totalling £0.46
million. Finally, deferred consideration totalling £0.35 million in realised
gains was received in respect of investments realised in a previous year. A
small realised loss of £(0.07) million was also recognised in respect of
transaction costs for Virgin Wines due to stamp duty paid upon the admission
of the shares to listing on AIM.
Portfolio income and yield
In the year under review, the Company received the following amounts in loan
interest and dividend income:
Investment Portfolio Yield 2021 2020
£m £m
Interest received in the year 1.26 3.03
Dividends received in the year 0.45 1.63
Total portfolio income in the year(1) 1.71 4.66
Portfolio value at 31 December 79.81 51.14
Portfolio Income Yield (Income as a % of Portfolio value at 31 December) 2.1% 9.1%
(1 ) Total portfolio income in the year is generated solely from investee
companies within the portfolio. The fall in interest received is due to a
significant interest receipt of £1.78 million from the realisation of Auction
Technology Group in 2020.
New investment after the year-end
£0.73 million was invested into a new investment after the year-end, as
detailed below:
Company Business Date of investment Amount of new investment (£m)
Proximity Insight 'Super-App' used to inspire and transact with customers February 2022 0.73
Proximity Insight (proximityinsight.com) is a retail technology business that
offers a 'Super-App' that is used by the customer-facing teams of brands and
retailers to engage, inspire and transact with customers. Headquartered in
London with offices in New York and Sydney, Proximity Insight has a global
client base that includes over 20 brands, boutiques and department stores in
fashion, beauty, jewellery, electronics and homewares. These clients use
Proximity Insight's platform to blur the lines between physical and digital
retail, enhancing the customer experience and improving the lifetime value of
their customers by upwards of 35%. The business grew annual recurring revenue
by 117% to £2.2 million in 2021, and the investment will support Proximity
Insight's continued product development and international growth. The
investment was made across all six VCTs advised and managed by Gresham House,
including the two Baronsmead VCTs.
Further investment made after the year-end
The Company made a further investment into an existing portfolio company of
£0.27 million after the year-end, as detailed below:
Company Business Date of investment Amount of further investment (£m)
Caledonian Leisure UK leisure and experience breaks January/February 2022 0.27
Caledonian Leisure works with accommodation providers, coach businesses and
other experienced providers (such as entertainment destinations and theme
parks) to deliver UK-based leisure and experience breaks to its customers. It
comprises two brands, Caledonian Travel (caledoniantravel.com) and UK
Breakaways (ukbreakaways.com). The domestic leisure and experience travel
market has been devastated by the COVID-19 pandemic, but the company is
well-placed to expand as lockdown and travel restrictions are eased. The
business has significantly exceeded planned revenues since launch and this
funding will provide additional working capital to facilitate further growth.
Environmental, Social and Governance considerations
When seeking new investment opportunities, the Investment Adviser under Mobeus
ensured that each potential new investment was subject to a comprehensive due
diligence process encompassing commercial, financial and ESG-related
considerations.
This process helped in the formulation and agreement of strategic objectives
at the stage of business planning and investment. The Investment Adviser has
continued to work closely with each portfolio company board to support them in
addressing their own ESG challenges and opportunities, which are diverse
across the entire portfolio.
Following the novation of the advisory agreement to Gresham House on
30 September 2021, a market leader that is well-resourced with knowledge and
expertise in sustainability, the Investment Advisor has moved to establish ESG
procedures and protocols of the highest standards as set out and informed by
Gresham House plc. The first tangible example of this revised approach is that
that the individual members of the investment team now have their own
individual ESG objectives set which align with the wider ESG goals of the
Investment Adviser.
Gresham House is committed to sustainable investment as an integral part of
its business strategy. During 2021, the Investment Adviser has taken further
steps to formalise its approach to sustainability and has put in place several
processes to ensure environmental, social and governance ("ESG") factors and
stewardship responsibilities are built into asset management across all funds
and strategies, including venture capital trusts.
Gresham House believes the "G" (Governance) of ESG is the most important
factor in its investment processes. Board composition, governance, control,
company culture, alignment of interests, shareholder ownership structure and
remuneration policy are important elements that will feed into the analysis
and the valuation of portfolio companies.
The "E" and "S" (Environmental and Social) will be assessed as risk factors
during due diligence to eliminate companies that face environmental and social
risks that cannot be mitigated through engagement and governance changes.
Where material ESG risks are identified, these will be reviewed by the Adviser
and a decision on how to proceed will be documented. The Adviser will then
proactively follow up with the investee company management team and ensure
appropriate corrective and preventative action is taken and any material
issues or incidents are recorded by the Adviser.
Gresham House published its inaugural Sustainable Investment Report in 2021,
that along with existing asset specific policies, including the Public Equity
Policy, can be found on its website
(www.greshamhouse.com). These reports and policies cover the Investment
Adviser's sustainable investment commitments, how the investment processes
meet these commitments and the application of the sustainable investment
framework. The Gresham House Board and General Management Committee assess
the adherence to the commitments in the Sustainable Investment Policies on an
annual basis.
In a changing world, the Investment Adviser believes that this approach will
contribute towards the enhancement of Shareholder value going forward.
Outlook
The growth strategy implemented in 2015 is clearly bearing fruit with many
companies beginning to achieve significant scale and attract the interest of
public markets and larger secondary investors. The portfolio is in a healthy
position with many companies trading well throughout the lockdowns, and
several at record levels. It continues to evolve, offering a balance of
fast-growing and more stable investments at various stages of maturity and
scale across a range of diverse market sectors. Meanwhile, the new investment
pipeline is recovering to levels seen pre-COVID-19 and the prospects for
capital deployment are encouraging.
The exceptional performance experienced since the impact of COVID-19 in March
2020 is, therefore, likely to moderate over the next 12 months as the level
of activity normalises. Although the threat of further lockdowns to combat
emerging new variants appears to have lessened somewhat, much uncertainty
remains around the wider impact of the pandemic upon the economy, particularly
in respect of supply chain and inflationary issues. The tragic events
currently unfolding in Ukraine have amplified this uncertainty and shocked
financial markets around the world. The Investment Adviser has reviewed the
underlying assets and has concluded that there are no material impacts on the
valuation of the portfolio. Whilst these events have created significant
short-term volatility post year-end, the portfolio is in robust shape and the
investment activity levels are promising. Gresham House therefore remains
optimistic for the future.
Gresham House Asset Management Limited
Investment Adviser
31 March 2022
Investment Portfolio Summary
as at 31 December 2021
Market sector Date of investment Total book cost Valuation Like for like valuation increase/ (decrease) over year(1) % value of net assets % of equity held by funds advised by Gresham House
Investment Portfolio £'000 £'000
Qualifying investments
Unquoted investments
Preservica Limited Software and computer services Dec-15 4,498 14,636 171.7% 13.0% 57.9%
Seller of proprietary digital archiving software
Virgin Wines UK plc(formerly Virgin Wines Holding Company Limited)(2) (AIM Retailers Nov-13 58 11,985 79.2% 10.6% 41.5%
quoted)
Online Wine retailer
MPB Group Limited Retailers Jun-16 1,405 7,395 78.4% 6.5% 14.4%
Online marketplace for used photographic and video equipment
EOTH Limited (trading as Equip Outdoor Technologies) Retailers Oct-11 1,000 6,289 124.1% 5.6% 8.0%
Branded outdoor equipment and clothing (Rab and Lowe Alpine)
My TutorWeb Limited (trading as MyTutor) Industrial support services May-17 2,892 5,885 102.5% 5.2% 22.6%
Digital marketplace connecting school pupils seeking one-to-one online
tutoring
End Ordinary Group Limited (trading as Buster and Punch) Retailers Mar-17 1,885 4,162 24.9% 3.7% 34.6%
Industrial inspired lighting and interiors retailer
Media Business Insight Holdings Limited Media Jan-15 2,518 4,091 550.0% 3.6% 67.5%
Apublishing and events business focused on the creative production industries
Master Removers Group 2019 Limited (trading as Anthony Ward Thomas, Industrial support services Dec-14 419 3,602 187.2% 3.2% 28.0%
Bishopsgate and Aussie Man & Van)
Aspecialist logistics, storage and removals business
Data Discovery Solutions Limited (trading as ActiveNav) Software and computer services Nov-19 1,809 3,370 5.2% 3.0% 35.1%
Provider of global market leading file analysis software for information
governance, security and compliance
Arkk Consulting Limited (trading as Arkk Solutions) Software and computer services May-19 2,069 2,174 1.9% 1.9% 30.1%
Provider of services and software to enable organisations to remain compliant
with regulatory reporting requirements
Manufacturing Services Investment Limited (trading as Wetsuit Outlet) Retailers Jul-17 2,174 2,171 26.3% 1.9% 27.5%
Online retailer in the water sports market
Tharstern Group Limited Software and computer services Jul-14 1,377 1,519 16.1% 1.3% 55.0%
Software based management information systems
Connect Childcare Group Limited Software and computer services Dec-20 1,168 1,373 17.5% 1.2% 14.4%
Nursery management software provider
Vivacity Labs Limited Technology, hardware & equipment Feb-21 1,158 1,158 New investment 1.0% 20.0%
Provider of artificial intelligence & urban traffic control systems
Bleach London Holdings Limited Retailers Dec-19 816 1,026 (18.2)% 0.9% 14.1%
Hair colourants brand
Rota Geek Limited Software and computer services Aug-18 1,142 1,001 5.4% 0.9% 20.3%
Workforce management software
IPV Limited Software and computer services Nov-19 890 890 - 0.8% 26.6%
Provider of media asset software
Spanish Restaurant Group Limited (trading as Tapas Revolution) Travel & leisure Jan-17 1,453 882 305.9% 0.8% 29.0%
Spanish restaurant chain
Caledonian Leisure Limited Travel & leisure Mar-21 409 865 New investment 0.8% 30.0%
Provider of UK leisure and experience breaks
Legatics Holdings Limited Software and computer services Jun-21 822 822 New investment 0.7% 27.3%
SaaS LegalTech software provider
Pets' Kitchen Limited (trading as Vet's Klinic) Consumer services Jun-21 763 763 New investment 0.7% 20.0%
Veterinary clinics
Northern Bloc Ice Cream Limited Food producers Dec-20 420 689 64.0% 0.6% 27.3%
Supplier of premium vegan ice cream
Parsley Box Group plc (formerly Parsley Box Limited) (3) (AIM quoted) Retailers May-19 806 534 (28.2)% 0.5% 13.9%
Supplier of home delivered ambient ready meals targeting the over 60s
CGI Creative Graphics International Limited General industrials Jun-14 1,808 495 1.7% 0.4% 26.9%
Vinyl graphics to global automotive, recreational vehicle and aerospace
markets
RDL Corporation Limited Industrial support services Oct-10 1,558 495 109.9% 0.4% 44.5%
Recruitment consultant for the pharmaceutical, business intelligence and IT
industries
Muller EV Limited (trading as Andersen EV) Technology, hardware & equipment Jun-20 472 270 (77.6)% 0.2% 37.0%
Provider of premium electric vehicle (EV) chargers
Kudos Innovations Limited Software and computer services Nov-18 421 105 (46.2)% 0.1% 10.9%
Online platform that provides and promotes academic research dissemination
Jablite Holdings Limited (in members' voluntary liquidation) Construction and materials Apr-15 502 66 - 0.1% 40.1%
Manufacturer of expanded polystyrene products
Veritek Global Holdings Limited Industrial support services Jul-13 2,045 - - 0.0% 65.6%
Maintenance of imaging equipment
Racoon International Group Limited Personal goods Dec-06 1,213 - - 0.0% 36.0%
Supplier of hair extensions, hair care products and training
BookingTek Limited Software and computer services Oct-16 688 - - 0.0% 14.9%
Direct booking software for hotels
Oakheath Limited (in members' voluntary liquidation) Industrial support services Mar-18 580 - - 0.0% 18.7%
Online platform that connects people seeking care home from experienced
independent carers
Total qualifying investments 41,238 78,713 69.6%(4)
Non-qualifying investments
Manufacturing Services Investment Limited (trading as Wetsuit Outlet) Retailers Jul-17 571 571 - 0.5% 27.5%
Online retailer in the water sports market
EOTH Limited (trading as Equip Outdoor Technologies) Retailers Oct-11 298 324 - 0.3% 8.0%
Branded outdoor equipment and clothing (Rab and Lowe Alpine)
Media Business Insight Limited Media Jan-15 200 200 - 0.2% 67.5%
Apublishing and events business focused on the creative production industries
Total non-qualifying investments 1,069 1,095 1.0%
Total investment portfolio 42,307 79,808 70.6%
Current asset investments and cash at bank(5) 32,967 32,967 29.2%
Total investments 75,274 112,775 99.8%
Other assets 433 0.4%
Current liabilities (248) (0.2)%
Net assets 112,960 100.0%
Portfolio split by type
Investment made prior to 2015 VCT rule change 12,996 29,066 36.4%
Investment made after 2015 VCT rule change 29,311 50,742 63.6%
Total investment portfolio 42,307 79,808 100.0%
1-This percentage change in 'like for like' valuations is a comparison of
the 31 December 2021 valuations with the 31 December 2020 valuations (or where
anew investment has been made in the year, the investment amount), having
adjusted for any partial disposals, loan stock repayments or new investments
in the year.
2-Admitted to AIM during the year. Ahead of the Admission to AIM of Virgin
Wines on 2 March 2021, the Company's equity investment in Virgin Wines Holding
Company Ltd ("VWHCL") had been exchanged for an equity investment in Rapunzel
Newco Ltd ("RNL"), a company owned by the four Mobeus VCTs pro rata to each
VCT's share of its investment in Virgin Wines. Immediately prior to Admission,
RNL exchanged its equity investment in VWHCL for an equity investment in
Virgin Wines UK plc ("VWUK"). The Company is beneficially interested in VWUK,
through its holding in RNL. RNL is the legal owner of the shares in VWUK, but
each VCT is the beneficial holder. As part of Virgin Wines' admission to AIM,
the Company received repayment of its loan stock generating proceeds of £2.38
million.
3-Admitted to AIM during the year. On 7 January 2021, a £0.33 million
follow-on investment was made into Parsley Box Limited. The enlarged
shareholding was admitted to AIM on 31 March 2021. Ahead of the admission to
AIM, the Company's equity investment in Parsley Box Limited had been exchanged
for an equity investment in Parsley Box Group plc. Upon admission to AIM, the
Company invested a further £0.01 million and realised proceeds of £1.59
million.
4-At 31 December 2021, the Company held more than 80% of its total
investments in qualifying holdings, and therefore complied with the VCT
qualifying investment test. For the purposes of the VCT qualifying investment
test, the Company is permitted to disregard disposals of investments for
twelve months from the date of disposal. It also has up to three years to
bring in new funds raised, before these need to be included in the qualifying
investment test.
5-Disclosed as Current asset investments and Cash at bank within Current
assets in the Balance sheet below.
PRINCIPAL RISKS
The Directors acknowledge the Board's responsibilities for the Company's
internal control systems and have instigated systems and procedures for
identifying, evaluating and managing the significant and emerging risks faced
by the Company. The Board's risk appetite is cognitive of the risks and
rewards of investing in small unquoted companies. A key risk management review
and robust assessment of the risks takes place at each quarterly Board meeting
and the Board discusses emerging risks as and when they arise, such as the
COVID-19 pandemic, and puts in place mitigating actions to manage the risk.
The principal and emerging 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:
Risk Possible consequence How the Board manages risk
Economic Events such as the war in Ukraine, COVID-19 pandemic, Brexit, an economic · The Board monitors
recession, supply shortages or a movement in sterling or in interest rates,
could affect trading conditions for smaller companies and consequently the (1) the portfolio as a whole to ensure that the Company invests as far
value of the Company's qualifying investments. as possible in a diversified portfolio of companies;
Movements in UK Stock Market indices may affect the valuation of the Company's (2) developments in the macro-economic environment such as movements in
investments, as well as affecting the Company's own share price and its interest rates and availability of labour under new immigration plans; and
discount to net asset value.
(3) the Company's cash position ensuring it can be flexible in light of
economic impacts.
Loss of approval as a Venture Capital Trust A breach of the VCT Rules, which change on a frequent basis, may lead to the · The Company's VCT qualifying status is regularly reviewed by the Board
Company losing its approval as a VCT, which would inter alia result in: and the Investment Adviser.
(1) qualifying Shareholders who have not held their shares for · The Board receives regular reports from its VCT Status Adviser who has
the designated period having to repay the income tax relief they obtained; been retained by the Board to monitor the Company's ongoing compliance with
the VCT Rules.
(2) future dividends paid by the Company being subject to tax;
and
(3) the Company losing its exemption from corporation tax on
capital gains.
Investment and strategic Investment in unquoted small companies involves a higher degree of risk than · The Board regularly reviews the Company's Objective and Investment
investment in fully listed companies. Smaller companies often have limited Policy.
product lines, markets or financial resources and may be dependent for their
management on a smaller number of key individuals. · Investments are made across a number of diverse sectors to mitigate
risk. Investee companies are carefully selected by the Investment Adviser for
recommendation to the Board. The investment portfolio is reviewed by the Board
on a regular basis.
· A member of the Investment Adviser normally sits on the investee
company board. Support has been provided to the portfolio companies throughout
the COVID-19 pandemic and is ongoing.
Regulatory The Company is required to meet its legal and regulatory obligations as a VCT, · Regulatory and legislative developments are kept under review by the
alisted company and its own AIFM. Failure to comply might result in Company's solicitors, its VCT Status Adviser and the Board.
suspension of the Company's Stock Exchange listing, financial penalties, a
qualified audit report or loss of its VCT status.
Financial and operating Failure of the systems (including breaches of cyber security) at any of the · The Board carries out a bi-annual review of the internal controls in
third-party service providers that the Company has contracted with could lead place and reviews the risks facing the Company at Board meetings and receives
to inaccurate reporting or monitoring. Inadequate controls could lead to the control reports by exception.
misappropriation or insecurity of assets. Outsourcing and the increase in
remote working could give rise to cyber and data security risk and internal · It reviews the performance of the service providers annually and has
control risk. obtained assurance that such providers have controls in place to reduce the
risk of breaches of their cyber security.
Valuations and stock market The majority of the Company's assets are minority holdings in unquoted · The Board receives quarterly valuation reports from the Investment
companies, which are inherently difficult to value. Changes in valuations are Adviser and, where necessary, challenges its valuation process and metrics.
taken to Profit and Loss account, so any inaccuracy in valuations will affect
both the Income Statement and the Balance Sheet. · The Investment Adviser alerts the Board about any adverse movements.
Asset liquidity The Company's unquoted investments cannot be realised in a short timescale. · The Board receives quarterly valuation reports from the Investment
Under-performing unquoted investments may be difficult to realise on any Adviser and, where necessary, challenges its valuation process and metrics.
timescale.
Market liquidity As a result of the limited secondary market in VCT shares, Shareholders may · The Board has a share buyback policy which seeks to mitigate market
find it difficult to sell their shares at a price which is close to the net liquidity risk. This policy is reviewed at each quarterly Board meeting.
asset value. Whilst demand has always been met to date, it may not be possible
for the Company to buy back large percentages of the share capital, other than
over several years.
Counterparty A counterparty may fail to discharge an obligation or commitment that it has · The Board regularly reviews and agrees policies for managing these
entered into with the Company. risks. Further details can be found under 'credit risk' in Note 15 to the
Financial Statements.
Key staff A partner or key member of staff at the Investment Adviser may leave the · The Board maintains regular dialogue with the Investment Adviser to
organisation or the Investment Adviser may fail to maintain adequate levels of ensure that the team is adequately resourced.
experience and expertise in its team. This may have an adverse effect on the
standard of service that the Company receives from the Investment Adviser and
therefore the performance of the Company.
Environmental, Social and Governance Emerging Risk Non-compliance with current and future reporting requirements could lead to a · ESG and climate change is taken into account when considering new
fall in demand from investors. That may affect the level of capital the investment proposals. The Investment Adviser monitors the potential impact on
Company has available to meet its investment objectives. investee companies of any proposed new legislation regarding environmental,
social and governance matters and advises and adapts accordingly.
· The Board recognises that climate change is an important emerging
risk which the Company is taking into account in their strategic planning
although the Company itself has little direct impact on environmental issues.
Measures have been introduced to reduce the cost and environmental impact of
providing paper copies of Shareholder correspondence and to decrease the
amount of travel undertaken.
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; and
● 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 Financial Statements are published on the Company's website at
www.migvct.co.uk, which is maintained by the Investment Adviser. The
maintenance and integrity of the website maintained by the Investment Adviser
is, so far as it relates to the Company, the responsibility of the Investment
Adviser. The work carried out by the Auditors does not involve consideration
of the maintenance and integrity of this website and, accordingly, the Auditor
accepts no responsibility for any changes that have occurred to the accounts
since they were initially presented to the website. The accounts are
prepared in accordance with UK legislation, which may differ from legislation
in other jurisdictions.
Directors' responsibilities pursuant to Disclosure and Transparency Rule 4 of
the UK Listing Authority
The Directors confirm to the best of their knowledge that:
a) The Financial Statements, which have been prepared in accordance with
United Kingdom Generally Accepted Accounting Practice give a true and fair
view of the assets, liabilities, financial position and the profit of the
Company.
b) the Annual Report includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces.
Having taken advice from the Audit Committee, the Board considers the Annual
Report and Financial Statements, taken as a whole, is fair, balanced and
understandable and that it provides the information necessary for Shareholders
to assess the Company's position, 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
Clive Boothman
Chairman
31 March 2022
FINANCIAL STATEMENTS
Income Statement
Year ended 31 December 2021 Year ended 31 December 2020
Notes Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Net investment portfolio gains 8 - 36,360,661 36,360,661 - 14,811,634 14,811,634
Income 3 1,710,712 - 1,710,712 4,754,700 - 4,754,700
Investment Adviser's fees 4a (525,873) (1,577,618) (2,103,491) (423,839) (1,271,516) (1,695,355)
Other expenses 4c (455,452) - (455,452) (424,396) - (424,396)
Profit on ordinary activities before taxation 729,387 34,783,043 35,512,430 3,906,465 13,540,118 17,446,583
Taxation on profit on ordinary activities 5 (53,768) 53,768 - (432,618) 241,588 (191,030)
Profit for the year and total comprehensive income 675,619 34,836,811 35,512,430 3,473,847 13,781,706 17,255,553
Basic and diluted earnings per ordinary share 7 0.54p 27.67p 28.21p 2.76p 10.97p 13.73p
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 April 2021) 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 31 December 2021 Company No.
5153931
31 December 2021 31 December 2020
Notes £ £
Fixed assets
Investments at fair value 8 79,807,671 51,144,184
Current assets
Debtors and prepayments 433,761 517,277
Current asset investments 9 24,362,614 30,371,198
Cash at bank and in hand 9 8,604,505 3,120,539
33,400,880 34,009,014
Creditors: amounts falling due within one year (248,076) (464,682)
Net current assets 33,152,804 33,544,332
Net assets 112,960,475 84,688,516
Capital and reserves
Called up share capital 10 1,250,775 1,263,366
Capital redemption reserve 38,127 25,536
Share premium reserve 14,397,509 14,397,509
Revaluation reserve 39,729,600 12,498,006
Special distributable reserve 18,967,400 27,415,880
Realised capital reserve 36,056,813 26,927,746
Revenue reserve 2,520,251 2,160,473
Equity shareholders' funds 112,960,475 84,688,516
Basic and diluted net asset value per ordinary share 11 90.31p 67.03p
The notes below form part of these Financial Statements.
The Financial Statements were approved and authorised for issue by the Board
of Directors on 31 March 2022 and were signed on its behalf by Clive Boothman,
Chairman.
Statement of Changes in Equity for the year ended 31 December 2021
Non-distributable reserves Distributable reserves
Called up Capital Share Revaluation Special Realised Revenue Total
share redemption premium reserve distributable capital reserve
Notes capital reserve reserve reserve reserve
(Note a) (Note b) (Note b)
£ £ £ £ £ £ £ £
At 1 January 2021 1,263,366 25,536 14,397,509 12,498,006 27,415,880 26,927,746 2,160,473 84,688,516
Comprehensive income for the year
Profit for the year - - - 30,913,086 - 3,923,725 675,619 35,512,430
Total comprehensive income for the year - - - 30,913,086 - 3,923,725 675,619 35,512,430
Contributions by and distributions to owners
Shares bought back (Note c) 10 (12,591) 12,591 - - (923,642) - - (923,642)
Dividends paid 6 - - - - (6,000,988) - (315,841) (6,316,829)
Total contributions by and distributions to owners (12,591) 12,591 - - (6,924,630) - (315,841) (7,240,471)
Other movements
Realised losses transferred to special reserve (Note a) - - - - (1,523,850) 1,523,850 - -
Realisation of previously unrealised appreciation - - - (3,681,492) - 3,681,492 - -
Total other movements - - - (3,681,492) (1,523,850) 5,205,342 - -
At 31 December 2021 1,250,775 38,127 14,397,509 39,729,600 18,967,400 36,056,813 2,520,251 112,960,475
Note a: The purpose of this reserve is to fund market purchases of the
Company's own shares, to write off existing and future losses and for any
other corporate purpose. The transfer of £1,523,850 to the special reserve
from the realised capital reserve above is the total of realised losses
incurred by the Company in the year. As at 31 December 2021, the Company has
aspecial reserve of £18,967,400, £11,154,495 of which arises from shares
issued more than three years ago. Reserves originating from share issues are
not distributable under VCT rules if they arise from share issues that are
within three years of the end of an accounting period in which shares were
issued.
Note b: The realised capital reserve and the revenue reserve together comprise
the Profit and Loss Account of the Company shown on the Balance Sheet.
Note c: During the year, the Company purchased 1,259,139 of its own shares at
the prevailing market price for a total cost of £923,642, which were
subsequently cancelled. This differs to the figure shown in the Cash Flow
Statement by £44,113 which was a creditor at the previous year-end.
Statement of Changes in Equity for the year ended 31 December 2020
Non-distributable reserves Distributable reserves
Called up Capital Share Revaluation Special Realised Revenue Total
share redemption premium reserve distributable capital reserve
For the year ended 31 December 2020 capital reserve reserve reserve reserve
£ £ £ £ £ £ £ £
At 1 January 2020 1,045,265 11,304 - 8,719,606 45,731,919 14,528,747 1,851,534 71,888,375
Comprehensive income for the year
Profit for the year - - - 10,471,413 - 3,310,293 3,473,847 17,255,553
Total comprehensive income for the year - - - 10,471,413 - 3,310,293 3,473,847 17,255,553
Contributions by and distributions to owners
Shares issued under Offer for Subscription 232,333 - 14,767,667 - - - - 15,000,000
Issue costs and facilitation fees on Offer for Subscription - - (370,158) - (152,153) - - (522,311)
Shares bought back (14,232) 14,232 - - (756,637) - - (756,637)
Dividends paid - - - - (15,011,556) - (3,164,908) (18,176,464)
Total contributions by and distributions to owners 218,101 14,232 14,397,509 - (15,920,346) - (3,164,908) (4,455,412)
Other movements
Realised losses transferred to special reserve - - - - (2,395,693) 2,395,693 - -
Realisation of previously unrealised appreciation - - - (6,693,013) - 6,693,013 - -
Total other movements - - - (6,693,013) (2,395,693) 9,088,706 - -
At 31 December 2020 1,263,366 25,536 14,397,509 12,498,006 27,415,880 26,927,746 2,160,473 84,688,516
The composition of each of these reserves is explained below:
Called up share capital - The nominal value of shares originally issued,
increased for subsequent share issues either via an Offer for Subscription or
reduced due to shares bought back by the Company.
Capital redemption reserve - The nominal value of shares bought back and
cancelled is held in this reserve, so that the Company's capital is
maintained.
Share premium reserve - This reserve contains the excess of gross proceeds
less issue costs over the nominal value of shares allotted under recent Offers
for Subscription.
Revaluation reserve - Increases and decreases in the valuation of investments
held at the year-end are accounted for in this reserve, except to the extent
that the diminution is deemed permanent.
In accordance with stating all investments at fair value through profit and
loss (as recorded in Note 8), all such movements through both revaluation and
realised capital reserves are shown within the Income Statement for the year.
Special distributable reserve - This reserve is created from cancellations of
the balances upon the Share premium reserve, which are transferred to this
reserve from time to time. The cost of share buybacks and any realised losses
on the sale or impairment of investments (excluding transaction costs) are
charged to this reserve. 75% of the Investment Adviser fee expense, and the
related tax effect, that are charged to the realised capital reserve are
transferred to this reserve. This reserve will also be charged any IFA
facilitation payments to financial advisers, which arose as part of the Offer
for Subscription.
Realised capital reserve - The following are accounted for in this reserve:
- Gains and losses on realisation of investments;
- Permanent diminution in value of investments;
- Transaction costs incurred in the acquisition and disposal of investments;
- 75% of the Investment Adviser fee expense and 100% of any performance 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, as well as 25% of the Investment Adviser fee together
with the related tax effect, as well as income dividends paid that are
classified as revenue in nature.
Statement of Cash Flows for the year ended 31 December 2021
Year ended Year ended
31 December 2021 31 December 2020
Notes £ £
Cash flows from operating activities
Profit after tax for the financial year 35,512,430 17,255,553
Adjustments for:
Net investment portfolio gains (36,360,661) (14,811,634)
Tax charge for current year 5 - 191,030
Decrease/(increase) in debtors 83,516 (291,749)
Increase in creditors 18,678 75,198
Net cash (outflow)/inflow from operations (746,037) 2,418,398
Corporation tax paid (191,171) (61,716)
Net cash (outflow)/inflow from operating activities (937,208) 2,356,682
Cash flows from investing activities
Acquisitions of investments 8 (7,541,213) (5,433,357)
Disposals of investments 8 15,238,387 20,803,968
Decrease in bank deposits with a maturity over three months 256 384
Net cash inflow from investing activities 7,697,430 15,370,995
Cash flows from financing activities
Shares issued as part of Offer for subscription - 15,000,000
Issue costs and facilitation fees as part of Offer for subscription - (522,311)
Equity dividends paid 6 (6,316,829) (18,176,464)
Share capital bought back 10 (967,755) (712,523)
Net cash outflow from financing activities (7,284,584) (4,411,298)
Net (decrease)/increase in cash and cash equivalents (524,362) 13,316,379
Cash and cash equivalents at start of year 32,486,439 19,170,060
Cash and cash equivalents at end of year 31,962,077 32,486,439
Cash and cash equivalents comprise:
Cash equivalents 9 23,357,572 29,365,900
Cash at bank and in hand 9 8,604,505 3,120,539
The notes below form part of these Financial Statements.
Notes to the Financial Statements for the year ended 31 December 2021
1 Company information
Mobeus Income and Growth VCT plc is a public limited company incorporated in
England, registration number 5153931. The registered office is 5 New Street
Square, London, EC4A 3TW.
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 at the top of each relevant note.
These Financial statements have been prepared in accordance with applicable
United Kingdom accounting standards, including Financial Reporting Standard
102 ("FRS102"), with the Companies Act 2006 and the 2014 Statement of
Recommended practice, 'Financial Statements of Investment Trust Companies and
Venture Capital Trusts' ('the SORP') (updated in April 2021) 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 15 of the
Annual Report.
After performing the necessary enquiries, the Directors have undertaken an
assessment of the Company's ability to meet its liabilities as they fall due.
The Company has significant cash and liquid resources and no external debt or
capital commitments. The Company's cash flow forecasts, which consider levels
of anticipated new and follow on investment, the net funds raised as part of
the Company's 2021/22 Offer for Subscription, as well as investment income and
annual running cost projections, are discussed at each quarterly Board meeting
and, in particular, have been considered in light of the ongoing impact of the
COVID-19 pandemic. The Directors have also received assurances that the
Company's key suppliers' abilities to continue to service the Company have not
been materially impacted by the COVID-19 pandemic. Following this assessment,
the Directors have a reasonable expectation that the Company will have
adequate resources to continue to meet its liabilities for at least 12 months
from the date of these Financial Statements. The Directors therefore consider
the preparation of these Financial Statements on a going concern basis to be
appropriate.
3 Income
Dividends receivable on quoted equity shares are brought into account on the
ex-dividend date. Dividends receivable on unquoted equity shares are brought
into account when the Company's right to receive payment is established and
there is no reasonable doubt that payment will be received.
Interest income on loan stock is accrued on a daily basis. Provision is made
against this income where recovery is doubtful or where it will not be
received in the foreseeable future. Where the loan stocks only require
interest or a redemption premium to be paid on redemption, the interest and
redemption premium is recognised as income or capital as appropriate once
redemption is reasonably certain. When a redemption premium is designed to
protect the value of the instrument holder's investment rather than reflect a
commercial rate of revenue return the redemption premium is recognised as
capital. The treatment of redemption premiums is analysed to consider if they
are revenue or capital in nature on a company by company basis. Accordingly,
the redemption premium recognised in the year ended 31 December 2021 has been
classified as capital and has been included within gains on investments.
2021 2020
£ £
Income from bank deposits 4,755 14,334
Income from investments
- from equities 446,397 1,628,784
- from OEIC funds 2,664 70,175
- from loan stock 1,256,891 2,967,870
- from interest on preference share dividend arrears - 64,840
1,705,952 4,731,669
Other income 5 8,697
Total income 1,710,712 4,754,700
Total income comprises
Dividends 449,061 1,698,959
Interest 1,261,646 3,047,044
Other income 5 8,697
1,710,712 4,754,700
Total loan stock interest due but not recognised in the year was £639,625
(2020: £979,270). The decrease is due to the removal of a number of company
provisions that were considered appropriate in the previous year due in light
of the COVID-19 pandemic.
4 Investment Adviser's fees and performance fees
All expenses are accounted for on an accruals basis.
25% of the Investment Adviser's fee is 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 and performance fees
Revenue Capital Total Revenue Capital Total
2021 2021 2021 2020 2020 2020
£ £ £ £ £ £
Gresham House Asset Management Limited¹
Investment Adviser's fees 525,873 1,577,618 2,103,491 423,839 1,271,516 1,695,355
¹ On 30 September 2021, Mobeus sold its VCT fund and Investment management
business to Gresham House. As a result, the Company's Investment advisory
arrangements have been novated from Mobeus to Gresham House. The entire core
management, investment and operational teams involved with the Company all
transferred to Gresham House in connection with this transaction.
Under the terms of a revised investment management agreement dated 20 May
2010, Mobeus (from 1 October 2021, Gresham House) provides investment
advisory, administrative and company secretarial services to the Company, for
afee of 2% per annum of closing net assets, paid in advance, calculated on a
quarterly basis by reference to the net assets at the end of the preceding
quarter, plus a fixed fee of £134,168 per annum, the latter inclusive of VAT
and subject to annual increases in RPI. In 2013, Mobeus agreed to waive such
further increases due to indexation, until otherwise agreed with the Board.
The Investment Adviser's fee includes provision for a cap on expenses
excluding irrecoverable VAT and exceptional items set at 3.6% of closing net
assets at the year-end. In accordance with the Investment Management
Agreement, any excess expenses are borne by the Investment Adviser. The excess
expenses during the year amounted to £nil (2020: £nil).
In line with common practice, Gresham House retains the right to charge
arrangement and syndication fees and directors' or monitoring fees to
companies in which the Company invests. The Investment Adviser received fees
totalling £430,390 during the year ended 31 December 2021 (2020: £415,064),
being £161,076 (2020: £144,530) for arrangement fees and £269,314 (2020:
£270,534) for acting as non-executive directors on a number of investee
company boards. These fees attributable to the Company are proportionate to
the investment allocation applicable to the Company which applied at the time
of each investment. These figures are not part of these financial statements.
Incentive agreement
Under the Incentive Agreement dated 9 July 2004, and a variation of this
agreement dated 20 May 2010, the Investment Adviser is entitled to receive an
annual performance-related incentive fee of 20% of the dividends paid in a
year in excess of a "Target Rate" comprising firstly, an annual dividend paid
in a year target which started at 6.00 pence per share on launch (indexed each
year for RPI) and secondly a requirement that any shortfall of cumulative
dividends paid in each year beneath the cumulative annual dividend target is
carried forward and added to the Target Rate for the next accounting period.
Any excess of cumulative dividends paid above the cumulative annual dividend
target is not carried forward, whether an incentive fee is payable for that
year or not. Payment of a fee is also conditional upon the daily weighted
average Net Asset Value ("NAV") per share throughout such year equalling or
exceeding the daily weighted average Base NAV per share throughout the same
year.
At 31 December 2021, the annual dividend target is 8.72 pence per share and as
cumulative dividends paid were 5.00 pence, this target was not met. Also, the
average NAV per share was 78.06 pence for the year, which was less than the
average base NAV per share for the year of 87.81 pence. Accordingly, no
performance incentive fee is payable for the year.
b) Offer for Subscription fees
2021 2020
£m £m
Gross funds raised by the Company - 15.00
Offer costs payable to Mobeus at 3.00% of gross funds raised by the Company - 0.45
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 (for 2020 only)
totalled £1.74 million across all four VCTs, out of which all the costs
associated with the allotment were met.
c) Other expenses
Other 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.
2021 2020
£ £
Directors' remuneration (including NIC of £6,830 (2020: £6,852)) - Note a) 111,830 111,852
IFA trail commission 111,674 98,888
Broker's fees 14,400 3,600
Auditor's fees - Audit of Company (excluding VAT) 31,069 30,084
- audit related 7,073 6,868
assurance services - Note b) (excluding VAT)
Registrar's fees 32,692 44,356
Printing 60,224 61,709
Legal & professional fees 16,794 6,654
VCT monitoring fees 9,000 9,000
Directors' insurance 8,975 6,225
Listing and regulatory fees 32,260 32,628
Sundry 19,461 9,200
Running costs 455,452 421,064
Provision against loan interest receivable (Note c) - 3,332
Other expenses 455,452 424,396
Notes:
a) Directors' remuneration is a related party transaction, see
analysis of Directors' fees payable and their interests in the shares of the
company in the Directors' Remuneration Report within the Annual Report, which
excludes the NIC above. The key management personnel are the three
non-executive Directors. The Company has no employees. There were no amounts
outstanding and due to the Directors at 31 December 2021 (2020: £nil).
b) The audit-related assurance services are in relation to a limited
scope engagement in respect of the Financial Statements within the Company's
Interim Report. The Audit Committee reviews the nature and extent of these
services to ensure that auditor independence is maintained.
c) Provision against loan interest receivable above relates to an
amount of £nil (2020: £3,332), being a provision made against loan stock
interest regarded as collectable in previous years.
5 Taxation on profit on ordinary activities
The tax expense for the year comprises current tax and is recognised in profit
or loss. The current income tax charge is calculated on the basis of tax rates
and laws that have been enacted or substantively enacted by the reporting
date.
Any tax relief obtained in respect of adviser fees allocated to capital is
reflected in the realised capital reserve 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.
Adeferred 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.
Tax relief relating to Investment Adviser fees is allocated between revenue
and capital where such relief can be utilised. The Company is an Investment
Trust and Investment Trust companies are exempt from tax on capital gains if
they meet the HMRC criteria set out in section 274 of the ITA.
2021 2021 2021 2020 2020 2020
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
a) Analysis of tax charge:
UK Corporation tax on profits/(losses) for the year 53,768 (53,768) - 432,618 (241,588) 191,030
Total current tax charge/(credit) 53,768 (53,768) - 432,618 (241,588) 191,030
Corporation tax is based on a rate of 19.00% (2020: 19.00%)
b) Profit on ordinary activities before tax 729,387 34,783,043 35,512,430 3,906,465 13,540,118 17,446,583
Profit on ordinary activities multiplied by main company rate of corporation 138,584 6,608,778 6,747,362 742,228 2,572,622 3,314,850
tax in the UK of 19.00% (2020: 19.00%)
Effect of:
UK dividends (84,816) - (84,816) (309,469) - (309,469)
Net investment portfolio gains not taxable - (6,908,526) (6,908,526) - (2,814,210) (2,814,210)
Losses not utilised - 245,980 245,980 - - -
Overprovision in prior period - - - (141) - (141)
Actual current tax charge 53,768 (53,768) - 432,618 (241,588) 191,030
Deferred taxation
No provision for deferred taxation has been made on potential capital gains
due to the Company's current status as a VCT under section 274 of the ITA and
the Directors' intention to maintain that status.
6 Dividends paid and payable
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.
Akey judgement in applying the above accounting policy is in determining the
amount of minimum dividend to be paid in respect of a year. The Company's
status as a VCT means it has to comply with Section 259 of the ITA, which
requires that no more than 15% of the income from shares and securities in a
year can be retained from the revenue available for distribution for the year.
Amounts recognised as distributions to equity shareholders in the year:
Dividend Type For year ended 31 December Pence per share Date Paid 2021 2020
Interim Capital 2019 4.00p* 08 January 2020 - 4,183,502
Interim Capital 2020 6.00p* 07 May 2020 - 7,665,588
Interim Income 2020 2.50p 17 December 2020 - 3,164,908
Interim Capital 2020 2.50p* 17 December 2020 - 3,164,908
Interim Income 2021 0.25p 12 July 2021 315,841 -
Interim Capital 2021 4.75p* 12 July 2021 6,000,988 -
- (2,442)
Dividends refunded in the year
6,316,829 18,176,464
Distributions to equity holders at the year end:
Pence per share Date Payable
Interim Income 2021 0.25p 07 January 2022 313,845 -
Interim Capital 2021 3.75p* 07 January 2022 4,707,677 -
5,021,522 -
*These dividends were paid out of or refunded to the Company's special
distributable reserve.
Set out below are the total income dividends payable in respect of the
financial year, which is the basis on which the requirements of Section 259 of
the ITA concerning the Company not retaining more than 15% of its income from
shares and securities, is considered.
Recognised income distributions in the financial statements for the year
Dividend Type For year ended 31 December Pence per share Date paid/payable 2021 £ 2020 £
Revenue available for distribution by way of dividends for the year 675,619 3,473,847
Interim Income 2020 2.50p 17 December 2020 - 3,164,908
Interim Income 2021 0.25p 12 July 2021 315,841 -
Interim Income 2021 0.25p 7 January 2022 313,845 -
Total income dividends for the year 629,686 3,164,908
7 Basic and diluted earnings per share
2021 2020
£ £
Total earnings after taxation: 35,512,430 17,255,553
Basic and diluted earnings per share (Note a) 28.21p 13.73p
Revenue earnings from ordinary activities after taxation 675,619 3,473,847
Basic and diluted revenue earnings per share (Note b) 0.54p 2.76p
Net investment portfolio gains 36,360,661 14,811,634
Capital Investment Adviser fees less taxation (1,523,850) (1,029,928)
Total capital earnings 34,836,811 13,781,706
Basic and diluted capital earnings per share (Note c) 27.67p 10.97p
Weighted average number of shares in issue in the year 125,868,010 125,685,147
Notes:
a) Basic earnings per share is total earnings after
taxation divided by the weighted average number of shares in issue.
b) Basic revenue earnings per share is the revenue
return after taxation divided by the weighted average number of shares in
issue.
c) Basic capital earnings per share is the total
capital return after taxation divided by the weighted average number of shares
in issue.
d) There are no instruments that will increase the
number of shares in issue in future. Accordingly, the above figures currently
represent both basic and diluted earnings per share.
8 Investments at fair value
The most critical estimates, assumptions and judgements relate to the
determination of the carrying value of investments at "fair value through
profit and loss" (FVTPL). All investments held by the Company are classified
as FVTPL and measured in accordance with the International Private Equity and
Venture Capital Valuation ("IPEV") guidelines, as updated in December 2018.
This classification is followed as the Company's business is to invest in
financial assets with a view to profiting from their total return in the form
of capital growth and income.
Purchases and sales of unlisted investments are recognised when the contract
for acquisition or sale becomes unconditional. For investments actively traded
on organised financial markets, fair value is generally determined by
reference to Stock Exchange market quoted bid prices at the close of business
on the balance sheet date. Purchases and sales of quoted investments are
recognised on the trade date where a contract of sale exists whose terms
require delivery within a time frame determined by the relevant market. Where
the terms of the disposal state that consideration may be received at some
future date and, subject to the conditionality and materiality of the amount
of deferred consideration, an estimate of the fair value, discounted for the
true value of money, may be recognised through the Income Statement. In other
cases, the proceeds will only be recognised once the right to receive payment
is established and there is no reasonable doubt that payment will be received.
Unquoted investments are stated at fair value by the Directors at each
measurement date in accordance with appropriate valuation techniques, which
are consistent with the IPEV guidelines:-
i) Each investment is considered as a whole on a 'unit of
account' basis, i.e. that the value of each portfolio company is considered as
awhole consideration of:-
The price of new or follow on 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 the
market performance of the investee company. The valuation bases used are the
following:
· a multiple basis. The enterprise value of the investment may be
determined by applying a suitable price-earnings ratio, revenue or gross
profit multiple to that company's historic, current or forecast post-tax
earnings before interest and amortisation, or revenue, or gross profit (the
ratio used being based on a comparable sector but the resulting value being
adjusted to reflect points of difference identified by the Investment Adviser
compared to the sector including, inter alia, scale and liquidity).
or:-
· where a company's underperformance against plan indicates a
diminution in the value of the investment, provision against the price of a
new investment is made, as appropriate.
ii) Premiums, to the extent that they are considered capital
in nature, and that they will be received upon repayment of loan stock
investments, are accrued at fair value when the Company receives the right to
the premium and when considered recoverable.
iii) Where a multiple or the price of recent investment less
impairment basis is not appropriate and overriding factors apply, a discounted
cash flow, net asset valuation, 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.
All investments are initially recognised and subsequently measured at fair
value. Changes in fair value are recognised in the Income Statement.
Akey 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 price of recent investment, the loss is treated
as a permanent impairment and as a realised loss, even though the investment
is still held. The Board assesses the portfolio for such investments and,
after agreement with the Investment Adviser, will agree the values that
represent the extent to which an investment loss has become realised. This is
based upon an assessment of objective evidence of that investment's future
prospects, to determine whether there is potential for the investment to
recover in value.
Accounting standards classify methods of fair value measurement as Levels 1, 2
and 3. This hierarchy is based upon the reliability of information used to
determine the valuation. All of the unquoted investments are Level 3, i.e.
fair value is measured using techniques using inputs that are not based on
observable market data.
Movements in investments during the year are summarised as follows:
Traded on AIM Unquoted ordinary shares Unquoted preference shares Unquoted Loan stock Total
£ £ £ £
Cost at 31 December 2020 - 23,685,698 1,185,039 16,354,239 41,224,976
Net unrealised gains/(losses) at 31 December 2020 - 16,717,309 83,145 (4,302,448) 12,498,006
Permanent impairment in value of investments as at 31 December 2020 - (2,578,496) (302) - (2,578,798)
Valuation at 31 December 2020 - 37,824,511 1,267,882 12,051,791 51,144,184
Purchases at cost - 4,961,532 749,800 1,829,881 7,541,213
Sale proceeds (Note a) (1,520,105) (8,908,269) (231,381) (4,578,632) (15,238,387)
Reclassification at value (Note b) 8,419,354 (7,798,669) - (620,685) -
Net realised gains on investments (Note a) 620,987 4,381,296 231,232 214,060 5,447,575
Net unrealised gains on investments (Note c) 4,998,195 24,371,785 95,130 1,447,976 30,913,086
Valuation at 31 December 2021 12,518,431 54,832,186 2,112,663 10,344,391 79,807,671
Cost at 31 December 2021 864,604 26,085,667 1,934,690 13,421,908 42,306,869
Net unrealised gains/(losses) at 31 December 2021 11,653,827 30,975,015 178,275 (3,077,517) 39,729,600
Permanent impairment in cost of investments as at 31 December 2021 (Note d) - (2,228,496) (302) - (2,228,798)
Valuation at 31 December 2021 12,518,431 54,832,186 2,112,663 10,344,391 79,807,671
Net realised gains on investments of £5,447,575 together with net unrealised
gains on investments of £30,913,086 equal net investment portfolio gains of
£36,360,661 as shown on the Income Statement.
Note a) Disposals of investment portfolio companies during the year were:
Type Investment cost Disposal proceeds Valuation at 31 December 2020 Realised gain/(loss) in year
£ £ £ £
Vian Marketing Limited (trading as Red Paddle Co) Realisation 1,043,394 5,219,982 1,937,741 3,282,241
Parsley Box Group plc (formerly Parsley Box Limited) Partial realisation 396,178 1,593,010 899,118 693,892
MPB Group Limited Partial realisation 494,815 2,048,093 1,520,520 527,573
My Tutorweb Limited (trading as MyTutor) Partial realisation 302,880 821,135 370,781 450,354
Media Business Insight Limited Loan repayment 564,136 564,136 350,069 214,067
CB Imports Group Limited Liquidation 350,000 - - -
Virgin Wines UK plc (formerly Virgin Wines Holding Company Limited) Loan repayment 2,381,344 2,381,344 2,381,344 -
Proactive Group Holdings Inc Realisation 926,573 2,323,658 2,331,239 (7,581)
Other capital proceeds* Various - 287,029 - 287,029
6,459,320 15,238,387 9,790,812 5,447,575
* Other capital proceeds contains £359,934 of deferred consideration from
companies realised in previous years, against a stamp duty payment of £72,905
upon the listing of Virgin Wines shares to AIM.
Note b) The Company's equity investments in Virgin Wines and Parsley Box were
admitted to AIM during the year. The amount transferred from Level 3 to Level
1of £8,419,354 reflects the combined equity value held at the start of the
year and a follow-on investment made in the year. The amount of £620,685
transferred from unquoted loan stock to unquoted equity shares represents the
conversion of the loans held in two portfolio companies into equity shares
during the year.
Note c) The major components of the net increase in unrealised valuations of
£30,913,086 in the year were increases of £8,206,460 in Preservica Limited,
£6,390,476 in Virgin Wines UK plc (formerly Virgin Wines Holding Company
Limited), £3,621,375 in MPB Group Limited, £3,419,609 in Media Business
Insight Holdings Limited, £3,337,642 in EOTH Limited (trading as Equip
Outdoor Technologies), £2,528,781 in My Tutorweb Limited (trading as MyTutor)
and £2,348,072 in Master Removers Group 2019 Limited (trading as Anthony Ward
Thomas, Bishopsgate and Aussie Man & Van). These increases were partly
offset by falls of £1,392,281 in Parsley Box Group plc (formerly Parsley Box
Limited), £233,731 in Muller EV Limited (trading as Andersen EV), £196,401
in Bleach London Holdings Limited and £90,154 in Kudos Innovations Limited.
Note d) During the year, permanent impairments of the cost of investments have
decreased from £2,578,798 to £2,228,798 due to the disposal of one investee
company which had been permanently impaired previously.
9 Current asset investments and Cash at bank
Cash equivalents, for the purposes of the Statement of Cash flows, comprises
bank deposits repayable on up to three months' notice and funds held in OEIC
money-market funds. Current asset investments are the same but also include
bank deposits that mature after three months. Current asset investments are
disposable without curtailing or disrupting the business and are readily
convertible into known amounts of cash at their carrying values at immediate
or up to three months' notice. Cash, for the purposes of the Statement of Cash
Flows, is cash held with banks in accounts subject to immediate access. Cash
at bank in the Balance Sheet is the same.
2021 2020
£ £
OEIC Money market funds 23,357,572 29,365,900
Cash equivalents per Statement of Cash Flows 23,357,572 29,365,900
Bank deposits that mature after three months but are not immediately repayable 1,005,042 1,005,298
Current asset investments 24,362,614 30,371,198
Cash at bank 8,604,505 3,120,539
10 Called up share capital
2021 2020
£ £
Allotted, called-up and fully paid:
Ordinary Shares of 1p each: 125,077,481 (2020: 126,366,620) 1,250,775 1,263,366
During the year the Company purchased 1,259,139 (2020: 1,423,180) of its own
shares for cash (representing 1.0% (2020: 1.4%) of the shares in issue at the
start of the year) at the prevailing market price for a total cost of
£923,642 (2020: £756,637). These shares were subsequently cancelled by the
Company. This differs to the figure shown in the Statement of Cash Flows of
£967,755 by £44,113 which was included in creditors at the previous
year-end.
11 Basic and diluted net asset value per share
Net asset value per ordinary share is based on net assets at the end of the
year and on 125,077,481 (2020: 126,336,620) ordinary shares, being the number
of ordinary shares in issue on that date.
There are no instruments that will increase the number of shares in issue in
future. Accordingly, the figures currently represent both basic and diluted
net asset value per share.
12 Post balance sheet events
On 7 January 2022, the Company paid a 4.00 pence per share dividend to
shareholders in respect of the year ended 31 December 2021.
On 24 January 2022 and 22 February 2022, the Company made a follow-on
investment totalling £0.27 million into Caledonian Leisure Limited.
On 31 January 2022, the Company received a loan repayment of £0.12 million
from Media Business Insight Limited.
On 10 February 2022, the Company invested £0.73 million into Proximity
Insight Limited.
On 16 February 2022, deferred proceeds of £0.53 million were received in
respect of the divestment of Vian Marketing Limited (trading as Red Paddle
Co), an investment realised in the previous year.
Prior to the allotment of shares under the 2022 Offer for Subscription
launched on 20 January 2022, the NAV was updated as at 28 February 2022 as the
basis for allocation. This produced an NAV per share of 79.17 pence compared
to a NAV per share at 31 December 2021 of 86.31 pence (adjusted for the 4
pence dividend paid on 7 January 2022). Subsequently, on 9 March 2022,
12,233,462 Ordinary Shares were allotted at an average effective offer price
of 81.74 pence per share, raising net funds of £9.69 million.
13 Statutory information
The financial information set out in these statements does not constitute the
Company's statutory accounts for the year ended 31 December 2021 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.
14 Annual Report & Financial Statements
The Annual Report will be published on the Company's website at
www.migvct.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, Gresham
House Asset Management Limited, 80 Cheapside, London EC2V 6EE or by email:
mobeusvcts@greshamhouse.com.
15 Annual General Meeting
The Company's next Annual General Meeting will be held on Thursday, 26 May
2022 at the offices of the Company's solicitors, Shakespeare Martineau, at 60
Gracechurch Street, London EC3V 0HR. A webcast will also be available at the
same time for those Shareholders who cannot attend in person. However, please
note that Shareholders will not be able to vote via this method and so are
encouraged to return their proxy form before the deadline of 24 May 2022.
Contact details for further enquiries
Gresham House Asset Management Limited (the Company Secretary) on +44(0) 20
7382 0999 or by email to info@greshamhouse.com.
DISCLAIMER
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
4
Investment Adviser's fees and performance fees
All expenses are accounted for on an accruals basis.
25% of the Investment Adviser's fee is 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 and performance fees
Revenue Capital Total Revenue Capital Total
2021 2021 2021 2020 2020 2020
£ £ £ £ £ £
Gresham House Asset Management Limited¹
Investment Adviser's fees 525,873 1,577,618 2,103,491 423,839 1,271,516 1,695,355
¹ On 30 September 2021, Mobeus sold its VCT fund and Investment management
business to Gresham House. As a result, the Company's Investment advisory
arrangements have been novated from Mobeus to Gresham House. The entire core
management, investment and operational teams involved with the Company all
transferred to Gresham House in connection with this transaction.
Under the terms of a revised investment management agreement dated 20 May
2010, Mobeus (from 1 October 2021, Gresham House) provides investment
advisory, administrative and company secretarial services to the Company, for
a fee of 2% per annum of closing net assets, paid in advance, calculated on a
quarterly basis by reference to the net assets at the end of the preceding
quarter, plus a fixed fee of £134,168 per annum, the latter inclusive of VAT
and subject to annual increases in RPI. In 2013, Mobeus agreed to waive such
further increases due to indexation, until otherwise agreed with the Board.
The Investment Adviser's fee includes provision for a cap on expenses
excluding irrecoverable VAT and exceptional items set at 3.6% of closing net
assets at the year-end. In accordance with the Investment Management
Agreement, any excess expenses are borne by the Investment Adviser. The excess
expenses during the year amounted to £nil (2020: £nil).
In line with common practice, Gresham House retains the right to charge
arrangement and syndication fees and directors' or monitoring fees to
companies in which the Company invests. The Investment Adviser received fees
totalling £430,390 during the year ended 31 December 2021 (2020: £415,064),
being £161,076 (2020: £144,530) for arrangement fees and £269,314 (2020:
£270,534) for acting as non-executive directors on a number of investee
company boards. These fees attributable to the Company are proportionate to
the investment allocation applicable to the Company which applied at the time
of each investment. These figures are not part of these financial statements.
Incentive agreement
Under the Incentive Agreement dated 9 July 2004, and a variation of this
agreement dated 20 May 2010, the Investment Adviser is entitled to receive an
annual performance-related incentive fee of 20% of the dividends paid in a
year in excess of a "Target Rate" comprising firstly, an annual dividend paid
in a year target which started at 6.00 pence per share on launch (indexed each
year for RPI) and secondly a requirement that any shortfall of cumulative
dividends paid in each year beneath the cumulative annual dividend target is
carried forward and added to the Target Rate for the next accounting period.
Any excess of cumulative dividends paid above the cumulative annual dividend
target is not carried forward, whether an incentive fee is payable for that
year or not. Payment of a fee is also conditional upon the daily weighted
average Net Asset Value ("NAV") per share throughout such year equalling or
exceeding the daily weighted average Base NAV per share throughout the same
year.
At 31 December 2021, the annual dividend target is 8.72 pence per share and as
cumulative dividends paid were 5.00 pence, this target was not met. Also, the
average NAV per share was 78.06 pence for the year, which was less than the
average base NAV per share for the year of 87.81 pence. Accordingly, no
performance incentive fee is payable for the year.
b) Offer for Subscription fees
2021 2020
£m £m
Gross funds raised by the Company - 15.00
Offer costs payable to Mobeus at 3.00% of gross funds raised by the Company - 0.45
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 (for 2020 only)
totalled £1.74 million across all four VCTs, out of which all the costs
associated with the allotment were met.
c) Other expenses
Other 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.
2021 2020
£ £
Directors' remuneration (including NIC of £6,830 (2020: £6,852)) - Note a) 111,830 111,852
IFA trail commission 111,674 98,888
Broker's fees 14,400 3,600
Auditor's fees - Audit of Company (excluding VAT) 31,069 30,084
- audit related 7,073 6,868
assurance services - Note b) (excluding VAT)
Registrar's fees 32,692 44,356
Printing 60,224 61,709
Legal & professional fees 16,794 6,654
VCT monitoring fees 9,000 9,000
Directors' insurance 8,975 6,225
Listing and regulatory fees 32,260 32,628
Sundry 19,461 9,200
Running costs 455,452 421,064
Provision against loan interest receivable (Note c) - 3,332
Other expenses 455,452 424,396
Notes:
a) Directors' remuneration is a related party transaction, see
analysis of Directors' fees payable and their interests in the shares of the
company in the Directors' Remuneration Report within the Annual Report, which
excludes the NIC above. The key management personnel are the three
non-executive Directors. The Company has no employees. There were no amounts
outstanding and due to the Directors at 31 December 2021 (2020: £nil).
b) The audit-related assurance services are in relation to a limited
scope engagement in respect of the Financial Statements within the Company's
Interim Report. The Audit Committee reviews the nature and extent of these
services to ensure that auditor independence is maintained.
c) Provision against loan interest receivable above relates to an
amount of £nil (2020: £3,332), being a provision made against loan stock
interest regarded as collectable in previous years.
5
Taxation on profit on ordinary activities
The tax expense for the year comprises current tax and is recognised in profit
or loss. The current income tax charge is calculated on the basis of tax rates
and laws that have been enacted or substantively enacted by the reporting
date.
Any tax relief obtained in respect of adviser fees allocated to capital is
reflected in the realised capital reserve 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.
Tax relief relating to Investment Adviser fees is allocated between revenue
and capital where such relief can be utilised. The Company is an Investment
Trust and Investment Trust companies are exempt from tax on capital gains if
they meet the HMRC criteria set out in section 274 of the ITA.
2021 2021 2021 2020 2020 2020
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
a) Analysis of tax charge:
UK Corporation tax on profits/(losses) for the year 53,768 (53,768) - 432,618 (241,588) 191,030
Total current tax charge/(credit) 53,768 (53,768) - 432,618 (241,588) 191,030
Corporation tax is based on a rate of 19.00% (2020: 19.00%)
b) Profit on ordinary activities before tax 729,387 34,783,043 35,512,430 3,906,465 13,540,118 17,446,583
Profit on ordinary activities multiplied by main company rate of corporation 138,584 6,608,778 6,747,362 742,228 2,572,622 3,314,850
tax in the UK of 19.00% (2020: 19.00%)
Effect of:
UK dividends (84,816) - (84,816) (309,469) - (309,469)
Net investment portfolio gains not taxable - (6,908,526) (6,908,526) - (2,814,210) (2,814,210)
Losses not utilised - 245,980 245,980 - - -
Overprovision in prior period - - - (141) - (141)
Actual current tax charge 53,768 (53,768) - 432,618 (241,588) 191,030
Deferred taxation
No provision for deferred taxation has been made on potential capital gains
due to the Company's current status as a VCT under section 274 of the ITA and
the Directors' intention to maintain that status.
6
Dividends paid and payable
Dividends payable are recognised as distributions in the Financial Statements
when the Company's liability to pay them has been established. This liability
is established for interim dividends when they are paid, and for final
dividends when they are approved by the shareholders, usually at the Company's
Annual General Meeting.
A key judgement in applying the above accounting policy is in determining the
amount of minimum dividend to be paid in respect of a year. The Company's
status as a VCT means it has to comply with Section 259 of the ITA, which
requires that no more than 15% of the income from shares and securities in a
year can be retained from the revenue available for distribution for the year.
Amounts recognised as distributions to equity shareholders in the year:
Dividend Type For year ended 31 December Pence per share Date Paid 2021 2020
Interim Capital 2019 4.00p* 08 January 2020 - 4,183,502
Interim Capital 2020 6.00p* 07 May 2020 - 7,665,588
Interim Income 2020 2.50p 17 December 2020 - 3,164,908
Interim Capital 2020 2.50p* 17 December 2020 - 3,164,908
Interim Income 2021 0.25p 12 July 2021 315,841 -
Interim Capital 2021 4.75p* 12 July 2021 6,000,988 -
- (2,442)
Dividends refunded in the year
6,316,829 18,176,464
Distributions to equity holders at the year end:
Pence per share Date Payable
Interim Income 2021 0.25p 07 January 2022 313,845 -
Interim Capital 2021 3.75p* 07 January 2022 4,707,677 -
5,021,522 -
*These dividends were paid out of or refunded to the Company's special
distributable reserve.
Set out below are the total income dividends payable in respect of the
financial year, which is the basis on which the requirements of Section 259 of
the ITA concerning the Company not retaining more than 15% of its income from
shares and securities, is considered.
Recognised income distributions in the financial statements for the year
Dividend Type For year ended 31 December Pence per share Date paid/payable 2021 £ 2020 £
Revenue available for distribution by way of dividends for the year 675,619 3,473,847
Interim Income 2020 2.50p 17 December 2020 - 3,164,908
Interim Income 2021 0.25p 12 July 2021 315,841 -
Interim Income 2021 0.25p 7 January 2022 313,845 -
Total income dividends for the year 629,686 3,164,908
7
Basic and diluted earnings per share
2021 2020
£ £
Total earnings after taxation: 35,512,430 17,255,553
Basic and diluted earnings per share (Note a) 28.21p 13.73p
Revenue earnings from ordinary activities after taxation 675,619 3,473,847
Basic and diluted revenue earnings per share (Note b) 0.54p 2.76p
Net investment portfolio gains 36,360,661 14,811,634
Capital Investment Adviser fees less taxation (1,523,850) (1,029,928)
Total capital earnings 34,836,811 13,781,706
Basic and diluted capital earnings per share (Note c) 27.67p 10.97p
Weighted average number of shares in issue in the year 125,868,010 125,685,147
Notes:
a) Basic earnings per share is total earnings after
taxation divided by the weighted average number of shares in issue.
b) Basic revenue earnings per share is the revenue
return after taxation divided by the weighted average number of shares in
issue.
c) Basic capital earnings per share is the total
capital return after taxation divided by the weighted average number of shares
in issue.
d) There are no instruments that will increase the
number of shares in issue in future. Accordingly, the above figures currently
represent both basic and diluted earnings per share.
8
Investments at fair value
The most critical estimates, assumptions and judgements relate to the
determination of the carrying value of investments at "fair value through
profit and loss" (FVTPL). All investments held by the Company are classified
as FVTPL and measured in accordance with the International Private Equity and
Venture Capital Valuation ("IPEV") guidelines, as updated in December 2018.
This classification is followed as the Company's business is to invest in
financial assets with a view to profiting from their total return in the form
of capital growth and income.
Purchases and sales of unlisted investments are recognised when the contract
for acquisition or sale becomes unconditional. For investments actively traded
on organised financial markets, fair value is generally determined by
reference to Stock Exchange market quoted bid prices at the close of business
on the balance sheet date. Purchases and sales of quoted investments are
recognised on the trade date where a contract of sale exists whose terms
require delivery within a time frame determined by the relevant market. Where
the terms of the disposal state that consideration may be received at some
future date and, subject to the conditionality and materiality of the amount
of deferred consideration, an estimate of the fair value, discounted for the
true value of money, may be recognised through the Income Statement. In other
cases, the proceeds will only be recognised once the right to receive payment
is established and there is no reasonable doubt that payment will be received.
Unquoted investments are stated at fair value by the Directors at each
measurement date in accordance with appropriate valuation techniques, which
are consistent with the IPEV guidelines:-
i) Each investment is considered as a whole on a 'unit of
account' basis, i.e. that the value of each portfolio company is considered as
a whole consideration of:-
The price of new or follow on 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 the
market performance of the investee company. The valuation bases used are the
following:
· a multiple basis. The enterprise value of the investment may be
determined by applying a suitable price-earnings ratio, revenue or gross
profit multiple to that company's historic, current or forecast post-tax
earnings before interest and amortisation, or revenue, or gross profit (the
ratio used being based on a comparable sector but the resulting value being
adjusted to reflect points of difference identified by the Investment Adviser
compared to the sector including, inter alia, scale and liquidity).
or:-
· where a company's underperformance against plan indicates a
diminution in the value of the investment, provision against the price of a
new investment is made, as appropriate.
ii) Premiums, to the extent that they are considered capital
in nature, and that they will be received upon repayment of loan stock
investments, are accrued at fair value when the Company receives the right to
the premium and when considered recoverable.
iii) Where a multiple or the price of recent investment less
impairment basis is not appropriate and overriding factors apply, a discounted
cash flow, net asset valuation, 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.
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 price of recent investment, the loss is treated
as a permanent impairment and as a realised loss, even though the investment
is still held. The Board assesses the portfolio for such investments and,
after agreement with the Investment Adviser, will agree the values that
represent the extent to which an investment loss has become realised. This is
based upon an assessment of objective evidence of that investment's future
prospects, to determine whether there is potential for the investment to
recover in value.
Accounting standards classify methods of fair value measurement as Levels 1, 2
and 3. This hierarchy is based upon the reliability of information used to
determine the valuation. All of the unquoted investments are Level 3, i.e.
fair value is measured using techniques using inputs that are not based on
observable market data.
Movements in investments during the year are summarised as follows:
Traded on AIM Unquoted ordinary shares Unquoted preference shares Unquoted Loan stock Total
£ £ £ £
Cost at 31 December 2020 - 23,685,698 1,185,039 16,354,239 41,224,976
Net unrealised gains/(losses) at 31 December 2020 - 16,717,309 83,145 (4,302,448) 12,498,006
Permanent impairment in value of investments as at 31 December 2020 - (2,578,496) (302) - (2,578,798)
Valuation at 31 December 2020 - 37,824,511 1,267,882 12,051,791 51,144,184
Purchases at cost - 4,961,532 749,800 1,829,881 7,541,213
Sale proceeds (Note a) (1,520,105) (8,908,269) (231,381) (4,578,632) (15,238,387)
Reclassification at value (Note b) 8,419,354 (7,798,669) - (620,685) -
Net realised gains on investments (Note a) 620,987 4,381,296 231,232 214,060 5,447,575
Net unrealised gains on investments (Note c) 4,998,195 24,371,785 95,130 1,447,976 30,913,086
Valuation at 31 December 2021 12,518,431 54,832,186 2,112,663 10,344,391 79,807,671
Cost at 31 December 2021 864,604 26,085,667 1,934,690 13,421,908 42,306,869
Net unrealised gains/(losses) at 31 December 2021 11,653,827 30,975,015 178,275 (3,077,517) 39,729,600
Permanent impairment in cost of investments as at 31 December 2021 (Note d) - (2,228,496) (302) - (2,228,798)
Valuation at 31 December 2021 12,518,431 54,832,186 2,112,663 10,344,391 79,807,671
Net realised gains on investments of £5,447,575 together with net unrealised
gains on investments of £30,913,086 equal net investment portfolio gains of
£36,360,661 as shown on the Income Statement.
Note a) Disposals of investment portfolio companies during the year were:
Type Investment cost Disposal proceeds Valuation at 31 December 2020 Realised gain/(loss) in year
£ £ £ £
Vian Marketing Limited (trading as Red Paddle Co) Realisation 1,043,394 5,219,982 1,937,741 3,282,241
Parsley Box Group plc (formerly Parsley Box Limited) Partial realisation 396,178 1,593,010 899,118 693,892
MPB Group Limited Partial realisation 494,815 2,048,093 1,520,520 527,573
My Tutorweb Limited (trading as MyTutor) Partial realisation 302,880 821,135 370,781 450,354
Media Business Insight Limited Loan repayment 564,136 564,136 350,069 214,067
CB Imports Group Limited Liquidation 350,000 - - -
Virgin Wines UK plc (formerly Virgin Wines Holding Company Limited) Loan repayment 2,381,344 2,381,344 2,381,344 -
Proactive Group Holdings Inc Realisation 926,573 2,323,658 2,331,239 (7,581)
Other capital proceeds* Various - 287,029 - 287,029
6,459,320 15,238,387 9,790,812 5,447,575
* Other capital proceeds contains £359,934 of deferred consideration from
companies realised in previous years, against a stamp duty payment of £72,905
upon the listing of Virgin Wines shares to AIM.
Note b) The Company's equity investments in Virgin Wines and Parsley Box were
admitted to AIM during the year. The amount transferred from Level 3 to Level
1 of £8,419,354 reflects the combined equity value held at the start of the
year and a follow-on investment made in the year. The amount of £620,685
transferred from unquoted loan stock to unquoted equity shares represents the
conversion of the loans held in two portfolio companies into equity shares
during the year.
Note c) The major components of the net increase in unrealised valuations of
£30,913,086 in the year were increases of £8,206,460 in Preservica Limited,
£6,390,476 in Virgin Wines UK plc (formerly Virgin Wines Holding Company
Limited), £3,621,375 in MPB Group Limited, £3,419,609 in Media Business
Insight Holdings Limited, £3,337,642 in EOTH Limited (trading as Equip
Outdoor Technologies), £2,528,781 in My Tutorweb Limited (trading as MyTutor)
and £2,348,072 in Master Removers Group 2019 Limited (trading as Anthony Ward
Thomas, Bishopsgate and Aussie Man & Van). These increases were partly
offset by falls of £1,392,281 in Parsley Box Group plc (formerly Parsley Box
Limited), £233,731 in Muller EV Limited (trading as Andersen EV), £196,401
in Bleach London Holdings Limited and £90,154 in Kudos Innovations Limited.
Note d) During the year, permanent impairments of the cost of investments have
decreased from £2,578,798 to £2,228,798 due to the disposal of one investee
company which had been permanently impaired previously.
9
Current asset investments and Cash at bank
Cash equivalents, for the purposes of the Statement of Cash flows, comprises
bank deposits repayable on up to three months' notice and funds held in OEIC
money-market funds. Current asset investments are the same but also include
bank deposits that mature after three months. Current asset investments are
disposable without curtailing or disrupting the business and are readily
convertible into known amounts of cash at their carrying values at immediate
or up to three months' notice. Cash, for the purposes of the Statement of Cash
Flows, is cash held with banks in accounts subject to immediate access. Cash
at bank in the Balance Sheet is the same.
2021 2020
£ £
OEIC Money market funds 23,357,572 29,365,900
Cash equivalents per Statement of Cash Flows 23,357,572 29,365,900
Bank deposits that mature after three months but are not immediately repayable 1,005,042 1,005,298
Current asset investments 24,362,614 30,371,198
Cash at bank 8,604,505 3,120,539
10
Called up share capital
2021 2020
£ £
Allotted, called-up and fully paid:
Ordinary Shares of 1p each: 125,077,481 (2020: 126,366,620) 1,250,775 1,263,366
During the year the Company purchased 1,259,139 (2020: 1,423,180) of its own
shares for cash (representing 1.0% (2020: 1.4%) of the shares in issue at the
start of the year) at the prevailing market price for a total cost of
£923,642 (2020: £756,637). These shares were subsequently cancelled by the
Company. This differs to the figure shown in the Statement of Cash Flows of
£967,755 by £44,113 which was included in creditors at the previous
year-end.
11
Basic and diluted net asset value per share
Net asset value per ordinary share is based on net assets at the end of the
year and on 125,077,481 (2020: 126,336,620) ordinary shares, being the number
of ordinary shares in issue on that date.
There are no instruments that will increase the number of shares in issue in
future. Accordingly, the figures currently represent both basic and diluted
net asset value per share.
12
Post balance sheet events
On 7 January 2022, the Company paid a 4.00 pence per share dividend to
shareholders in respect of the year ended 31 December 2021.
On 24 January 2022 and 22 February 2022, the Company made a follow-on
investment totalling £0.27 million into Caledonian Leisure Limited.
On 31 January 2022, the Company received a loan repayment of £0.12 million
from Media Business Insight Limited.
On 10 February 2022, the Company invested £0.73 million into Proximity
Insight Limited.
On 16 February 2022, deferred proceeds of £0.53 million were received in
respect of the divestment of Vian Marketing Limited (trading as Red Paddle
Co), an investment realised in the previous year.
Prior to the allotment of shares under the 2022 Offer for Subscription
launched on 20 January 2022, the NAV was updated as at 28 February 2022 as the
basis for allocation. This produced an NAV per share of 79.17 pence compared
to a NAV per share at 31 December 2021 of 86.31 pence (adjusted for the 4
pence dividend paid on 7 January 2022). Subsequently, on 9 March 2022,
12,233,462 Ordinary Shares were allotted at an average effective offer price
of 81.74 pence per share, raising net funds of £9.69 million.
13
Statutory information
The financial information set out in these statements does not constitute the
Company's statutory accounts for the year ended 31 December 2021 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.
14
Annual Report & Financial Statements
The Annual Report will be published on the Company's website at
www.migvct.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, Gresham
House Asset Management Limited, 80 Cheapside, London EC2V 6EE or by email:
mobeusvcts@greshamhouse.com.
15
Annual General Meeting
The Company's next Annual General Meeting will be held on Thursday, 26 May
2022 at the offices of the Company's solicitors, Shakespeare Martineau, at 60
Gracechurch Street, London EC3V 0HR. A webcast will also be available at the
same time for those Shareholders who cannot attend in person. However, please
note that Shareholders will not be able to vote via this method and so are
encouraged to return their proxy form before the deadline of 24 May 2022.
Contact details for further enquiries
Gresham House Asset Management Limited (the Company Secretary) on +44(0) 20
7382 0999 or by email to info@greshamhouse.com.
DISCLAIMER
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
1 Definitions of key terms and alternative performance measures shown
above and throughout this report are shown in the Glossary of terms on at the
end of the Annual Report & Financial Statements.
2 Source: Panmure Gordon & Co (mid-market price). The discount on the
Company's shares at 31 December 2021 was 4.2% as the share price was based on
the NAV per share at 30 September 2021 of 83.47 pence.
3 The share price at 31 December 2021 has been adjusted for a 4.00 pence
dividend paid after the year-end on 7 January 2022 which was ex-dividend at 31
December 2021.
Dividends paid post year-end in respect of the year ended 31 December 2021
A second interim dividend of 4.00 pence per share comprised of 0.25 pence
(income) and 3.75 pence (capital) was paid to Shareholders on 7 January 2022.
Change in Management Arrangements
Following the communication to all Shareholders sent by the Chairmen of each
of the VCTs advised by Mobeus Equity Partners LLP ("Mobeus") on 10 September
2021, I am pleased to report the sale of the Mobeus VCT fund and investment
management business to a subsidiary of Gresham House plc completed with effect
from 30 September 2021. As a result, the Mobeus-advised VCTs' investment
advisory arrangements have been novated from Mobeus to Gresham House Asset
Management Limited ("Gresham House").
The Board believes that the agreement to the novation of the investment
advisory arrangements was in the interests of the Mobeus VCTs' Shareholders
and that the Company will benefit from scale advantages, continuity, portfolio
diversification and investment in additional skilled staff at Gresham House.
The Board is pleased that Clive Austin and Trevor Hope, the two leading
partners involved with managing the Mobeus VCTs' investment portfolios, remain
responsible for the investment, portfolio and fund management of the Mobeus
VCTs, along-side the investment and operations teams.
CHAIRMAN'S STATEMENT
I am pleased to present the annual results of Mobeus Income & Growth VCT
plc for the year ended 31 December 2021.
Overview
In last year's Annual Report, I was able to report on the Company's resilient
performance over a time of material global uncertainty and market volatility.
Twelve months later, I am pleased to say that it has been a year of continued
strong trading and portfolio value growth to 31 December 2021. The Company
achieved an exceptional NAV total return per share of 42.2% for the year
(2020: 19.3%).
Although this period has been marked by continued challenges, the portfolio
has proven to be resilient and adaptive in facing them. The way in which
businesses have been able to identify and capitalise on new opportunities in
the changing UK consumer and business environment has been satisfying. The
threat of impacts from the war in Ukraine and global supply chain issues in
logistics, materials and labour is expected to remain for some months,
although for the most part, trading for the Company's largely service and
software-based portfolio has not been significantly impacted to date.
Despite Brexit concerns and considerable COVID-19 related restrictions across
the year, M&A activity has remained buoyant and the Investment Adviser
continues to see a healthy deal flow. The Company deployed £7.54 million of
investment capital and generated £15.23 million in realisation proceeds from
investment activity during the year. In that time, it added four new
investments to its portfolio, provided follow-on funding into eight existing
portfolio companies and supported the successful admission to AIM of a further
two of its investments.
Shareholders should note that the portfolio now features some value
concentration in two of its stocks: Preservica and Virgin Wines (13.0% and
10.6% of net assets respectively as at 31 December 2021), the latter of which
was listed on AIM during the year. With this additional AIM exposure, there is
the natural potential for a higher level of volatility in the value of the
Company's portfolio and subsequent NAV returns. Following an initial uplift in
value following the two IPOs in March 2021, the value of these quoted assets
has been volatile over the rest of the year as the companies were impacted by
unfavourable trading announcements and negative market sentiment. The
remainder of the portfolio, on the whole, exhibited strong performance and
growth over the same period.
We are witnessing a clear demonstration of the benefits of what is now a
diverse and maturing portfolio. Following the 2015 VCT rule change, the
revised investment strategy is now bearing fruit as more young growth
investments are starting to achieve significant scale and value. This view has
been validated by third-party investment transactions which have brought
significant positive re-rating in values of portfolio businesses, such as MPB
and MyTutor, whilst the Company has also been able to support the scaling of
investments such as Preservica, to which the Company provided significant
further funding in November 2021.
Performance
The Company's NAV total return per share was 42.2% for the year to
31 December 2021 (2020: 19.3%), and the share price total return was 47.8%
(2020: 13.7%). This difference in returns arises principally due to the timing
of NAV announcements and is explained more fully under Performance in the
Strategic Report within the Annual Report & Financial Statements. The
positive NAV total return for the year was principally the result of
significant unrealised gains in the value of investments still held, as well
as realised gains achieved via exits and partial realisations of several
portfolio companies.
At the year-end, the Company was ranked 3rd out of 38 Generalist VCTs over
five years and 1st out of 31 Generalist VCTs over ten years, in the
Association of Investment Companies' analysis of NAV Total Return (dividends
are reinvested). Shareholders should note that the AIC's rankings are based on
the latest available published NAVs and therefore do not reflect the NAV per
share increase achieved by the Company up to 31 December 2021. For further
details on the performance of the Company, please refer to the Strategic
Report within the Annual Report & Financial Statements.
Dividends
The Board continues to be committed to providing an attractive dividend stream
to Shareholders and is pleased to have announced a second interim dividend of
4.00 pence per share, which was paid on 7 January 2022 to Shareholders on the
register on 10 December 2021.
This second interim dividend, together with a first interim dividend of 5.00
pence per share paid on 12 July 2021, to Shareholders on the register on 21
May 2021, brings dividends paid and proposed in respect of the financial year
ended 31 December 2021 to 9.00 pence per share. To date, cumulative dividends
paid since inception are 148.8 pence per share.
The Company has always met, and often exceeded, the annual dividend payment
target of at least 4.00 pence per share in respect of each financial year.
As Shareholders have been advised previously, the gradual move of the
portfolio to younger growth capital investments as well as the realisations of
older, more mature companies that have provided a good income yield are likely
to make dividends harder to achieve from income and capital returns in any
given year and thus, the Board continues to monitor the sustainability of the
annual dividend target. Shareholders should also note that there may continue
to be circumstances where the Company is required to pay dividends in excess
of income and capital gains 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 paid in excess of net income
and capital gains achieved will cause the Company's NAV per share to reduce by
a corresponding amount.
Investment portfolio
The portfolio movements across the year were as follows:
2021 2020
£m £m
Opening portfolio value 51.14 51.70
New and further investments 7.54 5.43
Disposal proceeds (15.23) (20.80)
Net realised gains 5.45 4.34
Valuation movements 30.91 10.47
Portfolio value at 31 December 79.81 51.14
During the year, the Company invested a total of £7.54 million into four new
and eight existing portfolio companies (2020: £5.43 million; three new, four
existing).
New investments totalling £3.15 million were made into Vivacity Labs (an
artificial intelligence and Urban Traffic Control system), Caledonian Leisure
(a provider of UK experience and leisure breaks), Legatics (a SaaS LegalTech
software business) and Vet's Klinic (a veterinary clinic roll out).
Additional funding of £4.39 million was provided across eight existing
portfolio companies, including Parsley Box (an ambient meals provider), Bleach
London (hair colourants brand), Arkk Consulting (a reporting requirements
service provider), Tapas Revolution (a Spanish restaurant chain), MyTutor (an
online tutoring marketplace), Andersen EV (a producer of premium EV chargers),
ActiveNav (a provider of enterprise-level file analysis software) and
Preservica (a seller of proprietary digital archiving software).
The Company generated £7.23 million in proceeds from the realisation of its
investments in Proactive Group and Vian Marketing Limited (trading as Red
Paddle) during the year. In addition to £3.96 million of proceeds received
from the partial realisations of Virgin Wines and Parsley Box (upon the
admission of their shares to AIM as mentioned previously), the partial
realisations of MPB Group and MyTutor, together with loan repayments and other
capital receipts of £4.04 million, the Company generated total proceeds of
£15.23 million in the year to 31 December 2021.
The portfolio has performed very strongly over the Company's financial year.
The overall value increased by £36.36 million (2020: £14.81 million), or
71.1% (2020: 28.7%) on a like-for-like basis, compared to the start of the
year. This increase comprised a net unrealised uplift in portfolio valuations
of £30.91 million and £5.45 million in net realised gains over the year. The
portfolio was valued at £79.81 million at the year-end (31 December 2020:
£51.14 million).
Within net realised gains, the principal contributors were the full realised
gains of Red Paddle (£3.28 million) as well as gains from the partial
realisations of Parsley Box (£0.69 million), MPB Group (£0.53 million) and
MyTutor (£0.45 million).
The portfolio's valuation at the year-end reflects the continued beneficial
impact of changes in UK consumer and business behaviour brought on by the
pandemic and lockdown restrictions, particularly for those businesses
operating direct-to-consumer models. This also underscores the success of
portfolio companies in adapting to a rapidly changing environment,
diversifying their product offering in order to take advantage of
opportunities that have arisen.
Since the year-end, the first joint investment by the VCTs under Gresham House
took place into Proximity Insight, a retail software provider. The Company
contributed £0.73 million towards a total investment of £5.00 million which
completed on 10 February 2022. The Company also invested further funding
totalling £0.27 million into Caledonian Leisure in January and February 2022.
The flotation of both Virgin Wines and Parsley Box on the AIM market in March
2021 resulted in significant uplifts in valuation, as well as generating an
element of realised returns. As part of the Virgin Wines transaction, the
Company received repayment of its remaining loan stock, leaving Virgin Wines
ungeared and, as part of the IPO of Parsley Box, the Company realised part of
its equity holding, securing a 4.0x return on the cost of the shares sold. As
was expected, these quoted stocks are subject to stock market movements and
have brought an additional level of volatility to a portion of the portfolio.
In the second half of the year, Parsley Box in particular saw a subsequent
value decline in the face of changing market sentiment and an announcement of
results which were below market expectations. Virgin Wines has experienced
similar volatility, but had returned to its float price at the year end.
In contrast, there have been substantial unquoted valuation increases,
supported by a sizeable further investment from the Mobeus VCTs in the case of
Preservica, and by third-party investment transactions in the cases of
MyTutor, and MPB. It is gratifying that some growth investment companies in
the portfolio have now started to achieve a scale that is attracting interest
from larger private equity investors.
Although a minority of portfolio companies have been disadvantaged by the
COVID-19 pandemic, principally as a result of staff shortages, closure of
retail sites and interrupted supplies, these factors have only had a modest
impact on overall shareholder returns over the course of the Company's
financial year.
Further details of the Company's investment activity and the performance of
the portfolio are contained in the Investment Adviser's Review and the
Investment Portfolio Summary below.
Revenue account
The results for the year are set out in the Income Statement within the
Financial Statements below and show a revenue return (after tax) of 0.54 pence
per share (2020: 2.76 pence per share). The revenue return for the year of
£0.68 million has decreased from last year's comparable figure of £3.47
million. This decrease is mainly due to the receipt of significant loan
interest income in the previous year upon the sale of the Auction Technology
Group.
Liquidity & Fundraising
Cash and cash equivalents held by the Company as at 31 December 2021 amounted
to £32.97 million, or 29.2% of net assets. Following the payment of a 4.00
pence dividend shortly after the year-end, liquidity reduced to £27.95
million, or 25.9% of net assets.
On 20 January 2022, the Company launched an offer for subscription of
£10 million, alongside offers from the other Mobeus-advised VCTs ("Offers").
I am pleased to report that the Offers experienced unprecedented demand such
that the Company received subscriptions amounting to the full amount sought
within 24 hours of launching and closed to any further subscriptions on 21
January 2022. In accordance with the Offer's prospectus, the allotment of all
shares under the offer took place on 9 March 2022, generating net funds (after
offer costs) of £9.69 million. In consideration of the environmental factors
and cost savings, the Company elected to release the Prospectus digitally,
with hard copies only available upon request, and invited applications to be
submitted online via a digital portal. This method provided increased security
and efficiency in the application process and the Board strongly recommends
that Shareholders wishing to subscribe to any future offers opt to submit
their applications via the online facility.
Share buybacks
During the year, the Company bought back and cancelled 1,259,139 of its own
shares (2020: 1,423,180), representing 1.0% of the shares in issue at the
beginning of the year (2020: 1.4%), at a total cost of £0.92 million,
inclusive of expenses (2020: £0.76 million). 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.
Shareholder Communications & Annual General Meeting
May I remind you that the Company has its own website which is available at:
www.migvct.co.uk (http://www.migvct.co.uk) .
The Investment Adviser held a virtual Shareholder Event on the morning of
25 February 2022. A presentation was provided by representatives of each of
the Mobeus VCT Boards as well as the Investment Adviser and the founders of
two portfolio companies, Virgin Wines and MBI. A recording of the event is
available here: https://mvcts.connectid.cloud/
Your Board is pleased to be able to hold the next Annual General Meeting
("AGM") of the Company in person at 2.00 pm on Thursday, 26 May 2022 at the
offices of the Company's solicitors, Shakespeare Martineau, at 60 Gracechurch
Street, London EC3V 0HR. A webcast will also be available at the same time for
those Shareholders who cannot attend in person. However, please note that you
will not be able to vote via this method and you are encouraged to return your
proxy form before the deadline of 24 May 2022. Information setting out how to
join the meeting by virtual means will be shown on the Company's website. For
further details, please see the Notice of the Meeting which can be found at
the end of the Annual Report & Financial Statements.
Board Succession
Catherine Wall announced her retirement from the Board, effective from 1
January 2022. Catherine brought an enormous wealth of experience and breadth
to the Company during her six and a half years as a director and Chairman of
the Audit Committee, for which the Board is very grateful. The Board
considered its composition and succession in light of this and has been
engaged in a recruitment process to appoint a director to the Board who will
also fulfil the role of Chairman of the Audit Committee. When recruiting
prospective candidates, the Board took into consideration the range of
requisite skills, experience and qualifications needed to carry out the role
as well as diversity and, on 1 March 2022 the Company announced the
appointment of Lucy Armstrong, which was effective immediately.
Fraud Warning
We have been made aware of a 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, claiming or appearing
to be from a corporate finance firm offering to buy your shares at an inflated
price.
The Board strongly recommends Shareholders take time to read the Company's
Fraud warning section, including details of who to contact, contained within
the Information for Shareholders section at the end of the Annual Report &
Financial Statements.
Environmental, Social and Governance ("ESG")
The Board and the Investment Adviser believe that the consideration of
environmental, social and corporate governance ("ESG") factors throughout the
investment cycle will contribute towards enhanced Shareholder value.
Following the novation of the investment advisory agreement to Gresham House
Asset Management Limited, who have a team which is focused on sustainability,
the Board views this as an opportunity to enhance the Company's existing
protocols and procedures through the adoption of the highest industry
standards. Under the new enlarged investment team, each investment executive
is responsible for setting and achieving their own individual ESG objectives
in support of the wider overarching ESG goals of the Investment Adviser.
Outlook
The year under review can be characterised as a continuation of the trying
environment created for businesses in light of the COVID-19 pandemic and
Brexit in 2020. However, much in the same way that we were able to report on
its remarkable recovery one year ago, the Company has continued to achieve
success in creating opportunities and building on them. This has been
exemplified by strong trading performances and value growth across the
portfolio and in exceeding expectations for the level of investment activity.
Whilst the immediate threat of further lockdowns from new variants of the
virus appears to have lessened to some extent as we move into 2022, we
anticipate that the indirect effects of the COVID-19 pandemic and Brexit will
continue to impact the UK economy and bring an element of uncertainty for some
time to come, most notably in the form of supply chain and inflationary
pressures. More recently, the distressing invasion of Ukraine has sent
shockwaves through global financial markets. Portfolio valuations may
therefore remain volatile, particularly those of AIM-listed companies. Whilst
the portfolio has limited direct exposure to these geographies, this action is
expected to exacerbate risk factors in the short-term.
Nonetheless, following the successful fundraising in January 2022, the Board
considers that your Company is well positioned to adapt as necessary.
The Board was very pleased to have witnessed such a positive response to the
launch of the Company's offer for subscription in January and would like to
thank all Shareholders for their interest in applying for the Company's
shares. The Board has been satisfied with the Company's ability to maintain a
high rate of investment in quality opportunities over the year. It believes
that the additional fundraising will provide the necessary capital to continue
to create value growth for Shareholders in what has, to date, proven to be a
successful investment strategy.
I would like to take this opportunity once again to thank all Shareholders for
your continued support.
Clive Boothman
Chairman
31 March 2022
INVESTMENT POLICY
The Company's policy is designed to meet the Company's Objective.
Investments
The Company invests primarily in a diverse portfolio of UK unquoted companies.
Investments are made selectively across a 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 gains from realisations.
There are a number of conditions within the VCT legislation which need to be
met by the Company and which may change from time to time. The Company will
seek to make investments in accordance with the requirements of prevailing VCT
legislation.
Asset allocation and risk diversification policies, including the size and
type of investments the Company makes, are determined in part by the
requirements of prevailing VCT legislation. No single investment may represent
more than 15% (by VCT tax value) of the Company's total investments at the
date of investment.
Liquidity
The Company's cash and liquid funds are held in a portfolio of readily
realisable interest-bearing investments, deposit and current accounts, of
varying maturities, subject to the overriding criterion that the risk of loss
of capital be minimised.
Borrowing
The Company's Articles of Association permit 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
Change in Management Arrangements
As Shareholders will be aware, Gresham House Asset Management Limited
("Gresham House") acquired the VCT investment advisory business of Mobeus
Equity Partners LLP ("Mobeus") and, as a result, the entire investment and
operations teams of Mobeus joined Gresham on 1 October 2021.
At the time of writing, the integration has been well underway for just over
six months. Having formed one of the largest and most experienced teams in the
VCT sector, the team recently completed its first combined investment into
Proximity Insight, a retail software provider. It is hoped that this combined
investment team will be a major force in the supply of capital to the VCT
sector and the team's enhanced market position should attract strong deal flow
in order to produce attractive investment returns.
Portfolio Review
Having recovered from the COVID-19 related decline in value by the start of
the Company's financial year, the portfolio has made further positive progress
over the past 12-months.
Whilst markets helped deliver a strong recovery in 2020, the main driver of
value in 2021 has been a continuation of buoyant underlying trading
performance across the portfolio. This has been bolstered by a small number of
significant re-ratings during the year.
A limited number of portfolio companies have experienced disruption as a
result of the UK lockdowns, but it is pleasing to report that a significant
proportion have benefited from what appears to be a structural change in
consumer purchasing habits and, indeed, the majority of the portfolio
companies are now trading above their pre COVID-19 levels.
Overall, the majority of the portfolio has demonstrated a high degree of
resilience, with the vast majority of companies by number showing revenue
and/or earnings progression over the previous two years. Investments
classified as Retailers now comprise over 43% of the portfolio by value, all
of which are demonstrating the success of the direct-to-consumer business
model. In the case of both Virgin Wines UK plc and Parsley Box Group plc, this
strong performance led to successful AIM flotations in March 2021.
Significant up-ratings in the unquoted portfolio have been a consistent
feature across the year, with third-party investment driving value uplifts in
MPB and MyTutor, and a sizeable further investment from the Mobeus VCTs doing
the same in the case of Preservica. Whilst the portfolio has limited exposure
to more challenging sectors such as hospitality and overseas travel, software
and other technology-enabled businesses have performed strongly. A small
number of companies have struggled, though they are in the minority and their
impact on overall shareholder return is minimal. Furthermore, some of these
companies, such as Media Business Insight and RDL, have fundamentally
re-engineered their businesses, which should provide a more positive outlook.
It is worth noting that Virgin Wines and Preservica currently account for a
significant proportion of the invested portfolio's value (33.3% of the
portfolio value, 23.6% of net assets), whilst 15.7% of the portfolio now held
in AIM-listed investments (which equates to 11.1% of net assets). The AIM
market has witnessed some volatility over the Company's financial year, with
market sentiment reducing the initial value uplifts of the IPOs of Virgin
Wines and Parsley Box in March. Whilst Virgin Wines had recovered its value by
the year-end, Parsley Box was further impacted by its announcements of tougher
trading conditions, supply constraints and further fundraising. In line with
market practice, in both cases the Company's shareholdings are subject to
lock-in arrangements for a period post-flotation.
Strong trading activity levels have created investment opportunities for the
Company as portfolio companies sought to enhance their positions by building
capability in light of demand. A number of further investments were therefore
made into the portfolio during the year. Gresham House continues to review the
opportunities for follow-on investments. M&A sentiment also remained
buoyant with a continuing stream of attractive realisations throughout the
period. The outlook for both follow-on investment and realisations continues
to be positive.
The Company made investments totalling £7.54 million (2020: £5.43 million),
comprising £3.15 million (2020: £1.86 million) into four new investments and
£4.39 million (2020: £3.57 million) into eight existing investments. This
level of new and follow-on investment is pleasing given the continued
uncertainty and lockdown restrictions during the year under review.
A strong track record for the growth investments is now emerging which
validates the strategic change arising from the change in VCT rules in 2015.
Overall, it is reassuring to see that the more traditional investments, as
well as the new growth investments, are continuing to make good progress.
Portfolio review
The portfolio's movements and valuation changes in the year are summarised
below:
Investment Portfolio Capital Movement 2021 2020
£m £m
Increase in the value of unrealised investments 32.82 15.54
Decrease in the value of unrealised investments (1.91) (5.07)
Net increase in the value of unrealised investments 30.91 10.47
Realised gains 5.53 4.63
Realised losses (0.08) (0.29)
Net realised gains in the year 5.45 4.34
Net investment portfolio capital movement in the year 36.36 14.81
2021 2020
£m £m
Opening portfolio value 51.14 51.70
New and further investments 7.54 5.43
Disposal proceeds (15.23) (20.80)
Net realised gains 5.45 4.34
Valuation movements 30.91 10.47
Portfolio value at 31 December 79.81 51.14
New investments during the year
The Company made four new investments totalling £3.15 million during the
year, as detailed below:
Company Business Date of Investment Amount of new investment (£m)
Vivacity Artificial intelligence & urban traffic control system February 2021 1.16
Vivacity (vivacitylabs.com) develops camera sensors with on-board video
analytics software that enables real-time anonymised data gathering of road
transport system usage. It offers city transport authorities the ability to
manage their road infrastructure more effectively, enabling more efficient
monitoring of congestion and pollution levels as well as planning for other
issues, such as the changing nature of road usage (e.g. the increasing number
of cyclists). The technology and software represent a significant leap forward
for local planning authorities which have traditionally relied upon manual
data collection methods. The growth capital funding will allow the management
team to achieve deeper penetration of the UK transport management sector,
explore opportunities internationally and commercialise its new Smart Junction
offering. Revenues have grown 350% over the last three years and it has
exceeded its most recent year's budget despite the onset of the COVID-19
pandemic. In April 2021, Vivacity won the Queen's Award for Enterprise:
Innovation 2021.
Caledonian Leisure UK leisure and experience breaks March-May 2021 0.41
Caledonian Leisure works with accommodation providers, coach businesses and
other experienced providers (such as entertainment destinations and theme
parks) to deliver UK-based leisure and experience breaks to its customers. It
comprises two brands, Caledonian Travel (caledoniantravel.com) and UK
Breakaways (ukbreakaways.com). The domestic leisure and experience travel
market has been devastated by the COVID-19 pandemic, but the company is
well-placed to expand as lockdown and travel restrictions are eased. A series
of planned investment tranches, has helped the company prepare for and
capitalise on the strong demand for UK staycation holidays.
Legatics SaaS LegalTech software business June 2021 0.82
Legatics (legatics.com) transforms legal transactions by enabling deal teams
to collaborate and close deals in an interactive online environment. Designed
by lawyers to improve legacy working methods and solve practical transactional
issues, the legal transaction management platform increases collaboration,
efficiency and transparency. As a result, Legatics has been used by around
1,500 companies, and has been procured by more than half of the top global
banking and finance law firms, with collaborations having been hosted in
approximately 50 countries. With this new funding round, Legatics will be
looking to double the size of its team over the next 18 months and further
develop its technology to deliver new features and use cases for a wider range
of practice areas within new and existing customers.
Vet's Klinic Veterinary clinics June 2021 0.76
Pets' Kitchen (trading as Vet's Klinic) is an established and profitable
veterinary clinic providing veterinary services (vetsklinic.co.uk) as well as
a premium pet food provider (vetskitchen.co.uk). Its primary Swindon 'super
clinic' is a first opinion veterinary practice where pet owners can schedule
consultations online and obtain real time feedback on in-patient care through
its own technology platform. Without compromising on quality of care, this
model enables a significantly higher price point compared to the industry
average. This new investment will be used to roll out its unique clinic model
to other sites along the M4 corridor.
Further investments during the year
A total of £4.39 million was invested into eight existing portfolio companies
during the year, as detailed below:
Company Business Date of Investment Amount of further investment (£m)
Parsley Box Ambient ready meals targeting the over 60s January/March 2021 0.35
Parsley Box (parsleybox.com) is a UK direct to consumer supplier of home
delivered, ambient ready meals for the over 60s. Founded in 2017, Parsley Box
has grown rapidly and has developed a unique meal delivery solution for its
customers. The company supplies a diverse range of ambient meals via next day
delivery which are easy to store and contribute to a more independent and
healthier lifestyle. The company has seen a strong benefit from the COVID-19
pandemic with revenues nearly eight times that at the time of the original VCT
investment. This further investment enabled the company to scale its marketing
strategy and to process larger order volumes and continue to build out its
team. Parsley Box's shares were admitted to trading on AIM on 31 March 2021.
As part of the transaction, the Company also partially realised a portion of
its investment, as detailed in the "Loan stock repayments and other
gains/(losses) during the year" section of this report below.
Bleach London Hair colourants brand February 2021 0.14
Bleach London Holdings ("Bleach") (bleachlondon.com) is an established
branded, fast-growing business which manufactures a range of haircare and
colouring products. Bleach has made sound commercial progress since the VCTs
invested in 2019 with its direct-to-consumer channels benefiting from the
COVID-19 pandemic. Revenues have grown over 90% ahead of the previous year.
This further investment, along with strong support from existing investors, is
being used to invest in marketing and infrastructure to enable the business to
accelerate its development in the United States of America.
Arkk Consulting Regulatory and reporting requirement service provider
February 2021 0.62
Arkk Consulting (trading as Arkk Solutions) (arkksolutions.com) provides
services and software to enable organisations to remain compliant with
regulatory reporting requirements. Arkk was established in 2009 and currently
has over 800 clients across 20 countries. These include more than 80 of the
FTSE 350, and half of the largest 20 accountancy firms in the UK. This further
investment is to enable continued development of its software in order to
capitalise on HMRC's 'Making Tax Digital' campaign. The company has
incorporated artificial intelligence into its product and recurring revenues
are now over 50% higher than at the point of the original investment in May
2019.
Tapas Revolution Spanish restaurant chain June 2021 0.21
Spanish Restaurant Group (trading as Tapas Revolution) (tapasrevolution.com)
is a leading Spanish restaurant chain in the casual dining sector. At initial
investment in January 2017, it was operating five sites and, subsequent to a
further investment round in March 2018, had grown to 12 sites. Tapas was
trading well and had a strong outlook up until the onset of COVID-19 which
mandated the closure of much of its estate during the course of 2020 in
response to the varying patterns of government restrictions. Costs were
controlled well under the circumstances and this further investment provided
financial headroom whilst the business re-opened its estate.
MyTutor Digital marketplace for online tutoring August 2021 0.82
MyTutorweb (trading as MyTutor) (mytutor.co.uk) 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. This further investment,
alongside other existing shareholders and Australian strategic co-investor,
SEEK, who invested £30 million, aims 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. The company has been chosen
as a Tutoring Partner for the National Tuition Programme where they will
directly support 30,000 students in catching up on lost learning because of
the COVID-19 pandemic.
Andersen EV Provider of premium electric vehicle (EV) chargers September 2021 0.20
Muller EV Limited (trading as Andersen EV) (andersen-ev.com) 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. This follow-on funding is to further support its
premium brand and product positioning whilst ensuring all new and existing
products meet the most recent and highest safety and compliance standards.
Andersen has continued its strong trading performance with revenue up over
300% year on year.
Preservica Seller of proprietary digital archiving software October/ November 2021 1.65
Preservica (preservica.com) is a SaaS software business with blue chip
customers and strong recurring revenues. It 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 business has seen annual
recurring revenues nearly double over the last two financial years.
ActiveNav A provider of enterprise-level file analysis software December 2021 0.40
Data Discovery Solutions, trading as ActiveNav (activenav.com), is a file
analysis software solution which makes it easier for companies to clean up
network drives, respond to new data protection laws and dispose of redundant
and out dated documents. ActiveNav'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. This further funding is to market its nascent Hubble
platform in order to generate further company value.
Portfolio valuation movements
The portfolio generated net unrealised gains of £30.91 million in the year.
The scale of the valuation increases was underpinned by the Company's growth
portfolio, many of which have direct-to-consumer business models which have
grown significantly since the onset of the COVID-19 pandemic. In the first
half of the year, the Company generated significant unrealised gains,
exemplified by the successful flotations of two investments on AIM. Despite
ongoing uncertainties relating to COVID-19, Gresham House believes that the
pandemic has accelerated existing trends in consumer behaviour and, in many
cases, companies have experienced significant growth in demand. Over this
period, some older style MBO portfolio companies with similar business
practices have also benefited. A few companies have struggled in this
environment, but their value has already been reduced to modest levels,
reducing the risk to shareholder value.
Total valuation increases were £32.82 million. The main valuation increases
were:
Preservica £8.21 million
Virgin Wines £6.39 million
MPB Group £3.62 million
Media Business Insight (MBI) £3.42 million
EOTH £3.34 million
Virgin Wines, EOTH (Equip) and MPB Group generated record revenues and
earnings over the lockdown periods and beyond. They have all significantly
increased their customer base and each have strong growth prospects. Strong
trading and recurring revenues at Preservica have attracted third-party
investment interest which has led to a sizeable re-rating. MBI has recovered
very strongly having developed its capability to provide both virtual and
physical events.
Total valuation decreases were £(1.91) million. The main valuation decreases
were:
Parsley Box £(1.39) million
Andersen EV £(0.23) million
Bleach London £(0.20) million
Following a strong IPO in March, the value of Parsley Box subsequently
experienced a significant decline over the year in light of market sentiment
compounded by company announcements of slower than anticipated sales growth
and supply disruption. The business intends to carry out a further fundraising
soon. Andersen EV has been operating in a fast-developing industry beset with
regulatory hurdles that have challenged its progress over the period albeit,
these are now resolved. Bleach has had a challenging period having had to
delay its US launch and having experienced normalised D2C revenues post UK
lockdown. The US launch has now taken place after the Company's year-end.
The majority of the increase in portfolio value lies in the top 10 companies
which represent over 70% of the portfolio by value. Year-on-year growth by
either revenues or earnings has been seen in all of the top ten companies and
it is pleasing to note that eight of these are from the younger, growth
portfolio.
Growth capital investing involves companies which often have not achieved
profitability, and as a result, have to be measured on other metrics. The
table below shows the proportion of the portfolio that is represented by high
growth pre-profit companies (often valued by reference to revenue or gross
profit multiple), compared with more mature, established companies with a
history of profitability and which are therefore valued on an earnings
multiple:
Valuation methodology 2021 2020
£m £m
Revenue multiple 41.28 25.55
Earnings multiple 25.67 23.50
Bid Price 12.52 -
Recent investment price (reviewed for impairment) 0.27 -
Other 0.07 0.50
Recent investment price - 1.59
Total 79.81 51.14
Portfolio Realisations
The Company realised two of its investments during the year, as detailed
below:
Company Business Period of investment Total cash proceeds over the life of the investment / Multiple over cost
Provider of media services and investor conferences January 2018 to
Proactive Group September 2021 £2.38 million
2.6x cost
On 29 September 2021, the Company sold its investment in Proactive Group
Holdings Inc ("Proactive"). The Company received £2.32 million in cash
following the disposal of its equity and loan notes, contributing to a
realised gain over cost over the life of the investment of £1.46 million
(realised loss in the year: £(0.01) million). Total proceeds received over
the nearly four-year life of the investment were £2.38 million, compared to
an original cost of £0.93 million, which is a multiple on cost of 2.6x and an
IRR of 33.0%.
Red Paddle October 2008 to £5.87 million
Design and manufacturer of stand up paddleboards February 2020 4.9x cost
The Company sold its investment in Vian Marketing (trading as Red Paddle) to
the Myers Family Office for £4.91 million (realised gain in the year: £3.19
million). Total proceeds received to date over the six-year life of the
investment were £5.87 million compared to an original investment cost of
£1.19 million, which is a multiple on cost of 4.9x and an IRR of 31.5%.
Further proceeds of £0.53 million were received after the year end.
Loan stock repayments and other gains/(losses)
During the year and following the admission of its shares to AIM, the Company
received £1.59 million from the partial realisation of its holding in Parsley
Box, generating a realised gain of £0.69 million. Over the two years to date
this investment has been held, this partial sale generated a multiple of cost
of 4.0x on the cost of the shares sold. The Company also received £1.62
million from the partial realisation of MPB Group generating a realised gain
of £0.39 million. This partial realisation generated a 7.8x multiple of cost
on the cost of the shares sold and was the result of Vitruvian Partners, a
large private equity investor, taking a sizeable equity investment in the
company. There was a further partial realisation of MyTutor which generated
£0.82 million proceeds for the Company and a realised gain in the year of
£0.45 million.
repayments from Virgin Wines, Media Business Insight, Vian Marketing (trading
as Red Paddle) and MPB Group, generating realised gains totalling £0.46
million. Finally, deferred consideration totalling £0.35 million in realised
gains was received in respect of investments realised in a previous year. A
small realised loss of £(0.07) million was also recognised in respect of
transaction costs for Virgin Wines due to stamp duty paid upon the admission
of the shares to listing on AIM.
Portfolio income and yield
In the year under review, the Company received the following amounts in loan
interest and dividend income:
Investment Portfolio Yield 2021 2020
£m £m
Interest received in the year 1.26 3.03
Dividends received in the year 0.45 1.63
Total portfolio income in the year(1) 1.71 4.66
Portfolio value at 31 December 79.81 51.14
Portfolio Income Yield (Income as a % of Portfolio value at 31 December) 2.1% 9.1%
(1 ) Total portfolio income in the year is generated solely from investee
companies within the portfolio. The fall in interest received is due to a
significant interest receipt of £1.78 million from the realisation of Auction
Technology Group in 2020.
New investment after the year-end
£0.73 million was invested into a new investment after the year-end, as
detailed below:
Company Business Date of investment Amount of new investment (£m)
Proximity Insight 'Super-App' used to inspire and transact with customers February 2022 0.73
Proximity Insight (proximityinsight.com) is a retail technology business that
offers a 'Super-App' that is used by the customer-facing teams of brands and
retailers to engage, inspire and transact with customers. Headquartered in
London with offices in New York and Sydney, Proximity Insight has a global
client base that includes over 20 brands, boutiques and department stores in
fashion, beauty, jewellery, electronics and homewares. These clients use
Proximity Insight's platform to blur the lines between physical and digital
retail, enhancing the customer experience and improving the lifetime value of
their customers by upwards of 35%. The business grew annual recurring revenue
by 117% to £2.2 million in 2021, and the investment will support Proximity
Insight's continued product development and international growth. The
investment was made across all six VCTs advised and managed by Gresham House,
including the two Baronsmead VCTs.
Further investment made after the year-end
The Company made a further investment into an existing portfolio company of
£0.27 million after the year-end, as detailed below:
Company Business Date of investment Amount of further investment (£m)
Caledonian Leisure UK leisure and experience breaks January/February 2022 0.27
Caledonian Leisure works with accommodation providers, coach businesses and
other experienced providers (such as entertainment destinations and theme
parks) to deliver UK-based leisure and experience breaks to its customers. It
comprises two brands, Caledonian Travel (caledoniantravel.com) and UK
Breakaways (ukbreakaways.com). The domestic leisure and experience travel
market has been devastated by the COVID-19 pandemic, but the company is
well-placed to expand as lockdown and travel restrictions are eased. The
business has significantly exceeded planned revenues since launch and this
funding will provide additional working capital to facilitate further growth.
Environmental, Social and Governance considerations
When seeking new investment opportunities, the Investment Adviser under Mobeus
ensured that each potential new investment was subject to a comprehensive due
diligence process encompassing commercial, financial and ESG-related
considerations.
This process helped in the formulation and agreement of strategic objectives
at the stage of business planning and investment. The Investment Adviser has
continued to work closely with each portfolio company board to support them in
addressing their own ESG challenges and opportunities, which are diverse
across the entire portfolio.
Following the novation of the advisory agreement to Gresham House on
30 September 2021, a market leader that is well-resourced with knowledge and
expertise in sustainability, the Investment Advisor has moved to establish ESG
procedures and protocols of the highest standards as set out and informed by
Gresham House plc. The first tangible example of this revised approach is that
that the individual members of the investment team now have their own
individual ESG objectives set which align with the wider ESG goals of the
Investment Adviser.
Gresham House is committed to sustainable investment as an integral part of
its business strategy. During 2021, the Investment Adviser has taken further
steps to formalise its approach to sustainability and has put in place several
processes to ensure environmental, social and governance ("ESG") factors and
stewardship responsibilities are built into asset management across all funds
and strategies, including venture capital trusts.
Gresham House believes the "G" (Governance) of ESG is the most important
factor in its investment processes. Board composition, governance, control,
company culture, alignment of interests, shareholder ownership structure and
remuneration policy are important elements that will feed into the analysis
and the valuation of portfolio companies.
The "E" and "S" (Environmental and Social) will be assessed as risk factors
during due diligence to eliminate companies that face environmental and social
risks that cannot be mitigated through engagement and governance changes.
Where material ESG risks are identified, these will be reviewed by the Adviser
and a decision on how to proceed will be documented. The Adviser will then
proactively follow up with the investee company management team and ensure
appropriate corrective and preventative action is taken and any material
issues or incidents are recorded by the Adviser.
Gresham House published its inaugural Sustainable Investment Report in 2021,
that along with existing asset specific policies, including the Public Equity
Policy, can be found on its website
(www.greshamhouse.com). These reports and policies cover the Investment
Adviser's sustainable investment commitments, how the investment processes
meet these commitments and the application of the sustainable investment
framework. The Gresham House Board and General Management Committee assess
the adherence to the commitments in the Sustainable Investment Policies on an
annual basis.
In a changing world, the Investment Adviser believes that this approach will
contribute towards the enhancement of Shareholder value going forward.
Outlook
The growth strategy implemented in 2015 is clearly bearing fruit with many
companies beginning to achieve significant scale and attract the interest of
public markets and larger secondary investors. The portfolio is in a healthy
position with many companies trading well throughout the lockdowns, and
several at record levels. It continues to evolve, offering a balance of
fast-growing and more stable investments at various stages of maturity and
scale across a range of diverse market sectors. Meanwhile, the new investment
pipeline is recovering to levels seen pre-COVID-19 and the prospects for
capital deployment are encouraging.
The exceptional performance experienced since the impact of COVID-19 in March
2020 is, therefore, likely to moderate over the next 12 months as the level
of activity normalises. Although the threat of further lockdowns to combat
emerging new variants appears to have lessened somewhat, much uncertainty
remains around the wider impact of the pandemic upon the economy, particularly
in respect of supply chain and inflationary issues. The tragic events
currently unfolding in Ukraine have amplified this uncertainty and shocked
financial markets around the world. The Investment Adviser has reviewed the
underlying assets and has concluded that there are no material impacts on the
valuation of the portfolio. Whilst these events have created significant
short-term volatility post year-end, the portfolio is in robust shape and the
investment activity levels are promising. Gresham House therefore remains
optimistic for the future.
Gresham House Asset Management Limited
Investment Adviser
31 March 2022
Investment Portfolio Summary
as at 31 December 2021
Market sector Date of investment Total book cost Valuation Like for like valuation increase/ (decrease) over year(1) % value of net assets % of equity held by funds advised by Gresham House
Investment Portfolio £'000 £'000
Qualifying investments
Unquoted investments
Preservica Limited Software and computer services Dec-15 4,498 14,636 171.7% 13.0% 57.9%
Seller of proprietary digital archiving software
Virgin Wines UK plc(formerly Virgin Wines Holding Company Limited)(2) (AIM Retailers Nov-13 58 11,985 79.2% 10.6% 41.5%
quoted)
Online Wine retailer
MPB Group Limited Retailers Jun-16 1,405 7,395 78.4% 6.5% 14.4%
Online marketplace for used photographic and video equipment
EOTH Limited (trading as Equip Outdoor Technologies) Retailers Oct-11 1,000 6,289 124.1% 5.6% 8.0%
Branded outdoor equipment and clothing (Rab and Lowe Alpine)
My TutorWeb Limited (trading as MyTutor) Industrial support services May-17 2,892 5,885 102.5% 5.2% 22.6%
Digital marketplace connecting school pupils seeking one-to-one online
tutoring
End Ordinary Group Limited (trading as Buster and Punch) Retailers Mar-17 1,885 4,162 24.9% 3.7% 34.6%
Industrial inspired lighting and interiors retailer
Media Business Insight Holdings Limited Media Jan-15 2,518 4,091 550.0% 3.6% 67.5%
A publishing and events business focused on the creative production industries
Master Removers Group 2019 Limited (trading as Anthony Ward Thomas, Industrial support services Dec-14 419 3,602 187.2% 3.2% 28.0%
Bishopsgate and Aussie Man & Van)
A specialist logistics, storage and removals business
Data Discovery Solutions Limited (trading as ActiveNav) Software and computer services Nov-19 1,809 3,370 5.2% 3.0% 35.1%
Provider of global market leading file analysis software for information
governance, security and compliance
Arkk Consulting Limited (trading as Arkk Solutions) Software and computer services May-19 2,069 2,174 1.9% 1.9% 30.1%
Provider of services and software to enable organisations to remain compliant
with regulatory reporting requirements
Manufacturing Services Investment Limited (trading as Wetsuit Outlet) Retailers Jul-17 2,174 2,171 26.3% 1.9% 27.5%
Online retailer in the water sports market
Tharstern Group Limited Software and computer services Jul-14 1,377 1,519 16.1% 1.3% 55.0%
Software based management information systems
Connect Childcare Group Limited Software and computer services Dec-20 1,168 1,373 17.5% 1.2% 14.4%
Nursery management software provider
Vivacity Labs Limited Technology, hardware & equipment Feb-21 1,158 1,158 New investment 1.0% 20.0%
Provider of artificial intelligence & urban traffic control systems
Bleach London Holdings Limited Retailers Dec-19 816 1,026 (18.2)% 0.9% 14.1%
Hair colourants brand
Rota Geek Limited Software and computer services Aug-18 1,142 1,001 5.4% 0.9% 20.3%
Workforce management software
IPV Limited Software and computer services Nov-19 890 890 - 0.8% 26.6%
Provider of media asset software
Spanish Restaurant Group Limited (trading as Tapas Revolution) Travel & leisure Jan-17 1,453 882 305.9% 0.8% 29.0%
Spanish restaurant chain
Caledonian Leisure Limited Travel & leisure Mar-21 409 865 New investment 0.8% 30.0%
Provider of UK leisure and experience breaks
Legatics Holdings Limited Software and computer services Jun-21 822 822 New investment 0.7% 27.3%
SaaS LegalTech software provider
Pets' Kitchen Limited (trading as Vet's Klinic) Consumer services Jun-21 763 763 New investment 0.7% 20.0%
Veterinary clinics
Northern Bloc Ice Cream Limited Food producers Dec-20 420 689 64.0% 0.6% 27.3%
Supplier of premium vegan ice cream
Parsley Box Group plc (formerly Parsley Box Limited) (3) (AIM quoted) Retailers May-19 806 534 (28.2)% 0.5% 13.9%
Supplier of home delivered ambient ready meals targeting the over 60s
CGI Creative Graphics International Limited General industrials Jun-14 1,808 495 1.7% 0.4% 26.9%
Vinyl graphics to global automotive, recreational vehicle and aerospace
markets
RDL Corporation Limited Industrial support services Oct-10 1,558 495 109.9% 0.4% 44.5%
Recruitment consultant for the pharmaceutical, business intelligence and IT
industries
Muller EV Limited (trading as Andersen EV) Technology, hardware & equipment Jun-20 472 270 (77.6)% 0.2% 37.0%
Provider of premium electric vehicle (EV) chargers
Kudos Innovations Limited Software and computer services Nov-18 421 105 (46.2)% 0.1% 10.9%
Online platform that provides and promotes academic research dissemination
Jablite Holdings Limited (in members' voluntary liquidation) Construction and materials Apr-15 502 66 - 0.1% 40.1%
Manufacturer of expanded polystyrene products
Veritek Global Holdings Limited Industrial support services Jul-13 2,045 - - 0.0% 65.6%
Maintenance of imaging equipment
Racoon International Group Limited Personal goods Dec-06 1,213 - - 0.0% 36.0%
Supplier of hair extensions, hair care products and training
BookingTek Limited Software and computer services Oct-16 688 - - 0.0% 14.9%
Direct booking software for hotels
Oakheath Limited (in members' voluntary liquidation) Industrial support services Mar-18 580 - - 0.0% 18.7%
Online platform that connects people seeking care home from experienced
independent carers
Total qualifying investments 41,238 78,713 69.6%(4)
Non-qualifying investments
Manufacturing Services Investment Limited (trading as Wetsuit Outlet) Retailers Jul-17 571 571 - 0.5% 27.5%
Online retailer in the water sports market
EOTH Limited (trading as Equip Outdoor Technologies) Retailers Oct-11 298 324 - 0.3% 8.0%
Branded outdoor equipment and clothing (Rab and Lowe Alpine)
Media Business Insight Limited Media Jan-15 200 200 - 0.2% 67.5%
A publishing and events business focused on the creative production industries
Total non-qualifying investments 1,069 1,095 1.0%
Total investment portfolio 42,307 79,808 70.6%
Current asset investments and cash at bank(5) 32,967 32,967 29.2%
Total investments 75,274 112,775 99.8%
Other assets 433 0.4%
Current liabilities (248) (0.2)%
Net assets 112,960 100.0%
Portfolio split by type
Investment made prior to 2015 VCT rule change 12,996 29,066 36.4%
Investment made after 2015 VCT rule change 29,311 50,742 63.6%
Total investment portfolio 42,307 79,808 100.0%
1 - This percentage change in 'like for like' valuations is a comparison of
the 31 December 2021 valuations with the 31 December 2020 valuations (or where
a new investment has been made in the year, the investment amount), having
adjusted for any partial disposals, loan stock repayments or new investments
in the year.
2 - Admitted to AIM during the year. Ahead of the Admission to AIM of Virgin
Wines on 2 March 2021, the Company's equity investment in Virgin Wines Holding
Company Ltd ("VWHCL") had been exchanged for an equity investment in Rapunzel
Newco Ltd ("RNL"), a company owned by the four Mobeus VCTs pro rata to each
VCT's share of its investment in Virgin Wines. Immediately prior to Admission,
RNL exchanged its equity investment in VWHCL for an equity investment in
Virgin Wines UK plc ("VWUK"). The Company is beneficially interested in VWUK,
through its holding in RNL. RNL is the legal owner of the shares in VWUK, but
each VCT is the beneficial holder. As part of Virgin Wines' admission to AIM,
the Company received repayment of its loan stock generating proceeds of £2.38
million.
3 - Admitted to AIM during the year. On 7 January 2021, a £0.33 million
follow-on investment was made into Parsley Box Limited. The enlarged
shareholding was admitted to AIM on 31 March 2021. Ahead of the admission to
AIM, the Company's equity investment in Parsley Box Limited had been exchanged
for an equity investment in Parsley Box Group plc. Upon admission to AIM, the
Company invested a further £0.01 million and realised proceeds of £1.59
million.
4 - At 31 December 2021, the Company held more than 80% of its total
investments in qualifying holdings, and therefore complied with the VCT
qualifying investment test. For the purposes of the VCT qualifying investment
test, the Company is permitted to disregard disposals of investments for
twelve months from the date of disposal. It also has up to three years to
bring in new funds raised, before these need to be included in the qualifying
investment test.
5 - Disclosed as Current asset investments and Cash at bank within Current
assets in the Balance sheet below.
PRINCIPAL RISKS
The Directors acknowledge the Board's responsibilities for the Company's
internal control systems and have instigated systems and procedures for
identifying, evaluating and managing the significant and emerging risks faced
by the Company. The Board's risk appetite is cognitive of the risks and
rewards of investing in small unquoted companies. A key risk management review
and robust assessment of the risks takes place at each quarterly Board meeting
and the Board discusses emerging risks as and when they arise, such as the
COVID-19 pandemic, and puts in place mitigating actions to manage the risk.
The principal and emerging 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:
Risk Possible consequence How the Board manages risk
Economic Events such as the war in Ukraine, COVID-19 pandemic, Brexit, an economic · The Board monitors
recession, supply shortages or a movement in sterling or in interest rates,
could affect trading conditions for smaller companies and consequently the (1) the portfolio as a whole to ensure that the Company invests as far
value of the Company's qualifying investments. as possible in a diversified portfolio of companies;
Movements in UK Stock Market indices may affect the valuation of the Company's (2) developments in the macro-economic environment such as movements in
investments, as well as affecting the Company's own share price and its interest rates and availability of labour under new immigration plans; and
discount to net asset value.
(3) the Company's cash position ensuring it can be flexible in light of
economic impacts.
Loss of approval as a Venture Capital Trust A breach of the VCT Rules, which change on a frequent basis, may lead to the · The Company's VCT qualifying status is regularly reviewed by the Board
Company losing its approval as a VCT, which would inter alia result in: and the Investment Adviser.
(1) qualifying Shareholders who have not held their shares for · The Board receives regular reports from its VCT Status Adviser who has
the designated period having to repay the income tax relief they obtained; been retained by the Board to monitor the Company's ongoing compliance with
the VCT Rules.
(2) future dividends paid by the Company being subject to tax;
and
(3) the Company losing its exemption from corporation tax on
capital gains.
Investment and strategic Investment in unquoted small companies involves a higher degree of risk than · The Board regularly reviews the Company's Objective and Investment
investment in fully listed companies. Smaller companies often have limited Policy.
product lines, markets or financial resources and may be dependent for their
management on a smaller number of key individuals. · Investments are made across a number of diverse sectors to mitigate
risk. Investee companies are carefully selected by the Investment Adviser for
recommendation to the Board. The investment portfolio is reviewed by the Board
on a regular basis.
· A member of the Investment Adviser normally sits on the investee
company board. Support has been provided to the portfolio companies throughout
the COVID-19 pandemic and is ongoing.
Regulatory The Company is required to meet its legal and regulatory obligations as a VCT, · Regulatory and legislative developments are kept under review by the
a listed company and its own AIFM. Failure to comply might result in Company's solicitors, its VCT Status Adviser and the Board.
suspension of the Company's Stock Exchange listing, financial penalties, a
qualified audit report or loss of its VCT status.
Financial and operating Failure of the systems (including breaches of cyber security) at any of the · The Board carries out a bi-annual review of the internal controls in
third-party service providers that the Company has contracted with could lead place and reviews the risks facing the Company at Board meetings and receives
to inaccurate reporting or monitoring. Inadequate controls could lead to the control reports by exception.
misappropriation or insecurity of assets. Outsourcing and the increase in
remote working could give rise to cyber and data security risk and internal · It reviews the performance of the service providers annually and has
control risk. obtained assurance that such providers have controls in place to reduce the
risk of breaches of their cyber security.
Valuations and stock market The majority of the Company's assets are minority holdings in unquoted · The Board receives quarterly valuation reports from the Investment
companies, which are inherently difficult to value. Changes in valuations are Adviser and, where necessary, challenges its valuation process and metrics.
taken to Profit and Loss account, so any inaccuracy in valuations will affect
both the Income Statement and the Balance Sheet. · The Investment Adviser alerts the Board about any adverse movements.
Asset liquidity The Company's unquoted investments cannot be realised in a short timescale. · The Board receives quarterly valuation reports from the Investment
Under-performing unquoted investments may be difficult to realise on any Adviser and, where necessary, challenges its valuation process and metrics.
timescale.
Market liquidity As a result of the limited secondary market in VCT shares, Shareholders may · The Board has a share buyback policy which seeks to mitigate market
find it difficult to sell their shares at a price which is close to the net liquidity risk. This policy is reviewed at each quarterly Board meeting.
asset value. Whilst demand has always been met to date, it may not be possible
for the Company to buy back large percentages of the share capital, other than
over several years.
Counterparty A counterparty may fail to discharge an obligation or commitment that it has · The Board regularly reviews and agrees policies for managing these
entered into with the Company. risks. Further details can be found under 'credit risk' in Note 15 to the
Financial Statements.
Key staff A partner or key member of staff at the Investment Adviser may leave the · The Board maintains regular dialogue with the Investment Adviser to
organisation or the Investment Adviser may fail to maintain adequate levels of ensure that the team is adequately resourced.
experience and expertise in its team. This may have an adverse effect on the
standard of service that the Company receives from the Investment Adviser and
therefore the performance of the Company.
Environmental, Social and Governance Emerging Risk Non-compliance with current and future reporting requirements could lead to a · ESG and climate change is taken into account when considering new
fall in demand from investors. That may affect the level of capital the investment proposals. The Investment Adviser monitors the potential impact on
Company has available to meet its investment objectives. investee companies of any proposed new legislation regarding environmental,
social and governance matters and advises and adapts accordingly.
· The Board recognises that climate change is an important emerging
risk which the Company is taking into account in their strategic planning
although the Company itself has little direct impact on environmental issues.
Measures have been introduced to reduce the cost and environmental impact of
providing paper copies of Shareholder correspondence and to decrease the
amount of travel undertaken.
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; and
● 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 Financial Statements are published on the Company's website at
www.migvct.co.uk, which is maintained by the Investment Adviser. The
maintenance and integrity of the website maintained by the Investment Adviser
is, so far as it relates to the Company, the responsibility of the Investment
Adviser. The work carried out by the Auditors does not involve consideration
of the maintenance and integrity of this website and, accordingly, the Auditor
accepts no responsibility for any changes that have occurred to the accounts
since they were initially presented to the website. The accounts are
prepared in accordance with UK legislation, which may differ from legislation
in other jurisdictions.
Directors' responsibilities pursuant to Disclosure and Transparency Rule 4 of
the UK Listing Authority
The Directors confirm to the best of their knowledge that:
a) The Financial Statements, which have been prepared in accordance with
United Kingdom Generally Accepted Accounting Practice give a true and fair
view of the assets, liabilities, financial position and the profit of the
Company.
b) the Annual Report includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces.
Having taken advice from the Audit Committee, the Board considers the Annual
Report and Financial Statements, taken as a whole, is fair, balanced and
understandable and that it provides the information necessary for Shareholders
to assess the Company's position, 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
Clive Boothman
Chairman
31 March 2022
FINANCIAL STATEMENTS
Income Statement
Year ended 31 December 2021 Year ended 31 December 2020
Notes Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Net investment portfolio gains 8 - 36,360,661 36,360,661 - 14,811,634 14,811,634
Income 3 1,710,712 - 1,710,712 4,754,700 - 4,754,700
Investment Adviser's fees 4a (525,873) (1,577,618) (2,103,491) (423,839) (1,271,516) (1,695,355)
Other expenses 4c (455,452) - (455,452) (424,396) - (424,396)
Profit on ordinary activities before taxation 729,387 34,783,043 35,512,430 3,906,465 13,540,118 17,446,583
Taxation on profit on ordinary activities 5 (53,768) 53,768 - (432,618) 241,588 (191,030)
Profit for the year and total comprehensive income 675,619 34,836,811 35,512,430 3,473,847 13,781,706 17,255,553
Basic and diluted earnings per ordinary share 7 0.54p 27.67p 28.21p 2.76p 10.97p 13.73p
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 April 2021) 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 31 December 2021 Company No.
5153931
31 December 2021 31 December 2020
Notes £ £
Fixed assets
Investments at fair value 8 79,807,671 51,144,184
Current assets
Debtors and prepayments 433,761 517,277
Current asset investments 9 24,362,614 30,371,198
Cash at bank and in hand 9 8,604,505 3,120,539
33,400,880 34,009,014
Creditors: amounts falling due within one year (248,076) (464,682)
Net current assets 33,152,804 33,544,332
Net assets 112,960,475 84,688,516
Capital and reserves
Called up share capital 10 1,250,775 1,263,366
Capital redemption reserve 38,127 25,536
Share premium reserve 14,397,509 14,397,509
Revaluation reserve 39,729,600 12,498,006
Special distributable reserve 18,967,400 27,415,880
Realised capital reserve 36,056,813 26,927,746
Revenue reserve 2,520,251 2,160,473
Equity shareholders' funds 112,960,475 84,688,516
Basic and diluted net asset value per ordinary share 11 90.31p 67.03p
The notes below form part of these Financial Statements.
The Financial Statements were approved and authorised for issue by the Board
of Directors on 31 March 2022 and were signed on its behalf by Clive Boothman,
Chairman.
Statement of Changes in Equity for the year ended 31 December 2021
Non-distributable reserves Distributable reserves
Called up Capital Share Revaluation Special Realised Revenue Total
share redemption premium reserve distributable capital reserve
Notes capital reserve reserve reserve reserve
(Note a) (Note b) (Note b)
£ £ £ £ £ £ £ £
At 1 January 2021 1,263,366 25,536 14,397,509 12,498,006 27,415,880 26,927,746 2,160,473 84,688,516
Comprehensive income for the year
Profit for the year - - - 30,913,086 - 3,923,725 675,619 35,512,430
Total comprehensive income for the year - - - 30,913,086 - 3,923,725 675,619 35,512,430
Contributions by and distributions to owners
Shares bought back (Note c) 10 (12,591) 12,591 - - (923,642) - - (923,642)
Dividends paid 6 - - - - (6,000,988) - (315,841) (6,316,829)
Total contributions by and distributions to owners (12,591) 12,591 - - (6,924,630) - (315,841) (7,240,471)
Other movements
Realised losses transferred to special reserve (Note a) - - - - (1,523,850) 1,523,850 - -
Realisation of previously unrealised appreciation - - - (3,681,492) - 3,681,492 - -
Total other movements - - - (3,681,492) (1,523,850) 5,205,342 - -
At 31 December 2021 1,250,775 38,127 14,397,509 39,729,600 18,967,400 36,056,813 2,520,251 112,960,475
Note a: The purpose of this reserve is to fund market purchases of the
Company's own shares, to write off existing and future losses and for any
other corporate purpose. The transfer of £1,523,850 to the special reserve
from the realised capital reserve above is the total of realised losses
incurred by the Company in the year. As at 31 December 2021, the Company has
a special reserve of £18,967,400, £11,154,495 of which arises from shares
issued more than three years ago. Reserves originating from share issues are
not distributable under VCT rules if they arise from share issues that are
within three years of the end of an accounting period in which shares were
issued.
Note b: The realised capital reserve and the revenue reserve together comprise
the Profit and Loss Account of the Company shown on the Balance Sheet.
Note c: During the year, the Company purchased 1,259,139 of its own shares at
the prevailing market price for a total cost of £923,642, which were
subsequently cancelled. This differs to the figure shown in the Cash Flow
Statement by £44,113 which was a creditor at the previous year-end.
Statement of Changes in Equity for the year ended 31 December 2020
Non-distributable reserves Distributable reserves
Called up Capital Share Revaluation Special Realised Revenue Total
share redemption premium reserve distributable capital reserve
For the year ended 31 December 2020 capital reserve reserve reserve reserve
£ £ £ £ £ £ £ £
At 1 January 2020 1,045,265 11,304 - 8,719,606 45,731,919 14,528,747 1,851,534 71,888,375
Comprehensive income for the year
Profit for the year - - - 10,471,413 - 3,310,293 3,473,847 17,255,553
Total comprehensive income for the year - - - 10,471,413 - 3,310,293 3,473,847 17,255,553
Contributions by and distributions to owners
Shares issued under Offer for Subscription 232,333 - 14,767,667 - - - - 15,000,000
Issue costs and facilitation fees on Offer for Subscription - - (370,158) - (152,153) - - (522,311)
Shares bought back (14,232) 14,232 - - (756,637) - - (756,637)
Dividends paid - - - - (15,011,556) - (3,164,908) (18,176,464)
Total contributions by and distributions to owners 218,101 14,232 14,397,509 - (15,920,346) - (3,164,908) (4,455,412)
Other movements
Realised losses transferred to special reserve - - - - (2,395,693) 2,395,693 - -
Realisation of previously unrealised appreciation - - - (6,693,013) - 6,693,013 - -
Total other movements - - - (6,693,013) (2,395,693) 9,088,706 - -
At 31 December 2020 1,263,366 25,536 14,397,509 12,498,006 27,415,880 26,927,746 2,160,473 84,688,516
The composition of each of these reserves is explained below:
Called up share capital - The nominal value of shares originally issued,
increased for subsequent share issues either via an Offer for Subscription or
reduced due to shares bought back by the Company.
Capital redemption reserve - The nominal value of shares bought back and
cancelled is held in this reserve, so that the Company's capital is
maintained.
Share premium reserve - This reserve contains the excess of gross proceeds
less issue costs over the nominal value of shares allotted under recent Offers
for Subscription.
Revaluation reserve - Increases and decreases in the valuation of investments
held at the year-end are accounted for in this reserve, except to the extent
that the diminution is deemed permanent.
In accordance with stating all investments at fair value through profit and
loss (as recorded in Note 8), all such movements through both revaluation and
realised capital reserves are shown within the Income Statement for the year.
Special distributable reserve - This reserve is created from cancellations of
the balances upon the Share premium reserve, which are transferred to this
reserve from time to time. The cost of share buybacks and any realised losses
on the sale or impairment of investments (excluding transaction costs) are
charged to this reserve. 75% of the Investment Adviser fee expense, and the
related tax effect, that are charged to the realised capital reserve are
transferred to this reserve. This reserve will also be charged any IFA
facilitation payments to financial advisers, which arose as part of the Offer
for Subscription.
Realised capital reserve - The following are accounted for in this reserve:
- Gains and losses on realisation of investments;
- Permanent diminution in value of investments;
- Transaction costs incurred in the acquisition and disposal of investments;
- 75% of the Investment Adviser fee expense and 100% of any performance 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, as well as 25% of the Investment Adviser fee together
with the related tax effect, as well as income dividends paid that are
classified as revenue in nature.
Statement of Cash Flows for the year ended 31 December 2021
Year ended Year ended
31 December 2021 31 December 2020
Notes £ £
Cash flows from operating activities
Profit after tax for the financial year 35,512,430 17,255,553
Adjustments for:
Net investment portfolio gains (36,360,661) (14,811,634)
Tax charge for current year 5 - 191,030
Decrease/(increase) in debtors 83,516 (291,749)
Increase in creditors 18,678 75,198
Net cash (outflow)/inflow from operations (746,037) 2,418,398
Corporation tax paid (191,171) (61,716)
Net cash (outflow)/inflow from operating activities (937,208) 2,356,682
Cash flows from investing activities
Acquisitions of investments 8 (7,541,213) (5,433,357)
Disposals of investments 8 15,238,387 20,803,968
Decrease in bank deposits with a maturity over three months 256 384
Net cash inflow from investing activities 7,697,430 15,370,995
Cash flows from financing activities
Shares issued as part of Offer for subscription - 15,000,000
Issue costs and facilitation fees as part of Offer for subscription - (522,311)
Equity dividends paid 6 (6,316,829) (18,176,464)
Share capital bought back 10 (967,755) (712,523)
Net cash outflow from financing activities (7,284,584) (4,411,298)
Net (decrease)/increase in cash and cash equivalents (524,362) 13,316,379
Cash and cash equivalents at start of year 32,486,439 19,170,060
Cash and cash equivalents at end of year 31,962,077 32,486,439
Cash and cash equivalents comprise:
Cash equivalents 9 23,357,572 29,365,900
Cash at bank and in hand 9 8,604,505 3,120,539
The notes below form part of these Financial Statements.
Notes to the Financial Statements for the year ended 31 December 2021
1 Company information
Mobeus Income and Growth VCT plc is a public limited company incorporated in
England, registration number 5153931. The registered office is 5 New Street
Square, London, EC4A 3TW.
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 at the top of each relevant note.
These Financial statements have been prepared in accordance with applicable
United Kingdom accounting standards, including Financial Reporting Standard
102 ("FRS102"), with the Companies Act 2006 and the 2014 Statement of
Recommended practice, 'Financial Statements of Investment Trust Companies and
Venture Capital Trusts' ('the SORP') (updated in April 2021) 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 15 of the
Annual Report.
After performing the necessary enquiries, the Directors have undertaken an
assessment of the Company's ability to meet its liabilities as they fall due.
The Company has significant cash and liquid resources and no external debt or
capital commitments. The Company's cash flow forecasts, which consider levels
of anticipated new and follow on investment, the net funds raised as part of
the Company's 2021/22 Offer for Subscription, as well as investment income and
annual running cost projections, are discussed at each quarterly Board meeting
and, in particular, have been considered in light of the ongoing impact of the
COVID-19 pandemic. The Directors have also received assurances that the
Company's key suppliers' abilities to continue to service the Company have not
been materially impacted by the COVID-19 pandemic. Following this assessment,
the Directors have a reasonable expectation that the Company will have
adequate resources to continue to meet its liabilities for at least 12 months
from the date of these Financial Statements. The Directors therefore consider
the preparation of these Financial Statements on a going concern basis to be
appropriate.
3 Income
Dividends receivable on quoted equity shares are brought into account on the
ex-dividend date. Dividends receivable on unquoted equity shares are brought
into account when the Company's right to receive payment is established and
there is no reasonable doubt that payment will be received.
Interest income on loan stock is accrued on a daily basis. Provision is made
against this income where recovery is doubtful or where it will not be
received in the foreseeable future. Where the loan stocks only require
interest or a redemption premium to be paid on redemption, the interest and
redemption premium is recognised as income or capital as appropriate once
redemption is reasonably certain. When a redemption premium is designed to
protect the value of the instrument holder's investment rather than reflect a
commercial rate of revenue return the redemption premium is recognised as
capital. The treatment of redemption premiums is analysed to consider if they
are revenue or capital in nature on a company by company basis. Accordingly,
the redemption premium recognised in the year ended 31 December 2021 has been
classified as capital and has been included within gains on investments.
2021 2020
£ £
Income from bank deposits 4,755 14,334
Income from investments
- from equities 446,397 1,628,784
- from OEIC funds 2,664 70,175
- from loan stock 1,256,891 2,967,870
- from interest on preference share dividend arrears - 64,840
1,705,952 4,731,669
Other income 5 8,697
Total income 1,710,712 4,754,700
Total income comprises
Dividends 449,061 1,698,959
Interest 1,261,646 3,047,044
Other income 5 8,697
1,710,712 4,754,700
Total loan stock interest due but not recognised in the year was £639,625
(2020: £979,270). The decrease is due to the removal of a number of company
provisions that were considered appropriate in the previous year due in light
of the COVID-19 pandemic.
4 Investment Adviser's fees and performance fees
All expenses are accounted for on an accruals basis.
25% of the Investment Adviser's fee is 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 and performance fees
Revenue Capital Total Revenue Capital Total
2021 2021 2021 2020 2020 2020
£ £ £ £ £ £
Gresham House Asset Management Limited¹
Investment Adviser's fees 525,873 1,577,618 2,103,491 423,839 1,271,516 1,695,355
¹ On 30 September 2021, Mobeus sold its VCT fund and Investment management
business to Gresham House. As a result, the Company's Investment advisory
arrangements have been novated from Mobeus to Gresham House. The entire core
management, investment and operational teams involved with the Company all
transferred to Gresham House in connection with this transaction.
Under the terms of a revised investment management agreement dated 20 May
2010, Mobeus (from 1 October 2021, Gresham House) provides investment
advisory, administrative and company secretarial services to the Company, for
a fee of 2% per annum of closing net assets, paid in advance, calculated on a
quarterly basis by reference to the net assets at the end of the preceding
quarter, plus a fixed fee of £134,168 per annum, the latter inclusive of VAT
and subject to annual increases in RPI. In 2013, Mobeus agreed to waive such
further increases due to indexation, until otherwise agreed with the Board.
The Investment Adviser's fee includes provision for a cap on expenses
excluding irrecoverable VAT and exceptional items set at 3.6% of closing net
assets at the year-end. In accordance with the Investment Management
Agreement, any excess expenses are borne by the Investment Adviser. The excess
expenses during the year amounted to £nil (2020: £nil).
In line with common practice, Gresham House retains the right to charge
arrangement and syndication fees and directors' or monitoring fees to
companies in which the Company invests. The Investment Adviser received fees
totalling £430,390 during the year ended 31 December 2021 (2020: £415,064),
being £161,076 (2020: £144,530) for arrangement fees and £269,314 (2020:
£270,534) for acting as non-executive directors on a number of investee
company boards. These fees attributable to the Company are proportionate to
the investment allocation applicable to the Company which applied at the time
of each investment. These figures are not part of these financial statements.
Incentive agreement
Under the Incentive Agreement dated 9 July 2004, and a variation of this
agreement dated 20 May 2010, the Investment Adviser is entitled to receive an
annual performance-related incentive fee of 20% of the dividends paid in a
year in excess of a "Target Rate" comprising firstly, an annual dividend paid
in a year target which started at 6.00 pence per share on launch (indexed each
year for RPI) and secondly a requirement that any shortfall of cumulative
dividends paid in each year beneath the cumulative annual dividend target is
carried forward and added to the Target Rate for the next accounting period.
Any excess of cumulative dividends paid above the cumulative annual dividend
target is not carried forward, whether an incentive fee is payable for that
year or not. Payment of a fee is also conditional upon the daily weighted
average Net Asset Value ("NAV") per share throughout such year equalling or
exceeding the daily weighted average Base NAV per share throughout the same
year.
At 31 December 2021, the annual dividend target is 8.72 pence per share and as
cumulative dividends paid were 5.00 pence, this target was not met. Also, the
average NAV per share was 78.06 pence for the year, which was less than the
average base NAV per share for the year of 87.81 pence. Accordingly, no
performance incentive fee is payable for the year.
b) Offer for Subscription fees
2021 2020
£m £m
Gross funds raised by the Company - 15.00
Offer costs payable to Mobeus at 3.00% of gross funds raised by the Company - 0.45
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 (for 2020 only)
totalled £1.74 million across all four VCTs, out of which all the costs
associated with the allotment were met.
c) Other expenses
Other 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.
2021 2020
£ £
Directors' remuneration (including NIC of £6,830 (2020: £6,852)) - Note a) 111,830 111,852
IFA trail commission 111,674 98,888
Broker's fees 14,400 3,600
Auditor's fees - Audit of Company (excluding VAT) 31,069 30,084
- audit related 7,073 6,868
assurance services - Note b) (excluding VAT)
Registrar's fees 32,692 44,356
Printing 60,224 61,709
Legal & professional fees 16,794 6,654
VCT monitoring fees 9,000 9,000
Directors' insurance 8,975 6,225
Listing and regulatory fees 32,260 32,628
Sundry 19,461 9,200
Running costs 455,452 421,064
Provision against loan interest receivable (Note c) - 3,332
Other expenses 455,452 424,396
Notes:
a) Directors' remuneration is a related party transaction, see
analysis of Directors' fees payable and their interests in the shares of the
company in the Directors' Remuneration Report within the Annual Report, which
excludes the NIC above. The key management personnel are the three
non-executive Directors. The Company has no employees. There were no amounts
outstanding and due to the Directors at 31 December 2021 (2020: £nil).
b) The audit-related assurance services are in relation to a limited
scope engagement in respect of the Financial Statements within the Company's
Interim Report. The Audit Committee reviews the nature and extent of these
services to ensure that auditor independence is maintained.
c) Provision against loan interest receivable above relates to an
amount of £nil (2020: £3,332), being a provision made against loan stock
interest regarded as collectable in previous years.
5 Taxation on profit on ordinary activities
The tax expense for the year comprises current tax and is recognised in profit
or loss. The current income tax charge is calculated on the basis of tax rates
and laws that have been enacted or substantively enacted by the reporting
date.
Any tax relief obtained in respect of adviser fees allocated to capital is
reflected in the realised capital reserve 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.
Tax relief relating to Investment Adviser fees is allocated between revenue
and capital where such relief can be utilised. The Company is an Investment
Trust and Investment Trust companies are exempt from tax on capital gains if
they meet the HMRC criteria set out in section 274 of the ITA.
2021 2021 2021 2020 2020 2020
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
a) Analysis of tax charge:
UK Corporation tax on profits/(losses) for the year 53,768 (53,768) - 432,618 (241,588) 191,030
Total current tax charge/(credit) 53,768 (53,768) - 432,618 (241,588) 191,030
Corporation tax is based on a rate of 19.00% (2020: 19.00%)
b) Profit on ordinary activities before tax 729,387 34,783,043 35,512,430 3,906,465 13,540,118 17,446,583
Profit on ordinary activities multiplied by main company rate of corporation 138,584 6,608,778 6,747,362 742,228 2,572,622 3,314,850
tax in the UK of 19.00% (2020: 19.00%)
Effect of:
UK dividends (84,816) - (84,816) (309,469) - (309,469)
Net investment portfolio gains not taxable - (6,908,526) (6,908,526) - (2,814,210) (2,814,210)
Losses not utilised - 245,980 245,980 - - -
Overprovision in prior period - - - (141) - (141)
Actual current tax charge 53,768 (53,768) - 432,618 (241,588) 191,030
Deferred taxation
No provision for deferred taxation has been made on potential capital gains
due to the Company's current status as a VCT under section 274 of the ITA and
the Directors' intention to maintain that status.
6 Dividends paid and payable
Dividends payable are recognised as distributions in the Financial Statements
when the Company's liability to pay them has been established. This liability
is established for interim dividends when they are paid, and for final
dividends when they are approved by the shareholders, usually at the Company's
Annual General Meeting.
A key judgement in applying the above accounting policy is in determining the
amount of minimum dividend to be paid in respect of a year. The Company's
status as a VCT means it has to comply with Section 259 of the ITA, which
requires that no more than 15% of the income from shares and securities in a
year can be retained from the revenue available for distribution for the year.
Amounts recognised as distributions to equity shareholders in the year:
Dividend Type For year ended 31 December Pence per share Date Paid 2021 2020
Interim Capital 2019 4.00p* 08 January 2020 - 4,183,502
Interim Capital 2020 6.00p* 07 May 2020 - 7,665,588
Interim Income 2020 2.50p 17 December 2020 - 3,164,908
Interim Capital 2020 2.50p* 17 December 2020 - 3,164,908
Interim Income 2021 0.25p 12 July 2021 315,841 -
Interim Capital 2021 4.75p* 12 July 2021 6,000,988 -
- (2,442)
Dividends refunded in the year
6,316,829 18,176,464
Distributions to equity holders at the year end:
Pence per share Date Payable
Interim Income 2021 0.25p 07 January 2022 313,845 -
Interim Capital 2021 3.75p* 07 January 2022 4,707,677 -
5,021,522 -
*These dividends were paid out of or refunded to the Company's special
distributable reserve.
Set out below are the total income dividends payable in respect of the
financial year, which is the basis on which the requirements of Section 259 of
the ITA concerning the Company not retaining more than 15% of its income from
shares and securities, is considered.
Recognised income distributions in the financial statements for the year
Dividend Type For year ended 31 December Pence per share Date paid/payable 2021 £ 2020 £
Revenue available for distribution by way of dividends for the year 675,619 3,473,847
Interim Income 2020 2.50p 17 December 2020 - 3,164,908
Interim Income 2021 0.25p 12 July 2021 315,841 -
Interim Income 2021 0.25p 7 January 2022 313,845 -
Total income dividends for the year 629,686 3,164,908
7 Basic and diluted earnings per share
2021 2020
£ £
Total earnings after taxation: 35,512,430 17,255,553
Basic and diluted earnings per share (Note a) 28.21p 13.73p
Revenue earnings from ordinary activities after taxation 675,619 3,473,847
Basic and diluted revenue earnings per share (Note b) 0.54p 2.76p
Net investment portfolio gains 36,360,661 14,811,634
Capital Investment Adviser fees less taxation (1,523,850) (1,029,928)
Total capital earnings 34,836,811 13,781,706
Basic and diluted capital earnings per share (Note c) 27.67p 10.97p
Weighted average number of shares in issue in the year 125,868,010 125,685,147
Notes:
a) Basic earnings per share is total earnings after
taxation divided by the weighted average number of shares in issue.
b) Basic revenue earnings per share is the revenue
return after taxation divided by the weighted average number of shares in
issue.
c) Basic capital earnings per share is the total
capital return after taxation divided by the weighted average number of shares
in issue.
d) There are no instruments that will increase the
number of shares in issue in future. Accordingly, the above figures currently
represent both basic and diluted earnings per share.
8 Investments at fair value
The most critical estimates, assumptions and judgements relate to the
determination of the carrying value of investments at "fair value through
profit and loss" (FVTPL). All investments held by the Company are classified
as FVTPL and measured in accordance with the International Private Equity and
Venture Capital Valuation ("IPEV") guidelines, as updated in December 2018.
This classification is followed as the Company's business is to invest in
financial assets with a view to profiting from their total return in the form
of capital growth and income.
Purchases and sales of unlisted investments are recognised when the contract
for acquisition or sale becomes unconditional. For investments actively traded
on organised financial markets, fair value is generally determined by
reference to Stock Exchange market quoted bid prices at the close of business
on the balance sheet date. Purchases and sales of quoted investments are
recognised on the trade date where a contract of sale exists whose terms
require delivery within a time frame determined by the relevant market. Where
the terms of the disposal state that consideration may be received at some
future date and, subject to the conditionality and materiality of the amount
of deferred consideration, an estimate of the fair value, discounted for the
true value of money, may be recognised through the Income Statement. In other
cases, the proceeds will only be recognised once the right to receive payment
is established and there is no reasonable doubt that payment will be received.
Unquoted investments are stated at fair value by the Directors at each
measurement date in accordance with appropriate valuation techniques, which
are consistent with the IPEV guidelines:-
i) Each investment is considered as a whole on a 'unit of
account' basis, i.e. that the value of each portfolio company is considered as
a whole consideration of:-
The price of new or follow on 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 the
market performance of the investee company. The valuation bases used are the
following:
· a multiple basis. The enterprise value of the investment may be
determined by applying a suitable price-earnings ratio, revenue or gross
profit multiple to that company's historic, current or forecast post-tax
earnings before interest and amortisation, or revenue, or gross profit (the
ratio used being based on a comparable sector but the resulting value being
adjusted to reflect points of difference identified by the Investment Adviser
compared to the sector including, inter alia, scale and liquidity).
or:-
· where a company's underperformance against plan indicates a
diminution in the value of the investment, provision against the price of a
new investment is made, as appropriate.
ii) Premiums, to the extent that they are considered capital
in nature, and that they will be received upon repayment of loan stock
investments, are accrued at fair value when the Company receives the right to
the premium and when considered recoverable.
iii) Where a multiple or the price of recent investment less
impairment basis is not appropriate and overriding factors apply, a discounted
cash flow, net asset valuation, 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.
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 price of recent investment, the loss is treated
as a permanent impairment and as a realised loss, even though the investment
is still held. The Board assesses the portfolio for such investments and,
after agreement with the Investment Adviser, will agree the values that
represent the extent to which an investment loss has become realised. This is
based upon an assessment of objective evidence of that investment's future
prospects, to determine whether there is potential for the investment to
recover in value.
Accounting standards classify methods of fair value measurement as Levels 1, 2
and 3. This hierarchy is based upon the reliability of information used to
determine the valuation. All of the unquoted investments are Level 3, i.e.
fair value is measured using techniques using inputs that are not based on
observable market data.
Movements in investments during the year are summarised as follows:
Traded on AIM Unquoted ordinary shares Unquoted preference shares Unquoted Loan stock Total
£ £ £ £
Cost at 31 December 2020 - 23,685,698 1,185,039 16,354,239 41,224,976
Net unrealised gains/(losses) at 31 December 2020 - 16,717,309 83,145 (4,302,448) 12,498,006
Permanent impairment in value of investments as at 31 December 2020 - (2,578,496) (302) - (2,578,798)
Valuation at 31 December 2020 - 37,824,511 1,267,882 12,051,791 51,144,184
Purchases at cost - 4,961,532 749,800 1,829,881 7,541,213
Sale proceeds (Note a) (1,520,105) (8,908,269) (231,381) (4,578,632) (15,238,387)
Reclassification at value (Note b) 8,419,354 (7,798,669) - (620,685) -
Net realised gains on investments (Note a) 620,987 4,381,296 231,232 214,060 5,447,575
Net unrealised gains on investments (Note c) 4,998,195 24,371,785 95,130 1,447,976 30,913,086
Valuation at 31 December 2021 12,518,431 54,832,186 2,112,663 10,344,391 79,807,671
Cost at 31 December 2021 864,604 26,085,667 1,934,690 13,421,908 42,306,869
Net unrealised gains/(losses) at 31 December 2021 11,653,827 30,975,015 178,275 (3,077,517) 39,729,600
Permanent impairment in cost of investments as at 31 December 2021 (Note d) - (2,228,496) (302) - (2,228,798)
Valuation at 31 December 2021 12,518,431 54,832,186 2,112,663 10,344,391 79,807,671
Net realised gains on investments of £5,447,575 together with net unrealised
gains on investments of £30,913,086 equal net investment portfolio gains of
£36,360,661 as shown on the Income Statement.
Note a) Disposals of investment portfolio companies during the year were:
Type Investment cost Disposal proceeds Valuation at 31 December 2020 Realised gain/(loss) in year
£ £ £ £
Vian Marketing Limited (trading as Red Paddle Co) Realisation 1,043,394 5,219,982 1,937,741 3,282,241
Parsley Box Group plc (formerly Parsley Box Limited) Partial realisation 396,178 1,593,010 899,118 693,892
MPB Group Limited Partial realisation 494,815 2,048,093 1,520,520 527,573
My Tutorweb Limited (trading as MyTutor) Partial realisation 302,880 821,135 370,781 450,354
Media Business Insight Limited Loan repayment 564,136 564,136 350,069 214,067
CB Imports Group Limited Liquidation 350,000 - - -
Virgin Wines UK plc (formerly Virgin Wines Holding Company Limited) Loan repayment 2,381,344 2,381,344 2,381,344 -
Proactive Group Holdings Inc Realisation 926,573 2,323,658 2,331,239 (7,581)
Other capital proceeds* Various - 287,029 - 287,029
6,459,320 15,238,387 9,790,812 5,447,575
* Other capital proceeds contains £359,934 of deferred consideration from
companies realised in previous years, against a stamp duty payment of £72,905
upon the listing of Virgin Wines shares to AIM.
Note b) The Company's equity investments in Virgin Wines and Parsley Box were
admitted to AIM during the year. The amount transferred from Level 3 to Level
1 of £8,419,354 reflects the combined equity value held at the start of the
year and a follow-on investment made in the year. The amount of £620,685
transferred from unquoted loan stock to unquoted equity shares represents the
conversion of the loans held in two portfolio companies into equity shares
during the year.
Note c) The major components of the net increase in unrealised valuations of
£30,913,086 in the year were increases of £8,206,460 in Preservica Limited,
£6,390,476 in Virgin Wines UK plc (formerly Virgin Wines Holding Company
Limited), £3,621,375 in MPB Group Limited, £3,419,609 in Media Business
Insight Holdings Limited, £3,337,642 in EOTH Limited (trading as Equip
Outdoor Technologies), £2,528,781 in My Tutorweb Limited (trading as MyTutor)
and £2,348,072 in Master Removers Group 2019 Limited (trading as Anthony Ward
Thomas, Bishopsgate and Aussie Man & Van). These increases were partly
offset by falls of £1,392,281 in Parsley Box Group plc (formerly Parsley Box
Limited), £233,731 in Muller EV Limited (trading as Andersen EV), £196,401
in Bleach London Holdings Limited and £90,154 in Kudos Innovations Limited.
Note d) During the year, permanent impairments of the cost of investments have
decreased from £2,578,798 to £2,228,798 due to the disposal of one investee
company which had been permanently impaired previously.
9 Current asset investments and Cash at bank
Cash equivalents, for the purposes of the Statement of Cash flows, comprises
bank deposits repayable on up to three months' notice and funds held in OEIC
money-market funds. Current asset investments are the same but also include
bank deposits that mature after three months. Current asset investments are
disposable without curtailing or disrupting the business and are readily
convertible into known amounts of cash at their carrying values at immediate
or up to three months' notice. Cash, for the purposes of the Statement of Cash
Flows, is cash held with banks in accounts subject to immediate access. Cash
at bank in the Balance Sheet is the same.
2021 2020
£ £
OEIC Money market funds 23,357,572 29,365,900
Cash equivalents per Statement of Cash Flows 23,357,572 29,365,900
Bank deposits that mature after three months but are not immediately repayable 1,005,042 1,005,298
Current asset investments 24,362,614 30,371,198
Cash at bank 8,604,505 3,120,539
10 Called up share capital
2021 2020
£ £
Allotted, called-up and fully paid:
Ordinary Shares of 1p each: 125,077,481 (2020: 126,366,620) 1,250,775 1,263,366
During the year the Company purchased 1,259,139 (2020: 1,423,180) of its own
shares for cash (representing 1.0% (2020: 1.4%) of the shares in issue at the
start of the year) at the prevailing market price for a total cost of
£923,642 (2020: £756,637). These shares were subsequently cancelled by the
Company. This differs to the figure shown in the Statement of Cash Flows of
£967,755 by £44,113 which was included in creditors at the previous
year-end.
11 Basic and diluted net asset value per share
Net asset value per ordinary share is based on net assets at the end of the
year and on 125,077,481 (2020: 126,336,620) ordinary shares, being the number
of ordinary shares in issue on that date.
There are no instruments that will increase the number of shares in issue in
future. Accordingly, the figures currently represent both basic and diluted
net asset value per share.
12 Post balance sheet events
On 7 January 2022, the Company paid a 4.00 pence per share dividend to
shareholders in respect of the year ended 31 December 2021.
On 24 January 2022 and 22 February 2022, the Company made a follow-on
investment totalling £0.27 million into Caledonian Leisure Limited.
On 31 January 2022, the Company received a loan repayment of £0.12 million
from Media Business Insight Limited.
On 10 February 2022, the Company invested £0.73 million into Proximity
Insight Limited.
On 16 February 2022, deferred proceeds of £0.53 million were received in
respect of the divestment of Vian Marketing Limited (trading as Red Paddle
Co), an investment realised in the previous year.
Prior to the allotment of shares under the 2022 Offer for Subscription
launched on 20 January 2022, the NAV was updated as at 28 February 2022 as the
basis for allocation. This produced an NAV per share of 79.17 pence compared
to a NAV per share at 31 December 2021 of 86.31 pence (adjusted for the 4
pence dividend paid on 7 January 2022). Subsequently, on 9 March 2022,
12,233,462 Ordinary Shares were allotted at an average effective offer price
of 81.74 pence per share, raising net funds of £9.69 million.
13 Statutory information
The financial information set out in these statements does not constitute the
Company's statutory accounts for the year ended 31 December 2021 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.
14 Annual Report & Financial Statements
The Annual Report will be published on the Company's website at
www.migvct.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, Gresham
House Asset Management Limited, 80 Cheapside, London EC2V 6EE or by email:
mobeusvcts@greshamhouse.com.
15 Annual General Meeting
The Company's next Annual General Meeting will be held on Thursday, 26 May
2022 at the offices of the Company's solicitors, Shakespeare Martineau, at 60
Gracechurch Street, London EC3V 0HR. A webcast will also be available at the
same time for those Shareholders who cannot attend in person. However, please
note that Shareholders will not be able to vote via this method and so are
encouraged to return their proxy form before the deadline of 24 May 2022.
Contact details for further enquiries
Gresham House Asset Management Limited (the Company Secretary) on +44(0) 20
7382 0999 or by email to info@greshamhouse.com.
DISCLAIMER
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
4
Investment Adviser's fees and performance fees
All expenses are accounted for on an accruals basis.
25% of the Investment Adviser's fee is 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 and performance fees
Revenue Capital Total Revenue Capital Total
2021 2021 2021 2020 2020 2020
£ £ £ £ £ £
Gresham House Asset Management Limited¹
Investment Adviser's fees 525,873 1,577,618 2,103,491 423,839 1,271,516 1,695,355
¹ On 30 September 2021, Mobeus sold its VCT fund and Investment management
business to Gresham House. As a result, the Company's Investment advisory
arrangements have been novated from Mobeus to Gresham House. The entire core
management, investment and operational teams involved with the Company all
transferred to Gresham House in connection with this transaction.
Under the terms of a revised investment management agreement dated 20 May
2010, Mobeus (from 1 October 2021, Gresham House) provides investment
advisory, administrative and company secretarial services to the Company, for
a fee of 2% per annum of closing net assets, paid in advance, calculated on a
quarterly basis by reference to the net assets at the end of the preceding
quarter, plus a fixed fee of £134,168 per annum, the latter inclusive of VAT
and subject to annual increases in RPI. In 2013, Mobeus agreed to waive such
further increases due to indexation, until otherwise agreed with the Board.
The Investment Adviser's fee includes provision for a cap on expenses
excluding irrecoverable VAT and exceptional items set at 3.6% of closing net
assets at the year-end. In accordance with the Investment Management
Agreement, any excess expenses are borne by the Investment Adviser. The excess
expenses during the year amounted to £nil (2020: £nil).
In line with common practice, Gresham House retains the right to charge
arrangement and syndication fees and directors' or monitoring fees to
companies in which the Company invests. The Investment Adviser received fees
totalling £430,390 during the year ended 31 December 2021 (2020: £415,064),
being £161,076 (2020: £144,530) for arrangement fees and £269,314 (2020:
£270,534) for acting as non-executive directors on a number of investee
company boards. These fees attributable to the Company are proportionate to
the investment allocation applicable to the Company which applied at the time
of each investment. These figures are not part of these financial statements.
Incentive agreement
Under the Incentive Agreement dated 9 July 2004, and a variation of this
agreement dated 20 May 2010, the Investment Adviser is entitled to receive an
annual performance-related incentive fee of 20% of the dividends paid in a
year in excess of a "Target Rate" comprising firstly, an annual dividend paid
in a year target which started at 6.00 pence per share on launch (indexed each
year for RPI) and secondly a requirement that any shortfall of cumulative
dividends paid in each year beneath the cumulative annual dividend target is
carried forward and added to the Target Rate for the next accounting period.
Any excess of cumulative dividends paid above the cumulative annual dividend
target is not carried forward, whether an incentive fee is payable for that
year or not. Payment of a fee is also conditional upon the daily weighted
average Net Asset Value ("NAV") per share throughout such year equalling or
exceeding the daily weighted average Base NAV per share throughout the same
year.
At 31 December 2021, the annual dividend target is 8.72 pence per share and as
cumulative dividends paid were 5.00 pence, this target was not met. Also, the
average NAV per share was 78.06 pence for the year, which was less than the
average base NAV per share for the year of 87.81 pence. Accordingly, no
performance incentive fee is payable for the year.
b) Offer for Subscription fees
2021 2020
£m £m
Gross funds raised by the Company - 15.00
Offer costs payable to Mobeus at 3.00% of gross funds raised by the Company - 0.45
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 (for 2020 only)
totalled £1.74 million across all four VCTs, out of which all the costs
associated with the allotment were met.
c) Other expenses
Other 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.
2021 2020
£ £
Directors' remuneration (including NIC of £6,830 (2020: £6,852)) - Note a) 111,830 111,852
IFA trail commission 111,674 98,888
Broker's fees 14,400 3,600
Auditor's fees - Audit of Company (excluding VAT) 31,069 30,084
- audit related 7,073 6,868
assurance services - Note b) (excluding VAT)
Registrar's fees 32,692 44,356
Printing 60,224 61,709
Legal & professional fees 16,794 6,654
VCT monitoring fees 9,000 9,000
Directors' insurance 8,975 6,225
Listing and regulatory fees 32,260 32,628
Sundry 19,461 9,200
Running costs 455,452 421,064
Provision against loan interest receivable (Note c) - 3,332
Other expenses 455,452 424,396
Notes:
a) Directors' remuneration is a related party transaction, see
analysis of Directors' fees payable and their interests in the shares of the
company in the Directors' Remuneration Report within the Annual Report, which
excludes the NIC above. The key management personnel are the three
non-executive Directors. The Company has no employees. There were no amounts
outstanding and due to the Directors at 31 December 2021 (2020: £nil).
b) The audit-related assurance services are in relation to a limited
scope engagement in respect of the Financial Statements within the Company's
Interim Report. The Audit Committee reviews the nature and extent of these
services to ensure that auditor independence is maintained.
c) Provision against loan interest receivable above relates to an
amount of £nil (2020: £3,332), being a provision made against loan stock
interest regarded as collectable in previous years.
5
Taxation on profit on ordinary activities
The tax expense for the year comprises current tax and is recognised in profit
or loss. The current income tax charge is calculated on the basis of tax rates
and laws that have been enacted or substantively enacted by the reporting
date.
Any tax relief obtained in respect of adviser fees allocated to capital is
reflected in the realised capital reserve 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.
Tax relief relating to Investment Adviser fees is allocated between revenue
and capital where such relief can be utilised. The Company is an Investment
Trust and Investment Trust companies are exempt from tax on capital gains if
they meet the HMRC criteria set out in section 274 of the ITA.
2021 2021 2021 2020 2020 2020
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
a) Analysis of tax charge:
UK Corporation tax on profits/(losses) for the year 53,768 (53,768) - 432,618 (241,588) 191,030
Total current tax charge/(credit) 53,768 (53,768) - 432,618 (241,588) 191,030
Corporation tax is based on a rate of 19.00% (2020: 19.00%)
b) Profit on ordinary activities before tax 729,387 34,783,043 35,512,430 3,906,465 13,540,118 17,446,583
Profit on ordinary activities multiplied by main company rate of corporation 138,584 6,608,778 6,747,362 742,228 2,572,622 3,314,850
tax in the UK of 19.00% (2020: 19.00%)
Effect of:
UK dividends (84,816) - (84,816) (309,469) - (309,469)
Net investment portfolio gains not taxable - (6,908,526) (6,908,526) - (2,814,210) (2,814,210)
Losses not utilised - 245,980 245,980 - - -
Overprovision in prior period - - - (141) - (141)
Actual current tax charge 53,768 (53,768) - 432,618 (241,588) 191,030
Deferred taxation
No provision for deferred taxation has been made on potential capital gains
due to the Company's current status as a VCT under section 274 of the ITA and
the Directors' intention to maintain that status.
6
Dividends paid and payable
Dividends payable are recognised as distributions in the Financial Statements
when the Company's liability to pay them has been established. This liability
is established for interim dividends when they are paid, and for final
dividends when they are approved by the shareholders, usually at the Company's
Annual General Meeting.
A key judgement in applying the above accounting policy is in determining the
amount of minimum dividend to be paid in respect of a year. The Company's
status as a VCT means it has to comply with Section 259 of the ITA, which
requires that no more than 15% of the income from shares and securities in a
year can be retained from the revenue available for distribution for the year.
Amounts recognised as distributions to equity shareholders in the year:
Dividend Type For year ended 31 December Pence per share Date Paid 2021 2020
Interim Capital 2019 4.00p* 08 January 2020 - 4,183,502
Interim Capital 2020 6.00p* 07 May 2020 - 7,665,588
Interim Income 2020 2.50p 17 December 2020 - 3,164,908
Interim Capital 2020 2.50p* 17 December 2020 - 3,164,908
Interim Income 2021 0.25p 12 July 2021 315,841 -
Interim Capital 2021 4.75p* 12 July 2021 6,000,988 -
- (2,442)
Dividends refunded in the year
6,316,829 18,176,464
Distributions to equity holders at the year end:
Pence per share Date Payable
Interim Income 2021 0.25p 07 January 2022 313,845 -
Interim Capital 2021 3.75p* 07 January 2022 4,707,677 -
5,021,522 -
* These dividends were paid out of or refunded to the Company's special
distributable reserve.
Set out below are the total income dividends payable in respect of the
financial year, which is the basis on which the requirements of Section 259 of
the ITA concerning the Company not retaining more than 15% of its income from
shares and securities, is considered.
Recognised income distributions in the financial statements for the year
Dividend Type For year ended 31 December Pence per share Date paid/payable 2021 £ 2020 £
Revenue available for distribution by way of dividends for the year 675,619 3,473,847
Interim Income 2020 2.50p 17 December 2020 - 3,164,908
Interim Income 2021 0.25p 12 July 2021 315,841 -
Interim Income 2021 0.25p 7 January 2022 313,845 -
Total income dividends for the year 629,686 3,164,908
7
Basic and diluted earnings per share
2021 2020
£ £
Total earnings after taxation: 35,512,430 17,255,553
Basic and diluted earnings per share (Note a) 28.21p 13.73p
Revenue earnings from ordinary activities after taxation 675,619 3,473,847
Basic and diluted revenue earnings per share (Note b) 0.54p 2.76p
Net investment portfolio gains 36,360,661 14,811,634
Capital Investment Adviser fees less taxation (1,523,850) (1,029,928)
Total capital earnings 34,836,811 13,781,706
Basic and diluted capital earnings per share (Note c) 27.67p 10.97p
Weighted average number of shares in issue in the year 125,868,010 125,685,147
Notes:
a) Basic earnings per share is total earnings after
taxation divided by the weighted average number of shares in issue.
b) Basic revenue earnings per share is the revenue
return after taxation divided by the weighted average number of shares in
issue.
c) Basic capital earnings per share is the total
capital return after taxation divided by the weighted average number of shares
in issue.
d) There are no instruments that will increase the
number of shares in issue in future. Accordingly, the above figures currently
represent both basic and diluted earnings per share.
8
Investments at fair value
The most critical estimates, assumptions and judgements relate to the
determination of the carrying value of investments at "fair value through
profit and loss" (FVTPL). All investments held by the Company are classified
as FVTPL and measured in accordance with the International Private Equity and
Venture Capital Valuation ("IPEV") guidelines, as updated in December 2018.
This classification is followed as the Company's business is to invest in
financial assets with a view to profiting from their total return in the form
of capital growth and income.
Purchases and sales of unlisted investments are recognised when the contract
for acquisition or sale becomes unconditional. For investments actively traded
on organised financial markets, fair value is generally determined by
reference to Stock Exchange market quoted bid prices at the close of business
on the balance sheet date. Purchases and sales of quoted investments are
recognised on the trade date where a contract of sale exists whose terms
require delivery within a time frame determined by the relevant market. Where
the terms of the disposal state that consideration may be received at some
future date and, subject to the conditionality and materiality of the amount
of deferred consideration, an estimate of the fair value, discounted for the
true value of money, may be recognised through the Income Statement. In other
cases, the proceeds will only be recognised once the right to receive payment
is established and there is no reasonable doubt that payment will be received.
Unquoted investments are stated at fair value by the Directors at each
measurement date in accordance with appropriate valuation techniques, which
are consistent with the IPEV guidelines:-
i) Each investment is considered as a whole on a 'unit of
account' basis, i.e. that the value of each portfolio company is considered as
a whole consideration of:-
The price of new or follow on 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 the
market performance of the investee company. The valuation bases used are the
following:
· a multiple basis. The enterprise value of the investment may be
determined by applying a suitable price-earnings ratio, revenue or gross
profit multiple to that company's historic, current or forecast post-tax
earnings before interest and amortisation, or revenue, or gross profit (the
ratio used being based on a comparable sector but the resulting value being
adjusted to reflect points of difference identified by the Investment Adviser
compared to the sector including, inter alia, scale and liquidity).
or:-
· where a company's underperformance against plan indicates a
diminution in the value of the investment, provision against the price of a
new investment is made, as appropriate.
ii) Premiums, to the extent that they are considered capital
in nature, and that they will be received upon repayment of loan stock
investments, are accrued at fair value when the Company receives the right to
the premium and when considered recoverable.
iii) Where a multiple or the price of recent investment less
impairment basis is not appropriate and overriding factors apply, a discounted
cash flow, net asset valuation, 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.
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 price of recent investment, the loss is treated
as a permanent impairment and as a realised loss, even though the investment
is still held. The Board assesses the portfolio for such investments and,
after agreement with the Investment Adviser, will agree the values that
represent the extent to which an investment loss has become realised. This is
based upon an assessment of objective evidence of that investment's future
prospects, to determine whether there is potential for the investment to
recover in value.
Accounting standards classify methods of fair value measurement as Levels 1, 2
and 3. This hierarchy is based upon the reliability of information used to
determine the valuation. All of the unquoted investments are Level 3, i.e.
fair value is measured using techniques using inputs that are not based on
observable market data.
Movements in investments during the year are summarised as follows:
Traded on AIM Unquoted ordinary shares Unquoted preference shares Unquoted Loan stock Total
£ £ £ £
Cost at 31 December 2020 - 23,685,698 1,185,039 16,354,239 41,224,976
Net unrealised gains/(losses) at 31 December 2020 - 16,717,309 83,145 (4,302,448) 12,498,006
Permanent impairment in value of investments as at 31 December 2020 - (2,578,496) (302) - (2,578,798)
Valuation at 31 December 2020 - 37,824,511 1,267,882 12,051,791 51,144,184
Purchases at cost - 4,961,532 749,800 1,829,881 7,541,213
Sale proceeds (Note a) (1,520,105) (8,908,269) (231,381) (4,578,632) (15,238,387)
Reclassification at value (Note b) 8,419,354 (7,798,669) - (620,685) -
Net realised gains on investments (Note a) 620,987 4,381,296 231,232 214,060 5,447,575
Net unrealised gains on investments (Note c) 4,998,195 24,371,785 95,130 1,447,976 30,913,086
Valuation at 31 December 2021 12,518,431 54,832,186 2,112,663 10,344,391 79,807,671
Cost at 31 December 2021 864,604 26,085,667 1,934,690 13,421,908 42,306,869
Net unrealised gains/(losses) at 31 December 2021 11,653,827 30,975,015 178,275 (3,077,517) 39,729,600
Permanent impairment in cost of investments as at 31 December 2021 (Note d) - (2,228,496) (302) - (2,228,798)
Valuation at 31 December 2021 12,518,431 54,832,186 2,112,663 10,344,391 79,807,671
Net realised gains on investments of £5,447,575 together with net unrealised
gains on investments of £30,913,086 equal net investment portfolio gains of
£36,360,661 as shown on the Income Statement.
Note a) Disposals of investment portfolio companies during the year were:
Type Investment cost Disposal proceeds Valuation at 31 December 2020 Realised gain/(loss) in year
£ £ £ £
Vian Marketing Limited (trading as Red Paddle Co) Realisation 1,043,394 5,219,982 1,937,741 3,282,241
Parsley Box Group plc (formerly Parsley Box Limited) Partial realisation 396,178 1,593,010 899,118 693,892
MPB Group Limited Partial realisation 494,815 2,048,093 1,520,520 527,573
My Tutorweb Limited (trading as MyTutor) Partial realisation 302,880 821,135 370,781 450,354
Media Business Insight Limited Loan repayment 564,136 564,136 350,069 214,067
CB Imports Group Limited Liquidation 350,000 - - -
Virgin Wines UK plc (formerly Virgin Wines Holding Company Limited) Loan repayment 2,381,344 2,381,344 2,381,344 -
Proactive Group Holdings Inc Realisation 926,573 2,323,658 2,331,239 (7,581)
Other capital proceeds* Various - 287,029 - 287,029
6,459,320 15,238,387 9,790,812 5,447,575
* Other capital proceeds contains £359,934 of deferred consideration from
companies realised in previous years, against a stamp duty payment of £72,905
upon the listing of Virgin Wines shares to AIM.
Note b) The Company's equity investments in Virgin Wines and Parsley Box were
admitted to AIM during the year. The amount transferred from Level 3 to Level
1 of £8,419,354 reflects the combined equity value held at the start of the
year and a follow-on investment made in the year. The amount of £620,685
transferred from unquoted loan stock to unquoted equity shares represents the
conversion of the loans held in two portfolio companies into equity shares
during the year.
Note c) The major components of the net increase in unrealised valuations of
£30,913,086 in the year were increases of £8,206,460 in Preservica Limited,
£6,390,476 in Virgin Wines UK plc (formerly Virgin Wines Holding Company
Limited), £3,621,375 in MPB Group Limited, £3,419,609 in Media Business
Insight Holdings Limited, £3,337,642 in EOTH Limited (trading as Equip
Outdoor Technologies), £2,528,781 in My Tutorweb Limited (trading as MyTutor)
and £2,348,072 in Master Removers Group 2019 Limited (trading as Anthony Ward
Thomas, Bishopsgate and Aussie Man & Van). These increases were partly
offset by falls of £1,392,281 in Parsley Box Group plc (formerly Parsley Box
Limited), £233,731 in Muller EV Limited (trading as Andersen EV), £196,401
in Bleach London Holdings Limited and £90,154 in Kudos Innovations Limited.
Note d) During the year, permanent impairments of the cost of investments have
decreased from £2,578,798 to £2,228,798 due to the disposal of one investee
company which had been permanently impaired previously.
9
Current asset investments and Cash at bank
Cash equivalents, for the purposes of the Statement of Cash flows, comprises
bank deposits repayable on up to three months' notice and funds held in OEIC
money-market funds. Current asset investments are the same but also include
bank deposits that mature after three months. Current asset investments are
disposable without curtailing or disrupting the business and are readily
convertible into known amounts of cash at their carrying values at immediate
or up to three months' notice. Cash, for the purposes of the Statement of Cash
Flows, is cash held with banks in accounts subject to immediate access. Cash
at bank in the Balance Sheet is the same.
2021 2020
£ £
OEIC Money market funds 23,357,572 29,365,900
Cash equivalents per Statement of Cash Flows 23,357,572 29,365,900
Bank deposits that mature after three months but are not immediately repayable 1,005,042 1,005,298
Current asset investments 24,362,614 30,371,198
Cash at bank 8,604,505 3,120,539
10
Called up share capital
2021 2020
£ £
Allotted, called-up and fully paid:
Ordinary Shares of 1p each: 125,077,481 (2020: 126,366,620) 1,250,775 1,263,366
During the year the Company purchased 1,259,139 (2020: 1,423,180) of its own
shares for cash (representing 1.0% (2020: 1.4%) of the shares in issue at the
start of the year) at the prevailing market price for a total cost of
£923,642 (2020: £756,637). These shares were subsequently cancelled by the
Company. This differs to the figure shown in the Statement of Cash Flows of
£967,755 by £44,113 which was included in creditors at the previous
year-end.
11
Basic and diluted net asset value per share
Net asset value per ordinary share is based on net assets at the end of the
year and on 125,077,481 (2020: 126,336,620) ordinary shares, being the number
of ordinary shares in issue on that date.
There are no instruments that will increase the number of shares in issue in
future. Accordingly, the figures currently represent both basic and diluted
net asset value per share.
12
Post balance sheet events
On 7 January 2022, the Company paid a 4.00 pence per share dividend to
shareholders in respect of the year ended 31 December 2021.
On 24 January 2022 and 22 February 2022, the Company made a follow-on
investment totalling £0.27 million into Caledonian Leisure Limited.
On 31 January 2022, the Company received a loan repayment of £0.12 million
from Media Business Insight Limited.
On 10 February 2022, the Company invested £0.73 million into Proximity
Insight Limited.
On 16 February 2022, deferred proceeds of £0.53 million were received in
respect of the divestment of Vian Marketing Limited (trading as Red Paddle
Co), an investment realised in the previous year.
Prior to the allotment of shares under the 2022 Offer for Subscription
launched on 20 January 2022, the NAV was updated as at 28 February 2022 as the
basis for allocation. This produced an NAV per share of 79.17 pence compared
to a NAV per share at 31 December 2021 of 86.31 pence (adjusted for the 4
pence dividend paid on 7 January 2022). Subsequently, on 9 March 2022,
12,233,462 Ordinary Shares were allotted at an average effective offer price
of 81.74 pence per share, raising net funds of £9.69 million.
13
Statutory information
The financial information set out in these statements does not constitute the
Company's statutory accounts for the year ended 31 December 2021 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.
14
Annual Report & Financial Statements
The Annual Report will be published on the Company's website at
www.migvct.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, Gresham
House Asset Management Limited, 80 Cheapside, London EC2V 6EE or by email:
mobeusvcts@greshamhouse.com.
15
Annual General Meeting
The Company's next Annual General Meeting will be held on Thursday, 26 May
2022 at the offices of the Company's solicitors, Shakespeare Martineau, at 60
Gracechurch Street, London EC3V 0HR. A webcast will also be available at the
same time for those Shareholders who cannot attend in person. However, please
note that Shareholders will not be able to vote via this method and so are
encouraged to return their proxy form before the deadline of 24 May 2022.
Contact details for further enquiries
Gresham House Asset Management Limited (the Company Secretary) on +44(0) 20
7382 0999 or by email to info@greshamhouse.com.
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