The Inc & Grwth VCT - Annual Financial Report
19/12/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20221219:nRSS0637Ka&default-theme=true
RNS Number : 0637K Income & Growth VCT (The) PLC 19 December 2022
THE INCOME & GROWTH VCT PLC
LEI: 213800FPC15FNM74YD92
ANNUAL FINANCIAL RESULTS OF THE COMPANY FOR THE YEAR ENDED 30 SEPTEMBER 2022
The Income & Growth VCT plc (the "Company") announces the final results
for the year ended 30 September 2022. These results were approved by the
Board of Directors on 16 December 2022.
You may, in due course, view the Annual Report & Financial Statements,
comprising the statutory accounts of the Company by visiting
https://www.mobeusvcts.co.uk/ (https://www.mobeusvcts.co.uk/) .
FINANCIAL HIGHLIGHTS
As at 30 September 2022:
Net assets: £108.42 million
Net asset value ("NAV") per share: 83.73 pence
- There was a negative Net asset value ("NAV") total return (including
dividends)(1) per share was (8.7)%.
- Share price total return(1) per share was (3.8)% (2) (as per London
Stock Exchange mid-price on balance sheet date of 30 September 2022).
- Dividends paid/payable in respect of the year total 8.00 pence per
share. This brings cumulative dividends paid(1) to Shareholders in respect of
the past five years to 43.00 pence per share.
- The Company realised investments totalling £11.56 million of cash
proceeds and generated net realised gains in the year of £2.32 million.
- Net unrealised losses of £(13.16) million in the year.
- £7.33 million was invested into four new companies and eight
follow-on investments.
1 - Definitions of key terms and alternative performance measures shown above
and throughout this report are provided in the
Glossary of terms in the Annual Report.
2 - Further details on the share price total return are shown in the
Performance section of the Strategic Report within the Annual Report.
OUR INVESTMENT OBJECTIVE
The objective of the Company is to provide investors with an attractive return
by maximising the stream of
tax-free dividend distributions from the income and capital gains generated by
a diverse and carefully selected portfolio of investments, while continuing at
all times to qualify as a VCT.
INVESTMENT POLICY
The Company's Investment Policy is to invest primarily in a diverse portfolio
of UK unquoted companies. Investments are generally structured as part loan
and part equity in order to receive regular income, to generate capital gain
upon sale and to reduce the risk of high exposure to equities. To further
spread
risk, investments are made in a number of different businesses across
different industry sectors.
The Company's cash and liquid resources are held in a range of instruments
which can be of varying
maturities, subject to the overriding criterion that the risk of loss of
capital be minimised.
The Company seeks to make investments in accordance with the requirements of
VCT regulation. A
summary of this is set out below. The full text of the Company's Investment
Policy is set out in the Strategic Report.
STRATEGIC REPORT
CHAIRMAN'S STATEMENT
Overview
This Company's financial year has been notable for the significant
geopolitical economic and political disruption both domestically and
internationally. The end of the 2021 calendar year was a high watermark in
many technology and growth markets, and since then we have experienced a
number of significant global events such as the illegal Russian invasion of
Ukraine, the return of inflation to 40-year highs and political turmoil in the
UK and across Europe. All of this has led to increased volatility across
global markets and a material downward re-rating of growth stocks.
Despite the events set out above and the widely reported cost of living
increases, the fundraise, launched for applications on 17 October 2022 secured
the full £22 million sought (including £8 million over-allotment). This was
a strong demonstration of confidence in the Company by investors.
One positive and as yet, we believe, still planned outcome from the so-called
'mini-budget' of the previous Chancellor of the Exchequer in September, was
the commitment from the UK Government to extend the VCT 'sunset clause' beyond
the end date of 5 April 2025, however it should be noted that no further
detail has been provided at this stage and is also likely to require
parliamentary approval. This clause was due to expire in 2025 and would have
meant that investor income tax relief would have no longer been available on
new VCT subscriptions.
Performance
The Company's NAV total fell by (8.7)% for the year ended 30 September 2022
(versus a gain of + 50.5% in 2020/21). The negative NAV total return for the
year was principally comprised of unrealised falls in the value of investments
still held, tempered somewhat by the successful exits from Media Business
Insight ("MBI") and Vian Marketing Limited (trading as Red Paddle).
The reduction in the valuation of the portfolio has been driven primarily by
lower benchmark market comparables and to a lesser extent by falls in
underlying investee company trading performance. This is because markets are
already factoring in the likely impact of inflation and higher interest rates
on consumer spending and business investment.
At the year-end, the Company was ranked 2nd out of 39 Generalist VCTs over
five years and 9th out of 31 over ten years, in the Association of Investment
Companies' analysis of NAV Cumulative Total Return. Shareholders should note
that, due to the lag in the disclosed performance figures available each
quarter, the AIC ranking figures do not fully reflect the final NAV movement
to 30 September 2022, or those of our peers.
Dividends
The Board intends to continue to target the Investment Adviser with providing
an attractive dividend stream to Shareholders and was pleased to declare two
interim dividends of 4.00 pence per share each totalling 8.00 pence in respect
of the year ended 30 September 2022 exceeding the Company's annual target of
6.00 pence per share.
The first interim dividend was paid on 8 July 2022, to Shareholders on the
Register on 6 June 2022 and the second interim dividend was paid on 7 November
2022 to those Shareholders on the Register on 23
September 2022. These dividend payments brought cumulative dividends paid per
share since inception in 2004 to 148.5 pence.
The Company's ongoing target of paying a dividend of at least 6.00 pence per
share in respect of each financial year has been achieved and often exceeded
in each of the last eleven financial years.
It should be noted that the continued movement of the portfolio to a larger
share of younger growth capital investments could lead to increased
volatility, which may affect the return in any given year. Shareholders should
also note that there may continue to be circumstances where the Company is
required to pay dividends in order to maintain its regulatory status as a VCT,
for example, to stay above the minimum percentage of assets required to be
held in qualifying investments. Such dividends may cause the Company's NAV per
share to reduce by a corresponding amount.
Dividend Investment Scheme
The Company's Dividend Investment Scheme ("DIS") provides Shareholders with
the opportunity to reinvest their cash dividends into new shares in the
Company at the latest published NAV per share. New VCT shares attract the same
tax reliefs as shares purchased through an Offer for Subscription. A total
of 1,901,145 (2021: 1,178,669) Ordinary shares were allotted as a result of
dividends paid during the year resulting in £1.81 million (2021: £1.06
million) being retained by the Company.
Shareholders wishing to take advantage of the scheme for any future dividends
can join the DIS by completing a mandate form available on the Company's
website, under the 'Dividends' heading, at:
www.incomeandgrowthvct.co.uk, or alternatively, Shareholders can opt-out by
contacting Link Group, using their details provided under Corporate
Information in the Annual Report
.
Investment Portfolio
The portfolio movements across the year were as follows:
£m
Portfolio value at 30 September 2021 88.15
New and follow-on investments 7.33
Disposal proceeds (11.56)
Net realised gains/(losses) 2.32
Valuation movements (13.16)
Net investment portfolio losses (10.84)
Portfolio value at 30 September 2022 73.08
In the face of the current testing environment, particularly during the final
quarter of the financial year following the mini-budget, the Investment
Adviser has started to see the impact on trading of a number of investee
companies of a decline in consumer confidence. As a result, there was a fall
of £10.84 million in
the overall value of the portfolio across year to 30 September 2022 (2021:
increase of £43.64 million), or a fall of (12.3)% on a like-for-like basis
compared to the opening value of the portfolio at 1 October 2021. Notably,
included within the fall of £10.84 million above, Virgin Wines declined by
£9.67 million. Virgin Wines, an AIM listed investment which has suffered from
the negative sentiment of its sector, in spite of positive news flows from the
company itself and the relative outperformance versus its peers.
The negative NAV total return for the year was principally comprised of
unrealised falls in the value of
investments still held of £13.16 million, primarily Virgin Wines, MyTutor and
Buster & Punch mitigated to some extent by the successful exits from Media
Business Insight and Red Paddle contributing to net realised gains of £2.32
million.
In November 2021, the Company's entire holding in Red Paddle was realised,
generating proceeds of £5.52 million, taking proceeds received over the life
of the investment of £6.50 million, a multiple on cost of 5.4x and an IRR of
33.2%. In June 2022, the Company realised its investment in MBI generating
proceeds of £6.02 million from the sale (including loan repayments made
earlier in the year). This contributed to returns received amounting to £8.23
million, a 2.2x multiple of cost and an IRR of 13.7% over the life of this
investment.
Following the year-end, Andersen EV, the electric charger provider, was forced
into administration as a result of a substantial deterioration in its trading
conditions. This has resulted in a realised loss of £0.71 million recognised
in the year under review. This is particularly disappointing as the Company,
alongside the other Mobeus VCTs made a follow on investment into the company
in May of this year. The Company had secured some impressive clients and
funding was provided to drive product development in a premium brand which
operated in the emerging electric car charging market. However, over the
summer months, a sour combination of global supply issues and the removal of
Government consumer support for the purchase of EV chargers quickly impacted
the company's ability to continue trading and so necessitated the appointment
of administrators shortly after the Company's year-end.
Investment activity during the year has been robust, with four new and eight
follow-on investments completed, totalling £7.33 million. The Company
invested a total of £2.69 million into four new investments:
Proximity Insight retail technology software
Bidnamic a marketing technology business
Orri Limited an intensive day care provider for adults with eating disorders
FocalPoint a GPS enhancement software supplier
In addition, eight follow-on investments totalling £4.64 million were made
into:
Caledonian Leisure a provider of UK leisure and experience breaks
Northern Bloc a dairy and allergen free ice cream brand
Andersen EV a provider of premium EV chargers
Vivacity an AI and Urban Traffic Control business
Bleach London a hair colourants brand
ActiveNav a provider of enterprise-level file analysis software
Preservica a seller of proprietary digital archiving software
RotaGeek a workforce management software business
We expect follow-on investments to continue to be a significant feature of the
growth capital investments as they strive to achieve scale and move towards
profitability. Follow-on investment requests will be subject to scrutiny and
certain criteria being met, including the HMRC Financial Health Test.
During such uncertain times, management of the portfolio is critical and the
Investment Adviser is focused
on deploying its Talent Management team to support investments.
Shareholders should be aware that an effective tightening of HMRC policy and
practice to a technical aspect of the VCT financing rules is now resulting in
the restriction of potential follow on investments to support companies, where
more than half their subscribed share capital has been lost. In a small
number of cases, this may result in the Company not being able to follow its
money even where a compelling business case exists therefore affecting the
growth prospects of these businesses.
After the year end, the Company realised its equity holding in Equip Outdoor
Technologies Holdings Limited ("EOTH") for £7.34 million (including
preference dividends). These proceeds have contributed to returns received
over the life of this investment of £9.54 million, which is a multiple on
cost of 6.9x to
date. The Company has retained its interest yielding loan stock.
Revenue Account
The results for the year are set out in the Income Statement within the
Financial Statements and show a revenue return (after tax) of 1.23 pence per
share (2021: 0.77 pence per share). The revenue return for the year of £1.53
million has increased from last year's figure of £0.91 million. This is
primarily the result of significant loan interest arrears that were not
previously recognised that were received upon the sale of MBI as well as
higher dividends receivable from EOTH.
Fundraising
In January 2022, the Company completed a fundraise of £10 million for the
2021/2022 tax year which was fully subscribed in less than 24 hours. This
level of demand was pleasing, but the Board was aware that a number of
investors were left disappointed having not been able to subscribe. Later in
the year, upon considering the future cash requirements of the VCT and the
potential demand for the Company's shares, the Board approved a further
fundraise for the 2022/23 tax year.
Having provided a period of time between the launch of the prospectus and
acceptance of applications, the Board was pleased that the initial amount of
£14m (as well as an overallotment facility of a further £8m), launched early
in October 2022, was fully subscribed by 13 December 2022 and is therefore no
longer taking applications. Your Company welcomes both new and existing
shareholders.
Those investors who invested when the over-allotment facility had been
utilised, have yet to receive their shares which are due to be allotted in
January 2023 and certificates dispatched shortly afterwards.
The fundraising launched in October 2022 was to ensure that the Company
retained adequate levels of liquidity to continue to take advantage of new
investment opportunities and fund further expansion of the businesses in its
investment portfolio, seek the delivery of attractive returns for its
Shareholder, including the payment of dividends, over the medium term, and buy
back its shares from those Shareholders who may wish to sell their shares. It
is not the intention of the Board to conduct another fundraise in 2023.
Liquidity
Cash and liquidity fund balances as at 30 September 2022 amounted to £34.78
million representing 32.1% of net assets. After the year-end, following the
payment of a 4.00 pence per share dividend and the successful fundraise, the
pro-forma level of liquidity is £52.55 million (41.6% of net assets). The
Board
continues to monitor credit risk in respect of its cash and near cash
resources and to prioritise the security
and protection of the Company's capital.
Share buy-backs
During the year to 30 September 2022, the Company bought back and cancelled
1,166,089 of its own shares (2021: 1,285,499), representing 1% (2021: 1.1%) of
the shares in issue at the beginning of the year, at a total cost of £1.03
million (2021: £1.05 million), inclusive of expenses.
It is the Company's policy to cancel all shares bought back in this way. The
Board regularly reviews its buyback policy, where its priority is to act
prudently and in the interest of remaining Shareholders, whilst
considering other factors, such as levels of liquidity and reserves, market
conditions and applicable law and regulations. Under this policy, the Company
seeks to maintain the discount at which the Company's shares trade at
approximately 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.incomeandgrowthvct.co.uk (http://www.incomeandgrowthvct.co.uk) .
The Investment Adviser last held its Shareholder Event virtually on behalf of
all four Mobeus VCTs on 25 February 2022. The event was well received and the
Investment Adviser plans to hold another event in March 2023. Further details
will be circulated to Shareholders and shown on the Company's website in
due course.
Your Board is pleased to hold the next Annual General Meeting ("AGM") of the
Company at 11.00am on Wednesday,22 February 2023 at the offices of Shakespeare
Martineau LLP, 6th Floor, 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 so are encouraged to return your proxy form before the
deadline of 20 February 2023. 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.
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.
Gresham House Asset Management Limited, has 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.
The future FCA reporting requirements consistent with the Task Force on
Climate-related Financial Disclosures, which commenced on 1 January 2021 do
not currently apply to the Company but will be kept under review, the Board
being mindful of any recommended changes.
Fraud Warning
We are aware of a number of cases where Shareholders are being fraudulently
contacted or are being subjected to attempts of identity fraud. Shareholders
should remain vigilant of all potential financial scams or requests for them
to disclose personal data. 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 within the
Annual Report.
Board Succession
Helen Sinclair retired from the Board immediately following the Annual General
Meeting in February 2022 after 19 years wonderful service and left with the
gratitude of the Board. The Board continued to be comprised of the two
existing directors whilst considering the appropriate composition and
succession
of the Board. Following this review, an extensive recruitment process
commenced and we were delighted to appoint Nemone Wynn-Evans to the Board and
its committees as a nonexecutive director on 7 November 2022 and extend a warm
welcome to Nemone, who will present herself for election as a director at the
AGM in February 2023. Nemone has a wealth of relevant experience and will
bring additional skills to the Board.
Nemone will take over as Chair of the Audit Committee on 1 January 2023 and I
would like to thank Justin for filling this role since his appointment in 2019
and for the excellent work conducted under his Chairmanship. Justin will
remain as the Chair of the Investment Committee, a role he also took on
earlier in the year.
Outlook
The geopolitical and economic context for the next twelve months is likely to
be challenging although this can also provide a good opportunity to make high
quality investments and build strategic stakes in businesses with great
potential for the future. Despite the successful exit of EOTH in November, the
exit
environment is likely to be subdued compared to recent years, although this is
not foreseen to be a significant issue given that the VCT fund is not
time-limited. However, the combined impact of inflation, interest rates and
restrictions in Government spending can all be expected to impact consumer and
business confidence. With business failure rates still below their pre-Covid
levels, we therefore anticipate that further stresses will become apparent
across the UK business population over the coming year. No sectors will be
immune, but the Company has a reasonably large and diverse portfolio, managed
by a professional and capable investment team, that mitigates the challenges
which lie ahead.
Maurice Helfgott
Chairman
16 December 2022
INVESTMENT ADVISER'S REVIEW
Porfolio Review
The current macro environment continues to create challenging conditions for
all enterprises including
our investee companies, with operating margins coming under pressure. The
portfolio movements in the year are summarised as follows:
2022 2021
£m £m
Opening portfolio value 88.15 50.86
New and follow-on investments 7.33 8.09
Disposal proceeds (11.56) (14.44)
Net realised gains/(losses) 2.32 4.16
Unrealised valuation losses (13.16) 39.48
Portfolio value at 30 September 73.08 88.15
The year to 30 September 2022 saw a significant decline in many quoted market
values. In addition, political uncertainties have also affected consumer
confidence across the UK and impact is now being starting to be seen. In spite
of relatively resilient underlying trading performance in the early part of
the year, the portfolio value has reduced as a result of these circumstances.
The Company made four new growth capital investments during the year totalling
£2.69 million:
Proximity Insight £0.81M retail technology software
Bidnamic £0.64M a marketing technology business
Orri Limited £0.58M an intensive day care provider for adults with eating disorders
FocalPoint £0.66M a GPS enhancement software supplier
Also, during the year, the Company further invested into eight portfolio
companies totalling £4.64 million, a
breakdown is listed later in the Investment Adviser's Review.
Two strong exits were achieved during the year, Red Paddle and MBI. On Red
Paddle, the Company received a total of £5.52 million in proceeds during the
year, generating a realised gain of £1.20 million in the year. On MBI, the
Company received a total of £6.02 million in proceeds during the year
generating a
realised gain of £1.82 million. It was disappointing that Andersen EV,
despite securing some large clients such as Porsche and JLR, went into
administration. Andersen experienced very challenging trading conditions with
substantially reduced demand, supplier chain issues, cost pressures and the
removal of government consumer support for the purchase of EV chargers. A
realised loss of £0.71 million was
recognised during the financial year as a result.
After the year end, the Company realised its equity holding in Equip Outdoor
Technologies Holdings Limited ("EOTH") for £7.34 million (including
preference dividends). These proceeds have contributed to returns received
over the life of this investment of £9.54 million, which is a multiple on
cost of 6.9x to date, an IRR of 23.2%. The Company has retained it interest
yielding loan stock.
The investment and divestment activity during the year has further increased
the proportion of the portfolio comprised of investments made since the 2015
VCT rule change to 71.5% by value at the year-end (30 September 2021: 59.5%).
The portfolio's valuation changes in the year are summarised as follows:
Investment Portfolio Capital Movement 2022 2021
£m £m
Increase in the value of unrealised investments 7.32 40.81
Decrease in the value of unrealised investments (20.48) (1.33)
Net (decrease)/increase in the value of unrealised investments (13.16) 39.48
Realised gains 3.03 4.26
Realised losses (0.71) (0.10)
Net realised gains in the year 2.32 4.16
Net investment portfolio movement in the year (10.84) 43.64
Valuation changes of portfolio investments still held
The main reductions within total valuation decreases of £(20.48) million,
were:
· Virgin Wines - £(9.67) million;
· MyTutor - £(3.60) million
· Buster and Punch - £(1.64) million, and
· Wetsuit Outlet - £(1.58) million.
Virgin Wines has consistently delivered robust trading performance relative to
its peers and continued to release positive news flow. Nevertheless, the value
of the AIM-listed stock has been impacted by the general de-rating of its
sector. MyTutor has generated strong revenues in the year to date, both above
budget and previous years. However, a reduction in comparator multiples has
reduced the value of this investment which reflects market movements rather
than company specific performance. The decrease in Buster and Punch and
Wetsuit Outlet reflects the weak economic environment and the resulting
deterioration of consumer sentiment.
The main uplifts within total valuation increases of £7.32 million were:
· Preservica - £2.84 million
· EOTH - £1.72 million
· Master Removers Group - £1.40 million
Preservica continues build its high retention, long contract term
Software-as-a-Service ("SaaS") business improving recurring revenues year on
year. EOTH and Master Removers Group continue to grow with both businesses
being very cash generative and high margin.
Realised gains
The Company realised its investments in Red Paddle and MBI during the year
under review, generating gains in the year of £1.20 million and £1.82
million, respectively. These contributed to a multiple of cost of 5.4x and
2.2x over the life of the investments. A further £0.01 million of deferred
proceeds were received from investments realised in a previous year.
Conversely, Muller EV (trading as Andersen EV) generated a realised loss in
the year of £(0.71) million.
Investment portfolio yield
In the year under review, the Company received the following amounts in loan
interest and dividend income:
2022 2021
£m £m
Interest received in the year 1.41 1.22
Dividends received in the year 1.16 0.69
Total portfolio income in the year 2.57 1.91
Portfolio Value at 30 September 73.08 88.15
Portfolio Income Yield (Income as a % of Portfolio Value at 30 September) 3.5% 2.2%
New investments during the year
The Company made four new investments totalling £2.69 million during the
year, as detailed below:
Company Business Date of Investment Amount of new investment (£m)
Proximty Insight Retail software February 2022 0.81
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.
Marketing technology business May 2022 0.64
Bidnamic
Lads Store Limited, trading as "Bidnamic" (bidnamic.com) is a marketing
technology business that offers a SaaS platform for online retailers to manage
their search engine marketing spend. The technology was all developed
internally and uses bespoke machine learning algorithms to automate the
management and optimisation of online retailers' Google shopping spend. The
ARR of the business has grown substantially over the last two years and this
is projected to continue. The investment round will be used to further enhance
the product's capabilities and drive continued ARR growth through expanding
the sales & marketing team and building a presence in North America. The
investment was made across all six VCTs advised and managed by Gresham House,
including the two Baronsmead VCTs.
FocalPoint GPS enhancement software provider September 2022 0.66
Focal Point Positioning Limited (focalpointpositioning.com) is a deeptech
business with a growing IP and software portfolio. Its proprietary technology
applies advanced physics and machine learning to dramatically improve the
satellite-based location sensitivity, accuracy, and security of devices such
as smartphones, wearables, and vehicles and reduce costs. The investment was
made across all six VCTs advised and managed by Gresham House, including the
two Baronsmead VCTs.
Orri Specialists in eating disorder support September 2022 0.58
Orri Limited (orri-uk.com) is an intensive day care provider for adults with
eating disorders. Orri provides an alternative to expensive residential
in-patient treatment and lighter-touch outpatient services by providing highly
structured day and half day sessions either online or in-person at its clinic
on Hallam Street, London. Orri opened its current clinic on Hallam Street,
London in February 2019 which provides a homely environment in a converted
4-storey manor house but which is operating at capacity. The plan sees a
larger site being leased nearby with Hallam Street being used to provide a
step-down outpatient service. The investment was made across all six VCTs,
advised and managed by Gresham House, including the two Baronsmead VCTs.
Further investments during the year
The Company made eight further investments into existing portfolio companies
in the year, totalling £4.64 million, as detailed below:
Company Business Date of Investment Amount of new investment (£m)
Preservica Provider of digital preservation solutions November 2021 1.71
Preservica (preservica.com) is a leading provider of digital preservation
solutions and its access software is used around the globe by leading
businesses, archives, libraries, museums and government organisations to
safeguard and share valuable digital content. The additional investment
provides further growth funding to enable Preservica to evolve its technology
platform and to bring a potentially transformational product to market in
collaboration with Microsoft.
Active Navigation File analysis software December 2021 0.43
Data Discovery Solutions, trading as Active Navigation (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. Active Navigation's solution is used by
significant blue chip customers, particularly those in highly regulated
industries such as energy and professional services, as well as government
entities in the USA, Canada, Australia and the UK. Active Navigation will seek
to drive continued growth from its file analysis platform with the recruitment
of experienced sales and professional services staff.
Caledonian Leisure UK leisure and experience breaks January/February 2022 0.30
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 was devastated by the COVID-19 pandemic, but the company was
well-placed to expand as lockdown and travel restrictions eased. A series of
planned investment tranches has helped the company prepare for and capitalise
on the strong demand for UK staycation holidays.
Northern Bloc Dairy and allergen-free ice cream producer April 2022 0.19
Northern Bloc Ice Cream (northern-bloc.com) is an established food brand in
the emerging and rapidly growing vegan market. By focusing on chef quality and
natural ingredients, Northern Bloc has carved out an early mover position in
the dairy and allergen free ice cream sector. The company's focus on
plant-based alternatives has strong environmental credentials as well as it
being the first ice cream brand to move wholly into sustainable packaging.
Following the initial investment in December 2020, Northern Bloc has grown and
strengthened its prospects against a challenging market backdrop. This further
investment provides additional working capital and funds a new production
facility to increase its resilience, flexibility and margins in the future.
Andersen Premium EV chargers May 2022 0.40
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 secured high profile partnerships with household brands,
establishing an attractive niche position in charging points for the high-end
EV market. This follow-on funding was 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. Unfortunately, over
the summer months the company experienced very challenging trading conditions
including substantially reduced demand, global supply chain issues, inflation
and the removal of government consumer support for the purchase of EV
chargers. The company therefore entered administration after the year end.
RotaGeek Workforce management software June 2022 0.31
RotaGeek (rotageek.com) is a provider of cloud-based enterprise software to
help larger retail, leisure and healthcare organisations to schedule staff
effectively. RotaGeek has proven its ability to solve the scheduling issue for
large retail clients effectively competing due to the strength of its
technologically advanced proposition. The company has made significant
commercial progress since the VCTs first investment nearly doubling Annual
Recurring Revenues (ARR). This investment will help boost ARR further and
enable the company to take advantage further large client opportunities.
Vivacity Provider of artificial intelligence & urban traffic control systems July 2022 0.84
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. This new investment will help boost the company's
revenues through development of new functionality to enhance its product suite
which can also be installed into the existing asset base.
Bleach Hair colourants brand August 2022 0.46
Bleach London Holdings ("Bleach") (bleachlondon.com) is an established brand
which develops and markets a range of innovative haircare and colouring
products. Bleach is regarded as a leading authority in the hair colourant
market having opened one of the world's first salons focused on colouring and
subsequently launched its first range of products in 2013. This further
investment was part of a wider £5.5 million investment round alongside
existing shareholders and a strategic partner. The funds will be used to drive
further expansion and strategic penetration of the North American market and
consolidate the brand's position in the UK market.
Portfolio Realisations during the year
The Company realised two investments, as detailed below:
Company Business Date of Investment Amount of new investment (£m)
Vian Marketing Limited (trading as Red Paddle) Design, manufacture and sale of stand-up paddleboards and windsurfing sails July 2015 £6.50 million
to 5.4x cost
November 2021
The Company sold its investment in Vian Marketing Limited (trading as Red
Paddle) to the Myers Family Office for £5.52 million (realised gain in the
year: £1.20 million). This investment generated proceeds over the life of the
investment of £6.50 million compared to original cost of £1.21 million,
which is a multiple of cost of 5.4x and an IRR of 33.2%.
Publishing and events business January 2015 £8.23 million
MBI To 2.2x cost
June 2022
The Company realised its investment in MBI for £6.02 million (realised gain
in the year: £1.82 million) including deferred proceeds received since
completion. Total proceeds received over the life of the investment were
£8.23 million compared to an original investment cost of £3.67 million,
representing a multiple on cost of 2.2x and an IRR of 13.7%.
Environmental, Social, Governance considerations
The novation of the investment advisory agreement to Gresham House has enabled
the Company to benefit from a dedicated team which is focused on
sustainability tasked with implementing the highest industry standards in this
area. Under the new enlarged investment team, each investment executive is
responsible for their own individual ESG objectives in support of the wider
overarching ESG goals of the Investment Adviser. For further details, Gresham
House published its second Sustainable Investment Report in April 2022, which
can be found on its website at: www.greshamhouse.com.
Outlook
With inflation, political uncertainty and the increasing threat of recession
impacting consumer confidence and business investment, the number of UK
businesses experiencing financial stress is set to increase. This will impact
all sectors and businesses to varying degrees and may present attractive
opportunities for a selective investor with the advantage of being able to
take a longer-term view such as your VCT. However, the economic backdrop will
also impact existing portfolio companies and falls largely outside of the
experience of this generation of management teams and advisers. Markets are
volatile and uncertain and business planning is particularly difficult. As
such, the experience of seasoned investment managers will be increasingly
important in the coming year as they seek to support their portfolio
management teams in navigating through some particularly challenging
short-term trading conditions. The VCT has ample liquidity to provide further
support to its portfolio businesses through this period and is keen to make
such investments where there is a commercial case to do so over the
medium-long term.
Gresham House Asset Management Limited
Investment Adviser
16 December 2022
Annual General Meeting
The AGM will be held on Wednes, 22 February 2023 at the offices of Shakespeare
Martineau LLP, 6(th) floor, 60 Gracechurch Street, London EC3V 0HR and will
also by webcast for those Shareholders who are unable to attend in person.
Details of how to join the meeting by virtual means will be shown on the
Company's website. Shareholders joining virtually should note you will not be
able to vote at the meeting and therefore you are encouraged to lodge your
proxy form. For further details, please see the Notice of the Meeting which
can be found at the end of this Annual Report & Financial Statements.
Further Information
The Annual Report and Accounts for the year ended 30 September 2022 will be
available shortly on www.incomeandgrowthvct.co.uk
(http://www.incomeandgrowthvct.co.uk) .
It will also be submitted shortly in full unedited text to the Financial
Conduct Authority's National Storage Mechanism and will be available for
inspection at data.fca.org.uk/#/nsm/nationalstoragemechanism
(file:///C%3A/Users/b.onanuga/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/7ZS900ED/data.fca.org.uk/#/nsm/nationalstoragemechanism)
in accordance with DTR 6.3.5(1A) of the Financial Conduct Authority's
Disclosure Guidance and Transparency Rules.
Contact:
Gresham House Asset Management Limited
Company Secretary
mobeusvcts@greshamhouse.com (mailto:mobeusvcts@greshamhouse.com)
+44 20 7382 0999
In the face of the current testing environment, particularly during the final
quarter of the financial year following the mini-budget, the Investment
Adviser has started to see the impact on trading of a number of investee
companies of a decline in consumer confidence. As a result, there was a fall
of £10.84 million in
the overall value of the portfolio across year to 30 September 2022 (2021:
increase of £43.64 million), or a fall of (12.3)% on a like-for-like basis
compared to the opening value of the portfolio at 1 October 2021. Notably,
included within the fall of £10.84 million above, Virgin Wines declined by
£9.67 million. Virgin Wines, an AIM listed investment which has suffered from
the negative sentiment of its sector, in spite of positive news flows from the
company itself and the relative outperformance versus its peers.
The negative NAV total return for the year was principally comprised of
unrealised falls in the value of
investments still held of £13.16 million, primarily Virgin Wines, MyTutor and
Buster & Punch mitigated to some extent by the successful exits from Media
Business Insight and Red Paddle contributing to net realised gains of £2.32
million.
In November 2021, the Company's entire holding in Red Paddle was realised,
generating proceeds of £5.52 million, taking proceeds received over the life
of the investment of £6.50 million, a multiple on cost of 5.4x and an IRR of
33.2%. In June 2022, the Company realised its investment in MBI generating
proceeds of £6.02 million from the sale (including loan repayments made
earlier in the year). This contributed to returns received amounting to £8.23
million, a 2.2x multiple of cost and an IRR of 13.7% over the life of this
investment.
Following the year-end, Andersen EV, the electric charger provider, was forced
into administration as a result of a substantial deterioration in its trading
conditions. This has resulted in a realised loss of £0.71 million recognised
in the year under review. This is particularly disappointing as the Company,
alongside the other Mobeus VCTs made a follow on investment into the company
in May of this year. The Company had secured some impressive clients and
funding was provided to drive product development in a premium brand which
operated in the emerging electric car charging market. However, over the
summer months, a sour combination of global supply issues and the removal of
Government consumer support for the purchase of EV chargers quickly impacted
the company's ability to continue trading and so necessitated the appointment
of administrators shortly after the Company's year-end.
Investment activity during the year has been robust, with four new and eight
follow-on investments completed, totalling £7.33 million. The Company
invested a total of £2.69 million into four new investments:
Proximity Insight retail technology software
Bidnamic a marketing technology business
Orri Limited an intensive day care provider for adults with eating disorders
FocalPoint a GPS enhancement software supplier
In addition, eight follow-on investments totalling £4.64 million were made
into:
Caledonian Leisure a provider of UK leisure and experience breaks
Northern Bloc a dairy and allergen free ice cream brand
Andersen EV a provider of premium EV chargers
Vivacity an AI and Urban Traffic Control business
Bleach London a hair colourants brand
ActiveNav a provider of enterprise-level file analysis software
Preservica a seller of proprietary digital archiving software
RotaGeek a workforce management software business
We expect follow-on investments to continue to be a significant feature of the
growth capital investments as they strive to achieve scale and move towards
profitability. Follow-on investment requests will be subject to scrutiny and
certain criteria being met, including the HMRC Financial Health Test.
During such uncertain times, management of the portfolio is critical and the
Investment Adviser is focused
on deploying its Talent Management team to support investments.
Shareholders should be aware that an effective tightening of HMRC policy and
practice to a technical aspect of the VCT financing rules is now resulting in
the restriction of potential follow on investments to support companies, where
more than half their subscribed share capital has been lost. In a small
number of cases, this may result in the Company not being able to follow its
money even where a compelling business case exists therefore affecting the
growth prospects of these businesses.
After the year end, the Company realised its equity holding in Equip Outdoor
Technologies Holdings Limited ("EOTH") for £7.34 million (including
preference dividends). These proceeds have contributed to returns received
over the life of this investment of £9.54 million, which is a multiple on
cost of 6.9x to
date. The Company has retained its interest yielding loan stock.
Revenue Account
The results for the year are set out in the Income Statement within the
Financial Statements and show a revenue return (after tax) of 1.23 pence per
share (2021: 0.77 pence per share). The revenue return for the year of £1.53
million has increased from last year's figure of £0.91 million. This is
primarily the result of significant loan interest arrears that were not
previously recognised that were received upon the sale of MBI as well as
higher dividends receivable from EOTH.
Fundraising
In January 2022, the Company completed a fundraise of £10 million for the
2021/2022 tax year which was fully subscribed in less than 24 hours. This
level of demand was pleasing, but the Board was aware that a number of
investors were left disappointed having not been able to subscribe. Later in
the year, upon considering the future cash requirements of the VCT and the
potential demand for the Company's shares, the Board approved a further
fundraise for the 2022/23 tax year.
Having provided a period of time between the launch of the prospectus and
acceptance of applications, the Board was pleased that the initial amount of
£14m (as well as an overallotment facility of a further £8m), launched early
in October 2022, was fully subscribed by 13 December 2022 and is therefore no
longer taking applications. Your Company welcomes both new and existing
shareholders.
Those investors who invested when the over-allotment facility had been
utilised, have yet to receive their shares which are due to be allotted in
January 2023 and certificates dispatched shortly afterwards.
The fundraising launched in October 2022 was to ensure that the Company
retained adequate levels of liquidity to continue to take advantage of new
investment opportunities and fund further expansion of the businesses in its
investment portfolio, seek the delivery of attractive returns for its
Shareholder, including the payment of dividends, over the medium term, and buy
back its shares from those Shareholders who may wish to sell their shares. It
is not the intention of the Board to conduct another fundraise in 2023.
Liquidity
Cash and liquidity fund balances as at 30 September 2022 amounted to £34.78
million representing 32.1% of net assets. After the year-end, following the
payment of a 4.00 pence per share dividend and the successful fundraise, the
pro-forma level of liquidity is £52.55 million (41.6% of net assets). The
Board
continues to monitor credit risk in respect of its cash and near cash
resources and to prioritise the security
and protection of the Company's capital.
Share buy-backs
During the year to 30 September 2022, the Company bought back and cancelled
1,166,089 of its own shares (2021: 1,285,499), representing 1% (2021: 1.1%) of
the shares in issue at the beginning of the year, at a total cost of £1.03
million (2021: £1.05 million), inclusive of expenses.
It is the Company's policy to cancel all shares bought back in this way. The
Board regularly reviews its buyback policy, where its priority is to act
prudently and in the interest of remaining Shareholders, whilst
considering other factors, such as levels of liquidity and reserves, market
conditions and applicable law and regulations. Under this policy, the Company
seeks to maintain the discount at which the Company's shares trade at
approximately 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.incomeandgrowthvct.co.uk (http://www.incomeandgrowthvct.co.uk) .
The Investment Adviser last held its Shareholder Event virtually on behalf of
all four Mobeus VCTs on 25 February 2022. The event was well received and the
Investment Adviser plans to hold another event in March 2023. Further details
will be circulated to Shareholders and shown on the Company's website in
due course.
Your Board is pleased to hold the next Annual General Meeting ("AGM") of the
Company at 11.00am on Wednesday,22 February 2023 at the offices of Shakespeare
Martineau LLP, 6th Floor, 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 so are encouraged to return your proxy form before the
deadline of 20 February 2023. 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.
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.
Gresham House Asset Management Limited, has 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.
The future FCA reporting requirements consistent with the Task Force on
Climate-related Financial Disclosures, which commenced on 1 January 2021 do
not currently apply to the Company but will be kept under review, the Board
being mindful of any recommended changes.
Fraud Warning
We are aware of a number of cases where Shareholders are being fraudulently
contacted or are being subjected to attempts of identity fraud. Shareholders
should remain vigilant of all potential financial scams or requests for them
to disclose personal data. 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 within the
Annual Report.
Board Succession
Helen Sinclair retired from the Board immediately following the Annual General
Meeting in February 2022 after 19 years wonderful service and left with the
gratitude of the Board. The Board continued to be comprised of the two
existing directors whilst considering the appropriate composition and
succession
of the Board. Following this review, an extensive recruitment process
commenced and we were delighted to appoint Nemone Wynn-Evans to the Board and
its committees as a nonexecutive director on 7 November 2022 and extend a warm
welcome to Nemone, who will present herself for election as a director at the
AGM in February 2023. Nemone has a wealth of relevant experience and will
bring additional skills to the Board.
Nemone will take over as Chair of the Audit Committee on 1 January 2023 and I
would like to thank Justin for filling this role since his appointment in 2019
and for the excellent work conducted under his Chairmanship. Justin will
remain as the Chair of the Investment Committee, a role he also took on
earlier in the year.
Outlook
The geopolitical and economic context for the next twelve months is likely to
be challenging although this can also provide a good opportunity to make high
quality investments and build strategic stakes in businesses with great
potential for the future. Despite the successful exit of EOTH in November, the
exit
environment is likely to be subdued compared to recent years, although this is
not foreseen to be a significant issue given that the VCT fund is not
time-limited. However, the combined impact of inflation, interest rates and
restrictions in Government spending can all be expected to impact consumer and
business confidence. With business failure rates still below their pre-Covid
levels, we therefore anticipate that further stresses will become apparent
across the UK business population over the coming year. No sectors will be
immune, but the Company has a reasonably large and diverse portfolio, managed
by a professional and capable investment team, that mitigates the challenges
which lie ahead.
Maurice Helfgott
Chairman
16 December 2022
INVESTMENT ADVISER'S REVIEW
Porfolio Review
The current macro environment continues to create challenging conditions for
all enterprises including
our investee companies, with operating margins coming under pressure. The
portfolio movements in the year are summarised as follows:
2022 2021
£m £m
Opening portfolio value 88.15 50.86
New and follow-on investments 7.33 8.09
Disposal proceeds (11.56) (14.44)
Net realised gains/(losses) 2.32 4.16
Unrealised valuation losses (13.16) 39.48
Portfolio value at 30 September 73.08 88.15
The year to 30 September 2022 saw a significant decline in many quoted market
values. In addition, political uncertainties have also affected consumer
confidence across the UK and impact is now being starting to be seen. In spite
of relatively resilient underlying trading performance in the early part of
the year, the portfolio value has reduced as a result of these circumstances.
The Company made four new growth capital investments during the year totalling
£2.69 million:
Proximity Insight £0.81M retail technology software
Bidnamic £0.64M a marketing technology business
Orri Limited £0.58M an intensive day care provider for adults with eating disorders
FocalPoint £0.66M a GPS enhancement software supplier
Also, during the year, the Company further invested into eight portfolio
companies totalling £4.64 million, a
breakdown is listed later in the Investment Adviser's Review.
Two strong exits were achieved during the year, Red Paddle and MBI. On Red
Paddle, the Company received a total of £5.52 million in proceeds during the
year, generating a realised gain of £1.20 million in the year. On MBI, the
Company received a total of £6.02 million in proceeds during the year
generating a
realised gain of £1.82 million. It was disappointing that Andersen EV,
despite securing some large clients such as Porsche and JLR, went into
administration. Andersen experienced very challenging trading conditions with
substantially reduced demand, supplier chain issues, cost pressures and the
removal of government consumer support for the purchase of EV chargers. A
realised loss of £0.71 million was
recognised during the financial year as a result.
After the year end, the Company realised its equity holding in Equip Outdoor
Technologies Holdings Limited ("EOTH") for £7.34 million (including
preference dividends). These proceeds have contributed to returns received
over the life of this investment of £9.54 million, which is a multiple on
cost of 6.9x to date, an IRR of 23.2%. The Company has retained it interest
yielding loan stock.
The investment and divestment activity during the year has further increased
the proportion of the portfolio comprised of investments made since the 2015
VCT rule change to 71.5% by value at the year-end (30 September 2021: 59.5%).
The portfolio's valuation changes in the year are summarised as follows:
Investment Portfolio Capital Movement 2022 2021
£m £m
Increase in the value of unrealised investments 7.32 40.81
Decrease in the value of unrealised investments (20.48) (1.33)
Net (decrease)/increase in the value of unrealised investments (13.16) 39.48
Realised gains 3.03 4.26
Realised losses (0.71) (0.10)
Net realised gains in the year 2.32 4.16
Net investment portfolio movement in the year (10.84) 43.64
Valuation changes of portfolio investments still held
The main reductions within total valuation decreases of £(20.48) million,
were:
· Virgin Wines - £(9.67) million;
· MyTutor - £(3.60) million
· Buster and Punch - £(1.64) million, and
· Wetsuit Outlet - £(1.58) million.
Virgin Wines has consistently delivered robust trading performance relative to
its peers and continued to release positive news flow. Nevertheless, the value
of the AIM-listed stock has been impacted by the general de-rating of its
sector. MyTutor has generated strong revenues in the year to date, both above
budget and previous years. However, a reduction in comparator multiples has
reduced the value of this investment which reflects market movements rather
than company specific performance. The decrease in Buster and Punch and
Wetsuit Outlet reflects the weak economic environment and the resulting
deterioration of consumer sentiment.
The main uplifts within total valuation increases of £7.32 million were:
· Preservica - £2.84 million
· EOTH - £1.72 million
· Master Removers Group - £1.40 million
Preservica continues build its high retention, long contract term
Software-as-a-Service ("SaaS") business improving recurring revenues year on
year. EOTH and Master Removers Group continue to grow with both businesses
being very cash generative and high margin.
Realised gains
The Company realised its investments in Red Paddle and MBI during the year
under review, generating gains in the year of £1.20 million and £1.82
million, respectively. These contributed to a multiple of cost of 5.4x and
2.2x over the life of the investments. A further £0.01 million of deferred
proceeds were received from investments realised in a previous year.
Conversely, Muller EV (trading as Andersen EV) generated a realised loss in
the year of £(0.71) million.
Investment portfolio yield
In the year under review, the Company received the following amounts in loan
interest and dividend income:
2022 2021
£m £m
Interest received in the year 1.41 1.22
Dividends received in the year 1.16 0.69
Total portfolio income in the year 2.57 1.91
Portfolio Value at 30 September 73.08 88.15
Portfolio Income Yield (Income as a % of Portfolio Value at 30 September) 3.5% 2.2%
New investments during the year
The Company made four new investments totalling £2.69 million during the
year, as detailed below:
Company Business Date of Investment Amount of new investment (£m)
Proximty Insight Retail software February 2022 0.81
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.
Marketing technology business May 2022 0.64
Bidnamic
Lads Store Limited, trading as "Bidnamic" (bidnamic.com) is a marketing
technology business that offers a SaaS platform for online retailers to manage
their search engine marketing spend. The technology was all developed
internally and uses bespoke machine learning algorithms to automate the
management and optimisation of online retailers' Google shopping spend. The
ARR of the business has grown substantially over the last two years and this
is projected to continue. The investment round will be used to further enhance
the product's capabilities and drive continued ARR growth through expanding
the sales & marketing team and building a presence in North America. The
investment was made across all six VCTs advised and managed by Gresham House,
including the two Baronsmead VCTs.
FocalPoint GPS enhancement software provider September 2022 0.66
Focal Point Positioning Limited (focalpointpositioning.com) is a deeptech
business with a growing IP and software portfolio. Its proprietary technology
applies advanced physics and machine learning to dramatically improve the
satellite-based location sensitivity, accuracy, and security of devices such
as smartphones, wearables, and vehicles and reduce costs. The investment was
made across all six VCTs advised and managed by Gresham House, including the
two Baronsmead VCTs.
Orri Specialists in eating disorder support September 2022 0.58
Orri Limited (orri-uk.com) is an intensive day care provider for adults with
eating disorders. Orri provides an alternative to expensive residential
in-patient treatment and lighter-touch outpatient services by providing highly
structured day and half day sessions either online or in-person at its clinic
on Hallam Street, London. Orri opened its current clinic on Hallam Street,
London in February 2019 which provides a homely environment in a converted
4-storey manor house but which is operating at capacity. The plan sees a
larger site being leased nearby with Hallam Street being used to provide a
step-down outpatient service. The investment was made across all six VCTs,
advised and managed by Gresham House, including the two Baronsmead VCTs.
Further investments during the year
The Company made eight further investments into existing portfolio companies
in the year, totalling £4.64 million, as detailed below:
Company Business Date of Investment Amount of new investment (£m)
Preservica Provider of digital preservation solutions November 2021 1.71
Preservica (preservica.com) is a leading provider of digital preservation
solutions and its access software is used around the globe by leading
businesses, archives, libraries, museums and government organisations to
safeguard and share valuable digital content. The additional investment
provides further growth funding to enable Preservica to evolve its technology
platform and to bring a potentially transformational product to market in
collaboration with Microsoft.
Active Navigation File analysis software December 2021 0.43
Data Discovery Solutions, trading as Active Navigation (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. Active Navigation's solution is used by
significant blue chip customers, particularly those in highly regulated
industries such as energy and professional services, as well as government
entities in the USA, Canada, Australia and the UK. Active Navigation will seek
to drive continued growth from its file analysis platform with the recruitment
of experienced sales and professional services staff.
Caledonian Leisure UK leisure and experience breaks January/February 2022 0.30
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 was devastated by the COVID-19 pandemic, but the company was
well-placed to expand as lockdown and travel restrictions eased. A series of
planned investment tranches has helped the company prepare for and capitalise
on the strong demand for UK staycation holidays.
Northern Bloc Dairy and allergen-free ice cream producer April 2022 0.19
Northern Bloc Ice Cream (northern-bloc.com) is an established food brand in
the emerging and rapidly growing vegan market. By focusing on chef quality and
natural ingredients, Northern Bloc has carved out an early mover position in
the dairy and allergen free ice cream sector. The company's focus on
plant-based alternatives has strong environmental credentials as well as it
being the first ice cream brand to move wholly into sustainable packaging.
Following the initial investment in December 2020, Northern Bloc has grown and
strengthened its prospects against a challenging market backdrop. This further
investment provides additional working capital and funds a new production
facility to increase its resilience, flexibility and margins in the future.
Andersen Premium EV chargers May 2022 0.40
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 secured high profile partnerships with household brands,
establishing an attractive niche position in charging points for the high-end
EV market. This follow-on funding was 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. Unfortunately, over
the summer months the company experienced very challenging trading conditions
including substantially reduced demand, global supply chain issues, inflation
and the removal of government consumer support for the purchase of EV
chargers. The company therefore entered administration after the year end.
RotaGeek Workforce management software June 2022 0.31
RotaGeek (rotageek.com) is a provider of cloud-based enterprise software to
help larger retail, leisure and healthcare organisations to schedule staff
effectively. RotaGeek has proven its ability to solve the scheduling issue for
large retail clients effectively competing due to the strength of its
technologically advanced proposition. The company has made significant
commercial progress since the VCTs first investment nearly doubling Annual
Recurring Revenues (ARR). This investment will help boost ARR further and
enable the company to take advantage further large client opportunities.
Vivacity Provider of artificial intelligence & urban traffic control systems July 2022 0.84
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. This new investment will help boost the company's
revenues through development of new functionality to enhance its product suite
which can also be installed into the existing asset base.
Bleach Hair colourants brand August 2022 0.46
Bleach London Holdings ("Bleach") (bleachlondon.com) is an established brand
which develops and markets a range of innovative haircare and colouring
products. Bleach is regarded as a leading authority in the hair colourant
market having opened one of the world's first salons focused on colouring and
subsequently launched its first range of products in 2013. This further
investment was part of a wider £5.5 million investment round alongside
existing shareholders and a strategic partner. The funds will be used to drive
further expansion and strategic penetration of the North American market and
consolidate the brand's position in the UK market.
Portfolio Realisations during the year
The Company realised two investments, as detailed below:
Company Business Date of Investment Amount of new investment (£m)
Vian Marketing Limited (trading as Red Paddle) Design, manufacture and sale of stand-up paddleboards and windsurfing sails July 2015 £6.50 million
to 5.4x cost
November 2021
The Company sold its investment in Vian Marketing Limited (trading as Red
Paddle) to the Myers Family Office for £5.52 million (realised gain in the
year: £1.20 million). This investment generated proceeds over the life of the
investment of £6.50 million compared to original cost of £1.21 million,
which is a multiple of cost of 5.4x and an IRR of 33.2%.
Publishing and events business January 2015 £8.23 million
MBI To 2.2x cost
June 2022
The Company realised its investment in MBI for £6.02 million (realised gain
in the year: £1.82 million) including deferred proceeds received since
completion. Total proceeds received over the life of the investment were
£8.23 million compared to an original investment cost of £3.67 million,
representing a multiple on cost of 2.2x and an IRR of 13.7%.
Environmental, Social, Governance considerations
The novation of the investment advisory agreement to Gresham House has enabled
the Company to benefit from a dedicated team which is focused on
sustainability tasked with implementing the highest industry standards in this
area. Under the new enlarged investment team, each investment executive is
responsible for their own individual ESG objectives in support of the wider
overarching ESG goals of the Investment Adviser. For further details, Gresham
House published its second Sustainable Investment Report in April 2022, which
can be found on its website at: www.greshamhouse.com.
Outlook
With inflation, political uncertainty and the increasing threat of recession
impacting consumer confidence and business investment, the number of UK
businesses experiencing financial stress is set to increase. This will impact
all sectors and businesses to varying degrees and may present attractive
opportunities for a selective investor with the advantage of being able to
take a longer-term view such as your VCT. However, the economic backdrop will
also impact existing portfolio companies and falls largely outside of the
experience of this generation of management teams and advisers. Markets are
volatile and uncertain and business planning is particularly difficult. As
such, the experience of seasoned investment managers will be increasingly
important in the coming year as they seek to support their portfolio
management teams in navigating through some particularly challenging
short-term trading conditions. The VCT has ample liquidity to provide further
support to its portfolio businesses through this period and is keen to make
such investments where there is a commercial case to do so over the
medium-long term.
Gresham House Asset Management Limited
Investment Adviser
16 December 2022
Annual General Meeting
The AGM will be held on Wednes, 22 February 2023 at the offices of Shakespeare
Martineau LLP, 6(th) floor, 60 Gracechurch Street, London EC3V 0HR and will
also by webcast for those Shareholders who are unable to attend in person.
Details of how to join the meeting by virtual means will be shown on the
Company's website. Shareholders joining virtually should note you will not be
able to vote at the meeting and therefore you are encouraged to lodge your
proxy form. For further details, please see the Notice of the Meeting which
can be found at the end of this Annual Report & Financial Statements.
Further Information
The Annual Report and Accounts for the year ended 30 September 2022 will be
available shortly on www.incomeandgrowthvct.co.uk
(http://www.incomeandgrowthvct.co.uk) .
It will also be submitted shortly in full unedited text to the Financial
Conduct Authority's National Storage Mechanism and will be available for
inspection at data.fca.org.uk/#/nsm/nationalstoragemechanism
(file:///C%3A/Users/b.onanuga/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/7ZS900ED/data.fca.org.uk/#/nsm/nationalstoragemechanism)
in accordance with DTR 6.3.5(1A) of the Financial Conduct Authority's
Disclosure Guidance and Transparency Rules.
Contact:
Gresham House Asset Management Limited
Company Secretary
mobeusvcts@greshamhouse.com (mailto:mobeusvcts@greshamhouse.com)
+44 20 7382 0999
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END ACSBKABKOBDDOBD