REG - Mobeus Inc&Gwth 4 - Annual Financial Report
07/04/2022 07:00
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RNS Number : 5584H Mobeus Income & Growth 4 VCT PLC 07 April 2022
MOBEUS INCOME & GROWTH 4 VCT PLC
LEI: 213800IFNJ65R8AQW943
ANNUAL FINANCIAL RESULTS OF THE COMPANY
FOR THE YEAR ENDED 31 DECEMBER 2021
Mobeus Income & Growth 4 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 6 April 2022.
You may, in due course, view the Annual Report & Financial Statements,
comprising the statutory accounts of the Company by visiting
www.mig4vct.co.uk.
FINANCIAL HIGHLIGHTS
As at 31 December 2021:
Net assets: £92.79 million
Net asset value ("NAV") per share: 111.27 pence
➤ Net asset value ("NAV") total return(1) per share of 42.7%.
➤ Share price total return(1) per share of 50.4%.
➤ Dividends paid and declared in respect of the year totalled 9.00
pence per share. Cumulative dividends paid(1) to date stand at 143.20 pence
per share.
➤ £6.23 million was invested into four new growth capital
investments and nine existing portfolio companies during the year.
➤ Strong portfolio performance generated £25.71 million of
unrealised gains in the year.
➤ The Company realised investments totalling £12.23 million of cash
proceeds and generated net realised gains in the year of £4.19 million.
PERFORMANCE SUMMARY
Cumulative Total return(1) per share (NAV basis)
The longer term trend of performance on this measure is shown in the table
below:-
Reporting date as at NAV Cumulative dividends Cumulative total return(1)
(pence per share) paid (1) to date to Shareholders (NAV Basis)
(pence per share) (pence per share)
31 December 2021 111.27(2) 139.20(2) 250.47
31 December 2020 81.50 134.20 215.70
31 December 2019 74.90 124.20 199.10
31 December 2018 84.79 105.20 189.99
31 December 2017 86.57 101.20 187.77
(1 - )Definitions of key terms and alternative performance measures shown
above and throughout this report are shown in the Glossary of terms within the
Annual Report.
(2 - )These figures exclude the impact of a dividend of 4.00 pence per share
paid after the year-end on 7 January 2022. Payment of this dividend will
reduce the Company's NAV per share and increase cumulative dividends paid to
date by 4.00 pence per share.
The chart above shows the recent past performance of the original funds raised
in 1999. The original subscription price was 200 pence per share before the
benefit of income tax relief. Subscription prices from subsequent fundraisings
and historic performance data from 2008 are shown in the Investor Performance
Appendix on the Company's website, www.mig4vct.co.uk, where they can be
downloaded by clicking on "table" under "Reviewing the performance of your
investment" on the home page.
On 1 July 2006, Mobeus Equity Partners LLP became sole Investment Adviser to
the Company. The Investment Adviser novated to Gresham House on 1 October
2021. The cumulative total return per share (NAV basis) at this date was
122.51 pence.
CHAIRMAN'S STATEMENT
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 the Company will benefit from scale advantages, continuity, portfolio
diversification and investment in capability at Gresham House.
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, alongside the investment
and operations teams.
I am pleased to present the Annual Report of Mobeus Income & Growth 4 VCT
plc for the year ended 31 December 2021.
Overview
At the time of the previous Annual Report, I was able to report on the
Company's robust performance over a period 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 42.7% for the year
(2020: 22.2%).
Although the period under review was marked by many challenges, the portfolio
proved to be resilient and adaptive in facing them. The threat from global
supply issues in logistics, materials and labour resulting from COVID-19
disruption is expected to remain for some months, and the unfolding
geopolitical events relating to the war in Ukraine adds to the uncertainty.
However, for the most part, trading for your 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 £6.23 million of
investment capital and generated £12.23 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 nine existing
portfolio companies and supported the 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: Virgin Wines and Preservica (10.2% and
11.9% of net assets respectively as at 31 December 2021), the former of which
is listed on AIM. 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 two IPOs in March 2021, the value of the 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 largely demonstrated 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 of these 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 upratings in values of portfolio businesses, such as MPB, MyTutor
and Bella & Duke, whilst the Company has also been able to provide support
for the scaling of investments such as Preservica, to which the Company
provided significant further funding in November 2021. For further information
on value movements, see the Investment Adviser's Review below.
The Company launched an Offer for Subscription on 20 January 2022 alongside
the three other Mobeus VCTs ("Offers") and the Board was very pleased to see
that unprecedented demand meant that the target of £7.5 million was reached
in less than 24 hours, at which point no further applications were accepted.
It was gratifying that approximately half of the applications received were
from existing Shareholders in the Company. The subsequent allotment of shares
has now bolstered the Company's capital to deploy in new and exciting
investment opportunities.
Performance
The Company's NAV total return per share was 42.7% for the year to 31 December
2021 (2020: 22.2%) being the closing NAV per share of 111.27 pence plus 5.00
pence of dividends paid in the year, divided by the opening NAV per share of
81.50 pence. The share price total return was 50.4% (2020: 12.9%). The
difference between the share price and NAV total returns arises principally
due to the timing of NAV announcements which are usually made on a date
following the date to which they relate and is explained more fully under
Performance in the Strategic Report within the Annual Report. 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 6th out of 38 Generalist VCTs over
five years and 8th out of 31 Generalist VCTs over ten years, in the
Association of Investment Companies' analysis of NAV Cumulative Total Return.
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.
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 6 August 2021 to Shareholders on the register on 9
July 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 total 143.20 pence per share.
The Company has now met or exceeded the Board's dividend target of paying at
least 4.00 pence per share in respect of each financial year over the last
twelve years.
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
alone in any given year. The Board aims to distribute realised profits (such
as income and gains from realisations) achieved in a year as dividends but
notes that a reduction in income received by the Company was seen during the
year. The Board, therefore, 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 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.
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. As part of
the 5.00 pence per share dividend paid on 6 August 2021, 695,052 Ordinary
shares were allotted to participants of the DIS at a price of 92.24 pence per
share. For the further 4.00 pence per share dividend declared for the year and
paid after the year-end on 7 January 2022, 508,732 Ordinary shares were
allotted at a price of 99.57 pence per share to DIS participants.
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.mig4vct.co.uk., or
alternatively, Shareholders can opt-out by contacting Link Group, using their
details provided under Corporate Information within the Annual Report.
Investment portfolio
The portfolio movements across the year were as follows:
2021 2020
£m £m
Opening portfolio value 41.68 38.54
New and further investments 6.23 4.80
Disposal proceeds (12.23) (14.97)
Net realised gains 4.19 4.44
Valuation movements 25.71 8.87
Portfolio value at 31 December 65.58 41.68
During the year, the Company invested a total of £6.23 million into four new
and nine existing portfolio companies (2020: £4.80 million; four new, four
existing).
New investments totalling £2.53 million were made into Vivacity Labs (an
artificial intelligence and Urban Traffic Control ("UTC") 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 £3.70 million was provided across nine existing
portfolio companies, including Parsley Box (an ambient meals provider), Bleach
London (hair colourants brand), Arkk Consulting (a financial reporting service
provider), Bella & Duke (a frozen raw dog food provider), Tapas Revolution
(a Spanish restaurant chain), MyTutor (an online tutoring marketplace),
Andersen EV (a producer of premium EV chargers), Active Navigation (a provider
of enterprise-level file analysis software) and Preservica (a proprietary
digital archiving software provider).
The Company generated £6.02 million in proceeds from the realisation of its
investments in Proactive Group, Vian Marketing Limited (trading as Red Paddle)
and Omega Diagnostics during the year. In addition to £3.21 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 £3.00 million, the Company generated total
proceeds of £12.23 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 £29.90 million (2020: £13.31 million), or
71.8% (2020: 34.5%) on a like-for-like basis, compared to the start of the
year. This increase comprised a net unrealised uplift in portfolio valuations
of £25.71 million and £4.19 million in net realised gains over the year. The
portfolio was valued at £65.58 million at the year-end (2020: £41.68
million).
Within net realised gains, the principal contributors were the full realised
gains of Proactive Group and Red Paddle (total of £2.48 million). Total
proceeds received over the life of investments in Proactive Group (£1.94
million) and Red Paddle (£4.84 million) generated multiples of cost of 2.6x
(IRR: 33.0%) and 5.4x (33.2%) respectively (including £0.40 million received
in deferred proceeds from Red Paddle after the year-end. Further realised
gains were also generated from the partial realisations of Parsley Box (£0.54
million), MPB Group (£0.41 million) and MyTutor (£0.38 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, becoming
more efficient and diversifying their product offering in order to take
advantage of opportunities that have arisen.
Since the year-end, in February 2022, the Company made a new investment into
Proximity Insight, a retail software provider. This is the first investment
made since the acquisition of the Mobeus VCT investment advisory business by
Gresham House and the Company's investment was made alongside the other VCTs
advised and managed by Gresham House (the three other Mobeus VCTs and the two
Baronsmead VCTs). In accordance, with the agreed allocation policy, the
Company contributed £0.61 million towards a total Gresham House supported
investment of £5.00 million.
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. Your
Board remains confident in the future prospects of both these AIM quoted
businesses.
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, MPB and Bella & Duke.
The portfolio achieved a net increase in unrealised valuations of £25.71
million for the year in investments still held, with the biggest value
increases in Preservica, Virgin Wines and Media Business Insight partially
offset by modest valuation falls at Parsley Box, Andersen EV and Bleach
London. For further information on portfolio valuation movements, see the
Investment Adviser's Review below.
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 not affected any of
the businesses within the portfolio's top ten investments by value. Many of
those that were negatively affected have also since seen value uplifts.
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 on below.
Liquidity & Fundraising
Cash and cash equivalents held by the Company as at 31 December 2021 amounted
to £24.53 million, or 26.4% of net assets.
On 20 January 2022, the Company launched an offer for subscription of £7.50
million, alongside Offers from the other Gresham House-advised VCTs. As
previously stated in my Overview above, the Offers experienced unprecedented
demand such that the Company received subscriptions amounting to the full
amount sought within 24 hours of launching and were then unable to take any
further applications from the middle of 21 January 2022. In accordance with
the Offers' prospectus, the allotment of all shares under the offer took place
on 9 March 2022 - with cleared monies, and generated net funds (after costs)
of £7.27 million. In consideration of the environmental factors and cost
savings, the Company elected to release the Prospectus digitally, with hard
copies available on request, and invite 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 1,309,349 of its own
shares (2020: 1,245,646), representing 1.6% of the shares in issue at the
beginning of the year (2020: 1.9%), at a total cost of £1.23 million,
inclusive of expenses (2020: £0.73 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.mig4vct.co.uk (http://www.mig4vct.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 key executives of
two portfolio companies, Virgin Wines and Media Business Insight. A recording
of the event is available here: https://mvcts.connectid.cloud/
(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 11.30 am on Tuesday, 17 May 2022 at the
offices of Shakespeare Martineau, 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 11:30 am on 13 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 Composition
On 6 December 2021, the Company announced Helen Sinclair's retirement as a
Non-Executive Director of the Company, on 28 February 2022. The Board would
like to thank Helen for her significant contribution and dedication during her
directorship, particularly in her role as Chair of the Investment Committee
and wish her well for the future. The Board, comprised four directors prior to
Helen's retirement and careful consideration was given to ensuring that the
Board was well positioned to continue to fulfill its role in the direction of
the Company following her retirement. On 1 March 2022, Chris Burke was
appointed a member of both the Audit Committee and the Nomination and
Remuneration Committee. He was appointed Chair of the Investment Committee on
the same date. After considering and reviewing its composition, the Board
agreed that the remaining directors have the breadth and depth of relevant
knowledge and experience plus the appropriate skill sets such that the
recruitment of another Non-Executive Director is not necessary at the present
time. However, the directors are committed to increasing diversity of
representation and, when any further appointment to the Board is considered,
will take this fully into account alongside the skills required to serve
shareholders well in the specialist VCT sector.
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.
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,
who have a dedicated 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
their own individual ESG objectives in support of the wider overarching ESG
goals of the Investment Adviser. For further details, Gresham House
published its inaugural Sustainable Investment Report in 2021, which can be
found on its website at: www.greshamhouse.com.
Your Board would like to assure Shareholders that ESG matters form a key
consideration in investment decisions. The FCA reporting requirements
consistent with the Task Force on Climate-related Financial Disclosures
commencing from 1 January 2021 do not currently apply to the Company but will
be kept under review, the Board being mindful of any recommended changes.
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. Whilst the portfolio has limited
direct exposure to Eastern Europe, Russia's action has introduced a disruptive
factor the impact of which cannot yet be fully measured. Nonetheless, your
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 and to extend a warm welcome to new Shareholders.
Jonathan Cartwright
Chairman
6 April 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 number of sectors, principally in
established companies. Investments are usually structured as part loan stock
and part equity in order to produce a regular income stream and to generate
capital gains from realisations.
There are a number of conditions within the VCT legislation which need to be
met by the Company and which may change from time to time. The Company will
seek to make investments in accordance with the requirements of prevailing VCT
legislation.
Asset allocation and risk diversification policies, including the size and
type of investments the Company makes, are determined in part by the
requirements of prevailing VCT legislation. No single investment may represent
more than 15% (by VCT tax value) of the Company's total investments at the
date of investment.
Liquidity
The Company's cash and liquid funds are held in a portfolio of readily
realisable interest-bearing investments, deposit and current accounts, of
varying maturities, subject to the overriding criterion that the risk of loss
of capital be minimised.
Borrowing
The Company's Articles of Association permit borrowings of amounts up to 10%
of the adjusted capital and reserves (as defined therein).
However, the Company has never borrowed and the Board would only consider
doing so in exceptional circumstances.
INVESTMENT ADVISER'S REVIEW
Change in Management Arrangements
As Shareholders will be aware, Gresham House acquired the VCT investment
advisory business of Mobeus and, as a result, the entire investment and
operations teams of Mobeus joined Gresham House on 1 October 2021.
At the time of writing, the integration has been well underway for 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 continues on a positive
trajectory.
Whilst markets helped deliver a strong recovery in 2020, the main driver of
value growth 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. Indeed, the majority of the portfolio companies is
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 44% of the portfolio by value, all
of which are demonstrating the success of the direct-to-consumer business
model.
Significant up-ratings in the unquoted portfolio have been a consistent
feature across the year, with third-party investment driving value uplifts in
MPB (£2.82 million), MyTutor (£2.16 million) and Bella & Duke (£0.95
million), and a sizeable further investment from the Mobeus VCTs doing the
same in the case of Preservica (£6.20 million). 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 noted that Virgin Wines and Preservica currently account for a
significant proportion of the invested portfolio's value (31.3% of the
portfolio value, 22.1% of net assets), whilst 15.1% of the portfolio is now
held in AIM-listed investments (which equates to 10.7% of net assets). The AIM
market has witnessed some volatility in the final quarter of 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 at 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-up 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 £6.23 million (2020: £4.80 million),
comprising £2.53 million into four new investments and £3.70 million into
nine 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 amendment to 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.
Investment Portfolio Capital Movement 2021 2020
£m £m
Increase in the value of unrealised investments 27.19 12.94
Decrease in the value of unrealised investments (1.48) (4.07)
Net increase in the value of unrealised investments 25.71 8.87
Realised gains 4.26 4.52
Realised losses (0.07) (0.08)
Net realised gains in the year 4.19 4.44
Net investment portfolio capital movement in the year 29.90 13.31
The portfolio movements in the year are summarised as follows:
2021 2020
£m £m
Opening portfolio value 41.68 38.54
38.54
New and further investments 6.23 4.80
Disposal proceeds (12.23) (14.97)
Net realised gains 4.19 4.44
Valuation movements 25.71 8.87
Portfolio value at 31 December 65.58 41.68
New investments during the year
A total of £2.53 million was invested into four new investments 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 0.91
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 0.33
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 0.66
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 0.63
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 £3.70 million was invested into nine 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 0.27
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, 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 0.11
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 0.48
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.
Bella & Duke Frozen raw dog food provider May 2021 0.26
Bella & Duke (bellaandduke.com) is a direct-to-consumer subscription
service, providing premium frozen raw dog food to pet owners in the UK.
Founded in 2016, the business provides an alternative to standard meal options
for dog owners by focusing on the well documented health benefits of a raw
food diet. This area is a growing niche in the large and established pet food
market and is being driven by the premiumisation of dog food. This follow-on
investment from the Company, alongside a co-investment by the British Growth
Fund ("BGF") and existing shareholders, will provide additional working
capital enabling Bella & Duke to continue to scale.
Tapas Revolution Spanish restaurant chain June 2021 0.17
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 0.70
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 0.15
Muller EV Limited (trading as Andersen EV) (andersen-ev.com) is a design-led
manufacturer of premium 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 1.25
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 0.31
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. 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. This further funding is to market its nascent
Hubble platform in order to generate company value.
Portfolio valuation movements
The portfolio generated net unrealised gains of £25.71 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 £27.19 million. The main valuation increases
were:
Preservica £6.20 million
Virgin Wines £5.06 million
Media Business Insight £2.86 million
MPB Group £2.82 million
EOTH (Equip) £2.45 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 has attracted third-party
investment interest which has led to a sizeable re-rating. MBI has recovered
very strongly and has benefited from its ability in providing both virtual and
physical events.
Total valuation decreases were £(1.48) million. The main valuation decreases
were:
Parsley Box £(1.09) million
Andersen EV £(0.17) million
Bleach London £(0.15) million
Kudos Innovations £(0.07) million
The value of Parsley Box experienced a significant decline over the second
half of 2021 in light of market sentiment compounded by company announcements
of slower than anticipated sales growth and supply disruption. This 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 all of these are now
resolved. Bleach London has had a difficult period, having had to delay its US
launch and having experienced normalised direct-to-consumer revenues post-UK
lockdown. The US launch took place after the Company's year-end. Kudos
Innovations has been affected by contract delays.
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.
Portfolio Realisations
The Company realised three 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
Omega Diagnostics In vitro diagnostics for food intolerance, auto-immune diseases and infectious December 2010 to £1.17 million
diseases
February 2021 5.9 x cost
Following a further significant increase in the share price, the Company sold
its remaining investment in Omega Diagnostics Group plc for £0.42 million
(realised gain in the year: £0.16 million). Total proceeds received over the
ten-year life of the investment were £1.17 million, compared to an original
investment cost of £0.20 million, which is a multiple on cost of 5.9x and an
IRR of 19.9%.
Proactive Group Provider of media services and investor conferences January 2018 to £1.94 million
September 2021 2.6 x cost
On 29 September 2021, the Company sold its investment in Proactive Group
Holdings Inc ("Proactive"). The Company received £1.89 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 £1.19 million
(realised loss in the year: £0.01 million). Total proceeds received over the
nearly four-year life of the investment were £1.94 million, compared to an
original cost of £0.75 million, which is a multiple on cost of 2.6x and an
IRR of 33.0%.
Red Paddle July 2015 to November 2021 £4.44 million
Design and manufacturer of Stand up paddleboards 4.9 x cost
The Company sold its investment in Vian Marketing (trading as Red Paddle) to
Myers Family Office for £3.71 million (realised gain in the year: £2.41
million). Total proceeds received to date over the six-year life of the
investment were £4.44 million compared to an original investment cost of
£0.90 million, which is a multiple on cost of 4.9x and an IRR of 31.5%.
Further proceeds of £0.40 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 £1.25 million from the partial realisation of its holding in Parsley
Box, generating a realised gain of £0.54 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 £1.26
million from the partial realisation of MPB Group generating a realised gain
of £0.41 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
£0.70 million proceeds for the Company and a realised gain in the year of
£0.38 million.
In addition to the above, proceeds of £2.96 million were received via loan
repayments from Virgin Wines, Media Business Insight, Vian Marketing (trading
as Red Paddle), MPB Group and BG Training, generating realised gains totalling
£0.26 million. Finally, deferred consideration totalling £0.10 million in
realised gains was received in respect of investments realised in a previous
year. A small realised loss of £(0.06) 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.
Investment Portfolio Yield 2021 2020
£m £m
Interest received in the year 0.98 2.13
Dividends received in the year 0.35 0.66
Total portfolio income in the year(1) 1.33 2.79
Portfolio value at 31 December 65.58 41.68
Portfolio Income Yield (Income as a % of Portfolio value at 31 December) 2.0% 6.7%
(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 £1.08 million from the realisation of Auction
Technology Group in 2020.
New investments after the year-end
The Company made one new investment of £0.61 million after the year-end, as
detailed below:
Company Business Date of investment Amount of new investment (£m)
Proximity Insight Retail Software February 2022 0.61
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 investments after the year-end
The Company made further investments totalling £0.34 million into an existing
portfolio company 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 0.22
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 business has significantly exceeded planned
revenues since launch and this funding will provide additional working capital
to facilitate further growth.
Northern Bloc Vegan and dairy-free ice cream producer April 2022 0.12
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 vegan 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 rapidly and strengthened
its prospects. COVID disruption has impacted its plan but this further
investment provides additional working capital and funds a new production
facility to increase its resilience, flexibility and margins in the future.
Environmental, Social, 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.
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 showing signs of 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. There is a
significant exposure to businesses operating a direct-to-consumer business
model which has contributed to strong trading performance during the year.
This also gives confidence about the future strength of the portfolio and its
ability to cope with the challenges and opportunities associated with Brexit,
the macro-economic outlook and the ongoing impact of COVID-19. 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, there still remains
much uncertainty 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
stressed 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 this has 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
6 April 2022
Investment Portfolio Summary as at 31 December 2021
%of % of
Cost at Valuation at Valuation at equity portfolio
31-Dec-21 31-Dec-20 31-Dec-21 held by value
£ £ £
Investment Portfolio
Preservica Limited 3,397,745 3,611,144 11,056,628 13.1% 16.9%
Seller of proprietary digital archiving software
Virgin Wines UK plc (formerly Virgin Wines Holding Company Limited)(1,2) 45,915 6,312,889 9,486,219 8.3% 14.5%
Online wine retailer
MPB Group Limited 1,095,252 4,126,952 5,764,694 3.2% 8.8%
Online marketplace for used photographic equipment
My TutorWeb Limited (trading as MyTutor) 2,464,757 2,476,581 5,015,751 5.3% 7.6%
Digital marketplace connecting school pupils seeking one-to-one online
tutoring
EOTH Limited (trading as Equip Outdoor Technologies) 951,471 2,400,632 4,847,187 1.7% 7.4%
Distributor of branded outdoor equipment and clothing including the Rab and
Lowe Alpine brands
Media Business Insight Holdings Limited 2,225,042 1,013,748 3,560,047 15.7% 5.4%
Apublishing and events business focused on the creative production industries
End Ordinary Group Limited (trading as Buster and Punch) 1,496,785 2,646,272 3,305,392 7.8% 5.0%
Industrial inspired lighting and interiors retailer
Master Removers Group 2019 Limited (trading as Anthony Ward Thomas, 348,641 1,044,971 3,001,004 6.6% 4.6%
Bishopsgate and Aussie Man & Van)
Aspecialist logistics, storage and removals business
Data Discovery Solutions Limited (trading as ActiveNav) 1,408,640 2,201,000 2,624,447 7.7% 4.0%
Provider of global market leading file analysis software for information
governance, security and compliance
Manufacturing Services Investment Limited (trading as Wetsuit Outlet) 2,333,102 2,331,110 2,331,133 6.4% 3.6%
Online retailer in the water sports market
Bella & Duke Limited 877,381 836,042 2,050,122 4.4% 3.1%
Apremium frozen raw dog food provider
Arkk Consulting Limited 1,599,445 1,178,143 1,680,942 6.7% 2.6%
Provider of services and software to enable organisations to remain compliant
with regulatory reporting requirements
Tharstern Group Limited 1,091,886 1,037,390 1,204,783 12.2% 1.8%
MIS & Commercial print software solutions
Connect Childcare Group Limited 846,007 846,007 994,110 3.0% 1.5%
Nursery management software provider
Vivacity Labs Limited 914,754 - 914,754 4.4% 1.4%
Provider of artificial intelligence & urban traffic control systems
Bleach London Holdings Limited 629,772 832,878 791,477 3.1% 1.2%
Hair colourants brand
Rota Geek Limited 874,000 726,667 765,890 4.4% 1.2%
Workforce management software
Spanish Restaurant Group Limited (trading as Tapas Revolution) 1,219,096 139,317 739,557 6.7% 1.1%
Spanish restaurant chain
Caledonian Leisure Limited 328,502 - 695,000 6.6% 1.1%
Provider of UK leisure and experience breaks
Legatics Holdings Limited 663,011 - 663,011 6.0% 1.0%
SaaS LegalTech software provider
Pets' Kitchen Limited (trading as Vet's Klinic) 631,120 - 631,120 4.5% 1.0%
Veterinary clinics
IPV Limited 619,487 619,487 619,487 5.5% 0.9%
Provider of media asset software
Northern Bloc Ice Cream Limited 304,050 304,050 498,768 5.5% 0.8%
Dairy-free ice cream producer
Parsley Box Group plc (formerly Parsley Box Limited)(1,3) 631,003 1,937,571 417,536 3.1% 0.6%
Supplier of home delivered, ambient ready meals targeting the over 60s
CGI Creative Graphics International Limited 1,449,746 390,849 397,434 6.3% 0.6%
Vinyl graphics to global automotive, recreation vehicle and aerospace markets
RDL Corporation Limited 1,000,000 151,247 317,413 8.9% 0.5%
Recruitment consultants for the pharmaceutical, and IT industries
Muller EV Limited (trading as Andersen EV) 341,600 217,904 195,200 7.2% 0.3%
Provider of premium electric vehicle (EV) chargers
Kudos Innovations Limited 328,950 152,488 81,979 2.4% 0.1%
Online platform that provides and promotes academic research dissemination
Jablite Holdings Limited (in members' voluntary liquidation) 376,083 49,597 49,597 9.1% 0.1%
Manufacturer of expanded polystyrene products
Veritek Global Holdings Limited 1,620,086 - - 15.4% 0.0%
Maintenance of imaging equipment
BookingTek Limited 582,300 - - 3.5% 0.0%
Software for hotel groups
Oakheath Limited (in members' voluntary liquidation) 485,730 - - 4.3% 0.0%
Online platform that connects people seeking care home from experienced
independent carers
Racoon International Group Limited 484,347 - - 8.0% 0.0%
Supplier of hair extensions, hair care products and training
Disposals in year
Proactive Group Holdings Inc - 1,900,421 - 0.0% 0.0%
Provider of media services and investor conferences for companies primarily
listed on secondary public markets
Vian Marketing Limited (trading as Red Paddle Co) - 1,465,304 - 0.0% 0.0%
Design, manufacture and sale of stand-up paddleboards and windsurfing sails
Omega Diagnostics Group plc(1) - 266,680 - 0.0% 0.0%
In-vitro diagnostics for food intolerance, auto-immune diseases and infectious
diseases
BG Training Limited - 7,969 - 0.0% 0.0%
City-based provider of specialist technical training
Total 33,665,706 41,225,310 64,700,682 98.7%
Former Elderstreet Private Equity Portfolio
Cashfac Limited 260,101 451,386 851,035 2.9% 1.3%
Provider of virtual banking application software solutions to corporate
customers
Sift Group Limited 135,391 - 32,750 1.3% 0.0%
Developer of business-to-business internet communities
Total 395,492 451,386 883,785 1.3%
Total Investment Portfolio 34,061,198 41,676,696 65,584,467 100.0%
Total Investment Portfolio split by type
Growth focused portfolio⁴ 25,768,093 32,713,007 50,568,974 77.1%
MBO focused portfolio⁴ 8,293,105 8,963,689 15,015,493 22.9%
Investment Adviser's Total 34,061,198 41,676,696 65,584,467 100.0%
Notes:
(1) Quoted on AIM.
(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 Limited ("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 £1.83 million.
(3) Admitted to AIM during the period. On 7 January 2021, a £0.26 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 UK plc. Upon admission to AIM,
the Company invested a further £0.01 million and realised proceeds of
£1.25 million.
⁴ The growth focused portfolio contains all investments made after the
change in the VCT regulations in 2015 plus some investments that are growth in
nature made before this date. The MBO focused portfolio contains investments
made prior to 2015 as part of the previous MBO strategy and also includes five
companies preparing to trade.
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. This includes a key risk management review and robust
assessment of the risks, which takes place at each quarterly board meeting.
Further details of these are contained in the corporate governance section of
the Directors' Report on within the Annual Report. The principal risks and the
emerging risk identified by the Board are set out below:
Risk Possible consequence How the Board manages risk
Loss of approval as a Venture Capital Trust The Company must comply with section 274 of the Income Tax Act 2007 ("ITA") · The Company's VCT qualifying status is continually reviewed by the
which allows it to be exempt from capital gains tax on investment gains. Any Investment Adviser and confirmed at each Board meeting.
breach of these rules may lead to the Company losing its approval as a Venture
Capital Trust, qualifying Shareholders who have not held their shares for the · Regular reports are received from the VCT Status Adviser retained by
designated holding period having to repay the income tax relief they obtained the Board in order to monitor the Company's ongoing compliance with the VCT
and future dividends paid by the Company becoming subject to tax. The Company Rules.
would also lose its exemption from corporation tax on capital gains.
Economic and Political Events such as the war in Ukraine, the COVID-19 pandemic, the impact of · The Board monitors the portfolio as a whole to:
Brexit, an economic recession, supply shortages or a movement in sterling or
in interest rates, could affect trading conditions for smaller companies and (1) ensure that the Company invests as far as possible in a
consequently the value of the Company's qualifying investments. diversified portfolio of companies;
Movements in UK Stock Market indices may affect the valuation of the Company's (2) ensure that developments in the macro- economic environment such
investments, as well as affecting the Company's own share price and its as movements in interest rates are monitored; and
discount to net asset value.
(3) with regard to COVID-19, the Investment Adviser holds ongoing
The invasion of Ukraine and resulting economic sanctions imposed on trade with discussions with all the portfolio companies to ascertain where support is
Russia has also impacted global financial markets. Whilst the portfolio has required. Cash comprises a significant proportion of the net assets of the
limited direct exposure to these geographies, this action is expected to Company, further to the successful realisations and the fund-raise earlier in
exacerbate macroeconomic risk factors in the short term. the year giving the Company a strong liquidity position. The portfolio has
minimal exposure to sectors such as leisure, hospitality, retail travel which
are currently more at risk.
Investment Investment in VCT qualifying earlier stage unquoted small companies involves a · The Board regularly reviews the Company's investment strategy.
higher degree of risk than investment in fully listed companies. Smaller
companies often have limited product lines, markets or financial resources, · Careful selection and review of the investment portfolio occurs on a
may not be profitable at the point of investment and may be dependent for regular basis.
their management on a smaller number of key individuals. This may lead to
variable investment returns and the use of more subjective valuation · The Investment Adviser has provided a growing pipeline of compliant
methodologies. investment opportunities and continues to strengthen its investment team.
· The valuation of the investment portfolio and valuation methodologies
are reviewed by the Board each quarter.
Regulatory The Company is required to comply with the Companies Act, the Listing Rules of · Regulatory and legislative developments are kept under review by the
the UK Listing Authority and United Kingdom Accounting Standards. Changes to Company's solicitors and the Board.
and breach of any of these might lead to suspension of the Company's Stock
Exchange listing, financial penalties, a qualified audit report or the loss of
the Company's status as a VCT. Furthermore, changes to the UK VCT legislation
or the State-aid rules could have an adverse effect on the Company's ability
to achieve satisfactory investment returns.
Financial and operating Failure of systems (including breaches of data 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 risks, particularly · It reviews the performance of the service providers annually and has
relating to the threat of ransomware attacks, as well as internal control obtained assurance that such providers have controls in place to reduce the
risk. risk of breaches of their cyber security.
Market Movements in the valuations of the Company's investments will, inter alia, be · The Board receives quarterly valuation reports from the Investment
connected to movements in UK Stock Market indices as well as affecting the Adviser and, where necessary, challenges its valuation process and metrics.
Company's own share price and its discount to net asset value.
· The Investment Adviser alerts the Board about any adverse movements.
Asset liquidity The Company's investments may be difficult to realise. · The Board receives reports from the Investment Adviser and reviews
the portfolio at each quarterly Board meeting. It carefully monitors
investments where a particular risk has been identified.
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 that 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.
The risk profile of the Company changed as a result of changes to VCT
legislation 2015. As the Company is required to focus its new investment
activity on growth capital investments in younger companies it is anticipated
that investment returns will be more volatile and have a higher risk profile.
The Board also discusses emerging risks as and when they arise, such as the
COVID-19 pandemic, and puts in place mitigating actions to manage the risk. In
an environment of ultra-low interest rates, returns on liquidity may impact
overall performance. This factor is monitored by the Board with the objective
of optimising returns on liquid funds whilst minimising capital risk.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors are required to prepare the
financial statements and have elected to prepare the company financial
statements in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising Financial Reporting
Standard 102, the Financial Reporting Standard applicable in the UK and
Republic of Ireland ('FRS 102') and applicable law). Under company law the
directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the company and
of the profit or loss for the company for that period.
In preparing these Financial Statements, the Directors are required to:
● select suitable accounting policies and then apply them
consistently;
● make judgements and accounting estimates that are
reasonable and prudent;
● state whether the Financial Statements have been
prepared in accordance with 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 Directors' Report and
Directors' Remuneration Report which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the Financial Statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
Website publication
The Financial Statements are published on the Company's website at
www.mig4vct.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 and loss of
the Company.
b) the Annual Report includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces.
Having taken advice from the Audit Committee, the Board considers the Annual
Report and Financial Statements, taken as a whole, as fair, balanced and
understandable and that it provides the information necessary for Shareholders
to assess the Company's 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. Accordingly, any liability to a person who has
demonstrated reliance on any untrue or misleading statement or omission shall
be determined in accordance with section 90A and schedule 10A of the Financial
Services and Markets Act 2000.
The names and functions of the Directors are stated within the Annual Report.
For and on behalf of the Board
Jonathan Cartwright
Chairman
6 April 2022
FINANCIAL STATEMENTS
Income Statement for the year ended 31 December 2021
31 December 2021 31 December 2020
Notes Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Net investment portfolio gains 8 - 29,904,336 29,904,336 - 13,307,684 13,307,684
Income 3 1,354,209 - 1,354,209 2,868,103 - 2,868,103
Investment Adviser's fees 4a (428,601) (1,285,804) (1,714,405) (309,827) (929,481) (1,239,308)
Other expenses 4d (460,888) - (460,888) (426,422) - (426,422)
Profit on ordinary activities before taxation 464,720 28,618,532 29,083,252 2,131,854 12,378,203 14,510,057
Taxation on profit on ordinary activities 5 (22,097) 22,097 - (280,053) 176,602 (103,451)
Profit for the year and total comprehensive income 442,623 28,640,629 29,083,252 1,851,801 12,554,805 14,406,606
Basic and diluted earnings per ordinary share 6 0.53p 34.16p 34.69p 2.22p 15.05p 17.27p
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 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. 3707697
31 December 2021 31 December 2020
Notes £ £ £ £ £ £
Fixed assets
Investments at fair value 65,584,467 41,676,696
Current assets
Debtors and prepayments 2,895,532 403,568
Current investments 9 20,475,179 22,634,956
Cash at bank 9 4,059,487 4,053,536
27,430,198 27,092,060
Creditors: amounts falling due within one year (227,411) (307,561)
Net current assets 27,202,787 26,784,499
Net assets 92,787,254 68,461,195
Capital and reserves
Called up share capital 10 833,897 840,040
Share premium reserve 13,129,427 12,495,262
Capital redemption reserve 33,606 20,512
Revaluation reserve 32,819,832 10,205,933
Special distributable reserve 20,109,912 26,563,547
Realised capital reserve 24,028,652 16,738,215
Revenue reserve 1,831,928 1,597,686
Equity shareholders' funds 92,787,254 68,461,195
Basic and diluted net asset value per ordinary share 11 111.27p 81.50p
The notes below form part of these Financial Statements.
The Financial Statements were approved and authorised for issue by the Board
of Directors on 6 April 2022 and were signed on its behalf by:
Jonathan Cartwright
Chairman
Statement of Changes in Equity for the year ended 31 December 2021
Non-distributable reserves Distributable reserves
Called up Share Capital Special Realised Revenue
share premium redemption Revaluation distributable capital reserve
capital reserve reserve reserve reserve reserve Total
(Note a) (Note b) (Note b)
Notes £ £ £ £ £ £ £ £
At 1 January 2021 840,040 12,495,262 20,512 10,205,933 26,563,547 16,738,215 1,597,686 68,461,195
Comprehensive income for the year
Profit for the year - - - 25,711,355 - 2,929,274 442,623 29,083,252
Total comprehensive income for the year - - - 25,711,355 - 2,929,274 442,623 29,083,252
Contributions by and distributions to owners
Dividends re-invested into new shares 10 6,951 634,165 - - - - - 641,116
Shares bought back (Note c) 10 (13,094) - 13,094 - (1,230,702) - - (1,230,702)
Dividends - - - - (3,959,226) - (208,381) (4,167,607)
paid
7
Total contributions by and distributions to owners (6,143) 634,165 13,094 - (5,189,928) - (208,381) (4,757,193)
Other movements
Realised losses transferred to special reserve (Note a) - - - - (1,263,707) 1,263,707 - -
Realisation of previously unrealised appreciation - - - (3,097,456) - 3,097,456 - -
Total other movements - - - (3,097,456) (1,263,707) 4,361,163 - -
At 31 December 2021 833,897 13,129,427 33,606 32,819,832 20,109,912 24,028,652 1,831,928 92,787,254
Note a: The Special distributable reserve also provides the Company with a
reserve to absorb any existing and future realised losses and, when considered
by the Board to be in the interests of shareholders, to fund share buybacks
and for other corporate purposes. The transfer of £1,263,707 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 £20,109,912, £18,530,799 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 1,309,349 of its own shares at
the prevailing market price for a total cost of £1,230,702, which were
subsequently cancelled.
Statement of Changes in Equity for the year ended 31 December 2020
Non-distributable reserves Distributable reserves
Called up Share Capital Special Realised Revenue
share premium redemption Revaluation distributable capital reserve
capital reserve reserve reserve reserve reserve Total
£ £ £ £ £ £ £ £
At 1 January 2020 667,991 - 8,056 3,713,586 35,514,889 8,935,662 1,195,130 50,035,314
Comprehensive income for the year
Profit for the year - - - 8,866,811 - 3,687,994 1,851,801 14,406,606
Total comprehensive income for the year - - - 8,866,811 - 3,687,994 1,851,801 14,406,606
Contributions by and distributions to owners
Shares issued via Offer for Subscription 184,505 12,815,495 - - - - 13,000,000
Issue costs and facilitation fees on Offer for Subscription - (320,233) - - (145,330) - (465,563)
Shares bought back (12,456) - 12,456 - (728,216) - - (728,216)
Dividends paid - - - - (6,337,701) - (1,449,245) (7,786,946)
Total contributions by and distributions to owners 172,049 12,495,262 12,456 - (7,211,247) - (1,449,245) 4,019,275
Other movements
Realised losses transferred to special reserve - - - - (1,740,095) 1,740,095 - -
Realisation of previously unrealised appreciation - - - (2,374,464) - 2,374,464 - -
Total other movements - - - (2,374,464) (1,740,095) 4,114,559 - -
At 31 December 2020 840,040 12,495,262 20,512 10,205,933 26,563,547 16,738,215 1,597,686 68,461,195
Called up share capital
The nominal value of shares originally issued increased for subsequent share
issues either via an Offer for Subscription or Dividend Investment Scheme or
reduced due to shares bought back by the Company.
Share premium reserve
This reserve contains the excess of gross proceeds less issue costs over the
nominal value of shares allotted under recent Offers for Subscription and the
Company's Dividend Investment scheme.
Capital redemption reserve
The nominal value of shares bought back and cancelled is held in this reserve,
so that the Company's capital is maintained.
Revaluation reserve
Increases and decreases in the valuation of investments held at the year-end
are accounted for in this reserve, except to the extent that the diminution is
deemed permanent. In accordance with stating all investments at fair value
through profit and loss (as recorded in Note 8), all such movements through
both revaluation and realised capital reserves are shown within the Income
Statement for the year.
Special distributable reserve
This reserve is created from cancellations of the balances upon the Share
premium reserve, which are transferred to this reserve from time to time. The
cost of share buybacks is charged to this reserve. In addition, any realised
losses on the sale or impairment of investments (excluding transaction costs),
75% of the Investment Adviser fee expense and 100% of the Investment Adviser
performance fee expense, and the related tax effect, are transferred from the
realised capital reserve to this reserve. This reserve will also be charged
any IFA facilitation payments to advisers, which arose as part of the Offer
for Subscription.
Realised capital reserve
The following are accounted for in this reserve:
• Gains and losses on realisation of investments;
• Permanent diminution in value of investments;
• Transaction costs incurred in the acquisition and disposal of investments;
• 75% of the Investment Adviser fee expense and 100% of any performance
incentive fee payable, together with the related tax effect to this reserve in
accordance with the policies;
and
•
Capital dividends paid.
Revenue reserve
Income and expenses that are revenue in nature 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.
The Notes below form part of these Financial Statements.
The Notes below form part of these Financial Statements.
Statement of Cash Flows for the year ended 31 December 2021
Year ended 31 December 2021 Year ended 31 December 2020
Notes
£ £
Cash flows from operating activities
Profit for the financial year 29,083,252 14,406,606
Adjustments for:
Net investment portfolio gains (29,904,336) (13,307,684)
Tax charge for the current year - 103,451
Decrease/(increase) in debtors 87,812 (220,393)
Increase/(decrease) in creditors 23,302 (2,616)
Net cash (outflow)/inflow from operations (709,970) 979,364
Corporation tax paid (103,452) (35,383)
Net cash (outflow)/inflow from operating activities (813,422) 943,981
Cash flows from investing activities
Sale of investments 8 12,231,857 14,974,305
Purchase of investments 8 (6,235,292) (4,805,036)
Net cash inflow from investing activities 5,996,565 10,169,269
Cash flows from financing activities
Share issued as part of Offer for Subscription - 13,000,000
Issue costs and facilitation fees as part of Offer for subscription - (465,563)
Equity dividends paid 7 (6,106,267) (7,786,946)
Purchase of own shares (1,230,702) (728,216)
Net cash (outflow)/inflow from financing activities (7,336,969) 4,019,275
Net (decrease)/increase in cash and cash equivalents (2,153,826) 15,132,525
Cash and cash equivalents at start of year 24,688,492 9,555,967
Cash and cash equivalents at end of year 22,534,666 24,688,492
Cash and cash equivalents comprise:
Cash at bank and in hand 9 4,059,487 4,053,536
Cash equivalents 9 18,475,179 20,634,956
The notes below form part of these Financial Statements.
Cash flows from financing activities
Share issued as part of Offer for Subscription
-
13,000,000
Issue costs and facilitation fees as part of Offer for subscription
-
(465,563)
Equity dividends paid
7
(6,106,267)
(7,786,946)
Purchase of own shares
(1,230,702)
(728,216)
Net cash (outflow)/inflow from financing activities
(7,336,969)
4,019,275
Net (decrease)/increase in cash and cash equivalents
(2,153,826)
15,132,525
Cash and cash equivalents at start of year
24,688,492
9,555,967
Cash and cash equivalents at end of year
22,534,666
24,688,492
Cash and cash equivalents comprise:
Cash at bank and in hand
9
4,059,487
4,053,536
Cash equivalents
9
18,475,179
20,634,956
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 4 VCT plc is a public limited company incorporated in
England, registration number 03707697. The registered office is 5 New Street
Square, London, EC4A 3TW.
2 Basis of preparation
Asummary of the principal accounting policies, all of which have been applied
consistently throughout the year are set out next to the related disclosure
throughout the Notes to the Financial Statements. All accounting policies are
included at the top of each relevant note.
These Financial Statements have been prepared in accordance with applicable
United Kingdom accounting standards, including Financial Reporting Standard
102 ("FRS102"), with the Companies Act 2006 and the 2014 Statement of
Recommended practice, 'Financial Statements of Investment Trust Companies and
Venture Capital Trusts' ('the SORP') (updated in April 2021) issued by the
Association of Investment Companies. The Financial Statements have been
prepared on the historical cost basis except for the modification to a fair
value basis for certain financial instruments which are disclosed under FRS102
s11/12 as shown in Note 15 of the Notes to the accounts within 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 18,559 29,451
Income from investments
- from equities 348,420 657,891
- from overseas based OEICs 2,258 42,612
- from loan stock 984,972 2,113,964
- from interest on preference share dividend arrears - 17,770
1,335,650 2,832,237
Other income - 6,415
Total income 1,354,209 2,868,103
Total income comprises
Dividends 350,678 700,503
Interest 1,003,531 2,161,185
Other income - 6,415
1,354,209 2,868,103
Total loan stock interest due but not recognised in the year was £458,279
(2020: £777,919). This decrease is due to a number of investee companies
resuming payment of loan interest where previously provisions in light of
COVID-19 had been in place.
4 Investment Adviser's fees and performance fees
All expenses are accounted for on an accruals basis.
a) Investment Adviser's fees
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.
Revenue Capital Total Revenue Capital Total
2021 2021 2021 2020 2020 2020
£ £ £ £ £ £
Gresham House Asset Management Limited 428,601 1,285,804 1,714,405 309,827 929,481 1,239,308
Under the terms of a revised investment management agreement dated 12 November
2010, Mobeus Equity Partners LLP ("Mobeus") (from 1 October 2021, Gresham
House Asset Management Limited) provides investment advisory, administrative
and company secretarial services to the Company, for a fee of 2% per annum of
closing net assets, calculated on a quarterly basis by reference to the net
assets at the end of the preceding quarter, plus a fixed fee of £115,440 per
annum, the latter being subject to indexation, if applicable. In 2013, Mobeus
agreed to waive such further increases due to indexation, until otherwise
agreed with the Board.
The Investment Adviser fee includes provision for a cap on expenses excluding
irrecoverable VAT and exceptional items set at 3.4% of closing net assets at
the year end. In accordance with the investment management agreement, any
excess expenses are borne by the Investment Adviser. The excess expenses
during the year amounted to £nil (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 £349,777 (2020: £341,947) during the year ended 31 December 2021,
being £132,667 (2020: £126,542) for arrangement fees, and £217,110 (2020:
£215,405) 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 to the Company which applied at the time of each
investment. These figures are not part of these financial statements.
b) Incentive fee agreement
Under the terms of a separate agreement dated 1 November 2006, from the end of
the accounting period ending on 31 January 2009 and in each subsequent
accounting period throughout the life of the company, the Investment Adviser
will be entitled to receive a performance related incentive fee of 20% of the
dividends paid in excess of a "Target Rate" comprising firstly, an annual
dividend target of 6% of the net asset value per share at 5 April 2007
(indexed each year for RPI) and secondly a requirement that any cumulative
shortfalls below the 6 per cent hurdle must be made up in later years, while
any excess is not carried forward, whether a fee is payable for that year or
not. Payment of a fee is also conditional upon the average Net Asset Value
("NAV") per share for each such year equalling or exceeding the average Base
NAV per share for the same year. As at 31 December 2021, the average NAV per
share is below the average Base NAV per share so no incentive fee is payable
to date.
c) Offer for Subscription fees
2021 2020
£m £m
Gross funds raised by the Company - 13.00
Offer costs payable to Mobeus at 3.00% of gross funds raised by the Company - 0.39
Under the terms of an Offer for Subscription, with the other Mobeus advised
VCTs, launched on 25 October 2019, Mobeus was entitled to fees of 3.00% of the
investment amount received from investors. This amount totalled £1.74 million
across all four VCTs, out of which all the costs associated with the allotment
were met, excluding any payments to advisers facilitated under the terms of
the Offer.
d) 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 £9,750 (2020: £10,309)) - Note i) 144,750 141,524
IFA trail commission 88,938 78,825
Broker's fees 12,000 9,000
Auditor's fees - Audit of Company (excluding VAT) 33,191 26,650
- audit related assurance 6,212 5,919
services (excluding VAT) - Note ii)
Registrar's fees 42,343 54,145
Printing 46,227 42,113
Legal & professional fees 14,274 11,544
VCT monitoring fees 9,600 9,600
Directors' insurance 8,975 7,573
Listing and regulatory fees 44,787 28,700
Sundry 9,591 8,333
Running Costs 460,888 423,926
Provision against loan interest receivable - Note iii) - 2,496
Other expenses 460,888 426,422
Note i): Directors' remuneration is a related party transaction, see analysis
in Directors' Remuneration table within the Directors' Remuneration Report
within the Annual Report, which excludes the NIC above. The key management
personnel were the four Non-Executive Directors. The Company has no employees.
At the year-end, £538 was owed from Christopher Burke due to an overpayment
of salary, which was subsequently adjusted for in the following quarter.
Note ii): 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.
Note iii): Provision against loan interest receivable above relates to an
amount of £nil (2020: £2,496), being a provision made against loan stock
interest regarded as collectable in previous years.
5 Taxation on ordinary activities
The tax expense for the year comprises current tax and is recognised in profit
or loss. The current income tax charge is calculated on the basis of tax rates
and laws that have been enacted or substantively enacted by the reporting
date.
Any tax relief obtained in respect of adviser fees allocated to capital is
reflected in the capital reserve - realised and a corresponding amount is
charged against revenue. The tax relief is the amount by which corporation tax
payable is reduced as a result of these capital expenses.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right
to pay less tax in the future have occurred at the balance sheet date. Timing
differences are differences between the Company's taxable profits and its
results as stated in the financial statements that arise from the inclusion of
gains and losses in the tax assessments in periods different from those in
which they are recognised in the financial statements.
Deferred tax is measured at the average tax rates that are expected to apply
in the years in which the timing differences are expected to reverse based on
tax rates and laws that have been enacted or substantively enacted at the
balance sheet date. Deferred tax is measured on a non-discounted basis.
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.
2021 2020
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
a) Analysis of tax charge:
UK Corporation tax on profits for the year 22,097 (22,097) - 280,053 (176,602) 103,451
Total current tax charge 22,097 (22,097) - 280,053 (176,602) 103,451
Corporation tax is based on a rate of 19% (2020: 19%)
b) Profit on ordinary activities before tax 464,720 28,618,532 29,083,252 2,131,854 12,378,203 14,510,057
Profit on ordinary activities multiplied by company rate of corporation tax in 88,297 5,437,521 5,525,818 405,052 2,351,859 2,756,911
the UK of 19% (2020: 19%)
Effect of:
UK dividends not taxable (66,200) - (66,200) (124,999) - (124,999)
Net investment portfolio gains not taxable - (5,681,824) (5,681,824) - (2,528,461) (2,528,461)
Losses not utilised - 222,206 222,206 - - -
Actual tax charge 22,097 (22,097) - 280,053 (176,602) 103,451
Tax relief relating to investment adviser fees is allocated between revenue
and capital where such relief can be utilised.
No asset or liability has been recognised for deferred tax in relation to
capital gains or losses on revaluing investments as the Company is exempt from
corporation tax in relation to capital gains or losses as a result of
qualifying as a Venture Capital Trust.
There is no potential liability to deferred tax (2020: £nil). There is no
unrecognised deferred tax asset in 2021 (2020: £nil).
6 Basic and diluted earnings per share
2021 2020
£ £
Total earnings after taxation: 29,083,252 14,406,606
Basic and diluted earnings per share (Note a) 34.69p 17.27p
Net revenue from ordinary activities after taxation 442,623 1,851,801
Basic and diluted revenue return per share (Note b) 0.53p 2.22p
Net investment portfolio gains 29,904,336 13,307,684
Capital expenses (net of taxation) (1,263,707) (752,879)
Total capital return 28,640,629 12,554,805
Basic and diluted capital return per share (Note c) 34.16p 15.05p
Weighted average number of shares in issue in the year 83,840,235 83,426,755
Notes:
a) Basic earnings per share is total earnings after taxation
divided by the weighted average number of shares in issue.
b) Basic revenue earnings per share is the revenue return after
taxation divided by the weighted average number of shares in issue.
c) Basic capital earnings per share is the total capital
return after taxation divided by the weighted average number of shares in
issue.
d) There are no instruments that will increase the number of
shares in issue in future. Accordingly, the above figures currently represent
both basic and diluted returns.
7 Dividends paid and payable
Dividends payable are recognised as distributions in the financial statements
when the Company's liability to pay them has been established. This liability
is established for interim dividends when they are paid, and for final
dividends when they are approved by the Shareholders, usually at the Company's
Annual General Meeting.
Akey judgement in applying the above accounting policy is in determining the
amount of minimum income dividend to be paid in respect of a year. The
Company's status as a VCT means it has to comply with Section 259 of the
Income Tax Act 2007, which requires that no more than 15% of the income from
shares and securities in a year can be retained from the revenue available for
distribution for the year.
Amounts recognised as distributions to equity shareholders in the year:
Dividend Type For year ended 31 December Pence per share Date Paid 2021 £ 2020 £
Final Capital* 2019 4.00p 10/01/2020 - 2,671,965
Interim Income 2020 1.70p 07/05/2020 - 1,449,245
Interim Capital* 2020 4.30p 07/05/2020 - 3,665,736
Interim Income 2021 0.25p 06/08/2021 208,381 -
Interim Capital* 2021 4.75p 06/08/2021 3,959,226 -
4,167,607** 7,786,946
*-Paid out of or refunded to the Company's special distributable reserve.
** - For the year ended 31 December 2021, £4,167,607 disclosed above
differs to that shown in the Statement of Cash Flows of £6,106,267 due to a
dividend payment of £2,579,776 made to the Registrar before the year-end in
respect of the dividend paid to Shareholders on 7 January 2022. This amount is
held as a debtor at the year-end. This amount was partially offset by
£641,116 of new shares issued as part of the Company's Dividend Investment
Scheme.
Distributions to equity holders after the year end: Type For year ended 31 December Pence per share Date paid/payable 2021 £ 2020 £
Interim Income 2021 0.25p 07/01/2022 209,560 -
Interim Capital* 2021 3.75p 07/01/2022 3,143,394 -
3,352,954 -
*-Paid out of the Company's special distributable reserve.
Any proposed final dividend is subject to approval by Shareholders at the
Annual General Meeting and has not been included as a liability in these
financial statements.
Set out below are the total income dividends payable in respect of the
financial year, which is the basis on which the requirements of section 274 of
the Income Tax Act 2007 are considered.
Recognised income distributions in the financial statements for the year
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 442,623 1,851,801
Interim Income 2020 1.70p 07/05/2020 - 1,449,245
Interim Income 2021 0.25p 06/08/2021 208,381 -
Interim Income 2021 0.25p 07/01/2022 209,560 -
Total income dividends for the year 417,941 1,449,245
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 a disposal state that consideration may be received at some
future date and, subject to the conditionality and materiality of the amount
of deferred consideration, an estimate of the fair value discounted for the
time value of money may be recognised through the Income Statement. In other
cases, the proceeds will only be recognised once the right to receive payment
is established and there is no reasonable doubt that payment will be received.
Unquoted investments are stated at fair value by the Directors at each
measurement date in accordance with appropriate valuation techniques, which
are consistent with the IPEV guidelines:-
i. Each investment is considered as a whole on a 'unit of account'
basis, i.e. that the value of each portfolio company is considered as a whole,
alongside consideration of:-
The price of new 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 shares may be valued by applying a suitable
price-earnings ratio, revenue or gross profit multiple to that company's
historic, current or forecast post-tax earnings before interest, depreciation
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.
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.
The methods of fair value measurement are classified into hierarchy based on
the reliability of the information used to determine the valuation.
Level 1 - Fair value is measured based on quoted prices in an active
market.
Level 2 - Fair value is measured based on directly observable current market
prices or indirectly being derived from market prices.
Level 3 - Fair value is measured using valuation techniques using inputs that
are not based on observable market data.
Movements in investments during the year are summarised as follows:
Traded on AIM Unquoted equity shares Unquoted preference shares Unquoted loan stock Total
£ £ £ £ £
Cost at 31 December 2020 50,011 19,150,794 905,332 12,836,189 32,942,326
Unrealised gains/(losses) at 31 December 2020 216,669 13,262,864 64,294 (3,337,894) 10,205,933
Permanent impairment in value of investments as at 31 December 2020 - (1,406,948) (227) (64,388) (1,471,563)
Valuation at 31 December 2020 266,680 31,006,710 969,399 9,433,907 41,676,696
Purchases at cost - 4,238,438 566,200 1,430,654 6,235,292
Sale proceeds (Note a) (1,611,332) (6,905,286) (63,709) (3,651,530) (12,231,857)
Reclassification at value (Note b) 6,638,097 (6,188,772) (449,325) -
Net realised gains in the year 641,268 3,296,609 63,591 191,513 4,192,981
Net unrealised gains in the year (Note c) 3,969,042 20,524,983 72,857 1,144,473 25,711,355
Valuation at 31 December 2021 9,903,755 45,972,682 1,608,338 8,099,692 65,584,467
Cost at 31 December 2021 676,918 21,412,982 1,471,414 10,499,884 34,061,198
Unrealised gains/(losses) at 31 December 2021 9,226,837 25,791,648 137,151 (2,335,804) 32,819,832
Permanent impairment in value of investments at 31 December 2021 (Note d) - (1,231,948) (227) (64,388) (1,296,563)
Valuation at 31 December 2021 9,903,755 45,972,682 1,608,338 8,099,692 65,584,467
Details of investment transactions such as disposal proceeds, valuation
movements, cost and carrying value at the end of previous year are contained
in the Investment Portfolio Summary in the Annual Report.
Net realised gains in the year of £4,192,981 and unrealised gains in the year
of £25,711,355 equal net investment portfolio gains of £29,904,336 as shown
on the Income Statement.
Note a) Disposals of investment portfolio companies during the year were:
Company Type Investment Cost Disposal Proceeds Valuation at 31 December 2020 Realised gain/(loss) in year
£ £ £ £
Vian Marketing Limited (trading as Red Paddle Co) Realisation 789,006 3,947,311 1,465,304 2,482,007
Parsley Box Group plc (formerly Parsley Box Limited) Part Realisation 309,932 1,246,218 703,384 542,834
MPB Group Limited Part Realisation 385,741 1,596,618 1,185,343 411,275
My Tutorweb Limited Part Realisation 258,149 699,864 316,023 383,841
Media Business Insight Limited Loan repayment 497,718 497,718 308,854 188,864
Omega Diagnostics Group plc Realisation 50,011 422,823 266,680 156,143
Virgin Wines UK Plc (formerly Virgin Wines Loan repayment 1,884,898 1,884,898 1,884,898 -
Holding Company Limited)
CB Imports Group Limited Liquidation 175,000 - - -
Proactive Group Holdings Inc Realisation 755,340 1,894,238 1,900,421 ( 6,183)
Other capital proceeds Various 10,625 42,169 7,969 34,200
5,116,420 12,231,857 8,038,876 4,192,981
*Other capital proceeds contains a loan repayment of £10,625 from BG
Training, and £89,253 of deferred consideration from companies realised in
previous years, offset by a stamp duty payment of £57,709 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 £6,638,097 reflects the combined equity value held at the start of the
year and a follow-on investment made in the year. The amount of £449,325
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
£25,711,355 in the year were increases of £6,199,781 in Preservica Limited,
of £5,058,228 in Virgin Wines UK plc (previously Virgin Wines Holding Company
Limited), £2,855,153 in Media Business Insight Holdings Limited, £2,823,085
in MPB Group Limited, and £2,446,555 in EOTH Limited. These increases were
partly offset by the falls of £1,089,185 in Parsley Box Group plc (formerly
Parsley Box Limited), £169,104 in Muller EV Limited (trading as Andersen EV
Limited), and £151,501 in Bleach London Holdings Limited.
Note d) During the year, permanent impairments of the cost of investments have
reduced from £1,471,563 to £1,296,563 due to the disposal of one investee
company.
9 Cash at bank and Current Investments
Cash equivalents, for the purposes of the Statement of Cash flows, comprises
bank deposits repayable on up to three months' notice and funds held in OEIC
money-market funds. Current asset investments are the same but also include
bank deposits that mature after three months. Current asset investments are
disposable without curtailing or disrupting the business and are readily
convertible into known amounts of cash at their carrying values at immediate
or up to three months' notice. Cash, for the purposes of the Statement of Cash
Flows, is cash held with banks in accounts subject to immediate access. Cash
at bank in the Balance Sheet is the same.
2021 2020
£ £
OEIC Money market funds 18,475,179 20,634,956
Cash equivalents per Statement of Cash Flows 18,475,179 20,634,956
Bank deposits that mature after three months 2,000,000 2,000,000
Current asset investments 20,475,179 22,634,956
Cash at bank 4,059,487 4,053,536
10 Called up share capital
2021 2020
£ £
Allotted, called-up and fully paid:
Ordinary shares of 1p each: 83,389,721 (2020: 84,004,018) 833,897 840,040
During the year, the Company purchased 1,309,349 (2020: 1,245,646) of its own
shares for cash (representing 1.6% (2020: 1.9%) of the shares in issue at the
start of the year) at the prevailing market price for a total cost of
£1,230,702 (2020: £728,216). These shares were subsequently cancelled by the
Company.
Under the terms of the Dividend Investment Scheme, 695,092 shares were
allotted during the year for a non-cash consideration of £641,116.
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 83,389,721 (2020: 84,004,018) 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, further investments totalling £0.22
million were made into Caledonian Leisure Limited.
On 1 February 2022, a loan repayment of £0.10 million was received from Media
Business Insight Limited.
On 10 February 2022, a new investment of £0.61 million was made into
Proximity Insight Limited.
On 16 February 2022, deferred proceeds of £0.40 million were received in
respect 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 a NAV per share of 98.77 pence compared to
aNAV per share at 31 December 2021 of 107.27 pence (adjusted for the 4.00
pence dividend paid on 7 January 2022). Subsequently, on 9 March 2022,
7,361,191 Ordinary Shares were allotted at an average effective offer price of
101.89 pence per share, raising net funds of £7.27 million.
On 6 April 2022, a further investment of £0.12 million was made into Northern
Bloc Ice Cream Limited.
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.
Annual Report & Financial Statements
The Annual Report will be published on the Company's website at
www.mig4vct.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.
Annual General Meeting
The Company's next Annual General Meeting will be held on Tuesday, 17 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 13 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.
a) Investment Adviser's fees
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.
Revenue Capital Total Revenue Capital Total
2021 2021 2021 2020 2020 2020
£ £ £ £ £ £
Gresham House Asset Management Limited 428,601 1,285,804 1,714,405 309,827 929,481 1,239,308
Under the terms of a revised investment management agreement dated 12 November
2010, Mobeus Equity Partners LLP ("Mobeus") (from 1 October 2021, Gresham
House Asset Management Limited) provides investment advisory, administrative
and company secretarial services to the Company, for a fee of 2% per annum of
closing net assets, calculated on a quarterly basis by reference to the net
assets at the end of the preceding quarter, plus a fixed fee of £115,440 per
annum, the latter being subject to indexation, if applicable. In 2013, Mobeus
agreed to waive such further increases due to indexation, until otherwise
agreed with the Board.
The Investment Adviser fee includes provision for a cap on expenses excluding
irrecoverable VAT and exceptional items set at 3.4% of closing net assets at
the year end. In accordance with the investment management agreement, any
excess expenses are borne by the Investment Adviser. The excess expenses
during the year amounted to £nil (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 £349,777 (2020: £341,947) during the year ended 31 December 2021,
being £132,667 (2020: £126,542) for arrangement fees, and £217,110 (2020:
£215,405) 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 to the Company which applied at the time of each
investment. These figures are not part of these financial statements.
b) Incentive fee agreement
Under the terms of a separate agreement dated 1 November 2006, from the end of
the accounting period ending on 31 January 2009 and in each subsequent
accounting period throughout the life of the company, the Investment Adviser
will be entitled to receive a performance related incentive fee of 20% of the
dividends paid in excess of a "Target Rate" comprising firstly, an annual
dividend target of 6% of the net asset value per share at 5 April 2007
(indexed each year for RPI) and secondly a requirement that any cumulative
shortfalls below the 6 per cent hurdle must be made up in later years, while
any excess is not carried forward, whether a fee is payable for that year or
not. Payment of a fee is also conditional upon the average Net Asset Value
("NAV") per share for each such year equalling or exceeding the average Base
NAV per share for the same year. As at 31 December 2021, the average NAV per
share is below the average Base NAV per share so no incentive fee is payable
to date.
c) Offer for Subscription fees
2021 2020
£m £m
Gross funds raised by the Company - 13.00
Offer costs payable to Mobeus at 3.00% of gross funds raised by the Company - 0.39
Under the terms of an Offer for Subscription, with the other Mobeus advised
VCTs, launched on 25 October 2019, Mobeus was entitled to fees of 3.00% of the
investment amount received from investors. This amount totalled £1.74 million
across all four VCTs, out of which all the costs associated with the allotment
were met, excluding any payments to advisers facilitated under the terms of
the Offer.
d) 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 £9,750 (2020: £10,309)) - Note i) 144,750 141,524
IFA trail commission 88,938 78,825
Broker's fees 12,000 9,000
Auditor's fees - Audit of Company (excluding VAT) 33,191 26,650
- audit related assurance 6,212 5,919
services (excluding VAT) - Note ii)
Registrar's fees 42,343 54,145
Printing 46,227 42,113
Legal & professional fees 14,274 11,544
VCT monitoring fees 9,600 9,600
Directors' insurance 8,975 7,573
Listing and regulatory fees 44,787 28,700
Sundry 9,591 8,333
Running Costs 460,888 423,926
Provision against loan interest receivable - Note iii) - 2,496
Other expenses 460,888 426,422
Note i): Directors' remuneration is a related party transaction, see analysis
in Directors' Remuneration table within the Directors' Remuneration Report
within the Annual Report, which excludes the NIC above. The key management
personnel were the four Non-Executive Directors. The Company has no employees.
At the year-end, £538 was owed from Christopher Burke due to an overpayment
of salary, which was subsequently adjusted for in the following quarter.
Note ii): 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.
Note iii): Provision against loan interest receivable above relates to an
amount of £nil (2020: £2,496), being a provision made against loan stock
interest regarded as collectable in previous years.
5
Taxation on ordinary activities
The tax expense for the year comprises current tax and is recognised in profit
or loss. The current income tax charge is calculated on the basis of tax rates
and laws that have been enacted or substantively enacted by the reporting
date.
Any tax relief obtained in respect of adviser fees allocated to capital is
reflected in the capital reserve - realised and a corresponding amount is
charged against revenue. The tax relief is the amount by which corporation tax
payable is reduced as a result of these capital expenses.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right
to pay less tax in the future have occurred at the balance sheet date. Timing
differences are differences between the Company's taxable profits and its
results as stated in the financial statements that arise from the inclusion of
gains and losses in the tax assessments in periods different from those in
which they are recognised in the financial statements.
Deferred tax is measured at the average tax rates that are expected to apply
in the years in which the timing differences are expected to reverse based on
tax rates and laws that have been enacted or substantively enacted at the
balance sheet date. Deferred tax is measured on a non-discounted basis.
A deferred tax asset would be recognised only to the extent that it is more
likely than not that future taxable profits will be available against which
the asset can be utilised.
2021 2020
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
a) Analysis of tax charge:
UK Corporation tax on profits for the year 22,097 (22,097) - 280,053 (176,602) 103,451
Total current tax charge 22,097 (22,097) - 280,053 (176,602) 103,451
Corporation tax is based on a rate of 19% (2020: 19%)
b) Profit on ordinary activities before tax 464,720 28,618,532 29,083,252 2,131,854 12,378,203 14,510,057
Profit on ordinary activities multiplied by company rate of corporation tax in 88,297 5,437,521 5,525,818 405,052 2,351,859 2,756,911
the UK of 19% (2020: 19%)
Effect of:
UK dividends not taxable (66,200) - (66,200) (124,999) - (124,999)
Net investment portfolio gains not taxable - (5,681,824) (5,681,824) - (2,528,461) (2,528,461)
Losses not utilised - 222,206 222,206 - - -
Actual tax charge 22,097 (22,097) - 280,053 (176,602) 103,451
Tax relief relating to investment adviser fees is allocated between revenue
and capital where such relief can be utilised.
No asset or liability has been recognised for deferred tax in relation to
capital gains or losses on revaluing investments as the Company is exempt from
corporation tax in relation to capital gains or losses as a result of
qualifying as a Venture Capital Trust.
There is no potential liability to deferred tax (2020: £nil). There is no
unrecognised deferred tax asset in 2021 (2020: £nil).
6
Basic and diluted earnings per share
2021 2020
£ £
Total earnings after taxation: 29,083,252 14,406,606
Basic and diluted earnings per share (Note a) 34.69p 17.27p
Net revenue from ordinary activities after taxation 442,623 1,851,801
Basic and diluted revenue return per share (Note b) 0.53p 2.22p
Net investment portfolio gains 29,904,336 13,307,684
Capital expenses (net of taxation) (1,263,707) (752,879)
Total capital return 28,640,629 12,554,805
Basic and diluted capital return per share (Note c) 34.16p 15.05p
Weighted average number of shares in issue in the year 83,840,235 83,426,755
Notes:
a) Basic earnings per share is total earnings after taxation
divided by the weighted average number of shares in issue.
b) Basic revenue earnings per share is the revenue return after
taxation divided by the weighted average number of shares in issue.
c) Basic capital earnings per share is the total capital
return after taxation divided by the weighted average number of shares in
issue.
d) There are no instruments that will increase the number of
shares in issue in future. Accordingly, the above figures currently represent
both basic and diluted returns.
7
Dividends paid and payable
Dividends payable are recognised as distributions in the financial statements
when the Company's liability to pay them has been established. This liability
is established for interim dividends when they are paid, and for final
dividends when they are approved by the Shareholders, usually at the Company's
Annual General Meeting.
A key judgement in applying the above accounting policy is in determining the
amount of minimum income dividend to be paid in respect of a year. The
Company's status as a VCT means it has to comply with Section 259 of the
Income Tax Act 2007, which requires that no more than 15% of the income from
shares and securities in a year can be retained from the revenue available for
distribution for the year.
Amounts recognised as distributions to equity shareholders in the year:
Dividend Type For year ended 31 December Pence per share Date Paid 2021 £ 2020 £
Final Capital* 2019 4.00p 10/01/2020 - 2,671,965
Interim Income 2020 1.70p 07/05/2020 - 1,449,245
Interim Capital* 2020 4.30p 07/05/2020 - 3,665,736
Interim Income 2021 0.25p 06/08/2021 208,381 -
Interim Capital* 2021 4.75p 06/08/2021 3,959,226 -
4,167,607** 7,786,946
*-Paid out of or refunded to the Company's special distributable reserve.
** - For the year ended 31 December 2021, £4,167,607 disclosed above
differs to that shown in the Statement of Cash Flows of £6,106,267 due to a
dividend payment of £2,579,776 made to the Registrar before the year-end in
respect of the dividend paid to Shareholders on 7 January 2022. This amount is
held as a debtor at the year-end. This amount was partially offset by
£641,116 of new shares issued as part of the Company's Dividend Investment
Scheme.
Distributions to equity holders after the year end: Type For year ended 31 December Pence per share Date paid/payable 2021 £ 2020 £
Interim Income 2021 0.25p 07/01/2022 209,560 -
Interim Capital* 2021 3.75p 07/01/2022 3,143,394 -
3,352,954 -
*-Paid out of the Company's special distributable reserve.
Any proposed final dividend is subject to approval by Shareholders at the
Annual General Meeting and has not been included as a liability in these
financial statements.
Set out below are the total income dividends payable in respect of the
financial year, which is the basis on which the requirements of section 274 of
the Income Tax Act 2007 are considered.
Recognised income distributions in the financial statements for the year
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 442,623 1,851,801
Interim Income 2020 1.70p 07/05/2020 - 1,449,245
Interim Income 2021 0.25p 06/08/2021 208,381 -
Interim Income 2021 0.25p 07/01/2022 209,560 -
Total income dividends for the year 417,941 1,449,245
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 a disposal state that consideration may be received at some
future date and, subject to the conditionality and materiality of the amount
of deferred consideration, an estimate of the fair value discounted for the
time value of money may be recognised through the Income Statement. In other
cases, the proceeds will only be recognised once the right to receive payment
is established and there is no reasonable doubt that payment will be received.
Unquoted investments are stated at fair value by the Directors at each
measurement date in accordance with appropriate valuation techniques, which
are consistent with the IPEV guidelines:-
i. Each investment is considered as a whole on a 'unit of account'
basis, i.e. that the value of each portfolio company is considered as a whole,
alongside consideration of:-
The price of new 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 shares may be valued by applying a suitable
price-earnings ratio, revenue or gross profit multiple to that company's
historic, current or forecast post-tax earnings before interest, depreciation
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.
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.
The methods of fair value measurement are classified into hierarchy based on
the reliability of the information used to determine the valuation.
Level 1 - Fair value is measured based on quoted prices in an active
market.
Level 2 - Fair value is measured based on directly observable current market
prices or indirectly being derived from market prices.
Level 3 - Fair value is measured using valuation techniques using inputs that
are not based on observable market data.
Movements in investments during the year are summarised as follows:
Traded on AIM Unquoted equity shares Unquoted preference shares Unquoted loan stock Total
£ £ £ £ £
Cost at 31 December 2020 50,011 19,150,794 905,332 12,836,189 32,942,326
Unrealised gains/(losses) at 31 December 2020 216,669 13,262,864 64,294 (3,337,894) 10,205,933
Permanent impairment in value of investments as at 31 December 2020 - (1,406,948) (227) (64,388) (1,471,563)
Valuation at 31 December 2020 266,680 31,006,710 969,399 9,433,907 41,676,696
Purchases at cost - 4,238,438 566,200 1,430,654 6,235,292
Sale proceeds (Note a) (1,611,332) (6,905,286) (63,709) (3,651,530) (12,231,857)
Reclassification at value (Note b) 6,638,097 (6,188,772) (449,325) -
Net realised gains in the year 641,268 3,296,609 63,591 191,513 4,192,981
Net unrealised gains in the year (Note c) 3,969,042 20,524,983 72,857 1,144,473 25,711,355
Valuation at 31 December 2021 9,903,755 45,972,682 1,608,338 8,099,692 65,584,467
Cost at 31 December 2021 676,918 21,412,982 1,471,414 10,499,884 34,061,198
Unrealised gains/(losses) at 31 December 2021 9,226,837 25,791,648 137,151 (2,335,804) 32,819,832
Permanent impairment in value of investments at 31 December 2021 (Note d) - (1,231,948) (227) (64,388) (1,296,563)
Valuation at 31 December 2021 9,903,755 45,972,682 1,608,338 8,099,692 65,584,467
Details of investment transactions such as disposal proceeds, valuation
movements, cost and carrying value at the end of previous year are contained
in the Investment Portfolio Summary in the Annual Report.
Net realised gains in the year of £4,192,981 and unrealised gains in the year
of £25,711,355 equal net investment portfolio gains of £29,904,336 as shown
on the Income Statement.
Note a) Disposals of investment portfolio companies during the year were:
Company Type Investment Cost Disposal Proceeds Valuation at 31 December 2020 Realised gain/(loss) in year
£ £ £ £
Vian Marketing Limited (trading as Red Paddle Co) Realisation 789,006 3,947,311 1,465,304 2,482,007
Parsley Box Group plc (formerly Parsley Box Limited) Part Realisation 309,932 1,246,218 703,384 542,834
MPB Group Limited Part Realisation 385,741 1,596,618 1,185,343 411,275
My Tutorweb Limited Part Realisation 258,149 699,864 316,023 383,841
Media Business Insight Limited Loan repayment 497,718 497,718 308,854 188,864
Omega Diagnostics Group plc Realisation 50,011 422,823 266,680 156,143
Virgin Wines UK Plc (formerly Virgin Wines Loan repayment 1,884,898 1,884,898 1,884,898 -
Holding Company Limited)
CB Imports Group Limited Liquidation 175,000 - - -
Proactive Group Holdings Inc Realisation 755,340 1,894,238 1,900,421 ( 6,183)
Other capital proceeds Various 10,625 42,169 7,969 34,200
5,116,420 12,231,857 8,038,876 4,192,981
* Other capital proceeds contains a loan repayment of £10,625 from BG
Training, and £89,253 of deferred consideration from companies realised in
previous years, offset by a stamp duty payment of £57,709 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 £6,638,097 reflects the combined equity value held at the start of the
year and a follow-on investment made in the year. The amount of £449,325
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
£25,711,355 in the year were increases of £6,199,781 in Preservica Limited,
of £5,058,228 in Virgin Wines UK plc (previously Virgin Wines Holding Company
Limited), £2,855,153 in Media Business Insight Holdings Limited, £2,823,085
in MPB Group Limited, and £2,446,555 in EOTH Limited. These increases were
partly offset by the falls of £1,089,185 in Parsley Box Group plc (formerly
Parsley Box Limited), £169,104 in Muller EV Limited (trading as Andersen EV
Limited), and £151,501 in Bleach London Holdings Limited.
Note d) During the year, permanent impairments of the cost of investments have
reduced from £1,471,563 to £1,296,563 due to the disposal of one investee
company.
9
Cash at bank and Current Investments
Cash equivalents, for the purposes of the Statement of Cash flows, comprises
bank deposits repayable on up to three months' notice and funds held in OEIC
money-market funds. Current asset investments are the same but also include
bank deposits that mature after three months. Current asset investments are
disposable without curtailing or disrupting the business and are readily
convertible into known amounts of cash at their carrying values at immediate
or up to three months' notice. Cash, for the purposes of the Statement of Cash
Flows, is cash held with banks in accounts subject to immediate access. Cash
at bank in the Balance Sheet is the same.
2021 2020
£ £
OEIC Money market funds 18,475,179 20,634,956
Cash equivalents per Statement of Cash Flows 18,475,179 20,634,956
Bank deposits that mature after three months 2,000,000 2,000,000
Current asset investments 20,475,179 22,634,956
Cash at bank 4,059,487 4,053,536
10
Called up share capital
2021 2020
£ £
Allotted, called-up and fully paid:
Ordinary shares of 1p each: 83,389,721 (2020: 84,004,018) 833,897 840,040
During the year, the Company purchased 1,309,349 (2020: 1,245,646) of its own
shares for cash (representing 1.6% (2020: 1.9%) of the shares in issue at the
start of the year) at the prevailing market price for a total cost of
£1,230,702 (2020: £728,216). These shares were subsequently cancelled by the
Company.
Under the terms of the Dividend Investment Scheme, 695,092 shares were
allotted during the year for a non-cash consideration of £641,116.
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 83,389,721 (2020: 84,004,018) 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, further investments totalling £0.22
million were made into Caledonian Leisure Limited.
On 1 February 2022, a loan repayment of £0.10 million was received from Media
Business Insight Limited.
On 10 February 2022, a new investment of £0.61 million was made into
Proximity Insight Limited.
On 16 February 2022, deferred proceeds of £0.40 million were received in
respect 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 a NAV per share of 98.77 pence compared to
a NAV per share at 31 December 2021 of 107.27 pence (adjusted for the 4.00
pence dividend paid on 7 January 2022). Subsequently, on 9 March 2022,
7,361,191 Ordinary Shares were allotted at an average effective offer price of
101.89 pence per share, raising net funds of £7.27 million.
On 6 April 2022, a further investment of £0.12 million was made into Northern
Bloc Ice Cream Limited.
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.
Annual Report & Financial Statements
The Annual Report will be published on the Company's website at
www.mig4vct.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.
Annual General Meeting
The Company's next Annual General Meeting will be held on Tuesday, 17 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 13 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 within the
Annual Report.
(2 - )These figures exclude the impact of a dividend of 4.00 pence per share
paid after the year-end on 7 January 2022. Payment of this dividend will
reduce the Company's NAV per share and increase cumulative dividends paid to
date by 4.00 pence per share.
The chart above shows the recent past performance of the original funds raised
in 1999. The original subscription price was 200 pence per share before the
benefit of income tax relief. Subscription prices from subsequent fundraisings
and historic performance data from 2008 are shown in the Investor Performance
Appendix on the Company's website, www.mig4vct.co.uk, where they can be
downloaded by clicking on "table" under "Reviewing the performance of your
investment" on the home page.
On 1 July 2006, Mobeus Equity Partners LLP became sole Investment Adviser to
the Company. The Investment Adviser novated to Gresham House on 1 October
2021. The cumulative total return per share (NAV basis) at this date was
122.51 pence.
CHAIRMAN'S STATEMENT
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 the Company will benefit from scale advantages, continuity, portfolio
diversification and investment in capability at Gresham House.
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, alongside the investment
and operations teams.
I am pleased to present the Annual Report of Mobeus Income & Growth 4 VCT
plc for the year ended 31 December 2021.
Overview
At the time of the previous Annual Report, I was able to report on the
Company's robust performance over a period 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 42.7% for the year
(2020: 22.2%).
Although the period under review was marked by many challenges, the portfolio
proved to be resilient and adaptive in facing them. The threat from global
supply issues in logistics, materials and labour resulting from COVID-19
disruption is expected to remain for some months, and the unfolding
geopolitical events relating to the war in Ukraine adds to the uncertainty.
However, for the most part, trading for your 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 £6.23 million of
investment capital and generated £12.23 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 nine existing
portfolio companies and supported the 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: Virgin Wines and Preservica (10.2% and
11.9% of net assets respectively as at 31 December 2021), the former of which
is listed on AIM. 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 two IPOs in March 2021, the value of the 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 largely demonstrated 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 of these 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 upratings in values of portfolio businesses, such as MPB, MyTutor
and Bella & Duke, whilst the Company has also been able to provide support
for the scaling of investments such as Preservica, to which the Company
provided significant further funding in November 2021. For further information
on value movements, see the Investment Adviser's Review below.
The Company launched an Offer for Subscription on 20 January 2022 alongside
the three other Mobeus VCTs ("Offers") and the Board was very pleased to see
that unprecedented demand meant that the target of £7.5 million was reached
in less than 24 hours, at which point no further applications were accepted.
It was gratifying that approximately half of the applications received were
from existing Shareholders in the Company. The subsequent allotment of shares
has now bolstered the Company's capital to deploy in new and exciting
investment opportunities.
Performance
The Company's NAV total return per share was 42.7% for the year to 31 December
2021 (2020: 22.2%) being the closing NAV per share of 111.27 pence plus 5.00
pence of dividends paid in the year, divided by the opening NAV per share of
81.50 pence. The share price total return was 50.4% (2020: 12.9%). The
difference between the share price and NAV total returns arises principally
due to the timing of NAV announcements which are usually made on a date
following the date to which they relate and is explained more fully under
Performance in the Strategic Report within the Annual Report. 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 6th out of 38 Generalist VCTs over
five years and 8th out of 31 Generalist VCTs over ten years, in the
Association of Investment Companies' analysis of NAV Cumulative Total Return.
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.
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 6 August 2021 to Shareholders on the register on 9
July 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 total 143.20 pence per share.
The Company has now met or exceeded the Board's dividend target of paying at
least 4.00 pence per share in respect of each financial year over the last
twelve years.
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
alone in any given year. The Board aims to distribute realised profits (such
as income and gains from realisations) achieved in a year as dividends but
notes that a reduction in income received by the Company was seen during the
year. The Board, therefore, 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 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.
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. As part of
the 5.00 pence per share dividend paid on 6 August 2021, 695,052 Ordinary
shares were allotted to participants of the DIS at a price of 92.24 pence per
share. For the further 4.00 pence per share dividend declared for the year and
paid after the year-end on 7 January 2022, 508,732 Ordinary shares were
allotted at a price of 99.57 pence per share to DIS participants.
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.mig4vct.co.uk., or
alternatively, Shareholders can opt-out by contacting Link Group, using their
details provided under Corporate Information within the Annual Report.
Investment portfolio
The portfolio movements across the year were as follows:
2021 2020
£m £m
Opening portfolio value 41.68 38.54
New and further investments 6.23 4.80
Disposal proceeds (12.23) (14.97)
Net realised gains 4.19 4.44
Valuation movements 25.71 8.87
Portfolio value at 31 December 65.58 41.68
During the year, the Company invested a total of £6.23 million into four new
and nine existing portfolio companies (2020: £4.80 million; four new, four
existing).
New investments totalling £2.53 million were made into Vivacity Labs (an
artificial intelligence and Urban Traffic Control ("UTC") 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 £3.70 million was provided across nine existing
portfolio companies, including Parsley Box (an ambient meals provider), Bleach
London (hair colourants brand), Arkk Consulting (a financial reporting service
provider), Bella & Duke (a frozen raw dog food provider), Tapas Revolution
(a Spanish restaurant chain), MyTutor (an online tutoring marketplace),
Andersen EV (a producer of premium EV chargers), Active Navigation (a provider
of enterprise-level file analysis software) and Preservica (a proprietary
digital archiving software provider).
The Company generated £6.02 million in proceeds from the realisation of its
investments in Proactive Group, Vian Marketing Limited (trading as Red Paddle)
and Omega Diagnostics during the year. In addition to £3.21 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 £3.00 million, the Company generated total
proceeds of £12.23 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 £29.90 million (2020: £13.31 million), or
71.8% (2020: 34.5%) on a like-for-like basis, compared to the start of the
year. This increase comprised a net unrealised uplift in portfolio valuations
of £25.71 million and £4.19 million in net realised gains over the year. The
portfolio was valued at £65.58 million at the year-end (2020: £41.68
million).
Within net realised gains, the principal contributors were the full realised
gains of Proactive Group and Red Paddle (total of £2.48 million). Total
proceeds received over the life of investments in Proactive Group (£1.94
million) and Red Paddle (£4.84 million) generated multiples of cost of 2.6x
(IRR: 33.0%) and 5.4x (33.2%) respectively (including £0.40 million received
in deferred proceeds from Red Paddle after the year-end. Further realised
gains were also generated from the partial realisations of Parsley Box (£0.54
million), MPB Group (£0.41 million) and MyTutor (£0.38 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, becoming
more efficient and diversifying their product offering in order to take
advantage of opportunities that have arisen.
Since the year-end, in February 2022, the Company made a new investment into
Proximity Insight, a retail software provider. This is the first investment
made since the acquisition of the Mobeus VCT investment advisory business by
Gresham House and the Company's investment was made alongside the other VCTs
advised and managed by Gresham House (the three other Mobeus VCTs and the two
Baronsmead VCTs). In accordance, with the agreed allocation policy, the
Company contributed £0.61 million towards a total Gresham House supported
investment of £5.00 million.
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. Your
Board remains confident in the future prospects of both these AIM quoted
businesses.
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, MPB and Bella & Duke.
The portfolio achieved a net increase in unrealised valuations of £25.71
million for the year in investments still held, with the biggest value
increases in Preservica, Virgin Wines and Media Business Insight partially
offset by modest valuation falls at Parsley Box, Andersen EV and Bleach
London. For further information on portfolio valuation movements, see the
Investment Adviser's Review below.
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 not affected any of
the businesses within the portfolio's top ten investments by value. Many of
those that were negatively affected have also since seen value uplifts.
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 on below.
Liquidity & Fundraising
Cash and cash equivalents held by the Company as at 31 December 2021 amounted
to £24.53 million, or 26.4% of net assets.
On 20 January 2022, the Company launched an offer for subscription of £7.50
million, alongside Offers from the other Gresham House-advised VCTs. As
previously stated in my Overview above, the Offers experienced unprecedented
demand such that the Company received subscriptions amounting to the full
amount sought within 24 hours of launching and were then unable to take any
further applications from the middle of 21 January 2022. In accordance with
the Offers' prospectus, the allotment of all shares under the offer took place
on 9 March 2022 - with cleared monies, and generated net funds (after costs)
of £7.27 million. In consideration of the environmental factors and cost
savings, the Company elected to release the Prospectus digitally, with hard
copies available on request, and invite 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 1,309,349 of its own
shares (2020: 1,245,646), representing 1.6% of the shares in issue at the
beginning of the year (2020: 1.9%), at a total cost of £1.23 million,
inclusive of expenses (2020: £0.73 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.mig4vct.co.uk (http://www.mig4vct.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 key executives of
two portfolio companies, Virgin Wines and Media Business Insight. A recording
of the event is available here: https://mvcts.connectid.cloud/
(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 11.30 am on Tuesday, 17 May 2022 at the
offices of Shakespeare Martineau, 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 11:30 am on 13 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 Composition
On 6 December 2021, the Company announced Helen Sinclair's retirement as a
Non-Executive Director of the Company, on 28 February 2022. The Board would
like to thank Helen for her significant contribution and dedication during her
directorship, particularly in her role as Chair of the Investment Committee
and wish her well for the future. The Board, comprised four directors prior to
Helen's retirement and careful consideration was given to ensuring that the
Board was well positioned to continue to fulfill its role in the direction of
the Company following her retirement. On 1 March 2022, Chris Burke was
appointed a member of both the Audit Committee and the Nomination and
Remuneration Committee. He was appointed Chair of the Investment Committee on
the same date. After considering and reviewing its composition, the Board
agreed that the remaining directors have the breadth and depth of relevant
knowledge and experience plus the appropriate skill sets such that the
recruitment of another Non-Executive Director is not necessary at the present
time. However, the directors are committed to increasing diversity of
representation and, when any further appointment to the Board is considered,
will take this fully into account alongside the skills required to serve
shareholders well in the specialist VCT sector.
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.
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,
who have a dedicated 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
their own individual ESG objectives in support of the wider overarching ESG
goals of the Investment Adviser. For further details, Gresham House
published its inaugural Sustainable Investment Report in 2021, which can be
found on its website at: www.greshamhouse.com.
Your Board would like to assure Shareholders that ESG matters form a key
consideration in investment decisions. The FCA reporting requirements
consistent with the Task Force on Climate-related Financial Disclosures
commencing from 1 January 2021 do not currently apply to the Company but will
be kept under review, the Board being mindful of any recommended changes.
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. Whilst the portfolio has limited
direct exposure to Eastern Europe, Russia's action has introduced a disruptive
factor the impact of which cannot yet be fully measured. Nonetheless, your
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 and to extend a warm welcome to new Shareholders.
Jonathan Cartwright
Chairman
6 April 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 number of sectors, principally in
established companies. Investments are usually structured as part loan stock
and part equity in order to produce a regular income stream and to generate
capital gains from realisations.
There are a number of conditions within the VCT legislation which need to be
met by the Company and which may change from time to time. The Company will
seek to make investments in accordance with the requirements of prevailing VCT
legislation.
Asset allocation and risk diversification policies, including the size and
type of investments the Company makes, are determined in part by the
requirements of prevailing VCT legislation. No single investment may represent
more than 15% (by VCT tax value) of the Company's total investments at the
date of investment.
Liquidity
The Company's cash and liquid funds are held in a portfolio of readily
realisable interest-bearing investments, deposit and current accounts, of
varying maturities, subject to the overriding criterion that the risk of loss
of capital be minimised.
Borrowing
The Company's Articles of Association permit borrowings of amounts up to 10%
of the adjusted capital and reserves (as defined therein).
However, the Company has never borrowed and the Board would only consider
doing so in exceptional circumstances.
INVESTMENT ADVISER'S REVIEW
Change in Management Arrangements
As Shareholders will be aware, Gresham House acquired the VCT investment
advisory business of Mobeus and, as a result, the entire investment and
operations teams of Mobeus joined Gresham House on 1 October 2021.
At the time of writing, the integration has been well underway for 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 continues on a positive
trajectory.
Whilst markets helped deliver a strong recovery in 2020, the main driver of
value growth 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. Indeed, the majority of the portfolio companies is
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 44% of the portfolio by value, all
of which are demonstrating the success of the direct-to-consumer business
model.
Significant up-ratings in the unquoted portfolio have been a consistent
feature across the year, with third-party investment driving value uplifts in
MPB (£2.82 million), MyTutor (£2.16 million) and Bella & Duke (£0.95
million), and a sizeable further investment from the Mobeus VCTs doing the
same in the case of Preservica (£6.20 million). 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 noted that Virgin Wines and Preservica currently account for a
significant proportion of the invested portfolio's value (31.3% of the
portfolio value, 22.1% of net assets), whilst 15.1% of the portfolio is now
held in AIM-listed investments (which equates to 10.7% of net assets). The AIM
market has witnessed some volatility in the final quarter of 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 at 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-up 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 £6.23 million (2020: £4.80 million),
comprising £2.53 million into four new investments and £3.70 million into
nine 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 amendment to 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.
Investment Portfolio Capital Movement 2021 2020
£m £m
Increase in the value of unrealised investments 27.19 12.94
Decrease in the value of unrealised investments (1.48) (4.07)
Net increase in the value of unrealised investments 25.71 8.87
Realised gains 4.26 4.52
Realised losses (0.07) (0.08)
Net realised gains in the year 4.19 4.44
Net investment portfolio capital movement in the year 29.90 13.31
The portfolio movements in the year are summarised as follows:
2021 2020
£m £m
Opening portfolio value 41.68 38.54
38.54
New and further investments 6.23 4.80
Disposal proceeds (12.23) (14.97)
Net realised gains 4.19 4.44
Valuation movements 25.71 8.87
Portfolio value at 31 December 65.58 41.68
New investments during the year
A total of £2.53 million was invested into four new investments 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 0.91
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 0.33
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 0.66
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 0.63
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 £3.70 million was invested into nine 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 0.27
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, 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 0.11
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 0.48
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.
Bella & Duke Frozen raw dog food provider May 2021 0.26
Bella & Duke (bellaandduke.com) is a direct-to-consumer subscription
service, providing premium frozen raw dog food to pet owners in the UK.
Founded in 2016, the business provides an alternative to standard meal options
for dog owners by focusing on the well documented health benefits of a raw
food diet. This area is a growing niche in the large and established pet food
market and is being driven by the premiumisation of dog food. This follow-on
investment from the Company, alongside a co-investment by the British Growth
Fund ("BGF") and existing shareholders, will provide additional working
capital enabling Bella & Duke to continue to scale.
Tapas Revolution Spanish restaurant chain June 2021 0.17
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 0.70
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 0.15
Muller EV Limited (trading as Andersen EV) (andersen-ev.com) is a design-led
manufacturer of premium 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 1.25
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 0.31
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. 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. This further funding is to market its nascent
Hubble platform in order to generate company value.
Portfolio valuation movements
The portfolio generated net unrealised gains of £25.71 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 £27.19 million. The main valuation increases
were:
Preservica £6.20 million
Virgin Wines £5.06 million
Media Business Insight £2.86 million
MPB Group £2.82 million
EOTH (Equip) £2.45 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 has attracted third-party
investment interest which has led to a sizeable re-rating. MBI has recovered
very strongly and has benefited from its ability in providing both virtual and
physical events.
Total valuation decreases were £(1.48) million. The main valuation decreases
were:
Parsley Box £(1.09) million
Andersen EV £(0.17) million
Bleach London £(0.15) million
Kudos Innovations £(0.07) million
The value of Parsley Box experienced a significant decline over the second
half of 2021 in light of market sentiment compounded by company announcements
of slower than anticipated sales growth and supply disruption. This 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 all of these are now
resolved. Bleach London has had a difficult period, having had to delay its US
launch and having experienced normalised direct-to-consumer revenues post-UK
lockdown. The US launch took place after the Company's year-end. Kudos
Innovations has been affected by contract delays.
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.
Portfolio Realisations
The Company realised three 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
Omega Diagnostics In vitro diagnostics for food intolerance, auto-immune diseases and infectious December 2010 to £1.17 million
diseases
February 2021 5.9 x cost
Following a further significant increase in the share price, the Company sold
its remaining investment in Omega Diagnostics Group plc for £0.42 million
(realised gain in the year: £0.16 million). Total proceeds received over the
ten-year life of the investment were £1.17 million, compared to an original
investment cost of £0.20 million, which is a multiple on cost of 5.9x and an
IRR of 19.9%.
Proactive Group Provider of media services and investor conferences January 2018 to £1.94 million
September 2021 2.6 x cost
On 29 September 2021, the Company sold its investment in Proactive Group
Holdings Inc ("Proactive"). The Company received £1.89 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 £1.19 million
(realised loss in the year: £0.01 million). Total proceeds received over the
nearly four-year life of the investment were £1.94 million, compared to an
original cost of £0.75 million, which is a multiple on cost of 2.6x and an
IRR of 33.0%.
Red Paddle July 2015 to November 2021 £4.44 million
Design and manufacturer of Stand up paddleboards 4.9 x cost
The Company sold its investment in Vian Marketing (trading as Red Paddle) to
Myers Family Office for £3.71 million (realised gain in the year: £2.41
million). Total proceeds received to date over the six-year life of the
investment were £4.44 million compared to an original investment cost of
£0.90 million, which is a multiple on cost of 4.9x and an IRR of 31.5%.
Further proceeds of £0.40 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 £1.25 million from the partial realisation of its holding in Parsley
Box, generating a realised gain of £0.54 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 £1.26
million from the partial realisation of MPB Group generating a realised gain
of £0.41 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
£0.70 million proceeds for the Company and a realised gain in the year of
£0.38 million.
In addition to the above, proceeds of £2.96 million were received via loan
repayments from Virgin Wines, Media Business Insight, Vian Marketing (trading
as Red Paddle), MPB Group and BG Training, generating realised gains totalling
£0.26 million. Finally, deferred consideration totalling £0.10 million in
realised gains was received in respect of investments realised in a previous
year. A small realised loss of £(0.06) 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.
Investment Portfolio Yield 2021 2020
£m £m
Interest received in the year 0.98 2.13
Dividends received in the year 0.35 0.66
Total portfolio income in the year(1) 1.33 2.79
Portfolio value at 31 December 65.58 41.68
Portfolio Income Yield (Income as a % of Portfolio value at 31 December) 2.0% 6.7%
(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 £1.08 million from the realisation of Auction
Technology Group in 2020.
New investments after the year-end
The Company made one new investment of £0.61 million after the year-end, as
detailed below:
Company Business Date of investment Amount of new investment (£m)
Proximity Insight Retail Software February 2022 0.61
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 investments after the year-end
The Company made further investments totalling £0.34 million into an existing
portfolio company 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 0.22
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 business has significantly exceeded planned
revenues since launch and this funding will provide additional working capital
to facilitate further growth.
Northern Bloc Vegan and dairy-free ice cream producer April 2022 0.12
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 vegan 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 rapidly and strengthened
its prospects. COVID disruption has impacted its plan but this further
investment provides additional working capital and funds a new production
facility to increase its resilience, flexibility and margins in the future.
Environmental, Social, 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.
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 showing signs of 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. There is a
significant exposure to businesses operating a direct-to-consumer business
model which has contributed to strong trading performance during the year.
This also gives confidence about the future strength of the portfolio and its
ability to cope with the challenges and opportunities associated with Brexit,
the macro-economic outlook and the ongoing impact of COVID-19. 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, there still remains
much uncertainty 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
stressed 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 this has 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
6 April 2022
Investment Portfolio Summary as at 31 December 2021
% of % of
Cost at Valuation at Valuation at equity portfolio
31-Dec-21 31-Dec-20 31-Dec-21 held by value
£ £ £
Investment Portfolio
Preservica Limited 3,397,745 3,611,144 11,056,628 13.1% 16.9%
Seller of proprietary digital archiving software
Virgin Wines UK plc (formerly Virgin Wines Holding Company Limited)(1,2) 45,915 6,312,889 9,486,219 8.3% 14.5%
Online wine retailer
MPB Group Limited 1,095,252 4,126,952 5,764,694 3.2% 8.8%
Online marketplace for used photographic equipment
My TutorWeb Limited (trading as MyTutor) 2,464,757 2,476,581 5,015,751 5.3% 7.6%
Digital marketplace connecting school pupils seeking one-to-one online
tutoring
EOTH Limited (trading as Equip Outdoor Technologies) 951,471 2,400,632 4,847,187 1.7% 7.4%
Distributor of branded outdoor equipment and clothing including the Rab and
Lowe Alpine brands
Media Business Insight Holdings Limited 2,225,042 1,013,748 3,560,047 15.7% 5.4%
A publishing and events business focused on the creative production industries
End Ordinary Group Limited (trading as Buster and Punch) 1,496,785 2,646,272 3,305,392 7.8% 5.0%
Industrial inspired lighting and interiors retailer
Master Removers Group 2019 Limited (trading as Anthony Ward Thomas, 348,641 1,044,971 3,001,004 6.6% 4.6%
Bishopsgate and Aussie Man & Van)
A specialist logistics, storage and removals business
Data Discovery Solutions Limited (trading as ActiveNav) 1,408,640 2,201,000 2,624,447 7.7% 4.0%
Provider of global market leading file analysis software for information
governance, security and compliance
Manufacturing Services Investment Limited (trading as Wetsuit Outlet) 2,333,102 2,331,110 2,331,133 6.4% 3.6%
Online retailer in the water sports market
Bella & Duke Limited 877,381 836,042 2,050,122 4.4% 3.1%
A premium frozen raw dog food provider
Arkk Consulting Limited 1,599,445 1,178,143 1,680,942 6.7% 2.6%
Provider of services and software to enable organisations to remain compliant
with regulatory reporting requirements
Tharstern Group Limited 1,091,886 1,037,390 1,204,783 12.2% 1.8%
MIS & Commercial print software solutions
Connect Childcare Group Limited 846,007 846,007 994,110 3.0% 1.5%
Nursery management software provider
Vivacity Labs Limited 914,754 - 914,754 4.4% 1.4%
Provider of artificial intelligence & urban traffic control systems
Bleach London Holdings Limited 629,772 832,878 791,477 3.1% 1.2%
Hair colourants brand
Rota Geek Limited 874,000 726,667 765,890 4.4% 1.2%
Workforce management software
Spanish Restaurant Group Limited (trading as Tapas Revolution) 1,219,096 139,317 739,557 6.7% 1.1%
Spanish restaurant chain
Caledonian Leisure Limited 328,502 - 695,000 6.6% 1.1%
Provider of UK leisure and experience breaks
Legatics Holdings Limited 663,011 - 663,011 6.0% 1.0%
SaaS LegalTech software provider
Pets' Kitchen Limited (trading as Vet's Klinic) 631,120 - 631,120 4.5% 1.0%
Veterinary clinics
IPV Limited 619,487 619,487 619,487 5.5% 0.9%
Provider of media asset software
Northern Bloc Ice Cream Limited 304,050 304,050 498,768 5.5% 0.8%
Dairy-free ice cream producer
Parsley Box Group plc (formerly Parsley Box Limited)(1,3) 631,003 1,937,571 417,536 3.1% 0.6%
Supplier of home delivered, ambient ready meals targeting the over 60s
CGI Creative Graphics International Limited 1,449,746 390,849 397,434 6.3% 0.6%
Vinyl graphics to global automotive, recreation vehicle and aerospace markets
RDL Corporation Limited 1,000,000 151,247 317,413 8.9% 0.5%
Recruitment consultants for the pharmaceutical, and IT industries
Muller EV Limited (trading as Andersen EV) 341,600 217,904 195,200 7.2% 0.3%
Provider of premium electric vehicle (EV) chargers
Kudos Innovations Limited 328,950 152,488 81,979 2.4% 0.1%
Online platform that provides and promotes academic research dissemination
Jablite Holdings Limited (in members' voluntary liquidation) 376,083 49,597 49,597 9.1% 0.1%
Manufacturer of expanded polystyrene products
Veritek Global Holdings Limited 1,620,086 - - 15.4% 0.0%
Maintenance of imaging equipment
BookingTek Limited 582,300 - - 3.5% 0.0%
Software for hotel groups
Oakheath Limited (in members' voluntary liquidation) 485,730 - - 4.3% 0.0%
Online platform that connects people seeking care home from experienced
independent carers
Racoon International Group Limited 484,347 - - 8.0% 0.0%
Supplier of hair extensions, hair care products and training
Disposals in year
Proactive Group Holdings Inc - 1,900,421 - 0.0% 0.0%
Provider of media services and investor conferences for companies primarily
listed on secondary public markets
Vian Marketing Limited (trading as Red Paddle Co) - 1,465,304 - 0.0% 0.0%
Design, manufacture and sale of stand-up paddleboards and windsurfing sails
Omega Diagnostics Group plc(1) - 266,680 - 0.0% 0.0%
In-vitro diagnostics for food intolerance, auto-immune diseases and infectious
diseases
BG Training Limited - 7,969 - 0.0% 0.0%
City-based provider of specialist technical training
Total 33,665,706 41,225,310 64,700,682 98.7%
Former Elderstreet Private Equity Portfolio
Cashfac Limited 260,101 451,386 851,035 2.9% 1.3%
Provider of virtual banking application software solutions to corporate
customers
Sift Group Limited 135,391 - 32,750 1.3% 0.0%
Developer of business-to-business internet communities
Total 395,492 451,386 883,785 1.3%
Total Investment Portfolio 34,061,198 41,676,696 65,584,467 100.0%
Total Investment Portfolio split by type
Growth focused portfolio⁴ 25,768,093 32,713,007 50,568,974 77.1%
MBO focused portfolio⁴ 8,293,105 8,963,689 15,015,493 22.9%
Investment Adviser's Total 34,061,198 41,676,696 65,584,467 100.0%
Notes:
(1) Quoted on AIM.
(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 Limited ("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 £1.83 million.
(3) Admitted to AIM during the period. On 7 January 2021, a £0.26 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 UK plc. Upon admission to AIM,
the Company invested a further £0.01 million and realised proceeds of
£1.25 million.
⁴ The growth focused portfolio contains all investments made after the
change in the VCT regulations in 2015 plus some investments that are growth in
nature made before this date. The MBO focused portfolio contains investments
made prior to 2015 as part of the previous MBO strategy and also includes five
companies preparing to trade.
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. This includes a key risk management review and robust
assessment of the risks, which takes place at each quarterly board meeting.
Further details of these are contained in the corporate governance section of
the Directors' Report on within the Annual Report. The principal risks and the
emerging risk identified by the Board are set out below:
Risk Possible consequence How the Board manages risk
Loss of approval as a Venture Capital Trust The Company must comply with section 274 of the Income Tax Act 2007 ("ITA") · The Company's VCT qualifying status is continually reviewed by the
which allows it to be exempt from capital gains tax on investment gains. Any Investment Adviser and confirmed at each Board meeting.
breach of these rules may lead to the Company losing its approval as a Venture
Capital Trust, qualifying Shareholders who have not held their shares for the · Regular reports are received from the VCT Status Adviser retained by
designated holding period having to repay the income tax relief they obtained the Board in order to monitor the Company's ongoing compliance with the VCT
and future dividends paid by the Company becoming subject to tax. The Company Rules.
would also lose its exemption from corporation tax on capital gains.
Economic and Political Events such as the war in Ukraine, the COVID-19 pandemic, the impact of · The Board monitors the portfolio as a whole to:
Brexit, an economic recession, supply shortages or a movement in sterling or
in interest rates, could affect trading conditions for smaller companies and (1) ensure that the Company invests as far as possible in a
consequently the value of the Company's qualifying investments. diversified portfolio of companies;
Movements in UK Stock Market indices may affect the valuation of the Company's (2) ensure that developments in the macro- economic environment such
investments, as well as affecting the Company's own share price and its as movements in interest rates are monitored; and
discount to net asset value.
(3) with regard to COVID-19, the Investment Adviser holds ongoing
The invasion of Ukraine and resulting economic sanctions imposed on trade with discussions with all the portfolio companies to ascertain where support is
Russia has also impacted global financial markets. Whilst the portfolio has required. Cash comprises a significant proportion of the net assets of the
limited direct exposure to these geographies, this action is expected to Company, further to the successful realisations and the fund-raise earlier in
exacerbate macroeconomic risk factors in the short term. the year giving the Company a strong liquidity position. The portfolio has
minimal exposure to sectors such as leisure, hospitality, retail travel which
are currently more at risk.
Investment Investment in VCT qualifying earlier stage unquoted small companies involves a · The Board regularly reviews the Company's investment strategy.
higher degree of risk than investment in fully listed companies. Smaller
companies often have limited product lines, markets or financial resources, · Careful selection and review of the investment portfolio occurs on a
may not be profitable at the point of investment and may be dependent for regular basis.
their management on a smaller number of key individuals. This may lead to
variable investment returns and the use of more subjective valuation · The Investment Adviser has provided a growing pipeline of compliant
methodologies. investment opportunities and continues to strengthen its investment team.
· The valuation of the investment portfolio and valuation methodologies
are reviewed by the Board each quarter.
Regulatory The Company is required to comply with the Companies Act, the Listing Rules of · Regulatory and legislative developments are kept under review by the
the UK Listing Authority and United Kingdom Accounting Standards. Changes to Company's solicitors and the Board.
and breach of any of these might lead to suspension of the Company's Stock
Exchange listing, financial penalties, a qualified audit report or the loss of
the Company's status as a VCT. Furthermore, changes to the UK VCT legislation
or the State-aid rules could have an adverse effect on the Company's ability
to achieve satisfactory investment returns.
Financial and operating Failure of systems (including breaches of data 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 risks, particularly · It reviews the performance of the service providers annually and has
relating to the threat of ransomware attacks, as well as internal control obtained assurance that such providers have controls in place to reduce the
risk. risk of breaches of their cyber security.
Market Movements in the valuations of the Company's investments will, inter alia, be · The Board receives quarterly valuation reports from the Investment
connected to movements in UK Stock Market indices as well as affecting the Adviser and, where necessary, challenges its valuation process and metrics.
Company's own share price and its discount to net asset value.
· The Investment Adviser alerts the Board about any adverse movements.
Asset liquidity The Company's investments may be difficult to realise. · The Board receives reports from the Investment Adviser and reviews
the portfolio at each quarterly Board meeting. It carefully monitors
investments where a particular risk has been identified.
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 that 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.
The risk profile of the Company changed as a result of changes to VCT
legislation 2015. As the Company is required to focus its new investment
activity on growth capital investments in younger companies it is anticipated
that investment returns will be more volatile and have a higher risk profile.
The Board also discusses emerging risks as and when they arise, such as the
COVID-19 pandemic, and puts in place mitigating actions to manage the risk. In
an environment of ultra-low interest rates, returns on liquidity may impact
overall performance. This factor is monitored by the Board with the objective
of optimising returns on liquid funds whilst minimising capital risk.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors are required to prepare the
financial statements and have elected to prepare the company financial
statements in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising Financial Reporting
Standard 102, the Financial Reporting Standard applicable in the UK and
Republic of Ireland ('FRS 102') and applicable law). Under company law the
directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the company and
of the profit or loss for the company for that period.
In preparing these Financial Statements, the Directors are required to:
● select suitable accounting policies and then apply them
consistently;
● make judgements and accounting estimates that are
reasonable and prudent;
● state whether the Financial Statements have been
prepared in accordance with 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 Directors' Report and
Directors' Remuneration Report which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the Financial Statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
Website publication
The Financial Statements are published on the Company's website at
www.mig4vct.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 and loss of
the Company.
b) the Annual Report includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces.
Having taken advice from the Audit Committee, the Board considers the Annual
Report and Financial Statements, taken as a whole, as fair, balanced and
understandable and that it provides the information necessary for Shareholders
to assess the Company's 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. Accordingly, any liability to a person who has
demonstrated reliance on any untrue or misleading statement or omission shall
be determined in accordance with section 90A and schedule 10A of the Financial
Services and Markets Act 2000.
The names and functions of the Directors are stated within the Annual Report.
For and on behalf of the Board
Jonathan Cartwright
Chairman
6 April 2022
FINANCIAL STATEMENTS
Income Statement for the year ended 31 December 2021
31 December 2021 31 December 2020
Notes Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Net investment portfolio gains 8 - 29,904,336 29,904,336 - 13,307,684 13,307,684
Income 3 1,354,209 - 1,354,209 2,868,103 - 2,868,103
Investment Adviser's fees 4a (428,601) (1,285,804) (1,714,405) (309,827) (929,481) (1,239,308)
Other expenses 4d (460,888) - (460,888) (426,422) - (426,422)
Profit on ordinary activities before taxation 464,720 28,618,532 29,083,252 2,131,854 12,378,203 14,510,057
Taxation on profit on ordinary activities 5 (22,097) 22,097 - (280,053) 176,602 (103,451)
Profit for the year and total comprehensive income 442,623 28,640,629 29,083,252 1,851,801 12,554,805 14,406,606
Basic and diluted earnings per ordinary share 6 0.53p 34.16p 34.69p 2.22p 15.05p 17.27p
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 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. 3707697
31 December 2021 31 December 2020
Notes £ £ £ £ £ £
Fixed assets
Investments at fair value 65,584,467 41,676,696
Current assets
Debtors and prepayments 2,895,532 403,568
Current investments 9 20,475,179 22,634,956
Cash at bank 9 4,059,487 4,053,536
27,430,198 27,092,060
Creditors: amounts falling due within one year (227,411) (307,561)
Net current assets 27,202,787 26,784,499
Net assets 92,787,254 68,461,195
Capital and reserves
Called up share capital 10 833,897 840,040
Share premium reserve 13,129,427 12,495,262
Capital redemption reserve 33,606 20,512
Revaluation reserve 32,819,832 10,205,933
Special distributable reserve 20,109,912 26,563,547
Realised capital reserve 24,028,652 16,738,215
Revenue reserve 1,831,928 1,597,686
Equity shareholders' funds 92,787,254 68,461,195
Basic and diluted net asset value per ordinary share 11 111.27p 81.50p
The notes below form part of these Financial Statements.
The Financial Statements were approved and authorised for issue by the Board
of Directors on 6 April 2022 and were signed on its behalf by:
Jonathan Cartwright
Chairman
Statement of Changes in Equity for the year ended 31 December 2021
Non-distributable reserves Distributable reserves
Called up Share Capital Special Realised Revenue
share premium redemption Revaluation distributable capital reserve
capital reserve reserve reserve reserve reserve Total
(Note a) (Note b) (Note b)
Notes £ £ £ £ £ £ £ £
At 1 January 2021 840,040 12,495,262 20,512 10,205,933 26,563,547 16,738,215 1,597,686 68,461,195
Comprehensive income for the year
Profit for the year - - - 25,711,355 - 2,929,274 442,623 29,083,252
Total comprehensive income for the year - - - 25,711,355 - 2,929,274 442,623 29,083,252
Contributions by and distributions to owners
Dividends re-invested into new shares 10 6,951 634,165 - - - - - 641,116
Shares bought back (Note c) 10 (13,094) - 13,094 - (1,230,702) - - (1,230,702)
Dividends - - - - (3,959,226) - (208,381) (4,167,607)
paid
7
Total contributions by and distributions to owners (6,143) 634,165 13,094 - (5,189,928) - (208,381) (4,757,193)
Other movements
Realised losses transferred to special reserve (Note a) - - - - (1,263,707) 1,263,707 - -
Realisation of previously unrealised appreciation - - - (3,097,456) - 3,097,456 - -
Total other movements - - - (3,097,456) (1,263,707) 4,361,163 - -
At 31 December 2021 833,897 13,129,427 33,606 32,819,832 20,109,912 24,028,652 1,831,928 92,787,254
Note a: The Special distributable reserve also provides the Company with a
reserve to absorb any existing and future realised losses and, when considered
by the Board to be in the interests of shareholders, to fund share buybacks
and for other corporate purposes. The transfer of £1,263,707 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 £20,109,912, £18,530,799 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 1,309,349 of its own shares at
the prevailing market price for a total cost of £1,230,702, which were
subsequently cancelled.
Statement of Changes in Equity for the year ended 31 December 2020
Non-distributable reserves Distributable reserves
Called up Share Capital Special Realised Revenue
share premium redemption Revaluation distributable capital reserve
capital reserve reserve reserve reserve reserve Total
£ £ £ £ £ £ £ £
At 1 January 2020 667,991 - 8,056 3,713,586 35,514,889 8,935,662 1,195,130 50,035,314
Comprehensive income for the year
Profit for the year - - - 8,866,811 - 3,687,994 1,851,801 14,406,606
Total comprehensive income for the year - - - 8,866,811 - 3,687,994 1,851,801 14,406,606
Contributions by and distributions to owners
Shares issued via Offer for Subscription 184,505 12,815,495 - - - - 13,000,000
Issue costs and facilitation fees on Offer for Subscription - (320,233) - - (145,330) - (465,563)
Shares bought back (12,456) - 12,456 - (728,216) - - (728,216)
Dividends paid - - - - (6,337,701) - (1,449,245) (7,786,946)
Total contributions by and distributions to owners 172,049 12,495,262 12,456 - (7,211,247) - (1,449,245) 4,019,275
Other movements
Realised losses transferred to special reserve - - - - (1,740,095) 1,740,095 - -
Realisation of previously unrealised appreciation - - - (2,374,464) - 2,374,464 - -
Total other movements - - - (2,374,464) (1,740,095) 4,114,559 - -
At 31 December 2020 840,040 12,495,262 20,512 10,205,933 26,563,547 16,738,215 1,597,686 68,461,195
Called up share capital
The nominal value of shares originally issued increased for subsequent share
issues either via an Offer for Subscription or Dividend Investment Scheme or
reduced due to shares bought back by the Company.
Share premium reserve
This reserve contains the excess of gross proceeds less issue costs over the
nominal value of shares allotted under recent Offers for Subscription and the
Company's Dividend Investment scheme.
Capital redemption reserve
The nominal value of shares bought back and cancelled is held in this reserve,
so that the Company's capital is maintained.
Revaluation reserve
Increases and decreases in the valuation of investments held at the year-end
are accounted for in this reserve, except to the extent that the diminution is
deemed permanent. In accordance with stating all investments at fair value
through profit and loss (as recorded in Note 8), all such movements through
both revaluation and realised capital reserves are shown within the Income
Statement for the year.
Special distributable reserve
This reserve is created from cancellations of the balances upon the Share
premium reserve, which are transferred to this reserve from time to time. The
cost of share buybacks is charged to this reserve. In addition, any realised
losses on the sale or impairment of investments (excluding transaction costs),
75% of the Investment Adviser fee expense and 100% of the Investment Adviser
performance fee expense, and the related tax effect, are transferred from the
realised capital reserve to this reserve. This reserve will also be charged
any IFA facilitation payments to advisers, which arose as part of the Offer
for Subscription.
Realised capital reserve
The following are accounted for in this reserve:
• Gains and losses on realisation of investments;
• Permanent diminution in value of investments;
• Transaction costs incurred in the acquisition and disposal of investments;
• 75% of the Investment Adviser fee expense and 100% of any performance
incentive fee payable, together with the related tax effect to this reserve in
accordance with the policies;
and
•
Capital dividends paid.
Revenue reserve
Income and expenses that are revenue in nature 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.
The Notes below form part of these Financial Statements.
The Notes below form part of these Financial Statements.
Statement of Cash Flows for the year ended 31 December 2021
Year ended 31 December 2021 Year ended 31 December 2020
Notes
£ £
Cash flows from operating activities
Profit for the financial year 29,083,252 14,406,606
Adjustments for:
Net investment portfolio gains (29,904,336) (13,307,684)
Tax charge for the current year - 103,451
Decrease/(increase) in debtors 87,812 (220,393)
Increase/(decrease) in creditors 23,302 (2,616)
Net cash (outflow)/inflow from operations (709,970) 979,364
Corporation tax paid (103,452) (35,383)
Net cash (outflow)/inflow from operating activities (813,422) 943,981
Cash flows from investing activities
Sale of investments 8 12,231,857 14,974,305
Purchase of investments 8 (6,235,292) (4,805,036)
Net cash inflow from investing activities 5,996,565 10,169,269
Cash flows from financing activities
Share issued as part of Offer for Subscription - 13,000,000
Issue costs and facilitation fees as part of Offer for subscription - (465,563)
Equity dividends paid 7 (6,106,267) (7,786,946)
Purchase of own shares (1,230,702) (728,216)
Net cash (outflow)/inflow from financing activities (7,336,969) 4,019,275
Net (decrease)/increase in cash and cash equivalents (2,153,826) 15,132,525
Cash and cash equivalents at start of year 24,688,492 9,555,967
Cash and cash equivalents at end of year 22,534,666 24,688,492
Cash and cash equivalents comprise:
Cash at bank and in hand 9 4,059,487 4,053,536
Cash equivalents 9 18,475,179 20,634,956
The notes below form part of these Financial Statements.
Cash flows from financing activities
Share issued as part of Offer for Subscription
-
13,000,000
Issue costs and facilitation fees as part of Offer for subscription
-
(465,563)
Equity dividends paid
7
(6,106,267)
(7,786,946)
Purchase of own shares
(1,230,702)
(728,216)
Net cash (outflow)/inflow from financing activities
(7,336,969)
4,019,275
Net (decrease)/increase in cash and cash equivalents
(2,153,826)
15,132,525
Cash and cash equivalents at start of year
24,688,492
9,555,967
Cash and cash equivalents at end of year
22,534,666
24,688,492
Cash and cash equivalents comprise:
Cash at bank and in hand
9
4,059,487
4,053,536
Cash equivalents
9
18,475,179
20,634,956
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 4 VCT plc is a public limited company incorporated in
England, registration number 03707697. 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 next to the related disclosure
throughout the Notes to the Financial Statements. All accounting policies are
included at the top of each relevant note.
These Financial Statements have been prepared in accordance with applicable
United Kingdom accounting standards, including Financial Reporting Standard
102 ("FRS102"), with the Companies Act 2006 and the 2014 Statement of
Recommended practice, 'Financial Statements of Investment Trust Companies and
Venture Capital Trusts' ('the SORP') (updated in April 2021) issued by the
Association of Investment Companies. The Financial Statements have been
prepared on the historical cost basis except for the modification to a fair
value basis for certain financial instruments which are disclosed under FRS102
s11/12 as shown in Note 15 of the Notes to the accounts within 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 18,559 29,451
Income from investments
- from equities 348,420 657,891
- from overseas based OEICs 2,258 42,612
- from loan stock 984,972 2,113,964
- from interest on preference share dividend arrears - 17,770
1,335,650 2,832,237
Other income - 6,415
Total income 1,354,209 2,868,103
Total income comprises
Dividends 350,678 700,503
Interest 1,003,531 2,161,185
Other income - 6,415
1,354,209 2,868,103
Total loan stock interest due but not recognised in the year was £458,279
(2020: £777,919). This decrease is due to a number of investee companies
resuming payment of loan interest where previously provisions in light of
COVID-19 had been in place.
4 Investment Adviser's fees and performance fees
All expenses are accounted for on an accruals basis.
a) Investment Adviser's fees
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.
Revenue Capital Total Revenue Capital Total
2021 2021 2021 2020 2020 2020
£ £ £ £ £ £
Gresham House Asset Management Limited 428,601 1,285,804 1,714,405 309,827 929,481 1,239,308
Under the terms of a revised investment management agreement dated 12 November
2010, Mobeus Equity Partners LLP ("Mobeus") (from 1 October 2021, Gresham
House Asset Management Limited) provides investment advisory, administrative
and company secretarial services to the Company, for a fee of 2% per annum of
closing net assets, calculated on a quarterly basis by reference to the net
assets at the end of the preceding quarter, plus a fixed fee of £115,440 per
annum, the latter being subject to indexation, if applicable. In 2013, Mobeus
agreed to waive such further increases due to indexation, until otherwise
agreed with the Board.
The Investment Adviser fee includes provision for a cap on expenses excluding
irrecoverable VAT and exceptional items set at 3.4% of closing net assets at
the year end. In accordance with the investment management agreement, any
excess expenses are borne by the Investment Adviser. The excess expenses
during the year amounted to £nil (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 £349,777 (2020: £341,947) during the year ended 31 December 2021,
being £132,667 (2020: £126,542) for arrangement fees, and £217,110 (2020:
£215,405) 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 to the Company which applied at the time of each
investment. These figures are not part of these financial statements.
b) Incentive fee agreement
Under the terms of a separate agreement dated 1 November 2006, from the end of
the accounting period ending on 31 January 2009 and in each subsequent
accounting period throughout the life of the company, the Investment Adviser
will be entitled to receive a performance related incentive fee of 20% of the
dividends paid in excess of a "Target Rate" comprising firstly, an annual
dividend target of 6% of the net asset value per share at 5 April 2007
(indexed each year for RPI) and secondly a requirement that any cumulative
shortfalls below the 6 per cent hurdle must be made up in later years, while
any excess is not carried forward, whether a fee is payable for that year or
not. Payment of a fee is also conditional upon the average Net Asset Value
("NAV") per share for each such year equalling or exceeding the average Base
NAV per share for the same year. As at 31 December 2021, the average NAV per
share is below the average Base NAV per share so no incentive fee is payable
to date.
c) Offer for Subscription fees
2021 2020
£m £m
Gross funds raised by the Company - 13.00
Offer costs payable to Mobeus at 3.00% of gross funds raised by the Company - 0.39
Under the terms of an Offer for Subscription, with the other Mobeus advised
VCTs, launched on 25 October 2019, Mobeus was entitled to fees of 3.00% of the
investment amount received from investors. This amount totalled £1.74 million
across all four VCTs, out of which all the costs associated with the allotment
were met, excluding any payments to advisers facilitated under the terms of
the Offer.
d) 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 £9,750 (2020: £10,309)) - Note i) 144,750 141,524
IFA trail commission 88,938 78,825
Broker's fees 12,000 9,000
Auditor's fees - Audit of Company (excluding VAT) 33,191 26,650
- audit related assurance 6,212 5,919
services (excluding VAT) - Note ii)
Registrar's fees 42,343 54,145
Printing 46,227 42,113
Legal & professional fees 14,274 11,544
VCT monitoring fees 9,600 9,600
Directors' insurance 8,975 7,573
Listing and regulatory fees 44,787 28,700
Sundry 9,591 8,333
Running Costs 460,888 423,926
Provision against loan interest receivable - Note iii) - 2,496
Other expenses 460,888 426,422
Note i): Directors' remuneration is a related party transaction, see analysis
in Directors' Remuneration table within the Directors' Remuneration Report
within the Annual Report, which excludes the NIC above. The key management
personnel were the four Non-Executive Directors. The Company has no employees.
At the year-end, £538 was owed from Christopher Burke due to an overpayment
of salary, which was subsequently adjusted for in the following quarter.
Note ii): 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.
Note iii): Provision against loan interest receivable above relates to an
amount of £nil (2020: £2,496), being a provision made against loan stock
interest regarded as collectable in previous years.
5 Taxation on ordinary activities
The tax expense for the year comprises current tax and is recognised in profit
or loss. The current income tax charge is calculated on the basis of tax rates
and laws that have been enacted or substantively enacted by the reporting
date.
Any tax relief obtained in respect of adviser fees allocated to capital is
reflected in the capital reserve - realised and a corresponding amount is
charged against revenue. The tax relief is the amount by which corporation tax
payable is reduced as a result of these capital expenses.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right
to pay less tax in the future have occurred at the balance sheet date. Timing
differences are differences between the Company's taxable profits and its
results as stated in the financial statements that arise from the inclusion of
gains and losses in the tax assessments in periods different from those in
which they are recognised in the financial statements.
Deferred tax is measured at the average tax rates that are expected to apply
in the years in which the timing differences are expected to reverse based on
tax rates and laws that have been enacted or substantively enacted at the
balance sheet date. Deferred tax is measured on a non-discounted basis.
A deferred tax asset would be recognised only to the extent that it is more
likely than not that future taxable profits will be available against which
the asset can be utilised.
2021 2020
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
a) Analysis of tax charge:
UK Corporation tax on profits for the year 22,097 (22,097) - 280,053 (176,602) 103,451
Total current tax charge 22,097 (22,097) - 280,053 (176,602) 103,451
Corporation tax is based on a rate of 19% (2020: 19%)
b) Profit on ordinary activities before tax 464,720 28,618,532 29,083,252 2,131,854 12,378,203 14,510,057
Profit on ordinary activities multiplied by company rate of corporation tax in 88,297 5,437,521 5,525,818 405,052 2,351,859 2,756,911
the UK of 19% (2020: 19%)
Effect of:
UK dividends not taxable (66,200) - (66,200) (124,999) - (124,999)
Net investment portfolio gains not taxable - (5,681,824) (5,681,824) - (2,528,461) (2,528,461)
Losses not utilised - 222,206 222,206 - - -
Actual tax charge 22,097 (22,097) - 280,053 (176,602) 103,451
Tax relief relating to investment adviser fees is allocated between revenue
and capital where such relief can be utilised.
No asset or liability has been recognised for deferred tax in relation to
capital gains or losses on revaluing investments as the Company is exempt from
corporation tax in relation to capital gains or losses as a result of
qualifying as a Venture Capital Trust.
There is no potential liability to deferred tax (2020: £nil). There is no
unrecognised deferred tax asset in 2021 (2020: £nil).
6 Basic and diluted earnings per share
2021 2020
£ £
Total earnings after taxation: 29,083,252 14,406,606
Basic and diluted earnings per share (Note a) 34.69p 17.27p
Net revenue from ordinary activities after taxation 442,623 1,851,801
Basic and diluted revenue return per share (Note b) 0.53p 2.22p
Net investment portfolio gains 29,904,336 13,307,684
Capital expenses (net of taxation) (1,263,707) (752,879)
Total capital return 28,640,629 12,554,805
Basic and diluted capital return per share (Note c) 34.16p 15.05p
Weighted average number of shares in issue in the year 83,840,235 83,426,755
Notes:
a) Basic earnings per share is total earnings after taxation
divided by the weighted average number of shares in issue.
b) Basic revenue earnings per share is the revenue return after
taxation divided by the weighted average number of shares in issue.
c) Basic capital earnings per share is the total capital
return after taxation divided by the weighted average number of shares in
issue.
d) There are no instruments that will increase the number of
shares in issue in future. Accordingly, the above figures currently represent
both basic and diluted returns.
7 Dividends paid and payable
Dividends payable are recognised as distributions in the financial statements
when the Company's liability to pay them has been established. This liability
is established for interim dividends when they are paid, and for final
dividends when they are approved by the Shareholders, usually at the Company's
Annual General Meeting.
A key judgement in applying the above accounting policy is in determining the
amount of minimum income dividend to be paid in respect of a year. The
Company's status as a VCT means it has to comply with Section 259 of the
Income Tax Act 2007, which requires that no more than 15% of the income from
shares and securities in a year can be retained from the revenue available for
distribution for the year.
Amounts recognised as distributions to equity shareholders in the year:
Dividend Type For year ended 31 December Pence per share Date Paid 2021 £ 2020 £
Final Capital* 2019 4.00p 10/01/2020 - 2,671,965
Interim Income 2020 1.70p 07/05/2020 - 1,449,245
Interim Capital* 2020 4.30p 07/05/2020 - 3,665,736
Interim Income 2021 0.25p 06/08/2021 208,381 -
Interim Capital* 2021 4.75p 06/08/2021 3,959,226 -
4,167,607** 7,786,946
*-Paid out of or refunded to the Company's special distributable reserve.
** - For the year ended 31 December 2021, £4,167,607 disclosed above
differs to that shown in the Statement of Cash Flows of £6,106,267 due to a
dividend payment of £2,579,776 made to the Registrar before the year-end in
respect of the dividend paid to Shareholders on 7 January 2022. This amount is
held as a debtor at the year-end. This amount was partially offset by
£641,116 of new shares issued as part of the Company's Dividend Investment
Scheme.
Distributions to equity holders after the year end: Type For year ended 31 December Pence per share Date paid/payable 2021 £ 2020 £
Interim Income 2021 0.25p 07/01/2022 209,560 -
Interim Capital* 2021 3.75p 07/01/2022 3,143,394 -
3,352,954 -
*-Paid out of the Company's special distributable reserve.
Any proposed final dividend is subject to approval by Shareholders at the
Annual General Meeting and has not been included as a liability in these
financial statements.
Set out below are the total income dividends payable in respect of the
financial year, which is the basis on which the requirements of section 274 of
the Income Tax Act 2007 are considered.
Recognised income distributions in the financial statements for the year
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 442,623 1,851,801
Interim Income 2020 1.70p 07/05/2020 - 1,449,245
Interim Income 2021 0.25p 06/08/2021 208,381 -
Interim Income 2021 0.25p 07/01/2022 209,560 -
Total income dividends for the year 417,941 1,449,245
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 a disposal state that consideration may be received at some
future date and, subject to the conditionality and materiality of the amount
of deferred consideration, an estimate of the fair value discounted for the
time value of money may be recognised through the Income Statement. In other
cases, the proceeds will only be recognised once the right to receive payment
is established and there is no reasonable doubt that payment will be received.
Unquoted investments are stated at fair value by the Directors at each
measurement date in accordance with appropriate valuation techniques, which
are consistent with the IPEV guidelines:-
i. Each investment is considered as a whole on a 'unit of account'
basis, i.e. that the value of each portfolio company is considered as a whole,
alongside consideration of:-
The price of new 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 shares may be valued by applying a suitable
price-earnings ratio, revenue or gross profit multiple to that company's
historic, current or forecast post-tax earnings before interest, depreciation
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.
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.
The methods of fair value measurement are classified into hierarchy based on
the reliability of the information used to determine the valuation.
Level 1 - Fair value is measured based on quoted prices in an active
market.
Level 2 - Fair value is measured based on directly observable current market
prices or indirectly being derived from market prices.
Level 3 - Fair value is measured using valuation techniques using inputs that
are not based on observable market data.
Movements in investments during the year are summarised as follows:
Traded on AIM Unquoted equity shares Unquoted preference shares Unquoted loan stock Total
£ £ £ £ £
Cost at 31 December 2020 50,011 19,150,794 905,332 12,836,189 32,942,326
Unrealised gains/(losses) at 31 December 2020 216,669 13,262,864 64,294 (3,337,894) 10,205,933
Permanent impairment in value of investments as at 31 December 2020 - (1,406,948) (227) (64,388) (1,471,563)
Valuation at 31 December 2020 266,680 31,006,710 969,399 9,433,907 41,676,696
Purchases at cost - 4,238,438 566,200 1,430,654 6,235,292
Sale proceeds (Note a) (1,611,332) (6,905,286) (63,709) (3,651,530) (12,231,857)
Reclassification at value (Note b) 6,638,097 (6,188,772) (449,325) -
Net realised gains in the year 641,268 3,296,609 63,591 191,513 4,192,981
Net unrealised gains in the year (Note c) 3,969,042 20,524,983 72,857 1,144,473 25,711,355
Valuation at 31 December 2021 9,903,755 45,972,682 1,608,338 8,099,692 65,584,467
Cost at 31 December 2021 676,918 21,412,982 1,471,414 10,499,884 34,061,198
Unrealised gains/(losses) at 31 December 2021 9,226,837 25,791,648 137,151 (2,335,804) 32,819,832
Permanent impairment in value of investments at 31 December 2021 (Note d) - (1,231,948) (227) (64,388) (1,296,563)
Valuation at 31 December 2021 9,903,755 45,972,682 1,608,338 8,099,692 65,584,467
Details of investment transactions such as disposal proceeds, valuation
movements, cost and carrying value at the end of previous year are contained
in the Investment Portfolio Summary in the Annual Report.
Net realised gains in the year of £4,192,981 and unrealised gains in the year
of £25,711,355 equal net investment portfolio gains of £29,904,336 as shown
on the Income Statement.
Note a) Disposals of investment portfolio companies during the year were:
Company Type Investment Cost Disposal Proceeds Valuation at 31 December 2020 Realised gain/(loss) in year
£ £ £ £
Vian Marketing Limited (trading as Red Paddle Co) Realisation 789,006 3,947,311 1,465,304 2,482,007
Parsley Box Group plc (formerly Parsley Box Limited) Part Realisation 309,932 1,246,218 703,384 542,834
MPB Group Limited Part Realisation 385,741 1,596,618 1,185,343 411,275
My Tutorweb Limited Part Realisation 258,149 699,864 316,023 383,841
Media Business Insight Limited Loan repayment 497,718 497,718 308,854 188,864
Omega Diagnostics Group plc Realisation 50,011 422,823 266,680 156,143
Virgin Wines UK Plc (formerly Virgin Wines Loan repayment 1,884,898 1,884,898 1,884,898 -
Holding Company Limited)
CB Imports Group Limited Liquidation 175,000 - - -
Proactive Group Holdings Inc Realisation 755,340 1,894,238 1,900,421 ( 6,183)
Other capital proceeds Various 10,625 42,169 7,969 34,200
5,116,420 12,231,857 8,038,876 4,192,981
* Other capital proceeds contains a loan repayment of £10,625 from BG
Training, and £89,253 of deferred consideration from companies realised in
previous years, offset by a stamp duty payment of £57,709 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 £6,638,097 reflects the combined equity value held at the start of the
year and a follow-on investment made in the year. The amount of £449,325
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
£25,711,355 in the year were increases of £6,199,781 in Preservica Limited,
of £5,058,228 in Virgin Wines UK plc (previously Virgin Wines Holding Company
Limited), £2,855,153 in Media Business Insight Holdings Limited, £2,823,085
in MPB Group Limited, and £2,446,555 in EOTH Limited. These increases were
partly offset by the falls of £1,089,185 in Parsley Box Group plc (formerly
Parsley Box Limited), £169,104 in Muller EV Limited (trading as Andersen EV
Limited), and £151,501 in Bleach London Holdings Limited.
Note d) During the year, permanent impairments of the cost of investments have
reduced from £1,471,563 to £1,296,563 due to the disposal of one investee
company.
9 Cash at bank and Current Investments
Cash equivalents, for the purposes of the Statement of Cash flows, comprises
bank deposits repayable on up to three months' notice and funds held in OEIC
money-market funds. Current asset investments are the same but also include
bank deposits that mature after three months. Current asset investments are
disposable without curtailing or disrupting the business and are readily
convertible into known amounts of cash at their carrying values at immediate
or up to three months' notice. Cash, for the purposes of the Statement of Cash
Flows, is cash held with banks in accounts subject to immediate access. Cash
at bank in the Balance Sheet is the same.
2021 2020
£ £
OEIC Money market funds 18,475,179 20,634,956
Cash equivalents per Statement of Cash Flows 18,475,179 20,634,956
Bank deposits that mature after three months 2,000,000 2,000,000
Current asset investments 20,475,179 22,634,956
Cash at bank 4,059,487 4,053,536
10 Called up share capital
2021 2020
£ £
Allotted, called-up and fully paid:
Ordinary shares of 1p each: 83,389,721 (2020: 84,004,018) 833,897 840,040
During the year, the Company purchased 1,309,349 (2020: 1,245,646) of its own
shares for cash (representing 1.6% (2020: 1.9%) of the shares in issue at the
start of the year) at the prevailing market price for a total cost of
£1,230,702 (2020: £728,216). These shares were subsequently cancelled by the
Company.
Under the terms of the Dividend Investment Scheme, 695,092 shares were
allotted during the year for a non-cash consideration of £641,116.
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 83,389,721 (2020: 84,004,018) 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, further investments totalling £0.22
million were made into Caledonian Leisure Limited.
On 1 February 2022, a loan repayment of £0.10 million was received from Media
Business Insight Limited.
On 10 February 2022, a new investment of £0.61 million was made into
Proximity Insight Limited.
On 16 February 2022, deferred proceeds of £0.40 million were received in
respect 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 a NAV per share of 98.77 pence compared to
a NAV per share at 31 December 2021 of 107.27 pence (adjusted for the 4.00
pence dividend paid on 7 January 2022). Subsequently, on 9 March 2022,
7,361,191 Ordinary Shares were allotted at an average effective offer price of
101.89 pence per share, raising net funds of £7.27 million.
On 6 April 2022, a further investment of £0.12 million was made into Northern
Bloc Ice Cream Limited.
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.
Annual Report & Financial Statements
The Annual Report will be published on the Company's website at
www.mig4vct.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.
Annual General Meeting
The Company's next Annual General Meeting will be held on Tuesday, 17 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 13 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.
a) Investment Adviser's fees
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.
Revenue Capital Total Revenue Capital Total
2021 2021 2021 2020 2020 2020
£ £ £ £ £ £
Gresham House Asset Management Limited 428,601 1,285,804 1,714,405 309,827 929,481 1,239,308
Under the terms of a revised investment management agreement dated 12 November
2010, Mobeus Equity Partners LLP ("Mobeus") (from 1 October 2021, Gresham
House Asset Management Limited) provides investment advisory, administrative
and company secretarial services to the Company, for a fee of 2% per annum of
closing net assets, calculated on a quarterly basis by reference to the net
assets at the end of the preceding quarter, plus a fixed fee of £115,440 per
annum, the latter being subject to indexation, if applicable. In 2013, Mobeus
agreed to waive such further increases due to indexation, until otherwise
agreed with the Board.
The Investment Adviser fee includes provision for a cap on expenses excluding
irrecoverable VAT and exceptional items set at 3.4% of closing net assets at
the year end. In accordance with the investment management agreement, any
excess expenses are borne by the Investment Adviser. The excess expenses
during the year amounted to £nil (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 £349,777 (2020: £341,947) during the year ended 31 December 2021,
being £132,667 (2020: £126,542) for arrangement fees, and £217,110 (2020:
£215,405) 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 to the Company which applied at the time of each
investment. These figures are not part of these financial statements.
b) Incentive fee agreement
Under the terms of a separate agreement dated 1 November 2006, from the end of
the accounting period ending on 31 January 2009 and in each subsequent
accounting period throughout the life of the company, the Investment Adviser
will be entitled to receive a performance related incentive fee of 20% of the
dividends paid in excess of a "Target Rate" comprising firstly, an annual
dividend target of 6% of the net asset value per share at 5 April 2007
(indexed each year for RPI) and secondly a requirement that any cumulative
shortfalls below the 6 per cent hurdle must be made up in later years, while
any excess is not carried forward, whether a fee is payable for that year or
not. Payment of a fee is also conditional upon the average Net Asset Value
("NAV") per share for each such year equalling or exceeding the average Base
NAV per share for the same year. As at 31 December 2021, the average NAV per
share is below the average Base NAV per share so no incentive fee is payable
to date.
c) Offer for Subscription fees
2021 2020
£m £m
Gross funds raised by the Company - 13.00
Offer costs payable to Mobeus at 3.00% of gross funds raised by the Company - 0.39
Under the terms of an Offer for Subscription, with the other Mobeus advised
VCTs, launched on 25 October 2019, Mobeus was entitled to fees of 3.00% of the
investment amount received from investors. This amount totalled £1.74 million
across all four VCTs, out of which all the costs associated with the allotment
were met, excluding any payments to advisers facilitated under the terms of
the Offer.
d) 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 £9,750 (2020: £10,309)) - Note i) 144,750 141,524
IFA trail commission 88,938 78,825
Broker's fees 12,000 9,000
Auditor's fees - Audit of Company (excluding VAT) 33,191 26,650
- audit related assurance 6,212 5,919
services (excluding VAT) - Note ii)
Registrar's fees 42,343 54,145
Printing 46,227 42,113
Legal & professional fees 14,274 11,544
VCT monitoring fees 9,600 9,600
Directors' insurance 8,975 7,573
Listing and regulatory fees 44,787 28,700
Sundry 9,591 8,333
Running Costs 460,888 423,926
Provision against loan interest receivable - Note iii) - 2,496
Other expenses 460,888 426,422
Note i): Directors' remuneration is a related party transaction, see analysis
in Directors' Remuneration table within the Directors' Remuneration Report
within the Annual Report, which excludes the NIC above. The key management
personnel were the four Non-Executive Directors. The Company has no employees.
At the year-end, £538 was owed from Christopher Burke due to an overpayment
of salary, which was subsequently adjusted for in the following quarter.
Note ii): 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.
Note iii): Provision against loan interest receivable above relates to an
amount of £nil (2020: £2,496), being a provision made against loan stock
interest regarded as collectable in previous years.
5
Taxation on ordinary activities
The tax expense for the year comprises current tax and is recognised in profit
or loss. The current income tax charge is calculated on the basis of tax rates
and laws that have been enacted or substantively enacted by the reporting
date.
Any tax relief obtained in respect of adviser fees allocated to capital is
reflected in the capital reserve - realised and a corresponding amount is
charged against revenue. The tax relief is the amount by which corporation tax
payable is reduced as a result of these capital expenses.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right
to pay less tax in the future have occurred at the balance sheet date. Timing
differences are differences between the Company's taxable profits and its
results as stated in the financial statements that arise from the inclusion of
gains and losses in the tax assessments in periods different from those in
which they are recognised in the financial statements.
Deferred tax is measured at the average tax rates that are expected to apply
in the years in which the timing differences are expected to reverse based on
tax rates and laws that have been enacted or substantively enacted at the
balance sheet date. Deferred tax is measured on a non-discounted basis.
A deferred tax asset would be recognised only to the extent that it is more
likely than not that future taxable profits will be available against which
the asset can be utilised.
2021 2020
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
a) Analysis of tax charge:
UK Corporation tax on profits for the year 22,097 (22,097) - 280,053 (176,602) 103,451
Total current tax charge 22,097 (22,097) - 280,053 (176,602) 103,451
Corporation tax is based on a rate of 19% (2020: 19%)
b) Profit on ordinary activities before tax 464,720 28,618,532 29,083,252 2,131,854 12,378,203 14,510,057
Profit on ordinary activities multiplied by company rate of corporation tax in 88,297 5,437,521 5,525,818 405,052 2,351,859 2,756,911
the UK of 19% (2020: 19%)
Effect of:
UK dividends not taxable (66,200) - (66,200) (124,999) - (124,999)
Net investment portfolio gains not taxable - (5,681,824) (5,681,824) - (2,528,461) (2,528,461)
Losses not utilised - 222,206 222,206 - - -
Actual tax charge 22,097 (22,097) - 280,053 (176,602) 103,451
Tax relief relating to investment adviser fees is allocated between revenue
and capital where such relief can be utilised.
No asset or liability has been recognised for deferred tax in relation to
capital gains or losses on revaluing investments as the Company is exempt from
corporation tax in relation to capital gains or losses as a result of
qualifying as a Venture Capital Trust.
There is no potential liability to deferred tax (2020: £nil). There is no
unrecognised deferred tax asset in 2021 (2020: £nil).
6
Basic and diluted earnings per share
2021 2020
£ £
Total earnings after taxation: 29,083,252 14,406,606
Basic and diluted earnings per share (Note a) 34.69p 17.27p
Net revenue from ordinary activities after taxation 442,623 1,851,801
Basic and diluted revenue return per share (Note b) 0.53p 2.22p
Net investment portfolio gains 29,904,336 13,307,684
Capital expenses (net of taxation) (1,263,707) (752,879)
Total capital return 28,640,629 12,554,805
Basic and diluted capital return per share (Note c) 34.16p 15.05p
Weighted average number of shares in issue in the year 83,840,235 83,426,755
Notes:
a) Basic earnings per share is total earnings after taxation
divided by the weighted average number of shares in issue.
b) Basic revenue earnings per share is the revenue return after
taxation divided by the weighted average number of shares in issue.
c) Basic capital earnings per share is the total capital
return after taxation divided by the weighted average number of shares in
issue.
d) There are no instruments that will increase the number of
shares in issue in future. Accordingly, the above figures currently represent
both basic and diluted returns.
7
Dividends paid and payable
Dividends payable are recognised as distributions in the financial statements
when the Company's liability to pay them has been established. This liability
is established for interim dividends when they are paid, and for final
dividends when they are approved by the Shareholders, usually at the Company's
Annual General Meeting.
A key judgement in applying the above accounting policy is in determining the
amount of minimum income dividend to be paid in respect of a year. The
Company's status as a VCT means it has to comply with Section 259 of the
Income Tax Act 2007, which requires that no more than 15% of the income from
shares and securities in a year can be retained from the revenue available for
distribution for the year.
Amounts recognised as distributions to equity shareholders in the year:
Dividend Type For year ended 31 December Pence per share Date Paid 2021 £ 2020 £
Final Capital* 2019 4.00p 10/01/2020 - 2,671,965
Interim Income 2020 1.70p 07/05/2020 - 1,449,245
Interim Capital* 2020 4.30p 07/05/2020 - 3,665,736
Interim Income 2021 0.25p 06/08/2021 208,381 -
Interim Capital* 2021 4.75p 06/08/2021 3,959,226 -
4,167,607** 7,786,946
* - Paid out of or refunded to the Company's special distributable reserve.
** - For the year ended 31 December 2021, £4,167,607 disclosed above
differs to that shown in the Statement of Cash Flows of £6,106,267 due to a
dividend payment of £2,579,776 made to the Registrar before the year-end in
respect of the dividend paid to Shareholders on 7 January 2022. This amount is
held as a debtor at the year-end. This amount was partially offset by
£641,116 of new shares issued as part of the Company's Dividend Investment
Scheme.
Distributions to equity holders after the year end: Type For year ended 31 December Pence per share Date paid/payable 2021 £ 2020 £
Interim Income 2021 0.25p 07/01/2022 209,560 -
Interim Capital* 2021 3.75p 07/01/2022 3,143,394 -
3,352,954 -
* - Paid out of the Company's special distributable reserve.
Any proposed final dividend is subject to approval by Shareholders at the
Annual General Meeting and has not been included as a liability in these
financial statements.
Set out below are the total income dividends payable in respect of the
financial year, which is the basis on which the requirements of section 274 of
the Income Tax Act 2007 are considered.
Recognised income distributions in the financial statements for the year
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 442,623 1,851,801
Interim Income 2020 1.70p 07/05/2020 - 1,449,245
Interim Income 2021 0.25p 06/08/2021 208,381 -
Interim Income 2021 0.25p 07/01/2022 209,560 -
Total income dividends for the year 417,941 1,449,245
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 a disposal state that consideration may be received at some
future date and, subject to the conditionality and materiality of the amount
of deferred consideration, an estimate of the fair value discounted for the
time value of money may be recognised through the Income Statement. In other
cases, the proceeds will only be recognised once the right to receive payment
is established and there is no reasonable doubt that payment will be received.
Unquoted investments are stated at fair value by the Directors at each
measurement date in accordance with appropriate valuation techniques, which
are consistent with the IPEV guidelines:-
i. Each investment is considered as a whole on a 'unit of account'
basis, i.e. that the value of each portfolio company is considered as a whole,
alongside consideration of:-
The price of new 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 shares may be valued by applying a suitable
price-earnings ratio, revenue or gross profit multiple to that company's
historic, current or forecast post-tax earnings before interest, depreciation
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.
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.
The methods of fair value measurement are classified into hierarchy based on
the reliability of the information used to determine the valuation.
Level 1 - Fair value is measured based on quoted prices in an active
market.
Level 2 - Fair value is measured based on directly observable current market
prices or indirectly being derived from market prices.
Level 3 - Fair value is measured using valuation techniques using inputs that
are not based on observable market data.
Movements in investments during the year are summarised as follows:
Traded on AIM Unquoted equity shares Unquoted preference shares Unquoted loan stock Total
£ £ £ £ £
Cost at 31 December 2020 50,011 19,150,794 905,332 12,836,189 32,942,326
Unrealised gains/(losses) at 31 December 2020 216,669 13,262,864 64,294 (3,337,894) 10,205,933
Permanent impairment in value of investments as at 31 December 2020 - (1,406,948) (227) (64,388) (1,471,563)
Valuation at 31 December 2020 266,680 31,006,710 969,399 9,433,907 41,676,696
Purchases at cost - 4,238,438 566,200 1,430,654 6,235,292
Sale proceeds (Note a) (1,611,332) (6,905,286) (63,709) (3,651,530) (12,231,857)
Reclassification at value (Note b) 6,638,097 (6,188,772) (449,325) -
Net realised gains in the year 641,268 3,296,609 63,591 191,513 4,192,981
Net unrealised gains in the year (Note c) 3,969,042 20,524,983 72,857 1,144,473 25,711,355
Valuation at 31 December 2021 9,903,755 45,972,682 1,608,338 8,099,692 65,584,467
Cost at 31 December 2021 676,918 21,412,982 1,471,414 10,499,884 34,061,198
Unrealised gains/(losses) at 31 December 2021 9,226,837 25,791,648 137,151 (2,335,804) 32,819,832
Permanent impairment in value of investments at 31 December 2021 (Note d) - (1,231,948) (227) (64,388) (1,296,563)
Valuation at 31 December 2021 9,903,755 45,972,682 1,608,338 8,099,692 65,584,467
Details of investment transactions such as disposal proceeds, valuation
movements, cost and carrying value at the end of previous year are contained
in the Investment Portfolio Summary in the Annual Report.
Net realised gains in the year of £4,192,981 and unrealised gains in the year
of £25,711,355 equal net investment portfolio gains of £29,904,336 as shown
on the Income Statement.
Note a) Disposals of investment portfolio companies during the year were:
Company Type Investment Cost Disposal Proceeds Valuation at 31 December 2020 Realised gain/(loss) in year
£ £ £ £
Vian Marketing Limited (trading as Red Paddle Co) Realisation 789,006 3,947,311 1,465,304 2,482,007
Parsley Box Group plc (formerly Parsley Box Limited) Part Realisation 309,932 1,246,218 703,384 542,834
MPB Group Limited Part Realisation 385,741 1,596,618 1,185,343 411,275
My Tutorweb Limited Part Realisation 258,149 699,864 316,023 383,841
Media Business Insight Limited Loan repayment 497,718 497,718 308,854 188,864
Omega Diagnostics Group plc Realisation 50,011 422,823 266,680 156,143
Virgin Wines UK Plc (formerly Virgin Wines Loan repayment 1,884,898 1,884,898 1,884,898 -
Holding Company Limited)
CB Imports Group Limited Liquidation 175,000 - - -
Proactive Group Holdings Inc Realisation 755,340 1,894,238 1,900,421 ( 6,183)
Other capital proceeds Various 10,625 42,169 7,969 34,200
5,116,420 12,231,857 8,038,876 4,192,981
* Other capital proceeds contains a loan repayment of £10,625 from BG
Training, and £89,253 of deferred consideration from companies realised in
previous years, offset by a stamp duty payment of £57,709 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 £6,638,097 reflects the combined equity value held at the start of the
year and a follow-on investment made in the year. The amount of £449,325
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
£25,711,355 in the year were increases of £6,199,781 in Preservica Limited,
of £5,058,228 in Virgin Wines UK plc (previously Virgin Wines Holding Company
Limited), £2,855,153 in Media Business Insight Holdings Limited, £2,823,085
in MPB Group Limited, and £2,446,555 in EOTH Limited. These increases were
partly offset by the falls of £1,089,185 in Parsley Box Group plc (formerly
Parsley Box Limited), £169,104 in Muller EV Limited (trading as Andersen EV
Limited), and £151,501 in Bleach London Holdings Limited.
Note d) During the year, permanent impairments of the cost of investments have
reduced from £1,471,563 to £1,296,563 due to the disposal of one investee
company.
9
Cash at bank and Current Investments
Cash equivalents, for the purposes of the Statement of Cash flows, comprises
bank deposits repayable on up to three months' notice and funds held in OEIC
money-market funds. Current asset investments are the same but also include
bank deposits that mature after three months. Current asset investments are
disposable without curtailing or disrupting the business and are readily
convertible into known amounts of cash at their carrying values at immediate
or up to three months' notice. Cash, for the purposes of the Statement of Cash
Flows, is cash held with banks in accounts subject to immediate access. Cash
at bank in the Balance Sheet is the same.
2021 2020
£ £
OEIC Money market funds 18,475,179 20,634,956
Cash equivalents per Statement of Cash Flows 18,475,179 20,634,956
Bank deposits that mature after three months 2,000,000 2,000,000
Current asset investments 20,475,179 22,634,956
Cash at bank 4,059,487 4,053,536
10
Called up share capital
2021 2020
£ £
Allotted, called-up and fully paid:
Ordinary shares of 1p each: 83,389,721 (2020: 84,004,018) 833,897 840,040
During the year, the Company purchased 1,309,349 (2020: 1,245,646) of its own
shares for cash (representing 1.6% (2020: 1.9%) of the shares in issue at the
start of the year) at the prevailing market price for a total cost of
£1,230,702 (2020: £728,216). These shares were subsequently cancelled by the
Company.
Under the terms of the Dividend Investment Scheme, 695,092 shares were
allotted during the year for a non-cash consideration of £641,116.
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 83,389,721 (2020: 84,004,018) 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, further investments totalling £0.22
million were made into Caledonian Leisure Limited.
On 1 February 2022, a loan repayment of £0.10 million was received from Media
Business Insight Limited.
On 10 February 2022, a new investment of £0.61 million was made into
Proximity Insight Limited.
On 16 February 2022, deferred proceeds of £0.40 million were received in
respect 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 a NAV per share of 98.77 pence compared to
a NAV per share at 31 December 2021 of 107.27 pence (adjusted for the 4.00
pence dividend paid on 7 January 2022). Subsequently, on 9 March 2022,
7,361,191 Ordinary Shares were allotted at an average effective offer price of
101.89 pence per share, raising net funds of £7.27 million.
On 6 April 2022, a further investment of £0.12 million was made into Northern
Bloc Ice Cream Limited.
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.
Annual Report & Financial Statements
The Annual Report will be published on the Company's website at
www.mig4vct.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.
Annual General Meeting
The Company's next Annual General Meeting will be held on Tuesday, 17 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 13 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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