REG - Mobeus Inc&Gwth 4 - Half-year Report
14/09/2022 07:01
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RNS Number : 3449Z Mobeus Income & Growth 4 VCT PLC 14 September 2022
MOBEUS INCOME & GROWTH 4 VCT PLC
LEI: 213800IFNJ65R8AQW943
UNAUDITED HALF-YEAR RESULTS FOR THE SIX MONTHS TO 30 JUNE 2022
Mobeus Income & Growth 4 VCT plc ("the Company") announces its Half-Year
results for the six months to 30 June 2022. These results were approved by the
Board of Directors on 13 September 2022.
You may, in due course, view the Half-Year Report, comprising the Unaudited
Condensed Financial Statements of the Company by visiting www.mig4vct.co.uk.
Financial Highlights
As at 30 June 2022:
Net assets: £86.13 million
Net asset value ("NAV") per share: 94.66 pence
Results for the six months to 30 June 2022:
➤ There was a negative Net Asset Value ("NAV") total return¹
per share of (11.3)%.
➤ Share price total return(1) per share was 2.8%.
➤ The Board declared an interim dividend in respect of the
current year of 4.00 pence per share, which was paid to Shareholders on 8 July
2022. Payment of this dividend increased cumulative dividends paid(1) since
inception in 1998 to 147.20 pence per share.
➤ A further interim dividend for the year of 6.00 pence per
share has been declared for payment on 7 November 2022.
➤ The Company made two new investments totalling £1.09
million and four follow-on investments totalling £0.80 million.
➤ £11.05 million of unrealised losses were incurred in the
period.
➤ The Company realised investments totalling £4.34 million of
cash proceeds and a net realised gain of £0.78 million for the six months to
30 June 2022.
(1 ) Definitions of key terms and alternative performance measures ("APMs") /
Key performance indicators ("KPIs") shown above and throughout this Report are
shown in the Glossary of terms within the Half-Year Report.
PERFORMANCE SUMMARY
The longer-term trend of performance based upon cumulative total return per
share (NAV basis) is shown in the chart below:-
Reporting date NAV per Share Cumulative dividends paid Cumulative total return per share to shareholders
per share (NAV Basis)
As at (p) (p) (p)
30 June 2022 94.66¹ 143.20¹ 237.86
31 December 2021 111.27 139.20 250.47
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) These figures exclude the impact of a dividend in respect of the year
ending 31 December 2022 of 4.00 pence per share paid after the period-end on 8
July 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 200p 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 at 30 June 2022 on the Company's website at: www.mig4vct.co.uk where
they can be accessed by clicking on the word "table" under "Reviewing the
performance of your investment" heading on the home page.
On 1 August 2006, Mobeus became sole Investment Adviser to the Company. The
cumulative NAV total return at this date was 122.51 pence.
( )
( )
Chairman's Statement
I am pleased to present the Company's Half-Year Report for the six months to
30 June 2022.
Overview
The first six months of the Company's financial year have been notable for
significant economic disruption both domestically and internationally.
December 2021 was a high watermark in many technology and growth markets, and
since then we have experienced a number of significant global events such as
the Russian invasion of Ukraine, the return of inflation to 40-year highs and
heightened political uncertainty in the UK and across Europe. All of this has
led to marked volatility across markets and a general de-rating of growth
stocks.
Performance
As a consequence of the factors described above, the Company has experienced a
negative NAV total return of (11.3)% over the six months to 30 June 2022
(2021: positive 28.5%). Share price total return was in positive territory at
2.8% (2021: 34.1%) but markets remain very volatile and the results for the
six months to 30 June 2022 necessarily provide only a snapshot as at the
reporting period end.
This value decline has been largely driven by market multiples rather than
underlying trading performance at this stage, as markets have factored in the
likely impact of inflation and higher interest rates on consumer spending and
business investment.
The negative NAV total return for the period was principally comprised of
unrealised falls in the value of investments still held, tempered somewhat by
the successful exit from Media Business Insight ("MBI"), loan repayments and
deferred proceeds received from the realisation of Red Paddle in December
2021.
Investment portfolio
In the face of the current testing environment the portfolio has, thus far,
remained relatively resilient. Nevertheless, the Investment Adviser has
started to see indicators of customer retrenchment as consumer confidence
declines. There was a fall of £10.27 million, or 15.7%, in the overall value
of the portfolio across the six months to 30 June 2022 (2021: increase of
£19.95 million, or 47.9%) on a like for like basis compared to the opening
value of the portfolio at 1 January 2022. A significant proportion of this
asset movement reflected a value decline in the AIM-listed Virgin Wines
investment which, in spite of positive news flows and the relative
outperformance of its peers, has suffered from the de-rating of its sector.
The Company completed one successful exit during the period, generating
proceeds of £3.84 million from the sale of Media Business Insight. Returns
received over the life of this investment amounted to 2.2x multiple of cost
and an IRR of 13.7%. Further proceeds from loan repayments and deferred
consideration amounted to £0.49 million.
Global supply shortages remain a significant factor and are expected to
continue to cause disruption going forward. The economic backdrop falls
largely outside of the experience of this generation of management teams and
advisers. As such, the experience of seasoned investment managers will be
increasingly important in the coming months.
Investment activity during the period has been strong, with two new and four
follow-on investments completed during the period, totalling £1.89 million.
History suggests that, although the economic backdrop is challenging,
investing throughout the cycle is a fruitful strategy, with investments made
in previous downturns in many cases subsequently yielding very strong returns.
During the six months under review, the Company invested a total of £1.09
million into two new investments: a retail software provider (Proximity
Insight) and a marketing technology business (Bidnamic).
In addition, four follow-on investments totalling £0.80 million were made
into a provider of UK leisure and experience breaks (Caledonian Leisure), a
dairy and allergen-free ice cream brand (Northern Bloc), a provider of premium
electric vehicle chargers (Andersen EV) and a workforce management software
business (RotaGeek). Access to additional resources following the move to
Gresham House is very welcome in this regard.
Since the period-end, the Company has also made two follow-on investments and
two new investments. £0.62 million into an AI and Urban Traffic Control
business (Vivacity) and £0.33 million into a hair colourants brand (Bleach
London), both existing businesses. £0.50 million was newly invested into
FocalPoint, a navigation and positioning technology company and £0.44 million
into Orri Limited, a specialist private clinic, for those aged 16+, for expert
treatment of Anorexia, Bulimia and Binge Eating
Disorder.
During such turbulent times, doing everything in our power to support the
portfolio is an imperative. The Investment Adviser is making full use of its
Talent Management teams in helping to support management teams across the
portfolio. Such specialist skills are a key benefit of the move to Gresham
House.
Details of this investment activity and the performance of the portfolio are
contained in the Investment Review and the Investment Portfolio Summary
below.
Revenue account
The results for the period are set out in the Unaudited Condensed Income
Statement on pages 12 to 13 of the Half-Year Report and show a revenue return
(after tax) of 0.19 pence per share (2021: 0.11 pence per share). The revenue
return for the period of £0.17 million has increased from last year's figure
of £0.09 million. This is mainly due to a significant loan interest receipt
upon the sale of MBI.
Dividends
The Board continues to be committed to providing an attractive dividend stream
to Shareholders and was pleased to declare an Interim dividend of 4.00 pence
per share for the year ending 31 December 2022.
This dividend was paid on 8 July 2022, to Shareholders on the Register on
27 May 2022, and brought cumulative dividends paid per share since inception
to 147.20 pence.
An additional interim dividend of 6.00 pence per share is declared for payment
on 7 November 2022 for those shareholders on the Register of Members at 16
September 2022.
The Company's ongoing target of paying a dividend of at least 4.00 pence per
share in respect of each financial year has been achieved and often exceeded
in all 12 years since it was established. Whilst the Board still believes this
dividend target is attainable, it should be noted that the continued movement
of the portfolio to a larger share of younger growth capital investments could
lead to increased volatility, which may affect the return in any given year.
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 (adjusted for dividends paid).
New VCT shares attract the same tax reliefs as shares purchased through an
Offer for Subscription.
There were 508,732 shares allotted through the DIS during the period at an
average price of 99.57 pence.
Shareholders can opt-in to the DIS by completing a mandate form available on
the Company's website at www.mig4vct.co.uk (http://www.mig4vct.co.uk) or can
opt-out by contacting Link Group, using the details provided under Shareholder
Information on pages 24-25 of the Half-Year Report. Please note that
instructions received take 15 days to become effective.
To the extent that dividends are paid other than out of income or from gains
on investments, for instance out of special distributable reserves,
Shareholders should note this may result in a reduction in NAV over the
period.
Offer for Subscription
As announced recently, the Board intends to launch joint offers for
subscription for new ordinary shares in the 2022/23 tax year alongside the
other Mobeus VCTs. The Board expects to convene a general meeting of
shareholders to seek the necessary authority to allot shares and disapply
pre-emption rights in connection with the fundraising. Shareholders will have
received a Circular in September confirming the amount to be raised and the
purposes for which the funds will be used in advance of the General meeting
for consideration. We urge all Shareholders to submit their proxy votes online
in respect of the resolutions proposed via the Link Group shareholder portal:
www.signalshares.com (http://www.signalshares.com) .
If Shareholder approval is obtained, the Board expects to be in a position to
launch the offer for subscription later this month, full details of which will
be contained in the prospectus on the Company's website: www.mig4vct.co.uk
(http://www.mig4vct.co.uk) .
Liquidity
The Board continues to monitor credit risk in respect of its cash and near
cash resources and to prioritise the security and protection of the Company's
capital. Cash and liquidity fund balances as at 30 June 2022 amounted to
£33.36 million representing 38.7% of net assets. After the period-end,
following the payment of a 4.00 pence per share dividend, the pro-forma level
of liquidity will be £30.29 million (36.5% of net assets).
Share buy-backs
During the six months to 30 June 2022, the Company bought back and cancelled
269,283 of its own shares, representing 0.3% (2021: 0.8%) of the shares in
issue at the beginning of the period, at a total cost of £0.26 million (2021:
£0.60 million), inclusive of expenses.
It is the Company's policy to cancel all shares bought back in this way. The
Board regularly reviews its buyback policy, where its priority is to act
prudently and in the interest of remaining Shareholders, whilst considering
other factors, such as levels of liquidity and reserves, market conditions and
applicable law and regulations. Under this policy, the Company seeks to
maintain the discount at which the Company's shares trade at approximately 5%
below the latest published NAV.
Shareholder communications
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 its most recent Shareholder Event on behalf of all
four Mobeus VCTs in early 2022. The event was well received and the Investment
Adviser plans to hold another event in 2023.Further details will be circulated
to Shareholders and shown on the Company's website in due course.
Fraud Warning
We are aware of a number of cases where Shareholders are being fraudulently
contacted or are being subjected to attempts of identity fraud. Shareholders
should remain vigilant of all potential financial scams or requests for them
to disclose personal data. The Board strongly recommends Shareholders take
time to read the Company's Fraud warning section, including details of who to
contact, contained within the Information for Shareholders section on pages 24
and 25 of the Half-Year Report.
Succession Planning
I have stated my intention to retire as Chairman and a Director of the Company
following the conclusion of the Company's Annual General Meeting in May 2023.
The Board intends to appoint Graham Paterson as Chairman of the Company to
succeed me. It has therefore begun its recruitment process for a Non-Executive
Director to succeed Graham, who will step down from his role as Chairman of
the Audit Committee. In its recruitment process, the Nomination &
Remuneration Committee will give careful consideration to the diversity of
skills, experience, gender and background of the wider Board, whilst also
ensuring that the candidate selected has the requisite skills and experience
to discharge their duties effectively as a Director and Chairman of the Audit
Committee.
Outlook
The economic impacts for the next twelve months and perhaps beyond can be
expected to be challenging. However, such conditions can provide a good
opportunity to make high quality investments and build strategic stakes in
businesses with great potential for the future. The exit environment is likely
to dampen somewhat, although this is not foreseen to be a significant issue
given that the VCT fund is not time-limited. On the whole, your Board is
confident that, with continued and targeted support, the portfolio remains on
track to overcome its challenges and achieve its growth ambitions.
Jonathan Cartwright
Chairman
13 September 2022
Investment Policy
The investment policy is designed to meet the Company's objective.
Investments
The Company invests primarily in a diverse portfolio of UK unquoted companies.
Investments are made selectively across a number of sectors, principally in
established companies. Investments are usually structured as part loan stock
and part equity in order to produce a regular income stream and to generate
capital gains from realisations.
There are a number of conditions within the VCT legislation which need to be
met by the Company and which may change from time to time. The Company will
seek to make investments in accordance with the requirements of prevailing VCT
legislation.
Asset allocation and risk diversification policies, including the size and
type of investments the Company makes, are determined in part by the
requirements of prevailing VCT legislation. No single investment may represent
more than 15% (by VCT tax value) of the Company's total investments at the
date of investment.
Liquidity
The Company's cash and liquid funds are held in a portfolio of readily
realisable interest-bearing investments, deposit and current accounts, of
varying maturities, subject to the overriding criterion that the risk of loss
of capital be minimised.
Borrowing
The Company's Articles of Association permit borrowing of up to 10% of the
adjusted capital and reserves (as defined therein). However, the Company has
never borrowed and the Board would only consider doing so in exceptional
circumstances.
Investment Review
Portfolio review
Demand for growth capital investment remains strong and there continues to be
a healthy pipeline of investment opportunities. The current economic climate,
whilst challenging for businesses across the portfolio, also presents great
opportunities to develop potential through investment.
The portfolio movements in the period are summarised as follows:
2022 2021
£m £m
Opening portfolio value 65.58 41.68
New and follow-on investments 1.89 3.83
Disposal proceeds (4.33) (5.42)
Net realised gains 0.78 1.14
Unrealised valuation movements (11.05) 18.81
Portfolio value at 30 June 52.87 60.04
The six months to 30 June 2022 has seen volatility translate into a decline in
market ratings. The portfolio value has reduced as a result of this, in
spite of largely resilient underlying trading performances. The Company made
two new growth capital investments during the period: £0.61 million into
Proximity Insight and £0.48 million into Bidnamic. Both these companies are
retail technology businesses.
The Company also achieved a satisfying exit from Media Business Insight
("MBI") during the period, receiving a total of £3.84 million in proceeds,
contributing to total receipts of £4.23 million during the period.
The investment and divestment activity during the period has further increased
the proportion of the portfolio comprised of growth substantially made up of
investments made since the 2015 VCT rule change. These investments amount to
89.2% by value at the period-end (31 December 2021: 77.1%).
After the period-end, the Company invested a further £0.62 million into
Vivacity, an existing portfolio company. Vivacity is a developer of artificial
intelligence and Urban Traffic Control systems. Following its initial series
A funding in 2021, the business has doubled the size of its team and partnered
with leading firms in the automotive and environmental measurement industries.
Also, after the period end, £0.33 million was further invested into Bleach
(London). It also made a new investment of £0.50 into FocalPoint, a
next-generation navigation and positioning technology company and £0.44
million was invested into Orri Limited, a specialist private clinic, for those
aged 16+, for expert treatment of Anorexia, Bulimia and Binge Eating Disorder.
The portfolio's valuation changes in the six-month period to 30 June are
summarised as follows:
Investment Portfolio Capital Movement 2022 2021
£m £m
Increase in the value of unrealised investments 0.81 19.12
Decrease in the value of unrealised investments (11.86) (0.31)
Net (decrease)/increase in the value of unrealised investments (11.05) 18.81
Realised gains 0.78 1.20
Realised losses - (0.06)
Net realised gains in the period 0.78 1.14
Net investment portfolio movement in the period (10.27) 19.95
Valuation changes of portfolio investments still held
From the total value increases of £0.81 million within the portfolio, the
principal movements were in Bella and Duke: £0.40 million and Tharstern:
£0.36 million.
Bella and Duke has relatively maintained its existing customer base despite
the slowdown in securing new customers due to the current economic
environment. Improved trading for Tharstern through new business wins and cost
controls have enhanced its valuation.
The main reductions within total valuation decreases of (£11.86) million,
were in Virgin Wines £(6.02) million; MyTutor £(1.51) million and MPB Group
£(1.24) million. The portfolio's largest asset by value at the start of the
year, Virgin Wines, has consistently delivered robust trading performance
relative to its peers and continued to release positive news flow.
Nevertheless, the value of the AIM-listed stock has been impacted by the
general de-rating of its sector. MyTutor has generated strong revenues in the
year to date. However, a significant reduction in comparator multiples has
reduced the value of this investment. Finally, MPB has seen a reduction in
benchmark multiples and accelerated its cash spend for growth but is yet to
see this translate into revenues for valuation purposes.
Realised gains and deferred consideration receipts
The Company realised its investment in MBI during the period under review,
generating gains in the period of £0.38 million. These contributed to a
multiple of cost of 2.2x over the life of the investment. The Company also
received deferred proceeds of £0.40 million from the realisation of Red
Paddle in a previous period.
Investment portfolio yield and capital repayments
In the period under review, the Company received the following amounts in loan
interest and dividend income:
Portfolio income and yield 2022 2021
£m £m
Interest received in the period 0.55 0.42
Dividends received in the period 0.07 0.07
Total portfolio income in the period(1) 0.62 0.49
Portfolio Value at 30 June 52.87 60.04
Portfolio Income Yield (Income as a % of Portfolio Value at 30 June) 1.2% 0.8%
(1) Total portfolio income in the period is generated solely from investee
companies within the portfolio. See Note 4 of the Financial Statements for all
income receivable by the Company.
In addition to realisation proceeds and deferred consideration receipts
outlined earlier, the Company also received loan stock repayments of £0.09
million from MBI earlier in the period.
New investments during the period
The Company made two new investments totalling £1.09 million during the
period, as detailed below:
Company Business Date of Investment Amount of new investment (£m)
Proximity Insight 0.61
Retail Software February 2022
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.
Bidnamic May 2022 0.48
Marketing technology business
Lads Store Limited, trading as "Bidnamic" (www.bidnamic.com
(http://www.bidnamic.com) ) is a marketing technology business that offers a
SaaS platform for online retailers to optimise their search engine marketing
spend. The technology was all developed internally and uses bespoke machine
learning algorithms to automate the management and optimisation of online
retailers' Google shopping spend. The ARR of the business has grown
substantially over the last two years and this is projected to continue. The
investment round will be used to further enhance the product's capabilities
and drive continued ARR growth through expanding the sales & marketing
team and building a presence in North America. The investment was made
across all six VCTs advised and managed by Gresham House, including the two
Baronsmead VCTs.
Follow-on investments during the period
The Company made four further investments into existing portfolio companies,
totalling £0.80 million,
as detailed below:
Company Business Date of Investment Amount of further investment (£m)
Caledonian Leisure January/February 2022 0.22
UK Leisure and experience breaks
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 had been devastated by the COVID-19 pandemic, but the company was
well-placed to expand as lockdown and travel restrictions eased. A series of
planned investment tranches has helped the company prepare for and capitalise
on the strong demand for UK staycation holidays.
Northern Bloc Dairy and allergen-free ice cream producer April 2022 0.12
Northern Bloc Ice Cream (northern-bloc.com) is an an established food brand in
the emerging and rapidly growing vegan market. By focusing on chef quality and
natural ingredients, Northern Bloc has carved out an early mover position in
the dairy and allergen-free ice cream sector. The company's focus on
plant-based alternatives has strong environmental credentials as well as it
being the first ice cream brand to move wholly into sustainable packaging.
Following the initial investment in December 2020, Northern Bloc has grown
rapidly and strengthened its prospects. This further investment provides
additional working capital and funds a new production facility to increase its
resilience, flexibility and margins in the future.
Andersen EV May 2022 0.24
Provider of premium electric vehicle (EV) chargers
Muller EV Limited (trading as Andersen EV) (andersen-ev.com) is a design-led
manufacturer of premium electric vehicle (EV) chargers. Incorporated in 2016,
this business has secured high profile partnerships with household brands,
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 EV has
continued its strong trading performance with revenue up over 300% year on
year.
RotaGeek June 2022 0.22
Workforce management software
RotaGeek (rotageek.com) is a provider of cloud-based enterprise software to
help larger retail, leisure and healthcare organisations to schedule staff
effectively. This investment, alongside funds from a new investor and existing
shareholders, will be used to capitalise on opportunities that will emerge as
the retail sector recovers from lockdown restrictions. RotaGeek will also be
expanding its presence in healthcare to help address the workforce management
issues of a sector that is chronically overburdened at present.
Realisations during the period
The Company realised its investment in MBI, as detailed below:
Company Business Date of Investment Amount of further investment (£m)
Media Business Insight January 2015 to £6.07 million
Publishing and events business June 2022 2.2x cost
The Company realised its investment in MBI for £3.84 million (realised gain
in the period: £0.38 million). Total proceeds received over the life of the
investment were £6.07 million compared to an original investment cost of
£2.72 million, representing a multiple on cost of 2.2x and an IRR of 13.7%.
New investments made after the period-end
The Company made two further investments totalling £0.94 million, as detailed
below:
Company Business Date of Investment Amount of further investment (£m)
FocalPoint September 2022 0.50
Navigation
and positioning technology company
FocalPoint Positioning Limited (trading as FocalPoint)
(www.focalpointpositioning.com) is a DeepTech business with a growing IP and
software portfolio. FocalPoint's proprietary technology applies advanced
physics and machine learning to reduce costs and dramatically improve the
satellite-based location sensitivity, accuracy, and security of devices such
as smartphones, wearables, and vehicles. Across both the Mobeus VCTs and the
Baronsmead VCTs, this £4m investment is part of a larger investment round
alongside existing investor Molten Ventures. The investment will be used to
grow and develop its business, hire additional staff and continue the
development and roll out of its offerings.
Company Business Date of Investment Amount of further investment (£m)
Orri September 2022 0.44
A specialist private clinic
Orri Limited (www.orri-uk.com/) is a specialist service provider for patients
over 16 suffering from eating disorders. Orri's intensive day care model
addresses a gap in service provision between residential in-patient services
and infrequent outpatient sessions. Across both the Mobeus VCTs and the
Baronsmead VCTs, the £4.5m investment will be used to open a second Orri site
as well as to accelerate growth in online services, provide a step-down
outpatient service, and build out the business' head office team.
Further investments made after the period-end
The Company made two further investments into existing portfolio companies,
totalling £0.95 million, as detailed below:
Company Business Date of Investment Amount of further investment (£m)
Vivacity June 2022 0.62
Artificial Intelligence and Urban Traffic Control (UTC) system
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.
Bleach Hair Colourants Brand August 2022 0.33
Bleach London Holdings ("Bleach") is an established branded, fast-growing
business which manufactures a range of haircare and colouring products. Bleach
is regarded as a leading authority in the hair colourant market having opened
one of the world's first salons focused on colouring and subsequently launched
its first range of products in 2013. This further investment was part of a
wider £5.5 million investment round alongside existing shareholders and a
strategic partner. The funds will be used to consolidate the brands position
in the UK market as well as drive further expansion and strategic penetration
of the North American market.
Environmental, Social, Governance considerations
Following the novation of the investment advisory agreement to Gresham House,
who have a dedicated team which is focused on sustainability, this provides 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 second
Sustainable Investment Report in April 2022, which can be found on its website
at: www.greshamhouse.com (http://www.greshamhouse.com) .
Gresham House Asset Management Limited
Investment Adviser
13 September 2022
INVESTMENT PORTFOLIO SUMMARY as at 30 June 2022
Total Total Total % of % of
cost valuation valuation equity portfolio
at 30 June 2022 at 31 December 2021 at 30 June 2022 held by value
Gresham House Asset Management Portfolio £ £ £
Preservica Limited 3,397,745 11,056,628 10,693,622 13.3% 20.2%
Seller of proprietary digital archiving software
MPB Group Limited 1,095,252 5,764,694 4,526,932 3.2% 8.6%
Online marketplace for photographic and video equipment
EOTH Limited (trading as Equip Outdoor Technologies) 951,471 4,847,187 4,043,046 1.7% 7.6%
Branded outdoor equipment and clothing (including the RAB and Lowe Alpine
brands)
My TutorWeb Limited (trading as MyTutor) 2,464,757 5,015,751 3,511,020 5.3% 6.6%
Digital marketplace connecting school pupils seeking one to one online
tutoring
Virgin Wines UK plc 45,915 9,486,219 3,470,568 8.3% 6.6%
Online wine retailer
Master Removers Group 2019 Limited (trading as Anthony Ward Thomas, 348,641 3,001,004 3,006,136 6.6% 5.7%
Bishopsgate and Aussie Man & Van)
Aspecialist logistics, storage and removals business
End Ordinary Group Limited (trading as Buster and Punch) 1,496,785 3,305,392 2,987,455 7.8% 5.7%
Industrial inspired lighting and interiors retailer
Data Discovery Solutions Limited (trading as Active Navigation) 1,408,640 2,624,447 2,503,729 7.1% 4.7%
Provider of global market leading file analysis software for information
governance, security and compliance
Bella & Duke Limited 877,381 2,050,122 2,452,629 4.4% 4.6%
Apremium frozen raw dog food provider
Manufacturing Services Investment Limited (trading as Wetsuit Outlet) 2,333,102 2,331,133 1,967,122 6.4% 3.7%
Online retailer in the water sports market
Arkk Consulting Limited (trading as Arkk Solutions) 1,599,445 1,680,942 1,712,786 6.7% 3.2%
Provider of services and software to enable organisations to remain compliant
with regulatory reporting requirements
Tharstern Group Limited 1,091,886 1,204,783 1,560,890 12.7% 3.0%
Software based management information systems to the print sector
Rota Geek Limited 1,092,500 765,890 992,446 4.1% 1.9%
Workforce management software
Connect Childcare Group Limited 846,007 994,110 937,439 3.0% 1.8%
Nursery management software provider
Vivacity Labs Limited 914,754 914,754 914,754 4.4% 1.7%
Provider of artificial intelligence & urban traffic control systems
Spanish Restaurant Group Limited (trading as Tapas Revolution) 1,219,096 739,557 734,928 6.7% 1.4%
Spanish restaurant chain
Caledonian Leisure Limited 547,502 695,000 663,343 6.6% 1.3%
Provider of UK leisure and experience breaks
Legatics Limited 663,011 663,011 663,011 6.0% 1.2%
SaaS LegalTech software provider
Pets' Kitchen Limited (trading as Vet's Klinic) 631,120 631,120 631,120 4.5% 1.2%
Veterinary clinics
IPV Limited 619,487 619,487 619,487 5.5% 1.2%
Provider of media asset software
Bleach London Holdings Limited 629,772 791,477 613,118 3.1% 1.2%
Hair colourants brand
Proximity Insight Holdings Limited 608,000 - 608,000 2.5% 1.2%
Super-App used by customer-facing teams of brands and retailers to engage,
inspire and transact with customers
Northern Bloc Ice Cream Limited 425,670 498,768 555,832 6.3% 1.0%
Supplier of premium vegan ice cream
Lads Store Limited (trading as Bidnamic) 480,538 - 480,538 1.1% 0.9%
SaaS platform for optimisation of search engine marketing spend
CGI Creative Graphics International Limited 1,449,746 397,434 378,906 6.3% 0.7%
Vinyl graphics to global automotive, recreation vehicle and aerospace markets
Muller EV Limited (trading as Andersen EV) 585,598 195,200 329,398 8.8% 0.6%
Provider of premium electrical vehicle (EV) changers
Parsley Box Group plc 631,003 417,536 221,816 1.8% 0.4%
Home delivered ambient ready meals targeting the over 60s
RDL Corporation Limited 1,000,000 317,413 199,932 8.9% 0.4%
Recruitment consultants within the pharmaceutical, business intelligence and
IT industries
Kudos Innovations Limited 328,950 81,979 72,883 3.0% 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%
Direct booking software for hotels
Racoon International Group Limited 484,347 - - 0.0% 0.0%
Supplier of hair extensions, hair care products and training
Importer and distributor of artificial flowers, floral sundries and home decor
products
Disposals in period
Media Business Insight Holdings Limited 3,560,047 15.7% 0.0%
Apublishing and events business focused on the creative production industries
Total 32,846,590 64,700,682 52,102,483 98.5%
Former Elderstreet Private Equity Limited Portfolio
Cashfac Limited 260,101 851,035 725,731 2.9% 1.4%
Provider of virtual banking application software solutions to corporate
customers
Sift Group Limited 135,391 32,750 39,722 1.3% 0.1%
Developer of business-to-business internet communities
Total 395,492 883,785 765,453 1.5%
Total Investment Portfolio 33,242,082 65,584,467 52,867,936 100.0%
Total Investment Portfolio by type
Growth focused portfolio(1) 27,174,019 50,568,974 47,208,043 89.2%
MBO focused portfolio(1) 6,068,063 15,015,493 5,659,893 10.8%
Investment Adviser's Total 33,242,082 65,584,467 52,867,936 100.0%
Notes
(1) - 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.
Statement of the Directors' Responsibilities
Responsibility statements
In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Jonathan
Cartwright (Chairman), Graham Paterson (Chairman of the Audit Committee and
Nomination and Remuneration Committee) and Chris Burke (Chairman of the
Investment Committee), being the Directors of the Company confirm that to the
best of their knowledge:
a) the condensed set of financial statements, which has been prepared in
accordance with Financial Reporting Standard 104 "Interim Financial Reporting"
gives a true and fair view of the assets, liabilities, financial position and
profit of the Company, as required by DTR 4.2.10;
b) the Half-Year Management Report which comprises the Chairman's
Statement, Investment Policy, Investment Review and the Investment Portfolio
Summary includes a fair review of the information required by DTR 4.2.7, being
an indication of the important events that have occurred during the first six
months of the financial year and their impact on the condensed set of
financial statements;
c) a description of the principal risks and uncertainties facing the
Company for the remaining six months is set out below, in accordance with DTR
4.2.7; and
d) there were no related party transactions in the first six months of the
current financial year that are required to be disclosed, in accordance with
DTR 4.2.8.
Principal risks and uncertainties
In accordance with DTR 4.2.7, the Board confirms that the principal risks and
uncertainties facing the Company have not materially changed from those
identified in the Annual Report and Financial Statements for the year ended 31
December 2021 ("the Annual Report") and are not expected to change ahead of
the year-end.
The principal risks faced by the Company are:
· Loss of approval as a Venture Capital Trust;
· economic and political risk;
· investment risk;
· regulatory risk;
· financial and operating risk;
· market risk;
· asset liquidity risk; and
· environmental, social and governance emerging risk.
A detailed explanation of the principal risks can be found in the Annual
Report on pages 34 and 35 and in Note 15 on pages 72 to 79 of the Annual
Report and Financial Statements for the year ended 31 December 2021, copies of
which are available on the Investment Adviser's website, www.greshamhouse.com
or by going directly to the VCT's website, www.mig4vct.co.uk
(http://www.mig4vct.co.uk) .
Going concern
The Board has assessed the Company's operation as a going concern. The
Company's business activities, together with the factors likely to affect its
future development, performance and position are set out in the Half-Year
Management Report. The Directors have satisfied themselves that Company's cash
position, bolstered by the fundraising completed at the beginning of 2022 is
adequate for the Company to continue as a going concern under any plausible
stress scenario. The majority of companies in the portfolio continue to trade
well and the portfolio taken as a whole remains resilient and
well-diversified, although supply chain constraints and inflationary pressures
are beginning to impact. The major cash outflows of the Company (namely
investments, buybacks and dividends) are within the Company's control.
The Board's assessment of liquidity risk and details of the Company's policies
for managing its financial risks and capital are shown in Note 15 on pages 72
to 79 of the Annual Report and Financial Statements for the year ended 31
December 2021. Accordingly, the Directors continue to adopt the going concern
basis of accounting in preparing the Half-Year report and annual financial
statements.
Cautionary statement
This report may contain forward looking statements with regards to the
financial condition and results of the Company, which are made in the light of
current economic and business circumstances. Nothing in this report should be
construed as a profit forecast.
For and on behalf of the Board:
Jonathan Cartwright
Chairman
13 September 2022
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Unaudited Condensed Income Statement for the six months to 30 June 2022
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2021
(unaudited) (unaudited) (audited)
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £ £ £ £
Net investment portfolio (losses)/gains 10 - (10,266,686) (10,266,686) - 19,952,419 19,952,419 - 29,904,336 29,904,336
Income 4 699,999 - 699,999 496,873 - 496,873 1,354,209 - 1,354,209
Investment Adviser's fees 5 (247,680) (743,037) (990,717) (194,595) (583,787) (778,382) (428,601) (1,285,804) (1,714,405)
Other expenses (261,117) - (261,117) (208,965) - (208,965) (460,888) - (460,888)
Profit/(loss) on ordinary activities before taxation 191,202 (11,009,723) (10,818,521) 93,313 19,368,632 19,461,945 464,720 28,618,532 29,083,252
Tax on profit/(loss) on ordinary activities 6 (22,224) 22,224 - (4,371) 4,371 - (22,097) 22,097 -
Profit/(loss) and total comprehensive income 168,978 (10,987,499) (10,818,521) 88,942 19,373,003 19,461,945 442,623 28,640,629 29,083,252
Basic and diluted earnings per ordinary share 7 0.19p (12.43)p (12.24)p 0.11p 23.08p 23.19p 0.53p 34.16p 34.69p
The revenue column of the Income Statement includes all income and expenses.
The capital column accounts for the net investment portfolio (losses)/gains
(unrealised (losses)/gains and realised gains on investments) and the
proportion of the Investment Adviser's fee charged to capital.
The total column is the Statement of Total Comprehensive Income of the Company
prepared in accordance with Financial Reporting Standards ("FRS"). In order to
better reflect the activities of a VCT and in accordance with the 2014
Statement of Recommended Practice ("SORP") (updated in April 2021) issued 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 period/year.
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
Unaudited Condensed Balance Sheet as at 30 June 2022
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Notes £ £ £
Fixed assets
Investments at fair value 10 52,867,936 60,040,228 65,584,467
Current assets
Debtors and prepayments 146,585 148,101 2,895,532
Current asset investments 9 30,938,168 24,529,923 20,475,179
Cash at bank 9 2,422,753 3,001,675 4,059,487
33,507,506 27,679,699 27,430,198
Creditors: amounts falling due within one year (241,463) (400,219) (227,411)
Net current assets 33,266,043 27,279,480 27,202,787
Net assets 86,133,979 87,319,708 92,787,254
Capital and reserves
Called up share capital 909,903 833,540 833,897
Share premium reserve 20,869,200 12,495,262 13,129,427
Capital redemption reserve 36,299 27,012 33,606
Revaluation reserve 20,436,687 27,540,590 32,819,832
Special distributable reserve 15,945,431 25,380,699 20,109,912
Realised capital reserve 26,145,111 19,355,977 24,028,652
Revenue reserve 1,791,348 1,686,628 1,831,928
Equity shareholders' funds 86,133,979 87,319,708 92,787,254
Basic and diluted net asset value:
Basic and diluted net asset value per share 11 94.66p 104.76p 111.27p
The financial information for the six months ended 30 June 2022 and the six
months ended 30 June 2021 has not been audited.
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
Unaudited Condensed Statement of Changes in Equity
for the six months ended 30 June 2022
Non-distributable reserves Distributable reserves
Called up Share Capital Special Realised
share premium redemption Revaluation distributable capital Revenue
capital reserve reserve reserve reserve reserve reserve Total
(Note a) (Note b) (Note b)
For the six months ended 30 June 2022 Notes £ £ £ £ £ £ £ £
At 1 January 2022 833,897 13,129,427 33,606 32,819,832 20,109,912 24,028,652 1,831,928 92,787,254
Comprehensive income for the period
(Loss)/profit for the period - - - (11,048,140) - 60,641 168,978 (10,818,521)
Total comprehensive income for the period - - - (11,048,140) - 60,641 168,978 (10,818,521)
Contributions by and distributions to owners
Shares issued via Offer for Subscription (Note c) 73,612 7,426,388 - - - - - 7,500,000
Issue costs and facilitation fees on Offer for Subscription (Note c) - (188,072) - - (40,749) - - (228,821)
Issue of shares under Dividend Investment Scheme 5,087 501,457 - - - - - 506,544
Shares bought back (Note d) (2,693) - 2,693 - (259,553) - - (259,553)
Dividends paid 8 - - - - (3,143,366) - (209,558) (3,352,924)
Total contributions by and distributions to owners 76,006 7,739,773 2,693 - (3,443,668) - (209,558) 4,165,246
Other movements
Realised losses transferred to special reserve (Note a) - - - - (720,813) 720,813 - -
Realisation of previously unrealised gains - - - (1,335,005) - 1,335,005 - -
Total other movements - - - (1,335,005) (720,813) 2,055,818 - -
At 30 June 2022 909,903 20,869,200 36,299 20,436,687 15,945,431 26,145,111 1,791,348 86,133,979
Notes:
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 £720,813 to the special reserve
from the realised capital reserve above is the total of realised losses
incurred by the Company in the period. As at 30 June 2022, the Company has a
special reserve of £15,945,431, all of which arises from shares issued more
than three years after the end of the financial year in which they were
issued. Reserves originating from share issues are not distributable under VCT
rules if they are within three years of the end of an accounting period in
which the shares were issued.
b): The Realised capital reserve and the Revenue reserve together comprise the
Profit and Loss Account of the Company.
c): Under the Company's Offer for subscription launched on 20 January 2022,
7,361,191 Ordinary Shares were allotted on 9 March 2022, raising net funds of
£7,271,179 for the Company. This figure is net of issue costs of £188,072
and facilitation fees of £40,749.
d): During the period, the Company repurchased 269,283 of its own shares at
the prevailing market price for a total cost (including stamp duty) of
£259,553, which were subsequently cancelled.
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
Unaudited Condensed Statement of Changes in Equity
for the six months ended 30 June 2021
Non-distributable reserves Distributable reserves
Called up Share Capital Special Realised
share premium redemption Revaluation distributable capital Revenue
capital reserve reserve reserve reserve reserve reserve Total
For the six months ended 30 June 2021 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 period
Profit for the period - - - 18,812,482 - 560,521 88,942 19,461,945
Total comprehensive income for the period - - - 18,812,482 - 560,521 88,942 19,461,945
Contributions by and distributions to owners
Shares bought back (6,500) - 6,500 - (603,432) - - (603,432)
Dividends paid - - - - - - - -
Total contributions by and distributions to owners (6,500) - 6,500 - (603,432) - - (603,432)
Other movements
Realised losses transferred to special reserve - - - - (579,416) 579,416 - -
Realisation of previously unrealised gains - - - (1,477,825) - 1,477,825 - -
Total other movements - - - (1,477,825) (579,416) 2,057,241 - -
At 30 June 2021 833,540 12,495,262 27,012 27,540,590 25,380,699 19,355,977 1,686,628 87,319,708
The composition of each of these reserves is explained below:
Called up share capital - The nominal value of shares originally issued,
increased for subsequent share issues either via an Offer for Subscription or
Dividend Investment Scheme or reduced due to shares bought back by the
Company.
Capital redemption reserve - The nominal value of shares bought back and
cancelled is held in this reserve, so that the Company's capital is
maintained.
Share premium reserve - This reserve contains the excess of gross proceeds
less issue costs over the nominal value of shares allotted under recent Offers
for Subscription and the Company's Dividend Investment Scheme.
Revaluation reserve - Increases and decreases in the valuation of investments
held at the period-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, all such movements through both revaluation and realised capital
reserves are shown within the Income Statement for the period.
Special distributable reserve - This reserve is created from cancellations of
the balances upon the Share premium reserve, which are transferred to this
reserve from time to time. The cost of share buybacks and any realised losses
on the sale or impairment of investments (excluding transaction costs) are
charged to this reserve. 75% of the Investment Adviser fee expense, and the
related tax effect, that are charged to the realised capital reserve are
transferred to this reserve. This reserve will also be charged any
facilitation payments to financial advisers, which arose as part of an 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 together with the related tax effect, as well as income
dividends paid that are classified as revenue in nature.
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
Unaudited Condensed Statement of Cash Flows for the six months ended 30 June
2022
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2021
Notes (unaudited) (unaudited) (audited)
£ £ £
Cash flows from operating activities
(Loss)/Profit for the financial period (10,818,521) 19,461,945 29,083,252
Adjustments for:
Net investment portfolio losses/(gains) 10,266,686 (19,952,419) (29,904,336)
Decrease in debtors 169,170 255,467 87,812
Increase in creditors and accruals 14,052 45,409 23,302
Net cash outflow from operations (368,613) (189,598) (709,970)
Corporation tax paid - - (103,452)
Net cash outflow from operating activities (368,613) (189,598) (813,422)
Cash flows from investing activities
Sale of investments 10 4,341,501 5,424,072 12,231,857
Purchase of investments 10 (1,891,656) (3,835,185) (6,235,292)
Net cash inflow from investing activities 2,449,845 1,588,887 5,996,565
Cash flows from financing activities
Share issued as part of Offer for Subscription 7,500,000 - -
Issue costs and facilitation fees as part of Offer for Subscription (228,821) - -
Equity dividends paid 8 (266,603) - (6,106,267)
Purchase of own shares (259,553) (556,183) (1,230,702)
Net cash inflow/(outflow) from financing activities 6,745,023 (556,183) (7,336,969)
Net increase/(decrease) in cash and cash equivalents 8,826,255 843,106 (2,153,826)
Cash and cash equivalents at start of period 22,534,666 24,688,492 24,688,492
Cash and cash equivalents at end of period 31,360,921 25,531,598 22,534,666
Cash and cash equivalents comprise:
Cash at bank and in hand 9 2,422,753 3,001,675 4,059,487
Cash equivalents 9 28,938,168 22,529,923 18,475,179
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
Notes to the Unaudited Condensed Financial Statements
Notes to the Unaudited Condensed Financial Statements
for the six months ended 30 June 2022
1. Company information
Mobeus Income and Growth 4 VCT plc is a public limited company incorporated in
England, registration number 3707697. The registered office is 5 New Street
Square, London EC4A 3TW.
2. Basis of preparation of the financial statements
These Financial Statements have been prepared in accordance with accounting
policies consistent with Financial Reporting Standard 102 ("FRS102"),
Financial Reporting Standard 104 ("FRS104") - Interim Financial Reporting,
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 Half-Year Report has not been audited, nor has it been reviewed by the
auditor pursuant to the Financial Reporting Council's (FRC) guidance on Review
of Interim Financial Information.
3. Principal accounting policies
The accounting policies have been applied consistently throughout the period.
Full details of principal accounting policies will be disclosed in the Annual
Report, while the policy in respect of investments is included within an
outlined box at the top of note 10 on investments.
4. Income
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Income from investments £ £ £
Dividends 74,231 70,309 348,420
Loan stock interest 548,258 415,674 984,972
Money-market funds 59,788 758 2,258
Bank deposit interest 17,722 10,132 18,559
Total Income 699,999 496,873 1,354,209
5. Investment Adviser's fees and performance fees
25% of the Investment Adviser's fees are charged to the revenue column of the
Income Statement, while 75% is charged against the capital column of the
Income Statement. This is in line with the Board's expected long-term split of
returns from the investment portfolio of the Company. 100% of any performance
incentive fee payable for the year would be charged against the capital column
of the Income Statement, as it is based upon the achievement of capital
growth.
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Total Total Total
£ £ £
Allocated to revenue return: Investment Adviser's fees 247,680 194,595 428,601
Allocated to capital return: Investment Adviser's fees 743,037 583,787 1,285,804
Total 990,717 778,382 1,714,405
6. Taxation
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £ £ £ £
a) Analysis of tax charge:
UK Corporation tax on profits/(losses) for the period 22,224 (22,224) - 4,371 (4,371) - 22,097 (22,097) -
Total current tax charge/(credit) 22,224 (22,224) - 4,371 (4,371) - 22,097 (22,097) -
Corporation tax is based on a rate of 19.0% (2021: 19.0%)
b) Profit/(loss) on ordinary activities before tax 191,202 (11,009,723) (10,818,521) 93,313 19,368,632 19,461,945 464,720 28,618,532 29,083,252
Profit/(loss) on ordinary activities multiplied by rate of corporation tax in 36,328 (2,091,848) (2,055,520) 17,729 3,680,041 3,697,770 88,297 5,437,521 5,525,818
the UK of 19.0% (2021: 19.0%)
Effect of:
UK dividends (14,104) - (14,104) (13,358) - (13,358) (66,200) - (66,200)
Net investment portfolio losses/(gains) not allowable/(taxable) - 1,950,670 1,950,670 - (3,790,961) (3,790,961) - (5,681,824) (5,681,824)
Losses not utilised - 118,954 118,954 - 106,549 106,549 - 222,206 222,206
Actual current tax charge 22,224 (22,224) - 4,371 (4,371) - 22,097 (22,097) -
7. Basic and diluted earnings per share
The basic earnings, revenue return and capital return per share shown below
for each period are respectively based on numerators i)-iii), each divided by
the weighted average number of shares in issue in the period - see iv) below
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£ £ £
i) Total earnings after taxation (10,818,521) 19,461,945 29,083,252
Basic and diluted earnings per share (Note a) (12.24)p 23.19p 34.69p
ii) Revenue earnings from ordinary activities after taxation 168,978 88,942 442,623
Basic and diluted revenue return per share (Note b) 0.19p 0.11p 0.53p
Net investment portfolio (losses)/gains (10,266,686) 19,952,419 29,904,336
Capital Investment Adviser's fees less taxation (720,813) (579,416) (1,263,707)
iii) Total capital return (10,987,499) 19,373,003 28,640,629
Basic and diluted capital return per share (Note c) (12.43)p 23.08p 34.16p
iv) Weighted average number of shares in issue in the period 88,388,162 83,932,807 83,840,235
Notes:
a) Basic earnings per share is total earnings after taxation divided by the
weighted average number of shares in issue.
b) Basic revenue return per share is the revenue return after taxation divided by
the weighted average number of shares in issue.
c) Basic capital return per share is the capital return after taxation divided by
the weighted average number of shares in issue.
8. Dividends paid Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Dividend Type For the year ended 31 December Pence per share Date paid £ £ £
Interim Income 2021 0.25p 06 August 2021 - - 208,381
Interim Capital* 2021 4.75p 06 August 2021 - - 3,959,226
Interim Income 2021 0.25p 07 January 2022 209,558 - -
Interim Capital* 2021 3.75p 07 January 2022 3,143,366 - -
Total Dividends Paid 3,352,924 - 4,167,607
*-These dividends were paid out of the Company's special distributable
reserve.
For the period ended 30 June 2022, £3,352,924 disclosed above differs to that
shown in the Condensed Statement of Cash Flows of £266,603 due to £506,545
of new shares allotted subject to listing under the Company's Dividend
Investment scheme and £2,579,776 in dividends paid to the registrar before
the previous year end.
The Board declared an interim dividend in respect of the year ending 31
December 2022 of 4.00 pence per share which was paid to Shareholders on 8 July
2022.
9. Current asset investments and cash at bank
as at as at as at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£ £ £
OEIC Money market funds 28,938,168 22,529,923 18,475,179
Cash equivalents per Statement of Cash Flows 28,938,168 22,529,923 18,475,179
Bank deposits that mature after three months 2,000,000 2,000,000 2,000,000
Current asset investments 30,938,168 24,529,923 20,475,179
Cash at Bank 2,422,753 3,001,675 4,059,487
10. Summary of movement on investments during the period
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 quarterly measurement
dates are reconsidered for any changes in light of more recent events or
changes in the market performance of the investee company. The valuation bases
used are the following:
- a multiple basis. The enterprise value of the
investment may be determined by applying a suitable price-earnings ratio,
revenue or gross profit multiple to that company's historic, current or
forecast post-tax earnings before interest and amortisation, or revenue, or
gross profit (the ratio used being based on a comparable sector but the
resulting value being adjusted to reflect points of difference identified by
the Investment Adviser compared to the sector including, inter alia, scale and
liquidity).
or:-
- where a company's underperformance against plan indicates a
diminution in the value of the investment, provision against the price of a
new investment is made, as appropriate.
(ii) Premiums, to the extent that they are considered capital in nature, and
that they will be received upon repayment of loan stock investments are
accrued at fair value when the Company receives the right to the premium and
when considered recoverable.
(iii) Where a multiple or the price of recent investment less impairment basis
is not appropriate and overriding factors apply, a discounted cash flow, net
asset valuation, realisation proceeds or a weighted average of these bases may
be applied.
Capital gains and losses on investments, whether realised or unrealised, are
dealt with in the profit and loss and revaluation reserves and movements in
the period are shown in the Income Statement.
All investments are initially recognised and subsequently measured at fair
value. Changes in fair value are recognised in the Income Statement.
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 the 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.
Traded Unquoted Unquoted Unquoted Total
on AIM equity preference Loan Stock
shares shares
Level 1 Level 3 Level 3 Level 3
£ £ £ £ £
Valuation at 31 December 2021 9,903,755 45,972,682 1,608,338 8,099,692 65,584,467
Purchases at cost - 370,903 1,083,253 437,500 1,891,656
Sales - proceeds - (3,205,562) - (1,135,939) (4,341,501)
- realised gains (Note a) - 781,454 - - 781,454
Unrealised (losses)/gains on investments in the period (Note a) (6,211,371) (4,770,421) 56,645 (122,993) (11,048,140)
Valuation at 30 June 2022 3,692,384 39,149,056 2,748,236 7,278,260 52,867,936
Book cost at 30 June 2022 676,918 20,209,052 2,554,667 9,801,445 33,242,082
Unrealised gains/(losses) at 30 June 2022 3,015,466 19,686,222 193,796 (2,458,797) 20,436,687
Permanent impairment of investments - (746,218) (227) (64,388) (810,833)
Valuation at 30 June 2022 3,692,384 39,149,056 2,748,236 7,278,260 52,867,936
Gains on investments - 2,116,459 - - 2,116,459
Less amounts recognised as unrealised gains in previous years - (1,335,005) - - (1,335,005)
Realised gains based on carrying value at 31 December 2021 - 781,454 - - 781,454
Net movement in unrealised (losses)/gains in the period (6,211,371) (4,770,421) 56,645 (122,993) (11,048,140)
(Losses)/gains on investments for the six months ended 30 June 2022 (6,211,371) (3,988,967) 56,645 (122,993) (10,266,686)
Note a) Net realised gains on investments of £781,454 together with net
unrealised losses of £11,048,140 equal net investment portfolio losses of
£10,266,686 as disclosed in the Income Statement.
Level 3 unquoted equity and loan investments are valued in accordance with
IPEV guidelines as follows:
as at as at as at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£ £
Valuation methodology
Multiple of earnings, revenues or gross margin, as appropriate 47,708,019 45,057,207 55,435,915
Recent investment price 1,088,538 1,622,633 195,200
Recent investment price (reviewed for impairment) 329,398 48,800 -
Estimated and discounted realisation proceeds 49,597 49,597 49,597
Net asset value - 309,420 -
49,175,552 47,087,657 55,680,712
11. Net asset value per share
As at As at As at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Net assets £86,133,979 £87,319,708 £92,787,254
Number of shares in issue 90,990,361 83,354,074 83,389,721
Net asset value per share (pence) 94.66p 104.76p 111.27p
12. Post balance sheet events
On 5 July 2022, the Company made a further investment of £0.62 million into
Vivacity Labs Limited, an Artificial Intelligence and Urban Traffic Control
("UTC") system.
On 23 August 2022, the Company made a further investment of £0.33 million
into Bleach London Holdings Limited, a hair colourants brand.
On 9 September 2022, the Company made a new investment of £0.50 million into
Focal Point Positioning Limited, a navigation and positioning technology
company.
On 12 September 2022, the Company made a new investment of £0.44 million into
Orri Limited, a specialist private clinic, for those aged 16+, for expert
treatment of Anorexia, Bulimia and Binge Eating Disorder.
13. The financial information for the six months ended 30 June 2022 does not
comprise statutory accounts within the meaning of Section 434 of the Companies
Act 2006. The financial statements for the year ended 31 December 2021 have
been filed with the Registrar of Companies. The auditor has reported on the
financial statements for the year ended 31 December 2021 and that report was
unqualified and did not contain a statement under section 498(2) or (3) of the
Companies Act 2006.
14. This Half-Year Report will shortly be made available on our website:
www.mig4vct.co.uk and will be circulated by post to those shareholders who
have requested copies of the Report. Further copies are available free of
charge from the Company's registered office, 5 New Street Square, London, EC4A
3TW or can be downloaded via the website.
5. Investment Adviser's fees and performance fees
25% of the Investment Adviser's fees are charged to the revenue column of the
Income Statement, while 75% is charged against the capital column of the
Income Statement. This is in line with the Board's expected long-term split of
returns from the investment portfolio of the Company. 100% of any performance
incentive fee payable for the year would be charged against the capital column
of the Income Statement, as it is based upon the achievement of capital
growth.
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Total Total Total
£ £ £
Allocated to revenue return: Investment Adviser's fees 247,680 194,595 428,601
Allocated to capital return: Investment Adviser's fees 743,037 583,787 1,285,804
Total 990,717 778,382 1,714,405
6. Taxation
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £ £ £ £
a) Analysis of tax charge:
UK Corporation tax on profits/(losses) for the period 22,224 (22,224) - 4,371 (4,371) - 22,097 (22,097) -
Total current tax charge/(credit) 22,224 (22,224) - 4,371 (4,371) - 22,097 (22,097) -
Corporation tax is based on a rate of 19.0% (2021: 19.0%)
b) Profit/(loss) on ordinary activities before tax 191,202 (11,009,723) (10,818,521) 93,313 19,368,632 19,461,945 464,720 28,618,532 29,083,252
Profit/(loss) on ordinary activities multiplied by rate of corporation tax in 36,328 (2,091,848) (2,055,520) 17,729 3,680,041 3,697,770 88,297 5,437,521 5,525,818
the UK of 19.0% (2021: 19.0%)
Effect of:
UK dividends (14,104) - (14,104) (13,358) - (13,358) (66,200) - (66,200)
Net investment portfolio losses/(gains) not allowable/(taxable) - 1,950,670 1,950,670 - (3,790,961) (3,790,961) - (5,681,824) (5,681,824)
Losses not utilised - 118,954 118,954 - 106,549 106,549 - 222,206 222,206
Actual current tax charge 22,224 (22,224) - 4,371 (4,371) - 22,097 (22,097) -
7. Basic and diluted earnings per share
The basic earnings, revenue return and capital return per share shown below
for each period are respectively based on numerators i)-iii), each divided by
the weighted average number of shares in issue in the period - see iv) below
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£ £ £
i) Total earnings after taxation (10,818,521) 19,461,945 29,083,252
Basic and diluted earnings per share (Note a) (12.24)p 23.19p 34.69p
ii) Revenue earnings from ordinary activities after taxation 168,978 88,942 442,623
Basic and diluted revenue return per share (Note b) 0.19p 0.11p 0.53p
Net investment portfolio (losses)/gains (10,266,686) 19,952,419 29,904,336
Capital Investment Adviser's fees less taxation (720,813) (579,416) (1,263,707)
iii) Total capital return (10,987,499) 19,373,003 28,640,629
Basic and diluted capital return per share (Note c) (12.43)p 23.08p 34.16p
iv) Weighted average number of shares in issue in the period 88,388,162 83,932,807 83,840,235
Notes:
a) Basic earnings per share is total earnings after taxation divided by the
weighted average number of shares in issue.
b) Basic revenue return per share is the revenue return after taxation divided by
the weighted average number of shares in issue.
c) Basic capital return per share is the capital return after taxation divided by
the weighted average number of shares in issue.
8. Dividends paid Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Dividend Type For the year ended 31 December Pence per share Date paid £ £ £
Interim Income 2021 0.25p 06 August 2021 - - 208,381
Interim Capital* 2021 4.75p 06 August 2021 - - 3,959,226
Interim Income 2021 0.25p 07 January 2022 209,558 - -
Interim Capital* 2021 3.75p 07 January 2022 3,143,366 - -
Total Dividends Paid 3,352,924 - 4,167,607
*-These dividends were paid out of the Company's special distributable
reserve.
For the period ended 30 June 2022, £3,352,924 disclosed above differs to that
shown in the Condensed Statement of Cash Flows of £266,603 due to £506,545
of new shares allotted subject to listing under the Company's Dividend
Investment scheme and £2,579,776 in dividends paid to the registrar before
the previous year end.
The Board declared an interim dividend in respect of the year ending 31
December 2022 of 4.00 pence per share which was paid to Shareholders on 8 July
2022.
9. Current asset investments and cash at bank
as at as at as at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£ £ £
OEIC Money market funds 28,938,168 22,529,923 18,475,179
Cash equivalents per Statement of Cash Flows 28,938,168 22,529,923 18,475,179
Bank deposits that mature after three months 2,000,000 2,000,000 2,000,000
Current asset investments 30,938,168 24,529,923 20,475,179
Cash at Bank 2,422,753 3,001,675 4,059,487
10. Summary of movement on investments during the period
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 quarterly measurement
dates are reconsidered for any changes in light of more recent events or
changes in the market performance of the investee company. The valuation bases
used are the following:
- a multiple basis. The enterprise value of the
investment may be determined by applying a suitable price-earnings ratio,
revenue or gross profit multiple to that company's historic, current or
forecast post-tax earnings before interest and amortisation, or revenue, or
gross profit (the ratio used being based on a comparable sector but the
resulting value being adjusted to reflect points of difference identified by
the Investment Adviser compared to the sector including, inter alia, scale and
liquidity).
or:-
- where a company's underperformance against plan indicates a
diminution in the value of the investment, provision against the price of a
new investment is made, as appropriate.
(ii) Premiums, to the extent that they are considered capital in nature, and
that they will be received upon repayment of loan stock investments are
accrued at fair value when the Company receives the right to the premium and
when considered recoverable.
(iii) Where a multiple or the price of recent investment less impairment basis
is not appropriate and overriding factors apply, a discounted cash flow, net
asset valuation, realisation proceeds or a weighted average of these bases may
be applied.
Capital gains and losses on investments, whether realised or unrealised, are
dealt with in the profit and loss and revaluation reserves and movements in
the period are shown in the Income Statement.
All investments are initially recognised and subsequently measured at fair
value. Changes in fair value are recognised in the Income Statement.
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 the 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.
Traded Unquoted Unquoted Unquoted Total
on AIM equity preference Loan Stock
shares shares
Level 1 Level 3 Level 3 Level 3
£ £ £ £ £
Valuation at 31 December 2021 9,903,755 45,972,682 1,608,338 8,099,692 65,584,467
Purchases at cost - 370,903 1,083,253 437,500 1,891,656
Sales - proceeds - (3,205,562) - (1,135,939) (4,341,501)
- realised gains (Note a) - 781,454 - - 781,454
Unrealised (losses)/gains on investments in the period (Note a) (6,211,371) (4,770,421) 56,645 (122,993) (11,048,140)
Valuation at 30 June 2022 3,692,384 39,149,056 2,748,236 7,278,260 52,867,936
Book cost at 30 June 2022 676,918 20,209,052 2,554,667 9,801,445 33,242,082
Unrealised gains/(losses) at 30 June 2022 3,015,466 19,686,222 193,796 (2,458,797) 20,436,687
Permanent impairment of investments - (746,218) (227) (64,388) (810,833)
Valuation at 30 June 2022 3,692,384 39,149,056 2,748,236 7,278,260 52,867,936
Gains on investments - 2,116,459 - - 2,116,459
Less amounts recognised as unrealised gains in previous years - (1,335,005) - - (1,335,005)
Realised gains based on carrying value at 31 December 2021 - 781,454 - - 781,454
Net movement in unrealised (losses)/gains in the period (6,211,371) (4,770,421) 56,645 (122,993) (11,048,140)
(Losses)/gains on investments for the six months ended 30 June 2022 (6,211,371) (3,988,967) 56,645 (122,993) (10,266,686)
Note a) Net realised gains on investments of £781,454 together with net
unrealised losses of £11,048,140 equal net investment portfolio losses of
£10,266,686 as disclosed in the Income Statement.
Level 3 unquoted equity and loan investments are valued in accordance with
IPEV guidelines as follows:
as at as at as at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£ £
Valuation methodology
Multiple of earnings, revenues or gross margin, as appropriate 47,708,019 45,057,207 55,435,915
Recent investment price 1,088,538 1,622,633 195,200
Recent investment price (reviewed for impairment) 329,398 48,800 -
Estimated and discounted realisation proceeds 49,597 49,597 49,597
Net asset value - 309,420 -
49,175,552 47,087,657 55,680,712
11. Net asset value per share
As at As at As at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Net assets £86,133,979 £87,319,708 £92,787,254
Number of shares in issue 90,990,361 83,354,074 83,389,721
Net asset value per share (pence) 94.66p 104.76p 111.27p
12. Post balance sheet events
On 5 July 2022, the Company made a further investment of £0.62 million into
Vivacity Labs Limited, an Artificial Intelligence and Urban Traffic Control
("UTC") system.
On 23 August 2022, the Company made a further investment of £0.33 million
into Bleach London Holdings Limited, a hair colourants brand.
On 9 September 2022, the Company made a new investment of £0.50 million into
Focal Point Positioning Limited, a navigation and positioning technology
company.
On 12 September 2022, the Company made a new investment of £0.44 million into
Orri Limited, a specialist private clinic, for those aged 16+, for expert
treatment of Anorexia, Bulimia and Binge Eating Disorder.
13. The financial information for the six months ended 30 June 2022 does not
comprise statutory accounts within the meaning of Section 434 of the Companies
Act 2006. The financial statements for the year ended 31 December 2021 have
been filed with the Registrar of Companies. The auditor has reported on the
financial statements for the year ended 31 December 2021 and that report was
unqualified and did not contain a statement under section 498(2) or (3) of the
Companies Act 2006.
14. This Half-Year Report will shortly be made available on our website:
www.mig4vct.co.uk and will be circulated by post to those shareholders who
have requested copies of the Report. Further copies are available free of
charge from the Company's registered office, 5 New Street Square, London, EC4A
3TW or can be downloaded via the website.
( )
(1) These figures exclude the impact of a dividend in respect of the year
ending 31 December 2022 of 4.00 pence per share paid after the period-end on 8
July 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 200p 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 at 30 June 2022 on the Company's website at: www.mig4vct.co.uk where
they can be accessed by clicking on the word "table" under "Reviewing the
performance of your investment" heading on the home page.
On 1 August 2006, Mobeus became sole Investment Adviser to the Company. The
cumulative NAV total return at this date was 122.51 pence.
( )
( )
Chairman's Statement
I am pleased to present the Company's Half-Year Report for the six months to
30 June 2022.
Overview
The first six months of the Company's financial year have been notable for
significant economic disruption both domestically and internationally.
December 2021 was a high watermark in many technology and growth markets, and
since then we have experienced a number of significant global events such as
the Russian invasion of Ukraine, the return of inflation to 40-year highs and
heightened political uncertainty in the UK and across Europe. All of this has
led to marked volatility across markets and a general de-rating of growth
stocks.
Performance
As a consequence of the factors described above, the Company has experienced a
negative NAV total return of (11.3)% over the six months to 30 June 2022
(2021: positive 28.5%). Share price total return was in positive territory at
2.8% (2021: 34.1%) but markets remain very volatile and the results for the
six months to 30 June 2022 necessarily provide only a snapshot as at the
reporting period end.
This value decline has been largely driven by market multiples rather than
underlying trading performance at this stage, as markets have factored in the
likely impact of inflation and higher interest rates on consumer spending and
business investment.
The negative NAV total return for the period was principally comprised of
unrealised falls in the value of investments still held, tempered somewhat by
the successful exit from Media Business Insight ("MBI"), loan repayments and
deferred proceeds received from the realisation of Red Paddle in December
2021.
Investment portfolio
In the face of the current testing environment the portfolio has, thus far,
remained relatively resilient. Nevertheless, the Investment Adviser has
started to see indicators of customer retrenchment as consumer confidence
declines. There was a fall of £10.27 million, or 15.7%, in the overall value
of the portfolio across the six months to 30 June 2022 (2021: increase of
£19.95 million, or 47.9%) on a like for like basis compared to the opening
value of the portfolio at 1 January 2022. A significant proportion of this
asset movement reflected a value decline in the AIM-listed Virgin Wines
investment which, in spite of positive news flows and the relative
outperformance of its peers, has suffered from the de-rating of its sector.
The Company completed one successful exit during the period, generating
proceeds of £3.84 million from the sale of Media Business Insight. Returns
received over the life of this investment amounted to 2.2x multiple of cost
and an IRR of 13.7%. Further proceeds from loan repayments and deferred
consideration amounted to £0.49 million.
Global supply shortages remain a significant factor and are expected to
continue to cause disruption going forward. The economic backdrop falls
largely outside of the experience of this generation of management teams and
advisers. As such, the experience of seasoned investment managers will be
increasingly important in the coming months.
Investment activity during the period has been strong, with two new and four
follow-on investments completed during the period, totalling £1.89 million.
History suggests that, although the economic backdrop is challenging,
investing throughout the cycle is a fruitful strategy, with investments made
in previous downturns in many cases subsequently yielding very strong returns.
During the six months under review, the Company invested a total of £1.09
million into two new investments: a retail software provider (Proximity
Insight) and a marketing technology business (Bidnamic).
In addition, four follow-on investments totalling £0.80 million were made
into a provider of UK leisure and experience breaks (Caledonian Leisure), a
dairy and allergen-free ice cream brand (Northern Bloc), a provider of premium
electric vehicle chargers (Andersen EV) and a workforce management software
business (RotaGeek). Access to additional resources following the move to
Gresham House is very welcome in this regard.
Since the period-end, the Company has also made two follow-on investments and
two new investments. £0.62 million into an AI and Urban Traffic Control
business (Vivacity) and £0.33 million into a hair colourants brand (Bleach
London), both existing businesses. £0.50 million was newly invested into
FocalPoint, a navigation and positioning technology company and £0.44 million
into Orri Limited, a specialist private clinic, for those aged 16+, for expert
treatment of Anorexia, Bulimia and Binge Eating
Disorder.
During such turbulent times, doing everything in our power to support the
portfolio is an imperative. The Investment Adviser is making full use of its
Talent Management teams in helping to support management teams across the
portfolio. Such specialist skills are a key benefit of the move to Gresham
House.
Details of this investment activity and the performance of the portfolio are
contained in the Investment Review and the Investment Portfolio Summary
below.
Revenue account
The results for the period are set out in the Unaudited Condensed Income
Statement on pages 12 to 13 of the Half-Year Report and show a revenue return
(after tax) of 0.19 pence per share (2021: 0.11 pence per share). The revenue
return for the period of £0.17 million has increased from last year's figure
of £0.09 million. This is mainly due to a significant loan interest receipt
upon the sale of MBI.
Dividends
The Board continues to be committed to providing an attractive dividend stream
to Shareholders and was pleased to declare an Interim dividend of 4.00 pence
per share for the year ending 31 December 2022.
This dividend was paid on 8 July 2022, to Shareholders on the Register on
27 May 2022, and brought cumulative dividends paid per share since inception
to 147.20 pence.
An additional interim dividend of 6.00 pence per share is declared for payment
on 7 November 2022 for those shareholders on the Register of Members at 16
September 2022.
The Company's ongoing target of paying a dividend of at least 4.00 pence per
share in respect of each financial year has been achieved and often exceeded
in all 12 years since it was established. Whilst the Board still believes this
dividend target is attainable, it should be noted that the continued movement
of the portfolio to a larger share of younger growth capital investments could
lead to increased volatility, which may affect the return in any given year.
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 (adjusted for dividends paid).
New VCT shares attract the same tax reliefs as shares purchased through an
Offer for Subscription.
There were 508,732 shares allotted through the DIS during the period at an
average price of 99.57 pence.
Shareholders can opt-in to the DIS by completing a mandate form available on
the Company's website at www.mig4vct.co.uk (http://www.mig4vct.co.uk) or can
opt-out by contacting Link Group, using the details provided under Shareholder
Information on pages 24-25 of the Half-Year Report. Please note that
instructions received take 15 days to become effective.
To the extent that dividends are paid other than out of income or from gains
on investments, for instance out of special distributable reserves,
Shareholders should note this may result in a reduction in NAV over the
period.
Offer for Subscription
As announced recently, the Board intends to launch joint offers for
subscription for new ordinary shares in the 2022/23 tax year alongside the
other Mobeus VCTs. The Board expects to convene a general meeting of
shareholders to seek the necessary authority to allot shares and disapply
pre-emption rights in connection with the fundraising. Shareholders will have
received a Circular in September confirming the amount to be raised and the
purposes for which the funds will be used in advance of the General meeting
for consideration. We urge all Shareholders to submit their proxy votes online
in respect of the resolutions proposed via the Link Group shareholder portal:
www.signalshares.com (http://www.signalshares.com) .
If Shareholder approval is obtained, the Board expects to be in a position to
launch the offer for subscription later this month, full details of which will
be contained in the prospectus on the Company's website: www.mig4vct.co.uk
(http://www.mig4vct.co.uk) .
Liquidity
The Board continues to monitor credit risk in respect of its cash and near
cash resources and to prioritise the security and protection of the Company's
capital. Cash and liquidity fund balances as at 30 June 2022 amounted to
£33.36 million representing 38.7% of net assets. After the period-end,
following the payment of a 4.00 pence per share dividend, the pro-forma level
of liquidity will be £30.29 million (36.5% of net assets).
Share buy-backs
During the six months to 30 June 2022, the Company bought back and cancelled
269,283 of its own shares, representing 0.3% (2021: 0.8%) of the shares in
issue at the beginning of the period, at a total cost of £0.26 million (2021:
£0.60 million), inclusive of expenses.
It is the Company's policy to cancel all shares bought back in this way. The
Board regularly reviews its buyback policy, where its priority is to act
prudently and in the interest of remaining Shareholders, whilst considering
other factors, such as levels of liquidity and reserves, market conditions and
applicable law and regulations. Under this policy, the Company seeks to
maintain the discount at which the Company's shares trade at approximately 5%
below the latest published NAV.
Shareholder communications
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 its most recent Shareholder Event on behalf of all
four Mobeus VCTs in early 2022. The event was well received and the Investment
Adviser plans to hold another event in 2023.Further details will be circulated
to Shareholders and shown on the Company's website in due course.
Fraud Warning
We are aware of a number of cases where Shareholders are being fraudulently
contacted or are being subjected to attempts of identity fraud. Shareholders
should remain vigilant of all potential financial scams or requests for them
to disclose personal data. The Board strongly recommends Shareholders take
time to read the Company's Fraud warning section, including details of who to
contact, contained within the Information for Shareholders section on pages 24
and 25 of the Half-Year Report.
Succession Planning
I have stated my intention to retire as Chairman and a Director of the Company
following the conclusion of the Company's Annual General Meeting in May 2023.
The Board intends to appoint Graham Paterson as Chairman of the Company to
succeed me. It has therefore begun its recruitment process for a Non-Executive
Director to succeed Graham, who will step down from his role as Chairman of
the Audit Committee. In its recruitment process, the Nomination &
Remuneration Committee will give careful consideration to the diversity of
skills, experience, gender and background of the wider Board, whilst also
ensuring that the candidate selected has the requisite skills and experience
to discharge their duties effectively as a Director and Chairman of the Audit
Committee.
Outlook
The economic impacts for the next twelve months and perhaps beyond can be
expected to be challenging. However, such conditions can provide a good
opportunity to make high quality investments and build strategic stakes in
businesses with great potential for the future. The exit environment is likely
to dampen somewhat, although this is not foreseen to be a significant issue
given that the VCT fund is not time-limited. On the whole, your Board is
confident that, with continued and targeted support, the portfolio remains on
track to overcome its challenges and achieve its growth ambitions.
Jonathan Cartwright
Chairman
13 September 2022
Investment Policy
The investment policy is designed to meet the Company's objective.
Investments
The Company invests primarily in a diverse portfolio of UK unquoted companies.
Investments are made selectively across a number of sectors, principally in
established companies. Investments are usually structured as part loan stock
and part equity in order to produce a regular income stream and to generate
capital gains from realisations.
There are a number of conditions within the VCT legislation which need to be
met by the Company and which may change from time to time. The Company will
seek to make investments in accordance with the requirements of prevailing VCT
legislation.
Asset allocation and risk diversification policies, including the size and
type of investments the Company makes, are determined in part by the
requirements of prevailing VCT legislation. No single investment may represent
more than 15% (by VCT tax value) of the Company's total investments at the
date of investment.
Liquidity
The Company's cash and liquid funds are held in a portfolio of readily
realisable interest-bearing investments, deposit and current accounts, of
varying maturities, subject to the overriding criterion that the risk of loss
of capital be minimised.
Borrowing
The Company's Articles of Association permit borrowing of up to 10% of the
adjusted capital and reserves (as defined therein). However, the Company has
never borrowed and the Board would only consider doing so in exceptional
circumstances.
Investment Review
Portfolio review
Demand for growth capital investment remains strong and there continues to be
a healthy pipeline of investment opportunities. The current economic climate,
whilst challenging for businesses across the portfolio, also presents great
opportunities to develop potential through investment.
The portfolio movements in the period are summarised as follows:
2022 2021
£m £m
Opening portfolio value 65.58 41.68
New and follow-on investments 1.89 3.83
Disposal proceeds (4.33) (5.42)
Net realised gains 0.78 1.14
Unrealised valuation movements (11.05) 18.81
Portfolio value at 30 June 52.87 60.04
The six months to 30 June 2022 has seen volatility translate into a decline in
market ratings. The portfolio value has reduced as a result of this, in
spite of largely resilient underlying trading performances. The Company made
two new growth capital investments during the period: £0.61 million into
Proximity Insight and £0.48 million into Bidnamic. Both these companies are
retail technology businesses.
The Company also achieved a satisfying exit from Media Business Insight
("MBI") during the period, receiving a total of £3.84 million in proceeds,
contributing to total receipts of £4.23 million during the period.
The investment and divestment activity during the period has further increased
the proportion of the portfolio comprised of growth substantially made up of
investments made since the 2015 VCT rule change. These investments amount to
89.2% by value at the period-end (31 December 2021: 77.1%).
After the period-end, the Company invested a further £0.62 million into
Vivacity, an existing portfolio company. Vivacity is a developer of artificial
intelligence and Urban Traffic Control systems. Following its initial series
A funding in 2021, the business has doubled the size of its team and partnered
with leading firms in the automotive and environmental measurement industries.
Also, after the period end, £0.33 million was further invested into Bleach
(London). It also made a new investment of £0.50 into FocalPoint, a
next-generation navigation and positioning technology company and £0.44
million was invested into Orri Limited, a specialist private clinic, for those
aged 16+, for expert treatment of Anorexia, Bulimia and Binge Eating Disorder.
The portfolio's valuation changes in the six-month period to 30 June are
summarised as follows:
Investment Portfolio Capital Movement 2022 2021
£m £m
Increase in the value of unrealised investments 0.81 19.12
Decrease in the value of unrealised investments (11.86) (0.31)
Net (decrease)/increase in the value of unrealised investments (11.05) 18.81
Realised gains 0.78 1.20
Realised losses - (0.06)
Net realised gains in the period 0.78 1.14
Net investment portfolio movement in the period (10.27) 19.95
Valuation changes of portfolio investments still held
From the total value increases of £0.81 million within the portfolio, the
principal movements were in Bella and Duke: £0.40 million and Tharstern:
£0.36 million.
Bella and Duke has relatively maintained its existing customer base despite
the slowdown in securing new customers due to the current economic
environment. Improved trading for Tharstern through new business wins and cost
controls have enhanced its valuation.
The main reductions within total valuation decreases of (£11.86) million,
were in Virgin Wines £(6.02) million; MyTutor £(1.51) million and MPB Group
£(1.24) million. The portfolio's largest asset by value at the start of the
year, Virgin Wines, has consistently delivered robust trading performance
relative to its peers and continued to release positive news flow.
Nevertheless, the value of the AIM-listed stock has been impacted by the
general de-rating of its sector. MyTutor has generated strong revenues in the
year to date. However, a significant reduction in comparator multiples has
reduced the value of this investment. Finally, MPB has seen a reduction in
benchmark multiples and accelerated its cash spend for growth but is yet to
see this translate into revenues for valuation purposes.
Realised gains and deferred consideration receipts
The Company realised its investment in MBI during the period under review,
generating gains in the period of £0.38 million. These contributed to a
multiple of cost of 2.2x over the life of the investment. The Company also
received deferred proceeds of £0.40 million from the realisation of Red
Paddle in a previous period.
Investment portfolio yield and capital repayments
In the period under review, the Company received the following amounts in loan
interest and dividend income:
Portfolio income and yield 2022 2021
£m £m
Interest received in the period 0.55 0.42
Dividends received in the period 0.07 0.07
Total portfolio income in the period(1) 0.62 0.49
Portfolio Value at 30 June 52.87 60.04
Portfolio Income Yield (Income as a % of Portfolio Value at 30 June) 1.2% 0.8%
(1) Total portfolio income in the period is generated solely from investee
companies within the portfolio. See Note 4 of the Financial Statements for all
income receivable by the Company.
In addition to realisation proceeds and deferred consideration receipts
outlined earlier, the Company also received loan stock repayments of £0.09
million from MBI earlier in the period.
New investments during the period
The Company made two new investments totalling £1.09 million during the
period, as detailed below:
Company Business Date of Investment Amount of new investment (£m)
Proximity Insight 0.61
Retail Software February 2022
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.
Bidnamic May 2022 0.48
Marketing technology business
Lads Store Limited, trading as "Bidnamic" (www.bidnamic.com
(http://www.bidnamic.com) ) is a marketing technology business that offers a
SaaS platform for online retailers to optimise their search engine marketing
spend. The technology was all developed internally and uses bespoke machine
learning algorithms to automate the management and optimisation of online
retailers' Google shopping spend. The ARR of the business has grown
substantially over the last two years and this is projected to continue. The
investment round will be used to further enhance the product's capabilities
and drive continued ARR growth through expanding the sales & marketing
team and building a presence in North America. The investment was made
across all six VCTs advised and managed by Gresham House, including the two
Baronsmead VCTs.
Follow-on investments during the period
The Company made four further investments into existing portfolio companies,
totalling £0.80 million,
as detailed below:
Company Business Date of Investment Amount of further investment (£m)
Caledonian Leisure January/February 2022 0.22
UK Leisure and experience breaks
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 had been devastated by the COVID-19 pandemic, but the company was
well-placed to expand as lockdown and travel restrictions eased. A series of
planned investment tranches has helped the company prepare for and capitalise
on the strong demand for UK staycation holidays.
Northern Bloc Dairy and allergen-free ice cream producer April 2022 0.12
Northern Bloc Ice Cream (northern-bloc.com) is an an established food brand in
the emerging and rapidly growing vegan market. By focusing on chef quality and
natural ingredients, Northern Bloc has carved out an early mover position in
the dairy and allergen-free ice cream sector. The company's focus on
plant-based alternatives has strong environmental credentials as well as it
being the first ice cream brand to move wholly into sustainable packaging.
Following the initial investment in December 2020, Northern Bloc has grown
rapidly and strengthened its prospects. This further investment provides
additional working capital and funds a new production facility to increase its
resilience, flexibility and margins in the future.
Andersen EV May 2022 0.24
Provider of premium electric vehicle (EV) chargers
Muller EV Limited (trading as Andersen EV) (andersen-ev.com) is a design-led
manufacturer of premium electric vehicle (EV) chargers. Incorporated in 2016,
this business has secured high profile partnerships with household brands,
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 EV has
continued its strong trading performance with revenue up over 300% year on
year.
RotaGeek June 2022 0.22
Workforce management software
RotaGeek (rotageek.com) is a provider of cloud-based enterprise software to
help larger retail, leisure and healthcare organisations to schedule staff
effectively. This investment, alongside funds from a new investor and existing
shareholders, will be used to capitalise on opportunities that will emerge as
the retail sector recovers from lockdown restrictions. RotaGeek will also be
expanding its presence in healthcare to help address the workforce management
issues of a sector that is chronically overburdened at present.
Realisations during the period
The Company realised its investment in MBI, as detailed below:
Company Business Date of Investment Amount of further investment (£m)
Media Business Insight January 2015 to £6.07 million
Publishing and events business June 2022 2.2x cost
The Company realised its investment in MBI for £3.84 million (realised gain
in the period: £0.38 million). Total proceeds received over the life of the
investment were £6.07 million compared to an original investment cost of
£2.72 million, representing a multiple on cost of 2.2x and an IRR of 13.7%.
New investments made after the period-end
The Company made two further investments totalling £0.94 million, as detailed
below:
Company Business Date of Investment Amount of further investment (£m)
FocalPoint September 2022 0.50
Navigation
and positioning technology company
FocalPoint Positioning Limited (trading as FocalPoint)
(www.focalpointpositioning.com) is a DeepTech business with a growing IP and
software portfolio. FocalPoint's proprietary technology applies advanced
physics and machine learning to reduce costs and dramatically improve the
satellite-based location sensitivity, accuracy, and security of devices such
as smartphones, wearables, and vehicles. Across both the Mobeus VCTs and the
Baronsmead VCTs, this £4m investment is part of a larger investment round
alongside existing investor Molten Ventures. The investment will be used to
grow and develop its business, hire additional staff and continue the
development and roll out of its offerings.
Company Business Date of Investment Amount of further investment (£m)
Orri September 2022 0.44
A specialist private clinic
Orri Limited (www.orri-uk.com/) is a specialist service provider for patients
over 16 suffering from eating disorders. Orri's intensive day care model
addresses a gap in service provision between residential in-patient services
and infrequent outpatient sessions. Across both the Mobeus VCTs and the
Baronsmead VCTs, the £4.5m investment will be used to open a second Orri site
as well as to accelerate growth in online services, provide a step-down
outpatient service, and build out the business' head office team.
Further investments made after the period-end
The Company made two further investments into existing portfolio companies,
totalling £0.95 million, as detailed below:
Company Business Date of Investment Amount of further investment (£m)
Vivacity June 2022 0.62
Artificial Intelligence and Urban Traffic Control (UTC) system
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.
Bleach Hair Colourants Brand August 2022 0.33
Bleach London Holdings ("Bleach") is an established branded, fast-growing
business which manufactures a range of haircare and colouring products. Bleach
is regarded as a leading authority in the hair colourant market having opened
one of the world's first salons focused on colouring and subsequently launched
its first range of products in 2013. This further investment was part of a
wider £5.5 million investment round alongside existing shareholders and a
strategic partner. The funds will be used to consolidate the brands position
in the UK market as well as drive further expansion and strategic penetration
of the North American market.
Environmental, Social, Governance considerations
Following the novation of the investment advisory agreement to Gresham House,
who have a dedicated team which is focused on sustainability, this provides 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 second
Sustainable Investment Report in April 2022, which can be found on its website
at: www.greshamhouse.com (http://www.greshamhouse.com) .
Gresham House Asset Management Limited
Investment Adviser
13 September 2022
INVESTMENT PORTFOLIO SUMMARY as at 30 June 2022
Total Total Total % of % of
cost valuation valuation equity portfolio
at 30 June 2022 at 31 December 2021 at 30 June 2022 held by value
Gresham House Asset Management Portfolio £ £ £
Preservica Limited 3,397,745 11,056,628 10,693,622 13.3% 20.2%
Seller of proprietary digital archiving software
MPB Group Limited 1,095,252 5,764,694 4,526,932 3.2% 8.6%
Online marketplace for photographic and video equipment
EOTH Limited (trading as Equip Outdoor Technologies) 951,471 4,847,187 4,043,046 1.7% 7.6%
Branded outdoor equipment and clothing (including the RAB and Lowe Alpine
brands)
My TutorWeb Limited (trading as MyTutor) 2,464,757 5,015,751 3,511,020 5.3% 6.6%
Digital marketplace connecting school pupils seeking one to one online
tutoring
Virgin Wines UK plc 45,915 9,486,219 3,470,568 8.3% 6.6%
Online wine retailer
Master Removers Group 2019 Limited (trading as Anthony Ward Thomas, 348,641 3,001,004 3,006,136 6.6% 5.7%
Bishopsgate and Aussie Man & Van)
A specialist logistics, storage and removals business
End Ordinary Group Limited (trading as Buster and Punch) 1,496,785 3,305,392 2,987,455 7.8% 5.7%
Industrial inspired lighting and interiors retailer
Data Discovery Solutions Limited (trading as Active Navigation) 1,408,640 2,624,447 2,503,729 7.1% 4.7%
Provider of global market leading file analysis software for information
governance, security and compliance
Bella & Duke Limited 877,381 2,050,122 2,452,629 4.4% 4.6%
A premium frozen raw dog food provider
Manufacturing Services Investment Limited (trading as Wetsuit Outlet) 2,333,102 2,331,133 1,967,122 6.4% 3.7%
Online retailer in the water sports market
Arkk Consulting Limited (trading as Arkk Solutions) 1,599,445 1,680,942 1,712,786 6.7% 3.2%
Provider of services and software to enable organisations to remain compliant
with regulatory reporting requirements
Tharstern Group Limited 1,091,886 1,204,783 1,560,890 12.7% 3.0%
Software based management information systems to the print sector
Rota Geek Limited 1,092,500 765,890 992,446 4.1% 1.9%
Workforce management software
Connect Childcare Group Limited 846,007 994,110 937,439 3.0% 1.8%
Nursery management software provider
Vivacity Labs Limited 914,754 914,754 914,754 4.4% 1.7%
Provider of artificial intelligence & urban traffic control systems
Spanish Restaurant Group Limited (trading as Tapas Revolution) 1,219,096 739,557 734,928 6.7% 1.4%
Spanish restaurant chain
Caledonian Leisure Limited 547,502 695,000 663,343 6.6% 1.3%
Provider of UK leisure and experience breaks
Legatics Limited 663,011 663,011 663,011 6.0% 1.2%
SaaS LegalTech software provider
Pets' Kitchen Limited (trading as Vet's Klinic) 631,120 631,120 631,120 4.5% 1.2%
Veterinary clinics
IPV Limited 619,487 619,487 619,487 5.5% 1.2%
Provider of media asset software
Bleach London Holdings Limited 629,772 791,477 613,118 3.1% 1.2%
Hair colourants brand
Proximity Insight Holdings Limited 608,000 - 608,000 2.5% 1.2%
Super-App used by customer-facing teams of brands and retailers to engage,
inspire and transact with customers
Northern Bloc Ice Cream Limited 425,670 498,768 555,832 6.3% 1.0%
Supplier of premium vegan ice cream
Lads Store Limited (trading as Bidnamic) 480,538 - 480,538 1.1% 0.9%
SaaS platform for optimisation of search engine marketing spend
CGI Creative Graphics International Limited 1,449,746 397,434 378,906 6.3% 0.7%
Vinyl graphics to global automotive, recreation vehicle and aerospace markets
Muller EV Limited (trading as Andersen EV) 585,598 195,200 329,398 8.8% 0.6%
Provider of premium electrical vehicle (EV) changers
Parsley Box Group plc 631,003 417,536 221,816 1.8% 0.4%
Home delivered ambient ready meals targeting the over 60s
RDL Corporation Limited 1,000,000 317,413 199,932 8.9% 0.4%
Recruitment consultants within the pharmaceutical, business intelligence and
IT industries
Kudos Innovations Limited 328,950 81,979 72,883 3.0% 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%
Direct booking software for hotels
Racoon International Group Limited 484,347 - - 0.0% 0.0%
Supplier of hair extensions, hair care products and training
Importer and distributor of artificial flowers, floral sundries and home decor
products
Disposals in period
Media Business Insight Holdings Limited 3,560,047 15.7% 0.0%
A publishing and events business focused on the creative production industries
Total 32,846,590 64,700,682 52,102,483 98.5%
Former Elderstreet Private Equity Limited Portfolio
Cashfac Limited 260,101 851,035 725,731 2.9% 1.4%
Provider of virtual banking application software solutions to corporate
customers
Sift Group Limited 135,391 32,750 39,722 1.3% 0.1%
Developer of business-to-business internet communities
Total 395,492 883,785 765,453 1.5%
Total Investment Portfolio 33,242,082 65,584,467 52,867,936 100.0%
Total Investment Portfolio by type
Growth focused portfolio(1) 27,174,019 50,568,974 47,208,043 89.2%
MBO focused portfolio(1) 6,068,063 15,015,493 5,659,893 10.8%
Investment Adviser's Total 33,242,082 65,584,467 52,867,936 100.0%
Notes
(1) - 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.
Statement of the Directors' Responsibilities
Responsibility statements
In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Jonathan
Cartwright (Chairman), Graham Paterson (Chairman of the Audit Committee and
Nomination and Remuneration Committee) and Chris Burke (Chairman of the
Investment Committee), being the Directors of the Company confirm that to the
best of their knowledge:
a) the condensed set of financial statements, which has been prepared in
accordance with Financial Reporting Standard 104 "Interim Financial Reporting"
gives a true and fair view of the assets, liabilities, financial position and
profit of the Company, as required by DTR 4.2.10;
b) the Half-Year Management Report which comprises the Chairman's
Statement, Investment Policy, Investment Review and the Investment Portfolio
Summary includes a fair review of the information required by DTR 4.2.7, being
an indication of the important events that have occurred during the first six
months of the financial year and their impact on the condensed set of
financial statements;
c) a description of the principal risks and uncertainties facing the
Company for the remaining six months is set out below, in accordance with DTR
4.2.7; and
d) there were no related party transactions in the first six months of the
current financial year that are required to be disclosed, in accordance with
DTR 4.2.8.
Principal risks and uncertainties
In accordance with DTR 4.2.7, the Board confirms that the principal risks and
uncertainties facing the Company have not materially changed from those
identified in the Annual Report and Financial Statements for the year ended 31
December 2021 ("the Annual Report") and are not expected to change ahead of
the year-end.
The principal risks faced by the Company are:
· Loss of approval as a Venture Capital Trust;
· economic and political risk;
· investment risk;
· regulatory risk;
· financial and operating risk;
· market risk;
· asset liquidity risk; and
· environmental, social and governance emerging risk.
A detailed explanation of the principal risks can be found in the Annual
Report on pages 34 and 35 and in Note 15 on pages 72 to 79 of the Annual
Report and Financial Statements for the year ended 31 December 2021, copies of
which are available on the Investment Adviser's website, www.greshamhouse.com
or by going directly to the VCT's website, www.mig4vct.co.uk
(http://www.mig4vct.co.uk) .
Going concern
The Board has assessed the Company's operation as a going concern. The
Company's business activities, together with the factors likely to affect its
future development, performance and position are set out in the Half-Year
Management Report. The Directors have satisfied themselves that Company's cash
position, bolstered by the fundraising completed at the beginning of 2022 is
adequate for the Company to continue as a going concern under any plausible
stress scenario. The majority of companies in the portfolio continue to trade
well and the portfolio taken as a whole remains resilient and
well-diversified, although supply chain constraints and inflationary pressures
are beginning to impact. The major cash outflows of the Company (namely
investments, buybacks and dividends) are within the Company's control.
The Board's assessment of liquidity risk and details of the Company's policies
for managing its financial risks and capital are shown in Note 15 on pages 72
to 79 of the Annual Report and Financial Statements for the year ended 31
December 2021. Accordingly, the Directors continue to adopt the going concern
basis of accounting in preparing the Half-Year report and annual financial
statements.
Cautionary statement
This report may contain forward looking statements with regards to the
financial condition and results of the Company, which are made in the light of
current economic and business circumstances. Nothing in this report should be
construed as a profit forecast.
For and on behalf of the Board:
Jonathan Cartwright
Chairman
13 September 2022
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Unaudited Condensed Income Statement for the six months to 30 June 2022
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2021
(unaudited) (unaudited) (audited)
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £ £ £ £
Net investment portfolio (losses)/gains 10 - (10,266,686) (10,266,686) - 19,952,419 19,952,419 - 29,904,336 29,904,336
Income 4 699,999 - 699,999 496,873 - 496,873 1,354,209 - 1,354,209
Investment Adviser's fees 5 (247,680) (743,037) (990,717) (194,595) (583,787) (778,382) (428,601) (1,285,804) (1,714,405)
Other expenses (261,117) - (261,117) (208,965) - (208,965) (460,888) - (460,888)
Profit/(loss) on ordinary activities before taxation 191,202 (11,009,723) (10,818,521) 93,313 19,368,632 19,461,945 464,720 28,618,532 29,083,252
Tax on profit/(loss) on ordinary activities 6 (22,224) 22,224 - (4,371) 4,371 - (22,097) 22,097 -
Profit/(loss) and total comprehensive income 168,978 (10,987,499) (10,818,521) 88,942 19,373,003 19,461,945 442,623 28,640,629 29,083,252
Basic and diluted earnings per ordinary share 7 0.19p (12.43)p (12.24)p 0.11p 23.08p 23.19p 0.53p 34.16p 34.69p
The revenue column of the Income Statement includes all income and expenses.
The capital column accounts for the net investment portfolio (losses)/gains
(unrealised (losses)/gains and realised gains on investments) and the
proportion of the Investment Adviser's fee charged to capital.
The total column is the Statement of Total Comprehensive Income of the Company
prepared in accordance with Financial Reporting Standards ("FRS"). In order to
better reflect the activities of a VCT and in accordance with the 2014
Statement of Recommended Practice ("SORP") (updated in April 2021) issued 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 period/year.
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
Unaudited Condensed Balance Sheet as at 30 June 2022
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Notes £ £ £
Fixed assets
Investments at fair value 10 52,867,936 60,040,228 65,584,467
Current assets
Debtors and prepayments 146,585 148,101 2,895,532
Current asset investments 9 30,938,168 24,529,923 20,475,179
Cash at bank 9 2,422,753 3,001,675 4,059,487
33,507,506 27,679,699 27,430,198
Creditors: amounts falling due within one year (241,463) (400,219) (227,411)
Net current assets 33,266,043 27,279,480 27,202,787
Net assets 86,133,979 87,319,708 92,787,254
Capital and reserves
Called up share capital 909,903 833,540 833,897
Share premium reserve 20,869,200 12,495,262 13,129,427
Capital redemption reserve 36,299 27,012 33,606
Revaluation reserve 20,436,687 27,540,590 32,819,832
Special distributable reserve 15,945,431 25,380,699 20,109,912
Realised capital reserve 26,145,111 19,355,977 24,028,652
Revenue reserve 1,791,348 1,686,628 1,831,928
Equity shareholders' funds 86,133,979 87,319,708 92,787,254
Basic and diluted net asset value:
Basic and diluted net asset value per share 11 94.66p 104.76p 111.27p
The financial information for the six months ended 30 June 2022 and the six
months ended 30 June 2021 has not been audited.
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
Unaudited Condensed Statement of Changes in Equity
for the six months ended 30 June 2022
Non-distributable reserves Distributable reserves
Called up Share Capital Special Realised
share premium redemption Revaluation distributable capital Revenue
capital reserve reserve reserve reserve reserve reserve Total
(Note a) (Note b) (Note b)
For the six months ended 30 June 2022 Notes £ £ £ £ £ £ £ £
At 1 January 2022 833,897 13,129,427 33,606 32,819,832 20,109,912 24,028,652 1,831,928 92,787,254
Comprehensive income for the period
(Loss)/profit for the period - - - (11,048,140) - 60,641 168,978 (10,818,521)
Total comprehensive income for the period - - - (11,048,140) - 60,641 168,978 (10,818,521)
Contributions by and distributions to owners
Shares issued via Offer for Subscription (Note c) 73,612 7,426,388 - - - - - 7,500,000
Issue costs and facilitation fees on Offer for Subscription (Note c) - (188,072) - - (40,749) - - (228,821)
Issue of shares under Dividend Investment Scheme 5,087 501,457 - - - - - 506,544
Shares bought back (Note d) (2,693) - 2,693 - (259,553) - - (259,553)
Dividends paid 8 - - - - (3,143,366) - (209,558) (3,352,924)
Total contributions by and distributions to owners 76,006 7,739,773 2,693 - (3,443,668) - (209,558) 4,165,246
Other movements
Realised losses transferred to special reserve (Note a) - - - - (720,813) 720,813 - -
Realisation of previously unrealised gains - - - (1,335,005) - 1,335,005 - -
Total other movements - - - (1,335,005) (720,813) 2,055,818 - -
At 30 June 2022 909,903 20,869,200 36,299 20,436,687 15,945,431 26,145,111 1,791,348 86,133,979
Notes:
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 £720,813 to the special reserve
from the realised capital reserve above is the total of realised losses
incurred by the Company in the period. As at 30 June 2022, the Company has a
special reserve of £15,945,431, all of which arises from shares issued more
than three years after the end of the financial year in which they were
issued. Reserves originating from share issues are not distributable under VCT
rules if they are within three years of the end of an accounting period in
which the shares were issued.
b): The Realised capital reserve and the Revenue reserve together comprise the
Profit and Loss Account of the Company.
c): Under the Company's Offer for subscription launched on 20 January 2022,
7,361,191 Ordinary Shares were allotted on 9 March 2022, raising net funds of
£7,271,179 for the Company. This figure is net of issue costs of £188,072
and facilitation fees of £40,749.
d): During the period, the Company repurchased 269,283 of its own shares at
the prevailing market price for a total cost (including stamp duty) of
£259,553, which were subsequently cancelled.
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
Unaudited Condensed Statement of Changes in Equity
for the six months ended 30 June 2021
Non-distributable reserves Distributable reserves
Called up Share Capital Special Realised
share premium redemption Revaluation distributable capital Revenue
capital reserve reserve reserve reserve reserve reserve Total
For the six months ended 30 June 2021 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 period
Profit for the period - - - 18,812,482 - 560,521 88,942 19,461,945
Total comprehensive income for the period - - - 18,812,482 - 560,521 88,942 19,461,945
Contributions by and distributions to owners
Shares bought back (6,500) - 6,500 - (603,432) - - (603,432)
Dividends paid - - - - - - - -
Total contributions by and distributions to owners (6,500) - 6,500 - (603,432) - - (603,432)
Other movements
Realised losses transferred to special reserve - - - - (579,416) 579,416 - -
Realisation of previously unrealised gains - - - (1,477,825) - 1,477,825 - -
Total other movements - - - (1,477,825) (579,416) 2,057,241 - -
At 30 June 2021 833,540 12,495,262 27,012 27,540,590 25,380,699 19,355,977 1,686,628 87,319,708
The composition of each of these reserves is explained below:
Called up share capital - The nominal value of shares originally issued,
increased for subsequent share issues either via an Offer for Subscription or
Dividend Investment Scheme or reduced due to shares bought back by the
Company.
Capital redemption reserve - The nominal value of shares bought back and
cancelled is held in this reserve, so that the Company's capital is
maintained.
Share premium reserve - This reserve contains the excess of gross proceeds
less issue costs over the nominal value of shares allotted under recent Offers
for Subscription and the Company's Dividend Investment Scheme.
Revaluation reserve - Increases and decreases in the valuation of investments
held at the period-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, all such movements through both revaluation and realised capital
reserves are shown within the Income Statement for the period.
Special distributable reserve - This reserve is created from cancellations of
the balances upon the Share premium reserve, which are transferred to this
reserve from time to time. The cost of share buybacks and any realised losses
on the sale or impairment of investments (excluding transaction costs) are
charged to this reserve. 75% of the Investment Adviser fee expense, and the
related tax effect, that are charged to the realised capital reserve are
transferred to this reserve. This reserve will also be charged any
facilitation payments to financial advisers, which arose as part of an 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 together with the related tax effect, as well as income
dividends paid that are classified as revenue in nature.
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
Unaudited Condensed Statement of Cash Flows for the six months ended 30 June
2022
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2021
Notes (unaudited) (unaudited) (audited)
£ £ £
Cash flows from operating activities
(Loss)/Profit for the financial period (10,818,521) 19,461,945 29,083,252
Adjustments for:
Net investment portfolio losses/(gains) 10,266,686 (19,952,419) (29,904,336)
Decrease in debtors 169,170 255,467 87,812
Increase in creditors and accruals 14,052 45,409 23,302
Net cash outflow from operations (368,613) (189,598) (709,970)
Corporation tax paid - - (103,452)
Net cash outflow from operating activities (368,613) (189,598) (813,422)
Cash flows from investing activities
Sale of investments 10 4,341,501 5,424,072 12,231,857
Purchase of investments 10 (1,891,656) (3,835,185) (6,235,292)
Net cash inflow from investing activities 2,449,845 1,588,887 5,996,565
Cash flows from financing activities
Share issued as part of Offer for Subscription 7,500,000 - -
Issue costs and facilitation fees as part of Offer for Subscription (228,821) - -
Equity dividends paid 8 (266,603) - (6,106,267)
Purchase of own shares (259,553) (556,183) (1,230,702)
Net cash inflow/(outflow) from financing activities 6,745,023 (556,183) (7,336,969)
Net increase/(decrease) in cash and cash equivalents 8,826,255 843,106 (2,153,826)
Cash and cash equivalents at start of period 22,534,666 24,688,492 24,688,492
Cash and cash equivalents at end of period 31,360,921 25,531,598 22,534,666
Cash and cash equivalents comprise:
Cash at bank and in hand 9 2,422,753 3,001,675 4,059,487
Cash equivalents 9 28,938,168 22,529,923 18,475,179
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
Notes to the Unaudited Condensed Financial Statements
Notes to the Unaudited Condensed Financial Statements
for the six months ended 30 June 2022
1. Company information
Mobeus Income and Growth 4 VCT plc is a public limited company incorporated in
England, registration number 3707697. The registered office is 5 New Street
Square, London EC4A 3TW.
2. Basis of preparation of the financial statements
These Financial Statements have been prepared in accordance with accounting
policies consistent with Financial Reporting Standard 102 ("FRS102"),
Financial Reporting Standard 104 ("FRS104") - Interim Financial Reporting,
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 Half-Year Report has not been audited, nor has it been reviewed by the
auditor pursuant to the Financial Reporting Council's (FRC) guidance on Review
of Interim Financial Information.
3. Principal accounting policies
The accounting policies have been applied consistently throughout the period.
Full details of principal accounting policies will be disclosed in the Annual
Report, while the policy in respect of investments is included within an
outlined box at the top of note 10 on investments.
4. Income
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Income from investments £ £ £
Dividends 74,231 70,309 348,420
Loan stock interest 548,258 415,674 984,972
Money-market funds 59,788 758 2,258
Bank deposit interest 17,722 10,132 18,559
Total Income 699,999 496,873 1,354,209
5. Investment Adviser's fees and performance fees
25% of the Investment Adviser's fees are charged to the revenue column of the
Income Statement, while 75% is charged against the capital column of the
Income Statement. This is in line with the Board's expected long-term split of
returns from the investment portfolio of the Company. 100% of any performance
incentive fee payable for the year would be charged against the capital column
of the Income Statement, as it is based upon the achievement of capital
growth.
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Total Total Total
£ £ £
Allocated to revenue return: Investment Adviser's fees 247,680 194,595 428,601
Allocated to capital return: Investment Adviser's fees 743,037 583,787 1,285,804
Total 990,717 778,382 1,714,405
6. Taxation
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £ £ £ £
a) Analysis of tax charge:
UK Corporation tax on profits/(losses) for the period 22,224 (22,224) - 4,371 (4,371) - 22,097 (22,097) -
Total current tax charge/(credit) 22,224 (22,224) - 4,371 (4,371) - 22,097 (22,097) -
Corporation tax is based on a rate of 19.0% (2021: 19.0%)
b) Profit/(loss) on ordinary activities before tax 191,202 (11,009,723) (10,818,521) 93,313 19,368,632 19,461,945 464,720 28,618,532 29,083,252
Profit/(loss) on ordinary activities multiplied by rate of corporation tax in 36,328 (2,091,848) (2,055,520) 17,729 3,680,041 3,697,770 88,297 5,437,521 5,525,818
the UK of 19.0% (2021: 19.0%)
Effect of:
UK dividends (14,104) - (14,104) (13,358) - (13,358) (66,200) - (66,200)
Net investment portfolio losses/(gains) not allowable/(taxable) - 1,950,670 1,950,670 - (3,790,961) (3,790,961) - (5,681,824) (5,681,824)
Losses not utilised - 118,954 118,954 - 106,549 106,549 - 222,206 222,206
Actual current tax charge 22,224 (22,224) - 4,371 (4,371) - 22,097 (22,097) -
7. Basic and diluted earnings per share
The basic earnings, revenue return and capital return per share shown below
for each period are respectively based on numerators i)-iii), each divided by
the weighted average number of shares in issue in the period - see iv) below
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£ £ £
i) Total earnings after taxation (10,818,521) 19,461,945 29,083,252
Basic and diluted earnings per share (Note a) (12.24)p 23.19p 34.69p
ii) Revenue earnings from ordinary activities after taxation 168,978 88,942 442,623
Basic and diluted revenue return per share (Note b) 0.19p 0.11p 0.53p
Net investment portfolio (losses)/gains (10,266,686) 19,952,419 29,904,336
Capital Investment Adviser's fees less taxation (720,813) (579,416) (1,263,707)
iii) Total capital return (10,987,499) 19,373,003 28,640,629
Basic and diluted capital return per share (Note c) (12.43)p 23.08p 34.16p
iv) Weighted average number of shares in issue in the period 88,388,162 83,932,807 83,840,235
Notes:
a) Basic earnings per share is total earnings after taxation divided by the
weighted average number of shares in issue.
b) Basic revenue return per share is the revenue return after taxation divided by
the weighted average number of shares in issue.
c) Basic capital return per share is the capital return after taxation divided by
the weighted average number of shares in issue.
8. Dividends paid Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Dividend Type For the year ended 31 December Pence per share Date paid £ £ £
Interim Income 2021 0.25p 06 August 2021 - - 208,381
Interim Capital* 2021 4.75p 06 August 2021 - - 3,959,226
Interim Income 2021 0.25p 07 January 2022 209,558 - -
Interim Capital* 2021 3.75p 07 January 2022 3,143,366 - -
Total Dividends Paid 3,352,924 - 4,167,607
*-These dividends were paid out of the Company's special distributable
reserve.
For the period ended 30 June 2022, £3,352,924 disclosed above differs to that
shown in the Condensed Statement of Cash Flows of £266,603 due to £506,545
of new shares allotted subject to listing under the Company's Dividend
Investment scheme and £2,579,776 in dividends paid to the registrar before
the previous year end.
The Board declared an interim dividend in respect of the year ending 31
December 2022 of 4.00 pence per share which was paid to Shareholders on 8 July
2022.
9. Current asset investments and cash at bank
as at as at as at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£ £ £
OEIC Money market funds 28,938,168 22,529,923 18,475,179
Cash equivalents per Statement of Cash Flows 28,938,168 22,529,923 18,475,179
Bank deposits that mature after three months 2,000,000 2,000,000 2,000,000
Current asset investments 30,938,168 24,529,923 20,475,179
Cash at Bank 2,422,753 3,001,675 4,059,487
10. Summary of movement on investments during the period
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 quarterly measurement
dates are reconsidered for any changes in light of more recent events or
changes in the market performance of the investee company. The valuation bases
used are the following:
- a multiple basis. The enterprise value of the
investment may be determined by applying a suitable price-earnings ratio,
revenue or gross profit multiple to that company's historic, current or
forecast post-tax earnings before interest and amortisation, or revenue, or
gross profit (the ratio used being based on a comparable sector but the
resulting value being adjusted to reflect points of difference identified by
the Investment Adviser compared to the sector including, inter alia, scale and
liquidity).
or:-
- where a company's underperformance against plan indicates a
diminution in the value of the investment, provision against the price of a
new investment is made, as appropriate.
(ii) Premiums, to the extent that they are considered capital in nature, and
that they will be received upon repayment of loan stock investments are
accrued at fair value when the Company receives the right to the premium and
when considered recoverable.
(iii) Where a multiple or the price of recent investment less impairment basis
is not appropriate and overriding factors apply, a discounted cash flow, net
asset valuation, realisation proceeds or a weighted average of these bases may
be applied.
Capital gains and losses on investments, whether realised or unrealised, are
dealt with in the profit and loss and revaluation reserves and movements in
the period are shown in the Income Statement.
All investments are initially recognised and subsequently measured at fair
value. Changes in fair value are recognised in the Income Statement.
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 the 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.
Traded Unquoted Unquoted Unquoted Total
on AIM equity preference Loan Stock
shares shares
Level 1 Level 3 Level 3 Level 3
£ £ £ £ £
Valuation at 31 December 2021 9,903,755 45,972,682 1,608,338 8,099,692 65,584,467
Purchases at cost - 370,903 1,083,253 437,500 1,891,656
Sales - proceeds - (3,205,562) - (1,135,939) (4,341,501)
- realised gains (Note a) - 781,454 - - 781,454
Unrealised (losses)/gains on investments in the period (Note a) (6,211,371) (4,770,421) 56,645 (122,993) (11,048,140)
Valuation at 30 June 2022 3,692,384 39,149,056 2,748,236 7,278,260 52,867,936
Book cost at 30 June 2022 676,918 20,209,052 2,554,667 9,801,445 33,242,082
Unrealised gains/(losses) at 30 June 2022 3,015,466 19,686,222 193,796 (2,458,797) 20,436,687
Permanent impairment of investments - (746,218) (227) (64,388) (810,833)
Valuation at 30 June 2022 3,692,384 39,149,056 2,748,236 7,278,260 52,867,936
Gains on investments - 2,116,459 - - 2,116,459
Less amounts recognised as unrealised gains in previous years - (1,335,005) - - (1,335,005)
Realised gains based on carrying value at 31 December 2021 - 781,454 - - 781,454
Net movement in unrealised (losses)/gains in the period (6,211,371) (4,770,421) 56,645 (122,993) (11,048,140)
(Losses)/gains on investments for the six months ended 30 June 2022 (6,211,371) (3,988,967) 56,645 (122,993) (10,266,686)
Note a) Net realised gains on investments of £781,454 together with net
unrealised losses of £11,048,140 equal net investment portfolio losses of
£10,266,686 as disclosed in the Income Statement.
Level 3 unquoted equity and loan investments are valued in accordance with
IPEV guidelines as follows:
as at as at as at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£ £
Valuation methodology
Multiple of earnings, revenues or gross margin, as appropriate 47,708,019 45,057,207 55,435,915
Recent investment price 1,088,538 1,622,633 195,200
Recent investment price (reviewed for impairment) 329,398 48,800 -
Estimated and discounted realisation proceeds 49,597 49,597 49,597
Net asset value - 309,420 -
49,175,552 47,087,657 55,680,712
11. Net asset value per share
As at As at As at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Net assets £86,133,979 £87,319,708 £92,787,254
Number of shares in issue 90,990,361 83,354,074 83,389,721
Net asset value per share (pence) 94.66p 104.76p 111.27p
12. Post balance sheet events
On 5 July 2022, the Company made a further investment of £0.62 million into
Vivacity Labs Limited, an Artificial Intelligence and Urban Traffic Control
("UTC") system.
On 23 August 2022, the Company made a further investment of £0.33 million
into Bleach London Holdings Limited, a hair colourants brand.
On 9 September 2022, the Company made a new investment of £0.50 million into
Focal Point Positioning Limited, a navigation and positioning technology
company.
On 12 September 2022, the Company made a new investment of £0.44 million into
Orri Limited, a specialist private clinic, for those aged 16+, for expert
treatment of Anorexia, Bulimia and Binge Eating Disorder.
13. The financial information for the six months ended 30 June 2022 does not
comprise statutory accounts within the meaning of Section 434 of the Companies
Act 2006. The financial statements for the year ended 31 December 2021 have
been filed with the Registrar of Companies. The auditor has reported on the
financial statements for the year ended 31 December 2021 and that report was
unqualified and did not contain a statement under section 498(2) or (3) of the
Companies Act 2006.
14. This Half-Year Report will shortly be made available on our website:
www.mig4vct.co.uk and will be circulated by post to those shareholders who
have requested copies of the Report. Further copies are available free of
charge from the Company's registered office, 5 New Street Square, London, EC4A
3TW or can be downloaded via the website.
5. Investment Adviser's fees and performance fees
25% of the Investment Adviser's fees are charged to the revenue column of the
Income Statement, while 75% is charged against the capital column of the
Income Statement. This is in line with the Board's expected long-term split of
returns from the investment portfolio of the Company. 100% of any performance
incentive fee payable for the year would be charged against the capital column
of the Income Statement, as it is based upon the achievement of capital
growth.
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Total Total Total
£ £ £
Allocated to revenue return: Investment Adviser's fees 247,680 194,595 428,601
Allocated to capital return: Investment Adviser's fees 743,037 583,787 1,285,804
Total 990,717 778,382 1,714,405
6. Taxation
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £ £ £ £
a) Analysis of tax charge:
UK Corporation tax on profits/(losses) for the period 22,224 (22,224) - 4,371 (4,371) - 22,097 (22,097) -
Total current tax charge/(credit) 22,224 (22,224) - 4,371 (4,371) - 22,097 (22,097) -
Corporation tax is based on a rate of 19.0% (2021: 19.0%)
b) Profit/(loss) on ordinary activities before tax 191,202 (11,009,723) (10,818,521) 93,313 19,368,632 19,461,945 464,720 28,618,532 29,083,252
Profit/(loss) on ordinary activities multiplied by rate of corporation tax in 36,328 (2,091,848) (2,055,520) 17,729 3,680,041 3,697,770 88,297 5,437,521 5,525,818
the UK of 19.0% (2021: 19.0%)
Effect of:
UK dividends (14,104) - (14,104) (13,358) - (13,358) (66,200) - (66,200)
Net investment portfolio losses/(gains) not allowable/(taxable) - 1,950,670 1,950,670 - (3,790,961) (3,790,961) - (5,681,824) (5,681,824)
Losses not utilised - 118,954 118,954 - 106,549 106,549 - 222,206 222,206
Actual current tax charge 22,224 (22,224) - 4,371 (4,371) - 22,097 (22,097) -
7. Basic and diluted earnings per share
The basic earnings, revenue return and capital return per share shown below
for each period are respectively based on numerators i)-iii), each divided by
the weighted average number of shares in issue in the period - see iv) below
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£ £ £
i) Total earnings after taxation (10,818,521) 19,461,945 29,083,252
Basic and diluted earnings per share (Note a) (12.24)p 23.19p 34.69p
ii) Revenue earnings from ordinary activities after taxation 168,978 88,942 442,623
Basic and diluted revenue return per share (Note b) 0.19p 0.11p 0.53p
Net investment portfolio (losses)/gains (10,266,686) 19,952,419 29,904,336
Capital Investment Adviser's fees less taxation (720,813) (579,416) (1,263,707)
iii) Total capital return (10,987,499) 19,373,003 28,640,629
Basic and diluted capital return per share (Note c) (12.43)p 23.08p 34.16p
iv) Weighted average number of shares in issue in the period 88,388,162 83,932,807 83,840,235
Notes:
a) Basic earnings per share is total earnings after taxation divided by the
weighted average number of shares in issue.
b) Basic revenue return per share is the revenue return after taxation divided by
the weighted average number of shares in issue.
c) Basic capital return per share is the capital return after taxation divided by
the weighted average number of shares in issue.
8. Dividends paid Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Dividend Type For the year ended 31 December Pence per share Date paid £ £ £
Interim Income 2021 0.25p 06 August 2021 - - 208,381
Interim Capital* 2021 4.75p 06 August 2021 - - 3,959,226
Interim Income 2021 0.25p 07 January 2022 209,558 - -
Interim Capital* 2021 3.75p 07 January 2022 3,143,366 - -
Total Dividends Paid 3,352,924 - 4,167,607
* - These dividends were paid out of the Company's special distributable
reserve.
For the period ended 30 June 2022, £3,352,924 disclosed above differs to that
shown in the Condensed Statement of Cash Flows of £266,603 due to £506,545
of new shares allotted subject to listing under the Company's Dividend
Investment scheme and £2,579,776 in dividends paid to the registrar before
the previous year end.
The Board declared an interim dividend in respect of the year ending 31
December 2022 of 4.00 pence per share which was paid to Shareholders on 8 July
2022.
9. Current asset investments and cash at bank
as at as at as at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£ £ £
OEIC Money market funds 28,938,168 22,529,923 18,475,179
Cash equivalents per Statement of Cash Flows 28,938,168 22,529,923 18,475,179
Bank deposits that mature after three months 2,000,000 2,000,000 2,000,000
Current asset investments 30,938,168 24,529,923 20,475,179
Cash at Bank 2,422,753 3,001,675 4,059,487
10. Summary of movement on investments during the period
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 quarterly measurement
dates are reconsidered for any changes in light of more recent events or
changes in the market performance of the investee company. The valuation bases
used are the following:
- a multiple basis. The enterprise value of the
investment may be determined by applying a suitable price-earnings ratio,
revenue or gross profit multiple to that company's historic, current or
forecast post-tax earnings before interest and amortisation, or revenue, or
gross profit (the ratio used being based on a comparable sector but the
resulting value being adjusted to reflect points of difference identified by
the Investment Adviser compared to the sector including, inter alia, scale and
liquidity).
or:-
- where a company's underperformance against plan indicates a
diminution in the value of the investment, provision against the price of a
new investment is made, as appropriate.
(ii) Premiums, to the extent that they are considered capital in nature, and
that they will be received upon repayment of loan stock investments are
accrued at fair value when the Company receives the right to the premium and
when considered recoverable.
(iii) Where a multiple or the price of recent investment less impairment basis
is not appropriate and overriding factors apply, a discounted cash flow, net
asset valuation, realisation proceeds or a weighted average of these bases may
be applied.
Capital gains and losses on investments, whether realised or unrealised, are
dealt with in the profit and loss and revaluation reserves and movements in
the period are shown in the Income Statement.
All investments are initially recognised and subsequently measured at fair
value. Changes in fair value are recognised in the Income Statement.
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 the 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.
Traded Unquoted Unquoted Unquoted Total
on AIM equity preference Loan Stock
shares shares
Level 1 Level 3 Level 3 Level 3
£ £ £ £ £
Valuation at 31 December 2021 9,903,755 45,972,682 1,608,338 8,099,692 65,584,467
Purchases at cost - 370,903 1,083,253 437,500 1,891,656
Sales - proceeds - (3,205,562) - (1,135,939) (4,341,501)
- realised gains (Note a) - 781,454 - - 781,454
Unrealised (losses)/gains on investments in the period (Note a) (6,211,371) (4,770,421) 56,645 (122,993) (11,048,140)
Valuation at 30 June 2022 3,692,384 39,149,056 2,748,236 7,278,260 52,867,936
Book cost at 30 June 2022 676,918 20,209,052 2,554,667 9,801,445 33,242,082
Unrealised gains/(losses) at 30 June 2022 3,015,466 19,686,222 193,796 (2,458,797) 20,436,687
Permanent impairment of investments - (746,218) (227) (64,388) (810,833)
Valuation at 30 June 2022 3,692,384 39,149,056 2,748,236 7,278,260 52,867,936
Gains on investments - 2,116,459 - - 2,116,459
Less amounts recognised as unrealised gains in previous years - (1,335,005) - - (1,335,005)
Realised gains based on carrying value at 31 December 2021 - 781,454 - - 781,454
Net movement in unrealised (losses)/gains in the period (6,211,371) (4,770,421) 56,645 (122,993) (11,048,140)
(Losses)/gains on investments for the six months ended 30 June 2022 (6,211,371) (3,988,967) 56,645 (122,993) (10,266,686)
Note a) Net realised gains on investments of £781,454 together with net
unrealised losses of £11,048,140 equal net investment portfolio losses of
£10,266,686 as disclosed in the Income Statement.
Level 3 unquoted equity and loan investments are valued in accordance with
IPEV guidelines as follows:
as at as at as at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£ £
Valuation methodology
Multiple of earnings, revenues or gross margin, as appropriate 47,708,019 45,057,207 55,435,915
Recent investment price 1,088,538 1,622,633 195,200
Recent investment price (reviewed for impairment) 329,398 48,800 -
Estimated and discounted realisation proceeds 49,597 49,597 49,597
Net asset value - 309,420 -
49,175,552 47,087,657 55,680,712
11. Net asset value per share
As at As at As at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Net assets £86,133,979 £87,319,708 £92,787,254
Number of shares in issue 90,990,361 83,354,074 83,389,721
Net asset value per share (pence) 94.66p 104.76p 111.27p
12. Post balance sheet events
On 5 July 2022, the Company made a further investment of £0.62 million into
Vivacity Labs Limited, an Artificial Intelligence and Urban Traffic Control
("UTC") system.
On 23 August 2022, the Company made a further investment of £0.33 million
into Bleach London Holdings Limited, a hair colourants brand.
On 9 September 2022, the Company made a new investment of £0.50 million into
Focal Point Positioning Limited, a navigation and positioning technology
company.
On 12 September 2022, the Company made a new investment of £0.44 million into
Orri Limited, a specialist private clinic, for those aged 16+, for expert
treatment of Anorexia, Bulimia and Binge Eating Disorder.
13. The financial information for the six months ended 30 June 2022 does not
comprise statutory accounts within the meaning of Section 434 of the Companies
Act 2006. The financial statements for the year ended 31 December 2021 have
been filed with the Registrar of Companies. The auditor has reported on the
financial statements for the year ended 31 December 2021 and that report was
unqualified and did not contain a statement under section 498(2) or (3) of the
Companies Act 2006.
14. This Half-Year Report will shortly be made available on our website:
www.mig4vct.co.uk and will be circulated by post to those shareholders who
have requested copies of the Report. Further copies are available free of
charge from the Company's registered office, 5 New Street Square, London, EC4A
3TW or can be downloaded via the website.
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