TIDMMIG4
Matrix Income & Growth 4 VCT plc
Half-Yearly Report for the six months ended 31 July 2011
INVESTMENT OBJECTIVE
The objective of Matrix Income & Growth 4 VCT plc ("the Company" or "MIG4") is
to provide investors with a regular income stream by way of tax free dividends
and to generate capital growth through portfolio realisations which can be
distributed by way of additional tax free dividends.
The portfolio comprises a number of diverse investments over a wide range of
different business sectors, thus spreading risk by avoiding over-concentration
in any one sector.
FINANCIAL HIGHLIGHTS
As at 31 July 2011
- Increase in total shareholder return (net asset value basis) over the six
month period of 1.8%
- Increase in total shareholder return (share price basis) over the six month
period of 1.2%
- Further net funds of GBP3.5 million raised in period
Performance Summary - Ordinary Shares of 1 penny
Period Net assets Net NAV total Share Share price
asset return to price (p)1 total return to
(GBP million value shareholders shareholders
) (NAV) since launch since launch
per (p)2 per share (p)2
share
(p)
Six months ended
31 July 2011 28.3 111.9 133.6 101.75 123.5
31 July 2010 23.3 110.9 128.6 95.5 113.2
Year ended
31 January 2011 25.3 112.9 131.6 103.5 122.2
31 January 2010 21.2 106.3 122.0 92.3 108.0
31 January 2009 21.0 104.6 118.3 92.0 105.7
31 January 2008 24.1 117.4 128.9 109.0 120.5
31 January 2007 9.8 116.3 125.2 91.0 101.7
1 Source: London Stock Exchange 2 Total returns to Shareholders include
dividends paid
The tables below show the NAV total returns at 31 July 2011 for a shareholder
that invested GBP10,000 in the different fundraisings undertaken by the Company:
RETURN BEFORE AND AFTER INCOME TAX RELIEF
Fundraising 1999/2000 2006/2007 2010 2011
(Top-up (Linked
Offer) 3 Offer) 4
Issue price per share (p) 200 1 120.9 2 112.4 121.6
Number of shares held 5,000 8,271 8,896 8,225
Net asset value (NAV) at 31 5,594 9,253 9,953 9,202
July 2011 (GBP)
Dividends paid to 1,085 910 534 2475
shareholder since
subscription (GBP)
NAV total return to 6,679 10,163 10,487 9,448
shareholder since
subscription (GBP)
Profit/(loss) before income (3,321) 163 487 (552) 7
tax relief (GBP) 6
Income tax relief 20% 8 30% 30% 30%
Cost net of income tax 8,000 7,000 7,000 7,000
relief (GBP)
Profit/ (loss) after income (1,321) 3,163 3,487 2,448
tax relief (GBP) 9
1 Original investment at 100p per ordinary share of 5p each, converted on a 2
for 1 basis to ordinary shares of 1p each in October 2006.
2 Weighted average issue price of shares.
3 Top-Up Offer to raise up to GBP2.18 million.
4 Linked Offer for Subscription with Matrix Income & Growth VCT plc and The
Income & Growth VCT plc to raise up to GBP21 million in total. The issue price is
a weighted average for all shares issued.
5 As all investors except for the last allotment received this period's
dividend, it has been shown in these figures
6 NAV total return minus initial investment cost (before income tax relief).
7 Current unrealised loss results from initial Offer costs of 5.5% paid on
subscription.
8 Additional capital gains tax deferral relief of up to GBP4,000 available to
qualifying shareholders.
9 NAV total return minus cost net of income tax relief.
The data for the initial fundraising above includes the period up to 1 August
2006, when the Company used three investment advisers. The three subsequent
fundraisings have raised capital which has been solely managed by MPEP.
DIVIDEND HISTORY
Year ended 31 Dividends per share paid in Cumulative dividends
January respect of each year
per share paid and proposed
since launch
(p) (p)
2011 4.00 21.70
2010 3.00 17.70
2009 2.00 14.70
2008 2.00 12.70
2007 1.80* 10.70
2006 0.50* 8.90
2005 0.20* 8.40
2004 0.50* 8.20
2003 0.50* 7.70
2002 1.00* 7.20
2001 3.10* 6.20
2000 3.10* 3.10
Dividends paid include distributions from both income and capital.
* re-stated following capital reorganisation in 2006.
CHAIRMAN'S STATEMENT
I am pleased to present the Company's Half-Yearly Report for the six months
ended 31 July 2011.
Performance
As at 31 July 2011 the Company's NAV per share was 111.9 pence (31 January
2011: 112.9 pence). Adjusted for dividends of 3p per share paid in the 6 month
period, this represents an increase of 1.8% in NAV per share for the period.
Total shareholder return on a share price basis has risen by 1.2% during the
period. These figures compare with a decline of 0.9% in the FTSE SmallCap CR
Index and a rise of 2.7% in the FTSE AIM CR Index.
This result principally reflects a small net uplift in the value of the
portfolio companies.
Portfolio
Quoted markets have remained volatile during the six months under review with
most sector price earnings multiples (by reference to which unquoted
investments are valued) declining slightly. Notwithstanding this, overall, the
portfolio showed a net increase of GBP0.5 million over the six month period. The
significant contributors to this increase were Iglu.com Holidays, Blaze Signs,
Focus Pharma and DiGiCo. Blaze Signs and Youngman are affected by the
recession, but have seen their profits begin to recover.
The increase in deal activity in the smaller companies market reported in the
Annual Report has been sustained over this six month period, leading to more
prospective opportunities being reviewed by the Investment Manager. An
investment of GBP1,280,880 has been made into Motorclean Group, the UK's leading
provider of vehicle cleaning and valet services to the car dealership market. A
follow-on investment of GBP409,067 was made in ASL Technology Holdings Limited,
to enable that Company to acquire the assets of a similar company, Transcribe
Copier Systems Limited, as part of ASL's acquisition strategy.
It is encouraging to note that Iglu.com Holidays Limited made a final loan
repayment in February of GBP876,207, (of which GBP131,737 was premium), while in
March, Vectair Limited made a full loan repayment of GBP90,322 (of which GBP15,054
was a premium) and Machineworks fully repaid a loan of GBP116,588 (including a
premium of GBP23,318) in April. Further details of transactions in the period and
the performance of investee companies are contained in the Investment Manager's
Review of the Half-Yearly Report for the six months ended 31 July 2011.
Cash and liquidity fund balances as at 31 July 2011 amounted to GBP9.3 million.
Dividend
The Board has an objective of providing shareholders with a regular dividend.
For reasons of administrative efficiency, your Board has decided not to make a
relatively small interim payment, but intends to pay a dividend after
considering the year-end results.
Revenue Account
The revenue return for the six months to 31 July 2011 was GBP208,189 (after tax)
or 0.86p per share. This compares to a revenue return of GBP37,186 in the six
months to 31 July 2010. Income has benefited from the higher level of loan
stock interest received from companies as well as a notably higher dividend
from DiGiCo.
Interest received from money market funds continues to be low, at an average
rate of around 0.6%.
Investment Management expenses charged to revenue have increased by GBP29,672
compared to 2010, due to the increase in net assets, as a result of the funds
raised under the Top-up Offer earlier this year and the reclassification of
administration costs previously shown in other expenses. Other expenses have
decreased by GBP76,656, following the reclassification referred to above, lower
professional fees and trail commission.
Share buy-backs
During the six months ended 31 July 2011 the Company continued to implement its
buy-back policy and bought back 160,752 Ordinary Shares, representing 0.72% of
the shares in issue as at 1 February 2011 at a total cost of GBP163,990. These
shares were subsequently cancelled by the Company.
The Board regularly reviews its buyback policy and endeavours to maintain the
discount to NAV at which the Company's shares trade at around 10%. On 22
September, the mid-market price for the Company's shares was 101.5 pence,
representing a discount of 10.1% to the latest NAV announced before today.
Linked offer
A further 2,960,632 new shares were allotted under the linked offer which
closed on 30 June 2011. A total of GBP16.2m before expenses was subscribed across
the three VCTs of which GBP5.4 million was raised by the Company.
Future fundraising
The Company expects to be participating again in a linked fundraising with
Matrix Income & Growth VCT plc and The Income & Growth VCT plc which is
expected to launch later this year. The funds raised will further add to the
Company's capability to capitalise on new investment opportunities, should
provide further support, if needed, for the share buyback program, and should
spread fixed running costs over a larger asset base. Details of the Offer are
expected to be posted to shareholders shortly.
Shareholder communication
May I remind you that the Company has its own website which is available at
www.mig4vct.co.uk.
Following a successful Matrix VCT shareholder workshop held last December the
Investment Manager will be holding a second workshop on Wednesday, 14 December
2011 in central London. The workshop will include a presentation on the VCTs'
investment activity and performance. All shareholders will receive an
invitation to this event nearer to the date.
The Board also welcomes the opportunity to meet Shareholders at the Company's
General Meetings during which representatives of the Investment Manager are
present to discuss the progress of the portfolio. The next AGM of the Company
will be held in June 2012.
Outlook
There has been a sharp correction in global equity markets since the end of
July. This has been principally due to continued concerns over European
sovereign debt and the deteriorating prospects for economic growth in many
countries within the developed world. The UK is not immune from these fears.
The outlook for the domestic economy remains highly uncertain. Government debt
remains at relatively high levels and public expenditure needs to be far more
disciplined.
However, almost all of the portfolio companies are trading profitably at the
operating level. Having held back on investment during the downturn, the
Company retains a significant cash position. The Investment Manager is now
seeing more investment opportunities at realistic pricing levels. Your Board
expects that investments recently made, and to be made over the next year, will
contribute to enhancing the Company's performance which includes the objective
of making attractive dividend payments.
Finally, I would like to thank all of our Shareholders for their continuing
support.
Christopher Moore
Chairman
22 September 2011
PRINCIPAL RISKS AND UNCERTANTIES
In accordance with Disclosure and Transparency Rule (DTR) 4.2.7, the Board
confirms that the principal risks and uncertainties facing the Company have not
materially changed since the publication of the Annual Report and Accounts for
the year ended 31 January 2011. The Board acknowledges that there is regulatory
risk and continues to manage the Company's affairs in such a manner as to
comply with section 274 Income Tax Act 2007.
The principal risks faced by the Company are:
* economic risk;
* investment and strategic risk;
* regulatory risk (including loss of VCT status);
* financial and operating risk;
* market risk;
* asset liquidity risk;
* market liquidity risk;
* credit/counterparty risk.
A more detailed explanation of these risks can be found in the Directors'
Report on pages 21 - 30 and in Note 20 on pages 62 - 68 of the Annual Report
and Accounts for the year ended 31 January 2011 copies of which are available
on the VCT's website, www.mig4vct.co.uk.
Responsibility Statement
In accordance with Disclosure and Transparency Rule (DTR) 4.2.10 the Directors
confirm that to the best of their knowledge:
a. the condensed set of financial statements, which has been prepared in
accordance with the statement, "Half-Yearly Reports", issued by the
Accounting Standards Board, gives a true and fair view of the assets,
liabilities, financial position and profit of the Company, as required by
DTR 4.2.4; and
b. the interim management report, included within the Chairman's Statement,
Investment Policy, Investment Manager's 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 above, 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 reported, in accordance with
DTR 4.2.8.
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.
On behalf of the Board
Christopher Moore
Chairman
22 September 2011
INVESTMENT POLICY
The Company's policy is to invest primarily in a diverse portfolio of UK
unquoted companies. Investments are structured as part loan and part equity in
order to receive regular income and to generate capital gains from trade sales
and flotations of investee companies.
Investments are made selectively across a number of sectors, primarily in
management buyout transactions (MBOs) i.e. to support incumbent management
teams in acquiring the business they manage but do not yet own. Investments are
primarily made in companies that are established and profitable.
The Company has a small legacy portfolio of investments in companies from its
period prior to 1 August 2006, when it was a multi-manager VCT. This includes
investments in early stage and technology companies.
Uninvested funds are held in cash and lower risk money market funds.
UK companies
The companies in which investments are made must have no more than GBP15 million
of gross assets at the time of investment to be classed as a VCT qualifying
holding. The GBP20.2 million of Funds raised by the Company after 6 April 2006
are subject to a GBP7 million gross assets test for an investment to be VCT
qualifying.
VCT regulation
The investment policy is designed to ensure that the Company continues to
qualify and is approved as a VCT by HMRC. Amongst other conditions, the Company
may not invest more than 15% of its investments in a single company and must
have at least 70% by value of its investments throughout the year in shares or
securities comprised in VCT qualifying holdings, of which a minimum overall of
30% by value must be ordinary shares which carry no preferential rights. In
addition, although the Company can invest less than 30% of an investment in a
specific company in ordinary shares it must have at least 10% by value of its
total investments in each VCT qualifying company in ordinary shares which carry
no preferential rights (save as may be permitted under VCT rules).
The VCT regulations in respect of funds raised after 6 April 2011 will change,
such that 70% of such funds must be invested in equity.
Asset mix
The Company initially holds its funds in a portfolio of readily realisable
interest bearing investments and deposits. The investment portfolio of
qualifying investments is built up over a three year period with the aim of
investing and maintaining at least 80% of net funds raised in qualifying
investments.
Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses across
different industry sectors. To reduce the risk of high exposure to equities,
each qualifying investment is structured using a significant proportion of loan
stock (up to 70% of the total investment in each VCT qualifying company).
Initial investments in VCT qualifying companies are generally made in amounts
ranging from GBP200,000 to GBP1 million at cost. No holding in any one company will
represent more than 10% of the value of the Company's investments at the time
of investment. Ongoing monitoring of each investment is carried out by the
Investment Manager, generally through taking a seat on the board of each VCT
qualifying company.
Co-investment
The Company aims to invest in larger, more mature unquoted companies through
investing alongside the three other VCTs advised by the Investment Manager with
a similar investment policy. This enables the Company to participate in
combined investments advised on by the Investment Manager of up to GBP5 million.
Borrowing
The Company has no current plans to undertake any borrowing.
Management
The Board has overall responsibility for the Company's affairs including the
determination of its investment policy. Investment and divestment proposals are
originated, negotiated and recommended by the Investment Manager and are then
subject to formal approval by the Board of Directors.
INVESTMENT MANAGER'S REVIEW
Overview
We have been encouraged by positive signs of improvement in our marketplace
during the six month period to 31 July 2011. The number of quality potential
new investments that we have seen has increased considerably and more company
boards are confident about making decisions to market their businesses for sale
or raise new capital for expansion. Over these six months, we have continued
our measured approach in assessing the opportunities that are emerging. We
remain aware that we are yet to see the full effect of the UK Government's cuts
in public spending on the UK smaller company sector and are therefore
particularly mindful of the risks of deteriorating economic conditions on
prospective new investments. We have rejected a number of prospective deals
either on the grounds that they would not deliver forecast growth or because
the required sale price was too high, but there are still a number of
opportunities that we are progressing and expect to complete in the second half
of the year.
The Portfolio
The MPEP-invested portfolio at 31 July 2011 comprised thirty-one investments
with a cost of GBP17.9 million and a valuation of GBP19.0 million. On a
like-for-like basis the value of the portfolio has increased by 2.4% in the
first six months of the year.
This uplift in value principally derives from higher valuations for five
companies: Iglu.com Holidays, Blaze Signs, Focus Pharma, DiGiCo and CB Imports.
All other companies experienced relatively little change in their valuations.
Iglu.com continues to trade ahead of expectation at the time of investment, and
has repaid all of its loan stock, realising total proceeds of GBP876,207,
including a premium of GBP131,737. Blaze Signs' recovery in trading has
continued. Focus Pharma continues to perform satisfactorily and is planning to
progress further with several new product launches due during 2011. DiGiCo
continues to grow its business and generate strong profits and has paid a
dividend of GBP135,283 to the Company in the period.
The value of CB Imports has risen as trading continues to be robust and this
company has paid its first dividend since investment. ATG Media has traded
particularly well and returned good results. Racoon's profitability continues
to improve through sales of core hair extension products in the UK, although
export sales have been disappointing. Vectair's trading has been satisfactory,
and it has repaid all of its loan stock to the Company, realising GBP90,322,
including a premium of GBP15,054.
Whilst the building and construction sector has continued to suffer from
sluggish demand, those portfolio companies with direct exposure to this sector,
Blaze Signs, Plastic Surgeon and Youngman, are all performing steadily. We have
worked with these and other portfolio businesses and encouraged them to make
the changes necessary to ensure they are in the best possible position to
withstand this period of economic uncertainty. It is a measure of this effort
that only one portfolio company has required modest additional funding during
the past two years.
VSI completed the demerger of its two operating subsidiary companies in March
2011, creating two separate investee companies for the Company, MachineWorks
Software Limited (MachineWorks) and LightWorks Software Limited. It also paid a
dividend of GBP11,796. The original VSI loan of GBP93,270, which was transferred to
MachineWorks on the demerger, was repaid in April 2011, releasing GBP116,588
including a premium of GBP23,318. The Company now has separate investments in
each of these companies with a cost of GBP9,329 each. The boards of these
companies believe that the demerger will enhance the prospects of both
companies.
One new investment and two follow-on investments have been made. The Company
used GBP1m already invested in acquisition vehicle Fullfield Limited as part of a
total investment of GBP1,280,880 to support the MBO of Motorclean Group, the UK's
leading provider of vehicle cleaning and valet services to the car dealership
market. Following its original investment into ASL in December 2010, the
Company made a further investment totalling GBP409,067 in March 2011 to support
the acquisition of the assets of Transcribe Copier Systems Limited. ASL is a
Cambridge-based printer and copier services business with a broad customer base
of schools and small and medium sized enterprises. This acquisition is part of
ASL's strategy to acquire similar businesses, thereby consolidating a highly
fragmented market in order to become of interest to larger corporate acquirers
in this sector.
As reported in the Annual Report and Accounts for the year ended 31 January
2011, Monsal experienced completion delays on an existing contract and in the
commissioning of new contracts. These delays led to a requirement for
additional funding. In June your Company approved a further loan stock
investment commitment totalling GBP158,577 as part of a GBP1.75 million fundraising
alongside other Matrix VCTs and other shareholders. The terms of this new
investment provide that it ranks ahead of the previous rounds of investment
made up to 31 January 2011. We continue to hold the value of the Company's
previous rounds of investment at nil. GBP42,287 of the new commitment had been
drawn down by 31 July, which is valued at cost and a further GBP21,144 was drawn
down after 31 July. With this additional funding Monsal now has the ability to
pursue a number of major contracts in the waste and water sectors. Assuming
contract awards, the potential for recovery of value in the original investment
should become a more realistic prospect.
The investments previously made by Elderstreet are now unlikely to have a
significant impact on the Company's performance. Cashfac has increased its
headcount in anticipation of an increase in sales in the financial sector, and
this has started to occur. Sift has experienced a weakening in advertising
revenues and incurred losses. sparesFinder has been trading ahead of its budget
for the year, the budget itself being ahead of its previous financial year.
Outlook
The prospects for increased investment activity over the coming months have
improved now that the UK economy appears to have recovered from the worst of
the recession. We are also well-positioned to offer an attractive combination
of equity and debt to companies as the availability of external debt from the
major banks is harder to access. The positive performance of some of our
investee companies has enabled the value of our portfolio to be resilient
overall. We expect to be able to crystallise this value over time through
realisations, and we are seeing interest in a number of our investee companies
from larger private equity firms.
However, much uncertainty remains concerning the quality of the economic
recovery and we remain vigilant about the potential impact on the portfolio and
cautious when evaluating new opportunities.
Matrix Private Equity Partners LLP
22 September 2011
INVESTMENT PORTFOLIO SUMMARY
As at 31 July 2011
Total cost Total Total % of % of
at valuation at valuation equity portfolio
31 Jan 11 at 31-Jul-1 held by value
31 Jul 11 1
Matrix Private Equity GBP GBP GBP
Partners LLP
DiGiCo Europe Limited 495,652 1,900,210 1,962,646 6.52% 10.33%
Design and
manufacture of audio
mixing desks
ATG Media Holdings 888,993 1,293,507 1,337,986 8.50% 7.04%
Limited
Publisher and online
auction platform
operator
CB Imports Group 1,000,000 1,242,622 1,301,140 6.00% 6.85%
Limited
Importer and
distributor of
artificial flowers,
floral sundries and
home decor products
Fullfield Limited 1,280,880 1,000,000 1,280,880 8.75% 6.74%
(Motorclean Group)
Vehicle cleaning and
valet services
ASL Technology 1,257,133 848,066 1,257,133 6.78% 6.62%
Holdings Limited
Printer and
photocopier services
Focus Pharma Holdings 772,451 1,060,749 1,126,107 3.10% 5.93%
Limited
Licensor and
distributor of
generic
pharmaceuticals
Backbarrow Limited 1,000,000 1,000,000 1,000,000 16.67% 5.26%
Food manufacturing,
distribution and
brand management
Bladon Castle 1,000,000 1,000,000 1,000,000 16.67% 5.26%
Management Limited
Brand management,
consumer products and
retail
RDL Corporation 1,000,000 1,000,000 1,000,000 9.05% 5.26%
Limited (formerly
Aust Recruitment
Group Limited)
Recruitment
consultants for the
pharmaceutical,
business intelligence
and IT industries
Rusland Management 1,000,000 1,000,000 1,000,000 16.33% 5.26%
Limited
Brand management,
consumer products and
retail
Torvar Limited 1,000,000 1,000,000 1,000,000 16.33% 5.26%
Database management,
mapping, data mapping
and management
services to legal and
building industries
Vanir Consultants 1,000,000 1,000,000 1,000,000 16.67% 5.26%
Limited
Database management,
mapping, data mapping
and management
services to legal and
building industries
IGLU.com Holidays 133,779 1,420,200 763,425 7.15% 4.02%
Limited
Online ski and cruise
retailer
Westway Services 236,096 646,071 650,946 3.20% 3.43%
Holdings (2010)
Limited (formerly
MC440 Limited)
Installation,
maintenance and
servicing of
air-conditioning
systems
Blaze Signs Holdings 610,016 560,223 644,612 5.72% 3.39%
Limited
Manufacturer and
installer of signs
Higher Nature Limited 500,127 429,671 401,840 10.34% 2.11%
Supplier of mineral,
vitamin and food
supplements
British International 295,455 433,545 395,030 2.50% 2.08%
Holdings Limited
Operator of
helicopter services
Youngman Group 500,026 349,983 389,045 4.24% 2.05%
Limited
Manufacturer of
ladders and access
towers
Faversham House 346,488 346,488 346,488 6.26% 1.82%
Publisher, exhibition
organiser and
operator of web sites
for the
environmental, visual
communications and
building services
sectors
Omega Diagnostics plc 199,998 241,664 241,664 1.96% 1.27%
In-vitro diagnostics
for food intolerance,
autoimmune diseases
and infectious
diseases
Machineworks Software 9,329 306,331 189,321 4.20% 1.00%
Limited 2
Software for CAM and
machine tool vendors
Racoon International 406,805 174,507 178,128 5.70% 0.94%
Holdings Limited
Supplier of hair
extensions, hair care
products and training
Plastic Surgeon 458,837 114,709 114,709 6.88% 0.60%
Holdings Limited
Snagging and
finishing of domestic
and commercial
properties
Duncary 8 Limited 126,995 104,769 103,420 5.10% 0.54%
(formerly Duncary 4/
BG Consulting
Limited)
Technical training
business
Vectair Holdings 24,732 181,406 78,148 2.14% 0.41%
Limited
Designer and
distributor of
washroom products
Monsal Holdings 678,300 - 42,287 6.14% 0.22%
Limited
Supplier of
engineering services
to water and waste
sectors
BOX-IT Data 25,759 25,759 25,759 - 0.14%
Management Limited
(former investment in
Stortext FM Limited
Software based
solutions for
document management
Lightworks Software 9,329 63,248 21,337 4.20% 0.11%
Limited 2
Software for CAD
vendors
Letraset Limited 150,010 19,540 18,272 5.26% 0.10%
(formerly Creative
Opportunities)
Manufacturer and
distributor of
graphic art products
PXP Holdings Limited 679,549 - - 4.98% 0.00%
(Pinewood Structures)
Designer,
manufacturer and
supplier of timber
frames for buildings
Other investments in 150,102 - - - 0.00%
the portfolio 1
----- ----- ----- ----- -----
Total 17,236,841 18,763,268 18,870,323 - 99.30%
Former Elderstreet
Private Equity
Limited Portfolio
Cashfac Limited 260,101 111,054 99,311 3.04% 0.52%
Provider of virtual
banking application
software
Sparesfinder Limited 250,854 26,568 31,712 1.70% 0.18%
Supplier of
industrial spare
parts on-line
Sift Limited 130,116 - - 1.03% 0.00%
Developer of business
to business internet
communities
----- ----- ----- ----- -----
Total 641,071 137,622 131,023 - 0.70%
----- ----- ----- ----- -----
Investment Managers' 17,877,912 18,900,890 19,001,346 - 100.00%
totals
===== ===== ===== ===== =====
1 Other investments in the portfolio comprises those investments that have been
valued at nil and from which the Directors only expect to receive small
recoveries i.e. Legion Group plc (in administration) in the MPEP portfolio.
2 On 31 March 2011, VSI Limited undertook a demerger, such that MIG 4 VCT now
holds separate investments in Machineworks Software Limited ("Machineworks")
and Lightworks Software Limited ("Lightworks"). As a result, the cost as at 31
January 2011, of the ordinary and preference share investments in VSI Limited
has been split equally between Machineworks and Lightworks. The valuation of
the ordinary shares at 31 January 2011 has been split 75:25 between
Machineworks and Lightworks respectively. The former loan investment in VSI of
GBP93,270 had been wholly transferred to Machineworks, so this loan's cost and
value at 31 January 2011 has been specifically allocated to that new
investment.
UNAUDITED INCOME STATEMENT
For the six months ended 31 July 2011
Six months ended 31 July 2011
(unaudited)
Notes Revenue Capital Total
GBP GBP GBP
Unrealised gains on 8 - 451,225 451,225
investments held at
fair value
Realised gains/ 8 - 2,551 2,551
(losses) on
investments held at
fair value
Income 2 459,395 - 459,395
Recoverable VAT - - -
Investment 3 (81,573) (244,718) (326,291)
management expense
Other expenses (155,917) - (155,917)
----- ----- -----
Profit on ordinary 221,905 209,058 430,963
activities before
taxation
Tax on profit on 4 (13,716) 13,716 -
ordinary activities
----- ----- -----
Profit attributable 208,189 222,774 430,963
to equity
shareholders
===== ===== =====
Basic and diluted 5 0.86p 0.91p 1.77p
earnings per
Ordinary share
Six months ended 31 July 2010
(unaudited)
Notes Revenue Capital Total
GBP GBP GBP
Unrealised gains on 8 - 1,522,221 1,522,221
investments held at
fair value
Realised gains/ 8 - (80,807) (80,807)
(losses) on
investments held at
fair value
Income 2 321,660 - 321,660
Recoverable VAT - - -
Investment 3 (51,901) (155,703) (207,604)
management expense
Other expenses (232,573) - (232,573)
----- ----- -----
Profit on ordinary 37,186 1,285,711 1,322,897
activities before
taxation
Tax on profit on 4 - - -
ordinary activities
----- ----- -----
Profit attributable 37,186 1,285,711 1,322,897
to equity
shareholders
===== ===== =====
Basic and diluted 5 0.18p 6.17p 6.35p
earnings per
Ordinary share
Year ended 31 January 2011
(audited)
Notes Revenue Capital Total
GBP GBP GBP
Unrealised gains on 8 - 2,119,702 2,119,702
investments held at
fair value
Realised gains/ 8 - 16,077 16,077
(losses) on
investments held at
fair value
Income 2 636,426 - 636,426
Recoverable VAT (264) (794) (1,058)
Investment 3 (120,335) (361,003) (481,338)
management expense
Other expenses (396,019) - (396,019)
----- ----- -----
Profit on ordinary 119,808 1,773,982 1,893,790
activities before
taxation
Tax on profit on 4 - - -
ordinary activities
----- ----- -----
Profit attributable 119,808 1,773,982 1,893,790
to equity
shareholders
===== ===== =====
Basic and diluted 5 0.57p 8.47p 9.04p
earnings per
Ordinary share
The total column of this statement is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
There were no other recognised gains or losses in the period.
Other than revaluation movements arising on investments held at fair value
through profit and loss there were no differences between the profit/ (loss) as
stated above and at historical cost.
The notes below form part of these Half-Yearly financial statements.
UNAUDITED BALANCE SHEET
As at 31 July 2011
31 July 2011 31 July 2010 31 January 2011
(unaudited) (unaudited) (audited)
Notes GBP GBP GBP
Non-current assets
Investments at fair 8 19,001,346 16,187,108 18,900,890
value
Current assets
Debtors and prepayments 191,511 152,051 1,948,065
Current Investments 9 6,853,014 7,116,251 3,644,741
Cash at bank 2,460,293 255,319 1,061,164
----- ----- -----
9,504,818 7,523,621 6,653,970
Creditors: amounts (183,711) (400,774) (209,681)
falling due within one
year
----- ----- -----
Net current assets 9,321,107 7,122,847 6,444,289
----- ----- -----
Net assets 28,322,453 23,309,955 25,345,179
===== ===== =====
Capital and reserves 10
Called up share capital 253,166 210,277 224,558
Share premium reserve 6,847,570 1,583,088 3,413,664
Capital redemption 892,958 889,606 891,351
reserve
Revaluation reserve 1,273,536 317,939 992,420
Special distributable 14,861,009 15,656,959 15,256,001
reserve
Profit and loss account 4,194,214 4,652,086 4,567,185
----- ----- -----
Equity shareholders' 28,322,453 23,309,955 25,345,179
funds
===== ===== =====
Net asset value per 7 111.87p 110.85p 112.87p
Ordinary share
UNAUDITED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 31 July 2011
Six months Six months Year ended 31
ended 31 July ended 31 July January 2011
2011 2010
(unaudited) (unaudited) (audited)
GBP GBP GBP
Opening Shareholders' 25,345,179 21,222,542 21,222,542
Funds
Net share capital 3,464,121 1,598,150 3,444,752
subscribed
Net share capital bought (163,990) (405,046) (582,286)
back
Profit for the period 430,963 1,322,897 1,893,790
before dividends
Dividends paid in period 6 (753,820) (428,588) (633,619)
----- ----- -----
Closing shareholders' 28,322,453 23,309,955 25,345,179
funds
===== ===== =====
The notes below form part of these Half-Yearly financial statements.
UNAUDITED SUMMARISED CASH FLOW STATEMENT
For the six months ended 31 July 2011
Six months Six months Year ended 31
ended 31 July ended 31 July January 2011
2011 2010
(unaudited) (unaudited) (audited)
Notes GBP GBP GBP
Interest income received 263,398 285,302 494,974
Dividend income 128,616 22,653 144,366
Other income - - 2,544
VAT (paid)/recovered (to)/ (15,287) 44,569 10,199
from from Investment
managers
Investment management fees (326,080) (327,610) (561,799)
paid
Cash payments for other (131,059) (195,954) (397,775)
expenses
----- ----- -----
Net cash outflow from (80,412) (171,040) (307,491)
operating activities
Investing activities
Sale of investments 8 1,085,668 548,848 923,983
Purchase of investments 8 (732,348) (2,576) (2,397,128)
----- ----- -----
Net cash inflow/(outflow) 353,320 546,272 (1,473,145)
from investing activities
----- ----- -----
Cash inflow/(outflow) 272,908 375,232 (1,780,636)
before financing and liquid
resource management
Dividends
Equity dividends paid 6 (753,820) (428,588) (633,619)
Financing
Share capital 5,297,186 1,598,150 1,611,231
subscribed
Purchase of own shares (208,872) (219,447) (537,294)
Management of liquid
resources
(Increase)/decrease in (3,208,273) (1,140,432) 2,331,078
monies held in money
market funds
----- ----- -----
Increase in cash 1,399,129 184,915 990,760
===== ===== =====
Reconciliation of net
cash inflow to movement
in net funds
Increase in cash for 1,399,129 184,915 990,760
the period
Net funds at the start 1,061,164 70,404 70,404
of the period
----- ----- -----
Net funds at the end of 2,460,293 255,319 1,061,164
the period
===== ===== =====
RECONCILIATION OF PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION TO NET CASH
(OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES
For the six months ended 31 July 2011
Six months Six months Year ended 31
ended 31 ended 31 July January 2011
July 2011 2010
(unaudited) (unaudited) (audited)
GBP GBP GBP
Profit on ordinary activities before 430,963 1,322,897 1,893,790
taxation
Net unrealised gains on investments (451,225) (1,522,221) (16,077)
Net (gains)/ losses on realisations of (2,551) 80,807 (2,119,702)
investments
(Increase)/decrease in debtors (76,511) (12,349) 24,702
Increase/(decrease) in creditors 18,912 (40,174) (90,204)
----- ----- -----
Net cash outflow from operating (80,412) (171,040) (307,491)
activities
===== ===== =====
The share capital subscribed figure per the cash flow statement of GBP5,297,186
above differs to elsewhere in the financial statements by GBP1,833,065, which was
included within debtors at 31 January 2011.
The notes below form part of these Half-Yearly financial statements.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
Notes to the Unaudited Financial Statements
1. Principal accounting policies
The following accounting policies have been applied consistently throughout the
period. Full details of principal accounting policies will be disclosed in the
Annual Report.
a. Basis of accounting
The unaudited results cover the six months to 31 July 2011 and have been
prepared under UK Generally Accepted Accounting Practice (UK GAAP), consistent
with the accounting policies set out in the statutory accounts for the year
ended 31 January 2011 and the 2009 Statement of Recommended Practice,
`Financial Statements of Investment Trust Companies and Venture Capital Trusts'
('the SORP') issued by the Association of Investment Companies.
The Half-Yearly Report has not been audited, nor has it been reviewed by the
auditors pursuant to the Auditing Practices Board (APB)'s guidance on Review of
Interim Financial Information.
b. Presentation of the Income Statement
In order to better reflect the activities of a VCT and in accordance with the
SORP, 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.
c. Investments
All investments held by the Company are classified as "fair value through
profit and loss", in accordance with the International Private Equity and
Venture Capital Valuation ("IPEVCV") guidelines, as updated in September 2009.
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.
For investments actively traded in 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. Purchase and sales of unlisted investments are recognised when the
contract for acquisition or sale becomes unconditional.
Unquoted investments are stated at fair value by the Directors in accordance
with the following rules, which are consistent with the IPEVCV guidelines:
All investments are held at the price of a recent investment for an appropriate
period where there is considered to have been no change in fair value. Where
such a basis is no longer considered appropriate, the following factors will be
considered:
i. Where a value is indicated by a material arms-length transaction by an
independent third party in the shares of a company, this value will be
used.
ii. In the absence of i), and depending upon both the subsequent trading
performance and investment structure of an investee company, the valuation
basis will usually move to either:-
a) an earnings multiple basis. The shares may be valued by applying a suitable
price-earnings ratio to that company's historic, current or forecast post-tax
earnings before interest and amortisation (the ratio used being based on a
comparable sector but the resulting value being adjusted to reflect points of
difference identified by the Investment Manager compared to the sector
including, inter alia, a lack of marketability).
or:-
b) where a company's underperformance against plan indicates a diminution in
the value of the investment, provision against cost is made, as appropriate.
Where the value of an investment has fallen permanently below cost, the loss is
treated as a permanent impairment and as a realised loss, even though the
investment is still held. The Board assesses the portfolio for such investments
and, after agreement with the Investment Manager, 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.
iii. Premiums on loan stock investments are accrued at fair value when the
Company receives the right to the premium and when considered recoverable.
iv. Where an earnings multiple or cost less impairment basis is not appropriate
and overriding factors apply, discounted cash flow or net asset valuation
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.
2. Income
3.
Year
Six months ended Six months ended
ended
31 July 2011 31 July 2010
31 January 2011
(unaudited) (unaudited) (audited)
Income from GBP GBP GBP
investments
Dividends 156,589 74,794 127,836
Money-market funds 22,240 17,108 34,092
Loan stock interest 270,851 229,721 469,393
Bank deposit interest 9,715 37 2,561
Other Income - - 2,544
----- ----- -----
Total Income 459,395 321,660 636,426
===== ===== =====
3. Investment management expense
In accordance with the policy statement published under "Management and
Administration" in the Company's prospectus dated 8th February 1999, the
Directors have charged 75% of the investment management expenses to the capital
account. This is in line with the Board's expectation of the long-term split of
returns from the investment portfolio of the Company.
4. Taxation
There is no tax charge for the period as the Company has tax losses from the
current year and from previous periods, both of which can be offset between
revenue and capital.
5. 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 Six months ended Year ended 31
ended 31 July 31 July 2010 January 2011
2011
(unaudited) (unaudited) (audited)
GBP GBP GBP
i) Total earnings after 430,963 1,322,897 1,893,790
taxation
----- ----- -----
Basic and diluted earnings 1.77p 6.35p 9.04p
per Ordinary share (pence)
ii) Revenue earnings/ 208,189 37,186 119,808
(loss) from ordinary
activities after taxation
----- ----- -----
Basic and diluted revenue 0.86p 0.18p 0.57p
earnings/(loss) per
Ordinary share (pence)
Net unrealised capital 451,225 1,522,221 2,119,702
gains
Net realised capital gains 2,551 (80,807) 16,077
/(losses)
Capital expenses net of (231,002) (155,703) (361,003)
taxation
Capital element of VAT - - (794)
recoverable
iii) Capital return 222,774 1,285,711 1,773,982
----- ----- -----
Basic and diluted capital 0.91p 6.17p 8.47p
earnings per Ordinary
share (pence)
----- ----- -----
iv) Weighted average 24,337,457 20,831,585 20,946,842
number of shares in issue
in the period
6. Dividends paid
7.
Six Six Year
months months
ended ended ended
31 31 31 January
July July 2011
2011 2010
(unaudited) (unaudited) (audited)
GBP GBP GBP
Final income 100,509 - -
dividend for
the year ended
31 January
2011 of 0.4
pence per
Ordinary share
paid 24 June
2011
Final capital 653,311 - -
dividend for
the year ended
31 January
2011 of 2.6
pence per
Ordinary share
paid 24 June
2011
Final capital - 428,588 423,331
dividend for
the year ended
31 January
2010 of 2
pence per
Ordinary Share
paid 9 June
2010
Interim - - 210,288
capital
dividend for
the year ended
31 January
2011 of 1
pence per
Ordinary Share
paid 5
November 2010
----- ----- -----
753,820 428,588 633,619
===== ===== =====
7. Net asset value per Ordinary Share
8.
As at As at As at
31 July 2011 31 July 2010 31 January 2011
(unaudited) (unaudited) (audited)
GBP GBP GBP
Net assets 28,322,453 23,309,955 25,345,179
Number of shares in issue 25,316,557 21,027,687 22,455,802
----- ----- -----
Net asset value per share 111.87p 110.85p 112.87p
(pence)
8. Summary of non current asset investments at fair value during the period
9.
Unquoted Unquoted
Traded on AIM equity preference Loan Stock Total
shares shares
GBP GBP GBP GBP GBP
Valuation at 31 241,664 7,967,196 16,448 10,675,582 18,900,890
January 2011
Purchases at cost - 5,726 - 726,622 732,348
Reclassification - 932 (932) - -
at value
Sales - proceeds - (2,551) - (1,083,117) (1,085,668)
- realised gains - 2,551 - - 2,551
Unrealised gains - 408,542 - 42,683 451,225
----- ----- ----- ----- -----
Valuation at 31 241,664 8,382,396 15,516 10,361,770 19,001,346
July 2011
Book cost at 31 199,998 6,717,752 24,535 10,935,627 17,877,912
July 2011
Unrealised gains/ 41,666 1,814,746 (9,019) (573,857) 1,273,536
(losses) at 31
July 2011
Permanent - (150,102) - - (150,102)
impairment of
investments
----- ----- ----- ----- -----
Valuation at 31 241,664 8,382,396 15,516 10,361,770 19,001,346
July 2011
Gains on - 2,551 - 170,109 172,660
investments
Less amounts - - - (170,109) (170,109)
recognised as
unrealised gains
in previous years
----- ----- ----- ----- -----
Realised gains - 2,551 - - 2,551
based on carrying
value at 31 July
2011
Net movement in - 408,542 - 42,683 451,225
unrealised
appreciation in
the period
----- ----- ----- ----- -----
Gains on - 411,093 - 42,683 453,776
investments for
the period ended
31 July 2011
===== ===== ===== ===== =====
9. Current investments at fair value
These comprise investments in 8 Dublin based OEIC money market funds managed by
Royal Bank of Scotland, Blackrock Investment Management (UK) Ltd, Goldman
Sachs, Scottish Widows Investment Management and Fidelity Investment
Management.
GBP6,842,545 (31 July 2010: GBP7,105,841, 31 January 2011: GBP3,634,303) of this sum
is subject to same day access, whilst GBP10,469 (31 July 2010: GBP10,410, 31
January 2011: GBP10,438) is subject to 2 day access.
10. Capital and reserves
11.
Called up Share Capital Revaluation Special Profit and
share Premium redemption reserve distributable loss Total
capital account reserve reserve reserve
GBP GBP GBP GBP GBP GBP GBP
At 1 224,558 3,413,664 891,351 992,420 15,256,001 4,567,185 25,345,179
February
2011
Shares 29,606 3,373,214 - - - - 3,402,820
issued via
Linked Offer
for
Subscription
Dividends 609 60,692 - - - - 61,301
re-invested
into new
shares
Shares (1,607) - 1,607 - (163,990) - (163,990)
bought back
Profit/ - - - 451,225 - (20,262) 430,963
(loss) for
the period
Realised - - - - (231,002) 231,002 -
losses
transferred
to special
reserve
Realisation - - - (170,109) - 170,109 -
of
previously
unrealised
appreciation
Dividend - - - - - - (753,820) (753,820)
final paid
for year
ended 31
January 2011
----- ----- ----- ----- ----- ----- -----
At 31 July 253,166 6,847,570 892,958 1,273,536 14,861,009 4,194,214 28,322,453
2011
===== ===== ===== ===== ===== ===== =====
During the six months to 31 July 2011, the Company issued 2,960,632 new
ordinary shares at an average price of 121.46 pence per share under the linked
offer for subscription launched on 12 November 2010.
11. Related party transactions
All amounts raised from the Joint VCT fundraising offer were held in a bank
account called "The Income & Growth VCT plc For Matrix VCTs Linked Offer" prior
to each allotment. Following each allotment, the Company became entitled to
these amounts, which were subsequently received, totalling GBP5,236,340.
12. Post balance sheet events
On 9 August 2011, a further GBP21,144 was invested in loan notes issued by Monsal
Holdings Limited.
13. The financial information for the period ended 31 July 2011 does not
comprise full financial statements within the meaning of Section 435 of the
Companies Act 2006. The financial statements for the year ended 31 January
2011 have been filed with the Registrar of Companies. The auditors have
reported on these financial statements and that report was unqualified and
did not contain a statement under section 498(2) of the Companies Act 2006.
14. This Half-Yearly 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, One Vine Street, London W1J
0AH or can be downloaded via the website.
CORPORATE INFORMATION
Directors (Non-executive)
Christopher Moore (Chairman)
Andrew Robson
Helen Sinclair
Secretary
Matrix Private Equity Partners LLP
One Vine Street
London W1J 0AH
Company's Registered Office and Head Office
One Vine Street
London W1J 0AH
Company Registration Number
3707697
Investment Manager
Matrix Private Equity Partners LLP
One Vine Street
London W1J 0AH
www.matrixgroup.co.uk
Telephone: 020 3206 7000
Website: www.mig4vct.co.uk
Solicitors Independent Auditors
Martineau PKF (UK) LLP
No 1 Colmore Square Farringdon Place
Birmingham 20 Farringdon Road
B4 6AA London EC1M 3AP
Stockbroker VCT Status Adviser
Matrix Corporate Capital LLP PricewaterhouseCoopers LLP
One Vine Street 1 Embankment Place
London W1J 0AH London WC2N 6RH
Registrars Bankers
Capita Registrars National Westminster Bank plc
The Registry Financial Institutions Team
34 Beckenham Road First Floor
Beckenham Mayfair Commercial Banking Centre
Kent 65 Piccadilly
BR3 4TU London W1A 2PP
Tel: 0871 664 0300 (calls cost 10p per
minute plus net work extras. Lines are
open 8.30am-5.30pm Mon-Fri. If calling
from overseas please ring +44 208 639
2157)
END
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