TIDMMIG4
Matrix Income & Growth 4 VCT plc
Annual Results for the year ended 31 January 2012
Strategy
Matrix Income & Growth 4 VCT plc ("MIG4", the "Company" or the
"Fund") is a tax efficient company listed on the London Stock Exchange. It
invests primarily in established and profitable unquoted companies.
INVESTMENT OBJECTIVE
The VCT's objective 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.
DIVIDEND POLICY
The Company seeks to pay dividends at least annually out of income
and capital as appropriate, and subject to fulfilling certain regulatory
requirements.
FINANCIAL HIGHLIGHTS
As at 31 January 2012
- Increase in total shareholder return (net asset value basis) over
the year of 5.2% from 131.6p to 138.4p per share
- Further funds of GBP3.5 million subscribed in the year
- Dividend of 5 pence per share declared for the year
Performance Summary
Year ended Net Net asset Cumulative NAV total Share Share price
31 January assets value per dividends return per price 1(p) total return
share paid per share to per share to
(GBPm) share (p) shareholders shareholders
(p) since launch since launch
(p) (p) 2
2012 29.4 116.7 21.70 138.4 100.0 121.7
2011 25.3 112.9 18.70 131.6 103.5 122.2
2010 21.2 106.3 15.70 122.0 92.3 108.0
2009 21.0 104.6 13.70 118.3 92.0 105.7
2008 24.1 117.4 11.45 128.9 109.0 120.5
2007 9.8 116.3 8.90 125.2 91.0 99.9
2006 9.3 106.6 8.40 115.0 85.0 93.4
1 Source: London Stock Exchange 2 Total returns to Shareholders include dividends paid
Matrix Private Equity Partners LLP ("MPEP") became sole manager to the Company
on 1 August 2006.
In the graph on page 38, the NAV and share price total returns to shareholders
comprise the NAV and share price respectively assuming the dividends paid were
re-invested on the date on which the shares were quoted ex-dividend in respect
of each dividend. The total return figures have been rebased to 100 at 31
January 2007.
Return before and after income tax relief
The table below shows the NAV total returns at 31 January 2012 for
a shareholder that invested GBP10,000 in each fundraising undertaken by the
Company:
Fundraising 1999/2000 2006/2007 2010 2011
(Top-up Offer)3 (Linked Offer)4
Issue price per 200 1 120.9 2 112.4 121.6
share (p)
Number of shares 5,000 8,271 8,897 8,224
held
Net asset value 5,837 9,655 10,385 9,600
(NAV) at 31 January
2012 (GBP)
Dividends paid to 1,085 910 534 2475
shareholder since
subscription (GBP)
NAV total return to 6,922 10,565 10,919 9,847
shareholder since
subscription (GBP)
Percentage change in 5.2% 5.7% 5.9% 6.3%
NAV total return
from last year
(Loss)/ profit (3,078) 565 919 (153) 7
before income tax
relief (GBP) 6
Income tax relief 20% 8 30% 30% 30%
Cost net of income 8,000 7,000 7,000 7,000
tax relief (GBP)
(Loss)/ profit after (1,078) 3,565 3,919 2,847
income 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 2010 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 1999/2000 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 Cumulative dividends
January paid in respect per share paid and proposed
of each year since launch
(p) (p)
2012 5.00** 26.70
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.
** Interim dividend - an interim dividend of 5p per share for the
year ended 31 January 2012 has been declared on 18 April 2012 payable on 6
June 2012.
CHAIRMAN'S STATEMENT
I am pleased to present to Shareholders the Annual Report of the
Company for the year ended 31 January 2012.
Performance
At 31 January 2012, the Net Asset Value (NAV) per Share was 116.7
pence (2011: 112.9 pence). Adjusted for the dividends paid to shareholders
during the year, this represents an increase of 6.0% over the twelve month
period. The NAV Total Return per Share since launch increased in the year by
5.2% from 131.6 pence at 31 January 2011 to 138.4 pence at 31 January 2012.
Despite tough economic conditions, many of the portfolio companies
continue to develop well. The Board is satisfied with the performance of the
portfolio compared to its generalist VCT peers (a benchmark the Board uses),
and supports the Manager's investment approach. A continuation of current
performance trends, if achieved, should result in payment of a useful dividend
stream comprising both income and capital elements.
In this context, it is relevant to note that total dividends
declared in respect of the year to 31 January 2012 amount to 5 pence per
share.
Economic background
The year under review was dominated by continuing concerns about
the severity of the UK recession, the coalition government's reaction to this
and the timing of any recovery. Further concerns are rising UK inflation and a
lack of clarity on the future direction of the European community.
Against this backdrop, the quoted UK equity market as represented
by the FTSE All-Share Index was volatile but ended the year down (0.31%) on a
total return basis. Bearing in mind that many of the portfolio companies are
primarily valued by reference to the valuations of companies trading in
similar sectors within the FTSE All-Share Index, it is encouraging to note
that the Company's NAV total return rose by 5.2%.
The portfolio
The portfolio continues to be dominated by investments in management buy-out
situations ("MBOs"), which has risen to 75.4% of the portfolio, followed by
16.8% in acquisition companies, 5.3% in development capital, 1.0% invested in
one AIM investment and the remaining 1.5% of the portfolio being invested in
what were originally development capital and early stage investments of
previous managers. The portfolio is now invested in a wide range of market
sectors with the largest of those being Support Services at 44.8%.
The stronger dealflow in the second half of 2010 continued into
2011. Three new investments were completed during the year under review to
support the management buy-outs ("MBOs") of Motorclean Group Limited, EMaC
Limited, and to provide development capital to Equip Outdoor Technologies
Limited. The Company's existing investments in the acquisition vehicles
Fullfield and Vanir were used in respect of the Motorclean and EMaC
investments.
Further investments were made into ASL to support the acquisition
of the assets of a similar company, Transcribe Copier Systems Limited and into
Monsal as part of a GBP1.75 million facility to continue supporting the
turnaround of that company.
There has been a pleasing level of realisations in the year. Most notably, in
December 2011, the Company made a partial disposal of its investment in DiGiCo
to ISIS Equity Partners. The Company has received total cash proceeds of GBP3.0
million over the life of this investment, representing a 3 times cash return
to date. In addition, the Company continues to hold some loan stock and a
small equity investment in this company, valued in total at GBP1.3 million.
Five loan stocks held by the Company totalling GBP1.41 million in
value were fully or partly repaid during the year (including any premia due).
Repayments were received from Focus Pharma Holdings Limited, Fullfield
(Motorclean), Iglu.com Holidays, MachineWorks and Vectair. In addition, GBP4
million was received in loan stock repayments and related premia from Bladon
Castle Management Limited, Backbarrow Limited, Rusland Management Limited and
Torvar Limited, who had not been able to find suitable investment
opportunities.
A number of the investee companies continued to trade well, notably
DiGiCo, ATG Media and Iglu.com Holidays. Other companies are still
endeavouring to recover from the effects of the 2008/09 recession. Plastic
Surgeon returned a modest profit after a period of weak trading and Youngman
fully repaid its bank debt and so is well-positioned to benefit from any
upturn in its markets. Blaze Signs reported improved results demonstrating a
recovery during the year. PXP, however, continues to be valued at nil although
a further small investment into this company has been approved to support its
prospective turnaround. As you will see from the Manager's Review, most
companies in the portfolio continue to generate operating profits.
As at the year end the portfolio included three acquisition companies actively
searching for further investments. Since the year-end, investments of GBP1
million each have been made in 4 further acquisition companies. A number of
opportunities are under active consideration.
For further information on the portfolio please refer to the Investment
Manager's Review on pages 12 - 19.
Offer for Subscription
The Company is participating in a linked fundraising with The
Income & Growth VCT plc and Matrix Income & Growth VCT plc which was launched
on 20 January 2012 to raise up to GBP21 million across the three VCTs. The funds
to be raised for the VCT of up to GBP7 million will further improve the
Company's liquidity, enable the VCT to continue to take advantage of the
expected favourable conditions for new investment, support the Company's share
buy-back policy and mean that its fixed running costs will be spread over a
larger asset base. Details of the Offer have been posted to Shareholders. As
at 30 April 2012, GBP4.3m has been subscribed after the year-end for further
shares in the Company, and your Company has allotted 3,546,964 new ordinary
shares so far.
The Offer will remain open until 30 June 2012 although the Directors of the
three VCTs reserve the right to extend the closing date at their discretion.
Earlier in the year a further GBP3.4 million of net funds were raised
from the 2010/2011 linked fundraising with The Income & Growth VCT plc and
Matrix Income & Growth VCT plc, allotting 2,960,632 shares.
Cash available for investment
Cash and liquidity fund balances as at 31 January 2012 together
with funds in acquisition companies, amounted to GBP14.4m which is advantageous
to have at a time of increasing investment opportunities. In the meantime
these funds continue to be invested in a number of leading cash funds and
deposits with major banks. Despite the frustration of very low returns, your
Board has taken the view that it would not be prudent to further increase
counter party or timing exposures for a relatively small overall increase in
the return rates. However, the Board continues to keep this policy under
active review.
Review of results
The Company returned a profit for the year of GBP1,643,274 (2011:
GBP1,893,790), comprised of a revenue return of GBP430,307 (2011: GBP119,808) and a
capital return of GBP1,212,967 (2011: GBP1,773,982).
The revenue return for the Company has increased markedly during
the year, from GBP119,808 to GBP430,307. Three main factors affected the overall
increase in income to GBP955,864, from GBP636,426 for the year to 31 January 2011.
Firstly, loan interest from investee companies has increased by GBP208,204 (44%)
to GBP677,597. This is due to the benefit of further investments made in the
year, notably Motorclean, EOTH and EMaC, in addition to a full year's interest
received from CB Imports, ASL and RDL. Youngman has resumed loan stock
interest payments and settled some of the arrears.
Secondly, the Company's dividend income from investee companies
also rose by GBP79,130 (62%) to GBP206,966 during the year, compared to GBP127,836
for the year to 31 January 2011, predominantly due to dividends received from
ATG Media and DiGiCo.
Finally, interest on bank deposits and money-market funds continued
to be modest, rising slightly to GBP45,637 (2011: GBP34,092) due to higher
liquidity following monies raised from the joint offer for subscription.
Against this net improvement in income, there was an increase in
investment management fees of GBP185,898, principally due to increases in net
assets and reclassification. This figure has been adjusted for the
reclassification of Accounting and Company Secretarial fees to become part of
Investment Management fees, which occurred in the previous year.
Dividend
A final dividend of 3 pence per share in respect of the year ended
31 January 2011 was paid in June 2011.
The Company's earnings per Ordinary Share were 6.62 pence per share
(2011: 9.04 pence per share) comprising 1.73 pence of Income and 4.89 pence of
Capital. The Board is pleased to declare a dividend of 5 pence per share which
will be paid as an interim dividend, comprising 1.5 pence from income and 3.5
pence from capital in respect of the year under review. This payment will
bring total cumulative dividends paid since launch to 26.7 pence per share.
Dividend Investment Scheme
Shareholders have the opportunity of reinvesting all or part of
their dividends into new Ordinary Shares of the Company at the higher of an
amount equivalent to (i) the mid-market share price (averaged over the last 5
business days) or (ii) a 30% discount to the unaudited last published NAV per
share. It provides a convenient, easy and cost effective way for Shareholders
to build their shareholding in the Company, and further income tax relief is
available on the amount re-invested. The recent dividend declared above will
be eligible for the Scheme.
Shareholders that wish to participate in the Scheme should contact
Capita Registrars, whose contact details can be found on page 77. Please note
that Shareholders must be registered no later than 15 days prior to the
dividend payment date to be eligible for the Scheme.
Investment in qualifying holdings
In order to comply with VCT tax legislation, the Company must meet
the target set by HM Revenue & Customs (HMRC) of investing 70% of total funds
raised in qualifying unquoted and AiM quoted companies ("the 70% test"). At 31
January 2012, the Company was 61.2% invested in qualifying companies (based
upon the tax values, which differ from the valuations included in the
Investment Portfolio Summary on pages 20 - 21). However, once this figure is
adjusted for the partial disposal of DiGiCo, the percentage becomes 70.2%. In
accordance with HMRC rules, the Company is allowed six months from the date of
a realisation to meet the 70% test and the Board has taken sufficient steps to
restore the position post year-end.
Share buy-backs
During the year ended 31 January 2012 the Company continued to implement its
buy-back policy and bought back 275,403 (2011: 610,555) Ordinary Shares,
representing 1.23% (2011: 3.1%) of the shares in issue at 1 February 2011 at a
total cost of GBP280,089 (2011: GBP582,286). These shares were subsequently
cancelled by the Company.
The shares above were bought back for an average price of 101.05
pence per share. The share price discount to NAV has narrowed from 11.8% at
the start of the year to around 9.9% at the year end, in line with the Board's
current policy which is to seek to maintain the discount at which the
Company's shares trade at around 10%. Shareholders will continue to benefit
from the difference between the Net Asset Value and the price at which the
Shares are bought back and cancelled.
The Company's shares are listed on the London Stock Exchange and as such they
should be sold in the same way as any other quoted company through a
stockbroker. However, to ensure that they obtain the best price, Shareholders
wishing to sell their shares are advised to contact the Company's stockbroker,
Matrix Corporate Capital by telephoning 020 3206 7176/7 before agreeing a
price with their stockbroker. Shareholders are also advised to discuss their
individual tax position with their financial advisor before deciding to sell
their shares.
Change of ownership at Matrix Private Equity Partners
Since April 2004, the Company's Investment Manager, MPEP has been
owned jointly by its executive partners and Matrix Group Limited ("Matrix").
On 12 January 2012, the executive partners reached agreement to acquire
Matrix's interest in the business and this will lead to the Manager becoming a
fully independent owner-managed firm. The acquisition is subject to approval
from the FSA of the change of control in MPEP and is expected to be completed
on or around 30 June 2012.
The Company's arrangements with MPEP, in particular its investment
strategy and services, are not expected to change. The Directors look forward
to continuing to work with MPEP to provide attractive long term returns on
your Company investment whilst reserving the Company's rights under the
investment management agreement.
Shareholder communication
Shareholders receive a twice-yearly Matrix VCT
Newsletter from the Investment Manager, approved by the Board. The Annual
General Meeting to be held in June 2012 will provide a useful platform for the
Board to meet Shareholders and exchange views. Your Board welcomes your
attendance at General Meetings to give you the opportunity to meet your
Directors and representatives of the Investment Manager.
The Investment Manager held a second successful
investor workshop on 25 January 2012. The workshop provided a forum for about
100 Matrix VCT Shareholders to hear presentations from the Manager about its
investment activity in greater depth and from a successful entrepreneur of one
of the portfolio companies. It is intended that this will be an annual event,
to which all Shareholders will be invited.
May I remind you that the Company continues to have its own website which is
available at www.mig4vct.co.uk.
Outlook
The outlook for the UK economy remains uncertain. The coalition
government has largely side-stepped taking robust decisions to improve the
balance between the productive sectors of the economy and the public sector
overhead, with the result that an early recovery is less likely. Higher tax
rates combined with the rise in inflation in 2011 has increased pressures on
consumers and the small businesses that service them. Parts of the property
and construction industry have also been adversely affected. Despite this
difficult environment, the majority of companies in the portfolio continue to
generate operating profits and several are reporting results ahead of their
budget and prior year. However, the Manager expects that there may be
companies in our portfolio which may find the challenges of the economic
climate testing in the short term as the public sector cuts begin to take
effect and the economy struggles to achieve permanent positive growth.
The Company has a significant cash position which will be further
increased by this year's fundraising. This will ensure that it is well-placed
to take advantage of new investment opportunities as well as supporting
existing investee companies' trade through a testing period. This is
particularly important at a time that UK banks, despite government
exhortations, are limiting, or even withdrawing funds from the smaller company
sector. The Investment Manager continues to investigate a number of investment
opportunities at realistic purchase levels. The Board believes that the VCT's
strategy of investing primarily in MBOs and structuring investments to include
loan stock will continue to mitigate downside risk. This should contribute to
enhancing the Company's performance and help to achieve the objective of
attractive dividend payout levels.
As noted at the foot of the Investment Policy on page 11, your
Board and Investment Manager are aware of proposed changes to the VCT
legislation which could affect future operations and policies. It is still too
early to know the final details, but any resulting impact on the fund will be
reported to the Shareholders.
Finally, I would like to express my thanks to all Shareholders for
their continuing support of the Company.
Christopher Moore
Chairman
30 April 2012
Responsibility Statement of the Directors in respect of the Annual Financial Report
The Directors confirm to the best of their knowledge that:
(a) the financial statements, which have been prepared in accordance with UK
Generally Accepted Accounting Practice and the 2009 Statement of Recommended
Practice, `Financial Statements of Investment Trust Companies and Venture
Capital Trusts' (SORP), give a true and fair view of the assets, liabilities,
financial position and the profit of the Company; and
(b) the management report, comprising the Chairman's Statement, Investment
Portfolio Summary, Investment Manager's Review and Directors' Report includes
a fair review of the development and performance of the business and the
position of the Company, together with a description of the principal risks
and uncertainties that it faces.
The names and functions of the Directors are stated in the Annual Report.
On behalf of the Board
Christopher Moore
Chairman
30 April 2012
DIRECTORS' REPORT
Principal risks
The Board believes that the principal risks faced by the Company
are:
- Economic risk - events such as an economic recession and movement
in interest rates could affect trading conditions for smaller companies and
consequently the value of the Company's qualifying investments.
- Loss of approval as a Venture Capital Trust - the Company must
comply with section 274 of the Income Tax Act 2007 ("ITA") which allows it to
be exempted from capital gains tax on investment gains. Any breach of these
rules may lead to the Company losing its approval as a Venture Capital Trust
(VCT), qualifying shareholders who have not held their shares for the
designated holding period having to repay the income tax relief they obtained
and future dividends paid by the Company becoming subject to tax. The Company
would also lose its exemption from corporation tax on capital gains. If the
proposals in the draft Finance Act 2012 are adopted in their current form it
may no longer be possible for the Investment Manager to carry out certain
types of MBO transactions involving share acquisitions. If this turns out to
be the case, the Company still intends to use other types of MBO transactions
and therefore does not anticipate that this change will have a significant
impact on the Company's investment policy.
- Investment and strategic risk - inappropriate strategy or
consistently weak VCT qualifying investment recommendations might lead to
underperformance and poor returns to shareholders.
- Regulatory risk - the Company is required to comply with the
Companies Act 2006 ("the Companies Act"), the listing rules of the UK Listing
Authority and United Kingdom Accounting Standards. Breach of any of these
might lead to suspension of the Company's Stock Exchange listing, financial
penalties or a qualified audit report. In addition, rules and regulations, or
their interpretation, may change from time to time, which may limit the types
of investments the Company can make and/or reduce the level of returns which
would otherwise be achievable.
- Financial and operating risk - inadequate controls might lead to
misappropriation of assets. Inappropriate accounting policies might lead to
misreporting or breaches of regulations. Failure of the Investment Manager's
and Administrator's accounting systems or disruption to its business might
lead to an inability to provide accurate reporting and monitoring.
- Market risk - Investment in unquoted companies, by its nature,
involves a higher degree of risk than investment in companies traded on the
London Stock Exchange main market. In particular, smaller companies often have
limited product lines, markets or financial resources and may be dependent for
their management on a smaller number of key individuals. They may also be more
susceptible to changes to political, exchange rate, taxation, economic and
other regulatory changes and conditions.
- Asset liquidity risk - The Company's investments may be difficult
to realise, especially in the current economic climate.
- Market liquidity risk - Shareholders may find it difficult to
sell their shares at a price which is close to the net asset value.
- Counterparty risk - A counterparty may fail to discharge an
obligation or commitment that it has entered into with the Company. This may
lead to the loss of liquid funds.
- Fraud and dishonesty risk - Fraud may occur involving company
assets perpetrated by a third party, the Investment Manager or other service
provider.
For further information on the last four risks, please see Note 19
to the accounts in the full Annual Report.
The Board seeks to mitigate the internal risks by setting policies
and by undertaking a key risk management review at each quarterly Board
meeting. Performance is regularly reviewed and assurances in respect of
adequate internal controls and key risks are sought and received from the
Investment Manager on a six monthly basis. In mitigation and in management of
these risks, the Board applies rigorously the principles detailed in the AIC
Code of Corporate Governance. The Board also has a Share Buy Back policy which
seeks to mitigate the Market Liquidity risk. This policy is reviewed at each
quarterly Board Meeting.
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
have changed, such that 70% of such funds must be invested in equity.
Asset mix
The Company initially holds any new 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 never borrowed and 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.
=---------
Changes to the VCT tax legislation, which may be introduced with
effect from 6 April 2012 as part of the Finance Bill 2012, were published in
the Budget on 21 March 2012. The proposals are being considered by Parliament
and will be subject to EU state aid approval. If implemented, the current
proposals could impact on the Company's Investment Policy as follows:
(1) The size of companies in which investment can be made is proposed to be
increased back to pre 6 April 2006 levels of GBP15 million
immediately before and GBP16 million immediately after the investment.
(2) The number of permitted employees for an investee company at the time
of investment is proposed to be increased from 50 to 250 (this limit
does not apply to VCT funds raised before 6 April 2007).
(3) The GBP1 million limit on the amount of investment a VCT may make into a
particular company within a tax year is to be abolished. A new rule
will require that an investee company should not receive more than GBP5 million
from State Aid sources, including VCTs, within any twelve month rolling
period.
(4) If the proposals are adopted in their current form it will no longer be
possible for the Manager to carry out certain types of MBO transactions
using funds raised after 5 April 2012. If this turns out to be the case,
the Company still intends to use other types of MBO transactions and
therefore does not anticipate that this change will have a significant
impact on the Company's investment policy.
=---------
INVESTMENT MANAGER'S REVIEW
Overview
We continue to be encouraged by the positive signs that we have seen in our
investment market both in terms of making investments and in achieving
realisations. There has been a clear upward trend in deal flow in the year
under review and we have seen a higher number of better priced, profitable,
well-positioned and cash generative businesses seeking investment.
We believe that this is due to two important converging factors which have
combined to make our level of investment in 2011 the highest for several
years. Firstly, the continuing flat level of activity in the economy has led
to greater realism amongst vendors regarding the value of their companies,
leading to more realistic pricing. Secondly, our ability to invest significant
levels of capital in a market lacking bank funding means that management
buy-out ("MBO") teams are increasingly turning to us as a source of
deliverable, long-term finance.
Furthermore, we are finding that there is trade interest, as well as
enthusiasm from private equity investors, in the type of businesses in which
we have invested, creating some interesting exit opportunities.
We believe that the Company's strategy of investing in
modestly-geared MBO opportunities, supporting highly motivated management
teams, focusing on acquiring established, profitable, positive cashflow
businesses and investing partly in income yielding loan stocks substantially
increases the degree of downside protection to Shareholders' capital.
We have continued to work actively with the management teams of investee
companies, encouraging them to take cost cutting measures and discussing their
budgets, forecasts and cost structure with them to ensure that their
businesses remain as resilient as possible. The majority of investee companies
have managed their cashflow well and remain cash-generative.
New investment
Three new investments completed during the year under review
totalling GBP3.5 million, two of which used the VCT's existing investments of GBP1
million each in the acquisition vehicles Fullfield and Vanir.
First in July 2011, was a further investment of GBP280,880 into the
acquisition vehicle Fullfield to enable it to support the MBO of Motorclean
Group Limited, a provider of vehicle cleaning and valet services to the car
dealership market, bringing the Company's investment in this company to GBP1.20
million.
In October, the Company made an investment of GBP951,471 to provide
mezzanine finance as part of a GBP7.8m transaction to support the acquisition of
the international intellectual property and assets of Lowe Alpine Srl from
administration in Italy, by Equip Outdoor Technologies Limited, a company
specialising in owning and distributing brands focused on the outdoor sector.
Finally the Company invested a further GBP263,817 into the
acquisition vehicle Vanir to support the MBO of EMaC Limited, the UK's leading
provider of outsourced service plans to franchised dealers in the automotive
sector, bringing the Company's investment in this company to GBP1.26 million.
Our Operating Partner programme continues to pursue an active
search for investment opportunities in their chosen sectors. Two of the
acquisition companies successfully identified promising businesses during the
year, as described above. However, in December 2011, Bladon Castle Management
Limited repaid its loan stock as it had been unable to execute a transaction
within an acceptable period of time and its shares were exchanged for shares
in Watchgate Limited. Similarly, Backbarrow Limited, Rusland Management
Limited and Torvar Limited had not been able to identify suitable
opportunities so they also repaid their loan stocks, and their shares have
been sold to Watchgate Limited in January 2012. However, the research
undertaken by these companies will not be lost as we will continue to work
with our operating partners in new vehicles in which this Company has invested
in January 2012, namely Ackling Management Limited, Fosse Management Limited
and Peddars Management Limited. Each of these acquisition vehicles is headed
by an experienced Chairman, well-known to us, who is working closely with us
in seeking to identify and complete investments in specific sectors relevant
to their industry knowledge and experience. We have established these
companies to provide time for us to identify and invest in suitable target
companies at sufficiently attractive prices. We anticipate that the Operating
Partner programme will lead to further new investments during 2012.
Follow-on investment
In March and June 2011, a further GBP409,067 in total was invested in the loan stock
of ASL Technology Holdings Limited, making the total investment in ASL Technology
Holdings GBP1,257,133, to finance its acquisition of Transcribe Copier Systems Limited,
as part of its strategy to be a large player in this sector.
We have continued to work closely with our investee companies
during the downturn in the economy to support and encourage them to make the
necessary changes to ensure that they were well placed to withstand the
economic contraction.
It is indicative of the success of these efforts that Monsal is the
only investment in the portfolio that has required further working capital
funding during the year under review. Earlier in the year, Monsal was
experiencing completion delays on an existing contract and in the
commissioning of new contracts. These delays led to a requirement for
additional funding and, following careful consideration, your Company approved
a further loan stock investment of up to GBP147,007 as part of a GBP1.75 million
fundraising alongside other Matrix VCTs and other shareholders. Three tranches
of this new funding round, totalling GBP63,431, have been drawn down to date in
separate tranches in July and August 2011; these investments are held at cost.
The terms of this new investment round provided for it to rank ahead of the
existing investment. With this additional funding, Monsal now has the ability
to pursue a number of major contracts in the waste and water sector which will
make the potential for recovery of value in the original investment a more
realistic prospect. Encouragingly, since approval of this facility Monsal has
materially advanced its negotiations on a number of new contracts, and has
secured two of them.
Realisations
In the prevailing economic circumstances, we are pleased to report
a healthy level of realisations. Realisations during the year generated cash
proceeds of GBP3,582,042 (excluding seed company loan repayments of GBP3,996,000).
In December 2011 the Company made a partial realisation of its investment in
DiGiCo Europe Limited ("DiGiCo") through a sale to ISIS Equity Partners. This
realisation increased the total cash proceeds received by the Company over the
life of the investment by GBP2.14 million to GBP3.0 million, representing a 3.0
times cash return on the Company's original investment of GBP1.0 million. In
addition, the VCT retains a 2.39% equity stake, and new loan stock in DiGiCo
valued at GBP1.33 million at the date of completion of the transaction. The
total return to date thus equates to approximately GBP4.4 million; a 4.4 times
return on the Company's original investment. DiGiCo is a leading manufacturer
and distributor of sound mixing consoles used at major corporate and sporting
events worldwide. Its sustains strong profit growth since investment has been
largely driven by product development and a series of successful launches.
DiGiCo is a good example of how a properly financed business with strong
management and a market-leading product can develop a niche opportunity and
grow significant value.
A number of companies in the portfolio continue to be strongly cash
generative and some have repaid part or all of their loan stock during the
year to 31 January 2012. As a result of this the Company has received a total
of GBP1,409,899 in loan stock repayments plus premiums during the year. The
payments received were: GBP876,207 from Iglu.com Holidays in February 2011;
GBP90,322 from Vectair in March 2011; GBP116,588 from MachineWorks in April 2011,
GBP241,390 from Focus Pharma in January 2012 and GBP85,392 from Fullfield in
January 2012.
The Portfolio
The MPEP invested portfolio at 31 January 2012 comprised thirty-two
investments (2011: thirty) with a cost of GBP18.1 million (2011: GBP17.4 million)
and valued at GBP17.8 million (2011: GBP18.8 million), representing 98.3% of cost
(2011: 107.7%).
The portfolio's performance as a whole continues to be robust. Many
investee companies, of which DiGiCo, Iglu.com Holidays and ATG Media have been
the most notable, have continued to increase sales and profits despite the
challenges of the economic environment.
Of the new investments made during the year, Fullfield (Motorclean
Group) and Ingleby (EMaC) have made a good start. Fullfield in particular is
performing in line with its investment plan. EOTH (Equip), however, has
experienced a lower level of growth than expected since investment, reflecting
the recent problems affecting the retail leisure goods sector.
Iglu.com Holidays continues to perform strongly and is now valued
significantly above cost following out-performance of its business plans at
the time of investment. DiGiCo and ATG experienced increased trading and
profitability which has contributed to their higher valuations (in the former
case, value is now held principally in loan stock). Focus Pharma continues to
trade well, although it ended its financial year behind a stretching budget.
It launched two new products during 2011 and expects to progress further with
several further product launches planned for 2012.
Other companies are still endeavouring to recover fully from the
effects of the 2008-9 recession. Activity in the construction and house
building sectors remains well below historical levels and this continues to
affect the performance of PXP and Plastic Surgeon. Although Youngman has now
fully repaid its bank debt, demand for its products remains volatile and
difficult to predict. Blaze Signs has made an impressive recovery from the
depths of the recession but profitability remains well below peak levels.
Westway has experienced less favourable trading but remains solidly profitable
and with strong customer relationships. ASL has now integrated Transcribe, is
trading well and is examining further acquisitions.
Elsewhere the position is mixed. RDL has had a disappointing first
year with net reduction contract staff placements in its core pharmaceuticals
and IT markets. Faversham is streamlining its operations although progress is
slower than anticipated.
Of the Company's investments more directly exposed to the consumer,
CB Imports has continued to advance its position in a difficult floristry
supplies market and has started its trading year strongly. Racoon continues to
generate solid profitability.
British International has experienced a disappointing year after
record profitability in 2010 achieved on the back of high activity in oil and
gas support work. The oil support work in the Falklands ended in May and has
not been replaced by other contracts. In addition the long term decline in
passenger numbers on the Penzance to Isles of Scilly passenger route has
continued.
In March 2011, VSI completed a demerger of its two constituent
businesses and the VCT now holds equivalent investment in two companies,
LightWorks Software Limited and MachineWorks Software Limited. As part of the
agreement MachineWorks assumed all of VSI's loan stock, which it repaid in
April. Both investments are valued above cost.
The investments originally made by Elderstreet continue to trade
satisfactorily with sparesFinder in particular making strong progress. We
remain hopeful that value will be realised from the remaining investments,
although their impact on the Company as a whole is now very small.
Our strategy remains to invest in strong, profitable companies and
we consider that the prospect of further recovery and progress over the medium
term is good. We believe that the portfolio, taken as a whole, is resilient
and of high quality.
Outlook
Whilst we cannot be sure of the extent of UK economic recovery, we
have been encouraged by strong or resilient performance by most of our
investee companies in the year and we look forward to a productive new
investment period. The coming year may prove more testing as the public sector
cuts continue and the economy struggles to stabilise its faltering growth. We
consider that good quality companies of the calibre in which we seek to
invest, capable of maintaining competitive advantage, still have the potential
to succeed in this environment. We are seeing the confidence of both vendors
and sellers return, although the difficult economic outlook and the volatility
in the quoted markets will inevitably continue to have an impact on the
unrealised valuations of the companies in the portfolio. However, we believe
that the portfolio overall is resilient and essentially of high value which
will be released in the long term. Our strategy of investing primarily in MBOs
and structuring investments to include loan stock will continue to mitigate
downside risk. Having retained significant uninvested cash, which will be
bolstered by the current fundraising, we consider the Company is very well
placed to cover both any portfolio needs and funding for attractive new
investment opportunities that may arise. Alongside this, the Manager is
conscious of the need to ensure that investee companies take appropriate
actions to respond to the challenging environment ahead.
Details of the Company's ten largest investments by value
(excluding the three acquisition companies), representing 51.5% by cost and
64.1% by value of the portfolio are stated in the Annual Report.
INVESTMENT PORTFOLIO SUMMARY
as at 31 January 2012
% of % of
Cost at Valuation at Additional Valuation at equity portfolio
31-Jan-12 31-Jan-11 investments 31-Jan-12 held by value
GBP GBP GBP GBP
Matrix Private Equity
Partners Portfolio
ATG Media Holdings
Limited 888,993 1,293,507 104 1,854,802 8.50% 10.33%
Publisher and online
auction platform
operator
Newincco 1124 Limited
(trading as DiGiCo
Europe Limited) 1,334,293 - 1,334,293 1,334,293 2.39% 7.42%
Manufacturer of audio
mixing desks
Ingleby (1879) Limited
(trading as EMaC
Limited) (previously
Vanir Consultants
Limited) 1,263,817 1,000,000 263,817 1,263,817 6.32% 7.03%
Provider of service
plans for the motor
trade
Fullfield Limited
(Motorclean Limited) 1,195,488 1,000,000 280,880 1,195,488 8.75% 6.65%
Vehicle cleaning and
valet services
ASL Technology 1,257,133 848,066 409,067 1,154,217 6.78% 6.42%
Holdings Limited
Printer and
photocopier services
Iglu.com Holidays
Limited 133,779 1,420,200 - 1,107,862 7.15% 6.16%
Online ski and cruise
travel agent
CB Imports Group
Limited 1,000,000 1,242,622 - 1,082,283 5.79% 6.02%
Importer and
distributor of
artificial flowers,
floral sundries and
home décor products
Ackling Management
Limited 1,000,000 - 1,000,000 1,000,000 16.66% 5.56%
Food manufacturing,
distribution and brand
management
Fosse Management
Limited 1,000,000 - 1,000,000 1,000,000 16.66% 5.56%
Brand management,
consumer products and
retail
Peddars Management
Limited 1,000,000 - 1,000,000 1,000,000 16.66% 5.56%
Database management,
mapping, data mapping
and management
services to legal and
building industries
EOTH Limited (trading
as Equip Outdoor
Technologies) 951,471 - 951,471 951,471 1.71% 5.29%
Distributor of branded
outdoor equipment and
clothing
RDL Corporation
Limited (previously
Aust Recruitment
Limited) 1,000,000 1,000,000 893,542 9.05% 4.97%
Recruitment
consultants for the
pharmaceutical,
business intelligence
and IT industries
Focus Pharma Holdings
Limited 605,837 1,060,749 - 686,743 3.10% 3.82%
Licensor and
distributer of generic
pharmaceuticals
Blaze Signs Holdings
Limited 610,016 560,223 - 618,137 5.70% 3.44%
Manufacturer and
installer of signs
Westway Services
Holdings (2010)
Limited 236,096 646,071 - 422,062 3.20% 2.35%
Installation, service
and maintenance of air
conditioning systems
Youngman Group Limited 500,026 349,983 - 349,983 4.24% 1.95%
Manufacturer of
ladders and access
towers
British International
Holdings Limited 295,455 433,545 - 323,360 2.50% 1.80%
Helicopter service
operator
Faversham House
Holdings Limited 346,488 346,488 - 290,720 6.26% 1.62%
Publlisher, exhibition
organiser and operator
of websites for the
environmental, visual
communications and
building services
sectors
Higher Nature Limited 500,127 429,671 - 258,347 10.34% 1.44%
Mail order distributor
of vitamins and
natural medicines
The Plastic Surgeon
Holdings Limited 458,837 114,709 - 225,654 6.88% 1.26%
Snagging and finishing
of domestic and
commercial properties
Omega Diagnostics
Group plc 1 199,998 241,664 - 174,998 1.96% 0.97%
In-vitro diagnostics
for food intolerance,
autoimmune diseases
and infectious
diseases
Machineworks Software
Limited 2 9,329 277,184 - 143,770 4.20% 0.80%
Provider of software
for CAD and CAM
vendors
Duncary 8 Limited
(trading as BG
Consulting Limited) 126,995 104,769 - 124,465 5.10% 0.70%
City-based provider of
specialist technical
training
Racoon International
Holdings Limited 406,805 174,507 - 94,621 5.70% 0.53%
Supplier of hair
extensions, hair care
products and training
Letraset Limited 150,010 19,540 10 80,070 5.26% 0.46%
Manufacturer and
distributor of graphic
art products
Monsal Holdings
Limited 699,444 - 63,431 63,431 6.14% 0.35%
Supplier of
engineering services
to the water and waste
sectors
Vectair Holdings
Limited 24,732 181,406 - 59,357 2.14% 0.33%
Designer and
distributor of
washroom products
Lightworks Software
Limited 2 9,329 92,395 - 52,810 4.20% 0.29%
Provider of software
for CAD and CAM
vendors
DiGiCo Europe Limited - 1,900,210 - 6.52% 0.00%
Manufacturer of audio
mixing desks
Backbarrow Limited - 1,000,000 - - 0.00% 0.00%
Food manufacturing,
distribution and brand
management
Bladon Castle
Management Limited - 1,000,000 - - 0.00% 0.00%
Brand management,
consumer products and
retail
Rusland Management
Limited - 1,000,000 - - 0.00% 0.00%
Brand management,
consumer products and
retail
Torvar Limited - 1,000,000 - - 0.00% 0.00%
Database management,
mapping, data mapping
and management
services to legal and
building industries
PXP Holdings Limited 679,549 - - - 4.98% 0.00%
Designer, manufacturer
and supplier of timber
frames for buildings
Legion Group plc
(formerly Sectorguard
plc) 150,102 - - - 0.72% 0.00%
Provider of manned
guarding, patrolling
and alarm response
services
Box-it Data Management
Limited 25,759 25,759 - - N/A 0.00%
Document management
and storage
Watchgate Limited 1,000 - - - 33.33% 0.00%
Holding company
FH Ingredients Limited - - - N/A 0.00%
Processor and
distributor of frozen
herbs to the food
processing industry
Total 18,060,908 18,763,268 6,303,073 17,806,303 99.08%
Former Elderstreet
Private Equity
Portfolio
Cashfac Limited 260,101 111,054 - 104,906 2.88% 0.58%
Provider of virtual
banking application
software solutions to
corporate customers
Sparesfinder Limited 250,854 26,568 - 53,625 1.70% 0.30%
Supplier of industrial
spare parts online
Sift Group Limited 130,116 - - 6,523 1.03% 0.04%
Developer of
business-to-business
internet communities
Westchester Holdings
Limited - - - - 1.03% 0.00%
E-tailer of CDs,
videos and multi-media
titles
Total 641,071 137,622 - 165,054 0.92%
Investment Manager's
Total 18,701,979 18,900,890 6,303,073 17,971,357 100.00%
1 Quoted on AiM
2 On 31 March 2011, VSI Limited (VSI) undertook a demerger, such
that the Company now holds separate investments in Machineworks Software
Limited (Machineworks) and Lightworks Software Limited (Lightworks). On the
demerger date, the cost of the ordinary shares and the cost and valuation of
the preference shares were split equally between Machineworks and Lightworks.
However the valuation of the ordinary share investments at the merger date
were split 75:25 between Machineworks and Lightworks respectively. The former
loan investment in VSI of GBP93,270 was wholly transferred to Machineworks at
the date of the demerger. It was repaid in full on 4 April 2011.
INCOME STATEMENT
for the year ended 31 January 2012
Year ended 31 January 2012 Year ended 31 January 2011
Notes Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
Unrealised gains on
investments - 1,409,405 1,409,405 - 2,119,702 2,119,702
Gains on investments
realised - 247,559 247,559 - 16,077 16,077
Income 2 955,864 - 955,864 636,426 - 636,426
Recoverable VAT - - - (264) (794) (1,058)
Investment management
fees 6 (166,809) (500,427) (667,236) (120,335) (361,003) (481,338)
Other expenses (302,318) - (302,318) (396,019) - (396,019)
Profit on ordinary
activities before
taxation 486,737 1,156,537 1,643,274 119,808 1,773,982 1,893,790
Taxation on ordinary
activities (56,430) 56,430 - - - -
Profit for the year 430,307 1,212,967 1,643,274 119,808 1,773,982 1,893,790
Basic and diluted
earnings per ordinary
share 5 1.73p 4.89p 6.62p 0.57p 8.47p 9.04p
All the items in the above statement derive from continuing operations of the Company
There were no other recognised gains or losses in the year.
The total column is the profit and loss account of the Company.
Other than revaluation movements arising on investments held at fair value
through the profit and loss account, there were no differences between the
return as stated above and at historical cost.
BALANCE SHEET
as at 31 January 2012
as at 31 January 2012 as at 31 January 2011
Notes GBP GBP GBP GBP GBP GBP
Fixed assets
Investments at
fair value 17,971,357 18,900,890
Current assets
Debtors and
prepayments 200,080 1,948,065
Current
investments 8,883,265 3,644,741
Cash at bank 2,511,010 1,061,164
11,594,355 6,653,970
Creditors:
amounts
falling due
within
one year (147,047) (209,681)
Net current
assets 11,447,308 6,444,289
Net assets 29,418,665 25,345,179
Capital and
reserves
Called up share
capital 252,019 224,558
Share premium
account 6,847,570 3,413,664
Capital
redemption
reserve 894,105 891,351
Revaluation
reserve 1,204,972 992,420
Special
distributable
reserve 14,078,325 15,256,001
Profit and loss
account 6,141,674 4,567,185
Equity
shareholders'
funds 29,418,665 25,345,179
Basic and diluted
net
asset value per
Ordinary Share 4 116.73p 112.87p
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 January 2012
Year ended Year ended
31 January 2012 31 January 2011
GBP GBP
Opening shareholders' funds 25,345,179 21,222,542
Share capital subscribed 3,464,121 3,444,752
Purchase of own shares (280,089) (582,286)
Profit for the year 1,643,274 1,893,790
Dividends paid in year (753,820) (633,619)
Closing shareholders' funds 29,418,665 25,345,179
CASH FLOW STATEMENT
for the year ended 31 January 2012
Year ended Year ended
31 January 2012 31 January 2011
GBP GBP
Interest income received 609,497 494,974
Dividend income 264,438 144,366
VAT (paid)/received and interest thereon (15,287) 10,199
Other income - 2,544
Investment management fees paid (667,235) (561,799)
Cash payments for other expenses (299,720) (397,775)
Non-cash movement - -
Net cash outflow from operating
activities (108,307) (307,491)
Taxation
UK Corporation tax received/(paid) - -
Investing activities
Sale of investments 7,549,563 923,983
Purchase of investments (4,971,171) (2,397,128)
Net cash inflow/(outflow) from investing
activities 2,578,392 (1,473,145)
Dividends
Equity dividends paid (753,820) (633,619)
Cash inflow/(outflow) before liquid
resource management and financing 1,716,265 (2,414,255)
Management of liquid resources
(Increase)/decrease in monies held in
current investments (5,238,524) 2,331,078
Financing
Issue of own shares 5,297,186 1,611,231
Purchase of own shares (325,081) (537,294)
Increase in cash for the year 1,449,846 990,760
NOTES TO THE ACCOUNTS
1. Basis of accounting
The accounts have been prepared under UK Generally Accepted Accounting
Practice (UK GAAP) and the Statement of Recommended Practice, `Financial
Statements of Investment Trust Companies and Venture Capital Trusts'
("the SORP") issued by the Association of Investment Trust Companies
in January 2009.
2. Income
2012 2011
GBP GBP
Income from bank deposits 25,664 2,561
Income from investments
- from equities 206,966 127,836
- from overseas based OEICs 45,637 34,092
- from loan stock 677,597 469,393
930,200 631,321
Other income - 2,544
Total income 955,864 636,426
Total income comprises
Dividends 252,603 161,928
Interest 703,261 471,954
Other income - 2,544
955,864 636,426
Income from investments comprises
Listed overseas securities 45,637 34,092
Unlisted UK securities 206,966 127,836
Loan stock interest 677,597 469,393
930,200 631,321
Loan stock interest above is stated after deducting an amount of
GBPnil (2011: GBPnil), being a provision made against loan stock interest regarded
as collectable in previous years.
Total loan stock interest due but not recognised in the year was
GBP155,190 (2011: GBP214,248).
4. Basic and diluted net asset value per share
Net asset value per Ordinary Share is based on net assets at the
end of the year, and on 25,201,906 (2011: 22,455,802) Ordinary Shares, being
the number of Ordinary Shares in issue on that date.
There are no instruments that will increase the number of shares in
issue in future. Accordingly, the above figures currently represent both basic
and diluted net asset value per share.
5. Basic and diluted earnings per share
2011 2011
GBP GBP
Total earnings after taxation: 1,643,274 465,906
Basic and diluted earnings per share (note a) 6.62p 2.22p
Net revenue from ordinary activities after taxation 430,307 119,808
Basic and diluted revenue return per share (note b) 1.73p 0.57p
Net unrealised capital gains 1,409,405 691,818
Net realised capital gains 247,559 16,077
VAT recoverable - (794)
Capital expenses (net of taxation) (443,997) (361,003)
Total capital return 1,212,967 346,098
Basic and diluted capital return per share (note c) 4.89p 1.65p
Weighted average number of shares in issue in the
year 24,804,482 24,804,482
Notes:
a) Basic earnings per share is total earnings after taxation divided by the
weighted average number of shares in issue.
b) Revenue earnings per share is the revenue return after taxation divided by
the weighted average number of shares in issue.
c) Capital earnings per share is the total capital profit after taxation
divided by the weighted average number of shares in issue.
d) There are no instruments that will increase the number of shares in issue
in future. Accordingly, the above figures currently represent both basic and
diluted returns.
6. Investment Manager's Fees
Revenue Capital Total Revenue Capital Total
2012 2012 2012 2011 2011 2011
GBP GBP GBP GBP GBP GBP
Matrix Private Equity
Partners LLP 166,809 500,427 667,236 120,335 361,003 481,338
Under the investment management agreement dated 1
November 2006, but effective 18 October 2006, Matrix Private Equity Partners
LLP (MPEP LLP) was appointed to be sole advisor to the Company on investments
in qualifying companies. The agreement was for an initial period of 3 years
and thereafter unless if the appointment was terminated by not less than one
year's notice in writing at any time after the initial period. MPEP LLP was
entitled to an annual advisory fee of 2 per cent of the closing net assets
attributable to the Fund.
Under the terms of a revised investment
management agreement dated 12 November 2010, MPEP provides investment
advisory, administrative and company secretarial services to the Company, for
a fee of 2% per annum of closing net assets, calculated on a quarterly basis
by reference to the net assets at the end of the preceding quarter, plus a
fixed fee of GBP112,518 per annum, the latter being subject to indexation, if
applicable. This agreement replaced the previous agreements with MPEP
described above, and with Matrix-Securities Limited dated 1 November 2006,
which were all terminated with effect from 12 November 2010.
The investment management fee includes provision for a cap on
expenses excluding irrecoverable VAT and exceptional items set at 3.4% of
closing net assets at the year-end. In accordance with the investment
management agreement, any excess expenses are borne by the Investment Manager.
The excess expenses during the year amounted to GBPnil (2011: GBPnil).
Under the terms of a separate agreement dated 1
November 2006, from the end of the accounting period ending on 31 January 2009
and in each subsequent accounting period throughout the life of the company,
the Investment Manager will be entitled to receive a performance related
incentive fee of 20% of the excess above 6 per cent of the net asset value per
share of the annual dividends paid to Shareholders. The performance fee will
be payable annually, with any cumulative shortfalls below the 6 per cent
hurdle having to be made up in later years. The incentive payment will be
shared between the Investment Manager 75% and the Promoter 25%. No incentive
fee is payable to date.
The Company is responsible for external costs
such as legal and accounting fees, incurred on transactions that do not
proceed to completion ("abort expenses") subject to the cap on total annual
expenses referred to above. In line with common practice, MPEP LLP retain the
right to charge arrangement and syndication fees and Directors' or monitoring
fees ("deal fees") to companies in which the Company invests.
7. Dividends
The Board of Matrix Income & Growth 4 VCT plc announced on 20
April 2012 that it had declared a dividend of 5 pence per share which will be
paid as an interim dividend, comprising 1.5 pence from income and 3.5 pence
from capital in respect of the year ended 31 January 2012. The dividend will
be payable on 6 June 2012 to Shareholders who are on the Register of Members
at 6.00 pm on 11 May 2012.
Following this payment, the total cumulative dividends paid to
shareholders since launch will rise to 26.70 pence per share.
It is intended that the Company's Dividend Investment Scheme (the
"Scheme") will apply to the proposed dividend and elections under the Scheme
should be made to the Scheme Administrator, Capita Registrars, by 23 May 2012.
8. Post balance sheet events
From 8 March 2012 to the date of these financial statements, under
the Linked Offer for subscription launched on 20 January 2012, 3,546,964
Ordinary shares were allotted at a price of 123.5 pence per share raising net
funds of GBP4,145,844.
On 20 March 2012, the Company made separate investments of GBP1
million into each of the acquisition vehicles Almsworthy Trading Limited,
Culbone Trading Limited, Madacombe Trading Limited and Sawrey Limited.
9. Financial Information
The financial information set out in these statements does not constitute the
Company's statutory accounts for the year ended 31 January 2012 in terms of
section 434 of the Companies Act 2006 but is derived from those accounts.
Statutory accounts for the year ended 31 January 2012 will be delivered to
Companies House following the Company's Annual General Meeting. The auditors
have reported on those accounts: their report was unqualified and did not
contain a statement under Section 498 of the Companies Act 2006.
10. Annual Report
A Summary Annual Report will be circulated by post to all Shareholders shortly
and copies will be available thereafter to members of the public from the
Company's registered office. Shareholders who wish to receive a copy of the
full Annual Report may request a copy by writing to the Company Secretary,
Matrix Private Equity Partners LLP, One Vine Street, London W1J 0AH.
Alternatively copies may be downloaded via the Company Secretary's web site at
www.mig4vct.co.uk.
11. Annual General Meeting
The Annual General Meeting of the Company will be held at 12:00 noon on
Wednesday, 13 June 2012 at the offices of Matrix Group Limited, One Vine
Street, London W1J 0AH.
Contact details for further enquiries:
Robert Brittain at Matrix Private Equity Partners LLP (the Company
Secretary) on 020 3206 7000 or by e-mail on mig4@matrixgroup.co.uk
Mark Wignall or Mike Walker at Matrix Private Equity Partners LLP (the
Investment Manager), on 020 3206 7000 or by e-mail on info@matrixpep.co.uk.
DISCLAIMER
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
END
Mobeus Income & Growth 4... (LSE:MIG4)
Historical Stock Chart
From Jun 2024 to Jul 2024
Mobeus Income & Growth 4... (LSE:MIG4)
Historical Stock Chart
From Jul 2023 to Jul 2024
