Mobeus I&g 4 Regulatory News (MIG4)

Mobeus Income & Growth 4 VCT plc

Half-Yearly Report for the six months ended 30 June 2015

Mobeus Income & Growth 4 VCT plc, ("MIG4" or the "Company") is a Venture Capital Trust ("VCT") advised by Mobeus Equity Partners LLP ("Mobeus") investing primarily in established, profitable, unquoted companies.

Company Objective

The objective of the Company 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.

Financial Highlights

Results for the six months ended 30 June 2015

Note: The above data does not reflect the benefit of income tax relief.

Cumulative total shareholder return per share (NAV basis)*

The net asset value (NAV) per share as at 30 June 2015 was 113.33 pence.

The table below shows the recent past performance of the original funds raised in 1999.

*Cumulative NAV total shareholder return is net asset value per share plus cumulative dividends paid since 1999 to date.

The chart above shows the recent past performance of the original funds raised in 1999. The original subscription price in 1999 was equivalent to 200p per share before the benefit of income tax relief. Subsequent subscription prices from subsequent fundraisings and historic performance data from 2008 are available from the Company's website.

Chairman's Statement

I am pleased to present this Half-Yearly Report for Mobeus Income & Growth 4 VCT plc covering the six months ended 30 June 2015.

Shareholders may have noted that the recently announced summer budget 2015 statement has set out a number of new rules which, if implemented as currently stated, will change the Company's future investment strategy. For further information please see Industry Developments below.

The full impact of these new rules is being carefully evaluated by your Board, the Mobeus team and by advisers. Shareholders will be fully informed of our conclusions.

Performance

The NAV per share as at 30 June 2015 was 113.33 pence compared with the NAV per share of 118.21 pence as at 31 December 2014.

The Company's total return (NAV basis) to shareholders for the half-year was 2.6% (2014: 8.6%), after taking into consideration the second interim dividend of 8.00 pence per share for the year ended 31 December 2014, which was paid on 6 May 2015.

To assist shareholders who originally invested in any of the individual fundraisings to monitor the performance of their investment (including dividend payments) on a consistent basis, a table showing the returns to shareholders from each allotment is available on the Company's website.

Interim dividend

The Board is declaring an interim dividend of 2.00 pence per share (comprising 1.00 pence from capital and 1.00 pence from income) which will be paid on 25 September 2015 to shareholders on the Register on 20 August 2015. This payment will bring cumulative dividends paid per share since launch to 62.20 pence.

Investment portfolio

The investment portfolio recorded a gain of £1.53 million during the first half of the year (6.1% of the 1 January, 2015 value) and was valued at £40.72 million at the period-end. The portfolio has continued to perform well.

2014 was an exceptional year for realisations from the portfolio. The rate of realisation has slowed down this year, although the one sale, of Higher Nature, has enabled exit from one of our oldest investments that has not met expectations, at a total return just above cost. However, good cash generation at a number of portfolio companies, including new investments Jablite and Ward Thomas, has contributed to a total of £0.92 million in partial loan stock prepayments that has been received from six companies including Jablite, Tessella and Ward Thomas.

New investment activity has continued at the strong levels of last year. A total of £5.09 million was invested during the period in five transactions. In January 2015, £2.72 million was invested into Media Business Insight Holdings Limited ("MBI"), a publishing and events business which focuses on the creative production industries. In April 2015, £1.12 million was invested into Jablite, the UK's largest domestic manufacturer of Expanded Polystyrene ("EPS") products. Jablite has had a promising start as a portfolio company, very quickly returning cash of £0.68 million following a particularly strong initial period of cash generation. Three follow-on investments, totalling £1.25 million, were made into existing portfolio companies, namely Entanet, CGI Creative Graphics International and Racoon. In addition, further sums were invested into a number of acquisition vehicles shortly before the end of the 2014/15 tax year, one of which was utilised for the transaction into Jablite.

Shortly after the period-end, a new investment of £0.90 million was made in Tushingham Sails, a leading supplier of stand up paddleboards.

Further details of all these transactions can be found in the Investment Review of this Half-Yearly Report.

Revenue account

The net revenue return for the period fell by £0.33 million from £0.95 million at 30 June 2014, to £0.62 million for this half-year. Income during the period has fallen by £0.28 million, primarily due to a number of one-off interest arrears receipts from realised investments in the previous period not being repeated, resulting in a fall in loan stock interest of £0.06 million. Dividend income also fell by £0.20 million to £0.05 million, due similarly to a number of preference dividends on investments subsequently realised being received last year, but not repeated.

Running costs rose as Investment Adviser fees charged to revenue rose by £0.02 million due to rising net assets. Other costs have remained static over the period, but the revenue tax charge has risen by £0.03 million.

Fundraising

The Company successfully raised the full £6 million sought under its 2014/15 Offer, which closed earlier than planned on 18 February 2015. Recent fundraisings have taken the Company to an economic size, contributing to lower cost ratios and greater diversification. The Board will reserve a decision in respect of further fundraising until later in 2015.

Liquidity

The recent fundraisings and realisations in 2014 have resulted in a relatively high level of liquidity of £13.89 million as at 30 June 2015.

The Company continues to hold £6.53 million in a selection of money market funds with AAA credit ratings at 30 June 2015. The balance of cash and current asset investments of £7.36 million is held in deposit accounts with a number of well-known financial institutions across a range of maturities. Current returns from both categories of liquidity balances are poor, but the Board anticipates that returns will increase when UK interest rates start to rise. Alternative ways of prudently investing cash continue to be sought, although the risk of a loss of capital remains the overriding consideration. In addition, the Company holds a number of acquisition vehicles, which themselves hold cash or cash equivalents pending using those funds to acquire suitable business opportunities.

Investment in qualifying holdings

The Company is required to meet the threshold set by HM Revenue & Customs ("HMRC") of investing 70% of the funds raised in qualifying unquoted and AIM quoted companies. The Company exceeded this limit (based on VCT cost as defined in tax legislation, which differs from the actual cost given in the Investment Portfolio Summary) throughout the period. The balance of the portfolio was invested in non-qualifying investments and cash.

Share buybacks

During the six months ended 30 June 2015, the Company bought back 168,443 of its own shares, representing 0.4% of the issued share capital at the beginning of the period, at an average price, including costs, of 100.17 pence per share, representing an approximate discount of 10% to the net asset value per share then prevailing.

All of the shares bought back in the period were subsequently cancelled by the Company. Continuing shareholders benefit from the difference between NAV per share and the price per share at which the shares are bought back and cancelled.

Industry Developments

The Budget in March this year announced that some further amendments would be introduced to the VCT legislation, most of which were specifically aimed at enabling the scheme to gain continued approval under the European Commission's State Aid guidelines. These changes were not enacted in the truncated Finance Act passed prior to the General Election, but were proposed for a Finance Bill later in 2015.

The Summer Budget 2015 has proposed additional new rules to prevent VCT investment being used to acquire existing shares or the principal trade or assets of businesses. It is expected that VCTs will no longer be permitted to finance management buyouts ("MBOs"). The key aspects of the proposed new rules are as follows:

· Introducing an 'age of company' restriction of a maximum of 7 years at the time of first investment;

· Introducing a lifetime investment limit of £12 million; and

· Prohibiting VCT investment to finance acquisitions (as mentioned above).

The proposals remain subject to approval by the European Commission so the date when these proposals become legislation is uncertain, but currently the new rules are expected to apply to investments made by VCTs from October 2015. The precise details and implications for the VCT's future investment programme will only be fully clear once the legislation is enacted. However, in the longer term, the Investment Adviser does anticipate a reduction in the range of companies that the VCT could consider as potential investments, together with changes in the Company's investment strategy. In the meantime, the Investment Adviser, along with others in the industry, is in discussions with HM Treasury about the restrictive nature of the proposed new rules, the impact on smaller company funding, and the way in which these changes are being introduced.

Dividend Investment Scheme

The Company's Dividend Investment Scheme ("the Scheme") is a convenient, easy and cost effective way for shareholders to build up their shareholding in the Company. Instead of receiving cash dividends they can elect to receive new shares in the Company.

Shareholders who already participate, or are considering whether to participate, in the Scheme should be aware of the current uncertainties around the Company's future investment activities created by the regulatory changes proposed in the Summer Budget, as referred to above. Shareholders may wish to defer or suspend their participation until the new rules have been enacted and the implications of these changes are clearer.

The current uncertainties created by these proposed changes represents a heightened risk, bearing in mind the associated five year holding period required to secure income tax relief when new shares are allotted under the Scheme. If you are in any doubt about whether to participate in the Scheme or not, you should consult your financial adviser.

Shareholders wishing to join or leave the Scheme should submit a mandate form, if joining, or submit a written instruction requesting to leave the Scheme, to Capita Asset Services, the Scheme Administrator, by no later than 10 September 2015. Further information on the Scheme, including details of where to obtain an application form, can be found on the Company's website.

Shareholder Communications

The Investment Adviser holds an annual VCT event for shareholders in central London. Each event includes a presentation on the Mobeus VCTs' investment activity and performance. After the successful event held in January 2015, the next workshop is to be held on 26 January 2016. An invitation to this event is enclosed with this Half-Yearly Report.

Outlook

Confidence in prospects for the UK economy is growing and the Investment Adviser's deal flow is strong. The investment focus is on building the portfolio, both by making new and follow-on investments.

As stated above, the Summer Budget measures mean that there are uncertainties around the Company's future investment activities. Your Board is carefully considering these matters and will advise shareholders in due course.

Finally, I would like to thank shareholders for their continuing support.

Christopher Moore

Chairman

11 August 2015

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.

VCT regulation

The investment policy is designed to ensure that the VCT continues to qualify and is approved as a VCT by HM Revenue & Customs ("HMRC").

Amongst other conditions, the Company may not invest more than 15% of its investments in a single company or group of companies 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 (70% for funds raised from 6 April 2011) must be in ordinary shares which carry no preferential rights. In addition, although the Company can invest less than 30% (70% for funds raised from 6 April 2011) 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).

UK companies

The companies in which investments are made must have no more than £15 million of gross assets at the time of investment and £16 million immediately following the investment to be classed as a VCT qualifying holding.

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 around 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 investing in unquoted businesses, each qualifying investment is structured to maximise the amount which may be invested in loan stock as opposed to equity.

Co-investment

The Company aims to invest in larger, more mature unquoted companies through investing alongside three other VCTs advised by Mobeus with a similar investment policy. This enables the Company to participate in combined investments advised on by Mobeus of up to £5 million.

Borrowing

The Company's articles permit borrowing of amounts up to 10% of the adjusted capital and reserves (as defined therein). The Company has never borrowed and the Board has no current plans to undertake any borrowing.

Note on Investment Policy: In the light of proposed regulatory developments referred to in the Chairman's Statement, this policy may need to be reviewed, amending some aspects of the policy, once the details of the legislation are finalised, published and understood.

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 Adviser and are then subject to formal approval by the Board of Directors. Mobeus Equity Partners LLP also provides Company Secretarial and Accountancy services to the Company.

Investment Review

Investments remain spread across a number of sectors, primarily in support services, general retailers, media and fixed line telecommunications.

New investment

A total of £5.09 million was invested during the six months under review. This included substantial new investments to support the MBOs of Media Business Insight and Jablite and three follow-on investments.

Principal new investments in the half-year

Further investments into existing portfolio companies in the half-year

Further investment after the period-end

Realisations

The number and value of realisations this year has not repeated those of 2014, which were at exceptional levels. There was a modest realisation of one long standing investment, in Higher Nature Limited, during the period under review. The transaction provided £0.30 million in cash for the Company compared to a valuation as at 31 March 2015 of £0.16 million. Further sundry realisations from previous sales totalled £0.04 million.

Loan stock repayments

In addition to the realisation above, loan stock repayments totalled £0.92 million for the half-year. These proceeds are summarised below:-

Mobeus Equity Partners LLP

Investment Adviser

11 August 2015

Investment Portfolio Summary

at 30 June 2015

1 A further £1.14 million was invested into South West Services Investment Limited ('SWSI') adding to its earlier investment of £0.91 million. This enabled SWSI to acquire Media Business Insight Limited ('MBI'). The Company also advanced a non-qualifying loan of £0.67 million to MBI. SWSI subsequently changed its name to Media Business Insight Holding Limited

Statement of Directors' responsibilities

In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Christopher Moore (Chairman), Andrew Robson (Chairman of the Audit Committee and Remuneration and Nomination Committee) and Helen Sinclair (Chairman of the Investment Committee), being the Directors of the Company confirm that to the best of their knowledge:

Principal risks and uncertainties

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 of the Income Tax Act 2007. The level of regulatory uncertainty has increased following the publication of the July 2015 Finance Bill. The VCT tax rules contained in section 274 will be amended although the prospective new rules have not yet been finalised. With this exception, the Board confirms in accordance with DTR 4.2.7, that the principal risks and uncertainties facing the Company have not changed materially since the publication of the Annual Report and Accounts for the year ended 31 December 2014. The principal risks faced by the Company are:

A more detailed explanation of these risks can be found in the Strategic Report on pages 21 - 22 and in Note 19 on pages 59 - 65 of the Annual Report and Accounts for the year ended 31 December 2014, copies of which are available on the Investment Adviser's website, www.mobeusequity.co.uk or by going directly to the VCT's website, www.mig4vct.co.uk.

Going concern

The Board has assessed the Company's operation as a going concern. The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the interim management report which is included within the Chairman's Statement, Investment Policy, Investment Review and Investment Portfolio Summary. The Directors have satisfied themselves that the Company continues to maintain a significant cash position, the majority of companies in the portfolio continue to trade profitably and the portfolio taken as a whole remains resilient and well-diversified. The major cash outflows of the Company (namely investments, buybacks and dividends) are within the Company's control.

The Board's assessment of liquidity risk and details of the Company's policies for managing its capital and financial risks are shown in Note 19 on pages 59 - 65 of the Annual Report and Accounts for the year ended 31 December 2014. Accordingly, the Directors continue to adopt the going concern basis of accounting in preparing the half-yearly report and annual financial statements.

Cautionary Statement

This report may contain forward looking statements with regards to the financial condition and results of the Company, which are made in the light of current economic and business circumstances. Nothing in this report should be construed as a profit forecast.

On behalf of the Board

Christopher Moore

Chairman

11 August 2015

Unaudited Income Statement

for the six months ended 30 June 2015

The total column of this statement is the Income Statement of the Company.

Unaudited Statement of financial position

as at 30 June 2015

Unaudited Statement of changes in equity

for the six months ended 30 June 2015

Note a: As part of the offer for Subscription launched on 10 December 2014, a total of 5,167,929 ordinary shares were allotted at average effective offer prices ranging from 115.40 to 117.10 pence per share, raising net funds of £5,867,452.

Note b: Shares issued as part of the Offer for Subscription and Dividend Investment Scheme per the Statement of cash flows of £6,508,340 differ to that shown as shares issued above of £5,867,452 due to £640,888 of shares allotted under the Company's Dividend Investment Scheme, shown separately above.

Note c: The Special distributable reserve also provides the Company with a reserve to fund market purchases of the Company's own shares, to absorb any existing and future losses and for any other corporate purpose.

Unaudited Statement of Cash Flows  

for the six months ended 30 June 2015

Notes to the Unaudited Financial Statements

1. Principal accounting policies

Mobeus Income and Growth 4 VCT plc is a public limited company incorporated in England, registration number 3707697. The registered office is 30 Haymarket, London, SW1Y 4EX.

2. Basis of preparation

These financial statements have been prepared in accordance with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 ("FRS102"), with the Companies Act 2006 and the 2014 Statement of Recommended practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ('the SORP') issued by the Association of Investment Companies. The financial statements have been prepared on the historical cost basis except for the modification to a fair value basis for certain financial instruments as specified in the accounting policies below.

This is the first period in which the financial statements have been prepared under FRS102. There has been no material change in the accounting policies and so there has been no restatement of comparatives.

3. 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.

The Half-Year Report has not been audited, nor has it been reviewed by the auditor pursuant to the Auditing Practices Board (APB)'s guidance on Review of Interim Financial Information.

a) 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.

b) Investments

All investments held by the Company are classified as "fair value through profit and loss", and measured 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:

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.

4. Income

5. Taxation

There is no tax charge for the period as the Company has tax losses brought forward from previous periods, which can be offset between revenue and capital.

6. 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

7. Dividends paid

* - Of these amounts £640,888 (30 June 2014: £219,742; 31 December 2014: £1,050,003) were in new shares, issued as part of the Dividend Investment Scheme.

8. Net asset value per share

9. Summary of investments at fair value during the period

Purchases above of £15,443,995 are higher than that shown in the Statement of Cash Flows of £15,443,897 by £98, which relates to the purchase of shares via options in an investee company which completed in the period.

Sales proceeds above of £1,255,702 are less than that shown in the Statement of Cash Flows of £1,311,736 by £56,034. This sum relates to deferred cash proceeds receivable from two investments realised in the previous year, received in the current period.

10. Monies held pending investment and Current investments at fair value

11. Post balance sheet events

12. Financial statements for the period ended 30 June 2015

The financial information for the period ended 30 June 2015 does not comprise full financial statements within the meaning of Section 435 of the Companies Act 2006. The financial statements for the year ended have been filed with the Registrar of Companies. The auditor has reported on the financial statements for the year ended 31 December 2014 and that report was unqualified and did not contain a statement under section 498(2) of the Companies Act 2006.

13. Half-Yearly Report

This Half-Yearly Report is available on, and can be downloaded from, our website: www.mig4vct.co.uk and is circulated by post to those Shareholders who have requested copies of the Report. Further copies are also available free of charge from the Company's registered office, 30 Haymarket, London SW1Y 4EX.

Contact details for further enquiries: