Mobeus I&g Regulatory News (MIX)

Mobeus Income & Growth VCT plc

Annual Results Announcement for the year ended 31 December 2012

Investment Objective

Mobeus Income & Growth VCT plc ("the VCT" or "MIG VCT") is aVenture Capital Trust ("VCT") listed on the London Stock Exchange. Itsinvestment portfolio, which invests primarily in established and profitableunquoted companies, is managed by Mobeus Equity Partners LLP ("Mobeus").

The Company's objective is to provide investors with a regularincome stream by way of tax-free dividends generated from income and capitalreturns.

Financial Highlights

Results for the year ended 31 December 2012

- Net asset value (NAV) total return per Share for the year was 10.34%.

- Shareholders received an interim dividend of 5.00 pence per Share in September

2012 and this, together with the proposed final dividend of 2.00 pence per

Share, will bring total dividends paid in respect of the year to 7.00 pence per

Share.

- Strong liquidity has been enhanced by a successful fundraising in 2012 which

resulted in new funds of £5.04 million for the Company. A further fundraising

in 2013 is underway for which £4.90 million in total of applications have been

received to date.

- The Company realised its investment in Iglu.com Holidays in May for total cash

proceeds of £3.59 million over the two and a half years of the investment,

equivalent to an overall return of 2.53 times the original investment cost.

Performance Summary

The net asset value per share of the Company at 31 December 2012 was 94.22pence

The table below shows the recent past performanceof the original funds raised in 2004/05. As at Net NAV per Share Net Cumulative total Dividends per assets Share price cumulative return per Share Share paid in dividends to Shareholders respect of (mid- paid per since launch 2 the year market Share ended price)1 (NAV (Share basis) price basis) (£m) (p) (p) (p) (p) (p) (p)31 December 2012 43.29 94.22 80.50 38.05 132.27 ] 118.55 5.00*31 December 2011 40.73 95.59 78.75 26.80 122.39 105.55 6.7531 December 2010 38.45 96.66 84.00 21.30 117.96 105.30 5.00

1 Source: London Stock Exchange.

2 Total return per share comprises either the NAV per Share (NAV basis) or themid-market price per Share (share price basis), plus cumulative dividends paidper Share. * Dividends proposed A final dividend of 2.00 pence per Share, comprising 0.50 pencefrom capital and 1.50 pence from income, will be recommended to Shareholdersat the Annual General Meeting of the Company to be held on 8 May 2013. Ifapproved, the dividend will be paid on 15 May 2013 to Shareholders on theRegister on 19 April 2013 and will bring dividends paid in respect of the yearended 31 December 2012 to 7.00 pence per Share.

Liquidity and discount

The Company holds approximately £8.35 million inreadily realisable assets that are available for further investments,dividends and share buybacks. The discount on the Company's shares at 31December 2012 was 9.94% based on the NAV per share at 30 September 2012 of89.38 pence, which was the latest published figure at that time.

Chairman's Statement

I am pleased to present the annual results of Mobeus Income &Growth VCT plc for the year ended 31 December 2012.

Overview

During a year in which growth in the UK economy has been flat andwhere there has been significant volatility in financial markets, the Companyhas enjoyed a solid performance. In the UK, as elsewhere in the world, thecoalition government is struggling to find an effective solution to restarteconomic growth. The UK and other western economies continue to be buffeted bythe persistent financial and economic uncertainties caused, in part, by thecontinuing unresolved debt problems in the US and several European countries.

Despite this rather gloomy backdrop, the leading companies in ourportfolio have continued to achieve strong growth in their niche markets.There is clear evidence that well-managed and sensibly financed companies cansucceed and many of the companies in our portfolio are demonstrating theirresilience in contending with a challenging business environment.

Performance

The Company's total return for the year (NAV basis) was 10.34%(2011: 4.58%) after allowing for the dividends of 11.25 pence per Share paidduring the year. In comparison to this, the quoted UK equity market asrepresented by the FTSE All-Share Index continued to be volatile but ended theyear up 12.30% (2011: down 3.46%) on a total return basis. The Company'sperformance against the FTSE All-Share Index is encouraging, bearing in mindthat the VCT's underlying liquidity has averaged around one-third of netassets in the year. Many of the portfolio companies are primarily valued byreference to the valuations of companies trading in similar sectors within therelevant FTSE sector index.

The cumulative total return (NAV basis) per Share at 31 December2012, including cumulative dividends paid to date, was 132.27 pence (2011:122.39 pence). This compares with the initial NAV per share, net of initialcosts, of 94.50 pence representing a positive total return (NAV basis) perShare since inception of 39.97% (2011: 29.51%).

Taking into account initial tax relief, investors have seen anoverall gain on investment cost of 120.45% (2011: 103.98%) since the launch ofthe Company, based on a net investment cost of 60 pence per Share.

Portfolio review

New investment activity has been relatively quiet throughout theyear. The Board and the Manager have remained relatively cautious and havebeen prepared to wait for the right opportunities to invest in. Uncertaintiessurrounding the finalisation of changes to VCT tax legislation introduced inthe 2012 Finance Act also hindered the completion of new investments duringthe year. There are signs, however, of an upturn in the new investment marketand deal flow has increased. The Manager has been considering a number ofinteresting opportunities and two of these have completed since the year-end. The Company made one new investment during the year, in July 2012of £1.68 million (including £1 million from the acquisition vehicle Sawrey)into Tessella, an international provider of science-powered technology andconsulting services. We are encouraged by the good start that this company hasmade since investment. Following the year-end in February 2013, the Company made a furtherinvestment into Fullfield (Motorclean) totalling £1.34 million (including £1million from the acquisition vehicle, Almsworthy) to support the company'sacquisition of Forward Valeting Services Limited, a company with a similarbusiness model in the UK car valeting market. In March 2013, the VCT made anew investment of £1.86 million (including £1 million from the acquisitionvehicle, Fosse) to support the MBO of Gro-group, the market leader for babysleep time products in the UK and Australia.

The VCT sold its investment in Iglu.com in May 2012 for an overallreturn of 2.53 times the original investment cost over the life of theinvestment. This was a pleasing result in just two and half years since theMBO in December 2009. During the period of our investment, Iglu grew itscruise holiday business to become one of the leading distributors of theseholidays in the UK in addition to being the largest independent retailer ofski holidays.

The overall valuation of the portfolio held at the year-end hasbeen increased by £3.49 million over the year.

Further details of these investments and the year's othertransactions can be found in the Investment Manager's Review below.

Review of results

The Company returned a profit for the year of £4.33 million (2011:£1.66 million), comprised of a capital return of £3.24 million (2011: £0.70million) and a revenue return of £1.10 million (2011: £0.96 million).

The large positive capital return is due to a healthy uplift inportfolio valuations of £3.49 million. The revenue return has increased from£0.96 million to £1.10 million, a rise of £0.14 million, mainly due to a risein income of £0.12 million from £1.68 million to £1.80 million. There has been a rise in loan interest income of £0.30 million to£1.48 million over the year. A number of new investments made in 2011 have nowproduced a full year's loan interest, as well as some of the investeecompanies making inroads into outstanding interest arrears. This rise isdespite a number of repayments in the year and some interest provided forduring the year. There was a significant drop in dividend income of £0.22million, from £0.43 million to £0.21 million, largely as a result of thepartial disposal of DiGiCo which paid the Company a dividend of £0.26 millionin 2011. Removing the effect of this DiGiCo dividend, dividend income fromother companies rose in the year as a result of a number of companies payingmaiden dividends, namely RDL Corporation and Vectair, while ATG Mediaincreased its payment.

Revenue from the Company's bank balances and liquidity fundscontinued to be depressed as a result of the extremely low interest rateenvironment in the UK.

In line with the rise in net assets, investment management feescharged to both revenue and capital have increased from £0.92 million to £0.97million whilst other expenses have fallen from £0.31 million to £0.26 million.The fall in other expenses is mainly due to a large drop in IFA trailcommission fees as a result of a number of eligible shareholdings reachingtheir cap on such commission due. This will result in a saving going forward,although trail commission on more recent fundraisings will continue.

Dividends

Your Directors are pleased to recommend a final dividend in respectof 2012 of 2.00 pence (2011: 6.25 pence) per Share comprising 0.50 pence(2011: 5.00 pence) per Share from capital and 1.50 pence (2011: 1.25 pence)per Share from income. Subject to Shareholder approval, this dividend will bepaid on 15 May 2013 to Shareholders on the Register on 19 April 2013 . Thiswill bring dividends paid in respect of the year ended 31 December 2012 to7.00 pence (2011: 6.75 pence) per Share and cumulative dividends paid sinceinception to 40.05 pence (2011: 33.05 pence) per Share.

The Company aims to provide Shareholders with a consistent andregular income stream and the Board has set a target of paying a dividend ofat least 4.00 pence per share in respect of each financial year. This targethas now been exceeded in each of the last five years.

Investment in qualifying holdings

In order to comply with VCT tax legislation, the Company must meetthe target set by HMRC of investing 70% of total funds raised in qualifyingunquoted and AiM quoted companies ("the 70% test"). At 31 December 2012, theCompany was 77.38% invested in qualifying companies (based upon the taxvalues, which differ from the values given in the Investment Portfolio Summarybelow). Changes to VCT legislation The enactment of the Finance Act 2012 ended a period of uncertaintyin finalising the changes to the tax legislation that will apply to VCTs inthe future. The principal change that affects the Company is that the fundsraised after 6 April 2012 can no longer be used by the Manager to carry outcertain types of management buyout transactions ("MBOs"). However, the Companyhas a significant amount of funds raised prior to this date that it willcontinue to use to pursue its strategy of investing in MBOs of profitable andcash generative companies. Share buybacks

During the year ended 31 December 2012, the Company bought back1.94 million of its own Shares (2011: 2.68 million) at an average price of81.90 pence per Share and a total cost of £1.59 million including expenses(2011: £2.22 million). These Shares, representing 4.55% (2011: 6.74%) of theissued Share capital of the Company at the beginning of the year, weresubsequently cancelled by the Company.

Purchases were made at discounts to the latest published NAVs perSshare ranging between 10-12% (2011: 10-14%). The discount at which Shareswere bought back has remained constant at these levels throughout 2011-12,having stabilised in mid-2010. This reflects the Board's current policy whichis to seek to maintain the discount at which the Company's Shares trade ataround 10% to the latest announced NAV per Share, which was the position atthe year-end. Remaining Shareholders, of course, benefit from the differencebetween the Net Asset Value and the price at which the Shares are bought backand cancelled. Selling your shares The Company's Shares are listed on the London Stock Exchange and assuch they can be sold in the same way as any other quoted company through astockbroker. However, to ensure that you obtain the best price, if you wish tosell your Shares, you are strongly advised to contact the Company'sstockbroker, Panmure Gordon, by telephoning 020 7886 2716/7 before agreeing aprice with your stockbroker. Shareholders are also advised to discuss theirindividual tax position with their financial advisor before deciding to selltheir Shares.

Merger with Matrix Income & Growth 3 VCT plc

The Company has continued to benefit from the merger of the Companywith Matrix Income & Growth 3 VCT in May 2010, both in terms of cost savingsand more efficient administration. As planned, the full costs of the mergerwere recovered within two years and savings continue.

Fundraising

The Company raised £5.04 million net of issue costs in the Mobeus(formerly Matrix) Linked VCT Offer launched on 20 January 2012, which closedon 30 June 2012.

The Company launched a further linked fundraising with The Income &Growth VCT plc and Mobeus Income & Growth 4 VCT plc on 29 November 2012 toraise up to £21 million across the three VCTs and/or allot up to 10 millionshares in each VCT. The funds raised for the VCT will further improve theCompany's liquidity and spread its fixed running costs over a larger assetbase. They will provide a fund of new money which may be used to pay ongoingexpenses, including dividends and share buybacks, thus preserving money raisedprior to 6 April 2012 to support the Company's strategy of investing in newMBO deals. Details of the Offer were posted to Shareholders in December 2012.. This Offer has been well received and a total of £4.90 million in total ofapplications has been subscribed to date for the Company.

The Offer will remain open until 30 April 2013 (5 April 2013 inrespect of the current tax year) although the Directors of the three VCTsreserve the right to extend the closing date at their discretion. It willclose earlier if fully subscribed.

Enhanced buyback facility (EBF)

The VCT offered an Enhanced Buyback Facility (EBF) to Shareholdersin January 2013 by way of a tender offer to purchase from Shareholders up to50% of the issued capital of the VCT. An EBF is a loyalty scheme, whereby theVCT buys back some or all of a Shareholder's existing Shares at the prevailingNAV per Share. The resultant proceeds are applied to invest in new shares inthe same VCT, at a slightly higher price to cover the costs of the Scheme.Shareholders receive new VCT shares which qualify for upfront income taxreliefs of up to 30% on the amount reinvested. The EBF may not be appropriatefor all Shareholders particularly if they have not held their Shares for asufficient period to qualify for the upfront tax reliefs.

Shareholders approved this Scheme and the associated cancellationof the share premium account on 22 February 2013, which was subsequentlyapproved by the Court on 13 March 2013.

Change of Company name and change of ownership at the Manager

The Manager completed its MBO from Matrix Group Limited (inadministration) ("Matrix Group") and became a fully independent firm owned byits partners and renamed itself Mobeus Equity Partners LLP ("Mobeus") on 30June 2012.

Subsequent to this change, the Company changed its name to MobeusIncome & Growth VCT plc to be consistent with the Manager's change of name.The Company's investment strategy and its arrangements with Mobeus havecontinued as previously agreed. The team at Mobeus continues to be whollydedicated to the management and administration of VCTs.

Communication with Shareholders

We aim to communicate regularly with our Shareholders. In additionto the Half-Yearly and Annual Reports, Shareholders receive a twice-yearly VCTNewsletter from the Manager, approved by the Board. The May AGM will provide auseful platform for the Board to meet Shareholders and exchange views. YourBoard welcomes your attendance at General Meetings to give you the opportunityto meet your Directors and representatives of the Manager. The Manager held another successful investorworkshop in January 2013. The workshop provided a forum for about 140 MobeusVCT Shareholders to hear presentations from the Manager about its investmentactivity in greater depth and from a successful entrepreneur from DiGiCo, oneof the portfolio companies. It is intended that this will be an annual event,to which all Shareholders will be invited. The Manager has established a new website, which can be accessed bygoing to www.mobeusequity.co.uk. This is regularly updated with information onyour investments including case studies of portfolio companies. The Companycontinues to have its own dedicated section of the website which Shareholdersmay prefer to access directly by going to www.migvct.co.uk. This includesperformance tables and details of dividends paid as well as copies of pastreports to Shareholders. Presentations and Q & As from the recent investorworkshop can also be viewed here.

Industry awards for the Manager

The Manager received the award for VCT of the Year 2012 at InvestorAllStars 2012. It was also named VCT House of the Year 2012 at the unquote"British Private Equity Awards 2012. The citations for these awards recognisedthe Manager's outstanding performance in achieving record realisations duringthe year and promoting a successful fundraising. The Board is delighted thatthe work of the Manager has been acknowledged in this way.

Outlook

The UK, in common with other world economies, is struggling toachieve equilibrium in the aftermath of the recent recession and it appearsthat sustained growth will be slow to materialise. In the current environment,your Board and Manager remain cautious when evaluating new opportunities.Nevertheless, the Manager has seen a number of promising investmentopportunities at realistic purchase prices in recent months and two of these(Motorclean and Gro Group) have completed since the year-end. The Boardbelieves that the VCT's strategy of investing primarily in MBOs andstructuring investments to include loan stock will continue to mitigatedownside risk.

The VCT continues to maintain a significant cash position, a largeportion of which was raised prior to 6 April 2012. This will be used tosupport the VCT's policy of investing in established, profitable companiesthrough MBO deals that align the interests of the VCT with those of themanagement teams of the businesses that we support. The company's cashreserves and the cash-rich acquisition companies are available to helpportfolio companies through what we believe may be an exacting period. This isparticularly important at a time when the UK banks, despite governmentexhortations, continue to limit, or are even withdrawing, funds from thesmaller company sector.

The Board continues to believe that, despite the challenges ahead,the Company's lower risk investment strategy and its high levels of liquidityshould deliver attractive returns to Shareholders over the medium to longterm.

Finally, I would like to express my thanks to all Shareholders fortheir continuing support of the Company.

Keith Niven Chairman 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 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

Manager's Review, Investment Portfolio Summary 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.

For and on behalf of the Board:

Keith Niven Chairman Investment Policy The VCT's policy is to invest primarily in a diversified portfolioof UK unquoted companies. Investments are usually structured as part loan andpart equity in order to generate regular income and to generate capital gainsfrom realisations.

Investments are made selectively across a number of sectors,primarily in management buyout transactions ("MBOs") i.e. to support incumbentmanagement teams in acquiring the business they manage but do not own.Investments are primarily made in companies that are established andprofitable.

Uninvested funds are held in cash and low risk money market funds.

VCT regulation

The investment policy is designed to ensure that the VCT continuesto qualify and is approved as a VCT by HMRC. Amongst other conditions, the VCTmay not invest more than 15% of its investments in a single company or groupof companies and must have at least 70% by value of its investments throughoutthe period in shares or securities comprised in VCT qualifying holdings, ofwhich a minimum overall of 30% by value (70% for funds raised on or after 6April 2011) must be in ordinary shares which carry no preferential rights(save as may be permitted under VCT rules). The VCT can invest less than 30%by value (70% for funds raised on or after 6 April 2011) of an investment in aspecific company in ordinary shares. It must however have at least 10% byvalue of its total investments in each VCT qualifying company in ordinaryshares which carry no preferential rights (save as may be permitted under VCTrules). UK companies

The companies in which investments are made must have had no morethan £15 million of gross assets at the time of investment and £16 millionimmediately following the investment to be classed as a VCT qualifyingholding.

Asset mix

The VCT holds its liquid funds in a portfolio of readily realisableinterest-bearing investments and deposits. The investment portfolio ofqualifying investments has been built up over time with the aim of investingand 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 businessesacross different industry sectors. To reduce the risk of high exposure toequities, each qualifying investment is structured to maximise the amountwhich may be invested in loan stock.

Co-investment

The VCT aims to invest in larger, more mature, unquoted companiesthrough investing alongside three other VCTs advised by Mobeus with similarinvestment policies. This enables the VCT to participate in combinedinvestments by the Manager of up to £5 million.

Borrowing

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

Management

The Board has overall responsibility for the Company's affairsincluding the determination of its investment policy. Investment anddivestment proposals are originated, negotiated and recommended by the Managerand are then subject to formal approval by the Directors.

Principal risks, management and regulatory environment

The Board believes that the principal risks faced by the Companyare:

Economic risk - events such as an economic recession and movementin interest rates could affect trading conditions for smaller companies andconsequently the value of the Company's qualifying investments.

Loss of approval as a Venture Capital Trust - the Company mustcomply with section 274 of the Income Tax Act 2007 which allows it to beexempted from capital gains tax on investment gains. Any breach of these rulesmay lead to the Company losing its approval as a VCT, qualifying Shareholderswho have not held their shares for the designated holding period having torepay the income tax relief they obtained and future dividends paid by theCompany becoming subject to tax. The Company would also lose its exemptionfrom corporation tax on capital gains. Funds raised after 5 April 2012 andused by an investee company for the acquisition of shares in another companyare restricted from being qualifying for VCT purposes. This may reduce thenumber of investment opportunities for such funds

Investment and strategic risk - inappropriate strategy orconsistently weak VCT qualifying investment recommendations might lead tounder performance and poor returns to Shareholders. Investment in unquotedsmall companies by its nature involves a higher degree of risk than investmentin companies traded on the London Stock Exchange main market.

Regulatory risk - the Company is required to comply with theCompanies Act, the rules of the UK Listing Authority and United KingdomAccounting Standards. Breach of any of these might lead to suspension of theCompany's Stock Exchange listing, financial penalties or a qualified auditreport.

Financial and operating risk - inadequate controls might lead tomisappropriation of assets. Inappropriate accounting policies might lead tomisreporting or breaches of regulations. Failure of the Manager's accountingsystems or disruption to its business might lead to an inability to provideaccurate reporting and monitoring.

Market risk - Investment in unquoted companies, by its nature,involves a higher degree of risk than investment in companies traded on theLondon Stock Exchange main market. In particular, smaller companies often havelimited product lines, markets or financial resources and may be dependent fortheir management on a smaller number of key individuals. This may make themmore risk-prone and volatile investments.

Asset liquidity risk - The Company's investments may be difficultto realise especially in the current economic climate.

Market liquidity risk - Shareholders may find it difficult to selltheir shares at a price which is close to the net asset value.

Credit/counterparty risk - A counterparty may fail to discharge anobligation or commitment that it has entered into with the Company.

The Board seeks to mitigate the internal risks by setting policyand by undertaking a key risk management review at each quarterly Boardmeeting. Performance is regularly reviewed and assurances in respect ofadequate internal controls and key risks are sought and received from theManager on a six monthly basis. In the mitigation and management of theserisks, the Board applies rigorously the principles detailed in the AIC Code ofCorporate Governance. The Board also has a share buyback policy to try tomitigate the Market Liquidity risk. This policy is reviewed at each quarterlyBoard Meeting. Investment Manager's Review Overview This has been a relatively quiet year for the portfolio, duringwhich the Company made one new major investment and one major disposal. Theenvironment for new investment has made it harder to complete new investments,for two principal reasons. Firstly, 2012 saw a second dip into recession whichrevived uncertainty surrounding the extent and depth of the economic recovery.Secondly, a lack of clarity regarding changes to VCT regulations depressed aweak corporate finance market. Nonetheless, dealflow has improved in recentmonths, particularly in terms of the number of deals coming forward, althoughconcluding transactions has continued to be difficult. We have been working ona number of promising new investments and are, therefore, hopeful that thepace of new investment will pick-up in 2013. Indeed, two such deals havecompleted recently. Uncertainty over the future persists, particularly amongstpotential sellers of businesses, but our investment approach, combining debtand equity, continues to be compelling to companies seeking investment in amarket where availability of bank finance remains patchy at best. This meansthat management buyout teams are increasingly turning to us as a reliablesource of funding for their plans.

Over the year, the Company's liquidity position (including the £6million invested in acquisition vehicles at the year-end) has strengthenedfurther, so it is well placed to invest. In response, we are broadening thescope of the deals which we target by identifying opportunities to invest morecapital to support the expansion of successful businesses in the existingportfolio including, where appropriate, the deployment of loan funding tosupport portfolio companies' growth plans.

We continue to believe that the Company's strategy of investing inwell-structured MBO deals; supporting highly motivated management teams;focusing on acquiring established, profitable, positive cashflow businesses;and investing partly in income yielding loan stocks, substantially increasesthe degree of downside protection to Shareholders' capital. We have noted therecent change in VCT legislation preventing certain types of MBOs, but alsonote that this restriction does not apply to the substantial level of fundsheld by the Company from earlier fundraisings. We have continued to work actively with the management teams ofinvestee companies, encouraging them to take cost-cutting measures andreviewing their budgets, forecasts and cost structures with them to ensurethat their businesses remain as resilient as possible. A number of portfoliocompanies have made good progress and this is reflected in the valuations ofthese companies. The strategy above is executed by retaining and developing aportfolio of successful companies until each has reached the optimal point fora profitable realisation. In the meantime, the portfolio routinely benefitsfrom returns of loan stock interest, dividends and loan repayments, during thelife of an investment. New investment In July 2012, the Company made an investment totalling £1.68million to support the MBO of Tessella, an international provider ofscience-powered technology and consulting services. The Company used itsexisting investment of £1 million in the acquisition vehicle Sawrey to financethe transaction, along with a further £0.68 million from the Company's cashreserves. Founded in 1980, the company delivers innovative and cost-effectivesolutions to complex real-world commercial and technical challenges such asdeveloping smarter drug trials and minimising risk in oil and gas exploration.This company has made an encouraging start since investment. Following the year-end in March 2013, the VCT made a new investmentof £1.86 million (including £1 million from the acquisition vehicle, Fosse) tosupport the MBO of Gro-group, the market leader for baby sleep time productsin the UK and Australia. We are confident that our Operating Partner programme will continueto generate successful investments for the Company and accordingly £6 millionwas held in six acquisition vehicles at the year-end. These companies continueto pursue an active search for investment opportunities. Each of theacquisition vehicles is headed by an experienced Chairman, well known to us,who is working closely with us in seeking to identify and complete investmentsin specific sectors relevant to his industry knowledge and experience. We haveestablished these companies to provide time for us to identify and invest insuitable target companies at sufficiently attractive valuations. Two of thesecompanies, Almsworthy and Fosse, were used respectively following theyear-end, to complete a further investment into Motorclean (see below) and anew investment into Gro-group as described above.

Follow-on investment

PXP was the only investee company to receive a follow-on investmentduring the year. £0.11 million was invested in June 2012 as part of a majorrestructuring of this company to enable PXP to continue to trade following aperiod of poor trading in a challenging market. Trading in recent months hasstarted to show improvement.

Following the year-end in February 2013, the Company made a furtherinvestment into Fullfield (Motorclean) totalling £1.34 million (including £1million from the acquisition vehicle, Almsworthy) to support the company'sacquisition of Forward Valeting Services Limited, a company with a similarbusiness model in the UK car valeting market.

Realisations

Against an uncertain economic background, we are pleased to reportthat realisations during the year under review generated net cash of £4.13million for the Company.

In May 2012, the Company realised its entire investment in Iglu.comHolidays, the specialist online ski and cruise holiday travel agent, for acash consideration of £2.07 million through a sale to Growth Capital Partners.This realisation contributed to total cash proceeds of £3.59 million to theCompany over the two and a half year life of the investment, representing a2.53 times return on the Company's original investment of £1.42 million. Wehave supported this established online ski agent through a period of rapidgrowth in its cruise holiday business since the MBO in December 2009. Iglu isnow one of the leading distributors of cruise holidays in the UK and thelargest independent retailer of ski holidays. The company's annual revenuesnow exceed £90 million.

A total of £2.06 million (including any premiums paid) has alsobeen received in loan stock repayments from portfolio companies during theyear to 31 December 2012. Focus repaid £0.39 million in January 2012. BlazeSigns repaid a total of £1.40 million in four separate payments receivedbetween May and November 2012, plus interest arrears of £0.16 million.Fullfield and Tessella repaid a total of £0.27 million in two scheduledpayments.

Portfolio review

The portfolio comprised thirty-one investments as at 31 December2012 (2011: twenty-five) with a cost of £33.09 million (2011: £27.09 million)and valued at £34.86 million (2011: £27.42 million), representing 105.35% ofcost (2011: 101.22%). The portfolio's performance as a whole has continued to be strongand we are pleased to report that its value has increased over the year. ATGMedia and DiGiCo have again traded well despite the challenges of the economicenvironment. Blaze has made a steady recovery from the difficulties itexperienced during the economic downturn and has benefitted this year fromwork for the Olympics, enabling it to repay a large part of its loans as notedabove. CB Imports continues to trade well despite the general weakness ofretail spending and has grown profits compared to last year. Focus is expectedto exceed its budget and is performing well on product development and has ahealthy pipeline of new products. Fullfield (Motorclean) has maintained itssolid start and cash generation at this company has been strong, as evidencedby its early partial repayment of its loan stock. ASL has successfully integrated its acquisition of Transcribe,which is trading well, but the group's overall performance is behind itsinvestment plan. Of the newer investments, EMaC has made encouraging progressover its first year since the MBO in October 2011 despite growing competitionin its sector. This is reflected in an increase in valuation from cost. EOTHtoo, is making good progress in growing revenue and market share although itsmarket remains beset by price discounting. British International has had a difficult year, with further fallsin passenger journeys on its scheduled route to the Isles of Scilly leading toa material reduction in group profitability and the closure of the route atthe end of October; this was compounded by the delays in completing the saleto Sainsbury's of its heliport in Penzance, which was dependent on fullplanning permission being granted. However, completion finally took place inOctober 2012 and the substantial receipt enabled the company to fully repayits bank borrowings, thereby improving the security of the Company's loanstock investment in British International. Your Company is engaged indivesting its investment in British International as part of the assetrealisation process that British International has embarked upon. The persisting downturn in the construction and house buildingsectors continues to affect the performance of PXP and Plastic Surgeon,although management has worked well to reposition both of these businesses andmake the necessary cuts in costs. The market environment for Youngman remainsuncertain, although it has traded profitably and is well positioned to benefitfrom any upturn in its markets. Westway suffered from lower revenues last yearbut is now growing profits again and has strong customer relationships. RDLhas continued to perform below expectations with activity in its ITrecruitment business in particular, at lower than planned levels. It is takingmeasures to improve performance. Faversham has been streamlining itsoperations although progress is slower than anticipated.

Overall, we are encouraged by the strong and resilient performanceby most of our investee companies. Our strategy remains to retain investmentsuntil they have reached the optimum point for an exit in order to maximisevalue from each investment.

Outlook

The outlook for the UK economy remains uncertain, but the Companyhas ample liquidity to pursue its MBO strategy and we are hopeful that we areentering a healthy period of new investment over the coming year. As part ofour plans to increase the rate of investment, we are currently pursuingseveral opportunities to provide further capital for expansion of successfulexisting investments. The uncertain outlook necessitates that we ensure investeecompanies take appropriate actions to respond to the challenging environmentahead. We are also maintaining a prudent approach to making new investmentsand ensuring that the portfolio remains well-capitalised. We are confidentthat good returns can continue to be earned for investors over the medium tolonger term, if such disciplines are observed. Details of the Company's ten largest investments by value at 31December 2012 (excluding the six acquisition vehicles in the portfolio at theyear-end, which have yet to complete an investment and have a current cost andvaluation of £1 million each) are set out below. These represent 48.90% bycost and 63.05% by value of the portfolio.

Ten Largest Investments in the portfolio *

ATG Media Holdings Limited DiGiCo Global Limited CB Imports Group Limited (non-qualifying) www.antiquestradegazette.com www.digico.org www.countrybaskets.co.uk Cost £1,486,214 £2,592,669

£2,000,000

Valuation £4,021,003 £3,301,112

£2,481,424

Basis of valuation Earnings multiple Earnings multiple Earnings multipleEquity % held 13.96% 4.65% (fully diluted) 11.58% Income receivable £163,456 £103,806 £152,709in yearBusiness Publisher and on-line Designer and manufacturer of Importer and distributor auction platform operator digital audio mixing desks of artificial flowers, floral sundries and home décor products. Location London Chessington, Surrey East Ardsley, West Yorkshire History Management buyout Secondary buyout

Management buyout

Audited financial informationYear ended 30 September 2012 31 December 2011 31 December 2011Turnover £10,990,000 £21,314,000

£23,130,000

Operating profit £2,704,000 £6,466,000

£969,000

Net assets £4,612,000 £7,932,000

£4,421,000

Year ended 30 September 2011 31 December 2010 31 December 2010Turnover £8,927,000 £18,757,000

£21,197,000

Operating profit £1,831,000 £5,501,000

£2,139,000

Net assets £3,179,000 £8,909,000 £4,259,000 Ingleby (1879) Limited British International Holdings Fullfield Limited Limited www.emac.co.uk

www.islesofscillyhelicopter.com www.motorclean.net

Cost £1,762,336 £2,026,316

£1,595,000

Valuation £2,243,576 £2,026,316

£1,791,646

Basis of valuation Earnings multiple Fair value equivalent to cost Earnings multipleEquity % held 8.81% (fully diluted) 17.47% 12.58%Income receivable £147,770 £Nil £147,835in yearBusiness Provider of service plans Helicopter service operator Provider of vehicle for the motor trade cleaning and valet services Location Crewe Sherborne, Dorset Laindon, EssexHistory Management buyout Management buyout

Management buyout

Audited financial informationYear ended 31 December 2011 1 31 December 2010 31 March 20121Turnover £4,990,000 £19,350,,000

£23,818,000

Operating profit £867,000 £3,315,000

£1,752,000

Net assets £1,535,000 £4,017,000

£9,044 ,000

Year ended 31 December 2010 1 31 December 2009 31 March 20111Turnover £4,042,000 £16,050,,000

£22,400,000

Operating profit £1,596,000 £976,000

£1,631,000

Net assets £2,712,000 £2,970,000 £2,344,000 1 The financial information 1 The financial quoted above relates to the information quoted above operating subsidiary, EMaC relates to the operating Limited subsidiary, Motorclean Limited Tessella Holdings Limited Focus Pharma Holdings Limited Blaze Signs Holdings

Limited

www.tessella.com

www.focuspharmaceuticals.co.uk www.blaze-signs.com

Cost £1,655,131 £1,042,972

£727,471

Valuation £1,655,131 £1,649,436 £1,477,887 Basis of valuation Cost Earnings multiple Earnings multipleEquity % held 7.20% 5.08% 20.78%Income receivable £55,257 £70,946 £289,639in year Business Provider of science powered Licensing and distribution

of Manufacturer and

technology and consulting generic pharmaceuticals

installer of signs

servicesLocation Abingdon, Oxfordshire Burton-on-Trent, Staffordshire Broadstairs, KentHistory Management buyout Management buyout

Management buyout

Audited financial informationYear ended 31 March 20121 31 December 2011 31 March 2012Amended £18,533,000 £22,375,000

£20,878,000

Operating profit £278,000 £1,075,000

£1,761,000

Net assets £2,404 ,000 £3,485,000

£2,918,000

Year ended 31 March 20111 31 December 2010 31 March 2011Turnover £16,941,000 £24,429,000

£20,127,000

Operating profit £346,000 £1,507,000

£1,889,000

Net assets £2,403,000 £3,342,000 £2,937,000 1 The financial information quoted above relates to the operating subsidiary, Tessella Limited (previously Tessella plc) EOTH Limited www.equipuk.com Cost £1,298,031Valuation £1,330,039 Basis of valuation Earnings multipleEquity % held 2.33%Income receivable £124,262in yearBusiness Supplier of branded outdoor equipment and clothing including the Rab and Lowe Alpine brandsLocation Alfreton, DerbyshireHistory Acquisition capital Audited financial informationYear ended 31 January 2012Turnover £15,504,000Operating profit £1,830,000Net assets £6,173,000 Year ended 28 February 2011 1Turnover £13,457,000Operating profit £2,354,000Net assets £4,706,000 1 The financial information quoted above relates to the

operating subsidiary, Equip

Outdoor Technologies Limited.

The remaining twenty-one investments in the portfolio (including the sixacquisition vehicles in the portfolio at 31 December 2012) had a current costof £16.91 million and were valued at 31 December 2012 at £12.88 million.

Further details of the investments in the portfolio may be found on the Mobeuswebsite: www.mobeusequity.co.uk.

1. The voting rights held in each investee company is equal to the equitypercentage held figures given above in all cases.

2. Operating profit is stated before charging amortisation of goodwill, whereappropriate, for all investee companies.

Investment Portfolio Summary

as at 31 December 2012 Market sector Date of Total Valuation % value % of investment book of net equity cost assets held by funds advised by Mobeus 1 £'000 £'000Qualifying investments

AiM quoted investmentsOmega Diagnostics Group plc Health care Dec-10 305 407 0.9% 9.8%

equipment and servicesIn-vitro diagnostics for foodintolerance, autoimmunediseases and infectiousdiseases ------- ------- ------- 305 407 0.9%Unquoted investmentsATG Media Holdings Limited Media Oct-08 1,486 4,021 9.3% 38.4%Publisher and on-line auctionplatform operator CB Imports Group Limited General retailers Dec-09 2,000 2,481 5.7% 23.2%(Country Baskets)Importer and distributor ofartificial flowers and floralsundries.

Ingleby (1879) Limited (EMaC) Support services Nov-11 1,762 2,244 5.2% 30.0%

Provider of service plans forthe motor trade Fullfield Limited Support services Jul-11 1,595 1,792 4.1% 41.0%(Motorclean)Provider of vehicle cleaningand valet services British International Support services Jun-06 1,683 1,683 3.9% 34.9%Holdings LimitedHelicopter service operator Tessella Holdings Limited Support services Jul-12 1,655 1,655 3.8% 24.0%Technology consultancy Focus Pharma Holdings Limited Pharmaceuticals Oct-07 1,043 1,649 3.8% 12.7%Licensor and distributer ofgeneric pharmaceuticals Blaze Signs Holdings Limited Support services Apr-06 727 1,478 3.4% 52.5%Manufacturer and installer ofsigns

Machineworks Software Limited Software and Apr-06 223 1,140 2.6% 45.0%

computer servicesProvider of software for CAMand machine tool vendors RDL Corporation Limited Support services Oct-10 1,558 1,127 2.6% 45.2%Recruitment consultant forthe pharmaceutical, businessintelligence and ITindustries EOTH Limited (RAB and Lowe General retailers Oct-11 1,000 1,006 2.3% 8.0%Alpine)Branded outdoor equipment andclothing Ackling Management Support services Apr-12 1,000 1,000 2.3% 50.0%Company preparing to trade inthe food manufacturing,distribution and brandmanagement sectors Almsworthy Trading Limited Support services Mar-12 1,000 1,000 2.3% 50.0%Company preparing to trade inthe specialist construction,building support services,building products and relatedsectors Culbone Trading Limited Support services Mar-12 1,000 1,000 2.3% 50.0%Company preparing to trade inthe outsourced sector Madacombe Trading Limited Support services Mar-12 1,000 1,000 2.3% 50.0%Company preparing to trade inthe engineering sector Fosse Management Limited Support services Apr-12 1,000 1,000 2.3% 50.0%Company preparing to trade inthe brand management,consumer products and retailsectors Peddars Management Limited Support services Apr-12 1,000 1,000 2.3% 50.0%Company preparing to trade inthe database management anddata mapping sectors and inmanagement services to thelegal and building industries Westway Services Holdings Support services Jun-09 603 841 1.9% 13.0%(2010) LimitedInstallation, service andmaintenance for airconditioning systems ASL Technology Holdings Support services Dec-10 1,913 754 1.8% 34.0%LimitedPrinter and photocopierservices Youngman Group Limited Support services Oct-05 1,000 701 1.6% 29.7%Manufacturer of ladders andaccess towers The Plastic Surgeon Holdings Support services Apr-08 478 537 1.3% 30.0%LimitedSupplier of snagging andfinishing services to thedomestic and commercialproperty markets Vectair Holdings Limited Support services Jan-06 139 459 1.1% 24.0%Designer and distributor ofwashroom products Racoon International Holdings Personal goods Dec-06 1,213 389 0.9% 49.0%LimitedSupplier of hair extensions,hair care products andtraining

Lightworks Software Limited Software and Apr-06 223 174 0.4%

computer services 45.0%Provider of software for CADvendors Faversham House Holdings Media Dec-10 527 121 0.3% 31.4%LimitedPublisher, exhibitionorganiser and operator ofwebsites Monsal Holdings Limited Support services Dec-07 1,299 117 0.3% 27.7%Supplier of engineeringservices to water and wastesectors PXP Holdings Limited Construction and Dec-06 1,278 114 0.3% 32.9%(Pinewood Structures) building materialsDesigner, manufacturer andsupplier of timber-frames forbuildings Legion Group plc (in Support services Aug-05 150 - 0.0% N/Aadministration)Provider of manned guarding,mobile patrolling and alarmresponse services Watchgate Limited Support services Nov-11 1 - 0.0% 100.0%Holding company ------- ------- ------- 29,556 30,483 70.4% ------- ------- -------Total qualifying investments 29,861 30,890 71.3% ------- ------- ------- Non-qualifying investmentsDiGiCo Global Limited 2 Technology, Dec-11 2,593 3,301 7.6% hardware and equipment 11.0%Designer and manufacturer ofdigital sound mixing consolesBritish International Support services Nov-09 343 343 0.8% -Holdings LimitedEOTH Limited (Rab and Lowe General retailers Oct-11 298 324 0.8% -Alpine) ------- ------- -------Total portfolio investments 33,095

34,858 80.5%

------- ------- -------Current investments and cash at bankCash at NatWest Bank plc 3 4,713 4,713 10.9%The Co-operative Bank plc 4 2,000 2,000 4.6%GS Funds plc (Goldman Sachs) 4 429 429 1.0%Global Treasury Funds plc (Royal Bank of Scotland) 4 387 387 0.9%Institutional Cash Series plc (BlackRock) 4 256 256 0.6%Insight Liquidity Funds plc (HBOS) 4 271 271 0.6%SWIP Global Liquidity Fund plc (Scottish Widows)4 176 176 0.4%Fidelity Institutional Cash Fund plc 4 114 114 0.3% ------- ------- -------Total investments 41,441 43,204 99.8% ------- ------- -------Other assets 215 0.5%Current liabilities (130) (0.3)% ------- ------- -------Net assets 43,289 100.0% ------- ------- -------

1 The other funds advised by Mobeus include Mobeus Income & Growth 2 VCT plc

(formerly Matrix Income & Growth 2 VCT plc), Mobeus Income & Growth 4 VCT plc

(formerly Matrix Income & Growth 4 VCT plc) and The Income & Growth VCT plc.

2 Original investment was in DiGiCo Europe Limited in July 2007. This was

partially realised in December 2011 and therefore, this represents the cost and

valuation of the continuing investment.

3 Disclosed as Cash at bank within Current assets in the Balance Sheet below.

4 Disclosed as Current Investments within Current assets in the Balance Sheet

below. Income Statement

for the year ended 31 December 2012

Year ended 31 December 2012 Year ended 31 December 2011 Notes Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Unrealised gains on - 3,488,447 3,488,447 - 688,724 688,724investments 7Realised gains on - 286,530 286,530 - - - - 520,219 520,219investments 7Income 2 1,797,530 - 1,797,530 1,681,991 - 1,681,991Investment management (243,545) (730,634) (974,179) (230,025) (690,074) (920,099)fees 3Other expenses (263,893) - (263,893) (307,214) - - - (307,214) ------- ------- ------- ------- ------- -------Profit on ordinaryactivities beforetaxation 1,290,092 3,044,343 4,334,435 1,144,752 518,869 1,663,621 Tax on profit onordinary activities 4 (192,913) 192,913 - (181,181) 181,181 - ------- ------- ------- ------- ------- -------Profit for the year 1,097,179 3,237,256 4,334,435 963,571 700,050 1,663,621 ------- ------- ------- ------- ------- ------- Basic and dilutedearnings per ordinaryshare 6 2.42p 7.13p 9.55p 2.25p 1.64p 3.89p

All the items in the above statement derive from continuing operations of theCompany. No operations were acquired or discontinued in the year. The totalcolumn is the profit and loss account of the Company. There were no otherrecognised gains or losses in the year.

Other than revaluation movements arising on investments held at fair valuethrough the profit and loss account, there were no differences between thereturn as stated above and at historical cost.

Balance Sheet as at 31 December 2012 31 December 2012 31 December 2011 Notes £ £Fixed assetsInvestments at fair value 7 34,857,675 27,418,790 Current assetsDebtors and prepayments 8 215,525 329,659Current investments 9 3,632,668 11,123,681Cash at bank 4,713,008 2,085,082 ------- ------- 8,561,201 13,538,422 Creditors: amounts falling due within one year (130,353) (231,037) ------- -------Net current assets 8,430,848 13,307,385 ------- -------Net assets 43,288,523 40,726,175 ------- ------- Capital and reservesCalled up share capital 10 459,465 426,061Capital redemption reserve 10 75,583 56,182Share premium account 10 27,018,629 22,034,106Revaluation reserve 10 4,886,524 3,455,913 Special distributable reserve 10 8,989,989 11,161,745Profit and loss account 10 1,858,333 3,592,168 ------- ------- Equity shareholders' funds 10 43,288,523

40,726,175

-------

-------

Basic and diluted net asset value per OrdinaryShare 11 94.22p 95.59p

Reconciliation of Movements in Shareholders' Funds

for the year ended 31 December 2012

Year ended Year ended 31 December 2012 31 December 2011 Notes £ £ Opening shareholders' funds 40,726,175

38,450,907

Net share capital subscribed for in the year 5,037,328

5,236,341

Net share capital bought back in the year (1,588,947) (2,222,097)Profit for the year 4,334,435 1,663,621Dividends paid in year 5 (5,220,468) (2,402,597) ------- -------Closing shareholders' funds 10 43,288,523 40,726,175 Cash Flow Statement

for the year ended 31 December 2012

Year ended Year ended 31 December 2012 31 December 2011 Notes £ £ £ £Operating activitiesInvestment income received 1,880,902 1,577,644Other income 11,759 3,873Investment management fees paid (974,179)

(920,099)

Other cash payments (336,669)

(322,439)

Payment of merger costs of the Company -

(9,555)

------- ------- ------- -------Net cash inflow from operating activities 581,813 329,424 Investing activitiesAcquisitions of investments 7 (7,793,526) (3,645,194)Disposals of investments 7 4,129,618 8,478,349 ------- ------- ------- -------Net cash (outflow)/inflow from investing activities (3,663,908) 4,833,155 Equity dividendsPayment of dividends 5 (5,220,468) (2,402,597) ------- ------- ------- -------Cash (outflow)/inflow before liquid resourcemanagement and financing (8,302,563) 2,759,982 Management of liquid resourcesDecrease/(increase) in current investments 7,491,013 (3,657,544) FinancingShare capital raised 5,037,328 5,236,341Share capital bought back (1,597,852) (2,368,369) ------- ------- ------- ------- 3,439,476 2,867,972 ------- ------- ------- -------Increase in cash for the year 2,627,926 1,970,410 ------- ------- ------- ------- Notes 1 Accounting policies

A summary of the principal accounting policies, all of which have been applied

consistently throughout the year, is set out below. a) 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'

("SORP") issued by the Association of Investment Companies in January 2009.

The financial statements are prepared under the historical cost convention

except for the measurement of certain financial instruments at fair value.

b) Presentation of the Income Statement

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'

("SORP") issued by the Association of Investment Companies in January 2009.

The financial statements are prepared under the historical cost convention

except for the measurement of certain financial instruments at fair value.

c) 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 on organised financial markets, fair value

is generally determined by reference to Stock Exchange market quoted bid prices at the close of business on the balance sheet date. Purchases and sales of quoted investments are recognised on the trade date where a

contract of sale exists whose terms require delivery within a time frame

determined by the relevant market. Purchases 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 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 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. 2. Income 2012 2011 £ £ Income from bank deposits 64,180 12,879 Income from investments - from equities 206,304 425,919 - from overseas based OEICs 32,373 59,178 - from loan stock 1,482,914 1,184,015 ------- ------- 1,721,591 1,669,112 Other income 11,759 - ------- ------- Total income 1,797,530 1,681,991 ------- ------- Total income comprises Dividends 238,677 485,097 Interest 1,547,094 1,196,894 Other income 11,759 - ------- ------- 1,797,530 1,681,991 ------- ------- Income from investments comprises Listed overseas securities 32,373 59,178 Unlisted UK securities 206,304 425,919 Loan stock interest 1,482,914 1,184,015 ------- ------- 1,721,591 1,669,112 ------- ------- Total loan stock interest due but not recognised in the year was £523,534(2011: £514,475). 3 Investment manager's fees Revenue Capital Total Revenue Capital Total 2012 2012 2012 2011 2011 2011 £ £ £ £ £ £ Mobeus Equity Partners LLP 243,545 730,634 974,179

230,025 690,074 920,099

Under the terms of a revised investment management agreement dated 20 May 2010, Mobeus Equity

Partners LLP ("Mobeus") (formerly Matrix Private Equity Partners LLP ("MPEP")) provides

investment advisory, administrative and company secretarial services to the Company, for a fee

of 2% per annum of closing net assets, paid in advance, calculated on a quarterly basis by

reference to the net assets at the end of the preceding quarter, plus a fixed fee of £126,225

per annum up to 30 June 2012 (and £130,089 per annum thereafter), the latter inclusive of VAT

and subject to annual increases in RPI.

The investment management fee includes provision for a cap on expenses excluding irrecoverable

VAT and exceptional items set at 3.6% of closing net assets at the year-end. In accordance with

the investment management agreement, any excess expenses are borne by the Manager. The excess

expenses during the year amounted to £nil (2011: £nil).

Under an incentive agreement dated 9 July 2004, the Manager was entitled to receive an annual

performance-related incentive fee of 20% of the excess above an agreed hurdle rate in the annual

dividends paid to Shareholders. The hurdle rate was 6 pence per share for the Company's first

three annual reporting periods and increased annually thereafter in line with the Retail Price

Index. The performance fee was only payable if the mean net asset value per share over the

period relating to payment had remained at or above 100 pence and any cumulative shortfalls

below the annual hurdle rate have been recovered.

Under a deed of variation to the Performance Incentive Agreement, dated 20 May 2010, the Company

and MPEP agreed to amend the agreement to provide weighted average hurdles linked to the

performance of the Company and Matrix Income & Growth 3 VCT plc up to the date of the Merger and

so that it applied across the enlarged Company after that date. As a result, the hurdle rate of

dividends to be paid in a year before an incentive could become payable was set at 6.13 pence

per share, at the date of the Merger, which became 6.77 pence by 31 December 2012. The

cumulative shortfall of dividends paid below the annual hurdle rate at the date of the Merger

was 13.67 pence, which had become 14.04 pence at the year-end. The base net asset value of 100p

that must be maintained for an incentive fee to be payable has been amended to 97.71 pence per

share, (previously 97.33 pence following further rebasing from 96.91 pence after last year's

allotment of further shares) to allow for the impact of further shares being allotted during the

year at an average price of 100.8 pence per share. No performance incentive fee is payable to date.

Under the terms of the Linked Offer for Subscription launched on 20 January 2012 jointly with

Mobeus Income & Growth 4 VCT plc and The Income & Growth VCT plc, Mobeus Equity Partners LLP

were entitled to 5.5% of gross investment subscriptions, which amounted to £703,097 across all

three VCTs involved in the Offer.

Under the terms of a similar Linked Offer for Subscription launched on 29 November 2012, Mobeus

are entitled to fees of 5.5% of gross investment subscriptions up to 30 December 2012 and 3.25%

of gross investment subscriptions after 30 December 2012. As at the date of this document, these

amounted to £587,752 across all three VCTs involved in the Offer.

4 Tax on profit/(loss) on ordinary activities

2012 2012 2012 2011 2011 2011 Revenue Capital Total Revenue Capital Total £ £ £ £ £ £

a) Analysis of tax charge:

UK Corporation tax on profits/(losses) for

the year 192,913 (192,913) - 181,181 (181,181) - ------- -------

------- ------- ------- -------

Total current tax charge/(credit) 192,913 (192,913) - 181,181 (181,181) - ------- -------

------- ------- ------- -------

Corporation tax is based on a rate of 20%

(2011: 20.25%)

b) Profit on ordinary activities before tax 1,290,092 3,044,343 4,334,435 1,144,752 518,869 1,663,621

Profit on ordinary activities multiplied by

small company rate of corporation tax in the

UK of 20% (2011: 20.25%) 258,018 608,869 866,887 231,812 105,072 336,884 Effect of: UK dividends (41,261) - (41,261) (86,249) - (86,249) Unrealised gains not allowable - (697,689) (697,689) - (139,467) (139,467) Realised gains not taxable - (57,306) (57,306) - (105,344) (105,344) Losses brought forward (70,631) - (70,631) (5,824) (5,824) Marginal rate 46,787 (46,787) - 41,442 (41,442) - ------- ------- ------- ------- ------- ------- Actual current tax charge 192,913 (192,913) - 181,181 (181,181) - ------- -------

------- ------- ------- -------

Tax relief relating to investment management fees is allocated between revenue and capital where such relief

can be utilised.

Investment Trust companies are exempt from tax on capital gains if they meet the HMRC criteria set out in

section 274 of the ITA. Deferred taxation

No provision for deferred taxation has been made on potential capital gains due to the Company's current status

as a VCT under section 274 of the ITA and the Directors' intention to maintain that status. There is an

unrecognised deferred tax asset of £31,225 (2011: £99,621) in respect of unrelieved surplus management

expenses. 5 Dividends paid and payable 2012 2011 £ £

Amounts recognised as distributions to equity holders in the year:

Final dividend for the year ended 31 December 2011 of 1.25p (income) (2010: 0.5p); 5p

(capital) (2010: 4.5p) per Ordinary Share 2,894,707 2,184,361

Interim dividend for the year ended 31 December 2012 of 0.5p (income) and 4.5p (capital)

(2011: 0.5p (income) per Ordinary Share) 2,325,761 218,236 ------- ------- 5,220,468 2,402,597 ------- ------- Proposed distributions to equity holders at the year-end:

Final dividend for the year ended 31 December 2012 of 1.5p (income) (2011: 1.25p); 0.5p

(capital) (2011: 5p) per Ordinary share 960,660 2,746,532

Any proposed final dividend is subject to approval by Shareholders at the Annual General Meeting and has not been

included as a liability in these financial statements.

Set out below are the total income dividends payable in respect of the financial year, which is the basis on which

the requirements of Section 259 of the Income Tax Act 2007 are considered. 2012 2011 £ £ Revenue available for distribution by way of dividends for the year 1,097,179 963,571 Interim income dividend of 0.5p (2011: 0.5p) paid during the year 232,576 218,236 Final income dividend proposed for the year ended 31 December 2012 of 1.5p (2011: 1.25p) per Ordinary Share 720,495 549,306 ------- ------- 953,071 767,542

6 Basic and diluted earnings per share

2012 2011 £ £ Total earnings after taxation: 4,334,435 1,663,621 Basic and diluted earnings per share (note a) 9.55p 3.89p Revenue profit from ordinary activities after taxation 1,097,179 963,571 Basic and diluted revenue earnings per share (note b) 2.42p 2.25p Net unrealised capital gains on investments 3,488,447 688,724 Net realised capital gains on investments 286,530 520,219 Capital management fees less taxation

( 537,721) ( 508,893)

------- ------- Total capital earnings 3,237,256 700,050 Basic and diluted capital earnings per share (note c) 7.13p 1.64p Weighted average number of shares in issue in the year

45,383,141 42,820,660

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 profit 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 earnings per share. 7 Investments at fair value Movements in

investments during the year are summarised as follows:

Traded on AiM Unquoted Unquoted Loan stock Total ordinary preference shares shares £ £ £ £ £ Cost at 31 December 2011 305,000

6,389,408 50,438 20,342,450 27,087,296

Net unrealised (losses)/gains at 31 December 2011 (44,481) 1,213,331 (13,548) (287,411) 867,891

Permanent impairment in value of investments -

(438,104) (1,829) (96,464) (536,397)

-------

------- ------- ------- -------

Valuation at 31 December 2011 260,519 7,164,635 35,061 19,958,575 27,418,790 Purchases at cost - 2,914,286 - 4,879,240 7,793,526 Sale proceeds -

(2,110,798) (3,306) (2,060,602) (4,174,706)

Realised gains - 319,301 - 12,317 331,618 Reclassification at value - (119,327) - 119,327 - Net unrealised gains/(losses) for the year 146,145

3,870,286 1,000 (528,984) 3,488,447

-------

------- ------- ------- -------

Closing valuation at 31 December 2012 406,664

12,038,383 32,755 22,379,873 34,857,675

Cost at 31 December 2012 305,000

9,846,540 45,303 22,898,727 33,095,570

Net unrealised gains/(losses) at 31 December 2012 101,664 2,629,947 (10,719) (422,390) 2,298,502

Permanent impairment in value of investments -

(438,104) (1,829) (96,464) (536,397)

-------

------- ------- ------- -------

Valuation at 31 December 2012 406,664

12,038,383 32,755 22,379,873 34,857,675

Within net unrealised gains of £3,488,447 for the year, the significant gains were £918,090 in Blaze Signs

Holdings Limited, £1,097,940 in ATG Media Holdings Limited, £708,443 in DiGiCo Global Limited, £481,240 in EMaC

Limited, £420,487 in Machineworks Software Limited, £497,168 in Focus Pharma Holdings Limited, £423,074 in CB

Imports Group Limited; the significant losses were as follows: £987,553 in ASL Technology Holdings Limited,

£294,800 in Faversham House Holdings Limited and £235,033 in British International Holdings Limited.

Reconciliation of investment transactions to cash and income statement movements

The cash flow from investment proceeds shown above of £4,174,706 differs from the sale proceeds shown in the

cash flow statement of £4,129,618, due to transaction costs of £45,088. These transaction costs also account for

the difference in realised gains between £331,618 shown above and £286,530 disclosed in the Income Statement.

8 Debtors 2012 2011 £ £ Amounts due within one year: Accrued income 200,660 311,809 Prepayments 14,865 17,726 Other debtors - 124 ------- ------- 215,525 329,659 ------- ------- 9 Current investments 2012 2011 £ £ Monies held pending investment 3,632,668 11,123,681

This comprises cash invested in six Dublin based OEIC money market funds, subject to immediate access and

£2,000,000 in a bank deposit, repayable within one year. These sums are regarded as monies pending

investment and are treated as liquid resources

10 Movement in share capital and reserves

Called up Capital Share Premium Revaluation

Special Profit and Total

Share redemption reserve reserve

distributable loss account

capital reserve reserve (note b) (note b) £ £ £ £ £ £ £ At 1 January 2012 426,061 56,182 22,034,106 3,455,913 11,161,745 3,592,168 40,726,175 Shares issued 52,805 - 4,984,523 - - - 5,037,328 Share bought back (19,401) 19,401 - - (1,588,947) - (1,588,947) Write off to special reserve (note a) - - - - (582,809) 582,809 - Realisation of previously unrealised gains - - - (2,057,836) - 2,057,836 - Dividends paid - - - - - (5,220,468) (5,220,468) Profit for the year - - - 3,488,447 - 845,988 4,334,435 ------- ------- ------- ------- ------- ------- ------- As at 31 December 2012 459,465 75,583 27,018,629 4,886,524 8,989,989 1,858,333 43,288,523 ------- ------- ------- ------- ------- ------- -------

Note a: The cancellation of the share premium account (as approved at the Extraordinary General Meeting

held on 30 June 2004 and by the order of the Court dated 24 August 2006) has provided the Company with a

special distributable reserve. The purpose of the reserve is to fund market purchases of the Company's own

shares and to write off existing and future capital losses, now that the Company has revoked its

investment company status and is obliged to take into account capital losses in determining distributable

reserves. The transfer of £582,809 to the profit and loss account from the special distributable reserve

is the total of realised capital losses incurred by the Company during the year.

Note b: These reserves total £10,848,322 (2011: £14,753,913) and are regarded as distributable reserves

for the purpose of assessing the Company's ability to pay dividends to Shareholders.

11 Basic and diluted net asset value per share

Net asset value per Ordinary share is based on net assets at the end of the

year and on 45,946,513 (2011: 42,606,052) Ordinary Shares, being the number

of Ordinary Shares in issue on that date.

12 Post balance sheet events

On 14 January 2013, 2,086,509 new ordinary shares were allotted at a price

of 94.6 pence per share under the Linked Offer for Subscription launched on

29 November 2012 raising net funds of £1,869,866.

On 18 February 2012, the Company made a further investment into Fullfield

Limited (trading as Motorclean) to enable it to acquire rival Company,

Forward Valeting Services Limited. The Company used its existing investment

of £1 million in the acquisition vehicle, Almsworthy Trading Limited to

fund the transaction, along with a further £336,154 from the Company's cash

reserves.

On 13 March 2013, the Court granted authority to the Company to cancel the

balance of its share premium account.

On 14 March 2013, the Company invested £1,857,764 (including £1,000,000

from Fosse Management Limited, one of the VCT's acquisition companies) to

support the MBO of Gro-group, the market leader for baby sleep time

products in the UK and Australia.

14 Financial Information

The financial information set out in these statements does not constitute

the Company's statutory accounts for the year ended 31 December 2012 in terms of section 434 of the Companies Act 2006 but is derived from those accounts. Statutory accounts for the year ended 31 December 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. 15 Annual Report

The Annual Report for the year ended 31 December 2012 will shortly be made

available on the Company's website: www.migvct.co.uk. and Shareholders will

be notified of this by email or post or sent a hard copy in the post in

accordance with their instructions. Copies will be available thereafter to

members of the public from the Company's registered office.

16 Annual General Meeting

The Annual General Meeting will be held at 10.30 am on Wednesday, 8 May 2013 at the offices of Mobeus Equity Partners LLP, 30 Haymarket, London SW1Y 4EX.

Contact details for further enquiries:

Robert Brittain of Mobeus Equity Partners LLP (the CompanySecretary) on 020 7024 7600 or by e-mail to mig@mobeusequity.co.uk.

Mark Wignall or Mike Walker at Mobeus Equity Partners LLP (theInvestment Manager) on 020 7024 7600 or by e-mail to info@mobeusequity.co.uk.