Last checked at 
23 Mar 2011 16:23
Matrix Income & Growth VCT plc
Annual Results Announcement for the year ended 31 December 2010
Investment Objective
Matrix Income & Growth VCT plc ("the VCT" or "MIG VCT") is a Venture CapitalTrust ("VCT") listed on the London Stock Exchange. Its investment portfolio,which invests primarily in established and profitable unquoted companies, ismanaged by Matrix Private Equity Partners LLP ("MPEP").The Company's objective is to provide investors with a regular income stream,by way of tax free dividends, and to generate capital growth which, followingportfolio realisations, can be distributed by way of additional tax freedividends.
Merger with Matrix Income & Growth 3 VCT plc
The Company merged with Matrix Income & Growth 3 VCT plc ("MIG 3 VCT") on 20May 2010 ("the Merger"). As part of the merger process MIG 3 VCT was placed inmembers' voluntary liquidation and its assets and liabilities were transferredto the Company. 20,572,129 new ordinary shares of 1 penny each in the capitalof the Company were issued on 20 May 2010 at a deemed issue price of 83.2 penceper share to acquire net assets of £17,111,545 from MIG 3 VCT. Each MIG 3 VCTshareholder received approximately 1.0655 shares in MIG VCT (rounded down tothe nearest whole number) for each MIG 3 VCT share that they held at the dateof the merger. By way of illustration, a shareholder who previously held 10,000MIG 3 VCT shares now holds 10,655 shares in the Company. Further detailsexplaining the basis of the Merger can be found in Note 2 to the accountsbelow.
Financial Highlights
The Company acquired the net assets and liabilities of MIG 3 VCT on 20 May 2010. At that date, the net assets of the merged VCT were £34.1 million, which have increased to £38.5 million at 31 December 2010.
Performance Summary
The net asset value (NAV) per share at 31 December 2010 was 96.7 pence
To help Shareholders who originally invested in the Company and in MIG 3 VCTunderstand the recent past performance of their investment, comparative datafor each company is shown below. Total return (NAV basis) comprises NAV pershare plus cumulative dividends paid per share:- Net NAV Net Total return (NAV Share Total assets per cumulative basis) per share price2 expense Share dividends to shareholders ratio (£m) paid per since launch(p) (p) (p) share (p) MIG VCT As at 31 December 38.5 96.7 21.3 118.0 84.0 2.8%2010 1 As at 31 December 17.0 83.3 16.3 99.6 57.0 3.7%2009 As at 31 December 18.0 86.5 15.3 101.8 74.5 3.8%2008 MIG 3 VCT As at 31 December - 103.0 9.5 112.5 - -2010 1 As at 31 December 17.5 90.0 5.5 95.5 63.0 3.6%2009 As at 31 December 17.8 88.9 4.8 93.7 80.0 3.7%2008
1 Thedata at 31 December 2010 shows the return on an initial subscription price of 100p at the date of inception of each VCT taken from the table below divided by £10,000.
2 Source: London Stock Exchange.
Return before and after tax relief
The tables below show the total returns (NAV basis) at 31 December 2010 for ashareholder in each VCT that invested £10,000 at £1 a share at each VCT'sinception. MIG VCT MIG 3 VCT 2004/05 2005/06
Original investment (10,000 shares at £1 (£) 10,000
10,000each) Number of shares held post merger 10,000 10,655 Rate of income tax relief % 40% 40%
Cost net of income tax relief (£) 6,000
6,000 NAV at 31 December 2010 (£) 9,666 10,299
Dividends paid to shareholders since (£) 2,130
955subscription Total return (NAV basis) to shareholders (£) 11,796 11,254since subscription
Profit/(loss) before income tax relief (£) 1,796
1,254
Profit/(loss) after income tax relief 1 (£) 5,796
5,254
1 Total return (NAV basis) minus cost net of income tax relief
Liquidity and DiscountManagement
The Company holds approximately £7.5 million in readily realisable assets thatare available for further investments, dividends and share buy-backs. Thecurrent discount for the Company's shares is 11.6%at today's date. The discounthas therefore narrowed considerably from 38.1% on 20 May 2010 following the
Merger.Dividend historyIn respect of year Dividends paid in each year since launch ended Payment date MIG VCT MIG 3 VCT (p) per share (p) per share 31 December 2005 27 September 2005 0.30 -(interim) 31 December 2005 16 May 2006 0.70 - 31 December 2006 14 September 2006 0.80 -(interim) 31 December 2006 18 May 2007 1.40 1.25 31 December 2007 20 September 2007 1.00 1.00(interim) 31 December 2007 21 May 2008 7.80 1.50 31 December 2008 11 September 2008 3.30 1.00(interim) 31 December 2008 15 May 2009 1.00 0.80 31 December 2009 21 April 2010 5.00 4.00(interim) ----------- ----------- Cumulative dividends paid prior to the 21.30
9.55
merger
Dividends paid include distributions from both income and capital.
Dividends proposed
A final dividend of 5.0 pence per share, comprising 4.5 pence from capital and0.5 pence from income, will be recommended to Shareholders at the AnnualGeneral Meeting of the Company to be held on 4 May 2011 and this dividend, ifapproved, will be paid on 27 May 2011 to Shareholders on the Register on 13
May2011.Chairman's Statement
I am pleased to present the annual results of MIG VCT plc for the year to 31 December 2010.
Overview
The year under review was dominated by uncertainty in the UK economy, the impact of the Coalition Government and, more recently, public sector expenditure cuts and a slowdown in consumer expenditure.
It is therefore encouraging to report a year of solid progress by your Companydespite these challenging conditions. The year saw the successful merger withMIG 3 VCT and an increase of 18.5% in the total return (NAV basis) per shareover the year as a whole. Given the less uncertain investment outlook for theVCT portfolio and the Company's healthy liquidity position, your Boardimplemented its share buy-back policy so as to reduce significantly thediscount of the share price to NAV to 11.6% as at the date of this report. Newinvestment activity saw a sharp and welcome increase in the second half of theyear and the Company also launched a linked fundraising with two other Matrixadvised VCTs in November 2010 ("the Joint Offer"). A total of £3.3 million hasbeen raised for the Company under the Joint Offer to date and 3,465,559 newshares in the capital of the Company have been issued to subscribers after theyear-end.
Merger with Matrix Income & Growth 3 VCT plc
In the Half-Yearly Report, I reported that the Company had successfully mergedwith MIG 3 VCT. The merger created an enlarged company, broadly doubling netassets to £34.1 million (£38.5 million at the year-end). It has resulted inmaterial cost savings and simpler administration. The ratio used for theconversion of MIG 3 VCT shares to shares in MIG VCT was approximately 1.0655.Shareholders were issued with new share certificates on 26 May 2010.
Performance
The total return (NAV basis) per share, including dividends paid to date, isnow 118.0 pence (2009: 99.6 pence), an increase over the year of 18.5% (2009:fall of 2.2%). This compares with the initial NAV per share, net of initialcosts, of 94.5 pence representing a positive total return (NAV basis) per sharesince inception of 24.9% (2009: 5.4%).
Former MIG 3 VCT Shareholders can refer to the tables included in the Financial Highlights above for information on the performance of their original investment including dividend payments.
New investment and portfolio review
The Manager saw an upturn in deal activity in the second half of 2010 and alsoin the first quarter of 2011 and is hopeful this will be sustained. Four newinvestments were completed towards the end of the year. Three were MBOs: RDLRecruitment Corporation Limited (RDL), Faversham House Group Limited andAutomated Systems Group plc (ASL). The Company's existing investments inacquisition vehicles Aust and Apricot Trading were used in respect of the RDLand ASL investments. The fourth was an investment in AiM listed OmegaDiagnostics plc, a provider of high quality in vitro diagnostics products.A number of the loan stocks held by the Company, totalling £672,775 in value,have been partially repaid during the year (including any premiums paid). Theseinclude repayments from DiGiCo Europe, Monsal, Westway and ATG Media. Inaddition, payment of £1,205,180 has also been received after the year-end fromIglu.com in full repayment of its loan stock. Iglu has done particularly wellto increase its cash balances to this extent since investment in December 2009and it is encouraging to see that all three investments made towards the end of2009, Iglu, CB Imports (Country Baskets) and Westway, are all valued in excessof cost, having comfortably exceeded their investment plans.
Against this, a number of companies, particularly those exposed to the building and construction sectors, are still experiencing difficult trading as the economy emerges from recession and their valuations reflect this.
Following the year-end, the Company sold its entire investment in Campden Media for a cash consideration of £836,294.
Further details of these investments and the year's other transactions can be found in the Investment Manager's Review below.
Review of Results
The performance referred to earlier is reflected in a profit for the year of £6,321,656 (2009: loss of £564,172). This turnaround is mainly due to the risein the valuation of the portfolio of £6,527,412, itself reflecting the goodoverall performance of a number of individual companies, as explained in theInvestment Manager's Review. Pleasingly, the revenue return for the year (fromwhich any income dividends are paid) has improved from £8,797 in 2009 to £313,297 this year. This is because income has risen, while expenses arefalling, as explained below.Income has risen from last year, which is only to be expected, as this year'sincome includes income from MIG 3 VCT plc investments since the merger.However, income this year also exceeds the total for both VCTs last year, dueprincipally to a dividend of £135,189 from DiGiCo and higher loan stockinterest from investee companies.Revenue is still suffering from the low level of interest rates and thoseassets linked to variable interest rates, such as the Company's holdings inOEIC money-market funds, are continuing to yield considerably lower levels ofincome compared to previous periods before the fall in bank interest rates. Inaddition, certain of the investee companies are not currently fully servicingthe loans that the Company has made to them. Together, these factors have, andmay continue, to result in lower income dividends for the foreseeable future.
However, the revenue account has started to benefit from the savings in running costs envisaged as a consequence of the merger, and it is pleasing that a revenue surplus has been achieved, even after incurring £69,089 of merger costs.
Dividends
Your Directors are pleased to recommend a final dividend in respect of 2010 ofa total of 5.0 pence per share (2009: 5.0 pence (interim dividend)), comprising0.5 pence per share from income (2009: 0.5 pence (interim dividend)) and 4.5pence per share from capital (2009: 4.5 pence (interim dividend)).
Subject to approval by Shareholders, this dividend will be paid on 27 May 2011 to Shareholders on the Register on 13 May 2011. This payment would bring cumulative dividends paidby MIG VCT since inception to 26.3 pence per share.
Investment in qualifying holdings
The Company has continued to meet the target set by HM Revenue & Customs ofinvesting not less than 70% of total funds raised in qualifying unquoted andAiM quoted companies ("the 70% test"). At 31 December 2010, the Company was80.0% invested in qualifying companies (based upon the tax values, which differfrom the Investment Portfolio Summary below).
Share buy-backs
Prior to the Merger on 20 May 2010, MIG VCT bought back 33,525 of the Company'sown shares at a price of 54.8 pence per share and MIG 3 VCT bought back 103,995of its own shares at a price of 59.1 pence per share at a total aggregate costof £80,279. These shares, representing 0.16% and 0.54% respectively of theissued share capital of MIG VCT and MIG 3 VCT at the beginning of the year,were subsequently cancelled by the Company.Following the Merger, the Company has bought back 1,132,572 of its own sharesat an average price of 76.6 pence per share for a cost of £871,505. Purchasesin the first half of the year were made at discounts to the latest publishedNAVs per share ranging between 16% and 38% compared to between 10 and 11% inthe second half of the year. The wide discounts at which the shares were boughtback at the beginning of the year reflected the uncertain economic, financialand market conditions prevailing at the time. However, the investment portfoliovalue has shown resilience and the Company's strong liquidity position enabledyour Board to narrow significantly the level of discount and stabilise itaround 10%.The Company's shares are listed on the London Stock Exchange and as such theyshould be sold in the same way as any other quoted company through astockbroker. However, to ensure that they obtain the best price, Shareholderswishing to sell their shares are advised to contact the Company's stockbroker,Matrix Corporate Capital, by telephoning 020 3206 7176/7 before agreeing aprice with their stockbroker or placing an order on an online share dealingsystem. Shareholders are also advised to discuss their individual tax positionwith their financial advisor before deciding to sell their shares.
Ongoing Shareholders, of course, benefit from the difference between the Net Asset Value and the value at which the Shares are bought back and cancelled.
Fundraising
The Company is participating in a linked fundraising with The Income & GrowthVCT plc and Matrix Income & Growth 4 VCT plc launched on 12 November 2010 toraise up to £21 million across the three VCTs. The funds raised for the VCT ofup to £7 million will enhance the Company's cash position enabling it tocapitalise on new investment opportunities and spread fixed running costs overa larger asset base. Details of the Offer have been posted to Shareholders.This Offer has been well received and so far raised a further £3.3 million forthe Company.The Offer will remain open until 30 April 2011 (5 April 2011 in respect of thecurrent tax year) although the Directors of the three VCTs reserve the right toextend the closing date at their discretion.
The Board
Christopher Moore was appointed the independent Chairman of Matrix Income & Growth 4 VCT with effect from September 2010. In preparation for this he resigned from your Board on completion of the Merger with MIG 3 VCT.
I would like to take this opportunity to thank Christopher for the valuablecontribution he made to the Company since its launch and in particular for hisleadership as Chairman of the Investment Committee. His wise guidance and sageadvice were always greatly appreciated.
Communication with shareholders
We aim to communicate regularly with our Shareholders. In addition to theHalf-Yearly and Annual Reports, Shareholders have received a twice-yearlyInvestment Manager's Newsletter, approved by the Board. In 2011, the Manager isintending to replace this with a Newsletter to be circulated to all Matrix VCTshareholders in June and December of each year. 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 arranged a successful investor workshop in December 2010 to giveall Matrix-advised VCT Shareholders the opportunity to hear about the Manager'sinvestment activity in greater depth. Around 100 attendees heard presentationsby the Manager and from two of the successful entrepreneurs of portfoliocompanies. It is intended that this will be an annual event to be held eachDecember, to which Shareholders will be sent an invitation.
Outlook
The outlook for the UK economy remains uncertain and there are many challengesfacing smaller companies. However, the majority of companies in the portfoliocontinue to have sound liquidity and are trading profitably. Several arereporting results ahead of budget. It is encouraging that the portfolio as awhole remains resilient and that value has increased despite the volatility inthe year. The Manager aims to invest in only those companies with strongcompetitive positions in niche markets that they believe will perform stronglywithin their sector. Whilst poor quality companies may find conditionsincreasingly challenging in 2011, well-managed and well-capitalised smallercompanies with strong sales propositions should still prosper. Prospects foradditional new investment and profitable exit opportunities have improved andthis together with the Company's strong cash position gives your Boardconfidence in the future prospects for Shareholders.
Finally, I would like to express my thanks to all Shareholders for their continuing support of the Company.
Keith NivenChairman
Responsibility Statement of the Directors in respect of the Annual Financial Report
The Annual Report and Accounts contains the following statements regardingresponsibility for the management report and financial statements included inthe Annual Report and Accounts from which the information in this Announcementhas been extracted (references in the following statements are to sections ofthe Annual Report and Accounts).
The Directors confirm that to the best of their knowledge:
(a) the financial statements, 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 loss of the Company.
(b) the management report, comprising the Chairman's Statement, Investment
Portfolio Summary, Investment Manager's Review and Directors' Report, includes
a fair review of the development and performance of the business and the
position of the Company, together with a description of the principal risks and
uncertainties that it faces.
Approved by the Board on 23 March 2010 and signed on its behalf by:
Keith NivenChairmanInvestment PolicyThe VCT's policy is to invest primarily in a diversified portfolio of UKunquoted companies. Investments are usually structured as part loan and partequity in order to generate regular income and to generate capital gains fromrealisations.
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 own. Investments are primarily made in companies that are established and profitable.
Uninvested funds are held in cash and low risk money market funds.
UK companies
For funds raised before 6 April 2006, the companies in which investments weremade must have had no more than £15 million of gross assets at the time ofinvestment to be classed as a VCT qualifying holding. The funds raised by theCompany after 6 April 2006 are subject to the £7 million gross assets test foran investment to be VCT qualifying.
VCT regulation
The investment policy is designed to ensure that the VCT continues to qualifyand is approved as a VCT by HMRC. Amongst other conditions, the VCT may notinvest more than 15% of its investments in a single company and must have atleast 70% by value of its investments throughout the period in shares orsecurities comprised in VCT qualifying holdings, of which a minimum overall of30% by value must be in ordinary shares which carry no preferential rights(save as may be permitted under VCT rules). In addition, although the VCT caninvest less than 30% of an investment in a specific company in ordinary sharesit must have at least 10% by value of its total investments in each VCTqualifying company in ordinary shares which carry no preferential rights (saveas may be permitted under VCT rules).
The VCT regulations in respect of funds raised after 6 April 2011 will change, such that 70% of such funds must be invested in equity.
Asset mix
MIG VCT holds its liquid funds in a portfolio of readily realisable interest-bearing investments and deposits. The investment portfolio of qualifying investments has been built up over time with the aim of investing and maintaining 80% of net funds raised in qualifying investments.
Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses acrossdifferent industry sectors. To reduce the risk of high exposure to equities,each qualifying investment is structured to maximise the amount which may beinvested in loan stock. Initial investments in VCT qualifying companies are,subject to formal approval from the MIG VCT Board, generally made in amountsranging from £200,000 to £1 million at cost. No holding in any one company willrepresent more than 10% of the value of the VCT's investments at the time ofinvestment. Ongoing monitoring of each investment is carried out by the Managergenerally through taking a seat on the board of each VCT qualifying company.
Co-investment
The VCT aims to invest in larger more mature unquoted companies through investing alongside three other VCTs advised by MPEP with a similar investment policy. This enables the VCT to participate in combined investments by the Manager of up to £5 million.
Borrowing
The VCT's articles permit borrowings of amounts up to 10% of the sum equal tothe aggregate of the amount paid up on the allotted or issued share capital ofthe Company and the amount standing to the credit of the capital and revenuereserves of MIG VCT (whether or not distributable) after adding thereto ordeducting therefrom any balance standing to the credit or debit of the profitand loss account. However, the VCT has no current plans to undertake anyborrowing.
Management
The Board has overall responsibility for the Company's affairs including thedetermination of its investment and share buy-back policies. 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 Company are:
Economic risk - events such as an economic recession and movement in interestrates could affect trading conditions for smaller companies and consequentlythe value of the Company's qualifying investments.Loss of approval as a Venture Capital Trust - the Company must comply withsection 274 of the Income Tax Act 2007 which allows it to be exempted fromcapital gains tax on investment gains. Any breach of these rules may lead tothe Company losing its approval as a VCT, qualifying Shareholders who have notheld their shares for the designated holding period having to repay the incometax relief they obtained and future dividends paid by the Company becomingsubject to tax. The Company would also lose its exemption from corporation taxon capital gains.Investment and strategic risk - inappropriate strategy or consistently weak VCTqualifying investment recommendations might lead to under performance and poorreturns to Shareholders.Regulatory risk - the Company is required to comply with the Companies Acts,the rules of the UK Listing Authority and United Kingdom Accounting Standards.Breach of any of these might lead to suspension of the Company's Stock Exchangelisting, financial penalties or a qualified audit report.
Financial and operating risk- inadequate controls might lead to misappropriation of assets. Inappropriate accounting policies might lead to misreporting or beaches of regulations. Failure of the Manager's accounting systems or disruption to its business might lead to an inability to provide accurate reporting and monitoring.
Market risk - Investment in unquoted companies, by its nature, involves ahigher degree of risk than investment in companies traded on the London StockExchange main market. In particular, smaller companies often have limitedproduct lines, markets or financial resources and may be dependent for theirmanagement on a smaller number of key individuals.
Asset liquidity risk - The Company's investments may be difficult to realise especially in the current economic climate.
Market liquidity risk - Shareholders may find it difficult to sell their shares at a price which is close to the net asset value.
Credit/counterparty risk
A counter party may fail to discharge an obligation or commitment that it has entered into with the Company.
The Board seeks to mitigate the internal risks by setting policy and byundertaking a key risk management review at each quarterly Board meeting.Performance is regularly reviewed and assurances in respect of adequateinternal controls and key risks are sought and received from the Manager on asix monthly basis. In the mitigation and management of these risks, the Boardapplies rigorously the principles detailed in the AIC Code of CorporateGovernance. The Board also has a share buy-back policy to try to mitigate theMarket Liquidity risk. This policy is reviewed at each quarterly Board Meeting.
Investment Manager's Review
Overview
We are pleased to report that the latter part of the year has seen many signsof improvement in our investment marketplace. This makes us increasinglyconfident that the UK economy is starting to generate conditions for greatervolumes of attractively priced new investments. Confidence is improving amongmost of the management teams of companies in the portfolio, following anextended period of challenging trading conditions in most market sectors.Following a significant pick up in deal flow, our strategy is to select nichecompanies with strong market positions within their sectors rather thantargeting specific sectors. However, we remain alert to the potential impact onthe UK economy of the cuts in public spending that are being implemented by theCoalition Government.We have been appreciative of the Board's support through a period when we havethought it prudent to retain funds until economic conditions improved, ratherthan make investments of a lower quality. Where we have chosen to invest, ourstrategy has been to ensure that the companies were properly capitalised at thetime of investment so that they were well positioned to contend with adversemarket conditions. This, together with our focus on MBOs of established,profitable companies, has enabled us to build a resilient portfolio which hasweathered the recession well.It is notable that no further funding has been required by any of the investeecompanies, to help them deal with the downturn, during the year. We have beenworking actively with the management teams of investee companies encouragingthem to take cost cutting measures and discussing their budgets, forecasts andcost structure to ensure that their businesses remain as resilient as possible.The majority of investee companies have managed their cashflow well and remaincash-generative. Since commencing the investment programme five years ago, justtwo investments representing 1.3% of total investment current cost have failed.In addition to Legion Group which is discussed below, FH Ingredients was putinto Administration and subsequently dissolved in December 2008.
New investment
The last few months have been relatively busy in terms of investment activitywith four new investments completing since the end of October, two of whichused existing acquisition vehicles. In the first of these, the Company used itsinvestment of £1 million in the acquisition vehicle, Aust, to support the MBOof RDL Recruitment Corporation, a European recruitment provider within thepharmaceutical, business intelligence and IT sectors based in London andWoking. The company, which employs 70 staff, was established in 1992. Itsources staff for over 300 major companies, matching niche professionals with"hard to fill" contract assignments and staff positions. The VCT's totalinvestment in this company, which changed its name to Aust Recruitment GroupLimited following the MBO, now stands at £1.6 million.Secondly, the VCT invested £527,214 in December to support the MBO of FavershamHouse Group Limited. Based in Croydon, this is an established, media companyproviding magazines, exhibitions and online resources in the environment andsustainability, visual communications and building services sectors.Again in December, the VCT invested £305,000 into the AiM listed company OmegaDiagnostics Group Plc. Based in Alva, Scotland this company provides highquality in vitro diagnostics products for use in hospitals, blood banks,clinics and laboratories in over 100 countries and specialises in the areas offood intolerance, autoimmune disease and infectious disease. The share pricehas moved up since investment, giving an early uplift from cost of £76,248 bythe year-end.Finally, also in December, the VCT used its existing acquisition vehicle,Apricot Trading, to support the MBO of Automated Systems Group plc, a Cambridgebased printer and copier services business with a broad customer base ofschools and SMEs. The VCT's total investment in this company, which changed itsname to ASL Technology Holdings Limited following the MBO now stands at £1.3million.Our Operating Partner programme continues to pursue an active search forinvestment opportunities and the three remaining acquisition vehicles, BladonCastle Management, Fullfield and Vanir Consultants, are all actively seekingsuitable investment opportunities in a variety of sectors including foodmanufacturing, retailing, brand management, health and well-being and IT, butso far have not found sufficiently attractive investment opportunities at theright price. Each of the acquisition vehicles is headed by an experiencedChairman, well-known to us, who is working closely with us in seeking toidentify and complete investments in specific sectors relevant to theirindustry knowledge and experience.
Realisations
We are pleased to report that a number of companies in the portfolio continueto be strongly cash generative. As a result of this the Company has received atotal of £672,775 in loan stock repayments during the year (including anypremiums paid). Amongst these, DiGiCo Europe continues to make regularrepayments, the latest amount being £145,239 received in June. Monsal repaid £130,250 in July; Westway made two repayments totalling £215,496 in Septemberand November; and ATG Media repaid £181,790 in October.Since the year-end, Iglu.com has repaid its loan stock in full, realising £1,205,180 for the Company. It is particularly impressive that Iglu generatedsufficient cash in the short time since investment in December 2009 to makethis repayment possible.In January 2011, following the year-end, the Company realised its entireinvestment in Campden Media for a cash consideration of £836,294, representing85.8% of the total investment cost of £975,000. Together with interest paidover the life of the investment the total cash return was £1,016,150,representing 104.2% of cost.
Portfolio review
As at 31 December 2010, the portfolio comprised twenty-four (2009: twenty-twoin the combined portfolios of the two VCTs) qualifying investments with a costof £26.9 million (2009: £27.2 million) and valued at £31.0 million (2009: £23.9million) representing 115.4% (2009: 87.5%) of cost. Six of these investmentsare currently held at cost, eight are valued at below cost and ten above cost.Realisations during the year generated cash proceeds of £1.1 million.The three investments made towards the end of 2009 into Westway, CB Imports(Country Baskets) and Iglu.com, are all now valued above cost as a result ofout-performance of their investment plans. Despite seeing a fall in licenceincome, VSI has gained from the relative weakness of sterling against the USdollar. This company paid a dividend to the VCT of £18,213 in April 2010.Vectair continues to expand its export business and is making particularly goodprogress in the US market. Focus Pharma continues to trade well, comfortablyexceeding its budget for the year to 31 December 2009 and this growth inprofitability has continued during 2010.The construction and house building sectors remain weak and Youngman, PXP andPlastic Surgeon continue to trade well below pre-economic downturn levels. Eachbusiness has reduced its costs and managed its cash resources effectively.Youngman has almost fully repaid its acquisition debt since investment and iswell positioned to benefit from any upturn in its markets. PXP has moved awayfrom its dependence on private and public sector house builds towardscommercial buildings including hotels, doctor's surgeries and conveniencestores. Plastic Surgeon has diversified into commercial property and insurancemarkets.Monsal is currently trading well behind budget reflecting ongoing projectdelays. We have reduced the valuation of this business to cost pending greatervisibility of its upside potential, notwithstanding the substantial investmentmade at a higher valuation by a strategic partner during the year,. Blaze Signshas recovered strongly over the year and enjoyed particularly strong autumnmonths. Racoon has continued to recover profitability during 2010.Disappointingly, Legion Group requested a suspension of trading of its sharesin July 2010 pending clarification of the company's financial position. Legionhad a healthy order book but continued to suffer working capital constraints.On 6 August 2010, the board appointed administrators and the business wassubsequently sold to OCS Group, culminating in a write off to the Company of £150,106.
Our strategy remains to invest in strong, profitable companies and we consider that the prospect of further recovery and progress over the medium term is good. This is because we believe that the portfolio, taken as a whole, is resilient and of high quality.
Whilst we cannot be sure of the extent of UK economic recovery, we have beenencouraged by changes in the year and we look forward to a productive newinvestment period. Although the coming months are likely to prove more testingas the public sector cuts begin to take effect, we consider that good qualitycompanies of the calibre in which we seek to invest, capable of maintainingcompetitive advantage, have the potential to succeed in this environment. Weare seeing the confidence of both vendors and sellers return. Having retainedsignificant uninvested cash, which will be bolstered by the currentfundraising, we consider the Company is very well placed to cover both anyportfolio needs that may arise and to fund attractive new investmentopportunities that should be presented.Further details of the ten largest investments in the current portfolio,excluding the three remaining acquisition vehicles (Bladon Castle Management,Fullfield and Vanir Consultants) which have yet to complete investments and areheld at cost, are outlined below.DiGiCo Europe Limitedwww.digiconsoles.com Total Ordinary shares Preference shares Loan stock Cost £1,984,959 £1,765,276 £845 £218,838 Valuation £3,642,210 £3,414,433 £845 £226,932
Basis of valuation: Discounted earnings multiple
Equity % held and voting rights: 12.7%
Business: Designer and manufacturer of digital sound mixing consoles
Location: Chessington, Surrey
History: Management buyout
Income receivable, recognised for the year: £151,521
Audited financial information:
Year ended Turnover Operating profit * Net assets 31 December 2009 £12,922,000 £3,026,000 £5,660,000 British International Holdings Limitedwww.islesofscillyhelicopter.com Total Ordinary shares Preference Loan stock shares Cost £2,026,316 £225,000 £1,000 £1,800,316 Valuation £2,989,638 £726,124 £1,750 £2,261,764
Basis of valuation: Discounted earnings multiple
Equity % held and voting rights: 17.5%
Business: Helicopter service operator
Location: Sherborne, Dorset
History: Management buyout
Income receivable, recognised for the year: £31,905
Audited financial information:
Year ended Turnover Operating profit * Net assets 31 December 2009 £16,050,000 £976,000 £2,970,000 CB Imports Group Limited (Country Baskets)www.countrybaskets.co.uk Total Ordinary shares Preference Loan stock shares Cost £2,000,000 £350,000 - £1,650,000 Valuation £2,655,449 £655,449 - £2,000,000
Basis of valuation: Discounted earnings multiple
Equity % held and voting rights: 12.0%
Business: Importer and distributor of artificial flowers and floral sundries.
Location: East Ardsley, West Yorkshire
History: Management buyout via acquisition vehicle
Income receivable, recognised for the year: £116,814
Audited financial information:
14 months ended Turnover Operating profit Net assets 31 December 2009 £19,755,000 £2,437,000 £8,358,000 The financial information quoted above relates to the operating subsidiary, CBImports Limited.Iglu.com Holidays Limited www.iglu.com Total Ordinary shares Preference Loan stock shares Cost £1,421,750 £213,263 £3,306 £1,205,181 Valuation £2,328,376 £906,626 £3,306 £1,418,444
Basis of valuation: Discounted earnings multiple
Equity % held and voting rights: 11.6%
Business: On-line ski and cruise travel agent
Location: Wimbledon
History: Management buyout via acquisition vehicle
Income receivable, recognised for the year: £79,128
Audited financial information:
Year ended Turnover Operating profit * Net assets 31 May 2010 £56,617,000 £974,000 £5,151,000 The financial information quoted above relates to the operating subsidiary,Iglu.com Limited.ATG Media Holdings Limitedwww.antiquestradegazette.com Total Ordinary shares Preference Loan stock shares Cost £1,486,110 £530,871 £1,818 £953,421 Valuation £2,066,951 £1,020,208 £1,818 £1,044,925
Basis of valuation: Discounted earnings multiple
Equity % held and voting rights: 14.0%
Business: Publisher and on-line auction platform operator
Location: London
History: Management buyout via acquisition vehicle
Income receivable, recognised for the year: £71,455
Audited financial information:
Year ended Turnover Operating profit * Net assets 30 September 2009 £6,118,000 £873,000 £2,010,000 Focus Pharma Holdings Limitedwww.focuspharmaceuticals.co.uk Total Ordinary shares Preference Loan stock shares Cost £1,370,126 £384,663 £1,953 £983,510 Valuation £1,737,336 £560,676 £1,953 £1,174,707
Basis of valuation: Discounted earnings multiple
Equity % held and voting rights: 4.9%
Business: Licensor and distributor of generic pharmaceuticals
Location: Burton upon Trent, Staffordshire
History: Management buyout
Income receivable, recognised for the year: £80,570
Audited financial information:
Year ended Turnover Operating profit * Net assets 31 December 2009 £16,997,000 £1,151,000 £2,917,000 VSI Limitedwww.lightworkdesign.com Total Ordinary shares Preference Loan stock shares Cost £907,993 £440,720 £4,447 £462,826 Valuation £1,698,657 £1,138,102 £4,447 £556,108
Basis of valuation: Discounted earnings multiple
Equity % held and voting rights: 21.8% (20.1% fully diluted)
Business: Provider of software for CAD and CAM vendors
Location: Sheffield
History: Management buyout
Income receivable, recognised for the year: £58,147
Audited financial information:
Year ended Turnover Operating profit Net assets * 31 December 2009 £4,399,000 £560,000 £976,000Aust Recruitment Group Limitedwww.rdlcorp.com Total Ordinary shares Preference Loan stock shares Cost £1,558,334 £271,044 £1,558 £1,285,732 Valuation £1,558,334 £271,044 £1,558 £1,285,732 Basis of valuation: Cost
Equity % held and voting rights: 14.1%
Business: Recruitment consultants for the pharmaceutical, business intelligence and IT industries
Location: Woking, Surrey
History: Management buyout via acquisition vehicle
Income receivable, recognised for the year: £22,544
Audited financial information: First audited accounts since the MBO will be for the year ended 31 December 2010
Blaze Signs Holdings Limitedwww.blaze-signs.com Total Ordinary shares Preference Loan stock shares Cost £1,699,507 £472,125 £19,672 £1,207,710 Valuation £1,332,921 - - £1,332,921
Basis of valuation: Discounted earnings multiple
Equity % held and voting rights: 20.8%
Business: Manufacturer and installer of signs
Location: Broadstairs, Kent
History: Management buy-out
Income receivable, recognised for the year: £67,686
Audited financial information:
Year ended Turnover Operating profit * Net assets 31 March 2010 £15,826,000 £414,000 £2,834,000 ASL Technology Holdings Limited (formerly Apricot Trading Limited)www.aslplc.co.uk Total Ordinary shares Preference Loan stock shares Cost £1,290,479 £452,130 - £838,349 Valuation £1,290,479 £452,130 - £838,349 Basis of valuation: Cost
Equity % held and voting rights: 10.3% (fully diluted)
Business: Supplier of printer and photocopier services
Location: Cambridge
History: Management buyout via acquisition vehicle
Income receivable, recognised for the year: £2,067
Audited financial information: First audited accounts since investment will be for the year ended 30 September 2011
Further details of the investments in the Company's portfolio may be found on the Manager's website: www.matrixpep.co.uk.
________________________________________________________________
* Operating profit is stated before charging amortisation of goodwill where appropriate for all investee companies.
None of our investee companies are in breach of filing deadlines with the Registrar of Companies.
Investment Portfolio Summaryas at 31 December 2010 Date of Total Valuation % value % of initial book of net equity investment cost assets held by funds managed by MPEP* £'000 £'000 Qualifying investments AIM quoted investments Legion Group plc (in Aug-05 150 - 0.0% 2.9%administration)
Provider of manned guarding, mobile patrolling, and alarm
response services
Omega Diagnostics Group plc Dec-10 305 381 1.0%
9.8%
In vitro diagnostics for food intolerance, autoimmune diseases
and infectious diseases -------- -------- -------- 455 381 1.0% Unquoted investments DiGiCo Europe Limited Jul-07 1,985 3,642 9.5% 30.0%
Designer and manufacturer of digital sound mixing consoles British International Holdings May-06 2,026 2,990 7.8% 34.9%Limited Helicopter service operator CB Imports Group Limited Dec-07 2,000 2,656 6.9% 24.0%(Country Baskets) Importer and distributor of
artificial flowers and floral
sundries. Iglu.com Holidays Limited Oct-07 1,422 2,328 6.0% 35.0%
On-line ski and cruise travel
agent ATG Media Holdings Limited Oct-08 1,486 2,067 5.4% 40.0%
Publisher and on-line auction
platform operator
Focus Pharma Holdings Limited Oct-07 1,370 1,737 4.5% 13.0% Licensor and distributer of
generic pharmaceuticals VSI Limited Apr-06 908 1,699 4.4% 48.9%
Provider of software for CAD and
CAM vendors Aust Recruitment Group Limited Oct-07 1,558 1,558 4.1% 45.2%formerly Aust Construction Investors Limited)
Recruitment consultants for the pharmaceutical, business intelligence and IT industries
Blaze Signs Holdings Limited Apr-06 1,700 1,333 3.5% 52.5% Manufacturer and installer of
signs ASL Technologies Holdings Mar-08 1,291 1,291 3.3% 34.0%Limited (formerly Apricot Trading limited)
Printer and photocopier services
Westway Services Holdings (2010) Jun-09 603 1,182 3.1% 13.0% Limited (formerly MC440 Limited)
Designer and distributor of air
conditioning units. Monsal Holdings Limited Dec-07 1,182 1,174 3.1% 30.1%
Supplier of engineering services
to water and waste sectors Bladon Castle Management Limited Dec-08 1,000 1,000 2.6% 50.0%Company seeking to acquire businesses in the retail or
health and well-being products
sector Fullfield Limited Dec-08 1,000 1,000 2.6% 50.0%Company seeking to acquire businesses in food
manufacturing, distribution or
brand management sectors Vanir Consultants Limited Oct-08 1,000 1,000 2.6% 50.0%Company seeking to acquire
buisnesses in data management,
mapping, data mapping and management services Vectair Holdings Limited Jan-06 560 995 2.6% 24.0%Designer and distributor of washroom products Campden Media Limited Jan-06 975 836 2.2% 28.0%Magazine publisher and conference organiser
Racoon International Holdings Dec-06 1,213 760 2.0% 49.0% Limited
Supplier of hair extensions, hair care products and training
Youngman Group Limited Oct-05 1,000 701 1.8% 29.7%Manufacturer of ladders and access towers
Faversham House Holdings Limited Dec-10 527 527 1.4% 31.4% Publisher, exhibition organiser
and operator of websites The Plastic Surgeon Holdings Apr-08 478 186 0.5% 30.0%Limited Supplier of snagging and finishing services to the
domestic and commercial property
markets PXP Holdings Limited (Pinewood Dec-06 1,164 - 0.0% 37.3%Structures) Designer, manufacturer and
supplier of timber-frames for
buildings -------- -------- -------- 26,448 30,662 79.9% -------- -------- --------
Total qualifying investments 26,903 31,043 80.9%
-------- -------- --------
Non-qualifying investments Fidelity Institutional Cash Fund 2,168 2,168 5.6%
plc** Insight Liquidity Funds plc 1,267 1,267 3.3% (HBOS)**
SWIP Global Liquidity Fund plc (Scottish 1,149 1,149 3.0%
Widows)**
Institutional Cash Series plc 1,040 1,040 2.7%
(BlackRock)**
Institutional Cash Series plc (formerly 847 847 2.2%
BGI)**
Global Treasury Funds plc (Royal Bank of 568 568 1.5%
Scotland)**
GS Funds plc (Goldman Sachs)** 427 427 1.1%
-------- -------- --------
Total non-qualifying investments 7,466 7,466 19.4%
-------- -------- -------- Total investments 34,369 38,509 100.3% Other assets 346 0.9% Current liabilities (404) (1.1)% -------- -------- -------- Net assets 38,451 100.0% -------- -------- --------
* The other funds managed by MPEP include Matrix Income & Growth 2 VCT plc, Matrix Income & Growth 4 VCT plc and The Income & Growth VCT plc.
** Disclosed as Investments at fair value within Current assets in the Balance Sheet.
Income Statement
for the year ended 31 December 2010
Year ended 31 December 2010 Year ended 31 December 2009 Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Unrealised gains/ - 6,527,412 6,527,412 - (161,173) (161,173)(losses) on investments Realised losses on - (75,045) (75,045) - (177,845) (177,845)investments Income 934,890 - 934,890 399,661 - 399,661 Recoverable VAT - - - 1,939 5,818 7,757
Investment management (164,619) (493,859) (658,478) (79,923) (239,769) (319,692)fees Other expenses (338,661) - (338,661) (312,239)
- (312,239)
Merger costs (69,089) - (69,089) - - - ------------ ------------ ------------ ------------
------------ ------------
Profit/(loss) on 362,521 5,958,508 6,321,029 9,438 (572,969) (563,531)ordinary activities before taxation Tax on profit/(loss) (49,224) 49,851 627 (641)
- (641)on ordinary activities ------------ ------------ ------------ ------------
------------ ------------ Profit/(loss) for the 313,297 6,008,359 6,321,656 8,797 (572,969) (564,172)year ------------ ------------ ------------ ------------ ------------ ------------ - Basic and diluted 0.95p 18.30p 19.25p 0.04p (2.77)p (2.73)pearnings per ordinary share All the items in the above statement derive from continuing operations of theCompany. This includes the return on the assets and activities of Matrix Income& Growth 3 VCT plc after they were transferred to the Company on 20 May 2010.There were no other recognised gains or losses in the year. The total column isthe profit and loss account of the Company. Other than revaluation movementsarising on investments held at fair value through the profit and loss account,there were no differences between the return as stated above and at historicalcost.Balance Sheetas at 31 December 2010 31 December 2010 31 December 2009 £ £ Fixed assets Investments at fair value 31,043,002 11,779,583 Current assets Debtors and prepayments 231,222 94,327 Current investments 7,466,137 5,177,570 Cash at bank 114,672 46,253 ------------------- ------------------- 7,812,031 5,318,150 Creditors: amounts falling due within (404,126) (118,363)one year ------------------- ------------------- Net current assets 7,407,905 5,199,787 ------------------- ------------------- Net assets 38,450,907 16,979,370 ------------------- ------------------- Capital and reserves Called up share capital 397,795 203,735 Capital redemption reserve 29,364 17,703 Share premium account 16,852,849 - Revaluation reserve 4,290,333 (2,271,608) Special distributable reserve 16,423,246 17,907,374 Profit and loss account 457,320 1,122,166 ------------------- ------------------- Equity shareholders' funds 38,450,907 16,979,370 ------------------- ------------------- Basic and diluted net asset value per 96.66p
83.34p
Ordinary Share
Reconciliation of Movements in Shareholders' Funds
for the year ended 31 December 2010
Year ended Year ended 31 December 2010 31 December 2009 £ £ Opening shareholders' funds 16,979,370 17,998,562 Purchase of own shares (890,013) (247,033)
Shares issued upon merger with Matrix 17,111,545
-Income & Growth 3 VCT plc
Stamp duty on shares issued upon merger (52,975)
-
with Matrix Income & Growth 3 VCT plc Profit/(loss) for the year 6,321,656 (564,172) Dividends paid in year (1,018,676) (207,987) ------------------- ------------------- Closing shareholders' funds 38,450,907 16,979,370 ------------------- -------------------Cash Flow Statement
for the year ended 31 December 2010
Year ended Year ended 31 December 2010 31 December 2009 £ £ £ £ Operating activities Investment income received 827,488 398,184
VAT received and interest thereon - 223,249 Investment management fees paid (587,816) (239,743)
Other cash payments (461,372) (357,430)
Payment of merger costs of the (78,636) -
Company ------------- ------------- ------------- -------------
Net cash (outflow)/inflow from (300,336)
24,260operating activities Investing activities Acquisitions of investments (1,124,409) (567,834) Disposals of investments 1,123,942 1,996,610 ------------- ------------- ------------- -------------
Net cash (outflow)/inflow from (467)
1,428,776investing activities Taxation Taxation paid - (106,857) ------------- ------------- ------------- -------------
Net cash outflow from taxation -
(106,857) Equity dividends Payment of dividends (1,018,676) (207,987) ------------- ------------- ------------- ------------- Cash (outflow)/inflow before (1,319,479) 1,138,192
liquid resource management and
financing
Management of liquid resources Decrease in current investments (2,288,567)
(801,846) Financing Share capital raised - -
Cash received on acquisition of 4,561,289 net assets from Matrix Income &
Growth 3 VCT plc
Stamp duty on shares issued to (52,975) - acquire net assets of Matrix
Income & Growth 3 VCT plc
Payments to meet merger cost of (133,191) Matrix Income & Growth 3 VCT plc
Share capital bought back (698,658) ------------- ------------- ------------- ------------- 3,676,465 (361,905) ------------- ------------- ------------- -------------
Increase/(decrease) in cash for 68,419
(25,559)the year ------------- ------------- ------------- -------------Notes1. Basis of accountingThis announcement of the annual results of the Company for the year ended 31December 2010 have been prepared using accounting policies consistent withthose adopted in the full audited annual accounts which have been preparedunder UK Generally Accepted Accounting Practice (UK GAAP) and the Statement ofRecommended Practice, `Financial Statements of Investment Trust Companies
and Venture Capital Trusts' ("SORP") issued by the Association of Investment Companies in January 2009.
2. Acquisition of assets from Matrix Income and Growth 3 VCT plc
On 20 May 2010, the assets and liabilities of Matrix Income & Growth 3 VCT plcwere transferred to the Company in exchange for the issue of a further20,572,129 Ordinary Shares in the Company, at a total value of £17,111,545. Theincome and costs for the period up to 20 May 2010 and the comparable period forlast year reflect the activities of the Company before the acquisition andafter that date reflect those of the Company as enlarged by the acquisition.
The assets acquired comprised:-
Fixed asset Investments 12,801,084 Current asset investments 4,561,289 Other net current (250,828) liabilities -------------- 17,111,545
Subsequently and on the same day, Matrix Income & Growth 3 VCT plc was placed into members' voluntary liquidation pursuant to a scheme of reconstruction under section 110 of the Insolvency Act 1986.
The net asset values (NAV) per share of each fund used for the purposes of conversion at the calculation date of 19 May 2010, and the resultant conversion ratios into Ordinary Shares were:
NAV per Conversion ratio applied to Matrix share Income & Growth 3 VCT plc Ordinary (pence) Shares to obtain new number of Matrix Income & Growth VCT plc Ordinary Shares
Matrix Income & Growth VCT 83.17829000
-plc Matrix Income & Growth 3 VCT 88.63097637
1.0655542
plc
Share certificates reflecting the new shareholdings totalling 20,572,129 Ordinary Shares in Matrix Income & Growth VCT plc were sent to shareholders on 26 May 2010.
Based upon estimated total merger costs of £285,000 to merge the Company withMatrix Income & Growth 3 VCT plc, the Company's share of these costs is £130,945. This includes £52,975 of stamp duty, charged to the share premiumaccount. £69,089 is disclosed as merger costs in the Income Statement and thebalance of £8,881 relates to run-off insurance in future periods which is heldwithin prepayments. Final figures for the costs of the merger are not yetavailable as the liquidation of Matrix Income and Growth VCT plc is not yetfinalised. However, at this stage the Board expects that the final costs willbe slightly less than currently estimated in total.2. Income 2010 2009 £ £ Income from bank deposits 367 919 Income from investments - from equities 194,226 26,345 - from overseas based OEICs 35,779 37,254 - from loan stock 700,647 315,598 - from VAT recoverable - 15,492 ---------------- ---------------- 930,652 394,689 Other income 3,871 4,053 ---------------- ---------------- Total income 934,890 399,661 ---------------- ---------------- Total income comprises Dividends 230,005 63,599 Interest 701,014 332,009 Other income 3,871 4,053 ---------------- ---------------- 934,890 399,661 ---------------- ----------------
Income from investments comprises
Listed overseas securities 35,779 37,254 Unlisted UK securities 194,226 26,345 Loan stock interest 700,647 315,598 ---------------- ---------------- 930,652 379,197 ---------------- ----------------
Total loan stock interest due but not recognised in the year was £457,084 (2009: £451,904).
3. 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 39,779,546 (2009: 20,373,514) Ordinary Shares, being the number of Ordinary Shares in issue on that date.
4. Basic and diluted earnings per share
2010 2009 £ £ Total earnings after taxation: 6,321,656 (
564,172)
Basic and diluted earnings per share (note a) 19.25p
(2.73)p
Revenue profit from ordinary activities after 313,297
8,797taxation
Basic and diluted revenue earnings per share 0.95p
0.04p(note b) Net unrealised capital gains/(losses) on 6,527,412 ( 161,173)investments Net realised capital losses on investments ( 75,045) ( 177,845) Recoverable VAT - 5,818 Capital management fees less taxation ( 444,008) ( 239,769) --------------- --------------- Total capital earnings 6,008,359 ( 572,969) Basic and diluted capital earnings per share 18.30p (2.77)p(note c) Weighted average number of shares in issue in 32,833,601 20,648,175the year 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 earnings/(loss) 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. Dividends paid and payable
The directors have recommended a final dividend in respect of the year ended 31December 2010 of 5.0 pence per share, comprising 4.5 pence from capital and 0.5pence from income. If approved at the Annual General Meeting the dividend willbe paid on 27 May 2011 to shareholders on the Register on 13 May 2011.
8. Related party transactions
Bridget Gu©rin is a shareholder (1.4%) of Matrix Group Limited, which owns 100% of the equity of:-
1. MPE Partners Limited which has a 50% interest in Matrix Private Equity
Partners LLP ('MPEP'), the Company's Investment Manager.
2. Matrix Securities Limited which previously provided Company Secretarial and
Accountancy Services to the Company under agreements dated 9 July 2004 for
a fee of £35,590 (2009: £88,387) in the period. At the year-end £7 (2009: £
21,861) was due to Matrix Securities Limited. Following a re-organisation
of the Matrix group of companies, MPEP now provides administration services
under the terms of an investment management agreement dated 20 May 2010.
The revised annual fee for all combined services, including investment
management services, is 2% of net assets plus £120,000 per annum, the
latter inclusive of VAT and subject to increase in RPI.
3. Matrix CC Limited which has a 97% interest in Matrix Corporate Capital LLP
("MCC"), the Company's Corporate Broker. Nine (2009: four) share buy-backs
were undertaken by MCC on the Company's instruction, costing £890,013
(2009: £247,033). Fees of £15,863 (2009: £9,161) were paid to MCC during
the year and there was £190,399 (2009: £nil) due to MCC at the year-end in
respect of a purchase by the Company of 228,707 of its own shares on 22
December 2010.
Each of the Directors holds a small number of shares, representing less than0.015% of the issued share capital in each case, in each of Matrix Income &Growth 4 VCT plc and The Income & Growth VCT plc which are both also managed byMPEP,9.Post balance sheet events
Since the year end the entire holding of Campden Media was sold for total proceeds of £836,294, which is consistent with the valuation reported in the accounts.
On 8 February 2011, Iglu.com Holidays Limited repaid all of their loan stockrealising proceeds of £1,428,481 of which £213,262 was premium and £10,037 wasinterest due up until the date of repayment.
Under the linked offer for subscription launched on 12 November 2010, the Company has allotted 3,465,559 shares, raising net funds of £3,275,599 up to the date of the approval of these accounts.
10. Financial Information
The financial information set out in these statements does not constitute theCompany's statutory accounts for the year ended 31 December 2010 in terms ofsection 434 of the Companies Act 2006 but is derived from those accounts.Statutory accounts for the year ended 31 December 2010 will be delivered toCompanies House following the Company's Annual General Meeting. The auditorshave reported on those accounts: their report was unqualified and did notcontain a statement under Section 498 of the Companies Act 2006.
11.Annual Report
The Annual Report for the year ended 31 December 2010 will shortly be madeavailable on the Company's website: www.migvct.co.uk. and Shareholders will benotified of this by email or post or sent a hard copy in the post in accordancewith their instructions. Copies will be available thereafter to members of thepublic from the Company's registered office.
12.Annual General Meeting
The Annual General Meeting will be held at 11.00 am on Wednesday, 4 May 2011 at the offices of Matrix Group Limited, One Vine Street, London W1J 0AH.
Contact details for further enquiries:
Sarah Penfold of Matrix Private Equity Partners LLP (the Company Secretary) on 020 3206 7000 or by e-mail to mig@matrixgroup.co.uk
Mark Wignall or Mike Walker at Matrix Private Equity Partners LLP (the Investment Manager), on 020 3206 7000 or by e-mail to info@matrixpep.co.uk.
MATRIX INCOME & GROWTH VCT PLC