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13 Aug 2014 18:08
13 AUGUST 2014
Mobeus Income & Growth VCT plc
Half-Yearly results for the six months ended 30 June 2014
Mobeus Income & Growth VCT plc ("the VCT", "the Company" or "MIG VCT") is a Venture Capital Trust ("VCT") listed on the London Stock Exchange. Its investment portfolio, which invests primarily in established and profitable unquoted companies, is advised by Mobeus Equity Partners LLP ("Mobeus" or "the Investment Adviser").
Company Objective
The Company's Objective is to provide investors with a regular income stream, by way of tax-free dividends generated from income and capital returns.
FINANCIAL HIGHLIGHTS
Results for the six months ended 30 June 2014
- | Net asset value (NAV) total return per share for the period was 12.4%. |
- | £10.67 million of net cash proceeds were receivable during the period which included the partial sale of ATG Media and the full disposal of each of MachineWorks and Monsal, together with various loan stock repayments. |
- | An interim dividend of 17.00 pence per share has been declared, the magnitude of which largely reflects the exceptional level of capital gains realised in this six month period. This dividend will bring cumulative dividends paid to shareholders since launch to 64.30 pence per share. |
- | A total of £3.03 million was invested in the period into Entanet International and Creative Graphics International. After the period-end a further £1.46 million was invested into Tharstern. |
- | Liquidity was enhanced by a successful fundraising, which closed in May 2014, raising net funds of £8.19 million. |
PERFORMANCE SUMMARY
The net asset value per share of the Company at 30 June 2014 was 111.55 pence.
NAV per share | Cumulative dividends paid per share | Cumulative total shareholder return per share¹ | |
(NAV basis) | |||
(p) | (p) | (p) | |
As at 31 December 2006 | 100.64 | 1.80 | 102.44 |
As at 31 December 2007 | 116.89 | 4.20 | 121.09 |
As at 31 December 2008 | 86.54 | 15.30 | 101.84 |
As at 31 December 2009 | 83.34 | 16.30 | 99.64 |
As at 31 December 2010 | 96.66 | 21.30 | 117.96 |
As at 31 December 2011 | 95.59 | 26.80 | 122.39 |
As at 31 December 2012 | 94.22 | 38.05 | 132.27 |
As at 31 December 2013 | 102.18 | 44.05 | 146.23 |
As at 30 June 2014 | 111.55 | 47.30² | 158.85 |
1 | Cumulative NAV total shareholder return per share is net asset value per share plus cumulative dividends paid to date per share. It therefore excludes dividends declared but not yet paid. |
2 | An Interim dividend totalling 17.00 pence per share has been declared by the Directors and will be paid on 17 September 2014, bringing cumulative dividends paid to date to 64.30 pence per share. The NAV per share will reduce by a corresponding 17.00 pence. |
The figures quoted in the information given above are for the shares subscribed in the original offer for subscription in 2004/05.
The table above shows the recent past performance of the original funds raised in 2004/05. Performance data for all fundraising rounds and for former Matrix Income & Growth 3 VCT plc ("MIG3 VCT") shareholders will be shown in an appendix at the back of the Half-Yearly Report.
CHAIRMAN'S STATEMENT
I am pleased to present the Half-Yearly Report for Mobeus Income & Growth VCT plc covering the six month period ended 30 June 2014.
Net asset value and NAV total return to shareholders
This has been a period of very strong performance for the Company. The net asset value per share as at 30 June 2014 was 111.55 pence compared with the previously reported NAV per share of 102.18 pence as at 31 December 2013. The Company's total return for the half-year (NAV basis) was 12.4% (2013: 9.0%) after adding back the final dividend of 3.25 pence per share paid in this period in respect of the year ended 31 December 2013. Meanwhile, the cumulative NAV total return per share (being the closing net asset value plus total dividends paid to date since launch) rose during the six month period by 8.6%, from 146.23 pence to 158.85 pence.
This healthy rise in NAV return over the period was largely due to three substantial, profitable realisations of ATG Media (partial), MachineWorks and Monsal supported by unrealised gains across the portfolio, notably increases in the valuations of ASL Technology, DiGiCo Global, EMaC, Focus and Youngman. The increase in the value of the portfolio reflects the higher levels of profitability of a number of investee companies, several of which have used surplus cash to make loan repayments to the Company.
To assist shareholders who originally invested in any of the individual fundraisings (including MIG 3 VCT) to monitor the performance of their investment (including dividend payments) on a consistent basis, a table showing the returns to shareholders from each allotment will be included at the back of the Half-Yearly Report - and is available on the company's website: www.migvct.co.uk.
Investment portfolio
Overall the investment portfolio recorded a gain of £6.69 million (17.0% of the opening value) during the first half of the year and was valued at £39.66 million at the period-end.
A total of £3.03 million was invested during the period to finance two MBO transactions. In February, the Company invested £1.71 million to support the MBO of Entanet International Limited ("Entanet"), a wholesale communications provider, whilst in June, a new investment of £1.32 million was made to support the Buy-in/MBO of Creative Graphics International Limited ("CGI"), a leading specialist provider of self-adhesive branding solutions to the automotive, recreational vehicle and airline markets.
Shortly after the period-end, a further new investment of £1.46 million was made to support the MBO of Tharstern Limited, the UK's leading supplier of software-based management information systems to the print sector.
This has been an exceptionally strong period for portfolio realisations. Net cash proceeds receivable from portfolio realisations during the first six months of the year amounted to £10.67 million, giving rise to realised gains of £3.38 million in the period. These proceeds arose primarily from the partial sale of ATG Media (as part of which the VCT retained a loan stock and small equity investment in Turner Topco Limited, the acquirer of ATG Media, valued at 30 June 2014 at £2.56 million) and the full sales of MachineWorks and Monsal. They also included loan stock repayments of £2.04 million from five companies, but mainly from CB Imports (Country Baskets) and Fullfield (Motorclean). In addition, DiGiCo was sold following the period-end, realising further cash proceeds of £3.37 million, which is also the gain over cost on this investment.
Details of all these transactions can be found in the Investment Adviser's Review below.
Revenue account
The net revenue return for the period also posted a healthy increase, rising by £0.25 million from £1.22 million this time last year, to £1.47 million for the period under review. This was mainly because income rose by £0.29 million primarily due to an increase in dividend income of £0.36 million to £0.52 million. Despite more cash currently being held in bank deposits, income from cash balances fell slightly by an amount of £0.03 million, as interest rates continued to fall on such deposits.
Investment Adviser's fees charged to revenue rose by £0.03 million due to rising net assets. Other expenses rose by £0.04 million, due to a rise in Directors' fees, professional fees and trail commission costs, countered by a reduction in registrar's costs.
Interim dividend
The Directors are pleased to declare an interim dividend of 17.00 pence (2013: 4.00 pence) per share comprising an income dividend of 2.00 pence (2013: 2.00 pence) per share and a capital dividend of 15.00 pence (2013: 2.00 pence) per share. This interim dividend will be paid on 17 September 2014 to shareholders on the Register on 22 August 2014 and will bring cumulative dividends paid per share to 64.30 pence.
The magnitude of this capital dividend reflects the exceptional level of capital gains realised in the year so far. In the period under review, this included the partial realisation of ATG Media and the full disposal of each of MachineWorks and Monsal as well as a number of smaller loan stock repayments. Shareholders should not expect this level of capital distribution to be repeated unless an equally successful run of realisations occurs.
The total of all capital gains in the year to date (being net cash proceeds less original investment cost) were £10.12 million which compares with £1.71 million for the whole of 2013. The former includes the three disposals referred to above, and in the Investment Adviser's Review, in addition to net cash proceeds received from the realisation of DiGiCo Global after the period-end.
Fundraising
The Company participated with the other three Mobeus VCTs in a successful linked fundraising that closed on 30 May 2014. A total of £33.73 million (in excess of the original target of £24 million) was subscribed for under the Offer across the four VCTs, of which £8.43 million (£8.19 million after costs) was raised by the Company. The Board would like to thank the 722 existing shareholders and extend a very warm welcome to the 946 new shareholders, who invested in the Company through this fundraising. The Company had 5,098 shareholders as at 30 June 2014.
Annual fundraisings by the Company have provided it with a comfortable level of liquidity that has enhanced its ability to use the money raised in earlier fundraisings to continue to pursue its MBO strategy. Monies raised will be used to fund other types of investment opportunities, as well as to meet the Company's running costs, fund dividend payments and support its share buyback policy. Buybacks by the Company of its own shares help to provide liquidity in the Company's shares in what would otherwise be an illiquid market. The new funds also mean that the Company's fixed running costs are spread over a larger asset base. The Board is minded to participate in future fundraisings for the Mobeus VCTs. If the Company does fundraise, shareholders will have the opportunity to increase their investment in the Company and will be sent details of the offer later in the year.
General meeting and renewal of shareholder authorities
A notice of the General Meeting of the Company to be held at 10.30 am on Wednesday, 8 October 2014 at the offices of Mobeus Equity Partners LLP, 30 Haymarket, London SW1Y 4EX, together with a proxy form for the meeting will be sent with shareholders' copies of the Half-Yearly Report. Shareholders who have elected to receive communications from the Company via email, will be notified of how to submit their proxy votes electronically.
The purpose of the meeting is to renew authorities for the Directors to allot shares in the Company (Resolution 1) and disapply the pre-emption rights of members (Resolution 2), with the purpose of ensuring that the Company will be in a position to participate in any future fundraising for the Mobeus VCTs, as referred to above, should the Board be minded to do so. Both resolutions are in substitution for existing authorities and will replace the equivalent authorities taken at the Annual General Meeting of the Company on 7 May 2014.
Resolution 1 is being proposed as an ordinary resolution requiring more than 50% of the votes cast at the meeting to be in favour and Resolution 2 will be proposed as a special resolution requiring at least 75% of the votes cast at the meeting to be in favour.
The following is an explanation of the resolutions to be proposed at the General Meeting:
Authorities for the directors to allot shares in the Company (Resolution 1) and disapply the pre-emption rights of members (Resolution 2)
These two resolutions will grant the Directors the authority to allot shares for cash to a limited and defined extent otherwise than pro rata to existing shareholders. Resolution 1 will enable the Directors to allot new shares up to an aggregate nominal amount of £330,425 representing approximately 54.3% of the existing issued share capital of the Company as at the date of the notice convening the General Meeting.
Under section 561(1) of the Companies Act 2006, if the Directors wish to allot new shares or sell or transfer treasury shares for cash they must first offer such shares to existing shareholders in proportion to their current holdings. It is proposed by Resolution 2 to sanction the disapplication of such pre-emption rights in respect of the allotment of equity securities:
(i) with an aggregate nominal value of up to £300,000 in connection with offer(s) for subscription; and
(ii) with a nominal value of up to 5% of the issued share capital of the Company from time to time,
in each case where the proceeds may be used in whole or part to purchase the Company's shares in the market.
The Company does not currently hold any shares as treasury shares. Both resolutions will expire on the date falling fifteen months after the passing of the resolution or, if earlier, on the conclusion of the annual general meeting of the Company to be held in 2015. The Directors may allot securities after the expiry dates specified above in pursuance of offers or agreements made prior to the expiration of these authorities.
Liquidity
The Directors continue to seek opportunities to increase returns on the liquid assets of the Company without compromising the overriding requirement that risk to capital is minimised. The VCT continues to hold £1.63 million in a selection of money market funds with AAA credit ratings at 30 June 2014. The balance of cash and current asset investments of £23.91 million is held in deposit accounts with a number of well-known financial institutions across a range of maturities.
Appointment of a new board director
The Board appointed Catherine Wall as a Director of the Company with effect from 1 July 2014. Catherine has 30 years' experience in the private equity industry, principally gained at Barclays Private Equity (now Equistone Partners Europe) where she led and managed numerous investments in management buy-outs. Later, as the firm's UK portfolio director, she supervised the management of all the firm's UK investments and held numerous non-executive directorships as part of this role. Shareholders will have the opportunity to ratify her appointment at the next Annual General Meeting of the Company, to be held in May 2015.
Investment in qualifying holdings
The Company is required to meet the target set by HM Revenue & Customs ("HMRC") of investing at least 70% of the funds raised in qualifying unquoted and AIM quoted companies. The Company exceeded this limit (based on VCT cost as defined in tax legislation which differs from the actual cost given in the Investment Portfolio Summary below) throughout the period. The balance of the portfolio was invested in non-qualifying investments and cash.
Share buybacks
During the six months ended 30 June 2014, the Company bought back a further 0.44 million of its own shares, representing 0.8% of the issued share capital at the beginning of the period, at an average price, including costs, of 90.34 pence per share. All of the shares bought back in the period were subsequently cancelled by the Company. Continuing shareholders benefit from the difference between the NAV per share and the price per share at which the shares are bought back and cancelled.
Industry developments
The Finance Act 2014 introduced two measures that affect VCTs. Firstly, shareholders who sell their existing shares within six months before or after the date of subscribing for shares in the same VCT will not receive income tax relief on their new investment, a measure designed to prevent "enhanced buybacks" of VCT shares.
Secondly, the Act introduced measures intended to prevent the return of capital to shareholders prior to any profits being earned from the capital invested. This restriction only applies to funds raised after 5 April 2014 and it will not affect the ability of the Company to continue to pay dividends from profits and income that have been realised from investments in the portfolio.
Finally, with effect from 22 July 2014, the Board has appointed the Company as its own Alternative Investment Fund Manager ("AIFM") in compliance with the European Commission's Alternative Investment Fund Manager's Directive. The Directive will tighten the rules on alternative investments. However, the Company is registered as a small AIFM and will therefore be exempt from its principal requirements. Mobeus will continue to provide investment advisory and administrative services to the Company under the current agreement, subject to one change. This is that the company secretarial staff are now directly responsible to the Board, under its instruction, for accessing and dealing with the documents of title to the Company's investments. These new arrangements will enable the Company to discharge its safekeeping responsibilities for these documents.
Shareholder workshop - 27 January 2015
The Investment Adviser holds an annual VCT workshop in Central London for all its VCT shareholders. Each workshop includes a presentation on the Mobeus VCTs' investment activity and performance. The Board and the Investment Adviser welcome attendance and feedback from shareholders. The next workshop will be held on Tuesday, 27 January 2015 at the Royal Institute of British Architects in Central London. There will be separate day-time and evening sessions. Shareholders will be sent an invitation to this event with further details nearer to the date.
Outlook
It is particularly pleasing to have seen a number of investments being realised at substantial gains over cost during the period under review. The challenge for the Company will be to maintain this performance over the longer term and also to sustain current investment levels. At present, favourable market conditions are assisting your Company in meeting this challenge. The Investment Adviser believes that there continues to be a healthy level of quality deal flow in the market and that many of our investee companies should continue to trade profitably and grow. This should provide further opportunities for attractive new investments and for profitable realisations that will contribute towards producing further income and capital returns for shareholders.
Finally, I would like to thank all of our shareholders for their continuing support.
Keith Niven
Chairman
INVESTMENT POLICY
Investments are usually structured as part loan and part equity in order to receive regular income and to generate capital gains from realisations.
Investments are made selectively across a number of sectors, primarily in MBOs i.e. to support incumbent management teams in acquiring the businesses they manage but do not own. Investments are primarily made in companies that are established and profitable.
Uninvested funds are held in cash and lower risk money market funds.
VCT regulation
The Investment Policy is designed to ensure that the VCT continues to qualify and is approved as a VCT by HMRC. Amongst other conditions, the VCT may not invest more than 15% of its investments in a single company or group of companies. It must also have at least 70% by value of its investments throughout the period in shares or securities comprising VCT qualifying holdings, of which a minimum overall of 30% by value (70% for funds raised on or after 6 April 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 a specific company in ordinary shares. It must, however, have at least 10% by value of its total investments in each VCT qualifying company in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules).
UK companies
The companies in which investments are made must have no more than £15 million of gross assets at the time of investment and £16 million immediately following the investment to be classed as a VCT qualifying holding.
Asset mix
The 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 around 80% of net funds raised in qualifying investments.
Risk diversification
Risk is spread by investing in a number of different businesses across different industry sectors. To reduce the risk of investing in unquoted businesses, each qualifying investment is structured to maximise the amount which may be invested in loan stock as opposed to equity.
Co-investment
The VCT aims to invest in larger, more mature, unquoted companies through investing alongside three other VCTs advised by Mobeus with similar investment policies. This enables the VCT to participate in combined investments by the Investment Adviser of up to £5 million in each business year.
Borrowing
The Company's Articles of Association ("Articles") permit borrowings of amounts up to 10% of the adjusted capital and reserves (as defined therein). The VCT has never borrowed and the Board has no current plans to undertake any borrowing.
INVESTMENT ADVISER'S REVIEW
New investment
A total of £3.03 million was invested during the six months under review. This included substantial new investments to support the MBOs of Entanet International ("Entanet") and Creative Graphics International ("CGI").
Principal new investments in the half-year
Company | Business | Month | Amount of new investment (£m) |
Entanet | Wholesale provider of internet connectivity solutions | February | £1.71 |
Entanet is one of the UK's leading independent wholesale voice and data communications providers. Headquartered in Telford and with over 80 staff, the company provides a diverse portfolio of business class data and voice services via a network of over 2,000 wholesale and reseller channel partners in the UK. The total amount invested included £1 million from Ackling Management Limited, one of the Company's acquisition vehicles. The Company's audited accounts for the 13 months ended 31 December 2013 show annual sales of £29.42 million and profit before interest, tax and goodwill of £2.78 million. | |||
CGI | Producer of adhesive decorative graphics for vehicles | June | £1.32 |
CGI is a leading specialist provider of adhesive decorative graphics to the automotive, recreational vehicle and airline markets. It operates from two centres, in Bedford and South Africa. The Company's audited accounts for the year ended 30 November 2012 show annual sales of £12.64 million and profit before interest, tax and goodwill of £2.49 million. | |||
The VCT has also invested a further £2.29 million into two new acquisition vehicle investments, South West Services Investment Limited and Manufacturing Services Investment Limited, companies established to acquire business services companies in the South West of England and in the manufacturing sector respectively. | |||
Investment post period-end
Company | Business | Month | Amount of new investment (£m) |
Tharstern | Software-based management information systems | July | £1.46 |
Tharstern is the UK's leading supplier of software-based management information systems to the print sector. The Company's audited accounts for the year ended 31 January 2014 show annual sales of £3.87 million and profit before interest, tax and goodwill of £0.80 million. | |||
Realisations in the half-year
We have been particularly pleased with the quality of realisations over the first half of the year which have all generated attractive returns for the Company. The VCT completed the partial realisation of ATG Media and the full realisations of each of MachineWorks and Monsal for totalnet cash proceeds of £10.67 million. As part of the ATG Media transaction, the Company received an additional £2.50 million by way of issue of new loan stock and equity investments in Turner Topco Limited, the acquirer of ATG Media. Total net proceeds therefore amounted to £13.17 million.
Company | Business | Period of investment | Total cash proceeds over the life of the investment / Multiple over cost |
MachineWorks | Software for CAM and machine tool vendors | April 2006- | £2.66 million |
April 2014 | 4.1 times cost | ||
MachineWorks' core software products are used by builders of machine tool controllers to simulate real life manufacturing situations. The company was spun out of the Company's original investment in VSI in March 2011 and was sold to the German company, Dr Johannes Heidenhain GmbH to produce a very attractive return on original investment cost. | |||
ATG Media | Publisher and online auction platform operator | October 2008- | £6.00 million |
present | 1.8 times cost to date | ||
ATG Media has grown revenues and profited materially since initial investment in 2008. A partial sale of the company under a secondary MBO to a larger private equity house, ECI Partners, has realised net proceeds of £7.57 million, being cash of £5.07 million, with the balance being a new loan stock investment and a minority 6.2% equity stake, together valued at £2.56 million (cost £2.50 million). The cash returns received to date have crystallised an annual return of 20%, making this a particularly successful investment. | |||
Monsal | Supplier of engineering services to the water and waste sectors | December 2007- | £2.64 million |
June 2014 | 1.9 times cost | ||
The sale of Monsal, a renewable energy consultancy, to the US conglomerate General Electric Company, realised net cash proceeds of £1.84 million. The return on original cost represents a good return on an investment originally made in 2007 but which required support from further funding rounds in 2009 and 2011. | |||
Loan stock repayments
Loan stock repayments totalled £5.57 million for the period, including £3.53 million as part of the proceeds from the companies realised above. Positive cashflow at five other companies contributed to the balance of £2.04 million, as summarised below:-
Company | Business | Month | Amount (£000's) | |
| ||||
Country Baskets | Artificial flowers, floral sundries and home décor products | June | 1,250 | |
| ||||
Motorclean | Vehicle cleaning and valeting services | June | 307 | |
| ||||
Newquay Helicopters | Helicopter services | April | 293 | |
| ||||
Westway | Air conditioning services | January | 108 | |
| ||||
Tessella | Consultancy services | Quarterly | 84 | |
| ||||
Total | 2,042 | |||
Also during the period, £0.09 million was received from Iglu.com Holidays Limited as tax retention monies were released.
Realisation post period-end
Company | Business | Period of investment | Total cash proceeds over the life of the investment / Multiple over cost |
DiGiCo Global | Audio mixing desks | July 2007 - | £10.67 million |
July 2014 | 5.5 times cost | ||
The VCT realised this investment through a sale to a new professional audio group back by Electra Partners and generated both net cash proceeds and a capital gain over cost of £3.37 million in July. The business has demonstrated strong and consistent growth since investment. Turnover has grown threefold from £8 - £24 million over the period of the VCT's investment. This final sale follows a partial realisation in December 2011 through a secondary buyout by ISIS Equity Partners. | |||
Investment outlook
We are pursuing a number of opportunities which we hope will materialise over the coming months into new investments and further realisations for the Company. Dealflow remains healthy, reflecting our perception that the level of M&A activity in the small company sector continues to be buoyant. Our intention is to maximise the opportunities presented by these current favourable market conditions, to execute new investment deals and realisations, to meet our aims of sustaining current investment levels and to secure continued attractive returns to shareholders.
Mobeus Equity Partners LLP
INVESTMENT PORTFOLIO SUMMARY
As at 30 June 2014
Market sector | Date of investment | Total book cost | Valuation | Like for like valuation increase/ (decrease) over the period¹ | % value of net assets | |
Qualifying investments | £'000 | £'000 | ||||
Unquoted investments | ||||||
Ingleby (1879) Limited (trading as EMaC) | Support services | Nov-11 | 1,395 | 3,049 | 28.5% | 4.5% |
Provider of service plans for the motor trade | ||||||
Blaze Signs Holdings Limited | Support services | Apr-06 | 492 | 2,808 | 7.5% | 4.1% |
Manufacturer and installer of signs | ||||||
Turner Topco Limited (trading as ATG Media) | Media | Oct-08 | 2,501 | 2,557 | New investment from sale of ATG Media | 3.8% |
Publisher and on-line auction platform operator | ||||||
Virgin Wines Holding Company Limited (formerly Culbone Trading Limited) | General retailers | Nov-13 | 2,526 | 2,526 | - | 3.7% |
Online wine retailer | ||||||
Fullfield Limited (trading as Motorclean) | Support services | Jul-11 | 2,270 | 2,484 | (5.8)% | 3.7% |
Provider of vehicle cleaning and valet services | ||||||
Tessella Holdings Limited | Support services | Jul-12 | 1,474 | 2,159 | 7.5% | 3.2% |
Technology consultancy | ||||||
ASL Technology Holdings Limited | Support services | Dec-10 | 1,913 | 2,010 | 48.1% | 3.0% |
Printer and photocopier services | ||||||
Focus Pharma Holdings Limited | Pharmaceuticals | Oct-07 | 387 | 1,962 | 44.3% | 2.9% |
Licensor and distributer of generic pharmaceuticals | ||||||
Veritek Global Holdings Limited (formerly Madacombe Trading Limited) | Support services | Jul-13 | 2,045 | 1,865 | (8.8)% | 2.7% |
Maintenance of imaging equipment | ||||||
Gro-Group Holdings Limited | General retailers | Mar-13 | 1,928 | 1,741 | (9.7)% | 2.6% |
Baby sleep products | ||||||
Ackling Management Limited (trading as Entanet International)³ | Fixed Line Telecommunications | Feb-14 | 1,714 | 1,714 | New investment | 2.5% |
Wholesale voice and data communications provider | ||||||
Creative Graphics International Limited | General Industrials | Jun-14 | 1,322 | 1,322 | New investment | 1.9% |
Provider of adhesive decorative graphics for the automotive, recreational vehicle and airline markets | ||||||
South West Services Investment Limited | Support services | Jan-14 | 1,143 | 1,143 | New investment | 1.7% |
Company seeking to acquire a business service company in the South West of England | ||||||
Manufacturing Services Investment Limited | Support services | Feb-14 | 1,142 | 1,142 | New investment | 1.7% |
Company seeking to acquire a business in the manufacturing sector | ||||||
Youngman Group Limited | Support services | Oct-05 | 1,000 | 1,129 | 61.1% | 1.7% |
Manufacturer of ladders and access towers | ||||||
EOTH Limited (trading as Rab and Lowe Alpine) | General retailers | Oct-11 | 1,000 | 1,097 | 8.9% | 1.6% |
Branded outdoor equipment and clothing | ||||||
Westway Services Holdings (2010) Limited | Support services | Jun-09 | 304 | 1,018 | 2.8% | 1.5% |
Installation, service and maintenance for air conditioning systems | ||||||
RDL Corporation Limited | Support services | Oct-10 | 1,558 | 992 | 38.0% | 1.5% |
Recruitment consultant for the pharmaceutical, business intelligence and IT industries | ||||||
CB Imports Group Limited (trading as Country Baskets) | General retailers | Dec-09 | 969 | 788 | 16.7% | 1.2% |
Importer and distributor of artificial flowers and floral sundries. | ||||||
The Plastic Surgeon Holdings Limited | Support services | Apr-08 | 478 | 761 | 18.0% | 1.1% |
Supplier of snagging and finishing services to the domestic and commercial property markets | ||||||
Vectair Holdings Limited | Support services | Jan-06 | 139 | 635 | (1.1)% | 0.9% |
Designer and distributor of washroom products | ||||||
Newquay Helicopters (2013) Limited | Support services | Jun-06 | 226 | 396 | - | 0.6% |
Helicopter service operator | ||||||
PXP Holdings Limited (trading as Pinewood Structures) | Construction & Materials | Dec-06 | 1,278 | 114 | - | 0.2% |
Designer, manufacturer and supplier of timber-frames for buildings | ||||||
Lightworks Software Limited | Software and computer services | Apr-06 | 223 | 71 | (64.8)% | 0.1% |
Provider of software for CAD vendors | ||||||
Racoon International Holdings Limited | Personal goods | Dec-06 | 1,213 | 1 | - | 0.0% |
Supplier of hair extensions, hair care products and training | ||||||
Legion Group plc (in administration) | Support services | Aug-05 | 150 | - | - | 0.0% |
Provider of manned guarding, mobile patrolling and alarm response services | ||||||
Watchgate Limited | Support services | Nov-11 | 1 | - | - | 0.0% |
Holding company | ||||||
Total unquoted investments | 30,791 | 35,484 | 17.2% | 52.4% | ||
AiM quoted investments | ||||||
Omega Diagnostics Group plc | Health care equipment and services | Dec-10 | 305 | 483 | 8.5% | 0.7% |
In-vitro diagnostics for food intolerance, autoimmune diseases and infectious diseases | ||||||
Total AIM quoted investments | 305 | 483 | 0.7% | |||
Total qualifying investments | 31,096 | 35,967 | 17.1% | 53.1% | ||
Non-qualifying investments | ||||||
DiGiCo Global Limited 2 | Technology, hardware and equipment | Dec-11 | 1,612 | 3,371 | 18.0% | 5.0% |
Designer and manufacturer of digital sound mixing consoles | ||||||
EOTH Limited (trading as Rab and Lowe Alpine) | General retailers | Oct-11 | 298 | 324 | - | 0.5% |
Total non-qualifying investments | 1,910 | 3,695 | - | 5.5% | ||
Total portfolio investments | 33,006 | 39,662 | 17.0% | 58.6% | ||
Current investments and cash at bank | ||||||
Cash at NatWest Bank plc4 | 12,886 | 12,886 | 18.9% | |||
HSBC Bank plc5 | 3,506 | 3,506 | 5.2% | |||
Lloyds Bank plc5 | 3,504 | 3,504 | 5.2% | |||
Barclays Bank plc5 | 2,010 | 2,010 | 3.0% | |||
Nationwide International5 | 2,000 | 2,000 | 2.9% | |||
GS Funds plc (GoldmanSachs)5 | 429 | 429 | 0.6% | |||
GS Funds plc (Goldman Sachs) (formerly Royal Bank of Scotland plc)5 | 387 | 387 | 0.6% | |||
Insight Liquidity Funds plc (HBOS)5 | 271 | 271 | 0.4% | |||
Institutional Cash Series plc (BlackRock)5 | 256 | 256 | 0.4% | |||
SWIP Global Liquidity Fund plc (Scottish Widows)5 | 176 | 176 | 0.3% | |||
Fidelity Institutional Cash Fund plc5 | 114 | 114 | 0.2% | |||
Total current investments and cash at bank | 25,539 | 25,539 | 37.7% | |||
Total investments | 58,545 | 65,201 | 96.3% | |||
Other assets | 3,273 | 4.7% | ||||
Current liabilities | (595) | (1.0)% | ||||
Net assets | 67,879 | 100.0% | ||||
1 - This percentage change in 'like for like' valuations is the result of dividing the total of the closing valuation of the investment, plus any proceeds in the period from partial disposals, by the valuation at the start of the period. | ||||||
2 - Original investment was in DiGiCo Europe Limited in July 2007. This was partially realised in December 2011, since when part of the loan stock issued then has also been realised. Therefore, the figures above represent the cost and valuation of the remainder of the investment, realised in July 2014. | ||||||
3 - £1,000,000 of this investment into Ackling Management Limited (trading as Entanet International) had been invested in this company, which was formerly an acquisition vehicle, in a previous period. | ||||||
4 - Disclosed as Cash at bank within Current assets in the Balance Sheet. | ||||||
5 - Disclosed as Current Investments within Current assets in the Balance Sheet. | ||||||
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF-YEARLY REPORT
In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Keith Niven (Chairman), Bridget Guérin (Chairman of the Nominations & Remuneration Committee), Tom Sooke (Chairman of the Audit Committee) and Catherine Wall, the Directors of the Company, confirm that to the best of their knowledge:
(a) | the condensed set of financial statements, which has been prepared in accordance with the statement, "Half-Yearly Reports", issued by the Accounting Standards Board, gives a true and fair view of the assets, liabilities, financial position and profit of the Company, as required by DTR 4.2.4; |
(b) | the Half-Yearly Management Report, which comprises the Chairman's Statement, Investment Policy, Investment Adviser's Review and Investment Portfolio Summary includes a fair review of the information required by DTR 4.2.7 being an indication of the important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; |
(c) | a description of the principal risks and uncertainties facing the Company for the remaining six months is set out below, in accordance with DTR 4.2.7; and |
(d) | there are no related party transactions that are required to be disclosed in accordance with DTR 4.2.8. |
Principal Risks and Uncertainties
In accordance with DTR 4.2.7, the Board confirms that the principal risks and uncertainties facing the Company have not changed materially since the publication of the Annual Report and Accounts for the year ended 31 December 2013. The Board acknowledges that there is regulatory risk and continues to manage the Company's affairs in such a manner as to comply with section 274 of the Income Tax Act 2007. The principal risks faced by the Company are:
- | economic risk; |
- | risk of loss of approval as a Venture Capital Trust; |
- | investment and strategic risk; |
- | regulatory risk; |
- | financial and operating risk; |
- | market risk; |
- | asset liquidity risk; |
- | market liquidity risk; |
- | credit/ counterparty risk. |
A more detailed explanation of these risks can be found in the Strategic Report on pages 21 - 22 and in Note 19 on pages 55 - 61 of the Annual Report and Accounts for the year ended 31 December 2013, copies of which are available on the Investment Adviser's website, www.mobeusequity.co.uk or by going direct to : www.migvct.co.uk.
Going Concern
The Board has assessed the Company's operation as a going concern. The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Half-Yearly Management Report. The Directors have satisfied themselves that the Company continues to maintain a significant cash position, the majority of companies in the portfolio continue to trade profitably and the portfolio taken as a whole remains resilient and well-diversified. The major cash outflows of the Company (namely investments, buy-backs and dividends) are within the Company's control. The Board's assessment of liquidity risk and details of the Company's policies for managing its capital and financial risks are shown in Note19 on pages 55 - 61 of the Annual Report and Accounts for the year ended 31 December 2013. Accordingly, the Directors continue to adopt the going concern basis of accounting in preparing the half-yearly report and annual financial statements.
Cautionary Statement
This report may contain forward looking statements with regards to the financial condition and results of the Company, which are made in the light of current economic and business circumstances. Nothing in this report should be construed as a profit forecast.
On behalf of the Board
Keith Niven
Chairman
UNAUDITED INCOME STATEMENT
for the six months ended 30 June 2014
Six months ended 30 June 2014 | Six months ended 30 June 2013 | ||||||
(unaudited) | (unaudited) | ||||||
Notes | Revenue | Capital | Total | Revenue | Capital | Total | |
£ | £ | £ | £ | £ | £ | ||
Unrealised gains on investments | 8 | - | 3,310,223 | 3,310,223 | - | 2,890,482 | 2,890,482 |
Net realised gains on investments | 8 | - | 3,380,466 | 3,380,466 | - | 605,461 | 605,461 |
Income | 2 | 2,111,620 | - | 2,111,620 | 1,816,882 | - | 1,816,882 |
Investment adviser's fees | 3 | (166,887) | (500,663) | (667,550) | (136,480) | (409,440) | (545,920) |
Other expenses | (208,051) | - | (208,051) | (170,922) | - | (170,922) | |
Profit on ordinary activities before taxation | 1,736,682 | 6,190,026 | 7,926,708 | 1,509,480 | 3,086,503 | 4,595,983 | |
Tax on profit on ordinary activities | 4 | (262,957) | 107,643 | (155,314) | (293,043) | 131,406 | (161,637) |
Profit attributable to equity shareholders | 1,473,725 | 6,297,669 | 7,771,394 | 1,216,437 | 3,217,909 | 4,434,346 | |
Basic and diluted earnings per ordinary share | 5 | 2.55p | 10.90p | 13.45p | 2.40p | 6.35p | 8.75p |
Year ended 31 December 2013 | |||||||
(audited) | |||||||
Notes | Revenue | Capital | Total | ||||
£ | £ | £ | |||||
Unrealised gains on investments | 8 | - | 4,832,261 | 4,832,261 | |||
Net realised gains on investments | 8 | - | 725,905 | 725,905 | |||
Income | 2 | 3,459,318 | - | 3,459,318 | |||
Investment adviser's fees | 3 | (286,839) | (860,517) | (1,147,356) | |||
Other expenses | (290,635) | - | (290,635) | ||||
Profit on ordinary activities before taxation | 2,881,844 | 4,697,649 | 7,579,493 | ||||
Tax on profit on ordinary activities | 4 | (504,213) | 200,070 | (304,143) | |||
Profit attributable to equity shareholders | 2,377,631 | 4,897,719 | 7,275,350 | ||||
Basic and diluted earnings per ordinary share | 5 | 4.56p | 9.41p | 13.97p | |||
The total column of this statement is the Profit and Loss account of the Company. |
All revenue and capital items in the above statement derive from continuing operations. |
There were no other recognised gains or losses in the period. |
Other than revaluation movements arising on investments held at fair value through profit and loss, there were no differences between the profit as stated above and at historical cost. |
UNAUDITED BALANCE SHEET
as at 30 June 2014
30 June 2014 | 30 June 2013 | 31 December 2013 | ||
(unaudited) | (unaudited) | (audited) | ||
Notes | £ | £ | £ | |
Fixed assets | ||||
Investments at fair value | 1c, 8 | 39,662,044 | 37,334,097 | 39,317,184 |
Current assets | ||||
Debtors and prepayments | 9 | 3,272,913 | 500,094 | 609,464 |
Current investments | 10 | 12,653,372 | 9,632,916 | 9,642,587 |
Cash at bank | 12,885,788 | 6,927,943 | 5,157,499 | |
28,812,073 | 17,060,953 | 15,409,550 | ||
Creditors: amounts falling due within one year | (595,449) | (389,830) | (458,366) | |
Net current assets | 28,216,624 | 16,671,123 | 14,951,184 | |
Net assets | 67,878,668 | 54,005,220 | 54,268,368 | |
Capital and reserves | 11 | |||
Called up share capital | 608,500 | 536,273 | 531,126 | |
Capital redemption reserve | 4,367 | 181,372 | 186,520 | |
Share premium account | 4,938,202 | 15,361,612 | 15,361,612 | |
Revaluation reserve | 9,800,394 | 7,903,451 | 9,867,216 | |
Special distributable reserve | 43,181,014 | 27,383,210 | 25,580,251 | |
Profit and loss account | 9,346,191 | 2,639,302 | 2,741,643 | |
Equity shareholder funds | 67,878,668 | 54,005,220 | 54,268,368 | |
Net asset value per ordinary share | 7 | 111.55p | 100.70p | 102.18p |
UNAUDITED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 30 June 2014
Six months ended | Six months ended | Year ended | ||
30 June 2014 | 30 June 2013 | 31 December 2013 | ||
(unaudited) | (unaudited) | (audited) | ||
Notes | £ | £ | £ | |
Opening shareholders' funds | 54,268,368 | 43,288,523 | 43,288,523 | |
Net share capital bought back in the period - including expenses | (394,540) | (10,032,939) | (10,474,734) | |
Net share capital subscribed for in the period - net of expenses | 8,193,915 | 17,393,269 | 17,393,270 | |
Profit for the period | 7,771,394 | 4,434,346 | 7,275,350 | |
Dividends paid in period | 6 | (1,960,469) | (1,077,979) | (3,214,041) |
Closing shareholders' funds | 67,878,668 | 54,005,220 | 54,268,368 |
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 June 2014
Six months ended | Six months ended | Year ended | ||
30 June 2014 | 30 June 2013 | 31 December 2013 | ||
(unaudited) | (unaudited) | (audited) | ||
Notes | £ | £ | £ | |
Operating activities | ||||
Investment income received | 2,157,392 | 1,700,362 | 3,066,706 | |
Other income | - | - | 3,615 | |
Investment adviser's fees paid | (667,550) | (545,920) | (1,147,356) | |
Other cash payments | (170,283) | (131,504) | (286,453) | |
Net cash inflow from operating activities | 1,319,559 | 1,022,938 | 1,636,512 | |
Investing activities | ||||
Acquisitions of investments | 8 | (4,321,087) | (2,123,350) | (4,765,043) |
Disposals of investments | 8 | 8,741,449 | 3,142,871 | 5,863,541 |
Net cash inflow/(outflow) from investing activities | 4,420,362 | 1,019,521 | 1,098,498 | |
Dividends | ||||
Equity dividends paid | 6 | (1,960,469) | (1,077,979) | (3,214,041) |
Cash inflow/(outflow) before financing and liquid resource management | 3,779,452 | 964,480 | (479,031) | |
Management of liquid resources | ||||
Increase in current investments | (3,010,785) | (6,000,248) | (6,009,919) | |
Financing | ||||
Shares issued as part of fundraising offer for subscription | 11 | 7,405,079 | 7,922,677 | 8,092,536 |
Shares issued as part of the enhanced buyback facility | - | 9,300,734 | 250,000 | |
Shares bought back as part of the enhanced buyback facility (including expenses) | - | (9,412,459) | (388,289) | |
Share capital bought back | (445,457) | (560,249) | (1,020,806) | |
Net inflow from financing activities | 6,959,622 | 7,250,703 | 6,933,441 | |
Increase in cash for the period | 7,728,289 | 2,214,935 | 444,491 | |
RECONCILIATION OF PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION TO NET CASH INFLOW FROM OPERATING ACTIVITIES
for the six months ended 30 June 2014
Six months ended | Six months ended | Year ended | |
30 June 2014 | 30 June 2013 | 31 December 2013 | |
(unaudited) | (unaudited) | (audited) | |
£ | £ | £ | |
Profit on ordinary activities before taxation | 7,926,708 | 4,595,983 | 7,579,493 |
Net unrealised gains on investments | (3,310,223) | (2,890,482) | (4,832,261) |
Net gains on realisations of investments | (3,380,466) | (605,461) | (725,905) |
Decrease/(increase) in debtors | 50,694 | (114,710) | (393,780) |
Increase in creditors | 32,846 | 37,608 | 8,965 |
Net cash inflow from operating activities | 1,319,559 | 1,022,938 | 1,636,512 |
The notes below form part of these Half-Yearly financial statements.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. | Principal accounting policies | |||||
The following accounting policies have been applied consistently throughout the period. Full details of principal accounting policies will be disclosed in the Annual Report. | ||||||
a) Basis of accounting | ||||||
The unaudited results cover the six months to 30 June 2014 and have been prepared under UK Generally Accepted Accounting Practice (UK GAAP), consistent with the accounting policies set out in the statutory accounts for the year ended 31 December 2013 and the 2009 Statement of Recommended Practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ('the SORP') issued by the Association of Investment Companies. The financial statements are prepared under the historical cost convention except for the measurement of certain investments at fair value. | ||||||
The Half-Yearly Report has not been audited, nor has it been reviewed by the auditor pursuant to the Auditing Practices Board (APB)'s guidance on Review of Interim Financial Information. | ||||||
b) Presentation of the Income Statement | ||||||
In order to better reflect the activities of a VCT and in accordance with the SORP, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The revenue column of profit attributable to equity shareholders is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 274 Income Tax Act 2007. | ||||||
c) Investments | ||||||
Investments are accounted for on a trade date basis. | ||||||
All investments held by the Company are classified as "fair value through profit and loss", in accordance with the International Private Equity and Venture Capital Valuation ("IPEVCV") guidelines, as updated in September 2009. This classification is followed as the Company's business is to invest in financial assets with a view to profiting from their total return in the form of capital growth and income. | ||||||
For investments actively traded in organised financial markets, fair value is generally determined by reference to Stock Exchange market quoted bid prices at the close of business on the balance sheet date. Purchases and sales of quoted investments are recognised on the trade date where a contract of sale exists whose terms require delivery within a time frame determined by the relevant market. 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 Investment Adviser compared to the sector including, inter alia, a lack of marketability). | ||||||
or:- | ||||||
b) where a company's underperformance against plan indicates a diminution in the value of the investment, provision against cost is made, as appropriate. Where the value of an investment has fallen permanently below cost, the loss is treated as a permanent impairment and as a realised loss, even though the investment is still held. The Board assesses the portfolio for such investments and, after agreement with the Investment Adviser, will agree the values that represent the extent to which an investment loss has become realised. This is based upon an assessment of objective evidence of that investment's future prospects, to determine whether there is potential for the investment to recover in value. | ||||||
(iii) Premiums on loan stock investments are accrued at fair value when the Company receives the right to the premium and when considered recoverable. | ||||||
(iv) Where an earnings multiple or cost less impairment basis is not appropriate and overriding factors apply, discounted cash flow or net asset valuation bases may be applied. | ||||||
Capital gains and losses on investments, whether realised or unrealised, are dealt with in the profit and loss and revaluation reserves and movements in the period are shown in the Income Statement. | ||||||
2. | Income | |||||
Six months ended | Six months ended | Year ended | ||||
30 June 2014 | 30 June 2013 | 31 December 2013 | ||||
(unaudited) | (unaudited) | (audited) | ||||
£ | £ | £ | ||||
Dividends | 515,427 | 156,094 | 577,422 | |||
Money-market funds | 2,948 | 2,999 | 6,146 | |||
Loan stock interest | 1,506,324 | 1,575,288 | 2,723,737 | |||
Bank deposit interest | 51,901 | 82,501 | 152,013 | |||
Interest on preference dividends | 30,287 | - | - | |||
Other income | 4,733 | - | - | |||
Total Income | 2,111,620 | 1,816,882 | 3,459,318 | |||
3. | Investment adviser's fees | |||||
In accordance with the policy statement published under "Management and Administration" in the Company's prospectus dated 9 July 2004, the Directors have charged 75% of the investment management expense to the capital reserve. | ||||||
4. | Taxation | |||||
There is a tax charge for the period as the Company has taxable income in excess of deductible expenses. Last year, it utilised all available tax losses brought forward that had previously reduced taxable profit. | ||||||
Six months ended 30 June 2014 (unaudited) | ||||||
Revenue | Capital | Total | ||||
£ | £ | £ | ||||
a) Analysis of tax charge: | ||||||
UK Corporation tax on profits/(losses) for the period | 262,957 | (107,643) | 155,314 | |||
Total current tax charge/(credit) | 262,957 | (107,643) | 155,314 | |||
Corporation tax is based on a rate of 21.5% (2013: 20%) | ||||||
b) Profit on ordinary activities before tax | 1,736,682 | 6,190,026 | 7,926,708 | |||
Profit on ordinary activities multiplied by the small company rate of corporation tax in the UK of 21.5% (2013: 20%) | 373,387 | 1,330,855 | 1,704,242 | |||
Effect of: | ||||||
UK dividends | (110,817) | - | (110,817) | |||
Unrealised gains not allowable | - | (711,698) | (711,698) | |||
Realised gains not taxable | - | (726,800) | (726,800) | |||
Losses brought forward | - | - | - | |||
Marginal rate | - | - | - | |||
Expenses not deductible | 387 | - | 387 | |||
Actual current tax charge | 262,957 | (107,643) | 155,314 | |||
- | ||||||
Six months ended 30 June 2013 (unaudited) | ||||||
Revenue | Capital | Total | ||||
£ | £ | £ | ||||
a) Analysis of tax charge: | ||||||
UK Corporation tax on profits/(losses) for the period | 293,043 | (131,406) | 161,637 | |||
Total current tax charge/(credit) | 293,043 | (131,406) | 161,637 | |||
Corporation tax is based on a rate of 21.5% (2013: 20%) | ||||||
b) Profit on ordinary activities before tax | 1,509,480 | 3,086,503 | 4,595,983 | |||
Profit on ordinary activities multiplied by rate of corporation tax in the UK of 21.5% (2013: 20%) | 301,896 | 617,300 | 919,196 | |||
Effect of: | ||||||
UK dividends | (31,219) | - | (31,219) | |||
Unrealised gains not allowable | - | (578,096) | (578,096) | |||
Realised gains not taxable | - | (121,092) | (121,092) | |||
Losses brought forward | (27,152) | - | (27,152) | |||
Marginal rate | 49,518 | (49,518) | - | |||
Expenses not deductible | - | - | - | |||
Actual current tax charge | 293,043 | (131,406) | 161,637 | |||
Year ended 31 December 2013 (audited) | ||||||
Revenue | Capital | Total | ||||
£ | £ | £ | ||||
a) Analysis of tax charge: | ||||||
UK Corporation tax on profits/(losses) for the period | 504,213 | (200,070) | 304,143 | |||
Total current tax charge/(credit) | 504,213 | (200,070) | 304,143 | |||
Corporation tax is based on a rate of 21.5% (2013: 20%) | ||||||
b) Profit on ordinary activities before tax | 2,881,844 | 4,697,649 | 7,579,493 | |||
Profit on ordinary activities multiplied by rate of corporation tax in the UK of 21.5% (2013: 20%) | 670,029 | 1,092,204 | 1,762,233 | |||
Effect of: | ||||||
UK dividends | (134,251) | - | (134,251) | |||
Unrealised gains not allowable | - | (1,123,501) | (1,123,501) | |||
Realised gains not taxable | - | (168,773) | (168,773) | |||
Losses brought forward | (31,565) | - | (31,565) | |||
Marginal rate | - | - | - | |||
Expenses not deductible | - | - | - | |||
Actual current tax charge | 504,213 | (200,070) | 304,143 | |||
5. | Basic and diluted earnings and return per share | |||||
The basic and diluted earnings, revenue return and capital return per share shown below for each period are respectively based on numerators i)-iii), each divided by the weighted average number of shares in issue in the period - see iv) below. | ||||||
Six months ended | Six months ended | Year ended | ||||
30 June 2014 | 30 June 2013 | 31 December 2013 | ||||
(unaudited) | (unaudited) | (audited) | ||||
£ | £ | £ | ||||
i) Total earnings after taxation | 7,771,394 | 4,434,346 | 7,275,350 | |||
Basic and diluted earnings per ordinary share | 13.45p | 8.75p | 13.97p | |||
ii) Net revenue from ordinary activities after taxation | 1,473,725 | 1,216,437 | 2,377,631 | |||
Basic and diluted earnings per ordinary share | 2.55p | 2.40p | 4.56p | |||
Unrealised gains | 3,310,223 | 2,890,482 | 4,832,261 | |||
Net realised capital gains | 3,380,466 | 605,461 | 725,905 | |||
Capital expenses (net of taxation) | (393,020) | (278,034) | (660,447) | |||
iii) Total capital return | 6,297,669 | 3,217,909 | 4,897,719 | |||
Basic and diluted capital earnings per ordinary share | 10.90p | 6.35p | 9.41p | |||
iv) Weighted average number of ordinary shares in issue in the period | 57,794,080 | 50,681,548 | 52,090,673 | |||
6. | Dividends paid | |||||
Six months ended | Six months ended | Year ended | ||||
30 June 2014 | 30 June 2013 | 31 December 2013 | ||||
(unaudited) | (unaudited) | (audited) | ||||
£ | £ | £ | ||||
Final income dividend paid for year ended 31 December 2012 of 1.50p per share paid on 15 May 2013 | - | 808,484 | 807,428 | |||
Final capital dividend paid for year ended 31 December 2012 of 0.50p per share paid on 15 May 2013 | - | 269,495 | 266,329 | |||
Interim income dividend paid for year ended 31 December 2013 of 2.00p per share paid on 18 September 2013 | - | - | 1,070,141 | |||
Interim capital dividend paid for year ended 31 December 2013 of 2.00 p per share paid on 18 September 2013 | - | - | 1,070,143 | |||
Final income dividend paid for year ended 31 December 2013 of 1.75p per share paid on 14 May 2014 | 1,055,637 | - | - | |||
Final capital dividend paid for year ended 31 December 2013 of 1.50p per share paid on 14 May 2014 | 904,832 | - | - | |||
1,960,469 | 1,077,979 | 3,214,041 | ||||
7. | Basic and diluted net asset value per ordinary share | |||||
As at | As at | As at | ||||
30 June 2014 | 30 June 2013 | 31 December 2013 | ||||
(unaudited) | (unaudited) | (audited) | ||||
£ | £ | £ | ||||
Net assets | 67,878,668 | 54,005,220 | 54,268,368 | |||
Number of shares in issue | 60,850,032 | 53,627,282 | 53,112,565 | |||
Basic and diluted net asset value per ordinary share | 111.55p | 100.70p | 102.18p | |||
8. | Summary of non-current investments at fair value during the period | |||||
Traded | Unquoted | Unquoted | Loan | Total | ||
on AIM | equity | preference | stock | |||
shares | shares | |||||
£ | £ | £ | £ | £ | ||
Valuation at 1 January 2014 | 444,789 | 15,238,816 | 35,968 | 23,597,611 | 39,317,184 | |
Purchases at cost | 30 | 1,744,448 | 1,663 | 5,076,033 | 6,822,174 | |
Sales -proceeds | - | (7,925,040) | (1,818) | (5,574,926) | (13,501,784) | |
- realised gains | - | 2,781,746 | - | 932,501 | 3,714,247 | |
Reclassification at valuation | - | - | - | - | - | |
Unrealised gains | 38,114 | 2,034,935 | 11,972 | 1,225,202 | 3,310,223 | |
Valuation at 30 June 2014 | 482,933 | 13,874,905 | 47,785 | 25,256,421 | 39,662,044 | |
Book cost at 30 June 2014 | 305,030 | 8,611,619 | 47,611 | 24,042,468 | 33,006,728 | |
Permanent impairment in value of investments | - | (701,362) | (3,078) | (832,957) | (1,537,397) | |
Unrealised gains at 30 June 2014 | 177,903 | 5,964,648 | 3,252 | 2,046,910 | 8,192,713 | |
Valuation at 30 June 2014 | 482,933 | 13,874,905 | 47,785 | 25,256,421 | 39,662,044 | |
Gains on investments | ||||||
Net realised gains based on historical cost | - | 6,763,362 | - | 327,930 | 7,091,292 | |
Less amounts recognised as unrealised gains/(losses) in previous years | - | 3,981,616 | - | (604,571) | 3,377,045 | |
Net realised gains based on carrying value at 31 December 2013 | - | 2,781,746 | - | 932,501 | 3,714,247 | |
Net movement in unrealised gains in the period | 38,114 | 2,034,935 | 11,972 | 1,225,202 | 3,310,223 | |
Gains on investments for the six months ended 30 June 2014 | 38,114 | 4,816,681 | 11,972 | 2,157,703 | 7,024,470 | |
Transaction costs of £333,781 were incurred in the period and are deducted in arriving at realised gains on investments in the Income Statement. Deducting these from realised gains above gives £3,380,466 of gains as shown in the Income Statement. | ||||||
Purchases above of £6,822,174 differ to that shown in the Cash Flow Statement of £4,321,087 by £2,501,087 which is the accounting cost of ATG sale proceeds received in the form of the acquirer's equity and loan stock of £2,501,087. Sales proceeds above of £13,501,784 differ to that shown in the Cash Flow Statement of £8,741,449 by £4,760,335. This is due to proceeds receivable from the sale of Monsal Holdings Limited of £1,844,502, new equity and loan stock instruments of £2,501,087 received as consideration for the sale of ATG, an ATG equity proceeds retention of £80,965 and transaction costs of £333,781. | ||||||
Unrealised gains at 30 June 2014 of £8,192,713 differ to that shown in the Revaluation Reserve of £9,800,394. The difference of £1,607,681 is loan stock received (net of subsequent repayments made) as part of the disposal of DiGiCo Europe Limited in December 2011, which was not recognised as a realised gain in that year. | ||||||
9. | Debtors and prepayments | |||||||||
As at | As at | As at | ||||||||
30 June 2014 | 30 June 2013 | 31 December 2013 | ||||||||
(unaudited) | (unaudited) | (audited) | ||||||||
£ | £ | £ | ||||||||
Amounts due within one year | ||||||||||
Accrued income | 542,766 | 317,181 | 593,273 | |||||||
Prepayments | 10,953 | 9,454 | 16,032 | |||||||
Other debtors | 2,719,194 | 173,459 | 159 | |||||||
3,272,913 | 500,094 | 609,464 | ||||||||
The rise in other debtors is mainly due to the current period containing £788,836 of allotment monies arising from the issue of ordinary shares on 6 June 2014 and £1,844,502 receivable from the completion of the sale of Monsal Holdings Limited. Both were received after the period-end. | ||||||||||
10. | Current Investments at fair value | |||||||||
These comprise investments of £1,633,268 (30 June 2013: £1,632,916; 31 December 2013: £1,633,110 in six OEIC money market funds (five Dublin based and one London based) subject to immediate access, and £11,020,104 (30 June 2013: £8,000,000; 31 December 2013: £8,009,477) in four bank deposit accounts or overnight money market accounts, repayable within one year. | ||||||||||
11. | Capital and reserves | |||||||||
Called | Capital | Share | Revaluation | Special | Profit | Total | ||||
up share | redemption | premium | reserve | distributable | and loss | |||||
capital | reserve | reserve | reserve | account | ||||||
£ | £ | £ | £ | £ | £ | £ | ||||
At 1 January 2014 | 531,126 | 186,520 | 15,361,612 | 9,867,216 | 25,580,251 | 2,741,643 | 54,268,368 | |||
Shares issued under Linked Offer for Subscription (note a) | 81,741 | - | 8,115,663 | - | (3,489) | - | 8,193,915 | |||
Shares bought back | (4,367) | 4,367 | - | - | (394,540) | - | (394,540) | |||
Cancellation of share premium account (note b) | - | (186,520) | (18,539,073) | - | 18,725,593 | - | - | |||
Realised losses transformed to special reserve (note b) | - | - | - | - | (726,801) | 726,801 | - | |||
Realisation of previously unrealised appreciation | - | - | - | (3,377,045) | - | 3,377,045 | - | |||
Dividend paid | - | - | - | - | - | (1,960,469) | (1,960,469) | |||
Profit for the period | - | - | - | 3,310,223 | - | 4,461,171 | 7,771,394 | |||
At 30 June 2014 | 608,500 | 4,367 | 4,938,202 | 9,800,394 | 43,181,014 | 9,346,191 | 67,878,668 | |||
Note a: As part of the 2014 Linked Offer for Subscription, a total of 8,174,196 ordinary shares were allotted at average effective offer prices ranging from 100.01 pence to 108.50 pence per share, raising net funds of £8,193,915. | |
Shares issued as part of the Joint fundraising offer for subscription per the cash flow statement of £7,405,079 differs to that shown as shares issued above of £8,193,915 by £788,836 being net funds due to the Company arising from shares allotted on 6 June 2014, which was a debtor at the period-end. | |
Note b: The cancellation of £18,539,073 from the share premium account and £186,520 from the capital redemption reserve (as approved at the General Meeting held on 22 February 2014 and by order of the Court dated 12 March 2014) has increased the Company's special distributable reserve. The purpose of this reserve is to fund market purchases of the Company's own shares, to write off existing and future losses and for any other corporate purpose. All of this reserve arose from shares issued before 5 April 2014. | |
12. | Post balance sheet events |
On 18 July 2014, the Company made an investment of £1,460,500 to support the management buy-out of Tharstern Limited, a leading supplier of software-based management information systems to the global commercial printing and graphic arts industries. | |
On 30 July 2014, the entire holding of DiGiCo Global Limited was realised for net proceeds of £3,370,752. | |
13. | Financial statements for the year ended 31 December 2013 |
The information for the six months ended 30 June 2014 does not comprise full financial statements within the meaning of Section 435 of the Companies Act 2006. The financial statements for the year ended 31 December 2013 have been filed with the Registrar of Companies. The auditor has reported on these financial statements and that report was unqualified and did not contain a statement under section 498(2) of the Companies Act 2006. | |
14. | Half-Yearly Report |
This Half-Yearly Report is available on, and can be downloaded, from our website: www.migvct.co.uk and is circulated by post to those shareholders who have requested copies of the Report. Further copies are also available free of charge from the Company's registered office, 30 Haymarket, London, SW1Y 4EX. |
CONTACT DETAILS FOR ENQUIRIES
Sarah Penfold or Tim Jones at Mobeus Equity Partners LLP (the Company Secretary) on 020 7024 7600 or by e-mail on mig@mobeusequity.co.uk
Jonathan Gregory at Mobeus Equity Partners LLP (the Investment Adviser), on 020 7024 7600 or by e-mail on info@mobeusequity.co.uk.
DISCLAIMER
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.