Regulatory Filings • Jan 20, 2012
Regulatory Filings
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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN ANY DOUBT ABOUT WHAT ACTION YOU SHOULD TAKE, YOU ARE RECOMMENDED TO SEEK YOUR OWN FINANCIAL ADVICE IMMEDIATELY FROM YOUR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT OR OTHER INDEPENDENT FINANCIAL ADVISER AUTHORISED UNDER THE FINANCIAL SERVICES AND MARKETS ACT 2000 ("FSMA").
THIS DOCUMENT CONSTITUTES A REGISTRATION DOCUMENT ("THE REGISTRATION DOCUMENT") ISSUED BY MATRIX INCOME & GROWTH VCT PLC ("MIG"), MATRIX INCOME & GROWTH 4 VCT PLC ("MIG 4") AND THE INCOME & GROWTH VCT PLC ("I&G") (TOGETHER "THE COMPANIES" AND EACH "A COMPANY") DATED 20 JANUARY 2012.
THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF COMPLYING WITH THE PROSPECTUS DIRECTIVE, ENGLISH LAW AND THE RULES OF THE UK LISTING AUTHORITY ("UKLA") AND THE INFORMATION DISCLOSED MAY NOT BE THE SAME AS THAT WHICH WOULD BE DISCLOSED IF THIS DOCUMENT HAD BEEN PREPARED IN ACCORDANCE WITH THE LAWS OF A JURISDICTION OUTSIDE ENGLAND. ADDITIONAL INFORMATION RELATING TO THE COMPANIES IS CONTAINED IN A SECURITIES NOTE ISSUED BY THE COMPANIES ("THE SECURITIES NOTE"). A BRIEF SUMMARY WRITTEN IN NON-TECHNICAL LANGUAGE CONVEYING THE ESSENTIAL CHARACTERISTICS OF AND RISKS ASSOCIATED WITH THE COMPANIES AND THE ORDINARY SHARES OF 1 PENCE EACH IN THE CAPITAL OF MIG ("MIG SHARES"), ORDINARY SHARES OF 1 PENCE EACH IN THE CAPITAL OF MIG 4 ("MIG 4 SHARES") AND ORDINARY SHARES OF 1 PENCE EACH IN THE CAPITAL OF I&G ("I&G SHARES"), ("SHARES") WHICH ARE BEING OFFERED FOR SUBSCRIPTION ("OFFER SHARES") ("THE OFFER") IS CONTAINED IN A SUMMARY ISSUED BY THE COMPANIES ("THE SUMMARY"). THE REGISTRATION DOCUMENT, THE SECURITIES NOTE AND THE SUMMARY HAVE BEEN PREPARED IN ACCORDANCE WITH THE PROSPECTUS RULES MADE UNDER FSMA AND HAVE BEEN APPROVED BY THE FINANCIAL SERVICES AUTHORITY ("FSA") IN ACCORDANCE WITH FSMA.
THIS REGISTRATION DOCUMENT, THE SECURITIES NOTE AND THE SUMMARY TOGETHER COMPRISE A PROSPECTUS ISSUED BY THE COMPANIES DATED 20 JANUARY 2012 ("THE PROSPECTUS"). THE PROSPECTUS HAS BEEN FILED WITH THE FSA IN ACCORDANCE WITH THE PROSPECTUS RULES AND YOU ARE ADVISED TO READ THE PROSPECTUS IN FULL.
The Companies and the Directors of the Companies (whose names are set out on page 4) accept responsibility for the information contained in the Registration Document. To the best of the knowledge of the Companies and the Directors of the Companies (who have taken all reasonable care to ensure that such is the case), the information contained in the Registration Document is in accordance with the facts and does not omit anything likely to affect the import of such information.
| Matrix Income & Growth | Matrix Income & Growth 4 | The Income & Growth |
|---|---|---|
| VCT plc | VCT plc | VCT plc |
Registered in England and Wales under number 05153931
Registered in England and Wales under number 03707697 ISIN: GB00B01WL239 ISIN: GB00B1FMDH51 ISIN: GB00B29BN198
Registered in England and Wales under number 04069483
In connection with the Offer, Matrix Corporate Capital LLP the sponsor to the Offer, is acting for the Companies and noone else and will not be responsible to anyone other than the Companies for providing the protections afforded to customers of Matrix Corporate Capital LLP (subject to the responsibilities and liabilities imposed by FSMA and the regulatory regime established thereunder) in providing advice in relation to the Offer. Matrix Corporate Capital LLP is authorised and regulated in the United Kingdom by the FSA.
In connection with the Offer, Matrix Private Equity Partners LLP ("Matrix"), the promoter of the Offer, is acting for the Companies and no-one else and will not be responsible to anyone other than the Companies for providing the protections afforded to customers of Matrix, nor for providing advice in relation to the Offer. Matrix is authorised and regulated in the United Kingdom by the FSA.
The Offer Shares will not be registered under the United States Securities Act 1933 or the United States Investment Company Act 1990, and no action has been, or will be, taken in any jurisdiction by, or on behalf of, the Companies or Matrix which would permit a public offer of the Offer Shares in any jurisdiction other than the United Kingdom, nor has any such action been taken with respect to the possession or distribution of this document other than in the UK.
Application has been made to the UKLA for the Offer Shares to be admitted to the Official List and to the London Stock Exchange plc for such Offer Shares to be admitted to trading on its market for listed securities. It is expected that admission to the Official List will become effective and that dealings in the Offer Shares will commence three Business Days following allotment. The Companies' existing issued Shares are traded on the London Stock Exchange's main market for listed securities.
Copies of this Registration Document, the Securities Note and the Summary (and any supplementary prospectus published by the Companies) are available free of charge from the promoter of the Offer:
Matrix Private Equity Partners LLP telephone: 020 3206 7276 One Vine Street download: www.matrixvcts.co.uk London W1J 0AH email: [email protected]
YOUR ATTENTION IS DRAWN TO THE RISK FACTORS ON PAGES 1 TO 3.
| RISK FACTORS | 1 |
|---|---|
| CORPORATE INFORMATION FOR THE COMPANIES | 4 |
| DEFINITIONS | 5 |
| THE DIRECTORS AND MATRIX | 7 |
| MEMORANDA AND ARTICLES | 13 |
| PART I – MIG (A) General information (B) Analysis of the investment portfolio (C) Financial information |
23 |
| PART II – MIG 4 (A) General information (B) Analysis of the investment portfolio (C) Financial information |
39 |
| PART III – I&G (A) General information (B) Analysis of the investment portfolio (C) Financial information |
55 |
| PART IV - LARGEST INVESTMENTS OF THE COMPANIES | 72 |
| PART V - DOCUMENTS AVAILABLE FOR INSPECTION | 79 |
Page
Existing and prospective investors should consider carefully the following risk factors in addition to the other information presented in this document and the Prospectus as a whole. If any of the risks described below were to occur, it could have a material effect on the Companies' businesses, financial conditions or results of operations. The risks and uncertainties described below are not the only ones the Companies, the Boards or investors in the Shares will face. Additional risks not currently known to the Companies or the Boards, or that the Companies or the Boards currently believe are not material, may also adversely affect the Companies' businesses, financial condition and results of operations. The value of the Shares could decline due to any of these risk factors described below, and investors could lose part or all of their investment. Investors should consult an independent financial adviser authorised under FSMA. The attention of prospective investors is drawn to the following risks.
The value of Shares, and the income from them, can fluctuate and investors may not get back the amount they invested. In addition, there is no certainty that the market price of the Shares will fully reflect the underlying net asset value, nor should investors rely upon any Share buyback policy to offer any certainty of selling their Shares at prices that reflect the underlying NAV. In addition, there is no guarantee that dividends will be paid or that any dividend objective stated will be met.
Although the existing Shares issued by the Companies have been (and it is anticipated that the Offer Shares in the Companies to be issued pursuant to the Offer will be) admitted to the Official List of the UKLA and to trading on the London Stock Exchange's market for listed securities, the secondary market for VCT shares is generally illiquid and, therefore, there may not be a liquid market (which may be partly attributable to the fact that initial tax reliefs are not available for VCT shares generally bought in the secondary market and because VCT shares usually trade at a discount to NAV) and investors may find it difficult to realise their investment. Investment in the Companies should be seen as a long term investment.
The past performance of the Companies, other funds managed by Matrix, the investment manager to the Companies, and Matrix itself is no indication of future performance. The return received by investors will be dependent on the performance of the underlying investments. The value of such investments, and interest income and dividends therefrom, may rise or fall.
The articles of association of each Company provide the opportunity for Shareholders of a Company to vote on the continuation of that Company on the fifth anniversary of the last allotment of shares. The allotment of Offer Shares pursuant to the Offer will, therefore, defer (in accordance with the Articles) the opportunity for Shareholders of a Company to vote on the continuation of that Company for at least five years and, as a result, both new and existing Shareholders may have to wait longer to realise their holding in the relevant Company.
Although a Company may receive customary venture capital rights in connection with its investments, as a minority investor it may not be in a position to protect its interests fully.
A Company's investments may be difficult, and take time, to realise. There may also be constraints imposed on the realisation of investments in order to maintain the VCT tax status of a Company.
It can take a period of years for the underlying value or quality of the businesses of smaller companies, such as those in which the Companies invest, to be fully reflected in their market values and their market values are often also materially affected by general market sentiment, which can be negative for prolonged periods.
Investment in unquoted companies (including AIM-traded and PLUS market-traded companies), by its nature, involves a higher degree of risk than investment in companies listed on the Official List. In particular, small companies often have limited product lines, markets or financial resources and may be dependent for their management on a small number of key individuals and may be more susceptible to political, exchange rate, taxation, economic and other regulatory changes and conditions. In addition, the market for securities in smaller companies may be less regulated and is usually less liquid than that for securities in larger companies, bringing with it potential difficulties in acquiring, valuing and disposing of such securities. Proper information for determining their value or the risks to which they are exposed may also not be available. Investment returns will, therefore, be uncertain and involve a higher degree of risk than investment in a company listed on the Official List.
To the extent that investee companies are unable to pay the interest on loan stock instruments, a Company's income return will be adversely affected. Investee companies may also have debt, such as bank loans, which rank ahead of the loan stock issued to a Company.
Where more than one of the funds managed or advised by Matrix wishes to participate in an investment opportunity, allocations will generally be made in proportion to the net asset value of each fund. When one of the funds managed or advised by Matrix is in its fund raising period, its net funds raised, for the purpose of allocation, will be assumed to be the value of shares allotted at the time the allocation calculation is made. Implementation of this policy will be subject to the availability of funds to make the investment and other portfolio considerations such as sector exposure and the requirement to achieve or maintain a minimum of 70% of a particular VCT's portfolio in VCT qualifying holdings. This may mean that a Company may receive a greater or lesser allocation than would otherwise be the case under the normal co-investment policy.
VCTs are subject to investment restrictions, a summary of which are set out in Part Ten of the Securities Note, which may have an impact on the investments the Companies can make and the returns achievable.
Although Matrix is currently seeing a strong dealflow of opportunities, there can be no guarantee that suitable investment opportunities will be identified in order to meet each Company's objectives.
Whilst it is the intention of each Board that their Company will continue to be managed so as to qualify as a VCT, there can be no guarantee that a Company's status will be maintained. Failure to continue to meet the qualifying requirements could result in Qualifying Investors losing the tax reliefs available for VCT shares, resulting in adverse tax consequences including, if the holding has not been held for the relevant holding period, a requirement to repay the tax reliefs obtained. Furthermore, should a Company lose its VCT status, dividends and gains arising on the disposal of Shares would become subject to tax and the relevant Company would also lose its exemption from corporation tax on its capital gains.
If a Qualifying Investor disposes of his or her Shares within five years of issue, (three years if such Shares were issued on or between 6 April 2000 and 5 April 2006), he or she will be subject to clawback by HMRC of any income tax reliefs originally claimed.
If at any time VCT status is lost for a Company, dealings in its Shares will normally be suspended until such time as proposals to continue or to be wound-up have been announced.
The tax rules, or their interpretation, in relation to an investment in the Companies and/or the rates of any tax may change during the life of the Companies and may apply retrospectively.
Changes in legislation concerning VCTs (whether pursuant to the draft 2012 Finance Bill or otherwise), in relation to qualifying holdings, qualifying trades and qualifying use of funds, may limit the number of qualifying investment opportunities, reduce the level of returns which would otherwise have been achievable or result in the Companies not being able to meet its objectives. Investors should note that the draft legislation proposed for the draft 2012 Finance Bill restricts funds raised after 5 April 2012 from being used by an investee company for the acquisition of shares in another company which may reduce the number of investment opportunities for such funds.
Many commentators believe that the UK economy will continue to face testing circumstances in the short to medium term that will hinder economic growth, with some warning that the UK economy could return to recession. Such conditions could adversely affect the ability of small companies to perform adequately, which could in turn reduce the returns earned by VCT investors.
The UK economy, and its related stock markets, currently face some unusually challenging conditions. Stock market and currency movements may cause the value of the Companies' investments and the income from them to fall as well as rise and investors may not get back the amount they originally invested.
Any change of governmental, economic, fiscal, monetary or political policy, in particular current government spending reviews and cuts, could materially affect, directly or indirectly, the operation of the Companies and/or the performance of the Companies and the value of and returns from Shares and/or their ability to achieve or maintain VCT status.
Keith Melville Niven (Chairman) Bridget Elisabeth Guérin Thomas Peter Sooke
Christopher Mark Moore (Chairman) Andrew Stephen Robson Helen Rachelle Sinclair
Colin Peter Hook (Chairman) Jonathan Harry Cartwright Helen Rachelle Sinclair
Matrix Private Equity Partners LLP One Vine Street London W1J 0AH
SGH Martineau LLP No. 1 Colmore Square Birmingham B4 6AA
Matrix Corporate Capital LLP One Vine Street London W1J 0AH
PKF (UK) LLP Farringdon Place 20 Farringdon Road London WC2N 6RH
Capita Registrars 34 Beckenham Road Beckenham Kent BR3 4TU Telephone Number: 0871 664 0300*
One Vine Street London W1J 0AH
I&G 04069483 MIG 05153931 MIG 4 03707697
www.migvct.co.uk www.mig4vct.co.uk www.incomeandgrowthvct.co.uk
020 3206 7276
The City Partnership (UK) Limited Thistle House 21 Thistle Street Edinburgh EH2 1DF
PricewaterhouseCoopers LLP 1 Embankment Place London WC2N 6RH
National Westminster Bank plc Financial Institutions Team First Floor Mayfair Commercial Banking Centre Piccadilly 65 London W1A 2PP
Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ Telephone Number: 0870 707 1155
Further details on the costs of calls, opening hours and how to contact the Companies' registrars from abroad are detailed on their websites www.capitaregistrars.com/shareholders and www.investorcentre.co.uk
*Capita Registrars telephone number is open between 8.30 a.m. and 5.30 p.m. (GMT) Monday to Friday (except UK public holidays). If telephoning from outside of the UK dial +44 20 8639 3399. Calls to Capita Registrars' helpline are charged at 10p per minute (including VAT) plus your service providers' network extras. Calls from outside the UK will be charged at applicable international rates. Different charges may apply to calls from mobile telephones.
The following definitions apply throughout this document unless the context otherwise requires:
| "AIM" | the Alternative Investment Market |
|---|---|
| "Articles" | the articles of association of I&G and/or MIG and/or MIG 4, as the context permits |
| "Boards" | the board of directors of I&G, MIG and MIG 4 (and each "a Board") |
| "Business Days" | any day (other than a Saturday) on which clearing banks are open for normal banking business in sterling |
| "CA 1985" | Companies Act 1985 (as amended) |
| "CA 2006" | Companies Act 2006 (as amended) |
| "Capita Registrars" | a trading name of Capita Registrars Limited |
| "Closing Date" | the closing date of the Offer which is expected to be 12.00 pm on 30 April 2012, but the Boards reserve the right to extend the closing date of the Offer or will close earlier if it is fully subscribed or otherwise at the Boards' discretion |
| "Companies" | I&G, MIG and MIG 4 (and each "a Company") |
| "Companies Acts" | CA 1985 and CA 2006 |
| "Directors" | the directors of I&G and/or MIG and/or MIG 4 from time to time, as the context permits |
| "EBITA" | a company's earnings before the deduction of interest, tax and amortisation |
| "FSA" | the Financial Services Authority |
| "FSMA" | the Financial Services and Markets Act 2000 (as amended) |
| "HMRC" | Her Majesty's Revenue & Customs |
| "I&G" | The Income & Growth VCT plc |
| "I&G Shares" | ordinary shares of 1p each in the capital of I&G |
| "IPEVC Valuation Guidelines" |
the International Private Equity and Venture Capital Valuation Guidelines |
| "Listing Rules" | the Listing Rules of the UK Listing Authority |
| "London Stock Exchange" |
London Stock Exchange plc |
| "Matrix" or "manager" | Matrix Private Equity Partners LLP, the investment adviser, administrator, company secretary and promoter to the Companies and which is authorised and regulated by the FSA |
| "Matrix Corporate Capital" |
Matrix Corporate Capital LLP, the sponsor to the Offer and broker to the Companies |
| "Memorandum" | the memorandum of association of I&G and/or MIG and/or MIG 4, as the context permits (and together "the Memoranda") |
| "MIG" | Matrix Income & Growth VCT plc |
| "MIG Shares" | ordinary shares of 1p each in the capital of MIG |
| "MIG 4" | Matrix Income & Growth 4 VCT plc |
| "MIG 4 Shares" | ordinary shares of 1p each in the capital of MIG 4 |
| "Money Market Funds" |
money market funds, government securities or other low risk liquid assets |
| "NAV" or "net asset value" |
the net asset value of a company calculated in accordance with that company's normal accounting policies |
|---|---|
| "Offer" | the offer for subscription of Offer Shares as described in the Prospectus |
| "Offer Price" | the price at which the Offer Shares will be allotted in each Company pursuant to the Offer |
| "Offer Shares" | I&G Shares, MIG Shares and MIG 4 Shares, being offered for subscription pursuant to the Offer |
| "Official List" | the official list of the UK Listing Authority |
| "PLUS Markets" | 'PLUS quoted', a prescribed market for the purposes of Section 118 of Financial Services and Markets Act 2000 operated by PLUS Markets Group plc |
| "Prospectus" | together the Registration Document, the Securities Note and the Summary |
| "Prospectus Rules" | the prospectus rules of the UK Listing Authority |
| "Qualifying Company" | an unquoted (including an AIM-listed) company which satisfies the requirements of Part 4 of Chapter 6 of the Tax Act |
| "Receiving Agent" | The City Partnership (UK) Limited |
| "Registrar" | Capita Registrars or Computershare Investor Services plc, as the context permits |
| "Registration Document" |
this document |
| "Regulations" | the Uncertificated Securities Regulations 2001 |
| "Securities Note" | the securities note issued by the Companies dated 20 January 2012 in connection with the Offer |
| "Shareholder" | a holder of Shares in one or more of the Companies (as the context permits) |
| "Shares" | I&G Shares and/or MIG Shares and/or MIG 4 Shares (as the context permits) |
| "Summary" | the summary issued by the Companies dated 20 January 2012 in connection with the Offer |
| "Tax Act" | the Income Tax Act 2007 (as amended) |
| "Total Return" | the aggregate value of an investment or collection of investments comprising net asset value, valued where appropriate in accordance with IPEVC Valuation Guidelines, plus the aggregate amount of all distributions (both revenue and capital) made |
| "UKLA" or "UK Listing Authority" |
the FSA in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000 |
| "United Kingdom" or "UK" |
the United Kingdom of Great Britain and Northern Ireland |
| "United States" or "US" |
the United States of America, its states, territories and possessions (including the District of Columbia) |
| "VCT Value" | the value of an investment calculated in accordance with Section 278 of the Tax Act |
| "Venture Capital Investments" |
shares in, or securities of, a Qualifying Company held by a venture capital trust which meets the requirements described in Parts 3 and 4 of Chapter 6 to the Tax Act |
| "Venture Capital Trust" or "VCT" |
a venture capital trust as defined in Section 259 of the Tax Act |
As required by the new provisions of the Listing Rules for VCTs, each of the Companies' Boards is independent of Matrix. All Directors are independent of Matrix save for Bridget Guérin and Helen Sinclair as set out below.
Each Board has substantial experience of venture capital businesses and has overall responsibility for its company's affairs, including determining the investment policy of the relevant Company and making investment decisions (on the advice of Matrix). Each Board also retains responsibility for approving both the valuations of the portfolio and the net assets of its Company.
Keith has over 30 years' experience in the financial services industry, most of which was spent at Schroder Investment Management Limited, the fund management arm of Schroders plc, where he was appointed joint vice-chairman in 2000. He held a number of other senior positions within Schroders including managing director of its UK institutional fund management business between 1986 and 1992 and chairman of its retail business, Schroder Unit Trusts Limited, from 1992 to 2001. He retired from Schroders in October 2001. Keith is a non-executive director of three other trusts, Schroder UK Growth Fund plc, Schroder Income Growth Fund plc and Impax Environmental Markets plc. Keith is also an investment adviser to the Rolls-Royce Pension Fund and a director of the Trossachs Community Trust. Until May 2010, he was chairman of Matrix Income & Growth 3 VCT plc (and continued to be a director of Matrix Income & Growth 3 VCT plc until its dissolution in October 2011).
Christopher has considerable experience of the venture capital industry. After a law degree and qualifying as an accountant with Price Waterhouse he worked for Robert Fleming Inc., Lazards, Jardine Fleming and then Robert Fleming, latterly as a main board director from 1986 to 1995. During this period he was involved in various unquoted and venture capital investments and remained chairman of Fleming Ventures Limited, an international venture capital fund, until the fund's final distribution in 2003. His roles have included acting as senior adviser to the chairman of Lloyds and chairing the successful turn-around of a public industrial group. Until May 2010, he was a director of Matrix Income & Growth VCT plc, until September 2010 he was a director of The Income & Growth VCT plc and until its dissolution in October 2011 he was a director of Matrix Income & Growth 3 VCT plc.
Colin has wide financial and commercial experience. He has worked in the City for more than 30 years. During this time, he directed fund management operations for more than ten years. His City involvement includes mergers and acquisitions, and flotations. From 1994 to 1997 he was chief executive of Ivory and Sime plc. He is currently the chief executive officer of Pole Star Space Applications Limited, a leading provider of real-time tracking information for maritime applications via a global web-based satellite enabled solution. Until September 2010, he was Chairman and a director of Matrix Income & Growth 4 VCT.
Tom is an experienced venture capitalist and is chairman of Travel á la Carte Limited. In recent years he has been chairman and non-executive director of a number of quoted and unquoted private equity funds and other companies. Previously, up until 1991, he was a partner in Deloitte LLP, co-managing the firm's corporate advisory group in London. Prior to that he was a main board director at Granville Holdings plc, where he also established and ran its main private equity fund activities from 1980 to 1987. In 1983, whilst with Granville, Tom also one of the cofounding members of the British Venture Capital Association. Until January 2011 he was a director of Braxxon Consulting Limited and until its dissolution in October 2011 he was also a director of Matrix Income & Growth 3 VCT plc.
Andrew qualified as a Chartered Accountant in 1984. From 1984 to 1997, he worked in Corporate Finance at Robert Fleming & Co Limited, becoming a director. Following a four year term in charge of the finances of the National Gallery, he joined Société Générale as a director in the London M&A department. He subsequently became finance director of the eFinancial group, a group specialising in financial publishing and online recruitment. He now works as a business adviser to small companies.
Andrew has over 12 years of experience as a non-executive director, including with investment companies. He is currently a non-executive director of British Empire Securities and General Trust plc (from August 2008), Shires Income plc (from May 2008) and JP Morgan Smaller Companies Investment Trust plc (from 2007). Andrew was a non-executive director of Edinburgh UK Smaller Companies Tracker Trust plc from 1998 to 2006 and a non-executive director of Gate Gourmet Group Holding LLC from 2006 to 2007 and a non-executive director of M&G Equity Investment Trust plc from 2007 to 2011.
Jonathan qualified as a Chartered Accountant. He has significant experience of the investment trust sector and of serving on the boards of both public and private companies in executive and non-executive roles. Jonathan joined Caledonia Investments plc in 1989, serving as Finance Director from 1991 to December 2009 and Group Financial Controller at Hanson plc from 1984 to 1989. He was a non-executive director of Bristow Group Inc. (from 1996 to 2009) and has been a non-executive director of Serica Energy plc (from 2008), British Portfolio Trust plc (from September 2010) and Aberforth Geared Income Trust plc (from March 2010). Jonathan has served on the Self-Managed Investment Trust Committee of the Association of Investment Companies (to December 2009).
Bridget is a former director of and current shareholder (0.3%) in Matrix Group Limited which owns 100% of the equity in Matrix Private Equity Limited which, in turn, currently holds a 50% interest in Matrix. Bridget was managing director of Matrix Money Management Limited from June 1999 to March 2011, a wholly owned subsidiary of Matrix Group Limited which is a specialist financial services company. Whilst at Matrix, Bridget was also a director of the Matrix Alternative Investment Strategies Fund Limited, an open ended fund of hedge funds, Matrix Structured Products Limited, a closed ended fund based in Bermuda and Matrix UCITS Fund plc, a fund which has a number of UCITS sub funds. Until May 2010, she was a director of Matrix Income & Growth 3 VCT plc. Bridget ceased to be a director and employee of companies within the Matrix group and the connected funds on 31 March 2011. Prior to joining Matrix, Bridget accumulated 16 years' of retail investment fund experience at Schroder Unit Trusts Limited, Ivory & Sime and County NatWest. Bridget is currently a non-executive director of the CCP Quantitative Fund and York Racecourse and is a trustee of the York Racecourse Pension Fund. Under the Listing Rules, Bridget is considered to be independent; however, the MIG Board has considered that Bridget is not independent under the UK Corporate Governance Code due to her recent links with the Matrix group and the connected funds.
Helen has extensive experience of investing in a wide range of small and medium sized businesses. She graduated in economics from Cambridge University and began her career in banking. After an MBA at INSEAD business school, Helen worked from 1991 to 1998 at 3i plc based in their London office. She was a founding director of Matrix Private Equity Limited when it was established in early 2000 and raised two funds, Matrix Income & Growth 2 VCT plc and Matrix Enterprise Fund. After leaving Matrix in 2005 she was a non-executive director of Hotbed Fund Managers Limited from 2006 to 2008. She is chairman of British Smaller Companies VCT plc, a non-executive director of Framlington AIM VCT plc, Octopus Eclipse VCT 3 plc and Spark Ventures plc. Helen is a director of both I&G and MIG 4 and, as both are managed by Matrix, is not deemed to be an independent director pursuant to the Listing Rules.
The Directors are currently or have been within the last five years, a member of the administrative, management or supervisory bodies or partners of the companies and partnerships mentioned below:
| Current | Past Five Years | ||
|---|---|---|---|
| Keith Niven | Advance UK Trust PLC (in liquidation) Impax Environmental Markets plc Matrix Income & Growth VCT plc Schroder Income Growth Fund plc Trossachs Community Trust Limited Schroder UK Growth Fund plc |
CAF Bank Limited CAF Nominees Limited Matrix Income & Growth 3 VCT plc |
|
| Christopher Moore | Bletchley Park Trust Limited British Eye Research Foundation Eye Research UK Fight for Sight Trading Limited Matrix Income & Growth 4 VCT plc The Iris Fund for the Prevention of Blindness |
Helveta Limited Matrix Income & Growth VCT plc Matrix Income & Growth 3 VCT plc Oxonica Limited The Income & Growth VCT plc |
|
| Colin Hook | Absolute Maritime Tracking Services Inc Absolute Software (Australia) Pty Limited Absolute Software Inc Citron Press plc (in liquidation) The Income & Growth VCT plc Pole Star Data Centre Services Limited Pole Star Space Applications Limited The 9th/12th Royal Lancers |
Matrix Income & Growth 4 VCT plc |
| (Prince of Wales's) Regimental Museum IBIS Designs Ltd |
||
|---|---|---|
| Tom Sooke | Citicourt Associates Limited Matrix Income & Growth VCT plc Travel a La Carte Limited |
Braxxon Consulting Limited Braxxon Technology Limited Committed Capital VCT plc Kings Arms Yard VCT plc Matrix Income & Growth 3 VCT plc |
| Helen Sinclair | British Smaller Companies VCT plc Framlington AIM VCT plc Hemstall Road Residents Co Limited Matrix Income & Growth 4 VCT plc Octopus Eclipse VCT 3 plc Spark Ventures plc The Income & Growth VCT plc |
Hotbed Fund Managers Limited |
| Andrew Robson | Best Securities Limited Brambletye School Trust Limited British Empire Securities and General Trust plc First Integrity Limited JPMorgan Smaller Companies Investment Trust plc Matrix Income & Growth 4 VCT plc Peckwater Limited Shires Income plc |
eFinancialNews Limited eFinancialNews Holdings Limited Gate Gourmet Group Holdings LLC Institute for food, brain and behaviour London Financial News Publishing Limited M&G Equity Investment Trust plc (in liquidation) Specialist Waste Recycling Limited Topshire Limited Wiston Investment Company Limited |
| Jonathan Cartwright | Aberforth Geared Income Trust plc Aquilo Associates Limited British Portfolio Trust plc Serica Energy plc Tennants Consolidated Limited The Income & Growth VCT plc |
Bristow Group Inc. Bristow Aviation Holdings Limited Buckingham Gate Limited Caledonia CCIL Distribution Limited Caledonia El Distribution (in liquidation) Caledonia Financial Limited Caledonia GP Distribution Limited Caledonia Group Services Limited Caledonia Industrial & Services Limited Caledonia Investments plc Caledonia Investment Funds Limited Caledonia Settlement Limited Caledonia Treasury Limited Easybox Self-Storage Limited |
| Garlandheath Limited Sea Lion Ventures Limited Shieldcliff Limited Sloane Club Holdings Limited The Union-Castle Mail Steamship Company Limited Zulu Self Storage Properties Limited |
||
|---|---|---|
| Bridget Guérin | Cantab Capital (Cayman) Limited Cantab Capital LTIP Limited CCP Quantitative Fund Limited Matrix Income & Growth VCT plc Meaujo (764) Limited Meaujo (765) Limited York Racecourse Knavesmire LLP |
Matrix Alternative Investment Strategies Fund Matrix (Bermuda) Limited Matrix Group Limited Matrix Income & Growth 3 VCT plc Matrix Money Management Limited Matrix-Securities Limited Matrix Structured Products Limited Matrix UCITS Funds plc |
The Companies' investment manager is Matrix, a limited liability partnership incorporated and registered in England and Wales under number OC320577 pursuant to the Limited Liability Partnerships Act 2000 (telephone number 020 3206 7000). Matrix's registered office and principal place of business is One Vine Street, London W1J 0AH. Matrix is authorised and regulated by the Financial Services Authority to advise on investments, arrange deals in investments and to make arrangements with a view to transactions in investments. The principal legislation under which Matrix operates is the Limited Liability Partnership Act 2000 and the applicable provisions of the Companies Acts (and regulations made thereunder).
Matrix origins date back to 1998 when its four founder executive partners commenced working together. Since April 2004, Matrix has been owned jointly by its executive partners and Matrix Group Limited.
Matrix has now grown to six partners and ten staff with over 150 years' investing experience between them. This team is wholly dedicated to the management and administration of VCTs.
On 12 January 2012, the executive partners of Matrix and Matrix Group Limited agreed for the executive partners of Matrix to acquire Matrix Group Limited's interest in Matrix. This will result in the executive partners acquiring control of Matrix to create a fully independent firm. The acquisition is subject to approval from the FSA of the change of control in Matrix and is expected to be completed on or around 30 June 2012.
The Companies' arrangements with Matrix, in particular its investment approach and services, are not expected to change. The Boards look forward to this new phase with their manager whilst reserving their respective rights under the investment management agreements.
Subject to the acquisition being completed and following close of the Offer, it is currently intended that Matrix will leave its offices at One Vine Street and that both it and the names of the VCTs under its management (including, where relevant, the Companies) will be changed to remove references to "Matrix".
Of the 32 VCT managers in the UK, Matrix is the seventh largest with funds under management, as at 30 November 2011, of approximately £140 million and the VCTs advised by Matrix have over 7,200 existing investors.
Matrix entered the VCT industry advising two multi-manager VCTs as one of three managers each looking after a share of the assets. These VCTs, TriVen VCT plc and TriVest VCT plc, were launched in 1999 and 2000 respectively. Between 2004 and 2009, it became clear to the independent boards of each VCT that Matrix was achieving the best performance of the managers and that Matrix should be appointed sole manager. The VCTs have subsequently been re-named Matrix Income & Growth 4 VCT plc and The Income & Growth VCT plc and these are two of the Companies in this linked Offer. In 2004, Matrix Income & Growth VCT was launched with Matrix as sole manager. In 2005, Matrix Income & Growth 3 VCT plc was launched with Matrix as the sole manager. In 2010, Matrix Income & Growth VCT plc completed a merger with Matrix Income & Growth 3 VCT plc and this is the third Company in this linked Offer.
The material provisions of each of the Company's Articles are as detailed below. The provisions set out below apply, mutatis mutandis, to each Company unless otherwise stated. References in this section to "the Company" mean the relevant Company and references to "Directors" or "Board" mean the directors or board respectively of the relevant Company from time to time.
The liability of the members is limited to the amount, if any, unpaid on their shares.
The Board may convene a general meeting whenever it thinks fit.
The accidental omission to send a notice of meeting or, in cases where it is intended that it be sent out with the notice, an instrument of proxy, to, or the non-receipt of either by, any person entitled to receive the same shall not invalidate the proceedings at that meeting.
No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business but the absence of a quorum shall not preclude the choice or appointment of a chairman which shall not be treated as part of the business of the Meeting. Subject to the provisions below, two persons entitled to attend and to vote on the business to be transacted, each being a member present in person or a proxy for a member or a duly authorised representative of a corporation which is a member, shall be a quorum.
If within five minutes (or such longer interval as the Chairman in his absolute discretion thinks
fit) from the time appointed for the holding of a general meeting a quorum is not present, or if during a meeting such a quorum ceases to be present, the meeting, if convened on the requisition of members, shall be dissolved. In any other case, the meeting shall stand adjourned to such day and at such time and place as the Chairman may determine, being not less than ten clear days nor more than 28 days thereafter at such adjourned meeting one member present in person or by proxy or (being a corporation) by a duly authorised representative shall be a quorum. If no such quorum is present or if during the adjourned meeting a quorum ceases to be present, the adjourned meeting shall be dissolved. The Company shall give at least seven clear days' notice of any meeting adjourned through lack of quorum.
At any general meeting a resolution put to a vote of the meeting shall be decided on a show of hands unless (before or immediately after the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is duly demanded. Subject to the provisions of CA 2006, a poll may be demanded by:
Unless a poll is duly demanded and the demand is not withdrawn a declaration by the Chairman of the meeting that a resolution has on a show of hands been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive, and an entry to that effect in the book containing the minutes of proceedings of the Company shall be conclusive evidence thereof, without proof of the number or proportion of the votes recorded in favour of or against such resolution.
Subject to the provisions of the CA 2006 and to any special terms as to voting on which any shares may have been issued or may for the time being be held and to any suspension or abrogation of voting rights pursuant to the Articles, at any general meeting every member who is present in person or by proxy or (being a corporation) is present by a duly authorised representative shall on a show of hands have one vote and on a poll shall have one vote for each share of which he is the holder.
(a) Subject to the provisions of CA 2006, if at any time the share capital of the Company is divided into shares of different classes any of the rights for the time being attached to any share or class of shares in the Company (and notwithstanding that the Company may be or be about to be in liquidation) may (unless otherwise provided by the terms of issue of the shares of that class) be varied or abrogated in such manner (if any) as may be provided by such rights or, in the absence of any such provision, either with the consent in writing of the holders of not less than three quarters in nominal value of the issued shares of the class or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders of shares of the class duly convened and held as provided in these Articles (but not otherwise).
(b) The foregoing provisions of this article shall apply also to the variation or abrogation of the special rights attached to some only of the shares of any class as if each group of shares of the class differently treated formed a separate class the separate rights of which are to be varied.
All the provisions in the Articles as to general meetings shall mutatis mutandis apply to every meeting of the holders of any class of shares save that:
The Company in general meeting may from time to time by ordinary resolution:
Except as provided in paragraph 8.2 below, each member may transfer all or any of his shares by instrument of transfer in writing in any usual form or in any form approved by the Board. Such instrument shall be executed by or on behalf of the transferor and (in the case of a transfer of a share which is not fully paid up) by or on behalf of the transferee. The transferor shall be deemed to remain the holder of such share until the name of the transferee is entered in the Register in respect of it.
(v) it is delivered for registration to the Office, or such other place as the Board may from time to time determine, accompanied (except in the case of a transfer by a recognised person where a certificate has not been issued) by the certificate for the shares to which it relates and such other evidence as the Board may reasonably require to prove the title of the transferor and the due execution by him of the transfer or if the transfer is executed by some other person on his behalf, the authority of that person to do so, provided that such discretion may not be exercised in such a way as to prevent dealings in such shares from taking place on an open and proper basis.
Subject to the provisions of CA 2006 and of the Articles, the Company may by ordinary resolution declare that out of profits available for distribution dividends be paid to members according to their respective rights and interests in the profits of the Company available for distribution. However, no dividend shall exceed the amount recommended by the Board.
10.1 Subject as provided in the Articles, the Board may exercise all the powers of the Company to borrow money and to mortgage or charge all or any part of the undertaking, property and assets (present or future) and uncalled capital of the Company and, subject to the provisions of CA 2006, to issue debentures and other securities whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.
10.2 The Board shall restrict the borrowings of the Company and exercise all voting and other rights and powers of control exercisable by the Company in respect of its subsidiaries so as to procure (as regards its subsidiaries in so far as it can procure by such exercise) that the aggregate principal amount at any one time outstanding in respect of moneys borrowed by the Group (exclusive of moneys borrowed by one Group (being the Company and its subsidiaries from time to time) company from another) shall not at any time without the previous sanction of an ordinary resolution of the Company exceed an amount equal to the Adjusted Capital (as defined below) and Reserves (as defined below).
time of:
all as shown in the latest audited balance sheet of the Group but after:
but do not include:
10.4 All monies borrowed which fall to be repaid in a currency other than sterling shall be translated into sterling on the same basis as that adopted in the latest audited consolidated balance sheet of the Company or in the case of monies borrowed after the date of such balance sheet at the relevant rate of exchange ruling in London at the time the same was borrowed.
10.5 No debt incurred or security given in respect of moneys borrowed in excess of the limit imposed by this article shall be invalid or ineffectual unless to the lender or recipient of the security held at the time when the debt was incurred or security express notice that the limit had been or would thereby be exceeded but no lender or other person dealing with the Company shall be concerned to see or enquire whether such limit is observed.
10.6 In this paragraph 3, references to "Group" mean the Company and its subsidiaries and subsidiary undertakings for the time being.
The Board may, provided the quorum and voting requirements set out below are satisfied, authorise any matter that would otherwise involve a Director breaching his duty under CA 2006 to avoid conflicts of interest.
(i) the Board may (whether at the time of giving the authority or at any time or times subsequently) impose such terms upon the Director concerned and any other Director with a similar interest as it may determine, including, without limitation, the exclusion of that Director and any other Director with a similar interest from the receipt of information, or participation in discussion (whether at meetings of the Board or otherwise) related to the conflict;
(ii) the Director concerned and any other Director with a similar interest will be obliged to conduct himself in accordance with any terms imposed by the Board from time to time in relation to the conflict;
Subject to the provisions of CA 2006 and the Articles and further provided that a Director has declared his interest, a Director, notwithstanding his office:
The Company shall be entitled to sell at the best price reasonably obtainable any share of a member or any share to which a person is entitled by transmission if and provided that:
advertisements (or, if published on different dates the later or latest of them) and prior to the exercise of the power of sale so far as the Board is aware the Company has not received any communication in respect of such share from the member or person entitled by transmission; and
The Board may with the authority of an ordinary resolution of the Company:
accruing the benefit of it to the Company rather than to then holders of Shares concerned) or by payment in cash or otherwise as it thinks fit in the case of shares or debentures becoming distributable in fractions;
(any agreement made under such authority being effective and binding on all such holders); and
(f) generally do all acts and things required to give effect to such resolution.
At any time when the Company has given notice in the prescribed form (which has not been revoked) to the registrar of companies of its intention to carry on business as an investment company (a ''Relevant Period'') distribution of the Company's capital profits (within the meaning of Section 833 of CA 2006 shall be prohibited. The Board shall establish a reserve to be called the capital reserve. During a Relevant Period all surpluses arising from the realisation or revaluation of investments and all other monies realised on or derived from the realisation, payment off of or other dealing with any capital asset in excess of the book value thereof and all other monies which are considered by the Board to be in the nature of accretion to capital shall be credited to the capital reserve. Subject to CA 2006, the Board may determine whether any amount received by the Company is to be dealt with as income or capital or partly one way and partly the other. During a Relevant Period, any loss realised on the realisation or payment off of or other dealing with any investments or other capital assets and, subject to CA 2006, any expenses, loss or liability (or provision thereof) which the Board considers to relate to a capital item or which the Board otherwise considers appropriate to be debited to the capital reserve shall be carried to the debit of the capital reserve. During a Relevant Period, all sums carried and standing to the credit of the capital reserve may be applied for any of the purposes for which sums standing to any revenue reserve are applicable except and provided that notwithstanding any other provision of these Articles during a Relevant Period no part of the capital reserve or any other money in the nature of accretion to capital shall be transferred to the revenue reserves of the Company or be regarded or treated as profits of the Company available for distribution (as defined by Section 829 of CA 2006) or be applied in paying dividends on any shares in the Company. In periods other than a Relevant Period any amount standing to the credit of the capital reserve may be transferred to the revenue reserves of the Company or be regarded or treated as profits of the Company available for distribution (as defined by Section 474(2) of CA 2006) or be applied in paying dividends on any shares in the Company.
In order for the future of the Company to be considered by the members, the Board shall at the annual general meeting of the Company falling after the fifth anniversary of the last allotment of shares in the Company and thereafter at five yearly intervals, invite the members to consider and debate the future of the Company (including, without limitation, whether the Company should be wound up, sold or unitized) and as soon as practicable following that meeting shall convene a general meeting to propose such resolution as the members attending the annual general meeting may by ordinary resolution require.
The Board may make such arrangements as it sees fit, subject to CA 2006, to deal with the transfer, allotment and holding of shares in uncertificated form and related issues.
The Company shall indemnify the directors to the extent permitted by law and may take out and maintain insurance for the benefit of the directors.
to the redeemable non-voting shares and the rights attaching to them pursuant to a special resolution passed on 12 May 2010.
| Date | Issue/Purchase | Number |
|---|---|---|
| 6 July 2011 | Issue | 171,057 |
| 19 August 2011 | Purchase | 245,186 |
| 30 September 2011 | Purchase | 398,009 |
| 10 October 2011 | Purchase | 64,371 |
| 18 November 2011 | Purchase | 200,000 |
| 21 December 2011 | Purchase | 133,675 |
(b) in substitution for any existing authorities the MIG Directors were empowered in accordance with Sections 570(1) and 573 of CA 2006 to allot or make offers or agreements to allot or make offers or agreements to allot equity securities (as defined in Section 560(1) of CA 2006) for cash pursuant to the authority conferred upon them by resolutions passed at the annual general meeting or by way of a sale of treasury shares as if Section 561(1) of CA 2006 did not apply to any such allotment, provided that the power conferred by this resolution shall be limited to:
(i) the allotment of equity securities with an aggregate nominal value of up to but not exceeding £108,000 in connection with offer(s) for subscription; and
and shall expire on the conclusion of the annual general meeting of MIG to be held in 2012 (unless previously renewed, varied or revoked by MIG in general meeting), except that MIG may, before such expiry, make offers or agreements which would or might require equity securities to be allotted after such expiry and the MIG Directors may allot equity securities in pursuance of such offer or agreement as if the power conferred thereby had not expired.
| Issued | |||||
|---|---|---|---|---|---|
| Number £ |
|||||
| MIG Shares | 50,124,848 | 501,248.48 |
2.14 The MIG Shares are/will be in registered form and no temporary documents of title will be issued. MIG is registered with CREST, a paperless settlement system and those Shareholders who wish to hold their MIG Shares in electronic form may do so.
| MIG Shares | % of Issued MIG Share | |
|---|---|---|
| capital | ||
| Keith Niven | 35,929 | 0.08 |
| Bridget Guérin | 24,211 | 0.06 |
| Tom Sooke | 18,136 | 0.04 |
3.3 The MIG Directors intend to subscribe for Offer Shares under the Offer for the following aggregate amounts:
| £ | |
|---|---|
| Keith Niven | 12,000 |
| Bridget Guérin | 9,000 |
| Tom Sooke | 7,500 |
amounted to £74,760 (being £24,479 for Keith Niven, £23,273 for Tom Sooke, £19,023 for Bridget Guérin and £7,985 for Christopher Moore a former Director) plus, if applicable, VAT and employers National Insurance Contributions. Aggregate emoluments for the year ended 31 December 2011 and the current year (subject to review) are expected to be £70,000 (plus, if applicable, VAT and employers National Insurance Contributions).
3.14 There has been no official public incrimination and/or sanction of any MIG Director by statutory or regulatory authorities (including designated professional bodies) and no MIG Director has ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company during the previous five years.
MIG expects to co-invest with the other VCT funds advised by Matrix, participating in equity investments up to £6 million in order to target more development companies.
Where more than one of the funds managed or advised by Matrix wishes to participate in an investment opportunity, allocations will generally be made in proportion to the latest published net asset value of each fund at the date each investment proposal is forwarded to each Board. When one of the funds managed or advised by Matrix is in its fund raising period, its net funds raised, for the purpose of allocation, will be assumed to be the value of shares allotted at the time the allocation calculation is made. Implementation of this policy will be subject to the availability of funds to make the investment and other portfolio considerations such as sector exposure and the requirement to achieve or maintain a minimum of 70% of a particular VCT's portfolio in VCT qualifying holdings. This may mean that MIG may receive a greater or lesser allocation than would otherwise be the case under the normal co-investment policy
When MIG has insufficient funds available to satisfy its allocation, the balance shall be offered to one or more of the funds managed or advised by Matrix who have funds available for new investments pro rata as between themselves.
Any variation from this co-investment policy, insofar as it affects MIG or where MIG
makes any investment not at the same time and on the same terms as that made by other funds managed or advised by Matrix, may only be made with the prior approval of the MIG Directors who are independent of Matrix.
Save for the above, there are no material potential conflicts of interest which Matrix may have as between its duty to MIG and duties owed by them to third parties and their interests.
following appointment and then thereafter every three years. A formal induction programme for MIG Directors has not been required to date. New directors will be provided with an induction pack and an induction session will be arranged in conjunction with the Board and Matrix.
4.11 The Financial Services Authority requires all listed companies to disclose how they have applied the principles and complied with the provisions of the UK Corporate Governance Code (formerly the Combined Code) issued by the Financial Reporting Council in May 2010 for all companies who are now operating in financial years on or after 29 June 2010.
The MIG Board has also considered the principles and recommendations of the AIC Code of Corporate Governance ("AIC Code") by reference to the AIC Corporate Governance Guide for Investment Companies ("AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to MIG.
The Financial Reporting Council has confirmed that in complying with the AIC Code, MIG meets its obligations in relation to the UK Corporate Governance Code and the Listing Rules. The MIG Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Corporate Governance Code), will provide better information to shareholders.
For the year ended 31 December 2010 and as at the date of this document, MIG has complied with the recommendations of the AIC Code and the relevant provisions of the UK Corporate Governance Code, except where noted below. There are certain areas of the UK Corporate Governance Code that the AIC does not consider relevant to investment companies and with which MIG does not specifically comply, of which the AIC Code provides dispensation. The areas and reasons for non-compliance are as follows:
MIG has not, therefore, reported further in respect of these provisions.
Set out below is a summary of all contracts (not being contracts entered into in the ordinary course of business) entered into by MIG in the last two years that are material and all other contracts (not being contracts entered into in the ordinary course of business) that contain any provision under which MIG has an obligation or entitlement which is material to MIG as at the date of the document.
5.1 An investment management agreement dated 20 May 2010 between MIG (1), Matrix (2) and Matrix-Securities Limited (3), pursuant to which Matrix provides certain investment management, secretarial and accountancy services to MIG for a fee payable quarterly in advance of an amount equivalent to 2% per annum of net assets (inclusive of VAT, if any) plus £126,225 (inclusive of VAT, if any) subject to increase in the Retail Price Index. The agreement is terminable by either party on 12 months' notice by any party subject to earlier termination by any party in the event of, inter alia, a party having a receiver, administrator or liquidator appointed or committing a material breach of the agreement or by MIG if it fails to become, or ceases to be, a VCT for tax purposes or where Matrix ceases to be authorised by the FSA or if there is a change in control of Matrix. The MIG Board has acknowledged the proposed change of control which is proposed to take place by Matrix but have reserved their rights to terminate under this agreement with Matrix.The agreement contains provisions indemnifying Matrix against any liability not due to its default, gross negligence, fraud or breach of FSMA.
5.2 A performance incentive agreement dated 9 July 2004 between MIG (1) and Matrix Private Equity Partners Limited (2), which was novated to Matrix pursuant to a novation agreement dated 20 October 2006 and as amended by a deed of variation dated 20 May 2010, pursuant to which Matrix are entitled to receive performance related incentive fees subject to achieving certain defined targets.
Matrix is entitled to receive performance incentive fees of 20% of subsequent cash distributions made to MIG Shareholders (whether by dividend or otherwise from 20 May 2010) over and above a target return of dividends of 6.13p per MIG Share per annum (index linked) subject to the maintenance of a NAV per MIG Share of 96.91p. The performance incentive fee is payable annually and any cumulative shortfalls against the annual target return have to be made up in later years before any entitlement arises. The shortfall at 30 September 2011 was 18.47p. No performance incentive fee has been paid to date.
The agreement will terminate automatically if MIG enters into liquidation or if a receiver or manager is appointed or if a resolution is passed that MIG is voluntarily wound up in accordance with the MIG Articles.
5.6 A letter of engagement dated 2 November 2011 from Matrix Corporate Capital LLP pursuant to which Matrix Corporate Capital LLP has been appointed as sponsor to the Companies in connection with the Offer. The Companies have agreed to indemnify Matrix Corporate Capital LLP for any loss suffered in respect of its role as sponsor which is a customary provision in an agreement of this nature. The Companies' liability under this indemnity is unlimited. This engagement may be terminated at any time
The objective of MIG is to provide investors with a regular income stream, by way of tax-free dividends generated from income and capital returns.
MIG's policy is to invest primarily in a diverse portfolio of UK unquoted companies. Investments are usually structured as part loan and part equity in order to generate regular income and to generate capital gains from realisations.
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.
The funds raised by the Company after 6 April 2006 are subject to the £7 million gross assets test for an investment to be VCT qualifying. Pre 6 April 2006, any company in which investments are made must have no more than £15 million of gross assets at the time of investment to be classed as a VCT qualifying holding.
The investment policy is designed to ensure that MIG continues to qualify and is approved as a VCT by HMRC. Amongst other conditions, MIG may not invest more than 15% of its investments in a single company and must have at least 70% by value of its investments throughout the period in shares or securities comprised in VCT qualifying holdings, of which a minimum overall of 30% by value must be in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules). In addition, although MIG can invest less than 30% by value of an investment in a specific company in ordinary shares it must have at least 10% by value of its total investments in each VCT qualifying company in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules).
The VCT regulations in respect of funds raised after 6 April 2011 changed, such that 70% of such funds raised must be invested in equity.
MIG 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 is spread by investing in a number of different businesses across different industry sectors. To reduce the risk of high exposure to equities, each qualifying investment is structured to maximise the amount which may be invested in loan stock. Initial investments in VCT qualifying companies are, subject to formal approval from the MIG Board, generally made in amounts ranging from £200,000 to £1 million at cost. No holding in any one company will represent more than 10% of the value of MIG's investments at the time of investment. Ongoing monitoring of each investment is carried out by Matrix generally through taking a seat on the board of each Qualifying Company.
MIG aims to invest in larger, more mature unquoted companies through investing alongside three other VCTs advised by Matrix with a similar investment policy. This enables MIG to participate in combined investments by Matrix of up to £5 million.
MIG's Articles permit borrowings of amounts up to 10% of the sum equal to the aggregate of the amount paid up on the allotted or issued share capital of MIG and the amount standing to the credit of the capital and revenue reserves of MIG (whether or not distributable) after adding thereto or deducting therefrom any balance standing to the credit or debit of the profit and loss account. However, MIG has no current plans to undertake any borrowing.
The MIG Board has overall responsibility for MIG's affairs including the determination of its investment policy. Investment and divestment proposals are originated, negotiated and recommended by Matrix and are then subject to formal approval by the MIG Directors.
(b) MIG will not control the companies in which it invests in such a way as to render them subsidiary undertakings;
(c) none of the investments at the time of acquisition will represent more than 15% by VCT Value of MIG's investments; and
Related party transactions for MIG undertaken in the three financial years ended 31 December 2008, 2009 and 2010 are set out in the respective audited report and accounts for those year ends, which, together with the unaudited half-yearly report for the six month period ended 30 June 2011, are incorporated by reference: in Notes 6 and 23 on pages 38 and 50 for the year ended 31 December 2008, in Notes 6 and 23 on pages 36 and 50 for the year ended 31 December 2009, in Notes 6 and 24 on pages 38 and 52 for the year ended 31 December 2010 and in Note 12 for the half year to 30 June 2011. Apart from the payment of the MIG Directors' remuneration on the basis set out in paragraph 3.5 above, MIG has not entered into any related party transactions within the meaning of IFRS or UK GAAP since 30 June 2011.
The issue of Offer Shares to persons resident in or citizens of jurisdictions outside the UK may be affected by the laws of the relevant jurisdiction. Such investors should inform themselves about and observe any legal requirements, in particular:
registered addresses outside the UK to satisfy themselves as to the observance of the laws of the relevant jurisdiction in connection with the issue of Offer Shares, including the obtaining of any government or exchange control or other consents which may be required, the compliance with any other necessary formalities which need to be observed and the payment of any issue, transfer or other taxes or duties due in such jurisdiction.
The following paragraphs, which are intended as a general guide only and are based on current legislation and HMRC practice, summarise advice received by the MIG Directors as to the position of the Companies' Shareholders who hold MIG Shares other than for trading purposes. Any person who is in any doubt as to his taxation position or is subject to taxation in any jurisdiction other than the United Kingdom should consult his professional advisers.
10 5 Save as set out in the final four risk factors on pages 2 and 3, as at the date of this document, there are no governmental, economic, monetary, political or fiscal policies and factors which have or could affect MIG's operations.
10.6 There are no known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on MIG's prospects for at least the current financial year, so far as MIG and the MIG Directors are aware.
All of MIG's investments as at 30 September 2011, which are analysed below, are in the UK and are valued in sterling.
| Sector | % by cost | % by value |
|---|---|---|
| Support Services | 53.9 | 46.6 |
| General Retailers | 12.7 | 15.8 |
| Technology, hardware and | 7.8 | 13.6 |
| equipment | ||
| Software and computer | 1.7 | 3.7 |
| services | ||
| Construction | 4.6 | 0 |
| Media | 7.9 | 11.9 |
| Pharmaceuticals | 6.6 | 6.7 |
| Food production and | 0 | 0 |
| distribution | ||
| Personal goods | 4.8 | 1.7 |
| Type | % by cost | % by value |
|---|---|---|
| Unlisted ordinary shares | 23.1 | 28.4 |
| Unlisted loan stock and preference shares or loans |
47 | 43.3 |
| Listed ordinary shares | 0.9 | 0.8 |
| Cash/liquidity | 29.0 | 27.5 |
Save for the partial sale of DiGiCo Europe Limited and subsequent investments in EMaC Limited and EOTH Limited there has been no material change to the above analysis since 30 September 2011, the date to which the above analysis was prepared.
MIG has produced annual statutory accounts for the three financial years ended 31 December 2008, 2009 and 2010, and unaudited information in the half-yearly financial statements for the six month period ended 30 June 2011. The auditors, PKF (UK) LLP, Registered Auditor, of Farringdon Place, 20 Farringdon Road, London EC1M 2AP have reported on the annual statutory accounts without qualification and without statements under Section 237(2) or (3) of CA 1985 or Sections 495 to 497A of CA 2006 (as applicable).
The annual reports referred to above were prepared in accordance with UK generally accepted accounting practice (GAAP), the fair value rules of the Companies Acts and the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'. The annual reports contain a description of MIG's financial condition, changes in financial condition and results of operation for each relevant financial year and, together with the half-yearly report for the six month period ended 30 June 2011, are being incorporated by reference and can be accessed at the following website:
Where these documents make reference to other documents, such other documents are not incorporated into and do not form part of this Prospectus. The two tables below comprise a cross-referenced list of information incorporated by reference. The parts of these documents which are not being incorporated by reference are either not relevant for an investor or are covered elsewhere in the Prospectus.
| Description | 2008 Annual Report |
2009 Annual Report |
2010 Annual Report |
2011 Half Yearly Report |
|---|---|---|---|---|
| Balance Sheet | Page 32 | Page 30 | Page 31 | Page 18 |
| Income Statement (or equivalent) |
Page 31 | Page 29 | Page 30 | Pages 16 to 17 |
| Statement showing all changes in equity (or equivalent note) |
Page 33 | Page 31 | Page 32 | Page 19 |
| Cash Flow Statement | Page 34 | Page 32 | Page 33 | Page 20 |
| Accounting Policies and Notes |
Pages 35 to 50 |
Pages 33 to 50 |
Pages 34 to 53 |
Pages 22 to 28 |
| Auditor's Report | Pages 29 to 30 |
Page 28 | Page 29 | n/a |
This information has been prepared in a form consistent with that which will be adopted in MIG's next published annual financial statements having regard to accounting standards and policies and legislation applicable to those financial statements.
Such information also includes operating/financial reviews as follows:
| Description | 2008 Annual Report |
2009 Annual Report |
2010 Annual Report |
2011 Half Yearly Report |
|---|---|---|---|---|
| Objective | Page 1 | Inside front | Inside front | Inside front |
| cover | cover | cover | ||
| Performance | Page 4 | Page 2 | Page 2 | Page 1 |
| Summary | ||||
| Results & | Page 19 | Page 15 | Page 18 | Page 3 |
| Dividend | ||||
| Investment Policy | Page 2 | Page 1 | Page 1 | Pages 8 to 9 |
| Chairman's | Pages 5 to 6 | Pages 3 to 4 | Pages 5 to 7 | Pages 2 to 5 |
| Statement | ||||
| Manager's | Page 8 to 15 | Pages 5 to 10 | Pages 8 to 13 | Pages 10 to 12 |
| Review | ||||
| Portfolio | Pages 16 to 17 | Pages 11 to 12 | Pages 14 to 15 | Pages 13 to 15 |
| Summary | ||||
| Valuation Policy | Page 35 | Page 33 | Page 34 | Pages 22 to 23 |
Certain financial information of MIG is also set out below:
| Year ended 31 December 2008 |
Year ended 31 December 2009 |
Year ended 31 December 2010 |
Six month period ended 30 June 2011 |
|
|---|---|---|---|---|
| Investment income |
£1,148,195 | £379,197 | £930,652 | £864,903 |
| Profit/loss on ordinary activities before taxation |
£(4,155,892 | £(563,531) | £6,321,029 | £(452,748) |
| Earnings per MIG Share |
(19.89)p | (2.73)p | 19.25p | (1.07)p |
| Dividends per MIG Share |
2p | 5p | 5p | 0.5p |
| Total assets | £18,377,230 | £17,097,733 | £38,855,033 | £39,813,843 |
| NAV per MIG Share |
86.54p | 83.34p | 96.7p | 90.8p |
As at 30 June 2011, the date to which the most recent unaudited half-yearly financial statements on MIG were published, MIG had unaudited net assets of £39,494,397. As at 30 September 2011, MIG had unaudited net assets of £37,788,384.
As at 30 June 2011, the date to which the most recent unaudited half-yearly financial statements on MIG have been drawn up, MIG had unaudited net assets of £39,494,397. MIG is now seeking to raise up to £7 million through the Offer for which the associated expenses will be 5.5% of the gross proceeds. The impact of the Offer on MIG's earnings should be accretive to the extent, if any, that interest earned on the proceeds will exceed expenses. The assets of MIG will be increased by the net proceeds of the Offer.
2.3 On 20 June 2001, MIG 4 passed a resolution approving, subject to the sanction of the Court, the cancellation of the share premium account (such cancellation being subsequently confirmed by the Court on 5 September 2001).
2.4 At an extraordinary general meeting on 18 October 2006, the issued and unissued ordinary shares of 5p each in the capital of MIG 4 were consolidated on the basis of one new ordinary share of 10p each for every two existing ordinary shares of 5p each. The issued and unissued ordinary shares of 10p each were then sub-divided into one MIG 4 Share and nine deferred shares of 1p each. In accordance with MIG 4's Articles, the deferred shares were subsequently acquired for a nominal consideration and cancelled by MIG 4.
| Date | Issue/Purchase | Number |
|---|---|---|
| 27 September 2011 | Purchase | 54,870 |
| 28 November 2011 | Purchase | 41,999 |
(b) the allotment of equity securities with an aggregate nominal value of up to but not exceeding 10% of the issued MIG 4 Share capital from time to time in connection with any dividend investment scheme operated by MIG 4; and
(c) the allotment otherwise than pursuant to sub-paragraphs (a) and (b) above, of equity securities with an aggregate nominal value of up to but not exceeding 10% of the issued MIG 4 Share capital from time to time.
| Issued Number £ |
|||
|---|---|---|---|
| MIG 4 Shares | 31,121,880 | 311,218.80 |
the Listing Rules and Disclosure and Transparency Rules of the FSA, a holding of 3% or more must be notified to MIG 4).
| MIG 4 Shares | % of issued MIG 4 Share capital |
|
|---|---|---|
| Christopher Moore | 32,464 | 0.13 |
| Andrew Robson | 4,358 | 0.02 |
| Helen Sinclair | 11,002 | 0.04 |
3.3 The MIG 4 Directors intend to subscribe for Offer Shares under the Offer for the following aggregate amounts:
| £ | |
|---|---|
| Christopher Moore | 5,000 |
| Andrew Robson | 7,500 |
| Helen Sinclair | 5,000 |
3.6 No MIG 4 Director is or has been interested in any transaction which is or was unusual in its nature or conditions or significant to the business of MIG 4 and which was effected by MIG 4 in the years ended 31 January 2008, 2009 and 2010 or to the date of this document in the current financial year or and remains in any respect outstanding or unperformed.
3.7 There are no potential conflicts of interest between the duties of any MIG 4 Director and their private interests and/or other duties.
4.1 The MIG 4 Directors are responsible for the determination of the investment policy and have overall responsibility for its affairs. The MIG 4 Directors also retain responsibility for approving both the valuations of the portfolio and the net asset value of MIG 4. Matrix has been appointed as investment manager, providing investment advisory, administrative and company secretarial services to MIG 4 on the terms set out at paragraphs 5.1 and 5.2 below. The existing management agreement set out at paragraph 5.1 below will automatically cover the management and fees in relation to the new funds raised by MIG 4 pursuant to the Offer and the performance incentive arrangements set out in paragraphs 5.2 will also automatically extend to such funds.
MIG 4 expects to co-invest with the other VCT funds advised by Matrix, participating in equity investments up to £6 million in order to target more development companies.
Where more than one of the funds managed or advised by Matrix wishes to participate in an investment opportunity, allocations will generally be made in proportion to the latest published net asset value of each fund at the date each investment proposal is forwarded to each Board. When one of the funds managed or advised by Matrix is in its fund raising period, its net funds raised, for the purpose of allocation, will be assumed to be the value of shares allotted at the time the allocation calculation is made. Implementation of this policy will be subject to the availability of funds to make the investment and other portfolio considerations such as sector exposure and the requirement to achieve or maintain a minimum of 70% of a particular VCT's portfolio in VCT qualifying holdings. This may mean that MIG 4 may receive a greater or lesser allocation than would otherwise be the case under the normal co-investment policy.
When MIG 4 has insufficient funds available to satisfy its allocation, the balance shall be offered to one or more of the funds managed or advised by Matrix who have funds available for new investments pro rata as between themselves.
Any variation from this co-investment policy, insofar as it affects MIG 4 or where MIG 4 makes any investment not at the same time and on the same terms as that made by other funds managed or advised by Matrix, may only be made with the prior approval of the MIG 4 Directors who are independent of Matrix.
Save for the above, there are no material potential conflicts of interest which Matrix may have as between its duty to MIG 4 and duties owed by them to third parties and their interests.
4.5 PricewaterhouseCoopers LLP receives an annual fee of £10,000 plus VAT for providing legal advice and assistance in relation to the maintenance of the VCT status of MIG 4. If requested by MIG 4, PricewaterhouseCoopers LLP will also review prospective investments to ensure that they are qualifying venture capital investments and carry out reviews of the investment portfolio of MIG 4 to ensure continuing compliance.
The MIG 4 Board has also considered the principles and recommendations of the AIC Code of Corporate Governance ("AIC Code") by reference to the AIC Corporate Governance Guide for Investment Companies ("AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to MIG 4.
The Financial Reporting Council has confirmed that in complying with the AIC Code, MIG 4 meets its obligations in relation to the UK Corporate Governance Code and the Listing Rules. The MIG 4 Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Corporate Governance Code), will provide better information to shareholders.
For the year ended 31 January 2011 and as at the date of this document, MIG 4 has complied with the recommendations of the AIC Code and the relevant provisions of the UK Corporate Governance Code, except where noted below. There are certain areas of the UK Corporate Governance Code that the AIC does not consider relevant to investment companies and with which MIG 4 does not specifically comply, of which the AIC Code provides dispensation. The areas and reasons for non-compliance are as follows:
MIG 4 has not, therefore, reported further in respect of these provisions.
Set out below is a summary of all contracts (not being contracts entered into in the ordinary course of business) entered into by MIG 4 in the last two years that are material and all other contracts (not being contracts entered into in the ordinary course of business) that contain any provision under which MIG 4 has an obligation or entitlement which is material to MIG 4 as at the date of the document.
5.1 An investment management agreement dated 12 November 2010 between MIG 4 (1), Matrix (2) and Matrix-Securities Limited (3) pursuant to which Matrix is appointed to provide advisory investment management services in respect of MIG 4's investments in VCT qualifying investments.
Matrix is entitled to an annual management fee of 2% of the net asset value per annum of MIG 4 plus an annual fixed fee of £107,827 subject to annual RPI uplift, payable quarterly in arrears, together with any applicable VAT. The agreement is terminable by either party by 12 months' notice by any party subject to earlier termination by any party in the event of, inter alia, a party having a receiver, administrator or liquidator appointed or committing a material breach of the agreement or by MIG 4 if it fails to become, or ceases to be, a VCT for tax purposes or where Matrix ceases to be authorised by the FSA or if there is a change in control of Matrix. The MIG 4 Board has acknowledged the proposed change of control which is proposed to take place by Matrix and have reserved their rights to terminate under this agreement with Matrix.The agreement contains provisions indemnifying Matrix against any liability not due to its default, gross negligence, fraud or breach of FSMA.
5.2 A performance incentive agreement dated 1 November 2006 between MIG 4 (1), Matrix (2) and Matrix Group Limited (3), pursuant to which Matrix and Matrix Group Limited are entitled to receive performance related incentive fees subject to achieving certain defined targets. As a party to this agreement, Matrix Group Limited will continue to be entitled to receive its portion of the performance related incentive fee irrespective of the change of ownership of Matrix as agreed between the executive partners of Matrix and Matrix Group Limited.
Matrix and Matrix Group Limited are both entitled to receive performance incentive fees for accounting periods following 31 January 2009 of 20% of the annual dividends paid to MIG 4 Shareholders over and above an annual target return of dividends equivalent to 6% of the net assets per MIG 4 Share of 114.51p, being 6.78p. The performance incentive fee shall be split 75/25 between Matrix and Matrix Group Limited and is payable annually. Any cumulative shortfalls below the dividend hurdle per annum ("Shortfall") (being an estimated 22.9p per MIG 4 Share as at 31 July 2011) will have to be made up in later years before any entitlement arises. No performance incentive fee has been paid to date.
The agreement will terminate automatically if MIG 4 enters into liquidation or if a receiver or manager is appointed or if a resolution is passed that MIG 4 is voluntarily wound up in accordance with the MIG 4 Articles.
The objective of MIG 4 is to provide investors with a regular income stream, by way of tax-free dividends, and to generate capital growth through portfolio realisations, which can be distributed by way of additional tax-free dividends.
MIG 4's policy is to invest primarily in a diverse portfolio of UK unquoted companies. Investments are structured as part loan and part equity in order to generate regular income and to generate capital gains from trade sales and flotations of investee companies.
Investments are made selectively across a number of sectors, primarily in management buyout transactions (MBOs) i.e. to support incumbent management teams in acquiring the business they manage but do not yet own. Investments are primarily made in companies that are established and profitable.
MIG 4 has a small legacy portfolio of investments in companies from its period prior to 1 August 2006, when it was a multi-manager VCT. This includes investments in early stage and technology companies.
Uninvested funds are held in cash and low risk money market funds.
The companies in which investments are made must have no more than £15 million of gross assets at the time of investment to be classed as a VCT qualifying holding. The £21.7 million of funds raised by MIG 4 after 6 April 2006 are subject to a £7 million gross assets test for an investment to be a VCT qualifying holding.
The investment policy is designed to ensure that MIG 4 continues to qualify and is approved as a VCT by HMRC. Amongst other conditions, MIG 4 may not invest more than 15% of its investments in a single company and must have at least 70% by value of its investments throughout the year in shares or securities comprised in VCT qualifying holdings, of which a minimum overall of 30% by value must be in ordinary shares which carry no preferential rights. In addition, although MIG 4 can invest less than 30% of an investment in a specific company in ordinary shares it must have at least 10% by value of its total investments in each VCT qualifying company in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules).
The VCT regulations in respect of funds raised after 6 April 2011 changed, such that 70% of such funds must be invested in equity.
MIG 4 initially holds its funds in a portfolio of readily realisable interest bearing investments and deposits. The investment portfolio of qualifying investments is built up over a three year period with the aim of investing and maintaining at least 80% of net funds raised in qualifying investments.
Risk is spread by investing in a number of different businesses across different industry sectors. To reduce the risk of high exposure to equities, each qualifying investment is structured loan stock (up to 70% of the total investment in each VCT qualifying company. Initial investments in VCT qualifying companies are generally made in amounts ranging from £200,000 to £1 million at cost. No holding in any one company will represent more than 10% of the value of MIG 4's investments at the time of investment. Ongoing monitoring of each investment is carried out by Matrix, generally through taking a seat on the board of each VCT qualifying company.
MIG 4 aims to invest in larger, more mature unquoted companies through investing alongside three other VCTs advised by Matrix with a similar investment policy. This enables MIG 4 to participate in combined investments advised on by Matrix of up to £5 million.
MIG 4's Articles permit borrowings of amounts up to 10% of the sum equal to the aggregate of the amount paid up on the allotted or issued share capital of MIG 4 and the amount standing to the credit of the capital and revenue reserves of MIG 4 (whether or not distributable) after adding thereto or deducting therefrom any balance standing to the credit or debit of the profit and loss account. However, MIG 4 has no current plans to undertake any borrowing.
The MIG 4 Board has overall responsibility for MIG 4's affairs including the determination of its investment policy. Investment and divestment proposals are originated, negotiated and recommended by Matrix and are then subject to formal approval by the MIG 4 Directors.
(c) none of the investments at the time of acquisition will represent more than 15% by VCT value of MIG 4's investments; and
(d) not more than 20% of MIG 4's gross assets will at any time be invested in the securities of property companies.
Related party transactions for MIG 4 undertaken in the three financial years ended 31 January 2009, 2010 and 2011 are set out in the respective audited report and accounts for those years ends, which, together with the unaudited half-yearly report for the six month period ended 31 July 2011, are incorporated by reference: in Note 6 and 23 on pages 49 and 60 for the year ended 31 January 2009, in Note 6 on page 57 for the year ended 31 January 2010, in Note 6 on page 54 for the year ended 31 January 2011 and in Note 12 for the half year to 31 July 2011. Apart from the payment of the MIG 4 Directors' remuneration on the basis set out in paragraph 3.5 above, MIG 4 has not entered into any related party transactions within the meaning of IFRS or UK GAAP since 31 July 2011.
The issue of Offer Shares to persons resident in or citizens of jurisdictions outside the UK may be affected by the laws of the relevant jurisdiction. Such investors should inform themselves about and observe any legal requirements, in particular:
consents which may be required, the compliance with any other necessary formalities which need to be observed and the payment of any issue, transfer or other taxes or duties due in such jurisdiction.
The following paragraphs, which are intended as a general guide only and are based on current legislation and HMRC practice, summarise advice received by the MIG 4 Directors as to the position of the Companies' Shareholders who hold MIG 4 Shares other than for trading purposes. Any person who is in any doubt as to his taxation position or is subject to taxation in any jurisdiction other than the United Kingdom should consult his professional advisers.
10.6 There are no known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on MIG 4's prospects for at least the current financial year, so far as MIG 4 and the MIG 4 Directors are aware.
10.7 The issue costs payable by MIG 4 under the Offer (including irrecoverable VAT and sales commissions) have been fixed by the MIG 4 Directors at 5.5% of total funds subscribed (but excluding annual trail commission) in respect of MIG 4 Shares. Matrix has agreed to indemnify MIG 4 in respect of any excess over 5.5% of the gross proceeds of the issue of MIG 4 Shares under the Offer. The net proceeds for MIG 4 from the Offer (assuming full subscription and ignoring the Early Investment Incentive and the potential impact of intermediary commission waiver) will therefore amount to approximately £6,615,000.
All of MIG 4's investments as at 31 October 2011, which are analysed below, are in the UK and are valued in sterling.
| Sector | % by cost | % by value |
|---|---|---|
| General Retailers | 21.7 | 23.7 |
| Support Services | 46.0 | 38.5 |
| Food production and distribution |
5.3 | 5.0 |
| Technology, hardware and equipment |
2.6 | 12.6 |
| Manufacturing | 0.8 | 0.2 |
| Pharmaceuticals | 7.8 | 7.3 |
| Media | 7.2 | 10.6 |
| Software and computer services |
2.8 | 1.4 |
| Construction | 3.6 | 0.0 |
| Personal goods | 2.2 | 0.7 |
| Type | % by cost | % by value |
|---|---|---|
| Unlisted ordinary shares | 25.1 | 30.0 |
| Unlisted loan stock and preference shares or loans |
43.7 | 40.0 |
| Listing ordinary shares | 0.7 | 0.8 |
| Cash/liquidity | 30.5 | 29.2 |
Save for the sale of partial DiGiCo Europe Limited and a subsequent investment in EMaC Limited, there has been no material change to the above analysis since 31 October 2011, the date to which the above analysis was prepared.
MIG 4 has produced annual statutory accounts for the three financial years ended 31 January 2009, 2010 and 2011 and unaudited information in the half-yearly financial statements for the six month period ended 31 July 2011. The auditors, PKF (UK) LLP, Registered Auditor, of Farringdon Place, 20 Farringdon Road, London EC1M 2AP have reported on the annual statutory accounts without qualification and without statements under Section 237(2) or (3) of CA 1985 or Sections 495 to 497A of CA 2006 (as applicable).
The annual reports referred to above were prepared in accordance with UK generally accepted accounting practice (GAAP), the fair value rules of the Companies Acts and the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'. The annual reports contain a description of MIG 4's financial condition, changes in financial condition and results of operation for each relevant financial year and, together with the half-yearly report for the six month period ended 31 July 2011 are being incorporated by reference and can be accessed at the following website:
Where these documents make reference to other documents, such other documents are not incorporated into and do not form part of this Prospectus. The two tables below comprise a cross-referenced list of information incorporated by reference. The parts of these documents which are not being incorporated by reference are either not relevant for an investor or are covered elsewhere in the Prospectus.
| Description | 2009 Annual Report |
2010 Annual Report |
2011 Annual Report |
2011 Half Yearly Report |
|---|---|---|---|---|
| Balance Sheet | Page 42 | Page 50 | Page 47 | Page 16 |
| Income Statement (or equivalent) |
Page 41 | Page 49 | Page 46 | Pages 14 to 15 |
| Statement showing all changes in equity (or equivalent note) |
Page 43 | Page 51 | Page 48 | Page 16 |
| Cash Flow Statement | Page 44 | Page 52 | Page 49 | Page 17 |
| Accounting Policies and Notes |
Pages 45 to 60 |
Pages 53 to 70 |
Pages 50 to 68 |
Pages 19 to 25 |
| Auditor's Report | Pages 39 to 40 |
Pages 47 to 48 |
Pages 44 to 45 |
n/a |
This information has been prepared in a form consistent with that which will be adopted in MIG 4's next published annual financial statements having regard to accounting standards and policies and legislation applicable to those financial statements.
Such information also includes operating/financial reviews as follows:
| Description | 2009 Annual | 2010 Annual | 2011 Annual | 2011 Half |
|---|---|---|---|---|
| Report | Report | report | Yearly Report | |
| Objective | Inside front | Inside front | Inside front | Inside front |
| cover | cover | cover | cover | |
| Performance | Pages 1 to 2 | Pages 1 to 2 | Pages 1 to 2 | Pages 1 to 3 |
| Summary | ||||
| Results & | Page 23 | Pages 24 to 25 | Pages 24 to 25 | Page 4 |
| Dividend | ||||
| Investment | Pages 11 to 12 | Pages 9 to 10 | Pages 8 to 9 | Pages 7 to 8 |
| Policy | ||||
| Chairman's | Page 3 to 7 | Pages 3 to 8 | Pages 3 to 6 | Pages 4 to 5 |
| Statement | ||||
| Manager's | Pages 15 to 19 | Pages 13 to 19 | Pages 12 to 18 | Pages 9 to 10 |
| Review | ||||
| Portfolio | Pages 13 to 14 | Pages 11 to 12 | Pages 10 to 11 | Pages 11 to 13 |
| Summary | ||||
| Valuation Policy | Pages 45 to 46 | Pages 53 to 54 | Page 50 | Pages 19 to 20 |
Certain financial information of MIG 4 is also set out below:
| Year ended 31 January 2009 |
Year ended 31 January 2010 |
Year ended 31 January 2011 |
Six month period ended 31 July 2011 |
|
|---|---|---|---|---|
| Investment income |
£1,091,859 | £473,704 | £631,321 | £459,395 |
| Profit/loss on ordinary activities before taxation |
£(2,194,337) | £713,131 | £1,893,790 | £430,963 |
| Earnings per MIG 4 Share |
(10.79)p | 3.56p | 9.04p | 1.77p |
| Dividends per MIG 4 Share |
2p | 3p | 4p | 1p |
| Total assets | £21,173,848 | £21,477,891 | £25,554,860 | £28,506,164 |
| NAV per MIG 4 Share |
104.61p | 106.34p | 112.87p | 111.87p |
As at 31 July 2011, the date to which the most recent unaudited half-yearly financial statements on MIG 4 were published, MIG 4 had unaudited net assets of £28,322,453. As at 31 October 2011, MIG 4 had unaudited net assets of £28,472,853.
As at 31 July 2011, the date to which the most recent unaudited half-yearly financial statements on MIG 4 have been drawn up, MIG 4 had unaudited net assets of £28,322,453. MIG 4 is now seeking to raise up to £7 million through the Offer for which the associated expenses will be 5.5% of the gross proceeds. The impact of the Offer on MIG 4's earnings should be accretive to the extent, if any, that interest earned on the proceeds will exceed expenses. The assets of MIG 4 will be increased by the net proceeds of the Offer.
2.2 To enable I&G to obtain a certificate under Section 117 of CA 1985 (now Section 761 of CA 2006), on 28 September 2000, 5,000,000 redeemable non-voting shares of 1p each were allotted by I&G at par for cash, paid up as to one quarter of their nominal value. Such redeemable non-voting shares were paid up in full and redeemed in full out of the proceeds of the original offer for subscription on 2 November 2000. The authorised but unissued shares so arising were automatically redesignated as I&G Shares and I&G's articles of association were amended by the deletion of all references to the redeemable non-voting shares and the rights attaching to them pursuant to a special resolution passed on 9 October 2007.
2.3 On 13 February 2002, I&G passed a resolution approving, subject to the sanction of the Court, the cancellation of the share premium account (such cancellation being subsequently confirmed by the Court on 1 May 2002 and registered at Companies House on 9 May 2002).
conferred shall expire on the conclusion of the annual general meeting of I&G to be held in 2012 and provided further that this power shall be limited to:
where the proceeds of the allotment may be used in whole or in part to purchase I&G Shares in the market;
| Issued | |||
|---|---|---|---|
| Number £ |
|||
| I&G Shares | 46,165,073 | 461,650.73 |
| I&G Shares | % of issued I&G Share capital |
|
|---|---|---|
| Colin Hook | 38,157 | 0.10 |
| Jonathan Cartwright | 6,865 | 0.02 |
| Helen Sinclair | 15,883 | 0.04 |
3.3 The I&G Directors intend to subscribe for Offer Shares under the Offer for the following aggregate amounts:
| £ | |
|---|---|
| Colin Hook | 5,000 |
| Jonathan Cartwright | 5,000 |
| Helen Sinclair | 5,000 |
Their appointment does not confer any right to hold office for any period nor any right to compensation if they cease to be directors. The total annual remuneration receivable by Colin Hook as chairman of I&G is £41,000 (plus, if applicable, VAT and employers National Insurance Contributions). The total annual remuneration receivable by Helen Sinclair and Jonathan Cartwright is £31,000 each (plus, if applicable, VAT and employers National Insurance Contributions). The office of non-executive director of I&G is not pensionable and no retirement or similar benefits are provided to the I&G Directors. Aggregate I&G Directors' emoluments in respect of qualifying services for the period ended 30 September 2011 amounted to £103,000 (being £41,000 for Colin Hook, £31,000 for Helen Sinclair and £31,000 for Jonathan Cartwright plus, if applicable, VAT and National Insurance Contributions. Aggregate emoluments for the current year are expected to be £133,000 (plus, if applicable, VAT and National Insurance), which includes a one off £10,000 payment (paid on 31 December 2011) to each of the I&G Directors for additional work carried out on specific projects for I&G.
Jonathan Cartwright was a director of Caledonia El Distribution Limited until December 2009. The company was placed in members' voluntary liquidation in April 2010. Jonathan was also a director of the following companies which have all voluntarily been struck off the register of companies:
Director has ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company during the previous five years.
I&G expects to co-invest with the other VCT funds advised by Matrix, participating in equity investments up to £6 million in order to target more development companies.
Where more than one of the funds managed or advised by Matrix wishes to participate in an investment opportunity, allocations will generally be made in proportion to the latest published net asset value of each fund at the date each investment proposal is forwarded to each Board. When one of the funds managed or advised by Matrix is in its fund raising period, its net funds raised, for the purpose of allocation, will be assumed to be the value of shares allotted at the time the allocation calculation is made. Implementation of this policy will be subject to the availability of funds to make the investment and other portfolio considerations such as sector exposure and the requirement to achieve or maintain a minimum of 70% of a particular VCT's portfolio in VCT qualifying holdings. This may mean that I&G may receive a greater or lesser allocation than would otherwise be the case under the normal co-investment policy.
When I&G has insufficient funds available to satisfy its allocation, the balance shall be offered to one or more of the funds managed or advised by Matrix who have funds available for new investments pro rata as between themselves.
Any variation from this co-investment policy, insofar as it affects I&G or where I&G makes any investment not at the same time and on the same terms as that made by other funds managed or advised by Matrix, may only be made with the prior approval of the I&G Directors who are independent of Matrix.
Save for the above, there are no material potential conflicts of interest which Matrix may have as between its duty to I&G and duties owed by them to third parties and their interests.
The I&G Board has also considered the principles and recommendations of the AIC Code of Corporate Governance ("AIC Code") by reference to the AIC Corporate Governance Guide for Investment Companies ("AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to I&G.
The Financial Reporting Council has confirmed that in complying with the AIC Code, I&G meets its obligations in relation to the UK Corporate Governance Code and the Listing Rules. The I&G Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Corporate Governance Code), will provide better information to shareholders.
For the year ended 30 September 2011 and as at the date of this document, I&G has complied with the recommendations of the AIC Code and the relevant provisions of the UK Corporate Governance Code, except where noted below. There are certain areas of the UK Corporate Governance Code that the AIC does not consider relevant to investment companies and with which I&G does not specifically comply, of which the AIC Code provides dispensation. The areas and reasons for non-compliance are as follows:
I&G has not, therefore, reported further in respect of these provisions.
Set out below is a summary of all contracts (not being contracts entered into in the ordinary course of business) entered into by I&G in the last two years that are material and all other contracts (not being contracts entered into in the ordinary course of business) that contain any provision under which I&G has an obligation or entitlement which is material to I&G as at the date of the document.
5.1 An investment management agreement dated 29 March 2010 between I&G (1) and Matrix (2) (as amended by a deed of variation dated 12 November 2010) pursuant to which Matrix is appointed to provide advisory investment management services in respect of I&G's investments in VCT qualifying investments.
Matrix is entitled to an annual management fee of 2.4% of the net asset value per annum (0.4% of such fee being subject to a minimum of £150,000 and a maximum of £170,000 the remainder of such fee not being subject to any cap) of I&G, payable quarterly in arrears, together with any applicable VAT.
The above fees are subject to an annual expenses cap of over and above 3.25% of the net assets of I&G by way of a reduction of fees due to Matrix in the following accounting period(s). For these purposes annual expenses include the normal running costs of I&G (including irrecoverable VAT but excluding annual trail commission and performance incentive payments). The amount of the excess is borne in full by Matrix.
The agreement is terminable by either party by 12 months' notice by any party subject to earlier termination by any party in the event of, inter alia, a party having a receiver, administrator or liquidator appointed or committing a material breach of the agreement or by I&G if it fails to become, or ceases to be, a VCT for tax purposes or where Matrix ceases to be authorised by the FSA or if there is a change in control of Matrix. The I&G Board has acknowledged the proposed change of control which is proposed to take place by Matrix and have reserved their rights to terminate under this agreement with Matrix. The agreement contains provisions indemnifying Matrix against any liability not due to its default, gross negligence, fraud or breach of FSMA.
5.2 A performance incentive agreement dated 16 December 2008 (effective from 12 September 2007) between I&G (1) Foresight Group LLP (2) and Matrix (3) as varied by a deed of termination and variation between I&G (1) and Matrix (2) dated 29 March 2010 pursuant to which I&G granted to each of Matrix and Foresight Group LLP (the former joint investment manager of I&G), the right to receive performance incentive payments in connection with the management of the former I&G ordinary shares fund.
Matrix is entitled to 20% of any excess (over the investment growth hurdle detailed below) of realised Gains over realised Losses from its own portfolio during each relevant Calculation Period, provided that:
As new investments in the I&G ordinary shares fund are completed by Matrix, 70% thereof are added into the calculation of the Embedded Value at cost.
Such performance incentive payment due will be payable, in such form (in cash or in the form of a share issue subscribed at nominal value calculated as the number of I&G Shares represented by dividing the amount of the payment due by the NAV of an I&G Share as at the date of payment) as agreed between Matrix and I&G, annually by 31 January following the relevant Calculation Date.
The first Calculation Date was 30 September 2008 and is, thereafter, 30 September in each year. If a Calculation Period is longer or shorter than 12 months the investment growth hurdle will be pro rated accordingly.
"Calculation Period" means the relevant accounting period of I&G.
"Calculation Date" means the last day of the relevant accounting period of I&G.
"Embedded Value" means the value of the I&G portfolio managed by Matrix as at 30 June 2007 plus (i) the value as at 31 August 2007 of Nova Capital Management Limited's investments which Matrix agreed to provide investment services for; (ii) at cost, any further investments made in respect of the I&G ordinary shares fund; (iii) any investments made in respect of the former I&G S share fund; and (iv) 70% of all new investments made by I&G since the merger of the I&G ordinary share and I&G S share funds.
"Gains" means the realised excess over an individual investment's valuation comprised in the Embedded Value, received in cash and/or pre-completion dividend strips and/or bank-guaranteed loan notes during the relevant Calculation Period.
"Losses" means the realised deficit below an individual investment's valuation comprised in the Embedded Value, received in cash and/or pre-completion dividend strips and/or bank-guaranteed loan notes during the relevant Calculation Period.
"Surplus Income" means the income received from investments less pro rata share of the annual expenses of I&G (including trail commission but excluding performance incentive payments) but after the deduction of any taxation liabilities thereon.
Foresight Group LLP (the former joint investment manager of I&G) has an identical performance incentive arrangement in respect for the portfolio within the former I&G ordinary shares fund (i.e. prior to the merger of the I&G ordinary share and I&G S share funds) it was previously responsible for managing which, following the termination of its appointment, reduces proportionally over the ten years following such termination.
The investment objective of I&G is to provide private investors with an attractive return, by maximising a stream of dividend distributions from the income and capital gains generated by a diverse and carefully selected portfolio of investments.
I&G invests in companies at various stages of development. In some instances this may include investments in new and secondary issues of companies which may already be quoted on AIM or PLUS Markets.
I&G's investment policy is to invest primarily in a diverse portfolio of UK unquoted companies. Investments are structured as part loan and part equity in order to receive regular income and to generate capital gains from trade sales and flotations of investee companies.
Investments are made selectively across a number of sectors, primarily in management buyout transactions (MBOs) i.e. to support incumbent management teams in acquiring the business they manage but do not yet own. Investments are primarily made in companies that are established and profitable.
I&G has a small legacy portfolio of investments in early stage and technology companies from its period prior to 30 September 2008, when it was a multi-managed VCT. This includes investments in early stage and technology companies, and companies quoted on AIM or PLUS Markets.
Uninvested funds are held in cash and low risk Money Market Funds.
The companies in which investments are made must have no more than £15 million, in the case of funds raised under the original prospectus in 2000/2001, and £7 million in the case of funds raised after 6 April 2006 (including the former S ordinary share fund raised in 2007/2008) of gross assets at the time of investment to be classed as a VCT qualifying holding.
The investment policy is designed to ensure that I&G continues to qualify and is approved as a VCT by HMRC. Amongst other conditions, I&G may not invest more than 15% of its investments in a single company and must have at least 70% by value of its investments throughout the period in shares or securities comprised in VCT qualifying holdings, of which a minimum overall of 30% by value must be in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules). In addition, although I&G can invest less than 30% of an investment in a specific company in ordinary shares it must have at least 10% by value of its total investments in each VCT qualifying company in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules).
The VCT regulations in respect of funds raised after 6 April 2011 changed, such that 70% of such funds must be invested in equity.
I&G initially holds its funds in a portfolio of readily realisable interest-bearing investments and deposits. The investment portfolio of qualifying investments is built up over a three year period with the aim of investing and maintaining at least 70% of net funds raised in qualifying investments.
Risk is spread by investing in a number of different businesses across different industry sectors. To reduce the risk of high exposure to equities, each qualifying investment is structured to maximise the amount which may be invested in loan stock. Initial investments in Qualifying Companies are generally made in amounts ranging from £200,000 to £1 million at cost. No holding in any one company will represent more than 10% of the value of I&G's investments at the time of investment. Ongoing monitoring of each investment is carried out by Matrix, generally through taking a seat on the board of each Qualifying Company.
I&G aims to invest in larger, more mature unquoted companies through investing alongside the three other VCTs advised by Matrix with a similar investment policy. This enables I&G to participate in combined investments advised on by Matrix of up to £5 million.
I&G's Articles permit borrowings of amounts up to 10% of the sum equal to the aggregate of the amount paid up on the allotted or issued share capital of I&G and the amount standing to the credit of the capital and revenue reserves of I&G (whether or not distributable) after adding thereto or deducting therefrom any balance standing to the credit or debit of the profit and loss account. However, I&G has no current plans to undertake any borrowing.
The I&G Board has overall responsibility for I&G's affairs including the determination of its investment policy. Investment and divestment proposals are originated, negotiated and recommended by Matrix and are then subject to formal approval by the I&G Directors.
(a) I&G's income is intended to be derived wholly or mainly from shares or other securities, as this phrase is interpreted by HMRC;
(b) I&G will not control the companies in which it invests in such a way as to render them subsidiary undertakings;
Related party transactions for I&G undertaken in the three financial years ended 30 September 2009, 2010 and 2011 are set out in the respective audited report and accounts for these year ends which are incorporated by reference: in Note 6 and 23 on pages 66 and 82 for the year ended 30 September 2009, in Notes 6 and 24 on pages 62 and 78 for the year ended 30 September 2010, and in Note on page 59 for the year ended 30 September 2011. Apart from the payment of the I&G Directors' remuneration on the basis set out in paragraph 3.4 above, I&G has not entered into any related party transactions within the meaning of IFRS or UK GAAP since 30 September 2011.
The issue of Offer Shares to persons resident in or citizens of jurisdictions outside the UK may be affected by the laws of the relevant jurisdiction. Such investors should inform themselves about and observe any legal requirements, in particular:
Japan South Africa or New Zealand. It is the responsibility of investors with registered addresses outside the UK to satisfy themselves as to the observance of the laws of the relevant jurisdiction in connection with the issue of Offer Shares, including the obtaining of any government or exchange control or other consents which may be required, the compliance with any other necessary formalities which need to be observed and the payment of any issue, transfer or other taxes or duties due in such jurisdiction.
The following paragraphs, which are intended as a general guide only and are based on current legislation and HMRC practice, summarise advice received by the I&G Directors as to the position of shareholders who hold I&G Shares other than for trading purposes. Any person who is in any doubt as to his taxation position or is subject to taxation in any jurisdiction other than the United Kingdom should consult his professional advisers.
10.4 There are no governmental, legal or arbitration proceedings (including any such proceedings which are or were pending or threatened of which I&G is aware) during the period from the incorporation of I&G which may have or had in the recent past significant effects on I&G's financial position or profitability.
10 5 Save as set out in the final four risk factors on pages 2 and 3, as at the date of this document, there are no governmental, economic, monetary, political or fiscal policies and factors which have or could affect I&G's operations.
All of I&G investments as at 30 September 2011, which are analysed below, are in the UK and are valued in sterling.
| Sector | % by cost | % by value |
|---|---|---|
| Media | 5.7 | 6.5 |
| Software & Computer services | 9.6 | 38.3 |
| Construction and Building | 3.1 | 0.0 |
| Materials | ||
| Support Services | 38.1 | 30.0 |
| Technology, Hardware & | 8.4 | 3.5 |
| Equipment | ||
| General retailers | 10.6 | 10.5 |
| Manufacturing | 2.2 | 0.6 |
| Personal Goods | 1.9 | 1.9 |
| Food Production and | 3.6 | 4.2 |
| Distribution | ||
|---|---|---|
| Pharmaceuticals | 11.7 | 2.7 |
| Industrial Engineering | 5.1 | 1.8 |
| Type | % by cost | % by value |
|---|---|---|
| Unlisted ordinary shares | 26.7 | 41.0 |
| Unlisted loan stock and preference shares or loans |
34.2 | 29.0 |
| Listed ordinary shares | 10.3 | 5.6 |
| Cash/liquidity | 28.8 | 24.4 |
Save for the sale of App-DNA Group Limited and the partial sale of DiGiCo Europe Limited and subsequent investments in EMaC Limited and EOTH Limited, there has been no material change to the above analysis since 30 September 2011, the date to which the above analysis was prepared.
I&G has produced annual statutory accounts for the three financial years ended 30 September 2009, 2010 and 2011. The auditors, PKF (UK) LLP, Registered Auditor, of Farringdon Place, 20 Farringdon Road, London EC1M 2AP have reported on the annual statutory accounts without qualification and without statements under Section 237(2) or (3) of CA 1985 or Sections 495 to 497 of CA 2006 (as applicable).
The annual reports referred to above were prepared in accordance with UK generally accepted accounting practice (GAAP), the fair value rules of the Companies Acts and the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'. The annual reports contain a description of I&G's financial condition, changes in financial condition and results of operation for each relevant financial year and are being incorporated by reference and can be accessed at the following website:
Where these documents make reference to other documents, such other documents are not incorporated into and do not form part of this Prospectus. The two tables below comprise a cross-referenced list of information incorporated by reference. The parts of these documents which are not being incorporated by reference are either not relevant for an investor or are covered elsewhere in the Prospectus.
| Description | 2009 Annual Report |
2010 Annual Report |
2011 Annual Report |
|---|---|---|---|
| Balance Sheet | Page 59 | Page 54 | Page 52 |
| Income Statement (or equivalent) | Page 58 | Page 53 | Page 51 |
| Statement showing all changes in equity (or equivalent note) |
Page 60 | Page 55 | Page 53 |
| Cash Flow Statement | Page 61 | Page 56 | Page 54 |
| Accounting Policies and Notes | Pages 62 to 82 | Pages 57 to 78 | Pages 55 to 75 |
| Auditor's Report | Pages 56 to 57 | Pages 51 to 52 | Pages 49 to 50 |
Such information also includes operating/financial reviews as follows:
| Description | 2009 Annual | 2010 Annual | 2011 Annual |
|---|---|---|---|
| Report | Report | Report | |
| Objective | Inside front cover | Inside front cover | Inside front |
| cover | |||
| Performance Summary | Page 1 | Pages 1 to 4 | Pages 1 to 4 |
| Results & Dividend | Pages 28 to 29 | Page 31 | Page 30 |
| Investment Policy | Pages 10 to 11 | Pages11 to 12 | Pages11 to 12 |
| Chairman's Statement | Pages 4 to 9 | Pages 5 to 10 | Pages 5 to 10 |
|---|---|---|---|
| Manager's Review | Pages 12 to 19 | Pages 13 to 21 | Pages 13 to 21 |
| Portfolio Summary | Pages 20 to 22 | Pages 22 to 23 | Pages 22 to 24 |
| Valuation Policy | Pages 62 to 63 | Pages 57 to 58 | Pages 55 to 56 |
This information has been prepared in a form consistent with that which will be adopted in I&G's next published annual financial statements having regard to accounting standards and policies and legislation applicable to those financial statements.
Certain financial information of I&G is also set out below:
| Year ended 30 September 2009 |
Year ended 30 September 2010 |
Year ended 30 September 2011 |
|
|---|---|---|---|
| Investment income | £890,799 | £716,183 | £1,634,706 |
| Profit/loss on ordinary activities before taxation |
£(3,233,631) | £2,374,759 | £10,203,037 |
| Earnings per share | (8.73)p ordinary share (1.41)p S ordinary share |
9.55p I&G Share |
4p I&G Share |
| Dividends per share |
4p ordinary share (nil) S ordinary share |
4p ordinary share 0.5p S ordinary share |
4p I&G Share |
| Total assets | £36,209,780 | £37,093,664 | £50,702,972 |
| NAV per share | 71.45p ordinary share 93.18p S ordinary share |
99.01p I&G Share |
120.8p I&G Share |
The information in the above table for the years ended 30 September 2009, 2010 and 2011 is, as relevant, for the I&G ordinary shares of 1p each and S ordinary shares of 1p each before the merger of the I&G ordinary shares of 1p into the S ordinary shares of 1p and subsequent redesignation into I&G Shares.
As at 30 September 2011, the date to which the most recent audited financial statements on I&G has been drawn up, I&G had unaudited net assets of £49,152,799.
As at 30 September 2011, the date to which the most recent audited financial statements on I&G have been drawn up, I&G had net assets of £49.2 million. I&G is now seeking to raise up to £7 million through the Offer for which the associated expenses will be 5.5% of the gross proceeds. The impact of the Offer on I&G's earnings should be accretive to the extent, if any, that interest earned on the proceeds will exceed expenses. The assets of I&G will be increased by the net proceeds of the Offer.
Set out below are the largest investments held by each Company (which includes investments with a value of greater than 5% of their respective gross assets and which have an aggregate value of greater than 50% ), as at the date of this document.
The Venture Capital Investments set out below represent the Companies' 15 largest investments (excluding acquisition companies and liquidity funds). These comprise approximately 44.7% of the aggregate portfolios of the Companies, as at the date of this document.
All of the companies below, as at the date of their last published accounts, are profitable based on EBITA. Matrix believes that EBITA is a more meaningful measure of an investee company's underlying profitability to VCT investors, because loan stock interest (part of the return to VCT investors earned by the Matrix structure of investment) is ignored.
For MIG, the current cost is the original investment cost made by both MIG and Matrix Income & Growth 3 VCT plc, less capital repayments to 30 September 2011.
| ATG Media Holdings Limited | ||||||||
|---|---|---|---|---|---|---|---|---|
| Original investment October 2008 | ||||||||
| MIG | MIG 4 | I&G | Year ended | 30 September | ||||
| 2010 (£'000) |
||||||||
| Current cost | £1,454,419 | £888,993 | £888,993 | Sales | 7,215 | |||
| Valuation | £2,740,996 | £1,767,225 | £1,675,368 | EBITA | 1,261 | |||
| Valuation methodology |
Earnings multiples (for all Companies) | 632 | ||||||
| Equity/voting rights |
14.0% | 8.5% | 8.5% | Retained profit/(loss) |
565 | |||
| Percentage of investment portfolio |
6.6% | 5.9% | 3.1% | Net assets | 2,506 | |||
| operator. Location: London. |
Activity: Publisher of the leading newspaper serving the UK antiques trade and online auction platform |
| EMaC Limited | ||||||||
|---|---|---|---|---|---|---|---|---|
| Original investment November 2011 | ||||||||
| MIG | MIG 4 | I&G | Year ended | 30 December 2010* (£'000) |
||||
| Current cost | £1,762,336 | £1,263,817 | £1,878,124 | Sales | 4,042 | |||
| Valuation | £1,762,336 | £1,263,817 | £1,878,124 | EBITA | 1,596 | |||
| Valuation methodology |
Cost (for all Companies) | Profit/loss before tax |
1,657 | |||||
| Equity/voting rights |
8.8% | 6.3% | 9.4% | Retained profit/loss |
1,188 | |||
| Percentage of investment portfolio (estimate) |
4.2% 4.2% 3.5% Net assets 2,712 |
|||||||
| Activity: Provider of service plans to motor dealerships Location: Crewe, Cheshire *These figures are for EMaC Limited (acquired in November 2011) |
| Fullfield Limited (Motorclean Group Limited) Original investment July 2011 |
|||||||
|---|---|---|---|---|---|---|---|
| MIG | MIG 4 | I&G | Year ended | 31 March 2011* | |||
| (£'000) | |||||||
| Current cost | £1,840,384 | £1,280,880 | £1,718,189 | Sales | 22,400 | ||
| Valuation | £1,840,384 | £1,280,880 | £1,718,189 | EBITA | 1,631 | ||
| Valuation | Cost (for all Companies) | Profit/(loss) | 641 | ||||
| methodology | before tax | ||||||
| Equity/voting | 12.6% | 8.8% | 11.7% | Retained | 1,939 | ||
| rights | profit/(loss) | ||||||
| Percentage of | 4.4% | 4.3% | 3.2% | Net assets | 2,344 | ||
| investment | |||||||
| portfolio | |||||||
| Activity: Vehicle cleaning and valet services. |
Location: Laindon, Essex.
*These figures are for Motorclean Group Limited (acquired by Fullfield Limited in July 2011).
Original investment July 2007. The majority of the holding was sold in December 2011 for cash proceeds totalling £7.7 million, plus retaining an 8.6% equity interest and loan stock valued at £4.8 million, across the three VCTs.
| MIG | MIG 4 | I&G | Year ended | 31 December 2010 | ||
|---|---|---|---|---|---|---|
| (£'000) | ||||||
| Current cost | £370,063 | £190,449 | £125,107 | Sales | 18,576 | |
| Valuation | £2,592,668 | £1,334,293 | £876,496 | EBITA | 5,501 | |
| Valuation | Earnings multiple (for all Companies) | Profit/(loss) | 5,435 | |||
| methodology | before tax | |||||
| Equity/voting | 4.6% | 2.4% | 1.6% | Retained | 6,535 | |
| rights | profit/(loss) | |||||
| Percentage of | 6.2% | 4.4% | 1.6% | Net assets | 8,909 | |
| investment | ||||||
| portfolio | ||||||
| Activity: Manufacture of digital sound mixing consoles. | ||||||
| Original investment December 2010 | |||||||
|---|---|---|---|---|---|---|---|
| MIG | MIG 4 | I&G | Year ended | 30 September 2010* | |||
| (£'000) | |||||||
| Current cost | £1,912,945 | £1,257,133 | £1,769,790 | Sales | 9,675 | ||
| Valuation | £1,810,123 | £1,181,765 | £1,674,630 | EBITA | 772 | ||
| Valuation | Earnings multiple (for all Companies) | Profit/(loss) | 753 | ||||
| methodology | before tax | ||||||
| Equity/voting | 10.3% | 6.8% | 9.6% | Retained | 1,086 | ||
| rights | profit/(loss) | ||||||
| Percentage of | 4.4% | 3.9% | 3.1% | Net assets | 1,170 | ||
| investment | |||||||
| portfolio | |||||||
| Activity: Printer and photocopier services. |
Location: Cambridge.
*These figures are for Automated Systems Group Limited (acquired in December 2010).
| CB Imports Group Limited | |||||||
|---|---|---|---|---|---|---|---|
| Original investment December 2009 | |||||||
| MIG | MIG 4 | I&G | Year ended | 31 December 2010 (£'000) |
|||
| Current cost | £2,000,000 | £1,000,000 | £1,000,000 | Sales | 21,197 | ||
| Valuation | £2,050,934 | £972,105 | £1,025,448 | EBITA | 767 | ||
| Valuation methodology |
Earnings multiple (for all Companies) | Profit/(loss) before tax |
213 | ||||
| Equity/voting rights |
12.0% | 6.0% | 6.0% | Retained profit/(loss) |
(729) | ||
| Percentage of investment portfolio |
4.9% | 3.2% | 1.9% | Net assets | 4,259 | ||
| Activity: Importer and distributor of artificial flowers, floral sundries and home décor products. |
Location: East Ardsley, West Yorkshire.
| Blaze Signs Holdings Limited Original investment April 2006 |
||||||
|---|---|---|---|---|---|---|
| MIG | MIG 4 | I&G | Year ended | 31 March 2011 (£'000) |
||
| Current cost | £1,952,986 | £610,016 | £1,338,500 | Sales | 20,127 | |
| Valuation | £2,003,817 | £645,910 | £1,354,238 | EBITA | 1,889 | |
| Valuation methodology |
Earnings multiple (for all Companies) | 507 | ||||
| Equity/voting rights |
20.8% | 5.7% | 12.5% | before tax Retained profit/(loss) |
647 | |
| Percentage of investment portfolio |
4.8% | 2.1% | 2.5% | Net assets | 2,937 | |
| Activity: Manufacturing and installation of signs. Location: Broadstairs, Kent. |
| RDL Corporation Limited (RDL Recruitment Limited) | |||||||
|---|---|---|---|---|---|---|---|
| Original investment October 2010 | |||||||
| MIG | MIG 4 | I&G | Year ended | 31 December 2010* (£'000) |
|||
| Current cost | £1,558,334 | £1,000,000 | £1,441,667 | Sales | 19,999 | ||
| Valuation | £1,495,775 | £924,454 | £1,383,792 | EBITA | 1,111 | ||
| Valuation methodology |
Earnings multiple (for all Companies) | Profit/(loss) before tax |
1,315 | ||||
| Equity/voting rights |
14.1% | 9.1% | 13.0% | Retained profit/(loss) |
2,129 | ||
| Percentage of investment portfolio |
3.6% | 3.1% | 2.6% | Net assets | 2,130 | ||
| Activity: Recruitment consultants for the pharmaceutical, business intelligence, and IT industries Location: Woking, Surrey. |
*These figures are for RDL Recruitment Limited
| EOTH Limited (Equip Outdoor Technologies Limited) | ||||||
|---|---|---|---|---|---|---|
| Original investment October 2011 | ||||||
| MIG | MIG 4 | I&G | Year ended | 28 February 2011* | ||
| (£'000) | ||||||
| Current cost | £1,298,031 | £951,471 | £1,383,314 | Sales | 13,457 | |
| Valuation | £1,298,031 | £951,471 | £1,383,314 | EBITA | 2,355 | |
| Valuation | Cost (for all Companies) | Profit/(loss) | 2,223 | |||
| methodology | before tax | |||||
| Equity/voting | 3.2% | 1.7% | 1.7% | Retained | 4,497 | |
| rights | profit/(loss) | |||||
| Percentage of | 3.1% | 3.2% | 2.6% | Net assets | 4,706 | |
| investment | ||||||
| portfolio | ||||||
| Activity: Distributor of high quality, branded outdoor equipment. |
Location: Alfreton, Derbyshire
*These figures are for Equip Outdoor Technologies Limited (acquired in October 2011)
| British International Holdings Limited Original investment May 2006 |
||||||
|---|---|---|---|---|---|---|
| MIG | MIG 4 | I&G | Year ended | 31 December 2010 (£'000) |
||
| Current cost | £2,068,182 | £295,455 | £590,909 | Sales | 19,350 | |
| Valuation | £2,263,514 | £329,818 | £646,718 | EBITA | 3,315 | |
| Valuation methodology |
Earnings multiple (for all Companies) | Profit/(loss) before tax |
1,518 | |||
| Equity/voting rights |
17.5% | 2.5% | 5.0% | Retained profit/(loss) |
2,735 | |
| Percentage of investment portfolio |
5.4% | 1.1% | 1.2% | Net assets | 4,017 | |
| Activity: Helicopter service operator. Location: Sherbourne, Dorset. |
| Focus Pharma Holdings Limited | ||||||
|---|---|---|---|---|---|---|
| Original investment October 2007 | ||||||
| MIG | MIG 4 | I&G | Year ended | 31 December 2010 (£'000) |
||
| Current cost | £1,250,410 | £772,451 | £516,900 | Sales | 24,429 | |
| Valuation | £1,520,874 | £929,419 | £628,706 | EBITA | 1,510 | |
| Valuation | Earnings multiple (for all Companies) | Profit/(loss) | 739 | |||
| methodology | before tax | |||||
| Equity/voting | 5.1% | 3.1% | 2.1% | Retained | 380 | |
| rights | profit/(loss) | |||||
| Percentage of | 3.7% | 3.1% | 1.2% | Net assets | 3,342 | |
| investment | ||||||
| portfolio | ||||||
| Activity: Licensing and distribution of generic pharmaceuticals. Location: Burton upon Trent, Staffordshire. |
| Iglu.com Holidays Limited | ||||||
|---|---|---|---|---|---|---|
| Original investment December 2009 | ||||||
| MIG | MIG 4 | I&G | Year ended | 31 May 2011* (£'000) |
||
| Current cost | £216,569 | £133,779 | £152,326 | Sales | 72,924* | |
| Valuation | £1,261,129 | £817,620 | £888,657 | EBITA | 1,447 | |
| Valuation | Earnings multiple (for all Companies) | Profit/(loss) | 535 | |||
| methodology | before tax | |||||
| Equity/voting | 11.6% | 7.2% | 8.1% | Retained | 531 | |
| rights | profit/(loss) | |||||
| Percentage of | 3.0% | 2.7% | 1.6% | Net assets | 1,213 | |
| investment | ||||||
| portfolio | ||||||
| Activity: Online ski and cruise travel agent. | ||||||
| Location: Wimbledon, London. | ||||||
*underlying retail value of sales
| Westway Services Holdings (2010) Limited | |||||||
|---|---|---|---|---|---|---|---|
| Original investment June 2009 | |||||||
| MIG | MIG 4 | I&G | Year ended | 28 February 2011 (£'000) |
|||
| Current cost | £382,201 | £236,096 | £353,589 | Sales | 27,521 | ||
| Valuation | £1,003,721 | £675,303 | £928,577 | EBITA | 3,942 | ||
| Valuation | Earnings multiple (for all Companies) | Profit/(loss) | 2,451 | ||||
| methodology | before tax | ||||||
| Equity/voting | 5.1% | 3.2% | 4.7% | Retained | 2,696 | ||
| rights | profit/(loss) | ||||||
| Percentage of | 2.4% | 2.2% | 1.7% | Net assets | 3,769 | ||
| investment | |||||||
| portfolio | |||||||
| Activity: Installation, service and maintenance of air conditioning systems. | |||||||
| Location: Greenford, Middlesex. |
| Idox plc | ||||||
|---|---|---|---|---|---|---|
| Original investment December 2000 | ||||||
| MIG | MIG 4 | I&G | Year ended | 31 October 2010 (£'000) |
||
| Current cost | £0 | £0 | £872,625 | Sales | 31,628 | |
| Valuation | £0 | £0 | £1,796,667 | EBITA | 7,504 | |
| Valuation methodology |
- | - | Bid Price | Profit/(loss) before tax |
4,943 | |
| Equity/voting rights |
- | - | 2.4% | Retained profit/(loss) |
15,179 | |
| Percentage of investment portfolio |
- | - | 3.3% | Net assets | 31,012 | |
| Activity: Information and knowledge management software Location: London |
| Youngman Group Limited | ||||||
|---|---|---|---|---|---|---|
| Original investment October 2005 | ||||||
| MIG | MIG 4 | I&G | Year ended | 30 June 2011 | ||
| (£'000) | ||||||
| Current cost | £1,000,052 | £500,026 | £1,000,052 | Sales | 34,544 | |
| Valuation | £682,203 | £294,560 | £682,203 | EBITA | 810 | |
| Valuation | Earnings multiple | Profit/(loss) | 99 | |||
| methodology | before tax | |||||
| Equity/voting | 8.5% | 4.2% | 8.5% | Retained | 2,919 | |
| rights | profit/(loss) | |||||
| Percentage of | 1.6% | 1.0% | 1.3% | Net assets | 3,699 | |
| investment | ||||||
| portfolio | ||||||
| Activity: Manufacturer of metal products | ||||||
| Location: Malden, Essex |
In addition, the following liquidity funds also represent more than 5% of at least one of the Companies:
| SWIP Global Liquidity Fund plc | |||||||
|---|---|---|---|---|---|---|---|
| (managed by Scottish Widows Investment Partnership Limited) | |||||||
| MIG | MIG 4 | I&G | |||||
| Amount | £2,465,603 | £1,764,732 | £6,437,807 | ||||
| invested | |||||||
| Valuation | £2,465,603 | £1,764,732 | £6,437,807 | ||||
| Valuation | Market valuation (for all Companies) | ||||||
| methodology | |||||||
| Equity/voting | n/a (for all Companies) | ||||||
| rights | |||||||
| Percentage of | 5.9% | 5.9% | 11.9% | ||||
| investment | |||||||
| portfolio |
| Global Treasury Funds plc | |||||
|---|---|---|---|---|---|
| (managed by RBS Asset Management (Dublin) Limited) | |||||
| MIG | MIG 4 | I&G | |||
| Amount | £1,898,267 | £2,108,022 | £6,136,851 | ||
| invested | |||||
| Valuation | £1,898,267 | £2,108,022 | £6,136,851 | ||
| Valuation | Market valuation (for all Companies) | ||||
| methodology | |||||
| Equity/voting | n/a (for all Companies) | ||||
| rights | |||||
| Percentage of | 4.6% | 7.0% | 11.4% | ||
| investment | |||||
| portfolio |
| Fidelity Institutional Cash Fund plc | |||||||
|---|---|---|---|---|---|---|---|
| (managed by FIL Fund Management (Ireland) Limited) | |||||||
| MIG | MIG 4 | I&G | |||||
| Amount | £2,207,028 | £1,599,122 | £5,704,574 | ||||
| invested | |||||||
| Valuation | £2,207,028 | £1,599,122 | £5,704,574 | ||||
| Valuation | Market valuation (for all Companies) | ||||||
| methodology | |||||||
| Equity/voting | n/a (for all Companies) | ||||||
| rights | |||||||
| Percentage of | 5.3% | 5.3% | 10.6% | ||||
| investment | |||||||
| portfolio |
| Institutional Cash Series plc | ||||||||
|---|---|---|---|---|---|---|---|---|
| (managed by Blackrock Asset Management Ireland Limited) | ||||||||
| MIG | MIG 4 | I&G | ||||||
| Amount | £2,347,939 | £1,468,320 | £5,211,491 | |||||
| invested | ||||||||
| Valuation | £2,347,939 | £1,468,320 | £5,211,491 | |||||
| Valuation | Market valuation (for all Companies) | |||||||
| methodology | ||||||||
| Equity/voting | n/a (for all Companies) | |||||||
| rights | ||||||||
| Percentage of | 5.6% | 4.9% | 9.6 | |||||
| investment | ||||||||
| portfolio |
| GS Funds plc | ||||||||
|---|---|---|---|---|---|---|---|---|
| (managed by Goldman Sachs International) | ||||||||
| MIG | MIG 4 | I&G | ||||||
| Amount | £1,930,382 | £1,548,737 | £0 | |||||
| invested | ||||||||
| Valuation | £1,930,382 | £1,548,737 | £0 | |||||
| Valuation | Market valuation | Market valuation | - | |||||
| methodology | ||||||||
| Equity/voting | n/a | n/a | - | |||||
| rights | ||||||||
| Percentage of | 4.6% | 5.1% | - | |||||
| investment | ||||||||
| portfolio |
Note:
Investment and portfolio information in this Part IV has been extracted from the Companies' accounting records (taken from the unaudited management accounts to 30 September 2011 in respect of MIG, the audited financial statements to 30 September 2011 for I&G and the unaudited management accounts to 31 October 2011 in respect of MIG 4), save for (i) the information on the remaining investment in DiGiCo Europe Limited following the partial realisation of the original investments by the Companies in December 2011, (ii) information on EOTH Limited and EMaC Limited, in which investments were made by the Companies in October 2011 and November 2011 respectively and balances in cash and liquidity funds as at 31 December 2011.
The information on investee companies' sales, profits and losses and net assets in this Part IV, has been sourced from the latest financial year end accounts published (unless stated otherwise) by those investee companies (''Third Party Information'').
As at the date of this document, there has been nomaterial change in the valuations of investments set out in this Part IV since 30 September 2011 in respect of MIG and I&G and 31 October 2011 in respect of MIG 4 (or, in respect of DiGiCo Europe Limited, EOTH Limited, EMaC Limited and liquidity funds, the more recent valuations as explained above). The Third Party Information has been accurately reproduced and, as far as the Companies are aware and are able to ascertain from information published by the investee companies, no facts have been omitted which would render the reproduced information inaccurate or misleading.
Copies of the following documents will be available for inspection during usual business hours on weekdays, Saturdays and public holidays excepted, at the offices of Matrix, One Vine Street, London W1J 0AH whilst the Offer is open:
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