Registration Form • Sep 6, 2017
Registration Form
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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 (Registration Document) issued by Mobeus Income & Growth VCT plc (MIG), Mobeus Income & Growth 2 VCT plc (MIG 2), Mobeus Income & Growth 4 VCT plc (MIG 4) and The Income & Growth VCT plc (I&G) (together the Companies and each a Company) dated 6 September 2017.
This document has been prepared in compliance 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 (Securities Note). A brief summary written in non-technical language conveying the essential characteristics of and risks associated with the Companies and ordinary shares of 1p each in the capital of each of the Companies which are being offered for subscription (Offer Shares) (the Offers and each an Offer), is contained in a summary issued by the Companies (Summary). The Securities Note, Registration Document and Summary have been prepared in accordance with the Prospectus Rules made under FSMA (Prospectus Rules) and have been approved by the Financial Conduct Authority (FCA) in accordance with FSMA.
This Registration Document, the Securities Note and the Summary together comprise a prospectus issued by the Companies dated 6 September 2017 ("the Prospectus"). The Prospectus has been filed with the FCA in accordance with the Prospectus Rules and you are advised to read the prospectus in full.
The Companies and the directors of the Companies (Directors) (whose names are set out on page 5) accept responsibility for the information contained in this Registration Document. To the best of the knowledge of the Companies and the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Registration Document is in accordance with the facts and does not omit anything likely to affect the import of such information.
| Mobeus Income & | Mobeus Income & | Mobeus Income & | The Income & |
|---|---|---|---|
| Growth VCT plc | Growth 2 VCT plc | Growth 4 VCT plc | Growth VCT plc |
| Registered in England & Wales | Registered in England & Wales | Registered in England & Wales | Registered in England & Wales |
| under number 05153931 | under number 03946235 | under number 03707697 | under number 04069483 |
| ISIN: GB00B01WL239 | ISIN: GB00B0LKLZ05 | ISIN: GB00B1FMDH51 | ISIN: GB00B29BN198 |
| Offer for subscription to raise | Offer for subscription to | Offer for subscription to | Offer for subscription to raise |
| up to £15 million, with an over | raise up to £10 million, with an | raise up to £10 million, with an | up to £15 million, with an over |
| allotment facility to raise up to | over-allotment facility to raise | over-allotment facility to raise | allotment facility to raise up to |
| a further £10 million | up to a further £5 million | up to a further £5 million | a further £10 million |
In connection with the Offers, Howard Kennedy Corporate Services LLP, the sponsor to the Offers, and Mobeus Equity Partners LLP ("Mobeus"), the promoter to the Offers, are 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 Howard Kennedy Corporate Services LLP and Mobeus respectively (subject to the responsibilities and liabilities imposed by FSMA and the regulatory regime established thereunder) in providing advice in relation to the Offers. Howard Kennedy Corporate Services LLP and Mobeus are authorised and regulated in the United Kingdom by the FCA.
Shakespeare Martineau LLP, which is regulated in the United Kingdom by the Solicitors Regulation Authority, is acting as legal adviser to the Companies and no-one else and will not be responsible to anyone other than the Companies for the advice in connection with any matters referred to herein.
The attention of prospective investors in the Companies who are resident in, or citizens of, territories outside the United Kingdom is drawn to the information under the headings "Overseas Investors" in Part I, II, III and IV of this document. None of the Offer Shares have been, nor will be, registered in the United States under the United States Securities Act of 1933, as amended, (the Securities Act) or under the securities laws of Canada, Australia, Japan or South Africa (each a Restricted Territory) and they may not be offered or sold directly or indirectly within the United States or any of the Restricted Territories or to, or for the account or benefit of US Persons (as defined in Regulation S made under the Securities Act) or any national, citizen or resident of the United States or any of the Restricted Territories. The Offers are not being made, directly or indirectly, in or into the United States or any of the Restricted Territories or in any other jurisdiction where to do so would be unlawful. In particular, prospective investors who are resident in the United States or any Restricted Territory should note that this document is being sent for information purposes only. The distribution of this document in jurisdictions other than the UK may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any of these restrictions. Any failure to comply with any of those restrictions may constitute a violation of the securities law of any such jurisdiction. An Application Form is not being and must not be forwarded to or transmitted in or into the United States or a Restricted Territory.
Application has been made to the UKLA for the Offer Shares to be admitted to the premium segment of the Official List and to the London Stock Exchange plc for such Offer Shares to be admitted to trading on its main 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 are available free of charge from the promoter of the Offers:
Mobeus Equity Partners LLP telephone: 020 7024 7600
30 Haymarket download: www.mobeusequity.co.uk/investor-area London SW1Y 4EX email: [email protected]
YOUR ATTENTION IS DRAWN TO THE RISK FACTORS ON PAGES 3 TO 4.
| Page | |
|---|---|
| RISK FACTORS | 3 |
| CORPORATE INFORMATION | 5 |
| DEFINITIONS | 6 |
| THE DIRECTORS AND MOBEUS | 9 |
| ARTICLES | 15 |
| PART I – MIG | 23 |
| (A) General information | |
| (B) Analysis of the investment portfolio | |
| (C) Financial information | |
| PART II – MIG 2 | 36 |
| (A) General information | |
| (B) Analysis of the investment portfolio | |
| (C) Financial information | |
| PART III – MIG 4 | 49 |
| (A) General information | |
| (B) Analysis of the investment portfolio | |
| (C) Financial information | |
| PART IV – I&G | 63 |
| (A) General information | |
| (B) Analysis of the investment portfolio | |
| (C) Financial information | |
| PART V - THE COMPANIES' LARGEST INVESTMENTS | 77 |
| PART VI - DOCUMENTS AVAILABLE FOR INSPECTION | 84 |
The following are those risk factors which are material to each Company and of which each Company's respective Directors are aware. Material risk factors relating to the Offer Shares are contained in the Securities Note. Additional factors which are not presently known to the Directors, or that the Directors currently deem immaterial, may also have an effect on their respective Company's business, financial condition or results of operations.
Investment in unquoted companies (including AIM 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. They 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 investments in companies listed on the Official List.
VCTs are subject to investment restrictions, a summary of which are set out in Part Nine - Taxation Considerations of the Securities Note. This may have an impact on the investments the Companies can make and the returns achievable. Although Mobeus has seen a strong flow of new investment opportunities, there can be no guarantee that suitable investments will be identified in order to meet each Company's objectives.
It can take a period of years for the underlying value or quality 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. Furthermore, 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.
Although a Company may receive customary venture capital rights in connection with its investments, particularly as a minority investor, it may not be in a position to protect its interests fully or be the sole determining factor of when a company is offered for sale. Furthermore, VCTs are subject to certain requirements which may restrict its ability to provide further funding to an investment should the need arise.
Mobeus has typically structured its investments in part equity and part loan and it aims to maximise the loan stock element so as to minimise overall investment risk. 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. Dividends are also potentially receivable from investee companies arising from the Companies equity holding, but the size and likelihood of receipt is dependent upon a wide range of company specific factors.
Since the Companies hold a portfolio of underlying investments, the risks of which are explained above, the value of Shares, and the income investors derive from them, can fluctuate and investors may not get back the full amount they invested. In addition, there is no certainty that the market price of Shares will fully reflect their underlying net asset value nor is there any guarantee that dividends will be paid, nor that any dividend target stated will be met.
Where more than one of the funds advised by Mobeus wishes to participate in an investment opportunity, allocations will generally be made in proportion to the net asset value of each fund. When one or more of the funds advised by Mobeus is in a fundraising period, its net funds raised, for the purpose of allocation, will be assumed to be the value of Shares allotted in that Company 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 Company'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.
Whilst it is the intention of each Board that its Company will continue to be managed so as to qualify as a VCT, there can be no guarantee that a Company's VCT 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 upfront 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.
Changes in legislation concerning VCTs (including the 'patient' capital review announced by the UK Government), in particular in relation to what constitutes 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 a Company not being able to meet its objectives. Furthermore, the 'patient' capital review may impose restrictions on VCT fund raisings and such restrictions may affect the ability of a VCT to participate in follow-on funding for investee companies, pay dividends and/or support a buy-back policy.
If at any time VCT status is lost for a Company, dealings in its Shares will normally be suspended until such time as proposals for the Company to continue or to be wound up have been announced.
The disposal of Offer Shares within five years of subscription will result in any income tax relief claimed thereon becoming repayable. Further, the disposal of existing Shares within six months either side of the acquisition of Offer Shares in the same Company will result in the amount of the investment in Offer Shares to which VCT tax reliefs are available being reduced by an amount equal to the proceeds received on the disposal.
The tax rules, or their interpretation, in relation to an investment in a Company and/or the rates of any tax, may change during the life of that Company and may apply retrospectively. The value of the tax reliefs depends on the personal circumstances of the investors, who should consult their own tax advisers before making any investment.
Any change of governmental, economic, fiscal, monetary or political policy, in particular current government spending reviews and cuts and changes to the current level of interest rates, 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.
Some commentators believe that in light of the UK EU referendum vote to leave the European Union, as well as other global political uncertainties, the UK economy will continue to face testing circumstances in the short to medium term that could affect economic growth and as a result investors may not get back the amount they originally invested.
The Articles provide the opportunity for Shareholders of a Company to vote on the continuation of that Company at the annual general meeting falling after the fifth anniversary of the earlier of the last allotment of Shares in that Company or the last continuation vote held. The allotment of Offer Shares in a Company pursuant to its Offer will, therefore, defer (in accordance with the Articles) the opportunity for Shareholders of the relevant 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, if no trading in the market is possible.
The number of Offer Shares to be issued in a Company will be calculated by a formula linked to the latest published NAV of a Share in the relevant Company which will determine the Offer Price. The most recently published unaudited NAVs for the Companies are as at 30 June 2017.
Clive Nicholas Boothman (Chairman) Bridget Elisabeth Guérin Catherine Alison Wall
Nigel Edward Melville (Chairman) Ian Marcel Blackburn Sally Louise Duckworth Adam Fletcher Downs Kingdon Kenneth Charles Vere Nicoll
Christopher Mark Moore (Chairman) Andrew Stephen Robson Helen Rachelle Sinclair
Colin Peter Hook (Chairman) Jonathan Harry Cartwright Helen Rachelle Sinclair
Secretary and Promoter Mobeus Equity Partners LLP 30 Haymarket London SW1Y 4EX
Shakespeare Martineau LLP 60 Gracechurch Street London EC3V 0HR
Panmure Gordon (UK) Limited One New Change London EC4M 9AF
BDO LLP 55 Baker Street London W1U 7EU
Registrars for MIG 2, MIG 4 and I&G Capita Asset Services 34 Beckenham Road Beckenham Kent BR3 4TU Telephone Number: 0871 664 0324*
30 Haymarket London SW1Y 4EX
MIG 05153931 MIG 2 03946235 MIG 4 03707697 I&G 04069483
www.migvct.co.uk www.mig2vct.co.uk www.mig4vct.co.uk www.incomeandgrowthvct.co.uk
020 7024 7600
The City Partnership (UK) Limited Thistle House 21 Thistle Street Edinburgh EH2 1DF
Howard Kennedy Corporate Services LLP No.1 London Bridge London SE1 9BG
Philp Hare &Associates LLP 4-6 Staple Inn High Holborn London WC1V 7QH
Portunus Investment Solutions Limited Office 4 8 Percy Street London W1T 1DJ
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 Asset Services telephone number is open between 9.00 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 3170 0187. Calls to Capita Asset Services' 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.
**Computershare's telephone number is open between 8.30 am and 5.30 pm (GMT) Monday to Friday (except UK public holidays). Calls to Computershare 0870 number are often free if included in your plan, if not included, calls will be charged at no more than dialling a STD code (about 2p per minute usually depending on your supplier). Calls to the helpline from outside of the UK will be charged at applicable international rates.
| The following definitions apply throughout this document unless the context otherwise requires: | |
|---|---|
| AIFMD | the Alternative Investment Fund Managers Directive 2011/61/EU |
| AIM | the Alternative Investment Market |
| Allotment Formula | the formula to calculate the number of Offer Shares to be issued by each Company to each investor as set out in Part Eight of the Securities Note |
| Applicant or investor | an applicant under the Offer |
| Application | a valid application by an Applicant for Offer Shares pursuant to one or more of the Offers |
| Articles | the articles of association of MIG and/or MIG 2 and/or MIG 4 and/or I&G, as the context permits |
| Boards | the board of directors of MIG, MIG 2, MIG 4 and I&G (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 | the Companies Act 1985 (as amended) |
| CA 2006 | the Companies Act 2006 (as amended) |
| Closing Date | the closing date of an Offer, expected to be 12.00 noon on 4 April 2018, or earlier if fully subscribed or otherwise as so resolved by the relevant Board |
| Companies | MIG, MIG 2, MIG 4 and I&G (and each "a Company") |
| Companies Acts | CA 1985 and CA 2006 |
| Directors | the directors of MIG and/or MIG 2 and/or MIG 4 and/or I&G from time to time, as the context permits |
| Early Investment Incentive |
an amount equal to 1.00% of the Investment Amount on Applications which are received and accepted up to the earlier of the first £50 million being raised across the Offers or to 3 November 2017, payable by Mobeus and from which will be used to purchase additional Offer Shares in the Companies (as applicable) as set out in Part Eight of the Securities Note |
| EBITA | a company's earnings before the deduction of interest, tax and amortisation |
| FCA | the Financial Conduct Authority |
| FSMA | the Financial Services and Markets Act 2000 (as amended) |
| HMRC | Her Majesty's Revenue & Customs |
| Howard Kennedy | Howard Kennedy Corporate Services LLP, the sponsor to the Offers |
| I&G | The Income & Growth VCT plc |
| I&G Shares | ordinary shares of 1p each in the capital of I&G |
| Investment Amount | the monetary amount of an Application accepted, ignoring the Early Investment Incentive and any waived 'execution only' initial commission and/or waived Mobeus promotion fee to be reinvested for additional Offer Shares |
| 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 |
| MBO | management buy out |
| Memorandum | the memorandum of association of MIG and/or MIG 2 and/or MIG 4 and/or I&G, as the context permits (and together "the Memoranda") |
| MIG | Mobeus Income & Growth VCT plc |
| MIG Shares | ordinary shares of 1p each in the capital of MIG |
| MIG 2 | Mobeus Income & Growth 2 VCT plc | |||
|---|---|---|---|---|
| MIG 2 Shares | ordinary shares of 1p each in the capital of MIG 2 | |||
| MIG 3 | Matrix Income & Growth 3 VCT plc | |||
| MIG 4 | Mobeus Income & Growth 4 VCT plc | |||
| MIG 4 Shares | ordinary shares of 1p each in the capital of MIG 4 | |||
| Mobeus | Mobeus Equity Partners LLP, the investment adviser, administrator, company secretary and promoter to the Companies and which is authorised and regulated by the FCA |
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| 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 or, as the case may be, share, calculated in accordance with that company's normal accounting policies |
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| NEX | the NEX Exchange Main Board, a prescribed market for the purposes of section 118 of Financial Services and Markets Act 2000 |
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| Offers | the offers for subscription of Offer Shares in the Companies (including, if utilised, the over-allotment facilities) as described in the Prospectus (and each an "Offer") |
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| Offer Price | the price at which the Offer Shares will be allotted in each Company pursuant to the Offers, as determined by dividing the Investment Amount in a Company by the number of Shares to be issued by that Company (in accordance with the Allotment Formula) |
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| Offer Shares | the MIG Shares, MIG 2 Shares, MIG 4 Shares and I&G Shares (as the context permits), being offered for subscription pursuant to the Offers (and each an "Offer Share") |
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| Official List | the official list of the UK Listing Authority | |||
| Prospectus | together, this 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 Chapter 4 of Part 6 of the Tax Act |
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| Qualifying Investor | an individual aged 18 or over who is resident in the United Kingdom and who invests in the Companies |
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| Receiving Agent | The City Partnership (UK) Limited | |||
| Registrar | Capita Asset Services or Computershare Investor Services PLC, as the context permits |
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| Registration Document |
this document | |||
| Regulations | the Uncertificated Securities Regulations 2001 | |||
| Securities Note | the securities note issued by the Companies dated 6 September 2017 in connection with the Offers |
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| Shareholder | a holder of Shares in one or more of the Companies (as the context permits) | |||
| Shares | MIG Shares and/or MIG 2 Shares and/or MIG 4 Shares and/or I&G Shares (and each a "Share"), as the context permits |
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| Summary | the summary issued by the Companies dated 6 September 2017 in connection with the Offers |
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| Tax Act | the Income Tax Act 2007 (as amended) | |||
| UKLA or UK Listing Authority" |
the FCA in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000 |
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| 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) |
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| VCT Value | the value of an investment calculated in accordance with section 278 of 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 Listing Rules, each of the Companies' Boards is independent of Mobeus. All Directors are, except for Helen Sinclair, independent of Mobeus. Helen is a director of both I&G and MIG 4 and, as both are advised by Mobeus, is deemed not to be an independent director under the Listing Rules.
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, subject to approval by its shareholders and making investment decisions on the advice of Mobeus. Each Board also retains responsibility for approving both the valuations of its portfolio and the net assets of its Company (on the advice of Mobeus).
Clive has over 30 years' experience in the financial services industry. Initially, he qualified as a chartered accountant and worked for Arthur Young McClelland Moores (now Ernst & Young) and Moore Stephens (Bermuda). He was with Schroders for seventeen years from 1983 during which time he was, at different times, managing director, Schroder Unit Trusts for ten years and managing director of the Firm's Private Client Group for the final two years. Since leaving Schroders, he has been chief executive of the stockbroker, Gerrard Limited (2000 – 2001), the fund platform Cofunds Limited (2002 – 2003) and London Representative of Jersey Finance Limited (2009 – 2011). More recently, from 2004 until December 2014, he was non-executive chairman of Investment Funds Direct Limited (trading as Ascentric), a comprehensive, whole-of-market wrap platform. Since July 2014, he has been non-executive chairman of Platform One Group Limited, another wrap platform which specialises in providing services to international clients and their advisers as well as UK higher net worth clients.
Bridget has over 30 years' experience in the financial services industry. She was managing director of Matrix Money Management Limited between June 1999 and March 2011 and sat on the Matrix Group board between 2000 and 2009. Prior to joining Matrix, Bridget gained 14 years of retail investment fund experience at Schroder Unit Trusts Limited, Ivory & Sime and County NatWest. Bridget is currently a nonexecutive director of CCP Quantitative Fund, CCP Core Macro Fund,, Schroder Income Growth Fund plc, a London listed investment trust and Charles Stanley Group plc. She is on the board of Beverley Racecourse Limited and is a member of the York Racecourse Committee and is a trustee of the York Racecourse Pension Fund. Bridget was a director of MIG 3 which merged with MIG in May 2010.
Catherine has over 30 years' experience in the private equity industry, having worked for Barclays Private Equity (now called Equistone Partners Europe) from 1984 to 1989 and also from 1994 to 2013, and for 3i plc from 1989 to 1993. As a director of Barclays Private Equity she led and managed numerous investments in management buy-outs. She later became UK portfolio director, supervising the management of all the firm's UK investments. She held over 20 roles as non-executive director, nonexecutive chairman or shareholder representative on the boards of investee companies in which Barclays Private Equity/Equistone Partners Europe were invested; additionally, she was a non-executive director of Indigo Holdings Limited from August 2010 to December 2012 and served on the investment committee of the British Red Cross from 2004 to July 2014. She is currently chairman of Signum Technology Limited, a valve manufacturer, and a non-executive director of Greenwood & Coope Limited (trading as Cormar Carpets). She is also a member of Westminster Abbey's investment panel.
Nigel was chairman of Emtelle Holdings Limited, the UK's leading supplier of fibre-optic ducting systems, until August 2008. He has been a director of a number of other public and private companies. Between 1972 and 1995, he was an investment banker, latterly as a director of Barings, responsible for international corporate finance. In 1995 he established Melville Partners to provide strategic consultancy to a range of international companies.
Recently appointed on 1 July 2017, Ian is a qualified chartered accountant who specialised in Corporate Finance at KPMG before building and selling two listed food groups. He has extensive UK European strategic, operations and finance experience as chief executive and finance director of Perkins Foods plc and Zetar plc. Currently, he is an active investor in a number of SMEs including Chairman and nonexecutive roles with Mood Foods, Kinteract, and Peppersmith. He is also a trustee/treasurer of The Thomas Fryer Charity.
Sally has worked in the financial services sector since 1990 and in the private equity industry since 2000. An active angel investor, she sits on the board of several early stage companies. She is a qualified accountant, former investment banker and venture capitalist. From 2000 to 2004 she worked for Quester Capital Management Limited as part of the investment team for their VCTs.
Adam has over 20 years' experience as a turnaround specialist and of restoring companies to profitability. He led a management buyout of Robinson Electronics, a supplier of test equipment for electricity supply utilities. He then went on to turn around more than ten loss-making engineering and technology companies in the UK, France, Germany, Holland and Belgium. He is also the founder and chief executive of i2O Water Limited and a director of Kingdon Burrows Performance Aircraft Limited.
Ken has over 40 years' corporate finance experience and retired from Matrix Corporate Capital LLP, which provided corporate finance advice and stockbroking services, on 30 June 2009. He was a non-executive director of Unicorn AIM VCT II plc until March 2010, when it merged with Unicorn AIM VCT plc.
Christopher has considerable experience of the venture capital industry. After completing a law degree and qualifying as a chartered 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 turnaround of a public industrial group. Until May 2010, he was a director of MIG and until September 2010 he was a director of I&G. He was also a director of MIG 3 until it merged with MIG in 2010.
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 15 years' experience as a non-executive director, including with investment companies. He is currently an executive director of First Integrity Limited (from December 2006), and a non-executive director of Peckwater Limited, Shires Income plc (from May 2008), JP Morgan Smaller Companies Investment Trust plc (from 2007) and Witan Pacific Investment Trust plc (form 2014). Andrew was a non-executive director of Edinburgh UK Smaller Companies Tracker Trust plc from 1998 to 2006, British Empire Trust plc from 2008 to earlier this year and M&G Equity Investment Trust plc from 2007 to 2011.
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 helped raise the initial funds for Mobeus Income & Growth 2 VCT plc (formerly Matrix e-Ventures VCT plc). She is a non-executive director of Gresham House Strategic plc and is chairman of British Smaller Companies VCT plc. Helen is a director of both I&G and MIG 4 and, as both are advised by Mobeus, is deemed not to be an independent director under the Listing Rules.
Colin has extensive financial and commercial experience. He has worked in the City for more than 30 years. During this time, he has himself successfully founded two fund management companies and directed fund management operations for more than ten years. His City involvement includes mergers and acquisitions. From 1994 to 1997 he was chief executive of Ivory and Sime plc. Until February 2013, he was chief executive of Pole Star Space Applications Limited, a company which he helped to found in 1998 and which is today the world's leading provider of real-time tracking information for the maritime industry. He remains a director on this board. Until September 2010, he was also chairman of MIG 4.
Jonathan is a qualified 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 is currently a trustee of the Caledonia Pension Scheme. Prior to this he was group financial controller at Hanson plc from 1984 to 1989. He was also previously non-executive director of Bristow Group Inc. and of Serica Energy plc. He is non-executive chairman of BlackRock Income & Growth Investment Trust plc and also of Aberforth Split Level Investment Trust plc. He is also a non-executive director of Tennants Consolidated Limited. Jonathan has served on the Self-Managed Investment Trust Committee of the Association of Investment Companies (to December 2009).
Please see above for MIG 4.
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 | ||
|---|---|---|---|
| Clive Boothman | D. Napier & Son Ltd Carbooth Storage Limited LCT Pensions Limited Mobeus Income & Growth VCT plc Platform One Limited Platform One Group Limited Professional Partners Administration Limited Veteran Car Company Limited |
Fundsdirect ISA Nominees Limited IFDL Personal Pensions Limited Investment Funds Direct Group Limited Investment Funds Direct Holdings Limited Investment Funds Direct Limited Investment Sciences Limited |
|
| Nigel Melville | Egypt Investment Company Mobeus Income & Growth 2 VCT PLC Museum of Army Flying Limited (The) Museum of Army Flying Trading Company Limited (The) |
||
| Christopher Moore | Bletchley Park Trust Limited Mobeus Income & Growth 4 VCT plc |
British Eye Research Foundation Eye Research UK Fight for Sight Trading Limited The Iris Fund for the Prevention of Blindness |
|
| Colin Hook | Absolute Software (Australia) Pty Limited Absolute Software Inc Citron Press plc (in liquidation) Pole Star Space Applications Limited The Income & Growth VCT plc The 9th/12th Royal Lancers (Prince of Wales's) Regimental Museum |
Absolute Maritime Tracking Services Inc Member of the Council of the Society of Maritime Industries IBIS Designs Limited (dissolved) Pole Star Data Centre Services Limited |
|
| Bridget Guérin | Beverley Race Company Limited (The) Cantab Capital (Cayman) Limited Cantab Capital LTIP Limited CCP Core Macro Master Fund CCP Quantitative Fund Charles Stanley & Co. Limited Charles Stanley Group plc Mobeus Income & Growth VCT plc Schroder Income Growth Fund plc York Racecourse Knavesmire LLP |
Matrix Alternative Investment Strategies Fund Limited Matrix (Bermuda) Limited Matrix Structured Products Limited Cantab UCITS Fund plc |
|
| Catherine Wall | Copper Bidco Limited Copper Midco 1 Limited Copper Midco 2 Limited Filtration & Valves Limited Greenwood & Coope Limited Mobeus Income & Growth VCT plc Signum Technology Limited Vee Bee Filtration UK Limited Vee Bee Limited |
BRE Group Limited Equistone LLP Equistone (UK) LLP Greenfinch Investment Services Limited (dissolved) Indigo Topco Limited Worldmark International Holdings Limited |
| Ian Blackburn | Freshly Cut Limited Make It Plain Limited Mobeus Income & Growth 2 VCT plc Humdinger Limited Mood Foods Ltd |
A Taste of Luxury Limited Coda International Limited Readifoods Limited Zertus UK Holding Limited Zetar International Limited Zetar Limited |
|---|---|---|
| Sally Duckworth | Mobeus Income & Growth 2 VCT plc Stormagic Limited Superhit Limited Xanthic Limited Youatwork Holdings Limited Youatwork Limited |
Ashe Morris Limited Beyond The Story Limited Redkite Financial Markets Limited (Dissolved) |
| Adam Kingdon | Mobeus Income & Growth 2 VCT plc Adam Kingdon Associates Limited | (dissolved) I20 Water Limited I20 Water International Holdings Limited |
| Ken Vere Nicoll | Cross Point Trading (Pty) Ltd Mobeus Income & Growth 2 VCT plc Tolwall Limited Tolwall Fund Investments LLP VP Platinum LLP VPP Nominees 2 Limited VPP Nominees 3 Limited VPP Nominees 4 Limited VPP Nominees 5 Limited VPP Nominees 6 Limited |
|
| Andrew Robson | First Integrity Limited JPMorgan Smaller Companies Investment Trust plc Mobeus Income & Growth 4 VCT plc Peckwater Limited Shires Income plc Witan Pacific Investment Trust plc |
Best Securities Limited (dissolved) Brambletye School Trust Limited British Empire Trust plc |
| Jonathan Cartwright | Aberforth Split Level Investment Trust plc Blackrock Income and Growth Investment Trust plc Tennants Consolidated Limited The Income & Growth VCT plc Governor of Oundle School Oundle School Services Company Limited Trustee of the Caledonia Pension Scheme Trustee of the Old Oundelian Club Benevolent Fund |
Aberforth Geared Income Trust plc (in liquidation) Aquilo Associates Limited (dissolved) Trustee of the Non-Teaching Staff Pension Scheme of Oundle School |
| Helen Sinclair | British Smaller Companies VCT plc FTGS Holdco Limited Gresham House Strategic plc Hemstall Road Residents Co Limited Mobeus Income & Growth 4 VCT plc The Income & Growth VCT plc 16 Dennington Park Road Limited 39 Homer Street Management Limited |
Octopus Eclipse VCT 3 plc (dissolved) Downing ONE VCT plc Downing Income VCT 4 plc (dissolved) OFT 2 Limited (now FTGS Holdco Ltd) |
The Companies' investment adviser is Mobeus, 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 7024 7600). Mobeus' registered office is 3rd Floor, 52 Jermyn Street, London SW1Y 6LX and its principal place of business is 30 Haymarket, London SW1Y 4EX. Mobeus is authorised and regulated by the Financial Conduct 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 Mobeus operates is the Limited Liability Partnership Act 2000 and the applicable provisions of the Companies Acts (and regulations made thereunder).
The origins of Mobeus date back to 1998 when its four founder partners began working together. Since 30 June 2012, Mobeus has been wholly owned by its executive partners.
The Mobeus team has now grown to 34 people, including 23 investment professionals. The Mobeus team focuses on advising and administering four Mobeus-advised VCTs and on managing an Institutional limited partnership ("LP").
Mobeus entered the VCT industry advising two multi-adviser VCTs as one of three investment advisers 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 of those Companies that Mobeus was achieving the best performance of the investment advisers and that Mobeus should be appointed as sole investment adviser. TriVen VCT was renamed Matrix Income & Growth 4 VCT plc in October 2006 and subsequently re-named Mobeus Income & Growth 4 VCT plc in June 2012. TriVest VCT plc was re-named The Income & Growth VCT plc in October 2007. These are two of the Companies in the Offers.
Matrix E-Ventures Fund plc was launched in 2000 and changed its name to Matrix Venture Fund VCT plc in 2001. In 2005, the Company changed its investment strategy and name to Matrix Income and Growth 2 VCT plc and launched a new C ordinary share fund. The C shares were subsequently merged with the ordinary shares on 10 September 2010. The Company changed its name to Mobeus Income & Growth 2 VCT plc in June 2012. This is the third Company in the Offers.
Matrix Income & Growth VCT plc and Matrix Income & Growth 3 VCT plc were launched with Mobeus as their sole investment adviser in 2004 and 2005 respectively. Matrix Income & Growth 3 VCT plc merged with Matrix Income & Growth VCT plc in 2010 and Matrix Income & Growth VCT plc changed its name to Mobeus Income & Growth VCT plc in June 2012. This is the fourth Company in the Offers.
The material provisions of each of the Company's Articles are as detailed below. The provisions set out below apply 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.
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:
(b) every holder of shares of the class present in person or by proxy may demand a poll;
(c) each such holder shall on a poll be entitled to one vote for every share of the class held by him; and
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.
Subject to the provisions of CA 2006 and 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.
(a) Except as otherwise provided by the rights attached to shares, all dividends shall be declared and paid according to the amounts paid up (otherwise than in advance of calls) on the shares on which the dividend is paid. Subject as aforesaid, all dividends shall be apportioned and paid pro rata according to the amounts paid up or credited as paid up on the shares during any portion or portions of the period in respect of which the dividend is paid but if any share is issued on terms
providing that it shall rank for dividend as from a particular date or be entitled to dividends declared after a particular date it shall rank for or be entitled to dividends accordingly.
all as shown in the latest audited balance sheet of the Group but after:
the relevant balance sheet; and
but do not include:
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.
(ii) may, if the other members of the Board so decide, be excluded from any Board meeting while the conflict is under consideration; and
(iii) shall not vote on any resolution authorising the conflict except that, if he does vote, the resolution will still be valid if it would have been agreed to if his vote had not been counted.
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:
sell such share by advertisements in both a national daily newspaper published in the United Kingdom and in a newspaper circulating in the area in which the last known address of such member or person for the service of notices under these Articles appeared;
(ii) the payment up by the Company on behalf of such holders by the application to it of their respective proportions of the reserves or profits resolved to be capitalised of the amounts or any part of the amounts remaining unpaid on their existing shares,
(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 latter of the fifth anniversary of either (i) the last allotment of shares in the Company or (ii) the last continuation vote held, and thereafter at five year 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 unitised) 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.
2.4 As at 30 June 2017, the date to which the last unaudited half-year financial statements for MIG have been published, the issued share capital of MIG was 75,597,471 MIG shares (all fully paidup).
2.5 The issued share capital history of MIG since 31 December 2013 is as follows:
in each case where the proceeds of the allotment may be used, in whole or in part, to purchase MIG Shares in the market and provided that this authority shall (unless renewed, revoked or varied by MIG in general meeting) expire on the date falling fifteen months after the passing of the resolution, or, if earlier, at the conclusion of the annual general meeting of MIG to be held in 2018, except that MIG may, before such expiry of the authority, 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 offers or agreements as if the authority conferred thereby had not expired.
(i) the maximum aggregate number of MIG Shares which may be purchased shall not exceed 11,332,061 or, if lower, such number of MIG Shares (rounded down to the nearest whole MIG Share) as shall equal 14.99% of the MIG Shares in issue at the date of the passing of the resolution;
(ii) the minimum price which may be paid for a MIG Share is one penny (the nominal value thereof);
That, in addition to existing authorities:
(a) Authority to allot shares
the MIG Directors be and hereby are generally and unconditionally authorised in accordance with section 551 of CA 2006, to exercise all the powers of MIG to allot MIG Shares and to grant rights to subscribe for, or to convert any security into, MIG Shares (Rights) up to an aggregate nominal value of £410,000, provided that this authority shall (unless renewed, revoked or varied by MIG in general meeting) expire on the date falling fifteen months after the passing of this resolution (save that MIG shall be entitled to make offers or agreements before the expiry of such authority which would or might require shares to be allotted or Rights to be granted after such expiry and the MIG directors shall be entitled to allot shares or grant Rights pursuant to any such offers or agreements as if the authority had not expired); and
(b) Disapplication of pre-emption rights
the MIG Directors be and hereby are empowered pursuant to sections 570 and 573 of CA 2006 to allot equity securities (as defined in section 560 of CA 2006) for cash, pursuant to the authority conferred by paragraph (a) of this resolution as if section 561(1) of CA 2006 did not apply to any such allotment, provided that this authority shall be limited to the allotment of equity securities with an aggregate nominal value of up to but not exceeding £410,000 in connection with offer(s) for subscription (where the proceeds may be used, in whole or in part, to purchase MIG Shares), such authority to (unless renewed, revoked or varied by MIG in general meeting) expire on the date falling fifteen months after the passing of this resolution (save that MIG shall be entitled to make offers or agreements before the expiry of such authority which would or might require equity securities to be allotted after such expiry and the shall be entitled to allot equity securities in pursuance of such offers or agreements as if the authority conferred by this resolution had not expired).
| Issued | ||||
|---|---|---|---|---|
| Number £ |
||||
| MIG Shares | 116,511,897 | 1,165,118.97 |
2.11 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 | ||
| Clive Boothman | 27,621 | 0.04% |
| Bridget Guérin | 123,151 | 0.16% |
| Catherine Wall | 26,205 | 0.03% |
3.7 No loan or guarantee has been granted or provided by MIG to or for the benefit of any of the MIG Directors.
3.8 MIG has taken out directors' and officers' liability insurance for the benefit of its directors, which is renewable on an annual basis.
If, at any time, MIG's VCT status is lost, dealing in its shares and valuation of MIG's net asset value will normally be suspended, which will be communicated to shareholders on an appropriate regulatory information service until such time as proposals to continue as a VCT or to be wound up have been further announced. The MIG Directors do not anticipate any other circumstance under which valuations may be suspended.
4.4 MIG expects to co-invest with the other VCT funds advised by Mobeus, participating in equity investments up to £5 million in aggregate, as long as the business has not received funds from any state-aided risk capital in the 12 months prior to the date of investment.
Where more than one of the funds advised by Mobeus wishes to participate in an investment opportunity, allocations will generally be made in proportion to the latest announced net asset value, adjusted for subsequent buybacks and dividends paid, of each fund at the date each investment proposal is forwarded to each Board. When one of the funds advised by Mobeus 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 coinvestment policy.
When MIG has insufficient funds available to satisfy its allocation, the balance shall be offered to one or more of the funds advised by Mobeus 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 advised by Mobeus, may only be made with the prior approval of the MIG Directors.
Save for the above, there are no material potential conflicts of interest which Mobeus may have as between its duty to MIG and duties owed by them to third parties and their interests.
are required to resign at the annual general meeting following appointment and then thereafter every three years. New directors are provided with an induction pack and an induction session is arranged in conjunction with the Board and Mobeus.
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 2016 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 (as amended and restated on 9 November 2016 2016) between MIG (1) and Mobeus (2), pursuant to which Mobeus provides certain advisory investment management and administrative services to MIG for a fee payable quarterly in advance of an amount equal to 2% per annum of net assets (inclusive of VAT, if any) plus an annual fixed fee of £120,000 (inclusive of VAT, if any) subject to increase in the Retail Price Index. In 2013, Mobeus agreed to waive such further increases until otherwise agreed with the MIG Board. If such annual increases were reinstated, the base annual fee to which such percentage increases would apply would be £134,168 (inclusive of VAT).
The above fees are subject to an annual expenses cap of over and above 3.6% of the net assets of MIG by way of a reduction of fees due to Mobeus in the following accounting period(s). For these purposes annual expenses include the normal running costs of MIG (excluding irrecoverable VAT and exceptional items but including annual trail commission). The amount of the excess is borne in full by Mobeus.
Mobeus may (subject to due disclosure to the MIG Board) retain for its own benefit, arrangement or syndication fees, placing commissions, monitoring fees, directors' fees and/or similar sums which it receives in connection with any investment made by MIG, provided that the maximum amount of such fees and/or similar sums (other than directors' fees and monitoring fees) shall not exceed 2.5% of the funds provided for each such investment.
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 Mobeus ceases to be authorised by the FCA or if there is a change in control of Mobeus.
The agreement contains provisions indemnifying Mobeus 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 Mobeus (then Matrix Private Equity Partners LLP) pursuant to a novation agreement dated 20 October 2006 and as amended by a deed of variation dated 20 May 2010 and supplemented by a side letter dated 10 December 2014, pursuant to which Mobeus is entitled to receive performance related incentive fees subject to achieving certain defined targets.
Mobeus is entitled to receive an annual performance-related incentive fee of 20% of the dividends paid in a year in excess of a "Target Rate" comprising firstly, an annual dividend paid in a year target which started at 6p per MIG Share on launch (indexed each year for RPI) and secondly a requirement that any shortfall of cumulative dividends paid in each year beneath the cumulative annual dividend target is carried forward and added to the Target Rate for the next accounting period. Any excess of cumulative dividends paid above the cumulative annual dividend target is not carried forward, whether an incentive fee is payable for that year or not. Payment of a fee is also conditional upon the daily weighted average NAV per MIG Share throughout such year equalling or exceeding the daily weighted average base NAV per MIG Share throughout the same year. The performance fee is payable annually.
The agreement will terminate automatically if MIG enters into liquidation or if a receiver or administrator is appointed or if a resolution is passed that MIG voluntarily wound up in accordance with the MIG Articles.
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, while continuing at all times to qualify as a VCT.
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 receive regular income and to generate capital gains from realisations.
Investments are made selectively across a number of sectors, principally in established companies. Investments are usually structured as part loan and part equity in order to receive regular income stream and to generate capital gains from realisations.
There are a number of conditions within the VCT legislation which need to be met by MIG and which may change from time to time. MIG will seek to make investments in accordance with the requirements of prevailing VCT legislation.
Asset allocation and risk diversification policies, including the size and type of investments MIG makes, are determined in part by the requirements of prevailing VCT legislation. No single investment may represent more than 15% (by VCT tax value) of MIG's total investments at the date of investment.
MIG's cash and liquid funds are held in a portfolio of readily realisable interest bearing investments, deposit and current accounts, of varying maturities, subject to the overriding criterion that the risk of loss of capital be minimised.
MIG's articles of association permit borrowings of amounts up to 10% of the adjusted capital and reserves (as defined therein). However, MIG has never borrowed and the MIG Board would only consider doing so in exceptional circumstances.
(d) not more than 20% of MIG's gross assets will at any time be invested in the securities of property companies.
6.5 Mobeus has and will have sufficient and satisfactory relevant experience in advising on investments of the size and type which MIG proposes to make. The MIG Directors will also ensure that the board of MIG and any additional or replacement investment advisers have and will have sufficient and satisfactory experience in advising on such investments.
Related party transactions for MIG undertaken in the three financial years ended 31 December 2014, 2015 and 2016 are set out in the respective audited report and accounts for those year ends, which, together with the unaudited half-year report for the six month period ended 30 June 2017, are incorporated by reference: in Note 3 on pages 50 and 51 for the year ended 31 December 2014, and in Note 4 on pages 45 and 46 for the year ended 31 December 2015, in Note 4 on pages 43 and 44 for the year ended 31 December 2016 and in paragraph (d) of the Statement of the Directors' Responsibilities on page 11 of the half-year report to 30 June 2017. Apart from the payment of the MIG Directors' remuneration on the basis set out in paragraph 3.4 above, investment management, administration and performance incentive fees as set out in paragraphs 5.1 and 5.2 above, there have been no other related party arrangements in the current year to the date of this document. Save for the entering into of the offer agreement as set out in paragraph 5.4 above, MIG has not entered into any related party transactions within the meaning of IFRS or UK GAAP since 30 June 2017.
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:
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.
9.1 Taxation of dividends - under current law, no tax will be withheld by MIG when it pays a dividend.
All of MIG's investments as at the date of this document, which are analysed below, are in the UK and are valued in sterling.
| Sector | % by cost | % by value |
|---|---|---|
| Support Services | 25.9 | 31.8 |
| General Retailers | 22.7 | 24.7 |
| Travel and leisure | 1.6 | 1.6 |
| Software and computer services | 15.9 | 18.4 |
| Construction | 1.1 | 1.4 |
| Media | 13.0 | 10.7 |
| Personal goods | 3.8 | 0.0 |
| Companies preparing to trade | 9.2 | 4.2 |
| Leisure Goods | 2.7 | 4.1 |
| General Industrials | 4.1 | 3.1 |
| Type | % by cost | % by value |
|---|---|---|
| Unlisted ordinary shares | 32.3 | 23.7 |
| Unlisted loan stock and | 45.6 | 53.9 |
| preference shares | ||
| Cash/liquidity | 22.1 | 22.4 |
Save for (i) a realisation of Entanet Holdings Limited for net cash of £6.12 million, (ii) loan repayments totalling £298,000 from TPSFF Holdings Limited (formerly The Plastic Surgeon Holdings Limited) and (iii) a net investment of £78,000 into Manufacturing Services Investments Limited (trading as Wetsuit Outlet Limited), there has been no material change to the valuations used to prepare the above analysis (30 June 2017) being the date on which those unaudited valuations were undertaken.
MIG has produced annual statutory accounts for the three financial years ended 31 December 2014, 2015 and 2016, and the half-year reports for the six month periods ended 30 June 2016 and 2017. The auditors, BDO LLP, in respect of the financial years ended 31 December 2014, 2015 and 2016 have reported on the annual statutory accounts without qualification and without statements under sections 495 to 497A of CA 2006.
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-year report for the six month period ended 30 June 2016 and 2017, 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 | 2014 Annual Report |
2015 Annual Report |
2016 Annual Report |
2016 Half Year Report |
2017 Half Year Report |
|---|---|---|---|---|---|
| Balance Sheet | Page 45 | Page 40 | Page 38 | Page 14 | Page 14 |
| Income Statement (or equivalent) |
Page 44 | Page 39 | Page 37 Pages 12 to 13 |
Pages 12 to 13 |
|
| Statement showing all changes in equity (or equivalent note) |
Page 58 | Pages 41 to 42 |
Pages 39 to 40 |
Pages 15 to 16 |
Pages 15 to 16 |
| Cash Flow Statement |
Page 47 | Page 43 | Page 41 | Page 17 | Page 17 |
| Accounting Policies and Notes |
Pages 48 to 67 |
Pages 44 to 62 |
Pages 42 to 58 |
Pages 18 to 23 |
Pages 18 to 23 |
| Auditor's Report | Pages 41 to 43 |
Pages 36 to 38 |
Pages 34 to 36 |
N/A | 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 | 2014 Annual Report |
2015 Annual Report |
2016 Annual Report |
2016 Half Year Report |
2017 Half Year Report |
|---|---|---|---|---|---|
| Objective | Page 16 | Page 16 | Page 14 | Index Page | Index Page |
| Performance Summary |
Page 1 | Page 1 | Page 1 | Page 1 | Page 1 |
| Results & Dividend | Page 2 | Page 2 | Page 2 | Page 2 | Page 2 |
| Investment Policy | Page 23 | Page 20 | Page 18 | Page 5 | Page 4 |
| Chairman's Statement |
Pages 2 to 3 Pages 2 to 4 Pages 2 to 3 Pages 2 to 4 Pages 2 to 3 | ||||
| Manager's Review | Pages 4 to 8 Pages 5 to 7 Pages 4 to 5 Pages 6 to 7 Pages 5 to 7 | ||||
| Portfolio Summary | Pages 13 to 15 |
Pages 12 to 15 |
Pages 10 to 13 |
Pages 8 to 10 Pages 8 to 10 | |
| Valuation Policy | Page 48 | Pages 50 to 51 |
Page 47 | Page 20 | Page 21 |
Certain financial information of MIG is also set out below:
| Year ended 31 December 2014 (audited) |
Year ended 31 December 2015 (audited) |
Year ended 31 December 2016 (audited) |
Six month period ended 30 June 2016 (unaudited) |
Six month period ended 30 June 2017 (unaudited) |
|
|---|---|---|---|---|---|
| Investment income | £3,624,232 | £2,820,521 | £2,650,934 | £1,343,945 | £1,691,814 |
| Profit/(loss) on ordinary activities before taxation |
£10,942,064 | £6,847,925 | £1,198,543 | £222,620 | £3,922,387 |
| Earnings per MIG Share |
18.09p | 9.14p | 1.44p | 0.21p | 5.05p |
| Dividends paid per MIG Share |
20.25p | 10.00p | 15.50p | 6.00p | 6.00p |
| Total assets | £60,726,478 | £74,372,068 | £63,398,400 | £68,850,540 | £62,760,416 |
| NAV per MIG Share | 99.44p | 97.54p | 83.53p | 90.80p | 82.58p |
As at 30 June 2017, the date to which the most recent unaudited half-year financial statements on MIG were published, MIG had unaudited net assets of £62.4 million.
2.4 As at 31 March 2017, the date to which the last audited annual financial statements for MIG 2 have been published, the issued share capital of MIG 2 was 35,672,387 MIG 2 shares (all fully paid-up).
2.5 The issued share capital history of MIG 2 since 31 March 2014 is as follows:
That, in substitution for existing authorities:
(a) Authority to allot shares
the MIG 2 Directors be and hereby are generally and unconditionally authorised in accordance with section 551 of the CA 2006, to exercise all the powers of MIG 2 to allot MIG 2 Shares and to grant rights to subscribe for, or to convert any security into, MIG 2 Shares (Rights) up to an aggregate nominal value of £230,000, provided that this authority shall (unless renewed, revoked or varied by MIG 2 in general meeting) expire on the conclusion of the annual general meeting of MIG 2 to be held in 2018 (save that MIG 2 shall be entitled to make offers or agreements before the expiry of such authority which would or might require shares to be allotted or Rights to be granted after such expiry and the MIG 2 Directors shall be entitled to allot shares or grant Rights pursuant to any such offers or agreements as if the authority had not expired); and
(b) Disapplication of pre-emption rights
the directors be and hereby are empowered pursuant to sections 570 and 573 of CA 2006 to allot equity securities (as defined in section 560 of CA 2006) for cash, pursuant to the authority conferred by paragraph (i) of this resolution as if section 561(1) of CA 2006 did not apply to any such allotment, provided that this authority shall be limited to the allotment of equity securities:
where the proceeds may be used, in whole or in part, to purchase shares in the capital of MIG 2, such authority to (unless renewed, revoked or varied by MIG 2 in general meeting) expire on the conclusion of the annual general meeting of MIG 2 to be held in 2018 (save that MIG 2 shall be entitled to make offers or agreements before the expiry of such authority which would or might require equity securities to be allotted after such expiry and the shall be entitled to allot equity securities in pursuance of such offers or agreements as if the authority conferred by this resolution had not expired).
2.8 There are no other shares or loan capital in MIG 2 in issue or under option or agreed conditionally or unconditionally to be put under option nor does MIG hold shares in treasury.
2.9 Following the issue of MIG 2 Shares pursuant to the MIG 2 Offer (assuming the maximum 23 million MIG 2 Shares are allotted) the issued share capital of MIG 2 is expected to be as follows:
| Issued | ||||
|---|---|---|---|---|
| Number £ |
||||
| MIG 2 Shares | 35,652,431 | 356,524.31 |
| MIG 2 Shares | % of Issued MIG 2 Share capital |
|
|---|---|---|
| Nigel Melville | 52,302 | 0.15% |
| Ian Blackburn | - - |
|
| Sally Duckworth | - - |
|
| Adam Kingdon | 5,709 | 0.02% |
| Ken Vere Nicoll | 54,705 | 0.15% |
National Insurance Contributions. Aggregate emoluments for the current financial year are expected to be £99,164 (plus, if applicable, VAT and employers National Insurance Contributions).
AIM or other quoted investment will be valued at the bid price of its shares as derived from the Daily Official List of the London Stock Exchange, in accordance with general accepted accounting practice. MIG 2's net asset value will be calculated quarterly and published on an appropriate regulatory information service.
If, at any time, MIG 2's VCT status is lost, dealing in its shares and valuation of MIG 2's net asset value will normally be suspended, which will be communicated to shareholders on an appropriate regulatory information service until such time as proposals to continue as a VCT or to be wound up have been further announced. The MIG 2 Directors do not anticipate any other circumstance under which valuations may be suspended.
4.4 MIG 2 expects to co-invest with the other VCT funds advised by Mobeus, participating in equity investments up to £5 million in aggregate, as long as the business has not received funds from any state-aided risk capital in the 12 months prior to the date of investment.
Where more than one of the funds advised by Mobeus wishes to participate in an investment opportunity, allocations will generally be made in proportion to the latest announced net asset value of each fund, adjusted for subsequent buybacks and dividends paid, at the date each investment proposal is forwarded to each Board. When one of the funds advised by Mobeus 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 2 may receive a greater or lesser allocation than would otherwise be the case under the normal coinvestment policy
When MIG 2 has insufficient funds available to satisfy its allocation, the balance shall be offered to one or more of the funds advised by Mobeus who have funds available for new investments pro rata as between themselves.
Any variation from this co-investment policy, insofar as it affects MIG 2 or where MIG 2 makes any investment not at the same time and on the same terms as that made by other funds advised by Mobeus, may only be made with the prior approval of the MIG 2 Directors.
Save for the above, there are no material potential conflicts of interest which Mobeus may have as between its duty to MIG 2 and duties owed by them to third parties and their interests.
making recommendations to the MIG 2 Directors in relation to the appointment of the external auditor;
reviewing and monitoring the external auditor's independence;
The Nomination and Remuneration Committees are merging to become one Nomination and Remuneration Committee on 14 September 2017. The chairman of the committee will be Ian Blackburn.
4.11 The Financial Conduct 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.
The MIG 2 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 2.
The Financial Reporting Council has confirmed that in complying with the AIC Code, MIG 2 meets its obligations in relation to the UK Corporate Governance Code and the Listing Rules. The MIG 2 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 March 2017 and as at the date of this document, MIG 2 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 2 does not specifically comply, of which the AIC Code provides dispensation. The areas and reasons for non-compliance are as follows:
MIG 2 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 2 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 2 has an obligation or entitlement which is material to MIG 2 as at the date of the document.
5.1 An investment management agreement dated 10 September 2010 (as amended and restated on 15 September 2016) between MIG 2 (1) and Mobeus (2), pursuant to which Mobeus provides certain advisory investment management and administrative services to MIG 2 for a fee payable quarterly in advance of an amount equal to 2% per annum of net assets (exclusive of VAT, if any) plus an annual fixed fee of £104,432 (inclusive of VAT, if any) subject to increase in the Retail Price Index. In 2013, Mobeus agreed to waive such further increases until otherwise agreed with the MIG 2 Board. If such annual increases were reinstated, the base annual fee to which such percentage increases would apply would be £113,589 (inclusive of VAT).
The above fees are subject to an annual expenses cap of over and above 3.6% of the net assets of MIG 2 by way of a reduction of fees due to Mobeus in the following accounting period(s). For these purposes annual expenses include the normal running costs of MIG 2 (excluding irrecoverable VAT and exceptional items but including annual trail commission). The amount of the excess is borne in full by Mobeus.
Mobeus may (subject to due disclosure to the MIG 2 Board) retain for its own benefit, arrangement or syndication fees, placing commissions, monitoring fees, directors' fees and/or similar sums which it receives in connection with any investment made by MIG 2, provided that the maximum amount of such fees and/or similar sums (other than directors' fees and monitoring fees) shall not exceed 2.5% of the funds provided for each such investment.
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 2 where Mobeus ceases to be authorised by the FCA or if there is a change in control of Mobeus.
The agreement contains provisions indemnifying Mobeus against any liability not due to its default, gross negligence, fraud or breach of FSMA.
5.2 A performance incentive agreement dated 20 September 2005 between MIG 2 (1) and Mobeus (2), pursuant to which Mobeus is entitled to receive performance related incentive fees subject to achieving certain defined targets.
Mobeus is entitled to receive a performance incentive fee calculated as an amount equivalent to 20% of the excess of a "Target Rate" comprising an annual dividend target of 7.55p (indexed each year for RPI) per MIG 2 Share as at March 2017, and a requirement that any cumulative shortfalls below the annual dividend target from previous years must be made up in the relevant year in question. Any excess is not carried forward, whether a fee is payable for that year or not.
Payment of a fee is also conditional upon the average NAV per MIG 2 Share for the relevant year equaling or exceeding the average "Base NAV" per MIG 2 share for that year. Base NAV commenced at 100p per MIG 2 Share when the C ordinary shares ("C Shares"), which are now constituted within the MIG 2 Shares class, were first issued in 2005, with this further being adjusted for subsequent MIG 2 Shares issued and bought back.
Any performance fee will be payable annually. It will be reduced to the proportion which the number of "Incentive Fee Shares" represent of the total number of MIG 2 Shares in issue at any calculation date. Incentive Fee Shares are the only MIG 2 Shares upon which an incentive fee is payable. These are the number of C Shares in issue just before the merger of the two former share classes on 10 September 2010 (the merged share class then subsequently became the current class of MIG 2 Shares) plus MIG 2 Shares issued under new fundraisings since the merger. This total is then reduced by an estimated proportion of the MIG Shares bought back by MIG 2 since the merger, that are attributable to the Incentive Fee Shares.
For the year ending 31 March 2018, the annual dividend hurdle is currently 7.55p per MIG 2 Share (subject to any RPI increase for the current year) and as at 30 June 2017 the Base NAV is 106.14p, compared to a current average NAV per MIG 2 Share of 109.31p for the year.
The agreement will terminate automatically if MIG 2 enters into liquidation or if a receiver or administrator is appointed or if a resolution is passed that MIG 2 is voluntarily wound up in accordance with the MIG 2 Articles.
The objective of MIG 2 is to provide investors with a regular income stream, arising both from the income generated by the companies selected for the portfolio and from realising any growth in capital, while continuing at all times to qualify as a VCT.
MIG 2's policy is to invest primarily in a diverse portfolio of UK unquoted companies.
Investments are made selectively across a number of sectors, principally in established companies. Investments are usually structured as part loan stock and part equity in order to receive regular income stream and to generate capital gains from realisations.
There are a number of conditions within the VCT legislation which need to be met by MIG 2 and which may change from time to time. MIG 2 will seek to make investments in accordance with the requirements of prevailing VCT legislation.
Asset allocation and risk diversification policies, including the size and type of MIG 2 makes, are determined in part by the requirements of prevailing VCT legislation. No single investment may represent more than 15% (by VCT tax value) of MIG 2's total investments at the date of investment.
MIG 2's cash and liquid funds are held in a portfolio of readily realisable interest bearing investments, deposit and current accounts, of varying maturities, subject to the overriding criterion that the risk of loss of capital be minimised.
MIG 2's articles of association permit borrowings of amounts up to 10% of the adjusted capital and reserves (as defined therein). However, MIG 2 has never borrowed and the MIG 2 Board would only consider doing so in exceptional circumstances.
Related party transactions for MIG 2 undertaken in the financial years ended 31 March 2015, 2016 and 2017 are set out in the respective audited report and accounts for those year ends, which are incorporated by reference: in Note 3 and on page 47 for the year ended 31 March 2015, in Note 4 on pages 48 and 49 for the year ended 31 March 2016 and Note 4 on pages 45 and 46 for the year ended 31 March 2017. Apart from the payment of the MIG 2 Directors' remuneration on the basis set out in paragraph 3.4 above and the investment management, administration and performance incentive fees as set out in paragraphs 5.1 and 5.2 above, there have been no other related party payments in the current year to the date of this document. Save for the entering into of the offer agreement as set out in paragraph 5.4 above, MIG 2 has not entered into any related party transactions within the meaning of IFRS or UK GAAP since 31 March 2017.
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:
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 2 Directors as to the position of the Companies' Shareholders who hold MIG 2 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.
the MIG 2 Offer plus annual trail commission and any amounts due from MIG 2 to the investor in connection with the facilitation of initial financial adviser charges. Assuming that the MIG 2 Offer is fully subscribed and ignoring annual trail commission, the maximum expenses and the minimum net proceeds will be £487,500 and £14,512,500 respectively. The issue premium on a MIG 2 Share issued pursuant to the MIG 2 Offer will be the difference between the issue price of that share and the nominal value thereof of 1p.
All of MIG 2's investments as at today's date, which are analysed below, are in the UK and are valued in sterling.
| Sector | % by cost | % by value |
|---|---|---|
| Support Services | 26.4 | 31.9 |
| General Retailers | 21.1 | 24.0 |
| Travel and leisure | 1.6 | 1.8 |
| Software and computer services | 15.3 | 18.1 |
| Construction | 1.0 | 1.3 |
| Media | 12.2 | 10.2 |
| Leisure goods | 2.6 | 4.0 |
| Personal goods | 3.8 | 0.0 |
| Companies preparing to trade | 8.5 | 3.9 |
| Healthcare equipment and | 2.9 | 2.0 |
| services | ||
| General Industrials | 3.7 | 2.7 |
| Electronic and electrical | 0.9 | 0.0 |
| equipment |
| Type | % by cost | % by value |
|---|---|---|
| Unlisted ordinary shares | 29.5 | 21.3 |
| Unlisted loan stock and | 41.9 | 49.9 |
| preference shares | ||
| Listed ordinary shares | 0.7 | 0.0 |
| Cash/liquidity | 27.9 | 28.8 |
Save for (i) a realisation of Entanet Holdings Limited for net cash of £3.26 million, (ii) loan repayments totalling £157,000 from TPSFF Holdings Limited (formerly The Plastic Surgeon Holdings Limited) and (iii) a net investment of £109,000 into Manufacturing Services Investment Limited (trading as Wetsuit Outlet Limited), there has been no material change to the valuations used to prepare the above analysis (30 June 2017) being the date on which those unaudited valuations were undertaken.
MIG 2 has produced annual statutory accounts for the financial years ended 31 March 2015, 2016 and 2017. The auditors, BDO LLP, in respect of the financial years ended 31 March 2015, 2016 and 2017 have reported on the annual statutory accounts without qualification and without statements under sections 495 to 497A of CA 2006.
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 2's financial condition, changes in financial condition and results of operation for each relevant financial year/period 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 overleaf 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 | 2015 Annual Report | 2016 Annual Report | 2017 Annual Report |
|---|---|---|---|
| Balance Sheet | Page 41 | Page 43 | Page 40 |
| Income Statement (or |
Page 40 | Page 42 | Page 39 |
| equivalent) | |||
| Statement showing all |
Page 55 | Pages 44 - 45 | Pages 41 to 42 |
| changes in equity (or |
|||
| equivalent note) | |||
| Cash Flow Statement | Page 43 | Page 46 | Page 43 |
| Accounting Policies and | Pages 44 to 63 | Pages 47 to 66 | Pages 44 to 62 |
| Notes | |||
| Auditor's Report | Pages 37 to 39 | Pages 39 to 41 | Pages 36 to 38 |
This information has been prepared in a form consistent with that which will be adopted in MIG 2'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 | 2015 Annual Report | 2016 Annual Report | 2017 Annual Report |
|---|---|---|---|
| Objective | Inside front cover | Inside front cover | Inside front cover |
| Performance Summary | Pages 5 to 7 | Pages 7 to 9 | Pages 6 to 9 |
| Results & Dividend | Page 2 | Page 2 | Page 2 |
| Investment Policy | Page 19 | Page 21 | Page 20 |
| Chairman's Statement | Pages 2 to 3 | Pages 2 to 4 | Pages 2 to 4 |
| Manager's Review | Pages 8 to 11 | Pages 10 to 13 | Pages 10 to 12 |
| Portfolio Summary | Pages 16 to 18 | Pages 18 to 20 | Pages 17 to 19 |
| Valuation Policy | Pages 44 to 45 | Pages 53 to 54 | Page 50 |
Certain financial information of MIG 2 is also set out below:
| Year ended 31 March 2015 (audited) |
Year ended 31 March 2016 (audited) |
Year ended 31 March 2017 (audited) |
|
|---|---|---|---|
| Investment income | £1,901,055 | £1,736,490 | £1,679,033 |
| Profit/(loss) on ordinary activities before taxation |
£4,304,749 | £3,269,506 | £726,709 |
| Earnings per MIG 2 Share |
13.90p | 9.00p | 1.94p |
| Dividends paid per MIG 2 Share |
19.00p | 5.00p | 15.00p |
| Total assets | £42,267,123 | £43,301,902 | £38,205,085 |
| NAV per MIG 2 Share | 115.45p | 119.61p | 106.70p |
As at 31 March 2017, the date to which the most recent audited year financial statements on MIG 2 were published, MIG 2 had audited net assets of £38.1 million. As at 30 June 2017, MIG 2 had unaudited net assets of £39.3 million.
2.4 On 22 February 2013, MIG 4 passed a resolution approving, subject to the sanction of the Court, the cancellation of the amount standing to the credit of the share premium account and capital redemption reserve (such cancellation being subsequently confirmed by the Court on 12 March 2014 and registered at Companies House on 12 March 2014).
2.5 As at 30 June 2017, the date to which the last unaudited half-year financial statements for MIG 4 have been published, the issued share capital of MIG 4 was 49,749,171 MIG 4 Shares (all fully paid-up).
in each case where the proceeds may be used, in whole or in part, to purchase MIG 4 Shares in the market and provided that such authority shall (unless renewed, varied or revoked by MIG 4 in general meeting) expire, on the date falling fifteen months after the passing of this resolution or, if earlier on the conclusion of the annual general meeting of MIG 4 to be held in 2018, except that MIG 4 may, before the expiry of this authority make offers or agreements which would or might require equity securities to be allotted after such expiry and the MIG 4 Directors may allot equity securities in pursuance of such offers or agreements as if the authority conferred by this resolution had not expired.
That, in addition to existing authorities:
(a) Authority to allot shares
the MIG 4 Directors be and hereby are generally and unconditionally authorised in accordance with section 551 of CA 2006, to exercise all the powers of MIG 4 to allot MIG 4 Shares and to grant rights to subscribe for, or to convert any security into, MIG 4 Shares (Rights) up to an aggregate nominal value of £200,000, provided that this authority shall (unless renewed, revoked or varied by MIG 4 in general meeting) expire on the date falling fifteen months after the passing of this resolution (save that MIG 4 shall be entitled to make offers or agreements before the expiry of such authority which would or might require shares to be allotted or Rights to be granted after such expiry and the MIG 4 Directors shall be entitled to allot shares or grant Rights pursuant to any such offers or agreements as if the authority had not expired); and
(b) Disapplication of pre-emption rights
the MIG 4 Directors be and hereby are empowered pursuant to sections 570 and 573 of CA 2006 to allot equity securities (as defined in section 560 of CA 2006) for cash, pursuant to the authority conferred by paragraph (a) of this resolution as if section 561(1) of CA 2006 did not apply to any such allotment, provided that this authority shall be limited to the allotment of equity securities with an aggregate nominal value of up to but not exceeding £200,000 in connection with offer(s) for subscription (where the proceeds may be used, in whole or in part, to purchase MIG 4 Shares), such authority to (unless renewed, revoked or varied by MIG 4 in general meeting) expire on the date falling fifteen months after the passing of this resolution (save that MIG 4 shall be entitled to make offers or agreements before the expiry of such authority which would or might require equity securities to be allotted after such expiry and the shall be entitled to allot equity securities in pursuance of such offers or agreements as if the authority conferred by this resolution had not expired).
2.10 There are no other shares or loan capital in MIG 4 in issue or under option or agreed conditionally or unconditionally to be put under option nor does MIG 4 hold shares in treasury.
2.11 Following the issue of MIG 4 Shares pursuant to the MIG 4 Offer (assuming the maximum 20 million MIG 4 Shares are allotted) the issued share capital of MIG 4 is expected to be as follows:
| Issued | ||||
|---|---|---|---|---|
| Number £ |
||||
| MIG 4 Shares | 49,739,171 | 497,391.71 |
| MIG 4 Shares | % of issued MIG 4 Share | |
|---|---|---|
| capital | ||
| Christopher Moore | 41,359 | 0.08% |
| Andrew Robson | 14,820 | 0.03% |
| Helen Sinclair | 14,862 | 0.03% |
the years ended 31 December 2014, 2015 and 2016 or to the date of this document in the current financial year or and remains in any respect outstanding or unperformed.
4.3 Mobeus is responsible for the determination and calculation of MIG 4's net asset value, which is prepared quarterly for approval by the MIG 4 Directors. All unquoted investments are valued in accordance with IPEVC Valuation Guidelines under which investments are held at fair value. Any AIM or other quoted investment will be valued at the bid price of its shares as derived from the Daily Official List of the London Stock Exchange, in accordance with general accepted accounting practice. MIG 4's net asset value will be calculated quarterly and published on an appropriate regulatory information service.
If, at any time, MIG 4's VCT status is lost, dealing in its shares and valuation of MIG 4's net asset value will normally be suspended, which will be communicated to shareholders on an appropriate regulatory information service until such time as proposals to continue as a VCT or to be wound up have been further announced. The MIG 4 Directors do not anticipate any other circumstance under which valuations may be suspended.
4.4 MIG 4 expects to co-invest with the other VCT funds advised by Mobeus, participating in equity investments up to £5 million in aggregate, as long as the business has not received funds from any state-aided risk capital in the 12 months prior to the date of investment.
Where more than one of the funds advised by Mobeus wishes to participate in an investment opportunity, allocations will generally be made in proportion to the latest announced net asset value, adjusted for subsequent buybacks and dividends paid, of each fund at the date each investment proposal is forwarded to each Board. When one of the funds advised by Mobeus 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 coinvestment policy.
When MIG 4 has insufficient funds available to satisfy its allocation, the balance shall be offered to one or more of the funds advised by Mobeus 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 advised by Mobeus, may only be made with the prior approval of the MIG 4 Directors who are independent of Mobeus.
Save for the above, there are no material potential conflicts of interest which Mobeus may have as between its duty to MIG 4 and duties owed by them to third parties and their interests.
monitoring the integrity of the financial statements of MIG 4;
reviewing MIG 4's internal control and risk management systems;
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 December 2016 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 (as amended and restated on 10 November 2016) between MIG 4 (1) and Mobeus (2) pursuant to which Mobeus provides certain advisory investment management and administrative services to MIG 4.
Mobeus is entitled to an annual management fee of an amount equal to 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 advance (exclusive of VAT, if any). In 2013, Mobeus agreed to waive such further uplift until otherwise agreed with the MIG 4 Board. If such annual increases were reinstated, the base annual fee to which such percentage increases would apply would be £115,440 (exclusive of VAT).
The above fees are subject to an annual expenses cap of over and above 3.4% of the net assets of MIG 4 by way of a reduction of fees due to Mobeus in the following accounting period(s). For these purposes annual expenses include the normal running costs of MIG 4 (excluding irrecoverable VAT and exceptional items but including annual trail commission). The amount of the excess is borne in full by Mobeus.
Mobeus may (subject to due disclosure to the MIG 4 Board) retain for its own benefit, arrangement or syndication fees, placing commissions, monitoring fees, directors' fees and/or similar sums which it receives in connection with any investment made by MIG 4, provided that the maximum amount of such fees and/or similar sums (other than directors' fees and monitoring fees) shall not exceed 2.5% of the funds provided for each such investment.
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 where Mobeus ceases to be authorised by the FCA or if there is a change in control of Mobeus.
The agreement contains provisions indemnifying Mobeus 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), Mobeus (2) and Matrix Group Limited (in liquidation) (3), pursuant to which Mobeus is entitled to receive performance related incentive fees subject to achieving certain defined targets.
Mobeus is entitled to a receive a performance incentive fee of an amount equal to 20% of excess annual dividends paid in an accounting period to the holders of MIG 4 Shares in excess of an annual dividend target return of 8.52p (subject to annual RPI increases) per MIG 4 Share, subject to MIG 4 maintaining an average NAV per MIG 4 Share above or equal to an average "Base NAV" per MIG 4 Share. As at 30 June 2017 the Base NAV is currently 118.64p and the average NAV is currently 106.26p per MIG 4 Share.
The performance incentive fee is payable annually and any cumulative shortfalls against the annual dividend target return from previous years have to be made up in the year in question before any entitlement arises. The current cumulative dividend shortfall (ignoring the RPI increase for the current year) is 21.62p per MIG 4 Share.
The agreement will terminate automatically if MIG 4 enters into liquidation or if a receiver or administrator is appointed or if a resolution is passed that MIG 4 is voluntarily wound up in accordance with the MIG 4 Articles.
applications accepted under the MIG 4 Offer, less (i) an amount equal to the Early Investment Incentive discount in respect of such applications and less (ii) any 'execution only' initial commission offered by Mobeus in respect of such applications, but waived by the 'execution only' intermediary concerned, and less (iii) any additional amounts by which Mobeus has agreed to reduce its fees further (in whole or part) in respect of such applications (such amount being inclusive of VAT), out of which will be paid all costs, charges and expenses of or incidental to the Offer (other than trail commission and any amounts due from the Companies to the investor in connection with the facilitation of initial financial adviser charges).
5.5 A side letter dated 5 September 2017 from Mobeus to MIG 4 pursuant to which Mobeus has agreed, in the event that MIG 4 utilises its over-allotment facility, to waive its management fees payable for the 12 month period commencing on the close of the MIG 4 Offer under the agreement referred to at paragraph 5.1 above by an amount equal to 1% of any gross funds raised by MIG 4 under its over-allotment facility..
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, while continuing at all times to qualify as a VCT.
MIG 4's policy is to invest primarily in a diverse portfolio of UK unquoted companies
Investments are made selectively across a number of sectors, principally in established companies. Investments are usually structured as part loan stock and part equity in order to receive regular income stream and to generate capital gains from realisations.
There are a number of conditions within the VCT legislation which need to be met by MIG 4 and which may change from time to time. MIG 4 will seek to make investments in accordance with the requirements of prevailing VCT legislation.
Asset allocation and risk diversification policies, including the size and type of investments MIG 4 makes, are determined in part by the requirements of prevailing VCT legislation. No single investment may represent more than 15% (by VCT tax value) of MIG 4's total investments at the date of investment.
MIG 4's cash and liquid funds are held in a portfolio of readily realisable interest bearing investments, deposit and current accounts, of varying maturities, subject to the overriding criterion that the risk of loss of capital be minimised.
MIG 4's articles of association permit borrowings of amounts up to 10% of the adjusted capital and reserves (as defined therein). However, the Company has never borrowed and the MIG 4 Board would only consider doing so in exceptional circumstances.
Listing Rules. MIG 4 intends to direct its affairs in respect of each of its accounting periods so as to qualify as a venture capital trust and accordingly:
Related party transactions for MIG 4 undertaken in the financial years ended 31 December 2014, 2015 and 2016 are set out in the respective audited report and accounts for those year ends, which, together with the unaudited half-year reports for the six month periods ended 30 June 2017, are incorporated by reference: in Note 3 on page 48 for the year ended 31 December 2014, Note 4 pages 55 and 56 for the year ended 31 December 2015, in Note 4 on page 46 for the year ended 31 December 2016 and in paragraph (d) of the Statement of the Directors' Responsibilities on page 9 of the half-year report to 30 June 2017. Apart from the payment of the MIG 4 Directors' remuneration on the basis set out in paragraph 3.4 above, investment management, administration and performance incentive fees as set out in paragraphs 5.1 and 5.2 above, there have been no other related party payments in the current year to the date of this document. Save for the entering into of the offer agreement as set out in paragraph 5.4 above, MIG 4 has not entered into any related party transactions within the meaning of IFRS or UK GAAP since 30 June 2017.
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:
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 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.
10.8 MIG 4 and its Shareholders are subject to the provisions of the City Code on Takeovers and Mergers and CA 2006, which require shares to be acquired/transferred in certain circumstances.
10.9 The typical investor for whom investment in MIG 4 is designed is a retail investor who is a UK taxpayer, aged 18 or over and who already has a portfolio of VCT and non-VCT investments (such as unit trusts, OEICs, investment trusts and direct shareholdings in listed and non-listed companies). The investor should be comfortable with the risk factors set out at the beginning of this document and be willing to retain the investment for at least five years.
All of MIG 4's investments as at today's date, which are analysed below, are in the UK and are valued in sterling.
| Sector | % by cost | % by value |
|---|---|---|
| General Retailers | 23.1 | 25.7 |
| Support Services | 23.1 | 27.0 |
| Companies preparing to trade | 8.9 | 4.0 |
| General Industrials | 4.2 | 3.3 |
| Healthcare equipment services | 3.9 | 3.3 |
| Leisure Goods | 2.6 | 4.0 |
| Media | 12.7 | 10.1 |
| Software and computer services | 17.3 | 19.5 |
| Construction | 1.1 | 1.3 |
| Personal goods | 1.4 | 0.0 |
| Travel and Leisure | 1.7 | 1.8 |
| Type | % by cost | % by value |
|---|---|---|
| Unlisted ordinary shares | 30.2 | 21.5 |
| Unlisted loan stock and | 43.1 | 50.7 |
| preference shares | ||
| Listed ordinary shares | 0.4 | 0.7 |
| Cash/liquidity | 26.3 | 27.1 |
Save for (i) a realisation of Entanet Holdings Limited for net cash of £4.89 million, (ii) loan repayments totalling £184,000 from TPSFF Holdings Limited (formerly The Plastic Surgeon Holdings Limited) and (iii) a net investment of £316,000 into Manufacturing Services Investment Limited (trading as Wetsuit Outlet Limited), there has been no material change to the valuations used to prepare the above analysis (30 June 2017) being the date on which those unaudited valuations were undertaken).
MIG 4 has produced annual statutory accounts for the financial years ended 31 December 2014, 2015 and 2016 and the half-year reports for the six month periods ended 30 June 2016 and 2017. The auditors BDO LLP, in respect of the financial years ended 31 31 December 2014, 2015 and 2016 have reported on the annual statutory accounts without qualification and without statements under sections 495 to 497A of CA 2006.
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/period and, together with the half-year report for the six month period ended 30 June 2016 and 2017 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 | 2014 Annual Report |
2015 Annual Report |
2016 Annual Report |
2016 Half Year Report |
2017 Half Year Report |
|---|---|---|---|---|---|
| Balance Sheet | Page 42 | Page 49 | Page 41 | Page 12 | Page 12 |
| Income Statement (or equivalent) |
Page 41 | Page 48 | Page 40 Pages 10 to 11 |
Pages 10 to 11 |
|
| Statement showing all changes in equity (or equivalent note) |
Page 57 Pages 50 to 52 |
Pages 42 to 43 |
Pages 13 to 14 |
Pages 13 to 14 |
|
| Cash Flow Statement |
Page 44 | Page 53 | Page 44 | Page 15 | Page 15 |
| Accounting Policies and Notes |
Pages 45 to 65 |
Pages 54 to 72 |
Pages 45 to 61 |
Pages 16 to 21 |
Pages 16 to 21 |
| Auditor's Report | Pages 38 to 40 |
Page 45 to 47 |
Pages 37 to 39 |
N/A | 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 | 2014 Annual |
2015 Annual |
2016 Annual |
2016 Half Year |
2017 Half Year |
|---|---|---|---|---|---|
| Report | Report | Report | Report | Report | |
| Objective | Inside front | Inside front | Inside front | Inside front | Inside front |
| cover | cover | cover | cover | cover | |
| Performance Summary |
Pages 5 to 7 Pages 6 to 8 |
Pages 5 to 7 |
Page 1 | Page 1 | |
| Results & Dividend |
Page 2 | Page 2 | Page 2 | Page 1 | Page 1 |
| Investment Policy |
Page 20 | Page 24 | Page 18 | Page 4 | Page 4 |
| Chairman's Statement |
Pages 2 to 3 Pages 2 to 4 |
Pages 2 to 3 |
Pages 2 to 4 |
Pages 2 to 3 |
|
| Manager's Review |
Pages 8 to 11 |
Pages 9 to 13 |
Pages 8 to 9 |
Pages 5 to 6 |
Pages 5 to 6 |
| Portfolio | Pages 16 to | Pages 18 to | Pages 14 to | Pages 7 to | Pages 7 to |
| Summary | 19 | 23 | 17 | 8 | 8 |
| Valuation Policy |
Page 45 | Page 60 | Page 50 | Page 19 | Page 19 |
Certain financial information of MIG 4 is also set out below:
| Description | Year ended 31 December 2014 (audited) |
Year ended 31 December 2015 (audited) |
Year ended 31 December 2016 (audited) |
|---|---|---|---|
| Investment income |
£2,415,923 | £2,202,056 | £2,019,579 |
| Profit/loss on ordinary activities before taxation |
£6,970,976 | £4,981,606 | £433,578 |
| Earnings per MIG 4 Share |
17.12p | 10.41p | 0.83p |
| Dividends per MIG 4 Share |
18.00p | 10.00p | 11.00p |
| Total assets | £50,558,770 | £57,284,462 | £52,960,329 |
| NAV per MIG 4 Share |
118.21p | 117.89p | 107.57p |
| Description | Six month period ended 30 June 2016 (unaudited) |
Six month period ended 30 June 2017 (unaudited) |
|---|---|---|
| Investment | £1,054,766 | £1,244,177 |
| income | ||
| Profit/loss on | £141,811 | £2,934,528 |
| ordinary | ||
| activities | ||
| before | ||
| taxation | ||
| Earnings per | 0.28p | 5.80p |
| MIG 4 Share | ||
| Dividends per | 9.00p | 7.00p |
| MIG 4 Share | ||
| Total assets | £53,582,985 | £53,059,380 |
| NAV per MIG | 109.03p | 106.18p |
| 4 Share |
As at 30 June 2017, the date to which the most recent unaudited half-year financial statements on MIG 4 were published, MIG 4 had unaudited net assets of £52.8 million.
During the financial year ended 30 September 2014, I&G issued 7,989,659 I&G Shares and bought back 600,938 I&G Shares. As at 30 September 2014, the issued share capital of I&G comprised 60,476,940 I&G Shares, none of which were held in treasury.
During the financial year ended 30 September 2015, I&G issued 10,769,867 I&G Shares and bought back 553,800 I&G Shares. As at 30 September 2015, the issued share capital of I&G comprised 70,693,007 I&G Shares, none of which were held in treasury.
in each case where the proceeds of the allotment may be used in whole or in part to purchase I&G Shares in the market and provided that this authority shall (unless renewed, varied or revoked by I&G in general meeting) expire on the date falling fifteen months after the passing of this resolution, or, if earlier, at the conclusion of the annual general meeting of I&G to be held in 2015, except that I&G may, before the expiry of this authority, make offers or agreements which would or might require equity securities to be allotted after such expiry and the I&G Directors may allot equity securities in pursuance of such offers or agreements as if the authority conferred hereby had not expired.
(i) the aggregate number of I&G Shares which may be purchased shall not exceed 10,779,912 or, if lower, such number of I&G Shares (rounded down to the nearest whole I&G Share) as shall equal 14.99% of the I&G Shares in issue at the date of the passing of this resolution;
(ii) the minimum price which may be paid for an I&G Share is one penny (the nominal amount thereof);
That, in addition to existing authorities:
(a) Authority to allot
the I&G Directors be and hereby are generally and unconditionally authorised in accordance with section 551 of CA 2006, to exercise all the powers of I&G to allot I&G Shares and to grant rights to subscribe for, or to convert any security into, I&G Shares (Rights) up to an aggregate nominal value of £370,000, provided that this authority shall (unless renewed, revoked or varied by I&G in general meeting) expire on the date falling fifteen months after the passing of this resolution (save that I&G shall be entitled to make offers or agreements before the expiry of such authority which would or might require shares to be allotted or Rights to be granted after such expiry and the I&G Directors shall be entitled to allot shares or grant Rights pursuant to any such offers or agreements as if the authority had not expired); and
(b) Disapplication of pre-emption rights
the directors be and hereby are empowered pursuant to sections 570 and 573 of CA 2006 to allot equity securities (as defined in section 560 of CA 2006) for cash, pursuant to the authority conferred by paragraph (a) of this resolution as if section 561(1) of CA 2006 did not apply to any such allotment, provided that this authority shall be limited to the allotment of equity securities with an aggregate nominal value of up to but not exceeding £370,000 in connection with offer(s) for subscription (where the proceeds may be used, in whole or in part, to purchase shares in the capital I&G), such authority to (unless renewed, revoked or varied by I&G in general meeting) expire on the date falling fifteen months after the passing of this resolution (save that I&G shall be entitled to make offers or agreements before the expiry of such authority which would or might require equity securities to be allotted after such expiry and the shall be entitled to allot equity securities in pursuance of such offers or agreements as if the authority conferred by this resolution had not expired).
| Issued | ||
|---|---|---|
| Number | £ | |
| I&G Shares | 112,689,629 | 1,126,896.29 |
2.10 The I&G Shares are/will be in registered form and no temporary documents of title will be issued. I&G is registered with CREST, a paperless settlement system, and those Shareholders who wish to hold their I&G Shares in electronic form may do so.
| I&G Shares | % of issued I&G Share capital |
|
|---|---|---|
| Colin Hook | 75,780 | 0.1% |
| Jonathan Cartwright | 23,693 | 0.03% |
| Helen Sinclair | 20,018 | 0.03% |
3.8 I&G has taken out directors' and officers' liability insurance for the benefit of its directors, which is renewable on an annual basis.
3.9 The I&G 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 as set out on pages 12 to 13.
Daily Official List of the London Stock Exchange, in accordance with general accepted accounting practice. I&G's net asset value will be calculated quarterly and published on an appropriate regulatory information service.
If, at any time, I&G's VCT status is lost, dealing in its shares and valuation of I&G's net asset value will normally be suspended, which will be communicated to shareholders on an appropriate regulatory information service until such time as proposals to continue as a VCT or to be wound up have been further announced. The I&G Directors do not anticipate any other circumstance under which valuations may be suspended.
4.4 I&G expects to co-invest with the other VCT funds advised by Mobeus, participating in equity investments up to £5 million in aggregate, as long as the business has not received funds from any state-aided risk capital in the 12 months prior to the date of investment.
Where more than one of the funds advised by Mobeus wishes to participate in an investment opportunity, allocations will generally be made in proportion to the latest announced net asset value of each fund, adjusted for subsequent buybacks and dividends paid, at the date each investment proposal is forwarded to each Board. When one of the funds advised by Mobeus 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 coinvestment policy.
When I&G has insufficient funds available to satisfy its allocation, the balance shall be offered to one or more of the funds advised by Mobeus 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 advised by Mobeus, may only be made with the prior approval of the I&G Directors who are independent of Mobeus.
Save for the above, there are no material potential conflicts of interest which Mobeus may have as between its duty to I&G and duties owed by them to third parties and their interests.
monitoring the effectiveness of I&G's internal control systems;
reviewing the scope and the results of the audit and ensuring its cost effectiveness; and
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 2016 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 (as amended and restated on 14 September 2016) between I&G (1) and Mobeus (2) pursuant to which Mobeus provides certain advisory investment management and administrative services to I&G.
Mobeus is entitled to an annual management fee of an amount equal to 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 advance (inclusive of VAT, if any).
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 Mobeus in the following accounting period(s). For these purposes annual expenses include the normal running costs of I&G (including irrecoverable VAT but excluding exceptional items, annual trail commission and performance incentive payments). The amount of the excess is borne in full by Mobeus.
Mobeus may (subject to due disclosure to the I&G Board) retain for its own benefit, arrangement or syndication fees, placing commissions, monitoring fees, directors' fees and/or similar sums which it receives in connection with any investment made by I&G, provided that the maximum amount of such fees and/or similar sums (other than directors' fees and monitoring fees) shall not exceed 2.5% of the funds provided for each such investment.
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 where Mobeus ceases to be authorised by the FCA or if there is a change in control of Mobeus.
The agreement contains provisions indemnifying Mobeus 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 Private Equity Partners LLP (3) as varied by a deed of termination and variation between I&G (1) and Matrix Private Equity Partners LLP (2) dated 29 March 2010 pursuant to which I&G granted to each of Mobeus (then Matrix Private Equity Partners LLP) and Foresight Group LLP (the former joint investment adviser of I&G), the right to receive performance incentive payments in connection with the management of the former I&G ordinary shares fund.
Until 30 September 2013, Mobeus was entitled to receive a performance related incentive payment (payable in cash or I&G Shares) based on realised gains from the investment portfolio which it advises. The performance payment represents an amount equal to 20% of any excess (over the investment growth hurdle detailed below) of realised gains over realised losses from these investments during each accounting period provided that in respect of the portfolio:
Foresight Group LLP, in connection with its previous appointment as an investment adviser of I&G, has an ongoing entitlement to performance fees in respect of the portfolio of the original I&G ordinary shares fund (similar to the above but disregarding the terms relating to the merger of the original I&G ordinary shares and I&G S ordinary shares). Following the termination of Foresight Group's appointment, its entitlement reduces proportionally over the ten years following such termination. The agreement remains in force, but only with the former adviser, Foresight Group LLP, from 30 September 2013. The agreement is due to expire on 10 March 2019.
to the relevant financial year end, the resultant figure then being multiplied by (100+A)/100, where A is the number of full 12 month periods (or part thereof) that have passed between 1 October 2013 and the relevant financial year end (the result being that the cumulative increase in inflation is further uplifted to include a 1% above inflation increase per annum in the Target Return).
Both measures of Target Return are applied to the same opening base, being NAV per I&G Share as at 30 September 2013 of 113.90p. The objective of this Target Return is to enable I&G Shareholders to benefit from a cumulative NAV return of at least 6% per annum (5% in the financial year ended 30 September 2014), before any incentive fee is payable. Once a payment has been made, cumulative NAV total return is calculated after deducting past years' incentive fees paid and payable
Under this agreement, any fee payments to Mobeus are subject to an annual cap of an amount equal to 2% of the net assets of I&G as at the immediately preceding year end. This cap will include any fee payable to Foresight Group LLP under the agreement set out in paragraph 5.3, although any such payment to Foresight Group LLP is not capped. Any excess over 2% remains payable to Mobeus in the following year(s), subject again to the 2% annual cap in each subsequent year and after any payment in respect of such subsequent year(s). The incentive fee payable to Mobeus for the year ended 30 September 2016 was £1,096,391. As at 30 June 2017 the estimated incentive fee payable for the year ending 30 September 2017 is currently £607,634.
The investment objective of I&G is to provide investors with an attractive return, by maximising the stream of tax-free dividend distributions from the income and capital gains generated by a diverse and carefully selected portfolio of investments, while continuing at all times to qualify as a VCT.
I&G's investment policy is to invest primarily in a diverse portfolio of UK unquoted companies. Investments are generally structured as part loan and part equity in order to receive regular income and to generate capital gains upon sale.
Investments are made selectively across a number of sectors, principally in established companies.
I&G's cash and liquid resources are held in a range of instruments of varying maturities, subject to the overriding criterion that the risk of loss of capital be minimised.
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 (by VCT value at the time of investment) in a single company or group and must have at least 70% by VCT value of its investments throughout the period in shares or securities comprised in VCT qualifying holdings, of which a minimum overall of 30% by VCT value (70% for funds raised after 6 April 2011) 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% (70% for funds raised after 6 April 2011) of an investment in a specific company in ordinary shares it must have at least 10% by VCT 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 companies in which investments are made must have no more than £15 million of gross assets at the time of investment and £16 million immediately following the investment to be classed as a VCT qualifying holding.
I&G initially holds its funds in a portfolio of 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 achieve the optimum balance between loan stock and equity to provide protection against downside risk alongside the best potential overall returns.
I&G is entitled to invest along side other VCTs advised by Mobeus that have a similar investment policy, normally on a pro rata to net assets basis.
I&G's Articles permit borrowings of amounts up to 10% of the adjusted capital and reserves (as defined therein). However, I&G has never borrowed and the I&G Board has no current plans to undertake any borrowing.
(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 2014, 2015 and 2016 are set out in the respective audited report and accounts for these year ends, which, together with the unaudited half-year report for the six month period ended 31 March 2017, are incorporated by reference: in Note 3 on pages 52 and 53 for the year ended 30 September 2014, in Note 3 on pages 56 and 57 for the year ended 30 September 2015, in Note 4 on pages 48 and 49 for the year ended 30 September 2016 and in paragraph (d) of the responsibility statement on page 9 of the unaudited half-year report to 31 March 2017. Apart from the payment of the I&G Directors' remuneration on the basis set out in paragraph 3.4 above and the investment management, administration and performance incentive fees as set out in paragraphs 5.1 and 5.3 above there have been no other related party payments in the year ended 30 September 2016 or in the current year to the date of this document. Save for the offer agreement as set out in paragraph 5.5 above, I&G has not entered into any related party transactions within the meaning of IFRS or UK GAAP since 31 March 2017.
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:
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.
10.9 The typical investor for whom investment in I&G is designed is a retail investor who is a UK taxpayer, aged 18 or over and who already has a portfolio of VCT and non-VCT investments (such as unit trusts, OEICs, investment trusts and direct shareholdings in listed and non-listed companies). The investor should be comfortable with the risk factors set out at the beginning of this document and be willing to retain the investment for at least five years.
10.10 BDO LLP act as auditors to I&G. BDO LLP is registered to carry on audit work and is authorised to carry on investment business by the Institute of Chartered Accountants in England and Wales.
All of I&G investments as at today's date, which are analysed below, are in the UK and are valued in sterling.
| Sector | % by cost | % by value |
|---|---|---|
| Media | 10.3 | 8.4 |
| Software & Computer services | 16.7 | 22.5 |
| Construction and Building | 1.0 | 1.4 |
| Materials | ||
| Support Services | 27.2 | 25.7 |
| Leisure Goods | 2.4 | 3.7 |
| General retailers | 22.3 | 25.3 |
| Companies preparing to trade | 8.2 | 3.8 |
| Personal Goods | 1.3 | 0.0 |
| Travel and leisure | 1.5 | 1.6 |
| Industrial Engineering | 1.3 | 1.4 |
| Healthcare Equipment and | 4.0 | 3.2 |
| Services | ||
| General Industrials | 3.8 | 3.0 |
| Type | % by cost | % by value |
|---|---|---|
| Unlisted ordinary shares | 34.0 | 22.5 |
| Unlisted loan stock and | 42.7 | 50.6 |
| preference shares | ||
| Listed ordinary shares | 2.1 | 4.9 |
| Cash/liquidity | 21.2 | 22.0 |
Save for (i) a realisation of Entanet Holdings Limited for net cash of £7.17 million, (ii) loan repayments totalling £163,000 from TPSFF Holdings Limited (formerly The Plastic Surgeon Holdings Limited) and (iii) a net investment of £497,000 into Manufacturing Services Investment Limited (trading as Wetsuit Outlet Limited), there has been no material change to the valuations used to prepare the above analysis (30 June 2017 being the date on which those unaudited valuations were undertaken).
I&G has produced annual statutory accounts for the three financial years ended 30 September 2014, 2015 and 2016 and the half-year reports for the six month periods ended 31 March 2016 and 2017. The auditors, BDO LLP, in respect of the financial years ended 30 September 2014, 2015 and 2016 have reported on the annual statutory accounts without qualification and without statements under sections 495 to 497 of CA 2006.
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, together with the half-year reports for the six month periods ended 31 March 2016 and 2017, 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 | 2014 Annual Report |
2015 Annual Report |
2016 Annual Report |
2016 Half Year |
2017 Half Year Report |
|---|---|---|---|---|---|
| Balance Sheet | Page 46 | Page 50 | Page 43 | Report Page 14 |
Page 12 |
| Income Statement (or equivalent) |
Page 45 | Page 49 | Page 42 Pages 12 to 13 |
Pages 10 to 11 |
|
| Statement showing all changes in equity (or equivalent note) |
Page 61 | Page 65 | Pages 44 to 45 |
Pages 15 to 16 |
Pages 13 to 14 |
| Cash Flow Statement |
Page 48 | Page 52 | Page 46 | Page 17 | Page 15 |
| Accounting Policies and Notes |
Pages 49 to 69 |
Pages 53 to 73 |
Pages 47 to 66 |
Pages 18 to 23 |
Pages 16 to 21 |
| Auditor's Report | Pages 43 to 44 |
Pages 46 to 48 |
Pages 39 to 41 |
N/A | N/A |
Such information also includes operating/financial reviews as follows:
| Description | 2014 Annual Report |
2015 Annual Report |
2016 Annual Report |
2016 Half Year Report |
2017 Half Year Report |
|---|---|---|---|---|---|
| Objective | Page 6 | Page 6 | Page 4 | Contents page/Inside front cover |
Contents page/Inside front cover |
| Performance Summary |
Pages 7 to 11 Pages 7 to 10 Pages 6 to 9 | Page 1 | Page 1 | ||
| Results & Dividend | Page 3 | Page 3 | Page 2 | Page 1 | Page 1 |
| Investment Policy | Page 26 | Page 26 | Page 24 | Page 5 | Page 4 |
| Chairman's Statement |
Pages 3 to 5 Pages 3 to 5 Pages 2 to 3 Pages 2 to 4 Pages 2 to 3 | ||||
| Manager's Review | Pages 12 to 15 |
Pages 11 to 15 |
Pages 10 to 13 |
Pages 6 to 7 Pages 5 to 6 | |
| Portfolio Summary | Pages 20 to 25 |
Pages 20 to 25 |
Pages 18 to 23 |
Pages 8 to 10 Pages 7 to 8 | |
| Valuation Policy | Page 49 | Page 53 | Page 53 | Page 21 | Page 19 |
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 |
Year ended 30 |
Year ended 30 |
Six month period ended |
Six month period ended |
|
|---|---|---|---|---|---|
| September | September | September | 31 March | 31 March | |
| 2014 | 2015 | 2016 | 2016 | 2017 | |
| (audited) | (audited) | (audited) | (unaudited) | (unaudited) | |
| Investment income | £3,203,322 | £2,997,718 | £3,201,629 | £1,894,754 | £1,640,297 |
| Profit/loss on ordinary activities before taxation |
£6,347,215 | £6,864,148 | £3,048,174 | £2,905,400 | £1,438,758 |
| Earnings per I&G share |
11.13p | 10.21p | 4.28p | 4.10p | 1.99p |
| Dividends per share |
10.00p | 18.00p | 12.00p | 6.00p | 4.00p |
| Total assets | £71,456,726 | £76,332,129 | £72,197,816 | £75,688,436 | £70,049,050 |
| NAV per I&G share | 114.60p | 106.38p | 98.51p | 104.42p | 96.43p |
As at 31 March 2017, the date to which the most recent unaudited half-year financial statements on I&G were published, I&G had unaudited net assets of £69.9 million. As at 30 June 2017, I&G had unaudited net assets of £70.2 million.
The investments set out below represent the Companies' ten largest investments (excluding liquidity funds and cash deposits, which are shown below under 'Other Investments').
As at the date of this document, these ten largest investments comprise approximately 40.9% of the aggregate investment portfolios (investments, plus cash and liquidity funds) of the Companies and represent all investments which represent 5% or more of the gross assets of one or more of the Companies (other than bank balances and liquidity funds).
All of the companies referred to below are profitable based on EBITA, as at the date of their last published accounts. The Boards and Mobeus believe that EBITA is a more meaningful measure of an investee company's underlying profitability to investors than profit after taxation. This is because earnings are calculated before deducting loan stock interest (which is part of the return to Mobeus VCTs earned by the investment structure) and other interest.
The 'Retained profit/(loss)' figures in the tables below are in respect of the relevant financial year as opposed to a cumulative amount (that has been carried forward from previous financial years). The percentage of investment portfolio below takes into account cash held and investments in liquidity funds.
Original MBO investment in October 2015
| Total cost: | £11.0 million |
|---|---|
| Total valuation: | £13.1 million |
| MIG | MIG 2 | MIG 4 | I&G | Year ended 31 December | 20161 * (£ million) |
|
|---|---|---|---|---|---|---|
| Current cost (£ million) |
3.3 | 1.9 | 2.5 | 3.3 | Sales | 12.4 |
| Valuation (£ million) | 3.9 | 2.3 | 3.0 | 3.9 | EBITA | 1.3 |
| Valuation methodology | Earning multiple (for all Companies) | Profit/(loss) before tax |
1.2 | |||
| Equity/voting rights | 13.4% | 8.0% | 10.1% | 13.6% | Retained profit/(loss) |
1.3 |
| Percentage of investment portfolio |
7.0% | 6.3% | 6.4% | 6.4% | Net assets | 6.5 |
*These figures are for the trading subsidiary, Access Limited. Activity: Provider of data capture and scanning hardware.
Location: Reading.
Original MBO investment in November 2013
| Total cost: | £8.4 million |
|---|---|
| Total valuation: | £11.0 million |
| MIG | MIG 2 | MIG 4 | I&G | Year ended 30 June 20161 (£ million) |
||
|---|---|---|---|---|---|---|
| Current cost (£ million) |
2.4 | 1.3 | 1.9 | 2.8 | Sales | 38.0 |
| Valuation (£ million) | 3.2 | 1.7 | 2.5 | 3.6 | EBITA | 2.0 |
| Valuation methodology | Earning multiple (for all Companies) | Profit/(loss) before tax |
0.2 | |||
| Equity/voting rights | 12.2% | 6.4% | 9.7% | 13.7% | Retained profit/(loss) |
1.9 |
| Percentage of investment portfolio |
5.7% | 4.6% | 5.6% | 5.9% | Net assets | 3.3 |
Activity: Online wine retailer.
Location: Norwich.
Original MBO investment in December 2010
| Total cost: | £9.7 million |
|---|---|
| Total valuation: | £10.2 million |
| MIG | MIG 2 | MIG 4 | I&G | Year ended 30 September 20161 (£ million) |
||
|---|---|---|---|---|---|---|
| Current cost (£ million) |
3.0 | 2.1 | 1.9 | 2.7 | Sales | 16.1 |
| Valuation (£ million) | 3.1 | 2.2 | 2.0 | 2.9 | EBITA | 1.7 |
| Valuation methodology | Earning multiple (for all Companies) | Profit/(loss) before tax |
(0.4) | |||
| Equity/voting rights | 14.4% | 10.3% | 9.5% | 13.3% | Retained profit/(loss) |
(0.4) |
| Percentage of investment portfolio |
5.6% | 6.0% | 4.5% | 4.7% | Net liabilities | (2.8) |
Activity: Printer and photocopier services. Location: Cambridge.
Original Growth Capital investment in July 2017
| Total cost: | £10.0 million |
|---|---|
| Total valuation: | £10.0 million |
| MIG | MIG 2 | MIG 4 | I&G | Year ended 31 March 20161 * (£ million) |
||
|---|---|---|---|---|---|---|
| Current cost (£ million) |
2.8 | 1.7 | 2.3 | 3.2 | Sales | 8.6 |
| Valuation (£ million) | 2.8 | 1.7 | 2.3 | 3.2 | EBITA | 1.4 |
| Valuation methodology | Recent investment price (for all Companies) | Profit/(loss) before tax |
1.4 | |||
| Equity/voting rights | 7.6% | 4.7% | 6.4% | 8.8% | Retained profit/(loss) |
1.1 |
| Percentage of investment portfolio |
4.9% | 4.7% | 5.1% | 5.2% | Net liabilities | 3.7 |
*These figures are for the trading subsidiary B2C (Holdings) Limited Activity: Online retailer of watersports clothing and products. Location: Southend-on-Sea, Essex.
Original MBO investment in January 2015
Total cost: £11.7 million Total valuation: £8.5 million
| MIG | MIG 2 | MIG 4 | I&G | Year ended 31 December 20151 * (£ million) |
||
|---|---|---|---|---|---|---|
| Current cost (£ million) |
3.3 | 2.0 | 2.7 | 3.7 | Sales | 8.8 |
| Valuation (£ million) | 2.4 | 1.4 | 2.0 | 2.7 | EBITA | 0.5 |
| Valuation methodology | Earning multiple (for all Companies) | Profit/(loss) before tax |
0.1 | |||
| Equity/voting rights | 19.0% | 11.6% | 15.7% | 21.2% | Retained profit/(loss) |
0.1 |
| Percentage of investment portfolio |
4.3% | 4.0% | 4.4% | 4.4% | Net assets | 1.9 |
*These figures are for the trading subsidiary, Media Business Insight Limited. Activity: A publishing and events business focused on the creative production industries.
Location: London.
Original MBO investment in October 2008
| Total cost: | £6.9 million |
|---|---|
| Total valuation: | £6.1 million |
| MIG | MIG 2 | MIG 4 | I&G | Year ended 1 30 September 2016 (£ million) |
||
|---|---|---|---|---|---|---|
| Current cost (£ million) |
2.5 | 1.4 | 1.5 | 1.5 | Sales | 20.6 |
| Valuation (£ million) | 2.2 | 1.1 | 1.4 | 1.4 | EBITA | 2.8 |
| Valuation methodology | Earnings multiple (for all Companies) | Profit/(loss) before tax |
(8.0) | |||
| Equity/voting rights | 6.0% | 3.2% | 3.7% | 3.7% | Retained profit/(loss) |
(8.8) |
| Percentage of investment portfolio |
4.0% | 3.2% | 3.0 % | 2.2% | Net liabilties | (18.8) |
Activity: Publisher and on-line auction platform operator. Location: London.
Total cost: £4.0 million Total valuation: £5.9 million
| MIG | MIG 2 | MIG 4 | I&G | Year ended 29 February 20161 * (£ million) |
||
|---|---|---|---|---|---|---|
| Current cost (£ million) |
1.2 | 0.7 | 0.9 | 1.2 | Sales | 9.6 |
| Valuation (£ million) | 1.8 | 1.0 | 1.3 | 1.8 | EBITA | 0.5 |
| Valuation methodology | Earnings multiple (for all Companies) | Profit/(loss) before tax |
0.5 | |||
| Equity/voting rights | 9.3% | 5.6% | 7.1% | 9.5% | Retained profit/(loss) |
0.4 |
| Percentage of investment portfolio |
3.2% | 2.9% | 2.9% | 2.9% | Net assets | 2.3 |
*These figures are for the operating subsidiary, Tushingham Sails Limited.
Activity: Design, manufacturing and sale of stand-up paddleboards and windsurfing sails. Location: Totnes, Devon.
Original MBO investment in March 2013
| Total cost: | £7.1 million |
|---|---|
| Total valuation: | £5.7 million |
| MIG | MIG 2 | MIG 4 | I&G | Period ended 31 December 20151 * (£ million) |
||
|---|---|---|---|---|---|---|
| Current cost (£ million) |
2.0 | 1.1 | 1.6 | 2.4 | Sales | 21.0 |
| Valuation (£ million) | 1.6 | 0.9 | 1.3 | 1.9 | EBITA | 1.3 |
| Valuation methodology | Earnings multiple (for all Companies) | Profit/(loss) before tax |
(0.4) | |||
| Equity/voting rights | 13.4% | 7.6% | 10.7% | 16.3% | Retained profit/(loss) |
(0.4) |
| Percentage of investment portfolio |
2.8% | 2.4% | 2.8% | 3.1% | Net assets | 1.0 |
*These figures are for an 18 month period. Activity: Baby sleep products. Location: Ashburton, Devon.
Original growth capital investment in October 2011
Total cost: £4.5 million Total valuation: £5.6 million
| MIG | MIG 2 | MIG 4 | I&G | Year ended 31 January 20161 (£ million) |
||
|---|---|---|---|---|---|---|
| Current cost (£ million) |
1.3 | 0.8 | 1.0 | 1.4 | Sales | 37.8 |
| Valuation (£ million) | 1.6 | 1.0 | 1.2 | 1.8 | EBITA | 1.7 |
| Valuation methodology | Earnings multiple (for all Companies) | Profit/(loss) before tax |
0.5 | |||
| Equity/voting rights | 2.3% | 1.5% | 1.7% | 2.5% | Retained profit/(loss) |
0.7 |
| Percentage of investment portfolio |
2.9% | 2.8% | 2.6% | 2.8% | Net assets | 11.1 |
Activity: Branded outdoor equipment and clothing. Location: Alfreton, Derbyshire.
Original MBO investment in July 2014
| Total cost: | £4.7 million |
|---|---|
| Total valuation: | £5.4 million |
| MIG | MIG 2 | MIG 4 | I&G | Year ended 31 January 20171 (£ million) |
||
|---|---|---|---|---|---|---|
| Current cost (£ million) |
1.4 | 0.8 | 1.1 | 1.4 | Sales | 4.9 |
| Valuation (£ million) | 1.6 | 0.9 | 1.2 | 1.7 | EBITA | 0.4 |
| Valuation methodology | Earnings multiple (for all Companies) | Profit/(loss) before tax |
(0.6) | |||
| Equity/voting rights | 15.3% | 8.8% | 12.2% | 16.2% | Retained profit/(loss) |
(0.6) |
| Percentage of investment portfolio |
2.8% | 2.5% | 2.7% | 2.7% | Net assets | 0.5 |
Activity: Software based management information systems to the print sector. Location: Colne, Lancashire.
1 The information on investee companies' sales, profits and losses and net assets shown in the tables above has been sourced from the latest financial year end accounts published (unless stated otherwise) by those investee companies, not all of which is audited ("Third Party Information"). 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.
The following liquidity fund and bank balances also represent more than 5% of the gross assets of one or more of the Companies. In all cases, the amount invested is the same as their valuation, on a fair value basis. No equity or voting rights apply to such investments.
| Federated Short-Term Sterling Prime Fund-2 (liquidity fund) |
MIG | MIG 2 | MIG 4 | I&G |
|---|---|---|---|---|
| Amount invested and at valuation (£ million) | 2.0 | 2.2 | 1.6 | 2.9 |
| Percentage of investment portfolio (%) | 3.6 | 6.0 | 3.6 | 4.7 |
| Goldman Sachs Sterling Liquid Reserves Fund | MIG | MIG 2 | MIG 4 | I&G |
| Amount invested and at valuation (£ million) | 1.3 | 2.3 | 1.0 | 0.5 |
| Percentage of investment portfolio (%) | 2.3 | 6.2 | 2.1 | 0.9 |
| Fidelity Institutional Liquidity Fund (sterling) | MIG | MIG 2 | MIG 4 | I&G |
| Amount invested and at valuation (£ million) | 1.6 | - | 2.4 | 2.0 |
| Percentage of investment portfolio (%) | 2.8 | - | 5.2 | 3.3 |
| Nationwide Building Society (deposit account) | MIG | MIG 2 | MIG 4 | I&G |
| Amount invested and at valuation (£ million) | 2.6 | 2.0 | 0.8 | 1.0 |
| Percentage of investment portfolio (%) | 4.6 | 5.5 | 1.7 | 1.7 |
| Close Brothers | MIG | MIG 2 | MIG 4 | I&G |
The above investments, liquidity fund and bank balances have an aggregate value of greater than 50% of the gross assets of each Company as at the date of this document.
Amount invested and at valuation (£ million) - - 2.0 3.2 Percentage of investment portfolio (%) - - 4.4 5.1
Investment and portfolio information contained in the tables above has been extracted from the Companies' accounting records (the unaudited half-year report to 30 June 2017 in respect of MIG and MIG 4 and from unaudited financial information to 30 June 2017 for MIG 2 and I&G), save for the following adjustments:
As at the date of this document, save as set out above, there has been no material change in the valuations of investments set out in this Part Four since 30 June 2017 in respect of all four companies.
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 Mobeus, 30 Haymarket, London SW1Y 4EX whilst the Offers are open:
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