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8 Apr 2009 16:29
Matrix Income & Growth 4 VCT plc
Annual Results for the year ended 31 January 2009
Strategy
Matrix Income & Growth 4 VCT plc ("MIG4") is a tax efficient company listed onthe London Stock Exchange. It invests primarily in established and profitableunquoted companies.Investment Objective
The VCT's objective 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.
Dividend Policy
The VCT seeks to pay income dividends half-yearly. Subject to fulfilling certain regulatory requirements, the VCT also seeks to pay capital dividends at the year-end following portfolio realisations.
Financial Highlights
* Increase of 15.7% in year in cumulative dividends (paid and proposed)
* Within this, dividends paid and proposed in respect of 2009 have remained
constant compared to the previous year
* Increase of 12.6% in shareholder total return (share price basis) in period
since MPEP took over sole management of the Fund from 1 August 2006 * Decrease of 3.4% in total shareholder return (net asset value basis) in period since MPEP took over sole management of the Fund from 1 August 2006 Dividends paidYear ended Dividends per share paid and Cumulative dividends per share proposed in respect of each year paid since launch (p) (p) per share 31 January 2009 2.00 * 14.70 * 31 January 2008 2.00 12.70 31 January 2007 1.80 10.70 31 January 2006 0.50 8.90 31 January 2005 0.20 8.40
Dividends paid include distributions from both income and capital.
* Dividends proposed
A final proposed dividend of 1 penny per share will be recommended to Shareholders at the AGM of the Company to be held on 21 May 2009 to be paid on 10 June 2009 and has been included in the above figures.
Performance Summary
Year ended Net Net asset NAV total return Share Share price total assets value per per share to price 1 return per share share shareholders to shareholders (£ since launch (p) (p) since launch (p) million) (p) 31 January 2009 21.0 104.6 118.3 92.0 105.7 31 January 2008 24.1 117.4 128.9 109.0 120.5 31 January 2007 9.8 116.3 125.2 91.0 101.7 31 January 2006 9.3 106.6 115.0 85.0 93.9 31 January 2005 10.1 110.3 118.5 85.0 93.4
1 Source: London Stock Exchange
The share price and net asset value (NAV) total return comprise the share priceand NAV respectively per share assuming the dividends paid were re-invested onthe date on which the shares were quoted ex-dividend in respect of eachdividend.Figures for the years ended 31 January 2005, 2006 and 2007 have been restatedto take account of the restructuring of the share capital that took place on 18October 2006.Chairman's Statement
I am pleased to present to Shareholders the Annual Results of the Company for the year ended 31 January 2009.
Performance
As at 31 January 2009, the Net Asset Value (NAV) per share (including currentyear income) was 104.6 pence (2008: 117.4 pence). Adjusted for the dividendstotalling 2.25 pence paid to shareholders in the year, this represents adecrease of 9.0% over the period. The NAV total return per share fell in theyear by 8.2% from 128.9 pence at 31 January 2008 to 118.3 pence at 31 January2009.In the light of the current economic uncertainty and turmoil in financialmarkets during the last twelve months, possibly the worst in the last fiftyyears, this has definitely not been an easy period for investment companies.This is clearly evidenced by the relevant stock market indices shown below, allof which fell significantly. In marked contrast, the outcome for the year, at atime when the Company's net assets per share have fallen only slightly, isencouraging given the difficult economic climate.This encouraging outcome is supported by the fact that some 70% of our investeecompanies by value enjoyed profit growth in excess of 5% over the previous year(based on the latest annual accounts of each investee company). May I temperthis, however, by sounding a note of caution as a number of our investeecompanies, late in this financial period, have now started to notice the effectof the recession.The stock marketDuring the same twelve-month period referred to above the total return of theFTSE All-Share Index fell by 27.8%, the FTSE Small Cap Index by 40.9% and theFTSE AiM All-Share Index by 57.6%.It is helpful to observe the impact of the changes in the FTSE Sector PriceEarnings Ratios over the past financial year in those sectors in which theCompany is invested. Under the International Private Equity and Venture CapitalValuation (IPEVCV) guidelines, the Company is required to value its unquotedinvestments using, where appropriate, the most comparable sector multiple. Ascan be seen from the table shown below, even if an investment is tradingequally as profitably as a year ago, it is likely that the investment will bereduced in value because of the generally significantly lower comparable priceearning ratios.One Year Change 31 January 2009 31 January 2008 % +/- Construction and materials 7.54 12.29 -39 Food producers 11.18 12.21 -8 Media 9.97 16.16 -38 Personal goods 12.43 24.22 -49 Pharmaceuticals and 15.19 13.59 12biotechnology
Software and computer services 14.08 24.79
-43 Support services 10.81 15.69 -31 Technology, hardware and 11.60 24.63 -53equipment Economic backgroundAll UK investment portfolios have been and are being affected by the muchharsher economic conditions which now exist. These are predicted to continuefor the remainder of this calendar year. If the problems in the globalfinancial community are not resolved and if confidence is not restored in ourfinancial system quickly, the recession is likely to be very severe indeed.Today's economic and financial problems can be attributed to excessive lendingby most banks and to the Government's imprudent growth in public spending andby its insatiable borrowing, both on and off balance sheet, over more than adecade. I cover our views below on the outlook for the economy and theCompany's portfolio.Inevitably this general climate has affected sentiment across all sectors ofthe economy. There are two important aspects of this which are related to theCompany's business: whilst divestments have proved to be difficult to achieveover the past year, we do nevertheless expect acquisition prices to become moreattractive. No exits have been achieved in the current financial year, butnevertheless the Board and the Investment Manager remain confident about thetrading performances of most of our investments.
The portfolio
When considered by stage of development, the portfolio continues to bedominated by investments in management buy-out situations ("MBOs"), which hasrisen to 84.7% with 14.7% invested in development capital companies and theremaining 0.6% of the portfolio being invested in early stage investments. Theportfolio is now invested in a wide range of market sectors with the largest ofthose being support services at 24.2%. Media at 20.9% is the next largestinvestment sector. This spread of investments reflects the current investmentstrategy of spreading risks whilst trying to maintain a steady, if notincreasing, dividend yield.Within the portfolio, a partial loan stock repayment of £71,819 was made by VSIHoldings Limited in April 2008, but regrettably no realisations were achievedduring the period.A new investment of £458,837 was made in April 2008 in The Plastic SurgeonHoldings Limited to support the MBO of Plastic Surgeon Fine Finishers, which isengaged in the snagging and finishing of domestic and commercial properties. InOctober 2008, a new investment was also made into ATG Media Holdings Limited of£1 million to support the MBO of Metropress, publishers of the Antiques TradeGazette. A further loan stock investment of £95,461 was made in November 2008into PXP Holdings Limited and a further loan stock investment of £70,475 wasmade into Monsal Holdings Limited in January 2009. Inca Interiors Limited wentinto administration on 2 June 2008 and FH Ingredients was dissolved on 9December 2008.
Cash available for investment
Cash and liquidity fund balances as at 31 January 2009 amounted to some £13.1million. During this economic turmoil, the Board has worked hard to ensure thatour cash deposits have remained as secure as possible. We have for some timebeen spreading our significant cash deposits with a number of the leadingglobal cash funds rather than depositing directly with individual banks,thereby reducing our exposure to any one particular bank.
Revenue account
The revenue account rose by £56,042 due to three main factors. First, totalincome rose by £28,922, being the net increase across the three main categoriesof income. There has been a further rise in loan stock interest of £49,193, asthese loan stock investments yielded additional such income. Against this,income from liquidity funds fell by £20,483, due mainly to the sharp fall ininterest rates over the final four months of the year, a trend which iscontinuing in the current year.Secondly, revenue return was boosted by £13,500 of VAT recoverable as a resultof the recent HM Revenue & Customs ("HMRC") ruling that means some of the pastVAT on management fees can be recovered.Finally, fund management fees charged to the revenue return have fallen by £31,843 as net assets have fallen and because the Investment Manager bears theexpense cap that applies once running costs exceed 3.4% of closing net assets.Other costs have remained broadly constant.
Although there is no tax suffered overall by the Company, the higher revenue income increased the notional tax charge allocated to revenue by £24,066.
Dividend
The Company's revenue return per Ordinary Share was 2.35 pence (2008: 2.21pence). Your Board will be recommending a final income dividend of 1 penny perOrdinary Share in respect of the year under review at the Annual GeneralMeeting to be held on 21 May 2009. The dividend will be paid on 10 June 2009 toShareholders on the Register on 15 May 2009.
In the light of present interest rate levels, dividends arising from revenue are likely to be severely limited in the forthcoming year.
Valuation Policy
As quoted stocks are valued at bid prices, rather than mid-market prices, it isworth commenting that the Fund does hold a small number of relatively earlystage AiM-quoted stocks with limited marketability. In such cases, the price atwhich a sizeable block of shares could be traded, if at all, may varysignificantly from the market price used.
VAT
Shareholders may be aware of recent HMRC announcements that could permit VCTsto recover VAT previously charged on fund management fees for at least the pastthree years. These accounts have recognised VAT recoverable of £85,459, basedupon available information supplied by the Company's current and pastInvestment Managers, including £31,459 which has been set off against thecurrent year's management expense. This figure contains a degree of estimationand it is possible that additional amounts of such VAT will be recoverable indue course although the Directors are unable at this stage to quantify suchfurther amounts. £54,000 of this amount has been disclosed as a separate itemof income in the Profit and Loss Account.
Appointment of corporate broker
On 13 October 2008, the London Stock Exchange announced that LandsbankiSecurities (UK) Limited (Landsbanki) would no longer be able to act as a marketmaker. Landsbanki was therefore unable to quote prices or make a market in theCompany's shares. The Directors understand that this action by the London StockExchange related to the Administration of Landsbanki's parent company,Landsbanki Islands hf, and resultant regulatory actions arising therefrom. Iapologise for the inconvenience this may have caused to any shareholders.The Board is pleased, therefore to have been able to announce the appointmentof Matrix Corporate Capital LLP (MCC) as corporate broker to the Company on 3December 2008. The team at MCC includes the core Investment Funds team who
wereformerly at Landsbanki.Share buy-backsDuring the year ended 31 January 2009 the Company continued to implement itsbuy-back policy and bought back 391,399 Ordinary Shares, representing 1.91% ofthe shares in issue at 1 February 2008 at a total cost of £376,481 (excludingexpenses). These shares were subsequently cancelled by the Company.
MIG 4 Website
May I remind you that the Company continues to have its own website which is available at www.mig4vct.co.uk.
unquote" British Private Equity 2008 Awards
I am delighted to inform you that our Investment Manager, Matrix Private EquityPartners, won the award for "VCT Manager of the Year" at the recent unquote"British Private Equity Awards 2008. May I congratulate the team on this wellearned reward and for their hard work on behalf of the Company throughout theyear.OutlookIt is highly probable that the current tougher economic conditions could endurefor some time. Relatively small, early stage growth businesses will inevitablybe tested in such an environment. However, many of our portfolio companies,which are in later stages of development, are continuing to trade positivelyand, in some cases, above the levels seen more than a year ago.The Company has significant cash resources and this is crucially important at atime when many commercial banks have been announcing losses and are pursuingmore cautious lending policies. Furthermore, it places the Company in anexcellent position to take advantage of what are expected to be increasinglyattractive purchase opportunities which are expected to become available laterin the year. We have already recently seen one example where economicconditions enabled a renegotiation of the terms of investment.
Therefore, while short term valuations are likely to be subject to continuing pressure your Board looks to the mid-term future with more confidence.
Once again, I would like to take this opportunity to thank Shareholders for their continued support.
Colin HookChairman
Responsibility Statement of the Directors in respect of the Annual Financial Report
The Directors confirm that to the best of their knowledge:
a. The financial statements, which have been prepared in accordance with UK
Generally Accepted Accounting Practice (UK GAAP) and the Statement of
Recommended Practice, `Financial Statements of Investment Trust Companies'
issued by the Association of Investment Companies in 2003 and revised in
2005, give a true and fair view of the assets, liabilities, financial
position and loss of the Company; and
b. The management report, comprising the Chairman's Statement, Investment
Policy, Statement of Principal Risks, Management and Regulatory
Environment, Investment Portfolio Summary and the Investment Managers'
Review, includes a fair review of the development and performance of the
business and the position of the Company, together with a description of
the principal risks and uncertainties that they face.
On behalf of the BoardColin HookChairman
Principal Risks, Management and Regulatory Environment
The Board believes that the principal risks faced by the Company are:
* Economic risk - events such as an economic recession and movement in
interest rates could affect trading conditions for smaller companies and
consequently the value of the Company's qualifying investments.
* Loss of approval as a Venture Capital Trust - the Company must comply with
section 274 of the Income Tax Act 2007 ("ITA") which allows it to be
exempted from capital gains tax on investment gains. Any breach of these
rules may lead to the Company losing its approval as a Venture Capital
Trust (VCT), qualifying shareholders who have not held their shares for the
designated holding period having to repay the income tax relief they
obtained and future dividends paid by the Company becoming subject to tax.
The Company would also lose its exemption from corporation tax on capital
gains.
* Investment and strategic - inappropriate strategy or consistently weak VCT
qualifying investment recommendations might lead to underperformance and
poor returns to shareholders.
* Regulatory - the Company is required to comply with the Companies Acts 1985
and 2006 ("the Companies Acts"), the listing rules of the UK Listing
Authority and United Kingdom Accounting Standards. Breach of any of these
might lead to suspension of the Company's Stock Exchange listing, financial
penalties or a qualified audit report.
* Financial and operating risk - inadequate controls that might lead to
misappropriation of assets. Inappropriate accounting policies might lead to
misreporting or breaches of regulations. Failure of the Investment
Manager's and Administrator's accounting systems or disruption to its
business might lead to an inability to provide accurate reporting and
monitoring.
* Market risk - Investment in unquoted companies, by its nature, involves a
higher degree of risk than investment in companies traded on the London
Stock Exchange main market. In particular, smaller companies often have
limited product lines, markets or financial resources and may be dependent
for their management on a smaller number of key individuals. * Asset liquidity risk - The Company's investments may be difficult to realise, especially in the current economic climate.
* Market liquidity risk - Shareholders may find it difficult to sell their
shares at a price which is close to the net asset value.
* Counterparty risk - A counterparty may fail to discharge an obligation or
commitment that it has entered into with the Company.
The Board seeks to mitigate the internal risks by setting policy and byundertaking a key risk management review at each quarterly Board meeting.Performance is regularly reviewed and assurances in respect of adequateinternal controls and key risks are sought and received from the InvestmentManager and Administrator on a six monthly basis. In mitigation and themanagement of these risks, the Board applies rigorously the principles detailedin the AIC Code of Corporate Governance. The Board also has a Share Buy Backpolicy which seeks to mitigate the Market Liquidity risk. This policy isreviewed at each quarterly Board Meeting.
Investment Policy
The Company's policy is to invest primarily in a diverse portfolio of UKunquoted companies. Investments are structured as part loan and part equity inorder to receive regular income and to generate capital gains from trade salesand flotations of investee companies.
Investments are made selectively across a number of sectors, primarily in management buyout transactions (MBOs) i.e. to support incumbent management teams in acquiring the business they manage but do not yet own. Investments are primarily made in companies that are established and profitable.
The Company has a small legacy portfolio of investments in companies from itsperiod prior to 1 August 2006, when it was a multi-manager VCT. This includesinvestments in early stage and technology companies.
Uninvested funds are held in cash and lower risk money market funds.
UK companies
The companies in which investments are made must have no more than £15 million of gross assets at the time of investment to be classed as a VCT qualifying holding.
VCT regulation
The investment policy is designed to ensure that the Company continues toqualify and is approved as a VCT by HMRC. Amongst other conditions, the Companymay not invest more than 15% of its investments in a single company and musthave at least 70% by value of its investments throughout the period in sharesor securities comprised in VCT qualifying holdings, of which a minimum overallof 30% by value must be ordinary shares which carry no preferential rights. Inaddition, although the Company can invest less than 30% of an investment in aspecific company in ordinary shares it must have at least 10% by value of itstotal investments in each VCT qualifying company in ordinary shares which carryno preferential rights.Asset mix
The Company initially holds its funds in a portfolio of readily realisable interest bearing investments and deposits. The investment portfolio of qualifying investments is built up over a three year period with the aim of investing and maintaining at least 80% of net funds raised in qualifying investments.
Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses acrossdifferent industry sectors. To reduce the risk of high exposure to equities,each qualifying investment is structured using a significant proportion of loanstock (up to 70% of the total investment in each VCT qualifying company).Initial investments in VCT qualifying companies are generally made in amountsranging from £200,000 to £1 million at cost. No holding in any one company willrepresent more than 10% of the value of the Company's investments at the timeof investment. Ongoing monitoring of each investment is carried out by theInvestment Manager, generally through taking a seat on the board of each VCTqualifying company.Co-investmentThe Company aims to invest in larger, more mature unquoted companies throughinvesting alongside the four other VCTs advised by the Investment Manager witha similar investment policy. This enables the Company to participate incombined investments advised on by the Investment Manager of up to £5 million.
Borrowing
The Company has no current plans to undertake any borrowing.
Management
The Board has overall responsibility for the Company's affairs including thedetermination of its investment policy. Investment and divestment proposals areoriginated, negotiated and recommended by the Investment Manager and are thensubject to formal approval by the Board of Directors. Matrix-Securities Limitedprovides Company Secretarial and Accountancy services to the Company.
Investment Manager's Review
The opportunity to sell businesses at attractive prices peaked early on in theCompany's financial year driven by changes to the rules on capital gains taxfor owner managers. Thereafter, the market stalled and it has not beengenerally possible to secure attractive realisations.Over the year, deferred consideration was received from one previous investmentand one partial divestment was made. In August, Munro Global, which acquiredMaven Management in 2007, repaid £29k of a conditional loan stock after Mavensuccessfully achieved a revenue target during the year. A further and finalpayment may be made during the current year. In April, an early repayment ofloan stock was received from VSI. Proceeds of £71,819 produced a profit fromthe loan premium of £6,530 on the Company's investment cost of £65,289During 2008, the Company has pursued a highly cautious approach to newinvestment. This was based on our view that vendors' price expectations wouldprove unsustainable. We also avoided transactions requiring high levels of bankborrowing, believing that economic conditions were deteriorating and that thiswould make over-leveraged companies much too vulnerable in a tougherenvironment.Just two new investments were completed during the year; the first was inApril, when £458,837 was invested in the MBO of Plastic Surgeon for loan stockand a 6.9% equity holding. The company offers snagging and finishing servicesto domestic and commercial properties and is based in Bovey Tracey, Devon.The second was in ATG Media in early October. ATG Media acquired the publisherof the leading weekly newspaper serving the UK antiques trade, the AntiquesTrade Gazette, via a MBO. This London-based business also offers an on-lineauction capability. The Company now holds a £1,000,000 investment in ATG Mediaby way of loan stock and 8.9% of the equity.The investment portfolio has not been immune to the wider deteriorating tradingenvironment and appropriate provisions have been applied against thoseinvestments that have had to be reduced in response to falls in the value ofcomparable quoted companies. Some valuations have also been reduced where theinvestee company's trading has been affected. However, other investments havecontinued to perform well. Of a total of twenty-one investments in the MPEPportfolio, one is currently held at cost, thirteen valued at below cost andseven above cost.The Company's investments in PXP, Youngman Group and Plastic Surgeon each haveexposure to the house building and construction markets and all have sufferedfrom the rapid decline of this sector during the year. Youngman has seen asharp fall in revenues from its trade customers in particular although it hasremained profitable and expects to continue to do so. PXP carried forward astrong order book into the year but the outlook for next year is moreuncertain. In anticipation of this, the Company invested a further £95,461 aspart of a £1 million funding round to provide capital to support PXP in what isexpected to remain a difficult market.Plastic Surgeon has made strong progress in reducing its dependence on the newhousing market and into commercial property markets and has substantiallyreduced its direct and indirect cost base. Nevertheless, in view of thecontinuing difficult conditions in this sector we have deemed it appropriate toapply a 50% impairment provision against the Company's investment. Blaze Signs,having had a record year in 2007-8, is seeing the effects of a number of majorretail clients deferring work.Monsal too, has suffered from delays in new contract awards and a resultantdeferral of construction work on both water and waste contracts; accordingly animpairment provision of 25% has been made. However, Monsal enters 2009 with anencouraging level of contracted revenue and in January shareholders advanced afurther £500k, including £70,476 from the Company, to provide additionalworking capital.Campden has also suffered from the uncertainties of the financial servicesclients of its growing US conference business which has led to a disappointingyear. Racoon continued to struggle to grow revenues although it remainsprofitable. British International's helicopter service to the Scilly Isles fromPenzance experienced possibly the worst summer weather in two decades whichdecimated the day trip market, but it has benefited from the solidity of itslong-term military contract revenue.Nevertheless, there have continued to be portfolio highlights. DiGiCo Europehas enjoyed a strong first year post-investment following the successful launchof its new digital audio mixing desk. PastaKing has posted its highest everprofits of £2.7 million for the year ended 30 June 2008, a year-on-yearincrease greater than 20%, despite increasing pressure on ingredient prices.Focus Pharma has also had a good first year since its MBO.Vectair had an outstanding year, producing record profits and making inroadsinto potentially significant markets in India and the US. VSI is stronglyprofitable and cash-generative and is benefiting from the relative weakness ofsterling as well as seeing increased customer demand for its software. ATGMedia is performing in line with expectations, whilst SectorGuard has now beensubstantially re-organised following the acquisition of Manguard, a mannedguarding business, in early 2008. SectorGuard's share price has recoveredsomewhat towards the year-end.BG Consulting Group saw its profits fall in 2008 as a result of thedifficulties experienced by its investment banking clients but continues to beprofitable. Disappointingly, Inca Interiors went into administration in June,having failed to stem its losses over the past two years; no proceeds areexpected to accrue to the Fund, The investment had been fully provided against.Letraset continues to struggle to halt its gradual revenue decline of markerpen sales. FH Ingredients was dissolved in December 2008.
Higher Nature has also suffered from lower consumer demand for its natural medicine products and has posted reduced profits. Stortext FM, however, has moved into profit on the back of a large contract with a new customer which looks set to continue through 2009. Finally, Tottel continues to perform strongly, recording its third year of increased profitability; the current year looks set to continue this trend.
The MPEP investment portfolio at 31 January 2009 comprises twenty-oneinvestments with a cost of £9.1 million and valued at £7.8 million (85.7% ofcost). Whilst the fall in valuations over the year is disappointing, theadverse movement in public market indices has made some decreases inevitable.It is important to recognise that all of the reduction in the year, with theexception of one small investment, has resulted from falls in unrealisedvaluations as opposed to any actual realised investment losses. This offers theprospect of significant future recovery as we continue to believe that theportfolio, taken as a whole, is resilient and of high quality.Over the coming period, the need for additional investment to support portfoliocompanies may become a focus. We also anticipate much more attractive buyingconditions emerging as the year progresses. Having retained significantuninvested cash, we believe the Company is well placed to cover both theportfolio needs that may arise and the new investment opportunities presented.Investment Portfolio Summaryas at 31 January 2009 Cost at Valuation at Additionalinvestments Valuationat % of % of 31-Jan-09 31-Jan-08 31-Jan-09 equity portfolio held by value £ £ £ £
Matrix Private Equity Partners portfolio
DiGiCo Europe Limited 1,000,000 1,000,000 - 1,091,100 6.52% 13.98% Manufacturer of audio mixing desks ATG Media Holdings Limited 1,000,000 -
1,000,000 1,000,000 8.90% 12.81%
Publisher and online auction
platform operator
Focus Pharma Holdings Limited 772,451 772,451
- 758,440 3.10% 9.73% Licensor and distributer of generic pharmaceuticals Higher Nature Limited 500,127 1,243,246 - 708,597 10.69% 9.08% Mail order distributor of
vitamins and natural medicines
Tottel Publishing Limited 235,200 382,173 - 616,173 6.27% 7.89%
Publisher specialising in legal
and tax titles Blaze Signs Holdings Limited 610,016 776,914 - 593,471 5.70% 7.60% Manufacturer and installer of signs Monsal Holdings Limited 704,771 634,296 70,476 528,578 9.80% 6.77% Supplier of engineering
services to the water and waste
sectors Youngman Group Limited 500,026 1,439,740 - 476,523 4.24% 6.11% Manufacturer of ladders and access towers Pastaking Holdings Limited 133,055 351,877 - 409,344 2.10% 5.24% Manufacturer and supplier of fresh pasta meals Stortext FM Limited 561,820 375,968 - 375,968 4.60% 4.82%
Provider of document management
software and services VSI Limited 111,928 346,034 - 305,699 4.56% 3.92% Provider of software for CAD and CAM vendors
British International Holdings 250,000 251,075
- 247,338 2.50% 3.17%Limited
Helicopter service operator The Plastic Surgeon Holdings 458,837 - 458,837 229,419 6.88% 2.94%Limted
Snagging and finishing of domestic and commercial
properties
Vectair Holdings Limited 100,000 140,749
- 141,884 2.14% 1.82%
Designer and distributor of
washroom products PXP Holdings Limited 679,549 485,818 95,461 139,086 4.98% 1.78%
Designer, manufacturer and supplier of timber frames for
buildings SectorGuard plc 1 150,102 75,044 - 64,323 1.08% 0.82%
Provider of manned guarding, patrolling and alarm response
services
BG Consulting Group Limited/ 230,796 101,162
- 53,064 See 0.68%Duncary 4 Limited note 2 below
Provider of financial training
services Campden Media Limited 152,620 113,785 - 18,319 1.69% 0.23% Magazine publisher and conference organiser
Racoon International Holdings 406,805 203,403
- 0 5.70% 0.00%Limited
Supplier of hair extensions, hair care products and training
Letraset Limited 150,000 0 - 0 17.35% 0.00%
Manufacturer and distributor of
graphic art products Inca Interiors Limited (in 350,000 50,000 - 0 9.75% 0.00%liquidation) Designer, supplier and
installer of contract kitchens
------------- ------------- ------------- ------------- ----------- Total 9,058,103 8,743,735 1,624,774 7,757,326 99.39% ------------- ------------- ------------- ------------- -----------
Former Elderstreet Private Equity Portfolio Cashfac Limited 260,101 86,372
- 38,168 3.42% 0.49%
Provider of virtual banking
application software solutions to corporate customers Expansys plc 1 31,000 46,923
- 9,971 0.58% 0.12%
Retailer of handheld electrical products Sparesfinder Limited 250,000 0 - 0 2.19% 0.00% Supplier of industrial spare
parts on-line
Other investments in the 374,973 0
- 0 - 0.00%portfolio 3 ------------- -------------
------------- ------------- -----------
Total 916,074 133,295 - 48,139 0.61% ------------- -------------
------------- ------------- -----------
======== ======== ======== ======== ======== Investment Managers' Total 9,974,177 8,877,030 1,624,774 7,805,465 - 100.00% ======== ======== ======== ======== ========1 Quoted on AiM
2 The % of equity held in BG Consulting Group Limited is 2.6% and in Duncary 4 Limited is 6.64%.
3 Other investments in the Elderstreet portfolio comprise those investments that have been valued at nil and from which the Directors only expect to receive small recoveries i.e. ComponentSource Holding Corporation, and Sift Group Limited.
Profit and Loss Account
for the year ended 31 January 2009
Year ended 31 January 2009
Year ended 31 January 2008
Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Unrealised losses - (2,574,520) (2,574,520) - (36,523) (36,523)on investments held at fair value Realised (losses)/ - (21,299) (21,299) - 463,591 463,591gains on investments held at fair value Income 1,068,647 30,915 1,099,562 1,039,725 - 1,039,725 Recoverable VAT 13,500 40,500 54,000 - - - Investment (100,303) (300,909) (401,212) (132,146) (396,439) (528,585)management fees Other expenses (350,868) - (350,868) (356,711)
- (356,711)
------------ ------------ ------------ ------------
------------ ------------
Profit/(loss) on 630,976 (2,825,313) (2,194,337) 550,868 30,629 581,497ordinary activities before taxation Taxation on (152,313) 152,313 - (128,247) 128,247 -ordinary activities ======= ======= ======= ======= ======= ======= Profit/(loss) for 478,663 (2,673,000) (2,194,337) 422,621 158,876 581,497the year ======= ======= ======= ======= ======= ======= Basic and diluted 2.35p (13.14)p (10.79)p 2.21p
0.83p 3.04pearnings per ordinary share
The total column is the profit and loss account of the Company.
All the items in the above statement derive from continuing operations.
There were no other recognised gains or losses in the year.
Other than revaluation movements arising on investments held at fair value through the Profit and Loss Account, there were no differences between the profit/(loss) as stated above and at historical cost.
Balance Sheetas at 31 January 2009 as at 31 January 2009 as at 31 January 2008 £ £ Fixed assets Investments at fair value 7,805,465 8,877,030 Current assets Debtors and prepayments 240,016 221,203 Investments at fair value 13,113,111 15,124,308 Cash at bank 15,256 23,865 ------------- ------------- 13,368,383 15,369,376 Creditors: (138,150) (179,089)
amounts falling due within one
year ------------- ------------- Net current assets 13,230,233 15,190,287 ------------- ------------- Net assets 21,035,698 24,067,317 ------------- ------------- Capital and reserves Called up share capital 201,078 204,992 Capital redemption reserve 883,743 879,829 Revaluation reserve (1,537,950) 743,099 Special distributable reserve 16,968,144 30,141,575 Profit and loss account 4,520,683 (7,902,178) ------------- ------------- Equity shareholders' funds 21,035,698 24,067,317 ------------- ------------- Net asset value per Ordinary 104.61p
117.41p
Share
Reconciliation of Movements in Shareholders' Funds
for the year ended 31 January 2009
Year ended Year ended 31 January 2009 31 January 2008 £ £ Opening shareholders' funds 24,067,317 9,772,148 Share capital subscribed - 14,869,624 Share capital bought back (379,254) (846,932) (Loss)/profit for the year (2,194,337) 581,497 Dividends paid in year (458,028) (309,020) ------------- ------------- Closing shareholders' funds 21,035,698 24,067,317 ------------- -------------Cash Flow Statement
for the year ended 31 January 2009
Year ended Year ended 31 January 2009 31 January 2008 £ £ Interest income received 304,782 265,744 Dividend income 814,332 722,262 Other income 5,098 - Investment management fees paid (516,689)
(509,142)
Cash payments for other expenses (386,878) (276,845) ------------- ------------- Net cash inflow from operating 220,645 202,019activities Investing activities Sale of investments 227,615 1,225,594 Purchase of investments (1,624,774) (2,857,505) ------------- ------------- Net cash outflow from investing (1,397,159) (1,631,911)activities Dividends Equity dividends paid (458,028) (155,032) ------------- ------------- Cash outflow before financing and (1,634,542) (1,584,924)liquid resource management
Management of liquid resources Decrease/(increase) in monies 2,011,197 (14,429,782)held in money market funds Financing Issue of own shares - 14,869,624 Purchase of own shares (385,264) (871,495) ------------- ------------- (385,264) 13,998,129 ------------- ------------- Decrease in cash for the year (8,609) (2,016,577) ------------- -------------
Reconciliation of loss on ordinary activities before taxation to net cash inflow from operating activities
2009 2008 £ £ (Loss)/profit on ordinary activities (2,194,337) 581,497before taxation Net losses/(gains) on realisations 21,299 (463,591)of investments Net unrealised losses on investments 2,574,520 36,523 Increase in debtors (145,908) (24,995) (Decrease)/increase in creditors and (34,929) 72,689accruals Transaction costs charged to capital -
(104)
Net cash inflow from operating 220,645
202,019
activities
Analysis of changes in net funds
Cash Liquid resources Total £ £ £ At beginning of 23,865 15,124,308 15,148,173year Cash flows (8,609) (2,011,197) (2,019,806) At 31 January 2009 15,256 13,113,111 13,128,367Notes1. Basis of accountingThis announcement of the annual results of the Company for the year ended 31January 2009 has been prepared using accounting policies consistent with thoseadopted in the full audited annual accounts which have been prepared under UKGenerally Accepted Accounting Practice (UK GAAP) and the Statement ofRecommended Practice, `Financial Statements of Investment Trust Companies'("SORP") issued by the Association of Investment Companies in January 2003,revised December 2005 ("the SORP").2. Income 2009 2008 £ £ Income from bank deposits 2,605 12,611 Income from investments - from equities 85,896 49,861 - from overseas based OEICs 696,194 716,677 - from loan stock 309,769 260,576 ------------- ------------- 1,091,859 1,027,114 Other income 5,098 - ------------- ------------- Total income 1,099,562 1,039,725 Total income comprises Dividends 782,090 766,538 Interest 312,374 273,187 Other 5,098 - ------------- ------------- 1,099,562 1,039,725
Income from investments comprises
Listed overseas securities 696,194 716,677 Unlisted UK securities 85,896 49,861 Loan stock interest 309,769 260,576 ------------- ------------- 1,091,859 1,027,114
3. Net asset value per Ordinary Share
Net asset value per Ordinary Share is based on net assets at the end of theyear and on 20,107,800 Ordinary Shares of 1 pence (2008: 20,499,199), being thenumber of Ordinary Shares in issue on that date. There is no difference betweenbasic net asset value per Ordinary Share and diluted net asset value perOrdinary Share as there are no instruments that are potentially dilutive.
4. Return per Ordinary Share
The revenue return per Ordinary Share is based on the net revenue profit from ordinary activities after taxation of £478,663 (2008: £422,621) and on 20,338,366 (2008: 19,094,986) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.
The capital return per Ordinary Share is based on a capital loss of £2,673,000(2008: return of £158,876) which includes the portion of the InvestmentManager's fees charged to the capital reserve of £300,909 (net of tax) (2008: £396,439) and on 20,338,366 (2008: 19,094,986) Ordinary Shares, being theweighted average number of Ordinary Shares in issue during the year.
5. Investment Manager's Fees
In accordance with the policy statement published under "Management, Expenses and Administration" in the Company's Prospectus dated 2 November 2006, the Directors have charged 75% of the investment management expenses to the realised capital reserve.
6. Dividends
The Company proposes to pay a final dividend of 1 penny per Ordinary Share fromincome. The dividend will be recommended to members at the Annual GeneralMeeting and, if approved, will be paid on 10 June 2009 to shareholders on theRegister on 15 May 2009.
7. Related party transactions
Matrix Group Limited has a significant interest in Matrix Corporate Capital LLP("MCC"), who became the Company's brokers shortly before the year-end. Threeshare buybacks were undertaken by MCC on the Company's instruction, costing £116,135 (2008: nil). An amount of £35,811 (2008: nil) was due to MCC at theyear-end. 8. Financial Information The financial information set out in these statements does not constitute theCompany's statutory accounts for the year ended 31 January 2009 in terms ofsection 240 of the Companies Act 1985 but is derived from those accounts.Statutory accounts for the year ended 31 January 2009 will be delivered toCompanies House following the Company's Annual General Meeting. The auditorshave reported on those accounts: their report was unqualified and did notcontain a statement under Section 237 (2) or (3) of the Companies Act 1985.
9. Annual Report
A Summary Annual Report will be circulated by post to all Shareholders shortly and copies will be available thereafter to members of the public from the Company's registered office. Shareholders who wish to receive a copy of the full Annual Report may request a copy by writing to the Company Secretary, Matrix-Securities Limited, One Vine Street, London W1J 0AH. Alternatively copies may be downloaded via the Company Secretary's web site at www.mig4vct.co.uk.
10. Annual General Meeting
The Annual General Meeting of the Company will be held at 12.00 noon on Thursday, 21 May 2009 at the offices of Matrix Group Limited, One Vine Street, London W1J 0AH.
Contact details for further enquiries:
Sarah Penfold of Matrix-Securities Limited (the Company Secretary) on 020 3206 7000 or by e-mail on mig4@matrixgroup.co.uk
Mark Wignall or Mike Walker at Matrix Private Equity Partners LLP (the Investment Manager), on 020 3206 7000 or by e-mail on info@matrixpep.co.uk.
MATRIX INCOME & GROWTH 4 VCT PLC