Annual Financial Report for 31 December 2020
MOBEUS INCOME & GROWTH 4 VCT PLC LEI: 213800IFNJ65R8AQW943
ANNUAL FINANCIAL RESULTS OF THE COMPANY FOR THE YEAR ENDED 31 DECEMBER 2020
Mobeus Income & Growth 4 VCT plc (the "Company") announces the final results for the year ended 31 December 2020. These results were approved by the Board of Directors on 29 March 2021.
You may, in due course, view the Annual Report & Financial Statements, comprising the statutory accounts of the Company by visiting www.mig4vct.co.uk.
FINANCIAL HIGHLIGHTS
As at 31 December 2020: Net assets: £68.46 million Net asset value ("NAV") per share: 81.50 pence
- Net asset value ("NAV") total return1 per share of 22.2% for the year. - Share price total return1 per share was 12.9% for the year. - Dividends paid in respect of the year of 6.00 pence per share. Cumulative dividends paid1 stand at 134.20 pence per share. - £4.80 million was invested into four new growth capital investments and four existing portfolio companies during the year. - £8.87 million of unrealised gains achieved in the year from strong portfolio performance. - The Company realised investments totalling £14.97 million of cash proceeds and generated net realised gains in the year of £4.44 million.
PERFORMANCE SUMMARY
Cumulative Total return1 per share (NAV basis)
The longer term trend of performance on this measure is shown in the table below:-
1 - Definitions of key terms and alternative performance measures shown above and throughout this report are provided in the Glossary of Terms within the Annual Report & Financial Statements.
CHAIRMAN'S STATEMENT
I am pleased to present the annual results of Mobeus Income & Growth 4 VCT plc for the year ended 31 December 2020.
Introduction This is my first Statement since succeeding Christopher Moore as Chairman on 1 October 2020 following my appointment as a Director of the Company in September 2020. On your behalf, I would like to thank Christopher for the excellent service he provided to Shareholders throughout a period of significant change and development in the VCT sector.
Overview Overall, this year has been a very good one for Shareholder returns, despite the significant and unprecedented challenges resulting from the outbreak of COVID-19. Your Company's NAV total return per share for the year was a very pleasing 22.2%.
At the start of the year, before the pandemic took hold, the Company completed a timely and successful fundraising ensuring that the Company remained well funded. The very solid performance achieved in 2019 initially continued with strong portfolio progress as well as two well timed and profitable realisations achieved in February.
Shortly before the March quarter end, the COVID-19 pandemic and the UK Government's lockdown measures created substantial uncertainty and instability. There was a significant decline in consumer and business confidence and public markets saw a sharp fall. The immediate impact for Shareholders was a fall in portfolio valuations at the end of March, the low point of the year. These adjustments were partly general market related, but mainly reflected the Investment Adviser's assessment of COVID-19's potential impact on specific market segments and investee companies.
As the year progressed, the environment for most of our investee companies proved less volatile and uncertain than initially assumed in March.
In addition, favourable trading conditions emerged for a number of technology- related companies in the portfolio including those companies operating with direct to consumer business models. The valuation of the portfolio not only recovered strongly during the second quarter but also showed further improvement as the year progressed. Whilst the UK Government's roadmap to ease restrictions leaves a number of hurdles to be overcome, your Board is pleased with how well so many portfolio companies have been able to take advantage of the opportunities that have arisen and with the overall performance achieved.
The Company remained an active investor during the year despite the COVID-19 related restrictions adversely impacting previously planned timelines. Throughout the year, the Company made investments into four new portfolio companies and four existing portfolio companies. The Company also profitably realised its investments in six portfolio companies including the disposal of a residual interest in Auction Technology Group, an investment which, taken as a whole, has yielded one of the Company's most successful investment returns in its history.
Further information on investment activity, portfolio valuation movements as well as investment activity after the year-end is presented in the Investment Portfolio section of this Statement and detailed in the Investment Adviser's Review below.
Looking forward, the Investment Adviser continues to report a healthy pipeline of investment opportunities and strong trading performance in the majority of the portfolio companies.
Performance The Company's NAV total return per share for the year was 22.2% (2019: 10.7%) being the closing NAV of 81.50 pence plus 10.00 pence of dividends paid in the year, divided by the opening NAV of 74.90 pence. The share price total return for the year was 12.9% (2019: 17.9%), compared to the NAV return of 22.2%. This difference arises principally due to the timing of NAV announcements which are usually made on a date following the date to which they relate. This is explained more fully in the Strategic Report within the Annual Report, under Performance.
The positive NAV total return for the year was primarily due to:
I. Substantial net unrealised gains in portfolio valuations; II. Significant realised gains on disposals; and III. A strong revenue return.
The Company's performance has demonstrated strong resilience during a volatile year. The valuations at the year-end reflect that many of our investee companies became beneficiaries of accelerated changes in UK consumer and business behaviour, brought on by the pandemic and lockdown restrictions. Despite the continued uncertainty in respect of the pandemic's ultimate effect, both the Board and the Investment Adviser believe that many of these changes have become structural and will not reverse.
The Company's revenue return increased to £1.85 million during the year (2019: £1.13 million). This was mainly due to significant investment income received on the disposal of Auction Technology Group as well as higher dividend income, but partially offset by deferral of loan interest payments to support portfolio companies impacted by COVID-19.
At the year-end, your Company was ranked 14th out of 30 Generalist VCTs over ten years and 15th out of 41 Generalist VCTs over five years, in the Association of Investment Companies' analysis of NAV Cumulative Total Return Performance. Shareholders should note that these figures do not reflect the increased NAV per share in the fourth quarter, disclosed in this Report.
Investment portfolio The portfolio performed strongly in the year. The overall value increased by £13.31 million (2019: £5.68 million), or 34.5% (2019: 16.3%) on a like-for-like basis, compared to the start of the year. This increase comprised a net unrealised uplift in portfolio valuations of £8.87 million and £4.44 million in net realised gains over the year.
As at the year-end, the portfolio was valued at £41.68 million after taking account of investments purchased and sold in the year, together with the net realised and unrealised gains referred to above (2019: £38.54 million).
COVID-19 has been the dominant influence on the portfolio and its valuations for the majority of the year. During this unprecedented time, the Board liaised closely with the Investment Adviser, to ensure that all practical steps were taken to enable each portfolio company to trade through the crisis and return to growth in value. All investee companies were alerted to, and most utilised, the available government support packages.
The Company initially provided loan interest payment holidays to some portfolio companies, generating vital cash headroom during the period. During the year, £4.80 million was invested by the Company (2019: £4.48 million), comprising £1.96 million in four new investments and £2.84 million in four existing portfolio companies (analysed in the Investment Adviser's Review below and explained within the Notes to the Financial Statements).
These businesses may present opportunities for further investment in the future as they may require additional capital to realise their plans to expand.
The Company realised investments in Biosite, Auction Technology Group, Access IS, Blaze Signs, Vectair Holdings and Bourn Bioscience during the year. Combined with loan repayment and other capital receipts, including the partial realisation of Omega Diagnostics in several phases, total proceeds of £14.97 million were generated. The six realised investments, in aggregate, have generated total income and capital proceeds of £21.64 million and £13.99 million in realised gains over original cost which is equivalent to a combined 2.8x return over the life of these investments.
For the year under review, the portfolio generated a net realised gain of £4.44 million. Within this, the principal gains were from full exits by Access IS (£1.75 million), Auction Technology Group (£1.16 million), Bourn Bioscience (£0.80 million) and Blaze Signs (£0.04 million) offset by a decline of £(0.04) million on the realisation of Vectair, a strong profit over cost, but slightly below its holding value at the start of the year pre-COVID-19.
Further gains of £0.57 million arose from the partial realisation of Omega Diagnostics, as well as net gains of £0.16 million arising from loan repayments and other capital proceeds.
The portfolio also achieved a net increase in unrealised valuations of £8.87 million for the year on investments still held, with substantial increases from Virgin Wines, MPB Group and Wetsuit Outlet partially offset by modest valuation falls at Tapas Revolution, CGI Creative Graphics and Media Business Insight.
Further details on these portfolio movements are contained in the Investment Adviser's Review.
I am also pleased to report that transactional activity remains strong after the year-end, and up to the date of this report. Since the year-end, the Company has made new and follow-on Investments totalling £1.88 million comprising one new investment of £0.91 million and £0.97 million in four follow-on investments.
There have also been two events resulting in additional positive returns for Shareholders. Firstly, on 11 February 2021, the remaining holding in Omega Diagnostics was realised for £0.42 million. Over the life of this investment total proceeds of £1.17 million were received, which is a 5.9x multiple on original cost.
Secondly, as Shareholders may have seen in the financial press, the flotation of Virgin Wines on the AIM market took place on 2 March 2021, at a Placing Price per share that increased the value of the Company's investment in Virgin Wines by £4.64 million. This increase reflects a premium generated by the strong support received from investors in the public offer. In isolation, this has resulted in a 5.53 pence uplift in NAV per share compared to the 31 December 2020 NAV per share contained within this Annual Report. As part of this transaction, the Company received repayment of its remaining loan stock, leaving Virgin Wines ungeared. The Board and Investment Adviser remain strong supporters of Virgin Wines and the Company has retained its entire equity holding.
The flotation on the AIM market of another portfolio company, Parsley Box, is expected to take place on 31 March 2021. Subject to Admission to trading, the Placement Price of £2.00 per share will increase the year-end value of the Company's investment by £1.70 million. In isolation, this will result in a further 2.02 pence uplift in NAV per share compared to the 31 December 2020 NAV per share contained within this Annual Report.
Dividends Your Board declared and paid an interim dividend in respect of the year ended 31 December 2020 of 6.00 pence on 7 May 2020. No further dividends are proposed in respect of the year.
The interim dividend paid in respect of the year ended 31 December 2020 of 6.00 pence per share (2019: 19.00 pence) has increased cumulative dividends paid since inception to 134.20 pence (2019: 128.20 pence) per share.
The Company's target of paying a dividend of at least 4.00 pence per share in respect of each financial year has been achieved in each of the last ten years, and often exceeded. However, it should be noted that the continued move of the portfolio to an increased proportion of younger growth capital investments may lead to increased volatility, which could affect the return in any one year.
A chart showing the dividends paid in respect of each of the last five years and cumulative dividends on the same basis is included in the Strategic Report in the Annual Report. A full dividend history is contained in the Fund Performance section of the Company's website: www.mig4vct.co.uk.
Dividend Investment Scheme The Company's Dividend Investment Scheme ("DIS") was re-activated following the Annual General Meeting ("AGM") held in June 2020.
Shareholders wishing to take advantage of this method of increasing their investment in the Company can elect to join the DIS at any time by instructing the Registrar, Link Group, whose details are contained at the end of the Annual Report & Financial Statements or by completing the mandate form available on the Company's website: www.mig4vct.co.uk. Shareholders should note that an election must be registered at least 15 days prior to a dividend payment, for inclusion in the DIS. As no dividend payment has been made since the DIS was reinstated, no shares were allotted under the DIS scheme during the year.
Share Buybacks During the year, the Company bought back and cancelled 1,245,646 (2019: 1,483,865) of its own shares, representing 1.9% (2019: 2.2%) of the shares in issue at the beginning of the year, at a total cost of £0.73 million (2019: £1.07 million) inclusive of expenses. It is the Company's policy to cancel all shares bought back in this way. The Board regularly reviews its buyback policy and currently seeks to maintain the discount at which the Company's shares trade at no more than 5% below the latest published NAV. Further details are included in the Strategic Report within the Annual Report.
Shareholder Communications May I remind you that the Company has its own website containing useful information for Shareholders: www.mig4vct.co.uk.
The annual Shareholder event was held on Tuesday, 4 February 2020 at the National Gallery in central London. Feedback from attendees was that this was a successful and informative event. Due to the uncertainty of when it may be possible to meet in a physical location again and for the safety of all concerned, it is planned to hold a virtual Shareholder event later in 2021. Details will be notified to Shareholders once finalised and will be shown on the Company's website.
Environmental, Social and Governance (ESG) Whilst the requirements under company law to detail ESG matters are not directly applicable to the Company, the Board is conscious of its potential impact on the environment as well as its social and corporate governance responsibilities. The Investment Adviser has presented its ESG strategy to the Board and has started to provide regular updates regarding the ESG responsibilities of its portfolio of investee companies.
Your Board would like to assure Shareholders that ESG matters form a key consideration in investment decisions. The future FCA reporting requirements consistent with the Task Force on Climate-related Financial Disclosures commencing from 1 January 2021 do not currently apply to the Company however will be kept under review in light of any recommended changes.
In future, the Annual Report will address ESG matters in more detail. It is planned to provide additional reporting on these issues which are rightly viewed as integral to the investment process.
Shareholder Fraud Warnings We are aware of a number of cases where Shareholders are being fraudulently contacted or are being subjected to attempts of identity fraud. Shareholders should remain vigilant of all potential financial scams or attempts for them to disclose personal data for fraudulent gains. The Board strongly recommends Shareholders take time to read the Company's Fraud Warning section, including details of who to contact, contained within the Information for Shareholders section at the end of the Annual Report & Financial Statements.
Annual General Meeting The next Annual General Meeting of the Company will be held at 11.30 am on Tuesday, 18 May 2021. Shareholders should note that you will not be permitted to attend the AGM in person as it is likely the Government restrictions on physical meetings will still be in place at that time. The AGM will be held as a closed meeting with Shareholders able to join the meeting as attendees by electronic means.
A link to attend the meeting can be found in the Notice of Meeting at the end of the Annual Report & Financial Statements and on the Company's website at www.mig4vct.co.uk. Once the formal business of the meeting is concluded, a presentation by the Investment Adviser will commence followed by Shareholders' questions.
Shareholders will not be able to vote at the meeting and the Board encourages you to submit your vote by proxy by completing and returning the form enclosed or by electronic submission via the Link Shareholder portal at: www.signalshares.com. Shareholders are also strongly advised to appoint the Chairman of the Meeting as their proxy as attendance by proxies other than the Board and quorum, will not be permitted. Votes must arrive at the Registrar by 11.30am on Friday, 14 May 2021 to be valid.
The Notice of the meeting is included at the end of the Annual Report & Financial Statements. An explanation of the resolutions to be proposed can be found in the Directors' Report within the Annual Report.
Shareholders can also submit any questions about the resolutions to be passed at the AGM using the [email protected] email address up to 12 May 2021 and a response will be provided prior to the deadline for lodging proxy votes. You can also register any questions for the AGM by using the same email address or alternatively, use the question facility available during the meeting.
Outlook The impact of COVID-19 was and will continue to be wide reaching. Nevertheless, your Board considers that your Company is well positioned to continue to respond and adapt in most likely scenarios that can presently be foreseen. The successful realisations and earlier fundraising have given the Company strong liquidity not only to support the existing portfolio, but also to capitalise on opportunities which may arise for new investment.
The Investment Adviser is seeing a good pipeline of new and interesting investment opportunities. COVID-19 uncertainties and economic instability may cause global markets and economies to be more volatile in the short-term and UK and European businesses will continue to operate in an uncertain trading environment for the near future as the new UK/EU trade agreement beds in. The companies in the portfolio have been well prepared for a considerable time for the impact of Brexit and those preparations appear to be bearing fruit and working well. Although the degree and frequency of any future restrictions as a result of the pandemic are unclear, both the Investment Adviser and portfolio companies are well equipped to respond. Consequently, we have cause to be cautiously optimistic about the future.
I would like to take this opportunity once again to thank all Shareholders for your continued support and hope you and your families remain safe and well.
Jonathan Cartwright Chairman 29 March 2021
INVESTMENT POLICY The Company's policy is designed to meet the Company's Objective:
Investments The Company invests 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 produce a 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 the Company and which may change from time to time. The Company 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 the Company 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 the Company's total investments at the date of investment.
Liquidity The Company'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.
Borrowing The Company'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 Board would only consider doing so in exceptional circumstances.
INVESTMENT ADVISER'S REVIEW
Overview 2020 has been an unprecedented year in terms of initial value decline and subsequent recovery. The Company's year started well with a strong portfolio performance and two highly successful realisations. In March, the UK Government then introduced lockdown and social distancing measures in response to the COVID-19 pandemic. These measures had an immediate adverse impact on UK businesses, with many companies experiencing a significant reduction in demand, restrictions on working practices and disruption to their supply chains. Global markets also fell significantly. The valuations of the portfolio companies reflected this and experienced a significant decline at the end of the March quarter.
Once the immediate impact of lockdown subsided, the pandemic's continuing influence on business generally and portfolio companies specifically, was far clearer. It is pleasing that this impact has been far less negative than was initially feared with markets recovering and business activity levels quickly returning to pre COVID-19 levels in most cases. There have been a few portfolio companies which have experienced significant disruption but a significant proportion have actually benefited from a structural change in consumer purchasing habits and are now trading at or above their pre COVID-19 levels. General Retail now comprises over 50% of the portfolio and all these companies have significant direct to consumer channels - a business model that has performed well. The majority of the portfolio has therefore demonstrated a high degree of resilience with over 85% of companies by number showing revenue and/or earnings progression over the previous year. Software and other technology enabled businesses have also performed strongly and the portfolio has limited exposure to more challenging sectors such as hospitality and travel.
Strong trading activity levels created investment opportunities for the Company as portfolio companies sought to consolidate their positions by building capability in light of demand. A number of further growth capital investments were therefore made into the portfolio over the year. Mobeus continues to review the opportunities for follow-on investments and is in a good position to capitalise on opportunities due to the Company's strong liquidity. M&A sentiment also remained buoyant with a continuing stream of attractive realisations throughout the year. The outlook for both follow-on investment and realisations continues to be positive.
Although quoted markets have rallied since March, it is noteworthy that the principal driver of the rise in valuations over the recent months was strong underlying trading performance. A small number of companies have clearly struggled, but they are in the minority and their impact on overall shareholder return is minimal. Substantial value has arisen from the increase in revenues and earnings achieved across the majority of the portfolio. A significant example of this has been the flotation of Virgin Wines on the AIM market on 2 March 2021, at a price per share that further materially increases the value of the Company's investment. This increase reflects a premium generated by the strong support received from investors in the public offer.
The social and economic consequences of COVID-19 will be with us for some time to come and the practical impact of Brexit is still emerging. However, the portfolio is well prepared, in robust shape and well placed to respond to the challenges and opportunities that arise going forward.
Overall, the portfolio has demonstrated great resilience and potential. Nevertheless, we remain mindful of the macro-economic uncertainties and market volatility. We are cautiously optimistic, based upon the recent evidence of improved trading performance at many constituents of the portfolio. Mobeus believes much of this uplift will become permanent in many cases and should underpin further potential growth within the portfolio.
New and further investments The Company made new and follow-on investments totalling £4.80 million (2019: £4.48 million), comprising £1.96 million (2019: £4.03 million) into four new investments and £2.84 million (2019: £0.45 million) into four existing investments. This level of new and follow-on investment is pleasing given that there was effectively a temporary pause in new investment going into the summer months as entrepreneurs temporarily deferred fundraising but a healthy pipeline of suitable opportunities has been seen more recently. The level of follow-on investment into the portfolio has increased as anticipated, which indicates there are opportunities to further back growing portfolio companies that are achieving a strong performance.
New investments during the year A total of £1.96 million was invested into four new investments during the year, as detailed below:
Further investments during the year A total of £2.84 million was invested into four existing portfolio companies during the year, as detailed below:
Portfolio valuation movements The portfolio generated net unrealised gains of £8.87 million during the year. The scale of the valuation increases in the last nine months of the year was primarily driven by the Company's growth portfolio, many of which have direct to consumer business models that have been ideally suited to the more physically remote business environment necessitated by COVID-19. Mobeus believes that this has accelerated an existing trend and in many cases the shift in behaviour will prove permanent. Over this period, some older style MBO portfolio companies with similar business practices have also benefited. A few companies have struggled in this environment, and while there remains a possibility such businesses will fail, their value has already been reduced to modest levels, reducing their risk to future shareholder value. Total valuation increases were £12.94 million. The main valuation increases were:
Virgin Wines, MPB and Parsley Box have generated record earnings and revenues over the lockdown periods and beyond. All have significantly increased their customer base and there is evidence that these new customers are continuing to be at least as active and profitable as their pre-COVID-19 counterparts. Wetsuit Outlet has seen a marked turnaround in the last year and its performance is likely to further benefit from stronger brand relationships and increased usage by customers of its online channel.
Within total valuation decreases of £(4.07) million. The main reductions were:
These companies saw the most significant impact of a sudden decline in demand for their products or services as a result of COVID-19. However, as restrictions are eventually eased, a recovery is anticipated in due course.
The majority of the increase in portfolio value lies in the top 10 companies which represent over 70% of the portfolio by value. Year-on-year growth by either revenues or earnings has been seen in all of the top ten companies and it is pleasing to note that nine of these are from the younger, growth portfolio.
The year also saw portfolio companies, Jablite, Oakheath (formerly Super Carers) and CB entering voluntary liquidation and recognised as a realised loss. These companies were struggling before the impact of COVID-19. Valuation reductions for these companies had already been made. As a result, there has been little impact on shareholder value from these administration processes.
Portfolio Realisations The Company realised its investments in Biosite, Auction Technology Group, Access IS, Blaze Signs, Vectair Holdings and Bourn Bioscience during the year, receiving a total of £13.71 million in proceeds, contributing to total proceeds of £14.97 million during the year, as detailed below. In summary, aggregate proceeds generated over the life of these investments were £21.64 million representing a gain over original cost of £13.99 million.
Loan stock repayments and other gains/(losses) During the year and following a significant increase in the share price, the Company received £0.75 million from the partial realisations of its holding in AIM listed Omega Diagnostics Group plc, generating realised gains of £0.57 million. Based upon the valuation at the year-end, this holding has achieved an attractive return to date of 5.1x multiple on cost, an IRR of 18.2%. This investment was subsequently fully realised after the year-end (see realisations after the year-end for further details).
Proceeds of £0.37 million were received via loan repayments from BookingTek, Vian Marketing (trading as Red Paddle) and End Ordinary Group (trading as Buster & Punch), generating a realised gain of £0.06 million.
Finally, consideration and a realised gain of £0.14 million was received in respect of Redline Worldwide, an investment realised in a previous year and a realised loss of £(0.04) million from Jablite Holdings was recognised as this company entered liquidation, with some recovery still anticipated.
1 Total portfolio income in the year is generated solely from investee companies within the portfolio. See Note 3 to the Financial Statements for all income receivable by the Company. The increase in income was mainly due to interest of £1.08 million received on the loan instruments in Auction Technology Group being paid, as part of the sale transaction, which had not previously been recognised. Portfolio yield is expected to fall for the foreseeable future, as the growth portfolio's returns are likely to be more capital in nature.
Portfolio review The portfolio's movements and valuation changes in the year are summarised below:
New investments after the year-end £0.91 million was invested into one new investment after the year-end, as detailed below:-
Further investments after the year-end A total of £0.97 million was invested into four existing portfolio companies after the year-end, as detailed below:
Realisations after the year-end
Admission to AIM of Virgin Wines Mobeus is also pleased to report that on 2 March 2021, Virgin Wines UK plc ("Virgin Wines"), an existing portfolio company, was admitted to trading on the Alternative Investment Market ("AIM") of the London Stock Exchange, alongside a placing of new and existing shares. The Placing Price of these shares was £1.97 per share, valuing Virgin Wines at a market capitalisation of £110m. Mobeus has been proud to partner the management of Virgin Wines in growing this business. We continue to support Virgin Wines and its future development and are pleased to be retaining the Company's entire equity holding.
At the date of the admission, and based upon the Placing Price of £1.97 per share, the Company's beneficial equity investment in Virgin Wines was valued at £9.12 million. This represented a significant uplift in valuation of £4.64 million, compared to that included in the Company's audited Net Asset Value ("NAV") per share at 31 December 2020 as shown as part of this Annual Report. As part of this transaction, the Company received net proceeds of £1.86 million (net of transaction costs) to repay its loan stock and interest, leaving Virgin Wines ungeared at that point. At the date of this Report, Virgin's share price has remained above its Placing Price.
Funds available for investment Cash and other liquid investments available for investment amounted to £26.69 million at the year-end. Of this amount, £4.05 million is held as cash in bank accounts, and the balance is placed in AAA rated money market funds. The returns on these funds are low, but the Board retains its policy of seeking to minimise the loss of capital in respect of uninvested funds.
Environmental, Social, Governance considerations The Investment Adviser and the Board have discussed an appropriate framework within which to assess progress on these matters within the existing portfolio, and it will continue to be an important consideration in both the Investment Adviser's and the Board's assessment of new investment opportunities.
The statutory environmental disclosures are included in the Directors' Report within the Annual Report.
Outlook The portfolio is in a healthy position with many companies trading well throughout the lockdowns, and several at record levels. It continues to evolve offering a balance of fast-growing and more stable investments at various stages of maturity and scale across a range of diverse market sectors. There is a significant exposure to the direct to consumer business model which has underpinned performance during the year. This also gives confidence about the future performance of the portfolio and its ability to cope with other uncertainties, challenges and opportunities associated with Brexit, the macro-economic outlook and the latest and potentially ongoing national lockdowns. The new investment pipeline is recovering to levels seen pre-COVID-19 and capital deployment should continue at an encouraging rate in line with forecast. The Investment Adviser, although cautious in its approach, is confident that the portfolio is in a robust shape to be able to cope with whatever the short to medium-term holds.
Mobeus Equity Partners LLP Investment Adviser 29 March 2021
Investment Portfolio Summary as at 31 December 2020
PRINCIPAL RISKS The Directors acknowledge the Board's responsibilities for the Company's internal control systems and have instigated systems and procedures for identifying, evaluating and managing the significant and emerging risks faced by the Company. The Board's risk appetite is cognitive of the risks and rewards of investing in small unquoted companies. A key risk management review and robust assessment of the risks takes place at each quarterly Board meeting and the Board discusses emerging risks as and when they arise, such as the COVID-19 pandemic, and puts in place mitigating actions to manage the risk. The principal and emerging risks identified by the Board, a description of the possible consequences of each risk and how the Board manages each risk are set out below:
STATEMENT OF DIRECTORS' RESPONSIBILITIES The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year and the Directors have elected to prepare the Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these Financial Statements, the Directors are required to:
● select suitable accounting policies and then apply them consistently; ● make judgements and accounting estimates that are reasonable and prudent; ● state whether the Financial Statements have been prepared in accordance with United Kingdom accounting standards, subject to any material departures disclosed and explained in the Financial Statements; ● prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; ● prepare a Strategic Report, a Director's Report and Directors' Remuneration Report which comply with the requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication The Directors are responsible for ensuring the Annual Report and the Financial Statements are made available on a website. Financial Statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of Financial Statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the Financial Statements contained therein.
Directors' responsibilities pursuant to Disclosure and Transparency Rule 4 of the UK Listing Authority The Directors confirm to the best of their knowledge that:
a) the Financial Statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice give a true and fair view of the assets, liabilities, financial position and the profit of the Company; and
b) the Annual Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
Having taken advice from the Audit Committee, the Board considers the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Company's performance, business model and strategy.
Neither the Company nor the Directors accept any liability to any person in relation to the Annual Report except to the extent that such liability could arise under English law.
For and on behalf of the Board
Jonathan Cartwright Chairman 29 March 2021
FINANCIAL STATEMENTS
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.