8th Mar 2006 07:03
Matrix Income & Growth VCT PLC08 March 2006 Matrix Income & Growth VCT plc 8 March 2006 Preliminary Results for the fifteen months ended 31 December 2005 Investment Objective Matrix Income & Growth VCT plc is a Venture Capital Trust (VCT) managed byMatrix Private Equity Partners Limited (MPEP) investing primarily in establishedprofitable unquoted companies. The Company's objective is to provide investors with a regular and growingincome stream, by way of tax free dividends, and to generate capital growththrough portfolio realisations, which can be distributed by way of additionaltax free dividends. Financial highlights Ordinary Shares (listed on 8 October 2004) Initial net asset value per share 94.5 penceInitial net assets £20,933,124 31 December 2005Net assets £20,728,204Net asset value per share 93.6 penceTotal dividends per share for the period 1.0 pennyTotal return to shareholders since launch per share* 94.6 penceShare price (mid market price) 99.0 pence * Net asset value per share plus cumulative dividends per share. This comparesto an original investment cost of 60 pence per share after allowing for incometax relief of 40 pence per share. Chairman's Statement Overview I am pleased to present to Shareholders the annual results of Matrix Income &Growth VCT plc for the period from 1 October 2004 to 31 December 2005 and toreport good progress. The Company changed its accounting reference date from 30 September to 31December on 21 April 2005. This Report therefore covers the fifteen monthperiod since 30 September 2004, the date of its last audited accounts. Thefirst issue of shares under the Offer for Subscription was made on 5 October2004 and the shares were admitted to the Official List of the UK ListingAuthority and to trading on 8 October 2004. Your Company has raised £20.9 million, net of all costs, from 1,634Shareholders. The Company was one of only 11 VCTs launched in the 2004/2005 taxyear to raise in excess of £20 million. An encouraging start has been made in constructing the portfolio of qualifyinginvestments and the Company's revenue return has enabled your Directors torecommend a final dividend of 0.7 of a penny per share, making a total of 1.0penny per share for the period. The net asset value (NAV) per Ordinary Share at 31 December 2005 was 93.6 penceper share, after providing for total dividends of 1.0 penny per share, comparedwith the initial NAV of 94.5 pence per share. In line with the strategy set outin the Prospectus, the Board has invested the majority of the funds in aportfolio of interest bearing investments which are readily available forinvestment to meet the Investment Manager's qualifying investment programme asit unfolds. Investment portfolio In this period under review and in the period since 31 December 2005, sixinvestments were completed by the Investment Manager. As reported in theInterim Report, the Company invested £212,893 into FH Ingredients in February2005 and £150,000 into Sectorguard in August 2005. More recently, an investmentof £1,000,000 was made in September 2005 into Ministry of Cake (previouslyMaynard Scotts), a manufacturer and seller of frozen desserts to the foodservice industry. In October 2005 an investment of £1,000,000 was made tosupport the Management Buy Out (MBO) of Youngman Group, a leading manufacturerof ladders and access towers. Since 31 December 2005, £560,302 was invested tosupport the MBO of Vectair Holdings, a producer of air-care and sanitaryproducts and a further £975,000 was invested to support the MBO of CampdenMedia, a publisher of titles in the healthcare and wealth management sectors. In line with our objective, all six qualifying investments have been made inprofitable companies and 96% of the qualifying portfolio is represented byunquoted investments. Results and dividend The revenue account generated a net revenue return (after tax) for the period of£288,940 and your Directors will be recommending a final dividend of 0.7 of apenny per share to Shareholders at the Annual General Meeting to be held on 27April 2006. The dividend will be paid on 16 May 2006 to Shareholders on theRegister on 18 April 2006 making a total of 1.0 penny per share for the periodended 31 December 2005. This is in line with the Company's objective to provideinvestors with a regular and growing income stream. Investment in qualifying holdings The change of the accounting reference date to 31 December has maximised theamount of time available to the Investment Manager to meet the target set by HMRevenue & Customs of investing 70% of the funds raised in qualifying unquotedand AIM quoted companies. The key date in this respect is 31 December 2007. At 7March, the Company is 19% invested in qualifying companies which is in line withexpectations. Communication with Shareholders The Company intends to communicate regularly with Shareholders. The April AGMwill provide a useful platform for the Board to meet Shareholders and exchangeviews. Your Board welcomes active attendance at General Meetings to giveShareholders the opportunity to meet your Directors and representatives of theInvestment Manager. Our second newsletter providing further information on theprogress of the Company was sent out in December 2005. In this your Board waspleased to report that your Investment Manager had gained recognition amongstits peers, winning the award for the Venture Capital Trust Manager of the Yearat the Investor AllStars 2005 Awards ceremony in November 2005. Changes to UK accounting rules Shareholders may be aware that there have been some recent changes to UKaccounting rules. These will apply to the Company for the first time in thecurrent financial year to 31 December 2006 and further details will be set outin the 2006 Interim Report. One change which will have a direct impact on theNAV of the Company is the requirement to value quoted investments at the bidprice as opposed to using the mid market price. However, had bid prices beenused for the period-end valuations, this would not have resulted in a materialdifference to the NAV per share at 31 December 2005. Outlook Despite a better than expected showing over the Christmas period, recent figuressuggest that the slowdown in consumer spending may have further to run. In anumber of areas retailers are cutting prices in order to try and stimulatedemand. However, very high levels of consumer debt by historical standardscombined with the effects of markedly higher domestic energy bills on incomesmay continue to exert downward pressure on retail spending. Under thisscenario, economic growth is unlikely to rebound sharply and inflation, evenallowing for higher energy prices, is likely to remain benign. This suggeststhat interest rates are likely to stay low for the foreseeable future. Nevertheless, outside of the high street, business confidence in the service andmanufacturing sectors remains relatively robust reflecting healthy profits'growth and strong cash flows. Low interest rates and inflation together withsteady economic growth should continue to support these favourable trends. The Investment Managers are continuing to witness a good deal flow. Moreover,although the amount of private equity money chasing investment opportunities israising alarm in some quarters, our Managers report that, despite the increasingcompetition for mandates, deals remain attractively priced in that part of themarket in which your Company operates. Against this background, the Board remains confident that the Manager will beable, within the planned timescale, to construct a broadly based portfolio ofinvestments within the UK smaller companies sector. This will be designed toprovide Shareholders with a regular and growing stream of income together withthe prospects of capital growth. I would like to take this opportunity to thank all Shareholders for theircontinuing support of the Company. Keith NivenChairman Investment Manager's Review The Company's strategy is to invest principally in established profitableunquoted companies. Typically these investee companies will be cash-generativeand therefore capable of producing income as well as capital returns toShareholders on their ultimate sale or flotation. The Company focuses primarilyon investments in MBOs. Progress has been made towards the target of investing 70% of the Fund inqualifying investments by 31 December 2007. The Fund is benefiting from a strongflow of MBO opportunities. We anticipate this continuing and expect to reach thetarget for investing in qualifying companies comfortably over the course of thenext two years. We have completed four investments during the period under review. Twoinvestments into FH Ingredients in February 2005 of £212,893 and intoSectorguard in August 2005 of £150,000 were reported in the Interim Report. Wehave since made two additional investments, both MBOs of £1,000,000 each, intoMinistry of Cake (previously Maynard Scott Limited) a manufacturer and seller offrozen desserts to the food service industry and into Youngman Group, a leadingmanufacturer of ladders and access towers in September and October 2005respectively. Since the period-end two further investments have been completed totalling £1.5million, bringing the amount invested to £3.9 million, some 19% of the Fund. InJanuary £560,302 was invested to support the MBO of Vectair Holdings, aBasingstoke based producer of air-care and sanitary products used primarily inoffice and commercial washrooms. More recently, £975,000 was invested in CampdenMedia, a London based publisher of magazines and yearbooks and arranger ofconferences aimed at the healthcare and private wealth management markets. Thebusiness was bought by its management from private shareholders in January 2006. Qualifying Investments The qualifying investments in the portfolio as at 31 December 2005 are detailedbelow: FH Ingredients Limited Cost: £212,893Valuation: £212,893Basis of valuation: CostEquity % held: 9.3%Business: Processor and distributor of frozen herbs to the food processing industryLocation: Eye, SuffolkHistory: Management buy-in/buy-out from Harrington Food GroupOther MPEP funds investing: TriVen VCT plc, TriVest VCT plcIncome generated for the fund £17,142in period:Audited financial information: First annual audited accounts will be for the year ending 28 February 2006 Ministry of Cake Limited Cost: £1,000,000Valuation: £1,000,000Basis of valuation: CostEquity % held: 17.1%Business: Manufacturer of frozen cakes and desserts for the food services industryLocation: Taunton, SomersetHistory: Management buy-in/buy-out from private ownershipOther MPEP funds investing: TriVen VCT plc, TriVest VCT plcIncome generated for the fund £15,406in period:Audited financial information: First annual audited accounts will be for the period ending 30 June 2006 Sectorguard plc Cost: £150,000Valuation: £150,000Basis of valuation: Mid market less marketability discount (AIM quoted)Equity % held: 1.5 %Business: Provision of manned guarding, mobile patrolling and alarm response servicesLocation: Waltham Cross, EssexHistory: Expansion finance as part of a £3 million capital raisingOther MPEP funds investing: TriVen VCT plc, TriVest VCT plc, Matrix income & Growth 2 VCT plcIncome generated for the fund in £nilperiod: Audited financial information: For the year ended 30 September 2005 Turnover £16,375,000 Operating profit stated before goodwill amortisation £1,155,000 Net Assets £8,169,000 Youngman Group Limited Cost: £1,000,000Valuation: £1,000,000Basis of valuation: CostEquity % held: 8.6%Business: Manufacturer of ladders and access towersLocation: Maldon, EssexHistory: Management buy-in/buy-out from SGB GroupOther MPEP funds investing: TriVen VCT plc, TriVest VCT plc, Matrix Income & Growth 2 VCT plcIncome generated for the fund £17,470in period:Audited financial information: First annual audited accounts will be for the period ending 31 December 2006 Further details of the investments in the portfolio may be found on the Matrixwebsite: www.matrixgroup.co.uk/portfolio Statement of Total Return for the Fifteen months ended 31 December 2005 (incorporating the Revenue Accountof the Company) Fifteen months ended Period from 15 June to 31 December 2005 30 September 2004 Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Income 842,724 - 842,724 - - -Investment managers' fees (110,779) (332,337) (443,116) - - -Other expenses (375,313) - (375,313) (3,231) - (3,231) --------- --------- --------- ---------- ------- ----------Return on ordinary activities 356,632 (332,337) 24,295 (3,231) - (3,231)before taxation Tax on ordinary activities (67,692) 63,144 (4,548) - - - --------- --------- --------- ---------- ------- ----------Return attributable to equity 288,940 (269,193) 19,747 (3,231) - (3,231)shareholders Dividends in respect of equity (221,436) - (221,436) - - -shares --------- --------- --------- ---------- ------- ----------Transfer to/(from) reserves 67,504 (269,193) (201,689) (3,231) - (3,231) ======== ======== ======= ======== ======= =======Return per share 1.86p (1.73)p 0.13p (1,615.50)p 0.00p (1,615.50)p The revenue column is the profit and loss account of the Company. All revenueand capital items in the Statement of Total Return derive from continuingoperations. No operations were acquired or discontinued in the period. Balance SheetAs at 31 December 2005 31 December 2005 30 September 2004 £ £Fixed assetsInvestments 2,362,893 - ------------- -------------- 2,362,893 -Current assetsDebtors and prepayments 1,657,859 37,502Current investments 17,109,025 -Cash at bank 19,090 12,500 ------------- ------------- 18,785,974 50,002 Creditors: amounts falling due within one (420,663) (3,231)year ------------- ------------Net current assets 18,365,311 46,771 ======== ========Net assets 20,728,204 46,771 ======== ========Capital and reservesCalled up share capital 221,438 50,002Share premium account 20,711,686 -Capital reserve - realised (269,193) -Revenue reserve 64,273 (3,231) ======== ========Shareholders' funds 20,728,204 46,771 ======== ======== Equity interests 20,728,204 (3,229)Non Equity Interests - 50,000 ======== ======= 20,728,204 46,771 ======== =======Net asset value per Ordinary Share 93.61p (1,614.50)p Net asset value per Preference Share - 100.00p Cash Flow Statement for the fifteen months ended 31 December 2005 Fifteen months ended 31 Period from 15 June to 30 December 2005 September 2004 £ £ Operating activitiesInvestment income received 758,659 -Investment management fees paid (319,543) -Other cash payments (254,499) - ----------- ------------Net cash inflow from operating activities 184,617 - Investing activitiesAcquisitions of investments (2,362,893) - -DividendsInterim equity dividends paid (66,431) - ------------ -----------Cash outflow before financing and liquid (2,244,707) -resource management Management of liquid resourcesIncrease in liquid resources (18,669,327) - FinancingShare capital raised 22,131,121 12,500Issue costs of Ordinary Shares (1,210,497) - --------------- --------------- 20,920,624 12,500 ========= =========Increase in cash for the period 6,590 12,500 ========= ========= Notes 1. Net asset value per Ordinary Share Net asset value per Ordinary Share is based on net assets at the end of theperiod, and on 22,143,821 Ordinary Shares, being the number of Ordinary Sharesin issue on that date. 2. Return per Ordinary Share The revenue return per Ordinary Share is based on the net profit from ordinaryactivities after taxation of £288,940 and on 15,498,387 Ordinary Shares, beingthe weighted average number of Ordinary Shares in issue during the period offifteen months. The capital loss per Ordinary Share is based on a capital loss of £269,193 whichincludes the net portion of the Investment Manager's fees charged to the capitalreserve of £332,337 and 15,498,387 Ordinary Shares, being the weighted averagenumber of Ordinary Shares in issue during the period of fifteen months. 3. Investment Manager's Fees In accordance with the policy statement published under "Management, Expensesand Administration" in the Company's Prospectus dated 9 July 2004, the Directorshave charged 75% of the investment management expenses to capital reserve. 4. Financial Information The financial information set out in these statements does not constitute theCompany's statutory accounts for the fifteen months ended 31 December 2005 butis derived from those accounts. Statutory accounts for the fifteen months ended31 December 2005 will be delivered following the Company's Annual GeneralMeeting. The auditors have reported on those accounts: their reports wereunqualified and did not contain statements under Section 237 (2) or (3) of theCompanies Act 1985. 5. Annual Report The Annual Report will be circulated by post to all Shareholders shortly andcopies will be available thereafter to members of the public from the Company'sregistered office. 6. Annual General Meeting The Annual General Meeting will be held at 11.00 am on Thursday 27 April 2006 atthe offices of Matrix Group Limited, One Jermyn Street, London SW1Y 4UH. Contact details for further enquiries: Sarah Penfold of Matrix-Securities Limited (the Company Secretary) on 020 79253300 or by e-mail on [email protected] Mark Wignall or Mike Walker at Matrix Private Equity Partners Limited (theInvestment Manager), on 020 7925 3300 or by e-mail on [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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