TIDMMIXT
Matrix Income & Growth 3 VCT plc
Annual Results Announcement for the year ended 31 December 2008
12 March 2009
Investment Objective
Matrix Income & Growth 3 VCT plc ("the VCT" of "MIG3 VCT") is a Venture Capital
Trust ("VCT") listed on the London Stock Exchange. Its investment portfolio,
which invests primarily in established and profitable unquoted companies, is
managed by Matrix Private Equity Partners LLP ("MPEP").
The Company'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.
Financial Highlights
Ordinary Shares (listed on 26 January 2006)
Initial net asset value per share 94.5 pence
Initial net assets GBP18,907,738
31 December 2008 31 December 2007
Net assets GBP17,757,415 GBP19,471,932
Net asset value per share 88.9 p 97.5 p
Net cumulative dividends paid 4.75 p 2.3 p
Total return per share to Shareholders 93.7 p 99.8 p
since launch*
Share price (mid-market price) 80.0 p 87.5 p
Total expense ratio 3.7 % 3.7 %
* Net asset value per share plus cumulative dividends paid per share. This
compares with an original investment cost of 60 pence per share after allowing
for income tax relief of 40 pence per share.
A final income dividend of 0.8 of a penny per share will be recommended to
Shareholders at the AGM on 6 May 2009 to be paid on 15 May 2009, thereby
increasing net cumulative dividends paid since launch to 5.55 pence per share.
Chairman's Statement
I am pleased to present the annual results of Matrix Income & Growth 3 VCT plc
for the year to 31 December 2008 and to report on a year of satisfactory
progress in the context of the very challenging economic and market conditions
in the period.
Overview
2008 has been a year in which the economic environment has seriously and
sharply deteriorated and these difficult conditions are expected to persist for
some time. The collapse in confidence within the banking system and the extreme
deterioration in bank balance sheets has significantly curtailed bank lending
which is now adversely affecting the wider economy. As yet the increasingly
extreme measures taken by the Government to counter these problems,
particularly the drought of lending have yet to yield any signs of improvement.
The UK smaller companies sector in which your Company invests is clearly
affected by this poor environment.
Your Company has achieved the level of investment required by the VCT
regulations. Notwithstanding achievement of this objective, our strategy has
essentially been to retain healthy liquidity. The Company itself has retained GBP
4.8 million, but has also invested GBP8 million in acquisition vehicles that are
currently actively seeking to acquire high quality investment opportunities in
specific sectors, as shown in the Investment Portfolio Summary. One of these
vehicles has recently made an acquisition in ATG Media Holdings. Nonetheless,
this has been a year where the Investment Manager has considered that few
attractive new opportunities have presented themselves. The Board has supported
the Investment Manager's view that most opportunities generally remained
over-priced and that it was more advantageous to maintain high levels of
liquidity until investment opportunities look reasonably priced. The Company
has adopted a patient stance, in the expectation that better opportunities to
add longer term value for Shareholders should start to come forward later as
vendors realign their price expectations with the current economic climate.
Nevertheless, your Company chose to make two new investments in 2008, and one
follow-on investment, representing GBP1.3 million in aggregate. Investments were
made in The Plastic Surgeon Holdings and ATG Media Holdings and a top up
investment was made in PXP Holdings. A further investment of GBP62k was also made
into Monsal Holdings after the year-end. Disposal proceeds from a partial
divestment in VSI yielded GBP0.1 million.
The Company's qualifying portfolio has seen a number of valuations reduced in
response to falls in quoted markets and worsening trading conditions. However,
the trading performance of a number of investee companies remains encouraging.
Full details of these companies and the year's transactions are contained in
the Investment Manager's Review which follows below.
Review of results
Inevitably, the investment portfolio has not been immune to the economic
factors I have outlined above, but value has held up reasonably well. The
qualifying investment portfolio is currently valued at 93.6% of cost. Net asset
value ("NAV") per share at 31 December 2008 is 88.9 pence (2007: 97.5 pence), a
fall over the year of 8.6 pence (8.8%). However, 2.5 pence of this fall is due
to dividends paid to shareholders. Excluding dividends paid, the NAV has fallen
by 6.3%. The total NAV return per share, including dividends paid to date, is
now 93.7 pence (2007: 99.8 pence), compared with the initial NAV per share, net
of initial costs, of 94.5 pence. This represents a small negative total
shareholder return per share since inception of 0.8% (2007: positive return of
5.5%).
Income from the Company's loan stock investments was running at an aggregate
annualised rate of 4.3% at 31 December 2008 (2007: 7.9%). The annual running
yield on the qualifying investment portfolio as a whole was 2.7% (2007:4.9%),
while the yield on all assets was 2.6% (2007:5.7%). These figures have declined
from last year as certain investee companies are not currently fully servicing
loans the Company has made to them while those assets linked to variable
interest rates are now yielding considerably lower levels of income, most
notably the Company's holdings in OEIC money-market funds. Together, these
factors have and will continue to reduce income dividends from the level that
the Company has been able to pay in recent periods.
Shareholders should note that income in this year has been increased by the
anticipation of recoverable VAT. Legislation has been introduced exempting VCTs
from paying VAT on investment management fees and enabling them to pursue
reclaims for VAT previously paid. At this juncture, the Board is unable to
quantify precisely the amount of VAT that will eventually be recovered, but has
recognised a prudent amount that should be recoverable. An amount of GBP125,000
has therefore been recognised in these accounts for VAT paid in the past.
Dividends
The revenue account generated a decreased net revenue return (after tax) for
the year of GBP358,577 (2007: GBP507,402) and your Directors will be recommending a
final income dividend of 0.8 of a penny per share, making a total of 1.8 in
respect of the current year compared with the total income dividend of 2.5
pence per share paid in respect of the year ended 31 December 2007.
This dividend will be recommended to Shareholders at the AGM on 6 May 2009 to
be paid on 15 May 2009 to Shareholders on the Register on 17 April 2009. If
approved, dividends paid since inception will increase to 5.55 pence.
Investment in qualifying holdings
The Company has met the target set by HM Revenue & Customs of investing 70% of
total funds raised in qualifying unquoted and AIM quoted companies ("the 70%
test"), by 31 December 2008. At 31 December 2008, the Company was 74.6%
invested in qualifying companies (based upon the tax values, which differ from
the Investment Portfolio Summary below.
Communication with shareholders
We aim to communicate regularly with our Shareholders. In addition to the
half-yearly and annual reports, an Investment Manager's Newsletter, approved by
the Board, is circulated twice-yearly. The May AGM will provide a useful
platform for the Board to meet Shareholders and exchange views. Your Board
welcomes your attendance at General Meetings to give you the opportunity to
meet your Directors and representatives of the Investment Manager.
Share buy-backs
No Ordinary Shares came onto the market during the year under review. The Board
will review its share buy back policy if Shares are offered for sale in the
future and will, consider a number of factors, including the Company's
liquidity, and balancing the interests of both continuing and departing
shareholders.
Awards for Matrix Private Equity Partners and PastaKing
I am pleased to inform you that our Investment Manager, Matrix Private Equity
Partners won the award for "VCT Manager of the Year" at the recent unquote"
British Private Equity Awards 2008. We were also pleased to hear that one of
our investee companies, PastaKing, won the "The Small to Medium Sized Business
of the Year" award at the 2008 National Business Awards.
Outlook
Stock markets are experiencing extreme volatility, uncertainty and low levels
of confidence, reflecting rise to significant concerns over the prospects for
the global economy and the extent and length of the recession in the UK. Your
Company's fortunes will be affected by the UK economic environment, but
nevertheless, we consider the Company to be in relatively good health and with
a well-diversified portfolio of investee companies. The portfolio is held at
realistic valuations, in companies with resilience and the potential for
significant capital appreciation when economic conditions improve. Our strategy
of preserving strong cash balances means the Company should be able to support
its existing portfolio where required and justified and, in addition,
capitalise on what are expected to be attractive new investment opportunities
as the year progresses.
In the foreseeable future, the Company's ability to pay dividends as high as
those paid to date will be adversely affected by the ability of certain
investee companies to service the Company's loans to them, the lower interest
rate environment and the lack of profitable exit opportunities. However, the
Board still remains confident that the Company should continue to provide
Shareholders with an attractive long term combination of capital growth and
income.
Finally, I would like to express my thanks to all Shareholders for their
continuing support of the Company.
Keith Niven
Chairman
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 Trust 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 Manager's
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 Board
Keith Niven
Chairman
Principal risks, management and regulatory environment
The Board believes that the principal risks faced by the VCT 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 VCT's qualifying investments.
Loss of approval as a Venture Capital Trust - the VCT must comply with Section
274 of the Income Tax Act 2007 which allows it to be exempted from capital
gains tax on investment gains. Any breach of these rules may lead to the VCT
losing its approval as a 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 VCT becoming subject to tax. The
VCT would also lose its exemption from corporation tax on capital gains.
Investment and strategic risk - inappropriate strategy or consistently weak VCT
qualifying investment recommendations might lead to under performance and poor
returns to shareholders.
Regulatory risk - the VCT is required to comply with the Companies Acts, the
rules of the UK Listing Authority and United Kingdom Accounting Standards.
Breach of any of these might lead to suspension of the VCT's Stock Exchange
listing, financial penalties or a qualified audit report.
Financial and operating risk- inadequate controls might lead to
misappropriation of assets. Inappropriate accounting policies might lead to
misreporting or beaches 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 VCT'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.
Credit/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 by
undertaking a key risk management review at each quarterly Board meeting.
Performance is regularly reviewed and assurances in respect of adequate
internal controls and key risks are sought and received from the Investment
Manager and Administrator on a six monthly basis. In the mitigation and
management of these risks, the Board applies rigorously the principles detailed
in the AIC Code of Corporate Governance. The Board also has a Share Buy Back
policy to try to mitigate the Market Liquidity risk. This policy is reviewed at
each quarterly Board Meeting.
Investment Policy
The VCT's policy is to invest primarily in a diverse portfolio of UK unquoted
companies. Investments are structured as part loan and part equity in order to
receive regular income and to generate capital gains from trade sales and
flotations of investee companies.
Investments are made selectively across a number of sectors, primarily in
management buyout transactions (MBOs) i.e. to support incumbent management
teams in acquiring the business they manage but do not own. Investments are
primarily made in companies that are established and profitable.
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 GBP15 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 VCT continues to qualify
and is approved as a VCT by HMRC. Amongst other conditions, the VCT may not
invest more than 15% of its investments in a single company and must have at
least 70% by value of its investments throughout the period in shares or
securities comprised in Qualifying Holdings, of which a minimum overall of 30%
by value must be ordinary shares which carry no preferential rights. In
addition, although the VCT can invest less than 30% of an investment in a
specific company in ordinary shares it must have at least 10% by value of its
total investments in each Qualifying Company in ordinary shares which carry no
preferential rights.
Asset Mix
The VCT 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 80% of net funds raised in qualifying investments.
Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses across
different industry sectors. To reduce the risk of high exposure to equities,
each qualifying investment is structured using a significant proportion of loan
stock (up to 70% of the total investment in each VCT qualifying company.)
Initial investments in VCT qualifying companies are generally made in amounts
ranging from GBP200,000 to GBP1 million at cost. No holding in any one company will
represent more than 10% of the value of the VCT's investments at the time of
investment. Ongoing monitoring of each investment is carried out by the
Investment Manager generally through taking a seat on the Board of each VCT
qualifying company.
Co-investment
The VCT aims to invest in larger more mature unquoted companies through
investing alongside four other Income and Growth VCTs advised by the Investment
Manager with a similar investment policy. This enables the VCT to participate
in combined investments by the Investment Manager of up to GBP5 million.
Borrowing
The VCT has no current plans to undertake any borrowing.
Management
The Board has overall responsibility for the Company's affairs including the
determination of its investment policy. Investment and divestment proposals are
originated, negotiated and recommended by the Investment Manager and are then
subject to formal approval by the Directors. Matrix Securities provides Company
Secretarial and Accountancy services to the VCT.
Investment Manager's Review
Over the year, one partial divestment was made. In April, an early repayment of
loan stock was received from VSI. Proceeds of GBP92,089 produced a small realised
profit from the premium of GBP8,372 on the Company's investment cost of GBP83,717.
During 2008, the Company has pursued a very cautious approach to new
investment. This was based on our view that vendors' price expectations were
too high in the current economic environment. We also avoided transactions
requiring high levels of bank borrowing, believing that economic conditions
were deteriorating and that this would make over-leveraged companies much too
vulnerable in a tougher environment.
A very important part of this strategy has been our Operating Partner
programme. This involves establishing acquisition companies alongside
experienced entrepreneurs well known to us. Using the operating partner's
specialised knowledge and business contacts they offer additional opportunities
to access prospective investments that might not otherwise be sourced. During
the year we invested in a total of eight such companies. This programme has met
the twin aims of maintaining at least 70% of the monies raised in VCT
qualifying investments while at the same time, importantly, maintaining
significant cash balances for the VCT over a period we judged unattractive for
new investment. This has been possible because these acquisition companies,
which are structured as VCT qualifying investments, have two years in which to
invest in established VCT qualifying businesses. We believe this strategy has
proved to be extremely beneficial in protecting the value of the Company's
asset base in difficult market conditions.
Excluding the investment in acquisition companies refered to above, just two
new investments were completed during the year; the first was in April, when GBP
352,528 was invested in the MBO of Plastic Surgeon for loan stock and a 5.3%
equity holding. The company offers snagging and finishing services to domestic
and commercial properties and is based in Bovey Tracey, Devon.
The second was in ATG Media in October. This was the first target company and
MBO transaction to be sourced and completed under our Operating Partner
programme. Derringfield, the acquisition company in which the Company had
invested in July, was renamed ATG Media and acquired the publisher of the
leading weekly newspaper serving the UK antiques trade, the Antiques Trade
Gazette, via a MBO. This London-based business also offers an on-line auction
capability. The Company now holds a GBP776,465 investment in ATG Media by way of
loan stock and 6.9% of the equity.
Our other Operating Partners' companies have been active during 2008. Apricot
Trading, Aust Construction Investors, Barnfield Management Investments, Bladon
Castle Management, Calisamo Management, Fullfield and Vanir Consultants are all
seeking investments in the sectors of expertise relevant to the partners. These
sectors included marketing services, media, specialist construction, food
manufacturing, food services, retail, healthcare, consumer brands and
information technology databases and mapping. However, we were unable to
identify sufficiently attractive targets in the period and they therefore
remained invested in liquid funds.
The qualifying investment portfolio has not been immune to the wider
deteriorating trading environment and appropriate provisions have been applied
against those investments where the investee company's trading has been
affected. A number of valuations have also had to be reduced in response to
falls in the value of comparable quoted companies. However, other investments
have continued to trade well. Of a total of eighteen investments, eight are
currently held at cost, six valued at below cost and four above cost.
The Company's investments in PXP and Plastic Surgeon have exposure to the house
building and construction markets and have suffered from the rapid decline of
this sector during the year. PXP carried forward a strong order book into the
year but the outlook for next year is more uncertain. In anticipation of this,
the Company invested a further GBP163,436 as part of a GBP1 million funding round
to provide capital to support PXP in what is expected to remain a difficult
market. Plastic Surgeon has made strong progress in reducing its dependence on
the new housing market and has diversified into the commercial property and
insurance markets and has substantially reduced its direct and indirect cost
base. Nevertheless, in view of the continuing difficult conditions in this
sector we have deemed it appropriate to apply a 50% impairment provision
against the Company's investment.
Blaze Signs having had a record year in 2007-8, is now seeing the effects of a
number of major retail clients deferring work which has reduced revenue. Monsal
too, has suffered from delays in new contract awards and a resultant deferral
of construction work on both water and waste contracts; accordingly an
impairment provision of 25% has been made. However, it enters 2009 with an
encouraging level of contracted revenue and since the year end shareholders
have advanced a further GBP500k, including GBP61,817 from the Company, to provide
additional working capital. Racoon again continued to struggle to grow revenues
although it remains profitable. British International's helicopter service to
the Scilly Isles from Penzance experienced possibly the worst summer weather in
two decades which decimated the day trip market, but has benefited from the
solidity of its long-term military contract revenue.
Nevertheless, there have continued to be portfolio highlights. DiGiCo Europe
has enjoyed a strong first year post-investment following the successful launch
of its new digital audio mixing desk. PastaKing has posted its highest profits
of GBP2.7 million, a year-on-year increase greater than 20%, despite increasing
pressure on ingredient prices. Focus Pharma has also had a good first year
since its MBO.
VSI is strongly profitable and cash-generative and is benefiting from the
relative weakness of sterling as well as seeing increased customer demand. ATG
Media is performing in line with expectations.
The investment portfolio at 31 December 2008 comprises eighteen investments
with a cost of GBP13.9 million and valued at GBP13.0 million (93.6% of cost). GBP7.0
million of the investment cost is held in cash in the seven acquisition
companies in the Operating Partner programme. Whilst the fall in valuations
over the year is disappointing, the adverse movement in public market indices
has made some decreases inevitable. It is important to recognise that all of
the reduction in the year has been in unrealised valuations as opposed to any
actual realised investment losses. This offers the prospect of significant
future recovery as we continue to believe that the portfolio, taken as a whole,
is resilient and of high quality.
Over the coming period, the need for additional investment to support portfolio
companies may become a focus. We also anticipate much more attractive buying
conditions emerging as the year progresses. Having retained significant
uninvested cash, we feel the Company is well placed to cover both the portfolio
needs that may arise and the new investment opportunities presented.
Investment Portfolio Summary
as at 31 December 2008
Date of Total Valuation % value % of
initial book of net equity
investment cost assets held by
funds
managed by
MPEP*
GBP'000 GBP'000
Qualifying investments
Unquoted investments
PastaKing Holdings Limited Jun-06 419 1,316 7.4% 27.50%
Manufacturer and supplier of
fresh pasta meals
Apricot Trading Limited Mar-08 1,000 1,000 5.6% 49.00%
Company seeking to acquire
businesses in the market
services and media sector
Aust Construction Investors Jul-08 1,000 1,000 5.6% 49.00%
Limited
Company seeking to acquire
businesses in the specialist
construction, building
support services or building
products sectors
Barnfield Management Jul-08 1,000 1,000 5.6% 49.00%
Investments Limited
Company seeking to acquire
businesses in the food
manufacturing, distribution,
or brand management sectors
Bladon Castle Management Dec-08 1,000 1,000 5.6% 16.67%
Limited
Company seeking to acquire
businesses in the retail or
health and well-being
products sector.
Calisamo Management Limited Jul-08 1,000 1,000 5.6% 49.00%
Company seeking to acquire
businesses in the
healthcare, well-being
products or management or
professional servies sectors
Fullfield Limited Dec-08 1,000 1,000 5.6% 16.67%
Company seeking to acquire
businesses in the food
manufacturing, distribution,
or brand management sectors
Vanir Consulting Limited Oct-08 1,000 1,000 5.6% 49.00%
Company seeking to invest in
data management, data
mapping and management
services or legal and
building services sectors
DiGiCo Europe Limited Jul-07 943 986 5.6% 30.00%
Manufacturer of digital
sound mixing consoles
ATG Media Holdings Limited Oct-08 776 776 4.4% 40.00%
Publisher of the leading
newspaper serving the UK
antiques trade and on-line
platform operator
British International Jun-06 750 708 4.1% 34.93%
Holdings Limited
Helicopter service operator
Focus Pharma Holdings Oct-07 594 584 3.3% 13.00%
Limited
Licensor and distributor of
generic pharmaceuticals
Monsal Holdings Limited Dec-07 556 417 2.3% 46.51%
Supplier of engineering
services to water and waste
sectors
VSI Limited Apr-06 144 398 2.2% 48.91%
Provider of software for CAD
and CAM vendors
Blaze Signs Holdings Limited Apr-06 379 363 2.0% 52.50%
Manufacturer and installer
of signs
PXP Holdings Limited Dec-06 1,163 254 1.4% 37.33%
(Pinewood Structures)
Designer, manufacturer,
supplier and installer of
timber-frames for buildings
The Plastic Surgeon Holdings Apr-08 353 176 1.0% 30.00%
Limited
Supplier of snagging and
finishing services to the
domestic and commercial
property markets
Racoon International Dec-06 790 - 0.0% 49.00%
Holdings Limited
Supplier of hair extensions,
hair care products and
training
-------- ------------- ---------
Total qualifying investments 13,867 12,978 72.9%
Non-qualifying investments
Barclays Global Investors 946 946 5.3%
Cash Selection Funds plc**
Fidelity Institutional Cash 899 899 5.1%
Fund plc**
Insight Liquidity Funds plc 833 833 4.7%
(HBOS)**
Global Treasury Funds plc 747 747 4.2%
(Royal Bank of Scotland)**
SWIP Global Liquidity Fund 518 518 2.9%
plc (Scottish Widows)**
Institutional Cash Series 510 510 2.9%
plc (BlackRock)**
GS Funds plc (Goldman Sachs) 298 298 1.7%
**
-------- ------------- ---------
Total non-qualifying 4,751 4,751 26.8%
investments
-------- ------------- ---------
Total investments 18,618 17,729 99.7%
Other assets 229 229 1.3 %
Current liabilities (201) (201) (1.0)%
-------- ------------- ---------
Net assets 18,646 17,757 100.0%
-------- ------------- ---------
Income Statement
for the year ended 31 December 2008
Year ended 31 December 2008 Year ended 31 December 2007
Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
Unrealised - (1,569,263) (1,569,263) - 688,829 688,829
(losses)/gains on
investments
Income 827,044 162,375 989,419 1,065,400 - 1,065,400
Recoverable VAT 20,037 60,111 80,148 - - -
Investment (94,381) (283,144) (377,525) (113,185) (339,556) (452,741)
manager's fees
Other expenses (279,379) - (279,379) (264,311) - (264,311)
Return on 473,321 (1,629,921) (1,156,600) 687,904 349,273 1,037,177
ordinary
activities before
tax
Tax on ordinary (114,744) 56,108 (58,636) (180,502) 109,417 (71,085)
activities
Return 358,577 (1,573,813) (1,215,236) 507,402 458,690 966,092
attributable to
equity
shareholders
Basic and diluted 1.80p (7.88)p (6.08)p 2.54p 2.29p 4.83p
return per
ordinary share
The revenue column is the profit and loss account of the Company. All revenue
and capital 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
Income Statement, there were no differences between the return as stated above
and at historical cost.
Balance Sheet
as at 31 December 2008
31 December 2008 31 December 2007
GBP GBP
Fixed assets
Investments at fair value 12,978,008 6,346,931
Current assets
Debtors and prepayments 200,701 113,229
Current investments 4,751,577 13,195,746
Cash at bank 28,354 17,613
--------------- ---------------
4,980,632 13,326,588
Creditors: amounts falling due within (201,225) (201,587)
one year
--------------- ---------------
Net current assets 4,779,407 13,125,001
--------------- ---------------
Net assets 17,757,415 19,471,932
--------------- ---------------
Capital and reserves
Called up share capital 199,713 199,713
Capital redemption reserve 272 272
Capital reserve - unrealised (888,806) 688,829
Capital reserve - realised (437,671) (441,493)
Special reserve 18,683,635 18,683,635
Revenue reserve 200,272 340,976
--------------- ---------------
Equity shareholders' funds 17,757,415 19,471,932
--------------- ---------------
Net asset value per Ordinary Share 88.91p 97.50p
Reconciliation of Movements in Shareholders' Funds
for the year ended 31 December 2008
Year ended Year ended
31 December 2008 31 December 2008
GBP GBP
Opening Shareholders' funds 19,471,932 18,979,925
Buyback of shares - (24,118)
Return for the year (1,215,236) 966,092
Dividends paid in year (499,281) (449,967)
--------------- ---------------
Closing shareholders' funds 17,757,415 19,471,932
Cash Flow Statement
for the year ended 31 December 2008
Year ended Year ended
31 December 2008 31 December 2007
GBP GBP GBP GBP
Operating activities
Investment income received 1,024,309 1,055,252
Investment management fees (411,462) (452,741)
paid
Other cash payments (274,847) (254,603)
--------------- -------------- -------------- ---------------
Net cash inflow from 338,000 347,908
operating activities
Investing activities
Acquisitions of investments (8,516,827) (2,369,833)
Disposals of investments 316,487 -
--------------- -------------- -------------- ---------------
Net cash outflow from (8,200,340) (2,369,833)
investing activities
Taxation
Taxation paid (71,807) (9,000)
Equity dividends
Equity dividends paid (499,281) (449,967)
(8,433,428) (2,480,892)
Financing
Ordinary shares bought back - (24,118)
Management of liquid
resources
Decrease in liquid resources 8,444,169 2,472,616
-------------- ---------------
Increase/(decrease) in cash 10,741 (32,394)
for the year
Reconciliation of net revenue before taxation to net cash inflow from operating
activities
2008 2007
GBP GBP
Net revenue before taxation 473,321 687,904
Investment management fees charged to capital (283,144) (339,556)
Income credited to capital 222,486 -
Increase in debtors (87,472) (9,284)
Increase in creditors and accruals 12,809 8,844
----------- -----------
Net cash inflow from operating activities 338,000 347,908
Analysis of changes in net funds
Cash Liquid Total
resources
GBP GBP GBP
At beginning of year 17,613 13,195,746 13,213,359
Cash flows 10,741 (8,444,169) (8,433,428)
----------- ----------- -----------
At 31 December 2008 28,354 4,751,577 4,779,931
Notes
1. Basis of accounting
This announcement of the annual results of the Company for the year ended 31
December 2008 has been prepared using accounting policies consistent with those
adopted in the full audited annual accounts which have been prepared under UK
Generally Accepted Accounting Practice (UK GAAP) and the Statement of
Recommended Practice, `Financial Statements of Investment Trust Companies'
("SORP") issued by the Association of Investment Trust Companies in January
2003, revised December 2005 ("the SORP").
2. Income
2008 2007
GBP GBP
Income from bank deposits 4,481 2,009
Income from investments
- from equities 166,722 21,369
- from overseas based OEICs 533,840 829,174
- from loan stock 284,376 212,848
984,938 1,063,391
----------- -----------
Total income 989,419 1,065,400
Total income comprises
Dividends 700,562 850,543
Interest 288,857 214,857
----------- -----------
989,419 1,065,400
Income from investments comprises
Listed overseas securities 533,840 829,174
Unlisted UK securities 166,722 21,369
Loan stock interest 284,376 212,848
----------- -----------
984,938 1,063,391
3. Net asset value per Ordinary Share
Net asset value per Ordinary Share is based on net assets at the end of the
year, and on 19,971,254 (2007: 19,971,254) Ordinary Shares, being the number of
Ordinary Shares in issue on that date.
4. Return per Ordinary Share
The revenue return per Ordinary Share is based on the net revenue profit from
ordinary activities after taxation of GBP358,577 (2007: GBP507,402) and on
19,971,254 (2007: 19,995,044) 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 a capital loss of GBP
1,573,813 (2007: GBP458,690) which includes the net of tax portion of the
Investment Manager's fees charged to the capital reserve of GBP227,036 (2007: GBP
230,139) and on 19,971,254 (2007: 19,995,044) Ordinary Shares, being the
weighted 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 8 July 2005, the
Directors have charged 75% of the investment management expenses to the
realised capital reserve.
6. Taxation
Although the Company incurred a deficit in the year, a tax charge arises
principally because the unrealised losses for the year are disallowed for
taxation purposes.
7. Dividends
The Company proposes to pay a final dividend of 0.8 of a penny per Ordinary
Share from income. The dividend will be recommended to members at the Annual
General Meeting and, if approved, will be paid on 15 May 2009 to shareholders
on the Register on 17 April 2009.
8. Related party transactions
Bridget Guérin is a director and shareholder (2.0%) of Matrix Group Limited,
which owns 100% of the equity of MPE Partners Limited. MPE Partners Limited has
a 50% interest in Matrix Private Equity Partners LLP ("MPEP"), the Company's
Investment Manager. The fee arrangements and the fees payable are set out in
Note 4 of the full accounts. Bridget Guérin is also a director of
Matrix-Securities Limited who provided Company Secretarial and Accountancy
Services to the Company under agreements dated 8 September 2005, disclosed in
Note 5 of the full accounts to these accounts as administration fees. The
agreements with MPEP and with Matrix-Securities Limited became effective from
26 January 2006. GBP18,711 was due to Matrix-Securities Limited at the end of the
year (2007: GBP18,400).
9. Financial Information
The financial information set out in these statements does not constitute the
Company's statutory accounts for the year ended 31 December 2008 in terms of
section 240 of the Companies Act 1985 but is derived from those accounts.
Statutory accounts for the year ended 31 December 2008 will be delivered to
Companies House following the Company's Annual General Meeting. The auditors
have reported on those accounts: their report was unqualified and did not
contain a statement under Section 237 (2) or (3) of the Companies Act 1985.
10.Annual Report
The Annual Report for the year ended 31 December 2008 will shortly be made
available on our website: www.mig3vct.co.uk and will be circulated by post to
those Shareholders who have requested to receive copies of the Report. Copies
will be available thereafter to members of the public from the Company's
registered office.
11.Annual General Meeting
The Annual General Meeting will be held at 11.10 am on Wednesday, 6 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 to mig@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 to info@matrixpep.co.uk
END
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