Mobeus Income
& Growth 2 VCT plc
A Venture Capital Trust
Annual Report & Financial Statements
for the year ended 31 March 2023
Mobeus Income & Growth 2 VCT plc, (“the Company”) is a Venture Capital Trust (“VCT”)
advised by Gresham House Asset Management Limited (“Gresham House” or “Investment
Adviser”), investing primarily in established unquoted growth companies that meet the
‘qualifying company’ requirements of VCT legislation.
Objective of the Company
The objective of the Company is to provide investors with a regular income stream, arising
both from the income generated by companies selected for the portfolio and from realising
any growth in capital, while continuing at all times to qualify as a VCT.
Dividend Policy
The Company seeks to pay dividends at least annually out of income and capital as
appropriate, and subject to fulfilling certain regulatory requirements. More details are provided
on pages 3 to 4 of the Chair’s Statement and on page 11.
YOUR PRIVACY
We are committed to protecting and respecting your privacy. To understand how we collect, use and otherwise process
personal data relating to you, or that you provide to us, please read our privacy notice, which can be found at
www.mig2vct.co.uk.
1
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Contents
Financial Highlights
Financial Highlights and Performance Summary 2
Chair’s Statement 3
Strategic Report 7
- Company Objective and Business Model 7
- Objective 7
- Summary of Investment Policy 7
- The Company and its Business Model 7
- Summary of VCT Legislation 8
- Performance and Key Performance Indicators 9
- Investment Adviser’s Review 13
- Twelve largest investments in the Portfolio by Valuation 20
- Investment Portfolio Summary 24
- Key Policies 27
- Investment Policy 27
- Stakeholder Engagement and Directors’ Duties 28
- Principal and emerging risks, management and regulatory environment 30
- Going concern and Long-Term viability of the Company 32
Reports of the Directors 33
- Board of Directors 33
- Directors’ Report 34
- Corporate Governance Statement 38
- Report of the Audit Committee 41
- Directors’ Remuneration Report 43
- Statement of Directors’ Responsibilities 47
Independent Auditor’s Report 48
Financial Statements 53
Information for Shareholders 77
- Shareholder Information 77
- Performance Data at 31 March 2023 79
- VCT Tax Benefits for the Investor 81
- Notice of the Annual General Meeting 82
- Glossary of terms 85
- Corporate Information 86
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Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Results for the year ended 31 March 2023
As at 31 March 2023:
Net assets: £70.43 million
Net Asset Value (“NAV”) per share: 71.54 pence
➤
Net asset value (“NAV”) total return
1
per share of (12.3)%
2
.
➤
Share price total return
1
per share of (6.9)%
3
.
➤
Dividends paid and declared of 13.00 pence per share. Cumulative
dividends paid since inception amount to 147.00 pence per share.
➤
£3.32 million was invested into five new growth capital investments and five
existing portfolio companies.
➤
Net unrealised losses were £(9.14) million.
➤
Sale of investments generated £8.05 million of cash proceeds and a net
loss of £(0.28) million.
1
Definitions of key terms and alternative performance measures (“APMs”)/Key Performance Indicators (“KPIs”) shown above and throughout this
report are provided in the Glossary of terms on page 85.
2
Further details on the NAV total return are shown in the Performance and Key Performance Indicators section of the Strategic Report on pages
9 to 12.
3
The difference in NAV and share price total returns arises principally due to the timing of NAV announcements.
Performance Summary
The table below shows the recent past performance of the current share class, first raised in 2005/06 at an original subscription
price of 100 pence per share, before the benefit of income tax relief. Performance data for all fundraising rounds are shown in the
tables on pages 79 to 80 of this Annual Report.
Reporting date
as at
Net assets
(£m)
Net asset
value (NAV)
per
share
(p)
Share price
2
(mid-market
price)
(p)
Cumulative
dividends
paid per
share
(p)
Cumulative total return per
share since launch
1
Dividends
paid and
declared in
respect of
each year
(p)
(NAV basis)
(p)
(Share
price basis)
(p)
31 March 2023 70.43 71.54 68.50 147.00 218.54 215.50 13.00
31 March 2022 77.51 96.37 87.50 134.00 230.37 221.50 12.00
31 March 2021 73.90 100.91 85.50 116.00 216.91 201.50 13.00
31 March 2020 43.57 72.99 70.50 109.00 181.99 179.50 26.00
31 March 2019 48.73 99.60 85.50 83.00 182.60 168.50 5.00
1
Definitions of key terms and alternative performance measures (“APMs”)/Key Performance Indicators (“KPIs”) shown above and throughout this
report are provided in the Glossary of terms on page 85.
2
Source: Panmure Gordon & Co (mid-market price).
Financial Highlights and
Performance Summary
Financial Highlights
3
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
I am pleased to present the
annual results of Mobeus
Income & Growth 2 VCT plc
for the year ended
31 March 2023.
Overview
The Company’s financial year took place
during a period of significant political
and economic disruption. A high point
for many technology and growth
markets occurred at the end of 2021
before the impact of global events
including the Russian invasion of
Ukraine, political turmoil in the UK and
across Europe as well as rising inflation
and associated increase in interest rates.
Stock markets continue to be volatile
and there has been a substantial
downward re-rating of growth stock
valuations across global markets.
Recently inflation has moderated, albeit
remaining relatively high, and the UK
economy narrowly avoided recession.
However, the IMF forecast for 2023
warns of an ongoing threat of recession
which would likely result in additional
challenges for your portfolio companies,
particularly in respect of input cost
inflation and dampened customer
demand. Nevertheless, we believe your
Company is well prepared for most
scenarios with strong liquidity available
to support the portfolio and through
extensive planning and preparation by
each of the portfolio companies’
management teams with the assistance
of Gresham House.
The Company has continued to provide
finance to new and existing investee
companies and delivered three notable
exits during the year in the form of
Media Business Insight (MBI), Equip
Outdoor Technologies (EOTH) and
Tharstern Group Limited (Tharstern).
Looking forward we anticipate a quieter
exit environment in the current year.
The Board was pleased to learn of the
commitment from the UK Government to
extend the VCT ‘sunset clause’ beyond
the end date of 5 April 2025, although
Shareholders should note the VCT
industry has seen no further detail
provided to date and any extension will
most likely require parliamentary
approval. If the clause had not been
extended, investor income tax relief on
new VCT subscriptions would not have
been available.
Performance
NAV total return, expressed on a pence
per share basis, was derived as follows:
Year ended 31 March
2023
(pence
per
share)
2022
(pence
per
share)
Net realised and
unrealised (losses)/
gains on the investment
portfolio (9.60) 15.04
Income from the
investment portfolio and
liquid assets 1.87 1.34
Share buybacks and
adjustments (2.00) 0.89
Gross return (9.73) 17.27
Less: Investment
Adviser’s fees and other
expenses (2.10) (3.81)
Net return (11.83) 13.46
NAV total return per
share (12.3)% 13.3%
The Company’s NAV total return per
share decreased by (12.3)% for the year
ended 31 March 2023 (2022: 13.3%),
calculated as the closing NAV per share
of 71.54 pence plus 13.00 pence of
dividends paid in the year, divided by
the opening NAV per share of
96.37 pence. The share price total return
was down (6.9)% (2022: 23.4%). The
difference between the share price and
NAV total returns arises principally due
to the timing of NAV announcements
which are usually made on a date
following the date to which they relate
and is explained more fully under
Performance in the Strategic Report on
pages 9 to 12. The negative NAV total
return for the year was principally the
result of unrealised losses in the value of
investments in the portfolio, driven
initially by lower benchmark market
comparables and, more recently, by the
weaker trading performance of investee
companies as the impact of inflation and
higher interest rates on consumer
spending and business investment
began to bite.
In the Association of Investment
Companies’ analysis of Cumulative NAV
Total Returns at 31 March 2023, the
Company was ranked 7th out of 36
Generalist VCTs over five years and 1st
out of 31 Generalist VCTs over ten years.
Shareholders should note that the AIC’s
rankings are based on the latest
available published NAVs and therefore
do not reflect NAV per share movements
up to 31 March 2023. For further details
on the performance of the Company,
please refer to the Strategic Report on
pages 9 to 12.
Target Return
The Board’s current target is to achieve
an average NAV total return of 8.0% per
annum. Although this year’s NAV total
return decreased by (12.3)%
(2022: 13.3%) the average over five years
of 11.3% per annum, is well in excess of
the target.
The Board reminds Shareholders that
investment portfolio returns and
dividend payments should always be
viewed over the longer term.
Dividends
The Board continues to be committed to
providing an attractive dividend stream
to Shareholders. In respect of the year
ended 31 March 2023, the Company
paid Shareholders two interim dividends
totalling 13.00 pence per share
comprising 6.00 pence per share on
7 November 2022 and a further
dividend of 7.00 pence per share paid
on 30 March 2023 to Shareholders on
the register on 30 September 2022 and
3 March 2023 respectively. To date,
cumulative dividends paid since
inception total 147.00 pence per share.
The Company has now met or exceeded
the Board’s dividend target of paying at
least 5.00 pence per share in respect of
the last thirteen financial years.
The continuing change in the portfolio to
younger growth capital investments, as
the older, more mature companies with
higher income yields are sold, is likely to
make it more difficult to maintain a
consistently high level of dividends from
income and capital returns alone in any
given year. This year the Company
experienced a reduction in income from
portfolio companies and investments
but was able to exceed the dividend
target as it had sufficient distributable
reserves from past realised profits.
Shareholders should also note that there
may be circumstances where the
Company is required to pay dividends in
order to maintain its regulatory status as
a VCT, for example, to stay above the
minimum percentage of assets required
to be held in qualifying investments. It
should also be noted that the payment
of dividends causes the Company’s NAV
per share to reduce by a corresponding
amount. The Board takes all of these
variables into account when setting the
level of dividends and continues to
monitor the sustainability of the annual
dividend target.
On 20 June 2023 by order of the Court,
the share premium account and capital
redemption reserve of the Company was
reduced (as approved at the General
Chair’s Statement
Chair’s Statement
4
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Meeting of the Company held on
12 October 2022) and has been
transferred to a special distributable
reserve. The purpose of this reserve is to
fund market purchases of the Company’s
own shares as and when it is considered
by the Board to be in the interests of the
shareholders, make dividend payments,
and to write-off existing and future losses
as the Company must take into account
capital losses in determining
distributable reserves.
Investment and portfolio
performance
The portfolio movements across the
year were as follows:
2023
£mn
2022
£mn
Opening portfolio value 52.16 41.83
New and further investments 3.32 4.61
Disposal proceeds (8.05) (6.37)
Net realised (losses)/gains (0.28) 2.54
Valuation movements (9.14) 9.55
Portfolio value at 31 March 38.01 52.16
During the year, the Company invested a
total of £3.32 million into five new and
five existing portfolio companies
(2022: £4.61 million; three and seven
respectively). New investments totalling
£1.88 million were made into:
● Bidnamic – a marketing technology
business;
● FocalPoint – a GPS enhancement
software supplier;
● Orri – an intensive day care provider
for adults with eating disorders;
● Connect Earth – an environmental
data provider; and
● Cognassist – education and
neuro-inclusion solutions.
Additional funding of £1.44 million was
provided across five existing portfolio
companies:
● Northern Bloc – a dairy and
allergen-free ice cream brand;
● Rotageek – a workforce
management software system;
● Andersen EV – a provider of
premium EV chargers;
● Vivacity – an AI and Urban Traffic
Control business; and
● Bleach London – a hair colourants
brand.
Post the year-end, £0.39 million was
invested into a new portfolio company,
Dayrize, a provider of a rapid
sustainability impact assessment tool.
Additionally, £0.30 million was further
invested into Legatics, an existing
portfolio company.
Further details of the new investments
can be found in the Investment Adviser’s
Report on page 14-15.
The Company generated a total of £8.05
million in proceeds from full and partial
realisations alongside loan repayments
and other capital receipts in the year
ended 31 March 2023 as detailed below.
In June 2022, the Company realised its
investment in Media Business Insight
(MBI), a publishing and events business
focussed on the production industries,
generating proceeds of £2.80 million
(including deferred proceeds and loan
repayments made earlier in the year)
resulting in a realised gain in the year of
£0.16 million. Returns received over the
life of the investment amounted to £4.50
million, a 2.2x multiple of cost and an IRR
of 13.8 %.
In November 2022 we were delighted
by the sale of the equity in EOTH,
trading as Rab and Lowe Alpine,
receiving £4.34 million including
preference share dividends on
completion which generated a realised
gain in the year of £0.70 million. To date
total proceeds received amount to
£5.64 million providing a 6.9x multiple of
cost and an IRR of 23.2%. The Company
has retained interest bearing loan stock
to continue to generate future income.
In March 2023, the sale of Tharstern
completed generating a realised gain of
£0.35 million. Over the life of this
investment a 2.6x return and IRR of 15.0%
was achieved.
Unfortunately in October 2022, Andersen
EV, an electric charger provider, was
compelled to enter into administration as
a result of a substantial deterioration in its
trading environment, which resulted in a
realised loss of £(0.65) million in the year.
This was particularly disappointing as the
Company, alongside the other Mobeus
VCTs, made a follow-on investment into
the company in May 2022. The company
had secured some impressive clients and
funding was provided to drive product
development in a premium brand
operating in the emerging electric car
charging market. However, over the
summer months, a combination of global
supply issues, inflationary cost increases
and the removal of Government
consumer support for the purchase of EV
chargers quickly impacted its ability to
continue trading and so necessitated the
appointment of administrators. On
22 December 2022, Parsley Box Group
PLC delisted from the AIM market and its
shares were cancelled. It has
subsequently re-registered as a private
company.
Also in the year, Tapas Revolution, the
Spanish restaurant chain, went into
administration. Under the HMRC
Financial Health Test (more detail
below), the Company was unable to
invest further into this portfolio company
and as a result it was necessary for an
Administrator to be appointed. It is likely
that other company failures will be seen
during the rest of the financial year as
we are unable to invest and assist some
portfolio companies further. Including
Andersen EV above, a total of £1.49
million has been recognised as a
realised loss across three companies
which are experiencing significant
trading issues.
The portfolio’s valuation at the year-end
demonstrates the impact of slowing
consumer and business spending on
consumer facing portfolio companies, in
particular Virgin Wines. Virgin Wines is
an AIM-listed investment, which has also
suffered from the negative sentiment of
its sector, in spite of broadly positive
news flows from the company itself and
relative outperformance versus its
peers. It contributed £2.68 million of the
unrealised portfolio reduction of
£9.14 million. Other smaller valuation
decreases were registered by Buster &
Punch and Wetsuit Outlet, which were
also marked down as a result of
experiencing challenging trading
conditions.
The impact of the decline in consumer
confidence on the portfolio companies
operating in the consumer sector has
therefore contributed to the overall
realised and unrealised reduction in the
value of the portfolio by £(9.42) million in
the year ended 31 March 2023 (2022:
increase of £12.09 million), or a fall of
(18.1)% on a like-for-like basis compared
to the value of the portfolio at the start
of the year.
During these uncertain times, the
management of the portfolio is
absolutely critical and the Investment
Adviser is, and has been, focused on
deploying its Talent Management team
to support its investments. We continue
to expect follow-on investments to
remain a significant feature of our
portfolio companies as they seek to
achieve scale and move to profitability.
Follow-on investment requests are
subject to the same scrutiny as new
deals and both rely on certain criteria
being met, including the recently
introduced HMRC Financial Health Test.
Shareholders should be aware that this
test is an effective tightening of the
interpretation of HMRC policy and
Chair’s Statement
5
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
practice in a technical aspect of the VCT
financing rules, now resulting in the
restriction of potential follow-on
investments to support certain
companies, where more than half their
subscribed share capital has been lost.
In a small number of cases, this may
result in the Company not being able to
make follow-on investments, even
where a compelling business case
exists, which in turn could impact the
prospects of the portfolio company. The
Board continues to monitor
developments in the interpretation of
this area of legislation carefully.
Further details of the Company’s
investment activity and the performance
of the portfolio are contained in the
Investment Adviser’s Review and the
Investment Portfolio Summary on pages
13 to 26.
Liquidity & Fundraising
Cash and cash equivalents held by the
Company as at 31 March 2023 amounted
to £32.51 million, or 46.2% of net assets.
In October 2022, on considering the
future cash requirements of the
Company and the potential demand for
the Company’s shares following the
successful fundraise in January 2022,
the Board approved a further fundraise
for the 2022/23 tax year. Having
provided a period of time between the
launch of the prospectus and
acceptance of applications, the Board
was pleased that the initial amount of
£8 million (as well as an over-allotment
facility of a further £8 million), launched
early in October 2022, was fully
subscribed by 8 November 2022. Shares
were allotted in November 2022 and
February 2023 and your Company
extends a warm welcome to an equal mix
of both new and existing Shareholders.
The fundraising launched in October
2022 was to ensure that the Company
retained adequate levels of liquidity to:
take advantage of new investment
opportunities; fund further expansion of
existing portfolio companies; facilitate
attractive Shareholders returns,
including the payment of dividends; and
to buy back its shares from Shareholders
who wish to sell. Currently, the Board do
not anticipate a fundraise in 2023.
Share buy-backs
During the year, the Company bought
back and cancelled 1,464,956 of its own
shares (2022: 697,498), representing
1.8% of the shares in issue at the
beginning of the year (2022: 1.0%), at a
total cost of £1.15 million, inclusive of
expenses (2022: £0.64 million). 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.
Shareholder Communications &
Annual General Meeting
May I remind you that the Company has
its own website which is available at:
www.mig2vct.co.uk.
The Investment Adviser held a virtual
Shareholder Event on the afternoon of
23 March 2023 with a live Q&A session
which we hope you were able to join.
We are pleased that double the number
of attendees joined the meeting this
year. A recording of the event is
available via a link on the Company’s
website.
Your Board is pleased to be able to hold
the next Annual General Meeting
(“AGM”) of the Company at 11.00 am on
Wednesday, 13 September 2023 at the
offices of Shakespeare Martineau, 6th
Floor, 60 Gracechurch Street, London,
EC3V 0HR. A webcast will also be
available at the same time for those
Shareholders who cannot attend in
person. However, please note that you
will not be able to vote via this method
and so are encouraged to return your
proxy form before the deadline of 11:00
am on Monday 11 September 2023.
Information setting out how to join the
meeting by virtual means will be shown
on the Company’s website. For further
details, please see the Notice of the
Meeting which can be found at the end
of this Annual Report & Financial
Statements, on pages 82 to 84.
Board Composition & Succession
Throughout the year the Board
comprised three directors. Following the
retirement of Adam Kingdon in
September 2022, whom we thank for his
services to the Company, we were
delighted that Sarah Clark joined as a
director on 4 November 2023. Sarah
brings new skills and depth of
knowledge to the Company and will be
standing for election at the forthcoming
AGM. Sarah was also appointed as the
Chair of the Investment Committee and
is a member of all other Company’s
Committees.
After considering and reviewing its
composition, the Board agreed that the
directors have the breadth and depth of
relevant knowledge and experience
plus the appropriate skill sets. The Board
now consists of one male and two
female directors.
Fraud Warning
We have been made aware of a number
of Shareholders being contacted in
connection with sophisticated but
fraudulent financial scams which purport
to come from the Company or to be
authorised by it. This is often by a phone
call or an email usually originating from
outside of the UK, claiming or appearing
to be from a corporate finance firm
offering to buy your shares at an inflated
price.
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 on pages 77 and
78.
Environmental, Social and
Governance (“ESG”)
The Board and the Investment Adviser
believe that the consideration of
environmental, social and corporate
governance (“ESG”) factors throughout
the investment cycle will contribute
towards enhanced Shareholder value.
Gresham House has a team which is
focused on sustainability and the Board
views this as an opportunity to enhance
the Company’s existing protocols and
procedures through the adoption of the
highest industry standards.
The future FCA reporting requirements
consistent with the Task Force on
Climate-related Financial Disclosures,
which commenced on 1 January 2021,
do not currently apply to the Company
but will be kept under review, the Board
being mindful of any recommended
changes.
Consumer Duty
The Financial Conduct Authority (FCA)
has introduced the concept of Consumer
Duty, the rules and principles of which
come into effect in July 2023. Consumer
Duty is an advance on the existing
concept of ‘treating customers fairly’. It
sets higher and clearer standards of
consumer protection across financial
services and requires all firms to put
their customers needs first.
As the Company is not regulated by the
FCA it does not directly fall into the
scope of Consumer Duty. However,
Gresham House as the Investment
Adviser alongside any IFAs or financial
platforms used to distribute future
fundraising offers are subject to
Consumer Duty.
It is incumbent on all parties to uphold
the principles behind Consumer Duty
Chair’s Statement
6
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Chair’s Statement
and to that end we are working with the
Investment Adviser to review the
information we should provide to assist
consumers and their advisers to
discharge their obligations under
Consumer Duty.
Outlook
The geopolitical and macroeconomic
background conditions are likely to
remain uncertain in the near future.
Interest rates are set to remain relatively
high to combat inflation around the
world. This background will continue to
provide trading challenges for our
portfolio companies, although
historically these conditions have also
provided an opportunity for the
Company to make high quality
investments and build strategic stakes in
businesses with great potential. The
issues affecting the banking sector may
also mean that debt markets continue to
be constrained which may,
notwithstanding the recent successful
sales of EOTH and Tharstern, keep the
exit environment subdued compared to
recent years. However, as the Company
is not time-limited this is not expected to
be a significant issue. The combined
impact of inflation, interest rates and
restrictions in Government spending are
expected to continue to weigh down on
UK consumer and business confidence.
Therefore, we anticipate that further
market stresses will become evident as
the year progresses with all sectors
vulnerable. However, the Company has
a reasonably large and diverse portfolio,
managed by a professional and capable
investment team, which will mitigate the
challenges that lie ahead. Allied to our
strong balance sheet, the Board remains
confident that it will be able to continue
paying an attractive dividend.
I would like to take this opportunity once
again to thank all Shareholders for your
continued support and to extend a warm
welcome to new Shareholders.
Ian Blackburn
Chair
12 July 2023
7
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Strategic Report
Company Objective and
Business Model
Introduction
The Directors are pleased to present the
Strategic Report of the Company for the
year ended 31 March 2023. The purpose
of this Report is to inform Shareholders
and help them assess how the Directors
have performed their duty to promote the
success of the Company.
The Report has been prepared by the
Directors in accordance with section 414A
of the Companies Act 2006 (“the Act”).
Objective
The Objective of the Company is to
provide investors with a regular income
stream, arising both from the income
generated by the companies selected
for the portfolio and from realising any
growth in capital, while continuing at all
times to qualify as a VCT.
Summary of Investment Policy
The Company’s policy is to invest
primarily in a diverse portfolio of UK
unquoted companies. Investments are
generally structured as part loan and
part equity in order to produce a regular
income stream and to generate capital
gain from realisations.
The Company’s cash and liquid funds
are held in a portfolio of readily
realisable interest bearing investments
which can be of varying maturities,
subject to the overriding criterion that
the risk of loss of capital be minimised.
The Company will seek to make
investments in accordance with the
requirements of prevailing VCT
legislation. A summary of this is set out
overleaf, in the table “Summary of VCT
Regulation”.
The Company and its
Business Model
The Company is a Venture Capital Trust.
Its Objective and Investment Policy are
designed to ensure that it continues to
qualify as a VCT, and continues to be
approved as such by HM Revenue &
Customs, whilst maximising returns to
Shareholders from both income and
capital. A summary of the most important
rules that determine VCT approval is
contained in the panel headed
“Summary of VCT Regulation” overleaf.
The Company is a fully listed company
on the London Stock Exchange, which
also fulfils a VCT regulatory requirement.
It is therefore also required to comply
with the Listing Rules governing such
companies.
The Company is externally advised with
a Board comprising Non-Executive
Directors. The Board has overall
responsibility for the Company’s affairs
including the determination of its
Investment Policy (material changes to
which are subject to approval by
Shareholders). Investment advice and
operational support are outsourced to
external service providers (including the
Investment Adviser, Company Secretary
and Administrator and Registrar), with
the key strategic and operational
framework and key policies set and
monitored by the Board. Investment and
divestment proposals are originated,
negotiated and recommended by the
Investment Adviser and are then subject
to review and approval by the Directors.
The Company invests alongside five
other VCTs advised or managed by
Gresham House in proportion to the
relative net assets of each VCT-
(excluding direct AIM investments) at the
date the investment proposal submitted
to each Board.
The total percentage of equity held in
each investment by all funds advised by
Gresham House is shown in Note 9 on
page 66.
Private individuals invest in the
Company to benefit from both income
and capital returns from the portfolio. By
subscribing for shares in a VCT they also
receive immediate income tax relief
(currently 30% of the amount subscribed
by an investor). Investors receive
tax-free dividends from the Company
and incur no capital gains tax upon the
eventual sale of the shares. These tax
benefits are subject to the VCT
maintaining its approved VCT status and
the shares being held for a minimum of
five years from the date of subscription.
Page 81 contains information setting out
the tax benefits for an investor in VCT
shares.
The Company’s investee companies are
primarily unquoted businesses and
operate in the UK. These businesses
fulfil the criteria and characteristics as
set out in the current Investment Policy.
The Company’s business model is set out in the diagram below.
Strategic Report
8
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
To maintain its status as a VCT, the
Company must meet a number of
conditions, the most important of which
are that:
● the Company must hold at least
80%, by VCT tax value
1
, of its total
investments (shares, securities and
liquidity) in VCT qualifying holdings,
within approximately three years of
a fundraising;
● all qualifying investments made by
VCTs after 5 April 2018, together
with qualifying investments made
by funds raised after 5 April 2011
are, in aggregate, required to
comprise at least 70% by VCT tax
value in “eligible shares”, which
carry no preferential rights (save as
may be permitted under VCT rules);
● no investment in a single company
or group of companies may
represent more than 15% (by VCT
tax value) of the Company’s total
investments at the date of
investment;
● the Company must pay sufficient
levels of income dividend from its
revenue available for distribution so
as not to retain more than 15% of its
income from shares and securities
in a year;
● the Company’s shares must be
listed on the LSE or a regulated
European stock market;
● non-qualifying investments cannot
be made, except for certain
exemptions in managing the
Company’s short-term liquidity;
● VCTs are required to invest 30% of
funds raised in an accounting
period beginning on or after 6 April
2018 in qualifying holdings within 12
months of the end of the accounting
period; and
● the period for reinvestment of
proceeds on disposal of qualifying
investments is 12 months.
To be a VCT qualifying holding, new
investments must be in companies:
● which carry on a qualifying trade;
● which have no more than £15 million
of gross assets at the time of
investment and no more than £16
million immediately following
investment from VCTs;
● whose maximum age is generally
up to seven years (ten years for
knowledge intensive businesses);
● that receive no more than an annual
limit of £5 million and a lifetime limit
of £12 million (for knowledge
intensive companies the annual limit
is £10 million and the lifetime limit is
£20 million), from VCTs and similar
sources of State Aid funding; and
● that use the funds received from
VCTs for growth and development
purposes.
In addition, VCTs may not:
● offer secured loans to investee
companies, and any returns on loan
capital above 10% must represent
no more than a commercial return
on the principal; and
● make investments that do not meet
the ‘risk to capital’ condition (which
requires a company, at the time of
investment, to be an
entrepreneurial company with the
objective to grow and develop, and
where there is a genuine risk of loss
of capital).
1
VCT tax value means as valued in
accordance with prevailing VCT legislation.
The calculation of VCT tax value is arrived
at using tax values, based on the cost of the
most recent purchase of an investment
instrument in a particular company, which
may differ from the actual cost of each
investment shown in the Investment
Portfolio Summary on pages 24 to 26.
Strategic Report
Summary of VCT Legislation
To assist Shareholders, the following table contains a summary of the most important rules that determine VCT approval.
9
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Strategic Report
Performance and Key Performance Indicators
The Board has identified six key performance indicators that are used in its own assessment of the Company’s progress. Some of
these are classified as alternative performance measures (“APMs”) in line with Financial Reporting Council (“FRC”) guidance. See
Glossary of terms for details on page 85. APMs are measures of performance that are in addition to the data reported in the
Financial Statements. It is intended that these will provide Shareholders with sufficient information to assess how the Company
has performed against its Objectives in the year ended 31 March 2023, and over the longer-term, through the application of its
investment and other principal policies:
1. Annual and cumulative returns per share for the year
The Company’s objective is to generate long-term growth in capital and income. To assess this, the Board monitors the growth
in total returns per share, both on a NAV basis and a share price basis, adjusted for dividends paid in the year. NAV basis reflects
the net assets of the Company and share price basis reflects the price at which a Shareholder could expect to sell their shares.
These are the most widely used measures of performance in the VCT sector.
Total returns per share for the year
The Net Asset Value and share price total returns per share for the year ended 31 March 2023 decreased by (12.3)% and (6.9)%
respectively, as shown below:
NAV basis
(p)
Share price
basis
(p)
Closing NAV per share 71.54 Closing share price 68.50
Plus: dividend paid in year 13.00 Plus: dividend paid in year 13.00
NAV Total return for year 84.54 Share Price Total return for year 81.50
Less: opening NAV per share 96.37 Less: opening share price 87.50
Decrease in NAV total return for year
per share (Note 1) (11.83)
Decrease in Share Price total return for
year per share (Note 2) (6.00)
% NAV total return for year (12.3)% % Share Price total return for year (6.9)%
The analysis of the source of the NAV total returns is set out below:
Note 1: NAV total return per share for the year is comprised of:
Year ended 31 March
2023
(pence)
2022
(pence)
Gross portfolio capital returns (9.60) 15.04
Gross income returns 1.87 1.34
Costs (2.10) (3.81)
Other movements (2.00) 0.89
NAV return for the year as above (11.83) 13.46
The contributions from portfolio returns and income are shown before deducting attributable costs. They are explained below
under review of financial performance for the year. Costs are referred to in Note 6 on page 12.
Note 2: The Share Price total return differs from the NAV total return because the share prices quoted are typically by reference
to the latest announced NAV per share.
10
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Cumulative total returns per share (NAV basis)
The longer term trend of performance on this measure is shown in the chart below:-
Pence
per share
Net Asset Value Cumulative dividends paid
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
160
31/03/2022 31/03/202331/03/202131/03/202031/03/201931/03/2018
Cumulative
NAV total
return
(pence per
share)
181.99 216.91 230.37182.60174.54
170
180
190
200
210
220
230
96.54
78.00
99.60
83.00
72.99
109.00
100.91
116.00
96.37
134.00
218.54
71.54
147.00
For similar performance data to that shown above for each allotment in each fundraising since the inception of the Company,
please see the Performance Data on pages 79 to 80 of this Annual Report.
Review of financial results for the year ended 31 March 2023:
2023
£mn
2022
£mn
Capital (loss)/profit (10.56) 9.84
Revenue profit 0.92 0.27
Total (loss)/profit (9.64) 10.11
The capital loss for the year of £(10.56) million ((10.73) pence of NAV return per share, net of costs charged to capital) is primarily
due to a net decrease in the unrealised valuation of portfolio companies as well as realised loss from the permanent impairment
of three companies. This was partially offset by the exits of Media Business Insight Holdings Limited and Tharstern Group Limited
and a partial exit of EOTH Limited (trading as Equip Outdoor Technologies). The reduction in capital returns from £9.84 million to
a loss of £(10.56) million is principally due to lower realised gains compared to 2022 and a net unrealised loss in the period of
£(9.14) million compared to unrealised gains of £9.56 million in 2022 (£18.70 million fall).
The revenue profit for the year of £0.92 million (0.94 pence of NAV return per share, net of costs charged to revenue) is derived
from income, primarily dividends, liquidity fund interest and loan interest, exceeding revenue expenses. The increase from the
previous year is mainly due to an increase in dividend income, particularly due to preference dividends received from EOTH and
interest on liquidity funds. The higher revenue profit also resulted from a reduction in Investment Adviser fees due to lower net
assets throughout the year offset by running costs such as higher audit fees, subscription costs as well as provisions made
against loan interest.
Strategic Report
11
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Strategic Report
2. The VCT’s performance compared with its peer group performance
The Board places emphasis on benchmarking the Company’s performance against a peer group of generalist VCTs and aims
to maintain the Company’s performance within the top quartile of this peer group.
Using the benchmark of NAV Cumulative total return on an investment of £100, performance is as follows:
Year to 31 March 2023 Ranking Number of VCTs (AIC generalist VCTs)
10 years 1
st
31
5 years 7
th
36
3 years 6
th
40
1 year 30
th
39
Source: Association of Investment Companies (“AIC”) based on statistics prepared by Morningstar as at 31 March 2023.
The Company has maintained a ranking with the Board’s target of being within the top quartile compared to a peer group of AIC
Generalist VCTs across the 3, 5 and 10-year periods and will strive to improve the relative performance over the 1-year period.
Shareholders should note that the 1-year performance figures might be skewed by the timing of results and therefore this ranking
can be subject to fluctuations.
3. Dividends paid compared with dividend target
The Board has set a target of paying a regular dividend of not less than 5.00 pence per share in respect of each financial year.
Whilst the Board cannot guarantee future payments, it believes this target is still achievable although, as the proportion of more
established income generating investments in the portfolio reduces, it will become more challenging.
Pence
per share
Dividends paid/payable in respect of the year Cumulative dividends paid/payable in respect of the year
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
110.00
120.00
31/03/202331/03/202231/03/202131/03/202031/03/2019
5.00
83.00
26.00
109.00
13.00
130.00
140.00
150.00
122.00
12.00
134.00
13.00
147.00
An interim dividend declared for the year ended 31 March 2023 of 6.00 pence per share, was paid on 7 November 2022 to
Shareholders on the Register of Members as at the record date of 30 September 2022, and a 7.00 pence per share, was paid on
30 March 2023 to Shareholders on the Register of Members as at the record date of 3 March 2023. The 13.00 pence dividend in
respect of the year ended 31 March 2023 exceeded the Company’s 5.00 pence dividend target for the year.
4. Compliance with VCT legislation
In making their investment in a VCT, Shareholders become eligible for several tax benefits under VCT tax legislation, as long
as the Company also complies with VCT tax legislation. To achieve this, the Company must meet a number of tests set by the
VCT tax legislation. The principal tests are summarised in the ‘Summary of VCT Legislation’ on page 8. In respect of the year
ended 31 March 2023, the Company continued to meet these tests.
12
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Strategic Report
5. Share price and discount to NAV
The Board recognises that Shareholders may wish to sell their shares from time to time and that the secondary market for VCT
shares can be limited. The impact of this limited secondary market is that the Company’s share price will typically trade at a level
which is less than the Company’s NAV per share. Subject to the Company having sufficient available funds and distributable
reserves, it is the Board’s current intention to pursue a buyback policy with the objective of maintaining the discount to the latest
published NAV per share at which the shares trade at approximately 5% or less. It has succeeded in carrying out this objective
during the year.
The discount for the Company’s shares at 31 March 2023 was 4.5% (2022: 4.9%) based upon the share price shown in the
Performance Summary on page 2 and the latest announce NAV per share at 31 December 2022 of 71.70 pence per share
(adjusted for a 7.00 pence dividend paid on 30 March 2023).
The Board considers that a 5% discount represents a fair balance between assisting investors who wish to sell shares and the
majority of investors who wish to continue to invest in a portfolio of investments in unquoted shares. Any future purchases will be
subject to the Company having appropriate authorities from Shareholders and sufficient funds available for this purpose. Share
buybacks will also be subject to the Listing Rules and any applicable law at the relevant time. Shares bought back in the market
are always cancelled. Continuing Shareholders benefit from the difference between the NAV and the price at which the shares
are bought back and cancelled.
During the year ended 31 March 2023, Shareholders holding 1.46 million shares, expressed their desire to sell their investments.
The Company instructed its brokers, Panmure Gordon (UK) Limited (“Panmure Gordon”), to purchase these shares at prices
representing a discount of approximately 5% to the previously announced NAV per share. The Company subsequently
purchased these shares at prices between 68.12 and 85.44 pence per share and cancelled them.
In total, during the year the Company bought back 1.8% of the issued share capital of the Company at the beginning of the year.
6. Costs
Shareholders will be aware there are a number of costs involved in operating a VCT. Although Shareholders do not bear
costs in excess of an expense cap of 3.60% of closing net assets in respect of each financial year, the Board aims to maintain
the Ongoing charges ratio
1
before any performance fees at not more than 3%.
The Board monitors costs using the Ongoing Charges Ratio which is set out in the table below:
2023 2022
Ongoing charges 2.75% 2.50%
Performance fee 0.00% 1.29%
Ongoing charges plus accrued performance fee 2.75% 3.79%
1
- The Ongoing Charges Ratio has been calculated using the Association of Investment Companies recommended methodology.
The calculation of the expense cap as defined in the Investment Adviser’s Agreement is detailed in Note 4a).
The Ongoing charges ratio of 2.75% is well within the Board’s target ratio of 3%. The increase in the ratio from 2.50% to 2.75%
over the year reflects the decrease in average net assets over the year in spite of Investment Adviser fees and other expenses
overall remaining relatively flat year on year.
Investment Adviser fees and other expenses
Investment Adviser fees have decreased from £1.65 million to £1.58 million, charged to both revenue (decrease of £0.02 million)
and capital (decrease of £0.05 million). This was mainly due to the net asset value, upon which Investment Adviser’s fees are
calculated (quarterly in arrears) being lower for most of the year. Also, the Investment Adviser performance incentive fee target
was not achieved during the year. Other expenses (all charged to revenue) have increased by £0.08 million to £0.48 million. This
resulted from a combination of a rise in audit fees, subscriptions fees and provision for loan interest.
Further details of these are contained in Note 4 to the Financial Statements on pages 59 to 61 of this Annual Report.
13
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Strategic Report
Investment Adviser’s Review
Portfolio Review
The continuing harsh economic
conditions continue to create
challenging circumstances for portfolio
companies. UK business has seen both
demand and operating margins come
under pressure in the face of increases
in inflation, interest rates and the
associated threat of recession,
unprecedented in recent years and not
experienced by a generation of
management teams. Whilst markets have
somewhat stabilised, the impact of this is
now being seen on consumer
confidence and business investment.
Gresham House, as Investment Adviser
views portfolio value change in the first
half of the financial year characterised as
by declining market multiples with
relatively stable company level trading
performance carried over in part from
the momentum gained during the prior
financial year. However, in the latter
months of 2022 and into 2023, the
situation has reversed with trading
performance beginning to suffer
somewhat.
Although markets remain buoyant and
less volatile, in large part this is
attributable to the weighting of tech
giants such as Alphabet and Meta who
are not directly representative of the real
UK growth economy. Against this
backdrop, the latest US data suggests
growth rates have more than halved to
1.1%. Whilst inflation is expected to be
moderating following the rises in base
rates, it is still at a very high level and
has impacted economic growth
expectations. There are also early signs
that supply chains are returning to
normality, that the labour shortage is
easing and that there are pockets of
positive market sentiment. The outlook
is therefore mixed, and the emphasis is
thus on robust funding structures and on
being prepared for all eventualities.
The Company’s investment values have
been insulated partially from market
movements and lower revenue growth
by the preferred investment structures
employed in many of the portfolio
companies. This acts to moderate
valuation swings and the net result is a
more modest decline in portfolio value.
The Gresham House non-executive
directors who sit on each portfolio
company board have responded by
working with their boards to ensure that
appropriate scenario planning has been
done to achieve the best results during
these uncertain times. Furthermore, the
direct impact high interest rates on the
Company’s portfolio is negligible as
most portfolio companies do not have
any significant third-party debt. There is
also now a greater focus on cash
management and capital efficiency. With
ample liquidity following the recent fund
raise, the Company is also well placed to
support portfolio companies with
follow-on funding where it is appropriate
and can be done on attractive terms.
Strong liquidity will also benefit the
attractive new investment environment
for the Company which, in our view is
strong and we are seeing a number of
interesting business propositions.
There are some specific highs in the
portfolio such as Preservica which
continues to see strong trading and is
out-performing budget. The partial exit
from EOTH was also an excellent result
after a long running process which had
to negotiate numerous economic and
geo-political hurdles and shortly before
the end of the year was the exit of
Tharstern. By contrast, there were also
some significant falls. The largest was at
Virgin Wines, where market sentiment
shifted heavily against the whole sector
despite Virgin Wines itself outperforming
its peers. MyTutor was also impacted by
declining sector multiples combined with
slower than anticipated growth over the
year and Tapas has entered
administration since the year-end with
no expected recovery for the VCTs.
The portfolio’s valuation changes in the year are summarised as follows:
Investment Portfolio Capital Movement 2023
£mn
2022
£mn
Increase in the value of unrealised investments 0.67 14.91
Decrease in the value of unrealised investments (9.81) (5.36)
Net (decrease)/increase in the value of unrealised investments
(9.14) 9.55
Realised gains 1.21 2.54
Realised losses (1.49) -
Net realised (losses)/gains in the year (0.28) 2.54
Net investment portfolio movement in the year (9.42) 12.09
The portfolio movements in the year are summarised as follows:
2023
£mn
2022
£mn
Opening portfolio value 52.16 41.83
New and further investments 3.32 4.61
Disposal proceeds (8.05) (6.37)
Net realised (losses)/gains (0.28) 2.54
Valuation movements (9.14) 9.55
Portfolio value at 31 March 38.01 52.16
14
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
New Investments during the year
A total of £1.88 million was invested into five new investments during the year, as detailed below:
Company Business Date of
investment
Amount of new
investment (£m)
Bidnamic Marketing technology May 2022 0.43
Lads Store Limited, trading as “Bidnamic” (
bidnamic.com
) is a marketing technology business that offers a platform for online
retailers to manage their search engine marketing spend. The technology was all developed internally and uses bespoke
machine learning algorithms to automate the management and optimisation of online retailers’ Google shopping spend. The
ARR of the business has grown substantially over the last two years and this is projected to continue. The investment round
will be used further to enhance the product’s capabilities and drive continued ARR growth through expanding the sales &
marketing team and building a presence in North America.
FocalPoint
GPS enhancement
software provider
September
2022
0.42
Focal Point Positioning Limited (
focalpointpositioning.com
) is a deep tech business with a growing IP and software portfolio. Its
proprietary technology applies advanced physics and machine learning dramatically to improve the satellite-based location
sensitivity, accuracy, and security of devices such as smartphones, wearables and vehicles and reduce costs.
Orri
Specialists in eating
disorder support
September
2022
0.37
Orri Limited (
orri-uk.com
) is an intensive day care provider for adults with eating disorders. Orri provides an alternative to
expensive residential in-patient treatment and lighter-touch outpatient services by providing highly structured day and half
day sessions either online or in-person at its clinic on Hallam Street, London. Orri opened its current clinic in London in
February 2019 which provides a homely environment in a converted 4-storey house but which is operating at capacity. The
plan sees a larger site being leased nearby with Hallam Street being used to provide a step-down outpatient service.
Connect Earth
Environmental data
provider
March 2023 0.22
Founded in 2021, Connect Earth (connect.earth) is a London-based environmental data company that democratises easy
access to sustainability data. With its carbon tracking API technology, Connect Earth supports financial institutions in offering
their customers transparent insights into the climate impact of their daily spending and investment decisions. Connect Earth’s
defensible and scalable product platform suite has the potential to be a future market winner in the nascent but rapidly
growing carbon emission data market, for example, by enabling banks to provide end retail and business customers with
carbon footprint insights of their spending. This funding round is designed to facilitate the delivery of the technology and
product roadmap to broaden the commercial reach of a proven product.
Cognassist
Education and neuro-
inclusion solutions
March 2023 0.44
Cognassist (cognassist.com) is an education and neuro-inclusion solutions company that provides a Software-as-a-Service
(SaaS) platform focused on identifying and supporting individuals with hidden learning needs. The business is underpinned
by extensive scientific research and a vast cognitive dataset. Founded in 2019 by Chris Quickfall, Cognassist has scaled its
underlying business within the education market, enabling apprentices to unlock government funding and helping diverse
minds to thrive. This investment will empower Cognassist to continue its growth within the education market and penetrate
the enterprise market, where demand for neuro-inclusive solutions to adequately support employees is rapidly emerging.
Strategic Report
15
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Strategic Report
Further investments during the year
A total of £1.44 million was invested into five existing portfolio companies during the year, as detailed below:
Company Business Date of
investment
Amount of further
investment (£m)
Northern Bloc
Dairy and allergen-Free
ice cream producer
April 2022 0.12
Northern Bloc Ice Cream (
northern-bloc.com
) is an established food brand in the emerging and rapidly growing vegan market.
By focusing on chef quality and natural ingredients, Northern Bloc has carved out an early mover position in the dairy and
allergen-free ice cream sector. The company’s focus on plant-based alternatives has strong environmental credentials as well
as it being the first ice cream brand to move wholly into sustainable packaging. Following the initial investment in December
2020, Northern Bloc has grown and strengthened its prospects against a challenging market backdrop. This further
investment provides additional working capital and funds a new production facility to increase its resilience, flexibility and
margins in the future.
Andersen EV
Provider of premium
electric vehicle (EV)
chargers
May 2022 0.27
Muller EV Limited (trading as Andersen EV) (
andersen-ev.com
) is a design-led manufacturer of premium electric vehicle
chargers. Incorporated in 2016, this business has secured high profile partnerships with Porsche and Jaguar Land Rover,
establishing an attractive niche position in charging points for the high end EV market. This follow-on funding was to further
support its premium brand and product positioning whilst ensuring all new and existing products met the most recent and
highest safety and compliance standards. Unfortunately, external factors caused its market and trading prospects to worsen
rapidly, including substantially reduced demand, global supply chain issues, inflation and the removal of government
consumer support for the purchase of EV chargers. The company therefore entered administration in October 2022.
RotaGeek
Workforce management
software
June 2022 0.18
RotaGeek (
rotageek.com
) is a provider of cloud-based enterprise software to help larger retail, leisure and healthcare
organisations to schedule staff effectively. RotaGeek has proven its ability to solve the scheduling issue for large retail clients
effectively competing due to the strength of its technologically advanced proposition. The company has made significant
commercial progress since the VCTs first investment nearly doubling Annual Recurring Revenues (ARR). This investment aims
to boost ARR and enable the company to take advantage of further large client opportunities.
Vivacity
Provider of artificial
intelligence & urban traffic
control systems
July 2022 0.59
Vivacity (
vivacitylabs.com
) develops camera sensors with on-board video analytics software that enables real-time
anonymised data gathering of road transport system usage. It offers city transport authorities the ability to manage their road
infrastructure more effectively, enabling more efficient monitoring of congestion and pollution levels as well as planning for
other issues, such as the changing nature of road usage (e.g. the increasing number of cyclists). The technology and software
represent a significant leap forward for local planning authorities which have traditionally relied upon manual data collection
methods. This new investment will help boost the company’s revenues through development of new functionality to enhance
its product suite which can also be installed into the existing asset base.
Bleach Hair Colourants brand August 2022 0.28
Bleach London Holdings (“Bleach”) (
bleachlondon.com
) is an established brand which develops and markets a range of
innovative haircare and colouring products. Bleach is regarded as a leading authority in the hair colourant market having
opened one of the world’s first salons focused on colouring and subsequently launched its first range of products in 2013.
This further investment was part of a wider £5.5 million investment round alongside existing shareholders and a strategic
partner. The funds will be used to drive further expansion into the strategically important North American market and to
consolidate the brand’s position in the UK.
16
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Portfolio valuation movements
Across the portfolio, comparable market
multiples that are used as the basis of
valuation have declined over the year,
some by over 30%, but the levels at the
year-end reflect a degree of stabilisation
over the final quarter. Together with
several downward revisions to trading
forecasts in the latter half of the year, this
has driven a general decline in investee
company values. As noted, the
preference investment structures used in
many of the portfolio companies serve to
moderate the impact of such company
value movements on VCT value. The
need to protect and develop value going
forwards in such an uncertain
environment underlines the need for
portfolio readiness and planning, robust
funding and close monitoring by the
Gresham House team.
The main reductions within total valuation
decreases of £(9.81) million, were:
● Virgin Wines £(2.68) million
● MyTutor £(1.24) million
● Wetsuit Outlet £(1.12) million
● Buster and Punch £(1.05) million
● Connect Childcare £(0.85) million
Virgin Wines has suffered from negative
sentiment across its sector despite
outperforming its peers although more
recently, it also experienced some short
term operational difficulties particularly in
the last quarter of 2022. MyTutor’s growth
has slowed post COVID coupled with a
decline in market multiples. Buster and
Punch and Wetsuit Outlet are both
consumer facing businesses that have
experienced challenging trading
conditions which resulted in profit
downgrades. Connect Childcare has
struggled to grow revenues as rapidly as
hoped and is managing its cash carefully.
The uplifts within the total valuation
increase of £0.67 million were:
● Master Removers £0.27 million
● Preservica £0.22 million
● Orri £0.18 million
Master Removers continues to trade well
despite an uncertain housing market
across much of the period under review.
Preservica is performing well and
increasing its recurring revenues. Finally,
Orri has been valued on a revenue
multiple and the VCT has benefitted from
an increase in value due to the
investment structuring.
Portfolio Realisations during the year
The Company completed three full or partial exits during the year, as detailed below:
Company Business Period of
investment
Total cash proceeds over
the life of the investment/
Multiple over cost
MBI
Publishing and events
business
January 2015
to
June 2022
£4.50 million
2.2x cost
The Company realised its entire investment in MBI for £2.80 million (realised gain in the year: £0.16 million) including deferred
proceeds received since completion. Total proceeds received over the life of the investment were £4.50 million compared to an
original investment cost of £2.01 million, representing a multiple on cost of 2.2x and an IRR of 13.8%.
EOTH
Branded clothing (RAB
and Lowe Alpine)
October 2011
to
November 2022
£5.64 million
6.9x cost
The Company realised its equity investment in EOTH for £3.67 million (realised gain in the year: £0.70 million) including
preference dividends. Total proceeds received over the life of the investment were £5.64 million compared to an original
investment cost of £0.82 million, representing a multiple on cost of 6.9x and an IRR of 23.2%. The Company has retained its
interest yielding loan stock investment. Once repaid, this should increase the multiple on cost to 7.9x.
Tharstern
Software based
management
information systems
July 2014 to
March 2023
£2.17 million
2.6x cost
The Company realised its investment in Tharstern Group for £1.55 million (realised gain of £0.35 million). Total proceeds received
over the life of the investment were £2.17 million compared to an original cost of £0.84 million, representing a multiple on cost of
2.6x and an IRR of 15.0%.
Also during the year, the Company received a loan repayment from Jablite Holdings Limited.
Portfolio income and yield
In the year under review, the Company received the following amounts in loan interest and dividend income:
Investment Portfolio Yield 2023
£m
2022
£m
Interest received in the year 0.50 0.79
Dividends received in the year 0.76 0.29
Total portfolio income in the year
1
1.26 1.08
Portfolio Value at 31 March 38.01 52.16
Portfolio Income Yield (Income as a % of Portfolio value at 31 March) 3.3% 2.1 %
1
Total portfolio income in the year is generated solely from investee companies within the portfolio.
Investment Adviser’s Review
Strategic Report
17
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Strategic Report
New investments made after the year-end
The Company made one new investment of £0.39 million after the year-end, as detailed below:
Company Business Date of
investment
Amount of new
investment (£m)
Dayrize
Sustainability impact
assessment tool
provider
May 2023 0.39
Founded in 2020, Amsterdam-based Dayrize has developed a rapid sustainability impact assessment tool that delivers
product-level insights for consumer goods brands and retailers, enabling them to be leaders in sustainability. Its proprietary
software platform and methodology bring together an array of data sources to provide a single holistic product-level
sustainability score that is comparable across product categories in under two seconds. This funding round is to drive product
development and develop its market strategy to build on an opportunity to emerge as a market leader in the industry.
Further investments made after the year-end
The Company made a further investment of £0.30 million into an existing portfolio company after the year-end, as detailed below:
Company Business Date of
investment
Amount of further
investment (£m)
Legatics Holdings
Limited
SaaS LegalTech
software
July 2023 0.30
Legatics (legatics.com) transforms legal transactions by enabling deal teams to collaborate and close deals in an interactive
online environment. Designed by lawyers to improve legacy working methods and solve practical transactional issues, the
legal transaction management platform increases collaboration, efficiency and transparency. As a result, Legatics has been
used by around 1,500 companies, and has been procured by more than half of the top global banking and finance law firms,
with collaborations having been hosted in over 60 countries. This funding round will provide headroom to further accelerate
growth and to drive efficiencies to reach profitability.
Environmental, Social and
Governance considerations
The Board and the Investment Adviser
believe that the consideration of
environmental, social and corporate
governance (“ESG”) factors throughout
the investment cycle should contribute
towards enhanced shareholder value.
The Investment Adviser has a team
which is focused on sustainability as well
as the Investment Adviser’s
Sustainability Committee who provide
oversight and accountability for the
Investment Adviser’s approach to
sustainability across its operations and
investment practices. This is viewed as
an opportunity to enhance the
Company’s existing protocols and
procedures through the adoption of the
highest industry standards. Each
investment executive is responsible for
setting and achieving their own
individual ESG objectives in support of
the wider overarching ESG goals of the
Investment Adviser. The Investment
Adviser’s Private Equity division has its
own Sustainable Investment Policy, in
which it commits to:
● Ensuring its team understands the
imperative for effective ESG
management and is equipped to
carry this out through management
support and training.
● Conduct regular monitoring of ESG
risks, opportunities and performance
in its investments.
● Incorporate ESG into its monitoring
processes.
Outlook
Whilst the year under review has once
again been marked with volatility and
uncertainty as a result of a number of
factors affecting both the global and UK
economy, the portfolio has continued to
trade well under the circumstances.
Rising costs and recessionary pressures
will place further strains on the portfolio
however, the Investment Adviser with its
wealth of team experience will provide
all additional help and advice to portfolio
company management to help weather
this storm. In terms of new investment,
evidence shows that investing through
the economic cycle has the potential to
yield strong returns and Gresham House
is seeing a number of opportunities,
which although not without some risk,
have the potential to drive shareholder
value.
Gresham House Asset Management
Limited
Investment Adviser
12 July 2023
18
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Investment Adviser’s Review
Strategic Report
Investments by market sector
Investments by value remain spread across a number of sectors, primarily in retailers, software and computer services and
industrial support services. Although the portfolio appears concentrated on three main sectors, the range of companies
contained within these sectors is considered to be very diverse and the Investment Adviser continues to target further
investments to complement these sectors.
31 March 2023 31 March 2022
0% 20% 25%
30%35% 40% 45% 50% 55%
10%5% 15%
Industrial support services
Software & computer services
Media
Retailers
1.1%
0.4%
0.5%
0.7%
0.0%
1.4%
0.7%
3.9%
1.1%
1.5%
5.1%
0.0%
33.3%
40.3%
44.4%
38.4%
11.1%
12.0%
Consumer services
Technology, hardware & equipment
Healthcare
General industrials
Travel & Leisure
Construction and materials
Food producers
60%
0.1%
0.0%
2.6%
1.4%
All of the retailers investments have branded online direct-to-consumer businesses with no physical high street retail presence,
being Bella & Duke, Bleach London, Buster and Punch, EOTH (trading as RAB and Lowe Alpine), MPB Group, Parsley Box, Wetsuit
Outlet, and Virgin Wines.
Age of the portfolio by value
20232023
< 1 year
1 - 2 years
2 - 3 years
3 - 4 years
MBO
Growth Capital
4 - 5 years
> 5 years
20222022
20232023 20222022
5.9%
3.7%
96.3%
15.8%
84.2%
24.7%
1.3%
59.6%
4.0%
4.5%
20.4%
3.3%
6.8%
58.4%
9.8%
1.3%
Type of investment transaction by value
20232023
< 1 year
1 - 2 years
2 - 3 years
3 - 4 years
MBO
Growth Capital
4 - 5 years
> 5 years
20222022
20232023 20222022
5.9%
3.7%
96.3%
15.8%
84.2%
24.7%
1.3%
59.6%
4.0%
4.5%
20.4%
3.3%
6.8%
58.4%
9.8%
1.3%
Growth Capital contains all investments made after the 2015 rule change which are young businesses using the Company’s
investment for growth and development purposes (as defined under VCT legislation). This category also contains a small number
of growth capital style investments made before the 2015 rule change under the Investment Adviser’s MBO strategy.
MBO contains MBO type investments made under the Investment Adviser’s previous MBO strategy. This typically includes
companies which are more mature compared to those invested under the growth capital strategy.
19
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Strategic Report
This page has been left blank intentionally.
20
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Twelve largest investments in the portfolio
at 31 March 2023 by valuation
Bella & Duke Limited
www.bellaandduke.com
Cost £2,062,000
Valuation £5,660,000
Basis of valuation
Revenue multiple
Equity % held
10.2%
Income receivable in year
£Nil
Business
A premium frozen raw dog food
provider
Location
Edinburgh
Original transaction
Growth capital
Audited financial information
Year ended 31 March 2023
Turnover £22,945,000
Operating profit £458,000
Loss before tax £(622,000)
Net assets £2,431,000
Year ended 31 March 2022
Turnover £19,271,000
Operating loss £(2,024,000)
Loss before tax £(2,763,000)
Net assets £2,998,000
Additions/disposals during the year
None.
Preservica Limited
www.preservica.com
Cost £2,429,000
Valuation £8,826,000
Basis of valuation
Revenue multiple
Equity % held
9.4%
Income receivable in year
£59,707
Business
Seller of proprietary digital archiving
software
Location
Abingdon, Oxfordshire
Original transaction
Growth capital
Audited financial information
Year ended 31 March 2022
Turnover Not disclosed
Operating profit/(loss) Not disclosed
Profit before tax Not disclosed
Net liabilities £(1,001,000)
Year ended 31 March 2021
Turnover Not disclosed
Operating profit/(loss) Not disclosed
Profit before tax Not disclosed
Net liabilities £(3,057,000)
Additions/disposals during the year
None.
MPB Group Limited
www.mpb.com
Cost £870,000
Valuation £4,277,000
Basis of valuation
Revenue multiple
Equity % held
2.6%
Income receivable in year
£Nil
Business
Online marketplace for photographic
and video equipment
Location
Brighton
Original transaction
Growth capital
Audited financial information
Year ended 31 March 2022
Turnover £97,793,000
Operating loss £(4,959,000)
Loss before tax £(7,703,000)
Net assets £25,624,000
Year ended 31 March 2021
Turnover £64,888,000
Operating loss £(911,000)
Loss before tax £(2,857,000)
Net assets £31,267,000
Additions/disposals
during the year
None.
Strategic Report
21
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
MyTutorWeb Limited (trading
as MyTutor)
www.mytutor.co.uk
Cost £1,847,000
Valuation £2,139,000
Basis of valuation
Revenue multiple
Equity % held
4.0%
Income receivable in year
£Nil
Business
Provider of a digital marketplace
connecting school pupils seeking
one-to-one online tutoring
Location
London
Original transaction
Growth capital
Audited financial information
Year ended 31 December 2021
Turnover £17,152,000
Operating loss £(7,482,000)
Loss before tax £(7,520,000)
Net assets £11,247,000
Year ended 31 December 2020
Turnover £7,246,000
Operating loss £(2,379,000)
Loss before tax £(2,389,000)
Net assets £3,242,000
Additions/disposals
during the year
None.
End Ordinary Group Limited
(trading as Buster and Punch)
www.busterandpunch.com
Cost £1,232,000
Valuation £1,672,000
Basis of valuation
Earnings multiple
Equity % held
6.4%
Income receivable in year
£Nil
Business
Industrial inspired lighting and
interiors retailer
Location
Stamford, Lincolnshire
Original transaction
Growth capital
Audited financial information
Year ended 31 March 2022
Turnover £21,678,000
Operating profit £2,899,000
Profit before tax £2,474,000
Net assets £11,684,000
Year ended 31 March 2021
Turnover £16,177,000
Operating profit £3,209,000
Profit before tax £2,877,000
Net assets £9,448,000
Additions/disposals during the year
None.
Master Removers Group 2019
Limited (trading as Anthony
Ward Thomas, Bishopsgate
and Aussie Man & Van)
www.ward-thomas.co.uk
Cost £252,000
Valuation £2,422,000
Basis of valuation
Earnings multiple
Equity % held
4.8%
Income receivable in year
£98,198
Business
A specialist logistics, storage and
removals business
Location
London
Original transaction
Growth capital
Audited financial information
Year ended 30 September 2022
Turnover £41,617,000
Operating profit £8,531,000
Profit before tax £3,903,000
Net assets £17,688,000
Year ended 30 September 2021
Turnover £38,530,000
Operating profit £8,694,000
Profit before tax £4,163,000
Net assets £16,378,000
Additions/disposals during the year
None.
Strategic Report
Financial information above and opposite is derived from publicly available Report and Accounts. The valuation of each investee
company is derived in line with the valuation methodology detailed in Note 8 and is typically based upon each investee
company’s latest management accounts information not yet disclosed to public sources.
Further details of the investments in the portfolio may be found on the Gresham House website: www.greshamhouse.co.uk
Operating profit is stated before charging depreciation and amortisation, where appropriate, for all investee companies.
22
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Vivacity Labs Limited
www.vivacitylabs.com
Cost £1,467,000
Valuation £1,467,000
Basis of valuation
Earnings multiple
Equity % held
5.3%
Income receivable in year
£Nil
Business
Provider of artificial intelligence &
urban traffic control systems
Location
London
Original transaction
Growth capital
Unaudited financial information
Year ended 31 December 2021
Turnover Not disclosed
Operating profit/(loss) Not disclosed
Profit before tax Not disclosed
Net assets £3,954,000
Year ended 31 December 2020
Turnover Not disclosed
Operating profit/(loss) Not disclosed
Profit before tax Not disclosed
Net assets £632,000
Additions/disposals during the year
Follow-on investment in July 2022.
Data Discovery Solutions
Limited (trading as ActiveNav)
www.activenavigation.com
Cost £1,207,000
Valuation £1,395,000
Basis of valuation
Revenue multiple
Equity % held
6.1%
Income receivable in year
£Nil
Business
Provider of a global market leading
file analysis software for information
governance, security and
compliance
Location
Winchester
Original transaction
Growth capital
Audited financial information
Year ended 29 June 2022
Turnover £6,345,000
Operating loss £(59,000)
Loss before tax £(1,769,000)
Net assets £8,201,000
Year ended 29 June 2021
Turnover £5,521,000
Operating loss £(156,000)
Loss before tax £(1,581,000)
Net assets £6,885,000
Additions/disposals during the year
None.
Strategic Report
Arkk Consulting Limited
(trading as Arkk Solutions)
www.arkksolutions.com
Cost £1,300,000
Valuation £1,373,000
Basis of valuation
Revenue multiple
Equity % held
5.5%
Income receivable in year
£29,980
Business
Provider of services and software
to enable organisations to remain
compliant with regulatory reporting
requirements
Location
London
Original transaction
Growth capital
Audited financial information
Year ended 31 December 2021
Turnover Not disclosed
Operating profit/(loss) Not disclosed
Profit before tax Not disclosed
Net liabilities £(1,056,000)
Year ended 31 December 2020
Turnover Not disclosed
Operating profit/(loss) Not disclosed
Profit before tax Not disclosed
Net liabilities £(428,000)
Additions/disposals
during the year
None.
23
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
EOTH Limited (trading as Rab
and Lowe Alpine)
www.equipuk.com
Cost £816,000
Valuation £800,000
Basis of valuation
Net asset value
Equity % held
1.5%
Income receivable in year
£742,793
Business
Branded outdoor equipment and
clothing (Rab and Lowe Alpine)
Location
Alfreton, Derbyshire
Original transaction
Growth capital
Audited financial information
Year ended 31 January 2022
Turnover £95,790,000
Operating profit £20,360,000
Profit before tax £16,642,000
Net assets £45,230,000
Year ended 31 January 2021
Turnover £61,258,000
Operating profit £8,241,000
Profit before tax £5,913,000
Net assets £32,711,000
Additions/disposals
during the year
Partial equity realisation in November
2022.
Legatics Holdings Limited
www.legatics.com
Cost £605,000
Valuation £605,000
Basis of valuation
Revenue multiple
Equity % held
5.5%
Income receivable in year
£Nil
Business
Saas Legal Tech software
Location
London
Original transaction
Growth capital
Unaudited financial information
Year ended 31 May 2022
Turnover Not disclosed
Operating profit/(loss) Not disclosed
Profit before tax Not disclosed
Net assets £1,461,000
Year ended 31 May 2021
Turnover Not disclosed
Operating profit/(loss) Not disclosed
Profit before tax Not disclosed
Net liabilities £(49,000)
Additions/disposals
during the year
None.
Virgin Wines UK plc
www.virginwines.co.uk
Cost £31,000
Valuation £1,170,000
Basis of valuation
Bid price (AIM quoted)
Equity % held
5.5%
Income receivable in year
£Nil
Business
Online wine retailer
Location
Norwich
Original transaction
Management buyout
Audited financial information
Year ended 1 July 2022
Turnover £69,152,000
Operating profit £6,164,000
Profit before tax £5,098,000
Net assets £22,073,000
Year ended 2 July 2021
Turnover £73,634,000
Operating profit £3,468,000
Profit before tax £1,678,000
Net assets £17,627,000
Additions/disposals during the year
None.
Strategic Report
Financial information above and opposite is derived from publicly available Report and Accounts. The valuation of each investee
company is derived in line with the valuation methodology detailed in Note 8 and is typically based upon each investee
company’s latest management accounts information not yet disclosed to public sources.
Further details of the investments in the portfolio may be found on the Gresham House website: www.greshamhouse.co.uk
Operating profit is stated before charging depreciation and amortisation, where appropriate, for all investee companies.
24
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Date of first
investment
and Sector
Total Book
cost at
31 March
2023
Valuation
at
31 March
2022
Additions
at cost
Disposals
at opening
valuation
Change in
valuation
for year
Valuation
at
31 March
2023
% of net
assets by
value
£ £ £ £ £ £
Qualifying investments
Preservica Limited
Seller of proprietary digital archiving
software
December 2015
Software &
computer services
2,428,743 8,602,347 - - 223,573 8,825,920 12.5%
Bella & Duke Limited
A premium frozen raw dog food
provider
February 2020
Retailers
2,062,146 5,941,407 - - (281,190) 5,660,217 8.0%
MPB Group Limited
Online marketplace for photographic
and video equipment
June 2016
Retailers
869,871 4,392,111 - - (115,520) 4,276,591 6.1%
My Tutorweb Limited (trading as
MyTutor)
Digital marketplace connecting
school pupils seeking one-to-one
online tutoring
May 2017
Industrial support
services
1,846,886 3,376,630 - - (1,237,857) 2,138,773 3.0%
End Ordinary Group Limited
(trading as Buster and Punch)
Industrial inspired lighting and
interiors retailer
March 2017
Retailers
1,231,510 2,718,017 - - (1,045,920) 1,672,097 2.4%
Vivacity Labs Limited
Provider of artificial intelligence &
urban traffic control systems
February 2021
Technology,
hardware &
equipment
1,467,160 876,541 590,619 - - 1,467,160 2.1%
Data Discovery Solutions Limited
(trading as ActiveNav)
Provider of global market leading
file analysis software for information
governance, security and
compliance
November 2019
Software &
computer services
1,207,040 1,988,095 - - (593,547) 1,394,548 2.0%
Arkk Consulting Limited (trading as
Arkk Solutions)
Provider of services and software
to enable organisations to remain
compliant with regulatory reporting
requirements
May 2019
Software &
computer services
1,299,865 1,384,705 - - (11,986) 1,372,719 1.9%
Virgin Wines UK Plc (AIM quoted)
Online wine retailer
November 2013
Retailers
30,541 3,847,574 - - (2,677,911) 1,169,663 1.7%
EOTH Limited (trading as Equip
Outdoor Technologies)
6
Branded outdoor equipment and
clothing (Rab and Lowe Alpine)
October 2011
Retailers
816,267 3,773,864 - (2,974,125) - 799,739 1.1%
Legatics Holdings Limited
SaaS LegalTech software provider
June 2021
Software &
computer services
605,374 605,374 - - - 605,374 0.9%
Pets’ Kitchen Limited (trading as
Vet’s Klinic)
Veterinary clinics
June 2021
Consumer services
561,680 561,680 - - - 561,680 0.8%
Proximity Insight Holdings Limited
Super-App used by customer-facing
teams of brands and retailers to
engage, inspire and transact with
customers
February 2022
Software &
computer services
555,000 555,000 - - - 555,000 0.8%
Orri Limited
An intensive day care provider for
adults with eating disorders
September 2022
Healthcare
366,800 - 366,800 - 180,509 547,309 0.8%
IPV Limited
Provider of media asset software
November 2019
Software &
computer services
535,459 535,459 - - - 535,459 0.8%
Caledonian Leisure Limited
Provider of UK leisure and
experience breaks
March 2021
Travel & leisure
522,509 759,329 - (236,319) 523,010 0.7%
Rota Geek Limited
Workforce management software
August 2018
Software &
computer services
916,500 636,263 183,300 (343,329) 476,234 0.7%
Investment Portfolio Summary
as at 31 March 2023
Strategic Report
Green Growth focused portfolio
Blue MBO focused portfolio
25
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Date of first
investment
and Sector
Total Book
cost at
31 March
2023
Valuation
at
31 March
2022
Additions
at cost
Disposals
at opening
valuation
Change in
valuation
for year
Valuation
at
31 March
2023
% of net
assets by
value
£ £ £ £ £ £
Cognassist UK Limited
Provider of neurodiversity
assessments and support software
March 2023
Software &
computer services
438,000 - 438,000 - - 438,000 0.6%
Lads Store Limited (trading as
Bidnamic)
SaaS platform for optimisation of
search engine marketing spend
May 2022
Software &
computer services
429,323 - 429,323 - (2,853) 426,470 0.6%
Focal Point Positioning Limited
A positioning technology company
September 2022
Software &
computer services
419,357 - 419,357 - - 419,357 0.6%
Bleach London Holdings Limited
Hair colourants brand
December 2019
Retailers
822,715 593,174 283,033 - (485,267) 390,940 0.6%
Manufacturing Services Investment
Limited (trading as Wetsuit Outlet)
Online retailer in the water sports
market
July 2017
Retailers
1,412,992 1,411,513 - - (1,029,800) 381,713 0.5%
CGI Creative Graphics International
Limited
Vinyl graphics to global automotive,
recreation vehicle and aerospace
markets
June 2014
General industrials
999,568 262,160 - - (11,992) 250,168 0.4%
Connect Earth Limited
Environmental data provider
March 2023
Software &
computer services
218,996 - 218,996 - - 218,996 0.3%
Northern Bloc Ice Cream Limited
Supplier of premium vegan ice
cream
December 2020
Food producers
424,200 558,851 121,200
-
(538,653) 141,398 0.2%
Connect Childcare Group Limited
Nursery management software
provider
December 2020
Software &
computer services
828,419 954,882 -
-
(851,332) 103,550 0.1%
Parsley Box Group Limited (formerly
Parsley Box Plc)
4
Supplier of home delivered, ambient
ready meals targeting the over 60s
May 2019
Retailers
520,549 215,280 - - (182,988) 32,292 0.0%
RDL Corporation Limited
Recruitment consultants for
the pharmaceutical, business
intelligence and IT industries
October 2010
Industrial support
services
1,000,000 255,219 - (254,219) (1,000) - 0.0%
Spanish Restaurant Group Limited
(trading as Tapas Revolution)(in
administration)
Spanish restaurant chain
January 2017
Travel & Leisure
947,645 574,893 - (574,893) - - 0.0%
Racoon International Group Limited
Supplier of hair extensions, hair care
products and training
December 2006
Personal goods
906,935 - - - - - 0.0%
Muller EV Limited (trading as
Andersen EV) (in administration)
Provider of premium electric vehicle
(EV) chargers
June 2020
Technology,
hardware &
equipment
653,998 381,500 272,498 (653,998) - - 0.0%
Veritek Global Holdings Limited
5
Maintenance of imaging equipment
July 2013
Industrial support
services
530,985 - - - - - 0.0%
BookingTek Limited
Software for hotel groups
October 2016
Software &
computer services
450,283 - - - - - 0.0%
Strategic Report
Green Growth focused portfolio
Blue MBO focused portfolio
26
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Investment Portfolio Summary
as at 31 March 2023
Date of first
investment
and Sector
Total Book
cost at
31 March
2023
Valuation
at
31 March
2022
Additions
at cost
Disposals
at opening
valuation
Change in
valuation
for year
Valuation
at
31 March
2023
% of net
assets by
value
£ £ £ £ £ £
Realised in year
Kudos Innovations Limited
Online platform that provides and
promotes academic research
dissemination
November 2018
Software &
computer services
277,950 66,223 -
-
(66,223) - 0.0%
Jablite Holdings Limited (in
members’ voluntary liquidation)
Manufacturer of expanded
polystyrene products
April 2015
Construction and
materials
254,550 37,110 - (37,110) - - 0.0%
Media Business Insight Holdings
Limited
A publishing and events business
focused on the creative production
industries
January 2015
Media
- 2,646,394 - (2,646,394) - - 0.0%
Tharstern Group Limited
Software based management
Information systems
July 2014
Software &
computer services
- 1,191,908 - (1,191,908) - - 0.0%
Total qualifying investments 28,859,816 49,703,503 3,323,126 (8,332,647)
(9,309,605)
35,384,377
50.2%
1
Non-qualifying investments
Master Removers Group 2019
Limited (trading as Anthony Ward
Thomas, Bishopsgate and Aussie
Man & Van)
A specialist logistics, storage and
removals business
December 2014
Industrial support
services
251,763 2,153,619 - - 268,070 2,421,689 3.4%
Manufacturing Services Investment
Limited (trading as Wetsuit Outlet)
Online retailer in the water sports
market
July 2017
Retailers
304,000 304,000 - - (94,727) 209,273 0.3%
Racoon International Group Limited
Supplier of hair extensions, hair care
products and training
December 2006
Personal goods
139,050 - - - - - 0.0%
Total non-qualifying investments 694,813 2,457,619 - - 173,343 2,630,962 3.7%
Total investment portfolio per
Note 8, page 64
29,554,629 52,161,122 3,323,126 (8,332,647)
(9,136,262)
38,015,339 53.9%
Cash and current asset investments
2
26,259,504 - - 32,512,904 46.2%
Total investments including cash
and current asset investments
29,554,629 78,420,626 3,323,126 (8,332,647)
(9,136,262)
70,528,243 100.1%
Other current assets 260,786 172,167 0.3%
Current liabilities (1,175,430) (273,853) (0.4)%
Totals 29,554,629 3,323,126 (8,332,647)
Net assets at the year-end 77,505,982 70,426,557 100.0%
Total Investment Portfolio split by type
Growth focused portfolio
3
25,947,550 43,920,757 3,323,126 (4,203,016) (6,445,359) 36,595,508 96.3%
MBO focused portfolio
3
3,607,079 8,240,365 - (4,129,631)
(2,690,903)
1,419,831 3.7%
Investment Adviser’s Total 29,554,629 52,161,122 3,323,126 (8,332,647)
(9,136,262)
38,015,339 100.0%
Strategic Report
¹ As at 31 March 2023, the Company held more than 80% of its total investments in qualifying holdings, and therefore complied with the VCT
Qualifying Investment test. For the purposes of the VCT qualifying test, the Company is permitted to disregard disposals of investments for twelve
months from the date of disposal. It also has up to three years to bring in new funds raised, before these need to be included in the qualifying
investment test.
² Disclosed as Current asset investments and Cash at bank within Current assets in the Balance Sheet on page 54.
³ The growth focused portfolio contains all investments made after the change in the VCT regulations in 2015 plus some investments that are growth in
nature made before this date. The MBO focused portfolio contains investments made prior to 2015 as part of the previous MBO strategy.
4
Parsley Box Group Plc was delisted from AIM in December 2022; the company changed its name on 11 January 2023 to Parsley Box Group Limited.
5
The Company’s holding in Veritek Global Holdings Limited was restructured during the peirod resulting in a write-off of £436,796 of the loan stock held.
6
In November 2022, the equity value of the Company’s holding in EOTH Limited was realised. The Company retains an interest yielding loan stock as well
as deferred shares held at nominal value.
Green Growth focused portfolio
Blue MBO focused portfolio
27
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Key policies
The Board has put in place the following policies to be applied to meet the
Company’s overall Objective and to cover specific areas of the Company’s business.
Investment policy
The Investment 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.
Diversity Policy
The Directors have considered diversity
in relation to the composition of the
Board and it’s Committees and have
concluded that its membership is
diverse in relation to gender and its
breadth of experience. The Board and
it’s Committees comprise of one male
and two female directors. The Company
does not have any senior managers or
employees. The Board has made a
commitment to always consider diversity
in making future appointments. The
Directors had taken the Board’s diversity
into consideration in the recruitment and
appointment of a successor to Adam
Kingdom, and took this opportunity to
re-emphasise the commitment it made
to continue to consider diversity when
making all future appointments.
Other policies
In addition to the Investment Policy, the
Diversity Policy and the policies on
payment of dividends and share
buybacks, which are detailed earlier in
this section, the Company has adopted
a number of further policies relating to:
● Environmental and social
responsibility;
● Human rights;
● Anti-bribery;
● Global greenhouse gas emissions;
● Whistleblowing; and
● Anti-Tax Evasion
These are set out in the Directors’
Report on pages 34 to 37 of this Annual
Report.
Strategic Report
28
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Stakeholder Engagement and Directors’ Duties
The Board has discussed the discharge of their Director’s duties under Section 172 of the Companies Act 2006 having regard to
the factors set out under Provision 5 of the Association of Investment Companies (AIC) Code and in line with the UK Corporate
Governance Code. The views of and the impact of the Company’s activities on the key stakeholders are an important
consideration for the Board when making relevant decisions. The Board, in normal circumstances, engages directly with
stakeholder groups through either regular or annual meetings and investor presentations to assist the directors in understanding
the issues to which they must have regard.
The table below sets out the interests of key stakeholders that have been considered throughout the year during the Board’s
discussions and in decision making.
Stakeholders Engagement Type Outcome
Strategic Report
Shareholders The key mechanisms of Shareholder
engagement are:
● Annual General Meeting
● Annual, Interim Reports and Interim
Management Statements
● Annual Investor Events
● RNS Announcements
● Website
● Offer for subscription
● The AGM will be held on 13 September 2023. There will
also be a live stream providing access to view the meeting
remotely for those that cannot attend the meeting in
person, although only Shareholders physically attending
will be able to formally take part in the meeting and vote on
resolutions by a show of hands. Shareholders unable to
attend are therefore encouraged to submit their votes on
resolutions via proxy forms ahead of the meeting. A
recording of the AGM webcast will be available on the
Compnay’s website under Key Shareholder Information
following the meeting.
● Shareholders are provided with Annual and Interim
Reports in hard or soft copy according to their choice,
which are also available on the Company’s website.
Voluntary Interim Management Statements are released in
the quarters between reports to ensure that Shareholders
are kept up to date with events. The website is an
important source of information for Shareholders and
announcements are also regularly made through the
London Stock Exchange.
● The Share buyback programme has continued to be
offered throughout the year. This provides Shareholders
with liquidity if they wish to sell their shares, at a price
close to the latest announced NAV per share, the Board
having considered the interests of remaining Shareholders.
Further details are contained in the Chair’s Statement on
page 5 and in the Director’s Report on page 34.
● Shareholders are welcome to contact the Chair or the
Investment Adviser by email as advised on page 86 of this
Report.
● The Annual Shareholder Event was successfully held as a
virtual event on 23 March 2023 with a live Q&A session to
encourage more interaction between the Shareholders
and the Board. A recording of the event is available via a
link on the Company’s website at www.mig2vct.co.uk for
those Shareholders that were unable to join on the day.
● The Company seeks to create value for Shareholders by
generating good returns which are eventually distributed
to Shareholders as dividends. The importance of tax-free
dividends to Shareholders is recognised by the Board and
considered at each quarterly meeting and a decision was
made to declare an interim dividend of 6.00 pence per
share for payment in November 2022 and a further interim
dividend of 7.00 pence per share for payment on 30 March
2023. The Company’s dividend target has consistently
been achieved or exceeded as outlined in the Chairman’s
Statement on page 3 and in the Strategic Report.
● The liquidity level of the Company has remained strong
and is managed with the primary aim of preserving capital,
as discussed at each Board meeting. Liquidity levels are
managed after considering, inter alia, new and follow on
investments, applicable annual dividend commitments as
well as the provision of the buyback facility.
Stakeholders Engagement Type Outcome
29
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Strategic Report
Stakeholders Engagement Type Outcome
Stakeholders Engagement Type Outcome
● The Board, along with the three other Mobeus VCTs,
opened 2022/2023 Offers for Subscription on 5 October
2022 having considered:
– the impact of dilution of Shareholder’s holdings;
– the ability to adhere to the dividend policy of the
Company;
– the effect on the Net Asset Value;
– the ability of the Company and its liquidity levels to be
able to meet HMRC’s VCT investment rules and
timeline;
– the costs involved in issuing a prospectus and charges
to Shareholders; and
– the risk to performance and the equal treatment of
investors across the four Mobeus VCTs and those
investors that the Company co-invests with.
Suppliers Including: Registrar, Broker, Auditor,
Lawyer, Sponsor, Banker and the VCT
Status Adviser
● The Investment Adviser regularly communicates with each
of the professional advisers and secures an annual
confirmation of the policies they have in place. The Board
review the performance of each provider on an annual
basis.
Government &
Regulators
The Board is committed to conducting
business in line with the appropriate
laws and regulation. Mobeus Income &
Growth 2 VCT plc does not provide
financial contributions to political
parties or lobby groups.
● As a UK listed company the Board and Investment Adviser
comply with the Companies Act, the UKLA, HMRC, UK
Accounting Standards and FCA regulatory requirements in
addition to the Alternative Investment Fund Managers
Directive, to ensure the Company can continue to trade.
Non-compliance with the VCT regulations in particular is
viewed as a principal risk for the Company. The Company
continued to comply with these regulations throughout the
year and to the date of this Report.
Investee
Companies
The Board has delegated authority for
the day-to-day management of the
Company to the Investment Adviser
and engages with the Investment
Adviser in setting, approving and
overseeing the execution of the
business strategy and related policies.
● The Board has delegated authority for the day-to-day
management of the Company to the Investment Adviser in
setting, approving, and overseeing the execution of the
business strategy and related policies.
● The Board aims to have a diverse mix of companies across
a range of different sectors and regularly reviews the
composition of the portfolio.
● The Investment Adviser reports at the Company’s quarterly
Board meetings on each of the portfolio companies.
Members of the Investment Adviser sit on the majority of
the portfolio companies’ boards. This is to provide input on
key matters such as advancing the shareholder value
agenda, ensuring class leading corporate governance and
encouraging best practice in areas such as ESG.
● Gresham House organises, seminars and events that
involve portfolio companies to benefit from the Gresham
House network.
Investment
Adviser
The Investment Adviser’s performance
is vital for the Company to deliver its
investment strategy, meeting its
objectives and generating investment
returns for Shareholders, and is a
crucial relationship for the Board.
● The Investment Adviser meets with the Board at each
quarterly meeting and is in frequent contact throughout the
periods in between meetings e.g. to approve or reject
investment transactions. All key strategic and operational
topics are discussed in detail and a close dialogue is
maintained with the Board. The Board take an active
interest in the challenges faced by the portfolio companies.
The Board considers each potential disposal based on the
company’s performance, market conditions and the offer(s)
in its decision to sell the Company’s holding. The
Investment Adviser’s performance is evaluated annually
and its re-appointment is dependent on the outcome of
that evaluation.
30
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Principal and emerging risks, management and regulatory environment
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. This includes
a key risk management review and robust assessment of the risks, which takes place at each quarterly board meeting. Further
details of these are contained in the corporate governance section of the Directors’ Report on page 38. The principal risks and
the emerging risk identified by the Board are set out below:
Risk Possible consequence How the Board manages risk
Political and
Economic
Events such as the war in Ukraine, the impact of
Brexit, an economic recession, supply shortages
or movements in sterling or interest rates, could
affect trading conditions for smaller companies and
consequently the value of the Company’s qualifying
investments.
Movements in UK Stock Market indices may affect
the valuation of the Company’s investments, as well
as affecting the Company’s own share price and its
discount to net asset value.
● The Board monitors the portfolio as a whole to:
(1) ensure that the Company invests, as far as is
possible, in a diversified portfolio of
companies;
(2) ensure that developments in the macro-
economic environment such as movements
in interest rates and availability of labour
under new immigration plans are monitored;
and
(3) ensure ongoing discussions are held by the
Investment Adviser with all the portfolio
companies to ascertain where support is
required during the current uncertain
economic environment. Cash comprises a
significant proportion of the net assets of the
Company, further to the successful
realisations and the fund-raise earlier in the
year giving the Company a strong liquidity
position.
Investment and
strategic
Investment in VCT qualifying earlier stage unquoted
small companies involves a higher degree of risk
than investment in fully listed companies. Smaller
companies often have limited product lines, markets
or financial resources, may not be profitable at the
point of investment and may be dependent for their
management on a smaller number of key individuals.
This may lead to variable investment returns and the
use of more subjective valuation methodologies.
● The Board regularly reviews the Company’s
Objective and Investment Policy.
● Careful selection and review of the investment
portfolio on a regular basis.
● The Investment Adviser has provided a growing
pipeline of compliant investment opportunities
and continues to strengthen its investment
team.
● The valuation of the investment portfolio and
valuation methodologies are reviewed by the
Board each quarter.
Loss of
approval as a
Venture Capital
Trust
The Company must comply with section 274 of the
Income Tax Act 2007 (“ITA”) which allows it to be
exempt from capital gains tax on investment gains.
Any breach of these rules may lead to the Company
losing 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 Company
becoming subject to tax. The Company would also
lose its exemption from corporation tax on capital
gains.
● The Company’s VCT qualifying status is
continually reviewed by the Investment Adviser.
● The Board receives regular reports from its VCT
Status Adviser who has been retained by the
Board to monitor the Company’s ongoing
compliance with the VCT Rules.
VCT Regulatory
Changes
The Company is required to comply with the VCT
specific regulations relating to European State Aid
regulations as enacted by the UK Government which
still apply. Non-compliance would result in a loss of
VCT status.
● The Board receives advice from the VCT Status
Adviser in respect of these requirements,
including those arising from the withdrawal from
the EU, and conducts its affairs in order to
comply with these requirements.
Regulatory
Changes
The Company is required to comply with the
Companies Act, the Listing Rules of the UK Listing
Authority and United Kingdom Accounting Standards.
Changes to and breaches of any of these might lead
to suspension of the Company’s Stock Exchange
listing, financial penalties or a qualified audit report.
● Regulatory and legislative developments are
kept under review by the Company’s solicitors
and the Board.
31
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Risk Possible consequence How the Board manages risk
Financial and
operating
Failure of systems (including breaches of cyber
security) at any of the third-party service providers
that the Company has contracted with could lead
to inaccurate reporting or monitoring. Inadequate
controls could lead to the misappropriation or
insecurity of assets.
● The Board carries out an bi-annual review of the
internal controls in place and reviews the risks
facing the Company at Board meetings and
receives control reports by exception.
Market Movements in the valuations of the Company’s
investments will, inter alia, be connected to
movements in UK Stock Market indices as well as
affecting the Company’s own share price and its
discount to net asset value.
● The Board receives quarterly valuation reports
from the Investment Adviser and remains
focused on the investments being at fair value,
after considering many factors, including the
impact of market movements.
● The Investment Adviser alerts the Board of any
adverse movements.
Asset liquidity The Company’s investments may be difficult to
realise.
● The Board receives reports from the Investment
Adviser and reviews the portfolio at each
quarterly Board meeting. It carefully monitors
investments where a particular risk has been
identified.
Market liquidity Shareholders may find it difficult to sell their shares at
a price which is close to the net asset value given the
limited secondary market in VCT shares.
● The Board has a share buyback policy which
seeks to mitigate market liquidity risk. The policy
is reviewed at each quarterly meeting.
Cyber and
Data Security
The Company and its Shareholders may suffer losses
in the event of the IT systems at principal suppliers
being compromised by cyber attack. Outsourcing
and the increase in remote working could give rise to
cyber and data security risk and internal control risk.
● The Board reviews the performance of the
service providers annually and has obtained
assurance that such providers have controls in
place in respect of the systems and processes
to reduce the risk of breaches of their cyber
security.
Emerging Risk:
Environmental,
Social and
Governance
Non-compliance with current and future reporting
requirements could lead to a fall in demand from
investors. That may affect the level of capital the
Company has available to meet its investment
objectives.
● ESG and climate change impacts are taken into
account when considering new investment
proposals. The Investment Adviser monitors the
potential impact on investee companies of any
proposed new legislation regarding
environmental, social and governance matters
and advises and adapts accordingly.
● The Board recognises that climate change is an
important emerging risk which the Company is
taking into account in their strategic planning
although the Company itself has little direct
impact on environmental issues. Measures had
been introduced to decrease the amount of
travel undertaken prior to the pandemic and
working from home and to reduce the cost and
environmental impact of providing paper copies
of Shareholder correspondence.
The risk profile of the Company changed as a result of changes to VCT legislation 2015. As the Company is required to focus its new
investment activity on growth capital investments in younger companies it is anticipated that investment returns will be more volatile
and have a higher risk profile. The Board also discusses emerging risks as and when they arise, such as the potential for recession
and the resultant impact on portfolio companies, and puts in place mitigating actions to manage the risk.
32
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Going concern and
Long-Term viability of
the Company
The Board is required to assess the
Company’s operation as a going
concern. The Company’s business
activities, together with the factors likely
to affect its future development,
performance and position are set out in
the preceding pages of this Strategic
Report. The majority of companies in the
portfolio are well funded and the
portfolio taken as a whole remains
resilient and well-diversified, although
the impact of the cost of living crisis and
the challenging economic environment
may still impose considerable demands
on the liquidity and trading prospects of
some of these companies in the
near-term. In keeping with the ongoing
need to take advantage of opportunities
for further investment within the
portfolio, the Company announced its
intention to raise further funds in the
2022/23 tax year, with the offer reaching
full subscription. The major cash
outflows of the Company (namely
investments, share buybacks and
dividends) are within the Company’s
control. Accordingly, the Board believes
that the Company’s cash position, noting
the successful fundraise earlier in the
year, is adequate to enable the
Company to continue as a going
concern under any plausible stress
scenario. Further details of this
assessment are shown within Note 2 on
page 58. The Board’s assessment of
liquidity risk, and details of the
Company’s policies for managing
financial risk and its capital, are shown in
Notes 15 and 16 on pages 68 to 76.
Accordingly, the Directors believe that it
is appropriate to continue to apply the
going concern basis of accounting in
preparing the annual Financial
Statements.
Furthermore, the Directors have
considered whether there are any
material uncertainties that the Company
may face during the twelve months from
the date of approval of the financial
statements that may impact on its ability
to operate as a going concern. In
particular, the Directors have continued
to consider the impact of changes to
VCT legislation. No further material
uncertainties have been identified by
the Board.
Viability Statement
The UK Corporate Governance Code
includes a requirement for companies to
include a Viability Statement in the
Annual Report addressed to
Shareholders with the intention of
providing an improved and broader
assessment of long term solvency and
liquidity. The Code does not define long
term but expects the period to be longer
than twelve months with individual
companies choosing a period
appropriate to the nature of their own
businesses. The Directors have chosen
a period of three years, as explained
further below.
The Directors have carried out a robust
assessment comprising the emerging
risks, such as ESG and Climate Change
as shown on page 31 and principal risks,
facing the Company and the disclosure
of the principal and emerging risks are
listed on pages 30 to 31 and above.
Subsequent to this review they have a
reasonable expectation that the
Company will continue to operate and
meet its liabilities, as they fall due, for
the next three years. The Directors
believe that a three-year period is
appropriate given the frequency with
which it is necessary to review and
assess the impact of past, current and
proposed regulatory changes. A period
greater than three years is considered to
be too uncertain for it to be meaningful.
The Directors’ assessment has been
made with reference to the Company’s
current position and prospects, the
Company’s present strategy, the Board’s
risk appetite and the Company’s
principal and emerging risks and how
these are managed, as described on the
previous pages. The Board is mindful of
these risks but considers that its actions
to manage those risks provide
reasonable assurance that the
Company’s affairs are safeguarded for
the stated period.
The Directors have reached this
conclusion after giving careful
consideration to the Company’s
strategy. They believe the Company’s
current strategy of “providing investors
with a regular income stream by way of
tax-free dividends and to generate
capital growth through portfolio
realisations” remains valid. The Board
has focused upon the range of future
investments that the Company will be
permitted to fund under the current VCT
legislation.
The Board expects that positive returns
should continue to be achievable from
future investments and from the existing
portfolio. The Company has made five
more new investments in compliance
with the VCT rules introduced in 2015
and its revised Investment Policy, and
the Investment Adviser continues to
build a healthy pipeline of such
investment opportunities. The Board will
continue to monitor this assumption on a
regular basis and is encouraged, in the
current circumstances, by the returns
generated from some of these
investments to date.
The Board will continue to monitor
returns from growth capital investments
on a regular basis and the prospective
returns thereon over the next three
years. The Board considers that the
Company has sufficient liquidity to
maintain its present investment rate in
the short to medium-term.
Shareholders should be aware that,
under the Company’s Articles of
Association, it is required to hold a
continuation vote at the next AGM falling
after the fifth anniversary of last allotting
shares. As shares were last allotted in
February 2023 (under the Offer for
Subscription), this factor has not affected
the Board’s assumptions for the next
three years.
Future prospects
For a discussion of the Company’s future
prospects (both short and medium-term),
please see the Chair’s Statement on
page 3 and the Investment Adviser’s
Review on page 13.
Ian Blackburn
Chair
12 July 2023
Strategic Report
33
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Reports of
the Directors
Ian Blackburn
Independent, Non-executive Chairman
and Chair of Nomination and
Remuneration and Management
Engagement Committees
Appointed to the Board:
1 July 2017.
Experience:
Ian is an FCA who
specialised in Corporate Finance at
KPMG before building and selling two
listed food groups. He has extensive UK
and European strategic, operations and
finance experience as CEO and FD of
Perkins Foods Plc and Zetar Plc.
Currently he is an active investor in a
number of SMEs including Chairman and
Non-Executive roles with Mood Foods
Limited, SlimLine Wine Limited, Pink
Prosecco Limited and Make it Plain
Limited. He is also the treasurer of The
Thomas Fryer Charity and a trustee of
The Rutland Learning Trust (Multi
Academy Trust).
Sarah Clark
Independent, Non-executive Director
Chair of Investment Committee
Appointed to the Board: 4 November
2022.
Experience:
Sarah has broad
international commercial experience in a
variety of industries including travel,
retail, financial services, fintech and
e-commerce in markets spanning
Europe, the USA, and the Middle East
and Africa combined with a deep
understanding of digital technologies.
Her experience ranges from running
Central Europe, the Middle East & Africa
at PayPal Inc to setting up and running
European subsidiaries of North
American start-ups, LootCrate and
Clearco, one of the largest providers of
revenue-based finance to ecommerce
businesses. She is also a Non-Executive
Director of Trilium Services Limited and
of the Gynaecology Cancer Research
Fund.
Sally Duckworth
Independent, Non-executive Director
Chair of Audit Committee
Appointed to the Board: 1 January 2007.
Experience:
Sally has worked in the
financial services sector since 1990 and
in the private equity industry since
2000. She has extensive C-suite,
chairperson and VC experience in
investing in, growing restructuring and
exiting early and development stage
technology companies. After qualifying
as an associate chartered accountant
with Price Waterhouse she moved to J.P.
Morgan as an investment banker and
then became an early-stage technology
investor at Quester Capital
Management, as part of their VCT
investment team. After leaving Quester
Capital Management, she was a founder
of an angel network, Endeavour
Ventures Limited before becoming chief
operating and financial officer for
Redkite Financial Service Services; a
business they exited to NASDAQ-listed
NICE Actimize. She then spent three
years as chief executive officer of You at
Work Limited, a full-service employee
benefits provider, helping to restructure
the business and subsequently helped
to restructure what is now Eta Green
Power Limited. Sally has sat on a large
number of boards and currently chairs
StorMagic Limited, which was a gold
winner in two different categories of the
2021 Cybersecurity Excellence Awards
and is a Non-Executive Director on the
board of JP Morgan’s Japanese
Investment Trust and Immortalit.AI
Limited. She is an Ambassador for
Women on Boards, was shortlisted as
one of the top 5 Non-Executive
Directors in Private Equity in the 2021
Non-Executive Director Awards and was
a Judge for the Lloyds sponsored British
Business Excellence Awards in 2021 for
the SMB category.
Board of Directors
Reports of the Directors
For details of the share interest and remuneration of the Directors please see page 45 of the Directors’ Remuneration Report.
Details of the attendance record of the Directors is also reported in the Directors’ Remuneration Report on the same page.
34
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Reports of
the Directors
The Directors present the
Annual Report and Audited
Financial Statements of the
Company for the year ended
31 March 2023.
The Corporate Governance
Statement on pages 38 to 47,
including the Report of the
Audit Committee on pages
41 to 42, form part of this
Directors’ Report.
The Board believes that the Annual
Report and Financial Statements taken as
a whole is fair, balanced and
understandable and provides the
information necessary for Shareholders to
assess the Company’s performance,
position, business model and strategy.
The Company is registered in England
and Wales as a Public Limited Company
(registration number 03946235).
The Company has satisfied the
requirements for full approval as a
Venture Capital Trust under section 274 of
the Income Tax Act 2007 (“ITA”). It is the
Directors’ intention to continue to manage
the Company’s affairs in such a manner as
to comply with section 274 of the ITA.
To enable capital profits to be distributed
by way of dividends, the Company
revoked its status as an investment
company as defined in section 833 of the
Companies Act 2006 (“the Companies
Act”) on 7 July 2005. The Company does
not intend to re-apply for such status.
Share capital
The Company’s Ordinary shares of 1.00
penny each (“shares”) are listed on the
London Stock Exchange (“LSE”).
Issued Share Capital
The issued share capital of the Company
as at 31 March 2023 was £984,370 (2022:
£804,263 ) and the number of shares in
issue at this date was 98,437,045 (2022:
80,426,321 ).
Buyback of shares
The following disclosure is made in
accordance with Part 6 of Schedule 7 of
The Large and Medium-sized Companies
and Groups (Accounts and Reports)
Regulations 2008 (as amended in 2013).
The reason the Company makes market
purchases of its own shares is to enhance
the liquidity of the Company’s shares and
to seek to manage the level and volatility
of the discount to Net Asset Value at
which the Company’s shares may trade.
At the Annual General Meeting of the
Company held on 21 September 2022,
Shareholders granted the Company
authority, pursuant to section 701 of the
Companies Act 2006, to make market
purchases of up to 12,055,905 million of
its own shares, representing 14.99% of the
issued share capital of the Company at
that date. Such authority has been in
place through the year under review.
During the year under review, the
Company bought back 1,464,956
(2022: 697,498) of its own shares at a total
cost (including expenses) of £1,147,478
(2022: £643,810). These shares
represented 1.8% of the issued share
capital at the beginning of the year
(2022: 1.0%). All shares bought back by the
Company were subsequently cancelled.
Substantial interests
As at the date of the Report, the Company
had not been notified of any beneficial
interest exceeding 3% of the issued share
capital.
Dividends
Shareholders received a two interim
dividends in respect of the year ended
31 March 2023 of 6.00 pence per share
on 7 November 2022 and 7.00 pence per
share on 30 March 2023 respectively.
Directors
The names, dates of appointment and
brief biographical details of each of the
Directors are given on the previous page
of this Annual Report.
Disclosure of Information to the
Auditor
So far as each of the Directors in office at
31 March 2023 are aware, there is no
relevant audit information of which the
auditor is unaware. They have individually
taken all the steps that they ought to have
taken as Directors in order to make
themselves aware of any relevant audit
information and to establish that the
Company’s Auditor is aware of that
information.
Director’s indemnity and officers’
liability insurance
The Directors have individually entered
into Deeds of indemnity with the Company
which indemnifies each Director, subject to
the provisions of the Companies Act 2006
and the limitations set out in each deed,
against any liability arising out of any claim
made against him or her in relation to the
performance of their duties as Directors of
the Company. Copies of each Deed of
indemnity entered into by the Company for
the Directors are available at 5th floor, 80
Cheapside, London EV2V 6EE.
The Company maintains a Directors’ and
Officers’ liability insurance policy. The
policy does not provide cover for
fraudulent or dishonest actions by the
Directors.
Environmental and social
responsibility policies
The Board recognises its obligations
under Company law to provide
information in this respect about
environmental matters (including the
impact of the Company’s business on the
environment), human rights and social
and community issues, including
information about any policies the
Company has in relation to these matters
and the effectiveness of these policies.
The Board has recognised ESG and
Climate Change as an emerging risk, as
referenced on page 31, and takes full
consideration of relevant factors within
the overall assessment of potential
investee companies. It is considered
alongside investment assessments of
potential investee companies.
The Board seeks to maintain high
standards of conduct in respect of ethical,
environmental, governance and social
issues and to conduct the Company’s
affairs responsibly. It considers relevant
social and environmental matters when
appropriate and particularly with regard to
investment decisions. The Investment
Adviser encourages good practice within
the companies in which the Company
invests. The Board seeks to avoid
investing in certain areas which it
considers to be unethical and does not
invest in companies which do not operate
within relevant ethical, environmental and
social legislation or otherwise fail to
comply with appropriate industry
standards. The Investment Adviser has
aligned its current ESG procedures and
protocols to the high standards of
Gresham House plc. The Investment
Adviser believes that this approach will
contribute towards the enhancement of
shareholder value going forward.
The Company does not have any
employees or officers and the Board
therefore believes that there is limited
scope for developing environmental,
social or community policies. The
Company has however adopted
electronic communications for
Shareholders as a means of reducing the
volume of paper that the Company uses
to produce its reports. It uses mixed
source paper from well-managed forests
as endorsed by the Forest Stewardship
Council for the printing of its circulars and
annual and Interim reports. The
Investment Adviser is conscious of the
need to reduce its impact on the
environment and has taken a number of
Directors’ Report
35
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Reports of
the Directors
initiatives in its offices including recycling
and the reduction of its energy
consumption.
Global greenhouse gas emissions
The Company has no greenhouse gas
emissions to report from its operations,
nor does it have responsibility for any
other emissions producing sources under
the Companies Act 2006 (Strategic
Report and Directors’ Reports)
Regulations 2013, (including those within
the Company’s underlying investment
portfolio). The Company does not fall
within the scope of The Companies
(Directors’ Report) and Limited Liability
Partnerships (Energy and Carbon Report)
Regulations 2018 effective as of 1 April
2019 which implements the Government’s
policy on Streamlined Energy and Carbon
Reporting, replacing the Carbon
Reduction Commitment Scheme. The
2018 Regulations require companies that
have consumed over 40,000 kilowatt-
hours of energy to include energy and
carbon information in their Directors’
Report. This does not apply to the
Company as it qualifies as a low energy
user.
Human rights policy
The Board seeks to conduct the
Company’s affairs responsibly and gives
full consideration to the human rights
implications of its decisions, particularly
with regard to investment decisions.
Anti-bribery policy
The Company has adopted a zero-
tolerance approach to bribery and has
established an anti-bribery policy and
procedures, copies of which are available
in the Corporate Governance section of
the Company’s website:
www.mig2vct.co.uk
Whistleblowing policy
The Board has considered the
recommendation made in the UK
Corporate Governance Code with regard
to a policy on whistleblowing and has
reviewed the arrangements at the
Investment Adviser under which staff may,
in confidence, raise concerns. It has
concluded that adequate arrangements
are in place at the Investment Adviser for
the proportionate and independent
investigation of such matters and, where
necessary, for appropriate follow-up
action to be taken by the Investment
Adviser. The Board has also asked each
of its service providers to confirm that
they have a suitable whistle-blowing
policy in place.
Anti-Tax Evasion
The Company has also adopted a
zero-tolerance approach to tax evasion in
compliance with the Criminal Finance Act
2017 and the corporate criminal offence of
failing to take reasonable steps to prevent
the facilitation of tax evasion. The
Company has applied due diligence
procedures, taking an appropriate
risk-based approach, in respect of
persons who perform or will perform
services on behalf of the Company, in
order to mitigate risks.
Financial risk management
The main risks arising from the
Company’s financial instruments are due
to fluctuations in market prices,
investment risk, liquidity risk, interest
rates and credit risk. The Board regularly
reviews and agrees policies for managing
these risks and full details can be found in
Note 15 to the Financial Statements on
pages 68 to 75 of this Annual Report.
Post balance sheet events
For a full list of the post balance sheet
events that have occurred since 31 March
2023, please see Note 18 to the Accounts
on page 76.
Articles of Association
The Company may amend its Articles of
Association (“the Articles”) by special
resolution in accordance with section 21
of the Companies Act 2006. It is not the
Company’s intention to change its Articles
at the forthcoming AGM.
Annual General Meeting
The Notice of the Annual General
Meeting, which will be held at 11.00 am on
Wednesday, 13 September 2023 at the
offices of Shakespeare Martineau LLP, 6th
Floor, 60 Gracechurch Street, London
EC3V 0HR is set out on pages 82 to 84 of
this Annual Report.
A webcast of the Annual General Meeting
will also be available and details of how to
join virtually will be shown on the
Company’s website. If possible,
Shareholders intending to join the
Meeting by means of the webcast (which
would be as an attendee only) are
requested to join at least ten minutes
prior to the commencement of the Annual
General Meeting at 11.00 am on
Wednesday, 13 September 2023. Where a
member intends to join the Annual
General Meeting by means of the
webcast, they shall be permitted to ask
questions at the Annual General Meeting
but shall not be entitled to vote on
resolutions at the Annual General
Meeting (and are, therefore, encouraged
to lodge their proxy vote and appoint the
Chair of the Annual General Meeting as
their proxy.)
A proxy form for the meeting is enclosed
separately with Shareholders’ copies of
this Annual Report. Proxy votes may also
be submitted electronically via the Link
Group Signal Shares Portal at
www.signalshares.com. Shareholders
may also request a hard copy proxy form
by contacting the Company’s Registrar
Link Group, using their details as stated
on page 86. Shareholders are
encouraged to lodge their proxy vote and
appoint the Chair of the Annual General
Meeting as their proxy, as soon as
possible.
Resolutions 1 to 8 are being proposed as
ordinary resolutions requiring more than
50% of the votes cast at the meeting to
be in favour and resolutions 9 and 10 will
be proposed as special resolutions
requiring the approval of at least 75% of
the votes cast at the meeting.
The following is an explanation of the
business to be proposed:
Resolution 1 – To receive the
Annual Report and Financial
Statements
The Directors are required to present the
Financial Statements, Directors’ report
and Auditor’s report for the financial year
ended 31 March 2023 to the meeting.
Resolution 2 – To approve the
Directors’ Remuneration Report
Under section 420 of the Companies Act
2006 (the “Act”), the Directors must
prepare an annual report detailing the
remuneration of the Directors and a
statement by the Chair of the
Remuneration Committee (together the
“Directors’ Remuneration Report”). The
Act also requires that a resolution be put
to Shareholders each year for their
approval of that report. The Directors’
Remuneration Report can be found on
pages 43 to 46 of this Annual Report and
Financial Statements. Resolution 2 is an
advisory vote only.
Full details of Directors’ remuneration can
be found in the Directors’ Remuneration
Report on page 45 of this Annual Report.
Resolution 3 – To approve the
Company’s Remuneration Policy
The Company is required to put its
Remuneration Policy to Shareholders
every three years under section 439A of
the Companies Act and is subject to a
binding shareholder vote. A resolution on
the Remuneration Policy was last voted
on at the Annual General Meeting held on
36
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Reports of
the Directors
9 September 2020 and therefore a similar
resolution will be proposed at the
forthcoming meeting. The Remuneration
Policy is set out below and full details of
Directors’ remuneration can be found in
the Directors’ Remuneration Report on
pages 43 to 46 of this Annual Report.
Remuneration Policy
To ensure that the levels of
remuneration are sufficient to attract,
retain and motivate directors of the
quality required to manage the
Company in order to achieve the
Company’s Objective.
Resolutions 4 to 6 – To re-elect and
elect the Directors
The Company’s Articles of Association
require that each Director appointed to
the Board shall retire and seek election at
their first annual general meeting
following appointment and every three
years thereafter. The Board considers that
it is not appropriate for the Directors to be
appointed for a specified term.
The Board has previously agreed that
each Director will retire and offer
themselves for re-election annually after
serving on the Board for more than nine
years. However, following the publication
of the revised UK Corporate Governance
Code in July 2018, which applied to the
Company from 1 January 2019 onwards,
the Board has agreed to follow the
recommendation of provision 18, namely
that all directors be subject to annual
re-election.
Ian Blackburn
Independent non-executive chair
Following his annual performance review,
the remaining Directors agree that Ian
continues to carry out his duties
effectively and makes a significant
contribution to the Company’s long-term
sustainable success. The remaining
Directors are confident that he is a strong
and effective Chair and director and have
no hesitation in recommending his
re-election to Shareholders.
Sally Duckworth
Independent non-executive director
Following Sally’s performance review, the
remaining Directors agree that she
continues to make a significant
contribution to the work of the Board and
continues to demonstrate commitment to
her role and as Chair of the Audit
Committee. The other Directors have no
hesitation in recommending her re-
election to Shareholders. Sally has
agreed to remain a director for another
year.
The Directors believe that the Board
comprises an appropriate balance of
skills, experience and knowledge.
Sarah Clark
Independent non-executive director
Sarah, having only joined in November
2022, has not undergone a formal
performance evaluation process as yet,
however, the remaining directors agree
that she has already made a significant
contribution to the Board’s work. Sarah is
standing for election at the Annual
General Meeting, which is the first since
her appointment on 4 November 2022.
Resolution 7 – To reappoint BDO
LLP as auditor of the Company, to
hold office until the conclusion of
the next general meeting at which
accounts are laid before the
Company and to authorise the
Directors to determine the
remuneration of the auditor.
At each meeting at which the Company’s
accounts are presented to its members,
the Company is required to appoint an
auditor to serve until the next such
meeting. The Board, on the
recommendation of the Audit Committee,
recommends the re- appointment of BDO
LLP. This resolution also gives authority to
the Directors to determine the
remuneration of the auditor. For further
information, please see the report of the
Audit Committee on pages 41 and 42.
Resolution 8 – Authority to allot
shares in the Company and
Resolution 9 – Disapply the
pre-emption rights of members
These two resolutions grant the Directors
the authority to generally allot shares for
cash to a limited and defined extent
otherwise than pro rata to existing
Shareholders.
Resolution 8 will enable the Directors to
allot new shares up to an aggregate
nominal value of £328,123, representing
one-third of the existing issued share
capital of the Company as at the date of
the Notice convening the Annual General
Meeting.
Under section 561(1) of the Act, if the
Directors wish to allot new shares or sell
or transfer treasury shares for cash they
must first offer such shares to existing
Shareholders in proportion to their
current holdings. It is proposed by
Resolution 9 to sanction the
disapplication of such pre-emption rights
in respect of the allotment of equity
securities:
(i) with an aggregate nominal value of up
to, but not exceeding, £98,437 of the
issued share capital in connection
with offer(s) for subscription; and
(ii) otherwise than pursuant to (i) above,
with an aggregate nominal value of
equity securities of up to 10% of the
issued share capital of the Company
from time to time,
in each case where the proceeds may be
used in whole or part to purchase the
Company’s shares in the market.
The Company normally allots shares at
prices based on the prevailing net asset
value per share of the existing shares on
the date of allotment (plus costs). The
Directors thus seek to manage any
potential dilution of existing
shareholdings as a result of the
disapplication of Shareholders’ pre-
emption rights proposed in resolution 9.
The Company does not currently hold any
shares as treasury shares.
Both of these authorities, unless
previously renewed, varied or revoked,
will expire on the date falling fifteen
months after the passing of the resolution
or, if earlier, on the conclusion of the
Annual General Meeting of the Company
to be held in 2024. However, the
Directors may allot securities after the
expiry dates specified above in
pursuance of offers or agreements made
prior to the expiration of these authorities.
Both resolutions renew previous
authorities approved at the Annual
General Meeting of the Company held on
21 September 2022 and are intended to
be used for the purposes of top-up
offer(s) for subscription.
Resolution 10 – Authority to
purchase the Company’s own
shares
This resolution authorises the Company
to purchase its own shares pursuant to
section 701 of the Companies Act. The
authority is limited to the purchase of an
aggregate of 14,755,712 shares
(representing approximately 14.99% of the
issued share capital of the Company as at
the date of the notice convening the
Annual General Meeting) or, if lower, such
number of shares (rounded down to the
nearest whole share) as shall equal
14.99% of the issued share capital at the
date the resolution is passed. The
maximum price that may be paid for a
share will be the higher of (i) an amount
that is not more than 5% above the
average of the middle market quotations
of the shares as derived from the Daily
Official List of the UK Listing Authority for
the five business days preceding the date
such shares are contracted to be
Directors’ Report
37
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Reports of
the Directors
purchased and (ii) the price stipulated by
Article 5(6) of the Market Abuse
Regulation (EU) 596/2014 (as such
Regulation forms part of UK law and as
amended).
The minimum price that may be paid for a
share is 1 penny, being the nominal value
thereof.
Market liquidity in VCTs is normally very
restricted. The passing of this resolution
will enable the Company to purchase its
own shares thereby providing a
mechanism by which the Company may
enhance the liquidity of its shares and
seek to manage the level and volatility of
the discount to NAV at which its shares
may trade.
It is the Directors’ intention to cancel any
shares bought back under this authority.
Shareholders should note that the
Directors do not intend to exercise this
authority unless they believe to do so
would result in an increase in net assets
per share which would be in the interests
of Shareholders generally. This resolution
will expire on the date falling fifteen
months after the passing of this resolution
or, if earlier, on the conclusion of the
Annual General Meeting of the Company
to be held in 2024 except that the
Company may purchase its own shares
after this date in pursuance of a contract
or contracts made prior to the expiration
of this authority.
Recommendation
The Board recommends that
Shareholders vote in favour of the
resolutions to be proposed at the Annual
General Meeting, as the Directors intend
to do in respect of their own beneficial
holdings of 48,463 shares (representing
0.05% of the issued share capital as at the
date of publication).
Voting rights of Shareholders
At general meetings of the Company,
Shareholders have one vote on a show of
hands, and one vote per share held on a
poll. No member shall be entitled to vote
or exercise any rights at a general
meeting unless all their shares have been
paid up in full. Any instrument of proxy
must be deposited at the place specified
by the Directors no later than 48 hours
before the time fixed for holding the
meeting.
There are no restrictions on voting rights
and no agreements between holders of
securities that may prevent or restrict the
transfer of securities or voting rights.
By order of the Board
Gresham House Asset Management
Limited
Company Secretary
12 July 2023
38
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Reports of
the Directors
This Corporate Governance
Statement forms part of the
Directors’ Report.
The Directors have adopted the
Association of Investment Companies
(AIC) Code of Corporate Governance
2019 (“the AIC Code”) for the financial
year ended 31 March 2023. The Board
has considered the principles and
recommendations of the AIC Code by
reference to the AIC Corporate
Governance Guide for investment
companies (“AIC Guide”). The AIC Code,
as explained by the AIC Guide, addresses
all the principles set out in the UK
Corporate Governance Code (“the UK
Code”), as well as setting out additional
principles and recommendations on
issues that are of specific relevance to the
Company.
The Board considers that reporting
against the principles and
recommendations of the AIC Code, and
by reference to the AIC Guide (which
incorporates the UK Code), will provide
the most appropriate information to
Shareholders.
The AIC Code was endorsed by the
Financial Reporting Council (FRC) in
February 2019. In adopting the AIC Code,
the Company will therefore meet its
obligations in relation to the reporting
requirements of the Financial Conduct
Authority’s Listing and Disclosure and
Transparency Rules on Corporate
Governance.
The AIC Code can be viewed on the AIC’s
website at www.theaic.co.uk/aic-code-of-
corporate-governance
Statement of Compliance
This statement has been compiled in
accordance with the FCA’s Disclosure and
Transparency Rule (DTR) 7.2 on Corporate
Governance Statements.
The Board considers that the Company
has complied with the recommendations
of the AIC Code and relevant provisions
of the UK Code throughout the year
under review, except as explained in the
following paragraphs. A table providing
further explanations of how the Company
has complied with the AIC Code during
the year is available in the Corporate
Governance section of the Company’s
website: www.mig2vct.co.uk.
As an externally managed VCT, most of
the Company’s operations are delegated
to third parties and the Company has no
executive directors, employees or internal
operations. The Board has therefore
concluded, for the reasons set out in the
AIC Guide, that not all the provisions of
the UK Code are relevant to the
Company. Firstly, as the Company does
not employ a chief executive, nor any
executive directors, the provisions of the
AIC Code relating to the rate of the chief
executive and executive directors’
remuneration are not relevant to the
Company. Secondly, the systems and
procedures of the Investment Adviser, the
provision of VCT monitoring services by
Philip Hare & Associates LLP, as well as
the size of the Company’s operations,
give the Board full confidence that an
internal audit function is not necessary.
The Company has therefore not reported
further in respect of these provisions.
Internal control
The Board acknowledges that it is
responsible for the Company’s system of
internal control and for reviewing its
effectiveness. Internal control systems are
designed to manage the particular needs
of the Company and the risks to which it is
exposed and can by their nature only
provide reasonable and not absolute
assurance against material misstatement
or loss.
The Company’s internal control system
aims to ensure the maintenance of proper
accounting records, the reliability of the
finance information used for publication
and upon which business decisions are
made, and that the assets of the
Company are safeguarded. The financial
controls operated by the Board include
regular reviews of signing authorities,
quarterly management accounts and the
processes by which investments in the
portfolio are valued. The Board also
provides authorisation of the Investment
Policy and regular reviews of the financial
results and investment performance.
The Board has put in place ongoing
procedures for identifying, evaluating and
managing the significant risks faced by
the Company. As part of this process an
annual review of the control systems is
carried out. The review covers a
consideration of the key business,
operational, compliance and financial
risks facing the Company and includes a
review of the risks in relation to the
financial reporting process. The Board
reviews a schedule of key risks and the
management accounts at each quarterly
Board meeting. It is assisted by the Audit
Committee in respect of the Annual and
Interim Reports and other published
financial information.
The Board has delegated, contractually to
third parties, the management of the
investment portfolio, the day-to-day
accounting, company secretarial and
administration requirements and the
registration services. Each of these
contracts was entered into after full and
proper consideration by the Board of the
quality and cost of services offered,
including the financial control systems in
operation at the service providers in so
far as they relate to the affairs of the
Company. The Board regularly monitors
these controls from a risk perspective and
receives reports from the Registrar and
Investment Adviser and Administrator
when appropriate.
The Board, assisted by the Audit
Committee, carries out separate
assessments in respect of the Annual and
Interim Reports and other published
financial information. As part of these
reviews, the Board appraises all the
relevant risks ensuing from the internal
control process referred to above. The
main aspects of the internal controls
which have been in place throughout the
year in relation to financial reporting are:
● Internal controls are in place for the
preparation and reconciliation of the
valuations prepared by the
Investment Adviser.
● Independent reviews of the
valuations of investments within the
portfolio are undertaken quarterly by
the Board.
● The information contained in the
Annual Report and other financial
reports is reviewed separately by
the Audit Committee prior to
consideration by the Board.
● The Board reviews all financial
information prior to publication.
The system of internal control and the
procedure for the review of control
systems has been in place and
operational throughout the year under
review and up to the date of this Report.
The Audit Committee and the Board
carried out an assessment of the
effectiveness of internal controls in
managing risk which was conducted on
the basis of reports from the relevant
service providers. The last review took
place on 29 June 2023. The Board has
identified no significant problems with the
Company’s internal control mechanisms.
Section 172 Director Duties
The Directors continue to have regard to
the interests of the Company’s
Shareholders and other stakeholders,
including the impact of its activities on the
community, environment and the
Company’s reputation, when making
decisions. The Directors, acting fairly and
in good faith, consider what is most likely
to promote the success of the Company
for its members and stakeholders in the
long-term. For further information on how
the Directors have fulfilled their duties
under Section 172 of the Companies Act
2006, please see pages 28 to 31.
Corporate Governance Statement
39
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Reports of
the Directors
Fees paid to the Investment Adviser
The fees paid to the Investment Adviser
are set out in Note 4 to the Financial
Statements on page 59.
In addition, the Investment Adviser
received fees totalling £272,662
(2022: £288,267) during the year ended
31 March 2023, being £72,592
(2022: £98,172) for arrangement fees, and
£200,070 (2022: £190,095) for acting as
non-executive directors on a number of
investee company boards. These
amounts are the share of such fees
attributable to investments made by the
Company.
Alternative Investment Fund
Manager (“AIFM”)
The Board appointed the Company as its
own AIFM in compliance with the
European Commission’s Alternative
Investment Fund Management Directive
with effect from 22 July 2014. The
Company is registered as a small AIFM,
and is therefore exempt from the principal
requirements of the Directive. Gresham
House continues to provide investment
advisory and administrative services to
the Company. However, in order for the
Company to continue to discharge its
safekeeping responsibilities for the
documents of title to its investments, the
Board, has contracted a third-party, Apex
Group, to act as custodian.
The Board and its Committees
The powers of the Directors have been
granted by company law, the Company’s
Articles of Association and resolutions
passed by the Company’s members in
general meeting. Resolutions are
proposed annually at each annual general
meeting of the Company to authorise the
Directors to allot shares, disapply the
pre-emption rights of members and
buyback the Company’s own shares on
behalf of the Company. These authorities
are currently in place and resolutions to
renew them will be proposed at the
Annual General Meeting of the Company
to be held on 13 September 2023.
The Board has agreed a schedule of
matters specifically reserved for decision
by the Board. These include compliance
with the requirements of the Companies
Act 2006 and the Income Tax Act 2007,
the UK Listing Authority and the London
Stock Exchange; strategy and
management of the Company; changes
relating to the Company’s capital
structure or its status as a plc; financial
reporting and controls; board and
committee appointments as
recommended by the Nomination and
Remuneration Committee and terms of
reference of committees; material
contracts of the Company and contracts
of the Company not in the ordinary course
of business.
In regard to the Chair of the Board’s
tenure, the length of service of all
directors is considered on an ongoing
basis, with the Nomination and
Remuneration Committee giving
consideration to succession and
composition at its year-end meeting, in
compliance with the AIC Code of
Corporate Governance guidance.
Ian Blackburn was appointed by the
Board on 1 July 2017, Sally Duckworth was
appointed by the Board on 1 January
2007 and Sarah Clark was appointed by
the Board on 4 November 2022. They will
each be seeking re-election/election at
the upcoming Annual General Meeting on
13 September 2023. There have been no
new appointments to the Board since the
year-end to the date of this report.
The Board is of the view that a term of
service in excess of nine years is not in
itself prejudicial to a director’s ability to
carry out their duties effectively and from
an independent perspective; the nature
of the Company’s business is such that an
individual director’s experience and
continuity of non-executive board
membership can significantly enhance
the effectiveness of the Board as a whole.
Following the performance evaluation of
the Directors during the year, the Board
confirms that each of Ian Blackburn, Sally
Duckworth and Sarah Clark have and
continue to demonstrate commitment to
their roles and to be effective in carrying
out their duties on behalf of the Company.
Copies of the directors’ letters of
appointment will be available for
inspection at the place of the Annual
General Meeting for at least 15 minutes
before and during the Meeting.
Diversity and inclusion
Number
of board
members
Percentage
of the
board
Number
of senior
positions
on the
Board
Men 1 33.33% Not
applicable
Women 2 66.66% See
paragraph
below
Not
specified/
prefer not
to say
In accordance with Listing Rule 9.6.8R,
the Board reports that as an externally
managed Company, there are no
executive management roles such as
CEO or CFO and therefore, as allowed by
the above rule, the Board do not need to
report against this target as it is not
applicable. However, the roles within the
Company which are considered to be
senior, in addition to the Chair of the
Company, are the Chairs of the Audit and
Investment Committees both of which
were held by women at the year-end and
continue to be so.
The Board only consists of three
directors, all of whom are white and of
either British or Canadian nationality and
therefore there is no minority ethnic
Board representation. The Board have
committed to include diversity and
inclusion for all their future recruitment
and Women on Boards were consulted in
the recruitment of Sarah Clark to attract
more diverse candidates.
Being a smaller Board does make it more
challenging to achieve diversity however
the Board is more diverse in other
aspects as shown in the Directors’
biographies on page 33.
Board Committees
The Board has established four
Committees, the Nomination and
Remuneration Committee, the Investment
Committee, the Management
Engagement Committee and the Audit
Committee, each with responsibilities for
specific areas of its activity. Each of the
Committees have written terms of
reference, which detail their authority and
duties. Shareholders may obtain copies of
these by making a written request to the
Company Secretary or by downloading
these documents from the Company’s
website: www.mig2vct.co.uk.
The Board has satisfied itself that each of
its Committees has sufficient resources to
undertake its duties.
As a result of there only being 3 directors
appointed by the Company, the Audit
Committee and Nomination and
Remuneration Committee below are
chaired by Ian Blackburn who is also the
Chair of the Board which is not in line with
the AIC Code of Corporate Governance.
Audit Committee
The Audit Committee is chaired by Sally
Duckworth and comprises herself, Ian
Blackburn and Sarah Clark. A full
description of the work of the Audit
Committee is set out in the Report of the
Audit Committee on pages 41 and 42 of
this Annual Report.
40
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Reports of
the Directors
Nomination and Remuneration
Committee
The Nomination and Remuneration
Committee is chaired by Ian Blackburn
and comprises himself, Sally Duckworth
and Sarah Clark. Due to there only being
three directors appointed to the
Company, it was deemed appropriate that
the Chair, who was independent upon
appointment to the Board, should be a
member of the Nomination and
Remuneration Committee.
In accordance with the AIC Code of
Corporate Governance, the Chair of the
Board will not chair the committee when it
is dealing with the appointment of their
successor.
In considering nominations, the
Committee is responsible for making
recommendations to the Board
concerning new appointments of
Directors to the Board and its committees;
the periodic review of the composition of
the Board and its committees; and the
annual performance review of the Board,
the Directors and the Chair. This includes
the ongoing review of each Director’s
actual or potential conflicts of interest
which may arise as a result of the external
business activities of Board members.
The Board remains committed to include
consideration of gender and diversity for
all future appointments.
A full description of the work of the
Committee with regard to remuneration is
included within the Directors’
Remuneration Report on pages 43 to 46.
Investment Committee
The Investment Committee is chaired by
Sarah Clark and comprises all three
Directors.
The Committee meets as necessary to
consider the investment proposals put
forward by the Investment Adviser. The
Committee advises the Board on the
development and implementation of the
Investment Policy and leads the process
for the ongoing monitoring of investee
companies and the Company’s
investment therein. Investment guidance
has been issued to the Investment
Adviser and the Committee ensures that
this guidance is adhered to. New
investments and divestments are
approved by the Committee following
discussions between Committee
members and are subsequently ratified
by the Board. Investment matters are
discussed at each Board meeting. During
the year, the Committee formally
approved all investments, divestments
and variation decisions, meeting
informally on numerous occasions.
The Committee considers and agrees, on
the advice of the Investment Adviser for
recommendation to the Board, all
unquoted investment valuations.
Investments are valued in accordance
with the International Private Equity and
Venture Capital (IPEV) Valuation
Guidelines under which investments are
valued at fair value as defined in those
guidelines. Any AIM or other quoted
investment will be valued at the closing
bid price of its shares as at the relevant
reporting date, in accordance with
generally accepted accounting practice.
Management Engagement
Committee
The Management Engagement
Committee membership comprises all
directors. The Committee has
responsibility for carrying out a review of
the performance of the Investment
Adviser and other key service providers
on an annual basis.
Financial risk management
The main risks arising from the
Company’s financial instruments are due
to investment risk, liquidity risk, credit risk,
fluctuations in market prices (market price
risk), cash flow interest rate risk and
currency risk. The Board regularly reviews
and agrees policies for managing these
risks and full details can be found in Note
15 to the Accounts on pages 68 to 75 of
this Annual Report.
Investment management and
Service providers
The Directors carry out an annual review
of the performance of and contractual
arrangements with the Investment
Adviser, Gresham House Asset
Management Limited. The annual review
of the Investment Adviser forms part of
the Board’s overall internal control
procedures discussed above. As part of
this review, the Board considers the
quality and continuity of the investment
management team, investment
performance, quality of information
provided to the Board, remuneration of
the Investment Adviser, the investment
process and the results achieved to date.
A review of the performance of the
Company is included in the Strategic
Report on pages 9 to 12. The Board
concluded that the Investment Adviser
had performed consistently well over the
medium-term and has returned a good
performance in respect of the year under
review. The Company’s investment
portfolio has performed very well and the
Investment Adviser has been proactive in
ensuring the Company remains informed
and well-positioned to maintain
compliance with VCT tax legislation.
The Board places significant emphasis on
the Company’s performance against its
peers and further information on this has
been included in the Strategic Report on
page 11. The Board further considered the
Investment Adviser’s commitment to the
promotion of the Company and was
satisfied that this was highly prioritised by
the Investment Adviser as evidenced by,
inter alia, the Mobeus VCT fundraisings
which have taken place between 2010
and 2023 and annual Shareholder events.
The Board considers that the Investment
Adviser continued to exercise
independent judgement while producing
valuations which reflect fair value.
Overall, the Board continues to believe
that the Investment Adviser possesses
the experience, knowledge and
resources that are required to support the
Board in achieving the Company’s long
term investment objectives. The Directors
therefore believe that the continued
appointment of the Investment Adviser to
the Company on the terms currently
agreed is in the interests of Shareholders,
and this was formally approved by the
Board on 29 June 2023.
The principal terms of the Company’s
Investment Advisory Agreement,
amended and restated on 30 September
2016, and its Performance Incentive Fee
Agreement, novated on 30 September
2021 to Gresham House are set out in
Note 4 to the Financial Statements on
page 59 of this Annual Report. The Board
seeks to ensure that the terms of these
agreements represent an appropriate
balance between cost and the
incentivisation of the Investment Adviser.
By order of the Board
Gresham House Asset Management
Limited
Company Secretary
12 July 2023
Corporate Governance Statement
41
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Reports of
the Directors
This Report of the Audit
Committee forms part of the
Directors’ Report.
The Audit Committee is chaired by Sally
Duckworth and comprises herself, Ian
Blackburn and Sarah Clark. Due to there
only being three directors appointed to
the Company, it was deemed
appropriate that the Chair, who was
independent upon appointment to the
Board, should be a member of the Audit
Committee.
The duties of the Committee are set out
in the Terms of Reference which can be
found on the website in the Corporate
Governance section at:
www.mig2vct.co.uk.
A summary of the Audit Committee’s
principal activities for the year to
31 March 2023 is provided below:
Financial statements
The Interim and Annual Reports to
Shareholders were thoroughly reviewed
by the Committee prior to submission to
the Board for approval.
Internal control
The Committee has monitored the
system of internal controls throughout
the year under review as described in
more detail in this Report on page 38. It
receives a report by exception on the
Company’s progress against its internal
controls at its Annual and Interim results
meetings and reviews a schedule of key
risks at each meeting. A full review of
the internal controls in operation by the
Company was undertaken by the
Committee on 29 June 2023.
Valuation of investments
The Investment Adviser prepared
valuations of the investments in the
portfolio at the end of each quarter and
these were considered in detail and
agreed by the Investment Committee for
recommendation to the Board. The Audit
Committee continued to monitor the
adequacy of the controls over the
preparation of these valuations. As part
of this process, it focused on ensuring
that both the bases of the valuations and
any assumptions used were reasonable
and in accordance with the IPEV
Valuation Guidelines. The Committee
received a review within a report from
the external auditor as part of the
year-end audit process. This report was
discussed in full by the Committee, the
Investment Adviser and, with the Auditor
as necessary, before a recommendation
to approve the valuations was made to
the Board.
Key issues considered by the
Committee
The key accounting and reporting issues
considered by the Committee in addition
to those described above during the
year included:
Going concern and long-term
viability
The Committee monitors the Company’s
resources at each quarterly board
meeting and has satisfied itself that the
Company has an adequate level of
resources for the foreseeable future. It
has assessed the viability of the
Company for three years and beyond.
Consideration is given to the cash
balances and holdings in money market
funds, together with the ability of the
Company to realise its investments. See
page 32 of the Strategic Report for
further details.
Recognition of impairment and
realised losses
If an investment has been impaired such
that there is no realistic expectation that
there will be a full return from the
investment, the loss is treated as a
permanent impairment and is
recognised as a realised loss in the
Financial Statements. The Committee
reviews the appropriateness and
completeness of such impairments.
Compliance with the VCT tests
The Company engages the services of a
VCT Status Adviser (Philip Hare &
Associates LLP) to advise on its ongoing
compliance with the legislative
requirements relating to VCTs. A report
on the Company’s compliance
supported by the tests carried out is
produced by the VCT Status Adviser on
a bi-annual basis and reviewed by the
Committee for recommendation to the
Board. The Committee has continued to
consider the risk and compliance
aspects of changes to the VCT Rules
introduced by the Finance Act (No 2)
2015 and the Finance Act (No 2) 2018.
As an essential part of this work, the
Committee has held ongoing
discussions with the Company’s VCT
Status Adviser throughout the year.
Tax Compliance Services
Philip Hare & Associates LLP were
appointed during the year ended
31 December 2018 and continued to
provide such services during the year
under review.
Income from investee companies
The Committee notes that revenue from
loan stock and dividends may be
uncertain given the type of companies in
which the Company invests. Dividends
in particular may be difficult to predict.
The payments received however have a
direct impact on the level of income
dividends the Company is able to pay to
Shareholders. The Committee agrees
policies for revenue recognition and
reviews their application at each of its
meetings. It considers schedules of
income received and receivable from
each of the investee companies and
assesses, in consultation with the
Investment Adviser, the likelihood of
receipt of each of the amounts.
Key risks faced by the Company
The Board has identified the key risks
faced by the Company and established
appropriate controls (as disclosed in the
Strategic Report on page 30). The
Committee monitors these controls and
reviews any incidences of non-
compliance. Further details are set out in
the section of this report that discusses
the Company’s system of internal
controls (page 38).
Cyber Security
The Board sought and obtained
assurances during the year from the
Investment Adviser, the Registrar and
the other service providers concerning
their cyber security procedures and
policies. Board papers are circulated
and stored through an electronic
platform providing additional cyber
security protection.
Anti-tax evasion policy
In compliance with the Criminal Finance
Act 2017 the Company adopted a zero
tolerance towards the criminal facilitation
of tax evasion. A summary of the policy
is available on page 35 of the Annual
Report.
Safekeeping of the Company’s
documents of title to its
investments
The Committee has established
procedures for the safekeeping of the
Company’s documents of title under a
Safekeeping Agreement dated 17
February 2022 with Apex Fund and
Corporate Services (Guernsey) Limited,
for accessing and dealing with these
documents.
Relationship with the external
auditor and re-appointment
The Committee is responsible for
overseeing the relationship with the
external Auditor, assessing the
effectiveness of the external audit
Report of the Audit Committee
42
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Reports of
the Directors
process and making recommendations
on the appointment and removal of the
external Auditor. It makes
recommendations to the Board on the
level of audit fees and the terms of
engagement for the Auditor. The
external Auditor is invited to attend Audit
Committee meetings, where
appropriate, and also has the
opportunity to meet with the Committee
and its Chairman without representatives
of the Investment Adviser being present.
The Committee undertook an audit
tender process in 2016 in compliance
with the requirements on audit firm
rotation under the European Audit
Regulation Directive. As a consequence
of that process, BDO LLP were
reappointed. BDO LLP has been the
independent auditor to the Company
since 2008.
The Audit Committee also undertakes
an annual review of the external Auditor
and the effectiveness of the audit
process on an annual basis. When
assessing the effectiveness of the
process, the Committee considers
whether the Auditor:
● demonstrated strong technical
knowledge and a clear
understanding of the business;
● indicated professional scepticism in
key judgements and raised any
significant issues in advance of the
audit process commencing;
● provided an audit team that is
appropriately resourced;
● demonstrated a proactive approach
to the audit planning process and
engaged with the Committee
Chairman and other key individuals
within the business;
● provided a clear explanation of the
scope and strategy of the audit;
● demonstrated the ability to
communicate clearly and promptly
with the members of the Committee
and the Investment Adviser and
produce comprehensive reports on
its findings;
● demonstrated that it has appropriate
procedures and safeguards in place
to maintain its independence and
objectivity;
● charged justifiable fees in respect of
the scope of services provided; and
● handled key audit issues effectively
and responded robustly to the
Committee’s questions.
This review constituted the Audit
Committee’s annual assessment of the
effectiveness of the external audit
process. The Audit Committee
concluded that the re-appointment of
BDO LLP is in the best interests of the
Company and Shareholders and the
Board recommends their re-appointment
by Shareholders at the forthcoming
Annual General Meeting.
Non-audit services
The Board regularly reviews and
monitors the external Auditor’s
independence and objectivity. As part of
this it reviews the nature and extent of
services supplied by the Auditor to
ensure that independence is maintained.
The Committee has reviewed the
implications of the Financial Reporting
Council‘s (“FRC”) Revised Ethical
Reporting Standard 2019 effective from
5 March 2020.
The Committee, based upon the review
of this 2019 Ethical Standard, has
decided to purchase certain non-audit
services, such as tax compliance
services and iXBRL tagging, from
separate firms. The auditor is permitted
to provide audit-related services in
respect of the Half-Year Report (if
requested by the Board), whereas PHA
provides tax compliance services, and
Arkk Consulting Limited, one of the
Company’s investee companies,
provides the iXBRL tagging service.
Additional disclosures in the
Directors’ Report
Disclosures required by certain publicly-
traded companies as set out in Part 6 of
Schedule 7 of the Large and Medium-
sized Companies and Groups (Accounts
and Reports) Regulations 2008 (as
amended 2013) are contained in the
Directors’ Report on page 34.
By order of the Board
Sally Duckworth
Chair of the Audit Committee
12 July 2023
Report of the Audit Committee
43
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Reports of
the Directors
Introduction
This Report has been prepared by the
Directors in accordance with the
requirements of Schedule 8 of The Large
and Medium-sized Companies and
Groups (Accounts and Reports)
(Amendment) Regulations 2013, the
Companies Act 2006 and the Listing
Rules of the UK Listing Authority (“the
Listing Rules”).
The Company’s independent auditor is
required to give its opinion on the
information provided on Directors’
emoluments and Director’s interests on
page 45 of this Annual Report and this is
explained further in the Auditor’s report
to Shareholders on pages 48 to 52.
The resolution to approve the Directors’
Remuneration Policy as set out in the
Annual Report for the year ended
31 March 2022 was approved by
Shareholders at the Annual General
Meeting of the Company held on
9 September 2020. Full details of the
Remuneration Policy can be found within
this report in the adjacent column and on
page 44.
The resolution to approve the Directors’
Annual Remuneration Report, as set out
in the Annual Report for the year ended
31 March 2022, was approved by
Shareholders at the Annual General
Meeting of the Company held on
22 September 2022. An ordinary
resolution will be proposed at the
forthcoming Annual General Meeting of
the Company to be held on 13 September
2023 for the approval of the Annual
Remuneration Report as set out below.
Remuneration statement by the
Chair of the Nomination and
Remuneration Committee
This report sets out the Company’s
forward-looking Directors’ Remuneration
Policy and the Annual Remuneration
Report which describes how this policy
has been applied during the year.
The Committee reviewed the fees paid in
the year ended 31 March 2023 and as
part of this review it considered
information on the fees paid to directors
of a peer group of VCTs of a similar size
operating in its sector. As a result of the
increased level of regulation and size of
the Company, the Committee have
recommended, with effect from 1 April
2023 an increase in Director’s fees of 5%.
Ian Blackburn
Chair of the Nomination and
Remuneration Committee
12 July 2023
Directors’ Remuneration Policy
The remuneration policy is set by the
Board on the recommendation of the
Nomination and Remuneration
Committee. In determining the
Company’s remuneration policy, the
Committee seeks to determine a level of
fees appropriate to attract and retain
individuals of sufficient calibre to lead the
Company in achieving its strategy. When
considering the level of Directors’ fees, it
takes account of the required workload
and responsibilities of each role and the
value and amount of time that a Director
is required to commit to the Company. It
further considers remuneration levels
elsewhere in the Venture Capital Trust
industry for companies of a similar size
and structure, together with other
relevant information.
The level of fees paid to each of the
Directors is reviewed annually by the
Nomination and Remuneration
Committee which makes
recommendations to the Board.
The Committee has access to
independent advice where and when it
considers appropriate. In coming to a
decision on the Board’s remuneration,
the Committee reviewed an analysis of
VCT industry remuneration obtained from
David Cartwright FCA.
The Committee agreed that an increase
in remuneration from the previous year to
£36,750 per annum paid to each Director,
with the addition of a fee of £3,150 paid to
the Chairman of the Board. The Directors
may, at their discretion, pay additional
sums in respect of specific tasks carried
out by individual Directors on behalf of
the Company.
Since all the Directors are Non-Executive,
the Company is not required to comply
with the executive director’s provisions of
the Listing Rules, the UK Corporate
Governance Code and the AIC Code of
Corporate Governance in respect of
Directors’ remuneration, except in so far
as they relate specifically to Non-
Executive Directors.
Performance-related remuneration
Whilst it is a key element of this policy to
recruit directors of the calibre required to
lead the Company in achieving its short
and long-term objectives no component
of the fees paid is directly related to
performance.
Pensions
All the Directors are Non-Executive and
the Company does not provide pension
benefits to any of the Directors.
Additional benefits
The Company does not have any other
schemes in place to pay bonuses or
benefits to the Directors. No
arrangements have been entered into
between the Company and the Directors
to entitle any of the Directors to
compensation for loss of office. None of
the Directors receive pension benefits
from the Company and the Company has
not granted any Director any options over
the share capital of the Company.
Recruitment remuneration
Remuneration of any new Director, who
may subsequently be appointed to the
Board, will be in line with the
Remuneration Policy set out in this Report
and the levels of remuneration stated
therein, as modified from time to time.
Shareholders’ views on
remuneration
The Board prioritises the views of
Shareholders and encourages an open
discussion at general meetings of the
Company. It takes Shareholders’ views
into account, where appropriate, when
formulating its remuneration policy.
Shareholders can contact the Chair or
the Company Secretary, Gresham
House, at any time by email using the
address: mobeusvcts@greshamhouse.
com.
Directors’ Remuneration Report
44
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Reports of
the Directors
Directors’ terms of appointment
In accordance with the 2019 AIC Code,
Ian Blackburn and Sally Duckworth have
agreed to offer themselves for re-election
annually and will next seek re-election by
Shareholders at the Company’s Annual
General Meeting on 13 September 2023.
Sarah Clark was appointed to the Board
in November 2022, and under the
Articles, is seeking election at this, the
first Annual General Meeting since her
appointment to the Board.
All of the Directors are Non-Executive
and none of the Directors has a service
contract with the Company.
All Directors receive a formal letter of
appointment setting out the terms of their
appointment and their specific duties and
responsibilities and the fees pertaining to
their appointment. A Director’s
appointment may be terminated on three
months’ notice being given by the
Company and in certain other
circumstances. Copies of the Directors’
appointment letters will be available for
inspection at the place of the Annual
General Meeting on 13 September 2023
from 10.45 am. New Directors are asked
to undertake that they have sufficient
time to carry out their responsibilities to
the Company and to disclose their other
significant time commitments to the
Board before appointment.
Shareholder approval of the
Company’s Remuneration Policy
This policy applied throughout the
financial year ended 31 March 2023. A
resolution to approve the Directors’
Remuneration Policy, as set out in the
Annual Report for the year ended
31 March 2020 was approved by
Shareholders at the Annual General
Meeting held on 9 September 2020. The
Company received proxy votes in favour
of the resolution representing 96.28%
(including those who appointed the Chair
to vote at their discretion) of the votes
received (against 3.72%).
The Board is required to ask
Shareholders to approve the
Remuneration Policy every three years.
The Directors will therefore recommend
that Shareholders approve the Policy
again at the Annual General Meeting of
the Company to be held on 13 September
2023.
Directors’ Annual Remuneration
Report
This section of the report sets out how
the Remuneration Policy, described on
the previous pages, is being
implemented. A resolution to approve the
Directors’ Annual Remuneration Report as
set out in the Annual Report for the year
ended 31 March 2022 was approved by
Shareholders at the AGM of the Company
held on 21 September 2023. The
Company also received proxy votes in
favour of the resolution representing
96.03% of the votes submitted (including
those who appointed the Chair to vote at
his discretion) (against: 3.97%). An
ordinary resolution for the approval of the
Annual Remuneration Report will be
proposed at the AGM of the Company to
be held on 13 September 2023.
Future Remuneration Policy
The table below illustrates how the Company’s Objective is supported by its Remuneration Policy. It sets out details of each
component of the pay package and the maximum amount receivable per annum by each Director. The Nomination and
Remuneration Committee and the Board review the fees paid to Directors annually in accordance with the Remuneration Policy set
out below and may decide that an increase in fees is appropriate in respect of subsequent years.
Director and Role Components of
Pay Package
Maximum Payment
per annum
Performance
Conditions
Ian Blackburn
Chair of the Board
Chair of the Nomination and Remuneration Committee
Chair of the Management Engagement Committee
Director’s fee (incl.
fee for acting as
Chair of the Board) £39,900 None
Sarah Clark
Chair of the Investment Committee Director’s fee £36,750 None
Sally Duckworth
Chair of the Audit Committee Director’s fee £36,750 None
Total maximum fees payable £113,400
Company Objective
To provide investors with a regular income stream, arising both from the income generated by companies selected for the
portfolio and from realising any growth in capital, while continuing at all times to qualify as a VCT.
Remuneration Policy
To ensure that the levels of remuneration paid are sufficient to attract, retain and motivate directors of the quality and
experience required to manage the Company in order to achieve the Company’s Objective.
Directors’ Remuneration Report
Nomination and Remuneration
Committee
The Committee is chaired by Ian Blackburn
with Sally Duckworth and Sarah Clark as its
other members. All members of the
Committee were considered to be
independent of the Investment Adviser
during the year under review. The
Committee meets at least once a year and
is responsible for making recommendations
to the Board on remuneration policy and
reviewing the policy’s ongoing
appropriateness and relevance. It carries
out an annual review of the remuneration of
the Directors and makes recommendations
to the Board on the level of Directors’ fees.
The Committee may, at its discretion,
recommend to the Board that individual
Directors should be awarded further
payments in respect of additional work
undertaken on behalf of the Company. It is
responsible for the appointment of
remuneration consultants, if this should be
considered necessary, including
establishing the selection criteria and terms
of reference for such an appointment. The
Committee met twice during the year under
review with full attendance from all its
members. The Committee’s duties in
respect of Nominations to the Board are
outlined on page 39 of the Annual Report.
45
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Reports of
the Directors
Directors’ attendance at Board and Committee meetings in the financial year ended 31 March 2023
The table below sets out the Directors’ attendance at quarterly Board meetings and Committee meetings held during the year to
31 March 2023. In addition to the quarterly Board meetings, the Board met on other occasions to consider specific issues as they
arose.
Directors
Board Meetings
(4)
Audit Committee
Meetings
(2)
Nomination and
Remuneration Committee
Meetings
(2)
Eligible Attended Eligible Attended Eligible Attended
Ian Blackburn 4 4 2 2 2 2
Sally Duckworth 4 4 2 2 2 2
Sarah Clark 2 2 1 1 1 1
Adam Kingdon 2 2 1 1 1 1
Annual percentage change in
Directors’ Remuneration
%
change
for the
year to
31 March
2023
%
change
for the
year to
31 March
2022
3
%
change
for the
year to
31 March
2021
Ian Blackburn (2.6) 8.3 -
Sally Duckworth 12.9 3.3 -
Sarah Clark
1
n/a n/a n/a
Adam Kingdon
2
12.9 3.3 -
1
Sarah Clark was appointed as a director on
4 November 2022 and her fee was pro-rated
from that date.
2
Adam Kingdon retired as a director on
21 September 2022 and his fee was pro-rated
to that date.
3
In 2022, discretionary payments of £3,000 and
£1,000 were paid to the Chair and Directors,
respectively.
No sums were paid to third parties in
respect of any of the Director’s services
during the year under review.
Relative importance of spend on
Directors’ fees
Year to
31 March
2023
Year to
31 March
2022
£ £
Total directors’ fees 103,758 101,000
Dividends paid/payable in
respect of the year 11,709,416 8,726,149
Share Buybacks 1,147,478 643,810
Directors fees as a share of:
Closing net assets 0.1% 0.1%
Dividends paid and payable
in respect of the year 0.9% 1.2%
Total fees and expenses
1
5.0% 3.3%
1 - this figure is the combined total of Investment
Adviser’s fees (including performance fees) and Other
expenses disclosed in the Income Statement.
Directors’ remuneration: 5-year comparison
Director
2023
£
2018
£ Change
Chair Fee 38,000 26,000 46.2%
Directors' Fee (inc. committee chairman fee) 35,000 23,000 52.2%
Directors’ interests in the Company’s shares (audited)
The Company does not require the Directors to hold shares in the Company.
The Directors, however, believe that it is in the best interests of the Company and
its Shareholders for each Director to maintain an interest in the Company. The
Directors who held office throughout the year under review and their interests as
at 31 March 2023 were:
31 March 2023 31 March 2022
Director
Shares
held
Percentage of
issued share
capital
Shares
held
Percentage of
issued share
capital
Ian Blackburn 48,463 0.05% 48,463 0.06%
Sally Duckworth - - - -
Sarah Clark - - - -
Adam Kingdon - - 5,709 0.01%
There have been no further changes to the Directors’ share interests between the
year-end and the date of this Annual Report. The remuneration of the Directors contains
no performance related variable element. As the Company has no employees, the
directors do not consider it relevant to compare director fees against employee pay.
46
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Reports of
the Directors
Company performance
The graph below charts the total
shareholder return of the Company’s
shares on a share price basis (assuming
all dividends are re-invested and
excluding the tax relief available to
Shareholders) over the past ten years
compared with that of an index of all
VCTs and an index of generalist VCTs
which are members of the AIC (based on
figures provided by Morningstar). The
Board considers these indices to be the
most appropriate to use to measure the
Company’s relative performance over the
medium to long term. The total
shareholder returns have each been
rebased to 100 pence at 30 April 2013.
An explanation of the performance of the
Company is given in the Chair’s
Statement on page 3, the Performance
section of the Strategic Report on pages
9 to 12 and in the Investment Adviser’s
Review and Investment Portfolio
Summary on pages 13 to 26.
By order of the Board
Gresham House Asset Management
Limited
Company Secretary
12 July 2023
Mobeus Income & Growth 2 VCT plc NAV Cumulative total return
AIC Generalist VCTs NAV Cumulative total return
AIC ALL VCTs NAV Cumulative total return
Total return (pence)
100p
120p
140p
160p
180p
200p
220p
240p
260p
31 March
2020
31 March
2021
31 March
2022
31 March
2023
30 April
2013
30 April
2014
31 March
2015
31 March
2017
31 March
2016
31 March
2019
31 March
2018
Cumulative total return (NAV) basis
Directors’ Remuneration Report
47
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Reports of
the Directors
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. Under that law the
directors are required to prepare the
financial statements and have elected to
prepare the company financial
statements in accordance with United
Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards, comprising
Financial Reporting Standard 102, the
Financial Reporting Standard applicable
in the UK and Republic of Ireland (‘FRS
102’) 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 for 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;
and
● prepare a Strategic Report, a
Directors’ 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.
(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, as fair, balanced and
understandable and that it provides the
information necessary for Shareholders
to assess the Company’s position,
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. Accordingly, any
liability to a person who has
demonstrated reliance on any untrue or
misleading statement or omission shall
be determined in accordance with
section 90A and schedule 10A of the
Financial Services and Markets Act
2000.
The names and functions of the
Directors are stated on page 33.
For and on behalf of the Board
Ian Blackburn
Chair
12 July 2023
Statement of Directors’ Responsibilities
48
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
In our opinion the financial
statements:
● give a true and fair view of the state
of the Company’s affairs as at 31
March 2023 and of its loss for the
year then ended;
● have been properly prepared in
accordance with United Kingdom
Generally Accepted Accounting
Practice; and
● have been prepared in accordance
with the requirements of the
Companies Act 2006.
We have audited the financial
statements of Mobeus Income & Growth
2 VCT Plc (“the Company”) for the year
ended 31 March 2023 which comprise
the Income statement, the Balance
Sheet, the Statement of Changes in
Equity, the Statement of Cash Flows and
notes to the financial statements,
including a summary of significant
accounting policies. The financial
reporting framework that has been
applied in their preparation is applicable
law and United Kingdom Accounting
Standards, including Financial Reporting
Standard 102 The Financial Reporting
Standard applicable in the UK and
Republic of Ireland (United Kingdom
Generally Accepted Accounting
Practice).
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards
are further described in the Auditor’s
responsibilities for the audit of the
financial statements section of our
report. We believe that the audit
evidence we have obtained is sufficient
and appropriate to provide a basis for
our opinion. Our audit opinion is
consistent with the additional report to
the audit committee.
Independence
Following the recommendation of the
audit committee, we were appointed by
the Board of Directors in 2009 to audit
the financial statements for the year
ended 30 April 2009 and subsequent
financial periods. The period of total
uninterrupted engagement, including
retenders and reappointments is
15 years, covering the years ended
30 April 2009 to 31 March 2023. We
remain independent of the Company in
accordance with the ethical
requirements that are relevant to our
audit of the financial statements in the
UK, including the FRC’s Ethical Standard
as applied to listed public interest
entities, and we have fulfilled our other
ethical responsibilities in accordance
with these requirements. The non-audit
services prohibited by that standard
were not provided to the Company.
Conclusions relating to going
concern
In auditing the financial statements, we
have concluded that the Directors’ use
of the going concern basis of accounting
in the preparation of the financial
statements is appropriate. Our
evaluation of the Directors’ assessment
of the Company’s ability to continue to
adopt the going concern basis of
accounting included:
● Obtaining the VCT compliance
reports during the year and as at
year end and reviewing the
calculations therein to check that the
Company was meeting its
requirements to retain VCT status;
● Reviewing the forecasted cash flows
that support the Directors’
assessment of going concern,
challenging assumptions and
judgements made in the forecasts,
and assessing them for
reasonableness. In particular, we
considered the available cash
resources relative to the forecast
expenditure which was assessed
against the prior year for
reasonableness;
● Evaluating the Directors’ method of
assessing the going concern in light
of market volatility and the present
uncertainties in economic recovery
created by the ongoing matters
including the current situation in
Ukraine/Russia, high cost of living
crisis, increase in inflation; and
● Calculating financial ratios to
ascertain the financial health of the
Company.
Based on the work we have performed,
we have not identified any material
uncertainties relating to events or
conditions that, individually or
collectively, may cast significant doubt
on the Company’s ability to continue as
a going concern for a period of at least
twelve months from when the financial
statements are authorised for issue.
In relation to the Company’s reporting
on how it has applied the UK Corporate
Governance Code, we have nothing
material to add or draw attention to in
relation to the Directors’ statement in the
financial statements about whether the
Directors considered it appropriate to
adopt the going concern basis of
accounting.
Our responsibilities and the
responsibilities of the Directors with
respect to going concern are described
in the relevant sections of this report.
Overview
2023 2022
Key audit
matters
Valuation of
unquoted
investments
3 3
Materiality £760,000 (2022:
£1,040,000) based on 2%
(2022: 2%) of Total
investments
An overview of the scope of our
audit
Our audit was scoped by obtaining an
understanding of the company and its
environment including the company’s
system of internal control and assessing
the risks of material misstatement in the
financial statements. We also addressed
the risk of management override of
internal controls, including assessing
whether there was evidence of bias by
the Directors that may have represented
a risk of material misstatement.
Key audit matters
Key audit matters are those matters that,
in our professional judgement, were of
most significance in our audit of the
financial statements of the current
period and include the most significant
assessed risks of material misstatement
(whether or not due to fraud) that we
identified, including those which had the
greatest effect on: the overall audit
strategy, the allocation of resources in
the audit, and directing the efforts of the
engagement team. This matter was
addressed in the context of our audit of
the financial statements as a whole, and
in forming our opinion thereon, and we
do not provide a separate opinion on
this matter.
Independent Auditor’s Report to the Members of
Mobeus Income & Growth 2 VCT plc
Independent
Auditor’s Report
49
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Independent
Auditor’s Report
Key audit matter How the scope of our audit addressed the key audit matter
Valuation of unquoted
investments
(Note 8)
We consider the
valuation of unquoted
investments to be the
most significant audit
area as there is a high
level of estimation
uncertainty involved in
determining the
unquoted investment
valuations.
There is also an
inherent risk of
management override
arising from the
unquoted investment
valuations being
prepared by the
Investment Advisor,
who is remunerated
based on the net asset
value of the Company.
For these reasons we
considered the
valuation of unquoted
investments to be a
key audit matter.
Our sample for the testing of the unquoted investments was stratified
according to risk considering, inter alia, the value of the individual
investments, the nature of the investments, the extent of the fair value
movement and the subjectivity of the valuation technique.
For investments in our sample we:
Challenged whether the valuation methodology was the most appropriate in
the circumstances under the International Private Equity and Venture Capital
Valuation (“IPEV”) guidelines and applicable accounting standards.
Recalculated the value attributable to the company, having regard to the
application of enterprise value across the capital structures of the investee
companies.
For a sample of investments valued using less subjective valuation
techniques (price of recent investment reviewed for changes in fair value)
we:
● Agreed the cost or price of the recent investment to supporting
documentation;
● Considered whether the investment was an arm’s length transaction
through reviewing the parties involved in the transaction and checking
whether or not they were already investors of the investee company;
● Considered whether there were any indications that the cost or price of
the recent investment was no longer representative of fair value
considering, inter alia the current performance of the investee company
and the milestones and assumptions set out in the investment proposal;
and
● Considered whether the price of the recent investment is supported by
alternative valuation techniques.
For a sample of investments that were valued using more subjective
techniques (earnings and revenue multiples) we:
● Challenged and corroborated inputs to the valuation with reference to
management information of investee companies and market data,
including considering the impact of the current situation in Ukraine/
Russia, high cost of living crisis and increase in inflation on the valuation.
We assessed the impact of estimation uncertainty concerning these
assumptions and the disclosure of these uncertainties in the financial
statements;
● Reviewed the historical financial statements and any recent management
information available to support assumptions about maintainable
revenues and earnings used in the valuation;
● Considered the revenue or earnings multiples applied by reference to
observable listed company market data; and
● Challenged the consistency and appropriateness of adjustments made
to such market data in establishing the earnings or revenue multiple
applied in arriving at the valuations adopted by agreeing the adjusted
multiples to independent sources, the peer group, the market and sector
in which the investee company operates and obtaining independent
third party multiples.
Where appropriate, we performed a sensitivity analysis by developing our
own point estimate where we considered that alternative input assumptions
could reasonably have been applied and we considered the overall impact
of such sensitivities on the portfolio of investments in determining whether
the valuations as a whole are reasonable and free from bias.
Key observations:
Based on the procedures performed we consider the investment valuations
to be appropriate considering the level of estimation uncertainty.
50
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Independent
Auditor’s Report
Our application of materiality
We apply the concept of materiality both
in planning and performing our audit,
and in evaluating the effect of
misstatements. We consider materiality
to be the magnitude by which
misstatements, including omissions,
could influence the economic decisions
of reasonable users that are taken on
the basis of the financial statements.
In order to reduce to an appropriately
low level the probability that any
misstatements exceed materiality, we
use a lower materiality level,
performance materiality, to determine
the extent of testing needed.
Importantly, misstatements below these
levels will not necessarily be evaluated
as immaterial as we also take account of
the nature of identified misstatements,
and the particular circumstances of their
occurrence, when evaluating their effect
on the financial statements as a whole.
Based on our professional judgement,
we determined materiality for the
financial statements as a whole and
performance materiality as follows:
Company
financial
statements
2023
£mn
2022
£mn
Materiality 0.760 1.040
Basis for
determining
materiality
2% of Total investments
Rationale
for the
benchmark
applied
In setting materiality, we
have had regard to the
nature and disposition
of the investment
portfolio. Given that
the VCT’s portfolio is
comprised of unquoted
investments which
would typically have
a wider spread of
reasonable alternative
possible valuations,
we have applied a
percentage of 2% of
total investments, as
asset values are the
primary focus of the
users of these financial
statements.
Performance
materiality
0.570
0.780
Basis for
determining
performance
materiality
75% of materiality
Company
financial
statements
2023
£mn
2022
£mn
Rationale
for the
percentage
applied for
performance
materiality
The level of
performance
materiality applied
was set after having
considered a number
of factors including the
expected total value
of known and likely
misstatements and the
level of transactions in
the year.
Lower testing threshold
We determined that for Revenue return
before tax, a misstatement of less than
materiality for the financial statements as
a whole, could influence users of the
financial statements as it is a measure of
the Company’s performance of income
generated from its investments after
expenses. As a result, we determined a
lower testing threshold for those items
impacting revenue return of £92,000
based on 5% of Income (2022: £104,000
based on 5% of Income ).
Reporting threshold
We agreed with the Audit Committee
that we would report to them all
individual audit differences in excess of
£38,000 (2022: £53,000). We also
agreed to report differences below this
threshold that, in our view, warranted
reporting on qualitative grounds.
Other information
The directors are responsible for the
other information. The other information
comprises the information included in
the annual report and financial
statements other than the financial
statements and our auditor’s report
thereon. Our opinion on the financial
statements does not cover the other
information and, except to the extent
otherwise explicitly stated in our report,
we do not express any form of
assurance conclusion thereon. Our
responsibility is to read the other
information and, in doing so, consider
whether the other information is
materially inconsistent with the financial
statements or our knowledge obtained
in the course of the audit, or otherwise
appears to be materially misstated. If we
identify such material inconsistencies or
apparent material misstatements, we are
required to determine whether this gives
rise to a material misstatement in the
financial statements themselves. If,
based on the work we have performed,
we conclude that there is a material
misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Corporate governance statement
The Listing Rules require us to review
the Directors’ statement in relation to
going concern, longer-term viability and
that part of the Corporate Governance
Statement relating to the Company’s
compliance with the provisions of the UK
Corporate Governance Code specified
for our review.
Based on the work undertaken as part
of our audit, we have concluded that
each of the following elements of the
Corporate Governance Statement is
materially consistent with the financial
statements or our knowledge obtained
during the audit.
Going concern and longer-term
viability
● The Directors’ statement with
regards to the appropriateness of
adopting the going concern basis of
accounting and any material
uncertainties identified; and
● The Directors’ explanation as to their
assessment of the Company’s
prospects, the period this
assessment covers and why the
period is appropriate.
Other Code provisions
● Directors’ statement on fair,
balanced and understandable;
● Board’s confirmation that it has
carried out a robust assessment of
the emerging and principal risks;
● The section of the annual report that
describes the review of
effectiveness of risk management
and internal control systems; and
● The section describing the work of
the Audit Committee.
Other Companies Act 2006
reporting
Based on the responsibilities described
below and our work performed during
the course of the audit, we are required
by the Companies Act 2006 and ISAs
(UK) to report on certain opinions and
matters as described below.
Strategic report and Directors’
report
In our opinion, based on the work
undertaken in the course of the audit:
51
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Independent
Auditor’s Report
● the information given in the Strategic
report and the Directors’ report for
the financial year for which the
financial statements are prepared is
consistent with the financial
statements; and
● the Strategic report and the
Directors’ report have been
prepared in accordance with
applicable legal requirements.
In the light of the knowledge and
understanding of the Company and its
environment obtained in the course of
the audit, we have not identified material
misstatements in the strategic report or
the Directors’ report.
Directors’ remuneration
In our opinion, the part of the Directors’
remuneration report to be audited has
been properly prepared in accordance
with the Companies Act 2006.
Matters on which we are required
to report by exception
We have nothing to report in respect of
the following matters in relation to which
the Companies Act 2006 requires us to
report to you if, in our opinion:
● adequate accounting records have
not been kept, or returns adequate
for our audit have not been received
from branches not visited by us; or
● the financial statements and the part
of the Directors’ remuneration report
to be audited are not in agreement
with the accounting records and
returns; or
● certain disclosures of Directors’
remuneration specified by law are
not made; or
● we have not received all the
information and explanations we
require for our audit.
Responsibilities of Directors
As explained more fully in the Statement
of Directors’ Responsibilities, the
Directors are responsible for the
preparation of the financial statements
and for being satisfied that they give a
true and fair view, and for such internal
control as the Directors determine is
necessary to enable the preparation of
financial statements that are free from
material misstatement, whether due to
fraud or error.
In preparing the financial statements, the
Directors are responsible for assessing
the Company’s ability to continue as a
going concern, disclosing, as applicable,
matters related to going concern and
using the going concern basis of
accounting unless the Directors either
intend to liquidate the Company or to
cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditor’s
report that includes our opinion.
Reasonable assurance is a high level of
assurance, but is not a guarantee that an
audit conducted in accordance with ISAs
(UK) will always detect a material
misstatement when it exists.
Misstatements can arise from fraud or
error and are considered material if,
individually or in the aggregate, they
could reasonably be expected to
influence the economic decisions of
users taken on the basis of these
financial statements.
Extent to which the audit was
capable of detecting irregularities,
including fraud
Irregularities, including fraud, are
instances of non-compliance with laws
and regulations. We design procedures
in line with our responsibilities, outlined
above, to detect material misstatements
in respect of irregularities, including
fraud. The extent to which our
procedures are capable of detecting
irregularities, including fraud is detailed
below:
Non-compliance with laws and
regulations
Based on:
● Our understanding of the Company
and the industry in which it operates;
● Discussion with management and
those charged with governance; and
● Obtaining an understanding of the
Company’s policies and procedures
regarding compliance with laws and
regulations,
we considered the significant laws and
regulations to be the Companies Act
2006, the FCA listing and DTR rules, the
principles of the UK Corporate
Governance Code, industry practice
represented by the Statement of
Recommended Practice: Financial
Statements of Investment Trust
Companies and Venture Capital Trusts
(“the SORP”) and updated in 2022 with
consequential amendments and the
applicable financial reporting framework.
We also considered the Company’s
qualification as a VCT under UK tax
legislation.
Our procedures in respect of the above
included:
● Agreement of the financial statement
disclosures to underlying supporting
documentation;
● Enquiries of management and those
charged with governance relating to
the existence of any non-compliance
with laws and regulations;
● Obtaining the VCT compliance
reports prepared by management’s
expert during the year and as at year
end and reviewing their calculations
for the year end report to check that
the Company was meeting its
requirements to retain VCT status;
and
● Reviewing minutes of meeting of
those charged with governance
throughout the period for instances
of non-compliance with laws and
regulations.
Fraud
We assessed the susceptibility of the
financial statement to material
misstatement including fraud.
Our risk assessment procedures
included:
● Enquiry with management and those
charged with governance regarding
any known or suspected instances
of fraud;
● Obtaining an understanding of the
Company’s policies and procedures
relating to:
● Detecting and responding to the
risks of fraud; and
● Internal controls established to
mitigate risks related to fraud.
● Review of minutes of Board and
other Committee meetings
throughout the period for any known
or suspected instances of fraud;
● Discussion amongst the
engagement team as to how and
where fraud might occur in the
financial statements; and
● Obtaining an understanding of the
control environment in monitoring
compliance with laws and
regulations.
Based on our risk assessment, we
considered the areas most susceptible
to fraud to be the valuation of unquoted
investments and management override
of controls.
52
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Our procedures in respect of the above
included:
● The procedures set out in the Key
Audit Matters section above;
● Obtaining independent evidence to
support the ownership of a sample
of investments;
● Recalculating investment
management fees and incentive fees
in total;
● Obtaining independent confirmation
of bank balances; and
● Testing of journals, based on risk
assessment criteria as well as an
unpredictable sample, to supporting
documentation and evaluating
whether there was evidence of bias
by the Investment Adviser and
Directors that represented a risk of
material misstatement due to fraud.
We also communicated relevant
identified laws and regulations and
potential fraud risks to all engagement
team members who were all deemed to
have appropriate competence and
capabilities and remained alert to any
indications of fraud or non-compliance
with laws and regulations throughout the
audit.
Our audit procedures were designed to
respond to risks of material
misstatement in the financial statements,
recognising that the risk of not detecting
a material misstatement due to fraud is
higher than the risk of not detecting one
resulting from error, as fraud may involve
deliberate concealment by, for example,
forgery, misrepresentations or through
collusion. There are inherent limitations
in the audit procedures performed and
the further removed non-compliance
with laws and regulations is from the
events and transactions reflected in the
financial statements, the less likely we
are to become aware of it.
A further description of our
responsibilities is available on the
Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities.
This description forms part of our
auditor’s report.
Use of our report
This report is made solely to the
Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit
work has been undertaken so that we
might state to the Company’s members
those matters we are required to state to
them in an auditor’s report and for no
other purpose. To the fullest extent
permitted by law, we do not accept or
assume responsibility to anyone other
than the Company and the Company’s
members as a body, for our audit work,
for this report, or for the opinions we
have formed.
Vanessa Jayne Bradley
(Senior Statutory Auditor)
For and on behalf of BDO LLP,
Statutory Auditor
London, UK
12 July 2023
BDO LLP is a limited liability partnership
registered in England and Wales (with
registered number OC305127).
Independent
Auditor’s Report
53
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Year ended 31 March 2023 Year ended 31 March 2022
Notes Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Net investment portfolio (losses)/gains 8 -
(9,412,604) (9,412,604)
-
12,095,784 12,095,784
Income 3 1,841,863 - 1,841,863 1,080,796 - 1,080,796
Investment Adviser's fees 4a (395,609) (1,186,829) (1,582,438) (412,075) (1,236,223) (1,648,298)
Investment Adviser's performance fees 4b - - - - (1,014,703) (1,014,703)
Other expenses 4d (485,231) - (485,231) (403,366) - (403,366)
(Loss)/profit on ordinary
activities before taxation 961,023
(10,599,433)
(9,638,410) 265,355 9,844,858 10,110,213
Taxation on (loss)/profit on ordinary activities 5 (37,670) 37,670 - - - -
(Loss)/profit for the year and total
comprehensive income 923,353
(10,561,763) (9,638,410)
265,355
9,844,858
10,110,213
Basic and diluted earnings
per ordinary share: 7 1.09p (12.47)p (11.38)p 0.36p 13.42p 13.78p
The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the net
investment portfolio (losses)/gains (unrealised (losses)/gains and realised (losses)/gains on investments) and the proportion of the
Investment Adviser’s fee and performance fee charged to capital.
The total column is the Statement of Total Comprehensive Income of the Company prepared in accordance with Financial
Reporting Standards (“FRS”). In order to better reflect activities of a VCT and in accordance with the 2014 Statement of
Recommended Practice (“SORP”) (updated in July 2022) by the Association of Investment Companies (“AIC”), supplementary
information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside
the Income Statement. The revenue column of profit attributable to equity shareholders is the measure the Directors believe
appropriate in assessing the Company’s compliance with certain requirements set out in Section 274 Income Tax Act 2007.
All the items in the above statement derive from continuing operations of the Company. No operations were acquired or
discontinued in the year.
The Notes on pages 58 to 76 form part of these Financial Statements.
Income Statement
for the year ended 31 March 2023
Financial Statements
Financial Statements
54
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Financial Statements
Balance Sheet Company No. 03946235
as at 31 March 2023
31 March 2023 31 March 2022
Notes £ £
Fixed assets
Investments at fair value 8 38,015,339 52,161,122
Current assets
Debtors and prepayments 10 172,167 260,786
Current asset investments 11 28,611,496 23,458,496
Cash at bank 11 3,901,408 2,801,008
32,685,071 26,520,290
Creditors: amounts falling due within one year 12 (273,853) (1,175,430)
Net current assets 32,411,218 25,344,860
Net assets 70,426,557 77,505,982
Capital and reserves
Called up share capital 13 984,370 804,263
Share premium reserve 43,649,899 28,258,001
Capital redemption reserve 30,656 16,006
Revaluation reserve 12,709,695 24,455,488
Special distributable reserve 2,665,952 12,033,364
Realised capital reserve 8,845,711 10,521,719
Revenue reserve 1,540,274 1,417,141
Equity shareholders' funds 70,426,557 77,505,982
Basic and diluted net asset value per ordinary share 14 71.54p 96.37p
The Financial Statements were approved and authorised for issue by the Board of Directors on 12 July 2023 and are signed on
their behalf by:
Ian Blackburn
Chair
The Notes on pages 58 to 76 form part of these Financial Statements.
55
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Financial Statements
Statement of Changes in Equity
for the year ended 31 March 2023
Non-distributable reserves Distributable reserves
Called up Share Capital Special Realised Revenue
share premium redemption Revaluation distributable capital reserve
capital reserve reserve reserve reserve reserve Total
(Note a) (Note b) (Note b)
Notes £ £ £ £ £ £ £ £
At 1 April 2022 804,263 28,258,001 16,006 24,455,488 12,033,364 10,521,719 1,417,141 77,505,982
Comprehensive
income for the year
(Loss)/profit for the year - - - (9,136,262) - (1,425,501) 923,353 (9,638,410)
Total comprehensive
income for the year - - - (9,136,262) - (1,425,501) 923,353 (9,638,410)
Contributions by and
distributions to owners
Shares issued
under Offer for
Subscription (Note c) 13 194,757 15,793,243 - - - - - 15,988,000
Issue costs on Offer for
Subscription (Note c) 13 - (401,345) - - (176,146) - - (577,491)
Shares bought
back (Note d) 13 (14,650) - 14,650 - (1,147,478) - - (1,147,478)
Dividends paid 6 - - - - (4,001,107) (6,902,719) (800,220) (11,704,046)
Total contributions
by and distributions
to owners 180,107 15,391,898 14,650 - (5,324,731) (6,902,719) (800,220) 2,558,985
Other movements
Realised losses
transferred to special
reserve (Note a) - - - - (4,042,681) 4,042,681 - -
Realisation of previously
unrealised gains - - - (2,609,531) - 2,609,531 - -
Total other movements -
-
- (2,609,531) (4,042,681) 6,652,212 - -
At 31 March 2023 984,370 43,649,899 30,656 12,709,695 2,665,952 8,845,711 1,540,274 70,426,557
Notes
a): The Company’s special reserve is available to fund buybacks of shares as and when it is considered by the Board to be in the interests of
Shareholders, and to absorb any existing and future realised losses and for other corporate purposes. At 31 March 2023, the Company has a
special reserve of £2,665,952, all of which arises from shares issued more than three years ago. Reserves originating from share issues are
not distributable under VCT rules if they arise from share issues that are within three years of the end of an accounting period in which shares
were issued. The total transfer of £4,042,681 from the realised capital reserve to the special distributable reserve above is the total of realised
losses incurred by the Company in the year.
b): The realised capital reserve and the revenue reserve together comprise the Profit and Loss Account of the Company.
c): Under an Offer for Subscription launched on 17 October 2022, a total of 19,475,680 were allotted on 16 November 2022 and 6 February 2023,
raising net funds of £15,410,509 for the Company. This figure is net of issues costs of £401,345 and facilitation fees of £176,146.
d): During the year, the Company purchased 1,464,956 of its own shares at the prevailing market price for a total cost of £1,147,478, which were
subsequently cancelled.
The composition of each of these reserves is explained below:
Called up share capital
The nominal value of shares originally issued, increased for subsequent share issues either via a Offer for Subscription or reduced due to shares
bought back by the Company.
Capital redemption reserve
The nominal value of shares bought back and cancelled is held in this reserve, so that the Company’s capital is maintained.
The Notes on pages 58 to 76 form part of these Financial Statements.
56
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Financial Statements
Statement of Changes in Equity
for the year ended 31 March 2022
Non-distributable reserves Distributable reserves
Called up Share Capital Special Realised Revenue
share premium redemption Revaluation distributable capital reserve
capital reserve reserve reserve reserve reserve Total
Notes £ £ £ £ £ £ £ £
At 1 April 2021 732,303 21,025,160 9,031 16,598,524 19,524,067 13,397,234 2,612,549 73,898,868
Comprehensive
income for the year
Profit for the year - - - 9,557,514 - 287,344 265,355 10,110,213
Total comprehensive
income for the year - - - 9,557,514 - 287,344 265,355 10,110,213
Contributions by and
distributions to owners -
Shares issued via
Offer for Subscription 78,935 7,421,065 - - - - - 7,500,000
Issue costs and
facilitation fees on
Offer for Subscription - (188,224) - - (51,097) - - (239,321)
Shares bought back (6,975) - 6,975 - (643,810) - - (643,810)
Dividends paid - - - - (4,544,870) (7,114,335) (1,460,763) (13,119,968)
Total contributions by and
distributions to owners
71,960 7,232,841 6,975 - (5,239,777) (7,114,335) (1,460,763) (6,503,099)
Other movements
Realised losses
transferred to
special reserve - - - - (2,250,926) 2,250,926 - -
Realisation of previously
unrealised gains - - - (1,700,550) - 1,700,550 - -
Total other movements -
-
- (1,700,550) (2,250,926) 3,951,476 - -
At 31 March 2022 804,263 28,258,001 16,006 24,455,488 12,033,364 10,521,719 1,417,141 77,505,982
Notes - continued from previous page
Capital redemption reserve
The nominal value of shares bought back and cancelled is held in this reserve, so that the company’s capital is maintained.
Share premium reserve
This reserve contains the excess of gross proceeds less issue costs over the nominal value of shares allotted under recent Offers for
Subscription.
Revaluation reserve
Increases and decreases in the valuation of investments held at the year-end are accounted for in this reserve, except to the extent that the
diminution is deemed permanent. In accordance with stating all investments at fair value through profit and loss (as recorded in Note 8), all such
movements through both revaluation and realised capital reserves are shown within the Income Statement for the year.
Special distributable reserve
This reserve is created from cancellations of the balances upon the Share premium reserve, which are transferred to this reserve from time to
time. The cost of share buybacks and any realised losses on the sale or impairment of investments (excluding transaction costs) are charged to
this reserve. 75% of the Investment Adviser fee expense, and the related tax effect, that are charged to the realised capital reserve are
transferred to this reserve. This reserve will also be charged any facilitation payments to financial advisers, which arose as part of the Offer for
Subscription.
Realised capital reserve
The following are accounted for in this reserve:
● Gains and losses on realisation of investments;
● Permanent diminution in value of investments;
● Transaction costs incurred in the acquisition and disposal of investments;
● 75% of the Investment Adviser’s fee (subsequently transferred to the Special distributable reserve along with the related tax effect) and 100%
of any performance fee payable, together with the related tax effect to this reserve in accordance with the policies, and
● Capital dividends paid.
Revenue reserve
Income and expenses that are revenue in nature are accounted for in this reserve as well as 25% of the Investment Advisor fee together with the
related tax effect, as well as income dividends paid that are classified as revenue in nature.
The Notes on pages 58 to 76 form part of these Financial Statements.
57
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Financial Statements
Statement of Cash Flows
for the year ended 31 March 2023
Notes
Year ended
31 March 2023
£
Year ended
31 March 2022
£
Cash flows from operating activities
(Loss)/profit for the financial year (9,638,410) 10,110,213
Adjustments for:
Net investment portfolio losses/(gains) 9,412,604 (12,095,784)
Dividend income (762,761) (287,264)
Interest income (1,079,102) (801,295)
Decrease in debtors 39,066 12,954
(Decrease)/increase in creditors and accruals (902,172) 1,003,986
Net cash outflow from operations (2,930,775) (976,394)
Corporation tax paid - -
Net cash outflow from operating activities (2,930,775) (976,394)
Cash flows from investing activities
Purchase of investments 8 (3,201,926) (4,728,594)
Disposal of investments 8 8,056,018 8,447,833
Dividends received 762,761 279,501
Interest received 1,007,742 809,058
Net cash inflow from investing activities 6,624,595 3,719,239
Cash flows from financing activities
Shares issued as part of Offer for subscription 15,988,000 7,500,000
Issue costs and facilitiation fees as part of Offer for subscription (577,491) (239,321)
Equity dividends paid 6 (11,704,046) (13,119,968)
Purchase of own shares 13 (1,146,883) (643,810)
Net cash inflow/(outflow) from financing activities 2,559,580 (6,503,099)
Net increase/(decrease) in cash and cash equivalents 6,253,400 (3,760,254)
Cash and cash equivalents at start of year 26,259,504 30,019,758
Cash and cash equivalents at end of the year 32,512,904 26,259,504
Cash and cash equivalents comprise:
Cash equivalents 11 28,611,496 23,458,496
Cash at bank and in hand 11 3,901,408 2,801,008
The Notes on pages 58 to 76 form part of these Financial Statements.
58
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Financial Statements
1 Company Information
Mobeus Income and Growth 2 VCT plc is a public limited company incorporated in England, registration number 03946235.
The registered office is 5 New Street Square, London, EC4A 3TW.
2 Basis of preparation
A summary of the principal accounting policies, all of which have been applied consistently throughout the year are set out at
the start of the related disclosure throughout the Notes to the Financial Statements. All accounting policies are included
within an outlined box at the top of each relevant Note.
These Financial Statements have been prepared in accordance with applicable United Kingdom accounting standards,
including Financial Reporting Standard 102 (“FRS102”), with the Companies Act 2006 and the 2014 Statement of
Recommended practice, ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (‘the SORP’)
(updated in July 2022) issued by the Association of Investment Companies (“AIC”). The Company has a number of financial
instruments which are disclosed under FRS102 s11/12 as shown in Note 15.
After performing the necessary enquiries, the Directors have undertaken an assessment of the Company’s ability to meet its
liabilities as they fall due. The Company has significant cash and liquid resources and no external debt or capital
commitments. The Company’s cash flow forecasts, which consider levels of anticipated new and follow on investment, as well
as investment income and annual running cost projections, are discussed at each quarterly Board meeting and, in particular,
have been considered in light the current economic environment. Following this assessment, the Directors have a
reasonable expectation that the Company will have adequate resources to continue to meet its liabilities for at least 12
months from the date of these Financial Statements. The Directors therefore consider the preparation of these financial
statements on a going concern basis to be appropriate.
3 Income
Dividends receivable on quoted equity shares are brought into account on the ex-dividend date. Dividends receivable on
unquoted equity shares are brought into account when the Company’s right to receive payment is established and there is
no reasonable doubt that payment will be received.
Interest income on loan stock is accrued on a daily basis. Provision is made against this income where recovery is doubtful
or where it will not be received in the foreseeable future. Where the loan stocks only require interest or a redemption
premium to be paid on redemption, the interest and redemption premium is recognised as income or capital as appropriate
once redemption is reasonably certain. When a redemption premium is designed to protect the value of the instrument
holder’s investment rather than reflect a commercial rate of revenue return, the redemption premium is recognised as
capital. The treatment of redemption premiums is analysed to consider if they are revenue or capital in nature on a
company by company basis. Accordingly, the redemption premium recognised in the year ended 31 March 2023 has been
classified as capital and has been included within gains on investments.
2023 2022
£ £
Income from bank deposits 23,675 1,306
Income from investments
– from equities 762,761 279,501
– from overseas based OEICs 407,532 10,492
– from UK based OEICs 147,023 1,167
– from loan stock 500,872 788,330
1,818,188 1,079,490
Total income 1,841,863 1,080,796
Total income comprises
Dividends 1,317,316 291,160
Interest 524,547 789,636
1,841,863 1,080,796
Total loan stock interest due but not recognised in the year was £361,395 (2022: £336,436). The increase is due to the
additional provision of interest of four investee companies, partially offset by the removal of loan interest resulting from a loan
conversion at one investee company as well as the sale of two investee companies.
Notes to the Financial Statements for the year ended 31 March 2023
59
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Financial Statements
4 Investment Adviser’s fees and Other expenses
All expenses are accounted for on an accruals basis.
a) Investment Adviser’s fees
25% of the Investment Adviser’s fees are charged to the revenue column of the Income Statement, while 75% is charged
against the capital column of the Income Statement. This is in line with the Board’s expected long-term split of returns from
the investment portfolio of the Company.
100% of any performance incentive fee payable for the year is charged against the capital column of the Income
Statement. This is because although the incentive fee is linked to an annual dividend target, it is ultimately based upon the
achievement of capital growth.
2023 2022
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Gresham House Asset
Management Limited
Investment Adviser’s fees 395,609 1,186,829 1,582,438 412,075 1,236,223 1,648,298
395,609 1,186,829 1,582,438 412,075 1,236,223 1,648,298
Under the terms of a revised investment management agreement dated 10 September 2010, (as amended and restated on
15 September 2016 such agreement having been novated to Gresham House) provides investment advisory, administrative
and company secretarial services to the Company, for a fee of 2% per annum calculated on a quarterly basis by reference to
the net assets at the end of the preceding quarter, plus a fee of £113,589 per annum, the latter being subject to changes in
the retail prices index each year. In 2013, it was agreed to waive such further increases due to indexation, until otherwise
agreed with the Board. In accordance with the policy statement published under “Management and Administration” in the
Company’s prospectus dated 10 May 2000, the Directors have charged 75% of the investment management expenses to the
capital account. This is in line with the Board’s expectation of the long-term split of returns from the investment portfolio of
the Company.
Under the terms of the management agreement the total Investment Adviser and administration expenses of the Company
excluding any irrecoverable VAT, exceptional costs and any performance incentive fee, are linked to a maximum of 3.6% of
the value of the Company’s closing net assets. For the year ended 31 March 2023, the expense cap has not been breached
(2022: £nil).
In accordance with general market practice, the Investment Adviser earned arrangement fees and fees for supplying
Directors and/or monitoring services from investee companies. The share of such fees attributable to the investments made
by the Company were £72,592 (2022: £98,172) and £200,070 (2022: £190,095) respectively.
60
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Financial Statements
b) Performance fees
2023 2022
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Gresham House Asset
Management Limited - - - - 1,014,703 1,014,703
Performance incentive agreement
The following performance incentive fee arrangement dated 20 September 2005 continues to be in place, and operated as
detailed below:
New Ordinary and former C share fund shares
Basis of Calculation
The performance incentive fee payable is calculated as an amount equivalent to 20 per cent of the excess of a “Target rate”
comprising:-
i) an annual dividend target (indexed each year for RPI) and
ii) a requirement that any cumulative shortfalls below the annual dividend target must be made up in later years. Any excess
is not carried forward, whether a fee is payable for that year or not.
Payment of a fee is also conditional upon the average Net Asset Value (“NAV”) per share for each such year equalling or
exceeding the average “Base NAV” per share for the same year. Base NAV commenced at £1 per share when C fund shares
were first issued in 2005, which is adjusted for subsequent shares issued and bought back.
Any performance fee will be payable annually. It will be reduced to the proportion which the number of “Incentive Fee
Shares” represent of the total number of shares in issue at any calculation date. Incentive Fees Shares are the only shares
upon which an incentive fee is payable. They will be the number of C fund shares in issue just before the Merger of the two
former share classes on 10 September 2010, (which subsequently became Ordinary shares) plus Ordinary shares issued
under new fundraisings since the Merger. This total is then reduced by an estimated proportion of the shares bought back by
the Company since the Merger, that are attributable to the Incentive Fee Shares.
Clarifications to the agreement
During the year ended 31 March 2016, the Board and the Investment Adviser agreed to confirm and clarify in more detail a
number of principles and interpretations applied to the agreement. The principal ones are reflected in the paragraphs above
and explained below:-
First, the incentive fee is paid upon dividends paid in a year, not declared and paid in a year, as the original agreement
stated. Secondly, the average NAV referred to above is calculated on a daily weighted average basis throughout the year. In
turn, this average NAV is compared to a Base NAV that is also calculated on a daily weighted average basis throughout the
year. Thirdly, the methodologies to account for new shares issued and buybacks of shares, their inclusion in the incentive fee
calculations and to identify the proportion of all shares upon which an incentive fee is payable have been clarified.
Finally, it has been agreed that any excess of cumulative dividends paid over the cumulative annual dividend target is not
carried forward, whether a fee is paid for that year or not.
These clarifications have been incorporated into the performance incentive agreement. The Board has been advised that, as
these and a number of more minor clarifications, are clarifications of the Incentive Agreement, rather than changes to it, there
was no need to seek shareholder approval for them.
Position at 31 March 2023
The cumulative dividends paid exceeded the annual cumulative dividend target at 31 March 2023 by 2.69p per share
(£3,279,964 in aggregate being 93.1% of the total excess) at the year-end, (where 93.1% is the proportion of Incentive Fee
Shares to the total number of shares in issue at the year-end date) and taking into account the target rate of dividends and
the dividends paid to shareholders.
The 6.00 pence annual dividend hurdle was 10.30 pence per share at the year-end after adjustment for RPI. The Base NAV
was 97.03 pence per share at the year end, compared to an average NAV for the year of 88.50 pence per share.
There is no Incentive fee payable for the year (2022: £1,014,703).
Notes to the Financial Statements for the year ended 31 March 2023
61
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Financial Statements
c) Offer for subscription fees
2023 2022
£mn £mn
Funds raised by MIG2 VCT 15.99 7.26
Offer costs payable to Gresham House at 3.00% of funds raised by the Company 0.48 0.22
Under the terms of an Offer for Subscription, with the other Mobeus advised VCTs, launched on 17 October 2022, Gresham
House was entitled to fees of 3.00% of the investment amount received from investors. This amount totalled £2.28 million
across all four VCTs, out of which all the costs associated with the allotment were met, excluding any payments to advisers
facilitated under the terms of the Offer.
d) Other expenses
Expenses are charged wholly to revenue, with the exception of expenses incidental to the acquisition or disposal of an
investment, which are written off to the capital column of the Income Statement or deducted from the disposal proceeds as
appropriate.
2023 2022
£ £
Directors’ remuneration (including NIC of £5,589 (2022: £6,278)) (Note a) 109,347 107,278
IFA trail commission 68,959 67,648
Broker’s fees 12,000 12,000
Auditors’ fees – Audit of Company (Note b) (excluding VAT) 56,586 38,080
Registrar's fees 37,264 42,671
Printing 51,880 56,969
Legal & professional fees 30,224 22,768
VCT monitoring fees 8,400 8,400
Directors' insurance 13,133 9,659
Listing and regulatory fees 42,545 29,177
Sundry 22,216 8,716
Other expenses 452,554 339,113
Provision against loan interest receivable (Note c) 32,677 -
Other expenses 485,231 403,366
a): Directors’ remuneration is a related party transaction, see analysis of Directors’ fees payable and their interests in the
shares of the Company in the Directors’ Remuneration Report on pages 44 to 46, which excludes NIC above. The key
management personnel are the three Non-Executive Directors. The Company has no employees. There were no
amounts outstanding and due to the Directors at 31 March 2023 (2022: £nil).
b): Included within the comparative figure is £7,073 relating to advanced audit procedures in respect of the Financial
Statements carried out at the 2022 Half-Year. No such procedures were carried out in the current year, or are intended to
be carried out in future years.
c): Provision against loan interest receivable are impairments on interest amounts recognised in a previous year (2022:£nil).
62
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Notes to the Financial Statements for the year ended 31 March 2023
Financial Statements
5 Taxation on ordinary activities
The tax expense for the year comprises current tax and is recognised in profit or loss. The current income tax charge is
calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date.
Any tax relief obtained in respect of Investment Adviser fees allocated to capital is reflected in the realised capital reserve
and a corresponding amount is charged against revenue. The tax relief is the amount by which corporation tax payable is
reduced as a result of these capital expenses.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet
date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the
future have occurred at the balance sheet date. Timing differences are differences between the Company’s taxable profits
and its results as stated in the Financial Statements that arise from the inclusion of gains and losses in the tax assessments
in periods different from those in which they are recognised in the Financial Statements.
Deferred tax is measured at the average tax rates that are expected to apply in the years in which the timing differences
are expected to reverse based on tax rates and laws that have been enacted or substantively enacted at the balance
sheet date. Deferred tax is measured on a non-discounted basis.
A deferred tax asset would be recognised only to the extent that it is more likely than not that future taxable profits will be
available against which the asset can be utilised.
2023 2022
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
a) Analysis of tax charge:
UK Corporation tax on profits for
the year 37,670 (37,670) - - - -
Total current tax charge 37,670 (37,670) - - - -
Corporation tax is based on a rate
of 19% (2022: 19%)
b) (Loss)/profit on ordinary
activities before tax 961,023 (10,599,433) (9,638,410) 265,355 9,844,858 10,110,213
(Loss)/profit on ordinary activities
multiplied by small company rate
of corporation tax in the UK of 19%
(2022: 19%) 182,594 (2,013,892) (1,831,298) 50,417 1,870,523 1,920,940
Effect of:
UK dividends (144,924) - (144,924) (53,105) - (53,105)
Net investment portfolio gains not
taxable/deductible - 1,788,395 1,788,395 - (2,298,199) (2,298,199)
Unrelieved expenditure - 187,827 187,827 2,688 427,676 430,364
Actual tax charge 37,670 (37,670) - - - -
Tax relief relating to Investment Adviser fees is allocated between revenue and capital where such relief can be utilised.
No asset or liability has been recognised for deferred tax in relation to capital gains or losses on revaluing investments as the
Company is exempt from corporation tax in relation to capital gains or losses as a result of qualifying as a Venture Capital Trust.
There is no potential liability to deferred tax (2022: £nil). There is an unrecognised deferred tax asset of £980,314 (2022:
£733,172). The deferred tax asset relates to unrelieved management expenses and is not recognised because the Company
may not generate sufficient taxable income in the foreseeable future to utilise these expenses.
6 Dividends paid and payable
Dividends payable are recognised as distributions in the Financial Statements when the Company’s liability to pay them
has been established. This liability is established for interim dividends when they are paid, and for final dividends when
they are approved by Shareholders, usually at the Company’s Annual General Meeting.
A key judgement in applying the above accounting policy is in determining the amount of minimum income dividend to be
paid in respect of a year. The Company’s status as a VCT means it has to comply with Section 274 of the Income Tax Act
2007, which requires that no more than 15% of the income from shares and securities in a year can be retained from the
revenue available for distribution for the year.
63
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Financial Statements
Amounts recognised as distributions to equity Shareholders in the year:
Dividend Type
For year ended
31 March
Pence
per share Date paid
2023
£
2022
£
Interim Income 2021 1.25p 30/07/2021 - 915,378
Interim Capital 2021 4.75p 30/07/2021 - 3,478,438
Interim Income 2022 0.75p 07/01/2022 - 545,385
Interim Capital 2022 5.00p 07/01/2022 - 3,635,896
Interim Capital* 2022 6.25p 07/01/2022 - 4,544,870
Interim Capital* 2023 5.00p 07/11/2022 4,001,107 -
Interim Income 2023 1.00p 07/11/2022 800,220 -
Interim Capital 2023 7.00p 30/03/2023 6,902,719 -
11,704,046 13,119,968
* These dividends were paid out of the Company’s special distributable reserve.
Set out below are the total income dividends payable in respect of the financial year, which is the basis on which the
requirements of section 274 of the Income Tax Act 2007 are considered.
Recognised income distributions in the Financial Statements for the year
Dividend Type
For year ended
31 March
Pence
per share
Date
paid/payable
2023
£
2022
£
Revenue available for distribution by way of dividends for the year 923,353 265,355
Interim Income 2022 0.75p 07/01/2022 - 545,385
Interim Income 2023 1.00p 07/11/2022 800,220 -
Total income dividends for the year 800,220 545,385
7 Basic and diluted earnings and return per share
2023 2022
£ £
Total earnings after taxation: (9,638,410) 10,110,213
Basic and diluted earnings per share (Note a) (11.38)p 13.78p
Net revenue earnings from ordinary activities after taxation 923,353 265,355
Basic and diluted revenue earnings per share (Note b) 1.09p 0.36p
Net investment portfolio (losses)/gains (9,412,604) 12,095,784
Capital Investment Adviser's fees (net of taxation) (1,149,159) (1,236,223)
Investment Adviser's performance fee - (1,014,703)
Total capital earnings (10,561,763) 9,844,858
Basic and diluted capital earnings per share (Note c) (12.47)p 13.42p
Weighted average number of shares in issue in the year 84,717,306 73,353,491
Notes:
a) Basic earnings per share is total earnings after taxation divided by the weighted average number of shares in issue.
b) Basic revenue earnings per share is the revenue return after taxation divided by the weighted average number of shares in issue.
c) Basic capital earnings per share is the total capital return after taxation divided by the weighted average number of shares in issue.
d) There are no instruments that will increase the number of shares in issue in future. Accordingly, the above figures currently represent
both basic and diluted returns.
64
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Notes to the Financial Statements for the year ended 31 March 2023
Financial Statements
8 Investments at fair value
The most critical estimates, assumptions and judgements relate to the determination of the carrying value of investments at
“fair value through profit and loss” (FVTPL) and these are explained throughout the below. All investments held by the
Company are classified as FVTPL and measured in accordance with the International Private Equity and Venture Capital
Valuation (“IPEV”) guidelines, as updated in December 2022. This classification is followed as the Company’s business is to
invest in financial assets with a view to profiting from their total return in the form of capital growth and income.
Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional.
For investments actively traded on organised financial markets, fair value is generally determined by reference to Stock
Exchange market quoted bid prices at the close of business on the balance sheet date. Purchases and sales of quoted
investments are recognised on the trade date where a contract of sale exists whose terms require delivery within a time frame
determined by the relevant market. Where the terms of a disposal state that consideration may be received at some future
date and, subject to the conditionality and materiality of the amount of deferred consideration, an estimate of the fair value
discounted for the time value of money may be recognised through the Income Statement. In other cases, the proceeds will
only be recognised once the right to receive payment is established and there is no reasonable doubt that payment will be
received.
Unquoted investments are stated at fair value by the Directors at each measurement date in accordance with appropriate
valuation techniques, which are consistent with the IPEV guidelines:-
(i) Each investment is considered as a whole on a ‘unit of account’ basis, i.e. that the value of each portfolio company is
considered as a whole, alongside consideration of:-
The price of new or follow on investments made, if deemed to be made as part of an orderly transaction, are considered to be
at fair value at the date of the transaction. The inputs that derived the investment price are calibrated within individual
valuation models and at every subsequent quarterly measurement date, are reconsidered for any changes in light of more
recent events or changes in the market performance of the investee company. The valuation bases used are the following:
- a multiple basis. The enterprise value of the investment may be determined by applying a suitable price-earnings
ratio, revenue or gross profit multiple to that company’s historic, current or forecast post-tax earnings before interest,
depreciation and amortisation, or revenue, or gross profit (the ratio used being based on a comparable sector but the
resulting value being adjusted to reflect points of difference identified by the Investment Adviser compared to the
sector including, inter alia, scale and liquidity); or:
- where a company’s underperformance against plan indicates a diminution in the value of the investment, provision
against the price of a new investment is made, as appropriate.
(ii) Premiums, to the extent that they are considered capital in nature, and that they will be received upon repayment of loan
stock investments are accrued at fair value when the Company receives the right to the premium and when considered
recoverable.
(iii) Where a multiple or the price of recent investment less impairment basis is not appropriate and overriding factors apply, a
discounted cash flow, net asset valuation, realisation proceeds, or a weighted average of these bases may be applied.
The methodology applied takes account of the nature, facts and circumstances of the individual investment and uses
reasonable data, market input, assumptions and estimates in order to ascertain fair value. Methodologies are applied
consistently each year except where a change results in a better estimate of fair value.
Capital gains and losses on investments, whether realised or unrealised, are dealt with in the profit and loss and revaluation
reserves and movements in the period are shown in the Income Statement. All figures are shown net of any applicable
transaction costs incurred by the Company.
All investments are initially recognised and subsequently measured at fair value. Changes in fair value are recognised in the
Income Statement.
The key judgements for the Directors are in relation to identifying the most appropriate valuation methodologies for estimating
the fair value of unquoted investments. The most relevant methodologies applied are explained above.
A further key judgement made related to investments that are permanently impaired. Where the value of an investment has
fallen permanently below the price of recent investment, the loss is treated as a permanent impairment and a realised loss,
even though the investment is still held.
The key estimates involved in determining the fair value of a company can include:
- identifying a relevant basket of market comparables;
- deducing the discount to apply to those market comparables;
- determining maintainable earnings or revenues; or
- identifying surplus cash.
The methods of fair value measurement are classified into hierarchy based upon the reliabilty of the information used to
determine the valuation.
- Level 1 - Fair value is measured based upon quoted equity prices in an active market.
- Level 2 - Fair value is measured on directly observable current market prices or indirectly being derived from market prices.
- Level 3 - Fair value is measured using valuation techniques using inputs that are not based on observable market data.
65
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Financial Statements
Movements in investments during the year are summarised as follows:
Traded
on AIM
Level 1
Unquoted
equity shares
Level 3
Unquoted
preference
shares
Level 3
Unquoted
Loan Stock
Level 3 Total
£ £ £ £
Cost at 31 March 2022 551,090 19,279,388 1,649,045 8,155,689 29,635,212
Permanent impairment at 31 March 2022 - (1,790,358) (170) (139,050) (1,929,578)
Unrealised gains/(losses) at 31 March 2022 3,511,764 22,484,855 128,364 (1,669,495) 24,455,488
Valuation at 31 March 2022 4,062,854 39,973,885 1,777,239 6,347,144 52,161,122
Purchases at cost (Note b) - 2,704,018 435,808 183,300 3,323,126
Sale proceeds (Note b) - (2,862,112) (3,672,961) (1,521,232) (8,056,305)
Reclassification at value (Note d) (215,280) 862,720 (553,090) (94,350) -
Net realised gains on investments (Note a) - (3,116,676) 3,671,205 (830,871) (276,342)
Net unrealised (losses)/gains on investments
(Note c) (2,677,911) (5,869,867) 86,136 (674,620) (9,136,262)
Valuation at 31 March 2023 1,169,663 31,691,968 1,744,337 3,409,371 38,015,339
Cost at 31 March 2023 30,541 21,463,346 1,530,007 6,530,735 29,554,629
Permanent impairment at 31 March 2023 - (2,652,947) (170) (1,595,868) (4,248,985)
Unrealised gains/(losses) at 31 March 2023 1,139,122 12,881,569 214,500 (1,525,496) 12,709,695
Valuation at 31 March 2023 1,169,663 31,691,968 1,744,337 3,409,371 38,015,339
Net realised losses on investments of £276,342 together with net unrealised losses on investments of £9,136,262 equal net
investment portfolio losses of £9,412,604 shown on the Income Statement.
A breakdown of the increases and the decreases in unrealised valuations of the portfolio is shown in the Investment Portfolio
Summary on pages 24 to 26.
Major movements in investments
Note a) Disposals of investment portfolio companies during the year were:
Company Type
Investment
Cost
Disposal
Proceeds
Opening
Valuation
Net realised
gain/(loss)
in year
£ £ £ £
EOTH Limited (trading as Equip Outdoor
Technologies)*
Partial realisation 918 3,670,363 2,974,125 696,238
Tharstern Group Limited Realisation 789,815 1,548,431 1,191,908 356,523
Media Business Insight Holdings Limited Realisation 1,510,027 2,801,644 2,646,394 155,250
Veritek Global Holdings Limited Loan restructure 436,795 - - -
Oakheath Limited (dissolved) Liquidation 384,720 - - -
Prefcap Limited (dissolved) Liquidation 254,586 - - -
Jablite Holdings Limited (in liquidation) Loan repayment 26,848 37,110 37,110 -
RDL Corporation Limited Impairment - - 254,219 (254,219)
Spanish Restaurant Group Limited (trading
as Tapas Revolution) (in administration)
Impairment - - 574,893 (574,893)
Muller EV Limited (trading as Andersen EV)
(in administration)
Impairment - - 653,998 (653,998)
Other Transaction cost - (1,243) - (1,243)
3,403,709 8,056,305 8,332,647 (276,342)
* - Includes impact of permanent impairment of remaining equity holding which was converted to deferred shares with
nominal value in November 2022.
66
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Notes to the Financial Statements for the year ended 31 March 2023
Financial Statements
Note b) Purchases above of £3,323,126 are more than that shown in the Statement of Cash Flows of £3,201,926 by £121,200.
This is due to a further investment in Northern Bloc Ice Cream Limited for which funds were held as a debtor at the previous
year end, and was completed during the year. The sale proceeds shown above of £8,056,305 is £286 different to that shown
in the Statement of Cash Flows of £8,056,018 due to additional proceeds received in respect of the realisation of Tharstern
Group Limited.
Note c) The major components of the net decrease in unrealised valuations of £9,136,262 in the year were decreases of
£2,677,911 in Virgin Wines UK Plc (held via Rapunzel NewCo Limited), £1,237,857 in MyTutorWeb Limited (trading as MyTutor),
£1,124,527 in Manufacturing Services Investment Limited (trading as Wetsuit Outlet), £1,045,920 in End Ordinary Group
Limited (trading as Buster and Punch) and £851,332 in Connect Childcare. These decreases were partly offset by increases of
£268,070 in Master Removers Group (2019) Limited, £223,573 in Preservica Limited and £180,509 in Orri Limited.
Note d) The amount of £862,720 transferred to unquoted equity shares represents the conversion of the loans held in one
portfolio company into equity shares, one AIM company being delisted, and the reclassification of one company’s shares to
better reflect the nature of the instruments.
Note e) During the year, permanent impairments of the cost of investments have increased from £1,929,578 to £4,248,985.
The increase of £2,319,407 is due to the impairment of five companies of £2,958,773 offset by the removal of the cost of
£639,306 of two companies that were impaired in a previous year and liquidated in the year.
9 Significant interests
At 31 March 2023 the Company held significant investments, amounting to 3% or more of the equity capital of an undertaking,
in the following companies. The Company does not hold more than 20% in any of the companies.
Equity
investment
(Ordinary
Shares)
Investment
in loan
stock and
preference
shares
Total
investment
(at cost)
Percentage
of investee
company’s
total equity
% of equity
held by
all funds
advised by
Gresham
House
1
£ £ £
Preservica Limited 971,522 1,457,221 2,428,743 9.4% 57.9%
Bella & Duke Limited 2,062,146 - 2,062,146 10.2% 21.2%
My Tutorweb Limited (trading as MyTutor) 1,846,886 - 1,846,886 4.0% 22.6%
Manufacturing Services Investment
Limited (trading as Wetsuit Outlet)
858,496 858,496 1,716,992 4.7% 27.5%
Vivacity Labs Limited 1,467,160 - 1,467,160 5.7% 21.5%
Arkk Consulting Limited (trading as Arkk Solutions) 545,395 754,470 1,299,865 5.5% 30.1%
End Ordinary Group Limited (trading
as Buster and Punch)
1,231,510 - 1,231,510 6.4% 34.6%
Data Discovery Solutions Limited
(trading as Active Navigation)
1,207,040 - 1,207,040 6.6% 35.1%
Racoon International Group Limited 906,935 139,050 1,045,985 17.9% 47.5%
RDL Corporation Limited 173,932 826,068 1,000,000 8.9% 44.5%
CGI Creative Graphics International Limited 328,613 670,955 999,568 4.3% 26.9%
Spanish Restaurant Group Limited
(trading as Tapas Revolution)
315,896 631,749 947,645 5.2% 29.0%
Rota Geek Limited 733,200 183,300 916,500 3.9% 20.5%
Connect Childcare Group Limited 414,219 414,200 828,419 3.0% 14.4%
Bleach London Holdings Limited 822,715 - 822,715 3.5% 14.9%
Muller EV Limited (trading as
Andersen EV) (in liquidation)
653,998 - 653,998 9.8% 38.7%
Legatics Holdings Limited 605,374 - 605,374 5.5% 27.3%
Pet's Kitchen Limited (trading as Vets' Klinic) 320,960 240,720 561,680 4.0% 20.0%
IPV Limited 535,459 - 535,459 4.8% 26.6%
Veritek Global Holdings Limited 26,001 504,984 530,985 7.0% 63.4%
Caledonian Leisure Limited 313,507 209,002 522,509 6.3% 30.0%
Northern Bloc Ice Cream Limited 424,200 - 424,200 6.3% 28.0%
Jablite Holdings Limited (in members’
voluntary liquidation)
254,380 170 254,550 6.8% 6.8%
Master Removers Group 2019 Limited
(trading as Anthony Ward Thomas,
Bishopsgate and Aussie Man & Van)
251,763 - 251,763 4.8% 28.0%
Virgin Wines UK plc
2
30,541 - 30,541 5.5% 41.5%
67
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Financial Statements
1
- The percentage of equity held for these companies is the fully diluted figure if, in the event that, management of the investee company
exercises share options, where available.
2
- The proportion of equity held by the Mobeus VCTs is 36.1%. 5.4% is held by other funds held by Gresham House Asset Management.
It is considered that, under FRS102 s9.9, “Consolidated and Separate Financial Statements”, the above investments are held
as part of an investment portfolio and that accordingly, their value to the Company lies in their marketable value as part of
that portfolio and as such are not required to be consolidated. Also, the above investments are considered to be held as part
of an investment portfolio and are accounted for in accordance with FRS102 14.4B.
All of the above companies are incorporated in the United Kingdom.
10 Debtors
2023 2022
£ £
Amounts due within one year:
Accrued income 161,074 122,391
Prepayments 10,807 17,195
Other debtors 286 121,200
172,167 260,786
11 Current asset investments and Cash at bank
Cash equivalents, for the purposes of the Statement of Cash Flows, comprises bank deposits. Current asset investments
are funds held in OEIC money-market funds and are disposable without curtailing or disrupting the business and are
readily convertible into known amounts of cash at their carrying values at immediate notice. Cash, for the purposes of the
Statement of Cash Flows is cash held with banks in accounts subject to immediate access. Cash at bank in the Balance
Sheet is the same.
2023 2022
£ £
OEIC Money market funds (Cash equivalents per Statement of Cash Flows) 28,611,496 23,458,496
Current asset investments 28,611,496 23,458,496
Cash at bank 3,901,408 2,801,008
12 Creditors: amounts falling due within one year
2023 2022
£ £
Trade creditors 8,158 11,934
Accruals 265,695 1,163,496
273,853 1,175,430
68
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Notes to the Financial Statements for the year ended 31 March 2023
Financial Statements
13 Called up share capital
2023 2022
£ £
Allotted, called-up and fully paid:
Ordinary shares of 1p each: 98,437,045 (2022: 80,426,321) 984,370 804,263
Purchased Date of purchase Nominal value
£
314,695 18 August 2022 3,147
89,495 23 September 2022 895
219,022 07 October 2022 2,190
668,525 10 January 2023 6,685
125,000 02 March 2023 1,250
48,219 28 March 2023 483
1,464,956 14,650
Under the Offer for Subscription launched on 17 October 2022 9,693,240 ordinary shares were allotted on 24 November
2022 at an average effective offer price of 82.54 pence per share, raising net funds of £7,711,345, and 9,782,440 ordinary
shares were allotted on 6 February 2023 at an average effective offer price of 81.64 pence per share, raising net funds of
£7,699,164.
During the year the Company repurchased 1,464,956 (2022: 697,498) of its own ordinary shares (representing 1.8% (2022:
1.0%) of the ordinary shares in issue at the start of the year) at the prevailing market price for a total cost of £1,147,478 (2022:
£643,810). These shares were subsequently cancelled by the Company. This figure differs to that shown in the Statement of
Cash Flow of £1,146,883 by £595 which is due to the stamp duty paid shortly after the year end.
14 Basic and diluted net asset value per share
As at
31 March 2023
As at
31 March 2022
Net assets £70,426,557 £77,505,982
Number of ordinary shares in issue 98,437,045 80,426,321
Net asset value per share (pence) 71.54p 96.37p
15 Financial instruments
The Company’s financial instruments predominantly comprise investments held at fair value through profit and loss, namely
equity and preference shares and fixed and floating rate interest securities that are held in accordance with the Company’s
investment objective.
Other financial instruments are held at amortised cost comprising loans and receivables being Cash at bank, Current asset
investments and short term debtors and financial liabilities being creditors, all that arise directly from the Company’s
operations.
The principal purpose of these financial instruments is to generate revenue and capital appreciation for the Company’s
operations, although cash and current asset investments are held to yield revenue return only. The Company has no
gearing or other financial liabilities apart from short-term creditors. It is, and has been throughout the year under review,
the Company’s policy that no trading in derivative financial instruments shall be undertaken.
The accounting policy for determining the fair value of investments is set out in Note 8 to the Financial Statements. The
composition of investments held is shown below and in Note 8.
Loans and receivables such as cash at bank and current asset investments, and other financial liabilities are stated at
amortised cost which the Directors consider is equivalent to fair value.
69
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Financial Statements
Classification of financial instruments
The Company held the following categories of financial instruments at 31 March 2023:
2023 2022
(Fair value) (Fair value)
£ £
Assets at fair value through profit and loss:
Investment portfolio 38,015,339 52,161,122
Other basic financial assets held at amortised cost
Current asset investments 28,611,496 23,458,496
Cash at bank 3,901,408 2,801,008
Accrued income 161,074 122,391
Other debtors 286 121,200
Financial liabilities held at amortised cost
Other creditors (273,853) (1,175,430)
Total for financial instruments 70,415,750 77,488,787
Non financial instruments 10,807 17,195
Net assets 70,426,557 77,505,982
There are no differences between book value and fair value as disclosed above.
The investment portfolio principally consists of unquoted investments – 96.9% (2022: 92.2%) and AIM quoted stocks – 3.1%
(2022: 7.8%). The investment portfolio has a 100.0% (2022: 100.0%) concentration of risk towards small UK based, sterling
denominated companies, and represents 54.0% (2022: 67.3%) of net assets at the year-end.
Current asset investments are money market funds and bank deposits which, along with Cash at bank are discussed under
credit risk below, which represent 46.2% (2022: 33.9%) of net assets at the year-end.
The main risks arising from the Company’s financial instruments are the investment risk and the liquidity risk of the unquoted
and quoted portfolio. Other important risks are credit risk, fluctuations in market prices (market price risk), and cash flow
interest rate risk, although currency risk is also discussed overleaf. The Board regularly reviews and agrees policies for
managing each of these risks and they are summarised overleaf. These have been in place throughout the current and
preceding years.
Investment risk
The Company’s investment portfolio is made up of predominantly UK companies which are not quoted on any recognised
stock exchange. One asset is AIM listed representing 3.1% of the portfolio value at the year end. The companies held in the
portfolio are usually smaller than those which are quoted on the main market of the London Stock Exchange. They are
therefore usually regarded as carrying more risk compared to larger companies, as they are more sensitive to changes in key
financial indicators, such as a reduction in its turnover or an increase in costs. The Board is of the view that the Investment
Adviser mitigates this risk as the investment in an investee company is held as part of a portfolio of such companies so that
the performance of one company does not significantly affect the value of the portfolio as a whole. The Investment Adviser
also usually takes a seat on the Board of each investee company such that it is able to monitor its progress on a regular basis
and contribute to the strategic direction of the company.
Liquidity risk
The investments in equity and fixed interest stocks of unquoted companies that the Company holds are not traded, and
therefore they are not readily realisable. In the case of the Company’s quoted portfolio, the shares of these companies are
thinly traded and as such the prices are more volatile than those of more widely traded securities. The ability of the Company
to realise the investments at their carrying value may at times not be possible if there are no willing purchasers and, as the
Company owns minority stakes, could require a number of months and the co-operation of other shareholders to achieve at
a reasonable valuation. The Company’s ability to sell investments may also be constrained by the requirements set down for
VCTs. The maturity profile of the Company’s loan stock investments disclosed within the consideration of credit risk below
indicates that these assets are also not readily realisable until dates up to five years from the year-end.
To counter these risks to the Company’s liquidity, the Investment Adviser maintains sufficient cash and money market funds
to meet running costs and other commitments. The Company invests its surplus funds in high quality money market funds
and bank deposits of £32,512,904 (2022: £26,259,504) which are all accessible at varying points over the next 12 months.
The Board also receives regular cash flow projections in order to manage this liquidity risk.
70
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Notes to the Financial Statements for the year ended 31 March 2023
Financial Statements
The table below shows a maturity analysis of financial liabilities:
2023
<3 months 3-6 months 6-12 months over 12 months Total
Financial liabilities £ £ £ £ £
Other creditors 134,755 139,098 - - 273,853
2022
<3 months 3-6 months 6-12 months over 12 months Total
Financial liabilities £ £ £ £ £
Other creditors 91,405 1,084,025 - - 1,175,430
The Company does not have any derivative financial liabilities.
Credit risk
Credit risk is the risk that a counterparty will fail to discharge an obligation or commitment that it has entered into with the
Company.
The Company’s maximum exposure to credit risk is:
2023
£
2022
£
Loan stock investments 3,409,371 6,347,144
Preference shares 1,744,337 1,777,239
Current asset investments 28,611,496 23,458,496
Accrued income 161,074 122,391
Other debtors 286 121,200
Cash at bank 3,901,408 2,801,008
37,827,972 34,627,478
The Company has an exposure to credit risk in respect of the loan stock investments it has made into investee companies,
most of which have no security attached to them, and in a minority of cases, such security ranks beneath any bank debt that
an investee company may owe. The loan stock is held in companies with turnover under £50 million, which may be considered
less stable than larger, longer established businesses. The Investment Adviser undertakes extensive financial and commercial
due diligence before recommending an investment to the Board. The Investment Adviser usually takes a seat on the Board of
each investee company and the Board of the VCT receives regular updates on each company at each quarter end.
The accrued income shown above of £161,074 was all due within six months of the year-end.
The following table shows the maturity of the loan stock investments referred to above. In some cases, the loan maturities are
not the contractual ones, but are the best estimate using management’s expectations of when it is likely that such loans may
be repaid.
Repayable within
2023
£
2022
£
0 to 1 year 1,161,884 836,849
1 to 2 years 799,739 2,795,761
2 to 3 years 858,120 706,399
3 to 4 years 406,328 1,304,194
4 to 5 years 183,300 494,939
> 5 years - 209,002
Total 3,409,371 6,347,144
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Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Financial Statements
Included within loan stock investments above are loans at a carrying value of £1,046,755 which are past their repayment date
but have been renegotiated. These loan stock investments are made as part of the qualifying investments within the
investment portfolio, and the risk management processes applied to the loan stock investments have already been set out
under market price risk below.
An aged analysis of the loan stock investments included above, which are past due but not individually impaired, is set out
below. For this purpose, these loans are considered to be past due when any payment due date under the loan’s contractual
terms (such as payment of interest or redemption date) is received late or missed. We are required to report in this format and
include the full value of the loan even though, in some cases it is only in respect of interest that they are in default.
0-6 months 6-12 months over 12 months
2023
Total
£ £ £ £
Loans to investee companies past due - - 838,002 838,002
0-6 months 6-12 months over 12 months
2022
Total
£ £ £ £
Loans to investee companies past due - - 1,256,736 1,256,736
Credit risk also arises from cash and cash equivalents, deposits with banks and amounts held in liquidity funds. There is a risk
of liquidity fund defaults such that there could be defaults within their underlying portfolios that could affect the values at
which the Company could sell its holdings. As the four OEIC money market funds holding £28,611,496 (2022: £23,458,496)
are all triple A rated funds, along with bank deposits of £3,901,408 (2022: £2,801,008) at two well-known financial institutions
with a minimum credit rating of A2, credit risk is considered to be relatively low in current circumstances. The Board manages
credit risk in respect of these money market funds and cash by ensuring a spread of such investments such that none should
exceed 15% of the Company’s total investment assets. The Company’s current account included within the bank deposit
figure above is held with NatWest Bank plc, so the risk of default is low.
There could also be a failure by counter parties to deliver securities which the Company has paid for, or pay for securities
which the Company has delivered. This risk is considered to be small as most of the Company’s investment transactions are
in unquoted investments, where investments are conducted through solicitors, to ensure that payment matches delivery. In
respect of any quoted investment transactions that are undertaken, the Company uses brokers with a high credit quality, and
these trades usually have a short settlement period. Accordingly, counterparty risk is considered to be relatively low.
Market price risk
Market price risk arises from uncertainty about the future valuations of the unquoted portfolio held in accordance with the
Company’s investment objectives. These future valuations are determined by many factors but include the operational and
financial performance of the underlying investee companies (Investment risk), as well as market perceptions of the future
performance of the UK economy and its impact upon the economic environment in which these companies operate. This risk
represents the potential loss that the Company might suffer through holding its investment portfolio in the face of market
movements, which was a maximum of £38,015,339 (2022: £52,161,122) at the year-end, representing the fair value of the
investment portfolio.
The investments in equity and fixed interest stocks of unquoted companies that the Company holds are not traded and as
such the prices are more uncertain than those of more widely traded securities. As, in a number of cases, the unquoted
investments are valued by reference to price earnings ratios prevailing in quoted comparable sectors (discounted for points
of difference from quoted comparators), their valuations are exposed to changes in the price earnings ratios that exist in the
quoted markets.
The Board’s strategy in managing the market price risk inherent in the Company’s portfolio of equities and loan stock
investments is determined by the requirement to meet the Company’s Objective, as set out on page 7 in the Strategic Report.
As part of the investment management process, the Board seeks to maintain an appropriate spread of market risk, and also
has full and timely access to relevant information from the Investment Adviser. No single investment is permitted to exceed
15% of total investment assets at the point of investment. The Investment Committee meets regularly and reviews the
investment performance and financial results, as well as compliance with the Company’s objectives. The Company does not
use derivative instruments to hedge against market risk.
72
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Notes to the Financial Statements for the year ended 31 March 2023
Financial Statements
Market price risk sensitivity
The Board believes that the Company’s assets are mainly exposed to market price risk, as the Company is required to hold
most of its assets in the form of sterling denominated investments in small companies.
Although a small proportion of these assets are quoted on AIM, the majority of these assets are unquoted. All of the
investments made by the Investment Adviser in unquoted companies, irrespective of the instruments the Company actually
holds, (whether shares, preference shares or loan stock) carry a full market risk, even though some of the loan stocks may be
secured on assets, but behind any prior ranking bank debt in the investee company.
The Board considers that the value of investments in equity and loan stock instruments are ultimately sensitive to changes in
their trading performance (discussed under investment risk above) and to changes in quoted share prices, insofar as such
changes eventually affect the estimated enterprise value of the portfolio’s unquoted companies. The table below shows the
impact on profit and net assets if there were to be a 20% (2022: 20%) movement in overall share prices, and has used a 20%
change in the quoted market comparator multiple as a proxy for this.
The sensitivity analysis below assumes the actual portfolio of investments held by the Company is perfectly correlated to this
overall movement in share prices. However, Shareholders should note that this level of correlation is unlikely to be the case
in reality, particularly in the case small, unquoted companies which may have other factors which may influence the extent of
the valuation change, e.g. a strong niche brand may limit the valuation fall compares to comparators, or may be more affected
by external market factors than larger companies.
For each of the companies in the investment portfolio that are valued on a multiple basis, the calculation below has applied
plus and minus 20% to the multiple (such as earnings or revenue) derived from quoted market comparators that are used to
value the companies. The companies valued on a multiple basis represent £34.39 million of the total investment portfolio of
£38.02 million. The remainder of the portfolio, valued at net asset value, has had a 20% variance applied. The impact of both
calculations is shown below.
The impact of a change of 20% (2022: 20%) has been selected as this is considered reasonable given the level of volatility
observed both on a historical basis and market expectations for future movement.
Valuation Technique Base Case* Change in input
Change in fair value
of investments
(£’000)
Change in NAV
(pence per share)
Revenue Multiple 2.11 +20% 4,249 4.32
–20% (3,869) (3.93)
EBITDA Multiple 5.45 +20% 1,270 1.29
–20% (692) (0.70)
Bid price - +20% 234 0.24
–20% (234) (0.24)
Recent Investment Price - - - -
* As detailed in the accounting policies, the base case is based on market comparables, discounted where appropriate for
marketability, in accordance with the IPEV guidelines.
Cash flow interest rate risk
The Company’s fixed and floating rate interest securities, its equity and preference equity investments and net revenue may
be affected by interest rate movements. Investments are often in relatively small businesses, which are relatively high risk
investments sensitive to interest rate fluctuations.
Due to the short time to maturity of some of the Company’s floating rate investments, it may not be possible to re-invest in
assets which provide the same rates as those currently held.
The Company’s assets include fixed and floating rate interest instruments, as shown below. The rate of interest earned is
regularly reviewed by the Board, as part of the risk management processes applied to these instruments, already disclosed
under market price risk above.
73
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Financial Statements
The interest rate profile of the Company’s financial net assets at 31 March 2023 was:
Financial
net assets
on which no
interest paid
Fixed rate
financial
assets
Variable rate
financial
assets Total
Weighted
average
interest rate
Average
period to
maturity
£ £ £ £ % (years)
Equity shares 32,861,631 - - 32,861,631
Preference shares - 1,744,337 - 1,744,337 6.6 4.3
Loan stocks - 3,409,371 - 3,409,371 6.5 1.9
Current asset investments - - 28,611,496 28,611,496 3.5
Cash at bank - - 3,901,408 3,901,408 1.0
Debtors 161,360 - - 161,360
Creditors (273,853) - - (273,853)
Total for financial
instruments 32,749,138 5,153,708 32,512,904 70,415,750
Non-financial instruments 10,807 - - 10,807
Total net assets 32,759,945 5,153,708 32,512,904 70,426,557
The interest rate profile of the Company’s financial net assets at 31 March 2022 was:
Financial
net assets
on which no
interest paid
Fixed rate
financial
assets
Variable rate
financial
assets Total
Weighted
average
interest rate
Average
period to
maturity
£ £ £ £ % (years)
Equity shares 44,036,739 - - 44,036,739
Preference shares - 1,777,239 - 1,777,239 0.0 3.3
Loan stocks - 6,347,144 - 6,347,144 10.2 2.3
Current asset investments - - 23,458,496 23,458,496 0.5
Cash at bank - - 2,801,008 2,801,008 0.0
Debtors 243,591 - - 243,591
Creditors (1,175,430) - - (1,175,430)
Total for financial
instruments 43,104,900 8,124,383 26,259,504 77,488,787
Non-financial instruments 17,195 - - 17,195
Total net assets 43,122,095 8,124,383 26,259,504 77,505,982
Note: Weighted average interest rates above are derived by calculating the expected annual income that would be earned
on each asset (but only for those sums that are currently regarded as collectible and would therefore be recognised), divided
by the values for each asset class at the balance sheet date.
Floating rate cash earns interest based on SONIA rates.
The Company’s investments in equity shares and similar instruments have been excluded from the interest rate risk profile as
they have no maturity date and would thus distort the weighted average period information.
74
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Notes to the Financial Statements for the year ended 31 March 2023
Financial Statements
Cash flow interest rate sensitivity
Although the Company holds investments in loan stocks that pay interest, the Board does not consider it appropriate to
assess the impact of interest rate changes in isolation upon the value of the unquoted investment portfolio, as interest rate
changes are only one factor affecting the market price movements that are discussed above under market price risk.
However, as the Company has a substantial proportion of its assets in cash and money market funds, the table below shows
the sensitivity of income earned to changes in interest rates in these instruments:
2023
£
Profit and
net assets
2022
£
Profit and
net assets
If interest rates rose/fell by 5% (2022:2%), with all other
variables held constant – increase/(decrease) 1,316,296 / (1,316,296) 425,404 / (425,404)
Increase/(decrease) in earnings, and net asset
value, per ordinary share (in pence) 1.34p / (1.34p) 0.53p / (0.53p)
Currency risk
All assets and liabilities are denominated in sterling and therefore there is no currency risk, although a number of investee
companies do trade overseas, so do face some exposure to currency risk in their operations.
Fair value hierarchy
The tables below sets out fair value measurements using FRS 102 s11.27 fair value hierarchy.
Financial assets at fair value through profit and loss
At 31 March 2023
Level 1 Level 2 Level 3 Total
£ £ £ £
Equity investments 1,169,663 - 31,691,968 32,861,631
Preference shares - - 1,744,337 1,744,337
Loan stock investments - - 3,409,371 3,409,371
Total 1,169,663 - 36,845,676 38,015,339
Financial assets at fair value through profit and loss
At 31 March 2022
Level 1 Level 2 Level 3 Total
£ £ £ £
Equity investments 4,062,854 - 39,973,885 44,036,739
Preference shares - - 1,777,239 1,777,239
Loan stock investments - - 6,347,144 6,347,144
Total 4,062,854 - 48,098,268 52,161,122
There are currently no financial liabilities at fair value through profit and loss.
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair
value measurement of the relevant asset as follows:
Level 1 – valued using quoted prices in active markets for identical assets
Level 2 – valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1.
Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data.
The valuation techniques used by the Company are explained in the accounting policies in Note 8.
75
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Financial Statements
A reconciliation of fair value measurements is set out below:
Equity
investments
Preference
shares
Loan stock
investments Total
£ £ £ £
Opening balance at 1 April 2022 39,973,885 1,777,239 6,347,144 48,098,268
Purchases 2,704,018 435,808 183,300 3,323,126
Sales (2,862,112) (3,672,961) (1,521,232) (8,056,305)
Transfers into Level 3 215,280 - - 215,280
Reclassification at value 647,440 (553,090) (94,350) -
Total gains included in Income Statement:
- on assets sold (3,116,676) 3,671,205 (830,871) (276,342)
- on assets held at the year-end (5,869,867) 86,136 (674,620) (6,458,351)
Closing balance at 31 March 2023 31,691,968 1,744,337 3,409,371 36,845,676
As detailed in the accounting policy for Note 8, where investments are valued on an earnings-multiple basis, the main
input used for this basis of valuation is a suitable price-earnings ratio taken from a comparable sector on the quoted
market, which is then appropriately adjusted for points of difference. Thus any change in share prices can have a
significant effect on the fair value measurements of the Level 3 investments, as they may not be wholly offset by the
adjustment for points of difference.
Level 3 unquoted equity and loan stock investments are valued in accordance with the IPEV guidelines as follows:
2023 2022
£ £
Investment methodology
Multiple of earnings, revenues or gross margin, as appropriate 34,389,983 47,124,658
Recent investment price subsequently calculated as appropriate 1,623,662 936,500
Cost less amortisation 799,739 -
Average price 32,292 -
Estimated realisation proceeds - 37,110
36,845,676 48,098,268
The unquoted equity investments had the following movements between valuation methodologies between 31 March 2022
and 31 March 2023:
Change in investment
methodology (2022 to 2023)
Carrying value as at
31 March 2023
£ Explanatory note
Multiple basis to net cost less amortisation 799,739 Cost less amortisation is a more appropriate basis for
determining fair value.
The valuation will be the most appropriate valuation methodology for an investment within its market, with regard to the
financial health of the investment and the December 2022 IPEV guidelines.The Directors believe that, within these
parameters, these are the most appropriate methods of valuation which would be reasonable as at 31 March 2023.
76
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Notes to the Financial Statements for the year ended 31 March 2023
Financial Statements
16 Management of capital
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern, so
that it can continue to provide returns for Shareholders and to provide an adequate return to Shareholders by allocating its
capital to assets commensurate with the level of risk.
By its nature, the Company has an amount of capital, at least 80% (as measured under the tax legislation) of which is and must
be, and remain, invested in the relatively high risk asset class of small UK companies within three years of that capital being
subscribed. The Company accordingly has limited scope to manage its capital structure in the light of changes in economic
conditions and the risk characteristics of the underlying assets. Subject to this overall constraint upon changing the capital
structure, the Board may adjust the amount of dividends paid to Shareholders, return capital to Shareholders, issue new
shares, or sell assets if so required to maintain a level of liquidity to remain a going concern.
Although, as the Investment Policy implies, the Board would consider levels of gearing, there are no current plans to do so. It
regards the net assets of the Company as the Company’s capital, as the level of liabilities are small and the management of
them is not directly related to managing the return to shareholders. There has been no change in this approach from the
previous year.
17 Segmental analysis
The operations of the Company are wholly in the United Kingdom, from one class of business.
18 Post balance sheet events
On 3 May 2023, a new investment of £0.39 million was made into Dayrize B.V.
On 4 July 2023, a follow on investment of £0.30 million was made into Legatics Holdings Limited.
On 20 June 2023 by order of the Court, the share premium account and capital redemption reserve of the Company was
reduced (as approved at the General Meeting of the Company held on 12 October 2022) and has been transferred to a
special distributable reserve.
77
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Shareholder Information
Communication with Shareholders
We aim to communicate regularly with our Shareholders. The annual general meetings provide a useful platform for the Board to
meet Shareholders and exchange views and we are pleased to invite Shareholders to attend the Annual General Meeting of the
Company in September to give you the opportunity to meet the Directors and representatives of the Investment Adviser. We will
also offer a facility whereby you can view the Board, the Investment Adviser’s presentation and submit questions remotely via
live stream. The Company releases Interim Management Statements in respect of those quarters where it does not publish
interim or full year accounts via the London Stock Exchange RNS service. Gresham House was pleased present the Company’s
second virtual Shareholder event on 23 March 2023.
Shareholders wishing to follow the Company’s progress can visit its website at www.mig2vct.co.uk. The website includes
up-to-date details on fund performance and dividends as well as publicly available information on the Company’s portfolio of
investments and copies of company reports. There is also a link to the London Stock Exchange’s website at:
www.londonstockexchange.com, where Shareholders can obtain details of the share price and latest NAV announcements, etc.
Financial calendar
23 March 2023 Virtual Shareholder Event
12 July 2023 Announcement of Annual Results and circulation of Annual Report & Financial Statements for the
year ended 31 March 2023 to Shareholders
13 September 2023 Annual General Meeting
December 2023 Announcement of Interim Results and circulation of Interim Report for the six months ended
30 September 2023 to Shareholders
31 March 2024 Year-end
TBC 2024 Shareholder Event
Gresham House website
Shareholders can check the performance of the VCT by visiting the Investment Adviser’s website at www.greshamhouse.com.
This is regularly updated with information on your investment including case studies of portfolio companies.
The website includes relevant Shareholder literature, including previous Annual and Interim Reports and the Company’s Key
Information Document (“KID”) - Investors should note that the process for compiling the KID are prescribed by EU law and the
Company has no discretion over the format or content of the document. The illustrated performance returns in the KID cannot be
guaranteed and may not reflect figures for the Company derived using other methods. Accordingly, the Board recommends that
investors also take account of information from other sources, including the Annual Reports.
Annual General Meeting
The Company’s next Annual General Meeting will be held on Wednesday, 13 September 2023 at 11.00 am at the offices of
Shakespeare Martineau LLP, 6th Floor, 60 Gracechurch Street, London EC3V 0HR. Shareholders will also be able to view the
meeting remotely by registering for access to a web stream link which can be found on the Company’s website at
www.mig2vct.co.uk. Shareholders will be able to vote on a show of hands and the meeting. Those Shareholders will also be able
to submit questions to the Board in advance of the meeting using the AGM@greshamhouse.com email address. Shareholders
attending virtually will not be able to vote at the meeting and therefore you are encouraged to lodge your proxy form, which is
included with Shareholders’ copies of this Annual Report, or online at www.signalshares.com before 11 September 2023 at
11.00 am for your votes to be valid. A copy of the Notice of the Meeting is included on pages 82 to 84.
Dividends
Shareholders who wish to have dividends paid directly into their bank account, rather than sent by cheque to their registered
address, can complete a mandate for this purpose. Mandates can be obtained by contacting the Company’s Registrar, Link
Group, at the address given on page 86 or by completing the mandate form via www.mobeusvcts.co.uk under the ‘How can I
update my address details/dividend bank mandate’ tab and returning the form to the Registrar.
Shareholders are encouraged to ensure that the Registrar maintains up-to-date details for their account and to check
whether they have received all dividend payments. This is particularly important if a Shareholder has recently changed
address or changed their bank. We are aware that a number of dividends remain unclaimed by Shareholders and whilst we
will endeavour to contact them if this is the case, we cannot guarantee that we will be able to do so if the Registrar does not
have an up-to-date postal or email address.
Information for Shareholders
Information for
Shareholders
78
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Information for
Shareholders
Selling your shares
The Company’s Shares are listed on the London Stock Exchange and as such they can be sold in the same way as any other
quoted company through a stockbroker. Shareholders are also advised to discuss their individual tax position with their financial
advisor before deciding to sell their shares.
The Company is unable to buy back shares direct from Shareholders, so you will need to use a stockbroker to sell your shares. If
you are considering selling your shares or trading in the secondary market, please contact the Company’s Corporate Broker,
Panmure Gordon (UK) Limited (“Panmure”). Panmure is able to provide details of close periods (when the Company is prohibited
from buying in shares) and details of the price at which the Company has bought in shares.
Panmure can be contacted as follows:
Chris Lloyd 0207 886 2716 chris.lloyd@panmure.com
Paul Nolan 0207 886 2717 paul.nolan@panmure.com
Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”)
Tax legislation was introduced with effect from 1 January 2016 under the Organisation for Economic Co-operation and
Development Common Reporting Standard for Automatic Exchange of Financial Account Information. The legislation requires
investment trust companies to provide personal information to HMRC on certain investors who purchase shares. As an affected
entity, the Company has to provide information annually to HMRC relating to a number of non-UK based certificated
Shareholders who are deemed to be resident for tax purposes in any of the 90 plus countries who have joined CRS. All new
Shareholders, excluding those whose shares are held in CREST, entered onto the share register from 1 January 2016 will be
asked to provide the relevant information. Additionally, HMRC’s policy on FATCA now means that, as a result of the restricted
secondary market in VCT shares, the Company’s shares are not considered to be “regularly traded”. The Company is therefore
also an affected entity for the purposes of this legislation and so has to provide information annually to HMRC relating to
Shareholders who are resident for tax purposes in the United States.
For further information, please see HMRC’s Quick Guide: Automatic Exchange of Information – information for account holders:
https://www.gov.uk/government /publications/exchange-of-information-account-holders.
Managing your shareholding online
For details on your individual shareholding and to manage your account online, Shareholders may log into or register with the
Link Group Shareholder Portal at: www.signalshares.com. You can use the Shareholder Portal to change and update your
preferences including changing your address details, check your holding balance and transactions, view the dividends you have
received, add and amend your bank details and manage how you receive communications from the Company.
Fraud Warning
Boiler Room fraud and unsolicited communications to Shareholders
We are aware of Shareholders being contacted in connection with sophisticated but fraudulent financial scams which purport to
come from the Company or to be authorised by it. This is often by a phone call or an email usually originating from outside of the
UK, often claiming or appearing to be from a corporate finance firm offering to buy your VCT shares at an inflated price.
Further information on boiler room scams and fraud advice plus who to contact, can be found first in the answer to a question
“What should I do if I receive an unsolicited offer for my shares?” within the VCT Investor area of the Investment Adviser’s website
in the A Guide to VCTs section: www.mobeusvcts.co.uk and secondly, in a link to the FCA’s ScamSmart site: www.fca.org.uk/
scamsmart
We strongly recommend that you seek financial advice before taking any action if you remain in any doubt. You can also contact
the Investment Adviser on 0207 382 0999, or email mobeusvcts@greshamhouse.com to check whether any claims made by a
caller are genuine.
Shareholders are also encouraged to ensure their personal data is always held securely and that data held by the Registrar of
the Company is up to date, to avoid cases of identity fraud.
Shareholder enquiries
For enquiries concerning the investment portfolio or the Company in general, please contact the Investment Adviser, Gresham
House Asset Management Limited. To contact the Chair or any member of the Board, please contact the Company Secretary,
also Gresham House, in the first instance.
The Registrar, Link Group, may be contacted via their Shareholder portal, post or telephone for queries relating to your
shareholding or dividend payments, dividend mandate forms, change of address etc.
Full contact details for each of Gresham House and Link Group are included under Corporate Information on page 86 of this
Annual Report.
Shareholder Information
79
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Information for
Shareholders
Performance Data at 31 March 2023
The two former ‘C’ and Ordinary classes of shares were merged on 10 September 2010, and the ‘C’ share class redesignated as
Ordinary Shares. The following tables show, for all investors in the former share classes and in the more recent fundraisings, how
their investments have performed since they were originally allotted shares in each fundraising.
Total return data, which includes cumulative dividends paid to date, is shown on both a share price and NAV basis as at 31 March
2023. The NAV basis enables Shareholders to evaluate more clearly the performance of the Investment Adviser, as it reflects the
underlying value of the portfolio at the reporting date. This is the most widely used measure of performance in the VCT sector.
Ordinary Share Fund
Share price as at 31 March 2023 68.50p
1
NAV per share as at 31 March 2023 71.54p
Total return per share to
Shareholders since allotment
Allotment date(s)
Allotment
price
Net allotment
price
2
Cumulative
dividends
paid
per share
3
% Change
since
31 March 2022
(Share
price basis)
(NAV
basis)
(NAV
basis)
(p) (p) (p) (p) (p)
Funds raised 2005/06
Between 5 January 2006 and 5 April
2006 100.00 60.00 147.00 215.50 218.54 (5.1)%
Funds raised 2008/09
Between 3 April 2009 and 5 May 2009 92.39 64.67 143.00 211.50 214.54 (5.2)%
Funds raised 2013/14
9 January 2014 117.92
4
82.54 129.00 197.50 200.54 (5.6)%
11 February 2014 118.22
4
82.75 129.00 197.50 200.54 (5.6)%
31 March 2014 119.28
4
83.49 124.00 192.50 195.54 (5.7)%
3 April 2014 119.82
4
83.87 124.00 192.50 195.54 (5.7)%
4 April 2014 119.08
4
83.36 124.00 192.50 195.54 (5.7)%
6 June 2014 118.66
4
83.06 124.00 192.50 195.54 (5.7)%
Funds raised 2014/15
14 January 2015 118.44
4
82.91 110.00 178.50 181.54 (6.1)%
17 February 2015 124.35
4
87.05 110.00 178.50 181.54 (6.1)%
10 March 2015 120.18
4
84.13 105.00 173.50 176.54 (6.3)%
Funds raised 2017/2018
28 September 2017 104.73
4
73.31 78.00 146.50 149.54 (7.3)%
20 October 2017 105.07
4
73.55 78.00 146.50 149.54 (7.3)%
09 November 2017 105.79
4
74.05 78.00 146.50 149.54 (7.3)%
20 November 2017 107.44
4
75.21 78.00 146.50 149.54 (7.3)%
21 November 2017 107.39
4
75.17 78.00 146.50 149.54 (7.3)%
24 January 2018 97.81
4
68.47 69.00 137.50 140.54 (7.8)%
13 March 2018 100.79
4
70.55 69.00 137.50 140.54 (7.8)%
Funds raised 2019/20
8 January 2020 93.03
4
65.12 49.00 117.50 120.54 (8.9)%
2 April 2020 77.26
4
54.08 38.00 106.50 109.54 (9.7)%
Funds raised 2021/2022
9 March 2022 95.01
4
66.51 13.00 81.50 84.54 (12.3)%
Funds raised 2022/23
16 November 2022 82.54
4
57.78 7.00 75.50 78.54 -
8 February 2023 81.64
4
57.15 7.00 75.50 78.54 -
1 -
Source: Panmure Gordon & Co (mid-price basis) based upon the latest NAV announced of 71.70p at 31 December 2022 adjusted for
dividends paid since.
2 -
Net allotment price is the allotment price less applicable income tax relief. The tax relief was 20% up to 5 April 2004, 40% from 6 April
2004 to 5 April 2006, and 30% thereafter.
3 -
For derivation, see table on following page.
4 -
Average effective offer price.
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Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Information for
Shareholders
Former Ordinary Share Fund
Share price as at 31 March 2023 56.65p
NAV per share as at 31 March 2023 56.16p
Shareholders in the former Ordinary Share Fund received 0.827 shares in the Company for each former Ordinary share that they
held on 10 September 2010, when the two share classes merged. Both the share price and the NAV per share shown above have
been adjusted using this merger ratio.
Total return per share to
Shareholders since allotment
Allotment date(s)
Allotment
price
Net allotment
price
1
Cumulative
dividends
paid
per share
2
% Change
since 31
March 2022
(Share
price basis)
(NAV
basis)
(NAV
basis)
(p) (p) (p) (p) (p)
Funds raised 2000/01
3
Between 30 May 2000 and 11 December 2000 100.00 80.00 143.43 200.08 202.59 (4.6)%
1
- Net allotment price is the allotment price less applicable income tax relief. The tax relief was 20% up to 5 April 2004, 40% from 6 April 2004 to
5 April 2006, and 30% thereafter.
2
- For derivation, see table below.
3
- Investors in this fundraising may also have enhanced returns if they had also deferred capital gains tax liabilities.
Cumulative dividends paid per share
Funds
raised
2000/01
Funds
raised
2005/06
Funds
raised
2008/09
Funds
raised
2013/14
Funds
raised
2014/15
Funds
raised
2017/18
Funds
raised
2019/20
Funds
raised
2020/21
Funds
raised
2021/22
Funds
raised
2022/23
(p) (p) (p) (p) (p) (p) (p) (p) (p) (p)
30 March 2023 5.79 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00
7 November 2022 4.96 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
7 January 2022 9.92 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00
30 July 2021 4.96 6.00 6.00 6.00 6.00 6.00 6.00 6.00
19 June 2020 5.79 7.00 7.00 7.00 7.00 7.00 7.00 7.00
27 March 2020 9.10
1
11.00 11.00 11.00 11.00 11.00 11.00
20 September 2019 12.41
1
15.00 15.00 15.00 15.00 15.00
22 March 2019 4.14
1
5.00 5.00 5.00 5.00 5.00
22 January 2018 7.44
1
9.00 9.00 9.00 9.00 9.00
27 July 2017 5.79
1
7.00 7.00 7.00 7.00
31 March 2017 8.27
1
10.00 10.00 10.00 10.00
08 August 2016 4.14
1
5.00 5.00 5.00 5.00
18 March 2016 4.14
1
5.00 5.00 5.00 5.00
20 March 2015 4.14
1
5.00 5.00 5.00 5.00
20 October 2014 11.58
1
14.00 14.00 14.00
21 March 2014 4.14
1
5.00 5.00 5.00
19 April 2013 3.31
1
4.00 4.00
20 April 2012 3.31
1
4.00 4.00
20 April 2011 3.31
1
4.00 4.00
10 September 2010 - Merger of Ordinary Share Fund and C Share Fund
13 August 2010 - 1.00 1.00
19 September 2009 - 1.00 1.00
23 July 2008 6.00 2.50
19 September 2007 6.00 1.50
8 February 2006 6.00
20 October 2005 6.00
24 September 2003 0.51
16 September 2002 1.35
10 September 2001 0.93
Dividends Paid
2
143.43 147.00 143.00 129.00 110.00 78.00 49.00 38.00 25.00 13.00
1
- The dividends paid after the merger of the share classes on 10 September 2010 to former Ordinary Share Shareholders have been restated to
reflect the merger conversion ratio of approximately 0.827.
2
- The above date relates to an investor in the first allotment of each fundraising. The precise amount of dividends paid to Shareholders by date
of allotment is shown on page 79 and above.
Performance Data at 31 March 2023
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Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Information for
Shareholders
Taxation benefits
VCTs provide investors with an attractive method of investing in small to medium-sized unquoted (including AIM listed) trading
companies in the UK that would otherwise be difficult to invest in directly. The VCT is itself exempt from paying corporation tax
on its chargeable gains. VCTs also offer substantial tax benefits to private investors.
Personal taxation benefits
The tax reliefs set out below are available to individuals aged 18 or over who subscribe for ordinary shares. Whilst there is no
specific limit in the amount of an individual’s acquisitions of shares in a VCT, each of the following tax reliefs will only be given to
the extent that the individual’s total acquisitions of shares in VCTs in any tax year do not exceed the specified limit, currently
£200,000 (see below).
Tax reliefs currently available to VCT investors:
(1) Relief from income tax on investments
An investor subscribing for new ordinary shares in a VCT is entitled to claim income tax relief on amounts subscribed up to a
maximum of £200,000 in any tax year. The relief is given at 30% of the amount subscribed provided that the relief is limited to
the amount which reduces the investor’s income tax liability to nil. Investments used as security for, or financed by, a loan
may not qualify for relief depending on the circumstances. The income tax relief for investments in new VCT shares was
decreased from 40% to 30% in relation to VCT shares issued on or after 6 April 2006. Tax relief on subscription for shares in
a VCT is restricted where, within six months (before or after) that subscription, the investor disposes of shares in the same
VCT, or a VCT which merges with that VCT at any time.
(2) Capital gains tax reinvestment relief
The ability to defer capital gains by reinvesting the gains in a VCT, where the VCT shares are issued in the two year period
beginning twelve months before the gain arises, has been abolished in respect of shares issued on or after 6 April 2004.
However, gains which were deferred by subscribing for VCT shares issued before 6 April 2004 remain deferred while the
investor continues to hold those VCT shares.
(3) Dividend relief
An investor who acquires VCT shares within the specified limit (currently £200,000 per annum) will not be liable to income
tax on dividends paid on those shares.
(4) Relief from capital gains tax on disposal
A disposal by an investor of ordinary shares in a VCT required within the annual limit of £200,000 will not be subject to UK
capital gains tax.
(5) Purchases in the market
An individual purchaser of existing VCT shares in the market will be entitled to claim dividend relief but not relief from income
tax on investment.
(6) Withdrawal of relief
Relief from income tax on subscription for shares in a VCT is withdrawn if the shares are disposed of (other than between
spouses) within five years of issue or if the VCT loses its approval within this period.
The above is only an outline of the tax reliefs available under current legislation. Investors are recommended to consult an
independent professional adviser as to the taxation consequences of investing in a VCT.
Company History
The Company was launched in May 2000 as Matrix e-Ventures Fund VCT. In October 2001 the Company changed its name to
Matrix Venture Fund VCT. In September 2005, the Company adopted a broader investment strategy, to invest in established,
profitable and cash generative businesses across any sector. It also changed its name to Matrix Income & Growth 2 VCT plc. In
June 2012 the Company changed its name to Mobeus Income & Growth 2 VCT plc to reflect the Investment Adviser’s change of
name. In September 2016, the Company formally changed its investment strategy to invest in growth capital investments. On
30 September 2021, the Mobeus Equity Partners LLP VCT investment advisory business was acquired by Gresham House.
VCT Tax Benefits for the Investor
82
Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Information for
Shareholders
Notice of the Annual General Meeting
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Mobeus Income & Growth 2 VCT plc (“the Company”) will be held at
11.00 am on Wednesday, 13 September 2023, at the offices of Shakespeare Martineau LLP, 6th Floor, 60 Gracechurch Street,
London, EC3V 0HR, for the purposes of considering and, if thought fit, passing the following resolutions of which resolutions 1 to 8 will
be proposed as ordinary resolutions and resolutions 9 and 10 will be proposed as special resolutions. An explanation of the main
business to be proposed is included in the Directors’ Report on pages 35 to 37 of this document:
1. To receive and adopt the annual report and financial statements of the Company for the year ended 31 March 2023 (“Annual
Report”), together with the auditor’s report thereon.
2. To approve the directors’ annual remuneration report as set out in the Annual Report.
3. To approve the Company’s remuneration policy as set out in the Annual Report.
4. To re-elect Ian Blackburn as a director of the Company.
5. To re-elect Sally Duckworth as a director of the Company.
6. To elect Sarah Clark as a director of the Company.
7. To re-appoint BDO LLP of 55 Baker Street, London W1U 7EU, as auditor of the Company until the conclusion of the next general
meeting at which accounts are laid before the Company and to authorise the directors to determine the remuneration of the
auditor.
8. That, in substitution for any existing authorities, the directors of the Company be and hereby are generally and unconditionally
authorised pursuant to section 551 of the Companies Act 2006 (“the Act”) to exercise all the powers of the Company to allot
Ordinary shares of 1 penny each in the capital of the Company (“Shares”) and to grant rights to subscribe for, or convert, any security
into Shares (“Rights”) up to an aggregate nominal value of £328,123, provided that the authority conferred by this resolution shall
(unless renewed, varied or revoked by the Company in general meeting) expire on the date falling fifteen months after the passing
of this resolution or, if earlier, at the conclusion of the annual general meeting of the Company to be held in 2024, but so that this
authority shall allow the Company to make before the expiry of this authority offers or agreements which would or might require
Shares to be allotted or Rights to be granted after such expiry and the directors of the Company shall be entitled to allot Shares or
grant Rights pursuant to any such offers or agreements as if the authority conferred by this resolution had not expired.
9. That, subject to the passing of resolution 8 set out in this notice and in substitution for any existing authorities, the Directors of the
Company be and hereby are empowered in accordance with sections 570 and 573 of the Act to allot or make offers or
agreements to allot equity securities (as defined in section 560(1) of the Act) for cash, pursuant to the authority conferred upon
them by resolution 8 set out in this notice, or by way of a sale of treasury shares, as if section 561(1) of the Act did not apply to any
such sale or allotment, provided that the power conferred by this resolution shall be limited to the allotment of equity securities:
(i) with an aggregate nominal value of up to, but not exceeding, £98,437 of the issued share capital of the Company from time to
time in connection with offer(s) for subscription; and
(ii) otherwise than pursuant to sub-paragraph (i) above, with an aggregate nominal value of up to 10% of the issued share capital
from time to time,
in each case where the proceeds of the allotment may be used, in whole or in part, to purchase the Company’s Shares in the market
and provided that this authority shall (unless renewed, varied or revoked by the Company in general meeting) expire on the date
falling fifteen months after the passing of this resolution or, if earlier, on the conclusion of the annual general meeting of the
Company to be held in 2024, except that the Company may, before the expiry of this authority, make offers or agreements which
would or might require equity securities to be allotted after such expiry and the directors of the Company may allot equity securities
in pursuance of such offers or agreements as if the power conferred by this resolution had not expired.
10. That, in substitution for any existing authorities, the Company be and hereby is authorised pursuant to and accordance with
section 701 of the Act to make one or more market purchases (within the meaning of section 693(4) of the Act) of its own Shares
provided that:
(i) the aggregate number of Shares which may be purchased shall not exceed 14,755,712 or, if lower, such number of Shares
(rounded down to the nearest whole Share) as shall equal 14.99% of the Shares in issue at the date of passing of this resolution;
(ii) the minimum price which may be paid for a Share is 1 penny (the nominal value thereof);
(iii) the maximum price which may be paid for a Share (excluding expenses) shall be the higher of (a) an amount equal to 5%
above the average of the middle market quotations for a Share in the Company taken from the London Stock Exchange Daily
Official List for the five business days immediately preceding the day on which the Share is contracted to be purchased and
(b) the amount stipulated in Article 5(6) of the Market Abuse Regulation (EU) 596/2014 (as such Regulation forms part of UK
law and as amended);
(iv) the authority conferred by this resolution shall (unless renewed, varied or revoked by the Company in general meeting) expire
on the date falling fifteen months after the passing of this resolution or, if earlier, on the conclusion of the annual general
meeting of the Company to be held in 2024; and
(v) the Company may make a contract or contracts to purchase its own Shares under the authority hereby conferred prior to the
expiry of such authority which will or may be executed wholly or partly after the expiry of such authority and may make a
purchase of its own Shares in pursuance of any such contract.
BY ORDER OF THE BOARD
Registered Office Gresham House Asset Management Limited
5 New Street Square Company Secretary
London
EC4A 3TW
Dated: 12 July 2023
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Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Information for
Shareholders
Notes:
The following Notes explain your general rights as a Shareholder and your right to attend and vote at this Meeting or to appoint
someone else to vote on your behalf. A webcast of the Meeting will also be available and details of how to join the webcast will be
shown on the Company’s website. If possible, Shareholders intending to join the Meeting by means of the webcast (which would be as
an attendee only) are requested to join at least ten minutes prior to the commencement of the Meeting at 11.00 am on Wednesday,
13 September 2023.
1. A member is entitled to attend, speak and vote at the Meeting in person or to appoint one or more other persons as their proxy to
exercise all or any of his rights on his behalf. Further details of how to appoint a proxy, and the rights of proxies, are given in the
Notes below. Where a member intends to join the Meeting by means of the webcast, they shall be permitted to ask questions at the
Meeting but shall not be entitled to vote on resolutions at the Meeting (and are, therefore, encouraged to submit their votes by way
of proxy). Note 16 below will apply to those who join the meeting (which would be in attendance only) by means of the webcast.
2. To be entitled to attend the Meeting (and for the purpose of the determination by the Company of the number of votes they may
cast) and to be able to lodge your proxy votes, Shareholders must be registered in the Register of Members of the Company at close
of trading on 11 September 2023. Changes to the Register of Members after the relevant deadline shall be disregarded in
determining the rights of any person to attend the Meeting and/or virtual meeting and vote by proxy.
3. In order for a proxy appointment to be valid it must be received by Link Group, Central Square, 29 Wellington Street, Leeds LS1 4DL
by 11.00 am on 11 September 2023.
4. A Shareholder may appoint more than one proxy in relation to the Meeting provided that each proxy is appointed to exercise the
rights attached to a different ordinary share or ordinary shares held by that Shareholder. A proxy need not be a Shareholder of the
Company.
5. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by
the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the
Company’s Register of Members in respect of the joint holding (the first named being the most senior).
6. A form of proxy for use in connection with the Meeting is enclosed with the document of which this Notice forms part. If you do not
have a form of proxy and would like a copy, please contact the Company’s registrar, Link Group at Central Square, 29 Wellington
Street, Leeds LS1 4DL (“Registrar”), or on 0371 664 0391. Completion and return of a form of proxy form will not legally prevent a
Shareholder from attending and voting at the Meeting in person, or from joining the Meeting (which would be as an attendee only)
by means of the webcast. The Company requests all Shareholders to vote by proxy on the resolutions set out in this Notice as soon
as possible.
7. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the
resolution. If no voting indication is given, your proxy will vote or abstain from voting at their discretion. Your proxy will vote (or
abstain from voting) as they think fits in relation to any other matter which is put before the Meeting.
8. You can also vote either:
• by logging on to www.signalshares.com and following the instructions;
• if you need help with voting online, please contact our Registrar, Link Group, on 0371 664 0391 if calling from the UK, or +44 (0)
371 664 0391 if calling from outside of the UK, or email Link at shareholderenquiries@linkgroup.co.uk.
• in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures
set out below.
We strongly recommend voting electronically at www.signalshares.com as your vote will automatically be counted. Given the current
situation, with many people working from home and delays in the postal system, there is a risk that your vote may not be counted if
you send a paper proxy.
9. If you return more than one proxy appointment, the appointment received last by the Registrar before the latest time for the receipt
of proxies will take precedence. You are advised to read the terms and conditions of use carefully. Electronic communication
facilities are open to all Shareholders and those who use them will not be disadvantaged.
10. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the
Meeting (and any adjournment of the Meeting) by using the procedures described in the CREST Manual (available from
www.euroclear.com/site/ public/EUI). CREST Personal Members or other CREST sponsored members, and those CREST members
who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take
the appropriate action on their behalf.
11. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a ‘CREST
Proxy Instruction’) must be properly authenticated in accordance with Euroclear UK & International Limited’s specifications and must
contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to
be received by the issuer’s agent (ID RA10) by 11.00 am on 11 September 2023. For this purpose, the time of receipt will be taken to
mean the time (as determined by the timestamp applied to the message by the CREST application host) from which the issuer’s
agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of
instructions to proxies appointed through CREST should be communicated to the appointee through other means.
12. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK &
International Limited does not make available special procedures in CREST for any particular message. Normal system timings and
limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service
provider(s), to procure that their CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that
a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
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Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
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13. Any corporation which is a Shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its
powers as a Shareholder provided that no more than one corporate representative exercises powers in relation to the same shares.
14. As at 11 July 2023 (being the latest practicable business day prior to the publication of this Notice), the Company’s ordinary issued
share capital consists of 98,437,045 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at
11 July 2023 are 98,437,045.
15. Under Section 527 of the Companies Act 2006, Shareholders meeting the threshold requirements set out in that section have the
right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company’s
Financial Statements (including the Auditor’s Report and the conduct of the audit) that are to be laid before the Meeting; or (ii) any
circumstances connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual
Financial Statements and reports were laid in accordance with Section 437 of the Companies Act 2006 (in each case) that the
Shareholders propose to raise at the relevant meeting. The Company may not require the Shareholders requesting any such
website publication to pay its expenses in complying with Sections 527 or 528 of the Companies Act 2006. Where the Company is
required to place a statement on a website under Section 527 of the Companies Act 2006, it must forward the statement to the
Company’s auditor not later than the time when it makes the statement available on the website. The business which may be dealt
with at the Meeting for the relevant financial year includes any statement that the Company has been required under Section 527 of
the Companies Act 2006 to publish on a website.
16. Any Shareholder attending the Meeting has the right to ask questions. Any Shareholder may submit questions in relation to the
business to be transacted at the Meeting via email to: AGM@greshamhouse.com by 11 September 2023. The Company must cause
to be answered any such question relating to the business being dealt with at the Meeting but no such answer need be given if: (a)
to do so would interfere unduly with the preparation for the Meeting or involve the disclosure of confidential information; (b) the
answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the
Company or the good order of the Meeting that the question be answered.
17. Copies of the directors’ letters of appointment will be available for inspection at the Company’s registered office during normal
business hours on any weekday (excluding Saturdays, Sundays and public holidays) and will also be available for inspection at the
place of the Meeting for at least 15 minutes before and during the Meeting.
18. You may not use any electronic address (within the meaning of Section 333(4) of the Companies Act 2006) provided in either this
Notice or any related documents to communicate with the Company for any purposes other than those expressly stated.
A copy of this Notice, and other information required by Section 311A of the Companies Act 2006, can be found on the Company’s
website at www.mig2vct.co.uk
Notice of the Annual General Meeting
85
Mobeus Income & Growth 2 VCT plc
Annual Report & Financial Statements 2023
Information for
Shareholders
Glossary of terms
Alternative performance measure (“APM”)
A financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure
defined or specified in the Company’s financial reporting framework. These APMs tend to be industry specific terms which help
Shareholders to understand and assess the Company’s progress. A number of terms contained within this Glossary have been
identified as APMs.
Cumulative dividends paid (APM)
The total amount of dividend distributions by the Company over the time period specified. A list of all dividends paid since launch of
the Company is shown on the Company’s website www.mig2vct.co.uk. Dividends paid in the year and dividends paid/payable in
respect of the year are shown in Note 6.
Cumulative total return (APM)
Cumulative total return per share comprises the NAV per share (NAV basis) or the mid-market price per share (Share price basis), plus
cumulative dividends paid since launch of the existing share class in 2005.
Internal Rate of Return (“IRR”)
The internal rate of return is the annual discount rate that equates the original investment cost with the value of subsequent cash
flows (such as receipts/dividends or further investment) and the latest valuation/exit proceeds or net asset value. Generally speaking,
the higher an investment’s IRR, the more successful it is.
Net asset value or NAV
The value of the VCT’s total assets less its total liabilities. It is equal to the total equity Shareholders’ funds.
Net asset value per share or NAV per share
The net asset value per share is calculated as total equity Shareholders’ funds divided by the number of Ordinary shares in issue at
the year-end.
NAV Total Return (APM)
This measure combines two types of returns received by Shareholders. Firstly, as income in the form of dividends and secondly, as
capital movements (net asset value) of the value of the Fund.
It is a performance measure that adjusts for dividends that have been paid in a period or year. This allows Shareholders to assess the
returns they have received both in terms of the performance of the Company but also including dividends they have received from
the Company which no longer form part of the Company’s assets.
It is calculated as the percentage return achieved after taking the closing NAV per share and adding dividends paid in the year and
dividing the total by the opening NAV per share. The Directors feel that this is the most meaningful method for Shareholders to assess
the performance of the Company.
Ongoing charges ratio (APM)
This figure, calculated using the AIC recommended methodology, shows Shareholders the annual percentage reduction in
shareholder returns as a result of recurring operational expenses, assuming markets remain static and the portfolio is not traded.
Although the Ongoing Charges figure primarily is based upon historic information, it provides Shareholders with an indication of the
likely level of costs that will be incurred in managing the Company in the future. This is calculated by dividing the Investment Adviser’s
fees of £1,582,438 and running costs of £485,231 (per Notes 4a and 4d on pages 59 and 61), the latter being reduced by IFA trail
commission and one-off fees, by the average net assets throughout the year of £70,272,290.
Realised gains/(losses) in the year
This is the profit or loss that arises following the full or partial disposal of a holding in a portfolio company. It is calculated by deducting
the value of the holding as at the previous year-end from the proceeds received in respect of such disposal.
Share Price Total Return (APM)
As NAV Total Return, but the Company’s mid-market share price is used in place of NAV. This measure more accurately reflects the
actual return a Shareholder will have earned, were they to sell their shares at the year/period end date. It includes the impact of any
discounts or premiums at which the share price trades compared to the underlying net asset values of the Company. If the shares
trade at a discount, the returns could be less than the NAV Total Return, but if trading at a premium, returns could be higher than the
NAV Total Return.
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Mobeus Income & Growth 2 VCT plc Annual Report & Financial Statements 2023
Information for
Shareholders
Corporate Information
Directors (Non-executive)
Ian Blackburn
Sally Duckworth
Sarah Clark
Investment Adviser, Company Secretary and Administrator
Gresham House Asset Management Limited
80 Cheapside
London
EC2V 6EE
Tel: +44(0) 20 7382 0999
info@greshamhouse.com
www.greshamhouse.com
Company’s Registered Office and Head Office
5 New Street Square
London
EC4A 3TW
Company Registration Number
03946235
LEI No: 213000LY62XLI1B4VX35
Website
www.mig2vct.co.uk
E-mail
mobeusvcts@greshamhouse.com
Independent Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Solicitors
Shakespeare Martineau LLP
60 Gracechurch Street
London
EC3V 0HR
Corporate Brokers
Panmure Gordon (UK) Limited
40 Gracechurch Street
London
EC3V 0BT
Receiving Agent
The City Partnership (UK) Limited
The Mending Rooms
Park Valley Mills
Meltham Road
Huddersfield
HD4 7BH
Registrar
Link Group plc
Central Square
29 Wellington Street
Leeds
LS1 4DL
VCT Status Adviser
Philip Hare & Associates LLP
6 Snow Hill
London
EC1A 2AY
Sponsor
Howard Kennedy Corporate
Services LLP
1 London Bridge Walk
London
SE1 9BG
Shareholder Portal:
www.signalshares.com
Tel: +44 (0)371 664 0324
Bankers
National Westminster Bank plc
City of London Office
PO Box 12258
1 Princes Street
London
EC2R 8PA
Mobeus Income & Growth 2 VCT plc