Half-yearly Report
THE INCOME & GROWTH VCT PLC
Half-Year Results for the six months ended 31 March 2013
Investment Objective
The objective of The Income & Growth VCT plc ("I&G VCT" or "the Company") is
to provide investors with an attractive return, by maximising the stream of
dividend distributions from the income and capital gains generated by a
diverse and carefully selected portfolio of investments.
The Company invests in companies at various stages of development. In some
instances this may include investments in new and secondary issues of
companies which may already be quoted on the Alternative Investment Market
("AiM").
Financial Highlights
Six months to 31 March 2013
- Dividends totalling 6.0 pence per Share have been paid to Shareholders during
the period.
- An interim dividend of 6.0 pence per Share for the current year has been
declared.
- Increase of 7.2% in total return (share price basis) to Shareholders for the
period.
- Increase of 8.6% in total return (net asset value (NAV) basis) to Shareholders
for the period.
- Strong liquidity has been further enhanced by a successful fundraising in which
the Company has raised an additional £8.3 million.
Performance Summary
The net asset value (NAV) per Share at 31 March 2013 was 113.0 pence
The table below shows the recent past performance of funds raised in 2007/08
for the existing class of ordinary shares at the subscription price of £1.
Net NAV per Cumulative NAV total Share Share price
assets Share (p) dividends return to price total return
paid per Shareholders to
(£m) Share (p) since launch (p) 1 Shareholders
per Share since launch
(p) per Share
(p)
Ordinary Shares
As at 31 March 2013 56.7 113.0 34.5 147.5 98.0 132.5
As at 30 September 50.6 109.6 28.5 138.1 97.0 125.5
2012
As at 30 September 49.1 120.8 4.5 125.3 91.6 96.1
2011
As at 30 September 36.6 99.0 0.5 99.5 87.0 87.5
2010
1 Source: London Stock Exchange.
Chairman's Statement
I am pleased to present the Company's Half-Year Report for the six months
ended 31 March 2013.
Last year saw record realisations with the Company paying high levels of
dividends to Shareholders. It is, therefore, very satisfying to be able to
report another period of strong performance. The portfolio continues to
perform well in spite of the enduring uncertainty in the UK and global
economies. Many of the companies in the portfolio have continued to grow over
the period and demonstrate their potential to provide further positive returns
to Shareholders.
Performance
As at 31 March 2013 the Company's NAV per Share was 113.03 pence
(30 September 2012: 109.62 pence). After adjusting for the dividend of 6.0
pence per Share paid to Shareholders on 8 February 2013, this represents a
return of 8.58% for the six month period, a highly creditable result.
This compares with an increase of 19.70% in the FTSE SmallCap Index
and a rise of 3.94% in the FTSE AiM All-Share Index, both on a total return
basis, over the same period. In comparing the Company's return with these
indices, Shareholders should note that the Company has a strong liquidity
position. As current returns on liquid assets are low, comparisons with quoted
indices are not wholly meaningful, but this liquidity should be of benefit to
the Company in the medium term. The increase in NAV return per Share for this
half-year is due to both realised and unrealised gains in the portfolio, as
explained below.
Cumulative NAV total return per Share (being the closing net asset
value plus total dividends paid to date) has risen to 147.53 pence compared to
138.12 pence at the year-end. This represents a further increase of 6.81% over
the period and an increase of 55.79% since the merger of the VCT's share
classes in March 2010.
Performance incentive fee
In the Company's full year results to 30 September 2012, provision was made
for performance incentive fees which might become payable to the Investment
Manager, Mobeus, and a former Investment Manager, Foresight Group LLP, in
respect of realisations in that period. In February of this year, the Company
paid a fee of £3,050,234 to be shared between Mobeus and Foresight. An
additional amount of £491,811 may be payable to Mobeus subject to final
agreement between the Company and Mobeus.
Investment portfolio
The aggregate portfolio valuation saw a net increase of £3.01 million in
unrealised and £1.05 million in realised gains over the six month period. The
portfolio was, therefore, valued at £32.39 million at the period-end. The
portfolio has performed well during the period, increasing in value by 14.26%
on a like for like basis, mainly as a result of strong performances from
Blaze, EMaC, IDOX, DiGiCo, Alaric and Westway as well as the gain on the sale
of Image Source.
During the period, the VCT invested a total of £3.33 million (including funds
from the seed companies Almsworthy and Fosse). In February 2013, the VCT
provided an additional £916k from Almsworthy in a deal across the Mobeus VCTs
to finance Motorclean's acquisition of Forward Valeting Services to create the
UK's largest provider of car valeting services.
Just before the period-end in March 2013, the VCT also made one new investment
totalling £2.26 million to support the MBO of Gro-Group, including £1 million
from its existing investment in the acquisition vehicle Fosse Management.
Based in Devon, Gro is the market leader for baby sleep time products in the
UK and Australia.
After the period-end, the VCT invested £1 million, via the acquisition vehicle
Peddars Management, to enable ATG to acquire Bidspotter, a US company
providing live bidding and auction software to industrial and commercial
auctioneers.
Net cash proceeds received during the period from portfolio realisations
amounted to £4.67 million, from eleven separate disposals, which is an
encouraging reflection of the portfolio's quality. Most significant of these
was the disposal during February and March of the Company's remaining loan and
equity investment in Image Source Group for total proceeds of £1.65 million.
Over the life of the investment, total proceeds were £3.49 million compared to
a cost of £2.45 million.
There were several other divestments during the period. These included
Brookerpaks, Tikit and ANT. In addition, there were further partial
divestments of IDOX, Faversham House, and loan stock repayments from Blaze,
Faversham House and Tessella.
Two payments totalling £406k were also received, being deferred consideration
due from the sale of App-DNA to Citrix Systems Inc in November 2011.
Details of all these transactions and the performance of the portfolio are
contained in the Investment Manager's Review below.
Revenue account
The net revenue return for the period has, pleasingly, nearly
doubled from the comparable period last year, to £526,881, from £268,220 last
year, an increase of £258,661. Income has again increased, by £770,227,
benefiting again from firstly, a higher level of loan stock interest, up by
£143,548 as further loan stock investments have been made, and secondly from
higher dividends, up by £575,779 (including a one-off dividend from Image
Source of £533,750) compared to last year. Finally, interest has also risen,
by £50,900, reflecting a net benefit of switching some cash from liquidity
funds to fixed-term bank deposits.
Against this, fund management fees charged to revenue return have
risen by £8,029, due to the higher net assets under management over last year.
There is, however, a beneficial impact of a fall in running costs of £103,989
due to two main reasons. Firstly, a fall in trail commission expense of
£67,676 has occurred, as the limit for such commission on older holdings had
been reached in 2012. Secondly, lower Directors' fees of £34,140 were paid due
to last year's one-off payment of £10,000 made to each of the Directors in
respect of additional work carried out on specific projects for the Company.
Finally, the tax charge attributable to the revenue return has
risen by £73,776, reflecting higher loan stock interest (which is taxable),
and lower running costs, which are tax-deductible.
Dividends
The Directors have declared an interim dividend of 6.0 pence per share in
respect of the year ending 30 September 2013. The dividend will be paid on 27
June 2013 to Shareholders on the Register on 7 June 2013. The Company's
Dividend Investment Scheme will apply to this dividend.
A further interim dividend of 6.0 pence per Share in respect of the year ended
30 September 2012 was paid to Shareholders on 8 February 2013.
A record total of 26.0 pence per Share (comprising 23.0 pence from
capital and 3.0 pence from income) was paid to Shareholders in respect of the
year ended 30 September 2012, comprising the interim capital dividend of 20.0
pence paid on 27 January 2012, and the further interim dividend of 6.0 pence
referred to above.
Cumulative dividends per Share paid to date amount to 34.5 pence (pre-merger:
0.5 pence; post-merger: 34.0 pence) for the current share class.
The Board is committed to providing an attractive dividend stream to
Shareholders and has set a target of paying a dividend of at least 4.0 pence
per Share in each financial year. I am pleased to report that this target has
been exceeded in each of the last two years, and now the current year.
The Board will consider whether to pay a further dividend for the current
financial year following the year-end.
Dividend investment scheme
The Company's Dividend Investment Scheme ("the Scheme") is a convenient, easy
and cost effective way for Shareholders to build up their shareholding in the
Company. Instead of receiving cash dividends they can elect to receive new
shares in the Company. By opting to receive their dividend in this manner,
there are three benefits to Shareholders:
- The dividend remains tax free;
- Shareholders are allotted new Ordinary Shares which will, subject
to their particular circumstances, attract VCT tax reliefs applicable for the
tax year in which the shares are allotted. The tax relief currently available
to investors in new VCT shares is 30% for the 2013/14 tax year for investments
up to £200,000 in any one tax year; and
- The Scheme also has one particular advantage. Under its terms, a
member is able to re-invest at an advantageous price, being the average market
price of the Shares for the five business days prior to the dividend being
paid. This price is likely to be at a discount of 10% to the underlying net
asset value (provided that this is greater than 70% of the latest published
net asset value per Share).
The Company's Dividend Investment Scheme applied to the dividends
paid in respect of the year ended 30 September 2012 and used an issue price
equal to the average of the mid market price for the Shares taken from the
London Stock Exchange Daily Official List for the five business days
immediately preceding the payment date. It is encouraging to note that £1,425k
of dividends were re-invested through the Scheme in respect of these
dividends.
Linked offer for subscription
The 2012/13 Linked Offer for Subscription with Mobeus Income &
Growth VCT plc and Mobeus Income & Growth 4 VCT plc, to allot up to 10 million
new shares in each VCT, attracted strong investor interest. The Company has
raised £8.28 million as its share of the £24.85 million raised in
subscriptions by all three VCTs, which the Board regards as a good result.
A total of 7,411,346 new Shares in the Company were allotted under the Offer
which closed on 30 April 2013, of which 4,186,459 were allotted in the six
months to 31 March 2013.
Cash available for investment
The interest rates paid on cash deposits continue to be low and
this continues to inhibit the Company's ability to pay dividends from income.
The Board continues to prioritise the security and protection of the Company's
capital over any small increase in income from deposits that may be achieved
by subjecting the VCT to higher levels of risk. It has, therefore, continued
to adopt a conservative approach to the placement of the Company's funds
awaiting investment, and it has decided to place some of its liquidity in
higher yielding bank deposits. Cash and liquidity fund balances as at 31 March
2013 amounted to £22.3 million. In addition, a further £4 million remains
invested in four acquisition vehicles pending further investment at the
period-end (of which one, Peddars Management, was used to support the further
investment into ATG Media following the period-end).
Share buy-backs
During the six months ended 31 March 2013, the Company bought back
512,465 (2012: 449,818) Shares (representing 1.11% (2012: 1.11%) of the Shares
in issue at the beginning of the year) at a total cost of £495,903 (2012:
£399,876), inclusive of expenses. These Shares were subsequently cancelled by
the Company.
The Board regularly reviews its buyback policy and seeks to
maintain the discount to NAV at which the Company's Shares trade at around 10%
below the latest published NAV. This has been achieved in the period.
Enhanced buyback facility (EBF)
The VCT offered an EBF to Shareholders in January 2013 which took place
following the period-end in April 2013. 8,129,688 Shares were bought-back
(representing 17.04% of the Shares in issue at the date of launch of the EBF)
and 7,875,932 new Shares were allotted by the VCT under the EBF.
Auditor
With effect from 28 March 2013, the Company's auditor, PKF (UK) LLP
merged with BDO LLP to become part of BDO LLP. The Board has subsequently
appointed BDO LLP as the Company's auditor to fill the casual vacancy arising
as a result of the resignation of PKF (UK) LLP following the merger.
Shareholder communications
May I remind you that the Company continues to have its own website which is
available at www.incomeandgrowthvct.co.uk.
Around 140 Mobeus VCT Shareholders attended the Manager's third annual
Shareholder Workshop in January 2013. Shareholders attending heard
presentations from the Manager and the CEO from DiGiCo, one of the VCT's
portfolio companies.
Outlook
Quoted stock markets have risen strongly over the period, on the basis that
the threats to economic growth posed by the Eurozone crisis have receded. The
UK economy is dependent on world markets and is unlikely to achieve more than
minimal economic growth for the foreseeable future. The need to reduce the
public sector deficit rules out fiscal stimulus as a spur to raise growth.
In the absence of general growth available to the UK SME sector, it is crucial
that the Company continues to target only the highest quality of smaller
company investment opportunities available. The Board believes the outlook for
increasing the pace of new investment is positive and the Company's cash
position is strong, which has been further enhanced by the fundraising which
closed on 30 April 2013. The Board and Manager will continue to adopt a
cautious approach in selecting well-run, profitable companies operating in
niche markets. We believe that the overall portfolio is resilient and is
building value which will be realised in the medium to longer term. The
Company is very well placed to fund both the needs of the portfolio companies
and any new investment opportunities that arise.
The Board is delighted to note that the latest performance statistics
published by the Association of Investment Companies rank The Income & Growth
VCT plc first in its peer group over the last five years and second over the
last three years.
Once again, I would like to take this opportunity to thank Shareholders for
their continued support.
Colin Hook
Chairman
Responsibility Statement of the Directors in Respect of Half-Year Financial
Report
Responsibility Statement
In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Colin Hook
(Chairman), Jonathan Cartwright (Chairman of the Audit and Nominations &
Remuneration Committees) and Helen Sinclair (Chairman of the Investment
Committee), the Directors of the Company, confirm that to the best of their
knowledge:
(a) the condensed set of financial statements, which have been prepared in
accordance with the statement "Half-Yearly Reports" issued by the Accounting
Standards Board, give a true and fair view of the assets, liabilities,
financial position and profit of the Company as required by DTR 4.2.4;
(b) the Half-Year Management Report which is included within the Chairman's
Statement, Investment Policy, Investment Portfolio Summary and Investment
Manager's Review includes a fair review of the information required by DTR
4.2.7 being an indication of important events that have occurred during the
first six months of the financial year and their impact on the condensed set of
financial statements;
(c) a description of the principal risks and uncertainties facing the Company for
the remaining six months is set out below, in accordance with DTR 4.2.7; and
(d) there were no related party transactions in the first six months of the current
financial year that are required to be reported, in accordance with DTR 4.2.8.
Principal Risks and Uncertainties
In accordance with Disclosure and Transparency Rule (DTR) 4.2.7, the Board
confirms that the principal risks and uncertainties facing the Company have
not materially changed from those identified in the Annual Report and Accounts
for the year ended 30 September 2012. The Board acknowledges that there is
regulatory risk and continues to manage the Company's affairs in such a manner
as to comply with section 274 Income Tax Act 2007.
The principal risks faced by the Company are:
- economic risk;
- loss of approval as a Venture Capital Trust;
- investment and strategic risk;
- regulatory risk;
- financial and operating risk;
- market risk;
- asset liquidity risk;
- market liquidity risk;
- counterparty risk
A detailed explanation of the principal risks facing the Company can be found
in the Annual Report of the Company for the year ended 30 September 2012 on
pages 22-23. Copies are available from www.incomeandgrowthvct.co.uk.
Related Party Transactions
There were no related party transactions in the first six months of the
current financial year that are required to be reported.
Going Concern
The Board has assessed 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 Half-Year
Management Report which is included within the Chairman's Statement,
Investment Policy, Investment Portfolio Summary and Investment Manager's
Review. The Directors have satisfied themselves that the Company continues to
maintain a significant cash position and has raised additional funds during
the period in an Offer for Subscription which closed on 30 April 2013. The
majority of companies in the portfolio continue to trade profitably and the
portfolio taken as a whole remains resilient and well diversified. The major
cash outflows of the Company (namely investments, buy-backs and dividends) are
within the Company's control.
The Board's assessment of liquidity risk and details of the Company's policies
for managing its capital and financial risks are shown in note 20 on pages 54
- 61 of the Annual Report and Accounts for the year ended 30 September 2012.
Accordingly, the Directors continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
Cautionary Statement
This report may contain forward looking statements with regards to the
financial condition and results of the Company, which are made in the light of
current economic and business circumstances. Nothing in this report should be
construed as a profit forecast.
For and on behalf of the Board:
Colin Hook
Chairman
Investment Policy
The Company's policy is to invest primarily in a diverse portfolio of UK
unquoted companies. Investments are structured as part loan and part equity in
order to receive regular income and to generate capital gains from trade sales
and flotations of investee companies.
Investments are made selectively across a number of sectors, primarily in
management buy-out transactions (MBOs) i.e. to support incumbent management
teams in acquiring the business they manage but do not yet own. Investments
are primarily made in companies that are established and profitable.
The Company has a small legacy portfolio of investments in companies from the
period prior to 30 September 2008, when it was a multi-manager VCT. This
includes investments in early stage and technology companies and in companies
quoted on the AiM market.
The Company's cash and liquid resources are invested in a range of instruments
of varying maturities, subject to the overriding criterion that the risk of
loss of capital be minimised.
VCT regulation
The investment policy is designed to ensure that the Company continues to
qualify and is approved as a VCT by HM Revenue & Customs ("HMRC").
Amongst other conditions, the Company may not invest more than 15% of its
investments in a single company and must have at least 70% by value of its
investments throughout the period in shares or securities comprised in VCT
qualifying holdings of which a minimum overall of 30% by value (70% for funds
raised after 6 April 2011) must be in ordinary shares which carry no
preferential rights (save as may be permitted under VCT rules). In addition,
although the VCT can invest less than 30% (70% for funds raised after 6 April
2011) of an investment in a specific company in ordinary shares it must have
at least 10% by value of its total investments in each VCT qualifying company
in ordinary shares which carry no preferential rights (save as may be
permitted under VCT rules).
The companies in which investments are made must have no more than £15 million
of gross assets at the time of investment and £16 million immediately
following the investment to be classed as a VCT qualifying holding.
Asset mix
The Company initially holds its funds in a portfolio of readily realisable
interest-bearing investments and deposits. The investment portfolio of
qualifying investments is built up over a three year period with the aim of
investing and maintaining at least 70% of net funds raised in qualifying
investments.
Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses across
different industry sectors. To reduce the risk of high exposure to equities,
each qualifying investment is structured to maximise the amount which may be
invested in loan stock.
Co-investment
The Company aims to invest in larger, more mature unquoted companies through
investing alongside the three other VCTs advised by the Investment Manager
with a similar investment policy. This enables the Company to participate in
combined investments advised on by the Investment Manager of up to £5 million.
Borrowing
The Company's Articles permit borrowing of up to 10% of the adjusted capital
and reserves (as defined therein). However, it has never borrowed and the
Board has no current plans to undertake any borrowing.
Management
The Board has overall responsibility for the Company's affairs including the
determination of its investment policy. Investment and divestment proposals
are originated, negotiated and recommended by the Manager and are then subject
to approval by the Directors.
Investment Portfolio Summary
as at 31 March 2013
Total cost at Valuation at Additional Valuation at
31 March 30 September Investments in 31 March
2013 2012 the period 2013
(unaudited) (audited) (unaudited)
£ £ £ £
Fullfield Limited (Motorclean)1 2,405,465 1,652,768 916,368 2,883,363
Vehicle cleaning and valeting services
ATG Media Holdings Limited 888,993 2,270,884 - 2,429,926
Publisher and online auction platform
operator
Ingleby (1879) Limited (EMaC) 1,878,124 1,878,124 - 2,405,669
Service plans for the motor trade
Gro-Group Limited2 2,256,518 - 2,256,518 2,256,518
Baby sleep products
IDOX plc 453,881 2,058,371 46 2,083,434
Provider of document storage systems
Tessella Holdings Limited 1,695,234 1,745,351 - 1,695,234
Provider of science powered
technology and consulting services
EOTH Limited (Rab and Lowe Alpine) 1,383,313 1,383,313 - 1,430,134
Branded outdoor equipment and clothing
CB Imports Group Limited (Country Baskets) 1,000,000 1,128,228 - 1,194,296
Importer and distributor of artificial
flowers,floral sundries and home decór
products
Blaze Signs Holdings Limited 621,510 1,448,159 - 1,141,514
Manufacturer and installer of signs
Westway Services Holdings (2010) Limited 353,589 838,782 - 1,098,245
Installation, service and maintenance
of air conditioning systems
DiGiCo Global Limited 876,497 876,497 - 1,069,057
Designer and manufacturer of audio
mixing desks
Alaric Systems Limited 565,156 468,495 - 1,044,336
Software development, implementation
and support in the credit/debit card
authorisation and payments market
Ackling Management Limited 1,000,000 1,000,000 - 1,000,000
Company seeking to trade in the food
manufacturing, distribution and brand
management sectors
Peddars Management Limited 1,000,000 1,000,000 - 1,000,000
Acquisition vehicle used to finance ATG
Media's acquisition of Bidspotter Inc
Culbone Trading Limited 1,000,000 1,000,000 - 1,000,000
Company seeking to trade in the
outsourced sectors
Madacombe Trading Limited 1,000,000 1,000,000 - 1,000,000
Company seeking to trade in the
engineering sector
RDL Corporation Limited 1,441,667 1,271,194 - 968,033
Recruitment consultants for the
pharmaceutical, business intelligence
and IT industries
ASL Technology Holdings Limited 1,769,790 654,155 - 744,300
Printer and photocopier services
Focus Pharma Holdings Limited 405,407 636,574 - 716,624
Licensor and distributor of generic
pharmaceuticals
Aquasium Technology Limited 500,000 677,971 - 701,773
Design, manufacture and marketing of
bespoke electron beam welding and
vacuum furnace equipment
Youngman Group Limited 1,000,052 700,992 - 700,992
Manufacturer of ladders and access
towers
Duncary 8 Limited 509,923 814,025 - 679,267
City-based provider of specialist
technical training
British International Holdings Limited 674,733 590,909 83,824 674,733
Helicopter service operator
Original Additions Topco Limited 25,696 537,948 - 537,948
Manufacturer and distributor of beauty
products
Machineworks Software Limited 20,471 479,459 - 537,321
Software for CAM and machine tool
vendors
The Plastic Surgeon Holdings Limited 406,082 248,878 - 368,423
Supplier of snagging and finishing
services to the property sector
Omega Diagnostics Group plc 279,996 373,328 - 320,829
In-vitro diagnostics for food
intolerance,autoimmune diseases and
infectious diseases
Vectair Holdings Limited 53,400 164,178 - 207,460
Designer and distributor of washroom
products
Faversham House Holdings Limited 144,859 192,385 - 144,859
Publisher, exhibition organiser and
operator of websites for the
environmental,visual communications and
building services sectors
Racoon International Holdings Limited 550,852 79,026 - 121,641
Supplier of hair extensions, hair care
products and training
Lightworks Software Limited 20,471 84,060 - 114,595
Software for CAD vendors
Corero plc 600,000 31,434 - 14,748
Provider of e-business technologies
PXP Holdings Limited (Pinewood 965,371 45,195 - 45,195
Structures)
Designer, manufacturer and supplier of
timber frames for buildings
Monsal Holdings Limited 468,610 42,446 - 42,446
Supplier of engineering services to the
water and waste sectors
Sarantel Group plc 1,881,252 17,019 - 12,935
Developer and manufacturer of antennae
for mobile phones and other wireless
devices
Oxonica Limited 2,524,527 - - -
Manufacturer and distributor of beauty
products
Data Continuity Group Limited 163,345 2,171 73,311 -
(formerly DCG Group Limited)
Design, supply and integration of data
storage solutions
NexxtDrive Limited 487,014 - - -
Developer and exploiter of patented
transmission technologies
Aigis Blast Protection Limited 272,120 - - -
Specialist blast containment materials
company
Legion Group plc (in administration) 150,000 - - -
Provision of manned guarding, mobile
patrols, and alarm response services
Biomer Technology Limited 137,170 - - -
Developer of biomaterials for medical
devices
Watchgate Limited 1,000 - - -
Holding company
Realised investments
Fosse Management Limited - 1,000,000 - -
Acquisition vehicle used to complete the
investment in Gro-Group Limited
Almsworthy Trading Limited - 1,000,000 - -
Acquisition vehicle used to finance
Fullfield's (Motorclean's) acquisition
of Forward Valeting Services Limited
ANT plc - 131,319 - -
Provider of embedded browser/email
software for consumer electronics and
internet appliances
Tikit Group plc - 247,350 103 -
Provider of consultancy services and
software solutions for law firms
Image Source Group Limited - 925,470 - -
Royalty free picture library
Brookerpaks Limited - 509,209 - -
Importer and distributor of garlic and
vacuum-packed vegetables
----------- ----------- ----------- -----------
Total 33,832,088 31,205,667 3,330,170 32,385,848
----------- ----------- ----------- -----------
Investment Manager's Review
The two notable features of the portfolio during the period have been the
continuation of the strong flow of realisations and further uplifts in
investment valuations resulting from the good performance of a number of
investee companies. Dealflow is showing a positive trend and we are working on
a number of opportunities which we hope to complete over the coming months.
The wider economy in the UK continues to present challenges. Some weaker
companies in the small company sector, in which we invest, are finding it
difficult to ride the continuing downturn, while our portfolio is relatively
robust. Our strategy of selecting established, well run and profitable
companies with good, focused management and a positive cashflow is delivering
good returns. Many of our companies continue to grow and increase
profitability, demonstrating that well-managed and focussed smaller companies
can make strong progress despite an uncertain macroeconomic environment.
Investment activity
In March 2013, the Company completed a new investment of £2.26 million, to
support the MBO of Gro-Group. The amount invested included £1 million from the
Company's existing investment in the acquisition vehicle Fosse Management.
Devon based Gro-Group created the original, and now internationally renowned,
Grobag which has become the number one baby sleep bag brand in the UK and
Australia. Market penetration of the product has increased from zero to around
90% since the company was founded in 2000 and turnover has grown to £12
million.
Further investment has been provided to support two strong portfolio companies
pursuing exciting new opportunities that arose during the period. The first of
these was completed in February 2013; the VCT provided an additional £916k,
via the acquisition vehicle Almsworthy Trading, to finance Motorclean's
acquisition of Forward Valeting Services to create the UK's largest provider
of car valeting services.
In the second of these, after the period-end, the VCT provided a loan of £1
million, via the acquisition vehicle Peddars Management, to enable ATG Media
to acquire Bidspotter Inc, a US company providing live bidding and auction
software to industrial and commercial liquidation auctioneers.
A further loan stock investment of £84k for working capital purposes was made
in March 2013 into British International.
At the period-end, the VCT held £4 million in four remaining acquisition
vehicles. One of these, Peddars Management, has been used since 31 March 2013
to complete the VCT's further investment into ATG as outlined above.
The period has seen a continuation of realisation activity. Most significant
of these was the disposal of the Company's remaining loan and equity
investment in Image Source Group for total proceeds of £2.18 million
(including a dividend payment of £533,750) during February and March. Over the
life of the investment, total proceeds were £3.49 million compared to cost of
£2.45 million, being 142% of cost.
Also in March 2013, the VCT sold part of its loan stock and its
entire equity investment in Faversham House for net proceeds of £192k. The
Company continues to hold a loan stock investment in this company of £145k.
The total of these figures, £337k, compares with a total original cost of
£488k and with the 30 September 2012 valuation of £192k.
Two payments totalling £406k were received during the period, being deferred
consideration due from the sale of App-DNA to Citrix Systems Inc. in November
2011.
As disclosed in the Annual Report, the Company realised its remaining
investment in Brookerpaks, an importer and distributor of garlic and
vacuum-packed vegetables, in November 2012, for proceeds of £600k compared to
the equity investment cost of £55k; the overall return from this investment
was £1.92 million, or a 3.8 times multiple of original investment cost.
We also reported in the Annual Report that recommended offers had been
received by Tikit and ANT towards the end of last year. We are pleased to
update Shareholders that these both completed successfully. Tikit was acquired
by British Telecommunications plc in January 2013 at a price of 416 pence per
share, realising £270k for the VCT's remaining investment. This, in addition
to a further disposal of Tikit shares earlier in the period, brought total
proceeds for the period to £310k, realising a gain in the period of £63k. ANT
was acquired by Espial Group Inc, a company listed on the Toronto Stock
Exchange, at a price of 20.50 pence per share, in February 2013, valuing the
VCT's investment at £135k compared to the valuation at 30 September 2012 of
£131k.
In November 2012, the VCT sold a total of 1.25 million of its shares in IDOX
plc, representing 23.08% of the VCT's holding at the year-end, for total
proceeds of £514k.
Partial loan stock repayments were received from Blaze Signs of £609k in
November 2012 and from Duncary 8 of £125k in December 2012 and two repayments
of £25k each were received from Tessella, an investment that was made in July
2012.
Portfolio review
The portfolio at 31 March 2013, comprised forty-two investments with a cost of
£33.83 million and valued at £32.39 million.
The overall value of the portfolio has increased further over the six month
period and Blaze Signs, EMaC, DiGiCo, Westway, IDOX and Alaric have all
contributed strongly to this. Blaze Signs has continued its impressive
recovery having benefited from some high profile contract gains, including
work on the Olympics site in 2012, and has made a further repayment of loan
stock as a result. Westway too, has rebounded from a dip in trading in the
prior year. DiGiCo has continued to grow, and has recently launched a new
range of products. IDOX, an AiM quoted investment, continued to rise in value.
Focus has begun to benefit from the high level of new product development
expenditure over the past year, and our more recent investments into Fullfield
and EMaC are also making good progress. In particular the valuation of EMaC
has moved significantly above cost to reflect this company's strong
performance since investment. Alaric has delivered record profitability and
this has led to a material increase in valuation over the period. The partial
disposal of the investment in Faversham House for in excess of the opening
valuation has also contributed to the increase in the portfolio's value.
Against these positive performances, the building and construction sector
remains weak, causing Youngman and PXP to find it difficult to establish a
solid path to recovery, whilst the pace of profits recovery at RDL remains
slower than hoped.
Overall, we are encouraged by the strong and resilient performance by the
majority of our investee companies. Our strategy remains to maximise value by
retaining investments until they have reached the optimum point for an exit.
Outlook
We plan to take advantage of improved dealflow and the VCT's strong liquidity
over the remainder of the Company's financial year and beyond, while
maintaining a prudent approach to the selection of the right investments. The
two-speed economy can be ruthless in separating the winners from the losers.
We are making it a continuing priority to identify resilient companies that
have the characteristics to survive when weaker companies are failing. MBO
teams are increasingly turning to us as a source of deliverable, long-term
finance as an alternative to bank funding and this is increasing the range of
potential investments that we are considering.
The existing companies in the portfolio are predominantly proving that
well-funded, quality companies can perform well, even when challenges in the
wider economy are causing many companies to fail. We believe that the
portfolio will continue to create value in the medium to long term.
Unaudited Income Statement
for the six months ended 31 March 2012
Six months ended 31 March 2013 Six months ended 31 March 2012
(unaudited) (unaudited)
Notes Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Unrealised gains
on investments 7 - 3,009,086 3,009,086 - 2,273,414 2,273,414
Net realised gains
on investments 7 - 1,037,994 1,037,994 - 3,155,198 3,155,198
Income 2 988,065 533,750 1,521,815 751,588 - 751,588
Investment
manager's fees 3 (156,797) (470,393) (627,190) (148,768) (446,304) (595,072)
Investment
managers'
performance fees 3 - (106,778) (106,778) - (2,860,000) (2,860,000)
Other expenses (189,766) - (189,766) (293,755) - (293,755)
Provision for
litigation costs no
longer required - - - - 1,337,456 1,337,456
----------- ----------- ----------- ----------- ----------- -----------
Profit on ordinary
activities before
taxation 641,502 4,003,659 4,645,161 309,065 3,459,764 3,768,829
----------- ----------- ----------- ----------- ----------- -----------
Tax on profit on
ordinary activities 4 (114,621) 114,621 - (40,845) 40,845 -
----------- ----------- ----------- ----------- ----------- -----------
Profit on ordinary
activities after
taxation 526,881 4,118,280 4,645,161 268,220 3,500,609 3,768,829
----------- ----------- ----------- ----------- ----------- -----------
Basic and diluted
earnings per Ordinary Share 5 1.12p 8.80p 9.92p 0.65p 8.48p 9.13p
Year ended 30 September 2012
(audited)
Notes Revenue Capital Total
£ £ £
Unrealised gains on
investments 7 - 2,364,362 2,364,362
Net realised gains on
investments 7 - 5,243,190 5,243,190
Income 2 2,004,297 - 2,004,297
Investment manager's
fees 3 (290,664) (871,993) (1,162,657)
Investment managers'
performance fees 3 - (3,503,000) (3,503,000)
Other expenses (499,164) - (499,164)
Provision for litigation
costs no longer
required - 1,337,456 1,337,456
Profit on ordinary
activities before
taxation 1,214,469 4,570,015 5,784,484
----------- ----------- -----------
Tax on profit on
ordinary activities 4 (224,747) 224,747 -
----------- ----------- -----------
Profit on ordinary
activities after taxation 989,722 4,794,762 5,784,484
----------- ----------- -----------
Basic and diluted earnings per Ordinary Share 5 2.26p 10.97p 13.23p
The total column of this statement is the Profit and Loss Account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
There were no other recognised gains or losses in the period.
Other than revaluation movements arising on investments held at fair value
through profit and loss, there were no differences between the profit as
stated above and at historical cost.
Unaudited Balance Sheet
as at 31 March 2013
31 March 2013 31 March 2012 30 September 2012
(unaudited) (unaudited) (audited)
£ £ £
Notes
Fixed assets
Investments at fair value 7 32,385,848 32,685,232 31,205,667
Current assets
Debtors and prepayments 2,996,460 350,297 727,598
Current asset investments 8 17,787,414 13,917,141 17,523,440
Cash at bank 4,479,667 2,056,750 4,861,440
----------- ----------- -----------
25,263,541 16,324,188 23,112,478
Creditors:
amounts falling due within one year (967,381) (3,307,167) (3,766,160)
----------- ----------- -----------
Net current assets 24,296,160 13,017,021 19,346,318
----------- ----------- -----------
Net assets 56,682,008 45,702,253 50,551,985
----------- ----------- -----------
Capital and reserves 9
Called up share capital 501,495 433,544 461,157
Share premium account 3,013,474 8,584,454 11,898,621
Capital redemption reserve 202,389 191,807 197,265
Revaluation reserve 4,548,616 2,882,155 1,611,146
Special reserve 24,975,739 14,101,218 12,721,596
Profit and loss account 23,440,295 19,509,075 23,662,200
----------- ----------- -----------
Equity Shareholders' funds 56,682,008 45,702,253 50,551,985
----------- ----------- -----------
Basic and diluted net asset value:
Basic and diluted net asset value per Ordinary Share 10 113.03p 105.42p 109.62p
The financial information for the six months ended 31 March 2013 and the six
months ended 31 March 2012 has not been audited.
Unaudited Reconciliation of Movements in Shareholders' Funds
for the six months ended 31 March 2013
Six months ended Six months ended Year ended
31 March 2013 31 March 2012 30 September 2012
(unaudited) (unaudited) (audited)
£ £ £
Notes
Opening Shareholders' funds 50,551,985 49,152,799 49,152,799
Share capital bought back in the
period 9 (495,903) (399,876) (913,037)
Share capital subscribed in the period 9 4,911,846 2,946,435 6,293,673
Expenses incurred in respect of the
enhanced Buyback Facility 9 (68,771) - -
Profit for the period 4,645,161 3,768,829 5,784,484
Dividends paid in period 6 (2,862,310) (9,765,934) (9,765,934)
----------- ----------- -----------
Closing Shareholders' funds 56,682,008 45,702,253 50,551,985
----------- ----------- -----------
Unaudited Cash Flow Statement
for the six months ended 31 March 2013
Six months ended Six months ended Year ended
31 March 2013 31 March 2012 30 September 2012
(unaudited) (unaudited) (audited)
£ £ £
Notes
Operating activities
Investment income received 1,467,634 614,011 1,955,985
Investment management fees paid (3,677,424) (599,772) (1,162,657)
Other income - - 4,861
Other cash payments (113,612) (264,049) (561,556)
----------- ----------- -----------
Net cash (outflow)/inflow from
operating activities (2,323,402) (249,810) 236,633
Investing activities
Acquisitions of investments 7 (1,413,802) (11,465,139) (13,255,722)
Disposals of investments 7 4,761,617 21,499,964 26,468,137
----------- ----------- -----------
Net cash inflow from investing
activities 3,347,815 10,034,825 13,212,415
Dividends
Equity dividends paid 6 (2,862,310) (8,509,703) (9,765,934)
Cash (outflow)/inflow before
financing and liquid resource
management (1,837,897) 1,275,312 3,683,114
Management of liquid resources
Increase in current investments (263,974) (2,234,680) (5,840,979)
Financing
Issue of Ordinary Shares 2,165,648 1,690,204 6,293,673
Purchase of own shares (445,550) (251,506) (851,788)
----------- ----------- -----------
1,720,098 1,438,698 5,441,885
----------- ----------- -----------
(Decrease)/increase in cash for the period (381,773) 479,330 3,284,020
----------- ----------- -----------
Reconciliation of profit on ordinary activities before taxation to net cash
outflow from operating activities
for the six months ended 31 March 2013
Six months ended Six months ended Year ended
31 March 2013 31 March 2012 30 September 2012
£ £ £
Profit on ordinary activities before taxation 4,645,161 3,768,829 5,784,484
Net unrealised gains on investments (3,009,086) (2,273,414) (2,364,362)
Net gains on realisations of investments (1,037,994) (3,155,198) (5,243,190)
Increase in debtors (41,595) (143,661) (40,047)
(Decrease)/increase in creditors (2,879,888) 1,553,634 2,099,748
----------- ----------- -----------
Net cash (outflow)/inflow from operating activities (2,323,402) (249,810) 236,633
----------- ----------- -----------
The notes below form part of these Half-Year financial statements.
Notes to the Unaudited Financial Statements
1. Principal accounting policies
The following accounting policies have been applied consistently throughout the period. Full
details of principal accounting policies will be disclosed in the Annual Report.
a) Basis of accounting
The unaudited results cover the six months to 31 March 2013 and have been prepared under UK
Generally Accepted Accounting Practice (UK GAAP), consistent with the accounting policies set
out in the statutory accounts for the year ended 30 September 2012 and the 2009 Statement of
Recommended Practice, `Financial Statements of Investment Trust Companies and Venture Capital
Trusts' ("the SORP") issued by the Association of Investment Companies. The financial
statements are prepared under the historical cost convention except for the revaluation of
certain investments.
The Half-Year Report has not been audited, nor has it been reviewed by the auditor pursuant to
the Financial Reporting Council's (FRC's) guidance on Review of Interim Financial Information.
b) Presentation of the Income Statement
In order to better reflect the activities of a VCT and in accordance with the SORP,
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.
c) Investments
Investments are accounted for on a trade date basis.
All investments held by the Company are classified as "fair value through profit and loss",
and valued in accordance with the International Private Equity and Venture Capital Valuation
("IPEVCV") guidelines, as updated in September 2009. 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.
For investments actively traded in 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. Purchases and sales of unlisted investments are recognised
when the contract for acquisition or sale becomes unconditional.
Unquoted investments are stated at fair value by the Directors in accordance with the
following rules, which are consistent with the IPEVCV guidelines:
All investments are held at the price of a recent investment for an appropriate period where
there is considered to have been no change in fair value. Where such a basis is no longer
considered appropriate, the following factors will be considered:
(i) Where a value is indicated by a material arms-length transaction by an independent third
party in the shares of a company, this value will be used.
(ii) In the absence of i), and depending upon both the subsequent trading performance and
investment structure of an investee company, the valuation basis will usually move to either:-
a) an earnings multiple basis. The shares may be valued by applying a suitable price-earnings
ratio to that company's historic, current or forecast post-tax earnings before interest and
amortisation (the ratio used being based on a comparable sector but the resulting value
being adjusted to reflect points of difference identified by the Investment Manager compared
to the sector including, inter alia,a lack of marketability).
or:-
b) where a company's underperformance against plan indicates a diminution in the value of the
investment, provision against cost is made, as appropriate. Where the value of an investment
has fallen permanently below cost, the loss is treated as a permanent impairment and as a
realised loss, even though the investment is still held. The Board assesses the portfolio for
such investments and, after agreement with the Investment Manager, will agree the
values that represent the extent to which an investment has become realised. This is based
upon an assessment of objective evidence of that investment's future prospects, to determine
whether there is potential for the investment to recover in value.
(iii) Premiums on loan stock investments are accrued at fair value when the Company receives
the right to the premium and when considered recoverable.
(vi) Where an earnings multiple or cost less impairment basis is not appropriate and
overriding factors apply, discounted cash flow or net asset valuation bases may be applied.
d) Capital gains and losses
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.
2. Income
Six months ended Six months ended Year ended
31 March 2013 31 March 2012 30 September
2012
(unaudited) (unaudited) (audited)
Total Total Total
£ £ £
Revenue dividends received 147,002 104,973 305,650
Capital dividends received 533,750 - -
Income from money-market 25,199 57,529 96,138
funds
Loan stock interest 720,993 577,445 1,540,777
Bank deposit interest 94,871 11,641 56,871
Other Income - - 4,861
----------- ----------- -----------
Total Income 1,521,815 751,588 2,004,297
----------- ----------- -----------
3. Investment Manager's fees and performance fees
Six months ended Six months ended Year ended
31 March 2013 31 March 2012 30 September 2012
(unaudited) (unaudited) (audited)
Total Total Total
£ £ £
£ £ £
Allocated to revenue return:
Investment Manager's fee 156,797 148,768 290,664
Allocated to capital return:
Investment Manager's fee 470,393 446,304 871,993
Investment Managers' performance
fees 106,778 2,860,000 3,503,000
----------- ----------- -----------
Total 733,968 3,455,072 4,665,657
----------- ----------- -----------
Investment Manager's fee 627,190 595,072 1,162,657
Investment Managers' performance
fees 106,778 2,860,000 3,503,000
----------- ----------- -----------
Total 733,968 3,455,072 4,665,657
----------- ----------- -----------
The Directors have charged 75% of the fees payable under the
investment adviser's agreement, and 100% of the amounts payable under the
Incentive Agreement, to the capital reserve. The Directors believe it is
appropriate to charge the incentive fee wholly against the capital return, as
any fee payable depends on capital performance, as explained below.
Under a Deed of Termination and Variation relating to Performance
Incentive Agreements dated 29 March 2010, the Investment Manager's Incentive
Agreement for the former 'O' Share Fund has been continued while the former
'S' Share Fund's Incentive Agreement has been terminated. Under the terms of
the pre-merger 'O' Share Fund Incentive Agreement, each of the ongoing
Investment Manager, Mobeus Equity Partners LLP ("Mobeus") and a former
Investment Manager, Foresight Group LLP ("Foresight") are entitled to a
performance fee equal to 20% of the excess of the value of any realisation of
an investment made after 30 June 2007, over the value of that investment in an
Investment Manager's portfolio at that date ("the Embedded Value"), which
value is itself uplifted at the rate of 6% per annum subject to a High
Watermark test.
However, two amendments were made to this agreement for Mobeus, the
ongoing Investment Manager. Firstly, the High Watermark was increased by
£811,430, being the 'S' Share Fund's shortfall in total net assets from net
asset value of £1 per 'S' Share, at 31 December 2009. Secondly, only 70% of
any new investment made by Mobeus after the Merger will be added to the
calculation of the Embedded Value, the value of the Investment Manager's
portfolio and the value of any realisations, for the purposes of assessing any
excess.
Under the above agreements, each of the ongoing Investment Manager,
Mobeus and a former Investment Manager, Foresight were paid an aggregate
performance incentive fee of £3,050,234 on the ex-Foresight portfolio in
respect of the year ended 30 September 2012, with £3,050,000 having been
accrued at that date. As at 31 March 2013, a further £491,811 may be payable
in respect of the Mobeus portfolio, of which £453,000 was accrued at 30
September 2012.
4. Taxation
There is no tax charge for the period as the Company has incurred
tax losses, as its expenses exceed its income.
5. Basic and diluted earnings and return per Share
Six months ended Six months ended Year ended
31 March 2013 31 March 2012 30 September 2012
Total Total Total
£ £ £
i) Total earnings after taxation: 4,645,161 3,768,829 5,784,484
Basic earnings per Share 9.92 p 9.13 p 13.23 p
ii) Net revenue from ordinary activities
after taxation 526,881 268,220 989,722
Basic revenue return per Share 1.12 p 0.65 p 2.26 p
Net unrealised capital gains 3,009,086 2,273,414 2,364,362
Net realised capital gains 1,037,994 3,155,198 5,243,190
Capital dividend 533,750 - -
Provision for litigation costs no longer required - 1,337,456 1,337,456
Capital expenses (net of taxation) (355,772) (405,459) (647,246)
Investment Managers' performance fees (106,778) (2,860,000) (3,503,000)
----------- ----------- -----------
iii) Total capital return 4,118,280 3,500,609 4,794,762
Basic capital return per Share 8.80 p 8.48 p 10.97 p
iv) Weighted average number of shares
in issue in the period 46,836,111 41,301,622 43,710,889
6. Dividends
Year
Six months ended Six months ended ended
31 March 2013 31 March 2012 30 September 2012
£ £ £
Ordinary Shares
Interim paid for the year ended 2,862,310 8,138,244 8,138,244
30 September 2012 of 3p capital
and 3p income (2012 : 20p
capital) pence per Share
Final paid of nil p (2012 : 4p - 1,627,690 1,627,690
capital) pence per Share
----------- ----------- -----------
2,862,310* 9,765,934* 9,765,934*
----------- ----------- -----------
* Of this amount £333,740 (31 March 2012: £1,256,231; 30 September 2012:
£1,256,231) of new Shares were issued as part of the Company's Dividend
Investment Scheme.
7. Summary of movement on investments during the period
Traded on AiM Unquoted Preference Qualifying Total
ordinary shares shares loans
£ £ £ £ £
Valuation at 1 October
2012 2,858,821 8,999,239 35,430 19,312,177 31,205,667
Purchases at cost 149 73,311 - 1,340,342 1,413,802
Sales - proceeds (958,387) (824,835) (10,000) (2,498,488) (4,291,710)
- realised gains 118,892 320,626 5,000 604,485 1,049,003
Reclassification at
valuation - (497,952) 1,017 496,935 -
Unrealised gains/(losses) 412,471 1,770,278 (307) 826,644 3,009,086
----------- ----------- ----------- ----------- -----------
Valuation at 31 March 2013 2,431,946 9,840,667 31,140 20,082,095 32,385,848
----------- ----------- ----------- ----------- -----------
Book cost at 31 March
2013
3,215,129 11,498,182 48,664 19,070,113 33,832,088
Unrealised (losses)/gains
at 31 March 2013 (783,183) 3,462,415 (17,524) 1,011,982 3,673,690
Permanent impairment of
valuation of investments - (5,119,930) - - (5,119,930)
----------- ----------- ----------- ----------- -----------
Valuation at 31 March 2013 2,431,946 9,840,667 31,140 20,082,095 32,385,848
----------- ----------- ----------- ----------- -----------
Gains on investments
Realised gains based on
historical cost 275,701 681,386 - 163,532 1,120,619
Less amounts recognised
as unrealised
gains/(losses) in previous
years (156,809) (360,760) 5,000 440,953 (71,616)
----------- ----------- ----------- ----------- -----------
Realised gains based on
carrying value at 31 March
2013 118,892 320,626 5,000 604,485 1,049,003
Net movement in
unrealised gains/(losses)
in the period 412,471 1,770,278 (307) 826,644 3,009,086
----------- ----------- ----------- ----------- -----------
Gains on investments for
the period ended 31 March
2013 531,363 2,090,904 4,693 1,431,129 4,058,089
----------- ----------- ----------- ----------- -----------
8. Current asset investments
31 March 2013 31 March 2012 30 September 2012
£ £ £
Monies held pending investment 17,787,414 13,917,141 17,523,440
Current asset investments comprise investments in five OEIC money market funds
(four Dublin based and one London based) subject to immediate access, and
£5,000,000 in two bank deposits, repayable within one year. These sums are
regarded as monies held pending investment.
9. Capital and reserves for the six months ended 31 March 2013
Called
up Share Capital Revaluation Special Profit and
share premium redemption reserve reserve loss Total
capital account reserve account
£ £ £ £ £ £ £
At 1 October 2012 461,157 11,898,621 197,265 1,611,146 12,721,596 23,662,200 50,551,985
Shares bought
back (5,124) - 5,124 - (495,903) - (495,903)
Shares issued 41,864 4,536,242 - - - - 4,578,106
Dividends re-
invested into new
shares issued 3,598 330,142 - - - - 333,740
Expenses of
Enhanced
Buyback Facility
(note a) - - - - (68,771) - (68,771)
Dividends paid - - - - - (2,862,310) (2,862,310)
Loss transferred
between reserves - - - - (932,714) 932,714 -
Other expenses
net of taxation - - - - - (462,550) (462,550)
Net unrealised
gains on
investments - - - 3,009,086 - - 3,009,086
Net realised
gains
on investments - - - - - 1,037,994 1,037,994
Cancellation of
share premium
account (note b) - (13,751,531) - - 13,751,531 - -
Realisation of
previously
unrealised gains - - - (71,616) - 71,616 -
Profit for the
period - - - - - 1,060,631 1,060,631
----------- ----------- ----------- ----------- ----------- ----------- -----------
At 31 March 2013 501,495 3,013,474 202,389 4,548,616 24,975,739 23,440,295 56,682,008
----------- ----------- ----------- ----------- ----------- ----------- -----------
Note a: The expenses of the Enhanced Buyback Facility ("EBF") are third party
costs of the Facility of £68,771, incurred up to 31 March 2013. These costs
are borne by those Shareholders who participated in the EBF. Details of Shares
issued and bought back under the EBF are disclosed in Note 11, Post balance
sheet events. No fees were charged by the manager.
Note b: The cancellation of £13,751,531 from the share premium account (as
approved at the General Meeting held on 22 February 2013 and by the order of
the Court dated 13 March 2013) has increased the Company's special
distributable reserve. The purpose of this reserve is to fund market purchases
of the Company's own Shares, and to write off existing and future losses.
10. Net asset value per share
as at as at as at
31 March 2013 31 March 2012 30 September 2012
Net assets £56,682,008 £45,702,253 £50,551,985
Number of Shares in issue 50,149,478 43,354,355 46,115,656
Net asset value per Share - basic and
diluted 113.03p 105.42p 109.62p
Diluted NAV per Share assumes that the Investment Manager's
incentive fee is satisfied by the issue of additional shares. No dilution of
NAV per Share has occurred. If Shares were to be issued in the future in
respect of the accrued fees payable, no dilution will occur, as the estimated
incentive fee payable is already held as a creditor in these accounts.
11. Post balance sheet events
On 4 April 2013 and 5 April 2013, 2,679,214 Ordinary Shares were
allotted at a price of 112.60 pence per Share, raising net funds of
£2,919,440. On 10 April 2013, 96,846 Ordinary Shares were allotted at a price
of 115.3 pence per Share, raising net funds of £105,801 and 292,961Ordinary
Shares were allotted at a price of 112.6 pence per Share, raising net funds of
£319,328. Finally, on 7 May 2013, 155,866 Ordinary Shares were allotted at a
price of 112.6 pence per share, raising net funds of £169,859.
On 4 April 2013, as part of the Enhanced Buyback Facility,
4,694,852 Ordinary Shares were bought back for cancellation at a price of
108.8 pence per Share costing £5,107,999. Immediately following this,
4,548,282 Ordinary Shares were issued at a price of 112.3 pence per Share
raising net funds of £5,107,721.
On 8 April 2013, again as part of the Enhanced Buyback Facility,
3,434,836 Ordinary Shares were bought back for cancellation at a price of
108.8 pence per Share costing £3,737,102. Immediately following this,
3,327,650 Ordinary Shares were issued at a price of 112.3 pence per Share
raising net funds of £3,736,951.
On 19 April 2013, £1,000,013 was further invested into ATG Media
Holdings Limited, with £1,000,000 provided by acquisition vehicle Peddars
Management Limited. This was to enable ATG Medial Holdings Limited acquire the
US Company, Bidspotter Inc.
12. The financial information for the six months ended 31 March
2013 and the six months ended 31 March 2012 has not been audited.
The financial information contained in this Half-Year report does
not constitute statutory accounts as defined in Section 434 of the Companies
Act 2006. The financial statements for the year ended 30 September 2012 have
been filed with the Registrar of Companies. The auditor has reported on these
financial statements and that report was unqualified and did not contain a
statement under either section 498(2) or 498(3) of the Companies Act 2006.
13. Copies of this statement are being sent to all Shareholders.
Further copies are available free of charge from the Company's registered
office, 30 Haymarket, London, SW1Y 4EX, or can be downloaded via the Company's
website at www.incomeandgrowthvct.co.uk
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