Annual Financial Report

RNS Number : 1466I

Income & Growth VCT (The) PLC

10 December 2020

 

THE INCOME & GROWTH VCT PLC LEI:  213800FPC15FNM74YD92 ANNUAL FINANCIAL RESULTS OF THE COMPANY FOR THE YEAR ENDED 30 SEPTEMBER 2020 The Income & Growth VCT plc (the "Company") announces the final results for the year ended 30 September 2020.  These results were approved by the Board of Directors on 9 December 2020. You may, in due course, view the Annual Report & Financial Statements, comprising the statutory accounts of the Company by visiting www.incomeandgrowthvct.co.uk . FINANCIAL HIGHLIGHTS As at 30 September 2020: Net assets: £83.13 million Net asset value ("NAV") per share: 70.06 pence -  Net asset value ("NAV") total return1 per share was 11.9%. -  Share price total return1 per share was 3.3%2. -  Dividends paid in respect of the year total 14.00 pence per share. This brings cumulative dividends paid1 to Shareholders in respect of the past five years to 57.00 pence per share. -  The Company realised investments totalling £17.60 million of cash proceeds and generated net realised gains in the year of £6.42 million. -  £8.39 million was invested into five new companies and four follow-on investments. 1 - Definitions of key terms and alternative performance measures shown above and throughout this report are provided in the  Glossary of terms within the Annual Report & Financial Statements. 2 - Further details on the share price total return are shown in the Performance section of the Strategic Report within the Annual Report & Financial Statements. PERFORMANCE SUMMARY The table below shows the recent past performance of the Company's existing class of shares for each of the last five years. R eporting date Net assets NA V per share Share price 1 Cumulative dividends paidper Cumulativetotalreturn pershareto Shareholders 2 Dividends paidand proposed Asat share (NA V  (Share basis)  price basis) persharein respectof eachyear 30September  (£m) (p) (p) (p) (p)  (p) (p) 2020  83.13 70.06 59.50 131.50 201.56  191. 00 14. 00 2019  81.73 79 .12 75.50 3 113. 00 192. 12  188.50 6. 00 2018  82.58 78.32 69.50 108. 00 186.32  177 .50 6. 00 2017  64.35 81.24 73.00 102.50 183.74  175.50 21. 00 2016  70.84 98.51 88.80 80.50 179 . 01  169 .30 1 0.0 0 1  Source: Panmure Gordon & Co (mid-market price). 2 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 current share class. The details of the share price total return per share calculation are shown within the Annual Report & Financial Statements. 3  The share price at 30 September 2019 has been adjusted to add back the dividend of 4.50 pence per share paid on 18 October 2019, as the listed share price was quoted ex this dividend at this year-end. Detailed performance data for each of the VCT's fundraisings is provided in the Performance Data Appendix within the Annual Report. The tables, which give cumulative total return per share information for each allotment date on both a NAV and share price basis, are also available on the Company's website at www.incomeandgrowthvct.co.uk where they can be downloaded by clicking on "table" in "Reviewing the performance of your investment". CHAIRMAN'S STATEMENT I ampleasedtopresenttheAnnualReport oftheCompanyforthefinancialyearended30September2020. Chairman's Introduction This is my first Statement to Shareholders since succeeding Jonathan Cartwright as Chairman on 1 July 2020. I would like to thank Jonathan on your behalf, for the excellent service he provided to Shareholders during his tenure as a Director and latterly as interim Chairman. Overview This year has been a positive one for Shareholders, despite the significant and exceptional challenges caused by the outbreak of COVID-19 since late February 2020. Your Company's NAV total return per share increased in the year by 11.9%. Before this outbreak, the Company completed a timely and successful fundraising ensuring the Company remained well-funded. In the same period, performance had started strongly, as the portfolio made further progress and three profitable realisations were achieved. One exit was from one of the most successful investments the Company has made while the two others were the first profitable exits of growth capital investments (which have been the only permitted category of investment the VCT can make since the VCT rule changes in 2015). Shortly before the mid-point of the Company's year, the COVID-19 pandemic and the UK Government's lockdown measures provoked substantial uncertainty and instability. There was a significant decline in consumer and business confidence and public markets saw a sharp fall in March. The immediate impact of the COVID-19 crisis for Shareholders was a fall in portfolio values at the end of March, based on best knowledge at that uncertain time. These adjustments were partly market related, but mainly in response to the Investment Adviser's assessment of COVID-19's actual and potential impact on specific market segments and investee companies. As the year progressed, greater clarity has emerged. The environment for most of our investee companies has been less volatile and less uncertain than initially assumed last March, but critically, also more robust and favourable trading conditions emerged, such that the valuation of the portfolio has recovered strongly over the six months to 30 September from its March low point. Whilst the second lockdown and potential further restrictions may impact the portfolio going forward, overall, your Board is pleased with how well so many portfolio companies have been able to capitalise on opportunities presented and with the performance achieved. Despite the considerable COVID-19 related restrictions on its ability to process transactions efficiently, the Company remained an active investor during the year. Several profitable realisations occurred, being the primary driver of shareholder value for the year. New and follow-on investment activity was strong considering the circumstances and resulted in nine transactions to support further growth in these companies. Both the portfolio valuation changes and investment movements are discussed in the Investment Portfolio section below and further details are also provided in the Investment Adviser's Review. Performance The year's key events summarised above saw an overall increase in the Company's NAV total return per share of 11.9% (2019: 7.4%). This was due to a strong revenue return, substantial realised gains on disposals and net gains in portfolio valuations for the year. These factors are explained in further detail in the Company's Strategic Report and Investment Adviser's Review. The Board believes that the Company's performance has demonstrated resilience in a volatile year and that the valuations at the year-end reflect the responses to the pandemic and the potential to continue making progress, despite continued uncertainty in respect of the pandemic's impact. The share price total return for the year was 3.3% (2019: 15.8%), compared to the NAV return of 11.9%. This difference arises principally due to the timing of NAV announcements and is explained more fully in the Strategic Report within the Annual Report & Financial Statements, under Performance. At the year-end, your Company was ranked 1st out of 31 Generalist VCTs over ten years and 16th out of 42 Generalist VCTs over five years, in the Association of Investment Companies' analysis of NAV Cumulative Total Return. Shareholders should note that these figures do not reflect the NAV per share disclosed in this Report. For further details on the performance of the Company, please refer to the Investment Adviser's Review within the Annual Report & Financial Statements. Dividends and Dividend Investment Scheme A total of 18.50 pence has been paid in dividends during the year although 4.50 pence related to a dividend declared for the previous financial year. The two interim dividends paid of 3.00 and 11.00 pence per share in respect of the current year were paid on 10 July and 28 September 2020 respectively. The Company's Dividend Investment Scheme ("DIS") was re-activated following the Annual General Meeting ("AGM") held in February 2020 and Shareholders wishing to take advantage of this seamless method of continuing investment, and the resultant tax relief, can elect to join the DIS at any time by instructing the Registrar, Link Asset Services, whose details are contained within the Annual Report & Financial Statements or by completing the mandate form available on the Company's website: www. incomeandgrowthvct.co.uk.  Shareholders should note that an election must be registered at least 15 days prior to a dividend payment, for inclusion in the DIS. A total of 4,277,951 new Ordinary shares were allotted under the DIS scheme, subject to listing, throughout the year. The Company's target of paying a dividend of at least six pence per share in respect of each financial year has been reached or exceeded in each of the last nine years. As Shareholders have been advised previously, both the gradual move of the portfolio to younger growth capital investments, and the realisations of older companies that have provided a good yield, are likely to make dividends harder to achieve from income and capital returns alone in any given year. Accordingly, the Board continues to monitor the sustainability of this target. Also, Shareholders should note that there may continue to 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. Such dividends may cause the Company's NAV per share to reduce by a corresponding amount. Investment portfolio In the context of the continuing challenging business environment, the portfolio has performed strongly. The overall value has increased by £9.85 million (2019: increase of £4.93 million), or 19.6% (2019: increase of 10.0%) on a like-for-like basis, compared to the start of the year. This increase was comprised of £6.42 million in realised gains over the year and a net unrealised increase in valuations of £3.43 million.  The portfolio was valued at £50.86 million at the year-end (30 September 2019: £50.22 million). Clearly, COVID-19 has been the dominant influence on the portfolio and its valuations over the second half of the year. During this unprecedented time, the Board liaised closely with the Investment Adviser, who ensured that all practical steps were taken to enable each portfolio company to trade through the crisis where possible and return to growth in value thereafter. All investee companies were alerted to, and some utilised, the available government support packages. The Company has also provided loan interest payment holidays to some portfolio companies, generating vital cash headroom for certain companies in the portfolio over the subsequent half-year. The sudden imposition of lockdown on UK business created immediate volatility and uncertainty. However, once the immediate impact subsided, its continuing influence on business generally and portfolio companies specifically was able to be far better understood. It is pleasing that this impact has been far less negative than was initially expected. This, combined with trading levels achieved by some companies, has caused many valuations to achieve not just a substantial recovery, but in some cases to reach higher valuations. Several portfolio companies have greatly benefited from a structural change in activity, behaviour and consumer purchasing habits, and are now trading at or above their pre COVID-19 levels. The majority of the portfolio has demonstrated a strong degree of resilience with over two-thirds of the portfolio value showing year to date growth in revenue and/or earnings over the previous year. A further beneficial factor is the portfolio's relatively limited exposure to the travel and hospitality sectors with the great majority of the retail sector exposure being to online business models (of the nine investments in retail, only the smallest, held at nil value, has a physical presence). Although quoted markets have also been rallying since March, it is noteworthy that the principal driver of the rise in valuations over the recent half-year reflects strong earnings growth at many investee companies. On the other hand, some companies have clearly struggled, although they are in the minority and their impact on overall shareholder return is modest. The portfolio movements across the year were as follows: £m P ortfolio valueat30September2019 50.22 Newandfollow-oninvestments 8.39 Disposalproceeds (17. 60) Netrealisedgains 6.42 V aluation movements 3.43 Portfolio valueat30September2020 50.86 During the year, the Company invested a total of £8.39 million (2019: £5.08 million) into five new (2019: three) and four existing (2019: three) portfolio investments. The new investments were: Active Navigation £1.54million Aproviderofenterprise-level fil eanalysissoftware IPV £0.95million Adeveloperofmediaasset man agementsoftware B leachLondon £0.72million Directtoconsumer h aircarebrand B ella&Duke £0.93million Apremiumfrozenraw d ogfoodprovider Andersen E V £ 0.32million An el ec tri c vehicl echarge point business andfollow-onamountsintoexisting inv es tments: Rot ageek £0.63million Aworkforcemanagement so ft w ar e pr ovider MyTutor £ 0.98million Adigitalmarketplace forschooltutoring Bust er&Punch £1.54million Alightingandinteriors brand Preservica £0.78 million Asellerofproprietarydigital archi vingsoftware These businesses may present opportunities for further investment in the future as they may require further capital to realise their plans to expand. The Company realised investments in Redline, Biosite, Auction Technology Group, Access IS and Blaze Signs during the year which, combined with loan repayment and other capital receipts, generated total proceeds of £17.60 million. The first half of the year saw the realisations of two growth capital investments, Redline Worldwide and Biosite, generating proceeds of £1.53 million and £2.65 million respectively, realising a combined gain in the year of £0.98 million. Over the life of these investments, Redline generated a multiple on cost of 1.7x and an IRR of 17.7% and Biosite generated a multiple on cost of 1.5x and an IRR of 21.0%. In addition, the sale of Auction Technology Group ("ATG") achieved a substantial gain over cost and represented proceeds of £4.19 million and a gain of £1.56 million for the year. Over the life of the investment, total proceeds of £9.04 million have been received, an overall multiple of over 4.5x original cost and an IRR of 28.9%, an outstanding result for Shareholders. The second half of the year saw the realisations of Access IS and Blaze Signs. Access IS generated cash of £8.38 million, a return of 2.5x and an IRR of 23.4% over the life of the investment and its completion resulted in a gain of £3.00 million in the year. Blaze Signs generated £3.39 million over the life of the investment, a 2.5x return and an IRR of 13.1% and its completion resulted in a gain of £0.13 million. After the year-end, the sale of Vectair realised cash receipts of £1.10 million which over the nearly 15 year life of the investment contributed to a multiple on cost of 8.3x and an IRR of 22.2%. In isolation, this would result in an uplift of 0.07 pence per share over the 30 September 2020 NAV of 70.06 pence per share. Further proceeds may be receivable in due course. Other loan repayments and other capital proceeds of £1.34 million and net realised gains of £0.75 million were principally generated from Omega Diagnostics, which was partially realised in several phases during the year. Revenue account The results for the year are set out in the Income Statement within the Financial Statements and show a revenue return (after tax) of 2.07 pence per share (2019: 1.80 pence per share). The revenue return of £2.32 million for the year has increased from last year's comparable figure of £1.87 million. This increase is mainly due to a significant receipt of loan interest arising from the sale of ATG, partially offset by a number of provisions against loan interest. Industry and Regulatory Changes Although no further changes have emerged in the year, a previous change, already announced, whereby 80% (previously 70%) of the Company's total investments must now be in qualifying investments, applied to the Company from 1 October 2019. The Board has therefore ensured that this requirement has been met throughout the year under review. Fundraising The Board was pleased with the response to the Company's Offer for Subscription ("the Offer") which was launched during this financial year on 25 October 2019. This Offer became fully subscribed within two months and raised £10 million in total, made up of the initial £5 million limit, and the £5 million over-allotment facility. In accordance with the Offer's prospectus, all the shares in the Company were allotted under the Offer on 8 January 2020. The Board thanks Shareholders for their continued support and extends a warm welcome to all new investors. Share buy-backs During the year, the Company bought back and cancelled 1,858,177 (2019: 2,135,527) of its own shares, representing 1.8 % (2019: 2.0%) of the shares in issue at the beginning of the year, at a total cost of £1.24 million (2019: £1.47 million) inclusive of expenses. It is the Company's policy to cancel all shares bought back in this way. The Board regularly reviews its buyback policy and currently seeks to maintain the discount at which the Company's shares trade at no more than 5% below the latest published NAV. Liquidity Following the Company's successful fundraising, the re-introduction of the DIS and realisation proceeds, cash or near cash resources held by the Company as at 30 September 2020 were £32.19 million or 38.7% of net assets. At the date of this report pro forma cash and liquid assets amount to £33.50 million or 40.3% of net assets, following post year-end disposals. The Board considers the Company to have the advantage of a strong cash position. Shareholder communications May I remind you that the Company has its own website containing useful information for Shareholders. The Investment Adviser held the annual Shareholder event on 4 February 2020 and is planning to hold a virtual event later during 2021. Details will be notified to Shareholders once finalised and will be shown on the Company's website: www.incomeandgrowthvct.co.uk . Fraud Warnings Boiler Room Fraud We have been made aware of an increase in the 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, often claiming or appearing to be from a corporate finance firm offering to buy your VCT shares at an inflated price. Further information and fraud advice plus details of who to contact, can be found in the Information for Shareholders section within the Annual Report & Financial Statements. Protect against identity fraud 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. Environmental, Social and Governance Your Board would like to reassure Shareholders that it takes these issues seriously, and future reporting will cover them in more detail. Further reporting and procedural requirements for these increasingly important issues required by current and future regulation should enable the Board to provide concise information and implement further processes, both relevant to the Company and, correspondingly, useful to stakeholders. These objectives do require that regulations are measured, proportionate and cost-effective to introduce. Annual General Meeting The next Annual General Meeting of the Company will be held at 11.00 am on Wednesday, 10 February 2021. Shareholders should note that it is likely that physical meetings may still not be permitted due to the UK Government's COVID-19 restrictions and therefore Shareholders would not be allowed to attend the AGM in person. In planning our AGM we have sought to prioritise the safety and wellbeing of our Shareholders and all attendees. In light of the current COVID-19 measures in England, and the legislative measures that have been proposed to allow companies to hold general meetings safely, the AGM will, therefore, be held as a closed virtual meeting with Shareholders able to join the meeting as attendees by electronic means via MS Teams with the Board and Investment Adviser shown on the screen. A link to attend the meeting is available on pages 36, 76 and 78 of the Annual Report & Financial Statement and on the Company's website at www.incomeandgrowthvct.co.uk under the AGM bubble on the front page. You do not need to download MS Teams or have a MS Teams account to access the event. The meeting will also be accessible by telephone conference call for those without a suitable device and/or WiFi connection. Once the formal business of the meeting is concluded, a presentation by the Investment Adviser will commence followed by Shareholders' questions. Shareholders will not be able to vote at the meeting. Voting will be conducted by way of a poll, by the quorum of members, of all the valid proxy votes lodged. The Board encourages Shareholders to submit their vote by proxy either by completing and returning the form enclosed or proxy votes may also be submitted electronically via the Link Shareholder portal at: www.signalshares.com . Votes must arrive at the Registrar 48 hours before the meeting to be valid. The Notice of the meeting is included within the Annual Report & Financial Statements and an explanation of the resolutions to be proposed can be found in the Directors' Report. Shareholders can also submit any questions about the resolutions to be passed at the AGM by using the [e-mail] email address and a response will be provided prior to the deadline for lodging proxy votes. You can also register any questions for the AGM using the same email address or using the question facility during the meeting. Outlook The impact of COVID-19 was and will continue to be immediate and wide reaching. Nevertheless, your Board considers that your Company is well positioned to continue to respond and adapt in most likely scenarios in so far as they can presently be foreseen. The successful realisations and earlier fundraising have given the Company strong liquidity not only to support the existing portfolio as appropriate, but also to capitalise on opportunities which may arise for new investment. The portfolio still retains a foundation of mature investments that are providing an income return, but also an increasing proportion of younger, growth capital investments seeking to achieve further scale, higher levels of profitability and value. The year-end valuations reflect strong performance by many investees in the second half of the year and a robust and well-funded portfolio, well equipped to meet an uncertain environment. The results achieved for the year reflect the growth and valuation increases across the portfolio, underpinned by the successful realisations. The Investment Adviser is seeing a good pipeline of interesting new investment opportunities. Furthermore, as BREXIT negotiations continue unresolved they cause global market economies to be nervous and volatile. UK and European businesses in particular will therefore continue to operate in an uncertain trading environment for the foreseeable future. Although the degree and frequency of future lockdown and other restrictions to the UK economy is unclear, both the Investment Adviser and portfolio companies are well equipped to respond accordingly. On all fronts, we have cause to be cautiously optimistic. I would like to take this opportunity once again to thank all Shareholders for their continued support and hope you and your families remain healthy and well. Maurice Helfgott Chairman 9 December 2020 INVESTMENT POLICY The Company's policy is to invest primarily in a diverse portfolio of UK unquoted companies. Asset Mix and Diversification The Company will seek to make investments in UK unquoted companies in accordance with the requirements of prevailing VCT legislation. Investments are made selectively across a wide variety of sectors, principally in established companies. Investments are generally structured as part loan and part equity in order to receive regular income and to generate capital gain from realisations. There are a number of conditions within the VCT legislation which need to be met by I&G and which may change from time to time. No single investment may represent more than 15% (by VCT tax value) of the Company's total investments at the date of investment. Save as set out above, the Company's other investments are held in cash and liquid funds. 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 borrowing of up to 10% of the adjusted capital and reserves (as defined therein). However, the Company has never borrowed and the Board would only consider doing so in exceptional circumstances. INVESTMENT ADVISER'S REVIEW COVID-19 Pandemic The Company's year started well with strong portfolio performance and some high-quality realisations being seen. Six months into the year, in March 2020, the UK Government introduced lockdown and social distancing measures in response to the COVID-19 pandemic.  These measures had an immediate adverse impact on UK businesses, with many companies experiencing a significant reduction in consumer and business demand, restrictions on employees' working practices and disruption to their supply chains. Global markets fell significantly as a result. Following the low point in March, there has been a significant and pleasing bounce-back with recovery in portfolio trading levels. There are still uncertainties ahead, particularly the second wave of the COVID-19 pandemic and BREXIT, but the portfolio is in robust shape, following the experience gained and the opportunities taken over the last six months, to withstand and respond to these as yet uncertain developments in future.  At all times during the pandemic, the Investment Adviser has reviewed and evaluated the impact of COVID-19 on each sector exposure and on the value of the portfolio, and appropriate action taken. Mobeus has and continues to review the opportunities for new and follow-on investments and is in a position to capitalise as and when needed via the Company's relatively high liquidity levels. Over the most recent months, investment in new opportunities has been relatively low as entrepreneurs temporarily deferred fundraising but there is now a healthy pipeline of suitable opportunities which are being evaluated.  The level of portfolio follow-on investment has indicated there are opportunities to back proven portfolio companies that are achieving strong relative performance. The realisation activity outlook continues to be positive with approaches received from trade and financial investors to several investee companies.  Overall, the portfolio is robust and the Investment Adviser is mindful of the uncertain future but remains optimistic on the basis of recent evidence of trading performance and potential growth within the portfolio.  Portfolio review Prior to the emergence of the COVID-19 pandemic, there was some very positive progress within the portfolio, particularly with respect to exits such as Auction Technology Group, Redline Worldwide and Biosite. At the half-year stage, and at the height of the pandemic uncertainty, many valuation reductions were applied to the portfolio which reflected the initial drop in revenues, stock market movements and included COVID-19 specific adjustments given the uncertain outlook. In the second half of the year, the portfolio experienced a significant bounce-back such that for the year as a whole the value of the portfolio increased by £9.85 million, comprising an increase of £3.43 million in the unrealised portfolio and gains of £6.42 million through realisations.  It is important to note that the usual approach to portfolio valuation by the Investment Adviser continued to be applied throughout this uncertain period. The second half-year recovery is attributable to trading improvement achieved by many portfolio companies, against a backdrop of improved market sentiment. The removal of unused COVID-19 related adjustments that were put in place during March, and improved cash generation, were also contributing factors. Some portfolio companies, often with online business models, have traded strongly throughout the latter half of the year. Whilst it is still early to be certain, there is evidence that a degree of structural change to consumer purchasing habits has occurred, which should underpin strong performance in future under the "new normal". The second half of the year, benefited from further valuation increases and continued a strong run of realisations with further gains generated from the exits of Access IS and Blaze.  Activity in the year is summarised as follows: 2020 £m 2019 £m Openingportfoliovalue 50 .22 49.40 Newandfurther 8.39 5.08 investments Disposalproceeds (17. 60) (9.19) Netrealisedgains 6.42 3.15 V aluation movements 3.43 1.78 Portfolio value at 30 September 50.86 50.22 The Company made new and follow-on investments totalling £8.39 million, which is particularly pleasing given that there was effectively a temporary pause in new investment going into the summer months. The Company invested £4.46 million into five new growth companies, including one since the onset of the COVID-19 pandemic.  £3.93 million was invested into four existing portfolio companies to allow them to capitalise on further growth opportunities. The details of these investments are shown within the Investment Review section of the Annual Report & Financial Statements. The Company realised its investments in Redline, Biosite, Auction Technology Group, Access IS and Blaze Signs during the year, receiving a total of £16.25 million in proceeds, and contributing to total receipts of £17.60 million during the year. The details are set out below: In December, the Company realised £1.53 million from its first growth capital investment made under the new VCT rules, Redline Worldwide, generating a gain of £0.98 million in the year. Over the time that this investment was held, a multiple of proceeds over cost of 1.7x and an IRR of 17.7% has been achieved to date. In February, Auction Technology Group was sold and generated proceeds over the life of the investment of £9.04 million compared to an original cost of £2.00 million, a multiple on cost of 4.5x and an IRR of 28.9% over the 11½ years this investment was held - an exceptional return for Shareholders. Also in February, the investment in Biosite was realised, generating proceeds of £2.77 million over the life of the investment, representing a profit over cost of £0.98 million and contributing to a gain over original cost of 1.5x and an IRR of 21.0%. In August, the realisation of Access IS provided total proceeds over the life of the investment of £8.38 million representing a profit over cost of £5.06 million and a gain over original cost of 2.5x with an IRR of 23.4%. Finally, in September, the Blaze Signs exit contributed to total proceeds of £3.39 million over the life of the holding, contributing to a gain over cost of £2.06 million, representing 2.5x and an IRR of 13.1%. Following the year-end, the realisation of Vectair contributed to total proceeds received over the life of the investment of £1.79 million, generating a multiple over cost of 8.3x and an IRR of 22.2%. Also during the year and following a significant increase in its share price, the Company received £1.05 million from the partial realisations of its holding in Omega Diagnostics. This represented a realised gain of £0.85 million for the year and contributed to an attractive return to date of 5.3x multiple on cost and based upon the valuation at the year-end has achieved an IRR to that date of 19.1%. This investment has secured a strong positive return to date but maintains a degree of potential upside through the residual holding. The investment and divestment activity during the year increased the proportion of the portfolio regarded as growth capital investments by value to 74.6% at the year-end (30 September 2019: 59.2%). The portfolio (including legacy and AIM investments) had decreased from 41 to 40 investments at the year-end. The portfolio's contribution to the overall results of the Company is summarised below: InvestmentPortfolio CapitalMovement 2020 £m 2019 £m Increaseinthevalueof 10.16 6.69 unrealisedinvestments Decreaseinthe (6.73) (4.91) valueofunrealised investments Netincreaseinthe valueofunrealised investments 3.43 1 .7 8 Realised gains 6.53 3 . 1 5 Realised losses (0 .11) - Netrealisedgainsintheyear 6.42 3 . 1 5 Net investment portfolio capital movement in the year 9.85 4.93 Valuation changes of portfolio investments still held The strength of the valuation increases in the second half-year was primarily driven by the Company's growth portfolio, many of which have Direct-to-Consumer business models that have been ideally suited to the more physically remote business environment under COVID-19. Mobeus believes that this has accelerated an existing trend and in many cases the shift in behaviours will prove permanent. Over this period, some older style MBO portfolio companies with similar business practices have also benefited.  Despite much of the portfolio performance being positive, a few companies have struggled in this environment, although in most cases, these businesses were already struggling pre-COVID-19. While there remains a possibility such businesses will fail, their value has already been reduced to modest levels, reducing their risk to future shareholder value. The details of valuation increases and reductions are explained below. Within total valuation decreases of £(6.73) million, the main reductions were CGI Creative Graphics International - £(1.59) million, Tapas Revolution - £(1.33) million, and Media Business Insight (MBI) - £(1.25) million. These companies saw some of the most significant impact of a sudden decline in demand for their products or services which, even when restrictions are eased, may take time for value to recover. By contrast some investee companies' trading has benefited greatly from the lockdown. The main valuation increases include Virgin Wines - £3.04 million, Active Navigation - £1.54 million, Parsley Box - £1.24 million and MPB Group- £0.84 million. Virgin Wines, Parsley Box and MPB have generated record earnings and revenues over the lockdown period and beyond. All have significantly increased their customer base and there is evidence that these new customers are continuing to be at least as active and profitable as their pre-COVID-19 customers. Active Navigation has benefited from its strong levels of recurring revenues. The majority of the increase in portfolio value lies in the top 10 companies which represent nearly 70% of the portfolio by value. Year-on-year growth by either revenues or earnings has been seen in nine of the top ten companies and it is pleasing to note that eight of these are from the younger, growth portfolio. The significant value and performance growth has contributed to the resilience of the portfolio, reflecting investment by the Company in strong Direct-to- Customer business models or those that have adapted to them. The year also saw portfolio companies, Jablite and Oakheath (formerly Super Carers) entering voluntary liquidation. These two companies were struggling before the impact of COVID-19. Valuation reductions for these companies had already been made, so there has been little impact on shareholder value from these administration processes. Investment portfolio yield During its financial year, the Company received the following amounts in interest and dividend income: InvestmentPortfolio Yield 2020 £m 2019 £m Interestreceivedinthe year 2.66 2.64 Dividendsreceivedin the year 0 .84 0.26 Total portfolioincome intheyear1 3.50 2.90 Portfolio valueat30September 50.86 50.22 Portfolio IncomeYield (Incomeasa%of Portfoliovalueat 30September) 6.9% 5.8% 1  Total portfolio income in the year is generated solely from investee companies within the portfolio. See Note 3 of the Financial Statements for all income receivable by the Company. The increase in income was mainly due to interest of £1.09 million received on the loan instruments in Auction Technology Group being paid, as part of the sale transaction, which had not previously been recognised. Portfolio yield is expected to fall for the foreseeable future, as the growth portfolio's returns are likely to be more capital in nature. Environmental, Social, Governance considerations The Investment Adviser and the Board have discussed an appropriate framework within which to assess progress on these matters within the existing portfolio. The Investment Adviser is encouraging this matter to be a standing agenda item at investee company board meetings. It will continue to be an important consideration in our assessment of new investment opportunities. Outlook The portfolio is in a good position with many companies trading well during lockdown and several at record levels. This gives confidence about the future prosperity of the portfolio and its ability to cope with other uncertainties, challenges and opportunities associated with BREXIT and the second national lockdown. The new investment pipeline is recovering to levels seen pre-COVID-19 and capital deployment should continue at an encouraging rate. The Investment Adviser, although cautious in its approach, is confident that the portfolio is in robust shape to cope with whatever the short to medium-term holds. New investments in the year A total of £4.46 million was invested into five new investments during the year as detailed below: Company Business Date of Investment Amount of new investment (£m) Ac ti ve Nav igati o n Dataanalysissoftware November 20 1 9 1 . 5 4 Data Discovery Solutions (trading as "Active Navigation") is a data analysis software solution which makes it easier for companies to clean up network drives, respond to new data protection laws and dispose of redundant and out-dated documents. Active Navigation's solution is used by significant blue-chip customers, particularly those in highly regulated industries such as energy and professional services, as well as government entities in the USA, Canada, Australia and the UK. Active Navigation will seek to drive continued growth from its file analysis platform with the recruitment of experienced sales and professional services staff. Since 2014 revenues have grown from £1.50 million to £6.00 million in its financial year to 30 June 2019. I P V M ediaassetsoftware  November 2019 0.95 IPV has developed a media asset management software product called 'Curator'. This enables enterprise level customers to retrieve and search hours of video footage quickly, edit into multiple short clips and broadcast to online video platforms (such as YouTube) and company intranets. This enables IPV's impressive list of blue-chip clients, such as NASA , Sky and Turner Sports to improve efficiency in managing their video content. The company has built an impressive senior management team of proven operators and is targeting a media asset management market in the US and UK, worth an estimated £1 billion per  annum. The investment will be used to build out a sales and marketing team and to fund lead generation for new direct and partner channels as well as supporting the existing partner network. From 2016 to 2019 recurring revenues grew over 60% annually and represented approximately 70% of total revenues in 2019. Bleach London Direct to consumer hair care brand December 2019 0.72 Bleach London Holdings (trading as "Bleach London") is an established branded, fast growing business which manufactures a range of haircare and colouring products. Bleach London 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. The investment was part of a wider £5.60 million investment round alongside trade and angel investors. The funds will be used to drive continued growth in sales through retailers as well as capitalise on its strong social media presence whilst accelerating its growing direct to consumer channel. Bleach London delivered an impressive three times revenue growth between 2017 and 2019. Bella&Duke Premium frozen raw dog food provider February 2020 0.93 Bella & Duke is a direct to consumer subscription service, providing premium frozen raw dog food to pet owners in the UK. Founded in 2016, the business provides an alternative to standard meal options for dog owners by focusing on the well documented health benefits of a raw food diet. This area is a growing niche in the large and established pet food market and is being driven by the premiumisation of dog food. The investment will seek to optimise its production and supply facilities, expand and enhance its team and broaden its product range. The company has grown revenues over 300% between 2018 and 2019. Andersen EV Electric vehicle chargers June 2020 0.32 Muller EV Limited (trading as Andersen EV) is a design led manufacturer of premium electric vehicle (EV) 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. The Company's funds will be used to scale the business through investment in further products and software, sales and marketing and electric vehicle manufacturer partnerships.  Andersen is well positioned in a nascent sector experiencing significant growth and has increased sales by over 350% for its most recent financial year.               Further investments in existing portfolio companies in the year The Company made further investments totalling £3.93 million into four existing portfolio companies during the year under review, as detailed below: Company Business Date of Investment Amount of new investment (£m) Rotageek Workforce management software May 2020 0.63 Rotageek is a provider of cloud-based enterprise software to help larger retail, leisure and healthcare organisations predict  and meet demand to schedule staff effectively. This investment, alongside funds from a new VCT investor and existing shareholders, will be used to capitalise on opportunities that will emerge as the retail sector recovers from lockdown restrictions. Rotageek will also be expanding its presence in healthcare to help address the workforce management issues of a sector that is chronically overburdened at present. For the year ended 31 December 2019, revenues have grown over 45% on the prior year. MyTutor Digital marketplace connecting school pupils seeking one-to-one online tutoring May 2020 0.98 MyTutorweb (trading as MyTutor) is a digital marketplace that connects school pupils who are seeking private one-to-one tutoring with university students. The business is satisfying a growing demand from both schools and parents to improve pupils' exam results to enhance their academic and career prospects. This further investment, alongside other existing shareholders, seeks to build and reinforce its position as a UK category leader in the online education market as well as to begin to develop a broader, personalised learning product offering. MyTutor has performed strongly over the last 18 months with 70% growth in 2019 and in excess of 100% in the last six months. The company has been chosen as Tutoring Partner for the National Tuition Programme where they will directly support 30,000 students in catching up on lost learning as a result of the COVID-19 pandemic. Bu s ter&Punch Lighting and interiors brand September 2020 1 . 5 4 Buster and Punch is a well-established, premium branded, fast growing business which designs and manufactures a complete range of high-quality functional fittings (lighting, electrical and hardware and other accessories) for the home. The Company first invested in 2017 and since then, the business has delivered consistent high growth across its ranges, with revenues growing in excess of 65%, and reaching nearly £10 million in 2020. Buster and Punch's products are now sold in 99 countries via both its highly invested ecommerce platform and direct services to consumers, trade and retailers across the world. Buster and Punch also operates flagship showrooms in London, Stockholm and Los Angeles. The new funding will be used to drive the global business plans of this fast-growing luxury interior fashion label with further international expansion into the US and Asia Pacific markets. Preservica Seller of proprietary digital archiving software September 2020 0.78 Preservica is a SaaS software business with blue chip customers of strong recurring revenues and has developed market leading software for the long-term preservation of digital records, ensuring that digital content can remain accessible, irrespective of future changes in technology. This latest investment is to provide additional growth capital to finance the further development of the business. The year to 31 March 2020 saw record bookings growth of 68% and many key customer wins.             Realisations during the year The Company realised its investments in Redline Worldwide, Biosite, Auction Technology Group, Access IS and Blaze Signs, as detailed below: Company Business Period of investment Total cash proceeds over the life of the investment / Multiple over cost Redline P r ov id er o f securityservicestotheaviation in dustryandothersectors Fe bru a r y 2016 to December2019 £ 1 . 95 milli on 1.7 xcost The Company sold its investment in Redline Worldwide for £1.53 million (realised gain in the year of £0.98 million including proceeds received after completion). Since investment in 2016, the investment has generated proceeds to date of £1.95 million compared to an original investment cost of £1.13 million, which is a multiple on cost to date of 1.7x and an IRR of 17.7% to date. Further proceeds may be receivable in due course. Biosite Workforcemanagement andsecurityservices November 2016 to February 2020 £2.77 million 1.5 x cost The Company sold its investment in Pattern Analytics Limited (trading as "Biosite") to ASSA ABLOY AB for £2.65 million. Since investment in 2016, the investment has generated proceeds of £2.77 million compared to an original investment cost of £1.79 million, which is a multiple on cost of 1.5x and an IRR of 21.0%. AuctionTechnology Group SaaS basedonlineauction ma rk e t place platform October 2008  to February 2020 £9.04 million 4.5 x cost The Company sold its investment in Turner Topco Limited (trading as Auction Technology Group) to TA Associates for £5.28 million (including £1.09 million loan interest due on completion; realised gain in the year: £1.56 million). This investment generated proceeds over the life of the investment of £9.04 million (including proceeds received following a partial realisation from a sale to ECI Partners in June 2014) compared to an original cost of £2.00 million, which is a multiple on cost of 4.5x and an IRR of 28.9%. Access IS Data capture and scanning hardware October 2015 to August 2020 £8.38 million 2.5 x cost The Company sold its investment in Tovey Management Limited (trading as Access IS) to ASSA ABLOY AB for £7.15 million (realised gain in the year: £3.00 million). Since investment in 2015, the investment has generated cash proceeds of £8.38 million compared to an original investment cost of £3.31 million, which is a multiple on cost of 2.5x and an IRR of 23.4%. Blaze Signs Manufacturer and installer of signs April 2006 to September 2020 £3.39 million 2.5 x cost The Company sold its investment in Blaze Signs Holdings Limited via a secondary buy out backed by Elaghmore Advisor LLP and has received cash proceeds of £1.20 million (including dividends) (realised gain: £0.13 million). Over the 14 years this investment was held, cash proceeds of £3.39 million have been received compared to an original cost of £1.34 million, which is a multiple of cost of 2.5x and an IRR of 13.1%.           Realisations after the year-end After the year-end, the Company realised one investment, as detailed below: Company Business Period of investment Total cash proceeds over the life of the investment / Multiple over cost Vectair Designer and distributor of washroom products January 2006 to November 2020 £1.79 million 8.3 x cost The Company sold its investment in Vectair Holdings Limited to a consortium of US investment funds, including Oxbow Industries and Arcspring, and has received cash proceeds (including dividends) of £1.10 million. This investment generated proceeds over the life of the investment of £1.79 million compared to original cost of £0.22 million, which is a multiple of cost of 8.3x and an IRR of 22.2%. Loan stock repayments and other receipts During the year, there were two partial realisations of Omega Diagnostics Group plc which generated proceeds of £1.05 million and a realised gain of £0.85 million. A £0.08 million loan repayment was received from BookingTek, generating a nominal loss of £0.01 million. Finally, following the decision of Jablite Holdings to enter a voluntary liquidation, the Company recognised a realised loss of £0.09 million on that investment,  with some recovery still anticipated. Mobeus Equity Partners LLP Investment Adviser 9 December 2020 Investment Portfolio Summary for the year ended 30 September 2020 Total Total Additional Total % of cost at Valuation at investments valuation at portfolio 30-Sep-20 30-Sep-19 30-Sep-20 by value £ £ £ £ Virgin Wines Holding Company Limited 2,745,503 3,421,474 - 6,458,434 12.7% Online wine retailer MPB Group Limited 2,043,137 3,858,515 - 4,698,745 9.2% Online marketplace for used photographic equipment Preservica Limited 2,960,899 3,053,749 779,233 4,303,532 8.5% Seller of proprietary digital archiving software Data Discovery Solutions Limited (trading as Active Navigation) 1,543,500 - 1,543,500 3,087,000 6.1% Provider of global market leading file analysis software for information governance, security and compliance EOTH Limited (trading as Equip Outdoor Technologies) 1,383,313 2,939,441 - 2,986,028 5.9% Distributor of branded outdoor equipment and clothing including the Rab and Lowe Alpine brands My Tutorweb Limited 2,759,335 1,783,566 975,769 2,972,638 5.8% Digital marketplace connecting school pupils seeking one-to-one online tutoring Buster and Punch Holdings Limited 2,046,612 1,176,202 1,536,496 2,740,635 5.4% Industrial inspired lighting and interiors retailer Proactive Group Holdings Inc 988,390 2,486,769 - 2,486,769 4.9% Provider of media services and investor conferences for companies primarily listed on secondary public markets Manufacturing Services Investment Limited (trading as Wetsuit Outlet) 3,205,182 1,656,308 - 2,371,375 4.7% Online retailer in the water sports market Parsley Box Limited 925,800 925,800 - 2,168,135 4.3% Supplier of home delivered ambient ready meals for the elderly I-Dox plc1 453,881 1,312,563 - 1,895,924 3.7% Developer and supplier of knowledge management products Vian Marketing Limited (trading as Red Paddle Co) 1,207,437 1,883,950 - 1,881,880 3.6% Design, manufacture and sale of stand-up paddleboards and windsurfing sails Media Business Insight Holdings Limited 3,666,556 2,661,708 - 1,407,127 2.8% A publishing and events business focussed on the creative production industries Arkk Consulting Limited (trading as Arkk Solutions) 1,526,007 1,546,354 - 1,348,963 2.7% Provider of services and software to enable organisations to remain compliant with regulatory reporting requirements Bleach London Holdings Limited 721,452 - 721,452 1,232,358 2.4% Hair colourants brand Master Removers Group 2019 Limited (trading as Anthony Ward Thomas, Bishopsgate and Aussie Man & Van) 464,658 1,196,408 - 1,175,977 2.3% A specialist logistics, storage and removals business Rota Geek Limited 1,250,800 1,122,456 625,400 1,170,582 2.3% Provider of cloud based enterprise software that uses data-driven technologies to help retail and leisure organisations schedule staff Tharstern Group Limited 1,454,278 1,534,444 - 1,137,147 2.2% Software based management Information systems for the printing industry Vectair Holdings Limited 53,400 935,546 - 1,020,351 2.0% Designer and distributor of washroom products IPV Limited 954,674 - 954,674 954,674 1.9% Provider of media asset software Bella & Duke Limited 931,499 - 931,499 931,499 1.8% A premium frozen raw dog food provider Bourn Bioscience Limited 1,610,379 349,376 - 552,130 1.1% Management of In-vitro fertilisation clinics Omega Diagnostics Group plc 70,011 263,674 - 449,180 0.9% In-vitro diagnostics for food intolerance, autoimmune diseases and infectious diseases Muller EV Limited (trading as Andersen EV) 317,000 - 317,000 352,473 0.7% Provider of premium electric vehicle (EV) chargers CGI Creative Graphics International Limited 1,943,948 1,930,826 - 337,590 0.7% Vinyl graphics to global automotive, recreation vehicle and aerospace markets Kudos Innovations Limited 472,500 945,000 - 329,354 0.6% Online platform that provides and promotes academic research dissemination Spanish Restaurant Group Limited (formerly Ibericos Etc. Limited) (trading as Tapas Revolution) 1,397,386 1,512,372 - 186,300 0.4% Spanish restaurant chain RDL Corporation Limited 1,441,667 695,008 - 137,899 0.3% Recruitment consultants within the pharmaceutical, business intelligence and IT industries BookingTek Limited 779,155 87,233 - - 0.0% Software for hotel groups Oakheath Limited (trading as Super Carers) (in members' voluntary liquidation) 649,528 - - - 0.0% Online platform that connects people seeking home care from experienced independent carers Aquasium Technology Limited 3 166,667 176,951 - - 0.0% Manufacturing and marketing of bespoke electron beam welding and vacuum furnace equipment Jablite Holdings Limited (in members' voluntary liquidation) 498,790 162,366 - 65,779 0.1% Manufacturer of expanded polystyrene products BG Training Limited  53,125 26,563 - 13,281 0.0% Technical training business Corero Network Security plc4 600,000 2,458 - 7,374 0.0% Provider of e-business technologies Veritek Global Holdings Limited 2,289,859 - - - 0.0% Maintenance of imaging equipment CB Imports Group Limited (trading as Country Baskets) 175,000 - - - 0.0% Importer and distributor of artificial flowers, floral sundries and home decor products Racoon International Group Limited 655,851 - - - 0.0% Supplier of hair extensions, hair care products and training Oxonica Limited4 2,524,527 - - - 0.0% International nanomaterials group NexxtDrive Limited/Nexxt E-drive Limited5 487,014 - - - 0.0% Developer and exploiter of mechanical transmission technologies Biomer Technology Limited 6 137,170 - - - 0.0% Developer of biomaterials for medical devices 0.0% Disposed in year Tovey Management Limited (trading as Access IS) - 4,144,573 - - 0.0% Provider of data capture and scanning hardware Pattern Analytics Limited (trading as Biosite) - 2,648,952 - - 0.0% Workforce management and security services for the construction industry Turner Topco Limited (trading as Auction Technology Group)2 - 2,634,378 - - 0.0% SaaS based online auction market place platform Redline Worldwide Limited - 550,430 - - 0.0% Provider of security services to the aviation industry and other sectors Blaze Signs Holdings Limited - 599,314 - - 0.0% Manufacturer and installer of signs H Realisations (2018) Limited (formerly Hemmels Limited) - - - - 0.0% Company specialising in the sourcing, restoration, selling and servicing of high price, classic cars Total 49,555,890 50,224,727 8,385,023 50,861,133 100.0% Portfolio split by type Growth focused portfolio   30,138,643   37,931,047 74.6% MBO focused portfolio   19,417,247   12,930,086 25.4% Total   49,555,890 50,861,133   100.0% Notes 1 Investment formerly managed by Nova Capital Management Limited until 31 August 2007. 2 Shares and loan stock in Turner Topco Limited arose as proceeds from the part realisation of ATG Media Holdings Limited in 2014. 3 Investment formerly managed by Foresight Group LLP up to various dates ending on or before 10 March 2009. 4 Investment formerly managed by Nova Capital Management Limited until 31 August 2007 and by Foresight Group until various dates ending on or before 10 March 2009.                     For further information on the Investment Portfolio, please see the Annual Report and Financial Statements. PRINCIPAL RISKS The Directors acknowledge the Board's responsibilities for the Company's internal control systems and have instigated systems and procedures for identifying, evaluating and managing the principal risks faced by the Company. This includes a key risk management review which takes place at each quarterly Board meeting. The principal risks identified by the Board, a description of the possible consequences of each risk and how the Board manages each risk are set out below. The risk profile of the Company changed as a consequence of the VCT regulations introduced in 2015. As the Company is required to focus its investment on growth capital investments in younger companies it is anticipated that investment returns will be more volatile and will have a higher risk profile. The Board remains confident that the Company and the Investment Adviser has adapted to these new requirements and put in place appropriate resource to identify and make suitable investments. The Board regularly sets and reviews policies for financial risk management and full details of these can be found in Note 16 to the Financial Statements. Risk Possible consequence How the Board manages risk 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 and may be dependent for their management on a smaller number of key individuals and may also be more impacted by external events or factors outside their control. Furthermore, as the securities of such smaller companies held by the Company are unquoted, they less liquid, which may cause difficulties in valuing and realising these securities. ● Th eBoardregularlyreviewstheCompany's StrategyincludingitsInvestmentPolicy. ● CarefulselectionandreviewoftheInvestment po rtfoli o onaregularbasis. ● Th eBoardseekstoensuretheCompanyhasan ad equatelevelofliquidityatalltimes. Loss of approval as a Venture Capital Trust A breach of the VCT Tax Rules may lead to the Company losing its approval as a VCT, which would result in qualifying Shareholders who have not held their shares for the designated period having to repay the income tax relief they obtained and future dividends paid by the Company being subject to tax. The Company would also lose its exemption from corporation tax on capital gains. ● T heCompany'sVCTqualifyingstatusis continuallyreviewedbytheBoardandthe Inv estmentAdviser. ● Th eBoardreceivesregularreportsfromitsVCT StatusAdviserwhohasbeenretainedbythe BoardtomonitortheVCT'scompliancewiththe VCTRules. Regulatory The Company is required to meet its legal and regulatory obligations as a VCT, a listed company and its own Alternative Investment Fund Manager (AIFM). Failure to comply might result in suspension of the Company's Stock Exchange listing, financial penalties or a qualified audit report or a loss of the Company's status as a VCT. Furthermore, changes to the UK VCT legislation or the State-aid rules could have an adverse effect on the Company's ability to achieve satisfactory investment returns. ● Regulatory and legislative developments are kept under review by the Board. Economic and political and other external risks Factors such as the COVID-19 pandemic and resulting restrictions imposed by government, the impact of BREXIT, an economic recession and movements in 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 VCT's investments, as well as affecting the Company's own share price and its discount to net asset value. The COVID-19 pandemic is the current risk to the Company, the wider population and economy. ● The Board monitors (i)the portfolio as a whole to ensure that the Company invests in a diversified portfolio of companies; (ii) developments in the macro-economic environment such as movements in interest rates or general fluctuations in stock markets; and (iii) with regards to COVID-19, the Investment Adviser holds ongoing discussions with all the portfolio companies to ascertain where support is required. Cash comprises a significant proportion of net assets of the Company, further to the successful exits and the fund-raise in the year giving the Company a strong liquidity position. The portfolio has minimal exposure to sectors such as leisure, hospitality, retail and travel which are currently more at risk. Financial and operating Failure of the 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.  Outsourcing and the increase in remote working could give rise to cyber and data security risk and internal control risk. ● The Board carries out an annual review of the internal controls in place, reviews the risks facing the Company at each quarterly Board meeting and receives reports by exception. ● It reviews the performance of the service providers annually and has obtained assurance that such providers have controls in place to reduce the risk of breaches of their cyber security. Market liquidity Shareholders may find it difficult to sell their shares at a price which is close to the net asset value. ● The Board has a share buyback policy which seeks to mitigate market liquidity risk for shareholders. This policy is reviewed at each quarterly Board meeting. STATEMENT OF DIRECTORS' RESPONSIBILITIES The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare Financial Statements for each financial year and the Directors have elected to prepare the Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these Financial Statements, the Directors are required to: ●   select suitable accounting policies and then apply them consistently; ●   make judgements and accounting estimates that are reasonable and prudent; ●   state whether the Financial Statements have been prepared in accordance with United Kingdom accounting standards, subject to any material departures disclosed and explained in the Financial Statements; ●   prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; ●   prepare a Strategic Report, a Director ' s Report and Directors ' Remuneration Report which comply with the requirements of the Companies Act 2006. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Website publication The Directors are responsible for ensuring the Annual Report and the Financial Statements are made available on a website. Financial Statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of Financial Statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the Financial Statements contained therein. Directors' responsibilities pursuant to Disclosure and Transparency Rule 4 of the UK Listing Authority The Directors confirm to the best of their knowledge that: a)  the Financial Statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice give a true and fair view of the assets, liabilities, financial position and the profit of the Company; and b)  the Annual Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces. Having taken advice from the Audit Committee, the Board considers the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Company's performance, business model and strategy. Neither the Company nor the Directors accept any liability to any person in relation to the Annual Report except to the extent that such liability could arise under English law. For and on behalf of the Board Maurice Helfgott Chairman 9 December 2020 Financial Statements Income Statement For the year ended 30 September 2020 Year ended 30 September 2020 Year ended 30 September 2019 Notes Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Net investment portfolio gains 9   -    9,848,433   9,848,433   -    4,932,113   4,932,113 Income 3   3,660,837   -    3,660,837 3,130,823   -    3,130,823 Investment Adviser's fees 4a (458,619) (1,375,856) (1,834,475) (446,274) (1,338,822) (1,785,096) Other expenses 5 (528,481)   -  (528,481) (426,840)   -  (426,840) Profit on ordinary activities before taxation   2,673,737   8,472,577   11,146,314   2,257,709   3,593,291   5,851,000 Tax on profit on ordinary activities 6 (348,948)   348,948   -  (381,993)   381,993   -  Profit for the year and total comprehensive income   2,324,789   8,821,525   11,146,314   1,875,716   3,975,284   5,851,000 Basic and diluted earnings per ordinary share: 7 2.07p 7.87p 9.94p 1.80p 3.80p 5.60p The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the net investment portfolio gains (unrealised gains and realised 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 the activities of a VCT and in accordance with the 2014 Statement of Recommended Practice ("SORP") (updated in October 2019) 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 below form part of these Financial Statements.                     Balance sheet as at 30 September 2020 Company number: 4069483 as at 30 September 2020 as at 30 September 2019 Notes £ £ £ £ £ £ Fixed assets Investments at fair value 9 50,861,133 50,224,727 Current assets Debtors and prepayments 11 398,489 263,116 Current asset investments 12 30,449,213 29,964,187 Cash at bank and in hand 12 1,739,602 1,498,030 32,587,304 31,725,333 Creditors: amounts falling due within one year 13 (315,007) (221,981) Net current assets 32,272,297 31,503,352 Net assets 83,133,430 81,728,079 Capital and reserves Called up share capital 14 1,186,617 1,033,029 Capital redemption reserve 23,827 5,245 Share premium reserve 12,283,303 - Revaluation reserve 6,862,342 4,652,457 Special distributable reserve 54,626,873 63,751,255 Profit and loss account 8,150,468 12,286,093 Equity Shareholders' funds 83,133,430 81,728,079 Basic and diluted net asset value per share Ordinary shares 15 70.06p 79.12p The Notes below form part of these Financial Statements. The Financial Statements were approved and authorised for issue by the Board of Directors on 9 December 2020 and were signed on its behalf by: Maurice Helfgott Chairman Statement of Changes in Equity for the year ended 30 September 2020 Non-distributable reserves Distributable reserves Called up Capital Share Special Realised share redemption premium Revaluation distributable capital Revenue capital reserve reserve reserve reserve reserve reserve Total For the year ended 30 September 2020 (Note a) (Note b) (Note b) Notes £ £ £ £ £ £ £ £ At 1 October 2019 1,033,029 5,245 - 4,652,457 63,751,255 9,864,455 2,421,638 81,728,079 Comprehensive income for the year Profit for the year - - - 3,425,711 - 5,395,814 2,324,789 11,146,314 Total comprehensive income for the year - - - 3,425,711 - 5,395,814 2,324,789 11,146,314 Contributions by and distributions to owners Shares issued via Offer for Subscription (Note d) 11 129,391 - 9,870,609 - - 10,000,000 Issue costs and facilitation fees on Offer for Subscription (Note d) 11 - - (245,176) - (99,106) - (344,282) Dividends re-invested into new shares 11 42,779 - 2,657,870 - - - 2,700,649 Shares bought back (Note e) 11 (18,582) 18,582 - - (1,243,530) - (1,243,530) Dividends paid 8 - - - - (5,497,299) (12,822,541) (2,533,960) (20,853,800) Total contributions by and distributions to owners 153,588 18,582 12,283,303 - (6,839,935) (12,822,541) (2,533,960) (9,740,963) Other movements Realised losses transferred to special reserve (Note a) - - - - (2,284,447) 2,284,447 - Realisation of previously unrealised gains - - - (1,215,826) - 1,215,826 - Total other movements - - - (1,215,826) (2,284,447) 3,500,273 - - At 30 September 2020 1,186,617 23,827 12,283,303 6,862,342 54,626,873 5,938,001 2,212,467 83,133,430 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 30 September 2020, the Company has a special reserve of £54,626,873, £26,463,573 of which arises from shares issued more than three years after the end of the financial year in which they were issued. Reserves originating from share issues are not distributable under VCT rules if they are within three years of the end of an accounting period in which the shares were issued. The total transfer of £2,284,447 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 shown in the Balance Sheet. c) The shareholders authorised the Company to purchase its own shares for cancellation pursuant to section 701 of the Companies Act  2006  at the Annual General Meeting held on 12 February 2020.  The authority was limited to a maximum number of 15,485,098 shares (this being approximately 14.99% of the issued share capital at the date of the Notice of the meeting). The minimum price which may be paid for a share is 1 penny per share, the nominal value thereof.  The maximum price that may be paid for a share is 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 London Stock Exchange for the five business days preceding such purchase. The authorities provide that the Company may make a contract or contracts to purchase its own shares prior to the expiry of the authority which may be executed in whole or part after the expiry of such authority, and may purchase its shares in pursuance of any such contract.  d) Under the Company's Offer for Subscription launched on 25 October 2019, 12,939,080 Ordinary Shares were allotted on 8 January 2020, raising net funds of £9,655,718 for the Company. This figure is net of issue costs of £245,176 and facilitation fees of £99,106. e) During the year, the Company repurchased 1,858,177 of its own shares at the prevailing market price for a total cost of £1,243,530, which were subsequently cancelled. The difference between the figure shown above of £1,243,530, and that per the Statement of Cash Flows of £1,189,858 is due to an opening share buyback creditor of £40,379 offset by a share buyback creditor of £94,051 at the year-end. Statement of Changes in Equity for the year ended 30 September 2019 Non-distributable reserves Distributable reserves Called up Capital Share Special Realised share redemption premium Revaluation distributable capital Revenue capital reserve account reserve reserve reserve reserve Total £ £ £ £ £ £ £ £ At 1 October 2018 1,054,384 33,490 46,473,760 4,102,002 19,655,855 8,627,792 2,636,431 82,583,714 Comprehensive income for the year Profit for the year - - - 1,785,897 - 2,189,387 1,875,716 5,851,000 Total comprehensive income for the year - - - 1,785,897 - 2,189,387 1,875,716 5,851,000 Contributions by and distributions to owners Shares bought back (21,355) 21,355 - - (1,471,131) - (1,471,131) Dividends paid - - - - - (3,144,995) (2,090,509) (5,235,504) Total contributions by and distributions to owners (21,355) 21,355 - - (1,471,131) (3,144,995) (2,090,509) (6,706,635) Other movements Cancellation of Share Premium account - (49,600) (46,473,760) - 46,523,360 - - Realised losses transferred to special reserve - - - - (956,829) 956,829 - Realisation of previously unrealised gains - - - (1,235,442) - 1,235,442 - Total other movements - (49,600) (46,473,760) (1,235,442) 45,566,531 2,192,271 - - At 30 September 2019 1,033,029 5,245 - 4,652,457 63,751,255 9,864,455 2,421,638 81,728,079 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 an Offer for Subscription or Dividend Investment Scheme 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. 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 and the Company's Dividend Investment Scheme. 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 9), all such movements through both revaluation and realised capital reserves are shown within the Income Statement for the year. In accordance with stating all investments at fair value through profit and loss (as recorded in Note 9), 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 is charged to this reserve. In addition, any realised losses on the sale or impairment of investments (excluding transaction costs), and 75% of the Investment Adviser fee expense, and the related tax effect, are transferred from the realised capital reserve to this reserve. The cost of any IFA facilitation fee payable as part of the Offer for Subscription is also charged to this reserve. 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; and • 75% of the Investment Adviser fee expense 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 together with the related tax effect, as well as income dividends paid that are classified as revenue in nature. The Notes below form part of these Financial Statements.

Statement of Cash Flows For the year ended 30 September 2020 Year ended Year ended 30 September 2020 30 September 2019 Notes £ £ Cash flows from operating activities Profit for the financial year 11,146,314 5,851,000 Adjustments for: Net investment portfolio gains (9,848,433) (4,932,113) (Increase)/decrease in debtors (135,373) 117,537 Increase/(decrease) in creditors and accruals 39,354 (2,124) Net cash inflow from operating activities 1,201,862 1,034,300 Cash flows from investing activities Purchase of investments 9 (8,385,023) (5,004,960) Disposal of investments 9   17,597,050   9,186,966 Net cash inflow from investing activities   9,212,027   4,182,006 Cash flows from financing activities Shares issued as part of Offer for subscription   10,000,000   -  Issue costs and facilitation fees as part of Offer for subscription (344,282)   -  Equity dividends paid 8 (18,153,151) (5,235,504) Purchase of own shares 14 (1,189,858) (1,430,752) Net cash outflow from financing activities (9,687,291) (6,666,256) Net increase/(decrease) in cash and cash equivalents 726,598 (1,449,950) Cash and cash equivalents at start of year 28,310,448 29,760,398 Cash and cash equivalents at end of year 29,037,046 28,310,448 Cash and cash equivalents comprise: Cash at bank and in hand 12 1,739,602 1,498,030 Cash equivalents 12 27,297,444 26,812,418 The Notes below form part of these Financial Statements.

Notes to the Financial Statements for the year ended 30 September 2020 1 Company information The Income and Growth VCT plc is a public limited company incorporated in England, registration number 4069483. The registered office is 30 Haymarket, London, SW1Y 4EX. 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 on a Going Concern basis and 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 October 2019) issued by the Association of Investment Companies. The Company has a number of financial instruments which are disclosed under FRS102 s11/12 as shown in Note 16 of the Annual Report & Financial Statements. 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 stock instruments 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 30 September 2020 has been classified as capital and has been included within realised gains on investments. 2020 2019 £ £ Income from bank deposits 43,410 48,292 Income from investments -  from equities 837,168 259,666 -  from OEIC funds 112,575 179,705 -  from loan stock 2,625,570 2,623,375 -  from interest on preference share dividend arrears 38,987 17,423 3,614,300 3,080,169 Other income 3,127 2,362 Total income 3,660,837 3,130,823 Total income comprises Revenue dividends received 949,743 439,371 Interest 2,707,967 2,689,090 Other income 3,127 2,362 Total Income 3,660,837 3,130,823 Income from investments comprises Listed UK securities - - Listed overseas securities 112,575 179,705 Unlisted UK securities 3,501,725 2,900,464 Total investment income 3,614,300 3,080,169 Total loan stock interest due but not recognised in the year was £1,005,705 (2019: £630,147) due to uncertainty over its recoverability. The increase is due to a number of investee company provisions in light of COVID-19 offset by the realisation of one investee company whose interest was only recognised upon exit. 4 Investment Adviser's fees and performance 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, as it is based upon the achievement of capital growth. a)  Investment Adviser's fees Revenue Capital Total Revenue Capital Total 2020 2020 2020 2019 2019 2019 £ £ £ £ £ £ Mobeus Equity Partners LLP 458,619 1,375,856 1,834,475 446,274 1,338,822 1,785,096 Under the terms of a revised investment management agreement dated 29 March 2010, Mobeus Equity Partners LLP ("Mobeus") (formerly Matrix Private Equity Partners LLP ("MPEP")) provides investment advisory, administrative and company secretarial services to the Company, for a fee of 2.4% per annum of closing net assets, calculated on a quarterly basis by reference to the net assets at the end of the preceding quarter. One sixth of this fee is subject to minimum and maximum limits of £150,000 (2019: £150,000) and £170,000 (2019: £170,000) per annum respectively. The Investment Adviser fees disclosed above are stated after applying a cap on expenses excluding IFA trail commission and exceptional items set at 3.25% of closing net assets at the year end. In accordance with the Investment Management Agreement any excess expenses are wholly borne by the Investment Adviser. The excess expenses during the year attributable to the Investment Adviser amounted to £nil (2019: £nil). With effect from 1 April 2018, the Investment Adviser's fee upon the net funds raised from the over-allotment facility of £10 million under the 2017/18 Offer was reduced to 1.4% from 2.4%, for one year. From 1 April 2020, the Investment Adviser's fee upon the net funds raised under the 2019/2020 Offer for Subscription from the use of the over-allotment facility of £5 million is reduced to 1.4% from 2.4%, for one year. b)  Investment Adviser's performance fees Under a Deed of Termination and Variation relating to Performance Incentive Agreements dated 29 March 2010, the Investment Adviser's Incentive Agreement for the former 'O' Share Fund was continued, while the former 'S' Share Fund's Incentive Agreement was terminated. Under the terms of the pre-merger 'O' Share Fund Incentive Agreement, each of the ongoing Investment Adviser, Mobeus Equity Partners LLP and a former Investment Adviser, 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 Adviser'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. On 30 September 2014, a new incentive fee agreement was signed between the Board and Mobeus, with effect from 1 October 2013, to amend and replace the previous agreement. The previous agreement remained in force, but only with the former adviser, Foresight Group LLP. The agreement expired on 10 March 2019. Mobeus waived their right to their portion of the fee, under the previous agreement. Any payment under the new incentive agreement is now 15% of net realised gains for each year, payable in cash. It is payable only if Cumulative Net Asset Value (NAV) total return per share (being the closing NAV at a year-end plus cumulative  dividends paid to that year end, since 1 October 2013) equals or exceeds a Target Return. The Target Return is the greater of two targets, being: i)  compound growth of 6% per annum (but 5% per annum for the year ended 30 September 2014 only), before deducting any incentive fee payable (for the year of calculation only) under both this amended agreement and the existing incentive agreement with Foresight Group LLP in Cumulative NAV total return per share; or ii)  the cumulative percentage change in the Consumer Prices Index since 1 October 2013 to the relevant financial year end, the resultant figure then being multiplied by (100+A)/100, where A is the number of full 12 month periods (or part thereof) that have passed between 1 October 2013 and the relevant financial year end. Both measures of Target Return are applied to the same opening base, being NAV per share as at 30 September 2013 of 113.90 pence. The objective of this Target Return is to enable Shareholders to benefit from a cumulative NAV return of at least 6% per annum (5% in the financial year ended 30 September 2014), before any incentive fee is payable. Once a payment has been made, cumulative NAV total return is calculated after deducting past years' incentive fees paid and payable. Under this amended agreement, any fee payments to Mobeus are subject to an annual cap of an amount equal to 2% of the net assets of the Company as at the immediately preceding year end. Any excess over the 2% remains payable to Mobeus in the following year(s), subject to the 2% annual cap in such subsequent year(s) and after any payment in respect of such subsequent year(s). The Target Return for the year ended 30 September 2020 was a 6% uplift on the previous year's Target Return of 160.05 pence, being 169.65 pence. As Cumulative Total NAV return is 161.06 pence per share at the year-end, the Target Return has not been met and therefore no fee is payable (2019: £nil). c)  Offer for Subscription fees 2020 2019 £m £m Funds raised by I&G VCT 9.66 - Offer costs payable to Mobeus at 3.00% of funds raised by I&G VCT 0.30 - Under the terms of an Offer for Subscription, with the other Mobeus advised VCTs, launched on 25 October 2019, Mobeus was entitled to fees of 3.00% of the investment amount received from investors. This amount totalled £1.74 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. 5 Other Expenses All expenses are accounted for on an accruals basis. 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. 2020 2019 £ £ Directors' remuneration (including NIC of £8,277 (2019: £9,710) (Note a)   137,204   127,710 IFA trail commission   82,314   70,169 Broker's fees   3,000   12,000 Auditor's fees  - Audit of company (excluding VAT)   30,089   29,213   -  tax compliance (Note b) (excluding VAT)   -    1,845   - audit related assurance services (Note B) (excluding VAT)   5,248   5,125 VCT monitoring fees   10,800   10,800 Registrar's fees   54,836   48,215 Printing   46,246   43,426 Legal & professional fees (Note b)   18,448   18,916 Directors' insurance   7,769   7,565 Listing and regulatory fees   64,885   32,321 Sundry   42,791   19,535 Running costs   503,630   426,840 Provision against loan interest receivable (Note c)   24,851   -  Other expenses   528,481   426,840 Notes: a)  See analysis in Directors' Remuneration table in the Remuneration Report within the Annual Report & Financial Statements, which excludes the NIC above. The key management personnel are the three non-executive directors. The Company has no employees. b)  The audit-related assurance services are in relation to the review of the Financial Statements within the Company's Half Year Report. The Audit Committee reviews the nature and extent of these services to ensure that auditor independence is maintained. In this regard, compliance tax services are carried out by another firm, so are included within legal and professional fees. c)  Provision against loan interest receivable above relates to an amount of £24,851 (2019: £nil), being a provision made against loan stock interest regarded as collectable in previous years. 6 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 adviser fees allocated to capital is reflected in the capital reserve - realised 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. 2020 2020 2020 2019 2019 2019 Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ a)  Analysis of tax charge: UK Corporation tax on profits/(losses) for the year 348,948 (348,948) - 381,993 (381,993) - Total current tax charge/(credit) 348,948 (348,948) - 381,993 (381,993) - Corporation tax is based on a rate of 19.0% (2019: 19.0%) b) Profit  on ordinary activities before tax 2,673,737 8,472,577 11,146,314 2,257,709 3,593,291 5,851,000 Profit on ordinary activities multiplied by main company rate of corporation tax in the UK of 19.0% (2019: 19.0%) 508,010 1,609,790 2,117,800 428,965 682,725 1,111,690 Effect of: UK dividends (159,062) - (159,062) (49,337) - (49,337) Net investment portfolio gains not taxable - (1,871,202) (1,871,202) - (937,101) (937,101) Unrelieved expenditure - - - 2,365 - 2,365 Losses utilised - (87,536) (87,536) - (127,617) (127,617) Actual current tax charge 348,948 (348,948) - 381,993 (381,993) - 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 (2019: £nil). There is an unrecognised deferred tax asset of £768,000 (2019:  £766,000).  The deferred tax assets 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. 7 Basic and diluted earnings and return per share 2020 2019 £ £ Total earnings after taxation: 11,146,314 5,851,000 Basic and diluted earnings per share (Note a)   9.94p   5.60p Revenue earnings from ordinary activities after taxation 2,324,789 1,875,716 Basic and diluted revenue earnings per share (Note b)   2.07p   1.80p Net investment portfolio gains 9,848,433 4,932,113 Capitalised Investment Adviser fees and performance fees less taxation (1,026,908) (956,829) Total capital earnings 8,821,525 3,975,284 Basic and diluted capital earnings per share (Note c)   7.87p   3.80p Weighted average number of shares in issue in the year 112,120,361 104,575,505 Notes: a)  Basic earnings per share is total earnings after taxation divided by the weighted average number of shares in issue. b)  Revenue earnings per share is the revenue earnings after taxation divided by the weighted average number of shares in issue. c)  Capital earnings per share is the total capital earnings after taxation divided by the weighted average number of shares in issue. 8 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 the Shareholders, usually at the Company's Annual General Meeting. The Company's status as a VCT means it has to comply with Section 259 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. Accordingly, the Board is required to determine the amount of minimum income dividend. Amounts recognised as distributions to Equity Shareholders in the year: Dividend Type For the year ended 30 September Pence per share Date Paid 2020 2019 Final Income 2018 1.00p 15 February 2019 -    1,049,870 Final Capital 2018 2.50p 15 February 2019 -    2,624,676 Interim Income 2019 1.00p 12 July 2019 -    1,040,639 Interim Capital 2019 0.50p 12 July 2019 -    520,319 Interim Income 2019 0.50p 18 October 2019   519,137 -  Interim Capital 2019 4.00p 18 October 2019   4,153,095 -  Interim Income 2020 1.50p 10 July 2020   1,725,492 -  Interim Capital 2020 1.50p 10 July 2020   1,725,492 -  Interim Income 2020 0.25p 28 September 2020   289,331 -  Interim Capital 2020 6.00p 28 September 2020   6,943,954 -  Interim Capital* 2020 4.75p 28 September 2020   5,497,299 -    20,853,800   5,235,504                     * - This dividend was paid out of the Company's Special distributable reserve. For the year ended 30 September 2020, £20,853,800 disclosed above differs to that shown in the Statement of Cash Flows of £18,153,151 due to £2,700,649 of new shares allotted subject to listing under the Company's Dividend Investment Scheme. 2020 2020 2020 2019 2019 2019 Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Proposed distribution to equity holders at the year-end Second interim dividend for the year ended 30 September 2019 of 0.50p (income), 4.00p (capital) per ordinary share - - - 519,137 4,153,095 4,672,232 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. 2020 2019 £ £ Revenue available for distribution by way of dividends for the year   2,324,789   1,875,716 Interim income dividend for the year - 1.50p (2019: 1.00p)   1,725,492   1,040,639 Second interim income dividend for the year - 0.25p (2019: 0.50p)   289,331   519,137 Total income dividends for the year   2,014,823   1,559,776 9 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). 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 2018 (as updated by Special Valuation guidance issued in March 2020). 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 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 subsequent measurement dates, are reconsidered for any changes in light of more recent events or 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 shares may be valued 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 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, a lack of marketability). or:- where a company's underperformance against plan indicates a diminution in the value of the investment, provision against cost 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. 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 investments are initially recognised and subsequently measured at fair value. Changes in fair value are recognised in the Income Statement. A key judgement made in applying the above accounting policy relates to investments that are permanently impaired. 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 Adviser, will agree the values that represent the extent to which an investment loss 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. The methods of fair value measurement are classified into hierarchy based on the reliability of the information used to determine the valuation. -  Level 1 - Fair value is measured based on quoted prices in an active market. -  Level 2 - Fair value is measured based 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. 2020 2019 £ £ Traded on AIM 2,352,478 1,578,695 Unquoted equity shares 34,894,706 25,772,163 Unquoted preference shares 1,168,593 19,247 Loan stock 12,445,356 22,854,622 Total 50,861,133 50,224,727 Brought forward net unrealised gains now realised 1,215,826 1,235,442 Net realised gains during the year 6,750,740 3,185,889 Transaction costs (328,018) (39,673) Total realised gains over cost 7,638,548 4,381,658 Unrealised gains for the year 3,425,711 1,785,897 Total realised and unrealised gains 11,064,259 6,167,555 Movements in investments during the year are summarised as follows: Unquoted Unquoted Traded equity preference Unquoted on AIM shares shares Loan Stock Total £ £ £ £ £ Cost at 30 September 2019 1,333,907 25,155,824 24,138 23,388,141 49,902,010 Permanent impairment at 30 September 2019 (Note c) (500,000) (3,712,373) - (117,367) (4,329,740) Unrealised gains/(losses) at 30 September 2019 744,788 4,328,712 (4,891) (416,152) 4,652,457 Valuation at 30 September 2019 1,578,695 25,772,163 19,247 22,854,622 50,224,727 Purchases at cost - 7,320,490 623,400 441,133 8,385,023 Sale proceeds (Note a) (1,047,904) (9,441,565) (16,731) (7,090,850) (17,597,050) Reclassification at value - (630,747) 630,747 - - Net realised gains/(losses) on investments (Note a) 850,153 5,072,418 (602) 500,753 6,422,722 Net unrealised gains/(losses) on investments (Note b) 971,534 6,801,947 (87,468) (4,260,302) 3,425,711 Valuation at 30 September 2020 2,352,478 34,894,706 1,168,593 12,445,356 50,861,133 Cost at 30 September 2020 1,123,892 29,017,445 1,240,906 18,173,647 49,555,890 Permanent impairment at 30 September 2020 (Note c) (500,000) (4,969,611) (301) (87,187) (5,557,099) Unrealised gains/(losses) at 30 September 2020 1,728,586 10,846,872 (72,012) (5,641,104) 6,862,342 Valuation at 30 September 2020 2,352,478 34,894,706 1,168,593 12,445,356 50,861,133 Net realised gains on investments of £6,422,722 together with net unrealised gains on investments of £3,425,711 equal net investment portfolio gains of £9,848,433. A full breakdown of the increases and decreases in unrealised valuations of the portfolio is seen in the Investment Portfolio Summary in the Annual Report & Financial Statements. Major movements in investments Note a) Disposals of investment portfolio companies during the year were: Company Type Investment Cost Disposal Proceeds Valuation at 30 September 2019 Realised gain/(loss) in year £ £ £ £ Tovey Management Limited (trading as Access IS) Realisation 3,313,932 7,145,832 4,144,573 3,001,259 Pattern Analytics Limited (trading as Biosite) Realisation 1,791,938 2,648,952 2,648,952 - Turner Topco Limited (trading as Auction Technology Group) Realisation 1,529,075 4,190,494 2,634,378 1,556,116 Redline Worldwide Limited Realisation   1,129,121 1,533,940   550,430 983,510 Blaze Signs Holdings Limited Realisation 418,281 733,788 599,314   134,473 Buster and Punch Holdings Limited Loan Repayment 215,110 215,110 215,110 - Omega Diagnostics Group plc Part Realisation 210,015 1,047,904 197,751 850,154 BookingTek Limited Loan Repayment 93,491 78,377 87,233 (8,856) H Realisations (2018) Limited (formerly Hemmels) Realisation 30,180 2,653 -   2,653 Jablite Holdings Limited Permanent impairment - - - (96,587) 8,731,143 17,597,050 11,077,741 6,422,722 Note b) Within net unrealised gains of £3,425,711 for the year, the significant increases in value compared to last year were as follows: £3,036,960 in Virgin Wines Holding Company Limited, £1,543,500 in Data Discovery Solutions Limited (trading as Active Navigation), £1,242,335 in Parsley Box Limited, £840,230 in MPB Group Limited and £715,067 in Manufacturing Services Investment Limited (trading as Wetsuit Outlet). These gains were partially offset by unrealised falls in valuation compared to last year, including: £1,593,236 in CGI Creative Graphics International Limited, £1,326,072 in Spanish Restaurant Group Limited (formerly Ibericos Etc. Limited) (trading as Tapas Revolution), £1,254,581 in Media Business Insight Holdings Limited, £615,646 in Kudos Innovations Limited, £577,274 in Rota Geek Limited, £557,109 in RDL Corporation Limited and £397,297 in Tharstern Group Limited. The decrease in unrealised valuations of the loan stock investments above reflect the changes in the entitlements to loan premiums, and/or in the underlying enterprise value of the investee company. The decrease does not arise from assessments of credit risk or market risk upon these investments. Note c) During the year, permanent impairments of the cost of investments have increased from £4,329,740 to £5,557,099. This write-off of £1,227,359 is due to the permanent impairment of three investee companies in the period and the removal of one investee company which had been liquidated during the year and which had been permanently impaired previously. Provisions and write-offs against unlisted investments The amounts provided below cost at the end of the year or written-off against unlisted investments were as follows: Total Provisions at end of year Net write-offs/(write-backs) in year Financial Year £ £ 2020 18,123,280 1,227,359 2019 16,001,495 (2,307,326) 2018 16,029,509 38,426 2017 13,528,607 2,403,079 2016 11,500,860 (1,115,371) 10 Current asset investments and Cash at bank Cash equivalents, for the purposes of the Statement of Cash Flows, comprise bank deposits repayable on up to three months' notice and funds held in OEIC money-market funds. Current asset investments are the same but also include bank deposits that mature after three months. Current asset investments are disposable without curtailing or  disrupting the business and are  readily convertible into known amounts of cash at their carrying values at immediate or up to one year's 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. Current asset investments and Cash at bank 2020 2019 £ £ OEIC Money market funds 27,297,444 26,812,418 Cash equivalents per Statement of Cash Flows 27,297,444 26,812,418 Bank deposits that mature after three months 3,151,769 3,151,769 Current asset investments 30,449,213 29,964,187 Cash at bank 1,739,602 1,498,030 11 Called up share capital 2020 2019 £ £ Allotted, called-up and fully paid: Ordinary Shares of 1p each: 118,661,711 (2019: 103,302,857) 1,186,617 1,033,029 1,186,617 1,033,029 Under the Offer for Subscription launched on 25 October 2019 a total of 12,939,080 (2019: nil) ordinary shares were allotted at an average effective offer price of 77.29 pence per share, raising net funds of £9,655,718 (2019: £nil). During the year, the Company purchased 1,858,177 (2019: 2,135,527) of its own ordinary shares for cash (representing 1.8% (2019: 2.0%) of the ordinary shares in issue at the start of the year) at the prevailing market price for a total cost of £1,243,530 (2019: £1,471,131). The shares bought back were subsequently cancelled. This figure is higher than that shown in the Statement of Cashflows of £1,189,858 by £53,672. This is due to an opening share buyback creditor of £40,379 offset by a share buyback creditor of £94,051 at the year end. Under the terms of the Dividend Investment Scheme, a total of 4,277,951 ordinary shares were allotted during the year ended 30 September 2020, subject to listing, for a total consideration of £2,700,649. 12 Basic and diluted net asset value per share 2020 2019 £ £ Net assets 83,133,430 81,728,079 Number of shares in issue 118,661,711 103,302,857 Basic and diluted net asset value per share 70.06p 79.12p 13 Post balance sheet events On 16 October 2020, the Company received a loan repayment from Vian Marketing Limited (trading as Red Paddle) totalling £0.21 million (including premium of £0.06 million). On 27 November 2020, the Company realised its investment in Vectair Holdings Limited generating cash proceeds of £1.10 million. 14 Statutory information The financial information set out in these statements does not constitute the Company's statutory accounts for the year ended 30 September 2020 but is derived from those accounts.  Statutory accounts will be delivered to the Registrar of Companies after the Annual General Meeting.  The auditors have reported on these accounts and their report was unqualified and did not contain a statement under section 498(2) of the Companies Act 2006. 15 Annual Report The Annual Report will be published on the Company's website at www.incomeandgrowthvct.co.uk shortly and, following the adoption of electronic communications by the Company, shareholders will shortly receive notification from the Company on how to download a pdf of the Report from the website.  Shareholders and members of the public who wish to receive a hard copy of the Annual Report, may request a copy by writing to the Company Secretary, Mobeus Equity Partners LLP, 30 Haymarket (4th floor), London SW1Y 4EX or by email: [e-mail]. 16 Annual General Meeting The Company's next Annual General Meeting will be held on Wednesday, 10 February 2021 as a closed virtual meeting using the link: www.incomeandgrowthvctAGM.co.uk, the link if also available on the Company's website at: www.incomeandgrowthvct.co.uk. Contact details for further enquiries Mobeus Equity Partners LLP (the Company Secretary) on 020 7024 7600 or by email to [e-mail] . DISCLAIMER Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

 

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