Final Results for year ended 30 September 2018

RNS Number : 2907K

Income & Growth VCT (The) PLC

12 December 2018

THE INCOME & GROWTH VCT PLC

ANNUAL FINANCIAL RESULTS OF THE COMPANY FOR THE YEAR ENDED 30 SEPTEMBER 2018

The Income & Growth VCT plc (the "Company") today announces the final results for the year ended 30 September 2018.

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 2018:

Net assets: £82.58 million

Net asset value ("NAV") per share: 78.32 pence

- Net asset value ("NAV") total return per share was 3.2%.

- Share price total return per share was 2.7%.

- Dividends paid and proposed in respect of the year total 6.00 pence per share. The proposed final dividend of 3.50 pence per share, if approved, will bring cumulative dividends paid to shareholders in respect of the past five years to 67.00 pence per share.

- The Company realised investments totalling £6.58 million of cash proceeds and generated net realised gains over original investment cost of £1.60 million.

- £6.21 million was invested into four new companies and five follow-on investments.

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.

Reporting date		Net assets	NAV per share	Share price¹	Cumulative dividends paid per share	Cumulative total return per share to shareholders²		Dividends paid and proposed per share in respect of each year
As at 30 September						(NAV basis)	(Share price basis)
		(£m)	(p)	(p)	(p)	(p)	(p)	(p)
2018		82.58	78.32	69.50	108.00	186.32	177.50	6.00	⁴
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	10.00
2015		75.20	106.38	93.50	68.50	174.88	162.00	12.00
2014		69.31	114.60	103.50³	50.50	165.10	154.00	18.00
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 the launch of the current share class.
³	The share price at 30 September 2014 has been adjusted to add back the dividend of 8.00 pence per share paid on 30 October 2014, as the listed share price was quoted ex this dividend at the year end.
⁴	Dividends paid and proposed per share in respect of 2018 include the final dividend of 3.50 pence referred to above, which is subject to shareholder approval at the Annual General Meeting.

CHAIRMAN'S STATEMENT

I am pleased to present the Annual Report of the Company for the financial year ended 30 September 2018.

Overview

This has been another year of solid performance by the Company in which returns to shareholders have again been positive. During the year, the Company made investments into four new companies, provided follow-on investments to five existing portfolio companies and realised its investment in four portfolio companies. After the year end, one new and three follow-on investment were also made. Further details of this investment activity can be found under the 'Investment portfolio" section of my Statement below and in the Investment Adviser's Review in the Annual Report.

Fourteen new growth capital investments have now been completed by the Company in accordance with its investment policy, in response to the VCT legislation introduced by the Finance (No. 2) Act 2015. During the year, additional changes to VCT legislation were enacted, further details of which are included within the Annual Report and under the 'Industry and regulatory developments' section of my Statement below.

The Investment Adviser continues to report an interesting pipeline of growth capital opportunities. Meanwhile, the existing MBO focused portfolio constructed under the previous VCT rules continues to provide a healthy yield.

As mentioned in my half-year statement, we are delighted with the strong support from investors for our recent fundraising, which closed fully subscribed in March. The Board appreciates the continued support from existing shareholders and at the same time welcomes new shareholders.

Performance

The Company's NAV total return per share was 3.2% for the year ended 30 September 2018 (2017: 4.8%), after taking into account the dividends paid during the year. This NAV return for the year was primarily attributable to loan interest income in excess of costs resulting in a positive income return. The increase was also driven by the sale of the Company's investment in Gro-Group together with a net uplift in the value of the existing portfolio. Other portfolio movements are explained further under 'Investment Portfolio'.

As a result of this year's performance, the cumulative NAV total return per share (being the closing net asset value plus total dividends paid to date since launch) increased in the year by 1.4% (2017: 2.6%) from 183.74 pence to 186.32 pence.

Using the benchmark of cumulative NAV total return, at 30 September 2018 the Company was ranked second out of 33 VCTs over ten years amongst generalist (including planned exit) VCTs used by the Association of Investment Companies ("AIC") to measure performance. Over the shorter periods of one, three and five years, the VCT was ranked 30^th and 28^th (out of 46 VCTs) and 23^rd (out of 38 VCTs) respectively. This was partly as a result of the increase in volatility of shorter term performance which almost inevitably arises from the obligation, in accordance with VCT legislation, to invest in earlier stage companies, and partly from a drag on overall returns arising from liquid funds raised pending investment in the portfolio. For further details on performance, please refer to the Strategic Report in the Annual Report.

Final dividend

Your Board is proposing a final dividend in respect of the year ended 30 September 2018 of 3.50 (2017: 3.00) pence per share. The dividend, comprising 2.50 pence from capital and 1.00 pence from income, will be proposed to shareholder at the Annual General Meeting of the Company to be held on 6 February 2019, for payment on 15 February 2019 to shareholders on the register on 11 January 2019. This final dividend is in addition to the interim dividend of 2.50 pence per share paid on 21 June 2018.

If approved by shareholders, this forthcoming final dividend will bring dividends paid per share in respect of the year ended 30 September 2018 to 6.00 pence (2017: 6.00 pence plus 15.00 pence special dividend) and the Company will have paid dividends totalling 67.00 pence per share in respect of the last five years. Shareholders should note, however, that as a result of the changes in the VCT rules that require VCTs to make growth capital investments in younger, smaller companies, which are likely to have a higher risk profile, the Company may find it a challenge to generate a similar level of dividends over the next five years. Your Board will continue to monitor whether the current target annual dividend of 6.00 pence per share remains sustainable in the current investment environment.

For the reasons set out under 'Dividend Investment Scheme' below, the Company's Dividend Investment Scheme has been suspended and will not apply to the final dividend and any subsequent dividends which may be declared and paid whilst the Scheme remains suspended. If you have elected into the Scheme you do not need to take any action as you will automatically receive your dividend in cash instead of shares.

Investment portfolio

During the year £6.21 million was invested in four new growth capital investments and five existing growth portfolio companies (analysed in the Investment Adviser's Review and explained in Note 8 below).

The new growth capital investments totalling £2.48 million were made into the following companies:

· Proactive Investors, a provider of investor media services;

· Super Carers, an online platform connecting people seeking home care;

· Hemmels, a restorer of classic cars; and

· Rotageek, a provider of workforce management software.

In addition, five follow-on investments totalling £3.73 million were made into:

· BookingTek, a provider of direct-booking systems to major hotel groups;

· MPB, an online marketplace for used camera and video equipment;

· Tapas Revolution, a leading Spanish restaurant chain in the casual dining sector;

· MyTutor, a digital marketplace connecting people seeking online tutoring; and

· Preservica, a seller of proprietary digital archiving software.

After the year end, further amounts totalling £1.93 million were invested into one new and three existing portfolio companies, comprising an investment of £0.93 million into Biosite, a provider of workforce management and security services; an investment of £0.45 million into Proactive, a provider of investor media services; an investment of £0.08 million into MPB, an online marketplace for used camera and video equipment; and an investment of £0.47 million into Grow Kudos, a platform for the dissemination of academic research.

The new growth capital investments made to date now have a value of £18.17 million, against a cost now of £17.20 million, and so have already become significant part of the portfolio.

Cash proceeds totalling £6.58 million for the year were received from portfolio companies that were either sold, repaid loans, or settled other capital proceeds. Of this total, £5.92 million was received as cash proceeds from the sale of Gro-Group, Fullfield (trading as Motorclean), Hemmels and Lightworks, together realising a net gain of £1.31 million over investment cost, with a further £0.44 million being received as loan and share capital repayments and finally, £0.22 million from receipts of deferred consideration.

For the year under review, the portfolio as a whole achieved a net increase of £1.11 million on investments realised. The principal gains were from the sale of Gro-Group and Lightworks.

However, there were also losses incurred by the sale of Fullfield (trading as Motorclean) and Hemmels. The loss on the sale of Hemmels is explained further in the Investment Review. It serves to remind shareholders that an inherent risk of investing in relatively early stage smaller companies, (as required by the terms of the new VCT regulations), is that not all such companies will succeed.

Investment realisations produced £2.64 million in capital gains and capital losses of £1.04 million when compared to original investment cost, a net gain of £1.60 million.

The portfolio also achieved a net increase of £0.57 million on investments still held, with positive increases from Equip, Preservica and CGI, which were partially offset by valuation falls at Veritek, Idox and Wetsuit Outlet.

The portfolio was valued at £49.40 million (2017: £48.03 million) at the year end representing 95.1% of cost (2017: 94.8%).

Further details of the investment activity during the year and a summary of the performance highlights can be found in the Investment Adviser's Review.

Industry and regulatory developments

As mentioned in my Overview above, a number of further changes to the VCT Scheme were introduced with the enactment of the Finance Act 2018 on 15 March 2018. These changes were reportedly designed to exclude tax-motivated investments where capital is not at risk (that is, principally seeking to preserve investors' capital) and to encourage VCTs to put their money to work more quickly. They also place further restrictions on the way investments are able to be structured. A summary of the current VCT regulation is set out in the Annual Report.

Investment Policy revision

The Board has been advised that the changes in legislation referred to in the previous paragraph are material enough to require the Company to revise its Investment Policy ("the Policy"). Shareholders may recall that they were asked to approve a change in the Policy only two years ago in response to previous legislative changes. The Policy that is being proposed, which will require the approval by shareholders of an ordinary resolution at the February 2019 Annual General Meeting, comprises a revision to the previously approved Policy so that the Company will seek to make investments "in accordance with the requirements of the prevailing VCT legislation". This should minimise the need to revise the Policy again in response to further legislative changes.

An explanation of the proposed revisions to the Policy, and the full wording of the new Policy, which the Board recommends shareholders approve, are given in the Directors' Report in the Annual Report.

Dividend Investment Scheme

A total of 1,573,716 new Ordinary shares were issued under Dividend Investment Scheme (the "Scheme") (2017: 3,865,859) during the financial year.

The Scheme has historically been a practical and cost effective way for the Company to retain cash for investment and operating purposes and to reward the loyalty of those existing shareholders who wished to invest further in the Company. Given the Company's recent successful fundraising and current relatively high cash position, the Board has taken the decision to suspend the Scheme until further notice.

This means that those shareholders who had opted into the Scheme will now receive cash in respect of any dividends paid by the Company while the Scheme is suspended.

High levels of liquidity can dilute returns to shareholders. Furthermore, as a result of the changes enacted by the Finance Act 2018, funds raised under the Scheme would have an additional impact on the VCT's qualification status conditions in respect of the Company's 2019 financial year. From the start of that year, 30% of all funds raised (including under the Scheme) must be invested in qualifying investments within year of the financial year end in which the shares under the Scheme are allotted. This would have placed a further compliance hurdle on top of the Company's existing investment obligations.

Please rest assured that the Board will keep the suspension of the Scheme under review and will provide shareholders with advanced notice of any future decision to reintroduce, modify or cancel the Scheme.

Succession planning

During the year, a new UK Corporate Governance Code was published which will apply to the Company's financial year beginning on 1 October 2019. This code introduces a number of new provisions which will apply to the Company, including a provision regarding the tenure of chairmen. These changes have been considered by the Board and the Nomination & Remuneration Committee and factored into the Company's succession plans. Accordingly, given that I have served a Director on the Board since 2000, it is the present expectation that I will stand down as Chairman and as a Director on or before the Company's 2020 Annual General Meeting. The Half Year Report to shareholders will contain an update on the Company's succession plans.

Shareholder Event

The Investment Adviser holds an annual VCT event for shareholders in central London.

These events include presentations on the Mobeus-advised VCTs' investment activity and performance. We have been pleased to receive very positive comments from those attending in previous years. The next event will again be held at the Royal Institute of British Architects in central London on Tuesday, 5 February 2019. There will be separate day-time and evening sessions. Shareholders have already been sent an invitation to this event with further details. If you have not replied to the invitation, but would like to attend, please apply to Mobeus (events@mobeusequity.co.uk) by email to register. The Board looks forward to meeting all shareholders who are able to join them at the event.

Outlook

Your Board considers that your Company is well positioned to take advantage of the current strong demand for new growth capital investments, although entry valuations are presently perceived to be relatively expensive for the most interesting opportunities.

While the new growth capital element of the portfolio is still young, both your Board and the Investment Adviser will seek to assess, balance and diversify the risks within the growing proportion of the overall portfolio that these investments will represent. Your Board cautions that investing in such earlier stage companies does involve increased risk and those that succeed often take longer to achieve scale. Returns may, therefore, take longer to emerge and may be more volatile. Unfortunately, the least successful investments are likely to emerge before the most successful. This is likely to cause a slower rate of financial progress to be anticipated in the earlier years, although it should be offset by more significant gains in the longer-term.

Meanwhile, the portfolio retains a solid foundation of investments made under the previous MBO strategy, the majority of which are mature and profitable companies providing attractive income returns.

The Board and Investment Adviser have carried out an analysis of the possible impact of Brexit on the investment portfolio. This will be kept under review.

The recent successful fundraising provides the Company with sufficient funds to meet its cash needs and to continue the current investment rate in the medium-term. Your Board is also pleased to note that the Investment Adviser continues to expand and strengthen its investment team to source and manage investments that complement the portfolio.

Lastly, I would like to take this opportunity to thank all shareholders for their continued support.

Colin Hook

Chairman

12 December 2018

INVESTMENT POLICY*

The Company's policy is to invest primarily in a diverse portfolio of UK unquoted companies. Investments are generally structured as part loan and part equity in order to receive regular income to generate capital gains upon sale.

Investments are made selectively across a number of sectors, principally in established companies.

The Company's cash and liquid resources are held in a range of instruments of varying maturities, subject to the overriding criterion that the risk of loss of capital be minimised.

VCT regulation

The Investment Policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HMRC.

Amongst other conditions, the Company may not invest more than 15% of its investments (by VCT value at the time of investment) in a single company or group and must have at least 70% by VCT value of its investments throughout the period in shares or securities comprised in VCT qualifying holdings of which a minimum overall of 30% by VCT value (70% for funds raised after 6 April 2011) must be in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules). In addition, although the VCT can invest less than 30% (70% for funds raised after 6 April 2011) of an investment in a specific company in ordinary shares it must have at least 10% by VCT value of its total investments in each VCT qualifying company in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules).

The companies in which investments are made must have no more than £15 million of gross assets at the time of investment and £16 million immediately following the investment to be classed as a VCT qualifying holding.

Asset mix

The Company initially holds its funds in a portfolio of interest bearing investments and deposits. The investment portfolio of qualifying investments is built up over a three year period with the aim of investing and maintaining at least 70% of net funds raised in qualifying investments.

Risk diversification and maximum exposures

Risk is spread by investing in a number of different businesses across different industry sectors. To reduce the risk of high exposure to equities, each qualifying investment is structured to achieve the optimum balance between loan stock and equity to provide protection against downside risk alongside the best potential overall returns.

Co-investment

The Company is entitled to invest alongside other VCTs advised by Mobeus that have a similar investment policy, normally on a pro rata to net assets basis.

Borrowing

The Company's Articles of Association permit borrowing of up to 10% of the adjusted capital and reserves (as defined therein). However, it has never borrowed and the Board has currently no plans to undertake any borrowing.

* Please note that the Board is proposing that shareholders approve a revised Investment Policy at the AGM on 6 February 2019. This is explained further in the Annual Report.

INVESTMENT ADVISER'S REVIEW

Demand for growth capital investment remains strong and there is a large pipeline of investment opportunities. It is expected that the current pace and quantum of new and follow-on investments will continue in the short to medium-term.

Portfolio review

The portfolio's activity in the year is summarised as follows:

	2018	2017
	£m	£m
Opening portfolio value	48.09¹	54.37
New and further investments	6.21	5.30
Disposal proceeds	(6.58)	(14.73)
Net realised gains	1.11	3.88
Valuation movements	0.57	(0.79)
Portfolio value at 30 September	49.40	48.03

¹ Adjusted for deferred consideration of £0.05 million recognised in a previous period.

This has been a year of solid progress building the growth capital portfolio with four investments into new growth businesses totalling £2.48 million, five existing growth portfolio companies receiving follow-on funding totalling £3.73 million, and net cash proceeds received of £6.58 million, primarily from four realisations. The past year's investment and divestment activity has increased the proportion of the portfolio comprised of growth capital investments by value to 47.2% at the year end, excluding companies preparing to trade. After the year end, the Company invested a further £1.93 million into one new and three existing growth companies, bringing the total, to date, to £17.99 million in growth capital investments since the introduction of the new VCT regulations in 2015.

Details of these movements for each investee company is provided at the end of this Investment Review.

The portfolio's contribution to the overall results of the VCT is summarised in the table below:

Investment Portfolio Capital Movement	2018 £m	2017 £m
Increase in the value of unrealised investments	5.91	3.46
Decrease in the value of unrealised investments	(5.34)	(4.25)
Net increase in the value of unrealised investments	0.57	(0.79)

Realised gains	2.23	3.88
Realised losses	(1.12)	-
Net realised gains in the year	1.11	3.88

Net investment portfolio movement in the year	1.68	3.09

Valuation changes of portfolio investments still held

Within the valuation increases of £5.91 million, the principal contributors were Equip (£1.00 million), Preservica (£0.80 million) and CGI (£0.66 million). Equip achieved a record year of profitability, underpinned by continued growth in its Rab brand. Preservica is growing in line with its investment plan, with Mobeus making a second investment shortly before the year end. CGI has seen improved trading, principally benefitting from the growth in the UK and European caravan market.

Within total valuation decreases of £5.34 million, the main reductions were at Veritek (£1.62 million), IDOX plc (£1.23 million) and Wetsuit Outlet (£0.88 million). Veritek has experienced a challenging trading environment but is restructuring its operations accordingly. IDOX plc, a legacy AiM investment, announced disappointing results for its 2017 financial year end which caused a fall in its share price, albeit with a partial recovery in the share price since. Wetsuit Outlet has had a disappointing year post investment, with growth in profitability not being achieved as envisaged. Management has since implemented several measures to restore margins.

Realised gains and losses from sales of investments

The largest gain was £1.72 million, from the sale of Gro-Group to Mayborn Group, whilst a gain of £0.35 million was achieved from the sale of Lightworks to Siemens PLM Software, a business of Siemens AG.

The largest loss was £0.75 million, from the sale of Fullfield (trading as Motorclean) back to management, whilst a loss of £0.37 million resulted from the sale of Hemmels to its largest customer. Although the Hemmels loss was modest, it was unexpected, arising shortly after the initial investment, and illustrates the inherent risk of investing in early stage growth companies.

The company also realised a gain in the year from deferred consideration receipts of £0.16 million arising from past realisations, during the year.

Investment portfolio yield and capital repayments

During the year under review, the Company received the following amounts in loan interest and dividend income:

Investment Portfolio Yield	2018 £m	2017 £m
Loan interest received in the year	2.50	2.90
Dividends receive in the year	0.42	0.29
Total portfolio income in the year	2.92¹	3.19
Portfolio value at 30 September	49.40	48.03
Portfolio Income Yield (Income as a % of Portfolio value at 30 September)	5.9%	6.6%

¹ Total portfolio income in the period is generated solely from investee companies within the portfolio. See Note 3 of the Financial Statements for all income receivable by the Company.

The Company also received loan stock repayments of £0.39 million and preference share repurchases of £0.05 million, both at cost.

New investments in the year

A total of £2.48 million was invested into four new investment during the year as detailed below:

Company	Business	Date of Investment	Amount of new investment (£m)
Proactive Investors	Investor media services	January 2018	0.54
Proactive Investors specialises in timely multi-media news provision, events organisation, digital services and investor research. Proactive provides breaking news, commentary and analysis on hundreds of small-cap listed companies and pre-IPO businesses across the globe. The investment will enable Proactive to expand its services into the US market, which is the largest global market for investor media services. The company's accounts for the year ended 30 June 2017 show turnover of £3.99 million and a profit before interest, tax and amortisation of goodwill of £0.53 million. After the year end, a further £0.45 million was invested into the company. See further investments made after the year end below.
Super Carers	Online care provision	March 2018	0.65
Super Carers provides an online platform connecting people seeking home care, typically family members seeking care for their elderly relatives, with experienced independent carers. Carers and care-seekers manage care directly, thus reducing the administrative burden and the need for care managers, enabling care to be delivered with greater flexibility and more cost effectively. The company's accounts for the year ended 31 March 2017 show revenues of £0.18 million and a loss before interest, tax and amortisation of goodwill of £0.72 million.
Hemmels	Classic car restoration	March 2018	0.67
Hemmels commenced trading in September 2016 and specialises in the sourcing, restoration, selling and servicing of high value classic cars. Hemmels focused on classic Mercedes-Benz and planned to expand into the Porsche marque under a separate brand. The investment was made to enable Hemmels to proceed with its expansion plans and secure sufficient development stock. After a short period following the completion of the investment, it became clear that the company's financial situation and prospects were significantly at variance to expectations and the investment has since been realised, as also reported with 'Realisations during the year' below.
Rotageek	Workforce management software	August 2018	0.62
Rotageek is a provider of cloud-based enterprise software to help larger retail and leisure organisations predict and meet demand to schedule staff effectively. This investment will be used for further technology development and to grow sales from enterprise clients. The company's unaudited accounts for the year ended 31 December 2017 show revenues of £0.90 million and a loss before interest, tax and amortisation of goodwill of £1.57 million.

Further investments in existing portfolio companies in the year

The Company made further investments totalling £3.73 million into five existing portfolio companies during the year under review, as detailed below:

Company		Business		Date of Investment	Amount of new investment (£m)
BookingTek		Provider of direct-booking systems to major hotel groups		November 2017	0.09
London-based BookingTek provides software that enables hotels to reduce their reliance on third-party booking systems through an enterprise-grade, real-time booking platform for meeting rooms and restaurant reservations. BookingTek's existing clients include two of the world's top 10 hotel groups and the UK's largest hotel chain. The small follow-on investment saw the Company taking up its rights in a further financing round supported by existing shareholders. The company's latest audited accounts for the year ended 31 December 2017 show turnover of £2.15 million and a loss before interest, tax and amortisation of goodwill of £1.55 million.
MPB Group		Online marketplace for used camera and video equipment		December 2017 and February 2018	0.62
MPB is Europe's leading online marketplace for used camera and video equipment. Based in Brighton, its custom-designed pricing technology enables MPB to offer both buy and sell services through the same platform and offers a one-stop shop for all its customers. Having expanded into the US (opening a New York office) and German markets as part of the initial VCT investment round, this follow-on investment, alongside funds provided by the Proven VCTs, is to support its continued growth plan. Having doubled its sales over the last year, this investment will give the company sufficient capital to achieve its next planned expansion. The company's latest audited accounts for the year ended 31 March 2018 show turnover of £21.71 million and a loss before interest, tax and amortisation of goodwill of £2.00 million.
Tapas Revolution		Restaurant chain		March 2018	0.62
Based in London, Tapas Revolution is a leading Spanish restaurant chain in the casual dining sector focusing on shopping centre sites with high footfall. Having opened its first restaurant in Shepherd's Bush Westfield, with the support of the initial VCT investment in 2017, the business now operates six established restaurants. This follow-on investment is to finance the opening of several new locations around the UK. The company's latest audited accounts for the year ended 31 October 2017 show a turnover of £5.84 million and a loss before interest, tax and amortisation of goodwill of £0.68 million.
MyTutor	Online tutoring		May 2018		1.15
My Tutor 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 investment supports an opportunity to grow My Tutor's market presence and drive technological development within the company. The company's latest unaudited accounts for the year ended 31 December 2017 show turnover of £0.56 million and a loss before interest, tax and amortisation of goodwill of £1.40 million.
Preservica	Seller of proprietary digital archiving software		September 2018		1.25
Preservica 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. Previously a division of the Company's former portfolio company Tessella, Preservica was demerged prior to the sale of Tessella in December 2015. The investment provided additional growth capital to finance the development of the business. The Company's latest audited accounts for the year ended 31 March 2018 show turnover of £2.85 million and a loss before interest, tax and amortisation of goodwill of £1.93 million.

Further investments after the year end

The Company made further investments totalling £1.93 million into one new and three existing portfolio companies after the year end, as detailed below:

Company	Business		Date of investment		Amount of new investment (£m)
Biosite	Workforce management and security services		October 2018		0.93
Based in the Midlands, Biosite is a provider of biometric access control and software-based workforce management solutions for the construction sector. The business is growing significantly, and this investment will support the further development of software and hardware products. The Company's latest unaudited accounts for the year ended 31 July 2017 show turnover of £6.38 million and a loss before interest, tax and amortisation of goodwill of £0.45 million.
Proactive Investors	Investor media services		October 2018		0.45
Proactive Investors specialises in timely multi-media news provision, events organisation, digital services and investor research. This follow-on investment was agreed at the time of the original investment in January and these further funds will be used to develop its brand and enable the company to continue its global expansion.
Grow Kudos		Platform for the dissemination of academic research	November 2018	0.47
Grow Kudos is an online platform which provides and promotes academic research dissemination. The Kudos product was developed to allow researchers to increase the impact and readership of their work and to track and analyse distribution both within academia and across broader audiences. The investment will be used principally to expand the company's suite of services and to support sales growth. The company's unaudited accounts for the year ended 31 December 2017 show revenues of £0.53 million and a loss before interest, tax and amortisation of goodwill of £0.59 million.

In October 2018, a further £0.08 million was invested into MPB Group, an existing portfolio company. This investment was part of a planned drawdown having previously been approved by the Board as part of a larger funding round completed in February 2018.

Realisations during the year

The Company realised its investments in Gro-Group Holdings, Fullfield (trading as Motorclean), Hemmels and Lightworks during the year, generating a net realised gain of £0.95 million for the year. Net cash proceeds received in the year were £6.58 million. £5.92 million was from the sale of four investments as detailed below; £0.44 million from loan and share capital repayments and £0.22 million from other receipts of deferred consideration:

Company	Business	Period of investment	Total cash proceeds over the life of the investment/ Multiple over cost
Gro-Group	Manufacturer and distributor of baby sleep products	March 2013 to December 2017	£5.43 million 2.3 x cost
The Company sold its investment in Gro-Group to Mayborn Group for £4.19 million (realised gain in the year: £1.72 million) in December 2017. Since this date, deferred consideration of £0.14 million has also been received. Including this deferred consideration, the Company has realised a gain over the life of the investment of £3.03 million. This equates to a multiple of 2.3 times the investment cost of £2.40 million and an IRR of 21%.
Fullfield (Motorclean)	Vehicle cleaning and valet services	July 2011 to August 2018	£3.16 million 1.2 x cost
The Company sold its investment in Fullfield (trading as Motorclean) back to management in August 2018 receiving cash proceeds of £0.86 million (realised gain in the period: £0.75 million). This realisation contributed to a return of 1.2 times the original investment cost and an IRR of 5.0% in the seven years that this investment was held.
Hemmels	Classic car restorer	March 2018 to September 2018	£0.33 million 0.5 x cost
The Company sold its investment in Hemmels to the business's largest customer for £0.30 million in September 2018, generating a realised loss of £0.37 million on the original investment cost over the six months that this investment was held. The investment was realised six months after the original investment, for reasons already explained under new investments.
Lightworks	Provider of software for CAD and CAM vendors	March 2011 to September 2018	£0.44 million 21.7 x cost
The Company sold its investment in Lightworks to Siemens PLM Software for £0.43 million in September 2018 (realised gain in the year: £0.35 million), generating a realised gain over the life of the investment of £0.42 million. This equates to a multiple of 21.7 times the investment cost of £0.02 million and an IRR of 57%.

Other realised gains in the year amounted to £0.16 million arising from deferred consideration from companies realised in a previous year. Together with the realised gains upon the four disposals of £0.95 million, the total for the year was £1.11 million, as shown in the tables at the start of this Review.

Mobeus Equity Partners LLP

Investment Adviser

12 December 2018

Investment Portfolio Summary

for the year ended 30 September 2018
	Total cost at	Total Valuation at	Additional investments	Total valuation at	% of portfolio by value
	30-Sep-18	30-Sep-17		30-Sep-18
	£	£	£	£
Tovey Management Limited (trading as Access IS)	3,313,932	3,880,197	-	4.110.232	8.3%
Provider of data capture and scanning hardware
Virgin Wines Holding Company Limited	2,745,503	3,483,880	-	3,227,371	6.5%
Online wine retailer
Preservica Limited	2,181,666	935,000	1,246,666	2,977,489	6.0%
Seller of proprietary digital archiving software
ASL Technology Holdings Limited	2,722,106	2,845,619	-	2,904,306	5.9%
Printer and photocopier services
EOTH Limited (trading as Equip Outdoor Technologies)	1,383,313	1,809,879	-	2,809,199	5.7%
Distributor of branded outdoor equipment and clothing including the Rab and Lowe Alpine brands
Media Business Insight Holdings Limited	3,666,556	2,443,888	-	2,469,625	5.0%
A publishing and events business focused on the creative production industries
Manufacturing Services Investment Limited (trading as Wetsuit Outlet)	3,205,182	3,205,182	-	2,326,781	4.7%
Online retailer in the water sports market
My Tutorweb Limited	1,783,566	636,477	1,147,089	1,963,647	4.0%
Digital marketplace connecting school pupils seeking one-to-one online tutoring
CGI Creative Graphics International Limited	1,943,948	1,301,638	-	1,962,334	4.0%
Vinyl graphics to global automotive, recreation vehicle and aerospace markets
Master Removers Group Limited (trading as Anthony Ward Thomas, Bishopsgate and Aussie Man & Van))	682,183	1,379,326	-	1,926,851	3.9%
A specialist logistics, storage and removals business
MPB Group Limited	1,269,194	1,023,613	619,119	1,885,665	3.8%
Online marketplace for used photographic equipment
Vian Marketing Limited (trading as Red Paddle Co)	1,207,437	1,906,790	-	1,870,551	3.8%
Design, manufacture and sale of stand-up paddleboards and windsurfing sails
Ibericos Etc. Limited (trading as Tapas Revolution)	1,397,386	776,386	621,000	1,630,329	3.3%
Spanish restaurant chain
Tharstern Group Limited	1,454,278	1,770,484	-	1,569,303	3.2%
Software based management Information systems for the printing industry
I-Dox plc	453,881	2,687,629	-	1,462,570	3.0%
Developer and supplier of knowledge management products
Pattern Analytics Limited (trading as Biosite)	857,014	857,014	-	1,384,696	2.8%
Workforce management and security services for the construction industry
Turner Topco Limited (trading as Auction Technology Group (formerly ATG Media))	1,529,075	1,209,162	-	1,177,894	2.4%
SaaS based online market place platform
Bourn Bioscience Limited	1,610,379	925,420	-	1,153,951	2.3%
Management of In-vitro fertilisation clinics
Aquasium Technology Limited	166,667	706,592	-	1,002,689	2.0%
Manufacturing and marketing of bespoke electron beam welding and vacuum furnace equipment
Redline Worldwide Limited	1,129,121	1,145,887	-	956,894	1.9%
Provider of security services to the aviation industry and other sectors
RDL Corporation Limited	1,441,667	1,072,527	-	903,731	1.8%
Recruitment consultants within the pharmaceutical, business intelligence and IT industries
Buster and Punch Holdings Limited	725,226	725,226	-	855,330	1.7%
Industrial inspired lighting and interiors retailer
The Plastic Surgeon Holdings Limited (formerly TPSFF Holdings Limited)	40,877	765,694	-	829,934	1.7%
Supplier of snagging and finishing services to the property sector
Vectair Holdings Limited	53,400	601,006	-	684,085	1.4%
Designer and distributor of washroom products
Super Carers Limited	649,528	-	649,528	649,528	1.3%
Online platform that connects people seeking home care with experienced independent carers
Rota Geek Limited	625,400	-	625,400	625,400	1.3%
Provider of cloud-based enterprise software to help organisations predict and meet demand to schedule staff effectively
Hollydale Management Limited	994,560	621,600	-	621,600	1.3%
Company seeking to carry on a business in the food sector
Blaze Signs Holdings Limited	418,281	438,320	-	598,605	1.2%
Manufacturer and installer of signs
Proactive Group Holdings Inc.	539,214	-	539,214	539,214	1.1%
Provider of media services and investor conferences for companies primarily listed on secondary public markets
BookingTek Limited	872,646	779,095	93,551	436,323	0.9%
Software for hotel groups
Omega Diagnostics Group plc	280,026	501,682	-	350,010	0.7%
In-vitro diagnostics for food intolerance, autoimmune diseases and infectious diseases
Backhouse Management Limited	782,080	300,800	-	300,800	0.6%
Company seeking to carry on a business in the motor sector
Barham Consulting Limited	782,080	300,800	-	300,800	0.6%
Company seeking to carry on a business in the catering sector
Creasy Marketing Services Limited	782,080	300,800	-	300,800	0.6%
Company seeking to carry on a business in the textile sector
McGrigor Management Limited	782,080	300,800	-	300,800	0.6%
Company seeking to carry on a business in the pharmaceutical sector
Jablite Holdings Limited	498,790	304,755	-	162,366	0.3%
Manufacturer of expanded polystyrene products
Veritek Global Holdings Limited	2,289,859	1,752,129	-	129,132	0.3%
Maintenance of imaging equipment
BG Training Limited	53,125	26,563	-	26,563	0.1%
Technical training business
Corero Network Security plc	600,000	7,866	-	9,832	0.0%
Provider of e-business technologies
Hemmels Limited	30,180	-	671,203	-	0.0%
Company specialising in the sourcing, restoration, selling and servicing of high price classic cars
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 Limited	2,524,527	-	-	-	0.0%
International nanomaterials group
NexxtDrive Limited/Nexxt E-drive Limited	487,014	-	-	-	0.0%
Developer and exploiter of mechanical transmission technologies
Biomer Technology Limited	137,170	-	-	-	0.0%
Developer of biomaterials for medical devices
Newquay Helicopters (2013) Limited (in liquidation)	9,246	-	-	-	0.0%
Helicopter service operator

Disposed in year
Gro-Group Holdings Limited	-	2,606,640	-	-	0.0%
Baby sleep products
Lightworks Software Limited	-	87,596	-	-	0.0%
Provider of software for CAD and CAM vendors
Fullfield Limited (trading as Motorclean)	-	1,606,346	-	-	0.0%
Vehicle cleaning and valet services
Total	51,932,294	48,030,308	6,212,770	49,397,230	100.0%

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.	● The Board regularly reviews the Company's Strategy including its Investment Policy. ● Careful selection and review of the Investment portfolio on a regular basis.
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.	● The Company's VCT qualifying status is regularly reviewed by the Board and the Investment Adviser. ● The Board receives regular reports from its VCT Status Adviser who has been retained by the Board to monitor the VCT's compliance with the VCT Rules.
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.
Counterparty	A counterparty may fail to discharge an obligation or commitment that it has entered into with the Company.	● The Board regularly reviews and agrees policies for managing these risks. Further details can be found in the discussion on 'credit risk' in Note 16 to the Financial Statements in the Annual Report
Economic	Events, such as 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.	● The Board monitors (1) the portfolio as a whole to ensure that the Company invests in a diversified portfolio of companies and (2) developments in the macro-economic environment such as movements in interest rates.
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.	● 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	Movements in the UK Stock Market indices will inevitably impact the valuation of the VCT's investments.	● The Board receives and reviews quarterly valuation reports from the Investment Adviser. ● The Investment Adviser alerts the Board about any adverse movements.
Asset liquidity	The Company's investments may be difficult to realise.	● The Board receives reports from the Investment Adviser and reviews the portfolio at each quarterly board meeting. It carefully monitors investments where a particular risk has been identified.
Market liquidity	Shareholders may find it difficult to sell their shares at a price which is close to the net asset value.	● 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.

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

Colin Hook

Chairman

FINANCIAL STATEMENTS

Income Statement
For the year ended 30 September 2018
		Year ended 30 September 2018			Year ended 30 September 2017

	Notes	Revenue	Capital	Total	Revenue	Capital	Total
		£	£	£	£	£	£

Net unrealised gains/(losses) on investments	8c	-	570,022	570,022	-	(794,007)	(794,007)
Net gains on realisation of investments	8	-	1,113,464	1,113,464	-	3,883,829	3,883,829
Income	3	3,093,838	-	3,093,838	3,266,634	-	3,266,634
Investment Adviser's fees	4a	(428,311)	(1,284,934)	(1,713,245)	(394,012)	(1,182,037)	(1,576,049)
Investment Advisers' performance fees	4b	-	(1,119)	(1,119)	-	(571,879)	(571,879)
Other expenses		(455,836)	-	(455,836)	(423,354)	-	(423,354)
Profit on ordinary activities before taxation		2,209,691	397,433	2,607,124	2,449,268	1,335,906	3,785,174

Tax on profit on ordinary activities	5	(339,227)	339,227	-	(421,283)	421,283	-

Profit for the year and total comprehensive income		1,870,464	736,660	2,607,124	2,027,985	1,757,189	3,785,174

Basic and diluted earnings per ordinary share:	6	1.88p	0.74p	2.62p	2.79p	2.42p	5.21p

The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the unrealised gains/(losses) 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 January 2017) 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.

Balance sheet
as at 30 September 2018
Company number: 4069483
		as at 30 September 2018			as at 30 September 2017
	Notes
		£	£	£	£	£	£
Fixed assets
Investments at fair value	8			49,397,230			48,030,308

Current assets
Debtors and prepayments		458,043			3,372,032
Current asset investments	9	31,627,351			12,412,671
Cash at bank and in hand	9	1,284,816			1,375,065
			33,370,210			17,159,768

Creditors: amounts falling due within one year			(183,726)			(841,325)

Net current assets				33,186,484			16,318,443

Net assets				82,583,714			64,348,751

Capital and reserves
Called up share capital	10			1,054,384			792,047
Capital redemption reserve				33,490			14,014
Share premium reserve				46,473,760			24,099,311
Revaluation reserve				4,102,002			4,020,689
Special reserve				19,655,855			23,215,643
Profit and loss account				11,264,223			12,207,047
Equity shareholders' funds				82,583,714			64,348,751

Basic and diluted net asset value per share

Ordinary shares	11			78.32p			81.24p

Statement of Changes in Equity for the year ended 30 September 2018


		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
						(Note a)	(Note b)	(Note b)
For the year ended 30 September 2018	Notes	£	£	£	£	£	£	£	£

At 1 October 2017		792,047	14,014	24,099,311	4,020,689	23,215,643	10,134,703	2,072,344	64,348,751
Comprehensive income for the year
Profit for the year		-	-	-	570,022	-	166,638	1,870,464	2,607,124
Total comprehensive income for the year		-	-	-	570,022	-	166,638	1,870,464	2,607,124

Contributions by and distributions to owners
Shares issued via Offer for Subscription (note c)	10	266,076	-	21,293,047	-	(199,395)	-	-	21,359,728
Dividends re-invested into new shares	10	15,737	-	1,081,402	-	-	-	-	1,097,139
Shares bought back (note d, note e)	10	(19,476)	19,476	-	-	(1,379,298)	-	-	(1,379,298)
Dividends paid	7	-	-	-	-	-	(4,143,353)	(1,306,377)	(5,449,730)
Total contributions by and distributions to owners		262,337	19,476	22,374,449	-	(1,578,693)	(4,143,353)	(1,306,377)	15,627,839

Other movements
Realised losses transferred to special reserve (note f)		-	-	-	-	(1,981,095)	1,981,095		-
Realisation of previously unrealised appreciation		-	-	-	(488,709)	-	488,709		-
Total other movements		-	-	-	(488,709)	(1,981,095)	2,469,804	-	-

At 30 September 2018		1,054,384	33,490	46,473,760	4,102,002	19,655,855	8,627,792	2,636,431	82,583,714

Notes
a) The Company's special reserve is available to fund buy-backs of shares as and when it is considered by the Board to be in the interests of the shareholders, and to absorb any existing and future realised losses and for other corporate purposes. As at 30 September 2018, the Company has a special reserve of £19,655,855, all of which relates to reserves from shares issued on or before 5 April 2014.

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) Under an Offer for Subscription ("Offer") launched on 6 September 2017, 26,607,590 ordinary shares were allotted between October 2017 and March 2018, raising net funds of £21,359,728 for the Company. This figure is net of offer costs of £448,353. The difference between the figure shown above of £21,359,728, and that per the Statement of Cash Flows of £24,305,938 is due to a debtor of £2,946,210 held at the start of the year, arising from the first allotment under the Offer in the previous year on 28 September 2017.

d) 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 7 February 2018. The authority was limited to a maximum number of 14,187,907 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.

e) During the year, the Company repurchased 1,947,624 of its own shares at the prevailing market price for a total cost of £1,379,298, which were subsequently cancelled. The difference between the figure shown above of £1,379,298, and that per the Statement of Cash Flows of £1,461,936 is due to a share buyback creditor of £82,638 held at the start of the year.

f) The transfer of £1,981,095 to the special reserve from the realised capital reserve above is the total of realised losses incurred by the Company this year.

Statement of Changes in Equity for the year ended 30 September 2017

	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
For the year ended 30 September 2017	£	£	£	£	£	£	£	£

At 1 October 2016	719,140	11,985	18,308,887	4,744,396	24,980,045	20,225,980	1,850,205	70,840,638
Comprehensive income for the year
Profit for the year	-	-	-	(794,007)	-	2,551,196	2,027,985	3,785,174
Total comprehensive income for the year	-	-	-	(794,007)	-	2,551,196	2,027,985	3,785,174

Contributions by and distributions to owners
Shares issued under Offer for Subscription	36,277	-	2,910,719	-	(786)	-		2,946,210
Dividends re-invested into new shares	38,659	-	2,879,705	-	-	-		2,918,364
Shares bought back	(2,029)	2,029	-	-	(160,323)	-		(160,323)
Dividends paid	-	-	-	-	-	(14,175,466)	(1,805,846)	(15,981,312)
Total contributions by and distributions to owners	72,907	2,029	5,790,424	-	(161,109)	(14,175,466)	(1,805,846)	(10,277,061)

Other movements
Realised losses transferred to special reserve	-	-	-	-	(1,603,293)	1,603,293		-
Realisation of previously unrealised depreciation	-	-	-	70,300	-	(70,300)		-
Total other movements	-	-	-	70,300	(1,603,293)	1,532,993	-	-

At 30 September 2017	792,047	14,014	24,099,311	4,020,689	23,215,643	10,134,703	2,072,344	64,348,751

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 offer 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 8), 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 8), all such movements through both revaluation and realised capital reserves are shown within the Income Statement for the year.

Special distributable reserve

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.

Statement of Cash Flows

For the year ended 30 September 2018		Year ended	Year ended
		30 September 2018	30 September 2017
	Notes	£	£
Cash flows from operating activities
Profit for the financial year		2,607,124	3,785,174
Adjustments for:
Net unrealised (gains)/losses on investments		(570,022)	794,007
Net gains on realisations on investments		(1,113,464)	(3,883,829)
Increase in debtors		(4,832)	(120,887)
Decrease in creditors and accruals		(574,960)	(561,152)
Net cash inflow from operating activities		343,846	13,313

Cash flows from investing activities
Purchase of investments	8	(6,290,160)	(5,304,234)
Disposal of investments	8	6,579,334	14,728,706
Decrease in bank deposits with a maturity over three months		-	2,028,243
Net cash inflow from investing activities		289,174	11,452,715

Cash flows from financing activities
Shares issued as part of Offer for subscription	10	24,305,938	-
Equity dividends paid	7	(4,352,591)	(13,062,948)
Purchase of own shares		(1,461,936)	(115,024)
Net cash inflow/(outflow) from financing activities		18,491,411	(13,177,972)

Net increase/(decrease) in cash and cash equivalents		19,124,431	(1,711,944)
Cash and cash equivalents at start of year		10,635,967	12,347,911

Cash and cash equivalents at end of year		29,760,398	10,635,967

Cash and cash equivalents comprise:
Cash at bank and in hand	9	1,284,816	1,375,065
Cash equivalents	9	28,475,582	9,260,902

Notes to the Financial Statements

for the year ended 30 September 2018

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.

Basis of preparation

A summary of the principal accounting policies, all of which have been applied consistently throughout the year are set out at the start of the related disclosure throughout the Notes to the Financial Statements. All accounting policies are included within an outlined box at the top of each relevant note.

These Financial Statements have been prepared in accordance with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 ("FRS102"), with the Companies Act 2006 and the 2014 Statement of Recommended practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ('the SORP') (updated in January 2017) 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 to the Financial Statements in the Annual Report.

Income

Dividends receivable on quoted equity shares are brought into account on the ex-dividend date. Dividends receivable on unquoted equity shares are brought into account when the Company's right to receive payment is established and there is no reasonable doubt that payment will be received.

Interest income on loan stock is accrued on a daily basis. Provision is made against this income where recovery is doubtful or where it will not be received in the foreseeable future. Where the loan stocks only require interest or a redemption premium to be paid on redemption, the interest and redemption premium is recognised as income or capital as appropriate once redemption is reasonably certain. When a redemption premium is designed to protect the value of the instrument holder's investment rather than reflect a commercial rate of revenue return the redemption premium is recognised as capital. The treatment of redemption premiums is analysed to consider if they are revenue or capital in nature on a company by company basis. Accordingly, the redemption premium recognised in the year ended 30 September 2018 has been classified as capital and has been included within gains on investments.

	2018	2017
	£	£
Income from bank deposits	43,178	55,893

Income from investments
- from equities	424,491	288,843
- from OEIC funds	108,807	21,960
- from loan stock	2,497,742	2,899,869
- from interest on preference share dividend arrears	11,881	-
	3,042,921	3,210,672

Other income	7,739	69
Total income	3,093,838	3,266,634

Total income comprises
Revenue dividends received	533,298	310,803
Interest	2,552,801	2,955,762
Other income	7,739	69
Total Income	3,093,838	3,266,634

Income from investments comprises
Listed UK securities	43,335	42,389
Listed overseas securities	108,807	21,960
Unlisted UK securities	2,890,779	3,146,323
Total investment income	3,042,921	3,210,672

Total loan stock interest due but not recognised in the year was £445,302 (2017: £223,159) due to uncertainty over its recoverability.

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
	2018	2018	2018	2017	2017	2017
	£	£	£	£	£	£
Mobeus Equity Partners LLP	428,311	1,284,934	1,713,245	394,012	1,182,037	1,576,049

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 (2017: £150,000) and £170,000 (2017: £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 (2017: £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 recent Offer has been reduced to 1.4% from 2.4%, for one year.

b) Investment Adviser's performance fees

	Revenue	Capital	Total	Revenue	Capital	Total
	2018	2018	2018	2017	2017	2017
Portfolio	£	£	£	£	£	£
Mobeus Equity Partners LLP	-	-	-	-	571,879	571,879
Foresight Group LLP	-	1,119	1,119	-	-	-
	-	1,119	1,119	-	571,879	571,879

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 remains in force, but only with the former adviser, Foresight Group LLP, to whom, for the year ended 30 September 2018, £1,119 (2017: £nil) is payable. The agreement is due to expire 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. This cap will include any fee payable to Foresight Group LLP under the old agreement, although any such payment to Foresight Group LLP is not capped. 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 2018 was a 6% uplift on the previous year's Target Return of 142.44 pence, being 150.99 pence. As Cumulative Total NAV return is 145.82 pence per share at the year-end, the Target Return has not been met and therefore no fee is payable (2017: £571,879).

c) Offer for Subscription fees

	2018	2017
	£m	£m
Funds raised by I&G VCT	22.01	2.99
Offer costs payable to Mobeus at 3.25% of funds raised by I&G VCT	0.72	0.10

Under the terms of an Offer for Subscription, with the other Mobeus advised VCTs, launched on 6 September 2017, Mobeus is entitled to fees of 3.25% of the investment amount received from investors. This amount totalled £2.60 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.

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.

	2018	2018	2018	2017	2017	2017
	Revenue	Capital	Total	Revenue	Capital	Total
	£	£	£	£	£	£
a) Analysis of tax charge:
UK Corporation tax on profits/(losses) for the year	339,227	(339,227)	-	421,283	(421,283)	-
Total current tax charge/(credit)	339,227	(339,227)	-	421,283	(421,283)	-
Corporation tax is based on a rate of 19.0% (2017: 19.5%)

b) Profit on ordinary activities before tax	2,209,691	397,433	2,607,124	2,449,268	1,335,906	3,785,174
Profit on ordinary activities multiplied by main company rate of corporation tax in the UK of 19.0% (2017: 19.5%)	419,841	75,512	495,353	477,607	260,502	738,109
Effect of:
UK dividends	(80,653)	-	(80,653)	(56,324)	-	(56,324)
Unrealised (gains not taxable)/losses not allowable	-	(108,304)	(108,304)	-	154,831	154,831
Realised gains not taxable	-	(211,558)	(211,558)	-	(757,347)	(757,347)
Unrelieved expenditure	39	-	39	-	-	-
Losses utilised	-	(94,877)	(94,877)	-	(79,269)	(79,269)
Actual current tax charge	339,227	(339,227)	-	421,283	(421,283)	-

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 (2017: £nil). There is an unrecognised deferred tax asset of £880,000 (2017: £965,000).

Basic and diluted earnings and return per share

	2018	2017
	£	£
Total earnings after taxation:	2,607,124	3,785,174
Basic and diluted earnings per share (note a)	2.62p	5.21p
Revenue profit from ordinary activities after taxation	1,870,464	2,027,985
Basic and diluted revenue earnings per share (note b)	1.88p	2.79p

Net unrealised capital gains/(losses) on investments	570,022	(794,007)
Net realised capital gains on investments	1,113,464	3,883,829
Capitalised Investment Adviser fees and performance fees less taxation	(946,826)	(1,332,633)
Total capital return	736,660	1,757,189
Basic and diluted capital earnings per share (note c)	0.74p	2.42p

Weighted average number of shares in issue in the year	99,602,770	72,621,839

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 return after taxation divided by the weighted average number of shares in issue.

c) Capital earnings per share is the total capital return after taxation divided by the weighted average number of shares in issue.

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	2018	2017
Final	Income	2016	1.00p	15 February 2017	-	718,814
Final	Capital	2016	3.00p	15 February 2017	-	2,156,442
Interim	Income	2017	1.50p	20 June 2017	-	1,087,032
Interim	Capital	2017	1.50p	20 June 2017	-	1,087,032
Special	Capital	2017	15.00p	31 August 2017	-	10,931,992
Final	Income	2017	0.50p	15 February 2018	470,185
Final	Capital	2017	2.50p	15 February 2018	2,350,933
Interim	Income	2018	0.80p	21 June 2018	843,492
Interim	Capital	2018	1.70p	21 June 2018	1,792,420

Previous dividends not claimed within the statutory period					(7,300)
					5,449,730*	15,981,312

* - £5,449,730 (30 September 2017: £15,981,312) disclosed above differs to that shown in the Statement of Cash Flows of £4,352,591; (30 September 2017: £13,062,948) due to £1,097,139 (30 September 2017: £2,918,364) of new shares issued as part of the Company's Dividend Investment Scheme.

	2018	2018	2018	2017	2017	2017
Proposed distribution to equity holders at the year end	Revenue	Capital	Total	Revenue	Capital	Total
	£	£	£	£	£	£
Final dividend for the year ended 30 September 2018 of 1.00p (income) (2017: 0.50p), 2.50p (capital) (2017: 2.50p) per ordinary share	1,054,384	2,635,959	3,690,343	473,245	2,366,229	2,839,474

Any proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

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.

	2018	2017
	£	£
Revenue available by way of dividends for the year	1,870,464	2,027,985
Interim income dividend for the year - 0.80p (2017: 1.50p)	843,492	1,087,032
Proposed final income dividend for the year - 1.00p (2017: 0.50 p)	1,054,384	473,245
Total income dividends for the year	1,897,876	1,560,277

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 2015. This classification is followed as the Company's business is to invest in financial assets with a view to profiting from their total return in the form of capital growth and income.

For investments actively traded 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. Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional. 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 in accordance with the following rules, which are consistent with the IPEV guidelines:

All investments are held at the price of a recent investment for an appropriate period where there is considered to have been no change in fair value. Where such a basis is no longer considered appropriate, each investment is considered as a whole on a 'unit of account' basis, alongside the following factors:

(i) Where a value is indicated by a material arms-length transaction by an independent third party in the shares of a company, this value will be used.

(ii) In the absence of i), and depending upon both the subsequent trading performance and investment structure of an investee company, the valuation basis will usually move to either:

a) 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 of goodwill, 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:

b) where a company's underperformance against plan indicates a diminution in the value of the investment, provision against cost is made, as appropriate.

(iii) Premiums, to the extent that they are considered capital in nature, and that 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.

(iv) Where a multiple or cost less impairment basis is not appropriate and overriding factors apply, discounted cash flow or net asset valuation 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 and treated as a realised loss in the Income Statement. 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 in to 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.

	2018	2017
	£	£
Traded on AIM	1,822,412	3,197,177
Unquoted equity shares	20,758,488	14,353,491
Unquoted preference shares	368,541	414,186
Loan stock	26,447,789	30,065,454
Total	49,397,230	48,030,308

Brought forward net unrealised gains/(losses) now realised	488,709	(70,300)
Realised gains/(losses) during the year	1,168,917	4,009,372
Transaction costs	(55,453)	(125,543)
Total realised gains over cost	1,602,173	3,813,529

Unrealised gains for the year	570,022	(794,007)
Total realised and unrealised gains	2,172,195	3,019,522

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 2017	1,333,907	21,758,149	25,757	27,540,446	50,658,259
Permanent impairment at 30 September 2017 (note d)	(500,000)	(6,011,453)	-	(87,187)	(6,598,640)
Unrealised gains/(losses) at 30 September 2017	2,363,270	(1,393,205)	388,429	2,612,195	3,970,689
Valuation at 30 September 2017	3,197,177	14,353,491	414,186	30,065,454	48,030,308
					-
Purchases at cost (note b)	-	4,135,145	-	2,077,625	6,212,770
Sale proceeds (note a)	-	(2,801,086)	(51,776)	(3,726,472)	(6,579,334)
Realised gains/(losses) on investments (note a)	-	2,053,622	-	(940,158)	1,113,464
Unrealised (losses)/gains on investments (note c)	(1,374,765)	3,017,316	6,131	(1,028,660)	620,022
Valuation at 30 September 2018	1,822,412	20,758,488	368,541	26,447,789	49,397,230
Cost at 30 September 2018	1,333,907	24,937,303	24,718	25,636,366	51,932,294
Permanent impairment at 30 September 2018 (note d)	(500,000)	(6,019,699)	-	(117,367)	(6,637,066)
Unrealised gains at 30 September 2018	988,505	1,840,884	343,823	928,790	4,102,002
Valuation at 30 September 2018	1,822,412	20,758,488	368,541	26,447,789	49,397,230

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.

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 2017	Realised gain in year
		£	£	£	£
Gro-Group Holdings Limited	Realisation	2,398,928	4,328,503	2,606,640	1,721,863
Fullfield Limited (trading as Motorclean)	Realisation	1,517,734	856,577	1,606,346	(749,769)
LightWorks Software Limited	Realisation	20,471	433,210	87,596	345,614
Hemmels Limited¹	Realisation and permanent impairment	641,023	304,819	671,203	(366,384)
The Plastic Surgeon Holdings Limited (formerly TPSFF Holdings Limited)	Loan repayments and repurchase of preference shares	198,811	289,305	289,305	-
MPB Group Limited	Loan repayment	154,780	154,780	154,780	-
Others		6,988	212,140	50,000²	162,140
		4,938,735	6,579,334	5,465,870	1,113,464

¹ New investment in the year

²Relates to deferred consideration in respect of Alaric Systems referred to in note c below.

Note b) The purchases at cost figure shown above of £6,212,770 differs from the figure shown in the Statement of Cash Flows of £6,290,160, by £77,390. These funds are included in Debtors at the year end when they were held in a solicitor's client account in advance of an investment that completed in October 2018.

Note c) Unrealised gains above of £620,022 differ from that shown in the Income Statement of £570,022. The difference of £50,000 is a reduction in the year in the estimated fair value of contingent consideration held within debtors at the Balance Sheet date last year (see Note 11 of the Annual Report), to nil. This reduction is because £134,241 of such consideration was received in the year in respect of Alaric Systems, an investment realised in a prior year. £50,000 was recognised in a previous year and treated as a debtor.

Within net unrealised gains of £620,022 for the year, the significant increases in value compared to last year were as follows: £999,320 in EOTH Limited, £795,823 in Preservica Limited, £660,696 in CGI Creative Graphics International Limited and £547,525 in Master Removers Group Limited. These gains were partially offset by unrealised falls in valuation compared to last year, including: £1,622,997 in Veritek Global Holdings Limited, £1,225,059 in IDOX plc, £878,401 in Manufacturing Services Investment Limited (trading as Wetsuit Outlet), £436,323 in BookingTek Limited and £256,509 in Virgin Wines Holding Company 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 d) During the year, permanent impairments of the cost of investments have increased from £6,598,640 to £6,637,066. The increase of £38,426 is due to the impairments of the remaining investment costs of two investee companies.

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 in year
Financial Year	£	£
2018¹	16,029,509	38,426
2017	13,528,607	2,403,079
2016	11,500,860	(1,115,371)
2015	9,793,793	65,779
2014	7,709,509	(1,876,253)
2013	10,475,290	2,001,476
2012	11,991,733	313,850
2011	11,206,678	1,881,554

1 - £38,426 of the remaining cost of two investments were permanently impaired in the year.

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
	2018	2017
	£	£
OEIC Money market funds	28,475,582	9,260,902
Cash equivalents per Statement of Cash Flows	28,475,582	9,260,902
Bank deposits that mature after three months	3,151,769	3,151,769
Current asset investments	31,627,351	12,412,671
Cash at bank	1,284,816	1,375,065

Called up share capital

	2018	2017
	£	£

Allotted, called-up and fully paid:
Ordinary Shares of 1p each: 105,438,384 (2017: 79,204,702)	1,054,384	792,047
	1,054,384	792,047

Under the Offer for Subscription launched on 6 September 2017, a total of 26,607,590 (2017: 3,627,706) ordinary shares were allotted at an effective offer price of 82.71 pence per share, raising net funds of £21,359,728 (2017: £2,946,210). This figure is less than that shown in the Statement of Cash Flows due to an allotment debtor of £2,946,210 held at the start of the year.

Under the terms of the Dividend Investment Scheme, a total of 1,573,716 (2017: 3,865,859) ordinary shares were allotted during the year for a total consideration of £1,097,139 (2017: £2,918,364).

During the year, the Company purchased 1,947,624 (2017: 202,886) of its own ordinary shares for cash (representing 2.5% (2017: 0.3%) of the ordinary shares in issue at the start of the year) at the prevailing market price for a total cost of £1,379,298 (2017: £160,323). The shares bought back were subsequently cancelled.

Basic and diluted net asset value per share


	2018	2017


Net assets	£82,583,714	£64,348,751
Number of shares in issue	105,438,384	79,204,702

Basic and diluted net asset value per share	78.32p	81.24p

Post balance sheet events

On 9 October 2018, a follow-on investment of £0.93 million was made into Pattern Analytics Limited (trading as Biosite).

On 10 October 2018, a follow-on investment of £0.45 million was made into Proactive Group Holdings Inc.

On 19 October 2018, a follow-on investment of £0.08 million was made into MPB Group Limited.

On 31 October 2018, The Plastic Surgeon Holdings Limited (formerly TPSFF Holdings Limited) carried out a repurchase of preference shares in which £0.05 million of proceeds were received by the Company.

On 28 November 2018, a new investment of £0.47 million was made into Kudos Innovations Limited (trading as Grow Kudos).

Statutory information

The financial information set out in these statements does not constitute the Company's statutory accounts for the year ended 30 September 2018 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.

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: vcts@mobeusequity.co.uk.

Annual General Meeting

The Annual General Meeting of the Company will be held at 11.00 am on Wednesday, 6 February 2019 at The Clubhouse, 8 St James's Square, London, SW1Y 4JU.

Contact details for further enquiries

Robert King or Robert Brittain of Mobeus Equity Partners LLP (the Company Secretary) on 020 7024 7600 or by e-mail to vcts@mobeusequity.co.uk.

Mark Wignall at Mobeus Equity Partners LLP (the Investment Adviser) on 020 7024 7600 or by e-mail to info@mobeusequity.co.uk.

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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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Income & Growth VCT (IGV)

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