Half-year Report

RNS Number : 6558A

Income & Growth VCT (The) PLC

30 May 2019

 

THE INCOME & GROWTH VCT PLC
HALF YEAR REPORT FOR THE SIX MONTHS ENDED 31 MARCH 2019
The Income & Growth VCT plc ("the Company") today announces the half-year results for the six months ended 31 March 2019.
As at 31 March 2019: Net assets: £81.44 million Net asset value ("NAV") per share: 78.03 pence
Financial Highlights
Results for the Half Year ended 31 March 2019
-           Net asset value total return per share was 4.1% for the six months.
-           Share price total return per share was 1.4% for the six months.
-           The Board has declared an interim dividend in respect of the current year of 1.50 pence per share to be paid to shareholders on 12 July 2019.
-           The Company made one new investment and three follow-on investments totalling £2.00 million during the six months.
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, and the current year to date.
Reporting date As at Net assets NAV per share Share price¹ Cumulative dividends paid per share Cumulative total return per share to shareholders² Dividends paid and proposed in respect of each year (NAV basis) (Share price basis) (£ m) (p) (p) (p) (p) (p) (p) 31 March 2019 81.44 78.03 67.00 111.50 189.53 178.50 1.504 30 September 2018 82.58 78.32 69.50 108.00 186.32 177.50 6.00 30 September 2017 64.35 81.24 73.00 102.50 183.74 175.50 21.00 30 September 2016 70.84 98.51 88.80 80.50 179.01 169.30 10.00 30 September 2015 75.20 106.38 93.50 68.50 174.88 162.00 12.00 30 September 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 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     An interim dividend of 1.50 pence per share, referred to in the Financial Highlights above, is payable to shareholders on 12 July 2019.
Chairman's Statement I am pleased to present the Company's Half Year Report for the six months ended 31 March 2019. Overview The half-year has again seen good progress and a positive return for the period.  This is detailed in the Performance and the Investment Portfolio sections of my statement below. Sixteen growth capital investments have now been completed since the 2015 VCT Rule change. During the period under review, one new investment was made and three existing portfolio companies received follow-on funding.  After the period end, the Company made a further two new investments.  Further details of this investment activity are contained in the Investment Review. The Investment Adviser continues to report an interesting pipeline of growth capital opportunities. Meanwhile, the existing, more mature portfolio constructed under the previous rules continues to provide a healthy income yield. Performance The Company's NAV total return per share was 4.1% for the six months to 31 March 2019 (2018: 1.3%) while the total share price return was 1.4% (2018: 1.4%). The Company's cumulative NAV total return per share (being the closing net asset value plus total dividends paid to date) has increased from 186.32 pence per share at the start of the period to 189.53 pence per share at the period end. This represents an increase of 1.7% over the period. Investment portfolio The portfolio has performed well during the period, increasing in value by 5.2% (2018: 1.2%) on a like-for-like basis. The portfolio achieved a net increase of £2.20 million in unrealised gains and £0.37 million in realised gains over the six-month period.   The portfolio was valued at £51.68 million at the period end (30 September 2018:  £49.40 million). During the six months under review, the Company invested a total of £2.00 million (2018: £3.10 million) into four (2018: six) investments.  One of these investments was into a new business; Grow Kudos, an online platform which provides and promotes research dissemination; and three follow-on investments were made into existing portfolio companies, namely Biosite, Proactive and MPB.  After the period end, £1.53 million was invested into Arkk Consulting, a regulatory and reporting requirement service and product provider, and £0.93 million was invested into Parsley Box, a supplier of home delivered ambient ready meals for the elderly.  Also, the realisation of Plastic Surgeon occurred, realising proceeds of £1.22 million and generating a multiple on cost of 5.6x. Details of this investment activity and the performance of the portfolio are contained in the Investment Review and the Investment Portfolio Summary in the Half-Year Report. Revenue account The results for the period are set out in the Unaudited Condensed Income Statement and show a revenue return (after tax) of 1.08 pence per share (2018: 0.92 pence per share). The revenue return for the period of £1.13 million has increased from last year's comparable figure of £0.86 million. This is mainly due to an increase in income receivable from loans made to new investee companies and some investee companies resuming interest payments, as well as higher dividend receipts. Dividends The Board continues to be committed to provide an attractive dividend stream to shareholders and is pleased to declare an interim dividend of 1.50 pence per share for the year ending 30 September 2019, comprising 1.00 penny from income and 0.50 pence from capital.  This dividend will be paid on 12 July 2019 to shareholders on the Register on 14 June 2019 and will bring cumulative dividends paid per share to 113.00 pence. The Company's target of paying a dividend of at least 6.00 pence per share in respect of each financial year has been met or exceeded in each of the last seven years.  I have previously noted that the gradual move of the portfolio to younger growth capital investments may make dividends harder to achieve from income and capital returns alone in any given year.  Accordingly, the Board continues to monitor the sustainability of this target. Cash available for investment The Board continues to monitor credit risk in respect of its cash balances and to prioritise the security and protection of the Company's capital.  Cash and liquidity fund balances as at 31 March 2019 amounted to £29.53 million.  This figure included £24.72 million held in money market funds with AAA credit ratings and £4.81 million held in deposit accounts with a number of well-known financial institutions across a range of maturities. Fundraising The Board regularly review the Company's cash flow projections and is presently consideration whether it may be desirable to raise funds within the 2019/20 tax year.  The Board will notify shareholders of any intention to launch an offer for subscription at the earliest opportunity. Share buy-backs During the six months ended 31 March 2019, the Company bought back and cancelled 1,074,519 of its own shares, representing 1.0% (2018: 1.5%) of the shares in issue at the beginning of the period, at a total cost of £0.73 million (2018: £0.85 million) inclusive of expenses. It is the Company's policy to cancel all shares bought back in this way. The Board regularly reviews its buyback policy and currently seeks to maintain the discount at which the Company's shares trade at no more than 10% below the latest published NAV. Shareholder communications May I remind you that the Company has its own website which is available at www.incomeandgrowthvct.co.uk. The Investment Adviser held its most recent annual Shareholder Event in February 2019 which, from the feedback submitted, was well received by shareholders. The event included presentations on the investment activity and performance of all the Mobeus VCTs. I would like to thank those shareholders who attended for helping to make it a success. The next Event will take place in the first quarter of 2020 and shareholders will be sent further details and an invitation nearer the time. Succession As stated in last year's annual report, the Board is continuing with its succession planning and will provide further details in its Annual Report for the year ending 30 September 2019. Outlook Your Board considers that your Company is well positioned, with the portfolio being comprised of a strong foundation of more mature investments providing an income return, and a younger, growth capital portfolio seeking to achieve scale, so as to reach higher levels of profitability and hence value. The demand for growth capital investments is strong and the amount of capital available for investment in the sector is substantial, which is giving rise to increased competition and higher entry valuations for the most attractive investment opportunities. While the new growth capital element of the portfolio is still young, both your Board and the Investment Adviser continue to 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 involves increased risk, as those that succeed often take longer to build scale, while those less successful investments may be the first to show.  Returns may therefore take longer to achieve, and the performance of these businesses may be more volatile.  Hopefully these factors will be more than offset by longer-term gains. 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. Finally, I would like to take this opportunity once again to thank all shareholders for their continued support. Colin Hook Chairman 30 May 2019
Investment Policy The Company's policy is to invest primarily in a diverse portfolio of UK unquoted companies. Asset Mix and Diversification The Company will seek to make investments in UK unquoted companies in accordance with the prevailing requirements of VCT legislation. Investments are made selectively across a wide variety of sectors, principally in established companies. Investments are generally structured as part loan and part equity in order to receive regular income and to generate capital gain from realisations. There are a number of conditions within the VCT legislation which need to be met by I&G and which may change from time to time. No single investment may represent more than 15% (by VCT tax value) of the Company's total investments at the date of investment. Save as set out above, the Company's other investments are held in cash and liquid funds. Liquidity The Company's cash and liquid funds are held in a portfolio of readily realisable interest bearing investments, deposit and current accounts, of varying maturities, subject to the overriding criterion that the risk of loss of capital be minimised. Borrowing The Company's articles of association permit borrowing of up to 10% of the adjusted capital and reserves (as defined therein).  However, the Company has never borrowed and the Board would only consider doing to in exceptional circumstances.
Investment Review Demand for growth capital investment remains strong and there is a significant 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 six months to 31 March 2019 is summarised as follows: 2019 £m 2018 £m Opening portfolio value 49.40 48.09 New and follow-on investments 2.00 3.10 Disposal proceeds (2.29) (4.63) Net realised gains 0.37 1.81 Valuation movements 2.20 (1.25) Portfolio value at 31 March 51.68 47.12 The six months to 31 March 2019 has seen further solid progress.  New investment comprised one new growth capital investment of £0.47 million into Grow Kudos, an online platform which provides and promotes research dissemination, and three existing growth portfolio companies receiving follow-on funding totalling £1.53 million (Biosite, Proactive and MPB).  Net cash proceeds of £2.29 million were received, primarily from loan repayments. The investment and divestment activity during the period has increased the proportion of the portfolio comprised of all growth capital investments by value to 47.9% at the period end. After the period end, the Company invested £1.53 million into Arkk Consulting, a regulatory and reporting requirement service and product provider, and £0.93 million was invested into Parsley Box, a supplier of home delivered ambient ready meals for the elderly.  This brings the total invested in those growth capital investments made since the introduction of the VCT Rules in 2015 to £20.53 million.  Also, disposal proceeds of £1.22 million have been received following the realisation of Plastic Surgeon.  These proceeds contributed to a multiple on cost of 5.6x over the life of this investment. Details of the valuation movements for each investee company are provided in the Investment Portfolio Summary. The portfolio's contribution to the overall results of the VCT is summarised as follows: Investment Portfolio Capital Movement 2019 £m 2018 £m Increase in the value of unrealised investments 4.68 4.80 Decrease in the value of unrealised investments (2.48) (6.05) Net increase/(decrease) in the value of unrealised investments 2.20 (1.25) Realised gains 0.37 1.81 Realised losses - - Net realised gains in the period 0.37 1.81 Net investment portfolio movement in the period 2.57 0.56 Valuation changes of portfolio investments still held The principal contributors to the valuation increases of £4.68 million were ASL £1.25 million, EOTH (Rab and Lowe Alpine) £0.53 million and Rotageek £0.43 million. ASL's core business is trading well and, following two recent corporate acquisitions, is beginning to benefit from associated synergies.  EOTH achieved a record year of profitability, underpinned by continued growth in its Rab brand.  Rotageek has made a strong start since investment, having won a number of new contracts for its software. A small number of new growth investments have shown initial uplifts from cost, due in large part to the structure of the Company's investment, but, in some cases, also due to the underlying investee company performance. The main reductions within total valuation decreases of £(2.48) million, were Redline £(0.39) million, Aquasium £(0.35) million, and Bourne Bioscience £(0.34) million.  Redline's revenues have been unpredictable and sales in recent months have been lower than planned which has impacted the valuation.  Bourne has experienced softer trading in recent months due to a strong competitive landscape, but a recently opened clinic is expected to generate a positive contribution soon.  Finally, Aquasium, a legacy investment, is behind budget due to a low order book and customer delays, although the longer-term prospects appear more promising. Realised gains and deferred consideration receipts There have been no realisations during the period under review.  However, the Company realised a gain in the half-year from deferred consideration receipts of £0.37 million arising from past realisations. After the period end, the Company realised its investment in Plastic Surgeon, receiving £1.22 million in cash proceeds.  This contributed to a multiple on cost of 5.6x and an IRR of 20.5% over the 11 years the investment was held. Investment portfolio yield and capital repayments In the period under review, the Company received the following amounts in loan interest and dividend income: Investment Portfolio Yield 2019 £m 2018 £m Loan interest received in the period 1.41 1.29 Dividends received in the period 0.24 0.12 Total portfolio income in the period1 1.65 1.41 Portfolio Value at 31 March 51.68 47.12 Portfolio Income Yield (Income as a % of Portfolio value at 31 March) 3.2% 3.0% 1 Total portfolio income in the period is generated solely from investee companies within the portfolio.  In addition to deferred consideration receipts of £0.37 million, the Company also received loan stock repayments of £1.82 million (as the investments in the five companies preparing to trade repaid the final loan stock sums still payable) and preference share repurchases of £0.10 million, both at cost.   New investment in the half year The Company made one new investment of £0.47 million during the period, as detailed below:
Company Business Date of Investment Amount of new investment (£m) Grow Kudos Platform for the dissemination of research November 2018 0.47 Grow Kudos is an online platform which provides and promotes 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 increase its head count 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.
Further investments in existing portfolio companies in the half-year The Company made further investments totalling £1.53 million into three existing portfolio companies during the period under review, 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 audited accounts for the year ended 31 July 2018 show turnover of £9.76 million and a loss before interest, tax and amortisation of goodwill of £(0.64) 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. 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 unaudited accounts for the year ended 30 June 2018 show turnover of £4.75 million and a loss before interest, tax and amortisation of goodwill of £(0.31) million. MPB Group Online marketplace for used camera and video equipment October and December 2018 0.15 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 prior year, this investment will give the company sufficient capital to achieve its next phase of expansion. The company's 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.
New investments made after the period end The Company made two new investments, totalling £2.46 million after the period end, as detailed below: Company Business Date of Investment Amount of new investment (£m) Arkk Consulting Regulatory and reporting requirement service provider May 2019 1.53 Arkk Consulting (trading as Arkk Solutions) provides services and software to enable organisations to remain compliant with regulatory reporting requirements. Arkk was established in 2009 and currently has over 800 clients across 20 countries. These include more than 80 of the FTSE 350, and half of the largest 20 accountancy firms in the UK. The investment will build on Arkk's reputation and customer base, to target the cloud based period end reporting market by building the sales and marketing team. The company's audited accounts for the year ended 31 December 2017 show turnover of £3.18 million and a profit before interest, tax and amortisation of goodwill of £0.52 million. Parsley Box Home delivered ambient ready meals for the elderly May 2019 0.93 Parsley Box is a UK direct to consumer supplier of home delivered ambient ready meals for the elderly. Founded in 2017, Parsley Box has grown rapidly and has developed a unique meal delivery solution for its customers. The company supplies a diverse range of ambient meals via next day delivery which are easy to store and aim to contribute to a more independent and healthier lifestyle. The investment will scale the company's marketing strategy, enable it to process larger order volumes and continue to build out its team. The company's unaudited accounts for the period ended 31 March 2018 show revenues of £0.25 million and a loss before interest, tax and amortisation of goodwill of £(0.21) million.
Realisation after the period end The Company realised its investment in Plastic Surgeon after the period end, as detailed below: Company Business Period of investment Total cash proceeds over the life of the investment / Multiple over cost Plastic Surgeon Supplier of snagging and finishing services to the property sector April 2008 to May 2019 £2.27 million 5.6 times cost The Company sold its remaining investment in Plastic Surgeon to Polygon Group for £1.22 million. Over the eleven years this investment was held, it generated proceeds of £2.27 million compared to an original investment cost of £0.40 million which is a multiple on cost of 5.6x and an IRR of 20.5%. Mobeus Equity Partners LLP Investment Adviser 30 May 2019 Investment Portfolio Summary As at 31 March 2019
Total cost at 31 March 2019 (unaudited) £ Valuation at 30 September 2018 (audited) £ Additional investments in the period £ Valuation at 31 March 2019 (unaudited) £ Tovey Management Limited (trading as Access IS) Provider of data capture and scanning hardware 3,313,932 4,110,232 - 4,300,074 ASL Technology Holdings Limited Printer and photocopier services 2,722,106 2,904,306 - 4,151,254 EOTH Limited (trading as Equip Outdoor Technologies) Distributor of branded outdoor equipment and clothing including the Rab and Lowe Alpine brands 1,383,313 2,809,199 - 3,336,475 Virgin Wines Holding Company Limited Online wine retailer 2,745,503 3,227,371 - 3,327,794 Preservica Limited Seller of proprietary digital archiving software 2,181,666 2,977,489 - 3,119,565 Pattern Analytics Limited (trading as Biosite) Workforce management and security services for the construction industry 1,791,938 1,384,696 934,924 2,648,952 Media Business Insight Holdings Limited A publishing and events business focussed on the creative production industries 3,666,556 2,469,625 - 2,633,975 Manufacturing Services Investment Limited (trading as Wetsuit Outlet) Online retailer in the water sports market 3,205,182 2,326,781 - 2,236,330 Master Removers Group Limited (trading as Anthony Ward Thomas, Bishopsgate and Aussie Man & Van) A specialist logistics, storage and removals business 682,183 1,926,851 - 2,054,472 MPB Group Limited Online marketplace for used photographic equipment 1,423,974 1,885,665 154,780 2,050,973 Vian Marketing Limited (trading as Red Paddle Co) Design, manufacture and sale of stand-up paddleboards and windsurfing sails 1,207,437 1,870,551 - 1,988,059 CGI Creative Graphics International Limited Vinyl graphics to global automotive, recreation vehicle and aerospace markets 1,943,948 1,962,334 - 1,875,034 My TutorWeb Limited Digital marketplace connecting school pupils seeking one-to-one online tutoring 1,783,566 1,963,647 - 1,783,566 Tharstern Group Limited Software based management Information systems for the printing industry 1,454,278 1,569,303 - 1,551,295 Idox plc Developer and supplier of knowledge management products 453,881 1,462,570 - 1,500,072 Ibericos Etc. Limited (trading as Tapas Revolution) Spanish restaurant chain 1,397,386 1,630,329 - 1,395,285 Turner Topco Limited (trading as Auction Technology Group) SaaS based online auction market place platform 1,529,075 1,177,894 - 1,386,934 Proactive Group Holdings Inc Media Services and investor conferences 988,390 539,214 449,176 1,373,818 Rota Geek Limited Workforce management software 625,400 625,400 - 1,056,153 Buster and Punch Holdings Limited Industrial inspired lighting and interiors retailer 725,226 855,330 - 1,011,250 The Plastic Surgeon Holdings Limited Supplier of snagging and finishing services to the property sector 40,833 829,934 - 906,333 Vectair Holdings Limited Designer and distributor of washroom products 53,400 684,085 - 860,948 Bourn Bioscience Limited Management of in-vitro fertilisation clinics 1,610,379 1,153,951 - 815,059 Blaze Signs Holdings Limited Manufacturer and installer of signs 418,281 598,605 - 753,404 RDL Corporation Limited Recruitment consultants within the pharmaceutical, business intelligence and IT industries 1,441,667 903,731 - 713,522 Aquasium Technology Limited Manufacturing and marketing of bespoke electron beam welding and vacuum furnace equipment 166,667 1,002,689 - 654,321 Redline Worldwide Limited Provider of security services to the aviation industry and other sectors 1,129,121 956,894 - 564,561 Kudos Innovations Limited (trading as Grow Kudos) Online platform that provides and promotes research dissemination 472,500 - 472,500 472,500 Super Carers Limited Online introductory platform connecting local individuals with carers 649,528 649,528 - 324,764 Omega Diagnostics Group plc In-vitro diagnostics for food intolerance, autoimmune diseases and infectious diseases 280,026 350,010 - 303,342 BookingTek Limited Direct booking software for hotel groups 872,646 436,323 - 218,161 Jablite Holdings Limited Manufacturer of expanded polystyrene products 498,790 162,366 - 162,366 Veritek Global Holdings Limited Maintenance of imaging equipment 2,289,859 129,132 - 116,961 BG Training Limited                                                                   Technical training business 53,125 26,563 - 26,563 Corero Network Security plc Provider of e-business technologies 600,000 9,832 - 7,866 Hollydale Management Limited Company seeking to carry on a business in the food sector 621,600 621,600 - - Backhouse Management Limited Company seeking to carry on a business in the motor sector 601,600 300,800 - - Barham Consulting Limited Company seeking to carry on a business in the catering sector 601,600 300,800 - - Creasy Marketing Services Limited Company seeking to carry on a business in the textile sector 601,600 300,800 - - McGrigor Management Limited Company seeking to carry on a business in the pharmaceutical sector 601,600 300,800 - - Oxonica Limited International nanomaterials group 2,524,527 - - - Racoon International Group Limited Supplier of hair extensions, hair care products and training 655,851 - - - NexxtDrive Limited/Nexxt E-drive Limited Developer and exploiter of mechanical transmission technologies 487,014 - - - CB Imports Group Limited (trading as Country Baskets) Importer and distributor of artificial flowers, floral sundries and home decor products 175,000 - - - Biomer Technology Limited Developer of  biomaterials for medical devices 137,170 - - - Hemmels Limited Sourcing and restoration of classic cars 30,180 - - - Total 52,839,504 49,397,230 2,011,380 51,682,001
Statement of the Directors' Responsibilities  Responsibility statement In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Colin Hook (Chairman), Jonathan Cartwright (Chairman of the Audit and Nomination & Remuneration Committees) and Helen Sinclair (Chairman of the Investment Committee), being the Directors of the Company, confirm that to the best of their knowledge: (a) The condensed set of financial statements, which has been prepared in accordance with Financial Reporting Standard 104 "Interim Financial Reporting" gives a true and fair view of the assets, liabilities, financial position and profit of the Company as required by DTR 4.2.10; (b) the Half Year Management Report, which comprises the Chairman's Statement, Investment Policy, Investment Review and Investment Portfolio Summary, includes a fair review of the information required by DTR 4.2.7, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; (c) a description of the principal risks and uncertainties facing the Company for the remaining six months is set out below, in accordance with DTR 4.2.7; and (d) there were no related party transactions in the first six months of the current financial year that are required to be disclosed, in accordance with DTR 4.2.8. Principal risks and uncertainties In accordance with DTR 4.2.7, the Board confirms that the principal risks and uncertainties facing the Company have not materially changed from those identified in the Annual Report and Financial Statements for the year ended 30 September 2018 ("the Annual Report"). The principal risks faced by the Company are: •             Investment and strategic •             Loss of approval as a Venture Capital Trust; •             Regulatory; •             Counterparty; •             Economic; •             Financial and operating; •             Market; •             Asset liquidity; and •             Market liquidity; A detailed explanation of the principal risks facing the Company can be found in the Annual Report on pages 27 and 28, and in Note 16 on Financial Instruments on pages 65 to 72. Copies can be viewed or downloaded from the Company's website: www.incomeandgrowthvct.co.uk. Going Concern The Board has assessed the Company's operation as a going concern. The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Half Year Management Report. The Directors have satisfied themselves that the Company continues to maintain an adequate cash position. The portfolio taken as a whole remains resilient and well-diversified. The major cash outflows of the Company (namely investments, share buybacks and dividends) are within the Company's control. The Board's assessment of liquidity risk and details of the Company's policies for managing its capital and financial risks are shown in Note 16 on pages 65 to 72 of the Annual Report. Accordingly, the Directors continue to adopt the going concern basis of accounting in preparing the half year report and financial statements. Cautionary Statement This report may contain forward looking statements with regards to the financial condition and results of the Company, which are made in the light of current economic and business circumstances. Nothing in this report should be construed as a profit forecast. For and on behalf of the Board: Colin Hook Chairman 30 May 2019
Unaudited Condensed Income Statement for the six months ended 31 March 2019
Six months ended 31 March 2019 (unaudited) Six months ended 31 March 2018  (unaudited) Notes Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Unrealised gains / (losses) on investments held at fair value 9 - 2,199,709 2,199,709 - (1,251,618) (1,251,618) Realised gains on investments held at fair value 9 - 367,651 367,651 - 1,810,102 1,810,102 Income 4 1,783,886 - 1,783,886 1,476,579 - 1,476,579 Investment Adviser's fees 5 (215,882) (647,647) (863,529) (205,694) (617,082) (822,776) Other expenses (224,094) - (224,094) (234,496) - (234,496) Profit / (loss) on ordinary activities before taxation 1,343,910 1,919,713 3,263,623 1,036,389 (58,598) 977,791 Tax on profit / (loss) on ordinary activities 6 (209,618) 209,618 - (173,800) 173,800 - Profit for the period and total comprehensive income 1,134,292 2,129,331 3,263,623 862,589 115,202 977,791 Basic and diluted earnings per share 7 1.08p 2.02p 3.10p 0.92p 0.12p 1.04p Year ended 30 September 2018 (audited) Notes Revenue Capital Total £ £ £ Unrealised gains / (losses) on investments held at fair value - 570,022 570,022 Realised gains on investments held at fair value - 1,113,464 1,113,464 Income 4 3,093,838 - 3,093,838 Investment Adviser's fees 5 (428,311) (1,284,934) (1,713,245) Investment Adviser's performance fees 5 - (1,119) (1,119) Other expenses (455,836) - (455,836) Profit on ordinary activities before taxation 2,209,691 397,433 2,607,124 Tax on profit on ordinary activities 6 (339,227) 339,227 - Profit for the period and total comprehensive income 1,870,464 736,660 2,607,124 Basic and diluted earnings per share 7 1.88p 0.74p 2.62p
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") issued by the Association of Investment Companies ("AIC") and updated in January 2017, 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 period.
Unaudited Condensed Balance Sheet as at 31 March 2019
31 March 2019 (unaudited) 31 March 2018 (unaudited) 30 September 2018 (audited) Notes £ £ £ Fixed assets Investments at fair value 9 51,682,001 47,114,979 49,397,230 Current assets Debtors and prepayments 447,599 718,466 458,043 Current asset investments 10  27,873,883 34,467,981 31,627,351 Cash at bank 10  1,659,682 1,483,126 1,284,816 29,981,164 36,669,573 33,370,210 Creditors: amounts falling due within one year (225,127) (199,647) (183,726) Net current assets 29,756,037 36,469,926 33,186,484 Net assets 81,438,038 83,584,905 82,583,714 Capital and reserves Called up share capital 1,043,639 1,054,360 1,054,384 Capital redemption reserve 44,235 25,754 33,490 Share premium reserve 46,473,760 45,949,915 46,473,760 Revaluation reserve 6,200,237 2,484,528 4,102,002 Special distributable reserve 18,486,621 21,727,185 19,655,855 Realised capital reserve 6,469,707 9,878,415 8,627,792 Revenue reserve 2,719,839 2,464,748 2,636,431 Equity Shareholders' funds 81,438,038 83,584,905 82,583,714 Basic and diluted net asset value: Basic and diluted net asset value per share 11  78.03p 79.28p 78.32p
Unaudited Condensed Statement of Changes in Equity for the six months ended 31 March 2019
Non-distributable reserves Distributable reserves Total Called up share capital Capital redemption reserve Share premium reserve Revaluation reserve Special distributable reserve (Note a) Realised capital reserve (Note b) Revenue reserve (Note b) £ £ £ £ £ £ £ £ At 1 October 2018 1,054,384 33,490 46,473,760 4,102,002 19,655,855 8,627,792 2,636,431 82,583,714 Comprehensive income for the period Profit/(loss) for the period - - - 2,199,709 - (70,378) 1,134,292 3,263,623 Total comprehensive income for the period - - - 2,199,709 - (70,378) 1,134,292 3,263,623 Contributions by and distributions to owners Shares bought back (Note c) (10,745) 10,745 - - (731,205) - - (731,205) Dividends paid - - - - - (2,627,210) (1,050,884) (3,678,094) Total contributions by and distributions to owners (10,745) 10,745 - - (731,205) (2,627,210) (1,050,884) (4,409,299) Other movements Realised losses transferred to special reserve (Note a) - - - - (438,029) 438,029 - - Realisation of previously unrealised appreciation - - - (101,474) - 101,474 - - Total other movements - - - (101,474) (438,029) 539,503 - - At 31 March 2019 1,043,639 44,235 46,473,760 6,200,237 18,486,621 6,469,707 2,719,839 81,438,038
Notes: a): The Special distributable reserve also provides the Company with a reserve to absorb any existing and future realised losses and, when considered by the Board to be in the interests of shareholders, to fund share buybacks and for other corporate purposes. All of this reserve originates from funds raised prior to 6 April 2014. The transfer of £438,029 to the special reserve from the realised capital reserve above is the total of realised losses incurred by the Company in the period. b): The realised capital reserve and the revenue reserve together comprise the Profit and Loss Account of the Company. c): During the period, the Company repurchased 1,074,519 of its own shares at the prevailing market price for a total cost (including stamp duty) of £731,205, which were subsequently cancelled.
Unaudited Condensed Statement of Changes in Equity for the six months ended 31 March 2018
Non-distributable reserves Distributable reserves Called up share capital Capital redemption reserve Share premium reserve Revaluation reserve Special distributable reserve Realised capital reserve Revenue reserve Total £ £ £ £ £ £ £ £ 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 period (Loss)/profit for the period - - - (1,251,618) - 1,366,820 862,589 977,791 Total comprehensive income for the period - - - (1,251,618) - 1,366,820 862,589 977,791 Contributions by and distributions to owners Shares issued via Offer for Subscription 266,076 - 21,293,047 - (199,395) - - 21,359,728 Dividends re-invested into new shares 7,977 - 557,557 - - - - 565,534 Shares bought back (11,740) 11,740 - - (845,781) - - (845,781) Dividends paid - - - - - (2,350,933) (470,185) (2,821,118) Total contributions by and distributions to owners 262,313 11,740 21,850,604 - (1,045,176) (2,350,933) (470,185) 18,258,363 Other movements Realised losses transferred to special reserve - - - - (443,282) 443,282 - - Realisation of previously unrealised appreciation - - - (284,543) - 284,543 - - Total other movements - - - (284,543) (443,282) 727,825 - - At 31 March 2018 1,054,360 25,754 45,949,915 2,484,528 21,727,185 9,878,415 2,464,748 83,584,905
Unaudited Condensed Statement of Cash Flows for the six months ended 31 March 2019 Notes Six months ended 31 March 2019 (unaudited) Six months ended 31 March 2018 (unaudited) Year ended 30 September 2018 (audited) £ £ £ Cash flows from operating activities Profit for the financial period 3,263,623 977,791 2,607,124 Adjustments for: Net unrealised (gains)/losses on investments (2,199,709) 1,251,618 (570,022) Realised gains on realisations on investments (367,651) (1,810,102) (1,113,464) Increase in debtors (66,947) (228,772) (4,832) Increase/(decrease) in creditors and accruals 41,402 (559,040) (574,960) Net cash inflow/(outflow) from operating activities 670,718 (368,505) 343,846 Cash flows from investing activities Purchase of investments 9 (1,933,990) (3,103,915) (6,290,160) Disposal of investments 9 2,293,969 4,513,856 6,579,334 Net cash inflow from investing activities 359,979 1,409,941 289,174 Cash flows from financing activities Shares issued as part of Offer for Subscription -                                    24,305,938   24,305,938 Equity dividends paid 8 (3,678,094) (2,255,584) (4,352,591) Purchase of own shares (731,205) (928,419) (1,461,936) Net cash (outflow)/inflow from financing activities                (4,409,299) 21,121,935 18,491,411 Net (decrease)/increase in cash and cash equivalents (3,378,602) 22,163,371 19,124,431 Cash and cash equivalents at start of period 29,760,398 10,635,967 10,635,967 Cash and cash equivalents at end of period 26,381,796 32,799,338 29,760,398 Cash and equivalents comprise: Cash at bank and in hand 10 1,659,682 1,483,126 1,284,816 Cash equivalents 10 24,722,114 31,316,212 28,475,582
The notes below form part of the Half-Year Financial Statements
Notes to the Unaudited Condensed Financial Statements for the six months ended 31 March 2019
1.	Company Information
	The Income & Growth VCT plc is a public limited company incorporated in England and Wales, registration number 04069483.  The registered office is 30 Haymarket, London SW1Y 4EX.
2.	Basis of preparation of the Financial Statements
	These Financial Statements prepared in accordance with accounting policies consistent with Financial Reporting Standard 102 ("FRS102"), Financial Reporting Standard 104 ("FRS104") - Interim Financial Reporting, 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 Financial Statements have been prepared on the historical cost basis except for the modification to a fair value basis for certain financial instruments as specified in note 9. The Half-Year Report has not been audited, nor has it been reviewed by the auditor pursuant to the Financial Reporting Council's (FRC) guidance on Review of Interim Financial Information.
3.	Principal accounting policies
	The accounting policies have been applied consistently throughout the period. Full details of principal accounting policies will be disclosed in the Annual Report, while the policy in respect of investments is included within an outlined box at the top of note 9 on investments.
4.	Income
	Six months ended 31 March 2019 (unaudited) Six months ended 31 March 2018 (unaudited) Year ended 30 September 2018 (audited) £ £ £ Income  - Dividends 240,656 121,857 424,491  - Money market funds 91,855 33,569 108,807  - Loan stock interest 1,408,515 1,290,981 2,497,742  - Bank deposit interest 23,074 22,433 43,178  - Interest on preference share dividend arrears 17,423 - 11,881  - Other income 2,363 7,739 7,739 Total Income 1,783,886 1,476,579 3,093,838
5.	Investment Adviser's fees and performance fees
	Six months ended 31 March 2019 (unaudited) Six months ended 31 March 2018 (unaudited) Year ended                            30 September 2018 (audited) £ £ £ Allocated to revenue return: Investment Adviser's fees 215,882 205,694 428,311 Allocated to capital return: Investment Adviser's fees 647,647 617,082 1,284,934 Investment Adviser's performance fees                       -                        -   1,119 Total 863,529 822,776 1,714,364 Investment Adviser's fee 863,529 822,776 1,713,245 Investment Adviser's performance fees                       -                        -   1,119 Total 863,529 822,776 1,714,364
6.	Taxation
	There is no tax charge for the period as the Company has tax losses brought forward from previous periods, which can be offset against taxable income.
7.	Basic and diluted earnings and return per share
	Six months ended 31 March 2019 (unaudited) Six months ended 31 March 2018 (unaudited) Year ended 30 September 2018 (audited) £ £ £ i) Total earnings after taxation: 3,263,623 977,791 2,607,124 Basic earnings per share (Note a) 3.10 p 1.04 p 2.62 p ii) Revenue earnings from ordinary activities after taxation 1,134,292 862,589 1,870,464 Basic revenue earnings per share (Note b) 1.08 p 0.92 p 1.88 p Net unrealised capital gains/(losses) on investments 2,199,709 (1,251,618) 570,022 Net realised capital gains on investments 367,651 1,810,102 1,113,464 Capitalised Investment Adviser fees and performance fees less taxation (438,029) (443,282) (946,826) iii) Total capital return 2,129,331 115,202 736,660 Basic capital earnings per share (Note c) 2.02 p 0.12 p 0.74 p iv) Weighted average number of shares in issue in the period 105,141,805 93,616,928 99,602,770 Notes: a)     Basic earnings per share is total earnings after taxation divided by the weighted average number of shares in issue. b)    Basic revenue earnings per share is the revenue return after taxation divided by the weighted average number of shares in issue. c)     Basic capital earnings per share is the total capital return after taxation divided by the weighted average number of shares in issue.
8.	Dividends
	Dividend Type For the year ended 30 September Pence per share Date paid Six months ended 31 March 2019 (unaudited) £ Six months ended 31 March 2018 (unaudited)£ Year ended  30 September 2018 (audited) £ Final Income 2017 0.50p 15 February 2018 - 470,185 470,185 Final Capital 2017 2.50p 15 February 2018 - 2,350,933 2,350,933 Interim Income 2018 0.80p 21 June 2018 - - 843,492 Interim Capital 2018 1.70p 21 June 2018 - - 1,792,420 Final Income 2018 1.00p 15 February 2019 1,050,884 - - Final Capital 2018 2.50p 15 February 2019 2,627,210 - - Previous dividends not claimed within the statutory period - - (7,300) Total* 3,678,094 2,821,118 5,449,730 * - For the period ended 31 March 2018, £2,821,118 (30 September 2018: £5,449,730) disclosed above differs to that shown in the Statement of Cashflows of £2,255,584 (30 September 2018: £4,352,591) due to £565,534 (30 September 2018: £1,097,139) of new shares issued as part of the Company's Dividend Investment Scheme.  No new shares were issued as part of the Scheme in the current period following the suspension of the Scheme in December 2018.
9.	Summary of movement on investments during the period
	Traded on   AIM         Level 1 Unquoted ordinary shares Level 3 Unquoted preference shares Level 3 Unquoted loan stock  Level 3 Total £ £ £ £ £ Valuation at 1 October 2018 1,822,412 20,758,488 368,541 26,447,789 49,397,230 Purchases at cost - 926,956 - 1,084,424 2,011,380 Sales - proceeds (Note a) - (367,651) (101,518) (1,824,800) (2,293,969)          - realised (losses)/gains - (362,269) - 729,920 367,651 Unrealised (losses)/gains on investments in the period (11,132) 2,826,057 (7,672) (607,544) 2,199,709 Valuation at 31 March 2019 1,811,280 23,781,581 259,351 25,829,789 51,682,001 Book cost at 31 March 2019 1,333,907 25,855,013 24,674 25,625,910 52,839,504 Unrealised gains at 31 March 2019 977,373 4,666,941 234,677 321,246 6,200,237 Permanent impairment of valuation of investments (500,000) (6,740,373) - (117,367) (7,357,740) Valuation at 31 March 2019 1,811,280 23,781,581 259,351 25,829,789 51,682,001 (Losses)/gains on investments Realised gains based on historical cost - 367,651 101,474 - 469,125 Less amounts recognised as unrealised gains in previous years - - (101,474) - (101,474) Realised gains based on carrying value at 30 September 2018 - 367,651 - - 367,651 Net movement in unrealised (losses)/gains in the period (11,132) 2,826,057 (7,672) (607,544) 2,199,709 (Losses)/gains on investments for the period ended 31 March 2019 (11,132) 3,193,708 (7,672) (607,544) 2,567,360 Note a) Purchases shown above of £2,011,380 differs from those shown in the Statement of Cash flows of £1,933,990 by £77,390.  This difference arises due to funds held in a solicitor's client account in advance of an investment that completed in October 2018. There has been no significant change in the risk analysis as disclosed in Note 16 of the Financial Statements in the Company's Annual Report. The decrease in unrealised valuations of the loan stock investments above reflect the changes in the entitlement to loan premiums, and/or in the underlying enterprise value of the investee company. The decrease does not arise from assessments of credit or market risk upon these instruments.
10.	Current asset investments and Cash at bank as at 31 March 2019 (unaudited) as at 31 March 2018 (unaudited) as at  30 September 2018        (audited) £ £ £ OEIC Money market funds 24,722,114 31,316,212 28,475,582 Cash equivalents per Statement of Cash Flows 24,722,114 31,316,212 28,475,582 Bank deposits that mature after three months 3,151,769 3,151,769 3,151,769 Current asset investments 27,873,883 34,467,981 31,627,351 Cash at bank 1,659,682 1,483,126 1,284,816
11.	Net asset value per share
	as at 31 March 2019 (unaudited) as at 31 March 2018 (unaudited) as at 30 September 2018 (audited) Net assets £81,438,038 £83,584,905 £82,583,714 Number of shares in issue     104,363,865 105,435,973 105,438,384 Net asset value per share - basic and diluted 78.03p 79.28p 78.32p
12.	Post balance sheet events
	On 10 May 2019, the Company realised its investment in The Plastic Surgeon Holdings Limited, generating proceeds of £1.22 million. On 13 May 2019, the Company invested £1.53 million into Arkk Consulting Limited, a service and product provider that enables companies to remain compliant with regulatory reporting requirements. On 22 May 2019, the Company invested £0.93 million into Parsley Box Limited, a supplier of home delivered ambient ready meals for the elderly.
13.	Statutory information
	The financial information for the six months ended 31 March 2019 and the six months ended 31 March 2018 has not been audited. The financial information contained in this Half-Year results announcement does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The Financial Statements for the year ended 30 September 2018 have been filed with the Registrar of Companies.  The auditor has reported on these Financial Statements and that report was unqualified and did not contain a statement under either Section 498(2) or 498(3) of the Companies Act 2006.
14.	Half-Year Report
	Copies of the Half-Year Report will be sent to all shareholders.  Further copies are available on request by writing to the Company's registered office, 30 Haymarket, London, SW1Y 4EX, or can be downloaded via the Company's website at www.incomeandgrowthvct.co.uk.
Contact details for further enquiries:
Rob Brittain or Robert King at Mobeus Equity Partners LLP (the Company Secretary) on 020 7024 7600 or by e-mail to [e-mail]. Mobeus Equity Partners LLP (the Investment Adviser) on 020 7024 7600 or by e-mail to [e-mail].
DISCLAIMER
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

 

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