Half-year Report

RNS Number : 1495C

Income & Growth VCT (The) PLC

16 June 2021

 

THE INCOME & GROWTH VCT PLC

LEI: 213800FPC15FNM74YD92

UNAUDITED HALF-YEAR RESULTS FOR THE SIX MONTHS TO 31 MARCH 2021

The Income & Growth VCT plc ("the Company") today announces its Half-Year results for the six months to 31 March 2021. You may, in due course, view the Half-Year Report, comprising the Unaudited Condensed Financial Statements of the Company by visiting www.incomeandgrowthvct.co.uk.

Financial Highlights

As at 31 March 2021: Net assets: £111.95 million Net asset value ("NAV") per share: 94.71 pence

Results for the six months to 31 March 2021:

· Net asset value ("NAV") total return1 per share was 35.2%.

· Share price total return1 per share was 31.9%.

· The Board has declared an interim dividend in respect of the year ending 30 September 2021 of 5.00 pence per share to be paid to Shareholders on 23 July 2021.

· The Company made four new investments totalling £3.07 million and four follow-on investments totalling £1.35 million.

· £26.07 million of net unrealised gains were achieved in the period from strong portfolio performance.

· The Company realised investments totalling £10.22 million of cash proceeds and generated net realised gains in the period of £3.59 million. 1 Definitions of key terms and alternative performance measures ("APMs") / Key performance indicators ("KPIs") shown above and throughout are shown in the Glossary of terms in the Half-Year Report, available on the Company's website.

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 Net assets NAV per Share Share  Price1 Cumulative dividends paid per share Cumulative total return per share to shareholders2 Dividends per share paid and proposed in respect of each year (NAV basis) (Share price basis) As at (£m) (p) (p) (p) (p) (p) (p) 31 March 2021 111.95 94.71 78.50 131.50 226.21 210.00 5.004 30 September 2020 83.13 70.06 59.50 131.50 201.56 191.00 14.00 30 September 2019 81.73 79.12 75.503 113.00 192.12 188.50 6.00 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

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 2019 has been adjusted to add back the dividend of 4.50 pence per share paid on 18 October 2019, as the listed share price was quoted ex this dividend at this year-end. 4   An interim dividend of 5.00 pence per share, referred to in the Financial Highlights above, is payable to Shareholders on 23 July 2021.

Detailed performance data, including a table of dividends paid to date for all share classes and fundraising rounds, is shown in the Performance Data section towards the end of the Half-Year Report. The tables, which give information by allotment date on NAVs and dividends paid per share, are also available on the Company's website at www.incomeandgrowthvct.co.uk where they can be accessed by clicking on "table" under "Reviewing the performance of your investment" on the home page.

Chairman's Statement

I present the Company's Half-Year Report for the six months to 31 March 2021. Overview The first six months of the Company's financial year have been very satisfactory for Shareholders, with the Company achieving a NAV total return per share of 35.2% for the period. At the time of my last Statement in the Company's Annual Report for the year ended 30 September 2020, I was able to report on the resilience of the portfolio and the Company's strong recovery beyond the initial shock of COVID-19 on the UK economy last March, restoring the momentum it had built up over prior financial periods. I am pleased to say that this momentum has been sustained into the new financial year with a period of unprecedented value growth and activity, driven fundamentally by strong trading performance across the portfolio and characterised by a number of landmark transactions for the VCT. Whilst the longer-term economic impact of COVID-19 is yet to be fully understood, and with teething issues following Brexit, most of the investee companies in the portfolio have proven their ability to adapt well in a rapidly changing environment. Your Board has been encouraged by their adeptness in facing challenges by swiftly identifying new opportunities and capitalising on them. In addition, favourable trading conditions have emerged for a number of technology-related companies in the portfolio, particularly those businesses operating direct-to-consumer models. During the period under review and despite considerable COVID-19 related restrictions, the Company has maintained a high level of investment activity. The Company added four new investments to its portfolio, deployed follow-on funding into four existing portfolio companies, achieved three profitable realisations, and supported the successful admission to AIM of a further two of its investments. The Board has particularly valued the efforts and achievements of the Investment Adviser over this tumultuous period. Performance The Company's NAV total return per share was 35.2% for the six months to 31 March 2021 (2020: a fall of (7.8)%), and the share price total return was 31.9% (2020: a fall of (6.0)%). This represents an exceptional uplift for the period and contrasts markedly with that recorded following the onset of COVID-19 for the same period last year. The difference between the NAV total return and share price total return figures above arises principally due to the timing of NAV announcements which are usually made retrospectively. The exceptional NAV total return for the period was principally the result of significant unrealised gains in the value of investments still held as well as realised gains achieved via exits and partial realisations of several portfolio companies. The combination of these strong unrealised and realised portfolio returns has generated a performance fee that is potentially payable to our Investment Adviser for the first time in over three years. Shareholders should note that this fee is subject to performance targets continuing to be met for the remainder of the financial year and approval of the Annual Report & Financial Statements by Shareholders at the Company's Annual General Meeting ("AGM"). A breakdown of these fees is contained within Note 5 of the Unaudited Condensed Financial Statements. A positive revenue return driven by strong dividend receipts has also contributed to shareholder returns. The Company's cumulative NAV total return per share (being the closing net asset value plus total dividends paid since the launch of the current share class) has increased from 201.56 pence per share at the start of the period to 226.21 pence per share at the period-end. This represents an increase of 12.2% over the period. The Board believes that this performance has demonstrated strong portfolio resilience over a volatile period. The valuations at the Half-Year point reflect that many of our investee companies became beneficiaries of accelerated changes in UK consumer and business behaviour, brought on by a pandemic and lockdown restrictions. Despite the continued uncertainty in respect of the pandemic's ultimate effect, both the Board and the Investment Adviser believe that many of these changes have become structural and are unlikely to reverse. In the case of two direct-to-consumer portfolio companies, whose shares were admitted to public trading on AIM in March 2021, the Company has benefited from the market's recognition of this rapidly developing channel, reflected in the substantial investor appetite for the offers of shares. Nonetheless, the Board remains vigilant in monitoring the lasting economic uncertainty and increased concentration of risk associated with holding a significant portion of the portfolio's value in a small number of public market investments, which accounted for 18.3% of NAV at 31 March 2021. Investment portfolio The portfolio has performed very strongly in the first six months of the Company's financial year. The overall value increased by £29.66 million (2020: decrease of £(8.20) million), or 58.3% (2020: (16.3)%) on a like-for-like basis, compared to the opening portfolio value at 1 October 2020 of £50.86 million. This increase comprised a net unrealised uplift in portfolio valuations of £26.07 million and £3.59 million in net realised gains, over the period. At the period-end, the portfolio was valued at £74.72 million after taking account of investments purchased and sold in the period, together with the net realised and unrealised gains referred to above. The portfolio may present opportunities for further investment in the future. Two notable events supported unrealised returns for Shareholders during the period. The flotation of both Virgin Wines and Parsley Box on the AIM market in March 2021 resulted in significant uplifts in valuation. As part of the Virgin Wines transaction, the Company received repayment of its remaining loan stock, leaving Virgin Wines ungeared. As part of the IPO of Parsley Box, the Company realised part of its equity holding, securing a 4.0x return on the cost of shares sold. There were further substantial increases from MPB Group and EOTH, partially offset by modest valuation falls at Rota Geek and Kudos Innovations. Although a minority of companies remain disadvantaged by the COVID-19 pandemic, by contrast these have only had a modest impact on overall shareholder returns. Within the net realised gains, the principal contributors were the full exits of Bourn Bioscience (£1.44 million), Omega Diagnostics (£0.14 million) and Vectair (£0.06 million), as well as partial exits of Parsley Box (£0.94 million) and MPB (£0.82 million). Proceeds generated from these gains, combined with loan repayments and other capital receipts, totalled £10.22 million received by the Company in the period. During the six months under review, the Company invested a total of £3.07 million into four new investments: Northern Bloc £0.47 million  Vegan and plant-based ice cream producer Connect Childcare £1.16 million Nursery management software provider Vivacity £1.25 million Artificial intelligence & urban traffic control system Caledonian Leisure Travel £0.19 million UK leisure and experience breaks In addition, four follow-on investments totalling £1.35 million were made into: Parsley Box £0.38 million  Ambient ready meals for the over 60s Bleach London £0.15 million Hair colourants brand Arkk Consulting £0.66 million Regulatory reporting software Tapas Revolution £0.16 million Spanish restaurant chain in the casual dining sector We expect follow-on investments to continue to be a feature of the growth capital investments as they seek to achieve scale. Since the period-end, the Company has made two follow-on investments totalling £0.64 million. Details of this investment activity and the performance of the portfolio are contained in the Investment Adviser's Review and the Investment Portfolio Summary below. Revenue account The results for the period are set out in the Unaudited Condensed Income Statement and show a revenue return (after tax) of 0.70 pence per share (2020: 1.40 pence per share). Despite strong dividend receipts, the revenue return for the period of £0.83 million has decreased from last year's comparable figure of £1.53 million. This is mainly due to significant investment income received on the disposal of Auction Technology Group which inflated the prior year's figure. Dividends The Board continues to be committed to providing an attractive dividend stream to Shareholders and is pleased to declare an Interim dividend of 5.00 pence per share for the year ending 30 September 2021. This dividend will be paid on 23 July 2021, to Shareholders on the Register on 25 June 2021, and will bring cumulative dividends paid per share to 136.50 pence per share. 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 nine years. It has been previously noted that the evolution of the portfolio to younger growth capital investments may make dividends harder to achieve from income and capital returns alone in any given year, or which could affect the timing and frequency of dividend payments compared to previous distributions. In light of these factors, the Board continues to monitor the sustainability of its dividend target. Dividend Investment Scheme The Company's Dividend Investment Scheme ("DIS") was recommenced on 12 February 2020, having been temporarily suspended. All previously registered participants of the Scheme were automatically re-enrolled, with their future dividends to be re-invested unless they notified a wish to opt-out. Since its reinstatement in 2020, 4,277,951 Ordinary shares have been allotted to participants of the DIS at an average price of 63.13 pence per share. The Scheme provides Shareholders with the opportunity to reinvest their cash dividends into new shares in the Company at the latest published NAV per share (adjusted for any subsequent dividends). New VCT shares attract the same tax reliefs as shares purchased through an Offer for Subscription. Shareholders can opt-in to the DIS by completing a mandate form available on the Company's website at www.incomeandgrowthvct.co.uk and can opt-out by contacting Link Group, using their details provided under Shareholder Information in the Half-Year Report. Fundraising The Board, with the Investment Adviser, continues to monitor the Company's liquidity levels and cashflow requirements in view of investment activity, market movements and regulatory obligations. With these in mind and under regular review, the Board comes to a decision with regards to future fundraising requirements and, in doing so, will notify Shareholders of any intention to raise further funds for the Company through an Offer for Subscription. 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 2021 amounted to £34.33 million. This figure included £29.80 million held in money market funds with AAA credit ratings and £4.53 million held in deposit accounts with several well-known financial institutions across a range of maturities. Share buybacks During the six months ended 31 March 2021, the Company bought back and cancelled 461,200 of its own shares, representing 0.4% (2020: 1.1%) of the shares in issue at the beginning of the period, at a total cost of £0.32 million (2020: £0.83 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, where its priority is to act prudently and in the interest of remaining Shareholders, whilst considering other factors, such as levels of liquidity and reserves, market conditions and applicable law and regulations. Under this policy, the Company seeks to maintain the discount at which the Company's shares trade at no more than 5% 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 last held its annual Shareholder Event on behalf of all Mobeus-advised VCTs in early 2020. Last year's event was well received and the Investment Adviser plans to hold an event later in 2021. Further details will be circulated to Shareholders and shown on the Company's website in due course. Fraud Warning We have been made aware of an increase in the number of Shareholders being contacted in connection with sophisticated but fraudulent financial scams which purport to come from the Company or to be authorised by it. This is often by a phone call or an email usually originating from outside of the UK, claiming or appearing to be from a corporate finance firm offering to buy your shares at an inflated price. Further information and fraud advice plus details of who to contact, can be found in the Information for Shareholders section of the Half-Year Report. Environmental, Social and Governance ("ESG") Whilst the requirements under company law to detail ESG matters are not applicable to the Company at the current time, the Board is conscious of the Company's potential impact on the environment as well as its social and corporate governance responsibilities. The Investment Adviser has presented its ESG strategy to the Board and is providing regular updates regarding the ESG developments. Your Board would like to assure Shareholders that ESG matters form a key consideration in investment decisions. The future FCA reporting requirements consistent with the Task Force on Climate-related Financial Disclosures commencing from 1 January 2021 do not currently apply to the Company although will be kept under review in light of any recommended changes. Outlook The impact of COVID-19 was and will continue to be wide reaching. Nevertheless, your Board considers that your Company is well positioned to continue to respond and adapt in most likely scenarios that can presently be foreseen. The successful realisations and previous fundraisings have given the Company strong liquidity not only to support the existing portfolio, but also to capitalise on opportunities which may arise for new investment and the Investment Adviser is seeing a good pipeline of new and interesting investment opportunities. COVID-19 uncertainties and economic instability may cause global markets to be more volatile in the short-term. UK and European businesses will also continue to operate in an uncertain trading environment for the near future as the new UK/EU trade agreement beds in. The companies in the portfolio have been well prepared for a considerable time for the impact of Brexit and those preparations appear to be working well. Although the degree and frequency of any future restrictions as a result of the pandemic are unclear, both the Investment Adviser and portfolio companies are well equipped to respond. Consequently, we have cause to be cautiously optimistic about the future. I would like to take this opportunity once again to thank all Shareholders for your continued support. Maurice Helfgott Chairman 16 June 2021

Investment Policy

The Company's policy is to invest primarily in a diverse portfolio of UK unquoted companies. Asset Mix and Diversification The Company will seek to make investments in UK unquoted companies in accordance with the requirements of prevailing VCT legislation. Investments are made selectively across a wide variety of sectors, principally in established companies. Investments are generally structured as part loan and part equity in order to receive regular income and to generate capital gain from realisations. There are a number of conditions within the VCT legislation which need to be met by the Company and which may change from time to time. No single investment may represent more than 15% (by VCT tax value) of the Company's total investments at the date of investment. Save as set out above, the Company's other investments are held in cash and liquid funds. Liquidity The Company's cash and liquid funds are held in a portfolio of readily realisable interest-bearing investments, deposit and current accounts, of varying maturities, subject to the overriding criterion that the risk of loss of capital be minimised. Borrowing The Company's Articles of Association permit borrowing of up to 10% of the adjusted capital and reserves (as defined therein). However, the Company has never borrowed and the Board would only consider doing so in exceptional circumstances.

Investment Review

Portfolio review More than one year on from the March 2020 low point marked by value reductions and widespread volatility, it is apparent that the overall portfolio has adapted well and generally remained robust throughout. Having largely recovered from the COVID-19 related decline by the start of the period under review, and with the economic uncertainty subsiding, the portfolio has returned to a more stable and positive trajectory. It should be noted that, whilst markets showed a buoyant recovery in 2020, this has not continued into 2021 where the main driver of value growth has been a continuation of strong underlying trading performance across the portfolio. Whilst there have been a few portfolio companies which have experienced disruption as a result of the ongoing UK lockdowns, a significant proportion have actually benefited from a structural change in consumer purchasing habits and are now trading above their pre COVID-19 levels. The majority of the portfolio has demonstrated a high degree of resilience, with over 78% of companies by number showing revenue and/or earnings progression over the previous year. Investments classified as Retailers now comprise over 56% of the portfolio by value but all these companies have considerable direct-to-consumer channels, a business model that has performed well, and all but one have no physical presence. This has been exemplified by the flotation of Virgin Wines UK PLC and Parsley Box Group PLC in March 2021, both at a price per share that materially increased the value of the Company's investment. Software and other technology enabled businesses have also performed strongly with MPB attracting a sizeable equity investment from a large private equity investor in a Series D funding round, whilst the portfolio has limited exposure to more challenging sectors such as hospitality and travel. A small number of companies have struggled, but they are in the minority and their impact on overall shareholder return is minimal. Some of these companies, namely Media Business Insight and RDL, have seen a recent uplift in business which suggests a potentially more positive outlook, however it is still early days in their recovery. Whilst the exposure to General Retail is very well diversified across the most attractive business models, it is noted that 24% of the portfolio value is now concentrated in the two recently AIM-listed investments. In line with market practice, in both cases the Company's shareholdings are subject to lock-up arrangements normal for a transaction of this type. Strong trading activity levels created investment opportunities for the Company as portfolio companies sought to enhance their positions by building capability in light of demand. A number of further growth capital investments were therefore made into the portfolio during the period. Mobeus continues to review the opportunities for follow-on investments and is in a good position to capitalise on these due to the Company's strong liquidity. M&A sentiment also remained buoyant with a continuing stream of attractive realisations throughout the period. The outlook for both follow-on investment and realisations continues to be positive. The Company made investments totalling £4.42 million (2020: £4.15 million), comprising £3.07 million (2020: £4.15 million) into four new investments and £1.35 million (2020: £nil) into four existing investments. This level of new and follow-on investment is pleasing given the continued uncertainty and lockdown restrictions over the period under review. A healthy pipeline of suitable opportunities continues to be seen to date. Overall, it is reassuring to see that the traditional investments, as well as the new growth investments, are continuing to make good progress. A strong track record for the growth investments is now emerging which validates the strategic change arising from the change in VCT rules in 2015. The portfolio movements in the period are summarised as follows: 2021 £m 2020 £m Openingportfolio value 50.86 50.22 Newandfollow-on investments 4.42 4.15 Disposalproceeds (10.22) (8.36 ) Netrealisedgains 3.59 2.53 Unrealised v aluation movements 26.07 (10.73) Portfolio valueat 31March 74.72 37.81 The portfolio's valuation changes in the period are summarised as follows: InvestmentPortfolio CapitalMovement 2021 £m 2020 £m Increaseinthe valueofunrealised investments 26.68 1.71 Decreaseinthe valueofunrealised investments (0.61) (12.44) Net increase/(decrease) in the value of unrealised investments 26.07 (10.73) Realised gains 3.67 2.53 Realised losses (0 . 08) - Netrealisedgainsin theperiod 3.59 2.53 Net investment portfolio movementinthe period 29.66 (8.20)

New investments during the period The Company made four new investments totalling £3.07 million during the period, as detailed below:

Company Business Date of Investment Amount of new investment (£m) Northern Bloc Vegan and plant based ice cream producer December  2020 0.47 Northern Bloc Ice Cream (northern-bloc.com) is an established food brand in the emerging and rapidly growing vegan market. By focusing on chef quality natural ingredients, Northern Bloc has carved out an early mover position in the vegan ice cream sector. The company's focus on plant-based alternatives has strong environmental credentials as well as it being the first ice cream brand to move wholly into sustainable packaging. The investment is aimed at capitalising on the company's market position and accelerating growth. It has obtained key listings across several large supermarkets and is well placed to benefit from the food service recovery as it continues to secure menu placings. Northern Bloc has doubled its retail store facings in 2020 and saw a 60% increase in retail sales over the year.

Connect Childcare Nursery management software provider December  2020 1.16 Connect Childcare (connectchildcare.com) is a fully integrated nursery management system for childcare providers in the UK. Its market leading Core Connect product provides nurseries and preschools with an enterprise software solution enabling more efficient administrative processes. The investment will be used to drive product marketing, commercialise their new SaaS product, Foundations, as well as support the roll out of a payment facility to its underlying customer base. Supplying 14 of the top 25 largest nursery groups in the UK, the company has strong recurring revenues which have grown 20% for each of the last three years. Vivacity Artificial intelligence & urban traffic control system February  2021 1.25 Vivacity (vivacitylabs.com) develops camera sensors with on-board video analytics software that enables real-time anonymised data gathering of road transport system usage. It offers city transport authorities the ability to manage their road infrastructure more effectively, enabling more efficient monitoring of congestion and pollution levels as well as planning for other issues, such as the changing nature of road usage (e.g. the increasing number of cyclists). The technology and software represent a significant leap forward for local planning authorities which have traditionally relied upon manual data collection methods. The growth capital funding will allow the management team to achieve deeper penetration of the UK transport management sector, explore opportunities internationally and commercialise its new Smart Junction offering. Revenues have grown 350% over the last three years and it has exceeded its most recent year's budget despite the onset of the COVID-19 pandemic. In April 2021, Vivacity won the Queen's Award for Enterprise: Innovation 2021. Caledonian Leisure UK Leisure and experience breaks March 2021 0.19 Caledonian Leisure works with accommodation providers, coach businesses and other experienced providers (such as entertainment destinations and theme parks) to deliver to its customers UK-based leisure and experience breaks. It comprises two brands, Caledonian Travel (caledoniantravel.com) and UK Breakaways (ukbreakaways.com). The domestic leisure and experience travel market has been devastated by the COVID-19 pandemic, but the company is well-placed to expand as lockdown and travel restrictions are eased. This investment, as part of a series of planned investment tranches, will help the company prepare for and capitalise on what is expected to be strong demand for UK staycation holidays. Follow-on investments during the period The Company made four further investments into existing portfolio companies in the period, totalling £1.35 million, as detailed below: Company Business Date of Investment Amount of further investment (£m) Parsley Box Ambient ready meals targeting the over 60s January/March 2021 0.38 Parsley Box (parsleybox.com) is a UK direct to consumer supplier of home delivered, ambient ready meals for the over 60s. 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 company has seen a strong benefit from the COVID-19 pandemic with revenues nearly eight times that at the time of the original VCT investment. This further investment will scale the company's marketing strategy, enable it to process larger order volumes and continue to build out its team. The company admitted its shares to trading on AIM on 31 March 2021. Bleach London Hair colourants brand February 2021 0.15 Bleach London Holdings ("Bleach") (bleachlondon.com) is an established branded, fast growing business which manufactures a range of haircare and colouring products. Bleach has made sound commercial progress since the VCTs invested in 2019 with its direct-to-consumer channels benefiting greatly from the COVID-19 pandemic. Revenues have grown over 90% ahead of the previous year. This further investment, along with strong support from existing investors, will be used to invest in marketing and infrastructure to enable the business to accelerate its direct-to-consumer channel. Arkk Consulting Regulatory and reporting requirement service provider February 2021 0.66 Arkk Consulting (trading as Arkk Solutions) (arkksolutions.com) 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. This further investment is to enable continued development of its software in order to capitalise on HMRC's 'Making Tax Digital' campaign.  The company has incorporated artificial intelligence into its product and recurring revenues are now over 50% higher than at the point of the original investment in May 2019. Tapas Revolution Spanish restaurant chain March 2021 0.16 Spanish Restaurant Group Limited (trading as Tapas Revolution) (tapasrevolution.com) is a leading Spanish restaurant chain in the casual dining sector. At initial investment in January 2017, it was operating five sites and, subsequent to a further investment round in March 2018, had grown to 12 sites. Tapas was trading well and had a strong outlook up until the onset of COVID-19 which mandated the closure of much of its estate during the course of 2020 in response to the varying patterns of government restrictions. Costs have been controlled well under the circumstances and this further investment is to provide financial headroom through the remaining lockdown period and to capitalise on new site acquisition opportunities once the lockdown period has ended.

Portfolio valuation movements The portfolio generated significant net unrealised gains of £26.07 million in the first half of its financial year. The scale of the valuation increases was underpinned by the Company's growth portfolio, many of which have direct-to-consumer business models that have been ideally suited to the more physically remote business environment necessitated by COVID-19. Mobeus believes that this has accelerated an existing trend and, in many cases, the shift in behaviour will prove permanent.  Over this period, some older style MBO portfolio companies with similar business practices have also benefited. A few companies have struggled in this environment, and while there remains a possibility such businesses could fail, their value has already been reduced to modest levels, reducing the risk to shareholder value. Total valuation increases were £26.68 million. The main valuation increases were: Virgin Wines £10.89 million  MPB Group £3.21 million EOTH (Equip) £2.33 million Parsley Box £1.49 million Virgin Wines, MPB and Parsley Box have generated record revenues and earnings over the lockdown periods and beyond.  Both have significantly increased their customer base and there is evidence that these new customers are continuing to be at least as active and profitable as their pre-COVID-19 counterparts. EOTH experienced a very strong end to its financial year, fully recovering to pre-COVID-19 levels of profitability and has strong visibility over future orders. Total valuation decreases were £(0.61) million. The main valuation decreases were: RotaGeek £(0.23) million  Kudos Innovations £(0.19) million These companies saw the most significant impact of a sudden decline in demand for their products or services as a result of COVID-19. However, as restrictions are eventually eased, a recovery is anticipated in due course. The majority of the increase in portfolio value lies in the top 10 companies which represent over 70% of the portfolio by value (excluding legacy). Year-on-year growth by either revenues or earnings has been seen in all of the top ten companies (excluding legacy) and it is pleasing to note that nine of these are from the younger, growth portfolio.

Portfolio Realisations The Company realised its investments in Vectair, Bourn Bioscience and Omega Diagnostics during the period receiving combined proceeds of £3.67 million and contributed to total proceeds of £10.22 million received over the period, as detailed below. In summary, aggregate proceeds generated over the life of these three investments were £6.11 million representing a gain over original cost of £4.00 million. Company Business Period of investment Total cash proceeds over the life of the investment / Multiple over cost Vectair Designer and distributor of washroom products January 2006 to November 2020 £1.83 million 8.5x cost The Company sold its investment in Vectair Holdings Limited to a consortium of US investment funds, including Oxbow Industries and Arcspring, and has received proceeds of £1.14 million (including £0.06 million dividends) (realised gain in the period: £0.06 million). This investment generated proceeds over the life of the investment of £1.83 million compared to original cost of £0.22 million, which is a multiple of cost of 8.5x and an IRR of 22.3%. Bourn Bioscience In vitro fertilisation clinics January 2014  to  December 2020 £2.64 million 1.6x cost The Company sold its investment in Bourn Bioscience Limited to Canadian acquirer Triangle Capital, and has received cash proceeds of £2.14 million (including £0.14 million interest on completion) (realised gain in the period: £1.44 million). This investment generated proceeds over the life of the investment of £2.64 million compared to original cost of £1.61 million, which is a multiple of cost of 1.6x and an IRR of 8.5%. Omega Diagnostics In Vitro diagnostics for food intolerance, auto-immune diseases and infectious diseases December 2010 to February 2021 £1.64 million 5.9x cost Following a further significant increase in the share price, the Company sold its remaining investment in Omega Diagnostics Group plc for £0.59 million (realised gain in the period: £0.14 million). Total proceeds received over the eleven-year life of the investment were £1.64 million compared to an original investment cost of £0.28 million, which is a multiple on cost of 5.9x and an IRR of 19.9%. Loan repayments and other gains/(losses) in the period During the year and following the admission of its shares to AIM, the Company received £1.73 million from the partial realisation of its holding in Parsley Box, generating a realised gain of £0.94 million. Over the two years to date this investment has been held, this partial sale generated a multiple of cost of 4.0x on the cost of the shares sold. The Company also received £1.74 million from the partial realisation of MPB Group generating a realised gain of £0.82 million. This partial realisation generated a 7.8x multiple of cost on the cost of the shares sold and was the result of a large private equity investor taking a sizeable equity investment in the company. Proceeds of £2.93 million were received via loan repayments from Virgin Wines, Vian Marketing (trading as Red Paddle), and BG Training, generating a net realised gain of £0.04 million. Finally, consideration and realised gains totalling £0.23 million were received in respect of Redline Worldwide and Blaze Signs, both investments realised in a previous year.  A small realised loss of £(0.08) million was also recognised in respect of transaction costs for BookingTek and Virgin Wines, the latter due to stamp duty paid upon the listing of shares to AIM. Portfolio Income and yield In the period under review, the Company received the following amounts in loan interest and dividend income: Investment Portfolio Yield 2021 2020 £m £m Interest received in the period 0.72 1.85 Dividends received in the period 0.59 0.35 Total portfolio income in the period1 1.31 2.20 Portfolio Value at 31 March 74.72 37.81 Portfolio Income Yield (Income as a % of Portfolio value at 31 March) 1.8% 5.8% 1   Total portfolio income in the period is generated solely from investee companies within the portfolio

Further investments made after the period-end The Company made two further investments into existing portfolio companies, totalling £0.64 million after the period-end, as detailed below: Company Business Date of Investment Amount of further investment (£m) Caledonian Leisure UK Leisure and experience breaks April/May 2021 0.25 Caledonian Leisure works with accommodation providers, coach businesses and other experienced break providers (such as entertainment destinations and theme parks) to deliver to its customers UK-based leisure and experience breaks. It comprises two brands, Caledonian Travel (caledoniantravel.com) and UK Breakaways (ukbreakaways.com). The domestic leisure and experience travel market has been devastated by the COVID-19 pandemic, but the company is well-placed to expand as lockdown and travel restrictions are eased. This second and third investment, as part of a series of planned investment tranches, will continue to help the company prepare for and capitalise on what is expected to be strong demand for UK staycation holidays. Bella & Duke Premium frozen raw dog food provider May 2021 0.39 Bella & Duke (bellaandduke.com) is a direct-to-consumer subscription service, providing premium frozen raw dog food to pet owners in the UK. Founded in 2016, the business provides an alternative to standard meal options for dog owners by focusing on the well documented health benefits of a raw food diet. This area is a growing niche in the large and established pet food market and is being driven by the premiumisation of dog food.  Alongside a co-investment by the British Growth Fund ("BGF") and existing shareholders, this follow-on investment from the Company will provide additional working capital enabling Bella & Duke to continue to scale. Environmental, Social, Governance considerations The Investment Adviser believes that the consideration of environmental, social and corporate governance ("ESG") factors throughout the investment cycle will contribute towards enhanced Shareholder value.  When seeking new investment opportunities, it operates with a list of exclusions which preclude it from investing in any businesses operating in areas perceived to be unsustainable or detrimental to wider society, or any businesses that have committed purposeful breaches of regulation or have engaged in unlawful activity.  Once identified, each potential new investment is then subject to a comprehensive due diligence process that encompasses commercial, financial and ESG principles. This process helps in the formulation and agreement of strategic objectives at the stage of business planning and investment. The Investment Adviser then continues to work closely with each portfolio company board to support them in addressing their particular ESG challenges and opportunities, which are diverse across the entire portfolio. Mobeus Equity Partners LLP is a signatory of the United Nations Principles of Responsible Investment ("PRI"), considered to be the world's leading proponent of responsible investing. As a signatory, it must report to the PRI on an annual basis and is held accountable to worldwide ESG standards. As such, the Investment Adviser continues to develop its policies and procedures with the professional advice of specialist ESG consultants and reports on the development of this ESG framework to the Board on a regular basis. Outlook The growth strategy implemented in 2015 is clearly showing signs of bearing fruit with many companies beginning to achieve significant scale and attract the interest of public markets and larger secondary investors. The portfolio is in a healthy position with many companies trading well throughout the lockdowns, and several at record levels. It continues to evolve, offering a balance of fast-growing and more stable investments at various stages of maturity and scale across a range of diverse market sectors. There is a significant exposure to businesses operating a direct-to-consumer business model which has underpinned performance during the year. This also gives confidence about the future performance of the portfolio and its ability to cope with the challenges and opportunities associated with Brexit, the macro-economic outlook and the ongoing impact of COVID-19. The new investment pipeline is recovering to levels seen pre-COVID-19 and the prospects for capital deployment are encouraging.  The exceptional performance experienced since the impact of COVID-19 in March 2020, is likely to moderate over the next 12 months as the level of activity normalises.  However, the portfolio is in a robust shape and the investment activity levels are promising. Mobeus is therefore cautiously optimistic for the future. Mobeus Equity Partners LLP Investment Adviser 16 June 2021

INVESTMENT PORTFOLIO SUMMARY as at 31 March 2021

Total cost at Valuation at Additional Valuation at 31 March 2021 30 September 2020 investments 31 March 2021 (unaudited) (audited) in the period (unaudited) £ £ £ £ Virgin Wines UK Plc (formerly Virgin Wines Holding Company Limited) ¹ 65,288 6,458,434 - 14,673,244 Online wine retailer MPB Group Limited 1,820,552 4,698,745 - 6,992,306 Online marketplace for used photographic equipment EOTH Limited (trading as Equip Outdoor Technologies) 1,383,313 2,986,028 - 5,318,777 Branded outdoor equipment and clothing including the Rab and Lowe Alpine brands Preservica Limited 2,960,899 4,303,532 - 5,177,255 Seller of proprietary digital archiving software End Ordinary Group Limited (trading as Buster and Punch) (formerly Buster and Punch Holdings Limited) 2,046,612 2,740,635 - 3,965,398 Industrial inspired lighting and interiors retailer My Tutorweb Limited (trading as MyTutor) 2,759,335 2,972,638 - 3,701,022 Digital marketplace connecting school pupils seeking one-to-one online tutoring Parsley Box Group Plc (formerly Parsley Box Limited)2 874,001 2,168,135 377,486 3,253,102 Supplier of home delivered, ambient ready meals targeting the over 60s Manufacturing Services Investment Limited (trading as Wetsuit Outlet) 3,205,182 2,371,375 - 3,203,099 Online retailer in the water sports market Data Discovery Solutions Limited (trading as Active Navigation) 1,543,500 3,087,000 - 3,087,000 Provides the global market leading file analysis software for information governance, security and compliance I-Dox plc 453,881 1,895,924 - 2,583,458 Developer and supplier of knowledge management products Proactive Group Holdings Inc 988,390 2,486,769 - 2,486,769 Provider of media services and investor conferences for companies primarily listed on secondary public markets Media Business Insight Holdings Limited 3,666,556 1,407,127 - 2,332,587 A publishing and events business focused on the creative production industries Arkk Consulting Limited (trading as Arkk Solutions) 2,182,187 1,348,963 656,180 2,275,782 Provider of services and software to enable organisations to remain compliant with regulatory reporting requirements Vian Marketing Limited (trading as Red Paddle Co) 1,059,617 1,881,880 - 2,106,039 Design, manufacture and sale of stand-up paddleboards and windsurfing sails Master Removers Group 2019 Limited (trading as Anthony Ward Thomas, Bishopsgate and Aussie Man & Van) 464,658 1,175,977 - 2,041,054 A specialist logistics, storage and removals business Bella & Duke Limited 931,499 931,499 - 1,498,787 A premium frozen raw dog food provider Tharstern Group Limited 1,454,278 1,137,147 - 1,495,708 Software based management Information systems for the printing industry Connect Childcare Group Limited 1,157,214 - 1,157,214 1,402,901 Nursery management software provider Bleach London Holdings Limited 874,302 1,232,358 152,850 1,279,006 Hair colourants brand Vivacity Labs Limited 1,250,760 - 1,250,760 1,250,760 Provider of artificial intelligence & urban traffic control systems IPV Limited 954,674 954,674 - 954,674 Provider of media asset software Rota Geek Limited 1,250,800 1,170,582 - 944,809 Workforce management software CGI Creative Graphics International Limited 1,943,948 337,590 - 653,479 Vinyl graphics to global automotive, recreation vehicle and aerospace markets RDL Corporation Limited 1,441,667 137,899 - 529,811 Recruitment consultants within the pharmaceutical, business intelligence and IT industries Northern Bloc Ice Cream Limited 473,100 - 473,100 495,536 Supplier of premium vegan ice cream Spanish Restaurant Group Limited (formerly Ibericos Etc. Limited) (trading as Tapas Revolution) 1,552,636 186,300 155,250 341,550 Spanish restaurant chain Muller EV Limited (trading as Andersen EV) 317,000 352,473 - 263,474 Provider of premium electric vehicle (EV) chargers Caledonian Leisure Limited 194,675 - 194,675 194,675 Provider of UK leisure and experience breaks Kudos Innovations Limited 472,500 329,354 - 140,795 Online platform that provides and promotes academic research dissemination Jablite Holdings Limited (in members' voluntary liquidation) 498,790 65,779 - 65,779 Manufacturer of expanded polystyrene products Corero Network Security plc 600,000 7,374 - 11,787 Provider of e-business technologies Oxonica Limited 2,524,527 - - - International nanomaterials group Veritek Global Holdings Limited 2,289,859 - - - Maintenance of imaging equipment BookingTek Limited 779,155 - - - Software for hotel groups Racoon International Group Limited 655,851 - - - Supplier of hair extensions, hair care products and training Oakheath Limited (formerly Super Carers Limited) (in members' voluntary liquidation) 649,528 - - - Online platform that connects people seeking home care from experienced independent carers NexxtDrive Limited/Nexxt E-drive Limited 487,014 - - - Developer and exploiter of mechanical transmission technologies CB Imports Group Limited (trading as Country Baskets) (in members' voluntary liquidation) 175,000 - - - Importer and distributor of artificial flowers, floral sundries and home decor products Aquasium Technology Limited 166,667 - - - Manufacturing and marketing of bespoke electron beam welding and vacuum furnace equipment Biomer Technology Limited 137,170 - - - Developer of  biomaterials for medical devices Disposals in period Vectair Holdings Limited - 1,020,351 - - Designer and distributor of washroom products Bourn Bioscience Limited - 552,130 - - Management of In-vitro fertilisation clinics Omega Diagnostics Group plc - 449,180 - - In-vitro diagnostics for food intolerance, autoimmune diseases and infectious diseases BG Training Limited  - 13,281 - - Technical training business Total 48,706,585 50,861,133 4,417,515 74,720,423 Total Investment Portfolio split by type Growth focused portfolio ³ 32,146,089 37,931,047 4,417,515 52,374,570 MBO focused portfolio ³ 16,560,496 12,930,086 - 22,345,853 Total 48,706,585 50,861,133 4,417,515 74,720,423 1 Admitted to AIM during the period. Ahead of the Admission to AIM of Virgin Wines on 2 March 2021, the Company's equity investment in Virgin Wines Holding Company Ltd ("VWHCL") had been exchanged for an equity investment in Rapunzel Newco Limited ("RNL"), a company owned by the four Mobeus advised VCTs pro rata to each VCT's share of its investment in Virgin Wines. Immediately prior to Admission, RNL exchanged its equity investment in VWHCL for an equity investment in Virgin Wines UK plc ("VWUK"). The Company is beneficially interested in VWUK, through its holding in RNL. RNL is the legal owner of the shares in VWUK, but each VCT is the beneficial holder.  As part of Virgin Wines' admission to AIM, the Company received repayment of its loan stock generating proceeds of £2.68 million. 2 Admitted to AIM during the period.  On 7 January 2021, a £0.36 million follow-on investment was made into Parsley Box Limited. The enlarged shareholding was admitted to AIM on 31 March 2021. Ahead of the admission to AIM, the Company's equity investment in Parsley Box Limited had been exchanged for an equity investment in Parsley Box Group UK plc. Upon admission to AIM, the Company invested a further £0.02 million and realised proceeds of £1.73 million. ³ The growth focused portfolio contains all investments made after the change in the VCT regulations in 2015 plus some investments that are growth in nature made before this date. The MBO focused portfolio contains investments made prior to 2015 as part of the previous MBO strategy.

Statement of the Directors' Responsibilities  Responsibility statements In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Maurice Helfgott (Chairman), Justin Ward (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 Interim 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 the 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 2020 ("the Annual Report"). The COVID-19 pandemic continues to cause some uncertainty, but has not changed the nature of the principal risks. The Board considers that the present processes for mitigating those risks remain appropriate. The principal risks faced by the Company are: · Investment and liquidity; · Loss of approval as a Venture Capital Trust; · Regulatory; · Economic, political and other external risks; · Financial and operating; and · Market liquidity; A detailed explanation of the principal risks facing the Company can be found in the Annual Report on pages 31 and 32, as well as in Note 16 on Financial Instruments on pages 67 to 74 of that report. 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 earlier in the Interim management report which comprises the Chairman's Statement, Investment Policy, Investment Adviser's Review and Investment Portfolio Summary. The Directors have satisfied themselves that the Company continues to maintain a significant cash position. The majority of companies in the portfolio are well funded and the portfolio taken as a whole remains resilient and well diversified, although the continuing impact of COVID-19 may impose further considerable demands upon the liquidity and trading prospects of some of these companies in the near-term. 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 Notes 16 and 17 to the Financial Statements in the Annual Report, available on the Company's website. Accordingly, the Directors continue to adopt the going concern basis of accounting in preparing the Interim report and financial statements. Cautionary statement This report may contain forward looking statements with regard 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: Maurice Helfgott Chairman 16 June 2021

UNAUDITED CONDENSED FINANCIAL STATEMENTS

Unaudited Condensed Income Statement for the six months to 31 March 2021

Six months ended 31 March 2021 (unaudited) Six months ended 31 March 2020 (unaudited) Notes Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Net investment portfolio gains/(losses) 9   -    29,661,261   29,661,261   -  (8,201,658) (8,201,658) Income 4   1,328,132   -    1,328,132   2,311,854   -    2,311,854 Investment Adviser's fees 5 (223,439) (670,315) (893,754) (236,541) (709,625) (946,166) Investment Adviser's performance fees 5   -  (742,900) (742,900)   -    -    -  Other expenses (218,943)   -  (218,943) (270,947)   -  (270,947) Profit/(loss) on ordinary activities before taxation   885,750   28,248,046   29,133,796   1,804,366 (8,911,283) (7,106,917) Tax on profit/(loss) on ordinary activities 6 (56,538)   56,538   -  (276,098)   276,098   -  Profit/(loss) for the period and total comprehensive income   829,212   28,304,584   29,133,796   1,528,268 (8,635,185) (7,106,917) Basic and diluted earnings per share 7 0.70p 23.90p 24.60p 1.40p (7.93)p (6.53)p

Year ended 30 September 2020 (audited) Notes Revenue Capital Total £ £ £ Net investment portfolio gains/(losses)   -    9,848,433   9,848,433 Income 4   3,660,837   -    3,660,837 Investment Adviser's fees 5 (458,619) (1,375,856) (1,834,475) Investment Adviser's performance fees 5   -    -    -  Other expenses (528,481)   -  (528,481) Profit/(loss) on ordinary activities before taxation   2,673,737   8,472,577   11,146,314 Tax on profit/(loss) on ordinary activities 6 (348,948)   348,948   -  Profit/(loss) for the period and total comprehensive income   2,324,789   8,821,525   11,146,314 Basic and diluted earnings per share 7 2.07p 7.87p 9.94p

The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the net investment portfolio gains (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 October 2019, 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/year. The notes to the unaudited financial statements form part of these Half-Year Financial Statements.

Unaudited Condensed Balance Sheet as at 31 March 2021  31 March 2021 31 March 2020 30 September 2020 (unaudited) (unaudited) (audited) Notes £ £ £ Fixed assets Investments at fair value 9 74,720,423 37,808,748 50,861,133 Current assets Debtors and prepayments 3,917,073 362,814 398,489 Current asset investments 10  32,954,426 39,479,736 30,449,213 Cash at bank 10  1,378,815 1,406,450 1,739,602 38,250,314 41,249,000 32,587,304 Creditors: amounts falling due within one year (1,022,895) (282,076) (315,007) Net current assets 37,227,419 40,966,924 32,272,297 Net assets 111,947,842 78,775,672 83,133,430 Capital and reserves Called up share capital 1,182,005 1,150,685 1,186,617 Capital redemption reserve 28,439 16,980 23,827 Share premium reserve 12,283,303 9,625,433 12,283,303 Revaluation reserve 31,570,937 (6,814,985) 6,862,342 Special distributable reserve 52,950,812 61,740,118 54,626,873 Realised capital reserve 10,890,667 9,626,672 5,938,001 Revenue reserve 3,041,679 3,430,769 2,212,467 Equity Shareholders' funds 111,947,842 78,775,672 83,133,430 Basic and diluted net asset value: Basic and diluted net asset value per share 11  94.71p 68.46p 70.06p

The financial information for the six months ended 31 March 2021 and the six months ended 31 March 2020 has not been audited. The notes to the unaudited financial statements form part of these Half-Year Financial Statements.

Unaudited Condensed Statement of Changes in Equity for the six months to 31 March 2021 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) £ £ £ £ £ £ £ £ At 1 October 2020 1,186,617 23,827 12,283,303 6,862,342 54,626,873 5,938,001 2,212,467 83,133,430 Comprehensive income for the period Profit for the period - - - 26,073,426 - 2,231,158 829,212 29,133,796 Total comprehensive income for the period - - - 26,073,426 - 2,231,158 829,212 29,133,796 Contributions by and distributions to owners Shares bought back (Note c) (4,612) 4,612 - - (319,384) - - (319,384) Total contributions by and distributions to owners (4,612) 4,612 - - (319,384) - - (319,384) Other movements Realised losses transferred to special reserve (Note a) - - - - (1,356,677) 1,356,677 - - Realisation of previously unrealised appreciation - - - (1,364,831) - 1,364,831 - - Total other movements - - - (1,364,831) (1,356,677) 2,721,508 - - At 31 March 2021 1,182,005 28,439 12,283,303 31,570,937 52,950,812 10,890,667 3,041,679 111,947,842 Notes Note a): The Company's special reserve is available to fund buybacks of shares as and when it is considered by the Board to be in the interests of Shareholders, and to absorb any existing and future realised losses and for other corporate purposes. At 31 March 2021, the Company has a special reserve of £52,950,812, £30,576,363 of which arises from shares issued more than three years after the end of the financial year in which they were issued. Reserves originating from share issues are not distributable under VCT rules if they are within three years of the end of an accounting period in which the shares were issued. The total transfer of £1,356,677 from the realised capital reserve to the special distributable reserve above is the total of realised losses incurred by the Company in the period. Note b): The realised capital reserve and the revenue reserve together comprise the Profit and Loss Account of the Company. Note c): During the period, the Company repurchased 461,200 of its own shares at the prevailing market price for a total cost (including stamp duty) of £319,384, which were subsequently cancelled. The difference between the figure shown above of £319,384 and that per the Statement of Cash Flows of £413,435 is £94,051 which was a creditor at the previous year-end.

Unaudited Condensed Statement of Changes in Equity for the six months to 31 March 2020 Non-distributable reserves Distributable reserves Called up Capital Share Special Realised share redemption premium Revaluation distributable capital Revenue capital reserve reserve reserve reserve reserve reserve Total £ £ £ £ £ £ £ £ At 1 October 2019 1,033,029 5,245 - 4,652,457 63,751,255 9,864,455 2,421,638 81,728,079 Comprehensive income for the period (Loss)/profit for the period - - - (10,733,344) - 2,098,159 1,528,268 (7,106,917) Total comprehensive income for the period - - - (10,733,344) - 2,098,159 1,528,268 (7,106,917) Contributions by and distributions to owners Shares issued via Offer for Subscription 129,391 - 9,625,433 - (99,106) - - 9,655,718 Shares bought back (11,735) 11,735 - - (828,976) - - (828,976) Dividends paid - - - - - (4,153,095) (519,137) (4,672,232) Total contributions by and distributions to owners 117,656 11,735 9,625,433 - (928,082) (4,153,095) (519,137) 4,154,510 Other movements Realised losses transferred to special reserve - - - - (1,083,055) 1,083,055 - - Realisation of previously unrealised appreciation - - - (734,098) - 734,098 - - Total other movements - - - (734,098) (1,083,055) 1,817,153 - - At 31 March 2020 1,150,685 16,980 9,625,433 (6,814,985) 61,740,118 9,626,672 3,430,769 78,775,672 The notes to the unaudited financial statements form part of these Half-Year Financial Statements. The composition of each of these reserves is explained below: Called up share capital - The nominal value of shares originally issued, increased for subsequent share issues either via an Offer for Subscription or Dividend Investment Scheme or reduced due to shares bought back by the Company. Capital redemption reserve - The nominal value of shares bought back and cancelled is held in this reserve, so that the Company's capital is maintained. Share premium reserve - This reserve contains the excess of gross proceeds less issue costs over the nominal value of shares allotted under recent Offers for Subscription and the Company's Dividend Investment Scheme. Revaluation reserve - Increases and decreases in the valuation of investments held at the period-end are accounted for in this reserve, except to the extent that the diminution is deemed permanent. In accordance with stating all investments at fair value through profit and loss (as recorded in Note 9), all such movements through both revaluation and realised capital reserves are shown within the Income Statement for the period. Special distributable reserve - This reserve is created from cancellations of the balances upon the Share premium reserve, which are transferred to this reserve from time to time. The cost of share buybacks and any realised losses on the sale or impairment of investments (excluding transaction costs) are charged to this reserve. 75% of the Investment Adviser fee expense, and the related tax effect, that are charged to the realised capital reserve are transferred to this reserve. This reserve will also be charged any facilitation fee payments to financial advisers, which arose as part of the Offer for Subscription. Realised capital reserve - The following are accounted for in this reserve:  - Gains and losses on realisation of investments;  - Permanent diminution in value of investments;  - Transaction costs incurred in the acquisition and disposal of investments;  - 75% of the Investment Adviser 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, as well as 25% of the Investment Adviser fee together with the related tax effect, as well as income dividends paid that are classified as revenue in nature.

Unaudited Condensed Statement of Cash Flows for the six months ended 31 March 2021 Six months ended Six months ended Year ended 31 March 2021 31 March 2020 30 September 2020 Notes (unaudited) (unaudited) (audited) £ £ £ Cash flows from operating activities Profit/(loss) for the financial period 29,133,796 (7,106,917) 11,146,314 Adjustments for: Net investment portfolio (gains)/losses (29,661,261) 8,201,658 (9,848,433) Increase in debtors (12,233) (80,341) (135,373) Increase in creditors and accruals 799,205 37,456 39,354 Net cash inflow from operating activities 259,507 1,051,856 1,201,862 Cash flows from investing activities Purchase of investments 9 (4,417,515) (4,151,125) (8,385,023) Disposal of investments 9   6,715,869   8,346,088   17,597,050 Net cash inflow from investing activities   2,298,354   4,194,963   9,212,027 Cash flows from financing activities Shares issued as part of Offer for subscription   -    10,000,000   10,000,000 Issue costs as part of Offer for subscription   -  (344,282) (344,282) Equity dividends paid 8   -  (4,672,232) (18,153,151) Purchase of own shares (413,435) (806,336) (1,189,858) Net cash (outflow)/inflow from financing activities (413,435)   4,177,150 (9,687,291) Net increase in cash and cash equivalents 2,144,426 9,423,969 726,598 Cash and cash equivalents at start of period 29,037,046 28,310,448 28,310,448 Cash and cash equivalents at end of period 31,181,472 37,734,417 29,037,046 Cash and cash equivalents comprise: Cash at bank and in hand 10 1,378,815 1,406,450 1,739,602 Cash equivalents 10 29,802,657 36,327,967 27,297,444 The notes to the unaudited financial statements form part of these Half-Year Financial Statements.

Notes to the Unaudited Condensed Financial Statements 1. Company information The Income and Growth VCT plc is a public limited company incorporated in England, 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 October 2019) issued by the Association of Investment Companies ("AIC"). 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 Six months ended Year ended 31 March 2021 31 March 2020 30 September 2020 (unaudited) (unaudited) (audited) Total Total Total £ £ £ Income  - Dividends   588,183   351,220   837,168  - Money market funds   2,569   83,823   112,575  - Loan stock interest   715,528   1,851,961   2,625,570  - Bank deposit interest   16,063   24,570   43,410  - Interest on preference share dividend arrears   -    280   38,987  - Other income   5,789   -    3,127 Total Income   1,328,132   2,311,854   3,660,837 5. Investment Adviser's fees and performance fees Six months ended Six months ended Year ended 31 March 2021 31 March 2020 30 September 2020 (unaudited) (unaudited) (audited) Total Total Total £ £ £ Allocated to revenue return: Investment Adviser's fees   223,439   236,541   458,619 Allocated to capital return: Investment Adviser's fees   670,315   709,625   1,375,856 Investment Adviser's performance fees   742,900   -    -  Total   1,636,654   946,166   1,834,475 Investment Adviser's fee   893,754   946,166   1,834,475 Investment Adviser's performance fees   742,900   -    -  Total 1,636,654 946,166 1,834,475 The Directors have charged 75% of the fees payable under the Investment Adviser's agreement, and 100% of the amounts payable under the Incentive Agreement, to the capital reserve. The Directors believe it is appropriate to charge the incentive fees wholly against the capital return, as any fees payable depend on capital performance, as explained below. On 30 September 2014, a revised incentive fee agreement was signed between the Board, on behalf of the Company, and Mobeus, with effect from 1 October 2013, to amend and replace the previous agreement. The previous agreement remained in force, but only with the former adviser, Foresight Group LLP ("Foresight"). Mobeus waived their right to their portion of the fee under the previous agreement. This agreement expired on 10 March 2019. Any payment under the revised 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 either: (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 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 revised incentive 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 included any fee payable to Foresight under the old agreement, although any such payment to Foresight was not capped, but that agreement expired on 10 March 2019. 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). For the year ending 30 September 2021, the Target Return will be 179.83 pence per share (being a 6% uplift on the Target Return at the previous year-end of 169.65 pence per share). As at 31 March 2021, the Cumulative Total NAV return is 186.34 pence per share, so the Target Return for the 2021 financial year has currently been met and a fee of £742,900 has been accrued. This fee is payable subject to the cumulative Target NAV return continuing to exceed the Target Return at the year-end and the approval of the Company's Annual Report by shareholders at the AGM. Between 1 April 2020 and 31 March 2021, the Investment Adviser's fee upon the net assets raised under the 2019/20 Offer for Subscription from the use of the over-allotment facility of £5 million was reduced to 1.4% from 2.4%.

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 2021 Six months ended 31 March 2020 Year ended  30 September 2020 (unaudited) (unaudited) (audited) Total Total Total £ £ £ i) Total earnings after taxation: 29,133,796 (7,106,917) 11,146,314 Basic and diluted earnings per share (Note a) 24.60 p (6.53)p 9.94 p ii) Revenue earnings from ordinary activities after taxation 829,212 1,528,268 2,324,789 Basic and diluted revenue earnings per share (Note b) 0.70 p 1.40 p 2.07 p Net investment portfolio gains/(losses) 29,661,261 (8,201,658) 9,848,433 Capitalised Investment Adviser fees and performance fees less taxation (1,356,677) (433,527) (1,026,908) iii) Total capital return 28,304,584 (8,635,185) 8,821,525 Basic and diluted capital earnings per share (Note c) 23.90 p (7.93)p 7.87 p iv) Weighted average number of shares in issue in the period (Note d) 118,453,326 108,874,052 112,120,361 Notes: a) Basic earnings per share is total earnings after taxation divided by the weighted average number of shares in issue. b) Basic revenue earnings per share is the revenue return after taxation divided by the weighted average number of shares in issue. c) Basic capital earnings per share is the total capital return after taxation divided by the weighted average number of shares in issue. d) There are no instruments that will increase the number of shares in issue in the future. Accordingly, the above figures currently represent both basic and diluted earnings per share. 8. Dividends Six months ended Six months ended Year ended 31 March 2021 31 March 2020 30 September 2020 (unaudited) (unaudited) (audited) Dividend Type For the year ended 30 September Pence per share Date paid £ £ £ Interim Income 2019 0.50p 18 October 2019 - 519,137 519,137 Interim Capital 2019 4.00p 18 October 2019 - 4,153,095 4,153,095 Interim Income 2020 1.50p 10 July 2020 - - 1,725,492 Interim Capital 2020 1.50p 10 July 2020 - - 1,725,492 Interim Income 2020 0.25p 28 September 2020 - - 289,331 Interim Capital 2020 6.00p 28 September 2020 - - 6,943,954 Interim Capital* 2020 4.75p 28 September 2020 - - 5,497,299 - 4,672,232 20,853,800 * - This dividend was paid out of the Company's Special distributable reserve. The Board has declared an interim dividend in respect of the year ending 30 September 2021 of 5.00 pence per share to be paid to Shareholders on 23 July 2021. For the year ended 30 September 2020, £20,853,800 disclosed above differs to that shown in the Statement of Cash Flows of £18,153,151 due to £2,700,649 of new shares allotted subject to listing under the Company's Dividend Investment Scheme.

9. Summary of movement on investments during the period The most critical estimates, assumptions and judgements relate to the determination of the carrying value of investments at "fair value through profit and loss" (FVTPL). All investments held by the Company are classified as FVTPL and measured in accordance with the International Private Equity and Venture Capital Valuation ("IPEV") guidelines, as updated in December 2018 (as updated by Special Valuation guidance issued in March 2020). This classification is followed as the Company's business is to invest in financial assets with a view to profiting from their total return in the form of capital growth and income. Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional. For investments actively traded on organised financial markets, fair value is generally determined by reference to Stock Exchange market quoted bid prices at the close of business on the balance sheet date. Purchases and sales of quoted investments are recognised on the trade date where a contract of sale exists whose terms require delivery within a time frame determined by the relevant market. Where the terms of a disposal state that consideration may be received at some future date and, subject to the conditionality and materiality of the amount of deferred consideration, an estimate of the fair value discounted for the time value of money may be recognised through the Income Statement. In other cases, the proceeds will only be recognised once the right to receive payment is established and there is no reasonable doubt that payment will be received. Unquoted investments are stated at fair value by the Directors at each measurement date in accordance with appropriate valuation techniques, which are consistent with the IPEV guidelines:- (i)  Each investment is considered as a whole on a 'unit of account' basis, i.e. that the value of each portfolio company is considered as a whole, alongside consideration of:- The price of new or follow on investments made, if deemed to be made as part of an orderly transaction, are considered to be at fair value at the date of the transaction. The inputs that derived the investment price are calibrated within individual valuation models and at every subsequent quarterly measurement date, are reconsidered for any changes in light of more recent events or changes in the market performance of the investee company. The valuation bases used are the following: a)  a multiple basis. The enterprise value of the investment may be determined by applying a suitable price-earnings ratio, revenue or gross profit multiple to that company's historic, current or forecast post-tax earnings before interest, depreciation and amortisation, or revenue, or gross profit (the ratio used being based on a comparable sector but the resulting value being adjusted to reflect points of difference identified by the Investment Adviser compared to the sector including, inter alia, scale and liquidity). or:- b)  where a company's underperformance against plan indicates a diminution in the value of the investment, provision against the price of a new investment is made, as appropriate. (ii)  Premiums, to the extent that they are considered capital in nature, and that they will be received upon repayment of loan stock investments are accrued at fair value when the Company receives the right to the premium and when considered recoverable. (iii)  Where a multiple or the price of recent investment less impairment basis is not appropriate and overriding factors apply, a discounted cash flow, net asset valuation, realisation proceeds, or a weighted average of these bases may be applied. Capital gains and losses on investments, whether realised or unrealised, are dealt with in the profit and loss and revaluation reserves and movements in the period are shown in the Income Statement. All figures are shown net of any applicable transaction costs incurred by the Company. All investments are initially recognised and subsequently measured at fair value. Changes in fair value are recognised in the Income Statement. 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 the price of recent investment, the loss is treated as a permanent impairment and as a realised loss, even though the investment is still held. The Board assesses the portfolio for such investments and, after agreement with the Investment Adviser, will agree the values that represent the extent to which an investment loss has become realised. This is based upon an assessment of objective evidence of that investment's future prospects, to determine whether there is potential for the investment to recover in value. The methods of fair value measurement are classified into hierarchy based on the reliability of the information used to determine the valuation.  - Level 1 -  Fair value is measured based on quoted prices in an active market.  - Level 2 -  Fair value is measured based on directly observable current market prices or indirectly being derived from market prices.  - Level 3 -  Fair value is measured using valuation techniques using inputs that are not based on observable market data. Traded Unquoted ordinary Unquoted preference Unquoted Total on AIM shares shares loan stock Level 1 Level 3 Level 3 Level 3 £ £ £ £ £ Valuation at 1 October 2020 2,352,478 34,894,706 1,168,593 12,445,356 50,861,133 Purchases at cost 377,486 2,071,359 - 1,968,670 4,417,515 Sales - proceeds (Note a) (2,236,021) (3,888,490) (360) (4,094,615) (10,219,486)   - net realised gains/(losses) 999,759 1,953,582 (3,491) 637,985 3,587,835 Reclassification at valuation (Note b) 5,946,354 (5,946,354) - - - Net unrealised gains on investments 13,081,535 11,202,941 184,708 1,604,242 26,073,426 Valuation at 31 March 2021 20,521,591 40,287,744 1,349,450 12,561,638 74,720,423 Book cost at 31 March 2021 1,993,170 29,361,816 1,240,546 16,111,053 48,706,585 Unrealised gains/(losses) at 31 March 2021 19,028,421 15,895,539 109,205 (3,462,228) 31,570,937 Permanent impairment of investments (500,000) (4,969,611) (301) (87,187) (5,557,099) Valuation at 31 March 2021 20,521,591 40,287,744 1,349,450 12,561,638 74,720,423 Gains/(losses) on investments Realised gains based on historical cost 1,736,725 3,152,590 - 63,351 4,952,666 Less amounts recognised as unrealised gains/(losses) in previous years (736,966) (1,199,008) (3,491) 574,634 (1,364,831) Net realised gains/(losses) based on carrying value at 30 September 2020 999,759 1,953,582 (3,491) 637,985 3,587,835 Net movement in unrealised gains in the period 13,081,535 11,202,941 184,708 1,604,242 26,073,426 Net investment portfolio gains for the period ended 31 March 2021 14,081,294 13,156,523 181,217 2,242,227 29,661,261 Notes: a): The sale proceeds shown above of £10,219,486 is £3,503,617 more than that shown on the Condensed Statement of Cash Flows of £6,715,869 due to further proceeds receivable in respect of Vectair as well as proceeds receivable from the part realisations of MPB and Parsley Box. These amounts are recognised as debtors at 31 March 2021. b): The Company's equity investments in Virgin Wines and Parsley Box were admitted to AIM during the period. The amount transferred from Level 3 to Level 1 of £5,946,354 reflects the combined equity value held at the start of the period. Level 3 unquoted equity and loan investments are valued in accordance with IPEV guidelines as follows: As at As at As at 31 March 2021 31 March 2020 30 September 2020 (unaudited) (unaudited) (audited) Valuation methodology £ £ £ Multiple of earnings, revenues or gross margin, as appropriate 52,346,068 35,136,619 47,240,479 Recent investment price 1,445,435 - - Net asset value 341,550 1,063,667 1,189,116 Estimated realisation proceeds 65,779 13,281 79,060 54,198,832 36,213,567 48,508,655 10. Current asset investments and Cash at bank As at As at As at 31 March 2021 31 March 2020 30 September 2020 (unaudited) (unaudited) (audited) £ £ £ OEIC Money market funds 29,802,657 36,327,967 27,297,444 Cash equivalents per Statement of Cash Flows 29,802,657 36,327,967 27,297,444 Bank deposits that mature after three months 3,151,769 3,151,769 3,151,769 Current asset investments 32,954,426 39,479,736 30,449,213 Cash at bank 1,378,815 1,406,450 1,739,602 11. Net asset value per share As at As at As at 31 March 2021 31 March 2020 30 September 2020 (unaudited) (unaudited) (audited) Net assets £111,947,842 £78,775,672 £83,133,430 Number of shares in issue   118,200,511   115,068,452   118,661,711 Net asset value per share - basic and diluted 94.71p 68.46p 70.06p 12. Post balance sheet events On 16 April 2021 and 18 May 2021, follow-on investments of £0.15 million and £0.10 million respectively were made into Caledonian Leisure Limited, an existing portfolio company. On 1 April 2021, a loan repayment of £0.32 million was received from Vian Marketing Limited (trading as Red Paddle Co). On 26 May 2021, a follow-on investment of £0.39 was made into Bella & Duke Limited, an existing portfolio company. On 28 May 2021, a loan repayment of £0.46 million was received from MPB Group Limited. 13. Statutory Information The financial information for the six months ended 31 March 2021 and the six months ended 31 March 2020 has not been audited. The financial information contained in this Half-Year report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial statements for the year ended 30 September 2020 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 this report are being sent to all Shareholders who elected to receive a paper copy otherwise Shareholders are being notified that a copy is available on the Company's website. Further copies are available free of charge from the Company's registered office, 30 Haymarket, London, SW1Y 4EX, or can be downloaded via the Company's website at www.incomeandgrowthvct.co.uk.

 

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