Half-year Report

RNS Number : 0787U

Mobeus Income & Growth 2 VCT PLC

20 November 2019

 

MOBEUS INCOME & GROWTH 2 VCT PLC HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019 Mobeus Income & Growth 2 VCT plc ("the Company") today announces its half-year results for the six months ended 30 September 2019.
As at 30 September 2019: Net assets: £43.41 million Net asset value ("NAV"): 89.85 pence Financial Highlights For the six months ended 30 September 2019 -     Net asset value ("NAV") total return per share was 5.3%*. -     Share price total return per share was 17.5%*. -     Shareholders received an interim dividend of 15.00 pence per share in respect of the year ending 31 March 2020, which was paid on 20 September 2019. -     The Company made two new investments and one follow-on investment totalling £1.82 million. *NAV total return per share and share price total return are alternative performance measures (APMs).  APMs are defined as a financial measure of historical or financial performance, financial position or cashflows, other than a financial measure defined or specified in the accounting framework under which the financial statements are prepared.
Performance Summary The table below shows the recent past performance of the Company's current share class, first raised in 2005/06 at an original subscription price of 100 pence per share before the benefit of income tax relief.  Performance data for all fundraising rounds are shown in the Half-Year Report.
Reporting date As at Net assets (£m) NAV per share (p) Share price1 (p) Cumulative dividends paid per share (p) Cumulative total return per share since launch2 Dividends paid and proposed in respect of each year (p) (NAV basis) (p) (Share price basis) (p) 30 September 2019 43.41 89.85 85.50 98.00 187.85 183.50 15.00 31 March 2019 48.73 99.60 85.50 83.00 182.60 168.50 5.00 30 September 2019 48.86 99.10 88.00 78.00 177.10 166.00 -
1 Source: Panmure Gordon & Co (mid-market price). 2 Cumulative total return per share comprises either 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.
Chairman's Statement I am pleased to present the Company's Report for the six months ended 30 September 2019. Overview The Company has had a good start to the year with NAV total return per share for the first half of 5.3%. Despite general business and political uncertainty, it has been a busy period of corporate activity for Mobeus. We have participated in three new and follow-on investments and generated healthy proceeds from two successful disposals. On 20 September 2019, the Company paid an interim dividend of 15.00 pence per share, well ahead of its stated target of a minimum of 5.00 pence per share per annum. Details of our performance and the transactions in the period are provided under the Performance and Investment Portfolio headings below. As you will be aware, new VCT legislation introduced by the Finance (No. 2) Act 2015 required a change of investment strategy to focus on providing growth capital for earlier stage companies. We are pleased to report that the investments made in this period and since the period end means that the Company has now completed seventeen new growth capital investments to date. We anticipate continuing this level of investment activity as the Investment Adviser is evaluating a number of other opportunities, both in the existing portfolio and new transactions. The established portfolio constructed under the previous rules continues to trade well and provides an income for the Company. As detailed in the Summary of VCT regulation later, which for this Company will apply to its accounting period beginning on 1 April 2020, the percentage in VCT qualifying holdings that the Company is required to hold will increase from 70% to 80%. The Board is confident that its plans for the remainder of the year will enable it to comply with this increased qualifying investments threshold. Subscription Offer Your Board regards it as important that the Company maintains adequate levels of liquidity in order to take advantage of new investment opportunities and fund further expansion of the businesses in our investment portfolio. We also aim to deliver attractive Shareholder returns including the payment of dividends and purchase of shares from those Shareholders who may wish to sell their shares. Therefore, in conjunction with other Mobeus-advised VCTs, on 25 October 2019 the Company launched a subscription offer for new shares to raise £15 million with an over-allotment facility of an additional £5 million. Performance The Company's NAV total return per share was 5.3% for the six months to 30 September 2019 (2018: 2.7%) while the share price total return was 17.5% (2018: 1.7%). Your Board is pleased with these returns which reflect encouraging performances in both the growth capital and established (pre 2015) companies within the portfolio. The principal contributions to the increase in Net Asset Value ("NAV") per share are shown below: Six months to 30 September 2019 (pence per share) 2018 (pence per share) Net realised and unrealised gains on the investment portfolio 5.08 1.87 Income from the investment portfolio and on liquid assets 1.58 2.12 Share buybacks and adjustments 0.11 - Gross return 6.77 3.99 Less: Investment Adviser's fees and other expenses (1.52) (1.43) Net return 5.25 2.56 NAV total return per share 5.3% 2.7% After accounting for dividends of 15.00 pence per share paid during the period and a net return of 5.25 pence, the NAV per share was 89.85 pence compared to 99.60 pence at the start at the financial year. Investment Portfolio The main portfolio movements for the period are summarised below: (£m) Portfolio value at 31 March 2019 30.04 New and further investments 1.82 Disposal proceeds (5.31) Net realised gains 0.96 Valuation movements 1.49 Portfolio value at 30 September 2019 29.00 The portfolio continued to perform well during the period, increasing in value by 8.2% (2018: 3.4%) on a like-for-like basis, after adding back disposals and new investments. The portfolio achieved a net increase of £2.45 million over the period made up of £1.49 million in unrealised gains and £0.96 million in realised gains. The portfolio was valued at £29.00 million at the period end (30 September 2018: £27.92 million). During the six months under review, the Company invested a total of £1.82 million (2018: £1.70 million). Two investments were into new businesses; we invested £0.91 million into Arkk Consulting, a regulatory and reporting service provider, and £0.55 million into Parsley Box, a supplier of home delivered, ambient ready meals for the elderly. An investment of £0.36 million was also made into an existing portfolio company: MPB Group, an online marketplace for used camera and video equipment. This business has already achieved significant growth and we were therefore pleased to participate in a £9.00 million funding round to facilitate its continued rapid development. After the period end, we invested £0.94 million into Active Navigation, a provider of enterprise-level file analysis software. The net unrealised valuation increase of £1.49 million comprised increases at Auction Technology Group, Proactive Group and MPB Group, while the main decreases were at Wetsuit Outlet, EOTH and Bourn Bioscience. Further details of these movements are explained in the Investment Review. The Company realised its investments in Plastic Surgeon and ASL Technology during the six months under review. £1.18 million was received from the realisation of Plastic Surgeon, generating a gain in the period of £0.30 million and contributing to a multiple on cost of 5.6x over the life of the investment. £3.68 million was received from the sale of ASL Technology generating a gain in the period of £0.49 million and a multiple on cost of 2.2x over the life of this investment. The Company also received cash proceeds of £0.45 million during the period, comprising a part disposal of Master Removers Group generating £0.28 million and deferred consideration of £0.17 million arising from the realisation of Entanet holdings, which occurred in 2017. 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. Dividends The Board continues to monitor closely the Company's cash flow and qualifying ratio projections in order to ensure that it is able to maintain compliance with regulatory requirements whilst performing optimally. After taking into account the successful realisations of two investee companies in the period, the adequacy of distributable reserves, cash flow forecasts and the transition to new VCT regulations, the Company paid an interim dividend of 15.00 pence per share on 20 September 2019. The Board will consider the payment of further interim dividends later in the financial year depending upon performance, investment activity and the need to meet regulatory ratios. Share buybacks During the six months ended 30 September 2019, the Company bought back and cancelled 612,876 of its own shares, representing 1.25% (2018: nil) of the shares in issue at the beginning of the period, at a total cost of £0.53 million (2018: nil) inclusive of expenses.  With effect from 1 August 2019, the Board revised its share buyback policy objective of maintaining the discount to NAV at which the Company's shares may trade in the market from approximately 10% or less, to approximately 5% or less. In pursuing this policy, the Board's priority will remain to ensure that it is acting prudently and in the interests of the remaining shareholders of the Company. Share buybacks will continue to be entirely at the Board's discretion and will be subject to the Company having sufficient funds and distributable reserves available for such a purpose. They will also continue to be subject to prevailing market conditions, the Listing Rules and any applicable law and regulatory restrictions at the relevant time. Shares bought back in the market will ordinarily be cancelled. Share Premium Account At the Annual General Meeting held on 11 September 2019, Shareholders gave their authority for the Company to seek the Court's permission to cancel the share premium account and capital redemption reserve. On 5 November 2019, the High Court of Justice Chancery Division confirmed the cancellations of the amount standing to the credit of the share premium account and capital redemption reserve, increasing the Special Reserve by £30.60 million. This may be used to facilitate distributions to Shareholders, share buybacks and for other corporate purposes. Shareholder communications May I remind you that the Company has its own website which is available at www.mig2vct.co.uk. The Investment Adviser holds an annual VCT event for Shareholders in central London. Each event includes a presentation on the Mobeus advised VCTs' investment activity and performance. The next event will be held on Tuesday, 4 February 2020 at the National Gallery in Central London. This is a new venue from previous years, though there will continue to be separate daytime and evening sessions. Shareholders have been sent an invitation to this event with further details. If you have not replied to the invitation, but would like to attend, please send an email to  [e-mail] to register. The Board looks forward to meeting all shareholders able to attend. Outlook Your Board is pleased with the Company's encouraging performance in the first six months of its financial year.  We believe that the existing portfolio provides a good balance between well established investments providing an income return and earlier stage companies typically seeking rapid scale which, whilst recognising their inherently higher risk, also offer potentially higher capital growth. Whilst the medium-term economic and business environment continues to be challenging, the Investment Adviser reports a strong pipeline of attractive businesses with dynamic entrepreneurial management teams. They have increased their investment and operations management resource to support this continued growth. Accordingly, we continue to be optimistic about the Company's future investment prospects and, on 25 October 2019, launched a subscription offer for new shares to raise up to £20 million (including the optional over-allotment facility). At 18 November 2019, we have received applications for £5.27 million in respect of the offer which will enable us to capitalise on the investment opportunities outlined above. Finally, I would like to thank our Investment Adviser Mobeus for their hard work contributing to the successful implementation of your Company's investment strategy and all Shareholders for their continued support. Ian Blackburn Chairman 20 November 2019
Investment Policy The Investment Policy is designed to meet the Company's objective. Investments The Company invests primarily in a diverse portfolio of UK unquoted companies. Investments are made selectively across a number of sectors, principally in established companies. Investments are usually structured as part loan stock and part equity in order to produce a regular income stream and to generate capital gains 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. The Company will seek to make investments in accordance with the requirements of prevailing VCT legislation. Asset allocation and risk diversification policies, including the size and type of investments the Company makes, are determined in part by the requirements of prevailing VCT legislation. No single investment may represent more than 15% (by VCT tax value) of the Company's total investments at the date of investment. 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 borrowings of amounts up to 10% of the adjusted capital and reserves (as defined therein). However, the Company has never borrowed and the Board would only consider doing so in exceptional circumstances.
Investment Adviser's Review There remains a strong demand for growth capital investment and Mobeus is currently reviewing several interesting opportunities. It is expected that a number of new and follow-on investments will be undertaken in the short to medium-term.  Portfolio review 2019 2018 £m £m Portfolio value at 31 March 30.04 26.88 New and further investments 1.82 1.70 Disposal proceeds (5.31) (1.58) Net realised gains in the period 0.96 0.44 Valuation movements of unrealised investments 1.49 0.48 Portfolio value at 30 September 29.00 27.92 In the six months under review we have made two new growth investments of £1.46 million and one existing growth portfolio company has received follow-on funding of £0.36 million. We have also received net cash proceeds of £5.31 million, primarily from the sale of two investments. After the period end, the Company invested a further £0.94 million into a new portfolio company, Active Navigation. Investment Portfolio Capital Movement Six months to 30 September 2019 Six months to 30 September 2018 £m £m Increase in the value of unrealised investments 3.15 1.85 Decrease in the value of unrealised investments (1.66) (1.37) Net increase in the value of unrealised investments 1.49 0.48 Realised gains 0.96 0.68 Realised losses - (0.24) Net realised gains in the period 0.96 0.44 Net investment portfolio gains 2.45 0.92 Unrealised movements in the value of the portfolio The value of the existing portfolio increased by £1.49 million during the first half of the year. This net increase was due to the aggregate increase in individual valuations of £3.15 million exceeding the aggregate reduction in individual valuations of £1.66 million. Principal increases in value were achieved by Auction Technology Group £1.08 million, Proactive Group £0.72 million and MPB Group £0.68 million. Auction Technology Group, which MIG 2 part realised in 2014, is trading well ahead of budget with growth across all areas of its business. MPB Group has grown revenues substantially and in July, secured a £9.00 million further investment at a higher valuation. £2.00 million was provided by the Mobeus advised VCTs with MIG2 contributing £0.36 million. A small number of new growth investments (such as Proactive) 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. Proactive Group has made consistent positive progress in all its markets since investment. The principal driver of the value increase over the period however, is the preference structure of the investment which allocates a greater share of economic value to the VCTs at the current stage of the business' development. The principal decreases in value were seen at Wetsuit Outlet £(0.31 million), EOTH £(0.23 million) and Bourn Bioscience £(0.22 million). Wetsuit Outlet continues to face challenging markets, although it is anticipated that measures recently implemented will restore margins and begin to improve profitability. EOTH, having achieved record profits over recent years, is still performing well but is currently experiencing some retail headwinds. Bourn has now opened its new facility in Essex but this will take time to reach normal trading levels. Over the medium-term the company has a strong brand and retains a strategic position in the market. Realised gains from sales of investments The net realised gains from sale of investments was £0.96 million during the period under review. The Company realised its investments in ASL Technology and Plastic Surgeon, generating gains of £0.49 million and £0.30 million respectively. Proceeds from these sales contributed to multiples of original cost of 2.2x for ASL Technology and 5.6x for Plastic Surgeon respectively, over the life of the investments. The Company also made a part disposal of Master Removers Group realising £0.28 million of proceeds and a nominal gain. Finally, the Company made a gain of £0.17 million from deferred consideration arising from the disposal of Entanet Holdings in 2017. Investment portfolio yield and capital repayments During the period under review, the Company received the following amounts in interest and dividend income: Portfolio Yield Six months to 30 September 2019 Six months to 30 September 2018 £m £m Interest received                                                                         0.68 0.73 Dividends received 0.01 0.26 Total portfolio income in the period 0.69P1P 0.99 Portfolio value at 30 September 29.00 27.92 Portfolio Income Yield2 (Income as a % of portfolio value at 30 September) 2.4% 3.6% 1    Total portfolio income in the period is generated solely from investee companies within the portfolio. See note 4 of the unaudited condensed financial statements for details of all income receivable by the Company. 2    Total portfolio income in the period and Portfolio Income Yield are alternative performance measures ("APM").
New investments during the period The Company made two new investments during the period as detailed below:
Company Business Date of Investment Amount of new investment (£m) Arkk Consulting Regulatory and reporting requirement service provider May 2019 0.91 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 new cloud-based markets by building the sales and marketing team. The company's audited accounts for the year ended 31 December 2018 show turnover of £3.36 million and a loss before interest, tax and amortisation of goodwill of £(0.34) million. Company Business Date of Investment Amount of new investment (£m) Parsley Box Home delivered ambient ready meals for the elderly May 2019 0.55 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. Further investments in existing portfolio companies during the period The Company made a further investment of £0.36 million into MPB Group during the period, as detailed below: Company Business Date of Investment Amount of new investment (£m) MPB Group Online marketplace for used camera and video equipment July 2019 0.36 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 two other third-party investors, is to support its continued growth plan.  Having more than doubled its sales over the last two years, this investment will help drive the company's objective to create a £100 million+ internationally diverse and profitable re-commerce business. The company's audited accounts for the year ended 31 March 2019 show turnover of £31.91 million and a loss before interest, tax and amortisation of goodwill of £(1.73) million. New investments after the period end A total of £0.94 million was invested into one new company shortly after the period end as detailed below: Company Business Date of investment Amount of new investment (£m) Active Navigation File analysis software November 2019 0.94 Data Discovery Solutions, trading as Active Navigation, is a file analysis software solution which makes it easier for companies to clean up network drives, respond to new data protection laws and dispose of redundant and outdated documents. Active Navigation's solution is used by significant blue chip customers, particularly those in highly regulated industries such as energy and professional services, as well as government entities in the USA, Canada, Australia and the UK. Active Navigation will seek to drive continued growth from its file analysis platform with the recruitment of experienced sales and professional services staff. The company's audited accounts for the year ended 30 June 2018 show revenues of £5.02 million and a profit before interest, tax and amortisation of goodwill of £1.25 million. Realisations during the period The Company realised two investments in the period, 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 £2.19 million 5.6 x cost The Company sold its remaining investment in Plastic Surgeon to Polygon Group for £1.18 million. Over the eleven years this investment was held, it generated proceeds of £2.19 million compared to an original investment cost of £0.39 million which is a multiple on cost of 5.6x and an IRR of 20.5%. ASL Technology Printer and photocopier services December 2010 to June 2019 £4.57 million 2.2 x cost The Company sold its investment in ASL Technology for £3.68 million. Over the eight and a half years this investment was held, it generated proceeds of £4.57 million compared to an original investment cost of £2.09 million, which is a multiple on cost of 2.2x and an IRR of 12.6% Other realised gains in the period amounted to £0.17 million, arising from the realisation of the Company's investment in Entanet Holdings in 2017. Together with the realised gains upon the two disposals of £0.79 million, the total for the period was £0.96 million, as shown on earlier in this Review. Mobeus Equity Partners LLP Investment Adviser 20 November 2019 Investment Portfolio Summary as at 30 September 2019 Date of first investment Total Book cost at 30 September 2019 Valuation at 31 March 2019 Additions at cost Disposals at opening  valuation Change in valuation for period Valuation at 30 September 2019 % of net assets by value Sector Qualifying investments £ £ £ £ £ £ Unquoted investments Tovey Management Limited (trading as Access IS) October 2015 1,733,500 2,314,753 - - (91,661) 2,223,092 5.1% Provider of data capture and scanning hardware Electronics and electrical equipment MPB Group Limited June 2016 1,176,231 1,180,748 356,458 - 684,141 2,221,347 5.1% Online marketplace for photographic and video equipment General retailers EOTH Limited (trading as Rab and Lowe Alpine) October 2011 817,185 1,970,986 - - (234,542) 1,736,444 4.0% Branded outdoor equipment and clothing General retailers Virgin Wines Holding Company Limited November 2013 1,284,333 1,556,726 - - 43,823 1,600,549 3.7% Online wine retailer General retailers Proactive Group Holdings Inc January 2018 635,346 883,102 - - 715,416 1,598,518 3.7% Provider of media services and investor conferences for companies primarily listed on secondary public markets General financial Preservica Limited December 2015 1,133,464 1,620,741 - - (34,194) 1,586,547 3.7% Seller of proprietary digital archiving software Software and computer services Pattern Analytics Limited (trading as Biosite) November 2016 1,036,002 1,531,481 - - - 1,531,481 3.5% Workforce management and security services for the construction industry Software and computer services Vian Marketing Limited (trading as Red Paddle Co) July 2015 717,038 1,180,612 - - (61,826) 1,118,786 2.6% Design, manufacture and sale of stand-up paddleboards and windsurfing sails Leisure goods Vectair Holdings Limited January 2006 60,293 972,093 - - 84,228 1,056,321 2.4% Designer and distributor of washroom products Support services My Tutorweb Limited May 2017 979,834 979,834 - - - 979,834 2.3% Digtal marketplace connecting school pupils seeking one to one online tutoring Support services Master Removers Group 2019 Limited (formerly Master Removers Group) (trading as Anthony Ward Thomas, Bishopsgate and Aussie Man & Van) December 2014 251,763 1,113,167 - (278,292) (186,629) 648,246 1.5% A specialist logistics, storage and removals business Support services CGI Creative Graphics International Limited June 2014 999,568 964,132 - - 28,688 992,820 2.3% Vinyl graphics to global automotive, recreation vehicle and aerospace markets General industrials Arkk Consulting Limited May 2019 908,995 - 908,995 - 12,120 921,115 2.1% Provider of services and software to enable organisations to remain compliant with regulatory reporting requirements Software and computer services Ibericos Etc. Limited (trading as Tapas Revolution) January 2017 812,248 811,028 - - 68,044 879,072 2.0% Spanish restaurant chain General retailers Tharstern Group Limited July 2014 789,815 842,506 - - (9,153) 833,353 1.9% Software based management information systems to the print sector Software and computer services Media Business Insight Holdings Limited January 2015 1,447,188 770,532 - - 57,173 827,705 1.9% A publishing and events business focussed on the creative production industries Media Buster and Punch Holdings Limited March 2017 436,391 608,509 - - 99,259 707,768 1.6% Industrial inspired lighting and interiors retailer General retailers Rota Geek Limited August 2018 366,600 619,101 - - 38,865 657,966 1.5% Provider of cloud based enterprise software that uses data-driven technologies to help retail and leisure organisations schedule staff Support services Blaze Signs Holdings Limited April 2006 437,030 807,949 - - (165,342) 642,607 1.5% Manufacturing and installation of signs Support services Manufacturing Services Investment Limited (trading as Wetsuit Outlet Limited) July 2017 1,412,992 893,985 - - (310,713) 583,272 1.3% Online retailer in the water sports market General retailers Kudos Innovations Limited November 2018 277,950 277,950 - 277,950 555,900 1.3% Online platform that provides and promotes academic research dissemination Support services Parsley Box Limited May 2019 551,400 - 551,400 - - 551,400 1.3% Supplier of home delivered ambient ready meals for the elderly General retailers RDL Corporation Limited October 2010 1,000,000 494,929 - - (12,843) 482,086 1.1% Recruitment consultants for the pharmaceutical, business intelligence and IT industries Support services Redline Worldwide Limited February 2016 682,222 341,107 - - (8,537) 332,570 0.8% Provider of security services to the aviation industry Support services Bourn Bioscience Limited January 2014 757,101 383,189 - - (218,934) 164,255 0.4% Management of In-vitro fertilisation clinics Healthcare equipment & Services Jablite Holdings Limited April 2015 281,398 91,600 - - - 91,600 0.2% Manufacturer of expanded polystyrene products Construction and materials BookingTek Limited October 2016 504,336 126,084 - - (75,649) 50,435 0.1% Software for hotel groups Software and computer Services Super Carers Limited March 2018 384,720 192,360 - - (192,360) - 0.0% Online platform that connects people seeking home care from experienced independent carers Support services Veritek Global Holdings Limited July 2013 967,780 49,432 - - (49,432) - 0.0% Maintenance of imaging equipment Support services Racoon International Group Limited December 2006 906,935 - - - - - 0.0% Supplier of hair extensions, hair care products and training Personal goods ASL Technology Holdings Limited December 2010 - 3,190,292 - (3,190,292) - - 0.0% Printer and photocopier services Support services The Plastic Surgeon Holdings Limited (formerly TPSFF Holdings Limited ) April 2008 - 875,502 - (875,502) - - 0.0% Snagging and finishing of domestic and commercial properties Support services Total qualifying investments 23,749,658 27,644,430 1,816,853 (4,344,086) 457,892 25,575,089 58.9% Date of first investment Total Book cost at 30 September 2019 Valuation at 31 March 2019 Additions at cost Disposals at valuation Change in valuation for period Valuation at 30 September 2019 % of net assets by value Sector Non-qualifying investments Turner Topco Limited (trading as Auction Technology Group) October 2008 1,320,963 1,198,168 - - 1,077,648 2,275,816 5.2% SaaS based online auction market place platform Media Media Business Insight Limited January 2015 561,884 672,742 - - (41,976) 630,766 1.5% A publishing and events business focussed on the creative production industries Media Manufacturing Services Investment Limited (trading as Wetsuit Outlet) July 2017 304,000 304,000 - - - 304,000 0.8% Online retailer in the water sports market General retailers Tovey Management Limited (trading as Access IS) October 2015 219,873 219,873 - - - 219,873 0.5% Provider of data capture and scanning hardware Electronics and electrical equipment Prefcap Limited (formerly 365 Agile Group plc) March 2001 254,586 - - - - - 0.0% Development of energy saving devices for domestic use Electronic and electrical equipment Hemmels Limited March 2018 19,660 - - - - - 0.0% Sourcing, restoration, selling and servicing of high price, classic cars Automobiles and Parts Racoon International Group Limited December 2006 139,050 - - - - - 0.0% Supplier of hair extensions, hair care products and training Personal goods Total non-qualifying investments 2,820,016 2,394,783 - - 1,035,672 3,430,455 8.0% Total investment portfolio per note 9 26,569,674 30,039,213 1,816,853 (4,344,086) 1,493,564 29,005,544 66.9% Cash and current asset investments2 18,662,785 - - 14,646,591 33.7% Total investments including cash and current asset investments 26,569,674 48,701,998 1,816,853 (4,344,086) 1,493,564 43,652,135 100.6% Current assets 229,113 136,327 0.3% Current liabilities (201,154) (379,883) (0.9)% Totals 26,569,674 1,816,853 (4,344,086) Net assets at the period end 48,729,957 43,408,579 100.0% 1      As at 30 September 2019, the Company held more than 70% of its total investments in qualifying holdings, and therefore complied with the VCT Qualifying Investment test. For the Company's accounting periods beginning on or after 1 April 2020, this percentage will increase to 80%. For the purposes of the VCT qualifying test, the Company is permitted to disregard disposals of investments for twelve months from the date of disposal. It also has up to three years to bring in new funds raised, before these need to be included in the qualifying investment test. 2      Disclosed as Current asset investments and Cash at bank within Current assets in the Balance Sheet.
Statement of the Directors' Responsibilities  Responsibility Statement In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Ian Blackburn (Chairman), Adam Kingdon (Chairman of the Audit Committee) and Sally Duckworth (Chairman of the Investment Committee), being the Directors of the Company confirm that to the best of their knowledge: (a)        the unaudited 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 the 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 unaudited 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 31 March 2019 ("the Annual Report"). The principal risks faced by the Company are: ·    Political and Economic; ·    Investment and strategic; ·    Loss of approval as a VCT; ·    VCT regulatory changes; ·    Regulatory; ·    Financial and operating; ·    Market; ·    Asset liquidity; ·    Market liquidity; and ·    Cyber and Data Security. A more detailed explanation of these risks can be found in the Strategic Report on pages 24 to 26, and in Note 15 on pages 61 to 68 of the Annual Report and Financial Statements for the year ended 31 March 2019, copies of which are available on the Investment Adviser's website, www.mobeus.co.uk or by going directly to the VCT's website, www.mig2vct.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 which comprises the Chairman's Statement, Investment Policy, Investment Review and Investment Portfolio Summary. 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 15 on pages 61 to 68 of the Annual Report and Financial Statements for the year ended 31 March 2019. 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 Ian Blackburn Chairman 20 November 2019
Unaudited Condensed Income Statement for the six months ended 30 September 2019 Six months ended 30 September 2019 Year ended 31 March 2019 Six months ended 30 September 2018 (unaudited) (audited) (unaudited) Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ £ £ £ Net investment portfolio gains 9 - 2,455,341 2,455,341 - 3,137,000 3,137,000 - 920,159 920,159 Income 4 763,195 - 763,195 2,189,574 - 2,189,574 1,043,868 - 1,043,868 Investment Adviser's fees 5 (139,243) (417,731) (556,974) ( 259,026) ( 777,077) ( 1,036,103) ( 128,269) ( 384,807) ( 513,076) Other expenses (172,700) - (172,700) ( 320,722) - ( 320,722) ( 171,084) - ( 171,084) Profit on ordinary activities before taxation 451,252 2,037,610 2,488,862 1,609,826 2,359,923 3,969,749 744,515 535,352 1,279,867 Tax on profit on ordinary activities 6 (83,669) 79,369 (4,300) ( 208,983) 147,645 ( 61,338) ( 91,612) 73,113 ( 18,499) Profit and total comprehensive income 367,583 2,116,979 2,484,562 1,400,843 2,507,568 3,908,411 652,903 608,465 1,261,368 Basic and diluted earnings per ordinary share 7 0.75p 4.35p 5.10p 2.84p 5.09p 7.93p 1.32p 1.24p 2.56p The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the net investment portfolio gains (unrealised gains and realised gains on investments) and the proportion of the Investment Adviser's fee and performance fee charged to capital. The total column is the Statement of Total Comprehensive Income of the Company prepared in accordance with Financial Reporting Standards ("FRS"). In order to better reflect the activities of a VCT and in accordance with the 2014 Statement of Recommended Practice ("SORP") (updated in October 2019) by the Association of Investment Companies ("AIC"), supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The revenue column of profit attributable to equity shareholders is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 274 Income Tax Act 2007. All the items in the above statement derive from continuing operations of the Company. No operations were acquired or discontinued in the period. The notes to the unaudited Financial Statements within the Half Year Report to 30 September 2019 form part of these Half-Year Financial Statements.
Unaudited Condensed Balance Sheet as at 30 September 2019 30 September 2019 31 March 2019 30 September 2018 (unaudited) (audited) (unaudited) Notes £ £ £ Fixed assets Investments at fair value 9           29,005,544           30,039,213           27,924,135 Current assets Debtors and prepayments                136,327                229,113                292,295 Current asset investments 10           11,908,301           16,117,301           17,657,301 Cash at bank and in hand 10             2,738,290             2,545,484             3,202,319           14,782,918           18,891,898           21,151,915 Creditors: amounts falling due within one year (379,883) (201,154) (216,485) Net current assets           14,403,035           18,690,744           20,935,430 Net assets           43,408,579           48,729,957           48,859,565 Capital and reserves Called up share capital                483,122                489,251                493,042 Share premium reserve           30,498,349           30,498,349           30,498,349 Capital redemption reserve                104,218                  98,089                  94,298 Revaluation reserve             3,756,100             4,357,307             2,405,699 Special distributable reserve                126,857             4,391,645             5,037,085 Realised capital reserve             6,778,021             7,600,987             8,560,337 Revenue reserve             1,661,912             1,294,329             1,770,755 Equity shareholders' funds           43,408,579           48,729,957           48,859,565 Basic and diluted net asset value per share 11 89.85p 99.60p 99.10p The notes to the unaudited Financial Statements within the Half Year Report to 30 September 2019 form part of these Half Year Financial Statements. The financial information for the six months ended 30 September 2019 and 30 September 2018 has not been audited.
Unaudited Condensed Statement of Changes in Equity Non-distributable reserves Distributable reserves Called up Share Capital Special Realised Revenue share premium redemption Revaluation distributable capital reserve capital reserve reserve reserve reserve reserve Total (Note a) (Note b) (Note b) For the six months ended 30 September 2019 £ £ £ £ £ £ £ £ At 1 April 2019 489,251 30,498,349 98,089 4,357,307 4,391,645 7,600,987 1,294,329 48,729,957 Comprehensive income for the period Profit for the period - - - 1,493,564 - 623,415 367,583 2,484,562 Total comprehensive income for the period - - - 1,493,564 - 623,415 367,583 2,484,562 Contributions by and distributions to owners Shares bought back (note c) (6,129) - 6,129 - (531,851) - - (531,851) Dividends paid - - - - (3,394,575) (3,879,514) - (7,274,089) Total contributions by and distributions to owners (6,129) - 6,129 - (3,926,426) (3,879,514) - (7,805,940) Other movements Realised losses transferred to special reserve (note a) - - - - (338,362) 338,362 - - Realisation of previously unrealised gains - - - (2,094,771) - 2,094,771 - - Total other movements - - - (2,094,771) (338,362) 2,433,133 - - At 30 September 2019 483,122 30,498,349 104,218 3,756,100 126,857 6,778,021 1,661,912 43,408,579 Notes a): The cancellation of the formerly named C Share Fund's share premium reserve (as approved at the Extraordinary General meeting held on 10 September 2008 and by the order of the Court dated 28 October 2009), together with the previous cancellation of the share premium reserve attributable to the former Ordinary Share Fund and C Shares, has provided the Company with a special distributable reserve.  The purpose of this reserve is to fund market purchases of the Company's own shares as and when it is considered by the Board to be in the interests of the shareholders, and to write-off existing and future losses as the Company must take into account capital losses in determining distributable reserves. The total transfer of £338,362 from the realised capital reserve to the special distributable 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 purchased 612,876 of its own shares at the prevailing market price for a total cost of £531,851, which were subsequently cancelled. The difference between the total cost above of £531,851 and that per the Unaudited Condensed Statement of Cash Flows of £377,485 is due to a share repurchase of £154,366 held in creditors at 30 September 2019. 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 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 Offers for Subscription. On 5 November 2019, the High Court of Justice, Chancery Division confirmed the cancellation for the amount standing to the credit of the share premium account and capital redemption reserve. 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 The cost of share buybacks is charged to this reserve. In addition, any realised losses on the sale or impairment of investments (excluding transaction costs), and 75% of the Investment Adviser's fee and 100% of any performance fee expense, and the related tax effect, are transferred from the realised capital reserve to this reserve. The cost of any IFA facilitation fee payable as part of the Offer for Subscription is also charged to this reserve. Realised capital reserve The following are accounted for in this reserve: • Gains and losses on realisation of investments; • Permanent diminution in value of investments; • Transaction costs incurred in the acquisition and disposal of investments; • 75% of the Investment Adviser's fee (subsequently transferred to the Special distributable reserve along with the related tax effect) and 100% of any performance fee payable, together with the related tax effect to this reserve in accordance with the policies, and                                                                                                                                                                                                                                                      • Capital dividends paid. Revenue reserve Income and expenses that are revenue in nature are accounted for in this reserve together with the related tax effect, as well as income dividends paid that are classified as revenue in nature. Non-distributable reserves Distributable reserves Called up Share Capital Special Realised Revenue share premium redemption Revaluation distributable capital reserve capital reserve reserve reserve reserve reserve Total For the six months ended 30 September 2018 £ £ £ £ £ £ £ £ At 1 April 2018 493,042 30,498,349 94,298 1,398,656 6,052,525 7,943,475 1,117,852 47,598,197 Comprehensive income for the period Profit for the period - - - 482,295 - 126,170 652,903 1,261,368 Total comprehensive income for the period - - - 482,295 - 126,170 652,903 1,261,368 Contributions by and distributions to owners Shares bought back - - - - - - - - Dividends paid - - - - - - - - Total contributions by and distributions to owners - - - - - - - - Other movements Realised losses transferred to special reserve - - - - (1,015,440) 1,015,440 - - Realisation of previously unrealised depreciation - - - 524,748 - (524,748) - - Total other movements - - - 524,748 (1,015,440) 490,692 - - At 30 September 2018 493,042 30,498,349 94,298 2,405,699 5,037,085 8,560,337 1,770,755 48,859,565 The notes to the unaudited Financial Statements within the Half Year Report to 30 September 2019 form part of these Half Year Financial Statements.
Unaudited Condensed Statement of Cash Flows For the six months ended 30 September 2019 Six months ended Year ended Six months ended 30 September 2019 31 March 2019 30 September 2018 Notes (unaudited) (audited) (unaudited) £ £ £ Cash flows from operating activities Profit for the financial period 2,484,562 3,908,411 1,261,368 Adjustments for: Net investment portfolio gains (2,455,341) (3,137,000) (920,159) Tax charge for the current period 4,300 61,338 18,499 Decrease in debtors 92,786 56,764 38,135 Increase in creditors and accruals 20,063 4,341 12,110 Net cash inflow from operations 146,370 893,854 409,953 Corporation tax paid                                    -   (50,401)                                    -   Net cash inflow from operating activities 146,370 843,453 409,953 Cash flows from investing activities Purchase of investments 9 (1,816,853) (2,898,440) (1,746,680) Disposal of investments 9                     5,305,863                         2,934,649                     1,636,573 Net cash inflow/(outflow) from investing activities                     3,489,010                               36,209 (110,107) Cash flows from financing activities Dividends paid 8 (7,274,089) (2,459,246)                                    -   Dividends refunded 8 - 10,297 - Purchase of own shares (377,485) (327,702)                                    -   Net cash (outflow)/no change from financing activities (7,651,574) (2,776,651)                                    -   Net (decrease)/increase in cash and cash equivalents (4,016,194) (1,896,989) 299,846 Cash and cash equivalents at start of period 18,662,785 20,559,774 20,559,774 Cash and cash equivalents at end of period 14,646,591 18,662,785 20,859,620 Cash and cash equivalents comprise: Cash at bank and in hand 10 2,738,290 2,545,484 3,202,319 Cash equivalents 10 11,908,301 16,117,301 17,657,301 The notes to the unaudited financial statements within the Half Year Report to 30 September 2019 form part of these unaudited Half-Year Financial Statements.
Notes to the Unaudited Condensed Financial Statements 1. Company information Mobeus Income and Growth 2 VCT plc is a public limited company incorporated in England, registration number 03946235. The registered office is 30 Haymarket, London, SW1Y 4EX. 2. Basis of preparation These Financial Statements are prepared in accordance with accounting policies consistent with Financial Reporting Standard 102 ("FRS 102"), Financial Reporting Standard 104 ("FRS 104") - 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 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 Year ended Six months ended 30 September 2019 31 March 2019 30 September 2018 (unaudited) (audited) (unaudited) Income from investments £ £ £ Dividends                          11,247                               512,578                            264,940 Money-market funds                          59,442                               108,759                              46,871 Loan stock interest                        682,959                           1,521,722                            712,798 Bank deposit interest                            9,547                                 13,644                                 6,473 Interest on preference dividends                                   -                                   31,481                              12,786 Other income                                   -                                     1,390                                        -   Total Income                        763,195                           2,189,574                         1,043,868 5. Investment Adviser's fees and performance fees Investment Adviser's fees 25% of the Investment Adviser's fees are charged to the revenue column of the Income Statement, while 75% is charged against the capital column of the Income Statement. This is in line with the Board's expected long-term split of returns from the investment portfolio of the Company. 100% of any performance incentive fee payable for the year is charged against the capital column of the Income Statement. This is because although the incentive fee is linked to an annual dividend target, it is ultimately based upon the achievement of capital growth. Performance fees Performance incentive agreement New Ordinary and former C share fund shares Basis of Calculation The performance incentive fee payable is calculated as an amount equivalent to 20 per cent of the excess of a "Target rate" comprising:- i) an annual dividend target (indexed each year for RPI), and ii) a requirement that any cumulative shortfalls below the annual dividend target must be made up in later years. Any excess is not carried forward, whether a fee is payable for that year or not. Payment of a fee is also conditional upon the average Net Asset Value ("NAV") per share for each such year equalling or exceeding the average "Base NAV" per share for the same year. Base NAV commenced at £1 per share when C fund shares were first issued in 2005, which is adjusted for subsequent shares issued and bought back. Any performance fee will be payable annually. It will be reduced to the proportion which the number of "Incentive Fee Shares" represent of the total number of shares in issue at any calculation date. Incentive Fees Shares are the only shares upon which an incentive fee is payable. They will be the number of C fund shares in issue just before the Merger of the two former share classes on 10 September 2010, (which subsequently became Ordinary shares) plus Ordinary shares issued under new fundraisings since the Merger. This total is then reduced by an estimated proportion of the shares bought back by the Company since the Merger, that are attributable to the Incentive Fee Shares. There has been no performance incentive fee accrued for the current period. Six months ended 30 September 2019 Year ended 31 March 2019 Six months ended 30 September 2018 (unaudited) (audited) (unaudited) £ £ £ Mobeus Equity Partners LLP Investment Adviser's fees 556,974 1,036,103 513,076                              -   Total                       556,974          1,036,103                       513,076 6. Taxation There is a tax charge for the period as the Company has taxable income in excess of deductible expenses. Six months ended 30 September 2019 Year ended 31 March 2019 Six months ended 30 September 2019 (unaudited) (audited) (unaudited) Revenue Capital Total Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ £ £ £ a)  Analysis of tax charge: UK Corporation tax on profits for the period 83,669 (79,369) 4,300 208,983 (147,645) 61,338 91,612 (73,113) 18,499 Total current tax charge 83,669 (79,369) 4,300 208,983 (147,645) 61,338 91,612 (73,113) 18,499 Corporation tax is based on a rate of 19% (2018: 19%) b) Profit on ordinary activities before tax 451,252 2,037,610 2,488,862 1,609,826 2,359,923 3,969,749 744,515 535,352 1,279,867 Profit on ordinary activities multiplied by small company rate of corporation tax in the UK of 19% (2018: 19%) 85,738 387,146 472,884 305,867 448,385 754,252 141,458 101,717 243,175 Effect of: UK dividends (2,137) - (2,137) (97,390) - (97,390) (50,338) - (50,338) Net investment portfolio gains not taxable - (466,515) (466,515) - (596,030) (596,030) - (174,830) (174,830) Unrelieved expenditure 68 68 518 518 492 - 492 Over provision in prior period - - (12) - (12) - - - Actual tax charge 83,669 (79,369) 4,300 208,983 (147,645) 61,338 91,612 (73,113) 18,499 7. Basic and diluted earnings per share Six months ended 30 September 2019 Year ended 31 March 2019 Six months ended 30 September 2018 (unaudited) (audited) (unaudited) £ £ £ Total earnings after taxation: 2,484,562 3,908,411 1,261,368 Basic and diluted earnings per share (note a) 5.10p 7.93p 2.56p Net revenue from ordinary activities after taxation 367,583 1,400,843 652,903 Basic and diluted revenue earnings per share (note b) 0.75p 2.84p 1.32p Net investment portfolio gains 2,455,341 3,137,000 920,159 Capital expenses (net of taxation) (338,362) (629,432) (311,694) Total capital return 2,116,979 2,507,568 608,465 Basic and diluted capital earnings per share (note c) 4.35p 5.09p 1.24p Weighted average number of shares in issue in the period                 48,686,770                 49,247,849                    49,304,159 Notes a) Basic and diluted earnings per share is total earnings after taxation divided by the weighted average number of shares in issue. b) Basic and diluted revenue earnings per share is revenue earnings after taxation divided by the weighted average number of shares in issue. c) Basic and diluted capital earnings per share is total capital earnings divided by the weighted average number of shares in issue. 8. Dividends paid Dividend Type For year ended 31 March Pence per share Date Paid Six months ended 30 September 2019  £  Year ended 31 March 2019                £ Six months ended 30 September 2018               £ Interim Income 2019 2.50p 22/03/2019                           -             1,229,623 -  Interim Capital 2019 2.50p 22/03/2019                           -             1,229,623 -  Interim Capital* 2020 15.00p 20/09/2019                7,274,089 - -  Dividends paid in previous years not claimed within the statutory period (10,297) -                      7,274,089              2,448,949                                   -   *7.00 pence of this dividend was paid out of the Company's special distributable reserve.

	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. 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 the 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 true value of money, may be recognised through the Income Statement. In other cases, the proceeds will only be recognised once the right to receive payment is established and there is no reasonable doubt that payment will be received.
			Unquoted investments are stated at fair value by the Directors at each measurement date in accordance with appropriate valuation techniques, which are consistent with the IPEV guidelines:-
			(i)  Each investment is considered as a whole on a 'unit of account' basis, i.e. that the value of each portfolio company is considered as a whole, alongside consideration of:-
			The price of new investments made, if deemed to be made as part of an orderly transaction, are considered to be at fair value at the date of the transaction. The inputs that derived the investment price are calibrated within individual valuation models and at subsequent measurement dates, are reconsidered for any changes in light of more recent events or changes in the market performance of the investee company. The valuation bases used are the following:
			- a multiple basis. The shares may be valued by applying a suitable price-earnings ratio, revenue or gross profit multiple to that company's historic, current or forecast pre-tax earnings before interest and amortisation, or revenue, or gross profit (the ratio used being based on a comparable sector but the resulting value being adjusted to reflect points of difference identified by the Investment Adviser compared to the sector including, inter alia, a lack of marketability).
			or:-
			-  where a company's underperformance against plan indicates a diminution in the value of the investment, provision against 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 or realisation proceeds basis may be applied.
			Capital gains and losses on investments, whether realised or unrealised, are dealt with in the profit and loss and revaluation reserves and movements in the period are shown in the Income Statement.
			All investments are initially recognised and subsequently measured at fair value. Changes in fair value are recognised in the Income Statement.
			A key judgement made in applying the above accounting policy relates to investments that are permanently impaired. Where the value of an investment has fallen permanently below 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.
			Accounting standards classify methods of fair value measurement as Levels 1, 2 and 3. This hierarchy is based upon the reliability of information used to determine the valuation. All of the unquoted investments are Level 3, i.e. fair value is measured using techniques using inputs that are not based on observable market data.
			Movements in investments during the year are summarised as follows:
					Unquoted	Unquoted	Unquoted	Total
					Equity	Preference	Loan
					shares	shares	stock
					Level 3	Level 3	Level 3	£
					£	£	£
			Cost at 31 March 2019		13,750,498	22,095	14,941,143	28,713,736
			Unrealised gains at 31 March 2019		3,641,210	228,893	487,204	4,357,307
			Permanent impairment at 31 March 2019		(2,873,120)	-	(158,710)	(3,031,830)
			Valuation at 31 March 2019		14,518,588	250,988	15,269,637	30,039,213
			Purchases at cost		1,816,853	-	-	1,816,853
			Sale proceeds		(2,976,102)	(231,945)	(2,097,816)	(5,305,863)
			Net investment portfolio gains		2,496,783	-	(41,442)	2,455,341
			Valuation at 30 September 2019		15,856,122	19,043	13,130,379	29,005,544
			Book cost at 30 September 2019		13,326,646	21,710	13,221,318	26,569,674
			Unrealised gains at 30 September 2019		3,690,996	(2,667)	67,771	3,756,100
			Permanent impairment at 30 September 2019		(1,161,520)	-	(158,710)	(1,320,230)
			Valuation at 30 September 2019		15,856,122	19,043	13,130,379	29,005,544
			Net unrealised gains at 1 April 2019		768,090	228,893	328,494	1,325,477
			Net movement in unrealised appreciation in the period		1,535,005	-	(41,441)	1,493,564
			Reversal of permanent impairments in the period		1,711,600	-	-	1,711,600
			Realisation of previously unrealised losses/(gains)		(1,485,219)	(231,560)	(377,992)	(2,094,771)
			Gains/(losses) on investments at 30 September 2019		2,529,476	(2,667)	(90,939)	2,435,870
			There has been no significant change in the risk analysis as disclosed in note 15 of the Financial Statements in the Company's Annual Report.
			The decrease in unrealised valuations of the loan stock investments above reflects 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.
			Level 3 unquoted equity and loan investments are valued in accordance with IPEV guidelines as follows:
					As at		As at		As at
					30 September 2019 (Unaudited)		31 March 2019 (Audited)		30 September 2018 (Unaudited)
					£		£		£
			Investment methodology
			Multiple of earnings, revenues or gross margin, as appropriate		28,530,939		29,010,112		22,038,859
			Estimated realisation proceeds		383,005		467,191		-
			Net asset value		91,600		91,600		91,600
			Recent investment price (reviewed for impairment)		-		192,360		252,168
			Recent investment price		-		277,950		5,541,508
					29,005,544		30,039,213		27,924,135
	10.		Current asset investments and cash at bank
					as at		as at		as at
					30 September 2019		31 March 2019		30 September 2018
					(unaudited)		(audited)		(unaudited)
					£		£		£
			OEIC Money market funds		11,908,301		16,117,301		17,657,301
			Current asset investments and Cash equivalents per Unaudited Condensed Statements of Cashflows		11,908,301		16,117,301		17,657,301
			Cash at bank		2,738,290		2,545,484		3,202,319
	11.		Net asset value per share		As at  30 September 2019			As at                                     31 March 2019			As at                                30 September 2018
					(unaudited)			(audited)			(unaudited)
			Net assets		£43,408,579			£48,729,957			£48,859,565
			Number of shares in issue		48,312,254			48,925,130			49,304,159
			Net asset value per share (pence)		89.85 p			99.60 p			99.10 p
	12.		Post Balance Sheet Events
			On 1 November 2019, a new investment of £0.94 million was made into Data Discovery Solutions Limited (trading as Active Navigation).
			On 5 November 2019, all of the Company's Share Premium account and Capital Redemption reserve totalling £30,602,567 was cancelled and transferred to the Special Distributable reserve. The purpose of this reserve is to fund market purchases of the Company's own shares as and when it is considered by the Board to be in the interests of the shareholders, to write-off existing and future losses as the Company must take into account capital losses in determining distributable reserves, and for other corporate purposes.
	13.		Financial statements for the six months ended 30 September 2019
			The financial information set out in this half-year financial report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The information for the year ended 31 March 2019 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The auditors have reported on these financial statements and that report was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
	14.		Half-Year Report
		Copies of this statement are being sent to all Shareholders. Further copies are available free of charge from the Company's registered office, 30 Haymarket, London, SW1Y 4EX, or can be downloaded via the Company's website at www.mig2vct.co.uk.

 

END

 

 

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