Interim / Quarterly Report • Mar 31, 2011
Interim / Quarterly Report
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for the six months ended 31 March 2011
www.incomeandgrowthvct.co.uk
The objective of The Income & Growth VCT plc ("I&G VCT" or "the Company") is to provide investors with an attractive return, by maximising the stream of dividend distributions from the income and capital gains generated by a diverse and carefully selected portfolio of investments.
The Company invests in companies at various stages of development. In some instances this may include investments in new and secondary issues of companies which may already be quoted on the Alternative Investment Market ("AiM") or PLUS.
| Financial Highlights | 1 |
|---|---|
| Chairman's Statement | 3 |
| Principal Risks and Uncertainties, Responsibility Statement, Cautionary Statement |
6 |
| Investment Policy | 7 |
| Investment Portfolio Summary | 8 |
| Investment Manager's Review | 10 |
| Unaudited Financial Statements | 12 |
| Notes to the Unaudited Financial Statements | 18 |
| Corporate Information | 25 |
Six months to 31 March 2011
Strong liquidity has been further enhanced by a successful fundraising in which the Company raised an additional £5.1 million.
Dividends totalling 4.0* pence per share have been paid to shareholders during the period.
ÁIncrease of 9.1% in total return (share price basis) to Shareholders
ÁIncrease of 5.1% in total return (net asset value (NAV) basis) to Shareholders * 6 months ended 31 March 2010: 0.5p Ordinary; 2p former 'O' fund. Year ended 30 September 2010: 0.5 Ordinary; 2p former 'O' fund.
The former 'O' Share Fund was merged into the 'S' Share Fund (which subsequently became the current Ordinary Share Fund) on 29 March 2010. The ratio used for the conversion of former 'O' Shares into new Ordinary Shares was approximately 0.758. All the issued and unissued former 'S' Shares were subsequently redesignated as Ordinary Shares on a 1 for 1 basis.
To help shareholders in each former share class understand the trend in performance of their investment, comparative data for each former share class is shown below:-
| Net assets (£m) |
NAV per Share (p) |
Cumulative dividends paid per share (p) |
Total return (NAV basis) to shareholders since launch per Share (p) |
Share price2 (p) |
Total return (share price basis) to shareholders (p) |
|
|---|---|---|---|---|---|---|
| Ordinary Shares raised 2007/08 As at 31 March 2011 As at 30 September 2010 As at 30 September 2009 As at 30 September 2008 At close of Offer for subscription |
39.5 36.6 11.0 11.2 11.2 |
100.1 99.0 93.2 94.6 94.5 |
4.5 0.5 0.0 0.0 0.0 |
104.6 99.5 93.2 94.6 94.5 |
91.0 87.0 94.5 100.0 100.0 |
95.5 87.5 94.5 100.0 100.0 |
| Net assets (£m) |
NAV per Share (p) |
Cumulative dividends paid per share (p) |
Total return (NAV basis) to shareholders since launch per Share (p) |
Share price2 (p) |
Total return (share price basis) to shareholders (p) |
|
|---|---|---|---|---|---|---|
| Former 'O' Share Fund raised 2000/01 |
||||||
| As at 31 March 20111 As at 30 September 20101 As at 30 September 2009 As at 30 September 2008 |
– – 24.9 29.6 |
75.9 75.0 71.5 83.6 |
25.5 22.5 20.5 16.5 |
101.4 97.5 92.0 100.0 |
– – 54.8 79.5 |
– – 75.2 96.0 |
1 The data for periods since 31 March 2010 for the former 'O' Share Fund shows the return on an initial subscription price of 100p at the date of inception of each Fund taken, from the tables on page 2 divided by £10,000
2 Source: London Stock Exchange.
Six months to 31 March 2011
The tables below show the total returns (NAV basis) at 31 March 2011 for a shareholder in each original class that invested £10,000 at £1 a share at each Fund's inception.
| Fund | Original Investment (10,000 shares at £1 each) (£) |
Number of shares held post-merger |
NAV at 31 March 2011 (£) |
Dividends paid to shareholders since subscription (£) |
Total return (NAV basis) to shareholders since subscription (£) |
Profit before income tax relief1 (£) |
|---|---|---|---|---|---|---|
| Ordinary Share Fund 2007/082 Former 'O' Share Fund 2000/2001 |
10,000 10,000 |
10,000 7,578 |
10,010 7,586 |
450 2,548 |
10,460 10,134 |
460 134 |
1 Total return (NAV basis) minus initial investment cost (before applicable income tax relief)
2 Formerly, the 'S' Share Fund
| Fund | Original Investment (10,000 shares at £1 each) (£) |
Number of shares held post- merger |
Rate of income tax relief % |
Cost net of income tax relief (£) |
NAV at 31 March 2011 (£) |
Dividends paid to shareholders since subscription (£) |
Total return (NAV basis) to shareholders since subscription (£) |
Profit after income tax relief1 (£) |
|---|---|---|---|---|---|---|---|---|
| Ordinary Share Fund 2007/082 Former 'O' Share Fund 2000/2001 |
10,000 10,000 |
10,000 7,578 |
30% 20%3 |
7,000 8,000 |
10,010 7,586 |
450 2,548 |
10,460 10,134 |
3,460 2,134 |
1 Total return (NAV basis) minus initial investment cost net of income tax relief
2 Formerly, the 'S' Share Fund
3 Additional capital gains tax deferral relief of up to £4,000 available to qualifying shareholders
I am pleased to present the Company's Half-Year Report for the six months ended 31 March 2011.
The last six months have again been dominated by the continuing problems in the UK and wider global economies. Nevertheless, there are now faint signs that as the UK's economic indicators improve, albeit slightly, confidence may be returning slowly with analysts predicting that the Bank of England may towards the end of 2011 turn its focus towards controlling inflation and raise interest rates.
Many of the companies in the portfolio continue to make good progress in spite of the challenging conditions that have prevailed in recent months. The Board has been supportive of the Manager's selective approach to investing at a low point in the economy.
A Joint Offer for Subscription was launched on 12 November 2010 to raise £21 million across three Matrix VCTs of which the Company was one. To date the Company has raised a highly encouraging £5.2 million gross. The Offer will remain open until 30 June 2011.
As at 31 March 2011 the Company's NAV per Ordinary Share was 100.1 pence (30 September 2010: 99.0 pence); adjusted for dividends paid to Shareholders during this six month period this represents an increase of 5.1%.
Cumulative dividends per share paid to date amount to 4.5 pence (pre-merger: 0.5 pence; post-merger: 4.0 pence) for the current share class (former 'S' Shares) and 25.5 pence (premerger: 22.5 pence; post merger equivalent 3.0 pence) for the former 'O' Shares.
The MPEP invested portfolio overall has had an encouraging period and the valuation is up £1.5 million, with Blaze Signs Holdings seeing the greatest improvement of £987,073.
Four new investments have been completed since the end of October 2010. First, in October the Company, through its acquisition vehicle Aust, invested £1.4 million to support the MBO of RDL Recruitment Corporation, a European recruitment provider within the pharmaceutical, business intelligence and IT sectors. In December 2010 the Company invested £487,744 to support the MBO of Faversham House Group Limited, a broadly based publishing business. Also in December, the Company invested £279,997 into the AiM-listed company Omega Diagnostics Group plc, which operates in the healthcare sector. Finally, again in December, the Company, using its acquisition vehicle, Apricot Trading, invested in Automated Systems Group plc, a Cambridge based printer and copier services business. The Company's investment in this company, which changed its name to ASL Technology Holdings Limited, stood at £1.2 million on conclusion of the transaction. In March, I&G VCT invested a further £575,884 (including a commitment to invest £419,667), to assist ASL in funding the acquisition of Transcribe Copier Systems Limited, a complementary printer and copier services business.
This six month period has also seen two of our investments demerge. In November 2010 Camwood completed the demerger of its AppDNA business. Following the demerger, I&G VCT had an investment in each of Camwood Enterprises Limited and AppDNA Limited comprising a 31.5% equity stake and a secured loan of £333,333 (half of which has since been repaid). Both companies are leading specialists in Application Migration SoftwareTM. In March 2011, VSI also completed the demerger of its two operating subsidiary companies creating two separate companies, namely MachineWorks Software Limited and LightWorks Software Limited. Following the repayment of the VSI secured loan (which was transferred to MachineWorks on the demerger) in April 2011, I&G VCT now has a 9.2% equity stake in both companies.
There have been three realisations during the period under review. In January 2011 I&G VCT realised its entire investment in Campden Media for a cash consideration of £287,239, compared to the year-end valuation of £125,921. Together with interest paid over the life of the investment the total cash return was marginally above cost. In February 2011, the Company also realised its remaining investment in HWA Group. The total cash return over the life of this investment was £5,070,682, compared to the £1,422,320 originally invested. The Company sold a total of 220,000 shares in Tikit Group during the six months to 31 March 2011 realising total net proceeds of £488,536 compared to a year-end valuation of £424,600. It has sold a further 50,000 Tikit shares since the period-end realising
total net proceeds of £136,949 compared to the valuation at 31 March 2011 of £128,500. I&G VCT continues to retain a residual holding in this company.
Very encouragingly during this six month period the Company has received a total of £1.9 million in loan stock repayments. This suggests that many of the Company's investments are maturing and continuing to trade well. In October 2010 ATG Media made a partial repayment of £111,111 and in the following month DCG Group repaid its outstanding loan in full remitting £204,772 to the Company. In the same month Westway made a further repayment of £99,681. Then, in February 2011, Iglu.com repaid its loan stock in full realising £997,675 for the Company. In March 2011, Vectair paid off its loan in full by remitting £195,017 to I&G VCT. Camwood Enterprises and AppDNA both made repayments in March of £166,667 per company and Camwood Enterprises has settled its loan in full since the period-end by making a further repayment of £166,667.
Just after the period-end in April 2011, MachineWorks made a payment of £255,818 in full settlement of its loan.
In contrast, Monsal Holdings experienced some contract delays and additional costs during recent months which have caused this investment to require further funds. These new funds will have more attractive terms, at the expense of the existing investment and consequently, the Manager has advised the Board that the fair value of the Company's existing investment should, for the time being, be reduced to nil. The Board has accepted this advice, but remains hopeful that value can be still be realised in the future. It has agreed to participate in this further funding.
The valuation of Image Source has also reduced, as this company has suffered from a downturn in trading.
Generally, the ex Foresight portfolio continues to find these economic trading conditions difficult. The exceptions to this are AppDNA and Camwood Enterprises which are trading strongly and are valued at some £1.4 million and £0.9 million above cost respectively.
During this economic downturn, both the Board and the Manager have continued to work to ensure that the Company's cash deposits continue to remain as secure as possible. We have for some time been spreading cash deposits between a number of the leading global cash funds rather than depositing directly to individual banks, thereby reducing our exposure to any one particular bank. The Board and Manager both continue to believe strongly that at this time the security and protection of the Company's capital is more important than striving for a small increase in deposit rates at the cost of much higher risk.
Cash and liquidity fund balances as at 31 March 2011 amounted to £9.3 million. In addition, a further £5.0 million has been invested into a series of acquisition vehicles pending further investment. As at the date of this Report, cash and liquidity fund balances had increased to £5.1 million as a result of the subscriptions under the Joint Offer.
Pleasingly, the revenue account has shown a substantial improvement, achieving a profit this half-year of £231,868 (2010: loss of £173,592). This improvement is mainly due to a rise in loan stock income and dividends, and to reductions in costs. I&G VCT has benefited from an increase of £286,705 in loan stock interest. At the same time dividends from investee companies have nearly doubled from £33,742 to £66,346.
Investment management fees have fallen by £18,428 (after adjusting for the treatment of costs previously treated as administrative) primarily due to a slight fall in net assets under management during the period. Last year's other expenses have reduced by £88,512, principally because last year's figure included the costs of merging the 'O' and 'S' Share funds.
An interim capital dividend in respect of the year ended 30 September 2010 of 2 pence per share was announced on 4 November 2010. The dividend was paid, to Shareholders on the Register on 28 January 2011, on 22 February 2011. The Company's Dividend Investment Scheme applied to this dividend and 288 Shareholders, who between them held a total of 2,276,359 representing 5.9% of the Company, were issued 52,473 Shares at an issue price of 86.70 pence per share.
A final capital dividend of 2 pence per new share was recommended to Shareholders at the Annual General Meeting of the Company held on 16 February 2011. This Resolution was passed for payment to Shareholders on the register on 4 March 2011 on 28 March 2011. The Company's Dividend Investment Scheme also applied to this dividend and 419 Shareholders, who between them held a total of 3,590,904 Shares representing 9.36% of the Company, were issued 78,840 Shares on 29 March 2011 at an issue price of 91.0 pence per share.
The issue price used for both dividends above was equal to the average of the middle market price for the Shares taken from the London Stock Exchange Daily Official List for the five business days immediately preceding the payment date.
During the period ended 31 March 2011 the Company bought back 904,909 Shares (representing 2.45% of the Shares in issue at the beginning of the year) at a total cost of £805,142 (inclusive of expenses). These shares were subsequently cancelled by the Company.
The Board regularly reviews its buyback policy and its current intention, given the less volatile outlook for the valuation of the portfolio, is to continue with its existing buy-back policy with the objective of maintaining the discount to NAV at which the Company's Shares trade at 10% or less. At 26 May 2011, the mid-market price for the Company's Shares was 89.5 pence, representing a discount of 10.6% to the NAV prevailing at 31 March 2011.
May I remind you that the Company continues to have its own website which is available at www.incomeandgrowthvct.co.uk.
The Investment Manager held a successful and well attended Shareholder workshop in December 2010 and intends to hold a similar event in late 2011.
The uncertain times continue in the economic arena. After months of negotiation, Portugal finally admitted defeat by asking its European partners to bail it out via the Eurozone's stabilisation mechanism. It is not entirely clear whether this will be the last member of the 'club' to have to seek assistance or whether those nations having taken a bail-out will be able to repay their debts when they become due. Nevertheless within the UK, the events in Portugal have strengthened the arguments for the measures currently undertaken by the Chancellor.
Against this economic backdrop a more encouraging picture is being seen in the UK by the many individual companies that are producing better than expected results, although overall economic growth is expected to be slow by comparison with their US and German counterparts.
As a result of this scenario, the Company has continued to retain a significant cash position. Moreover, the recent fundraising will place the Company in an excellent position to take advantage of what are expected to be increasingly attractive purchase opportunities which should become available as and when the economy climbs out of recession. Therefore, your Board still expects to see attractive investment opportunities and is confident of a continued recovery in performance and portfolio values over the longer term.
The current level of interest rates in the United Kingdom means that it may still to be difficult for the Company to pay a dividend from revenue in the forthcoming year, although some encouragement can be gained from the higher loan interest payments received by the Company in the current period being reported upon. The market view is that interest rates are not expected to rise from this level until the end of 2011. However, the most recent UK economic figures suggest that even this may be optimistic. Nevertheless, the Board remains firmly committed to providing an attractive dividend stream to shareholders.
Once again, I would like to take this opportunity to thank Shareholders for their continued support.
Colin Hook Chairman 26 May 2011
In accordance with Disclosure and Transparency Rule (DTR) 4.2.7, the Board confirms that the principal risks and uncertainties facing the Company have not materially changed since the publication of the Annual Report and Accounts for the year ended 30 September 2010. The Board acknowledges that there is regulatory risk and continues to manage the Company's affairs in such a manner as to comply with section 274 Income Tax Act 2007. The principal risks faced by the Company are:
A more detailed explanation of these risks can be found in the Directors' Report on pages 29 – 30 and in Note 20 on pages 71 - 77 of the Annual Report and Accounts for the year ended 30 September 2010 copies of which are available on the VCT's website: www.incomeandgrowthvct.co.uk.
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.
In accordance with DTR 4.2.10 the Directors confirm that to the best of their knowledge:
On behalf of the Board
Colin Hook Chairman
26 May 2011
The Company's policy is to invest primarily in a diverse portfolio of UK unquoted companies. Investments are structured as part loan and part equity in order to receive regular income and to generate capital gains from trade sales and flotations of investee companies.
Investments are made selectively across a number of sectors, primarily in management buyout transactions (MBOs) i.e. to support incumbent management teams in acquiring the business they manage but do not yet own. Investments are primarily made in companies that are established and profitable.
The Company has a small legacy portfolio of investments in companies from its period prior to 30 September 2008, when it was a multi-manager VCT. This includes investments in early stage and technology companies and in companies quoted on the AiM or PLUS.
Uninvested funds are held in cash and lower risk money market funds.
The companies in which investments are made must have no more than £15 million, in the case of funds raised under the original prospectus in 2000/01, and £7 million, in the case of funds raised after 6 April 2006, (including the former 'S' Share Fund raised in 2007/08) of gross assets at the time of investment to be classed as a VCT qualifying holding.
The investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HM Revenue & Customs ("HMRC"). Amongst other conditions, the Company may not invest more than 15% of its investments in a single company and must have at least 70% by value of its investments throughout the period in shares or securities comprised in VCT qualifying holdings, of which a minimum overall of 30% by value must be in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules). In addition, although the Company can invest less than 30% of an investment in a specific company in ordinary shares it must have at least 10% by value of its total investments in each VCT qualifying company in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules).
The VCT regulations in respect of funds raised after 6 April 2011 will change, such that 70% of such funds must be invested in equity.
The Company initially holds its funds in a portfolio of readily realisable interest-bearing investments and deposits. The investment portfolio of qualifying investments is built up over a three year period with the aim of investing and maintaining at least 70% of net funds raised in qualifying investments.
Risk is spread by investing in a number of different businesses across different industry sectors. To reduce the risk of high exposure to equities, each qualifying investment is structured to maximise the amount which may be invested in loan stock. Initial investments in VCT qualifying companies are generally made in amounts ranging from £200,000 to £1 million at cost. No holding in any one company will represent more than 10% of the value of the Company's investments at the time of investment. Ongoing monitoring of each investment is carried out by the Investment Manager, generally through taking a seat on the board of each VCT qualifying company.
The Company aims to invest in larger, more mature unquoted companies through investing alongside the three other VCTs advised by the Investment Manager with a similar investment policy. This enables the Company to participate in combined investments advised on by the Investment Manager of up to £5 million.
as at 31 March 2011
| Total cost at 31 March 2011 (unaudited) |
Valuation at 30 September 2010 (audited) |
Additional Investments in the period |
Valuation at 31 March 2011 (unaudited) |
|
|---|---|---|---|---|
| £ | £ | £ | £ | |
| Amaldis (2008) Limited (Original Additions) Manufacturer and distributor of beauty products |
80,313 | 1,965,586 | – | 1,996,026 |
| AppDNA Limited1 Provider of software repackaging services |
347,4241 | 1,091,3461 | – | 1,795,640 |
| IDOX plc Provider of document storage systems |
872,625 | 939,167 | – | 1,449,583 |
| Aust Recruitment Group Limited (formerly Aust Construction Investors Limited) Recruitment consultants for the pharmaceutical, business intelligence and IT industries |
1,441,667 | 1,000,000 | 441,667 | 1,441,667 |
| ASL Technology Holdings Limited (formerly Apricot Trading Limited) Printer and photocopier services |
1,350,123 | 1,000,000 | 350,123 | 1,350,123 |
| ATG Media Holdings Limited Publisher and online auction platform operator |
888,889 | 1,377,208 | – | 1,268,851 |
| Blaze Signs Holdings Limited Manufacturer and installer of signs |
1,338,500 | 242,090 | – | 1,229,163 |
| CB Imports Group Limited (Country Baskets) Importer and distributor of artificial flowers, floral sundries and home decÓr products |
1,000,000 | 1,199,310 | – | 1,221,310 |
| Camwood Enterprises Limited1 Provider of software repackaging services |
347,4241 | 1,091,3461 | – | 1,209,722 |
| DiGiCo Europe Limited Designer and manufacturer of audio mixing desks |
325,594 | 1,201,553 | – | 1,192,759 |
| Westway Cooling Services Holdings (2010) Limited (formerly MC440 Limited) Installation, service and maintenance of air conditioning systems |
353,589 | 884,557 | _ | 1,127,282 |
| Backbarrow Limited Company seeking to invest in food manufacturing, distribution and brand management services |
1,000,000 | 1,000,000 | – | 1,000,000 |
| Bladon Castle Management Limited Company seeking to invest in the brand management, consumer products and retail sectors |
1,000,000 | 1,000,000 | – | 1,000,000 |
| Fullfield Limited Company seeking to invest in food manufacturing, distribution and brand management services |
1,000,000 | 1,000,000 | – | 1,000,000 |
| Rusland Management Limited Company seeking to invest in brand management, consumer products and retail sectors |
1,000,000 | 1,000,000 | – | 1,000,000 |
| Torvar Limited Company seeking to invest in database management, mapping, data mapping and management services to legal and building industries |
1,000,000 | 1,000,000 | – | 1,000,000 |
| Iglu.com Holidays Limited Online ski and cruise travel agent |
152,326 | 1,616,116 | – | 867,323 |
| British International Holdings Limited Helicopter service operator |
590,909 | 796,381 | – | 828,512 |
| Focus Pharma Holdings Limited Licensor and distributor of generic pharmaceuticals |
516,900 | 707,569 | – | 795,638 |
| Youngman Group Limited Manufacturer of ladders and access towers |
1,000,052 | 700,992 | _ | 700,992 |
| Machineworks Software Limited2 Software for CAM and machine tool vendors |
225,1252 | 511,7612 | _ | 688,799 |
| Brookerpaks Limited Importer and distributor of garlic and vacuum-packed vegetables |
55,000 | 498,095 | – | 603,296 |
| Tikit Group plc Provider of consultancy services and software solutions for law firms |
247,000 | 839,129 | – | 551,990 |
| Total cost at 31 March 2011 (unaudited) |
Valuation at 30 September 2010 (audited) |
Additional Investments in the period |
Valuation at 31 March 2011 (unaudited) |
|
|---|---|---|---|---|
| £ | £ | £ | £ | |
| Duncary 8 Limited Technical training business |
634,923 | 683,746 | _ | 515,015 |
| Faversham House Publisher, exhibition organiser and operator of websites for the environmental, visual communications and building services sectors |
487,744 | – | 487,744 | 487,744 |
| Image Source Group Limited Royalty free picture library |
305,000 | 1,399,114 | – | 474,770 |
| Omega Diagnostics Group plc In-vitro diagnostics for food intolerance, autoimmune diseases and infectous diseases |
279,996 | – | 279,997 | 338,239 |
| Racoon International Holdings Limited Supplier of hair extensions, hair care products and training |
550,852 | 243,664 | – | 246,970 |
| Biomer Technology Limited Developer of biomaterials for medical devices |
137,170 | 226,152 | – | 226,152 |
| Letraset Limited Manufacturer and distributor of graphic art products |
650,000 | 213,859 | – | 215,468 |
| Vectair Holdings Limited Designer and distributor of washroom products |
53,400 | 366,575 | – | 174,848 |
| NexxtDrive Limited Developer and exploiter of patented transmission technologies |
812,014 | 162,500 | _ | 162,500 |
| ANT plc Provider of embedded browser/email software for consumer electronics and internet appliances |
462,816 | 160,866 | – | 157,583 |
| The Plastic Surgeon Holdings Limited Supplier of snagging and finishing services to the property sector |
406,082 | 101,521 | – | 101,521 |
| Sarantel Group plc Developer and manufacturer of antennae for mobile phones and other wireless devices |
1,881,252 | 102,117 | – | 74,885 |
| Oxonica plc International nanomaterials group |
2,524,527 | – | – | 69,624 |
| Aquasium Technology Limited Design, manufacture and marketing of bespoke electron beam welding and vacuum furnace equipment |
700,000 | 396,581 | – | 68,576 |
| Lightworks Software Limited2 Software for CAD vendors |
20,4712 | 266,1772 | _ | 58,886 |
| Corero plc Provider of e-business technologies |
600,000 | 24,558 | – | 34,381 |
| Alaric Systems Limited Software development, implementation and support in the credit/debit card authorisation and payments market |
595,802 | 30,647 | – | 30,647 |
| Aigis Blast Protection Limited Specialist blast containment materials company |
272,120 | – | – | – |
| DCG Group Limited Design, supply and integration of data storage solutions |
83,324 | 181,771 | – | – |
| Legion Group plc Provider of manned guarding, mobile patrols and alarm response services |
150,000 | – | – | – |
| Monsal Holdings Limited Supplier of engineering services to water and waste sectors |
426,164 | 768,505 | – | – |
| PXP Holdings Limited (Pinewood Structures) Designer, manufacturer and supplier of timber frames for buildings |
920,176 | – | – | – |
| Campden Media Limited Magazine publisher and conference organiser |
– | 125,921 | – | – |
| Total | 29,087,293 | 28,116,479 | 1,559,531 | 28,756,485 |
1 On 23 November 2010, Camwood Limited undertook a demerger, such that I&G VCT now holds separate investments in AppDNA Limited and Camwood Enterprises Limited. As a result, the cost, and valuation as at 30 September 2010, of Camwood Limited has been split equally between AppDNA Limited and Camwood Enterprises Limited.
2 On 31 March 2011, VSI Limited undertook a demerger, such that I&G VCT now holds separate investments in Machineworks Software Limited and Lightworks Software Limited . As a result, the cost, and valuation as at 30 September 2010, of the ordinary and preference share investments in VSI Limited has been split equally between Machineworks Software Limited and Lightworks Software Limited. The former loan investment in VSI of £204,654 had been wholly transferred to Machineworks Software Limited, so this loan's cost, and value at 30 September 2010, has been specifically allocated to that new investment.
The six month period to 31 March 2011 has shown signs of improvement in our investment marketplace. As a result of this we have made four new investments in the first few months of the period. Whilst this recovery may as yet be uneven, we are increasingly confident that the UK economy is now robust enough to generate the right environment for attractively priced new investment opportunities. Portfolio boards are also becoming more confident in considering their strategy for the future development of their companies.
Our strategic response to the significant increase in deal flow is to focus on companies with strong and defensible market positions within their sectors, rather than targeting specific market sectors. However, we remain alert to the potential impact of cuts in public spending that are being implemented by the coalition government on the UK economy.
Four new investments have completed since the end of October, two of which used the existing acquisition vehicles Aust and Apricot.
In the first of these, in October the Company used its existing investment of £1 million in the acquisition vehicle, Aust, to support the MBO of RDL Recruitment Corporation, a European recruitment provider within the pharmaceutical, business intelligence and IT sectors based in London and Woking. The company, which employs 70 staff, was established in 1992. It sources staff for over 300 major companies, matching niche professionals with "hard to fill" contract assignments and staff positions. The VCT's total investment in this company, which changed its name to Aust Recruitment Group Limited following the MBO, now stands at £1.4 million.
Secondly, the VCT invested £487,744 in December to support the MBO of Faversham House Group Limited. Based in Croydon, this is an established media company providing magazines, exhibitions and online resources in the environment and sustainability, visual communications and building services sectors.
Again in December, the VCT invested £279,997 into the AiMlisted company Omega Diagnostics Group Plc. Based in Alva, Scotland this company provides high quality in vitro diagnostics products for use in hospitals, blood banks, clinics and laboratories in over 100 countries and specialises in the areas of food intolerance, autoimmune disease and infectious disease. The share price has moved up since investment, giving an early uplift from cost of £58,243 at the period end.
Finally, also in December, the VCT used its existing acquisition vehicle, Apricot Trading, to support the MBO of Automated Systems Group plc, a Cambridge-based printer and copier services business with a broad customer base of schools and SMEs. The VCT's total investment in this company, which changed its name to ASL Technology Holdings Limited, stands at £1.35 million following the MBO. The VCT made a follow-on investment of £575,884 to help fund the acquisition of Transcribe Copier Systems Limited (of which £419,667 is held in escrow pending finalisation of the second tranche of this additional investment until June 2011).
Our Operating Partner programme continues to pursue an active search for investment opportunities. The Company's five acquisition vehicles Backbarrow, Bladon Castle Management, Fullfield, Rusland Management and Torvar are all actively seeking suitable investment opportunities in a variety of sectors including food manufacturing, retailing, brand management, health and well-being and IT. So far they, have not found sufficiently attractive investment opportunities at the right price. Each of the acquisition vehicles is headed by an experienced Chairman, well-known to us, who is working closely with us in seeking to identify and complete investments in specific sectors relevant to their industry knowledge and experience.
We are pleased to report that a number of companies in the portfolio continue to be strongly cash generative. As a result of this the Company has received a total of £1.94 million in loan stock repayments during the six month period to 31 March 2011 (including any premiums paid). ATG Media made a partial repayment of £111,111 in October 2010. In November 2010, DCG Group repaid its outstanding loan in full remitting £204,772 to the Company and Westway made a further repayment of £99,681. Iglu.com repaid its loan stock in full in February 2011, realising £997,675 for the Company. It is particularly impressive that Iglu has generated further cash in the short time since investment in December 2009, making this prepayment possible. Vectair repaid its loan in full in March 2011 remitting £195,017 to the Company.Camwood Enterprises and App-DNA Group both repaid half of their secured loans in March, remitting equal payments of £166,667. In April 2011, Camwood Enterprises repaid its loan in full, by repaying the other £166,667.
Also in April 2011, MachineWorks Software made a payment of £255,818 in full settlement of its loan.
In January 2011 the Company realised its entire investment in Campden Media for a cash consideration of £287,239, compared to the previous quarter's valuation of £125,921. This represented 85.8% of the total investment cost of £334,880. Together with interest paid over the life of the investment the total cash return was £349,013, representing 104.2% of cost.
In February 2011, the Company realised its remaining investment in HWA Group Limited for a cash consideration. The total cash return over the life of this investment was £5,070,682, compared to amounts originally invested of £1,422,320, being 3.6 times cost.
The Company sold a total of 220,000 shares in Tikit Group during the six months to 31 March 2011 realising total net proceeds of £488,536. The shares were sold in two tranches in November 2010 and February 2011 at prices of £1.97 and £2.45 per share respectively, compared to an investment cost of £1.15 per share. A further 50,000 shares were sold after the period-end realising total net proceeds of £136,949 compared to the valuation at 31 March 2011 of £128,500. The VCT retains a residual holding in this company.
The portfolio as a whole continues to demonstrate resilience. The period has seen the demergers of the VCT's investments in Camwood and VSI. There have been some strong performances in the portfolio whilst other companies, mainly in the construction sector, are still contending with the worst effects of the downturn.
Camwood completed the demerger of its AppDNA business in November 2010. As a result of the demerger, the VCT has two identical investments in each of Camwood Enterprises and App-DNA Group comprising a 31.5% equity stake. (The original Camwood secured loan of £666,667 was initially divided equally between the two companies but has since been substantially repaid as referred to above. Both companies are leading specialists in Application Migration softwareTM. Camwood, trading as Camwood Consulting, provides IT consultancy services to blue chip customers and AppDNA sells its software via third party consultancies. The demerger has established AppDNA as an independent business.
Just before the end of the period in March 2011, VSI also completed the demerger of its two operating subsidiary companies, creating two separate investee companies for the VCT, MachineWorks Software Limited and LightWorks Software Limited. The original VSI loan, which was transferred to MachineWorks on the demerger, was repaid by this company shortly after the period-end leaving the VCT with separate investments in each of these companies of £20,471. The demerger should enhance the prospects of both companies.
The three investments made during 2009 into Westway, CB Imports Group and Iglu.com Holidays are all now valued above cost as a result of out performance of their investment plans. Vectair continues to make good progress in the US market. Focus Pharma continues to trade well, although it ended its financial year slightly behind a stretching budget. It expects to progress further with several new product launches due during 2011. Amaldis has recorded increased profitability, as has British International, and Blaze Signs has also recovered strongly in recent months. Youngman has also returned to profitability after a prolonged period of slow trading.
Recovery in the construction and house building sectors remains fragile and this continues to affect the performance of PXP and Plastic Surgeon. Monsal is currently trading well behind budget reflecting ongoing project delays. As reported in the Chairman's Statement, the Manager has assessed that the pending round of additional funding that Monsal requires (which your Company intends to participate in), is likely to have priority over the existing investment. Accordingly, we have advised that the existing investment be valued at nil for the time being. We retain the view that the potential for this environmental business remains considerable, albeit that realisation of that potential has been deferred. In addition, Image Source has continued to suffer from deteriorating trading conditions in a challenging market.
Oxonica plc re-registered as Oxonica Limited in February 2011 and as part of a capital distribution, returned £69,624 to the Company.
It is important to note that during the period, no further funding has been required by any of the investee companies to help them deal with trading downturns (with the exception of Monsal, as mentioned above, where a commitment has been made after the period-end). Having retained significant uninvested cash, which will be bolstered by the current fundraising, we consider the Company is very well placed to cover both any portfolio needs and funding for attractive new investment opportunities that may arise.
for the six months ended 31 March 2011
| Six months ended 31 March 2011 (unaudited) |
Six months ended 31 March 2010 (unaudited) |
||||||
|---|---|---|---|---|---|---|---|
| Notes | Revenue £ |
Capital £ |
Total £ |
Revenue £ |
Capital £ |
Total £ |
|
| Unrealised gains on investments | 7 | – | 1,541,682 | 1,541,682 | – | 1,187,618 | 1,187,618 |
| Net gains on realisation of investments Income Recoverable VAT |
7 2 |
– 576,851 – |
379,561 – – |
379,561 576,851 – |
– 277,682 – |
37,442 – – |
37,442 277,682 – |
| Investment management expense Other expenses Merger costs |
3 | (110,981) (189,622) – |
(332,942) – – |
(443,923) (189,622) – |
(96,270) (355,004) – |
(288,811) – – |
(385,081) (355,004) – |
| Profit/(loss) on ordinary activities before taxation |
276,248 | 1,588,301 | 1,864,549 | (173,592) | 936,249 | 762,657 | |
| Tax on profit/(loss) on ordinary activities |
4 | (44,380) | 44,380 | – | – | – | – |
| Profit/(loss) on ordinary activities after taxation |
231,868 | 1,632,681 | 1,864,549 | (173,592) | 936,249 | 762,657 | |
| Basic and diluted earnings per Ordinary Share (formerly 'S' Share): |
6 | 0.62p | 4.36p | 4.98p | (0.75)p | 0.71p | (0.04)p |
The total column of this statement is the Profit and Loss Account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
There were no other recognised gains or losses in the period.
Other than revaluation movements arising on investments held at fair value through profit and loss, there were no differences between the profit/(loss) as stated above and at historical cost.
The notes on pages 18 to 23 form part of these half-year financial statements.
| Year ended 30 September 2010 (audited) |
||
|---|---|---|
| Revenue £ |
Capital £ |
Total £ |
| – | 2,986,059 | 2,986,059 |
| – 730,447 12,295 (204,246) (513,840) (75,516) |
15,412 – 36,886 (612,738) – – |
15,412 730,447 49,181 (816,984) (513,840) (75,516) |
| (50,860) | 2,425,619 | 2,374,759 |
| – | – | – |
| (50,860) | 2,425,619 | 2,374,759 |
| (0.20)p | 9.75p | 9.55p |
as at 31 March 2011
| Notes | 31 March 2011 (unaudited) £ |
31 March 2010 (unaudited) £ |
30 September 2010 (audited) £ |
|
|---|---|---|---|---|
| Non-current assets | ||||
| Investments | 7 | 28,756,485 | 21,534,682 | 28,116,479 |
| Current assets | ||||
| Debtors and prepayments | 10 | 1,718,335 | 168,229 | 162,076 |
| Investments at fair value | 8 | 6,768,945 | 14,385,083 | 8,708,573 |
| Cash at bank | 9 | 2,566,232 | 20,385 | 106,536 |
| 11,053,512 | 14,573,697 | 8,977,185 | ||
| Creditors: amounts falling due within one year | (291,383) | (378,229) | (488,968) | |
| Net current assets | 10,762,129 | 14,195,468 | 8,488,217 | |
| Net assets | 39,518,614 | 35,730,150 | 36,604,696 | |
| Capital and reserves | 11 | |||
| Called up share capital | 394,792 | 379,300 | 369,709 | |
| Share premium account | 3,728,433 | 369,141 | 369,141 | |
| Capital redemption reserve | 179,860 | 161,220 | 170,811 | |
| Revaluation reserve | 2,563,342 | (4,208,921) | 422,183 | |
| Special reserve | 21,307,003 | 27,059,018 | 23,105,248 | |
| Profit and loss account | 11,345,184 | 11,970,392 | 12,167,604 | |
| Equity shareholders' funds | 39,518,614 | 35,730,150 | 36,604,696 | |
| Basic and diluted net asset value: per Ordinary Share |
12 | 100.10p | 94.20p | 99.01p |
The financial information for the six months ended 31 March 2011 and the six months ended 31 March 2010 has not been audited. The notes on pages 18 to 23 form part of these half-year financial statements.
for the six months ended 31 March 2011
| Notes | Six months ended 31 March 2011 (unaudited) £ |
Six months ended 31 March 2010 (unaudited) £ |
Year ended 30 September 2010 (audited) £ |
|
|---|---|---|---|---|
| Opening shareholders' funds | 11 | 36,604,696 | 35,883,097 | 35,883,097 |
| Net share capital bought back in the period | (805,142) | (225,911) | (966,118) | |
| Net share capital subscribed in the period | 3,393,424 | 61,721 | 61,721 | |
| Profit for the period | 1,864,549 | 762,657 | 2,374,759 | |
| Dividends paid in period | 5 | (1,538,913) | (751,414) | (748,763) |
| Closing shareholders' funds | 39,518,614 | 35,730,150 | 36,604,696 |
The notes on pages 18 to 23 form part of these half-year financial statements.
for the six months ended 31 March 2011
| Six months ended 31 March 2011 (unaudited) £ |
Six months ended 31 March 2010 (unaudited) £ |
Year ended 30 September 2010 (audited) £ |
|
|---|---|---|---|
| Operating activities Investment income received Investment management fees paid Recoverable VAT and interest received thereon Other income Other cash payments Merger costs paid by the company |
424,952 (653,033) 34,370 3,582 (136,645) |
185,905 (381,259) 143,757 4,053 (262,947) |
687,327 (595,053) 144,206 4,053 (508,610) (75,516) |
| Net cash outflow from operating activities | (326,774) | (310,491) | (343,593) |
| Investing activities Acquisitions of investments Disposals of investments |
(1,559,531) 2,835,173 |
(1,512,597) 1,093,303 |
(6,514,315) 1,289,635 |
| Net cash inflow/(outflow) from investing activities | 1,275,642 | (419,294) | (5,224,680) |
| Dividends Equity dividends paid |
(1,538,914) | (751,414) | (748,763) |
| Cash outflow before financing and liquid resource management | (590,046) | (1,481,199) | (6,317,036) |
| Management of liquid resources Decrease in current investments |
1,939,628 | 1,576,987 | 7,253,497 |
| Financing Issue of Ordinary Shares Purchase of own shares |
1,950,890 (840,776) |
61,722 (192,763) |
61,721 (947,284) |
| 1,110,114 | (131,041) | (885,563) | |
| Increase/(decrease) in cash for the period | 2,459,696 | (35,253) | 50,898 |
for the six months ended 31 March 2011
| Six months ended 31 March 2011 £ |
Six months ended 31 March 2010 £ |
Year ended 30 September 2010 £ |
|
|---|---|---|---|
| Profit on ordinary activities before taxation | 1,864,549 | 762,657 | 2,374,759 |
| Net unrealised gains on investments | (1,541,682) | (1,187,618) | (2,986,059 |
| Net gains on realisations of investments | (379,561) | (37,442) | (15,412) |
| (Increase)/decrease in debtors | (108,138) | 17,647 | 23,800 |
| (Decrease)/increase in creditors | (161,942) | 134,265 | 259,319 |
| Net cash outflow from operating activities | (326,774) | (310,491) | (343,593) |
The notes on pages 18 to 23 form part of these half-year financial statements.
The following accounting policies have been applied consistently throughout the period. Full details of principal accounting policies will be disclosed in the Annual Report.
The unaudited results cover the six months to 31 March 2011 and have been prepared under UK Generally Accepted Accounting Practice (UK GAAP), consistent with the accounting policies set out in the statutory accounts for the year ended 30 September 2010 and the 2009 Statement of Recommended Practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ("the SORP").
The Half-Year Report has not been audited, nor has it been reviewed by the auditors pursuant to the Auditing Practices Board (APB)'s guidance on Review of Interim Financial Information.
The results for the six months to 31 March 2010 and the year ended 30 September 2010 reflected the activities of what were previously the 'O' and 'S' Share Funds of the Company. On 29 March 2010, the 'O' Share Fund and the 'S' Share Fund were consolidated. New 'S' Shares were issued to 'O' Fund Shareholders in proportion to its net assets relative to the 'S' Share Fund. Each of the issued and unissued 'S' Shares were then redesignated as new Ordinary Shares.
In order to better reflect the activities of a VCT and in accordance with the SORP, 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 investments held by the Company are classified as "fair value through profit and loss", in accordance with the International Private Equity and Venture Capital Valuation ("IPEVCV") guidelines, as updated in September 2009, which have not materially changed the results reported last year. This classification is followed as the Company's business is to invest in financial assets with a view to profiting from their total return in the form of capital growth and income.
For investments actively traded in organised financial markets, fair value is generally determined by reference to Stock Exchange market quoted bid prices at the close of business on the balance sheet date. Purchases and sales of quoted investments are recognised on the trade date where a contract of sale exists whose terms require delivery within a time frame determined by the relevant market. Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional.
Unquoted investments are stated at fair value by the Directors in accordance with the following rules, which are consistent with the IPEVCV guidelines:
All investments are held at the price of a recent investment for an appropriate period where there is considered to have been no change in fair value. Where such a basis is no longer considered appropriate, the following factors will be considered:
or:-
| Six months ended 31 March 2011 (unaudited) Total £ |
Six months ended 31 March 2010 (unaudited) Total £ |
Year ended 30 September 2010 (audited) Total £ |
|
|---|---|---|---|
| Dividends | 66,346 | 33,742 | 200,605 |
| Money-market funds | 22,226 | 37,087 | 73,446 |
| Loan stock interest | 479,342 | 192,637 | 442,132 |
| Bank deposit interest | 5,356 | 616 | 664 |
| Interest received on VAT | – | 9,547 | 9,547 |
| Other Income | 3,581 | 4,053 | 4,053 |
| Total Income | 576,851 | 277,682 | 730,447 |
| Six months | Six months | Year | |
|---|---|---|---|
| ended | ended | ended | |
| 31 March 2011 | 31 March 2010 | 30 September 2010 | |
| Total | Total | Total | |
| £ | £ | £ | |
| Investment management fee | 443,923 | 385,081 | 816,984 |
The Directors have charged 75% of the fees payable under the investment adviser's agreement, and charge 100% of the amounts payable under the Incentive Agreement, to the capital reserve. The Directors believe it is appropriate to charge the incentive fee wholly against the capital return, as any fee payable depends on capital performance, as explained below.
After the merger, the Investment Manager's Incentive Agreement for the former 'O' Share Fund has been continued while the former 'S' Share Fund's Incentive Agreement has been terminated. Under the terms of the pre-merger 'O' Share Fund Incentive Agreement, each of the ongoing Investment Manager, Matrix Private Equity Partners LLP ("MPEP") and a former Investment Manager, Foresight Group LLP ("Foresight") are entitled to a performance fee equal to 20% of the excess of the value of any realisation of an investment made after 30 June 2007, over the value of that investment in an Investment Manager's portfolio at that date ("the Embedded Value"), which value is itself uplifted at the rate of 6% per annum. No fee is payable in any year if the value of that Investment Manager's portfolio at that year-end plus the cumulative value of any realisations made up to that year-end is less than the value of that Investment Manager's portfolio at 30 June 2007, "the High Watermark test".
However, two amendments were made to this agreement for MPEP, the ongoing Investment Manager. Firstly, the High Watermark was increased by £811,430, being the 'S Share Fund's shortfall in total net assets from net asset value of £1 per 'S' Share, at 31 December 2009. Secondly, only 70% of any new investment made by MPEP after the merger will be added to the calculation of the Embedded Value and value of the Investment Manager's portfolio, for the purposes of assessing any excess. No incentive fee is payable for the period ended 31 March 2011.
There is no tax charge for the period as the Company has tax losses which can be offset between revenue and capital.
| Six months ended 31 March 2011 £ |
Six months ended 31 March 2010 £ |
Year ended 30 September 2010 £ |
|
|---|---|---|---|
| Ordinary shares (formerly 'S' Share Fund) | |||
| Ordinary Shares – interim paid of 2p and final paid of 2p (30 September 2010: | |||
| 0.5p; 31 March 2010: 0.5p) pence per share | 1,538,913 | 59,032 | 52,668 |
| Under/(over) provision re prior year | – | (56) | – |
| Former 'O' Share Fund | |||
| 'O' Shares – nil (31 March 2010: 2p; 30 September 2010: 2p) pence per share | – | 696,488 | 696,095 |
| Under/(over) provision re prior year | – | (4,050) | – |
| 1,538,913 | 751,414 | 748,763 |
| Six months ended 31 March 2011 Ordinary Shares Total £ |
'O' Share Fund £ |
Six months ended 31 March 2010 'S' (now Ordinary) Share Fund £ |
Year ended 30 September 2010 Ordinary Shares Total £ |
|
|---|---|---|---|---|
| i) Total earnings after taxation: Basic earnings per share |
1,864,549 4.98p |
767,073 2.22p |
(4,416) (0.04)p |
2,374,759 9.55p |
| ii) Net revenue from ordinary acivities after taxation Revenue return per share |
231,868 0.62p |
(84,695) (0.24)p |
(88,897) (0.75)p |
(50,860) (0.20)p |
| Net unrealised capital gains Net realised capital gains Income from capital dividends Recoverable VAT |
1,541,682 379,561 – – |
1,021,916 36,403 – – |
165,702 1,039 – – |
2,986,059 15,412 – 36,886 |
| Capital expenses (net of taxation) iii) Total capital return Capital return per share |
(288,562) 1,632,681 4.36p |
(206,551) 851,768 2.45p |
(82,260) 84,481 0.71p |
(612,738) 2,425,619 9.75p |
| iv) Weighted average number of shares in issue in the period |
37,412,969 | 34,578,490 | 11,807,017 | 24,854,456 |
Other than the performance related incentive, there are no instruments in place that will increase the number of shares in issue in future. Accordingly, the above figures currently represent both basic and diluted returns.
| Company | Traded on AiM |
Unlisted or traded on PLUS MARKETS |
Preference shares |
Qualifying loans |
Total |
|---|---|---|---|---|---|
| £ | £ | £ | £ | £ | |
| Valuation at 30 September 2010 Purchases at cost Sales – proceeds |
2,065,837 – (490,500) |
11,867,127 483,378 (95,392) |
35,738 – – |
14,147,777 1,076,153 (2,257,997) |
28,116,479 1,559,531 (2,843,889) |
| – realised gains Reclassification at valuation Unrealised gains |
65,901 – 627,184 |
95,392 (175,383) 590,051 |
– 27,576 16,731 |
221,389 147,807 307,716 |
382,682 – 1,541,682 |
| Valuation at 31 March 2011 | 2,268,422 | 12,765,173 | 80,045 | 13,642,845 | 28,756,485 |
| Book cost at 31 March 2011 Unrealised (losses)/gains at 31 March 2011 Permanent impairment of valuation of investments |
4,063,693 (1,795,271) – |
11,253,729 4,405,594 (2,894,150) |
96,766 (16,721) – |
13,673,105 (30,260) – |
29,087,293 2,563,342 (2,894,150) |
| 2,268,422 | 12,765,173 | 80,045 | 13,642,845 | 28,756,485 | |
| Gains on investments Realised losses based on historical cost Less amounts recognised as unrealised gains/(losses) |
237,500 | (168,742) | – | (285,553) | (216,795) |
| in previous years | 171,599 | (264,134) | – | (506,942) | (599,477) |
| Realised gains based on carrying value at 30 September 2010 Net movement in unrealised appreciation in the period |
65,901 627,184 |
95,392 590,051 |
– 16,731 |
221,389 307,716 |
382,682 1,541,682 |
| Gains on investments for the period ended 31 March 2011 |
693,085 | 685,443 | 16,731 | 529,105 | 1,924,364 |
Transaction costs of £3,121 were incurred in the period and are treated as realised gains on investments in the Income Statement. Deducting these from realised gains above gives £379,561 of gains as shown in the Income Statement.
Proceeds above of £2,843,889 differ from the cash flow statement figure of £2,835,173 by £8,716. This is due to transaction costs of £3,121 and an amount due from the liquidators of FH Ingredients of £5,595.
| 31 March 2011 Total £ |
31 March 2010 Total £ |
30 September 2010 Total £ |
|
|---|---|---|---|
| Monies held pending investment | |||
| Royal Bank of Scotland Sterling Liquidity Fund | 120,079 | 2,642,764 | 1,080,206 |
| Royal Bank of Scotland Sterling Liquidity Fund plus | – | 93,725 | – |
| Blackrock Investment Management (UK) Institutional Sterling Fund | 969,186 | 2,460,113 | 966,062 |
| Fidelity Institutional Cash Fund | 2,690,056 | 4,173,115 | 4,182,636 |
| Prime Rate Capital Management LLP Sterling Liquidity Fund (UK based) | 1,560,346 | 1,002,346 | 1,055,669 |
| Scottish Widows Investment Partnership Sterling Liquidity Fund | 1,429,278 | 4,013,020 | 1,424,000 |
| Monies held pending investment | 6,768,945 | 14,385,083 | 8,708,573 |
These comprise investments in five Dublin based OEIC money market funds and one UK based as shown in the table above. £6,768,945 (31 March 2010: £14,291,358; 30 September 2010: £8,708,573) of this sum is subject to same day access, while £nil (31 March 2010: £93,725; 30 September 2010: £nil) is subject to two day access.
Cash at bank includes £419,667 of cash committed to be subscribed for new loan stock in investee company ASL Technology Holdings Limited, as part of a larger commitment by other VCTs advised by the Manager to invest a sum totalling £1,600,000. The subscription will take place in June 2011 and until that time the cash is held in an escrow account in the Company's name but secured against a bank bridging loan to ASL Technology Holdings Limited.
| 31 March 2011 Total £ |
31 March 2010 Total £ |
30 September 2010 Total £ |
|
|---|---|---|---|
| Accrued Income | 260,350 | 160,688 | 112,032 |
| Prepayments | 9,865 | 7,093 | 15,674 |
| Other debtors | 5,594 | 448 | 34,370 |
| Share allotment proceeds receivable (see note) | 1,442,526 | – | – |
| 1,718,335 | 168,229 | 162,076 |
Note: This sum of £1,442,526 is due from allotments of shares on 28 February 2011 and 22 March 2011, arising from the Joint VCT fundraising offer. These funds were received shortly after the period end.
| Called up share capital |
Share premium account |
Capital Redemption reserve |
Revaluation reserve |
Special reserve |
Profit and loss account |
Total | |
|---|---|---|---|---|---|---|---|
| £ | £ | £ | £ | £ | £ | £ | |
| At 1 October 2010 Shares bought back Shares issued |
369,709 (9,049) 32,819 |
369,141 – 3,243,235 |
170,811 9,049 – |
422,183 – – |
23,105,248 (805,142) – |
12,167,604 – – |
36,604,696 (805,142) 3,276,054 |
| Dividends re-invested into new shares Dividends paid Loss transferred between |
1,313 – |
116,057 – |
– – |
– – |
– – |
– (1,538,913) |
117,370 (1,538,913) |
| reserves Other expenses net of taxation Net unrealised gains on |
– – |
– – |
– – |
– – |
(993,103) – |
993,103 (288,562) |
– (288,562) |
| investments Gains on disposal of investments (net of transaction costs) |
– – |
– – |
– – |
1,541,682 – |
– – |
– 379,561 |
1,541,682 379,561 |
| Realisation of previously unrealised appreciation Profit for the period |
– – |
– – |
– – |
599,477 – |
– – |
(599,477) 231,868 |
– 231,868 |
| At 31 March 2011 | 394,792 | 3,728,433 | 179,860 | 2,563,342 | 21,307,003 | 11,345,184 | 39,518,614 |
| 31 March 2011 | 31 March 2010 | 30 September 2010 | |
|---|---|---|---|
| Ordinary Shares | Ordinary Shares | Ordinary Shares | |
| Total | Total | Total | |
| Net assets | £39,518,614 | £35,730,150 | £36,604,696 |
| Number of shares in isssue | 39,479,195 | 37,929,970 | 36,970,891 |
| Net asset value per share – basis and diluted | 100.10p | 94.20p | 99.01p |
Diluted NAV per share assumes that the Investment Manager's incentive fee is satisfied by the issue of additional shares. No incentive fee is expected to be triggered for the Company for the current period and therefore net asset value per share and diluted net asset value per share are the same.
The Company and another shareholder of one of its investee companies are parties to an action brought by a former director and current shareholder of that investee company. The Board is committed to defending the action. However the litigation process has not yet reached a point at which it is possible for the Board to quantify with any certainty the final costs that the Company may ultimately incur from this action. The Board hopes to be able to assess these with greater certainty by the year end.
On 1 April, 5 April and 10 May 2011, the Company allotted a further 1,803,918 ordinary shares under the Matrix VCT Linked Offer launched on 12 November 2010, raising net funds of £1,805,973.
15 The financial information for the six months ended 31 March 2011 and the six months ended 31 March 2010 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 2010 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 either section 498(2) or 498(3) of the Companies Act 2006.
16 Copies of this statement are being sent to all shareholders. Further copies are available free of charge from the Company's registered office, One Vine Street, London, W1J OAH and a pdf may be downloaded from its website: www.incomeandgrowthvct.co.uk.
Colin Hook Jonathan Cartwright Helen Sinclair
One Vine Street London W1J 0AH
Matrix Private Equity Partners LLP One Vine Street London W1J 0AH
Matrix Private Equity Partners LLP One Vine Street London W1J 0AH www.matrixpep.co.uk
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