INCOME & GROWTH VCT (THE) PLC

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RNS Number : 6558A

Income & Growth VCT (The) PLC

30 May 2019

THE INCOME & GROWTH VCT PLC

HALF YEAR REPORT FOR THE SIX MONTHS ENDED 31 MARCH 2019

The Income & Growth VCT plc ("the Company") today announces the half-year results for the six months ended 31 March 2019.

As at 31 March 2019:

Net assets: £81.44 million

Net asset value ("NAV") per share: 78.03 pence

Financial Highlights

Results for the Half Year ended 31 March 2019

- Net asset value total return per share was 4.1% for the six months.

- Share price total return per share was 1.4% for the six months.

- The Board has declared an interim dividend in respect of the current year of 1.50 pence per share to be paid to shareholders on 12 July 2019.

- The Company made one new investment and three follow-on investments totalling £2.00 million during the six months.

Performance summary

The table below shows the recent past performance of the Company's existing class of shares for each of the last five years, and the current year to date.


Reporting date As at	Net assets	NAV per share	Share price¹	Cumulative dividends paid per share	Cumulative total return per share to shareholders²		Dividends paid and proposed in respect of each year
(NAV basis)	(Share price basis)
(£ m)	(p)	(p)	(p)	(p)	(p)	(p)
31 March 2019	81.44	78.03	67.00	111.50	189.53	178.50	1.504
30 September 2018	82.58	78.32	69.50	108.00	186.32	177.50	6.00
30 September 2017	64.35	81.24	73.00	102.50	183.74	175.50	21.00
30 September 2016	70.84	98.51	88.80	80.50	179.01	169.30	10.00
30 September 2015	75.20	106.38	93.50	68.50	174.88	162.00	12.00
30 September 2014	69.31	114.60	103.503	50.50	165.10	154.00	18.00

1 Source: Panmure Gordon & Co (mid-market price).

2 Cumulative total return per share comprises the NAV per share (NAV basis) or the mid-market price per share (share price basis) plus cumulative dividends paid since launch of the current share class.

3 The share price at 30 September 2014 has been adjusted to add back the dividend of 8.00 pence per share paid on 30 October 2014, as the listed share price was quoted ex this dividend at the year end.

4 An interim dividend of 1.50 pence per share, referred to in the Financial Highlights above, is payable to shareholders on 12 July 2019.

Chairman's Statement

I am pleased to present the Company's Half Year Report for the six months ended 31 March 2019.

Overview

The half-year has again seen good progress and a positive return for the period. This is detailed in the Performance and the Investment Portfolio sections of my statement below.

Sixteen growth capital investments have now been completed since the 2015 VCT Rule change. During the period under review, one new investment was made and three existing portfolio companies received follow-on funding. After the period end, the Company made a further two new investments. Further details of this investment activity are contained in the Investment Review.

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

Performance

The Company's NAV total return per share was 4.1% for the six months to 31 March 2019 (2018: 1.3%) while the total share price return was 1.4% (2018: 1.4%).

The Company's cumulative NAV total return per share (being the closing net asset value plus total dividends paid to date) has increased from 186.32 pence per share at the start of the period to 189.53 pence per share at the period end. This represents an increase of 1.7% over the period.

Investment portfolio

The portfolio has performed well during the period, increasing in value by 5.2% (2018: 1.2%) on a like-for-like basis. The portfolio achieved a net increase of £2.20 million in unrealised gains and £0.37 million in realised gains over the six-month period. The portfolio was valued at £51.68 million at the period end (30 September 2018: £49.40 million).

During the six months under review, the Company invested a total of £2.00 million (2018: £3.10 million) into four (2018: six) investments. One of these investments was into a new business; Grow Kudos, an online platform which provides and promotes research dissemination; and three follow-on investments were made into existing portfolio companies, namely Biosite, Proactive and MPB.

After the period end, £1.53 million was invested into Arkk Consulting, a regulatory and reporting requirement service and product provider, and £0.93 million was invested into Parsley Box, a supplier of home delivered ambient ready meals for the elderly. Also, the realisation of Plastic Surgeon occurred, realising proceeds of £1.22 million and generating a multiple on cost of 5.6x.

Details of this investment activity and the performance of the portfolio are contained in the Investment Review and the Investment Portfolio Summary in the Half-Year Report.

Revenue account

The results for the period are set out in the Unaudited Condensed Income Statement and show a revenue return (after tax) of 1.08 pence per share (2018: 0.92 pence per share). The revenue return for the period of £1.13 million has increased from last year's comparable figure of £0.86 million. This is mainly due to an increase in income receivable from loans made to new investee companies and some investee companies resuming interest payments, as well as higher dividend receipts.

Dividends

The Board continues to be committed to provide an attractive dividend stream to shareholders and is pleased to declare an interim dividend of 1.50 pence per share for the year ending 30 September 2019, comprising 1.00 penny from income and 0.50 pence from capital. This dividend will be paid on 12 July 2019 to shareholders on the Register on 14 June 2019 and will bring cumulative dividends paid per share to 113.00 pence.

The Company's target of paying a dividend of at least 6.00 pence per share in respect of each financial year has been met or exceeded in each of the last seven years. I have previously noted that the gradual move of the portfolio to younger growth capital investments may make dividends harder to achieve from income and capital returns alone in any given year. Accordingly, the Board continues to monitor the sustainability of this target.

Cash available for investment

The Board continues to monitor credit risk in respect of its cash balances and to prioritise the security and protection of the Company's capital. Cash and liquidity fund balances as at 31 March 2019 amounted to £29.53 million. This figure included £24.72 million held in money market funds with AAA credit ratings and £4.81 million held in deposit accounts with a number of well-known financial institutions across a range of maturities.

Fundraising

The Board regularly review the Company's cash flow projections and is presently consideration whether it may be desirable to raise funds within the 2019/20 tax year. The Board will notify shareholders of any intention to launch an offer for subscription at the earliest opportunity.

Share buy-backs

During the six months ended 31 March 2019, the Company bought back and cancelled 1,074,519 of its own shares, representing 1.0% (2018: 1.5%) of the shares in issue at the beginning of the period, at a total cost of £0.73 million (2018: £0.85 million) inclusive of expenses.

It is the Company's policy to cancel all shares bought back in this way. The Board regularly reviews its buyback policy and currently seeks to maintain the discount at which the Company's shares trade at no more than 10% below the latest published NAV.

Shareholder communications

May I remind you that the Company has its own website which is available at www.incomeandgrowthvct.co.uk.

The Investment Adviser held its most recent annual Shareholder Event in February 2019 which, from the feedback submitted, was well received by shareholders. The event included presentations on the investment activity and performance of all the Mobeus VCTs. I would like to thank those shareholders who attended for helping to make it a success. The next Event will take place in the first quarter of 2020 and shareholders will be sent further details and an invitation nearer the time.

Succession

As stated in last year's annual report, the Board is continuing with its succession planning and will provide further details in its Annual Report for the year ending 30 September 2019.

Outlook

Your Board considers that your Company is well positioned, with the portfolio being comprised of a strong foundation of more mature investments providing an income return, and a younger, growth capital portfolio seeking to achieve scale, so as to reach higher levels of profitability and hence value.

The demand for growth capital investments is strong and the amount of capital available for investment in the sector is substantial, which is giving rise to increased competition and higher entry valuations for the most attractive investment opportunities.

While the new growth capital element of the portfolio is still young, both your Board and the Investment Adviser continue to seek to assess, balance and diversify the risks within the growing proportion of the overall portfolio that these investments will represent. Your Board cautions that investing in such earlier stage companies involves increased risk, as those that succeed often take longer to build scale, while those less successful investments may be the first to show. Returns may therefore take longer to achieve, and the performance of these businesses may be more volatile. Hopefully these factors will be more than offset by longer-term gains.

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

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

Colin Hook

Chairman

30 May 2019

Investment Policy

The Company's policy is to invest primarily in a diverse portfolio of UK unquoted companies.

Asset Mix and Diversification

The Company will seek to make investments in UK unquoted companies in accordance with the prevailing requirements of VCT legislation.

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

Investments are generally structured as part loan and part equity in order to receive regular income and to generate capital gain from realisations.

There are a number of conditions within the VCT legislation which need to be met by I&G and which may change from time to time.

No single investment may represent more than 15% (by VCT tax value) of the Company's total investments at the date of investment.

Save as set out above, the Company's other investments are held in cash and liquid funds.

Liquidity

The Company's cash and liquid funds are held in a portfolio of readily realisable interest bearing investments, deposit and current accounts, of varying maturities, subject to the overriding criterion that the risk of loss of capital be minimised.

Borrowing

The Company's articles of association permit borrowing of up to 10% of the adjusted capital and reserves (as defined therein). However, the Company has never borrowed and the Board would only consider doing to in exceptional circumstances.

Investment Review

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

Portfolio review

The portfolio's activity in the six months to 31 March 2019 is summarised as follows:


	2019 £m	2018 £m
Opening portfolio value	49.40	48.09
New and follow-on investments	2.00	3.10
Disposal proceeds	(2.29)	(4.63)
Net realised gains	0.37	1.81
Valuation movements	2.20	(1.25)
Portfolio value at 31 March	51.68	47.12

The six months to 31 March 2019 has seen further solid progress. New investment comprised one new growth capital investment of £0.47 million into Grow Kudos, an online platform which provides and promotes research dissemination, and three existing growth portfolio companies receiving follow-on funding totalling £1.53 million (Biosite, Proactive and MPB). Net cash proceeds of £2.29 million were received, primarily from loan repayments.

The investment and divestment activity during the period has increased the proportion of the portfolio comprised of all growth capital investments by value to 47.9% at the period end.

After the period end, the Company invested £1.53 million into Arkk Consulting, a regulatory and reporting requirement service and product provider, and £0.93 million was invested into Parsley Box, a supplier of home delivered ambient ready meals for the elderly. This brings the total invested in those growth capital investments made since the introduction of the VCT Rules in 2015 to £20.53 million. Also, disposal proceeds of £1.22 million have been received following the realisation of Plastic Surgeon. These proceeds contributed to a multiple on cost of 5.6x over the life of this investment.

Details of the valuation movements for each investee company are provided in the Investment Portfolio Summary.

The portfolio's contribution to the overall results of the VCT is summarised as follows:


Investment Portfolio Capital Movement	2019 £m	2018 £m
Increase in the value of unrealised investments	4.68	4.80
Decrease in the value of unrealised investments	(2.48)	(6.05)
Net increase/(decrease) in the value of unrealised investments	2.20	(1.25)
Realised gains	0.37	1.81
Realised losses	-	-
Net realised gains in the period	0.37	1.81
Net investment portfolio movement in the period	2.57	0.56

Valuation changes of portfolio investments still held

The principal contributors to the valuation increases of £4.68 million were ASL £1.25 million, EOTH (Rab and Lowe Alpine) £0.53 million and Rotageek £0.43 million.

ASL's core business is trading well and, following two recent corporate acquisitions, is beginning to benefit from associated synergies. EOTH achieved a record year of profitability, underpinned by continued growth in its Rab brand. Rotageek has made a strong start since investment, having won a number of new contracts for its software.

A small number of new growth investments have shown initial uplifts from cost, due in large part to the structure of the Company's investment, but, in some cases, also due to the underlying investee company performance.

The main reductions within total valuation decreases of £(2.48) million, were Redline £(0.39) million, Aquasium £(0.35) million, and Bourne Bioscience £(0.34) million. Redline's revenues have been unpredictable and sales in recent months have been lower than planned which has impacted the valuation. Bourne has experienced softer trading in recent months due to a strong competitive landscape, but a recently opened clinic is expected to generate a positive contribution soon. Finally, Aquasium, a legacy investment, is behind budget due to a low order book and customer delays, although the longer-term prospects appear more promising.

Realised gains and deferred consideration receipts

There have been no realisations during the period under review. However, the Company realised a gain in the half-year from deferred consideration receipts of £0.37 million arising from past realisations.

After the period end, the Company realised its investment in Plastic Surgeon, receiving £1.22 million in cash proceeds. This contributed to a multiple on cost of 5.6x and an IRR of 20.5% over the 11 years the investment was held.

Investment portfolio yield and capital repayments

In the period under review, the Company received the following amounts in loan interest and dividend income:


Investment Portfolio Yield	2019 £m	2018 £m
Loan interest received in the period	1.41	1.29
Dividends received in the period	0.24	0.12
Total portfolio income in the period1	1.65	1.41
Portfolio Value at 31 March	51.68	47.12
Portfolio Income Yield (Income as a % of Portfolio value at 31 March)	3.2%	3.0%

1 Total portfolio income in the period is generated solely from investee companies within the portfolio.

In addition to deferred consideration receipts of £0.37 million, the Company also received loan stock repayments of £1.82 million (as the investments in the five companies preparing to trade repaid the final loan stock sums still payable) and preference share repurchases of £0.10 million, both at cost.

New investment in the half year

The Company made one new investment of £0.47 million during the period, as detailed below:


Company	Business	Date of Investment	Amount of new investment (£m)
Grow Kudos	Platform for the dissemination of research	November 2018	0.47
Grow Kudos is an online platform which provides and promotes research dissemination. The Kudos product was developed to allow researchers to increase the impact and readership of their work and to track and analyse distribution both within academia and across broader audiences. The investment will be used principally to increase its head count to support sales growth. The company's unaudited accounts for the year ended 31 December 2017 show revenues of £0.53 million and a loss before interest, tax and amortisation of goodwill of £(0.59) million.

Further investments in existing portfolio companies in the half-year

The Company made further investments totalling £1.53 million into three existing portfolio companies during the period under review, as detailed below:


Company	Business	Date of Investment	Amount of new investment (£m)
Biosite	Workforce management and security services	October 2018	0.93
Based in the Midlands, Biosite is a provider of biometric access control and software-based workforce management solutions for the construction sector. The business is growing significantly, and this investment will support the further development of software and hardware products. The company's audited accounts for the year ended 31 July 2018 show turnover of £9.76 million and a loss before interest, tax and amortisation of goodwill of £(0.64) million.
Proactive Investors	Investor media services	October 2018	0.45
Proactive Investors specialises in timely multi-media news provision, events organisation, digital services and investor research. Proactive provides breaking news, commentary and analysis on hundreds of small-cap listed companies and pre-IPO businesses across the globe. The investment will enable Proactive to expand its services into the US market, which is the largest global market for investor media services. The company's unaudited accounts for the year ended 30 June 2018 show turnover of £4.75 million and a loss before interest, tax and amortisation of goodwill of £(0.31) million.
MPB Group	Online marketplace for used camera and video equipment	October and December 2018	0.15
MPB is Europe's leading online marketplace for used camera and video equipment. Based in Brighton, its custom-designed pricing technology enables MPB to offer both buy and sell services through the same platform and offers a one-stop shop for all its customers. Having expanded into the US (opening a New York office) and German markets as part of the initial VCT investment round, this follow-on investment, alongside funds provided by the Proven VCTs, is to support its continued growth plan. Having doubled its sales over the prior year, this investment will give the company sufficient capital to achieve its next phase of expansion. The company's audited accounts for the year ended 31 March 2018 show turnover of £21.71 million and a loss before interest, tax and amortisation of goodwill of £(2.00) million.

New investments made after the period end

The Company made two new investments, totalling £2.46 million after the period end, as detailed below:


Company	Business	Date of Investment	Amount of new investment (£m)
Arkk Consulting	Regulatory and reporting requirement service provider	May 2019	1.53
Arkk Consulting (trading as Arkk Solutions) provides services and software to enable organisations to remain compliant with regulatory reporting requirements. Arkk was established in 2009 and currently has over 800 clients across 20 countries. These include more than 80 of the FTSE 350, and half of the largest 20 accountancy firms in the UK. The investment will build on Arkk's reputation and customer base, to target the cloud based period end reporting market by building the sales and marketing team. The company's audited accounts for the year ended 31 December 2017 show turnover of £3.18 million and a profit before interest, tax and amortisation of goodwill of £0.52 million.
Parsley Box	Home delivered ambient ready meals for the elderly	May 2019	0.93
Parsley Box is a UK direct to consumer supplier of home delivered ambient ready meals for the elderly. Founded in 2017, Parsley Box has grown rapidly and has developed a unique meal delivery solution for its customers. The company supplies a diverse range of ambient meals via next day delivery which are easy to store and aim to contribute to a more independent and healthier lifestyle. The investment will scale the company's marketing strategy, enable it to process larger order volumes and continue to build out its team. The company's unaudited accounts for the period ended 31 March 2018 show revenues of £0.25 million and a loss before interest, tax and amortisation of goodwill of £(0.21) million.

Realisation after the period end

The Company realised its investment in Plastic Surgeon after the period end, as detailed below:


Company	Business	Period of investment	Total cash proceeds over the life of the investment / Multiple over cost
Plastic Surgeon	Supplier of snagging and finishing services to the property sector	April 2008 to May 2019	£2.27 million 5.6 times cost
The Company sold its remaining investment in Plastic Surgeon to Polygon Group for £1.22 million. Over the eleven years this investment was held, it generated proceeds of £2.27 million compared to an original investment cost of £0.40 million which is a multiple on cost of 5.6x and an IRR of 20.5%.

Mobeus Equity Partners LLP

Investment Adviser

30 May 2019

Investment Portfolio Summary

As at 31 March 2019


	Total cost at 31 March 2019 (unaudited) £	Valuation at 30 September 2018 (audited) £	Additional investments in the period £	Valuation at 31 March 2019 (unaudited) £



Tovey Management Limited (trading as Access IS) Provider of data capture and scanning hardware	3,313,932	4,110,232	-	4,300,074
ASL Technology Holdings Limited Printer and photocopier services	2,722,106	2,904,306	-	4,151,254
EOTH Limited (trading as Equip Outdoor Technologies) Distributor of branded outdoor equipment and clothing including the Rab and Lowe Alpine brands	1,383,313	2,809,199	-	3,336,475
Virgin Wines Holding Company Limited Online wine retailer	2,745,503	3,227,371	-	3,327,794
Preservica Limited Seller of proprietary digital archiving software	2,181,666	2,977,489	-	3,119,565
Pattern Analytics Limited (trading as Biosite) Workforce management and security services for the construction industry	1,791,938	1,384,696	934,924	2,648,952
Media Business Insight Holdings Limited A publishing and events business focussed on the creative production industries	3,666,556	2,469,625	-	2,633,975
Manufacturing Services Investment Limited (trading as Wetsuit Outlet) Online retailer in the water sports market	3,205,182	2,326,781	-	2,236,330
Master Removers Group Limited (trading as Anthony Ward Thomas, Bishopsgate and Aussie Man & Van) A specialist logistics, storage and removals business	682,183	1,926,851	-	2,054,472
MPB Group Limited Online marketplace for used photographic equipment	1,423,974	1,885,665	154,780	2,050,973
Vian Marketing Limited (trading as Red Paddle Co) Design, manufacture and sale of stand-up paddleboards and windsurfing sails	1,207,437	1,870,551	-	1,988,059
CGI Creative Graphics International Limited Vinyl graphics to global automotive, recreation vehicle and aerospace markets	1,943,948	1,962,334	-	1,875,034
My TutorWeb Limited Digital marketplace connecting school pupils seeking one-to-one online tutoring	1,783,566	1,963,647	-	1,783,566
Tharstern Group Limited Software based management Information systems for the printing industry	1,454,278	1,569,303	-	1,551,295
Idox plc Developer and supplier of knowledge management products	453,881	1,462,570	-	1,500,072
Ibericos Etc. Limited (trading as Tapas Revolution) Spanish restaurant chain	1,397,386	1,630,329	-	1,395,285
Turner Topco Limited (trading as Auction Technology Group) SaaS based online auction market place platform	1,529,075	1,177,894	-	1,386,934
Proactive Group Holdings Inc Media Services and investor conferences	988,390	539,214	449,176	1,373,818
Rota Geek Limited Workforce management software	625,400	625,400	-	1,056,153
Buster and Punch Holdings Limited Industrial inspired lighting and interiors retailer	725,226	855,330	-	1,011,250
The Plastic Surgeon Holdings Limited Supplier of snagging and finishing services to the property sector	40,833	829,934	-	906,333
Vectair Holdings Limited Designer and distributor of washroom products	53,400	684,085	-	860,948
Bourn Bioscience Limited Management of in-vitro fertilisation clinics	1,610,379	1,153,951	-	815,059
Blaze Signs Holdings Limited Manufacturer and installer of signs	418,281	598,605	-	753,404
RDL Corporation Limited Recruitment consultants within the pharmaceutical, business intelligence and IT industries	1,441,667	903,731	-	713,522
Aquasium Technology Limited Manufacturing and marketing of bespoke electron beam welding and vacuum furnace equipment	166,667	1,002,689	-	654,321
Redline Worldwide Limited Provider of security services to the aviation industry and other sectors	1,129,121	956,894	-	564,561
Kudos Innovations Limited (trading as Grow Kudos) Online platform that provides and promotes research dissemination	472,500	-	472,500	472,500
Super Carers Limited Online introductory platform connecting local individuals with carers	649,528	649,528	-	324,764
Omega Diagnostics Group plc In-vitro diagnostics for food intolerance, autoimmune diseases and infectious diseases	280,026	350,010	-	303,342
BookingTek Limited Direct booking software for hotel groups	872,646	436,323	-	218,161
Jablite Holdings Limited Manufacturer of expanded polystyrene products	498,790	162,366	-	162,366
Veritek Global Holdings Limited Maintenance of imaging equipment	2,289,859	129,132	-	116,961
BG Training Limited Technical training business	53,125	26,563	-	26,563
Corero Network Security plc Provider of e-business technologies	600,000	9,832	-	7,866
Hollydale Management Limited Company seeking to carry on a business in the food sector	621,600	621,600	-	-
Backhouse Management Limited Company seeking to carry on a business in the motor sector	601,600	300,800	-	-
Barham Consulting Limited Company seeking to carry on a business in the catering sector	601,600	300,800	-	-
Creasy Marketing Services Limited Company seeking to carry on a business in the textile sector	601,600	300,800	-	-
McGrigor Management Limited Company seeking to carry on a business in the pharmaceutical sector	601,600	300,800	-	-
Oxonica Limited International nanomaterials group	2,524,527	-	-	-
Racoon International Group Limited Supplier of hair extensions, hair care products and training	655,851	-	-	-
NexxtDrive Limited/Nexxt E-drive Limited Developer and exploiter of mechanical transmission technologies	487,014	-	-	-
CB Imports Group Limited (trading as Country Baskets) Importer and distributor of artificial flowers, floral sundries and home decor products	175,000	-	-	-
Biomer Technology Limited Developer of biomaterials for medical devices	137,170	-	-	-
Hemmels Limited Sourcing and restoration of classic cars	30,180	-	-	-
Total	52,839,504	49,397,230	2,011,380	51,682,001

Statement of the Directors' Responsibilities

Responsibility statement

In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Colin Hook (Chairman), Jonathan Cartwright (Chairman of the Audit and Nomination & Remuneration Committees) and Helen Sinclair (Chairman of the Investment Committee), being the Directors of the Company, confirm that to the best of their knowledge:


(a)	The condensed set of financial statements, which has been prepared in accordance with Financial Reporting Standard 104 "Interim Financial Reporting" gives a true and fair view of the assets, liabilities, financial position and profit of the Company as required by DTR 4.2.10;

(b)	the Half Year Management Report, which comprises the Chairman's Statement, Investment Policy, Investment Review and Investment Portfolio Summary, includes a fair review of the information required by DTR 4.2.7, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements;

(c)	a description of the principal risks and uncertainties facing the Company for the remaining six months is set out below, in accordance with DTR 4.2.7; and

(d)	there were no related party transactions in the first six months of the current financial year that are required to be disclosed, in accordance with DTR 4.2.8.

Principal risks and uncertainties

In accordance with DTR 4.2.7, the Board confirms that the principal risks and uncertainties facing the Company have not materially changed from those identified in the Annual Report and Financial Statements for the year ended 30 September 2018 ("the Annual Report").

The principal risks faced by the Company are:

• Investment and strategic

• Loss of approval as a Venture Capital Trust;

• Regulatory;

• Counterparty;

• Economic;

• Financial and operating;

• Market;

• Asset liquidity; and

• Market liquidity;

A detailed explanation of the principal risks facing the Company can be found in the Annual Report on pages 27 and 28, and in Note 16 on Financial Instruments on pages 65 to 72. Copies can be viewed or downloaded from the Company's website: www.incomeandgrowthvct.co.uk.

Going Concern

The Board has assessed the Company's operation as a going concern. The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Half Year Management Report. The Directors have satisfied themselves that the Company continues to maintain an adequate cash position. The portfolio taken as a whole remains resilient and well-diversified. The major cash outflows of the Company (namely investments, share buybacks and dividends) are within the Company's control.

The Board's assessment of liquidity risk and details of the Company's policies for managing its capital and financial risks are shown in Note 16 on pages 65 to 72 of the Annual Report. Accordingly, the Directors continue to adopt the going concern basis of accounting in preparing the half year report and financial statements.

Cautionary Statement

This report may contain forward looking statements with regards to the financial condition and results of the Company, which are made in the light of current economic and business circumstances. Nothing in this report should be construed as a profit forecast.

For and on behalf of the Board:

Colin Hook

Chairman

30 May 2019

Unaudited Condensed Income Statement

for the six months ended 31 March 2019


		Six months ended 31 March 2019 (unaudited)			Six months ended 31 March 2018 (unaudited)
	Notes	Revenue	Capital	Total	Revenue	Capital	Total
		£	£	£	£	£	£
Unrealised gains / (losses) on investments held at fair value	9	-	2,199,709	2,199,709	-	(1,251,618)	(1,251,618)
Realised gains on investments held at fair value	9	-	367,651	367,651	-	1,810,102	1,810,102
Income	4	1,783,886	-	1,783,886	1,476,579	-	1,476,579
Investment Adviser's fees	5	(215,882)	(647,647)	(863,529)	(205,694)	(617,082)	(822,776)
Other expenses		(224,094)	-	(224,094)	(234,496)	-	(234,496)
Profit / (loss) on ordinary activities before taxation		1,343,910	1,919,713	3,263,623	1,036,389	(58,598)	977,791
Tax on profit / (loss) on ordinary activities	6	(209,618)	209,618	-	(173,800)	173,800	-
Profit for the period and total comprehensive income		1,134,292	2,129,331	3,263,623	862,589	115,202	977,791
Basic and diluted earnings per share	7	1.08p	2.02p	3.10p	0.92p	0.12p	1.04p


		Year ended 30 September 2018 (audited)
	Notes	Revenue	Capital	Total
		£	£	£
Unrealised gains / (losses) on investments held at fair value		-	570,022	570,022
Realised gains on investments held at fair value		-	1,113,464	1,113,464
Income	4	3,093,838	-	3,093,838
Investment Adviser's fees	5	(428,311)	(1,284,934)	(1,713,245)
Investment Adviser's performance fees	5	-	(1,119)	(1,119)
Other expenses		(455,836)	-	(455,836)
Profit on ordinary activities before taxation		2,209,691	397,433	2,607,124
Tax on profit on ordinary activities	6	(339,227)	339,227	-
Profit for the period and total comprehensive income		1,870,464	736,660	2,607,124
Basic and diluted earnings per share	7	1.88p	0.74p	2.62p

The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the unrealised gains/(losses) and realised gains on investments and the proportion of the Investment Adviser's fee and performance fee charged to capital.

The total column is the Statement of Total Comprehensive Income of the Company prepared in accordance with Financial Reporting Standards ("FRS"). In order to better reflect the activities of a VCT and in accordance with the 2014 Statement of Recommended Practice ("SORP") issued by the Association of Investment Companies ("AIC") and updated in January 2017, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The revenue column of profit attributable to equity shareholders is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 274 Income Tax Act 2007.

All the items in the above statement derive from continuing operations of the Company. No operations were acquired or discontinued in the period.

Unaudited Condensed Balance Sheet

as at 31 March 2019


		31 March 2019 (unaudited)	31 March 2018 (unaudited)		30 September 2018
				(audited)
	Notes	£	£			£
Fixed assets
Investments at fair value	9	51,682,001	47,114,979			49,397,230
Current assets
Debtors and prepayments		447,599	718,466			458,043
Current asset investments	10	27,873,883	34,467,981			31,627,351
Cash at bank	10	1,659,682	1,483,126			1,284,816
		29,981,164	36,669,573			33,370,210
Creditors: amounts falling due within one year		(225,127)	(199,647)			(183,726)
Net current assets		29,756,037	36,469,926			33,186,484
Net assets		81,438,038	83,584,905			82,583,714
Capital and reserves
Called up share capital		1,043,639	1,054,360			1,054,384
Capital redemption reserve		44,235	25,754			33,490
Share premium reserve		46,473,760	45,949,915			46,473,760
Revaluation reserve		6,200,237	2,484,528			4,102,002
Special distributable reserve		18,486,621	21,727,185			19,655,855
Realised capital reserve		6,469,707	9,878,415			8,627,792
Revenue reserve		2,719,839	2,464,748			2,636,431
Equity Shareholders' funds		81,438,038	83,584,905			82,583,714
Basic and diluted net asset value:
Basic and diluted net asset value per share	11	78.03p	79.28p			78.32p

Unaudited Condensed Statement of Changes in Equity

for the six months ended 31 March 2019


	Non-distributable reserves				Distributable reserves			Total
	Called up share capital	Capital redemption reserve	Share premium reserve	Revaluation reserve	Special distributable reserve (Note a)	Realised capital reserve (Note b)	Revenue reserve (Note b)
	£	£	£	£	£	£	£	£
At 1 October 2018	1,054,384	33,490	46,473,760	4,102,002	19,655,855	8,627,792	2,636,431	82,583,714
Comprehensive income for the period
Profit/(loss) for the period	-	-	-	2,199,709	-	(70,378)	1,134,292	3,263,623
Total comprehensive income for the period	-	-	-	2,199,709	-	(70,378)	1,134,292	3,263,623
Contributions by and distributions to owners
Shares bought back (Note c)	(10,745)	10,745	-	-	(731,205)	-	-	(731,205)
Dividends paid	-	-	-	-	-	(2,627,210)	(1,050,884)	(3,678,094)
Total contributions by and distributions to owners	(10,745)	10,745	-	-	(731,205)	(2,627,210)	(1,050,884)	(4,409,299)
Other movements
Realised losses transferred to special reserve (Note a)	-	-	-	-	(438,029)	438,029	-	-
Realisation of previously unrealised appreciation	-	-	-	(101,474)	-	101,474	-	-
Total other movements	-	-	-	(101,474)	(438,029)	539,503	-	-
At 31 March 2019	1,043,639	44,235	46,473,760	6,200,237	18,486,621	6,469,707	2,719,839	81,438,038

Notes:

a): The Special distributable reserve also provides the Company with a reserve to absorb any existing and future realised losses and, when considered by the Board to be in the interests of shareholders, to fund share buybacks and for other corporate purposes. All of this reserve originates from funds raised prior to 6 April 2014. The transfer of £438,029 to the special reserve from the realised capital reserve above is the total of realised losses incurred by the Company in the period.

b): The realised capital reserve and the revenue reserve together comprise the Profit and Loss Account of the Company.

c): During the period, the Company repurchased 1,074,519 of its own shares at the prevailing market price for a total cost (including stamp duty) of £731,205, which were subsequently cancelled.

Unaudited Condensed Statement of Changes in Equity

for the six months ended 31 March 2018


	Non-distributable reserves				Distributable reserves
	Called up share capital	Capital redemption reserve	Share premium reserve	Revaluation reserve	Special distributable reserve	Realised capital reserve	Revenue reserve	Total
	£	£	£	£	£	£	£	£
At 1 October 2017	792,047	14,014	24,099,311	4,020,689	23,215,643	10,134,703	2,072,344	64,348,751
Comprehensive income for the period
(Loss)/profit for the period	-	-	-	(1,251,618)	-	1,366,820	862,589	977,791
Total comprehensive income for the period	-	-	-	(1,251,618)	-	1,366,820	862,589	977,791
Contributions by and distributions to owners
Shares issued via Offer for Subscription	266,076	-	21,293,047	-	(199,395)	-	-	21,359,728
Dividends re-invested into new shares	7,977	-	557,557	-	-	-	-	565,534
Shares bought back	(11,740)	11,740	-	-	(845,781)	-	-	(845,781)
Dividends paid	-	-	-	-	-	(2,350,933)	(470,185)	(2,821,118)
Total contributions by and distributions to owners	262,313	11,740	21,850,604	-	(1,045,176)	(2,350,933)	(470,185)	18,258,363
Other movements
Realised losses transferred to special reserve	-	-	-	-	(443,282)	443,282	-	-
Realisation of previously unrealised appreciation	-	-	-	(284,543)	-	284,543	-	-
Total other movements	-	-	-	(284,543)	(443,282)	727,825	-	-
At 31 March 2018	1,054,360	25,754	45,949,915	2,484,528	21,727,185	9,878,415	2,464,748	83,584,905

Unaudited Condensed Statement of Cash Flows

for the six months ended 31 March 2019


	Notes	Six months ended 31 March 2019 (unaudited)	Six months ended 31 March 2018 (unaudited)	Year ended 30 September 2018 (audited)
		£	£	£
Cash flows from operating activities
Profit for the financial period		3,263,623	977,791	2,607,124
Adjustments for:
Net unrealised (gains)/losses on investments		(2,199,709)	1,251,618	(570,022)
Realised gains on realisations on investments		(367,651)	(1,810,102)	(1,113,464)
Increase in debtors		(66,947)	(228,772)	(4,832)
Increase/(decrease) in creditors and accruals		41,402	(559,040)	(574,960)
Net cash inflow/(outflow) from operating activities		670,718	(368,505)	343,846
Cash flows from investing activities
Purchase of investments	9	(1,933,990)	(3,103,915)	(6,290,160)
Disposal of investments	9	2,293,969	4,513,856	6,579,334
Net cash inflow from investing activities		359,979	1,409,941	289,174

Cash flows from financing activities
Shares issued as part of Offer for Subscription		-	24,305,938	24,305,938
Equity dividends paid	8	(3,678,094)	(2,255,584)	(4,352,591)
Purchase of own shares		(731,205)	(928,419)	(1,461,936)
Net cash (outflow)/inflow from financing activities		(4,409,299)	21,121,935	18,491,411
Net (decrease)/increase in cash and cash equivalents		(3,378,602)	22,163,371	19,124,431
Cash and cash equivalents at start of period		29,760,398	10,635,967	10,635,967
Cash and cash equivalents at end of period		26,381,796	32,799,338	29,760,398
Cash and equivalents comprise:
Cash at bank and in hand	10	1,659,682	1,483,126	1,284,816
Cash equivalents	10	24,722,114	31,316,212	28,475,582

The notes below form part of the Half-Year Financial Statements

Notes to the Unaudited Condensed Financial Statements

for the six months ended 31 March 2019


	Six months ended 31 March 2019 (unaudited)	Six months ended 31 March 2018 (unaudited)	Year ended 30 September 2018 (audited)
	£	£	£
Income
- Dividends	240,656	121,857	424,491
- Money market funds	91,855	33,569	108,807
- Loan stock interest	1,408,515	1,290,981	2,497,742
- Bank deposit interest	23,074	22,433	43,178
- Interest on preference share dividend arrears	17,423	-	11,881
- Other income	2,363	7,739	7,739
Total Income	1,783,886	1,476,579	3,093,838


		Six months ended 31 March 2019 (unaudited)	Six months ended 31 March 2018 (unaudited)	Year ended 30 September 2018 (audited)
		£	£	£
i)	Total earnings after taxation:	3,263,623	977,791	2,607,124
	Basic earnings per share (Note a)	3.10 p	1.04 p	2.62 p
ii)	Revenue earnings from ordinary activities
	after taxation	1,134,292	862,589	1,870,464
	Basic revenue earnings per share (Note b)	1.08 p	0.92 p	1.88 p
	Net unrealised capital gains/(losses) on investments	2,199,709	(1,251,618)	570,022
	Net realised capital gains on investments	367,651	1,810,102	1,113,464
	Capitalised Investment Adviser fees and performance fees less taxation	(438,029)	(443,282)	(946,826)
iii)	Total capital return	2,129,331	115,202	736,660
	Basic capital earnings per share (Note c)	2.02 p	0.12 p	0.74 p
iv)	Weighted average number of shares in issue in the period	105,141,805	93,616,928	99,602,770


	Traded on AIM Level 1	Unquoted ordinary shares Level 3	Unquoted preference shares Level 3	Unquoted loan stock Level 3	Total
	£	£	£	£	£
Valuation at 1 October 2018	1,822,412	20,758,488	368,541	26,447,789	49,397,230

Purchases at cost	-	926,956	-	1,084,424	2,011,380
Sales - proceeds (Note a)	-	(367,651)	(101,518)	(1,824,800)	(2,293,969)
- realised (losses)/gains	-	(362,269)	-	729,920	367,651
Unrealised (losses)/gains on investments in the period	(11,132)	2,826,057	(7,672)	(607,544)	2,199,709
Valuation at 31 March 2019	1,811,280	23,781,581	259,351	25,829,789	51,682,001

Book cost at 31 March 2019	1,333,907	25,855,013	24,674	25,625,910	52,839,504
Unrealised gains at 31 March 2019	977,373	4,666,941	234,677	321,246	6,200,237
Permanent impairment of valuation of investments	(500,000)	(6,740,373)	-	(117,367)	(7,357,740)
Valuation at 31 March 2019	1,811,280	23,781,581	259,351	25,829,789	51,682,001

(Losses)/gains on investments
Realised gains based on historical cost	-	367,651	101,474	-	469,125
Less amounts recognised as unrealised gains in previous years	-	-	(101,474)	-	(101,474)

Realised gains based on carrying value at 30 September 2018	-	367,651	-	-	367,651
Net movement in unrealised (losses)/gains in the period	(11,132)	2,826,057	(7,672)	(607,544)	2,199,709
(Losses)/gains on investments for the period ended 31 March 2019	(11,132)	3,193,708	(7,672)	(607,544)	2,567,360


	as at 31 March 2019 (unaudited)	as at 31 March 2018 (unaudited)	as at 30 September 2018 (audited)
Net assets	£81,438,038	£83,584,905	£82,583,714
Number of shares in issue	104,363,865	105,435,973	105,438,384

Net asset value per share - basic and diluted	78.03p	79.28p	78.32p

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Dividend	Type	For the year ended 30 September	Pence per share	Date paid	Six months ended 31 March 2019 (unaudited) £	Six months ended 31 March 2018 (unaudited)£	Year ended 30 September 2018 (audited) £

Final	Income	2017	0.50p	15 February 2018	-	470,185	470,185
Final	Capital	2017	2.50p	15 February 2018	-	2,350,933	2,350,933
Interim	Income	2018	0.80p	21 June 2018	-	-	843,492
Interim	Capital	2018	1.70p	21 June 2018	-	-	1,792,420
Final	Income	2018	1.00p	15 February 2019	1,050,884	-	-
Final	Capital	2018	2.50p	15 February 2019	2,627,210	-	-
Previous dividends not claimed within the statutory period					-	-	(7,300)
Total*					3,678,094	2,821,118	5,449,730


	as at 31 March 2019 (unaudited)	as at 31 March 2018 (unaudited)	as at 30 September 2018 (audited)
	£	£	£
OEIC Money market funds	24,722,114	31,316,212	28,475,582
Cash equivalents per Statement of Cash Flows	24,722,114	31,316,212	28,475,582
Bank deposits that mature after three months	3,151,769	3,151,769	3,151,769
Current asset investments	27,873,883	34,467,981	31,627,351
Cash at bank	1,659,682	1,483,126	1,284,816