Inc&gwth Vct Regulatory News (IGV)

The Income & Growth VCT plc

19 December 2012

Annual Financial Results of the Company for the Year ended 30 September 2012

Investment Objective

The objective of The Income & Growth VCT plc is to provideinvestors with an attractive return, by maximising the stream of dividenddistributions from the income and capital gains generated by a diverse andcarefully 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 ofcompanies which may already be quoted on the Alternative Investment Market("AiM") or the ICAP Securities and Derivatives Exchange (ISDX).

Financial Highlights

- This has been an exceptional year for disposals. A total of £26.64 million was

realised, primarily through the sales of the VCT's investments in App-DNA,

DiGiCo and Iglu.

- Dividends totalling 24 pence per share were paid during the year. An interim

dividend of 6 pence per share has also been declared. This payment will bring

cumulative dividends paid to date to 34.5 pence per share (48.22 pence per

original share invested for shareholders who invested in 2000/01).

- Increase of 10.62% in net asset value (NAV) total return for the year to

Shareholders.

- Increase of 32.05% in share price total return for the year to Shareholders

Performance Summary

The net asset value (NAV) per share at 30 September 2012 was 109.62 pence

The table below shows the recent past performance of funds raisedin 2007/08 for the existing class of ordinary shares.

Net NAV per Cumulative NAV total Share Share price assets Share dividends return to price total return (p) paid per Shareholders (p) 1 to (£m) Share (p) since launch Shareholders per Share (p) (p)Ordinary SharesAs at 30 September 2012 50.55 109.62 28.50 138.12 97.00 125.50As at 30 September 2011 49.15 120.794 4.50 125.29 91.63 96.13As at 30 September 2010 36.60 99.01 0.50 99.51 87.00 87.50

1 Source: London Stock Exchange.

Discount

The Board's current intention is to continue withits existing buy-back policy with the objective of maintaining the discount toNAV at which the shares trade at 10% or less. The discount for the Company'sOrdinary Shares at 30 September 2012 was 9.4% (2011: 10.9%) based on an NAV at30 June 2012 of 107.11 pence.

Dividends proposed

An interim dividend of 6 pence per share comprising 3 pence fromincome and 3 pence from capital has been declared and will be paid on 8February 2013 to Shareholders on the Register on 18 January 2013.

Investments at valuation at 30 September 2012

Investments by market sector% of venture capital portfolioMarket sector 30 September 2012 30 September 2011Manufacturing 0.00% 0.63%Industrial engineering 2.17% 1.75%Pharmaceuticals and biotechnology 3.24% 2.66%Technology, hardware and equipment 2.86% 3.49%Software and computer services 10.42% 38.22%Personal goods 1.98% 1.87%Food producers 1.63% 1.55%Media 10.86% 6.46%General retailers 8.05% 5.15%Support services 39.56% 27.35%Acquisition vehicles 19.23% 10.77%Investments by stage of development% of venture capital portfolioStage of development 30 September 2012 30 September 2011Management buyout/buyin 65.67% 48.07%Development capital 5.94% 33.29%Early stage 0.00% 0.44%AIM-quoted 9.16% 7.44%Acquisition vehicles 19.23% 10.76%Chairman's Statement

I am pleased to present to Shareholders the twelfth Annual Reportof the Company for the year ended 30 September 2012.

Overview

As referred to in my statement at the half year stage, the UK andglobal economies are still struggling to come to terms with the persistingvolatility caused in part by the continuing unresolved debt problems inseveral of the Eurozone countries. We expect the recovery to be slow anduncertain.

However, despite the macro-economic situation, there is goodprogress in the portfolio and in the Manager's investment activity. The VCThas made three new investments during the year to support the MBOs of EMaC,EOTH (the holding company for the Rab and Lowe Alpine brands) and Tessella.These have all made promising starts. The Board and the Manager continue toadopt the cautious approach of waiting to identify the right opportunities inthis challenging market. Even though the rate of investment may still be lowcompared to some previous periods, the Manager is currently considering anumber of potentially strong opportunities. The year under review has been themost successful year to date in the history of the Company for realisationswhich have totalled £26.643 million. The most noteworthy of these was App-DNA,which was sold to Citrix Systems Inc in November 2011 resulting in thesubstantial return on investment of 32 times original investment cost. Otherrealisations included DiGiCo (where the Company retains a residual loan stockand equity investment), Camwood, Iglu and Letraset. With the exception ofLetraset, which returned a disappointing 1.13 times cost on our originalinvestment, all of these achieved returns of 2.5 - 4.4 times the cost ofinvestment.

Performance

As at 30 September 2012 the Company's NAV per Ordinary Share was109.62 pence (30 September 2011: 120.79 pence). Adjusted for dividends paid toShareholders during the year, this represents an increase of 10.62% over thetwelve month period. This compares with an increase of 14.61% in the FTSESmallCap Index and an increase of 0.77% in the FTSE AiM All-Share Index, bothon a capital return basis.Cumulative dividends paid and proposed to date amount to 48.22pence per original share invested for shareholders who invested in 2000/01(the 28.00 pence per share paid following the Merger has, therefore, beenadjusted using the merger ratio of 0.7578) and 34.50 pence per Ordinary Sharefor shareholders who invested in 2007/08 (the existing share class followingthe Merger) .The portfolio

Over the year, the portfolio as a whole achieved a net increase of£2.364 million in unrealised, and £5.243 million in realised, gains net oftransaction costs. The portfolio under management was valued at £31.206million at the year-end representing 86.73% of cost.

During the year £5 million was placed into new investments(including the £1 million already invested into the acquisition vehicleSawrey). I included details of the investments of £1.383 million into EOTH andof £1.878 million into EMaC in my Statement in last year's Annual Report, asboth of these completed shortly after the beginning of the year under reviewin October 2011.

More recently, in July 2012, the Company made a third newinvestment of £1.745 million (including £1 million from the acquisitionvehicle Sawrey) into Tessella, an international provider of science-poweredtechnology and consulting services. Founded in 1980, this company deliversinnovative and cost-effective solutions to complex real-world commercial andtechnical challenges, such as developing smarter drug trials and minimisingrisk in oil and gas exploration.

The VCT made a further loan of £1.450 million to Image Source, anexisting investment, in December 2011 to fund the settlement of a legaldispute with a former employee and shareholder in that company. I am nowpleased to report that shortly after the year-end in October 2012, ImageSource merged with a similar company working in its sector, Cultura Creative,to create Europe's largest independent branded image business. The Boardbelieves that the combined company will be better positioned to deal with thechallenges it faces in a competitive marketplace for independent distributors.

Change of name and control at the Manager

With effect from 30 June 2012, the Manager, together with all itsstaff, became a fully independent firm owned by its partners and renameditself, Mobeus Equity Partners LLP ("Mobeus"). The Company's investmentstrategy and its arrangements with Mobeus remain unchanged. The managementteam continues to be wholly dedicated to the management and administration ofVCTs. The Board looks forward with confidence to this new phase of workingwith its Manager.

Cash available for investment

We have experienced a prolonged period of low interest rates oncash deposits which continues to inhibit the Company's ability to paydividends out of interest income from cash held. The Board strongly believes,that at this time, the security and protection of the Company's capital ismore important than striving for a small increase in deposit rates at the costof much higher risk. However, in recent months we have started to place somefunds in carefully selected bank deposit accounts offering improved returns.

Cash and liquidity fund balances as at 30 September 2012 amountedto £22.385 million.

Revenue Account

The revenue account has again achieved a strong return this year,with a positive return of £990k compared to last year's positive return of£864k, a further improvement of £126k.

A further increase in income over the year of £350k has been theprincipal reason for this improvement. This rise is due to an increase in loanstock interest of £328k. This year's figure was boosted by an exceptional£412k, as several investee companies paid interest that had been in arrears,although last year's income was itself boosted by an exceptional £427k earnedfrom Amaldis. New investments in the year and during last year (primarilyMotorclean, EOTH and EMaC) have contributed to substantial increases in loanstock, and there have also been lesser reductions from loan repayments andrealisations made in this year and last.Dividend income fell by £60k, mainly as DiGiCo had contributed adividend of £89k in 2011, but an increased dividend from Brookerpaks, as wellas new dividends from Vectair and RDL, reduced some of this fall. Higher cashbalances contributed to higher liquidity fund income and bank interest of£80k.Fund management fees charged to revenue return have increased by£53k, in line with the rise in net assets over the last twelve months. Otherexpenses have also risen by £123k in the year to £499k (2011: £376k). Thisincrease was due firstly to higher directors' fees of £35k, due to a one-offpayment of £10k (plus employers' National Insurance Contributions) made toeach of the Directors in respect of additional work carried out on specificprojects for the Company. In addition, registrars' fees, printing costs,listing fees and trail commission costs all rose, by an aggregate £56k, partlyreflecting a larger number of shareholders and higher postage costs.Finally, the tax charge nominally borne by the revenue account roseby £48k, mainly due to the increase in loan stock interest which is taxable.However, as the Company has the ability to offset some capital costs againstrevenue profits, the Company has no overall charge to tax.

Dividends

On 5 December 2012, the Directors declared a further interimdividend in respect of the year ended 30 September 2012 of 6 pence per share,comprising 3 pence from capital and 3 pence from income. The dividend will bepaid to Shareholders on the Register on 18 January 2013, on 8 February 2013.

An interim capital dividend of 20 pence per share was also paid, inrespect of the year ended 30 September 2012, on 27 January 2012. Thus totaldividends paid and declared in respect of this year were 26 pence per sharecomprising 23 pence from capital and 3 pence from income (2011: 4 pence pershare comprising 2 pence from capital and 2 pence from income).

The Directors will not be recommending a final dividend toShareholders in respect of the year ended 30 September 2012 at the AnnualGeneral Meeting of the Company to be held on 13 February 2013.

The Company's Dividend Investment Scheme will apply to thisdividend and elections under the Scheme should be received by the SchemeAdministrator, Capita Registrars, by no later than 24 January 2013.

Dividend Investment Scheme

The Scheme is a convenient, easy and cost effective way to build upyour shareholding in the Company. Instead of receiving cash dividends, you canelect to receive new shares in the Company. By opting to receive your dividendin this manner, there are three benefits to Shareholders:

- The dividend is tax free to you;

- - Shareholders are allotted new ordinary shares which will, subject to your

particular circumstances, attract VCT tax reliefs applicable for the tax year in

which the shares are allotted. The tax relief currently available to investors

in new VCT shares is 30% for the 2012/13 tax year for investments up to £200,000

in any one tax year; and

- The Scheme also has one other, particular advantage. Under its terms, a member

is able to re-invest at an advantageous price, being the average market price of

the shares for the five business days prior to the dividend being paid. This

price is likely to be at a discount of 10% to the underlying net asset value

(provided that this is greater than 70% of the latest published net asset value

per share).Share buy-backsDuring the year ended 30 September 2012, the Company bought back996k Ordinary Shares (year to 30 September 2011: 1.650 million) representing2.45% of the Shares in issue at the beginning of the year at a total cost of£913k (year to 30 September 2011: £1.475 million) net of expenses. Theseshares were subsequently cancelled by the Company.The Board regularly reviews its buyback policy and has maintainedthe discount to NAV at which the Company's shares trade over the last year ataround 10%. At 30 September 2012, the mid-market price for the Company'sshares was 97.00 pence, representing a discount of 9.44% to the last publishedNAV, which at that time was the NAV at 30 June 2012 of 107.11 pence. Whencompared to the NAV at 30 September 2012 shown by these results, the discounthas moved to 12.88% at 17 December 2012. The share price peaked towards theend of last year following the realisation of App-DNA and has since stabilisedat a discount of approximately 10% to the latest published NAV per share.

Selling your shares

The Company's shares are listed on the London Stock Exchange and assuch they can be sold in the same way as any other quoted company through astockbroker. However, to ensure that you obtain the best price if you wish tosell your shares, you are strongly advised to contact the Company'sstockbroker, Panmure Gordon, by telephoning 020 7886 2716/7 before agreeing aprice with your stockbroker. Shareholders are also advised to discuss theirindividual tax position with their financial advisor before deciding to selltheir shares.

Changes to VCT legislation

Further to changes set out in the note to the Investment Policy atthe half year stage, the enactment of the Finance Act 2012 has ended a periodof uncertainty in finalising the changes to the tax legislation that willapply to VCTs going forward. Funds raised after 6 April 2012 can no longer beused to support certain types of management buy-out transactions (MBOs).However, the Company has a significant amount of cash raised prior to thisdate that it will continue to use to pursue its successful strategy ofinvesting in MBOs of profitable and cash generative companies.

A number of the tests for VCT investment have been revised by thisAct, enabling VCTs to invest in larger companies with up to 250 staff andgross assets of up to £15 million immediately before and £16 millionimmediately after the investment. Investee companies can now receive up to £5million in any rolling 12 month period from state-aided sources, whichincludes VCTs.

Fundraising

The Company raised £5.168 million gross of issue costs in theMobeus (formerly Matrix) Linked VCT Offer launched on 20 January 2012.

A further Linked Offer to raise £21 million in aggregate for theCompany, together with Mobeus Income & Growth VCT plc and Mobeus Income &Growth 4 VCT plc (both former Matrix Income & Growth named VCTs) was launchedon 29 November 2012. The funds raised will spread our fixed running costs overa larger asset base and support the Company's existing investment strategy byproviding new money to meet its year on year expenses, thus enabling it topreserve its funds raised prior to 6 April 2012 to invest in new MBO deals.

Enhanced share buyback facility (EBF)

Shareholders should note that the Company intends to offer anenhanced buyback facility to shareholders early in the New Year, which may beof interest to Shareholders who have held their shares for more than fiveyears. An enhanced buyback facility is a loyalty scheme offered to ashareholder whereby the VCT buys back a proportion of the shareholder'sexisting shares at net asset value. The proceeds must then be used by theshareholder to purchase new shares in the same VCT at net asset value pluscosts. Further up front tax reliefs are then available to qualifyingshareholders. No new monies are required to participate in an enhanced buybackfacility; rather, the shareholder's proceeds from the buyback are used toacquire new shares in the same VCT.

Industry awards for the Manager

The Manager received the award for VCT of the Year 2012 in respectof your Company at Investor AllStars 2012. It was also named VCT House of theYear 2012 at the unquote" British Private Equity Awards 2012. The citationsfor these awards recognised the Manager's outstanding performance in achievingrecord realisations during the year and promoting a successful fundraising.The Board is delighted that the work of the Manager has been acknowledged inthis way.OutlookWhilst stockmarkets appear to be taking the view that USpoliticians will ultimately broker a deal to address the country's so called"fiscal cliff", both political parties seem to be positioning themselves forwhat could be a war of attrition, despite the positive noises emanating fromCapitol Hill. While the politicians are still talking, it was been USbusinesses that have responded to the call for action and probably not in theway President Obama would like. Faced with uncertainty over future tax rates,a swathe of American companies have decided to take matters into their ownhands by announcing special dividends in order to escape possible higher taxeson equity payments come next year. The current rate is 15% but this couldspike to 40% unless a deal is agreed. So, against this backdrop, and with manycompanies being flush with cash, it is no real surprise that, in the fourthquarter, a record of some 103 businesses have announced that they will pay aspecial dividend before the year-end. Some companies, such as retail giantWal-Mart, have even brought forward their scheduled dividend payment date toavoid the possibility of being taxed more heavily.The implications of an impasse have been highlighted by the USFederal Reserve in its latest Beige Book report, saying it had picked up"concern and uncertainty about the federal budget, especially the "fiscalcliff". The Report went on to note that a number of Federal districts hadexpressed concern about business conditions for the months ahead as firms andtheir customers waited for the outcome of the budget negotiations. Whilst theraft of special dividends will be welcomed by shareholders, there is adownside. For one thing, companies declaring special dividends will enter 2013with less cash, reducing their ability to invest in their businesses or makeacquisitions. Coupled with this, it is likely that there will be more sharebuy-backs as corporations try to find other ways to get cash back toshareholders without paying dividends that are likely to be taxed moreseverely.Given this scenario, it is no surprise that Wall Street has beenjittery; but so far investors continue to take the view that a compromise willbe reached, with confidence being boosted by signs that the economy continuesto make progress. US growth for the third quarter was revised up from 2.0% to2.7% and the latest S&P/Case-Schiller housing data showed prices rising forthe sixth consecutive month. This coincided with news that consumer confidencerose to its highest level for four years and that US companies increased theirorders for durable goods.In Europe in the last few weeks, the troika - the IMF, ECB and EU -finally agreed to release the latest €34.4 billion tranche of bailout fundingfor Greece, giving the country more time to reduce its mountain of debt: some€350 billion. It seems that desperate EU officials are also exploring otherways to help Greece hit its target, including access to EU development fundswhich would trim another 2.6% off the deficit.Nearer to home in the United Kingdom, the surprise appointment ofCanadian Mark Carney as the new Governor of the Bank of England was one of thefew moments of excitement in recent weeks as markets spent much of their timetrading sideways. Mr Carney's appointment as Sir Mervyn King's successor wasgenerally well received, with his experience at Canada's central bank likelyto be invaluable given Mr Osborne's apparent desire to see the UK's centralbank undergo reform. George Osborne's recent Autumn Statement delivered aneutral budget that endeavoured to give both growth and business a boost. TheChancellor, however, received no help from the Office for BudgetResponsibility, whose forecasts for UK growth were cut, whilst also expectingthe Government to borrow some £52.5 billion more than expected over the nextfive years. So with little room for manoeuvre, Mr Osborne made a judgementthat the best course of action was to try and boost growth by bolsteringbusiness confidence and encouraging greater investment by companies and thepublic sector.

Against this backdrop, the Board also continues to face manychallenges in advancing its strategy in the face of developments in thelegislative and regulatory environment in which the Company operates. We arecontinuing to monitor developments in the industry, including the recentconsultation paper published by the FSA on the promotion of VCT shares toretail investors and the implementation of the Retail Distribution Review.

The valuation of the portfolio as a whole has held up well, and anumber of the investee companies continue to show good potential for growth.The Manager has reported that deal flow is improving and is considering anumber of attractive investment opportunities. We are hopeful that a number ofthese will be completed over the coming months.

Mobeus website

The Manager has established a new website, which can be accessed bygoing to www.mobeusequity.co.uk. This is regularly updated with information onyour investments including case studies of portfolio companies. The Companycontinues to have its own dedicated section of the website which Shareholdersmay prefer to access directly by going to www.incomeandgrowthvct.co.uk. Thisincludes performance tables and details of dividends paid as well as copies ofpast reports to shareholders.Shareholder workshopWe have received positive feedback from the shareholder workshop,held in January 2012, which was attended by nearly 100 Mobeus VCTshareholders. It is intended that this will be an annual event. Shareholdersshould have already received an invitation to attend the next workshop to beheld on 29 January 2013. The workshop will include presentations from theManager on the portfolio as a whole and from at least one successfulentrepreneur from one of the VCT's investee companies.

Once again, I would like to take this opportunity to thankShareholders for their continued support.

Colin HookChairmanGoing concernThe Board has assessed the Company's operation as a going concern.The Company's business activities, together with the factors likely to affectits future development, performance and position are set out in the ManagementReport which is included within the Chairman's Statement, the InvestmentPortfolio Summary, the Investment Manager's Review and the Directors' Report.The Directors have satisfied themselves that the Company continues to maintaina significant cash position and is currently raising additional funds. Themajority of companies in the portfolio continue to trade profitably and theportfolio taken as a whole remains resilient and well diversified. The majorcash outflows of the Company (namely investments, buy-backs and dividends) arewithin the Company's control. The Board's assessment of liquidity risk anddetails of the Company's policies for managing its capital and financial risksare shown below. Accordingly, the Directors continue to adopt the goingconcern basis of accounting in preparing the annual financial statements.

Principal risks, management and regulatory environment

The Board believes that the principal risks faced by the Companyare:

Economic risk - events such as an economic recession and movementin interest rates could affect trading conditions for smaller companies andconsequently the value of the Company's qualifying investments.

Risk of loss of approval as a Venture Capital Trust - the Companymust comply with the provisions of section 274 of the Income Tax Act 2007("ITA") to continue to be exempted from capital gains tax on investment gainsand to ensure that its investors continue to qualify for VCT tax reliefs. Anybreach of these rules may lead to the Company losing its approval as a VentureCapital Trust (VCT), qualifying shareholders who have not held their sharesfor the designated holding period having to repay the income tax relief theyobtained and future dividends paid by the Company becoming subject to tax. TheCompany would also lose its exemption from corporation tax on capital gains. Investment and strategic risk - inappropriate strategy orconsistently weak VCT qualifying investment recommendations might lead tounderperformance and poor returns to shareholders. Investment in unquotedsmall companies by its nature involves a higher degree of risk than investmentin companies traded on the London Stock Exchange main market. Smallercompanies often have limited product lines, markets or financial resources andmay be dependent for their management on a smaller number of key individuals.This may make them more risk-prone and volatile investments.

Regulatory risk - the Company is required to comply with theCompanies Act, the listing rules of the UKLA and United Kingdom AccountingStandards. Breach of any of these might lead to suspension of the Company'sStock Exchange listing, financial penalties or a qualified audit report.

Financial and operating risk - inadequate controls that might leadto misappropriation of assets. Inappropriate accounting policies might lead tomisreporting or beaches of regulations. Failure of the Investment Manager'sand Administrator's accounting systems or disruption to its business mightlead to an inability to provide accurate reporting and monitoring.

Market risk - movements in the valuations of the VCT's investmentswill, inter alia, be connected to movements in UK Stock Market indices.

Asset liquidity risk - The Company's investments may be difficultto realise.

Market liquidity risk - Shareholders may find it difficult to selltheir shares at a price which is close to the net asset value.

Counterparty risk - A counterparty may fail to discharge anobligation or commitment that it has entered into with the Company.

The Board seeks to mitigate the internal risks by setting policyand by undertaking a key risk management review at each quarterly Boardmeeting. Performance is regularly reviewed and assurances in respect ofadequate internal controls and key risks are sought and received from theInvestment Manager and Administrator on a six monthly basis. In mitigation andthe management of these risks, the Board applies rigorously the principlesdetailed in the AIC Code of Corporate Governance. The Board also has a ShareBuy-Back policy which seeks to mitigate the Market Liquidity risk. This policyis reviewed at each quarterly Board Meeting.

Cautionary Statement

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

Investment Policy

The Company's policy is to invest primarily in a diverse portfolioof UK unquoted companies. Investments are structured as part loan and partequity in order to receive regular income and to generate capital gains fromtrade 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 incumbentmanagement teams in acquiring the business they manage but do not yet own.Investments are primarily made in companies that are established andprofitable.

The Company has a small legacy portfolio of investments incompanies from the period prior to 30 September 2008, when it was amulti-manager VCT. This includes investments in early stage and technologycompanies and in companies quoted on the AiM or ISDX.

The Company's cash and liquid resources are invested in a range ofinstruments of varying maturities, subject to the overriding criterion thatthe risk of loss of capital be minimised.

VCT regulation

The investment policy is designed to ensure that the Companycontinues 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 ofits investments throughout the period in shares or securities comprised in VCTqualifying holdings of which a minimum overall of 30% by value (70% for fundsraised after 6 April 2011) must be in ordinary shares which carry nopreferential rights (save as may be permitted under VCT rules). In addition,although the VCT can invest less than 30% (70% for funds raised after 6 April2011) of an investment in a specific company in ordinary shares it must haveat least 10% by value of its total investments in each VCT qualifying companyin ordinary shares which carry no preferential rights (save as may bepermitted under VCT rules).

The companies in which investments are made must have no more than£15 million of gross assets at the time of investment and £16 millionimmediately following the investment to be classed as a VCT qualifyingholding.

Asset mix

The Company initially holds its funds in a portfolio of readilyrealisable interest-bearing investments and deposits. The investment portfolioof qualifying investments is built up over a three year period with the aim ofinvesting and maintaining at least 70% of net funds raised in qualifyinginvestments.

Risk diversification and maximum exposures

Risk is spread by investing in a number of different businessesacross different industry sectors. To reduce the risk of high exposure toequities, each qualifying investment is structured to maximise the amountwhich may be invested in loan stock.

Co-investment

The Company aims to invest in larger, more mature unquotedcompanies through investing alongside the three other VCTs advised by theInvestment Manager with a similar investment policy. This enables the Companyto participate in combined investments advised on by the Investment Manager ofup to £5 million.Borrowing

The Company's Articles permits borrowing up to 10% of the adjustedcapital and reserves (as defined therein). However, it has never borrowed andthe Board has no current plans to undertake any borrowing.

Management

The Board has overall responsibility for the Company's affairsincluding the determination of its investment policy. Investment anddivestment proposals are originated, negotiated and recommended by the Managerand are then subject to approval by the Directors.

Investment Manager's Review

Overview

This has been a busy year for the portfolio, which has achieved arecord level of realisations totaling £26.643 million. In the early part ofthe year new investment activity was also strong, with the company supportingthe MBO of EMaC and financing the acquisition of Lowe Alpine through aninvestment in Equip Outdoor Technologies (EOTH Limited). However, theenvironment for new investment became much more problematic in the lattermonths, for a number of reasons. First of these was the second dip intorecession which revived uncertainty surrounding the extent and depth of therecovery. Lack of clarity regarding changes to VCT regulations furtherdampened the fragile market. Nonetheless, dealflow has improved in recentmonths, in terms of the number of deals coming forward, although concludingtransactions has continued to be difficult. We have a number of interestingopportunities in the pipeline and are therefore hopeful that the pace of newinvestment will increase again. Uncertainty over the future persists,particularly amongst potential sellers of businesses, but our investmentapproach combining debt and equity continues to be compelling to companiesseeking investment in a market where availability of bank finance remainspatchy at best. This means that management buyout teams are increasinglyturning to us as a reliable source of funding for their plans.The VCT has an exceptionally strong liquidity position at present,so is well placed to invest. In response, we are widening the scope of thedeals which we target. We are also seeking to identify opportunities to investmore capital to support the expansion of successful businesses in the existingportfolio, including where appropriate, deploying loan funding to supportportfolio companies' growth plans.We believe that the VCT's strategy of investing in well-structuredMBO deals; supporting highly motivated management teams; focusing on acquiringestablished, profitable, positive cashflow businesses; and investing partly inincome yielding loan stocks substantially increases the degree of downsideprotection to Shareholders' capital. We have noted the recent change in VCTlegislation preventing certain types of MBOs, but also note that thisrestriction does not apply to the substantial level of funds held by the VCTfrom earlier fundraisingsThe strategy above is executed by retaining and developing aportfolio of successful companies until each has reached the optimal point fora profitable realisation. In the meantime, the portfolio routinely benefitsfrom returns of loan stock interest, dividends and loan repayments, during thelife of an investment.New investment

Three new investments were completed during the year under reviewtotalling £5.007 million, in addition to £6 million invested into six newacquisition vehicle investments. An additional investment of £1 million into afurther acquisition vehicle, Sawrey, was also completed and used to supportthe MBO of Tessella as explained below.

The first two of these new investments were completed shortly afterthe last year-end in October 2011. Firstly, the VCT made an investment of£1.383 million to provide mezzanine finance as part of a £4.45 milliontransaction by the Manager to support the acquisition of the internationalintellectual property and assets of Lowe Alpine Srl from administration inItaly by Equip Outdoor Technologies Limited, a company specialising in owningand distributing brands focused on the outdoor sector, including theworld-renowned Rab range of mountaineering clothing. This investment continuesto be valued at cost. It has two very strong brands and is making steadyprogress and gaining market share despite well-publicised volatility in thesector.Secondly, a new investment of £1.878 million was made, as part of£6 million deal, to support the MBO of EMaC Limited, the UK's leading providerof outsourced service plans to franchised dealers in the automotive sector.EMaC employs 55 people and currently manages over 350,000 plans for over 1,000motor dealers in the UK. Despite a promising start, we are prudently valuingthis investment at cost.The third new investment was made in July 2012, when the Companyinvested £1.745 million to support the MBO of Tessella, an internationalprovider of science-powered technology and consulting services, using theCompany's existing investment of £1 million in the acquisition vehicle Sawreyand an additional £745k from its cash reserves. Founded in 1980, the companydelivers innovative and cost-effective solutions to complex real-worldcommercial and technical challenges such as developing smarter drug trials andminimising risk in oil and gas exploration. This company has made anencouraging start since investment.We are confident that our Operating Partner programme will continueto generate successful investments for the Company and accordingly, seveninvestments have been made during the year into new acquisition vehicles of £1million each, totalling £7 million. One of these, Sawrey, was used to completethe Tessella investment, referred to above. The remaining six companiescontinue to pursue an active search for investment opportunities. Each of theacquisition vehicles is headed by an experienced Chairman, well-known to us,who is working closely with us in seeking to identify and complete investmentsin specific sectors relevant to their industry knowledge and experience. Wehave established these companies to provide time for us to identify and investin suitable target companies at sufficiently attractive prices.Four of the acquisition vehicles in which the Company invested inSeptember 2010, Backbarrow, Bladon Castle Management, Rusland Management andTorvar, did not find sufficiently attractive investment opportunities at theright price. These companies have therefore repaid their loan stock, and beensold to a new acquisition vehicle, Watchgate Limited, which has the intentionof continuing to seek similar opportunities, building on the work of thesecompanies to date.

Follow-on investments

Two investee companies received further funds in the year. OnlyImage Source has required a significant injection of further cash. This wasmade in the form of a loan of £1.450 million in December 2011 at the time ofthe resolution of a legal dispute with a former employee and shareholder inthat company. This company has implemented changes to remain competitive in achallenging market where independent distributors have found it difficult tomaintain revenue. The company merged with Cultura Creative in October 2012 tocreate Europe's largest independent image business. The combined business willbenefit from significantly reduced overhead costs and routes to market.

A smaller follow-on investment of £45k was made into PXP in June2012 as part of a major re-structuring of the company to enable PXP tocontinue to trade following a period of poor trading in a challenging market.Trading in recent months has started to show improvement.

Realisations

The year under review has been notably strong for realisations.Taken as a whole, a total of £23.706 million was realised by the Company overthe investment lives of App-DNA, DiGiCo, Camwood and Iglu.

The VCT realised its investment in App-DNA in November 2011 by wayof a trade sale to Citrix Systems Inc. The net cash consideration from thesale of £14.542 million contributed to net proceeds to the Company over thelife of the investment of £16.854 million, which, including contingentconsideration, represented an exceptional 32 times return on the Company'soriginal investment of £514k.

In December 2011, the VCT made a partial disposal of its investmentin DiGiCo, a fast growing, technology-led business that designs market-leadingdigital sound-mixing consoles used by the live music market, theatres and manycorporate users, to ISIS Equity Partners. The VCT received cash proceeds of£1.405 million, which contributed to total cash proceeds of £2.864 millionover the life of the investment, representing a 4.36 times cash return on thisinvestment to date. In addition, the VCT continues to hold a residual loanstock and equity (1.57%) investment valued at £876k, which represented another1.4 times the original investment cost. Since the original investment by theVCT, the business has invested heavily in R&D and turnover has grown from £8million in 2007 to an anticipated £25 million in 2012. The company, now calledDiGiCo Global Limited, continues to trade strongly.In April 2012, the VCT sold its investment in Camwood Enterprises,a company which was spun out of App-DNA in 2010, to the company's managementteam for a net cash consideration of £943k compared to a prior year-endvaluation of £499k. Total proceeds to the VCT over the life of the investmentamounted to £1.458 million, representing a 2.8 times return on the VCT'sinvestment cost of £514k.In May 2012, the Company realised its entire investment in Iglu.comHolidays, the specialist online ski and cruise holiday travel agent, for netcash proceeds and interest of £1.445 million through a sale to Growth CapitalPartners. This realisation contributed to total cash proceeds of £2.530million to the Company over the two and a half year life of the investment,representing a 2.5 times return on the Company's original investment of £1million. We supported this established online ski agent through a period ofrapid growth in its cruise holiday business since the MBO in December 2009.Iglu is now one of the leading distributors of cruise holidays, in the UK, inits sector, and the largest independent retailer of ski holidays. Thecompany's revenues now exceed £90 million.In June 2012, the VCT sold its entire investment in Letraset for acash consideration of £369k compared to a valuation of £234k at 30 September2011. Total proceeds to I&G VCT over the life of the investment amounted to£1.133 million representing a 1.13 times return on the VCT's originalinvestment cost of £1 million. The sale of Letraset represented an uplift inthe year of 58% over the opening value.The Company sold a total of 2.750 million shares in IDOX plc duringthe year under review, realising total net proceeds of £1.018 million whichrepresented a 3.53 times realised return on the VCT's original investment costof £288k. The VCT continues to retain a residual holding in this company,which had a value of £2.058 million at the year-end. A further 1.250 millionshares were sold following the year-end in November 2012 at an average priceof 41 pence per share.The Company sold a total of 87k shares in Tikit Group plc duringthe year under review, realising total net proceeds of £276k which representeda 2.75 times realised return on the VCT's original investment cost of £101k.The VCT continues to retain a residual holding in this company, which had avalue of £247k at the year-end. A further 12,500 shares were sold followingthe year-end in October 2012 at a price of 325 pence per share.A total of £1.278 million (including any premiums paid) has alsobeen received in loan stock repayments from portfolio companies during theyear to 30 September 2012. In January 2012, the company received partial loanstock pre-payments from Focus Pharma of £162k and Fullfield of £229k. BlazeSigns repaid a total of £323k in three separate payments received in May -August 2012, and in June 2012 the VCT received a payment of £564k fromAquasium.

Also, in January 2012, the Company accepted a repayment of £250kfrom NexxtDrive in full repayment of this company's outstanding loan stock(held at a cost of £325k) and arrears of interest.

Further loan repayments of £125k and 609k were received fromDuncary 8 and Blaze Signs respectively following the year-end.

Subsequent to the year-end, Tikit Group plc has received a recommended offerfrom BT plc at 4.16 pence per share valuing the VCT's investment at £321,556compared to the valuation at 30 September 2012 of £247,350.

Also subsequent to the year-end Espial Group Inc, a company listed on theToronto Stock Exchange, announced a recommended offer for ANT plc at 20.5pence per share, valuing the VCT's investment at £134,602 compared to thevaluation at 30 September 2012 of £131,319.

In November 2012, and subsequent to the year-end, the Companyrealised its entire holding in Brookerpaks, for proceeds of £600k.

Portfolio review

The portfolio at 30 September 2012 comprised 47 investments with acost of £35.981 million and valued at £31.206 million.

The portfolio's performance as a whole continues to be robust. ATGMedia, DiGiCo and IDOX continue to be the strongest performers. Blaze has madea steady recovery from the difficulties it experienced during the economicdownturn, enabling it to repay part of its loans as noted above. CB Importscontinues to trade well overall and is improving its performance compared tolast year. Focus is expected to exceed its budget, is performing well onproduct development and has a healthy pipeline of new products. Fullfield hasmaintained its solid start and cash generation at this company has beenstrong, as evidenced by its early partial repayments of its loan stock duringthe year.Aquasium is ahead of its budget after many years of disappointingperformance with good prospects for 2013. The sale of its US subsidiary EBTECto NASDAQ-listed EDAC Technologies Corporation was completed in June 2012;this enabled the company to repay some of its outstanding loan stock andinterest to the VCT. Alaric is demonstrating sustained profit growth enablingit to repay your company's loan stock investment.

ASL made a small acquisition during the year of Arkle ReprographicConsultants Limited, a Midlands based printer and photocopier dealer, fundedfrom the company's cashflow. The company has successfully integrated itsacquisition of Transcribe in 2011, which is trading well, but the group'soverall performance is behind its investment plan.

British International has had a difficult year, with the persistentand escalating reduction in passenger journeys on its scheduled route to theIsles of Scilly leading to a material reduction in profitability; this wascompounded by the delays in completing the sale to Sainsbury of its heliportin Penzance, which was dependent on full planning permission being granted.Completion finally took place in October 2012 and this enabled the company tofully repay its bank borrowings.

The continuing downturn in the construction and house buildingsectors continues to affect the performance of PXP and Plastic Surgeon,although management have worked well to reposition both of these businessesand make the necessary cuts in costs. The market environment for Youngmanremains uncertain, although it has now fully repaid its bank debt and is wellpositioned to benefit from any upturn in its markets. Westway suffered fromlower revenues last year but is now growing profits again and has strongcustomer relationships. RDL had a disappointing first year with a netreduction in contract staff placements in its core pharmaceuticals and ITmarkets but has taken measures to improve performance. Faversham has beenstreamlining its operations although progress is slower than anticipated.

Investment outlook

This has been an unprecedented year for realisations for the VCT,leaving us with ample liquidity to pursue our MBO strategy. We remain hopefulof completing a healthy period of new investment over the coming year. As partof our plans to increase the rate of investment, we will be seekingopportunities to provide further capital for expansion of successful existinginvestments.

We continue to pursue a prudent approach to making new investmentsand ensuring that the portfolio remains well capitalised. We are confidentthat good returns can be earned for investors.

Details of the Company's twelve largest investments by value as at30 September 2012 (excluding the six acquisition vehicles in the portfolio,which have yet to complete an investment and have a current cost and valuationof £1 million each) are set out on the following below.

Twelve Largest Investments(Excluding the six acquisition vehicles in the portfolio at 30 September 2012)

ATG Media Holdings Limited IDOX plc Ingleby (1879) Limited - EMaCwww.antiquestradegazette.com www.idoxplc.com www.emac.co.uk Cost £888,993 Cost £584,710 Cost £1,878,124 Valuation £2,270,884 Valuation £2,058,371 Valuation £1,878,124 Basis of valuation Basis of valuation Basis of valuationEarnings multiple Bid price (AiM quoted) Cost Equity % held Equity % held Equity % held8.53% 1.55% 9.39% (fully diluted) Income receivable in year Income receivable in year Income receivable in year£71,889 £44,296 £144,181 Business Business BusinessPublisher and on-line auction Development and supply of knowledge Provider of service plans forplatform operator management products the motor trade Location Location LocationLondon London Crewe History History HistoryManagement buyout AiM flotation Management buyout Audited financial information Audited financial information

Audited financial information

Year ended 30 September Year ended 31 October 2011 Year ended 31 December 2011 2011 1Turnover £8,927,000 Turnover £38,605,000 Turnover £4,990,000Operating profit £1,831,000 Operating £9,506,000

Operating profit £867,000

profitNet assets £3,179,000 Net assets £34,371 ,000 Net assets £1,535,000 Year ended 30 September Year ended 31 October 2010 Year ended 31 December 2010 2010 1Turnover £7,215,000 Turnover £31,268,000 Turnover £4,042,000Operating profit £1,261,000 Operating £7,504,000

Operating profit £1,596,000

profitNet assets £2,506,000 Net assets £31,012 Net assets £2,712,000 1 The financial information quoted above relates to the operating subsidiary, EMaC Limited Tessella Holdings Limited Fullfield Limited - Blaze Signs Holdings Motorclean Limited www.tessella.com www.motorclean.net www.blaze-signs.com Cost £1,745,351 Cost £1,489,097 Cost £1,090,334 Valuation £1,745,351 Valuation £1,652,768 Valuation £1,448,159 Basis of valuation Basis of valuation Basis of valuationCost Earnings multiple Earnings multiple Equity % held Equity % held Equity % held7.48% 11.74% 12.54% Income receivable in year Income receivable in year Income receivable in year£25,214 £144,215 £147,784 Business Business BusinessProvider of science powered Provider of vehicle Manufacturer and installertechnology and consulting cleaning and valet services of signsservices Location Location LocationAbingdon, Oxfordshire Laindon, Broadstairs, Essex Kent History History HistoryManagement buyout Management buyout Management buyout Audited financial Audited financial Audited financialinformation information information

Year ended 31 March 2012 1 Year ended 31 March 2012 1

Year ended 31 March 2012Turnover £18,533,000 Turnover £2300 £23,818,000 Turnover £20,878,000 Operating profit £278,000 Operating profit £1,752,000 Operating profit £1,761,000 Net assets £2,404,000 Net assets £9,044,000

Net assets £2,918,000

Year ended 31 March 2011 1 Year ended 31 March 2011 1

Year ended 31 March 2011Turnover £16,941,000 Turnover £22,400,000 Turnover £20,127,000Operating profit £346,000 Operating profit £1,631,000 Operating profit £1,889,000Net assets £2,403,000 Net assets £2,344,000

Net assets £2,937,000

1 The financial information 1 The financialquoted above relates to the information quoted aboveoperating subsidiary, relates to the operatingTessella Limited subsidiary, Motorclean(previously Tessella plc) Limited EOTH Limited RDL Corporation Limited CB Imports Group Limited- Equip Outdoor Technologieswww.equipuk.com www.rdlcorp.com www.countrybaskets.co.uk Cost £1,383,313 Cost £1,441,667 Cost £1,000,000 Valuation £1,383,313 Valuation £1,271,194 Valuation £1,128,228 Basis of valuation Basis of valuation Basis of valuationCost Earnings multiple Earnings multiple Equity % held Equity % held Equity % held2.49% (fully diluted) 13.04% 5.79% Income receivable in year Income receivable in year Income receivable in year£124,080 £133,012 £76,355 Business Business BusinessSupplier of branded outdoor Recruitment consultants for the Importer and distributor ofequipment and clothing including pharmaceutical, business artificial flowers, floralthe Rab and Lowe Alpine brands intelligence and IT industries

sundries and home décor

products. Location Location LocationAlfreton, Derbyshire Woking, Surrey

East Ardsley, West Yorkshire

History History HistoryManagement buyout Management buyout Management buyout Audited financial information Audited financial information

Audited financial information

Year ended 31 January 2012 Year ended 31 December 2011

Year ended 31 December 2011Turnover £15,504,000 Turnover £18,266,000 Turnover £23,130,000Operating profit £1,830,000 Operating profit £1,214,000 Operating profit £969,000Net assets £6,173,000 Net assets £1,501,000

Net assets £4,421,000

Year ended 28 February 2011 1 Year ended 31 December 2010

Year ended 31 December 2010Turnover £13,457,000 Turnover £3,700,000 Turnover £21,197,000Operating profit £2,354,000 Operating profit £279,000 Operating profit £2,139,000Net assets £4,706,000 Net assets £1,846,000

Net assets £4,259,000

1 The financial informationquoted above relates to theoperating subsidiary, EquipOutdoor Technologies Limited Image Source Group Limited DiGiCo Global Limited

Westway Services Holdings

non-qualifying) (2010) Limitedwww.imagesource.com www.digico.org www.westwayservices.com Cost £1,754,558 Cost £876,497 Cost £353,589 Valuation £925,470 Valuation £876,497

Valuation £838,782

Basis of valuation Basis of valuation Basis of valuationEarnings multiple Cost supported by earnings Earnings multiple multiple calculation Equity % held Equity % held Equity % held 39.60% (diluted) 1.57% 4.72% Income receivable in year Income receivable in year Income receivable in year£58,569 £28,381 £31,708 Business Business BusinessRoyalty-free picture Designer and manufacturer Installation, service andlibrary of digital audio mixing desks

maintenance of air

conditioning systems

Location Location

Location

London Chessington, Surrey

Greenford, Middlesex

History History HistoryManagement buyout Secondary buyout Management buyout Audited financial Audited financial Audited financialinformation information information

Year ended 31 December 2011 Year ended 31 December 2011

Year ended 28 February 2011 Turnover £4,525,,000

Turnover £21,314,000 Turnover

£27,521,000

Operating loss £2,120,000 Operating profit £6,466,000

Operating profit £3,942,000Net assets £260,000 Net assets £7,932,000

Net assets £3,769,000

Year ended 31 December 2010 Year ended 31 December 2010

Year ended 28 February 2010 1Turnover £6,053,000 Turnover £18,757,000 Turnover £13,352,000Operating profit £165,000 Operating profit £5,501,000 Operating profit £1,638,000Net assets £2,547,000 Net assets £8,909,000 Net assets £1,826,000 1 For the eight month period ended 28 February 2010

The remaining 35 investments in the portfolio (including the sixacquisition vehicles in the portfolio at 30 September 2012) had a current costof £21.495 million and were valued at 30 September 2012 at £13.729 million.

Further details of the investments in the portfolio may be found on the Mobeuswebsite: www.mobeusequity.co.uk.

Operating profit is stated before charging amortisation of goodwillwhere appropriate for all investee companies.

Investment Portfolio Summary

for the year ended 30 September 2012

Total

Total Additional Total % of % of

cost

valuation investments valuation at equity portfolio

at at held by value 30-Sep-12 30-Sep-11 30-Sep-12 1 £ £ £ £ ATG Media Holdings Limited 888,993 1,675,368 - 2,270,884 8.5% 7.28%

Publisher and online auction platform operator

I-Dox plc 3 584,710

1,796,667 36 2,058,371 1.6% 6.60%Developer and supplier of knowledge management products

Ingleby (1879) Limited 1,878,124 - 1,878,124 1,878,124 9.4% 6.02%trading as EMaC)Provider of service plans for the motor trade Tessella Holdings Limited 1,745,351 - 1,745,351 1,745,351 7.5% 5.59%(formerly Oval (2253) Limited)Provider of science powered technology and consulting services Fullfield Limited 1,489,097 1,718,189 - 1,652,768 11.7% 5.29%(trading as Motorclean)Vehicle cleaning andvalet services Blaze Signs Holdings Limited 1,090,334 1,354,238 - 1,448,159 12.5% 4.64%

Manufacturer and installer of signs

EOTH Limited (trading as Equip Outdoor Technologies) 1,383,313 - 1,383,313 1,383,313 2.5% 4.43%Distributor of branded outdoor equipment and clothingincluding the Rab and Lowe Alpine brands

RDL Corporation Limited 1,441,667 1,383,792 - 1,271,194 13.0% 4.07%

Recruitment provider within the pharmaceutical, businessintelligence and IT sectors

CB Imports Group Limited 1,000,000 1,025,448 - 1,128,228 5.8% 3.62%

(trading as Country Baskets)Importer and distributor of artificial flowers, floralsundries and home decor products

Ackling Management Limited 1,000,000 - 1,000,000 1,000,000 12.5% 3.20%Company seeking to acquire businesses in the foodmanufacturing, distributionand brand management sectors Fosse Management Limited 1,000,000

- 1,000,000 1,000,000 12.5% 3.20%Company seeking to acquire businesses in the brand management,consumer products and retail sectors

Peddars Management Limited 1,000,000

- 1,000,000 1,000,000 12.5% 3.20%Company seeking to acquire businesses in the databasemanagement, mapping, data mapping and management services tolegal and building industries

Almsworthy Trading Limited 1,000,000

- 1,000,000 1,000,000 12.5% 3.20%Company seeking to acquire businesses in the specialistconstruction, building support building products and relatedservices sectors

Culbone Trading Limited 1,000,000

- 1,000,000 1,000,000 12.5% 3.20%Company seeking to acquire businesses in the outsourcedservices sector

Madacombe Trading Limited 1,000,000

- 1,000,000 1,000,000 12.5% 3.20%Company seeking to acquire businesses in the engineeringservices sector

Image Source Group Limited 1,754,558

238,977 1,449,558 925,470 20.0% 2.97%Royalty free picture library

DiGiCo Global Limited 876,497 - 876,497 876,497 1.6% 2.81%(formerly Newincco 1124 Limited)2Designer and manufacturer of digital audio mixing desks Westway Services Holdings (2010) Limited 353,589 928,577 - 838,782 4.7% 2.69%

Installation, service and maintenance of air conditioningsystems

Duncary 8 Limited 634,923 535,699 - 814,025 25.5% 2.61%(trading as BG Consulting)Technical training business Youngman Group Limited 1,000,052 682,203 - 700,992 8.5% 2.25%

Manufacturer of ladders and access towers

Aquasium Technology Limited 4 500,000 486,319 - 677,971 16.7% 2.17%

Manufacturing and marketing of bespoke electron beam weldingand vacuum furnace equipment

ASL Technology Holdings Limited 1,769,790 1,674,630 - 654,155 9.6% 2.10%

Printer and photocopier services

Focus Pharma Holdings Limited 405,407 628,706 - 636,574 2.1% 2.04%

Licensor and distributor of generic pharmaceuticals

British International Holdings Limited 590,909 646,718 - 590,909 5.0% 1.89%

Helicopter service operator

Original Additions Topco Limited 6 25,696 537,948 - 537,948 0.0% 1.72%

Sale of false nails, nail accessories, false eyelashes,depilatory products, hair lightening and perming products

Brookerpaks Limited 55,000 576,042 - 509,209 17.1% 1.63%

Importer and distributor of garlic and vacuum-packedvegetables

Machineworks Software Limited 20,471 407,310 - 479,459 9.2% 1.54%

Provider of software for CAD and CAM vendors

Alaric Systems Limited 4 565,156 167,114 - 468,495 6.9% 1.50%

Software developer and provider of support services for retailcredit card payment systems

Omega Diagnostics Group plc 279,996 291,663 - 373,328 2.7% 1.20%

In-vitro diagnostics for food intolerance, autoimmune diseasesand infectious diseases

The Plastic Surgeon Holdings Limited 406,082 101,521 - 248,878 6.1% 0.80%

Supplier of snagging and finishing services to the propertysector

Tikit Group plc 3 88,892 458,094 - 247,350 0.5% 0.79%

Supplier of IT solutions and support services to legal andaccounting businesses

Faversham House Holdings Limited 487,744 487,744 - 192,385 8.8% 0.62%

Publisher, exhibition organiser and operator of websites forthe environmental, visual communications and building services

Vectair Holdings Limited 53,400 139,125 - 164,178 4.6% 0.53%

Designer and distributor of washroom products

ANT plc 4 462,816 144,451 - 131,319 2.7% 0.42%

Provider of embedded browser/email software for consumerelectronics and Internet appliances

Lightworks Software Limited 20,471 54,138 - 84,060 9.2% 0.27%

Provider of software for CAD and CAM vendors

Racoon International Holdings Limited 550,852 157,755 - 79,026 7.7% 0.25%

Supplier of hair extensions, hair care products and training

PXP Holdings Limited 965,371 - 45,195 45,195 6.0% 0.15%(trading as Pinewood Structures)Designer, manufacturer and supplier of timber frames forbuildings Monsal Holdings Limited 468,610 42,446 - 42,446 5.6% 0.14%

Supplier of engineering services to the water and wastesectors

Corero Network Security plc 4 600,000 35,363 - 31,434 0.2% 0.11%

Provider of e-business technologies

Sarantel Group plc 4 1,881,252 39,485 - 17,019 0.8% 0.05%

Developer and manufacturer of antennae for mobile phones andother wireless devices

Data Continuity Group Limited (formerly DCG Group Limited) 4 90,034 - 6,711 2,171 11.1% 0.01%Design, supply and integration of data storage solutionsOxonica Limited 2,524,527 69,624 - - 0.00%

International nanomaterials group

NexxtDrive Limited 5 487,014 162,500 - - 5.1% 0.00%

Developer and exploiter of mechanical transmissiontechnologies

Aigis Blast Protection Limited 4 272,120 - - - 0.4% -

Specialist blast containment materials company

Legion Group plc (in administration) 150,000 - - - -

Provider of manned guarding, mobile patrols and alarm responseservices

Biomer Technology Limited 5 137,170 - - - 4.4% -

Developer of biomaterials for medical devices

Watchgate Limited 1,000 - - - 33.3% -Holding company Disposed of in year App-DNA Group Limited - 11,633,974 - - - -

Provider of software repackaging services

DiGiCo Europe Limited 2 - 1,258,330 - - - -

Designer and manufacturer of digital audio mixing desks

Iglu.com Holidays Limited - 888,657 - - - -

Online ski and cruise travel agency

Backbarrow Limited - 1,000,000 - - - -Company seeking to acquire businesses in the foodmanufacturing, distribution and brand management sectors Bladon Castle Management Limited - 1,000,000 - - - -

Company seeking to acquire businesses in the brand management,consumer products and retail sectors

Rusland Management Limited - 1,000,000 - - - -

Company seeking to acquire businesses in the brand management,consumer products and retail sectors

Torvar Limited - 1,000,000 - - - -

Company seeking to acquire businesses in the databasemanagement, mapping, data mapping and management servicessectors

Camwood Enterprises Limited - 499,182 - - - -

Provider of software repackaging services

Letraset Limited - 234,385 - - - -

Manufacturer and worldwide distributor of graphic art products

Total 35,980,988 37,162,382 13,384,785 31,205,667 100.00%Notes

1 The percentage of equity held for these companies may be subjectto further dilution of an additional 1% or more if, for example, management ofthe investee company exercises share options.

2 As well as the consideration on the disposal of DiGiCo EuropeLimited, £874,926 of loan stock in DiGiCo Global Limited and 1.57% of itsequity were also issued to the Company.

3 Investment formerly managed by Nova Capital Management Limiteduntil 31 August 2007.

4 Investment formerly managed by Foresight Group LLP up to variousdates ending on or before 10 March 2009.

5 Investment formerly managed by Nova Capital Management Limiteduntil 31 August 2007 and by Foresight Group until various dates ending on orbefore 10 March 2009.

6 As part of the consideration on the disposal of Amaldis (2008)Limited, £537,948 of Original Additions Topco Limited loan stock was issued tothe Company.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Directors' Report,the Directors' Remuneration Report and the financial statements in accordancewith applicable law and regulations. They are also responsible for ensuringthat the Annual Report includes information required by the Listing Rules ofthe Financial Services Authority.Company law requires the Directors to prepare financial statementsfor each financial year. Under that law the Directors have elected to preparethe financial statements in accordance with United Kingdom Generally AcceptedAccounting Practice (United Kingdom Accounting Standards and applicable law).Under company law the Directors must not approve the financial statementsunless they are satisfied that they give a true and fair view of the state ofaffairs of the company and of the profit or loss of the company for that year.

In preparing these financial statements the Directors are requiredto:

- select suitable accounting policies and then apply them consistently;- make judgements and accounting estimates that are reasonable and prudent;- state whether applicable UK accounting standards have been followed, subject to

any material departures disclosed and explained in the financial statements;- prepare the financial statements on the going concern basis unless it is

inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accountingrecords that are sufficient to show and explain the Company's transactions, todisclose with reasonable accuracy at any time the financial position of theCompany and to enable them to ensure that the financial statements comply withthe Companies Act 2006. They are also responsible for safeguarding the assetsof the Company and hence for taking reasonable steps for the prevention anddetection of fraud and other irregularities.The Directors are responsible for the maintenance and integrity ofthe corporate and financial information included on the Company's website.Legislation in the United Kingdom governing the preparation and disseminationof the financial statements and other information included in annual reportsmay differ from legislation in other jurisdictions.

The Directors confirm to the best of their knowledge that:

the financial statements, which have been prepared in accordance with UK

Generally Accepted Accounting Practice and the 2009 Statement of Recommended(a) Practice, `Financial Statements of Investment Trust Companies and Venture

Capital Trusts' (SORP), give a true and fair view of the assets, liabilities,

financial position and the profit of the Company.

(b) the management report, included within the Chairman's Statement, Investment

Manager's Review, Investment Portfolio Summary and Directors' Report includes a

fair review of the development and performance of the business and the position

of the Company, together with a description of the principal risks and

uncertainties that it faces.For and on behalf of the Board:Colin HookChairmanIncome Statement

for the year ended 30 September 2012

Year ended 30 September 2012

Year ended 30 September 2011

Notes Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Net unrealisedgains oninvestments - 2,364,362 2,364,362 - 10,870,219 10,870,219 Net gains onrealisation ofinvestments - 5,243,190 5,243,190 - 343,231 343,231Income 2 2,004,297 - 2,004,297 1,654,663 - 1,654,663 InvestmentManager `s fees 3a (290,664) (871,993) (1,162,657) (237,946) (713,837) (951,783)

Investment

Managers' performance fees 3b - (3,503,000) (3,503,000) - - - Other expenses (499,164) - (499,164) (375,837) - (375,837) Provision for litigationcost no longerrequired/ (charged) - 1,337,456 1,337,456 - (1,337,456) (1,337,456) --------- --------- --------- --------- --------- ---------Profit on ordinaryactivities beforetaxation 1,214,469 4,570,015 5,784,484 1,040,880 9,162,157 10,203,037 Tax on profit onordinary activities (224,747) 224,747 - (176,808) 176,808 - --------- --------- --------- --------- --------- ---------Profit on ordinaryactivities aftertaxation for thefinancial year 989,722 4,794,762 5,784,484 864,072 9,338,965 10,203,037 --------- --------- --------- --------- --------- ---------Basic and dilutedearnings per OrdinaryShare: 7 2.26p 10.97p 13.23p 2.21p 23.83p 26.04p

All the items in the above statement derive from continuingoperations. No operations were acquired or discontinued in the year. The totalcolumn is the Profit and Loss Account of the Company. There were no otherrecognised gains and losses in the year.

Other than the revaluation movements arising in investments held atfair value through profit and loss, there were no differences between theprofit as stated above and at historical cost.

Balance Sheetas at 30 September 2012 as at 30 September 2012 as at 30 September 2011 Notes £ £ £ £ £ £Fixed assetsInvestments at fair value 8 31,205,667 37,162,382 Current assetsDebtors and prepayments 9 727,598 280,709Current investments 10 17,523,440 11,682,461Cash at bank 4,861,440 1,577,420 --------- --------- --------- 23,112,478 13,540,590 Creditors: amountsfalling due withinone year (3,766,160) (212,717) --------- --------- --------- ---------Net current assets 19,346,318 13,327,873 Provision for liabilities andcharges - (1,337,456) ====== ======Net assets 50,551,985 49,152,799 ====== ====== Capital and reservesCalled up share capital 461,157 406,920Share premium account 11 11,898,621 5,669,141Capital redemptionreserve 11 197,265 187,309Capital reserve -unrealised 11 1,611,146 12,350,858Special reserve 11 12,721,596 17,139,273Profit and loss account 11 23,662,200 13,399,298 ====== ======Equity Shareholders' funds 50,551,985 49,152,799 ====== ====== Basic and diluted netasset value per share Ordinary Shares 12 109.62p 120.79p

Reconciliation of Movements in Shareholders' Funds

For the year ended 30 September 2012

Year ended Year ended 30 September 2012 30 September 2011 £ £ Opening shareholders' funds 49,152,799 36,604,696 Net share capital bought back in the year (913,037)

(1,475,019)

Net share capital subscribed for in the year 6,293,673 5,353,709Profit for the year 5,784,484 10,203,037Dividends paid in the year 6 (9,765,934) (1,533,624) ====== ======Closing shareholders' funds 50,551,985 49,152,799 ====== ======Cash Flow Statement

For the year ended 30 September 2012

Year ended Year ended 30 September 2012 30 September 2011 Operating activities £ £ £ £Investment income received 1,955,985

1,571,454

VAT received and interest thereon - 34,370Other income 4,861 3,647Investment management fees paid (1,162,657) (1,160,893)Other cash payments (561,556) (480,615) -------- -------- -------- --------Net cash inflow/(outflow) from operating activities 236,633 (32,037) Investing activitiesAcquisition of investments 8 (13,255,722) (2,739,946)Disposal of investments 8 26,468,137 4,907,493 -------- -------- -------- --------Net cash inflow from investing activities 13,212,415 2,167,547 Equity DividendsPayment of equity dividends 6 (9,765,934) (1,533,624) -------- -------- -------- --------Net cash inflow before liquid resource managementand financing 3,683,114 601,886 Management of liquid resourcesIncrease in monies held pending investment (5,840,979) (2,973,888) FinancingIssue of Ordinary Shares 6,293,673 5,353,709Purchase of own shares (851,788) (1,510,823) -------- -------- -------- -------- 5,441,885 3,842,886 -------- -------- -------- --------Increase in cash for the year 3,284,020 1,470,884 -------- -------- -------- --------Notes1 Accounting policies

The following accounting policies have been applied consistently throughout the

year:

a) Basis of accounting

The accounts have been prepared under UK Generally Accepted Accounting Practice

(UK GAAP) and the Statement of Recommended Practice, `Financial Statements of

Investment Trust Companies and Venture Capital Trusts' ("the SORP") issued by

the Association of Investment Companies in January 2009. The financial

statements are prepared under the historical cost convention except for the

revaluation of certain financial instruments. b) Presentation of the Income Statement

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 the 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. c) Investments All investments held by the Company are classified as "fair value through

profit and loss", and are valued 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 on organised financial markets, fair value is

generally determined by reference to Stock Exchange market quoted bid prices at

the close of business on the balance sheet date. Purchases and sales of quoted

investments are recognised on the trade date where a contract of sale exists

whose terms require delivery within a time frame determined by the relevant

market. 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: (i) Where a value is indicated by a material arms-length transaction by an

independent third party in the shares of a company, this value will be used.

(ii) In the absence of (i), and depending upon both the subsequent trading

performance and investment structure of an investee company, the valuation

basis will usually move to either:-

(a) an earnings multiple basis. The shares may be valued by applying a suitable

price-earnings ratio to that company's historic, current or forecast post-tax

earnings before interest and amortisation (the ratio used being based on a

comparable sector but the resulting value being adjusted to reflect points of

difference identified by the Investment Manager compared to the sector including, inter alia, a lack of marketability). or:-

a) (b) where a company's underperformance against plan indicates a diminution

in the value of the investment, provision against cost is made, as appropriate.

Where the value of an investment has fallen permanently below cost, the loss is

treated as a permanent impairment and as a realised loss, even though the

investment is still held. The Board assesses the portfolio for such investments

and, after agreement with the Investment Manager, will agree the values that

represent the extent to which an investment loss has become realised. This is

based upon an assessment of objective evidence of that investment's future

prospects, to determine whether there is potential for the investment to

recover in value.

(iii) Premiums on loan stock investments are accrued at fair value when the Company

receives the right to the premium and when considered recoverable.

(iv) Where an earnings multiple or cost less impairment basis is not appropriate and

overriding factors apply, discounted cash flow or net asset valuation bases may be applied. 2 Income 2012 2011 £ £ Income from investments - from equities 305,650 365,331 - from OEIC funds 96,138 56,580 - from loan stock 1,540,777 1,212,795 - from bank deposits 56,871 16,309 -------- -------- 1,999,436 1,651,015 Other income 4,861 3,648 -------- -------- Total income 2,004,297 1,654,663 -------- -------- Total income comprises Revenue dividends received 401,788 421,911 Interest 1,597,648 1,229,104 Other income 4,861 3,648 -------- -------- Total Income 2,004,297 1,654,663 -------- -------- Income from investments comprises Listed UK securities 38,549 61,539 Listed overseas securities 96,138 56,580 Unlisted UK securities 1,807,878 1,516,587 -------- -------- Total Income 1,942,565 1,634,706 -------- -------- Total loan stock interest due but not recognised in the year was £352,133 (2011: £428,557).3a Investment Manager's fees Revenue Capital Total Revenue Capital Total 2012 2012 2012 2011 2011 2011 £ £ £ £ £ £ Mobeus Equity Partners LLP 290,664 871,993 1,162,657 237,946 713,837 951,783 Under the terms of a revised investment management agreement dated29 March 2010, Mobeus Equity Partners LLP ("Mobeus") (formerly Matrix PrivateEquity Partners LLP ("MPEP")) provides investment advisory, administrative andcompany secretarial services to the Company, for a fee of 2.4% per annum ofclosing net assets, calculated on a quarterly basis by reference to the netassets at the end of the preceding quarter. One sixth of this fee is subjectto minimum and maximum limits of £150,000 (2011: £150,000) and £170,000 (2011:£170,000) per annum respectively.

The investment management expense disclosed above is stated afterapplying a cap on expenses excluding IFA trail commission and exceptionalitems set at 3.25% of closing net assets at the year-end. In accordance withthe investment management agreement any excess expenses are wholly borne bythe Investment manager. The excess expenses during the year attributable tothe Investment Manager amounted to £nil (2011: £nil).

3b Investment Managers' performance fees

Revenue Capital Total Revenue Capital Total 2012 2012 2012 2011 2011 2011 £ £ £ £ £ £ Portfolio Mobeus Equity Partners LLP - 453,000 453,000 - - - Mobeus Equity Partners LLP/ Foresight Group LLP - 3,050,000 3,050,000 - - - -------- -------- -------- -------- -------- -------- - 3,503,000 3,503,000 - - -Under a Deed of Termination and Variation relating to PerformanceIncentive Agreements dated 29 March 2010, the Investment Manager's IncentiveAgreement for the former 'O' Share Fund has been continued while the former'S' Share Fund's Incentive Agreement has been terminated. Under the terms ofthe pre-merger 'O' Share Fund Incentive Agreement, each of the ongoingInvestment Manager, Mobeus Equity Partners LLP and a former InvestmentManager, Foresight Group LLP ("Foresight") are entitled to a performance feeequal to 20% of the excess of the value of any realisation of an investmentmade after 30 June 2007, over the value of that investment in an InvestmentManager's portfolio at that date ("the Embedded Value"), which value is itselfuplifted at the rate of 6% per annum subject to a High Watermark test.However, two amendments were made to this agreement for Mobeus forits portfolio. Firstly, the High Watermark was increased by £811,430, beingthe 'S' Share Fund's shortfall in total net assets from net asset value of £1per 'S' Share, at 31 December 2009. Secondly, only 70% of any new investmentmade by Mobeus after the Merger will be added to the calculation of theEmbedded Value, the value of the Investment Manager's portfolio and the valueof any realisations, for the purposes of assessing any excess.Under the above agreements, the Investment Manager (Mobeus) andformer investment manager (Foresight) may be entitled to an Incentive fee forthe year ended 30 September 2012 of £453,000 (that may be payable on theMobeus portfolio) (2011: £nil) and £3,050,000 (that may be payable on theex-Foresight portfolio, to be shared between Mobeus and Foresight) (2011:£nil). At the date of approval of these accounts, the amounts accrued abovehave not yet been agreed between the Board, and Mobeus and Foresight. Theamounts above are regarded by the Board as a prudent estimate of the amountsthat may be ultimately be agreed between the parties as payable.4 Provision for litigation costs no longer required/(charged) 2012 2011 £ £ Writeback/(charge) for the year 1,337,456

(1,337,456)

As explained in the previous year-end accounts, at 30 September2011 the Company had a prima facie obligation to meet the costs of an actionbrought by a former director and shareholder in Image Source Group Limited("IMSG").

Under an agreement between the Company and IMSG dated 6 December2011, IMSG met the cost of the settlement including the Company's pro ratashare of the legal fees incurred in defending the action up to 30 September2011 and all the legal costs incurred since. To facilitate the settlement, theCompany has lent approximately £1.45 million to IMSG on commercial terms andrepayable in 5 years. The plaintiff to the action will also be entitled to asmall percentage share of the net proceeds over and above £5 millionattributable to the ordinary shareholders from any sale of IMSG up to 31December 2016, after all loans and any outstanding interest costs and priorcharges have been repaid. This loan therefore forms part of the Company'sinvestments and has a value of £925,470 as shown in the Investment PortfolioSummary above. Accordingly, the obligation has been discharged due to IMSGagreeing to meet the costs of the settlement, funded by the loan to IMSG inthe period. Thus the provision at 30 September 2011 is no longer required at30 September 2012 and has been credited to the Income Statement.

5 Tax on ordinary activities

2012 2012 2012 2011 2011 2011 Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ a) Analysis of tax charge: UK Corporation tax on profits/(losses) for the year 224,747 (224,747) - 176,808 (176,808) - -------- --------

-------- -------- -------- --------

Total current tax charge/(credit) 224,747 (224,747) - 176,808 (176,808) - -------- --------

-------- -------- -------- --------

Corporation tax is based on a rate of 20% (2011: 20.5%) b) Profit on ordinary activities before tax 1,214,469 4,178,404

5,392,873 1,040,880 9,162,157 10,203,037

Profit on ordinary activities multiplied

by small company rate of corporation tax

in the UK of 20% (2011: 20.5%) 242,894 835,681

1,078,575 213,380 1,878,242 2,091,622

Effect of:

UK dividends (61,130) - (61,130) (74,893) - (74,893) Unrealised gains not taxable - (394,550)

(394,550) - (2,228,395) (2,228,395)

Realised gains not taxable - (1,048,638)

(1,048,638) - (70,362) (70,362)

Litigation costs - (267,491)

(267,491) - 274,178 274,178

Income not yet taxable 165 - 165 (552) - (552) Unrelieved expenditure - 693,069

693,069 - 8,402 8,402

Impact of marginal rate 42,818 (42,818) - 38,873 (38,873) - -------- --------

-------- -------- -------- --------

Actual current tax charge 224,747 (224,747) - 176,808 (176,808) -6 Dividends paid and payable 2012 2012 2012 2011 2011 2011 Revenue Capital Total Revenue Capital Total £ £ £ £ £ £

Dividends on equity shares

Ordinary Shares (formerly 'S' Shares) - Special

interim - year ended 30 September 2012 - 20p

capital paid in January 2012 (2011: £nil) - 8,138,244 8,138,244 - - - Ordinary Shares (formerly 'S' Shares) - Interim - year ended 30 September 2010 - nil p (2010: 2p - capital) - - - - 765,916 765,916 Ordinary Shares (formerly 'S' Shares) - Final - year ended 30 September 2011 - 2p revenue and 2p capital paid in February 2012 (2011 - 2p capital). 813,845 813,845

1,627,690 - 767,708 767,708

-------- --------

-------- -------- -------- --------

Total paid in year 813,845 8,952,089

9,765,934* - 1,533,624 1,533,624*

*- Of these amounts £1,256,231 (30 September 2011: £117,369) was re-investedin new shares, issued as part of the DRIS scheme.

Set out below are the total income dividends payable inrespect of the financial year, which is the basis on which the requirements ofSection 259 of the Income Tax Act 2007 are considered.

2012 2011 £ £ Revenue available by way of dividends for the year 989,722 864,072 Proposed interim income dividend for the year - 3p (2011: 2p) 1,383,470 813,841

7 Basic and diluted earnings per share

2012 2011 £ £ Total earnings after taxation: 5,784,484 10,203,037 Basic and diluted earnings per share (note a) 13.23p 26.04p Revenue profit from ordinary activities after taxation 989,722 864,072 Basic and diluted revenue earnings per share (note b) 2.26p 2.21p Net unrealised capital gains on investments 2,364,362 10,870,219 Net realised capital gains on investments 5,243,190 343,231 Provision for litigation cost no longer required/(charged) 1,337,456 (1,337,456) Capitalised management fees less taxation (647,246) (537,029) Investment Managers' performance fees (3,503,000) - -------- -------- Total capital return 4,794,762 9,338,965 Basic and diluted capital earnings per share (note c) 10.97p 23.83p Weighted average number of shares in issue in the year 43,710,889 39,182,112

Notes

a) Basic earnings per share is total earnings after taxation divided by the

weighted average number of shares in issue.b) Revenue earnings per share is the revenue profit after taxation divided by

the weighted average number of shares in issue.c) Capital earnings per share is the total capital gain after taxation divided

by the weighted average number of shares in issue.d) Diluted earnings per share in each case are the same as basic earnings per

share due to the potential extra shares that may be issued to settle the

investment managers incentive fee having no effect on the weighted average

number of shares in issue at the year end.

8 Summary of movement on investments during the year

Traded Unquoted Preference Qualifying Total on AiM Ordinary shares loans or OFEX shares £ £ £ £ £ Cost at 30 September 2011 4,286,189 11,104,773 86,767 14,139,876 29,617,605 Impairment (940,626) (3,865,454) - - (4,806,080) Unrealised (losses)/gains (579,840) 12,926,699 (16,722) 20,720 12,350,857 -------- -------- -------- -------- -------- Valuation at 30 September 2011 2,765,723 20,166,018 70,045 14,160,596 37,162,382 - Purchases at cost 36 3,555,244 3,119 9,826,386 13,384,785 Sales - proceeds (1,296,944) (19,428,785) (30,792) (5,886,175) (26,642,696) Reclassification - (108,277) - 108,277 - Realised gains 460,905 2,746,842 - 2,120,698 5,328,445 Unrealised gains/(losses) 929,101 2,068,197 (6,942) (1,017,605) 1,972,751 -------- -------- -------- -------- -------- Valuation at 30 September 2012 2,858,821 8,999,239 35,430 19,312,177 31,205,667 -------- -------- -------- -------- -------- Cost at 30 September 2012 3,897,666 12,457,883 57,647 19,567,792 35,980,988 Impairment (940,626) (4,179,304) - - (5,119,930) Unrealised (losses)/gains at 30 September 2012 (98,219) 720,660 (22,217) (255,615) 344,609 -------- -------- -------- -------- -------- Valuation at 30 September 2012 2,858,821 8,999,239 35,430 19,312,177 31,205,667

Transaction costs on the purchase and disposal of investments of£85,255 were incurred in the year. These are excluded from realised gainsshown above of £5,328,445, but were included in arriving at gains onrealisation of investments in the Income Statement of £5,243,190.

Reconciliation of cash movements in investment transactions

The difference between additions in the investments note above of£13,384,785 and the additions figure per the Cash Flow Statement of£13,255,722 is £129,063. This relates to costs funded by the Company in aprevious period subsequently treated as a loan. The difference betweendisposals in the investments note above of £26,642,696 and the disposalsfigure per the Cash Flow Statement of £26,468,137 is £174,559. This relates totransaction costs of £85,255 and an unsettled trade of £89,304 receivedshortly after the year end.

9 Debtors and prepayments 2012 2011 £ £

Amounts due within one year:

Accrued income 226,319 191,592 Prepayments 14,327 15,044 Other debtors 486,952 74,073 -------- -------- 727,598 280,709Included within Other debtors is an amount receivable from MobeusEquity Partners LLP of £6,037 for the reimbursement of listing fees incurredby the VCT in relation to the Joint Linked Offer for Subscription launched on20 January 2012.10 Current Investments 2012 2011 £ £ Monies held pending investment 17,523,440 11,682,461

This comprises cash of £15,523,440 invested in four Dublin basedand one UK based OEIC money market funds, subject to immediate access, and£2,000,000 in a bank deposit, repayable within one year. These sums areregarded as monies held pending investment.

11 Movement in share capital and reserves

Called up Share

Capital Capital reserve Special Profit and

share premium redemption (unrealised) reserve* loss capital account reserve (non- (note a) account* distributable) (note b) £ £ £ £ £ £ At 30 September 2011 406,920 5,669,141

187,309 12,350,858 17,139,273 13,399,298

Shares bought back (9,956) - 9,956 - (913,037) - Shares issued 49,844 4,987,598 - - - -

Dividends re-invested into new

shares 14,349 1,241,882 - - - - Dividends paid - - - - - (9,765,934) Transfer between reserves (note a) - - - - (3,504,640) 3,504,640 Other expenses net of taxation - - - - - (4,150,246) Net unrealised gains on investments - - - 2,364,362 - -

Write-back of provision for

settlement of litigation costs (note

5) - - - - - 1,337,456

Gains on disposal of investments

(net of transaction costs) - - - - - 5,243,190

Realisation of previously unrealised

gains - - - (13,104,074) - 13,104,074 Profit for the year - - - - - 989,722 -------- --------

-------- -------- -------- --------

At 30 September 2012 461,157 11,898,621

197,265 1,611,146 12,721,596 23,662,200

* - Distributable reserves total £36,383,796 (2011: £30,538,571).The Special reserve has been treated as distributable in determining theamounts available for distribution.

12 Net asset value per share

2012 2011 £ £ Net assets 50,551,985 49,152,799 Number of shares in issue 46,115,656 40,692,048 Basic and diluted net asset value per share 109.62p 120.79p

13 Post balance sheet events

The Company sold 12,500 of its shares in Tikit Group on 1 October 2012 at a

price of 325 pence per share, realising proceeds of £40,625. Duncary 8 Limited made two separate partial repayments of its loan stock totaling £125,000 in October and December 2012.

The Company sold 1,250,000 of its shares in IDOX plc in November 2012 at an

average price of 41 pence per share, realising proceeds of £513,500.

On 23 November 2012, Blaze Signs Holdings Limited partially repaid loan stock,

realising proceeds of £609,471 including a premium of £140,647.

On 30 November 2012, the entire equity holding of Brookerpaks Limited was

realised for proceeds of £600,000.

14 Statutory information

The financial information set out in these statements does not constitute the

Company's statutory accounts for the year ended 30 September 2012 but is

derived from those accounts. Statutory accounts will be delivered to the

Registrar of Companies after the Annual General Meeting. The auditors have

reported on these accounts and their report was unqualified and did not contain

a statement under section 498(2) of the Companies Act 2006.

15 Annual Report

The Annual Report will be published on the Company's website at

www.incomeandgrowthvct.co.uk shortly and, following the adoption of electronic

communications by the Company, Shareholders will shortly receive notification

from the Company on how to download a pdf of the Report from the website if

they have not requested to receive a hard copy. Shareholders and members of the

public, who wish to receive a hard copy of the Annual Report, may request a

copy by writing to the Company Secretary, Mobeus Equity Partners LLP, 30

Haymarket (4th floor), London SW1Y 4EX or by email: iandg@mobeusequity.co.uk.

16 Annual General Meeting

The Annual General Meeting of the Company will be held at 11.00 am on

Wednesday, 13 February 2013 at the offices of Mobeus Equity Partners, 30

Haymarket (4th floor), London SW1Y 4EX.