Inc&gwth Vct Regulatory News (IGV)

THE INCOME & GROWTH VCT PLC

HALF-YEAR REPORT FOR THE SIX MONTHS ENDED 31 MARCH 2020

The Income & Growth VCT plc ("the Company") today announces the Half-Year results for the six months ended 31 March 2020.

As at 31 March 2020:

Net assets: £78.78 million

Net asset value ("NAV") per share: 68.46 pence

➤ Net asset value ("NAV") total return per share fell by 7.8% for the six months.

➤ Share price total return per share fell by 6.0% for the six months.

➤ The Board has declared an interim dividend in respect of the current year of

3.00 pence per share to be paid to Shareholders on 10 July 2020.

➤ The Company made four new investments totalling £4.15 million.

➤ Proceeds of £8.36 million were received from investments realised, generating net realised gains of £2.53 million.

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

(£m)

NAV per

share

(p)

Share price1

(p)

Cumulative dividends paid per

share

(p)

Cumulative total return per share to Shareholders2

Dividends paid and proposed in respect of each year

(p)

NAV basis

(p)

Share price basis

(p)

31 March 2020

78.78

68.46

66.50

117.50

185.96

184.00

3.004

30 September 2019

81.73

79.12

75.503

113.00

192.12

188.50

6.00

30 September 2018

82.58

78.32

69.50

108.00

186.32

177.50

6.00

30 September 2017

64.35

81.24

73.00

102.50

183.74

175.50

21.00

30 September 2016

70.84

98.51

88.80

80.50

179.01

169.30

10.00

30 September 2015

75.20

106.38

93.50

68.50

174.88

162.00

12.00

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

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

3  The share price at 30 September 2019 has been adjusted to add back the dividend of 4.50 pence per share paid on 18 October 2019, as the listed share price was quoted ex this dividend at the year end.

4  An interim dividend of 3.00 pence per share, referred to in the Financial Highlights above, is payable to Shareholders on 10 July 2020.

Chairman's Statement

I present the Company's Half-Year Report for the six months ended 31 March 2020 and extend a warm welcome to new Shareholders.

Overview

The Half-Year under review saw five months' strong progress being tempered by a very challenging final month for the portfolio as a result of the UK Government's lockdown and social distancing measures in response to the outbreak of COVID-19. These measures had an immediate adverse impact on UK businesses with many companies experiencing significant reduction in demand for their products and services, compounded by restrictions on their ability to operate.

The Board has liaised closely with the Investment Adviser, Mobeus Equity Partners LLP, who have been very actively engaged with the portfolio companies. The focus has been to ensure that all practical steps are being taken to enable each company to trade through the crisis where possible and to seek to grow value thereafter. The full impact of the COVID-19 crisis will only emerge as time passes. The immediate effect has been on the valuation of the portfolio as set out in detail in the Investment Adviser's Review and summarised in my Statement below.

During the period, the Company has realised three portfolio investments. Two of these were profitable exits of growth capital investments made since the VCT rule changes in 2015 (and the first such disposals for this portfolio category), and the third was the exit of Auction Technology Group, so becoming one of the Company's most successful investments to date. Also, four new investments were made into the portfolio, with two follow-on investments into existing portfolio companies made after the period end. Further details of this investment activity are contained in the Investment Adviser's Review.

Following the onset of the COVID-19 crisis, the Investment Adviser's focus has been to prioritise the funding requirements of the existing portfolio. A number of companies are continuing to experience significant growth and further investment is being made to capitalise on these opportunities. Other portfolio companies will continue to experience an adverse impact on their trading activities because of the crisis and may require further investment funding. The Company is well capitalised and will consider each case on merit should the need arise.

In the immediate term, the Company is adopting a cautious approach when considering new investment opportunities. Adequate depth of investment appraisal and due diligence is challenging during the current UK Government restrictions, business performance is highly volatile and achievement of forecasts more uncertain. However, looking further forward, the Board and Investment Adviser believe the investment landscape will become clearer and a number of attractive opportunities should be able to be brought forward.

Performance

The Company's NAV total return per share fell by 7.8% in the six months to 31 March 2020 (2019: increase of 4.1%), with the share price total return falling by 6.0% (2019: increase of 1.4%). Whilst disappointing, the Board believes that the Company's performance has demonstrated a degree of resilience in relation to its VCT peer group. This has been due to a number of factors which allow the Board to view the Company's future with cautious optimism over the medium to longer term.

These factors have been at both the portfolio and the fund level. The aggregate portfolio valuation decreased due to a number of reductions in the valuation of individual portfolio companies reflecting the impact of COVID-19. However, this adverse impact was partly offset by the benefit of the uplift achieved from the three profitable realisations in the period. In addition, several of the Company's investment structures afford a preference, such that a reduction in enterprise value does not feed directly into the same reduction in the value of the Company's investment. At the fund level, the Company has the benefit of significant liquidity and has therefore been cushioned to an extent from reductions in the valuations of invested assets. In addition, the Company's policy has been to invest its liquidity in lower risk liquidity funds and bank deposit accounts. This again has acted to mitigate the impact on the fund's overall value arising from falls in markets and valuations of invested assets.

The Company's cumulative NAV total return per share (being the closing net asset value plus total dividends paid to date) has decreased from 192.12 pence per share at the start of the period to 185.96 pence per share at the period end. This represents a decrease of 3.2% over the period.

Investment Portfolio

Following a detailed review by the Investment Adviser agreed by the Board, the portfolio has been valued 16.3% lower (2019: increase of 5.2%) compared to the value at the start of the period on a like-for-like basis. The portfolio carrying value has been reduced by £10.73 million of net unrealised losses, though there were net realised gains of £2.53 million arising from exits in the period. The portfolio was valued at £37.81 million at the period end (30 September 2019: £50.22 million).

During the six months under review, the Company invested a total of £4.15 million (2019: £2.00 million) into four (2019: four) new investments:

● Active Navigation - A data analysis software provider

● IPV - A media asset software provider

● Bleach London - A hair care brand

● Bella & Duke - A premium frozen raw dog food provider

After the period end, a total of £1.61 million was invested to support the further expansion of two existing portfolio companies:

● MyTutor - A digital marketplace for school tutoring

● Rotageek - A workforce management software provider

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

Revenue account

The results for the period are set out in the Unaudited Condensed Income Statement on pages 14 to 15 of the Half-Year Report and show a revenue return (after tax) of 1.40 pence per share (2019: 1.08 pence per share). The revenue return for the period of £1.53 million has increased from last year's comparable figure of £1.13 million. This is mainly due to higher loan stock income receivable arising from the realisation of Auction Technology Group.

As a result of COVID-19 related uncertainty upon their trading prospects, the Company has not recognised some interest due at 31 March 2020 as receivable in these accounts in respect of a higher number of investee companies than has previously been the case.

Dividends

The Board continues to be committed to providing an attractive dividend stream to Shareholders and is pleased to declare an Interim dividend of 3.00 pence per share for the year ending 30 September 2020, comprising 1.00 penny from income and 2.00 pence from capital.

This dividend will be paid on 10 July 2020 to Shareholders on the Register on 19 June 2020 and will bring cumulative dividends paid per share to 120.50 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 eight 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.

Dividend Investment Scheme

The Company's Dividend Investment Scheme was recommenced on 12 February 2020, having been temporarily suspended. All previously registered participants of the Scheme were automatically re-enrolled, with their future dividends to be re-invested unless they notified a wish to opt-out.

The Scheme provides Shareholders with the opportunity to reinvest their cash dividends into new shares in the VCT at the latest published NAV price (adjusted for subsequent dividends). New VCT shares attract the same tax reliefs as shares purchased through an offer for subscription.

Shareholders can opt-in by completing a mandate form available on the Company's website and can opt-out by contacting Link Asset Services, using their details provided under Shareholder Information on page 26 of the Half Year Report.

Fundraising

On 25 October 2019, the Company launched an offer for subscription of £5 million (the "Offer") with an over-allotment facility of an additional £5 million, alongside offers from the other Mobeus- advised VCTs.

I am pleased to report that the Offer experienced strong demand. The Board utilised the over-allotment facility of £5 million on 14 November 2019 and the Company received subscriptions in excess of the full amount sought of £10 million within two months of the launch date. In accordance with the Offer's prospectus, the allotment of shares under the Offer took place on 8 January 2020, in respect of the first £10 million of applications received and accepted. The Offer closed early, on 13 January 2020. The Board is grateful for this particularly strong level of support from both existing Shareholders and new investors.

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 2020 amounted to £40.89 million. This figure included £36.33 million held in money market funds with AAA credit ratings and £4.56 million held in deposit accounts with several well-known financial institutions across a range of maturities.

Share buy-backs

During the six months ended 31 March 2020, the Company bought back and cancelled 1,173,485 of its own shares, representing 1.1% (2019: 1.0%) of the shares in issue at the beginning of the period, at a total cost of £0.83 million (2019: £0.73 million), inclusive of expenses.

It is the Company's policy to cancel all shares bought back in this way. The Board regularly reviews its buyback policy, where its priority is to act prudently and in the interest of remaining Shareholders, whilst considering other factors, such as levels of liquidity and reserves, market conditions and applicable law and regulations. The current COVID-19 pandemic has contributed significantly to volatility in share prices generally. However, when buying back shares, the Company seeks to maintain the discount at which the Company's shares trade at no more than 5% below the latest published NAV.

Shareholder Communications

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

On behalf of all the Mobeus advised VCTs, the Investment Adviser held its most recent annual VCT Shareholder Event on 4 February 2020 which, from the feedback submitted, was well received by Shareholders. The event was held at The National Gallery in Central London and included presentations on the investment activity and performance of all the Mobeus VCTs. I would like to thank all those Shareholders who attended for helping to make it a success.

Environmental, Social and Governance

Your Board would like to assure Shareholders that it is taking these issues seriously, and future annual reports will be covering them in more detail. Further reporting and procedural requirements for these increasingly important issues required by current and future regulation should enable the Board to provide concise information and implement further processes, both relevant to the Company and, correspondingly, useful to stakeholders. These objectives do require that regulations are measured, proportionate and cost-effective to introduce.

Succession

During the period under review, the Company has appointed two new directors: Justin Ward who succeeded me as Chairman of both the Audit Committee and the Nomination and Remuneration Committee on 12 November 2019, and Maurice Helfgott, who was appointed on 12 February 2020.

The Board is continuing with its succession planning and, as announced on 12 February 2020, will be appointing Maurice Helfgott as its Chairman on 1 July 2020, following my retirement from the Board after 10 years, effective from 30 June 2020.

Both Maurice and Justin bring a wealth of experience to the Board and I would like to welcome them on behalf of all Shareholders.

Outlook

The impact of COVID-19 has been immediate and wide reaching. The eventual effects of the pandemic, many of which are unclear at present, are likely to be felt over the course of the months and years to come. Nevertheless, your Board considers that your Company is well positioned to cope with most likely scenarios in so far as they can presently be foreseen. The successful realisations and recent fundraising have given the Company strong liquidity not only to support the existing portfolio if appropriate, but also to capitalise on opportunities which may arise for new investment. The portfolio comprises a foundation of mature investments that are still providing an income return, as well as a younger, growth capital portfolio seeking to achieve scale, higher levels of profitability and hence value. The challenges arising from the COVID-19 pandemic should not be underestimated. However, once conditions stabilise, the Investment Adviser and the Board believe that a number of attractive new investment opportunities will emerge.

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

Jonathan Cartwright

Chairman

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 Adviser's Review

COVID-19 Pandemic

In March 2020, in response to the COVID-19 pandemic, the UK Government introduced lockdown and social distancing measures. These measures had an immediate adverse impact on UK businesses, with many companies experiencing significant reduction in consumer and business demand.

Businesses' ability to trade was further impacted by restrictions on their employees' working practices and disruption to their supply chains.

The travel, hospitality, leisure, consumer and physical retail sectors have seen the most significant adverse impact. On the other hand, there have been beneficiaries, including businesses in software and IT, online direct to consumer and those with long term business to business customers.

Many of the VCT's portfolio companies are encountering very challenging trading conditions, and the full extent and impact of COVID-19 will only emerge over time. The Investment Adviser, Mobeus, has reviewed and evaluated the impact of COVID-19 on each sector exposure and upon the value of the portfolio in so far as is practicable at the present time. Mobeus is fully engaged with the portfolio companies to ensure that all steps are being taken to assist each to trade through this crisis where possible, restore and grow value thereafter. As part of this, Mobeus is reviewing the implications for new and follow-on investments, with the recent fundraising and relatively high liquidity levels providing a solid foundation for such assessments.

Portfolio Review

Prior to the UK Government's response to the COVID-19 pandemic, the six months to 31 March 2020 had seen very positive progress within the portfolio. The Company invested a total of £4.15 million into four new growth capital investments, receiving net cash proceeds of £8.36 million, primarily from three very profitable realisations. Following the Investment Adviser's COVID-19 review, the valuation of each investee company has been considered, leading to an overall net valuation reduction of £10.73 million.

Activity in the six months to 31 March 2020 is summarised as follows:

The investment and divestment activity during the period has increased the proportion of the portfolio in growth capital investments to 65.2% (2019: 47.9%) by value at the period end.

After the period end, the Company provided further investment totalling £1.61 million into two existing portfolio companies. This brings the total invested in growth capital investments made since the introduction of the new VCT regulations in 2015 to £26.28 million.

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

Valuation changes of portfolio investments still held

The valuation reductions of £12.44 million principally arise from the Investment Adviser's COVID-19 impact review of the portfolio.

At summary level, there have been some clear beneficiaries of the COVID-19 crisis that are currently trading strongly.

Although some of the fillip will subside, there can be a reasonable expectation that some of the behavioural change will prove structural. Other businesses are raising capital to ensure that they are ready to capitalise on demand when it returns. The majority of the portfolio has experienced material impact but not sufficient to threaten their viability and/or require rescue financing. They have scaled back operations in response and are making full use of Government assistance schemes where appropriate. Finally, there are a few businesses whose viability is now under threat. In the main, these are businesses that were already struggling and hence the Company's carrying value had already been written down significantly. The value risk to the Company from this subset is therefore modest.

Within total valuation decreases, the main reductions were CGI Creative Graphics - £1.57 million, Media Business Insight - £1.35 million and Wetsuit Outlet - £1.02 million. These three companies saw some of the most significant impact of sudden decline in demand for their products or services. This was the prevailing impact across the portfolio, but some investee companies' trading has benefited from the lockdown, including Virgin Wines, Parsley Box, Bella & Duke, Bleach London and MyTutor.

Within total valuation increases, the principal contributors were Access IS £0.62 million and Active Navigation £0.44 million. The former valuation reflects the long-term nature of many of Access IS's projects, while the latter reflects the Company's preferred investment structure in Active Navigation.

Realised gains

Cash proceeds totalling £8.36 million have been received, principally from three realisations during the period under review.

In December, the Company realised £1.53 million from its first growth capital investment made under the new VCT rules, Redline Worldwide, generating a gain of £0.98 million in the period. Over the time that this investment was held, a multiple of 1.6x cost has been achieved to date with further proceeds potentially receivable in due course. £0.10 million of these proceeds was received in March, bringing the multiple on cost achieved to 1.7x.

In February, the Company exited investments held in Biosite and Auction Technology Group, generating a total realised gain in the period of £1.55 million. The investment in Biosite was realised, generating proceeds of £2.77 million over the life of the investment and contributed to a gain over original cost of 1.5x. Auction Technology Group generated proceeds over the life of the investment of £9.03 million compared to an original cost of £2.00 million, a multiple on cost of 4.5x over the 11 ½ years this investment was held - an exceptional return for Shareholders.

After the period end, a number of transactions occurred. A loan repayment of £0.09 million was received from BookingTek and, following continued under performance, the trade and assets of SuperCarers were sold to Home Instead for a nominal sum. Finally, following a significant increase in its share price, the Company received £0.64 million from the partial realisation of half its holding in Omega Diagnostics. This represented an attractive return of 4.6x multiple on cost and an IRR of 17.7%, securing a positive return overall whilst maintaining a degree of exposure to any potential upside.

Investment portfolio yield

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

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

The increase in income was due to interest of £1.09 million upon the loan instruments in Auction Technology Group being paid, as part of the sale transaction, which had not previously been recognised.

New investments in the Half-Year

The Company made four new investments totalling £4.15 million during the period, as detailed below:

Company

Business

Date of investment

Amount of new investment (£m)

Active Navigation

Data analysis software

November 2019

1.54

Data Discovery Solutions, trading as Active Navigation, is a data analysis software solution which makes it easier for companies to clean up network drives, respond to new data protection laws and dispose of redundant and out-dated documents. Active Navigation's solution is used by significant blue-chip customers, particularly those in highly regulated industries such as energy and professional services, as well as government entities in the USA, Canada, Australia and the UK. Active Navigation will seek to drive continued growth from its file analysis platform with the recruitment of experienced sales and professional services staff. Since 2014, revenues have grown from £1.50 million to £5.00 million in the its financial year to 30 June 2018.

IPV

Media asset software

November 2019

0.96

IPV has developed a media asset management software product called 'Curator'. This enables enterprise level customers to quickly retrieve and search hours of video footage, edit into multiple short clips and broadcast to online video platforms (such as YouTube) and company intranets. This enables IPV's impressive list of blue-chip clients such as Turner Sports, NASA and Sky, to improve efficiency in managing their video content. The company has built an impressive senior management team of proven operators and is targeting a media asset management market in the US and UK, worth an estimated £1 billion per annum. The investment will be used to build out a sales and marketing team and to fund lead generation for new direct and partner channels as well as supporting the existing partner network. From 2016 to 2018 recurring revenues grew over 50% annually and represented approximately 70% of total revenues in 2018.

Bleach London

Direct to consumer hair care brand

December 2019

0.72

Bleach London Holdings ("Bleach London") is an established branded, fast growing business which manufactures a range of haircare and colouring products. Bleach London is regarded as a leading authority in the hair colourant market having opened one of the world's first salons focused on colouring and subsequently launched its first range of products in 2013. The investment was part of a wider £5.60 million investment round alongside trade and angel investors. The funds will be used to drive continued growth in sales through retailers as well as capitalise on its strong social media presence whilst accelerating its growing direct to consumer channel. Bleach London delivered an impressive three times revenue growth between 2017 and 2018.

Bella & Duke

Premium frozen raw dog food provider

February 2020

0.93

Bella & Duke is a direct to consumer subscription service, providing premium frozen raw dog food to pet owners in the UK. Founded in 2016, the business provides an alternative to standard meal options for dog owners by focusing on the well documented health benefits of a raw food diet. This area is a growing niche in the large and established pet food market and is being driven by the premiumisation of dog food. The investment will seek to optimise its production and supply facilities, expand and enhance its team and broaden its product range. The company has grown revenues over 300% between 2018 and 2019.

Realisations during the Half-Year

The Company realised its investments in Redline, Biosite and Auction Technology Group as detailed below:

Company

Business

Period of investment

Total cash proceeds over the life of the investment/Multiple over cost

Redline

Provider of security services to the aviation industry and other sectors

February 2016 to December 2019

£1.95 million

1.7x cost

The Company sold its investment in Redline Worldwide for £1.53 million (realised gain in the period: £0.98 million) (including proceeds received after completion). Since investment in 2016, the investment has generated proceeds to date of £1.95 million compared to an original investment cost of £1.13 million, which is a multiple on cost to date of 1.7x and an IRR of 17.7%. Further proceeds may be receivable in due course.

Biosite

Workforce management and security services

November 2016 to February 2020

£2.77 million

1.5x cost

The Company sold its investment in Pattern Analytics Limited (trading as Biosite) to ASSA ABLOY for £2.65 million. Since investment in 2016, the investment has generated proceeds of £2.77 million compared to an original investment cost of £1.79 million, which is a multiple on cost of 1.5x and an IRR of 21.0%.

Auction Technology Group

SaaS based online auction marketplace platform

October 2008 to February 2020

£9.03 million

4.5x cost

The Company sold its investment in Turner Topco Limited (trading as Auction Technology Group) to TA Associates for £5.27 million (including £1.09 million loan interest due on completion; realised gain in the period: £1.55 million). This investment generated proceeds over the life of the investment of £9.03 million (including proceeds received following a partial realisation from a sale to ECI Partners in June 2014) compared to an original cost of £2.00 million, which is a multiple on cost of 4.5x and an IRR of 28.9%.

Finally, £0.003 million of liquidation proceeds have been received from H Realisations (2018) Limited (formerly Hemmels Limited).

Further investments made after the period end

The Company made two further investments into existing portfolio companies, totalling £1.61 million after the period end, as detailed below:

Company

Business

Period of investment

Total cash proceeds over the life of the investment/Multiple over cost

MyTutor

Digital Marketplace connecting school pupils seeking one-to-one online tutoring

May 2020

0.98

MyTutorWeb Limited (trading as "MyTutor") is a digital marketplace that connects school pupils who are seeking private one-to-one tutoring with university students. The business is satisfying a growing demand from both schools and parents to improve pupils' exam results to enhance their academic and career prospects. This further investment, alongside other existing shareholders, seeks to build and reinforce its position as a UK category leader in the online education market as well as to begin to develop a broader, personalised learning product offering. MyTutor has grown strongly over the last six months with average year on year growth of 70% and over 210,000 tutorials delivered in 2019. The COVID- 19 impact on the education sector has significantly heightened the awareness of online learning and tutoring.

Rotageek

Workforce management software

May 2020

0.63

Rota Geek Limited (trading as "Rotageek") is a provider of cloud-based enterprise software to help larger retail and leisure organisations predict and meet demand to schedule staff effectively. This investment, alongside funds from a new VCT investor and existing shareholders will be used to capitalise on opportunities that will emerge as the retail sector recovers from lockdown restrictions. Rotageek has also moved into healthcare to help address the workforce management issues of a sector that is chronically overburdened at present. For the year ended 31 December 2019, revenues have grown over 45% on the prior year.

After the period end, a number of transactions occurred. A loan repayment of £0.09 million was received from BookingTek and, following continued under performance, the trade and assets of SuperCarers were sold to Home Instead for a nominal sum. Finally, following a significant increase in its share price, the Company received £0.64 million from the partial realisation of half its holding in Omega Diagnostics. This represented an attractive return of 4.6x multiple on cost and an IRR of 17.7%, securing a positive return overall whilst maintaining a degree of exposure to any potential upside.

Mobeus Equity Partners LLP

Investment Adviser

Investment Portfolio Summary

Statement of Directors' Responsibilities

Responsibility statement

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

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

(b) the 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 2019 ("the Annual Report"). The occurrence of the COVID-19 pandemic has created heighted uncertainty but has not changed the nature of the principal risks. The Board considers that the present processes for mitigating those risks remain appropriate.

The principal risks faced by the Company are:

●Investment and liquidity

●Loss of approval as a Venture Capital Trust;

●Regulatory;

●Economic and political;

●Financial and operating;

●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 63 to 70. 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 a significant cash position. The majority of companies in the portfolio are well funded and the portfolio taken as a whole remains resilient and well diversified.

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 can be found in the Annual Report on pages 37 and 71, and in Note 16 on Financial Instruments on pages 63 to 70 of that Report. Accordingly, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing the Financial Statements and the Directors' identification of any material uncertainties to the Company's ability to continue to do so over a period of at least twelve months from the date of approval of the 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:

Jonathan Cartwright

Chairman

Unaudited Condensed Income Statement

for the six months ended 31 March 2020

Year ended 30 September 2019

(audited)

Notes

Revenue

Capital

Total

£

£

£

Net investment portfolio (losses)/gains

-

4,932,113

4,932,113

Income

4

3,130,823

-

3,130,823

Investment Adviser's fees

5

(446,274)

(1,338,822)

(1,785,096)

Other expenses

(426,840)

-

(426,840)

Profit/(loss) on ordinary activities before taxation

2,257,709

3,593,291

5,851,000

Tax on profit/(loss) on ordinary activities

6

(381,993)

381,993

-

Profit/(loss) for the period and total comprehensive income

1,875,716

3,975,284

5,851,000

Basic and diluted earnings per share

7

1.80p

3.80p

5.60p

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

The total column is the Statement of Total Comprehensive Income of the Company prepared in accordance with Financial Reporting Standards ("FRS"). In order to better reflect the activities of a VCT and in accordance with the 2014 Statement of Recommended Practice ("SORP") issued by the Association of Investment Companies ("AIC") and updated in October 2019, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The revenue column of profit attributable to equity Shareholders is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 274 Income Tax Act 2007.

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

The notes to the unaudited financial statements form part of these Half-Year Financial Statements.

Unaudited Condensed Balance Sheet

as at 31 March 2020

Unaudited Condensed Statement of Changes in Equity

for the six months ended 31 March 2020

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. As at 31 March 2020, the Company has a special reserve of £61,740,118, £33,576,818 of which relates to reserves from shares issued on or before 5 April 2014, or that arise from shares issued more than three years ago. Reserves originating from Share issues are not distributable under VCT rules if they are within three years of the end of an accounting period in which the shares were issued. The transfer of £1,083,055 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): Under the Company's Offer for Subscription launched on 25 October 2019, 12,939,080 ordinary shares were allotted on 8 January 2020, raising net funds of £9,655,718 for the Company. This figure is net of issue costs of £245,176.

d): During the period, the Company repurchased 1,173,485 of its own shares at the prevailing market price for a total cost (including stamp duty) of £828,976, which were subsequently cancelled. The difference between the figure above and that per the Statement of Cash Flows is £22,640, being an opening share buyback creditor of £40,379 offset by a share buyback creditor of £63,019 at the period end.

The notes to the unaudited financial statements form part of these Half-Year Financial Statements.

Unaudited Condensed Statement of Changes in Equity

for the six months ended 31 March 2019

Non-distributable reserves

Distributable reserves

Called up

Capital

Share

Revaluation

Special

Realised

Revenue

Total

share

redemption

premium

reserve

distributable

capital

reserve

capital

reserve

reserve

reserve

reserve

£

£

£

£

£

£

£

£

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

(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

-

-

-

-

(438,029)

438,029

-