Inc&gwth Vct Regulatory News (IGV)

THE INCOME & GROWTH VCT PLC

HALF YEAR REPORT FOR THE SIX MONTHS ENDED 31 MARCH 2019

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

As at 31 March 2019:

Net assets: £81.44 million

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

Financial Highlights

Results for the Half Year ended 31 March 2019

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

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

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

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

Performance summary

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

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

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

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

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

Chairman's Statement

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

Overview

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

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

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

Performance

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

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

Investment portfolio

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

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

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

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

Revenue account

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

Dividends

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

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

Cash available for investment

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

Fundraising

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

Share buy-backs

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

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

Shareholder communications

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

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

Succession

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

Outlook

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

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

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

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

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

Colin Hook

Chairman

30 May 2019

Investment Policy

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

Asset Mix and Diversification

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

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

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

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

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

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

Liquidity

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

Borrowing

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

Investment Review

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

Portfolio review

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

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

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

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

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

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

Valuation changes of portfolio investments still held

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

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

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

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

Realised gains and deferred consideration receipts

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

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

Investment portfolio yield and capital repayments

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

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

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

New investment in the half year

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

Further investments in existing portfolio companies in the half-year

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

New investments made after the period end

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

Realisation after the period end

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

Mobeus Equity Partners LLP

Investment Adviser

30 May 2019

Investment Portfolio Summary

As at 31 March 2019

Statement of the Directors' Responsibilities

Responsibility statement

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

Principal risks and uncertainties

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

The principal risks faced by the Company are:

• Investment and strategic

• Loss of approval as a Venture Capital Trust;

• Regulatory;

• Counterparty;

• Economic;

• Financial and operating;

• Market;

• Asset liquidity; and

• Market liquidity;

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

Going Concern

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

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

Cautionary Statement

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

For and on behalf of the Board:

Colin Hook

Chairman

30 May 2019

Unaudited Condensed Income Statement

for the six months ended 31 March 2019

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

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

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

Unaudited Condensed Balance Sheet

as at 31 March 2019

Unaudited Condensed Statement of Changes in Equity

for the six months ended 31 March 2019

Notes:

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

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

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

Unaudited Condensed Statement of Changes in Equity

for the six months ended 31 March 2018

Unaudited Condensed Statement of Cash Flows

for the six months ended 31 March 2019

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

Notes to the Unaudited Condensed Financial Statements

for the six months ended 31 March 2019

1.

Company Information

The Income & Growth VCT plc is a public limited company incorporated in England and Wales, registration number 04069483. The registered office is 30 Haymarket, London SW1Y 4EX.

2.

Basis of preparation of the Financial Statements

These Financial Statements prepared in accordance with accounting policies consistent with Financial Reporting Standard 102 ("FRS102"), Financial Reporting Standard 104 ("FRS104") - Interim Financial Reporting, with the Companies Act 2006 and the 2014 Statement of Recommended Practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ('the SORP') (updated in January 2017) issued by the Association of Investment Companies. The Financial Statements have been prepared on the historical cost basis except for the modification to a fair value basis for certain financial instruments as specified in note 9.

The Half-Year Report has not been audited, nor has it been reviewed by the auditor pursuant to the Financial Reporting Council's (FRC) guidance on Review of Interim Financial Information.

3.

Principal accounting policies

The accounting policies have been applied consistently throughout the period. Full details of principal accounting policies will be disclosed in the Annual Report, while the policy in respect of investments is included within an outlined box at the top of note 9 on investments.

4.

Income

5.

Investment Adviser's fees and performance fees

6.

Taxation

There is no tax charge for the period as the Company has tax losses brought forward from previous periods, which can be offset against taxable income.

7.

Basic and diluted earnings and return per share

Notes:

a) Basic earnings per share is total earnings after taxation divided by the weighted average number of shares in issue.

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

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

8.

Dividends

* - For the period ended 31 March 2018, £2,821,118 (30 September 2018: £5,449,730) disclosed above differs to that shown in the Statement of Cashflows of £2,255,584 (30 September 2018: £4,352,591) due to £565,534 (30 September 2018: £1,097,139) of new shares issued as part of the Company's Dividend Investment Scheme. No new shares were issued as part of the Scheme in the current period following the suspension of the Scheme in December 2018.

9.

Summary of movement on investments during the period

Note a) Purchases shown above of £2,011,380 differs from those shown in the Statement of Cash flows of £1,933,990 by £77,390. This difference arises due to funds held in a solicitor's client account in advance of an investment that completed in October 2018.

There has been no significant change in the risk analysis as disclosed in Note 16 of the Financial Statements in the Company's Annual Report. The decrease in unrealised valuations of the loan stock investments above reflect the changes in the entitlement to loan premiums, and/or in the underlying enterprise value of the investee company. The decrease does not arise from assessments of credit or market risk upon these instruments.

10.

Current asset investments and Cash at bank

11.

Net asset value per share

12.

Post balance sheet events

On 10 May 2019, the Company realised its investment in The Plastic Surgeon Holdings Limited, generating proceeds of £1.22 million.

On 13 May 2019, the Company invested £1.53 million into Arkk Consulting Limited, a service and product provider that enables companies to remain compliant with regulatory reporting requirements.

On 22 May 2019, the Company invested £0.93 million into Parsley Box Limited, a supplier of home delivered ambient ready meals for the elderly.

13.

Statutory information

The financial information for the six months ended 31 March 2019 and the six months ended 31 March 2018 has not been audited.

The financial information contained in this Half-Year results announcement does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Financial Statements for the year ended 30 September 2018 have been filed with the Registrar of Companies. The auditor has reported on these Financial Statements and that report was unqualified and did not contain a statement under either Section 498(2) or 498(3) of the Companies Act 2006.

14.

Half-Year Report

Copies of the Half-Year Report will be sent to all shareholders. Further copies are available on request by writing to the Company's registered office, 30 Haymarket, London, SW1Y 4EX, or can be downloaded via the Company's website at www.incomeandgrowthvct.co.uk.

Contact details for further enquiries:

Rob Brittain or Robert King at Mobeus Equity Partners LLP (the Company Secretary) on 020 7024 7600 or by e-mail to vcts@mobeus.co.uk.

Mobeus Equity Partners LLP (the Investment Adviser) on 020 7024 7600 or by e-mail to info@mobeus.co.uk.

DISCLAIMER

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.