Inc&gwth Vct Regulatory News (IGV)

THE INCOME & GROWTH VCT PLC

HALF YEAR REPORT FOR THE SIX MONTHS ENDED 31 MARCH 2018

The Income & Growth VCT plc ("the Company") today announces the half-year results for the six months ended 31 March 2018.

As at 31 March 2018:

Net assets: £83.58 million

Net asset value ("NAV") per share: 79.28 pence

Financial Highlights

Results for the six months ended 31 March 2018

- Net asset value total return per share was 1.3% 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 2.50 pence per share to be paid to shareholders on 21 June 2018.

- The Company made three new investments and three follow-on investments totalling £3.10 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 2.50 pence per share, referred to in the Financial Highlights above, is payable to shareholders on 21 June 2018.

Chairman's Statement

I am pleased to present the Company's Half-Year Report for the six months ended 31 March 2018.

Overview

The half-year has again seen steady progress and a small positive return for the period, which is detailed in the Performance section below, and a continuation in the rate of growth capital investments made since the change in Investment Policy approved by shareholders in February 2016.

Twelve growth capital investments have now been completed in accordance with the Investment Policy, in response to the VCT legislation introduced by the Finance (No 2) Act 2015. Most recently, additional changes to VCT legislation that were proposed in the 2017 Autumn Budget Statement were enacted in March 2018. Further details and comments on these changes are set out in the Summary of VCT Regulations in the Half-Year Report and under the 'Industry and regulatory developments' section of my statement below.

The Investment Adviser continues to report a healthy pipeline of growth capital opportunities. Meanwhile, the existing MBO focused portfolio constructed under the previous VCT rules has continued to perform steadily.

We are delighted with the strong support from investors for our recent fundraising, which was fully subscribed in March. The Board appreciates the continued support from existing shareholders and at the same time welcomes new shareholders.

Performance

The Company's NAV total return per share was 1.3% for the six months to 31 March 2018 (2017: 2.0%) while the total share price return was 1.4% (2017: 1.9%).

The Cumulative NAV total return per share (being the closing net asset value plus total dividends paid to date) has increased to 184.78 pence compared to 183.74 pence at the year end. This represents an increase of 0.6% over the period.

Investment portfolio

The portfolio has performed satisfactorily during the period, increasing in value by 1.2% (2017: 1.5%) on a like-for-like basis. The aggregate portfolio saw a net increase of £1.81 million in realised gains against £1.25 million in unrealised losses over the six month period. The portfolio was valued at £47.11 million at the period-end (30 September 2017: £48.03 million).

During the six months under review, the Company invested a total of £3.10 million, (2017: £4.07 million, including £0.72 million via a company preparing to trade) into six (2017: five) investments. Three of these investments were into new businesses; Proactive Investors, a provider of investor media services; Super Carers Limited, an online platform connecting people seeking home care; and Hemmels Limited, a restorer of classic cars.

The Company received cash proceeds of £4.63 million during the six month period, mostly attributable to the sale of the Company's investment in Gro-Group Holdings Limited in December 2017, an excellent result.

Details of these transactions 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 0.92 pence per share (2017: 1.42 pence per share). The revenue return for the period of £0.86 million has decreased from last year's comparable figure of £1.02 million. This decrease is mainly due to a fall in income receivable arising from the realisation of Entanet as well as a provision against loan interest receivable for two companies which are currently experiencing a challenging trading environment.

Dividends

The Board continues to be committed to endeavouring to provide an attractive dividend stream to shareholders, and is pleased to declare an interim dividend of 2.50 pence per share for the year ending 30 September 2018, comprising 0.80 pence from income and 1.70 pence from capital. This dividend will be paid on 21 June 2018 to shareholders on the Register on 25 May 2018 and will bring cumulative dividends paid per share to 108.00 pence.

Shareholders are encouraged to ensure that Link, the Company's Registrar, has up-to-date details for them and to check whether they have received all dividends payable to them. We are aware that a number of dividends remain unclaimed by shareholders and whilst we continue to endeavour to contact shareholders if this is the case, we cannot guarantee that we will be able to do so if the Registrars do not have up-to-date contact details.

Dividend Investment Scheme

The Company's Dividend Investment Scheme ("the Scheme") is a convenient, easy and cost effective way for shareholders to build up their shareholding in the Company. Instead of receiving cash dividends, shareholders can elect to receive new shares in the Company. By opting to receive a dividend in this manner, there are three benefits to shareholders:

- The dividend remains tax free;

- Shareholders are allotted new shares in the Company which will, subject to their 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 2018/19 tax year for investments up to £200,000 in any one tax year; and

- The Scheme also has one 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).

Shareholders wishing to join the Scheme should submit a mandate form to Link Asset Services, the Scheme Administrator, by no later than, Wednesday, 6 June 2018, to ensure that they receive the above dividend as shares. Details of where to obtain an application form can be found under Shareholder Information in the Half-Year Report.

Industry and regulatory developments

As mentioned in my overview, the 2017 Autumn Budget Statement outlined the key findings from the Patient Capital Review, which was tasked with identifying and tackling factors considered to be adversely affecting the supply of longer-term capital to small and developing firms. These findings have resulted in a number of legislative changes to the VCT scheme which include measures to exclude purely tax motivated investments where capital is not at risk (that is, principally seeking to preserve investors' capital) and to encourage VCTs to put their funds to work faster.

Your Board notes these changes, some of which place further restrictions on the way investments may be structured. However, they are not expected to materially affect the Company's present investment approach.

A summary of the current VCT regulations is included in the Summary of VCT Regulations in the Half-Year Report.

Liquidity

The recent fundraising round, which closed fully subscribed in March 2018 raising £25 million, has provided the Company with sufficient liquidity to meets its cash needs and maintain the current rate of investment in the medium term. It is unlikely the Company will seek to raise further funds in the current 2018/19 tax year.

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 2018 amounted to £35.95 million. This figure included £31.32 million held in money market funds with AAA credit ratings and £4.63 million held in deposit accounts with a number of well-known financial institutions across a range of maturities. In addition, the investment portfolio contained £1.82 million in companies preparing to trade that also hold cash in money market funds.

Share buy-backs

During the six months ended 31 March 2018, the Company bought back and cancelled 1,173,968 of its own shares, representing 1.5% (2017: 0.1%) of the shares in issue at the beginning of the period, at a total cost of £0.85 million (2017: £0.03 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 around 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 eighth annual Shareholder Event in January 2018 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 February 2019 and Shareholders will be sent further details and an invitation nearer the time.

Outlook

UK growth is expected to remain modest due to subdued real consumer spending growth. The environment is characterised by uncertainty which in turn will lead to continuing economic volatility. The invested portfolio is well positioned against this backdrop as it is robustly funded using conservative levels of third party bank debt alongside the Company's funds. UK interest rates are forecast to remain at low levels, albeit some small rises are predicted for the balance of the year. We believe that there is unlikely to be a step change in economic outlook until there is greater clarity on the UK's post-Brexit relationship with the EU.

Your Board remains of the opinion that your Company is well positioned to take advantage of the strong demand for growth capital investment, despite the uncertainties faced within the UK economy. The portfolio has a solid foundation of investments made under the previous MBO strategy, and the Investment Adviser continues to source interesting growth capital investment opportunities to complement the portfolio. Mobeus has continued to recruit additional experienced growth capital investors into its team.

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

Colin Hook

Chairman

15 May 2018

Investment Policy

The Company's policy is to invest primarily in a diverse portfolio of UK unquoted companies. Investments are generally structured as part loan and part equity in order to receive regular income and to generate capital gain upon sale.

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

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

VCT regulation

The Investment Policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HMRC.

Amongst other conditions, the Company may not invest more than 15% of its investments (by VCT value at the time of investment) in a single company or group and must have at least 70% by VCT value of its investments throughout the period in shares or securities comprised in VCT qualifying holdings of which a minimum overall of 30% by VCT value (70% for funds raised after 6 April 2011) must be in ordinary shares which carry no preferential 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 April 2011) of an investment in a specific company in ordinary shares it must have at least 10% by VCT value of its total investments in each VCT qualifying company in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules).

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

Asset Mix

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

Risk diversification and maximum exposures

Risk is spread by investing in a number of different businesses across different industry sectors. To reduce the risk of high exposure to equities, each qualifying investment is structured to achieve the optimum balance between loan stock and equity to provide protection against downside risk alongside the best potential overall returns.

Co-investment

The Company is entitled to invest alongside other VCTs advised by Mobeus Equity Partners LLP that have a similar investment policy, normally on a pro rata to net assets basis.

Borrowing

The Company's articles of association permit borrowing of up to 10% of the adjusted capital and reserves (as defined therein). However, it has never borrowed and the Board has currently no plans to undertake any borrowing.

Investment Review

New investments in the half-year

A total of £1.77 million was invested into three new investments during the period under review as detailed below.

Further investments in existing portfolio companies in the half-year

A total of £1.33 million was invested into three existing portfolio companies during the period under review as detailed below.

Realisation in the half-year

The Company realised its investment in Gro-Group Holdings during the period under review, generating cash proceeds totalling £4.33 million as detailed below.

Loan stock repayments and other receipts

Loan stock repayments totalled £0.16 million for the period, all from TPSFF Holdings Limited (formerly Plastic Surgeon). Other receipts of £0.14 million were also received; primarily from Alaric Systems, a company realised in a prior period.

Investment Portfolio Summary

as at 31 March 2018

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 2017 ("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 25 and 26, and in Note 16 on Financial Instruments on pages 60 to 67. 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 continue to trade profitably 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 are shown in Note 16 on pages 60 to 67 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

15 May 2018

Unaudited Condensed Income Statement

for the six months ended 31 March 2018

The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the 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 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 2018

Unaudited Condensed Statement of Changes in Equity

for the six months ended 31 March 2018

Note 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 £443,282 to the special reserve from the realised capital reserve above is the total of realised losses incurred by the Company in the period.

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

Note c): Under the 2017/18 Offer, 26,607,590 shares were allotted during the period, raising net funds of £21,359,728 for the Company. This figure differs from that shown in the Statement of Cash Flows by £2,946,209, which are the net funds raised under the first allotment that took place on 28 September 2017. These funds were held in debtors at the previous year end and received in the current period.

Note d): During the period, the Company repurchased 1,173,968 of its own shares at the prevailing market price for a total cost (including stamp duty) of £845,781, which were subsequently cancelled. This differs to the figure shown in the Statement of Cash Flows by £82,638. This amount was included in creditors at the previous year end.

Unaudited Condensed Statement of Changes in Equity

for the six months ended 31 March 2017

Unaudited Condensed Statement of Cash Flows

for the six months ended 31 March 2018

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

Notes to the Unaudited Condensed Financial Statements

for the six months ended 31 March 2018

1.

Company Information

The Income & Growth VCT plc is a public limited company incorporated in England and Wales, registration number 4069483. 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 paid

* - £2,821,118 (31 March 2017: £2,875,256; 30 September 2017: £15,981,312) disclosed above differs to that shown in the Statement of Cash Flows of £2,255,584 (31 March 2017: £2,368,798; 30 September 2017: £13,062,948) due to £565,534 (31 March 2017: £506,458; 30 September 2017: £2,918,364) of new shares issued as part of the Company's Dividend Investment Scheme.

9.

Summary of movement on investments during the period

Note a) Investment proceeds shown above of £4,627,728 differs from the sale proceeds shown in the Statement of Cash flows of £4,513,856 by £113,872. This difference arises because of deferred consideration due from the disposal of Gro-Group held in debtors at the period end.

Note b) Realised gains above of £1,860,102 differ from that shown in the Income Statement of £1,810,102. The difference of £50,000 is a reduction for the period in the estimated fair value of contingent consideration held at the Balance Sheet date, to nil. This reduction is because such consideration of £134,241 was received in the period in respect of Alaric Systems, an investment realised in a prior period, of which £50,000 was recognised in a previous year.

There has been no significant change in the risk analysis as disclosed in Note 18 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