Mobeus I&g Regulatory News (MIX)

9 Aug 2010 12:45

Matrix Income & Growth VCT plc ("the Company")

Half-yearly results for the six months ended 30 June 2010

Investment Objective

Matrix Income & Growth VCT plc ("MIG VCT" or the "VCT") is a Venture CapitalTrust ("VCT") listed on the London Stock Exchange. Its investment portfolio,which invests primarily in established and profitable unquoted companies, ismanaged by Matrix Private Equity Partners LLP ("MPEP" or "the InvestmentManager").The Company's objective is to provide investors with a regular income stream,by way of tax free dividends, and to generate capital growth through portfoliorealisations, which can be distributed by way of additional tax free dividends.

Merger with Matrix Income & Growth 3 VCT plc

The Company merged with Matrix Income & Growth 3 VCT plc (MIG 3 VCT) on 20 May2010. As part of the merger process MIG 3 VCT was placed in members' voluntaryliquidation and its assets and liabilities were transferred to the Company.20,572,129 new ordinary shares of 1 penny each in the capital of the Companywere issued on 20 May 2010 at an attributable issue price of 83.2 pence pershare to acquire net assets of £17,111,545 from MIG 3 VCT. Each MIG 3 VCTshareholder received 1.065 shares in MIG VCT (rounded down to the nearest wholenumber) for each MIG 3 VCT share that they held at the date of the merger.

Financial Highlights - Half-yearly results for the six months ended 30 June 2010

Dividends

Prior to the merger, dividends of 5 pence (MIG VCT) and 4 pence (MIG 3 VCT) were paid to shareholders on 21 April 2010.

Performance SummaryInitial net asset value (NAV) 94.5 pper share Initial net assets on 8 October £20.9 million2004 As at As at As at 30 June 2010 30 June 2009 31 December 2009 Net assets £m 35.2 16.7 17.0 Net asset value (NAV) per share 86.3 p 81.1p

83.3 p

Net cumulative dividends paid per 21.3 p 16.3p 16.3 pshare Total return per share to 107.6 p 97.4p 99.6 p

shareholders since launch (NAV

basis) 1 Share price (mid-market price) 63.0 p 60.0p

57.0 p

Former MIG 3 VCT Shareholders - Illustration of performance

To help shareholders who originally invested in MIG 3 VCT understand the performance of their investment since inception, the table below shows the NAV return at 30 June 2010 on a single MIG 3 VCT share of £1.

Original Number of MIG NAV per share Net Total NAV investment VCT shares held at 30 June 2010 cumulative return per share post-merger dividends to shareholders paid per since launch 1(1 share at £1.00) share 100.0p 1.0655 91.9p 9.6p 101.5p

1 Net asset value per share plus cumulative dividends per share. This compares with an original investment cost of 60 pence per share after allowing for income tax relief of 40 pence per share.

Chairman's Statement

This Half-yearly Report covers the six month period ended 30 June 2010.

Merger with Matrix Income & Growth 3 VCT plc

I am pleased to report that the Company successfully merged with Matrix Income& Growth 3 VCT plc (MIG 3 VCT) on 20 May 2010. The merger created an enlargedcompany with net assets of £35 million compared with £17 million before themerger. It has resulted in material cost savings and simpler administration andbrought many benefits to shareholders:● a reduction in annual running costs for the enlarged company compared withthe total annual running costs of the separate companies, in particular througha reduction in the aggregate directors' and advisers' fees;

● the creation of a single VCT of a more efficient size with a greater capital base over which to spread annual costs;

● participation in a larger VCT with the longer term potential for a more diversified portfolio thereby spreading risk across a broader range of investments and creating an increased ability to support follow-on investments;

● the potential for greater liquidity in the secondary market due to an increased ability to maintain a buy-back programme; and

● increased flexibility in continuing to meet the various requirements for qualifying VCT status.

For further information on the financial details of the merger please see Note 13 to the Notes to the Accounts below.

Total return to shareholders and net asset value (NAV)

The net asset value per share as at 30 June 2010 was 86.3 pence, compared witha NAV of 83.3 pence per share at the beginning of the period. This represents arise of 3.6%, and is after deducting a dividend of 5.0 pence paid toshareholders. The NAV total return per share rose by 8.0% during the six monthperiod from 99.6 pence to 107.6 pence. This represents a very solid andpleasing performance in a challenging investment environment.To assist shareholders who originally invested in MIG 3 VCT to monitor theperformance of their investment on a consistent basis, we have included in theFinancial Highlights above a table showing the returns to a former MIG 3 VCTshareholder based on an original subscription of £1 for 1 share.

Investment portfolio

The recent prolonged period of uncertainty and volatility in the economy andstock markets has made negotiating financial transactions in smaller companiesextremely difficult. Despite much background work, no new investments or exitswere completed during the review period. The Board believes that the InvestmentManager has been right to adopt a cautious approach; rather waiting patientlyuntil better investment/divestment opportunities present themselves.Following the end of the period a small follow-on investment of £1,717 was madein Monsal Holdings. Although immaterial in size this investment was part of arefinancing that introduced a new investor at a valuation significantly greaterthan our original cost and previous valuation for this holding. Thesenegotiations were well-advanced before the period-end and this uplift hastherefore been recognised in our accounts as at 30 June 2010.In spite of the continued economic uncertainty, the overall performance of themajority of the companies in the portfolio has been relatively strong. Thewell-diversified nature of the portfolio has also helped to limit the impact ofparticular sector weaknesses on the value of the Company's investments.

For further information on the investment portfolio please see the Investment Manager's Review below.

Revenue account and dividend

Disappointingly, income from the Company's investment portfolio and moneymarket fund holdings has continued to come under considerable pressure.However, the revenue account has generated a net positive return (after tax)for the period of £117,082 (2009: £26,214). This was largely due to a firstequity dividend from DiGiCo of £135,189, reflecting that company's strongtrading. In addition, the levels of loan stock interest received were boostedby several loan stock investments made since the last half-yearly report.Interest received from money market funds continues at an exceptionally lowlevel. Interest rates receivable on these funds have continued to averagearound 0.5% this year compared to 5.6% before the economic downturn.

Although the period under review witnessed higher expenses, these were largely due to the one-off costs of the merger. Going forward the underlying rate should also now decline reflecting the savings generated by the merger.

Given the current position on the revenue account and the absence of any exitsduring the period, the Board will not be declaring an interim dividend but willreview the situation once the full year results are available.

Liquidity

The Company held £8.5 million in cash and money market fund balances as at 30June 2010. In addition, the £6 million invested in the Operating Partneracquisition vehicles is also held in liquid assets. The Company is thereforewell-positioned both to make investments to support the existing portfolio andto take advantage of favourable opportunities as they arise.

Investment in qualifying holdings

The Company is required to meet the target set by HM Revenue & Customs (HMRC)of investing 70% of the funds raised in qualifying unquoted and AiM quotedcompanies, which it has achieved throughout the period. The Company was 76.3%invested in qualifying companies (based on VCT cost as defined in taxlegislation which differs from actual cost given in the Investment PortfolioSummary below) at the period-end, with the balance of the portfolio invested ina selection of readily realisable, money market funds with AAA credit ratings.

Share buy-backs

During the period from 1 January 2010 to the date of the merger, MIG VCT boughtback 33,525 of the Company's own shares, representing 0.2% of the issued sharecapital at the beginning of the period, at an average price, excluding costs,of 54.8 pence per share. These shares were purchased at an average discount of30.0% to NAV per share, adjusted for the dividend paid on 21 April 2010.

Since the merger, the Company has bought back 144,852 of the Company's own shares, representing 0.4% of the issued share capital at the date of the merger, at an average price, excluding costs, of 59.0 pence per share. These shares were purchased at an average discount of 33.4% to NAV per share.

All of the shares bought back in the period were subsequently cancelled by the Company.

The Board continues to pursue an active share buy-back policy which itregularly reviews. Over the last few months the selling pressure on theCompany's shares has greatly diminished. Given this and the less uncertain andless volatile outlook for valuation bases, the Board has determined to seek toreduce the discount to NAV at which the Company's shares trade in the stockmarket towards the level prevailing before the onset of the financial crisis.As at 9 August 2010, the Company's shares were trading at a mid market price of73.5 pence representing a discount of 14.8% to the NAV per share at 30 June2010 of 86.3 pence.

Communicating with shareholders

The Company maintains a programme of regular communication with Shareholdersthrough newsletters and a dedicated website www.migvct.co.uk, supplementing theHalf-Yearly and Annual Reports. The Board welcomes the opportunity to meetShareholders at the Company's General Meetings during which representatives ofthe Investment Manager are present to discuss the progress of the portfolio.The next AGM of the Company will be held in May 2011.The Board and Investment Manager are arranging a workshop for Shareholders tohave the opportunity to hear about the Company's investment activity in greaterdepth. This is planned to be in Central London in December 2010 and allShareholders will receive an invitation to attend once details are finalised.

BVCA awards

We are very pleased that two of the companies in the VCT's portfolio havesuccessfully won awards in their local regions to reach the national finals ofthe British Venture Capital Association ("BVCA") Portfolio Company ManagementAwards 2010. DiGiCo Europe won the International Impact category in London andthe South East and the PastaKing exit was a successful award winner in theSouth West. The regional winners will go through to the national finals to

beheld on 30 September 2010.Outlook

The worst of the economic and financial crisis now appears to be behind us.Economic activity has recovered from the depths of last year's recession.Although economic growth may be much less robust going forward than we havebeen used to in previous cycles, particularly as the coalition governmentpresses ahead with its plans to reduce public sector spending, the businessenvironment may now have entered a more stable period in terms of planning forthe future. The election of a new government in the UK and the recent emergencybudget have also helped to remove some of the previous uncertainties. This mayre-awaken the appetite for financial transactions at mutually acceptablevaluations in the UK small companies sector. Indeed, the Investment Manager isseeing a greater number of good quality investment opportunities now than atany time in the past two years.As noted above, the Company has a strong cash position and will, therefore, bea well-positioned buyer of attractive businesses at the right prices whenconditions improve. The Board continues to believe that the patience of theInvestment Manager and the patience of our Shareholders should be rewarded

overthe medium termLinked Matrix fundraising

The Company will be participating in a linked top-up with Matrix Income & Growth 4 VCT plc and The Income & Growth VCT plc that is planned to launch later this year. The funds raised should further increase market liquidity and further spread fixed running costs over a larger asset base. Details of the Offer will be posted to shareholders later in the year.

Finally, I would like to thank all of our Shareholders for their continuing support.

Keith NivenChairman

Principal risks and uncertainties

In accordance with Disclosure and Transparency Rule (DTR) 4.2.7, the Boardconfirms that the principal risks and uncertainties facing the Company have notmaterially changed since the publication of the Annual Report and Accounts forthe year ended 31 December 2009. The Board acknowledges that there isregulatory risk and continues to manage the Company's affairs in such a manneras to comply with section 274 Income Tax Act 2007. The principal risks faced bythe Company are: * economic risk;

* investment and strategic risk;

* regulatory risk (including VCT status);

* financial and operating risk;

* market risk;

* asset liquidity risk;

* market liquidity risk;

* credit/counterparty risk.

A more detailed explanation of these can be found in the Directors' Report onpages 14 - 15 and in Note 20 on pages 43 - 49 of the Annual Report and Accountsfor the year ended 30 December 2009, copies of which are available on the VCT'swebsite, www.migvct.co.uk.Related Party Transactions

Details of related party transactions in accordance with DTR 4.2.8 can be found in Note 14 to the Accounts below.

Responsibility Statement

In accordance with DTR 4.2.10 the Directors confirm that to the best of their knowledge:

a. the condensed set of financial statements, which has been prepared in

accordance with the statement, "Half-Yearly Reports", issued by the

Accounting Standards Board, gives a true and fair view of the assets,

liabilities, financial position and profit of the Company, as required by

DTR 4.2.4; and

b. the interim management report, included within the Chairman's Statement,

Investment Policy, Investment Portfolio Summary and the Investment

Manager's Review includes a fair review of the information required by DTR

4.2.7 being an indication of the 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 above, in accordance with DTR

4.2.7; and

d. the financial statements include a description of the related party

transactions in the first six months of the current financial year that

have materially affected the financial position or performance of the

Company during the period, and any material changes to the related party

transactions since the last Annual Report, in accordance with DTR 4.2.8.

Cautionary Statement

This report may contain forward looking statements with regard to the financialcondition and results of the Company, which are made in the light of currenteconomic and business circumstances. Nothing in this report should be construedas a profit forecast.On behalf of the BoardKeith NivenChairmanInvestment PolicyThe VCT's policy is to invest primarily in a diverse portfolio of UK unquotedcompanies. Investments are structured as part loan and part equity in order toreceive regular income and to generate capital gains from trade sales andflotations of investee companies.

Investments are made selectively across a number of sectors, primarily in management buyout transactions ("MBOs") i.e. to support incumbent management teams in acquiring the business they manage but do not own. Investments are primarily made in companies that are established and profitable.

Uninvested funds are held in cash and lower risk money market funds.

* UK Companies

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

* VCT regulation

The investment policy is designed to ensure that the VCT continues to qualifyand is approved as a VCT by HMRC. Amongst other conditions, the VCT may notinvest more than 15% of its investments in a single company and must have atleast 70% by value of its investments throughout the period in shares orsecurities comprising Qualifying Holdings, of which a minimum overall of 30% byvalue must be ordinary shares which carry no preferential rights. In addition,although the VCT can invest less than 30% of an investment in a specificcompany in ordinary shares it must have at least 10% by value of its totalinvestments in each Qualifying Company in ordinary shares which carry nopreferential rights.

* Asset mix

The VCT holds funds awaiting investment in a portfolio of readily realisable interest-bearing investments and deposits. The investment portfolio of qualifying investments will be maintained at approximately 80% of net assets.

* Risk diversification and maximum exposures

Risk is spread by investing in a number of different businesses acrossdifferent industry sectors. To reduce the risk of high exposure to equities,each qualifying investment is structured using a significant proportion of loanstock (up to 70% of the total investment in each VCT qualifying company).Initial investments in VCT qualifying companies are generally made in amountsranging from £200,000 to £1 million at cost. Normally, no holding in any onecompany will represent more than 10% of the value of the VCT's investments atthe time of investment. Ongoing monitoring of each investment is carried out bythe Investment Manager generally through taking a seat on the Board of each

VCTqualifying company. * Co-investment

The VCT aims to invest in larger more mature unquoted companies through investing alongside three other Income and Growth VCTs advised by the Investment Manager with a similar investment policy. This enables the VCT to participate in combined investments by the Investment Manager of up to £5 million.

* Borrowing

The VCT has no current plans to undertake any borrowing.

* Management

The Board has overall responsibility for the Company's affairs including thedetermination of its investment policy. Investment and divestment proposals areoriginated, negotiated and recommended by the Investment Manager and are thensubject to formal approval by the Directors. Matrix Private Equity Partnersalso provides Company Secretarial and Accountancy services to the VCT.Investment Manager's ReviewOverview

The six month period to 30 June 2010 has seen a continuation of challengingconditions both for completing new investments and for achieving exits. Faceduntil recently with the uncertainties of the political environment, unstableslow recovery from recession and a lack of clarity in the immediate aftermathof the election, companies have generally been reluctant to market theirbusinesses for sale or raise new capital for expansion.We are hopeful, however, that now that the new coalition administration haslaid out its plans for reducing the budget deficit, this will provide businessowners with the clarity they need to plan for the future. This should generatea greater number of more attractively priced opportunities for us to consider.We recruited an additional investment manager in the period and sustained ourmarketing and deal origination programme. Nevertheless, sufficiently attractivedeals have continued to be difficult to complete. We continue to believe thatour cautious approach to new investment has been an important factor inmaintaining value in the Company. This environment is a risky time for newinvestment and we have been and will remain highly selective.

Investment portfolio

The uplift in the portfolio valuation has been assisted by the improvedperformance of three companies (ATG Media, British International and Racoon)and a recent third party investment at a fourth (Monsal). ATG Media is seeingexcellent market response to its online auction facility. As a result of this,the company is forecasting higher than budgeted profits for the current year.British International is returning to historic levels of profitability after adisappointing year in 2009. It is supplying helicopter support to the drillingrig stationed in Falklands Islands' waters. Racoon has also shown materialprofit growth as a result of more focussed marketing expenditure. A highlightshortly after the period-end was the closing of a refinancing of Monsal thatbrought in a new investor, FourWinds Capital, offering to invest £4 million ata valuation significantly greater than our original cost and previousvaluation. Such negotiations were well advanced before the half-year end, andthis uplift in valuation has been reflected in these accounts.

£6 million of the investment cost is held in cash in the five acquisition companies in the Operating Partner Programme. These companies are actively seeking to acquire investments in the construction, food manufacturing and healthcare and wellbeing sectors but so far have not found sufficiently attractive investment transactions at the right price.

DiGiCo continues to show strong profit growth driven by new product developmentand has paid back £135,172 loan stock plus a premium of £10,066 during theperiod. Focus is also seeing increased success and anticipates continued growthin profitability this year.The three new investments completed over the last twelve months, CB Imports,Iglu and Westway have all made strong starts and are all performing ahead oftheir investment plans. We invested in CB Imports and Iglu in December 2009 andwe continue to hold these valuations at cost at this early stage.Due to technical covenant breaches with their borrowing facilities and despitetheir current profitable trading, six companies are not currently servicingtheir VCT loan stock as at 30 June 2010. On the grounds of prudence none ofthis interest owed has been accounted for. In certain cases we expect servicingto resume and, in others, value to be recovered only on realisation.Whilst the building and construction sector continues to suffer from sluggishdemand, the portfolio companies which are directly exposed to this sector,Plastic Surgeon, Youngman, Blaze and PXP, are all now performing steadily. Wecontinue to work with existing businesses in the portfolio to encourage them tomake the changes that are necessary to ensure that they are in the bestpossible position to withstand this period of economic uncertainty. It is ameasure of the success of this effort that the investment portfolio hasrequired hardly any additional funding despite the extreme challenges of thepast two years.

With the exception of Monsal, which is forecasting a modest loss, we expect all of the companies in the portfolio to deliver operating profits (ie prior to goodwill amortisation and servicing debt) in their current financial year.

Outlook

The UK economic environment continues to hold uncertainty but there are nocurrent signs of further threats to the financial health of our portfoliocompanies. Overall, we expect to continue to be able to unlock additional valueover time. Smaller companies and the entrepreneurs that run them now have astable political and economic regime in which to plan for the future and thisshould increase our dealflow. We are hopeful that many more investmentopportunities will become available at more attractive prices over the comingmonths. Having retained strong cash reserves, the VCT is very well-placed totake advantage at this point in the cycle.

Matrix Private Equity Partners LLP

Investment Portfolio Summary

as at 30 June 2010 Date of Total book Valuation % value of initial cost * net assets investment £'000 £'000 Qualifying investments AiM quoted investments Legion Group plc (formerly Aug-05 150 30 0.09%SectorGuard plc)

Provider of manned guarding, mobile patrolling, and alarm response

services ----------- ----------- ----------- 150 30 0.09% Unquoted investments DiGiCo Europe Limited Jul-07 1,985 3,114 8.86%

Designer and manufacturer of audio

mixing desks

British International Holdings May-06 2,026 2,351

6.69%Limited

Supplier of helicopter services

ATG Media Holdings Limited Oct-08 1,668 2,012 5.72% Publisher and on-line auction platform operator

Aust Construction Investors Limited Oct-07 2,000 2,000

5.69%

Company seeking to acquire businesses

in the construction sector

CB Imports Group Limited (formerly Dec-07 2,000 2,000

5.69%

Calisamo Management Limited) Importer and distributor of artificial flowers

and floral sundries VSI Limited Apr-06 907 1,670 4.75%

Developer and marketer of 3D software

Focus Pharma Holdings Limited Oct-07 1,370 1,514 4.31%

Licensor and distributor of generic

pharmaceuticals

Iglu.com Holidays Limited (formerly Oct-07 1,422 1,422

4.04%

Barnfield Management Limited) On-line

ski and cruise travel agent Monsal Holdings Limited Dec-07 1,310 2,248 6.39%

Supplier of engineering services to

water and waste sectors

Westway Services Holdings (2010) Jun-09 783 1,007

2.86%

Limited (formerly MC440 Limited) Installation, maintenance and servicing of air- conditioning

systems Apricot Trading Limited Mar-08 1,000 1,000 2.85%

Company seeking to acquire businesses in the market services and media

sector.

Bladon Castle Management Limited Dec-08 1,000 1,000

2.85%

Company seeking to acquire businesses in the retailing, health and brand

management sector Fullfield Limited Dec-08 1,000 1,000 2.85%

Company seeking to acquire businesses

in the food sector Vanir Consultants Limited Oct-08 1,000 1,000 2.85%

Company seeking to invest in data

management, data mapping and management services Vectair Holdings Limited Jan-06 560 940 2.67%

Designer and distributor of washroom

products

Racoon International Holdings Limited Dec-06 1,213 789

2.24%

Supplier of hair extensions, hair

care products and training Youngman Group Limited Oct-05 1,000 701 1.99%

Manufacturer of ladders and access

towers Campden Media Limited Jan-06 975 380 1.08%

Magazine publisher and conference

organiser

Blaze Signs Holdings Limited Apr-06 1,700 363

1.03%

Manufacturer and installer of signs

Plastic Surgeon Holdings Limited Apr-08 479 186

0.53%(The)

Supplier of snagging and finishing

services to the domestic and commercial property markets

PXP Holdings Limited (Pinewood Dec-06 1,164 -

0.00%Structures)

Designer, manufacturer, supplier and installer of timber-frames for

buildings ----------- ----------- ----------- 26,562 26,697 75.94% ----------- ----------- ----------- Total qualifying investments 26,712 26,727 76.03% ----------- ----------- ----------- Non-qualifying investments

Fidelity Institutional Cash Fund plc* 2,162 2,162

6.15%*

Global Treasury Funds plc (Royal Bank 1,341 1,341

3.81%of Scotland)**

Insight Liquidity Funds plc (HBOS)** 1,263 1,263

3.59%

SWIP Global Liquidity Fund plc 1,146 1,146

3.26%(Scottish Widows)**

Institutional Cash Series plc 1,038 1,038

2.95%(BlackRock)** Sterling Liquidity First 844 844 2.40%

Institutional plc(Blackrock)** GS Funds plc (Goldman Sachs)** 426 426

1.21% ----------- ----------- -----------

Total non-qualifying investments 8,220 8,220

23.37% ----------- ----------- ----------- Total investments 34,932 34,947 99.40% Other assets 628 628 1.78 % Current liabilities (415) (415) (1.18)% ----------- ----------- ----------- Net assets 35,145 35,160 100.00%

* Book cost includes the fair value of the qualifying investments acquired from MIG 3 VCT plc on 20 May 2010 of £12,756,000 where still held at 30 June 2010,.

** Disclosed as `Investments at fair value' within `Current assets' in the Balance Sheet.

Unaudited Income Statement

for the six months ended 30 June 2010

Six months ended 30 June 2010 Six months ended 30 June 2009 (unaudited) (unaudited) Notes Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Unrealised gains/ 10 - 2,291,988 2,291,988 - (906,568) (906,568)(losses) on investments held at fair value Realised gains/ 10 - - - - 16,189 16,189(losses) on investments held at fair value Income 3 437,524 - 437,524 223,535 - 223,535 Recoverable VAT - - - 1,939 5,818 7,757 Investment 4 (54,589) (163,766) (218,355) (37,150) (111,451) (148,601)management expense Other expenses 5 (177,021) - (177,021) (160,440) - (160,440) Merger costs 5 (88,670) - (88,670) - - - ------------- ------------- -------------

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

Profit/(loss) on 117,244 2,128,222 2,245,466 27,884 (996,012) (968,128)ordinary activities before taxation Tax on profit/(loss) 6 (162) - (162) (1,670) 2,691 1,021on ordinary activities ------------- ------------- -------------

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

Profit/(loss) 117,082 2,128,222 2,245,304 26,214 (993,321) (967,107)attributable to equity shareholders ------------- ------------- -------------

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

Basic and diluted 7 0.47p 8.47p 8.94p 0.13p (4.79)p (4.66)pearnings per share Year ended 31 December 2009 (audited) Notes Revenue Capital Total £ £ £ Unrealised - (161,173) (161,173) gains/(losses) on investments held at fair value Realised gains - (177,845) (177,845) /(losses) on investments held at fair value Income 3 399,661 - 399,661 Recoverable 1,939 5,818 7,757 VAT Investment 4 (79,923) (239,769) (319,692) management expense Other expenses (312,239) - (312,239) Merger costs - - - ------------- ------------- ------------- Profit/(loss) 9,438 (572,969) (563,531) on ordinary activities before taxation Tax on profit/ 6 (641) - (641) (loss) on ordinary activities ------------- ------------- ------------- Profit/(loss) 8,797 (572,969) (564,172) attributable to equity shareholders ------------- ------------- ------------- Basic and 7 0.04p (2.77)p (2.73)p diluted earnings per share

All revenue and capital items in the above statement derive from continuingoperations of the Company. This includes the assets, liabilities and activitiesof Matrix Income & Growth 3 VCT plc after they were transferred to the Companyon 20 May 2010. No restatement has been made for comparable periods.

The total column of this statement is the Profit and Loss account of the Company.

There were no other recognised gains or losses in the period.

Other than revaluation movements arising on investments held at fair value through profit and loss, there were no differences between the profit/(loss) as stated above and at historical cost.

The notes below form part of these half-yearly financial statements.

Unaudited Balance Sheetas at 30 June 2010 As at As at As at 30 June 2010 * 30 June 2009 31 December 2009 (unaudited) (unaudited) (audited) Notes £ £ £ Non-current assets Investments at fair 1c, 26,727,418 12,818,934 11,779,583value 10 Current assets Debtors and 322,022 76,696 94,327prepayments Current Investments 11 8,219,791 3,980,136 5,177,570 Cash at bank 305,798 57,594 46,253 -------------------- -------------------- -------------------- 8,847,611 4,114,426 5,318,150 Creditors: amounts (414,805) (216,509) (118,363)

falling due within one

year -------------------- -------------------- -------------------- Net current assets 8,432,806 3,897,917 5,199,787 -------------------- -------------------- -------------------- Net assets 35,160,224 16,716,851 16,979,370 -------------------- -------------------- -------------------- Capital and reserves 12 Called up share 407,673 206,241 203,735capital Capital redemption 19,487 15,197 17,703reserve Share Premium account 16,852,849 - - Revaluation reserve 15,201 (2,023,784) (2,271,608) Special distributable 17,639,263 18,178,797 17,907,374reserve Profit and loss 225,751 340,400 1,122,166account -------------------- -------------------- -------------------- Equity shareholders' 35,160,224 16,716,851 16,979,370funds Net asset value per 9 86.25p 81.06p 83.34pOrdinary Share

* Includes those assets and liabilities acquired from Matrix Income & Growth 3 VCT plc on 20 May 2010.

The notes below form part of these half-yearly financial statements.

Unaudited Reconciliation of Movements in Shareholders' Funds

for the six months ended 30 June 2010

Six months ended Six months ended Year ended 30 June 2010 30 June 2009 31 December 2009 (unaudited) (unaudited) (audited) Notes £ £ £ Opening Shareholders' 16,979,370 17,998,562 17,998,562funds Purchase of own (104,345) (106,617) (247,033)shares Shares issued upon 17,111,546 - -merger with Matrix Income & Growth 3 VCT plc Stamp duty on shares (52,975) - -issued Profit/(loss) for the 2,245,304 (967,107) (564,172)period before dividends Dividends paid in 8 (1,018,676) (207,987) (207,987)period -------------------- -------------------- -------------------- Closing Shareholders' 35,160,224 16,716,851 16,979,370funds

The notes below form part of these half-yearly financial statements.

Unaudited Summarised Cash Flow Statement

for the six months ended 30 June 2010

Six months ended Six months ended Year ended 30 June 2010 30 June 2009 31 December 2009 (unaudited) (unaudited) (audited) £ £ £ Operating activities Investment income 242,837 247,798 398,184received VAT recovered - 207,757 223,249 Investment management (173,535) (101,242) (239,743)fees paid Other cash payments (244,374) (182,208) (357,430) Payment of merger costs (36,247) - -of the Company -------------------- -------------------- -------------------- Net cash inflow/ (211,319) 172,105 24,260(outflow) from operating activities Investing activities Acquisitions of - (386,016) (567,834)investments Disposals of investments 154,739 233,581 1,996,610 -------------------- -------------------- -------------------- Net cash inflow/(outflow) 154,739 (152,435) 1,428,776from investing activities Dividends Equity dividends paid (1,018,676) (207,987) (207,987) Taxation Taxation repaid/(paid) - - (106,857) -------------------- -------------------- -------------------- Cash inflow/(outflow) (1,075,256) (188,317) 1,138,192before financing and liquid resource management Management of liquid resources (Increase)/decrease in (3,042,221) 395,588 (801,846)current investments Financing Cash received on 4,561,289 - -acquisition of net assets from Matrix Income & Growth 3 VCT plc Stamp duty on shares (52,975) - -issued to acquire net assets of Matrix Income & Growth 3 VCT PLC Payments to meet merger (90,295) - -costs of Matrix Income & Growth 3 VCT plc Share capital bought back (40,997) (221,489) (361,905) -------------------- -------------------- -------------------- Net inflow/(outflow) from 4,377,022 (221,489) (361,905)financing activities -------------------- -------------------- -------------------- Increase/(decrease) in 259,545 (14,218) (25,559)cash for the period -------------------- -------------------- --------------------

Reconciliation of profit/(loss) on ordinary activities before taxation to net cash (outflow)/ inflow from operating activities

for the six months ended 30 June 2010

Six months ended Six months ended Year ended 30 June 2010 30 June 2009 31 December 2009 (unaudited) (unaudited) (audited) £ £ £ Profit/(loss) on ordinary 2,245,466 (968,128) (563,531)activities before taxation Net unrealised (gains)/ (2,291,988) 906,568 177,845losses on investments Net (gains)/losses on - (16,189) 161,173realisations of investments (Increase)/decrease in (131,776) 296,120 287,990debtors Decrease in creditors (33,021) (46,266) (39,217) -------------------- -------------------- -------------------- Net cash (outflow)/inflow (211,319) 172,105 24,260from operating activities -------------------- -------------------- --------------------

Notes to the Unaudited Financial Statements

1. Principal accounting policies

The following accounting policies have been applied consistently throughout theperiod. Full details of principal accounting policies will be disclosed in

theAnnual Report.a) Basis of accountingThe unaudited results cover the six months to 30 June 2010 and have beenprepared under UK Generally Accepted Accounting Practice (UK GAAP), consistentwith the accounting policies set out in the statutory accounts for the yearended 31 December 2009 and the 2009 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 results for the period to 20 May 2010 reflect the activities of theCompany. On this date the assets and liabilities of Matrix Income & Growth 3VCT plc were acquired by the Company and therefore the results for theremaining period to 30 June 2010 reflect the activities of the enlarged entity.Further details are contained in note 13 below.The Half-Yearly Report has not been audited, nor has it been reviewed by theauditors pursuant to the Auditing Practices Board (APB)'s guidance on Review ofInterim Financial Information.

b) Presentation of the Income Statement

In order to better reflect the activities of a VCT and in accordance with theSORP, supplementary information which analyses the Income Statement betweenitems of a revenue and capital nature has been presented alongside the IncomeStatement. The revenue column of profit attributable to equity shareholders isthe measure the Directors believe appropriate in assessing the Company'scompliance with certain requirements set out in Section 274 Income Tax Act2007.

c) Investments

Investments are accounted for on a trade date basis.

All investments held by the Company are classified as "fair value throughprofit and loss" as the Company's business is to invest in financial assetswith a view to profiting from their total return in the form of capital growthand income. For investments actively traded in organised financial markets,recognition and fair value is determined by reference to Stock Exchange markettrading rules and quoted bid prices at the close of business on the balancesheet date.Unquoted investments are valued by the Directors at `fair value through profitand loss'. Accordingly, in the absence of a market price, the Directors havevalued unquoted investments in accordance with International Private EquityVenture Capital Valuation (IPEVCV) guidelines as updated in September 2009,which have not materially changed the results reported last year.All investments are held at the price of a recent investment for an appropriateperiod where there is considered to have been no change in fair value. Wheresuch a basis is no longer considered appropriate, the following factors will beconsidered:

(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 asuitable price-earnings ratio to that company's historic, current or forecastpost-tax earnings before interest and amortisation (the ratio used being basedon a) an earnings multiple basis. The shares may be valued by applying asuitable price-earnings ratio to that company's historic, current or forecastpost-tax earnings before interest and amortization (the ratio used being basedon a comparable sector but the resulting value being adjusted to reflect pointsof difference identified by the Investment Manager compared to the sectorincluding, inter alia, a lack of marketability).

or:-

b) where a company's underperformance against plan indicates a diminution inthe value of the investment, provision against cost is made, as appropriate.Where the value of an investment has fallen permanently below cost, the loss istreated as a permanent impairment and as a realised loss, even though theinvestment is still held. The Board assesses the portfolio for such investmentsand, after agreement with the Investment Manager, will agree the values thatrepresent the extent to which an investment loss has become realised. This isbased upon an assessment of objective evidence of that investment's futureprospects, to determine whether there is potential for the investment torecover 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. Capital gains and losses on investments, whether realised or unrealised, aredealt with in the profit and loss and revaluation reserves and movements in theperiod are shown in the Income Statement.3. Income Six months ended Six months ended Year ended 30 June 2010 30 June 2009 31 December 2009 (unaudited) (unaudited) (audited) £ £ £ Dividends 161,067 19,933 26,345 Money-market funds 12,684 26,171 37,254 Loan stock interest 263,613 161,602 315,598 Bank deposits 160 337 919 Interest on VAT - 15,492 15,492recovered Other Income - - 4,053 -------------------- -------------------- -------------------- Total Income 437,524 223,535 399,661

4. Investment management expense

In accordance with the policy statement published under "Management and Administration" in the Company's prospectus dated 9 July 2004, the Directors have charged 75% of the investment management expense to the capital reserve.

5. Merger costs

Based upon estimated total merger costs of £285,000 to merge the Company withMatrix Income & Growth 3 VCT plc, the Company's share of these costs is £141,975. This includes £52,975 of stamp duty, charged to the share premiumaccount, as shown in note 12. The balance of £88,670 is disclosed as mergercosts in the Income Statement. Final figures for the costs of the merger arenot yet available, but at this stage, the Board expects that the final costswill be close to those currently estimated in total.

6. Taxation

Other than a small charge for deferred tax, there is no tax charge for the period as the Company has incurred taxable losses.

7. Basic and diluted earnings and return per share

The basic and diluted earnings, revenue return and capital return per shareshown below for each period are respectively based on numerators i)-iii), eachdivided by the weighted average number of shares in issue in the period - seeiv) below. Six months ended Six months ended Year ended 30 June 2010 30 June 2009 31 December 2009 (unaudited) (unaudited) (audited) £ £ £ i) Total earnings after 2,245,304 (967,107) (564,172) taxation Basic and diluted 8.94p (4.66)p (2.73)p gain/(loss) per o rdinary share (pence) ii) Net revenue from 117,082 26,214 8,797 ordinary activities after taxation Basic and diluted 0.47p 0.13p 0.04p revenue per ordinary share (pence) Net unrealised gains/ 2,291,988 (906,568) (161,173) (losses) Net realised capital - 16,189 (177,845) gains/(losses). Capital element of - 5,818 5,818 VAT recoverable Dividends received - - - treated as capital Capital expenses (net (163,766) (108,760) (239,769) of taxation) -------------------- -------------------- -------------------- iii) Total capital return 2,128,222 (993,321) (572,969) Capital gain/(loss) 8.47p (4.79)p (2.77)p per ordinary share (pence) iv) Weighted average 25,118,886 20,743,911 20,648,175 number of shares in issue in the period 8. Dividends paid Six months ended Six months ended Year ended 30 June 2010 30 June 2009 31 December 2009 (unaudited) (unaudited) (audited) £ £ £ Interim income dividend 101,868 - -for the year ended 31 December 2009 of 0.5p per share Interim capital dividend 916,808 - -for the year ended 31 December 2009 of 4.5p per share Final income dividend - 207,987 207,987paid for year ended 31 December 2008 of 1.0p per share -------------------- -------------------- -------------------- 1,018,676 207,987 207,987

9. Net asset value per ordinary share

As at As at As at 30 June 2010 30 June 2009 31 December 2009 (unaudited) (unaudited) (audited) Net assets £35,160,224 £16,716,851 £16,979,370 Number of shares in issue 40,767,266 20,624,052 20,373,514 Net asset value per share 86.25p 81.06p 83.34p(pence)

10. Summary of non-current investments at fair value during the period

Traded Unquoted Unquoted Loan Total on AiM equity preference stock shares shares £ £ £ £ £ Valuation at 1 January 75,045 4,009,273 7,981 7,687,284 11,779,5832010 Investments acquired as - 4,791,342 5,033 8,004,709 12,801,084part of the acquisition of the assets and liabilities of Matrix Income & Growth 3 VCT plc at fair value (see note). Sales - proceeds - - - (145,237) (145,237) Unrealised (losses)/ (45,028) 1,455,761 1,750 879,505 2,291,988gains -------------- -------------- -------------- -------------- -------------- Valuation at 30 June 30,017 10,256,376 14,764 16,426,261 26,727,4182010 Book cost at 30 June 150,106 8,425,598 51,245 18,085,268 26,712,2172010 Unrealised (losses)/ (120,089) 1,830,778 (36,481) (1,659,007) 15,201gains at 30 June 2010 -------------- -------------- -------------- -------------- -------------- Valuation at 30 June 30,017 10,256,376 14,764 16,426,261 26,727,4182010 Gains on investments Realised gains based on - - - 5,179 5,179historical cost Less amounts recognised - - (5,179) (5,179)as unrealised gains in previous years -------------- -------------- --------------

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

Realised gains based on - - - - -carrying value at 31 December 2009 Net movement in (45,028) 1,455,761 1,750 879,505 2,291,988unrealised (losses)/ gains in the period -------------- -------------- --------------

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

(Losses)/gains on (45,028) 1,455,761 1,750 879,505 2,291,988investments at 30 June 2010 Note: The original cost of these assets in the books of Matrix Income & Growth3 VCT plc was £13,152,238, being £361,154 more than the transfer at fair valueshown above.

11. Current investments at fair value

These comprise investments in seven Dublin based OEIC money market fundsmanaged by Royal Bank of Scotland, Blackrock Investment Management (two funds),Goldman Sachs, Insight Investment Management, Scottish Widows InvestmentManagement and Fidelity Investment Management. All of these sums are subject tosame day access.12. Capital and reserves Called up Capital Share Revaluation Special Profit and Total share redemption Premium reserve distributable loss capital reserve reserve reserve account £ £ £ £ £ £ £ At 1 January 203,735 17,703 - (2,271,608) 17,907,374 1,122,166 16,979,3702010 Shares bought (1,784) 1,784 - - (104,345) - (104,345)back Written off - - - - (163,766) 163,766 -to special reserve Realisation - - - (5,179) - 5,179 -of previously unrealised appreciation Dividend - - - - - - (1,018,676) (1,018,676)final for year ended 31 December 2009 Shares issued 205,722 - 16,905,824 - - - 17,111,546on 20 May 2010 to acquire net assets of Matrix Income & Growth 3 VCT plc Stamp duty on - - (52,975) - - - (52,975)shares issued Profit for - - - 2,291,988 - (46,684) 2,245,304the period ---------- ---------- ---------- ---------- ---------- ---------- ---------- At 30 June 407,673 19,487 16,852,849 15,201 17,639,263 225,751 35,160,2242010 ---------- ---------- ---------- ---------- ---------- ---------- ----------

13. Acquisition of assets and liabilities of Matrix Income & Growth 3 VCT plc

On 20 May 2010, the assets and liabilities of Matrix Income & Growth 3 VCT plcwere transferred to the Company in exchange for the issue of a further20,572,129 Ordinary Shares in the Company, at a total value of £17,111,545.Subsequently and on the same day, Matrix Income & Growth 3 VCT plc was placedinto members' voluntary liquidation pursuant to a scheme of reconstructionunder section 110 of the Insolvency Act 1986.

The net asset values (NAV) per share of each fund used for the purposes of conversion at the calculation date of 19 May 2010, and the resultant conversion ratios into Ordinary Shares were:

NAV per share Conversion ratio applied to (pence) Matrix Income & Growth 3 VCT plc ordinary shares to obtain new number of Matrix Income & Growth VCT plc Ordinary Shares Matrix Income & Growth VCT 83.18 1.0000000plc Matrix Income & Growth 3 88.63 1.0655542VCT plc

Share certificates reflecting the new shareholdings totalling 20,572,129 Ordinary Shares in Matrix Income & Growth VCT plc were sent to shareholders on 26 May 2010.

14. Related party transactions

Bridget Gu©rin is a shareholder (2.0%) of Matrix Group Limited, which owns 100%of the equity of MPE Partners Limited and Matrix Securities Limited. MPEPartners Limited has a 50% interest in Matrix Private Equity Partners LLP('MPEP'), the Company's Investment Manager. Following a re-organisation of theMatrix group of companies, MPEP now provides administration as well asinvestment management services under the terms of an Investment ManagementAgreement dated 20 May 2010. The revised annual fee is 2% of net assets plus £120,000 per annum, the latter inclusive of VAT and subject to increase in RPI.Until that date, Matrix-Securities Limited provided Company Secretarial andAccountancy Services to the Company under agreements dated 9 July 2004 for afee of £35,590 (30 June 2009: £44,351; 31 December 2009: £88,387) in theperiod.15. The information for the year ended 31 December 2009 does not comprise fullfinancial statements within the meaning of Section 435 of the Companies Act2006. The financial statements for the year ended 31 December 2009 have beenfiled with the Registrar of Companies. The auditors have reported on thesefinancial statements and that report was unqualified and did not contain astatement under section 498(2) of the Companies Act 2006.16. This Half-Yearly Report will shortly be made available on our website:www.migvct.co.uk and will be circulated by post to those shareholders who haverequested copies of the Report. Further copies are available free of chargefrom the Company's registered office, One Vine Street, London W1J 0AH or can bedownloaded via the website.

MATRIX INCOME & GROWTH VCT PLC