IBIS Media VCT 1 plc Half Yearly Report -2-

The Board is grateful for the support of the Company's shareholders and would encourage them (or their advisers) to contact the company secretary on 0131 243 7210 with any questions which they may have about either the Company or their shareholdings in it. The Investment Adviser also maintains a website for the Company which may be accessed at www.ibismediavct.com.

Sir Robin Miller

Chairman

30 September 2013

Investment Adviser's Review

Investment Overview

IBIS' Investment Adviser has been actively working with investee companies at both the operational and corporate level to help develop each business in the portfolio and identify exits that have the potential to add significant value to IBIS shareholders.

Investee companies where we increased the carrying value of our investments at 31 July 2013 were Steel River Media, the holding company for Contagious, Ginx TV and Freshwater.

During the period under review, Contagious has continued to expand its business both domestically and internationally, Ginx TV has accelerated its deal flow to the point of being on the verge of reaching operating break even and Freshwater has restored profits to pre-recession levels. The increase in the carrying value of Contagious and Freshwater reflects the increased valuations of transactions and public trading involving comparable companies, while the uplift in Ginx TV is the result of the company's recent Rights Issue in relation to a significant acquisition opportunity, raising equity at a 25% premium to the price per share of its last fundraising.

We maintained the carrying value of our investments in Get Me Media, Masher Technologies and Riva Digital Media. Get Me Media is trading up 50% year-on-year, Masher has received preliminary acquisition interest and Riva Digital Media continues to be held at nil value.

We reduced the carrying value of our investment in Futurelex due to a restructuring of IBIS' debt in an effort to support the company's fundraising efforts.

The portfolio company valuations and recent trading updates are explained in more detail later in this review.

IBIS' investments are valued in accordance with the International Private Equity and Venture Capital Guidelines. During the 6 month period ending 31 July 2013 we have seen an increase of 0.1% in the Company's net asset value per share, from 56.80p to 57.26p. The increase in value of GBP38,792 over the period under review can be attributed to a decrease in the share capital and share premium account of GBP21,891 (arising primarily from the Company's SRRP) and the Company's return attributable to shareholders of GBP60,683. The Company's return attributable to shareholders is made up of a capital return of GBP222,064 comprising an unrealised gain of GBP260,875, arising primarily from the increase in valuation of the Company's investments in Contagious, Ginx TV and Freshwater set off against the decrease in the valuation of Futurelex and a realised loss of GBP38,810 representing the Investment Adviser's fee for the period allocated to capital and a revenue loss of GBP161,382, including GBP190,805 of accrued loan note interest due from Futurelex written off, as detailed later in this review.

The table below summarises the changes in fair value at 31 July 2013 as compared to the year-end carrying values at 31 January 2013, including and excluding the impact of new investment by IBIS.

 
                                                                  Change in 
                                                                  Fair Value 
                            Change in                              between 
                            Fair Value                           31 Jan 2013         Percentage 
                            between 31                            and 31 Jul           Change 
                           Jan 2013 and     New Investment     2013 (excluding       (excluding 
                           31 Jul 2013         in Period       new investment)     new investment) 
---------------------  ------------------  ----------------  ------------------  ----------------- 
 Steel River 
  Media (Contagious)          +GBP97,074            GBP0           +GBP97,074                  +5% 
---------------------  ------------------  ----------------  ------------------  ----------------- 
 Ginx TV                     +GBP278,189           GBP0            +GBP278,189                +20% 
---------------------  ------------------  ----------------  ------------------  ----------------- 
 Get Me 
  Media                          GBP0              GBP0               GBP0                      0% 
---------------------  ------------------  ----------------  ------------------  ----------------- 
 Masher                          GBP0              GBP0               GBP0                      0% 
---------------------  ------------------  ----------------  ------------------  ----------------- 
 Freshwater                   +GBP7,488            GBP0             +GBP7,488                  +2% 
---------------------  ------------------  ----------------  ------------------  ----------------- 
 Futurelex                   -GBP121,876           GBP0            -GBP121,876                -38% 
---------------------  ------------------  ----------------  ------------------  ----------------- 
 Riva Digital 
  Media                          GBP0              GBP0               GBP0                      0% 
---------------------  ------------------  ----------------  ------------------  ----------------- 
 Total                       +GBP260,875           GBP0            +GBP260,875                 +5% 
---------------------  ------------------  ----------------  ------------------  ----------------- 
 

As the above table illustrates, we have seen an increase in the overall value of the IBIS investment portfolio on a like-for-like basis of approximately 5.0% in the six month period to 31 July 2013. Due to loan note interest being accounted for separately in the calculation of the Company's net asset value, the table above excludes GBP161,818 in accrued loan note interest due to IBIS at 31 July 2013 from Ginx TV and Get Me Media set off against GBP190,805 of accrued loan note interest written off via the Futurelex restructuring.

Portfolio Review

The portfolio of IBIS comprises investments in Steel River Media (the holding company for Contagious), Ginx TV, Get Me Media, Masher Technologies, Freshwater, Futurelex and Riva Digital Media.

The following is a review of the current portfolio.

 
 Steel River Media (being the holding company 
  of Contagious) 
--------------------------------------------------- 
 Date of initial         12 January 2010 
  investment: 
----------------------  --------------------------- 
 Investment to date:     GBP850,000 ordinary shares 
----------------------  --------------------------- 
 Valuation as at         GBP1,842,683 
  31 January 2013: 
----------------------  --------------------------- 
 Investment in period:   GBP0 
----------------------  --------------------------- 
 Valuation as at         GBP1,939,757 
  31 July 2013: 
----------------------  --------------------------- 
 Change in valuation:    +GBP97,074; +5% 
----------------------  --------------------------- 
 

Investment Overview

Contagious, which was launched in 2004, is a respected global intelligence resource reporting on innovative marketing techniques and the impact of emerging technologies on brands. Contagious' clients include some of the world's leading advertisers such as Google, Heineken, Kraft and Louis Vuitton as well as range of advertising agencies including Draftfcb, Havas, JWT and McCann Worldgroup.

Contagious' offering includes a magazine, app, consultancy and online information resources, covering topics such as: branded content, mobile marketing, social networking, user-generated content, video games and emerging technologies. Contagious complements its core offering with a bespoke online intelligence resource and alerts service for advertisers and agencies. Separately, Contagious also provides interactive workshops and briefings on developments in the wider communications sector.

The overall proposition of the business is to identify ideas, insight and innovation behind the world's most revolutionary marketing strategies.

Recent Updates

Contagious' trading is ahead year-on-year but is marginally behind its revenue budget, which has been partly offset by a lower operating cost base than projected. In aggregate, renewal rates for its printed quarterly magazine and digital feed are in line with targets. During the period under review, Contagious has won a number of contracts with major global brands, including consultancy projects with Mondelez and Google. In addition to tightly managed costs, cash flow has been excellent and in April 2013, IBIS received the first tranche of a GBP52,000 dividend payment it will receive in respect of the company's 2012 financial year.

As a result of a successful launch into the US through its New York office, the company is pursuing joint ventures with local partners in other international locations, including South America and Asia. Contagious is also undergoing a major redevelopment of its technology, which will enable the company to streamline its suite of digital services. The successful launch of its content delivery platform later this year will provide Contagious with a more comprehensive offering for new business and the opportunity to increase both service offering and price to existing clients.