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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Income & Growth Vct (the) Plc | LSE:IGV | London | Ordinary Share | GB00B29BN198 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 70.00 | 68.50 | 71.50 | 70.25 | 70.00 | 70.00 | 78 | 08:00:07 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Offices-holdng Companies,nec | 8.63M | 5.49M | 0.0348 | 20.11 | 110.27M |
From Apr 2019 to Apr 2024
TIDMIGV
RNS Number : 3983Z
Income & Growth VCT (the) PLC
26 May 2016
The Income & Growth VCT plc ("the Company" "the VCT" or "I&G VCT") is a Venture Capital Trust ("VCT") listed on the London Stock Exchange. Its investment portfolio is advised by Mobeus Equity Partners LLP ("Mobeus").
Company Objective
The objective of the Company is to provide investors with an attractive return, by maximising the stream of dividend distributions from the income and capital gains generated by a diverse and carefully selected portfolio of investments, while continuing at all times to qualify as a VCT.
Financial Highlights
Results for the six months ended 31 March 2016
Hot Features
Premium
- Net asset value total return per share was 3.8% for the six
months.
- Share price total return per share was 7.0% for the six months.
- The Board has declared an interim dividend for the current
year of 6.00 pence per share, to be paid to shareholders on
7 July 2016 which will bring cumulative dividends paid since
the inception of the current share class* to 80.50 pence per
share.
- A total of GBP4.44 million was invested into two new investments,
Access IS and Redline.
- Total cash proceeds from realisations were GBP10.65 million
which included GBP6.84 million from the realisations of Tessella
and Westway.
* The first allotment of the former 'S' Share class, now the current share class, took place on 6 February 2008.
Performance Summary
The net asset value ("NAV") per share at 31 March 2016 was 104.42 pence.
The table below shows the recent past performance of the Company's existing class of shares. Detailed performance data, including a table of dividends paid to date, for all fundraising rounds is shown in the Performance Data appendix which will be included in the published Half-Year Report and on the Company's website.
Reporting Net NAV Cumulative Cumulative Share Cumulative Dividends
date assets per dividends NAV total price (1) share price paid and
Share paid per return per total return proposed
share share to per share in respect
shareholders to of each
(GBPm) (p) (p) (p) (p) shareholders year
As at (p) (p)
31 March 2016 74.31 104.42 74.50 178.92 94.00 168.50 6.00 (2)
30 September
2015 75.20 106.38 68.50 174.88 93.50 162.00 12.00
30 September
2014 69.31 114.60 50.50 165.10 103.50 (3) 154.00 18.00
30 September
2013 60.47 113.90 40.50 154.40 99.50 140.00 10.00
30 September
2012 50.55 109.62 28.50 138.12 97.00 125.50 26.00
30 September
2011 49.15 120.79 4.50 125.29 91.60 96.10 4.00
(1) Source: London Stock Exchange.
(2) As noted in the third financial highlight above
(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, which
was excluded from the listed share price at that year-end.
Chairman's Statement
I am pleased to present the Company's Half-Year Report for the six months ended 31 March 2016.
This half-year has seen a period of solid performance for the Company. Three profitable investment disposals and a good performance across the portfolio as a whole were the main contributors to a further increase in shareholder returns for the half-year. During the period, the Company also completed new investments into two companies.
The second of these investments was the first made by the Company in compliance with the new VCT legislation introduced by the Finance (No 2) Act 2015 (the "new VCT Rules") and in accordance with the Company's new Investment Policy. By way of a reminder, the new Investment Policy was required to comply with the new VCT Rules and was approved by shareholders at the Annual General Meeting on 10 February 2016. Details of the new VCT Rules were set out in the 2015 Annual Report and a summary of current VCT regulation is provided following the Investment Policy below. Further information is given on more recent developments later in this statement.
Performance
The Company's NAV total return per share was 3.8% for the six months to 31 March 2016 (2015: 3.0%) while the total share price return was 7.0% (2015: 4.3%).
Cumulative NAV total return per share (being the closing net asset value plus total dividends paid to date) has risen to 178.92 pence compared to 174.88 pence at the year-end. This represents a further increase of 2.3% over the period and an increase of 88.9% since the merger of the VCT's share classes in March 2010.
Longer term performance of the Company
Shareholders who invested in the former class of 'S' Shares in 2007 (the current share class) have seen a total NAV return to date of 178.92 pence per share. This return compares with an initial investment of 100 pence per share, or a net cost (after initial income tax relief of 30%) of 70 pence per share. As part of this return, shareholders have received 74.50 pence in dividends, representing an average annual yield upon their initial 70.00 pence net investment of 13.0% (2015: 12.5%). The underlying net asset value, which represents the balance of their total return, is 104.42 pence per share.
Similar details are contained in the tables showing the performance for all fundraisings, including the fund of ordinary shares launched in 2000/01 ("the former 'O' Share Fund"), in the Performance Data tables which will be included in the published Half-Year Report and on the Company's website.
Investment portfolio
The portfolio has performed well during the period, increasing in value by 6.5% (2015: 8.0%) on a like-for-like basis. The aggregate portfolio saw a net increase of GBP2.47 million in realised gains and GBP0.73 million in unrealised gains over the six month period. The portfolio was valued at GBP53.95 million at the period-end (2015: GBP60.42 million). The movement over the six months is largely explained by disposals that are summarised below and in more detail in the Investment Review.
During the six months under review, the Company invested a total of GBP4.47 million, principally being GBP4.44 million invested into two new investments. These were Access IS, a leading provider of data capture and scanning hardware, and Redline, a market leader in the provision of security consultancy and services, particularly to airports.
The sale proceeds for the period of GBP10.65 million arose mainly from GBP7.38 million received from the full realisations of Tessella and Westway in December 2015 and the exit of Original Additions just before the period-end. The balance included proceeds from sales of investments made in previous years and receipts from partial loan stock repayments.
Details of all these transactions and the performance of the portfolio are contained in the Investment Review below.
Revenue account
The results for the period are set out in the Unaudited Income Statement below and show a revenue gain (after tax) of 1.69 pence per share (2015: 1.29 pence). The revenue return for the period of GBP1.19 million has risen by GBP0.37 million from last year's comparable figure of GBP0.82 million. This is primarily due to an increase in income of GBP0.46 million partly offset by an increase in the tax charge.
The rise in income of GBP0.46 million is due to a rise in loan interest income of GBP0.52 million, mainly arising from the exit of Original Additions (but also arising from a net increase in loan stock investments). Higher yields are also now being received from several loan stock investments.
Running costs charged to revenue returns fell marginally to GBP0.41 million. Other expenses fell by GBP0.02 million resulting from lower printing costs, trail commission fees and subscription costs, countered by an increase in Investment Adviser fees. Finally, the tax charge rose by GBP0.09 million due to the increase in taxable loan interest income.
As the Company has achieved two substantial and profitable exits in the period together with other realisations at gains over cost, a performance fee accrual of GBP1.13 million (chargeable to the capital return) has been made, which is an increase of GBP0.46 million over the comparable period.
Dividends
The Board continues to be committed to providing an attractive dividend stream to shareholders and has set a target in respect of each financial year of at least 6.00 pence per share.
The Board has declared an interim dividend of 6.00 pence per share for the year ending 30 September 2016. I am pleased to note that this payment will meet the Board's target for the current year at the half-year stage. This dividend will be paid on 7 July 2016 to shareholders on the Register on 10 June 2016 and will bring cumulative dividends per share paid to date to 80.50 pence.
In respect of the past four financial years, and this half-year, the Company has now paid or declared dividends totalling 72.00 pence per share.
Shareholders are encouraged to ensure that Capita, as the Company's Registrar, has up-to-date details for them and to check whether they have received all dividends payable to them. This is particularly important if they have recently moved house or changed their bank. We are aware that a number of dividends remain unclaimed by shareholders and whilst we will continue to endeavour to contact you if this is the case, we cannot guarantee that we will be able to do so if the Registrars do not have an up-to-date address and/or email address for you.
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 they can elect to receive new shares in the Company. By opting to receive their 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 2015/16 tax year for investments up to GBP200,000 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 Capita Asset Services, the Scheme Administrator, by no later than, Wednesday, 22 June 2016, to ensure that they receive the above dividend as shares. An application form for the Scheme can be obtained from the Company's Registrars or downloaded from the Company's website.
Shareholders who already participate, or are considering whether to participate, in the Scheme should consider the following section on Industry Developments and the information given in the Annual Report. There is an associated five year holding period required to secure income tax relief when new shares are allotted under the Scheme. Shareholders may, therefore, wish to review their participation until the implications of these changes are clearer. If you are in any doubt about whether to participate in the Scheme or not, you should consult your financial adviser.
Industry developments
As explained in more detail in the Annual Report, the Finance (No 2) Act 2015, enacted in November 2015, introduced a series of amendments to the VCT Scheme. In summary, VCT capital may now only be invested for growth and development purposes which means that any new investments made by the VCT are likely to be focused upon younger and smaller companies within defined limits. The VCT's recent investment into Redline is an example of the type of investment the Company is likely to make in the future.
Since the publication of the Annual Report, your Board, together with the Investment Adviser and the whole VCT industry, has sought greater clarity from HMRC at a more detailed, practical level of what investments will or will not be permitted by the legislation. The draft guidelines, published by HMRC earlier this month, have now clarified some of the implications of these new VCT rules, which the Investment Adviser is now reviewing.
Notwithstanding the above, the Board's view remains that the change in focus carries not only a higher risk, but also the prospect of more variable returns.
Generating the level of consistently high returns achieved over the last six years, for example, is likely to be more challenging. Shareholders should note that the nature of the more restrictive range and size of new potential investments is likely to reduce gradually the overall income yield on the portfolio as a whole, although there should be a commensurate increase in the level of capital returns, albeit with a more volatile profile. However, shareholders should also note that the existing portfolio is comprised almost exclusively of MBO investments whose full potential should be realised over the next five years or so and thus changes to the balance of the portfolio and, therefore, to the risk and reward metrics are likely to be gradual. Based upon these discussions and developments to date, allied to the record of past returns achieved, the Board remains of the view that the Investment Adviser should be well able to apply its measured approach, taking account of the new VCT Rules, in order to continue to generate satisfactory returns in the future.
Liquidity
Annual fundraisings by the Company have provided it with a satisfactory level of liquidity sufficient to pursue its Objective and to meet the Company's running costs. The Board will consider further fundraising once it has had the opportunity to consider the implications of the new VCT Rules on the pace and scale of new investment.
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 2016 amounted to GBP21.20 million. This figure included GBP10.70 million held in money market funds with AAA credit ratings and GBP10.50 million held in deposit accounts with a number of well-known financial institutions across a range of maturities. In addition, the investment portfolio contained GBP11.78 million in seven companies preparing to trade that also hold cash in money market funds.
Share buy-backs
During the six months ended 31 March 2016, the Company bought back 227,619 of its own shares, representing 0.3% (2015: 0.2%) of the shares in issue at the beginning of the period, at a total cost of
GBP0.21 million (2015: GBP0.12 million) inclusive of expenses.
It is the Company's policy to cancel all shares bought back by the Company. The Board regularly reviews its buyback policy and currently seeks to maintain the discount to NAV at which the Company's shares trade at around 10% below the latest published NAV.
Shareholder communications
May I remind you that the Company continues to have its own website which is available at www.incomeandgrowthvct.co.uk.
The Investment Adviser held its sixth annual Shareholder Event in January 2016 which, from the feedback submitted, was well received by shareholders. The event included presentations on the investment activity and performance of the Mobeus VCTs. I would like to thank those shareholders who attended for helping to make it such a success. The next event will take place on Tuesday, 24 January 2017. Shareholders will be sent further details and an invitation nearer to the time.
Outlook
The global economy is currently undergoing a period of particular uncertainty reflected in some volatility in financial markets. Despite this backdrop and the added uncertainty generated by the forthcoming EU referendum, the outlook for the UK economy continues to look relatively resilient. If the Government's predicted growth rate of 2.0% for the UK economy in 2016 transpires, the existing portfolio should continue to make further steady progress. It would seem reasonable to expect a reduction in the level of new investment as the Investment Adviser identifies and evaluates opportunities that comply with the requirements of the new legislation. The Board is, therefore, pleased to note the completion of the first investment, under the new VCT legislation, in Redline. The Board is confident that the Investment Adviser will be able to tailor its investment approach to comply with the new VCT Rules. Meanwhile, the existing portfolio continues to perform well and provide a good foundation for future performance.
Once again, I would like to take this opportunity to thank all shareholders for their continued support.
Colin Hook
Chairman
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 GBP15 million of gross assets at the time of investment and GBP16 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.
Summary of VCT Regulation
To assist shareholders, the following table contains a summary of the most important rules that determine VCT approval.
To achieve continued status as a VCT, the Company must meet a number of
conditions, the most important of which are that:-
- The Company must hold at least 70%, by VCT tax value*, of its total
investments (shares, securities and liquidity) in VCT qualifying holdings,
within approximately three years of a fundraising;
- Of these qualifying holdings, an overall minimum of 30% by VCT tax
value* (70% for funds raised on or after 6 April 2011) must be in ordinary
shares which carry no preferential rights (save as may be permitted
under VCT rules);
- No investment in a single company or group of companies may represent
more than 15% (by VCT tax value*) of the Company's total investments
at the date of investment.
- The Company must pay sufficient levels of income dividend from its
revenue available for distribution so as not to retain more than 15%
of its income from shares and securities in a year.
- The Company's shares must be listed on a regulated European stock market.
To be VCT qualifying holdings, new investments must be in companies:-
- which carry on a qualifying trade
- which have no more than GBP15 million of gross assets at the time of
investment and GBP16 million immediately following investment from
VCTs;
- whose maximum age is generally seven years (ten years for knowledge
intensive businesses);
- that receive no more than an annual limit of GBP5 million and a lifetime
limit of GBP12 million (GBP20 million for knowledge intensive companies),
from VCTs and similar sources of State Aid funding;
- that use the funds received from VCTs for growth and development purposes.
* VCT tax value means as valued in accordance with prevailing VCT legislation.
The above takes into account legislation up to the Finance (No 2) Act
2015. The recent 2016 Budget proposes that non-qualifying investments
can no longer be made, except for certain exceptions in managing the Company's
short-term liquidity.
----------------------------------------------------------------------------------
Investment Review
New investment in the half-year
A total of GBP4.44 million was invested into new companies during the six months under review. This comprised new investments into Access IS and Redline.
Company Business Date of investment Amount of new
Investment (GBPm)
------------ ----------------------------- -------------------- -------------------
Data capture and scanning
Access IS hardware October 2015 3.31*
------------ ----------------------------- -------------------- -------------------
Access IS is a leading provider of data capture and scanning hardware.
The company has a significant share of the worldwide market for this
technology in airports and strong positions in the fast growing market
of both ID & Security and Transport & Ticketing. This was an opportunity
to invest in a longstanding and profitable business that is well positioned
in its niche market. The company's latest audited accounts for the year
ended 31 December 2014 show annual sales of GBP9.95 million and profit
before interest, tax and amortisation of goodwill of GBP1.22 million.
*Amounts held in existing companies preparing to trade, Knighton Management
(GBP1.55 million) and Tovey Management (GBP1.50 million), along with
a further GBP0.26 million from the Company, were used for this investment.
--------------------------------------------------------------------------------------
Provision of security February
Redline products and services 2016 1.13*
------------ ----------------------------- -------------------- -------------------
Redline Assured Security ("Redline") is a market leader in the provision
of security consultancy and training services to airlines, governments,
institutions, airports and global distribution companies. Redline currently
operates predominantly in the aviation security market and is at the
forefront of counter terrorism training and services. The investment
will be applied to enable the Company to grow in its core aviation market
and in other sectors. The company's latest accounts for the year ended
31 March 2015 show turnover of GBP4.81 million and profit before interest,
tax and amortisation of goodwill of GBP0.82 million.
*GBP1.13 million held in Pound FM Consultants, a company preparing to
trade, was used for this investment. This resulted in a net repayment
of GBP0.37 million. Pound FM Consultants subsequently changed its name
to Redline Worldwide Limited.
--------------------------------------------------------------------------------------
Further investment into an existing portfolio company
In October 2015, the VCT made a further investment of GBP0.03 million into Racoon, a premier supplier of ethically sourced hair for hair extensions, to provide additional working capital to enable the business to strengthen its sales team and to broaden its product range.
Realisations in the half-year
The VCT realised three investments during the six months under review for cash proceeds totaling GBP7.38 million. This comprised the very successful realisations of Tessella and Westway as well as the final loan stock payment from Original Additions. Other realisations were GBP1.52 million, including post-sale receipts from the companies referred to below. With the loan repayments of GBP1.75 million, total net cash proceeds for the six months amounted to GBP10.65 million.
Company Business Period of Total cash proceeds
investment over the life of the
investment/ Multiple
over cost
------------------- --------------------------- --------------- ----------------------
Tessella Science powered technology July 2012 - GBP4.91 million
and consulting services December 2015 2.8 times cost
------------------- --------------------------- --------------- ----------------------
The VCT sold its investment in Tessella to the French engineering consultancy
Altran Group plc for GBP4.04 million. Founded in 1980, Tessella is now
a global business. In 2011 the company received the prestigious Queen's
Award fir Enterprise in Innovation for its work on preserving the integrity
of digital information over long periods of time, irrespective of numerous
changes in technology. As part of the sale transaction, the company
has retained a small investment in this data and archiving business,
Preservica, which was previously held within Tessella. The sale returned
an IRR of 42% and during the three and a half years of this investment,
revenue increased by 43% from GBP18.5 million in 2012 to GBP26.5 million
forecast for the current financial year. The Company realised a gain,
over current cost, of GBP2.68 million; being 3.80 pence per share.
-----------------------------------------------------------------------------------------
Westway Air conditioning systems June 2009 - GBP3.74 million
December 2015 6.7 times cost
------------------- --------------------------- --------------- ----------------------
The VCT sold its investment in Westway to ABM Industries Inc, one of
the largest facility management service providers in the US, for GBP2.80
million. During the period of the investment Westway, which is headquarter
in Middlesex, and founded in 2001, expanded its range of services from
heating, ventilation and air conditioning and now offers other technical
services including mechanical and electrical maintenance, energy services,
communications, security systems and the servicing of electronic garment
picking systems. The sale returned an IRR of 48%. The Company realized
a gain over current cost of GBP2.74 million, being a 3.88 pence per
share.
-----------------------------------------------------------------------------------------
Original Additions Beauty products September 2004 GBP4.41 million
- 4.4 times cost
March 2016
------------------- --------------------------- --------------- ---------------------- Original Additions repaid the final tranche of its loan stock on the sale of this investment to PDC Brands, a US private equity backed personal products business. Original Additions serves the retail and professional beauty markets with three leading brands. Over the lifetime of the investment, it returned an IRR of 41%. -----------------------------------------------------------------------------------------
In addition to the above, the Company received a further GBP1.52 million from investments realised in a previous period. This mainly comprised GBP1.27 million as deferred consideration primarily from App-DNA (GBP0.78 million), Focus Pharma (GBP0.29 million) and Alaric (GBP0.12 million). In addition GBP0.01 million was received from Newquay Helicopters as a second distribution resulting from the members' voluntary liquidation of that company and GBP0.24 million was received in consideration for the shares of Pound FM Consultants (a company preparing to trade).
Loan stock repayments
Loan stock repayments totalled GBP4.27 million for the year, including GBP2.52 million as part of the proceeds from the companies realised above. Positive cash flow at three other companies (in addition to Pound FM Consulting, a company preparing to trade) contributed to the balance of GBP1.75 million, summarised below:-
Company Business Month(s) Amount (GBP000's)
Logistics, storage and removals
Ward Thomas business December and January 1,225
Jablite Expanded polystyrene products October and November 241
Vehicle cleaning and valeting
Motorclean services October and February 143
Former company preparing to
Pound FM trade February 136
-------------- --------------------------------- ---------------------- ------------------
Total 1,745
Investment Portfolio Summary
as at 31 March 2016
Total cost Valuation Additional Valuation
at at investments at
in the period
31 March 30 September 31 March 2016
2015 (unaudited)
2016 (audited)
(unaudited)
Entanet Holdings Limited
Wholesale communications provider 3,175,171 4,790,700 - 4,496,641
Virgin Wines Holding Company
Limited
Online wine retailer 2,745,503 3,462,349 - 4,031,969
Tovey Management Limited (trading
as Access IS)1
Provider of data capture and
scanning hardware 3,313,932 3,058,000 255,932 3,313,932
ASL Technology Holdings Limited
Printer and photocopier services 2,722,106 3,196,284 - 3,119,039
Media Business Insight Holdings
Limited
A publishing and events business
focused on the creative
production
industries 3,666,556 3,666,556 - 3,111,959
Manufacturing Services Investment
Limited
Company seeking to carry on
a business in the manufacturing
sector 2,708,100 2,708,100 - 2,708,100
Veritek Global Holdings Limited
Maintenance of imaging equipment 2,289,859 2,494,306 - 2,304,702
Idox plc
Developer and supplier of
knowledge
management products 453,881 1,687,581 - 2,083,434
Fullfield Limited (trading
as Motorclean)
Vehicle cleaning and valet
services 1,517,734 1,634,751 - 1,897,328
Tharstern Group Limited
Software based management
Information
systems for the printing industry 1,454,278 2,012,448 - 1,800,189
CGI Creative Graphics
International
Limited
Vinyl graphics to the global
automotive, recreation vehicle
and aerospace markets 1,943,948 1,990,351 - 1,730,151
Gro-Group Holdings Limited
Baby sleep products 2,398,928 1,788,187 - 1,606,131
Hollydale Management Limited
Company seeking to carry on
a business in the food sector 1,554,000 1,554,000 - 1,554,000
Backhouse Management Limited
Company seeking to carry on
a business in the motor sector 1,504,000 1,504,000 - 1,504,000
Barham Consulting Limited
Company seeking to carry on
a business in the catering
sector 1,504,000 1,504,000 - 1,504,000
Chatfield Services Limited
Company seeking to carry on
a business in the retail sector 1,504,000 1,504,000 - 1,504,000
Creasy Marketing Services Limited
Company seeking to carry on
a business in the textile sector 1,504,000 1,504,000 - 1,504,000
McGrigor Management Limited
Company seeking to carry on
a business in the pharmaceutical
sector 1,504,000 1,504,000 - 1,504,000
EOTH Limited (trading as Equip
Outdoor Technologies)
Distributor of branded outdoor
equipment and clothing including
the Rab and Lowe Alpine brands 1,383,313 1,696,968 - 1,426,483
Jablite Holdings Limited
Manufacturer of expanded
polystyrene
products 553,195 727,291 - 1,396,799
Bourn Bioscience Limited
Management of In-vitro
fertilisation
clinics 1,610,379 1,220,035 - 1,332,624
Vian Marketing Limited (trading
as Tushingham Sails)
Design, manufacture and sale
of stand-up paddleboards and
windsurfing sails 1,207,437 1,207,437 - 1,207,437
Redline Worldwide Limited
(formerly
Pound FM Consultants Limited)2
Provider of security services
to the aviation industry and
other sectors 1,129,121 1,504,000 - 1,129,121
Leap New Co Limited (trading
as Ward Thomas Removals,
Bishopsgate
and Aussie Man & Van)
A specialist logistics, storage
and removals business 682,183 1,907,095 - 987,267
Aquasium Technology Limited
Manufacturer and marketer of
bespoke electron beam welding
and vacuum furnace equipment 250,000 799,82-5 967,309
RDL Corporation Limited
Recruitment consultants within
the pharmaceutical, business
intelligence and IT sectors 1,441,667 892,907 - 964,558
Turner Topco Limited (trading
as ATG Media)
Publisher and online auction
platform operator 1,529,075 1,135,058 - 924,515
The Plastic Surgeon Holdings
Limited
Supplier of snagging and
finishing
services to the property sector 406,169 618,566 - 794,058
Blaze Signs Holdings Limited
Manufacturer and installer
of signs 418,281 858,687 - 689,091
Omega Diagnostics Group plc
In-vitro diagnostics for food
intolerance, autoimmune diseases
and infectious diseases 280,026 320,843 - 332,509
Vectair Holdings Limited
Designer and distributor of
washroom products 53,400 235,229 - 240,153
Racoon International Holdings
Limited
Supplier of hair extensions,
hair care products and training 655,851 74,999 30,000 104,999
BG Training Limited
Technical training business 70,833 - - 70,833
LightWorks Software Limited
Provider of software for CAD
and CAM vendors 20,471 51,266 - 52,193
Newquay Helicopters (2013)
Limited
(in members' voluntary
liquidation)
Helicopter service operator 33,084 42,500 - 33,084
Corero Network Security plc
Provider of e-business
technologies 600,000 12,033 - 23,821
Oxonica Limited 2,524,527 - - -
International nanomaterials
group
PXP Holdings Limited (no longer 965,371 - - -
trading)
Former designer, manufacturer
and supplier of timber frames
for buildings
NexxtDrive Limited 487,014 - - -
Developer and exploiter of
mechanical transmission
technologies
CB Imports Group Limited (trading 175,000 - - -
as Country Baskets)
Importer and distributor of
artificial flowers, floral
sundries and home décor
products
alwaysOn Group Limited 165,661 - - -
Design, supply and integration
of data storage solutions
Biomer Technology Limited 137,170 - - -
Developer of biomaterials for
medical devices
Watchgate Limited 1,000 - - -
Holding company
Preservica Limited3 - - - -
Seller of proprietary digital
archiving software
Realised Investments
Tessella Holdings Limited
Provider of science powered - 3,448,417 - -
technology and consulting services
Westway Services Holdings (2014) - 1,561,033 - -
Limited
Installation, service and
maintenance
of air conditioning systems
Original Additions Topco Limited - 537,948 - -
Sale of beauty products
----------------------------------- ------------- -------------- --------------- ---------------
Total 54,244,224 60,415,750 285,932 53,954,429
----------------------------------- ------------- -------------- --------------- ---------------
(1) GBP1,504,000 invested in Tovey Management, a company preparing to
trade, was used to acquire Knighton Management, a second company
preparing to trade held at 31 March 2015, and Azio Limited (the holding
company for Access IS) on 2 October 2015. The Company also advanced
a non-qualifying loan of GBP255,932 to Access IS Limited.
(2) GBP1,129,121 invested in Pound FM Consultants, a company preparing
to trade, was used for the investment into Redline. This resulted
in a net repayment to the Company of GBP374,879.
(3) The Company realised its investment in Tessella in December 2015.
As part of the consideration, in addition to cash, the Company received
a small shareholding in Preservica, a subsidiary of Tessella that
was demerged as part of the transaction. The fair value of the holding
received was deemed to be zero at the date of the transaction and
therefore, the investment cost is zero.
Statement of the Directors' Responsibilities
Responsibility statements
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:
(a) the condensed set of financial statements, which has been prepared
in accordance with Financial Reporting Standard 104 "Interim
Financial Reporting" gives a true and fair view of the assets,
liabilities, financial position and profit of the Company as
required by DTR 4.2.10;
(b) the half-year management report which comprises the Chairman's
Statement, Investment Policy, Investment Review and Investment
Portfolio Summary includes a fair review of the information required
by DTR 4.2.7, being an indication of important events that have
occurred during the first six months of the financial year and
their impact on the condensed set of financial statements;
(c) a description of the principal risks and uncertainties facing
the Company for the remaining six months is set out below, in
accordance with DTR 4.2.7; and
(d) there were no related party transactions in the first six months
of the current financial year that are required to be disclosed,
in accordance with DTR 4.2.8.
Principal risks and uncertainties
In accordance with DTR 4.2.7, the Board confirms that the principal risks and uncertainties facing the Company have not materially changed from those identified in the Annual Report and Accounts for the year ended 30 September 2015.
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 and Accounts for the year ended 30 September 2015 on pages 27 - 28 and in Note 18 on pages 67 - 73. 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 which comprises the Chairman's Statement, Investment Policy, Investment Review and Investment Portfolio Summary. 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 18 on pages 67 - 73 of the Annual Report and Accounts for the year ended 30 September 2015. Accordingly, the Directors continue to adopt the going concern basis of accounting in preparing the half-yearly report and annual 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
Unaudited Income Statement
for the six months ended 31 March 2016
Six months ended 31 March 2016
(unaudited)
Notes Revenue Capital Total
GBP GBP GBP
Net unrealised gains on investments 9 - 726,630 726,630
Net realised gains on investments 9 - 2,471,203 2,471,203
Income 4 1,894,754 - 1,894,754
Investment adviser's fees 5 (213,564) (640,692) (854,256)
Investment advisers' performance
fees 5 - (1,134,982) (1,134,982)
Other expenses (197,949) - (197,949)
------------------------------------- ------ ---------- ------------ ------------
Profit on ordinary activities
before taxation 1,483,241 1,422,159 2,905,400
Tax on profit on ordinary
activities 6 (288,818) 288,818 -
------------------------------------- ------ ---------- ------------ ------------
Profit and total comprehensive
income 1,194,423 1,710,977 2,905,400
------------------------------------- ------ ---------- ------------ ------------
Basic and diluted earnings
per share 7 1.69p 2.41p 4.10p
Six months ended 31 March 2015
(unaudited
Notes Revenue Capital Total
GBP GBP GBP
Net unrealised gains on investments - 885,965 885,965
Net realised gains on investments - 1,687,489 1,687,489
Income 4 1,432,249 - 1,432,249
Investment adviser's fees 5 (193,934) (581,802) (775,736)
Investment advisers' performance
fees 5 - (679,068) (679,068)
Other expenses (219,185) - (219,185)
Profit on ordinary activities
before taxation 1,019,130 1,312,584 2,331,714
Tax on profit on ordinary
activities 6 (194,620) 194,620 -
------------------------------------- ------ ----------- ---------- ----------
Profit and total comprehensive
income 824,510 1,507,204 2,331,714
------------------------------------- ------ ----------- ---------- ----------
Basic and diluted earnings
per share 7 1.29p 2.36p 3.65p
Year ended 30 September 2015
(audited)
Notes Revenue Capital Total
GBP GBP GBP
Net unrealised gains on investments - 4,574,928 4,574,928
Net realised gains on investments - 2,053,151 2,053,151
Income 4 2,997,718 - 2,997,718 Investment adviser's fees 5 (405,687) (1,217,061) (1,622,748) Investment advisers' performance fees 5 - (667,622) (667,622) Other expenses (471,279) - (471,279) --------------------------------------- ------- ----------- ------------ ------------ Profit on ordinary activities before taxation 2,120,752 4,743,396 6,864,148 Tax on profit on ordinary activities 6 (386,360) 386,360 - --------------------------------------- ------- ----------- ------------ ------------ Profit and total comprehensive income 1,734,392 5,129,756 6,864,148 --------------------------------------- ------- ----------- ------------ ------------ Basic and diluted earnings per share 7 2.58p 7.63p 10.21p
The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the unrealised gains and realised gains on investments and the proportion of the Investment Adviser's 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 Statement of Recommended Practice ("SORP") issued in November 2014 by the Association of Investment Companies ("AIC"), 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 year.
Unaudited Balance Sheet
at 31 March 2016
Notes 31 March 31 March 30 September
2016 2015 2015
(unaudited) (unaudited) (audited)
Fixed assets
Investments at fair value 9 53,954,429 43,762,661 60,415,750
Current assets
Debtors and prepayments 532,667 1,005,745 1,082,567
Current asset investments 10 18,395,656 15,624,649 11,158,555
Cash at bank 2,805,684 15,485,127 3,675,257
------------------------------- ------ ------------- ------------- -------------
21,734,007 32,115,521 15,916,379
Creditors: amounts falling
due within one year (1,377,009) (1,214,402) (1,129,833)
------------------------------- ------ ------------- ------------- -------------
Net current assets 20,356,998 30,901,119 14,786,546
------------------------------- ------ ------------- ------------- -------------
Net assets 74,311,427 74,663,780 75,202,296
------------------------------- ------ ------------- ------------- -------------
Capital and reserves
Called up share capital 711,648 704,429 706,930
Capital redemption reserve 11,564 4,988 9,288
Share premium reserve 17,628,344 16,369,167 16,977,902
Revaluation reserve 4,921,137 5,284,075 8,997,633
Special reserve 25,448,930 28,011,329 27,147,965
Realised capital reserve 23,393,471 22,797,227 19,653,747
Revenue reserve 2,196,333 1,492,565 1,708,831
------------------------------- ------ ------------- ------------- -------------
Equity shareholders' funds 74,311,427 74,663,780 75,202,296
------------------------------- ------ ------------- ------------- -------------
Basic and diluted net asset
value:
Basic and diluted net asset
value per share 11 104.42p 105.99p 106.38p
Unaudited Statement of Changes in Equity
For the six months ended 31 March 2016
Non-distributable reserves Distributable reserves Total
Called Capital Share Revaluation Special Realised Revenue
up redemption premium reserve distributable capital reserve
share reserve reserve reserve reserve
capital
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 October
2015 706,930 9,288 16,977,902 8,997,633 27,147,965 19,653,747 1,708,831 75,202,296
Comprehensive
income for
the period
Profit for
the period - - - 726,630 - 984,347 1,194,423 2,905,400
--------------- -------- ----------- ----------- ------------ -------------- ------------ ---------- --------------
Total
comprehensive
income for
the period - - - 726,630 - 984,347 1,194,423 2,905,400
--------------- -------- ----------- ----------- ------------ -------------- ------------ ---------- --------------
Contributions
by and
distributions
to owners
Shares issued
via Offer
for
Subscription - - - - - - -
Dividends
re-invested
into new
shares 6,994 - 650,442 - - - 657,436
Shares bought
back (2,276) 2,276 - - (212,179) - (212,179)
Dividends
paid - - - - - (3,534,605) (706,921) (4,241,526)
--------------- -------- ----------- ----------- ------------ -------------- ------------ ---------- --------------
Total
contributions
by and
distributions
to owners 4,718 2,276 650,442 - (212,179) (3,534,605) (706,921) (3,796,269)
--------------- -------- ----------- ----------- ------------ -------------- ------------ ---------- --------------
Other
movements
Realised
losses
transferred
to special
reserve (note
a) - - - - (1,486,856) 1,486,856 -
Realisation
of previously
unrealised
appreciation - - - (4,803,126) - 4,803,126 -
--------------- -------- ----------- ----------- ------------ -------------- ------------ ---------- --------------
Total other
movements - - - (4,803,126) (1,486,856) 6,289,982 - -
--------------- -------- ----------- ----------- ------------ -------------- ------------ ---------- --------------
At 31 March
2016 711,648 11,564 17,628,344 4,921,137 25,448,930 23,393,471 2,196,333 74,311,427
--------------- -------- ----------- ----------- ------------ -------------- ------------ ---------- --------------
a) The special distributable reserve provides the Company with a reserve
to fund market purchases of the Company's own shares, to absorb any
existing and future losses and for any other corporate purpose.
b) The Realised capital reserve and the Revenue reserve together comprise
the Profit and Loss Account of the Company.
Unaudited Statement of Changes in Equity
For the six months ended 31 March 2015
Non-distributable reserves Distributable reserves Total
Called Capital Share Revaluation Special Realised Revenue
up share redemption premium reserve distributable capital reserve
capital reserve reserve reserve reserve
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 October
2014 604,769 3,750 5,662,818 7,662,673 29,576,755 23,917,139 1,878,501 69,306,405
Comprehensive
income for
the period
Profit for
the period - - - 885,965 - 621,239 824,510 2,331,714
--------------- --------- ----------- ----------- ------------ -------------- ------------ ------------ ------------
Total
comprehensive
income for
the period - - - 885,965 - 621,239 824,510 2,331,714
--------------- --------- ----------- ----------- ------------ -------------- ------------ ------------ ------------
Contributions
by and
distributions
to owners
Shares issued
via Offer
for
Subscription 90,435 - 9,716,707 - (42,292) - - 9,764,850
Dividends
re-invested
into new
shares 10,463 - 989,642 - - - - 1,000,105 Shares bought back (1,238) 1,238 - - (118,985) - - (118,985) Dividends paid - - - - - (6,409,863) (1,210,446) (7,620,309) Total contributions by and distributions to owners 99,660 1,238 10,706,349 - (161,277) (6,409,863) (1,210,446) 3,025,661 --------------- --------- ----------- ----------- ------------ -------------- ------------ ------------ ------------ Other movements Realised losses transferred to special reserve - - - - (1,404,149) 1,404,149 - - Realisation of previously unrealised appreciation - - - (3,264,563) - 3,264,563 - - Total other movements - - - (3,264,563) (1,404,149) 4,668,712 - - --------------- --------- ----------- ----------- ------------ -------------- ------------ ------------ ------------ At 31 March 2015 704,429 4,988 16,369,167 5,284,075 28,011,329 22,797,227 1,492,565 74,663,780 --------------- --------- ----------- ----------- ------------ -------------- ------------ ------------ ------------
Unaudited Statement of Cash Flows
for the six months ended 31 March 2016
Six months Six months Year
ended ended ended
31 March 2016 31 March 2015 30 September
(unaudited) (unaudited) 2015
Notes GBP GBP (audited)
GBP
Cash flows from operating
activities Profit
for the financial
period 2,905,400 2,331,714 6,864,148
Adjustments for:
Net unrealised gains
on investments (726,630) (885,965) (4,574,928)
Net realised gains
on investments (2,471,203) (1,687,489) (2,053,151)
(Increase)/decrease
in debtors (150,101) 97,937 171,028
Increase/(decrease)
in creditors and
accruals 220,474 (1,022,075) (1,020,953)
---------------------------- ------- --------------- --------------- -----------------------
Net cash outflow
from operating activities (222,060) (1,165,878) (613,856)
Cash flows from investing
activities
Purchase of investments 9 (285,932) (10,720,327) (26,134,832)
Disposal of investments 9 10,645,086 9,581,318 12,247,446
Decrease/(increase)
in bank deposits
with a maturity over
three months 1,960,755 (2,003,318) (2,031,611)
---------------------------- ------- --------------- --------------- -----------------------
Net cash inflow/(outflow)
from investing activities 12,319,909 (3,142,327) (15,918,997)
Cash flows from financing
activities
Shares issued as part of
Offer
for subscription - 9,764,850 9,764,851
Equity dividends
paid 8 (3,584,090) (6,620,204) (10,205,256)
Purchase of own shares (185,476) (32,829) (527,387)
---------------------------- ------- --------------- --------------- -----------------------
Net cash (outflow)/inflow
from financing activities (3,769,566) 3,111,817 (967,792)
---------------------------- ------- --------------- --------------- -----------------------
Net increase/(decrease)
in cash and cash
equivalents 8,328,283 (1,196,388) (17,500,645)
Cash and cash equivalents
at
start of period 7,693,045 25,193,690 25,193,690
------------------------------------- --------------- --------------- -----------------------
Cash and cash equivalents
at end of period 16,021,328 23,997,302 7,693,045
---------------------------- ------- --------------- --------------- -----------------------
Cash and cash equivalents comprise:
Cash at bank and
in hand 2,805,684 15,485,127 3,675,257
Cash equivalents 10 13,215,644 8,512,175 4,017,788
The notes below form part of these Half-Year Financial Statements.
Notes to the Unaudited Financial Statements
for the six months ended 31 March 2016
1. Company information
The Income and Growth VCT plc is a public limited company incorporated in England, registration number 04069483. The registered office is 30 Haymarket, London, SW1Y 4EX.
2. Basis of preparation of the financial statements
These Financial Statements have been prepared in accordance with accounting policies consistent with Financial Reporting Standard 102 ("FRS 102"), Financial Reporting Standard 104 - Interim Financial Reporting ("FRS 104"), with the Companies Act 2006 and the 2014 Statement of Recommended Practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ('the SORP') issued by the Association of Investment Companies.
This is the first period in which the Financial Statements have been prepared under FRS 102. There has been no material change in the accounting policies and so there has been no restatement of comparatives, other than in relation to Cash at bank and Current asset investments. The Company has elected to apply early the revised disclosure requirements as set out in Amendments to FRS 102 - Fair Value hierarchy disclosures issued in March 2016.
The Half-Year Report has not been audited, nor has it been reviewed by the Auditor pursuant to the Auditing Practices Board (APB)'s 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
Six months Six months ended Year ended
ended
31 March 2016 31 March 2015 30 September 2015
(unaudited) (unaudited) (audited)
GBP GBP GBP
Dividends 39,150 69,762 167,656
Money-market funds 17,595 26,714 29,977
Loan stock interest 1,779,137 1,254,297 2,667,443
Bank deposit interest 58,872 70,881 121,523
Other income - 10,595 11,119
----------------------- ---------------- ------------------ ----------------------------
Total income 1,894,754 1,432,249 2,997,718
----------------------- ---------------- ------------------ ----------------------------
5. Investment Adviser's fees and Performance fees
Six months Six months ended Year
ended 31 March 2015 ended
31 March 2016 GBP 30 September 2015
GBP GBP
Allocated to revenue return:
Investment Adviser's fees 213,564 193,934 405,687
Allocated to capital return:
Investment Adviser's fees 640,692 581,802 1,217,061
Investment Advisers' performance
fees 1,134,982 679,068 667,622
---------------------------------- ---------------- ------------------ ----------------------------
Total 1,989,238 1,454,804 2,290,370
---------------------------------- ---------------- ------------------ ----------------------------
Investment Adviser's fees 854,256 775,736 1,622,748
Investment Advisers' performance
fees 1,134,982 679,068 667,622
---------------------------------- ---------------- ------------------ ----------------------------
Total 1,989,238 1,454,804 2,290,370
---------------------------------- ---------------- ------------------ ----------------------------
The Directors have charged 75% of the fees payable under the Investment Adviser's Agreement, and 100% of the amounts payable under the incentive agreements, to the capital reserve. The Directors believe it is appropriate to charge the performance fees wholly against the capital return, as any fees payable depend on capital performance, as explained below.
On 30 September 2014, a new incentive fee agreement was signed between the Board and Mobeus, with effect from 1 October 2013, to amend and replace the previous agreement. The previous agreement remains in force, but only with the former adviser, Foresight Group LLP ("Foresight").
For the period ended 31 March 2016, GBP43,830 has been accrued under the previous agreement. Mobeus waived its right to its portion of the fee under the previous agreement. This agreement is due to expire on 10 March 2019.
Any payment under the new Performance Fees Incentive Agreement ("new Incentive Agreement") is now 15% of net realised gains for each year, payable in cash. It is payable only if the Cumulative Net Asset Value (NAV) Total Return per share (being the closing NAV at a year-end plus cumulative dividends paid to that year-end, since 1 October 2013) equals or exceeds a "Target Return". The Target Return is the greater of two targets, being either:
(i) Compound growth of 6% per annum (but 5% per annum for the year
ended 30 September 2014 only), before deducting any incentive
fee payable (for the year of calculation only) under both this
amended agreement and the existing incentive agreement with
Foresight in cumulative NAV total return per share; or
(ii) The cumulative percentage change in the Consumer Prices Index
since 1 October 2013 to the relevant financial year-end, the
resultant figure then being multiplied by (100+A)/100, where
A is the number of full twelve month periods (or part thereof
) that have passed between 1 October 2013 and the relevant financial
year end.
Both measures of Target Return are applied to the same opening base, being NAV per share as at 30 September 2013 of 113.90 pence. The objective of this Target Return is to enable shareholders to benefit from a cumulative NAV return of at least 6% per annum (5% in the financial year ended 30 September 2014), before any incentive fee is payable. Once a payment has been made, cumulative NAV total return is calculated after deducting past years' incentive fees paid and payable.
The Target Return for the year ended 30 September 2015 was a 6% uplift on the opening Target Return of 119.60 pence, being 126.77 pence. As Cumulative NAV Total return was 134.17 pence per share at 30 September 2015, the Target Return had been exceeded and a fee of GBP667,622 (along with GBP191,138, which was payable from a previous year as a result of the annual cap (as explained below)) was paid following the approval of the Annual Report for the year ended 30 September 2015 by shareholders at the AGM held on 10 February 2016.
Under this new Incentive Agreement, any fee payments to Mobeus are subject to an annual cap of an amount equal to 2% of the net assets of I&G VCT as at the immediately preceding year-end. This cap will include any fee payable to Foresight under the old agreement, although any such payment to Foresight is not capped. Any excess over the 2% remains payable to Mobeus in the following year(s), subject to the 2% annual cap in such subsequent year(s) and after any payment in respect of such subsequent year(s).
For the year ended 30 September 2016, the Target Return will be 134.38p per share (being a 6% uplift on the Target Return at the previous year end of 126.77 pence). As at 31 March 2016, the Cumulative NAV Total Return per share is 138.42p, so the Target Return for the 2016 financial year has currently been met and a fee of GBP1,091,152 has therefore been accrued. This fee will only be payable if the Cumulative NAV Total Return per share at 30 September 2016 exceeds the Target Return per share of 134.38p.
6. Taxation
There is no tax charge for the period as the Company has incurred tax losses, as its tax-deductible expenses exceed its taxable income.
7. Basic and diluted earnings per share
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2016 2015 2015
GBP GBP GBP
(i) Total earnings after
taxation: 2,905,400 2,331,714 6,864,148
Basic earnings per share 4.10p 3.65p 10.21p
---------------------------------- ------------ ------------ --------------
(ii) Net revenue from ordinary
activities after taxation 1,194,423 824,510 1,734,392
Basic revenue return per
share 1.69p 1.29p 2.58p
---------------------------------- ------------ ------------ --------------
Net unrealised capital
gains on investments 726,630 885,965 4,574,928
Net realised capital gains
on investments 2,471,203 1,687,489 2,053,151
Capital Investment Adviser's
fees less taxation (351,874) (387,182) (830,701)
Investment Advisers' performance
fees (1,134,982) (679,068) (667,622)
---------------------------------- ------------ ------------ --------------
(iii) Total capital return 1,710,977 1,507,204 5,129,756
Basic capital return per
share 2.41p 2.36p 7.63p
---------------------------------- ------------ ------------ --------------
Weighted average number
of shares in issue in the
period 70,863,747 63,847,421 67,212,047
Other than the performance related incentive, there are no instruments in place that will increase the number of shares in issue in future. If shares are issued, no dilution of earnings per share will occur, as the estimated incentive fee payable has been charged in these accounts.
8. Dividends
Dividend Type For the year Pence Date paid Six months Six months Year ended
ended per ended ended 30 September
30 September share 31 March 31 March 2015
2016 2015
GBP GBP GBP
30 October
Second Interim Income 2014 2.00p 2014 - 1,210,446 1,210,446
30 October
Second Interim Capital 2014 6.00p 2014 - 3,631,337 3,631,337
20 March
Final Income 2014 1.25p 2015 - 868,289 868,289
20 March
Final Capital 2014 2.75p 2015 - 1,910,237 1,910,237
Interim Income 2015 1.00p 30 June 2015 - - 701,394
Interim Capital 2015 5.00p 30 June 2015 - - 3,506,971
15 February
Final Income 2015 1.00p 2016 706,921 - -
15 February
Final Capital 2015 5.00p 2016 3,534,605 - -
Previous dividends not claimed within
the statutory period - - (7,778)
4,241,526 7,620,309 11,820,896
-------------------------------------------------------------------- ----------- ----------- --------------
* - GBP4,241,526 (31 March 2015: GBP7,620,309; 30 September 2015: GBP11,820,896) disclosed above differs to that shown in the Statement of Cash Flows of GBP3,584,090 (31 March 2015: GBP6,620,204; 30 September 2015: GBP10,205,256) due to GBP657,436 (31 March 2015: GBP1,000,105; 30 September 2015: GBP1,615,640) of new shares issued as part of the Company's Dividend Investment Scheme.
9. Summary of movement on investments during the period
All investments held by the Company are classified as "fair value
through profit and loss", and valued in accordance with the International
Private Equity and Venture Capital Valuation ("IPEVCV") guidelines,
as updated in December 2015. This classification is followed as
the Company's business is to invest in financial assets with a view
to profiting from their total return in the form of capital growth
and income.
For investments actively traded in organised financial markets,
fair value is generally determined by reference to Stock Exchange
market quoted bid prices at the close of business on the balance
sheet date. Purchases and sales of quoted investments are recognised
on the trade date where a contract of sale exists whose terms require
delivery within a time frame determined by the relevant market.
Purchases and sales of unlisted investments are recognised when
the contract for acquisition or sale becomes unconditional.
Unquoted investments are stated at fair value by the Directors in
accordance with the following rules, which are consistent with the
IPEVCV guidelines:
All investments are held at the price of a recent investment for
an appropriate period where there is considered to have been no
change in fair value. Where such a basis is no longer considered
appropriate, the following factors will be considered:
Where a value is indicated by a material arms-length transaction
i) 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
a suitable price-earnings ratio to that company's historic,
current or forecast post-tax earnings before interest and
amortisation (the ratio used being based on a comparable sector
but the resulting value being adjusted to reflect points of
difference identified by the Investment Adviser compared to
the sector including, inter alia, a lack of marketability).
or:-
where a company's underperformance against plan indicates
b) a diminution in the value of the investment, provision against
cost is made, as appropriate. Where the value of an investment
has fallen permanently below cost, the loss is treated as
a permanent impairment and as a realised loss, even though
the investment is still held. The Board assesses the portfolio
for such investments and, after agreement with the Investment
Adviser, will agree the values that represent the extent to
which an investment has become realised. This is based upon
an assessment of objective evidence of that investment's future
prospects, to determine whether there is potential for the
investment to recover in value.
iii) Premiums that will be received upon repayment of 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.
Capital gains and losses on investments, whether realised or unrealised,
are dealt with in the profit and loss and revaluation reserves and
movements in the period are shown in the Income Statement.
All investments are initially recognised and subsequently measured
at fair value. Changes in fair value are recognised in the Income
Statement.
The methods of fair value measurement are classified into a hierarchy
based on the reliability of the information used to determine the
valuation.
Level Fair value is measured based on quoted prices in an active
1 market.
Level Fair value is measured based on directly observable current
2 market prices or indirectly being derived from market prices.
Level Fair value is measured using valuation techniques using
3 inputs that are not based on observable market data.
----------------- -----------------------------------------------------------------
Traded on Unquoted Preference Qualifying Total
AIM ordinary shares loans
shares
GBP GBP GBP GBP GBP
Valuation at
1 October 2015 2,020,457 18,105,585 24,581 40,265,127 60,415,750
Purchases at cost - - - 285,932 285,932
Sales - proceeds - (5,674,273) - (4,270,813) (9,945,086)
- realised gains - 2,404,659 - 66,544 2,471,203
Reclassification at
valuation - (301) 301 - -
Unrealised gains/(losses)
on investments in the
period 419,307 (213,505) (565) 521,393 726,630
Valuation at
31 March 2016 2,439,764 14,622,165 24,317 36,868,183 53,954,429
------------------------------ ------------- ------------------- -------------- ---------------- ----------------
Book cost at 31 March
2016 1,333,907 18,590,747 27,341 34,292,229 54,244,224
Unrealised gains/(losses)
at
31 March 2016 1,105,857 1,192,350 (3,024) 2,575,954 4,871,137
Permanent impairment
of valuation of investments - (5,160,932) - - (5,160,932)
Valuation at 31 March
2016 2,439,764 14,622,165 24,317 36,868,183 53,954,429
------------------------------ ------------- ------------------- -------------- ---------------- ----------------
Gains on investments
Realised gains based
on historical cost - 5,816,645 - 1,457,684 7,274,329
Less amounts recognised
as unrealised gains
in previous years - (3,411,986) - (1,391,140) (4,803,126)
------------------------------ ------------- ------------------- -------------- ---------------- ----------------
Realised gains based
on carrying value at
30 September 2015 - 2,404,659 - 66,544 2,471,203
Net movement in unrealised
gains/ (losses) in
the period 419,307 (213,505) (565) 521,393 726,630
Gains/(losses) on investments
for the period ended
31 March 2016 419,307 2,191,154 (565) 587,937 3,197,833
------------------------------ ------------- ------------------- -------------- ---------------- ----------------
The cash flow from investment proceeds shown above of GBP9,945,086 differs from the sale proceeds shown in the Statement of Cash Flows figure of GBP10,645,086 by GBP700,000. This is due to the receipt of contingent consideration, which was previously recognised as an unrealised gain in a prior year.
Unrealised gains/(losses) at 31 March 2016 above of GBP4,871,137 differ to that shown in the Revaluation reserve on the Statement of Changes in Equity of GBP4,921,137. The difference of GBP50,000 is the estimated fair value of contingent consideration held at the Balance Sheet date, and is included within Debtors.
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 increase 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 increase does not arise from assessments of credit or market risk upon these instruments.
Level 3 unquoted equity and loan investments are valued in accordance with IPEVCV guidelines as follows:
Valuation methodology as at as at as at
31 March 2016 31 March 2015 30 September 2015
GBP GBP GBP
Estimated realisation proceeds 103,917 113,000 42,500
Cost (reviewed for impairment) - - -
Recent investment price 17,537,589 13,317,376 25,431,478
Earnings multiple 33,873,159 28,360,558 32,864,282
Total 51,514,665 41,790,934 58,338,260
-------------------------------- -------------- -------------- ------------------
10. Current asset investments
as at as at as at
31 March 2016 31 March 2015 30 September 2015
GBP GBP GBP
OEIC Money market funds 10,704,092 1,470,978 1,471,708
Bank deposits that mature within
three months
but are not immediately repayable 2,511,552 7,041,197 2,546,080
----------------------------------- -------------------------- --------------- ------------------
Cash equivalents per Statement
of Cash Flows 13,215,644 8,512,175 4,017,788
Bank deposits that mature after
three months 5,180,012 7,112,474 7,140,767
----------------------------------- -------------------------- --------------- ------------------
Current asset investments 18,395,656 15,624,649 11,158,555
----------------------------------- -------------------------- --------------- ------------------
11. Net asset value per share
as at as at as at
31 March 2016 31 March 2015 30 September 2015
Net assets GBP74,311,427 GBP74,663,780 GBP75,202,296
Number of shares in issue 71,164,788 70,442,856 70,693,007
Net asset value per share
- basic and diluted 104.42p 105.99p 106.38p
Diluted NAV per share assumes that the Investment Adviser's performance
fee is satisfied by the issue of additional shares. If shares are issued,
no dilution of NAV per share will occur, as the estimated incentive fee
payable is already held as a creditor in these accounts.
12. Post balance sheet events
There have been no significant post balance sheet events.
13. Statutory Information
The financial information for the six months ended 31 March 2016 and the six months ended 31 March 2015 has not been audited.
The financial information contained in this Half-Year Report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Financial Statements for the year ended 30 September 2015 have been filed with the Registrar of Companies. BDO LLP, as auditor to the Company, 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-Yearly Report will be sent to shareholders. Further copies are available free of charge from the Company's registered office, 30 Haymarket, London SW1Y 4EX, or can be downloaded via the Company's website at www.incomeandgrowth.co.uk.
Contact details for further enquiries:
Rob Brittain or Sarah Penfold at Mobeus Equity Partners LLP (the Company Secretary) on 020 7024 7600 or by e-mail on vcts@mobeusequity.co.uk.
Mobeus Equity Partners LLP (the Investment Adviser), on 020 7024 7600 or by e-mail on info@mobeusequity.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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR VQLBLQEFEBBQ
(END) Dow Jones Newswires
May 26, 2016 09:49 ET (13:49 GMT)
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