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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 | 70.00 | 70.00 | 70.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Offices-holdng Companies,nec | 8.63M | 5.49M | 0.0348 | 20.11 | 110.27M |
TIDMIGV
RNS Number : 5576P
Income & Growth VCT (The) PLC
10 June 2020
Hot Features
Premium
THE INCOME & GROWTH VCT PLC
HALF-YEAR REPORT FOR THE SIX MONTHSED 31 MARCH 2020
The Income & Growth VCT plc ("the Company") today announces the Half-Year
results for the six months ended 31 March 2020.
As at 31 March 2020:
Net assets: GBP78.78 million
Net asset value ("NAV") per share: 68.46 pence
Net asset value ("NAV") total return per share fell by 7.8% for the
six months.
Share price total return per share fell by 6.0% for the six months.
The Board has declared an interim dividend in respect of the current
year of
3.00 pence per share to be paid to Shareholders on 10 July 2020.
The Company made four new investments totalling GBP4.15 million.
Proceeds of GBP8.36 million were received from investments realised,
generating net realised gains of GBP2.53 million.
Performance summary
The table below shows the recent past performance of the Company's existing
class of shares for each of the last five years, and the current year
to date.
R eporting Net assets NA V Share Cumulative Cumulative total Dividends
date per price1 dividends return per share paid and
share paid per to Shareholders proposed
share 2 in respect
(GBPm) of each
(p) (p) year
(p) (p)
As at
NAV basis Share
(p) price
basis
(p)
31 March 184.
2020 78.78 68.46 66.50 117 .50 185.96 00 3.004
30
September
2019 81.73 79.12 75.50(3) 113.00 192.12 188.50 6.00
30
September
2018 82.58 78.32 69.50 108.00 186.32 177.50 6.00
30
September
2017 64.35 81.24 73.00 102.50 183.74 175.50 21.00
30
September
2016 70.84 98.51 88.80 80.50 179.01 169.30 10.00
30
September
2015 75.20 106.38 93.50 68.50 174.88 162.00 12.00
1 Source: Panmure Gordon & Co (mid-market price).
2 Cumulative total return per share comprises the NAV per share (NAV
basis) or the mid-market price per share (share price basis) plus cumulative
dividends paid since launch of the current share class.
3 The share price at 30 September 2019 has been adjusted to add back
the dividend of 4.50 pence per share paid on 1 8 October 2019, as the
list ed share price was quoted ex this dividend at the year end.
4 An interim dividend of 3.00 pence per share, referred to in the Financial
Highlights above, is payable to Shareholders on 10 July 2020.
Chairman's Statement
I present the Company's Half-Year Report for the six months ended 31
March 2020 and extend a warm welcome to new Shareholders.
Overview
The Half-Year under review saw five months' strong progress being tempered
by a very challenging final month for the portfolio as a result of the
UK Government's lockdown and social distancing measures in response to
the outbreak of COVID-19. These measures had an immediate adverse impact
on UK businesses with many companies experiencing significant reduction
in demand for their products and services, compounded by restrictions
on their ability to operate.
The Board has liaised closely with the Investment Adviser, Mobeus Equity
Partners LLP, who have been very actively engaged with the portfolio
companies. The focus has been to ensure that all practical steps are
being taken to enable each company to trade through the crisis where
possible and to seek to grow value thereafter. The full impact of the
COVID-19 crisis will only emerge as time passes. The immediate effect
has been on the valuation of the portfolio as set out in detail in the
Investment Adviser's Review and summarised in my Statement below.
During the period, the Company has realised three portfolio investments.
Two of these were profitable exits of growth capital investments made
since the VCT rule changes in 2015 (and the first such disposals for
this portfolio category), and the third was the exit of Auction Technology
Group, so becoming one of the Company's most successful investments to
date. Also, four new investments were made into the portfolio, with two
follow-on investments into existing portfolio companies made after the
period end. Further details of this investment activity are contained
in the Investment Adviser's Review.
Following the onset of the COVID-19 crisis, the Investment Adviser's
focus has been to prioritise the funding requirements of the existing
portfolio. A number of companies are continuing to experience significant
growth and further investment is being made to capitalise on these opportunities.
Other portfolio companies will continue to experience an adverse impact
on their trading activities because of the crisis and may require further
investment funding. The Company is well capitalised and will consider
each case on merit should the need arise.
In the immediate term, the Company is adopting a cautious approach when
considering new investment opportunities. Adequate depth of investment
appraisal and due diligence is challenging during the current UK Government
restrictions, business performance is highly volatile and achievement
of forecasts more uncertain. However, looking further forward, the Board
and Investment Adviser believe the investment landscape will become clearer
and a number of attractive opportunities should be able to be brought
forward.
Performance
The Company's NAV total return per share fell by 7.8% in the six months
to 31 March 2020 (2019: increase of 4.1%), with the share price total
return falling by 6.0% (2019: increase of 1.4%). Whilst disappointing,
the Board believes that the Company's performance has demonstrated a
degree of resilience in relation to its VCT peer group. This has been
due to a number of factors which allow the Board to view the Company's
future with cautious optimism over the medium to longer term.
These factors have been at both the portfolio and the fund level. The
aggregate portfolio valuation decreased due to a number of reductions
in the valuation of individual portfolio companies reflecting the impact
of COVID-19. However, this adverse impact was partly offset by the benefit
of the uplift achieved from the three profitable realisations in the
period. In addition, several of the Company's investment structures afford
a preference, such that a reduction in enterprise value does not feed
directly into the same reduction in the value of the Company's investment.
At the fund level, the Company has the benefit of significant liquidity
and has therefore been cushioned to an extent from reductions in the
valuations of invested assets. In addition, the Company's policy has
been to invest its liquidity in lower risk liquidity funds and bank deposit
accounts. This again has acted to mitigate the impact on the fund's overall
value arising from falls in markets and valuations of invested assets.
The Company's cumulative NAV total return per share (being the closing
net asset value plus total dividends paid to date) has decreased from
192.12 pence per share at the start of the period to 185.96 pence per
share at the period end. This represents a decrease of 3.2% over the
period.
Investment Portfolio
Following a detailed review by the Investment Adviser agreed by the Board,
the portfolio has been valued 16.3% lower (2019: increase of 5.2%) compared
to the value at the start of the period on a like-for-like basis. The portfolio carrying value has been reduced by GBP10.73 million of net unrealised losses, though there were net realised gains of GBP2.53 million arising from exits in the period. The portfolio was valued at GBP37.81 million at the period end (30 September 2019: GBP50.22 million). During the six months under review, the Company invested a total of GBP4.15 million (2019: GBP2.00 million) into four (2019: four) new investments: -- Active Navigation - A data analysis software provider -- IPV - A media asset software provider -- Bleach London - A hair care brand -- Bella & Duke - A premium frozen raw dog food provider After the period end, a total of GBP1.61 million was invested to support the further expansion of two existing portfolio companies: -- MyTutor - A digital marketplace for school tutoring -- Rotageek - A workforce management software provider Details of this investment activity and the performance of the portfolio are contained in the Investment Review and the Investment Portfolio Summary within the Half-Year Report. Revenue account The results for the period are set out in the Unaudited Condensed Income Statement on pages 14 to 15 of the Half-Year Report and show a revenue return (after tax) of 1.40 pence per share (2019: 1.08 pence per share). The revenue return for the period of GBP1.53 million has increased from last year's comparable figure of GBP1.13 million. This is mainly due to higher loan stock income receivable arising from the realisation of Auction Technology Group. As a result of COVID-19 related uncertainty upon their trading prospects, the Company has not recognised some interest due at 31 March 2020 as receivable in these accounts in respect of a higher number of investee companies than has previously been the case. Dividends The Board continues to be committed to providing an attractive dividend stream to Shareholders and is pleased to declare an Interim dividend of 3.00 pence per share for the year ending 30 September 2020, comprising 1.00 penny from income and 2.00 pence from capital. This dividend will be paid on 10 July 2020 to Shareholders on the Register on 19 June 2020 and will bring cumulative dividends paid per share to 120.50 pence. The Company's target of paying a dividend of at least 6.00 pence per share in respect of each financial year has been met or exceeded in each of the last eight years. I have previously noted that the gradual move of the portfolio to younger growth capital investments may make dividends harder to achieve from income and capital returns alone in any given year. Accordingly, the Board continues to monitor the sustainability of this target. Dividend Investment Scheme The Company's Dividend Investment Scheme was recommenced on 12 February 2020, having been temporarily suspended. All previously registered participants of the Scheme were automatically re-enrolled, with their future dividends to be re-invested unless they notified a wish to opt-out. The Scheme provides Shareholders with the opportunity to reinvest their cash dividends into new shares in the VCT at the latest published NAV price (adjusted for subsequent dividends). New VCT shares attract the same tax reliefs as shares purchased through an offer for subscription. Shareholders can opt-in by completing a mandate form available on the Company's website and can opt-out by contacting Link Asset Services, using their details provided under Shareholder Information on page 26 of the Half Year Report. Fundraising On 25 October 2019, the Company launched an offer for subscription of GBP5 million (the "Offer") with an over-allotment facility of an additional GBP5 million, alongside offers from the other Mobeus- advised VCTs. I am pleased to report that the Offer experienced strong demand. The Board utilised the over-allotment facility of GBP5 million on 14 November 2019 and the Company received subscriptions in excess of the full amount sought of GBP10 million within two months of the launch date. In accordance with the Offer's prospectus, the allotment of shares under the Offer took place on 8 January 2020, in respect of the first GBP10 million of applications received and accepted. The Offer closed early, on 13 January 2020. The Board is grateful for this particularly strong level of support from both existing Shareholders and new investors. 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 2020 amounted to GBP40.89 million. This figure included GBP36.33 million held in money market funds with AAA credit ratings and GBP4.56 million held in deposit accounts with several well-known financial institutions across a range of maturities. Share buy-backs During the six months ended 31 March 2020, the Company bought back and cancelled 1,173,485 of its own shares, representing 1.1% (2019: 1.0%) of the shares in issue at the beginning of the period, at a total cost of GBP0.83 million (2019: GBP0.73 million), inclusive of expenses. It is the Company's policy to cancel all shares bought back in this way. The Board regularly reviews its buyback policy, where its priority is to act prudently and in the interest of remaining Shareholders, whilst considering other factors, such as levels of liquidity and reserves, market conditions and applicable law and regulations. The current COVID-19 pandemic has contributed significantly to volatility in share prices generally. However, when buying back shares, the Company seeks to maintain the discount at which the Company's shares trade at no more than 5% below the latest published NAV. Shareholder Communications May I remind you that the Company has its own website which is available at: www.incomeandgrowthvct.co.uk On behalf of all the Mobeus advised VCTs, the Investment Adviser held its most recent annual VCT Shareholder Event on 4 February 2020 which, from the feedback submitted, was well received by Shareholders. The event was held at The National Gallery in Central London and included presentations on the investment activity and performance of all the Mobeus VCTs. I would like to thank all those Shareholders who attended for helping to make it a success. Environmental, Social and Governance Your Board would like to assure Shareholders that it is taking these issues seriously, and future annual reports will be covering them in more detail. Further reporting and procedural requirements for these increasingly important issues required by current and future regulation should enable the Board to provide concise information and implement further processes, both relevant to the Company and, correspondingly, useful to stakeholders. These objectives do require that regulations are measured, proportionate and cost-effective to introduce. Succession During the period under review, the Company has appointed two new directors: Justin Ward who succeeded me as Chairman of both the Audit Committee and the Nomination and Remuneration Committee on 12 November 2019, and Maurice Helfgott, who was appointed on 12 February 2020. The Board is continuing with its succession planning and, as announced on 12 February 2020, will be appointing Maurice Helfgott as its Chairman on 1 July 2020, following my retirement from the Board after 10 years, effective from 30 June 2020. Both Maurice and Justin bring a wealth of experience to the Board and I would like to welcome them on behalf of all Shareholders. Outlook The impact of COVID-19 has been immediate and wide reaching. The eventual effects of the pandemic, many of which are unclear at present, are likely to be felt over the course of the months and years to come. Nevertheless, your Board considers that your Company is well positioned to cope with most likely scenarios in so far as they can presently be foreseen. The successful realisations and recent fundraising have given the Company strong liquidity not only to support the existing portfolio if appropriate, but also to capitalise on opportunities which may arise for new investment. The portfolio comprises a foundation of mature investments that are still providing an income return, as well as a younger, growth capital portfolio seeking to achieve scale, higher levels of profitability and hence value. The challenges arising from the COVID-19 pandemic should not be underestimated. However, once conditions stabilise, the Investment Adviser and the Board believe that a number of attractive new investment opportunities will emerge. I would like to take this opportunity once again to thank all Shareholders for their continued support. Jonathan Cartwright Chairman Investment Policy The Company's policy is to invest primarily in a diverse portfolio of UK unquoted companies. Asset Mix and Diversification The Company will seek to make investments in UK unquoted companies in accordance with the prevailing requirements of VCT legislation. Investments are made selectively across a wide variety of sectors, principally in established companies. Investments are generally structured as part loan and part equity in order to receive regular income and to generate capital gain from realisations. There are a number of conditions within the VCT legislation which need to be met by I&G and which may change from time to time. No single investment may represent more than 15% (by VCT tax value) of the Company's total investments at the date of investment. Save as set out above, the Company's other investments are held in cash and liquid funds.
Liquidity
The Company's cash and liquid funds are held in a portfolio of readily
realisable interest bearing investments, deposit and current accounts,
of varying maturities, subject to the overriding criterion that the risk
of loss of capital be minimised.
Borrowing
The Company's articles of association permit borrowing of up to 10% of
the adjusted capital and reserves (as defined therein). However, the
Company has never borrowed and the Board would only consider doing to
in exceptional circumstances.
Investment Adviser's Review
COVID-19 Pandemic
In March 2020, in response to the COVID-19 pandemic, the UK Government
introduced lockdown and social distancing measures. These measures had
an immediate adverse impact on UK businesses, with many companies experiencing
significant reduction in consumer and business demand.
Businesses' ability to trade was further impacted by restrictions on
their employees' working practices and disruption to their supply chains.
The travel, hospitality, leisure, consumer and physical retail sectors
have seen the most significant adverse impact. On the other hand, there
have been beneficiaries, including businesses in software and IT, online
direct to consumer and those with long term business to business customers.
Many of the VCT's portfolio companies are encountering very challenging
trading conditions, and the full extent and impact of COVID-19 will only
emerge over time. The Investment Adviser, Mobeus, has reviewed and evaluated
the impact of COVID-19 on each sector exposure and upon the value of
the portfolio in so far as is practicable at the present time. Mobeus
is fully engaged with the portfolio companies to ensure that all steps
are being taken to assist each to trade through this crisis where possible,
restore and grow value thereafter. As part of this, Mobeus is reviewing
the implications for new and follow-on investments, with the recent fundraising
and relatively high liquidity levels providing a solid foundation for
such assessments.
Portfolio Review
Prior to the UK Government's response to the COVID-19 pandemic, the six
months to 31 March 2020 had seen very positive progress within the portfolio.
The Company invested a total of GBP4.15 million into four new growth
capital investments, receiving net cash proceeds of GBP8.36 million,
primarily from three very profitable realisations. Following the Investment
Adviser's COVID-19 review, the valuation of each investee company has
been considered, leading to an overall net valuation reduction of GBP10.73
million.
Activity in the six months to 31 March 2020 is summarised as
follows: 2020 2019
GBPm GBPm
Opening portfolio value 50 .22 49.40
New and follow-on investments 4. 15 2.00
Disposal proceeds (8.36) (2.29)
Net realised gains 2.53 0 .37
V aluation movements (10. 73) 2.20
------------------------------ ----------- --------
Portfolio value at 31 March 37.81 51. 68
The investment and divestment activity during the period has increased
the proportion of the portfolio in growth capital investments to 65.2%
(2019: 47.9%) by value at the period end.
After the period end, the Company provided further investment totalling
GBP1.61 million into two existing portfolio companies. This brings the
total invested in growth capital investments made since the introduction
of the new VCT regulations in 2015 to GBP26.28 million.
The portfolio's contribution to the overall results of the VCT is summarised
below as follows:
Investment Portfolio 2020 2019
Capital Movement GBPm GBPm
Increase in the value of 1.71 4.68
unrealised investments
Decrease in the (12.44) (2.48)
value of unrealised
investments
------------------------------------------ ------------ -----------
Net (decrease)/ (10.73) 2.20
increase in the value of
unrealised investments
Realised gains 2.53 0.37
Realised losses - -
------------------------------------------ ------------ -----------
Net realised gains in 2.53 0.37
the period
Net investment (8.20) 2.57
portfolio movement in
the period
Valuation changes of portfolio investments still held
The valuation reductions of GBP12.44 million principally arise from the
Investment Adviser's COVID-19 impact review of the portfolio.
At summary level, there have been some clear beneficiaries of the COVID-19
crisis that are currently trading strongly.
Although some of the fillip will subside, there can be a reasonable expectation
that some of the behavioural change will prove structural. Other businesses
are raising capital to ensure that they are ready to capitalise on demand
when it returns. The majority of the portfolio has experienced material
impact but not sufficient to threaten their viability and/or require
rescue financing. They have scaled back operations in response and are
making full use of Government assistance schemes where appropriate. Finally,
there are a few businesses whose viability is now under threat. In the
main, these are businesses that were already struggling and hence the
Company's carrying value had already been written down significantly.
The value risk to the Company from this subset is therefore modest.
Within total valuation decreases, the main reductions were CGI Creative
Graphics - GBP1.57 million, Media Business Insight - GBP1.35 million
and Wetsuit Outlet - GBP1.02 million. These three companies saw some
of the most significant impact of sudden decline in demand for their
products or services. This was the prevailing impact across the portfolio,
but some investee companies' trading has benefited from the lockdown,
including Virgin Wines, Parsley Box, Bella & Duke, Bleach London and
MyTutor.
Within total valuation increases, the principal contributors were Access
IS GBP0.62 million and Active Navigation GBP0.44 million. The former
valuation reflects the long-term nature of many of Access IS's projects,
while the latter reflects the Company's preferred investment structure
in Active Navigation.
Realised gains
Cash proceeds totalling GBP8.36 million have been received, principally
from three realisations during the period under review.
In December, the Company realised GBP1.53 million from its first growth
capital investment made under the new VCT rules, Redline Worldwide, generating
a gain of GBP0.98 million in the period. Over the time that this investment
was held, a multiple of 1.6x cost has been achieved to date with further
proceeds potentially receivable in due course. GBP0.10 million of these
proceeds was received in March, bringing the multiple on cost achieved
to 1.7x.
In February, the Company exited investments held in Biosite and Auction
Technology Group, generating a total realised gain in the period of GBP1.55
million. The investment in Biosite was realised, generating proceeds
of GBP2.77 million over the life of the investment and contributed to
a gain over original cost of 1.5x. Auction Technology Group generated
proceeds over the life of the investment of GBP9.03 million compared
to an original cost of GBP2.00 million, a multiple on cost of 4.5x over
the 11 1/2 years this investment was held - an exceptional return for
Shareholders.
After the period end, a number of transactions occurred. A loan repayment
of GBP0.09 million was received from BookingTek and, following continued
under performance, the trade and assets of SuperCarers were sold to Home
Instead for a nominal sum. Finally, following a significant increase
in its share price, the Company received GBP0.64 million from the partial
realisation of half its holding in Omega Diagnostics. This represented
an attractive return of 4.6x multiple on cost and an IRR of 17.7%, securing
a positive return overall whilst maintaining a degree of exposure to
any potential upside.
Investment portfolio yield
In the period under review, the Company received the following amounts
in interest and dividend income:
Investment Portfolio Yield 2020 2019
GBPm GBPm
Interest received in the period 1.85 1.43
Dividends received in the period 0.35 0.24
----------------------------------------------- ----- -----
Total portfolio income in the period(1) 2.20 1.67
Portfolio Value at 31 March 37.81 51.68
Portfolio Income Yield
(Income as a % of Portfolio value at 31 March) 5.8% 3.2%
1 Total portfolio income in the period is generated solely from investee
companies within the portfolio.
The increase in income was due to interest of GBP1.09 million upon the
loan instruments in Auction Technology Group being paid, as part of the
sale transaction, which had not previously been recognised.
New investments in the Half-Year
The Company made four new investments totalling GBP4.15 million during
the period, as detailed below:
Amount of new
Company Business Date of investment investment (GBPm)
Active Navigation Data analysis software November 2019 1.54
Data Discovery Solutions, trading as Active Navigation, is a data analysis
software solution which makes it easier for companies to clean up network
drives, respond to new data protection laws and dispose of redundant
and out-dated documents. Active Navigation's solution is used by significant
blue-chip customers, particularly those in highly regulated industries
such as energy and professional services, as well as government entities
in the USA, Canada, Australia and the UK. Active Navigation will seek
to drive continued growth from its file analysis platform with the recruitment
of experienced sales and professional services staff. Since 2014, revenues
have grown from GBP1.50 million to GBP5.00 million in the its financial
year to 30 June 2018.
IPV Media asset software November 2019 0.96
IPV has developed a media asset management software product called 'Curator'.
This enables enterprise level customers to quickly retrieve and search
hours of video footage, edit into multiple short clips and broadcast
to online video platforms (such as YouTube) and company intranets. This
enables IPV's impressive list of blue-chip clients such as Turner Sports,
NASA and Sky, to improve efficiency in managing their video content.
The company has built an impressive senior management team of proven
operators and is targeting a media asset management market in the US
and UK, worth an estimated GBP1 billion per annum. The investment will
be used to build out a sales and marketing team and to fund lead generation
for new direct and partner channels as well as supporting the existing
partner network. From 2016 to 2018 recurring revenues grew over 50% annually
and represented approximately 70% of total revenues in 2018.
Direct to consumer
Bleach London hair care brand December 2019 0.72
Bleach London Holdings ("Bleach London") is an established branded, fast
growing business which manufactures a range of haircare and colouring
products. Bleach London is regarded as a leading authority in the hair
colourant market having opened one of the world's first salons focused
on colouring and subsequently launched its first range of products in
2013. The investment was part of a wider GBP5.60 million investment round
alongside trade and angel investors. The funds will be used to drive
continued growth in sales through retailers as well as capitalise on
its strong social media presence whilst accelerating its growing direct
to consumer channel. Bleach London delivered an impressive three times
revenue growth between 2017 and 2018.
Premium frozen raw
Bella & Duke dog food provider February 2020 0.93
Bella & Duke is a direct to consumer subscription service, providing
premium frozen raw dog food to pet owners in the UK. Founded in 2016,
the business provides an alternative to standard meal options for dog
owners by focusing on the well documented health benefits of a raw food
diet. This area is a growing niche in the large and established pet food
market and is being driven by the premiumisation of dog food. The investment
will seek to optimise its production and supply facilities, expand and
enhance its team and broaden its product range. The company has grown
revenues over 300% between 2018 and 2019.
Realisations during the Half-Year
The Company realised its investments in Redline, Biosite and Auction
Technology Group as detailed below:
Total cash proceeds
over the life
of the investment/Multiple
Company Business Period of investment over cost
Provider of security GBP1.95 million
services to the 1.7x cost
aviation industry February 2016 to December
Redline and other sectors 2019
The Company sold its investment in Redline Worldwide for GBP1.53 million
(realised gain in the period: GBP0.98 million) (including proceeds received
after completion). Since investment in 2016, the investment has generated
proceeds to date of GBP1.95 million compared to an original investment
cost of GBP1.13 million, which is a multiple on cost to date of 1.7x
and an IRR of 17.7%. Further proceeds may be receivable in due course.
Workforce management November 2016 to February GBP2.77 million
Biosite and security services 2020 1.5x cost
The Company sold its investment in Pattern Analytics Limited (trading
as Biosite) to ASSA ABLOY for GBP2.65 million. Since investment in 2016,
the investment has generated proceeds of GBP2.77 million compared to
an original investment cost of GBP1.79 million, which is a multiple on
cost of 1.5x and an IRR of 21.0%.
SaaS based online GBP9.03 million
Auction Technology auction marketplace October 2008 to February 4.5x cost
Group platform 2020
The Company sold its investment in Turner Topco Limited (trading as Auction
Technology Group) to TA Associates for GBP5.27 million (including GBP1.09
million loan interest due on completion; realised gain in the period:
GBP1.55 million). This investment generated proceeds over the life of
the investment of GBP9.03 million (including proceeds received following
a partial realisation from a sale to ECI Partners in June 2014) compared
to an original cost of GBP2.00 million, which is a multiple on cost of
4.5x and an IRR of 28.9%.
Finally, GBP0.003 million of liquidation proceeds have been received
from H Realisations (2018) Limited (formerly Hemmels Limited).
Further investments made after the period end
The Company made two further investments into existing portfolio companies,
totalling GBP1.61 million after the period end, as detailed below:
Total cash proceeds
over the life
of the investment/Multiple
Company Business Period of investment over cost
Digital Marketplace
connecting school
pupils seeking one-to-one
MyTutor online tutoring May 2020 0.98
MyTutorWeb Limited (trading as "MyTutor") is a digital marketplace that
connects school pupils who are seeking private one-to-one tutoring with
university students. The business is satisfying a growing demand from
both schools and parents to improve pupils' exam results to enhance their
academic and career prospects. This further investment, alongside other
existing shareholders, seeks to build and reinforce its position as a
UK category leader in the online education market as well as to begin
to develop a broader, personalised learning product offering. MyTutor
has grown strongly over the last six months with average year on year
growth of 70% and over 210,000 tutorials delivered in 2019. The COVID-
19 impact on the education sector has significantly heightened the awareness
of online learning and tutoring.
Workforce management
Rotageek software May 2020 0.63
Rota Geek Limited (trading as "Rotageek") is a provider of cloud-based
enterprise software to help larger retail and leisure organisations predict
and meet demand to schedule staff effectively. This investment, alongside
funds from a new VCT investor and existing shareholders will be used
to capitalise on opportunities that will emerge as the retail sector
recovers from lockdown restrictions. Rotageek has also moved into healthcare
to help address the workforce management issues of a sector that is chronically
overburdened at present. For the year ended 31 December 2019, revenues
have grown over 45% on the prior year.
After the period end, a number of transactions occurred. A loan repayment
of GBP0.09 million was received from BookingTek and, following continued
under performance, the trade and assets of SuperCarers were sold to Home
Instead for a nominal sum. Finally, following a significant increase
in its share price, the Company received GBP0.64 million from the partial
realisation of half its holding in Omega Diagnostics. This represented
an attractive return of 4.6x multiple on cost and an IRR of 17.7%, securing
a positive return overall whilst maintaining a degree of exposure to
any potential upside.
Mobeus Equity Partners LLP
Investment Adviser
Investment Portfolio Summary
Total cost Valuation Valuation
at at Additional at
31 March 30 September 31 March
2020 2019 investments 2020
(unaudited) (audited) in the period (unaudited)
GBP GBP GBP GBP
Tovey Management Limited
(trading
as Access IS) 3,313,932 4,144,573 - 4,764,862
Provider of data capture and
scanning hardware
Virgin Wines Holding Company
Limited 2,745,503 3,421,474 - 3,048,521
Online wine retailer
MPB Group Limited 2,043,137 3,858,515 - 3,009,661
Online marketplace for used
photographic equipment
Preservica Limited 2,181,666 3,053,749 - 2,851,310
Seller of proprietary digital
archiving software
EOTH Limited (trading as Equip
Outdoor Technologies) 1,383,313 2,939,441 - 2,376,720
Distributor of branded outdoor
equipment and clothing including
the Rab and Lowe Alpine brands
Data Discovery Solutions Limited
(trading as Active Navigation) 1,543,500 - 1,543,500 1,980,905
Provides the global market
leading file analysis software
for information governance,
security and compliance
Proactive Group Holdings Inc 988,390 2,486,769 - 1,823,164
Media Services and investor
conferences
MyTutorWeb Limited (trading
as "MyTutor") 1,783,566 1,783,566 - 1,783,566
Digital marketplace connecting
school pupils seeking one-to-one
online tutoring
I-Dox plc 453,881 1,312,563 - 1,416,735
Developer and supplier of
knowledge
management products
Media Business Insight Holdings
Limited 3,666,556 2,661,708 - 1,308,482
A publishing and events business
focused on the creative
production
industries
Arkk Consulting Limited 1,526,007 1,546,354 - 1,274,590
Provider of services and
software
to enable organisations to
remain compliant with regulatory
reporting requirements
Vian Marketing Limited (trading
as Red Paddle Co) 1,207,437 1,883,950 - 1,244,310
Design, manufacture and sale
of stand-up paddleboards and
windsurfing sails
Tharstern Group Limited 1,454,278 1,534,444 - 1,118,234
Software based management
Information
systems for the printing
industry
Parsley Box Limited 925,800 925,800 - 1,102,716
Supplier of home delivered,
ambient ready meals for the
elderly
Buster and Punch Holdings
Limited 725,226 1,176,202 - 976,365
Industrial inspired lighting
and interiors retailer
IPV Limited 954,674 - 954,674 954,674
Provider of media asset software
Bella & Duke Limited 931,499 - 931,499 931,499
A premium frozen raw dog food
provider
Bleach London Holdings Limited 721,452 - 721,452 909,403
An established direct to
consumer
brand in the hair colourants
market
Rota Geek Limited 625,400 1,122,456 - 872,780
Workforce management software
Vectair Holdings Limited 53,400 935,546 - 821,819
Designer and distributor of
washroom products
Ibericos Etc. Limited (trading
as Tapas Revolution) 1,397,386 1,512,372 - 662,005
Spanish restaurant chain
Manufacturing Services
Investment
Limited 3,205,182 1,656,308 - 641,037
(trading as Wetsuit Outlet)
Online retailer in the water
sports market
Bourn Bioscience Limited 1,610,379 349,376 - 531,425
Management of In-vitro
fertilisation
clinics
Kudos Innovations Limited 472,500 945,000 - 472,500
Online platform that provides
and promotes academic research
dissemination
CGI Creative Graphics
International
Limited 1,943,948 1,930,826 - 359,069
Vinyl graphics to global
automotive,
recreation vehicle and
aerospace
markets
Master Removers Group Limited (trading
as Anthony Ward 464,658 1,196,408 - 233,412
Thomas, Bishopsgate and Aussie Man &
Van)
A specialist logistics, storage and
removals business
Omega Diagnostics Group plc 280,026 263,674 - 175,005
In-vitro diagnostics for food
intolerance, autoimmune diseases
and infectious diseases
Blaze Signs Holdings Limited 418,281 599,314 - 147,257
Manufacturer and installer of signs
BG Training Limited 53,125 26,563 - 13,281
Technical training business
Corero Network Security plc 600,000 2,458 - 3,441
Provider of e-business technologies
RDL Corporation Limited 1,441,667 695,008 - -
Recruitment consultants within the
pharmaceutical, business
intelligence and IT industries
Aquasium Technology Limited 166,667 176,951 - -
Manufacturing and marketing of bespoke
electron beam welding
and vacuum furnace equipment
Jablite Holdings Limited 498,790 162,366 - -
Manufacturer of expanded polystyrene
products
BookingTek Limited 872,646 87,233 - -
Software for hotel groups
Oxonica Limited 2,524,527 - - -
International nanomaterials group
Veritek Global Holdings Limited 2,289,859 - - -
Maintenance of imaging equipment
Racoon International Group Limited 655,851 - - -
Supplier of hair extensions, hair care
products and training
Super Carers Limited 649,528 - - -
Online introductory platform connecting
local individuals with
carers
NexxtDrive Limited/Nexxt E-drive
Limited 487,014 - - -
Developer and exploiter of mechanical
transmission technologies
CB Imports Group Limited (trading as
Country Baskets) 175,000 - - -
Importer and distributor of artificial
flowers, floral sundries and
home decor products
Biomer Technology Limited 137,170 - - -
Developer of biomaterials for medical
devices
H Realisations (2018) Limited (formerly
Hemmels Limited) 27,527 - - -
(in liquidation)
Sourcing and restoration of classic
cars
Disposals in period
Pattern Analytics Limited (trading as
Biosite) - 2,648,952 - -
Workforce management and security
services for the construction
industry
Turner Topco Limited (trading as
Auction Technology Group) - 2,634,378 - -
Publisher and online auction platform
operator
Redline Worldwide Limited - 550,430 - -
Provider of security services to the
aviation industry and other
sectors
--------------------------------------- ---------- ---------- --------- ----------
Total 49,600,348 50,224,727 4,151,125 37,808,748
Total Investment Portfolio split by
type
Growth focused portfolio 26,240,873 29,722,881 4,151,125 24,632,042
MBO focused portfolio 23,359,475 20,501,846 - 13,176,706
Total 49,600,348 50,224,727 4,151,125 37,808,748
--------------------------------------- ---------- ---------- --------- ----------
Statement of Directors' Responsibilities
Responsibility statement
In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Jonathan
Cartwright (Chairman), Maurice Helfgott, Justin Ward (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 Financial Statements for the
year ended 30 September 2019 ("the Annual Report"). The occurrence of
the COVID-19 pandemic has created heighted uncertainty but has not changed
the nature of the principal risks. The Board considers that the present
processes for mitigating those risks remain appropriate.
The principal risks faced by the Company are:
-- Investment and liquidity
-- Loss of approval as a Venture Capital Trust;
-- Regulatory;
-- Economic and political;
-- Financial and operating;
-- Market liquidity;
A detailed explanation of the principal risks facing the Company can
be found in the Annual Report on pages 27 and 28, and in Note 16 on Financial
Instruments on pages 63 to 70. Copies can be viewed or downloaded from
the Company's website: www.incomeandgrowthvct.co.uk
Going Concern
The Board has assessed the Company's operation as a going concern. The
Company's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Half-Year
Management Report. The Directors have satisfied themselves that the Company
continues to maintain a significant cash position. The majority of companies
in the portfolio are well funded 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 can be found in the Annual Report on
pages 37 and 71, and in Note 16 on Financial Instruments on pages 63
to 70 of that Report. Accordingly, the Directors consider it appropriate
to adopt the going concern basis of accounting in preparing the Financial
Statements and the Directors' identification of any material uncertainties
to the Company's ability to continue to do so over a period of at least
twelve months from the date of approval of the 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:
Jonathan Cartwright
Chairman
Unaudited Condensed Income Statement
for the six months ended 31 March 2020
Six months ended 31 March Six months ended 31 March
2020 2019
(unaudited) (unaudited)
Notes Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
Net investment
portfolio
(losses)/gains 9 - (8,201,658) (8,201,658) - 2,567,360 2,567,360
Income 4 2,311,854 - 2,311,854 1,783,886 - 1,783,886
Investment
Adviser's fees 5 (236,541) (709,625) (946,166) (215,882) (647,647) (863,529)
Other expenses (270,947) - (270,947) (224,094) - (224,094)
---------------- ------ ---------- ------------ ------------ ---------- ---------- ----------
Profit/(loss)
on ordinary
activities
before
taxation 1,804,366 (8,911,283) (7,106,917) 1,343,910 1,919,713 3,263,623
Tax on
profit/(loss)
on ordinary
activities 6 (276,098) 276,098 - (209,618) 209,618 -
---------------- ------ ---------- ------------ ------------ ---------- ---------- ----------
Profit/(loss)
for the period
and total
comprehensive
income 1,528,268 (8,635,185) (7,106,917) 1,134,292 2,129,331 3,263,623
---------------- ------ ---------- ------------ ------------ ---------- ---------- ----------
Basic and
diluted
earnings per
share 7 1.40p (7.93)p (6.53)p 1.08p 2.02p 3.10p
---------------- ------ ---------- ------------ ------------ ---------- ---------- ----------
Year ended 30 September
2019
(audited)
Notes Revenue Capital Total
GBP GBP GBP
Net investment
portfolio
(losses)/gains - 4,932,113 4,932,113
Income 4 3,130,823 - 3,130,823
Investment
Adviser's fees 5 (446,274) (1,338,822) (1,785,096)
Other expenses (426,840) - (426,840)
------------------------ -------------- ------------------ ----------------- --------------------------
Profit/(loss)
on ordinary
activities
before taxation 2,257,709 3,593,291 5,851,000
Tax on profit/(loss)
on ordinary
activities 6 (381,993) 381,993 -
------------------------ -------------- ------------------ ----------------- --------------------------
Profit/(loss)
for the period
and total
comprehensive
income 1,875,716 3,975,284 5,851,000
------------------------ -------------- ------------------ ----------------- --------------------------
Basic and diluted
earnings per
share 7 1.80p 3.80p 5.60p
------------------------ -------------- ------------------ ----------------- --------------------------
The revenue column of the Income Statement includes all income and expenses.
The capital column accounts for the net investment portfolio unrealised
(losses)/gains and realised gains on investments and the proportion
of the Investment Adviser's fee and performance fee charged to capital.
The total column is the Statement of Total Comprehensive Income of the
Company prepared in accordance with Financial Reporting Standards ("FRS").
In order to better reflect the activities of a VCT and in accordance
with the 2014 Statement of Recommended Practice ("SORP") issued by the
Association of Investment Companies ("AIC") and updated in October 2019,
supplementary information which analyses the Income Statement between
items of a revenue and capital nature has been presented alongside the
Income Statement. The revenue column of profit attributable to equity
Shareholders is the measure the Directors believe appropriate in assessing
the Company's compliance with certain requirements set out in Section
274 Income Tax Act 2007.
All the items in the above statement derive from continuing operations
of the Company. No operations were acquired or discontinued in the period/year.
The notes to the unaudited financial statements form part of these Half-Year
Financial Statements.
Unaudited Condensed Balance Sheet
as at 31 March 2020
30 September
31 March 2020 31 March 2019 2019
(unaudited) (unaudited) (audited)
Notes GBP GBP GBP
Fixed assets
Investments at fair value 9 37,808,748 51,682,001 50,224,727
Current assets
Debtors and prepayments 362,814 447,599 263,116
Current asset investments 10 39,479,736 27,873,883 29,964,187
Cash at bank 10 1,406,450 1,659,682 1,498,030
---------------------------- ------ ------------- ------------- ------------
41,249,000 29,981,164 31,725,333
Creditors: amounts falling
due within one year (282,076) (225,127) (221,981)
---------------------------- ------ ------------- ------------- ------------
Net current assets 40,966,924 29,756,037 31,503,352
Net assets 78,775,672 81,438,038 81,728,079
Capital and reserves
Called up share capital 1,150,685 1,043,639 1,033,029
Capital redemption reserve 16,980 44,235 5,245
Share premium reserve 9,625,433 46,473,760 -
Revaluation reserve (6,814,985) 6,200,237 4,652,457
Special distributable reserve 61,740,118 18,486,621 63,751,255
Realised capital reserve 9,626,672 6,469,707 9,864,455
Revenue reserve 3,430,769 2,719,839 2,421,638
Equity Shareholders' funds 78,775,672 81,438,038 81,728,079
---------------------------------- ------------ ----------- -----------
Basic and diluted net asset
value:
Basic and diluted net asset
value per share 11 68.46p 78.03p 79.12p
---------------------------------- ------------ ----------- -----------
The financial information for the six months ended 31 March 2020 and
the six months ended 31 March 2019 has not been audited.
The notes to the unaudited financial statements form part of these
Half-Year Financial Statements.
Unaudited Condensed Statement of Changes in Equity
for the six months ended 31 March 2020
Non-distributable reserves Distributable reserves
Called
up Capital Share Revaluation Special Realised Revenue Total
share redemption premium reserve distributable capital reserve
(Note
capital reserve reserve reserve reserve b)
(Note (Note
a) b)
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 October
2019 1,033,029 5,245 - 4,652,457 63,751,255 9,864,455 2,421,638 81,728,079
Comprehensive
income
for the period
(Loss)/profit
for the
period - - - (10,733,344) - 2,098,159 1,528,268 (7,106,917)
-------------- --------- ---------- --------- ------------ ------------- ----------- --------- -----------
Total
comprehensive
income for the
period - - - (10,733,344) - 2,098,159 1,528,268 (7,106,917)
-------------- --------- ---------- --------- ------------ ------------- ----------- --------- -----------
Contributions
by and
distributions
to owners
Shares issued
via Offer
for
Subscription
(Note c) 129,391 - 9,625,433 - (99,106) - - 9,655,718
Shares bought
back (Note d) (11,735) 11,735 - - (828,976) - - (828,976)
Dividends paid - - - - - (4,153,095) (519,137) (4,672,232)
-------------- --------- ---------- --------- ------------ ------------- ----------- --------- -----------
Total
contributions
by and
distributions
to owners 117,656 11,735 9,625,433 - (928,082) (4,153,095) (519,137) 4,154,510
-------------- --------- ---------- --------- ------------ ------------- ----------- --------- -----------
Other
movements
Realised
losses
transferred
to special
reserve
(Note a) - - - - (1,083,055) 1,083,055 - -
Realisation of
previously
unrealised
appreciation - - - (734,098) - 734,098 - -
-------------- --------- ---------- --------- ------------ ------------- ----------- --------- -----------
Total other
movements - - - (734,098) (1,083,055) 1,817,153 - -
-------------- --------- ---------- --------- ------------ ------------- ----------- --------- -----------
At 31 March
2020 1,150,685 16,980 9,625,433 (6,814,985) 61,740,118 9,626,672 3,430,769 78,775,672
-------------- --------- ---------- --------- ------------ ------------- ----------- --------- -----------
Notes
a): The Special distributable reserve also provides the Company with
a reserve to absorb any existing and future realised losses and, when
considered by the Board to be in the interests of Shareholders, to
fund share buybacks and for other corporate purposes. As at 31 March
2020, the Company has a special reserve of GBP61,740,118, GBP33,576,818
of which relates to reserves from shares issued on or before 5 April
2014, or that arise from shares issued more than three years ago. Reserves
originating from Share issues are not distributable under VCT rules
if they are within three years of the end of an accounting period in
which the shares were issued. The transfer of GBP1,083,055 to the special
reserve from the realised capital reserve above is the total of realised
losses incurred by the Company in the period.
b): The realised capital reserve and the revenue reserve together comprise
the Profit and Loss Account of the Company.
c): Under the Company's Offer for Subscription launched on 25 October
2019, 12,939,080 ordinary shares were allotted on 8 January 2020, raising
net funds of GBP9,655,718 for the Company. This figure is net of issue
costs of GBP245,176.
d): During the period, the Company repurchased 1,173,485 of its own
shares at the prevailing market price for a total cost (including stamp
duty) of GBP828,976, which were subsequently cancelled. The difference
between the figure above and that per the Statement of Cash Flows is
GBP22,640, being an opening share buyback creditor of GBP40,379 offset
by a share buyback creditor of GBP63,019 at the period end.
The notes to the unaudited financial statements form part of these
Half-Year Financial Statements.
Unaudited Condensed Statement of Changes in Equity
for the six months ended 31 March 2019
Non-distributable
reserves Distributable reserves
Called
up Capital Share Revaluation Special Realised Revenue Total
share redemption premium reserve distributable capital reserve
capital reserve reserve reserve reserve
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 October
2018 1,054,384 33,490 46,473,760 4,102,002 19,655,855 8,627,792 2,636,431 82,583,714
Comprehensive
income
for the period
Profit/(loss)
for the period - - - 2,199,709 - (70,378) 1,134,292 3,263,623
------------------------ -------------- ------------------ ----------------- ----------- ------------- ---------------- -------------- ---------------------
Total comprehensive
income for the
period - - - 2,199,709 - (70,378) 1,134,292 3,263,623
------------------------ -------------- ------------------ ----------------- ----------- ------------- ---------------- -------------- ---------------------
Contributions
by and
distributions
to owners
Shares bought
back (10,745) 10,745 - - (731,205) - - (731,205)
Dividends paid - - - - - (2,627,210) (1,050,884) (3,678,094)
------------------------ -------------- ------------------ ----------------- ----------- ------------- ---------------- -------------- ---------------------
Total contributions
by and
distributions
to owners (10,745) 10,745 - - (731,205) (2,627,210) (1,050,884) (4,409,299)
------------------------ -------------- ------------------ ----------------- ----------- ------------- ---------------- -------------- ---------------------
Other movements
Realised losses
transferred
to special reserve - - - - (438,029) 438,029 - -
Realisation of
previously
unrealised appreciation - - - (101,474) - 101,474 - -
------------------------ -------------- ------------------ ----------------- ----------- ------------- ---------------- -------------- ---------------------
Total other movements - - - (101,474) (438,029) 539,503 - -
------------------------ -------------- ------------------ ----------------- ----------- ------------- ---------------- -------------- ---------------------
At 31 March 2019 1,043,639 44,235 46,473,760 6,200,237 18,486,621 6,469,707 2,719,839 81,438,038
------------------------ -------------- ------------------ ----------------- ----------- ------------- ---------------- -------------- ---------------------
The composition of each of these reserves is explained below:
Called up share capital - The nominal value of shares originally issued
increased for subsequent share issues either via an Offer for Subscription
or Dividend Investment Scheme or reduced due to shares bought back by the
Company.
Capital redemption reserve - The nominal value of shares bought back and
cancelled is held in this reserve, so that the Company's capital is maintained.
Share premium reserve - This reserve contains the excess of gross proceeds
less issue costs over the nominal value of shares allotted under recent
Offers for Subscription and the Company's Dividend Investment Scheme.
Revaluation reserve - Increases and decreases in the valuation of investments
held at the period end are accounted for in this reserve, except to the
extent that the diminution is deemed permanent.
In accordance with stating all investments at fair value through profit
and loss, all such movements through both revaluation and realised capital
reserves are shown within the Income Statement for the period.
Special distributable reserve - This reserve is created from cancellations
of the balances upon the Share premium reserve, which are transferred to
this reserve from time to time. The cost of share buybacks and any realised
losses on the sale or impairment of investments (excluding transaction
costs) are charged to this reserve. 75% of the Investment Adviser fee expense,
and the related tax effect, that are charged to the realised capital reserve
are transferred to this reserve. This reserve will also be charged any
facilitation payments to financial advisers, which arose as part of the
Offer for Subscription.
Realised capital reserve - The following are accounted for in this reserve:
-- Gains and losses on realisation of investments;
-- Permanent diminution in value of investments;
-- Transaction costs incurred in the acquisition of investments;
-- 75% of the Investment Adviser fee expense and 100% of any performance
incentive fee payable, together with the related tax effect to this reserve
in accordance with the policies; and
-- Capital dividends paid.
Revenue reserve - Income and expenses that are revenue in nature are accounted
for in this reserve together with the related tax effect, as well as income
dividends paid that are classified as revenue in nature.
The notes to the unaudited financial statements form part of these Half-Year
Financial Statements.
Unaudited Condensed Statement of Cash Flows
for the six months ended 31 March 2020
Six months Six months Year ended
ended 31 March ended 31 March 30 September
2020 2019 2019
(unaudited) (unaudited) (audited)
Notes GBP GBP GBP
Cash flows from operating
activities
(Loss)/profit for the
financial period (7,106,917) 3,263,623 5,851,000
Adjustments for:
Net investment portfolio
losses/(gains) 8,201,658 (2,567,360) (4,932,113)
(Increase)/decrease
in debtors (80,341) (66,947) 117,537
Increase/(decrease) in creditors
and accruals 37,456 41,402 (2,124)
--------------------------------- --------------- --------------- -------------
Net cash inflow from
operating activities 1,051,856 670,718 1,034,300
Cash flows from investing
activities
Purchase of investments 9 (4,151,125) (1,933,990) (5,004,960)
Disposal of investments 9 8,346,088 2,293,969 9,186,966
-------------------------- ----- --------------- --------------- -------------
Net cash inflow from
investing activities 4,194,963 359,979 4,182,006
Cash flows from financing
activities
Shares issued as part of Offer
for subscription 9,900,894 - -
Issue costs as part of Offer for
subscription (245,176) - -
Equity dividends paid 8 (4,672,232) (3,678,094) (5,235,504)
Purchase of own shares (806,336) (731,205) (1,430,752)
-------------------------- ----- --------------- --------------- -------------
Net cash inflow/(outflow)
from financing activities 4,177,150 (4,409,299) (6,666,256)
-------------------------- ----- --------------- --------------- -------------
Net increase/(decrease) in cash
and cash equivalents 9,423,969 (3,378,602) (1,449,950)
Cash and cash equivalents at
start
of period 28,310,448 29,760,398 29,760,398
--------------------------------- --------------- --------------- -------------
Cash and cash equivalents at end
of period 37,734,417 26,381,796 28,310,448
--------------------------------- --------------- --------------- -------------
Cash and cash equivalents
comprise:
Cash at bank and in
hand 10 1,406,450 1,659,682 1,498,030
Cash equivalents 10 36,327,967 24,722,114 26,812,418
---------------
The notes to the unaudited financial statements form part of these
Half-Year Financial Statements.
Notes to the Unaudited Condensed Financial Statements
for the six months ended 31 March 2020
1. Company information
The Income & 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 prepared in accordance with accounting policies
consistent with Financial Reporting Standard 102 ("FRS102"), Financial
Reporting Standard 104 ("FRS104") - Interim Financial Reporting, with the
Companies Act 2006 and the 2014 Statement of Recommended practice, 'Financial
Statements of Investment Trust Companies and Venture Capital Trusts' ('the
SORP') (updated in October 2019) issued by the Association of Investment
Companies.
The Half-Year Report has not been audited, nor has it been reviewed by
the auditor pursuant to the Financial Reporting Council's (FRC) guidance
on Review of Interim Financial Information.
3. Principal accounting policies
The accounting policies have been applied consistently throughout the period.
Full details of principal accounting policies will be disclosed in the
Annual Report, while the policy in respect of investments is included within
an outlined box at the top of Note 9 on investments.
4. Income
Six months Six months
ended ended Year ended
30 September
31 March 2020 31 March 2019 2019
(unaudited) (unaudited) (audited)
GBP GBP GBP
Income
- Dividends 351,220 240,656 259,666
- Money market funds 83,823 91,855 179,705
- Loan stock interest 1,851,961 1,408,515 2,623,375
- Bank deposit interest 24,570 23,074 48,292
- Interest on preference share
dividend arrears 280 17,423 17,423
- Other income - 2,363 2,362
------------------------------- ------------- ------------- ------------
Total Income 2,311,854 1,783,886 3,130,823
------------------------------- ------------- ------------- ------------
5. Investment Adviser's fees and performance fees
Six months Six months
ended 31 March ended 31 March Year ended 30
2020 2019 September 2019
(unaudited) (unaudited) (audited)
GBP GBP GBP
Allocated to revenue return:
Investment Adviser's fees 236,541 215,882 446,274
Allocated to capital return:
Investment Adviser's fees 709,625 647,647 1,338,822
Investment Adviser's performance
fees - - -
--------------------------------- --------------- --------------- ---------------
Total 946,166 863,529 1,785,096
--------------------------------- --------------- --------------- ---------------
Investment Adviser's fee 946,166 863,529 1,785,096
Investment Adviser's performance
fees - - -
--------------------------------- --------------- --------------- ---------------
Total 946,166 863,529 1,785,906
--------------------------------- --------------- --------------- ---------------
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 incentive 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 Company and Mobeus, with effect from 1 October 2013,
to amend and replace the previous agreement. The previous agreement
remained in force, but only with the former adviser, Foresight
Group LLP. Mobeus waived their right to their portion of the fee
under the previous agreement. This agreement expired on 10 March
2019.
Any payment under the new incentive agreement is now 15% of net
realised gains for each year, payable in cash. It is payable only
if 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 12 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.
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 the Company as at the immediately preceding year end.
This cap included any fee payable to Foresight under the old agreement,
although any such payment to Foresight was not capped, but that
agreement expired on 10 March 2019. 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 ending 30 September 2020, the Target Return will
be 169.65p per share (being a 6% uplift on the Target Return at
the previous year end of 160.05 pence per share). As at 31 March
2020, the Cumulative Total NAV return is 145.46p per share, so
the Target Return for the 2020 financial year has currently not
been met and no fee has been accrued.
6. Taxation
There is no tax charge for the period as the Company has tax losses brought
forward from previous periods, which can be offset against taxable income.
7. Basic and diluted earnings and return per share
Six months Six months Year ended
ended 31 March ended 31 March 30 September
2020 2019 2019
(unaudited) (unaudited) (audited)
GBP GBP GBP
i) Total earnings after taxation: (7,106,917) 3,263,623 5,851,000
Basic and diluted earnings per
share (Note a) (6.53)p 3.10p 5.60p
----------------------------------- --------------- --------------- -------------
ii) Revenue earnings from ordinary
activities after taxation 1,528,268 1,134,292 1,875,716
Basic and diluted revenue earnings
per share (Note b) 1.40p 1.08p 1.80p
----------------------------------- --------------- --------------- -------------
Net investment portfolio
(losses)/gains (8,201,658) 2,567,360 4,932,113
Capitalised Investment Adviser
fees and performance fees less
taxation
----------------------------------- --------------- --------------- -------------
(433,527) (438,029) (956,829)
iii) Total capital return (8,635,185) 2,129,331 3,975,284
Basic and diluted capital earnings
per share (Note c) (7.93)p 2.02p 3.80p
----------------------------------- --------------- --------------- -------------
iv) Weighted average number of
shares in issue in the period 108,874,052 105,141,805 104,575,505
----------------------------------- --------------- --------------- -------------
Notes:
a) Basic earnings per share is total earnings after taxation divided
by the weighted average number of shares in issue.
b) Basic revenue earnings per share is the revenue return after
taxation divided by the weighted average number of shares in issue.
c) Basic capital earnings per share is the total capital return
after taxation divided by the weighted average number of shares
in issue.
d) There are no instruments that will increase the number of shares
in issue in the future. Accordingly, the above figures currently
represent both basic and diluted earnings per share.
8. Dividends
Type For the Pence Date Six months Six months Year
year ended per paid ended ended ended
30 share
Dividend September
31 March 31 March 30
2020 2019 September
2019
(unaudited) (unaudited) (audited)
GBP GBP GBP
15
February
Final Income 2018 1.00p 2019 - 1,050,884 1,049,870
15
February
Final Capital 2018 2.50p 2019 - 2,627,210 2,624,676
12 July
Interim Income 2019 1.00p 2019 - - 1,040,639
12 July
Interim Capital 2019 0.50p 2019 - - 520,319
18
October
Interim Income 2019 0.50p 2019 519,137 - -
18
October
Interim Capital 2019 4.00p 2019 4,153,095 - -
--------- -------- ---------- ----- -------- ----------- ----------- ---------
Total 4,672,232 3,678,094 5,235,504
------------------------------- ----- -------- ----------- ----------- ---------
9. Summary of movement on investments during the period
The most critical estimates, assumptions and judgements relate to the determination
of the carrying value of investments at 'fair value through profit and
loss' ("FVTPL"). All investments held by the Company are classified as
FVTPL and measured in accordance with the International Private Equity
and Venture Capital Valuation ("IPEV") guidelines, as updated in December
2018. 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.
Purchases and sales of unlisted investments are recognised when the contract
for acquisition or sale becomes unconditional. For investments actively
traded on 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
where the terms of a disposal state that consideration may be received
at some future date and, subject to the conditionality and materiality
of the amount of deferred consideration, an estimate of the fair value
discounted for the time value of money may be recognised through the Income
Statement. In other cases, the proceeds will only be recognised once the
right to receive payment is established and there is no reasonable doubt
that payment will be received.
Unquoted investments are stated at fair value by the Directors at each
measurement date in accordance with appropriate valuation techniques, which
are consistent with the IPEV guidelines:
(i) Each investment is considered as a whole on a 'unit of account' basis,
i.e. that the value of each portfolio company is considered as a whole,
alongside consideration of:-
The price of new investments made, if deemed to be made as part of an orderly
transaction, are considered to be at fair value at the date of the transaction.
The inputs that derived the investment price are calibrated within individual
valuation models and at subsequent measurement dates, are reconsidered
for any changes in light of more recent events or changes in light of more
recent events or changes in the market performance of the investee company.
The valuation bases used are the following:
a) a multiple basis. The investment may be valued by applying a suitable
price-earnings ratio, revenue or gross profit multiple to that company's
historic, current or forecast post-tax earnings before interest and amortisation,
or revenue, or gross profit in order to derive an enterprise value (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:-
b) where a company's underperformance against plan indicates a diminution
in the value of the investment, provision against cost is made, as appropriate.
(ii) Premiums, to the extent that they are considered capital in nature,
and that they 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.
(iii) Where a multiple or the price of recent investment less impairment
basis is not appropriate and overriding factors apply, a discounted cash
flow, net asset valuation, realisation proceeds or, a weighted average
of these 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.
A key judgement made in applying the above accounting policy relates to
investments that are permanently impaired. 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 loss 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.
The methods of fair value measurement are classified into hierarchy based
on the reliability of the information used to determine the valuation.
- Level 1 - Fair value is measured based on quoted prices in an active
market.
- Level 2 - Fair value is measured based on directly observable current
market prices or indirectly being derived from market prices.
- Level 3 - Fair value is measured using valuation techniques using inputs
that are not based on observable market data.
Traded Unquoted Unquoted Unquoted Total
on AIM ordinary Preference Loan stock
shares shares
Level
1 Level 3 Level 3 Level 3
GBP GBP GBP GBP GBP
Valuation at 1 October
2019 1,578,695 25,772,163 19,247 22,854,622 50,224,727
Purchases at cost - 4,151,125 - - 4,151,125
Sales - proceeds (Note a) - (4,860,994) - (3,504,452) (8,365,446)
Net realised gains - 2,037,191 - 494,495 2,531,686
Net unrealised
gains/(losses)
on investments 16,486 (5,598,457) 2,473 (5,153,846) (10,733,344)
------------
Valuation at 31 March
2020 1,595,181 21,501,028 21,720 14,690,819 37,808,748
Book cost at 31 March
2020 1,333,907 28,082,929 24,138 20,159,374 49,600,348
Unrealised gains/(losses)
at 31 March 2020 761,274 (2,220,000) (2,418) (5,353,841) (6,814,985)
Permanent impairment of
valuation
of investments (500,000) (4,361,901) - (114,714) (4,976,615)
------------
Valuation at 31 March
2020 1,595,181 21,501,028 21,720 14,690,819 37,808,748
Gains/(losses) on
investments
Realised gains based on
historical
cost - 2,987,446 - 278,338 3,265,784
Less amounts recognised
as
unrealised
(gains)/losses in
previous
years - (950,255) - 216,157 (734,098)
------------
Net realised gains based
on carrying
value at 30 September
2019 - 2,037,191 - 494,495 2,531,686
Net movement in
unrealised
gains/
(losses) in the period 16,486 (5,598,457) 2,473 (5,153,846) (10,733,344)
------------
Net investment portfolio
gains/(losses)
for the period ended 31
March
2020 16,486 (3,561,266) 2,473 (4,659,351) (8,201,658)
------------
Notes
a): The sale proceeds shown above of GBP8,365,446 is GBP19,358 more
than that shown on the Statement of Cash Flows of GBP8,346,088 due
to further proceeds receivable in respect of Redline. This amount
is recognised as a debtor at 31 March 2020.
There has been no significant change in the risk analysis as disclosed
in Note 18 of the Financial Statements in the Company's Annual Report.
The decrease in unrealised valuations of the loan stock investments
above reflect the changes in the entitlement to loan premiums, and/or
in the underlying enterprise value of the investee company. The decrease
does not arise from assessments of credit or market risk upon these
instruments.
10. Current asset investments and Cash at bank
as at as at as at
31 March 2019 30 September
31 March 2020 2019
(unaudited) (unaudited) (audited)
GBP GBP GBP
OEIC Money market funds 36,327,967 24,722,114 26,812,418
Cash equivalents per Statement
of Cash Flows 36,327,967 24,722,114 26,812,418
Bank deposits that mature after
three months 3,151,769 3,151,769 3,151,769
Current asset investments 39,479,736 27,873,883 29,964,187
Cash at bank 1,406,450 1,659,682 1,498,030
11. Net asset value per share
as at as at as at
31 March 2020 31 March 2019 30 September
2019
(unaudited) (unaudited) (audited)
Net assets GBP78,775,672 GBP81,438,038 GBP81,728,079
Number of shares in issue 115,068,452 104,363,865 103,302,857
Net asset value per share -
basic and diluted 68.46p 78.03p 79.12p
12. Post balance sheet events
On 30 April 2020, proceeds of GBP644,835 were received in respect of a
partial realisation of Omega Diagnostics plc.
On 5 May 2020, a further GBP625,400 was invested into Rotageek and a further
GBP975,770 was invested on 26 May 2020 into MyTutor, both existing portfolio
companies.
On 19 May 2020, the Company received GBP90,375 as a loan repayment from
BookingTek Limited.
13. Statutory Information
The financial information for the six months ended 31 March 2020 and the
six months ended 31 March 2019 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 2019 have been
filed with the Registrar of Companies. The auditor has reported on these
Financial Statements and that report was unqualified and did not contain
a statement under either section 498(2) or 498(3) of the Companies Act
2006.
14. Half-Year Report
Copies of this statement are being sent to all 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.incomeandgrowthvct.co.uk,
under the heading Key Shareholder Information on the left-hand side.
Contact details for further enquiries:
Mobeus Equity Partners LLP (the Company Secretary) on 020 7024 7600 or
by e-mail to vcts@mobeus.co.uk.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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