The Inc & Grwth VCT - Half-year Report
25/05/2022 10:00
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RNS Number : 7577M Income & Growth VCT (The) PLC 25 May 2022
THE INCOME & GROWTH VCT PLC
LEI: 213800FPC15FNM74YD92
UNAUDITED HALF-YEAR RESULTS FOR THE SIX MONTHS TO 31 MARCH 2022
The Income & Growth VCT plc ("the Company") today announces its Half-Year
results for the six months to 31 March 2022.
You may, in due course, view the Half-Year Report, comprising the Unaudited
Condensed Financial Statements of the Company by visiting
www.incomeandgrowthvct.co.uk.
Financial Highlights
As at 31 March 2022:
Net assets: £127.65 million
Net asset value ("NAV") per share: 98.79 pence
Results for the six months to 31 March 2022:
· Net asset value ("NAV") total return¹ per share was 2.3%.
· Share price total return(1) per share was 1.6%.
· The Board has declared an interim dividend in respect of the current
year of 4.00 pence per share to be paid to Shareholders on 8 July 2022.
· The Company made one new investment of £0.81 million and three
follow-on investments totalling £2.44 million.
· Proceeds of £6.24 million were received from realisations,
generating net realised gains of £1.21 million.
(1) Alternative Performance Measure ("APM"). See Glossary of Terms in the
Half-Year Report.
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.
Reporting date Net NAV per Share Share Cumulative dividends paid Cumulative total return per share to shareholders(2) Dividends
assets
Price(1) per share per share paid and proposed in respect of each year
(NAV (Share price basis)
basis)
As at (£m) (p) (p) (p) (p) (p) (p)
31 March 2022 127.65 98.79 90.50 140.50 239.29 231.00 4.00(3)
30 September 2021 119.09 100.45 93.00 136.50 236.95 229.50 9.00
30 September 2020 83.13 70.06 59.50 131.50 201.56 191.00 14.00
30 September 2019 81.73 79.12 75.50⁴ 113.00 192.12 188.50 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
( )
(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) An interim dividend of 4.00 pence per share, referred to in the
Financial Highlights above, is payable to Shareholders on 8 July 2022.
(4) The share price at 30 September 2019 has been adjusted to add back the
dividend of 4.50 pence per share paid on 18 October 2019, as the listed share
price was quoted ex this dividend at this year-end.
( )
Detailed performance data, including a table of dividends paid to date for all
share classes and fundraising rounds, is shown in the Performance Data
appendix in the Half-Year Report. The tables, which give information by
allotment date on NAVs and dividends paid per share, are also available on the
Company's website at www.incomeandgrowthvct.co.uk where they can be accessed
by clicking on "table" under "Reviewing the performance of your investment" on
the home page.
( )
( )
Chairman's Statement
I present the Company's Half-Year Report for the six months to 31 March 2022.
Overview
At the time of the publication of the Company's Annual Report in December
2021, I was able to report on the Company's robust performance over what was a
time of material market volatility. The first six months of the Company's
financial year has largely seen a continuation of this environment, with the
portfolio generating a 2.3% NAV total return for the period against a backdrop
of ongoing global uncertainty.
Although the period was marked by many challenges, the portfolio proved to be
resilient and adaptive in facing them. The threat from global supply issues in
logistics, materials and labour resulting from COVID-19 disruption is expected
to remain for some months, and the unfolding geopolitical events and
instability relating to Russia's brutal aggression in Ukraine has compounded
uncertainties. A more challenging environment is expected in the near future.
Inevitably, this has combined with expectation of an increased risk free
return on capital and, arguably, a more realistic assessment of risk in public
market valuations, especially for growth and technology stories and generated
an overarching negative market sentiment. This has translated into material
falls in AIM market valuations and sector PE multiples which impacted overall
portfolio value towards the latter stages of the period. However, for the most
part, your Company's largely service and software-based portfolio has
continued to trade well.
M&A activity has also remained buoyant and the Investment Adviser
continues to see a healthy deal flow. The Company completed its first combined
new investment across all the Gresham House VCTs in February, deploying £0.81
million into Proximity Insight. Over the six-month period, the Company
deployed a total of £3.25 million of investment capital and generated
£6.24 million in realisation proceeds from investment activity. In that
time, it added one new investment to its portfolio, realised one investment
and provided follow-on funding into three existing portfolio companies.
On 20 January 2022, the Company launched an Offer for Subscription alongside
the three other Mobeus VCTs ("Offers") and the Board was very pleased to see
that unprecedented demand meant that the target of £10 million was reached in
less than 24 hours, at which point no further applications were accepted. It
was gratifying that approximately half of the applications received were from
existing Shareholders in the Company. The subsequent allotment of shares has
now bolstered the Company's capital to deploy in new and exciting investment
opportunities. Further details of this are set out later in my statement.
Performance
The Company's NAV total return per share was 2.3% for the six months to
31 March 2022 (2021: 35.2%), and the share price total return was 1.6% (2021:
31.9%). The difference between the NAV total return and share price total
return figures above arises principally due to the timing of NAV announcements
which are usually made retrospectively. This Half-Year performance represents
a modest return for Shareholders during the period when many markets have seen
declines. Your Board therefore remains satisfied with the way in which the
portfolio companies have been able to deal with the challenges faced over the
period.
The Company's resilient performance was bolstered primarily by a combination
of unrealised gains in the value of investments still held such as Preservica,
MBI and MRG, as well as the notable exit of Red Paddle, generating a realised
gain in the period of £1.20 million which contributed to a multiple on
original cost over the life of that investment of 5.4x.
Investment portfolio
In spite of market headwinds, the portfolio has demonstrated healthy
performance in the first six months of the Company's financial year. The
overall value increased by £4.20 million (2021: £29.66 million), or 4.8%
(2021: 58.3%) on a like-for-like basis, compared to the opening portfolio
value at 1 October 2021 of £88.15 million. This increase comprised a net
unrealised uplift in portfolio valuations of £2.99 million and £1.21 million
in net realised gains, over the period.
At the period-end, the portfolio was valued at £89.36 million after taking
account of investments purchased and sold in the period, together with the net
realised and unrealised gains referred to above. The portfolio may present
opportunities for further investment in the future.
Strong trading in portfolio companies improved investment values for companies
such as MBI (£1.33 million), MRG (£1.13 million), EOTH (£0.96 million) and
Bella & Duke (£0.65 million) as well as a significant funding round and
positive re-rating of Preservica (£5.86 million) were the primary drivers of
unrealised gains for Shareholders during the period. The negative market
sentiment meant that the impacts of dips in the trading performance of
AIM-listed stocks were magnified and represent some of the portfolio's most
significant valuation falls over the period, in Virgin Wines (£4.61 million)
and Parsley Box (£0.72 million). MyTutor (£2.49 million), was similarly
impacted by reduced PE sector multiples.
During the six months under review, the Company invested £0.81 million into
one new investment:
Proximity Insight £0.81 million
Retail software
In addition, three follow-on investments totalling £2.44 million were made
into:
Preservica £1.71 million
Digital archiving software
ActiveNav £0.43 million
File analysis software
Caledonian Leisure £0.30 million
UK leisure and experience breaks provider
We expect follow-on investments to continue to be a feature of the growth
capital investments as they seek to achieve scale. Since the period-end, the
Company has made one follow-on investment of £0.19 million into Northern Bloc
and one new investment of £0.64 million into Bidnamic, a marketing technology
business.
Details of this investment activity and the performance of the portfolio are
contained in the Investment Adviser's Review and the Investment Portfolio
Summary below.
Revenue account
The results for the period are set out in the Unaudited Condensed Income
Statement and show a revenue return (after tax) of 0.51 pence per share (2021:
0.70 pence per share). The revenue return for the period of £0.61 million
represents a decrease from last year's comparable figure of £0.83 million.
This is due to lower dividend receipts, combined with higher other expenses
and Investment Adviser fees, the latter resulting from the growth in net
assets.
Dividends
The Board intends to continue to provide an attractive dividend stream to
Shareholders and is pleased to declare an Interim dividend of 4.00 pence per
share for the year ending 30 September 2022.
This dividend will be paid on 8 July 2022, to Shareholders on the Register on
6 June 2022, and will bring cumulative dividends paid per share to 144.50
pence per share.
Shareholders wishing to amend their participation in the Dividend Investment
Scheme in time for their preference to come into effect for this dividend
payment must submit their instruction to the Scheme Administrator, Link Group,
by no later than 23 June 2022. For further details, please see the Company's
website at www. incomeandgrowthvct.co.uk, under the "Dividends" heading.
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
ten financial years. The Board continues to monitor the sustainability of its
dividend target.
Offer for Subscription and Dividend Investment Scheme
On 20 January 2022, the Company took part in a Joint Offer for Subscription
("Offer") alongside the other Mobeus VCTs. Following unprecedented demand, the
Offer became fully subscribed in record time, with an allotment of 10,191,964
shares taking place on 9 March 2022 raising net funds of £9.67 million for
the Company. Shareholders should have now received their share certificates.
If you applied for shares, but have not received your share certificate,
please contact Link Group, details as shown within the Half-Year Report.
Due to the rapid, and unforeseen, response to the Offer, the Board
acknowledges that not all of our existing Shareholders were able to subscribe
for shares and were disappointed by this outcome. For any future fundraising,
the Board will consider lessons learned and seek to apply them where practical
but we would encourage all Shareholders to register for, and respond to,
communications digitally to improve their access and opportunity.
The Company's Dividend Investment Scheme ("DIS") provides Shareholders with
the opportunity to reinvest their cash dividends into new shares in the
Company at the latest published NAV per share (adjusted for any subsequent
dividends). New VCT shares attract the same tax reliefs as shares purchased
through an Offer for Subscription.
There were 901,031 shares allotted through the DIS during the period at a
price of 95.45 pence. Since its reinstatement in 2020, 6,357,651 Ordinary
shares have been allotted to participants.
Shareholders can opt-in to the DIS by completing a mandate form available on
the Company's website at: www.incomeandgrowthvct.co.uk or can opt-out by
contacting Link Group, using the details provided in the Half Year Report.
Please note that instructions take 15 days to become effective.
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 2022 amounted to £38.62 million. This
figure has been boosted by the funds raised under the Offer and includes
£34.05 million held in money market funds with AAA credit ratings and
£4.57 million held in deposit accounts with several well-known financial
institutions across a range of maturities.
Share buybacks
During the six months ended 31 March 2022, the Company bought back and
cancelled 430,175 of its own shares, representing 0.4% (2021: 0.4%) of the
shares in issue at the beginning of the period, at a total cost of £0.40
million (2021: £0.32 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. Under this policy, 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 Event & Communications
May I remind you that the Company has its own website which is available at:
www.incomeandgrowthvct.co.uk (http://www.incomeandgrowthvct.co.uk) . The
Investment Adviser last held a Shareholder Event on behalf of the Mobeus VCTs
in February 2022, a recording of which can be found on the Company's website
at the web address above. The event was well received and the Investment
Adviser plans to hold another shareholder event in 2023. Further details will
be circulated to Shareholders and shown on the Company's website in due
course.
Fraud Warning
Shareholders continue to be contacted in connection with sophisticated but
fraudulent financial scams which purport to come from the Company or to be
authorised by it. This is often by a phone call or an email usually
originating from outside of the UK, claiming or appearing to be from a
corporate finance firm offering to buy your shares at an inflated price.
Further information and fraud advice plus details of who to contact, can be
found in the Information for Shareholders section in the Half-Year Report.
Environmental, Social and Governance ("ESG")
Following the novation of the investment advisory agreement to Gresham House,
who have a dedicated team which is focused on sustainability, the Board views
this as an opportunity to enhance the Company's existing protocols and
procedures through the adoption of the highest industry standards. Under the
new enlarged investment team, each investment executive is responsible for
their own individual ESG objectives in support of the wider overarching ESG
goals of the Investment Adviser. For further details, Gresham House published
its second Sustainable Investment Report in April 2022, which can be found on
its website at: www.greshamhouse.com.
Board Constitution
Helen Sinclair resigned as a Director of the Company following the Annual
General Meeting held on 23 February 2022. The Board is extremely grateful for
Helen's invaluable time, experience and commitment to her role during her
tenure. The Board has since been constituted of two directors who will
continue to consider the composition and succession of the Board particularly
in light of the new UKLA listing rules on diversity and inclusion.
Outlook
There is no doubt that the six months under review has been a challenging
environment for businesses in general, but the majority of the portfolio has
continued to trade well and deliver value growth. The Board is pleased to
report that the Company has achieved a positive net return for the period but
remains cautious in the face of a range of macroeconomic risks.
Whilst the residual threat of further lockdowns from new variants of the virus
appears to have lessened to some extent as we progress through 2022, we
anticipate that the indirect effects of the COVID-19 pandemic and Brexit will
continue to impact the UK economy and bring an element of uncertainty for some
time to come, most notably in the form of supply chain and inflationary
pressures. More recently, Russia's flagrant breach of the rules-based
international order has of course resulted, inter alia, in global economic
financial disruption and trade dislocation, including accelerated inflation.
Nonetheless, your Board considers that your Company is well positioned to
adapt as necessary.
In closing, the Board was very pleased to have witnessed such a positive
response to the launch of the Company's Offer for subscription in January and
would like to thank all Shareholders for their interest in applying for the
Company's shares. The Board has been satisfied with the Company's ability to
maintain a high rate of investment in quality opportunities over the period.
It believes that the additional fundraising will provide the necessary capital
to continue to create value growth for Shareholders in what has, to date,
proven to be a successful investment strategy. The portfolio has performed
well and appears robust.
I would like to take this opportunity once again to thank all Shareholders for
your continued support and to extend a warm welcome to new Shareholders.
Maurice Helfgott
Chairman
25 May 2022
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 requirements of prevailing 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 the Company 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 so in exceptional
circumstances.
Investment ADVISER'S Review
Portfolio review
The first six months of the Company's financial year have been marked by
volatile markets and uncertainty resulting from global events such as the War
in Ukraine as well as inflationary pressures. We are starting to see that
these factors are now beginning to have a noticeable impact on consumer
confidence but underlying trading to date has largely remained healthy.
Widespread volatility of global markets and negative sentiment have hampered
the ability of businesses to sustain the exceptional performance of the
previous financial year. However, a continuation of steady underlying
trading by the majority of investee companies has ensured that the portfolio
has nonetheless been able to record value growth of 4.8% over the six-month
period, with combined net unrealised and realised gains of £4.20 million.
The Company received unprecedented demand for its Offer for Subscription in
January 2022, raising the full £10 million capacity of the Offer in less than
24 hours. This supports the Company's continued momentum in deploying
capital, having completed its first combined investment across all the Gresham
House VCTs during the period, investing £0.81 million into retail software
platform Proximity Insight in February. In addition to this, strong trading
activity levels have created investment opportunities for the Company as
portfolio companies sought to enhance their positions by building capability
in light of demand. The Company therefore delivered follow-on investments into
three portfolio companies during the period, Preservica (£1.71 million),
ActiveNav (£0.43 million) and Caledonian Leisure (£0.30 million). Further
investments totalling £0.83 were made after the period-end (details below).
The Company continues to generate healthy returns from the realisation of
investments, completing the disposal of Red Paddle in November, generating net
proceeds of £5.52 million in the period and contributing to a multiple of
original cost of 5.4x and an IRR of 33.2%. As has been noted in previous
reports, the traditional investments, as well as the growth investments, are
continuing to make good progress. In challenging periods such as these for
global markets, the diverse portfolio has demonstrated its robustness and
resilience. The Investment Adviser remains confident that the portfolio is
well positioned as it enters the second half-year.
The portfolio movements in the period are summarised as follows:
2022 2021
£m £m
Opening portfolio value 88.15 50.86
New and follow-on investments 3.25 4.42
Disposal proceeds (6.24) (10.22)
Net realised gains 1.21 3.59
Unrealised valuation movements 2.99 26.07
Portfolio value at 31 March 89.36 74.72
Valuation changes of portfolio investments still held
The portfolio generated net unrealised gains of £2.99 million in the first
half of its financial year. A substantial portion of the valuation increases
were generated within the growth portfolio, many of which operate with
direct-to-consumer business models that have been able to capitalise on the
continuing trend of remote working and online shopping for goods and
services. Gresham House believes that much of this will prove to be
permanent. The more traditional assets that form part of the older portfolio
have begun to trade well again either by re-engineering their business or
benefiting as COVID-19 restrictions have receded.
The total valuation increases were £11.98 million. The main valuation
increases were in:
● Preservica - £5.86 million
● Media Business Insight - £1.33 million
● Master Removers Group - £1.13 million
Preservica has benefitted from a significant re-rating as part of a further
funding round and increased scale. Media Business Insight has continued to
reap the rewards of the success of its diversification to online income
streams and a more flexible cost base, whilst Master Removers Group has been
effective in taking advantage of strong property markets and a structural
shift in demand for storage and logistics.
The total valuation decreases were £(8.99) million. The main valuation
decreases were:
· Virgin Wines - £4.61 million
· MyTutor - £2.49 million
· Parsley Box - £0.72 million
Virgin Wines and Parsley Box have been impacted by negative market sentiment
compounded by more challenging customer recruitment over the period, whilst
MyTutor's valuation has been affected by a combination of smaller factors such
as downgraded sector PE multiples and a reduction in surplus cash used for
valuation purposes.
The portfolio's valuation changes in the period are summarised as follows:
Investment Portfolio Capital Movement 2021 2020
£m £m
Increase in the value of unrealised investments 11.98 26.68
Decrease in the value of unrealised investments (8.99) (0.61)
Net increasein the value of unrealised investments 2.99 26.07
Realised gains 1.21 3.67
Realised losses - (0.08)
Net realised gains in the period 1.21 3.59
Net investment portfolio movement in the period 4.20 29.66
New investments during the period
The Company made one new investment of £0.81 million during the period, as
detailed below:
Company Business Date of Investment Amount of new investment (£m)
Proximity Insight Retail Software February 2022 0.81
Proximity Insight (proximityinsight.com) is a retail technology business that
offers a 'Super-App' that is used by the customer-facing teams of brands and
retailers to engage, inspire and transact with customers. Headquartered in
London with offices in New York and Sydney, Proximity Insight has a global
client base that includes over 20 brands, boutiques and department stores in
fashion, beauty, jewellery, electronics and homewares. These clients use
Proximity Insight's platform to blur the lines between physical and digital
retail, enhancing the customer experience and improving the lifetime value of
their customers by upwards of 35%. The business grew annual recurring revenue
by 117% to £2.2 million in 2021, and the investment will support Proximity
Insight's continued product development and international growth. The
investment was made across all six VCTs advised and managed by Gresham House,
including the two Baronsmead VCTs.
Further investments during the period
The Company made three further investments into existing portfolio companies
in the period, totalling £2.44 million, as detailed below:
Company Business Date of Investment Amount of further investment (£m)
Preservica Seller of proprietary digital archiving software
October/ 1.71
November 2021
Preservica is a SaaS software business with blue chip customers and strong
recurring revenues. It has developed market leading software for the long-term
preservation of digital records, ensuring that digital content can remain
accessible, irrespective of future changes in technology. This latest
investment is to provide additional growth capital to finance the further
development of the business. The business has seen annual recurring revenues
nearly double over the last two financial years.
ActiveNav File analysis Software December 2021 0.43
Data Discovery Solutions (trading as ActiveNav) (activenav.com) is a file
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 outdated documents. ActiveNav'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. This further funding is to market its nascent SaaS-based
Hubble platform.
Caledonian Leisure
UK Leisure and experience breaks January/ February 2022 0.30
Caledonian Leisure works with accommodation providers, coach businesses and
other experienced providers (such as entertainment destinations and theme
parks) to deliver to its customers UK-based leisure and experience breaks. It
comprises two brands, Caledonian Travel (caledoniantravel.com) and UK
Breakaways (ukbreakaways.com). The domestic leisure and experience travel
market has been devastated by the COVID-19 pandemic, but the company is
well-placed to expand as lockdown and travel restrictions are eased. This
investment, as part of a series of planned investment tranches, will help the
company prepare for and capitalise on what is expected to be strong demand for
UK staycation holidays.
Realisations during the period
The Company realised its investment in Red Paddle during the period, as
detailed below:
Company Business Period of investment Total cash proceeds over the life of the investment / Multiple over cost
Red Paddle Design and manufacturer of stand up paddleboards July 2015 to £6.50 million
November 2021 5.4x cost
The Company sold its investment in Vian Marketing Limited (trading as Red
Paddle) to the Myers Family Office for £5.52 million (realised gain in the
period: £1.20 million). This investment generated proceeds over the life of
the investment of £6.50 million compared to original cost of £1.21 million,
which is a multiple of cost of 5.4x and an IRR of 33.2%.
Loan repayments and other proceeds in the period
The Company received loan repayments totalling £0.70 million from Media
Business Insight during the period as well as receiving additional nominal
proceeds from Bourn Bioscience and Vectair, both of which were investments
realised in a previous year.
Investment portfolio yield
In the period under review, the Company received the following amounts in loan
interest and dividend income:
Investment Portfolio Yield 2022 2021
£m £m
Interest received in the period 0.84 0.72
Dividends received in the period 0.40 0.59
Total portfolio income in the period(1) 1.24 1.31
Portfolio Value at 31 March 89.36 74.72
Portfolio Income Yield (Income as a % of Portfolio value at 31 March) 1.4% 1.8%
(1) Total portfolio income in the period is generated solely from investee
companies within the portfolio
New investments made after the period-end
The Company made one new investment of £0.64 million after the period-end, as
detailed below:
Company Business Date of Investment Amount of further investment (£m)
Bidnamic May 2022 0.64
Marketing technology business
Bidnamic (www.bidnamic.com) is a marketing technology business that offers a
SaaS platform for online retailers to optimise their search engine marketing
("SEM") spend. The technology was all developed internally, and uses bespoke
machine learning algorithms to automate the management and optimisation of
online retailers' Google shopping spend. The ARR of the business has grown
substantially over the last two years and this is projected to continue. The
investment round will be used to further enhance the product's capabilities,
and drive continued ARR growth through expanding the sales & marketing
team and building a presence in North America.
Further investments made after the period-end
The Company made one further investment into an existing portfolio company of
£0.19 million after the period end, as detailed below:
Company Business Date of Investment Amount of further investment (£m)
Northern Bloc Dairy and allergen-free ice cream producer April 2022 0.19
Northern Bloc Ice Cream (northern-bloc.com) is an established food brand in
the emerging and rapidly growing vegan market. By focusing on chef quality and
natural ingredients, Northern Bloc has carved out an early mover position in
the vegan ice cream sector. The company's focus on plant-based alternatives
has strong environmental credentials as well as it being the first ice cream
brand to move wholly into sustainable packaging. Following the initial
investment in December 2020, Northern Bloc has grown rapidly and strengthened
its prospects. COVID disruption has impacted its plan but this further
investment provides additional working capital and funds a new production
facility to increase its resilience, flexibility and margins in the future.
Environmental, Social, Governance considerations
Following the novation of the advisory agreement to Gresham House on 30
September 2021, a market leader that is well-resourced with knowledge and
expertise in sustainability, the Investment Adviser aims to establish ESG
procedures and protocols of the highest standards as set out and informed by
Gresham House plc. The first tangible example of movement towards this revised
approach is that that the individual members of the investment team now have
their own individual ESG objectives set which align with the wider ESG goals
of the Investment Adviser.
Gresham House published its second Sustainable Investment Report in April 2022
that, along with existing asset specific policies, including the Public Equity
Policy, can be found on its website www.greshamhouse.com. These reports and
policies cover the Investment Adviser's sustainable investment commitments,
how the investment processes meet these commitments and the application of the
sustainable investment framework. The Gresham House Board and General
Management Committee assess the adherence to the commitments in the
Sustainable Investment Policies on an annual basis.
In a changing world, the Investment Adviser believes that this approach will
contribute towards the enhancement of Shareholder value going forward.
Outlook
Whilst the period under review has been marked with volatility and uncertainty
as a result of a number of factors affecting both the global and UK economy,
the portfolio has continued to trade well. Even so, negative market sentiment
has impacted valuations, particularly those of the AIM-listed stocks. Global
supply issues and inflationary pressures are starting to cause a noticeable
impact on consumer confidence. Although there are challenging times ahead,
nevertheless the Company has achieved a positive return for the period and
with new investment remaining buoyant. The Investment adviser therefore
remains cautiously optimistic that the portfolio will continue to provide
healthy returns for shareholders.
Gresham House Asset Management Limited
Investment Adviser
25 May 2022
INVESTMENT PORTFOLIO SUMMARY as at 31 March 2022
Total cost at Valuation at Additional Valuation at
31 March 2022 30 September 2021 investments 31 March 2022
(unaudited) (audited) in the period (unaudited)
£ £ £ £
Preservica Limited 4,675,163 8,986,207 1,714,264 16,558,035
Seller of proprietary digital archiving software
Virgin Wines UK Plc (AIM quoted) 65,288 12,830,864 - 8,224,913
Online wine retailer
MPB Group Limited 1,510,992 7,466,511 - 7,629,204
Online marketplace for used photographic and video equipment
EOTH Limited (trading as Equip Outdoor Technologies) 1,383,313 5,427,729 - 6,388,397
Branded outdoor equipment and clothing (Rab and Lowe Alpine)
My Tutorweb Limited (trading as MyTutor) 3,361,778 8,640,371 - 6,146,278
Digital marketplace connecting school pupils seeking one-to-one online
tutoring
Media Business Insight Holdings Limited 2,966,160 4,199,330 - 4,829,658
Apublishing and events business focused on the creative production industries
End Ordinary Group Limited (trading as Buster and Punch) 2,046,612 4,470,852 - 4,516,899
Industrial inspired lighting and interiors retailer
Master Removers Group 2019 Limited (trading as Anthony Ward Thomas, 464,658 2,847,390 - 3,974,741
Bishopsgate and Aussie Man & Van)
Aspecialist logistics, storage and removals business
Bella & Duke Limited 1,323,745 3,165,212 - 3,813,948
Apremium frozen raw dog food provider
Data Discovery Solutions Limited (trading as ActiveNav) 1,975,681 3,087,000 432,181 3,254,109
Provides the global market leading file analysis software for information
governance, security and compliance
Manufacturing Services Investment Limited (trading as Wetsuit Outlet) 3,205,182 3,202,735 - 3,202,421
Online retailer in the water sports market
I-Dox plc (AIM quoted) 453,881 2,916,088 - 2,608,460
Developer and supplier of knowledge management products
Arkk Consulting Limited (trading as Arkk Solutions) 2,182,187 2,264,597 - 2,324,614
Provider of services and software to enable organisations to remain compliant
with regulatory reporting requirements
Tharstern Group Limited 1,454,278 1,668,487 - 2,194,651
Software based management Information systems
Connect Childcare Group Limited 1,157,214 1,390,148 - 1,333,867
Nursery management software provider
Vivacity Labs Limited 1,250,760 1,250,760 - 1,250,760
Provider of artificial intelligence & urban traffic control systems
Caledonian Leisure Limited 748,749 449,251 299,498 1,088,103
Provider of UK leisure and experience breaks
Rota Geek Limited 1,250,800 962,085 - 1,085,432
Workforce management software
Spanish Restaurant Group Limited (trading as Tapas Revolution) 1,630,233 979,122 - 988,943
Spanish restaurant chain
Bleach London Holdings Limited 874,302 1,335,917 - 960,952
Hair colourants brand
IPV Limited 954,674 954,674 - 954,674
Provider of media asset software
Legatics Holdings Limited 909,330 909,330 - 909,330
SaaS LegalTech software provider
Northern Bloc Ice Cream Limited 473,100 506,869 - 872,583
Supplier of premium vegan ice cream
Pets' Kitchen Limited (trading as Vet's Klinic) 844,200 844,200 - 844,200
Veterinary clinics
Proximity Insight Holdings Limited 807,000 - 807,000 807,000
Super-App used by customer-facing teams of brands and retailers to engage,
inspire and transact with customers
Aquasium Technology Limited 166,667 478,072 - 617,538
Manufacturing and marketing of bespoke electron beam welding and vacuum
furnace equipment
Muller EV Limited (trading as Andersen EV) 554,750 317,000 - 554,750
Provider of premium electric vehicle (EV) chargers
CGI Creative Graphics International Limited 1,943,948 587,292 - 509,847
Vinyl graphics to global automotive, recreation vehicle and aerospace markets
RDL Corporation Limited 1,441,667 322,033 - 367,941
Recruitment consultants within the pharmaceutical, business intelligence and
IT industries
Parsley Box Group Plc (AIM quoted) 874,001 1,084,367 - 361,456
Supplier of home delivered, ambient ready meals targeting the over 60s
Kudos Innovations Limited 472,500 200,340 - 112,575
Online platform that provides and promotes academic research dissemination
Jablite Holdings Limited (in members' voluntary liquidation) 498,790 65,779 - 65,779
Manufacturer of expanded polystyrene products
Corero Network Security plc (AIM quoted) 600,000 10,314 - 11,002
Provider of e-business technologies
Oxonica Limited 2,524,527 - - -
International nanomaterials group
Veritek Global Holdings Limited 2,289,859 - - -
Maintenance of imaging equipment
BookingTek Limited 779,155 - - -
Software for hotel groups
Racoon International Group Limited 655,851 - - -
Supplier of hair extensions, hair care products and training
Oakheath Limited (in members' voluntary liquidation) 649,528 - - -
Online platform that connects people seeking home care from experienced
independent carers
NexxtDrive Limited/Nexxt E-drive Limited 487,014 - - -
Developer and exploiter of mechanical transmission technologies
Biomer Technology Limited 137,170 - - -
Developer of biomaterials for medical devices
Disposals in period
Vian Marketing Limited (trading as Red Paddle Co) - 4,324,963 - -
Design, manufacture and sale of stand-up paddleboards and windsurfing sails
Total 52,044,707 88,145,889 3,252,943 89,363,060
Total Investment Portfolio split by type
Growth focused portfolio¹ £36,359,607 £65,067,630 £3,252,943 £69,933,271
MBO focused portfolio¹ £15,685,100 £23,078,259 - £19,429,789
Total £52,044,707 £88,145,889 £3,252,943 £89,363,060
¹ The growth focused portfolio contains all investments made after the change
in the VCT regulations in 2015 plus some investments that are growth in nature
made before this date. The MBO focused portfolio contains investments made
prior to 2015 as part of the previous MBO strategy.
Statement of the Directors' Responsibilities
Responsibility statements
In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Maurice
Helfgott (Chairman) and Justin Ward
(Chairman of the Audit, Investment and Nomination & Remuneration
Committees), 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 under the following heading,
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 2021 ("the Annual Report"). The occurrence of the COVID-19 pandemic
and the war in Ukraine have 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, political and other external risks;
· Financial and operating; and
· Market liquidity;
A detailed explanation of the principal risks facing the Company can be found
in the Annual Report as well as in Note 16 on Financial Instruments in that
report. 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 earlier in the Half
Year management report which comprises the Chairman's Statement, Investment
Policy, Investment Adviser's 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 are well
funded and the portfolio taken as a whole remains resilient and well
diversified, although the continuing impact of COVID-19, Brexit, and Russia's
invasion of Ukraine, may impose further considerable demands upon the
liquidity and trading prospects of some of these companies in the near-term.
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 Notes 16 and 17 of the Annual Report and
Financial Statements. Accordingly, the Directors continue to adopt the going
concern basis of accounting in preparing the Interim report and financial
statements.
Cautionary statement
This report may contain forward looking statements with regard 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:
Maurice Helfgott
Chairman
25 May 2022
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Unaudited Condensed Income Statement for the six months to 31 March 2022
Six months ended 31 March 2022 (unaudited) Six months ended 31 March 2021 (unaudited)
Notes Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Net investment portfolio gains 9 - 4,197,868 4,197,868 - 29,661,261 29,661,261
Income 4 1,266,322 - 1,266,322 1,328,132 - 1,328,132
Investment Adviser's fees 5 (325,312) (975,934) (1,301,246) (223,439) (670,315) (893,754)
Investment Adviser's performance fees 5 - (704,303) (704,303) - (742,900) (742,900)
Other expenses (280,973) - (280,973) (218,943) - (218,943)
Profit on ordinary activities before taxation 660,037 2,517,631 3,177,668 885,750 28,248,046 29,133,796
Tax on profiton ordinary activities 6 (49,366) 49,366 - (56,538) 56,538 -
Profit for the period and total comprehensive income 610,671 2,566,997 3,177,668 829,212 28,304,584 29,133,796
Basic and diluted earnings per share 7 0.51p 2.13p 2.64p 0.70p 23.90p 24.60p
Year ended 30 September 2021 (audited)
Notes Revenue Capital Total
£ £ £
Net investment portfolio gains - 43,637,384 43,637,384
Income 4 1,953,493 - 1,953,493
Investment Adviser's fees 5 (548,812) (1,646,435) (2,195,247)
Investment Adviser's performance fees 5 - (1,095,268) (1,095,268)
Other expenses (444,069) - (444,069)
Profit on ordinary activities before taxation 960,612 40,895,681 41,856,293
Tax on profit on ordinary activities 6 (50,487) 50,487 -
Profitfor the period and total comprehensive income 910,125 40,946,168 41,856,293
Basic and diluted earnings per share 7 0.77p 34.57p 35.34p
The revenue column of the Income Statement includes all income and expenses.
The capital column accounts for the net investment portfolio gains (unrealised
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 April 2021, 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 below form part of these
Half-Year Financial Statements.
Unaudited Condensed Balance Sheet as at 31 March 2022
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Notes £ £ £
Fixed assets
Investments at fair value 9 89,363,060 74,720,423 88,145,889
Current assets
Debtors and prepayments 622,615 3,917,073 2,459,633
Current asset investments 10 37,198,475 32,954,426 27,194,727
Cash at bank 10 1,424,968 1,378,815 2,653,455
39,246,058 38,250,314 32,307,815
Creditors: amounts falling due within one year (955,691) (1,022,895) (1,367,430)
Net current assets 38,290,367 37,227,419 30,940,385
Net assets 127,653,427 111,947,842 119,086,274
Capital and reserves
Called up share capital 1,292,177 1,182,005 1,185,549
Capital redemption reserve 40,984 28,439 36,682
Share premium reserve 23,827,036 12,283,303 13,328,900
Revaluation reserve 42,700,452 31,570,937 43,197,940
Special distributable reserve 46,405,339 52,950,812 50,884,712
Realised capital reserve 10,836,154 10,890,667 8,511,877
Revenue reserve 2,551,285 3,041,679 1,940,614
Equity Shareholders' funds 127,653,427 111,947,842 119,086,274
Basic and diluted net asset value:
Basic and diluted net asset value per share 11 98.79p 94.71p 100.45p
The financial information for the six months ended 31 March 2022 and the six
months ended 31 March 2021 has not been audited.
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
Unaudited Condensed Statement of Changes in Equity
for the six months to 31 March 2022
Non-distributable reserves Distributable reserves
Called up Capital Share Special Realised
share redemption premium Revaluation distributable capital Revenue
capital reserve reserve reserve reserve reserve reserve Total
(Note a) (Note b) (Note b)
£ £ £ £ £ £ £ £
At 1 October 2021 1,185,549 36,682 13,328,900 43,197,940 50,884,712 8,511,877 1,940,614 119,086,274
Comprehensive income for the period
Profit/(loss) for the period - - - 2,989,587 - (422,590) 610,671 3,177,668
Total comprehensive income for the period - - - 2,989,587 - (422,590) 610,671 3,177,668
Contributions by and distributions to owners
Shares issued via Offer for Subscription (Note c) 101,920 - 9,898,080 - - - - 10,000,000
Issue costs (Note c) - - (250,968) (81,278) (332,246)
Dividends re-invested into new shares 9,010 - 851,024 - - - - 860,034
Shares bought back (Note d) (4,302) 4,302 - - (396,145) - - (396,145)
Dividends paid - - - - (2,371,079) (2,371,079) - (4,742,158)
Total contributions by and distributions to owners 106,628 4,302 10,498,136 - (2,848,502) (2,371,079) - 5,389,485
Other movements
Realised losses transferred to special reserve (Note a) - - - - (1,630,871) 1,630,871 - -
Realisation of previously unrealised appreciation - - - (3,487,075) - 3,487,075 - -
Total other movements - - - (3,487,075) (1,630,871) 5,117,946 - -
At 31 March 2022 1,292,177 40,984 23,827,036 42,700,452 46,405,339 10,836,154 2,551,285 127,653,427
Note a): The Company's special reserve is available to fund buybacks of shares
as and when it is considered by the Board to be in the interests of
Shareholders, and to absorb any existing and future realised losses and for
other corporate purposes. At 31 March 2022, the Company has a special reserve
of £46,405,339, all of which arises from shares issued more than three years
after the end of the financial year in which they were issued. 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 total transfer of £1,630,871 from the realised capital
reserve to the special distributable reserve above is the total of realised
losses incurred by the Company in the period.
Note b): The realised capital reserve and the revenue reserve together
comprise the Profit and Loss Account of the Company.
Note c): Under the Company's Offer for subscription launched on 20 January
2022, 10,191,964 Ordinary Shares were allotted on 9 March 2022, raising net
funds of £9,667,754 for the Company. This figure is net of issue costs of
£250,968 and facilitation fees of £81,278.
Note d): During the period, the Company repurchased 430,175 of its own shares
at the prevailing market price for a total cost (including stamp duty) of
£396,145, which were subsequently cancelled. The difference between the
figure shown above of £396,145 and that per the Condensed Statement of Cash
Flows of £437,809 is £41,664 which was a creditor at the previous year end.
Unaudited Condensed Statement of Changes in Equity
for the six months to 31 March 2021
Non-distributable reserves Distributable reserves
Called up Capital Share Special Realised
share redemption premium Revaluation distributable capital Revenue
capital reserve reserve reserve reserve reserve reserve Total
£ £ £ £ £ £ £ £
At 1 October 2020 1,186,617 23,827 12,283,303 6,862,342 54,626,873 5,938,001 2,212,467 83,133,430
Comprehensive income for the period
(Loss)/profit for the period - - - 26,073,426 - 2,231,158 829,212 29,133,796
Total comprehensive income for the period - - - 26,073,426 - 2,231,158 829,212 29,133,796
Contributions by and distributions to owners
Shares bought back (4,612) 4,612 - - (319,384) - - (319,384)
Total contributions by and distributions to owners (4,612) 4,612 - - (319,384) - - (319,384)
Other movements
Realised losses transferred to special reserve - - - - (1,356,677) 1,356,677 - -
Realisation of previously unrealised appreciation - - - (1,364,831) - 1,364,831 - -
Total other movements - - - (1,364,831) (1,356,677) 2,721,508 - -
At 31 March 2021 1,182,005 28,439 12,283,303 31,570,937 52,950,812 10,890,667 3,041,679 111,947,842
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
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 (as recorded in Note 9), 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 fee
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 and disposal of investments;
- 75% of the Investment Adviser fee expense and 100% of any performance 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, as well as 25% of the Investment
Adviser fee together with the related tax effect, as well as income dividends
paid that are classified as revenue in nature.
Unaudited Condensed Statement of Cash Flows
for the six months ended 31 March 2022
Six months ended Six months ended Year ended
31 March 2022 31 March 2021 30 September 2021
Notes (unaudited) (unaudited) (audited)
£ £ £
Cash flows from operating activities
Profit for the financial period 3,177,668 29,133,796 41,856,293
Adjustments for:
Net investment portfolio gains (4,197,868) (29,661,261) (43,637,384)
(Increase)/decrease in debtors (218,732) (12,233) 183,844
(Decrease)/Increase in creditors and accruals (370,075) 799,205 1,104,812
Net cash (outflow)/inflow from operating activities (1,609,007) 259,507 (492,435)
Cash flows from investing activities
Purchase of investments 9 (3,442,183) (4,417,515) (8,087,743)
Disposal of investments 9 8,478,630 6,715,869 12,195,381
Net cash inflow from investing activities 5,036,447 2,298,354 4,107,638
Cash flows from financing activities
Shares issued as part of Offer for subscription 10,000,000 - -
Issue costs as part of Offer for subscription (332,246) - -
Equity dividends paid 8 (3,882,124) - (4,852,504)
Purchase of own shares (437,809) (413,435) (1,103,332)
Net cash inflow/(outflow) from financing activities 5,347,821 (413,435) (5,955,836)
Net increase/(decrease) in cash and cash equivalents 8,775,261 2,144,426 (2,340,633)
Cash and cash equivalents at start of period 26,696,413 29,037,046 29,037,046
Cash and cash equivalents at end of period 35,471,674 31,181,472 26,696,413
Cash and cash equivalents comprise:
Cash at bank and in hand 10 1,424,968 1,378,815 2,653,455
Cash equivalents 10 34,046,706 29,802,657 24,042,958
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
Notes to the Unaudited Condensed Financial Statements
1. Company information
The Income and Growth VCT plc is a public limited company incorporated in
England, registration number 04069483. The registered office is 5 New Street
Square, London, EC4A 3TW.
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 April 2021) issued by the Association of Investment
Companies ("AIC").
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 ended Six months ended Year ended
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Total Total Total
£ £ £
Income
- Dividends 400,218 588,183 694,891
- Money market funds 15,113 2,569 4,103
- Loan stock interest 838,162 715,528 1,220,332
- Bank deposit interest 12,829 16,063 28,376
- Other income - 5,789 5,791
Total Income 1,328,132 1,953,493
1,266,322
5. Investment Adviser's fees and performance fees
Six months ended Six months ended Year ended
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Total Total Total
£ £ £
Allocated to revenue return: Investment Adviser's fees 325,312 223,439 548,812
Allocated to capital return: Investment Adviser's fees 975,934 670,315 1,646,435
Investment Adviser's performance fees 704,303 742,900 1,095,268
Total 2,005,549 1,636,654
3,290,515
Investment Adviser's fee 1,301,246 893,754 2,195,247
Investment Adviser's performance fees 704,303 742,900 1,095,268
Total 2,005,549 1,636,654 3,290,515
On 30 September 2021, Mobeus sold its VCT and Investment management business
to Gresham House. As a result, the Company's Investment advisory arrangements
have been novated to Gresham House. The entire core management, investment and
operational teams involved with the Company all transferred to Gresham House
in connection with this transaction.
The Directors have charged 75% of the fees payable under the Investment
Adviser's agreement, and 100% of the amounts payable under the Incentive
Agreement, 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 revised incentive fee agreement was signed between the
Board, on behalf of the Company, and Mobeus, with effect from 1 October 2013,
to amend and replace the previous agreement. This agreement was novated to
Gresham House following its purchase of the Mobeus VCT fund and Investment
management business on 30 September 2021.
Any payment under the revised incentive agreement is 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) 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 agreement, any fee payments to Gresham 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. Any excess over the 2% remains payable to
Gresham House 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 2022, the Target Return is 190.62 pence per
share (being a 6% uplift on the Target Return at the previous year-end of
179.83 pence per share). As at 31 March 2022, the Cumulative Total NAV return
is 199.33 pence per share, so the Target Return for the 2022 financial year
has currently been met and a fee of £704,303 has been accrued. This fee is
payable subject to the cumulative Target NAV return continuing to exceed the
Target Return at the year-end and the approval of the Company's Annual Report
by shareholders at the AGM.
6. Taxation
There is no tax charge for the period as the Company incurred tax allowable
expenses in excess of taxable income.
7. Basic and diluted earnings and return per share
Six months ended 31 March 2022 Six months ended 31 March 2021 Year
ended
30 September 2021
(unaudited) (unaudited) (audited)
Total Total Total
£ £ £
i) Total earnings after taxation: 3,177,668 29,133,796 41,856,293
Basic and diluted earnings per share (Note a) 2.64 p 24.60 p 35.34 p
ii) Revenue earnings from ordinary activities
after taxation 610,671 829,212 910,125
Basic and diluted revenue earnings per share (Note b) 0.51 p 0.70 p 0.77 p
Net investment portfolio gains/(losses) 4,197,868 29,661,261 43,637,384
Capitalised Investment Adviser fees and performance fees less taxation (1,630,871) (1,356,677) (2,691,216)
iii) Total capital earnings 2,566,997 28,304,584 40,946,168
Basic and diluted capital earnings per share (Note c) 2.13 p 23.90 p 34.57 p
iv) Weighted average number of shares
in issue in the period (Note d) 119,992,964 118,453,326 118,422,497
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
Six months ended Six months ended Year ended
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Dividend Type For the year ended 30 September Pence per share Date paid £ £ £
Interim Income 2021 1.00p 23 July 2021 - - 1,181,978
Interim Capital 2021 4.00p 23 July 2021 - - 4,727,910
Interim Capital* 2021 2.00p 7 January 2022 2,371,079 - -
Interim Capital 2021 2.00p 7 January 2022 2,371,079 - -
4,742,158 - 5,909,888
* - This dividend was paid out of the Company's Special distributable reserve.
For the period ended 31 March 2022, £4,742,158 disclosed above differs to
that shown in the Condensed Statement of Cash Flows of £3,882,124 due to
£860,034 of new shares allotted subject to listing under the Company's
Dividend Investment Scheme.
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 every subsequent quarterly
measurement date, are reconsidered for any 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 enterprise value of the investment may be
determined 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 (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, scale and liquidity).
or:-
b) where a company's underperformance against plan indicates a diminution in
the value of the investment, provision against the price of a new investment
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 figures are shown net of any
applicable transaction costs incurred by the Company.
All investments are initially recognised and subsequently measured at fair
value. Changes in fair value are recognised in the Income Statement.
Akey 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 the price of recent investment, 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 ordinary Unquoted preference Unquoted Total
on AIM shares shares loan stock
Level 1 Level 3 Level 3 Level 3
£ £ £ £ £
Valuation at 1 October 2021 16,841,633 57,782,482 1,400,192 12,121,582 88,145,889
Purchases at cost (Note a) - 746,639 1,583,423 922,881 3,252,943
Sales - proceeds (Note b) - (4,857,496) - (1,376,144) (6,233,640)
- net realised gains - 1,208,281 - - 1,208,281
Reclassification at valuation (Note c) - 425,790 - (425,790) -
Net unrealised (losses)/gains on investments in the period (5,635,802) 8,611,665 66,174 (52,450) 2,989,587
Valuation at 31 March 2022 11,205,831 63,917,361 3,049,789 11,190,079 89,363,060
Book cost at 31 March 2022 1,993,170 32,486,833 2,823,969 14,740,735 52,044,707
Unrealised gains/(losses) at 31 March 2022 9,712,661 36,225,139 226,121 (3,463,469) 42,700,452
Permanent impairment of cost of investments (500,000) (4,794,611) (301) (87,187) (5,382,099)
Valuation at 31 March 2022 11,205,831 63,917,361 3,049,789 11,190,079 89,363,060
(Losses)/gains on investments
Realised gains based on historical cost - 4,492,632 - 202,724 4,695,356
Less amounts recognised as unrealised gains in previous years - (3,284,351) - (202,724) (3,487,075)
Net realised gains based on carrying value at 30 September 2021 - 1,208,281 - - 1,208,281
Net movement in unrealised (losses)/gains in the period (5,635,802) 8,611,665 66,174 (52,450) 2,989,587
Net investment portfolio (losses)/gains for the period ended 31 March 2022 (5,635,802) 9,819,946 66,174 (52,450) 4,197,868
Notes:
a): Purchases of investments shown above of £3,252,943 is £189,240 less than
that shown on the Condensed Statement of Cash Flows due to a follow on
investment into Northern Bloc which completed after the period end.
b): The sale proceeds shown above of £6,233,640 is £2,244,990 less than that
shown on the Condensed Statement of Cash Flows of £8,478,630 due to proceeds
received from Proactive in the period. This amount was recognised as a debtor
at 30 September 2021.
c): The Company's loan investment in Northern Bloc Ice-Cream Limited was
converted into equity during the period.
Level 3 unquoted equity and loan investments are valued in accordance with
IPEV guidelines as follows:
As at As at As at
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Valuation methodology £ £ £
Multiple of earnings, revenues or gross margin, as appropriate 76,729,700 52,346,068 69,628,026
Recent investment price 807,000 1,445,435 1,293,451
Recent investment price (reviewed for impairment) 554,750 - 317,000
Estimated realisation proceeds 65,779 65,779 65,779
Net asset value - 341,550 -
78,157,229 54,198,832 71,304,256
10. Current asset investments and Cash at bank
As at As at As at
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
£ £ £
OEIC Money market funds 34,046,706 29,802,657 24,042,958
Cash equivalents per Statement of Cash Flows 34,046,706 29,802,657 24,042,958
Bank deposits that mature after three months 3,151,769 3,151,769 3,151,769
Current asset investments 37,198,475 32,954,426 27,194,727
Cash at bank 1,424,968 1,378,815 2,653,455
11. Net asset value per share
As at As at As at
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Net assets £127,653,427 £111,947,842 £119,086,274
Number of shares in issue 129,217,701 118,200,511 118,554,881
Net asset value per share - basic and diluted 98.79p 94.71p 100.45p
12. Post balance sheet events
On 6 April 2022, a further investment of £0.19 million was made into Northern
Bloc Ice Cream Limited, an existing portfolio company.
On 5 May 2022, a new investment of £0.64 million was made into Bidnamic
Limited.
On 23 May 2022, a further investment of £0.40 million was made into Muller EV
Limited (trading as Andersen EV), an existing portfolio company.
13. Statutory Information
The financial information for the six months ended 31 March 2022 and the six
months ended 31 March 2021 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 2021 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, 5 New
Street Square, London, EC4A 3TW, or can be downloaded via the Company's
website at www.incomeandgrowthvct.co.uk.
Traded Unquoted ordinary Unquoted preference Unquoted Total
on AIM shares shares loan stock
Level 1 Level 3 Level 3 Level 3
£ £ £ £ £
Valuation at 1 October 2021 16,841,633 57,782,482 1,400,192 12,121,582 88,145,889
Purchases at cost (Note a) - 746,639 1,583,423 922,881 3,252,943
Sales - proceeds (Note b) - (4,857,496) - (1,376,144) (6,233,640)
- net realised gains - 1,208,281 - - 1,208,281
Reclassification at valuation (Note c) - 425,790 - (425,790) -
Net unrealised (losses)/gains on investments in the period (5,635,802) 8,611,665 66,174 (52,450) 2,989,587
Valuation at 31 March 2022 11,205,831 63,917,361 3,049,789 11,190,079 89,363,060
Book cost at 31 March 2022 1,993,170 32,486,833 2,823,969 14,740,735 52,044,707
Unrealised gains/(losses) at 31 March 2022 9,712,661 36,225,139 226,121 (3,463,469) 42,700,452
Permanent impairment of cost of investments (500,000) (4,794,611) (301) (87,187) (5,382,099)
Valuation at 31 March 2022 11,205,831 63,917,361 3,049,789 11,190,079 89,363,060
(Losses)/gains on investments
Realised gains based on historical cost - 4,492,632 - 202,724 4,695,356
Less amounts recognised as unrealised gains in previous years - (3,284,351) - (202,724) (3,487,075)
Net realised gains based on carrying value at 30 September 2021 - 1,208,281 - - 1,208,281
Net movement in unrealised (losses)/gains in the period (5,635,802) 8,611,665 66,174 (52,450) 2,989,587
Net investment portfolio (losses)/gains for the period ended 31 March 2022 (5,635,802) 9,819,946 66,174 (52,450) 4,197,868
Notes:
a): Purchases of investments shown above of £3,252,943 is £189,240 less than
that shown on the Condensed Statement of Cash Flows due to a follow on
investment into Northern Bloc which completed after the period end.
b): The sale proceeds shown above of £6,233,640 is £2,244,990 less than that
shown on the Condensed Statement of Cash Flows of £8,478,630 due to proceeds
received from Proactive in the period. This amount was recognised as a debtor
at 30 September 2021.
c): The Company's loan investment in Northern Bloc Ice-Cream Limited was
converted into equity during the period.
Level 3 unquoted equity and loan investments are valued in accordance with
IPEV guidelines as follows:
As at As at As at
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Valuation methodology £ £ £
Multiple of earnings, revenues or gross margin, as appropriate 76,729,700 52,346,068 69,628,026
Recent investment price 807,000 1,445,435 1,293,451
Recent investment price (reviewed for impairment) 554,750 - 317,000
Estimated realisation proceeds 65,779 65,779 65,779
Net asset value - 341,550 -
78,157,229 54,198,832 71,304,256
10.
Current asset investments and Cash at bank
As at
As at
As at
31 March 2022
31 March 2021
30 September 2021
(unaudited)
(unaudited)
(audited)
£
£
£
OEIC Money market funds
34,046,706
29,802,657
24,042,958
Cash equivalents per Statement of Cash Flows
34,046,706
29,802,657
24,042,958
Bank deposits that mature after three months
3,151,769
3,151,769
3,151,769
Current asset investments
37,198,475
32,954,426
27,194,727
Cash at bank
1,424,968
1,378,815
2,653,455
11.
Net asset value per share
As at As at As at
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Net assets £127,653,427 £111,947,842 £119,086,274
Number of shares in issue 129,217,701 118,200,511 118,554,881
Net asset value per share - basic and diluted 98.79p 94.71p 100.45p
12.
Post balance sheet events
On 6 April 2022, a further investment of £0.19 million was made into Northern
Bloc Ice Cream Limited, an existing portfolio company.
On 5 May 2022, a new investment of £0.64 million was made into Bidnamic
Limited.
On 23 May 2022, a further investment of £0.40 million was made into Muller EV
Limited (trading as Andersen EV), an existing portfolio company.
13.
Statutory Information
The financial information for the six months ended 31 March 2022 and the six
months ended 31 March 2021 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 2021 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, 5 New
Street Square, London, EC4A 3TW, or can be downloaded via the Company's
website at www.incomeandgrowthvct.co.uk.
( )
(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) An interim dividend of 4.00 pence per share, referred to in the
Financial Highlights above, is payable to Shareholders on 8 July 2022.
(4) The share price at 30 September 2019 has been adjusted to add back the
dividend of 4.50 pence per share paid on 18 October 2019, as the listed share
price was quoted ex this dividend at this year-end.
( )
Detailed performance data, including a table of dividends paid to date for all
share classes and fundraising rounds, is shown in the Performance Data
appendix in the Half-Year Report. The tables, which give information by
allotment date on NAVs and dividends paid per share, are also available on the
Company's website at www.incomeandgrowthvct.co.uk where they can be accessed
by clicking on "table" under "Reviewing the performance of your investment" on
the home page.
( )
( )
Chairman's Statement
I present the Company's Half-Year Report for the six months to 31 March 2022.
Overview
At the time of the publication of the Company's Annual Report in December
2021, I was able to report on the Company's robust performance over what was a
time of material market volatility. The first six months of the Company's
financial year has largely seen a continuation of this environment, with the
portfolio generating a 2.3% NAV total return for the period against a backdrop
of ongoing global uncertainty.
Although the period was marked by many challenges, the portfolio proved to be
resilient and adaptive in facing them. The threat from global supply issues in
logistics, materials and labour resulting from COVID-19 disruption is expected
to remain for some months, and the unfolding geopolitical events and
instability relating to Russia's brutal aggression in Ukraine has compounded
uncertainties. A more challenging environment is expected in the near future.
Inevitably, this has combined with expectation of an increased risk free
return on capital and, arguably, a more realistic assessment of risk in public
market valuations, especially for growth and technology stories and generated
an overarching negative market sentiment. This has translated into material
falls in AIM market valuations and sector PE multiples which impacted overall
portfolio value towards the latter stages of the period. However, for the most
part, your Company's largely service and software-based portfolio has
continued to trade well.
M&A activity has also remained buoyant and the Investment Adviser
continues to see a healthy deal flow. The Company completed its first combined
new investment across all the Gresham House VCTs in February, deploying £0.81
million into Proximity Insight. Over the six-month period, the Company
deployed a total of £3.25 million of investment capital and generated
£6.24 million in realisation proceeds from investment activity. In that
time, it added one new investment to its portfolio, realised one investment
and provided follow-on funding into three existing portfolio companies.
On 20 January 2022, the Company launched an Offer for Subscription alongside
the three other Mobeus VCTs ("Offers") and the Board was very pleased to see
that unprecedented demand meant that the target of £10 million was reached in
less than 24 hours, at which point no further applications were accepted. It
was gratifying that approximately half of the applications received were from
existing Shareholders in the Company. The subsequent allotment of shares has
now bolstered the Company's capital to deploy in new and exciting investment
opportunities. Further details of this are set out later in my statement.
Performance
The Company's NAV total return per share was 2.3% for the six months to
31 March 2022 (2021: 35.2%), and the share price total return was 1.6% (2021:
31.9%). The difference between the NAV total return and share price total
return figures above arises principally due to the timing of NAV announcements
which are usually made retrospectively. This Half-Year performance represents
a modest return for Shareholders during the period when many markets have seen
declines. Your Board therefore remains satisfied with the way in which the
portfolio companies have been able to deal with the challenges faced over the
period.
The Company's resilient performance was bolstered primarily by a combination
of unrealised gains in the value of investments still held such as Preservica,
MBI and MRG, as well as the notable exit of Red Paddle, generating a realised
gain in the period of £1.20 million which contributed to a multiple on
original cost over the life of that investment of 5.4x.
Investment portfolio
In spite of market headwinds, the portfolio has demonstrated healthy
performance in the first six months of the Company's financial year. The
overall value increased by £4.20 million (2021: £29.66 million), or 4.8%
(2021: 58.3%) on a like-for-like basis, compared to the opening portfolio
value at 1 October 2021 of £88.15 million. This increase comprised a net
unrealised uplift in portfolio valuations of £2.99 million and £1.21 million
in net realised gains, over the period.
At the period-end, the portfolio was valued at £89.36 million after taking
account of investments purchased and sold in the period, together with the net
realised and unrealised gains referred to above. The portfolio may present
opportunities for further investment in the future.
Strong trading in portfolio companies improved investment values for companies
such as MBI (£1.33 million), MRG (£1.13 million), EOTH (£0.96 million) and
Bella & Duke (£0.65 million) as well as a significant funding round and
positive re-rating of Preservica (£5.86 million) were the primary drivers of
unrealised gains for Shareholders during the period. The negative market
sentiment meant that the impacts of dips in the trading performance of
AIM-listed stocks were magnified and represent some of the portfolio's most
significant valuation falls over the period, in Virgin Wines (£4.61 million)
and Parsley Box (£0.72 million). MyTutor (£2.49 million), was similarly
impacted by reduced PE sector multiples.
During the six months under review, the Company invested £0.81 million into
one new investment:
Proximity Insight £0.81 million
Retail software
In addition, three follow-on investments totalling £2.44 million were made
into:
Preservica £1.71 million
Digital archiving software
ActiveNav £0.43 million
File analysis software
Caledonian Leisure £0.30 million
UK leisure and experience breaks provider
We expect follow-on investments to continue to be a feature of the growth
capital investments as they seek to achieve scale. Since the period-end, the
Company has made one follow-on investment of £0.19 million into Northern Bloc
and one new investment of £0.64 million into Bidnamic, a marketing technology
business.
Details of this investment activity and the performance of the portfolio are
contained in the Investment Adviser's Review and the Investment Portfolio
Summary below.
Revenue account
The results for the period are set out in the Unaudited Condensed Income
Statement and show a revenue return (after tax) of 0.51 pence per share (2021:
0.70 pence per share). The revenue return for the period of £0.61 million
represents a decrease from last year's comparable figure of £0.83 million.
This is due to lower dividend receipts, combined with higher other expenses
and Investment Adviser fees, the latter resulting from the growth in net
assets.
Dividends
The Board intends to continue to provide an attractive dividend stream to
Shareholders and is pleased to declare an Interim dividend of 4.00 pence per
share for the year ending 30 September 2022.
This dividend will be paid on 8 July 2022, to Shareholders on the Register on
6 June 2022, and will bring cumulative dividends paid per share to 144.50
pence per share.
Shareholders wishing to amend their participation in the Dividend Investment
Scheme in time for their preference to come into effect for this dividend
payment must submit their instruction to the Scheme Administrator, Link Group,
by no later than 23 June 2022. For further details, please see the Company's
website at www. incomeandgrowthvct.co.uk, under the "Dividends" heading.
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
ten financial years. The Board continues to monitor the sustainability of its
dividend target.
Offer for Subscription and Dividend Investment Scheme
On 20 January 2022, the Company took part in a Joint Offer for Subscription
("Offer") alongside the other Mobeus VCTs. Following unprecedented demand, the
Offer became fully subscribed in record time, with an allotment of 10,191,964
shares taking place on 9 March 2022 raising net funds of £9.67 million for
the Company. Shareholders should have now received their share certificates.
If you applied for shares, but have not received your share certificate,
please contact Link Group, details as shown within the Half-Year Report.
Due to the rapid, and unforeseen, response to the Offer, the Board
acknowledges that not all of our existing Shareholders were able to subscribe
for shares and were disappointed by this outcome. For any future fundraising,
the Board will consider lessons learned and seek to apply them where practical
but we would encourage all Shareholders to register for, and respond to,
communications digitally to improve their access and opportunity.
The Company's Dividend Investment Scheme ("DIS") provides Shareholders with
the opportunity to reinvest their cash dividends into new shares in the
Company at the latest published NAV per share (adjusted for any subsequent
dividends). New VCT shares attract the same tax reliefs as shares purchased
through an Offer for Subscription.
There were 901,031 shares allotted through the DIS during the period at a
price of 95.45 pence. Since its reinstatement in 2020, 6,357,651 Ordinary
shares have been allotted to participants.
Shareholders can opt-in to the DIS by completing a mandate form available on
the Company's website at: www.incomeandgrowthvct.co.uk or can opt-out by
contacting Link Group, using the details provided in the Half Year Report.
Please note that instructions take 15 days to become effective.
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 2022 amounted to £38.62 million. This
figure has been boosted by the funds raised under the Offer and includes
£34.05 million held in money market funds with AAA credit ratings and
£4.57 million held in deposit accounts with several well-known financial
institutions across a range of maturities.
Share buybacks
During the six months ended 31 March 2022, the Company bought back and
cancelled 430,175 of its own shares, representing 0.4% (2021: 0.4%) of the
shares in issue at the beginning of the period, at a total cost of £0.40
million (2021: £0.32 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. Under this policy, 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 Event & Communications
May I remind you that the Company has its own website which is available at:
www.incomeandgrowthvct.co.uk (http://www.incomeandgrowthvct.co.uk) . The
Investment Adviser last held a Shareholder Event on behalf of the Mobeus VCTs
in February 2022, a recording of which can be found on the Company's website
at the web address above. The event was well received and the Investment
Adviser plans to hold another shareholder event in 2023. Further details will
be circulated to Shareholders and shown on the Company's website in due
course.
Fraud Warning
Shareholders continue to be contacted in connection with sophisticated but
fraudulent financial scams which purport to come from the Company or to be
authorised by it. This is often by a phone call or an email usually
originating from outside of the UK, claiming or appearing to be from a
corporate finance firm offering to buy your shares at an inflated price.
Further information and fraud advice plus details of who to contact, can be
found in the Information for Shareholders section in the Half-Year Report.
Environmental, Social and Governance ("ESG")
Following the novation of the investment advisory agreement to Gresham House,
who have a dedicated team which is focused on sustainability, the Board views
this as an opportunity to enhance the Company's existing protocols and
procedures through the adoption of the highest industry standards. Under the
new enlarged investment team, each investment executive is responsible for
their own individual ESG objectives in support of the wider overarching ESG
goals of the Investment Adviser. For further details, Gresham House published
its second Sustainable Investment Report in April 2022, which can be found on
its website at: www.greshamhouse.com.
Board Constitution
Helen Sinclair resigned as a Director of the Company following the Annual
General Meeting held on 23 February 2022. The Board is extremely grateful for
Helen's invaluable time, experience and commitment to her role during her
tenure. The Board has since been constituted of two directors who will
continue to consider the composition and succession of the Board particularly
in light of the new UKLA listing rules on diversity and inclusion.
Outlook
There is no doubt that the six months under review has been a challenging
environment for businesses in general, but the majority of the portfolio has
continued to trade well and deliver value growth. The Board is pleased to
report that the Company has achieved a positive net return for the period but
remains cautious in the face of a range of macroeconomic risks.
Whilst the residual threat of further lockdowns from new variants of the virus
appears to have lessened to some extent as we progress through 2022, we
anticipate that the indirect effects of the COVID-19 pandemic and Brexit will
continue to impact the UK economy and bring an element of uncertainty for some
time to come, most notably in the form of supply chain and inflationary
pressures. More recently, Russia's flagrant breach of the rules-based
international order has of course resulted, inter alia, in global economic
financial disruption and trade dislocation, including accelerated inflation.
Nonetheless, your Board considers that your Company is well positioned to
adapt as necessary.
In closing, the Board was very pleased to have witnessed such a positive
response to the launch of the Company's Offer for subscription in January and
would like to thank all Shareholders for their interest in applying for the
Company's shares. The Board has been satisfied with the Company's ability to
maintain a high rate of investment in quality opportunities over the period.
It believes that the additional fundraising will provide the necessary capital
to continue to create value growth for Shareholders in what has, to date,
proven to be a successful investment strategy. The portfolio has performed
well and appears robust.
I would like to take this opportunity once again to thank all Shareholders for
your continued support and to extend a warm welcome to new Shareholders.
Maurice Helfgott
Chairman
25 May 2022
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 requirements of prevailing 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 the Company 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 so in exceptional
circumstances.
Investment ADVISER'S Review
Portfolio review
The first six months of the Company's financial year have been marked by
volatile markets and uncertainty resulting from global events such as the War
in Ukraine as well as inflationary pressures. We are starting to see that
these factors are now beginning to have a noticeable impact on consumer
confidence but underlying trading to date has largely remained healthy.
Widespread volatility of global markets and negative sentiment have hampered
the ability of businesses to sustain the exceptional performance of the
previous financial year. However, a continuation of steady underlying
trading by the majority of investee companies has ensured that the portfolio
has nonetheless been able to record value growth of 4.8% over the six-month
period, with combined net unrealised and realised gains of £4.20 million.
The Company received unprecedented demand for its Offer for Subscription in
January 2022, raising the full £10 million capacity of the Offer in less than
24 hours. This supports the Company's continued momentum in deploying
capital, having completed its first combined investment across all the Gresham
House VCTs during the period, investing £0.81 million into retail software
platform Proximity Insight in February. In addition to this, strong trading
activity levels have created investment opportunities for the Company as
portfolio companies sought to enhance their positions by building capability
in light of demand. The Company therefore delivered follow-on investments into
three portfolio companies during the period, Preservica (£1.71 million),
ActiveNav (£0.43 million) and Caledonian Leisure (£0.30 million). Further
investments totalling £0.83 were made after the period-end (details below).
The Company continues to generate healthy returns from the realisation of
investments, completing the disposal of Red Paddle in November, generating net
proceeds of £5.52 million in the period and contributing to a multiple of
original cost of 5.4x and an IRR of 33.2%. As has been noted in previous
reports, the traditional investments, as well as the growth investments, are
continuing to make good progress. In challenging periods such as these for
global markets, the diverse portfolio has demonstrated its robustness and
resilience. The Investment Adviser remains confident that the portfolio is
well positioned as it enters the second half-year.
The portfolio movements in the period are summarised as follows:
2022 2021
£m £m
Opening portfolio value 88.15 50.86
New and follow-on investments 3.25 4.42
Disposal proceeds (6.24) (10.22)
Net realised gains 1.21 3.59
Unrealised valuation movements 2.99 26.07
Portfolio value at 31 March 89.36 74.72
Valuation changes of portfolio investments still held
The portfolio generated net unrealised gains of £2.99 million in the first
half of its financial year. A substantial portion of the valuation increases
were generated within the growth portfolio, many of which operate with
direct-to-consumer business models that have been able to capitalise on the
continuing trend of remote working and online shopping for goods and
services. Gresham House believes that much of this will prove to be
permanent. The more traditional assets that form part of the older portfolio
have begun to trade well again either by re-engineering their business or
benefiting as COVID-19 restrictions have receded.
The total valuation increases were £11.98 million. The main valuation
increases were in:
● Preservica - £5.86 million
● Media Business Insight - £1.33 million
● Master Removers Group - £1.13 million
Preservica has benefitted from a significant re-rating as part of a further
funding round and increased scale. Media Business Insight has continued to
reap the rewards of the success of its diversification to online income
streams and a more flexible cost base, whilst Master Removers Group has been
effective in taking advantage of strong property markets and a structural
shift in demand for storage and logistics.
The total valuation decreases were £(8.99) million. The main valuation
decreases were:
· Virgin Wines - £4.61 million
· MyTutor - £2.49 million
· Parsley Box - £0.72 million
Virgin Wines and Parsley Box have been impacted by negative market sentiment
compounded by more challenging customer recruitment over the period, whilst
MyTutor's valuation has been affected by a combination of smaller factors such
as downgraded sector PE multiples and a reduction in surplus cash used for
valuation purposes.
The portfolio's valuation changes in the period are summarised as follows:
Investment Portfolio Capital Movement 2021 2020
£m £m
Increase in the value of unrealised investments 11.98 26.68
Decrease in the value of unrealised investments (8.99) (0.61)
Net increasein the value of unrealised investments 2.99 26.07
Realised gains 1.21 3.67
Realised losses - (0.08)
Net realised gains in the period 1.21 3.59
Net investment portfolio movement in the period 4.20 29.66
New investments during the period
The Company made one new investment of £0.81 million during the period, as
detailed below:
Company Business Date of Investment Amount of new investment (£m)
Proximity Insight Retail Software February 2022 0.81
Proximity Insight (proximityinsight.com) is a retail technology business that
offers a 'Super-App' that is used by the customer-facing teams of brands and
retailers to engage, inspire and transact with customers. Headquartered in
London with offices in New York and Sydney, Proximity Insight has a global
client base that includes over 20 brands, boutiques and department stores in
fashion, beauty, jewellery, electronics and homewares. These clients use
Proximity Insight's platform to blur the lines between physical and digital
retail, enhancing the customer experience and improving the lifetime value of
their customers by upwards of 35%. The business grew annual recurring revenue
by 117% to £2.2 million in 2021, and the investment will support Proximity
Insight's continued product development and international growth. The
investment was made across all six VCTs advised and managed by Gresham House,
including the two Baronsmead VCTs.
Further investments during the period
The Company made three further investments into existing portfolio companies
in the period, totalling £2.44 million, as detailed below:
Company Business Date of Investment Amount of further investment (£m)
Preservica Seller of proprietary digital archiving software
October/ 1.71
November 2021
Preservica is a SaaS software business with blue chip customers and strong
recurring revenues. It has developed market leading software for the long-term
preservation of digital records, ensuring that digital content can remain
accessible, irrespective of future changes in technology. This latest
investment is to provide additional growth capital to finance the further
development of the business. The business has seen annual recurring revenues
nearly double over the last two financial years.
ActiveNav File analysis Software December 2021 0.43
Data Discovery Solutions (trading as ActiveNav) (activenav.com) is a file
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 outdated documents. ActiveNav'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. This further funding is to market its nascent SaaS-based
Hubble platform.
Caledonian Leisure
UK Leisure and experience breaks January/ February 2022 0.30
Caledonian Leisure works with accommodation providers, coach businesses and
other experienced providers (such as entertainment destinations and theme
parks) to deliver to its customers UK-based leisure and experience breaks. It
comprises two brands, Caledonian Travel (caledoniantravel.com) and UK
Breakaways (ukbreakaways.com). The domestic leisure and experience travel
market has been devastated by the COVID-19 pandemic, but the company is
well-placed to expand as lockdown and travel restrictions are eased. This
investment, as part of a series of planned investment tranches, will help the
company prepare for and capitalise on what is expected to be strong demand for
UK staycation holidays.
Realisations during the period
The Company realised its investment in Red Paddle during the period, as
detailed below:
Company Business Period of investment Total cash proceeds over the life of the investment / Multiple over cost
Red Paddle Design and manufacturer of stand up paddleboards July 2015 to £6.50 million
November 2021 5.4x cost
The Company sold its investment in Vian Marketing Limited (trading as Red
Paddle) to the Myers Family Office for £5.52 million (realised gain in the
period: £1.20 million). This investment generated proceeds over the life of
the investment of £6.50 million compared to original cost of £1.21 million,
which is a multiple of cost of 5.4x and an IRR of 33.2%.
Loan repayments and other proceeds in the period
The Company received loan repayments totalling £0.70 million from Media
Business Insight during the period as well as receiving additional nominal
proceeds from Bourn Bioscience and Vectair, both of which were investments
realised in a previous year.
Investment portfolio yield
In the period under review, the Company received the following amounts in loan
interest and dividend income:
Investment Portfolio Yield 2022 2021
£m £m
Interest received in the period 0.84 0.72
Dividends received in the period 0.40 0.59
Total portfolio income in the period(1) 1.24 1.31
Portfolio Value at 31 March 89.36 74.72
Portfolio Income Yield (Income as a % of Portfolio value at 31 March) 1.4% 1.8%
(1) Total portfolio income in the period is generated solely from investee
companies within the portfolio
New investments made after the period-end
The Company made one new investment of £0.64 million after the period-end, as
detailed below:
Company Business Date of Investment Amount of further investment (£m)
Bidnamic May 2022 0.64
Marketing technology business
Bidnamic (www.bidnamic.com) is a marketing technology business that offers a
SaaS platform for online retailers to optimise their search engine marketing
("SEM") spend. The technology was all developed internally, and uses bespoke
machine learning algorithms to automate the management and optimisation of
online retailers' Google shopping spend. The ARR of the business has grown
substantially over the last two years and this is projected to continue. The
investment round will be used to further enhance the product's capabilities,
and drive continued ARR growth through expanding the sales & marketing
team and building a presence in North America.
Further investments made after the period-end
The Company made one further investment into an existing portfolio company of
£0.19 million after the period end, as detailed below:
Company Business Date of Investment Amount of further investment (£m)
Northern Bloc Dairy and allergen-free ice cream producer April 2022 0.19
Northern Bloc Ice Cream (northern-bloc.com) is an established food brand in
the emerging and rapidly growing vegan market. By focusing on chef quality and
natural ingredients, Northern Bloc has carved out an early mover position in
the vegan ice cream sector. The company's focus on plant-based alternatives
has strong environmental credentials as well as it being the first ice cream
brand to move wholly into sustainable packaging. Following the initial
investment in December 2020, Northern Bloc has grown rapidly and strengthened
its prospects. COVID disruption has impacted its plan but this further
investment provides additional working capital and funds a new production
facility to increase its resilience, flexibility and margins in the future.
Environmental, Social, Governance considerations
Following the novation of the advisory agreement to Gresham House on 30
September 2021, a market leader that is well-resourced with knowledge and
expertise in sustainability, the Investment Adviser aims to establish ESG
procedures and protocols of the highest standards as set out and informed by
Gresham House plc. The first tangible example of movement towards this revised
approach is that that the individual members of the investment team now have
their own individual ESG objectives set which align with the wider ESG goals
of the Investment Adviser.
Gresham House published its second Sustainable Investment Report in April 2022
that, along with existing asset specific policies, including the Public Equity
Policy, can be found on its website www.greshamhouse.com. These reports and
policies cover the Investment Adviser's sustainable investment commitments,
how the investment processes meet these commitments and the application of the
sustainable investment framework. The Gresham House Board and General
Management Committee assess the adherence to the commitments in the
Sustainable Investment Policies on an annual basis.
In a changing world, the Investment Adviser believes that this approach will
contribute towards the enhancement of Shareholder value going forward.
Outlook
Whilst the period under review has been marked with volatility and uncertainty
as a result of a number of factors affecting both the global and UK economy,
the portfolio has continued to trade well. Even so, negative market sentiment
has impacted valuations, particularly those of the AIM-listed stocks. Global
supply issues and inflationary pressures are starting to cause a noticeable
impact on consumer confidence. Although there are challenging times ahead,
nevertheless the Company has achieved a positive return for the period and
with new investment remaining buoyant. The Investment adviser therefore
remains cautiously optimistic that the portfolio will continue to provide
healthy returns for shareholders.
Gresham House Asset Management Limited
Investment Adviser
25 May 2022
INVESTMENT PORTFOLIO SUMMARY as at 31 March 2022
Total cost at Valuation at Additional Valuation at
31 March 2022 30 September 2021 investments 31 March 2022
(unaudited) (audited) in the period (unaudited)
£ £ £ £
Preservica Limited 4,675,163 8,986,207 1,714,264 16,558,035
Seller of proprietary digital archiving software
Virgin Wines UK Plc (AIM quoted) 65,288 12,830,864 - 8,224,913
Online wine retailer
MPB Group Limited 1,510,992 7,466,511 - 7,629,204
Online marketplace for used photographic and video equipment
EOTH Limited (trading as Equip Outdoor Technologies) 1,383,313 5,427,729 - 6,388,397
Branded outdoor equipment and clothing (Rab and Lowe Alpine)
My Tutorweb Limited (trading as MyTutor) 3,361,778 8,640,371 - 6,146,278
Digital marketplace connecting school pupils seeking one-to-one online
tutoring
Media Business Insight Holdings Limited 2,966,160 4,199,330 - 4,829,658
A publishing and events business focused on the creative production industries
End Ordinary Group Limited (trading as Buster and Punch) 2,046,612 4,470,852 - 4,516,899
Industrial inspired lighting and interiors retailer
Master Removers Group 2019 Limited (trading as Anthony Ward Thomas, 464,658 2,847,390 - 3,974,741
Bishopsgate and Aussie Man & Van)
A specialist logistics, storage and removals business
Bella & Duke Limited 1,323,745 3,165,212 - 3,813,948
A premium frozen raw dog food provider
Data Discovery Solutions Limited (trading as ActiveNav) 1,975,681 3,087,000 432,181 3,254,109
Provides the global market leading file analysis software for information
governance, security and compliance
Manufacturing Services Investment Limited (trading as Wetsuit Outlet) 3,205,182 3,202,735 - 3,202,421
Online retailer in the water sports market
I-Dox plc (AIM quoted) 453,881 2,916,088 - 2,608,460
Developer and supplier of knowledge management products
Arkk Consulting Limited (trading as Arkk Solutions) 2,182,187 2,264,597 - 2,324,614
Provider of services and software to enable organisations to remain compliant
with regulatory reporting requirements
Tharstern Group Limited 1,454,278 1,668,487 - 2,194,651
Software based management Information systems
Connect Childcare Group Limited 1,157,214 1,390,148 - 1,333,867
Nursery management software provider
Vivacity Labs Limited 1,250,760 1,250,760 - 1,250,760
Provider of artificial intelligence & urban traffic control systems
Caledonian Leisure Limited 748,749 449,251 299,498 1,088,103
Provider of UK leisure and experience breaks
Rota Geek Limited 1,250,800 962,085 - 1,085,432
Workforce management software
Spanish Restaurant Group Limited (trading as Tapas Revolution) 1,630,233 979,122 - 988,943
Spanish restaurant chain
Bleach London Holdings Limited 874,302 1,335,917 - 960,952
Hair colourants brand
IPV Limited 954,674 954,674 - 954,674
Provider of media asset software
Legatics Holdings Limited 909,330 909,330 - 909,330
SaaS LegalTech software provider
Northern Bloc Ice Cream Limited 473,100 506,869 - 872,583
Supplier of premium vegan ice cream
Pets' Kitchen Limited (trading as Vet's Klinic) 844,200 844,200 - 844,200
Veterinary clinics
Proximity Insight Holdings Limited 807,000 - 807,000 807,000
Super-App used by customer-facing teams of brands and retailers to engage,
inspire and transact with customers
Aquasium Technology Limited 166,667 478,072 - 617,538
Manufacturing and marketing of bespoke electron beam welding and vacuum
furnace equipment
Muller EV Limited (trading as Andersen EV) 554,750 317,000 - 554,750
Provider of premium electric vehicle (EV) chargers
CGI Creative Graphics International Limited 1,943,948 587,292 - 509,847
Vinyl graphics to global automotive, recreation vehicle and aerospace markets
RDL Corporation Limited 1,441,667 322,033 - 367,941
Recruitment consultants within the pharmaceutical, business intelligence and
IT industries
Parsley Box Group Plc (AIM quoted) 874,001 1,084,367 - 361,456
Supplier of home delivered, ambient ready meals targeting the over 60s
Kudos Innovations Limited 472,500 200,340 - 112,575
Online platform that provides and promotes academic research dissemination
Jablite Holdings Limited (in members' voluntary liquidation) 498,790 65,779 - 65,779
Manufacturer of expanded polystyrene products
Corero Network Security plc (AIM quoted) 600,000 10,314 - 11,002
Provider of e-business technologies
Oxonica Limited 2,524,527 - - -
International nanomaterials group
Veritek Global Holdings Limited 2,289,859 - - -
Maintenance of imaging equipment
BookingTek Limited 779,155 - - -
Software for hotel groups
Racoon International Group Limited 655,851 - - -
Supplier of hair extensions, hair care products and training
Oakheath Limited (in members' voluntary liquidation) 649,528 - - -
Online platform that connects people seeking home care from experienced
independent carers
NexxtDrive Limited/Nexxt E-drive Limited 487,014 - - -
Developer and exploiter of mechanical transmission technologies
Biomer Technology Limited 137,170 - - -
Developer of biomaterials for medical devices
Disposals in period
Vian Marketing Limited (trading as Red Paddle Co) - 4,324,963 - -
Design, manufacture and sale of stand-up paddleboards and windsurfing sails
Total 52,044,707 88,145,889 3,252,943 89,363,060
Total Investment Portfolio split by type
Growth focused portfolio¹ £36,359,607 £65,067,630 £3,252,943 £69,933,271
MBO focused portfolio¹ £15,685,100 £23,078,259 - £19,429,789
Total £52,044,707 £88,145,889 £3,252,943 £89,363,060
¹ The growth focused portfolio contains all investments made after the change
in the VCT regulations in 2015 plus some investments that are growth in nature
made before this date. The MBO focused portfolio contains investments made
prior to 2015 as part of the previous MBO strategy.
Statement of the Directors' Responsibilities
Responsibility statements
In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Maurice
Helfgott (Chairman) and Justin Ward
(Chairman of the Audit, Investment and Nomination & Remuneration
Committees), 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 under the following heading,
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 2021 ("the Annual Report"). The occurrence of the COVID-19 pandemic
and the war in Ukraine have 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, political and other external risks;
· Financial and operating; and
· Market liquidity;
A detailed explanation of the principal risks facing the Company can be found
in the Annual Report as well as in Note 16 on Financial Instruments in that
report. 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 earlier in the Half
Year management report which comprises the Chairman's Statement, Investment
Policy, Investment Adviser's 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 are well
funded and the portfolio taken as a whole remains resilient and well
diversified, although the continuing impact of COVID-19, Brexit, and Russia's
invasion of Ukraine, may impose further considerable demands upon the
liquidity and trading prospects of some of these companies in the near-term.
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 Notes 16 and 17 of the Annual Report and
Financial Statements. Accordingly, the Directors continue to adopt the going
concern basis of accounting in preparing the Interim report and financial
statements.
Cautionary statement
This report may contain forward looking statements with regard 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:
Maurice Helfgott
Chairman
25 May 2022
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Unaudited Condensed Income Statement for the six months to 31 March 2022
Six months ended 31 March 2022 (unaudited) Six months ended 31 March 2021 (unaudited)
Notes Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Net investment portfolio gains 9 - 4,197,868 4,197,868 - 29,661,261 29,661,261
Income 4 1,266,322 - 1,266,322 1,328,132 - 1,328,132
Investment Adviser's fees 5 (325,312) (975,934) (1,301,246) (223,439) (670,315) (893,754)
Investment Adviser's performance fees 5 - (704,303) (704,303) - (742,900) (742,900)
Other expenses (280,973) - (280,973) (218,943) - (218,943)
Profit on ordinary activities before taxation 660,037 2,517,631 3,177,668 885,750 28,248,046 29,133,796
Tax on profiton ordinary activities 6 (49,366) 49,366 - (56,538) 56,538 -
Profit for the period and total comprehensive income 610,671 2,566,997 3,177,668 829,212 28,304,584 29,133,796
Basic and diluted earnings per share 7 0.51p 2.13p 2.64p 0.70p 23.90p 24.60p
Year ended 30 September 2021 (audited)
Notes Revenue Capital Total
£ £ £
Net investment portfolio gains - 43,637,384 43,637,384
Income 4 1,953,493 - 1,953,493
Investment Adviser's fees 5 (548,812) (1,646,435) (2,195,247)
Investment Adviser's performance fees 5 - (1,095,268) (1,095,268)
Other expenses (444,069) - (444,069)
Profit on ordinary activities before taxation 960,612 40,895,681 41,856,293
Tax on profit on ordinary activities 6 (50,487) 50,487 -
Profitfor the period and total comprehensive income 910,125 40,946,168 41,856,293
Basic and diluted earnings per share 7 0.77p 34.57p 35.34p
The revenue column of the Income Statement includes all income and expenses.
The capital column accounts for the net investment portfolio gains (unrealised
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 April 2021, 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 below form part of these
Half-Year Financial Statements.
Unaudited Condensed Balance Sheet as at 31 March 2022
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Notes £ £ £
Fixed assets
Investments at fair value 9 89,363,060 74,720,423 88,145,889
Current assets
Debtors and prepayments 622,615 3,917,073 2,459,633
Current asset investments 10 37,198,475 32,954,426 27,194,727
Cash at bank 10 1,424,968 1,378,815 2,653,455
39,246,058 38,250,314 32,307,815
Creditors: amounts falling due within one year (955,691) (1,022,895) (1,367,430)
Net current assets 38,290,367 37,227,419 30,940,385
Net assets 127,653,427 111,947,842 119,086,274
Capital and reserves
Called up share capital 1,292,177 1,182,005 1,185,549
Capital redemption reserve 40,984 28,439 36,682
Share premium reserve 23,827,036 12,283,303 13,328,900
Revaluation reserve 42,700,452 31,570,937 43,197,940
Special distributable reserve 46,405,339 52,950,812 50,884,712
Realised capital reserve 10,836,154 10,890,667 8,511,877
Revenue reserve 2,551,285 3,041,679 1,940,614
Equity Shareholders' funds 127,653,427 111,947,842 119,086,274
Basic and diluted net asset value:
Basic and diluted net asset value per share 11 98.79p 94.71p 100.45p
The financial information for the six months ended 31 March 2022 and the six
months ended 31 March 2021 has not been audited.
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
Unaudited Condensed Statement of Changes in Equity
for the six months to 31 March 2022
Non-distributable reserves Distributable reserves
Called up Capital Share Special Realised
share redemption premium Revaluation distributable capital Revenue
capital reserve reserve reserve reserve reserve reserve Total
(Note a) (Note b) (Note b)
£ £ £ £ £ £ £ £
At 1 October 2021 1,185,549 36,682 13,328,900 43,197,940 50,884,712 8,511,877 1,940,614 119,086,274
Comprehensive income for the period
Profit/(loss) for the period - - - 2,989,587 - (422,590) 610,671 3,177,668
Total comprehensive income for the period - - - 2,989,587 - (422,590) 610,671 3,177,668
Contributions by and distributions to owners
Shares issued via Offer for Subscription (Note c) 101,920 - 9,898,080 - - - - 10,000,000
Issue costs (Note c) - - (250,968) (81,278) (332,246)
Dividends re-invested into new shares 9,010 - 851,024 - - - - 860,034
Shares bought back (Note d) (4,302) 4,302 - - (396,145) - - (396,145)
Dividends paid - - - - (2,371,079) (2,371,079) - (4,742,158)
Total contributions by and distributions to owners 106,628 4,302 10,498,136 - (2,848,502) (2,371,079) - 5,389,485
Other movements
Realised losses transferred to special reserve (Note a) - - - - (1,630,871) 1,630,871 - -
Realisation of previously unrealised appreciation - - - (3,487,075) - 3,487,075 - -
Total other movements - - - (3,487,075) (1,630,871) 5,117,946 - -
At 31 March 2022 1,292,177 40,984 23,827,036 42,700,452 46,405,339 10,836,154 2,551,285 127,653,427
Note a): The Company's special reserve is available to fund buybacks of shares
as and when it is considered by the Board to be in the interests of
Shareholders, and to absorb any existing and future realised losses and for
other corporate purposes. At 31 March 2022, the Company has a special reserve
of £46,405,339, all of which arises from shares issued more than three years
after the end of the financial year in which they were issued. 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 total transfer of £1,630,871 from the realised capital
reserve to the special distributable reserve above is the total of realised
losses incurred by the Company in the period.
Note b): The realised capital reserve and the revenue reserve together
comprise the Profit and Loss Account of the Company.
Note c): Under the Company's Offer for subscription launched on 20 January
2022, 10,191,964 Ordinary Shares were allotted on 9 March 2022, raising net
funds of £9,667,754 for the Company. This figure is net of issue costs of
£250,968 and facilitation fees of £81,278.
Note d): During the period, the Company repurchased 430,175 of its own shares
at the prevailing market price for a total cost (including stamp duty) of
£396,145, which were subsequently cancelled. The difference between the
figure shown above of £396,145 and that per the Condensed Statement of Cash
Flows of £437,809 is £41,664 which was a creditor at the previous year end.
Unaudited Condensed Statement of Changes in Equity
for the six months to 31 March 2021
Non-distributable reserves Distributable reserves
Called up Capital Share Special Realised
share redemption premium Revaluation distributable capital Revenue
capital reserve reserve reserve reserve reserve reserve Total
£ £ £ £ £ £ £ £
At 1 October 2020 1,186,617 23,827 12,283,303 6,862,342 54,626,873 5,938,001 2,212,467 83,133,430
Comprehensive income for the period
(Loss)/profit for the period - - - 26,073,426 - 2,231,158 829,212 29,133,796
Total comprehensive income for the period - - - 26,073,426 - 2,231,158 829,212 29,133,796
Contributions by and distributions to owners
Shares bought back (4,612) 4,612 - - (319,384) - - (319,384)
Total contributions by and distributions to owners (4,612) 4,612 - - (319,384) - - (319,384)
Other movements
Realised losses transferred to special reserve - - - - (1,356,677) 1,356,677 - -
Realisation of previously unrealised appreciation - - - (1,364,831) - 1,364,831 - -
Total other movements - - - (1,364,831) (1,356,677) 2,721,508 - -
At 31 March 2021 1,182,005 28,439 12,283,303 31,570,937 52,950,812 10,890,667 3,041,679 111,947,842
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
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 (as recorded in Note 9), 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 fee
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 and disposal of investments;
- 75% of the Investment Adviser fee expense and 100% of any performance 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, as well as 25% of the Investment
Adviser fee together with the related tax effect, as well as income dividends
paid that are classified as revenue in nature.
Unaudited Condensed Statement of Cash Flows
for the six months ended 31 March 2022
Six months ended Six months ended Year ended
31 March 2022 31 March 2021 30 September 2021
Notes (unaudited) (unaudited) (audited)
£ £ £
Cash flows from operating activities
Profit for the financial period 3,177,668 29,133,796 41,856,293
Adjustments for:
Net investment portfolio gains (4,197,868) (29,661,261) (43,637,384)
(Increase)/decrease in debtors (218,732) (12,233) 183,844
(Decrease)/Increase in creditors and accruals (370,075) 799,205 1,104,812
Net cash (outflow)/inflow from operating activities (1,609,007) 259,507 (492,435)
Cash flows from investing activities
Purchase of investments 9 (3,442,183) (4,417,515) (8,087,743)
Disposal of investments 9 8,478,630 6,715,869 12,195,381
Net cash inflow from investing activities 5,036,447 2,298,354 4,107,638
Cash flows from financing activities
Shares issued as part of Offer for subscription 10,000,000 - -
Issue costs as part of Offer for subscription (332,246) - -
Equity dividends paid 8 (3,882,124) - (4,852,504)
Purchase of own shares (437,809) (413,435) (1,103,332)
Net cash inflow/(outflow) from financing activities 5,347,821 (413,435) (5,955,836)
Net increase/(decrease) in cash and cash equivalents 8,775,261 2,144,426 (2,340,633)
Cash and cash equivalents at start of period 26,696,413 29,037,046 29,037,046
Cash and cash equivalents at end of period 35,471,674 31,181,472 26,696,413
Cash and cash equivalents comprise:
Cash at bank and in hand 10 1,424,968 1,378,815 2,653,455
Cash equivalents 10 34,046,706 29,802,657 24,042,958
The notes to the unaudited financial statements below form part of these
Half-Year Financial Statements.
Notes to the Unaudited Condensed Financial Statements
1. Company information
The Income and Growth VCT plc is a public limited company incorporated in
England, registration number 04069483. The registered office is 5 New Street
Square, London, EC4A 3TW.
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 April 2021) issued by the Association of Investment
Companies ("AIC").
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 ended Six months ended Year ended
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Total Total Total
£ £ £
Income
- Dividends 400,218 588,183 694,891
- Money market funds 15,113 2,569 4,103
- Loan stock interest 838,162 715,528 1,220,332
- Bank deposit interest 12,829 16,063 28,376
- Other income - 5,789 5,791
Total Income 1,328,132 1,953,493
1,266,322
5. Investment Adviser's fees and performance fees
Six months ended Six months ended Year ended
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Total Total Total
£ £ £
Allocated to revenue return: Investment Adviser's fees 325,312 223,439 548,812
Allocated to capital return: Investment Adviser's fees 975,934 670,315 1,646,435
Investment Adviser's performance fees 704,303 742,900 1,095,268
Total 2,005,549 1,636,654
3,290,515
Investment Adviser's fee 1,301,246 893,754 2,195,247
Investment Adviser's performance fees 704,303 742,900 1,095,268
Total 2,005,549 1,636,654 3,290,515
On 30 September 2021, Mobeus sold its VCT and Investment management business
to Gresham House. As a result, the Company's Investment advisory arrangements
have been novated to Gresham House. The entire core management, investment and
operational teams involved with the Company all transferred to Gresham House
in connection with this transaction.
The Directors have charged 75% of the fees payable under the Investment
Adviser's agreement, and 100% of the amounts payable under the Incentive
Agreement, 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 revised incentive fee agreement was signed between the
Board, on behalf of the Company, and Mobeus, with effect from 1 October 2013,
to amend and replace the previous agreement. This agreement was novated to
Gresham House following its purchase of the Mobeus VCT fund and Investment
management business on 30 September 2021.
Any payment under the revised incentive agreement is 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) 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 agreement, any fee payments to Gresham 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. Any excess over the 2% remains payable to
Gresham House 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 2022, the Target Return is 190.62 pence per
share (being a 6% uplift on the Target Return at the previous year-end of
179.83 pence per share). As at 31 March 2022, the Cumulative Total NAV return
is 199.33 pence per share, so the Target Return for the 2022 financial year
has currently been met and a fee of £704,303 has been accrued. This fee is
payable subject to the cumulative Target NAV return continuing to exceed the
Target Return at the year-end and the approval of the Company's Annual Report
by shareholders at the AGM.
6. Taxation
There is no tax charge for the period as the Company incurred tax allowable
expenses in excess of taxable income.
7. Basic and diluted earnings and return per share
Six months ended 31 March 2022 Six months ended 31 March 2021 Year
ended
30 September 2021
(unaudited) (unaudited) (audited)
Total Total Total
£ £ £
i) Total earnings after taxation: 3,177,668 29,133,796 41,856,293
Basic and diluted earnings per share (Note a) 2.64 p 24.60 p 35.34 p
ii) Revenue earnings from ordinary activities
after taxation 610,671 829,212 910,125
Basic and diluted revenue earnings per share (Note b) 0.51 p 0.70 p 0.77 p
Net investment portfolio gains/(losses) 4,197,868 29,661,261 43,637,384
Capitalised Investment Adviser fees and performance fees less taxation (1,630,871) (1,356,677) (2,691,216)
iii) Total capital earnings 2,566,997 28,304,584 40,946,168
Basic and diluted capital earnings per share (Note c) 2.13 p 23.90 p 34.57 p
iv) Weighted average number of shares
in issue in the period (Note d) 119,992,964 118,453,326 118,422,497
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
Six months ended Six months ended Year ended
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Dividend Type For the year ended 30 September Pence per share Date paid £ £ £
Interim Income 2021 1.00p 23 July 2021 - - 1,181,978
Interim Capital 2021 4.00p 23 July 2021 - - 4,727,910
Interim Capital* 2021 2.00p 7 January 2022 2,371,079 - -
Interim Capital 2021 2.00p 7 January 2022 2,371,079 - -
4,742,158 - 5,909,888
* - This dividend was paid out of the Company's Special distributable reserve.
For the period ended 31 March 2022, £4,742,158 disclosed above differs to
that shown in the Condensed Statement of Cash Flows of £3,882,124 due to
£860,034 of new shares allotted subject to listing under the Company's
Dividend Investment Scheme.
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 every subsequent quarterly
measurement date, are reconsidered for any 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 enterprise value of the investment may be
determined 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 (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, scale and liquidity).
or:-
b) where a company's underperformance against plan indicates a diminution in
the value of the investment, provision against the price of a new investment
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 figures are shown net of any
applicable transaction costs incurred by the Company.
All investments are initially recognised and subsequently measured at fair
value. Changes in fair value are recognised in the Income Statement.
Akey 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 the price of recent investment, 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 ordinary Unquoted preference Unquoted Total
on AIM shares shares loan stock
Level 1 Level 3 Level 3 Level 3
£ £ £ £ £
Valuation at 1 October 2021 16,841,633 57,782,482 1,400,192 12,121,582 88,145,889
Purchases at cost (Note a) - 746,639 1,583,423 922,881 3,252,943
Sales - proceeds (Note b) - (4,857,496) - (1,376,144) (6,233,640)
- net realised gains - 1,208,281 - - 1,208,281
Reclassification at valuation (Note c) - 425,790 - (425,790) -
Net unrealised (losses)/gains on investments in the period (5,635,802) 8,611,665 66,174 (52,450) 2,989,587
Valuation at 31 March 2022 11,205,831 63,917,361 3,049,789 11,190,079 89,363,060
Book cost at 31 March 2022 1,993,170 32,486,833 2,823,969 14,740,735 52,044,707
Unrealised gains/(losses) at 31 March 2022 9,712,661 36,225,139 226,121 (3,463,469) 42,700,452
Permanent impairment of cost of investments (500,000) (4,794,611) (301) (87,187) (5,382,099)
Valuation at 31 March 2022 11,205,831 63,917,361 3,049,789 11,190,079 89,363,060
(Losses)/gains on investments
Realised gains based on historical cost - 4,492,632 - 202,724 4,695,356
Less amounts recognised as unrealised gains in previous years - (3,284,351) - (202,724) (3,487,075)
Net realised gains based on carrying value at 30 September 2021 - 1,208,281 - - 1,208,281
Net movement in unrealised (losses)/gains in the period (5,635,802) 8,611,665 66,174 (52,450) 2,989,587
Net investment portfolio (losses)/gains for the period ended 31 March 2022 (5,635,802) 9,819,946 66,174 (52,450) 4,197,868
Notes:
a): Purchases of investments shown above of £3,252,943 is £189,240 less than
that shown on the Condensed Statement of Cash Flows due to a follow on
investment into Northern Bloc which completed after the period end.
b): The sale proceeds shown above of £6,233,640 is £2,244,990 less than that
shown on the Condensed Statement of Cash Flows of £8,478,630 due to proceeds
received from Proactive in the period. This amount was recognised as a debtor
at 30 September 2021.
c): The Company's loan investment in Northern Bloc Ice-Cream Limited was
converted into equity during the period.
Level 3 unquoted equity and loan investments are valued in accordance with
IPEV guidelines as follows:
As at As at As at
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Valuation methodology £ £ £
Multiple of earnings, revenues or gross margin, as appropriate 76,729,700 52,346,068 69,628,026
Recent investment price 807,000 1,445,435 1,293,451
Recent investment price (reviewed for impairment) 554,750 - 317,000
Estimated realisation proceeds 65,779 65,779 65,779
Net asset value - 341,550 -
78,157,229 54,198,832 71,304,256
10. Current asset investments and Cash at bank
As at As at As at
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
£ £ £
OEIC Money market funds 34,046,706 29,802,657 24,042,958
Cash equivalents per Statement of Cash Flows 34,046,706 29,802,657 24,042,958
Bank deposits that mature after three months 3,151,769 3,151,769 3,151,769
Current asset investments 37,198,475 32,954,426 27,194,727
Cash at bank 1,424,968 1,378,815 2,653,455
11. Net asset value per share
As at As at As at
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Net assets £127,653,427 £111,947,842 £119,086,274
Number of shares in issue 129,217,701 118,200,511 118,554,881
Net asset value per share - basic and diluted 98.79p 94.71p 100.45p
12. Post balance sheet events
On 6 April 2022, a further investment of £0.19 million was made into Northern
Bloc Ice Cream Limited, an existing portfolio company.
On 5 May 2022, a new investment of £0.64 million was made into Bidnamic
Limited.
On 23 May 2022, a further investment of £0.40 million was made into Muller EV
Limited (trading as Andersen EV), an existing portfolio company.
13. Statutory Information
The financial information for the six months ended 31 March 2022 and the six
months ended 31 March 2021 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 2021 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, 5 New
Street Square, London, EC4A 3TW, or can be downloaded via the Company's
website at www.incomeandgrowthvct.co.uk.
Traded Unquoted ordinary Unquoted preference Unquoted Total
on AIM shares shares loan stock
Level 1 Level 3 Level 3 Level 3
£ £ £ £ £
Valuation at 1 October 2021 16,841,633 57,782,482 1,400,192 12,121,582 88,145,889
Purchases at cost (Note a) - 746,639 1,583,423 922,881 3,252,943
Sales - proceeds (Note b) - (4,857,496) - (1,376,144) (6,233,640)
- net realised gains - 1,208,281 - - 1,208,281
Reclassification at valuation (Note c) - 425,790 - (425,790) -
Net unrealised (losses)/gains on investments in the period (5,635,802) 8,611,665 66,174 (52,450) 2,989,587
Valuation at 31 March 2022 11,205,831 63,917,361 3,049,789 11,190,079 89,363,060
Book cost at 31 March 2022 1,993,170 32,486,833 2,823,969 14,740,735 52,044,707
Unrealised gains/(losses) at 31 March 2022 9,712,661 36,225,139 226,121 (3,463,469) 42,700,452
Permanent impairment of cost of investments (500,000) (4,794,611) (301) (87,187) (5,382,099)
Valuation at 31 March 2022 11,205,831 63,917,361 3,049,789 11,190,079 89,363,060
(Losses)/gains on investments
Realised gains based on historical cost - 4,492,632 - 202,724 4,695,356
Less amounts recognised as unrealised gains in previous years - (3,284,351) - (202,724) (3,487,075)
Net realised gains based on carrying value at 30 September 2021 - 1,208,281 - - 1,208,281
Net movement in unrealised (losses)/gains in the period (5,635,802) 8,611,665 66,174 (52,450) 2,989,587
Net investment portfolio (losses)/gains for the period ended 31 March 2022 (5,635,802) 9,819,946 66,174 (52,450) 4,197,868
Notes:
a): Purchases of investments shown above of £3,252,943 is £189,240 less than
that shown on the Condensed Statement of Cash Flows due to a follow on
investment into Northern Bloc which completed after the period end.
b): The sale proceeds shown above of £6,233,640 is £2,244,990 less than that
shown on the Condensed Statement of Cash Flows of £8,478,630 due to proceeds
received from Proactive in the period. This amount was recognised as a debtor
at 30 September 2021.
c): The Company's loan investment in Northern Bloc Ice-Cream Limited was
converted into equity during the period.
Level 3 unquoted equity and loan investments are valued in accordance with
IPEV guidelines as follows:
As at As at As at
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Valuation methodology £ £ £
Multiple of earnings, revenues or gross margin, as appropriate 76,729,700 52,346,068 69,628,026
Recent investment price 807,000 1,445,435 1,293,451
Recent investment price (reviewed for impairment) 554,750 - 317,000
Estimated realisation proceeds 65,779 65,779 65,779
Net asset value - 341,550 -
78,157,229 54,198,832 71,304,256
10.
Current asset investments and Cash at bank
As at
As at
As at
31 March 2022
31 March 2021
30 September 2021
(unaudited)
(unaudited)
(audited)
£
£
£
OEIC Money market funds
34,046,706
29,802,657
24,042,958
Cash equivalents per Statement of Cash Flows
34,046,706
29,802,657
24,042,958
Bank deposits that mature after three months
3,151,769
3,151,769
3,151,769
Current asset investments
37,198,475
32,954,426
27,194,727
Cash at bank
1,424,968
1,378,815
2,653,455
11.
Net asset value per share
As at As at As at
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
Net assets £127,653,427 £111,947,842 £119,086,274
Number of shares in issue 129,217,701 118,200,511 118,554,881
Net asset value per share - basic and diluted 98.79p 94.71p 100.45p
12.
Post balance sheet events
On 6 April 2022, a further investment of £0.19 million was made into Northern
Bloc Ice Cream Limited, an existing portfolio company.
On 5 May 2022, a new investment of £0.64 million was made into Bidnamic
Limited.
On 23 May 2022, a further investment of £0.40 million was made into Muller EV
Limited (trading as Andersen EV), an existing portfolio company.
13.
Statutory Information
The financial information for the six months ended 31 March 2022 and the six
months ended 31 March 2021 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 2021 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, 5 New
Street Square, London, EC4A 3TW, or can be downloaded via the Company's
website at www.incomeandgrowthvct.co.uk.
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