TIDMMAV4 TIDMTTM
RNS Number : 3514I
Maven Income & Growth VCT 4 PLC
24 March 2015
Maven Income and Growth VCT 4 PLC
Final results for the year ended 31 December 2014
Chairman's Statement
On behalf of your Board I am pleased to announce the results for
the twelve months to 31 December 2014. During the year, improved
income derived from the investment portfolio combined with the
proceeds of a number of profitable realisations resulted in a
further increase in NAV total return and enabled your Company to
propose an increased annual dividend for the fourth year in
succession.
The majority of investee businesses are trading well, and a
number of notable performances by, amongst others, Nenplas
Holdings, HCS Control Systems Group and John McGavigan has enabled
the Board to write up their values, whilst the valuations of CHS
Engineering Services and DPP have been reduced during the year.
There has been ongoing interest in various portfolio companies from
trade and private equity buyers, and pleasingly several profitable
exits have been achieved, most significantly the full realisations
of our investments in Adler and Allan Holdings and EFC Group.
The Manager has continued to invest in a varied range of private
companies which generate an income to your Company and, as a result
of this strategy, investment income has increased by 21% over the
year. As at the period end, and including the benefit of another
successful fund raising, net assets have risen to GBP31
million.
In line with the policy of reducing exposure to AIM, the Manager
has continued to dispose of holdings for optimum value as
opportunities arose and listed equities now account for a modest
1.6% of the asset base. Developments within the portfolio are
detailed in the Investment Manager's Review.
Your Company was also able to complete the final stage of the
2013 merger with Ortus VCT PLC, and accelerate the consolidation of
the two separate share classes that have been in place since that
time. When the merger occurred, the Boards of both Companies agreed
that the common assets would merge into the Ordinary Share pool and
the legacy investments would be segregated into a new C Share pool,
which would be managed separately until the assets were sold or
could be merged into the Ordinary Share pool.
At the half-year, your Board reduced the valuation of the former
Ortus holdings in Higher Nature and Networks by Wireless to reflect
trading performance, which had the effect of reducing the NAV of
the C Share pool to 76.10p per Share. The valuations of all
remaining legacy assets were reviewed prior to the share
consolidation taking place and, being considered to be a fair
reflection of value, were left unchanged.
As a result of the merger and share class consolidation, in
tandem with a series of successful fund raisings, your Company has
grown materially in scale in recent years and is now well
positioned to build a larger and more diverse portfolio.
Highlights for the year
-- NAV total return of 131.25p per share (2013: 127.90p) at the
year end, up 2.6% over the year
-- NAV at period end of 97.20p per share (2013: 98.60p)
-- Eleven new private equity investments added to the portfolio
-- Realisation of Adler and Allan Holdings for a total return of 2.6 times cost
-- Exit from EFC Group, generating a total return multiple of 3.8 times cost
-- Increased final dividend proposed of 2.90p per share, making
the full year dividend 5.00p per share (2013:4.65p)
Dividends
The Board recommends that an increased final dividend of 2.90p
per Ordinary Share, comprising 0.70p of revenue and 2.20p of
capital, be paid on 5 June 2015 to Shareholders on the Register at
8 May 2015. This brings total dividends for the year to 5.00p per
share, representing a yield of 5.7% based on the year end closing
mid-market share price of 87.00p.
Since the Company's launch, and after receipt of the proposed
final dividend, Shareholders will have received 36.95p per share in
tax-free dividends. The effect of paying the proposed final
dividend would be to reduce the NAV of the Company by the total
cost of the distribution.
Dividend Investment Scheme (DIS)
The Directors have agreed to implement a DIS through which
Shareholders may elect to have their dividend payments used to
apply for additional Ordinary Shares issued by the Company under
the standing authority requested from Shareholders at Annual
General Meetings. Shares issued under the DIS will qualify for VCT
tax reliefs applicable for the tax year in which they are
allotted.
Full details of the scheme, together with a mandate form, are
being made available alongside this Annual Report to enable
Shareholders to take advantage of the DIS in respect of the final
dividend for the year ending 31 December 2014. Shareholders wishing
to do so should ensure that a mandate form, or CREST instruction if
appropriate, is submitted by no later than the election date of 22
May 2015. Under current VCT legislation, dividends that are
invested will be eligible for income tax relief at 30% of the
amount invested, subject to an annual investment limit of
GBP200,000, in aggregate, per individual for all investments into
new VCT Shares in a tax year.
Fund Raising
Following the success of the GBP4 million Offer for Subscription
that opened in October 2013 and closed on 30 May 2014, in October
2014 the Company announced that it planned to raise up to GBP2
million in a joint Offer for Subscription alongside four other
Maven VCTs. That Offer in respect of your Company was fully
subscribed by 7 January 2015 and, consequently, closed early. Maven
Income and Growth VCT, Maven Income and Growth VCT 2, Maven Income
and Growth VCT 3 and Maven Income and Growth VCT 5 have each also
raised their maximum target of GBP4 million.
The first allotment under the Offer took place on 20 February
2015, and it is anticipated that a further allotment will take
place in early April 2015 in respect of the 2015/16 tax year.
Relevant details regarding shares issued in respect of the Offers
can be found in note 12 to the Financial Statements.
The Company may use the money raised under the Offers to pay
dividends (subject to meeting the requirements of the return of
capital legislation effective from 6 April 2014) and general
running costs, thereby preserving for investment purposes an
equivalent sum of more valuable 'old money' which operates under
more advantageous VCT regulations. The proceeds of the Offers will
also provide additional liquidity for the Company to make further
investments, and enable it to spread its costs over a larger asset
base to the benefit of all Shareholders.
Share Buy-backs
Shareholders should be aware that the Board's primary objective
is for the Company to retain sufficient liquid assets for making
investments in line with its stated policy and for the continued
payment of dividends to Shareholders. However, the Directors also
acknowledge the need to maintain an orderly market in the Company's
shares and have delegated authority to the Manager to buy back
shares in the market for cancellation or to be held in treasury,
subject always to such transactions being in the best interest of
Shareholders.
It is intended that, subject to market conditions, available
liquidity and the maintenance of the Company's VCT status, shares
will be bought back at prices representing a discount of up to 15%
to the prevailing NAV per share.
Share Consolidation
The Company completed a merger with Ortus VCT PLC on 3 April
2013, details of which were contained in a shareholder circular and
prospectus dated 1 March 2013. It was agreed that the common assets
be merged into the Ordinary Share pool and, in view of the
disproportionately high value of several of the legacy Ortus VCT
PLC investments, that these be segregated into a new C Share pool,
which would be managed separately for a period of up to two years.
The C Shares would then be consolidated into the Ordinary Shares on
a relative net asset basis (as provided for in the Articles of
Association as amended at the time of the merger). As the C Shares
pool investments had been materially realised and the proceeds
reinvested alongside the Ordinary Shares pool, the Board decided to
accelerate the consolidation of the C Shares into the Ordinary
Shares and create a single class of shares, and accordingly the
share consolidation was implemented on 30 September 2014. Details
of the transaction are contained in note 18 to the Financial
Statements.
Alternative Investment Fund Manager's Directive (AIFMD)
The AIFMD regulates the management of alternative investment
funds, including VCTs, and the Board has received approval as a
self-managed small registered UK AIFM under the AIFMD from the FCA.
A new Risk Committee has been established, and information
regarding the composition and responsibilities of this committee
can be found in the Report by the Audit and Risk Committees.
VCT Regulatory Developments
The Association of Investment Companies (AIC) participated in a
consultation process on 'tax-advantaged venture capital schemes' to
assist the Government's discussions with the European Commission
regarding a review of the State Aid rules for businesses in member
countries. The Board supported the AIC's response, in which a
number of recommendations were made that we believe would protect
the VCT scheme against the imposition of further restrictions on
investment
and would reduce administrative burdens.
The FCA has removed the requirement for listed companies to
publish quarterly interim management statements. However, your
Company will continue to announce the NAV
per share on a quarterly basis.
Board of Directors
The merger with Ortus VCT PLC led to a temporary increase in the
number of directors, and as previously intimated, it was the
intention as set out in the merger prospectus that the size of the
Board would return to previous levels when the C Share pool was
merged and your Company had a single class of shares. Your Board
has also been considering the issue of Board composition and
orderly succession, and has agreed in principle that it would be
advantageous to reduce the number of independent directors from
five to three. Accordingly, Andrew Lapping and David Potter have
indicated that they will stand down and not seek re-election at the
AGM to be held on 29 April 2015.
Further changes in Board membership are likely to take place
within the next few years, and the future constitution of the Board
will be confirmed and communicated fully to Shareholders in due
course, with each new Director being subject to re-election by
Shareholders at the AGM immediately following their
appointment.
I would like to take this opportunity to thank Andrew for the
valued contribution that he has made to the Board since the
inception of your Company, and David for his support since the
merger with
Ortus VCT PLC. I wish both of them well for the future.
Your Board recognises that the UK Code of Corporate Governance
recommends that all non-executive directors who have served for a
period of longer than nine years should be subject to annual
re-election. As the majority of the current members of the Board,
including myself as Chairman, have held office for periods in
excess of nine years, it has been resolved to adopt this practice
with effect from the 2015 AGM.
Distribution of Annual and Interim Reports
As detailed in the 2014 Interim Report, a number of Shareholders
have expressed an interest in receiving notification, by post or
e-mail, that documents, including Annual and Interim reports,
are
available on the Company's website as an alternative to
receiving hard copies by post. A letter of request was enclosed for
Shareholders to complete and return to confirm whether or not they
wished to take advantage of this facility, and indicating that, if
it was not returned, they would be deemed as having given their
consent to receiving only postal notifications that documents are
available on the website. As a result, if no such letter of request
was returned, Shareholders will have received notification by post
of the publication of this Annual Report on the Company's website.
Shareholders who wish notifications to be sent by e-mail rather
than by post should complete and return the form enclosed or advise
the Registrar via the Share Portal at www.capitashareportal.com.
Hard copies of all documents are available on request.
The Future
The Board believes that the continuation of the proven
later-stage investment policy adopted by the Manager, combined with
the benefits and efficiencies that will come from having a
simplified share capital structure, will deliver continued growth
in Shareholder value in the years ahead.
Ian Cormack
Chairman
24 March 2015
Business Report
This Business Report is intended to provide an overview of the
strategy and business model of the Company as well as the key
measures used by the Directors in overseeing its management. The
Company is a venture capital trust which invests in accordance with
the investment objective set out below.
Investment Objective
The Company aims to achieve long term capital appreciation and
generate maintainable levels of income for Shareholders.
Business Model and Investment Policy
Under an investment policy approved by the Directors, the
Company intends to achieve its objective by:
-- investing the majority of its funds in a diversified
portfolio of shares and securities in smaller, unquoted UK
companies and AIM/ISDX quoted companies which meet the criteria for
VCT qualifying investments and have strong growth potential;
-- investing no more than GBP1 million in any company in one
year and no more than 15 per cent of the Company's assets by cost
in one business at any time; and
-- borrowing up to 15 per cent of net asset value, if required
and only on a selective basis, in pursuit of its investment
strategy.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Company are as
follows:
Investment Risk
Many of the Company's investments are in small and medium sized
unlisted and AIM/ISDX quoted companies which, by their nature,
entail a higher level of risk and lower liquidity than investments
in large quoted companies. The Board aims to limit the risk
attaching to the investment portfolio as a whole by ensuring a
structured selection, monitoring and realisation process. The Board
reviews the investment portfolio with the Manager on a regular
basis.
The Company manages and minimises investment risk by:
-- diversifying across a large number of companies;
-- diversifying across a range of economic sectors;
-- actively and closely monitoring the progress of investee companies;
-- seeking to appoint a non-executive director to the board of
each private investee company, provided from the Manager's
investment management team or from its pool of experienced
independent directors;
-- co-investing with other funds run by the Manager in larger
deals, which tend to carry less risk;
-- not investing in hostile public to private transactions; and
-- retaining the services of a Manager that can provide the
resources required to achieve the investment objective and meet the
criteria stated above.
An explanation of certain risks and how they are managed is
contained in Note 17 to the Financial Statements.
Financial and Liquidity Risk
As most of the investments require a mid to long term commitment
and are relatively illiquid, the Company retains a portion of the
portfolio in cash or cash equivalents in order to finance any new
unquoted investment opportunities. The Company has no direct
exposure to currency risk and does not enter into any derivative
transactions.
Economic Risk
The valuation of investment companies may be affected by
underlying economic conditions such as fluctuating interest rates
and the availability of bank finance.
Credit Risk
The Company may hold financial instruments and cash deposits and
is dependent on counterparties discharging their agreed
responsibilities. The Directors consider the creditworthiness of
the counterparties to such instruments and seek to ensure that
there is no undue concentration of exposure to any one party.
Internal Control Risk
The Board reviews regularly the system of internal controls,
both financial and non-financial, operated by the Company and the
Manager. These include controls designed to ensure that the
Company's assets are safeguarded and that all records are complete
and accurate.
VCT Qualifying Status Risk
The Company operates in a complex regulatory environment and
faces a number of related risks, including:
-- becoming subject to capital gains tax on the sale of its
investments as a result of a breach of Section 274 of the Income
Tax Act 2007;
-- loss of VCT status and consequent loss of tax reliefs
available to Shareholders as a result of a breach of the VCT
Regulations; and
-- loss of VCT status and reputational damage as a result of
serious breach of other regulations such as the UKLA Listing Rules
and the Companies Act 2006.
Legislative and Regulatory Risk
In order to maintain its approval as a VCT, the Company is
required to comply with current VCT legislation in the UK as well
as the European Commission's (EC) state aid rules. Changes in the
future to UK legislation or the EC state aid rules could have an
adverse impact on Shareholder investment returns whilst maintaining
the Company's VCT status. The Board and the Manager continue to
make representations where appropriate, either directly or through
relevant industry bodies such as the AIC or the British Venture
Capital Association (BVCA).
Statement of Compliance with Investment Policy
The Company is adhering to its stated investment policy and
managing the risks arising from it. This can be seen in various
tables and charts throughout the Annual Report, and from
information provided in the Chairman's Statement and the Investment
Manager's Review. A review of the Company's business, its position
as at 31 December 2014 and its performance during the year then
ended, is included in the Chairman's Statement, which also includes
an overview of its strategy and business model.
The management of the investment portfolio has been delegated to
Maven, which also provides company secretarial, administrative and
financial management services to the Company. The Board is
satisfied with the depth and breadth of the Manager's resources and
its network of offices, which supply new deals and enable it to
monitor the geographically widespread portfolio of companies
effectively.
The Investment Portfolio Summary discloses the investments in
the portfolio and the degree of co-investment with other clients of
the Manager. The tabular analysis of the unlisted and quoted
portfolio shows that the portfolio is diversified across a variety
of sectors and deal types. The level of qualifying investments is
monitored by the Manager on a daily basis and reported to the Risk
Committee quarterly.
Key Performance Indicators
At each Board Meeting, the Directors consider a number of
financial performance measures to assess the Company's success in
achieving its objectives and these also enable Shareholders and
investors to gain an understanding of its business. The key
performance indicators are as follows:
-- NAV total return;
-- dividends per share;
-- investment income; and
-- operational expenses.
The NAV total return is a measure of the current NAV per share
and the sum of dividends paid to date. The dividends per share
measure shows how much of that Shareholder value has been returned
to original investors in the form of dividends. A historical record
of these measures is shown in the Financial Highlights. The change
in the profile of the portfolio is reflected in the Summary of
Investment Changes. The Board reviews the Company's investment
income and operational expenses on a quarterly basis.
There is no meaningful venture capital trust index against which
to compare the financial performance of the Company, but, for
reporting to the Board and Shareholders, the Manager uses
comparisons with appropriate indices and the Company's peer group.
The Directors also consider non-financial performance measures such
as the flow of investment proposals and ranking of the VCT sector
by independent analysts.
Valuation Process
Investments held by Maven Income and Growth VCT 4 PLC in
unquoted companies are valued in accordance with the International
Private Equity and Venture Capital Valuation Guidelines.
Investments quoted or traded on a recognised stock exchange,
including AIM, are valued at their bid prices.
Share Buy-backs
The Board will seek the necessary Shareholder authority to
continue the share buy-back programme under appropriate
circumstances.
Employee, Environmental and Human Rights Policy
As a venture capital trust, the Company has no direct employee
or environmental responsibilities, nor is it responsible for the
emission of greenhouse gases. Its principal responsibility to
Shareholders is to ensure that the investment portfolio is managed
and invested properly. The Company has no employees and,
accordingly, has no requirement to report separately on employment
matters. The management of the portfolio is undertaken by the
Manager through members of its portfolio management team. The
Manager engages with the Company's underlying investee companies in
relation to their corporate governance practices and in developing
their policies on social, community and environmental matters and
further information may be found in the Statement of Corporate
Governance. In light of the nature of the Company's business, there
are no relevant human rights issues and, therefore, the Company
does not have a human rights policy.
Future Strategy
The Board and Manager intend to maintain the policies set out
above for the year ending 31 December 2015 as it is believed that
these are in the best interests of Shareholders.
Ian Cormack
Chairman
24 March 2015
Maven Income and Growth VCT 4 PLC
Income Statement
For the Year Ended 31 December 2014
Ordinary Shares
Revenue Capital Total
GBP'000 GBP'000 GBP'000
------------------------- -------- -------- --------
Gains on investments - 473 473
Income from
investments 1,282 - 1,282
Investment management
fees (208) (831) (1,039)
Other expenses (387) - (387)
-------------------------- -------- -------- --------
Net Return on
ordinary activities
before taxation 687 (358) 329
Tax on ordinary
activities (132) 132 -
-------------------------- --------
Return attributable
to Equity Shareholders 555 (226) 329
-------------------------- -------- -------- --------
Earnings per
share (pence) 1.7 (0.7) 1.0
-------------------------- -------- -------- --------
A Statement of Total Recognised Gains and Losses has not been
prepared, as all gains and losses are recognised in the Income
Statement.
All items in the above statement are derived from continuing
operations. The Company has only one class of business and derives
its income from investments made in shares, securities and bank
deposits.
The total column of this statement is the Profit and Loss
Account of the Company.
Reconciliation of Movements in Shareholders' Funds
For the year ended 31 December 2014
Ordinary C Ordinary
Shares Shares TOTAL
GBP'000 GBP'000 GBP'000
Opening Shareholders'
funds 25,340 3,631 28,971
C Ordinary share consolidation
to Ordinary 3,631 (3,631) -
Net return for year 329 - 329
Net proceeds of share
issue 4,093 - 4,093
Merger costs (3) - (3)
Repurchase and cancellation
of shares (861) - (861)
Dividends paid - revenue (484) - (484)
Dividends paid - capital (907) - (907)
Closing Shareholders'
funds 31,138 - 31,138
--------------------------------- --------------- --------------- --------------
The accompanying Notes are an integral part of the Financial
Statements.
Income Statement
For the year ended 31 December 2013
Ordinary Shares C Ordinary Shares TOTAL
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------- --------------- ------------- -------------- --------------- -------- ------------- --------------- -------------
Gains/(losses)
on investments - 1,808 1,808 - (120) (120) - 1,688 1,688
Income
from
investments 1,041 - 1,041 18 - 18 1,059 - 1,059
Investment
management
fees (188) (753) (941) (20) (84) (104) (208) (837) (1,045)
Other
expenses (358) - (358) (37) - (37) (395) - (395)
---------------- ------------- --------------- ------------- -------------- --------------- -------- ------------- --------------- -------------
Net Return
on ordinary
activities
before
taxation 495 1,055 1,550 (39) (204) (243) 456 851 1,307
Tax on
ordinary
activities (95) 95 - - - - (95) 95 -
---------------- --------------- --------------- ---------------
Return
attributable
to Equity
Shareholders 400 1,150 1,550 (39) (204) (243) 361 946 1,307
---------------- ------------- --------------- ------------- -------------- --------------- -------- ------------- --------------- -------------
Earnings
per share
(pence) 1.8 5.3 7.1 (1.0) (5.2) (6.2) 0.8 0.1 0.9
---------------- ------------- --------------- ------------- -------------- --------------- -------- ------------- --------------- -------------
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended 31 December 2013
Ordinary C Ordinary S Ordinary
Shares Shares Shares TOTAL
GBP'000 GBP'000 GBP'000 GBP'000
Opening Shareholders'
funds 8,990 - 5,877 14,867
S Ordinary share consolidation
to Ordinary 5,877 - (5,877) -
Net return for year 1,550 (243) - 1,307
Issue of new Ordinary
shares 6,272 - - 6,272
Issue of new C Ordinary
shares - 3,969 - 3,969
Net proceeds of share
issue 4,169 - - 4,169
Merger costs (29) - - (29)
Repurchase and cancellation
of shares (621) (95) - (716)
Dividends paid - revenue (423) - - (423)
Dividends paid - capital (445) - - (445)
Closing Shareholders'
funds 25,340 3,631 - 28,971
----------------------------------- --------------- --------------- --------------- --------------
Maven Income and Growth VCT 4 PLC
Balance Sheet
As at 31 December 2014
31 December
2014 31 December 2013
Ordinary Ordinary C Ordinary
Shares Shares Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------------------------------- -------------------- --------------------- --------------------
Fixed assets
Investments at
fair value
through
profit or
loss 29,296 24,185 3,133 27,318
Current assets
Debtors 511 467 214 681
Cash 1,565 963 291 1,254
--------------- --------------------------------- -------------------- --------------------- --------------------
2,076 1,430 505 1,935
Creditors:
Amounts
falling
due within
one
year (234) (275) (7) (282)
--------------------------------- -------------------- --------------------- --------------------
Net current
assets 1,842 1,155 498 1,653
--------------- --------------------------------- -------------------- --------------------- --------------------
Total net
assets 31,138 25,340 3,631 28,971
--------------- --------------------------------- -------------------- --------------------- --------------------
Capital and
reserves
Called up
share
capital 3,205 2,569 386 2,955
Share premium
account 17,677 10,350 3,572 13,922
Capital
reserve
- realised (1,018) (123) (281) (404)
Capital
reserve
- unrealised 883 1,325 77 1,402
Distributable
reserve 9,621 10,591 (95) 10,496
Capital
redemption
reserve 229 119 11 130
Revenue
reserve 541 509 (39) 470
Net assets
attributable
to Ordinary
Shareholders 31,138 25,340 3,631 28,971
--------------- --------------------------------- -------------------- --------------------- --------------------
Net asset
value
per ordinary
share (pence) 97.2 98.6 94.0
--------------- --------------------------------- -------------------- --------------------- --------------------
Maven Income and Growth VCT 4 PLC
Cash Flow Statement
For the year ended 31 December 2014
Year ended Year ended
31 December
2014 31 December 2013
Ordinary Ordinary C Ordinary
Shares Shares Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------------------------------------------- --------------------- -------------------- ---------------------
Operating activities
Investment income
received 1,323 946 3 949
Deposit interest
received 2 - - -
Investment management
fees paid (1,092) (744) (104) (848)
Secretarial fees
paid (93) (80) (11) (91)
Directors fees paid (73) (68) (10) (78)
Other cash payments (20) (215) (208) (423)
---------------------- --------------------------------------------- --------------------- -------------------- ---------------------
Net cash
inflow/(outflow)
from operating
activities 47 (161) (330) (491)
Taxation
Corporation tax - (4) - (4)
---------------------- --------------------------------------------- --------------------- -------------------- ---------------------
Financial investment
Purchase of
investments (20,941) (22,367) (1,407) (23,774)
Sale of investments 19,367 17,797 1,459 19,256
---------------------- --------------------------------------------- --------------------- -------------------- ---------------------
Net cash
(outflow)/inflow
from financial
investment (1,574) (4,570) 52 (4,518)
Equity dividends
paid (1,391) (868) - (868)
---------------------- --------------------------------------------- --------------------- -------------------- ---------------------
Net cash outflow
before financing (2,918) (5,603) (278) (5,881)
Financing
Issue of Ordinary
Shares 4,093 4,169 - 4,169
Net cash balance
acquired from merger - 1,686 664 2,350
Merger costs (3) - - -
Repurchase of
Ordinary
Shares (861) (621) (95) (716)
Net cash inflow
from financing 3,229 5,234 569 5,803
---------------------- --------------------------------------------- --------------------- --------------------
Increase/(decrease)
in cash 311 (369) 291 (78)
---------------------- --------------------------------------------- --------------------- -------------------- ---------------------
Notes
Accounting Policies - UK Generally Accepted Accounting
Practice
(a) Basis of preparation
The Financial Statements have been prepared under the historical
cost convention modified to include the revaluation of investments
and in accordance with the Statement of Recommended Practice
'Financial Statements of Investment Trust Companies' and Venture
Capital Trusts (the SORP) issued in January 2009.
The disclosures on Going Concern on page 35 of the Directors'
Report form part of the financial statements.
(b) Income
Dividends receivable on equity shares and unit trusts are
treated as revenue for the period on an ex-dividend basis. Where no
ex-dividend date is available dividends receivable on or before the
year end are treated as revenue for the period. Provision is made
for any dividends not expected to be received. The fixed returns on
debt securities and non-equity shares are recognised on a time
apportionment basis so as to reflect the effective interest rate on
the debt securities and shares. Provision is made for any income
not expected to be received. Interest receivable from cash and
short term deposits and interest payable are accrued to the end of
the year.
(c) Expenses
All expenses are accounted for on an accruals basis and charged
to the income statement. Expenses are charged through the revenue
account except as follows:
-- expenses which are incidental to the acquisition and disposal
of an investment are charged to capital.
-- expenses are charged to realised capital reserves where a
connection with the maintenance or enhancement of the value of the
investments can be demonstrated. In this respect the investment
management fee has been allocated 20% to revenue and 80% to
realised capital reserves to reflect the Company's investment
policy and prospective income and capital growth.
-- share issue and merger costs are charged to the share premium account.
(d) Taxation
Deferred taxation is recognised in respect of all timing
differences that have originated but not reversed at the balance
sheet date, where transactions or events that result in an
obligation to pay more tax in the future or right to pay less tax
in the future have occurred at the balance sheet date. This is
subject to deferred tax assets only being recognised if it is
considered more likely than not that there will be suitable profits
from which the future reversal of the underlying timing differences
can be deducted. Timing differences are differences arising between
the Company's taxable profits and its results as stated in the
Financial Statements which are capable of reversal in one or more
subsequent periods.
Deferred tax is measured on a non-discounted basis at the tax
rates that are expected to apply in the periods in which timing
differences are expected to reverse, based on tax rates and laws
enacted or substantively enacted at the balance sheet date.
The tax effect of different items of income/gain and
expenditure/loss is allocated between capital reserves and revenue
account on the same basis as the particular item to which it
relates using the Company's effective rate of tax for the
period.
UK Corporation tax is provided at amounts expected to be
paid/recovered using the tax rates and laws that have been enacted
or substantively enacted at the balance sheet date.
(e) Investments
In valuing unlisted investments the Directors follow the
criteria set out below. These procedures comply with the revised
International Private Equity and Venture Capital Valuation
Guidelines for the valuation of private equity and venture capital
investments. Investments are recognised at their trade date and are
designated by the Directors as fair value through profit or loss.
At subsequent reporting dates, investments are valued at fair
value, which represent the Directors' view of the amount for which
an asset could be exchanged between knowledgeable willing parties
in an arm's length transaction. This does not assume that the
underlying business is saleable at the reporting date or that its
current shareholders have an intention to sell their holding in the
near future.
A financial asset or liability is generally derecognised when
the contract that gives rise to it is settled, sold, cancelled or
expires.
1. For investments completed prior to the reporting date and
those at an early stage in their development, fair value is
determined using the Price of Recent Investment Method, except that
adjustments are made when there has been a material change in the
trading circumstances of the company or a substantial movement in
the relevant sector of the stock market.
2. Whenever practical, recent investments will be valued by
reference to a material arm's length transaction or a quoted
price.
3. Mature companies are valued by applying a multiple to their
prospective earnings to determine the enterprise value of the
company.
3.1 To obtain a valuation of the total ordinary share capital
held by management and the institutional investors, the value of
third party debt, institutional loan stock, debentures and
preference share capital is deducted from the enterprise value. The
effect of any performance related mechanisms is taken into account
when determining the value of the ordinary share capital.
3.2 Preference shares, debentures and loan stock are valued
using the Price of Recent Investment Method. When a redemption
premium has accrued, this will only be valued if there is a
reasonable prospect of it being paid. Preference shares which carry
a right to convert into ordinary share capital are valued at the
higher of the Price of Recent Investment Method basis and the
price/earnings basis, both described above.
4. Where there is evidence of impairment, a provision may be
taken against the previous valuation of the investment.
5. In the absence of evidence of a deterioration, or strong
defensible evidence of an increase in value, the fair value is
determined to be that reported at the previous balance sheet
date.
6. All unlisted investments are valued individually by the
Portfolio Management Team of Maven Capital Partners UK LLP. The
resultant valuations are subject to detailed scrutiny and approval
by the Directors of the Company.
7. In accordance with normal market practice, investments listed
on the Alternative Investment Market or a recognised stock exchange
are valued at their bid market price.
(f) Fair Value Measurement
Fair value is defined as the price that the Company would
receive upon selling an investment in a timely transaction to an
independent buyer in the principal or the most advantageous market
of the investment. A three-tier hierarchy has been established to
maximise the use of observable market data and minimise the use of
unobservable inputs and to establish classification of fair value
measurements for disclosure purposes. Inputs refer broadly to the
assumptions that market participants would use in pricing the asset
or liability, including assumptions about risk, for example, the
risk inherent in a particular valuation technique used to measure
fair value including such a pricing model and/or the risk inherent
in the inputs to the valuation technique. Inputs may be observable
or unobservable.
Observable inputs are inputs that reflect the assumptions market
participants would use in pricing the asset or liability developed
based on market data obtained from sources independent of the
reporting entity.
Unobservable inputs are inputs that reflect the reporting
entity's own assumptions about the assumptions market participants
would use in pricing the asset or liability developed based on best
information available in the circumstances.
The three-tier hierarchy of inputs is summarised in the three
broad levels listed below.
-- Level 1 - quoted prices in active markets for identical investments.
-- Level 2 - other significant observable inputs (includes
quoted prices for similar investments, interest rates, credit risk
etc).
-- Level 3 - significant unobservable inputs (including the
Company's own assumptions in determining the fair value of
investments).
(g) Gains and losses on investments
When the company sells or revalues its investments during the
year, any gains or losses arising are credited/charged to the
Income Statement.
Reserves
Share Capital Capital Capital
Premium Reserve Reserve Distributable redemption Revenue
account realised unrealised reserve reserve reserve
Ordinary
Shares GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2014 -
Ordinary 10,350 (123) 1,325 10,591 119 509
At 1 January
2014 - C
Ordinary 3,572 (281) 77 (95) 11 (39)
--------------- ----------------------- ---------------------- --------------------- ------------------------ ---------------------- ---------------------
13,922 (404) 1,402 10,496 130 470
Gains on sales
of investments - 992 - - - -
Net decrease
in value of
investments - - (519) - - -
Investment
management
fees - (831) - - - -
Dividends paid - (907) - - - (484)
Tax effect of
capital items - 132 - - - -
Share Issue -
2014 3,679 - - (14) - -
Merger - C
share
consolidation 79 - - - - -
Merger costs (3) - - - - -
Repurchase and
cancellation
of shares - - - (861) 99 -
Net return on
ordinary
activities
after
taxation - - - - - 555
At 31 December
2014 17,677 (1,018) 883 9,621 229 541
--------------- ----------------------- ---------------------- --------------------- ------------------------ ---------------------- ---------------------
Return per Ordinary Share
Year ended Year ended
31 December
2014 31 December 2013
The returns per
share have been
based on the following Ordinary Ordinary C Ordinary
figures: Shares Shares Shares Total
Weighted average
number of ordinary
shares 31,821,673 21,811,660 3,894,337 25,705,997
Revenue return GBP555,000 GBP400,000 (GBP39,000) GBP361,000
Capital return (GBP226,000) GBP1,150,000 (GBP204,000) GBP946,000
Total Return GBP329,000 GBP1,550,000 (GBP243,000) GBP1,307,000
-------------------------- -------------- -------------- --------------- -------------
Net asset value per Ordinary Share
The net asset value per share and the net asset value
attributable to the Ordinary Shares at the year end, calculated in
accordance with the Articles of Association, were as follows:
31 December 2014 31 December 2013
C Ordinary
Ordinary Shares Ordinary Shares Shares
Net
Net asset Net asset Net asset Net asset asset Net asset
value value value
per value per value per value
share attributable share attributable share attributable
p GBP'000 p GBP'000 p GBP'000
Ordinary
Shares 97.2 31,138 98.6 25,340 94.0 3,631
---------- ------------------- -------------------- ------------------- ----------------- --------------- ------------------
Basis of preparation of the Financial Statements
The Financial Statements included in this Announcement have been
prepared on the same basis as the Annual Report and Financial
Statements for the year ended 31 December 2013. The Annual Report
and Financial Statements for the year ended 31 December 2014 will
be filed with the Registrar of Companies and issued to Shareholders
in due course.
The financial information contained within this Announcement
does not constitute the Company's statutory Financial Statements as
defined in the Companies Act 2006. The statutory Financial
Statements for the year ended 31 December 2013 have been delivered
to the Registrar of Companies and contained an audit report which
was unqualified and did not constitute statements under S498(2) or
S498(3) of the Companies Act 2006.
Responsibility Statement of the Directors in respect of the
Annual Report and Financial Statements
The Directors believe that, to the best of their knowledge:
-- the Financial Statements have been prepared in accordance
with the applicable accounting standards and give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company as at 31 December 2014 and for the year to that
date;
-- the Directors' Report includes a fair review of the
development and performance of the Company, together with a
description of the principal risks and uncertainties that it faces;
and
-- the Annual Report and Financial Statements taken as a whole
are fair, balanced and understandable and provide the information
necessary to assess the Company's performance, business model and
strategy.
Other information
The Annual General Meeting will be held at 1-2 Royal Exchange
Buildings, London EC3V 3LF at 10.30 am on Wednesday 29 April
2015.
Copies of this announcement, and of the Annual Report and
Financial Statements for the year ended 31 December 2014, will be
available to the public at the registered office of the Company,
Kintyre House, 205 West George Street, Glasgow G2 2LW; at the
office of Maven Capital Partners UK LLP, 1-2 Royal Exchange
Buildings, London EC3V 3LF and on the Company's website at
www.mavencp.com/migvct4.
Neither the content of the Company's website nor the contents of
any website accessible from hyperlinks on the Company's website (or
any other website) is incorporated into, or forms part of, this
announcement.
The Annual Report and the Circular have been submitted to the
National Storage Mechanism and will be available for inspection at:
www.Hemscott.com/nsm.do
By Order of the Board
Maven Capital Partners UK LLP
Secretary
24 March 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
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