TIDMMIG1
RNS Number : 0643H
Maven Income & Growth VCT PLC
02 June 2017
Maven Income and Growth VCT PLC
Final results for the year ended 28 February 2017
The Directors are pleased to report the Company's financial
results for the year ended 28 February 2017.
Highlights for the Year
-- NAV total return of 138.94p per share (2016: 135.16p) at the
year end, up 2.80% over the year
-- NAV at year end of 65.84p per share (2016: 68.06p) after
payment of dividends totalling 6.00p per share during the year
-- Second interim dividend of 3.60p per share paid, with annual
dividend maintained at 6.00p per share
-- Six new VCT qualifying private company holdings added to the portfolio
-- Strong pipeline of VCT qualifying investments, with a number in advanced process
-- Realisation of Nenplas for a total return of 5.0 times cost
Chairman's Statement
On behalf of your Board I am pleased to report on the further
progress achieved by your Company in the year to 28 February 2017.
During the period under review, NAV total return increased to
138.94p per share, representing the eighth consecutive year of
growth. This positive performance reflects the strength of the
underlying portfolio, where the valuations of a number of
investments have been increased following consistently good trading
results. In addition, several of the more mature private company
holdings have been realised profitably. In recognition of this
encouraging result, the Board declared a second interim dividend of
3.60p per share representing a full year dividend of 6.00p per
share and an annual tax-free yield of 9.60%, based on the share
price at the year end.
The reporting period has been one of transition for the UK VCT
industry following the enactment of the revised VCT legislation in
November 2015. The new rules have introduced a number of
restrictions on the types of qualifying transactions and companies
in which VCTs can invest, requiring the Manager to focus on the
provision of development capital, or investing in businesses with
growth finance requirements, rather than management buy-outs or
acquisition based transactions which have traditionally offered a
more predictable return profile. The investment team at Maven is
highly experienced at sourcing and executing transactions that meet
the revised criteria, and the Board is pleased to report that six
new VCT qualifying investments were completed during the year. The
Directors are also encouraged by the large and diverse pipeline of
prospective new investments, at various stages of due diligence,
and anticipate seeing a number of these transactions complete
during the first half of the current financial year.
The Board believes that considerable progress has been achieved
by your Company during the reporting period, despite the challenges
presented by the implementation of the revised VCT legislation and
the economic uncertainty resulting from the outcome of the European
Union (EU) referendum in June 2016. Against this backdrop, the core
portfolio has continued to trade well, as can be seen from the
detailed analysis included in the Investment Manager's Review in
the Annual Report. The continuing growth experienced by a number of
private company holdings has enabled the valuations of these assets
to be increased to reflect positive trading results. The Board also
remains conscious of the impact that the low oil price is having on
companies with exposure to the oil & gas sector. Whilst direct
remedial actions have been taken by portfolio companies with
exposure to this sector, the external environment remains
challenging and, notwithstanding some early indications of
recovery, conditions are not forecast to show a sustained
improvement until at least the second half of 2017. Consequently,
the valuations of a small number of these investments have been
conservatively reduced.
A number of profitable realisations were achieved during the
reporting period, the most notable being Nenplas which completed in
December 2016, achieving a total return of 5.0 times cost over the
life of the investment. The Board is aware that there are
discussions in progress regarding potential exits from a number of
the more mature portfolio assets, although there can be no
certainty that these will lead to profitable realisations.
Whilst the full impact of the UK's decision to leave the EU will
become clearer once formal negotiations commence, the Board and the
Manager have conducted a review of the portfolio and, at present,
believe that the overall effect is likely to be limited. The
businesses in which your Company has invested will focus on
maintaining or adapting their growth strategies as appropriate. A
number of exporters have already experienced a short-term benefit
from the devaluation of Sterling against several major currencies
that has occurred since the referendum in June 2016. The Board and
the Manager are also cognisant of the political situation in
Scotland and will monitor the potential impact on investee
companies there, should a second independence Referendum be
held.
The Board is pleased to note that, in June 2016, Maven received
industry recognition for its performance when it was named Private
Equity House of the Year, for the second year running, at the 2016
High Potential Business Awards (previously the M&A Awards).
This category celebrates outstanding growth businesses and their
financial backers, recognising private equity managers that have
displayed the keenest judgement and opportunism in completing
acquisitions or exit transactions. Maven was also named Private
Equity Manager of the Year at the ACQ Global Awards, which
celebrate achievement and innovation across the fund management
industry.
Dividends
The Directors resolved that the full dividend for the year ended
28 February 2017 should be 6.00p per Ordinary Share (2016: 6.00p),
of which 2.40p was paid as an interim dividend on 25 November 2016.
In order to ensure that the Company would continue to comply with
the VCT regulations at all times, it was decided that the balance
of the distribution for the year should be paid as a second interim
dividend.
Therefore, on 25 April 2017, the Board declared a second interim
dividend of 3.60p per Ordinary Share, comprising 0.50p of revenue
and 3.10p of capital, for payment on 26 May 2017 to Shareholders on
the register at 5 May 2017.This brought the total dividend for the
year to 6.00p per share, representing a yield of 9.60% based on the
year-end closing mid-market share price of 62.50p. The effect of
paying the second interim dividend was to reduce the NAV of the
Company by the total cost of the distribution. The Directors have
decided not to recommend the payment of a final dividend in respect
of the year ended 28 February 2017
Since the Company's launch, and after receipt of the second
interim dividend, Shareholders have received 76.70p per share in
tax-free dividends. The Board considers it important that
Shareholders are aware that the move to invest in development
capital and growth finance opportunities, as required by the
revised VCT legislation, is likely to result in less predictable
capital gains and income flows, with the result that the quantum
and timing of future dividend payments could be subject to
fluctuation.
Fund Raising
As the Company currently enjoys sufficient cash liquidity for
new investment, the Board has elected not to raise further funds
during the year.
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. 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 interests 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 between 5%
and 10% to the prevailing NAV per share.
Regulatory Developments
As previously reported, the Finance Act (No. 2) 2015 was enacted
in November 2015 and introduced a number of changes to the
legislation governing VCTs. The new rules are designed to bring the
UK VCT scheme into line with EU State Aid Rules for smaller company
investment and have introduced a number of restrictions on the
types of qualifying transactions and companies in which VCTs can
invest. Unlike previous changes in legislation, the new rules apply
to all funds raised by a VCT, including those raised prior to
November 2015.
The new rules specifically prohibit participation in management
buy-outs or acquisitions, and limit the ability to support older
companies unless specific criteria are met. The emphasis is,
therefore, on providing development capital to younger and earlier
stage companies, or supporting more established businesses which
can demonstrate growth strategies that satisfy specific provisions
under the revised qualification criteria. In a further amendment,
the March 2016 Budget Statement included changes to the rules
governing non-qualifying investments by VCTs. With effect from 6
April 2016, VCTs can only make qualifying investments and certain
limited non-qualifying investments for liquidity purposes, with
other types of new non-qualifying investments now prohibited.
The revised legislation has imposed additional diligence and
administrative requirements on the investment process in order to
ensure that all aspects of the potential investment and transaction
structure remain compliant with the new rules. The Manager
continues to pursue a cautious approach and works closely with a
specialist VCT adviser, engaged by the Company, to assist in
interpreting the revised legislation and advising on the VCT tax
clearance process with HM Revenue & Customs (HMRC), with
advance assurance secured prior to any new investment completing.
The Board welcomed the announcement in the Chancellor's 2016 Autumn
Statement that, in response to the increased volume of applications
submitted and the resultant delays experienced in obtaining
clearance for proposed investments, a consultation has been
launched to consider the options for streamlining the HMRC advance
assurance service.
The 2016 Autumn Statement also highlighted that the Government
will no longer be initiating a review into the potential to allow
replacement capital in certain new VCT transactions, but suggested
that this may be reviewed at some point in the future. Whilst the
Directors and the Manager were disappointed by this announcement,
as the ability to include replacement capital was viewed as an
important capability under the new rules, it does not impact the
Company's investment strategy which has already been adapted to
meet the requirements of the new rules. The Chancellor's 2017
Spring Statement did not introduce any further amendments to the
VCT legislation.
Annual General Meeting (AGM)
The 2017 AGM will be held in the London office of Maven Capital
Partners LLP on Thursday 6 July 2017, and the Notice of Annual
General Meeting can be found in the Annual Report.
The Future
The Directors are encouraged by the progress made during the
reporting period, where further growth in Shareholder value was
achieved despite the headwinds presented by the changes to VCT
legislation and the EU referendum. During the year, the Manager
demonstrated its capacity to adjust to these challenges, and
completed six new private company investments that meet the revised
VCT qualification criteria. Evidence of a strong pipeline of new
investments in progress at the time of this report gives the Board
further confidence in the future development and expansion of the
portfolio.
Maven and your Board are committed to carefully expanding the
asset base by investing in a diverse range of qualifying companies
that satisfy the requirements of the new VCT rules. Over time, the
Board expects the portfolio to grow in terms of the number of
investments, although its composition will gradually alter as the
proportion of investments supporting growth or development capital
increases relative to those in more established companies completed
prior to the VCT rule changes. This strategy will allow your
Company to develop a valuable hybrid portfolio of younger, higher
growth companies with the potential to deliver significant returns
from market disruptive products or services, alongside the existing
primary asset base of more mature companies. This rebalancing may
result in a less predictable trend in future Shareholder returns,
rather than the consistent year-on-year growth which has been
achieved previously. Nevertheless, your Board has confidence that
the quality of the existing portfolio remains capable of
underpinning Shareholder returns in the years ahead.
John Pocock
Chairman
2 June 2017
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 in the Annual Report. The Board
holds at least one separate meeting per annum to discuss strategic
matters.
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% of the Company's assets by cost in one
business at any time; and
-- borrowing up to 15% of net asset value, if required and only
on a selective basis, in pursuit of its investment strategy.
The Company had no borrowings as at 28 February 2017 and, as at
the date of the Annual Report, the Board has no intention of
utilising the borrowing facility.
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 that a
robust structured selection, monitoring and realisation process is
applied. 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 16 to the Financial Statements within the Annual
Report.
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;
-- loss of VCT status and reputational damage as a result of a
serious breach of other regulations such as the Financial Conduct
Authority Listing Rules and the Companies Act 2006; and
-- increased investment restrictions resulting from the EU State
Aid Rules enacted through the Finance Act (No. 2) 2015.
Legislative and Regulatory Risk
In order to maintain its approval as a VCT, the Company is
required to comply with VCT legislation in the UK as well as the EU
State Aid Rules. Changes in either 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 British Private Equity and Venture Capital
Association (BVCA).
The Company has retained Philip Hare & Associates LLP as VCT
advisers.
Breaches of other regulations including, but not limited to, the
Companies Act 2006, the FCA Listing Rules, the FCA Disclosure and
Transparency Rules or the Alternative Investment Fund Managers
Directive (AIFMD), could lead to a number of detrimental outcomes
and reputational damage.
The AIFMD, which regulates the management of alternative
investment funds, including VCTs, introduced a new authorisation
and supervisory regime for all investment companies in the EU. The
Company is approved by the FCA as a self-managed small registered
UK AIFM under the AIFMD.
The Company is also required to comply with tax legislation
under the Foreign Account Tax Compliance Act and the Common
Reporting Standard. The Company has appointed Capita Asset Services
to act on its behalf to report annually to HMRC and to ensure
compliance with this new legislation.
Political Risk
In a referendum held in June 2016, the UK voted to leave the EU
(a process informally known as Brexit). The formal process of
implementing this decision exists in Article 50 of the Lisbon
Treaty, which was invoked in March 2017. The political, economic
and legal consequences of the referendum vote are not yet known. It
is possible that investments in the UK may be more subjective to
value, more difficult to assess for suitability of risk, harder to
buy or sell, or subject to greater or more frequent rises and falls
in value. In the longer term, there is likely to be a period of
uncertainty as the UK seeks to negotiate its exit from the EU. The
UK's laws and regulations concerning funds may, in future, diverge
from those of the EU and this may lead to changes in the operation
of the Company, the rights of investors, or the territories in
which the shares of the Company may be promoted and sold.
An explanation of certain economic and financial risks and how
they are managed is also contained in Note 16 to the Financial
Statements within the Annual Report.
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 28 February 2017 and its performance during the year then
ended is included in the Chairman's Statement, which also includes
an overview of the Company's strategy and business model.
The management of the investment portfolio has been delegated to
Maven Capital Partners UK LLP (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 industry sectors and deal types. The level of VCT qualifying
investment 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;
-- dividend growth;
-- share price discount to NAV;
-- investment income; and
-- operational expenses.
The NAV total return is a measure of Shareholder value that
includes both the current NAV per share and the sum of dividends
paid to date. The dividend growth 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 and 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 as the Directors consider that both of these
elements are important components in the generation of Shareholder
returns.
There is no meaningful VCT 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 the Company's ranking within the VCT
sector by independent analysts.
In addition, the Directors consider economic, regulatory and
political trends and features that may impact on the Company's
future development and performance.
Valuation Process
Investments held by Maven Income and Growth VCT 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 are valued at their bid
prices.
Share Buy-backs
The Board will seek the necessary Shareholder authority to
continue to conduct a share buy-back programme under appropriate
circumstances.
Employee, Environmental and Human Rights Policy
The Company has no direct employee or environmental
responsibilities, nor is it responsible for the emission of
greenhouse gases. The Board's principal responsibility to
Shareholders is to ensure that the investment portfolio is managed
and invested properly. 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 the Annual Report. 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.
Independent Auditor
The Company's Independent Auditor is required to report if there
are any material inconsistencies between the content of the
Strategic Report and the Financial Statements. The Independent
Auditor's Report can be found in the Annual Report.
Future Strategy
The Board and Manager intend to maintain the policies set out
above for the year ending 28 February 2018, as it is believed that
these are in the best interests of Shareholders.
Approval
The Business Report, and the Strategic Report as a whole, was
approved by the Board of Directors and signed on its behalf by:
John Pocock
Director
2 June 2017
Income Statement
For the Year Ended 28 February 2017
Year ended 28 February Year ended 29 February
2017 2016
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------- -------- -------- -------- -------- --------
Gains on investments - 1,938 1,938 - 2,792 2,792
Income from investments 1,104 - 1,104 2,024 - 2,024
Other income 7 - 7 - - -
Investment management fees (136) (546) (682) (138) (552) (690)
Other expenses (287) - (287) (261) - (261)
----------------------------------- -------- -------- -------- -------- -------- --------
Net return on ordinary activities
before taxation 688 1,392 2,080 1,625 2,240 3,865
Tax on ordinary activities (147) 109 (38) (282) 111 (171)
----------------------------------- -------- -------- -------- -------- -------- --------
Return attributable to Equity
Shareholders 541 1,501 2,042 1,343 2,351 3,694
----------------------------------- -------- -------- -------- -------- -------- --------
Earnings per share (pence) 1.00 2.77 3.77 2.47 4.32 6.79
----------------------------------- -------- -------- -------- -------- -------- --------
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 one
reportable segment, the results of which are set out in the Income
Statement and Balance Sheet. The Company derives its income from
investments made in shares, securities and bank deposits.
There are no potentially dilutive capital instruments in issue
and, therefore, no diluted returns per share figures are relevant.
The basic and diluted earnings per share are, therefore,
identical.
The total column of this Statement is the Profit and Loss
Account of the Company.
Statement of Changes in Equity
For the Year Ended 28 February 2017
Share Capital Capital reserve Special Capital
Share premium reserve unrealised distributable redemption Revenue
capital account realised GBP'000 reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- -------- --------- --------------- -------------- -------------- --------- ---------
At 29 February
2016 5,420 10,253 (9,215) 2,795 26,417 227 992 36,889
Net return - - 888 613 - - 541 2,042
Dividends paid - - (2,411) - - - (840) (3,251)
Repurchase and
cancellation
of shares (15) - - - (91) 15 - (91)
--------------- --------- -------- --------- --------------- -------------- -------------- --------- ---------
At 28 February
2017 5,405 10,253 (10,738) 3,408 26,326 242 693 35,589
--------------- --------- -------- --------- --------------- -------------- -------------- --------- ---------
For the Year Ended 29 February 2016
Share Capital Capital reserve Special Capital
Share premium reserve unrealised distributable redemption Revenue
capital account realised GBP'000 reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- -------- --------- --------------- -------------- -------------- --------- ---------
At 28 February
2015 5,380 10,013 (9,609) 3,070 26,610 198 629 36,291
Net return - - 2,626 (275) - - 1,343 3,694
Dividends paid - - (2,232) - - - (980) (3,212)
Repurchase and
cancellation
of shares (29) - - - (193) 29 - (193)
Share issue 69 240 - - - - - 309
--------------- --------- -------- --------- --------------- -------------- -------------- --------- ---------
At 29 February
2016 5,420 10,253 (9,215) 2,795 26,417 227 992 36,889
--------------- --------- -------- --------- --------------- -------------- -------------- --------- ---------
The accompanying Notes are an integral part of the Financial
Statements.
Balance Sheet
As at 28 February 2017
28 February 2017 29 February 2016
GBP'000 GBP'000
Fixed assets
Investments at fair value through
profit or loss 27,935 34,827
Current assets
Debtors 620 793
Cash 7,101 1,580
------------------------------------- ---------------- ----------------
7,721 2,373
Creditors
Amounts falling due within one
year (67) (311)
------------------------------------- ---------------- ----------------
Net current assets 7,654 2,062
------------------------------------- ---------------- ----------------
Net assets 35,589 36,889
------------------------------------- ---------------- ----------------
Capital and reserves
Called up share capital 5,405 5,420
Share premium account 10,253 10,253
Capital reserve - realised (10,738) (9,215)
Capital reserve - unrealised 3,408 2,795
Special distributable reserve 26,326 26,417
Capital redemption reserve 242 227
Revenue reserve 693 992
------------------------------------- ---------------- ----------------
Net assets attributable to Ordinary
Shareholders 35,589 36,889
------------------------------------- ---------------- ----------------
Net asset value per Ordinary
Share (pence) 65.84 68.06
------------------------------------- ---------------- ----------------
The Financial Statements of Maven Income and Growth VCT PLC,
registered number 3908220, were approved and authorised for issue
by the Board of Directors on 2 June 2017 on its behalf by:
John Pocock
Director
The accompanying Notes are an integral part of the Financial
Statements.
Cash Flow Statement
For the Year Ended 28 February 2017
Year ended 28 February Year ended 29 February
2017 2016
GBP'000 GBP'000
Net cash flows from operating
activities (1,246) (1,003)
Cash flows from investing activities
Investment income received 1,174 2,038
Deposit interest received 7 -
Purchase of investments (7,414) (27,066)
Sale of investments 16,342 26,525
---------------------------------------- ---------------------- ----------------------
Net cash flows from investing
activities 10,109 1,497
---------------------------------------- ---------------------- ----------------------
Cash flows from financing activities
Equity dividends paid (3,251) (3,212)
Issue of Ordinary Shares - 4,013
Repurchase of Ordinary Shares (91) (193)
---------------------------------------- ---------------------- ----------------------
Net cash flows from financing
activities (3,342) 608
---------------------------------------- ---------------------- ----------------------
Net increase in cash 5,521 1,102
---------------------------------------- ---------------------- ----------------------
Cash at beginning of year 1,580 478
Cash at end of year 7,101 1,580
The accompanying Notes are an integral part of the Financial
Statements.
Notes to the Financial Statements
For the Year Ended 28 February 2017
1 Accounting Policies
(a) Basis of preparation
The Financial Statements have been prepared under FRS 102, The
Financial Reporting Standard applicable in the UK and Republic of
Ireland and in accordance with the Statement of Recommended
Practice for Investment Trust Companies and Venture Capital Trusts
(the SORP) issued by the AIC in November 2014.
(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; and
-- 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.
(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 (IPEVCV) 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
and loss. At subsequent reporting dates, investments are valued at
fair value, which represents the Directors' view of the amount for
which an asset could be exchanged between knowledgeable and 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. 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.
5. 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.
6. 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 - the unadjusted quoted price in an active market for
identical assets or liabilities that the entity can access at the
measurement date.
-- Level 2 - inputs other than quoted prices included within
Level 1 that are observable (ie developed using market data) for
the asset or liability, either directly or indirectly.
-- Level 3 - inputs are unobservable (ie for which market data
is unavailable) for the asset or liability.
(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.
(h) Significant judgements and estimates
Disclosure is required of judgements and estimates made by the
Board and the Manager in applying the accounting policies that have
a significant effect on the Financial Statements. The area
involving the highest degree of judgement and estimates is the
valuation of unlisted investments recognised in Note 8 and
explained in Note 1 (e) above.
Reserves
Share premium account
The share premium account represents the premium above nominal
value received by the Company on issuing shares net of issue
costs.
Capital reserves
Gains or losses on investments realised in the year that have
been recognised in the Income Statement are transferred to the
capital reserve realised account on disposal. Furthermore, any
prior unrealised gains or losses on such investments are
transferred from the capital reserve unrealised account to the
capital reserve realised account on disposal.
Increases and decreases in the fair value of investments are
recognised in the Income Statement and are then transferred to the
capital reserve unrealised account. The capital reserve realised
account also represents capital dividends, capital investment
management fees and the tax effect of capital items.
Special distributable reserve
The total cost to the Company of the repurchase and cancellation
of shares is represented in the special distributable reserve
account.
Capital redemption reserve
The nominal value of shares repurchased and cancelled is
represented in the capital redemption reserve.
Revenue reserve
The revenue reserve represents accumulated profits retained by
the Company that have not been distributed to Shareholders as a
dividend.
Return per Ordinary Share
Year ended 28 February Year ended 29 February
2017 2016
------------------------------------ ---------------------- ----------------------
The returns per share have been
based on the following figures:
Weighted average number of Ordinary
Shares 54,141,007 54,383,852
Revenue return GBP541,000 GBP1,343,000
Capital return GBP1,501,000 GBP2,351,000
------------------------------------ ---------------------- ----------------------
Total return GBP2,042,000 GBP3,694,000
------------------------------------ ---------------------- ----------------------
Net Asset Value per Ordinary Share
Net asset value per Ordinary Share as at 28 February 2017 has
been calculated using the number of Ordinary Shares in issue at
that date of 54,052,884 (2016: 54,197,884)
Directors' Responsibility Statement
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 28 February 2017 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,
is fair, balanced and understandable and provides the information
necessary for Shareholders to assess the Company's position and
performance, business model and strategy.
Other Information
The Annual General Meeting will be held on Thursday 6 July 2017,
commencing at 12.00 noon, at the offices of Maven Capital Partners
UK LLP, Fifth Floor, 1-2 Royal Exchange Buildings, London EC3V
3LF.
Copies of this announcement, and of the Annual Report and
Financial Statements for the year ended 28 February 2017, will be
available to the public at the offices of Maven Capital Partners UK
LLP, Kintyre House, 205 West George Street, Glasgow G2 2LW; at the
registered office of the Company, Fifth Floor, 1-2 Royal Exchange
Buildings, London EC3V 3LF and on the Company's website at
www.mavencp.com/migvct.
The Annual Report and Financial Statements for the year ended 28
February 2017 will be issued to Shareholders and filed with the
Registrar of Companies 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 29 February 2016 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.
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 will be submitted to the National Storage
Mechanism and will be available for inspection at:
www.morningstar.co.uk/uk/NSM .
By Order of the Board
Maven Capital Partners UK LLP
Secretary
2 June 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
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