TIDMMIG3
RNS Number : 7552R
Maven Income and Growth VCT 3 PLC
11 March 2016
Maven Income and Growth VCT 3 PLC
Final results for the year ended 30 November 2015
The Directors report the Company's financial results for the
year ended 30 November 2015.
Highlights for the Year
-- NAV total return of 138.3p per share (2014: 128.2p) at the
year end, up 7.9% over the year
-- NAV at period end of 91.1p per share (2014: 86.5p)
-- Five new private equity investments added to the portfolio
-- Sale of Cash Bases, achieving a total return of 7.1 times cost
-- Realisation of Steminic, for a total return of 3.3 times cost
-- Exit from Six Degrees Group, generating a total return multiple of 2.1 times cost
-- Disposal of XPD8 Solutions, delivering a 1.75 times return on cost
-- Increased final dividend of 3.75p per share (2014: 3.50p) proposed
Strategic Report
Chairman's Statement
On behalf of your Board I am pleased to report another
successful year for the Company. During the 12 months to 30
November 2015 NAV total return increased by 7.9% year-on-year
driven by four profitable realisations, valuation uplifts and
investment income generated from the portfolio. Given the robust
performance achieved in the year the Board is recommending an
increase in the final dividend to 3.75p per share, bringing the
total for the year to 5.75p.
During the period under review the Manager has continued to
follow the proven strategy of investing in a diversified portfolio
of attractive growth businesses, and has delivered improvements in
Shareholder value through a number of profitable exits; the most
significant being the sale of Cash Bases in October 2015 which
achieved a premium return of 7.1 times cost. Your Company has also
added five new private equity investments, and supported a number
of existing portfolio companies. The yield derived from the
portfolio continues to be a core focus of the Manager in order to
maintain attractive tax-free distributions to Shareholders.
Developments within the portfolio are detailed in the Investment
Manager's Review. Notably the further progress achieved by Crawford
Scientific, Just Trays, John McGavigan, Nenplas, SPS (EU) and
Westway Services Holdings has enabled the Board to adjust the
valuations to reflect increased fair value. Others, such as Cat
Tech International, ISN Solutions Group, R&M Engineering Group,
D Mack and Maven Co-invest Fletcher, have had their valuations
reduced in response to challenging trading conditions.
The Board is pleased to note that Maven received industry
recognition for its performance during the year when it was named
Private Equity House of the Year at the 2015 M&A Awards, one of
the leading events in the corporate finance calendar. This category
recognises private equity managers that have displayed the keenest
judgement and opportunism in completing acquisitions or exit
transactions, including an acknowledgement of their contribution in
increasing the value of investee businesses. Maven was also
shortlisted at the 2015 unquote" British Private Equity Awards in
the VCT House of the Year category, whilst the 3.8 times cost exit
achieved by your Company in 2014 from EFC Group was nominated for
VCT Exit of the Year.
Shareholders may be aware of the significant legislative changes
which were introduced to the UK VCT scheme during the period. The
July 2015 Budget announced a number of amendments designed to bring
the UK into line with European Union (EU) State Aid rules for
smaller company investment. The revised legislation imposes
restrictions on the types of transactions and companies which VCTs
are able to invest in, with strict limitations around acquisitions
(specifically prohibiting the financing of management buy-outs),
restrictions on providing follow-on funding to existing portfolio
companies, a lifetime cap on the amount of funding a company can
receive and an age restriction on investee companies. The Board has
reviewed the new legislation and, following detailed discussions
with the Manager, has concluded that Maven remains well placed to
adapt to the new requirements. The Directors believe Maven's track
record and experience in sourcing and executing similar
transactions for non-VCT clients, for whom over 40 development
capital transactions have been completed since 2011, provides the
Manager with sufficient flexibility and resource to identify and
complete transactions which qualify under the terms of the new
legislation.
Dividends
The Board recommends that an increased final dividend of 3.75p
per Ordinary Share, comprising 1.5p of revenue and 2.25p of
capital, be paid on 29 April 2016 to Shareholders on the Register
at 1 April 2016. This would bring total dividends for the year to
5.75p per share, an increase of 4.5% over the prior year,
representing a yield of 7.59% based on the year end closing
mid-market share price of 75.75p.
Since the Company's launch, and after receipt of the proposed
final dividend, Shareholders will have received 50.95p 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.
On 24 August 2015 the Board announced that, under the Terms and
Conditions of the Company's Dividend Investment Scheme (DIS) which
allow the Directors to suspend or terminate its operation without
prior notice and revert to making monetary payments to all
Participants, the Directors had resolved that, in light of the
investment restrictions proposed in the Government's July 2015
Budget, the DIS was to be suspended with immediate effect to allow
the Directors and the Manager to review the changes to the VCT
legislation and to consider the full potential impact of these on
the Company's future investment strategy. As a result, until
further notice, all future dividends will be paid to Shareholders
either by cheque or direct bank transfer using existing mandate
instructions.
Fund Raising
In October 2014 the Company announced that it planned to raise
up to GBP4 million in an Offer for Subscription alongside offers by
four other Maven VCTs. The Offer by your Company was fully
subscribed by 30 January 2015 and, consequently, closed early.
Relevant details regarding shares issued during the year under
review in respect of the Offer can be found in Note 12 to the
Financial Statements.
As the Company currently enjoys significant cash liquidity for
new investment, the Board has elected not to raise further funds at
present.
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 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.
Management and Administration Fees
HM Revenue & Customs (HMRC) has confirmed that VAT is no
longer payable on secretarial fees. The Manager has sought the
recovery of amounts paid previously and the total sum of GBP76,000
received during the year has been reflected in the Financial
Statements.
Regulatory Developments
The July 2015 Budget received Royal Assent on 18 November,
bringing into statute a number of material changes to the
legislation governing UK VCT schemes, aligning them with EU State
Aid rules for smaller company investments. The new rules impose
specific restrictions on the types of companies and transactions
which VCTs are able to pursue in order to retain qualifying status
including specific restrictions on a VCTs ability to finance
management buy-outs and fund acquisitions, limitations on the
ability to provide follow on funding to existing portfolio
companies, a lifetime cap on the amount of funding a company can
receive and an age restriction for investee companies. In order to
ensure ongoing compliance with the new rules, the Company has
engaged the services of investment advisers to assist in
interpreting the revised legislation and to offer specific
expertise and advice on new transactions.
Since the announcement of the new rules, the Manager has been
actively involved in the consultation process through the industry
representative body, the Association of Investment Companies (AIC),
which, supported by other leading VCT managers, has engaged with HM
Treasury and HMRC on the practical application of the new
rules.
The 2014 UK Corporate Governance Code introduced a new
requirement to include a viability statement regarding the
Directors' assessment of the future prospects of the Company. The
Board has fully considered the Company's current position,
principal risks and future expectations, and the Directors'
statement of viability can be found in the Annual Report.
With effect from 1 January 2016 new tax legislation under The
OECD (Organisation for Economic Co-operation and Development)
Common Reporting Standard for Automatic Exchange of Financial
Account Information ("the Common Reporting Standard") is being
introduced. The legislation will require investment trust
companies, including VCTs, to provide personal information to HMRC
on certain investors who purchase shares in investment trusts and
VCTs. As a result, the Company, will have to provide information
annually to the local tax authority on the tax residencies of a
number of non-UK based certificated shareholders, and corporate
entities.
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All new Shareholders, excluding those whose shares are held in
CREST, entered onto the share register from 1 January 2016 will be
sent a certification form for the purposes of collecting this
information. For further information, please see HMRC's Quick
Guide: Automatic Exchange of Information - information for account
holders: https://www.gov.uk/
government/publications/exchange-of-information-account-
holders.
Board of Directors
Your Board has previously intimated its intention to implement
its succession plan and, as detailed in the 2014 Annual Report, I
intend to stand down and not seek re- election following conclusion
of the Annual General Meeting (AGM) to be held on 13 April 2016. It
is proposed that Atul Devani be appointed as Chairman following
conclusion of the AGM. Keith Pickering was appointed as a Director
on 15 April 2015 and is proposed for election at the 2016 AGM. As
previously stated, Alec Craig will stand down at the AGM to be held
in 2017. The appointment of new Directors and the future
constitution of the Board will be confirmed and communicated fully
to Shareholders in due course.
The Future
The Company has previously adopted a strategy of investing in a
diversified portfolio of later-stage businesses capable of
generating high levels of income and capital growth. Whilst the
asset mix of the portfolio is likely to alter over time to include
a number of younger and earlier-stage businesses, the Board is
confident that the selective and conservative investment approach
adopted by the Manager will continue to deliver positive
Shareholder returns.
Gregor Michie
Chairman
10 March 2016
Maven Income and Growth VCT 3 PLC
Business Report
Introduction
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 this report.
Investment Objective
The Company aims to achieve long term capital gains and generate
maintainable levels of income for Shareholders.
Business Model and Investment Policy
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.
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
attached to the investment portfolio as a whole by ensuring that a
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.
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.
Maven Income and Growth VCT 3 PLC
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
serious breach of other regulations such as the FCA Listing Rules
and the Companies Act 2006; and
-- investment restrictions resulting from the EU State Aid Rules
enacted through the Finance Act 2015.
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 EU State Aid rules. Changes in the future to UK legislation
or the EU 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).
The Company has retained Gowling WLG (UK) LLP as VCT advisers to
the Company.
Breaches of other regulations, including the Companies Act 2006,
the FCA Listing Rules, the Common Reporting Standard or the
Alternative Investment Fund Managers Directive (the AIFMD), could
lead to a number of detrimental outcomes and reputational damage.
Breaches of control by service providers, such as Capita who manage
the Company's Common Reporting Standard requirements, could also
lead to reputational damage or loss. However, to mitigate these
risks the Board has established controls and reviews to ensure that
the Company continues to meet its regulatory responsibilities.
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 this 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 30 November 2015 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, 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 by industry sector and deal type show 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 Audit and 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;
-- 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. 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.
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There is no meaningful venture capital trust index against which
to compare the performance of the Company. However, 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 3 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
The Company has no direct employee or environmental
responsibilities, nor is it responsible for the emission of
greenhouse gases. However, the Directors will consider economic,
regulatory and political trends and features that may impact on the
Company's future development and performance. 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 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.
Auditor
The Company's Auditor is required to report if there are any
material inconsistencies between the content of the Strategic
Report and the Financial Statements.
Future Strategy
The Board and Manager intend to maintain the policies set out
above for the year ending 30 November 2016 as it is believed that
these are in the best interests of Shareholders.
Gregor Michie
Chairman
10 March 2016
Maven Income and Growth VCT 3 PLC
Income Statement
For the Year Ended 30 November 2015
Year ended 30 November
2014
=======
Year ended 30 Revenue Capital Total
November 2015 GBP'000 GBP'000 GBP'000
Revenue Capital
Total
GBP'000 GBP'000
GBP'000
======================== ======================== ======== ======== ========
Gains on investments - 3,512 3,512 - 3,076 3,076
Income from investments 1,849 - 1,849 1,437 - 1,437
Other income 1 - 1 2 - 2
Investment management
fees (175) (699) (874) (147) (589) (736)
Other expenses (215) - (215) (415) - (415)
------------------------- ------- ------ ------- -------- -------- --------
Net return on ordinary
activities 1,460 2,813 4,273 877 2,487 3,364
before taxation
Tax on ordinary
activities (257) 141 (116) (173) 118 (55)
------------------------- ------- ------ ------- -------- -------- --------
Return attributable
to Equity Shareholders 1,203 2,954 4,157 704 2,605 3,309
------------------------- ------- ------ ------- -------- -------- --------
Earnings per share
(pence) 2.98 7.33 10.31 1.96 7.26 9.22
------------------------- ------- ------ ------- -------- -------- --------
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.
Maven Income and Growth VCT 3 PLC
Reconciliation of Movements in Shareholders' Funds
For the Year Ended 30 November 2015
Year ended Year ended
30 November 30 November 2014
2015 GBP'000
GBP'000
============================= ============= ==================
Opening Shareholders'
funds 31,958 26,838
Net return for year 4,157 3,309
Net proceeds of
share issue 3,966 4,088
Net proceeds of
DIS issue 39 -
Repurchase and cancellation
of shares (209) (336)
Dividends paid -
revenue (827) (741)
Dividends paid -
capital (1,448) (1,200)
----------------------------- ------------- ------------------
Closing Shareholders'
funds 37,636 31,958
----------------------------- ------------- ------------------
The accompanying Notes are an integral part of the Financial
Statements
Maven Income and Growth
VCT 3 PLC
Balance Sheet
As at 30 November 2015
30 November 30 November
2015 2014
GBP'000 GBP'000
=============================== ============= =============
Fixed assets
Investments at fair value
through profit or loss 36,521 29,118
Current assets
Debtors 444 1,552
Cash 866 1,385
-------------------------------- ------------- -------------
1,310 2,937
Creditors: amounts falling
due within one year (195) (97)
-------------------------------- ------------- -------------
Net current assets 1,115 2,840
-------------------------------- ------------- -------------
Net assets 37,636 31,958
-------------------------------- ------------- -------------
Capital and reserves
Called up share capital 4,132 3,694
Share premium account 13,820 10,280
Capital reserve - realised (2,064) (3,405)
Capital reserve - unrealised 3,315 3,150
Distributable reserve 16,563 16,772
Capital redemption reserve 713 686
Revenue reserve 1,157 781
-------------------------------- ------------- -------------
Net assets attributable
to Ordinary Shareholders 37,636 31,958
-------------------------------- ------------- -------------
Net asset value per ordinary
share (pence) 91.1 86.5
-------------------------------- ------------- -------------
The financial Statements of Maven Income and Growth VCT 3 PLC,
registered number 04283350, were approved by the Board of Directors
and were signed on its behalf by:
Gregor Michie
Director
10 March 2016
The accompanying Notes are an integral part of the Financial
Statements
Maven Income and Growth VCT 3 PLC
Cash Flow Statement
For the Year Ended 30 November 2015
Year Year ended
ended 30
30 November
November 2014
2015 (restated)
GBP'000 GBP'000
------------------------------------------ -------------------------------------- ----------------------------------------
Net
cashflows
from
operating
activities (1,132) (1,236)
Cashflows
from
investing
activities
Investment
income
received 2,012 1,536
Deposit
interest
received 1 2
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Purchase of
investments (23,944) (10,743)
Sale of
investments 20,989 8,622
------------------------------------------ -------------------------------------- ----------------------------------------
Net
cashflows
from
investing
activities (942) (583)
------------------------------------------ -------------------------------------- ----------------------------------------
Cashflows
from
financing
activities
Equity
dividends
paid (2,275) (1,941)
Issue of
Ordinary
Shares 4,005 4,088
Repurchase
of Ordinary
Shares (175) (336)
------------------------------------------ -------------------------------------- ----------------------------------------
Net
cashflows
from
financing
activities 1,555 1,811
------------------------------------------ -------------------------------------- ----------------------------------------
Net decrease
in cash (519) (8)
------------------------------------------ -------------------------------------- ----------------------------------------
Cash at
beginning
of
year 1,385 1,393
Cash at end
of year 866 1,385
*The 2014 cashflow has been restated for presentation
requirements of FRS 102.
The accompanying notes are an integral part of the Financial
Statements.
Maven Income and Growth VCT 3 PLC
Notes to the Financial Statements
For the Year Ended 30 November 2015
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 Association of Investment Companies (AIC)
in November 2014. The early adoption of FRS 102 and the SORP for
this financial year was recommended by the Audit and Risk
Committee. There are no significant changes to the Company's
accounting policies as a result of the adoption of FRS 102 and the
SORP.
(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 for 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.
For investments completed prior to the reporting date, 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.
Whenever practical, recent investments will be valued by
reference to a material arm's length transaction or a quoted
price.
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.
Where there is evidence of impairment, a provision may be taken
against the previous valuation of the investment.
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.
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.
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
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