Annual Financial Report

RNS Number : 3501S

Maven Income and Growth VCT 5 PLC

17 March 2016

 

Maven Income and Growth VCT 5 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 71.47p per share (2014: 66.95p) at the year end, up 6.75% over the year

·           NAV at period end of 41.42p per share (2014: 39.50p)

·           Seven new private equity investments added to the portfolio

·           Income from investments increased by 40% over the prior year

·           Realisation of Steminic for a total return of 1.3 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

·           A total of £2,543,000 of proceeds realised from AIM disposals

·           AIM concentration reduced to 34% of total assets

·           Final dividend of 1.75p per share (2014: 1.70p) proposed

Strategic Report 

Chairman's Statement

On behalf of your Board, I am pleased to report on another successful year for the Company with NAV total return up 6.75% over the period. This performance further demonstrates the effective implementation of the investment strategy which has the primary objective of improving Shareholder returns by rebalancing the portfolio towards income generating private companies whilst gradually reducing the proportion invested in AIM. In light of the improvements to income alongside the capital receipts from successful exits, your Board is proposing an increase in the final dividend, representing a 6% uplift in the total dividend over the prior year.

 

In the period under review further progress has been made in reshaping the portfolio in line with the investment strategy adopted in February 2011, when Maven was appointed as Manager. A key component has been the phased reduction in the quoted security holdings whilst building a portfolio of diversified private equity assets capable of generating income and capital returns. This was demonstrated in the period by a 40% increase in investment income and three profitable private company exits.

 

The careful management of the reduction in the AIM portfolio has continued throughout the year, with the Manager taking the opportunity to lock in profits on the back of positive trading and share price momentum, resulting in realisations of £2.54 million in the period. As at 30 November 2015 the proportion of the portfolio invested in quoted security holdings had reduced to 34% of total assets, from 41% in the prior period and from 84% in February 2011. It is intended that the Manager will continue the policy of selectively disposing of quoted holdings for best possible value as opportunities arise.

In the period under review the Company invested in seven new private equity investments in a range of industries with a wide geographic base, and a number of existing portfolio companies were supported through follow-on funding. The performance of the private company portfolio has been generally robust a number of valuation uplifts have been made. The Board has taken the opportunity to reduce the valuations of several holdings, particularly in the oil & gas sector, in response to challenging trading and market conditions. Full details of the developments within the portfolio are detailed in the Investment Manager's Review.

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 have reviewed the new legislation, and following detailed discussions with the Manager, have 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 a final dividend of 1.75p per Ordinary Share, comprising 0.40p of revenue and 1.35p 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 2.65p per share, an increase of 6.0% over the prior year and represents a yield of 7.36% based on the year-end closing mid-market share price of 36.0p.

Since the Company's launch, and after receipt of the proposed final dividend, Shareholders will have received 31.80p 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 by either cheque or direct bank transfer using existing mandate instructions.

Fund Raising

In October 2014 the Company announced that it planned to raise up to £4 million in an Offer for Subscription alongside offers by four other Maven VCTs. The Offer by your Company was fully subscribed by 5 February 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.

Following further realisations post year end, the Company currently enjoys significant cash liquidity for new investment.

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 10% and 15% to the prevailing NAV per share.

Management and Administration Fees

In order to compensate Maven for additional fixed costs that it has committed to pay on behalf of the Company, with effect from 1 June 2015 the investment management fee payable to the Manager under the investment management agreement was increased to 1.6% (previously 1.5%) of total assets per annum and this has been independently confirmed as a fair and reasonable related party transaction. Your Company continues to enjoy one of the most competitive fee structures in the generalist VCT sector.

HM Revenue & Customs (HMRC) has also confirmed that VAT is no longer payable on performance and secretarial fees. The Manager has sought the recovery of amounts paid previously and the total sum of £119,000 received during the year has been reflected in Notes 3 and 4 to the Financial Statements.

As a result of these changes the ongoing charges ratio (excluding performance fees) has been reduced from 3.2% (for the year to 30 November 2010) to 2.3% (for the year to November 2015). 

 

Regulatory Developments

The July 2015 Budget received Royal Assent on 18 November 2015 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 VCT's 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 specifically in relation to proposed 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 for companies 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 on pages 34 and 35 of 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 residency of a number of non-UK based certificated shareholders, and corporate entities.

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.

Annual General Meeting (AGM)

 

As indicated in previous Annual Reports, AGMs have been held in Glasgow and London in alternate years in order to allow a wider range of Shareholders the opportunity to meet the Directors and the Manager. The 2016 AGM will be held in Glasgow on 19 April 2016, and the Notice of Annual General Meeting can be found on pages 73 to 77 of the Annual Report.

The Future

In the five years since Maven was appointed as Manager the portfolio has been materially restructured and the concentration in the AIM market significantly reduced. The further increase in investment income, and several profitable exits achieved this year, validates the strategy put in place in 2011. Whilst it is acknowledged that the recent changes in legislation may result in a reduction in the number of opportunities available to the Company, your Board is confident that the large and experienced resource available to the Manager across the key UK regions will allow its investment team to continue to source attractive VCT qualifying businesses to enable your Company to continue to meet its investment objective.

Allister Langlands

Chairman

16 March 2016

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 this report.

Investment Objective

The Company aims to achieve long term capital appreciation and generate maintainable levels of income for Shareholders. Maven Capital Partners UK LLP (Maven or the Manager) was appointed in February 2011 with a view to applying a new investment policy, as set out below, and changing the focus of the portfolio from AIM/ISDX quoted companies to unquoted private company investments.

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 £1 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 Board has no intention of approving any borrowing at this time.

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.

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 serious breach of other regulations such as the FCA Listing Rules and the Companies Act 2006; and

·          increased 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 and the British Venture Capital Association (BVCA).

The Company has retained Gowling WLG (UK) LLP as VCT advisers.

Breaches of other regulations, including the Companies Act 2006, the FCA Listing Rules, the FCA Disclosure and Transparency Rules or the Alternative Investment Fund Managers Directive (the AIFMD), could lead to a number of detrimental outcomes and reputational damage.

The AIFMD, which regulates the management of alternative investment funds, including VCTs, was fully implemented with effect from 22 July 2014 and introduced a new authorisation and supervisory regime for all investment companies in the European Union. The Board is approved by the FCA as a self-managed small registered UK AIFM under the AIFMD.

As referred to in the Chairman's Statement, the Company requires to comply with new tax legislation under the Common Reporting Standards. The Company has appointed Capita Asset Services to act on behalf of the Company to report annually to HMRC and to ensure compliance with this new legislation.

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 business model and strategy.

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 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:

·           the progress being made on the transition of the legacy AIM portfolio to one focused on new unquoted investments;

·           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.

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.

However, the Directors will 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 5 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 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 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.

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. The Independent Auditor's Report is contained within the Annual Report.

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.

Allister Langlands

Chairman

16 March 2016

 

Maven Income and Growth VCT 5 PLC

Income Statement

For the Year Ended 30 November 2015

		Year ended 30 November 2015			Year ended 30 November 2014
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments		-	3,581	3,581	-	3,180	3,180
Income from investments and deposit interest		830	-	830	593	-	593
Investment management fees		(175)	(524)	(699)	(157)	(473)	(630)
Other expenses		(224)	-	(224)	(294)	-	(294)
Net return on ordinary activities		431	3,057	3,488	142	2,707	2,849
before taxation
Tax on ordinary activities		(68)	68	-	-	-	-
Return attributable to Equity Shareholders		363	3,125	3,488	142	2,707	2,849
Earnings per share (pence)		0.48	4.16	4.64	0.21	4.09	4.30

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 5 PLC

Reconciliation of Movements in Shareholders' Funds

For the Year Ended 30 November 2015

		Year ended		Year ended
		30 November 2015		30 November 2014
			£'000		£'000
Opening Shareholders' funds			26,702		22,569
Net return for year			3,488		2,849
Net proceeds of share issue			3,965		3,064
Net proceeds of DIS issue			24		-
Repurchase and cancellation of shares			(131)		(321)
Dividends paid - revenue			(155)		-
Dividends paid - capital			(1,861)		(1,459)
Closing Shareholders' funds			32,032		26,702

The accompanying Notes are an integral part of the Financial Statements.

 

Maven Income and Growth VCT 5 PLC

Balance Sheet

As at 30 November 2015

		30 November 2015	30 November 2014
		£'000	£'000
Fixed assets
Investments at fair value through profit or loss		30,488	25,899
Current assets
Debtors		168	330
Cash		1,717	755
		1,885	1,085
Creditors:
Amounts falling due within one year		(341)	(282)
Net current assets		1,544	803
Net assets		32,032	26,702
Capital and reserves
Called up share capital		7,734	6,760
Share premium account		8,816	5,840
Capital reserve - realised		(20,515)	(19,779)
Capital reserve - unrealised		(4,663)	(6,663)
Special distributable reserve		38,219	38,350
Capital redemption reserve		3,545	3,506
Revenue reserve		(1,104)	(1,312)
Net assets attributable to Ordinary Shareholders		32,032	26,702
Net asset value per Ordinary Share (pence)		41.42	39.50

The Financial Statements of Maven Income and Growth VCT 5 PLC, registered number 4084875, were approved and authorised for issue by the Board of Directors on 16 March 2016 and were signed on its behalf by:

Allister Langlands

Director

The accompanying Notes are an integral part of the Financial Statements.
 

Maven Income and Growth VCT 5 PLC

Cash Flow Statement

For the Year Ended 30 November 2015

	Year ended 30 November 2015		Year ended 30 November 2014
				(restated)*
		£'000		£'000
Net cash flows from operating activities		(854)		(1,017)
Cash flows from investing activities
Investment income received		819		513
Purchase of investments		(22,840)		(20,344)
Sale of investments		21,995		18,381
Net cash flows from investing activities		(26)		(1,450)
Cash flows from financing activities
Equity dividends paid		(2,016)		(1,459)
Issue of Ordinary Shares		3,989		3,064
Repurchase of Ordinary Shares		(131)		(321)
Net cash flows from financing activities		1,842		1,284
Net increase/(decrease) in cash		962		(1,183)
Cash at beginning of year		755		1,938
Cash at end of year		1,717		755

*The 2014 cashflow has been restated for the presentation requirements of FRS 102.

The accompanying Notes are an integral part of the Financial Statements
 

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 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 fixed 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 25% to revenue and 75% 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.

1.          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.

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.

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 - 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; and

·          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.

 

Reserves

	Share premium account	Capital reserve realised	Capital reserve unrealised	Special distributable reserve	Capital redemption reserve	Revenue reserve
	£'000	£'000	£'000	£'000	£'000	£'000
At 1 December 2014	5,840	(19,779)	(6,663)	38,350	3,506	(1,312)
Gains on sales of investments	-	1,581	-	-	-	-
Net increase in value of investments	-	-	2,000	-	-	-
Investment management fees	-	(524)	-	-	-	-
Tax effect of capital items	-	68	-	-	-	-
Dividends paid	-	(1,861)	-	-	-	(155)
Repurchase and cancellation of shares	-	-	-	(131)	39	-
Share issue	2,961	-	-	-	-	-
DIS share issue	15	-	-	-	-	-
Net return on ordinary activities	-	-	-	-	-	363
At 30 November 2015	8,816	(20,515)	(4,663)	38,219	3,545	(1,104)

Return per Ordinary Share

The returns per share have been based on the following figures:

	Year ended	Year ended
	30 November 2015	30 November 2014
Weighted average number of Ordinary Shares in issue	75,119,671	66,160,258
Revenue return	£363,000	£142,000
Capital return	£3,125,000	£2,707,000
Total return	£3,488,000	£2,849,000

Net asset value per Ordinary Share

The net asset value per Ordinary Share as at 30 November 2015 has been calculated using the number of Ordinary Shares in issue at that date of 77,341,087 (2014: 67,602,492).

Other information

The Annual General Meeting will be held on Tuesday 19 April 2016, commencing at 10.00 am, at Kintyre House, First Floor, 205 West George Street, Glasgow, G2 2LW.

Copies of this announcement, and of the Annual Report and Financial Statements for the year ended 30 November 2015, 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/migvct5.

The Annual Report and Financial Statements for the year ended 30 November 2015 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 30 November 2014 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. 

Directors' responsibility statement

The Directors confirm 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 and loss of the Company as at 30 November 2015 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.

By order of the Board

Maven Capital Partners UK LLP

Secretary

16 March 2016

 

END

 

 

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