Annual Financial Report

RNS Number : 4783E

Maven Income & Growth VCT 4 PLC

09 April 2014

 

Maven Income and Growth VCT 4 PLC

Final results for the year ended 31 December 2013

 

Chairman's Statement

The Directors report the Company's financial results for the year ended 31 December 2013.

On behalf of your Board I am pleased to announce the results for the twelve months to 31 December 2013, with net assets increasing to £29 million following a positive trading period, the merger with Ortus VCT plc and a successful Offer for subscription which raised a further £4.2 million of share capital.

Following shareholder approval, the Company completed a share class consolidation and a merger with Ortus VCT PLC on 3 April 2013, details of which were contained in a shareholder circular and prospectus dated 1 March 2013. The objective was to create a larger and more efficient Company while protecting shareholders from the lack of diversification in the Ortus portfolio resulting from the investment strategy pursued prior to the appointment of Maven Capital Partners UK LLP (Maven) as Manager. The Boards of both Companies agreed that the common assets would merge into the Ordinary Share pool and the legacy investments would be segregated into a new C Share pool, which would be managed separately for a period of up to two years. Ortus Shareholders received shares in each pool.

As a result of the merger, and expansion of the asset base through ongoing investment in private equity holdings, the enlarged Ordinary portfolio has generated income from investments in excess of £1 million in the period under review, enabling your Board to declare an increased annual revenue dividend for Ordinary Shareholders.

The Maven team has continued to demonstrate its ability to create value in investee companies and attract interest from buyers, and several successful exits have been achieved during the period, including a realisation of the largest legacy asset within the C Share portfolio. Proceeds from these disposals have enabled both share pools to invest in further income generating later-stage businesses, and your Company participated in eleven new private equity transactions, as well as seven follow-on investments supporting the development of existing investee companies during the twelve month period. The majority of these businesses are trading positively, and strong performances have enabled the Board to write up the values of, amongst others, Maven

Co-invest Exodus, Torridon and Steminic. Conversely, adverse events at Lawrence Recycling, Training for Travel and Higher Nature have led to their values being reduced or written off. Developments within the portfolio are detailed in the Investment Manager's Review.

In line with the strategy of reducing the exposure to AIM, a number of further disposals were made during the period and at the year end listed securities represented only 1% of the asset base for the Ordinary Share pool and 11% for the C Share pool. The Manager will continue the policy of disposing of quoted holdings for best possible value in cases where the investments are underperforming or to take the opportunity to lock in profits.

We are also pleased to note that Maven's success as a private equity manager has continued to be acknowledged, with a range of nominations and awards across the UK which recognise the quality of its investment team and your Company's portfolio.

Highlights for the year

·      NAV total return of 127.90p per Ordinary Share (2012: 122.75p) at the year end, up 4.2% over the year

·      NAV at period end of 98.60p per Ordinary Share (2012: 98.20p) and 94.00p per C Ordinary Share

·      Eleven new investments added to the portfolio

·      Realisation of Atlantic Foods Group for a total return of 1.8x cost

·      Partial exit from Homelux Nenplas at an exit multiple of 3.8x cost alongside a secondary buy-out of the Nenplas business

·      Successful IPO of esure, generating cash proceeds of £602,000 and an exit multiple of 2.8x cost

·      Final dividend proposed of 2.65p per share making the full year dividend 4.65p (2012: 4.50p)

Dividends

The Board recommends a final dividend of 2.65p per Ordinary Share to be paid on 30 May 2014 to Shareholders on the Register at 9 May 2014. This brings total dividends for the year to 4.65p per Ordinary Share, representing a yield of 5.6% on the year end closing share price of 83.12p.

Since the Company's launch, and after receipt of the proposed final dividend, Ordinary Shareholders will have received 31.95p per share to date in tax-free dividends. The effect of paying the proposed dividend would be to reduce the NAV of the Company by the total cost of the distribution.

Ortus Shareholders received a special dividend of 2.00p per Ortus Ordinary Share on 17 April 2013, paid from cash transferred from Ortus to the C Share pool. By that time, Ordinary, S and Ortus Shareholders who invested at the outset had received dividends totalling 27.30p, 13.35p and 15.41p respectively.

New Annual Reporting Requirements

Changes have been made to the narrative reporting requirements for annual reports in respect of years ending on or after 30 September 2013 and, therefore, this report includes a Strategic Report, a revised format for the Directors' Remuneration Report (including a new Remuneration Policy Report) and a number of other consequent changes, including enhanced reports on the activities of the Audit Committee.

Fund Raising and Share Buy-backs

An Offer for Subscription was included in the Ortus merger documentation, resulting in the issue of 4,324,206 new Ordinary Shares and raising an additional £4,224,749 of share capital. The Offer closed on 30 April 2013.

In September 2013, the Company announced that it planned to raise up to £4 million in a joint Offer for Subscription alongside the other Maven VCTs. The first allotment under the Offer took place on 3 February 2014 when 2,432,334 new Ordinary Shares were issued. On 5 April 2014 a further 1,292,767 new Ordinary Shares were issued in respect of the 2013/14 tax year. It is anticipated that the Offer will remain open until 30 April 2014 in respect of the 2014/15 tax year, unless fully subscribed at an earlier date and subject to the Directors' right to close or extend the Offer at any time. The full terms of the Offer, which includes an over-allotment facility to allow the Company to raise a further £1 million, are set out in a detailed Prospectus that was issued on 24 October 2013, along with a Circular explaining the necessary authorities required for the Offer to proceed, which were duly confirmed at a General Meeting held on 27 November 2013. Additional information was provided in the Supplementary Prospectuses issued on 10 February, 17 March and 7 April 2014.

The Company may use the money raised under these Offers to pay dividends and general running costs, thereby preserving for investment purposes an equivalent sum of more valuable 'old money' which operates under more advantageous VCT regulations. The proceeds of the Offers will provide additional liquidity for the Company to make further later-stage investments, and enable it to spread its costs over a larger asset base to the benefit of all Shareholders.

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, subject always to such transactions being in the best interest of Shareholders. It is intended that, subject to market conditions, available liquidity and the maintenance of the Company's VCT status, shares will be bought back at prices representing a discount of up to 15% per Ordinary Share and up to 20% per C Ordinary Share to the prevailing NAV per share.

VCT Regulatory Developments

The Association of Investment Companies (AIC) worked closely with the Financial Services Authority (FSA) on Consultation Paper 12-19 (restrictions on the retail distribution of unregulated collective investment schemes and close substitutes) and its applicability to venture capital trusts. The Board supported the AIC in calling on the FSA to exclude VCTs from the proposals, as investment trusts had been excluded, and was pleased to note the subsequent announcement by the Financial Conduct Authority (FCA, which replaced the FSA) that VCTs had been excluded from the marketing restrictions.

The Alternative Investment Fund Managers Directive (AIFMD) came into force on 21 July 2011 and was implemented within the UK on 22 July 2013. The AIC has published a briefing paper reviewing the key issues, including confirmation that the UK will impose a compliance deadline of July 2014. The Board and the Manager have engaged legal advisers to ensure that the impact of the legislation has been considered fully, and the Board has taken the decision to register Maven Income and Growth VCT 4 PLC as a self-managed small registered AIFM. This will enable the Company to take advantage of the reduced reporting requirements and avoid the direct and indirect costs of appointing a depositary; the application was submitted on 22 January 2014.

The AIC has participated in a consultation process to ensure the Government's continued long-term support for the VCT sector by addressing concerns from HM Treasury that enhanced shared buy-back (EBB) schemes conflict with the public policy objectives of venture capital trusts. Whilst it is proposed that the buy-back and cancellation of shares will continue to be permitted, it is the Government's intention, through the Finance Bill, that EBBs will be prohibited, and in light of this the Board has not offered Shareholders the opportunity to participate in an EBB scheme during 2013.

Board of Directors

Following the merger with Ortus VCT on 3 April 2013, I was pleased to welcome David Potter to the Board as a director. David is the former chairman of Ortus. Although this has led to a temporary increase in the number of directors, the size of the Board will return to previous levels when the C pool is finally merged, and your Company has a single class of Ordinary Shares.

The Future

The past year has been another period of significant change and positive developments for your Company, and the Board notes that the benefits and efficiencies which were expected from the merger have already helped towards achieving a lower total expense ratio, due to the larger capital base, and an increase in tax-free returns to all Shareholders. The Board believes that the selective, later-stage investment policy pursued by the Manager will continue to be successful, and will deliver further growth in Shareholder value in the years ahead.

Ian Cormack

Chairman

9 April 2014

Strategic Report

This Strategic Report has been prepared by the Directors in accordance with Section 414 of the Companies Act 2006, as amended. The Company's Auditor is required to report if there are any material inconsistencies between this Report and the Financial Statements.

The Board

The Board, which is responsible for setting and monitoring the Company's strategy, currently consists of six non-executive Directors, all of whom are male. The names and biographies of the Directors indicate their range of investment, commercial and professional experience. Further details are also provided in the Directors' Report and the Statement of Corporate Governance.

Investment Objective

The Company aims to achieve long term capital appreciation and generate maintainable levels of income for Shareholders.

Statement of 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 per cent of the Company's assets by cost in one business at any time; and

·      borrowing up to 15 per cent of net asset value, if required and only on a selective basis, in pursuit of its investment strategy.

Principal Risks and Uncertainties

The principal risks and uncertainties facing the Company are as follows:

Investment Risk

Many of the Company's investments are in small and medium sized unlisted and AIM/ISDX quoted companies which, by their nature, entail a higher level of risk and lower liquidity than investments in large quoted companies. The Board aims to limit the risk attaching to the investment portfolio as a whole by ensuring a structured selection, monitoring and realisation process. The Board reviews the investment portfolio with the Manager on a regular basis.

The Company manages and minimises investment risk by:

·      diversifying across a large number of companies;

·      diversifying across a range of economic sectors;

·      actively and closely monitoring the progress of investee companies;

·      seeking to appoint a non-executive director to the board of each private investee company, provided from the Manager's investment management team or from its pool of experienced independent directors;

·      co-investing with other funds run by the Manager in larger deals, which tend to carry less risk;

·      not investing in hostile public to private transactions; and

·      retaining the services of a Manager that can provide the resources required to achieve the investment objective and meet the criteria stated above.

An explanation of certain risks and how they are managed is contained in Note 17 to the Financial Statements.

Financial and Liquidity Risk

As most of the investments require a mid to long term commitment and are relatively illiquid, the Company retains a portion of the portfolio in cash or cash equivalents in order to finance any new unquoted investment opportunities. The Company has no direct exposure to currency risk and does not enter into any derivative transactions.

Economic Risk

The valuation of investment companies may be affected by underlying economic conditions such as fluctuating interest rates and the availability of bank finance.

Credit Risk

The Company may hold financial instruments and cash deposits and is dependent on counterparties discharging their agreed responsibilities. The Directors consider the creditworthiness of the counterparties to such instruments and seek to ensure that there is no undue concentration of exposure to any one party.

Internal Control Risk

The Board reviews regularly the system of internal controls, both financial and non-financial, operated by the Company and the Manager. These include controls designed to ensure that the Company's assets are safeguarded and that all records are complete and accurate.

VCT Qualifying Status Risk

The Company operates in a complex regulatory environment and faces a number of related risks, including:

·      becoming subject to capital gains tax on the sale of its investments as a result of a breach of Section 274 of the Income Tax Act 2007;

·      loss of VCT status and consequent loss of tax reliefs currently available to Shareholders as a result of a breach of the VCT Regulations; and

·      loss of VCT status and reputational damage as a result of serious breach of other  regulations such as the UKLA Listing Rules and the Companies Act 2006.

Legislative and Regulatory Risk

In order to maintain its approval as a VCT, the Company is required to comply with current VCT legislation in the UK as well as the European Commission's (EC) state aid rules. Changes in the future to UK legislation or the EC state aid rules could have an adverse impact on Shareholder investment returns whilst maintaining the Company's VCT status. The Board and the Manager continue to make representations where appropriate, either directly or through relevant industry bodies such as the Association of Investment Companies (AIC) or the British Venture Capital Association (BVCA).

Statement of Compliance with Investment Policy

The Company is adhering to its stated investment policy and managing the risks arising from it. This can be seen in various tables and charts throughout the Annual Report, and from information provided in the Chairman's Statement and the Investment Manager's Review. A review of the Company's business, its position as at 31 December 2013 and its performance during the year then ended is included in the Chairman's Statement, which also includes an overview of its strategy and business model.

The management of the investment portfolio has been delegated to Maven, which also provides company secretarial, administrative and financial management services to the Company. The Board is satisfied with the depth and breadth of the Manager's resources and its network of offices, which supply new deals and enable it to monitor the geographically widespread portfolio of companies effectively.

The Investment Portfolio Summary discloses the investments in the portfolio and the degree of co-investment with other clients of the Manager. The tabular analysis of the unlisted and quoted portfolio by industrial sector and deal type shows that the portfolio is diversified across a variety of sectors and deal types. The level of qualifying investments is monitored by the Manager on a daily basis and reported to the Board quarterly.

Key Performance Indicators

At each Board Meeting, the Directors consider a number of financial performance measures to assess the Company's success in achieving its objectives and these also enable Shareholders and investors to gain an understanding of its business. The key performance indicators are as follows:

·      NAV total return;

·      dividends per share;

·      investment income; and

·      operational expenses.

The NAV total return is a measure of Shareholder value that includes both the current NAV per share and the sum of dividends paid to date. The dividends per share measure shows how much of that Shareholder value has been returned to original investors in the form of dividends. A historical record of these measures is shown in the Financial Highlights. The change in the profile of the portfolio is reflected in the Summary of Investment Changes. The Board reviews the Company's operational expenses on a quarterly basis.

There is no meaningful venture capital trust index against which to compare the financial performance of the Company, but, for reporting to the Board and Shareholders, the Manager uses comparisons with appropriate indices and the Company's peer group. The Directors also consider non-financial performance measures such as the flow of investment proposals and ranking of the VCT sector by independent analysts.

As mentioned below the Company has no direct employee or environmental responsibilities but 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 4 PLC in unquoted companies are valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines. Investments quoted or traded on a recognised stock exchange, including AIM, are valued at their bid prices.

Share Buy-backs

The Board will seek the necessary Shareholder authority to continue the share buy-back programme under appropriate circumstances.

Employee, Environmental and Human Rights Policy

As a venture capital trust, the Company has no direct employee or environmental responsibilities, nor is it responsible for the emission of greenhouse gases. Its principal responsibility to Shareholders is to ensure that the investment portfolio is properly managed and invested. The Company has no employees and, accordingly, has no requirement to report separately on employment matters. The management of the portfolio is undertaken by the Manager through members of its portfolio management team. The Manager engages with the Company's underlying investee companies in relation to their corporate governance practices and in developing their policies on social, community and environmental matters and further information may be found in the Statement of Corporate Governance. In light of the nature of the Company's business, there are no relevant human rights issues and, therefore, the Company does not have a human rights policy.

Future Strategy

The Board and Manager intend to maintain the strategic policies set out above for the year ending 31 December 2014 as it is believed that these are in the best interests of Shareholders.

Ian Cormack

Chairman

9 April 2014

Maven Income and Growth VCT 4 PLC

Income Statement

For the Year Ended 31 December 2013

		Ordinary Shares			C Ordinary Shares			TOTAL
		Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments	8	-	1,808	1,808	-	(120)	(120)	-	1,688	1,688
Income from investments	2	1,041	-	1,041	18	-	18	1,059	-	1,059
Investment management fees	3	(188)	(753)	(941)	(20)	(84)	(104)	(208)	(837)	(1,045)
Other expenses	4	(358)	-	(358)	(37)	-	(37)	(395)	-	(395)
Net Return on ordinary activities before taxation		495	1,055	1,550	(39)	(204)	(243)	456	851	1,307
Tax on ordinary activities	5	(95)	95	-	-	-	-	(95)	95	-
Return attributable to Equity Shareholders		400	1,150	1,550	(39)	(204)	(243)	361	946	1,307
Earnings per share (pence)		1.8	5.3	7.1	(1.0)	(5.2)	(6.2)	0.8	0.1	0.9

A Statement of Total Recognised Gains and Losses has not been prepared, as all gains and losses are recognised in the Income Statement.

All items in the above statement are derived from continuing operations. The Company has only one class of business and derives its income from investments made in shares, securities and bank deposits. The total column of this statement is the Profit and Loss Account of the Company.

Reconciliation of Movements in Shareholders' Funds

For the year ended 31 December 2013

	Ordinary Shares			C Ordinary Shares			S Ordinary Shares			TOTAL
	£'000			£'000			£'000			£'000
Opening Shareholders' funds		8,990			-			5,877		14,867
S Ordinary share consolidation to Ordinary		5,877			-			(5,877)		-
Net return for year		1,550			(243)			-		1,307
Issue of new Ordinary shares		6,272			-			-		6,272
Issue of new C Ordinary shares		-			3,969			-		3,969
Net proceeds of share issue		4,169			-			-		4,169
Merger costs		(29)			-			-		(29)
Repurchase and cancellation of shares		(621)			(95)			-		(716)
Dividends paid - revenue		(423)			-			-		(423)
Dividends paid - capital		(445)			-			-		(445)
Closing Shareholders' funds		25,340			3,631			-		28,971

Income Statement

For the year ended 31 December 2012

		Ordinary Shares			S Ordinary Shares			TOTAL
		Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments	8	-	410	410	-	461	461	-	871	871
Income from investments	2	460	-	460	318	-	318	778	-	778
Investment management fees	3	(61)	(241)	(302)	(21)	(87)	(108)	(82)	(328)	(410)
Other expenses	4	(160)	-	(160)	(99)	-	(99)	(259)	-	(259)
Net Return on ordinary activities before taxation		239	169	408	198	374	572	437	543	980
Tax on ordinary activities	5	(50)	50	-	(21)	17	(4)	(71)	67	(4)
Return attributable to Equity Shareholders		189	219	408	177	391	568	366	610	976
Earnings per share (pence)		2.1	2.4	4.5	3.4	7.5	10.9	5.5	9.9	15.4

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

For the year ended 31 December 2012

			Ordinary Shares			S Ordinary Shares				TOTAL
			£'000			£'000				£'000
Opening Shareholders' funds				8,231			5,058			13,289
Net return for year				408			568			976
Net proceeds of share issue				740			436			1,176
Repurchase and cancellation of shares				-			(25)			(25)
Dividends paid - revenue				(124)			(108)			(232)
Dividends paid - capital				(265)			(52)			(317)
Closing Shareholders' funds				8,990			5,877			14,867

Maven Income and Growth VCT 4 PLC

Balance Sheet

As at 31 December 2013

						31 December 2013				31 December 2012
			Ordinary			C Ordinary			Ordinary		S Ordinary
				Shares		Shares		Total	Shares		Shares	Total
		Notes			£'000	£'000		£'000	£'000		£'000	£'000
Fixed assets
Investments at fair value through profit or loss			8		24,185		3,133	27,318	8,027		5,223	13,250
Current assets
Debtors			10		467		214	681	234		131	365
Cash and overnight deposits					963		291	1,254	785		547	1,332
					1,430		505	1,935	1,019		678	1,697
Creditors:
Amounts falling due within one year			11		(275)		(7)	(282)	(56)		(24)	(80)
Net current assets					1,155		498	1,653	963		654	1,617
Total net assets					25,340		3,631	28,971	8,990		5,877	14,867
Capital and reserves
Called up share capital			12		2,569		386	2,955	916		526	1,442
Share premium  account			13		10,350		3,572	13,922	663		393	1,056
Capital reserve - realised			13		(123)		(281)	(404)	375		322	697
Capital reserve - unrealised			13		1,325		77	1,402	(511)		311	(200)
Distributable reserve			13		10,591		(95)	10,496	7,168		4,124	11,292
Capital redemption reserve			13		119		11	130	37		11	48
Revenue reserve			13		509		(39)	470	342		190	532
Net assets attributable to Ordinary Shareholders					25,340		3,631	28,971	8,990		5,877	14,867
Net asset value per ordinary share (pence)			14		98.6		94.0		98.2		111.6

Maven Income and Growth VCT 4 PLC

Cash Flow Statement

For the year ended 31 December 2013

			Year ended 31 December 2013			Year ended 31 December 2012
			Ordinary	C Ordinary		Ordinary	S Ordinary
			Shares	Shares	Total	Shares	Shares	Total
	Notes		£'000	£'000	£'000	£'000	£'000	£'000
Operating activities
Investment income received			946	3	949	472	316	788
Deposit interest received			-	-	-	-	-	-
Investment management fees paid			(744)	(104)	(848)	(345)	(114)	(459)
Secretarial fees paid			(80)	(11)	(91)	(56)	(35)	(91)
Directors fees paid			(68)	(10)	(78)	(41)	(25)	(66)
Other cash payments			(215)	(208)	(423)	(62)	(38)	(100)
Net cash (outflow)/inflow from operating activities		15	(161)	(330)	(491)	(32)	104	72
Taxation
Corporation tax			(4)	-	(4)	-	-	-
Financial investment
Purchase of investments			(22,367)	(1,407)	(23,774)	(4,380)	(3,225)	(7,605)
Sale of investments			17,797	1,459	19,256	4,447	3,061	7,508
Net cash (outflow)/inflow from financial investment			(4,570)	52	(4,518)	67	(164)	(97)
Equity dividends paid			(868)	-	(868)	(389)	(160)	(549)
Net cash outflow before financing			(5,603)	(278)	(5,881)	(354)	(220)	(574)
Financing
Issue of Ordinary Shares			4,169	-	4,169	740	436	1,176
Net cash balance acquired from merger			1,686	664	2,350	-	-	-
Repurchase of Ordinary Shares			(621)	(95)	(716)	-	(25)	(25)
Net cash inflow from financing			5,234	569	5,803	740	411	1,151
(Decrease)/increase in cash		16	(369)	291	(78)	386	191	577

Notes

Accounting Policies - UK Generally Accepted Accounting Practice

(a) Basis of Preparation

The Financial Statements have been prepared under the historical cost convention modified to include the revaluation of investments and in accordance with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' and Venture Capital Trusts (the SORP) issued in January 2009. The disclosures on Going Concern in the Directors' Report form part of these financial statements.

(b) Income

Dividends receivable on equity shares and unit trusts are treated as revenue for the period on an ex-dividend basis. Where no ex-dividend date is available dividends receivable on or before the year end are treated as revenue for the period. Provision is made for any dividends not expected to be received. The fixed returns on debt securities and non-equity shares are recognised on a time apportionment basis so as to reflect the effective interest rate on the debt securities and shares. Provision is made for any income not expected to be received. Interest receivable from cash and short term deposits and interest payable are accrued to the end of the year.

(c) Expenses

All expenses are accounted for on an accruals basis and charged to the income statement. Expenses are charged through the revenue account except as follows:

·      expenses which are incidental to the acquisition and disposal of an investment are charged to capital.

·      expenses are charged to realised capital reserves where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect the investment management fee has been allocated 20% to revenue and 80% to realised capital reserves to reflect the Company's investment policy and prospective income and capital growth.

·      share issue costs are charged to the share premium account: and

·      expenses are allocated between the original pool or the C share pool depending on the nature of the expense.

(d) Taxation

Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the balance sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the Financial Statements which are capable of reversal in one or more subsequent periods.

Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

The tax effect of different items of income/gain and expenditure/loss is allocated between capital reserves and revenue account on the same basis as the particular item to which it relates using the Company's effective rate of tax for the period.

UK Corporation tax is provided at amounts expected to be paid/recovered using the tax rates and laws that have been enacted or substantively enacted at the balance sheet date.

(e) Investments

In valuing unlisted investments the Directors follow the criteria set out below. These procedures comply with the revised International Private Equity and Venture Capital Valuation Guidelines for the valuation of private equity and venture capital investments. Investments are recognised at their trade date and are designated by the Directors as fair value through profit or loss. At subsequent reporting dates, investments are valued at fair value, which represent the Directors' view of the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction. This does not assume that the underlying business is saleable at the reporting date or that its current shareholders have an intention to sell their holding in the near future.

A financial asset or liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires.

1. For investments completed within the 12 months 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 fully taxed prospective earnings to determine the enterprise value of the company.

3.1 To obtain a valuation of the total ordinary share capital held by management and the institutional investors, the value of third party debt, institutional loan stock, debentures and preference share capital is deducted from the enterprise value. The effect of any performance related mechanisms is taken into account when determining the value of the ordinary share capital.

3.2 Preference shares, debentures and loan stock are valued using the Price of Recent Investment Method. When a redemption premium has accrued, this will only be valued if there is a reasonable prospect of it being paid. Preference shares which carry a right to convert into ordinary share capital are valued at the higher of the Price of Recent Investment Method basis and the price/earnings basis, both described above.

4. Where there is evidence of impairment, a provision may be taken against the previous valuation of the investment.

5. In the absence of evidence of a deterioration, or strong defensible evidence of an increase in value, the fair value is determined to be that reported at the previous balance sheet date.

6. All unlisted investments are valued individually by the Portfolio Management Team of Maven Capital Partners UK LLP. The resultant valuations are subject to detailed scrutiny and approval by the Directors of the Company.

7. In accordance with normal market practice, investments listed on the Alternative Investment Market or a recognised stock exchange are valued at their bid market price.

(f) Fair Value Measurement

Fair value is defined as the price that the Company would receive upon selling an investment in a timely transaction to an independent buyer in the principal or the most advantageous market of the investment. A three-tier hierarchy has been established to maximise the use of observable market data and minimise the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market

participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable.

Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity.

Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on best information available in the circumstances.

The three-tier hierarchy of inputs is summarised in the three broad levels listed below.

·      Level 1 - quoted prices in active markets for identical investments.

·      Level 2 - other significant observable inputs (including quoted prices for similar  investments, interest rates, credit risk etc).

·      Level 3 - significant unobservable inputs (including the Company's own assumptions in determining the fair value of investments).

(g) Gains and losses on investments

When the company sells or revalues its investments during the year, any gains or losses arising are credited/charged the year, any gains or losses arising are credited/charged to the Income Statement.

 

Reserves

	Share premium	Capital reserve	Capital reserve	Distributable	Capital redemption	Revenue
	account	realised	unrealised	reserve	reserve	reserve
Ordinary Shares	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2013 - Ordinary	663	375	(511)	7,168	37	342
At 1 January 2013 - S Ordinary	393	322	311	4,124	11	190
	1,056	697	(200)	11,292	48	532
Gains on sales of investments	-	283	-	-	-	-
Net increase in value of investments	-	-	1,525	-	-	-
Investment management fees	-	(753)	-	-	-	-
Dividends paid	-	(445)	-	-	-	(423)
Tax effect of capital items	-	95	-	-	-	-
Share Issue - 5 April 2013	3,196	-	-	-	-	-
Share Issue - 30 April 2013	543	-	-	-	-	-
Share Issue - 2014	(2)	-	-	-	-	-
Merger - issue of ordinary shares	5,773	-	-	-	-	-
Merger - S share consolidation	-	-	-	(80)	-	-
Merger costs	(216)	-	-	-	-	-
Repurchase and cancellation of shares	-	-	-	(621)	71	-
Net return on ordinary activities after taxation	-	-	-	-	-	400
At 31 December 2013	10,350	(123)	1,325	10,591	119	509

 

C Ordinary Shares
At 1 January 2013	-	-	-	-	-	-
Losses on sales of investments	-	(197)	-	-	-	-
Net increase in value of investments	-	-	77	-	-	-
Investment management fees	-	(84)	-	-	-	-
Issue of C ordinary shares	3,572	-	-	-	-	-
Dividends paid	-	-	-	-	-	-
Tax effect of capital items	-	-	-	-	-	-
Repurchase and cancellation of shares	-	-	-	(95)	11	-
Net return on ordinary activities after taxation	-	-	-	-	-	(39)
At 31 December 2013	3,572	(281)	77	(95)	11	(39)
Total Reserves	13,922	(404)	1,402	10,496	130	470

Return per Ordinary Share

	Year ended				Year ended
	31 December 2013				31 December 2012
The returns per share have been based on the following	Ordinary	C Ordinary			Ordinary	S Ordinary
figures:	Shares	Shares	Total		Shares	Shares	Total
Weighted average number of ordinary shares	21,811,660	3,894,337	25,705,997		8,999,464	5,184,732	14,184,196
Revenue return	£400,000	(£39,000)	£361,000		£189,000	£177,000	£366,000
Capital return	£1,150,000	(£204,000)	£946,000		£219,000	£391,000	£610,000
Total Return	£1,550,000	(£243,000)	£1,307,000		£408,000	£568,000	£976,000

Net asset value per Ordinary Share

The net asset value per share and the net asset value attributable to the Ordinary Shares at the year end calculated in accordance with the Articles of Association were as follows:
	31 December 2013					31 December 2012
	Ordinary Shares			C Ordinary Shares		Ordinary Shares		S Ordinary Shares
	Net asset		Net asset	Net asset	Net asset	Net asset	Net asset	Net asset		Net asset
	value per		value	value per	value	value per	value	value per		value
	share		attributable	share	attributable	share	attributable	share		attributable
	p		£'000	p	£'000	p	£'000	p		£'000
Ordinary Shares	98.6		25,340	94.0	3,631	98.2	8,990	111.6		5,877

Basis of preparation of the Financial Statements

The Financial Statements included in this Announcement have been prepared on the same basis as the Annual Report and Financial Statements for the year ended 31 December 2012. The Annual Report and Financial Statements for the year ended 31 December 2013 will be filed with the Registrar of Companies and issued to Shareholders in due course.

The financial information contained within this Announcement does not constitute the Company's statutory Financial Statements as defined in the Companies Act 2006. The statutory Financial Statements for the year ended 31 December 2012 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.

Directors' Responsibility Statement

Each Director confirms, to the best of his knowledge, that:

·      the Financial Statements have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company as at 31 December 2013 and for the year to that date;

·      the Directors' Report includes a fair review of the development and performance of the Company, together with a description of the principal risks and uncertainties that it faces; and

·      the Annual Report and Financial Statements taken as a whole are fair, balanced and understandable and provide the information necessary to assess the Company's performance, business model and strategy.

Other information

The Annual General Meeting will be held on 14 May 2014, commencing at 10.30 am, at 1-2 Royal Exchange Buildings, London EC3V 3LF.

Copies of this announcement, and of the Annual Report and Financial Statements for the year ended 31 December 2013, will be available to the public at the office of Maven Capital Partners UK LLP, 205 West George Street, Glasgow G2 2LW (the registered office); at the office of  the Company, 1-2 Royal Exchange Buildings, London EC3V 3LF and on the Company's website at www.mavencp.com/migvct4.

Neither the content of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

The Annual Report and the Circular have been submitted to the National Storage Mechanism and will be available for inspection at: www.Hemscott.com/nsm.do

By Order of the Board

Maven Capital Partners UK LLP

Secretary

9 April 2014

 

END

 

 

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