Annual Financial Report

Maven Income & Growth VCT 4 PLC

05 April 2024

 

Maven Income and Growth VCT 4 PLC

Final results for the year ended 31 December 2023

The Directors report the Company's financial results for the year ended 31 December 2023.

Highlights

•    NAV total return at the year end of 152.81p per share (2022: 155.90p)

•    NAV at the year end of 61.71p per share (2022: 68.30p)

•    Final dividend of 1.75p per share proposed for payment in May 2024

•    £7.58 million deployed in new and follow-on investments

•    Offer for Subscription closed in May 2023, raising a total of £6.83 million

•    New Offer for Subscription launched in October 2023

Strategic Report 

Chairman's Statement

On behalf of your Board, I am pleased to present the results for the 12 months to 31 December 2023. This has been a challenging year for the UK economy and, notwithstanding the modest reduction in NAV total return, your Board is encouraged by the further strategic progress that has been achieved. Across the private company portfolio, most of the earlier stage growth companies have continued to gain commercial traction and achieve defined milestones, which has resulted in uplifts to the value of specific portfolio holdings. The impact of this positive progress has, however, been offset by the more general rebasing of valuations across public and private markets. It is encouraging to report that there has been further expansion of the portfolio, with the addition of eight new private companies that operate across a range of dynamic and emerging markets, adding further breadth and sector diversity. Your Board recognises the importance of making regular Shareholder distributions and is pleased to propose a final dividend of 1.75p per share for payment in May 2024, which brings the annual yield to 5.12%.

The financial year was another period of economic instability for global markets with domestic growth constrained by persistently high inflation and rising interest rates. Against this backdrop, your Board is pleased to report on the generally resilient performance that was achieved. For several years, your Company has been following an investment strategy focused on constructing a large, diverse portfolio of ambitious and emerging companies with high growth potential. During the year, many of these businesses have continued to deliver meaningful revenue growth and achieve commercial objectives. As the portfolio evolves, it is evident that there are a number of high performing companies that have the capability of achieving superior returns at exit. Given the sustained progress, the valuations of specific holdings have been uplifted, although the impact of the movement has been moderated by the market wide reduction in valuation multiples. This dynamic has impacted the valuations of certain larger holdings in the private company portfolio where, despite most of the businesses continuing to trade to plan, multiples have been adjusted to reflect the general rebasing. This approach is consistent with industry best practice and the requirement to ensure that private company valuations reflect market movements, as well as a company specific progress. There are also a small number of companies that have encountered challenges, largely due to the conditions in the wider economy and where the business plan has not been achieved. In these cases, valuations have been reduced. It is worthwhile noting that your Company also retains a number of holdings in more mature companies, completed prior to the VCT rules change in 2015. Whilst the size of this later stage portfolio will naturally decrease over time as realisations are completed, it continues to broaden exposure across the portfolio.

This has been another difficult year for AIM, as uncertain market conditions have resulted in restricted liquidity both on the demand and supply side. AIM has also experienced its quietest year for initial public offering (IPOs) in over 20 years as companies with cash resources have opted to delay listing until markets stabilise and valuations improve. As a result, investors have continued to exercise caution towards earlier stage listed growth companies, which has resulted in reduced trading volumes and increased share price volatility. Consequently, new AIM investment activity by your Company has remained at low levels. Although your Company's AIM portfolio represents a relatively small proportion of net assets, your Board continues to believe that a balanced portfolio of private equity and AIM quoted holdings represents the optimal strategy for delivering consistent returns over the longer term. While markets remain unpredictable, it is likely that there will be limited new AIM investments until there is demonstrable evidence of a sustained recovery in this market and an improvement in the quality of companies seeking investment on the junior market.

The Manager has continued to see good demand for growth capital from ambitious and entrepreneurial companies across the UK. During the year, a total of £7.58 million was deployed, with eight new private companies added to the portfolio and follow-on funding provided to support the growth and development of 18 existing private company holdings, alongside three small AIM transactions. This level of investment activity highlights the benefits of the Manager's regional model, which enables Maven's investment team to develop strong relationships within their local corporate finance communities ensuring access to the widest pool of emerging companies. The ability to provide follow-on funding is a central component of the investment strategy as it enables your Company to progressively support growth or to fund a specific strategic initiative, such as targeted international expansion, which should ultimately help that business achieve scale and maximise value. With good levels of liquidity, your Company is well positioned to continue to progress this strategy.

As Shareholders will be aware, your Board is committed to supporting your Company's future growth, and in October 2023, was pleased to announce the launch of a new Offer for Subscription alongside Offers by the other Maven managed VCTs. Your Company had an initial target raise of £5 million, with the ability to utilise an over-allotment facility of up to a further £2.5 million and, as at 3 April 2024, being the latest practicable date prior to the publication, £5.61 million had been raised. The Offers closed to new applications on 5 April 2024 for the 2023/24 tax year and will close on 26 April 2024 for the 2024/25 tax year, unless fully subscribed at an earlier date. Further information about the Offers, as well as the Securities Note and Application Form, can be found at: mavencp.com/vctoffer. With respect to the current Offer and future fund raisings, the Board and the Manager welcomed the announcement by the UK Government in November 2023 that tax relief for the VCT and EIS schemes will continue until 2035. The news that the "sunset clause" will be extended provides greater clarity for VCT Shareholders and, importantly, reassures entrepreneurial smaller UK companies that access to VCT growth capital will continue to be available.

The Investment Manager's Review contains further details of the key developments across the portfolio and can be found in the Annual Report. The principal Key Performance Indicators (KPIs) are outlined in the Business Report, and a summary of the Alternative Performance Measures (APMs) is included in the Financial Highlights, with definitions of key terms contained in the Glossary, available in the Annual Report.

Treasury Management

During the year, significant focus has been placed on refining your Company's treasury management strategy, where the objective remains to optimise the income generated from cash held prior to investment in VCT qualifying companies, whilst meeting the requirements of the Nature of Income condition. This is a mandatory part of the VCT legislation, which stipulates that not less than 70% of a VCT's income must be derived from shares or securities. In order to meet this condition, the Board had previously approved the construction of a diversified portfolio of permitted, non-qualifying holdings in carefully selected investment trusts with strong fundamentals and attractive income characteristics, with the remaining cash held on deposit across four Tier 1 UK banks. Given the rise in interest rates during the year, the Board and the Manager have revised this approach and adjusted the composition of this portfolio, whilst ensuring that your Company maintains appropriate levels of cash for new investment. In this regard, the Board has approved a revised strategy focused on constructing a portfolio of leading money market funds and investment trusts that will allow your Company to maximise the income receivable on monies held prior to deployment in VCT qualifying investments, whilst also ensuring compliance with the Nature of Income condition. The investments within this portfolio have been selected following a whole of market review by the Manager and were approved by the Company's VCT adviser, and further details can be found in the Investments table in the Annual Report. This strategy provides your Company with a significant new stream of income, with a blended annualised yield of 3.3% currently being achieved from the portfolio of treasury management holdings and cash. Shareholders should, however, note that this portfolio will vary in size depending on the rate of new VCT qualifying investment, investee company realisations and overall liquidity levels.

Dividend Policy

Decisions on distributions take into consideration a number of factors, including the realisation of capital gains, the adequacy of distributable reserves, the availability of surplus revenue and the VCT qualifying level, all of which are kept under close and regular review. The Board and the Manager recognise the importance of tax free distributions to Shareholders and, subject to the considerations outlined above, will seek, as a guide, to pay an annual dividend that represents 5% of the NAV per share at the immediately preceding year end.

The Directors would like to remind Shareholders that, as the portfolio continues to expand and the proportion of holdings in companies with high growth potential increases, the timing of distributions will be more closely linked to realisation activity, whilst also reflecting the Company's requirement to maintain its VCT qualifying level.

Proposed Final Dividend

In keeping with the wider market, this has been a quiet year for exits. The Directors are, however, pleased to propose that a final dividend of 1.75p per Ordinary Share, in respect of the year ended 31 December 2023, be paid on 24 May 2024 to Shareholders who are on the register at 19 April 2024. This will bring the annual dividend to 3.50p per Ordinary Share, representing a yield of 5.12% based on the NAV at the immediately preceding year end. Since the Company's launch, and after receipt of the proposed final dividend, a total of 92.85p per Ordinary Share will have been paid in tax free distributions.

Dividend Investment Scheme (DIS)

Your Company operates a DIS, through which Shareholders can, at any time, elect to have their dividend payments utilised to subscribe for new Ordinary Shares issued under the standing authority requested from Shareholders at Annual General Meetings. Ordinary Shares issued under the DIS should qualify for VCT tax relief applicable for the

tax year in which they are allotted, subject to an individual Shareholder's particular circumstances.

Shareholders can elect to participate in the DIS, in respect of future dividends, by completing a DIS mandate form. In order for the DIS to apply to the 2023 final dividend, the mandate form must be received by the Registrar (The City Partnership) before 10 May 2024, this being the relevant dividend election date. The mandate form, terms & conditions and full details of the scheme (including tax considerations) are available from the Company's webpage at: mavencp.com/migvct4. Election to participate in the DIS can also be made through the Registrar's online investor hub at: maven-cp.cityhub.uk.com/login.

If a Shareholder is in any doubt about the merits of participating in the DIS, or their own tax status, they should seek advice from a suitably qualified adviser.

Fund Raising

In May 2023, your Company closed an Offer for Subscription, having raised £6.83 million across the 2022/23 and 2023/24 tax years. All shares in respect of that Offer have been allotted and Shareholders will find further details regarding the new Ordinary Shares issued in Note 12 to the Financial Statements in the Annual Report.

On 13 October 2023, your Company launched a new Offer for Subscription alongside Offers by the other three Maven managed VCTs. Your Company had an initial target raise of £5 million, with the ability to utilise an over-allotment facility of up to a further £2.5 million. The first allotment of new Ordinary Shares took place on 17 January 2024, with further allotments for the 2023/24 tax year completing on 8 February, 27 March and 5 April 2024. The Offer will close to new applications for the 2024/25 tax year on 26 April 2024, unless fully subscribed ahead of this date and, it is intended that shares will be allotted in early May 2024.

The Directors are confident that Maven's regional office network has the capability to continue to source attractive investment opportunities in VCT qualifying companies across a range of sectors, and that the additional liquidity provided by the fundraising will facilitate further expansion and development of the portfolio in line with the investment strategy. Furthermore, the funds raised will allow your Company to maintain its share buy-back policy, whilst also spreading costs over a wider asset base, with the objective of maintaining a competitive ongoing charges ratio for the benefit of all Shareholders.

Share Buy-backs

The Directors acknowledge the need to maintain an orderly market in the Company's shares and have, therefore, delegated authority to the Manager to enable the Company to buy back its own shares in the secondary 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 the Company will seek to buy back shares with a view to maintaining a share price that is at a discount of approximately 5% to the latest published NAV per share. Any purchase of the Company's own shares will be subject to market conditions, available liquidity and the maintenance of the VCT qualifying status. It should, however, be noted that such transactions cannot take place whilst the Company is in a closed period, which is the time from the end of a reporting period until the announcement of the relevant results, or the release of an unaudited NAV. A closed period may also be introduced if the Directors and Manager are in possession of price sensitive information.

Shareholders should note that neither the Company nor the Manager can execute a transaction in the Company's shares. Any instruction to buy or sell shares on the secondary market must be directed through a stockbroker. If a Shareholder wishes to buy or sell shares on the secondary market, they, or their broker, can contact the Company's corporate broker, Shore Capital Stockbrokers on 020 7647 8132, to discuss a transaction.

VCT Regulatory Developments

During the period under review, there were no further amendments to the rules governing VCTs, and your Company remains fully compliant with the complex conditions and requirements as set out by HMRC.

Shareholders may recall that under the VCT scheme approved by the European Commission in 2015, a "sunset clause" was introduced, which stated that income tax relief would no longer be available on subscriptions for new shares in VCTs made on or after 6 April 2025, unless the legislation was renewed by an HM Treasury Order. In the Autumn Statement 2022, the Chancellor announced that the "sunset clause" would be extended, and during the year there was a significant amount of debate regarding the mechanism required to achieve this. The Board and the Manager were reassured by the announcement in the Autumn Statement 2023 that the "sunset clause" would be extended until April 2035, with relevant legislation to be announced in due course.

Valuation Methodology

Consistent with industry best practice, the Board and the Manager continue to apply the International Private Equity and Venture Capital Valuation (IPEV) Guidelines as the central methodology for all private company valuations. The IPEV Guidelines are the prevailing framework for fair value assessment in the private equity and venture capital industry. The most recent update (December 2022) incorporates the special guidance issued post COVID and following the invasion of Ukraine, which expands on the concept of and impact on valuations of distressed markets, as well as looking at how environmental, social and governance (ESG) factors impact valuations. The Directors and the Manager continue to follow industry guidelines and adhere to the IPEV Guidelines in all private company valuations. In accordance with normal market practice, investments quoted on AIM, or another recognised stock exchange, are valued at their closing bid price at the period end. Further details on your Company's approach to valuing portfolio companies can be found in Note 1(e) to the Financial Statements.

The Consumer Duty

In July 2023, the FCA's new Consumer Duty came into effect. This is an enhancement to the existing concept of "treating customers fairly" and requires firms that are subject to the new rules to ensure that they are acting to deliver good outcomes for retail consumers, and that their strategies, governance, leadership and policies all reflect this. Although the Consumer Duty does not apply directly to your Company, the Manager, as an FCA authorised firm, is within its scope. During the year, the Manager has been providing the Directors with regular updates on the work that has been undertaken to ensure that good outcomes are being delivered for Shareholders, and will continue to report to the Board on Consumer Duty related activities and ongoing obligations.

Environmental, Social and Governance (ESG) Considerations

The Board acknowledges the importance of ESG principles and considers that portfolio companies with ESG aims integrated into their business models are likely to benefit both society and Shareholders. Whilst your Company does not have any specific ESG targets, and Maven does not manage any funds with defined ESG criteria, the Board and the Manager believe that a proactive approach to ESG is a driver to value creation, and can help the long term growth and sustainability of these businesses.

During the year, the Manager has made encouraging progress in this evolving area and has introduced an ESG and Responsible Investment Policy, which is a best practice approach that is being applied across all portfolio companies. The Manager has also developed a robust framework for assessing and promoting ESG aims by actively engaging with portfolio companies, taking into consideration material issues at the investment stage and, thereafter, monitoring progress throughout the period of investment.

In May 2021, the Manager became a signatory to the internationally recognised Principles for Responsible Investment (PRI), demonstrating its commitment to include ESG as an integral part of its investment decision making and ownership, with the first report submitted in September 2023. Additionally, in the past year, the Manager has actively participated in various initiatives dedicated to enhancing diversity and is also a signatory to the Investing in Women Code, which seeks to improve and increase opportunities for female entrepreneurs.

The ESG regulatory landscape is continually evolving, and the Manager provides the Board with regular updates on the latest developments. A key regulation, which is prominent within the asset management sector, is the Task Force on Climate-related Financial Disclosures (TCFD). Although neither the Company nor the Manager are currently required to disclose climate-related financial information in line with the TCFD, they recognise the significance and importance of the TCFD recommendations in providing a foundation to improve investors' ability to appropriately assess climate-related risks and opportunities. Reporting in line with TCFD is, therefore, an objective of the Manager as part of its approach to ESG. The Manager also reviews and actively engages with new ESG regulations to understand any new responsibilities, and will continue to update the Board on any requirements that are material to your Company.

Annual General Meeting (AGM)

The 2024 AGM will be held on 9 May 2024 in Maven's London office, which is located at 6th Floor, Saddlers House, 44 Gutter Lane, London EC2V 6BR. The AGM will commence at 12.00 noon and the Notice of Annual General Meeting can be found in the Annual Report.

The Future

Whilst the UK moved into technical recession in the final quarter of 2023, there are signs that the outlook is improving. Inflation has sharply declined from its peak in 2023 and, assuming this trajectory continues, interest rates are expected to gradually ease during the second half of the year. Against a more positive macroeconomic outlook, your Company will remain focused on maintaining a steady rate of new investment to further expand and diversify the portfolio, whilst also targeting successful exits to ensure that the 5% dividend yield can be maintained.

Fraser Gray

Chairman

5 April 2024

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 VCT and invests in accordance with the investment objective set out below.

Investment Objective

Under an investment policy approved by the Directors, the Company aims to achieve long-term capital appreciation and generate 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 quoted companies that meet the criteria for VCT qualifying investments and have strong growth potential;

•     investing no more than £1.25 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 and Emerging Risks and Uncertainties

The Board and the Risk Committee have an ongoing process for identifying, evaluating and monitoring the principal and emerging risks and uncertainties facing the Company. The risk register and dashboard form key parts of the Company's risk management framework used to carry out a robust assessment of the risks, including a significant focus on the controls in place to mitigate them. The current principal and emerging risks and uncertainties facing the Company are considered to be as follows:

Principal Risk	Root Cause	Control Measure
Investment risk	·    The majority of investments are in small and medium sized unquoted UK companies and AIM quoted companies, which carry a higher level of risk and lower liquidity relative to investments in larger quoted companies.	·    The Company appoints an FCA authorised investment manager with the appropriate skills, experience and resources required to achieve the Investment Objective. ·    The Board ensures that a robust and structured selection, monitoring and realisation process is applied by the Manager and regularly reviews the investment portfolio with the Manager. ·    The Company's investment portfolio is diversified across a large number of companies and a range of economic sectors, and is actively and closely monitored.
Operational risk	·    Heightened cyber security risk and potential IT failure, which could cause a third party to fail to perform its duties and responsibilities or experiences financial difficulties such that it is unable to carry on trading and cannot provide services to the Company.	·    The Board closely monitors the systems and controls in place to prevent or mitigate against a systems or data security failure. ·    The Board reviews control and compliance reports from the Manager, which includes oversight of third party cyber security arrangements, to ensure these adequately address systems and data security risks. ·    Ability of third parties to operate effective business continuity plan (BCP) arrangements has been validated.
VCT qualifying status risk	·    Failure to meet VCT qualifying status could result in Shareholders losing the income tax relief on initial investment and loss of tax relief on any tax free income or capital gains received. Failure to meet the qualifying requirement could result in a loss of listing of the shares.	·    The Board works closely with the Manager to ensure compliance with all applicable and upcoming legislation, such that VCT qualifying status is maintained. ·    Further information on the management of this risk is detailed under other headings in the Business Report in the Annual Report.
Legislative and regulatory risk	·    Breaches of regulations including, but not limited to, the Companies Act 2006, the FCA Listing Rules, the FCA Disclosure Guidance and Transparency Rules, the General Data Protection Regulation (GDPR), or the Alternative Investment Fund Managers Directive (AIFMD) by the Company could lead to a number of detrimental outcomes and reputational damage.	·    The Board strives to maintain a good understanding of the changing regulatory landscape and consider emerging issues so that appropriate changes can be developed and implemented in good time. ·    The Board and the Manager continue to make representations where appropriate, either directly or through relevant industry bodies such as the AIC, the British Private Equity and Venture Capital Association (BVCA) and the Venture Capital Trust Association (VCTA) in relation to any changes in legislation.
Emerging Risk	Root Cause	Control Measure
Inflationary pressures/ cost of living crisis	·    Inflationary pressures, supply chain issues and access to skilled workforce disrupting business plans and creating challenges for SMEs within the portfolio. ·    Cost of living crisis resulting in rising costs within the portfolio including, but not limited to, the cost of supplies, employee wages and utilities.	·    The Board regularly reviews the investment portfolio with the Manager, and the Manager works closely with portfolio companies to identify potential issues and support them in the management of economic challenges. ·    The Board and the Manager are monitoring this risk closely and, whilst this risk cannot be obviated entirely, the Company's investment portfolio is diversified across a large number of investee companies operating in a range of economic sectors, and progress is actively and closely monitored.

An explanation of certain economic and financial risks and how they are managed is contained in Note 16 to the Financial Statements in the Annual Report.

Statement of Compliance with Investment Policy

The Company is adhering to its stated investment policy and managing the risks arising from it. This can be seen in various tables and charts throughout this Annual Report, and from information provided in the Chairman's Statement and in the Investment Manager's Review. A review of the Company's business, its financial position as at 31 December 2023 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 breadth and depth of the Manager's resources and its nationwide network of offices, which supply new deals and enable it to monitor the geographically widespread portfolio of companies effectively.

The Investment Portfolio Summary in the Annual Report discloses the investments in the portfolio and the degree of co-investment with other clients of the Manager. The Portfolio Analysis charts in the Annual Report show the profile of the portfolio by industry sector. They also show the sectoral diversity of the portfolio and the hybrid structure, which is balanced between private growth capital companies, more mature private company holdings, and AIM quoted investments. The level of VCT qualifying investments is monitored continually by the Manager and reported to the Risk Committee quarterly, or as otherwise required.

Key Performance Indicators (KPIs)

During the year, the net return on ordinary activities before taxation was a loss of £4,307,000 (2022: loss of £2,068,000); there was a net loss on investments of £2,989,000 (2022: loss of £787,000) and earnings per share represented a deficit of 3.17p (2022: deficit of 1.64p). The Directors also use a number of APMs in order to assess the Company's success in achieving its objectives, which enable Shareholders and prospective investors to gain an understanding of its business. The APMs are shown in the Financial History table and definitions of the APMs can be found in the Glossary in the Annual Report. The Board considers the following to be KPIs:

•    NAV total return;

•    cumulative dividends paid;

•    share price discount to NAV;

•    share price total return; and

•    ongoing charges ratio (OCR).

The NAV total return is considered to be a more appropriate long-term measure of Shareholder value as it includes both the current NAV per share and the sum of dividends paid to date. Cumulative dividends paid is the total amount of both capital and income distributions paid since the launch of the Company. The annual yield is the total of dividends paid per share for the financial year, expressed as a percentage of the NAV per share at the immediately preceding year end. The Directors seek to pay dividends to provide a yield and comply with the VCT rules, taking account of the level of distributable reserves, profitable realisations in each accounting period and the Company's future cash flow projections. The share price discount to NAV is the percentage by which the mid-market price of a share is lower than its NAV per share. Share price total return is the percentage movement in the share price over a period of time including any re-invested dividends paid over that timeframe.

The OCR is a measure of the total cost of a fund to an investor. The OCR is the total recurring annual expenses of the Company, including management fees charged to the capital reserve, as a percentage of the average net assets attributable to Shareholders. The Company's OCR for the year ended 31 December 2023 was 3.26% (2022: 2.97%) and is detailed in Note 4 to the Financial Statements in the Annual Report. A historical record of these measures is shown in the Financial Highlights in the Annual Report, and the profile of the portfolio is reflected in the Summary of Investment Changes in the Annual Report. The Board also reviews the Company's operational expenses on a quarterly basis as the Directors consider that this element is an important component in the generation of Shareholder returns. Further information can be found in Notes 2 and 4 to the Financial Statements in the Annual Report.  

Your Board continues to believe that a blended portfolio of private equity and AIM quoted holdings provides the optimal structure for delivering long term growth in Shareholder value. However, the Manager will remain cautious on new AIM investments until there is clear evidence of a recovery in this market and an improvement in the quality and range of companies seeking VCT investment.

There is no VCT index against which to compare the financial performance of the Company. However, for reporting to the Board and Shareholders, the Manager uses comparisons with the most appropriate index, being the FTSE AIM All-Share Index, and the graph in the Annual Report compares the Company's performance against the FTSE AIM All-Share Index. The Directors also consider non-financial performance measures, such as the flow of investment proposals, and ranking of the VCT sector by independent analysts. In addition, the Directors will consider economic, regulatory and political trends and factors 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 IPEV Guidelines, being the prevailing framework for fair value assessment in the private equity and venture capital industry. The guidelines were updated in December 2022 and incorporate the special guidance issued post COVID and following the invasion of Ukraine, and expand on the concept of and impact on valuations of distressed markets, as well as looking at how ESG factors impact valuations. The Directors and the Manager continue to follow the IPEV Guidelines in all private company valuations. Investments quoted or traded on a recognised stock exchange, including AIM, are valued at their closing bid price at the year end.

Share Buy-backs

At the forthcoming AGM, the Board will seek the necessary Shareholder authority to continue to conduct a share buy-back programme under appropriate circumstances.

The Board's Duty and Stakeholder Engagement

The Directors recognise the importance of an effective Board and its ability to discuss, review and make decisions to promote the long term success of the Company and protect the interests of its key stakeholders. As required by Provision 5 of the AIC Code (and in line with the UK Code), the Board has discussed the Directors' duty under Section 172 of the Companies Act and how the interests of key stakeholders have been considered in the Board discussions and decision making during the year.

This has been summarised in the table below:

Form of engagement	Influence on Board decision making
Shareholders Shareholders are encouraged to attend and vote at the AGM and have the opportunity to ask questions and engage with the Directors and the Manager. The Company reports formally to Shareholders by publishing Annual and Interim Reports. In the instance of a corporate action taking place, the Board will communicate with Shareholders through the issue of a Circular and, if required, a Prospectus. In addition, significant matters or reporting obligations are disseminated to Shareholders by way of announcements to the London Stock Exchange. The Secretary acts as a key point of contact for the Directors and communications received from Shareholders are circulated to the whole Board. The Manager also publishes a bi-annual newsletter and provides regular portfolio updates by email.	The Board recognises the importance of tax-free dividends to Shareholders and takes this into consideration when making decisions to pay interim and propose final dividends for each year. Further details regarding dividends for the year under review can be found in the Chairman's Statement. The Directors recognise the importance to Shareholders of the Company maintaining an active buy-back policy, with the intention that share buy backs will be conducted with a view to maintaining a share price that is at a discount of approximately 5% to the latest published NAV per share. Further details can be found in the Chairman's Statement, and in the Directors' Report in the Annual Report. In making the decision to launch the current Offer for Subscription, the Directors considered that it would be in the interest of Shareholders to continue to expand the portfolio and make investments across a diverse range of sectors. By growing the Company, as certain costs are fixed, these costs are spread over a wider asset base, which helps to promote a competitive ongoing charges ratio and is in the interests of Shareholders. In addition, the increased liquidity helps support the buy-back policy referred to above. Further details regarding the latest Offers for Subscription can be found in the Chairman's Statement.
Environment and society The Directors and the Manager take account of the social, environmental and ethical factors impacted by the Company and the investments that it makes.	The Directors and the Manager are aware of their duty to act in the interests of the Company and acknowledge that there are risks associated with investment in companies that fail to conduct business in a socially responsible manner. The Manager's ESG assessment of investee companies focuses heavily on their impact on the environment, as well as broader social themes such as the companies' approach to diversity and inclusion in the workplace, and their work with charities.Further details can be found in the Chairman's Statement, the Investment Manager's Review, and in the Statement of Corporate Governance in the Annual Report.
Portfolio companies At quarterly Board Meetings, the Manager reports to the Board on the portfolio companies and the Directors challenge the Manager where they feel it is appropriate. The Manager communicates directly with each private investee company, normally through the Maven representative who sits on its board. From time to time, the management teams of investee companies give presentations to the Board.	Through the Manager, the Directors encourage portfolio companies to adopt best practice corporate governance, exercising voting rights where needed. The Board has delegated the responsibility for monitoring the portfolio companies to the Manager and has given it discretion to vote in respect of the Company's holdings in the investment portfolio, in a way that reflects the concerns and key governance matters discussed by the Directors. The Board is also mindful that, as the portfolio expands and the proportion of early stage investments increases, follow-on funding will represent an important part of the Company's investment strategy and this forms a key part of the Directors' discussions in relation to valuations, risk management and fundraising. Meeting with the management teams of private companies gives the Board a better understanding of the investee business.
Manager The Manager attends the quarterly Board Meeting, presenting a detailed portfolio analysis and reports on key issues such as VCT compliance, investment pipeline, utilisation of any new monies raised, share liquidity and peer group performance.	The Board ensures that the Manager implements the investment objective and strategy, in accordance with the terms of the Management and Administration Deed, and in compliance with the VCT, and other, regulations. On an annual basis, as part of its decision on the re-appointment of the Manager, the Board conducts a review of the Manager's performance and management fee. Information provided by the Manager supports the Board's policies regarding dividends and share buy-backs, and the decisions made on fundraising. The Board has an active treasury management policy, which has the objective of generating income from the cash held prior to investment.  As detailed in the Chairman's Statement and in the Investment Manager's Report, in the Annual Report, during the year under review, the treasury management strategy was refined in response to rising interest rates and to ensure ongoing compliance with the Nature of Income test. This resulted in an adjustment to the composition of the portfolio, including the introduction of holdings in money market funds and an expansion of the portfolio of investment trusts.
Registrar Annual review meetings and control reports.	The Directors review the performance of all third party service providers on an annual basis, including ensuring compliance with GDPR.
Banks and Custodian Regular statements and control reports received, with all holdings and balances reconciled.	The Directors review the performance of all third party providers on an annual basis, including oversight of securing the Company's assets.

Employee, Environmental and Human Rights Policy

As a VCT, the Company has no direct employee or environmental responsibilities, nor is it responsible directly 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. As the Company has no employees, it has no requirement to report separately on employment matters. The Board comprises four male Directors and delegates responsibility for diversity to the Nomination Committee, as explained in the Statement of Corporate Governance in the Annual Report.

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. Further information can be found in the Investment Manager's Review, and in the Statement of Corporate Governance, in the Annual Report. The Manager is continuing to focus on developing its ESG framework and oversight capabilities. Further details regarding the Manager's approach to ESG and the progress made on developing its ESG framework can be found in the Chairman's Statement. The Manager will be overseeing the collation of this information for the benefit of the Board but will also be supporting individual companies to identify ESG risks and opportunities and, where potential improvements are identified, will work jointly with investee businesses to make positive changes.

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 can be found in the Annual Report.

Future Strategy

The Board and the Manager intend to maintain the policies set out above for the year ending 31 December 2024, as it is believed that these are in the best interests of Shareholders.

Approval

The Business Report, and the Strategic Report as a whole, was approved by the Board of Directors and signed on its behalf by:

Fraser Gray

Director

5 April 2024

Income Statement

For the year ended 31 December 2023

	Year ended 31 December 2023			Year ended 31 December 2022
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Loss on investments	-	(2,989)	(2,989)	-	(787)	(787)
Income from investments	1,262	-	1,262	1,297	-	1,297
Other income	299	-	299	92	-	92
Investment management fees	(449)	(1,797)	(2,246)	(435)	(1,738)	(2,173)
Other expenses	(633)	-	(633)	(497)	-	(497)
Net return on ordinary activities before taxation	479	(4,786)	(4,307)	457	(2,525)	(2,068)
Tax on ordinary activities	-	-	-	-	-	-
Return attributable to Equity Shareholders	479	(4,786)	(4,307)	457	(2,525)	(2,068)
Earnings per share (pence)	0.35	(3.52)	(3.17)	0.36	(2.00)	(1.64)

All gains and losses are recognised in the Income Statement.

The total column of this statement is the Profit & Loss Account of the Company. The revenue and capital return columns are prepared in accordance with the AIC SORP. All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year. There are no potentially dilutive capital instruments in issue and, therefore, no diluted earnings per share figures are relevant. The basic and diluted earnings per share are, therefore, identical.

The Notes are an integral part of the Financial Statements and can be found in full in the Annual Report.

Statement of Changes in Equity

For the year ended 31 December 2023

Year ended 31 December 2023	Non-distributable Reserves				Distributable Reserves
	Share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserve unrealised £'000	Capital reserve realised £'000	Special distributable reserve £'000	Revenue reserve £'000	Total £'000
At 31 December 2022	12,977	37,443	762	12,100	4,213	19,975	1,174	88,644
Net return	-	-	-	(2,950)	(39)	(1,797)	479	(4,307)
Dividends paid	-	-	-	-	-	(4,580)	(205)	(4,785)
Repurchase and cancellation of shares	(434)	-	434	-	-	(2,715)	-	(2,715)
Net proceeds of share issue	978	5,615	-	-	-	-	-	6,593
Net proceeds of DIS issue*	75	412	-	-	-	-	-	487
At 31 December 2023	13,596	43,470	1,196	9,150	4,174	10,883	1,448	83,917

Year ended 31 December 2022	Non-distributable Reserves				Distributable Reserves
	Share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserve unrealised £'000	Capital reserve realised £'000	Special distributable reserve £'000	Revenue reserve £'000	Total £'000
At 31 December 2021	10,992	23,244	502	14,583	2,517	29,367	1,107	82,312
Net return	-	-	-	(2,483)	1,696	(1,738)	457	(2,068)
Dividends paid	-	-	-	-	-	(5,940)	(390)	(6,330)
Repurchase and cancellation of shares	(260)	-	260	-	-	(1,714)	-	(1,714)
Net proceeds of share issue	2,157	13,692	-	-	-	-	-	15,849
Net proceeds of DIS issue*	88	507	-	-	-	-	-	595
At 31 December 2022	12,977	37,443	762	12,100	4,213	19,975	1,174	88,644

*DIS represents the Dividend Investment Scheme as detailed in the Chairman's Statement.

The capital reserve unrealised is generally non-distributable other than the part of the reserve relating to gains/(losses) attributable to readily realisable quoted investments that are distributable. The capital reserve unrealised contains £4,325,000 of losses (2022: £1,699,000) in relation to level 1 and level 2 investments, which could be converted to cash, and as such, could be deemed realised.

Where all, or an element of the proceeds of sales have not been received in cash or cash equivalent (as noted on the realisations table in the Annual Report), and are not readily convertible to cash, they do not qualify as realised gains for the purposes of distributable reserves calculations and therefore do not form part of distributable reserves. The split of unrealised gains/(losses) for the year is detailed within the portfolio valuation section of Note 8 in the Annual Report.

The Notes are an integral part of the Financial Statements and can be found in full in the Annual Report.

Balance Sheet

As at 31 December 2023

		31 December 2023 £'000	31 December 2022 £'000
Fixed assets
Investments at fair value through profit or loss		77,237	66,858
Current assets
Debtors		1,506	1,610
Cash		5,458	20,352
		6,964	21,962
Creditors
Amounts falling due within one year		(284)	(176)
Net current assets		6,680	21,786
Net assets		83,917	88,644
Capital and reserves
Called up share capital		13,596	12,977
Share premium account		43,470	37,443
Capital redemption reserve		1,196	762
Capital reserve - unrealised		9,150	12,100
Capital reserve - realised		4,174	4,213
Special distributable reserve		10,883	19,975
Revenue reserve		1,448	1,174
Net assets attributable to Ordinary Shareholders		83,917	88,644
Net asset value per Ordinary Share (pence)		61.71	68.30

The Financial Statements of Maven Income and Growth VCT 4 PLC, registered number SC272568, were approved by the Board of Directors and were signed on its behalf by:

Fraser Gray

Director

5 April 2023

The Notes are an integral part of the Financial Statements and can be found in full in the Annual Report.

Cash Flow Statement

For the Year Ended 31 December 2023

		Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Net cash flows from operating activities		(1,308)	(2,187)
Cash flows from investing activities
Purchase of investments		(19,583)	(5,471)
Sale of investments		6,320	9,068
Net cash flows from investing activities		(13,263)	3,597
Cash flows from financing activities
Equity dividends paid		(4,785)	(6,330)
Net proceeds of share issue		6,707	15,849
Net proceeds of DIS issue		470	595
Repurchase of Ordinary Shares		(2,715)	(1,714)
Net cash flows from financing activities		(323)	8,400
Net (decrease)/increase in cash		(14,894)	9,810
Cash at beginning of year		20,352	10,542
Cash at end of year		5,458	20,352

The Notes are an integral part of the Financial Statements and can be found in full in the Annual Report.

Notes to the Financial Statements

For the Year Ended 31 December 2023

Accounting policies

The Company is a public limited company, incorporated in Scotland and its registered office is shown in the Corporate Summary in the Annual Report.

(a) Basis of preparation

The Financial Statements have been prepared on a going concern basis, further details can be found in the Directors' Report in the Annual Report. The Financial Statements have been prepared under the historical cost convention, as modified by the revaluation of investments and in accordance with FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland, and in accordance with the Statement of Recommended Practice for Investment Trust Companies and Venture Capital Trusts (the SORP) issued by the AIC in July 2022.

(b) Income

Equity income

Dividends receivable on quoted equity shares are recognised on the ex-dividend date. Dividends receivable on unquoted equity shares are recognised when the Company's right to receive payment is established and there is no reasonable doubt that payment will be received.

Unquoted loan stock and other preferred income

Fixed returns on non-equity shares and debt securities are recognised when the Company's right to receive payment and expected settlement is established. Where interest is rolled up and/or payable at redemption then it is recognised as income unless there is reasonable doubt as to its receipt.

Redemption premiums

When a redemption premium is designed to protect the value of the instrument holder's investment rather than reflect a commercial rate of revenue return the redemption premium should be recognised as capital. The treatment of redemption premiums is analysed to consider if they are revenue or capital in nature on a company by company basis. A revenue redemption premium of £nil (2022: £141,836) was received in the year ended 31 December 2023.

Bank interest

Deposit Interest is recognised on an accruals basis using the rate of interest agreed with the bank. Income from unquoted loan stock and deposit interest is included on an effective interest rate basis.

(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 that are incidental to the acquisition and disposal of an investment are charged to capital;

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

•      share issue and merger costs are charged to the share premium account.

(d) Taxation

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

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

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

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

(e) Investments

In valuing unlisted investments the Directors follow the criteria set out below. These procedures comply with the revised IPEV 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 represents 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 early stage investments completed in the reporting period, fair value is determined using the Price of Recent Investment Method, calibrating for any material change in the trading circumstances of the investee company. Other early stage companies are valued by applying a multiple to the investee's revenue to derive the enterprise value of each company. Where relevant, an investee company may be valued on a discounted cash flow basis.

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 maintainable earnings to determine the enterprise value of the company.

       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.

4.    All private company unlisted investments are valued individually by the Manager. The resultant valuations are subject to detailed scrutiny and approval by the Directors of the Company.

5.    In accordance with normal market practice, investments quoted on AIM 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 (i.e. developed using market data) for the asset or liability, either directly or indirectly.

•      Level 3 - inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.

(g) Gains and losses on investments

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

(h) Critical accounting judgements and key sources of estimation uncertainty

Disclosure is required of judgements and estimates made by the Board and the Manager in applying the accounting policies that have a significant effect on the Financial Statements. The area involving the highest degree of judgement and estimates is the valuation of unlisted investments recognised in Note 8 and 16 in the Annual Report and explained in Note 1(e) above.

In the opinion of the Board and the Manager, there are no critical accounting judgements.

Reserves

Share premium account

The share premium account represents the premium above nominal value received by the Company on issuing shares net of share issue costs, including £113,694 trail commission. This reserve is non-distributable.

Capital redemption reserve

The nominal value of shares repurchased and cancelled is represented in the capital redemption reserve. This reserve is non-distributable.

Capital reserve - unrealised

Increases and decreases in the fair value of investments are recognised in the Income Statement and are then transferred to the capital reserve unrealised account. This reserve is generally non-distributable other than the part of the reserve relating to gains/(losses) attributable to readily realisable quoted investments which are distributable.

Capital reserve - realised

Gains or losses on investments realised in the year that have been recognised in the Income Statement are transferred to the capital reserve realised account on disposal. Furthermore, any prior unrealised gains or losses on such investments are transferred from the capital reserve unrealised account to the capital reserve realised account on disposal. This reserve is distributable.

Special distributable reserve

The total cost to the Company of the repurchase and cancellation of shares is represented in the special distributable reserve account. The special distributable reserve also represents capital dividends, capital investment management fees and the tax effect of capital items. This reserve is distributable.

Revenue reserve

The revenue reserve represents accumulated profits retained by the Company that have not been distributed to Shareholders as a dividend. This reserve is distributable.

Return per Ordinary Share

	Year ended 31 December 2023	Year ended 31 December 2022
The returns per share have been based on the following figures: Weighted average number of Ordinary Shares Revenue return Capital return	136,002,183 £479,000 (£4,786,000)	126,180,477 £457,000 (£2,525,000)
Total return	(£4,307,000)	(£2,068,000)

Net asset value per Ordinary Share

The net asset value per Ordinary Share as at 31 December 2023 has been calculated using the number of Ordinary Shares in issue at that date of: 135,982,341 (2022: 129,788,859).

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 or loss of the Company as at 31 December 2023 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 and emerging risks and uncertainties that it faces; and

•    the Annual Report and Financial Statements taken as a whole is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company's position and performance, business model and strategy.

Other Information

The Annual General Meeting will be held on Thursday 9 May 2024, commencing at 12.00 noon at the offices of Maven Capital Partners UK LLP, 6th Floor, Saddlers House, 44 Gutter Lane, London EC2V 6BR.

The Annual Report and Financial Statements for the year ended 31 December 2023 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 31 December 2022 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.

Copies of this announcement, and of the Annual Report and Financial Statements for the year ended 31 December 2023, will be available, in due course, to the public at the registered office of the Company, Kintyre House, 205 West George Street, Glasgow, G2 2LW and on the Company's webpage mavencp.com/migvct4.

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

The Annual Report will shortly be submitted to the National Storage Mechanism and will be available for inspection at: www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism.

By Order of the Board

Maven Capital Partners UK LLP

Secretary

5 April 2024

 

END