Annual Financial Report

RNS Number : 2262A

Maven Income & Growth VCT PLC

03 June 2016

 

Maven Income and Growth VCT PLC

Final results for the year ended 29 February 2016

The Directors are pleased to report the Company's financial results for the year ended 29 February 2016.

Highlights for the Year

•        NAV total return of 135.2p per share (2015: 128.7p) at the year end, up 5.1% over the year

•        NAV at period end of 68.1p per share (2015: 67.5p) after payment of dividends totalling 5.9p during the year

•        Three new private equity investments added to the portfolio

•        Realisation of Westway Services Holdings for a total return of 6.5 times cost

•        Exit from Steminic, generating a total return multiple of 3.3 times cost

•        Disposal of XPD8 Solutions for a total return of 1.75 times cost

•        Sale of Dantec Hose, delivering a 2.1 times total return on cost

•        Exit from Six Degrees Group, generating a 2.1 times total return on cost

•        Second interim dividend of 2.4p per share declared and final dividend of 1.2p per share proposed (2015 final: 3.5p)

Chairman's Statement

Your Board is pleased to report that the year to 29 February 2016 has been another successful period for your Company. During the year NAV total return increased by 5.1%, representing the seventh consecutive year of growth. In recognition of this positive performance the Board is pleased to recommend an uplift in the full year dividend to 6.0p per share, an increase of 1.7% over the prior year.

In the period under review your Company has continued to deliver against its core objectives of long term capital appreciation and steady improvement in Shareholder returns. This is demonstrated by the five profitable exits achieved during the year, the most notable of which was the sale of Westway Services Holdings, which completed in December 2015 and generated a return of 6.5 times cost over the life of the investment. In addition, three new private equity investments were completed consistent with the strategy of building a diversified portfolio of robust, growth businesses. The Board believes that your Company has a high quality asset base capable of maintaining the payment of tax-free distributions to Shareholders and is proposing an increase in the full year dividend to 6.0p per share, an uplift of 1.7% over the previous period.

The majority of investee companies are trading well, as can be seen from the detailed analysis of portfolio developments included in the Investment Manager's Review on pages 18 to 22 of the Annual Report. Further progress has been achieved during the year by Crawford Scientific, Just Trays, John McGavigan, Nenplas and SPS (EU), which has enabled the Board to increase the valuation of those investments. Others such as CatTech International, D Mack, ISN Solutions Group and R&M Engineering Group have had their valuations reduced in response to challenging market conditions.

The Board is also pleased to note that Maven received industry recognition for its performance during the year when it was named Private Equity House of the Year at the 2015 M&A Awards, one of the leading events in the corporate finance calendar. This category recognises private equity managers that have displayed the keenest judgement and opportunism in completing acquisitions or exit transactions, including an acknowledgement of their contribution in increasing the value of investee businesses. Maven was also shortlisted at the 2015 unquote" British Private Equity Awards in the VCT House of the Year category, whilst the 3.8 times cost exit achieved by your Company from EFC Group was nominated for VCT Exit of the Year.

Shareholders may be aware of the significant legislative changes which were introduced to the UK VCT scheme during the period. The July 2015 Budget announced a number of amendments designed to bring the UK into line with European Union (EU) State Aid Rules for smaller company investment. The revised legislation imposes restrictions on the types of transactions and companies that VCTs are able to invest in, with strict limitations around acquisitions (specifically prohibiting the financing of management buy-outs), an age limit on investee companies at the time of investment, a lifetime cap on the amount of funding a company can receive, and restrictions on providing follow-on funding to existing portfolio companies. The Board has reviewed the new legislation and, following detailed discussions with the Manager, has concluded that Maven remains well placed to adapt to the new requirements of a much changed regulatory and investment landscape. The Directors believe that Maven's track record and experience in sourcing and executing similar transactions for non-VCT clients, for whom over 40 development capital transactions have been completed since 2011, provides the Manager with sufficient flexibility and resource to identify and complete transactions which will qualify under the new rules.

Dividends

The Directors intend that the full dividend for the year ended 29 February 2016 should be 6.0p per Ordinary Share (2015: 5.9p), of which 2.4p was paid as an interim dividend on 27 November 2015. Furthermore, in order to ensure that the Company will continue to comply with the VCT regulations at all times, part of the balance of the distribution for the year is to be paid as a second interim dividend.

Therefore, the Directors declared on 26 April 2016 that a second interim dividend in respect of the year ended 29 February 2016, of 2.4p per Ordinary Share, was to be paid on 27 May 2016 to Shareholders on the register at close of business on 6 May 2016. Thereafter, subject to the approval of Shareholders at the Annual General Meeting to be held on 7 July 2016, the Directors also propose that a final dividend in respect of the year ended 29 February 2016, of 1.2p per Ordinary Share, be paid on 15 July 2016 to Shareholders on the register at close of business on 17 June 2016. This total dividend for the year of 6.0p per share represents an increase of 1.7% over the prior year and a yield of 9.2% based on the year end closing mid-market share price of 65.5p.

Since the Company's launch, and after receipt of the second interim and proposed final dividends, Shareholders will have received 70.7p per share in tax-free dividends. The effect of paying the proposed final dividend would be to reduce the NAV of the Company by the total cost of the distribution.

On 24 August 2015 the Board announced that, under the Terms and Conditions of the Company's Dividend Investment Scheme (DIS) which allow the Directors to suspend or terminate its operation without prior notice and revert to making monetary payments to all Participants, the Directors had resolved that, in light of the investment restrictions proposed in the Government's July 2015 Budget, the DIS was to be suspended with immediate effect to allow the Directors and the Manager to review the changes to the VCT legislation and to consider the potential impact of these on the Company's future investment strategy. As a result, until further notice, all future dividends will be paid to Shareholders by either cheque or direct bank transfer using existing mandate instructions.

Fund Raising

In October 2014 the Company announced that it planned to raise up to £4.0 million in an Offer for Subscription alongside offers by four other Maven VCTs. The Offer by your Company was fully subscribed by 20 January 2015 and, consequently, closed early. Relevant details regarding shares issued during the year under review in respect of the Offer can be found in Note 12 to the Financial Statements.

As the Company currently enjoys significant cash liquidity for new investment, the Board elected not to raise further funds in the 2015/16 tax year.

Share Buy-backs

Shareholders should be aware that the Board's primary objective is for the Company to retain sufficient liquid assets for making investments in line with its stated policy and for the continued payment of dividends to Shareholders. However, the Directors also acknowledge the need to maintain an orderly market in the Company's shares and have delegated authority to the Manager to buy back shares in the market for cancellation or to be held in treasury. It is intended that, subject to market conditions, available liquidity and the maintenance of the Company's VCT status, shares will be bought back at prices representing a discount of between 5% and 10% to the prevailing NAV per share. Shares may also be bought back at prices out with this discount range, but only when it is considered to be in the best interests of all Shareholders.

Management and Administration Fees

HM Revenue & Customs (HMRC) has confirmed that VAT is no longer payable on secretarial fees. The Manager has sought recovery of amounts paid previously and the total sum of £47,000 received during the year has been reflected in the Financial Statements.

Regulatory Developments

The July 2015 Budget received Royal Assent on 18 November 2015, bringing into statute a number of material changes to the legislation governing the UK VCT scheme, aligning it with EU State Aid Rules for smaller company investment. The new rules impose specific restrictions on the types of companies and transactions which VCTs are able to pursue in order to retain qualifying status, including a VCT's ability to finance management buy-outs and acquisitions, an age limit for investee companies, a lifetime cap on the amount of funding a company can receive and limitations on the ability to provide existing portfolio companies with follow-on funding. In order to ensure ongoing compliance with the new rules the Manager has engaged the services of an adviser to assist in interpreting the revised legislation in relation to proposed new transactions.

Since the announcement of the new rules the Manager has been actively involved in a consultation process through the industry representative body the Association of Investment Companies (AIC) which, supported by other leading VCT managers, has engaged with HM Treasury and HMRC on the practical application of the new rules. These discussions are ongoing and the Board will ensure Shareholders are kept up to date on any further developments.

The 2014 UK Corporate Governance Code introduced a new requirement, in respect of financial periods commencing on or after 1 October 2014, for companies to include a viability statement regarding the Directors' assessment of the future prospects of the Company. The Board has considered fully the Company's current position, principal risks and future expectations, and the Directors' statement of viability can be found on pages 32 and 33 of the Annual Report.

With effect from 1 January 2016, new tax legislation under the OECD (Organisation for Economic Co-operation and Development) Common Reporting Standard for Automatic Exchange of Financial Account Information (the Common Reporting Standard) is being introduced. The legislation will require investment trusts and VCTs to provide personal information to HMRC on certain investors who purchase shares in investment trusts and VCTs. As a result, the Company will have to provide information annually to the local tax authority on the tax residencies of a number of non-UK based certificated shareholders and corporate entities.

All new Shareholders, excluding those whose shares are held in CREST, entered onto the share register from 1 January 2016 will be sent a certification form for the purposes of collecting this information. For further information, please see HMRC's Quick Guide: Automatic Exchange of Information - information for account holders at https://www.gov.uk/ government/publications/exchange-of-information-accountholders.

Annual General Meeting (AGM)

As indicated in previous Annual Reports, in order to allow a wider range of Shareholders the opportunity to meet the Directors and the Manager, the AGM has been held in Glasgow and London in alternate years. Due to levels of Shareholder attendance at the respective venues, the Board has decided that most AGMs should be held in London. Therefore, the 2016 AGM will be held in the Manager's London office on 7 July 2016, and the Notice of Annual General Meeting can be found on pages 72 to 76 of the Annual Report.

The Future

Your Company has achieved significant success by following a proven strategy of investing in a diversified portfolio of private companies capable of generating regular income and capital appreciation. The introduction of the new VCT rules will result in an adjustment to this strategy, requiring the Manager to consider investing in earlier stage businesses with growth capital requirements, as opposed to focusing on management buy-out or acquisition based transactions which have historically provided a more predictable revenue stream. Whilst this revised approach will, over time, alter the composition of the asset base, your Board is confident that Maven's strong track record and stringent selection process, supported by the strength of the existing portfolio, will enable your Company to deliver growth whilst supporting the distribution of tax-free returns to Shareholders.

John Pocock

Chairman

3 June 2016

Business Report

This Business Report is intended to provide an overview of the strategy and business model of the Company, as well as the key measures used by the Directors in overseeing its management. The Company is a venture capital trust which invests in accordance with the investment objective set out in this report.

Investment Objective

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

Business Model and Investment Policy

Under an investment policy approved by the Directors, the Company intends to achieve its objective by:

•        investing the majority of its funds in a diversified portfolio of shares and securities in smaller, unquoted UK companies and AIM/ISDX quoted companies which meet the criteria for VCT qualifying investments and have strong growth potential;

•        investing no more than £1 million in any company in one year and no more than 15% of the Company's assets by cost in one business at any time; and

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

The Company had no borrowings as at 29 February 2016 and, as at the date of this Report, the Board has no intention of utilising the borrowing facility.

Principal Risks and Uncertainties

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

Investment Risk

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

The Company manages and minimises investment risk by:

•        diversifying across a large number of companies;

•        diversifying across a range of economic sectors;

•        actively and closely monitoring the progress of investee companies;

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

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

•        not investing in hostile public to private transactions; and

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

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

Financial and Liquidity Risk

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

Economic Risk

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

Credit Risk

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

Internal Control Risk

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

VCT Qualifying Status Risk

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

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

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

•        loss of VCT status and reputational damage as a result of serious breach of other regulations such as the FCA Listing Rules and the Companies Act 2006; and

•        increased investment restrictions resulting from the EU State Aid rules enacted through the Finance Act 2015.

Legislative and Regulatory Risk

In order to maintain its approval as a VCT, the Company is required to comply with VCT legislation in the UK as well as the EU State Aid Rules.

Changes in the future to UK legislation or the EU State Aid Rules could have an adverse impact on Shareholder investment returns whilst maintaining the Company's VCT status. The Board and the Manager continue to make representations where appropriate, either directly or through relevant industry bodies such as the AIC and the British Venture Capital Association (BVCA).

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

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

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

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

Statement of Compliance with Investment Policy

The Company is adhering to its stated investment policy and managing the risks arising from it. This can be seen in various tables and charts throughout 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 29 February 2016 and its performance during the year then ended is included in the Chairman's Statement, which also includes an overview of the Company's strategy and business model.

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

The Investment Portfolio Summary on pages 29 and 30 of the Annual Report 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 on pages 16 and 17 of the Annual Report shows that the portfolio is diversified across a variety of sectors and deal types. The level of VCT qualifying investment is monitored by the Manager on a daily basis and reported to the Risk Committee quarterly.

Key Performance Indicators

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

•        NAV total return;

•        dividend growth;

•        share price discount to NAV;

•        investment income; and

•        operational expenses.

The NAV total return is a measure of Shareholder value that includes both the current NAV per share and the sum of dividends paid to date. The dividend growth measure shows how much of that Shareholder value has been returned to original investors in the form of dividends. A historical record of these measures is shown in the Financial Highlights on pages 5 and 6 of the Annual Report and the profile of the portfolio is reflected in the Summary of Investment Changes on page 12. The Board reviews the Company's investment income and 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 the Company's ranking within the VCT sector by independent analysts.

Valuation Process

Investments held by Maven Income and Growth VCT PLC in unquoted companies are valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines. Investments quoted or traded on a recognised stock exchange are valued at their bid prices.

Share Buy-backs

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

Employee, Environmental and Human Rights Policy

The Company has no direct employee or environmental responsibilities, nor is it responsible for the emission of greenhouse gases. The Board's principal responsibility to Shareholders is to ensure that the investment portfolio is managed and invested properly. The management of the portfolio is undertaken by the Manager through members of its portfolio management team.

The Manager engages with the Company's underlying investee companies in relation to their corporate governance practices and in developing their policies on social, community and environmental matters and further information may be found in the Statement of Corporate Governance on page 45 of the Annual Report. In light of the nature of the Company's business, there are no relevant human rights issues and, therefore, the Company does not have a human rights policy.

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 on pages 51 to 54 of the Annual Report.

Future Strategy

The Board and Manager intend to maintain the policies set out above for the year ending 28 February 2017, as it is believed that these are in the best interests of Shareholders.

John Pocock

Chairman

3 June 2016

Maven Income and Growth VCT PLC
Income Statement
For the year ended 29 February 2016
	Year ended 29 February 2016			Year ended 28 February 2015
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Investment income and deposit interest	2,024	-	2,024	1,502	-	1,502
Investment management fees	(138)	(552)	(690)	(122)	(488)	(610)
Other expenses	(261)	-	(261)	(355)	-	(355)
Gains on investments	-	2,792	2,792	-	2,173	2,173
Net return on ordinary activities before taxation	1,625	2,240	3,865	1,025	1,685	2,710
Tax on ordinary activities	(282)	111	(171)	(206)	100	(106)
Return attributable to Equity Shareholders	1,343	2,351	3,694	819	1,785	2,604
Earnings per share (pence)	2.5	4.3	6.8	1.7	3.7	5.4

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 29 February 2016
	Year ended 29 February 2016		Year ended 28 February 2015
	£'000		£'000
Opening Shareholders' funds	36,291		31,212
Net return for year	3,694		2,604
Net proceeds of share issue	263		5,459
Net proceeds of DIS issue	46		-
Repurchase and cancellation of shares	(193)		(155)
Dividends paid - revenue	(980)		(960)
Dividends paid - capital	(2,232)		(1,869)
Closing Shareholders' funds	36,889		36,291

Balance Sheet

As at 29 February 2016

	29 February 2016	28 February 2015
	£'000	£'000
Investments at fair value through profit or loss	34,827	31,255
Current assets
Debtors	793	4,749
Cash	1,580	478
	2,373	5,227
Creditors
Amounts falling due within one year	(311)	191
Net current assets	2,062	5,036
Net assets	36,889	36,291
Capital and reserves
Called up share capital	5,420	5,380
Share premium account	10,253	10,013
Capital reserve - realised	(9,215)	(9,609)
Capital reserve - unrealised	2,795	3,070
Special distributable reserve	26,417	26,610
Capital redemption reserve	227	198
Revenue reserve	992	629
Net assets attributable to Shareholders	36,889	36,291
Net asset value per Ordinary Share (pence)	68.1	67.5

The Financial Statements of Maven Income and Growth VCT PLC, registered number 3908220, were approved and authorised for issue by the Board of Directors on 3 June 2016 on its behalf by:

John Pocock

Director

Cash Flow Statement

For the Year Ended 29 February 2016

			Year ended
	Year ended		28 February 2015
	29 February 2016		(restated)*
		£'000		£'000
Net cash flows from operating activities		(1,003)		(1,107)
Cash flows from investing activities
Investment income received		2,038		1,680
Deposit interest received		-		2
Purchase of investments		(27,066)		(13,768)
Sale of investments		26,525		13,419
Net cash flows from investing activities		1,497		1,333
Cash flows from financing activities
Equity dividends paid		(3,212)		(2,829)
Issue of Ordinary Shares		4,013		1,755
Repurchase of Ordinary Shares		(193)		(155)
Net cash flows from financing activities		608		(1,229)
Net increase/(decrease) in cash		1,102		(1,003)
Cash at beginning of year		478		1,481
Cash at end of year		1,580		478

*The 2015 cash flow has been restated for the presentational requirements of FRS 102.

Notes

Accounting Policies

(a) Basis of Preparation                      

The Financial Statements have been prepared under FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland and in accordance with the Statement of Recommended Practice for Investment Trust Companies and Venture Capital Trusts (the SORP) issued by the AIC in November 2014. This is the first year that the Company has presented its Financial Statements under the Financial Reporting Standard 102 (FRS 102) issued by the Financial Reporting Council.  The date of transition to FRS 102 is 1 March 2014. There are no significant changes to the Company's accounting policies as a result of the adoption of FRS 102 and the SORP. 

(b) Income                  

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

(c) Expenses               

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

-    expenses which are incidental to the acquisition and disposal of an investment are charged to capital; and

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

(d) Taxation                

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

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

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

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

(e) Investments                       

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

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

1. For investments completed prior to the reporting date and those at an early stage in their development, fair value is determined using the Price of Recent Investment Method, except that adjustments are made when there has been a material change in the trading circumstances of the company or a substantial movement in the relevant sector of the stock market.

2. Whenever practical, recent investments will be valued by reference to a material arm's length transaction or a quoted price.

3. Mature companies are valued by applying a multiple to their prospective earnings to determine the enterprise value of the company.

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

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

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

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

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

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

(f) Fair Value Measurement                

Fair value is defined as the price that the Company would receive upon selling an investment in a timely transaction to an independent buyer in the principal or the most advantageous market of the investment.  A three-tier hierarchy has been established to maximise the use of observable market data and minimise the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique.  Inputs may be observable or unobservable.

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

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

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

 -     Level 1 - the unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date;

 -     Level 2 - inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly; and       

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

(g) Gains and Losses on Investments              

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

	Year ended 29 February 2016
	Share	Capital	Capital	Special	Capital
	premium	reserve	reserve	distributable	redemption	Revenue
	account	realised	unrealised	reserve	reserve	reserve
Movement in reserves	£'000	£'000	£'000	£'000	£'000	£'000
At 1 March 2015	10,013	(9,609)	3,070	26,610	198	629
Gains on sale of investments	-	3,067	-	-	-	-
Net decrease in value of investments	-	-	(275)	-	-	-
Investment management fees	-	(552)	-	-	-	-
Dividends paid	-	(2,232)	-	-	-	(980)
Tax effect of capital items	-	111	-	-	-	-
Repurchase and cancellation of shares	-	-	-	(193)	29	-
Share issue	202	-	-	-	-	-
DIS share issue	38	-	-	-	-	-
Net return on ordinary activities after taxation	-	-	-	-	-	1,343
At 29 February 2016	10,253	(9,215)	2,795	26,417	227	992

	Year ended	Year ended
	29 February 2016	28 February 2015
Weighted average number of Ordinary Shares	54,383,852	48,061,685
Revenue return	£1,343,000	£819,000
Capital return	£2,351,000	£1,785,000
Total return	£3,694,000	£2,604,000

The full Notes to the Financial Statements are contained in the Annual Report.

Net Asset Value per Ordinary Share

Net asset value per Ordinary Share as at 29 February 2016 has been calculated using the number of Ordinary Shares in issue at that date of 54,197,884 (2015: 53,799,962).

Basis of Preparation of the Financial Statements

This Financial Statements included in this Announcement have been prepared on the same basis as the Annual Report and Financial Statements for the year ended 28 February 2015. The Annual Report and Financial Statements for the year ended 29 February 2016 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 28 February 2015 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

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 29 February 2016 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 position and performance, business model and strategy.

Other Information

The Annual General Meeting will be held on 7 July 2016, commencing at 12.00 noon at 5^th Floor, 1-2 Royal Exchange Buildings, London, EC3V 3LF.

Copies of this announcement, and of the Annual Report and Financial Statements for the year ended 29 February 2016, will be available to the public at the office of Maven Capital Partners UK LLP, 205 West George Street, Glasgow G2 2LW; at the registered office of the Company, Fifth Floor, 1-2 Royal Exchange Buildings, London EC3V 3LF and on the Company's website at http://www.mavencp.com/migvct.

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 will be available for inspection at: www.morningstar.co.uk/uk/NSM.

By Order of the Board

Maven Capital Partners UK LLP

Secretary

3 June 2016

 

END

 

 

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