Annual Financial Report

RNS Number : 0981Q

Maven Income & Growth VCT PLC

01 June 2018

 

Maven Income and Growth VCT PLC

Final results for the year ended 28 February 2018

The Directors are pleased to report the Company's financial results for the year ended 28 February 2018.

Highlights

·       NAV total return at the year end of 140.56p per share (2017: 138.94p)

·       NAV at year end of 58.20p per share (2017: 65.84p), after payment of dividends totalling 9.26p per share during the year

·       Annual dividends of 5.66p per share (2017: 6.00p)

·       First interim dividend of 7.45p per share paid on 13 April 2018 for the year ending 28 February 2019, with a second interim dividend of 5.10p per share declared for payment on 22 June 2018

·       Nine new VCT qualifying investments completed

·       Profitable exits achieved from Crawford Scientific, SPS (EU), John McGavigan and Endura

Chairman's Statement

Your Board is pleased to report on the positive progress achieved by your Company in the year to 28 February 2018. During the period under review, NAV total return increased to 140.56p per share, representing the ninth consecutive year of growth. This outcome reflects the strength of the underlying portfolio of investee companies and the profitable realisation of a number of assets, although overall performance for the year was constrained by the write-down in value of one of the more mature private company holdings. Significant progress was also achieved in the long-term construction of the portfolio, with the addition of nine new VCT qualifying investments in companies operating across a range of high growth industries and sectors.

Annual dividends totalled 5.66p per share, representing a yield of 10.48% based on the share price at the year end, with further payments totalling 12.55p per share declared subsequent to the year end. This reflects the build-up of distributable reserves following recent exits, and was also required in order to ensure your Company's ongoing compliance with the VCT legislation. Your Board recognises the importance of dividend payments, and remains committed to making distributions when realisations are achieved and to providing regular tax-free income to Shareholders.

During the financial year, your Company delivered further growth in NAV total return against a backdrop of economic uncertainty, relating to the UK's intended withdrawal from the European Union (EU), and an ever-changing regulatory environment. Since enactment of the Finance (No. 2) Act 2015 the framework under which VCTs operate has become increasingly complex, with further legislation introduced in the Finance Act 2018. However, your Board is encouraged by the Manager's proactive response to these market challenges, and believes that Maven has the requisite levels of skill and experience to ensure that your Company continues to respond appropriately and remains well positioned to deliver future growth in line with its investment objective.

Throughout the year, the majority of the companies in the investee portfolio have continued to trade in line with expectations. The progress achieved by a number of established private company assets has enabled their valuations to be increased. The Board is encouraged to note that after a number of years of exceptionally challenging market conditions, the portfolio companies with exposure to the oil & gas services sector are seeing an improvement in trading, with financial performance showing an increase over the comparative period in the prior year. The valuations of a number of those assets had previously been reduced in response to market conditions, and the conservative valuations will be maintained until there is evidence of a sustained market recovery. There are also a small number of businesses that are operating behind plan, or where a market adjustment has impacted upon performance, and the valuations of these assets have been reduced in order to reflect this. A detailed analysis of portfolio developments can be found in the Investment Manager's Review in the Annual Report.

It is pleasing to report on an accelerated rate of new investment during the period, with the addition of nine, carefully selected, growth oriented companies to the portfolio. The pipeline of new opportunities remains strong, with the Manager's expanded nationwide office network, delivering a regular supply of prospective investments. The Directors welcomed the announcement in the 2017 Autumn Budget Statement that the Advanced Assurance process will be revised by HM Revenue & Customs (HMRC), as this should markedly improve the timescales for transaction completion.

Given the maturing profile of a number of assets in the portfolio, there has been significant sale and realisation activity during the year. In October 2017, an exit was achieved from Crawford Scientific, a leading supplier of chromatography products and services, through a sale to an institutional buyer which achieved a return of 4.5 times cost over the three-year investment period. In December 2017, exits were achieved from SPS (EU), the UK's largest provider of promotional merchandise, and John McGavigan, a manufacturer and supplier of plastic components for the global automotive industry, delivering total returns of 2.5 times and 4.2 times cost respectively over the lives of the investments. In February 2018, the exit from Endura, a designer and manufacturer of high performance cycling clothing and accessories, completed for a total return of 1.56 times cost over the holding period. The Board is aware that discussions are in process regarding further potential exits from a number of the more mature portfolio assets, although there can be no certainty that these will lead to profitable realisations.

The Directors believe it is important that Shareholders are aware of the longer term implications arising from the VCT regulations. The changes to the VCT rules that were enacted in November 2015 specifically prohibit participation in management buy- outs or acquisition based transactions. They also restrict the ability of VCTs to provide follow-on funding to older companies, including existing portfolio holdings, unless certain conditions are met. As a result, VCT managers are required to focus on the provision of development capital to younger or earlier stage companies which, given their inherent lack of maturity, have a different risk profile. In addition, transaction structures are now required to contain a greater proportion of equity, where previously a higher level of interest bearing debt was permitted. As the portfolio evolves, and a greater proportion of holdings are invested in earlier stage companies, there is likely to be an impact on income levels. This could result in dividend payments being subject to variation in terms of quantum and timing, as well as being more closely linked to realisation activity and the requirement to comply with the VCT qualification rules. The Board and the Manager will ensure that this transition is managed carefully in line with your Company's investment objective.

Regulatory Developments

During the summer of 2017, the Patient Capital Review was formally extended to consider the effectiveness and value for money provided by the VCT and Enterprise Investment Scheme sector. The Manager contributed to this consultation on behalf of its VCT clients and it was widely anticipated that, as a result of this review, the 2017 Autumn Budget Statement would include a number of amendments.

The Directors were encouraged that the measures announced in the 2017 Autumn Budget Statement were intended to preserve the attractive fundamentals of the VCT scheme, which continues to provide a valuable bridge between private capital and the UK SME sector. The availability of long-term patient capital, in line with Government objectives at what is an increasingly important time for the UK economy, gives comfort to small businesses and ensures that entrepreneurial companies can continue to access equity finance, and investors can benefit from their success.

General Data Protection Regulation (GDPR)

The GDPR came into force on 25 May 2018, replacing the Data Protection Act 1998. This regulation enforces the principle of 'privacy by design and by default' and enshrines new rights for individuals, including the right to be forgotten and to data portability. The Manager has worked with the third parties that process Shareholders' personal data to ensure that their rights under the new regulation are respected.

Dividends

As previously highlighted, the Directors have considered it necessary to distribute an enhanced level of interim dividends. This was a result of a build-up of distributable reserves, including the proceeds from recent profitable realisations, and the requirement to ensure ongoing compliance with the VCT regulations.

The first interim dividend in respect of the year ended 28 February 2018, of 2.96p per Ordinary Share and comprising capital only, was paid on 14 July 2017 to Shareholders on the register at close of business on 23 June 2017. The second interim dividend of 2.70p per Ordinary Share, comprising 1.10p of revenue and 1.60p of capital, was paid on 30 November 2017 to Shareholders on the register at close of business on 3 November 2017. No final dividend is proposed and therefore, total distributions for the financial year were 5.66p per Ordinary Share, representing a yield of 10.48% based on the year-end closing mid-market price of 54.00p. The effect of paying dividends is to reduce the NAV of the Company by the total cost of the distribution.

Subsequent to the year end, on 8 March 2018 the Company announced an interim dividend in respect of the year ending 28 February 2019 of 7.45p per Ordinary Share, which was paid on 13 April 2018 to Shareholders on the register on 16 March 2018. A second interim dividend was declared on 17 May 2018, with a payment of 5.10p per Ordinary Share to be made on 22 June 2018 to Shareholders on the register at close of business on 25 May 2018.

Since the Company's launch, and after receipt of the dividends noted above, Shareholders will have received 94.91p per share in tax-free dividends. Decisions on future distributions will take into consideration the availability of surplus revenue, the adequacy of reserves, the proceeds from any further realisations and the VCT qualifying levels of the portfolio, all of which are kept under close and regular review by the Board and the Manager.

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. However, the Directors also acknowledge the need to maintain an orderly market in the Company's shares and have delegated authority to the Manager to buy back shares in the market for cancellation or to be held in treasury, subject always to such transactions being in the best interests of Shareholders.

It is intended that, subject to market conditions, available liquidity and the maintenance of the Company's VCT status, shares will continue to be bought back at prices representing a discount of between 5% and 10% of the prevailing NAV per share.

Strategy

The Directors monitor the strategic options for your Company on a regular basis and are currently considering the impact of the increased rate of distribution on net assets and the potential to provide funding for new investments.

The Future

The Directors are encouraged by the steady progress achieved in the financial year, where further growth in Shareholder value has been generated despite the challenges presented by the prevailing economic uncertainty and an increasingly restrictive regulatory environment. During the period, the Manager has successfully demonstrated its ability to continue to deliver growth under the new investment parameters, following the VCT rules change, and the Board believes that Maven remains well placed to adapt to the further legislative amendments as they are introduced, whilst continuing to deliver your Company's investment objective.

Your Board remains committed to expanding the portfolio, through the addition of attractive, high growth assets from a diverse range of industry sectors that are capable of generating enhanced returns over time as they reach maturity. The pipeline for new investments is strong, with a number of transactions due to complete early in the new financial year, and it is anticipated that the momentum in rate of investment will continue to build. It will take a number of years for the gradual rebalancing of the portfolio towards younger and early stage companies to complete and, in the near term, the portfolio of established companies, which forms the majority of the asset base, should continue to deliver steady growth and investment income to support Shareholder returns.

John Pocock

Chairman

1 June 2018

Strategic Report

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 Business Report. The Board holds at least one separate meeting per annum to discuss strategic matters.

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

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/NEX 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 28 February 2018 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 unquoted UK companies and AIM/NEX quoted companies which, by their nature, carry a higher level of risk and lower liquidity relative to investments in large quoted companies. The Board aims to limit the risk attaching to the investment portfolio as a whole by ensuring that a robust and structured selection, monitoring and realisation process is applied by the Manager. 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;

•      co-investing with other clients of the Manager;

•      ensuring valuations of underlying investments are made accurately and fairly (see Notes 1(e) and 1(f) to the Financial Statements for further detail);

•      taking steps to ensure that share price discount is managed appropriately; and

•      choosing and appointing an FCA authorised investment manager with the appropriate skills, experience and resources required to achieve the investment objectives above, with ongoing monitoring to ensure the Manager is performing in line with expectations.

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.

The economic and market environment is kept under constant review and the investment strategy of the Company adapted so far as is possible to mitigate emerging risks.

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, Maven and other key third party outsourcers such as the Custodian and Registrar. These include controls designed to ensure that the Company's assets are safeguarded, that all records are complete and accurate and that the third parties have adequate controls in relation to the prevention of data protection and cyber security failings.

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

•      increased investment restrictions resulting from EU State Aid Rules, incorporated by the Finance (No. 2) Act 2015 and the Finance Act 2018.

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 this Business Report.

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 either legislation 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 British Private Equity and Venture Capital Association (BVCA).

The Company has retained Philip Hare & Associates LLP as VCT advisers.

Breaches of other regulations including, but not limited to, the Companies Act 2006, the FCA Listing Rules, the FCA Disclosure Guidance and Transparency Rules or the Alternative Investment Fund Managers Directive (AIFMD), could lead to a number of detrimental outcomes and reputational damage. Breaches of controls by service providers to the Company could also lead to reputational damage or loss.

The AIFMD, which regulates the management of alternative investment funds, including VCTs, introduced a new authorisation and supervisory regime for all investment companies in the EU. The Company is approved by the FCA as a self-managed small registered UK AIFM under the AIFMD.

The Company is also required to comply with tax legislation under the Foreign Account Tax Compliance Act and the Common Reporting Standard. The Company has appointed Link Asset Services to act on its behalf to report annually to HMRC and to ensure compliance with this new legislation.

Political Risk

In a referendum held in June 2016, the UK voted to leave the EU. The formal process of implementing this decision exists in Article 50 of the Lisbon Treaty, which was invoked in March 2017. The political, economic and legal consequences of the referendum vote are not yet known. It is possible that investments in the UK may be more subjective to value, more difficult to assess for suitability of risk, harder to buy or sell, or subject to greater or more frequent rises and falls in value. In the longer term, there is likely to be a period of uncertainty as the UK seeks to negotiate its exit from the EU. The UK's laws and regulations concerning funds may, in future, diverge from those of the EU and this may lead to changes in the operation of the Company, the rights of investors, or the territories in which the shares of the Company may be promoted and sold.

On a regular basis, the Board reviews the political situation together with any associated changes to the economic, regulatory and legislative environment in order to ensure that any risks arising are mitigated as effectively as possible.

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

Statement of Compliance with Investment Policy

The Company is adhering to its stated investment policy and managing the risks arising from it. This can be seen in various tables and charts throughout this Annual Report, and from information provided in the Chairman's Statement and the Investment Manager's Review. A review of the Company's business, its position as at 28 February 2018 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 in 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 shows that the portfolio is diversified across a variety of industry 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, or as otherwise required.

Key Performance Indicators

At each Board Meeting, the Directors consider a number of Alternative Performance Measures (APMs) to assess the Company's success in achieving its investment objective. These APMs are key performance indicators that enable Shareholders and prospective investors to gain an understanding of its business, and are as follows:

•           NAV total return;

•           cumulative dividends paid;

•           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 total 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 Directors seek to pay dividends to 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 an investment is lower than its net asset value per share.

A historical record of these measures is shown in the Financial Highlights in the Annual Report and the change in the profile of the portfolio is reflected in the Summary of Investment Changes. Definitions of these APMs can be found in the Glossary.

The Board reviews the Company's investment income and operational expenses on a quarterly basis as the Directors consider that both of these elements are important components in the generation of Shareholder returns. Further information can be found in Notes 2 and 4 to the Financial Statements.

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

In addition, the Directors consider economic, regulatory and political trends and features that may impact on the Company's future development and performance.

Valuation Process

Investments held by Maven Income and Growth VCT 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

At the forthcoming Annual General Meeting (AGM), 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 in 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.

Independent Auditor

The Company's Independent 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 Manager intend to maintain the policies set out above for the year ending 28 February 2019, 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:

John Pocock

Director

1 June 2018

Income Statement

For the Year Ended 28 February 2018

	Year ended 28 February 2018			Year ended 28 February 2017
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Gains on investments	-	504	504	-	1,938	1,938
Income from investments	1,244	-	1,244	1,104	-	1,104
Other income	14	-	14	7	-	7
Investment management fees	(125)	(502)	(627)	(136)	(546)	(682)
Other expenses	(232)	-	(232)	(287)	-	(287)
Net return on ordinary activities before taxation	901	2	903	688	1,392	2,080
Tax on ordinary activities	(158)	96	(62)	(147)	109	(38)
Return attributable to Equity Shareholders	743	98	841	541	1,501	2,042
Earnings per share (pence)	1.38	0.18	1.56	1.00	2.77	3.77

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 one reportable segment, the results of which are set out in the Income Statement and Balance Sheet. The Company derives its income from investments made in shares, securities and bank deposits.

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 accompanying Notes are an integral part of the Financial Statements.

Statement of Changes in Equity

For the Year Ended 28 February 2018

	Share   capital £'000	Share premium account £'000	Capital reserve realised £'000	Capital reserve unrealised £'000	Special distributable reserve £'000	Capital redemption reserve £'000	Revenue reserve £'000	Total £'000
At 28 February 2017 Net return	5,405 -	10,253 -	(10,738) 4,105	3,408 (4,007)	26,326 -	242 -	693 743	35,589 841
Dividends paid	-	-	(4,137)	-	-	-	(862)	(4,999)
Repurchase and cancellation of shares	(49)	-	-	-	(259)	49	-	(259)
At 28 February 2018	5,356	10,253	(10,770)	(599)	26,067	291	574	31,172

For the year ended 28 February 2017

	Share capital £'000	Share premium account £'000	Capital reserve realised £'000	Capital reserve unrealised £'000	Special distributable reserve £'000	Capital redemption reserve £'000	Revenue reserve £'000	Total £'000
At 29 February 2016 Net return	5,420 -	10,253 -	(9,215) 888	2,795 613	26,417 -	227 -	992 541	36,889 2,042
Dividends paid	-	-	(2,411)	-	-	-	(840)	(3,251)
Repurchase and cancellation of shares	(15)	-	-	-	(91)	15	-	(91)
At 28 February 2017	5,405	10,253	(10,738)	3,408	26,326	242	693	35,589

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

Balance Sheet

As at 28 February 2018

	28 February 2018 £'000	28 February 2017 £'000
Fixed assets Investments at fair value through profit or loss Current assets Debtors Cash	20,671 963 9,636	27,935 620 7,101
Creditors Amounts falling due within one year	10,599 (98)	7,721 (67)
Net current assets	10,501	7,654
Net assets	31,172	35,589
Capital and reserves
Called up share capital	5,356	5,405
Share premium account	10,253	10,253
Capital reserve - realised	(10,770)	(10,738)
Capital reserve - unrealised	(599)	3,408
Special distributable reserve	26,067	26,326
Capital redemption reserve	291	242
Revenue reserve	574	693
Net assets attributable to Ordinary Shareholders	31,172	35,589
Net asset value per Ordinary Share (pence)	58.20	65.84

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 1 June 2018 on its behalf by:

John Pocock

Director

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

Cash Flow Statement

For the Year Ended 28 February 2018

	Year ended 28 February 2018 £'000	Year ended 28 February 2017 £'000
Net cash flows from operating activities	(894)	(1,246)
Cash flows from investing activities
Investment income received	1,160	1,174
Deposit interest received	14	7
Purchase of investments	(2,810)	(7,414)
Sale of investments	10,323	16,342
Net cash flows from investing activities	8,687	10,109
Cash flows from financing activities
Equity dividends paid	(4,999)	(3,251)
Repurchase of Ordinary Shares	(259)	(91)
Net cash flows from financing activities	(5,258)	(3,342)
Net increase in cash	2,535	5,521
Cash at beginning of year	7,101	1,580
Cash at end of year	9,636	7,101

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

Notes to the Financial Statements

For the Year Ended 28 February 2018

Accounting Policies

(a)   Basis of preparation

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 November 2014.

(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 in the reporting period 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.    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.

5.    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.

6.    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.

•      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.

(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 explained in Note 1(e) of the Notes to the Financial Statements in the Annual Report. 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 issue costs.

Capital reserves

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.

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. The capital reserve realised account also represents capital dividends, capital investment management fees and the tax effect of capital items.

Special distributable reserve

The total cost to the Company of the repurchase and cancellation of shares is represented in the special distributable reserve account.

Capital redemption reserve

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

Revenue reserve

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

Earnings per share

	Year ended 28 February 2018	Year ended 28 February 2017
The returns per share have been based on the following figures: Weighted average number of Ordinary Shares Revenue return Capital return	53,864,742 £743,000 £98,000	54,141,007 £541,000 £1,501,000
Total return	£841,000	£2,042,000

Net Asset Value per Ordinary Share

Net asset value per Ordinary Share as at 28 February 2018 has been calculated using the number of Ordinary Shares in issue at that date of 53,563,884 (2017: 54,052,884)

Directors' Responsibility Statement

The Directors believe 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 28 February 2018 and for the year to that date;

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

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

Other Information

The Annual General Meeting will be held on Thursday 5 July 2018, commencing at 12.00 noon, at the offices of Maven Capital Partners UK LLP, Fifth 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 28 February 2018, will be available to the public at the offices of Maven Capital Partners UK LLP, Kintyre House, 205 West George Street, Glasgow G2 2LW; at the registered office of the Company, Fifth Floor, 1-2 Royal Exchange Buildings, London EC3V 3LF and on the Company's website at www.mavencp.com/migvct .

The Annual Report and Financial Statements for the year ended 28 February 2018 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 28 February 2017 have been delivered to the Registrar of Companies and contained an audit report which was unqualified and did not constitute statements under S498(2) or S498(3) of the Companies Act 2006.

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

The Annual Report will be submitted to the National Storage Mechanism and will be available for inspection at: www.morningstar.co.uk/uk/NSM.

By Order of the Board

Maven Capital Partners UK LLP

Secretary

1 June 2018

 

END

 

 

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