Half Yearly Report

RNS Number : 8924U

Maven Income & Growth VCT PLC

22 October 2010

 



Maven Income and Growth VCT PLC

Interim results for the six months ended 31 August 2010 (unaudited)            

The Directors announce the unaudited Interim Management Report for the six months ended 31 August 2010.

Manager's review

The first half of 2010 was characterised by significant fluctuations in the UK financial markets. Uncertainty over the general election, sovereign debt concerns and the fear of a 'double dip' recession all contributed to an unpredictable environment for investors.

Nevertheless, in the reporting period to 31 August 2010, your Company continued to make steady progress and achieved an increase in NAV total return in tandem with a continuation of the successful investment strategy, focused on investing in later stage and income producing private companies.

Two new unlisted and four follow-on investments were completed and a total of £1.35 million was invested. At 31 August 2010, the portfolio stood at 65 unlisted and AIM/PLUS quoted investments at a total combined cost of £25.1 million.

The following investments were completed during the reporting period:

Investment	Date	Activity	Investment cost  £'000	Website
Unlisted
Beckford Capital	May 2010	Leisure & Hotels	640	No website available
Camwatch	June 2010	Communications	98	www.camwatch.co.uk
Countcar	May 2010	Oil & Gas	101	www.atrgroup.co.uk
Lawrence Recycling & Waste Management	April 2010	Support Services	104	www.lawrenceskiphire.co.uk
TC Communications Holdings	June 2010	Support Services	50	www.tccommunications.co.uk
Venmar (trading as XPD8 Solutions)	June 2010	Oil & Gas	358	www.xpd8solutions.com
Total investment			1,351

Two new substantial investments were added to the portfolio during the six months ended 31 August 2010. These were Beckford Capital, a company established to look at acquisitions in the Leisure and Hotels industry; and Venmar (trading as XPD8 Solutions), which operates in the fast growing condition monitoring and asset integrity segment of the oil and gas industry. The continuation of this later stage and yield based investment strategy should ensure that the Company is well placed to be able to support its long term dividend policy.

Realisations

In line with the strategy of reducing exposure to the quoted markets in favour of later stage private equity transactions, the Manager has continued to pursue the structured realisation of the AIM/PLUS portfolio.

The table below gives details of realisations during the reporting period.

	Year first invested	Complete/ partial exit	Cost of shares disposed of £'000	Sales proceeds £'000	Realised gain/ (loss) £'000	Realised gain/(loss) over February 2010 valuation £'000
Unlisted
Cyclotech	2007	Complete	-	15	15	15
Driver Hire Investments Group	2004	Partial	21	1	(20)	(20)
House of Dorchester	2002	Partial	76	76	-	-
Torridon Capital (LitComp)	2010	Partial	505	505	-	-
Total unlisted disposals			602	597	(5)	(5)
AIM
Animalcare  Group	2008	Partial	72	155	83	82
Avanti Communications Group	2007	Partial	31	82	51	51
Brookwell	2008	Partial	44	20	(24)	(24)
Melorio	2007	Complete	99	152	53	53
SDI Group	2007	Complete	96	5	(91)	(91)
Total AIM disposals			342	414	72	71
Total disposals			944	1,011	67	66

Performance

The NAV total return per Ordinary Share at 31 August 2010 was 99.3p, an increase of 1.9p or 2.0% over the equivalent figure at 28 February 2010. The NAV per Ordinary share at 31 August 2010, after payment of the final dividend of 3.0p in respect of the year ended 28 February 2010, was 61.2p compared with 62.3p at 28 February 2010.

Recovery of VAT

The Company received an offer from Aberdeen Asset Managers Limited (Aberdeen), to refund all VAT charged on investment management fees for the period from 1 October 2005 to 1 October 2008. This offer was accepted by the Directors subject to reserving the Company's rights in respect of sums not repaid for earlier periods. The amount of £256,926 was received during the period but had already been recognised within the Financial Statements for the year ended 28 February 2010 and allocated to revenue and capital in accordance with the underlying accounting policy. The Board will continue its dialogue with Aberdeen with a view to making further recovery of amounts due to the Company.

Special distributable reserve

In the Annual Report for the year ended 28 February 2010, the Board highlighted that its proposals for the cancellation of the share premium account and the capital redemption reserve of the Company had been approved by Shareholders at a General Meeting held on 17 March 2010. The Companies Court has sanctioned these proposals and, as highlighted in Note 2, the special distributable reserve has been increased accordingly from the amount standing at the year end.

Dividend policy

The Board continues to target regular annual dividend payments subject to the availability of distributable reserves. The Board has declared an interim capital dividend of 1.0p per Ordinary share to be paid on 10 December 2010 to Shareholders on the Register at 12 November 2010.

The Company paid dividends totalling 4.0p per Ordinary Share in respect of the year ended 28 February 2010, which represents a yield of 5.0% per annum on the Ordinary Shares based on their net cost after initial tax relief and is equivalent to 5.33p gross from a UK equity share for a 40% rate tax payer. Based on the mid-market price of 50.0p at 31 August 2010, the annualised equivalent yield is 8.0%, which is paid tax-free and is equivalent to 10.7% for a 40% rate tax payer.

Principal risks and uncertainties

The Board has reviewed the principal risks and uncertainties facing the Company in the second half of its financial year: these are unchanged from those it faced at the start of the year, which are set out in the Annual Report and are the risks involved in investment in small and unquoted companies.

In order to reduce its exposure to investment risk, the Company has invested in a broadly-based portfolio of investments in unlisted and AIM/PLUS quoted companies in the United Kingdom. The VCT qualifying level of the portfolio is reviewed regularly by your Board and monitored on a continuous basis by the Manager in order to ensure that the Company consistently satisfies all of the criteria for VCT status.

Constitution of the Board

As indicated in the Annual Report for the year ended 28 February 2010, John Pocock assumed the role of Chairman of the Company after the conclusion of AGM on 8 July 2010. He replaced Fiona Wollocombe, who will remain as a Director of the Company until 28 February 2011, by which time it is anticipated that the Directors will have been able to identify another candidate to join the Board.

Outlook

Whilst there is a range of opinions on the general economic outlook in the UK, what appears to be in evidence is that both low growth and low interest rates are likely to persist for at least the medium term. Government spending cuts are yet to fully impact on the economy and consumer confidence, which gives further credence to this view. Bank debt will also remain scarce for private companies and, where available, will be significantly more expensive.

In these conditions, opportunities will continue to emerge for well managed, private equity focussed VCTs to take advantage of any dislocation or shortfall in the market for funding good quality private companies. The market has shifted noticeably in recent years, with private and public capital increasingly available to satisfy the funding gap experienced by many established companies across the UK. However, notwithstanding the wider opportunity to invest, competition for the better quality assets has increased markedly over the past 12 months with the emergence of alternative providers of capital to smaller companies, and this trend is expected to continue.

Maven Capital Partners UK LLP

Manager

22 October 2010

Summary of Investment Changes for the six months ended 31 August 2010
	Valuation 28 February 2010		Net investment/ (disinvestment)	Appreciation/ (depreciation)	Valuation 31 August 2010
	£'000	%	£'000	£'000	£'000	£'000
Unlisted investments
Equities	4,516	20.7	122	585	5,223	22.5
Preference shares	1,062	4.9	-	(2)	1,060	4.6
Loan stock	10,203	46.8	632	57	10,892	46.8
Total unlisted investments	15,781	72.4	754	640	17,175	73.9
AIM/PLUS investments	1,565	7.2	(414)	36	1,187	5.1
Listed fixed income investments	1,218	5.6	(1,205)	(13)	-	-
Total investments	18,564	85.2	(865)	663	18,362	79.0
Other net assets	3,233	14.8	1,650	-	4,883	21.0
Net assets	21,797	100.0	785	663	23,245	100.0

Investment Portfolio Summary as at 31 August 2010
Investments	Valuation £'000	Cost £'000	% of net assets	% of equity held	% of equity held by other clients1
Unlisted
THL Midlands (formerly Transys Holdings)	1,600	2,771	6.9	31.7	40.1
House of Dorchester	1,498	683	6.4	44.2	-
Homelux Nenplas	1,034	391	4.4	7.9	32.1
Oliver Kay Holdings	1,003	771	4.3	4.9	15.1
ELE Advanced Technologies	942	192	4.0	11.3	-
Westway Services	927	523	4.0	4.9	17.0
Camwatch	884	884	3.8	14.6	28.5
Martel Instruments Holdings	807	807	3.5	14.9	29.3
Torridon Capital (LitComp)	790	341	3.4	3.7	29.4
Lawrence Recycling & Waste Management	750	750	3.2	9.7	48.3
Atlantic Foods Group	677	522	2.9	2.9	5.9
Steminic	656	656	2.8	8.8	42.8
Dalglen 1150 (trading as Walker Technical Resources)	647	527	2.8	11.3	51.7
Beckford Capital	640	640	2.8	46.1	53.9
Adler & Allan Holdings	623	623	2.7	2.2	4.8
Nessco Group Holdings	472	472	2.0	6.2	31.6
Training for Travel Group	462	446	2.0	5.1	24.9
Intercede (Scotland) 1 (trading as Electo-Flow Controls)	428	428	1.8	4.7	23.8
PLM Dollar Group	402	402	1.7	4.7	25.5
Venmar (trading as XPD8 Solutions)	358	358	1.5	5.4	29.6
Dalglen 1148 (trading as PSP/AHC)	300	1,075	1.3	17.5	57.5
TC Communications Holdings	256	248	1.1	8.4	53.0
Tosca Penta Investments (esure Holdings)	250	250	1.1	0.1	0.2
Countcar	244	123	1.0	13.8	39.3
PSCA International	154	154	0.7	-	-
Enpure Holdings	137	100	0.6	0.4	2.2
Driver Hire Investments Group	79	203	0.4	1.1	1.4
Other unlisted investments	155	4,972	0.8
Total unlisted investments	17,175	20,312	73.9
AIM/PLUS
System C Healthcare	196	311	0.9	0.5	0.5
Cello Group	136	310	0.6	0.8	0.3
Avanti Communications Group	111	42	0.5	0.1	0.1
Plastics Capital	104	281	0.4	1.0	2.7
Animalcare Group	92	53	0.4	0.5	1.1
OPG Power Ventures	90	78	0.4	0.1	0.4
Hasgrove	70	168	0.3	0.6	1.1
Betbrokers	60	132	0.3	0.4	1.5
Neutrahealth	43	91	0.2	0.6	1.3
AMZ Holdings	41	251	0.2	0.8	1.4
Fuse 8 (formerly Award International Holdings)	35	366	0.1	0.1	0.2
Brulines Group	35	37	0.1	0.1	0.3
Chime Communications	29	26	0.1	-	0.3
Mount Engineering	25	35	0.1	0.2	2.3
Tangent Communications	23	98	0.1	0.4	0.8
Other AIM/PLUS investments	97	2,493	0.4
Total AIM/PLUS investments	1,187	4,772	5.1
Total investments	18,362	25,084	79.0
1Other clients of Maven Capital Partners UK LLP.

Maven Income and Growth VCT PLC
Income Statement
	Six months ended 31 August 2010 (unaudited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Investment income and deposit interest	376	-	376
Investment management fees	(32)	(128)	(160)
Other expenses	(136)	-	(136)
Gains/(losses) on investments	-	663	663
Net return on ordinary activities before taxation	208	535	743
Tax on ordinary activities	(27)	18	(9)
Return attributable to Equity Shareholders	181	553	734
Earnings per share (pence)	0.48	1.48	1.96

Maven Income and Growth VCT PLC
Income Statement
	Six months ended 31 August 2009 (unaudited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Investment income and deposit interest	586	-	586
Investment management fees	(32)	(127)	(159)
Other expenses	(85)	-	(85)
Gains/(losses) on investments	-	(412)	(412)
Net return on ordinary activities before taxation	469	(539)	(70)
Tax on ordinary activities	(127)	35	(92)
Return attributable to Equity Shareholders	342	(504)	(162)
Earnings per share (pence)	0.97	(1.43)	(0.46)

Maven Income and Growth VCT PLC
Income Statement
	Year ended 28 February 2010 (audited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Investment income and deposit interest	1,047	-	1,047
Investment management fees	(11)	(42)	(53)
Other expenses	(287)	-	(287)
Gains/(losses) on investments	-	114	114
Net return on ordinary activities before taxation	749	72	821
Tax on ordinary activities	(186)	11	(175)
Return attributable to Equity Shareholders	563	83	646
Earnings per share (pence)	1.61	0.24	1.85
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.
The accompanying Notes are an integral part of the Financial Statements.

Maven Income and Growth VCT PLC
Reconciliation of movements in Shareholders' funds
	Six months ended 31 August 2010	Six months ended  31 August 2009	Year ended 28 February 2010
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Opening Shareholders' funds	21,797	22,371	22,371
Net return for the period	734	(162)	646
Proceeds of share issue	1,864	-	-
Repurchase and cancellation of shares	(10)	(4)	(160)
Dividends paid - revenue	(228)	(707)	(1,060)
Dividends paid - capital	(912)	-	-
Closing Shareholders' funds	23,245	21,498	21,797
The accompanying Notes are an integral part of the Financial Statements.

Maven Income and Growth VCT PLC
Balance Sheet
	31 August	31 August	28 February
	2010	2009	2010
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Fixed assets
Investments at fair value through profit or loss	18,362	20,325	18,564
Current assets
Debtors	568	1,000	765
Cash and overnight deposits	4,343	514	2,775
	4,911	1,514	3,540
Creditors
Amounts falling due within one year	28	341	307
Net current assets	4,883	1,173	3,233
Net assets	23,245	21,498	21,797
Capital and reserves
Called up share capital	3,799	3,535	3,497
Share premium account	159	17,235	17,235
Capital reserve - realised	(2,790)	(1,269)	(1,835)
Capital reserve - unrealised	(5,887)	(7,636)	(6,483)
Special distributable reserve	27,791	8,933	8,777
Capital redemption reserve	2	350	388
Revenue reserve	171	350	218
Net assets attributable to Equity Shareholders	23,245	21,498	21,797
Net Asset Value per Ordinary Share (pence)	61.2	60.8	62.3
The accompanying Notes are an integral part of the Financial Statements.

Maven Income and Growth VCT PLC
Cash Flow Statement
	Six months ended 31 August 2010	Six months ended 31 August 2009	Year ended 28 February 2010
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Operating activities
Investment income received	324	415	1,347
Deposit interest received	7	-	25
Investment management fees paid	97	(239)	(390)
Secretarial fees paid	(30)	(43)	(72)
Directors' fees paid	(30)	(30)	(60)
Other cash payments	(103)	(65)	(178)
Net cash inflow from operating activities	265	38	672
Taxation
Corporation tax	(174)	-	(232)
	(174)	-	(232)
Financial investment
Purchase of investments	(1,447)	(1,733)	(3,288)
Sale of investments	2,210	1,810	5,733
Net cash inflow from financial investment	763	77	2,445
Equity dividends paid	(1,140)	(707)	(1,060)
Net cash (outflow)/inflow before financing	(286)	(592)	1,825
Financing
Issue of Ordinary Shares	1,864	-	-
Repurchase of Ordinary Shares	(10)	(4)	(160)
Net cash inflow/(outflow) from financing	1,854	(4)	(160)
Increase/(decrease) in cash	1,568	(596)	1,665
The accompanying Notes are an integral part of the Financial Statements.

Maven Income and Growth VCT PLC

Notes to the Financial Statements

1. Accounting policies

The financial information for the six months ended 31 August 2010 and the six months ended 31 August 2009 comprises non-statutory accounts within the meaning of the Companies Act 2006. The financial information contained in this report has been prepared on the basis of the accounting policies set out in the Annual Report and Financial Statements for the year ended 28 February 2010, which have been filed at Companies Houses and which contained an Auditors' Report which was not qualified and did not contain a statement under s498 (2) or s498 (3) of the Companies Act 2006.

2. Movement in reserves

	Share premium account	Capital reserve - realised	Capital reserve - unrealised	Special distributable reserve	Capital redemption reserve	Revenue reserve
	£'000	£'000	£'000	£'000	£'000	£'000
As at 28 February 2010	17,235	(1,835)	(6,483)	8,777	388	218
Gains on sales of investments	-	67	-	-	-	-
Net increase in value of investments	-	-	596	-	-	-
Investment management fees	-	(128)	-	-	-	-
Dividends paid	-	(912)	-	-	-	(228)
Tax effect of capital items	-	18	-	-	-	-
Repurchase and cancellation of shares	-	-	-	(10)	2	-
Share issue - 1 April 2010	1,154	-	-	-	-	-
Share issue - 5 April 2010	247	-	-	-	-	-
Cancellation of share premium account	(18,636)	-	-	18,636	-	-
Cancellation of capital redemption reserve	-	-	-	388	(388)	-
Share issue - 30 April 2010	159	-	-	-	-	-
Net return on ordinary activities after taxation	-	-	-	-	-	181
As at 31 August 2010	159	(2,790)	(5,887)	27,791	2	171

3. Returns per Ordinary Share

The returns per Ordinary Share are based on the following figures:

	Six months ended
	31 August 2010
	£'000
Weighted average number of Ordinary Shares in issue	37,429,973
Revenue return	£181,000
Capital return	£553,000

Directors' responsibility statement

The Directors confirm that, to the best of their knowledge:

·      the Financial Statements for the six months ended 31 August 2010 have been prepared in accordance with applicable accounting standards, the Companies Act 2006 and the 2009 Statement of Recommended Practice 'Financial Statements of Investment Trust Companies (the SORP);

·      the Interim Management Report includes a fair review of the information required by DTR 4.2.7R in relation to the indication of important events during the first six months, and of the principal risks and uncertainties facing the Company during the second six months, of the year ending 28 February 2011; and

·      the Interim Management Report includes adequate disclosure of the information required by DTR 4.2.8R in relation to related party transactions and any changes therein.

Other information

The Net Asset Value per Ordinary Share has been calculated using the number of Ordinary Shares in issue at 31 August 2010 of 37,998,258.

A summary of investment changes for the six months under review and an investment portfolio summary as at 31 August 2010 are included above.

A full copy of the Interim Report and Financial Statements will be printed and issued to Shareholders.

Copies of this announcement will be available to the public at the office of Maven Capital Partners UK LLP, 149 St Vincent Street, Glasgow G2 5NW and at the registered office of the Company, 5th Floor, 9-13 St Andrew Street, London EC4A 3AF.

On behalf of the Board

Maven Capital Partners UK LLP

Secretary

22 October 2010

 

END

 

 

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