Annual Financial Report

RNS Number : 1221C

Maven Income and Growth VCT 3 PLC

01 March 2011

 



Maven Income and Growth VCT 3 PLC

Annual Financial Report for the year ended 30 November 2010

The Directors announce the audited Annual Financial Report for the year ended 30 November 2010 as follows.

Chairman's Statement

The recovery in stock markets continued throughout 2010 and the FTSE 100 index breached 6000 in December. Indices throughout the world have now seen significant rises since the lows experienced in 2008 when the difficulties in global credit markets first emerged. However, this recovery in financial markets is arguably ahead of the underlying macro economic conditions where the UK continues to experience weak growth, falling house prices and high levels of consumer debt.  The economy is not yet clear of the threat of a 'double-dip' recession and inflation is increasingly in evidence with RPI at 4.4% in the year to 30 November 2010. The next year will also be critical on the path towards long term recovery for the UK as public sector spending cuts begin to have an impact on the wider economy.

Against this background conditions for investment in private companies have nevertheless remained relatively benign over the past year and the Manager has successfully completed a number of income producing, later stage private company transactions across a range of defensive sectors.

The major features of the year are:

·     Total Return on Ordinary shares of 100.34p per share at year end, up 4.7% over the year.

·     Net Asset Value (NAV) of Ordinary shares at year end of 77.9p.

·     Net realised gains from AIM stocks of 0.9p (2009:0.6p) per Ordinary share for the year.

·     Final dividend proposed of 2.5p making a total of 4.0p per Ordinary share in respect of the year.

Performance

The Total Return per Ordinary Share at 30 November 2010 was 100.34p, an increase of 4.7% over the equivalent figure at November 2009. This is the most important measure for a VCT, being the long term record of dividend payments out of income and capital gains combined with the current NAV. In the short term, the NAV on its own is a less important measure of the performance as the underlying investments are long-term in nature and not readily realisable.

Dividends

The Company paid an interim dividend of 1.5pps to Shareholders on 24 August 2010. The Board is now proposing a final dividend of 2.5p per Ordinary Share to be paid on 26 May 2011 to shareholders on the register on 06 May 2010. All dividends are of course paid tax free to shareholders and the total dividend for the year of 4.0p is equivalent to a yield of 6.7% from an equity investment to a higher rate taxpayer on an effective investment of 80.0p when the initial tax relief of 20% is taken into account. For former C Ordinary shareholders the equivalent yield is 10.5%. Since the Company's launch, and after receipt of the final dividend, Ordinary shareholders will have received 24.95p in tax free dividends. The effect of paying the proposed final dividend of 2.5p will be to reduce the NAV to 75.39p.

Shareholder Issues 

Turnover in the Company's shares has been relatively modest and it is encouraging that there are signs of increased activity in the secondary market. With interest rates remaining low and a new top rate of income tax of 50% the advantages of tax exempt income are expected to draw further investors towards VCTs as an attractive source of high-yielding, relatively stable, assets.

The Board continues to keep under review the principal risks and uncertainties facing the Company, which has invested in a broadly-based portfolio of investments in private and AIM/PLUS quoted companies in the United Kingdom. As at 30^th November the portfolio contained a total of 68 investments spread across a broad range of sectors.

VCT Qualifying Status

The Company is required to meet the 70% qualifying and other tests on a continuous basis. The Board regularly reviews the status of the criteria that have to be met to continue to qualify as a VCT and I am pleased to confirm that all tests continue to be met.

Investment Strategy

The investment strategy remains to build a large and diversified portfolio of holdings in profitable later stage private companies. The Manager has a national network of offices and consequently is introduced to a large number of potential opportunities across the UK every year. This resource is leveraged by your company to gain access at attractive entry multiples to well managed businesses across a range of sectors where a yield is available from the outset via an investment constituted principally as secured loan stock.

In recent years the board and the Manager have concluded that the returns available from the AIM market are too uncertain, with poor liquidity in many stocks and little or no yield via dividend income in comparison to private equity structures.  As is evident from the realisations achieved over the last 12 months, the Manager is realising its AIM portfolio as reasonable value is offered in the market, to redeploy the proceeds in income producing private companies.

The revised Listing Rules require your board to ensure that this and subsequent reports carry additional information on investment policy, in particular statements concerning asset mix, the spread of risk and maximum exposures. This information is contained in the Directors' Report and in the tabular analyses of the portfolio.

Valuation Process

Investments held by Maven Income and Growth VCT 3 in unquoted companies are valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines.

Investments quoted or traded on a recognised stock exchange including the Alternative Investment Market (AIM) are valued at their bid prices.

Portfolio Developments

There were five new investments and six follow on investments completed during the financial year. The manager has also invested in four unlisted companies seeking acquisitions in specific sectors, and has successfully completed a further three qualifying investments during December, after the year end.

The existing private equity portfolio is performing well, with most companies trading acceptably or in certain cases better than plan. Encouragingly, the increasing maturity of a number of holdings is leading to the emergence of M&A interest and the Manager is currently working on the potential sale of several companies, although there can be no certainty these will ultimately lead to a successful exit.

Details of all investments and divestments during the course of the year are shown in the table on pages 10 and 12.

Linked top-up fundraising

Between January and April 2010 the Company participated in a successful linked VCT top-up offer in conjunction with the other three Maven Income and Growth VCTs. In November 2010 the Board decided to raise further top-up funds, through a similar linked offer across the same four Maven Income and Growth VCTs. The £6.4m Maven Linked VCT Offer 2 allows the Company to raise new funds, without incurring the higher costs associated with a full prospectus, which can be used to make further new private company investments and take advantage of the significant levels of deal flow being seen across the UK by the Manager. The increased funds will also enable the Company to spread its costs over a larger asset base to the benefit of all Shareholders. Investors will benefit from up to 30% income tax relief on their subscriptions, for one or both of the tax years 2010/11 and 2011/12.

Recovery of VAT

The company received an offer from Aberdeen Asset Managers (the Manager from inception until the buyout by Maven Capital Partners in June 2009) to refund £275,718 representing all VAT charged on investment management fees for the period from 1 October 2005 to 31 August 2008. This offer was accepted by the directors subject to reserving the Company's rights over sums not repaid in respect of earlier periods and on interest arising. The amount received has been recognised within the financial statements and allocated to revenue and capital in accordance with the underlying accounting policy.

Distributable Reserve

On 20 October 2010, the Court approved the reduction in share premium account and capital redemption reserve voted for by shareholders at the General Meeting on 1st September 2010. The purpose of the reduction is to provide the Company with greater flexibility in returning funds to shareholders, whether through the payment of dividends, share buy-backs or other means.

Co-Investment Scheme of the Manager

The co-investment scheme which allows executive members of the Manager to invest alongside the Company continued in operation during the year. The scheme operates through a nominee company investing alongside the Company in each and every transaction made by the Company, including any follow-on investments. The scheme more closely aligns the interests of the executives and the Company's shareholders while providing an incentive to enable the Manager to retain the existing skills and capacity of the Manager's investment team in a competitive market.

The Outlook

The scarcity of bank debt for good quality private companies will continue to drive opportunities for well managed generalist VCTs for the foreseeable future.  Whilst economic conditions in the UK and beyond remain a concern, your company is focussing on attractively priced private companies with modest levels of debt, to protect the downside risk should there be a deterioration in the UK economy. The investment portfolio is being constructed with a high level of loan stock based instruments with the aim of growing the revenue profile of your company in order to enhance revenue. Over the last year the number of income producing private company holdings has increased, and your company intends to build on this investment strategy throughout 2011 and beyond.

Investment Manager's Review

Overview

The Manager ('Maven') operates from five UK regional offices in Glasgow, London, Aberdeen, Manchester and Birmingham and is introduced to a large number of potential transactions every year, mainly from a range of contracts across the corporate finance and business community. In terms of asset selection Maven employs a highly selective process, investing only in private companies which meet strict quality criteria, where access can be gained at attractive entry prices under investment structures which generate income for our client funds from the outset.  Maven generally avoids businesses at an early stage of their development, where the company has significant external borrowings, or where the trading activity is overly reliant on a concentrated customer base or a single product, in favour of companies with established revenue streams.

Post-investment Maven executives remain closely involved in the strategic direction of each portfolio company, and actively work with the executive management to ensure the business realises its full potential and ultimately achieves the best possible returns on exit, normally through a trade sale. Maven has representation on the board of most portfolio companies.

During the year the strength and quality of this approach was recognised by industry professionals. In July Maven won the BVCA London & Southeast Portfolio Company Management Award for Exit Team of the Year, for the successful sale of Cyclotech in November 2009. This award acknowledged the quality of managers in supporting fast growing and innovative companies in the most challenging of economic times.

In November Maven was named Small Buyout House of the Year 2010 at the unquote British Private Equity Awards, as judged by corporate finance and private equity professionals across the UK, which recognise managers who demonstrate strategic vision and consistently high standards across their wider investment activity.

Investment Activity

During the year ended 30 November 2010 the Maven team completed five new significant private equity investments, alongside six follow-on investments in existing portfolio companies.  Maven also invested in four new companies established to seek out acquisitions in a range of sectors where our investments executives have relevant industry knowledge and awareness of suitable target investments. At the year end, the portfolio stood at 68 unlisted and AIM investments at a total cost of £19.8 million.

Investment	Date	Sector	Investment  cost £'000
Unlisted
Ailsa Craig Capital Limited	Oct-10	Consumer Goods	50
Beckford Capital Limited	May-10	Consumer Goods	360
Blackford Capital Limited	May-10	Consumer Goods	630
Camwatch Limited	Jun-10	Telecommunications	81
Corinthian Foods Limited	Nov-10	Consumer Goods	630
Countcar Limited (trading as Aberdeen Tool and Rental Holdings Limited)	Oct-10	Oil and Gas	123
Flexlife Group Limited	Oct-10	Oil and Gas	597
Intercede (Scotland) 1 Limited (trading as Electroflow Controls Limited)	Dec-09	Oil and Gas	298
Lawrence Recycling & Waste Management Limited	Apr-10	Basic Materials	99
PLM Dollar Group Limited	Sep-10	Consumer Services	39
Riverdale Publishing Limited	Feb-10	Basic Materials	31
Staffa Capital Limited	Nov-10	Consumer Goods	640
TC Communications Holdings Limited	May-10	Basic Materials	118
Torridon Capital Limited	Jan-10	Financials	846
Tosca Penta Investments Limited (trading as esure Holdings Limited)	Feb-10	Financials	250
Venmar Limited (trading as XPD8 Solutions Limited)	Jun-10	Oil and Gas	358
Others			6
Total Unlisted investment			5,156
Total			5,156

*The transfer to Riverdale was in settlement of a guarantee to support deferred consideration liabilities.

Maven Income and Growth VCT 3 has co-invested in some or all of the above transactions with Maven Income and Growth VCT, Maven Income and Growth VCT 2, Maven Income and Growth VCT 4, Talisman First Venture Capital Trust and Ortus VCT. Your Company is expected to continue to co-invest with these as well as other Maven clients, with the advantage that in aggregate the funds are able to underwrite a wider range and larger size of transaction than would be the case on a stand-alone basis.

Portfolio Developments

Five new substantial unlisted investments were added to the portfolio during the year:

·     Intercede (Scotland) 1 Limited, the holding company for a new oil services group formed through the acquisition and merger of Electro-Flow Controls and Celeris Engineering, providing integrated products and services to a niche global energy services customer base;

·     Torridon Capital, the holding company of LitComp plc, a highly profitable specialist insurance business which has a market leading position in the rapidly expanding After the Event Insurance market, where Maven led one of the first public-to-private acquisitions by a mainstream VCT manager;

·     esure, one of the largest and pioneering online providers of general and motor insurance in the UK, and with a portfolio of high profile insurance brands, where Maven client funds participated in the syndicate which funded the acquisition from Lloyds Banking Group Plc;

·     Venmar, the holding company for XPD8 Solutions, a highly profitable asset integrity business operating in a defensive sub-sector of the energy services industry, providing asset maintenance solutions to a blue-chip international customer base; and

·     Flexlife, an award winning flexible pipe specialist, which employs patented ultrasonic scanning technology to provide subsea asset integrity solutions to energy sector clients as their global market places ever greater emphasis on maintaining critical infrastructure and sustained field production.

There have also been a number of additional investments made since the year end, namely:

·     Attraction World Holdings, which offers ticketing solutions to the worldwide travel sector. The business enjoys exclusive trading partnerships with key UK travel organisations and provides travel agents with integrated access to the ticketing systems of major global theme parks;

·     CHS Engineering Services, a market leading provider of condition monitoring and maintenance services for domestic and international airport terminal operators and major clients in the distribution and materials handling sector; and

·     McGavigans, a manufacturer and supplier of decorative assemblies and interior parts to global automotive manufacturers, with a strong share of the Western European market and a strategy to establish a low cost manufacturing operation in China, where it can leverage the overseas experience of its management team to serve the wider Asian markets.

One AIM and two unlisted companies were struck off the Register during the year resulting in a realised loss of £575,000 (cost £591,000). This had no effect on the NAV as a full provision had been made in earlier years.

Repayments of loan stock were received from some of the investee companies as shown on the table on page 12.

In respect of AIM assets/holdings the Manager has continued its policy of structured exits from this part of the portfolio. An overall net gain of £248,000 was achieved, including the impact of disposals where either Maven had lost confidence in a specific holding or a mandatory sale process or bid event was in evidence. There was no impact on the NAV as realisations were achieved close to carrying values. 

Investments in the unlisted portfolio are generally trading well and increased valuations have been achieved where appropriate.

Outlook

The underlying investment portfolio has seen a significant diversification and improvement over the past two years, with an emphasis on identifying and investing in later stage private companies with attractive yield characteristics. There is significant demand for this type of asset by providers of alternative capital, and the market for private equity transactions has therefore become more competitive notwithstanding the shortage of capital available from more traditional sources.  In this operating environment Maven will leverage its UK network and experience to continue to construct a high quality and income producing portfolio of assets diversified across a range of sectors on behalf of its VCT client investors.

Realisations made during the year

	Date first invested	Complete/ Partial Exit	Cost of shares disposed of	Value at 30 November 2009	Sales Proceeds	Realised Gain/Loss	Gain/(Loss) over November 2009 value
			£'000	£'000	£'000	£'000	£'000
Unlisted
Armannoch Investments Limited	2008	Complete	700	-	700	-	-
Cash Bases Limited (formerly Deckflat Limited)	2004	Partial	30	30	36	6	6
Cyclotech Limited	2007	Complete	-	-	17	17	17
Driver Hire Investments Group Limited	2004	Partial	12	4	1	(11)	(3)
IRW Systems	2009	Complete	45	8	21	(24)	(13)
PLM Dollar Group Limited	1999	Partial	32	32	32	-	-
Torridon Capital Limited	2010	Partial	505	505	505	-	-
Valkyrie Capital Limited	2008	Complete	700	700	700	-	-
Westway Services Limited	2009	Partial	67	67	67	-	-
			2,091	1,346	2,079	(12)	7
AIM
Animalcare  PLC	2008	Partial	232	401	444	212	43
Avanti Communications Group PLC	2004	Complete	39	119	134	95	15
Brookwell Limited	2008	Partial	6	3	3	(3)	-
Melorio PLC	2007	Complete	394	591	607	213	16
Mount Engineering PLC	2007	Complete	161	115	187	26	72
OPG Power Ventures PLC	2008	Partial	3	3	4	1	1
Software Radio Technology PLC	2005	Partial	252	175	349	97	174
Litcomp PLC	2005	Complete	151	0	87	(64)	87
Neuropharm Group PLC	2007	Complete	100	8	9	(91)	1
Neutrahealth PLC	2005	Complete	89	42	55	(34)	13
SDI Group PLC	2007	Complete	74	3	4	(70)	1
Sport Media Group PLC	2006	Complete	138	5	4	(134)	(1)
			1,639	1,465	1,887	248	422

Income Statement

For the year ended 30 November 2010

		2010			2009
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Gain on investments	8	-	1,439	1,439	-	76	76
Income from investments	2	664	-	664	1,088	-	1,088
Other income	2	3	-	3	14	-	14
Investment management fees	3	(93)	(371)	(464)	(106)	(426)	(532)
Other expenses	4	(447)	-	(447)	(262)	-	(262)
Net return/(loss) on ordinary activities		127	1,068	1,195	734	(350)	384
before taxation
Tax on ordinary activities	5	(25)	23	(2)	(144)	89	(55)
Return attributable to equity shareholders	7	102	1,091	1,193	590	(261)	329
Return per Ordinary share (pence)	7	0.36	3.80	4.16	2.15	(0.95)	1.20

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 30 November 2010

		2010	2009
		Total	Total
	Notes	£'000	£'000
Opening Shareholders' funds		21,244	22,070
Movements in the year
Shares Allotted during year		1,787	-
Share buy backs during year		(400)	-
Total return for the year		1,193	329
Dividends paid - revenue	6	(441)	(962)
Dividends paid - capital	6	(736)	(193)
Closing Shareholders' funds		22,647	21,244

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.

Balance Sheet

As at 30 November 2010

		30 November 2010	30 November 2009
	Notes	£'000	£'000
Fixed assets
Investments at fair value through profit or loss	8	18,283	18,180
Current assets
Debtors	10	1,846	1,879
Cash and overnight deposits		2,721	1,287
		4,567	3,166
Creditors: amounts falling due within one year	11	(203)	(102)
Net current assets		4,364	3,064
Total net assets		22,647	21,244
Capital and reserves
Called up share capital	12	2,907	2,746
Share premium	13	-	17,396
Distributable reserve	13	22,033	3,371
Capital redemption reserve	13	33	73
Capital reserve - realised	13	(1,135)	289
Capital reserve - unrealised	13	(1,422)	(3,201)
Revenue reserve	13	231	570
Equity shareholders' interest		22,647	21,244
Net asset value per ordinary share (pence)	14	77.9	77.4

The accompanying notes are an integral part of the financial statements.

The financial statements of Maven Income and Growth VCT 3 PLC, registered number 4283350, were approved by the Board of Directors and were signed on its behalf by:

Gregor Michie

Director

 28 February 2011

Cash Flow Statement

For the year ended 30 November 2010

		Year ended	Year ended
		30 November 2010	30 November 2009
	Notes	£'000	£'000
Operating activities
Investment income received		622	1,297
Deposit interest received		3	15
Investment management fees paid		(132)	(532)
Secretarial fees paid		(65)	(85)
Cash paid to and on behalf of Directors		(77)	(89)
Other cash payments		(127)	(102)
Net cash inflow from operating activities	15	224	504
Taxation
Corporation tax		(59)	(32)
Financial investment
Purchase of investments		(4,027)	(3,982)
Sale of investments		5,086	5,810
Net cash inflow from financial investment		1,059	1,828
Equity dividends paid		(1,177)	(1,155)
Net cash inflow before financing		47	1,145
Financing
Share allotment		1,787	-
Repurchase of ordinary shares		(400)	-
Net cash inflow from financing		1,387	1,145
Increase in cash	16	1,434	1,145

Notes to the Financial Statements

For the year ended 30 November 2010

1.		Accounting Policies - UK Generally Accepted Accounting Practice
		(a)	Basis of preparation
			The financial statements have been prepared in accordance with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' (the SORP) issued in 2005, amended October 2009.  The disclosures on Going Concern on page 28 of the Directors' Report form part of these financial statements.
		(b)	Income
			Dividends receivable on equity shares are treated as revenue for the year 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 year.  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 fixed 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 through 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 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 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 subsequently 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.
		(e)	Investments
			In valuing unlisted investments the Directors follow the criteria set out below.  These procedures comply with the revised International Private Equity and Venture Capital Valuation Guidelines for the valuation of private equity and venture capital investments.  Investments are recognised at their trade date and are designated by the directors as fair value through profit 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 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.
			1.	For investments completed within the 12 months prior to the reporting date and those at an early stage in their development, fair value is determined using the Price of recent Investment Method, except that adjustments are made when there has been a material change in the trading circumstances of the company or a substantial movement in the relevant sector of the stock market.
				A financial asset or liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires.
			2.	Whenever practical, recent investments will be valued by reference to a material arm's length transaction or a quoted price.
			3.	Mature companies are valued by applying a multiple to their fully taxed prospective earnings to determine the enterprise value of the company.
				3.1	To obtain a valuation of the total ordinary share capital held by management and the institutional investors, the value of third party debt, institutional loan stock, debentures and preference share capital is deducted from the enterprise value.  The effect of any performance related mechanisms is taken into account when determining the value of the ordinary share capital.
				3.2	Preference shares, debentures and loan stock are valued using the Price of Recent Investment Method.  When a redemption premium has accrued, this will be valued only 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 Maven Capital Partners' Portfolio Management Team.  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 value.
	(f)      Fair Value Measurement
	Fair value is defined as the price that the Company would receive upon selling an investment in a timely transaction to an independent buyer in the principal or the most advantageous market of the investment.  A three-tier hierarchy has been established to maximise the use of observable market data and minimise the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes.  Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique.  Inputs may be observable or unobservable.  Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity.  Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on best information available in the circumstances. The three-tier hierarchy of inputs is summarised in the three broad levels listed below. -   Level 1 - quoted prices in active markets for identical investments -   Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk etc) -   Level 3 - significant unobservable inputs (including the Company's own assumptions in determining the fair value of investments) (g)   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		Year ended
		30 November 2010		30 November 2009
2	Income
	Income from investments:	£'000		£'000
	UK dividends	21		43
	UK unfranked investment income	643		1,045
		664		1,088
	Interest:
	Deposit interest	3		14
	Total income	667		1,102

		Year ended 30 November 2010
		Ordinary Shares
		Revenue	Capital		Total
3	Investment management fees	£'000	£'000		£'000
	Investment management fees at 2.5%	109	437		546
	Reclaimed VAT	(16)	(66)		(82)
		93	371		464
		Year ended 30 November 2009
		Ordinary Shares
		Revenue		Capital		Total
		£'000		£'000		£'000
	Investment management fees at 2.5%	106		426		532
	Reclaimed VAT	-		-		-
		106		426		532
	Details of the fee basis are contained in the Director's Report on page 22.

				Year ended 30 November 2010
		Revenue	Capital	Total
4	Other expenses	£'000	£'000	£'000
	Secretarial fees	87	-	87
	Directors' remuneration	68	-	68
	Audit remuneration    - audit services	15	-	15
	-  tax services	3	-	3
	Bad debts written off	158	-	158
	Miscellaneous expenses	116	-	116
		447	-	447
				Year ended 30 November 2009
		Revenue	Capital	Total
		£'000	£'000	£'000
	Secretarial fees	85	-	85
	Directors' remuneration	68	-	68
	Audit remuneration    - audit services	14	-	14
	-  tax services	4	-	4
	Bad debts written off	24	-	24
	Miscellaneous expenses	67	-	67
		262	-	262

					Year ended 30 November 2010
					Revenue		Capital	Total
					£'000		£'000	£'000
5	Tax on ordinary activities
	Corporation tax				25		(23)	2
	Charge for year				25		(23)	2
					Year ended 30 November 2009
					Revenue		Capital	Total
					£'000		£'000	£'000
	Corporation tax				144		(89)	55
	Charge for year				144		(89)	55
	The tax assessed for the period is lower than the standard rate of corporation tax 28% (2009: 28%).  The differences are explained below:
		Year ended						Year ended
		30 November 2010						30 November 2009
		Revenue	Capital			Total		Revenue	Capital		Total
		£'000	£'000			£'000		£'000	£'000		£'000
Return on ordinary activities before tax		127	1,068			1,195		734	(350)		384
Revenue return on ordinary activities multiplied by standard rate of corporation tax		36	299			335		206	(98)		108
Non taxable UK dividend income		(6)	-			(6)		(12)	-		(12)
Gain on investments		-	(403)			(403)		-	(21)		(21)
Adjustment from 2009		2	-			2		-	-		-
Smaller Companies relief		(7)	81			74		(50)	30		(20)
Relief from capital		-				-		-	-		-
		25	(23)			2		144	(89)		55

No provision for tax has been made in the current or prior accounting period.

The Company has an unrecognised deferred tax asset of £15,555 (2009: nil) arising as a result of having unutilised management expenses.

Dividends
	Year ended	Year ended
	30 November 2010	30 November 2009
Amounts recognised as distributions to Shareholders in the year:
	£'000	£'000
Revenue dividends
Interim revenue dividend for the year end 30 November 2009 1.5p paid on 24 August 2009	-	413
Final revenue dividend for the year end 30 November 2008 2.0p paid on 30 April 2009	-	549
Final revenue dividend for the year end 30 November 2009 0.5p paid on 26 May 2010	147	-
Interim revenue dividend for the year end 30 November 2010 1.0p paid on 24 August 2010	294	-
	441	962
Capital dividends
Final capital dividend for the year end 30 November 2008 0.7p	-	193
paid on 30 April 2009
Final capital dividend for the year end 30 November 2009 2.00p	589	-
paid on 26 May 2010
Interim capital dividend for the year end 30 November 2010 0.5p	147	-
paid on 24 August 2010
	736	193

6	Dividends (continued)
	We set out below the total revenue dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Section 274 of the Income Tax Act 2007 are considered.
		Year ended 30 November 2010	Year ended 30 November 2009
	Revenue dividends
	Revenue available for distribution by way of dividends for the year	102	590
	Interim revenue dividend for the year ended 30 November 2010 of 1.0p paid on 31 July 2010	294	413
	Final revenue dividend for the year ended 30 November 2010 of nil (2009: nil)	-	-
	Capital Dividends
	Final capital dividend proposed for the year ended 30 November 2010 of 2.5p (2009: 2.0p) payable on 26 May 2011	727	589

7	Return per ordinary share
	The returns per share have been based on the following figures:
	Weighted average number of ordinary shares	28,707,938	27,460,383
	Revenue return	£102,000	£590,000
	Capital return	£1,091,000	(£261,000)
	Total return	£1,193,000	£329,000

				Year ended
				30 November 2010
		Listed	AIM	Unlisted	Total
		(Quoted Prices)	(Quoted Prices)	(Unobservable Inputs)
8	Investments	£'000	£'000	£'000	£'000
	Valuation brought forward	2,514	2,438	13,228	18,180
	Unrealised gain/(loss)	3	(2,588)	(616)	(3,201)
	Cost at 30 November 2009	2,511	5,026	13,844	21,381
	Movements during the year:
	Purchases	-	-	5,156	5,156
	Sales proceeds	(2,510)	(1,887)	(2,095)	(6,492)
	Realised gains/(loss)	(1)	98	(437)	(340)
	Amortisation of book cost	-	-		-
	Cost at 30 November 2010	-	3,237	16,468	19,705
	Unrealised gain/(loss)	-	(2,242)	820	(1,422)
	Valuation at 30 November 2010	-	995	17,288	18,283

	30 November 2010			30 November 2009
			Ordinary Shares
			£'000	£'000
Realised gains on historical basis			(340)	150
Net decrease in value of investments			1,779	(74)
Gains on investments			1,439	76

As at 30 November 2010 £16,000 was held with lawyers pending investment and is excluded from the purchase of investments above. £1,145,000 representing monies held with lawyers as at 30 November 2009 is included. Sale proceeds include outstanding settlements as at 30 November 2010 of £1,406,000.

9		Participating and significant interests
		The principal activity of the Company is to select and hold a portfolio of investments in unlisted & AIM securities.  Although the Company will, in some cases, be represented on the board of the investee company, it will not take a controlling interest or become involved in its management.  The size and structure of the companies with unlisted and AIM securities may result in certain holdings in the portfolio representing a participating interest without there being any partnership, joint venture or management consortium agreement.
		At 30 November 2010 the Company held shares amounting to 20% or more of the equity capital of Ailsa Craig Capital Limited, Blackford Capital Limited, Beckford Capital Limited, Corinthian Foods Limited, Dunning Capital Limited, Staffa Capital Limited and Shiskine Capital Limited.
		The Company also holds shares amounting to more than 3% or more of the nominal value of the allotted shares or units of any class of certain investee companies.
		Details of equity percentages held are shown in the Investment Portfolio Summary on page 14.

		30 November 2010	30 November 2009
10
	Debtors	£'000	£'000
	Prepayments and accrued income	424	541
	Other debtors	-	193
	Monies held pending investment	16	1,145
	Balance at Brokers	1,406	-
		1,846	1,879

		30 November 2010		30 November 2009
11	Creditors	£'000	£'000
	Amounts falling due within one year:
	Current taxation	6	63
	Accruals	197	39
		203	102

			30 November 2010				30 November 2009
			Ordinary Shares				Ordinary Shares
12	Share capital		Number	£'000			Number	£'000
	At 30 November the authorised share capital comprised:
	allotted, issued and fully paid:
	Ordinary shares of 10p each
	Balance brought forward 30 November 2009		27,460,383	2,746			9,744,243	974
	C ordinary shares converted into ordinary shares on 28 February 2009						14,954,494	1,495
	Ordinary shares issued during year		2,373,582	237			2,766,646	277
	Ordinary shares repurchased during the year		(759,569)	(76)			(5,000)	-
			29,074,396		2,907	27,460,383		2,746
	On 1 February 2011, 342,246 new Ordinary shares were allotted in respect of applications under the Maven Linked VCT Offer.

		Share		Capital	Capital	Capital
		premium	Distributable	redemption	reserve	reserve	Revenue
		account	reserve	reserve	realised	unrealised	reserve
13	Reserves	£'000	£'000	£000	£'000	£'000	£'000
	At 30 November 2009	17,396	3,371	73	289	(3,201)	570
	Share Allotment	1,550		-	-	-	-
	Share buy backs	-	(400)	76	-	-	-
	Gains on sales of investments	-	-	-	(340)	-	-
	Net decrease in value of investments	-	-	-	-	1,779	-
	Investment management fees	-	-	-	(371)	-	-
	Tax effect of capital items	-	-	-	23	-	-
	Cancellation of share premium account	(18,946)	18,946	-	-	-	-
	Cancellation of capital redemption reserve	-	116	(116)	-	-	-
	Retained net revenue for year	-	-	-	-	-	102
	Dividends paid	-	-	-	(736)	-	(441)
	At 30 November 2010	-	22,033	33	(1,135)	(1,422)	231

On 20 October 2010, the Court approved the reduction in share premium and capital redemption reserve. Share premium of £18,946,000 and capital redemption reserve of £116,000 were cancelled and the relevant sums transferred to the distributable reserve.

14	Net asset value per Ordinary share	30 November 2010		30 November 2009
		Ordinary shares		Ordinary shares
		Net asset	Net asset	Net asset	Net asset
		value per	value	value per	value
		share	attributable	share	attributable
		p	£'000	p	£'000
		77.89	22,647	77.4	21,244

	The number of shares used in the above calculation is set out in note 12.
				Year ended		Year ended
				30 November 2010		30 November 2009
15	Reconciliation of total return before finance costs			£'000		£'000
	and taxation to net cash inflow from operating activities
	Total return before taxation			1,195		384
	(Gains) on Investments			(1,439)		(76)
	Decrease/(Increase) in accrued income			115		159
	Decrease/(Increase) in prepayments			2		1
	Increase in other debtors			193		17
	Increase in accruals			158		(15)
	Decrease in other creditors			-		(13)
	Amortisation of fixed income investment book cost			-		47
	Net cash inflow from operating activities				224	504

16	Analysis of changes in net funds
		At		At
		30 November	Cash	30 November
		2009	flows	2010
		£'000	£'000	£'000
	Cash and overnight deposits	1,287	1,434	2,721
		At		At
		30 November	Cash	30 November
		2008	flows	2009
		£'000	£'000	£'000
	Cash and overnight deposits	142	1,145	1,287

			At 30 November 2010	At 30 November 2009
17	Capital commitments, contingencies and financial guarantees	£'000		£'000
	Financial guarantees		718	725

These financial guarantees represent potential further investment in unlisted securities.

18	Derivatives and other financial instruments
	The Company's financial instruments comprise equity and fixed interest investments, cash balances and debtors and creditors that arise directly from its operations, for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income.  The company holds financial assets in accordance with its investment policy of investing mainly in a portfolio of VCT-qualifying unquoted and AIM-quoted securities. The Company may not enter into derivative transactions in the form of forward foreign currency contracts, futures and options without the written permission of the Directors.  No derivative transactions were entered into during the period.  The purpose of these financial instruments is efficient portfolio management.
	The main risks the Company faces from its financial instruments are (i) market price risk, being the risk that the value of investment holdings will fluctuate as a result of changes in market prices caused by factors other than interest rates, (ii) interest rate risk, (iii) liquidity risk and (iv) credit rate risk.  In line with the Company's investment objective, the portfolio comprises only sterling currency securities and therefore has no exposure to foreign currency risk.
	The Manager's policies for managing these risks are summarised below and have been applied throughout the period.  The numerical disclosures below exclude short-term debtors and creditors.
	Market price risk
	The Company's investment portfolio is exposed to market fluctuations, which are monitored by the Manager in pursuance of the investment objective as set out on page x. Adherence to investment guidelines and to investment and borrowing policies set out in the management agreement mitigates the risk of excessive exposure to any particular type of security or issuer.  These powers and guidelines include the requirement to invest in up to 50 companies across a range of industrial and service sectors at varying stages of development, to closely monitor the progress of these companies and to appoint a non executive director to the board of each company.  Further information on the investment portfolio is set out in the Investment Manager's Review on pages 9 to 12.
	Price risk sensitivity
	The following details the Company's sensitivity to a 10% increase and decrease in the market prices of AIM/PLUS quoted securities, with 10% being the Manager's assessment of a reasonably possible change in market prices.
	At 30 November 2010, if market prices of listed AIM/PLUS quoted securities had been 10% higher or lower with all other variables held constant, the increase or decrease in net assets attributable to Shareholders for the year would have been £100,000 (2009: £244,000), due to the change in valuation of financial assets at fair value through profit or loss.
	At 30 November 2010, 93.8% (2009: 62.3%) comprised investments in unquoted companies held at fair value.  The valuation methods used by the Company include cost and realisable value.  Therefore, it is not considered meaningful to provide a sensitivity analysis on the net asset position and total return for the year due to the fact any such movements would be immaterial to users of financial statements.
	Interest rate risk
	Some of the Company's financial assets are interest bearing, some of which are at fixed rates and some at variable.  As a result, the Company is subject to exposure to fair value interest rate risk due to fluctuations in the prevailing levels of market interest rates.
	The interest rate risk profile of financial assets at the balance sheet date was as follows:
	At 30 November 2010					Fixed		Floating	Non interest
						Interest		rate	bearing
	Sterling					£'000		£'000	£'000
	Listed					-		-	-
	AIM/PLUS					-		-	995
	Unlisted					11,165		-	5,858
	Cash					-		2,721	-
						11,165		2,721	6,974
	At 30 November 2009					Fixed		Floating	Non interest
						Interest		rate	bearing
	Sterling					£'000		£'000	£'000
	Listed					2,514		-	-
	AIM/PLUS					-		-	2,438
	Unlisted					10,519		-	2,709
	Cash					-		1,287	-
						13,033		1,287	5,147

The listed fixed interest assets matured on 8th December 2009. The unlisted fixed interest assets have a weighted average life of 2.84 years (2009: 3.16 years) and weighted average interest rate of 10.33% (2009: 8.41%) per annum. Floating rate assets are cash balances held in interest bearing accounts. The interest rate received on the interest bearing cash balances was 0.5% (2009: nil). The non-interest bearing assets represent the equity element of the portfolio. All assets and liabilities of the Company are included in the balance sheet at fair value.

Maturity profile
The interest rate profile of the Company's financial assets at the balance sheet date was as follows:
	Within	Within	Within	Within	Within		More than
	1 year	1-2 years	2-3 years	3-4 years	4-5 years		5 years	Total
At 30 November 2010	£'000	£'000	£'000	£'000	£'000		£'000	£'000
Fixed interest
Listed	-	-	-	-	-		-	-
Unlisted	1,724	2,016	645	3,974	2,753		53	11,165
	1,724	2,016	645	3,974	2,753		53	11,165
	Within	Within	Within	Within	Within		More than
	1 year	1-2 years	2-3 years	3-4 years	4-5 years		5 years	Total
At 30 November 2009	£'000	£'000	£'000	£'000	£'000		£'000	£'000
Fixed interest
Listed	2,514	-	-	-	-		-	2,514
Unlisted	2,048	1,054	1,691	735	3,411		1,580	10,519
	4,562	1,054	1,691	735	3,411		1,580	13,033

In "More than 5 years" column the figure of £53,000 (2009: £73,000) is in respect of preference shares which have no redemption date. It is the Directors' opinion that the carrying amounts of these financial assets represent the maximum credit risk exposure at the balance sheet date.

Liquidity risk

This is the risk that the Company will encounter difficulty in meting obligations associated with financial liabilities. The Company's financial instruments include unlisted and AIM/PLUS traded investments which are not traded in an organised public market and which generally may be illiquid. As a result, the Company may not be able to liquidate quickly some of its investments at an amount close to their fair value in order to meet its liquidity requirements. Note 1 (f) details the three-tier hierarchy of inputs used as at 30 November 2010 in valuing the Company's investments carried at fair value.

The Company's investment policy ensures that the Company has sufficient investment in cash and readily realisable securities to meet its ongoing obligations. At 30 November 2010 these investments including cash held were £2,721,000 (2009: £3,801,000).

The Company has the power to take out borrowings, which gives it access to additional funding when required.

Credit risk

This is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company.

The Company's financial assets exposed to credit risk amounted to the following:

	30 November 2010	30 November 2009
	£'000	£'000
Investments in fixed interest instruments	-	2,514
Cash and cash equivalents	2,721	1,287
	2,721	3,801

All assets which are traded on a recognised exchange and all the Company's cash balances are held by JP Morgan Chase (JPM), the Company's custodian. Should the credit quality or the financial position of JPM deteriorate significantly the Manager will move these assets to another financial institution.

There were no significant concentrations of credit risk to counterparties at 30 November 2010 or 30 November 2009.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report, Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards) and applicable law. The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the net return of the Company for that period. In preparing these financial statements the Directors are required to:

·      select suitable accounting policies and then apply them consistently

·      make judgments and estimates that are reasonable and prudent

·      state whether applicable UK Accounting Standards have been followed, subject to any

material departures disclosed and explained in the financial statements

·      prepare the financial statements on the going concern basis unless it is inappropriate to

presume that the company will continue in business.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Other information

This announcement has been prepared on the same basis as the Annual Report and Financial Statements for the year ended 30 November 2010. The Annual Report and Financial Statements for the year ended 30 November 2010 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 30 November 2009 have been delivered to the Registrar of Companies and contained an audit report which was unqualified.

Copies of this announcement and of the Annual Report and Financial Statements for the year ended 30 November 2010 will be available to the public at the office of Maven Capital Partners, 149 St Vincent Street, Glasgow; at the registered office of the Company, 9-13 St Andrew Street, London, and on the Company's website at www.mavencp.com/migvct3.

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.

By order of the Board

Maven Capital Partners UK LLP

Secretary

1 March 2011

ENDS

 

END

 

 

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