TIDMMAV4 TIDMTTM
RNS Number : 1745K
Maven Income & Growth VCT 4 PLC
06 April 2018
Maven Income and Growth VCT 4 PLC
Final results for the year ended 31 December 2017
Highlights for the year
-- NAV total return of 145.87p per share at the year end (2016:143.40p)
-- NAV at year end of 85.97p per share (2016: 99.00p), after
payment of dividends totalling 15.50p per share during the year
-- Annual dividends 12.45p per share (2016: 5.25p)
-- Offer for Subscription launched with GBP19.22 million of new capital raised to date
-- Gains on investments GBP984,000 (2016: GBP1,424,000)
-- Net return on ordinary activities before taxation GBP887,000 (2016: GBP1,008,000)
-- Earnings per share 2.67p (2016: 3.04p)
Chairman's Statement
On behalf of your Board, I am pleased to report on the progress
achieved by your Company in the period under review, which was
highly successful in terms of the ongoing construction of the long
term portfolio, with the addition of nine new assets, across a wide
range of high growth industries and sectors. There were also a
number of successful realisations of the more mature holdings
during the year, although one of the larger portfolio companies
suffered a write down in value, which diluted the overall
performance for the financial year.
Dividends in respect of the year totalled 12.45p per share,
representing a 16.49% yield based on the share price at the year
end. Whilst this level of annual distribution is not expected to be
sustained, it reflected a number of profitable realisations and was
required in order to ensure ongoing compliance with the VCT
legislation. Notwithstanding this enhanced level of Shareholder
payments, NAV has been increased by the proceeds arising from the
Offer for Subscription, which will create a solid foundation for
the future growth of the portfolio. Your Board remains committed to
making distributions when realisations are achieved, and to the
payment of regular tax-free income to Shareholders.
In the year to 31 December 2017, your Company delivered positive
performance, with a further increase in NAV total return against a
backdrop of continuing economic uncertainty, largely related to the
ongoing negotiations regarding the UK's intended withdrawal from
the European Union (EU) and an ever-changing regulatory
environment. The framework under which VCTs operate is becoming
increasingly complex, with further legislation announced in the
2017 Autumn Budget Statement. However, your Board believes that the
Manager has the depth of experience and breadth of skill to ensure
that your Company continues to respond appropriately.
The new Offer for Subscription was launched on 22 September 2017
and has, to date, raised GBP19.22 million of new capital, with
4,367,370 shares allotted prior to the year end and a further
16,714,707 issued subsequently. This provides your Company with
significant liquidity to facilitate the continued expansion of the
portfolio. The investment programme for deploying these funds has
commenced and the Directors are encouraged by the strength of the
pipeline of prospective opportunities currently under review across
Maven's expanded network of eleven regional offices.
It is encouraging to report that most investee companies
continued to trade in line with plan and grow in value during the
year, as can be seen from the detailed analysis in the Investment
Manager's Review in the Annual Report. The continued progress
achieved by a number of established private company holdings has
enabled the valuations of those assets to be increased. The Board
is also pleased to note that, after a number of years of
exceptionally challenging market conditions, those portfolio
companies with exposure to the oil & gas services sector are
seeing an improvement, with financial performance showing an
increase over the comparative period in the prior year. The
valuations of a number of these assets had previously been reduced
in response to market conditions and the conservative valuation of
these holdings will be maintained until there is evidence of a
sustained market recovery. Elsewhere in the portfolio, there are a
small number of investments that are operating behind plan, or
where a market adjustment has impacted upon performance and, as a
result, the valuations of these assets have been reduced.
Investment activity was positive in the financial year, with the
addition of nine carefully selected growth oriented companies to
the portfolio. The pipeline of new opportunities remains strong and
is supported by the Manager's expanded nationwide office network,
which is delivering a regular supply of prospective investments.
The Board is, however, aware of the challenges that the Manager is
facing with regard to securing Advance Assurance from HM Revenue
& Customs (HMRC) for new investments, and notes that this has
resulted in a number of potential transactions being lost during
the year due to slow response times.
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 completed from
Crawford Scientific, a leading supplier of chromatography products
and services, through a sale to an institutional buyer, achieving 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, over the life of the
investments, of 2.5 times and 4.2 times cost respectively. The
Board is aware that discussions are in process regarding further
potential exits from a number of the more mature holdings in the
portfolio, although there can be no certainty that these will lead
to profitable realisations.
In light of the evolving legislative environment for VCTs, the
Directors believe it is important that Shareholders are aware of
the longer term implications arising from the Finance (No. 2) Act
2015 and the forthcoming amendments in the Finance (No. 2) Bill
2017-2019. 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 support older companies, including existing
portfolio holdings, unless certain conditions are met. As a result,
VCT managers are required to focus exclusively 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 higher proportion of equity, where previously high levels
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, and may ultimately be driven by
realisation activity, and the requirement to maintain regulatory
compliance with the VCT 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 allows investors to benefit from their success.
Whilst there were no changes to tax reliefs or the minimum
holding period for these reliefs, and VCT dividends will maintain
their tax-free status, a number of less favourable changes were
announced, some of which had been anticipated. As expected, the
focus is to continue to move towards supporting higher risk
investments, and includes the introduction of a 'risk to capital'
based test, certain sector exclusions and measures designed to
assist the financing of knowledge-intensive companies. The
percentage of funds that a VCT must hold in qualifying investments
will increase from 70% to 80% from 6 April 2019, with a shorter
time period for the investment of newly raised funds. In order to
assist with this requirement, the add-back period on sales will be
increased from six to twelve months. The Finance (No. 2) Bill
2017-19, is expected to receive Royal Assent in the summer of
2018.
The Autumn Budget Statement also announced that HMRC anticipates
being able to improve its approval process for Advance Assurance
clearance during the early part of 2018. This is a welcome
development, as it should help the rate of new investment and allow
VCT managers to continue to build their portfolios without
unnecessary delay, whilst complying with the new qualifying
requirements. The Board and the Manager will continue to consider
the implications of the forthcoming Finance Bill and take these
developments into account when planning future strategy.
In January 2018 two major new pieces of legislation were
introduced; the Packaged Retail and Insurance-based Investment
Products (PRIIPs) Regulation and the Second Markets in Financial
Instruments Directive (MiFID II), and came into force on 1 and 3
January 2018 respectively. PRIIPs required that a Key Information
Document (KID) be published by the Company; the form and content of
the KID is strictly prescribed and includes specific information on
investment risks, performance and costs, which must be provided to
all potential investors to enable them to compare the performance
of different VCTs. With regard to MiFID II, the main practical
change for the Company is the requirement for the Manager to report
all transactions in quoted shares, including share buy- backs as
well as those in underlying investments, to the Financial Conduct
Authority to assist in its continued efforts to combat market
abuse.
The General Data Protection Regulation comes 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 is currently working
with the third parties that process Shareholders' personal data to
ensure that their rights under the new regulation are
respected.
Dividends
As previously noted, the Directors considered it necessary to
distribute an enhanced level of interim dividends during the
financial year. 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 31
December 2017, of 3.36p per Ordinary Share and comprising 0.60p of
revenue and 2.76p of capital, was paid on 14 July 2017 to
Shareholders on the register at close of business on 23 June 2017.
The second interim dividend of 3.70p per Ordinary Share, comprising
capital only, was paid on 15 September 2017 to Shareholders on the
register at close of business on 18 August 2017. The third interim
dividend of 5.39p per Ordinary Share, comprising 0.80p of revenue
and 4.59p 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
full year were 12.45p per Ordinary Share, representing a yield of
16.49% based on the year-end closing mid-market price of 75.50p.
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 31
December 2018 of 8.90p per Ordinary Share, payable on 13 April 2018
to Shareholders on the register on 16 March 2018.
Since the Company's launch, including receipt of the above
interim dividends, Shareholders will have received 68.80p 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 review by the Board and the Manager.
Dividend Investment Scheme
As detailed in the 2017 Interim Report, and announced on 10
August 2017, the Directors resolved to re-introduce the Dividend
Investment Scheme (DIS) ahead of the launch of the Offer for
Subscription. The DIS was previously suspended on 24 August 2015
due to the uncertainty regarding the potential impact of the
Finance (No. 2) Act 2015.
Shareholders who had previously elected to participate in the
DIS will, unless they advise otherwise, revert to receiving their
dividends in the form of new shares. The shares issued under the
DIS should qualify for VCT tax reliefs, applicable for the tax year
in which they are allotted. Full details of the scheme, together
with a mandate form, are available from the Company's website.
Shareholders who had not previously applied to participate in the
DIS and who wish to do so for future dividends should ensure that a
mandate form, or CREST instruction if appropriate, is submitted to
the Registrar (Link Asset Services).
Fund Raising
On 22 September 2017 the Directors of your Company, together
with the Directors of Maven Income and Growth VCT 3 PLC, launched
an Offer for Subscription in new Ordinary Shares for up to GBP30
million, in aggregate, with over-allotment facilities of up to, in
aggregate, a further GBP10 million.
The first allotment of 4,367,370 new Ordinary Shares, in respect
of the 2017/18 tax year, was made on 21 November 2017 with a
further allotment on 6 February 2018 when 5,792,849 new Ordinary
Shares were issued. A final allotment for the 2017/18 tax year took
place on 5 April 2018, with 10,921,858 new Ordinary Shares being
issued, and an allotment for the 2018/19 tax year will take place
on or before 20 April 2018. The Board is confident that the
additional liquidity will enable your Company to continue to expand
the portfolio by investing in dynamic earlier stage VCT qualifying
businesses, which are capable of delivering growth in Shareholder
value over the medium term.
Further details regarding the new Ordinary Shares issued under
the Offer can be found in Note 12 to the Financial Statements.
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 be bought back at prices representing a discount of up to 15%
of the prevailing NAV per share.
The Future
During the financial year your Company has delivered further
growth in Shareholder value against a backdrop of economic
uncertainty, relating to the UK's intended exit from the EU, and an
increasingly restrictive regulatory environment. Your Board is
encouraged by the progress achieved, which demonstrates the
Manager's ability to adapt to the prevailing market conditions and
to continue to deliver your Company's investment objective.
The strategy for the new financial year will continue to focus
on portfolio construction, utilising the proceeds from the recent
profitable realisations and the new funds raised under the Offer
for Subscription. The addition of attractive high growth assets
that are capable of generating enhanced returns as they capitalise
on market opportunities and reach maturity will, over time, build a
platform for long term value creation. In the near term, the
existing portfolio of established companies is expected to continue
to deliver steady growth and investment income to support
Shareholder returns.
Ian Cormack
Chairman
6 April 2018
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.
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 GBP1 million in any company in one
year and no more than 15% of the Company's assets by cost in one
business at any time; and
-- borrowing up to 15% of net asset value, if required and only
on a selective basis, in pursuit of its investment strategy.
Principal 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 than
investments in large quoted companies. The Board aims to limit the
risk attaching to the investment portfolio as a whole by ensuring
that a robust and structured selection, monitoring and realisation
process is applied. The Board reviews the investment portfolio with
the Manager on a regular basis.
The Company manages and minimises investment risk by:
-- diversifying across a large number of companies;
-- diversifying across a range of economic sectors;
-- actively and closely monitoring the progress of investee companies;
-- co-investing with other clients of the Manager;
-- ensuring valuations of underlying investments are made
accurately and fairly (see Notes to the Financial Statements 1 (e)
and (f) 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.
Financial and Liquidity Risk
As most of the investments require a medium to long-term
commitment and are relatively illiquid, the Company retains a
portion of the portfolio in cash and listed investments in order to
finance any new unquoted and listed investments. The Company has
only limited 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, in the
Summer of 2018, the Finance (No. 2) Bill 2017-19.
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 current VCT legislation in the UK as well
as the EU State Aid Rules. Changes in the future to 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 Venture Capital Association (BVCA).
The Company has retained Philip Hare & Associates LLP as its
VCT Adviser.
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 an internally 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 ensure
compliance with this legislation.
Political Risk
In a referendum held on 23 June 2016, the UK voted to leave the
EU (a process informally known as Brexit). The formal process of
implementing this decision exists in Article 50 of the Lisbon
Treaty, which was invoked on 29 March 2017. The full 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 be 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. 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 in the
Investment Manager's Review. A review of the Company's business,
its position as at 31 December 2017 and its performance during the
year then ended is included in the Chairman's Statement, which also
includes an overview of its business model and strategy.
The management of the investment portfolio has been delegated to
Maven, which also provides company secretarial, administrative and
financial management services to the Company. The Board is
satisfied with the 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 investments 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 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 the current NAV per share and the sum of dividends paid to
date. Cumulative dividends paid is the total amount of both capital
and income distributions paid since the launch of the Company. The
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.
Definitions of these APMs can be found in the Glossary in the
Annual Report. A historical record of some of these measures is
shown in the Financial Highlights. The change in the profile of the
portfolio is reflected in the Summary of Investment Changes, and
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 in the Annual Report.
There is no meaningful VCT index against which to compare the
financial performance of the Company. However, for reporting to the
Board and Shareholders, the Manager uses comparisons with
appropriate indices. The Directors also consider non-financial
performance measures, such as the flow of investment proposals, and
ranking of the VCT sector by independent analysts.
In addition, the Directors will consider economic, regulatory
and political trends and factors that may impact on the Company's
future development and performance.
Valuation Process
Investments held by Maven Income and Growth VCT 4 PLC in
unquoted companies are valued in accordance with the International
Private Equity and Venture Capital Valuation Guidelines.
Investments quoted or traded on a recognised stock exchange,
including AIM, 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
As a venture capital trust, 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. As the Company has no employees, it
has no requirement to report separately on employment matters. 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 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 the Manager intend to maintain the policies set
out above for the year ending 31 December 2018 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:
Ian Cormack
Director
6 April 2018
Income Statement
For the Year Ended 31 December 2017
Year ended Year ended
31 December 2017 31 December 2016
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----------- ----------- ----------- --------- --------- ---------
Gains on investments - 984 984 - 1,424 1,424
Income from investments 1,182 - 1,182 1,057 - 1,057
Other income 11 - 11 4 - 4
Investment management
fees (201) (806) (1,007) (215) (862) (1,077)
Other expenses (283) - (283) (400) - (400)
---------------------------- ----------- ----------- ----------- --------- --------- ---------
Net Return on ordinary 709 178 887 446 562 1,008
activities before taxation
Tax on ordinary activities (128) 128 - (85) 85 -
---------------------------- ----------- ----------- ----------- --------- --------- ---------
Return attributable to
Equity Shareholders 581 306 887 361 647 1,008
---------------------------- ----------- ----------- ----------- --------- --------- ---------
Earnings per share (pence) 1.75 0.92 2.67 1.09 1.95 3.04
---------------------------- ----------- ----------- ----------- --------- --------- ---------
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 31 December 2017
Share Capital Capital Special Capital
Share premium reserve reserve distributable redemption Revenue
capital account realised unrealised reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------- -------- --------- ----------- -------------- ----------- --------- ---------
At 31 December 2016 3,290 19,449 (1,571) 1,874 8,528 354 644 32,568
Net return - - 4,005 (3,699) - - 581 887
Dividends paid - - (4,545) - - - (523) (5,068)
Repurchase and
cancellation
of shares (30) - - - (257) 30 - (257)
Net proceeds of share
issue 437 3,211 - - - - - 3,648
Net proceeds of DIS
issue 11 85 - - - - - 96
---------------------- --------- -------- --------- ----------- -------------- ----------- --------- ---------
At 31 December 2017 3,708 22,745 (2,111) (1,825) 8,271 384 702 31,874
---------------------- --------- -------- --------- ----------- -------------- ----------- --------- ---------
For the Year Ended 31 December 2016
Share Capital Capital Special Capital
Share premium reserve reserve distributable redemption Revenue
capital account realised unrealised reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- -------- --------- ----------- -------------- ----------- -------- --------
At 31 December 2015 3,354 19,449 (697) 1,401 9,096 290 983 33,876
Net return - - 174 473 - - 361 1,008
Dividends paid - - (1,048) - - - (700) (1,748)
Repurchase and
cancellation
of shares (64) - - - (568) 64 - (568)
------------------------- -------- -------- --------- ----------- -------------- ----------- -------- --------
At 31 December 2016 3,290 19,449 (1,571) 1,874 8,528 354 644 32,568
------------------------- -------- -------- --------- ----------- -------------- ----------- -------- --------
The accompanying Notes are an integral part of the Financial
Statements.
Balance Sheet
As at 31 December 2017
31 December 2017 31 December 2016
GBP'000 GBP'000
------------------------------------- ---------------- ----------------
Fixed assets
Investments at fair value through
profit or loss 20,081 28,108
Current assets
Debtors 456 347
Cash 11,587 4,394
------------------------------------- ---------------- ----------------
12,043 4,741
Creditors
Amounts falling due within one
year (250) (281)
------------------------------------- ---------------- ----------------
Net current assets 11,793 4,460
------------------------------------- ---------------- ----------------
Net assets 31,874 32,568
------------------------------------- ---------------- ----------------
Capital and reserves
Called up share capital 3,708 3,290
Share premium account 22,745 19,449
Capital reserve - realised (2,111) (1,571)
Capital reserve - unrealised (1,825) 1,874
Special distributable reserve 8,271 8,528
Capital redemption reserve 384 354
Revenue reserve 702 644
------------------------------------- ---------------- ----------------
Net assets attributable to Ordinary
Shareholders 31,874 32,568
------------------------------------- ---------------- ----------------
Net asset value per Ordinary
Share (pence) 85.97 99.00
------------------------------------- ---------------- ----------------
The Financial Statements of Maven Income and Growth VCT 4 PLC,
registered number SC272568, were approved by the Board of Directors
and were signed on its behalf by:
Ian Cormack
6 April 2018
The accompanying Notes are an integral part of the Financial
Statements.
Cash Flow Statement
For the Year Ended 31 December 2017
Year ended 31 December Year ended 31 December
2017 2016
GBP'000 GBP'000
------------------------------- ---------------------- ----------------------
Net cash flows from operating
activities (1,320) (1,618)
Cash flows from investing
activities
Investment income received 1,072 1,106
Deposit interest received 11 4
Purchase of investments (2,615) (6,441)
Sale of investments 11,626 12,897
------------------------------- ---------------------- ----------------------
Net cash flows from investing
activities 10,094 7,566
------------------------------- ---------------------- ----------------------
Cash flows from financing
activities
Equity dividends paid (5,068) (1,748)
Issue of Ordinary Shares 3,744 -
Repurchase of Ordinary Shares (257) (568)
=============================== ====================== ======================
Net cash flows from financing
activities (1,581) (2,316)
=============================== ====================== ======================
Net increase in cash 7,193 3,632
------------------------------- ---------------------- ----------------------
Cash at beginning of year 4,394 762
Cash at end of year 11,587 4,394
The accompanying Notes are an integral part of the Financial
Statements
Notes to the Financial Statements
For the Year Ended 31 December 2017
1. 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
Association of Investment Companies (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;
-- 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; and
-- share issue and merger costs are charged to the share premium account.
(d) Taxation
Deferred taxation is recognised in respect of all timing
differences that have originated but not reversed at the balance
sheet date, where transactions or events that result in an
obligation to pay more tax in the future or right to pay less tax
in the future have occurred at the balance sheet date. This is
subject to deferred tax assets only being recognised if it is
considered more likely than not that there will be suitable profits
from which the future reversal of the underlying timing differences
can be deducted. Timing differences are differences arising between
the Company's taxable profits and its results as stated in the
Financial Statements which are capable of reversal in one or more
subsequent periods.
Deferred tax is measured on a non-discounted basis at the tax
rates that are expected to apply in the periods in which timing
differences are expected to reverse, based on tax rates and laws
enacted or substantively enacted at the balance sheet date.
The tax effect of different items of income/gain and
expenditure/loss is allocated between capital reserves and revenue
account on the same basis as the particular item to which it
relates using the Company's effective rate of tax for the
period.
UK corporation tax is provided at amounts expected to be
paid/recovered using the tax rates and laws that have been enacted
or substantively enacted at the balance sheet date.
(e) Investments
In valuing unlisted investments the Directors follow the
criteria set out below. These procedures comply with the revised
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 or loss.
At subsequent reporting dates, investments are valued at fair
value, which represent the Directors' view of the amount for which
an asset could be exchanged between knowledgeable willing parties
in an arm's length transaction. This does not assume that the
underlying business is saleable at the reporting date or that its
current shareholders have an intention to sell their holding in the
near future.
A financial asset or liability is generally derecognised when
the contract that gives rise to it is settled, sold, cancelled or
expires.
1. For early stage investments completed in the reporting
period, fair value is determined using the Price of Recent
Investment Method, except that adjustments are made when there has
been a material change in the trading circumstances of the investee
company.
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; and
-- Level 3 - inputs are unobservable (ie for which market data
is unavailable) for the asset or liability.
(g) Gains and losses on investments
When the Company sells or revalues its investments during the
year, any gains or losses arising are credited/charged to the
Income Statement.
(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 explained in
Note 1 (e) above.
In the opinion of the Board and the Manager, there are no
critical accounting judgements.
Reserves
Share premium account
The share premium account represents the premium above nominal
value received by the Company on issuing shares net of 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.
Return per Ordinary Share
Year ended 31 December Year ended 31 December
2017 2016
------------------------------------- ---------------------- ----------------------
The returns per share have been
based on the following figures:
Weighted average number of Ordinary
Shares 33,115,448 33,260,669
Revenue return GBP581,000 GBP361,000
Capital return GBP306,000 GBP647,000
------------------------------------- ---------------------- ----------------------
Total return GBP887,000 GBP1,008,000
------------------------------------- ---------------------- ----------------------
Net asset value per Ordinary Share
The net asset value per Ordinary Share as at 31 December 2017
has been calculated using the number of Ordinary Shares in issue at
that date of 37,074,635 (2016: 32,897,502).
Directors' Responsibility Statement
The Directors confirm that, to the best of their knowledge:
-- the Financial Statements have been prepared in accordance
with the applicable accounting standards and give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company as at 31 December 2017 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 Tuesday 15 May 2018,
commencing at 10.30am, at the offices of Maven Capital Partners UK
LLP, Fifth Floor, 1-2 Royal Exchange Buildings, London EC3V
3LF.
Copies of this announcement and the Annual Report and Financial
Statements for the year ended 31 December 2017, will be available
to the public at the registered office of the Company, Kintyre
House, 205 West George Street, Glasgow G2 2LW; at the offices of
Maven Capital Partners UK LLP, Fifth Floor, 1-2 Royal Exchange
Buildings, London EC3V 3LF and on the Company's website at
www.mavencp.com/migvct4.
The Annual Report and Financial Statements for the year ended 31
December 2017 will be issued to Shareholders and filed with the
Registrar of Companies in due course.
The financial information contained within this announcement
does not constitute the Company's statutory Financial Statements as
defined in the Companies Act 2006. The statutory Financial
Statements for the year ended 31 December 2016 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
6 April 2018
This information is provided by RNS
The company news service from the London Stock Exchange
END
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