TIDMMAV4 TIDMTTM
RNS Number : 3347V
Maven Income & Growth VCT 4 PLC
05 April 2019
Maven Income and Growth VCT 4 PLC
Final results for the year ended 31 December 2018
Highlights for the year
-- NAV total return at the year end of 145.37p per share (2017: 145.87p)
-- NAV at year end of 71.77p per share (2017: 85.97p), after
payment of dividends totalling 13.70p per share during the
period
-- Annual dividend 13.70p per share (2017: 12.45p)
-- Offer for Subscription fully subscribed and raised GBP20 million
-- Merger with Maven Income and Growth VCT 2 PLC (Maven VCT 2) completed on 15 November 2018
-- Net assets increased to GBP54.95 million
-- Completion of 15 VCT qualifying new and follow-on investments
Chairman's Statement
On behalf of your Board, I am pleased to announce the results
for the full year to 31 December 2018. The year under review has
been a period of strategic growth and development for your Company,
including the completion of a GBP20 million fundraising, which
provides further liquidity to allow the Manager to continue to
expand the portfolio of investee companies in line with the
objective of increasing Shareholder value. On 15 November 2018,
following
Shareholder approval, your Board was also pleased to announce
the completion of the merger with Maven VCT 2, which provides
Shareholders with further scale and a reduction in the total
expense ratio.
Total dividends declared during the financial year were 13.70p
per share, reflecting the build-up of distributable reserves,
following a number of profitable exits, and the requirement to
maintain ongoing compliance with the VCT regulations. While this
enhanced level of distribution is unlikely to be sustained, your
Board remains committed to making regular tax-free payments
wherever possible, with the potential for further distributions
when realisations are achieved.
This has been an important year in the strategic development of
your Company. The success of the Offer for Subscription and the
completion of the merger with Maven VCT 2 effected a step change in
the size and scale of your Company, positioning it well for future
growth whilst also enabling it to realise the economic benefits of
an enlarged VCT.
The Offer for Subscription, which closed fully subscribed in
April 2018, including full utilisation of the over-allotment
facility, raised GBP20 million of new capital. The strategy remains
to build a broadly based and diversified portfolio by investing in
a wide range of carefully selected VCT qualifying growth companies
that offer the prospect of capital gains. The Directors are
encouraged by the level of investment achieved during the period,
particularly given the requirement to secure Advance Assurance from
HM Revenue and Customs (HMRC), for which the new regulations have
lengthened the process.
Following the enactment of the Finance Act 2015, which altered
the investment parameters for VCT qualifying transactions, Maven
has successfully adapted its deal origination strategy and
significantly expanded its investment team and nationwide presence,
providing access to a wide range of qualifying opportunities. Based
on the pipeline of live transactions currently under review, your
Board anticipates that the Company can sustain a healthy rate of
investment in the new financial year, supplemented by follow-on
commitments to support existing portfolio companies that are making
identifiable commercial progress. Given the increased liquidity
resulting from the Offer for Subscription, it is also possible that
your Company may make a number of investments in VCT qualifying AIM
quoted companies, where Maven has an established team with good
knowledge of that market.
Notwithstanding the political and economic uncertainty that has
continued to surround the UK's intended exit from the European
Union (EU), it is encouraging to report that most of the investee
companies in the portfolio have performed broadly in line with
expectations. The continuing positive performance achieved by a
number of the more established private companies has enabled some
of the valuations of those assets to be increased. The younger and
earlier stage investee companies have generally made satisfactory
progress, although it may take time for this to translate into
meaningful uplifts in valuations. The Board and the Manager will
maintain a prudent approach to valuing these assets, holding them
at cost, or cost less provision, until there is clear evidence of
measurable progress, or a specific event from which a new valuation
can be supported. Encouragingly, trading performance across the oil
& gas portfolio companies has continued to show a further
steady improvement, continuing the trend of the previous year.
There are, however, a small number of investments that are
operating behind plan or where a market adjustment has influenced
performance and, as a result, the valuations of these assets have
been reduced. A detailed analysis of portfolio developments can be
found in the Investment Manager's Review in the Annual Report.
Details of the principal Key Performance Indicators (KPIs) can be
found in the Business Report and a summary of the Alternative
Performance Measures (APMs) can be found in the Financial
Highlights in the Annual Report.
The Directors were encouraged to note the good level of
investment activity that was achieved during the period under
review, with the addition of seven new qualifying private company
assets to the portfolio, and anticipate a continuation of this
trend in the new financial year. Two notable disposals were also
completed. In February 2018, the exit was completed from Endura, a
designer and manufacturer of high performance cycling apparel and
accessories, for a total return of 1.6 times cost over the holding
period. In October 2018, the holding in Cursor Controls, a niche
manufacturer of trackballs, track pads and keyboards for industrial
applications, was sold at a premium to carrying value, generating a
total return of 2.7 times cost over the three-year investment
period. The Board is aware that discussions are underway regarding
further potential exits from a number of portfolio companies,
although there can be no certainty that these will result in
concluded sales.
Dividends and Distributable Reserves
As a result of recent profitable exits and in order to ensure
ongoing compliance with the VCT regulations, the Directors
considered it appropriate to distribute an enhanced level of
interim dividends in the first half of the financial year.
Accordingly, a first interim dividend in respect of the year
ended 31 December 2018, of 8.90p per Ordinary Share, was paid on 13
April 2018 to Shareholders on the register at close of business on
16 March 2018. A second interim dividend, of 4.80p per Ordinary
Share, was paid on 22 June 2018 to Shareholders on the register at
close of business on 25 May 2018. As no final dividend is proposed,
total distributions for the year are 13.70p per Ordinary Share,
representing a tax-free yield of 20.92% based on a year-end closing
mid-market price of 65.50p. Since the Company's launch, and after
receipt of the payments noted above, Shareholders will have
received 73.60p per share in tax-free dividends. It should be noted
that the effect of paying dividends is to reduce the NAV of the
Company by the total cost of the distributions.
Decisions on future distributions will take into consideration
the availability of surplus revenue, the adequacy of reserves and
the VCT qualifying level, all of which are kept under close and
regular review by the Board and the Manager. To this end, the
Directors are proposing a Special Resolution at the Annual General
Meeting (AGM), to seek Shareholders' approval to cancel the share
premium account and the capital redemption reserve of the Company,
pursuant to the Companies Act 2006 and subject to sanction by the
Scottish Court, to create a further pool of distributable reserves
that can be used for future distributions or any purpose for which
the Company's profits available for distribution may be
applied.
As the portfolio continues to evolve, and a greater proportion
of holdings are invested in younger and earlier stage companies,
there may be more fluctuation in the quantum and timing of dividend
payments, which could ultimately become more closely linked to
realisation activity. The Board and the Manager will ensure that
this is carefully monitored, in line with your Company's investment
objective.
Dividend Investment Scheme (DIS)
Your Company has in place a DIS through which Shareholders may
elect to have their dividend payments used to apply for new
Ordinary Shares issued by the Company under the standing authority
requested from Shareholders at annual general meetings. Shares
issued under the DIS should qualify for VCT tax relief applicable
for the tax year in which they are allotted, subject to
Shareholders' particular circumstances. If a Shareholder is in any
doubt about the merits of participating in the DIS, or their own
tax status, they should seek advice from a qualified adviser.
Shareholders who wish to participate in respect of any future
dividends should ensure that a DIS mandate or CREST instruction as
appropriate, is submitted to the Registrar (Link Market Services).
The mandate form, terms & conditions and full details of the
scheme, including further details on tax considerations, are
available from the Company's website at www.mavencp.com/migvct4. A
DIS election can also be made using the Link Market Services share
portal at www.signalshares.com.
Fund Raising
On 22 September 2017, the Directors of your Company, together
with the board of Maven Income and Growth VCT 3 PLC, launched a
joint Offer for Subscription for new Ordinary Shares for up to
GBP30 million, in aggregate, with total over-allotment facilities
of up to GBP10 million.
On 24 April 2018, your Board was pleased to announce that its
Offer was fully subscribed, having raised GBP20 million in total,
including full utilisation of the over-allotment facility. During
the period, the Company issued 16,714,707 new Ordinary Shares for
the 2017/2018 tax year, with a further 3,513,830 new Ordinary
Shares issued for the 2018/2019 tax year. The programme for
investing this capital has commenced and the Directors are
encouraged by the positive rate of new investment that has been
achieved to date, which is expected to continue in the new
financial year.
Further details regarding the new Ordinary Shares issued under
the Offer for Subscription can be found in Note 12 to the Financial
Statements in the Annual Report.
Merger
On 15 November 2018, following the passing of resolutions at a
series of general meetings of both companies, the Directors were
pleased to announce the completion of the merger of the Company
with Maven VCT 2 through a scheme of reconstruction. On completion,
the assets and liabilities of Maven VCT 2 were transferred to your
Company in consideration for 19,469,302 new Ordinary Shares in your
Company issued to the former shareholders of Maven VCT 2 based on a
ratio of 0.485100 new shares for each Maven VCT 2 share held and at
a deemed issue price of 70.5621p per new share. Following the
merger, the net asset value of your Company increased to GBP54.95
million and the new shares were admitted to the Official List on 16
November 2018. Maven VCT 2 was placed in members' voluntary
liquidation, with the listing of its ordinary shares cancelled on
16 November 2018.
The impact of the merger can be seen in the Financial Statements
and related Notes, and is also reflected in the
Financial Highlights in the Annual Report.
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 normally be bought back at prices representing a discount of
up to 15% of the prevailing NAV per share.
Regulatory Developments
Following the legislative changes introduced by the Finance Act
2015, with further amendments included in the Finance Act 2018, it
is reassuring to report that the Finance (No. 3) Act 2019 does not
contain any further amendments to the legislation governing VCTs.
Your Company is well positioned to accommodate the provisions of
the Finance Act 2018, in particular the requirement for a VCT to
hold 80% of its investments in qualifying holdings for financial
periods ending after 6 April 2019. For your Company, this will be
applicable from 31 December 2019 and progress towards this target
is being monitored closely.
The General Data Protection Regulation (GDPR) came into force on
25 May 2018, replacing the Data Protection Act 1998. During the
year, the Manager worked with the third parties that process
Shareholders' personal data to ensure that their rights under the
new regulation are respected.
In July 2018, the Financial Reporting Council published an
update of the UK Corporate Governance Code (the Code), which
focuses on the application and reporting of the updated Principles.
The 2018 Code applies to all companies with a Premium Listing and
is applicable for all accounting periods beginning on or after 1
January 2019. The Board will consider the implications of the Code
and take appropriate action as required.
Board of Directors
On behalf of the Board, I am pleased to welcome Peter Linthwaite
as a Non-executive Director with effect from 15 November 2018.
Peter was previously a non-executive director of Maven VCT 2 prior
to the merger and has extensive experience of the private equity
industry; further details can be found in the Your Board section in
the Annual Report. As required by company law, Peter will stand for
election by Shareholders at the AGM on 15 May 2019.
I have been Chairman of your Company since its inception in 2004
and, during this period, your Company has experienced
transformational growth, with net assets increasing from GBP8
million to over GBP54 million. Following completion of the
fundraising and merger, and taking account of my length of service,
I consider that it is appropriate to stand down as Chairman and
Non-executive Director at the conclusion of the 2019 AGM. It is
intended that, subject to his successful election at the 2019 AGM,
Peter Linthwaite will succeed me as Chairman. I would like to wish
him, and your Company, every success in the future.
The Future
The period under review has been one of the most active in your
Company's history and, given the progress achieved, it is now well
positioned to continue to deliver on its core investment strategy.
Notwithstanding the ongoing macro-economic uncertainty associated
with the UK's intended withdrawal from the EU, the priority for the
year ahead will be to maintain a steady rate of investment, in
order to expand the portfolio and enable your Company to deliver
positive Shareholder returns in the years ahead.
Ian Cormack
Chairman
5 April 2019
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 and 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 that meet the criteria for
VCT qualifying investments and have strong growth potential;
-- investing no more than GBP1.25 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 by the Manager. The Board reviews the investment
portfolio with the Manager on a regular basis.
The Company manages and minimises investment risk by:
-- diversifying across a large number of companies;
-- diversifying across a range of economic sectors;
-- actively and closely monitoring the progress of investee companies;
-- co-investing with other clients of Maven and also other VCT managers;
-- ensuring valuations of underlying investments are made fairly
and reasonably (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 Objective, 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 place
to prevent data protection and cyber security failings.
VCT Qualifying Status Risk
The Company operates in a complex regulatory environment and
faces a number of related risks, including:
-- becoming subject to capital gains tax on the sale of its
investments as a result of a breach of Section 274 of the Income
Tax Act 2007;
-- loss of VCT status and consequent loss of tax reliefs
available to Shareholders as a result of a breach of the VCT
Regulations;
-- loss of VCT status and reputational damage as a result of a
serious breach of other regulations such as the FCA Listing Rules
and the Companies Act 2006; and
-- increased investment restrictions resulting from EU State Aid
Rules, incorporated by the Finance (No. 2) Act 2015 and the Finance
Act 2018.
The Board works closely with the Manager to ensure compliance
with all applicable and upcoming legislation, such that VCT
qualifying status is maintained. Further information on the
management of this risk is detailed under other headings in this
Business Report.
Legislative and Regulatory Risk
In order to maintain its approval as a VCT, the Company is
required to comply with 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 Private Equity and Venture Capital Association.
The Company has retained Philip Hare & Associates LLP as its
principal VCT adviser and also uses a number of other VCT advisers
on a transactional basis.
Breaches of other regulations including, but not limited to, the
Companies Act 2006, the FCA Listing Rules, the FCA Disclosure
Guidance and Transparency Rules, the GDPR, 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 a small, registered and internally managed alternative
investment fund 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 Market Services
to act on its behalf to report annually to HMRC and ensure
compliance with this legislation.
Political Risk
Following the referendum held on 23 June 2016, the UK voted to
leave the EU and negotiations regarding the Withdrawal Agreement
are ongoing. The full political, economic and legal consequences of
this 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 ongoing relationship with the EU and other global
trade partners. In future, the UK's laws and regulations, including
those relating to investment companies and AIFMs may 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 in the Annual Report.
Statement of Compliance with Investment Policy
The Company is adhering to its stated investment policy and
managing the risks arising from it. This can be seen in various
tables and charts throughout the Annual Report, and from
information provided in the Chairman's Statement and in the
Investment Manager's Review. A review of the Company's business,
its financial position as at 31 December 2018 and its performance
during the year then ended is included in the Chairman's Statement,
which also includes an overview of its strategy and business
model.
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 nationwide 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 in the Annual Report 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
During the year, the net return on ordinary activities before
taxation was GBP361,000 (2017: GBP887,000); gains on investments
were GBP1,082,000 (2017: GBP984,000) and earnings per share were
0.66p (2017: 2.67p).
The Directors also use a number of APMs in order to assess the
Company's success in achieving its objectives as these are
considered to be more appropriate long-term measures. These APMs
are viewed by the Board as additional key performance indicators
that enable Shareholders and prospective investors to gain an
understanding of the Company's business, and are as follows:
-- NAV total return;
-- annual yield;
-- 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. The annual yield is the total of dividends paid per share for
the financial year, expressed as a percentage of the share price at
the year-end date. The Directors seek to pay dividends to provide a
yield and 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 NAV 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 and the change in the profile of
the portfolio is reflected in the Summary of Investment Changes in
the Annual Report. 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 VCT index against which to compare the financial
performance of the Company. However, for reporting to the Board and
Shareholders, the Manager uses comparison with the most appropriate
index, being the FTSE AIM All-Share Index.
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 the Company 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 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 VCT, 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. 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 2019, as it is believed
that these are in the best interests of Shareholders.
Approval
The Business Report, and the Strategic Report as a whole, was
approved by the Board of Directors and signed on its behalf by:
Ian Cormack
Director
5 April 2019
Income Statement
For the Year Ended 31 December 2018
Year ended 31 December 2018 Year ended 31 December 2017
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----------- ----------- ----------- ----------- ----------- ----------
Gains on investments - 1,082 1,082 - 984 984
Income from investments 697 - 697 1,182 - 1,182
Other income 29 - 29 11 - 11
Investment management
fees (205) (819) (1,024) (201) (806) (1,007)
Other expenses (423) - (423) (283) - (283)
---------------------------- ----------- ----------- ----------- ----------- ----------- ----------
Net return on ordinary 98 263 361 709 178 887
activities before
taxation
Tax on ordinary activities (12) 12 - (128) 128 -
---------------------------- ----------- ----------- ----------- ----------- ----------- ----------
Return attributable
to Equity Shareholders 86 275 361 581 306 887
---------------------------- ----------- ----------- ----------- ----------- ----------- ----------
Earnings per share
(pence) 0.16 0.50 0.66 1.75 0.92 2.67
---------------------------- ----------- ----------- ----------- ----------- ----------- ----------
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 2018
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 2017 3,708 22,745 (2,111) (1,825) 8,271 384 702 31,874
Net return - - (364) 639 - - 86 361
Dividends paid - - (6,545) - - - - (6,545)
Repurchase and
cancellation
of shares (88) - - - (596) 88 - (596)
Issue of shares on
merger 1,947 11,483 - - - - - 13,430
Net proceeds of share
issue 2,023 13,947 - - - - - 15,970
Net proceeds of DIS
issue 67 393 - - - - - 460
---------------------- --------- -------- --------- ----------- -------------- ----------- --------- ---------
At 31 December 2018 7,657 48,568 (9,020) (1,186) 7,675 472 788 54,954
---------------------- --------- -------- --------- ----------- -------------- ----------- --------- ---------
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
---------------------- --------- -------- --------- ----------- -------------- ----------- --------- ---------
The accompanying Notes are an integral part of the Financial
Statements.
Balance Sheet
As at 31 December 2018
31 December 2018 31 December 2017
GBP'000 GBP'000
------------------------------------- ---------------- ----------------
Fixed assets
Investments at fair value through
profit or loss 33,912 20,081
Current assets
Debtors 537 456
Cash 20,553 11,587
------------------------------------- ---------------- ----------------
21,090 12,043
Creditors
Amounts falling due within one
year (48) (250)
------------------------------------- ---------------- ----------------
Net current assets 21,042 11,793
------------------------------------- ---------------- ----------------
Net assets 54,954 31,874
------------------------------------- ---------------- ----------------
Capital and reserves
Called up share capital 7,657 3,708
Share premium account 48,568 22,745
Capital reserve - realised (9,020) (2,111)
Capital reserve - unrealised (1,186) (1,825)
Special distributable reserve 7,675 8,271
Capital redemption reserve 472 384
Revenue reserve 788 702
------------------------------------- ---------------- ----------------
Net assets attributable to Ordinary
Shareholders 54,954 31,874
------------------------------------- ---------------- ----------------
Net asset value per Ordinary
Share (pence) 71.77 85.97
------------------------------------- ---------------- ----------------
The Financial Statements of Maven Income and Growth VCT 4 PLC
(registered in Scotland; company number SC272568) were approved by
the Board of Directors and were signed on its behalf by:
Ian Cormack
5 April 2019
The accompanying Notes are an integral part of the Financial
Statements.
Cash Flow Statement
For the Year Ended 31 December 2018
Year ended 31 December Year ended 31 December
2018 2017
GBP'000 GBP'000
------------------------------- ---------------------- ----------------------
Net cash flows from operating
activities* (1,004) (237)
Cash flows from investing
activities
Purchase of investments (15,547) (2,615)
Sale of investments 2,798 11,626
------------------------------- ---------------------- ----------------------
Net cash flows from investing
activities (12,749) 9,011
------------------------------- ---------------------- ----------------------
Cash flows from financing
activities
Equity dividends paid (6,545) (5,068)
Issue of Ordinary Shares 16,430 3,744
Issue of Ordinary Shares
- merger 13,430 -
Repurchase of Ordinary Shares (596) (257)
=============================== ====================== ======================
Net cash flows from financing
activities 22,719 (1,581)
=============================== ====================== ======================
Net increase in cash 8,966 7,193
------------------------------- ---------------------- ----------------------
Cash at beginning of year 11,587 4,394
Cash at end of year 20,553 11,587
* Refer to Note 15 in the Annual Report for reclassification in
the current and prior years.
The accompanying Notes are an integral part of the Financial
Statements
Notes to the Financial Statements
For the Year Ended 31 December 2018
Accounting Policies
The Company is a public limited company, incorporated in
Scotland, and its registered office is shown in the Corporate
Summary in the Annual Report.
(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 (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, that 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. 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 AIM or a recognised stock exchange are valued at their bid
market price.
(f) Fair value measurement
Fair value is defined as the price that the Company would
receive upon selling an investment in a timely transaction to an
independent buyer in the principal or the most advantageous market
of the investment. A three-tier hierarchy has been established to
maximise the use of observable market data and minimise the use of
unobservable inputs and to establish classification of fair value
measurements for disclosure purposes. Inputs refer broadly to the
assumptions that market participants would use in pricing the asset
or liability, including assumptions about risk, for example, the
risk inherent in a particular valuation technique used to measure
fair value including such a pricing model and/or the risk inherent
in the inputs to the valuation technique. Inputs may be observable
or unobservable.
Observable inputs are inputs that reflect the assumptions market
participants would use in pricing the asset or liability developed
based on market data obtained from sources independent of the
reporting entity.
Unobservable inputs are inputs that reflect the reporting
entity's own assumptions about the assumptions market participants
would use in pricing the asset or liability developed based on best
information available in the circumstances.
The three-tier hierarchy of inputs is summarised in the three
broad levels listed below.
-- Level 1 - the unadjusted quoted price in an active market for
identical assets or liabilities that the entity can access at the
measurement date.
-- Level 2 - inputs other than quoted prices included within
Level 1 that are observable (ie developed using market data) for
the asset or liability, either directly or indirectly.
-- Level 3 - inputs are unobservable (ie for which market data
is unavailable) for the asset or liability.
(g) Gains and losses on investments
When the Company sells or revalues its investments during the
year, any gains or losses arising are credited/charged to the
Income Statement.
(h) Critical accounting judgements and key sources of estimation uncertainty
Disclosure is required of judgements and estimates made by the
Board and the Manager in applying the accounting policies that have
a significant effect on the Financial Statements. The area
involving the highest degree of judgement and estimates is the
valuation of unlisted investments recognised in Note 8 in the
Annual Report and explained in (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.
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
2018 2017
------------------------------ ---------------------- ----------------------
The returns per share have
been based on the following
figures:
Weighted average number of
Ordinary Shares 55,321,759 33,115,448
Revenue return GBP86,000 GBP581,000
Capital return GBP275,000 GBP306,000
------------------------------ ---------------------- ----------------------
Total return GBP361,000 GBP887,000
------------------------------ ---------------------- ----------------------
Net asset value per Ordinary Share
The net asset value per Ordinary Share as at 31 December 2018
has been calculated using the number of Ordinary Shares in issue at
that date of 76,570,595 (2017: 37,074,635).
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 2018 and for the year to that
date;
-- the Directors' Report includes a fair review of the
development and performance of the Company, together with a
description of the principal risks and uncertainties that it faces;
and
-- the Annual Report and Financial Statements taken as a whole
is fair, balanced and understandable and provides the information
necessary for Shareholders to assess the Company's position and
performance, business model and strategy.
Other information
The AGM will be held on Wednesday 15 May 2019, commencing at
12.00 noon, at the offices of Maven Capital Partners UK LLP, Fifth
Floor, 1-2 Royal Exchange Buildings, London EC3V 3LF.
Copies of this announcement and the Annual Report and Financial
Statements for the year ended 31 December 2018, 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 2018 will be issued to Shareholders and filed with the
Registrar of Companies in due course.
The financial information contained within this announcement
does not constitute the Company's statutory Financial Statements as
defined in the Companies Act 2006. The statutory Financial
Statements for the year ended 31 December 2017 have been delivered
to the Registrar of Companies and contained an audit report which
was unqualified and did not constitute statements under S498(2) or
S498(3) of the Companies Act 2006.
Neither the content of the Company's website nor the contents of
any website accessible from hyperlinks on the Company's website (or
any other website) is incorporated into, or forms part of, this
announcement.
The Annual Report will be submitted to the National Storage
Mechanism and will be available for inspection at:
www.morningstar.co.uk/uk/NSM
By Order of the Board
Maven Capital Partners UK LLP
Secretary
5 April 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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