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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Maven I&G 4 S | LSE:MAVS | London | Ordinary Share | GB00B1FPZ567 | S ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 94.125 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMMAV4 TIDMMAVS
RNS Number : 9197C
Maven Income & Growth VCT 4 PLC
14 March 2011
Maven Income and Growth VCT 4 PLC
Annual Financial Report for the year ended 31 December 2010
Chairman's Statement
I am pleased to report that during the year to 31 December 2010 your Company achieved positive returns for shareholders, and maintained its policy of paying regular dividends against a backdrop of uncertainty and challenging economic conditions.
Global stock markets have recovered from the depths of the credit crisis in 2008, and the FTSE 100 Index rose above 6000 by the end of December 2010. Although some companies were cutting dividends, many blue chip companies were able to provide a healthy yield to their shareholders, in stark contrast with low interest rates. However, the macro-economic indicators were mixed. Growth in the UK continued modestly, consumer debt remained high, and concern about inflation rose.
The major highlights of the year are:
-- Total return on Ordinary shares of 112.0p per share at 31 December 2010, up 9.3% over the year
-- Net asset value (NAV) of Ordinary shares at the year end of 95.7p p per share
-- Total return on S Shares of 103.85 p per share at 31 December 2010, up 4.4% over the year
-- NAV of S Shares at the year end of 97.3p per share
-- Final dividends proposed of 2.5p per Ordinary Share and 0.5p per S Share.
Performance
The NAV total return per Ordinary Share at 31 December 2010 was 112.0p, an increase of 9.3% over the equivalent figure at 31 December 2009, while for the S Share it was 103.85p, an increase of 4.4% and reflecting the differing mix of the two portfolios. At 31 December 2010, the NAV per Ordinary Share was 95.7p and the NAV per S Share was 97.3p.
NAV total return is generally regarded as the most meaningful performance measure for a VCT, representing the long term record of dividend payments out of income and capital gains combined with the current NAV. The NAV in isolation is a less important measure, as the underlying investments are long-term in nature and not readily realisable.
Dividends
It is the Company's policy to pay regular dividends to investors out of revenue and realised capital gains.
The Board is proposing a final dividend of 2.5p per Ordinary share and 0.5p per S share to be paid on 27 May 2011 to shareholders on the register on 6 May 2011. Including the interim dividends paid in September 2010, the total tax-free yield for the year is 5.8% on the net cost to Ordinary shareholders and 2.1% to S shareholders. Since the Company's launch, and after receipt of the proposed final dividend, Ordinary shareholders and S shareholders will have received 18.8p and 7.05p respectively in tax-free dividends.
Investment strategy
Our investment strategy is to build a large and diversified portfolio of holdings in profitable and income-yielding later stage private companies. The Manager is introduced to a continuous and varied flow of potential opportunities through its UK-wide regional office network. The Company leverages these resources to gain access, at attractive entry multiples, to well managed businesses in a range of sectors. Investments are mainly in the form of secured loan stock and offer high yields from the outset.
The Board and the Manager have concluded that the potential returns available from AIM and PLUS quoted investments are too uncertain: there is poor liquidity in many stocks and little or no dividend yield in comparison with private equity investments. As is evident from the realisations achieved over the past 12 months, the Manager is looking to realise the AIM portfolio selectively for value and redeploy the proceeds into investments in mature, income-producing private companies.
The Listing Rules require your Board to ensure that this report includes information on the investment policy, including a description of the asset mix, the spread of risk and maximum exposures. This information is contained in the Directors' Report and in the various tabular analyses of the portfolio.
Portfolio developments
The portfolio is now invested in 62 unquoted companies. Seven new investments and seven follow-on investments were completed during the financial year. The Manager has also invested in three unlisted companies that are looking to acquire target businesses in specific sectors.
I am pleased to report that our portfolio companies are currently trading either satisfactorily or better than plan, and the cash generative nature of most of our investee companies leads us to be optimistic about their future trading prospects. The increasing maturity of a number of holdings is leading to the emergence of M&A interest from potential trade buyers, and the Manager is currently working on the potential realisation of several portfolio holdings.
Valuation process
Investments in unquoted companies are valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines. Investments quoted or traded on a recognised stock exchange, including the Alternative Investment Market (AIM), are valued at their bid prices.
VCT qualifying status
The Company is required to meet the 70% qualifying test and other VCT regulatory criteria continuously. The Board regularly reviews the Company's performance in relation to these criteria and I am pleased to confirm that they have been met throughout the year.
Principal risks and uncertainties
The Board has reviewed the principal risks and uncertainties facing the Company for the financial year. In order to reduce its exposure to investment risk, the Company has invested in a broadly-based portfolio of unlisted and AIM/PLUS quoted companies in the United Kingdom
Recovery of VAT
I am pleased to announce that the Board received and accepted an offer from the previous manager, Aberdeen Asset Managers Limited, to refund GBP94,898 which represented all of the VAT charged on investment management fees for the period from 1 October 2005 to 31 August 2008. This offer was accepted, subject to wholly reserving the Company's rights in respect of sums not repaid in respect of earlier periods. The amount received has been recognised within the financial statements and allocated to revenue and capital in accordance with the underlying accounting policy.
Distributable reserve
Following approval by the Shareholders on 1 February 2011, the Board is seeking to cancel the Company's share premium account and capital redemption reserve. The purpose of the cancellation is to provide the Company with greater flexibility in returning funds to Shareholders, whether through the payment of dividends, share buy-backs or other means.
Linked Offer
At the start of the year, the Company participated in a successful linked VCT top-up offer with the other three Maven Income and Growth VCTs. The Board has decided to raise further top-up funds through a similar linked offer by the same four VCTs. Investors will benefit from up to 30% income tax relief on their subscriptions for one or both of the tax years 2010/11 and 2011/12.
The second Maven Linked VCT Offer aims to raise GBP6.4 million in new funds for the four participating VCTs without incurring the higher costs associated with a full prospectus, which will enable the Company to make further private company investments at a time when the Manager is experiencing significant levels of deal flow across its UK office network. The Company's share of these funds, up to GBP77,982 will also enable it to spread its costs over a larger asset base to the benefit of all shareholders.
Co-investment scheme
The co-investment scheme, which enables executive members of the Manager to invest alongside the Company, continued in operation during the year. The scheme operates through a nominee company which invests in each and every transaction, including any follow-on investments. The scheme more closely aligns the interests of the executives and the Company's shareholders while enabling the Manager to retain the skills and capacity of its investment team in a highly competitive market.
Outlook
Some uncertainty remains, both globally and in the UK, about the medium-term outlook for the economy. The economic indicators point to modest growth in a climate of reduced government spending and higher taxation on private consumption, and some commentators are still concerned about the risk of a return to recession.
Whilst the outlook for the UK undoubtedly remains challenging, your Company continues to invest in later stage, high-yielding UK businesses, with strong balance sheets and robust business models. Many of our investments are counter-cyclical, in defensive sectors, and have a significant global dimension to their business activities.
The Board is encouraged by the range and quality of deal flow that the Manager is seeing throughout the UK, where one of the effects of the credit crisis is an increase in the range of companies seeking capital from alternative sources such as VCT managers. Although recent economic conditions have suppressed merger and acquisitions activity, the Manager is now seeing a number of attractive trade and private equity approaches. The Board is confident that the Company will continue to meet its investment objectives and produce returns for shareholders that are consistent with those objectives.
Investment Manager's Review
Overview
The Manager ('Maven') operates from five UK regional offices in Glasgow, London, Aberdeen, Manchester and Birmingham and is introduced to a large number of potential transactions every year, mainly from a range of contacts across the corporate finance and business community. In terms of asset selection Maven employs a highly selective process, investing only in private companies which meet strict quality criteria, where access can be gained at attractive entry prices under investment structures which produce income to VCT client funds from the outset. Maven actively avoids businesses at an early stage of their development, where the company has significant external borrowings, or where the trading activity is overly reliant on a concentrated customer base or a single product.
Post-investment, Maven executives remain closely involved in the strategic direction of each portfolio company, and actively work with the executive management to ensure the business realises its full potential and ultimately achieves the best possible returns on exit, normally through a trade sale.
During the year the strength and quality of this approach was recognised by industry professionals. In July Maven won the BVCA London & Southeast Portfolio Company Management Award for Exit Team of the Year, for the successful sale of Cyclotech in November 2009. This award acknowledged the quality of managers in supporting fast growing and innovative companies in the most challenging of economic times.
In November Maven was named Small Buyout House of the Year 2010 at the unquote British Private Equity Awards, as judged by corporate finance and private equity professionals across the UK, which recognised managers who demonstrated strategic vision and consistently high standards across their wider investment activity.
Investment Activity
During the year ended 31 December 2010 the Maven team completed seven new significant private equity investments, and seven follow-on investments in existing portfolio companies. Maven also invested in three new companies established to seek out acquisitions in a range of sectors where our investments executives have relevant industry knowledge and awareness of suitable target investments. At the year end, the portfolio stood at 62 unlisted and AIM investments at a total cost of GBP12.2 million.
The following new investments have been completed during the year.
Hot Features
Premium
Investment cost
Investment Date Sector GBP'000
Ordinary S Ordinary
shares shares
Unlisted
Oct
Ailsa Craig Limited 2010 Basic Materials - 199
Atlantic Foods Oct
Group Limited 2010 Consumer Goods - 130
Attraction World Dec
Holdings Limited 2010 Basic Materials 165 124
Beckford Capital May
Limited 2010 Consumer Goods 160 160
Blackford Capital May
Limited 2010 Consumer Goods - 200
Dec
Camwatch Limited 2010 Telecommunications 60 34
CHS Engineering Dec
Services Limited 2010 Basic Materials 152 114
Countcar Limited
(trading as Aberdeen
Tool and Rental Oct
Holdings Limited) 2010 Oil and Gas 42 24
Flexlife Group Oct
Limited 2010 Oil and Gas 199 134
Lawrence Recycling
& Waste Management Apr
Limited 2010 Basic Materials 54 36
Lemac No. 1 Limited
(trading as John Dec
McGavigans Limited) 2010 Consumer Goods 50 40
Riverdale Publishing Feb
Limited* 2010 Basic Materials 25 -
Staffa Capital Nov
Limited 2010 Consumer Goods - 200
TC Communications May
Holdings Limited 2010 Basic Materials 40 25
Torridon Capital Jan
Limited 2010 Financials 253 198
Tosca Penta
Investments Limited
(trading as esure Feb
Holdings Limited) 2010 Financials 88 87
Venmar Limited
(trading as XPD8 Jun
Solutions Limited) 2010 Oil and Gas 109 124
Others 4 -
Total Unlisted
investment 1,401 1,829
--------- -----------
Total 1,401 1,829
========= ===========
*The transfer to Riverdale was in settlement of a guarantee to support deferred consideration liabilities.
Maven Income and Growth VCT 4 has co-invested in some or all of the above transactions with Maven Income and Growth VCT, Maven Income and Growth VCT 2, Maven Income and Growth VCT 3, Talisman First Venture Capital Trust and Ortus VCT. The Company is expected to continue to co-invest with these as well as other Maven clients, which offers the advantage that in aggregate the funds are able to underwrite a wider range and larger size of transaction than would be the case on a stand-alone basis.
Portfolio Developments
Seven new substantial unlisted investments were added to the portfolio during the year:
-- Torridon Capital, the holding company of LitComp plc, a highly profitable specialist insurance business which has a market leading position in the rapidly expanding After the Event Insurance market, where Maven led one of the first public-to-private acquisitions by a mainstream VCT manager
-- esure, one of the largest and pioneering online providers of general and motor insurance in the UK, and with a portfolio of high profile insurance brands; Maven client funds participated in the syndicate which funded the acquisition from Lloyds Banking Group Plc
-- Venmar, the holding company for XPD8 Solutions, a highly profitable asset integrity business operating in a defensive sub-sector of the energy services industry, providing asset maintenance solutions to a blue-chip international customer base
-- Flexlife, an award winning flexible pipe specialist, which employs patented ultrasonic scanning technology to provide sub-sea asset integrity solutions to energy sector clients at a time when their global market places ever greater emphasis on maintaining critical infrastructure and sustained field production
-- Attraction World Holdings, which offers ticketing solutions to the worldwide travel sector, enjoys exclusive trading partnerships with key UK travel organisations and provides travel agents with integrated access to the ticketing systems of major global theme parks
-- CHS Engineering Services, a leading provider of condition monitoring and maintenance services to domestic and international airport terminal operators and major clients in the distribution and materials handling sector
-- McGavigans, a manufacturer and supplier of decorative assemblies and interior parts to global automotive manufacturers, with a significant share of the Western European market and a strategy to establish a low cost manufacturing operation in China, where it can leverage the overseas experience of its management team to serve the wider Asian markets.
In addition, repayments of loan stock were received from some of the investee companies as shown on the table on page 12.
In respect of AIM holdings, the Manager has continued its policy of structured exits. An overall net gain of GBP152,000 was achieved from this part of the portfolio, including the impact of a disposal where a security was written off the register, and instances where Maven had lost confidence in a specific holding or where a mandatory sale process or bid was in evidence. There was no effect on the NAV as realisations were achieved at close to carrying values.
Investments in the unlisted portfolio are generally trading well and increased valuations have been achieved where appropriate.
Outlook
The underlying investment portfolio has seen a significant diversification and improvement over the past two years, with an emphasis on identifying and investing in later stage private companies with attractive yield characteristics. There is significant demand for this type of asset by providers of alternative capital, and the market for private equity transactions has become more competitive notwithstanding the shortage of capital available from more traditional sources. In this operating environment Maven will leverage its UK network and experience to continue to construct a high quality and income producing portfolio of assets diversified across a range of sectors on behalf of its VCT client investors.
Realisations
Ordinary Share S Ordinary Share
Cost of Cost of
Date Complete/ shares Realised shares Realised
first Partial disposed Sales Gain/ disposed Sales Gain/
invested Exit of Proceeds Loss of Proceeds Loss
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------- ---------- --------- --------- --------- --------- --------- ---------
Unlisted
Ailsa Craig
Capital
Limited 2009 Partial - - - 179 179 -
Armannoch
Investments
Limited 2008 Complete 225 225 - 125 125 -
Atlantic
Foods Group
Limited 2008 Partial - - - 19 21 2
Cyclotech
Limited 2007 Complete - 10 10 - 5 5
Torridon
Capital
Limited 2010 Partial 150 150 - 110 110 -
Valkyrie
Capital
Limited 2008 Complete 225 225 - 125 125 -
Westway
Services
Limited 2009 Partial 18 18 - 18 18 -
618 628 10 576 583 7
--------- --------- --------- --------- --------- ---------
AIM
Animalcare
PLC 2008 Complete - - - 94 179 85
Avanti
Communications
Group PLC 2004 Complete 18 47 29 - - -
Brookwell
Limited 2008 Partial 4 2 (2) - - -
Melorio
PLC 2007 Complete 148 228 80 90 139 49
Mount
Engineering
PLC 2007 Complete 124 144 20 35 41 6
OPG Power
Ventures
PLC 2008 Partial 2 3 1 2 3 1
Software Radio
Technology
PLC 2005 Partial 127 175 48 - - -
Others 314 173 (141) 25 1 (24)
737 772 35 246 363 117
--------- --------- --------- --------- --------- ---------
Total 1,355 1,400 45 822 946 124
========= ========= ========= ========= ========= =========
Included in 'Others' is the legacy AIM security, Elevation Events, which was struck off the Register during the year resulting in a realised loss of GBP100,000. This had no effect on the NAV as a full provision had been made in earlier years.
INCOME STATEMENT
For the year ended 31 December
2010
Ordinary Shares S Ordinary Shares TOTAL
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------ -------- -------- -------- -------- -------- -------- -------- -------- --------
Gains on
investments 8 - 799 799 - 278 278 - 1,077 1,077
Income from
investments 2 229 - 229 121 - 121 350 - 350
Other income 2 - - - - - - - - -
Investment
management
fees 3 (14) (57) (71) (14) (55) (69) (28) (112) (140)
Other
expenses 4 (201) - (201) (122) - (122) (323) - (323)
-------------- ------ -------- -------- -------- -------- -------- -------- -------- -------- --------
Net Return on
ordinary
activities
before
taxation 14 742 756 (15) 223 208 (1) 965 964
Tax on
ordinary
activities 5 (1) 1 - - - - (1) 1 -
-------------- ------ -------- -------- --------
Return
attributable
to equity
shareholders 13 743 756 (15) 223 208 (2) 966 964
-------------- ------ -------- -------- -------- -------- -------- -------- -------- -------- --------
Earnings per
share
(pence) 0.2 9.0 9.2 (0.3) 4.5 4.2 (0.1) 13.5 13.4
-------------- ------ -------- -------- -------- -------- -------- -------- -------- -------- --------
A Statement of Total Recognised Gains and Losses has not been prepared,
as all gains and losses are
recognised in the Income Statement.
All items in the above statement are derived from continuing operations.
The Company has only one class of
business and derives its income from investments made in shares,
securities and bank deposits.
The total column of this statement is the Profit and Loss Account
of the Company.
RECONCILIATION OF MOVEMENTS IN
SHAREHOLDERS' FUNDS
For the year ended 31 December
2010
S Ordinary
Ordinary Shares Shares TOTAL
GBP'000 GBP'000 GBP'000
Opening Shareholders'
funds 6,996 4,693 11,689
Net return
for year 756 208 964
Net proceeds
of share issue 605 - 605
Repurchase
and cancellation
of shares (98) (26) (124)
Dividends paid
- revenue (42) (25) (67)
Dividends paid
- capital (253) (49) (302)
Closing Shareholders'
funds 7,964 4,801 12,765
--------------------------- ---------------- ----------- --------
INCOME STATEMENT
For the year ended 31 December 2009
Ordinary Shares S Ordinary Shares TOTAL
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------ ---------- -------- --------- -------- -------- -------- -------- -------- --------
Gains on
investments 8 - 459 459 - 56 56 - 515 515
Income from
investments 2 355 - 355 206 - 206 561 - 561
Other income 2 6 - 6 2 - 2 8 - 8
Investment
management
fees 3 (24) (95) (119) (16) (66) (82) (40) (161) (201)
Other
expenses 4 (127) - (127) (95) - (95) (222) - (222)
-------------- ------ ---------- -------- --------- -------- -------- -------- -------- -------- --------
Net Return on
ordinary
activities
before
taxation 210 364 574 97 (10) 87 307 354 661
Tax on
ordinary
activities 5 (42) 20 (22) (19) 14 (5) (61) 34 (27)
-------------- ------ ---------- -------- --------- -------- -------- --------
Return
attributable
to equity
shareholders 168 384 552 78 4 82 246 388 634
-------------- ------ ---------- -------- --------- -------- -------- -------- -------- -------- --------
Earnings per
share
(pence) 2.1 4.9 7.0 1.6 - 1.6 3.7 4.9 8.6
-------------- ------ ---------- -------- --------- -------- -------- -------- -------- -------- --------
A Statement of Total Recognised Gains and Losses has not been prepared,
as all gains and losses are
recognised in the Income Statement.
All items in the above statement are derived from continuing operations.
The Company has only one class of
business and derives its income from investments made in shares,
securities and bank deposits.
The total column of this statement is the Profit and Loss Account
of the Company.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS'
FUNDS
For the year ended 31 December
2009
S Ordinary
Ordinary Shares Shares TOTAL
GBP'000 GBP'000 GBP'000
Opening Shareholders'
funds 6,647 4,750 11,397
Net Return for year 552 82 634
Repurchase and cancellation
of shares (23) - (23)
Dividends paid -
revenue (180) (139) (319)
Dividends paid -
capital - - -
Closing Shareholders'
funds 6,996 4,693 11,689
--------------------------------- ---------------- ----------- --------
BALANCE SHEET
As at 31 December
2010
31 December 2010 31 December 2009
S S
Ordinary Ordinary Ordinary Ordinary
Shares Shares Total Shares Shares Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------ --------- --------- -------- --------- --------- --------
Fixed assets
Investments at
fair value
through
profit or
loss 8 6,956 4,002 10,958 6,156 2,841 8,997
Current assets
Debtors 10 167 78 245 163 65 228
Cash and
overnight
deposits 890 753 1,643 756 1,832 2,588
--------------- ------ --------- --------- -------- --------- --------- --------
1,057 831 1,888 919 1,897 2,816
Creditors:
amounts
falling due
within one
year 11 (49) (32) (81) (79) (45) (124)
--------- --------- -------- --------- --------- --------
Net current
assets 1,008 799 1,807 840 1,852 2,692
--------------- ------ --------- --------- -------- --------- --------- --------
Total net
assets 7,964 4,801 12,765 6,996 4,693 11,689
--------------- ------ --------- --------- -------- --------- --------- --------
Capital and
reserves
Called up
share capital 12 832 494 1,326 780 497 1,277
Share premium 13 538 4,227 4,765 - 4,227 4,227
Distributable
reserve 13 6,539 (26) 6,513 6,637 - 6,637
Capital
Redemption
Reserve 13 19 3 22 4 - 4
Capital
reserves -
realised 13 1,085 106 1,191 1,349 86 1,435
Capital
reserves -
unrealised 13 (1,236) (38) (1,274) (1,990) (192) (2,182)
Revenue
reserve 13 187 35 222 216 75 291
Net assets
attributable
to ordinary
Shareholders 7,964 4,801 12,765 6,996 4,693 11,689
--------------- ------ --------- --------- -------- --------- --------- --------
Net asset
value per
ordinary
share (pence) 14 95.7 97.3 89.7 94.4
--------------- ------ --------- --------- -------- --------- --------- --------
The Financial Statements of Maven Income and Growth VCT 4
PLC, registered number 272568, were approved and authorised
for issue by the Board of Directors and were signed on its
behalf by:
Ian Cormack
Director
11 March 2011
CASH FLOW STATEMENT
For the year ended 31
December 2010
Year to 31 December Year to 31 December
2010 2009
S S
Ordinary Ordinary Ordinary Ordinary
Shares Shares Total Shares Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- --------- -------- --------- --------- --------
Operating
activities
Investment
income received 226 109 335 397 268 665
Deposit interest
received - - - 8 3 11
Investment
management
fees paid (82) (77) (159) (90) (62) (152)
Secretarial
fees paid (48) (33) (81) (34) (25) (59)
Cash paid
to and on
behalf of
Directors (39) (26) (65) (38) (27) (65)
Other cash
payments (111) (63) (174) (52) (37) (89)
--------------------- --------- --------- -------- --------- --------- --------
Net cash
(outflow)/inflow
from operating
activities (54) (90) (144) 191 120 311
Taxation
Corporation
tax (22) (5) (27) (12) (15) (27)
Financial
investment
Purchase of
investments (1,401) (1,829) (3,230) (1,617) (1,028) (2,645)
Sale of investments 1,399 945 2,344 2,121 2,804 4,925
--------------------- --------- --------- -------- --------- --------- --------
Net cash
(outflow)/inflow
from financial
investment (2) (884) (886) 504 1,776 2,280
Equity dividends
paid (295) (74) (369) (180) (139) (319)
--------------------- --------- --------- -------- --------- --------- --------
Net cash
(outflow)/inflow
before financing (373) (1,053) (1,426) 503 1,742 2,245
Financing
Issue of Ordinary
Shares 605 - 605 - - -
Repurchase
of Ordinary
Shares (98) (26) (124) (23) - (23)
Net cash
inflow/(outflow)
from financing 507 (26) 481 (23) - (23)
--------------------- --------- --------- --------- ---------
Increase/(decrease)
in cash 134 (1,079) (945) 480 1,742 2,222
--------------------- --------- --------- -------- --------- --------- --------
Principal risks and uncertainties
The principal risks facing the Company relate to its investment
activities and include market price, interest rate, liquidity and
credit risks. An explanation of these risks and how they are managed
is contained in Note 18 to the financial statements on pages 50
to 53. Additional risks faced by the Company, and the mitigation
approach adopted by the Board, are as follows:
(i) investment objective: The Board's aim is to maximise absolute
returns to shareholders while managing risk by ensuring an appropriate
diversification of investments
(ii) investment policy: inappropriate stock selection, leading to
underperformance in absolute and relative terms, is a risk which
the Manager mitigates by operating within investment guidelines
and regularly monitoring performance against the peer group
(iii) discount volatility: due to lack of liquidity in the secondary
market, venture capital trust shares tend to trade at discounts
to net asset values which the Board seeks to manage by making purchases
of shares in the market from time to time
(iv) regulatory risk: the Company operates in a complex regulatory
environment and faces a number of related risks. A breach of section
274 of the Income Tax Act 2007 could result in the Company's being
subject to capital gains tax on the sale of its investments.
Serious breach of other regulations, such as the UKLA Listing rules
and the Companies Act 2006, could lead to suspension from the Stock
Exchange and reputational damage. The board receives quarterly reports
from the Manager in order to monitor compliance with regulations.
The Board considers all risks and the measures in place to manage
them and monitors their management twice each year.
Derivatives and other financial instruments:
The Company's financial instruments comprise equity and fixed interest
investments, cash balances and debtors and creditors that arise
directly from its operations, for example, in respect of sales and
purchases awaiting settlement, and debtors for accrued income. The
Company holds financial assets in accordance with its investment
policy of investing mainly in a portfolio of VCT qualifying unquoted
an AIM quoted securities. The Company may not enter into derivative
transactions in the form of forward foreign currency contracts,
futures and options without the written permission of the Directors.
No derivative transactions were entered into during the period.
The main risks the Company faces from its financial instruments
are (i) market price risk, being the risk that the value of investment
holdings will fluctuate as a result of changes in market prices
caused by factors other than interest rates, (ii) interest rate
risk, (iii) liquidity risk and (iv) credit risk. In line with the
Company's investment objective, the portfolio comprises only sterling
currency securities and therefore has no direct exposure to foreign
currency risk.
The Manager's policies for managing these risks are summarised below
and have been applied throughout the period. The numerical disclosures
below exclude short-term debtors and creditors which are included
in the balance sheet at fair value.
Market price risk
The Company's investment portfolio is exposed to market price fluctuations,
which are monitored by the Manager in pursuance of the investment
objective as set out on page 19. Adherence to investment guidelines
and to investment and borrowing policies set out in the management
agreement mitigates the risk of excessive exposure to any particular
type of security or issuer. These powers and guidelines include
the requirement to invest in a minimum of 30 companies across a
range of industrial and service sectors at varying stages of development,
to closely monitor the progress of these companies and to appoint
a non-executive director to the board of each company. Further information
on the investment portfolio (including sector concentration and
deal type analysis) is set out in the Analysis of Unlisted and AIM
Portfolio, Investment Manager's Review, Summary of Investment Changes,
Investment Portfolio Summary and Largest Unlisted and AIM Investments
on pages 9 to 12.
Interest rate risk
Ordinary Shares as at 31 December 2010:
The unlisted fixed interest assets have a weighted average life
of 2.8 years (2009: 2.9 years) and weighted average interest rate
of 8.45% (2009: 8.34%). The non-interest bearing assets represent
the equity element of the portfolio. All assets and liabilities
of the fund are included in the balance sheet at fair value.
It is the Directors' opinion that the carrying amounts of these
financial assets represent the maximum credit risk exposure at the
balance sheet date.
The interest rate which determines the interest received on cash
balances is the bank base rate.
S Ordinary Shares at 31 December 2010:
The unlisted fixed interest assets have a weighted average life
of 3.2 years (2009: 3.3 years) and a weighted average interest rate
of 8.20% (2009: 8.25%). The non-interest bearing assets represent
the equity element of the portfolio. All assets and liabilities
of the fund are included in the balance sheet at fair value.
It is the Directors opinion that the carrying amounts of these financial assets represent the maximum credit risk exposure at the balance sheet date.
The interest rate which determines the interest received on cash
balances is the bank base rate.
Liquidity risk
Unlisted investments may not be readily realisable and therefore
a portfolio of listed assets and cash is held to offset this liquidity
risk. Note 8 details the three-tier hierarchy of inputs used as
at 31 December 2010 in valuing the Company's investments carried
at fair value.
The company, generally, does not hold significant cash balances
and any cash held is with reputable banks with high quality external
credit ratings.
Credit risk
This is the risk that a counterparty to a financial instrument will
fail to discharge an obligation or commitment that it has entered
into with the Company.
All fixed interest assets which are traded on a recognised exchange
and all the Company's cash balances are held by JP Morgan Chase
(JPM), the Company's custodian. Should the credit quality or the
financial position of JPM deteriorate significantly the Manager
will move these assets to another financial institution.
The manager evaluates credit risk on unlisted debt securities and
financial commitments and guarantees prior to investment, and as
part of the ongoing monitoring of investments. In doing this, it
takes into account the extent and quality of any security held.
Typically, unlisted debt securities have a fixed charge over the
assets of the investee company in order to mitigate the gross credit
risk. The manager receives management accounts from investee companies,
and members of the investment management team sit on the boards
of investee companies; this allows the close identification, monitoring
and management of investment specific credit risk.
There were no significant concentrations of credit risk to counterparties
at 31 December 2010 or 31 December 2009.
Price risk sensitivity
The following details the Company's sensitivity to a 10% increase
or decrease in the market prices of listed or AIM/PLUS quoted securities,
with 10% being the Manager's assessment of a reasonable possible
change in market prices.
At 31 December 2010, if market prices of AIM/PLUS quoted securities
had been 10% higher or lower and with all other variables held constant,
the increase or decrease in net assets attributable to Ordinary
Shareholders for the year would have been GBP71,000 (2009: GBP123,516)
due to the change on valuation of financial assets at fair value
through profit or loss.
At 31 December 2010, if market prices of listed or AIM/PLUS quoted
securities had been 10% higher or lower and with all other variables
held constant, the increase or decrease in net assets attributable
to S Ordinary Shareholders for the year would have been GBP16,200
(2009: GBP52,200) due to the change on valuation of financial assets
at fair value through profit or loss.
At 31 December 2010, 78.4% (2009: 70.3%) comprised investments in
unquoted companies held at fair value attributable to Ordinary Shareholders.
The valuation methods used by the Company include cost and realisable
value. Therefore, it is not considered meaningful to provide a sensitivity
analysis on the net asset position and total return for the year
due to the fact any such movements would be immaterial to users
of financial statements.
At 31 December 2010, 79.9% (2009: 49.4%) comprised investments in
unquoted companies held at fair value attributable to S Ordinary
Shareholders. The valuation methods used by the Company include
cost and realisable value. Therefore, it is not considered meaningful
to provide a sensitivity analysis on the net asset position and
total return for the year due to the fact any such movements would
be immaterial to users of financial statements.
Statement of Directors' Responsibility in Respect of the Annual
Financial Report
The directors are responsible for preparing the Annual Report, Directors'
Remuneration Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements
for each financial year. Under that law the directors have elected
to prepare the financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law). The financial statements are required
by law to give a true and fair view of the state of affairs of the
company and of the net return of the company for that period. In
preparing these financial statements, the directors are required
to:
-- select suitable accounting policies and then apply them consistently
-- make judgments and estimates that are reasonable and prudent
-- state whether applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in the
financial statements
-- prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the company will continue in
business.
The directors are responsible for keeping proper accounting records
that disclose with reasonable accuracy at any time the financial
position of the company and enable them to ensure that the financial
statements comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the company's
website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation
in other jurisdictions.
Responsibility of the Directors in respect of the Annual Financial
Report
We confirm that, to the best of our knowledge, the financial statements,
prepared in accordance with the applicable set of accounting standards
and set out on pages 35 to 53, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
company; and the Directors' Report, set out on pages 20 to 29, includes
a fair review of the developments and performance of the business
and the position of the Company together with a description of the
principal risks and uncertainties that they face
Notes
1 Accounting Policies - UK Generally Accepted Accounting Practice
(a) Basis of preparation
The Financial Statements have been prepared under the historical
cost convention modified to include the revaluation of investments
and in accordance with the Statement of Recommended Practice
'Financial Statements of Investment Trust Companies' (the SORP)
issued in January 2009.
(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 fixed income not expected to be received.
Interest receivable from cash and short term deposits and interest
payable are accrued to the end of the year.
(c) Expenses
All expenses are accounted for on an accruals basis and charged
to the income statement. Expenses are charged through the revenue
account except as follows:
- expenses which are incidental to the acquisition and disposal
of an investment are charged to capital; and
- expenses are charged to realised capital reserves where a connection
with the maintenance or enhancement of the value of the investments
can be demonstrated. In this respect the investment management
fee has been allocated 20% to revenue and 80% to realised capital
reserves to reflect the Company's investment policy and prospective
income and capital growth.
- share issue costs are charged to the share premium account.
- expenses are allocated between the original pool or the S share
pool depending on the nature of the expense.
(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.
(e) Investments
In valuing unlisted investments the Directors follow the criteria
set out below. These procedures comply with the revised International
Private Equity and Venture Capital Valuation Guidelines for the
valuation of private equity and venture capital investments.
Investments are recognised at their trade date and are designated
by the directors as fair value through profit and loss. At subsequent
reporting dates, investments are valued at fair value, which
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 Investments completed within the 12 months prior to the
reporting date and those at an early stage in their development,
fair value is determined using the Price of Recent Investment
Method, except that adjustments are made when there has been
a material change in the trading circumstances of the company
or a substantial movement in the relevant sector of the stock
market.
2. Whenever practical, recent investments will be valued by reference
to a material arm's length
transaction or a quoted price.
3. Mature companies are valued by applying a multiple to their
fully taxed prospective earnings to
determine the enterprise value of the company.
3.1 To obtain a valuation of the total ordinary share capital
held by management and
the institutional investors, the value of third party debt,
institutional loan stock, debentures and preference share capital is
deducted from the enterprise value. The effect of any performance
related mechanisms is taken into account when determining the value of
the ordinary share capital.
3.2 Preference shares, debentures and loan stock are valued using
the Price of Recent Investment Method. When a redemption premium
has accrued, this will 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. Where there is evidence of impairment, a provision may be
taken against the previous valuation of the investment.
5. In the absence of evidence of a deterioration, or strong defensible
evidence of an increase in value, the fair value is determined
to be that reported at the previous balance sheet date.
6. All unlisted investments are valued individually by the Manager.
The resultant valuations are subject to detailed scrutiny and
approval by the Directors of the Company.
7. In accordance with normal market practice, investments listed
on the Alternative Investment Market or a recognised stock exchange
are valued at their bid market 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
board levels listed below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (included quoted
prices for similar investments, interest rates, prepayment speeds,
credit risk etc).
Level 3 - significant unobservable inputs (including the Company's
own assumptions in determining the fair value of investments).
(g) 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.
Year ended Year ended
31 December 2010 31 December 2009
7 Return
per
ordinary
share
The
returns
per share
have been
based on
the S
following Ordinary S Ordinary Ordinary Ordinary
figures: Shares Shares Total Shares Shares Total
Weighted
average
number of
ordinary
shares 8,243,192 4,937,304 13,180,496 7,834,599 4,972,459 12,807,058
Revenue GBP13,000 (GBP15,000) - GBP168,000 GBP78,000 GBP246,000
return
Capital GBP743,000 GBP223,000 GBP966,000 GBP384,000 GBP4,000 GBP388,000
return
Total GBP756,000 GBP208,000 GBP966,000 GBP552,000 GBP82,000 GBP634,000
Return
----------- ----------- ------------ ----------- ----------- ---------- -----------
31 December 2010 31 December 2009
S Ordinary
Ordinary Shares Shares Ordinary Shares S Ordinary Shares
12 Share
capital Number GBP'000 Number GBP'000 Number GBP'000 Number GBP'000
At 31
December the
authorised
share
capital
comprised:
allotted,
issued and
fully paid:
Ordinary
shares of
10p each
Balance
brought
forward 7,798,296 780 4,972,459 497 7,835,163 784 4,972,459 497
Repurchased
and
cancelled
in year (152,065) (15) (36,450) (3) (36,867) (4) - -
------------- ---------- -------- ---------- -------- ---------- -------- ---------- --------
7,646,231 765 4,936,009 494 7,798,296 780 4,972,459 497
Issued
during the
period 676,899 67 - - - - - -
------------- ---------- -------- ---------- -------- ---------- -------- ---------- --------
8,323,130 832 4,936,009 494 7,798,296 780 4,972,459 497
============= ========== ======== ========== ======== ========== ======== ========== ========
Share Capital Capital Capital
premium Distributable reserves reserves Redemption Revenue
account reserve realised unrealised Reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
13 Reserves
Ordinary
Shares
At 1 January
2010 - 6,637 1,349 (1,990) 4 216
Gains on
sales of
investments - - 45 - - -
Net increase
in value of
investments - - - 754 - -
Investment
management
fees - - (57) - - -
Dividends
paid - - (253) - - (42)
Tax effect of
capital
items - - 1 - - -
Share Issue -
1 April 2010 398 - - - - -
Share Issue -
5 April 2010 85 - - - - -
Share Issue -
30 April
2010 55 - - - - -
Repurchase
and
cancellation
of shares - (98) - - 15 -
Net return on
ordinary
activities
after
taxation - - - - - 13
At 31
December
2010 538 6,539 1,085 (1,236) 19 187
-------------- -------- -------------- --------- ----------- ----------- --------
S Ordinary
Shares
At 1 January
2010 4,227 - 86 (192) - 75
Gains on
sales of
investments - - 124 - - -
Net increase
in value of
investments - - - 154 - -
Investment
management
fees - - (55) - - -
Dividends
paid - - (49) - - (25)
Tax effect of
capital
items - - - - - -
Repurchase
and
cancellation
of shares - (26) - - 3 -
Net return on
ordinary
activities
after
taxation - - - - - (15)
At 31
December
2010 4,227 (26) 106 (38) 3 35
-------------- -------- -------------- --------- ----------- ----------- --------
14 Net asset value per ordinary share
The net asset value per share and the net asset value attributable
to the ordinary shares at the period end
calculated in accordance with the Articles of Association were
as follows:
31 December 2010 31 December 2009
Ordinary Shares S Ordinary Shares Ordinary Shares S Ordinary Shares
Net Net Net Net
asset Net asset asset Net asset asset Net asset asset Net asset
value value value value
per value per value per value per value
share attributable share attributable share attributable share attributable
p GBP'000 p GBP'000 p GBP'000 p GBP'000
Ordinary
shares 95.7 7,964 97.3 4,801 89.7 6,996 94.4 4,693
---------- ------ ------------- ------ ------------- ------ ------------- ------ -------------
Other information
This announcement has been prepared on the same basis as the Annual Report and Financial Statements for the year ended 31 December 2010. The Annual Report and Financial Statements for the year ended 31 December 2010 will be filed with the Registrar of Companies and issued to Shareholders in due course. References to page numbers and notes to the financial statements are references to the Annual Report and Financial Statements for the year ended 31 December 2010.
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 2009 have been delivered to the Registrar of Companies and contained an audit report which was unqualified.
Copies of this announcement and of the Annual Report and Financial Statements for the year ended 31 December 2010 will be available at the registered office:149 St Vincent Street, Glasgow, G2 5NW, and on the Company's website at www.mavencp.com/migvct4.
By order of the Board
Maven Capital Partners UK LLP
Secretary
14 March 2011
ENDS
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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