Maven Income and Growth VCT 5 PLC Annual Financial Report (3232H)

TIDMMIG5

RNS Number : 3232H

Maven Income and Growth VCT 5 PLC

12 March 2018

Maven Income and Growth VCT 5 PLC

Final results for the year ended 30 November 2017

The Directors report the Company's financial results for the year ended 30 November 2017

Highlights for the Year

   --       NAV total return of 75.89p per share (2016: 71.67p) at the year end 

-- NAV at year end of 38.24p per share (2016: 38.92p) after payment of dividends totalling 4.90p per share during the year

   --       Annual dividend of 3.20p per share (2016: 2.65p) 
   --       AIM concentration 32.8% of net assets (2016: 30%) 
   --       Gains on investments GBP3,636,000 (2016: GBP311,000) 
   --       Net return on ordinary activities before taxation GBP3,212,000 (2016: GBP148,000) 
   --       Earnings per share 4.18p (2016: GBP0.19p) 

STRATEGIC REPORT

Chairman's Statement

On behalf of your Board, I am pleased to report on another year of positive performance by your Company, with NAV total return increasing by 5.89% to 75.89p per share. This continues the trend of consistent improvements in NAV total return since Maven was appointed as Manager in 2011. The key objective remains to improve Shareholder returns while at the same time rebalancing the portfolio towards private company investments and gradually reducing the exposure to AIM.

Full year distributions in respect of the financial year were 3.20p per share which represents a yield of 9.85%, based on the share price at the year end. The enhanced level of distributions in the current year was due to a build-up of distributable reserves, including the proceeds arising from a number of recent profitable realisations, and ensured that your Company remained compliant with the VCT regulations.

During the period under review your Company delivered further steady growth in Shareholder value against a backdrop of continuing economic uncertainty, due primarily to the ongoing negotiations regarding the UK's intended exit from the European Union (EU), together with an evolving regulatory environment. Whilst the framework under which VCTs operate is becoming increasingly complex, with further legislation announced in the 2017 Autumn Budget Statement, your Board believes that the Manager has the depth of experience and breadth of skills to ensure that your Company is responding appropriately. The growth in Shareholder value achieved during the period demonstrates the successful execution of the investment strategy.

The Board is pleased to report that the portfolio of investee companies has generally continued to trade well in the financial year, as can be seen from the detailed analysis in the Investment Manager's Review of the Annual Report. The positive performance achieved by a number of established private companies has enabled the valuations of these assets to be increased. It is encouraging to note that, after a number of years of exceptionally challenging market conditions, those portfolio companies with exposure to the oil & gas services sector are seeing an improvement, with financial performance showing an uplift over the comparative period in the prior year. The valuations of a number of these assets had previously been reduced in response to market conditions. The conservative valuation of these holdings will be maintained until there is evidence of a sustained market recovery. Elsewhere in the portfolio, there are a small number of investments that are operating behind plan, or where a market adjustment has impacted performance and, as a result, the valuations of these assets have been reduced.

The strategy remains to gradually realise the proportion of the portfolio invested in AIM, subject to suitable market conditions and meeting the regulatory requirements of the Company. During the year GBP1.28 million was realised through AIM disposals, though, this was offset by the appreciation of the AIM portfolio as a whole. As a result, there has been a slight increase in the amount of the portfolio invested in AIM relative to NAV. Reducing the exposure to AIM is partially restricted by a requirement to maintain your Company's VCT qualifying levels and therefore the Board and the Manager will continue to reduce exposure to this market as new private company investments are completed.

As detailed in the Investment Manager's Review, there has been a good level of new investment during the year, with the addition of eight, carefully selected, growth oriented companies to the portfolio. The pipeline of private company investment opportunities remains strong and is supported by the Manager's expanded nationwide office network, which is generating a regular supply of prospective investments. The Board is, however, aware of the challenges that the Manager is facing with regard to securing advance assurance from HM Revenue & Customs (HMRC) for prospective investments and notes that this has resulted in a small number of potential transactions being lost during the year due to slow response times.

The Directors are pleased to report on the profitable realisation of Crawford Scientific during the year, which achieved a total return of 4.5 times cost over the three-year investment period. An exit was achieved from SPS (EU) shortly after the period end, at a premium to carrying value. Given the maturing profile of a number of assets in the portfolio, the Board is aware that discussions are underway regarding a number of potential exits from other private equity portfolio companies, although there can be no certainty that these will lead to profitable realisations.

Following the introduction of the Finance (No. 2) Act 2015, the Directors believe it is important that Shareholders are aware of the longer term implications imposed by the new regulatory framework, including the forthcoming amendments of the Finance (No. 2) Bill 2017-19. The changes to the VCT rules enacted in November 2015 specifically prohibit participation in management buy-outs or acquisition based transactions. They also restrict the ability of VCTs to support older companies, including companies within the portfolio, unless certain conditions are met. VCT managers are thereby required to focus on the provision of development capital to younger or earlier stage companies which, given their relatively early stage of maturity, have a different risk profile. In addition, transaction structures are now required to contain a higher proportion of equity, where previously high levels of interest bearing debt was permitted. As the portfolio evolves, and a greater proportion of holdings are invested in earlier stage companies, there is likely to be a consequential impact on income levels. This could result in dividend payments being subject to variation in terms of quantum and timing, and may ultimately be driven by realisation activity and the requirement to maintain regulatory compliance with the VCT rules. The Board and the Manager will ensure that this further transition is managed carefully, in line with the investment objective.

Regulatory Developments

During the summer of 2017 the Patient Capital Review was formally extended to consider the effectiveness and value for money provided by the VCT and Enterprise Investment Scheme sectors. The Manager contributed to this consultation on behalf of its VCT clients and it was widely anticipated that, as a result of this review, the 2017 Autumn Budget Statement would include a number of amendments.

The Directors were encouraged that the measures announced in the 2017 Autumn Budget Statement were intended to preserve the attractive fundamentals of the VCT scheme, which continues to provide a valuable bridge between private capital and the UK SME sector. The availability of long-term patient capital in line with Government objectives, at what is an increasingly important time for the UK economy, gives comfort to small businesses and ensures that entrepreneurial companies can continue to access equity finance and allows investors to benefit from their success.

Whilst there were no changes to tax reliefs (or the minimum holding period for these reliefs) and VCT dividends will maintain their tax-free status, a number of less favourable changes were announced, some of which were anticipated. As expected, the focus is to continue to move towards supporting higher risk investments, and includes the introduction of a 'risk to capital' based test, certain sector exclusions and measures designed to assist the financing of knowledge-intensive companies. The percentage of funds that a VCT must hold in qualifying investments will increase from 70% to 80% for year ends beginning after 6 April 2019 (in the Company's case from 1 December 2019), with a shorter time period for the investment of newly raised funds. In order to assist with this, the add-back period on sales will be increased from six to twelve months. The loan stock element of any investment will now have to be unsecured with a potential cap on loan note coupon rates. The Finance (No. 2) Bill 2017-19 is expected to receive Royal Assent in the summer of 2018.

The Autumn Statement also announced that HMRC anticipates being able to enhance its approval process for advance assurance clearance during the early part of 2018. This is a welcome development as it should help improve the timescales for transaction approval, allowing VCT managers to continue to build their portfolios without unnecessary delay whilst complying with the new VCT qualifying requirements. The Board and the Manager will continue to consider the implications of the Autumn Budget Statement and take these developments into account when planning future strategy.

In January 2018 two major new pieces of legislation were introduced; the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation and the Second Markets in Financial Instruments Directive (MiFID II) came into force on 1 and 3 January 2018 respectively. PRIIPs required that a Key Information Document (KID) be published for the Company; the form and content of the KID is strictly prescribed and includes specific information on investment risks, performance and costs, which must be provided to all potential investors to enable them to compare the performance of different VCTs. With regard to MiFID II, the main practical change for the Company is the requirement for the Manager to report all transactions in quoted shares (for buy backs as well as those in underlying investments) to the FCA to assist in its continued efforts to combat market abuse.

The General Data Protection Regulation comes into force on 25 May 2018, replacing the Data Protection Act 1998. This regulation enforces the principle of 'privacy by design and by default' and enshrines new rights for individuals, including the right to be forgotten and to data portability. The Manager is currently working with the third parties that process Shareholders' personal data to ensure that their rights under the new regulation are respected.

Dividends

As previously noted, during the year to 30 November 2017, the Board considered it appropriate to declare an enhanced level of interim dividends to comply with the VCT regulations.

The first interim dividend in respect of the year ended 30 November 2017 of 2.00p per Ordinary Share comprising capital only, was paid on 15 September 2017 to Shareholders on the register at close of business on 25 August 2017. The second interim dividend of 1.20p per Ordinary Share, comprising 0.30p of revenue and 0.90p of capital, was paid on 30 November 2017 to Shareholders on the register at close of business on 3 November 2017. No final dividend is proposed and therefore this brings total distributions for the year to 3.20p per Ordinary Share, representing a yield of 9.85% based on a year-end closing mid-market price of 32.50p. The payment of dividends reduces the NAV of the Company by the total cost of the distribution.

Subsequent to the year end, on 8 March 2018 the Company announced an interim dividend in respect of the year ending 30 November 2018 of 3.70p per Ordinary Share payable on 13 April 2018 to Shareholders on the register on 16 March 2018.

Since the Company's launch, and after receipt of the three interim dividends noted above, Shareholders will have received 41.35p per share in tax-free dividends. Decisions on future distributions will take into consideration the availability of surplus revenue, the adequacy of reserves, the proceeds from any further realisations and the VCT qualifying level of the portfolio, all of which are kept under close review by the Board and the Manager. The move to support younger and earlier stage companies, as dictated by the new VCT investment rules, may result in less predictable capital gains and income flows, with future distributions likely to be subject to fluctuation.

Fund Raising

As your Company currently enjoys sufficient liquidity for new investment, the Board has elected not to raise further funds at present. However, this will be kept under close review, in conjunction with the wider strategic options for your Company's longer term growth.

Share Buy backs

Shareholders should be aware that the Board's primary objective is for the Company to retain sufficient liquid assets for making investments in line with its stated policy and for the continued payment of dividends. However, the Directors also acknowledge the need to maintain an orderly market in the Company's shares and have delegated authority to the Manager to buy back shares in the market for cancellation or to be held in treasury, subject always to such transactions being in the best interests of Shareholders.

It is intended that, subject to market conditions, available liquidity and the maintenance of the Company's VCT status, shares will be bought back at prices representing a discount of between 10% and 15% to the prevailing NAV per share.

During the year the Company bought back 650,000 Ordinary Shares (2016: 230,000 Ordinary Shares) and subsequent to the year end 783,500 Ordinary Shares were bought back. All buy backs were carried out within the 10% to 15% discount range referred to above. Subject to available cash resources, the Board will continue to instruct the buying back of shares in order to maintain this targeted discount level.

Annual General Meeting (AGM)

As Shareholders are aware, AGMs have been held in Glasgow and London in alternate years in order to allow a wide range of Shareholders the opportunity to meet the Directors and the Manager. The 2018 AGM will be held in the Glasgow office of Maven Capital Partners UK LLP on 24 April 2018, and the Notice of Annual General Meeting can be found in the Annual Report.

The Future

Your Board is encouraged by the progress achieved during the financial year where, against a backdrop of wider economic uncertainty, there has been further growth in line with the long-term investment objective. The changes introduced through the enactment of the revised VCT legislation in 2015 have had a significant impact on the operations of your Company. However, the Directors are satisfied that the Manager has successfully adapted to these changes and remains well-placed to adjust to the requirements of the forthcoming legislation.

During the new financial year the Board anticipates that there will be further growth of the portfolio through the addition of VCT qualifying private company holdings. Whilst these new investee companies will typically be younger and growth oriented, they also represent an opportunity to introduce dynamic, high growth assets to the portfolio. These companies will be carefully selected and offer the potential to generate enhanced returns over time as they reach maturity, allowing a more blended portfolio of AIM, later stage private equity and high growth companies to be constructed. In the meantime, the older investments completed prior to November 2015 are expected to continue to deliver growth and generate investment income to support Shareholder returns in the near term.

Allister Langlands

Chairman

9 March 2018

Business Report

This Business Report is intended to provide an overview of the strategy and business model of the Company as well as the key measures used by the Directors in overseeing its management. The Company is a venture capital trust which invests in accordance with the investment objective set out in this Business Report.

Investment Objective

The Company aims to achieve long-term capital appreciation and generate income for Shareholders. Maven Capital Partners UK LLP (Maven or the Manager) was appointed in February 2011 with a view to applying a new investment policy, as set out below, and changing the focus of the portfolio from AIM/NEX quoted companies to unquoted private company investments.

Business Model and Investment Policy

Under an investment policy approved by the Directors, the Company intends to achieve its objective by:

-- investing the majority of its funds in a diversified portfolio of shares and securities in smaller, unquoted UK companies and AIM/NEX quoted companies which meet the criteria for VCT qualifying investments and have strong growth potential;

-- investing no more than GBP1 million in any company in one year and no more than 15% of the Company's assets by cost in one business at any time; and

-- borrowing up to 15% of net asset value, if required and only on a selective basis, in pursuit of its investment strategy. The Board has no intention of approving any borrowing at this time.

Principal Risks and Uncertainties

The principal risks and uncertainties facing the Company are as follows:

Investment Risk

The majority 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 structured selection, monitoring and realisation process is applied. The Board reviews the investment portfolio with the Manager on a regular basis.

The Company manages and minimises investment risk by:

   --      diversifying across a large number of companies; 
   --      diversifying across a range of economic sectors; 
   --      actively and closely monitoring the progress of investee companies; 
   --      co-investing with other clients of the Manager; 

-- ensuring valuations of underlying investments are made accurately and fairly (see Notes to the Financial Statements 1(e) and 1(f) for further detail);

   --      taking steps to ensure that the share price discount is managed appropriately; and 

-- choosing and appointing an FCA authorised investment manager with the appropriate skills, experience and resources required to achieve the investment objectives above, with ongoing monitoring to ensure the Manager is performing in line with expectations.

Financial and Liquidity Risk

As most of the investments require a mid 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 investment opportunities. 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 is adapted so far as 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 regularly reviews the system of internal controls, both financial and non-financial, operated by the Company, Maven and other key third party outsourcers such as the Custodian and Registrar. These include controls designed to ensure that the Company's assets are safeguarded, that all records are complete and accurate and that the third parties have adequate controls in relation to the prevention of data protection and cyber security failings.

VCT Qualifying Status Risk

The Company operates in a complex regulatory environment and faces a number of related risks, including:

-- becoming subject to capital gains tax on the sale of its investments as a result of a breach of Section 274 of the Income Tax Act 2007;

-- loss of VCT status and the consequential 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 the EU State Aid Rules incorporated by the Finance (No. 2) Act 2015, and in the summer of 2018, the Finance (No. 2) Bill 2017-19.

The Company 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 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 Association of Investment Companies (AIC) and the British Venture Capital Association (BVCA).

The Company has retained Philip Hare & Associates LLP as VCT adviser.

Breaches of other regulations, including but not limited to the Companies Act 2006, the FCA Listing Rules, the FCA Disclosure Guidance and Transparency Rules or the Alternative Investment Fund Managers Directive (the AIFMD), could lead to a number of detrimental outcomes and reputational damage. Breaches of controls by service providers to the Company could also lead to reputational damage or loss.

The AIFMD, which regulates the management of alternative investment funds, including VCTs, introduced a new authorisation and supervisory regime for all investment companies in the EU. The Company is approved by the FCA as an internally managed small registered UK AIFM under the AIFMD.

The Company is also required to comply with tax legislation under the Foreign Account Tax Compliance Act and the Common Reporting Standard. The Company has appointed Link Asset Services (formerly Capita Asset Services) to act on its behalf to report annually to HMRC and ensure compliance with this legislation.

Political Risk

In a referendum held on 23 June 2016, the UK voted to leave the EU (a process informally known as "Brexit"). The formal process of implementing this decision exists in Article 50 of the Lisbon Treaty which was invoked on 29 March 2017. The full political, economic and legal consequences of the referendum vote are not yet known. It is possible that investments in the UK may be more difficult to value and assess for suitability of risk, harder to buy or sell and may be subject to greater or more frequent rises and falls in value. In the longer term there is likely to be a period of uncertainty as the UK seeks to negotiate its exit from the EU. The UK's laws and regulations concerning funds may in future diverge from those of the EU. This may lead to changes in the operation of the Company or the rights of investors in the territories in which the shares of the Company may be promoted and sold.

The Board regularly reviews the political situation, together with any associated changes to the economic, regulatory and legislative environment, 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 contained in Note 16 to the Financial Statements.

Statement of Compliance with Investment Policy

The Company is adhering to its stated investment policy and managing the risks arising from it. This can be seen in various tables and charts throughout this Annual Report, from information provided in the Chairman's Statement and in the Investment Manager's Review. A review of the Company's business, its position as at 30 November 2017 and its performance during the year then ended is included in the Chairman's Statement, which also includes an overview of the Company's business model and strategy.

The management of the investment portfolio has been delegated to Maven, which also provides company secretarial, administrative and financial management services to the Company. The Board is satisfied with the depth and breadth of the Manager's resources and its network of offices which supply new deals and enable it to monitor the geographically widespread portfolio of companies effectively.

The Investment Portfolio Summary in the Annual Report discloses the investments in the portfolio and the degree of co-investment with other clients of the Manager. The tabular analysis of the unlisted and quoted portfolio in the annual report shows that the portfolio is diversified across a variety of industry sectors and deal types. The level of VCT qualifying investment is monitored by the Manager on a daily basis and reported to the Risk Committee quarterly.

Key Performance Indicators

At each Board Meeting the Directors consider a number of Alternative Performance Measures (APMs) to assess the Company's success in achieving its objectives, and these also enable Shareholders and prospective investors to gain an understanding of its business. The key performance indicators are as follows:

   --     NAV total return; 
   --     cumulative dividends paid; 
   --     share price discount to NAV; 

-- the progress being made on the transition of the legacy AIM portfolio to one focused on new unquoted investments;

   --     investment income; and 
   --     operational expenses. 

The NAV total return is a measure of Shareholder value that includes both the current NAV per share and the sum of dividends paid to date. Cumulative dividends paid is the total amount of both capital and income distributions paid since the launch of the Company. The Directors seek to pay dividends to comply with the VCT rules taking account of the level of distributable reserves, profitable realisations in each accounting period and the Company's future cash flow projections. The share price discount to NAV is the percentage by which the mid-market price of an investment is lower than the net asset value per share. A historical record of these measures is shown in the Financial Highlights in the Annual Report and the profile of the portfolio is reflected in the Summary of Investment Changes in the Annual Report. Definitions of these APMs can be found in the Glossary in the Annual Report. As referred to in the Chairman's Statement, the strategy remains to realise the element of the portfolio invested in AIM, subject to suitable market conditions and meeting the regulatory requirements of the Company and provided that at all times the Company's VCT qualifying levels are maintained. 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.

There is no meaningful VCT index against which to compare the financial performance of the Company but, for reporting to the Board and Shareholders, the Manager uses comparisons with appropriate indices. The Directors also consider non-financial performance measures such as the flow of investment proposals and the Company's ranking within the VCT sector. In addition, the Directors consider economic, regulatory and political trends and factors that may impact on the Company's future development and performance.

Valuation Process

Investments held by Maven Income and Growth VCT 5 PLC in unquoted companies are valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines. Investments quoted or traded on a recognised stock exchange, including AIM, are valued at their bid prices.

Share Buy backs

The Board will seek the necessary Shareholder authority to continue to conduct share buy backs under appropriate circumstances.

Employee, Environmental and Human Rights Policy

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. The Company has no employees and, accordingly, has no requirement to report separately on employment matters. The management of the portfolio is undertaken by the Manager through members of its portfolio management team. The Manager engages with the Company's underlying investee companies in relation to their corporate governance practices and in developing their policies on social, community and environmental matters and further information may be found in the Statement of Corporate Governance in the Annual Report. 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.

Auditor

The Company's 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 Manager intend to maintain the policies set out above for the year ending 30 November 2018 as it is believed that these are in the best interests of Shareholders.

Approval

The Business Report, and the Strategic Report as a whole, was approved by the Board of Directors and signed on its behalf by:

Allister Langlands

Director

9 March 2018

Income Statement

For the Year Ended 30 November 2017

 
                                  Year ended 30 November        Year ended 30 November 
                                           2017                          2016 
                                Revenue   Capital     Total   Revenue   Capital     Total 
                                GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
-----------------------------  --------  --------  --------  --------  --------  -------- 
Gains on investments                  -     3,636     3,636         -       311       311 
Income from investments             770         -       770       779         -       779 
Other income                         11         -        11         3         -         3 
Investment management 
 fees                             (232)     (696)     (928)     (162)     (488)     (650) 
Other expenses                    (277)         -     (277)     (295)         -     (295) 
-----------------------------  --------  --------  --------  --------  --------  -------- 
Net return on ordinary 
 activities                         272     2,940     3,212       325     (177)       148 
before taxation 
Tax on ordinary activities         (20)        20         -      (57)        57         - 
-----------------------------  --------  --------  --------  --------  --------  -------- 
Return attributable 
 to Equity Shareholders             252     2,960     3,212       268     (120)       148 
-----------------------------  --------  --------  --------  --------  --------  -------- 
 
  Earnings per share (pence)       0.33      3.85      4.18      0.35    (0.16)      0.19 
-----------------------------  --------  --------  --------  --------  --------  -------- 
 
 

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 30 November 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 30 November 
 2016                7,711     8,816   (21,537)      (5,539)          38,137        3,568    (1,145)     30,011 
Net return               -         -      1,643        1,317               -            -        252      3,212 
Dividends paid           -         -    (3,382)            -               -            -      (384)    (3,766) 
Repurchase and 
 cancellation 
 of shares            (65)         -          -            -           (219)           65          -      (219) 
---------------  ---------  --------  ---------  -----------  --------------  -----------  ---------  --------- 
At 30 November 
 2017                7,646     8,816   (23,276)      (4,222)          37,918        3,633    (1,277)     29,238 
---------------  ---------  --------  ---------  -----------  --------------  -----------  ---------  --------- 
 

For the year ended 30 November 2016

 
                              Share    Capital      Capital         Special      Capital 
                    Share   premium    reserve      reserve   distributable   redemption   Revenue 
                  capital   account   realised   unrealised         reserve      reserve   reserve     Total 
                  GBP'000   GBP'000    GBP'000      GBP'000         GBP'000      GBP'000   GBP'000   GBP'000 
---------------  --------  --------  ---------  -----------  --------------  -----------  --------  -------- 
At 30 November 
 2015               7,734     8,816   (20,515)      (4,663)          38,219        3,545   (1,104)    32,032 
Net return              -         -        756        (876)               -            -       268       148 
Dividends paid          -         -    (1,778)            -               -            -     (309)   (2,087) 
Repurchase and 
 cancellation 
 of shares           (23)         -          -            -            (82)           23         -      (82) 
---------------  --------  --------  ---------  -----------  --------------  -----------  --------  -------- 
At 30 November 
 2016               7,711     8,816   (21,537)      (5,539)          38,137        3,568   (1,145)    30,011 
---------------  --------  --------  ---------  -----------  --------------  -----------  --------  -------- 
 

The accompanying Notes are an integral part of the Financial Statements.

Balance Sheet

As at 30 November 2017

 
                               30 November  30 November 
                                      2017         2016 
                                   GBP'000      GBP'000 
-----------------------------  -----------  ----------- 
Fixed assets 
Investments at fair value 
 through profit or loss             23,141       26,077 
 
  Current assets 
Debtors                                321          210 
Cash                                 6,331        4,103 
-----------------------------  -----------  ----------- 
                                     6,652        4,313 
Creditors 
Amounts falling due within 
 one year                            (555)        (379) 
-----------------------------  -----------  ----------- 
Net current assets                   6,097        3,934 
-----------------------------  -----------  ----------- 
Net assets                          29,238       30,011 
-----------------------------  -----------  ----------- 
 
  Capital and reserves 
Called up share capital              7,646        7,711 
Share premium account                8,816        8,816 
Capital reserve - realised        (23,276)     (21,537) 
Capital reserve - unrealised       (4,222)      (5,539) 
Special distributable 
 reserve                            37,918       38,137 
Capital redemption reserve           3,633        3,568 
Revenue reserve                    (1,277)      (1,145) 
-----------------------------  -----------  ----------- 
Net assets attributable 
 to Ordinary Shareholders           29,238       30,011 
-----------------------------  -----------  ----------- 
Net asset value per Ordinary 
 Share (pence)                       38.24        38.92 
-----------------------------  -----------  ----------- 
 

The Financial Statements of Maven Income and Growth VCT 5 PLC, registered number 4084875, were approved and authorised for issue by the Board of Directors on 9 March 2018 and were signed on its behalf by:

Allister Langlands

Director

The accompanying Notes are an integral part of the Financial Statements.

Cash Flow Statement

For the Year Ended 30 November 2017

 
                              Year ended 30 November  Year ended 30 November 
                                                2017                    2016 
                                             GBP'000                 GBP'000 
Net cash flows from 
 operating activities                          (927)                 (1,100) 
Cash flows from investing 
 activities 
Investment income received                       664                     742 
Deposit interest received                         11                       3 
Purchase of investments                      (2,452)                (10,478) 
Sale of investments                            8,836                  15,388 
----------------------------  ----------------------  ---------------------- 
Net cash flows from 
 investing activities                          7,059                   5,655 
----------------------------  ----------------------  ---------------------- 
 
  Cash flows from financing 
  activities 
Equity dividends paid                        (3,766)                 (2,087) 
Repurchase of Ordinary 

 Shares                                        (138)                    (82) 
----------------------------  ----------------------  ---------------------- 
Net cash flows from 
 financing activities                        (3,904)                 (2,169) 
----------------------------  ----------------------  ---------------------- 
 
Net increase in cash                           2,228                   2,386 
----------------------------  ----------------------  ---------------------- 
 
  Cash at beginning of 
  year                                         4,103                   1,717 
Cash at end of year                            6,331                   4,103 
 

The accompanying Notes are an integral part of the Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

For the Year Ended 30 November 2017

Accounting Policies

   (a)   Basis of preparation 

The Financial Statements have been prepared under the historical cost convention, as modified by the revaluation of investments, and in accordance with FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland, and in accordance with the Statement of Recommended Practice for Investment Trust Companies and Venture Capital Trusts ('the SORP') issued by the Association of Investment Companies ('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 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 25% to revenue and 75% to realised capital reserves to reflect the Company's investment policy and prospective income and capital growth.

   (d)   Taxation 

Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the balance sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the Financial Statements which are capable of reversal in one or more subsequent periods.

Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

The tax effect of different items of income/gain and expenditure/loss is allocated between capital reserves and revenue account on the same basis as the particular item to which it relates using the Company's effective rate of tax for the period.

UK Corporation tax is provided at amounts expected to be paid/recovered using the tax rates and laws that have been enacted or substantively enacted at the balance sheet date.

   (e)   Investments 

In valuing unlisted investments the Directors follow the criteria set out below. These procedures comply with the revised International Private Equity and Venture Capital Valuation Guidelines (IPEVCV) for the valuation of private equity and venture capital investments. Investments are recognised at their trade date and are designated by the Directors as fair value through profit and loss. At subsequent reporting dates, investments are valued at fair value, which represents the Directors' view of the amount for which an asset could be exchanged between knowledgeable and 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.

4. In the absence of evidence of a deterioration, or strong defensible evidence of an increase in value, the fair value is determined to be that reported at the previous balance sheet date.

5. All unlisted investments are valued individually by the portfolio management team of Maven Capital Partners UK LLP. The resultant valuations are subject to detailed scrutiny and approval by the Directors of the Company.

6. In accordance with normal market practice, investments listed on 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 and explained in note 1(e) above.

In the opinion of the Board and the Manager, there are no critical accounting judgements.

Reserves

Share premium account

The share premium account represents the premium above nominal value received by the Company on issuing shares net of issue costs.

Capital reserves

Gains or losses on investments realised in the year that have been recognised in the Income Statement are transferred to the capital reserve realised account on disposal. Furthermore, any prior unrealised gains or losses on such investments are transferred from the capital reserve unrealised account to the capital reserve realised account on disposal.

Increases and decreases in the fair value of investments are recognised in the Income Statement and are then transferred to the capital reserve unrealised account. The capital reserve realised account also represents capital dividends, capital investment management fees and the tax effect of capital items.

Special distributable reserve

The total cost to the Company of the repurchase and cancellation of shares is represented in the special distributable reserve account.

Capital redemption reserve

The nominal value of shares repurchased and cancelled is represented in the capital redemption reserve.

Revenue reserve

The revenue reserve represents accumulated profits retained by the Company that have not been distributed to shareholders as a dividend.

Return per Ordinary Share

 
                                                Year ended                Year ended 
                                               30 November               30 November 
                                                      2017                      2016 
  -----------------------------  -------------------------  ------------------------ 
  The returns per share have 
  been 
  based on the following 
   figures: 
  Weighted average number 
   of Ordinary Shares                           76,934,019                77,277,480 
 
  Revenue return                                GBP252,000                GBP268,000 
  Capital return                              GBP2,960,000              (GBP120,000) 
  Total return                                GBP3,212,000                GBP148,000 
-------------------------------  -------------------------  ------------------------ 
 

Net asset value per Ordinary Share

The net asset value per Ordinary Share as at 30 November 2017 has been calculated using the number of Ordinary Shares in issue at that date of 76,461,087 (2016: 77,111,087).

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 30 November 2017 and for the year to that date;

-- the Directors' Report includes a fair review of the development and performance of the Company, together with a description of the principal risks and uncertainties that it faces; and

-- the Annual Report and Financial Statements taken as a whole is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company's position and performance, business model and strategy.

Other information

The Annual General Meeting will be held on Tuesday, 24 April 2018, commencing at 10.00am, at the offices of Maven Capital Partners UK LLP, 1st Floor Kintyre House, 205 West George Street, Glasgow, G2 2LW.

Copies of this announcement and copies of the Annual Report and Financial Statements for the year ended 30 November 2017, will be available to the public at the offices of Maven Capital Partners UK LLP, 1st Floor Kintyre House, 205 West George Street, Glasgow G2 2LW; at the registered office of the Company, Fifth Floor, 1-2 Royal Exchange Buildings, London EC3V 3LF and on the Company's website at www.mavencp.com/migvct5.

The Annual Report and Financial Statements for the year ended 30 November 2017 will be issued to Shareholders and filed with the Registrar of Companies in due course.

The financial information contained within this Announcement does not constitute the Company's statutory Financial Statements as defined in the Companies Act 2006. The statutory Financial Statements for the year ended 30 November 2016 have been delivered to the Registrar of Companies and contained an audit report which was unqualified and did not constitute statements under S498(2) or S498(3) of the Companies Act 2006.

Neither the content of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

The 2017 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

9 March 2018

This information is provided by RNS

The company news service from the London Stock Exchange

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March 12, 2018 03:00 ET (07:00 GMT)