Maven Income and Growth VCT 3 PLC Annual Financial Report (6699F)

TIDMMIG3

RNS Number : 6699F

Maven Income and Growth VCT 3 PLC

10 March 2020

Maven Income and Growth VCT 3 PLC

Final results for the year ended 30 November 2019

The Directors report the Company's financial results for the year ended 30 November 2019

Highlights

   --      NAV total return at the year end of 144.09p per share (2018: 143.66p) 

-- NAV at the year end of 59.92p per share (2018: 61.49p), after payment of the interim dividend of 2.00p per share

   --      Final dividend of 2.00p per share proposed 
   --      Offer for Subscription closed fully subscribed 

-- Deployment of GBP6.1 million in total, which includes investments in 16 new private and AIM quoted companies

-- Two profitable realisations completed during the year, with a further two full exits completing after the period end

Strategic Report

Chairman's Statement

Your Board is pleased to report on another year of progress, which has seen NAV total return increase to 144.09p per share. The Directors are encouraged by the strong investment rate that has been achieved during the year, with the acquisition of 16 new portfolio company holdings and the deployment of GBP6.1 million of investor capital. This is consistent with the strategy of building a large, broadly based portfolio of emerging and fast growing companies to support future growth in Shareholder value. There has also been notable exit activity, with the profitable realisation of two of the more established portfolio holdings. The Directors are cognisant of Shareholders' expectations with respect to dividend payments and, in recognition of the performance achieved in the financial year, are pleased to propose a final dividend of 2.00p per share, making the total dividend for the year 4.00p per share.

Following the success of the 2017/18 fund raising, and with healthy levels of liquidity, a key focus for the reporting period was to maintain momentum in the rate of investment, to ensure effective utilisation of the new capital in line with the regulatory timeframe for deployment. The Board is pleased to report that your Company completed its highest ever number of investments in a single year and comfortably achieved its required target. This successful outturn is testament to Maven's regionally focused investment approach, which has evolved over recent years to focus on early stage investment for its VCT clients. The Board remains committed to further expanding the portfolio to ensure that Shareholders have increasing exposure to a diverse range of attractive, fast growing private company and AIM quoted holdings that are capable of generating capital gains. The ability to invest across both markets is therefore an important differentiator, giving access to a wider range of companies and scope to realise profits earlier.

In order to continue to help increase the size and scale of your Company a top-up Offer for Subscription was launched on 13 November 2019 with the objective of raising up to GBP7.5 million of new capital. On 28 January 2020, the Board announced that the Company had received subscriptions up to its fundraising limit of GBP7.5 million and that the Offer was closed for further applications. On 5 February 2020, 11,065,572 new Ordinary Shares were allotted in respect of applications for the 2019/20 tax year. A further allotment in respect of applications for the 2020/21 tax year, will take place as soon as practicable after 6 April 2020.

This additional liquidity will enable your Company to continue to expand its portfolio through the acquisition of new investments across a wide range of sectors, whilst also supporting existing companies that are growing and require additional capital to deliver their plans. As the portfolio evolves and the proportion of early stage companies continues to increase, the ability to provide follow-on funding will become an increasingly important element of the investment strategy, as many of these companies will require several rounds of funding before they reach maturity and value is optimised. The Manager has, therefore, taken the cautious approach of making smaller initial investments, often as part of a syndicate with another VCT house or co-investment partner, as a means of managing portfolio risk. The Board recognises that the opportunity to generate significant capital gains from early-stage companies has to be balanced against their inherently different risk profile. Investing through a phased approach provides the opportunity to monitor commercial progress closely and continually assess the merits of investment before committing further financial support.

The Investment Manager's Review in the Annual Report contains a detailed analysis of portfolio developments and a summary of the investments completed during the year. Whilst political and economic uncertainty continued to dominate the UK's macro-economic outlook throughout the financial year, it is reassuring to report that the portfolio has not been discernibly impacted to date. The majority of the underlying investee companies have limited direct exposure to the EU, and those that do have been implementing contingency plans to mitigate any potential impact.

The continuing positive performance achieved by a number of the more established private companies has enabled the valuations of certain assets to be increased. Those companies that are at an earlier stage of development have generally performed in line with expectations, with most achieving growth in revenue over the previous year, which has, in a small number of cases, warranted uplifts to valuations. Inevitably, however, there are other investments that are operating behind plan or have experienced a market adjustment that has influenced performance and, as a result, the valuations of these assets have been reduced. In addition, one early stage portfolio company was unable to scale in line with the business plan and the value of that holding was fully written down before the business was placed into administration.

Two notable exits completed during the period. In June 2019, the holdings in Just Trays, the UK's leading designer and manufacturer of shower trays and accessories, and wind turbine blade maintenance specialist GEV were realised for total returns of 2.0 times and 2.7 times cost over their respective holding periods. The Board is aware that discussions are underway regarding further potential exits from other portfolio companies, although there can be no certainty that these will result in profitable realisations.

Dividends and Distributable Reserves

As Shareholders will be aware from recent Interim and Annual Reports, decisions on distributions take into consideration the availability of surplus revenue, the realisation of capital gains, the adequacy of distributable reserves and the VCT qualifying level, all of which are kept under close and regular review by the Board and the Manager. During 2017 and 2018, your Company made a number of enhanced dividend payments, which occurred outwith the normal dividend payment cycle and were the result of a build-up of distributable reserves and the requirement to maintain ongoing compliance with the VCT regulations.

Whilst your Company does not have a specific dividend target, the Board and the Manager recognise the importance of tax-free distributions to Shareholders and, following recent realisation activity, are pleased to propose a final dividend of 2.00p per Ordinary Share, in respect of the year ended 30 November 2019. The dividend will be paid on 17 April 2020 to Shareholders on the register at 20 March 2020. This will bring total distributions for the year to 4.00p per Ordinary Share, representing a yield of 7.34% based on the year end closing mid-market share price of 54.50p. Since the Company's launch, and after receipt of the proposed final dividend, Shareholders will have received 86.17p per share in tax-free distributions. It should be noted that the effect of paying dividends is to reduce the NAV of the Company by the total cost of the distribution.

At the Company's 2019 AGM, Shareholders approved a Special Resolution to cancel the share premium account and the capital redemption reserve, pursuant to the Companies Act 2006, to create a further pool of distributable reserves that could be used for future dividends or any other applicable purpose. On 4 December 2019, the Company announced that the High Court of Justice had confirmed the cancellation of the share premium account and the capital redemption reserve. The Court Order was registered by the Registrar of Companies on 19 November 2019, at which point the cancellation became effective.

Whilst the level of distributable reserves has increased, the Directors would like to remind Shareholders that as the portfolio evolves, and a greater proportion of holdings are invested in young companies with growth capital requirements, there are likely to be fluctuations in the quantum and timing of dividend payments. Distributions will be more closely linked to realisation activity and will also reflect the Company's requirement to maintain its VCT qualifying level. If larger distributions are required this could result in a reduction in NAV per share, however the Board considers this to be a tax efficient means of returning value to Shareholders whilst ensuring ongoing compliance with the requirements of the VCT legislation.

Dividend Investment Scheme (DIS)

Your Company operates a DIS, through which Shareholders may elect to have their dividend payments used to subscribe for new Ordinary Shares issued by the Company under the standing authority requested from Shareholders at AGMs. Shares issued under the DIS should qualify for VCT tax relief applicable for the tax year in which they are allotted, subject to an individual Shareholder's particular circumstances. If a Shareholder is in any doubt about the merits of participating in the DIS, or their own tax status, they should seek advice from a suitably qualified adviser.

Shareholders who wish to participate in the DIS in respect of future dividends, including the payment of the proposed final dividend, should ensure that a DIS mandate or CREST instruction, as appropriate, is received by the Registrar (Link Market Services) in advance of 3 April 2020, this being the next dividend election date. The mandate form, terms & conditions and full details of the scheme (including further details about tax considerations) are available from the Company's website at www.mavencp.com/migvct3. An election to participate in the DIS can also be made through the Registrar's share portal at www.signalshares.com.

Fund Raising

On 13 November 2019, the Directors of your Company, together with the board of Maven Income and Growth VCT 4 PLC, launched joint Offers for Subscription of new Ordinary Shares for up to GBP15 million in aggregate (GBP7.5 million for each company). Your company's Offer closed on 28 January 2020, fully subscribed.

The allotment of 11,065,572 new Ordinary Shares, in respect of the 2019/20 tax year, was made on 5 February 2020. The allotment for the 2020/21 tax year will take place as soon as practicable after 6 April 2020.

This additional liquidity will enable your Company to continue to expand the portfolio by investing in ambitious, growth focused private and AIM quoted companies that operate across a range of markets sectors, and are capable of generating capital gains. It will also ensure that existing portfolio companies can continue to be supported through follow-on funding where there is an ongoing business case and commercial traction that merits support. Furthermore, the funds raised will allow your Company to maintain its share buy-back policy, whilst also spreading costs over a wider asset base in line with the objective of maintaining a competitive total expense ratio for the benefit of all Shareholders.

Further details regarding the new Ordinary Shares issued under the Offer for Subscription can be found in Note 12 to the Financial Statements.

Share Buy-backs

Shareholders will be aware that a primary objective for the Board is to ensure that the Company retains sufficient liquidity 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, therefore, 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 5% and 10% to the prevailing NAV per share.

Regulatory Developments

Whilst the 2019 Budget did not introduce further amendments to the rules governing VCTs, a key focus for the financial year has been satisfying the requirements of the Finance Act 2018, which increased the threshold level of qualifying investments that a VCT must hold from 70% to 80%. The Directors are pleased to confirm that this was achieved ahead of 1 December 2019, being the date of compliance for your Company. The qualifying position will continue to be closely monitored by the Manager and reviewed by the Board on a regular basis.

In February 2019, the Association of Investment Companies (AIC) issued an updated version of the AIC Code of Corporate Governance (the AIC Code), reflecting the revised UK Corporate Governance Code (the UK Code), which was published in July 2018. Having considered the implications and reporting obligations under the revised Codes, and consistent with maintaining high standards of corporate governance, the Board has elected to adopt the AIC Code ahead of your Company's required application date, which is 30 November 2020 (being the end of the first accounting period beginning after 1 January 2019). Shareholders will note the inclusion of a number of additional disclosures in this Annual Report, reflecting application of the AIC Code. The notable changes to the revised AIC Code are highlighted in the statement of Corporate Governance in the Annual Report.

During the year, the Manager has been working towards the implementation of the Senior Managers and Certification Regime (SMCR) which, for solo regulated firms such as Maven, came into effect on 9 December 2019. The SMCR replaces the FCA's approved person regime and aims to increase transparency and accountability of processes and structures within FCA regulated entities, including Maven. Whilst the introduction of this regime will have no direct impact on the way in which your Company is managed or administered, the Board is pleased to note that all necessary requirements of the SMCR were achieved by Maven ahead of the application date.

AGM

The 2020 AGM will be held in the London office of Maven Capital Partners UK LLP on 8 April 2020 commencing at 12.00 noon. The Notice of Annual General Meeting can be found in the Annual Report.

The Future

During the reporting period your Company has made considerable progress in laying the foundations for future growth. Over the past two years the portfolio has experienced a significant level of expansion and diversification with the addition of 25 new private and AIM quoted investments, which complement and balance the portfolio of older, more mature investments. The Board anticipates that the recent strong level of investment activity will continue during the first half of the new financial year, and that a combination of building a larger asset base and raising further capital will leave your Company well positioned to generate positive Shareholder returns in the future.

Atul Devani

Chairman

10 March 2020

Business Report

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

Investment Objective

The Company aims to achieve long-term capital appreciation and generate income for Shareholders.

Business Model and Investment Policy

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 GBP1.25 million in any company in one year and no more than 15% of the Company's assets by cost in one business at any time; and

-- borrowing up to 15% of net asset value, if required and only on a selective basis, in pursuit of its investment strategy.

Principal and Emerging Risks and Uncertainties

The Board and the Audit & Risk Committee have an ongoing process for identifying, evaluating and monitoring the principal and emerging risks and uncertainties facing the Company. The Risk Register and Dashboard form key parts of the Company's risk management framework used to carry out a robust assessment of the risks, including a significant focus on the controls in place to mitigate them. The principal and emerging risks and uncertainties facing the Company are considered to be 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 attached to the investment portfolio as a whole by ensuring that a robust and structured selection, monitoring and realisation process is applied. The Board reviews the investment portfolio with the Manager on a regular basis.

The Company manages and minimises investment risk by:

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

-- ensuring valuations of underlying investments are made fairly and reasonably (see Notes to the Financial Statements 1(e), 1(f) and 16 for further details);

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

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

Internal Control Risk

The Board regularly reviews the system of internal controls, both financial and non-financial, operated by the Company, the Manager 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, all records are complete and accurate and that the third parties have adequate controls in place to prevent data protection and cyber security failings.

VCT Qualifying Status Risk

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

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

-- loss of VCT status and 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 serious breach of other regulations such as the FCA Listing Rules and the Companies Act 2006 (the Companies Act); and

-- increased investment restrictions resulting from the EU State Aid Rules incorporated by the Finance (No. 2) Act 2015 and the Finance Act 2018.

The Board works closely with the Manager to ensure compliance with all applicable and upcoming legislation, such that VCT qualifying status is maintained. Further information on the management of this risk is detailed under other headings in this Business Report.

Legislative and Regulatory Risk

The Directors strive to maintain a good understanding of the changing regulatory agenda and consider emerging issues so that appropriate changes can be implemented and developed in good time. 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 AIC and the British Venture Capital Association (BVCA).

The Company has retained Philip Hare & Associates LLP as its principal VCT adviser and also uses the services of a number of other VCT advisers on a transactional basis.

Breaches of other regulations including, but not limited to, the Companies Act, the FCA Listing Rules, the FCA Disclosure Guidance and Transparency Rules, the GDPR, 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 loss or damage.

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

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

Political Risk

The full political, economic and legal consequences of the UK leaving the EU 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 ongoing relationship with the EU and other global trade partners.

In the future, UK laws and regulations, including those relating to investment companies and AIFMs, may diverge from those of the EU. This may lead to changes in the operation of the Company, the rights of investors, or the list of territories in which the shares of the Company can be promoted or sold.

The Board regularly reviews the political situation, together with any associated changes to the economic, regulatory and legislative environment, in order to ensure that any risks are mitigated as effectively as possible.

Climate Change and Social Responsibility Risk

The Board recognises that climate change is an important emerging risk that all companies should take into consideration within their strategic planning. As referred to elsewhere in this Strategic Report and in the Statement of Corporate Governance, the Company has little direct impact on environmental issues. However, the Company has introduced measures to reduce the cost and environmental impact of the production and circulation of Shareholder documentation such as the annual and interim reports. This has resulted in a significant reduction in the number of paper copies being printed and posted, with fewer than 10% of Shareholders now receiving printed reports.

The Board is also aware that the Manager continues to take into account environmental, social and governance matters when considering investment proposals. VCTs in general are regarded as supporting small and medium sized enterprises, which helps to create local employment across a range of UK geographical regions.

Other Risks

Governance Risk

The Directors are aware that an ineffective Board could have a negative impact on the Company and its Shareholders. The Board recognises the importance of effective leadership and board composition, and this is ensured by completing an annual evaluation process, with action taken if required.

Management Risk

The Directors are aware of the risk that investment opportunities could fail, or the management of the VCT could breach the Management and Administration Deed or regulatory parameters, due to lack of knowledge and/or experience of the investment professionals acting on behalf of the Company. To manage this risk, the Board has appointed Maven as investment manager, as it employs skilled professionals with the required VCT knowledge and experience. In addition, the Board takes comfort that the Manager's controls have been updated to ensure compliance with the SMCR.

The Directors are also mindful of the impact that the loss of the Manager's key employees could have on both investment opportunities that may be lost or existing investments that may fail. The Board is reassured by the Manager's approach to incentivising staff and ensuring that adequate notice periods are included in all contracts of employment.

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 investment trusts in order to finance any new or follow-on 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, which can be impacted during times of geopolitical uncertainty and fluctuating markets. 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.

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 the 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 2019 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 nationwide network of offices, which supply new deals and enable it to monitor the geographically widespread portfolio of companies effectively.

The Investment Portfolio Summary in the Annual Report discloses the investments in the portfolio and the degree of co-investment with other clients of the Manager. The tabular analysis of the unlisted and quoted portfolio in the Annual Report shows that the portfolio is diversified across a variety of sectors and transaction types. The level of qualifying investments is monitored continually by the Manager and reported to the Audit & Risk Committee quarterly, or as otherwise required.

Key Performance Indicators (KPIs)

During the year, the net return on ordinary activities before taxation was GBP256,000 (2018: GBP74,000), gains on investment were GBP641,000 (2018: GBP521,000) and earnings per share were 0.37p (2018: 0.12p). The Directors also use a number of Alternative Performance Measures (APMs) in order 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 APMs are shown in the Financial Highlights in the Annual Report.

In addition, the Board considers the following to be KPIs:

   --      NAV total return; 
   --      annual yield; 
   --      share price discount to NAV; 
   --      investment income; and 
   --      operational expenses. 

The NAV total return is considered to be a more appropriate long-term measure of Shareholder value as it includes both the current NAV per share and the sum of dividends paid to date. The annual yield is the total dividends paid for the financial year, expressed as a percentage of the share price at the year end date. The Directors seek to pay dividends to provide a yield and comply with the VCT rules, taking account of the level of distributable reserves, profitable realisations in each accounting period and the Company's future cash flow projections. The share price discount to NAV is the percentage by which the mid-market price of an investment is lower than the NAV per share. A historical record of these measures is shown in the Financial Highlights in the Annual Report. The change in 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. The Board also reviews the Company's investment income and operational expenses on a quarterly basis, as the Directors consider that both of these elements are important components in the

generation of Shareholder returns. Further information can be found in Notes 2 and 4 to the Financial Statements in the Annual Report.

There is no VCT index against which to compare the performance of the Company. However, for reporting to the Board and Shareholders, the Manager uses comparisons with the most appropriate index, being the FTSE AIM All-Share Index. The Directors also consider non-financial performance measures such as the flow of investment proposals and ranking of the VCT sector by independent analysts.

In addition, the Directors 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 3 PLC in unquoted companies are valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines. Investments quoted or traded on a recognised stock exchange, including AIM, are valued at their bid prices.

Share Buy-backs

At the forthcoming AGM, the Board will seek the necessary Shareholder authority to continue to conduct share buy-backs under appropriate circumstances.

The Board's Duty and Stakeholder Engagement

The Directors recognise the importance of an effective Board and its ability to discuss, review and make decisions to promote the long-term success of the Company and protect the interests of its key stakeholders. As required by provision 5 of the AIC Code (and in line with the UK Code), the Board has discussed the Directors' duty under Section 172 of the Companies Act and how the interests of key stakeholders have been considered in the Board discussions and decision making during the year. This has been summarised in the table below:

 
Stakeholder     Form of Engagement                    Influence on Board/Committee decision 
                                                       making 
Shareholders    Annual General Meeting                Dividend Declarations - the Board recognises 
                 - Shareholders are encouraged         the importance of tax-free dividends 
                 to attend the AGM and                 to Shareholders and takes this into consideration 
                 are provided with the                 when making decisions to pay interim 
                 opportunity to ask questions          and propose final dividends for each 
                 and engage with the Directors         year. Further details regarding dividends 
                 and the Manager. Shareholders         for the year under review can be found 
                 are also encouraged to                in the Chairman's Statement in the Annual 
                 exercise their right to               Report. 
                 vote on the resolutions               Share Buy-Back Policy - the Directors 
                 proposed at the AGM.                  recognise the importance to Shareholders 
                 Shareholder Documents                 of the Company maintaining an active 
                 - the Company reports                 buy-back policy and considered this when 
                 formally to Shareholders              establishing the current policy. Further 
                 by publishing Annual and              details can be found in the Chairman's 
                 Interim Reports, normally             Statement and Directors' Report in the 
                 in March and July each                Annual Report. 
                 year. In the instance                 Offer for Subscription - in making a 
                 of a corporate action                 decision to launch an Offer for Subscription, 
                 taking place, the Board               the Directors considered that it would 
                 will communicate with                 be in the interest of Shareholders to 
                 Shareholders through the              continue to grow the portfolio and make 
                 issue of a Circular and,              investments across a diverse range of 
                 if required, a Prospectus.            sectors. By growing the Company, costs 
                 In addition, significant              are spread over a wider asset base, which 
                 matters or reporting obligations      helps to promote a competitive total 
                 are disseminated to Shareholders      expense ratio, which is in the interest 
                 by way of Stock Exchange              of Shareholders. In addition, the increased 
                 Announcements.                        liquidity helps support the buy-back 
                 The Company Secretary                 policy referred to above. Further details 
                 acts as a key point of                regarding the Offer for Subscription 
                 contact for the Board                 can be found in the Chairman's Statement 
                 and communications received           in the Annual Report. 
                 from Shareholders are                 Liquidity Management - as a result of 
                 circulated to the whole               the success of the recent Offer for Subscription, 
                 Board.                                the Company has a strong liquidity position 
                                                       and the Board is conscious that it will 
                                                       take time for the Manager to deploy the 
                                                       funds raised. In order to generate income 
                                                       and add value for Shareholders, the Board 
                                                       has an active liquidity management policy, 
                                                       which has the objective of generating 
                                                       income from the cash held prior to investment. 
                                                       Further details regarding the liquidity 
                                                       management policy can be found in the 
                                                       Investment Manager's Report in the Annual 
                                                       Report. 
              -----------------------------------  ----------------------------------------------------- 
Portfolio       Quarterly Board Meetings              The Directors are aware that the exercise 
 Companies       - the Manager reports                 of voting rights is key to promoting 
                 to the Board on the portfolio         good corporate governance and, through 
                 companies and the Directors           the Manager, ensures that the portfolio 
                 challenge the Manager                 companies are encouraged to adopt best 
                 where they feel it is                 practice corporate governance. The Board 
                 appropriate. The Manager              has delegated the responsibility for 
                 then communicates directly            monitoring the portfolio companies to 
                 with each portfolio company,          the Manager and has given it discretion 
                 normally through the Maven            to vote in respect of the Company's holdings 
                 representative who sits               in the investment portfolio, in a way 
                 on the board of the portfolio         that reflects the concerns and key governance 
                 company.                              matters discussed by the Board. From 
                                                       time to time, the management teams of 
                                                       investee companies give presentations 
                                                       to the Board. 
                                                       The Board is also mindful that, as the 
                                                       portfolio expands and the proportion 
                                                       of early-stage investments increases, 
                                                       follow-on funding will represent an important 
                                                       part of the Company's investment strategy 
                                                       and this forms a key part of the Directors' 
                                                       discussions on valuations and also risk 
                                                       management. 
              -----------------------------------  ----------------------------------------------------- 
Manager         Quarterly Board Meetings              The Manager is responsible for implementing 
                 - the Manager attends                 the investment objective and the strategy 
                 every Board Meeting and               agreed by the Board. In making a decision 
                 presents a detailed portfolio         to launch any Offer for Subscription, 
                 analysis and reports on               the Board needs to consider that the 
                 key issues such as VCT                Company requires to have sufficient liquidity 
                 compliance, investment                in order to continue to expand and broaden 
                 pipeline and utilisation              the investment portfolio in line with 
                 of any new monies raised.             the strategy, including the provision 
                                                       of follow-on funding. 
              -----------------------------------  ----------------------------------------------------- 
Registrar       Annual review meetings                The Directors review the performance 
                 and control reports.                  of all third party service providers 
                                                       on an annual basis, including ensuring 

                                                       compliance with GDPR. 
              -----------------------------------  ----------------------------------------------------- 
Custodian       Regular statements and                The Directors review the performance 
                 control reports received,             of all third party providers on an annual 
                 with all holdings and                 basis, including oversight of securing 
                 balances reconciled.                  the Company's assets. 
              -----------------------------------  ----------------------------------------------------- 
 

Employee, Environmental and Human Rights Policy

The Company has no direct employee or environmental responsibilities, nor is it responsible directly for the emission of greenhouse gases. The Board's principal responsibility to Shareholders is to ensure that the investment portfolio is managed and invested properly. As the Company has no employees, it has no requirement to report separately on employment matters. The management of the portfolio is undertaken by the Manager through members of its portfolio management team. The Manager engages with the Company's underlying investee companies in relation to their corporate governance practices and in developing their policies on social, community and environmental matters and further information may be found in the Statement of Corporate Governance. In light of the nature of the Company's business, there are no relevant human rights issues and, therefore, the Company does not have a human rights policy.

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 2020, 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:

Atul Devani

Director

10 March 2020

Income Statement

For the Year Ended 30 November 2019

 
                                          Year ended 30 November        Year ended 30 November 
                                                            2019                          2018 
                                     Revenue   Capital     Total   Revenue   Capital     Total 
                                     GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
----------------------------------  --------  --------  --------  --------  --------  -------- 
Gains on investments                       -       641       641         -       521       521 
Income from investments                  922         -       922       984         -       984 
Other income                              60         -        60        35         -        35 
Investment management fees             (213)     (854)   (1,067)     (214)     (854)   (1,068) 
Other expenses                         (300)         -     (300)     (398)         -     (398) 
----------------------------------  --------  --------  --------  --------  --------  -------- 
Net return on ordinary activities        469     (213)       256       407     (333)        74 
before taxation 
 
 Tax on ordinary activities             (78)        78         -      (71)        71         - 
----------------------------------  --------  --------  --------  --------  --------  -------- 
Return attributable to Equity 
 Shareholders                            391     (135)       256       336     (262)        74 
----------------------------------  --------  --------  --------  --------  --------  -------- 
Earnings per share (pence)              0.57    (0.20)      0.37      0.54    (0.42)      0.12 
----------------------------------  --------  --------  --------  --------  --------  -------- 
 

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 Notes are an integral part of the Financial Statements and can be found in full in the Annual Report.

Statement of Changes in Equity

Year Ended 30 November 2019

 
                                      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 2018        6,897    31,285    (9,784)      (3,058)          15,323          890        856     42,409 
 Net return                     -         -    (1,707)        1,572               -            -        391        256 
 Cancellation of share 
  premium account               -  (31,379)          -            -          31,379            -          -          - 
 Cancellation of 
  capital 
  redemption reserve            -         -          -            -             977        (977)          -          - 
 Share premium 
  cancellation 
  costs                         -       (2)          -            -               -            -          -        (2) 
 Dividends paid                 -         -    (1,367)            -               -            -          -    (1,367) 
 Repurchase and 
  cancellation 
  of shares                 (122)         -          -            -           (677)          122          -      (677) 
 Net proceeds of DIS 
  issue                        23        96          -            -               -            -          -        119 
----------------------  ---------  --------  ---------  -----------  --------------  -----------  ---------  --------- 
 At 30 November 2019        6,798         -   (12,858)      (1,486)          47,002           35      1,247     40,738 
----------------------  ---------  --------  ---------  -----------  --------------  -----------  ---------  --------- 
 

Year Ended 30 November 2018

 
                                      Share    Capital      Capital         Special      Capital 
                            Share   premium    reserve      reserve   distributable   redemption    Revenue 
                          capital   account   realised   unrealised         reserve      reserve    reserve      Total 
                          GBP'000   GBP'000    GBP'000      GBP'000         GBP'000      GBP'000    GBP'000    GBP'000 
----------------------  ---------  --------  ---------  -----------  --------------  -----------  ---------  --------- 
 At 30 November 2017        4,702    18,035    (5,989)         (62)          15,749          819        761     34,015 
 Net return                     -         -      2,734      (2,996)               -            -        336         74 
 Dividends paid                 -         -    (6,529)            -               -            -      (241)    (6,770) 
 Repurchase and 
  cancellation 
  of shares                  (71)         -          -            -           (426)           71          -      (426) 
 Net proceeds of share 
  issue                     2,174    12,793          -            -               -            -          -     14,967 
 Net proceeds of DIS 
  issue                        92       457          -            -               -            -          -        549 
----------------------  ---------  --------  ---------  -----------  --------------  -----------  ---------  --------- 
 At 30 November 2018        6,897    31,285    (9,784)      (3,058)          15,323          890        856     42,409 
----------------------  ---------  --------  ---------  -----------  --------------  -----------  ---------  --------- 
 

The Notes are an integral part of the Financial Statements and can be found in full in the Annual Report.

Balance Sheet

As at 30 November 2019

 
                                         30 November 2019  30 November 2018 
                                                  GBP'000           GBP'000 
---------------------------------------  ----------------  ---------------- 
 Fixed assets 
  Investments at fair value through 
   profit or loss                                  26,623            21,108 
 
  Current assets 
  Debtors                                             333               358 
  Cash                                             13,822            20,979 
---------------------------------------  ----------------  ---------------- 
                                                   14,155            21,337 
   Creditors 
   Amounts falling due within one year               (40)              (36) 
---------------------------------------  ----------------  ---------------- 
 Net current assets                                14,115            21,301 
---------------------------------------  ----------------  ---------------- 
 Net assets                                        40,738            42,409 
---------------------------------------  ----------------  ---------------- 
 
   Capital and reserves 
 Called up share capital                            6,798             6,897 
 Share premium account                                  -            31,285 

 Capital reserve - realised                      (12,858)           (9,784) 
 Capital reserve - unrealised                     (1,486)           (3,058) 
 Special distributable reserve                     47,002            15,323 
 Capital redemption reserve                            35               890 
 Revenue reserve                                    1,247               856 
---------------------------------------  ----------------  ---------------- 
 Net assets attributable to Ordinary 
  Shareholders                                     40,738            42,409 
---------------------------------------  ----------------  ---------------- 
 
 Net asset value per ordinary share 
  (pence)                                           59.92             61.49 
---------------------------------------  ----------------  ---------------- 
 

The financial statements of Maven Income and Growth VCT 3 PLC, registered number 04283350, were approved by the Board of Directors and were signed on its behalf by:

Atul Devani

Director

10 March 2020

The Notes are an integral part of the Financial Statements and can be found in full in the Annual Report.

Cash Flow Statement

For the Year Ended 30 November 2019

 
                                               Year ended         Year ended 
                                         30 November 2019   30 November 2018 
                                                  GBP'000            GBP'000 
--------------------------------------  -----------------  ----------------- 
Net cash flows from operating 
 activities                                         (292)              (335) 
 Cash flows from investing activities             (7,367)            (3,904) 
 Purchase of investments                            2,429              7,652 
 Sale of investments 
--------------------------------------  -----------------  ----------------- 
Net cash flows from investing 
 activities                                       (4,938)              3,748 
--------------------------------------  -----------------  ----------------- 
 Cash flows from financing activities 
Equity dividends paid                             (1,367)            (6,770) 
Issue of Ordinary Shares                              119             15,516 
Share premium cancellation 
 costs                                                (2)                  - 
Repurchase of Ordinary Shares                       (677)              (426) 
--------------------------------------  -----------------  ----------------- 
Net cash flows from financing 
 activities                                       (1,927)              8,320 
--------------------------------------  -----------------  ----------------- 
 
Net (decrease)/increase in 
 cash                                             (7,157)             11,733 
--------------------------------------  -----------------  ----------------- 
 Cash at beginning of year                         20,979              9,246 
Cash at end of year                                13,822             20,979 
 

The Notes are an integral part of the Financial Statements and can be found in full in the Annual Report.

Notes to the Financial Statements

For the Year Ended 30 November 2019

   1     Accounting Policies 

The Company is a public limited company, incorporated in England and Wales and its registered office is shown on the Corporate Summary in the Annual Report.

   (a)   Basis of preparation 

The Financial Statements have been prepared under the historical cost convention, as modified by the revaluation of investments and in accordance with FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland, and in accordance with the Statement of Recommended Practice for Investment Trust Companies and Venture Capital Trusts (the SORP) issued by the AIC in November 2014.

   (b)   Income 

Dividends receivable on equity shares and unit trusts are treated as revenue for the period on an ex-dividend basis. Where no ex-dividend date is available dividends receivable on or before the year end are treated as revenue for the period. Provision is made for any dividends not expected to be received. The fixed returns on debt securities and

non-equity shares are recognised on a time apportionment basis so as to reflect the effective interest rate on the debt securities and shares. Provision is made for any income not expected to be received. Interest receivable from cash and short term deposits and interest payable are accrued to the end of the year.

   (c)   Expenses 

All expenses are accounted for on an accruals basis and charged to the income statement. Expenses are charged through the revenue account except as follows:

- expenses which are incidental to the acquisition and disposal of an investment are charged to capital; 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 and performance fee have been allocated 20% to revenue and 80% to realised capital reserves to reflect the Company's investment policy and prospective income and capital growth.

   (d)   Taxation 

Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, where transactions or events 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. Other early-stage investments are valued using a milestone approach, in particular where it is considered there are no deemed current or short-term future maintainable earnings or positive cashflows.

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 the 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 (i.e. developed using market data) for the asset or liability, either directly or indirectly; and

-- Level 3 - inputs are unobservable (i.e. 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 early-stage 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, and there are no reasonable possible alternative assumptions and estimates that will have a significant effect on the valuation of the rest of the unlisted portfolio.

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. This reserve is non-distributable.

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. This reserve is distributable.

Special distributable reserve

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

Capital redemption reserve

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

Revenue reserve

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

Return per Ordinary Share

 
                                      Year ended 30 November  Year ended 30 November 
                                                        2019                    2018 
The returns per share have been                   68,673,884              62,607,303 
 based on the following figures: 
 Weighted average number of Ordinary              GBP391,000              GBP336,000 
  Shares 
 Revenue return                                 (GBP135,000)            (GBP262,000) 
 Capital return 
                                      ----------------------  ---------------------- 
Total return                                      GBP256,000               GBP74,000 
                                      ----------------------  ---------------------- 
 

Net Asset Value per Ordinary Share

The net asset value per Ordinary Share as at 30 November 2019 has been calculated using the number of Ordinary Shares in issue at that date of 67,983,600 (2018: 68,973,462).

Directors' Responsibility Statement

Each Director believes 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 2019 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 Wednesday 8 April 2020, commencing at 12.00 noon, at Maven Capital Partners UK LLP, Fifth Floor, 1-2 Royal Exchange Buildings, London EC3V 3LF.

The Annual Report and Financial Statements for the year ended 30 November 2019 will be issued to Shareholders and filed with the Registrar of Companies and issued to Shareholders in due course.

The financial information contained within this announcement does not constitute the Company's statutory Financial Statements as defined in the Companies Act 2006. The statutory Financial Statements for the year ended 30 November 2018 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.

Copies of this announcement, and of the Annual Report and Financial Statements for the year ended 30 November 2019, will be available, in due course, to the public at the office of Maven Capital Partners UK LLP, 205 West George Street, Glasgow G2 2LW; at the registered office of the Company, 1-2 Royal Exchange Buildings, London EC3V 3LF and on the Company's website at www.mavencp.com/migvct3.

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

The Annual Report will shortly 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

10 March 2020

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

END

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March 10, 2020 12:41 ET (16:41 GMT)