Maven Income & Growth VCT 4 PLC Annual Financial Report (3347V)

TIDMMAV4 TIDMTTM

RNS Number : 3347V

Maven Income & Growth VCT 4 PLC

05 April 2019

Maven Income and Growth VCT 4 PLC

Final results for the year ended 31 December 2018

Highlights for the year

   --      NAV total return at the year end of 145.37p per share (2017: 145.87p) 

-- NAV at year end of 71.77p per share (2017: 85.97p), after payment of dividends totalling 13.70p per share during the period

   --      Annual dividend 13.70p per share (2017: 12.45p) 
   --      Offer for Subscription fully subscribed and raised GBP20 million 
   --      Merger with Maven Income and Growth VCT 2 PLC (Maven VCT 2) completed on 15 November 2018 
   --      Net assets increased to GBP54.95 million 
   --      Completion of 15 VCT qualifying new and follow-on investments 

Chairman's Statement

On behalf of your Board, I am pleased to announce the results for the full year to 31 December 2018. The year under review has been a period of strategic growth and development for your Company, including the completion of a GBP20 million fundraising, which provides further liquidity to allow the Manager to continue to expand the portfolio of investee companies in line with the objective of increasing Shareholder value. On 15 November 2018, following

Shareholder approval, your Board was also pleased to announce the completion of the merger with Maven VCT 2, which provides Shareholders with further scale and a reduction in the total expense ratio.

Total dividends declared during the financial year were 13.70p per share, reflecting the build-up of distributable reserves, following a number of profitable exits, and the requirement to maintain ongoing compliance with the VCT regulations. While this enhanced level of distribution is unlikely to be sustained, your Board remains committed to making regular tax-free payments wherever possible, with the potential for further distributions when realisations are achieved.

This has been an important year in the strategic development of your Company. The success of the Offer for Subscription and the completion of the merger with Maven VCT 2 effected a step change in the size and scale of your Company, positioning it well for future growth whilst also enabling it to realise the economic benefits of an enlarged VCT.

The Offer for Subscription, which closed fully subscribed in April 2018, including full utilisation of the over-allotment facility, raised GBP20 million of new capital. The strategy remains to build a broadly based and diversified portfolio by investing in a wide range of carefully selected VCT qualifying growth companies that offer the prospect of capital gains. The Directors are encouraged by the level of investment achieved during the period, particularly given the requirement to secure Advance Assurance from HM Revenue and Customs (HMRC), for which the new regulations have lengthened the process.

Following the enactment of the Finance Act 2015, which altered the investment parameters for VCT qualifying transactions, Maven has successfully adapted its deal origination strategy and significantly expanded its investment team and nationwide presence, providing access to a wide range of qualifying opportunities. Based on the pipeline of live transactions currently under review, your Board anticipates that the Company can sustain a healthy rate of investment in the new financial year, supplemented by follow-on commitments to support existing portfolio companies that are making identifiable commercial progress. Given the increased liquidity resulting from the Offer for Subscription, it is also possible that your Company may make a number of investments in VCT qualifying AIM quoted companies, where Maven has an established team with good knowledge of that market.

Notwithstanding the political and economic uncertainty that has continued to surround the UK's intended exit from the European Union (EU), it is encouraging to report that most of the investee companies in the portfolio have performed broadly in line with expectations. The continuing positive performance achieved by a number of the more established private companies has enabled some of the valuations of those assets to be increased. The younger and earlier stage investee companies have generally made satisfactory progress, although it may take time for this to translate into meaningful uplifts in valuations. The Board and the Manager will maintain a prudent approach to valuing these assets, holding them at cost, or cost less provision, until there is clear evidence of measurable progress, or a specific event from which a new valuation can be supported. Encouragingly, trading performance across the oil & gas portfolio companies has continued to show a further steady improvement, continuing the trend of the previous year. There are, however, a small number of investments that are operating behind plan or where a market adjustment has influenced performance and, as a result, the valuations of these assets have been reduced. A detailed analysis of portfolio developments can be found in the Investment Manager's Review in the Annual Report. Details of the principal Key Performance Indicators (KPIs) can be found in the Business Report and a summary of the Alternative Performance Measures (APMs) can be found in the Financial Highlights in the Annual Report.

The Directors were encouraged to note the good level of investment activity that was achieved during the period under review, with the addition of seven new qualifying private company assets to the portfolio, and anticipate a continuation of this trend in the new financial year. Two notable disposals were also completed. In February 2018, the exit was completed from Endura, a designer and manufacturer of high performance cycling apparel and accessories, for a total return of 1.6 times cost over the holding period. In October 2018, the holding in Cursor Controls, a niche manufacturer of trackballs, track pads and keyboards for industrial applications, was sold at a premium to carrying value, generating a total return of 2.7 times cost over the three-year investment period. The Board is aware that discussions are underway regarding further potential exits from a number of portfolio companies, although there can be no certainty that these will result in concluded sales.

Dividends and Distributable Reserves

As a result of recent profitable exits and in order to ensure ongoing compliance with the VCT regulations, the Directors considered it appropriate to distribute an enhanced level of interim dividends in the first half of the financial year.

Accordingly, a first interim dividend in respect of the year ended 31 December 2018, of 8.90p per Ordinary Share, was paid on 13 April 2018 to Shareholders on the register at close of business on 16 March 2018. A second interim dividend, of 4.80p per Ordinary Share, was paid on 22 June 2018 to Shareholders on the register at close of business on 25 May 2018. As no final dividend is proposed, total distributions for the year are 13.70p per Ordinary Share, representing a tax-free yield of 20.92% based on a year-end closing mid-market price of 65.50p. Since the Company's launch, and after receipt of the payments noted above, Shareholders will have received 73.60p per share in tax-free dividends. It should be noted that the effect of paying dividends is to reduce the NAV of the Company by the total cost of the distributions.

Decisions on future distributions will take into consideration the availability of surplus revenue, the adequacy of reserves and the VCT qualifying level, all of which are kept under close and regular review by the Board and the Manager. To this end, the Directors are proposing a Special Resolution at the Annual General Meeting (AGM), to seek Shareholders' approval to cancel the share premium account and the capital redemption reserve of the Company, pursuant to the Companies Act 2006 and subject to sanction by the Scottish Court, to create a further pool of distributable reserves that can be used for future distributions or any purpose for which the Company's profits available for distribution may be applied.

As the portfolio continues to evolve, and a greater proportion of holdings are invested in younger and earlier stage companies, there may be more fluctuation in the quantum and timing of dividend payments, which could ultimately become more closely linked to realisation activity. The Board and the Manager will ensure that this is carefully monitored, in line with your Company's investment objective.

Dividend Investment Scheme (DIS)

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

Shareholders who wish to participate in respect of any future dividends should ensure that a DIS mandate or CREST instruction as appropriate, is submitted to the Registrar (Link Market Services). The mandate form, terms & conditions and full details of the scheme, including further details on tax considerations, are available from the Company's website at www.mavencp.com/migvct4. A DIS election can also be made using the Link Market Services share portal at www.signalshares.com.

Fund Raising

On 22 September 2017, the Directors of your Company, together with the board of Maven Income and Growth VCT 3 PLC, launched a joint Offer for Subscription for new Ordinary Shares for up to GBP30 million, in aggregate, with total over-allotment facilities of up to GBP10 million.

On 24 April 2018, your Board was pleased to announce that its Offer was fully subscribed, having raised GBP20 million in total, including full utilisation of the over-allotment facility. During the period, the Company issued 16,714,707 new Ordinary Shares for the 2017/2018 tax year, with a further 3,513,830 new Ordinary Shares issued for the 2018/2019 tax year. The programme for investing this capital has commenced and the Directors are encouraged by the positive rate of new investment that has been achieved to date, which is expected to continue in the new financial year.

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

Merger

On 15 November 2018, following the passing of resolutions at a series of general meetings of both companies, the Directors were pleased to announce the completion of the merger of the Company with Maven VCT 2 through a scheme of reconstruction. On completion, the assets and liabilities of Maven VCT 2 were transferred to your Company in consideration for 19,469,302 new Ordinary Shares in your Company issued to the former shareholders of Maven VCT 2 based on a ratio of 0.485100 new shares for each Maven VCT 2 share held and at a deemed issue price of 70.5621p per new share. Following the merger, the net asset value of your Company increased to GBP54.95 million and the new shares were admitted to the Official List on 16 November 2018. Maven VCT 2 was placed in members' voluntary liquidation, with the listing of its ordinary shares cancelled on 16 November 2018.

The impact of the merger can be seen in the Financial Statements and related Notes, and is also reflected in the

Financial Highlights in the Annual Report.

Share Buy-backs

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

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

Regulatory Developments

Following the legislative changes introduced by the Finance Act 2015, with further amendments included in the Finance Act 2018, it is reassuring to report that the Finance (No. 3) Act 2019 does not contain any further amendments to the legislation governing VCTs. Your Company is well positioned to accommodate the provisions of the Finance Act 2018, in particular the requirement for a VCT to hold 80% of its investments in qualifying holdings for financial periods ending after 6 April 2019. For your Company, this will be applicable from 31 December 2019 and progress towards this target is being monitored closely.

The General Data Protection Regulation (GDPR) came into force on 25 May 2018, replacing the Data Protection Act 1998. During the year, the Manager worked with the third parties that process Shareholders' personal data to ensure that their rights under the new regulation are respected.

In July 2018, the Financial Reporting Council published an update of the UK Corporate Governance Code (the Code), which focuses on the application and reporting of the updated Principles. The 2018 Code applies to all companies with a Premium Listing and is applicable for all accounting periods beginning on or after 1 January 2019. The Board will consider the implications of the Code and take appropriate action as required.

Board of Directors

On behalf of the Board, I am pleased to welcome Peter Linthwaite as a Non-executive Director with effect from 15 November 2018. Peter was previously a non-executive director of Maven VCT 2 prior to the merger and has extensive experience of the private equity industry; further details can be found in the Your Board section in the Annual Report. As required by company law, Peter will stand for election by Shareholders at the AGM on 15 May 2019.

I have been Chairman of your Company since its inception in 2004 and, during this period, your Company has experienced transformational growth, with net assets increasing from GBP8 million to over GBP54 million. Following completion of the fundraising and merger, and taking account of my length of service, I consider that it is appropriate to stand down as Chairman and Non-executive Director at the conclusion of the 2019 AGM. It is intended that, subject to his successful election at the 2019 AGM, Peter Linthwaite will succeed me as Chairman. I would like to wish him, and your Company, every success in the future.

The Future

The period under review has been one of the most active in your Company's history and, given the progress achieved, it is now well positioned to continue to deliver on its core investment strategy. Notwithstanding the ongoing macro-economic uncertainty associated with the UK's intended withdrawal from the EU, the priority for the year ahead will be to maintain a steady rate of investment, in order to expand the portfolio and enable your Company to deliver positive Shareholder returns in the years ahead.

Ian Cormack

Chairman

5 April 2019

BUSINESS REPORT

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

Investment Objective

Under an investment policy approved by the Directors, the Company aims to achieve long-term capital appreciation and generate income for Shareholders.

Business Model and Investment Policy

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

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

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

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

Principal Risks and Uncertainties

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

Investment Risk

Many of the Company's investments are in small and medium sized unquoted UK companies and AIM/NEX quoted companies which, by their nature, carry a higher level of risk and lower liquidity than investments in large quoted companies. The Board aims to limit the risk attaching to the investment portfolio as a whole by ensuring that a robust and structured selection, monitoring and realisation process is applied by the Manager. The Board reviews the investment portfolio with the Manager on a regular basis.

The Company manages and minimises investment risk by:

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

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

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

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

Financial and Liquidity Risk

As most of the investments require a medium to long-term commitment and are relatively illiquid, the Company retains a portion of the portfolio in cash and listed investments in order to finance any new unquoted and listed investments. The Company has only limited direct exposure to currency risk and does not enter into any derivative transactions.

Economic Risk

The valuation of investment companies may be affected by underlying economic conditions such as fluctuating interest rates and the availability of bank finance. The economic and market environment is kept under constant review and the investment strategy of the Company adapted so far as is possible to mitigate emerging risks.

Credit Risk

The Company may hold financial instruments and cash deposits and is dependent on counterparties discharging their agreed responsibilities. The Directors consider the creditworthiness of the counterparties to such instruments and seek to ensure that there is no undue concentration of exposure to any one party.

Internal Control Risk

The Board reviews regularly the system of internal controls, both financial and non-financial, operated by the Company, Maven and other key third party outsourcers such as the Custodian and Registrar. These include controls designed to ensure that the Company's assets are safeguarded, that all records are complete and accurate and that the third parties have adequate controls in place to prevent data protection and cyber security failings.

VCT Qualifying Status Risk

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

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

-- loss of VCT status and consequent loss of tax reliefs available to Shareholders as a result of a breach of the VCT Regulations;

-- loss of VCT status and reputational damage as a result of a serious breach of other regulations such as the FCA Listing Rules and the Companies Act 2006; and

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

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

Legislative and Regulatory Risk

In order to maintain its approval as a VCT, the Company is required to comply with current VCT legislation in the UK as well as the EU State Aid Rules. Changes in the future to either legislation could have an adverse impact on Shareholder investment returns whilst maintaining the Company's VCT status. The Board and the Manager continue to make representations where appropriate, either directly or through relevant industry bodies such as the British Private Equity and Venture Capital Association.

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

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

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

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

Political Risk

Following the referendum held on 23 June 2016, the UK voted to leave the EU and negotiations regarding the Withdrawal Agreement are ongoing. The full political, economic and legal consequences of this are not yet known. It is possible that investments in the UK may be more subjective to value, more difficult to assess for suitability of risk, harder to buy or sell, or be subject to greater or more frequent rises and falls in value. In the longer term, there is likely to be a period of uncertainty as the UK seeks to negotiate its ongoing relationship with the EU and other global trade partners. In future, the UK's laws and regulations, including those relating to investment companies and AIFMs may diverge from those of the EU. This may lead to changes in the operation of the Company, the rights of investors, or the territories in which the shares of the Company may be promoted and sold.

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

An explanation of certain economic and financial risks and how they are managed is also contained in Note 16 to the Financial Statements in the Annual Report.

Statement of Compliance with Investment Policy

The Company is adhering to its stated investment policy and managing the risks arising from it. This can be seen in various tables and charts throughout the Annual Report, and from information provided in the Chairman's Statement and in the Investment Manager's Review. A review of the Company's business, its financial position as at 31 December 2018 and its performance during the year then ended is included in the Chairman's Statement, which also includes an overview of its strategy and business model.

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

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

Key Performance Indicators

During the year, the net return on ordinary activities before taxation was GBP361,000 (2017: GBP887,000); gains on investments were GBP1,082,000 (2017: GBP984,000) and earnings per share were 0.66p (2017: 2.67p).

The Directors also use a number of APMs in order to assess the Company's success in achieving its objectives as these are considered to be more appropriate long-term measures. These APMs are viewed by the Board as additional key performance indicators that enable Shareholders and prospective investors to gain an understanding of the Company's business, and are as follows:

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

The NAV total return is a measure of Shareholder value that includes the current NAV per share and the sum of dividends paid to date. The annual yield is the total of dividends paid per share for the financial year, expressed as a percentage of the share price at the year-end date. The Directors seek to pay dividends to provide a yield and comply with the VCT rules, taking account of the level of distributable reserves, profitable realisations in each accounting period and the Company's future cash flow projections. The share price discount to NAV is the percentage by which the mid-market price of an investment is lower than its NAV per share.

Definitions of these APMs can be found in the Glossary in the Annual Report. A historical record of some of these measures is shown in the Financial Highlights and the change in the profile of the portfolio is reflected in the Summary of Investment Changes in the Annual Report. The Board reviews the Company's investment income and operational expenses on a quarterly basis, as the Directors consider that both of these elements are important components in the generation of Shareholder returns. Further information can be found in Notes 2 and 4 to the Financial Statements in the Annual Report.

There is no VCT index against which to compare the financial performance of the Company. However, for reporting to the Board and Shareholders, the Manager uses comparison with the most appropriate index, being the FTSE AIM All-Share Index.

The Directors also consider non-financial performance measures, such as the flow of investment proposals, and ranking of the VCT sector by independent analysts.

In addition, the Directors will consider economic, regulatory and political trends and factors that may impact on the Company's future development and performance.

Valuation Process

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

Share Buy-backs

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

Employee, Environmental and Human Rights Policy

As a VCT, the Company has no direct employee or environmental responsibilities, nor is it responsible for the emission of greenhouse gases. The Board's principal responsibility to Shareholders is to ensure that the investment portfolio is managed and invested properly. As the Company has no employees, it has no requirement to report separately on employment matters. The management of the portfolio is undertaken by the Manager through members of its portfolio management team.

The Manager engages with the Company's underlying investee companies in relation to their corporate governance practices and in developing their policies on social, community and environmental matters. Further information may be found in the Statement of Corporate Governance. In light of the nature of the Company's business, there are no relevant human rights issues and, therefore, the Company does not have a human rights policy.

Independent Auditor

The Company's Independent Auditor is required to report if there are any material inconsistencies between the content of the Strategic Report and the Financial Statements. The Independent Auditor's Report can be found in the Annual Report.

Future Strategy

The Board and the Manager intend to maintain the policies set out above for the year ending 31 December 2019, as it is believed that these are in the best interests of Shareholders.

Approval

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

Ian Cormack

Director

5 April 2019

Income Statement

For the Year Ended 31 December 2018

 
                                        Year ended 31 December 2018           Year ended 31 December 2017 
                                  Revenue      Capital        Total      Revenue      Capital       Total 
                                  GBP'000      GBP'000      GBP'000      GBP'000      GBP'000     GBP'000 
----------------------------  -----------  -----------  -----------  -----------  -----------  ---------- 
 Gains on investments                   -        1,082        1,082            -          984         984 
 Income from investments              697            -          697        1,182            -       1,182 
 Other income                          29            -           29           11            -          11 
 Investment management 
  fees                              (205)        (819)      (1,024)        (201)        (806)     (1,007) 
 Other expenses                     (423)            -        (423)        (283)            -       (283) 
----------------------------  -----------  -----------  -----------  -----------  -----------  ---------- 
 Net return on ordinary                98          263          361          709          178         887 
 activities before 
  taxation 
 Tax on ordinary activities          (12)           12            -        (128)          128           - 
----------------------------  -----------  -----------  -----------  -----------  -----------  ---------- 
 Return attributable 
  to Equity Shareholders               86          275          361          581          306         887 
----------------------------  -----------  -----------  -----------  -----------  -----------  ---------- 
 Earnings per share 
  (pence)                            0.16         0.50         0.66         1.75         0.92        2.67 
----------------------------  -----------  -----------  -----------  -----------  -----------  ---------- 
 

All gains and losses are recognised in the Income Statement.

All items in the above statement are derived from continuing operations. The Company has only one class of business and one reportable segment, the results of which are set out in the Income Statement and Balance Sheet. The Company derives its income from investments made in shares, securities and bank deposits.

There are no potentially dilutive capital instruments in issue and, therefore, no diluted earnings per share figures are relevant. The basic and diluted earnings per share are, therefore, identical.

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

Statement of Changes in Equity

For the Year Ended 31 December 2018

 
                                      Share    Capital      Capital         Special      Capital 
                            Share   premium    reserve      reserve   distributable   redemption    Revenue 
                          capital   account   realised   unrealised         reserve      reserve    reserve      Total 
                          GBP'000   GBP'000    GBP'000      GBP'000         GBP'000      GBP'000    GBP'000    GBP'000 
----------------------  ---------  --------  ---------  -----------  --------------  -----------  ---------  --------- 
At 31 December 2017         3,708    22,745    (2,111)      (1,825)           8,271          384        702     31,874 
Net return                      -         -      (364)          639               -            -         86        361 
Dividends paid                  -         -    (6,545)            -               -            -          -    (6,545) 
Repurchase and 
 cancellation 
 of shares                   (88)         -          -            -           (596)           88          -      (596) 
Issue of shares on 
 merger                     1,947    11,483          -            -               -            -          -     13,430 
Net proceeds of share 
 issue                      2,023    13,947          -            -               -            -          -     15,970 
Net proceeds of DIS 
 issue                         67       393          -            -               -            -          -        460 
----------------------  ---------  --------  ---------  -----------  --------------  -----------  ---------  --------- 
At 31 December 2018         7,657    48,568    (9,020)      (1,186)           7,675          472        788     54,954 
----------------------  ---------  --------  ---------  -----------  --------------  -----------  ---------  --------- 
 

For the Year Ended 31 December 2017

 
                                      Share    Capital      Capital         Special      Capital 
                            Share   premium    reserve      reserve   distributable   redemption    Revenue 
                          capital   account   realised   unrealised         reserve      reserve    reserve      Total 
                          GBP'000   GBP'000    GBP'000      GBP'000         GBP'000      GBP'000    GBP'000    GBP'000 
----------------------  ---------  --------  ---------  -----------  --------------  -----------  ---------  --------- 
At 31 December 2016         3,290    19,449    (1,571)        1,874           8,528          354        644     32,568 
Net return                      -         -      4,005      (3,699)               -            -        581        887 
Dividends paid                  -         -    (4,545)            -               -            -      (523)    (5,068) 
Repurchase and 
 cancellation 
 of shares                   (30)         -          -            -           (257)           30          -      (257) 
Net proceeds of share 
 issue                        437     3,211          -            -               -            -          -      3,648 
Net proceeds of DIS 
 issue                         11        85          -            -               -            -          -         96 
----------------------  ---------  --------  ---------  -----------  --------------  -----------  ---------  --------- 
At 31 December 2017         3,708    22,745    (2,111)      (1,825)           8,271          384        702     31,874 
----------------------  ---------  --------  ---------  -----------  --------------  -----------  ---------  --------- 
 

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

Balance Sheet

As at 31 December 2018

 
                                       31 December 2018  31 December 2017 
                                                GBP'000           GBP'000 
-------------------------------------  ----------------  ---------------- 
 Fixed assets 
 Investments at fair value through 
  profit or loss                                 33,912            20,081 
 
   Current assets 
 Debtors                                            537               456 
 Cash                                            20,553            11,587 
-------------------------------------  ----------------  ---------------- 
                                                 21,090            12,043 
 Creditors 
 Amounts falling due within one 
  year                                             (48)             (250) 
-------------------------------------  ----------------  ---------------- 
 Net current assets                              21,042            11,793 
-------------------------------------  ----------------  ---------------- 
 Net assets                                      54,954            31,874 
-------------------------------------  ----------------  ---------------- 
 
   Capital and reserves 
 Called up share capital                          7,657             3,708 
 Share premium account                           48,568            22,745 
 Capital reserve - realised                     (9,020)           (2,111) 
 Capital reserve - unrealised                   (1,186)           (1,825) 
 Special distributable reserve                    7,675             8,271 
 Capital redemption reserve                         472               384 
 Revenue reserve                                    788               702 
-------------------------------------  ----------------  ---------------- 
 Net assets attributable to Ordinary 
  Shareholders                                   54,954            31,874 
-------------------------------------  ----------------  ---------------- 
 
   Net asset value per Ordinary 
   Share (pence)                                  71.77             85.97 
-------------------------------------  ----------------  ---------------- 
 

The Financial Statements of Maven Income and Growth VCT 4 PLC (registered in Scotland; company number SC272568) were approved by the Board of Directors and were signed on its behalf by:

Ian Cormack

5 April 2019

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

Cash Flow Statement

For the Year Ended 31 December 2018

 
                                 Year ended 31 December  Year ended 31 December 
                                                   2018                    2017 
                                                GBP'000                 GBP'000 
-------------------------------  ----------------------  ---------------------- 
 Net cash flows from operating 
  activities*                                   (1,004)                   (237) 
 Cash flows from investing 
  activities 
 Purchase of investments                       (15,547)                 (2,615) 
 Sale of investments                              2,798                  11,626 
-------------------------------  ----------------------  ---------------------- 
 Net cash flows from investing 
  activities                                   (12,749)                   9,011 
-------------------------------  ----------------------  ---------------------- 
 
   Cash flows from financing 
   activities 
 Equity dividends paid                          (6,545)                 (5,068) 
 Issue of Ordinary Shares                        16,430                   3,744 
 Issue of Ordinary Shares 

  - merger                                       13,430                       - 
 Repurchase of Ordinary Shares                    (596)                   (257) 
===============================  ======================  ====================== 
 Net cash flows from financing 
  activities                                     22,719                 (1,581) 
===============================  ======================  ====================== 
 
 Net increase in cash                             8,966                   7,193 
-------------------------------  ----------------------  ---------------------- 
 
   Cash at beginning of year                     11,587                   4,394 
 Cash at end of year                             20,553                  11,587 
 

* Refer to Note 15 in the Annual Report for reclassification in the current and prior years.

The accompanying Notes are an integral part of the Financial Statements

Notes to the Financial Statements

For the Year Ended 31 December 2018

Accounting Policies

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

   (a)   Basis of preparation 

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

   (b)   Income 

Dividends receivable on equity shares and unit trusts are treated as revenue for the period on an ex-dividend basis. Where no ex-dividend date is available dividends receivable on or before the year end are treated as revenue for the period. Provision is made for any dividends not expected to be received. The fixed returns on debt securities and non-equity shares are recognised on a time apportionment basis so as to reflect the effective interest rate on the debt securities and shares. Provision is made for any income not expected to be received. Interest receivable from cash and short term deposits and interest payable are accrued to the end of the year.

   (c)   Expenses 

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

-- expenses which are incidental to the acquisition and disposal of an investment are charged to capital;

-- expenses are charged to realised capital reserves where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect, the investment management fee has been allocated 20% to revenue and 80% to realised capital reserves to reflect the Company's investment policy and prospective income and capital growth; and

   --      share issue and merger costs are charged to the share premium account. 
   (d)   Taxation 

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

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

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

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

   (e)   Investments 

In valuing unlisted investments the Directors follow the criteria set out below. These procedures comply with the revised International Private Equity and Venture Capital Valuation Guidelines for the valuation of private equity and venture capital investments. Investments are recognised at their trade date and are designated by the Directors as fair value through profit or loss. At subsequent reporting dates, investments are valued at fair value, which represent the Directors' view of the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction. This does not assume that the underlying business is saleable at the reporting date or that its current shareholders have an intention to sell their holding in the near future.

A financial asset or liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires.

1. For early stage investments completed in the reporting period, fair value is determined using the Price of Recent Investment Method, except that adjustments are made when there has been a material change in the trading circumstances of the investee company.

2. Whenever practical, recent investments will be valued by reference to a material arm's length transaction or a quoted price.

3. Mature companies are valued by applying a multiple to their prospective earnings to determine the enterprise value of the company.

3.1 To obtain a valuation of the total ordinary share capital held by management and the institutional investors, the value of third party debt, institutional loan stock, debentures and preference share capital is deducted from the enterprise value. The effect of any performance related mechanisms is taken into account when determining the value of the ordinary share capital.

3.2 Preference shares, debentures and loan stock are valued using the Price of Recent Investment Method. When a redemption premium has accrued, this will only be valued if there is a reasonable prospect of it being paid. Preference shares which carry a right to convert into ordinary share capital are valued at the higher of the Price of Recent Investment Method basis and the price/earnings basis, both described above.

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

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

6. In accordance with normal market practice, investments listed on AIM or a recognised stock exchange are valued at their bid market price.

   (f)    Fair value measurement 

Fair value is defined as the price that the Company would receive upon selling an investment in a timely transaction to an independent buyer in the principal or the most advantageous market of the investment. A three-tier hierarchy has been established to maximise the use of observable market data and minimise the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable.

Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity.

Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on best information available in the circumstances.

The three-tier hierarchy of inputs is summarised in the three broad levels listed below.

-- Level 1 - the unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.

-- Level 2 - inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly.

-- Level 3 - inputs are unobservable (ie for which market data is unavailable) for the asset or liability.

   (g)   Gains and losses on investments 

When the Company sells or revalues its investments during the year, any gains or losses arising are credited/charged to the Income Statement.

   (h)   Critical accounting judgements and key sources of estimation uncertainty 

Disclosure is required of judgements and estimates made by the Board and the Manager in applying the accounting policies that have a significant effect on the Financial Statements. The area involving the highest degree of judgement and estimates is the valuation of unlisted investments recognised in Note 8 in the Annual Report and explained in (e) above.

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

Reserves

Share premium account

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

Capital reserves

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

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

Special distributable reserve

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

Capital redemption reserve

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

Revenue reserve

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

Return per Ordinary Share

 
                                Year ended 31 December  Year ended 31 December 
                                                  2018                    2017 
------------------------------  ----------------------  ---------------------- 
 The returns per share have 
  been based on the following 
  figures: 
 Weighted average number of 
  Ordinary Shares                           55,321,759              33,115,448 
 Revenue return                              GBP86,000              GBP581,000 
 Capital return                             GBP275,000              GBP306,000 
------------------------------  ----------------------  ---------------------- 
 Total return                               GBP361,000              GBP887,000 
------------------------------  ----------------------  ---------------------- 
 

Net asset value per Ordinary Share

The net asset value per Ordinary Share as at 31 December 2018 has been calculated using the number of Ordinary Shares in issue at that date of 76,570,595 (2017: 37,074,635).

Directors' Responsibility Statement

The Directors confirm that, to the best of their knowledge:

-- the Financial Statements have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company as at 31 December 2018 and for the year to that date;

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

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

Other information

The AGM will be held on Wednesday 15 May 2019, commencing at 12.00 noon, at the offices of Maven Capital Partners UK LLP, Fifth Floor, 1-2 Royal Exchange Buildings, London EC3V 3LF.

Copies of this announcement and the Annual Report and Financial Statements for the year ended 31 December 2018, will be available to the public at the registered office of the Company, Kintyre House, 205 West George Street, Glasgow G2 2LW; at the offices of Maven Capital Partners UK LLP, Fifth Floor, 1-2 Royal Exchange Buildings, London EC3V 3LF and on the Company's website at www.mavencp.com/migvct4.

The Annual Report and Financial Statements for the year ended 31 December 2018 will be issued to Shareholders and filed with the Registrar of Companies in due course.

The financial information contained within this announcement does not constitute the Company's statutory Financial Statements as defined in the Companies Act 2006. The statutory Financial Statements for the year ended 31 December 2017 have been delivered to the Registrar of Companies and contained an audit report which was unqualified and did not constitute statements under S498(2) or S498(3) of the Companies Act 2006.

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

The Annual Report will be submitted to the National Storage Mechanism and will be available for inspection at: www.morningstar.co.uk/uk/NSM

By Order of the Board

Maven Capital Partners UK LLP

Secretary

5 April 2019

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

END

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April 05, 2019 10:26 ET (14:26 GMT)