TIDMMIG2
RNS Number : 5612X
Maven Income and Growth VCT 2 PLC
06 May 2016
Maven Income and Growth VCT 2 PLC
The Directors announce the Company's results for the year ended
31 January 2016
Highlights for the Year
-- NAV total return of 97.47p per share (2015: 91.12p) at the
year end, up 7.0% over the year
-- NAV at year end of 53.0p per share (2015: 60.8p) after
payment of dividends totalling 14.15p, including a 10p special
dividend, during the year
-- Three new private equity investments added to the portfolio
-- Realisation of Cash Bases for a total return of 7.1 times cost
-- Exit from Westway Services Holdings, generating a total
return multiple of 6.45 times cost
-- Disposal of Steminic, delivering a 3.3 times total return on cost
-- Sale of XPD8 Solutions for a total return of 1.75 times cost
-- Exit from Six Degrees Group, generating a total return multiple of 2.1 times cost
-- Increased final dividend of 2.25p per share (2015: 2.15p) proposed
Chairman's Statement
This has been a very good year for your Company, with the sale
of two portfolio investments to US trade buyers, which each
generated a return in excess of 6 times cost over the period of
investment. These successful exits, together with growth in
investment income, uplifts in valuations and further profitable
sales, have resulted in a 7.0% increase in NAV total return. Your
Board is pleased to propose an increased final dividend of 2.25p
per share which, when added to the 2p interim and 10p special
dividend represents a total of 14.25p of tax-free distributions
paid to Shareholders in respect of the financial year to 31 January
2016.
During the year, the Manager has made further progress in
developing the portfolio by completing three new investments whilst
also achieving a number of realisations, the most notable of which
were two trade sales to US corporate acquirers. In September 2015
the holding in Cash Bases was realised, achieving an exit multiple
of 7.1 times cost, whilst the sale of Westway Services Holdings
completed in December 2015, delivering a return of 6.45 times cost
over the life of the investment. The proceeds from the Cash Bases
exit facilitated the payment of the 10p per share special dividend,
paid on 30 October 2015, and in recognition of this continued
success and strong liquidity the Board is proposing a final
dividend of 2.25p, bringing the full distribution for the year
ended 31 January 2016 to 14.25p per share.
The majority of investee companies are trading well, as can be
seen from the detailed analysis of portfolio developments included
in the Investment Manager's Review. Notably, further progress has
been achieved by Just Trays, John McGavigan, Nenplas and SPS (EU),
which has enabled the Board to increase the valuation of those
investments. Others such as CatTech International, D Mack, ISN
Solutions Group and R&M Engineering Group have had their
valuations reduced in response to challenging market or related
trading conditions.
The Board is also pleased to note that Maven received industry
recognition for its performance during the year when it was named
Private Equity House of the Year at the 2015 M&A Awards, one of
the leading events in the corporate finance calendar. This category
recognises private equity managers that have displayed the keenest
judgement and opportunism in completing acquisitions or exit
transactions, including an acknowledgement of their contribution in
increasing the value of investee businesses. Maven was also
shortlisted at the 2015 unquote" British Private Equity Awards in
the VCT House of the Year category, whilst the 3.8 times cost exit
achieved by your Company from EFC Group in 2014 was nominated for
VCT Exit of the Year.
Shareholders may be aware of the significant legislative changes
which were introduced to the UK VCT scheme during the period. The
July 2015 Budget announced a number of amendments designed to bring
the UK into line with European Union (EU) State Aid Rules for
smaller company investment. The revised legislation imposes
restrictions on the types of transactions and companies which VCTs
are able to invest in, with strict limitations around acquisitions
(specifically prohibiting the financing of management buy-outs),
restrictions on providing follow-on funding to existing portfolio
companies, a lifetime cap on the amount of funding a company can
receive and an age restriction on investee companies. The Board has
reviewed the new legislation and, following detailed discussions
with the Manager, has concluded that Maven remains well placed to
adapt to the new requirements. The Directors believe that Maven's
track record and experience in sourcing and executing similar
transactions for non-VCT clients, for whom over 40 development
capital transactions have been completed since 2011, provides the
Manager with sufficient flexibility and resource to identify and
complete investments which qualify under the new legislation.
Dividends
The Board recommends that an increased final dividend of 2.25p
per Ordinary Share, comprising 0.5p of revenue and 1.75p of
capital, be paid on 24 June 2016 to Shareholders on the Register at
27 May 2016. This would bring total dividends for the year to
14.25p per share. Excluding the impact of the special dividend,
this represents an increase of 6.3% over the prior year and a yield
of 8.8% based on the year end closing mid-market share price of
48.25p.
Since the Company's launch, and after receipt of the proposed
final dividend, Shareholders will have received 46.72p per share in
tax-free dividends. The effect of paying the proposed final
dividend would be to reduce the NAV of the Company by the total
cost of the distribution.
On 24 August 2015 the Board announced that, under the Terms and
Conditions of the Company's Dividend Investment Scheme (DIS) which
allow the Directors to suspend or terminate its operation without
prior notice and revert to making monetary payments to all
participants, the Directors had resolved that, in light of the
investment restrictions proposed in the Government's July 2015
Budget, the DIS was to be suspended with immediate effect to allow
the Directors and the Manager to review the changes to the VCT
legislation and to consider the full potential impact of these on
the Company's future investment strategy. As a result of this, and
recognising that revised legislation may come under consideration,
until further notice all future dividends will be paid to
Shareholders by either cheque or direct bank transfer using
existing mandate instructions.
Fund Raising
In October 2014 the Company announced that it planned to raise
up to GBP4.0 million in an Offer for Subscription alongside offers
by four other Maven VCTs. The Offer by your Company was fully
subscribed by 3 February 2015 and, consequently, closed early.
Relevant details regarding shares issued during the year under
review in respect of the Offer can be found in Note 12 to the
Financial Statements.
As the Company currently enjoys significant cash liquidity for
new investment, the Board has elected not to raise further funds at
present.
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 to Shareholders. However, the Directors also
acknowledge the need to maintain an orderly market in the Company's
shares and have delegated authority to the Manager to buy back
shares in the market for cancellation or to be held in treasury,
subject always to such transactions being in the best interests of
Shareholders.
It is intended that, subject to market conditions, available
liquidity and the maintenance of the Company's VCT status, shares
will be bought back at prices representing a discount of between
10% and 20% to the prevailing NAV per share.
Management and Administration Fees
HM Revenue & Customs (HMRC) has confirmed that VAT is no
longer payable on performance and secretarial fees. The Manager has
sought recovery of amounts paid previously and the sum of
GBP181,000 received during the year has been reflected in the
Financial Statements.
Regulatory Developments
The July 2015 Budget received Royal Assent on 18 November 2015,
bringing into statute material changes to the legislation governing
the UK VCT scheme, aligning it with EU State Aid Rules for smaller
company investment. The new rules impose a number of restrictions
on the types of companies and transactions which VCTs are able to
pursue in order to retain qualifying status, including a VCT's
ability to finance management buy-outs and acquisitions,
limitations on the ability to provide follow-on funding to existing
portfolio companies, a lifetime cap on the amount of funding a
company can receive, and an age restriction for investee companies.
In order to ensure ongoing compliance with the new rules the
Manager has engaged the services of advisers to assist in
interpreting the revised legislation specifically in relation to
proposed new transactions.
Since the announcement of the new rules the Manager has been
actively involved in a consultation process through the industry
representative body the Association of Investment Companies (AIC)
which, supported by other leading VCT managers, has engaged with HM
Treasury and HMRC on the practical application of the new rules.
These discussions are ongoing and the Board will ensure
Shareholders are kept up to date on further developments.
The 2014 UK Corporate Governance Code introduced a new
requirement in respect of financial periods commencing on or after
1 October 2014, for companies to include a viability statement
regarding the Directors' assessment of the future prospects of the
Company. The Board has considered fully the Company's current
position, principal risks and future expectations, and the
Directors' statement of viability can be found in the Annual
Report.
With effect from 1 January 2016, new tax legislation under the
OECD (Organisation for Economic Co-operation and Development)
Common Reporting Standard for Automatic Exchange of Financial
Account Information ("the Common Reporting Standard") is being
introduced. This legislation will require investment trusts and
VCTs to provide personal information to HMRC on certain investors
who purchase shares in investment trusts and VCTs. As a result, the
Company will have to provide information annually to the local tax
authority on the tax residencies of a number of non-UK based
certificated shareholders and corporate entities.
All new Shareholders, excluding those whose shares are held in
CREST, entered onto the share register from 1 January 2016 will be
sent a certification form for the purposes of collecting this
information. For further information, please see HMRC's Quick
Guide: Automatic Exchange of Information - information for account
holders at https://www.gov.uk/
government/publications/exchange-of-information-accountholders.
Board of Directors
Your Board has previously intimated its intention to implement a
succession plan and, having confirmed his intention to do so in the
2015 Annual Report, Charles Nicolson stood down as a Director at
the conclusion of the Annual General Meeting held on 17 June 2015
and was succeeded by myself in the role of Chairman. David
MacLellan stood down as a Director with effect from 16 September
2015, with Peter Linthwaite being appointed in his place. Peter
will stand for re-election at the AGM to be held in June 2016,
being the first following his appointment. On behalf of the Board,
I would like to take this opportunity to thank Charles and David
for the valued contributions that they made during their periods of
service.
Annual General Meeting (AGM)
As indicated in previous Annual Reports, in order to allow a
wider range of Shareholders the opportunity to meet the Directors
and the Manager, it is intended to hold AGMs in Glasgow and London
in alternate years. Therefore, the 2016 AGM will be held in the
Glasgow office of Maven Capital Partners UK LLP on 15 June 2016,
and the Notice of Annual General Meeting can be found in the Annual
Report.
The Future
Your Board remains committed to the strategy of building a
diversified portfolio of private company holdings capable of
supporting a progressive level of tax-free dividends. The Directors
are, however, mindful of the potential impact that the new VCT
rules may have on the regularity and quantum of these
distributions. The revised legislation has introduced a degree of
uncertainty by altering the type of company and transaction in
which your Company can invest, requiring the Manager to consider
financing earlier stage businesses with growth capital
requirements, at the expense of management buy-out or acquisition
based transactions. Given Maven's experience and track record in
sourcing and executing development capital transactions for its
non-VCT clients, the Board remains confident in the Manager's
ability to identify suitable investment opportunities that meet the
new criteria, whilst balancing the risk profile across the
portfolio. The Directors recognise the importance of dividend
payments to Shareholders, and the ability to maintain the current
progressive policy remains a core shared objective for the Board
and the Manager.
John E Lawrence MBE
Chairman
6 May 2016
Business Report
This Business Report is intended to provide an overview of the
strategy and business model of the Company as well as the key
measures used by the Directors in overseeing its management. The
Company is a venture capital trust which invests in accordance with
the investment objective set out in this report.
Investment Objective
The Company aims to achieve long term capital appreciation and
generate maintainable levels of 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/ISDX quoted companies which meet the criteria for
VCT qualifying investments and have strong growth potential;
-- investing no more than GBP1 million in any company in one
year and no more than 15% of the Company's assets by cost in one
business at any time; and
-- borrowing up to 15% of net asset value, if required and only
on a selective basis, in pursuit of its investment strategy.
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
unlisted and AIM/ ISDX quoted companies which, by their nature,
entail 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
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;
-- seeking to appoint a non-executive director to the board of
each private investee company, provided from the Manager's
investment management team or from its pool of experienced
independent directors;
-- co-investing with other funds run by the Manager in larger
deals, which tend to carry less risk;
-- not investing in hostile public to private transactions; and
-- retaining the services of a Manager that can provide the
resources required to achieve the investment objective and meet the
criteria stated above.
An explanation of certain risks and how they are managed is
contained in Note 16 to the Financial Statements.
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 or cash equivalents in order to finance any new
unquoted investment opportunities. The Company has no 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.
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 and the
Manager. These include controls designed to ensure that the
Company's assets are safeguarded and that all records are complete
and accurate.
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
serious breach of other regulations such as the UKLA Listing Rules
and the Companies Act 2006; and
-- increased investment restrictions resulting from the 2015 Finance Act.
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 UK legislation or the EU State Aid
Rules 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 BVCA.
The Board has retained Gowling WLG (UK) LLP as VCT Adviser to
the Company.
Breaches of other regulations, including the Companies Act 2006,
the FCA Listing Rules, the FCA Disclosure and Transparency Rules 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 was fully
implemented with effect from 22 July 2014 and introduced a new
authorisation and supervisory regime for all investment companies
in the EU.
As referred to in the Chairman's Statement, the Company is also
required to comply with new tax legislation under the Common
Reporting Standards. The Company has appointed Capita Asset
Services to act on its behalf to report annually to HMRC and ensure
compliance with this new legislation.
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 the Investment
Manager's Review. A review of the Company's business, its position
as at 31 January 2016 and its performance during the year then
ended is included in the Chairman's Statement, which also includes
an overview of the Company's strategy and business model.
The management of the investment portfolio has been delegated to
Maven Capital Partners UK LLP (Maven), which also provides company
secretarial, administrative and financial management services to
the Company. The Board is satisfied with the depth and breadth of
the Manager's resources and its network of offices, which supply
new deals and enable it to monitor the geographically widespread
portfolio of companies effectively.
The Investment Portfolio Summary 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 show that the portfolio is diversified across a variety
of sectors and deal types. The level of VCT qualifying investment
is monitored by the Manager on a daily basis and reported to the
Risk Committee quarterly.
Key Performance Indicators
At each Board Meeting the Directors consider a number of
financial performance measures to assess the Company's success in
achieving its objectives, and these also enable Shareholders and
prospective investors to gain an understanding of its business. The
key performance indicators are as follows:
-- NAV total return;
-- dividend growth;
-- share price discount to NAV;
-- investment income; and
-- operational expenses.
The NAV total return is a measure of the current NAV per share
and dividends paid to date. The dividend growth measure shows how
much of that Shareholder value has been returned to original
investors in the form of dividends. A historical record of these
measures is shown in the Financial Highlights and the profile of
the portfolio is reflected in the Summary of Investment Changes,
which can be found in the Annual Report. The Board reviews the
Company's investment income and operational expenses on a quarterly
basis.
There is no meaningful venture capital trust index against which
to compare the financial performance of the Company but, for
reporting to the Board and Shareholders, the Manager uses
comparisons with appropriate indices and the Company's peer group.
The Directors also consider non-financial performance measures such
as the flow of investment proposals and the Company's ranking
within the VCT sector by independent analysts.
Valuation Process
Investments held by Maven Income and Growth VCT 2 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 are
valued at their bid prices.
Share Buy-backs
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
The Company has no direct employee or environmental
responsibilities, nor is it responsible for the emission of
greenhouse gases. However, the Directors will consider economic,
regulatory and political trends and features that may impact on the
Company's future development and performance. The Board's principal
responsibility to Shareholders is to ensure that the investment
portfolio is managed and invested properly.
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.
Future Strategy
The Board and Manager intend to maintain the policies set out
above for the year ending 31 January 2016 as it is believed that
these are in the best interests of Shareholders.
John E Lawrence MBE
Chairman
6 May 2016
Maven Income and Growth VCT 2 PLC
Income Statement
For the Year Ended 31 January 2016
Year ended 31 January Year ended 31 January
2016 2015
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Gains on
investments - 3,085 3,085 - 2,070 2,070
Income from
investments 1,025 - 1,025 764 - 764
Other income - - - 2 - 2
Investment
management
fees (116) (1,041) (1,157) (88) (789) (877)
Other expenses (188) - (188) (383) - (383)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net return on
ordinary
activities 721 2,044 2,765 295 1,281 1,576
before taxation
Tax on ordinary
activities (119) 119 - (57) 57 -
---------------- --------------- --------------- --------------- --------------- ---------------
Return
attributable
to Equity
Shareholders 602 2,163 2,765 238 1,338 1,576
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Earnings per
share
(pence) 1.48 5.33 6.81 0.71 3.97 4.68
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
A Statement of Total Recognised Gains and Losses has not been
prepared, as all gains and losses are recognised in the Income
Statement.
All items in the above statement are derived from continuing
operations. The Company has only one class of business and derives
its income from investments made in shares, securities and bank
deposits.
The total column of this statement is the Profit and Loss
Account of the Company.
Reconciliation of Movements
in Shareholders' Funds
For the Year Ended
31 January 2016 Year ended Year ended
31 January 31 January
2016 2015
GBP'000 GBP'000
----------------------------- --------------- ---------------
Opening Shareholders'
funds 20,834 16,723
Net return for year 2,765 1,576
Net proceeds of share
issue 3,966 4,087
Net proceeds of DIS
issue 18 -
Repurchase and cancellation
of shares - (241)
Dividends paid - revenue (411) (341)
Dividends paid - capital (5,402) (970)
Closing Shareholders'
funds 21,770 20,834
------------------------------ --------------- ---------------
The accompanying Notes are an integral part of the Financial
Statements.
Balance Sheet
As at 31 January 2016
31 January 31 January
2016 2015
GBP'000 GBP'000
------------------------------- ------------------------------ ------------------------------
Fixed assets
Investments at fair value
through profit or loss 21,591 19,676
Current assets
Debtors 221 352
Cash 688 1,248
------------------------------- ------------------------------ ------------------------------
909 1,600
Creditors:
Amounts falling due within
one year (730) (442)
------------------------------ ------------------------------
Net current assets 179 1,158
------------------------------- ------------------------------ ------------------------------
Net assets 21,770 20,834
------------------------------- ------------------------------ ------------------------------
Capital and reserves
Called up share capital 4,109 3,424
Share premium account 9,473 6,174
Capital reserve - realised (11,296) (11,223)
Capital reserve - unrealised 821 3,987
Special distributable reserve 17,842 17,842
Capital redemption reserve 295 295
Revenue reserve 526 335
Net assets attributable
to Ordinary Shareholders 21,770 20,834
------------------------------- ------------------------------ ------------------------------
Net asset value per Ordinary
share (pence) 53.0 60.8
------------------------------- ------------------------------ ------------------------------
The Financial Statements of Maven Income and Growth VCT 2 PLC,
registered number 4135802, were approved and authorised for issue
by the Board of Directors on 6 May 2016 and were signed on its
behalf by:
John E Lawrence MBE
Director
The accompanying Notes are an integral part of the Financial
Statements.
Cash Flow Statement
For the Year Ended
31 January 2016
Year ended 31
Year ended 31 January 2015
January 2016 (restated)(1)
GBP'000 GBP'000
---------------------------- ------------------------- ------------------------
Net cash flows from
operating activities (1,034) (1,369)
Cash flows from investing
activities
Investment income received 1,065 926
Deposit interest received - 2
Purchase of investments (27,006) (9,801)
Sale of investments 28,244 8,400
Net cash flows from
investing activities 2,303 (473)
---------------------------- ------------------------- ------------------------
Cash flows from financing
activities
Equity dividends paid (5,813) (1,311)
Issue of Ordinary Shares 3,984 4,087
Repurchase of Ordinary
Shares - (241)
---------------------------- ------------------------
Net cash flows from
financing activities (1,829) 2,535
---------------------------- ------------------------- ------------------------
Net (decrease)/increase
in cash (560) 693
---------------------------- ------------------------- ------------------------
Cash at beginning of
year 1,248 555
Cash at end of year 688 1,248
(1) The 2015 cash flow has been restated for the presentational
requirements of FRS 102
The accompanying Notes are an integral part of the Financial
Statements
Notes to the Financial Statements
For the Year Ended 31 January 2016
1. Accounting Policies
a) Basis of Preparation
The Financial Statements have been prepared under 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. This is the first year that the Company has
presented its Financial Statements under the Financial Reporting
Standard 102 (FRS 102) issued by the Financial Reporting Council.
The date of transition to FRS 102 is 1 February 2014. There are no
significant changes changes to the Company's accounting policies as
a result of the adoption of FRS 102 and the SORP.
b) Income
Dividends receivable on equity shares and unit trusts are
treated as revenue for the period on an ex-dividend basis. Where no
ex-dividend date is available dividends receivable on or before the
year end are treated as revenue for the period. Provision is made
for any dividends not expected to be received. The fixed returns on
debt securities and non-equity shares are recognised on a time
apportionment basis so as to reflect the effective interest rate on
the debt securities and shares. Provision is made for any fixed
income not expected to be received. Interest receivable from cash
and short term deposits and interest payable are accrued to the end
of the year.
c) Expenses
All expenses are accounted for on an accruals basis and charged
to the income statement. Expenses are charged through the revenue
account except as follows:
-- expenses which are incidental to the acquisition and disposal
of an investment are charged to capital; and
-- expenses are charged to realised capital reserves where a
connection with the maintenance or enhancement of the value of the
investments can be demonstrated. In this respect the investment
management fee has been allocated 10% to revenue and 90% 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 investments completed prior to the reporting date and
those at an early stage in their development, fair value is
determined using the Price of Recent Investment Method, except that
adjustments are made when there has been a material change in the
trading circumstances of the company or a substantial movement in
the relevant sector of the stock market.
2. Whenever practical, recent investments will be valued by
reference to a material arm's length transaction or a quoted
price.
3. Mature companies are valued by applying a multiple to their
prospective earnings to determine the enterprise value of the
company.
3.1 To obtain a valuation of the total ordinary share capital
held by management and the institutional investors, the value of
third party debt, institutional loan stock, debentures and
preference share capital is deducted from the enterprise value. The
effect of any performance related mechanisms is taken into account
when determining the value of the ordinary share capital.
3.2 Preference shares, debentures and loan stock are valued
using the Price of Recent Investment Method. When a redemption
premium has accrued, this will only be valued if there is a
reasonable prospect of it being paid. Preference shares which carry
a right to convert into ordinary share capital are valued at the
higher of the Price of Recent Investment Method basis and the
price/earnings basis, both described above.
4. Where there is evidence of impairment, a provision may be
taken against the previous valuation of the investment.
5. In the absence of evidence of a deterioration, or strong
defensible evidence of an increase in value, the fair value is
determined to be that reported at the previous balance sheet
date.
6. All unlisted investments are valued individually by the
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.
7. In accordance with normal market practice, investments listed
on the Alternative Investment Market or a recognised stock exchange
are valued at their bid market price.
f) Fair Value Measurement
Fair value is defined as the price that the Company would
receive upon selling an investment in a timely transaction to an
independent buyer in the principal or the most advantageous market
of the investment. A three-tier hierarchy has been established to
maximise the use of observable market data and minimise the use of
unobservable inputs and to establish classification of fair value
measurements for disclosure purposes. Inputs refer broadly to the
assumptions that market participants would use in pricing the asset
or liability, including assumptions about risk, for example, the
risk inherent in a particular valuation technique used to measure
fair value including such a pricing model and/or the risk inherent
in the inputs to the valuation technique. Inputs may be observable
or unobservable.
Observable inputs are inputs that reflect the assumptions market
participants would use in pricing the asset or liability developed
based on market data obtained from sources independent of the
reporting entity.
Unobservable inputs are inputs that reflect the reporting
entity's own assumptions about the assumptions market participants
would use in pricing the asset or liability developed based on best
information available in the circumstances.
The three-tier hierarchy of inputs is summarised in the three
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; and
-- 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.
Movement in reserves
Share Capital Capital Special Capital
premium reserve reserve distributable redemption Revenue
account realised unrealised reserve reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 February
2015 6,174 (11,223) 3,987 17,842 295 335
Gains on sale
of investments - 6,251 - - - -
Net decrease
in value of
investments - - (3,166) - - -
Investment management
fees - (1,041) - - - -
Dividends paid - (5,402) - - - (411)
Tax effect of
capital items - 119 - - - -
Repurchase and
cancellation
of shares - - - - - -
Share Issue 3,286 - - - - -
DIS share issue 13 - - - - -
Net return on
ordinary activities - - - - - 602
At 31 January
2016 9,473 (11,296) 821 17,842 295 526
----------------------- --------- ---------- ------------ ----------------- ------------ ---------
Return per Ordinary Share
The returns per Ordinary Share are based on the following
figures:
Year ended Year ended
31 January 31 January
2016 2015
Weighted average number
of Ordinary Shares in issue 40,602,938 33,718,935
Revenue return GBP602,000 GBP238,000
Capital return GBP2,163,000 GBP1,338,000
------------ ------------
Total return GBP2,765,000 GBP1,576,000
------------ ------------
NAV per Ordinary Share
NAV per Ordinary Share as at 31 January 2016 has been calculated
using the number of Ordinary Shares in issue at that date of
41,089,617 (2015: 34,243,932).
Directors' Responsibility Statement
The Directors believe 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 January 2016 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
are fair, balanced and understandable and provide the information
necessary to assess the Company's position and performance,
business model and strategy.
Other information
The Annual General Meeting will be held on 15 June 2016,
commencing at 10.30 am at Kintyre House, 205 West George Street,
Glasgow G2 2LW.
This Announcement has been prepared on the same basis as the
Annual Report and Financial Statements for the year ended 31
January 2016. The Annual Report and Financial Statements for the
year ended 31 January 2016 will be submitted to the National
Storage Mechanism and be available for inspection at:
www.morningstar.co.uk/uk/NSM and will also be 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 31 January 2015 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 31 January 2016, will be
available 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/migvct2.
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.
By order of the Board
Maven Capital Partners UK LLP
Secretary
6 May 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR AKADPQBKDBPK
(END) Dow Jones Newswires
May 06, 2016 10:56 ET (14:56 GMT)
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