Annual Report • Dec 31, 2014
Annual Report
Open in ViewerOpens in native device viewer
Annual Report For the Year Ended 31 December 2014
Maven Income and Growth VCT 4 PLC (the Company) is a venture capital trust (VCT) and its shares are listed on the Premium segment of the Official List and traded on the main market of the London Stock Exchange. Following the consolidation of the Ordinary Shares on 30 September 2014, the Company has one class of share. The Company was incorporated on 26 August 2004.
The Company aims to achieve long term capital appreciation and generate maintainable levels of income for Shareholders.
The Company's Articles of Association require the Directors to put a proposal for the continuation of the Company, in its then form, to Shareholders at the Company's Annual General Meeting in 2020, and thereafter, at five yearly intervals. For such a resolution not to be passed, Shareholders holding at least 25% of the Shares then in issue must vote against the resolution.
Shares in the Company can be purchased and sold in the market through a stockbroker. For qualifying investors buying shares on the open market:
The Broker to the Company is Shore Capital Stockbrokers Limited (020 7647 8132).
The Company currently conducts its affairs so that the shares issued by it can be recommended by financial advisers to ordinary retail investors in accordance with the rules of the Financial Conduct Authority (FCA) in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future. The Company's shares are excluded from the FCA's restrictions which apply to non-mainstream investment products because they are shares in a venture capital trust and the returns to investors are predominantly based on investments in private companies or publicly quoted securities.
Shareholders in a number of UK registered companies have received unsolicited calls from organisations, usually based overseas or using false UK addresses or phone lines routed abroad, offering to buy shares at prices much higher than their current market values or to sell non-tradable, overpriced, high risk or even nonexistent securities. Whilst the callers may sound credible and professional, Shareholders should be aware that their intentions are often fraudulent and high pressure sales techniques may be applied, often involving a request for an indemnity or a payment to be provided in advance.
If you receive such a call, you should exercise caution and, based on advice from the FCA, the following precautions are suggested:
Telephone: 0300 123 2040 Website: www.actionfraud.police.uk
Website: www.fca.org.uk
Register:
www.fca.org.uk/firms/systems-reporting/register
Scam warning:
www.fca.org.uk/consumers/scams
Annual General Meeting (AGM) 29 April 2015
| Interim dividend | |
|---|---|
| Rate | 2.10p |
| XD date | 3 September 2014 |
| Record date | 5 September 2014 |
| Payment date 26 September 2014 | |
| Proposed final dividend | |
| Rate | 2.90p |
| XD date | 7 May 2015 |
| Record date | 8 May 2015 |
| Dividend investment |
|
| election date | 22 May 2015 |
Payment date 5 June 2015
| 35 40 44 49 50 53 |
Directors' Report Directors' Remuneration Report Statement of Corporate Governance Statement of Directors' Responsibilities Report by the Audit and Risk Committees Independent Auditor's Report to the Members of Maven Income and Growth VCT 4 PLC |
G ov er na nc e Re po rt |
|---|---|---|
| 57 | Income Statement (For the Year Ended 31 December 2014) |
Fi |
| 57 | Reconciliation of Movements in Shareholders' Funds (For the Year Ended 31 December 2014) |
na nc |
| 58 | Income Statement (For the Year Ended 31 December 2013) |
ia l S |
| 58 | Reconciliation of Movements in Shareholders' Funds (For the Year Ended 31 December 2013) |
ta te m |
| 59 | Balance Sheet | en |
| 60 | Cash Flow Statement | ts |
| 61 | Notes to the Financial Statements | |
| 81 86 |
Notice of Annual General Meeting Explanatory Notes to the Notice of Annual General Meeting |
A nn ua l G en er al M ee ti ng |
Strategic Report
3
Financial History
| 31 December 2014 |
31 December 2013 |
31 December 2012 |
|
|---|---|---|---|
| Net asset value (NAV) | £31,138,000 | £25,340,000 | £8,990,000 |
| NAV per Ordinary Share | 97.20p | 98.60p | 98.20p |
| Dividends paid or proposed for year | 5.00p | 4.65p | 4.50p |
| Dividends paid to date | 34.05p | 29.30p | 24.55p |
| NAV total return per shareA | 131.25p | 127.90p | 122.75p |
| Share priceB | 87.00p | 83.12p | 96.75p |
| Discount to NAV | 10.5% | 15.7% | 1.5% |
| Annual yieldC | 5.7% | 5.6% | 4.7% |
| Ordinary Shares in issue | 32,049,188 | 25,693,172 | 9,157,406 |
A Sum of NAV per share and dividends paid to date (excluding initial tax relief).
B Mid-market price (Source: Bloomberg).
C Based on full year dividend and share price at year end.
The above chart shows NAV total return per share (NAV plus dividends paid to date) at 31 December in each year. Dividends that have been proposed but not yet paid are included in the NAV at the balance sheet date. The policy for valuing investments is disclosed in note 1 to the Financial Statements.
| Year ended 31 December | Payment date | Interim/final | Rate (p) | Annual rate (p) |
|---|---|---|---|---|
| 2006-2009 | Total | 15.30 | ||
| 2010 | 27 September 2010 | Interim | 1.00 | |
| 27 May 2011 | Final | 2.50 | 3.50 | |
| 2011 | 27 September 2011 | Interim | 1.50 | |
| 30 May 2012 | Final | 2.50 | 4.00 | |
| 2012 | 28 September 2012 | Interim | 1.75 | |
| 22 March 2013 | Second interim | 2.75 | 4.50 | |
| 2013 | 27 September 2013 | Interim | 2.00 | |
| 30 May 2014 | Final | 2.65 | 4.65 | |
| 2014 | 26 September 2014 | Interim | 2.10 | |
| Total dividends paid | 34.05 | |||
| 2014 | 5 June 2015 | Proposed final | 2.90 | 5.00 |
| Total dividends paid or proposed | 36.95 |
All of the S Shares were redesignated as Maven Income and Growth VCT 4 Ordinary Shares with a further 804,028 bonus Maven Income and Growth VCT 4 Ordinary Shares issued on 25 March 2013. As a result, following completion of the Share Consolidation, holders of S Shares now hold 1.1528 Ordinary Shares for every S Share held on the record date for the Share Consolidation.
On 30 September 2014 the C Ordinary Shares were consolidated into the Ordinary Shares of the Company. In accordance with the Articles of Association of the Company, 3,863,876 C Ordinary Shares were re-designated as 3,077,827 Ordinary Shares (based on a conversion ratio of 0.7968 per holding of C Ordinary Shares) and rounded down to the nearest whole share. Further information is contained in notes 12, 14 and 18 to the Financial Statements.
The Board of Directors is responsible for setting and monitoring the Company's strategy. The Board of Directors, the majority of whom are independent of the Manager, also supervises the management of Maven Income and Growth VCT 4 PLC and looks after the interests of its Shareholders.
The Board currently consists of six non-executive Directors, all of whom are male. The size of the board will reduce to four from the end of April 2015, as David Potter and Andrew Lapping are retiring at the Annual General Meeting. The names and biographies of the Directors set out below indicate their range of investment, commercial and professional experience. Further details are also provided in the Directors' Report and Statement of Corporate Governance (on pages 35 and 44 respectively).
Ian Cormack Chairman and Independent Non-executive Director
Relevant experience and other directorships: Ian spent 30 years at Citigroup (formerly Citibank), occupying many senior positions in the bank including Country Head (CCO) for Citicorp in the UK, Chairman of Citibank International and was Co-head of Global Financial Institutions. Following his career at Citigroup, he spent two years at AIG Inc where he was Chief Executive of insurance, financial services and asset management businesses in Europe.
He holds a number of directorships including Bloomsbury Publishing plc, Phoenix Group plc, Partnership Assurance Group plc and Xchanging plc.
Length of service: He was appointed as Director and as Chairman on 1 September 2004.
Last re-elected to the Board: 6 June 2013
Committee membership: Audit (Chairman), Risk (Chairman), Management Engagement (Chairman) and Nomination (Chairman).
Employment by the Manager: None
Shared directorships with other Directors: None
Shareholding in Company: 149,881 Ordinary Shares
Malcolm Graham-Wood Independent Non-executive Director
Relevant experience and other directorships: Malcolm began his career with Wood Mackenzie in 1979 as a financial analyst and then spent twelve years at James Capel after which he became Head of Equities at Williams de Broe. He is now a founding partner of HydroCarbon Capital which provides independent advisory services to the oil & gas sector.
Length of service: He was appointed as Director on 1 September 2004.
Last re-elected to the Board: 6 June 2013
Committee membership: Audit, Risk, Management Engagement and Nomination.
Employment by the Manager: None
Shared directorships with other Directors: None
Shareholding in Company: 47,241 Ordinary Shares
Andrew Lapping Independent Non-executive Director
Relevant experience and other directorships: Andrew worked for PricewaterhouseCoopers (now PwC) for 12 years, specialising in corporate finance and tax planning. In 1999 he established a private equity company, The Hamilton Portfolio Limited, of which he is Managing Director. He has managed a number of private equity and AIM investments. A Fellow of The Chartered Institute of Taxation, he is a non-executive director of a number of private companies.
Length of service: He was appointed as Director on 1 September 2004. Andrew is standing down as Director following conclusion of the AGM on 29 April 2015.
Last re-elected to the Board: 14 May 2014 Committee membership: Audit, Risk, Management Engagement and Nomination. Employment by the Manager: None
Shared directorships with other Directors: None
Shareholding in Company: 75,941 Ordinary Shares
Bill Nixon Non-executive Director
Relevant experience and other directorships: Bill is managing partner of Maven Capital Partners UK LLP (Maven) and has over 30 years' experience in banking and private equity. He is a Fellow of the Chartered Institute of Bankers in Scotland and obtained an MBA from Strathclyde University in 1996. In the 1990's, Bill was head of the private equity business at Clydesdale Bank plc, a subsidiary of National Australia Bank, before joining Aberdeen Asset Management plc (Aberdeen) in 1999. In 2004 he was appointed as principal fund manager to all Aberdeen managed VCTs. In 2009, Bill and his senior colleagues led a management buy-out from Aberdeen to form Maven. He is a director of Maven Income and Growth VCTs 2, 3 and 6.
Length of service: An Alternate Director since 1 November 2005, he was appointed as Director on 6 August 2008.
Last re-elected to the Board: 14 May 2014
Committee membership: Risk and Nomination.
Employment by the Manager: Since 2009; with Aberdeen 1999-2009.
Shared directorships with other Directors: None
Shareholding in Company: 249,243 Ordinary Shares
Steven Scott Independent Non-executive Director
Relevant experience and other directorships: Steven is a qualified chartered accountant. He worked in the Bank of Scotland Structured Finance Group before becoming a director of Royal Bank Development Capital, the private equity division of The Royal Bank of Scotland plc. In 1999, he founded Penta Capital, an independent UK private equity manager with around £400 million under management. Penta specialises in buy & build investments and opportunities presented by the credit crunch and liquidity issues in the UK.
Length of service: He was appointed as Director on 1 September 2004.
Last re-elected to the Board: 14 May 2014
Committee membership: Audit, Risk, Management Engagement and Nomination.
Employment by the Manager: None
Shared directorships with other Directors: None
Shareholding in Company: 149,061 Ordinary Shares
David Potter Independent Non-executive Director
Relevant experience and other directorships: In his executive career in the City, David worked for CFSB, Samuel Montagu, Midland Bank (now HSBC) and was CEO of the Guinness Mahon Group prior to its acquisition by Investec where he was Deputy Chairman (UK). He is Chairman of Spark Ventures PLC and is a non-executive Director of Fundsmith Emerging Equities Trust PLC. Among his other activities, he is on the Council of The Centre for the Study of Financial Innovation.
Length of service: He was appointed as Director on 4 April 2013. David is standing down as Director following conclusion of the AGM on 29 April 2015.
Last re-elected to the Board: 14 May 2014
Committee membership: Audit, Risk, Management Engagement and Nomination.
Employment by the Manager: None
Other connections with Manager: Previously Chairman of Ortus VCT PLC, which was managed by Maven prior to its merger with the Company in April 2013.
Shared directorships with other Directors: None
Shareholding in Company: 89,381 Ordinary Shares
On behalf of your Board I am pleased to announce the results for the twelve months to 31 December 2014. During the year, improved income derived from the investment portfolio combined with the proceeds of a number of profitable realisations resulted in a further increase in NAV total return and enabled your Company to propose an increased annual dividend for the fourth year in succession.
The majority of investee businesses are trading well, and a number of notable performances by, amongst others, Nenplas Holdings, HCS Control Systems Group and John McGavigan has enabled the Board to write up their values, whilst the valuations of CHS Engineering Services and DPP have been reduced during the year. There has been ongoing interest in various portfolio companies from trade and private equity buyers, and pleasingly several profitable exits have been achieved, most significantly the full realisations of our investments in Adler and Allan Holdings and EFC Group.
The Manager has continued to invest in a varied range of private companies which generate an income to your Company and, as a result of this strategy, investment income has increased by 21% over the year. As at the period end, and including the benefit of another successful fund raising, net assets have risen to £31 million.
In line with the policy of reducing exposure to AIM, the Manager has continued to dispose of holdings for optimum value as opportunities arose and listed equities now account for a modest 1.6% of the asset base. Developments within the portfolio are detailed in the Investment Manager's Review on pages 19 to 25.
Your Company was also able to complete the final stage of the 2013 merger with Ortus VCT PLC, and accelerate the consolidation of the two separate share classes that have been in place since that time. When the merger occurred, the Boards of both Companies agreed that the common assets would merge into the Ordinary Share pool and the legacy investments would be segregated into a new C Share pool, which would be managed separately until the assets were sold or could be merged into the Ordinary Share pool.
At the half-year, your Board reduced the valuation of the former Ortus holdings in Higher Nature and Networks by Wireless to reflect trading performance, which had the effect of reducing the NAV of the C Share pool to 76.10p per Share. The valuations of all remaining legacy assets were reviewed prior to the share consolidation taking place and, being considered to be a fair reflection of value, were left unchanged.
As a result of the merger and share class consolidation, in tandem with a series of successful fund raisings, your Company has grown materially in scale in recent years and is now well positioned to build a larger and more diverse portfolio.
The Board recommends that an increased final dividend of 2.90p per Ordinary Share, comprising 0.70p of revenue and 2.20p of capital, be paid on 5 June 2015 to Shareholders on the Register at 8 May 2015. This brings total dividends for the year to 5.00p per share, representing a yield of 5.7% based on the year end closing mid-market share price of 87.00p.
NAV total return of 131.25p per share (2013: 127.90p) at the year end, up 2.6% over the year
NAV at period end of 97.20p per share (2013: 98.60p)
Eleven new private equity investments added to the portfolio
Realisation of Adler and Allan Holdings for a total return of 2.6 times cost
Exit from EFC Group, generating a total return multiple of 3.8 times cost
Increased final dividend proposed of 2.90p per share, making the full year dividend 5.00p per share (2013: 4.65p)
Since the Company's launch, and after receipt of the proposed final dividend, Shareholders will have received 36.95p 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.
The Directors have agreed to implement a DIS through which Shareholders may elect to have their dividend payments used to apply for additional Ordinary Shares issued by the Company under the standing authority requested from Shareholders at Annual General Meetings. Shares issued under the DIS will qualify for VCT tax reliefs applicable for the tax year in which they are allotted.
Full details of the scheme, together with a mandate form, are being made available alongside this Annual Report to enable Shareholders to take advantage of the DIS in respect of the final dividend for the year ending 31 December 2014. Shareholders wishing to do so should ensure that a mandate form, or CREST instruction if appropriate, is submitted by no later than the election date of 22 May 2015. Under current VCT legislation, dividends that are invested will be eligible for income tax relief at 30% of the amount invested, subject to an annual investment limit of £200,000, in aggregate, per individual for all investments into new VCT Shares in a tax year.
Following the success of the £4 million Offer for Subscription that opened in October 2013 and closed on 30 May 2014, in October 2014 the Company announced that it planned to raise up to £2 million in a joint Offer for Subscription alongside four other Maven VCTs. That Offer in respect of your Company was fully subscribed by 7 January 2015 and, consequently, closed early. Maven Income and Growth VCT, Maven Income and Growth VCT 2, Maven Income and Growth VCT 3 and Maven Income and Growth VCT 5 have each also raised their maximum target of £4 million.
The first allotment under the Offer took place on 20 February 2015, and it is anticipated that a further allotment will take place in early April 2015 in respect of the 2015/16 tax year. Relevant details regarding shares issued in respect of the Offers can be found in note 12 to the Financial Statements.
The Company may use the money raised under the Offers to pay dividends (subject to meeting the requirements of the return of capital legislation effective from 6 April 2014) and general running costs, thereby preserving for investment purposes an equivalent sum of more valuable 'old money' which operates under more advantageous VCT regulations. The proceeds of the Offers will also provide additional liquidity for the Company to make further investments, and enable it to spread its costs over a larger asset base to the benefit of all Shareholders.
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 interest 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 up to 15% to the prevailing NAV per share.
The Company completed a merger with Ortus VCT PLC on 3 April 2013, details of which were contained in a shareholder circular and prospectus dated 1 March 2013. It was agreed that the common assets be merged into the Ordinary Share pool and, in view of the disproportionately high value of several of the legacy Ortus VCT PLC investments, that these be segregated into a new C Share pool, which would be managed separately for a period of up to two years. The C Shares would then be consolidated into the Ordinary Shares on a relative net asset basis (as provided for in the Articles of Association as amended at the time of the merger). As the C Shares pool investments had been materially realised and the proceeds reinvested alongside the Ordinary Shares pool, the Board decided to accelerate the consolidation of the C Shares into the Ordinary Shares and create a single class of shares, and accordingly the share consolidation was implemented on 30 September 2014. Details of the transaction are contained in note 18 to the Financial Statements.
The AIFMD regulates the management of alternative investment funds, including VCTs, and the Board has received approval as a self-managed small registered UK AIFM under the AIFMD from the FCA. A new Risk Committee has been established, and information regarding the composition and responsibilities of this committee can be found in the Report by the Audit and Risk Committees on pages 50 to 52.
The Association of Investment Companies (AIC) participated in a consultation process on 'tax-advantaged venture capital schemes' to assist the Government's discussions with the European Commission regarding a review of the State Aid rules for businesses in member countries. The Board supported the AIC's response, in which a number of recommendations were made that we believe would protect the VCT scheme against the imposition of further restrictions on investment and would reduce administrative burdens.
The FCA has removed the requirement for listed companies to publish quarterly interim management statements. However, your Company will continue to announce the NAV per share on a quarterly basis.
The merger with Ortus VCT PLC led to a temporary increase in the number of directors, and as previously intimated, it was the intention as set out in the merger prospectus that the size of the Board would return to previous levels when the C Share pool was merged and your Company had a single class of shares. Your Board has also been considering the issue of Board composition and orderly succession, and has agreed in principle that it would be advantageous to reduce the number of independent directors from five to three. Accordingly, Andrew Lapping and David Potter have indicated that they will stand down and not seek re-election at the AGM to be held on 29 April 2015.
Further changes in Board membership are likely to take place within the next few years, and the future constitution of the Board will be confirmed and communicated fully to Shareholders in due course, with each new Director being subject to re-election by Shareholders at the AGM immediately following their appointment.
I would like to take this opportunity to thank Andrew for the valued contribution that he has made to the Board since the inception of your Company, and David for his support since the merger with Ortus VCT PLC. I wish both of them well for the future.
Your Board recognises that the UK Code of Corporate Governance recommends that all non-executive directors who have served for a period of longer than nine years should be subject to annual re-election. As the majority of the current members of the Board, including myself as Chairman, have held office for periods in excess of nine years, it has been resolved to adopt this practice with effect from the 2015 AGM.
As detailed in the 2014 Interim Report, a number of Shareholders have expressed an interest in receiving notification, by post or e-mail, that documents, including Annual and Interim reports, are available on the Company's website as an alternative to receiving hard copies by post. A letter of request was enclosed for Shareholders to complete and return to confirm whether or not they wished to take advantage of this facility, and indicating that, if it was not returned, they would be deemed as having given their consent to receiving only postal notifications that documents are available on the website. As a result, if no such letter of request was returned, Shareholders will have received notification by post of the publication of this Annual Report on the Company's website. Shareholders who wish notifications to be sent by e-mail rather than by post should complete and return the form enclosed or advise the Registrar via the Share Portal at www.capitashareportal.com. Hard copies of all documents are available on request.
The Board believes that the continuation of the proven later-stage investment policy adopted by the Manager, combined with the benefits and efficiencies that will come from having a simplified share capital structure, will deliver continued growth in Shareholder value in the years ahead.
Ian Cormack Chairman
24 March 2015
For the Year Ended 31 December 2014
| 31 December 2013 £'000 |
Ordinary Valuation % |
31 December 2013 £'000 |
C Ordinary Valuation % |
Net investment/ (disinvestment) £'000 |
Appreciation/ (depreciation) £'000 |
31 December 2014 £'000 |
Ordinary Valuation % |
|
|---|---|---|---|---|---|---|---|---|
| Unlisted investments | ||||||||
| Equities | 8,070 | 31.8 | 1,363 | 37.5 | 537 | 1,058 | 11,028 | 35.4 |
| Preference shares | 3 | - | - | - | - | - | 3 | - |
| Loan stock | 12,305 | 48.6 | 623 | 17.2 | 2,422 | (558) | 14,792 | 47.5 |
| 20,378 | 80.4 | 1,986 | 54.7 | 2,959 | 500 | 25,823 | 82.9 | |
| AIM/ISDX investments Equities |
260 | 1.0 | 398 | 11.0 | (160) | (41) | 457 | 1.5 |
| Listed investments | ||||||||
| Equities | 50 | 0.2 | - | - | (30) | (1) | 19 | 0.1 |
| UK treasury bills | 3,497 | 13.8 | 749 | 20.6 | (1,264) | 15 | 2,997 | 9.6 |
| Total investments | 24,185 | 95.4 | 3,133 | 86.3 | 1,505 | 473 | 29,296 | 94.1 |
| Other net assets | 1,155 | 4.6 | 498 | 13.7 | 189 | - | 1,842 | 5.9 |
| Total assets | 25,340 100.0 | 3,631 100.0 | 1,694 | 473 | 31,138 100.0 |
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 below.
The Company aims to achieve long term capital appreciation and generate maintainable levels of income for Shareholders.
Under an investment policy approved by the Directors, the Company intends to achieve its objective by:
The principal risks and uncertainties facing the Company are as follows:
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 a structured selection, monitoring and realisation process. The Board reviews the investment portfolio with the Manager on a regular basis.
The Company manages and minimises investment risk by:
An explanation of certain risks and how they are managed is contained in Note 17 to the Financial Statements.
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.
The valuation of investment companies may be affected by underlying economic conditions such as fluctuating interest rates and the availability of bank finance.
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.
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.
The Company operates in a complex regulatory environment and faces a number of related risks, including:
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 European Commission's (EC) state aid rules. Changes in the future to UK legislation or the EC 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 or the British Venture Capital Association (BVCA).
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 December 2014 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 network of offices, which supply new deals and enable it to monitor the geographically widespread portfolio of companies effectively.
The Investment Portfolio Summary on pages 32 to 33 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 on pages 17 and 18 shows that the portfolio is diversified across a variety of sectors and deal types. The level of qualifying investments is monitored by the Manager on a daily basis and reported to the Risk Committee quarterly.
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 investors to gain an understanding of its business. The key performance indicators are as follows:
The NAV total return is a measure of the current NAV per share and the sum of dividends paid to date. The dividends per share 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 on pages 5 and 6. The change in the profile of the portfolio is reflected in the Summary of Investment Changes on page 13. 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 ranking of the VCT sector by independent analysts.
Investments held by Maven Income and Growth VCT 4 PLC in unquoted companies are valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines. Investments quoted or traded on a recognised stock exchange, including AIM, are valued at their bid prices.
The Board will seek the necessary Shareholder authority to continue the share buy-back programme under appropriate circumstances.
As a venture capital trust, the Company has no direct employee or environmental responsibilities, nor is it responsible for the emission of greenhouse gases. Its principal responsibility to Shareholders is to ensure that the investment portfolio is managed and invested properly. The Company has no employees and, accordingly, has no requirement to report separately on employment matters. The management of the portfolio is undertaken by the Manager through members of its portfolio management team. The Manager engages with the Company's underlying investee companies in relation to their corporate governance practices and in developing their policies on social, community and environmental matters and further information may be found in the Statement of Corporate Governance. In 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.
The Board and Manager intend to maintain the policies set out above for the year ending 31 December 2015 as it is believed that these are in the best interests of Shareholders.
Ian Cormack Chairman 24 March 2015
As at 31 December 2014
| Industry sector | Unlisted valuation £'000 |
% | Quoted valuation £'000 |
% | Total valuation £'000 |
% |
|---|---|---|---|---|---|---|
| Energy services | 5,239 | 19.9 | - | - | 5,239 | 19.9 |
| Support services | 4,776 | 18.2 | 46 | 0.1 | 4,822 | 18.3 |
| Insurance | 2,453 | 9.3 | 19 | 0.1 | 2,472 | 9.4 |
| Telecommunication services | 2,420 | 9.2 | 2 | - | 2,422 | 9.2 |
| Construction & building materials | 1,763 | 6.7 | - | - | 1,763 | 6.7 |
| Automobiles & parts | 1,491 | 5.7 | - | - | 1,491 | 5.7 |
| Engineering & machinery | 1,325 | 5.0 | - | - | 1,325 | 5.0 |
| Diversified industrials | 1,173 | 4.5 | - | - | 1,173 | 4.5 |
| Real estate | 1,128 | 4.3 | - | - | 1,128 | 4.3 |
| Health | 800 | 3.0 | 10 | 0.1 | 810 | 3.1 |
| Pharmaceuticals & biotechnology | 612 | 2.3 | 156 | 0.6 | 768 | 2.9 |
| Electronic & electrical equipment | 750 | 2.9 | - | - | 750 | 2.9 |
| Household goods & textiles | 523 | 2.0 | 92 | 0.3 | 615 | 2.3 |
| General retailers | 446 | 1.7 | - | - | 446 | 1.7 |
| Chemicals | 398 | 1.5 | - | - | 398 | 1.5 |
| Financial services | 308 | 1.2 | - | - | 308 | 1.2 |
| Software & computer services | 218 | 0.8 | 76 | 0.3 | 294 | 1.1 |
| Media & entertainment | - | - | 73 | 0.3 | 73 | 0.3 |
| Investment companies | - | - | 2 | - | 2 | - |
| Total | 25,823 | 98.2 | 476 | 1.8 | 26,299 | 100.0 |
| Valuation | |||
|---|---|---|---|
| Deal type | Number | £'000 | % |
| Unlisted | |||
| Management buy-out | 16 | 7,871 | 29.9 |
| Acquisition finance | 9 | 3,771 | 14.3 |
| Development capital | 14 | 3,639 | 13.8 |
| Replacement capital | 5 | 3,539 | 13.5 |
| Buy & build | 3 | 2,828 | 10.8 |
| Buy-in/management buy-out | 3 | 2,560 | 9.7 |
| Management buy-in | 1 | 559 | 2.1 |
| Refinancing | 1 | 540 | 2.1 |
| Mezzanine | 1 | 516 | 2.0 |
| Total unlisted | 53 | 25,823 | 98.2 |
| Quoted | 14 | 476 | 1.8 |
| Total unlisted and quoted | 67 | 26,299 | 100.0 |
Development capital Acquisition finance Replacement capital Buy & build Buy-in/management buy-out Management buy-out Management buy-in Refinancing Mezzanine Quoted
Bill Nixon, Managing Partner Maven Capital Partners UK LLP
The year to 31 December 2014 has been very satisfactory in accomplishing your Company's investment objective. A number of successful exits were achieved, providing liquidity to continue to expand the asset base, with new investments structured to provide maximum yield and capital gain potential. Delivery of this strategy has resulted in a further increase in NAV total return and tax-free income for Shareholders.
This has been a good year for your Company with meaningful realisations for value combined with the addition of a number of defensively structured new private company holdings across a range of industries. The Maven team continues to apply strict criteria to new portfolio assets, investing only in established and well managed businesses, each available on a reasonable entry multiple, and where the investment has a significant income producing loan stock element. Our experience suggests that this is the optimum strategy to deliver attractive Shareholder returns and maintain a progressive dividend programme.
As the portfolio has continued to mature, the Maven investment team has demonstrated an ongoing ability to create and realise value in investee companies by working closely with management teams to develop exit strategies, and it is pleasing to note that considerable interest has been shown in your Company's assets by both trade and private equity buyers based within the UK and overseas.
Several profitable realisations were achieved, most notably the full exits from Adler and Allan Holdings and EFC Group, as well as the secondary buy-out of Westway Services, which has achieved rapid growth since Maven supported the initial management buy-out in 2009. Satisfactory disposals were made from Tuscola (FC100) and Moriond, and insurance proceeds were also received in respect of the fire that occurred in 2012 at the Lawrence Recycling and Waste Management plant. The cash generated from these transactions has enabled a number of new assets to be added to the portfolio during the year across a wide range of UK industries and a broad geographical base.
The investee company portfolio includes a number of businesses which are active in the UK and international oil & gas industry and it is worth making some comment around prospects for the sector given the recent fall in oil prices. Maven's presence in that global market has been focused on the operational expenditure segment of the industry, rather than being dependent on large capital expenditure programmes or exploration projects.
We have invested in businesses that are active in key support services and, in the main, benefit from contracts based on essential maintenance requirements, asset integrity and mandatory health & safety obligations. We believe, therefore, that your Company's investments are relatively well shielded from the challenges facing that sector.
Turning to new investment activity, in February 2014, Maven supported the management buy-out of SPS (EU) from 4imprint Group and drawdowns also commenced on the first ranking mezzanine loan to Maven Capital (Llandudno). In March 2014, an investment was completed in ISN Solutions Group, an IT services business which has an international focus. Maven supported the buy-in/management buy-out of RMEC Group in April 2014 and shortly thereafter led a secondary buy-out of Just Trays from Gresham Private Equity.
Further investments were completed in Crawford Scientific Holdings in August 2014, and in specialist cycling apparel business Endura in October 2014, in a transaction led by Penta Capital. Just prior to the period end Maven led the management buy-out of Fathom Systems Group, and a new investment was completed in CB Technology Group, a business formed in 1999 that assembles and tests printed circuit boards. Maven has also established three new companies to seek out acquisitions in sectors where there are believed to be opportunities and the investment team has relevant industry knowledge and experience.
The private equity portfolio has generally performed well during the year, and strong trading results have led to valuation uplifts for a number of companies operating in a range of sectors. Nenplas Holdings has continued to perform ahead of plan due to operational efficiencies achieved following the integration of Polyplas, increased sales volumes and favourable market conditions. This has led to an uplift in the valuation, and the company has now added to its product range and manufacturing capacity through the acquisition of Wolverhampton based Delta Plastics.
HCS Control Systems Group, which specialises in the design, manufacture and testing of equipment for the global subsea industry, has a strategy to grow through expansion into key markets and has achieved a number of milestones since the investment by Maven clients in June 2013. Trading results have exceeded expectations and the business has won several new contracts, including a valuable project to provide services for the BP Quad 204 development off the coast of Shetland.
It has been an excellent year for John McGavigan, a manufacturer and supplier of technical plastic components and interior parts for the global automotive industry. The UK and Chinese plants have each been successful in securing significant levels of new business and a number of programme launches have been announced, including projects for BMW, Nissan, Volvo, Fiat, Ford and Jaguar Land Rover.
Glacier Energy Services Group provides bespoke solutions to the global energy sector through its operating hubs in the UK, Singapore, United Arab Emirates and Australia. During the reporting period a follow-on investment was made to fund the acquisition of Professional Testing Services, a business that provides a comprehensive range of non-destructive testing services. Glacier subsequently completed its sixth Maven-backed acquisition with the purchase of MSL Heat Transfer, a radiator and cooler provider, and announced a new divisional structure to support its expansion across the Middle East and Australia.
Six Degrees Group was established in 2011 to implement a buy & build strategy in the telecommunications and IT sectors and has since completed 13 acquisitions. The company is now a broadly based business centred on the convergence of mobile, fixed-line, broadband, internet and IT technology businesses, and delivered annual sales of £51.5 million for the year ended 31 March 2013.
Redevelopment of the property acquired by Maven Capital (Llandudno) in North Wales has been completed and the hotel, which is leased to Travelodge, is expected to open in March 2015. The investment generates a paid yield of 9% per annum, underpinned by a first ranking secured charge over the hotel property.
Steminic, a supplier of industrial cleaning services, trading as MSIS, has grown into a major provider of cleaning, coatings and inspection services since Maven clients first invested in 2007. The company has recently recorded its most successful year, with earnings increasing on the back of investment in new plant and equipment.
Torridon (Gibraltar), trading through its subsidiary Elite Insurance, offers specialist insurance solutions and exceptional service across a full range of general insurance classes. Its experienced in-house underwriting teams have continued to expand the product range, delivering bespoke proposals supported by a full risk assessment and effective decision-making, establishing Elite as a market leading provider of legal expenses insurance. Elite now offers over eighty lines across Europe, including before-the-event, afterthe-event and clinical negligence products.
Funding was provided during the year to support a secondary buy-out of Westway Services, a provider of design, installation and maintenance services on air-conditioning and associated building services plant. The business enjoys a longstanding relationship with M&S, and has a proven track record of delivering a reliable and high quality service to its clients across a broad range of planned and reactive maintenance projects.
In addition to the provisions taken at the half-year on the legacy holdings in Networks by Wireless and Higher Nature acquired under the merger with Ortus VCT PLC, in light of trading performance your Board has taken the prudent step of reducing the valuations in respect of DPP and CHS Engineering Services.
During the year under review, alongside follow-on investments supporting the development of existing portfolio companies, your Company invested in three businesses incorporated by Maven in the industrials, engineering and insurance sectors. Additionally, eight new private equity assets were added to the portfolio:
RMEC Group, a Forfar based provider of engineering solutions and pressure control equipment to multinational oil service companies. The business benefits from an excellent reputation for the speed, flexibility and quality of its service, and in December 2014 was ranked number 71 in the annual Sunday Times Virgin Fast Track 100 list of the fastest growing privately owned UK companies;
Just Trays, the UK's leading manufacturer of shower trays and related accessories, has a growth strategy focused on increased sales through overseas expansion, development of new routes to market and extending its current product range;
The following investments have been completed during the period:
| Date | Sector | Investment cost £'000 |
Website | |
|---|---|---|---|---|
| Unlisted | ||||
| Assecurare Limited | December 2014 | Insurance | 600 | No website available |
| Braelaw Limited | December 2014 | Industrials | 600 | No website available |
| Broadwave Engineering Limited |
December 2014 | Engineering | 600 | No website available |
| CB Technology Group Limited | December 2014 | Electronics | 560 | www.cbtechnology.co.uk |
| CHS Engineering Services Limited | September 2014 | Support services | 98 | www.chsservices.com |
| Crawford Scientific Holdings Limited |
August 2014 | Pharmaceuticals & biotechnology |
612 | www.crawfordscientific.com |
| D Mack Limited | June 2014 | Automobiles & parts | 237 | www.dmacktyres.com |
| Endura Limited | October 2014 | General retailers | 400 | www.endurasport.com |
| Fathom Systems Group Limited | December 2014 | Energy services | 573 | www.fathomsystems.co.uk |
| Glacier Energy Services Holdings Limited |
February 2014 | Energy sevices | 188 | www.glacier.co.uk |
| ISN Solutions Group Limited | March 2014 | Support services | 403 | www.isnsolutions.co.uk |
| JT Holdings (UK) Limited (trading as Just Trays) |
June 2014 | Household goods & textiles |
523 | www.just-trays.co.uk |
| Kelvinlea Limited | June 2014 | Real estate | 96 | No website available |
| Maven Capital (Llandudno) LLP | February 2014 | Real estate | 516 | No website available |
| Maven Capital (Telfer House) LLP | April 2014 | Real estate | 899 | No website available |
| Maven Co-invest Endeavour Limited Partnership (invested in Global Risk Partners) |
December 2014 | Insurance | 58 | No website available |
| RMEC Group Limited | April 2014 | Energy services | 463 | www.rmecltd.co.uk |
| SPS (EU) Limited | February 2014 | Support services | 647 | www.spseu.com |
| Steminic Limited (trading as MSIS) |
November 2014 | Energy services | 343 | www.msisgroup.com |
| Westway Services Holdings (2014) Limited |
November 2014 | Support services | 540 | www.westwayservices.com |
| Total unlisted investment | 8,956 | |||
| UK treasury bills | ||||
| Treasury Bill 16 June 2014 | February 2014 | UK government | 1,998 | |
| Treasury Bill 15 September 2014 |
May 2014 | UK government | 3,498 | |
| Treasury Bill 15 December 2014 |
September 2014 | UK government | 3,497 | |
| Treasury Bill 16 March 2015 | September 2014 | UK government | 2,992 | |
| Total UK treasury bills investment |
11,985 | |||
| Total investment | 20,941 |
Your Company has co-invested in some or all of the above transactions with Maven Income and Growth VCT, Maven Income and Growth VCT 2, Maven Income and Growth VCT 3, Maven Income and Growth VCT 5 and Maven Income and Growth VCT 6. At the period end, the portfolio stood at 67 unlisted and quoted investments at a total cost of £25.4 million, and now includes 53 later-stage private company assets.
A profitable realisation was achieved in September 2014 when environmental services business Adler and Allan Holdings was acquired by UK private equity house LDC for a 2.6 times total return over the holding period. Maven clients first invested in Adler and Allan in 2007, alongside Spirit Capital Partners, to support the company's development and have since backed a series of acquisitions to help the group gain scale and grow shareholder value.
In November 2014 Maven realised the investment in control systems specialist EFC Group, via a secondary buy-out to a consortium of investors led by Arle Capital and Front Row Energy Partners, achieving a 3.8 times total return on cost. Since our initial investment in 2009, EFC has more than doubled its turnover and increased employee numbers from 50 to 150 by targeting new international markets, extending the product offering and growing its customer base. Also in November, Camwatch was sold at close to carrying value to VPS Holdings, a leader in the European vacant property services market.
The Manager is currently engaged with investee companies and prospective acquirers at various stages of a potential exit process. This realisation activity reflects the increasing maturity of a number of holdings, but it should be noted that there can be no certainty that these discussions will lead to profitable sales.
The table below gives details of all realisations during the reporting period:
| Year first invested |
Complete/ partial exit |
Cost of shares disposed of £'000 |
Value at 31 December 2013 £'000 |
Sales proceeds £'000 |
Realised gain/ (loss) £'000 |
Gain/ (loss) over December 2013 value £'000 |
|
|---|---|---|---|---|---|---|---|
| Unlisted | |||||||
| Adler and Allan Holdings Limited | 2007 | Complete | 280 | 391 | 585 | 305 | 194 |
| ATR Holdings Limited | 2007 | Complete | - | - | 9 | 9 | 9 |
| Attraction World Holdings Limited | 2010 | Partial | 28 | 28 | 45 | 17 | 17 |
| Camwatch Limited | 2007 | Complete | 997 | 632 | 553 | (444) | (79) |
| Endura Limited | 2014 | Partial | 171 | 171 | 171 | - | - |
| Enpure Holdings Limited | 2006 | Complete | - | - | 11 | 11 | 11 |
| Ensco 969 Limited (trading as DPP) | 2013 | Partial | 70 | 70 | 70 | - | - |
| Espresso Group Limited | 2001 | Complete | - | - | 49 | 49 | 49 |
| Homelux Nenplas Limited | 2006 | Complete | - | - | 1 | 1 | 1 |
| Intercede (Scotland) 1 Limited (trading as EFC Group)1 |
2009 | Complete | 337 | 792 | 770 | 433 | (22) |
| Kelvinlea Limited | 2013 | Partial | 196 | 196 | 196 | - | - |
| Lawrence Recycling & Waste Management Limited |
2009 | Partial | 84 | 84 | 84 | - | - |
| Manor Retailing Limited | 2013 | Partial | 508 | 508 | 508 | - | - |
| Maven Capital (Telfer House) LLP2 | 2014 | Complete | 904 | N/A | 904 | - | N/A |
| Moriond Limited | 2011 | Complete | 42 | 69 | 79 | 37 | 10 |
| Nessco Group Holdings Limited | 2008 | Complete | - | - | 4 | 4 | 4 |
| Search Commerce Limited | 2013 | Partial | 508 | 508 | 508 | - | - |
| Space Student Living Limited | 2011 | Partial | 235 | 220 | 294 | 59 | 74 |
| Torridon (Gibraltar) Limited (formerly Torridon Capital Limited)1 |
2010 | Partial | 96 | 102 | 93 | (3) | (9) |
| Tuscola (FC100) Limited (formerly Grangeford FC (100) Limited) |
2012 | Complete | 400 | 400 | 400 | - | - |
| Westway Services Holdings (2010) Limited | 2009 | Complete | 241 | 483 | 663 | 422 | 180 |
| Total unlisted disposals | 5,097 | 4,654 | 5,997 | 900 | 439 | ||
| Quoted | |||||||
| Angle PLC | 2006 | Partial | 32 | 43 | 51 | 19 | 8 |
| Brookwell Limited | 2008 | Partial | - | - | 11 | 11 | 11 |
| esure Group PLC | 2010 | Partial | - | 27 | 30 | 30 | 3 |
| Hasgrove PLC | 2006 | Complete | 17 | 6 | 8 | (9) | 2 |
| Plastics Capital PLC | 2007 | Partial | 26 | 32 | 34 | 8 | 2 |
| Vectura PLC | 2004 | Partial | 32 | 50 | 56 | 24 | 6 |
| Total quoted disposals | 107 | 158 | 190 | 83 | 32 | ||
| UK treasury bills | |||||||
| Treasury Bill 24 March 2014 | 2013 | Complete | 4,247 | 4,246 | 4,250 | 3 | 4 |
| Treasury Bill 16 June 2014 | 2014 | Complete | 1,998 | 1,998 | 2,000 | 2 | 2 |
| Treasury Bill 15 September 2014 | 2014 | Complete | 3,498 | 3,497 | 3,500 | 2 | 3 |
| Treasury Bill 15 December 2014 Total UK treasury bills disposals |
2014 | Complete | 3,497 13,240 |
3,497 13,238 |
3,499 13,249 |
2 9 |
2 11 |
| Total disposals | 18,444 | 18,050 | 19,436 | 992 | 482 | ||
1 Proceeds exclude yield and redemption premiums received, which are disclosed as revenue for financial reporting purposes. 2 Holding acquired and realised during the period.
The table above includes the redemption of loan notes by a number of investee companies.
Since 31 December 2014, a follow-on investment has been completed in an existing portfolio business, and one AIM listed company has been added to the portfolio.
We believe that the UK economic outlook is generally positive for established private companies and will continue to present attractive investment opportunities which Maven's nationwide team is well placed to source, execute and manage through to a successful exit. We are confident that the proven strategy of investing principally in mature businesses, which are each capable of generating a high level of income and offer the potential to achieve capital appreciation on realisation, will continue to optimise total Shareholder returns and sustain a progressive dividend programme.
Maven Capital Partners UK LLP Manager
24 March 2015
As at 31 December 2014
| Cost (£'000) | 682 | |
|---|---|---|
| Valuation (£'000) | 1,853 | |
| Basis of valuation | Earnings | |
| Equity held | 3.7% | |
| Income received (£'000) | 173 | |
| First invested | Jan 2010 | |
| Year ended | 31 March | |
| 2013 | 2012 | |
| £'000 | £'000 | |
| Sales | 112,028 | 47,790 |
| EBITDA1 | 11,499 | 3,430 |
| Net assets | 18,120 | 8,830 |
Torridon was established to acquire LitComp, a national supplier of financial and legal insurance products and litigation services in a public-to-private transaction in 2010. LitComp provides a range of products, including before-the-event, after-the-event, pet, gap and warranty insurance through its wholly owned subsidiary company Elite, as well as medico legal reports and psychological reports to a client base of principally UK based solicitors.
Maven Income and Growth VCT, Maven Income and Growth VCT 2, Maven Income and Growth VCT 3 and Maven Income and Growth VCT 6
Maven Co-invest Exodus Limited Partnership (invested in Six Degrees Group) London www.6dg.co.uk
| 895 | |
|---|---|
| 1,827 | |
| Earnings | |
| 4.0% | |
| 71 | |
| June 2011 | |
| 31 March | |
| 2013 | 2012 |
| £'000 | £'000 |
| 51,507 | 20,200 |
| 7,993 | 3,319 |
| 87,983 | 51,400 |
Six Degrees Group was established in 2011 with a buy & build acquisition strategy for the B2B telecoms service sector, and has since completed 13 acquisitions. The business is targeting three key managed data services elements: data centre and hosting, network connectivity and cloud offerings. The aim is to help UK mid-market companies meet the challenges of a connected, always-on world. Six Degrees acts as a reseller of converged business communications services to customers where there is a requirement for a 'one stop shop' operation that is beyond most independent voice and data resellers.
Maven Income and Growth VCT, Maven Income and Growth VCT 2, Maven Income and Growth VCT 3, Maven Income and Growth VCT 5 and Maven Income and Growth VCT 6
*Excluding one acquisition vehicle in the portfolio at 31 December 2014.
Glacier Energy Services Holdings Limited Aberdeen www.glacier.co.uk
| Cost (£'000) | 957 | |
|---|---|---|
| Valuation (£'000) | 1,141 | |
| Basis of valuation | Earnings | |
| Equity held | 3.7% | |
| Income received (£'000) | 96 | |
| First invested | March 2011 | |
| Year ended | 31 March | |
| 2014 | 2013 | |
| £'000 | £'000 | |
| Sales | 14,708 | 9,695 |
| EBITDA1 | 1,627 | 1,221 |
| Net assets | 1,155 | 935 |
Glacier was formed in 2011 following the management buyout of Wellclad and Roberts Pipeline Machining from MB Aerospace. The group provides specialist services for energy infrastructure, relating to on-site machining; well overlay for pressure control equipment; non-destructive testing; and heat transfer equipment repair and refurbishment. Glacier has a strong international presence in key energy markets, including the North Sea, the Middle East and West Africa, and focuses on developing products in the areas of production and processing equipment, intervention and pipeline components.
Maven Income and Growth VCT, Maven Income and Growth VCT 2, Maven Income and Growth VCT 3, Maven Income and Growth VCT 5 and Maven Income and Growth VCT 6
Nenplas Holdings Limited Ashbourne www.nenplas.co.uk
| Cost (£'000) | 488 |
|---|---|
| Valuation (£'000) | 1,041 |
| Basis of valuation | Earnings |
| Equity held | 4.0% |
| Income received (£'000) | 22 |
| First invested | Mar 2013 |
| Year ended | 31 May2 |
| 2014 | |
| £'000 | |
| Sales | 15,845 |
| EBITDA1 | 3,226 |
| Net assets | 2,781 |
Nenplas is one of the country's leading producers of specialist plastic products. The business designs and manufactures polymer based extrusions for a wide variety of uses including building, shop fitting, caravan and leisure and automotive applications. The business was established as an independent concern following a demerger of Homelux Nenplas, with the technical manufacturing capability retained within Nenplas. The company's strategy is to expand its manufacturing and customer base through selected bolt-on acquisitions.
Maven Income and Growth VCT, Maven Income and Growth VCT 2, Maven Income and Growth VCT 3 and Maven Income and Growth VCT 6
Lemac No. 1 Limited (trading as John McGavigan) Glasgow www.mcgavigan.com
| Cost (£'000) | 698 | |
|---|---|---|
| Valuation (£'000) | 987 | |
| Basis of valuation | Earnings | |
| Equity held | 9.1% | |
| Income received (£'000) | 123 | |
| First invested | Dec 2010 | |
| Year ended | 31 Dec | |
| 2013 | 2012 | |
| £'000 | £'000 | |
| Sales | 10,557 | 7,771 |
| EBITDA1 | 1,000 | 390 |
| Net assets | 745 | 430 |
John McGavigan is a manufacturer and supplier of decorative assemblies and interior parts for the global automotive industry, with a strong share of the European market. The business supplies tier 1 manufacturers such as Bosch, Visteon, Continental and Yazaki, with components widely used by global brand car makers producing affordable high volume cars, including Ford, GM, Jaguar Land Rover and Toyota. The principal focus of operations is the design, manufacture and supply of parts, and it also provides a logistics management service, enabling just-in-time supply to manufacturing facilities across the world.
Maven Income and Growth VCT, Maven Income and Growth VCT 2, Maven Income and Growth VCT 3 and Maven Income and Growth VCT 6
HCS Control Systems Group Limited Glenrothes www.hcscsl.com
| Cost (£'000) | 836 |
|---|---|
| Valuation (£'000) | 957 |
| Basis of valuation | Earnings |
| Equity held | 6.8% |
| Income received (£'000) | 63 |
| First invested | Dec 2012 |
| Year ended | 31 Dec3 |
| 2013 | |
| £'000 | |
| Sales | 8,401 |
| EBITDA1 | 1,176 |
| Net assets | 470 |
HCS is headquartered in Glenrothes, Fife, and is a specialist manufacturer of engineered mechanical, hydraulic and electrical systems for the upstream subsea energy services sector. Established in 1997, the company sells control systems to a global blue chip customer base of subsea service companies, and umbilical and project businesses.
Maven Income and Growth VCT, Maven Income and Growth VCT 2, Maven Income and Growth VCT 3, Maven Income and Growth VCT 5 and Maven Income and Growth VCT 6
(trading as DPP Limited) Southampton www.dpp.ltd.uk
| Cost (£'000) | 1,217 |
|---|---|
| Valuation (£'000) | 904 |
| Basis of valuation | Earnings |
| Equity held | 4.6% |
| Income received (£'000) | 91 |
| First invested | March 2013 |
| Year ended | 31 Oct |
| 2013 | |
| £'000 | |
| Sales | 16,297 |
| EBITDA1 | 2,002 |
| Net assets | 3,745 |
DPP provides planned and reactive maintenance to the leisure sector, principally operators of pubs and restaurants. Founded in 1985, DPP has grown from a jobbing heating contractor into a service provider across the mechanical, electrical, HVAC and ventilation sectors, providing maintenance services under medium term contracts alongside project work for minor and major refurbishment programmes.
Steminic Limited (trading as MSIS) Aberdeen www.msisgroup.com
| Cost (£'000) | 665 | |
|---|---|---|
| Valuation (£'000) | 898 | |
| Basis of valuation | Earnings | |
| Equity held | 4.3% | |
| Income received (£'000) | 210 | |
| First invested | April 2007 | |
| Year ended | 31 Dec | |
| 2013 | 2012 | |
| £'000 | £'000 | |
| Sales | 12,537 | 9,405 |
| EBITDA1 | 2,161 | 1,085 |
| Net assets/(liabilities) | 115 | (307) |
Steminic is an environmental services group primarily focused on the energy services sector, and acquired MSIS, a provider of industrial cleaning and waste management services in the North East of Scotland, in 2007. Historically, MSIS provided industrial cleaning services to a wide range of clients, and has been successful in expanding its business into the offshore markets, particularly in offering tank cleaning, waste removal and disposal services.
Maven Income and Growth VCT, Maven Income and Growth VCT 2, Maven Income and Growth VCT 3, Maven Income and Growth VCT 5 and Maven Income and Growth VCT 6
Maven Income and Growth VCT, Maven Income and Growth VCT 2, Maven Income and Growth VCT 3, Maven Income and Growth VCT 5 and Maven Income and Growth VCT 6
| Cost (£'000) | 498 |
|---|---|
| Valuation (£'000) | 792 |
| Basis of valuation | Earnings |
| Equity held | 4.8% |
| Income received (£'000) | 108 |
| First invested | March 2012 |
| Year ended | 31 Dec |
| 2012 | |
| £'000 | |
| Sales | 7,168 |
| EBITDA1 | 1,273 |
| Net assets | 1,558 |
CatTech provides niche industrial services to oil refineries and petrochemical plants across the major international markets, and operates from offices in the UK, Bulgaria, Sweden, China, Singapore and Thailand. The business has developed a range of proprietary products for servicing essential equipment and improving catalyst handling operations. CatTech operates in a sector where the ability to maintain operational efficiency is critical and there is an increasing focus on health and safety issues, and only a limited number of specialist operators world-wide that have the skilled personnel and equipment to undertake catalyst handling projects.
Maven Income and Growth VCT, Maven Income and Growth VCT 2, Maven Income and Growth VCT 3, Maven Income and Growth VCT 5 and Maven Income and Growth VCT 6
¹Earnings before interest, tax, depreciation and amortisation. 2 For the 15 month period to 31 May 2014. 3
Lambert Contracts Holdings Limited Paisley www.lambertcontracts.co.uk
| Cost (£'000) | 723 |
|---|---|
| Valuation (£'000) | 723 |
| Basis of valuation | Earnings |
| Equity held | 12.3% |
| Income received (£'000) | 63 |
| First invested | June 2013 |
| Year ended | 30 Apr |
| 2014 | |
| £'000 | |
| Sales | 8,558 |
| EBITDA1 | 520 |
| Net assets | 2,237 |
Lambert was founded in 1986 and is a leading specialist contractor in insurance reinstatement, property maintenance and fire protection. Lambert has long standing relationships with many of the UK's best known insurance companies, loss adjustors and property managers. The company provides 24/7 property maintenance, repairs and construction services as part of an integrated offering to homes and business owners aimed at minimising disruption, ranging from restoring properties damaged by fire, flood, water and smoke, carrying out general property maintenance and restoration, through to providing specialist advice on fire safety contracts.
Maven Income and Growth VCT, Maven Income and Growth VCT 2, Maven Income and Growth VCT 3, Maven Income and Growth VCT 5 and Maven Income and Growth VCT 6
Maven offices
Ten largest investments
As at 31 December 2014
| Investment | Valuation £'000 |
Cost £'000 |
% of total net assets |
% of equity held |
% of equity held by other clients¹ |
|---|---|---|---|---|---|
| Unlisted | |||||
| Torridon (Gibraltar) Limited (formerly Torridon Capital Limited) |
1,853 | 682 | 6.0 | 3.7 | 36.3 |
| Maven Co-invest Exodus Limited Partnership and Tosca Penta Exodus Mezzanine Limited Partnership (invested in Six Degrees Group)² |
1,827 | 895 | 5.9 | 4.0 | 8.5 |
| Glacier Energy Services Holdings Limited | 1,141 | 957 | 3.8 | 3.7 | 23.9 |
| Nenplas Holdings Limited | 1,041 | 488 | 3.3 | 4.0 | 28.5 |
| Lemac No. 1 Limited (trading as John McGavigan) | 987 | 698 | 3.2 | 9.1 | 27.7 |
| HCS Control Systems Group Limited | 957 | 836 | 3.1 | 6.8 | 29.7 |
| Ensco 969 Limited (trading as DPP) | 904 | 1,217 | 2.9 | 4.6 | 29.9 |
| Steminic Limited (trading as MSIS) | 898 | 665 | 2.9 | 4.3 | 47.3 |
| CatTech International Limited | 792 | 498 | 2.5 | 4.8 | 25.3 |
| Richfield Engineering Services Limited | 725 | 725 | 2.3 | 11.7 | 38.1 |
| Lambert Contracts Holdings Limited | 723 | 723 | 2.3 | 12.3 | 52.4 |
| Venmar Limited (trading as XPD8 Solutions) | 651 | 651 | 2.1 | 6.0 | 29.0 |
| R&M Engineering Group Limited | 648 | 648 | 2.1 | 8.7 | 61.9 |
| SPS (EU) Limited | 647 | 647 | 2.1 | 6.5 | 35.9 |
| Crawford Scientific Holdings Limited | 612 | 612 | 2.0 | 7.2 | 41.0 |
| Assecurare Limited | 600 | 600 | 1.9 | 12.0 | 37.8 |
| Braelaw Limited | 600 | 600 | 1.9 | 12.0 | 37.8 |
| Broadwave Engineering Limited | 600 | 600 | 1.9 | 12.0 | 37.8 |
| Lab M Holdings Limited | 600 | 404 | 1.9 | 17.6 | - |
| Vodat Communications Group Limited | 592 | 592 | 1.9 | 6.9 | 34.9 |
| Fathom Systems Group Limited | 573 | 573 | 1.8 | 7.7 | 52.3 |
| CB Technology Group Limited | 560 | 560 | 1.8 | 11.4 | 67.6 |
| TC Communications Holdings Limited | 554 | 777 | 1.8 | 8.1 | 21.9 |
| Westway Services Holdings (2014) Limited | 540 | 540 | 1.7 | 6.9 | 40.2 |
| JT Holdings (UK) Limited (trading as Just Trays) | 523 | 523 | 1.7 | 5.8 | 24.2 |
| Maven Capital (Llandudno) LLP | 516 | 516 | 1.7 | - | 100.0 |
| D Mack Limited | 504 | 504 | 1.6 | 4.8 | 25.2 |
| Flexlife Group Limited | 482 | 482 | 1.5 | 1.9 | 12.7 |
| RMEC Group Limited | 463 | 463 | 1.5 | 3.5 | 54.7 |
| Maven Capital (Claremont House) Limited | 426 | 355 | 1.4 | 11.8 | 88.2 |
| ISN Solutions Group Limited | 403 | 403 | 1.3 | 4.6 | 50.4 |
| LCL Hose Limited (trading as Dantec Hose) | 398 | 398 | 1.3 | 7.1 | 22.9 |
| CHS Engineering Services Limited | 352 | 497 | 1.1 | 4.2 | 19.1 |
As at 31 December 2014
| Investment | Valuation £'000 |
Cost £'000 |
% of total net assets |
% of equity held |
% of equity held by other clients¹ |
|---|---|---|---|---|---|
| Attraction World Holdings Limited | 278 | 98 | 0.9 | 6.2 | 32.2 |
| Endura Limited2 | 229 | 229 | 0.7 | - | - |
| Manor Retailing Limited | 218 | 218 | 0.7 | 11.7 | 38.1 |
| Search Commerce Limited | 218 | 218 | 0.7 | 11.7 | 38.1 |
| Higher Nature Limited | 200 | 600 | 0.6 | 11.2 | - |
| Martel Instruments Holdings Limited | 190 | 227 | 0.6 | 4.2 | 40.0 |
| Kelvinlea Limited | 186 | 186 | 0.6 | 13.1 | 36.9 |
| Space Student Living Limited | 168 | - | 0.5 | 10.6 | 69.4 |
| Maven Co-invest Endeavour Limited Partnership (invested in Global Risk Partners)² |
159 | 159 | 0.5 | 6.0 | 94.0 |
| Claven Holdings Limited | 150 | 88 | 0.5 | 10.2 | 39.9 |
| Lawrence Recycling and Waste Management Limited | 135 | 770 | 0.4 | 8.4 | 53.6 |
| Other unlisted investments | - | 1,360 | - | ||
| Total unlisted investments | 25,823 | 24,482 | 82.9 | ||
| Quoted | |||||
| Vectura Group PLC | 156 | 110 | 0.6 | - | 0.1 |
| Plastics Capital PLC | 92 | 85 | 0.3 | 0.2 | 1.2 |
| OMG PLC | 75 | 80 | 0.2 | 0.2 | - |
| Chime Communications PLC | 73 | 56 | 0.3 | - | - |
| Angle PLC | 36 | 29 | 0.1 | 0.1 | - |
| esure Group PLC | 19 | - | 0.1 | - | - |
| Deltex Medical Group PLC | 10 | 33 | - | 0.1 | - |
| Work Group PLC | 8 | 151 | - | 0.7 | 2.5 |
| Other quoted investments | 7 | 395 | - | ||
| Total quoted investments | 476 | 939 | 1.6 | ||
| UK treasury bills | |||||
| Treasury Bill 16 March 2015 | 2,997 | 2,992 | 9.6 | ||
| Total investments | 29,296 | 28,413 | 94.1 |
¹Other clients of Maven Capital Partners UK LLP
²These investments are managed by Penta Capital LLP of which a director of the Company, Steven Scott, is a partner.
The Directors submit their Annual Report together with the Financial Statements of the Company for the year ended 31 December 2014. A summary of the financial results for the year and the proposed final dividend can be found in the Financial Highlights on pages 5 and 6.
The Company's affairs have been conducted, and will continue to be conducted, in a manner to satisfy the conditions to enable it to continue to obtain approval as a venture capital trust under Section 274 of the Income Tax Act 2007. HM Revenue and Customs will grant Section 274 status, if requested, provided that the Company's affairs have been conducted in such a manner as to satisfy the conditions of that Section of the Act. Such approval was last granted in respect of the year ended 31 December 2013.
The Company is a member of the AIC and its Ordinary Shares are listed on the Premium segment of the Official List and traded on the main market of the London Stock Exchange. Further details are provided in the Corporate Summary on page 2.
As a venture capital trust pursuant to Section 274 of the Income Tax Act 2007, the rules of the FCA in relation to non-mainstream investment products do not apply to the Company.
The Company's business activities, together with the factors likely to affect its future development and performance, are set out in this Directors' Report, and the financial position of the Company is described in the Chairman's Statement. In addition, Note 17 to the Financial Statements includes: the Company's objectives, policies and processes for managing its financial risks; details of its financial instruments; and its exposures to market price risk, interest rate risk, liquidity risk, credit risk and price risk sensitivity. The Directors believe that the Company is well placed to manage its business risks.
Having made suitable enquiries, the Directors have a reasonable expectation that the Company has adequate financial resources to enable it to continue in operational existence for the foreseeable future and, accordingly, they have continued to adopt the going concern basis when preparing the Annual Report and Financial Statements.
The Company's financial instruments comprise its investment portfolio, cash balances and debtors and creditors that arise directly from its operations, including accrued income and purchases and sales awaiting settlement. The main risks that the Company faces arising from its financial instruments are disclosed in Note 17 to the Financial Statements.
The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013.
35
The Statement of Corporate Governance, which forms part of this Directors' Report, is shown on pages 44 to 48.
Biographies of the Directors who held office at the year-end are shown in the Your Board section of this Annual Report along with their interests in the shares of the Company. No Director has a service contract with the Company and no contract or arrangement significant to the Company's business and in which any of the Directors is interested has subsisted during the year.
Ian Cormack, Malcolm Graham-Wood and Steven Scott will have served as Directors for more than nine years from the date of their first election as at the date of the forthcoming Annual General Meeting (AGM) and as such will retire at the AGM in accordance with the provisions of the AIC Code. As a result, being eligible, they offer themselves for annual re-election. In accordance with corporate governance best practice, Bill Nixon retires at the AGM and, being eligible, offers himself for annual re-election. David Potter and Andrew Lapping are not offering themselves for re-election and are standing down at the 2015 AGM.
The Board confirms that, following a formal process of evaluation, the performance of each of the Directors seeking re-election continues to be effective and demonstrates commitment to the role. The Board, therefore, believes that it is in the best interests of Shareholders that Ian Cormack, Malcolm Graham-Wood, Steven Scott and Bill Nixon be re-elected and Resolutions to this effect will be proposed at the AGM.
Bill Nixon is managing partner of Maven Capital Partners UK LLP, which is entitled to receive investment management and secretarial fees, which are disclosed in Notes 3 and 4 to the Financial Statements respectively. No other contract or arrangement significant to the Company's business, and in which any of the Directors is interested, has subsisted during the year. Under Listing Rule 15.2.13, the Company is not able to have more than one Director who is also a Director of another company with the same investment manager. Bill Nixon is the only such Director and, therefore, the Company complies with this requirement and is expected to continue to do so.
Other than those set out in this Directors' Report, there are no further related party transactions that require to be disclosed.
Each Director has a statutory duty to avoid a situation where he has, or could have, a direct or indirect interest which conflicts, or may conflict with the interests of the Company. A Director will not be in breach of that duty if the relevant matter has been authorised by the Board in accordance with the Company's Articles of Association and this includes any co-investment made by the Directors in entities in which the Company has an interest.
The Board has approved a protocol for identifying and dealing with conflicts and has resolved to conduct a regular review of actual or possible conflicts. No new conflicts or potential conflicts were identified during the year.
At 20 March 2015, the only person known to the Company who, directly or indirectly, was interested in 3.0 per cent or more of the Company's issued share capital was Hargreaves Lansdown (Nominees) Limited as follows:
| Number of Shares Held |
% of issued share capital |
|
|---|---|---|
| Ordinary Shares | 1,711,756 | 5.00 |
Maven Capital Partners UK LLP (Maven) acted as Manager and Secretary to the Company during the year ended 31 December 2014 and details of the investment management and secretarial fees are disclosed in Notes 3 and 4 to the Financial Statements respectively.
For the year ended 31 December 2014, the investment management and secretarial fees payable to Maven were calculated and charged on the following basis:
By agreement with the Manager, the total management and administrative expenses of the Company, inclusive of irrecoverable VAT but exclusive of transaction costs and expenses relating to the acquisition and disposal of investments, are capped at 3.5% of the net asset value at the end of the relevant financial period, calculated before deduction of management and administrative expenses or any exceptional items such as merger or performance incentive fees in respect of that financial year.
Subject to certain criteria being met, Maven is entitled to a performance incentive fee in respect of the Ordinary Shares fund for each six month period ended 30 June and 31 December of an amount equal to 20% of any increase in the total return (before applying any performance incentive fee) as at the end of the relevant six month period to the total return (after accruing for the performance incentive fee payable for that period) as at the end of the last six month period on which a performance incentive fee was paid. Total return for these purposes means net asset value, adjusted for dividends, share buy-backs and share issues since the period in which the last performance incentive fee was paid.
The management agreement is terminable on twenty-four months' written notice. Should the Company terminate the management agreement on shorter notice before that date, the Manager would be entitled to receive fees which would otherwise have been due up until the date of the end of the contractual notice period.
Independent from the above arrangements, the sum of £12,000 (2013: £12,000) plus VAT per annum is paid to the Manager in respect of Bill Nixon's role as a Director of the Company. Maven may also receive, from investee companies, fees in relation to arranging transactions, monitoring of business progress and for providing non-executive directors for their boards.
In addition, in order to ensure that the Manager's staff are appropriately incentivised in relation to the management of the portfolio, a co-investment scheme allows individuals to participate in new investments in portfolio companies alongside the Company. All such investments are made through a nominee and under terms agreed by the Board.
The terms of the scheme ensure that all investments are made on identical terms to those of the Company and that no selection of investments will be allowed. Total investment by participants in the co-investment scheme is set at 5% of the aggregate amount of ordinary shares subscribed for, except where the only securities to be acquired by the Company are ordinary shares or are securities quoted on AIM or ISDX, in which case the co-investment percentage will be 1.5%. Any dilution of the Company's interests is, therefore, minimal and the Directors believe that the scheme provides a useful incentive which closely aligns the interests of key individuals within the Manager's staff with those of the Shareholders.
In light of investment performance achieved by the Manager, together with the standard of company secretarial and administrative services provided, the Board considers that the continued appointment of the Manager and Secretary on the stated terms is in the best interests of the Company and its Shareholders. It should be noted that, as at 20 March 2015, Maven Capital Partners UK LLP, Mr Nixon and certain of its other executives held, in aggregate, 667,570 of the Company's Ordinary Shares, representing 1.96% of the issued Ordinary Share capital as at that date.
The Company's Independent Auditor, Deloitte LLP, is willing to continue in office and Resolution 8 to propose its re-appointment will be proposed at the 2015 AGM, along with Resolution 9, to authorise the Directors to fix its remuneration. Non-audit fees for tax services amounting to £5,000 were paid to Deloitte LLP during the year under review (2013: £10,000). The Directors have received confirmation from the Auditor that it remains independent and objective. The Directors have also reviewed the Auditor's procedures in connection with the provision of nonaudit services and remain satisfied that objectivity and independence is being safeguarded by Deloitte LLP.
So far as the Directors who held office at the date of approval of this Report are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the Company's Auditor is unaware, and each of the Directors has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.
During the year ended 31 December 2014, the Company bought back a total of 995,000 of its own Ordinary Shares, being 3.57% of the Ordinary Shares in issue as at 31 March 2014 (2013: Ordinary Shares 710,000; C Ordinary Shares 105,000).
A Special Resolution, numbered 12 in the Notice of Meeting, will be put to Shareholders at the 2015 AGM for their approval to renew the Company's authority to purchase in the market a maximum of 3,397,409 Ordinary Shares (excluding shares held in treasury) (10% of the shares in issue at 20 March 2015). Such authority will expire on the date of the Annual General Meeting in 2016 or after a period of 15 months from the date of the passing of the Resolution, whichever is the earlier.
Purchases of shares will be made within guidelines established from time to time by the Board, but only if it is considered that such purchases would be to the advantage of the Company and its Shareholders when taken as a whole. Purchases will be made in the market at prices below the prevailing NAV per share. Under the Listing Rules of the UK Listing Authority, the maximum price that may be paid on the exercise of this authority must not exceed 105% of the average of the midmarket quotations for the shares over the five business days immediately preceding the date of purchase. The minimum price that may be paid is 10p per share. In making purchases, the Company will deal only with member firms of the London Stock Exchange. Any shares which are purchased will be cancelled and not available for reissue, or held in treasury. Once held in treasury, such shares may be cancelled or sold for cash. The Board intends to use this authority to continue to implement its share buy-back policy.
Purchases of shares by the Company will be made from distributable reserves and will normally be paid out of cash balances held by the Company from time to time. As any purchases will be made at a discount to NAV at the time of purchase, the NAV of the remaining Ordinary Shares in issue should increase as a result of any such purchase. Shares will not be purchased by the Company in the period of 60 days immediately preceding the notification of the Company's Interim Report and the 60 days immediately preceding the announcement of the Annual Report or, if shorter, the period from the end of the Company's relevant financial period up to and including the earlier of an announcement of all price sensitive information in respect of the relevant period or the release of the full results.
During the year under review, 4,273,189 new Ordinary Shares were allotted under an Offer for Subscription. An Ordinary Resolution, numbered 10 in the Notice of Meeting, will be put to Shareholders at the 2015 AGM for their approval for the Company to issue up to an aggregate nominal amount of £339,741 in respect of the Ordinary Shares (equivalent to 3,397,409 Ordinary Shares or 10% of the total issued share capital at 20 March 2015).
Issues of new Ordinary Shares may only be made at, or at a premium to, NAV per share, thus ensuring existing investors will not be disadvantaged by such issues. The proceeds of any issue may be used to purchase the Company's shares in the market or to fund further investments in accordance with the Company's investment policy. This authority shall expire either at the conclusion of the Annual General Meeting in 2016 or on the expiry of 15 months from the passing of the Resolution, whichever is the first to occur.
When shares are to be allotted for cash, Section 561(1) of the Companies Act 2006 provides that existing Shareholders have pre-emption rights and that the new shares are offered first to such Shareholders in proportion to their existing shareholdings. However, Shareholders can, by special resolution, authorise the Directors to allot shares otherwise than by a pro-rata issue to existing Shareholders. A Special Resolution, numbered 11 in the Notice of Meeting, will, if passed, give the Directors power to allot for cash, up to an aggregate nominal amount not exceeding £339,741 in respect of the Ordinary Shares (equivalent to 3,397,409 Ordinary Shares or 10% of the total issued share capital at 20 March 2015) as if Section 561(1) does not apply. This is the same amount of share capital that the Directors are seeking the authority to allot pursuant to Resolution 10. The authority will also expire either at the conclusion of the Annual General Meeting of the Company in 2016 or on the expiry of 15 months from the passing of the Resolution, whichever is the first to occur.
As at 31 December 2014 the Company's share capital amounted to 32,049,188 Ordinary Shares of 10p each. Subsequent to the year end, the Company issued 1,924,909 new Ordinary Shares under the Offer for Subscription. As a result, there were 33,974,097 Ordinary Shares in issue as at 20 March 2015. Further details are included in Note 12 to the Financial Statements.
Other than those referred to above, there have been no events since 31 December 2014 that require disclosure.
The Annual General Meeting will be held on 29 April 2015, and the Notice of Annual General Meeting is on pages 81 to 85 of this Annual Report. The Notice of Annual General Meeting also contains a Resolution that seeks authority for the Directors to convene a general meeting, other than an annual general meeting, on not less than fourteen days' clear notice, although it is anticipated that such authority would only be exercised under exceptional circumstances.
The Directors consider that all of the Resolutions to be put to the Annual General Meeting are in the best interests of the Company and its Shareholders as a whole. Your Board will be voting in favour of them and unanimously recommends that you do so as well.
By order of the Board Maven Capital Partners UK LLP Secretary
24 March 2015
This report has been prepared in accordance with the requirements of Section 421 of the Companies Act 2006 and the Enterprise and Regulatory Reform Act 2013. An Ordinary Resolution for the approval of this Report will be put to the Members of the Company at the forthcoming AGM. The law requires the Company's Auditors to audit certain of the disclosures provided. Where disclosures have been audited, they are indicated as such and the Auditor's opinion is included in their report on pages 53 to 55.
The full Board, with Ian Cormack as its Chairman, carries out the functions of a remuneration committee. As all of the Directors are non-executive, the Company is not required to comply with the Principles of the UK Code on Corporate Governance in respect of executive directors' remuneration.
At 31 December 2014, the Company had six non-executive Directors and their biographies are shown in the Your Board section of the Strategic Report. The names of the Directors who served during the year together with the fees paid during the year are shown in the table on page 41.
During the year ended 31 December 2014, the Board was not provided with advice or services by any person in respect of its consideration of the Directors' remuneration. However, in the application of the Board's policy on Directors' remuneration, as defined below, the Board expects, from time to time, to review the fees paid to the directors of other venture capital trust companies.
The Board met once during the year ended 31 December 2014 to review the policy for, and the level of, Directors' Remuneration.
The Company's policy is that the remuneration of the Directors, all of whom are non-executive, should reflect the experience of the Board as a whole and be fair and comparable to that of other venture capital trusts with a similar capital structure and similar investment objectives. Directors are remunerated in the form of fees, payable quarterly in arrears, to the Director personally or to a third party specified by him. The fees for the Directors are determined within the limits set out in the Company's Articles of Association, which limit the aggregate of the fees payable to the Directors to £150,000 per annum and the approval of Shareholders in a General Meeting would be required to change this limit.
It is intended that the fees payable to the Directors should reflect their duties, responsibilities, and the value and amount of time committed to the Company's affairs, and should also be sufficient to enable candidates of a high quality to be recruited and retained. Non-executive Directors do not receive bonuses, pension benefits, share options, long-term incentive schemes or other benefits, and the fees are not specifically related to the Directors' performance, either individually or collectively.
A copy of the remuneration policy may be inspected by the members of the Company at its registered office.
The Company does not have any employees and Directors' remuneration comprises solely of Directors' fees. The current and projected Directors' fees for the year ended 31 December 2014 and the year ending 31 December 2015 are shown below.
| Year ending 31 December 2015 £ |
Year ended 31 December 2014 £ |
|
|---|---|---|
| Ian Cormack | 15,000 | 15,000 |
| Malcolm Graham-Wood | 12,000 | 12,000 |
| Andrew Lapping** | 4,000 | 12,000 |
| Bill Nixon* | 12,000 | 12,000 |
| Steven Scott | 12,000 | 12,000 |
| David Potter** | 4,000 | 12,000 |
| Total | 59,000 | 75,000 |
Directors do not have service contracts, but new Directors are provided with a letter of appointment. The terms of appointment provide that Directors should retire and be subject to re-election at the first Annual General Meeting after their appointment. Thereafter, the Company's Articles of Association require all Directors to retire by rotation at least every three years. There is no notice period and no provision for compensation upon early termination of appointment, save for any arrears of fees which may be due.
During the year ended 31 December 2014, no communication has been received from Shareholders regarding Directors' remuneration.
The chart below shows, for the years ending 31 December 2013 and 31 December 2014, the cost of Directors' fees compared with the level of dividend distribution.
As noted in the Strategic Report, all of the Directors are non-executive and, therefore, the Company does not have a chief executive officer, nor does it have any employees. In the absence of a chief executive officer or employees, there is no related information to disclose.
At the Annual General Meeting held in May 2014, the results in respect of Ordinary Resolutions to approve the Directors' Remuneration Report for the year ended 31 December 2013 and the Directors' remuneration policy for the three year period ending 31 December 2016 were as follows:
| Percentage of votes cast for |
Percentage of votes cast against |
Number of votes withheld |
|
|---|---|---|---|
| Remuneration Report | 97.12 | 2.88 | 66,660 |
| Remuneration Policy | 96.81 | 3.19 | 76,683 |
A Resolution to approve the Directors' Remuneration Report for the year ended 31 December 2014 will be put to Shareholders at the 2015 AGM and, unless there is a change proposed in the intervening period, a Resolution to approve the remuneration policy will next be put to Shareholders at the 2017 AGM.
The Company purchases and maintains liability insurance covering the Directors and Officers of the Company. This insurance is not a benefit in kind, nor does it form part of the Directors' remuneration.
The Board is responsible for the Company's investment strategy and performance, although the management of the Company's investment portfolio is undertaken by the Manager through the investment management agreement, as referred to in the Directors' Report.
The graph below compares the total returns on an investment of £100 in the Ordinary Shares of the Company, for each annual accounting period for the five years to 31 December 2014, assuming all dividends are reinvested, with the total shareholder return on a notional investment of £100 made up of shares of the same kind and number as those by reference to which the FTSE AIM All-Share index is calculated. This index was chosen for comparison purposes as it is the most relevant to the Company's investment portfolio.
FTSE AIM All-Share Total Return
The Directors who served during the year received the following emoluments in the form of fees:
| Year ended 31 December 2014 £ |
Year ended 31 December 2013 £ |
|
|---|---|---|
| Ian Cormack (Chairman) | 15,000 | 15,000 |
| Malcolm Graham-Wood | 12,000 | 12,000 |
| Andrew Lapping | 12,000 | 12,000 |
| Bill Nixon* | 12,000 | 12,000 |
| Steven Scott | 12,000 | 12,000 |
| David Potter | 12,000 | 10,231 |
| Total | 75,000 | 73,231 |
*Bill Nixon's remuneration is paid to Maven Capital Partners UK LLP (and is subject to VAT).
The above amounts exclude any employers' national insurance contributions, if applicable. No other forms of remuneration were received by the Directors and no Director has received any taxable expenses, compensation for loss of office or non-cash benefit for the year ended 31 December 2014 (2013: £nil).
The Directors' interests in the share capital of the Company are shown below. There is no requirement for the Directors to hold shares in the Company.
| 2014 Ordinary Shares of 10p each |
2014 C Ordinary Shares of 10p each |
|||
|---|---|---|---|---|
| 31 December 2014 | 1 January 2014 | 31 December 2014 | 1 January 2014 | |
| Ian Cormack | 149,881 | 143,734 | n/a | n/a |
| Malcolm Graham-Wood | 47,241 | 47,241 | n/a | n/a |
| Andrew Lapping | 75,941 | 65,941 | n/a | n/a |
| Bill Nixon | 186,417 | 144,629 | n/a | n/a |
| Steven Scott | 149,061 | 128,571 | n/a | n/a |
| David Potter | 89,381 | 72,891 | - | 5,495 |
| Total | 697,922 | 603,007 | - | 5,495 |
On 30 September 2014 the C Ordinary Shares were consolidated into the Ordinary Shares of the Company. In accordance with the Articles of Association of the Company, 3,863,876 C Ordinary Shares were re-designated as 3,077,827 Ordinary Shares (based on a conversion ratio of 0.7968 per holding of C Ordinary Shares) and rounded down to the nearest whole share.
All of the interests shown above are beneficial. Subsequent to the end of the Company's financial year, Bill Nixon acquired 62,826 Ordinary Shares as a result of an application under the Offer for Subscription which opened on 20 October 2014.
The Directors' Remuneration Report was approved by the Board of Directors and signed on its behalf by:
Ian Cormack Director 24 March 2015
The Company is committed to, and is accountable to the Company's Shareholders for, a high standard of corporate governance. The Board has put in place a framework for corporate governance that it believes is appropriate for a venture capital trust and which enables it to comply with the UK Code of Corporate Governance (the Code), published in September 2012. The Code is available from the website of the Financial Reporting Council at www.frc.org.uk.
The Company has continued its membership of the Association of Investment Companies (the AIC). The AIC has published its own code on Corporate Governance (the AIC Code) and the AIC Corporate Governance Guide for Investment Companies (the AIC Guide), both revised in February 2013 and which provide a comprehensive guide to best practice in certain areas of governance where the specific characteristics of investment trusts or venture capital trusts suggest alternative approaches to those set out in the Code. Both the AIC Code and AIC Guide are available at www.theaic.co.uk.
This Statement of Corporate Governance forms part of the Directors' Report.
This statement describes how the main principles identified in the Code and the AIC Code (the Codes) have been applied by the Company throughout the year as is required by the Listing Rules of the UK Listing Authority. In instances where the Code and AIC Code differ, an explanation will be given as to which governance code has been applied, and the reason for that decision. The Board is of the opinion that the Company has complied fully with the main principles identified in the Codes, except as set out below:
For the reasons set out in the AIC Guide, and as explained in the Code, the Board considers that these provisions are not relevant to the Company, being an externally managed investment company. The Company has, therefore, not reported further in respect of these provisions.
The Board currently consists of six Directors, all of whom are non-executive. All of the Directors are considered to be independent of the investment manager (Maven Capital Partners UK LLP, Maven, or the Manager) with the exception of Bill Nixon, who is not considered to be independent because of his position as Managing Partner of the Manager. The independent non-executive Directors are free of any relationship which could materially interfere with the exercise of their independent judgement. The biographies of the Directors appear in the Your Board section of this report and indicate their high level and range of investment, industrial, commercial and professional experience.
Ian Cormack was independent of the Manager at the time of his appointment as a Director and Chairman in September 2004 and continues to be so by virtue of his lack of connection with the Manager and the absence of cross-directorships with his fellow Directors.
The Board sets the Company's values and objectives and ensures that its obligations to Shareholders are met. It has formally adopted a schedule of matters which are required to be brought to it for decision, thus ensuring that it maintains full and effective control over appropriate strategic, financial, operational and compliance issues. These matters include:
Companies Act requirements such as the approval of the Interim and Annual Financial Statements and the approval and recommendation of interim and final dividends;
major changes relating to the Company's structure, including share buy-backs and share issues;
As required by the Companies Act 2006 and permitted by the Articles of Association, Directors notify the Company of any situation which might give rise to the potential for a conflict of interest, so that the Board may consider and, if appropriate, approve such situations. A register of potential conflicts of interest for Directors is reviewed regularly by the Board and the Directors notify the Company whenever there is a change in the nature of a registered conflict, or whenever a new conflict situation arises.
Following implementation of the Bribery Act 2010, the Board adopted appropriate procedures.
There is an agreed procedure for Directors to take independent professional advice, if necessary, at the Company's expense.
The Directors have access to the advice and services of the corporate Company Secretary through its appointed representatives who are responsible to the Board for:
• ensuring that Board procedures are complied with;
An induction meeting will be arranged by the Manager on the appointment of any new Director, covering details about the Company, the Manager, legal responsibilities and venture capital industry matters. Directors are provided, on a regular basis, with key information on the Company's policies, regulatory and statutory requirements and internal controls. Changes affecting Directors' responsibilities are advised to the Board as they arise.
Ian Cormack is Chairman of the Company and is Chairman of the Audit Committee. The Chairman is also Chairman of the Risk, Management Engagement and Nomination Committees as the other Directors consider that he has the skills and experience relevant to these roles. A senior non-executive Director has not been appointed, as the Board considers that each of the Directors has different qualities and areas of expertise on which they may lead.
The Board meets at least four times each year and, between Meetings, maintains regular contact with the Manager. The primary focus of quarterly Board Meetings is a review of investment performance and related matters including asset allocation, peer group information and industry issues. During the year ended 31 December 2014, the Board held four quarterly Board Meetings. In addition, there were two Meetings of the Audit Committee and one Meeting each of the Nomination Committee, the Risk Committee and of the Management Engagement Committee.
Directors have attended Board and Committee Meetings during the year ended 31 December 20141 as follows:
| Director | Board | Audit Committee |
Management Engagement Committee |
Nomination Committee |
Risk Committee |
|---|---|---|---|---|---|
| Ian Cormack | 4(4) | 2(2) | 1(1) | 1(1) | 1(1) |
| Malcolm Graham-Wood | 4(4) | 2(2) | 1(1) | 1(1) | 1(1) |
| Andrew Lapping | 4(4) | 2(2) | 1(1) | 1(1) | 1(1) |
| Bill Nixon* | 4(4) | n/a | n/a | 0(1) | 1(1) |
| Steven Scott | 3(4) | 2(2) | 1(1) | 1(1) | 1(1) |
| David Potter | 4(4) | 2(2) | 1(1) | 1(1) | 1(1) |
1 The number of meetings which the Directors were eligible to attend is in brackets.
*Bill Nixon is not a member of the Audit committee or the Management Engagement Committee.
To enable the Board to function effectively and allow Directors to discharge their responsibilities, full and timely access is given to all relevant information. In the case of Board Meetings, this consists of a comprehensive set of papers, including the Manager's review and discussion documents regarding specific matters. The Directors make further enquiries when necessary.
The Board and its Committees have undertaken a process for their annual performance evaluation, using questionnaires and discussion to ensure that Directors have devoted sufficient time and contributed adequately to the work of the Board and its Committees. The Chairman is subject to evaluation by his fellow Directors.
All non-executive Directors are appointed for an initial period of three years, subject to re-election and Companies Act provisions and, in accordance with the Articles of Association, stand for election at the first annual general meeting following their appointment. The Articles of Association state that Directors must offer themselves for re-election at least once every three years. In accordance with best practice, as they have served as Directors for more than nine years, Ian Cormack, Malcolm Graham-Wood and Steven Scott are offering themselves for annual re-election. In addition, Bill Nixon is subject to annual re-election in view of his position as Managing Partner of the Manager.
The Board subscribes to the view expressed in the AIC Code that long-serving Directors should not be prevented from forming part of an independent majority. It does not consider that a Director's tenure necessarily reduces his ability to act independently and, following formal performance evaluations, believes that each Director is independent in character and judgement and that there are no relationships or circumstances which are likely to affect the judgement of any Director.
The Board's policy on tenure is that continuity and experience are considered to add significantly to the strength of the Board and, as such, no limit on the overall length of service of any of the Company's Directors, including the Chairman, has been imposed. The Company does not have any executive Directors or employees.
Each of the Committees has been established with written terms of reference. The terms of reference of each of the Committees, which are available on request from the Registered Office of the Company, are reviewed and re-assessed for their adequacy at each Meeting.
The Audit Committee is chaired by Ian Cormack and comprises all of the independent Directors. The Board is satisfied that at least one member of the Committee has recent and relevant financial experience. The role and responsibilities of the Committee are detailed in a joint Report by the Audit and Risk Committees.
The Management Engagement Committee, which comprises all of the independent Directors and is chaired by Ian Cormack, is responsible for the annual review of the management contract with the Manager, details of which are shown in the Directors' Report. One Meeting was held during the year ended 31 December 2014, at which the Committee recommended the continued appointment of Maven Capital Partners UK LLP as Manager of the Company.
The Nomination Committee comprises all of the independent Directors and is chaired by Ian Cormack. The Committee met once during the year ended 31 December 2014. The Committee makes recommendations to the Board on the following matters:
At a meeting held in November 2014, the Committee recommended the re-election of Ian Cormack, Malcolm Graham-Wood and Bill Nixon. Subsequently, at the Board Meeting held in March 2015, and in accordance with best practice, it was agreed that all Directors who had served for more than nine years should offer themselves for annual re-election. As a result, Ian Cormack, Malcolm Graham-Wood and Steven Scott will offer themselves for re-election at the 2015 AGM. Accordingly, Resolutions 4 to 7 will be put to the 2015 AGM.
In addition, it was agreed that David Potter and Andrew Lapping would retire at the 2015 AGM. As a result the size of the Board will reduce to four Directors.
The performance of the Board, Committees and individual Directors was evaluated through an assessment process, led by the Chairman and the performance of the Chairman was evaluated by the other Directors. While the Company does not have a formal policy on diversity, Board diversity forms part of the responsibilities of the Committee.
Where a venture capital trust has only non-executive directors, the Code principles relating to directors' remuneration do not apply. As noted on page 40, the full Board, chaired by Ian Cormack, carries out the functions of a remuneration committee. The Board met once during the year ended 31 December 2014 to review the policy for, and the level of, Directors' Remuneration.
The level of remuneration for the Directors has been set in order to attract and retain individuals of a calibre appropriate to the future development of the Company. Details of the remuneration of each Director and of the Company's policy on Directors' remuneration are provided in the Directors' Remuneration Report.
A Risk Committee was established during the year under review. It is chaired by Ian Cormack and comprises all of the Directors. The role and responsibilities of the Committee are detailed in a joint Report by the Audit and Risk Committees.
The Board has contracted to external agencies, including the Manager, certain services: the management of the investment portfolio, the custodial services (which include the safeguarding of assets), the registration services and the day to day accounting and company secretarial requirements. Each of these contracts was entered into after full and proper consideration by the Board of the quality and cost of services offered. The Board receives and considers reports from the Manager and other external agencies on a regular basis. In addition, ad hoc reports and information are supplied to the Board as requested.
The Financial Reporting Council (FRC) published the UK Stewardship Code (the Stewardship Code) for institutional shareholders on 2 July 2010 and this was revised in September 2012. The purpose of the Stewardship Code is to enhance the quality of engagement between institutional investors and companies to help improve long-term returns to shareholders and assist institutional investors in the efficient exercise of their governance responsibilities.
The Board is aware of its duty to act in the interests of the Company and the Directors believe that the exercise of voting rights lies at the heart of regulation and the promotion of good corporate governance. The Directors, through the Manager, would wish to encourage companies in which investments are made to adhere to best practice in the area of corporate governance. The Manager believes that, where practicable, this can best be achieved by entering into a dialogue with investee company management teams to encourage them, where necessary, to improve their governance policies. Therefore, the Board has delegated responsibility for monitoring the activities of portfolio companies to the Manager and has given it discretionary powers to vote in respect of the holdings in the Company's investment portfolio.
The Directors and the Manager are aware of their duty to act in the interests of the Company and acknowledge that there are risks associated with investment in companies which fail to conduct business in a socially responsible manner. Therefore, the Directors and Manager take account of the social environment and ethical factors that may affect the performance or value of the Company's investments. Maven believes that a company run in the long-term interests of its shareholders should manage its relationships with its employees, suppliers and customers and behave responsibly towards the environment and society as a whole.
The Company places a great deal of importance on communication with its Shareholders. The Annual General Meeting is an event that all Shareholders are welcome to attend and participate in. The Notice of Meeting sets out the business of the Annual General Meeting and the Resolutions are explained more fully in the Explanatory Notes to the Notice of Annual General Meeting as well as the Directors' Report and the Directors' Remuneration Report. Separate Resolutions are proposed for each substantive issue and Shareholders have the opportunity to put questions to the Board and to the Manager. The results of proxy voting are relayed to Shareholders after each Resolution has been voted on by a show of hands. Nominated persons, often the beneficial owners of shares held for them by nominee companies, may attend Shareholder Meetings and are invited to contact the registered Shareholder, normally a nominee company, in the first instance in order to be nominated to attend the Meeting and to vote in respect of the shares held for them. It is in the nature of a venture capital trust that it generally has few major shareholders.
As recommended under the Code, the Annual Report is normally posted to Shareholders at least twenty business days before the Annual General Meeting. Annual and Interim Reports and Financial Statements are distributed to Shareholders and other parties who have an interest in the Company's performance. Shareholders and potential investors may obtain up-to-date information on the Company through the Manager and the Secretary, and the Company responds to letters from Shareholders on a wide range of issues. In order to ensure that the Directors develop an understanding of the views of Shareholders, correspondence between Shareholders and the Manager or the Chairman is copied to the Board. The Company's web pages are hosted on the Manager's website, and can be visited at www.mavencp.com/migvct4 from where Annual and Interim Reports, Stock Exchange Announcements and other information can be viewed, printed or downloaded. Access to further information about the Manager can be gained from www.mavencp.com.
The Statement of Directors' Responsibilities in respect of the Financial Statements is on page 49 and the Statement of Going Concern is included in the Directors' Report on page 35. The Independent Auditor's Report is on pages 53 to 55.
By order of the Board Maven Capital Partners UK LLP Secretary
24 March 2015
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law, the Directors have elected to prepare the Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The Financial Statements are required by law to give a true and fair view of the state of affairs of the Company and of the net return of the Company for that period.
In preparing these Financial Statements, the Directors are required to:
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report (including a report on remuneration policy), and Corporate Governance Statement that comply with applicable law and regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website hosted by the Manager. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.
The Directors are also responsible for ensuring that 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 performance, business model and strategy.
The Directors believe that, to the best of their knowledge:
By order of the Board Maven Capital Partners UK LLP Secretary
24 March 2015
The Audit Committee is chaired by Ian Cormack and comprises all independent Directors. The Board is satisfied that at least one member of the Committee has recent and relevant financial experience.
The principal responsibilities of the Committee include:
The Committee met twice during the year under review, in March and July 2014. At each meeting the Committee considered the key risks detailed above and the corresponding internal control and risk reports provided by the Manager, which included the Company's Risk Management Framework (the Framework). No significant weaknesses in the control environment were identified and it was also noted that there had not been any adverse comment from the Auditor and that the Auditor had not identified any significant issues in its audit report. The Committee, therefore, concluded that there were no significant issues which required to be reported to the Board.
At its meeting in March 2014, the Committee reviewed the Framework in light of AIFMD and the related changes to the relationship between the Company and its Investment Manager. In addition, the Committee reviewed the new requirements for the Annual Report in relation to narrative reporting, enhanced audit reporting and the 2012 Corporate Governance Code. The Committee also reviewed, for recommendation to the Board, the Audit Report from the independent Auditor and the draft Annual Report and Financial Statements for the year ended 31 December 2013, along with the amount of the final dividend for the year then ended.
At its meeting in August 2014 the Committee reviewed the Half Yearly Report and Financial Statements for the six months ended 30 June 2014 and also considered the performance of Deloitte LLP (Deloitte) as Auditor, and its independence and tenure. The Committee concluded that it was satisfied with the performance of Deloitte and recommended its continued appointment, with there being no requirement to put the provision of audit services out to tender at that time. The Committee agreed that this matter would be reviewed in 2015.
Subsequent to 31 December 2014, the Committee considered the draft Annual Report and Financial Statements for the year ended 31 December 2014 and provided advice to the Board that it considered the Annual Report and Financial Statements, taken as a whole, were fair, balanced and understandable and provided the information necessary for Shareholders to assess the Company's performance and strategy.
As part of its annual review of audit services, the Committee considers the performance, cost effectiveness and general relationship with the external auditor. In addition, the Committee reviews the independence and objectivity of the external auditor. The Company first appointed Deloitte as Auditor in 2007. The Independent Auditor's Report is on pages 53 to 55 and it should be noted that Deloitte rotates the Senior Statutory Auditor responsible for the audit every five years. The Senior Statutory Auditor was last changed in 2012. Details of the amounts paid to the Auditor during the year for audit and other services are set out in Note 4 to the Financial Statements.
The Company has in place a policy governing and controlling the provision of non-audit services by the external Auditor, so as to safeguard its independence and objectivity. Shareholders are asked to approve the re-appointment, and the Directors' responsibility for the remuneration, of the Auditor at each Annual General Meeting. Any non-audit work, other than interim reviews, requires the specific approval of the Audit Committee in each case. Non-audit work, where independence may be compromised or conflicts arise, is prohibited. There are no contractual obligations which restrict the Committee's choice of Auditor. However, in light of recent EU regulation and FRC guidance on audit tenders, the Committee is mindful that the audit will require to be put out to tender and will continue to keep the tenure of the Auditor under review. The Committee has concluded that Deloitte is independent of the Company and recommended that a Resolution for the re-appointment of Deloitte as independent Auditor should be put to the 2015 AGM.
Under the recommendations of AIFMD, the Company has established a Risk Committee, which is chaired by Ian Cormack and comprises all of the Directors.
The responsibilities of the Committee are:
to ensure that the risk profile of the Company corresponds to the size, portfolio structure and investment strategies and objectives of the Company;
to report to the Board on its conclusions and to make recommendations in respect of any matters within its remit including proposals for improvement in, or changes to, the systems, processes and procedures that are in place;
The Committee will review these Terms of Reference at least once each year.
In terms of the assessment of the key risks facing the Company, it is recognised that the investment portfolio forms a significant element of its assets. The recognition, ownership and valuation of the investment portfolio is therefore an area of particular attention by the Committee. Specifically, the risk is that investments are not recognised and measured in line with the Company's stated accounting policy on the valuation of investments as set out in note 1(e) to the Financial Statements on page 62. As revenue generated from dividend income and loan stock interest is the major source of revenue and a significant item in the Income Statement, a key risk relates to the recognition of investment income. Specifically, the risk is that the Company does not recognise income in line with its stated policy on income recognition. The maintenance of VCT status is another key risk that the Company has to address.
The Company uses the services of an independent custodian (JP Morgan Chase) to hold the quoted investment assets of the Company. An annual internal control report is received from the Custodian which provides details of the Custodian's control environment. The investment portfolio is reconciled regularly by the Manager and the reconciliation is also reviewed by the Independent Auditor. The portfolio is reviewed and verified by the Manager on a regular basis and management accounts including a full portfolio listing are prepared quarterly and considered at the quarterly meetings of the Board. The portfolio is also audited annually by the Independent Auditor.
The valuation of investments is undertaken in accordance with the Company's stated accounting policy as set out in Note 1(e) to the Financial Statements on page 62. Unlisted investments are valued by the Manager and are subject to scrutiny and approval by the Directors. Investments listed on a recognised stock exchange are valued at their bid market price.
The Committee considered and challenged the assumptions and significant judgements in relation to the valuation of each quoted and unquoted investment and was satisfied that they were appropriate. The Committee also satisfied itself that there were no issues associated with the existence and ownership of the investments which required to be addressed.
The recognition of dividend income and loan stock interest is undertaken in accordance with accounting policy note 1(b) to the Financial Statements on page 61. The management accounts are reviewed by the Board on a quarterly basis and discussion takes place with the Manager at the quarterly Board Meetings regarding the revenue generated from dividend income and loan stock. The Directors are satisfied that the levels of income recognised are in line with revenue estimates. The Committee concluded that there were no issues associated with revenue recognition which required to be addressed.
Compliance with the VCT regulations is monitored continually by the Manager and is reviewed by the Committee on a quarterly basis. The Committee concluded that there were no issues associated with the maintenance of VCT status which required to be addressed.
The Board of Directors of Maven Income and Growth VCT 4 PLC has overall responsibility for the Company's system of internal control and for reviewing its effectiveness, and has considered the requirement for an internal audit function as recommended by Code provision 3.6. However, as the Directors have delegated the investment management, company secretarial and administrative functions of the Company to the Manager, the Board considers that it is appropriate for the Company's internal controls to be monitored by the Manager, rather than by the Company itself. The Directors have confirmed that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Company, which has been in place up to the date of approval of the Annual Report and Financial Statements. This process is reviewed regularly by the Board and accords with internal control guidance issued by the FRC.
The Board has reviewed the effectiveness of the system of internal control and, in particular, it has reviewed the process for identifying and evaluating the significant risks affecting the Company and the policies and procedures by which these risks are managed. The Directors have delegated the management of the Company's assets to the Manager and this embraces implementation of the system of internal control, including financial, operational and compliance controls and risk management. Internal control systems are monitored and supported by the compliance function of the Manager, which undertakes periodic examination of business processes, including compliance with the terms of the Management and Administration Deed, and ensures that recommendations to improve controls are implemented.
Risks are identified through a risk management framework by each function within the Manager's activities. Risk is considered in the context of the guidance issued by the FRC and includes financial, regulatory, market, operational and reputational risk. This helps the Manager's risk model to identify those functions most appropriate for review.
Any errors or weaknesses identified are reported to the Company and timetables are agreed for implementing improvements to systems. The implementation of any remedial action required is monitored and feedback provided to the Board.
The key components designed to provide effective internal control for the year under review and up to the date of this report are:
The internal control systems are intended to meet the company's particular needs and the risks to which it is exposed. Accordingly, these systems are designed to manage, rather than eliminate, the risk of failure to achieve business goals and, by their nature, can provide reasonable, but not absolute, assurance against material mis-statement or loss.
The principal risks and uncertainties faced by the Company and the Board's strategy for managing these risks are covered in the Business Report on page 14.
Ian Cormack Chairman 24 March 2015
In our opinion the Financial Statements:
The Financial Statements comprise the Income Statement, Reconciliation of Movements in Shareholders' Funds, Balance Sheet, Cash Flow Statement, and the related notes 1 to 18. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
As required by the Listing Rules we have reviewed the Directors' statement on page 35 that the Company is a going concern. We confirm that:
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Company's ability to continue as a going concern.
The assessed risks of material mis-statement described below are those that had the greatest effect on our audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team:
| Risk | How the scope of our audit responded to the risk |
|---|---|
| The valuation of unlisted investments £25.8 million of the VCT's net assets are in unlisted investments where there is no readily available market price, and there is a risk that the valuation attributed to these investments is inappropriate due to significant management judgment required. The Company's fair value measurement policy is disclosed within note 1(f). |
We have challenged the valuation of investments by obtaining an understanding of the methodology used by the investment manager, considering whether this is consistent with industry practice and the International Private Equity and Venture Capital Valuation Guidelines. We obtained third party evidence that underpins inputs to the valuation, as well as testing the arithmetical accuracy of the valuation calculation. In addition, we attended the year end Audit Committee meeting where we assessed the effectiveness of the Audit Committee's challenge and approval of unlisted investment valuations. |
| The ownership of investments £29.3 million of the VCT's net assets are held in investments. There is a risk that investments recorded are not valid assets of the VCT. Details of investments are disclosed within note 8. |
We tested 100% of the investment ownership by verifying the portfolio to either share certificates, loan stock confirmations or custodian confirmations. We have also reviewed and challenged the paper prepared by the investment manager for the Audit Committee on the process for identifying, evaluating and managing the controls over the custodian's operations. |
| Revenue recognition The Company's principal revenue sources are dividends and loan stock interest. There is a risk that the mis-statement of revenue could result in incorrect dividend payments. The Company's revenue recognition policy is disclosed within note 1(b). |
We have tested a sample of dividend income receipts to bank statements to confirm they have been correctly recorded. We have reviewed and challenged the investment manager's assertions regarding the ageing of accrued income and assessed its recoverability for a sample of balances. Additionally we have reviewed and challenged the investment manager's assertions regarding recoverability of a sample of balances outstanding at the year end with reference to the latest performance of the Company and payments received in the year. |
The description of risks above should be read in conjunction with the significant issues considered by the Audit Committee discussed on pages 51 to 52. These risks are unchanged from the 2013 report.
Our audit procedures relating to these matters were designed in the context of our audit of the Financial Statements as a whole, and not to express an opinion on individual accounts or disclosures. Our opinion on the Financial Statements is not modified with respect to any of the risks described above, and we do not express an opinion on these individual matters.
We define materiality as the magnitude of mis-statement in the Financial Statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our work and in evaluating the results of our work.
We determined materiality for the Company to be £620,000 (2013: £851,000), which is approximately 2% (2013: 3%) of total shareholders' equity at the year end.
This is a change of approach from 2013, where we used a materiality of 3% of total shareholders' equity. We have changed the percentage applied to align more closely with other comparable companies.
We agreed with the Audit Committee that we would report to the committee all audit differences in excess of £12,400 (2013: £17,000), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the Financial Statements.
Our audit was scoped by obtaining an understanding of the entity and its environment, including internal control, and assessing the risks of material mis-statement. Audit work to respond to the risks of material mis-statement was performed directly by the audit engagement team.
In our opinion:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
We have nothing to report in respect of these matters.
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors' remuneration have not been made or the part of the Directors' Remuneration Report to be audited is not in agreement with the accounting records and returns. We have nothing to report arising from these matters.
Under the Listing Rules we are also required to review the part of the Corporate Governance Statement relating to the Company's compliance with ten provisions of the UK Corporate Governance Code. We have nothing to report arising from our review.
Under International Standards on Auditing (UK & Ireland), we are required to report to you if, in our opinion, information in the annual report is:
In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the Directors' statement that they consider the annual report is fair, balanced and understandable and whether the annual report appropriately discloses those matters that we communicated to the audit committee which we consider should have been disclosed. We confirm that we have not identified any such inconsistencies or misleading statements.
As explained more fully in the Directors' Responsibilities Statement the Directors are responsible for the preparation of the Financial Statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the Financial Statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. We also comply with International Standard on Quality Control 1 (UK and Ireland). Our audit methodology and tools aim to ensure that our quality control procedures are effective, understood and applied. Our quality controls and systems include our dedicated professional standards review team and independent partner reviews.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, or for the opinions we have formed.
An audit involves obtaining evidence about the amounts and disclosures in the Financial Statements sufficient to give reasonable assurance that the Financial Statements are free from material mis-statement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been applied consistently and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the Financial Statements.
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited Financial Statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material mis-statements or inconsistencies we consider the implications for our report.
Andrew Partridge C.A. (Senior statutory auditor) for and on behalf of Deloitte LLP Chartered Accountants and Statutory Auditor Glasgow, United Kingdom
24 March 2015
| Notes | Revenue £'000 |
Capital £'000 |
Ordinary Shares Total £'000 |
|
|---|---|---|---|---|
| Gains on investments | 8 | - | 473 | 473 |
| Income from investments | 2 | 1,282 | - | 1,282 |
| Investment management fees | 3 | (208) | (831) | (1,039) |
| Other expenses | 4 | (387) | - | (387) |
| Net Return on ordinary activities before taxation |
687 | (358) | 329 | |
| Tax on ordinary activities | 5 | (132) | 132 | - |
| Return attributable to Equity Shareholders |
555 | (226) | 329 | |
| Earnings per share (pence) | 1.7 | (0.7) | 1.0 |
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.
| Ordinary Shares £'000 |
C Ordinary Shares £'000 |
Total £'000 |
|
|---|---|---|---|
| Opening Shareholders' funds | 25,340 | 3,631 | 28,971 |
| C Ordinary share consolidation to Ordinary |
3,631 | (3,631) | - |
| Net return for year | 329 | - | 329 |
| Net proceeds of share issue | 4,093 | - | 4,093 |
| Merger costs | (3) | - | (3) |
| Repurchase and cancellation of shares |
(861) | - | (861) |
| Dividends paid - revenue | (484) | - | (484) |
| Dividends paid - capital | (907) | - | (907) |
| Closing Shareholders' funds | 31,138 | - | 31,138 |
For the Year Ended 31 December 2013
| Notes | Revenue £'000 |
Capital £'000 |
Ordinary Shares Total £'000 |
Revenue £'000 |
C Ordinary Shares Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
TOTAL Total £'000 |
|
|---|---|---|---|---|---|---|---|---|---|---|
| Gains/(losses) on investments | 8 | - | 1,808 | 1,808 | - | (120) | (120) | - | 1,688 | 1,688 |
| Income from investments | 2 | 1,041 | - | 1,041 | 18 | - | 18 | 1,059 | - | 1,059 |
| Investment management fees | 3 | (188) | (753) | (941) | (20) | (84) | (104) | (208) | (837) | (1,045) |
| Other expenses | 4 | (358) | - | (358) | (37) | - | (37) | (395) | - | (395) |
| Net Return on ordinary activities before taxation |
495 | 1,055 | 1,550 | (39) | (204) | (243) | 456 | 851 | 1,307 | |
| Tax on ordinary activities | 5 | (95) | 95 | - | - | - | - | (95) | 95 | - |
| Return attributable to Equity Shareholders |
400 | 1,150 | 1,550 | (39) | (204) | (243) | 361 | 946 | 1,307 | |
| Earnings per share (pence) | 1.8 | 5.3 | 7.1 | (1.0) | (5.2) | (6.2) | 0.8 | 0.1 | 0.9 |
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.
| Ordinary Shares £'000 |
C Ordinary Shares £'000 |
S Ordinary Shares £'000 |
TOTAL £'000 |
|
|---|---|---|---|---|
| Opening Shareholders' funds | 8,990 | - | 5,877 | 14,867 |
| S Ordinary share consolidation to Ordinary |
5,877 | - | (5,877) | - |
| Net return for year | 1,550 | (243) | - | 1,307 |
| Issue of new Ordinary shares | 6,272 | - | - | 6,272 |
| Issue of new C Ordinary shares | - | 3,969 | - | 3,969 |
| Net proceeds of share issue | 4,169 | - | - | 4,169 |
| Merger costs | (29) | - | - | (29) |
| Repurchase and cancellation of shares |
(621) | (95) | - | (716) |
| Dividends paid - revenue | (423) | - | - | (423) |
| Dividends paid - capital | (445) | - | - | (445) |
| Closing Shareholders' funds | 25,340 | 3,631 | - | 28,971 |
As at 31 December 2014
| 31 December 2014 | 31 December 2013 | ||||
|---|---|---|---|---|---|
| Ordinary Shares |
Ordinary Shares |
C Ordinary Shares |
Total | ||
| Notes | £'000 | £'000 | £'000 | £'000 | |
| Fixed assets | |||||
| Investments at fair value through profit or loss |
8 | 29,296 | 24,185 | 3,133 | 27,318 |
| Current assets | |||||
| Debtors | 10 | 511 | 467 | 214 | 681 |
| Cash | 1,565 | 963 | 291 | 1,254 | |
| 2,076 | 1,430 | 505 | 1,935 | ||
| Creditors: | |||||
| Amounts falling due within one year | 11 | (234) | (275) | (7) | (282) |
| Net current assets | 1,842 | 1,155 | 498 | 1,653 | |
| Total net assets | 31,138 | 25,340 | 3,631 | 28,971 | |
| Capital and reserves | |||||
| Called up share capital | 12 | 3,205 | 2,569 | 386 | 2,955 |
| Share premium account | 13 | 17,677 | 10,350 | 3,572 | 13,922 |
| Capital reserve - realised | 13 | (1,018) | (123) | (281) | (404) |
| Capital reserve - unrealised | 13 | 883 | 1,325 | 77 | 1,402 |
| Distributable reserve | 13 | 9,621 | 10,591 | (95) | 10,496 |
| Capital redemption reserve | 13 | 229 | 119 | 11 | 130 |
| Revenue reserve | 13 | 541 | 509 | (39) | 470 |
| Net assets attributable to Ordinary Shareholders |
31,138 | 25,340 | 3,631 | 28,971 | |
| Net asset value per ordinary share (pence) |
14 | 97.2 | 98.6 | 94.0 |
The Financial Statements of Maven Income and Growth VCT 4 PLC, registered number SC272568, were approved by the Board of Directors and were signed on its behalf by:
Ian Cormack Director
24 March 2015
For the Year Ended 31 December 2014
| Year ended 31 December 2014 Ordinary |
Ordinary | C Ordinary | Year ended 31 December 2013 |
|
|---|---|---|---|---|
| Notes | Shares £'000 |
Shares £'000 |
Shares £'000 |
Total £'000 |
| Operating activities | ||||
| Investment income received | 1,323 | 946 | 3 | 949 |
| Deposit interest received | 2 | - | - | - |
| Investment management fees paid | (1,092) | (744) | (104) | (848) |
| Secretarial fees paid | (93) | (80) | (11) | (91) |
| Directors' fees paid | (73) | (68) | (10) | (78) |
| Other cash payments | (20) | (215) | (208) | (423) |
| Net cash inflow/(outflow) 15 from operating activities |
47 | (161) | (330) | (491) |
| Taxation | ||||
| Corporation tax | - | (4) | - | (4) |
| Financial investment | ||||
| Purchase of investments | (20,941) | (22,367) | (1,407) | (23,774) |
| Sale of investments | 19,367 | 17,797 | 1,459 | 19,256 |
| Net cash (outflow)/inflow from financial investment |
(1,574) | (4,570) | 52 | (4,518) |
| Equity dividends paid | (1,391) | (868) | - | (868) |
| Net cash outflow before financing | (2,918) | (5,603) | (278) | (5,881) |
| Financing | ||||
| Issue of Ordinary Shares | 4,093 | 4,169 | - | 4,169 |
| Net cash balance acquired from merger | - | 1,686 | 664 | 2,350 |
| Merger costs | (3) | - | - | - |
| Repurchase of Ordinary Shares | (861) | (621) | (95) | (716) |
| Net cash inflow from financing | 3,229 | 5,234 | 569 | 5,803 |
| Increase/(decrease) in cash 16 |
311 | (369) | 291 | (78) |
For the Year Ending 31 December 2014
UK Generally Accepted Accounting Practice
The Financial Statements have been prepared under the historical cost convention modified to include the revaluation of investments and in accordance with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' and Venture Capital Trusts (the SORP) issued in January 2009.
The disclosures on Going Concern on page 35 of the Directors' Report form part of these financial statements.
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.
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:
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.
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.
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.
When the company sells or revalues its investments during the year, any gains or losses arising are credited/charged to the Income Statement.
| 2. Income |
Year ended 31 December 2014 Ordinary Shares £'000 |
Ordinary Shares £'000 |
31 December 2013 C Ordinary Shares £'000 |
Year ended Total £'000 |
|---|---|---|---|---|
| Income from investments: | ||||
| UK franked investment income | 26 | 21 | - | 21 |
| UK unfranked investment income | 1,254 | 1,020 | 18 | 1,038 |
| 1,280 | 1,041 | 18 | 1,059 | |
| Other Income: | ||||
| Deposit interest | 2 | - | - | - |
| Total income | 1,282 | 1,041 | 18 | 1,059 |
| Total income comprises: | ||||
| Dividends | 26 | 21 | - | 21 |
| Interest | 1,256 | 1,020 | 18 | 1,038 |
| 1,282 | 1,041 | 18 | 1,059 |
| Investment Management Fees | Revenue £'000 |
Capital £'000 |
Year ended 31 December 2014 Total £'000 |
|---|---|---|---|
| Investment management fees | 153 | 611 | 764 |
| Performance fees | 55 | 220 | 275 |
| 208 | 831 | 1,039 | |
| Year ended 31 December 2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Ordinary Shares | C Ordinary Shares | TOTAL | |||||||
| Revenue | Capital | Total Revenue | Capital | Total Revenue | Capital | Total | |||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Investment management fees | 107 | 430 | 537 | 14 | 59 | 73 | 121 | 489 | 610 |
| Performance fees | 81 | 323 | 404 | 6 | 25 | 31 | 87 | 348 | 435 |
| 188 | 753 | 941 | 20 | 84 | 104 | 208 | 837 | 1,045 |
Details of the fee basis are contained in the Directors' Report on pages 36 and 37.
| 4. Other Expenses |
Revenue £'000 |
Capital £'000 |
Year ended 31 December 2014 Total £'000 |
|---|---|---|---|
| Secretarial fees | 93 | - | 93 |
| Directors' remuneration | 77 | - | 77 |
| Fees to Auditor - audit services | 17 | - | 17 |
| Fees to Auditor - tax services | 5 | - | 5 |
| Bad debts written off | 59 | - | 59 |
| Miscellaneous expenses | 136 | - | 136 |
| 387 | - | 387 |
| Year ended 31 December 2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Ordinary Shares | C Ordinary Shares | TOTAL | |||||||
| Revenue | Capital | Total Revenue | Capital | Total Revenue | Capital | Total | |||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Secretarial fees | 80 | - | 80 | 11 | - | 11 | 91 | - | 91 |
| Directors' remuneration | 68 | - | 68 | 10 | - | 10 | 78 | - | 78 |
| Fees to Auditor - audit services | 14 | - | 14 | 3 | - | 3 | 17 | - | 17 |
| Fees to Auditor - tax services | 9 | - | 9 | 1 | - | 1 | 10 | - | 10 |
| Bad debts written off | 85 | - | 85 | - | - | - | 85 | - | 85 |
| Miscellaneous expenses | 102 | - | 102 | 12 | - | 12 | 114 | - | 114 |
| 358 | - | 358 | 37 | - | 37 | 395 | - | 395 |
| 5. | Tax on Ordinary Activities | Revenue £'000 |
Capital £'000 |
Year ended 31 December 2014 Total £'000 |
|---|---|---|---|---|
| Corporation tax | (132) | 132 | - | |
| Year ended 31 December 2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Ordinary Shares | C Ordinary Shares | TOTAL | |||||||
| Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Corporation tax | (95) | 95 | - | - | - | - | (95) | 95 | - |
The tax assessed for the period is lower than the standard rate of corporation tax of 21% (2013: 23%). The differences are explained below:
| Revenue £'000 |
Capital £'000 |
Year ended 31 December 2014 Total £'000 |
|
|---|---|---|---|
| Return on ordinary activities before tax | 687 | (358) | 329 |
| Revenue return on ordinary activities multiplied by standard rate of corporation tax |
144 | (75) | 69 |
| Non taxable UK dividend income | (6) | - | (6) |
| Gains on investments | - | (99) | (99) |
| Increase in excess management expenses | (6) | 42 | 36 |
| 132 | (132) | - | |
Losses with a tax value of £120,040 (2013: £92,297) are available to carry forward against future trading profits. These have not been recognised as a deferred tax asset as recoverability is not sufficiently certain.
| Tax on Ordinary Activities (continued) | Year ended 31 December 2013 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Ordinary Shares | C Ordinary Shares | TOTAL | |||||||
| Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
| Return on ordinary activities before tax |
495 | 1,055 | 1,550 | (39) | (204) | (243) | 456 | 851 | 1,307 |
| Revenue return on ordinary activities multiplied by standard rate of corporation tax |
114 | 243 | 357 | (9) | (47) | (56) | 105 | 196 | 301 |
| Non taxable UK dividend income | (5) | - | (5) | - | - | - | (5) | - | (5) |
| (Gains)/losses on investments | - | (416) | (416) | - | 27 | 27 | - | (389) | (389) |
| Increase in excess management expenses |
(14) | 78 | 64 | 9 | 20 | 29 | (5) | 98 | 93 |
| 95 | (95) | - | - | - | - | 95 | (95) | - |
| 6. | Dividends | Year ended 31 December 2014 |
Year ended 31 December 2013 |
|||
|---|---|---|---|---|---|---|
| Ordinary Shares £'000 |
Ordinary Shares £'000 |
C Ordinary Shares £'000 |
S Ordinary Shares £'000 |
Total £'000 |
||
| Revenue dividends | ||||||
| 2nd interim dividend for the year ended 31 December 2013 of Nil (2012: 0.75p) |
- | 69 | - | - | 69 | |
| 2nd interim dividend for the year ended 31 December 2013 of Nil (2012: 1.75p) |
- | - | - | 92 | 92 | |
| Final revenue dividend for the year ended 31 December 2013 of 0.65p (2012: Nil) paid on 30 May 2014 |
190 | - | - | - | - | |
| Interim revenue dividend for the year ended 31 December 2014 of 1.0p (2013: 1.0p) paid on 26 September 2014 |
294 | 262 | - | - | 262 | |
| 484 | 331 | - | 92 | 423 | ||
| Capital dividends | ||||||
| 2nd interim dividend for the year ended 31 December 2013 of Nil (2012: 2.0p) |
- | 183 | - | - | 183 | |
| Final capital dividend for the year ended 31 December 2013 of 2.00p (2012: Nil) paid on 30 May 2014 |
583 | - | - | - | - | |
| Interim capital dividend for the year ended 31 December 2014 of 1.1p (2013: 1.0p) paid on 26 September 2014 |
324 | 262 | - | - | 262 | |
| 907 | 445 | - | - | 445 | ||
Financial Statements
We set out below the final dividends proposed in respect of the financial year, which reflect the requirements of Section 274 of the Income Tax Act 2007.
| Year ended | Year ended | ||||
|---|---|---|---|---|---|
| 31 December 2014 | 31 December 2013 | ||||
| Ordinary Shares £'000 |
Ordinary Shares £'000 |
C Ordinary Shares £'000 |
S Ordinary Shares £'000 |
Total £'000 |
|
| Revenue available for distribution by way of dividends for the year |
555 | 400 | (39) | - | 361 |
| Revenue dividends | |||||
| Final revenue dividend proposed for the year ended 31 December 2014 of 0.70p (2013: 0.65p) payable on 5 June 2015 |
225 | 167 | - | - | 167 |
| 225 | 167 | - | - | 167 | |
| Capital dividends Final capital dividend proposed for the year ended 31 December 2014 of 2.2p (2013: 2.0p) payable on 5 June 2015 |
705 | 514 | - | - | 514 |
| 705 | 514 | - | - | 514 |
| 7. Return per Ordinary Share |
Year ended 31 December 2014 Ordinary Shares |
Year ended 31 December 2013 C Ordinary Ordinary Shares Shares Total |
|---|---|---|
| The returns per share have been based on the following figures: |
||
| Weighted average number of ordinary shares | 31,821,673 | 21,811,660 3,894,337 25,705,997 |
| Revenue return | £555,000 | £400,000 (£39,000) £361,000 |
| Capital return | (£226,000) | £1,150,000 (£204,000) £946,000 |
| Total Return | £329,000 | £1,550,000 (£243,000) £1,307,000 |
| 8. Investments |
Listed (quoted prices) £'000 |
AIM/ISDX (quoted prices) £'000 |
Year ended 31 December 2014 Unlisted/Listed (unobservable inputs) £'000 |
Total £'000 |
|---|---|---|---|---|
| Movements during the year: | ||||
| Valuation at 1 January 2014 - Ordinary | 3,547 | 260 | 20,378 | 24,185 |
| Valuation at 1 January 2014 - C Ordinary | 749 | 398 | 1,986 | 3,133 |
| 4,296 | 658 | 22,364 | 27,318 | |
| Unrealised (gain)/loss - Ordinary | (49) | 318 | (1,594) | (1,325) |
| Unrealised (gain)/loss - C Ordinary | - | (81) | 4 | (77) |
| (49) | 237 | (1,590) | (1,402) | |
| Cost at 1 January 2014 | 4,247 | 895 | 20,774 | 25,916 |
| Purchases | 11,985 | - | 8,956 | 20,941 |
| Sales proceeds | (13,279) | (160) | (5,997) | (19,436) |
| Realised gains | 39 | 53 | 900 | 992 |
| Cost at 31 December 2014 | 2,992 | 788 | 24,633 | 28,413 |
| Unrealised gain/(loss) | 24 | (331) | 1,190 | 883 |
| Valuation at 31 December 2014 | 3,016 | 457 | 25,823 | 29,296 |
Note1(f) defines the three tier hierarchy of investments, and the significance of the information used to determine their fair value, that is required by Financial Reporting Standard 29 "Financial Instruments: Disclosures ". Listed and AIM/ISDX securities are categorised as Level 1 and unlisted investments as Level 3.
FRS 29 requires disclosure, by class of financial instrument, if the effect of changing one or more inputs to reasonably possible alternative assumptions would result in a significant change to the fair value measurement. The information used in determination of the fair value of Level 3 investments is chosen with reference to the specific underlying circumstances and position of each investee company. The Directors are of the view that there are no reasonably possible alternative assumptions that will have a significant effect on the current valuation of the unlisted portfolio.
| Investments (continued) | Year ended 31 December 2013 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Listed (quoted prices) £'000 |
AIM/ISDX prices) £'000 |
Unlisted (quoted (unobservable inputs) £'000 |
Ordinary Shares Total £'000 |
Listed (quoted prices) £'000 |
AIM/ISDX prices) £'000 |
C Ordinary Shares Unlisted (quoted (unobservable inputs) £'000 |
Total £'000 |
Listed (quoted prices) £'000 |
AIM/ISDX (quoted prices) £'000 |
Unlisted (unobservable inputs) £'000 |
TOTAL Total £'000 |
|
| Movements during the year: | ||||||||||||
| Valuation at 1 January 2013 - Ordinary | 999 | 321 | 6,707 | 8,027 | - | - | - | - | 999 | 321 | 6,707 | 8,027 |
| Valuation at 1 January 2013 - S Ordinary | 999 | 72 | 4,152 | 5,223 | - | - | - | - | 999 | 72 | 4,152 | 5,223 |
| 1,998 | 393 | 10,859 | 13,250 | - | - | - | - | 1,998 | 393 | 10,859 | 13,250 | |
| Unrealised loss/(gain) - Ordinary | - | 633 | (122) | 511 | - | - | - | - | - | 633 | (122) | 511 |
| Unrealised loss/(gain) - S Ordinary | - | 26 | (337) | (311) | - | - | - | - | - | 26 | (337) | (311) |
| - | 659 | (459) | 200 | - | - | - | - | - | 659 | (459) | 200 | |
| Cost at 1 January 2013 | 1,998 | 1,052 | 10,400 | 13,450 | - | - | - | - | 1,998 | 1,052 | 10,400 | 13,450 |
| Purchases | 15,088 | 99 | 11,737 | 26,924 | 749 | 464 | 3,499 | 4,712 | 15,837 | 563 | 15,236 | 31,636 |
| Sales proceeds | (13,599) | (445) | (3,753) (17,797) | - | (195) | (1,264) | (1,459) | (13,599) | (640) | (5,017) | (19,256) | |
| Realised gain/(loss) | 11 | (128) | 400 | 283 | - | 48 | (245) | (197) | 11 | (80) | 155 | 86 |
| Cost at 31 December 2013 | 3,498 | 578 | 18,784 | 22,860 | 749 | 317 | 1,990 | 3,056 | 4,247 | 895 | 20,774 | 25,916 |
| Unrealised gain/(loss) | 49 | (318) | 1,594 | 1,325 | - | 81 | (4) | 77 | 49 | (237) | 1,590 | 1,402 |
| Valuation at 31 December 2013 | 3,547 | 260 | 20,378 | 24,185 | 749 | 398 | 1,986 | 3,133 | 4,296 | 658 | 22,364 | 27,318 |
| 8. Investments (continued) |
31 December 2014 Ordinary |
Ordinary | C Ordinary | 31 December 2013 |
|---|---|---|---|---|
| The portfolio valuation | Shares £'000 |
Shares £'000 |
Shares £'000 |
Total £'000 |
| Held at market valuation: | ||||
| UK treasury bills | 2,997 | 3,497 | 749 | 4,246 |
| Listed investments | 19 | 50 | - | 50 |
| AIM quoted equities | 457 | 260 | 398 | 658 |
| 3,473 | 3,807 | 1,147 | 4,954 | |
| Unlisted at Directors' valuation: | ||||
| Unquoted unobservable equities | 11,028 | 8,070 | 1,363 | 9,433 |
| Unquoted unobservable fixed income |
14,795 | 12,308 | 623 | 12,931 |
| 25,823 | 20,378 | 1,986 | 22,364 | |
| Total | 29,296 | 24,185 | 3,133 | 27,318 |
| Realised gains/(losses) on historical basis |
992 | 283 | (197) | 86 |
| Net movement in unrealised appreciation |
(519) | 1,525 | 77 | 1,602 |
| Gains/(losses) on investments | 473 | 1,808 | (120) | 1,688 |
Financial Statements
The principal activity of the Company is to select and hold a portfolio of investments in unlisted and AIM securities. Although the Company will, in some cases, be represented on the board of the investee company, it will not take a controlling interest or become involved in its management. The size and structure of the companies with unlisted and AIM securities may result in certain holdings in the portfolio representing a participating interest without there being any partnership, joint venture or management consortium agreement.
At 31 December 2014, the Company held shares amounting to 20% or more of the equity capital of the following undertakings.
| Investment | % of class held |
% of equity held |
Total cost £'000 |
Carrying value £'000 |
Latest accounts period end |
Aggregate capital & reserves £'000 |
Loss after tax for period £'000 |
|---|---|---|---|---|---|---|---|
| Networks by Wireless Limited | |||||||
| 2,948,654 B ordinary shares | 40.3 | 28.3 | 4 | - | 30/06/13 | (704) | (853) |
| 700,000 ordinary shares | 12.6 | 250 | - | ||||
| £196,154 secured loan stock | 38.3 | 196 | - |
The company also holds shares or units amounting to 3% or more of the nominal value of the allotted shares or units of any class of certain investee companies.
Details of equity percentages held are shown in the Investment Portfolio Summary on page 32.
| 10. Debtors | 31 December 2014 Ordinary Shares £'000 |
Ordinary Shares £'000 |
C Ordinary Shares £'000 |
31 December 2013 Total £'000 |
|---|---|---|---|---|
| Prepayments and accrued income | 419 | 464 | 15 | 479 |
| Other debtors | 92 | 3 | 199 | 202 |
| 511 | 467 | 214 | 681 |
| 11. Creditors | 31 December 2014 Ordinary Shares £'000 |
Ordinary Shares £'000 |
C Ordinary Shares £'000 |
31 December 2013 Total £'000 |
|---|---|---|---|---|
| Accruals | 234 | 275 | 7 | 282 |
| 234 | 275 | 7 | 282 | |
| 12. Share Capital | Ordinary Shares | 31 December 2014 C Ordinary Shares |
Ordinary Shares | C Ordinary Shares | 31 December 2013 S Ordinary Shares |
|||||
|---|---|---|---|---|---|---|---|---|---|---|
| Number | £'000 | Number | £'000 | Number | £'000 | Number | £'000 | Number | £'000 | |
| At 31 December the authorised share capital comprised: |
||||||||||
| allotted, issued and fully paid: | ||||||||||
| Ordinary Shares of 10p each | ||||||||||
| Balance brought forward | 25,693,172 | 2,569 | 3,863,876 | 386 | 9,157,406 | 916 | - | - | 5,264,446 | 526 |
| Repurchased and cancelled in year | (995,000) | (99) | - | - | (710,000) | (71) | (105,000) | (11) | - | - |
| 24,698,172 | 2,470 | 3,863,876 | 386 | 8,447,406 | 845 | (105,000) | (11) | 5,264,446 | 526 | |
| S share consolidation | - | - | - | - | 5,264,446 | 526 | - | - | (5,264,446) | (526) |
| Issue of bonus shares to former S shareholders |
- | - | - | - | 804,028 | 80 | - | - | - | - |
| Merger - issue of ordinary shares to Ortus shareholders |
- | - | - | - | 6,853,086 | 685 | - | - | - | - |
| Merger - issue of C ordinary shares | - | - | - | - | - | - | 3,968,876 | 397 | - | - |
| Offer for subscription - issue of ordinary shares |
4,273,189 | 427 | - | - | 4,324,206 | 433 | - | - | - | - |
| C share consolidation | 3,077,827 | 308 (3,863,876) | (386) | - | - | - | - | - | - | |
| 32,049,188 | 3,205 | - | - | 25,693,172 | 2,569 | 3,863,876 | 386 | - | - |
During the year 995,000 Ordinary Shares (2013: 710,000) of 10p each were repurchased by the Company at a cost of £861,000 (2013: £621,445) and cancelled.
During the year there were no C Ordinary Shares (2013: 105,000) of 10p repurchased by the Company at nil cost (2013: £95,300) and cancelled.
During the year 3,863,876 C Ordinary shares were redesignated as 3,077,827 Ordinary shares.
During the year the Company issued 4,273,189 Ordinary Shares (2013: 4,324,206) pursuant to the linked offer at a subscription price of 99.07p per share (2013: 97.7p).
During the year the Company issued no C Ordinary Shares (2013: 3,968,876).
Subsequent to the year end, the Company issued a further 1,924,909 Ordinary Shares pursuant to an Offer for Subscription at Subscription Prices ranging from 95.50p to 98.21p per share.
| 13. Reserves Ordinary Shares |
Share premium account £'000 |
Capital reserve realised £'000 |
Capital reserve unrealised £'000 |
Distributable reserve £'000 |
Capital redemption reserve £'000 |
Revenue reserve £'000 |
|---|---|---|---|---|---|---|
| At 1 January 2014 - Ordinary | 10,350 | (123) | 1,325 | 10,591 | 119 | 509 |
| At 1 January 2014 - C Ordinary | 3,572 | (281) | 77 | (95) | 11 | (39) |
| 13,922 | (404) | 1,402 | 10,496 | 130 | 470 | |
| Gains on sales of investments | - | 992 | - | - | - | - |
| Net decrease in value of investments | - | - | (519) | - | - | - |
| Investment management fees | - | (831) | - | - | - | - |
| Dividends paid | - | (907) | - | - | - | (484) |
| Tax effect of capital items | - | 132 | - | - | - | - |
| Share Issue - 2014 | 3,679 | - | - | (14) | - | - |
| Merger - C share consolidation | 79 | - | - | - | - | - |
| Merger costs | (3) | - | - | - | - | - |
| Repurchase and cancellation of shares | - | - | - | (861) | 99 | - |
| Net return on ordinary activities after taxation |
- | - | - | - | - | 555 |
| At 31 December 2014 | 17,677 | (1,018) | 883 | 9,621 | 229 | 541 |
| 14. Net Asset Value per Ordinary Share The net asset value per share and |
31 December 2014 Ordinary Shares Ordinary Shares |
31 December 2013 C Ordinary Shares |
||||
|---|---|---|---|---|---|---|
| the net asset value attributable to the Ordinary Shares at the year end, calculated in accordance with the Articles of Association, were as follows: |
Net asset value per share p |
Net asset value attributable £'000 |
Net asset value per share p |
Net asset value attributable £'000 |
Net asset value per share p |
Net asset value attributable £'000 |
| Ordinary Shares | 97.2 | 31,138 | 98.6 | 25,340 | 94.0 | 3,631 |
The number of issued shares used in the above calculation is set out in note 12.
| 15. Reconciliation of Net Return before Taxation to Net Cash Inflow/(outflow) from Operating Activities |
Year ended 31 December 2014 Ordinary Shares £'000 |
Ordinary Shares £'000 |
Year ended 31 December 2013 C Ordinary Shares £'000 |
|---|---|---|---|
| Net return before taxation | 329 | 1,550 | (243) |
| (Gains)/losses on investments | (473) | (1,808) | 120 |
| Decrease/(increase) in accrued income & prepayments |
60 | (102) | (15) |
| Decrease/(increase) in other debtors | 197 | - | (197) |
| (Decrease)/increase in accruals | (48) | 199 | 7 |
| Tax on unfranked income | (18) | - | (2) |
| Net cash inflow/(outflow) from operating activities |
47 | (161) | (330) |
| 16. Analysis of Changes in Net Funds | Ordinary Shares | |||||
|---|---|---|---|---|---|---|
| At | At | |||||
| 1 January | Cash | 31 December | ||||
| 2014 | flows | 2014 | ||||
| £'000 | £'000 | £'000 | ||||
| Cash | 1,254 | 311 | 1,565 | |||
| Ordinary Shares | C Ordinary Shares | |||||
| At | At | At | At | |||
| 1 January | Cash | 31 December | 1 January | Cash | 31 December | |
| 2013 | flows | 2013 | 2013 | flows | 2013 | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Cash | 1,332 | (369) | 963 | - | 291 | 291 |
The Company's financial instruments comprise equity and fixed interest investments, cash balances and debtors and creditors that arise directly from its operations, for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income. The company holds financial assets in accordance with its investment policy of investing mainly in a portfolio of VCT qualifying unquoted and AIM quoted securities.
The Company may not enter into derivative transactions in the form of forward foreign currency contracts, futures and options without the written permission of the Directors. No derivative transactions were entered into during the period.
The main risks the Company faces from its financial instruments are (i) market price risk, being the risk that the value of investment holdings will fluctuate as a result of changes in market prices caused by factors other than interest rates, (ii) interest rate risk, (iii) liquidity risk, (iv) credit risk and (v) price risk sensitivity.
In line with the Company's investment objective, the portfolio comprises only sterling currency securities and therefore has no direct exposure to foreign currency risk.
The Manager's policies for managing these risks are summarised below and have been applied throughout the period. The numerical disclosures below exclude short-term debtors and creditors which are included in the Balance Sheet at fair value.
The Company's investment portfolio is exposed to market price fluctuations, which are monitored by the manager in pursuance of the investment objective as set out on page 14. Adherence to investment guidelines and to investment and borrowing policies set out in the management agreement mitigates the risk of excessive exposure to any particular type of security or issuer. These powers and guidelines include the requirement to invest in a minimum of 30 companies across a range of industrial and service sectors at varying stages of development, to closely monitor the progress of these companies and to appoint a non-executive director to the board of each company. Further information on the investment portfolio (including sector concentration and deal type analysis) is set out in the Analysis of Unlisted and Quoted Portfolio, Investment Manager's Review, Summary of Investment Changes, Investment Portfolio Summary and Largest Investments by Valuation.
The interest rate risk profile of financial assets at the balance sheet date was as follows:
| At 31 December 2014 | Fixed | Floating | Non interest |
|---|---|---|---|
| Interest | rate | bearing | |
| £'000 | £'000 | £'000 | |
| Sterling | |||
| Unlisted and AIM/ISDX | 14,795 | - | 11,504 |
| UK treasury bills | - | - | 2,997 |
| Cash | - | 1,565 | - |
| 14,795 | 1,565 | 14,501 | |
| At 31 December 2013 | Fixed | Floating | Non interest |
| Interest | rate | bearing | |
| £'000 | £'000 | £'000 | |
| Sterling | |||
| Unlisted and AIM/ISDX | 12,308 | - | 8,380 |
| UK treasury bills | - | - | 3,497 |
| Cash | - | 963 | - |
| 12,308 | 963 | 11,877 |
The unlisted fixed interest assets have a weighted average life of 3.14 years (2013: 2.82 years) and a weighted average interest rate of 9.28% (2013: 9.30%).
The non-interest bearing assets represents the equity element of the portfolio. All assets and liabilities of the fund are included in the balance sheet at fair value.
It is the Directors' opinion that the carrying amounts of these financial assets represent the maximum credit risk exposure at the balance sheet date.
The interest rate which determines the interest received on cash balances is the bank base rate.
The maturity profile of the Company's financial assets at the Balance sheet date was as follows:
| Ordinary Shares At 31 December 2014 |
Within 1 year £'000 |
Within 1-2 years £'000 |
Within 2-3 years £'000 |
Within 3-4 years £'000 |
Within 4-5 years £'000 |
More than 5 years £'000 |
Total £'000 |
|---|---|---|---|---|---|---|---|
| UK treasury bills | 2,997 | - | - | - | - | - | 2,997 |
| Unlisted | 3,518 | 1,403 | 2,045 | 3,846 | 1,017 | 2,966 | 14,795 |
| 6,515 | 1,403 | 2,045 | 3,846 | 1,017 | 2,966 | 17,792 |
Within "more than 5 years" there is a figure of £3,283 (2013 - £3,498) in respect of preference shares which have no redemption date).
| Ordinary Shares | Within | Within | Within | Within | Within More than | ||
|---|---|---|---|---|---|---|---|
| 1 year | 1-2 years | 2-3 years | 3-4 years | 4-5 years | 5 years | Total | |
| At 31 December 2013 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| UK treasury bills | 3,497 | - | - | - | - | - | 3,497 |
| Unlisted | 2,527 | 2,803 | 821 | 2,055 | 4,099 | 3 | 12,308 |
| 6,024 | 2,803 | 821 | 2,055 | 4,099 | 3 | 15,805 | |
| C Ordinary Shares | Within | Within | Within | Within | Within More than | ||
| 1 year | 1-2 years | 2-3 years | 3-4 years | 4-5 years | 5 years | Total | |
| At 31 December 2013 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| UK treasury bills | 749 | - | - | - | - | - | 749 |
| Unlisted | 112 | 459 | - | - | 52 | - | 623 |
Due to their nature, unlisted investments may not be readily realisable and therefore a portfolio of listed assets and cash is held to offset this liquidity risk. Note 1(f) details the three-tier hierarchy of inputs used as at 31 December 2014 in valuing the Company's investments carried at fair value.
Credit risk and interest rate risk are minimised by acquiring high quality government treasury stocks or other bonds which have a relatively short time to maturity.
The Company, generally, does not hold significant cash balances and any cash held is with reputable banks with high quality external credit ratings.
This is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company.
The Company's financial assets exposed to credit risk amounted to the following :
| 31 December 2014 Ordinary Shares £'000 |
Ordinary Shares £'000 |
31 December 2013 C Ordinary Shares £'000 |
Total £'000 |
|
|---|---|---|---|---|
| Investments in unlisted debt securities |
14,795 | 12,308 | 623 | 12,931 |
| UK treasury bills | 2,997 | 3,497 | 749 | 4,246 |
| Cash | 1,565 | 963 | 291 | 1,254 |
| 19,357 | 16,768 | 1,663 | 18,431 |
All assets which are traded on a recognised exchange, are held by JP Morgan Chase (JPM), the Company's custodian. Cash balances are held by JPM and Clydesdale. Should the credit quality or the financial position of any of these institutions deteriorate significantly the Manager will move these assets to another financial institution.
The Manager evaluates credit risk on unlisted debt securities and financial commitments and guarantees prior to investment, and as part of the ongoing monitoring of investments. In doing this, it takes into account the extent and quality of any security held. Typically, unlisted debt securities have a fixed charge over the assets of the investee company in order to mitigate the gross credit risk. The Manager receives management accounts from investee companies, and members of the investment management team sit on the boards of investee companies; this enables the close identification, monitoring and management of investment specific credit risk.
There were no significant concentrations of credit risk to counterparties at 31 December 2014 or 31 December 2013.
The following details the Company's sensitivity to a 10% increase or decrease in the market prices of listed or AIM/ ISDX quoted securities, with 10% being the Manager's assessment of a reasonable possible change in market prices.
At 31 December 2014, if market prices of AIM/ISDX quoted securities had been 10% higher or lower and with all other variables held constant, the increase or decrease in net assets attributable to Ordinary Shareholders for the year would have been £47,600 (2013: £31,000) due to the change in valuation of financial assets at fair value through profit or loss.
At 31 December 2014, no investments in AIM/ISDX quoted securities were held attributable to C Ordinary Shareholders (2013: £39,800).
At 31 December 2014, 82.9% (2013: 80.4%) comprised investments in unquoted companies held at fair value attributable to Ordinary Shareholders. The valuation of unquoted investments reflects a number of factors, including the performance of the investee company itself and the wider market. Therefore, it is not considered meaningful to provide a sensitivity analysis on the net asset position and total return for the year due to the fact any such movements would be immaterial to users of Financial Statements.
At 31 December 2014, no investments in unquoted companies were held at fair value (2013: 54.7%) attributable to C Ordinary Shareholders.
Pursuant to the Company share consolidation on 30 September 2014, all 3,863,876 C Ordinary Shares were redesignated as 3,077,827 Ordinary Shares (based on a conversion ratio of 0.7968 per holding of C Shares and rounded down to the nearest whole share). The balance of the C Shares held by a C Shareholder which were not redesignated as Ordinary Shares were redesignated as deferred shares of 10p each, all of which have been bought back by the Company for an aggregate price of 1p and cancelled.
Notice is hereby given that the Annual General Meeting of Maven Income and Growth VCT 4 PLC (the Company: Registered in Scotland with registered number SC272568) will be held at 1-2 Royal Exchange Buildings, London EC3V 3LF at 10.30 am on Wednesday 29 April 2015 for the purposes of considering and, if thought fit, passing the following Resolutions:
(a) the maximum number of Ordinary Shares hereby authorised to be purchased is 3,397,409 Ordinary Shares representing approximately 10% of the Company's issued share capital as at 20 March 2015;
(b) the minimum price that may be paid for an Ordinary Share shall be 10p per share;
By order of the Board Maven Capital Partners UK LLP Secretary Kintyre House 205 West George Street Glasgow G2 2LW
24 March 2015
1) To be entitled to attend and vote at the Meeting (and for the purposes of the determination by the Company of the votes that may be cast in accordance with Regulation 41 of the Uncertified Securities Regulations 2001), only those members registered in the Company's register of members at 10.30 am on 27 April 2015 (or, if the Meeting is adjourned, 5.00 pm on the date which is two business days before the adjourned Meeting) shall be entitled to attend and vote at the Meeting. Changes to the register of members of the Company after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the Meeting.
2) Information regarding the Meeting, including the information required by Section 311A of the Companies Act 2006, is available from www.mavencp.com/migvct4
3) If you wish to attend the Meeting in person, please bring some form of identification.
or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting.
9) A form of proxy is enclosed with this document. The notes to the proxy form explain how to direct your proxy to vote or withhold their vote on each Resolution. To appoint a proxy using the proxy form, the form must be completed, signed and sent or delivered to the Company's registrars, Capita Asset Services, at The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU so as to be received by Capita Asset Services no later than 10.30 am on 27 April 2015 or by 5.00 pm on a date two business days prior to that appointed for any adjourned Meeting or, in the case of a poll taken subsequent to the date of the Meeting or adjourned Meeting, so as to be received no later than 24 hours before the time appointed for taking the poll. In the case of a member which is a company, the proxy form must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or authority) must be included with the proxy form. For the purposes of determining the time for delivery of proxies, no account has been taken of any part of a day that is not a working day.
10) CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for the Meeting and any adjournment(s) of it by using the procedures described in the CREST Manual (available from https://www.euroclear.com/site/public/EUI). CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a CREST Proxy Instruction) must be properly authenticated in accordance with Euroclear UK & Ireland Limited's (EUI) specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the issuer's agent (ID: RA10) by 10.00 am on 27 April 2015. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. CREST members and, where applicable, their CREST sponsors or voting service providers should note that EUI does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of
CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time.
In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
11) In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company's register of members in respect of the joint holding, the first-named being the most senior.
12) To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the cut-off times for receipt of proxy appointments (see above) also apply in relation to amended instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded. Where you have appointed a proxy using the hard-copy proxy form and would like to change the instructions using another hard-copy proxy form, please contact Capita Asset Services at the address shown in note 9. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence.
13) In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to Capita Asset Services, at the address shown in note 9. In the case of a member which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the revocation notice is signed, or a duly certified copy of such power or authority, must be included with the revocation notice. The revocation notice must be received by Capita Asset Services no later than 48 hours before the Meeting. If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph directly
below, your proxy appointment will remain valid. Appointment of a proxy does not preclude you from attending the Meeting and voting in person. If you have appointed a proxy and attend the Meeting in person, your proxy appointment will automatically be terminated.
14) A corporation which is a member can appoint one or more corporate representatives who may exercise, on its behalf, all its powers as a member provided that no more than one corporate representative exercises powers over the same share.
15) As at 20 March 2015 the Company's issued share capital comprised 33,974,097 Ordinary shares of 10p each. Each Ordinary Share carries the right to one vote at a General Meeting of the Company and, therefore, the total number of voting rights in the Company on 20 March 2015 is 33,974,097. The website referred to in note 2 will include information on the number of shares and voting rights.
Where the Company is required to publish such a statement on its website:
18) In order to be able to exercise the members' right to require the Company to publish audit concerns (see note 17), the relevant request must be made by a member or members having a right to vote at the Meeting and holding at least 5% of total voting rights of the Company, or at least 100 members having a right to vote at the Meeting and holding, on average, at least £100 of paid up share capital. For information on voting rights, including the total number of voting rights, see note 15 above and the website referred to in note 2.
21) Copies of the letters of appointment of the Directors of the Company and a copy of the Articles of Association of the Company will be available for inspection at the registered office of the Company at Kintyre House, 205 West George Street, Glasgow G2 2LW from the date of this notice until the end of the Meeting.
An explanation of the Resolutions to be proposed at the Annual General Meeting is set out below. Resolutions 1 to 10 will be proposed as Ordinary Resolutions requiring the approval of more than 50% of the votes cast and Resolutions 11 to 13 will be proposed as Special Resolutions requiring the approval of 75% or more of the votes cast.
The Directors seek approval to receive the Directors' Report and audited Financial Statements for the year ended 31 December 2014 which are included within the Annual Report.
The Board seeks the approval of the Directors' Remuneration Report for the year ended 31 December 2014 which is also included in the Annual Report.
The Company's Shareholders will be asked to approve a final dividend of 2.90p per Ordinary Share for the year ended 31 December 2014 for payment on 5 June 2015 to Shareholders on the register at close of business on 8 May 2015.
Mr Cormack retires pursuant to the UK Code Provision B.7.1 and, being eligible, offers himself for re-election as a Director of the Company.
Mr Graham-Wood retires pursuant to the UK Code Provision B.7.1 and, being eligible, offers himself for re-election as a Director of the Company.
Mr Scott retires pursuant to the UK Code Provision B.7.1 and, being eligible, offers himself for re-election as a Director of the Company.
Mr Nixon retires annually because he is not independent and is proposed for re-election by the Company's Shareholders.
The Company must appoint an auditor at each general meeting at which the accounts are presented to Shareholders to hold office until the conclusion of the next such meeting. Resolution 8 seeks Shareholder approval to reappoint Deloitte LLP as the Company's Auditor. In accordance with normal practice, resolution 9 seeks authority for the Directors to determine the Auditor's remuneration.
Resolution 10, if passed, will authorise the Directors to allot shares or rights to subscribe for them up to an aggregate nominal value of £339,741. This amounts to 3,397,409 Ordinary Shares representing approximately one tenth of the total share capital of the Company in issue at the date of this notice. The Directors' authority will expire at the conclusion of the next Annual General Meeting of the Company or on the expiry of 15 months from the passing of the Resolution, whichever is the first to occur. At the date of this notice the Company does not hold any Ordinary Shares in the capital of the Company in treasury.
Resolution 11, if passed, would allow the Board to allot new Shares, up to 10% of the current share capital, without implementing pre-emption rights. This authority will expire at the conclusion of the Annual General Meeting of the Company or, if earlier, on the expiry of 15 months from the passing of the resolution.
Under resolution 12 the Company's shareholders are being asked to renew the Directors' authority to make market purchases of up to 3,397,409 Ordinary Shares (excluding shares held in treasury) of the Company (which represents approximately 10 per cent of the issued share capital of the Company at the date of this notice) and the resolution sets out the minimum and maximum prices that can be paid, exclusive of expenses. Any Ordinary Shares in the Company purchased pursuant to the authority sought under resolution 12 may be either cancelled, and not be available for reissue, or held in treasury. Once held in treasury, such shares may be cancelled or sold for cash.
The Board intends to use this authority to continue to implement its share buy-back policy.
Resolution 13, which would be effective until the Company's next annual general meeting, seeks approval to allow the Company to call general meetings other than annual general meetings on 14 days' notice. Such authority will only be exercised under exceptional circumstances. The Company will also need to meet the requirements for electronic voting before it can call a general meeting on 14 days' notice.
| Directors | Ian Cormack (Chairman) Malcolm Graham-Wood Andrew Lapping Bill Nixon Steven Scott David Potter |
||||
|---|---|---|---|---|---|
| Manager and Secretary | Maven Capital Partners UK LLP Kintyre House 205 West George Street Glasgow G2 2LW Telephone: 0141 306 7400 E-mail: [email protected] |
||||
| Registered Office | Kintyre House 205 West George Street Glasgow G2 2LW |
||||
| Registered in Scotland | Company Registration Number: SC272568 | ||||
| Website | www.mavencp.com/migvct4 | ||||
| Registrars | Capita Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU |
||||
| Website: www.capitaassetservices.com | |||||
| Shareholder Portal: www.capitashareportal.com | |||||
| Shareholder Helpline: 0333 300 1566 | |||||
| (Lines are open 9.00am until 5.30pm, Monday to Friday; calls are charged at the standard rates used for 01 and 02 UK geographic numbers, and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate) |
|||||
| Auditor | Deloitte LLP | ||||
| Bankers | J P Morgan Chase Bank | ||||
| Stockbrokers | Shore Capital Stockbrokers Limited Telephone: 020 7647 8132 |
Maven Capital Partners UK LLP Kintyre House 205 West George Street Glasgow G2 2LW
Tel 0141 306 7400
Authorised and Regulated by The Financial Conduct Authority
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.