Annual Report • Mar 31, 2017
Annual Report
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Annual Report For the Year Ended 31 March 2017
Maven Income and Growth VCT 6 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. It has one class of share and was incorporated on 2 November 1999.
The Company aims to achieve long-term capital appreciation and generate maintainable levels of income for Shareholders.
The Articles of Association (Articles) 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 to be held in 2022.
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 Stockbroker to the Company is Shore Capital Stockbrokers (020 7647 8132).
The Company currently conducts its affairs so that the shares issued by it can be recommended by authorised 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 nonmainstream investment products because they are shares in a VCT 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-tradeable, overpriced, high risk or even non-existent 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:
ACTION FRAUD
Telephone: 0300 123 2040 Website: www.actionfraud.police.uk FCA
Telephone: 0800 111 6768 (freephone)
E-mail: [email protected]
Website: www.fca.org.uk
Annual General Meeting (AGM) 30 August 2017
| Rate | 0.25p |
|---|---|
| XD date | 10 August 2017 |
| Record date | 11 August 2017 |
| Payment date | 8 September 2017 |
| Financial Highlights | 5 |
|---|---|
| Your Board | 7 |
| Chairman's Statement | 9 |
| Summary of Investment Changes | 12 |
| Business Report | 13 |
| Analysis of Unlisted and Quoted Portfolio | 16 |
| Investment Manager's Review | 18 |
| Largest Investments by Valuation | 24 |
| Investment Portfolio Summary | 30 |
| Directors' Report | 33 |
|---|---|
| Directors' Remuneration Report | 37 |
| Statement of Corporate Governance | 41 |
| Statement of Directors' Responsibilities | 45 |
| Report of the Audit and Risk Committees | 46 |
| Independent Auditor's Report to the Members of Maven Income and Growth VCT 6 PLC |
49 |
| Income Statement | 55 |
|---|---|
| Statement of Changes in Equity | 55 |
| Balance Sheet | 56 |
| Cash Flow Statement | 57 |
| Notes to the Financial Statements | 58 |
| Notice of Annual General Meeting | 70 |
|---|---|
| Explanatory Notes to the | 76 |
| Notice of Annual General Meeting | |
| Your Notes | 77 |
| Financial Highlights | 5 |
|---|---|
| Your Board | 7 |
| Chairman's Statement | 9 |
| Summary of Investment Changes | 12 |
| Business Report | 13 |
| Analysis of Unlisted and Quoted Portfolio | 16 |
| Investment Manager's Review | 18 |
| Largest Investments by Valuation | 24 |
| Investment Portfolio Summary | 30 |
| 31 March 2017 | 31 March 2016 | 31 March 2015 | |
|---|---|---|---|
| Net asset value (NAV) | £23,421,000 | £12,301,000 | £4,187,000 |
| NAV per Ordinary Share | 58.51p | 59.21p | 57.89p |
| Dividends paid or proposed for year | 0.25p | 1.05p | 0.70p |
| Dividends paid to date | 2.85p | 2.60p | 1.10p |
| NAV total return per share1 | 61.36p | 61.81p | 58.99p |
| Share price2 | 55.50p | 51.50p | 43.50p |
| Discount to NAV | 5.14% | 13.02% | 24.86% |
| Annual yield3 | 0.45% | 2.04% | 1.61% |
| Ordinary Shares in issue | 40,032,061 | 20,775,100 | 7,232,852 |
1 Sum of NAV per share and dividends paid to date (excluding initial tax relief).
2Closing mid-market price (Source: London Stock Exchange).
3Based on dividend paid or proposed for year and share price at year end. NAV Total Return Performance
The chart shows the NAV total return per share as at 31 March 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.
The above graph depicts the total returns on the Company's NAV and share price, rebased to 100p, over the five year period to 31 March 2017.
Please note that past performance is not necessarily a guide to future performance. Source: Maven Capital Partners UK LLP/London Stock Exchange.
| Year ended 31 March | Payment date | Revenue/capital | Interim/final | Rate (p) |
|---|---|---|---|---|
| 2013 | 30 August 2013 | Revenue | Final | 0.50 |
| 2014 | 29 August 2014 | Capital | Final | 0.60 |
| 2015 | 11 September 2015 | Capital | Final | 0.70 |
| 2016 | 18 March 2016 | Capital | Interim | 0.80 |
| 9 September 2016 | Revenue | Final | 0.25 | |
| Total dividends paid | 2.85 | |||
| 2017 | 8 September 2017 | Capital | Proposed final | 0.25 |
| Total dividends paid or proposed | 3.10 |
The Board of four Directors, all of whom are non-executive and the majority of whom are considered by the Board to be independent of Maven Capital Partners UK LLP (Maven or the Manager), supervises the management of Maven Income and Growth VCT 6 PLC and looks after the interests of its Shareholders. The Board is responsible for setting and monitoring the Company's strategy and the biographies set out below indicate the Directors' range of investment, commercial and professional experience. Further details are also provided in the Directors' Report and the Statement of Corporate Governance.
Relevant experience and other directorships: Brian graduated from Stanford University, California in 1983. From 1984 to 1988 he worked for Aitken Hume Plc as a small companies fund manager for Sentinel Funds Management Limited. Since 1989, he has been managing director of Berthon Boat Company Limited and he is a director of a number of other small companies.
Length of service: He was appointed as a Director on 22 March 2000 and as Chairman on 31 August 2016.
Last re-elected to the Board: 31 August 2016
Committee membership: Audit, Management Engagement (Chairman), Nomination, Remuneration and Risk.
Employment by the Manager: None
Shared directorships with other Directors: None
Shareholding in Company: 287,061 Ordinary Shares
Relevant experience and other directorships: Fraser sits on a number of advisory boards, supporting SME companies on growth and strategic matters. He was previously a managing director in AlixPartners' turnaround and restructuring practice, where he led the provision of restructuring and liquidity improvement solutions to clients across a wide variety of industry sectors. Fraser is a chartered accountant, licensed insolvency practitioner and accredited mediator. He has been personally involved in business disposals and brings this experience and perspective to the Board.
Length of service: He was appointed as a Director on 1 July 2016.
Elected to the Board: 31 August 2016
Committee membership: Audit, Management Engagement, Nomination (Chairman), Remuneration (Chairman) and Risk.
Employment by the Manager: None
Shared directorships with other Directors: None
Shareholding in Company: 26,439 Ordinary Shares
Chairman and Independent Non-executive Director
Fraser Gray Independent Non-executive Director
Gregor Logan Independent Non-executive Director
Relevant experience and other directorships: Gregor has spent 40 years in investment management. He managed UK and European equities at Fidelity International then became investment director of MGM Assurance, focusing on asset allocation and manager selection across all asset classes globally, including private equity. Gregor and his team won multiple awards for fund performance over many years. After a couple of sequential takeovers, he became Chief Investment Officer at New Star Asset Management and, subsequent to its take-over by Henderson Administration in 2009, he then ventured into a portfolio career. He has been a co-investor in private equity and venture capital investments over many years, often becoming a director of the investee companies.
Length of service: He was appointed as a Director on 10 February 2015.
Elected to the Board: 3 September 2015
Committee membership: Audit (Chairman), Management Engagement, Nomination, Remuneration and Risk (Chairman).
Employment by the Manager: None
Shared directorships with other Directors: None
Shareholding in Company: 45,450 Ordinary Shares
Bill Nixon Non-executive Director
Relevant experience and other directorships: Bill is managing partner of Maven and has over 35 years of 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 1990s, Bill was head of the private equity business at Clydesdale Bank plc, then a subsidiary of National Australia Bank, before joining Aberdeen Asset Management (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 also a director of Maven Income and Growth VCT 2 PLC, Maven Income and Growth VCT 3 PLC and Maven Income and Growth VCT 4 PLC.
Length of service: He was appointed as a Director on 21 February 2006.
Last re-elected to the Board: 31 August 2016
Committee membership: None
Employment by the Manager: Since 1999 (1999-2009 with Aberdeen)
Shared directorships with other Directors: None
Shareholding in Company: 641,374 Ordinary Shares
On behalf of your Board I am pleased to present the Annual Report for the first time as Chairman. The year to 31 March 2017 has seen very significant progress achieved by your Company following the success of the most recent Offer for Subscription, which was fully subscribed and raised £8 million of new capital. As a result of the expansion of the asset base, your Company now has a strong liquidity position and is well resourced to undertake a strategy to increase the size and range of the investee company portfolio holdings. The Board is pleased to note that the Manager has actively commenced this approach, completing six new investments in a diverse range of VCT qualifying private companies during the year, with a further four completed shortly after the year end. In addition, a notable realisation was achieved during the year with the sale of Nenplas, which delivered a 5.0 times money multiple return over the ten year holding period.
The period under review has been transformational for your Company following the success of the latest Offer for Subscription, which was launched on 9 December 2016, and closed early raising the full £8 million (including an over-allotment facility of £2 million). Since 2014, the asset base of your Company has been significantly enhanced by three fundraisings. These have aligned it more closely in size with the other Maven VCTs and positions it for growth in Shareholder value by increasing its investment capacity and ability to commit higher amounts to new VCT qualifying investments, whilst further reducing the total expense ratio for the benefit of all Shareholders. As a result of this expansion, your Company has entered a growth phase and, as it evolves and the rate of investment increases as the new capital is deployed, there may be a short-term delay until the benefits feed through to investor returns. It is important to note that the Company's increasing asset base is supported by the strength of the existing portfolio, the majority of which is invested in established businesses, completed prior to the rule changes and continues to deliver growth and generate investment income.
Shareholders will be aware that the reporting period has also been one of transition for the UK VCT industry, following the enactment of revised legislation in November 2015. The new rules have introduced a number of restrictions on the types of transactions and companies in which VCTs can invest, requiring the Manager to focus on the provision of development capital or investing in businesses with growth finance requirements, rather than management buy-outs or acquisition based transactions that have traditionally offered a more predictable return profile. The investment team at Maven is highly experienced at sourcing and executing transactions that meet the revised criteria. In addition to the new holdings already mentioned above, the Directors are encouraged by the large and diverse pipeline of prospective new investments at various stages of due diligence, and anticipate seeing a number of these transactions complete during the first half of the current financial year.
The Board believes that considerable progress has been achieved by your Company during the reporting period, despite the challenges presented by the implementation of the revised VCT legislation and the economic uncertainty resulting from the outcome of the European Union (EU) referendum held in June 2016. Whilst the full impact of the UK's decision to leave the EU may become clearer as formal negotiations progress, the Board and the Manager have conducted a review of the portfolio and, at present, believe that the overall effect is likely to be limited. The businesses in which your Company has invested will focus on maintaining or adapting their growth strategies as appropriate. A number of exporters have already experienced a short-term benefit from the devaluation of Sterling against several major currencies that has occurred since the referendum.
NAV total return of 61.36p per share (2016: 61.81p) at the year end
NAV at year end of 58.51p per share (2016: 59.21p), after payment of a dividend of 0.25p per share during the year
Offer for Subscription raised £8 million of new capital
Net assets increased to over £23 million
Six new VCT qualifying private company holdings added to the portfolio, with a further four completed after the year end
Large pipeline of VCT qualifying investments, with a number in advanced process
Realisation of Nenplas for a total return of 5.0 times cost
Proposed final dividend of 0.25p per share (2016: 0.25p)
Total expense ratio reduced to 2.98% from 6.82% for the year to 31 March 20131
1 The total expense ratio has been calculated using the total annual expenses and the average net asset value of the Company over the respective financial years.
Against this backdrop, performance has generally been good across the investee portfolio, as can be seen from the detailed analysis included in the Investment Manager's Review on pages 18 to 23 of this Annual Report. The continuing growth experienced by a number of our private company holdings has enabled the valuations of these assets to be increased to reflect positive trading results. The Board also remains conscious of the impact that the low oil price is having on companies with exposure to the oil & gas sector. Whilst direct remedial actions have been taken by portfolio companies with exposure to this sector, the external environment remains challenging and, notwithstanding some early indications of recovery, conditions are not forecast to show a sustained improvement until at least late 2017. Consequently, the valuations of a small number of these investments have been conservatively reduced. In addition, it is disappointing to report that the valuation of the holding in Traceall Global has been reduced in response to consistently poor trading, the impact of which is reflected in the modest dip in NAV at the year end.
As previously noted, the holding in Nenplas was realised in full during the period achieving a total return of 5.0 times cost over the life of the investment. The Board is aware that discussions are in progress regarding potential exits from a number of the other more mature portfolio assets, although there can be no certainty that these will lead to profitable realisations.
The Directors are pleased to note that, Maven received industry recognition for its performance during the year when it was named Private Equity House of the Year, for the second year running, at the 2016 High Potential Business Awards (previously the M&A Awards). This category celebrates outstanding growth businesses and their financial backers, recognising private equity managers that have displayed the keenest judgement and opportunism in completing acquisitions or exit transactions. Maven was also named Private Equity Manager of the Year at the ACQ Global Awards which celebrate achievement and innovation across the fund management industry.
The Board recommends that a final capital dividend of 0.25p per Ordinary Share, be paid on 8 September 2017 to Shareholders on the register at 11 August 2017. The effect of paying the proposed final dividend would be to reduce the NAV of the Company by the total cost of the distribution.
After receipt of the proposed final dividend, Shareholders will have received 3.10p per share in tax-free dividends over the past five financial years. The Board considers it important that Shareholders are aware that the move to invest in development capital and growth finance opportunities, as required by the revised VCT legislation, is likely to result in less predictable capital gains and income flows. Although the Company has distributable reserves that will help to support its distribution policy, it is possible that the quantum and timing of future dividend payments could be subject to increased fluctuation.
In the prior year, the Company launched an Offer for Subscription in New Ordinary Shares which closed on 30 June 2016 raising a total of £12.87 million, before expenses, for the 2015/16 and 2016/17 tax years.
On 23 September 2016 the Directors announced their intention to launch a further £6 million top-up Offer for the 2016/17 and 2017/18 tax years, with an overallotment facility for up to £2 million. This Offer was launched on 9 December 2016 and closed early on 7 February 2017 being fully subscribed including the overallotment facility. On 16 February 2017 the Company issued and allotted Ordinary Shares in respect of the 2016/17 tax year, with a further allotment for the 2017/18 tax year made on 6 April 2017. The proceeds from the Offer will provide additional liquidity to support a higher deal allocation in investments in VCT qualifying companies, buy back shares for cancellation and enable the Company to spread its cost over a larger asset base, thereby reducing the total expense ratio for the benefit of all Shareholders. Relevant details regarding the New Ordinary Shares issued under the Offer can be found in Note 12 to the Financial Statements.
Shareholders should be aware that the Board's primary objective is for the Company to retain sufficient liquid assets to make investments in line with its stated policy and for the continued payment of dividends. However, the Directors also acknowledge the need to maintain an orderly market in the Company's shares and have delegated authority to the Manager to buy back shares in the market for cancellation or to be held in treasury, subject always to such transactions being in the best interests of Shareholders.
It is intended that, subject to market conditions, available liquidity and the maintenance of the Company's VCT status, shares will normally be bought back at prices representing a discount of between 10% and 20% to the prevailing NAV per share.
The Finance Act (No. 2) 2015 was enacted in November 2015 and introduced a number of changes to the legislation governing VCTs. The new rules are designed to bring the UK VCT scheme into line with EU State Aid Rules for smaller company investment and have introduced a number of restrictions on the types of qualifying transactions and companies in which VCTs can invest. Unlike previous changes in legislation, the new rules apply to all funds raised by a VCT, including those raised prior to November 2015.
The new rules specifically prohibit participation in management buy-outs or acquisitions, and limit the ability to support older companies unless specific criteria are met.
The emphasis is, therefore, on providing development capital to younger and earlier stage companies, or supporting more established businesses which can demonstrate growth strategies that satisfy specific provisions under the revised qualification criteria. In a further amendment, the March 2016 Budget Statement included changes to the rules governing non-qualifying investments by VCTs. With effect from 6 April 2016, VCTs can only make qualifying investments and certain limited non-qualifying investments for liquidity purposes, with other types of new non-qualifying investments now prohibited.
The revised legislation has imposed additional diligence and administrative requirements on the investment process in order to ensure that all aspects of the potential investment and transaction structure remain compliant with the new rules.
The Manager continues to pursue a cautious approach and works closely with a specialist VCT adviser, engaged by the Company, to assist in interpreting the revised legislation and advising on the VCT tax clearance process with HM Revenue & Customs (HMRC), with advance assurance secured prior to any new investment completing. The Board welcomed the announcement in the Chancellor's 2016 Autumn Statement that, in response to the increased volume of applications submitted and the resultant delays experienced in obtaining clearance for proposed investments, a consultation was launched to consider the options for streamlining the HMRC advance assurance service.
The 2016 Autumn Statement also highlighted that the Government will no longer be initiating a review into the potential to allow replacement capital as part of certain new VCT transactions, but suggested that this may be reviewed at some point in the future. Whilst the Directors and the Manager were disappointed by this announcement, as the ability to include replacement capital was viewed as an important capability under the new rules, it does not impact the Company's investment strategy which has already adapted to meet the requirements of the new rules. The Chancellor's 2017 Spring Statement did not introduce any further amendments to the legislation.
As indicated in the 2016 Interim Report, Jonathan Carr stood down as Director and Chairman at the conclusion of the Annual General Meeting (AGM) on 31 August 2016, succeeded by myself in the role of Chairman following my re-election as a Director. Fraser Gray was appointed as a Director on 1 July 2016 and was formally elected by Shareholders at the 2016 AGM.
On behalf of the Board and the Manager, I would like to take this opportunity to thank Jonathan for the valued contribution he has made since the launch of your Company and wish him every success for the future.
The strategy remains to build a broadly based portfolio of private company holdings, diversified by geography and sector, which meet the revised VCT qualification criteria. Whilst the introduction of the new VCT rules has placed restrictions on the types of companies and transactions in which your Company can invest, the Board believes that the Manager has adapted nimbly to the changes, as demonstrated by the wide range of VCT qualifying investments completed since the new rules were enacted. This position is strengthened by the recent extension of Maven's office network through the opening of four new regional offices, which will assist in sourcing attractive VCT qualifying investment opportunities from across the UK. Your Board takes comfort from the large pipeline of prospective investments in due diligence at the date of this report and, consequently, believes that the rate of investment during the remainder of the current year will continue to be strong. The success of the recent Offers for Subscription means that your Company is fully financed so as to take advantage of these new opportunities, and the Directors look forward to a year of further progress as the Manager continues to build the investee company portfolio.
Brian May Chairman 14 July 2017
For the Year Ended 31 March 2017
| £'000 | Valuation 31 March 2016 % |
Net investment/ (disinvestment) £'000 |
Appreciation/ (depreciation) £'000 |
£'000 | Valuation 31 March 2017 % |
|
|---|---|---|---|---|---|---|
| Unlisted investments | ||||||
| Equities | 1,468 | 11.9 | 559 | 188 | 2,215 | 9.5 |
| Loan stock | 1,848 | 15.0 | 29 | (7) | 1,870 | 8.0 |
| 3,316 | 26.9 | 588 | 181 | 4,085 | 17.5 | |
| AIM/ISDX investments | ||||||
| Equities | 96 | 0.8 | - | (22) | 74 | 0.3 |
| Listed investments | ||||||
| Equities | 7 | 0.1 | (2) | 1 | 6 | - |
| Investment trusts | - | - | 1,250 | 63 | 1,313 | 5.6 |
| UK treasury bills | 8,382 | 68.1 | (8,400) | 18 | - | - |
| Total investments | 11,801 | 95.9 | (6,564) | 241 | 5,478 | 23.4 |
| Other net assets | 500 | 4.1 | 17,443 | - | 17,943 | 76.6 |
| Net assets | 12,301 | 100.0 | 10,879 | 241 | 23,421 | 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, some of which may be in the early stages of their development and, by their nature, entail a higher level of risk and lower liquidity than investments in large quoted companies. The Board aims to limit the risk attaching to the investment portfolio as a whole by ensuring that a structured selection, monitoring and realisation process is applied. The Board reviews the investment portfolio with the Manager on a regular basis.
The Company manages and minimises investment risk by:
An explanation of certain risks and how they are managed is contained in Note 16 to the Financial Statements.
As most of the investments require a medium to long term commitment and are relatively illiquid, the Company retains a portion of the portfolio in cash or cash equivalents in order to finance any new unquoted investment opportunities. The Company has only limited direct exposure to currency risk and does not enter into any derivative transactions.
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 EU State Aid Rules. Changes in either could have an adverse impact on Shareholder investment returns whilst maintaining the Company's VCT status. The Board and the Manager continue to make representations where appropriate, either directly or through relevant industry bodies such as the British Private Equity & Venture Capital Association (BVCA).
The Company has retained Philip Hare & Associates LLP as VCT advisers.
Breaches of other regulations including, but not limited to, the Companies Act 2006, the FCA Listing Rules, the FCA Disclosure and Transparency Rules or the Alternative Investment Fund Managers Directive (AIFMD), could lead to a number of detrimental outcomes and reputational damage.
The AIFMD, which regulates the management of alternative investment funds, including VCTs, introduced a new authorisation and supervisory regime for all investment companies in the EU. The Company is approved by the FCA as a self-managed small registered UK AIFM under the AIFMD.
The Company is also required to comply with tax legislation under the Foreign Account Tax Compliance Act and the Common Reporting Standard. The Company has appointed Capita Asset Services to act on its behalf to report annually to HMRC and ensure compliance with this legislation.
In a referendum held on 23 June 2016, the UK voted to leave the EU (a process informally known as Brexit). The formal process of implementing this decision exists in Article 50 of the Lisbon Treaty, which was invoked on 29 March 2017. The political, economic and legal consequences of the referendum vote are not yet known. It is possible that investments in the UK may be more subjective to value, may be more difficult to assess for suitability of risk, harder to buy or sell, or may be subject to greater or more frequent rises and falls in value. In the longer term, there is likely to be a period of uncertainty as the UK seeks to negotiate its exit from the EU. The UK's laws and regulations concerning funds may, in future, diverge from those of the EU and this may lead to changes in the operation of the Company, the rights of investors, or the territories in which the shares of the Company may be promoted and sold.
An explanation of certain economic and financial risks and how they are managed is also contained in Note 16 to the Financial Statements.
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 March 2017 and its performance during the year then ended is included in the Chairman's Statement, which also includes an overview of the Company's business model and strategy.
The management of the investment portfolio has been delegated to Maven, which also provides company secretarial, administrative and financial management services to the Company. The Board is satisfied with the depth and breadth of the Manager's resources and its network of offices, which supply new deals and enable it to monitor the geographically widespread portfolio of companies effectively.
The Investment Portfolio Summary on pages 30 and 31 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 16 and 17 shows that the portfolio is diversified across a variety of sectors and deal types. The level of VCT qualifying investment is monitored by the Manager on a daily basis and reported to the Risk Committee quarterly.
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 dividends paid to date. The dividend history 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 and the profile of the portfolio is reflected in the Summary of Investment Changes on page 12. The Board reviews the Company's investment income and operational expenses on a quarterly basis as the Directors consider that both of these elements are important components in the generation of Shareholder returns.
In addition, the Directors consider economic, regulatory and political trends and features that may impact on the Company's future development and performance.
There is no meaningful venture capital trust index against which to compare the financial performance of the Company but, for reporting to the Board and Shareholders, the Manager uses comparisons with appropriate indices and the Company's peer group. The Directors also consider non-financial performance measures such as the flow of investment proposals and the Company's ranking within the VCT sector by independent analysts.
Investments held by Maven Income and Growth VCT 6 PLC in unquoted companies are valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines. Investments quoted or traded on a recognised stock exchange are valued at their bid prices.
The Board will seek the necessary Shareholder authority to conduct a share buy-back programme under appropriate circumstances.
The Company has no direct employee or environmental responsibilities, nor is it responsible for the emission of greenhouse gases. However, the Directors will consider economic, regulatory and political trends and features that may impact on the Company's future development and performance. The Board's principal responsibility to Shareholders is to ensure that the investment portfolio is managed and invested properly. The management of the portfolio is undertaken by the Manager through members of its portfolio management team. The Manager engages with the Company's underlying investee companies in relation to their corporate governance practices and in developing their policies on social, community and environmental matters and further information may be found in the Statement of Corporate Governance. In light of the nature of the Company's business, there are no relevant human rights issues and, therefore, the Company does not have a human rights policy.
The Company's Independent Auditor is required to report if there are any material inconsistencies between the content of the Strategic Report and the Financial Statements. The Independent Auditor's Report can be found on pages 49 to 53.
The Board and Manager intend to maintain the policies set out above for the year ending 31 March 2018 as it is believed that these are in the best interests of Shareholders.
The Business Report, and the Strategic Report as a whole, was approved by the Board of Directors and signed on its behalf by:
Brian May Director 14 July 2017
As at 31 March 2017
| Industry sector | Unlisted valuation £'000 |
% | Quoted valuation £'000 |
% | Total valuation £'000 |
% |
|---|---|---|---|---|---|---|
| Investment companies | 100 | 1.8 | 1,313 | 24.0 | 1,413 | 25.8 |
| Support services | 578 | 10.6 | 50 | 0.9 | 628 | 11.5 |
| Automobiles & parts | 536 | 9.8 | - | - | 536 | 9.8 |
| Technology | 523 | 9.5 | - | - | 523 | 9.5 |
| Insurance | 460 | 8.4 | 6 | 0.1 | 466 | 8.5 |
| Energy services | 354 | 6.5 | - | - | 354 | 6.5 |
| Telecommunication services | 258 | 4.7 | - | - | 258 | 4.7 |
| Health | 199 | 3.6 | - | - | 199 | 3.6 |
| Leisure & hotels | 187 | 3.4 | - | - | 187 | 3.4 |
| Electronic & electrical equipment | 164 | 3.0 | - | - | 164 | 3.0 |
| Pharmaceuticals & biotechnology | 148 | 2.7 | - | - | 148 | 2.7 |
| Diversified industrials | 145 | 2.6 | - | - | 145 | 2.6 |
| Speciality & other finance | 125 | 2.3 | - | - | 125 | 2.3 |
| Software & computer services | 75 | 1.4 | 12 | 0.2 | 87 | 1.6 |
| Household goods & textiles | 65 | 1.3 | 12 | 0.2 | 77 | 1.5 |
| Engineering & machinery | 61 | 1.1 | - | - | 61 | 1.1 |
| General retailers | 57 | 1.0 | - | - | 57 | 1.0 |
| Food producers & processors | 50 | 0.9 | - | - | 50 | 0.9 |
| Total | 4,085 | 74.6 | 1,393 | 25.4 | 5,478 | 100.0 |
As at 31 March 2017
| Deal type | Number of holdings |
Valuation £'000 |
% |
|---|---|---|---|
| Unlisted | |||
| Development capital | 13 | 1,568 | 28.6 |
| Management buy-out | 12 | 1,183 | 21.6 |
| Acquisition finance | 7 | 650 | 11.9 |
| Replacement capital | 4 | 340 | 6.2 |
| Buy-in/management buy-out | 3 | 242 | 4.4 |
| Management buy-in | 1 | 58 | 1.1 |
| Buy & build | 1 | 44 | 0.8 |
| Mezzanine | 1 | - | - |
| Total unlisted | 42 | 4,085 | 74.6 |
| Quoted | |||
| Listed | 14 | 1,319 | 24.0 |
| AIM | 8 | 74 | 1.4 |
| Total quoted | 22 | 1,393 | 25.4 |
| Total unlisted and quoted | 64 | 5,478 | 100.0 |
Bill Nixon Managing Partner Maven Capital Partners UK LLP
The year to 31 March 2017 represented another period of significant progress for your Company. During the year, six VCT qualifying private company holdings were added to the portfolio, with a further four completed after the period end. There is a strong and growing pipeline of prospective new investments currently at various stages of due diligence and it is anticipated that a number of these will complete in the first half of the current year. In addition, the holding in Nenplas was realised in full through a trade sale to a German acquirer achieving a 5.0 times money multiple return over the life of the investment. The success of the latest Offer for Subscription has further increased the asset base, leaving your Company well positioned and with sufficient liquidity to maintain an active investment policy.
During the reporting period, the Manager has focused on continuing to deliver your Company's investment objective in line with the provisions of the new VCT rules. These rules have introduced a number of restrictions on the types of companies and transactions in which VCTs can invest, with the emphasis on providing development capital, or supporting businesses with growth finance requirements.
Throughout the year, the investment team has reviewed and assessed an extensive pipeline of potential opportunities, progressing only those prospects that meet Maven's strict investment quality criteria. In light of the revised VCT regulations, the focus has been on identifying opportunities available at an attractive entry price or that can demonstrate a disruptive business model capable of scalable growth. Wherever possible, Maven is keen to support management teams with a proven track record of success in a previous business.
The Manager is pleased to report on the completion of six new VCT qualifying investments in companies across a range of sectors. In April 2016, an investment was completed in The GP Service (UK), a business with an innovative on-line interface which provides access to GP appointments delivered by live video link. In July 2016, an investment was completed in Rockar, a revolutionary automotive retail platform, and in October 2016 Maven VCTs invested in Chic Lifestyle, a fast growing inventory management system for small luxury accommodation operators in the premium travel market. In November 2016, an investment was completed in Growth Capital Ventures, a developer and operator of on-line co-investment platforms for the alternative finance sector. In December 2016 Maven VCTs invested in Whiterock Group, a specialist visual asset management business operating across a range of sectors, and QikServe, a business that has developed a patented software product for the hospitality industry.
Maven is currently evaluating a strong pipeline of potential new investments across a diverse range of sectors and it is anticipated that a number of these will complete in the first half of the current financial year. Given the complexity of the new VCT rules, and to ensure ongoing compliance, the investment team continues to work closely with VCT advisers in order to obtain advance assurance from HMRC prior to any investment being completed. Latterly, it has become apparent that the level of information required, and the time taken to opine, by HMRC can vary significantly and this delayed the completion of a number of new investments during the reporting period. The Manager, therefore, welcomed the opportunity to participate in the consultation into options to streamline the HMRC advance assurance service.
During the year progress has been achieved across the portfolio, despite the challenges presented by the enactment of the revised VCT legislation and the economic uncertainty resulting from the outcome of the UK referendum on EU membership, held in June 2016. Maven maintains a supportive working relationship with investee management teams, offering practical assistance to help deliver strategic and operational objectives. This proactive approach helps to ensure greater stability across the portfolio with a view to maximising the value of assets up until the point of exit.
The Maven team has also worked closely with those portfolio companies that have been engaged in an exit process, helping management teams to develop strategies and identify suitable buyers that may be willing to pay a premium price for the business. In December 2016, the holding in Nenplas, was realised in full through a sale to a German trade buyer, achieving a total return of 5.0 times cost over the life of the investment. There remains further interest in your Company's assets from a range of potential acquirers, including both trade and private equity in the UK and from overseas. However, there can be no guarantee that these discussions will lead to realisations.
The private equity portfolio has generally performed well during the year, as detailed below, with strong trading results having led to valuation uplifts for a number of companies operating across a range of sectors. Conversely, the Board has elected to take protective provisions against the values of a small number of investments with exposure to the oil & gas sector, until there is evidence of a sustained recovery.
Cursor Controls, a global leader in the design and niche manufacture of trackball pointing solutions for industrial applications, has performed well since Maven clients invested in July 2015. The impressive organic growth achieved in the year to 31 December 2015 has been maintained and was further enhanced by the acquisition, in April 2016, of Belgian distributor NSI. The acquisition formed part of Maven's investment proposal and is expected to be significantly earnings enhancing, with a number of commercial and operational synergies identified to help drive growth and profitability of the enlarged group. The management team is encouraged by the integration process to date, with NSI trading to plan and the core Cursor business delivering organic growth.
Manufacturer and supplier of technical plastic components and interior parts for the global automotive industry, John McGavigan, continues to exceed expectations. The current year has seen a further significant increase in profitability across its operations in China and Scotland, which has been achieved through top line growth enhanced by the benefits of a number of productivity improvement projects implemented earlier in the year. The order book remains strong, with a number of significant contracts secured in recent months, increasing the visibility of future prospects for the business. Given the solid performance and growth achieved, the management team is considering potential acquisitions and also moving its Chinese premises in anticipation of forthcoming capacity constraints in the region.
Crawford Scientific, a leading supplier of chromatography products and services, has traded ahead of plan since the initial investment by Maven clients in August 2014. During 2015, the business acquired, and successfully integrated, analytical services company Hall Analytical Laboratories which, alongside strong trading within the core business, has contributed to out-performance against the original investment case. The business has fully repaid the debt used to fund the Hall acquisition and the management team is continuing to widen each of Crawford's product and service lines, with organic growth forecast to increase both turnover and earnings in the current year. The strong balance sheet and cash generative nature of the business has enabled the company to make a voluntary partial repayment of Maven client loan notes during the period.
Torridon (Gibraltar) is an established general insurer, which trades through its subsidiary Elite Insurance. The business is registered in Gibraltar and is authorised to write 12 general insurance business classes across 14 EU/EEA States. Elite has delivered impressive growth over recent years and now has over 30 lines of insurance, with the UK business representing 62% of total sales. The business focuses on high margin niche lines, requiring considerable expertise and underwriting skills, as well as holding strong distribution relationships.
The UK's largest provider of promotional merchandise, SPS (EU), has achieved excellent growth under private equity ownership since Maven clients invested in February 2014. Operational improvements have enhanced profitability following the successful implementation of a new enterprise resource planning system. The complementary acquisitions of HPP and TEC, completed during the year to 31 December 2015, have been successfully integrated within the group and are delivering a positive profit contribution. The company has invested in sales resource to help penetrate the European market, and this region is starting to contribute significantly to group performance. The balance sheet remains healthy and the business continues to reduce its core term debt.
DPP provides mechanical and electrical maintenance and installation services mainly to the leisure, hospitality and retail sectors in the south of England and Wales. The company differentiates itself by employing a large and highly responsive team of skilled engineers. The business has made considerable progress over the past twelve months by enhancing operational procedures and reducing costs, which has led to a significant improvement in profitability. A number of new contracts were secured during the year and the outlook is positive, which is highly encouraging given the challenges experienced during 2014 when DPP lost a key customer. The company has no external bank debt and was able to make a voluntary partial repayment of Maven client loan notes during the period.
Vodat Communications Group is a leading supplier of communications infrastructure to the UK retail industry, with customers including high street names such as Poundland, Welcome Break, Ted Baker and SuperGroup. Vodat supplies data networks, IP telephony, wi-fi solutions and fixed line connectivity to retail customers. Following the Maven-led management buy-out in 2012, the business has achieved positive growth and added a number of new customer contracts. Vodat benefits from high levels of contracted revenue, which underpins future growth, and is highly cash generative with no external bank debt.
International catalyst handling specialist, CatTech International is currently trading very strongly. Whilst the improvement in performance is largely attributable to three sizeable projects in Kazakhstan, Iran and Venezuela that are unlikely to recur, the underlying profitability of the business has seen a significant turnaround from the performance of the previous two years. The outlook remains positive with a number of tenders currently progressing. There is no bank debt in the business and the cash position is healthy.
As well as reflecting the good trading performance highlighted above, your Board has also reduced the valuations of Flexlife, Glacier Energy Services and HCS Control Systems Group. These companies are active in the oil & gas sector, which has endured several years of difficult market conditions. Whilst Maven has seen encouraging signs of improved activity across the industry in recent months, a conservative approach to valuations has nevertheless been adopted until there is evidence of a sustained recovery.
The Manager has continued to work closely with the portfolio companies that have exposure to the oil & gas sector, including providing help to penetrate new markets and win additional customers, whilst working with management teams to reduce costs against a backdrop of lower activity levels. Most of the portfolio companies in this sector are now operating with a lean cost base and limited or no external debt, and consequently are well placed to benefit from any market recovery. Maven has avoided investing in exploration or production based assets, preferring those businesses focused on operational expenditure, particularly relating to essential health and safety, where a recovery in activity is often much less sensitive to the oil price. It is anticipated that there will be an improvement in this sub-sector of the industry during 2017, as previously deferred expenditure is deployed by the oil majors in response to the improving market conditions.
In addition, the valuations of the investments in CHS Engineering Systems and Traceall Global have been reduced.
During the year, your Company provided development capital to six new private companies operating across a range of sectors:
Rockar, an innovative motor retailer with a disruptive technology platform led by a team with extensive sector experience. The investment will enable Rockar to enhance its product offering and finance new dealerships in high footfall shopping centres, working in partnership with global automotive brands, including Hyundai and Jaguar Land Rover. Maven VCTs invested in Rockar alongside NVM Private Equity.
Chic Lifestyle, trading under the brand Chic Retreats, has developed an inventory management system which allows small-scale independent travel operators to control the live distribution of boutique hotel rooms and luxury villas, and manage reservations in real time through leading traffic generators. The investment will enable Chic to further develop its technology and strengthen its position within core European and North American markets.
The March 2016 Budget Statement imposed restrictions on the ability of VCTs to make certain new non-qualifying investments for liquidity purposes, including treasury bills and other government securities. In response to these changes, the Company has invested a small proportion of its liquid assets base across five private equity investment trusts, six real estate investment trusts and two fixed income investment trusts. These are permitted liquidity management investments under the amended legislation, and give your Company further exposure to asset classes that the Manager is familiar with, having existing knowledge of the respective portfolios and fund managers. These investments have been carefully selected and recommended by Maven as intended long-term holdings within the portfolio and, given their attractive yield characteristics, should provide an income stream that will help to support future dividend payments by your Company.
The Board and the Manager are highly cognisant of the importance of maintaining an effective liquidity management policy, and are currently reviewing a range of other permitted income generating options with a view to maximising the returns from monies held prior to investment or as non-qualifying assets permitted under the legislation.
The following investments have been completed during the period:
| Investment cost |
||||
|---|---|---|---|---|
| Date | Sector | £'000 | Website | |
| Unlisted | ||||
| Chic Lifestyle Limited (trading as Chic Retreats) |
October 2016 | Leisure & hotels | 187 | www.chicretreats.com |
| Growth Capital Ventures Limited | November 2016 | Investment companies | 99 | www.growthcapitalventures.co.uk |
| QikServe Limited | December 2016 | Software & computer services |
249 | www.qikserve.com |
| Rockar 2016 Limited (trading as Rockar) |
July 2016 | Automobiles & parts | 199 | www.rockar.com |
| The GP Service (UK) Limited | April 2016 | Health | 199 | www.thegpservice.co.uk |
| Whiterock Group Limited | December 2016 | Technology | 100 | www.whiterockgroup.net |
| Total unlisted | 1,033 | |||
| Private equity investment trusts | ||||
| Apax Global Alpha Limited | September 2016 | Investment companies | 99 | www.apaxglobalalpha.com |
| F&C Private Equity Trust PLC | September 2016 | Investment companies | 103 | www.fandc.com |
| HgCapital Trust PLC | September 2016 | Investment companies | 100 | www.hgcapitaltrust.com |
| Princess Private Equity Holding Limited |
September 2016 | Investment companies | 98 | www.princess-privateequity.net |
| Standard Life Private Equity Trust PLC |
September 2016 | Investment companies | 43 | www.slcapital.com |
| Total private equity investment trusts | 443 | |||
| Real estate investment trusts | ||||
| British Land Company PLC | November 2016 | Investment companies | 99 | www.britishland.com |
| Custodian REIT PLC | November 2016 | Investment companies | 99 | www.custodianreit.com |
| Regional REIT Limited | November 2016 | Investment companies | 99 | www.regionalreit.com |
| Schroder REIT Limited | November 2016 | Investment companies | 99 | www.srei.co.uk |
| Standard Life Investment Property Income Trust Limited |
November 2016 | Investment companies | 99 | www.standardlifeinvestments.com |
| Target Healthcare REIT PLC | November 2016 | Investment companies | 98 | www.targethealthcarereit.co.uk |
| Total real estate investment trusts | 593 | |||
| Fixed income investment trusts | ||||
| Alcentra European Floating Rate Income Fund Limited |
March 2017 | Investment companies | 113 | www.aefrif.com |
| TwentyFour Income Fund Limited | March 2017 | Investment companies | 101 | www.twentyfouram.com |
| Total fixed income investment trusts | 214 | |||
| Total investments | 2,283 |
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 4, Maven Income and Growth VCT 5 and Maven Investor Partners.
At the period end, the portfolio stood at 64 unlisted and quoted investments at a total cost of £5.2 million.
In December 2016, Maven achieved a full exit from plastics manufacturer Nenplas, through a trade sale to a German acquirer at a premium to carrying value. This is the second profitable realisation for Maven clients following the demerger process in March 2013, which achieved a partial exit for the Maven VCTs through the sale of the Homelux DIY products division to US firm QEP. Over the period since investment, the exit achieved a total return of 5.0 times for investors in the 2006 buy-out of Homelux Nenplas.
Further realisations were achieved through the partial repayment of loan notes by Crawford Scientific and DPP, the complete exit from Kelvinlea and the release of a further tranche of recovery proceeds from Space Student Living.
As at the date of this Annual Report, the Manager is engaged with several investee companies and prospective acquirers at various stages in the negotiations process, although there can be no certainty that these discussions will result in exits.
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 March 2016 £'000 |
Sales proceeds £'000 |
Realised gain/(loss) £'000 |
Gain/(loss) over 31 March 2016 value £'000 |
|
|---|---|---|---|---|---|---|---|
| Unlisted | |||||||
| Assecurare Limited | 2014 | Complete | 50 | 50 | 50 | - | - |
| Broadwave Engineering Limited | 2014 | Complete | 50 | 50 | 50 | - | - |
| Crawford Scientific Holdings Limited1 | 2014 | Partial | 17 | 22 | 17 | - | (5) |
| Ensco 969 Limited (trading as DPP)1 | 2013 | Partial | 14 | 14 | 14 | - | - |
| Kelvinlea Limited | 2013 | Complete | 10 | 10 | 14 | 4 | 4 |
| LCL Hose Limited (trading as Dantec Hose) |
2011 | Complete | - | - | 1 | 1 | 1 |
| Nenplas Holdings Limited1 | 2013 | Complete | 81 | 276 | 287 | 206 | 11 |
| Space Student Living Limited | 2011 | Partial | - | - | 11 | 11 | 11 |
| Westway Services Holdings (2014) Limited |
2014 | Complete | - | - | 1 | 1 | 1 |
| Total unlisted | 222 | 422 | 445 | 223 | 23 | ||
| Quoted Gocompare.com Group PLC |
2016 | Complete | - | - | 2 | 2 | 2 |
| Total quoted | - | - | 2 | 2 | 2 | ||
| UK treasury bills | |||||||
| Treasury Bill 20 June 2016 | 2015 | Complete | 300 | 300 | 300 | - | - |
| Treasury Bill 12 September 2016 | 2016 | Complete | 8,082 | 8,082 | 8,100 | 18 | 18 |
| Total UK treasury bills | 8,382 | 8,382 | 8,400 | 18 | 18 | ||
| Total disposals | 8,604 | 8,804 | 8,847 | 243 | 43 |
1Proceeds exclude yield and redemption premiums received, which are disclosed as revenue for financial reporting purposes.
The table includes the redemption of loan notes by a number of investee companies.
In May 2017, your Company completed a further four new VCT qualifying investments in ebb3, Horizon Cremation, ITS Technology and Contego Fraud Solutions.
ebb3 is a technology company that develops and delivers mobile workspace solutions that challenge the mature workstation computer market. The technology is aimed at addressing the need for seamless and secure access to apps, files and services on any device, in any location, and is specifically targeted at high-end 3D computer graphics users within the oil & gas, automotive (Formula 1), construction and education sectors, where there is a requirement for data-intensive applications that can service geographically dispersed, multi-disciplinary teams. ebb3 has existing contracts with a number of multinational clients and the strength of the technology is supported by high profile partnership agreements with providers such as Cisco, NetApp and NVidia. The Maven VCT investment will enable ebb3 to pursue its growth strategy in a niche part of the growing supercomputing market.
Horizon Cremation plans to develop and operate a portfolio of next generation crematoria across the UK where existing facilities are either under-invested or in short supply. Horizon is seeking to build contemporary facilities that are environmentally and technologically advanced, offering enhanced professional service and care levels for families. The company has secured full planning consent for its first crematorium in North Ayrshire, Scotland and construction commenced in May 2017. The Maven VCT investment will provide capital to source and secure subsequent development sites, whilst supporting the operational expenditure and overheads of the initial crematorium. Third party finance has been secured to fund the construction and fit-out of the first crematorium, which is expected to be operational by March 2018.
ITS Technology is a leading alternative network provider that owns and maintains fibre networks, providing faster and more reliable broadband connectivity, and related services, to customers, particularly in areas that are not well served by the existing infrastructure. The business currently has 12 fibre broadband networks in operation, with a further five under construction. The investment will help to fund growth within the existing networks, build a stable recurring revenue base and also support expansion through the addition of new networks.
In July, an investment was completed in Contego Fraud Solutions, the provider of a complex, multi-source compliance and fraud detection software platform for public and private sector clients, including property, banking and financial services. The application performs a vast number of screening, verification and vetting assessments, including Know Your Customer and Anti Money Laundering across a wide range of databases to fulfil both real-time customer on-boarding and on-going monitoring of regulatory requirements. The investment will support the continued growth of the business, facilitating the hiring of additional sales resources, further product development and expansion into new markets.
The Manager is cautiously optimistic about the year ahead, notwithstanding the political and economic uncertainty surrounding the UK's intended exit from the EU and the changes introduced through the enactment of the revised VCT legislation. The progress achieved by your Company during the reporting period demonstrates the strength and resilience of the investee company portfolio and its ability to support Shareholder returns. The Manager believes that the current pipeline of prospective new investments provides your Company with the opportunity to further broaden the portfolio, and expects a number of these transactions to complete in the first half of the current financial year, subject to receiving advance assurance from HMRC on a case by case basis.
Following the recent success of the Offer for subscription, the investment strategy being applied by the Manager is to continue to expand the asset base of your Company by both size and sector, adding carefully selected younger companies capable of higher growth. This should offer commensurately higher return potential, to complement the existing portfolio of more established businesses completed prior to the legislation changes. The Manager believes that this approach will enable Shareholders to benefit from a balanced and diverse asset base capable of achieving long term growth and will support future dividend payments.
Maven Capital Partners UK LLP Manager 14 July 2017
As at 31 March 2017
Torridon (Gibraltar) Limited Grantham www.elite-insurance.co.uk
Maven Income and Growth VCT Maven Income and Growth VCT 2 Maven Income and Growth VCT 3 Maven Income and Growth VCT 4 Maven Investor Partners
Lemac No. 1 Limited (trading as John McGavigan) Glasgow www.mcgavigan.com
Maven Income and Growth VCT Maven Income and Growth VCT 2 Maven Income and Growth VCT 3 Maven Income and Growth VCT 4
| Cost (£'000) | 21 | |||
|---|---|---|---|---|
| Valuation (£'000) | 416 | |||
| Basis of valuation | Earnings | |||
| Equity held | 0.8% | |||
| Income received (£'000) | 46 | |||
| First invested | January 2010 | |||
| Year end | 31 March1 | |||
| 2016 (£'000) | 2015 (£'000) | |||
| Sales | 163,753 | 160,423 | ||
| EBITDA2 | 8,675 | 6,720 | ||
| Net assets | 47,870 | 37,624 |
Torridon was established to acquire Elite Insurance Company, a national supplier of financial and legal insurance products and litigation services in a public-to-private transaction in 2010. Elite provides a range of over 30 lines, including before-the-event, after-the-event and clinical negligence products, as well as medico-legal and psychological reports to a client base of principally UK based solicitors.
| Cost (£'000) | 107 | ||
|---|---|---|---|
| Valuation (£'000) | 337 | ||
| Basis of valuation | Earnings | ||
| Equity held | 1.4% | ||
| Income received (£'000) | 47 | ||
| First invested | December 2010 | ||
| Year end | 31 December | ||
| 2016 (£'000) | 2015 (£'000) | ||
| Sales | 22,744 | 19,332 | |
| EBITDA2 | 5,032 | 2,642 | |
| Net assets | 6,233 2,915 |
John McGavigan is a manufacturer and supplier of decorative assemblies and interior parts for the global automotive industry, with a high proportion 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.
| Cost (£'000) | 249 | |
|---|---|---|
| Valuation (£'000) | 249 | |
| Basis of valuation | Cost | |
| Equity held | 2.5% | |
| Income received (£'000) | Nil | |
| First invested | December 2016 | |
| Year end | 31 July3 | |
| 2016 (£'000) | 2015 (£'000) | |
| Sales | 78 | 14 |
| EBITDA2 | (645) | (365) |
| Net assets | 405 | 295 |
Founded in 2011, QikServe's platform enables customers to discover restaurants, check-in to tables, browse menus, place orders, save and redeem loyalty points or vouchers, and pay their bill directly from their mobile phone or tablet. The platform targets the increasing consumer adoption of mobile solutions and also brings significant advantages to restaurants by introducing efficiencies, reducing labour costs, and increasing average spend. QikServe is the only accredited mobile ordering system that is fully integrated with a world-leading electronic point of sale provider, Oracle Hospitality.
| Cost (£'000) | 199 | |
|---|---|---|
| Valuation (£'000) | 199 | |
| Basis of valuation | Cost | |
| Equity held | 2.5% | |
| Income received (£'000) | 6 | |
| First invested | April 2016 | |
| Year end | 31 December | |
| This company has not yet produced its first report and accounts. | ||
The GP Service provides online services for general medical consultations and prescriptions in a rapidly emerging sector in the UK, driven by an increase in average waiting times for GP appointments as well as surgery opening times being unsuitable for busy lifestyles. The GPS web-based platform is already fully operational, with GP consultations being delivered live via video link direct, and prescriptions issued directly to a pharmacy. GPS is led by experienced entrepreneur Atul Devani as Executive Chairman. Atul was the founder of United Clearing, which listed on AIM in 2004, before being sold in 2006 for £25 million. He then served as CEO of BSG's wireless division prior to its trade sale to Syniverse Technologies for \$290 million.
QikServe Limited Edinburgh www.qikserve.com
Maven Income and Growth VCT Maven Income and Growth VCT 2 Maven Income and Growth VCT 3 Maven Income and Growth VCT 4 Maven Income and Growth VCT 5
The GP Service (UK) Limited London www.thegpservice.co.uk
Maven Income and Growth VCT Maven Income and Growth VCT 2 Maven Income and Growth VCT 3 Maven Income and Growth VCT 4 Maven Income and Growth VCT 5
Rockar 2016 Limited (trading as Rockar) Hull www.rockar.com
Maven Income and Growth VCT Maven Income and Growth VCT 2 Maven Income and Growth VCT 3 Maven Income and Growth VCT 4 Maven Income and Growth VCT 5
(trading as Chic Retreats) London www.chicretreats.com
Maven Income and Growth VCT Maven Income and Growth VCT 2 Maven Income and Growth VCT 3 Maven Income and Growth VCT 4 Maven Income and Growth VCT 5
| Cost (£'000) | 199 | |
|---|---|---|
| Valuation (£'000) | 199 | |
| Basis of valuation | Cost | |
| Equity held | 1.1% | |
| Income received (£'000) | Nil | |
| First invested | July 2016 | |
| Year end | 31 December | |
| This company has not yet produced its first report and accounts. | ||
Rockar was established in 2012 with the aim of revolutionising the retail car buying market. The business model is a disruptive retail proposition which gives customers access to all the services of a traditional dealership online, or at one of Rockar's digital stores in high footfall shopping centres. The stores have created a convenient place for customers to view cars at their leisure without the pressure to buy. Rockar has also developed its on-line Buy-Button solution, which helps car manufacturers digitalise their traditional route to market and enables consumers to complete the entire purchase on-line, including options for part-exchange and finance.
| Cost (£'000) | 187 | ||
|---|---|---|---|
| Valuation (£'000) | 187 | ||
| Basis of valuation | Cost | ||
| Equity held | 5.6% | ||
| Income received (£'000) | 2 | ||
| First invested | October 2016 | ||
| Year end | 31 December3 | ||
| 2015 (£'000) | 2014 (£'000) | ||
| Sales | 181 | 197 | |
| EBITDA2 | (233) | (69) | |
| Net assets | 93 | (75) |
Chic Retreats enables independent and boutique hotels, as well as luxury villas, to optimise the distribution of their rooms, rates and availability online. The innovative software platform, developed on Google Cloud, targets an underserviced segment of the market, offering a distribution solution to smaller boutique hotels and villas and allowing them to manage inventory in real time and process bookings through a number of leading traffic generators. Hotels and villas are able to join Chic Retreats by invitation only, thereby enabling the membership network to retain its exclusivity. Once approved, the hotel is thoroughly vetted before it becomes part of the unique Chic Retreats online collection.
| Cost (£'000) | 150 | |
|---|---|---|
| Valuation (£'000) | 150 | |
| Basis of valuation | Earnings | |
| Equity held | 0.6% | |
| Income received (£'000) | 32 | |
| First invested | March 2011 | |
| Year end | 31 March | |
| 2016 (£'000) | 2015 (£'000) | |
| Sales | 22,692 | 25,949 |
| EBITDA2 | 1,109 | 2,609 |
| Net assets | (3,824) | 735 |
Glacier provides specialist services for energy infrastructure: 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.
| Cost (£'000) | 57 | |
|---|---|---|
| Valuation (£'000) | 148 | |
| Basis of valuation | Earnings | |
| Equity held | 0.9% | |
| Income received (£'000) | 20 | |
| First invested | August 2014 | |
| Year end | 30 September | |
| 2016 (£'000) | 20154 (£'000) |
|
| Sales | 13,628 | 14,751 |
| EBITDA2 | 2,827 | 2,770 |
| Net assets/(liabilities) | 3,973 | 2,965 |
Crawford Scientific provides chromatography consumables, instrument parts and technical services to a wide range of sectors, including pharmaceuticals and energy services, and supplies laboratories across the UK, mainland Europe and the US. Crawford has built up an excellent reputation for its technical expertise, offering a range of value-add technical support services which includes training, e-learning, analytical services, IT solutions and consultancy. The business also provides complementary and highly valuable analytical and laboratory testing services following the acquisition of Hall Analytical Laboratories in December 2014.
Glacier Energy Services Holdings Limited Aberdeen www.glacier.co.uk
Maven Income and Growth VCT Maven Income and Growth VCT 2 Maven Income and Growth VCT 3 Maven Income and Growth VCT 4 Maven Income and Growth VCT 5 Maven Investor Partners
Crawford Scientific Holdings Limited Strathaven www.crawfordscientific.com
Maven Income and Growth VCT Maven Income and Growth VCT 3 Maven Income and Growth VCT 4 Maven Income and Growth VCT 5 Maven Investor Partners
SPS (EU) Limited Blackpool www.spseu.com
Maven Income and Growth VCT Maven Income and Growth VCT 2 Maven Income and Growth VCT 3 Maven Income and Growth VCT 4 Maven Income and Growth VCT 5 Maven Investor Partners
Maven Income and Growth VCT Maven Income and Growth VCT 2 Maven Income and Growth VCT 3 Maven Income and Growth VCT 4 Maven Income and Growth VCT 5
| Cost (£'000) | 61 | ||
|---|---|---|---|
| Valuation (£'000) | 116 | ||
| Basis of valuation | Earnings | ||
| Equity held | 0.5% | ||
| Income received (£'000) | 12 | ||
| First invested | February 2014 | ||
| Year end | 31 December | ||
| 2015 (£'000) | 20145 (£'000) |
||
| Sales | 21,995 | 16,731 | |
| EBITDA2 | 2,302 | 1,864 | |
| Net assets/(liabilities) | 2,188 | 1,878 |
SPS is a market-leading supplier in the promotional merchandise market and operates out of a modern 90,000 ft2 site with manufacturing, branding and storage facilities. The business focuses on new product development, innovative product sourcing, investment in branding technology and a clear commitment to operational and service excellence. SPS is now the UK's largest provider of promotional merchandise, supplying to more than 2,000 independent distributors in the UK and Europe.
| Cost (£'000) | 116 | ||
|---|---|---|---|
| Valuation (£'000) | 106 | ||
| Basis of valuation | Earnings | ||
| Equity held | 1.4% | ||
| Income received (£'000) | 17 | ||
| First invested | January 2007 | ||
| Year end | 31 December | ||
| 2015 (£'000) | 2014 (£'000) | ||
| Sales | 2,485 | 2,635 | |
| EBITDA2 | 312 | 405 | |
| Net assets/(liabilities) | (2,490) | (1,921) |
Martel is one of the leading UK manufacturers of custom built compact printer and display units to a global customer base, across a range of industries including automotive, medical, transport and retail. The business differentiates itself from other printer suppliers by offering a complete design and build service for low volume/high customisation printer solutions. Martel offers in-house software and tooling design expertise, as well as injection moulding and surface mount capabilities.
1 Results for Elite Insurance Company Limited.
5 For the period from 10 February 2014 to 27 December 2014. Holding company acquired the trading company part way through the year.
Ten largest investments
1 Including new offices in Bristol, Durham, Newcastle and Preston opened during 2017
As at 31 March 2017
| Valuation | Cost | % of total | % of | % of equity held by other |
|
|---|---|---|---|---|---|
| Investment | £'000 | £'000 | assets | equity held | clients1 |
| Unlisted | |||||
| Torridon (Gibraltar) Limited | 416 | 21 | 1.9 | 0.8 | 39.2 |
| Lemac No.1 Limited (trading as John McGavigan) | 337 | 107 | 1.5 | 1.4 | 35.4 |
| QikServe Limited | 249 | 249 | 1.2 | 2.5 | 17.5 |
| The GP Service (UK) Limited | 199 | 199 | 0.8 | 2.5 | 30.0 |
| Rockar 2016 Limited (trading as Rockar) | 199 | 199 | 0.8 | 1.1 | 12.7 |
| Chic Lifestyle Limited (trading as Chic Retreats) | 187 | 187 | 0.8 | 5.6 | 41.3 |
| Glacier Energy Services Holdings Limited | 150 | 150 | 0.6 | 0.6 | 27.1 |
| Crawford Scientific Holdings Limited | 148 | 57 | 0.6 | 0.9 | 47.3 |
| Majenta Logistics Limited | 125 | 125 | 0.5 | 1.7 | 48.1 |
| Metropol Communications Limited | 125 | 125 | 0.5 | 1.7 | 48.1 |
| Onyx Logistics Limited | 125 | 125 | 0.5 | 1.7 | 48.1 |
| Vectis Technology Limited | 125 | 125 | 0.5 | 1.7 | 48.1 |
| SPS (EU) Limited | 116 | 61 | 0.5 | 0.5 | 42.0 |
| Martel Instruments Holdings Limited | 106 | 116 | 0.5 | 1.4 | 42.8 |
| Whiterock Group Limited | 100 | 100 | 0.4 | 2.2 | 22.8 |
| Growth Capital Ventures Limited | 99 | 100 | 0.4 | 2.8 | 27.8 |
| CatTech International Holdings Limited | 93 | 60 | 0.4 | 0.6 | 29.4 |
| Ensco 969 Limited (trading as DPP) | 91 | 91 | 0.4 | 0.4 | 34.1 |
| Fathom Systems Group Limited | 89 | 89 | 0.4 | 1.0 | 59.0 |
| Vodat Communications Group Limited | 83 | 60 | 0.4 | 0.7 | 41.0 |
| Flow UK Holdings Limited | 75 | 75 | 0.3 | 0.9 | 34.1 |
| Flexlife Group Limited | 67 | 75 | 0.3 | 0.3 | 14.3 |
| JT Holdings (UK) Limited (trading as Just Trays) | 65 | 50 | 0.3 | 0.5 | 29.5 |
| CHS Engineering Services Limited | 64 | 72 | 0.3 | 0.6 | 22.7 |
| Castlegate 737 Limited (trading as Cursor Controls) | 61 | 50 | 0.3 | 0.5 | 47.0 |
| CB Technology Group Limited | 58 | 58 | 0.3 | 1.2 | 77.8 |
| Endura Limited | 57 | 57 | 0.2 | 0.2 | 5.7 |
| GEV Holdings Limited | 56 | 56 | 0.2 | 0.4 | 35.6 |
| Constant Progress Limited | 50 | 50 | 0.2 | 1.0 | 48.8 |
| Equator Capital Limited | 50 | 50 | 0.2 | 1.0 | 48.8 |
| Toward Technology Limited | 50 | 50 | 0.2 | 1.0 | 48.8 |
| RMEC Group Limited | 50 | 50 | 0.2 | 0.3 | 49.8 |
| R&M Engineering Group Limited | 45 | 60 | 0.2 | 0.7 | 69.9 |
| Maven Co-invest Endeavour Limited Partnership (invested in Global Risk Partners) |
44 | 38 | 0.2 | 0.7 | 99.3 |
| HCS Control Systems Group Limited | 43 | 60 | 0.2 | 0.5 | 36.0 |
| Attraction World Holdings Limited | 42 | 3 | 0.2 | 0.9 | 37.5 |
| ISN Solutions Group Limited | 25 | 40 | 0.1 | 0.6 | 54.4 |
| Space Student Living Limited | 11 | - | - | 1.7 | 78.4 |
| Lawrence Recycling & Waste Management Limited | 10 | 73 | - | 0.8 | 61.2 |
| Other unlisted investments | - | 174 | - | ||
| Total unlisted | 4,085 | 3,487 | 17.5 |
As at 31 March 2017
| Investment | Valuation £'000 |
Cost £'000 |
% of total assets |
% of equity held |
% of equity held by other clients1 |
|---|---|---|---|---|---|
| Quoted | |||||
| Angle PLC | 46 | 69 | 0.1 | 0.1 | 0.3 |
| Plastics Capital PLC | 13 | 10 | 0.1 | - | 1.4 |
| Vianet Group PLC (formerly Brulines Group PLC) | 12 | 16 | 0.1 | - | 1.5 |
| esure Group PLC | 6 | - | - | - | - |
| Work Group PLC | 3 | 101 | - | 0.4 | 2.7 |
| Other quoted investments | - | 238 | - | ||
| Total quoted | 80 | 434 | 0.3 | ||
| Private equity investment trusts Apax Global Alpha Limited |
118 | 99 | 0.5 | - | 0.1 |
| HgCapital Trust PLC | 111 | 100 | 0.5 | - | 0.1 |
| Princess Private Equity Holding Limited | 111 | 98 | 0.5 | - | 0.1 |
| F&C Private Equity Trust PLC | 106 | 103 | 0.4 | 0.1 | 0.3 |
| Standard Life European Private Equity Trust PLC | 50 | 43 | 0.2 | - | - |
| Total private equity investment trusts | 496 | 443 | 2.1 | ||
| Real estate investment trusts | |||||
| Schroder REIT Limited | 107 | 99 | 0.5 | - | 0.2 |
| Custodian REIT PLC | 104 | 99 | 0.5 | - | 0.2 |
| British Land Company PLC | 101 | 99 | 0.4 | - | - |
| Target Healthcare REIT PLC | 99 | 98 | 0.4 | - | 0.2 |
| Standard Life Investment Property Income Trust Limited |
99 | 99 | 0.4 | - | 0.2 |
| Regional REIT Limited | 93 | 99 | 0.4 | - | 0.2 |
| Total real estate investment trusts | 603 | 593 | 2.6 | ||
| Fixed income investment trusts Alcentra European Floating Rate Income Fund Limited |
113 | 113 | 0.5 | 0.1 | - |
| TwentyFour Income Fund Limited | 101 | 101 | 0.4 | 0.1 | - |
| Total fixed income investment trusts | 214 | 214 | 0.9 | ||
| Total investments | 5,478 | 5,171 | 23.4 |
1Other clients of Maven Capital Partners UK LLP.
| Directors' Report | 33 |
|---|---|
| Directors' Remuneration Report | 37 |
| Statement of Corporate Governance | 41 |
| Statement of Directors' Responsibilities | 45 |
| Report of the Audit and Risk Committees | 46 |
| Independent Auditor's Report to the Members of Maven Income and Growth VCT 6 PLC |
49 |
The Directors submit their Annual Report together with the Financial Statements of the Company for the year ended 31 March 2017. 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.
The Company's 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.
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. The financial position of the Company is described in the Chairman's Statement within the Strategic Report. In addition, Note 16 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, price risk sensitivity and credit risk. 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.
In accordance with Provision C.2.2 of the UK Corporate Governance Code, published in April 2016, the Board has considered the Company's prospects and risks for the forthcoming five year period, which is considered appropriate for a VCT business of this Company's size.
In making this statement the Board carried out a robust assessment of the principal business risks facing the Company as set out in the Business Report on pages 13 and 14, including those that might threaten its business model, future performance, solvency, or liquidity, particularly given the unquoted nature of the portfolio.
The Board also considered the Company's ability to raise new funds and invest those proceeds, taking into account the more restrictive VCT investment rules and, as highlighted in the Chairman's Statement on pages 9 to 11, the Directors consider the Company's future prospects to be positive.
Therefore, after careful consideration of the Company's current position, future prospects, and taking into account the Board's attitude to risk and its ongoing review of investment objective and policy, the Board have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the course of the forthcoming five year period ending 31 March 2022.
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 16 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.
The Statement of Corporate Governance, which forms part of this Directors' Report, is shown on pages 41 to 44.
Biographies of the Directors who held office at the date of this report are shown in the Your Board section, along with their interests in the shares of the Company, which are also shown below. 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.
In accordance with the Articles, Directors must offer themselves for re-election at least once every three years. However, in accordance with corporate governance best practice, the Board has decided that all Directors who have served for periods in excess of nine years should stand for re-election on an annual basis. Brian May will retire at the 2017 AGM, and, being eligible, offers himself for re-election. Also, in accordance with corporate governance best practice for nonindependent Directors, Bill Nixon retires at the 2017 AGM and, being eligible, offers himself for annual re-election.
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 each of the Directors wishing to retain office is re-elected and Resolutions to this effect will be proposed at the AGM.
The Directors who held office during the year and their interests in the share capital of the Company are as follows:
| 31 March 2017 Ordinary Shares of 10p each |
31 March 2016 Ordinary Shares of 50p each |
|
|---|---|---|
| Brian May (Chairman) | 287,061 | 261,977 |
| Jonathan Carr (retired on 31 August 2016) | N/A | 10,000 |
| Fraser Gray | 26,439 | N/A |
| Gregor Logan | 45,450 | 45,450 |
| Bill Nixon | 641,374 | 513,737 |
All of the interests shown above are beneficial and as at 7 July 2017, being the latest practicable date prior to the publication of this Annual Report, there had been no changes to these since the end of the Company's financial year.
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 coinvestment by the Directors in entities in which the Company also 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 material conflicts or potential conflicts were identified during the year.
At 31 March 2017 the only Shareholders known to the Company to be directly or indirectly interested in 3.00% or more of its issued Ordinary Share capital were as follows:
| Number of Ordinary Shares held |
% of issued share capital |
|
|---|---|---|
| Hargreaves Lansdown (Nominees) Limited |
1,888,612 | 4.72 |
As at 7 July 2017, being the latest practicable date prior to the publication of this Annual Report, the Shareholders known to be directly or indirectly interested in 3.00% or more of the Company's issued Ordinary Share capital were as follows:
| Number of shares held |
% of issued share capital |
|
|---|---|---|
| Hargreaves Lansdown (Nominees) Limited |
2,154,392 | 5.20 |
Maven Capital Partners UK LLP (Maven) acted as Manager and Secretary to the Company during the year ended 31 March 2017 and details of the fees paid are disclosed in Notes 3 and 4 to the Financial Statements.
The principal terms of the Investment Management Agreement agreed with Maven are as follows:
The agreement is terminable, by either party, on the expiry of twelve months' notice in writing. Furthermore, the Company may terminate the agreement without compensation due if:
Under the Investment Management Agreement, payment of fees to the Manager during the year were made on the following terms:
The annual running costs of the Company are capped at 4.1% of its net assets, adjusted annually and excluding any performance related fees and exceptional costs. A performance fee will only become payable if the Company's adjusted NAV total return at the agreed reference date exceeds that at the previous reference date and at each anniversary of the Commencement Date.
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 participants invest 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 7 July 2017, Maven, Bill Nixon and certain of the Manager's other executives held, in aggregate, 1,594,687 of the Company's Ordinary Shares, representing 3.85% of the issued capital as at that date.
The Company's Independent Auditor, Deloitte LLP, is willing to continue in office and Resolution 7 to propose its re-appointment will be put forward to Shareholders at the 2017 AGM, along with Resolution 8, to authorise the Directors to fix its remuneration. Non-audit fees for tax services amounting to £3,000 were paid to Deloitte LLP during the year under review (2016: £3,000). 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 non-audit services and remain satisfied that objectivity and independence are 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.
The Company has authority to make market purchases of its own shares and during the year ended 31 March 2017 a total of 400,000 Ordinary Shares (2016: 260,000) were bought back for cancellation, representing 1.41% of the issued share capital as at 11 July 2016, being the latest practicable date prior to the publication of the previous Annual Report.
A Special Resolution, numbered 11 in the Notice of Annual General Meeting, will be put to Shareholders at the 2017 AGM for their approval to renew the Company's authority to purchase in the market a maximum of 6,206,164 Ordinary Shares (14.99% of the shares in issue at 7 July 2017). This authority will expire either on the date of the AGM in 2018 or after a period of 15 months from the passing of the Resolution, whichever is the first to occur.
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 FCA Listing Rules, 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.
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. As any purchases will be made at a discount to the prevailing NAV, 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 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, 19,656,961 new Ordinary Shares (2016: 13,802,248) were allotted under Offers for Subscription. An Ordinary Resolution, numbered 9 in the Notice of Annual General Meeting, will be put to Shareholders at the 2017 AGM for their approval for the Company to issue up to an aggregate nominal amount of £414,020 (equivalent to 4,140,200 Ordinary Shares or 10% of the total issued share capital at 7 July 2017).
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 will expire either at the conclusion of the AGM in 2018 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 10 in the Notice of Annual General Meeting, will, if passed, give the Directors power to allot, for cash, Ordinary Shares up to an aggregate nominal amount of £414,020 (equivalent to 4,140,200 Ordinary Shares or 10% of the total issued share capital at 7 July 2017) 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 9. This authority will also expire either at the conclusion of the AGM in 2018 or on the expiry of 15 months from the passing of the Resolution, whichever is the first to occur.
As at 31 March 2017 the Company's share capital amounted to 40,032,061 Ordinary Shares of 10p each.
Subsequent to the year end, the Company issued 1,369,971 new Ordinary Shares under the Offer for Subscription on 6 April 2017. As a result, there were 41,402,032 Ordinary Shares in issue as at 7 July 2017, with each share carrying one voting right. Further details are included in Note 12 to the Financial Statements.
Other than those set out in this Directors' Report, there are no further related party transactions that require to be disclosed.
Other than those referred to above and in the Investment Manager's Review, there have been no events since 31 March 2017 that require disclosure.
The Annual General Meeting will be held on 30 August 2017, and the Notice of Annual General Meeting is on pages 70 to 75 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.
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 Shareholders do so as well.
By order of the Board Maven Capital Partners UK LLP Secretary
14 July 2017
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, which includes a section on the Company's policy for the remuneration of its Directors, will be put to the Members of the Company at the forthcoming AGM. The law requires the Company's Auditor to audit certain disclosures provided. Where disclosures have been audited, they are indicated as such and the Auditor's opinion is included in their report on pages 49 to 53.
The Directors have established a Remuneration Committee comprising all of the independent Directors and with Fraser Gray as its Chairman. As all of the Directors are non-executive, the Principles of the UK Corporate Governance Code in respect of directors' remuneration do not apply.
At 31 March 2017, the Company had four non-executive Directors and their biographies are shown in the Your Board section of this Annual Report. The names of the Directors who served during the year, together with the fees paid during that period, are shown in the table on page 39.
| Date of original appointment |
Date of previous re-election |
Due date for re-election |
|
|---|---|---|---|
| Brian May (Chairman) | 22 March 2000 | 31 August 2016 | 30 August 2017 |
| Fraser Gray | 1 July 2016 | 31 August 2016 | August 2019 |
| Gregor Logan | 10 February 2015 | 3 September 2015 | August 2018 |
| Bill Nixon | 21 February 2006 | 31 August 2016 | 30 August 2017 |
The dates of appointment of the Directors in office as at 31 March 2017 and the dates on which they will next be proposed for re-election are as follows:
During the year ended 31 March 2017, 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 Boards policy on Directors' remuneration, as defined below, the Committee expects, from time to time, to review the fees paid to the directors of other venture capital trust companies.
During the year ended 31 March 2017, the Remuneration Committee carried out a review of the remuneration policy and the level of Directors' fees and, in light of the successful fundraising activity, it was recommended that the fees should be increased towards a more normal level and, with effect from 1 October 2016, the rates of remuneration were increased to £14,000 for the Chairman and £12,000 for each other Director. At 31 March 2004, the then Directors of the Company reduced the Directors' fees by 33.3%, with there being no increase in remuneration since that date. In light of the recent fundraising, the Committee considered that the revised total Directors' Remuneration was reasonable when compared with other similar VCTs.
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 or her. The fees for the Directors are determined within the limits set out in the Company's Articles, which limit the aggregate of the fees payable to the Directors to £250,000 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 this Remuneration Policy may be inspected by Members of the Company at its registered office.
It is the Board's intention that the remuneration policy will be put to a Shareholders' vote at least once every three years and, as a Resolution was approved at the AGM held in 2014, an Ordinary Resolution for its approval will next be proposed at the AGM to be held in 2017.
At the Annual General Meeting held in August 2014, the result in respect of the Ordinary Resolution to approve the Remuneration Policy Report for the three years to 31 March 2017 was as follows:
| Percentage of | Percentage of | Number of | |
|---|---|---|---|
| votes cast for | votes cast against | votes withheld | |
| Remuneration Policy (2014 AGM) | 98.0 | 2.0 | 560 |
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 Directors' Interests in the share capital of the Company are shown in the Directors' Report on page 34. There is no requirement for Directors to hold shares in the Company.
The Board is responsible for the Company's investment strategy and performance, although the management of the Company's investment portfolio is delegated to the Manager through the Management and Administration Deed, 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 ten years to 31 March 2017, 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.
Source: Maven Capital Partners UK LLP/London Stock Exchange. Please note that past performance is not necessarily a guide to future performance.
The Company does not have any employees and Directors' remuneration comprises solely of Directors' fees. The Directors' fees for the years ended 31 March 2017 and 31 March 2016, and projected fees for the year ending 31 March 2018, respectively are as follows:
| Year ending 31 March 2018 £ |
Year ended 31 March 2017 £ |
Year ended 31 March 2016 £ |
|
|---|---|---|---|
| Brian May (Chairman)1 | 14,000 | 9,611 | 5,000 |
| Stephen Barclay2 | N/A | N/A | 2,125 |
| Jonathan Carr3 | N/A | 2,725 | 6,500 |
| Fraser Gray4 | 12,000 | 7,244 | N/A |
| Gregor Logan5 | 12,000 | 8,490 | 2,889 |
| Bill Nixon6 | 12,000 | 8,490 | - |
| Total | 50,000 | 36,560 | 16,514 |
1 Brian May was appointed as Chairman on 31 August 2016.
2 Stephen Barclay retired at the AGM on 3 September 2015.
3 Jonathan Carr retired at the AGM on 31 August 2016.
4 Fraser Gray was appointed on 1 July 2016.
5 Gregor Logan was appointed on 10 February 2015 and his remuneration was effective from 3 September 2015.
6 Bill Nixon's remuneration is paid to Maven Capital Partners UK LLP and subject to VAT. Prior to 1 April 2016 he waived his entitlement to remuneration.
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 March 2017 (2016: £nil).
The table below shows, for the years ended 31 March 2017 and 31 March 2016, the cost of Directors' fees, compared with the level of dividend distribution and the net assets of the Company.
| 2017 £'000 |
2016 £'000 |
|
|---|---|---|
| Dividend | 71 | 106 |
| Total Director's fees | 38 | 17 |
| Total Net Assets | 23,421 | 12,301 |
As noted in the Strategic Report, all of the Directors are nonexecutive 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.
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 AGM after their appointment. Thereafter, the Company's Articles 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 March 2017, no communication was received from Shareholders regarding Directors' remuneration. The remuneration policy and the level of fees payable is reviewed annually by the Remuneration Committee and it is intended that the current policy will continue for the year ending 31 March 2018.
The graph below shows the Directors' remuneration relative to the Company's total expenses, both in pence per share (pps), over the five years to 31 March 2017. Relative Remuneration Cost (Pps)
An Ordinary Resolution to approve this Directors' Remuneration Report for the year ended 31 March 2017 will be put to Shareholders at the 2017 AGM. At the Annual General Meeting in held in August 2016, the results in respect of an Ordinary Resolution to approve the Directors' Remuneration Report for the year ended 31 March 2016 were as follows:
| Percentage of | Percentage of | Number of | |
|---|---|---|---|
| votes cast for | votes cast against | votes withheld | |
| Remuneration Report (2016 AGM) | 99.47 | 0.53 | 25,381 |
The Directors' Remuneration Report for the year ended 31 March 2017 was approved by the Board of Directors and signed on its behalf by:
Fraser Gray Director
14 July 2017
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 April 2016. The Code is available from the website of the Financial Reporting Council at www.frc.org.uk.
This statement describes how the main principles identified in the Code have been applied by the Company throughout the year, as is required by the Listing Rules of the FCA.
The Board is of the opinion that the Company has complied fully with the main principles identified in the Code, except as set out below and in the Report by the Audit and Risk Committees:
In the relevant sections of this Statement of Corporate Governance, the Board has reported further in the respect of the above provisions.
The Board currently consists of four male 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 Annual Report and indicate their high level and range of investment, industrial, commercial and professional experience.
Brian May was independent of the Manager at the time of his appointment as a Director on 22 March 2000 and as Chairman on 31 August 2016 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:
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 Secretary through its appointed representatives who are responsible to the Board for:
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.
Brian May is Chairman of the Company and is also Chairman of the Management Engagement Committee, as the other Directors consider that he has the skills and experience relevant to these roles.
A Senior Independent 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 March 2017, the Board held seven full Board Meetings and two Board Committee Meetings. In addition, there were two Meetings of the Audit Committee, four Meetings of the Risk Committee, one Meeting of the Management Engagement Committee and three Meetings each of the Nomination and Remuneration Committees.
Directors have attended Board and Committee Meetings during the year ended 31 March 20171 as follows:
| Board | Board Committee |
Audit Committee |
Management Engagement Committee |
Nomination Committee |
Remuneration Committee |
Risk Committee |
|
|---|---|---|---|---|---|---|---|
| Brian May (Chairman) | 7 (7) | 2 (2) | 2 (2) | 1 (1) | 3 (3) | 3 (3) | 4 (4) |
| Jonathan Carr2 | 4 (4) | 1 (1) | 1 (1) | -(-) | 1 (1) | 1 (1) | 2 (2) |
| Fraser Gray3 | 5 (5) | 2 (2) | 1 (1) | 1 (1) | 2 (2) | 2 (2) | 3 (3) |
| Gregor Logan | 7 (7) | 2 (2) | 2 (2) | 1 (1) | 3 (3) | 3 (3) | 4 (4) |
| Bill Nixon4 | 7 (7) | 2 (2) | -(-) | -(-) | -(-) | -(-) | -(-) |
1 The number of meetings which the Directors were eligible to attend is in brackets.
2 Retired on 31 August 2016.
3 Appointed on 1 July 2016.
4 Bill Nixon is not a member of the Audit, Management Engagement, Nomination, Remuneration and Risk Committees.
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.
The Company's Articles of Association require all Directors to retire by rotation at least once every three years. However, in accordance with corporate governance best practice, the Board has decided that all Directors who have served for periods in excess of nine years should stand for re-election on an annual basis. Also in accordance with corporate governance best practice, as a non-independent Director, Bill Nixon stands for re-election at each AGM.
The Board subscribes to the view 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 has no executive Directors or employees.
Each of the Committees has been established with written terms of reference and comprises members that are independent of the Manager and free from any relationship that would interfere with important judgement in carrying out their responsibilities. 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 Gregor Logan and the role and responsibilities of the Committee are detailed in a joint Report by the Audit and Risk Committees.
The Management Engagement Committee, which is chaired by Brian May, 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 March 2017, at which the Committee recommended the continued appointment of Maven Capital Partners UK LLP as Manager of the Company.
The Nomination Committee, which is chaired by Fraser Gray, held three Meetings during the year ended 31 March 2017. The Committee makes recommendations to the Board on the following matters:
succession planning;
the identification and nomination of candidates to fill Board vacancies, as and when they arise, for the approval of the Board;
In advance of Mr Carr's retirement at the 2016 AGM, the Committee considered the curriculum vitae of several candidates and carried out a process of formal interviews. At its Meeting in May 2016, the Committee, after due consideration of each candidate, recommended that Fraser Gray should be offered the position of Director. In agreement with this recommendation, Fraser Gray was appointed to the Board on 1 July 2016.
At a Meeting held in November 2016, the Committee considered the chairmanship of the committees in light of the recent changes in Board composition and recommended that the chairmanship of the committees be shared between Board members.
At a Meeting held in February 2017 the Committee recommended, in accordance with best practice, that all independent Directors who had served for more than nine years should continue to offer themselves for annual reelection alongside the representative of the Manager serving on the Board. Accordingly, Brian May and Bill Nixon will offer themselves for re-election at the 2017 AGM.
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. However, the Company does have a Remuneration Committee, which is chaired by Fraser Gray. The Committee held three Meetings during the year ended 31 March 2017 to review the policy for, and the level of, Directors' Remuneration.
The level of remuneration of 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.
The Risk Committee is chaired by Gregor Logan and the role and responsibilities of the Committee are detailed in a joint Report by the Audit and Risk Committees.
The Board has contractually delegated 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 the Manager take account of the social environment and ethical factors that may affect the performance or value of the Company's investments. Maven and the Directors believe 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 and all are welcome to attend and participate in the AGM. The Notice of Annual General Meeting sets out the business of the AGM 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 the Manager. The results of proxy voting are relayed to Shareholders after the Resolutions have 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 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 published at least twenty business days before the AGM. 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/migvct6 from where Annual and Interim Reports, Stock Exchange Announcements and other information can be viewed, printed or downloaded. Further information about the Manager can be obtained from www.mavencp.com.
The Statement of Directors' Responsibilities in respect of the Financial Statements is on page 45, the Statement of Going Concern is included in the Directors' Report on page 33, and the Viability Statement can also be found in the Directors' Report on pages 33 and 34. The Independent Auditor's Report is on pages 49 to 53.
By order of the Board Maven Capital Partners UK LLP Secretary
14 July 2017
The Directors are responsible for preparing the Annual Report, Directors' Remuneration 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 FRS 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland. 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 webpages, which are hosted on the Manager's website. 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, is fair, balanced and understandable and provide the information necessary for Shareholders to assess the Company's position and 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
14 July 2017
Under the recommendations of AIFMD, the Company has established a Risk Committee with separate responsibilities from those of the Audit Committee. Both Committees are chaired by Gregor Logan and comprise all independent Directors.
The principal responsibilities of the Audit Committee include:
The Board is satisfied that at least one member of the Committee has recent and relevant financial experience, and that the Audit Committee, as a whole, has competence relevant to the sector in which the Company operates.
The Committee met twice during the year under review, in May and November 2016, and at each Meeting considered the key risks detailed below and the corresponding internal control and risk reports provided by the Manager which included the Company's risk management 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 May 2016, the Committee 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 March 2016, along with the amount of the final dividend for the year then ended. It recommended to the Board that it considered that the 2016 Annual Report and Financial Statements, taken as a whole, was fair, balanced and understandable and provided the information necessary for Shareholders to assess the Company's position and performance, business model and strategy.
Subsequent to this Meeting, and as part of a separate exercise, the Directors considered the performance, tenure and independence of Deloitte LLP (Deloitte) as Auditor, as part of a formal tender process that included two other potential providers and concluded that it was satisfied with the performance of Deloitte and recommended its continued appointment.
At its Meeting in November 2016, the Committee reviewed the Half Yearly Report for the six months ended 30 September 2016 and recommended it for issue to Shareholders.
Subsequent to 31 March 2017, the Committee reviewed the draft Annual Report and Financial Statements for the year ended 31 March 2017, along with the report from the Independent Auditor thereon and the amount of the final dividend for the year then ended. It recommended to the Board that it considered that the 2017 Annual Report and Financial Statements, taken as a whole, was fair, balanced and understandable and provided the information necessary for Shareholders to assess the Company's position and performance, business model and strategy.
It is recognised that the portfolio forms a significant element of the Company's assets and that there are different risks associated with listed and unlisted investments. The primary risk that requires the particular attention of the Committee is that unlisted 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 pages 58 and 59. In accordance with that policy, 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 Audit Committee has considered the assumptions and judgements in relation to the valuation of each quoted and unquoted investment and is satisfied that they are appropriate.
| Investment | % of net assets by value |
Valuation basis |
|---|---|---|
| Quoted | 0.3 | Bid price1 |
| Listed investment trusts |
5.6 | Bid price1 |
| Unlisted | 17.5 | Directors' valuation2 |
| Total investment | 23.4 |
1 London Stock Exchange closing market quote.
2 Directors' valuation represents an independent third party valuation or either of: (i) an earnings multiple basis; (ii) cost; or (iii) a provision against cost where there may be a diminution in value due to a company's underperformance. Where an earnings multiple or cost is not appropriate, or other overriding factors apply, a discounted cash flow or net asset value basis may be applied.
The Committee recommended the investment valuations, representing 23.4% of net assets as at 31 March 2017, to the Board for approval. In addition, the revenue generated from dividend income and loan stock interest has been considered by the Committee on a quarterly basis and the Directors are satisfied that the levels of income recognised are in line with revenue estimates.
As part of its annual review of audit services, the Committee considers the performance, cost effectiveness and general relationship with the Auditor. In addition, the Committee reviews the independence and objectivity of the external auditor. The Company first appointed Deloitte as Auditor for the year ended 31 March 2008. The Independent Auditor's Report is on pages 49 to 53 and it should be noted that Deloitte rotates the Senior Statutory Auditor responsible for the audit every five years. The Senior Statutory Auditor at Deloitte was last changed after the conclusion of the audit for the year ended 31 March 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.
During the year ended 31 March 2017, alongside the other Maven managed VCTs, the Board agreed to put audit services out to tender and, during that process, the Audit Committee considered the FRC Guidance on Audit Tenders and carried out a review of auditors active in the VCT sector. A shortlist comprising three firms was considered and these firms were invited to present to the Audit Committee. One firm withdrew due to other commitments and, accordingly, the shortlist comprised BDO LLP and Deloitte LLP. Both audit firms presented to a representative of the Audit Committee in London in July 2016 and, after careful consideration, the Audit Committee recommended to the Board that Deloitte LLP be re-appointed as Auditor in respect of the audit for the year ended 31 March 2017. This recommendation was based on Deloitte's knowledge of the VCT sector, its particular knowledge of the underlying investee companies and the competitive fee proposed.
The Company has a policy in place for 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' authority to fix the remuneration, of the Auditor at each AGM. 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. 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 2017 AGM.
Under the recommendations of the AIFMD the Company established a Risk Committee, which comprises all of the independent Directors.
The Risk Committee held four Meetings during the year under review. The responsibilities of the Committee are:
• to review the adequacy and effectiveness of the Manager's internal financial controls and internal control and risk management systems and procedures in the context of the Company's overall risk management system;
The Committee will review these terms of reference at least once each year.
The Board of Directors of Maven Income and Growth VCT 6 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 provision 3.6 of the Code. However, as the Directors have delegated the investment management, company secretarial and administrative functions of the Company to Maven, 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 this Annual Report. 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 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 misstatement or loss.
In terms of the assessment of the key risks facing the Company, it is recognised that the investment portfolio forms a material element of its assets. The recognition, ownership and valuation of the investment portfolio is therefore an area of particular attention for 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 pages 58 and 59. As revenue generated from dividend income and loan stock interest is the major source of revenue and a significant item in the Income Statement, another key risk relates to the recognition of investment income and, specifically, that the Company does not recognise income in line with its stated policy. The maintenance of VCT status is another key risk that the Company has to consider and the approach to address each of these key risks is set out below.
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 Auditor. The portfolio is reviewed and verified by the Manager on a regular basis and management accounts, including a full portfolio listing, are considered at the quarterly meetings of the Board. The portfolio is also audited annually by the 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 pages 58 and 59. 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 was also satisfied 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 58. 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 Committee is satisfied that the levels of income recognised are in line with revenue estimates and 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 that required to be addressed.
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 pages 13 and 14.
Gregor Logan Director 14 July 2017
In our opinion the Financial Statements:
The Financial Statements comprise the Income Statement, Statement of Changes in Equity, Balance Sheet, Cash Flow Statement, and the related Notes 1 to 16. 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), including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland".
| Key risks | The key risks that we identified in the current year were: • Valuation of unlisted investments • Existence of listed and unlisted investments • Compliance with VCT regulations |
|---|---|
| Materiality | The materiality that we used in the current year was £464,800 which was determined on the basis of 2% of the net asset value of the Company at year end. |
| Scoping | We continue to design our audit by determining materiality and assessing risks of material misstatement in the Financial Statements. |
| Significant changes in our approach |
Due to recent changes in VCT regulations, we have included a key risk regarding compliance with VCT regulations in the current year. Other than the addition of this key risk, we have not identified any significant changes in the business and environment from the prior year that have resulted in a significant change in our approach. |
As required by the Listing Rules we have reviewed the Directors' statement regarding the appropriateness of the going concern basis of accounting and the Directors' statement on the longer-term viability of the Company contained within the Directors' Report on pages 33 and 34 of this Annual Report.
We are required to state whether we have anything material to add or draw attention to in relation to:
We confirm that we have nothing material to add or draw attention to in respect of these matters.
We agreed with the Directors' adoption of the going concern basis of accounting and we did not identify any such material uncertainties. 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.
We are required to comply with the Financial Reporting Council's Ethical Standards for Auditors and confirm that we are independent of the Company and that we have fulfilled our other ethical responsibilities in accordance with those standards. We confirm that we are independent of the Company and we have fulfilled our other ethical responsibilities in accordance with those standards. We also confirm we have not provided any of the prohibited non-audit services referred to in those standards.
The assessed risks of material misstatement 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.
Within this report, new risks are identified with and risks which are the same as the prior year are identified with .
| Risk description | Refer to Note 1(e) of Accounting Policies on pages 58 and 59 and Note 8 of the Notes to the Financial Statements on page 63. The Company holds unlisted investments that are valued in accordance with the revised International Private Equity and Venture Capital Valuation (IPEVCV) Guidelines. These unlisted investments represent £4.1m or 17% (2016: £3.3m or 27%) of the entity's total net assets. The valuation of the unlisted investments held by the Company is considered a key risk since judgement is required in order to determine the fair value – for example, judgement is required to ascertain the level of maintainable earnings for any given company as well as the multiplier to be applied to investments in different sectors. Under the new VCT regulations, investments are more likely to be in earlier stage companies, with a lack of financial performance history. These valuations are, therefore, exposed to a greater degree of judgement. Due to the prevailing economic conditions in the oil and gas sector, investments with activities in this market have been subject to an increased focus and assessment. |
|---|---|
| How the scope of our audit responded to the risk |
Our testing has included: • assessment of the design and implementation of key controls relating to valuation of unlisted investments; • assessment of the valuation methodology applied for compliance with the IPEVCV review of the assumptions adopted for each unquoted investment; • agreement of the carrying value of the cash acquisition vehicles to supporting bank statements; and • review of a sample of unquoted investee company data (e.g. financial information and capital structures) to supporting documentation. |
| Key observations | Based on our testing and enquiries with management, we conclude that key controls around the valuation of unlisted investments were adequately designed and implemented. We conclude that the unquoted investments sit within a reasonable range of valuations. |
| Risk description | Refer to Note 1(e) of Accounting Policies on pages 58 and 59 and Note 8 of the Notes to the Financial Statements on page 63. The Company holds both listed and unlisted investments. These investments represent £5.5m or 23% (2016: £11.8m or 96%) of the entity's total net assets. The decrease is largely due to sale of Treasury Bills (£8.4m) in the year. The ownership of the listed and unlisted investments held by the Company is considered a key risk since if investments are not recorded in line with the holdings per the loan note certificates or custodian confirmation, this could result in a misstatement of the assets held. |
|---|---|
| How the scope of our audit responded to the risk |
Our testing included: • assessment of the design and implementation of key controls relating to existence of listed and unlisted investments; • obtaining share certificates for unlisted shares and loan notes held by the Manager and reconciling these to the portfolio listing; • agreeing quoted investment ownership to reports from the underlying custodian; and • confirming that the Manager has processes and controls in place to monitor compliance during the year. In addition to the above, we also tested a sample of purchase and sales of investments during the year, which supports our work performed on this key risk. |
| Key observations | Based on our testing, we conclude that key controls around the existence of listed and unlisted investments were adequately designed and implemented. We conclude that the Company has appropriate title of the investments reported in the Financial Statements. |
| Risk description | Refer to the assessment of the VCT Qualifying Status Risk in the Governance Report on page 48. |
|---|---|
| The Company must comply with Section 274 of the Income Tax Act 2007 to maintain VCT status. Failure to comply would result in the VCT losing its corporation tax exemption on chargeable gains, with investors' gains also no longer being exempt from income tax. |
|
| The VCT rule changes have become increasingly more complex to administer, with close monitoring required of the use of monies and monitoring of qualifying or non-qualifying investments. |
|
| How the scope | Our testing included: |
| of our audit responded to the risk |
• assessment of the design and implementation of key controls relating to monitoring compliance with VCT regulations, including new controls and processes in place over the pre-trade identification of qualifying investments and the ongoing review of VCT Section 274 compliance; |
| • reviewing the year-end compliance statement to assess whether the Company satisfies the Income Tax Act 2007 Section 274 criteria at the year end and for all other quarter-ends in the year and for consistency with the investments holding of the Company; and |
|
| • reviewing whether each of the criteria that must be met to retain VCT status have been complied with through re-performance of the relevant calculations and review of the qualifying investment listings. |
|
| Key observations | Based on our testing and enquiries with management, we conclude that controls in place to monitor the compliance with VCT regulations were adequately designed and implemented. We noted no issues to report on the Company's compliance with the VCT regulations. |
These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We define materiality as the magnitude of misstatement 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 audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows:
| Materiality | £464,800 (2016: £246,000) |
|---|---|
| Basis for determining materiality |
2% of net asset value (2016: 2% of net asset value). |
| Rationale for the benchmark applied |
Net asset value is the primary measure used by the Shareholders in assessing the performance of the Company, and this is a generally accepted auditing benchmark used for companies in this industry. |
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £9,000 (2016: £4,900), 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 misstatement. Audit work to respond to the risks of material misstatement was performed directly by the audit engagement team.
In our opinion, based on the work undertaken in the course of the audit:
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified any material misstatements in the Strategic Report and the Directors' Report.
| Adequacy of explanations received and accounting records Under the Companies Act 2006 we are required to report to you if, in our opinion: |
We have nothing to report in respect of |
|---|---|
| • we have not received all the information and explanations we require for our audit; or |
these matters. |
| • adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or |
|
| • the Financial Statements are not in agreement with the accounting records and returns. |
|
| Directors' remuneration 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. |
| Corporate Governance Statement Under the Listing Rules we are also required to review part of the Corporate Governance Statement relating to the Company's compliance with certain provisions of the UK Corporate Governance Code. |
We have nothing to report arising from our review. |
| Our duty to read other information in the Annual Report Under International Standards on Auditing (UK and Ireland), we are required to report to you if, in our opinion, information in the Annual Report is: • materially inconsistent with the information in the audited Financial Statements; or |
We confirm that we have not identified any such inconsistencies or misleading statements. |
| • apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Company acquired in the course of performing our audit; or |
|
| • otherwise misleading. |
|
| 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. |
As explained more fully in the Statement of Directors' Responsibilities, 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). 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, for this report, 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 misstatement, 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 consistently applied 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 nonfinancial 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 misstatements or inconsistencies we consider the implications for our report.
Andrew Partridge CA (Senior Statutory Auditor) for and on behalf of Deloitte LLP Statutory Auditor Glasgow, United Kingdom
14 July 2017
| Income Statement | 55 |
|---|---|
| Statement of Changes in Equity | 55 |
| Balance Sheet | 56 |
| Cash Flow Statement | 57 |
| Notes to the Financial Statements | 58 |
For the Year Ended 31 March 2017
| Notes | Revenue £'000 |
Year ended 31 March 2017 Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Year ended 31 March 2016 Total £'000 |
|
|---|---|---|---|---|---|---|---|
| Gains on investments | 8 | - | 241 | 241 | - | 274 | 274 |
| Income from investments | 2 | 142 | - | 142 | 211 | - | 211 |
| Other income | 2 | 7 | - | 7 | - | - | - |
| Investment management fees | 3 | (75) | (300) | (375) | (29) | (114) | (143) |
| Other expenses | 4 | (181) | - | (181) | (101) | - | (101) |
| Net return on ordinary activities before taxation | (107) | (59) | (166) | 81 | 160 | 241 | |
| Tax on ordinary activities | 5 | - | - | - | (12) | 12 | - |
| Return attributable to Equity Shareholders | 7 | (107) | (59) | (166) | 69 | 172 | 241 |
| Earnings per share (pence) | (0.37) | (0.21) | (0.58) | 0.84 | 2.10 | 2.94 |
All gains and losses are recognised in the Income Statement.
All items in the above statement are derived from continuing operations. The Company has only one class of business and one reportable segment, the results of which are set out in the Income Statement and Balance Sheet. The Company derives its income from investments made in shares, securities and bank deposits.
There are no potentially dilutive capital instruments in issue and therefore no diluted returns per share figures are relevant. The basic and diluted earnings per share are therefore identical.
The total column of this statement is the Profit and Loss Account of the Company.
For the Year Ended 31 March 2017
| Notes | Share capital £'000 |
Share premium account £'000 |
Capital reserve realised £'000 |
Capital reserve unrealised £'000 |
Special distributable redemption reserve £'000 |
Capital reserve £'000 |
Revenue reserve £'000 |
Total £'000 |
|
|---|---|---|---|---|---|---|---|---|---|
| At 31 March 2016 | 2,078 | 6,784 | (1,189) | 309 | 2,257 | 2,919 | (857) 12,301 | ||
| Net return | - | - | (57) | (2) | - | - | (107) | (166) | |
| Dividends paid | 6 | - | - | - | - | - | - | (71) | (71) |
| Repurchase and cancellation of shares | 12 | (40) | - | - | - | (211) | 40 | - | (211) |
| Share issue | 12 | 1,965 | 9,618 | - | - | - | - | - | 11,583 |
| Cancellation of share premium account | - | (10,538) | - | - | 10,538 | - | - | - | |
| Cancellation of capital redemption reserve | - | - | - | - | 2,919 | (2,919) | - | - | |
| Costs relating to cancellation of | |||||||||
| share premium account and capital | |||||||||
| redemption reserve | - | - | - | - | (15) | - | - | (15) | |
| At 31 March 2017 | 4,003 | 5,864 | (1,246) | 307 | 15,488 | 40 | (1,035) 23,421 | ||
| For the year ended 31 March 2016 | Notes | Share capital £'000 |
Share premium account £'000 |
Capital reserve realised £'000 |
Capital reserve unrealised £'000 |
Special distributable redemption reserve £'000 |
Capital reserve £'000 |
Revenue reserve £'000 |
Total £'000 |
| At 31 March 2015 | 3,617 | 53 | (1,327) | 381 | 2,389 | - | (926) | 4,187 | |
| Net return | - | - | 244 | (72) | - | - | 69 | 241 | |
| Dividends paid | 6 | - | - | (106) | - | - | - | - | (106) |
| Repurchase and cancellation of shares | 12 | (130) | - | - | - | (132) | 130 | - | (132) |
| Share capital reconstruction | 12 | (2,789) | - | - | - | - | 2,789 | - | - |
Share issue 12 1,380 6,731 - - - - - 8,111 At 31 March 2016 2,078 6,784 (1,189) 309 2,257 2,919 (857) 12,301
The accompanying Notes are an integral part of the Financial Statements.
As at 31 March 2017
| Notes | 31 March 2017 £'000 |
31 March 2016 £'000 |
|
|---|---|---|---|
| Fixed assets | |||
| Investments at fair value through profit or loss | 8 | 5,478 | 11,801 |
| Current assets | |||
| Debtors | 10 | 60 | 43 |
| Cash | 18,129 | 507 | |
| 18,189 | 550 | ||
| Creditors | |||
| Amounts falling due within one year | 11 | 246 | 50 |
| Net current assets | 17,943 | 500 | |
| Net assets | 23,421 | 12,301 | |
| Capital and reserves | |||
| Called up share capital | 12 | 4,003 | 2,078 |
| Share premium account | 13 | 5,864 | 6,784 |
| Capital reserve - realised | 13 | (1,246) | (1,189) |
| Capital reserve - unrealised | 13 | 307 | 309 |
| Special distributable reserve | 13 | 15,488 | 2,257 |
| Capital redemption reserve | 13 | 40 | 2,919 |
| Revenue reserve | 13 | (1,035) | (857) |
| Net assets attributable to Ordinary Shareholders | 23,421 | 12,301 | |
| Net Asset Value per Ordinary Share (pence) | 14 | 58.51 | 59.21 |
The Financial Statements of Maven Income and Growth VCT 6 PLC, registered number 3870187, were approved by the Board and were signed on its behalf by:
Brian May Director 14 July 2017
The accompanying Notes are an integral part of the Financial Statements.
For the Year Ended 31 March 2017
| Notes | Year ended 31 March 2017 £'000 |
Year ended 31 March 2016 £'000 |
|---|---|---|
| Net cash flow from operating activities 15 |
(574) | (230) |
| Cash flows from investing activities | ||
| Investment income received | 125 | 222 |
| Deposit interest received | 7 | - |
| Purchase of investments | (2,069) | (11,035) |
| Sale of investments | 8,847 | 2,884 |
| Net cash flows from investing activities | 6,910 | (7,929) |
| Cash flows from financing activities | ||
| Equity dividends paid 6 |
(71) | (106) |
| Issue of Ordinary Shares | 11,583 | 8,111 |
| Repurchase of Ordinary Shares | (211) | (132) |
| Costs relating to cancellation of share premium account |
(15) | - |
| Net cash flows from financing activities | 11,286 | 7,873 |
| Increase/(decrease) in cash | 17,622 | (286) |
| Cash at beginning of year | 507 | 793 |
| Cash at end of year | 18,129 | 507 |
The accompanying Notes are an integral part of the Financial Statements.
For the Year Ended 31 March 2017
The Financial Statements have been prepared under FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland, and in accordance with the Statement of Recommended Practice for Investment Trust Companies and Venture Capital Trusts (the SORP) issued by the Association of Investment Companies (AIC) in November 2014.
Dividends receivable on equity shares and unit trusts are treated as revenue for the period on an ex-dividend basis. Where no ex-dividend date is available dividends receivable on or before the year end are treated as revenue for the period. Provision is made for any dividends not expected to be received. The fixed returns on debt securities and non-equity shares are recognised on a time apportionment basis so as to reflect the effective interest rate on the debt securities and shares. Provision is made for any fixed income not expected to be received. Interest receivable from cash and short term deposits and interest payable are accrued to the end of the year.
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 (IPEVCV) for the valuation of private equity and venture capital investments. Investments are recognised at their trade date and are designated by the Directors as fair value through profit and loss. At subsequent reporting dates, investments are valued at fair value, which represents the Directors' view of the amount for which an asset could be exchanged between knowledgeable and willing parties in an arm's length transaction. This does not assume that the underlying business is saleable at the reporting date or that its current shareholders have an intention to sell their holding in the near future.
A financial asset or liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires.
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.
Disclosure is required of judgements and estimates made by the Board and the Manager in applying the accounting policies that have a significant effect on the financial statements. The area involving the highest degree of judgement and estimates is the valuation of unlisted investments recognised in Note 8 and explained in note 1 (e) above.
| 2. Income | Year ended 31 March 2017 £'000 |
Year ended 31 March 2016 £'000 |
|---|---|---|
| Income from investments: | ||
| UK franked investment income | 13 | 21 |
| UK unfranked investment income | 129 | 190 |
| 142 | 211 | |
| Other income: | ||
| Deposit interest | 7 | - |
| Total income | 149 | 211 |
| 3. Investment management fees | Year ended 31 March 2017 | Year ended 31 March 2016 | ||||
|---|---|---|---|---|---|---|
| Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
| Investment management fees | 74 | 298 | 372 | 20 | 80 | 100 |
| Performance fees | 1 | 2 | 3 | 12 | 48 | 60 |
| VAT reclaim on performance fees | - | - | - | (3) | (14) | (17) |
| 75 | 300 | 375 | 29 | 114 | 143 |
Details of the fee basis are contained in the Directors' Report on page 35.
| 4. Other expenses | Revenue £'000 |
Year ended 31 March 2017 Capital £'000 |
Total £'000 |
Revenue £'000 |
Year ended 31 March 2016 Capital £'000 |
Total £'000 |
|---|---|---|---|---|---|---|
| Secretarial fees | 50 | - | 50 | 30 | - | 30 |
| VAT reclaim on secretarial fees | - | - | - | (28) | - | (28) |
| Directors' remuneration | 38 | - | 38 | 17 | - | 17 |
| Fees to Auditor - audit services | 11 | - | 11 | 11 | - | 11 |
| Fees to Auditor - tax compliance services | 3 | - | 3 | 3 | - | 3 |
| Bad debts written off | 5 | - | 5 | - | - | - |
| Miscellaneous expenses | 74 | - | 74 | 68 | - | 68 |
| 181 | - | 181 | 101 | - | 101 |
| 5. Tax on ordinary activities | Year ended 31 March 2017 | Year ended 31 March 2016 | ||||
|---|---|---|---|---|---|---|
| Revenue | Capital | Total | Revenue | Capital | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Corporation tax | - | - | - | (12) | 12 | - |
The tax assessed for the period is 20% (2016: 20%).
| Year ended 31 March 2017 | Year ended 31 March 2016 | |||||
|---|---|---|---|---|---|---|
| Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
| Return on ordinary activities before tax | (107) | (59) | (166) | 81 | 160 | 241 |
| Revenue return on ordinary activities multiplied by standard rate of corporation tax |
(21) | (12) | (33) | 16 | 32 | 48 |
| Non taxable UK dividend income | (3) | - | (3) | (4) | - | (4) |
| Gains on investments | - | (48) | (48) | - | (55) | (55) |
| Increase in excess management expenses | 24 | 60 | 84 | - | 11 | 11 |
| - | - | - | 12 | (12) | - |
The Company has not recognised a deferred tax asset of £382,511 (2016: £306,813) arising as a result of having unutilised management expenses. It is unlikely that the Company will obtain relief for these in the future, so no deferred tax asset has been recognised.
| 6. Dividends | Year ended 31 March 2017 £'000 |
Year ended 31 March 2016 £'000 |
|---|---|---|
| Revenue dividends | ||
| Final revenue dividend for year ended 31 March 2016 of 0.25p (2015: Nil) paid on 9 September 2016 |
71 | - |
| 71 | - | |
| Capital dividends | ||
| Final capital dividend for year ended 31 March 2016 of Nil (2015: 0.70p) |
- | 50 |
| Interim capital dividend for year ended 31 March 2017 of Nil (2016: 0.80p) |
- | 56 |
| - | 106 | |
| 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. |
||
| Revenue available for distribution by way of dividends for the year |
(107) | 69 |
| Revenue dividends | ||
| Final revenue dividend proposed for the year ended 31 March 2017 of Nil (2016: 0.25p) |
- | 52 |
| - | 52 | |
| Capital dividends | ||
| Final capital dividend proposed for the year ended 31 March 2017 of 0.25p (2016: Nil) payable on 8 September 2017 |
100 | - |
| 100 | - |
| 7. Return per Ordinary Share | Year ended 31 March 2017 | Year ended 31 March 2016 |
|---|---|---|
| The returns per share have been based on the following figures: | ||
| Weighted average number of Ordinary Shares | 28,546,015 | 8,175,723 |
| Revenue return | (£107,000) | £69,000 |
| Capital return | (£59,000) | £172,000 |
| Total return | (£166,000) | £241,000 |
| 8. Investments | Year ended 31 March 2017 | |||
|---|---|---|---|---|
| Listed (quoted prices) £'000 |
Unlisted (unobservable inputs) £'000 |
AIM/ISDX (quoted prices) £'000 |
Total £'000 |
|
| Valuation at 31 March 2016 | 8,389 | 3,316 | 96 | 11,801 |
| Unrealised (gain)/loss | (7) | (640) | 338 | (309) |
| Cost at 31 March 2016 | 8,382 | 2,676 | 434 | 11,492 |
| Movements during the year: | ||||
| Purchases | 1,250 | 1,033 | - | 2,283 |
| Sales proceeds | (8,402) | (445) | - | (8,847) |
| Realised gain | 20 | 223 | - | 243 |
| Cost at 31 March 2017 | 1,250 | 3,487 | 434 | 5,171 |
| Unrealised gain/(loss) | 69 | 598 | (360) | 307 |
| Valuation at 31 March 2017 | 1,319 | 4,085 | 74 | 5,478 |
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 102 Section 11 "Basic Financial Instruments". Listed and AIM/ISDX securities are categorised as Level 1 and unlisted investments as Level 3.
FRS 102 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 the 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 valuation of the unlisted portfolio.
| The portfolio valuation Held at market valuation: |
31 March 2017 £'000 |
31 March 2016 £'000 |
|---|---|---|
| Listed investments | 6 | 7 |
| Investment trusts | 1,313 | - |
| AIM/ISDX quoted equities | 74 | 96 |
| UK treasury bills | - | 8,382 |
| 1,393 | 8,485 | |
| Unlisted at Directors' valuation: | ||
| Unlisted unobservable equities | 2,215 | 1,468 |
| Unlisted unobservable fixed income | 1,870 | 1,848 |
| 4,085 | 3,316 | |
| Total | 5,478 | 11,801 |
| Realised gains on historical basis | 243 | 346 |
| Movement in net unrealised gains | (2) | (72) |
| Gains on investments | 241 | 274 |
The principal activity of the Company is to select and hold a portfolio of investments in listed and unlisted 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 the management. The size and structure of companies with unlisted 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 March 2017, the Company held no shares amounting to 20% or more of the equity capital of any of the unlisted or quoted undertakings. The Company does hold shares or units amounting to more than 3% or more of the nominal value of the allotted shares or units of any class in certain investee companies.
Details of equity percentages held are shown in the Investment Portfolio Summary on pages 30 and 31.
| 10. Debtors | 31 March 2017 £'000 |
31 March 2016 £'000 |
|---|---|---|
| Prepayments and accrued income | 59 | 42 |
| Current taxation | 1 | 1 |
| 60 | 43 |
| 11. Creditors | 31 March 2017 | 31 March 2016 |
|---|---|---|
| £'000 | £'000 | |
| Accruals | 32 | 50 |
| Other creditors | 214 | - |
| 246 | 50 |
| 12. Share capital | Number | 31 March 2017 £'000 |
Number | 31 March 2016 £'000 |
|---|---|---|---|---|
| At 31 March 2017, the authorised share capital comprised: allotted, issued and fully paid: Ordinary Shares of 10p each |
||||
| Balance brought forward | 20,775,100 | 2,078 | 7,232,852 | 3,617 |
| Repurchased during the year | (400,000) | (40) | (260,000) | (130) |
| Share Capital Reconstruction | - | - | 6,972,852 | (2,789) |
| Repurchase of Deferred Shares | - | - | (6,972,852) | - |
| Issued during the year | 19,656,961 | 1,965 | 13,802,248 | 1,380 |
| 40,032,061 | 4,003 | 20,775,100 | 2,078 |
During the year, 400,000 Ordinary Shares (2016: 260,000 Ordinary Shares and 6,972,852 Deferred Ordinary Shares) were repurchased by the Company at a cost of £211,005 (2016: £131,655 for Ordinary Shares and £0.01 for Deferred Ordinary Shares).
During the year, the Company issued 19,656,961 Ordinary Shares (2016: 13,802,248) pursuant to Offers for Subscription at Subscription Prices ranging from 58.76p to 62.00p per share (2016: 58.90p to 61.00p).
On 6 April 2017, the Company issued a further 1,369,971 Ordinary Shares pursuant to an Offer for Subscription at Subscription Prices ranging from 58.76p to 59.81p.
The share premium account represents the premium above nominal value received by the Company on issuing shares net of issue costs.
Gains or losses on investments realised in the year that have been recognised in the Income Statement are transferred to the capital reserve realised account on disposal. Furthermore, any prior unrealised gains or losses on such investments are transferred from the capital reserve unrealised account to the capital reserve realised account on disposal.
Increases and decreases in the fair value of investments are recognised in the Income Statement and are then transferred to the capital reserve unrealised account. The capital reserve realised account also represents capital dividends, capital investment management fees and the tax effect of capital items.
The total cost to the Company of the repurchase and cancellation of shares is represented in the special distributable reserve account.
The nominal value of shares repurchased and cancelled is represented in the capital redemption reserve.
The revenue reserve represents accumulated profits retained by the Company that have not been distributed to Shareholders as a dividend.
| 14. Net asset value per share | Net asset | 31 March 2017 Net asset |
Net asset | 31 March 2016 Net asset |
|---|---|---|---|---|
| value per | value | value per | value | |
| share p |
attributable £'000 |
share p |
attributable £'000 |
|
| Ordinary Shares | 58.51 | 23,421 | 59.21 | 12,301 |
The number of Ordinary Shares used in this calculation is set out in Note 12.
| 15. Reconciliation of Net Return to Cash Utilised by Operations |
Year ended 31 March 2017 £'000 |
Year ended 31 March 2016 £'000 |
|---|---|---|
| Net return | (166) | 241 |
| Adjustment for: | ||
| Gains on investments | (241) | (274) |
| Income from investment | (142) | (211) |
| Other income | (7) | - |
| Operating cash flow before movement in working capital |
(556) | (244) |
| Decrease in prepayments | - | 2 |
| (Decrease)/increase in accruals | (18) | 12 |
| Cash utilised by operations | (574) | (230) |
The Company's financial instruments comprise equity and fixed interest investments, financial commitments and guarantees, 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/ISDX quoted securities. The Company may not enter into derivative transactions in the form of forward foreign currency contracts, futures and options without the written approval of the Directors. It is not the Company's policy to enter into derivative transactions.
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 rate or currency movement; (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 mainly sterling currency securities and therefore foreign currency risk is minimal.
The Manager's policies for managing these risks are summarised below and have been applied throughout the year. 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. Adherence to investment guidelines and to investment and borrowing powers set out in the Management & Administration Deed 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 number of companies across a range of industrial and service sectors at varying stages of development, to closely monitor the progress of the investee companies and to appoint a nonexecutive director to the board of each company. Further information on the investment portfolio (including sector analysis, concentration and deal type analysis) is set out in the Analysis of Unlisted and Quoted Portfolio, the Investment Manager's Review, the Investment Portfolio Summary and the Largest Investments by Valuation.
The interest rate risk profile of financial assets at the balance sheet date was as follows:
| At 31 March 2017 | Fixed interest £'000 |
Floating rate £'000 |
Non-interest bearing £'000 |
|---|---|---|---|
| Sterling | |||
| Unlisted and AIM/ISDX | 1,870 | - | 2,295 |
| Investment trusts | - | - | 1,313 |
| Cash | - | 18,129 | - |
| 1,870 | 18,129 | 3,608 |
| At 31 March 2016 | Fixed interest £'000 |
Floating rate £'000 |
Non-interest bearing £'000 |
|---|---|---|---|
| Sterling | |||
| Unlisted and AIM/ISDX | 1,848 | - | 1,571 |
| UK treasury bills | - | - | 8,382 |
| Cash | - | 507 | - |
| 1,848 | 507 | 9,953 |
The unlisted fixed interest assets have a weighted average life of 1.23 years (2016: 1.86 years) and a weighted average interest rate of 8.10% (2016: 7.61%). The floating rate assets consist of cash. These assets are earning interest at prevailing money market rates. The non-interest bearing assets represent the equity element of the portfolio. All assets and liabilities of the Company are included in the Balance Sheet at fair value.
The maturity profile of the Company's financial assets at the balance sheet date was as follows:
| At 31 March 2017 | Within 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 |
|---|---|---|---|---|---|---|
| Unlisted | 1,226 | 81 | 364 | 199 | - | 1,870 |
| 1,226 | 81 | 364 | 199 | - | 1,870 |
| At 31 March 2016 | Within 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 | 8,382 | - | - | - | - | 8,382 |
| Unlisted | 1,076 | 316 | 103 | 353 | - | 1,848 |
| 9,458 | 316 | 103 | 353 | - | 10,230 |
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 March 2017 in valuing the Company's investments carried at fair value.
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 March 2017 £'000 |
31 March 2016 £'000 |
|
|---|---|---|
| Investments in unlisted debt securities | 1,870 | 1,848 |
| UK treasury bills | - | 8,382 |
| Investment trusts | 1,313 | - |
| Cash | 18,129 | 507 |
| 21,312 | 10,737 |
All fixed interest assets which are traded on a recognised exchange and all the Company's cash balances are held by JPM Chase (JPM), the Company's custodian and Clydesdale Bank. Should the credit quality or the financial position of JPM and Clydesdale Bank 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 March 2017 or 31 March 2016.
The following details the Company's sensitivity to a 10% increase and decrease in the market prices, with 10% being the Manager's assessment of a reasonable possible change in market prices.
At 31 March 2017, if market prices of AIM/ISDX quoted securities had been 10% higher or lower with all other variables held constant, the increase or decrease in net assets attributable to Ordinary Shareholders for the year would have been £8,000 (2016: £10,300), due to the change in valuation of financial assets at fair value through profit or loss.
At 31 March 2017, 17.5% (2016: 26.9%) comprised investments in unquoted companies held at fair value. 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.
| Notice of Annual General Meeting | 70 |
|---|---|
| Explanatory Notes to the Notice of Annual General Meeting |
76 |
| Your Notes | 77 |
Notice is hereby given that the Annual General Meeting of Maven Income and Growth VCT 6 PLC (the Company; Registered in England and Wales with registered number 3870187) will be held at 10.00 am on Wednesday 30 August 2017 at 5th Floor 1-2 Royal Exchange Buildings, London EC3V 3LF, for the purposes of considering and, if thought fit, passing the following Resolutions:
b) (other than under paragraph (a) above) of equity securities up to an aggregate nominal amount not exceeding £414,020 (equivalent to 4,140,200 Ordinary Shares); and shall expire at the conclusion of the next Annual General Meeting of the Company or on the expiry of 15 months from the passing of this Resolution, whichever is the first to occur, so that the Company may, before such expiry, make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such offer or agreement as if the power conferred hereby had not expired.
By order of the Board Maven Capital Partners UK LLP Secretary Fifth Floor 1-2 Royal Exchange Buildings London EC3V 3LF
14 July 2017
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 10.00 am on 25 August 2017 (or, if the Meeting is adjourned, close of business 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 Act, is available from www.mavencp.com/migvct6.
3) If you wish to attend the Meeting in person, please bring some form of identification.
8) A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the Resolution. If no voting indication is given, your proxy will vote or abstain from voting at his 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 10.00 am on 25 August 2017 or by close of business 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) You may submit your proxy electronically using the Share Portal service at www.capitashareportal.com. Shareholders can use this service to vote or appoint a proxy online. The same voting deadline of 48 hours (excluding non-working days) before the time of the meeting applies as if you were using your Personalised Voting Form to vote or appoint a proxy by post to vote for you. Shareholders will need to use the unique personal identification Investor Code printed on your share certificate. Shareholders should not show this information to anyone unless they wish to give proxy instructions on their behalf.
11) 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 25 August 2017. 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.
12) 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.
13) 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 hardcopy 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.
14) 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.
15) 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.
16) As at 7 July 2017, the Company's issued share capital comprised 41,402,032 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 7 July 2017 is 41,402,032. The website referred to in note 2 will include information on the number of shares and voting rights.
19) In order to be able to exercise the members' rights under notes 18, 24 and/or 25, 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 16 above and the website referred to in note 2.
22) 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 and at Kintyre House, 205 West George Street, Glasgow G2 2LW from the date of this notice until the end of the Meeting.
Registered in England and Wales: Company Number 3870187
An explanation of the Resolutions to be proposed at the AGM is set out below. Resolutions 1 to 9 will be proposed as Ordinary Resolutions requiring the approval of more than 50% of the votes cast and Resolutions 10 to 12 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 March 2017, which are included within the Annual Report.
The Board seeks the approval of the Directors' Remuneration Report for the year ended 31 March 2017, which is also included within the Annual Report.
The Board seeks the approval of its remuneration policy to be applied during the three-year period ending 31 March 2020.
The Company's Shareholders will be asked to approve a final dividend of 0.25p per Ordinary Share for the year ended 31 March 2017 for payment on 8 September 2017 to Shareholders on the register at the close of business on 11 August 2017.
Brian May retires annually in accordance with corporate governance best practice and, being eligible, is offering himself for re-election.
Bill Nixon, as a non-independent Director, retires annually in accordance with corporate governance best practice and, being eligible, is offering himself for re-election.
Shareholders will be asked to approve the re-appointment of Deloitte LLP as the Company's Auditor; Deloitte LLP having expressed their willingness to remain in office.
Shareholders will be asked to give the Directors' authority to fix the remuneration of Deloitte LLP.
The Directors are seeking authority pursuant to Section 551 of the Act for the Company to allot Ordinary Shares or rights to subscribe for Ordinary Shares up to an aggregate nominal value of £414,020. This amounts to 4,140,200 Ordinary Shares representing approximately 10% of the issued share capital as at 7 July 2017 (this being the latest practicable date prior to the publication of this Annual Report). This authority will be used for the purposes set out in Resolution 9.
The authority conferred by Resolution 9 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.
Shareholders will be asked to grant authority to the Directors to allot Ordinary Shares: (i) on a pre-emptive basis to existing Shareholders as far as possible, subject to excluding circumstances where it is impractical to apply the strict prorating; and (ii) otherwise allot Ordinary Shares or rights to subscribe for Ordinary Shares up to an aggregate nominal value of £414,020 (representing, in accordance with institutional investor guidelines, approximately 10% of the issued share capital as at 7 July 2017, this being the latest practicable date prior to the publication of this Annual Report) as if the pre-emption rights of Section 561 of the Act did not apply, in each case where the proceeds may be used in whole or part to purchase existing Ordinary Shares. The authority conferred by Resolution 10 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.
The Board may use the authorities conferred under Resolutions 9 and 10 to allot further Ordinary Shares or rights to subscribe for them.
Shareholders will be asked to authorise the Company to make market purchases of up to 6,206,164 Ordinary Shares (representing approximately 14.99% of the issued share capital as at 7 July 2017, this being the latest practicable date prior to the publication of this Annual Report). The Resolution sets out the minimum and maximum prices that can be paid, exclusive of expenses, and Ordinary Shares bought back may be cancelled or held in treasury as may be determined by the Board. The authority conferred by Resolution 11 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. Once held in treasury, such Ordinary Shares may be sold for cash or cancelled. The Board may use this authority to allow the Company to continue to operate a share buy-back policy.
The Directors propose to preserve the Company's ability to call general meetings (other than annual general meetings) on 14 clear days' notice, as previously approved by Shareholders at the last Annual General Meeting. Resolution 12 seeks such approval and would be effective until the Company's next Annual General Meeting when it would be intended that a similar Resolution be proposed. It is anticipated that, if confirmed, such authority will only be used in 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 Brian May (Chairman) Fraser Gray Gregor Logan Bill Nixon 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 Fifth Floor 1-2 Royal Exchange Buildings London EC3V 3LF Registered in England and Wales Company Registration Number: 3870187 Website www.mavencp.com/migvct6 Registrars Capita Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Website: www.capitaassetservices.com Shareholder Portal: www.signalshares.com Shareholder Helpline: 0333 300 1566 (Lines are open 9 am until 5.30 pm, Monday to Friday excluding public holidays in England and Wales. Calls are charged at the standard geographic rate and will vary by provider. Calls from outside the United Kingdom should be made to +44 208 639 3399 and 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 VCT Adviser Philip Hare & Associates LLP |
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|---|---|
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
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