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Maven IncGw VCT 6 (MIG6)

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Friday 14 July, 2017

Maven IncGw VCT 6

Annual Financial Report

RNS Number : 1604L
Maven Income and Growth VCT 6 PLC
14 July 2017
 

Maven Income and Growth VCT 6 PLC

 

The Directors announce the final results for the year ended 31 March 2017.

 

Highlights for the year

 

•      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.

 

Chairman's Statement

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.

 

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 in the 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.

 

Dividends

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.

 

Fund Raising

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 over- allotment 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 over- allotment 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 in the Annual Report.

 

Share Buy-backs

Shareholders should be aware that the Board's primary objective is for the Company to retain sufficient liquid assets 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.

 

Regulatory Developments

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.

 

Board of Directors

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 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

 

 

 

Business Report

 

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

 

Investment Objective

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

 

Business Model and Investment Policy

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

 

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

 

•      investing no more than £1 million in any company in one year and no more than 15% of the Company's assets by cost in one business at any time; and

 

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

 

Principal Risks and Uncertainties

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

 

Investment Risk

Many of the Company's investments are in small and medium sized unlisted and AIM/ISDX quoted companies, 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:

 

•      diversifying across a large number of companies;

 

•      diversifying across a range of economic sectors;

 

•      investing selectively, and predominantly in businesses with established profitability;

 

•      actively and closely monitoring the progress of investee companies;

 

•      seeking to appoint a non-executive director to the board of each private investee company, provided from the Manager's investment management team or from its pool of experienced independent directors;

 

•      co-investing with other funds run by the Manager in larger deals, which tend to carry less risk;

 

•      not investing in hostile public to private transactions; and

 

•      retaining the services of a manager that can provide the resources required to achieve the investment objective and meet the criteria stated above.

 

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

 

Financial and Liquidity Risk

As most of the investments require a medium to long term commitment and are relatively illiquid, the Company retains a portion of the portfolio in cash 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.

 

Economic Risk

The valuation of investment companies may be affected by underlying economic conditions such as fluctuating interest rates and the availability of bank finance.



 

Credit Risk

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

 

Internal Control Risk

The Board reviews regularly the system of internal controls, both financial and non-financial, operated by the Company and the Manager. These include controls designed to ensure that the Company's assets are safeguarded and that all records are complete and accurate.

 

VCT Qualifying Status Risk

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

 

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

 

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

 

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

 

•      increased investment restrictions resulting from the EU State Aid Rules enacted through the Finance Act (No. 2) 2015.

 

Legislative and Regulatory Risk

In order to maintain its approval as a VCT, the Company is required to comply with current VCT legislation in the UK as well as the EU State Aid Rules. Changes in 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.

 

Political Risk

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 in the Annual Report.

 

Statement of Compliance with Investment Policy

The Company is adhering to its stated investment policy and managing the risks arising from it. This can be seen in various tables and charts throughout the Annual Report, and from information provided in the Chairman's Statement and 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 in the Annual Report discloses the investments in the portfolio and the degree of co-investment with other clients of the Manager. The tabular analysis of the unlisted and quoted portfolio in the Annual Report shows that the portfolio is diversified across a variety of sectors and deal types. The level of VCT qualifying investment is monitored by the Manager on a daily basis and reported to the Risk Committee quarterly.

 

Key Performance Indicators

At each Board Meeting the Directors consider a number of financial performance measures to assess the Company's success in achieving its objectives, and these also enable Shareholders and investors to gain an understanding of its business. The key performance indicators are as follows:

 

•      NAV total return;

 

•      dividend history;

 

•      share price discount to NAV;

 

•      investment income; and

 

•      operational expenses.

 

The NAV total return is a measure of the current NAV per share and dividends paid to date. The dividend 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 in the Annual Report and the profile of the portfolio is reflected in the Summary of Investment Changes in the Annual Report. The Board reviews the Company's investment income and operational expenses on a quarterly basis as the Directors consider that both of these elements are important components in the generation of Shareholder returns.

 

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.

 

Valuation Process

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.

 

Share Buy-backs

The Board will seek the necessary Shareholder authority to conduct a share buy-back programme under appropriate circumstances.

 

Employee, Environmental and Human Rights Policy

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

 

Independent Auditor

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

 

Future Strategy

The Board and 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.

 

Approval

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

 

 



 

Income Statement

For the Year Ended 31 March 2017

 



Year ended 31 March 2017


Year ended 31 March 2016


Revenue

£'000

 

Capital

£'000

Total

£'000

Revenue

£'000

 

Capital

£'000

Total

£'000

Gains on investments

-

241

241

-

274

274

Income from investments

142

-

142

211

-

211

Other income

7

-

7

-

-

-

Investment management fees

(75)

(300)

(375)

(29)

(114)

(143)

Other expenses

(181)

-

(181)

(101)

-

(101)

Net return on ordinary activities before taxation

(107)

(59)

(166)

81

160

241

Tax on ordinary activities

-

-

-

(12)

12

-

Return attributable to Equity   Shareholders

(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.

 

Statement of Changes in Equity

 

For the Year Ended 31 March 2017


 

Share   

capital

£'000

Share premium account

£'000

Capital reserve realised

£'000

Capital

reserve unrealised

£'000

Special distributable

reserve

£'000

Capital redemption

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

-

-

-

-

-

-

(71)

(71)

Repurchase and cancellation of shares

(40)

-

-

-

(211)

40

-

(211)

Share issue

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


 

Share capital

£'000

Share premium account

£'000

Capital reserve realised

£'000

Capital reserve unrealised

£'000

Special distributable

reserve

£'000

Capital redemption

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

-

-

(106)

-

-

-

-

(106)

Repurchase and cancellation of shares

(130)

-

-

-

(132)

130

-

(132)

Share capital reconstruction

(2,789)

-

-

-

-

2,789

-

-

Share issue

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.

 

Balance Sheet

As at 31 March 2017

 

 

 

31 March 2017

£'000

31 March 2016

£'000

Fixed assets



Investments at fair value through profit or loss

5,478

11,801

 

Current assets



Debtors

60

43

Cash

18,129

507


18,189

550

Creditors



Amounts falling due within one year

246

50

Net current assets

17,943

500

Net assets

23,421

12,301

 

Capital and reserves



Called up share capital

4,003

2,078

Share premium account

5,864

6,784

Capital reserve - realised

(1,246)

(1,189)

Capital reserve - unrealised

307

309

Special distributable reserve

15,488

2,257

Capital redemption reserve

40

2,919

Revenue reserve

(1,035)

(857)

Net assets attributable to Ordinary Shareholders

23,421

12,301

 

Net asset value per Ordinary Share (pence)

 

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.



 

Cash Flow Statement

For the Year Ended 31 March 2017

 

 

 

Year ended 31 March 2017

£'000

Year ended 31 March 2016

£'000

Net cash flow from operating activities

(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

(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.

 

 



 

Notes to the Financial Statements

For the Year Ended 31 March 2017

 

1.    Accounting Policies

(a)   Basis of preparation

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

 

(b)   Income

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

 

(c)   Expenses

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

 

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

 

•      expenses are charged to realised capital reserves where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect the investment management fee has been allocated 25% to revenue and 75% to realised capital reserves to reflect the Company's investment policy and prospective income and capital growth.

 

(d)   Taxation

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

 

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

 

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

 

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

 

(e)   Investments

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

 



 

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

 

1.    For investments completed prior to the reporting date, fair value is determined using the Price of Recent Investment Method, except that adjustments are made when there has been a material change in the trading circumstances of the company or a substantial movement in the relevant sector of the stock market.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(f)    Fair value measurement

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)   Gains and losses on investments

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

 



 

(h)   Significant judgements and estimates

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 to the Financial Statements and explained in note 1 (e) above.

 

 

Reserves

 

Share premium account

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

 

Capital reserves

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

 

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

 

Special distributable reserve

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

 

Capital redemption reserve

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

 

Revenue reserve

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

 

Return per Ordinary Share


Year ended 31 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

 

Net Asset Value per Ordinary Share

Net asset value per Ordinary Share as at 31 March 2017 has been calculated using the number of Ordinary Shares in issue at that date of 40,032,061 (2016: 20,775,100).

 

Directors' Responsibility Statement

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

 

•      the Financial Statements have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company as at 31 March 2017 and for the year to that date;

 

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

 

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

 

Other information

The Annual General Meeting of the Company will be held on 30 August 2017, commencing at 10.00 am at 5th Floor, 1-2 Royal Exchange Buildings, London, EC3V 3LF.

 

Copies of this announcement will be available to the public at the office of Maven Capital Partners UK LLP, Kintyre House, 205 West George Street, Glasgow G2 2LW; at the registered office of the Company, 1-2 Royal Exchange Buildings, London EC3V 3LF; and on the Company's website at: www.mavencp.com/migvct6.

 

The financial information contained within this Announcement does not constitute the Company's statutory Financial Statements as defined in the Companies Act 2006. The statutory Financial Statements for the year ended 31 March 2016 have been delivered to the Registrar of Companies and contained an audit report which was unqualified and did not constitute statements under S498(2) or S498(3) of the Companies Act 2006.

 

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

 

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

 

 

By order of the Board

Maven Capital Partners UK LLP

Secretary

 

14 July 2017


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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