8th May 2015 17:00
Maven Income and Growth VCT 2 PLC
The Directors announce the Company's results for the year ended 31 January 2015.
Highlights for the Year
· NAV total return of 91.12p per share (2014: 87.17p) at the year end, up 4.5% over the year;
· NAV at period end of 60.80p per share (2014: 60.70p);
· Ten new private equity investments added to the portfolio;
· Realisation of Adler and Allan Holdings for a total return of 2.6 times cost;
· Exit from EFC Group, generating a total return multiple of 3.8 times cost;
· Increased final dividend of 2.15p per share (2014: 2.00p) proposed.
Chairman's Statement
Your Board is pleased to announce an excellent set of results for the twelve months to 31 January 2015. The proceeds of realisations, including two full disposals which were achieved at considerably greater than carrying value, have contributed to an increase in both NAV and dividends, with NAV total return having risen for the sixth consecutive year.
The Manager has continued its strategy of building an income generating portfolio of private company holdings and, during the year under review, has sourced and completed additional new investments in a range of well-established UK businesses. The level of revenue generated from the portfolio is an important component in your Company's ability to maintain a progressive level of tax-free distributions to Shareholders, and has enabled your Board to recommend an increased annual dividend of 4.00p per share, including the proposed final dividend of 2.15p.
Most of the existing private equity assets are trading well, and the strong performance of certain businesses, including Cash Bases, Nenplas Holdings, Six Degrees Group and John McGavigan, has enabled the Board to increase their valuations. Conversely, a small number of investments have been written down in value to reflect trading conditions. Developments within the portfolio are detailed in the Investment Manager's Review on pages 18 to 23 of the Annual Report.
Dividends
The Board recommends that an increased final dividend of 2.15p per Ordinary Share, comprising 0.20p of revenue and 1.95p of capital, be paid on 26 June 2015 to Shareholders on the Register at 29 May 2015. This would bring total dividends for the year to 4.00p per share, an increase of 3.90% over the prior year, representing a yield of 7.41% based on the year end closing mid-market share price of 54.00p.
Since the Company's launch, and after receipt of the proposed final dividend, Shareholders will have received 32.47p per share in tax-free dividends. The effect of paying the proposed final dividend would be to reduce the NAV of the Company by the total cost of the distribution.
Dividend Investment Scheme (DIS)
The Directors have agreed to implement a DIS through which Shareholders may elect to have their dividend payments used to apply for additional Ordinary Shares issued by the Company under the standing authority requested from Shareholders at Annual General Meetings. Shares issued under the DIS will qualify for VCT tax reliefs applicable for the tax year in which they are allotted.
Full details of the scheme, together with a mandate form, are being made available alongside the Annual Report to enable Shareholders to take advantage of the DIS in respect of the final dividend for the year ended 31 January 2015. Shareholders wishing to do so should ensure that a mandate form, or CREST instruction if appropriate, is submitted by no later than the election date of 12 June 2015. Under current VCT legislation, dividends that are invested will be eligible for income tax relief at 30% of the amount invested, subject to an annual investment limit of £200,000, in aggregate, per individual for all investments into new VCT Shares in a tax year.
Fund Raising
Following the success of the £4 million Offer for Subscription that opened in October 2013 and closed on 30 May 2014, in October 2014 the Company announced that it planned to raise up to a further £4 million in a joint Offer for Subscription alongside offers by four other Maven VCTs. That Offer by your Company was fully subscribed by 3 February 2015 and, consequently, closed early. Maven Income and Growth VCT, Maven Income and Growth VCT 3 and Maven Income and Growth VCT 5 have each also raised their targets of £4 million, with Maven Income and Growth VCT 4 having raised its target of £2 million.
The first allotment under the Offer took place on 20 February 2015, and a further allotment took place on 13 April 2015 in respect of the 2015/16 tax year. Relevant details regarding shares issued in respect of the Offers can be found in Note 12 to the Financial Statements.
The Company may use the money raised under the Offers to pay dividends (subject to meeting the requirements of the return of capital legislation effective from 6 April 2014) and general running costs, thereby preserving for investment purposes an equivalent sum of more valuable 'old money' which operates under more advantageous VCT regulations. The proceeds of the Offers will also provide additional liquidity for the Company to make further investments, and enable it to spread its costs over a larger asset base to the benefit of all Shareholders.
Share Buy-backs
Shareholders should be aware that the Board's primary objective is for the Company to retain sufficient liquid assets for making investments in line with its stated policy and for the continued payment of dividends to Shareholders. However, the Directors also acknowledge the need to maintain an orderly market in the Company's shares and have delegated authority to the Manager to buy back shares in the market for cancellation or to be held in treasury, subject always to such transactions being in the best interests of Shareholders.
It is intended that, subject to market conditions, available liquidity and the maintenance of the Company's VCT status, shares will be bought back at prices representing a discount of between 10% and 20% to the prevailing NAV per share.
Alternative Investment Fund Manager's Directive (AIFMD)
The AIFMD regulates the management of alternative investment funds, including VCTs, and the Board has received approval from the FCA as a self-managed small registered UK AIFM under the AIFMD. A new Risk Committee has been established, and information regarding the composition and responsibilities of this Committee can be found in the Report by the Audit and Risk Committees on pages 46 to 49 of the Annual Report.
VCT Regulatory Developments
The Association of Investment Companies (AIC) participated in a consultation process on 'tax-advantaged venture capital schemes' to assist the Government's discussions with the European Commission regarding a review of the State Aid rules for businesses in member countries. The Board supported the AIC's response, in which a number of recommendations were made that we believe would protect the VCT scheme against the imposition of further restrictions on investment and would reduce administrative burdens.
The 2015 Budget announced a package of changes to the VCT scheme, including a new age limit on companies qualifying for investment and a new cap on total EIS/VCT investment that a company can receive. As the limits proposed are higher than the provisions intended to be introduced as a result of EU requirements, and are subject to State Aid approval, the legislation has not been published in the Finance Bill 2015; a consultation period for comments on the draft legislation is open until 15 May 2015.
On 15 April 2015, HMRC published guidance on how they intend to apply the new proposed rule changes to investments made between 6 April 2015 and the date the EU grants State Aid approval, which involves new procedures in particular circumstances where investments exceed the basic limits of seven years and €15 million.
The FCA has removed the requirement for listed companies to publish quarterly interim management statements. However, your Company will continue to announce the NAV per share on a quarterly basis.
Board of Directors
Your Board recognises that the UK Code of Corporate Governance recommends that all non-executive directors who have served for a period of longer than nine years should be subject to annual re-election. As all of the current non-executive Directors, including myself as Chairman, have held office for periods in excess of that timescale, this matter has been the subject of regular review and discussion.
The Company is invested almost entirely in private equity holdings, which by their nature are likely to be retained for many years before reaching maturity, and the Directors remain of the opinion that a small and independent Board with extensive experience and knowledge of the portfolio is in the best interests of Shareholders. An annual evaluation of the Board is undertaken to ensure that each Director's independence is maintained and that their experience in the VCT sector remains relevant. After careful consideration it has been agreed that the current basis for the retirement of independent Directors bi-annually will be retained.
However, your Board has also been considering the issue of an orderly succession, and it is my intention to stand down as a Director following the conclusion of the AGM to be held on 17 June 2015, from which point John Lawrence will become Chairman. David MacLellan has indicated his desire to stand down in September 2015, following the appointment of a suitable successor. As the Board considers that it should now comprise three independent non-executive Directors in addition to a representative of the Manager, consideration is being given to a number of candidates as a potential replacement. The appointment of a new Director and the future constitution of the Board will be confirmed and communicated fully to Shareholders in due course, with any new Director being subject to re-election by Shareholders at the first AGM following their appointment.
I would like to take this opportunity to thank my fellow Directors for their support during my time in office and to wish John every success when he takes on the role of Chairman.
Distribution of Annual and Interim Reports
As detailed in the 2014 Interim Report, a number of Shareholders have expressed an interest in receiving notification, by post or e-mail, that documents, including Annual and Interim Reports, are available on the Company's website as an alternative to receiving hard copies by post. A letter of request was enclosed for Shareholders to complete and return to confirm whether or not they wished to take advantage of this facility and indicating that, in the absence of a response, they would be deemed as having given their consent to receiving only postal notifications that documents are available on the website. Therefore, Shareholders who made an election for postal notification, and those who chose not to respond, will have received notification by post of the publication of the Annual Report on the Company's website. Shareholders who wish notifications to be sent by e-mail rather than by post should complete and return the form enclosed with the Annual Report or advise the Registrar via the Share Portal at www.capitashareportal.com. Hard copies of all documents are available on request.
Annual General Meeting (AGM)
As indicated in previous Annual Reports, in order to allow a wider range of Shareholders the opportunity to meet the Directors and the Manager, it is intended to hold AGMs in Glasgow and London in alternate years. Therefore, the 2015 AGM will be held in the London office of Maven Capital Partners UK LLP on 17 June 2015, and the Notice of Annual General Meeting can be found on pages 72 to 77 of the Annual Report.
The Future
The strategy employed by the Manager over a number of years has enabled it to build a diversified portfolio of later-stage private businesses that your Board believes will generate maintainable levels of revenue for your Company, and which will continue to drive further improvements in Shareholder returns.
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 which, by their nature, entail a higher level of risk and lower liquidity than investments in large quoted companies. The Board aims to limit the risk attaching to the investment portfolio as a whole by ensuring that a structured selection, monitoring and realisation process is applied. The Board reviews the investment portfolio with the Manager on a regular basis.
The Company manages and minimises investment risk by:
· diversifying across a large number of companies;
· diversifying across a range of economic sectors;
· actively and closely monitoring the progress of investee companies;
· seeking to appoint a non-executive director to the board of each private investee company, provided from the Manager's investment management team or from its pool of experienced independent directors;
· co-investing with other funds run by the Manager in larger deals, which tend to carry less risk;
· not investing in hostile public to private transactions; and
· retaining the services of a Manager that can provide the resources required to achieve the investment objective and meet the criteria stated above.
An explanation of certain risks and how they are managed is contained in Note 17 to the Financial Statements.
Financial and Liquidity Risk
As most of the investments require a mid to long term commitment and are relatively illiquid, the Company retains a portion of the portfolio in cash or cash equivalents in order to finance any new unquoted investment opportunities. The Company has no direct exposure to currency risk and does not enter into any derivative transactions.
Economic Risk
The valuation of investment companies may be affected by underlying economic conditions such as fluctuating interest rates and the availability of bank finance.
Credit Risk
The Company may hold financial instruments and cash deposits and is dependent on counterparties discharging their agreed responsibilities. The Directors consider the creditworthiness of the counterparties to such instruments and seek to ensure that there is no undue concentration of exposure to any one party.
Internal Control Risk
The Board reviews regularly the system of internal controls, both financial and non-financial, operated by the Company and the Manager. These include controls designed to ensure that the Company's assets are safeguarded and that all records are complete and accurate.
VCT Qualifying Status Risk
The Company operates in a complex regulatory environment and faces a number of related risks, including:
· becoming subject to capital gains tax on the sale of its investments as a result of a breach of Section 274 of the Income Tax Act 2007;
· loss of VCT status and consequent loss of tax reliefs available to Shareholders as a result of a breach of the VCT Regulations; and
· loss of VCT status and reputational damage as a result of serious breach of other regulations such as the UKLA Listing Rules and the Companies Act 2006.
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 European Commission's (EC) state aid rules. Changes in the future to UK legislation or the EC state aid rules could have an adverse impact on Shareholder investment returns whilst maintaining the Company's VCT status. The Board and the Manager continue to make representations where appropriate, either directly or through relevant industry bodies such as the AIC and the British Venture Capital Association (BVCA).
Statement of Compliance with Investment Policy
The Company is adhering to its stated investment policy and managing the risks arising from it. This can be seen in various tables and charts throughout the Annual Report, and from information provided in the Chairman's Statement and the Investment Manager's Review. A review of the Company's business, its position as at 31 January 2015 and its performance during the year then ended is included in the Chairman's Statement, which also includes an overview of the Company's strategy and business model.
The management of the investment portfolio has been delegated to Maven Capital Partners UK LLP (Maven), which also provides company secretarial, administrative and financial management services to the Company. The Board is satisfied with the depth and breadth of the Manager's resources and its network of offices, which supply new deals and enable it to monitor the geographically widespread portfolio of companies effectively.
The Investment Portfolio Summary on pages 30 and 31 of 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 on pages 16 and 17 of the Annual Report show that the portfolio is diversified across a variety of sectors and deal types. The level of VCT qualifying investment is monitored by the Manager on a daily basis and reported to the Risk Committee quarterly.
Key Performance Indicators
At each Board Meeting the Directors consider a number of financial performance measures to assess the Company's success in achieving its objectives, and these also enable Shareholders and investors to gain an understanding of its business. The key performance indicators are as follows:
· NAV total return;
· dividend growth;
· share price discount to NAV;
· investment income; and
· operational expenses.
The NAV total return is a measure of the current NAV per share and dividends paid to date. The dividend growth measure shows how much of that Shareholder value has been returned to original investors in the form of dividends. A historical record of these measures is shown in the Financial Highlights on pages 5 and 6 of the Annual Report 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.
There is no meaningful venture capital trust index against which to compare the financial performance of the Company but, for reporting to the Board and Shareholders, the Manager uses comparisons with appropriate indices and the Company's peer group. The Directors also consider non-financial performance measures such as the flow of investment proposals and the Company's ranking within the VCT sector by independent analysts.
Valuation Process
Investments held by Maven Income and Growth VCT 2 PLC in unquoted companies are valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines. Investments quoted or traded on a recognised stock exchange are valued at their bid prices.
Share Buy-backs
The Board will seek the necessary Shareholder authority to continue to conduct a share buy-back programme under appropriate circumstances.
Employee, Environmental and Human Rights Policy
The Company has no direct employee or environmental responsibilities, nor is it responsible for the emission of greenhouse gases. However, the Directors will consider economic, regulatory and political trends and features that may impact on the Company's future development and performance. The Board's principal responsibility to Shareholders is to ensure that the investment portfolio is managed and invested properly.
The management of the portfolio is undertaken by the Manager through members of its portfolio management team. The Manager engages with the Company's underlying investee companies in relation to their corporate governance practices and in developing their policies on social, community and environmental matters and further information may be found in the Statement of Corporate Governance. In light of the nature of the Company's business, there are no relevant human rights issues and, therefore, the Company does not have a human rights policy.
Auditor
The Company's Auditor is required to report if there are any material inconsistencies between the content of the Strategic Report and the Financial Statements. The Independent Auditor's Report can be found on pages 50 to 53 of the Annual Report.
Future Strategy
The Board and Manager intend to maintain the policies set out above for the year ending 31 January 2016 as it is believed that these are in the best interests of Shareholders.
Charles Nicolson
Chairman
8 May 2015
Maven Income and Growth VCT 2 PLC Income Statement For the year ended 31 January 2015 | ||||||
Year ended 31 January 2015 (audited) | Year ended 31 January 2014 (audited) | |||||
Revenue | Capital | Total | Revenue | Capital | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Gains on investments | - | 2,070 | 2,070 | - | 1,972 | 1,972 |
Income from investments | 764 | - | 764 | 797 | - | 797 |
Other income | 2 | - | 2 | 2 | - | 2 |
Investment management fees | (88) | (789) | (877) | (88) | (794) | (882) |
Other expenses | (383) | - | (383) | (341) | - | (341) |
Net return on ordinary activities before taxation | 295 | 1,281 | 1,576 | 370 | 1,178 | 1,548 |
Tax on ordinary activities | (57) | 57 | - | (69) | 69 | - |
Return attributable to Equity Shareholders | 238 | 1,338 | 1,576 | 301 | 1,247 | 1,548 |
Earnings per share (pence) | 0.71 | 3.97 | 4.68 | 1.10 | 4.55 | 5.65 |
A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement.
All items in the above statement are derived from continuing operations. The Company has only one class of business and derives its income from investments made in shares, securities and bank deposits.
The total column of this statement is the Profit and Loss Account of the Company.
Maven Income and Growth VCT 2 PLC Reconciliation of Movements in Shareholders' Funds For the year ended 31 January 2015 | ||
Year ended 31 January 2015 (audited) | Year ended 31 January 2014 (audited) | |
£'000 | £'000 | |
Opening Shareholders' funds | 16,723 | 15,025 |
Net return for year | 1,576 | 1,548 |
Proceeds of share issue | 4,087 | 1,445 |
Repurchase and cancellation of shares | (241) | (295) |
Dividends paid - revenue | (341) | (208) |
Dividends paid - capital | (970) | (792) |
Closing Shareholders' funds | 20,834 | 16,723 |
Maven Income and Growth VCT 2 PLC Balance Sheet As at 31 January 2015 | ||||
31 January 2015 (audited) | 31 January 2014 (audited) | |||
£'000 | £'000 | £'000 | £'000 | |
Fixed assets | ||||
Investments at fair value through profit or loss | 19,676 | 16,273 | ||
Current assets | ||||
Debtors | 352 | 425 | ||
Cash | 1,248 | 555 | ||
1,600 | 980 | |||
Creditors | ||||
Amounts falling due within one year | (442) | (530) | ||
Net current assets | 1,158 | 450 | ||
Net assets |
20,834 |
16,723 | ||
Capital and reserves | ||||
Called up share capital | 3,424 | 2,757 | ||
Share premium account | 6,174 | 2,782 | ||
Capital reserve - realised | (11,223) | (9,693) | ||
Capital reserve - unrealised | 3,987 | 2,089 | ||
Special distributable reserve | 17,842 | 18,100 | ||
Capital redemption reserve | 295 | 250 | ||
Revenue reserve | 335 | 438 | ||
Net assets attributable to Ordinary Shareholders | 20,834 | 16,723 | ||
Net asset value per Ordinary Share (pence) | 60.8 | 60.7 |
The Financial Statements of Maven Income and Growth VCT 2 PLC, registered number 4135802, were approved and authorised for issue by the Board of Directors on 8 May 2015 and were signed on its behalf by:
Charles Nicolson
Director
Maven Income and Growth VCT 2 PLC Cash Flow Statement For the year ended 31 January 2015 | ||||
Year ended | Year ended | |||
31 January 2015 (audited) | 31 January 2014 (audited) | |||
£'000 | £'000 | £'000 | £'000 | |
Operating activities | ||||
Investment income received | 926 | 825 | ||
Deposit interest received | 2 | 2 | ||
Investment management fees paid | (972) | (445) | ||
Secretarial fees paid | (80) | (80) | ||
Directors' fees paid | (74) | (79) | ||
Other cash payments | (243) | (183) | ||
Net cash (outflow)/inflow from operating activities | (441) | 40 | ||
Financial investment | ||||
Purchase of investments | (9,801) | (6,001) | ||
Sale of investments | 8,400 | 5,196 | ||
Net cash outflow from financial investment | (1,401) | (805) | ||
Equity dividends paid | (1,311) | (1,000) | ||
Net cash outflow before financing | (3,153) | (1,765) | ||
Financing | ||||
Issue of Ordinary Shares | 4,087 | 1,445 | ||
Repurchase of Ordinary Shares | (241) | (295) | ||
Net cash inflow from financing | 3,846 | 1,150 | ||
Increase/(decrease) in cash | 693 | (615) |
Notes
1. Accounting Policies - UK Generally Accepted Accounting Practice
(a) Basis of Preparation
The Financial Statements have been prepared under the historical cost convention, modified to include the revaluation of investments, and in accordance with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the SORP) issued in January 2009. The disclosures on going concern in the Directors' Report form part of these Financial Statements.
(b) Income
Dividends receivable on equity shares and unit trusts are treated as revenue for the period on an ex-dividend basis. Where no ex-dividend date is available dividends receivable on or before the year end are treated as revenue for the period. Provision is made for any dividends not expected to be received. The fixed returns on debt securities and non-equity shares are recognised on a time apportionment basis so as to reflect the effective interest rate on the debt securities and shares. Provision is made for any fixed income not expected to be received. Interest receivable from cash and short term deposits and interest payable are accrued to the end of the year.
(c) Expenses
All expenses are accounted for on an accruals basis and charged to the Income Statement. Expenses are charged through the revenue account except as follows:
• expenses which are incidental to the acquisition and disposal of an investment are charged to capital; and
• expenses are charged to realised capital reserves where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect the investment management fee has been allocated 10% to revenue and 90% to realised capital reserves to reflect the Company's investment policy and prospective income and capital growth.
(d) Taxation
Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the balance sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the Financial Statements which are capable of reversal in one or more subsequent periods.
Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
The tax effect of different items of income/gain and expenditure/loss is allocated between capital reserves and revenue account on the same basis as the particular item to which it relates using the Company's effective rate of tax for the period.
UK Corporation tax is provided at amounts expected to be paid/recovered using the tax rates and laws that have been enacted or substantively enacted at the balance sheet date.
(e) Investments
In valuing unlisted investments the Directors follow the criteria set out below. These procedures comply with the revised International Private Equity and Venture Capital Valuation Guidelines (IPEVCV) for the valuation of private equity and venture capital investments. Investments are recognised at their trade date and are designated by the Directors as fair value through profit and loss. At subsequent reporting dates, investments are valued at fair value, which represents the Directors' view of the amount for which an asset could be exchanged between knowledgeable and willing parties in an arm's length transaction. This does not assume that the underlying business is saleable at the reporting date or that its current shareholders have an intention to sell their holding in the near future.
A financial asset or liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires.
1. For investments completed prior to the reporting date and those at an early stage in their development, fair value is determined using the Price of Recent Investment Method, except that adjustments are made when there has been a material change in the trading circumstances of the company or a substantial movement in the relevant sector of the stock market.
2. Whenever practical, recent investments will be valued by reference to a material arm's length transaction or a quoted price.
3. Mature companies are valued by applying a multiple to their prospective earnings to determine the enterprise value of the company.
3.1 To obtain a valuation of the total ordinary share capital held by management and the institutional investors, the value of third party debt, institutional loan stock, debentures and preference share capital is deducted from the enterprise value. The effect of any performance related mechanisms is taken into account when determining the value of the ordinary share capital.
3.2 Preference shares, debentures and loan stock are valued using the Price of Recent Investment Method. When a redemption premium has accrued, this will only be valued if there is a reasonable prospect of it being paid. Preference shares which carry a right to convert into ordinary share capital are valued at the higher of the Price of Recent Investment Method basis and the price/earnings basis, both described above.
4. Where there is evidence of impairment, a provision may be taken against the previous valuation of the investment.
5. In the absence of evidence of a deterioration, or strong defensible evidence of an increase in value, the fair value is determined to be that reported at the previous balance sheet date.
6. All unlisted investments are valued individually by the portfolio management team of Maven Capital Partners UK LLP. The resultant valuations are subject to detailed scrutiny and approval by the Directors of the Company.
7. In accordance with normal market practice, investments listed on the Alternative Investment Market or a recognised stock exchange are valued at their bid market price.
(f) Fair Value Measurement
Fair value is defined as the price that the Company would receive upon selling an investment in a timely transaction to an independent buyer in the principal or the most advantageous market of the investment. A three-tier hierarchy has been established to maximise the use of observable market data and minimise the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable.
Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity.
Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on best information available in the circumstances.
The three-tier hierarchy of inputs is summarised in the three broad levels listed below.
• Level 1 - quoted prices in active markets for identical investments;
• Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk etc); and
• Level 3 - significant unobservable inputs (including the Company's own assumptions in determining the fair value of investments).
(g) Gains and Losses on Investments
When the Company sells or revalues its investments during the year, any gains or losses arising are credited/charged to the Income Statement.
Movement in reserves
Share premium account | Capital reserve realised | Capital reserve unrealised | Special distribut-able reserve | Capital redemption reserve | Revenue reserve | |
£'000 | £'000 | £'000 | £'000 | £000 | £'000 | |
At 1 February 2014 | 2,782 | (9,693) | 2,089 | 18,100 | 250 | 438 |
Gains on sale of investments | - | 172 | - | - | - | - |
Net increase in value of investments | - | - | 1,898 | - | - | - |
Investment management fees | - | (789) | - | - | - | - |
Dividends paid | - | (970) | - | - | - | (341) |
Tax effect of capital items | - | 57 | - | - | - | - |
Repurchase and cancellation of shares | - | - | - | (241) | 45 | - |
Share Issue | 3,392 | - | - | (17) | - | - |
Net return on ordinary activities | - | - | - | - | - | 238 |
At 31 January 2015 | 6,174 | (11,223) | 3,987 | 17,842 | 295 | 335 |
Return per Ordinary Share
The returns per Ordinary Share are based on the following figures:
Year ended | Year ended | |
31 January 2015 | 31 January 2014 | |
Weighted average number of Ordinary Shares in issue | 33,718,935 | 27,395,324 |
Revenue return | £238,000 | £301,000 |
Capital return | £1,338,000 | £1,247,000 |
Total return | £1,576,000 | £1,548,000 |
NAV per Ordinary Share
NAV per Ordinary Share as at 31 January 2015 has been calculated using the number of Ordinary Shares in issue at that date of 34,243,932 (2014: 27,571,366).
Directors' Responsibility Statement
The Directors believe that, to the best of their knowledge:
· the Financial Statements have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company as at 31 January 2015 and for the year to that date;
· the Directors' Report includes a fair review of the development and performance of the Company, together with a description of the principal risks and uncertainties that it faces; and
· the Annual Report and Financial Statements taken as a whole are fair, balanced and understandable and provide the information necessary to assess the Company's performance, business model and strategy.
Other information
The Annual General Meeting will be held on 17 June 2015, commencing at 10.30 am at 5th Floor, 1-2 Royal Exchange Buildings, London, EC3V 3LF.
This Announcement has been prepared on the same basis as the Annual Report and Financial Statements for the year ended 31 January 2015. The Annual Report and Financial Statements for the year ended 31 January 2015 will be submitted to the National Storage Mechanism and be available for inspection at: www.Hemscott.com/nsm.do, and will also be filed with the Registrar of Companies and issued to Shareholders in due course.
The financial information contained within this Announcement does not constitute the Company's statutory Financial Statements as defined in the Companies Act 2006. The statutory Financial Statements for the year ended 31 January 2014 have been delivered to the Registrar of Companies and contained an audit report which was unqualified and did not constitute statements under S498(2) or S498(3) of the Companies Act 2006.
Copies of this announcement, and of the Annual Report and Financial Statements for the year ended 31 January 2015, will be available to the public at the office of Maven Capital Partners UK LLP, 205 West George Street, Glasgow G2 2LW; at the registered office of the Company, 1-2 Royal Exchange Buildings, London EC3V 3LF and on the Company's website at www.mavencp.com/migvct2.
Neither the content of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.
By order of the Board
Maven Capital Partners UK LLP
Secretary
8 May 2015
Related Shares:
Maven Income and Growth VCT 2