TIDMMIG3
RNS Number : 3203H
Maven Income and Growth VCT 3 PLC
09 March 2018
Maven Income and Growth VCT 3 PLC
Final results for the year ended 30 November 2017
The Directors report the Company's financial results for the
year ended 30 November 2017
Highlights for the Year
-- NAV total return at the year end of 143.57p per share (2016: 143.40p)
-- NAV at year end of 72.35p per share (2016: 90.45p), after
payment of dividends totalling 18.27p per share during the year
-- Annual dividend of 14.52p per share (2016: 5.75p)
-- Offer for Subscription launched with GBP12.73 million of new capital raised to date
-- 15,084,657 new shares allotted between 21 November 2017 and 6 February 2018
Strategic Report
Chairman's Statement
This has been a dynamic and transformative year for your
Company, with significantly enhanced dividend payments, and a new
Share Offer underway to replenish the NAV. It was also a very
successful period in the ongoing construction of the long term
portfolio, with the addition of nine new assets, across a wide
range of high growth industries and sectors. In addition, there
were a number of successful realisations during and shortly after
the year end, although one of the larger portfolio company holdings
suffered a write down in value, which constrained the overall
performance for the year.
Dividends in respect of the year totalled 14.52p per share
representing a 21.83% yield based on the share price at the year
end. Although this level of distribution is not expected to be
sustained, your Board remains committed to making distributions
when realisations are achieved and to making regular income
payments to Shareholders.
During the financial year, your Company has delivered a steady
performance against a backdrop of continuing economic uncertainty,
largely related to the ongoing negotiations regarding the UK's
intended withdrawal from the European Union (EU), and an
ever-changing regulatory environment. Over the past few years the
framework under which VCTs operate has become increasingly complex,
with further legislation announced in the 2017 Autumn Budget
Statement however, your Board believes that the Manager has the
depth of experience and breadth of skill to ensure that your
Company is responding appropriately.
The Share Offer was launched on 22 September 2017 and has, to
date, raised GBP12.73 million of new capital, with 6,496,645 shares
allotted prior to the year end in respect of GBP4.74 million of
subscriptions with a further GBP6.59 million of subscriptions
received subsequently, giving rise to the allotment of 8,588,012
shares on 6 February 2018. This provides your Company with
significant liquidity to facilitate the continued expansion of the
portfolio. The programme for deploying these funds has commenced
and the Directors are encouraged by the strength of the pipeline of
prospective opportunities currently under review across Maven's
expanded network of eleven regional offices.
Following the introduction of the Finance (No. 2) Act 2015, the
Directors believe it is important that Shareholders are aware of
the longer term implications arising from the new regulatory
framework, including the forthcoming amendments in the Finance
(No.2) Bill 2017-2019. The changes to the VCT rules that were
enacted in November 2015 specifically prohibit participation in
management buy-outs or acquisition based transactions and also
restrict the ability of VCTs to support older companies, including
portfolio holdings, unless certain conditions are met. VCT managers
are thereby required to focus on the provision of development
capital to younger or earlier stage companies which, given their
relatively early stage of maturity, have a different risk profile.
In addition, transaction structures are now required to contain a
higher proportion of equity, where previously high levels of
interest bearing debt was permitted. As the portfolio evolves, and
a greater proportion of holdings are invested in earlier stage
companies, there is likely to be a consequential impact on income
levels. This could result in dividend payments being subject to
variation in terms of quantum and timing, and may ultimately be
driven by realisation activity, and the requirement to comply with
the VCT rules. The Board and the Manager will ensure that this
further transition is managed carefully in line with your Company's
investment objective.
The Board is pleased to report that the portfolio of investee
companies has generally continued to trade well during the year, as
can be seen from the detailed analysis in the Investment Manager's
Review of the Annual Report. The continuing positive performance
achieved by a number of established private companies has enabled
the valuations of these assets to be increased. The Board is also
encouraged to note that, after a number of years of exceptionally
challenging market conditions, the portfolio companies with
exposure to the oil & gas services sector are seeing an
improvement, with financial performance showing an uplift over the
comparative period in the prior year. The valuations of a number of
these assets had previously been reduced in response to market
conditions and the conservative valuation of these holdings will be
maintained until there is evidence of a sustained market recovery.
Inevitably, there are a small number of investments that are
operating behind plan, or where a market adjustment has impacted
performance and, as a result, the valuations of these assets have
been reduced which has constrained the performance for the full
year.
An encouraging level of new investment has been achieved during
the financial year, with the addition of nine carefully selected
growth oriented companies to the portfolio. The pipeline of
investment opportunities remains strong and is supported by the
Manager's expanded nationwide office network, which is delivering a
continuous supply of prospective investments. The Board is,
however, aware of the challenges that the Manager is facing with
regard to securing Advance Assurance from HMRC for new investments,
and notes that this has resulted in a small number of potential
transactions being lost during the year due to slow response
times.
Given the maturing profile of a number of assets in the
portfolio there has been significant sale and realisation activity
during the period. As previously reported, in December 2016 the
holding in Nenplas was realised in full, generating a total return
of 5.0 times cost over the life of the investment. In October 2017,
a complete exit from Crawford Scientific, a leading supplier of
chromatography products and services, through a sale to an
institutional buyer, delivered a return of 4.5 times cost over the
three-year investment period. In addition, exits were achieved
shortly after the period end from SPS (EU), the UK's largest
provider of promotional merchandise and John McGavigan, a
manufacturer and supplier of plastic components for the global
automotive industry, both of which delivered a premium to carrying
value. The Board is aware that discussions are in process regarding
further potential exits from a number of the more mature holdings
in the portfolio, although there can be no certainty that these
will lead to profitable realisations.
Dividends
As previously noted, the Directors considered it necessary to
distribute an enhanced level of interim dividends during the
financial year. This was a result of a build-up of distributable
reserves, including the proceeds of recent profitable realisations,
and the requirement to ensure ongoing compliance with the VCT
regulations.
The first interim dividend in respect of the year ended 30
November 2017, of 2.71p per Ordinary Share and comprising 0.50p of
revenue and 2.21p of capital, was paid on 14 July 2017 to
Shareholders on the register at close of business on 23 June 2017.
The second interim dividend of 5.14p per Ordinary Share, comprising
capital only, was paid on 15 September 2017 to Shareholders on the
register at close of business on 18 August 2017. The third interim
dividend of 6.67p per Ordinary Share, comprising 0.40p of revenue
and 6.27p of capital, was paid on 30 November 2017 to Shareholders
on the register at close of business on 3 November 2017. No final
dividend is proposed and this, therefore, brings the total
distributions for the year to 14.52p per Ordinary Share,
representing a yield of 21.83% based on the year-end closing
mid-market price of 66.50p. The effect of paying dividends is to
reduce the NAV of the Company by the total cost of the
distribution.
Subsequent to the year end, on 8 March 2018 the Company
announced an interim dividend in respect of the year ending 30
November 2018 of 5.70p per Ordinary Share payable on 13 April 2018
to Shareholders on the Register on 16 March 2018.
Since the Company's launch, and after receipt of the interim
dividends, noted above, Shareholders will have received 76.92p per
share in tax-free dividends. Decisions on future distributions will
take into consideration the availability of surplus revenue, the
adequacy of reserves, the proceeds from any further realisations
and the VCT qualifying levels of the portfolio, all of which are
kept under close review by the Board and the Manager.
Dividend Investment Scheme
As detailed in the 2017 Interim Report, the Directors resolved
to re-introduce the Dividend Investment Scheme (DIS), which was
subsequently announced on 10 August 2017, ahead of the launch of
the Offer for Subscription. The DIS was previously suspended on 24
August 2015 due to the uncertainty regarding the potential impact
of the Finance (No. 2) Act 2015.
Shareholders who had previously elected to participate in the
DIS will, unless they advise otherwise, revert to receiving their
dividends in the form of new shares. The shares issued under the
DIS should 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 available from the Company's website.
Shareholders who had not previously applied to participate in the
DIS and who wish to do so for future dividends should ensure that a
mandate form, or CREST instruction if appropriate, is submitted to
the Registrar (Link Asset Services).
Fund Raising
On 22 September 2017 the Directors of your Company, together
with the Directors of Maven Income and Growth VCT 4 PLC, launched
an Offer for Subscription in new Ordinary Shares for up to GBP30
million, in aggregate, with over-allotment facilities of up to, in
aggregate, a further GBP10 million.
The first allotment of 6,496,645 new Ordinary Shares, in respect
of the 2017/18 tax year, was made on 21 November 2017, with a
further allotment on 6 February 2018 when 8,588,012 new Ordinary
Shares were issued. It is anticipated that a final allotment for
the 2017/18 tax year will take place on or before 5 April 2018 and
an allotment for the 2018/19 tax year will take place on or before
20 April 2018. The Board is confident that the additional liquidity
will enable your Company to continue to expand the portfolio by
investing in dynamic earlier stage VCT qualifying businesses, which
are capable of delivering growth in Shareholder value over the
medium term.
Further details regarding the new Ordinary Shares issued under
the Offer can be found in Note 12 to the Financial Statements.
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. 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 5%
and 10% to the prevailing NAV per share.
Regulatory Developments
During the summer of 2017, the Patient Capital Review was
formally extended to consider the effectiveness and value for money
provided by the VCT and Enterprise Investment Scheme sector. The
Manager contributed to this consultation on behalf of its VCT
clients and it was widely anticipated that, as a result of this
review, the 2017 Autumn Budget Statement would include a number of
amendments.
The Directors were encouraged that the measures announced in the
2017 Autumn Budget Statement were intended to preserve the
attractive fundamentals of the VCT scheme, which continues to
provide a valuable bridge between private capital and the UK SME
sector. The availability of long-term patient capital, in line with
Government objectives at what is an increasingly important time for
the UK economy, gives comfort to small businesses and ensures that
entrepreneurial companies can continue to access equity finance,
and allows investors to benefit from their success.
Whilst there were no changes to tax reliefs, or the minimum
holding period for these reliefs, and VCT dividends will maintain
their tax-free status, a number of less favourable changes were
announced, some of which were anticipated. As expected, the focus
is to continue to move towards supporting higher risk investments,
which includes the introduction of a 'risk to capital' based test,
certain sector exclusions and measures designed to assist the
financing of knowledge-intensive companies.
The percentage of funds that a VCT must hold in qualifying
investments will increase from 70% to 80% from 6 April 2019 (in the
Company's case from 1 December 2019), with a shorter time period
for the investment of newly raised funds. In order to assist with
this requirement, the add-back period on sales will be increased
from six to twelve months. The loan stock element of investments
will now have to be unsecured with a practical cap on coupon rates.
The Finance (No.2) Bill 2017 - 2019 is expected to receive Royal
Assent in the summer of 2018.
The Autumn Budget Statement also announced that HMRC anticipates
being able to enhance its approval process for Advance Assurance
clearance during the early part of 2018. This is a welcome
development as it should assist the process for completing new
investments, whilst allowing VCT managers to continue to build
their portfolios without unnecessary delay and remain compliant
with the qualifying requirements. The Board and the Manager will
continue to consider the implications of the Autumn Budget
Statement and take these developments into account when planning
future strategy.
In January 2018 two major new pieces of legislation were
introduced; the Packaged Retail Investment and Insurance Based
Products (PRIIPs) Regulation and the second Markets in Financial
Instruments Directive (MiFID II), came into force on 1 and 3
January respectively. PRIIPs required that a Key Information
Document (KID) be published for each VCT; the form and content of
the KID is strictly prescribed and includes specific information on
investment risks, performance and costs, which must be provided to
all potential investors to enable them to compare the performance
of different VCTs. With regard to MiFID II, the main practical
change for the Company is the requirement for the Manager to report
all transactions in quoted shares including share buy-backs as well
as those in underlying investments, to the FCA to assist in its
continued efforts to combat market abuse.
The General Data Protection Regulation comes into force on 25
May 2018, replacing the Data Protection Act 1998. This regulation
enforces the principle of 'privacy by design and by default' and
enshrines new rights for individuals, including the right to be
forgotten and to data portability. The Manager is currently working
with the third parties that process Shareholders' personal data to
ensure that their rights under the new regulation are
respected.
The Future
Notwithstanding the prevailing economic and regulatory
challenges, your Board remains confident in the future prospects
for your Company, which is continuing to build a diverse portfolio
of qualifying investments that can deliver positive investor
returns and generate attractive levels of tax- free distributions.
Current activity levels are encouraging for both new investments
and disposals, and the new assets being acquired are allowing your
Company to gain access to a portfolio of younger, high growth
companies, which offer the prospect of achieving significant
multiples of sums invested as they mature and are ultimately
realised. These new investments are complementary to the more
mature holdings in later stage companies, which continue to
represent the majority of the investee portfolio. The Board and the
Manager believe that this hybrid portfolio offers investors' access
to an attractive and varied investee company asset base capable of
delivering growth in Shareholder value that will help to support
the payment of regular tax-free dividends in the years ahead.
Atul Devani
Chairman
9 March 2018
Business Report
This Business Report is intended to provide an overview of the
strategy and business model of the Company as well as the key
measures used by the Directors in overseeing its management. The
Company is a venture capital trust which invests in accordance with
the investment objective set out in this Business Report.
Investment Objective
The Company aims to achieve long-term capital appreciation and
generate income for Shareholders.
Business Model and Investment Policy
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/NEX quoted companies which meet the criteria for
VCT qualifying investments and have strong growth potential;
-- investing no more than GBP1 million in any company in one
year and no more than 15% of the Company's assets by cost in one
business at any time; and
-- borrowing up to 15% of net asset value, if required and only
on a selective basis, in pursuit of its investment strategy.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Company are as
follows:
Investment Risk
The majority of the Company's investments are in small and
medium sized unquoted UK companies and AIM/NEX quoted companies
which, by their nature, carry a higher level of risk and lower
liquidity than investments in large quoted companies. The Board
aims to limit the risk attached to the investment portfolio as a
whole by ensuring that a robust 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;
-- co-investing with other clients of the Manager;
-- ensuring valuations of underlying investments are made
accurately and fairly (see Notes to the Financial Statements 1(e)
and 1(f) for further detail);
-- taking steps to ensure that share price discount is managed appropriately; and
-- choosing and appointing an FCA authorised investment manager
with the appropriate skills, experience and resources required to
achieve the investment objectives above, with ongoing monitoring to
ensure the Manager is performing in line with expectations.
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 and listed investments 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. The economic and market
environment is kept under constant review and the investment
strategy of the Company adapted so far as is possible to mitigate
emerging risks.
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 regularly reviews the system of internal controls,
both financial and non-financial, operated by the Company, Maven
and other key third party outsourcers such as the Custodian and
Registrar. These include controls designed to ensure that the
Company's assets are safeguarded and that all records are complete
and accurate and that the third parties have adequate controls in
relation to the prevention of data protection and cyber security
failings.
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 the consequential loss of tax reliefs
available to Shareholders as a result of a breach of the VCT
Regulations;
-- loss of VCT status and reputational damage as a result of
serious breach of other regulations such as the FCA Listing Rules
and the Companies Act 2006; and
-- increased investment restrictions resulting from the EU State
Aid Rules incorporated by the Finance (No. 2) Act 2015 and, in the
summer of 2018, the Finance (No. 2) Bill 2018- 2019.
The Board works closely with the Manager to ensure compliance
with all applicable and upcoming legislation, such that VCT
qualifying status is maintained. Further information on the
management of this risk is detailed under other headings in this
Business Report.
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 to either legislation 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 Association of Investment Companies (AIC) or the
British Venture Capital Association (BVCA).
The Company has retained Philip Hare & Associates LLP as VCT
adviser.
Breaches of other regulations including, but not limited to, the
Companies Act, the FCA Listing Rules, FCA Disclosure Guidance and
Transparency Rules or the Alternative Investment Fund Managers
Directive (the AIFMD), could lead to a number of detrimental
outcomes and reputational damage. Breaches of controls by service
providers to the Company could also lead to reputational loss or
damage.
The AIFMD, which regulates the management of alternative
investment funds, including VCTs, introduced an authorisation and
supervisory regime for all investment companies in the EU. The
Company was 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 Standards. The Company has appointed Link 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 (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 full political,
economic and legal consequence of the referendum vote are not yet
known. It is possible that investments in the UK may be more
difficult to value and assess for suitability of risk, harder to
buy or sell and 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. This may lead to changes in
the operation of the Company, the rights of investors, or the list
of territories in which the shares of the Company may be promoted
and sold.
The Board regularly reviews the political situation, together
with any associated changes to the economic, regulatory and
legislative environment, in order to ensure that any risks are
mitigated as effectively as possible.
An explanation of certain economic and financial risks and how
they are managed is contained in Note 16 to the Financial
Statements.
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, from information
provided in the Chairman's Statement and in the Investment
Manager's Review. A review of the Company's business, its position
as at 30 November 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 show that the portfolio is
diversified across a variety of sectors and deal types. The level
of qualifying investments is monitored by the Manager on a daily
basis and reported to the Audit & Risk Committee quarterly, or
as required.
Key Performance Indicators
During the year, the net return on ordinary activities before
taxation was GBP27,000 (2016: GBP2,061,000), gains on investment
was GBP153,000 (2016: GBP2,066,000) and earnings per share were
0.07p (2016: 5.01p). However, the Directors also use a number of
Alternative Performance Measures (APMs) in order to assess the
Company's success in achieving its objectives as these are
considered to be more appropriate. The APMs also enable
Shareholders and prospective investors to gain an understanding of
the Company's business. The key performance indicators are as
follows:
-- NAV total return;
-- cumulative dividends paid;
-- share price discount to NAV;
-- investment income; and
-- operational expenses.
The NAV total return is a measure of Shareholder value that
includes both the current NAV per share and the sum of dividends
paid to date. Cumulative dividends paid is the total amount of both
capital and income distributions paid since the launch of the
Company. The Directors seek to pay dividends to comply with the VCT
rules taking account of the level of distributable reserves,
profitable realisations in each accounting period and the Company's
future cash flow projections. A historical record of these measures
is shown in the Financial Highlights in the Annual Report. The
change in the profile of the portfolio is reflected in the Summary
of Investment Changes. 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.
There is no meaningful VCT index against which to compare the
performance of the Company. However, for reporting to the Board and
Shareholders, the Manager uses comparisons with appropriate
indices. The Directors also consider non-financial performance
measures such as the flow of investment proposals and ranking of
the VCT sector by independent analysts.
In addition, the Directors consider economic, regulatory and
political trends and factors that may impact on the Company's
future development and performance.
Valuation Process
Investments held by Maven Income and Growth VCT 3 PLC in
unquoted companies are valued in accordance with the International
Private Equity and Venture Capital Valuation Guidelines.
Investments quoted or traded on a recognised stock exchange,
including AIM, are valued at their bid prices.
Share Buy backs
At the forthcoming Annual General Meeting (AGM), the Board will
seek the necessary Shareholder authority to continue to conduct
share buy backs 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. The Board's principal responsibility to
Shareholders is to ensure that the investment portfolio is managed
and invested properly. As the Company has no employees, it has no
requirement to report separately on employment matters. The
management of the portfolio is undertaken by the Manager through
members of its portfolio management team. The Manager engages with
the Company's underlying investee companies in relation to their
corporate governance practices and in developing their policies on
social, community and environmental matters and further information
may be found in the Statement of Corporate Governance. In light of
the nature of the Company's business, there are no relevant human
rights issues and, therefore, the Company does not have a human
rights policy.
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 in the Annual Report.
Future Strategy
The Board and Manager intend to maintain the policies set out
above for the year ending 30 November 2018, as it is believed that
these are in the best interest 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:
Atul Devani
Director
9 March 2018
Income Statement
For the Year Ended 30 November 2017
Year ended 30 November 2017 Year ended 30 November 2016
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains on investments - 153 153 - 2,066 2,066
Income from investments 1,047 - 1,047 1,328 - 1,328
Other income 14 - 14 4 - 4
Investment management
fees (179) (717) (896) (186) (743) (929)
Other expenses (291) - (291) (408) - (408)
------------------------- --------- ---------- -------- -------- ----------- --------
Net return on ordinary
activities 591 (564) 27 738 1,323 2,061
before taxation
Tax on ordinary
activities (103) 103 - (147) 147 -
------------------------- --------- ---------- -------- -------- ----------- --------
Return attributable
to Equity Shareholders 488 (461) 27 591 1,470 2,061
------------------------- --------- ---------- -------- -------- ----------- --------
Earnings per share
(pence) 1.20 (1.13) 0.07 1.44 3.57 5.01
------------------------- --------- ---------- -------- -------- ----------- --------
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 earnings per share figures are relevant.
The basic and diluted earnings per share are, therefore,
identical.
The accompanying Notes are an integral part of the Financial
Statements.
Statement of Changes in Equity
For the Year Ended 30 November 2017
Share Capital Capital Special Capital
Share premium reserve reserve distributable redemption Revenue
capital account realised unrealised reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------- -------- --------- ----------- -------------- ----------- --------- ---------
At 30 November
2016 4,093 13,820 (2,115) 3,499 16,251 752 720 37,020
Net return - - 3,100 (3,561) - - 488 27
Dividends paid - - (6,974) - - - (447) (7,421)
Repurchase and
cancellation
of shares (67) - - - (502) 67 - (502)
Net proceeds
of share issue 650 4,042 - - - - - 4,692
Net proceeds
of DIS issue 26 173 - - - - - 199
---------------- --------- -------- --------- ----------- -------------- ----------- --------- ---------
At 30 November
2017 4,702 18,035 (5,989) (62) 15,749 819 761 34,015
---------------- --------- -------- --------- ----------- -------------- ----------- --------- ---------
Share Share Capital Capital Special Capital Revenue
capital premium reserve reserve distributable redemption reserve Total
For the Year GBP'000 account realised unrealised reserve reserve GBP'000 GBP'000
Ended 30 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
November
2016
----------------- --------- --------- ---------- ------------ --------------- ------------ --------- ---------
At 30 November
2015 4,132 13,820 (2,064) 3,315 16,563 713 1,157 37,636
Net return - - 1,286 184 - - 591 2,061
Dividends paid - - (1,337) - - - (1,028) (2,365)
Repurchase and
cancellation
of shares (39) - - - (312) 39 - (312)
----------------- --------- --------- ---------- ------------ --------------- ------------ --------- ---------
At 30 November
2016 4,093 13,820 (2,115) 3,499 16,251 752 720 37,020
----------------- --------- --------- ---------- ------------ --------------- ------------ --------- ---------
The accompanying Notes are an integral part of the Financial
Statements.
Balance Sheet
As at 30 November 2017
30 November 30 November
2017 2016
GBP'000 GBP'000
Fixed assets
Investments at fair value
through profit or loss 24,335 32,590
Current assets
Debtors 469 394
Cash 9,246 4,269
------------------------------- ------------- -------------
9,715 4,663
Creditors
Amounts falling due within
one year (35) (233)
------------------------------- ------------- -------------
Net current assets 9,680 4,430
------------------------------- ------------- -------------
Net assets 34,015 37,020
------------------------------- ------------- -------------
Capital and reserves
Called up share capital 4,702 4,093
Share premium account 18,035 13,820
Capital reserve - realised (5,989) (2,115)
Capital reserve - unrealised (62) 3,499
Special distributable
reserve 15,749 16,251
Capital redemption reserve 819 752
Revenue reserve 761 720
------------------------------- ------------- -------------
Net assets attributable
to Ordinary Shareholders 34,015 37,020
------------------------------- ------------- -------------
Net asset value per Ordinary
Share (pence) 72.35 90.45
------------------------------- ------------- -------------
The Financial Statements of Maven Income and Growth VCT 3 PLC,
registered number 04283350, were approved by the Board of Directors
and were signed on its behalf by:
Atul Devani
Director
9 March 2018
The accompanying Notes are an integral part of the Financial
Statements.
Cash Flow Statement
For the Year Ended 30 November 2017
Year ended Year ended
30 November 2017 30 November 2016
GBP'000 GBP'000
Net cash flows from
operating activities (1,203) (1,453)
Cash flows from investing
activities
Investment income received 978 1,348
Deposit interest received 14 4
Purchase of investments (3,212) (11,105)
Sale of investments 11,432 17,320
---------------------------- ----------------- -----------------
Net cash flows from
investing activities 9,212 7,567
---------------------------- ----------------- -----------------
Cash flows from financing
activities
Equity dividends paid (7,421) (2,365)
Issue of Ordinary Shares 4,891 -
Repurchase of Ordinary
Shares (502) (346)
---------------------------- ----------------- -----------------
Net cash flows from
financing activities (3,032) (2,711)
---------------------------- ----------------- -----------------
Net increase in cash 4,977 3,403
---------------------------- ----------------- -----------------
Cash at beginning of
year 4,269 866
Cash at end of year 9,246 4,269
The accompanying Notes are an integral part of the Financial
Statements.
Notes to the Financial Statements
For the Year Ended 30 November 2017
1. Accounting policies
(a) Basis of preparation
The Financial Statements have been prepared under FRS 102, the
historical cost convention, as modified by the revaluation of
investments, and in accordance with 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 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 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 20% to revenue and 80% 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 early stage investments completed in the reporting
period, 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 investee
company.
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. 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; and
-- Level 3 - inputs are unobservable (ie for which market data
is unavailable) for the asset or liability.
(g) Gains and losses on investments
When the Company sells or revalues its investments during the
year, any gains or losses arising are credited/charged to the
Income Statement.
(h) Critical accounting judgements and key sources of estimation uncertainty
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 explained in Note 1(e).
In the opinion of the Board and the Manager, there are no
critical accounting judgements.
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 Year ended
30 November 2017 30 November 2016
The returns per share
have been based on the
following figures:
Weighted average number
of Ordinary Shares 40,706,349 41,121,125
Revenue return GBP488,000 GBP591,000
Capital return (GBP461,000) GBP1,470,000
-------------------------- ----------------- -----------------
Total return GBP27,000 GBP2,061,000
-------------------------- ----------------- -----------------
Net asset value per Ordinary Share
The net asset value per Ordinary Share as at 30 November 2017
has been calculated using the number of Ordinary Shares in issue at
that date of 47,016,945 (2016: 40,930,853).
Directors Responsibility Statement
Each Director believes 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 30 November 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 will be held on Wednesday 11 April
2018, commencing at 10.00am, at Maven Capital Partners UK LLP,
Fifth Floor, 1-2 Royal Exchange Buildings, London EC3V 3LF.
The Annual Report and Financial Statements for the year ended 30
November 2017 will be issued to Shareholders and 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 30 November 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.
Copies of this announcement, and of the Annual Report and
Financial Statements for the year ended 30 November 2017, will be
available, in due course, 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/migvct3.
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 shortly be submitted to the National
Storage Mechanism and will be available for inspection at:
www.morningstar.co.uk/uk/NSM
By Order of the Board
Maven Capital Partners UK LLP
Secretary
9 March 2018
This information is provided by RNS
The company news service from the London Stock Exchange
END
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