Maven I&g 4 Regulatory News (MAV4)

Maven Income and Growth VCT 4 PLC

Annual Financial Report for the year ended 31 December 2011

Despite continued volatility for global quoted markets throughout the reporting period, and the resulting adverse impact on UK business and investor sentiment, the Board is pleased to report that your Company has achieved further positive shareholder returns during the year to 31 December 2011. Smaller companies are exposed to the wider market fragility, but your Company's private equity portfolio continues to perform well and in line with the Company's objective of generating long term capital appreciation and maintainable levels of tax-free income for shareholders.

The Manager seeks to invest in a wide range of attractively priced later-stage companies with defensive characteristics, predictable earnings and modest levels of debt, which are therefore well placed to withstand extended periods of challenging trading conditions. This approach has helped to deliver an increasing level of tax-free dividends for shareholders and steady growth in the underlying NAV. Your Board was encouraged to note that a recent AIC press release entitled 'VCT performance rivals conventional companies in 2011', which analysed the high representation of VCTs among the top performing investment companies during 2011, highlighted the fact that your Company was ranked 2nd of the top ten VCTs for share price total return during that period and was also showing strong positive returns over 3 years.

The Manager's ability to source high quality private company holdings was confirmed in the Deloitte Buyout Track 100 report published in February 2012, which tracks the performance of the top 100 private equity backed medium-sized companies in Britain over the past two years. Four portfolio companies feature in this report, which provides useful independent validation of the underlying quality of the assets held by your Company.

Performance

• Total return on Ordinary shares of 118.5p per share (2010: 112.0p) at 31 December 2011, up 5.8% over the year and 24.7% since launch.

• Net asset value (NAV) of Ordinary shares at the year end of 98.2p per share (2010: 95.7p).

• Total return on S Shares of 112.65p per share (2010: 103.85p) at 31 December 2011, up 8.5% over the year and 18.6% since launch.

• NAV of S Shares at the year end of 104.1p per share (2010: 97.3p).

• Five new later stage, yielding investments added during the year.

• Disposal of Walker Technical Resources, for a return of 3.0 times cost.

• Final dividends proposed of 2.5p per Ordinary Share (2010: 2.5p) and 1.3p per S Share (2010: 0.5p).

• A total of 4.0p declared per Ordinary share and 2.8p per S Share in respect of the year (2010: 3.5p and 1.5p respectively).

The most important measure of performance for a VCT is the total return, which is the long term record of dividend payments out of income and capital gains combined with the current NAV. The NAV in isolation is a less relevant measure of performance as the underlying investments are long-term in nature and not readily realisable.

Dividends

The Board is proposing a final dividend of 2.5p per Ordinary share and 1.3p per S share to be paid on 30 May 2012 to shareholders on the register on 9 May 2012. Including the interim dividends paid in September 2011, the tax-free yield for the year is 6.7% on the net cost (taking into account the initial tax relief available at time of investment) to Ordinary shareholders and 4% to S shareholders. Since the Company's launch, and after receipt of the proposed final dividend, Ordinary shareholders and S shareholders will have received 22.8p and 9.85p respectively in tax-free dividends.

Distributable Reserve

On 13 June 2011, the Court order approving the reduction in share premium account, as voted for by shareholders at the General Meeting on 1 February 2011, became effective. The purpose of the reduction was to provide the Company with greater flexibility in returning funds to shareholders, whether through the payment of dividends, share buy-backs or other means.

Principal risks and uncertainties

The Board has reviewed the principal risks and uncertainties facing the Company, which are set out in the annual report and are the risks involved in investment in small and unquoted companies. In order to reduce the exposure to investment risk, the Company has invested in a broadly-based portfolio of mature companies in the United Kingdom.

VCT Qualifying Status

The VCT qualifying status of the Company is reviewed regularly by your Board and monitored on a continuous basis by the Manager in order to ensure that all of the criteria for VCT qualifying status continue to be met. I can confirm that all tests were met throughout the year.

Investment Strategy

The Manager's investment strategy is to build a large and diversified portfolio of income producing, later stage private companies across a range of sectors and industries. The principal domicile of these companies will generally be in the UK, although many have an export dimension or overseas operations.

The Board and the Manager have previously concluded that the potential returns available from AIM and PLUS quoted investments are too uncertain, with very limited liquidity in many stocks and poor dividend yield in comparison with private equity investments. The Manager has therefore continued to selectively realise the AIM portfolio for value over the past 12 months, and redeploy the proceeds into investments in established, income-producing private companies.

Shareholder value is created through a combination of generating revenue from loan stock holdings and capital proceeds arising from profitable realisations, normally via an eventual trade sale of the business. To achieve this goal, new transactions are typically structured with 70% to 90% in secured, yielding loan stock, in companies where an equity stake can also be acquired at a reasonable entry price, and where the Manager perceives an opportunity to arbitrage a capital profit when the business achieves greater scale and maturity.

The revised Listing Rules require your Board to ensure that this and subsequent reports carry additional information on investment policy, in particular statements concerning asset mix, the spread of risk and maximum exposures. This information is contained in the Directors' Report and in the tabular analyses of the portfolio.

Valuation Process

Investments held by Maven Income and Growth VCT 4 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.

Portfolio Developments

During the year your Company participated in five substantial new private company transactions, as well as ten follow-on investments intended to support the development of existing portfolio companies. Most of the existing private equity assets are trading acceptably or ahead of plan. There has also been significant recent acquisition interest in several portfolio companies and the Manager is currently working on the potential sale of a number of holdings, although there is no certainty that any of these discussions will result in successful exits.

In line with the strategy of reducing the exposure to AIM, a number of further disposals were made during the period and the portfolio is now almost exclusively invested in private companies, with AIM securities now representing only 4.2% and 1.5% of the asset base for the Ordinary Pool and S pool respectively (2010: Ordinary Pool 8.9%, S Pool 3.4%). The proceeds of those disposals are then available for investment in the further growth of the private equity portfolio.

Your Company continues to co-invest in each transaction with other Maven client funds, which allows the Manager to invest in a greater range and size of transaction on behalf of VCT clients than would otherwise be the case.

Recovery of VAT

The Board continues to pursue the recovery of VAT and interest on VAT paid on management fees paid in the years before October 2008 and is confident of making progress in this area. We expect that further sums will be recovered in due course.

Co-Investment Scheme of the Manager

The co-investment scheme, which allows executive members of the Manager to invest alongside the Company, continued in operation during the year. The scheme operates through a nominee company which invests alongside the Company in each and every transaction made by the Company, including any follow-on investments. The scheme more closely aligns the interests of the executives and the Company's shareholders while providing an incentive to enable the Manager to retain the existing skills and capacity of the Manager's investment team in a competitive market.

Share Capital

As reported previously, in the period to 29 April 2011 your Company raised further funds through the Maven Linked VCT Offer 2. An additional £395,843 was raised, at a cost of 5% of total funds raised, and 431,672 new shares were issued. In December 2011 your Board announced its intention to offer a further opportunity to acquire New Ordinary Shares and New S Ordinary Shares through a top-up Offer aiming to raise £1.25 million before expenses, which is within the maximum permitted under the prospectus rules and avoids the higher costs associated with publishing a full prospectus.

On 1 March 2012, the Company issued and allotted 482,424 New Ordinary Shares and 268,769 New S Ordinary Shares under the Offer. At that point the Offer had been over-subscribed and the Board announced its closure on 2 March 2012. The remaining shares will be allotted on 5 April 2012 for the 2011/2012 tax year and on 18 April 2012 for the 2012/2013 tax year.

The Company may use the money raised, under both the earlier top-up Offer and the latest Offer, to pay dividends and general running costs. This has the effect of preserving for investment purposes an equivalent sum of valuable 'old money' which operates under more advantageous VCT regulations. The proceeds of both Offers will provide additional liquidity for the Company to make further later-stage investments, and allow it to spread its costs over a larger asset base to the benefit of all Shareholders.

Outlook

Although the UK economy continues to face significant uncertainty, with widespread concerns over the prospects for growth and potential for rising inflation, well run cash-generative smaller companies continue to prosper. As a result of the persistent scarcity of bank debt available to growth companies looking for additional capital, there are continuing opportunities for well managed generalist VCTs to identify and invest in established, progressive businesses with strong balance sheets and proven business models. The Manager has been able to source a steady flow of private company introductions across the UK, allowing your Company to invest in good quality assets which are capable of generating significant income in support of a sustainable dividend programme.

Investors have been contending with record low interest rates since early 2009 and your Board recognises that regular tax-free income is a significant factor in VCT investment, alongside the ability to generate capital gains in the medium to long term. Your Company continues to build momentum, with a more established portfolio and improving dividends which bode well for future Shareholder returns.

Ian Cormack

Chairman

16 April 2012

Investment Manager's Review

Overview

The prospects for the UK economy remain uncertain, with most indicators suggesting low economic growth is likely to persist for a number of years ahead. This view is further supported by the Government's 2011 Autumn Statement which forecasts that the public sector borrowing requirement will increase over the next five years, and an extended period of spending restraint will be required in order to ensure that the UK maintains its current rating with the key credit agencies. This fiscal control and lower discretionary spend capacity is likely to impact on both consumer and investor confidence over the medium term.

Notwithstanding the challenges facing the UK economy, we are encouraged to note that the majority of private company assets in the portfolio are trading in line with expectations, and are creating value for our client investors through a combination of revenue generation to fund dividends, and capital growth.

The fundamental strategy pursued by Maven is to use its national presence and local advisory relationships to generate a high level of new transaction introductions each year, and to invest selectively and conservatively in earnings reliable and well managed private companies on prudent entry multiples. This approach has ensured positive shareholder returns have been consistently achieved in recent years and will continue to be at the cornerstone of our investment approach.

We believe there are continuing positive medium term prospects for potential deal flow in our target private equity market, as well resourced generalist VCT managers continue to be introduced to high quality later-stage private companies seeking capital to expand. Maven has been introduced to over 400 private company transactions around the UK in the past 12 months, mainly by a network of long-established contacts across the corporate finance and business community.

Investment Activity

During the year the Maven team completed five substantial new private equity investments on behalf for your company, alongside ten follow-on investments in existing portfolio companies. At the year end, the portfolio stood at 55 unlisted and AIM investments at a total cost of £12.7 million.

The following investments have been completed during the period.

Unlisted Portfolio Developments

Five substantial private company investments were added to the portfolio during the period under review.

• Glacier Energy Services, a profitable oil and gas service group with two specialist trading subsidiaries, Roberts Pipeline Machining and Wellclad. Roberts designs and manufactures on-site portable cutting machines for blue chip oil and gas clients. Wellclad provides services to the European offshore and subsea equipment market. Glacier is focused on growth within its core UK market as well as promoting its technologies to the international oil and gas market.

• Space Student Living, a business providing contracted property management services across the student housing sector. Space aims to achieve significant growth across its consultancy services operation, in tandem with the acquisition of further long term management contracts.

• Maven Co-invest Exodus, a new company trading as 60, established by Penta Capital to implement a buy-and-build strategy in the business telecommunications service sector based on the converging of mobile, fixed-line, broadband, internet and IT technology businesses. Penta is an established private equity firm with which Maven previously co-invested in the successful 2010 management buy-out of esure.

• LCL Hose, (trading as Dantec) a specialist manufacturer of hand-built composite hoses for the global petrochemical industry. Composite hoses provide the vital flexible connection in many fluid transfer systems, and are used worldwide in applications such as unloading road, rail and marine tankers within chemical and oil plants, and in Formula 1 racing. Dantec exports around 70% of its output and is engaged in a number of significant overseas projects.

• Moriond, a new company set up to acquire an established residential property portfolio at a significant discount to open market value. Maven will work on a joint venture basis with an experienced developer to break up the portfolio into single lots, carry out minor refurbishment, and then implement a structured sale of the individual assets over an 18-24 month period. The transaction is projected to generate a significant capital gain alongside a 6.5% paid yield through the life of the investment.

In a number of cases the Manager is also currently engaged with investee companies and prospective acquirers at various stages of a potential exit process. This realisation activity reflects the increasing maturity of a number of holdings, but it should be noted that there can be no certainty that these discussions will ultimately lead to profitable sales.

There was one notable private company exit during the period. The investment in Dalglen 1150 (Walker Technical Resources) was realised in July with further proceeds received on agreement of completion accounts. Total proceeds over the life of the investment were £1.05m representing an overall 3.0 times return on the initial investment cost. The exit was via a secondary buy-out, funded by Gresham Private Equity, just two years after Maven originally led the management buy-in in June 2009. Walker, which provides some of the most advanced composite repairs technology available for the global oil & gas industry, has consistently traded ahead of budget and has more than doubled earnings since the initial investment.

The table on page 13 gives details of realisations during the reporting period.

One unlisted investment and one AIM company were struck off the Register during the year resulting in a realised losses of £232,000 (cost £267,000) and £62,000 (cost £132,000) for the Ordinary Share Pool and S Share Pool respectively. This had no effect on the NAV as a full provision had been made in earlier years.

In respect of AIM holdings the Manager has continued its policy of structured exits from this part of the portfolio. Four AIM securities were purchased by a closed ended investment company established to acquire investments which were underperforming or trading below entry price. These transactions incurred realised losses of £126,000 (cost £179,000) and £41,000 (cost £52,000) for the Ordinary Share Pool and S Share Pool respectively during the year.

Outlook

Your Company's portfolio has benefitted from significant diversification in recent years, with a specific focus on investing in a wide range of later-stage private companies with income generating characteristics. There is increased competition among providers of alternative capital for access to attractive private equity transactions, and good quality private company opportunities are at a premium. However with one of the most highly resourced and experienced management teams in the industry, Maven has access to a UK-wide network of introducers and is therefore well placed to continue to expand the asset base and consistently grow shareholder value.

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.

The accompanying Notes are an integral part of the Financial Statements.

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.

The accompanying Notes are an integral part of the Financial Statements.

The Financial Statements of Maven Income and Growth VCT 4 PLC, registered number SC272568, were approved by the Board of Directors and were signed on its behalf by:

16 April 2012

The accompanying Notes are an integral part of the Financial Statements.

The accompanying Notes are an integral part of the Financial Statements.

Notes to the Financial Statements

For the year ending 31 December 2011

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 on page 29 of 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 ofthe 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.

- 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.

- share issue costs are charged to the share premium account: and

- expenses are allocated between the original pool or the S share pool depending on the nature of the expense.

 (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 for the valuation of private equity and venture capital investments. Investments are recognised at their trade date and are designated by the Directors as fair value through profit or loss. At subsequent reporting dates, investments are valued at fair value, which represent the Directors' view of the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction. This does not assume that the underlying business is saleable at the reporting date or that its current shareholders have an intention to sell their holding in the near future.

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

1. For Investments completed within the 12 months 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 fully taxed 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.

3. Where there is evidence of impairment, a provision may be taken against the previous valuation of the investment.

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.

 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 (included quoted prices for similar investments, interest rates, prepayment speeds, credit risk etc).

 - 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.

Details of the fee basis are contained in the Director's Report on page 24.

The tax assessed for the period is lower than the standard rate of corporation tax of 26% (2010: 28%). The differences are explained below: