Marwyn Val. Regulatory News (MVI)

LEI: 213800L5751QTTVEA774

30 April 2020

MARWYN VALUE INVESTORS LIMITED (THE "COMPANY")

Audited Annual Report and Financial Statements 2019

Marwyn Value Investors Limited announces the publication of its annual results for the year ended 31 December 2019.

The Annual Report and Financial Statements are available on the 'Financial Reports' section of the Company's website, http://www.marwynvalue.com/company-information/financial-reports.

Company enquiries:

Louisa Bonney / Scott Danks

Axio Capital Solutions Limited

Telephone: 01534 761240

PR enquiries:

Alex Child-Villiers / Will Barker

Temple Bar Advisory

Telephone: 020 7975 1415

Cautionary Statement

This announcement contains forward-looking statements which are made in good faith based on the information available at the time of its approval. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievement of the Company to be materially different from those expressed or implied by these forward-looking statements.

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

MARWYN VALUE INVESTORS LIMITED

AUDITED ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

Strategic Report

At the time of writing, we are facing an unprecedented global crisis in the form of the COVID-19 pandemic. We enter this time with an enviable position, having one significant investment that continues to perform well and more than 60% of the Company's underlying net asset value in cash. The Manager talks in more detail about its future expectations later in this report; however, I think we all agree that beyond the obvious terrible human cost of current events, this period will have a profound effect on the global economic environment and few, if any, companies will remain unaffected. My co-Directors and I are all experienced operating executives and we are in no doubt that investing in this environment will require caution and patience. In addition, investors will require clear operational and investment expertise, across bull and bear markets and access to a bench of executives with long track records of navigating business through challenging times and creating shareholder value. This, I believe, is where the Manager has both a unique model and strong pedigree.

The Directors bring both significant funds expertise and commercial operating experience having managed businesses across a wide range of industries and economic environments. We maintain a close dialogue with the Manager on a constant basis sharing both our experience and acting as a sounding board for the team. I am pleased to report that both they and we believe this is materially additive to the Company's investment and risk management processes. Whilst we as a Board operate with reference to the recommendations of the AIC Code, we believe, given Marwyn's highly concentrated investment strategy, that shareholders are best served by a Board with strong business and investment expertise. As such we will continue to actively consider candidates to add to our Board to enhance this expertise.

Over the last 10 years, the Company's structure has evolved to provide investors with the ability to receive underlying, undiscounted net asset value, as and when investments are ultimately realised, through a 5 yearly Realisation Class election. Whilst obviously, as significant ordinary shareholders ourselves, we find the current discount to net asset value frustrating and irrational, we believe shareholders are best served by the Board and the Manager focusing on growing the size of the Company through investment performance. We are acutely aware of the pressures on shareholders due to the discount and alongside the Manager, are continually considering cost effective ways to enhance shareholder value. We remain committed to current policies and programmes and will continue to implement the attractive Ordinary Share Distribution Policy by way of the shareholder approved Buyback Programme (which returned over £5.8 million in 2019, representing over 9% of the Ordinary Share market capitalisation as at 31 December 2019) and the Profit Distribution Policy, which have together contributed to over £66.7 million being returned to investors over the last 7 years. Investors will also have the opportunity for a future Realisation Class election in November 2021.

Progress over the period

Over the course of 2019, whilst there were no additions to the portfolio, there was significant activity within the existing investments, with significant developments for the Company's more established Portfolio Companies. We are delighted that significant value was crystallised through the successful exit of the investment in BCA, Zegona raised over £100 million to increase its stake in and influence over Euskaltel and the partnership with Bradshaw Taylor has accelerated the expected timeline for Le Chameau to return to profitability following a significant write down of our investment.

Whilst our investments in Safe Harbour and Wilmcote have not resulted in any acquisitions in the year, a number of material transactions reached an advanced stage of due diligence and negotiation, but ultimately failed to complete. As a Board, we are encouraged that the Manager continues to apply its robust approach to investing and has abandoned deals rather than overpaying or investing in deals without a clear path to shareholder value creation. Although significant deal costs were incurred as a consequence, this is a more desirable outcome over the longer term than making the wrong investments. Both continue to explore acquisition opportunities in their respective industry sectors.

A review of the performance of the underlying Portfolio Companies is set out in the Report of the Manager.

Robert Ware

Chairman

30 April 2020

Performance summary

1 Total return assumes the reinvestment of dividends paid to shareholders into the Company at NAV and is calculated on a cum income basis

2019 Performance

The Company's net loss for the year of £27.0 million was primarily attributable to a write down of the fair values of investments in Le Chameau (£22.5 million) and Wilmcote (£9.7 million), partly offset by gains recognised on the investment in BCA.

The NAV Total Return for the year to 31 December 2019 of the Ordinary Shares and Realisation Shares was (16.5)% and (12.9)% respectively, compared to the FTSE All-Share index benchmark of 19.2%.

Performance since inception

From inception in February 2006 to 31 December 2019, the Ordinary Share NAV Total Return of 131.4% is broadly in line with the benchmark for the same period of 133.4%.

The Realisation Share performance since inception on 30 November 2016 to 31 December 2019 was (19.3)%, compared to the FTSE All-Share performance over the same period of 28.1%.

Performance post COVID-19 (January - March 2020, "Q1")

The Q1 Ordinary Share NAV performance was (7.1)% and the Q1 Realisation Class performance was (13.7)% against FTSE All Share performance of (25.1)%.

This brings the performance since inception for the Ordinary Shares to 115.0% (FTSE All-Share for the same period: 74.8%) and since inception for the Realisation Shares of (30.4)% (FTSE All-Share for the same period: (4.1)%).

A review of the performance of the underlying investment assets is set out in the Report of the Manager.

Market Outlook

It is difficult to look back at 2019, and indeed the investing environment over the last few years, without reference to the current COVID-19 related events unfolding around the globe. We enter this period of unprecedented uncertainty we believe well positioned, with a stable portfolio and more than 60% of the Company's underlying net asset value in cash.

Whilst there are numerous consequences to the current pandemic and the consequential political and economic responses, we are already beginning to see many of the themes that have characterised the challenging investment environment of the last few years laid bare.

It has been challenging in the last few years to buy good companies, at sensible valuations following our traditional approach. The tidal wave of capital into private equity and leverage levels surpassing those of 2007 have all contributed to average multiples paid for assets reaching unprecedented heights. By contrast, the public markets have seen increased illiquidity driven by increased regulation, fewer actively managed funds and compounded by internal imposed liquidity restrictions at many firms creating significant differences between many public and private company valuations.

Excess leverage, even for those sitting behind the covenant-lite debt that has characterised a staggering 90% of high yield debt issued in 2019, will sit very uncomfortably for companies operating with macro headwinds of the force that may come. In addition, government assistance provided over the coming months will need to be repaid in a relatively short time thereafter placing further pressure on equity investors who have already participated in recent rights issues and capital calls. We believe that in this environment, the patient investor may find exciting opportunities to deploy capital.

Whilst we do not believe the current environment is directly comparable to 2008, the years that followed that market dislocation were our best years ever and we believe that some of the key tenets of our success continue to hold. We do not believe that our opportunity will come from trying to buy businesses largely unaffected by the current environment, but by investing in those that are impacted in the short to medium term, are best of breed and are likely to see the opportunity to capitalise on their market position, relative strength and ultimate wider economic recovery.

Identifying the winners and losers will not be straight forward and a depth of sector experience and operating capabilities will be key. Over the 15 years since Marwyn's launch, we have had the good fortune to partner with some exceptional company executives, who brought deep sector insights, wide corporate and management relationships, and the operational capabilities to build high quality, sustainable businesses for all stakeholders. We will continue to nurture and expand these relationships, in pursuit of new investment opportunities, over the coming years.

What we invest in

Our investment strategy is to identify, support, invest in and work alongside high-calibre sector-leading, experienced, operational management teams to acquire, manage, build and grow businesses headquartered in the UK, Europe or the Americas. This strategy is reliant on a robust approach to identifying and valuing acquisition targets and the ability to raise adequate capital to execute each acquisition.

We have executed this strategy using dedicated investment vehicles, which are launched in partnership with operational executives, who bring a combination of sector expertise, access to proprietary corporate relationships and most importantly, the hands-on operational capability to deliver our plan.

Our funds typically act as the lead cornerstone investor in these investment vehicles, with additional capital drawn from both our club of public equity-focused co-investors and new investors introduced by the management team which allows us to consider a scale of acquisition beyond the capacity of our funds' capability and provides an independent validation of our investment thesis.

To 31 December 2019, we have launched 16 investment vehicles which have together delivered an aggregate gross cash multiple on Marwyn's invested capital of 2.2x on exited investments, with the investee companies drawing circa £2.8 billion of capital from Marwyn and third-party co-investors.

How we invest

When evaluating opportunities, we seek to understand:

·  the major drivers for the sector (both positive and negative);

· the assets under consideration for acquisition; and

· how our buy-and-build strategy will improve value creation.  

Our immersive approach to managing our investments includes having our management teams headquartered in Marwyn's offices for the lifetime of our investment, allowing for close proximity to management and the day-to-day operations of Portfolio Companies.

Over the course of what can be up to two years, we work with management to develop the sector thesis, company resources and target pipeline while identifying suitable co-investors prior to the company's platform acquisition.

We aim to avoid auction processes with over 90% of deals to date completed outside of a competitive process.

We have developed a methodical approach to sourcing, executing and exiting investments, using the following process:

· early stage partnerships with experienced industry-leading executives/management teams;

· focus on fragmented sectors which can benefit from consolidation or sectors where structural and/or regulatory change is driving a shift in value;

· actively support the execution and development of each business throughout the investment period;

· actively identify and build relationships with the ultimate acquirors and/or merger partner for the business on completion of the buy and build.

The review that follows refers to the underlying Portfolio Companies in which the Company is indirectly invested.

Performance

2019 has been a challenging year with a number of contrasting outcomes, resulting in a net loss for the year of £27.0 million, representing a loss per ordinary share of 37.4p and a loss per realisation share of 31.2p.

On the positive side of the portfolio, we have been delighted with the performance of our investment in BCA which was acquired by TDR Capital LLP for an enterprise value of £2.1 billion at 243p per share generating, including dividends, a total equity profit of £34.7 million and cash proceeds of £85.9 million for the Marwyn Funds, with £60.2 million cash attributable to the Company's ordinary shareholders and £5.3 million attributable to the Company's realisation shareholders. The exit crystallised a 1.6x cash multiple and 14.4% internal rate of return on the Marwyn Funds' investment.

Zegona has seen good progress in implementing its strategy of increased influence. Euskaltel released its 2019 results on 25 February 2020, with improved operating KPIs and solid financial results. 2019 represented the first year of customer growth after two years of customer losses, with Q4 2019 revenue returning to growth and the delivery of cost saving initiatives driving increased net profit, evidencing the progress made since the appointment of Jose Miguel Garcia and his ex-Jazztel team in the deployment of the strategic plans proposed by Zegona. Jose Miguel Garcia has subsequently announced the launch of the Virgin brand as its National Expansion Plan partner and prior to the current market dislocation had seen strong share price performance to the period ending 31 December 2019. Disappointingly the Zegona shares have continued to trade at a material discount to the look through price of the Euskaltel shares (£1.3041 as at 31 December 2019) and we are working with Zegona to address that discount over the coming year. Based on a look through value the underlying net asset value of Zegona (driven by cash and the underlying Euskaltel price) of our position at 31 December 2019 was £47.4 million, producing a 1.7% return to our net asset value rather than the 1.7% decline.

2019 has been a tumultuous but pivotal year for Le Chameau. The business has been a very difficult investment for a number of years, requiring over the last 5 years a complete restructuring of the legacy French manufacturing and operating base, a relaunch in the UK and capitalising on its excellent manufacturing capabilities in Morocco. We began the year with a process to evaluate offers for the company. As part of this process we evaluated both potential trade acquirors and trade partners who could offer a scale of operating efficiencies that the business desperately needed but simply could not achieve on a standalone basis. We are very pleased that this process culminated in a joint venture with an excellent trade partner, Bradshaw Taylor, a leading distributor of Schöffel Country, a high-end, specialist outdoor and country clothing and equipment brand in the UK and Europe. Bradshaw Taylor's Managing Director, Corry Taylor, has been appointed as Le Chameau CEO. As Schöffel is the market leader in premium clothing in Le Chameau's key markets and there is significant overlap between the key customers in all of our markets we believe the joint-venture provides significant potential for revenue growth. In addition, there are significant operating synergies which will significantly improve the business' ability to achieve profitability and positive cash generation. However, whilst we believe we have reasonable visibility on the execution of the joint-venture's plan, and as at 31 March 2020 the business has made substantial progress in delivering those synergies, we have written down the carrying value of the investments materially to £4.9 million as at 31 December 2019 (a write down of £22.5 million, making up 84% of the Company's total loss for the year) to reflect the early stage nature of the joint venture.

The performance of our current investment vehicles yet to execute a platform acquisition has however been very disappointing and contributed 36% of the total loss for the year. In particular, Wilmcote experienced a second aborted acquisition having been extremely close to its conclusion, which combined with a similar event in the prior year, contributed to a significant write down of our investment (£9.7 million) in the year. To have two acquisitions fail to complete, at such a late stage, was a new and humbling experience for us. In each of the transactions, institutional investors were wall crossed and had full visibility on the target companies from an early stage in our investment process and throughout material due diligence, but we were not able to complete them for a number of different factors. The scale and complexity of those cross-border transactions, at enterprise values of more than £1 billion each, and during the final stage of the processes meant that the aborted transaction fees were materially higher than we had previously experienced.

We have spent considerable time reflecting on how we avoid similar situations in the future and transaction risk mitigation and management of deal costs will continue to be a very significant part of our investment process and on-going risk management.

We have subsequently recapitalised Wilmcote with a view to a having a broader sector view and are in discussion with a number of potential new operating executives to lead the vehicle.

Safe Harbour continues to review opportunities across the business-to-business distribution space.

1 Calculated based on Zegona's investment in Euskaltel held at the year end quoted price of €8.97, translated into GBP, divided by the number of Zegona shares in issue

Investments

Details of each of the Portfolio Companies are included on page 14 to 15.

Impact of COVID-19 on the portfolio

Whilst over 60% of the Company's NAV is in cash, the Portfolio Company investments will be impacted by COVID-19. Between 31 December 2019 and 24 April 2020, Zegona's share price fell by 21.1%, broadly in line with the general market (reflected by a 23.7% decrease in the FTSE All-Share Index over the same period). During this period, Zegona's underlying investment, Euskaltel has seen an increased demand for services, as the telecommunications market has been a critical enabler of homeworking during the period of restricted movement and the business remains stable. Le Chameau's integration with Bradshaw Taylor has begun well, with sales in January and February ahead of budget, but the UK and European lock-down may have a significant impact on Le Chameau's retail customers and sales in the coming months. The full impact is as yet unknown, but the current lock-down has coincided with the business's 'low season', lessening the impact to date. The acquisition companies, Safe Harbour and Wilmcote, will be unaffected financially in the short term, and may, as a consequence of the economic disruption and financial market dislocation, see increased opportunity to execute an attractive platform acquisition.

Allocation of Marwyn Value Investors Limited NAV by company

Based upon the Company's investments in the Master Fund (directly) and MVI II LP (indirectly), a detailed breakdown of the Company's total NAV is shown below as at 31 December 2019 and 31 March 2020:

Allocation of NAV by company at 31 December 2019

Ordinary shares

Based upon the Company's indirect investments in the Portfolio Companies through its interest in the Master Fund and MVI II LP, the Company's total NAV attributable to ordinary shareholders is broken down as follows as at 31 December 2019:

Realisation shares

Based upon the Company's indirect investments in the Portfolio Companies through its interest in the Master Fund, the Company's total NAV attributable to realisation shareholders is broken down as follows as at 31 December 2019:

Allocation of NAV by company at 31 March 2020

Ordinary shares

Based upon the Company's indirect investments in the Portfolio Companies through its interest in the Master Fund and MVI II LP, the Company's total NAV attributable to ordinary shareholders is broken down as follows as at 31 March 2020:

Realisation shares

Based upon the Company's indirect investments in the Portfolio Companies through its interest in the Master Fund, the Company's total NAV attributable to realisation shareholders is broken down as follows as at 31 March 2020:

The directors submit their Annual Report and the audited financial statements for the year ended 31 December 2019.

Directors and their interests

The directors of the Company who served during the year and subsequent to the date of this report were:

Robert Ware

Ronald Hobbs

Louisa Bonney

Martin Adams

Robert Ware (Non-Executive Chairman)Committee membership:

Audit Committee - Member

Nomination Committee - Chairman

Remuneration Committee - Member

Length of service: 14 years

Date of appointment: 3 October 2006

Last re-elected to the Board: 3 September 2019 at the Annual General MeetingRobert served first as corporate development director and then as deputy chief executive of MEPC between June 1997 and June 2003. MEPC was the fourth largest property company quoted on the LSE until September 2000, when Leconport Estates, a company jointly owned by clients of Hermes Pensions Management Limited and GE Real Estate, took the company private. During his tenure at MEPC, Robert and the team realised over £6 billion of international properties and invested over £2 billion, mainly in the UK. Prior to joining MEPC, Robert served as a director of Development Securities plc between 1988 and 1994.

Robert is currently chief executive officer of The Conygar Investment Company PLC, an AIM quoted property investment and development company formed in 2003 by Robert and members of the ex-MEPC team. Robert is also the Chairman of Le Chameau Group plc.

Ronald Hobbs (Independent Non-Executive Director)

Committee membership:

Audit Committee - Chairman

Nomination Committee - Member

Remuneration Committee - Member

Length of service: 6 years

Date of appointment: 2 January 2014

Last re-elected to the Board: 20 June 2017 at the Annual General Meeting

Ronald Hobbs, a qualified accountant, has over 25 years of private equity experience, having been managing director and senior partner with UBS AG, London and Paris in their European Private Equity Division as well as Vice President at Citicorp Venture Capital, London.

Louisa Bonney (Non-Executive Director)

Committee membership:

Audit Committee - Member

Nomination Committee - Member

Remuneration Committee - Member

Length of service: 6 years

Date of appointment: 2 January 2014

Last re-elected to the Board: 3 September 2019 at the Annual General Meeting 

Louisa Bonney is a chartered accountant and has worked in the finance industry in Jersey for over 20 years. Her experience includes working with large multi-jurisdictional structures with private equity, real estate and private wealth. Louisa is the managing director of Axio Capital Solutions Limited, a provider of fund and corporate administration services in Jersey, which is the Company's administrator.

Louisa is also an executive director of the Manager as well as a non-executive director of Marwyn Capital Management Limited, Marwyn General Partner Limited (the general partner of the Master Fund), Marwyn General Partner II Limited (the general partner of MVI II LP) and other Marwyn group companies.

Martin Adams (Independent Non-Executive Director)

Committee membership:

Audit Committee - Member

Nomination Committee - Member

Remuneration Committee - Chairman

Length of service: 5 years

Date of appointment: 8 May 2015

Last re-elected to the Board: 26 June 2018 at the Annual General Meeting 

Martin has over 30 years' experience in executive and non-executive capacities, both as a director of over 20 closed-end funds and fund-invested operating companies; and on the boards of fund management companies. He is currently the founder and Managing Director of Vietnam Fund Management Company, the Chairman of Eastern European Property Fund Limited and is a non-executive director of Metage Funds Limited, and Vietnam Phoenix Fund Limited. Prior to establishing VFMC, Martin worked for the Lloyds Bank Group in the United Kingdom, the Netherlands, Portugal and Hong Kong

Directors' interests

The directors' interests in the ordinary shares of the Company were as follows as at 31 December 2019 and 31 December 2018. There is no change in the holdings between 31 December 2019 and the date of approval of these financial statements.

The directors' interests in the realisation shares of the Company were nil as at 31 December 2019 (2018: nil) and to the date of the approval of these financial statements.

The Board has put in place measures to ensure that the Market Abuse Regulation is adhered to. 

Status and activities

Marwyn Value Investors Limited is a closed-ended investment company registered by way of continuation in the Cayman Islands (registered number MC-228005). The rights of shareholders are governed by Cayman law and the Company's Articles. These rights may differ from the rights and duties owed to shareholders in a UK incorporated company.

The Company was admitted to trading as a closed-ended investment company on the Specialist Fund Market (the precursor to the Specialist Fund Segment) on 8 December 2008.

The investment objective is to maximise total returns, primarily through the capital appreciation of its investment in the Master Fund. The Master Fund was launched in March 2006. It is an open-ended fund domiciled in the Cayman Islands. MVI II LP was launched in December 2015. It is an expert-fund pursuant to the Jersey Funds Law and the Expert Fund Guide and domiciled in Jersey, Channel Islands.

The investment policy allows follow-on investment in existing Portfolio Companies and, only in so far as it relates to the ordinary shares, permits investment in new Portfolio Companies.

A review of the performance of, and the outlook for, the portfolio is provided in the Report of the Manager.

An analysis of the Company's exposure to financial risk and the policies adopted in its efforts to mitigate such risks are disclosed in Note 13 to the financial statements.

Results

The results attributable to the shareholders for the year are shown in the Statement of Comprehensive Income.

Ordinary Share Distribution Policy

The Ordinary Share Distribution Policy was amended on 5 September 2018, permitting the 'Minimum Annual Distribution' (as defined in the policy) to be made through the repurchase of ordinary shares. Under the amended policy, returns to ordinary shareholders may be made by repurchase of shares, dividend payments, or a combination of both. It is the Board's current intention to effect the distribution via share repurchases, which commenced on 1 October 2018 (the Buyback Programme). Should the repurchases under the Buyback Programme not be sufficient to satisfy the quarterly allocation of the Minimum Annual Distribution, the balance will be paid as a dividend. We will continue to review the means by which funds are distributed on a regular basis.

The full amended Ordinary Share Distribution Policy is available within the August 2018 circular, included in the 'Documents' section of the Company's website, www.marwynvalue.com.

During 2019, the Master Fund purchased 4,651,046 ordinary shares in the Company for a total of £5,843,262 pursuant to the Company's Buyback Programme as announced on 14 September 2018. These ordinary shares were converted into exchange shares under the Company's Exchange Procedure (as defined and described in the Company's prospectus dated 19 October 2016) and the corresponding limited partnership interests cancelled.

January 2019 Partial Offer

In January 2019, the Master Fund, under instruction from the Manager made a partial offer to institutional shareholders for ordinary shares in the Company, conducted by way of a reverse bookbuild. Pursuant to this offer, the Master Fund acquired 4,030,625 ordinary shares at a price of 130p per share for a total consideration of £5.2 million.

To the date of this report, a total of £58.3 million has been returned to ordinary shareholders since the implementation of the Ordinary Share Distribution Policy in November 2013 (including the Partial Offer in January 2019 and shares purchased under the Buyback Programme in 2020 to date).

Realisation class cash return

In November 2019, the Company announced that funds attributable to realisation shareholders received from the exit of the investment in BCA and the final distribution from the liquidation of Gloo, would be returned to realisation shareholders by way of a redemption of realisation shares. Following a redemption of the Company's interests in Class R(F) and Class R(G) of the Master Fund to the value of £4.1 million, the distribution to realisation shareholders was effected by way of a redemption of 2,533,505 realisation shares which were subsequently cancelled.

Share capital

As at 31 December 2019, the Company had 60,903,687 ordinary shares in issue (31 December 2018: 69,585,358) and 4,187,226 realisation shares in issue (2018: 6,720,731).

Facility

MVI II LP, along with MVI II Co-Invest LP, had an interest-bearing secured committed sterling revolving credit facility with Barclays Bank for a combined £50 million which commenced in May 2017. On 22 May 2019, the total facility amount was reduced to £30 million. The facility expired on 31 August 2019.

Subsequent events

The rapid spread of COVID-19 has caused unprecedented volatility in equity markets, with significant declines seen globally.

As at the end of March 2020, through the Company's investment in the Master Fund (and indirectly in MVI II LP), over 60% of the underlying asset value is in cash reserves with an additional 14% held in cash shell acquisition vehicles, whose only significant asset is cash. The largest Portfolio Company, Zegona (representing 30% of the underlying net asset value), currently operates in the Spanish telecommunications market which has been a critical enabler of homeworking during the period of restricted movement. There has been a 21.1% drop in Zegona's share price between 31 December 2019 and 24 April 2020 (broadly consistent with the overall market decline, as evidenced by a 23.7% drop in the FTSE All-Share Index over the same period).

Given the emergence and spread of COVID-19 occurred in 2020, it is not considered relevant to conditions that existed at the balance sheet date. Consequently COVID-19 is considered to be a non-adjusting post balance sheet event. The measurement of assets and liabilities in the accounts has not been adjusted for its potential impact. The impact of COVID-19 is uncertain and may be material. The Board and the Manager are continually assessing the situation.

Directors' remuneration 

The emoluments of the individual directors for the year were as follows:

*Payable to the Administrator

Directors' fees are paid directly from the Master Fund. The above fees do not include reimbursed out-of-pocket expenditure

Manager

The Manager is entitled to a management fee, payable by the Company in arrears, equal to 1/12th of 2% per month of the NAV from the Company where such investment is not in the Master Fund. As the Company's investments are all through the Master Fund, the Company does not currently pay a management fee to the Manager.

The Manager receives a management fee from the Master Fund, payable monthly in arrears, equal to 1/12th of 2% of the NAV before management fees and incentive allocations in respect of Class F, Class G, Class R(F)1 and Class R(G)1 interests of the Master Fund into which the Company invests. From 30 November 2018, being 2 years after the creation of the realisation pool, the management fee on the realisation share interests is calculated by reference to NAV before management fees and incentive allocation less the aggregate value of cash and near cash investments attributable to the realisation share interests.

The Manager may, at its discretion, pay from the management fee to any person to which it has delegated any of the functions it is permitted to delegate such as the Investment Adviser. MUFG Alternative Fund Services (Ireland) Limited, the administrator to the Master Fund, calculates the management fee payable to the Manager by the Master Fund. The Manager is also entitled to reimbursement of certain expenses incurred by it in connection with its duties. The Company does not pay any management fee or carried interest charge as a result of its indirect investment in MVI II LP through the Master Fund.

Incentive allocation

As detailed in Note 14 to the financial statements, incentive allocations are due from the Master Fund in respect of interests in Class F, Class G, Class R(F)1 and Class R(G)1 into which the Company invests.

The incentive allocations are due on returns generated by the Master Fund and are deducted from the Gross Asset Value of the Master Fund in deriving the NAV. The NAV is used to calculate the value of the Company's holding in the Master Fund.

The incentive allocations to be borne by the Class F, Class G, Class R(F)1 and Class R(G)1 interests in the Master Fund will only be due on further returns being made.

Following settlement of the Partial Offer in January 2019 the 'reference amount' in respect of Class F interests in the Master Fund, being the amount that must be distributed to shareholders before any incentive allocation is due, was distributed in full. Consequently, the 'initial incentive allocation' in respect of Class F of £2,460,579 crystallised and was distributed.

During the year ended 31 December 2019 the total movement in the uncrystallised incentive allocations relating to the ordinary and realisation shares due to movements in the underlying net asset value was a decrease of £4,869,762 (for the equivalent year to 31 December 2018, the decrease was £2,786,785). The value of the total incentive allocation as at 31 December 2019 amounted to £15,587,823 (2018: 22,918,164). Six of the directors of the Manager are incentivised through the incentive allocation and three are beneficially interested in the investment advisory fee payable by the Master Fund.

Investors can assess remuneration and incentives by reference to the disclosure of the basis of calculation of the incentive allocations which was made in the Circular dated 19 October 2016 in relation to the Company's investment in Class F, Class R(F)1, Class G and Class R(G)1 interests of the Master Fund. These documents are available on the Company's website. Disclosure of the amount of investment advisory fee is contained in Note 14.

Substantial shareholdings

At 31 December 2019 the following interests in 3% or more of the issued ordinary shares had been notified to the Company.

At 31 March 2020 the following interests in 3% or more of the issued ordinary shares had been notified to the Company.

Auditors

The Audit Committee does not have any reason to believe that PwC did not conduct an effective audit.

PwC has expressed its willingness to continue to act as auditor to the Company and a resolution for its re-appointment will be proposed at the forthcoming Annual General Meeting. Audit fees for the year ended 31 December 2019 for the Company total £30,920. Non-audit fees paid to PwC for the Company for the same period totalled £6,828. All Company-related expenses are paid by the Master Fund and allocated to the relevant Master Fund class interest as described in Note 3.8 to the financial statements.

Annual General Meeting

The notice of the Annual General Meeting will be forwarded to shareholders under separate cover.

Corporate governance

As a company registered in the Cayman Islands and subject to the rules of the Specialist Fund Segment, the Company is not required to comply with the UK Corporate Governance Code published by the Financial Reporting Council.

The directors however recognise the importance of maintaining sound corporate governance and so seek to ensure that the Company adopts policies and procedures which reflect those principles of good corporate governance as are appropriate to the Company's size. Full details are included in the latest Company prospectus available on the Company's website.

The Company is a member of the AIC and the Board has considered the principles and recommendations of the AIC Code.

The AIC Code sets out a framework of best practice in respect of the governance of investment companies. It has been endorsed by the UK Financial Reporting Council and is supported by the Commission. The AIC Code is available on the AIC's website (http://www.theaic.co.uk/).

The Board considers that reporting against the principles and recommendations of the AIC Code provides the most relevant information to shareholders given that the Company is an externally managed investment company.

The Company has complied with the recommendations of the AIC Code, except as set out in this report.

The Board 

The Chairman, Robert Ware, is not considered to be independent due to his tenure as Chairman exceeding the AIC Code 9-year recommendation and his having interests in, and having other directorships within, the Marwyn group and the Le Chameau group. The Board does not consider it necessary to have an independent Chairman as it believes that Robert's high level and range of business knowledge, financial experience and integrity enables him to provide clear and effective leadership and, in conjunction with his fellow Directors, proper stewardship of the Company.

Louisa Bonney is not considered to be independent due to her having interests in, and having other directorships within, the Marwyn group. Notwithstanding such interests, the Board believes Louisa's skills and her position within Marwyn are of benefit to the Board, and as such do not consider that it is necessary for her to be independent. 

Ronald Hobbs and Martin Adams are considered to be independent in terms of their respective directorships. However they have a beneficial interest in the Company as detailed on page 18.

Given the size and composition of the Board it is not currently felt necessary to appoint a senior independent director however this position is reviewed on an annual basis by the Nomination Committee.

The Board has adopted a policy on tenure which requires the Nomination Committee to annually consider the appropriateness of the tenure of the Chairman and each director. One-third, or the nearest number to one-third, of the directors shall retire and offer themselves for re-appointment at each annual general meeting in accordance with the Articles.

The Chairman regularly meets with representatives of the Manager and is in regular communication with his fellow Directors. In addition, the Board maintains open and frequent communication with the Manager and the Administrator throughout the year so that any ad hoc items for the Board's consideration are able to be considered in a timely manner by all members of the Board.

The Board normally meets on a quarterly basis to consider among other things, the investment performance and associated matters such as marketing and investor relations, risk and portfolio management, the suitability of the investment policy, performance of the share price as well as NAV performance and any discount between the share price and the NAV, the shareholder profile of the Company and the performance and cost of service providers, to ensure control is maintained over the Company's affairs. Regular ad hoc informal meetings are also held with the Manager principally to review the performance of the investments.

During the financial year ended 31 December 2019, the Board formally met a total of four times, for formal quarterly meetings. In addition, the Audit Committee, the Nomination Committee and the Remuneration Committee each met twice.

Culture 

The Company is acutely aware that company culture needs to clearly align with the Company's purpose, value and strategy. The Company is small and, and as at the date of these financial statements, consists of four Directors. The Company culture is therefore set by the Board and demonstrated through Board interaction and in turn the relationships the Board develops with service providers, in particular the Manager.

The Directors bring both significant funds expertise and commercial operating experience, having managed businesses across a wide range of industries and economic environments. The Board comprises an equal number of independent and non-independent Directors. The Chairman in his role of leading the Board, managing Board meetings and encouraging constructive challenge between Board members is central to setting the tone from the top. The Board meets frequently, both formally and informally, and across all means of communication fosters openness and honesty. This is mirrored in the relationships the Board has developed with the Company's service providers. The Board meet frequently with the Manager, providing constructive challenge as well as honest and frank feedback.

Remuneration plays a role in impacting company behaviour and culture. The Remuneration Committee has reviewed the Company's remuneration policy and Director remuneration and are satisfied that this is aligned with Company culture, ensuring that remuneration is at level to attract individuals of a calibre appropriate to the Company's future development without compromising Director independence

Attendance record:

The number held has been shown for each individual to reflect the number of meetings held over the year or since the date of their appointment.

Board committees

The Company uses a number of committees to manage its operations. Each committee has formal written terms of reference, which clearly define their responsibilities. The terms of reference are available on the Company's website www.marwynvalue.com.

Audit Committee

The Audit Committee comprises all the Directors of the Company and meets at least twice a year. Ronald Hobbs is Chairman of the Audit Committee. The terms of reference of the Audit Committee are reviewed and reassessed for their adequacy on an annual basis. The Audit Committee provides a forum through which the Company's auditor has access to and can report to the Board. Its functions relate to the Company only and do not apply to the Master Fund, MVI II LP or any other vehicle.

The Company's auditor provides certain tax services to the Company. However audit independence regulations do not currently restrict the services which are provided under the terms of the separate engagement entered into in respect of those services.

The Audit Committee performs the following functions:

· selection of the statutory auditor and making recommendations relating to the appointment of the statutory auditor to the Board;

· monitoring the financial reporting (including cash and securities reconciliations) process and submitting recommendations or proposals to the board in order to ensure the integrity of that process;

· monitoring the statutory audit of the Company's annual financial statements and the performance of the Company's auditor, taking into account any findings and conclusions by the Financial Reporting Council under article 26 (6) of Regulation 538/2014 (the "Audit Regulation");

· reviewing and monitoring auditor independence in accordance with paragraphs 2(3), 2(4), 3 to 8 and 10 to 12 of Schedule 1 to the Statutory Auditors and Third Country Auditors Regulations 2016 (SI 2016/649) and article 6 of the Audit Regulation, and in particular the appropriateness of the provision of non-audit services to the issuer in accordance with article 5 of the Audit Regulation;

· informing the Board of the outcome of the statutory audit and explaining how the statutory audit contributed to the integrity of the financial reporting process and what role the Audit Committee played in that process; and

· keep under review the adequacy and effectiveness of the Company's internal financial controls and internal control and risk management systems.

During the year the Audit Committee met twice, the key matters discussed include review and consideration of:

· Audit Committee's terms of reference;

· The Company's annual financial statements for the year ended 31 December 2018 and interim financial statements for the six-month period ended 30 June 2019, including review of the RNS announcements released in connection with these accounts;

· The Company's policy and procedures, including compliance arrangements in relation to anti-bribery and corruption and whistleblowing;

· the need for an internal audit committee; and

cash flow management and the payment control system.

The Audit Committee concluded that an internal audit department was not required as all of the Company's day-to-day management and administrative functions are outsourced to regulated third parties. As a result, the Company has no executive directors, employees or internal operations.

There were no updates made to the Audit Committee's terms of reference during the year.

Nomination Committee

The Nomination Committee comprises all the Directors of the Company and meets at least twice a year. Robert Ware is Chairman of the Nomination Committee. The terms of reference of the Nomination Committee are reviewed and reassessed for their adequacy on an annual basis. Members of the Nomination Committee do not participate in the review of their own position, and further, Robert Ware will not chair a meeting of the Nomination Committee when it is dealing with the matter of succession to the chairmanship of the Board.

The function of the Nomination Committee is to consider the appointment and re-appointment of directors. When considering the appointment and re-appointment of directors, the Nomination Committee and the Board consider whether the Board and its committees have a balance of skills, experience, length of service, knowledge of the Company, its diversity, how the Board works together and any other factors relevant to the effectiveness of the Board including if the director or candidate being reviewed has sufficient time to devote to the Company to carry out their duties effectively.

The Board and the Nomination Committee does not take into account the gender of a director or candidate as they do not believe it affects a director's performance.

External search consultants are used as and when considered appropriate by the Nomination Committee.

Formal induction training is provided to new directors on request. All new directors meet with the Chairman, and members of the Nomination Committee, prior to appointment in order to discuss the Company, the Manager, the responsibilities of a director of the Company and investment company industry matters.

Any new directors will meet with the full Board at the earliest opportunity following their appointment. In addition, all directors have full access to the administrator and the Manager.

All directors are re-elected at the next Annual General Meeting following their appointment and thereafter retire by rotation (with one third of the directors being required to retire by rotation each year) subject also to the requirement that all directors are required to offer themselves for re-election at least every three years.

During the year the Nomination Committee met twice, the key matters discussed include review and consideration of:

· Nomination Committee's terms of reference;

· resolved that Louisa Bonney should be put forward for election at the 2019 AGM; and

· that given the composition and size of the board it was not felt necessary to appoint a senior independent director.

There were no updates made to the Nomination Committee's terms of reference during the year.

Remuneration Committee

The Remuneration Committee comprises all the directors of the Company and meets at least twice a year. Martin Adams is Chairman of the Remuneration Committee. The terms of reference of the Remuneration Committee are reviewed and reassessed for their adequacy on an annual basis. Members of the Remuneration Committee do not participate in the review of their own remuneration.

The Company's remuneration policy is to set remuneration at a level to attract individuals of a calibre appropriate to the Company's future development.

During the year the Remuneration Committee met twice to discuss the Remuneration Committee's terms of reference and duties. The Company does not have a workforce and there were no changes to the board composition during the year.

Following review and consideration of the Company's remuneration policy, the Remuneration Committee concluded that the current remuneration policy of the Company is currently to set at a level to attract, motivate and retain individuals of a calibre appropriate to the Company's future development and that the structure of the Company's remuneration remains appropriate for the size and the activities of the Company.

There were no changes to the Remuneration Committee's terms of reference during the year.

Management Engagement Committee

The Board considers that due to its size and structure as a feeder fund, it would be unnecessarily burdensome to establish a separate management engagement committee. The review of the performance of, and contractual arrangements with, the Manager is undertaken by the Board. However only Directors independent of the Manager are involved with this review.

Authority of the Manager

The authority of the Manager is set out in writing in the management agreement. Under the terms of the management agreement the key duties of the Manager are the negotiation of any investment, consolidation disposal of an investment, in accordance with the relevant investment policy. In performing these services, the Manager is granted authority to:

· give instructions to administrators and sub-administrators in relation to acquisitions and disposals of investments;

· cause money to be retained in cash or placed in deposit;

· negotiate contracts, agreements and other undertakings as may be reasonable;

· instruct and appoint any advisors and specialists which are believed necessary or advisable for the purposes of implementing the investment policy and/or managing the investments;

· use reasonable endeavours to obtain all licences, permissions and consents necessary to complete, maintain or dispose of any investment;

· prepare all necessary documentation and where necessary submit to the board for execution;

· borrow or raise monies as required;

· assist as necessary in the valuation of unlisted investments;

· advise on availability and appropriate source of funds to be utilised as distributions;

· carry out quarterly reviews of the investment portfolio, or at any other time as directed by the Company;

· prepare at least quarterly a report detailing the activities and performance of the Manager during the quarter; and

· monitor investment policy and propose changes to the Board.

Relations with shareholders

The Directors are always available for communication with shareholders and all shareholders have the opportunity, and are encouraged, to attend and vote at the Annual General Meetings of the Company during which the Board and the Manager will be available to discuss issues affecting the Company. The Board is regularly informed of shareholders' views via regular updates from the Manager and Broker as to meetings and other communications they may have had with shareholders.

Statement of going concern

Under the relevant class agreements between the Company and the Master Fund, the Master Fund is required to meet the Company's expenses and as such, the directors consider that there is no mismatch between the Company's assets and liabilities.

The Board and the Manager are continually assessing the economic and wider implications of the COVID-19 pandemic, and whilst the long-term impact is as yet unknown, considering the significant cash balance held by the Master Fund, the directors believe that the Company, via the Master Fund, has sufficient resources to meet all liabilities as they fall due for the foreseeable future and continue to adopt a going concern basis in preparing the financial statements.

Internal control

The Board is responsible for establishing and maintaining the Company's system of internal quality control and risk management and reviewing its effectiveness. Internal control systems are designed to meet the particular needs of the Company and the particular risks to which it is exposed.

The procedures are designed to manage rather than eliminate risk and by their nature can only provide reasonable but not absolute assurance against material misstatement or loss. The key procedures which have been established to provide effective internal controls are as follows:

The duties of managing the investments and accounting are segregated:

· MUFG Alternative Fund Services (Ireland) Limited, a company independent of the Manager and the Board, provides administrative and accounting services to the Master Fund;

· custodian services are provided by an independent party to the Master Fund and are segregated from the administrative and accounting services provided;

· Axio provides administrative and accounting services to the Company and the provision of these services is independent from the investment management services provided by the Manager;

· the Board reviews financial information produced by the Manager and Axio on a regular basis;

· the Manager and Axio are regulated entities and are subject to an annual audit by an independent auditor. This is confirmed to the Board on an annual basis; and

· Assets attributable to the realisation shares are segregated from those attributable to the ordinary shares.

The Company does not have an internal audit function as all of the Company's management functions are delegated to third parties and the Board therefore considers that there is no need for the Company to have an internal audit function.

The Audit Committee has reviewed the Company's risk management and control systems and believes that the controls are satisfactory given the nature and size of the Company.

Financial Risk Profile

The Company's financial instruments comprise investments, cash and various items such as payables and receivables that arise directly from the Company's operations. The main purpose of these instruments is the investment of shareholders' funds. The main risks are detailed in Note 13 to the financial statements and pages 52 to 57.

Directors' Responsibilities

The Directors are responsible for preparing the financial statements in accordance with applicable law and International Financial Reporting Standards as adopted by the European Union ("IFRS").

The Directors are required to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period and to confirm that the reports contained in these financial statements includes a fair review of the performance of the business and the position of the Company.

In preparing these financial statements the directors are required to:

· select suitable accounting policies and apply them consistently;

· make judgements and estimates which are reasonable and prudent;

· state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with Cayman law. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Each of the Directors, whose names and functions are listed on page 17, confirms that, to the best of their knowledge:

· these financial statements, which have been prepared in accordance with IFRS, give a true and fair view of the assets, liabilities, financial position and loss of the Company; and

· the reports contained in these financial statements includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

On behalf of the Board

Independent auditors' report to the directors of Marwyn Value Investors Limited

Report on the audit of the financial statements

In our opinion, Marwyn Value Investors Limited's financial statements:

· give a true and fair view of the state of the company's affairs as at 31 December 2019 and of its loss and cash flows for the year then ended; and

· have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

We have audited the financial statements, included within the Annual Report and Financial Statements (the "Annual Report"), which comprise: the statement of financial position as at 31 December 2019; the statement of comprehensive income, the statement of cash flows, the statement of changes in net assets attributable to equity holders of the Company for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC's Ethical Standard, as applicable to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Overview

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.

Key audit matters

Key audit matters are those matters that, in the auditors' professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the company, the accounting processes and controls, and the industry in which it operates.

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £52,504 (2018: £73,573) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you where:

· the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

· the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the company's ability to continue as a going concern.

The other information comprises all of the information in the Annual Report other than the financial statements and our auditors' report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.

Responsibilities of the directors for the financial statements

As explained more fully in the Directors' Responsibilities set out on page 28, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report.

Use of this report

This report, including the opinion, has been prepared for and only for the company's directors as a body for the audit of your financial statements for the year ended 31 December 2019 as required by the Company's governing documents agreement dated 19 November 2013 in accordance with our engagement letter dated 30 January 2020 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come, including without limitation under any contractual obligations of the company, save where expressly agreed by our prior consent in writing.

Partner responsible for the audit

The engagement partner on the audit resulting in this independent auditors' report is Natasha McMillan.

PricewaterhouseCoopers LLP

Chartered Accountants

London

30 April 2020

For the year ended 31 December 2019

Notes 1 to 18 on pages 37 to 51 form an integral part of these financial statements.

As at 31 December 2019

The financial statements on pages 33 to 51 were approved by the Board of Directors and authorised for issue on 30 April 2020. They were signed on its behalf by:

Notes 1 to 18 on pages 37 to 51 form an integral part of these financial statements.

For the year ended 31 December 2019

Notes 1 to 18 on pages 37 to 51 form an integral part of these financial statements.

For the year ended 31 December 2019

For the year ended 31 December 2018

Notes 1 to 18 on pages 37 to 51 form an integral part of these financial statements.

1. General information

Marwyn Value Investors Limited (the "Company") is a closed-ended investment fund registered by way of continuation in the Cayman Islands (registered number MC-228005) and is traded on the Specialist Fund Segment. The rights of the shareholders are governed by Cayman law and may differ from the rights and duties owed to shareholders in a UK incorporated company. The address of its registered office is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

2. New standards and amendments to IFRS

The following standards and amendments to existing standards, which are effective for annual periods beginning on or after 1 January 2019 have had no impact on the Company's financial position or results:

2.1 New standards, amendments and interpretations not yet effective

The following standards and amendments are effective for annual periods beginning on or after 1 January 2020 and have not been early adopted in preparing these financial statements. The Company has considered the impact of these and concluded that none of these are expected to have a significant effect on the financial position or results of the Company.

3. Summary of significant accounting policies

The principal accounting policies, which have been consistently applied in the preparation of these financial statements, are set out below.

3.1 Basis of preparation and going concern

The financial statements have been prepared under the historical cost convention on a going concern basis, as modified by the revaluation of financial assets measured at fair value through profit or loss.

Under the relevant class agreements between the Company and the Master Fund, the Master Fund is required to meet the Company's expenses and as such, the directors consider that there is no mismatch between the Company's assets and liabilities.

The Board and the Manager are continually assessing the economic and wider implications of the COVID-19 pandemic, and whilst the long-term impact is as yet unknown, considering the significant cash balance held by the Master Fund, the directors believe that the Company, via the Master Fund, has sufficient resources to meet all liabilities as they fall due for the foreseeable future and continue to adopt a going concern basis in preparing the financial statements.

3.2 Statement of compliance

The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union together with the applicable legal and regulatory requirements of Cayman law.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and judgements. It also requires the Board of Directors to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 4.

The Statement of Recommended Practice ("SORP") issued in October 2019 by the AIC seeks to best reflect the activities of an investment company. Where the SORP contains recommendations applicable to the Company and involving material balances, its recommendations have been incorporated in these financial statements.

As required for a company which is externally managed by a Jersey-incorporated manager which is regulated by the Commission, these financial statements also comply with the requirements of the Codes of Practice for Alternative Investment Funds and AIF Service Business issued by the Commission.

3.3 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (the functional currency). In arriving at the functional currency the directors have considered the currency in which the original capital was raised, any distributions that may be made and ultimately the currency that the capital would be returned in on a break up basis.

The directors have also considered the currency to which the underlying investments are exposed. The directors are of the opinion that British Pounds Sterling ("Sterling") best represents the functional currency and therefore the financial statements are presented in Sterling.

(b) Transactions and balances

Foreign currency transactions are translated into Sterling using the exchange rates prevailing at the dates of the transactions. Foreign currency assets and liabilities are translated using the exchange rate prevailing at the Statement of Financial Position date. Foreign exchange gains and losses arising from translation are included in the Statement of Comprehensive Income.

3.4 Financial assets measured at fair value through profit or loss

(a) Classification

The Company's investment in the Master Fund was designated by the Board of Directors at fair value through profit or loss at inception as it is not held for trading but is managed, and its performance evaluated, on a fair value basis, in accordance with the Company's documented investment strategy.

The Company's business model was re-assessed on adoption of IFRS 9 Financial Instruments ("IFRS 9") on 1 January 2018. As the investment in the Master Fund is not held for trading and the Company did not irrevocably elect, at transition, to classify the investment as a financial asset measured at fair value through other comprehensive income, the investment continues to be held as a financial asset measured at fair value through profit or loss under IFRS 9.

Changes in the fair value of investments measured at fair value through profit or loss are recognised in the Capital column of the Statement of Comprehensive Income. On disposal, realised gains and losses are also recognised in the Capital column of the Statement of Comprehensive Income and are transferred from the capital reserve to the revenue reserve in the Statement of Changes in Net Assets.

(b) Recognition, derecognition and measurement

The Company recognises unquoted investments measured at fair value through profit or loss on the date it commits to purchase the instrument. Derecognition of an investment occurs when the rights to receive cash flows from the investment expires or is transferred and substantially all of the risks and rewards of ownership have been transferred.

The amount that may be realised from the disposal of an investment in the Master Fund may differ from the values reflected in the financial statements.

(c) Fair value estimation

The Master Fund is unquoted and accordingly the fair value of the investment is determined based primarily on the NAV information provided by the administrator of the Master Fund. The NAV of the Master Fund is determined by the administrator of the Master Fund by deducting the fair value of the liabilities of the Master Fund from the fair value of the Master Fund's assets.

3.5 Financial liabilities

The Company recognises a financial liability on assuming a financial obligation and derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or they expire. Borrowings are initially measured at fair value net of transaction costs and subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis in the Statement of Comprehensive Income. Financial liabilities include loans payable, accruals and dividends payable.

3.6 Cash and cash equivalents

Cash and cash equivalents comprise bank balances held by the Company including short-term bank deposits with an original maturity of three months or less. The carrying value of these assets approximates to their fair value.

3.7 Finance income

Interest income on cash deposits is accounted for on an accruals basis.

3.8 Expenditure

Pursuant to the "Amended and restated agreement relating to Class F, Class G and Class R interests in Marwyn Value Investors LP", the Master Fund is legally obliged to settle all expenses specifically attributable to the Company. The Manager does not receive a management fee or incentive allocation from the Company in respect of funds invested by the Company in the Master Fund. A summary of costs ultimately incurred by the both ordinary shareholders and realisation shareholders is included in the 'Key Information Documents', located on the 'Documents' section of the Company's website, www.marwynvalue.com.

3.9 Costs directly attributable to the issue of equity

Share issue costs are placing expenses directly relating to the issue of the Company's shares. These expenses include fees payable under share placement agreements, printing, advertising and distribution costs and legal fees and any other applicable expenses. All such costs are charged to equity and deducted from the proceeds received.

3.10 Investment in unconsolidated structured entities

IFRS 12 Disclosures of Interest in Other Entities defines a structured entity as an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to the administrative tasks only and the relevant activities are directed by means of contractual agreements.

The Company has concluded that the Master Fund, in which it invests, but that it does not consolidate, meets the definition of a structured entity because: 

• The voting rights in the Master Fund are not dominant rights in deciding who controls them as they relate to administrative tasks only; 

• The Master Fund's activities are restricted by its stated investment policy, as disclosed in the Company's prospectus; and 

• The Master Fund has a narrow and well-defined objective to provide investment opportunities to investors.

3.11 Segment reporting

The Company is organised and operates as one segment by allocating its assets to its investment in the Master Fund which is not actively traded.

4. Critical accounting estimates and judgements

The Company makes estimates, judgements and assumptions that affect the reported amounts of assets and liabilities. Estimates and underlying assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The fair value of the investment held in the Master Fund is determined by the directors on the basis of the NAV of the Master Fund as determined by the administrator of the Master Fund at the year end date. In turn, the NAV of the Master Fund is primarily determined by the fair value of its underlying investments which, as described in Note 6, comprise fair value hierarchy level 1, level 2 and level 3 investments. Due to their unobservable nature, level 3 investments are inherently subject to a higher degree of judgement and uncertainty. The fair value of the investment held by the Master Fund in MVI II LP (also being a fund), is determined by the MVI II LP administrator and is also primarily based on the fair value of its underlying investments, which comprise level 1, level 2 and level 3 fair value hierarchy equities. Please refer to Note 6 for further details of the valuation methodologies applied.

5. Taxation

The Company is exempt from all forms of taxation in the Cayman Islands, including income and capital gains. However, dividend income and certain other interest from other countries are subject to withholding taxes at various rates. The Company recognises interest and penalties, if any, related to unrecognised tax benefits as income tax expense in the Statement of Comprehensive Income. During the years ended 31 December 2019 and 31 December 2018, the Master Fund did not incur any interest or penalties. The Company identifies its major tax jurisdiction as the Cayman Islands where the Company makes significant investments (in the Master Fund). The Board has considered the Company's tax positions, and has concluded that no liability for unrecognised tax liabilities should be recorded related to uncertain tax positions for open tax years and the positions to be taken for tax year ended 31 December 2019.

The Directors of the Company intend to manage the affairs of the Company in such a way that it is not resident in the United Kingdom for United Kingdom tax purposes. In these circumstances, the Company will not be subject to United Kingdom tax on its profits and gains (other than withholding tax on any interest or certain other income which has a United Kingdom source).

The Company recognises the tax benefits of uncertain tax positions only where the position is "more likely than not" to be sustained assuming examination by tax authorities. As at 31 December 2019, there are no such tax benefits recognised (31 December 2018: none). IFRIC 23 "Uncertainty over Income Tax Treatments" is effective for annual reporting periods beginning on or after 1 January 2019 and clarifies the accounting for uncertain income tax treatments that have yet to be accepted by tax authorities. An assessment has been carried out and the new standard has no significant impact on the Company's financial position, performance or disclosures in its financial statements.

6. Financial assets measured at fair value through profit or loss

As at 31 December 2019, 100% (2018: 100%) of the financial assets measured at fair value through profit or loss relate to the Company's investment in the Master Fund. The fair value of the investment in the Master Fund is based on the latest available NAV reported by the administrator of the Master Fund. The limited partnership interests in the Master Fund are not publicly traded.

As a result, the carrying value of the Master Fund may not be indicative of the value ultimately realised on redemption. In addition, the Company may be materially affected by the actions of other investors who have invested in the Portfolio Companies in which the Master Fund has directly or indirectly invested.

Net Asset Value - investment movements

The net gain or loss recognised on financial assets measured at fair value through profit or loss reported in the Statement of Comprehensive Income consists of the movement in the unrealised gain or loss and the net realised gains or losses on redemptions. Realised gains or losses are subsequently transferred from the capital reserve to the revenue reserve.

The Company holds 100% (2018: 100%) of the Class F interests which represent 70.07% (2018: 67.79%) of the NAV of the Master Fund and 100% (2018: 100%) of the Class G interests which represent 20.83% (2018: 21.26%) of the NAV of the Master Fund.

The Company holds 100% (2018: 100%) of the Class R(F)1 interests which represent 5.30% (2018: 6.78%) of the NAV of the Master Fund and 100% (2018: 100%) of the Class R(G)1 interests which represent 1.48% (2018: 2.15%) of the Master Fund.

As the Company has no control over either the Master Fund's activities or MVI II LP and has no voting power in either of their affairs, neither the Master Fund nor MVI II LP are considered to be subsidiaries.

Fair value hierarchy

The Company classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

- quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)

- inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2)

- inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3)

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined by the lowest level input that is significant to the fair value instrument. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. Assessing the significance of a particular input to the fair value measurement requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes 'observable' requires significant judgement. Observable data is considered to be market data that is readily available, regularly distributed or updated, reliable, not proprietary and provided by independent sources that are actively involved in the market.

Taking into account the valuation methodology applied to the investments in the Master Fund and in MVI II LP (which is held by the Master Fund at NAV), the Company's valuation of investments is classified as level 3 (2018: level 3). The Portfolio Company investments are categorised as level 1 fair value measurement if they are quoted in active markets (Zegona) or as level 3 if they are unquoted investments (Le Chameau). For investments which are quoted, but trading in the stock does not constitute an 'active market' under IFRS alternative valuation techniques are applied; Wilmcote, valued by reference to the observable equity raise in December 2019, is classified as level 2 whilst Safe Harbour, valued by reference to unobservable inputs, is classified as level 3. The level 2 and level 3 categorised investments are valued in accordance with IPEV Guidelines.

The following table presents the movement in the Company's investments classified as Level 3 instruments:

The following table summarises the valuation methodology used for the Company's investments characterised as Level 3 as at 31 December 2019:

The following table summarises the valuation methodology used for the Company's investments characterised as Level 3 as at 31 December 2018:

7. Cash and cash equivalents

For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise balances with original maturity of less than 3 months, which total £128,372 as at 31 December 2019 (2018: £127,827).

8. Loan payable

The Master Fund has made a loan to the Company of £125,000 (2018: £125,000) for which the Company pays interest received on the corresponding cash amount held. The loan will be repaid by set-off on the date that the Company's interests in the Master Fund are redeemed. As a cash balance is held to the value of the loan payable and all interest earned on the cash balance is added to accruals, the effect of discounting is not material to the cash flows or balance sheet position.

9. Distributions

Distributions in 2019

In January 2019, the Master Fund, under instruction from the Manager made a partial offer to institutional shareholders for ordinary shares in the Company, conducted by way of a reverse bookbuild process, whereby shareholders were able to offer to sell some or all of their shareholding to the Master Fund; at the end of the offer period, the lowest clearing price submitted, allowing at least £5 million of shares to be purchased, was selected. Full details are set out in the RNS announcement made by the Manager on 3 January 2019 (available in Company's website 'RNS' page). Pursuant to this offer, the Master Fund acquired 4,030,625 ordinary shares at a price of 130p per share for a total consideration of £5.2 million. Following approval by shareholders at the Company's September 2019 Annual General Meeting, these shares were converted to exchange shares and the corresponding Master Fund limited partnership interests cancelled.

As announced on 14 September 2018, the Company commenced its Buyback Programme in October 2018 as a mechanism to satisfy the Minimum Annual Distribution of the Company's Ordinary Share Distribution Policy. Liberum Capital Limited, in its capacity as corporate broker to the Company, manages the programme and is authorised to effect on-market purchases of Ordinary Shares on behalf of the Master Fund. Under the Buyback Programme, during 2019, the Master Fund purchased 4,651,046 ordinary shares in the Company for a total of £5,843,262. These ordinary shares have all been converted into exchange shares under the Company's Exchange Procedure (as defined and described in the Company's prospectus dated 19 October 2016) and the corresponding limited partnership interests cancelled.

In November 2019, the Company announced that funds attributable to realisation shareholders received from the exit of the investment in BCA and the final distribution from the liquidation of Gloo, would be returned to realisation shareholders by way of a redemption of realisation shares.

Following a redemption of the Company's interests in Class R(F) and Class R(G) of the Master Fund to the value of £4.1 million, the distribution to realisation shareholders was effected by way of a redemption of 2,533,505 realisation shares which were subsequently cancelled. As required by IAS 32, this has been reflected through the Statement of Changes in Equity.

Distributions in 2018

Three quarterly interim dividends of 2.064p per ordinary share were paid in January, April and July, totalling £4,382,191. Of this, £1,460,730 was recognised as a liability as at 31 December 2017. Dividends paid by the Company are funded by an equal distribution from the Master Fund to the Company.

In the fourth quarter of 2018 (being October - December), the Master Fund purchased 1,186,468 ordinary shares in the Company for a total of £1,460,730. In December 2018, these ordinary shares were converted into exchange shares under the Company's Exchange Procedure and the corresponding Master Fund interests cancelled.

In September 2018, the Company announced that, following the receipt of funds from the liquidation of Gloo, the funds attributable to realisation shareholders would be returned to realisation shareholders by way of a redemption of realisation shares. Following a redemption of the Company's interests in Class R(F) and Class R(G) of the Master Fund to the value of £442,978, the distribution to realisation shareholders was effected by way of a redemption of 211,062 realisation shares which were subsequently cancelled. As required by IAS 32, this has been reflected through the Statement of Changes in Equity.

10. Reconciliation of net (loss)/profit for the year to net cash inflow from operating activities

11. Share Capital

As at 31 December 2019 and 31 December 2018 the authorised share capital was as follows:

The ordinary share capital of the Company of a par value of 0.0001p may be issued or redesignated in classes, and includes realisation shares.

Shares in issue

Share premium

*Includes both ordinary and realisation shares, which constitute a single class of share for the purpose of the Company's Articles and Cayman law.

The weighted average number of shares in issue for the year ended 31 December:

(a) Voting rights

(i) Ordinary shares (including realisation shares) carry the right to receive notice of and attend and vote at any general meeting of the Company in accordance with the Articles.

(ii) Exchange shares carry the rights to receive notice of and to attend any general meeting of the Company but not vote unless there are no ordinary shares in issue in which case Exchange shares will have the voting rights set out in (i) above as if exchange shares were ordinary shares.

(b) Dividends and distributions

(i) Subject to the Companies Law, the directors may declare dividends (including interim distributions) and distributions on shares in issue and authorise payment of the dividends or distributions out of the funds of the Company lawfully available. No dividend or distribution will be paid except out of the realised or unrealised profits of the Company, or as otherwise permitted by the Companies Law. There are no fixed dates on which the entitlement to dividends arises. All dividend payments will be non-cumulative.

(ii) Distributions on each class of ordinary shares may only be paid from proceeds received from the corresponding class of interests in the Master Fund.

(iii) Exchange shares will not confer any rights to dividends or other distributions.

(iv) At the 2015 EGM a new distribution policy for the ordinary shareholders was adopted which resulted in:

· a progressive return, payable quarterly in the form of a dividend in January, April, July and October each year that will be maintained or grown on a pence per ordinary share basis.

· in addition to the return detailed above, where the Master Fund or MVI II LP disposes of an asset for a Net Capital Gain1 and has not already returned an aggregate amount in excess of 50% of that gain and any previous such gains pursuant to the distribution policy, the Company will make an additional capital return of the difference to ordinary shareholders by way of tender offers, share repurchases or other returns of capital and distributions; and

· the opportunity to augment the distribution policy by returning cash in excess of the amounts referred to in (i) and (ii) above being kept under review and to be undertaken through periodic tender offers, share repurchases or other returns of capital and distributions.

(v) At an ordinary class meeting held on 5 September 2018, the ordinary share distribution policy was further amended, permitting the 'Minimum Annual Distribution' to be made by the repurchase of ordinary shares. Under the amended policy, returns to ordinary shareholders may be made by repurchase of shares, dividend payments, or a combination of both.

The distribution policy (described in sections (iv) and (v) above) does not apply to the realisation shares.

1 Net Capital Gains means the net sale proceeds received by the Master Fund or MVI II LP on a Profitable Realisation (being the disposal of a security for a net consideration with a value higher than its value on 27 August 2013 for investments held at that date or, in respect of new investments made after that date, the Weighted Average Investment Cost (being the total capital cost of the investment dividend by the number of shares held in such investment)).

(c) Realisation opportunities

On 19 October 2016, the Company offered its shareholders the opportunity to redesignate some or all of their ordinary shares of 0.0001p each in the capital of the Company as realisation shares of the same par value. The realisation shares rank equally and otherwise carry the same rights as the ordinary shares, save that (i) the investment policy differs to that of the ordinary shares, the realisation pool is only permitted to invest cash in follow-on investments in the Portfolio Companies within three years of creation of the realisation pool and cash generated on the sale of an investment in the realisation pool may not be re-invested, (ii) the distribution policy for the ordinary shares will not apply and (iii) the realisation shares entitle their holders to returns only in respect of realisations made on investments attributable to the realisation pool.

Realisation opportunities will be offered every five years, with the next scheduled for 2021.

(d) Rights as to capital

There are no exit penalties for those ordinary shareholders electing to re-designate all or some of their investment into realisation shares or on a return of capital attributable to the realisation shares. Equivalent realisation share offers will be made to ordinary shareholders again in November 2021 and thereafter at five-yearly intervals. Whilst the realisation shares currently in issue are listed on the Specialist Fund Segment, listing of realisation shares from future offers will be subject to the receipt of all required consents and approvals, including the approval of the FCA of a prospectus in relation to their admission to trading.

The surplus capital and assets of the Company will, on a winding-up or on a return of capital (otherwise than on a purchase by the Company of any of its shares) be paid to the holders of ordinary shares and realisation shares pro rata to their holding of such shares out of the proceeds of the corresponding class of interests in the Master Fund.

12. Reserves

Special distributable reserve

A special distributable reserve was created when the Company cancelled all of its share premium account in existence as at 26 January 2007, transferring it to a distributable reserve to allow, among other things, the buy-back and cancellation of the ordinary shares subject to shareholder approval at each Company annual general meeting.

Exchange reserve

Movements in capital in respect of shareholders exchanging into and out of the Company are recognised in the exchange reserve. In 2019, a total of £1,605,943 was recognised in the exchange reserve following the exchange of the Company's ordinary shares held by the Master Fund as explained above. There were no movements in the prior year.

Where the Company's partnership interests in the Master Fund are cancelled following exchanges by the Master Fund out of ordinary shares, the capital amount previously transferred to the exchange reserve is transferred to the revenue reserve. As a result, in 2019, £1,605,943 was transferred from the exchange reserve to the revenue reserve. There were no movements in the prior year.

Revenue reserve

Realised gains and losses on redemptions of interests in the Master Fund made during the year are transferred from the capital reserve to the revenue reserve. In the current year, £592,253 has been recognised as a realised loss on redemption of interests in the Master Fund (2018: £50,151 realised loss). All distribution income received in the year ended 31 December 2018 paid to shareholders by way of dividends.

Capital reserve

Unrealised gains and losses on interests in the Master Fund are recognised in the capital reserve.

13. Instruments and associated risks

The Company invests substantially all its assets in the Master Fund, which is exposed to market risk (including currency risk, interest risk and price risk), credit risk and liquidity risk arising from financial instruments it holds.

As at 31 December 2019, the Company owned 97.69% (2018: 97.98%) of the net assets of the Master Fund.

Market price risk

The Company is susceptible to the same market price risk arising from uncertainties about future values of the underlying Portfolio Companies. The Board accepts the market price risks inherent in the investment portfolio and monitors this by ensuring full and timely access to relevant information from the Manager. The Board receives quarterly reports from the Manager, meets regularly with the Manager and at each quarterly board meeting reviews investment performance.

Any movement in the value of the ordinary interests or the realisation interests of the Master Fund would result in an equivalent movement in the reported NAV per ordinary share and realisation share respectively.

The Company's exposure to changes in market prices at 31 December 2019 and 31 December 2018 on its unquoted investments was as follows (as at both dates, this exclusively comprises the Company's investment in the Master Fund):

The following table shows the average monthly performance of the reported NAV of the Company:

The impact on net income and equity of the average monthly period returns set out in the above table as of 31 December 2019 and 2018 is as follows:

The Company invests directly in the Master Fund and indirectly in MVI II LP. The Company is therefore exposed to price risks derived from the investment portfolios of the Master Fund and MVI II LP.

The Master Fund is theoretically exposed to a loss limited to the value of its investments if the market value of its investment holdings decreases. The Master Fund's direct and indirect investments in underlying Portfolio Companies are subject to normal market fluctuations and the risks inherent in investment in international securities markets and there can be no assurances that the Master Fund's objective of capital appreciation will be achieved.

Currency risk

The Company is not directly exposed to any material currency risk, although this may be a factor in price risk as a result of the investments made by the Master Fund or by MVI II LP as certain Portfolio Company investments may invest in underlying assets denominated in other currencies. It is therefore considered that the Company is not materially exposed to significant direct currency risk.

Liquidity risk

The Company may not sell its investment in the Master Fund without the approval of the Master Fund's General Partner. Redemption opportunities are available in relation to ordinary shares in line with the policy adopted at the 2013 EGM and as disclosed in Note 11(c). Further, the Master Fund has no control over the timing of the redemption of its investment in MVI II LP and a significant proportion of the investments in the Portfolio Companies are in publicly traded investments, the holdings of which may not be readily realisable due to their size or in private companies which may also not be readily realisable. As such the Master Fund and/or Company may not be able to readily dispose of such illiquid investments and, in some cases, may be contractually prohibited from doing so. However, the Company's liquidity profile of its assets is matched with the liquidity profile of its liabilities, as described below.

The Company holds Class F, Class G, Class R(F)1 Class R(G)1 interests in the Master Fund. The policy is that the Company should remain fully invested in normal market conditions. The Company is only required to settle its liabilities when its investment is fully redeemed. The following table shows the contractual, undiscounted cash flows of the Company's financial liabilities:

The Company holds, and will continue to hold, a minimum of £125,000 (2018: £125,000) in respect of the £125,000 loan payable to the Master Fund (2018: £125,000) (see Note 8). The remainder of the loan will be repaid by set-off on the date that Master Fund interests are fully redeemed.

As all Company specific operating expenses, other than share issue costs paid directly by the Company from the proceeds of shares issued, are paid by the Master Fund as discussed in Note 3.8 and as the loan is repayable by set-off, the directors do not consider the Company has any net liquidity risk.

Interest rate risk

The Company itself is not exposed to significant interest rate risk, however it is indirectly exposed to such risk through its direct investment in the Master Fund and indirect investment in MVI II LP. Details of this exposure to interest rate risk are set out below:

The Master Fund holds cash and cash equivalents at short-term market interest rates. This exposes it to risks associated with the effects of fluctuations in the prevailing levels of the market interest rates on its cash flows. The impact of any movement in interest rates is not considered to have a material effect on the Master Fund.

Between 2016 and 2018, loan facilities totalling £33.4 million was extended to entities associated with the Le Chameau investment with varying rates of interest by the Master Fund. These loans were fully drawn down as at 31 December 2019 (total drawn of £24.7 million as at 31 December 2018. The total value of the Master Fund's investment in Le Chameau as at 31 December 2019 was £4.9 million (2018: 16.7 million).

The remainder of the Master Fund's assets and liabilities are non-interest bearing.

MVI II LP, along with MVI II Co-Invest LP, had an interest-bearing secured committed Sterling revolving credit facility with Barclays Bank for a combined £50 million which commenced in May 2017. On 22 May 2019, the total facility amount was reduced to £30 million. The facility expired on 31 August 2019.

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The main credit risk relates to the cash held with financial institutions.

The Company, the Master Fund and MVI II LP manage their exposure to credit risk associated with their cash deposits by selecting counterparties with a high credit rating with which to carry out these transactions. The Company's maximum exposure to credit risk is the carrying value of the cash on the balance sheet.

The Master Fund's policy is to enter into financial instruments with a range of reputable counterparties. Therefore, the Master Fund does not expect to incur material credit losses on its financial instruments. At 31 December 2019, having considered the Portfolio Companies directly and indirectly held by the Master Fund, the Board considers that credit risk is limited to the extent of the equity investments in the underlying Portfolio Companies (the risks associated with such investments have been considered under Market Price Risk) and the drawn down facility extended to the Le Chameau group. The carrying value of the debt investment is periodically assessed in accordance with IPEV Guidelines. Whilst the facility is secured by charges over shares in other Le Chameau group entities and over certain bank accounts, partly reducing the credit risk exposure of the facility, the risk is only mitigated to the extent that these other group entities and bank accounts have any incremental value.

14. Material contracts and related-party transactions

In the opinion of the directors on the basis of shareholdings advised to them, the Company has no ultimate controlling party.

The Company, the Master Fund and MVI II LP are each managed by the Manager.

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party, or the parties are under common control or influence, in making financial or operational decisions.

(a) Management fee, investment advisory fee and incentive allocation

On 29 November 2013, Marwyn Asset Management Limited was appointed Manager to the Company. The Manager engaged Marwyn Investment Management LLP as the Investment Adviser on the same date.

Under the Management Agreement dated 29 November 2013 the Manager does not receive any fees to the extent that the Company invests its assets only in the Master Fund. In respect of any assets of the Company not invested in the Master Fund, the Manager receives aggregate performance and management fees on the same basis as those to which it would have been entitled if such assets had been those of the Master Fund.

The Company has not made any such investments during the year and as such no fees were paid by the Company or payable at the year end (2018: nil).

Under the Master Fund Management Agreement, the Manager receives monthly management fees from the Master Fund not exceeding 2% of the NAV before incentive allocations of each class of interests in the Master Fund, payable monthly in arrears. From 30 November 2018, being 2 years after the creation of the realisation pool, the management fee on the realisation share interests is calculated by reference to NAV before management fees and incentive allocation less the aggregate value of cash and near cash investments attributable to the realisation share interests. The total management fee expense, borne by the Master Fund for the year ended 31 December 2019 was £2,827,394 (2018: £3,789,621).

The incentive allocations to be borne by the Class F, Class G, Class R(F)1 and Class R(G)1 interests in the Master Fund will only be due on returns being made to shareholders as disclosed in Part II, section 9 of the prospectus published on 19 October 2016. Following settlement of the Partial Offer in January 2019,the full 'reference amount' (as described in the 2016 prospectus) had been returned to Class F interest holders and accordingly the 'initial incentive allocation' in respect of Class F of £2,460,579 crystallised and was distributed.

In 2016, an amount totalling £7,243,939 was distributed to retired partners in accordance with the provisions of the Circular. As a result of this distribution to the retired partners, the incentivisation of the existing Marwyn partners and senior management team is fully aligned with the interests of ordinary shareholders in the Company. The net impact of the distribution to retired partners on the NAV attributable to ordinary shareholders is zero, although ordinary shareholders benefit from the calculation of the management fee on a reduced Gross Asset Value, which decreased by the amount of the payment. As a consequence of this payment, the first £7,243,939 of crystallised incentive allocation (excluding any 'initial incentive allocation') will not be paid in cash, but will offset these amounts already paid out.

Following the return to realisation shareholders as detailed in Note 11, an incentive allocation in respect of Class R(F) of £1,216,481 crystallised, reducing the remaining retired partners balance to £6,027,458.

During the year ended 31 December 2019 the total movement in the uncrystallised incentive allocations relating to the ordinary and realisation shares due to movements in the underlying net asset value was a decrease of £4,869,762 (for the equivalent year to 31 December 2018, the decrease was £2,786,785). The value of the total incentive allocation as at 31 December 2019 amounted to £15,587,823 (2018: £22,918,164) net of remaining the retired partner balance.

The Company does not bear any management fee or make any incentive allocation in relation to the Master Fund's investment into MVI II LP.

As noted in the Report of the Directors, investors can assess remuneration and incentives by reference to the disclosure of the basis of calculation of the incentive allocations which was made in the Circular and in the prospectus published on 19 October 2016. These documents are available on the Company's website.

(b) Administration fee

Axio Capital Solutions Limited is the administrator of the Company and is considered to be a related party due to common ownership with the Manager.

The Administrator was paid a fee of £140,000 in 2019 (2018: £120,000) for the administration of the ordinary and realisation shares, payable monthly in arrears. Axio is entitled to reimbursement of certain expenses incurred by it in connection with its duties. These fees are paid by the Master Fund as they were in 2018 as per Note 3.8.

(c) Board of Directors' remuneration

Directors' fees are paid by the Master Fund as per Note 3.8. The directors of the Company received the following fees in the year:

Robert Ware £45,000 (2018: £45,000)

Ronald Hobbs £40,000 (2018: £40,000)

Martin Adams £40,000 (2018: £40,000)

Louisa Bonney* £40,000 (2018: £40.000)

*Paid to the Administrator

All directors are entitled to receive reimbursement for all travel and other costs incurred as a direct result of carrying out their duties as directors.

15. Capital management policies and procedures

The Company's capital management objectives are to ensure that it will be able to continue as a going concern and to maximise capital return to its equity shareholders.

The Board, with the assistance of the Manager, monitors and reviews the structure of the Company's capital on an ongoing basis.

16. Ordinary shares - by series

The Company has the ability to issue different series of ordinary shares (including realisation shares), the proceeds of which can be invested in separate classes of the Master Fund. Distributions on each series of ordinary shares may only be paid from proceeds received from the corresponding class of interests in the Master Fund. The surplus capital and assets of the Company will on a winding-up or on a return of capital (otherwise than on a purchase by the Company of any of its shares) be paid to the holders of each series of the ordinary shares pro rata to their holding of such ordinary shares out of the proceeds of the corresponding class of interests in the Master Fund. As at 31 December 2019, ordinary shares and realisation shares remained outstanding as per Note 11. The information on pages 52 to 57 sets out the risks applicable to these shares in issue.

17. Commitments and contingent liabilities

There were no commitments or contingent liabilities of the Company outstanding at 31 December 2019 or 31 December 2018 that require disclosure or adjustment in these financial statements.

18. Subsequent events

The rapid spread of COVID-19 has caused unprecedented volatility in equity markets, with significant declines seen globally.

As at the end of March 2020, through the Company's investment in the Master Fund (and indirectly in MVI II LP), over 60% of the underlying asset value is in cash reserves with an additional 14% held in cash shell acquisition vehicles, whose only significant asset is cash. The largest Portfolio Company, Zegona (representing 30% of the underlying net asset value), currently operates in the Spanish telecommunications market which has been a critical enabler of homeworking during the period of restricted movement. There has been a 21.1% drop in Zegona's share price between 31 December 2019 and 24 April 2020 (broadly consistent with the overall market decline, as evidenced by a 23.7% drop in the FTSE All-Share Index over the same period).

Given the emergence and spread of COVID-19 occurred in 2020, it is not considered relevant to conditions that existed at the balance sheet date. Consequently COVID-19 is considered to be a non-adjusting post balance sheet event. The measurement of assets and liabilities in the accounts has not been adjusted for its potential impact. The impact of COVID-19 is uncertain and may be material. The Board and the Manager are continually assessing the situation.

Risks applicable to investing in the Company

Past performance

The past performance of the Company, the Master Fund and MVI II LP, the Manager, the Investment Adviser and the principals of the Investment Adviser may not be indicative of future performance.

Dependence on key individuals

The success of the Company and the Master Fund and MVI II LP depends upon the ability of the Manager and Investment Adviser to develop and implement investment strategies that achieve the Marwyn Fund's investment objectives. If the Manager were to become unable to participate in the investment management of the Funds, or if the Investment Adviser were to become unable to provide investment advice to the Manager, the consequence for the Company and the Marwyn Funds would be material and adverse and could lead to the premature winding-up of the Company and/or Marwyn Funds.

Economic risk

On 31 January 2020, pursuant to Article 50 of the Treaty of Lisbon, the United Kingdom left the European Union ("Brexit"), and is currently in a transition period whilst negotiations of the ongoing relationship with the European Union are concluded.

The long term consequences of Brexit are as yet unclear and will not become clear for some considerable time, but there is a significant possibility that (i) financial markets in the United Kingdom will experience greater volatility than would otherwise be expected; and (ii) securities listed on financial markets across Europe in general will suffer a decline in value in the period within which the outcome of Brexit and its timing is uncertain.

Economic uncertainty due to COVID-19

The rapid spread of COVID-19 has caused unprecedented volatility in equity markets, with significant declines seen globally and economic impacts across all business sectors. As a consequence, investments are inherently more risky and the value of the investment portfolios held by the Master Fund and/or by MVI II may experience significant losses as a result. The longer term impacts of the pandemic are, as yet, unknown, but the situation is being closely monitored by the Board and the Manager.

Restriction on auditors' liability

Cayman Islands law does not restrict the ability of auditors to limit their liability. Consequently the engagement letters in relation to the Company and the Master Fund entered into with the auditor of the Company and the Master Fund contain such a provision as well as contain provisions indemnifying the auditor in certain circumstances.

Handling of mail

Mail addressed to the Company and/or the Master Fund and received at their respective registered offices is scanned and emailed to the Administrator or Master Fund Administrator as the case may be to be dealt with. None of the Company, the Master Fund, the General Partner or any of its or their directors, officers or providers bear any responsibility for any delay howsoever caused in mail reaching the Administrator or Master Fund Administrator as the case may be. There may be further delays resulting from restricted movements imposed by governments as a result of the current COVID-19 pandemic.

Net asset value considerations

The NAV per ordinary share including realisation shares of the Company and the NAV of the Master Fund is expected to fluctuate over time with the performance of the Company's, the Master Fund's and/or MVI II LP's investments.

Where in relation to the calculation of the NAV of the Company there is any conflict between IFRS and the valuation principles set out in the prospectus in relation to the Company, the latter principles shall take precedence.

Where in relation to the calculation of the NAV of the Master Fund there is any conflict between US GAAP and the valuation principles set out in the limited partnership agreement of the Master Fund or its offering memorandum, the latter principles shall take precedence.

Where in relation to the calculation of the NAV of MVI II LP there is any conflict between IFRS and the valuations principles set out in the limited partnership agreement of MVI II LP or its private placement memorandum, the latter principles shall take precedence.

Liquidity risk

The investment objectives of the Company, the Master Fund and MVI II LP allow them to invest in instruments which may be both illiquid and scarce. Market conditions may increase illiquidity and scarcity and have a generally negative impact on the Manager's ability to identify and execute suitable investments that might generate acceptable returns. Market conditions may also restrict the supply of investment assets that may generate acceptable returns and thereby cause "cash drag" on the Company's performance. Adverse market conditions and their consequences may have a material adverse effect on the Company's investment portfolio. To the extent that there is a delay in making investments, the Company's returns will be reduced.

Market price

There is no guarantee that the market price of the ordinary and realisation shares will fully reflect the underlying value of the assets held by the Company and which are attributable to the ordinary or realisation shares. The underlying investments of the Company may be subject to market fluctuations and the risks inherent in all investments and there can be no assurance that an investment will retain its value or that appreciation will occur.

As well as being affected by the underlying value of the assets held, the market value of the ordinary or realisation shares will also be influenced by the supply and demand for the ordinary or realisation shares in the market. As such, the market value of the ordinary shares may vary considerably from the underlying value of the Company's assets attributable to the ordinary or realisation shares.

Financial transactions tax

The European Commission has made a proposal for the implementation of a financial transactions tax, which if implemented may have an adverse effect on investment returns.

Risks Applicable to Investments in the Company

Each series of ordinary shares is not a separate legal entity

The Company may raise additional finance to invest in the Master Fund by selling further series of ordinary shares to investors. The net proceeds of issue of each series of ordinary shares will be invested by the Company in a corresponding class of interests in the Master Fund. In certain circumstances, if the Company incurs a liability in respect of assets attributable to another series of ordinary shares, the ability of the Company to distribute profits or repurchase ordinary shares, not only in relation to that series, but also in relation to any other series may be affected because under the Companies Law, the ability to distribute profits or repurchase ordinary shares has to be determined by reference to the solvency of the Company as a whole, rather than on a series by series basis. Liabilities relating to one ordinary share series cannot be ring-fenced.

Additionally, the investment assets of the Company (i.e. namely, its interests in the ordinary interests and realisation share interests of the Master Fund), are not legally segregated and so assets held by the Company and attributed to realisation shareholders may be required to be liquidated to meet liabilities attributable to ordinary shareholders (or vice versa).

Risk of not obtaining distributing or reporting status

There is no guarantee that the Company will continue to obtain distributing or reporting status for UK taxation purposes in relation to the ordinary shares. There is therefore a risk that any gain realised on any disposal of ordinary shares will be taxed as income in the UK, rather than capital gain.

Sole purpose

The Company has been established with the sole purpose of investing in the Master Fund. The success of the Company therefore depends on the success of the Master Fund and its ability to successfully implement its investment strategy. Identification and exploitation of the investment strategies to be pursued by the Fund involve a high degree of uncertainty.

Limited redemption rights

The Company has no right of redemption in relation to the Class F interests, Class R(F)1 interest, Class G interests or Class R(G)1 interest in the Master Fund. The right of shareholders to elect to move into realisation shares does not result in the resulting realisation share interests in the Master Fund (which will be held on behalf of realisation shareholders) being redeemable. They will only be redeemed when the underlying investments are sold.

Cayman Islands registration

The Company is registered in the Cayman Islands. As a result, the rights of the shareholders are governed by the laws of the Cayman Islands and the Articles. The rights of shareholders under Cayman Islands law may differ from the rights of shareholders of companies incorporated in other jurisdictions and the enforcement of such rights may involve different considerations and may be more difficult than would be the case if the Company had been incorporated in England and Wales or the jurisdiction of a shareholder's residence. The following are examples: (i) subject only to the Company's articles of association, the allotment and issue of securities is under the exclusive control of the Directors and there are no pre-emption rights under the Companies Law; (ii) there is no express restriction on the Company making loans to Directors nor the equivalent of substantial property rules for transactions involving directors under the Companies Law; and (iii) assets of the Company are under the exclusive control of the Directors and the Companies Law does not expressly restrict the powers of the directors to dispose of assets. Examples (i) to (iii) above are intended for the purposes of illustration only and are not an exhaustive list. Investors should take appropriate independent legal advice to determine if they are afforded protections they consider are necessary for their specific circumstances.

The Cayman Islands courts ordinarily would be expected to follow English case law precedents which permit a minority shareholder to commence a representative action against or derivative actions in the name of the company to challenge (i) an act which is ultra vires the company or illegal, (ii) an act which constitutes a fraud against the minority and the wrongdoers are themselves in control of the company, and (iii) an irregularity in the passing of a resolution which requires a qualified (or special) majority. In the case of a company (not being a bank) having a share capital divided into shares, the courts may, on the application of members holding not less than one fifth of the shares of the company in issue, appoint an inspector to examine the affairs of the company and to report thereon in such manner as the courts will direct. Any shareholder of a company may petition the courts which may make a winding-up order if the courts are of the opinion that it is just and equitable that the company should be wound up. Generally, claims against a company by its shareholders must be based on the general laws of contract or tort applicable in the Cayman Islands or their individual rights as shareholders as established by the company's memorandum and articles of association.

Control over the Master Fund and MVI II LP

The Company, in its capacity as an investor, has no opportunity to control the day-to-day operation, including investment and disposition decisions made by the Manager on behalf of the Master Fund or MVI II LP, the resolution of potential or actual conflicts of interest that may arise, distributions by the Master Fund or MVI II LP or the appointment or removal of service providers to the Master Fund or MVI II LP. The Company does not have the opportunity to evaluate the relevant economic, financial and other information that is utilised by the Manager in its selection of investments or the Investment Adviser in its evaluation of investments, does not receive the detailed financial information regarding investments that is available to the Manager or the Investment Adviser and has no right to be informed about actual or potential conflicts of interest.

The Master Fund has adopted the amended distribution policy in relation to Class F, Class G, Class R(F)1 and Class R(G)1 interests in the Master Fund. However, the Company has no control over the amount or timing of any redemptions by the Master Fund or MVI II LP or other distributions which may be used to fund extraordinary distributions.

The Master Fund, as a limited partner in MVI II LP, has no control over the investment or disposal decisions of MVI II LP or timing of any redemptions or other distributions by MVI II LP.

Conflicts of interest

The Master Fund and MVI II LP (together the "Master Funds") are subject to a number of actual and potential conflicts of interest with the Company and with each other. The Company (or, as appropriate, other relevant parties) aims to manage such conflicts to prevent a material risk of damaging any investor's interest. Where this is not possible the conflicts are disclosed.

Certain inherent conflicts arise from the fact that the Manager and its affiliates (including the Investment Adviser) provide investment management and investment advisory services to both Master Funds and the Company.

In order to ensure an equitable management of the potential conflicts of interest that could arise in managing the interests of ordinary shareholders and realisation shareholders, the Master Funds have agreed the following policies:

· interests in Portfolio Companies held by the Master Fund (with the exception of interests in Le Chameau) attributable to realisation share interests will only be sold when MVI II LP's interests in the same Portfolio Companies are disposed of on a simultaneous basis. All disposals will be pro rata between MVI II LP and the Master Fund;

· interests in Le Chameau held by the Master Fund attributable to realisation share interests will only be sold when the Master Fund disposes of interests in Le Chameau attributable to ordinary share interests on a simultaneous basis. All disposals will be pro rata between the holdings attributable to the realisation share interests and the ordinary share interests; and

· the Master Fund and MVI II LP will make follow-on investments in Zegona, and Safe Harbour pro rata to the holdings of the Master Fund and MVI II LP in such shares on the date of such follow-on investment, provided that the Master Fund shall not be required to make a follow-on investment to the extent it does not have cash available to fund such investment having regard to its working capital requirements as agreed with the general partner of the Master Fund (with the prior written agreement of the Board).

The Company's Administrator is ultimately owned by the principals of the Investment Adviser and certain directors of the Administrator also provide director services to the Manager, the Company, the general partner of the Master Fund and the general partner of MVI II LP. The Administrator also provides certain corporate administration services to certain of the Portfolio Companies, the Master Fund as well as other Marwyn entities. The Administrator also provides nominee related services to the general partner of MVI II LP in respect of MVI II LP.

The use of a structure which includes the Master Funds may also create a conflict of interest in that different tax considerations for investors in the Company, the Master Fund and/or MVI II LP may cause the Master Fund and/or MVI II LP to structure or dispose of an investment in a manner that is more advantageous to one group than the other.

Class consents

Certain actions by the General Partner in respect of the Master Fund require the written consent of investors in that Class. Where the directors allow holders of ordinary shares or realisation shares to vote on a matter for which the General Partner is seeking investor consent and, if the resolution is passed by a simple majority of those voting in person or by proxy at a meeting of the holders of the relevant shares, the directors will give consent to the General Partner in respect of all of the Company's interests in the relevant Class. The Company will not split its consent in accordance with the votes of the holders of the relevant series of shares.

Value and liquidity of the shares

The shares of publicly traded companies can have limited liquidity and their share prices can be highly volatile. The price at which the shares will be traded and the price at which investors may realise their investment will be influenced by a large number of factors, some specific to the Company and its operations, and others which may affect companies operating within a particular sector or quoted companies generally.Prospective investors should be aware that the value of the shares could go down as well as up, and investors may therefore not recover their original investment. Furthermore, the market price of the shares may not reflect the underlying value of the Company's net assets.

There is no reliable liquid market for the Company's interest in the Master Fund and the valuation of Portfolio Companies may involve the general partners of the Master Fund and MVI II LP exercising judgement. This is particularly the case in the context of the Master Fund's investment in Le Chameau which is comprised of unlisted securities and debt investment for which there is no liquid market. There can be no guarantee that the basis of calculation of the value of Portfolio Companies used in the valuation process will reflect the actual value on realisation of those investments.

Additional financing and dilution

If the Company issues further series of ordinary shares, whilst these will not dilute the economic interests of the existing classes in the Master Fund, the additional ordinary shares will carry rights to vote at general meetings of the Company and will therefore dilute shareholders' voting rights accordingly. The directors may seek debt finance to fund the expansion of the Company. There can be no assurance that the Company will be able to raise such debt funds, whether on acceptable terms, or at all. If debt financing is obtained, the Company's ability to raise further finance, and its ability to operate its business, may be subject to restrictions.

Registration under the US Investment Company Act and the US Advisers Act

The Company has not been and it is unlikely it will ever be registered under the US Investment Company Act. In addition, the Manager and the Investment Adviser have not been and it is unlikely that they will ever be registered as "Investment Advisers" under the US Investment Advisers Act.

Depository Interests

Securities issued by non-UK registered companies, such as the Company, cannot be held or transferred in the CREST system. However, to enable shareholders to settle such securities through the CREST system, a depository or custodian can hold the relevant securities and issue dematerialised depository interests representing the underlying shares which are held on trust for the holders of these depository interests.

Voting rights

Under the Articles, only those persons who are shareholders of record are entitled to exercise voting rights. Persons who hold ordinary shares or realisation shares in the form of depository interests will not be considered to be record holders of such shares that are on deposit with the depository and, accordingly, will not be able to exercise voting rights. However, the deed poll which created the depositary interests (the "Deed Poll") provides that the depository shall pass on, as far as it is reasonably able, rights and entitlements to vote. In order to direct the delivery of votes, holders of depository interests must deliver instructions to the depository by the specified date.

Neither the Company nor the depository can guarantee that holders of depository interests will receive the notice in time to instruct the depository as to the delivery of votes in respect of shares represented by depository interests and it is possible that they will not have the opportunity to direct the delivery of votes in respect of such shares. In addition, persons who beneficially own shares that are registered in the name of a nominee must instruct their nominee to deliver votes on their behalf.

Neither the Company nor any nominee can guarantee that holders of depository interests will receive any notice of a solicitation of votes in time to instruct nominees to deliver votes on behalf of such holders and it is possible that holders of depository interests and other persons who hold ordinary shares or realisation shares through brokers, dealers or other third parties will not have the opportunity to exercise any voting rights.

Limitation of liability

The Deed Poll contains provisions excluding and limiting the depository's liability to holders of depository interests. For example, the depository will not be liable to any holder of depository Interests or any other person for liabilities in connection with the performance or non-performance of obligations under the Deed Poll or otherwise except as may result from its negligence or wilful default or the fraud of any custodian or agent which is not a member of its group unless it has failed to exercise reasonable care in the appointment and continued use and supervision of such custodian or agent. Furthermore, except in the case of personal injury or death, the depository's liability to a holder of depository interests will be limited to the lesser of: (i) the value of shares and other deposited property properly attributable to the depository interests to which the liability relates; and (ii) that proportion of £10 million which corresponds to the portion which the amount the depository would otherwise be liable to pay to the holder of the depository interests bears to the aggregate of the amounts the depository would otherwise be liable to pay all such holders in respect of the same act, omission or event which gave rise to such liability or, if there are no such amounts, £10 million.

The depository is entitled to charge fees and expenses for the provision of its services under the Deed Poll without passing any profit from such fees to holders of depository interests.

Indemnification

Each holder of depository interests is liable to indemnify the depository and any custodian (and their agents, officers and employees) against all costs and liabilities arising from or incurred in connection with, or arising from any act related to, the Deed Poll so far as they relate to the property held for the account of depository interests held by that holder, other than those resulting from the wilful default, negligence or fraud of the depository, or the custodian or any agent, if such custodian or agent is a member of the depository's group, or, if not being a member of the same group, the depository has failed to exercise reasonable care in the appointment and continued use and supervision of such custodian or agent.

United States ownership and transfer restrictions

There are restrictions on the purchase of ordinary shares by or transfers to investors who are located in the United States or who are US persons (as defined in the United States Securities Act of 1933, as amended) or who acquire ordinary shares or realisation for the account or benefit of US persons. For a complete description of these ownership and transfer restrictions please refer to section 4 of Part VIII of the prospectus published by the Company on 19 October 2016.

In the event that ordinary shares are acquired by persons who are not qualified to hold the ordinary shares or realisation shares, such ordinary shares are subject to provisions requiring forfeiture and/or compulsory transfer as described in section 3 of Part VIII of that prospectus.

United Kingdom tax considerations

Although the directors intend that, insofar as it is within their control, the affairs of the Company are conducted so that the Company does not become subject to United Kingdom tax on its profits or gains, there can be no guarantee that all of the requirements to ensure this will, at all times, be satisfied.

Fund Structure

The Company is a feeder fund which has invested all of its available capital into limited partnership interests in Master Fund.

The Master Fund has invested in a second master fund, MVI II LP, a private equity fund structure through which the majority of the Master Fund's investments attributable to ordinary shareholders are made. Assets attributable to the realisation shareholders (the "realisation pool") are held directly by the Master Fund. A look-through breakdown of the NAV attributable to the ordinary and realisation shareholders along with ownership of the assets is detailed in the Report of the Manager on page 12 and 13.

The Company is traded on the Specialist Fund Segment.

Investment objective

The investment objective of the Company is to maximise total returns primarily through the capital appreciation of its investments.

Investment policy

There are no investment restrictions applicable to the Company or the Master Fund.

MVI II LP has the following investment restrictions:

· no investment can exceed 30% of the partners' aggregate commitments at the time of investment;

· it cannot engage in derivative trading except to hedge or enhance an investment in an existing or prospective Portfolio Company;

· it cannot invest in any blind-pool investment fund; and

· it may recycle distributed capital, up to an amount equal to 100% of the partners' aggregate commitments, which may only be used to acquire assets, and not pay fees.

The Master Fund and MVI II LP invest either directly or indirectly into the Portfolio Companies. The Master Fund (with the exception of the classes attributable to realisation shareholders) and MVI II LP (during its investment period being five years from final close) are permitted to make follow-on investments into the Portfolio Companies and invest in new Portfolio Companies. In the case of capital relating to the Company's realisation shares, the Master Fund is only permitted to invest cash in follow-on investments in the Portfolio Companies within three years of creation of the realisation class.

The Master Fund also has an express power to use cash to acquire the Company's shares at a discount to their NAV for cancellation. Any such acquisitions and cancellations will be NAV enhancing for the continuing holders of ordinary shares. The use of such power is reviewed by the Manager and the Board.

The assets attributable to the realisation pool are managed with a view to maximising investment returns, realising investments and making distributions to the holders of realisation shares as realisations are made. The realisation pool is permitted to invest cash allocated to it upon its creation in follow-on investments into existing Portfolio Companies made within three years of the creation of the realisation pool. Unlike the investment policy in respect of the assets relating to ordinary shareholders, cash generated on the sale of an investment in the realisation pool may not be re-invested and are, subject to amounts held back for reasonable working capital requirements, distributed to realisation shareholders.

The Manager

Marwyn Asset Management Limited is the manager of the Company, the Master Fund, MVI II LP, its stapled co-investment vehicle, MVI II Co-Invest LP and MVI II DCI I LP, a discretionary co-investment vehicle. The Manager is advised by Marwyn Investment Management.

The management agreement governing the Company's appointment of the Manager allows for the investment strategies that the Manager may employ to be in any securities, instruments, obligations, guarantees, derivative instrument or property of any nature in which the relevant vehicle is empowered to invest and as contemplated by its investment policy.

The Company does not pay a management fee or incentive allocation to the Manager in respect of the Company's investment in the Master Fund. The valuation of the Company's investment in the Master Fund takes into account the management fee payable by, and incentive allocation due from, the Master Fund that is applicable to the classes of partnership interests in which the Company invests. Furthermore, the Company does not pay any management fee or make any incentive allocation in relation to the Master Fund's investment into MVI II LP.

Defined Terms

The following terms have the following meanings in this annual report and financial statements.

DISCLAIMER

The report of the Manager ("Manager's Report") is issued by Marwyn Asset Management Limited which has been registered as a fund service business provider under the Financial Services (Jersey) Law 1998 by the Jersey Financial Services Commission (the "Commission"), in connection with the Master Fund, Marwyn Value Investors II LP ("MVI II LP"), MVI II Co-Invest LP, MVI II DCI I LP and the Company (collectively, the "Marwyn Funds"). The Commission is protected by the Financial Services (Jersey) Law 1998 against liability arising from the discharge of its function under that law.

This Manager's Report does not constitute a prospectus or offering document relating to the Marwyn Funds, nor does it constitute or form part of any offer or invitation to purchase, sell or subscribe for, or any solicitation of any such offer to purchase, sell or subscribe for, any securities in the Marwyn Funds (an "Investment") nor shall this Manager's Report or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor.

Persons who wish to make an Investment are reminded that any such Investment should only be made on the basis of the information contained in materials provided for that purpose for your consideration and not on the information contained in this Manager's Report. No reliance may be placed, for any purposes whatsoever, on the information contained in this Manager's Report or on its completeness and this Manager's Report should not be considered a recommendation by Marwyn Investment Management LLP, the Manager or any member of the Marwyn group or any of their respective advisers or affiliates or the Marwyn Funds (the "Relevant Entities") in relation to an Investment.

No representation or warranty, express or implied, is given by or on behalf of the Relevant Entities or any of their respective directors, partners, officers, employees, advisers or any other persons as to the accuracy, fairness or sufficiency of the information or opinions contained in this Manager's Report and none of the information contained in this Manager's

Report has been independently verified by the Relevant Entities or any other person. Save in the case of fraud, no liability is accepted for any errors, omissions or inaccuracies in such information or opinions.

The distribution of this document in certain jurisdictions may be restricted by law and the persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

This Manager's Report includes "forward-looking statements" which includes all statements other than statements of historical facts, including, without limitation, those regarding the Master Fund's and the Company's financial position, business strategy, plans and objectives of management for future operations and any statements preceded by, followed by or that include forward-looking terminology such as the words "targets", "believes", "estimates", "expects", "aims", "intends", "can", "may", "anticipates", "would", "should", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Marwyn Funds that could cause the actual results, performance or achievements of the Marwyn Funds to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the present and future business strategies of the Marwyn Funds and the environment in which the Marwyn Funds will operate in the future.

These forward-looking statements speak only as at the date of this Manager's Report.

Investing in the Company involves certain risks, as detailed in these financial statements, and as described more fully in the prospectus published by the Company on 19 October 2016.