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Company Announcements

Annual Financial Report

RNS Number : 0572A
Triple Point VCT 2011 PLC
23 May 2019
 

Triple Point VCT 2011 plc

LEI: 213800AOOAQA5XQDEA89

 

 

The financial information set out in these statements does not constitute the Company's statutory accounts for the year ended 28 February 2019, prepared in accordance with section 435 of the Companies Act 2006, but is derived from those accounts.  Statutory accounts will sent to the Registrar of Companies in due course. The auditors have reported on these accounts and their report was unqualified and did not contain a statement under section 498(2) of the Companies Act 2006.

 

Final Results

 

Triple Point VCT 2011 plc managed by Triple Point Investment Management LLP today announces the final results for the year ended 28 February 2019.

 

These results were approved by the Board of Directors on 23 May 2019.

 

You may view the Annual Report in due course on the Triple Point website www.triplepoint.co.uk

 

Financial Summary

 

Year ended 28 February 2019









Ord Shares

A Shares

B Shares


Total

Net assets

£'000

-  

10,995

7,243


18,238

Net asset value per share

Pence

-  

110.49p

106.10p


n/a

Profit before tax

£'000

-  

801

414


1,215

Earnings per share

Pence

-   

7.34p

6.10p


n/a








Cumulative return to shareholders (p)






Net asset value per share


-   

110.49p

106.10p



Total dividends paid


-   

7.75p

-   



Net asset value plus dividends paid


-   

118.24p

106.10p



 

Year ended 28 February 2018









Ord Shares

A Shares

B Shares


Total

Net assets

£'000

-  

10,637

6,826


17,463

Net asset value per share

Pence

-   

106.90p

100.00p


n/a

(Loss)/profit before tax

£'000

(2)

783

16


797

(Loss)/earnings per share

Pence

(0.03p)

6.83p

0.24p


n/a








Cumulative return to shareholders (p)






Net asset value per share


-   

106.90p

100.00p



Total dividends paid


115.05p

4.00p

-   



Net asset value plus dividends paid


115.05p

110.90p

100.00p



 

Triple Point VCT 2011 plc ("the Company") is a Venture Capital Trust ("VCT"). The Investment Manager is Triple Point Investment Management LLP ("TPIM" and "Triple Point"). The Company was incorporated in July 2010.

 

·      A Shares: On 30 April 2015 the A Share Class offer closed having raised £10.3 million with a total of 9,951,133 A Shares being issued.

 

·      B Shares: On 29 April 2016 the B Share Class offer closed having raised £6,972,311 with a total of 6,824,266 B Shares being issued.

 

The Strategic Report on pages 2 to 23, the Directors' Report on pages 24 to 27, the Corporate Governance report on pages 29 to 32 and the Directors' Remuneration Report on pages 35 to 38 have each been drawn up in accordance with the requirements of English law and liability in respect thereof is also governed by English law. In particular, the responsibility of the Directors for these reports is owed solely to Triple Point VCT 2011 plc.

 

The Directors submit to the members their Annual Report and Financial Statements for the Company for the year ended 28 February 2019.

 

Strategic Report

 

The Strategic Report, on pages 2 to 23, has been prepared in accordance with the requirements of section 414c of the Companies Act 2006. Its purpose is to inform the members of the Company and help them to assess how the Directors have performed their duty to promote the success of the Company, in accordance with section 172 of the Companies Act 2006.

 

Chairman's Statement

 

I am writing to present the Financial Statements for Triple Point VCT 2011 plc ("the Company") for the year ended 28 February 2019.

 

During the year the Company launched a new Venture Fund offer which has raised £6m to date. The first allotment from these funds took place after the year end in March 2019.

 

There were no significant changes in the investment holdings of the A Share Class or the B Share Class which continue to perform broadly in line with expectations. 

 

Investment Portfolio

 

The Company's funds at 28 February 2019 were 99% invested in a portfolio of VCT qualifying and non-qualifying unquoted investments. It continues to meet the condition that 70% of relevant funds must be invested in qualifying investments, which will increase to 80% for the Company from 1st March 2020.

 

The Investment Manager's review on pages 12 to 16 gives an update on the portfolio of investments in 12 small unquoted businesses.

 

A Share Class

 

The A Share Class has investments in six companies in the Hydroelectric Power sector which between them own seven hydroelectric schemes in the Scottish Highlands.

 

The A Share Class has recorded a profit over the period of 7.34p per share and as at 28 February 2019 the NAV per share stood at 110.49p, which when taken with dividends paid to date provides a total shareholder return of 118.24p.

 

On 22 December 2018, the Company, by way of a special resolution, cancelled its Share Premium account relating to the A Share Class creating a special distributable reserve. The cancellation of the Share Premium will enable the Company to pay dividends at higher levels in order to meet the A Share Class dividend payment target.

 

The Company's distributable reserves were restricted until after 1 March 2019, when the restriction period under VCT legislation will end for the Share Class.  

 

The Board has resolved to pay a fourth dividend of 4.00p. This represents a significant increase on the dividend paid last summer when distributions were restricted by a lack of distributable reserves. The A share class, during the initial deployment stage, is targeting an aggregate cash return to investors of 100.00p including the initial tax rebate of 30.00p, by the end of year six from a mixture of tax-free dividends and a capital realisation. This is discussed further on page 4.

 

This dividend announcement brings the total dividends paid to date to 11.75p per share from a combination of the annual dividends and a special dividend which was paid in February 2019.

 

B Share Class 

 

The B Share Class has investments in two companies that have each constructed a gas fired energy centre. In May 2018 both energy centres were successfully commissioned and are now fully operational. Following this period of successful operation and the reduction of construction risk, the Board is pleased to announce an uplift in valuation for both companies.

 

The B Share Class has recorded a profit over the year of 6.10p per share, predominantly due to an uplift in the valuation of the two companies which operate gas fired energy centres.

 

The NAV per share at 28 February 2019 was 106.10p compared to 100.00p at 28 February 2018.

 

The Board has resolved to pay the B Shareholders their first dividend of 5.00p in line with the B Share Class return target.

 

Specific Risks

 

The principal risks which the Board feel the Company is facing are discussed in further detail on page 10. In particular the Board consider specific risks to be;

 

·    Compliance risk of failure to maintain approval as a qualifying VCT;

·    Investment risk associated with the VCT's portfolio of unquoted investments, including the inability to invest funds raised and the inability to realise funds to facilitate return to investors;

·    Financial risk of investing on a medium to long-term basis; and

·    Risk of failure of internal controls.

 

The Board believes these risks are manageable and, with the Investment Manager, continues to work to minimise either the likelihood or potential impact of these risks within the scope of the Company's established investment strategy.

 

Outlook

 

In the Financial Accounts for the year ended 28 February 2018 we highlighted changes to the VCT landscape with the government, through its 'Financing Growth in Innovative Firms' consultation ("the Patient Capital Review") emphasising the importance of VCT's in helping to provide investments into SMEs. Several changes were introduced, including increasing a VCT's minimum qualifying percentage threshold from 70% to 80% which will come into effect for the Company from 1 March 2020.

 

Another key change following the Patient Capital Review is that VCTs (from 6 April 2018) must now adhere to new deployment timelines with 30% of new funds required to be invested within the first 12 months compared to the previous timeframe of 3 years.

 

The Company, along with the Investment Manager, has identified and is currently in the process of introducing new procedures to ensure the transition required will be successful. The Board is pleased to report good progress has been made and the Company is on track to implement the required changes.

 

The Company and the Investment Manager will ensure that the Company is compliant with the new rules as they come into force in relation to the new Venture Fund and the VCT as a whole.

 

Venture Fund

 

In September 2018 the Company launched a new Venture Fund Offer targeting investment in early stage businesses. The Venture Fund offer will close on 31 August 2019 and has raised £6 million to date. The first allotment from these funds took place after the year end in March 2019.

 

The funds aim is to acquire a portfolio of Qualifying Investments in early stage companies, capable of generating significant long-term capital growth, whilst enabling investors to take advantage of the substantial tax reliefs available to Investors in VCTs, including 30% income tax relief on amounts invested. To date £450,000 has been invested into such qualifying companies.

 

If you have any questions about your investment, please do not hesitate to contact Triple Point on 020 7201 8990.

 

Jane Owen

Chairman

23 May 2019

 

Strategic Report - Company Strategy and Business Model

 

The Directors assess the Company's success in meeting its objectives in relation to returns, stability, VCT qualification and, ultimately, exit.

 

Performance Update

 

The target for the A Share Class is to pay dividends of an average 5p per share from 2017 for four years, followed by a partial realisation targeted to bring the aggregate distribution from the Company to 70p per A Share after five years. Thereafter an ongoing dividend of 3.50p per annum of net asset value is targeted for a further nine years. The A Share Class reported a strong return of 3.39p on income and 3.95p on capital return for the year to 28 February 2019. The net asset value per share for the A Share Class at 28 February 2019 stood at 110.49p.

 

The target for the B Share Class is to pay dividends of an average 5p per share from 2019. The B Share Class reported an income loss of 0.09p and a capital return of 6.19p for the year to 28 February 2019. The net asset value per share for the B Share Class at 28 February 2019 stood at 106.10p.

 

The Board and the Investment Manager are both committed to ensuring that returns on the investment portfolio are optimised and that the VCT continues to be managed in line with the Company's investment strategy and risk profile.

 

The Board expects the Investment Manager to deliver a performance which meets the objective of achieving long-term investment returns, including tax-free dividends. A review of the performance of the Company's investments during the financial year, the position of the Company at the year end and the outlook for the coming year is contained within the Chairman's Statement on page 2 to 3 and the Investment Manager's Review on pages 12 to 16.

 

Investment Policy

 

Investment Objectives

 

The Company's Investment Policy is directed towards new investments in businesses which either: (i) have the potential for high growth, or (ii) are cash flow generative businesses with a high-quality customer base. All investments must provide the potential for a strong, positive, risk-adjusted return to investors. All investments will be made with the intention of growing and developing the revenues and profitability of the target businesses.

 

Venture Fund

 

The Company's Venture Fund focuses on providing funding to unquoted companies at an early stage in their lifecycle to help them grow and scale. The Venture Fund will typically make initial investments of between £50,000 and £2 million and may make further follow-on investments into existing portfolio companies. The intention is to build a portfolio of predominantly unquoted companies with significant growth potential across a diversified range of sectors.

 

The Company will not vary these objectives to any material extent without the approval of the Shareholders.

 

A & B Shares

 

The key objectives of the Company's A Share Fund and B Share Fund are to:

 

·      Pay regular tax-free dividends to investors;

·      Maintain VCT status to enable investors to benefit from the associated tax reliefs;

·      Reduce the volatility normally associated with early stage investments by applying its Investment

Policy;

·      Make investments typically in the range of £500,000 to £5 million in companies with contractual

revenues from financially sound counterparties; and

·      In respect of the B Share Fund only, provide investors with the option to exit shortly after 5 years

following investment.

 

The Company will not vary any of the above objectives for the Venture Fund, A Share Fund or B Share Fund to any

material extent without the approval of the Shareholders.

 

Target Asset Allocation

 

The Company aims to invest its capital fully in VCT Qualifying Investments. Where this is not practicable, the long term investment profile of the Company is expected to be:

 

·      At least 80% in VCT Qualifying Investments, with a focus on unquoted companies with high growth

potential for the Venture Fund; and

·      A maximum of 20% in permitted Non-Qualifying Investments, cash or cash-based similar liquid

investments.

 

Qualifying Investments

 

Investment decisions made must adhere to HMRC's VCT qualification rules. In considering a prospective

investment in a company, particular regard is made to:

 

·      the track record, expertise and ability of the management team with clear commercial and financial objectives;

·      a significant, often global, total addressable market;

·      the ability of the company to create and sustain a competitive advantage;

·      the quality of the company's assets, in particular where appropriate the ownership and effective use of proprietary technology and or an innovative product;

·      the high likelihood of a transformational corporate contract and established market fit and then the opportunity to develop regular, repeated income from new clients, leading to growth and long-term profitability;

·      a high level of access to regular material financial and other information during the holding period;

·      an attractive valuation at the time of the investment;

·      the long-term prospect of being sold or listed in the future at a significant multiple of the initial investment value; and

·      in respect of the B Share Fund, the prospect of achieving an exit after 5 years of the life of the B Share Fund.

 

In respect of the Venture Fund, no more than 10% of the NAV of the Venture Fund (at the point of the investment), will be invested in companies which are not revenue-generating or where there is no expectation of revenues being generated in the near future.

 

As the value of investments increase, Triple Point will monitor opportunities for the Company to realise capital gains to enable TP11 to make tax-free distributions to shareholders.

 

Non-Qualifying Investments

 

The Non-Qualifying Investments will be managed with the intention of generating a positive return. The Non-Qualifying Investments will comprise from time to time a variety of assets including (a) short term deposits of money, shares or units in alternative investment funds (which have the meaning given by regulation 3 of the Alternative Investment Fund Managers Regulations 2013) or in undertakings for the collective investment in transferable securities (which have the meaning given by Section 363A(4) of the Taxation (International and Other Provisions) Act 2010), which may be repurchased, redeemed, or paid out on no more than seven days' notice; and (b) ordinary shares or securities in a company which are acquired on a regulated market (defined in Section S274(4) ITA 2007).

 

Borrowing Powers

 

Any borrowing by the Company for the purposes of making investments will be in accordance with the Company's articles of association. To the extent that borrowing is required, the Directors will restrict the borrowings of the Company and exercise all voting and other rights or powers of control over its subsidiary undertakings (if any) to ensure that the aggregate amount of money borrowed by the group, being the Company and any subsidiary undertakings for the time being, (excluding intra-group borrowings), will not, without shareholder approval, exceed 30 per cent of its NAV at the time of any borrowing.

 

Risk Diversification

 

The Company aims to invest in a number of different businesses within different industry sectors but may focus investments in a single sector where appropriate to do so. No single investment by the Company will represent more than 15 per cent of the aggregate NAV of the Company at the time the investment is made.

 

Valuation Policy

 

All unquoted investments will be valued in accordance with BVCA or similar guidelines under which investments are not normally re-valued above cost within twelve months of acquisition unless third party funding has occurred. A brief summary of the BVCA guidelines as it applies to TP11's investments is as follows:

 

·      Investments should be reported at fair value where this can be reliably determined by the Board on the recommendation of the Investment Manager.

·      In estimating fair value for an investment, the valuation methodology applied should be the most appropriate for a particular investment. Such methodologies, including the price of the recent investment, earnings multiples, net assets, discounted cash flows or earnings and industry valuation benchmarks, should be applied consistently.

·      If fair value cannot be reliably measured, transaction price is used for valuing investments where it is believed that this price is a proxy for fair value.

 

Any quoted investments, if made, will be valued at prevailing bid prices.

 

For accounting periods commencing 1 January 2019 onwards, updated International Private Equity and Venture Capital Valuation ("IPEV") guidelines no longer allow 'cost' and 'price of a recent investment' to be used when valuing investments. This is discussed further in note 10.

 

Co-Investment Policy

 

The Company may invest alongside other funds or entities managed or advised by the Investment Manager which would help the Company to broaden its range of investments or the scale of opportunities than if it were investing on its own.

 

It is possible that conflicts may arise in these circumstances between different funds or between the Company and the Investment Manager. The Investment Manager maintains robust conflict of interest procedures to manage potential conflicts and issues are resolved at the discretion of the independent board of the Company.

 

Dividend Policy

 

The Company will distribute by way of dividend such amount as ensures that it retains not more than 15% of its income from shares and securities. The Directors aim to maximise tax-free distributions to Shareholders of income or realised gains. It is envisaged that the Company will distribute most of its net income each year by way of dividend, subject to liquidity.

 

For the Venture Fund, the Company intends to distribute 3 pence per Venture Share in the financial year ending 28 February 2021, 3 pence per Venture Share in the financial year ending 28 February 2022, followed by regular dividends of up to 5 pence per Venture Share per annum. The Company's ability to pay dividends is subject to the existence of realised profits, legislative requirements, and the available cash reserves.

 

Share Buy-Back Policy

 

TP11 aims, but is not committed, to offer liquidity to Shareholders through on-going buy-backs, subject to the availability of distributable reserves, at a target discount of 5% to net asset value.

 

Share Realisation Policy

 

After an anticipated holding period of between five and seven years, which may include follow-on investments into investee companies as appropriate, Triple Point intends to identify opportunities to exit Venture Fund investments.

 

Exits will typically be realised through trade sales to businesses, acquisitions by private equity funds, or selling shareholdings to later stage venture and growth capital funds during the course of further investee company fund raising activity. Sales during the course of further investee company fund raising activity may include investee companies buying back shares at a price reflecting the valuation at that stage. The proceeds of any realisation will be used to identify further investment opportunities and to pay dividends to Investors.

 

Key Performance Indicators

 

As a VCT the Company's objectives are providing Shareholders with up front tax relief and returns through capital appreciation and the payment of dividends.

 

The main KPIs in meeting these objectives are:

 

·    Net Asset Value plus dividends paid; and

·    Earnings per share

 

A record of these indicators is detailed on page 1 entitled Financial Summary.

 

Tax Benefits

 

The Company's objective is to provide shareholders with an attractive income and capital return by investing its funds in a broad spread of unlisted UK companies which meet the relevant criteria for investment by Venture Capital Trusts.

 

Investing in a VCT brings the benefit of tax-free dividends, as well as up-front income tax relief. The Company continues to meet the VCT qualification requirements which are continuously monitored by the Investment Manager and reviewed by the Directors. 

 

Investment classification by asset value and sector value are shown on the following pages:

 

Investment Portfolio - A Share Class

 

VCT Qualifying Investments             69%  

VCT Non-Qualifying Investments       31%

Cash                                               0%         

 

** Please note that the percentage of qualifying investments above is not representative of the Company as a whole, whose qualifying investments exceed the requisite 70% threshold.

 

Investments by Sector - A Share Class

 

 

 

Hydro Electric Power                            69%

SME Funding Hydro Electric Power       17%

SME Funding Other                              14%

 

Investment Portfolio - B Share Class

 

VCT Qualifying Investments             75%  

VCT Non-Qualifying Investments       24%

Cash                                               1%    

 

Investments by Sector - B Share Class

 

Gas Power                   76%

SME Funding - Other    24%

 

VCT Regulation

 

VCTs were first introduced in the Finance Act 1995 to provide a means for private individuals to invest in unquoted companies in the UK. The Finance Act 2004 introduced changes to VCT legislation designed to make VCTs more attractive to investors. The current tax benefits available to eligible investors in VCTs include:

·    Up-front income tax relief of 30% on a maximum investment of £200,000 per tax year on newly issued shares;

·    exemption from income tax on dividends received; and

·    exemption from capital gains tax on disposals of shares in VCTs.

 

Since the Finance Act 2004, the VCT rules have subsequently been amended under the Finance Act 2014 and The Finance (No 2) Act 2015. The Investment Manager, utilising advice from Philip Hare & Associates LLP, ensures continued compliance with any legislative changes.

 

As referred to in the Chairman's Statement on page 3, further changes have been introduced with effect from 6 April 2019. The Company will continue to ensure its compliance with the qualification requirements. 

 

The Company has been approved as a VCT by Her Majesty's Revenue and Customs. In order to maintain this approval the Company must comply with certain requirements on a continuing basis. Within three years from the effective date of provisional approval or later allotment at least 70% of the Company's investments must comprise "qualifying holdings" of which at least 30% must be in eligible Ordinary Shares. This investment criterion continues to be met. From the 1 March 2020, the percentage of the Company's investments held in "qualifying holdings" will increase to 80% from 70%.

 

FCA Regulation

 

On 22 July 2014 Triple Point VCT 2011 plc registered with the Financial Conduct Authority as a small Alternative Investment Fund Manager ("AIFM") under the AIFM Directive.

 

Exit Programme

 

The Company and Investment Manager continue to be committed to ensuring a timely exit and return of funds to B Class Shareholders as soon as practicable after the end of the minimum five-year holding period. The Investment Manager has a strong track record in managing such exits. In relation to the A Share Class the Company is intending to secure a partial realisation after five years but plans to retain its investment in the Hydro companies until 2030.  

 

Principal Risks and uncertainties

 

The Directors carry out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The main areas of risk identified by them, along with the risks to which the Company is exposed through its operational and investing activities, are detailed below.

 

VCT qualifying status risk: the Company is required at all times to observe the conditions laid down in the Income Tax Act 2007 for the maintenance of approved VCT status.  The loss of such approval could lead to the Company losing its exemption from corporation tax on capital gains, to investors being liable to pay income tax on dividends received from the Company and, in certain circumstances, to investors being required to repay the initial income tax relief on their investment.  The Investment Manager keeps the Company's VCT qualifying status under continual review and reports to the Board on a quarterly basis.  The Board has also appointed Philip Hare & Associates LLP to undertake an independent VCT status monitoring role.

 

Investment risk: the Company's VCT qualifying investments will be held in small and medium-sized unquoted investments which, by their nature, entail a higher level of risk and lower liquidity than investments in large quoted companies. This could make it difficult to realise investments in line with the relevant strategy. The Directors and Investment Manager aim to limit the risk attached to the portfolio as a whole by careful selection and timely realisation of investments, by carrying out rigorous due diligence procedures and by maintaining a spread of holdings in terms of industry sector and geographical location. The Board reviews the investment portfolio with the Investment Manager on a regular basis.

 

Financial risk: as a VCT the Company is exposed to market price risk, credit risk, fair value risk, liquidity risk and interest rate risk. As most of the Company's investments will involve a medium to long-term commitment and will be relatively illiquid, the Directors consider that it is inappropriate to finance the Company's activities through borrowing, other than for short term liquidity. The key elements of financial risk are discussed in more detail in note 15.

 

Failure of Internal controls risk: the Board regularly reviews the system of internal controls, both financial and non-financial, operated by the Company and the Investment Manager. These include controls designed to ensure that the Company's assets are safeguarded and that proper accounting records are maintained.

 

Viability Statement

 

In accordance with provision C.2.2 of the 2016 revision to the UK Corporate Governance Code, the Directors have assessed the prospect of the Company over a longer period than 12 months required by the Going Concern provision. The Board conducted this review for a period of five years, which was considered to be an appropriate time horizon, as investors are required to hold their investment for a period of five years in order to benefit from the associated tax reliefs. The Board has determined that five years up to 29 February 2024, is the maximum timescale over which the future position of the Company can be forecast with a material degree of accuracy and therefore is the appropriate period over which to consider the viability. During the next five years, the B Share Class will reach its 5-year holding period and the A Share Class will partially exit, based on this the Directors believe it is reasonable to make their assessment over 5 years.

 

In order to assess this requirement, the Board regularly considers the Company's strategy and takes into account the Company's current position and carries out a robust assessment of the principal risks, including future performance and liquidity. Consideration has also been given to the Company's reliance on, and close working relationship with the Investment manager. This has enabled the Directors to state that they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment. The board has considered both the Company's long-term and short-term cash flow projections and considers these to be realistic and reasonable.

 

More information on the principal risks of the Company is set out on page 10.

 

To provide this assessment the Board has considered the Company's financial position and ability to meet its expenses as they fall due as well as considering longer term viability:

 

 

 

·    the expenses of the Company are predictable and modest in comparison with the assets and there are no capital commitments foreseen which would alter that position;

·      the Company has no employees, only Non-Executive Directors, and consequently does not have redundancy or other employment related liabilities or responsibilities;

·    most of the Company's investments will involve a medium to long-term commitment and will be relatively illiquid but the board reduces the risk as a whole by careful selection and timely realisation of investments; and

·    the Directors will continue to monitor closely changes in the VCT legislation and adapt to any changes to ensure the Company maintains approval. The Directors have appointed an independent adviser to undertake the VCT status monitoring role.

 

Based on the results of this review, the Directors have a reasonable expectation that the Company will be able to continue its operations and meet its expenses and liabilities as they fall due over the period of their assessment.

 

Share Price Discount Policy

 

The Company has a share buy-back facility, committing to buy back shares at no more than a 10% discount to the prevailing NAV, subject to the Directors' discretion. We will be asking shareholders at the Annual General Meeting to extend the facility for the Company to purchase shares in the market for cancellation. Shareholders should note that if they sell their shares within five years of subscription, they forfeit any tax relief obtained. If you are considering selling your shares, please contact TPIM on 020 7201 8989.

 

Environmental, Social, Employee and Human Rights Issues

 

As an externally managed investment company with no employees the Company does not maintain specific policies in relation to these matters. Due to the nature of the Company's activities, there being no employees and only 3 Non-Executive Directors, there are no Human Rights Issues to report. Its investment in companies engaged in energy generation from renewable sources means it will contribute to the reduction in carbon emissions.

 

Gender Diversity

 

The Board of Directors comprises 1 female and 2 male Directors. The Investment Manager has 93 staff of whom 50 are men and 43 are women.

 

Strategic Report - Investment Manager's Review

 

Sector Analysis

 

The unquoted investment portfolio can be analysed as follows:

 


Electricity Generation

SME Funding


Industry Sector

Hydro Electric Power

Gas Power

Hydro Electric Power

Other*

Total Unquoted Investments


£'000

£'000

£'000

£'000

£'000

Investments at 1 March 2018






A shares

6,577

-  

1,652

1,515

9,744

B shares

-  

5,100

-  

1,710

6,810

Total Investments

6,577

5,100

1,652

3,225

16,554

Investments disposed of during the period






A shares

-  

-  

-  

(75)

(75)

B Shares

-  

-  

-  

-  

-  

Total disposals

-  

-  

-  

(75)

(75)

Investment revaluations during the period






A shares

428

-  

-  

5  

433

B Shares

-  

413

-  

16  

429

Total revaluations

428

413

-  

21  

862

Investments at 28 February 2019






A Shares

7,005

-  

1,652

1,445

10,102

B Shares

-  

5,513

-  

1,726

7,239


7,005

5,513

1,652

3,171

17,341

Unquoted Investments %

40.40%

31.79%

9.53%

18.29%

100.00%

 

* Other SME funding includes £1,445,000 of A Ordinary Share Class investments and £1,726,000 of B Ordinary Share Class investment in to a UK based LLP which provides finance to small and medium sized enterprises.

 

The VCT was established to fund small and medium sized enterprises. It has two share classes with separate portfolios as detailed on page 12. At the year end the overall portfolio comprised investments in 12 small, unquoted companies focussing investments in two areas: electricity generation and SME funding.

 

This year the Company elected to raise funds for new investments. The Venture Fund was launched in September 2018 and will primarily focus on providing funding to unquoted companies at an early stage in their lifecycle to help them grow and scale. The Venture Fund's investment strategy was developed to help start-ups establish market fit faster and increase their chances of reaching scale.

 

A number of new requirements were put in place following the Patient Capital Review, including an increase in the threshold for qualifying investments from 70% to 80% for accounting periods commencing after 6 April 2019. The Investment Manager monitors compliance with all qualification conditions closely and maintains a forward-looking Qualifying Investment Tracker.  We are confident that we can ensure continuing compliance with all conditions. 

 

The Company's A & B Share Class portfolio consists of businesses which are fully operational and revenue generating. Generally, performance during the year across the portfolio has been in line with expectations with the A Share Class recording an uplift in NAV (including dividends) from the performance of its portfolio from 110.90p per share to 118.24p per share. The B Share Class recorded an uplift from 100.00p per share to 106.10p per share due to the revaluation of its qualifying investments from a cost basis to a discounted cash flow basis following completion of construction in both cases.

 

Review & Outlook

 

A Share Class

 

The A Share Class has investments in six hydroelectric companies which between them own seven hydroelectric schemes in the Scottish Highlands. All seven schemes have been commissioned and are operational. The A Share Class also has investments in two companies which provide funding to SMEs.

 

The seven hydro-electric schemes are "run of river" plants which capture river flow agreed above a certain level as determined by the Scottish Environment Protection Agency (SEPA). Water flow is generally captured before a descent and flows down the penstock (pipe) to a turbine engine which produces electricity. The water is then returned to the river.  The hydro companies benefit from government backed Feed-in Tariff (FiT) payments based on output and from the sale of the electricity produced to utilities or other power companies under Power Purchase Agreements (PPAs). The companies have continued to obtain better power prices than were originally forecast, currently earning an average of 6.3 pence per kWh compared to an expected 5 pence per kWh at the outset of the projects.

 

The last 12 months have seen lower than expected rainfall across the Scottish Highlands. Rainfall variability is to be expected over the 40-year period of generation which our investee companies are expected to experience overall, and we continue to be pleased with the efficiency of the hydro plants owned by them. The hydro-electric companies remain highly focussed on improving efficiencies and maximising output and are working alongside hydro experts to further enhance performance.

 

Industry Update

 

The hydro-electric companies, together with other industry members and the British Hydropower Association, are continuing to lobby the Scottish Government to recognise the concern on business rates in the hydro sector. For the financial year 2018/19, the hydro-electric companies received a 60% relief and it is expected that this relief will continue to be applied for the financial year 2019/20 and until such time as the Scottish Government address the issues of the business rates in the hydro sector.

 

In July 2018, the government announced the end of the FiT scheme for renewable energy from 31st March 2019.  All businesses that already have FiT registrations will continue to receive payments for the remainder of their agreement.  Therefore, as the companies entered in to 20-year agreements prior to this announcement, the seven hydro-electric companies are unaffected by this change.

 

 

Top Holdings by The A Share Fund

Qualifying

Green Highland Allt Garbh Ltd has constructed a 1,300 KW run-of-river hydro-electric power plant near Glen Affric, Cannich, which was commissioned in July 2017.  The company earns Feed-in-Tariffs and other revenues from the generation and export of electricity to the National Grid.

Green Highland Allt Ladaidh (1148) Ltd operates a 1,350 KW run-of-river hydro-electric power plant near Loch Garry, Invergarry in the Scottish Highlands.  The company earns Feed-in-Tariffs and other revenues from the generation and export of electricity to the National Grid.

Green Highland Allt Luaidhe (228) Ltd operates a 500 KW run-of-river hydro-electric power plant located in Knockie, Whitebridge near Inverness in the Scottish Highlands.  The company earns Feed-In-Tariffs from the generation and export of electricity to the National Grid.

Green Highland Allt Phocachain (1015) Ltd operates two separate 500 KW run-of-river hydraulic power plants located in Glen Moriston, in the Scottish Highlands.  The company earns Feed-in-Tariffs from generation and export of electricity to the National Grid.

Non-Qualifying

Broadpoint 2 Ltd is a VCT non-qualifying investment, which has provided investment to hydro-electric power companies.

Broadpoint 3 Ltd owns equity stakes in hydro-electric power companies and one rooftop solar PV company.

Funding Path Ltd is a VCT non-qualifying investment, which has a participation in an LLP that provides finance to small and medium sized enterprises (SMEs).

Modern Power Generation Ltd is a VCT non-qualifying investment, which has a participation in an LLP that provides finance to small and medium sized enterprises (SMEs).

 

B Share Class

 

The B Share Class remains is invested with two Qualifying Investments in companies operating gas fired energy centres and one Non-Qualifying Investment. Both energy centres were commissioned during May 2018 and consist of containerised gas combustion engines that generate electricity for onward sale, especially at times when there is high demand for power. The UK is aiming to close its coal-fired power plants by 2025, and it is therefore expected that there will be a shortage in the supply of energy in the UK. Although renewable energy makes an increasing contribution, the irregular nature of its production means that other baseload sources will also be required to make up the deficit.

 

The companies have taken advantage of a gap in the market by constructing and operating gas fired energy centres to produce and sell electricity to customers. The energy centres utilise simple technology, provided by Rolls Royce, to deliver a reliable and secure energy supply.

 

Gas is purchased from the National Transmission System and combusted in the engines. The electricity is then exported to the National Grid and sold under a power purchase agreement. The companies receive revenues from the sale of electricity and additional income from embedded benefits.

 

Embedded benefits cover a range of payments available to small electricity generators connected to the distribution network, rather than the transmission grid. Benefits can be earned for generating at peak times and for local distribution.

 

In addition, generators can earn additional revenues by operating outside the peak 4-7pm hours to take advantage of 'intraday' and 'post-gate closure' price volatility.

 

Both qualifying companies are fully operational. During the six-month period to 31 December 2018, Green Peak Generation Ltd generated 4,483 MWh of electricity, and Distributed Generators Ltd generated 2,923 MWh of electricity. Based on an average of 3.8 MWh annual use per household, the energy centres generated enough electricity for 2,359 and 1,538 homes respectively during the period.

 

Green Peak Generation is working with the contractor to replace the engine silencers, at no cost to Green Peak Generation owing to their poor acoustic performance. This is expected to be completed in June 2019.

 

Industry Update

 

The Capacity Market consists of fixed payments to power generators to ensure they are available during periods of high demand. Eligible power generators must bid in an auction process to win a contract, they will then receive these payments in exchange for ensuring the generator is available during the peak demand periods.

 

On 15 November 2018, the European Court of Justice unexpectedly announced that it did not believe that sufficient work had been undertaken when the European Commission ('EC') approved the UK's Capacity Market scheme, leading to a halt to all payments under the scheme. 

 

The UK's Department for Business, Energy and Industrial Strategy ('BEIS') have indicated they are working closely with the EC to secure approval and have suggested they anticipate securing this approval by the end of 2019 (including making the currently frozen Capacity Market payments). As the expected impact of this announcement is only a delay in payments which will be received by the projects, it is not anticipated that this will have a material impact on investor returns, but there is currently uncertainty over the timing of when these revenues will be received.

 

In addition, Ofgem completed its review of embedded benefits available to small generators and announced certain planned changes. Albeit a relatively small element of the revenue generated by the companies, embedded benefits form another income stream which the energy centres receive. Assuming these changes are implemented, this will have the effect of reducing the income the energy centres are able to earn as well as introducing a small cost for each MWh of electricity that is generated. This is expected to have a minor negative impact on investor returns.

 

Top Holdings by The B Share fund

Qualifying

Distributed Generators Ltd has constructed a 5 MW gas power plant in Bedford.  The 2 x 2.5 MW gas fired MTU Rolls Royce Engines have been successfully installed and construction was completed, and commissioning achieved in May 2018. 

Green Peak Generation Ltd has constructed a 7.5 MW gas power plant in Workington, Cumbria. The 3 containerised 2.48 MW gas fired MTU Rolls Royce Engines have been successfully installed and construction was completed, and commissioning achieved in May 2018. 

Non-Qualifying

Modern Power Generation Ltd: is a VCT non-qualifying investment, which has a participation in an LLP that provides finance to small and medium sized enterprises (SMEs).

 

Non-Qualifying Investments

 

SME Funding

 

The Company has non-qualifying investments in four finance companies. These four finance companies provide funding for business critical loans and asset finance to over 75,000 UK Corporate and SME customers.

 

Brexit

 

The Investment Manager and the Board continue to keep the possible impact of Brexit on the Company under review.  The Company's strategy of investing in small UK based businesses means that it is unlikely to be directly exposed to the terms of an exit from the EU.  We are, however, going through a period of some political and, potentially, economic uncertainty. We believe that by investing carefully, monitoring our portfolio rigorously and providing support to the businesses in which we have invested we can minimise the effects of this uncertainty.   

 

Venture Fund

 

The Company made the first allotments into its new Venture share class in late March 2019 and completed its first two investments in early April 2019 into MWS Technology Limited and Augnet Limited.

 

The Venture share class (known as the Venture Fund) targets significant capital growth by investing in innovative businesses that are solving real-world corporate challenges. To underpin the investment opportunity flow for the new share class, the Company and the Investment Manager have established relationships with several new Venture Partners who specialise in advising larger corporate and public sector organisations on how to use products and services from start-up and SME companies to drive innovation and efficiency gains. The Company will have the opportunity to consider investing in many of the smaller, growth orientated companies.

 

Many, though not all that the venture fund invests, of the companies that we invest in will involve the use of new technology and be knowledge-intensive, very much the types of innovative British businesses that the Government wishes to see backed by VCT capital. One particular area of focus for the Venture Fund will be companies delivering software-as-a-service, helping to automate and improve workplace practises. Most investee companies will already be generating revenues from their core products.

 

The Venture Fund's dividend policy is to target a 3 pence per share dividend in 2020 and 2021 with dividend payments thereafter being dependent on the realisation of gains from within the investment portfolio.

 

 

If you have any questions, please do not hesitate to call us on 020 7201 8990.

 

Ben Beaton

Managing Partner

For Triple Point Investment Management LLP

23 May 2019

 

Strategic Report - Investment Portfolio Summary


28 February 2019


28 February 2018


        Cost 

     Valuation


        Cost 

     Valuation


£'000

£'000


£'000

£'000

Unquoted qualifying holdings

11,423

70.49

12,518

72.00


11,423

68.84

11,677

69.07

Non-Qualifying holdings

4,736

29.23

4,823

27.74


4,811

29.01

4,877

28.84

Financial assets at fair value through profit or loss

16,159

99.72

17,341

99.74


16,234

97.85

16,554

97.91

Cash and cash equivalents

46

0.28

46

0.26


353

2.15

353

2.09


16,205

100.00

17,387

100.00


16,587

100.00

16,907

100.00

Qualifying Holdings










Unquoted










Hydro Electric Power










Green Highland Allt Choire A Bhalachain (225) Ltd

30

0.19

35

0.20


30

0.18

30

0.18

Green Highland Allt Garbh Ltd

2,250

13.88

2,250

12.94


2,250

13.56

2,250

13.31

Green Highland Allt Ladaidh (1148) Ltd

1,470

9.07

2,063

11.87


1,470

8.86

1,802

10.66

Green Highland Allt Luaidhe (228) Ltd

855

5.28

958

5.51


855

5.15

937

5.54

Green Highland Allt Phocachain (1015) Ltd

858

5.29

1,088

6.26


858

5.17

1,005

5.94

Green Highland Shenval Ltd

860

5.31

611

3.51


860

5.18

553

3.27

Gas Power










Distributed Generators Ltd

3,200

19.75

3,472

19.97


3,200

19.29

3,200

18.93

Green Peak Generation Ltd

1,900

11.72

2,041

11.74


1,900

11.45

1,900

11.24


11,423

70.49

12,518

72.00


11,423

68.84

11,677

69.07

Non-Qualifying Holdings










Unquoted










Hydro Electric Power










Green Highland Allt Choire A Bhalachain (225) Ltd

3

0.02

3

0.02


3

0.02

3

0.02

Green Highland Allt Ladaidh (1148) Ltd

30

0.19

30

0.17


30

0.18

30

0.18

Green Highland Allt Luaidhe (228) Ltd

61

0.38

61

0.35


61

0.37

61

0.36

Green Highland Allt Phocachain (1015) Ltd

2

0.01

3

0.02


2

0.01

3

0.02

SME Funding:










Hydro Electric Power










Broadpoint 2 Ltd

550

3.39

550

3.16


550

3.32

550

3.25

Broadpoint 3 Ltd

1,005

6.20

1,005

5.78


1,005

6.06

1,005

5.94

Other










Funding Path Ltd

925

5.71

925

5.32


1,000

6.03

1,000

5.91

Modern Power Generation Ltd

2,160

13.33

2,246

12.92


2,160

13.02

2,225

13.16


4,736

29.23

4,823

27.74


4,811

29.01

4,877

28.84

 

Financial Assets are measured at fair value through profit or loss. The initial best estimate of fair value of these investments that are either quoted or unquoted on an active market is the transaction price (i.e. cost). The fair value of these investments is subsequently measured by reference to the enterprise value of the investee company, which is best deemed to reflect the fair value. Where the Board considers the investee company's enterprise value to remain unchanged since acquisition, investments continue to be held at cost less any loan repayments received. Where the Board considers the investee company's enterprise value has changed since acquisition, investments are held at a value measured using a discounted cash flow model or the value to be realised on disposal which is equivalent to fair value.

For accounting periods commencing 1 January 2019 onwards, updated International Private Equity and Venture Capital Valuation ("IPEV") guidelines no longer allow 'cost' and 'price of a recent investment' to be used as the primary valuation technique when valuing investments. This is discussed further in note 10.

 

Strategic Report - Investment Portfolio Ten Largest Unquoted Investments

 

Distributed Generators Ltd





Date of first investment

Cost £

Valuation £

Valuation Method

Income recognised by TP11 for the year £'000

Equity Held by TP11 %

Equity Held by TPIM managed funds %

02-Apr-2015

3,200,000

3,472,000

Discounted Cash Flow

-  

45

45








Summary of Information from Investee Company Financial Statements:

£'000








Turnover


159

Earnings before interest, tax, amortisation and depreciation (EBITDA)


(100)

Profit before tax


(207)

Net assets before VCT loans


2,802

Net assets


(1,842)


Distributed Generators Ltd constructed a 5 MW gas power plant in Bedford.  The 2 x 2.5 MW gas fired MTU Rolls Royce Engines are being installed and construction was completed in May 2018. The plant will generate revenues through the sale of electricity to the National Grid, when electricity prices are at their highest.

 

Green Highland Allt Garbh Ltd





Date of first investment

Cost £

Valuation £

Valuation Method

Income recognised by TP11 for the year £'000

Equity Held by TP11 %

Equity Held by TPIM managed funds %

01-Apr-2015

2,250,000

2,250,000

Discounted

Cash Flow*

146

23

50








Summary of Information from Investee Company Financial Statements:

£'000








Turnover


581 

Earnings before interest, tax, amortisation and depreciation (EBITDA)


394 

Profit before tax


(85) 

Net assets before VCT loans


4,752 

Net assets


3,264 


Green Highland Allt Garbh Ltd has constructed a 1,300 KW run-of-river hydro-electric power plant near Glen Affric, Cannich.  The scheme completed construction and was commissioned in July 2017.  The company earns Feed-in-Tariffs and other revenues from the generation and export of electricity to the National Grid.

 

* The investment is valued on a discounted cash flow basis, but is restricted to cost due to the drag along rights held by a co-owner.

 

Modern Power Generations Ltd





Date of first investment

Cost £

Valuation £

Valuation Method

Income recognised by TP11 for the year £'000

Equity Held by TP11 %

Equity Held by TPIM managed funds %

04-Apr-2016

2,160,000

2,225,000

Share of net assets

82

50

50








Summary of Information from Investee Company Financial Statements:

£'000








Turnover


151

Earnings before interest, tax, amortisation and depreciation (EBITDA)


142

Profit before tax


34

Net assets before VCT loans


2,227

Net assets


1,432


Modern Power Generations Ltd is a VCT non-qualifying investment, which has invested in an LLP that provides finance to small and medium sized enterprises (SME's).

 

Green Peak Generation Ltd





Date of first investment

Cost £

Valuation £

Valuation Method

Income recognised by TP11 for the year £'000

Equity Held by TP11 %

Equity Held by TPIM managed funds %

02-Apr-2015

1,900,000

2,041,000

Discounted Cash Flow

-  

42

90








Summary of Information from Investee Company Financial Statements:

£'000








Turnover


286

Earnings before interest, tax, amortisation and depreciation (EBITDA)


(52)

Profit before tax


(139)

Net assets before VCT loans


3,714

Net assets


2,484


Green Peak Generation Ltd constructed a 7.5 MW gas power plant in Bedford.  The 3 x 2.5 MW gas fired MTU Rolls Royce Engines are being installed and construction was completed in May 2018. The plant will generate revenues through the sale of electricity to the National Grid, when electricity prices are at their highest.

 

Green Highland Allt Ladaidh (1148) Ltd





Date of first investment

Cost £

Valuation £

Valuation Method

Income recognised by TP11 for the year £'000

Equity Held by TP11 %

Equity Held by TPIM managed funds %

19-Mar-2015

1,470,000

2,063,000

Discounted Cash Flow

126

15

100








Summary of Information from Investee Company Financial Statements:

£'000








Turnover


644

Earnings before interest, tax, amortisation and depreciation (EBITDA)


476

Profit before tax


(109)

Net assets before VCT loans


4,452

Net assets


2,952


Green Highland Allt Ladaidh (1148) Ltd operates a 1,350 KW run-of-river hydro-electric power plant near Loch Garry, Invergarry in the Scottish Highlands.  The company earns Feed-in-Tariffs and other revenues from the generation and export of electricity to the National Grid.

 

Funding Path Ltd





Date of first investment

Cost £

Valuation £

Valuation Method

Income recognised by TP11 for the year £'000

Equity Held by TP11 %

Equity Held by TPIM managed funds %

29-Jan-2016

925,000

925,000

Share of net assets

71

49

98








Summary of Information from Investee Company Financial Statements:

£'000








Turnover


279

Earnings before interest, tax, amortisation and depreciation (EBITDA)


269

Profit before tax


(40)

Net assets before VCT loans


3,116

Net assets


(9)


Funding Path Ltd is a VCT non-qualifying investment, which has invested in an LLP that provides finance to small and medium sized enterprises (SME's).

 

Broadpoint 3 Ltd





Date of first investment

Cost £

Valuation £

Valuation Method

Income recognised by TP11 for the year £'000

Equity Held by TP11 %

Equity Held by TPIM managed funds %

08-Jan-2016

1,005,000

1,005,000

Discounted cash flow*

-  

-  

-  








Summary of Information from Investee Company Financial Statements:

£'000








Turnover


Earnings before interest, tax, amortisation and depreciation (EBITDA)


(36) 

Profit before tax


17 

Net assets before VCT loans


3,012 

Net assets


(2) 


Broadpoint 3 Ltd owns equity stakes in hydro-electric power companies and one digital deployment company.

 

*The directors consider the fair value to be equivalent to the par value.

 

Green Highland Allt Luaidhe (228) Ltd





Date of first investment

Cost £

Valuation £

Valuation Method

Income recognised by TP11 for the year £'000

Equity Held by TP11 %

Equity Held by TPIM managed funds %

18-Mar-2015

855,000

958,000

Discounted Cash Flow

74

15

100








Summary of Information from Investee Company Financial Statements:

£'000








Turnover


337

Earnings before interest, tax, amortisation and depreciation (EBITDA)


142

Profit before tax


(187)

Net assets before VCT loans


3,892

Net assets


2,455


Green Highland Allt Luaidhe (228) Ltd operates a 500 KW run-of-river hydro-electric power plant located in Knockie, Whitebridge near Inverness in the Scottish Highlands.  The company earns Feed-In-Tariffs from the generation and export of electricity to the National Grid.

 

Broadpoint 2 Ltd





Date of first investment

Cost* £

Valuation £

Valuation Method

Income recognised by TP11 for the year £'000

Equity Held by TP11 %

Equity Held by TPIM managed funds %

07-Jan-2016

550,000

550,000

 Discounted cash flow*

43

49

98








Summary of Information from Investee Company Financial Statements:

£'000








Turnover


-  

Earnings before interest, tax, amortisation and depreciation (EBITDA)


(11)

Profit before tax


3

Net assets before VCT loans


3,370

Net assets


(15)


Broadpoint 2 Ltd is a VCT non-qualifying investment, which has provided investment to hydro-electric power companies.

 

*The directors consider the fair value to be equivalent to the par value.

 

Green Highland Allt Phocachain (1015) Ltd





Date of first investment

Cost £

Valuation £

Valuation Method

Income recognised by TP11 for the year £'000

Equity Held by TP11 %

Equity Held by TPIM managed funds %

13-Nov-2014

858,000

1,088,000

Discounted Cash Flow

73

8

100








Summary of Information from Investee Company Financial Statements:

£'000








Turnover


759

Earnings before interest, tax, amortisation and depreciation (EBITDA)


559

Profit before tax


(114)

Net assets before VCT loans


3,892

Net assets


2,455


Green Highland Allt Phocachain (1015) Ltd operates two separate 500 KW run-of-river hydraulic power plants located in Glen Moriston, in the Scottish Highlands.  The company earns Feed-in-Tariffs from generation and export of electricity to the National Grid.

 

Strategic Report -Significant Influence

 

The principal undertakings in which the company's interest at the year-end is 20% or more are as follows:

 

Name

Registered address

Holding




Broadpoint 2 Limited

1 King William Street, London, EC4N 7AF

49.00%

Distributed Generators Limited

1 King William Street, London, EC4N 7AF

45.00%

Funding Path Limited

1 King William Street, London, EC4N 7AF

49.00%

Green Highland Alt Garbh Limited

Inveralmond Road, Inveralmond Industrial Estate, Perth, PH1 3TW

22.79%

Green Highland Shenval Limited

Q Court, 3 Quality Street, Edinburgh, EH4 5BP

22.09%

Green Peak Generation Limited

Q Court, 3 Quality Street, Edinburgh, EH4 5BP

41.67%

Modern Power Generation Limited

1 King William Street, London, EC4N 7AF

49.90%

 

·      The investments are a combination of debt and equity.

·      Equity holding is equal to the voting rights.

·      All investments are held in the UK.

 

The Strategic Report has been approved by the Board and signed on their behalf by the Chairman.

 

Jane Owen

Chairman

23 May 2019

 

Report of the Directors

 

The Directors present their Report and the audited Financial Statements for the year ended 28 February 2019.

 

Details of Directors

 

Jane Owen is the Chairman of the Board of the Company. After graduating in law from Oxford University, Jane was called to the Bar in 1978 and until 1989 was a practising barrister in the chambers that are now 3 Verulam Buildings. Subsequently Jane became UK group legal director at Alexander & Alexander Services, and was appointed Aon's General Counsel in the UK in 1997, a position she held until 2008, where she was also a director of Aon Limited from 2001 to 2008. She is also a Non-Executive Director of TWG Europe Ltd and related companies and a Governor of James Allen's Girls' School.

 

Chad Murrin graduated in law from Cambridge University, and then qualified as a barrister. He worked for 3i Group plc from 1986-2004, the last five years as 3i's Corporate Development Director. In 2004, he set up his own corporate advisory business, Murrin Associates Limited. He holds the Advanced Diploma in Corporate Finance from The Corporate Finance Faculty of the ICAEW. He is a Non-Executive Director of Keytask Management Limited, E.W. Beard (Holdings) Limited, Procom-IM Limited and other companies.

 

Tim Clarke graduated in PPE from Oxford University. He joined Panmure Gordon & Co as an equities analyst, subsequently becoming a Partner and Head of Research. He joined Bass PLC in 1990, holding a number of operating roles in the Hotels, Pub and Restaurant divisions before becoming Chief Executive in 2000. Following its demerger he was Chief Executive of Mitchells & Butlers PLC until 2009. He was a Non-Executive Director of Associated British Foods PLC from 2004 until 2017. He is currently Chairman of Birmingham Airport, Chairman of Timothy Taylor & Co Ltd, and a Non-Executive Director of Hall & Woodhouse Ltd. He is Vice-Chairman of the Foundation of the Schools of King Edward VI in Birmingham. 

 

All Directors are considered to be independent.

 

The Board has considered provision B.7.2 of the UK Corporate Governance Code (April 2016) and believes that all the Directors continue to be effective and to demonstrate commitment to their roles, the Board and the Company. The Directors are discussed further within the Corporate Governance report on pages 29 to 32 which demonstrates the Boards compliance with the UK Corporate Governance code.

 

Activities and Status

 

The Company is a Venture Capital Trust and its main activity is investing. The Company has chosen to focus its investing activities towards companies involved in renewable energy, energy production and SME funding.

 

The Company has been approved as a VCT by HMRC and, in the opinion of the Directors, has conducted its affairs so as to enable it to continue to obtain such approval.

 

The Company is registered in England as a Public Limited Company (Registration number 07324448). The Directors have managed, and intend to continue to manage, the Company's affairs in such a manner as to comply with Section 274 of the Income Tax Act 2007 which grants approval as a VCT.

 

The Company was not at any time up to the date of this report a close company within the meaning of S439 of the Corporation Tax Act 2010.

 

Post Balance Sheet Events

 

For details of post balance sheet events see note 20 to the Financial Statements.

 

Directors' and Officers' Liability Insurance

 

The Company has, as permitted by S233 of the Companies Act 2006, maintained insurance cover on behalf of the Directors and Company Secretary, indemnifying them against certain liabilities which may be incurred by them in relation to their offices with the Company.

 

Matters Covered in the Strategic Report

 

Dividends and financial risk management have both been discussed within the Strategic Report on page 6.

 

Management

 

TPIM acts as Investment Manager to the Company. The principal terms of the Company's management agreement with TPIM are set out in note 5 to the Financial Statements.

 

The Board has evaluated the performance of the Investment Manager based on the returns generated since taking on the management of the Fund and a review of the management contract and the services provided in accordance with its terms. As required by the Listing Rules, the Directors confirm that in their opinion the continuing appointment of TPIM as Investment Manager is in the best interests of the shareholders as a whole.  In reaching this conclusion the Directors have taken into account the performance of other VCTs managed by TPIM and the service provided by TPIM to the Company.

 

Substantial Shareholdings

 

As at the date of this report no disclosures of major shareholdings had been made to the Company under Disclosure and Transparency Rule 5 (Vote Holder and Issuer Notification Rules).

 

Global Greenhouse Gas Emissions

 

The Company has no greenhouse gas emissions to report from the operations of its Company, nor does it have responsibility for any other emission producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

 

Annual General Meeting

 

Notice convening the 2019 Annual General Meeting of the Company and a form of proxy in respect of that meeting can each be found at the end of this document.

 

Share Capital, Rights Attaching to the Shares and Restrictions on Voting and Transfer

 

The A Share capital is £100,000 divided into 10,000,000 shares of 1p each, of which 9,951,133 shares were in issue at 28 February 2019. The B Share capital is £100,000 divided into 10,000,000 shares of 1p each, of which 6,824,266 shares were in issue at 28 February 2019. As at that date none of the issued shares were held by the Company as treasury shares. Subject to any suspension or abrogation of rights pursuant to relevant law or the Company's articles of association, the shares confer on their holders (other than the Company in respect of any treasury shares) the following principal rights:

 

a) the right to receive, out of profits available for distribution, such dividends as may be agreed to be paid (in the case of a final dividend in an amount not exceeding the amount recommended by the Board as approved  by shareholders in general meeting or in the case of an interim dividend in an amount determined by the Board). All dividends unclaimed for a period of 12 years after having become due for payment are forfeited automatically and cease to remain owing by the Company;

 

b) the right, on a return of assets on a liquidation, reduction of capital or otherwise, to share in the surplus assets of the Company remaining after payment of its liabilities pari passu with other holders of A Shares of that class and B Shares of that class.

 

c) the right to receive notice of and to attend and speak and vote in person or on a poll by proxy at any general meeting of the Company. On a show of hands every member present or represented and voting has one vote and on a poll every member present or represented and voting has one vote for every share of which that member is the holder; the validly executed appointment of a proxy must be received not less than 48 hours before the time of the holding of the relevant meeting or adjourned meeting or, in the case of a poll taken otherwise than at or on the same day as the relevant meeting or adjourned meeting, be received after the poll has been demanded and not less than 24 hours before the time appointed for the taking of the poll.

 

These rights can be suspended. If a member, or any other person appearing to be interested in shares held by that member, has failed to comply within the time limits specified in the Company's articles of association with a notice pursuant to S793 of the Companies Act 2006 (notice by a Company requiring information about interests in its shares), the Company can, until the default ceases, suspend the right to attend and speak and vote at a general meeting and if the shares represent at least 0.25% of their class the Company can also withhold any dividend or other money payable in respect of the shares (without any obligation to pay interest) and refuse to accept certain transfers of the relevant shares.

 

Shareholders, either alone or with other shareholders, have other rights as set out in the Company's articles of association and in company law. (Principally, the Companies Act 2006).

 

A member may choose whether his or her shares are evidenced by share certificates (certificated shares) or held in electronic (uncertificated) form in CREST (the UK electronic settlement system). Any member may transfer all or any of his or her shares, subject in the case of certificated shares to the rules set out in the Company's articles of association or in the case of uncertificated shares to the regulations governing the operation of CREST (which allow the Directors to refuse to register a transfer as therein set out); the transferor remains the holder of the shares until the name of the transferee is entered in the register of members. The Directors may refuse to register a share transfer if it is in respect of a certificated share which is not fully paid up or on which the Company has a lien provided that, where the share transfer is in respect of any share admitted to the Official List maintained by the UK Listing Authority, any such discretion may not be exercised so as to prevent dealings taking place on an open and proper basis, or if in the opinion of the Directors (and with the concurrence of the UK Listing Authority) exceptional circumstances so warrant, provided that the exercise of such power will not disturb the market in those shares. Whilst there are no squeeze-out and sell out rules relating to the shares in the Company's articles of association, shareholders are subject to the compulsory acquisition provisions in S974 to S991 of the Companies Act 2006.

 

Amendment of Articles of Association

 

The Company's articles of association may be amended by the members of the Company by special resolution (requiring a majority of at least 75% of the persons voting on the relevant resolution).

 

Appointment and Replacement of Directors

 

A person may be appointed as a Director of the Company by the shareholders in general meeting by ordinary resolution (requiring a simple majority of the persons voting on the relevant resolution) or by the Directors. No person, other than a Director retiring by rotation or otherwise, shall be appointed or re-appointed a Director at any general meeting unless he is recommended by the Directors or, not less than seven nor more than 42 clear days before the date appointed for the meeting, notice is given to the Company of the intention to propose that person for appointment or re-appointment in the form and manner set out in the Company's articles of association.

 

Each Director who is appointed by the Directors (and who has not been elected as a Director of the Company by the members at a general meeting held in the interval since his appointment as a Director of the Company) is to be subject to election as a Director of the Company by the members at the first Annual General Meeting of the Company following his or her appointment. At each Annual General Meeting of the Company one third of the Directors for the time being, or if their number is not three or an integral multiple of three the number nearest to but not exceeding one-third, are to be subject to re-election.

 

The Companies Act allows shareholders in general meeting by ordinary resolution (requiring a simple majority of the persons voting on the relevant resolution) to remove any Director before the expiring of his or her period of office, but without prejudice to any claim for damages which the Director may have for breach of any contract of service between him or her and the Company.

 

A person also ceases to be a Director if he or she resigns in writing, ceases to be a Director by virtue of any provision of the Companies Act, becomes prohibited by law from being a Director, becomes bankrupt or is the subject of a relevant insolvency procedure, or becomes of unsound mind, or if the Board so decides following at least six months' absence without leave or if he or she becomes subject to relevant procedures under the mental health laws, as set out in the Company's articles of association.

 

Powers of the Directors

 

Subject to the provisions of the Companies Act, the memorandum and articles of association of the Company and any directions given by shareholders by special resolution, the articles of association specify that the business of the Company is to be managed by the Directors, who may exercise all the powers of the Company, whether relating to the management of the business or not. In particular, the Directors may exercise on behalf of the Company its powers to purchase its own shares to the extent permitted by shareholders.

 

Directors Responsibilities

 

The Directors confirm that: 

 

·      so far as each of the Directors is aware there is no relevant audit information of which the Company's auditor is unaware; and

·      the Directors have taken all steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

 

Auditor

 

BDO LLP is the appointed auditor of the Company and offer themselves for reappointment. In accordance with section 489 (4) of the Companies Act 2006 a resolution to reappoint BDO LLP as auditor and to authorise the Directors to fix their remuneration will be proposed at the forthcoming Annual General Meeting.

 

Jane Owen

Director

23 May 2019

 

Directors' Responsibility Statement

 

The Directors are responsible for preparing the Strategic Report, the Directors' Report, the Directors' Remuneration Report and the Financial Statements in accordance with applicable law and regulations.

 

Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have elected to prepare the Financial Statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company for that year. In preparing these Financial Statements, the Directors are required to:

 

·      select suitable accounting policies and then apply them consistently;

·      make judgments and accounting estimates that are reasonable and prudent;

·      state whether applicable IFRS 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 adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements and the Remuneration report comply with the Companies Act 2006. 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.

 

The Directors are responsible for preparing the Annual Report in accordance with applicable law and regulations. The Directors consider the Annual Report and the Financial Statements, taken as a whole, provide the information necessary to assess the Company's position, performance, business model and strategy and are fair, balanced and understandable.

 

The Company's Financial Statements are published on the TPIM website, www.triplepoint.co.uk. The maintenance and integrity of this website is the responsibility of TPIM and not of the Company.  Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions. 

 

To the best of our knowledge:

 

·      The Financial Statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

 

·      The Strategic Report 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.

 

Jane Owen

Chairman

23 May 2019

 

Corporate Governance

 

This Corporate Governance Report forms part of the Directors' Report on pages 24-27.

 

The Financial Conduct Authority requires all listed companies to disclose how they have applied the principles and complied with the provisions of the UK Corporate Governance Code (the 'Code') issued by the Financial Reporting Council (FRC) in 2016.

 

The Board of Triple Point VCT 2011 plc has considered the principles and recommendations of the Association of Investment Companies Code of Corporate Governance (AIC Code 2016) by reference to the Association of Investment Companies Corporate Governance Guide for Investment Companies (AIC Guide).  The AIC Code 2016, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code (April 2016), as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company.

 

The Board considers that reporting against principles and recommendations of the AIC Code 2016, by reference to the AIC Guide, which incorporates the UK Corporate Governance Code (April 2016), will provide improved reporting to shareholders. The Company has complied with the recommendations of the AIC Code and the relevant provisions of the code, except as set out on pages 31 and 32 under the heading Compliance Statement.

 

The Company is committed to maintaining high standards in corporate governance and has complied with the recommendations of the AIC Code 2016 and the relevant provisions of the UK Corporate Governance Code (April 2016), except as set out at the end of this report in the Compliance Statement.

 

The 2018 Corporate Governance code will apply from the next financial reporting period. The Board are currently taking steps to ensure the requirements of the code are met.

 

Board of Directors

 

The Company has a Board of three Non-Executive Directors. Since all Directors are Non-Executive and day-to-day management responsibilities are sub-contracted to the Investment Manager, the Company does not have a Chief Executive Officer. The Directors have a range of business and financial skills which are relevant to the Company; these are described on page 24 of this report. Directors are provided with key information on the Company's activities, including regulatory and statutory requirements, by the Investment Manager. The Board has direct access to company secretarial advice and compliance services provided by the Investment Manager which is responsible for ensuring that Board procedures are followed and applicable regulations complied with. All Directors are able to take independent professional advice in furtherance of their duties.

 

Any appointment of new Directors to the Board is conducted, and appointments made, on merit and with due regard for the benefits of diversity on the Board, including gender. All Directors are able to allocate sufficient time to the Company to discharge their responsibilities.

The Board meets regularly on a quarterly basis, and on other occasions as required, to review the investment performance and monitor compliance with the investment policy laid down by the Board. There is a formal schedule of matters reserved for Board decision and the agreement between the Company and the Manager has authority limits beyond which Board approval must be sought.

 

The Investment Manager has authority over the management of the investment portfolio, the organisation of custodial services, accounting, secretarial and administrative services. In practice the Investment Manager makes investment recommendations for the Board's approval. In addition all investment decisions involving other VCTs managed by the Investment Manager are taken by the Board rather than the Investment Manager. Other matters reserved for the Board include:

•     The consideration and approval of future developments or changes to the investment policy, including risk and asset allocation;

•     consideration of corporate strategy;

•     approval of any dividend or return of capital to be paid to the shareholders;

•     the appointment, evaluation, removal and remuneration of the Investment Manager;

•     the performance of the Company, including monitoring the net asset value per share; and

•     monitoring shareholder profiles and considering shareholder communications.

 

The Chairman leads the Board in the determination of its strategy and in the achievement of its objectives. The Chairman is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda and has no involvement in the day to day business of the Company.  She facilitates the effective contribution of the Directors and ensures that they receive accurate, timely and clear information and that they communicate effectively with shareholders. The Chairman does not have significant commitments conflicting with her obligations to the Company.

 

The Company Secretary is responsible for advising the Board on all governance matters.  All of the Directors have access to the advice and services of the Company Secretary which has administrative responsibility for the meetings of the Board and its committees.  Directors may also take independent professional advice at the Company's expense where necessary in the performance of their duties. As all of the Directors are Non-Executive, it is not considered appropriate to identify a member of the Board as the senior Non-Executive Director of the Company.

 

The Company's articles of association and the schedule of matters reserved to the Board for decision provide that the appointment and removal of the Company Secretary is a matter for the full Board.

 

The Company's articles of association require that one third of the Directors should retire by rotation each year and seek re-election at the Annual General Meeting and that Directors newly appointed by the Board should seek re-appointment at the next Annual General Meeting. The Board complies with the requirement of the UK Corporate Governance Code (April 2016) that all Directors are required to submit themselves for re-election at least every three years.

 

During the period covered by these Financial Statements the following meetings were held:

 

Directors present

4 Full Board

2 Audit Committee


Meetings

Meetings

Jane Owen, Chairman

4

2

Chad Murrin

4

2

Tim Clarke

4

2

 

Internal Control

 

The Directors have overall responsibility for keeping under review the effectiveness of the Company's systems of internal controls. The purpose of these controls is to ensure that proper accounting records are maintained, the Company's assets are safeguarded, and the financial information used within the business and for publication is accurate and reliable; such a system can only provide reasonable and not absolute assurance against material misstatement or loss. The system of internal controls is designed to manage rather than eliminate the risk of failure to achieve business objectives. As part of this process an annual review of the internal control systems is carried out. The review covers all material controls including financial, operational and risk management systems. The Directors regularly review financial results and investment performance with the Investment Manager.

 

The Directors have established an ongoing process designed to meet the particular needs of the Company in identifying, evaluating and managing risks to which it is exposed. The process adopted is one whereby the Directors identify the risks to which the Company is exposed including, among others, market risk, VCT qualifying investment risk and operational risks which are recorded on a risk register. The controls employed to mitigate these risks are identified and the residual risks are rated taking into account the impact of the mitigating factors. The risk register is updated twice a year.

 

TPIM is engaged to provide administrative (including accounting) services and retains physical custody of the documents of title relating to investments.

 

The Directors regularly review the system of internal controls, both financial and non-financial, operated by the Company and the Investment Manager. These include controls designed to ensure that the Company's assets are safeguarded and that proper accounting records are maintained.

 

Internal control systems include the production and review of quarterly bank reconciliations and management accounts.

 

The Investment Manager's procedures are subject to internal compliance checks.

 

Capital management is monitored and controlled by the Investment Manager. The capital being managed includes equity and fixed interest VCT qualifying investments, cash balances and liquid resources including debtors and creditors.

 

The Company's objectives when managing capital are:

·      to safeguard its ability to continue as a going concern, so that it can continue to provide returns to shareholders and benefits for other stakeholders;

·    to ensure sufficient liquid resources are available to meet the funding requirements of its investments and to fund new investments where identified.

 

Going Concern

 

After making the necessary enquiries, the Directors confirm that they are satisfied that the Company has adequate resources to continue in business for at least the next 12 months. The Board receives regular reports from the Manager and the Directors believe that, as no material uncertainties leading to significant doubt about going concern have been identified, it is appropriate to continue to apply the going concern basis in preparing the Financial Statements.  

 

Relations with Shareholders

 

The Board recognises the value of maintaining regular communications with shareholders. In addition to the formal business of the Annual General Meeting, an opportunity is given to all shareholders to question the Board and the Investment Manager on matters relating to the Company's operation and performance. The Board and the Investment Manager will also respond to any written queries made by shareholders during the course of the year and both can be contacted at 1 King William Street, London, EC4N 7AF or on 020 7201 8989.

 

Compliance Statement

 

The Listing Rules require the Board to report on compliance with the UK Corporate Governance Code (April 2016) provisions throughout the accounting period. The UK Corporate Governance Code does, however, acknowledge that some provisions may have less relevance for investment companies, adding that the AIC Code and AIC Guide can assist in meeting the obligations under The UK Corporate Governance Code. With the exception of the limited items outlined below, the Directors consider that the Company has complied throughout the period under review with the provisions set out in the UK Corporate Governance Code (April 2016). The section references to The UK Corporate Governance Code are shown in brackets. 

 

1.  New Directors do not receive a full, formal and tailored induction on joining the Board. Such matters are addressed on an individual basis as they arise (B.4.1).

 

2.  Due to the size of the Board and the nature of the Company's business, a formal performance evaluation of the Board, its committees, the individual Directors and the Chairman has not been undertaken. Specific performance issues are dealt with as they arise (B.6.1, B.6.3).

 

3.  The Company does not have a senior independent director. The Board does not consider such an appointment appropriate for the Company (A.4.1).

 

4. The Company conducts a formal review as to whether there is a need for an internal audit function. The Directors do not consider that an internal audit would be an appropriate control for a Venture Capital Trust (C.3.6).

 

5.  As all the Directors are Non-Executive, it is not considered appropriate to appoint a Nomination or Remuneration Committee (B.2.1 and D.2.1).

 

6.  The Audit committee includes three Non-Executive Directors, all of whom are considered independent. Jane Owen, who is chairman, is also chairman of the audit committee but it is not considered appropriate to appoint another independent Director. The Board regularly reviews the independence of its Directors (C.3.1).

 

On behalf of the Board.

 

Jane Owen

Chairman 

23 May 2019

 

Report of the Audit Committee

 

The Board has appointed an audit committee of which Jane Owen is Chairman, which deals with matters relating to audit, financial reporting and internal control systems. The Committee meets as required and has direct access to BDO LLP, the Company's auditor.

 

The audit committee safeguards the objectivity and independence of the auditor by reviewing the nature and extent of non-audit services supplied by the external auditor to the Company. BDO LLP do not provide any non-audit services to the company.

 

When considering whether to recommend the reappointment of the external auditor, the audit committee takes into account their current fee compared to the external audit fees paid by other similar companies. The quality and competence of the external auditor is also taken into consideration. The audit committee will then recommend to the Board the appointment of an external auditor which is ratified at the Annual General Meeting.

 

The FRC's Ethical Standard requires the audit partner to rotate every five years. The first audit engagement for BDO LLP was for the year ended 28 February 2018.

 

The effectiveness of the external audit is assessed as part of the Board evaluation conducted annually and by the quality and content of the audit plan provided to the audit committee by the external auditor and the discussions then held on topics raised. The audit committee will challenge the external auditor at the audit committee meeting if appropriate.

 

The Audit Committee's terms of reference include the following roles and responsibilities:

·      reviewing and making recommendations to the Board in relation to the Company's published Financial Statements and other formal announcements or regulatory returns relating to the Company's financial performance, reviewing significant financial reporting judgements contained in them;

·      reviewing and making recommendations to the Board in relation to the Company's internal control (including internal financial control) and risk management systems;

·      periodically considering the need for an internal audit function;

·      making recommendations to the Board in relation to the appointment, re-appointment and removal of the external auditor and approving the remuneration and terms of engagement of the external auditor;

·      reviewing and monitoring the external auditor's independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK professional regulatory requirements;

·      monitoring the extent to which the external auditor is engaged to supply non-audit services; and

·      ensuring that the Investment Manager has arrangements in place for the investigation and follow-up of any concerns raised confidentially by staff in relation to propriety of financial reporting or other matters.

 

The committee reviews its terms of reference and effectiveness annually and recommends to the Board any changes required as a result of the review.  The terms of reference are available on request from the Company Secretary.

 

The Board considers that the members of the committee collectively have the skills and experience required to discharge their duties effectively, and that the Chairman of the committee meets the requirements of the UK Corporate Governance Code (April 2016) as to relevant financial experience.

 

The Company does not have an independent internal audit function as it is not deemed appropriate given the size of the Company and the nature of the Company's business.  However, the committee considers annually whether there is a need for such a function and, if there were, would recommend it be established.

 

In respect of the year ended 28 February 2019, the audit committee discharged its responsibilities by:

 

·      reviewing the external auditor's plan for the audit of the Financial Statements, including identification of key risks and confirmation of auditor independence;

·      reviewing TPIM's statement of internal controls operated in relation to the Company's business and assessing those controls in minimising the impact of key risks;

·      reviewing periodic reports on the effectiveness of TPIM's compliance procedures;

·      reviewing the appropriateness of the Company's accounting policies;

·      reviewing the Company's half-yearly results and draft annual Financial Statements prior to Board approval;

·      reviewing the external auditor's audit plan document to the audit committee on the annual Financial Statements;

·      reviewing the Company's going concern status; and

·      reviewing the external auditor's findings document.

 

The audit committee is responsible for considering and reporting on any significant issues that arise in relation to the Financial Statements.

 

The key areas of risk that have been identified and considered by the audit committee in relation to the business activities and the Financial Statements of the Company are as follows:

·     valuation and existence of unquoted investments; and

·    compliance with HM Revenue & Customs conditions for maintenance of approved Venture Capital Trust status.

 

The audit committee relies on the Investment Manager to assess the valuation of unquoted investments and the existence of those investments. The Investment Manager has a director on the board of all the investee companies and meets regularly with the other directors and hence has an oversight of all the investments made. The audit committee have reviewed the valuations and discussed them with both the Investment Manager and the external auditor to confirm their assessment of the valuation of the unquoted investments and the existence of those investments.

 

The Investment Manager has confirmed to the audit committee that the conditions for maintaining the Company's status as an approved Venture Capital Trust had been complied with throughout the year. The position has been reviewed by Philip Hare & Associates LLP in its capacity as adviser to the Company on taxation matters.

 

The audit committee has considered the whole Report and Accounts for the year ended 28 February 2019 and has reported to the Board that it considers them to be fair, balanced and understandable providing the information necessary for shareholders to assess the Company's position, performance, business model and strategy.

 

On behalf of the Board.

 

Jane Owen

Audit Committee Chairman 

23 May 2019

 

Directors' Remuneration Report

 

Introduction

 

This report is submitted in accordance with schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) (amendment) Regulations 2013, in respect of the year ended 28 February 2019.  This report also meets the Financial Conduct Authority's Listing Rules and describes how the Board has applied the principles relating to Directors' remuneration set out in UK Corporate Governance Code (issued April 2016). The reporting requirements require two sections to be included, a Policy Report and an Annual Remuneration Report which are presented below.

 

The Company's auditor, BDO LLP, is required to give their opinion on certain information included in this report; comprising the Directors' emoluments section and their shareholdings below. Their report on these and other matters is set out on pages 39 to 44.

 

Directors' Remuneration Policy Report

 

This statement of the Directors' Remuneration Policy took effect following approval by shareholders at the Annual General Meeting on 12 July 2018. The Board currently comprises three Directors, all of whom are Non-Executive. The Board does not have a separate remuneration committee, as the Company has no employees or executive directors. The Board has not retained external advisers in relation to remuneration matters but has access to information about Directors' fees paid by other companies of a similar size and type. No views which are relevant to the formulation of the Directors' remuneration policy have been expressed to the Company by shareholders, whether at a general meeting or otherwise.

 

The Board's policy is that the remuneration of Non-Executive Directors should reflect the experience of the Board as a whole, be fair and be comparable with that of other relevant Venture Capital Trusts that are similar in size and have similar investment objectives and structures. Furthermore, the level of remuneration should be sufficient to attract and retain the Directors needed to oversee the Company properly and to reflect the specific circumstances of the Company, the duties and responsibilities of the Directors and the value and amount of time committed to the Company's affairs. The articles of association provide that the Directors shall be paid in aggregate a sum not exceeding £100,000 per annum. None of the Directors are eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits in respect of their services as Non-Executive Directors of the Company.

 

The articles of association provide that Directors shall retire and be subject to re-election at the first Annual General Meeting after their appointment and that any Director who has not been re-elected for three years shall retire and be subject to re-election at the Annual General Meeting. Also, any Director not considered independent shall retire each year and offer himself for re-election at the Annual General Meeting.  The Directors' service contracts provide for an appointment of 12 months, after which three months written notice must be given by either party. A Director who ceases to hold office is not entitled to receive any payment other than accrued fees (if any) for past services. The same policies will apply if a new Director is appointed.

 

Details of each Director's contract is shown below. The Chairman is paid more than the other Directors to reflect the additional responsibilities of that role. There are no other fees payable to the Directors for additional services outside of their contracts.

 






Date of Contract

Unexpired term of contract

Annual rate of Directors' fees

Policy on payment for loss of office




£


Jane Owen, Chairman

23-Sep-10

none

17,500

none

Chad Murrin

23-Sep-10

none

15,000

none

Tim Clarke

05-May-11

none

15,000

none






 

Annual Remuneration Report

 

The remuneration policy described above was approved on 13 July 2017 at the Annual General Meeting and will remain unchanged for a three-year period from that date. The Board will review the remuneration of the Directors in line with the VCT industry on an annual basis, if thought appropriate.  Otherwise, only a change in role is likely to incur a change in remuneration of any one Director.

 

Directors' Remuneration (audited information)

 

The fees paid to Directors in respect of the year ended 28 February 2019 and the prior year are shown below:

 



Emoluments for the Year ended 28 February 2019

Emoluments for the Year ended 28 February 2018



£  

£  

Jane Owen, Chairman


17,500

17,500

Chad Murrin


15,000

15,000

Tim Clarke


15,000

15,000



47,500

47,500

Employers' NI contributions


112

175

Total Emoluments


47,612

47,675

 

None of the Directors are eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits in respect of their services as Non-Executive Directors of the Company.

 

Information required on executive Directors, including the Chief Executive Officer and employees has been omitted because the Company has neither and therefore it is not relevant.

 

Directors' emoluments compared to payments to shareholders:

 

 Unaudited


 28 February 2019

 28 February 2018



£'000

£'000





Total Dividends paid

373

2,495

Total Directors' emoluments

48

48





 

Directors' Share Interests (audited information)

 

At 28 February 2019 Jane Owen held 24,624 A Ordinary Shares and 24,378 B Ordinary Shares (2018: 24,624 A Ordinary Shares; 24,378 B Ordinary Shares).

 

Tim Clarke held 24,624 B Ordinary Shares (2018: 24,624 B Ordinary Shares).

 

Chad Murrin held 24,874 A Ordinary Shares and 24,624 B Ordinary Shares (2018: 24,874 A Ordinary Shares; 24,624 B Ordinary Shares).

 

No other connected parties to the Directors held any shares at 28 February 2019 (2018: nil). Any shares owned by the Directors were purchased at the same price offered to investors. There are no requirements or restrictions on Directors holding shares in the Company.

 

Company Performance

 

The following performance charts compare the total return of the A & B Share Classes over the period from 1 March 2015 to 28 February 2019 with the total return from notional investments in the FTSE All-Share index and FTSE Small-Cap index over the same period.

 

Investors should be reminded that shares in venture capital trusts generally continue to trade at a discount to the NAV of the Company.

 

 

These charts have been prepared in accordance with part 3 to schedule 8 of the Companies Act 2006. The Company measures its performance against its target returns as detailed in the Strategic Report on page 7. The charts do not take in to account the tax benefit of investing in a VCT.

 

Statement of Voting at the Annual General Meeting

 

The 2018 Remuneration Report was presented to the Annual General Meeting in July 2018 and received shareholder approval following a vote 99% in favour and none abstained.

 

Statement of the Chairman

 

The Directors' fees were £17,500 per annum for the Chairman and £15,000 per annum for other Directors from 5 April 2016. The remuneration of the Directors reflects the experience of the Board as a whole, is fair and comparable with that of other relevant Venture Capital Trusts that are similar in size and have similar investment objectives and structures.

 

On behalf of the Board.

 

Jane Owen

Chairman 

23 May 2019

 

Statement of Comprehensive Income

For the year ended 28 February 2019



28 February 2019


28 February 2018


Note

Revenue

Capital

Total


Revenue

Capital

Total



£'000

£'000

£'000


£'000

£'000

£'000










Investment income

4

711

-  

711


715

-  

715

Loss arising on the realisation of investments during the period


-  

-  

-  


-  

(17)

(17)

Gain arising on the revaluation of investments at the period end


-  

862

862


-  

264

264

Investment return


711

862

1,573


715

247

962

Investment management fees

5

135

45

180


24

8

32

Financial and regulatory costs


26

-  

26


26

-  

26

General administration


49

-  

49


42

(19)

23

Legal and professional fees


43

12

55


38

(2)

36

Directors' remuneration

7

48

-  

48


48

-  

48

Operating expenses


301

57

358


178

(13)

165

Profit before taxation


410

805

1,215


537

260

797

Taxation

8

(78)

11

(67)


(102)

(2)

(104)

Profit after taxation


332

816

1,148


435

258

693

Other comprehensive income


-  

-  

-  


-  

-  

-  

Profit and total comprehensive income for the period


332

816

1,148


435

258

693










Basic & diluted earnings per share (pence)

 















Ordinary Share

9

-   

-   

-   


(0.04p)

0.01p

(0.03p)










A Share

9

3.39p

3.95p

7.34p


4.44p

2.39p

6.83p










B Share

9

(0.09p)

6.19p

6.10p


(0.01p)

0.25p

0.24p

 

The total column of this statement is the Statement of Comprehensive Income of the Company prepared in accordance with International Financial Reporting Standards (IFRS). The supplementary revenue return and capital columns have been prepared in accordance with the Association of Investment Companies Statement of Recommended Practice (AIC SORP) in so far as it does not conflict with IFRS.

 

All revenue and capital items in the above statement derive from continuing operations.

 

This Statement of Comprehensive Income includes all recognised gains and losses.

 

The accompanying notes on pages 53 to 66 form an integral part of these statements.

 

Balance Sheet

At 28 February 2019

Company No: 07324448

 



28 February 2019


28 February 2018


Note

£'000


£'000






Non-current assets





Financial assets at fair value through profit or loss

10

17,341


16,554






Current assets





Receivables

11

1,052


779

Cash and cash equivalents

12

46


353



1,098


1,132

Total assets


18,439


17,686






Current liabilities





Payables and accrued expenses

13

135


120

Current taxation payable


66


103



201


223

Net assets


18,238


17,463






Equity attributable to equity holders





Share capital

14

168


168

Share Premium


6,756


16,683

Special distributable reserve


9,927  


-  

Capital reserve


1,135


319

Revenue reserve


252


293

Total equity


18,238


17,463






Shareholders' funds










Net asset value per Ordinary Share

16

-  


-  






Net asset value per A Share

16

110.49p


106.90p






Net asset value per B Share

16

106.10p


100.00p

 

The statements were approved by the Directors and authorised for issue on 23 May 2019 and are signed on their behalf by:

 

Jane Owen

Chairman

23 May 2019

 

The accompanying notes on pages 53 to 66 form an integral part of these statements.

 

Statement of Changes in Shareholders' Equity

For the year ended 28 February 2019


Issued Capital

Share Premium

Share Redemption Reserve

Special Distributable Reserve

Capital Reserve

Revenue Reserve

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000









Year ended 28 February 2019








Opening balance

168

16,683

-  

-  

319

293

17,463

Cancellation of Share Premium

-  

(9,927)

-  

9,927

-  

-  

-  

Dividends paid

-  

-  

-  

-  

-  

(373)

(373)

Transactions with owners

-  

(9,927)

-  

9,927

-  

(373)

(373)

Profit before taxation

-  

-  

-  

-  

805

410

1,215

Taxation

-  

-  

-  

-  

11

(78)

(67)

Profit after taxation

-  

-  

-  

-  

816

332

1,148

Other comprehensive income

-  

-  

-  

-  

-  

-  

-  

Total comprehensive profit for the period

-  

-  

-  

-  

816

332

1,148

Balance at 28 February 2019

168

6,756

-  

9,927

1,135

252

18,238

The Capital Reserve consists of:








Investment holding gains





1,182



Other realised losses




(47)








1,135



Year ended 28 February 2018








Opening balance

371

16,683

1

255

1,443

715

19,468

Cancellation of shares

(203)

-  

(1)

-  

1

-  

(203)

Dividend Paid

-  

-  

-  

(255)

(1,383)

(857)

(2,495)

Transactions with owners

(203)

-  

(1)

(255)

(1,382)

(857)

(2,698)

Profit after taxation

-  

-  

-  

-  

258

435

693

Total comprehensive profit for the period

-  

-  

-  

-  

258

435

693

Balance at 28 February 2018

168

16,683

-  

-  

319

293

17,463

The Capital Reserve consists of:








Investment holding losses





320



Other realised losses




(1)








319



 

The capital reserve represents the proportion of Investment Management fees charged against capital and realised/unrealised gains or losses on the disposal/revaluation of investments. The unrealised element of the capital reserve is not distributable. The special distributable reserve was created on court cancellation of the share premium account. Due to VCT rules, this was not distributable until 1 March 2019. The revenue reserve, realised capital reserve and special distributable reserve are distributable by way of dividend.

 

At 28 February 2019 the total reserves available for distribution are £205,000. This consists of the distributable revenue reserve net of the realised capital loss. At 1 March, following the cancellation of the Share Premium account, the Company had £10,133,000 available for distribution.

 

Statement of Cash Flows

For the year ended 28 February 2019

 


Year ended

Year ended

28 February 2019


28 February 2018


£'000


£'000





Cash flows from operating activities




Profit before taxation

1,215


797

Loss arising on the disposal of investments during the period

-  


17

(Gain)/loss arising on the revaluation of investments at the period end

(862)


(264)

Cash generated by operations

353


550

(Increase)/decrease in receivables

(273)


596

(Decrease) in payables

15


(95)

Cash flows from operating activities

95


1,051

Tax paid

(104)


(2)

Net cash flows from operating activities

(9)


1,049

Cash flows from investing activities




Sales of financial assets at fair value through profit or loss

75


477

Net cash flows from investing activities

75


477

Cash flows from financing activities




Distribution of proceeds from share cancellation

-  


(203)

Dividends paid

(373)


(2,495)

Net cash flows from financing activities

(373)


(2,698)

Net (decrease)/increase in cash and cash equivalents

(307)


(1,172)

Reconciliation of net cash flow to movements in cash and cash equivalents




Cash and cash equivalents at 1 March 2018

353


1,525

Net (decrease)/increase in cash and cash equivalents

(307)


(1,172)

Cash and cash equivalents at 28 February 2019

46


353

 

The accompanying notes on pages 53 to 66 form an integral part of these statements.

 

Unaudited Non-Statutory Analysis of - The A Share Fund

 

Statement of Comprehensive Income






Year ended 28 February 2019


Year ended 28 February 2018



Revenue

Capital

Total


Revenue

Capital

Total



£'000

£'000

£'000


£'000

£'000

£'000

Investment income


629

-  

629


634

-  

634

Unrealised gain on investments


-  

433

433


-  

240

240

Investment return


629

433

1,062


634

240

874

Investment management fees


(110)

(37)

(147)


(22)

-  

(22)

Other expenses


(102)

(12)

(114)


(67)

(2)

(69)

Profit before taxation


417

384

801


545

238

783

Taxation


(79)

9

(70)


(104)

-  

(104)

Profit after taxation


338

393

731


441

238

679

Profit and total comprehensive income for the period


338

393

731


441

238

679

Basic and diluted earnings per share


3.39p

3.95p

7.34p


4.44p

2.39p

6.83p








Balance Sheet


28 February 2019


28 February 2018





£'000




£'000

Non-current assets









Financial assets at fair value through profit or loss




10,102




9,744










Current assets









Receivables




995




764

Cash and cash equivalents




3




274





998




1,038

Current liabilities









Payables




(36)




(40)

Corporation Tax




(69)




(105)

Net assets




10,995




10,637










Equity attributable to equity holders


10,995




10,637

Net asset value per share




110.49p




106.90p

Statement of Changes in Shareholders' Equity


















28 February 2019



28 February 2018





£'000




£'000

Opening shareholders' funds




10,637




10,356

Profit for the period




731




679

Dividend paid




(373)




(398)

Closing shareholders' funds




10,995




10,637

 

Unaudited Non-Statutory Analysis of - The A Share Fund

 


28 February 2019


28 February 2018


        Cost 

     Valuation


        Cost 

     Valuation


£'000

£'000


£'000

£'000

Unquoted qualifying holdings

6,323

67.25

7,005

69.34


6,323

64.86

6,577

65.65

Non-Qualifying holdings

3,076

32.72

3,097

30.65


3,151

32.33

3,167

31.61

Financial assets at fair value through profit or loss

9,399

99.97

10,102

99.99


9,474

97.19

9,744

97.26

Cash and cash equivalents

3

0.03

3

0.01


274

2.81

274

2.74


9,402

100.00

10,105

100.00


9,748

100.00

10,018

100.00

Qualifying Holdings










Unquoted










Hydro Electric Power










Green Highland  Allt Choire A Bhalachain (225) Ltd

30

0.32

35

0.35


30

0.31

30

0.30

Green Highland Allt Garbh Ltd

2,250

23.93

2,250

22.27


2,250

23.08

2,250

22.46

Green Highland Allt Ladaidh (1148) Ltd

1,470

15.63

2,063

20.42


1,470

15.08

1,802

17.99

Green Highland Allt Luaidhe (228) Ltd

855

9.09

958

9.48


855

8.77

937

9.35

Green Highland Allt Phocachain (1015) Ltd

858

9.13

1,088

10.77


858

8.80

1,005

10.03

Green Highland Shenval Ltd

860

9.15

611

6.05


860

8.82

553

5.52


6,323

67.25

7,005

69.34


6,323

64.86

6,577

65.65












Unaudited


Audited


28 February 2019


28 February 2018


        Cost 

     Valuation


        Cost 

     Valuation

Non-Qualifying Holdings

£'000

£'000


£'000

£'000

Unquoted










Hydro Electric Power










Green Highland  Allt Choire A Bhalachain (225) Ltd

3

0.03

3

0.03


3

0.03

3

0.03

Green Highland Allt Ladaidh (1148) Ltd

30

0.32

30

0.30


30

0.31

30

0.30

Green Highland Allt Luaidhe (228) Ltd

61

0.65

61

0.60


61

0.63

61

0.61

Green Highland Allt Phocachain (1015) Ltd

2

0.02

3

0.03


2

0.02

3

0.03

SME Funding:










Hydro Electric Power










Broadpoint 2 Ltd

550

5.85

550

5.44


550

5.64

550

5.49

Broadpoint 3 Ltd

1,005

10.69

1,005

9.95


1,005

10.31

1,005

10.03

Other






  


  


Funding Path Ltd

925

9.84

925

9.15


1,000

10.26

1,000

9.98

Modern Power Generation Ltd

500

5.32

520

5.15


500

5.13

515

5.14


3,076

32.72

3,097

30.65


3,151

32.33

3,167

31.61

 

Unaudited Non-Statutory Analysis of - The B Share Fund

 

Statement of





Comprehensive Income


Year ended 28 February 2019


Year ended 28 February 2018



Revenue

Capital

Total


Revenue

Capital

Total



£'000

£'000

£'000


£'000

£'000

£'000

Investment income


82

-  

82


82

-  

82

Unrealised gain on investments


-  

429

429


-  

24

24

Investment return


82

429

511


82

24

106

Investment management fees


(25)

(8)

(33)


(38)

(8)

(46)

Other expenses


(64)

-  

(64)


(44)

-  

(44)

(Loss)/profit before taxation


(7)

421

414


-  

16

16

Taxation


1

2

3


-  

2

2

(Loss)/profit after taxation


(6)

423

417


-  

18

18

Loss and total comprehensive (loss)/income for the period


(6)

423

417


-  

18

18

Basic and diluted (loss)/earnings per share


(0.09p)

6.19p

6.10p


(0.01p)

0.25p

0.24p








Balance Sheet


28 February 2019


28 February 2018





£'000




£'000

Non-current assets









Financial assets at fair value through profit or loss



7,239




6,810










Current assets









Receivables




57




15

Corporation Tax




3




2

Cash and cash equivalents


43




79





103




96

Current liabilities









Payables




(99)




(80)

Net assets




7,243




6,826










Equity attributable to equity holders

7,243




6,826

Net asset value per share


106.10p




100.00p

 

Unaudited Non-Statutory Analysis of - The B Share Fund

 

 


28 February 2019


28 February 2018


        Cost 

     Valuation


        Cost 

     Valuation


£'000

£'000


£'000

£'000

Unquoted qualifying holdings

5,100

74.97

5,513

75.71


5,100

74.57

5,100

74.03

Non-Qualifying holdings

1,660

24.40

1,726

23.70


1,660

24.27

1,710

24.82

Financial assets at fair value through profit or loss

6,760

99.37

7,239

99.41


6,760

98.84

6,810

98.85

Cash and cash equivalents

43

0.63

43

0.59


79

1.16

79

1.15


6,803

100.00

7,282

100.00


6,839

100.00

6,889

100.00

Qualifying Holdings










Unquoted










Gas Power










Distributed Generators Ltd

3,200

47.04

3,472

47.68


3,200

46.79

3,200

46.45

Green Peak Generation Ltd

1,900

27.93

2,041

28.03


1,900

27.78

1,900

27.58


5,100

74.97

5,513

75.71


5,100

74.57

5,100

74.03












28 February 2019


28 February 2018


        Cost 

     Valuation


        Cost 

     Valuation

Non-Qualifying Holdings

£'000

£'000


£'000

£'000

Unquoted










SME Funding










Other










Modern Power Generation Ltd

1,660

24.40

1,726

23.70


1,660

24.27

1,710

24.82


1,660

24.40

1,726

23.70


1,660

24.27

1,710

24.82

 

Notes to the Financial Statements

 

1.      Corporate Information

 

The Financial Statements of the Company for the year ended 28 February 2019 were authorised for issue in accordance with a resolution of the Directors on 23 May 2019.

 

The Company applied for listing on the London Stock Exchange on 24 December 2010.

 

Triple Point VCT 2011 plc is incorporated and domiciled in Great Britain and registered in England and Wales.  The address of the Company's registered office, which is also its principal place of business, is 1 King William Street, London, EC4N 7AF.

 

The Company is required to nominate a functional currency, being the currency in which the Company predominately operates. The functional and reporting currency is pounds sterling (£), reflecting the primary economic environment in which the Company operates.

 

The principal activity of the Company is investment. The Company's investment strategy is to offer combined exposure to cash or cash-based funds and venture capital investments focused on companies with contractual revenues from financially secure counterparties.

 

2.      Basis of Preparation and Accounting Policies

 

Basis of Preparation

 

After making the necessary enquiries, the Directors confirm that they are satisfied that the Company has adequate resources to continue in business for the foreseeable future. The Board receives regular reports from the Investment Manager and the Directors believe that, as no material uncertainties leading to significant doubt about going concern have been identified, it is appropriate to continue to apply the going concern basis in preparing the Financial Statements.

 

The Financial Statements of the Company for the year to 28 February 2019 have been prepared in accordance with International Financial Reporting Standards ("IFRS") adopted for use in the European Union and comply with the Statement of Recommended Practice: "Financial Statements of Investment Trust Companies and Venture Capital Trusts" (SORP) issued by the Association of Investment Companies (AIC) in November 2014 and updated in January 2017, in so far as this does not conflict with IFRS.

 

The Financial Statements are prepared on a historical cost basis except that investments are shown at fair value through profit or loss ("FVTPL") as well as in some circumstances share of net assets.  

 

The preparation of Financial Statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these judgements.

 

The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities relate to:

·    the valuation of unlisted financial investments held at fair value through profit or loss, which are valued on the basis noted below (under the heading Non-Current Asset Investments) and in note 10;

·    the recognition or otherwise of accrued income on loan notes and similar instruments granted to investee companies, which are assessed in conjunction with the overall valuation of unlisted financial investments as noted above; and

·    the previously uncharged investment management fees, which are discussed further below in note 5 and note 18.

 

The key judgements made by Directors are in the valuation of non-current assets and the assessment of realised losses. The estimates and underlying assumptions are reviewed on an ongoing basis.  Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects that period or in the period of revision and future periods if the revision affects both current and future periods. The carrying value of investments is disclosed in note 10.

 

The Directors do not believe that there are any further key judgements made in applying accounting policies or estimates in respect of the Financial Statements.

 

These Financial Statements have been prepared in accordance with the accounting policies set out below which are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union (EU).

 

These accounting policies have been applied consistently in preparing these Financial Statements.

 

New and amended standards and interpretations applied

 

IFRS 9 was issued to replace IAS 39 "Financial Instruments: Recognition and Measurement" and became effective

for accounting periods beginning on or after 1 January 2018 and has been first adopted in these financial

statements.

 

The Company has chosen not to restate comparatives.

 

The Company's financial instruments predominantly comprise equity and loan investments held at fair value through profit and loss. Having considered the classification of the Company's financial instruments by applying the business model test under IFRS 9, it has been concluded that it is still appropriate for the Company to hold its equity and loan investments at fair value through profit and loss.

 

IFRS 15 "Revenue from contracts with customers" was issued and became effective for accounting periods beginning on or after 1 January 2018. As the Company's investments are held at fair value through profit or loss, the introduction of IFRS 15 has had no impact on the reported results and financial position of the Company.

 

New and amended standards and interpretations not applied

 

At the date of authorisation of these financial statements, IFRS 16 "Leases" was issued but will not become effective until accounting periods beginning on or after 1 January 2019. As the Company's investments are held at fair value through profit or loss and the leases are held at investee company level, the introduction of IFRS 16 is not expected to have a material impact on the reported results and financial position of the Company.

 

Presentation of Statement of Comprehensive Income

 

In order better to reflect the activities of a Venture Capital Trust, and in accordance with the guidance issued by the Association of Investment Companies, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Income Statement.

 

The Company has no external debt; consequently, all capital is represented by the value of share capital, distributable and other reserves.  Total shareholder equity at 28 February 2019 was £18.24 million (2018: £17.46 million).

 

Non-Current Asset Investments

 

The Company invests in financial assets with a view to profiting from their total return through income and capital growth. These investments are managed, and their performance is evaluated on a fair value basis in accordance with the investment policy detailed in the Strategic Report on page 4 and information about the portfolio is provided internally on that basis to the Company's Board of Directors.  Accordingly, upon initial recognition the investments are classified by the Company as "at fair value through profit or loss" in accordance with IFRS 9. They are included initially at fair value, which is taken to be their cost (excluding expenses incidental to the acquisition which are written off in the Statement of Comprehensive Income and allocated to "capital" at the time of acquisition).  Subsequently the investments are valued at "fair value" which is the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. This is measured as follows:

 

Non-Current Asset Investments (continued)

·      unlisted investments are fair valued by the Directors in accordance with the International Private Equity and Venture Capital Valuation Guidelines.  Fair value is established by using measurements of value such as discounted cash flows and initial cost of investment; and

·      listed investments are fair valued at bid price on the relevant date.

 

The Board believe that those investments valued based on the transaction price are done so because the transaction price is still representative of fair value.

 

Where securities are classified upon initial recognition as at fair value through profit or loss, gains and losses arising from changes in fair value are included in the Statement of Comprehensive Income for the year as capital items in accordance with the AIC SORP 2014.  The profit or loss on disposal is calculated net of transaction costs of disposal.

 

Investments are recognised as financial assets on legal completion of the investment contract and are de-recognised on legal completion of the sale of an investment. Fair value is calculated on an unlevered, discounted cashflow basis or share of net assets in accordance with IFRS 13 and IFRS 9.

 

The Company has taken the exemption permitted by IAS 28 "Investments in Associates and Joint Ventures" and, upon initial recognition, will measure its investments in Associates at fair value with subsequent changes to fair value recognised in the income statement in the period of change.

 

Income

 

Investment income includes interest earned on bank balances and investment loans and includes income tax withheld at source. Dividend income is shown net of any related tax credit and is brought into account on the ex-dividend date.

 

Fixed returns on investment loans and debt are recognised on a time apportionment basis so as to reflect the effective yield, provided there is no reasonable doubt that payment will be received in due course.

 

Expenses

 

All expenses are accounted for on the accruals basis. Expenses are charged to revenue with the exception of the investment management exit fee which has been charged to the capital account and the investment management fee which has been charged 75% to the revenue account and 25% to the capital account to reflect, in the Directors' opinion, the expected long term split of returns in the form of income and capital gains respectively from the investment portfolio.

 

The Company's general expenses are split between the Share Classes using the net asset value of each Share Class divided by the total net asset value of the Company.

 

Taxation

 

Corporation tax payable is applied to profits chargeable to corporation tax, if any, at the current rate in accordance with IAS 12 "Income Taxes". The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue on the "marginal" basis as recommended by the AIC SORP 2014.

 

In accordance with IAS 12, deferred tax is recognised using the balance sheet method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised.  Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. The Directors have considered the requirements of IAS 12 and do not believe that any provision should be made.

 

Financial Instruments

 

The Company's principal financial assets are its investments and the accounting policies in relation to those assets are set out above. Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities.

 

Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.

 

Financial assets and financial liabilities are recognised in the Company's Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument. At 28 February 2019 and 2018 the carrying amounts of cash and cash equivalents, receivables, payables, accrued expenses and short-term borrowings reflected in the financial statements are reasonable estimates of fair value in view of the nature of these instruments or the relatively short period of time between the original instruments and their expected realisation.

 

Issued Share Capital

 

A Shares and B Shares are classified as equity because they do not contain an obligation to transfer cash or another financial asset. Issue costs associated with the allotment of shares have been deducted from the share premium account in accordance with IAS 32.

 

Cash and Cash Equivalents

 

Cash and cash equivalents representing cash available at less than 3 months' notice are classified as loans and receivables at amortised cost under IFRS 9.

 

Reserves

 

The revenue reserve (retained earnings) and capital reserve reflect the guidance in the AIC SORP 2014. The capital reserve represents the proportion of Investment Management fees charged against capital and realised/unrealised gains or losses on the disposal/revaluation of investments. The unrealised capital reserve is not distributable. The special distributable reserve was created on court cancellation of the share premium account and is available for distribution from 1 March 2019. The revenue reserve, realised capital reserve and special distributable reserve are distributable by way of dividend.

 

3.      Segmental Reporting

 

The Directors are of the opinion that the Company only has a single operating segment of business, being investment activity.  All revenues and assets are generated and held in the UK. 

 

4.           Investment Income

 


Year ended 28 February 2019


Year ended 28 February 2018


Ord Shares

A Shares

B Shares


Total


Ord Shares

A Shares

B Shares


Total


£'000

£'000

£'000


£'000


£'000

£'000

£'000


£'000

Interest receivable on bank balances

-  

1

-  


1


-  

-  

-  


-  

Loan interest

-  

628

82


710


(4)

634

82


712

Other investment income

-  

-  

-  


-  


3

-  

-  


3


-  

629

82


711


(1)

634

82


715

 

Disclosure by share class is unaudited.

 

5.      Investment Management Fees

 

TPIM provides investment management and administration services to the Company under an Investment Management Agreement effective 23 September 2010 and a deed of variation to that agreement effective 23 December 2015.

 

A Shares: The agreement provides for an investment management fee of 2.00% per annum of net assets payable quarterly in arrear for A Shares. For A Shares the appointment shall continue for a period of at least 6 years from the admission of those shares.

 

B Shares: The agreement provides for an investment management fee of 1.90% per annum of net assets payable quarterly in arrear for B Shares. For B Shares the appointment shall continue for a period of at least 6 years from the admission of those shares.

 

Following a deed of variation to the Investment management agreement, dated 14 September 2018. An administration fee equal to 0.25% of the Company's NAV replaces the previously charged £37,500 per annum. 

 

Investment Management Fees

Year ended 28 February 2019


Year ended 28 February 2018


A Shares

B Shares


Total


A Shares

B Shares


Total


£'000

£'000


£'000


£'000

£'000


£'000

Investment Management Fees

147

33


180


-  

32


32

 

TPIM agreed not to charge their management fees for the A share class for the financial year ending 28 February 2018, to build up distributable reserves improving the ability of the share class to make dividend payments. The amount waived during the previous year was £206,400. Subject to performance of the A Share Class, these fees may be recovered by TPIM. During the current year TPIM recommenced the charging of their management fees to the A Share Class.  

 

TPIM agreed not to charge their management fees from 1 January 2017 on the amounts invested in gas power projects, which represents circa 75% of the B Share Class NAV, until these investments started to generate income. These fees will begin to accrue from 1 March 2019 but will not be immediately payable. The total fee waived to date for the B Share Class is £209,950. Subject to performance of the B Share Class, these fees may be recovered by TPIM.

 

Fees paid to the Investment Manager for administrative and other services during the year was £41,000 (2018: £19,000). The investment Manager also received fees of £Nil (2018: £67,000) for services provided to investee companies.

 

6.      Legal and Professional Fees

 

Legal and professional fees include remuneration paid to the Company's auditor, BDO LLP as shown in the following table:

 


Year ended 28 February 2019


Year ended 28 February 2018


Ord Shares

A Shares

B Shares


Total


Ord Shares

A Shares

B Shares


Total


£'000

£'000

£'000


£'000


£'000

£'000

£'000


£'000

Fees payable to the Company's auditor:










for the audit of the Financial Statements

-  

12

8


20


1

10

7


18


-  

13

8


20


1

10

7


18

 

 

Disclosure by share class is unaudited.

 

7.      Directors' Remuneration

 


Year ended 28 February 2019


Year ended 28 February 2018


Ord Shares

A Shares

B Shares


Total


Ord Shares

A Shares

B Shares


Total


£'000

£'000

£'000


£'000


£'000

£'000

£'000


£'000

Jane Owen

-  

11

7


18


1

11

6


18

Chad Murrin

-  

9

6


15


1

9

5


15

Tim Clarke

-  

9

6


15


-  

8

7


15


-  

29

19


48


2

28

18


48

 

The only remuneration received by the Directors was their Directors' fees. The Company has no employees other than the Non-Executive Directors. The average number of Non-Executive Directors in the year was three. Full disclosure of Directors' remuneration is included in the Directors' Remuneration report.

 

8.      Taxation


Year ended 28 February 2019


Year ended 28 February 2018


Ord Shares

A Shares

B Shares


Total


Ord Shares

A Shares

B Shares


Total


£'000

£'000

£'000


£'000


£'000

£'000

£'000


£'000

Profit/(loss) on ordinary activities before tax

-  

801

414


1,215


(2)

783

16


797

Corporation tax @ 19%

-  

156

79


235


-  

152

3


155

Effect of:












Capital (gains)/losses not taxable

-  

(82)

(82)


(164)


3

(46)

(4)


(47)

Disallowed expenditure

-  

-  

-  


-  


(1)

-  

-  


(1)

Unrelieved tax losses arising in the year

-  

(4)

-  


(4)


-  

(2)

(1)


(3)

Tax charge/(credit) for the period

-  

70

(3)


67


2

104

(2)


104

 

Capital gains and losses are exempt from corporation tax due to the Company's status as a Venture Capital Trust.

 

9.      Earnings per Share

 

The earnings per A Share is 7.34p (2018: 6.83p) and is based on a profit from ordinary activities after tax of £730,417 (2018: £679,845) and on the weighted average number of A Shares in issue during the period of 9,951,133 (2018: 9,951,133).

 

The earnings per B Share is 6.10p (2018: 0.24p) and is based on a profit from ordinary activities after tax of £416,563 (2018: £16,275) and on the weighted average number of B Shares in issue during the period of 6,824,266 (2018: 6,824,266).

 

10.    Financial Assets at Fair Value through Profit or Loss

 

Investments

Fair Value Hierarchy:

Level 1: quoted prices on active markets for identical assets or liabilities. The fair value of financial instruments traded on active markets is based on quoted market prices at the balance sheet date. A market is regarded as active where the market in which transactions for the asset or liability takes place with sufficient frequency and volume to provide pricing information on an ongoing basis. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in level 1.

Level 2: the fair value of financial instruments that are not traded on active markets is determined by using valuation techniques. These valuation techniques maximise the use of observable inputs including market data where it is available either directly or indirectly and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: the fair value of financial instruments that are not traded on an active market (for example, investments in unquoted companies) is determined by using valuation techniques such as discounted cash flows. If one or more of the significant inputs is based on unobservable inputs including market data, the instrument is included in level 3.

 

There have been no transfers between these classifications in the period.  Any change in fair value is recognised through the Statement of Comprehensive Income.

 

The portfolio of the Company is classified as level 3 and further details of the types of investments are provided in the Investment Manager's Review and Investment Portfolio on pages 12 and 17.

 

The Company's Investment Manager performs valuations of financial items for financial reporting purposes, including Level 3 fair values. Valuation techniques are selected based on the characteristics of each instrument, with the overall objective of maximising the use of market-based information.

 

Level 3 valuations include assumptions based on non-observable data with the majority of investments being valued on discounted cash flows or price of recent transactions.

 

Valuation techniques and unobservable inputs:



Sector

Valuation Techniques

Significant unobservable inputs

Inter relationship between significant unobservable inputs and fair value measurement




Estimated fair value would increase/(decrease) if:

 

Hydroelectric Power

·    Discounted cash flows: The valuation model considers the present value of expected payment, discounted using a risk-adjusted discount rate.

·    Discount rate 7.25%

(2018: 7.25%)

·    Inflation rate: OBR 5-year forecast, 2.75% long term.

(2018: 2.5%)

·    The discount rate was lower/(higher)

 

 

·    The inflation rate was higher/(lower)

Gas Power

·    Discounted cash flows: The valuation model considers the present value of expected payment, discounted using a risk-adjusted discount rate.

·    Discount rate 8.5%

(2018: n/a)

·    Inflation rate: OBR 5-year forecast, 2.75% long term.

(2018: 2.0%)

·    The discount rate was lower/(higher)

 

 

·    The inflation rate was higher/(lower)

 

IPEV issued updated valuations guidance in December 2018 and removed cost and price of recent investment as recognised primary valuation methodologies. No investments remain valued at cost and in the Board's opinion, having followed guidance in the IPEV guidelines, fair value is deemed to still be represented by the price on the date of transaction.

 

At the year end, the Company valued its Gas Power assets on a discounted cash flow basis for the first time, having being previously held at cost. This resulted in an uplift in valuation of £413,000 representing the decrease in construction risk. The Board consider the change to appropriate as both companies have been operational for just under 12 months. This has allowed for forecasts to be assessed for reasonableness based on the previous trading history of the assets.

 

The Board considers the discount rates used reflect the current levels of risk and life expectancy of the investments and to be in line with Market expectations. However, consideration has been given whether the effect of changing one or more inputs to reasonably possible alternative assumptions would result in a significant change to the fair value measurement. Each unquoted portfolio company has been reviewed in order to identify the sensitivity of the valuation methodology to using alternative assumptions.

 

On this basis, where discount rates have been applied to the unquoted investments, alternative discount rates have been considered, an upside case and a downside case. For the upside case, the assumptions were flexed 1% and for the downside scenarios the assumptions were flexed by 0.5%. No sensitivity has been performed on other key assumptions such as asset life and P50 because the directors believe the asset life assumptions and discount rate applied interact appropriately with one another to give an appropriate valuation.

 

The two alternative scenarios for each investment have been modelled with the resulting movements as follows:

Applying the downside alternative, the aggregate change in value of the unquoted investments would be a reduction in the value of the portfolio of £310,943 or 1.8% per cent.

 

Using the upside alternative, the aggregate value of the unquoted investments would be an increase of £832,311 or 4.8% per cent.  

 

It is considered that, due to the prudent selection of discount rates by the board, the sensitivity discussed above provides the most meaningful potential impact of the possible changes across the portfolio.

 

Movements in investments held at fair value through the profit or loss during the year to 28 February 2019 were as follows:

 


Year ended 28 February 2019


Year ended 28 February 2018


Ord Shares

A Shares

B Shares


Total


Ord Shares

A Shares

B Shares


Total


£'000

£'000

£'000


£'000


£'000

£'000

£'000


£'000













Opening Cost

-  

9,474

6,760


16,234


-  

9,772

6,760


16,532

Opening unrealised gains

-  

270

50


320


5

30

26


61

Opening fair value at 1 March 2018

-  

9,744

6,810


16,554


5

9,802

6,786


16,593

Disposal proceeds

-  

(75)

-  


(75)


(2)

(298)

-  


(300)

Realised loss on disposal

-  

-  

-  


-  


(3)

-  

-  


(3)

Investment holding gains

-  

433

429


862


-  

240

24


264

-  

10,102

7,239


17,341


-  

9,744

6,810


16,554

Closing cost

-  

9,399

6,760


16,159


-  

9,474

6,760


16,234

Closing investment holding gains

-  

703

479


1,182


-  

270

50


320

 

All investments are designated as fair value through profit or loss at the time of acquisition and all capital gains or losses arising on investments are so designated. Given the nature of the Company's venture capital investments, the changes in fair values of such investments recognised in these Financial Statements are not considered to be readily convertible to cash in full at the balance sheet date and accordingly any gains or losses on these items are treated as unrealised.

 

Further details of the types of investments are provided in the Investment Manager's review and investment portfolio on pages 12-16, and details of entities over which the VCT has significant influence are included on page 23.

 

Material disposals during the year

 

There were no material disposals during the year. During the year a non-qualifying investment repaid part of its loan of £75,000.

 

Disclosure by share class is unaudited.

 

11.    Receivables


28 February 2019


28 February 2018


A Shares

B Shares


Total


A Shares

B Shares


Total


£'000

£'000


£'000


£'000

£'000


£'000





















Accrued interest receivable

100

13


113


101

13


114

Prepaid expenses

3

2


5


3

2


5

Other debtors

892

42


934


660

-  


660


995

57


1,052


764

15


779

 

Other debtors relate to interest receivable on investment loans.

 

12.    Cash and Cash Equivalents

 

Cash and cash equivalents comprise deposits with The Royal Bank of Scotland plc.

 

13.         Payables and Accrued Expenses

 


28 February 2019


28 February 2018


A Shares

B Shares


Total


A Shares

B Shares


Total


£'000

£'000


£'000


£'000

£'000


£'000





















Trade Creditors

18

88


106


23

69


92

Other taxation and social security

3

2


5


3

2


5

Accrued expenses & deferred income

15

9


24


14

9


23


36

99


135


40

80


120

 

Disclosure by share class is unaudited.

 

14.    Share Capital

 


28 February 2019

28 February 2018




A Ordinary Shares of £0.01 each



Issued & Fully Paid



Number of shares

9,951,133

9,951,133

Par Value £'000

100

100

Authorised



Number of shares

10,000,000

10,000,000

Par Value £'000

100

100




B Ordinary Shares of £0.01 each



Issued & Fully Paid



Number of shares

6,824,266

6,824,266

Par Value £'000

68

68

Authorised



Number of shares

10,000,000

10,000,000

Par Value £'000

100

100




Company Total Shares of £0.01 each



Issued & Fully Paid



Number of shares

16,775,399

16,775,399

Par Value £'000

168

168

 

During the year the premium paid for the A shares was transferred to a special distributable reserve.

 

15.    Financial Instruments and Risk Management

 

The Company's financial instruments comprise VCT qualifying investments and non-qualifying investments, cash balances and liquid resources including debtors and creditors. The Company holds financial assets in accordance with its investment policy detailed in the Strategic Report on page 4.

 

The following table discloses the financial assets and liabilities of the Company in the categories defined by IFRS 9, "Financial Instruments".

 

Fixed Asset Investments (see note 10) are valued at fair value. Unquoted investments are carried at fair value as determined by the Directors in accordance with current venture capital industry guidelines. The fair value of all other financial assets and liabilities is represented by their carrying value on the balance sheet.

 

The Directors believe that where an investee company's enterprise value, which is equivalent to fair value, remains unchanged since acquisition that investment should continue to be held at cost less any loan repayments received. Where they consider the investee company's enterprise value has changed since acquisition, that should be reflected by the investment being held at a value measured using a discounted cash flow model or a recent transaction price.

 

In carrying out its investment activities, the Company is exposed to various types of risk associated with the financial instruments and markets in which it invests. The Company's approach to managing its risks is set out below together with a description of the nature of the financial instruments held at the balance sheet date.

 


Total value

Financial assets at amortised cost

Financial Liabilities held at amortised cost

Financial assets held at fair value through profit or loss


£'000

£'000

£'000

£'000

Year ended 28 February 2019





Assets:





Financial assets at fair value through profit or loss

17,341

-  

-  

17,341

Interest income receivable at fair value through profit or loss

1,047

-  

-  

1,047

Cash and cash equivalents

46

46

-  

-  


18,434

46

-  

18,388

Liabilities:





Taxation payable

66

-  

66

-  

Other Payables

135

-  

135

-  


201

-  

201

-  






Year ended 28 February 2018





Assets:





Financial assets at fair value through profit or loss

16,554

-  

-  

16,554

Receivables

774

774

-  

-  

Cash and cash equivalents

353

353

-  

-  


17,681

1,127

-  

16,554

Liabilities:





Other Payables

120

-  

120

-  


120

-  

120

-  

 

Market Risk (continued)

 

The Company's VCT qualifying investments are held in small and medium-sized unquoted investments which, by their nature, entail a higher level of risk and lower liquidity than investments in large quoted companies.  The Directors and Investment Manager aim to limit the risk attached to the portfolio as a whole by careful selection and timely realisation of investments, by carrying out rigorous due diligence procedures and by maintaining a spread of holdings in terms of industry sector and geographical location. The Board reviews the investment portfolio with the Investment Manager on a regular basis. Details of the Company's investment portfolio at the balance sheet date are set out on pages 17 to 23.

 

The Directors have considered the impact of an increase or decrease in the power price assumptions across the Hydro portfolio. The power prices have been stressed by 5%, 5% was chosen to represent a potential significant move in power prices. A 5% decrease in power prices across the portfolio would lead to an increase of £94,493 in the value of the unquoted investment portfolio. A reduction of 5% in power prices would result in a decrease of £26,261 of the unquoted investment portfolio.

 

An increase of 1% in the value of investments would increase the capital profits for the period and the net asset value at 28 February 2019 by £173,404. A decrease of 1% would reduce the capital profits and net asset value by the same amount. A movement of 1% is used as a multiple to demonstrate the impact of varying changes on the capital profits and net asset value of the Company.

 

Interest Rate Risk

 

Some of the Company's financial assets are interest bearing, of which some are at fixed rates and some at variable rates.  As a result, the Company is exposed to interest rate risk arising from fluctuations in the prevailing levels of market interest rates.

 

Investments made into qualifying holdings are part equity and part loan. The loan element of investments totals £3,405,900 (2018: £3,397,000) and is subject to fixed interest rates of between 21.6% and 29.5% for between 5 - 20 years and, as a result, there is no cash flow interest rate risk. As the loans are held in conjunction with equity and are valued in combination as part of the enterprise value, fair value risk is considered part of market risk.

 

The Company also has non-qualifying loan investments of £3,305,000 (2018: £3,380,000) which carry interest rates between 7.75 and 13.5% for between 5 - 15 years.

 

The amounts held in variable rate investments at the balance sheet date are as follows:

 


28 February 2019


29 February 2018


£'000


£'000

Cash on Deposit

46


353


46


353

 

An increase in interest rates of 1% per annum would not have a material effect either on the revenue for the year or the net asset value at 28 February 2019. The Board believes that in the current economic climate a movement of 1% is reasonably possible.

 

Credit Risk

 

Credit risk is the risk that a counterparty will fail to discharge an obligation or commitment that it has entered into with the Company. The Investment Manager and the Board carry out a regular review of counterparty risk. The carrying value of the financial assets represent the maximum credit risk exposure at the balance sheet date.

 


28 February 2019


28 February 2018


£'000


£'000

Non-Qualifying investment loans

3,371


3,446

Qualifying investment loans

3,406


3,406

Cash on Deposit

46


353

Receivables

1,047


774


7,870


7,979

 

The Company's loan to Broadpoint 3 Limited was due for repayment on 28 February 2019. After discussions between the Board of the Company and that of Broadpoint 3 Limited, it was agreed to extend the due date on a rolling basis to be repayable on demand. Any impact of this extension has been considered in deriving the fair value of the instrument.

 

No other issues have been identified which would be cause for concern with regards the quality of credit for any other investee company.

 

The Company's bank accounts are maintained with The Royal Bank of Scotland plc ("RBS"). Should the credit quality

or financial position of RBS deteriorate significantly, the Investment Manager will move the cash holdings to another bank. Credit risk arising on unquoted loan stock held within unlisted investments is considered to be part of Market risk as disclosed above.

 

Liquidity Risk

 

The Company's financial assets include investments in unquoted equity securities which are not traded on a recognised stock exchange and which are illiquid. As a result, the Company may not be able to realise some of its investments in these instruments quickly at an amount close to their fair value in order to meet its liquidity requirements.

 

The Company's liquidity risk is managed on a continuing basis by the Investment Manager in accordance with policies and procedures laid down by the Board. The Company's overall liquidity risks are monitored by the Board on a quarterly basis.

 

The Board maintains a liquidity management policy where cash and future cash flows from operating activities will be sufficient to pay expenses. At 28 February 2019 cash held by the Company amounted to £46,000.

 

Foreign Currency Risk

 

The Company does not have exposure to material foreign currency risks.

 

16.    Net Asset Value per Share

 

The net asset value per share for the A Shares is 110.49p (2018: 106.90p) and is calculated based on net assets of £10,638,000 (2018: £10,638,000) divided by the 9,951,133 A Shares in issue.

 

The net asset value per share for the B Shares is 106.10p (2018: 100.00p) and is calculated on net assets of £7,227,000 (2018: £6,824,000) divided by the 6,824,266 B Shares in issue.

 

17.    Commitments and Contingencies

 

As highlighted in note 5, the Investment Manager has waived £416,350 of management fees. Subject to the performance of the underlying investments, the Investment Manager may decide to charge these previously waived fees to the Company. The likelihood of these outstanding fees being recovered is not considered probable and therefore no provision has been made.

 

18.    Relationship with Investment Manager

 

During the period, TPIM received £221,164 (2018: £51,394) (which has been expensed by the Company) for providing management and administrative services to the Company. At the Balance Sheet date, the total fee which have been waived by the Investment Manager stood at £416,350.

 

19.    Related Party Transactions

 

The Directors Remuneration Statement on pages 35 to 36 discloses the Directors' remuneration and shareholdings.

 

There were no other related party transactions during the period.

 

20.    Post Balance Sheet Events

 

Following the balance sheet date, the Company allotted a further 6,038,330 shares into the Venture Share Class.

 

21.    Dividend 

 

A Share Class:

 

On 28 June 2018 a dividend of £273,656 equal to 2.75p per share was paid to the A Class Shareholders. On 22 February a dividend of £99,511 equal to 1.00p per share was paid to the A Class Shareholders.

 

During the year dividends of £373,167 were paid out of the Revenue Reserve.

 

The Board has resolved to pay a fourth dividend to A Class Shareholders of £398,045 equal to 4.00p per share which will be paid on 28 June 2019 to shareholders on the register on 14 June 2019.

 

B Share Class:

 

The Board has resolved to pay its first dividend to B Class Shareholders of £341,213 equal to 5.00p per share which will be paid on 28 June 2019 to shareholders on the register on 14 June 2019.

 

Information

 

Details of Advisers

 

Secretary and Registered Office:  

Triple Point Investment Management LLP

1 King William Street

London

EC4N 7AF

 

Registered Number

07324448

 

FCA Registration number

659605

 

Investment Manager and Administrator

Triple Point Investment Management LLP

1 King William Street

London

EC4N 7AF

 

Tel: 020 7201 8989

 

Independent Auditor

BDO LLP

55 Baker Street

London

W1U 7EU

 

Solicitors

Howard Kennedy LLP

No. 1 London Bridge

London

SE1 9BG

 

Registrars

Neville Registrars Limited

Neville House

18 Laurel Lane

Halesowen

West Midlands

B62 8HD

 

VCT Taxation Advisers

Philip Hare & Associates LLP

First floor

4-6 Staple Inn

Holborn

London

WC1V 7QH

 

Bankers

The Royal Bank of Scotland plc

54 Lime Street

London

EC3M 7NQ

 

Shareholder Information

 

The Company

Triple Point VCT 2011 plc is a Venture Capital Trust. The Investment Manager is Triple Point Investment Management LLP. The Company was incorporated on 23 July 2010.

 

The Company's investment strategy is to offer combined exposure to cash or cash-based funds and venture capital investments focused on companies with contractual revenues from financially secure counterparties.  The Company continues to meet the condition that 70% of relevant funds must be invested in qualifying investments.

 

Financial Calendar

The Company's financial calendar is as follows:

 

May 2019              Results for the year to 28 February 2019 announced; Annual Report and Financial Statements published.

 

11 July 2019               Annual General Meeting

 

October 2019             Interim report for the six months ending 31 August 2019 despatched

 

May 2020                   Results for the year to 28 February 2020 announced; Annual Report and Financial        Statements published.

 

Notice of Annual General Meeting

 

NOTICE is hereby given that the Annual General Meeting of Triple Point VCT 2011 plc will be held at 1 King William Street, London, EC4N 7AF at 10.45am on Thursday 11 July 2019 for the following purposes:

 

Ordinary Business

 

1.  To receive, consider and adopt the Report of the Directors and Financial Statements of the Company for the year ended 28 February 2019 together with the Independent Auditors Report thereon (Ordinary Resolution).

 

2.  To approve the Directors' Remuneration Report for the year ended 28 February 2019 (Ordinary Resolution).

 

3.  To re-appoint BDO LLP as Auditor and determine their remuneration (Ordinary Resolution).

 

Special Business

 

4.  That the Company be and is hereby authorised in accordance with s701 of the Companies Act 2006 (the "Act") to make one or more market purchases (as defined in section 693(4) of the Act) of A Shares or B Shares provided that:

 

(i)         the maximum aggregate number of A Shares authorised to be purchased is an amount equal to 10% of the issued A Shares as at the date of this Resolution;

 

(ii)         the maximum aggregate number of B Shares authorised to be purchased is an amount equal to 10% of the issued B Shares as at the date of this Resolution;

 

(iii)        the minimum price which may be paid for an A Share or B Share or Venture Share is 1 pence;

 

(iv)        the maximum price which may be paid for an A Share, a B Share or a Venture Share is an amount, exclusive of expenses, equal to 105 per cent. of the average of the middle market prices for the A Shares, B Shares and Venture Shares as derived from the Daily Official List of the UK Listing Authority for the five business days immediately preceding the day on which that A Share, B Share or Venture Share (as applicable) is purchased; and

 

(v)        this authority shall expire either at the conclusion of the next Annual General Meeting of the Company or 15 months following the date of the passing of this Resolution, whichever is the first to occur (unless previously renewed, varied or revoked by the Company in general meeting), provided that the Company may, before such expiry, make a contract to purchase its own shares which would or might be executed wholly or partly after such expiry, and the Company may make a purchase of its own shares in pursuance of such contract as if the authority hereby conferred had not expired. (Special Resolution).

 

By Order of the Board

 

Jane Owen

Director

Registered Office:

1 King William Street,

London, EC4N 7AF                                                                                                 23 May 2019

 

Notes:

 

(i)         A member entitled to vote at the Meeting is entitled to appoint one or more proxies to attend and, on a poll, vote on his or her behalf. A proxy need not be a member of the Company.

(ii)        A form of proxy is enclosed. To be effective, the instrument appointing a proxy (together with the power of attorney or other authority, if any, under which it is signed, or a certified copy of such power or authority) must be deposited at or posted to the office of the registrars of the Company,  Neville Registrars Limited, Neville House, Steelpark Road, Halesowen, West Midlands B62 8HD, so as to be received not less than 48 hours before the time fixed for the Meeting. Completion and return of the form of proxy will not preclude a member from attending or voting at the Meeting in person if he or she so wishes.

(iii)       Members who hold their shares in uncertificated form must be entered in the Company's register of Members 48 hours before the Meeting to be entitled to attend or vote at the Meeting. Such shareholders may only cast votes in respect of Ordinary Shares held by them at such time.

(iv)     Copies of the service contracts of each of the Directors,  the register of Directors' interests in shares of the Company kept in accordance with the Listing Rules and a copy of the Memorandum and Articles of Association of the Company, will be available for inspection at the registered offer of the Company during usual business hours on any week day (Saturdays, Sundays and public holidays excepted) from the date of this notice until the date of the Annual General Meeting and at the place of the Annual General Meeting from at least 15 minutes prior to and until the conclusion of the Annual General Meeting. 

 

Form of Proxy

 

Relating to the 2019 Annual General Meeting of Triple Point VCT 2011 plc

I/We…………………………………………………………………………………………………………………………

BLOCK CAPITALS PLEASE - Name in which shares registered

 

of…………………………………………………………………………………………………………………………

 

………………………………………………………………………………………………………………………………

or failing him/her the Chairman of the meeting to be my/our proxy and vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at 1 King William Street, London, EC4N 7AF on Thursday 11 July 2019 at 10.45am, notice of which was sent to shareholders with the Directors' Report and the accounts for the year ended 28 February 2019, and at any adjournment thereof. The proxy will vote as indicated below in respect of the resolutions set out in the notice of meeting:

 

Resolution number

For

Against

Withheld

1.

To receive, consider and adopt the Report of the Directors and the Financial Statements for the year ended 28 February 2019.

 




2.

To approve the implementation report set out in the Directors' Remuneration Report for the year ended 28 February 2019.

 




3.

To re-appoint BDO LLP as auditor and authorise the Directors to agree their remuneration.

 




4.

To authorise the Directors to make market purchases of the Company's own shares (Special Resolution).

 




 

Signed: ...................................................................... Dated: ................................................ ..2019

 

Notes

1.   A member wishing to appoint a person other than the Chairman of the meeting as proxy should insert the name and address of such person in the space provided.

2.   Use of the proxy form does not preclude a member from attending and voting in person.

3.   Where this form of proxy is executed by a corporation it must be either under its seal or under the hand of an officer or attorney duly authorised.

4.   If the proxy form is signed and returned without any indication as to how the proxy shall vote, the proxy will exercise his/her discretion as to whether and how he/she votes.

5.   To be valid, the proxy form must be received by Computershare, Neville Registrars at Neville House, Steelpark Road, Halesowen, West Midlands B62 8HD no later than 48 hours before the commencement of the meeting.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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FR LLFIDEAIVFIA

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