TIDMTPVE TIDMTPVC TIDMTPVD
RNS Number : 0107Q
Triple Point Inc VCT - TPVE
15 June 2020
15 June 2020
Triple Point Income VCT plc
(the "Company")
RESULTS FOR THE YEARED 31 MARCH 2020
The financial information set out in these statements does not
constitute the Company's statutory accounts for the year ended 31
March 2020, prepared in accordance with section 435 of the
Companies Act 2006, but is derived from those accounts. Statutory
accounts will be delivered 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.
Results
Triple Point Income VCT plc, managed by Triple Point Investment
Management LLP, today announces the results for the year ended 31
March 2020.
These results were approved by the Board of Directors on 15 June
2020.
You may view the Annual Report in due course on the Triple Point
website www.triplepoint.co.uk . Please note that page numbers in
this announcement are in reference to the Annual Report.
FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:
Triple Point Investment Management Tel: 020 7201 8989
LLP
(Investment Manager)
Ben Beaton
Belinda Thomas
The Company's LEI is 213800IXD8S5WY88L245
Further information on the Company can be found on its website
https://www.triplepoint.co.uk/current-vcts/triple-point-income-vct-plc/s1238/
.
Financial Summary
Year ended 31 March
2020
Ord Shares C Shares D Shares E Shares Total
Net assets GBP'000 - 11,406 8,559 29,442 49,407
Net asset value per
share Pence - 84.87p 62.46p 101.69p n/a
----------------------- ---------- ------------ ---------- ---------- ---------- --------
Net profit before
tax GBP'000 - 746 86 1,217 2,049
Earnings per share Pence - 5.29p 0.12p 4.13p n/a
----------------------- ---------- ------------ ---------- ---------- ---------- --------
Cumulative return
to Shareholders (p)
Net asset value per
share - 84.87 62.46 101.69
Dividends paid - 70.00 65.00 5.00
Net asset value plus
dividends paid - 154.87 127.46 106.69
----------------------------------- ------------ ---------- ---------- ---------- --------
Year ended 31 March
2019
Ord Shares C Shares D Shares E Shares Total
Net assets GBP'000 - 18,088 16,077 29,691 63,856
Net asset value per
share Pence - 134.58p 117.34p 102.56p n/a
----------------------- ---------- ------------ ---------- ---------- ---------- --------
Net profit before
tax GBP'000 35 3,652 2,083 1,263 7,033
Earnings per share Pence 0.07p 26.74p 14.36p 4.24p n/a
----------------------- ---------- ------------ ---------- ---------- ---------- --------
Cumulative return
to Shareholders (p)
Net asset value per
share - 134.58 117.34 102.56
Dividends paid 97.87 15.00 10.00 -
----------
Net asset value plus
dividends paid 97.87 149.58 127.34 102.56
----------------------------------- ------------ ---------- ---------- ---------- --------
Triple Point Income VCT plc ("the Company") is a Venture Capital
Trust ("VCT"). The Investment Manager is Triple Point Investment
Management LLP ("TPIM"). The Company was incorporated in November
2007.
-- C Ordinary Share Fund ("C Shares"): these are the shares
issued in the Offer that closed on 27 May 2014. A total of GBP14
million was raised and 13,441,438 C Shares were issued.
-- D Ordinary Share Fund ("D Shares"): these are the shares
issued in the Offer that closed on 30 April 2015. A total of
GBP14.3 million was raised and 13,701,636 D Shares were issued.
-- E Ordinary Share Fund ("E Shares"): these are the shares
issued in the Offer that closed on 15 May 2017. Just under GBP30
million was raised and 28,949,575 E Shares were issued.
The Strategic Report on pages 9 to 53, the Directors' Report on
pages 71 to 74, the Corporate Governance Statement on pages 56 to
60 and the Directors' Remuneration Report on pages 66 to 70 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 Income VCT plc.
The Directors submit to the members their Annual Report and
Financial Statements for the Company for the year ended 31 March
2020.
Key Highlights
-- Dividend per C Share 55.00p (Year ended 31 Mar 2019: 5.00p)
-- Dividend per D Share 55.00p (Year ended 31 Mar 2019: 5.00p)
-- Dividend per E Share 5.00p (Year ended 31 Mar 2019: Nil)
-- Net Asset Value per C Share 84.87p (Year ended 31 Mar 2019: 134.58p)
-- Net Asset Value per D Share 62.46p (Year ended 31 Mar 2019: 117.34p)
-- Net Asset Value per E Share 101.69p (Year ended 31 Mar 2019: 102.56p)
-- Total Return* per C Share 154.87p (Year ended 31 Mar 2019: 149.58p)
-- Total Return* per D Share 127.46p (Year ended 31 Mar 2019: 127.34p)
-- Total Return* per E Share106.69p (Year ended 31 Mar 2019: 102.56p)
-- Realisation Proceeds GBP7.07 million
-- Ongoing Charges Ratio** 2.70%
*Total Return is made up by current Net Asset Value plus
Dividends paid to date. More information on Total Return is on page
21.
Total Return and **Ongoing Charges Ratio are defined as
Alternative Performance Measures ("APM"). The Board considers Total
Return to be the primary measure of shareholder value. The Ongoing
Charges Ratio ("OCR") shows the drag on performance caused by
operational expenses. This OCR shows the annual costs of the VCT as
a percentage of its average asset value during the year.
The Annual Report contains a number of APMs. APMs are financial
measures that are in addition to those defined or specified in the
Company's reporting framework.
Chairman's Statement
I am writing to present the Financial Statements for Triple
Point Income VCT plc for the year ended 31 March 2020.
I am writing this at a time when we have all been facing
unprecedented, uncertain and challenging times, as a result of the
COVID-19 pandemic. Businesses, economies, supply chains and
consumer habits in the UK and globally are unquestionably facing
challenges greater than most will have seen before. Given the rapid
and continuing evolution of the situation, it is difficult to know
the full extent of the economic impact that the COVID-19 pandemic
will have on the UK and businesses or how long it may last. Society
and industry will of course recover, but now more than ever is the
time to be grateful for stability.
In the short term many companies across the economy are facing
varying degrees of pressure on their revenue lines. For some it
will just be a slow-down in their sales growth as acquiring new
customers becomes difficult in the next few months, while for
others it will be an actual contraction in sales. Despite the
current challenges that many businesses will be currently facing,
discussed above, the Board and the Company believe that there has
been minimal impact across all share classes as a result of
COVID-19. We believe that the revenue lines of our investee
companies are robust and will continue despite the pandemic.
All of our share classes have exposure to hydroelectric
companies. The companies currently benefit from inflation linked
Feed in Tariff ("FiTs") Income and have all recently signed up to
new 12-month fixed price power purchase agreements ("Export") with
one of the "big six" energy providers. The revenue stack of our
Hydro assets is currently weighted c.75% FiT and c.25% Export. Both
the FiT element and the portion of the Export tariff, which is made
up by embedded benefits, should not be affected by the fall in
energy prices. Consequently, we do not expect the hydroelectric
companies to be materially impacted by the current volatility we
are witnessing in the energy markets.
Our E Share Class holds a gas power company, in a sector which
has exposure to the recent decline in wholesale energy prices.
Spark-spreads (the difference between the price of gas used to
produce electricity and the electricity produced) have narrowed,
reducing gross margins, although despite the changing electricity
demand profile, it still remains highly profitable for our gas
power asset to run during the evening peak. Over the long term
industry experts believe prices will revert to historical norms and
therefore the recent volatility is expected to have only a
negligible impact on this business.
The E Share Class also holds investments in several businesses
which operate rooftop solar installations. These solar
installations require a relatively low level of human presence and
we therefore expect to be able to maintain normal operations
without significant disruption and impairment to revenues. There
are risks, albeit low, surrounding repair or maintenance work due
to potential supply chain constraints. This risk is consistent
across the portfolio but is considered minor.
The rooftop solar assets are the beneficiaries of inflation
linked income through FITs or Renewable Obligation Certificates.
The impact of COVID-19, and the Government's response to it, should
therefore be relatively minor on these revenue streams and not
materially impact the ongoing NAV of these businesses.
We continue to monitor the risk of disruption, particularly to
international supply chains for spares, but to date neither site
visits nor maintenance requirements have been significantly
affected by the pandemic.
Around 50% of food in the UK is imported and the COVID-19
pandemic has highlighted the need for greater food security here in
the UK. The UK food chain is changing rapidly and dramatically as a
result. The UK currently is heavily reliant on imports of fresh
fruit and vegetables, especially during March to May when food
importing hits its annual peak. In addition to this, the farming
industry is predominantly staffed by overseas workers and with both
Brexit and COVID-19, seasonal workers are struggling to travel into
the UK. The food system in the UK is under great strain and it is
impossible to predict the time frame within which the food system
will return to a stable footing.
The E Share Class investment into the vertical growing solution,
Perfectly Fresh Cheshire Limited ("PFC"), is helping bridge this
gap. The business continues to operate despite the obstacles
provided by COVID-19; however, its high care nature does bring
additional complications. The team have been working around the
clock to ensure business continues as normal where possible.
Through this period, PFC has liaised closely with its main customer
in its response to COVID-19, and I am delighted to say that they
have been able to greatly support them with the product continuing
to be grown, delivered on time and as requested.
As the UK begins to return to a sense of normality, society and
industry will of course recover from the crisis, but now is the
time to look towards long-term opportunity. As the need for greater
food security is increased and this issue becomes more prevalent on
the Government agenda, we believe PFC is in a position to exploit
these opportunities, as a solution that looks to offer a guaranteed
food yield and a lower environmental impact.
I am pleased to say that all our Share Classes are fully
invested, and all companies are fully operational. We believe that
these companies should continue to operate as normal.
Investment Portfolio
The Company's funds at 31 March 2020 are 99% invested in a
portfolio of VCT qualifying and non-qualifying quoted and unquoted
investments.
The Investment Manager's review on pages 31 to 44 gives an
update on the portfolio of investments in 18 small unquoted
businesses and one quoted Real Estate Investment Trust.
C Share Class
The C Share Class has investments in three companies in the
Hydroelectric Power sector which between them own six hydroelectric
schemes in the Scottish Highlands . The C Share Class has also
invested in companies which provide SME funding to the
Hydroelectric Power sector.
I am pleased to report the C Share Class portfolio continues to
perform well and has recorded a profit over the period of 5.29
pence per share and as at 31 March 2020 the NAV per share stood at
84.87 pence per share.
During the year C Class Shareholders were paid total dividends
of 55 pence per share. This was enabled by a combination of
investment realisations and a small amount of borrowing: more
detail on the borrowing can be seen in the upcoming D Share Class
Section.
In total during the year GBP7.39 million was returned to C Class
Shareholders, taking total dividends paid to C Shareholders to date
to 70 pence per share.
One of the core targets of the C Share Class was to deliver to
investors a cash return of 100 pence per share by the end of year
six. It was initially intended that this return would be derived
from a combination of the initial income tax rebate, tax-free
dividends in years two, three, four and five, followed by a
substantial capital realisation in year six.
During the year, we achieved our goal of returning to C Share
Shareholders (including the initial income tax relief) 100 pence
per share. This is an excellent achievement and I would like to
thank the Investment Manager for all their hard work in helping the
Company reach this milestone for its C Class Shareholders.
Looking to the future, the C Share Class now moves into its
income generation stage, where we are targeting an ongoing dividend
of 3.50p per annum. I am delighted to say we have achieved this
target and can announce a further dividend of 3.5 pence per share
will be paid on 30 June 2020.
D Share Class
The D Share Class has investments in five companies in the
Hydroelectric Power sector which between them own six hydroelectric
schemes in the Scottish Highlands .
I am pleased to report the D Share Class portfolio continues to
perform and has recorded a profit over the period of 0.12 pence per
share and as at 31 March 2020 the NAV per share stood at 62.46
pence per share.
During the year, the Company paid two dividends to Shareholders,
its third 5 pence per share dividend along with a significant
return of capital worth 50 pence per share.
Along with the C Share Class, one of the core targets of the D
Share Class was to deliver to Shareholders a cash return of 100
pence per share by the end of year six. It was initially intended
that this return would be derived from a combination of the initial
income tax rebate, tax-free dividends in years two, three, four and
five, followed by a substantial capital realisation in year
six.
I am delighted to say that with the declaration of the latest 5
pence per share dividend we have achieved this target. In order to
help achieve the dividend and partial realisation target, the
Company put in place a loan facility for GBP2.7 million. Of this
facility GBP2.3 million was drawn during the period. The loan
attracts interest at 4.5%, it is not envisaged the Company will
draw the remaining funds available under the current facility.
Following the payment of the next 5 pence per share dividend, we
will have achieved our goal of returning to Shareholders (including
the initial income tax relief) 100 pence per share. This result has
been achieved a year ahead of target and represents an excellent
achievement. I would like to thank the Investment Manager for all
their hard work in helping the Company reach this milestone for its
D Class Shareholders.
Looking to the future, the D Share Class now moves into its
income generation stage, where we are targeting an ongoing dividend
of 3.50p per annum.
Another highlight during the year for the D Share Class, in line
with the way the investment was structured, was the sale of its
holding in one of the hydroelectric schemes, Green Highland allt
Garbh Limited. The D Share Class received net proceeds in excess of
GBP2.71 million from the sale. This disposal helped to contribute
significantly to the dividend and partial realisation target I
discussed earlier.
E Share Class
The E Share Class benefits by being the owner of an established,
income-producing portfolio of investments spanning Hydroelectric
Power, Crematorium Management, Gas Fired Energy Centres, Solar PV,
Vertical Growing and SME Lending.
The construction of a pioneering Vertical Growing facility by
PFC is now complete. The company continues to work towards
achieving full capacity and has the full support of its main
customer. Vertical growing produces crops in a controlled
environment ensuring optimal growing conditions all year round. PFC
provides their customers with a sustainable, resource efficient
premium product, which is helping reduce their carbon footprint,
with distribution from within the UK. The business has seen an
uplift of GBP1.28 million on its valuation. This represents a 10%
annual return on the initial investment of GBP5 million. The
investment is structured in such a way that the Company will
benefit from a priority return up to 10% per annum and will share
in any excess above this hurdle rate.
Further information on this investment is included in the
Investment Manager's Review on pages 32 to 43.
The E Share Class declared a second dividend of 6.5 pence per
share on 4 June 2020. This dividend will be paid to Shareholders on
30 June 2020. This will take total dividends paid to E Shareholders
of 11.5 pence per share.
Share buy-backs
The Company aims, subject to distributable reserves and
liquidity, to be willing to buy back the Company's shares in the
market at a 10% discount to NAV.
There were no Share buy-backs made during the year.
VCT qualifying status
The Company has maintained its approved VCT status with HM
Revenue & Customs. The Company's compliance with the VCT
qualifying conditions is closely monitored by the Board, who
receive regular reports from the Investment Manager and from our
VCT taxation advisers Philip Hare & Associates LLP.
VCT legislation and regulation
In previous communications with Shareholders we have 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 VCTs in helping to
provide investments into SMEs.
As part of the Patient Capital Review, several changes were
introduced, including increasing a VCT's minimum qualifying
percentage threshold from 70% to 80%. This change came into effect
for the Company from 1 April 2020. The Investment Manager has been
monitoring this target very closely since it was announced and I am
pleased to say that the Company complied fully during the year and
now also continues to comply with the updated rules since the year
end.
A number of other measures have also applied to the Company for
the first time in the current financial year. From 1 April 2020,
the Company benefited from an increased disregard period available
before the proceeds of investment disposals become non-qualifying.
This disregard period was increased from six months to twelve
months.
This additional time may prove helpful in the event of any
future significant disposals.
In the case of the D Share class disposal of Green Highland Allt
Garbh Limited, the proceeds of this disposal were paid out to
Shareholders during the year, within six months of disposal.
We will continue to work closely with the Investment Manager to
ensure the Company maintains compliance with the VCT scheme
rules.
Outlook
The future has never been more uncertain. The Company is very
mindful that the economic disruption in the next few months will be
severe and many small companies, including those across the UK and
beyond, will have to assume that sales opportunities could be
greatly diminished.
The recovery from COVID-19 may be slow, depending on how
policies associated with virus containment evolve. We are fortunate
that our portfolio of electricity generating assets can continue to
produce electricity and should give the Company stability in
turbulent times.
We will also be focusing on the positives that will come from
this crisis. An economic shock like this will no doubt change some
behaviours permanently and may lead many to think hard about how
they run their businesses. We believe that through our investment
in PFC we will be in a position to capitalise on the positives to
emerge from this crisis.
We are optimistic that PFC can play an important part, during
what we expect to be a paradigm shift from industrial agriculture
to diversified agroecological and enhanced technological systems as
this becomes prominent and on the agenda of governments.
Brexit
Whilst it would seem that Brexit has taken a back seat in the
UK, along with COVID-19, the political and economic environment
continues to remain uncertain. Despite this, it is still very
unclear as to what the eventual result of the ongoing negotiations
between Britain and the rest of the EU will look like. Given the UK
focus of the Company and the sectors the Company operates within,
we do not expect that Brexit will have a significant impact on the
current operations of the Company.
I would like to take this opportunity to thank Shareholders for
your continued support, and our Investment Manager for their
support and commitment during the year.
If you have any questions about your investment, please do not
hesitate to contact the Investment Manager on 020 7201 8990.
David Frank
Chairman
15 June 2020
Strategic Report - Company Strategy and Business Model
The Strategic Report 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.
The Directors assess the Company's success in meeting its
objectives in relation to returns, stability, VCT qualification
and, ultimately, exit.
Investment Policy
Investment Objectives
The Company's main focus is to generate returns from a portfolio
of investments in companies based in the UK in order to make
regular tax-free dividends.
The Company's Investment Policy was adopted and approved by
Shareholders before recent changes to the rules for VCT-qualifying
investments and applies to the existing investment portfolio. The
Company recognises that it is likely that any new Qualifying
Investments would require amendment to the Investment Policy. In
order for the Company to amend the Investment Policy, any
amendments would require Shareholder approval. As the Company is
fully invested and has no intention, at present, to raise
additional funds, it is unlikely that the Investment Policy will be
amended in the medium term.
The key objectives of the Company are to:
a) Pay regular tax-free dividends to investors;
b) Maintain VCT status to enable investors to benefit from the associated tax reliefs;
c) Reduce the volatility normally associated with early stage
investments by applying its Investment Policy;
d) In respect of the C Shares and the D Shares, provide
investors with the opportunity to exit shortly after 16 years
following investment with a partial return of funds to Shareholders
after 6 years; and
e) In respect of the E Shares, provide investors with the
opportunity to exit between 10 and 12 years following investment
with a possible early partial return of funds to Shareholders if
market conditions present such an opportunity.
The Company will not vary these objectives to any material
extent without the approval of the Shareholders.
The Company's Investment Policy has been designed to satisfy the
legislative requirements of the VCT scheme and to provide stable
and readily realisable returns. The Company's Investment Policy is
directed towards new investments into cash generative businesses
which are operating in stable or mature fields with a high-quality
customer base and which can provide a positive return to investors.
The Board may on occasion, where deemed appropriate, invest in less
mature or stable fields where there is the opportunity for
substantial growth and development. The investments will be made
with the intention of growing and developing the revenues and
profitability of the target businesses to enable them to be
considered for traditional forms of bank finance and other funding.
This, in turn, should enable the Company to benefit from refinance
gains or from a favourable sale to a third party.
As identified in the Chairman's Statement, the outcome of the
Government's Patient Capital Review was announced in the Autumn
Budget in 2017. Although the landscape of VCTs has been affected
the Investment Policy of the Company will continue to aim for
regular tax-free dividends, maintenance of the VCT qualifying
status and to minimise the volatility associated with early stage
investments.
In respect of Qualifying Investments, the Company will seek:
a) Investments on which robust due diligence has been undertaken;
b) Investments where there is access to regular material financial and other information;
c) Investments where it may be possible to mitigate capital
losses through careful analysis of the collateral available;
and
d) Investments where there is a strong relationship with the key decision makers.
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; and
-- A maximum of 20% in permitted Non-Qualifying Investments, cash or cash-based similar liquid
investments.
Qualifying Investments
The key ongoing objective of the Company is to generate an
attractive return for investors, through a combination of tax-free
income and capital appreciation.
The Company will pursue investments in a range of industries but
the type of business being targeted is subject to the specific
investment criteria discussed below. The objective is to build a
portfolio of unquoted companies which are cash generative and,
therefore, capable of producing income and capital repayments to
the Company prior to their disposal by the Company.
Although invested in diverse industries, it is intended that the
Company's portfolio will comprise companies with certain
characteristics, for example clear commercial and financial
objectives, strong customer relationships and, where possible,
tangible assets with value. TPIM will focus on identifying
businesses typically with contractual revenues from financially
sound counterparties or a stream of predictable transactions with
multiple clients.
Businesses with assets providing valuable security may also be
considered. The objective is to reduce the risk of losses through
reliability of cash flows or quality of asset backing and to
provide investors with tax-free income.
The criteria against which investment targets would be assessed
will include the following:
a) An attractive valuation at the time of the investment;
b) Managed risk of capital losses;
c) The quality of the company's cash flows;
d) The quality of the businesses' counterparties, suppliers and market position;
e) The sector in which the business is active;
f) The quality of the company's assets;
g) The opportunity to structure an investment that can produce distributable income;
h) The potential for growing and developing the revenues and
profitability of the company to enable it to be considered for
traditional forms of bank finance and other funding; and
i) The ability to facilitate an exit which enables the Company
to meet its key investment objective of returning funds in line
with shareholder expectations.
As the value of investments increase the Company's Investment
Manager will monitor opportunities for the Company to realise
capital gains to enable the Company 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
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), shall not
without the previous sanction of an ordinary resolution of the
Company exceed 30% of its NAV at the time of any borrowing.
During the year, the Company entered into a short-term facility
agreement with Triple Point Lease Partners ("TPLP"). TPLP is a
business that specialises in leasing, lending and infrastructure
financing with the public sector (Local Authorities and the NHS)
and corporates and is also managed by the Investment Manager.
The secured facility was for GBP2.7 million at a fixed rate of
4.5% per annum. The facility was put in place to refinance a
portfolio of the hydroelectric assets to enable the C and D Share
Classes to pay a dividend. This was in line with the original
mandate of both share classes. At the year-end there was GBP2.3
million outstanding, with a further GBP0.4m of the facility still
in place. More information on this can be found on page 95 in the
notes to the financial statements. The facility is a short-term
facility, and the Company will maintain an active dialogue with the
lender surrounding the timing of future repayment of the facility.
While the Company may not currently have sufficient resources to
repay the loan without realising investments, the Board and the
Investment Manager believe that the risk around the facility not
being extended is extremely low. As a precautionary measure, the
Company has entered into a similar facility agreement with a
different lender on the same key terms, but which includes a two
year availability period and a three year term. This agreement was
put in place to mitigate the risk of the existing loan facility not
being extended by the existing lender.
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% 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 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;
-- That this price is a proxy for fair value;
-- 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; and
-- 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.
The December 2018 update to the IPEV Guidelines discourages the
use of cost or price of a recent investment as a primary
methodology for valuation. That change has had little impact on the
portfolio's valuation as we have calibrated the valuation basis
used to the recent investment round.
We would only usually expect significant adjustments to recent
investment values where an investment is significantly under- or
over-performing compared to our expectation at the time of
investment.
Any quoted investments, if made, will be valued at prevailing
bid prices.
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
more 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 of income and/or realised gains to Shareholders. It
is envisaged that the Company will distribute most of its net
income each year by way of dividend, subject to liquidity.
The Company's ability to pay dividends is subject to the
existence of realised profits, legislative requirements, and the
available cash reserves.
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, TPIM intends to identify opportunities to
realise investments in order to exit investors in the most
efficient way possible.
Exits will typically be realised through sales to businesses,
acquisitions by private equity or other investment funds. The
proceeds of any realisation will be used to repay borrowings if
applicable and to pay dividends to Investors.
Key Performance Indicators ("KPIs")
As a VCT, the Company's objectives are to provide Shareholders
with up front tax relief, an attractive income and returns through
capital appreciation and the payment of dividends. The Company aims
to meet these criteria by investing its funds in line with the
Company's Investment Policy, more detail of which can be found on
pages 17 to 19.
The Board expects the Investment Manager to deliver a
performance which meets the objectives of providing Shareholders
with an attractive income and capital return. The Board has
identified four KPIs that it uses in its own assessment of the
Company's performance.
These are intended to provide Shareholders with sufficient
information to assess how the Company has performed against its
objectives in the year to 31 March 2020, and over the longer term,
through the application of its investment and other principal
policies:
The primary KPIs in meeting these objectives are:
-- Net Asset Value ("NAV") plus dividends paid ("Total Return");
-- Earnings per Share;
-- Compliance with VCT Legislation; and
-- Ongoing Charges Ratio.
Total Return
NAV plus dividends paid is a measure of shareholder value that
includes the current NAV plus cumulative dividends paid to
Shareholders to date. The Charts show how the Total Return of each
Share Class has developed since launch. Total Return is deemed an
alternative performance measure.
C Share Class
The Net Asset Value per C Share has decreased from 134.58 pence
per share at 31 March 2019 to 84.87 pence per share at the
reporting date. After making an adjustment for dividends paid
during the year the C Shares Total Return has increased from 149.58
pence per share at 31 March 2019 to 154.87 pence per share at the
reporting date. This represents an increase of 3.54%. Whilst Net
Asset Value has fallen, Total Shareholder Return has continued to
increase.
The increase in the Total Return for the C Shareholders is in
line with the Company's long-term objectives to achieve both
capital growth and pay dividends to Shareholders. The Board is
pleased with this performance.
TP Income C
Date NAV per share Cumulative dividends Total
31-Mar-14 97.62 - 97.62
31-Mar-15 99.76 - 99.76
31-Mar-16 105.03 - 105.03
31-Mar-17 106.49 5.00 111.49
31-Mar-18 112.84 10.00 122.84
31-Mar-19 134.58 15.00 149.58
31-Mar-20 84.87 70.00 154.87
-------------- --------------- ---------------------- --------------------
D Share Class
The Net Asset Value per D Share has decreased from 117.34 pence
per share at 31 March 2019 to 62.46 pence per share at the
reporting date. After making an adjustment for dividends paid
during the year the D Shares Total Return has increased from 127.34
pence per share at 31 March 2020 to 127.46 pence per share at the
reporting date. This represents an increase of 0.09%. Whilst Net
Asset Value has fallen, Total Shareholder Return has continued to
increase, albeit at a slightly slower rate.
The increase in the Total Return for the D Shareholders is in
line with the Company's long-term objectives to achieve both
capital growth and pay dividends to Shareholders. The Board is
pleased with this performance.
TP Income D
Date NAV per share Cumulative dividends Total
31-Mar-15 98.15 - 98.15
31-Mar-16 101.26 - 101.26
31-Mar-17 105.19 - 105.19
31-Mar-18 107.98 5.00 112.98
31-Mar-19 117.34 10.00 127.34
31-Mar-20 62.46 65.00 127.46
-------------- -------------------- ---------------------- -----------
E Share Class
The Net Asset Value per E Share has decreased from 102.56 pence
per share at 31 March 2019 to 101.69 pence per share at the
reporting date. After making an adjustment for dividends paid
during the year the E Shares Total Return has increased from 102.56
pence per share at 31 March 2020 to 106.69 pence per share at the
reporting date. This represents an increase of 3.96%.
The Net Asset Value of the E Share Class decreased due to the
payment of dividends in the sum of 5 pence per share. Whilst Net
Asset Value has fallen, Total Shareholder Return has continued to
increase. A large part of the increase can be attributed to the
valuation increase of Perfectly Fresh Cheshire Limited. This is the
first year that the company has been valued above cost.
The increase in the Total Return for the E Shareholders is in
line with the Company's long-term objectives to achieve both
capital growth and pay dividends to Shareholders. The Board is
pleased with this performance.
TP Income E
Date NAV per share Cumulative dividends Total
31-Mar-18 98.32 - 98.32
31-Mar-19 102.55 - 102.55
31-Mar-20 101.69 5.00 106.69
-------------- --------------- ---------------------- --------------------
Earnings per Share
The Charts below show the Company's earnings per share by share
class for the year ended 31 March 2020. The longer-term trend of
performance on this measure is shown in the charts below. This also
shows the distinction between earnings generated by revenue and
earnings generated by capital movements.
TP Income C
Date Revenue Capital Total
31-Mar-14 (1.70p) (0.46p) (2.16p)
31-Mar-15 1.22p (0.44p) 0.78p
31-Mar-16 3.31p 1.96p 5.27p
31-Mar-17 3.06p 3.40p 6.46p
31-Mar-18 5.02p 6.32p 11.34p
31-Mar-19 5.53p 21.21p 26.74p
31-Mar-20 4.18p 1.11p 5.29p
-------------- --------- --------- ---------
TP Income D
Date Revenue Capital Total
31-Mar-15 (0.28p) (0.44p) (0.72p)
31-Mar-16 2.82p (0.63p) 2.19p
31-Mar-17 4.01p (0.08p) 3.93p
31-Mar-18 3.85p 3.94p 7.79p
31-Mar-19 3.93p 10.43p 14.36p
31-Mar-20 2.61p (2.49p) 0.12p
-------------- --------- --------- ---------
TP Income E
Date Revenue Capital Total
31-Mar-18 (0.92p) (0.78p) (1.70p)
31-Mar-19 0.86p 3.38p 4.24p
31-Mar-20 1.21p 2.92p 4.13p
-------------- --------- --------- ---------
Compliance with VCT legislation
By making an investment in a VCT, Shareholders become eligible
for several tax benefits under VCT tax legislation. This is,
however, contingent on the Company complying with VCT tax
legislation.
The Board is of the opinion that the main business risk facing
the Company at present is the retention of VCT qualifying status.
In order to mitigate this risk, the Board receives regular updates
and reports on compliance with the VCT legislative tests from the
Investment Manager. In addition, the Board receives formal reports
from its VCT Tax Compliance Adviser, Philip Hare & Associates
LLP, once a year.
When making new investments, the Company seeks advice from our
Tax Compliance Adviser and other Legal Advisers to ensure all new
investments made are in compliance with the VCT legislative
tests.
The Board can confirm that throughout the year ended 31 March
2020, the Company continued to meet these tests.
To achieve compliance, the Company must meet a number of tests
set by HMRC. A summary of these steps is set out on page 73 under
"VCT Regulation".
Ongoing Charges Ratio
The Ongoing Charges Ratio is a ratio of annualised ongoing
charges expressed as a percentage of the average Net Asset Value
throughout the period. The annual running costs of the Company are
capped at 3.5% of the Company's NAV, above which, the Investment
Manager will bear any excess costs.
The ongoing charges of the Company for the financial year under
review represented 2.70% (2019: 2.15%) of the average net assets.
The increase during the year is due to an increase in general
administration costs of the Company.
This ratio is calculated using the AIC's "Ongoing Charges"
methodology which can be found on their website. The Ongoing
Charges Ratio is deemed an alternative performance measure.
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 VCTs.
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 over the
following pages:
Investment classification for the C Share Class by asset value
and sector value are shown below:
Investment Portfolio - C Share Class
C Share class
Qualifying Investments 96%
Non-Qualifying Holdings 2%
Cash 2%
Investments by Sector - C Share Class
Hydroelectric
Power 100%
Investment classification for the D Share Class by asset value
and sector value are shown below:
Investment Portfolio - D Share Class
Qualifying Investments 97%
Non-Qualifying Holdings 1%
Cash 2%
Investments by Sector - D Share Class
Hydroelectric
Power 100%
Investment classification for the E Share Class by asset value
and sector value are shown below:
Investment Portfolio - E Share Class
Qualifying Investments 67%
Non-Qualifying Holdings 32%
Cash 1%
** Please note that the percentage of qualifying investments in
the above graph is not representative of the Company as a whole,
whose qualifying investments exceed the requisite 80%
threshold.
Investments by Sector - E Share Class
Crematorium Management 0%
Vertical Growing 22%
Quoted Investments 10%
Hydroelectric Power 22%
SME Funding - Hydroelectric
Power 11%
SME Funding - Other 8%
Electricity Generation
- Other 27%
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
GBP200,000 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 9 to 15,
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 80% (from 1 March 2020, the percentage of
the Company's investments held in "qualifying holdings" increased
to 80% from 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.
FCA Regulation
On 1 April 2014 the Company registered with the Financial
Conduct Authority as a small Alternative Investment Fund Manager
("AIFM") under the AIFM Directive.
Exit Programme
During the year the Company successfully secured a partial
realisation for both the C and D Share Classes.
The Company benefitted from economies of scale in refinancing
the hydro investments for both share classes at the same time, both
share classes intend to retain their investment in the Hydro
companies until 2030.
The declaration of the latest dividend for the D Share Class
holders takes total distributions to Shareholders to 70 pence per
share in each of the share classes. These distributions, along with
initial tax relief, equates to a return to both sets of
Shareholders of 100 pence per share.
In relation to the E Share Class the Company is intending to
return funds to the E Shareholders as soon as practicable after
their ten to twelve year holding period.
The valuation of, and potential exit routes for, the Company's
portfolio of investments are reviewed and discussed at each Board
meeting. The Investment Manager has successfully implemented exit
plans for other VCTs under its management.
Principal Risks and Uncertainties
The Directors seek to mitigate the Company's principal risks by
regularly reviewing performance and monitoring progress and
compliance. In the mitigation and management of these risks, the
Directors carry out a robust assessment of the Company's emerging
and principal risks, 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 on pages 26.
Details of the Company's internal controls are contained in the
Corporate Governance Report on pages 56 and 60 and further
information on exposure to risks including those associated with
financial instruments is given in note 19 of the financial
statements.
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.
Mitigation: 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.
Mitigation: 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.
Mitigation: The key elements of financial risk are discussed in
more detail in note 19.
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.
Mitigation: The Board maintains a risk register which sets out
the risks affecting both the Company and the investee companies in
which the Company is invested. This risk register is reviewed and
updated at least annually to ensure that procedures are in place to
identify the principal risks which may affect the Company and its
portfolio companies, mitigate and minimise the impact of those
risks should they crystallise and to identify emerging risks and to
determine whether any actions are required. This enables the Board
to carry out a robust assessment of the risks facing the Group,
including those risks that would threaten its business model,
future performance, solvency or liquidity.
Liquidity Risk: In line with t he Company's initial mandate for
the C and D Share Classes the Company has entered into a short-term
loan facility of GBP2.3 million which has repayment terms of 364
days. The Company currently has GBP700k of cash. This therefore
poses a slight risk to the Company's liquidity and cash flow
prospects.
Mitigation: The Company and the lender have reviewed longer-term
cash flow forecasts and the Company is comfortable that it will
generate sufficient cash flow from its current investments to
service and repay the borrowing. The Company keeps an open dialogue
with the lender and will continue to update the lender on the
outlook for its loan and on the performance of the Company's
investment portfolio. The lender has indicated its willingness to
extend the facility if required. T he company has entered into a
similar facility agreement with a different lender which includes
the same key terms, but also has a two year availability period.
This agreement was put in place to mitigate the risk of the
existing loan facility not being extended by the existing
lender.
Emerging Risks
Investee companies
The risks of Brexit and COVID-19 are relevant to not just the
Company, but also the companies in which we invest.
The risks to the portfolio companies are discussed in more
detail in the Investment Manager's Review on pages 32 to 44
COVID-19
The impact of COVID-19 is discussed at length in both the
Chairman's Statement on pages 9 to 10 and the Investment Manager's
Review on pages 32 to 33.
Brexit
Following the United Kingdom's withdrawal from the European
Union ("EU") on 31 January 2020, the Investment Manager and the
Board continue to keep the impact of Brexit on the Company under
review. Despite the UK having now left the EU the current economic
outlook and potential impact from Brexit is relatively unknown as
the terms of the UK's exit has not been finalised with the EU. Any
potential impact of the UK's withdrawal is difficult to
quantify.
The Company's strategy of investing in small UK-based
businesses, however, means that it is unlikely to be directly
exposed to the terms of any future deals negotiated with the EU. We
are, however, going through a period of some political and 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.
Going Concern
The Company's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Investment Manager's Report. The Company faces a
number of risks and uncertainties, as set out above.
The nancial risk management objectives and policies of the
Company, including exposure to price risk, interest rate risk,
credit risk and liquidity risk are discussed in note 19 to the
nancial statements.
Liquidity risk in relation to the loan facility is also
discussed further in the principal risks and uncertainties section
above.
The Company entered into a loan facility during the period. More
detail on this can be found in the Strategic Report on page 18. The
borrowing was in line with the original mandate for the C and D
Shareholders. The Company continues to meet day-to-day liquidity
needs through its cash resources and income from its investment
portfolio, although, at present it does not have sufficient cash to
repay the facility other than through a realisation of investments
in the hydro portfolio.
More information surrounding this is included in the principal
risks section on page 27.
As highlighted in the Chairman's Statement, the Company's
revenue comes from predominantly secure and reliable counterparties
across all three of its share classes. The Hydro portfolio is
contractual, with inflation linked FiT income and export income
from a recently signed 12-month power purchase agreement. The
rooftop solar business also benefits from contractual and inflation
linked income through the government FiT and ROC scheme. We expect
minimal disruption to these revenue streams as a result of
COVID-19.
As highlighted in the Chairman's Statement we expect the
pandemic to highlight the need for greater food security here in
the UK. PFC continues to refine its operation and increase its
output. We expect the heightened scrutiny of the food and farming
sector following the crisis to lead to potentially improved
valuations in the vertical growing sector.
The Company had net current liabilities of GBP1.35 million
(2019: net current assets of GBP1.25 million) and had cash balances
of GBP700k (2019: GBP6.18m) (this does not include cash balances
held within investee companies), which the Board believes are suf
cient to meet current obligations as they fall due. Further detail
on liquidity risk can be found in the principal risks and
uncertainties section.
The major cash out ows of the Company are the payment of
dividends and costs relating to the acquisition of new assets, both
of which are discretionary and can be scaled back if required. The
interest on the loan facility amount is payable quarterly and has
been factored into cash flow projections produced by the
Company.
The Directors have reviewed cash flow projections which cover a
period of at least 12 months from the date of approval of this
report, which show that the Company has suf cient nancial resources
to continue to meet its day to day commitments for at least the
next 12 months. Further information on this can be found in the
notes to the financial statements on page 95. The Company has an
existing 364 day loan facility in place. Due to the short term
nature of the loan agreement, the Company has entered into a
similar facility agreement with a different lender which includes a
2 year availability period. This agreement was put in place to
mitigate the risk of the existing loan facility not being extended.
The Directors therefore continue to adopt the going concern basis
in preparing these nancial statements.
Viability Statement
The Association of Investment Companies Code of Corporate
Governance 2019 requires the Board to assess the Company's
viability over an appropriate period, 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 31 March 2025 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 its viability. During
the next five years both the C and D Share Class will reach their
income generation phase and look to pay investors c3.5 pence per
annum. The E Share Class will also reach its five year holding
period. Based on this the Directors believe it is reasonable to
make their assessment over five 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 26 and above.
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 other than the loan
facility which is in place and is described in detail in the going
concern section above;
-- 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;
-- 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; and
-- The Directors have considered the ongoing and future effects
of the COVID-19 pandemic on the Company and its longer-term
viability. More detail on this is included in the Principal Risks
and Uncertainties section on page 25.
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. This is discussed further
in note 2 on page 95 to 97.
Section 172(1) Statement
The following disclosure describes how the Directors have had
regard to the matters set out in section 172(1)(a) to (f) when
performing their duty under section 172 and forms the directors'
statement required under section 414CZA of the Act.
This section describes how the Board engages with its key
stakeholders, and how it considers their interests when making its
decisions. Further, it demonstrates how the Board takes into
consideration the long-term impact of its decisions, and its desire
to maintain a reputation for high standards of business
conduct.
The Company's objective is to provide the potential for a
strong, positive, risk-adjusted return to investors by making
investments with the intention of growing and developing the
revenues and profitability of the target businesses and adhering to
HMRC's VCT qualification rules. By making an investment in a VCT,
Shareholders are eligible for several tax benefits under VCT tax
legislation and therefore encourage investment indirectly in a
range of unquoted smaller, higher risk trading companies.
All Share Classes are fully invested in companies spanning
hydroelectric power, gas power, rooftop solar and vertical growing.
Such investment increases the resources and capital dedicated to
the development of renewable energy and contributes to the
reduction of greenhouse gas emissions or in the case of gas power,
bridges the gap between environmentally unfriendly fossil fuels and
more irregular solar and wind power helping to solve these
short-term peaks in the electricity demand profile. Vertical
growing aims to reduce the risk to food security in the UK along
with reducing emissions from the distribution process as vertical
farms can be based in and around our cities.
Section 172(1) Principal Decisions
Below are the principal decisions made or approved by the
Directors during the year. In taking these decisions, the Directors
considered their duties under section 172 of the Act. Principal
decisions have been defined as those that have a material impact to
the Company and its key stakeholders, as defined on pages 59 to
60
Dividends
The Company declared dividends during the year to all of its
Shareholders, 55 pence per C share, 55 pence per D share and 5
pence per E share. This decision represented a significant return
of capital for C and D Share Class holders and the first payment of
an annual dividend for E Share Class holders.
Sale of Green Highland allt Garbh Limited
The Company completed the sale of its holding in Green Highland
allt Garbh Limited. Following recommendation from the Investment
Manager, the Directors considered the sale in the context of the
Company's Investment Policy, availability of financing and the
potential returns to investors.
The D Share Class received net proceeds in excess of GBP2.71
million from the sale and it contributed significantly to the
dividend and partial realisation target which were paid out to
Shareholders within six months of the disposal. In considering the
need to treat all members fairly, the Directors also considered the
qualifying investment requirement of the Company following the
disposal and the likely consequence of any decision in the long
term.
Facility Agreement
During the year, the Company entered into a facility agreement
with TPLP. The secured facility was for GBP2.7 million at a fixed
rate of 4.5% per annum. The Board believed that the facility was in
the best interest of those Shareholders and followed the initial
mandate of the C and D Share Classes to refinance the hydro
portfolio.
The Company utilised GBP2.3 million of this facility in March
2020 which enabled the Company to return in excess of GBP12.2
million to Shareholders and meet the initial target set by the
Company for all share classes. The Company maintained an active
dialogue for the lender to appraise the Company's business model
and its portfolio.
Alongside this existing facility, t he company has entered into
a similar facility agreement with a different lender which includes
the same key terms, but also has a two year availability period.
This agreement was put in place to mitigate the risk of the
existing 364 day loan facility not being extended by the existing
lender.
Strategic Report - Investment Manager's Review
Sector Analysis
Electricity
Generation SME Funding
Other
Industry Crematorium Vertical Hydroelectric Electric Hydroelectric Quoted Total
Sector Management Growing Power Power Power Other** Investments Investments
--------------- ---------- --------------- ----------- --------------- --------- ------------- -------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- --------------- --------- ------------- -------------
Investments
at
31 March 2019
--------------- ------------- ---------- --------------- ----------- --------------- --------- ------------- -------------
C Shares - - 14,527 - 2,888 - - 17,415
D Shares - - 13,529 - 1,206 - - 14,735
E Shares 103 5,000 2,512 7,820 796 2,717 5,901 24,788
Total 103 5,000 30,568 7,820 4,890 2,717 5,901 56,938
----------
Investments
made
during the
period
--------------- ------------- ---------- --------------- ----------- --------------- --------- ------------- -------------
C Shares - - (3,013) - (2,888) - - (5,901)
D Shares - - (325) - (1,206) - - (1,531)
E Shares - - 3,338 - 4,094 - - 7,432
Total
additions - - - - - - - -
----------
Investments
realised
during the
period
--------------- ------------- ---------- --------------- ----------- --------------- --------- ------------- -------------
C Shares - - (230) - - - - (230)
D Shares - - (2,781) - - - - (2,781)
E Shares (10) - (51) - (1,559) - (2,681) (4,301)
-------------
Total
disposals (10) - (3,062) - (1,559) - (2,681) (7,312)
----------
Investments
revalued
during the
period
--------------- ------------- ---------- --------------- ----------- --------------- --------- ------------- -------------
C Shares - - 218 - - - - 218
D Shares - - (277) - - - - (277)
E Shares 4 1,282 73 52 17 - (293) 1,135
-------------
Total
revaluations 4 1,282 14 52 17 - (293) 1,076
----------
Investments
at
31 March 2020
--------------- ------------- ---------- --------------- ----------- --------------- --------- ------------- -------------
C Shares - - 11,502 - - - - 11,502
D Shares - - 10,146 - - - - 10,146
E Shares 97 6,282 5,872 7,872 3,348 2,717 2,927 29,115
Total 97 6,282 27,520 7,872 3,348 2,717 2,927 50,763
Total
investments
% 0.19% 12.38% 54.21% 15.51% 6.60% 5.34% 5.77% 100.00%
------------- ---------- --------------- ----------- --------------- --------- -------------
We have pleasure in presenting our annual review for the year
ended 31 March 2020.
As the Chairman highlighted in his statement to Shareholders on
pages 9 to 15 we are all currently facing unprecedented, uncertain
and challenging times as a result of the ongoing COVID-19
pandemic.
At Triple Point Investment Management, we believe we are well
equipped to deal with this challenging situation. The majority of
our revenues are recurring, giving us a high level of
predictability in our income streams. TPIM can operate effectively
with remote, or home working, and as such we do not depend heavily
on the regular physical presence of staff in one specific location
though, of course, the sales process is often impacted by the lack
of face-to-face meetings.
We are well positioned to continue managing the Company
efficiently and effectively.
Like many businesses we are facing unprecedented circumstances.
Many of our ongoing projects and work streams will no doubt face
delays, and whilst this may be challenging, we believe,
fundamentally that the types of assets and businesses we fund, the
predictable returns we generate, and the impact we have, will never
be more attractive to investors.
We are confident that the investee companies invested in by the
Company will be resilient and be minimally affected by the COVID-19
pandemic. All Share Classes remain fully invested in companies
providing electricity generation in the hydroelectric power, gas
power, rooftop solar and vertical growing sectors. Despite the
ongoing COVID-19 crisis, investments across all share classes
continue to generate electricity and produce output.
As many of the working population are now getting used to
working from home, the electricity demand pattern is expected to
take a new shape. It is widely anticipated that the electricity
demand in the coming weeks and months will largely resemble the
consumption pattern on the weekends as more adjust to life working
at home.
While we expect the electricity generating companies to be
minimally affected by the COVID-19 pandemic, it is inevitable that
they may suffer some minor operational delays, as a result of the
crisis. Global supply chain disruptions could potentially lead to
delays in the sourcing of key components for both the hydroelectric
and gas power projects. Key manufacturing hubs are in China, where
previous quarantines slowed production to a halt, though some are
beginning to reopen, with lower production rates. We continue to
liaise with our Operation and Maintenance contractors across all
companies to try and avert any potential future delays in the
procurement process.
The E Share Class is also invested in a vertical growing
business PFC, which we believe is well-placed to contribute in a
revised future. The COVID-19 crisis is not only a health crisis but
also an economic crisis and a food crisis. Major governance gaps
have emerged, first and foremost in regard to insufficient
investment in public health, but also in food security.
While extraordinary steps have been taken by some public
authorities to secure food provisioning, the crisis has also seen
many people left wholly reliant on the charity and solidarity of
their neighbours.
What started as a crisis response must be transposed into the
new foundations of public governance. Billions of pounds are now
being injected into the economy through bailouts, stimulus
packages, and quantitative easing. The opportunity cannot be missed
to use this money to transform the economy, not simply bail it out.
Already, ambitious policy reforms are being devised in the EU and
the US to spark the shift towards sustainable food and agricultural
systems. These reform packages are now more relevant than ever and
should be the vehicle for delivering resilience.
Given supply chain uncertainties and an unpredictable future,
many smaller and middle-sized agri-food companies may be on the
edge of bankruptcy or under considerable shareholder pressure to
act. PFC is able to capitalise on this with its existing strong
customer relationships and short growing cycle, enabling it to
reliably produce crops for its customers with little disruption and
year-round crop production.
When it comes to food production, the last-mile delivery is
usually the most expensive part of the supply chain. And it's not
uncommon for crops to be shipped across continents and oceans.
Growing food closer to where the consumer lives is a substantial
vertical growing benefit as it can significantly reduce
transportation costs, CO2 emissions and reduce the need for
refrigerated storage - making produce fresher and more
profitable.
Looking back over the year the net cash outflows to Shareholders
for the year were GBP16.4 million. This represents a significant
return of funds to investors. We are proud of this achievement.
Review and Future Developments
Crematorium Management
The Company has an investment in a business called Furnace
Managed Services Limited ("FMS") that provides crematory and
mercury abatement services for the crematoria of a London Borough.
This investment receives revenues from local authorities and has
consistently generated a steady return over the years it has been
held. Looking ahead, the Company is expected to receive dividends
from FMS.
Solar
The Company holds an investment in four portfolios of rooftop
solar PV systems through the following investee companies:
-- Green Energy for Education Limited ("GEFE"), which owns a
portfolio of 103 systems on residential rooftops in East
Anglia;
-- Campus Link Limited ("CMP"), which owns a portfolio of 36
systems on residential rooftops in South West England;
-- Digima Limited ("DIG"), which owns a portfolio of 105 systems
on residential rooftops in East Anglia; and
-- Digital Screen Solutions Limited ("DSS"), which owns a
portfolio of 323 systems on residential rooftops in Northern
Ireland.
The GEFE, CMP and DSS portfolios are currently performing in
line with, or slightly above, expectations. The DIG portfolio is
performing slightly below expectations, and DIG is working closely
with its Operations & Maintenance provider in an effort to
improve this performance going forward.
Hydroelectric Power
The eleven hydroelectric 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.
Run of River systems have the advantage of a long operational
lifetime, with minimal maintenance. Also, these systems tend to
generate the most electricity in the colder months when the demand
is greater for electrical heating and extra lighting.
During the period to 31 March 2020, the hydroelectric companies
generated 23,038 MWh of electricity. Based on an average of 3.8 MWh
annual use per household, the companies generated enough
electricity for 6,062 homes during the period.
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 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 hydroelectric
companies remain highly focused on improving efficiencies and
maximising output and continue working alongside hydro experts to
further enhance performance where possible.
Industry Update
As we highlighted in our Interim Report the hydroelectric
companies, together with other industry members and the British
Hydropower Association, had been lobbying the Scottish Government
to recognise the concern on business rates in the hydro sector. As
a result of this, the Tretton Review report was published in
January 2020, which unfortunately found that no changes to business
rates would be applied.
This was very disappointing news for us and the Hydro
Companies.
The report suggests temporary government reliefs, which don't
apply equally across the sector and are not guaranteed, should
continue, rather than recommending an industry-preferred permanent
solution to the unfair rateable value increase in 2017 which far
outstripped that faced by other businesses.
The British Hydropower Association along with other industry
members continues to pursue this matter and is putting forward
different ideas to the Scottish Government.
Solutions put forward by the sector, but which were not
mentioned by the Tretton Review include rateable values of 8-10%
being prescribed for the small hydro sector, or the wording in
current legislation being changed to ensure key components of plant
and machinery in hydro construction - the turbine, generator and
penstock - are not rateable.
Whilst this is obviously not the outcome that we hoped for, for
the financial year 2019/20, the hydroelectric companies received a
60% relief and it is expected that this relief will continue to be
applied for the financial year 2020/21.
Gas Power
The Company has an investment which has constructed a gas fired
energy centre which will provide a reliable and secure energy
supply. The energy centre was commissioned during May 2018 and it
consists of containerised gas combustion engines that generate
electricity for onward sale, especially at times when there is high
demand for power.
In June 2019 the UK Government became the first major economy in
the world to pass laws to end its contribution to global warming by
2050. The target will require the UK to bring all greenhouse gas
emissions to net zero by 2050, compared with the previous target of
at least 80% reduction from 1990 levels.
As a result of this, the UK is aiming to close its coal-fired
power plants by 2025, and it is therefore expected that there will
be increased pressure on the supply of energy in the UK during
periods of peak demand. Although renewable energy makes an
increasing contribution, the irregular nature of its production
means that other baseload sources will also be required to help
make up the deficit.
The UK still experiences significant peaks and troughs in energy
consumption. From unexpected cold snaps that prompt consumers to
turn up their heating, to the mass switching on of televisions
between 4-7pm when people return home from work.
Gas fired energy centres help to solve these short-term peaks in
the electricity demand profile. These are small power plants
fuelled by gas, and generally run only when there is a high demand
for electricity. They bypass the nationwide transmission system to
deliver power direct to local distribution networks. Natural gas
neatly bridges the gap between environmentally unfriendly fossil
fuels and more irregular solar and wind power.
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
established technology, provided by Rolls Royce, to deliver a
reliable and secure energy supply.
Gas fired energy centres play an important role in balancing the
UK electricity network, which is growing ever more reliant on
renewable energy sources, as the nation shifts towards a low-carbon
economy. The National Grid is keen to develop a smart, easily
accessible flexible system of supplementary services, which make
optimum use of the peaks and troughs of energy demand. With gas
fired energy centres fitting the bill for reliable and
environmentally friendly energy solutions, the popularity and usage
of these plants is significantly increasing around the UK.
This enables greater solar, hydro and wind power generation
overall, as the gas fired energy centres are an important
facilitator of green energy base load.
How does it work?
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.
Highlights
During the period to 31 March 2020, Green Peak Generation
Limited generated 15,150 MWh of electricity. Based on an average of
3.8 MWh annual use per household, the energy centre generated
enough electricity for 3,986 homes during the period.
During the period, the company contracted with a market leading
Operation & Maintenance ("O&M") provider. The new service
provider currently manages a large fleet of the same engines.
Following their appointment, both the operational performance and
quality of maintenance have significantly improved. We are hopeful
that this improved service quality will result in a longer useful
life of the equipment.
Historical performance of the asset versus the technical
expectations has been modest. Since moving to the new O&M
provider there has been an uptick in availability and therefore
generation. This is through faster response and repair times with
the O&M provider having a greater depth of experience. There
has been a reduction in number of faults through better
preventative maintenance procedures. Looking forward, we hope to
continue working closely with the new provider to continue to
improve operational efficiencies and performance across both
companies.
Industry Update
In our interim update, we reported on the current status of the
Capacity Market. The Capacity Market was originally introduced to
provide an insurance policy against the possibility of future
blackouts - for example, during periods of low wind and high demand
this was to ensure that consumers continued to benefit from
reliable electricity supplies at an affordable price.
The Capacity Market is designed to ensure sufficient reliable
capacity is available by providing payments to encourage investment
in new capacity or for existing capacity to remain open.
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. This led to a halt of all payments under
the scheme.
On 24 October 2019, the UK reinstated the capacity market scheme
following approval by the EC under state aid rules. Following a
lengthy and in-depth investigation, the EC found that the scheme is
necessary to guarantee security of electricity supply in the UK and
is in line with EU energy policy objectives.
We are pleased to announce that Green Peak Generation Limited
won a one-year agreement in the recent auctions for the 2022/23 and
2023/24 delivery years.
Vertical Growing
Vertical Growing is the practice of producing food in an indoor
growing facility where all inputs (water, light, and nutrients)
meet the optimum needs of the crop. Farming indoors is not a new
concept, as greenhouse-based agriculture has been in existence for
some time.
What PFC is aiming to achieve here that differs radically from
what now exists is to scale up the concept of indoor farming, in
which a wide variety of produce is harvested in quantity enough to
sustain even the largest of cities without significantly relying on
resources beyond the city limits. Currently, in traditional
farming, maximising crop production takes place over an annual
growth cycle that is wholly dependent upon what happens outside -
climate and local weather conditions.
Vertical Growing promises to eliminate external natural
processes as confounding elements in the production of food, since
crops will be grown indoors under carefully selected and
well-monitored conditions, ensuring an optimal growth rate for each
type of crop year-round. It is estimated that one acre of vertical
farm could be equivalent to as many as ten to twenty traditional
soil-based acres, depending upon which crop species is considered.
Growing food close to home will lower significantly the amount of
fossil fuels needed to deliver them to the consumer, and will
eliminate forever the need for fossil fuels during the act of
farming (i.e., ploughing, applying fertilizer, seeding, weeding,
harvesting).
Our Vertical Growing facility is designed to have a sealed
environment, meaning that the product is grown under controlled
conditions, with positive air pressure to prevent any pests
entering the facility. This ensures that insects and other pests
cannot attack the crop, removing both the need to use pesticides
and to wash the crop before distribution therefore increasing its
shelf life. A large variety of produce can be grown using this
method including herbs, salad leaves, and beyond. By combining
flexible designs and short growing cycles, vertical growing
facilities enable the grower to quickly respond to the demands of
customers, switching between different products with minimal
notice.
As highlighted above, following the COVID-19 pandemic, it is
expected that food security will be an item high on the government
agenda. This is backed up by the fact that the government is
planning to introduce a legal requirement to measure and report on
"food security", meaning how much food is available in the UK. The
landmark Agriculture Bill currently going through Parliament is the
first new legislation on British food and farming post-Brexit. One
of the provisions of the Agriculture Bill puts a legal requirement
on the government to measure and report on "food security". We
believe that PFC is poised to capitalise on this changing landscape
while it could see an active increase in valuations across the
sector.
We believe PFC is one of the front-runners in the industry and
boasts significant technology and know-how developed within its
first facility. The construction of the first facility presented
many challenges, which was to be expected when considering the
innovative and high-tech nature of the build. The initial
construction challenges have now been rectified and the facility is
up and running and regularly distributing crops to its main
customer. The PFC team are now looking towards operational
improvements and increasing yield.
"Our mission is to grow the best quality, highly nutritious
produce, whilst improving food security in times of economic and
political uncertainty. Everything we grow is produced in optimum
conditions for that specific crop, without compromise. We strive
for zero carbon, producing close to the point of supply, harvesting
more, wasting less, with sustainable resource efficient year-round
production. Ultimately, we are producing food that tastes great,
that you can feel good about eating."
Phill Davies, Chief Agronomist, Perfectly Fresh Cheshire
Challenges faced Solution
Land use A remarkable opportunity from, or advantage
of Vertical Growing over, traditional field
agriculture is that it can help increase
agricultural outputs by maximising the use
of lands.
------------------------------------------------------
Climate change & resources Vertical Growing also aims to address environmental
issues associated with the use of limited
natural resources and land areas. Because
this practice involves maximising the use
of a limited land area, it can eliminate
deforestation and desertification due to
agricultural encroachment. It also eliminates
farming practices that lead to soil erosion
and nutrient runoff.
------------------------------------------------------
Around 50% of food in the Vertical Growing tackles the issues mentioned
UK is imported above. This benefit translates further to
more specific opportunities and benefits
such as the promotion of sustainable or
self-sufficient cities, encouragement of
urban growth, and the delivery of fresh
and inexpensive food products.
------------------------------------------------------
Agriculture irrigation accounts Vertical Growing depends on the effective
for 70% of water use worldwide and efficient use of different technologies
and practices such as hydroponic systems,
aeroponics, aquaponics, greenhouse design,
environmental control, and energy sustainability
to collectively implement a controlled-environment
agriculture or CEA technology.
------------------------------------------------------
Unemployment There is also an opportunity or benefit
centred on the creation of different types
of jobs from different fields or disciplines.
Promoting Vertical Growing means promoting
high-tech green industry. It would lead
to the generation of new careers for professionals
in the fields of civil engineering and agriculture,
information technology, project management,
business and management, and marketing and
retail, among others.
------------------------------------------------------
The investment in PFC has been valued this year at GBP6.28
million, a GBP1.28 million increase on the initial GBP5 million
cost of this investment. This represents an equivalent compounded
annual return of 10%.
C Share Class
The Company and the Investment Manager will monitor the ongoing
operation and efficiency of the C Share Class investments. The C
Share Class has investments in three companies which between them
own six hydroelectric schemes in the Scottish Highlands.
Further updates on this sector are detailed in the Hydroelectric
Power section on pages 36 to 37.
D Share Class
The Company and the Investment Manager will monitor the ongoing
operation and efficiency of the D Share Class investments. The D
Share Class has investments in three companies which between them
own five hydroelectric schemes in the Scottish Highlands.
Further updates on this sector are detailed in the Hydroelectric
Power section on pages 36 to 37.
E Share Class
The E Share Class has a diverse portfolio consisting of
hydroelectric power, rooftop solar, crematoria, vertical growing
and social housing through its investment in a REIT.
TPIM is paid an annual management fee as Investment Manager to
the REIT and consequently has agreed to rebate a corresponding part
of its management fee relating to this investment, to ensure VCT
Investors are not bearing additional fees.
Brexit
While it may seem that Brexit has taken a back seat due to
recent circumstances, 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. This has now been
exacerbated by the ongoing COVID-19 pandemic.
If you have any questions, please do not hesitate to call us on
020 7201 8990.
Ben Beaton
Managing Partner
Triple Point Investment Management LLP
15 June 2020
Responsible Investing
UN Sustainable Development Goals
Never before have environmental and social considerations played
such a prominent role in the world of finance and investing. This
mirrors the shift we are observing in the investment community
towards applying an ESG lens to capital allocation.
Triple Point's investment ethos is based on the 17 UN
Sustainable Development Goals ("SDGs") and focuses on the four
themes of health, environment, children & young people and
inequality. We invest in companies that meet our impact threshold
and measure their impact on an ongoing basis. Our aim is to provide
an estimate of a company's impact that is measurable, comparable
and is delivered at an appropriate level of resource.
What are the SDGs?
The 17 UN SDGs sit at the heart of the 2030 Agenda for
Sustainable Development. Adopted by all United Nations Member
States in 2015, the SDGs provide the blueprint for a more
sustainable future by tackling some of the biggest and most urgent
global challenges we face, such as poverty, inequality, climate
change and environmental degradation.
Climate change will influence the achievement of most, if not
all, of the SDGs.
The SDGs were agreed by all UN Member States as the blueprint to
achieve a better and more sustainable future for all.
The SDGs can be broadly grouped into five overarching elements:
people, planet, prosperity, peace and partnership and are made up
of 17 inter-related and mutually supporting goals.
The SDGs are emerging as a global framework for investors and
corporations to prioritise agendas, and report on their impact. 72%
of respondents to the Global Impact Investing Network ("GIIN")
investor survey use the SDGs to measure and report on their
impact.
The UN Sustainable Development Goals lists the need for
achieving food security, improved nutrition and promoting
sustainable agriculture globally. The organisation aims to seek
sustainable solutions to end hunger by 2030. With declining arable
land, retreating quality of existing farmland, soil erosion,
erratic climate and rainfall, vertical growing techniques with low
dependence on climate are being looked at as solutions to improve
quality of life. With progressive solutions and implementation, the
European vertical growing market holds the largest demand, with
over one-third of the entire global share. This is due to the
presence of extensive R&D centres and availability of
funding.
Strategic Report - Investment Portfolio Summary
31 March 2020 31 March 2019
---------------------------------------- ----------------------------------------
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted qualifying holdings 30,980 73.62 41,144 79.95 33,704 61.90 42,523 67.37
Quoted non-qualifying holdings 3,319 7.89 2,927 5.69 6,001 11.02 5,901 9.35
Unquoted non-qualifying
holdings 7,082 16.83 6,692 13.00 8,563 15.72 8,513 13.48
Financial assets at fair
value through profit or
loss 41,381 98.34 50,763 98.64 48,268 88.64 56,937 90.20
Cash and cash equivalents 701 1.66 701 1.36 6,188 11.36 6,188 9.80
42,082 100.00 51,464 100.00 54,456 100.00 63,125 100.00
========= ======== ========= ======== ========= ======== ========= ========
Qualifying Holdings
Unquoted
Solar
Digima Limited 1,262 3.00 1,661 3.23 1,262 2.32 1,612 2.55
Digital Screen Solutions
Limited 2,020 4.80 2,586 5.02 2,020 3.71 2,658 4.21
Green Energy for Education
Limited 475 1.13 1,260 2.45 475 0.87 1,127 1.79
Hydroelectric Power
Elementary Energy Limited 2,060 4.90 2,461 4.78 2,060 3.78 2,409 3.82
Green Highland Allt Choire
A Bhalachain (255) Limited 3,130 7.44 3,763 7.31 3,130 5.75 3,642 5.77
Green Highland Allt Garbh
Limited - - - - 2,710 4.98 2,710 4.29
Green Highland Allt Ladaidh
(1148) Limited 3,500 8.32 4,771 9.27 3,500 6.43 5,010 7.94
Green Highland Allt Luaidhe
(228) Limited 1,995 4.74 2,425 4.71 1,995 3.66 2,407 3.81
Green Highland Allt Phocachain
(1015) Limited 3,932 9.34 4,989 9.69 3,932 7.22 4,871 7.72
Green Highland Shenval Limited 1,120 2.66 739 1.44 1,120 2.06 797 1.26
Achnacarry Hydro Ltd 4,286 10.18 7,841 15.24 4,300 7.90 7,857 12.45
Gas Power
Green Peak Generation Limited 2,200 5.23 2,366 4.60 2,200 4.04 2,423 3.84
Vertical Growing
Perfectly Fresh Cheshire
Limited 5,000 11.88 6,282 12.21 5,000 9.18 5,000 7.92
30,980 73.62 41,144 79.95 33,704 61.90 42,523 67.37
========= ======== ========= ======== ========= ======== ========= ========
Strategic Report - Investment Portfolio Summary
31 March 2020 31 March 2019
-------------------------------------- --------------------------------------
Cost Valuation Cost Valuation
Non-Qualifying Holdings GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Quoted
Investment property
Triple Point Social Housing
REIT plc Equity 3,319 7.89 2,927 5.69 6,001 11.02 5,901 9.35
3,319 7.89 2,927 5.69 6,001 11.02 5,901 9.35
========= ======= ========= ======= ========= ======= ========= =======
Unquoted
Crematorium Management
Furnace Managed Services Limited 486 1.15 97 0.19 496 0.91 103 0.16
Hydroelectric Power
Elementary Energy Limited 200 0.48 199 0.39 248 0.46 248 0.39
Green Highland Allt Choire A
Bhalachain (255) Limited 223 0.53 223 0.43 289 0.53 289 0.46
Green Highland Allt Luaidhe
(228) Limited 109 0.26 110 0.21 180 0.33 180 0.29
Green Highland Allt Phocachain
(1015) Limited - - - - 122 0.22 122 0.19
Achnacarry Hydro Ltd - - - - 26 0.05 27 0.04
SME Funding
Broadpoint 2 Limited 1,335 3.17 1,334 2.59 2,834 5.20 2,834 4.49
Broadpoint 3 Limited 2,010 4.78 2,010 3.91 2,010 3.69 2,010 3.18
Aeris Power Limited 519 1.23 519 1.01 158 0.29 500 0.79
Funding Path Limited 2,200 5.23 2,200 4.27 2,200 4.04 2,200 3.49
7,082 16.83 6,692 13.00 8,563 15.72 8,513 13.48
--------- ------- --------- ------- --------- ------- --------- -------
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 not quoted 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 expected 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.
10 Largest Investments
Achnacarry Hydro Ltd
Date of first Cost GBP Valuation Valuation Income Equity Equity Held
investment GBP Method recognised Held by by TPIM
by TP Income TP Income managed
for the % funds %
year GBP'000
Discounted
13 August 2014 4,300,000 7,841,000 Cash Flow 435 40.65 40.65
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2019:
Turnover 2,016
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 1,477
Profit before tax 832
Net assets before VCT loans 4,358
Net assets 3,068
Achnacarry Hydro Ltd is operating three separate Run-of-River hydroelectric
power plants located adjacent to Loch Arkaig near Fort William. Having
reached financial close in August 2014, the Allt Dubh site (722kw) was
commissioned in November 2015 with the Loch Blair site (1,250kw) and the
Cheanna Mhuir site (500kw) both successfully commissioned in December
2015. The company earns Feed in Tariffs and other revenues from the generation
and export of electricity to the National Grid.
Perfectly Fresh Cheshire Limited
Date of first investment Cost GBP Valuation Valuation Income Equity Equity Held
GBP Method recognised Held by by TPIM
by TP TP Income managed
Income % funds %
for the
year GBP'000
21 November 2017 5,000,000 6,282,000 Asset multiple 43 49.97 49.97
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2019:
Turnover -
Earnings before interest, tax, amortisation and depreciation
(EBITDA) (534)
Profit before tax (532)
Net assets before VCT loans 4,477
Net assets 2,976
Perfectly Fresh Cheshire Limited has constructed a pioneering vertical
growing facility. This facility is producing premium quality fresh salads
and herbs in indoor, laboratory-like conditions.
--------------------------------------------------------------------------------------------------------------------
Green Highland Allt Phocachain (1015)
Limited
Date of first investment Cost GBP Valuation Valuation Income Equity Equity Held
GBP Method recognised Held by by TPIM
by TP Income TP Income managed
for the % funds %
year GBP'000
Discounted
13 November 2014 3,932,000 4,989,000 Cash Flow 331 42.70 100.00
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2019:
Turnover 803
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 467
Loss before tax (68)
Net assets before VCT loans 3,823
Net assets 2,386
Green Highland Allt Phocachain (1015) Limited 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.
-----------------------------------------------------------------------------------------------------------------
Green Highland Allt Ladaidh (1148)
Limited
Date of first Cost GBP Valuation Valuation Income Equity Equity Held
investment GBP Method recognised Held by by TPIM
by TP Income TP Income managed
for the % funds %
year GBP'000
Discounted
20 March 2015 3,500,000 4,771,000 Cash Flow 295 35.17 50.25
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2019:
Turnover 669
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 512
Loss before tax (68)
Net assets before VCT loans 4,383
Net assets 2,884
Green Highland Allt Ladaidh (1148) Limited operates a 1,350 KW Run-of-River
hydroelectric 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 Choire A Bhalachain
(255) Limited
Date of first Cost GBP Valuation Valuation Income Equity Equity Held
investment GBP Method recognised Held by by TPIM
by TP TP Income managed
Income % funds %
for the
year GBP'000
Discounted
18 July 2014 3,130,000 3,763,000 Cash Flow 282 49.90 100.00
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2019:
Turnover 397
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 195
Loss before tax (167)
Net assets before VCT loans 2,307
Net assets 1,089
Green Highland Allt Choire a Bhalachain (255) Limited is currently operating
a 740kw Run-of-River hydroelectric power plant located at Tomdoun, Invergarry
in the Scottish Highlands. The project started construction in July 2014
and was commissioned on schedule in November 2015. The company earns Feed
in Tariffs and other revenues from the generation and export of electricity
to the National Grid.
Triple Point Social Housing REIT plc
Date of first investment Cost GBP Valuation Valuation Income Equity Equity Held
GBP Method recognised Held by by TPIM
by TP Income TP Income managed
for the % funds %
year GBP'000
17 November 2017 3,319,000 2,927,000 Bid Price 263 0.92 0.92
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2019:
Turnover 21,112
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 26,936
Profit before tax 23,717
Net assets 369,733
Triple Point Social Housing REIT plc is a UK Real Estate Investment Trust
("REIT") investing in UK Social Housing assets, in particular homes in
the Supported Housing sector which have been adapted to provide care and
support to vulnerable tenants. Following the year end, the Company disposed
of part of its holding in Triple Point Social Housing REIT plc. Please
see note 23 to the Financial Statements for further information.
----------------------------------------------------------------------------------------------------------------
Digital Screen Solutions Limited
Date of first investment Cost GBP Valuation Valuation Income Equity Equity Held
GBP Method recognised Held by by TPIM
by TP TP Income managed
Income % funds %
for the
year GBP'000
Discounted
12 February 2014 2,020,000 2,586,000 Cash Flow 69 35.36 98.00
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2019:
Turnover 453
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 420
Profit before tax 343
Net assets before VCT loans 2,190
Net assets 776
Digital Screen Solutions Limited is a VCT qualifying investment, which
owns and operates a portfolio of rooftop solar PV assets.
-----------------------------------------------------------------------------------------------------------------
Elementary Energy Limited
Date of first Cost GBP Valuation Valuation Income Equity Equity Held
investment GBP Method recognised Held by by TPIM
by TP Income TP Income managed
for the % funds %
year GBP'000
Discounted
18 March 2013 2,060,000 2,461,000 Cash Flow 196 49.93 99.22
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2019:
Turnover 332
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 241
Loss before tax (15)
Net assets before VCT loans 1,851
Net assets 311
Elementary Energy Limited is currently operating a 500kw Run-of-River
hydroelectric power plant situated at Abhainn Shalachain river at Fiunary,
Morven, Scotland. The plant was commissioned in January 2015 and is operating
successfully earning Feed in Tariffs and other revenues from the generation
and export of electricity to the National Grid.
Green Highland Allt Luaidhe (228)
Limited
Date of first Cost GBP Valuation Valuation Income Equity Equity Held
investment GBP Method recognised Held by by TPIM
by TP Income TP Income managed
for the % funds %
year GBP'000
Discounted
18-Mar-2015 1,995,000 2,425,000 Cash Flow 178 35.18 100
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2019:
Turnover 424
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 250
Profit before tax (75)
Net assets before VCT loans 1,977
Net assets 1,122
Green Highland Allt Luaidhe (228) Limited operates a 500 KW Run-of-River
hydroelectric 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 Peak Generation Limited
Date of first Cost GBP Valuation Valuation Income Equity Equity Held
investment GBP Method recognised Held by by TPIM
by TP Income TP Income managed
for the % funds %
year GBP'000
Discounted
02-Apr-2015 2,200,000 2,366,000 Cash Flow - 48.26 90
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2019:
Turnover 1,402
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 418
Profit before tax 136
Net assets before VCT loans 3,843
Net assets 2,613
Green Peak Generation Limited constructed a 7.5 MW gas power plant in
Bedford. The 3 x 2.5 MW gas fired MTU Rolls Royce Engines were installed
and construction was completed in May 2018. The plant generates revenues
through the sale of electricity to the National Grid, when electricity
prices are at their highest.
------------------------------------------------------------------------------------------------------
The Strategic Report has been approved by the Board and signed
on their behalf by the Chairman.
David Frank
Chairman
15 June 2020
GOVERNANCE
Board of Directors
Michael Stanes has been an Investment Director at Heartwood
Investment Management, a London-based firm providing investment
management and wealth structuring services for high net worth
individuals, since 2010. He began his career at Warburg Investment
Management (which became Mercury Asset Management) where he ran
equity portfolios in London and Tokyo. He then moved to the US
where he founded a business on behalf of Merrill Lynch offering
equity portfolio management to high net worth individuals. In 2002
he joined Goldman Sachs Asset Management in London running global
equity portfolios for a range of institutional and individual
clients before joining a new fund management partnership as
CEO.
David Frank is the Chairman of the Board. He was a partner in
Slaughter and May for 22 years before retiring from the firm in
2008. As well as being the firm's first Practice Partner from 2001
to 2008, his practice involved acting for several venture capital
houses, including 3i and Schroder Ventures. He was also involved in
several flotations in the venture capital sector, including 3i,
Baronsmead and SVG Capital. Since retiring from legal practice, he
has established a portfolio of voluntary roles.
Simon Acland has over 30 years' experience in venture capital,
primarily at Quester, where he became Managing Director. When
Quester was sold in 2007 it had GBP200 million under management and
was one of the leading UK venture capital and VCT investment
managers. Simon was a director of over 20 companies in Quester's
portfolio, many of which achieved successful exits through
flotation or trade sales. Simon is currently a director of several
private companies, including the Satellite Applications Catapult,
and is a member of the investment committee of the Angel Co-Fund.
Simon is a Founder and Director of Green Angel Syndicate, the UK's
only business angel group focused on investing in the green
economy. He also acts as an Adviser to the Triple Point Impact EIS
Fund.
CORPORATE GOVERNANCE
Compliance Statement
The Board of Triple Point Income VCT plc has considered the
Principles and Provisions of the Association of Investment
Companies Code of Corporate Governance 2019 (AIC Code). The AIC
Code addresses the Principles and Provisions set out in the UK
Corporate Governance Code (the UK Code), as well as setting out
additional Provisions on issues that are of specific relevance to
Triple Point Income VCT plc.
The Board considers that reporting against the Principles and
Provisions of the AIC Code, which has been endorsed by the
Financial Reporting Council and will provide improved reporting to
Shareholders.
The Company has complied with the Principles and Provisions of
the AIC Code except as set out below:
AIC Code of Corporate Governance Explanation
The appointment of a Senior Independent As there are only two independent
Director (Provision 14) Non-Executive Directors, excluding
the Chairman, it is not considered
appropriate to identify a member
of the Board as senior independent
Director. Both independent Non-Executive
Directors, as appropriate, will
act as a sounding board for the
Chairman, serve as intermediaries
between Directors and Shareholders,
and evaluate the Chairman's performance
as part of the Board's annual evaluation.
--------------------------------------------
Chairman of the Audit Committee (Provision The Chairman of the Board is the
29) Chairman of the Audit Committee.
The Board considers this appointment
appropriate given the size and complexity
of the Company.
--------------------------------------------
The AIC Code is available on the AIC website ( www.theaic.co.uk
). It includes an explanation of how the AIC Code adapts the
Principles and Provisions set out in the UK Code to make them
relevant for investment companies.
Board of Directors
The Board comprises three Non-Executive Directors.
The Board's role is to promote the long-term sustainable success
of the Company, generating value for its Shareholders and
contributing to wider society.
All Directors are considered independent and day-to-day
management responsibilities are delegated to the Investment
Manager. The Directors have a combination of skills, experience and
knowledge which are relevant to the Company. Biographies of each
director are presented on page 55 of this report.
The Directors are provided with key operational information on
the Company's activities, including regulatory and statutory
requirements, by the Investment Manager and Company Secretary.
The Board has direct access to the Company Secretary and may
also take independent professional advice at the Company's expense
where necessary in the performance of their duties. During the
year, the Board was satisfied that all Directors were able to
commit sufficient time to discharge their responsibilities
effectively having given due consideration to their other
significant commitments. The Directors were advised on appointment
of the expected time required to fulfil their roles and have
confirmed that they remain able to make that commitment. No
external appointments accepted during the year were considered to
be significant for the relevant Directors, taking into account the
expected time commitment and nature of these roles.
All Directors have sufficient time to meet their Board
responsibilities and provide constructive challenge, strategic
guidance, offer specialist advice and hold third party service
providers to account.
The Chairman, David Frank, leads the Board and is responsible
for its overall effectiveness in directing the Company. The
Chairman leads the process in determining its strategy and the
achievement of its objectives. The Chairman is responsible for
setting the Board agenda focusing on strategy, performance, value
creation, culture, stakeholders and ensuring that issues relevant
to these areas are reserved for Board decision. The Chairman
facilitates constructive Board relations and the effective
contribution of all Directors, encouraging a culture of openness
and debate and ensures the Directors receive accurate, timely and
clear information. The Chairman does not have significant
commitments which conflict with his Board responsibilities.
Appointment of New Directors
Any appointment to the Board is subject to a formal, rigorous
and transparent procedure and is based on merit and objective
criteria which promotes diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths.
Company's Operations
The Investment Manager has authority over the management of the
investment portfolio, the organisation of custodial services,
accounting and administrative services. The Investment Manager
makes investment recommendations for the Board's approval.
The Board meets regularly in person or via conference call at
least four times a year, 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 schedule of
matters reserved for the Board which includes:
-- Review investment performance and monitor compliance with the Investment Policy;
-- 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 and the Company Secretary;
-- The performance of the Company, including monitoring the Net Asset Value per share;
-- Monitoring shareholder profiles and considering shareholder communications; and
-- Approving major investments.
The Company Secretary, Hanway Advisory Limited, is responsible
for ensuring that Board procedures are complied with, advising the
Board on all governance matters, supporting the Chairman and
helping the Board and its Committees to function effectively. The
Company Secretary will also provide the Board with support in
ensuring that it has the policies, processes, information, time and
resources it needs in order to function effectively.
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 Board reviews the performance of the Investment Manager
annually taking into consideration the contractual arrangements and
scrutinises their performance. The Board as a whole carries out
this review and due to the size of the Board, does not consider it
appropriate to establish a separate Management Engagement
Committee.
Re-election of Directors
Directors' retirement and re-election is subject to the
Company's articles of association and the AIC Code. The AIC Code
requires that all Directors should be subject to an annual
re-election. The Directors have therefore agreed to submit
themselves for annual re-election at the next Annual General
Meeting.
Independence of Directors
The Board has a Non-Executive Chairman and two other
Non-Executive Directors, all of whom were considered independent on
their appointment. A majority of the Directors are independent of
the Investment Manager.
Simon Acland acts as an Adviser to the Triple Point Impact EIS
Service that is an Alternative Investment Fund managed by the
Investment Manager. He therefore has a business relationship with
the Investment Manager. The Board nonetheless considers Simon
Acland to be independent as the Triple Point Impact EIS Service is
an area of the Investment Manager's business which is not directly
related to that of the Company and as such does not create a
conflict between his interests as an Adviser and that of the
Company. Furthermore, the Board do not consider that such
relationship is material both with regards to remuneration or time
and would therefore be unlikely to impair his judgement.
The AIC Code outlines further circumstances that are likely to
impair a director's independence including whether a director has
served on the board for more than nine years from the date of their
first appointment. Two of the three Non-Executive Directors have
served on the Board for nine years or more. Length of service is
currently one of several indicators the Board considers when
assessing independence. The Board is of the view that a term of
service in excess of nine years does not in itself compromise
independence and notes the positive contribution that their long
service offers. In particular that they are better able to serve
the needs of the Company and its Shareholders by providing
experience across the business/economic cycle. The nature of the
Company's business is such that the Directors' experience and
continuity is critical to promote the long-term sustainable success
and future viability of the Company. The Board regularly reviews
the independence of its Directors and is satisfied that the Board
as a whole is independent, including in character and
judgement.
As part of the annual evaluation, the Directors considered
length of service of the Board as a whole and agreed to implement a
succession plan that addresses the regular refreshment of Board
membership whilst maintaining continuity.
Policy on Tenure of the Chairman
The Board considers that the length of time each Director,
including the Chairman, serves on the Board should not be limited
and has not set a finite tenure policy. Continuity,
self-examination and ability to do the job are the relevant
criteria on which the Board assesses a Director's independence.
Length of service of current Directors and future succession
planning will be reviewed each year as part of the Board evaluation
process.
Board Committees
The Board only has one committee which is the Audit Committee.
The Directors consider that due to the size of the Board, there
being no employees or executive directors, it is not necessary to
appoint a separate Remuneration Committee or Nomination Committee.
The Remuneration Report is detailed on pages 66 to 70.
Board Meeting Attendance
During the period the following Board meetings were held and the
number attended by each Director compared with the maximum possible
attendance:
Directors Board
Meetings
David Frank, Chairman 7/7
Simon Acland 6/7
Michael Stanes 5/7
The Board holds four meetings during the year on a quarterly
basis. These meetings are arranged in advance of the start of the
financial year, however, from time to time further ad hoc meetings
are scheduled to deal with transactional and specific events for
which arrangements are put in place on shorter notice and subject
to the availability of those directors available at the time.
The attendance of the Audit Committee is detailed in the Audit
Committee report on pages 62 to 64.
Performance Evaluation
The Board, led by the Chairman, established a formal process for
a formal and rigorous annual evaluation of the performance of the
Board, individual Directors and the Audit Committee. The evaluation
considered the composition, diversity, investment matters,
development and how effectively each member works together to
achieve its objectives.
During the period, the Board conducted its first performance
evaluation by completing a written questionnaire to appraise and
gather useful learnings on the functioning of the Board, the Audit
Committee and individual Directors.
The Chairman, supported by the Company Secretary, acted on the
results of the evaluation. The results of the questionnaire
demonstrated that there is a consensus that the performance and
functioning of the Board remains effective. However, the following
areas of improvement were identified with the appropriate action
approved by the Board:
-- Greater focus should be given to the tenure of the Board to
ensure that membership is regularly refreshed. The Board agreed
that a clear succession plan in the immediate and longer term be
established that considers diversity of gender, social and ethnic
backgrounds with the intention to gradually refresh Board
membership.
-- Further training on an ongoing basis and regular updates on
legal, regulatory and governance matters should be provided to the
Board. The Board agreed that additional governance and compliance
reports and training be provided at future Board meetings.
-- The feedback and views of Shareholders be further understood.
The Board agreed that additional reporting from the Investment
Manager be provided and engagement increased where applicable.
Corporate Social Responsibility
The Board is committed to integrating social, environmental and
governance matters in the Company's business operations, including
the Company itself and the companies it invests in. The Board is
actively seeking ways to interact with their stakeholders. The
Board seeks to avoid investing in companies which do not operate
within ethical, environmental and social legislation. Details on
the Company's responsible investing can be found on page 45
Internal Control and Risk Management
The Board has overall responsibility for establishing procedures
to manage risk, overseeing the internal control framework,
determining the nature and extent of the principal risks the
Company is willing to take in order to achieve its long-term
strategic objectives, and identifying emerging risks. The purpose
of an internal control framework 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. Emerging risks are regularly monitored, and
to the extent possible or practicable, mitigating actions are
implemented.
The system of risk management and internal control 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 risk management and internal control systems is carried out.
The review covers all material controls including financial,
operational and compliance controls.
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 the significant and emerging risks to which it 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 reviewed
bi-annually. The principal risks and uncertainties including
emerging risks identified from the risk register and a description
of the Group's risk management procedures can be found on pages 26
to 27.
TPIM is engaged to provide accounting services, and Hanway
Advisory Limited is engaged to provide secretarial 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.
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 Investment Manager's
procedures are subject to internal compliance checks.
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; and
-- To ensure sufficient liquid resources are available to meet
the funding requirements of its investments and to fund new
investments where identified.
Stakeholder Engagement
The Company continuously interacts with a variety of
stakeholders important to its success. This includes regular
engagement with the Company's Shareholders and other
stakeholders by the Board and the Investment Manager. The Directors
are responsible for acting in a way that they consider, in good
faith, is the most likely to promote the success of the Company for
the benefit of its members. In doing so, they have regard for the
needs of stakeholders and the wider society along with the matters
set out in the Section 172 statement on pages 29.
The Company is committed to understanding the views of its
stakeholders and maintaining effective dialogue with its' key
stakeholders of which include:
-- Shareholders;
-- Investee companies;
-- the Investment Manager;
-- lenders; and
-- the wider communities in which the Company and its investee companies operate.
Shareholders
In addition to the formal business of the Annual General Meeting
where Shareholders have an opportunity to question the Board and
the Investment Manager on matters relating to the Company's
operation and performance, formal updates are provided to
Shareholders on a quarterly basis. The Board and the Investment
Manager will also respond to any written queries made by
Shareholders during the course of the year. The Chairman provides
feedback to the Board and is responsible for providing a clear
understanding of the views of Shareholders to the Board. The Board
recognises the importance of providing strong financial returns to
Shareholders and the eligible tax benefits under VCT tax
legislation and takes this into consideration when making
investments into and from investee companies, approving offers for
subscription and declaring declarations.
Investee Companies
The Company via its Investment Manager has important
relationships with individuals responsible for the maintenance and
performance of its investee companies. This includes monthly
operational reports from the Operation & Maintenance
("O&M") providers. Site visits are undertaken at least annually
by representatives from the Investment Manager including the
Investor Directors and portfolio management team. The Investment
Manager is in regular contact with the O&M providers.
Management accounts and performance reports are provided to the
directors of investee companies on a quarterly basis.
As part of achieving its investment objectives, the Company
provides funding to a number of investee companies and as such, has
debtor relationships with several companies. Should issues arise
with payment deadlines, the Investment Manager, on behalf of the
Company will consider appropriate measures to engage with any
debtors and take into consideration their circumstances, with the
aim of not causing detriment to the Company's long term sustainable
success.
Investment Manager
The Company maintains a good relationship with the Investment
Manager, Triple Point Investment Management LLP and regularly
considers its performance. The Investment Manager attends every
Board meeting and presents a detailed portfolio analysis and
reports on key issues such as VCT compliance, investment pipeline
and valuations.
Community
The Directors recognise that the long term success of the
Company is linked to the success of the communities in which the
Group, and its investee companies, operate. The Board encourages
the responsible investment ethos of the Investment Manager that is
based on the 17 UN Sustainable Development Goals. The Board is
cognisant of the impact of the Company's operations and of the
companies in which it invests and believes that its investment
activities have many positive benefits beyond the returns delivered
for Shareholders.
Directors' Share Interests
All of the Directors' share interests were held beneficially and
they are actively encouraged to own shares. The Company has not set
out any formal requirements or guidelines to Directors concerning
their ownership of shares in the Company.
On behalf of the Board
David Frank
Chairman
15 June 2020
Audit Committee Report
The Audit Committee consists of the Chairman, David Frank, and
the Non-Executive Directors, Simon Acland and Michael Stanes. The
Audit Committee deals with matters relating to audit, financial
reporting and internal control systems. The Committee meets at
least twice a year and as required. The Audit Committee also has
direct access to BDO LLP, the Company's auditor.
Audit Committee Role and Responsibilities
In respect of the year ended 31 March 2020, 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;
-- Monitoring the integrity of the financial statements of the
Company and any formal announcements relating to the Company's
financial performance, and reviewing significant financial
reporting judgements contained in them;
-- Reviewing the Company's internal financial controls and
internal control and risk management systems 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;
-- Providing advice on whether the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable, and
provides the information necessary for Shareholders to assess the
company's position and performance, business model and
strategy;
-- Reviewing the Company's half-yearly results and draft annual
financial statements prior to Board approval;
-- Making recommendations to the Board regarding the
reappointment of the external auditor and approving their
remuneration;
-- Reviewing and monitoring the external auditor's independence and objectivity;
-- Reviewing the effectiveness of the external audit process,
taking into consideration relevant UK professional and regulatory
requirements;
-- Reviewing the Company's going concern status; and
-- Reviewing the external auditor's findings document.
Financial Reporting
The primary role of the Audit Committee in relation to financial
reporting is to review with the Investment Manager and the Auditor
the appropriateness of the half year report and Annual Report,
concentrating on, amongst other matters:
-- Compliance with financial reporting standards and relevant
financial and governance reporting requirements;
-- Amendments to legislation and corporate governance reporting requirements;
-- The impact of any new and proposed amendments to accounting
standards which affect the Company;
-- Material areas in which significant judgements have been applied;
-- Whether the Committee believes that proper and appropriate
processes and procedures have been followed in the preparation of
the Annual Report; and
-- Considering and recommending the contents of the Annual Report for approval.
Significant Matters Considered by the Audit Committee in
Relation to Financial Reporting
The Audit Committee is responsible for considering and reporting
on any significant issues that arise in relation to the Financial
Statements and how they have been addressed.
The following key issues were discussed:
-- Compliance with HM Revenue & Customs conditions for maintenance of approved VCT status;
-- Valuation and existence of unquoted investments; and
-- Net asset value projections of the C, D and E Share classes.
Compliance with HMRC Conditions
The Investment Manager provides the Board with monthly
qualifying investment updates. This report shows the current
qualifying percentage position of the Company and highlights
actions which may be required to maintain this position in the
future. The qualifying position of the Company is a recurring
agenda item at Board meetings and is often discussed by the Board
at length.
The Company also has in place an engagement with Philip Hare and
Associates LLP, the Board seek their opinion before undertaking any
material transaction which may affect the qualifying status of the
Company.
Valuation & Net Asset Value Projections
The Company's unquoted Investment portfolio is valued in line
with the International Private Equity Valuation guidelines. The
Company's accounting policy is to designate investments at fair
value through pro t or loss. Therefore, the most signi cant risk in
the nancial statements is whether its investments are fairly
valued. Being unquoted there is uncertainty and estimation involved
in determining the investment valuations.
There is also an inherent risk of management override as the
Investment Manager's fee is calculated based on NAV as disclosed in
note 5 to the nancial statements. The Investment Manager is
responsible for calculating the NAV, prior to approval by the
Board.
On a quarterly basis, the Investment Manager provides a detailed
analysis of the NAV highlighting any movements and assumption
changes from the previous quarter's NAV. This analysis and the
rationale for any changes made is considered and challenged by the
Chairman of the Audit Committee and subsequently considered and
approved by the Board.
External Audit
It is the Audit Committee's responsibility to monitor the
performance, objectivity, and independence of the external auditors
and this is assessed by the Committee each year. In evaluating
BDO's performance the Committee examines the effectiveness of the
audit process, independence and objectivity of the auditor, taking
into consideration the length of tenure of the external auditors,
the non-audit services undertaken during the year and relevant UK
professional and regulatory requirements, and the quality of
delivery of its services.
BDO LLP attended 1 of the 2 formal Audit Committee meetings held
during the year. Matters typically discussed include the Auditor's
assessment of the transparency and openness of the Investment
Manager, con rmation that there has been no restriction in scope
placed on them, the independence of their audit and how they have
exercised professional scepticism.
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 approved by Shareholders 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 31 March 2018.
The independence and effectiveness of the external audit process
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 auditor and the discussions then held on topics
raised. The Audit Committee will challenge the auditor at the Audit
Committee meeting if appropriate.
The Audit Committee's terms of reference include the following
roles and responsibilities:
-- Periodically considering the need for an internal audit function;
-- 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 the Committee as a whole has
competence relevant to the sector in which it operates.
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.
Non-Audit Services
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. Details
of fees paid to BDO LLP during the year are disclosed in note 8 to
the financial statements.
There were no non-audit services performed during the year.
Independence
The Audit Committee is required to consider the independence of
the external auditor. In fulfilling this requirement, the Audit
Committee has considered the Audit Strategy report from BDO LLP
which describes their arrangements to identify, report and manage
any conflict of interest and their independence.
Audit Committee Meeting Attendance
During the period, the following Audit Committee meetings were
held, and the number attended by each director compared with the
maximum possible attendance:
Directors Audit Committee
Meetings
David Frank, Chairman 2/2
Simon Acland 2/2
Michael Stanes 2/2
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
VCT 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 Annual Report for the
year ended 31 March 2020 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.
David Frank
Audit Committee Chairman
15 June 2020
Directors' Remuneration Report
Statement of the Chairman
I am pleased to present the Remuneration Report on behalf of the
Board for the year ended 31 March 2020.
This report is submitted in accordance with schedule 8 of the
Large and Medium Sized Companies and Groups (Accounts and Reports)
(amendment) Regulations 2013 and The Companies (Miscellaneous
Reporting) Regulations 2018, in respect of the year ended 31 March
2020. This report also meets the Financial Conduct Authority's
Listing Rules and describes how the Board has applied the
Principles and Provisions relating to Directors' remuneration set
out in the AIC Code. The reporting requirements require two
sections to be included:
-- Directors' Remuneration Policy - This sets out our
Remuneration Policy for Directors of the Company for the future and
will be subject to a binding shareholder vote at our 2020 AGM.
There have been no changes to the policy since its approval by
Shareholders at the 2017 AGM other than presentational amendments
to display the policy in a simple and transparent manner.
-- Annual Remuneration Report - This sets out how our Directors
were paid for the period ended 31 March 2020. There will be an
advisory shareholder vote on this section of the report at our 2020
AGM.
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
76-81.
During the period, as part of the performance evaluation
undertaken by the Board, the remuneration of the Directors was
reviewed, taking into account the Company and individual
performance.
The Board agreed that the fees of the Non-Executive Directors
and the Chairman should be increased to reflect the time commitment
and responsibilities of the role. The fee for the Non-Executive
Directors (excluding the chairman) was increased from GBP17,500 to
GBP21,000 and the fee for the Chairman was increased from GBP20,000
to GBP24,000.
This fee increase took effect from 1 April 2020. The increased
remuneration of the Directors reflects the findings of a
benchmarking exercise undertaken by the Company Secretary in which
the remuneration of directors of comparable VCT of a similar size,
objective and structure were evaluated against those of the
Company's Directors.
We value engagement with our Shareholders and for the
constructive feedback we receive and look forward to your support
at the forthcoming AGM.
David Frank
Chairman
15 June 2020
Directors' Remuneration Policy
Approval of Remuneration Policy
The Company's Remuneration Policy was last approved on 24 August
2017 at the Annual General Meeting. In accordance with section 439A
of the Companies Act 2006, a resolution to approve this Directors'
Remuneration Policy will be proposed at the Annual General Meeting
of the Group to be held on 23 July 2020. If the resolution is
passed, the provisions of the policy will apply until they are next
put to Shareholders for renewal of that approval, which must be at
intervals of not more than three years, or if the Remuneration
Policy is varied, in which event Shareholder approval for the new
Remuneration Policy will be sought.
Remuneration Policy Overview
The Board currently comprises three Directors, all of whom are
Non-Executive. 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
VCT 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 GBP100,000 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.
Consideration of Remuneration
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. As such, the Board as a whole
will consider the remuneration of the Directors, however no
Director is involved in determining their own remuneration. 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 responsibilities is likely to incur a
change in remuneration of any one Director or the Remuneration
Policy itself.
Directors' Service Contracts
The Directors are engaged under letters of appointment and do
not have service contracts with the Company.
Directors' Term of Office
The Directors' letters of appointment provide for an appointment
of 12 months', after which three months' written notice must be
given by either party. Each Director will be subject to annual
re-election by Shareholders at the Company's Annual General Meeting
in each financial year.
Policy on Payment for Loss of Office
A Director who ceases to hold office is not entitled to receive
any payment other than accrued fees (if any) for past services.
Consideration of Shareholder Views
The Company is committed to ongoing shareholder dialogue and
takes an active interest in voting outcomes. Where there are
substantial votes against resolutions in relation to directors'
remuneration, the Group will seek the reasons for any such vote and
will detail any resulting actions in the Directors' Remuneration
Report. 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.
Future Policy Table
The Directors are entitled only to the fees as set out in the
table below. No element of Directors' remuneration is subject to
performance factors. There are no other fees payable to the
Directors for additional services outside of their contracts.
Component How it Operates Maximum Fee Link to Strategy Provisions
to Recover
or Withhold
Sums
Annual Fee Each Director receives The total aggregate The level of the There are
a basic fee which fees that can annual fee has no provisions
is paid on a quarterly be paid to the been set to attract to recover
basis. Directors is and retain high or withhold
calculated in calibre Directors sums.
accordance with with the skills
the articles and experience
of association. necessary for
the role. The
fee has been benchmarked
against companies
of a similar size
------------------------- -------------------------- ---------------------------
Other Benefits The Directors shall Article 89 of In line with market
be entitled to be the Company's practice, the
repaid expenses. Articles of Association Company will reimburse
permits for any the Directors
director to be for expenses to
repaid reasonable ensure that they
expenses incurred are able to carry
in attending out their duties
or returning effectively.
from meetings
of the Board,
Committees of
the Board or
Shareholder meetings
or otherwise
in connection
with the performance
of their duties
as Directors
of the Company.
------------------------- -------------------------- --------------------------- ----------------
Annual Remuneration Report
Directors' Fees
Details of each Director's contract is shown below. The Chairman
is paid more than the other Directors to reflect the additional
responsibilities of the role.
Policy on
Unexpired Term Annual Rate of Payment For
Date of Contract of Contract Directors' Fees Loss of Office
David Frank, Chairman 11-Nov-10 none 20,000 none
Simon Acland 12-Mar-09 none 17,500 none
Michael Stanes 21-Nov-12 none 17,500 none
----------------------- ----------------- ---------------- ------------------ -----------------
Single Total Figure (audited information)
The fees paid to Directors in respect of the year ended 31 March
2020 and the prior year are shown below:
Emoluments Emoluments
for the Year for the Year
ended 31 March ended 31 March
2020 2019
GBP GBP
David Frank, Chairman 20,000 20,000
Simon Acland 17,500 17,500
Michael Stanes 17,500 17,500
55,000 55,000
Employers' NI contributions 1,016 1,102
Total Emoluments 56,016 56,102
------------------------------- -----------------
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 and employees has
been omitted because the Company has neither and therefore it is
not relevant.
Directors' emoluments compared to payments to Shareholders:
Unaudited 31 March 2020 31 March 2019
GBP'000 GBP'000
Total Dividends paid: 16,376 13,972
Directors' emoluments 56 56
------------------------- ---------------
Directors' Share Interests (audited information)
At 31 March 2020, the Directors held no shares in the Company
(2019: Nil).
At 31 March 2020, Simon Acland's wife held 48,750 D Class Shares
(2019: 48,750).
There are no other connected parties to the Directors that held
any shares at 31 March 2020. 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
Company's C, D and E Share Classes over the period from admission
to 31 March 2020 with the Total Return from notional investments in
the FTSE Small-Cap index and FTSE Small-Cap index over the same
period.
Shareholders should be reminded that shares in VCT generally
continue to trade at a discount to the NAV of the Company.
The Total Return does not include the initial 30% tax relief
available to Shareholders.
C Ordinary Share Net Asset Value total return since launch
against the FTSE Small-Cap Index & FTSE All Share total
return
FTSE Small Cap FTSE All Share Total Return
31-Mar-14 100.00 100.00 100.00
30-Sep-14 97.87 99.39 100.85
31-Mar-15 102.81 103.04 102.19
30-Sep-15 100.22 93.82 103.62
31-Mar-16 101.56 95.49 107.58
30-Sep-16 111.22 105.62 108.95
31-Mar-17 121.41 112.22 114.19
30-Sep-17 127.71 113.90 117.70
31-Mar-18 125.04 109.52 125.81
30-Sep-18 130.16 116.09 124.78
31-Mar-19 122.21 111.88 153.20
30-Sep-19 122.24 114.23 151.38
31-Mar-20 95.30 87.39 158.62
D Ordinary Share Net Asset Value total return since launch
against the FTSE Small-Cap & FTSE All Share Index total
return
FTSE Small Cap FTSE All Share Total Return
31-Mar-15 100.00 100.00 100.00
30-Sep-15 91.06 91.06 101.73
31-Mar-16 92.68 92.68 103.17
30-Sep-16 102.51 102.51 105.02
31-Mar-17 108.92 108.92 107.17
30-Sep-17 110.55 110.55 108.91
31-Mar-18 106.30 106.30 115.10
30-Sep-18 112.68 112.68 111.88
31-Mar-19 108.60 108.60 129.73
30-Sep-19 110.88 110.88 130.95
31-Mar-20 84.83 84.83 129.85
E Ordinary Share Net Asset Value total return since launch
against the FTSE Small-Cap & FTSE All Share Index total
return
FTSE Small Cap FTSE All Share Total Return
30-Sep-17 100.00 100.00 100.00
31-Mar-18 97.91 96.15 99.06
30-Sep-18 101.92 101.92 100.09
31-Mar-19 95.69 98.23 103.32
30-Sep-19 95.71 100.29 102.11
31-Mar-20 74.61 76.73 107.49
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 20.
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 resolutions to approve the Directors' Remuneration Report
were passed at the Annual General Meeting on 26 July 2019 and the
Directors' Remuneration Policy was passed at the Annual General
Meeting on 24 August 2017 on a show of hands. Details of the proxy
votes in respect of the resolutions are as set out below:
Voting for Voting Against Votes Withheld
Remuneration
Report 99.9% 0.1% 14,723
------------ ---------------- ----------------
Remuneration
Policy 99.1% 0.9% 30,143
------------ ---------------- ----------------
During the year, the Company did not receive any communications
from Shareholders specifically regarding Directors' pay.
On behalf of the Board,
David Frank
Chairman
15 June 2020
Directors' Report
The Directors are pleased to present the Directors' Report for
the year ended 31 March 2020.
The information that fulfils the requirements of the Corporate
Governance Statement in accordance with rule
7.2 of the DTR can be found in this Directors' Report and in the
Governance section on pages 56 to 60 all of which is
incorporated into this Directors' Report by reference.
Directors
The Directors of the Company during the period were David Frank,
Simon Acland and Michael Stanes.
Principal Activity and Status
The principal activity of the Company is that of a VCT and its
main activity is investing in companies involved in renewable
energy, energy production, innovative vertical growing and SME
funding.
The Company has been approved as a VCT by HMRC, in accordance
with Section 274 of the Income Tax Act 2007 and, in the opinion of
the Directors, has conducted its affairs so as to enable it to
continue to obtain such approval. In order to maintain its status
under VCT legislation, a VCT must comply on a continuing basis with
the provisions of Section 274 and further details can be found on
page 73.
The Company is registered in England as a Public Limited Company
(Registration number 06421083) and its shares are listed on the
main market of the London Stock Exchange.
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
Following the Company's year-end, the country continued to be in
lockdown as a result of the COVID-19 pandemic which has affected
the UK and the world.
The effect on the Company as a result of COVID-19 is discussed
at length in both the Chairman's Statement and the Investment
Manager's Review.
Directors' and Officers' Liability Insurance
The Company has, as permitted by Section 233 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.
Research and Development
No expenditure on research and development was made during the
year (2019: Nil).
Management
TPIM acts as Investment Manager to the Company and has done
since incorporation. 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).
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.
Purchase of Own Shares
The Directors may exercise on behalf of the Company its powers
to purchase its own shares to the extent permitted by Shareholders
and the articles of association.
Global Greenhouse Gas Emissions, Energy Consumption and Energy
Efficiency
The Company has no greenhouse gas emissions to report from its
operations, nor does it have responsibility for any other emission
producing sources under the Companies Act 2006 (Strategic Report
and Directors' Reports) Regulations 2013.
It is worth highlighting that the Company has invested in
renewable energy, through its portfolio of hydroelectric, rooftop
solar and gas power companies. Natural gas neatly bridges the gap
between environmentally unfriendly fossil fuels and more irregular
solar and wind power. Gas fired energy centres play an important
role in balancing the UK electricity network, which is growingly
ever more reliant on renewable energy sources, as the nation shifts
towards a low-carbon economy.
The Company also has an investment in a vertical growing
business. Vertical growing is beneficial for the environment
because it massively reduces the amount of fossil fuels needed for
farming equipment which is not required to sow, fertilise, weed or
harvest crops. A vertical growing facility offers the opportunity
to completely eliminate the need for pesticides as pests cannot
enter the controlled environment to cause crop damage and fungal
diseases struggle to develop. When it comes to food production, the
last-mile delivery is usually the most expensive part of the supply
chain and it is not uncommon for crops to be shipped across
continents and oceans. Growing food closer to where the consumer
lives is a massive vertical growing benefit as it can massively
reduce transportation costs, CO2 emissions and reduce the need for
refrigerated storage.
More information on the Company's hydro portfolio, gas fired
energy centres, rooftop solar panels and the vertical growing
facility can be found in the Investment Manager's review on pages
34 to 43.
Share Capital
As at 31 March 2020 the Company's issued share capital amounted
to 56,092,649 consisting of 13,441,438 C Shares of 1p each,
13,701,636 D Shares of 1p each and 28,949,575 E Shares of 1p
each.
As at that date none of the issued shares were held by the
Company as treasury shares.
There are no restrictions on the transfer of securities in the
Company other than the Group's Share Dealing Code and other certain
restrictions which may be impaired by law, for example, the Market
Abuse Regulations.
The Company is not aware of any agreements between holders of
securities that may result in restrictions on transferring
securities in the Company. There are no securities of the Company
carrying special rights with regards to the control of the Company
in issue.
Annual General Meeting
Notice of the 2020 Annual General Meeting to be held on 23 July
2020 is set out at the end of the Annual Report to Shareholders
along with the explanatory notes on the resolutions.
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. Thereafter all
Directors are subject to re-election at each Annual General Meeting
of 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 2006, 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.
Conflicts of Interest
The Directors review the disclosure of conflicts of interest
quarterly, with changes reviewed and noted at the beginning of each
Board meeting. A Director who has a potential conflict of interest
has the interest authorised and acknowledged by the Board.
Procedures to disclose and authorise conflicts have been adhered to
throughout the year.
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.
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. However, as
discussed further in note 1, during the year the Company entered
into a 364 day loan facility which is repayable within the next 12
months. To mitigate the risk of the loan not being extended, the
Company entered into a separate facility agreement with similar key
terms which includes a 2 year availability period. As a result, the
Directors continue to apply the going concern basis in preparing
the financial statements.
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.
Annual Report
The Board is of the opinion that the Annual Report, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for Shareholders to assess the position,
performance, strategy and business model of the Company.
The Board recommends that the Annual Report, the Directors'
Report and the Independent Auditor's Report for the year ended 31
March 2020 are received and adopted by the Shareholders. A
resolution concerning this will be proposed at the forthcoming
Annual General Meeting.
VCT Regulation
The Investment Policy is designed to ensure that the Company
continues to qualify and is approved as a VCT by HMRC. In order to
maintain its status under VCT legislation, a VCT must comply on a
continuing basis with the provisions of section 274 of the Income
Tax Act 2007 as follows:
(1) The Company's income must be derived wholly or mainly from shares and securities;
(2) At least 80% of the HMRC value of its investments must have
been represented throughout the year by shares or securities that
are classified as "qualifying holdings". This increased from 70%
from 1 March 2020;
(3) At least 70% by HMRC value of its total qualifying holdings
must have been represented throughout the year by holdings of
"eligible share". Investments made before 6 April 2018 from funds
raised before 6 April 2011 are excluded from this requirement;
(4) At least 30% of funds raised in accounting periods beginning
on or after 6 April 2018 must be invested in qualifying holdings by
the anniversary of the end of the accounting period in which funds
were raised;
(5) At the time of investment, or addition to an investment, the
Company's holdings in any one company must not have exceeded 15% by
HMRC value of its investments;
(6) The Company must not have retained greater than 15% of its
income earned in the year from shares and securities;
(7) The Company's shares, throughout the year, must have been
listed on a regulated European market;
(8) An investment in any company must not cause that company to
receive more than GBP5 million in State aid risk finance in the 12
months up to date of the investment, nor more than GBP12 million in
total (the limits are GBP10 million and GBP20 million respectively
for a "knowledge intensive" company);
(9) The Company must not invest in a company whose trade is more
than seven years old (ten years for a "knowledge intensive"
company) unless the company previously received State and risk
finance in its first seven years, or the company is entering a new
market and a turnover test is satisfied;
(10) The Company's investment in another company must not be
used to acquire another business, or shares in another company;
and
(11) The Company may only make qualifying investments or certain
non-qualifying investments permitted by section 274 of the Income
Tax Act 2007.
Environment
The management and administration of the Company is undertaken
by the Investment Manager. TPIM recognises the importance of its
environmental responsibilities, monitors its impact on the
environment, and designs and implements policies to reduce any
damage that might be caused by its activities. Initiatives designed
to minimise the Company's impact on the environment include
recycling and reducing energy consumption.
Anti-Bribery Policy
The Company has a zero tolerance approach to bribery, and will
not tolerate bribery under any circumstances in any transaction the
Company is involved in.
TPIM reviews the anti-bribery policies and procedures of all
portfolio companies.
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 three 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.
More information can be found in the section on responsible
investing on page 45.
Diversity
The Company is an externally managed investment company which
does not have any employees or office space. As such the Company
does not operate a diversity policy with regards to any
administrative, management and supervisory functions.
Employees
The Company has no employees and accordingly no requirement to
separately report on this area.
The Investment Manager is an equal opportunities employer who
respects and seeks to empower each individual and the diverse
cultures, perspectives, skills and experiences within its
workforce. The Investment Manager places great importance on
Company culture and the wellbeing of its employees and considers
various initiatives and events to ensure a positive work
environment.
Investment and Co-Investment
The Company co-invests with one other VCT and funds managed by
TPIM.
Matters Covered in the Strategic Report
The information that fulfils the reporting requirements relating
to the following matters can be found on the pages identified.
Matter Page Reference
Future Developments 34 to 39
----------------
On behalf of the Board.
David Frank
Chairman
15 June 2020
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 EU, 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.
David Frank
Chairman
15 June 2020
Statement of Comprehensive Income
For the year ended 31 March 2020
Year ended Year ended
31 March 2020 31 March 2019
------------------------------- -------------------------------
Note Rev. Cap. Total Rev. Cap. Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income
Investment income 4 2,743 - 2,743 2,923 - 2,923
(Loss)/gain arising on the disposal
of investments during the year - (181) (181) - 420 420
Gain arising on the revaluation
of investments at the year end 12 - 1,076 1,076 - 5,049 5,049
Investment return 2,743 895 3,638 2,923 5,469 8,392
--------- --------- --------- --------- --------- ---------
Investment management fees 5 896 297 1,193 771 257 1,028
Other expenses 6 393 - 393 331 - 331
Finance costs 7 3 - 3
1,292 297 1,589 1,102 257 1,359
--------- --------- --------- --------- --------- ---------
Profit before taxation 1,451 598 2,049 1,821 5,212 7,033
--------- --------- --------- --------- --------- ---------
Taxation 10 (180) 57 (123) (264) 35 (229)
Profit after taxation 1,271 655 1,926 1,557 5,247 6,804
--------- --------- --------- --------- --------- ---------
Other comprehensive income - - - - - -
Total comprehensive income 1,271 655 1,926 1,557 5,247 6,804
--------- --------- --------- --------- --------- ---------
Basic and diluted earnings/(loss)
per share (pence)
Ordinary Share 11 - - - 0.13p (0.06p) 0.07p
C Share 11 4.18p 1.11p 5.29p 5.53p 21.21p 26.74p
D Share 11 2.61p (2.49p) 0.12p 3.93p 10.43p 14.36p
E Share 11 1.21p 2.92p 4.13p 0.86p 3.38p 4.24p
8.00p 1.62p 9.63p 10.45p 34.96p 45.41p
The total column of this statement is the Statement of
Comprehensive Income of the Company prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the EU. The supplementary revenue return and capital columns have
been prepared in accordance with the Association of Investment
Companies Statement of Recommended Practice (AIC SORP).
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 are an integral part of
these statements.
Balance Sheet
at 31 March 2020
31 March 2020 31 March 2019
Note GBP'000 GBP'000
Non-current assets
Financial assets at fair value
through profit or loss 12 50,763 56,937
--------------- ---------------
Current assets
Receivables 13 785 1,250
Cash and cash equivalents 14 701 6,188
1,486 7,438
--------------- ---------------
Total Assets 52,249 64,375
--------------- ---------------
Current liabilities
Payables and accrued expenses 16 430 327
Current taxation payable 112 193
Short-term debt facility 17 2,300 -
2,842 520
--------------- ---------------
Net Assets 49,407 63,855
=============== ===============
Equity attributable to equity
holders of the parent
Share capital 18 561 561
Share redemption reserve - -
Share premium 28,661 28,661
Special distributable reserve 12,960 26,887
Capital reserve 6,845 6,189
Revenue reserve 380 1,557
Total equity 49,407 63,855
=============== ===============
Shareholder' funds
C Share 20 84.87p 134.58p
D Share 20 62.46p 117.34p
E Share 20 101.69p 102.56p
The statements were approved by the Directors and authorised for
issue on 15 June 2020 and are signed on behalf of the Board by:
David Frank
Chairman
15 June 2020
The accompanying notes on pages 94 to 109 are an integral part
of this statement.
Statement of Changes in Shareholders' Equity
For the year ended 31 March 2020
Special
Issued Share Redemption Share Distributable Capital Revenue
Capital Reserve Premium Reserve Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31
March
2020
Opening balance 561 - 28,661 26,887 6,189 1,557 63,855
---------- ------------------ ---------- ---------------- ---------- ---------- ----------
Issue of new
shares - - - - - - -
Purchase of own
shares - - - - - - -
Cancellation of
share
premium - - - - - - -
Dividends paid - - - (13,927) - (2,447) (16,374)
Transfer on share
redemption - - - - - - -
Transactions with
owners - - - (13,927) - (2,447) (16,374)
---------- ------------------ ---------- ---------------- ---------- ---------- ----------
Profit for the
year - - - - 655 1,271 1,926
Other
comprehensive
income - - - - - - -
Profit and total
comprehensive
income for the
year - - - - 655 1,271 1,926
---------- ------------------ ---------- ---------------- ---------- ---------- ----------
Balance at 31
March
2020 561 - 28,661 12,960 6,844 381 49,407
========== ================== ========== ================ ========== ========== ==========
Capital reserve
consists
of:
Investment holding
gains 9,379
Other realised
losses (2,535)
6,844
==========
Year ended 31
March
2019
Opening balance 756 2 44,968 23,968 942 582 71,218
---------- ------------------ ---------- ---------------- ---------- ---------- ----------
Cancellation of
shares (195) 195 - - - - -
Cancellation of
share
premium - - (16,307) 16,307 - - -
Dividend paid - - - (13,390) - (582) (13,972)
Transfer on share
redemption - (2) - 2 - - -
Repayment of
capital - (195) - - - - (195)
Transactions with
owners (195) (2) (16,307) 2,919 - (582) (14,167)
---------- ------------------ ---------- ---------------- ---------- ---------- ----------
Profit for the
year - - - 5,247 1,557 6,804
Other
comprehensive
income - - - - - -
Profit and total
comprehensive
income for the
year - - - 5,247 1,557 6,804
---------- ------------------ ---------- ---------------- ---------- ---------- ----------
Balance at 31
March
2019 561 - 28,661 26,887 6,189 1,557 63,855
========== ================== ========== ================ ========== ========== ==========
Capital reserve
consists
of:
Investment holding
gains 8,303
Other realised
losses (2,114)
6,189
==========
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. The revenue, special distributable and
realised capital reserves are distributable by way of dividend.
At 31 March 2020 the total reserves available for distribution
are GBP10,806,000. This consists of the distributable revenue
reserve net of the realised capital loss and the special
distributable reserve.
Statement of Cash Flows
For the year ended 31 March 2020
Year ended Year ended
31 March 2020 31 March 2019
GBP'000 GBP'000
Cash flows from operating activities
Profit before taxation 2,049 7,033
Loss/(gain) arising on the disposal of
investments during the period 181 (420)
(Gain) arising on the revaluation of
investments at the period end (1,076) (5,049)
Cashflow generated by operations 1,154 1,564
Decrease in receivables 465 126
Increase/(decrease) in payables 103 (332)
Cash flows from operating activities 1,722 1,358
--------------- ---------------
Tax paid (204) (127)
Net cash flows from operating activities 1,518 1,231
--------------- ---------------
Cash flow from investing activities
Proceeds of sale of financial assets
at fair value through profit or loss 7,069 676
Net cash flows from investing activities 7,069 676
--------------- ---------------
Cash flows from financing activities
Repayment of capital - (195)
Dividends paid (16,374) (13,972)
Drawdown on loan facility 2,300 -
Net cash flows from financing activities (14,074) (14,167)
--------------- ---------------
Net (decrease)/increase in cash and cash
equivalents (5,487) (12,260)
=============== ===============
Reconciliation of net cash flow to movements
in cash and cash equivalents
Opening cash and cash equivalents 6,188 18,448
Net (decrease)/increase in cash and cash
equivalents (5,487) (12,260)
Closing cash and cash equivalents 701 6,188
=============== ===============
The accompanying notes are an integral part of these
statements.
Unaudited Non-Statutory Analysis of - The C Ordinary Share
Fund
Statement of Comprehensive
Income
Year ended Year ended
31 March 2020 31 March 2019
------------------------------- -------------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 988 - 988 1,127 - 1,127
Unrealised gain on investments - 218 218 - 2,913 2,913
Investment return 988 218 1,206 1,127 2,913 4,040
Investment management
fees (316) (86) (402) (273) (76) (349)
Other expenses (58) - (58) (39) - (39)
Profit before taxation 614 132 746 815 2,837 3,652
Taxation (53) 17 (36) (72) 14 (58)
Profit after taxation 561 149 710 743 2,851 3,594
--------- --------- --------- --------- ---------
Profit and total comprehensive
income for the period 561 149 710 743 2,851 3,594
Basic and diluted earnings
per share 4.18p 1.11p 5.29p 5.53p 21.21p 26.74p
Balance Sheet Year ended Year ended
31 March 2020 31 March 2019
GBP'000 GBP'000
Non-current assets
Financial assets at fair
value through profit
or loss 11,502 17,415
Current assets
Receivables 66 83
Cash and cash equivalents 193 759
259 842
Current liabilities
Payables (17) (103)
Corporation tax (38) (66)
Short-term debt facility (300) -
Net assets 11,406 18,088
Equity attributable to
equity holders 11,406 18,088
Net asset value per share 84.87p 134.58p
Statement of Changes
in Year ended Year ended
Shareholders' Equity 31 March 2020 31 March 2019
GBP'000 GBP'000
Opening Shareholders'
funds 18,088 15,166
Profit for the period 710 3,594
Dividends paid (7,392) (672)
Closing Shareholders'
funds 11,406 18,088
---------
Unaudited Non-Statutory Analysis of - The C Ordinary Share
Fund
Investment Portfolio 31 March 2020 31 March 2019
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted qualifying holdings 7,682 94.86 11,279 96.44 9,430 69.78 14,089 77.52
Unquoted non-qualifying
holdings 223 2.75 223 1.91 3,325 24.60 3,326 18.30
Financial assets at fair value
through profit or loss 7,905 97.61 11,502 98.35 12,755 94.38 17,415 95.82
Cash and cash equivalents 193 2.39 193 1.65 759 5.62 759 4.18
8,098 100.00 11,695 100.00 13,514 100.00 18,174 100.00
Qualifying Holdings
Unquoted
Hydroelectric Power
Green Highland Allt Choire A
Bhalachain (25
5) Limited 2,466 30.45 2,965 25.35 3,130 23.16 3,642 20.04
Green Highland Allt Phocachain
(1015) Limited 1,576 19.46 2,136 18.26 2,000 14.80 2,590 14.25
Achnacarry Hydro Ltd 3,640 44.95 6,178 52.83 4,300 31.82 7,857 43.23
7,682 94.86 11,279 96.44 9,430 69.78 14,089 77.52
Non-Qualifying Holdings
Unquoted
Hydroelectric Power
Green Highland Allt Choire A
Bhalachain (25
5) Limited 223 2.75 223 1.91 289 2.14 289 1.59
Green Highland Allt Phocachain
(1015) Limited - - - - 122 0.90 122 0.67
Achnacarry Hydro Ltd - - - - 26 0.19 27 0.15
SME Funding
Hydroelectric Power:
Broadpoint 2 Limited - - - - 2,084 15.42 2,084 11.47
Broadpoint 3 Limited - - - - 804 5.95 804 4.42
223 2.75 223 1.91 3,325 24.60 3,326 18.30
Unaudited Non-Statutory Analysis of - The D Ordinary Share
Fund
31 March 2020 31 March 2019
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 780 - 780 919 - 919
Unrealised (loss)/gain
on investments - (277) (277) - 1,475 1,475
Investment return 780 (277) 503 919 1,475 2,394
Investment management
fees (286) (79) (365) (215) (58) (273)
Other expenses (52) - (52) (38) - (38)
Profit/(loss) before taxation 442 (356) 86 666 1,417 2,083
Taxation (83) 15 (68) (126) 11 (115)
Profit after taxation 359 (341) 18 540 1,428 1,968
Profit and total comprehensive
income for the period 359 (341) 18 540 1,428 1,968
Basic and diluted earnings/(loss)
per share 2.61p (2.49p) 0.12p 3.93p 10.43p 14.36p
Balance Sheet Year ended Year ended
31 March 2020 31 March 2019
GBP'000 GBP'000
Non-current assets
Financial assets at fair
value through profit or
loss 10,146 14,735
Current assets
Receivables 378 821
Cash and cash equivalents 173 719
551 1,540
Current liabilities
Payables (69) (82)
Corporation tax (69) (116)
Short-term debt facility (2,000) -
Net assets 8,559 16,077
Equity attributable to
equity holders 8,559 16,077
Net asset value per share 62.46p 117.34p
Statement of Changes in Year ended Year ended
Shareholders' equity 31 March 2020 31 March 2019
GBP'000 GBP'000
Opening shareholders'
funds 16,077 14,794
Profit for the period 18 1,968
Dividends paid (7,536) (685)
Closing shareholders'
funds 8,559 16,077
Unaudited Non-Statutory Analysis of - The D Ordinary Share
Fund
Investment Portfolio 31 March 2020 31 March 2019
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted qualifying holdings 8,248 96.69 10,036 97.25 11,240 84.23 13,349 86.39
Unquoted non-qualifying
holdings 109 1.28 110 1.07 1,386 10.39 1,386 8.96
Financial assets at fair value
through profit or loss 8,357 97.97 10,146 98.32 12,626 94.62 14,735 95.35
Cash and cash equivalents 173 2.03 173 1.68 719 5.38 719 4.65
8,530 100.00 10,319 100.00 13,345 100.00 15,454 100.00
Qualifying Holdings
Unquoted
Hydroelectric Power
Elementary Energy Limited 337 3.95 380 3.68 342 2.56 400 2.59
Green Highland Allt Garbh
Limited - - - - 2,710 20.31 2,710 17.54
Green Highland Allt Ladaidh
(1148) Limited 3,374 39.55 4,622 44.79 3,500 26.23 5,010 32.42
Green Highland Allt Luaidhe
(228) Limited 1,918 22.49 2,341 22.69 1,995 14.95 2,407 15.58
Green Highland Allt Phocachain
(1015) Limited 1,858 21.78 2,191 21.23 1,932 14.48 2,281 14.76
Green Highland Shenval Limited 761 8.92 502 4.86 761 5.70 541 3.50
8,248 96.69 10,036 97.25 11,240 84.23 13,349 86.39
======== ========= ======== ========= ======== ========= ========
Non-Qualifying Holdings
Unquoted
Hydroelectric Power
Green Highland Allt Luaidhe
(228) Limited 109 1.28 110 1.07 180 1.35 180 1.16
SME Funding
Hydroelectric Power:
Broadpoint 3 Limited - - - - 1,206 9.04 1,206 7.80
109 1.28 110 1.07 1,386 10.39 1,386 8.96
======== ========= ======== ========= ======== ========= ========
Unaudited Non-Statutory Analysis of - The E Ordinary Share
Fund
Year ended Year ended
31 March 2020 31 March 2019
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 975 - 975 855 - 855
Realised gain on investments - (181) (181) - 420 420
Unrealised loss on investments - 1,135 1,135 - 660 660
Investment return 975 954 1,929 855 1,080 1,935
Investment management
fees (485) (132) (617) (460) (126) (586)
Other expenses (95) - (95) (86) - (86)
Profit before taxation 395 822 1,217 309 954 1,263
Taxation (44) 25 (19) (59) 24 (35)
Profit after taxation 351 847 1,198 250 978 1,228
Profit and total comprehensive
income for the period 351 847 1,198 250 978 1,228
Basic and diluted earnings
per share 1.21p 2.92p 4.13p 0.86p 3.38p 4.24p
Balance Sheet Year ended Year ended
31 March 2020 31 March 2019
GBP'000 GBP'000
Non-current assets
Financial assets at fair
value through profit or
loss 29,115 24,787
Current assets
Receivables 341 346
Cash and cash equivalents 335 4,711
676 5,057
Current liabilities
Payables (344) (143)
Corporation tax (5) (10)
Net assets 29,442 29,691
Equity attributable to
equity holders 29,442 29,691
Net asset value per share 101.69p 102.56p
Statement of Changes in Year ended Year ended
Shareholders' equity 31 March 2020 31 March 2019
GBP'000 GBP'000
Opening shareholders'
funds 29,691 28,463
Profit for the period 1,198 1,228
Dividends paid (1,447) -
Closing shareholders'
funds 29,442 29,691
Unaudited Non-Statutory Analysis of - The E Ordinary Share
Fund
Investment Portfolio 31 March 2020 31 March 2019
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted qualifying holdings 15,315 59.55 19,829 67.34 13,034 47.23 15,085 51.13
Quoted non-qualifying holdings 3,319 12.90 2,927 9.94 6,001 21.74 5,901 20.00
Unquoted non-qualifying
holdings 6,750 26.25 6,359 21.60 3,852 13.96 3,801 12.89
Financial assets at fair
value through profit or
loss 25,384 98.70 29,115 98.88 22,887 82.93 24,787 84.02
Cash and cash equivalents 335 1.30 335 1.12 4,711 17.07 4,711 15.98
25,719 100.00 29,450 100.00 27,598 100.00 29,498 100.00
Qualifying Holdings
Unquoted
Solar
Digima Limited 1,262 4.91 1,661 5.64 1,262 4.57 1,612 5.46
Digital Screen Solutions
Limited 2,020 7.85 2,586 8.78 2,020 7.32 2,658 9.01
Green Energy for Education
Limited 475 1.85 1,260 4.28 475 1.72 1,127 3.82
Hydroelectric Power
Elementary Energy Limited 1,723 6.70 2,081 7.07 1,718 6.23 2,009 6.81
Green Highland Shenval Limited 359 1.40 237 0.80 359 1.30 256 0.87
Green Highland Allt Choire
A Bhalachain (255) Limited 664 2.58 798 2.71 - - - -
Green Highland Allt Ladaidh
(1148) Limited 126 0.49 149 0.51 - - - -
Green Highland Allt Luaidhe
(228) Limited 77 0.30 84 0.29 - - - -
Green Highland Allt Phocachain
(1015) Limited 498 1.94 662 2.25 - - - -
Achnacarry Hydro Ltd 911 3.54 1,663 5.65 - - - -
Gas Power
Green Peak Generation Limited 2,200 8.55 2,366 8.03 2,200 7.97 2,423 8.21
Vertical Growing
Perfectly Fresh Cheshire
Limited 5,000 19.44 6,282 21.33 5,000 18.12 5,000 16.95
15,315 59.55 19,829 67.34 13,034 47.23 15,085 51.13
Non-Qualifying Holdings
Quoted
Investment Property
Triple Point Social Housing
REIT plc Equity 3,319 12.90 2,927 9.94 6,001 21.74 5,901 20.00
3,319 12.90 2,927 9.94 6,001 21.74 5,901 20.00
Unquoted
Crematorium Management
Furnace Managed Services
Limited 486 1.89 97 0.33 496 1.80 103 0.35
Hydroelectric Power
Elementary Energy Limited 200 0.78 199 0.68 248 0.90 248 0.84
SME Funding
Hydroelectric Power:
Broadpoint 2 Limited 1,335 5.19 1,334 4.53 750 2.72 750 2.54
Other:
Funding Path Limited 2,200 8.55 2,200 7.47 2,200 7.97 2,200 7.46
Aeris Power Limited 519 2.02 519 1.76 158 0.57 500 1.70
Broadpoint 3 Limited 2,010 7.82 2,010 6.83 - - - -
6,750 26.25 6,359 21.60 3,852 13.96 3,801 12.89
Notes to the Financial Statements
1. Corporate Information
The Financial Statements of the Company for the year ended 31
March 2020 were authorised for issue in accordance with a
resolution of the Directors on 15 June 2020.
The Company was admitted for listing on the London Stock
Exchange on 6 February 2008.
The Company is incorporated and domiciled in the United Kingdom
and registered in England and Wales. The address of its 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 predominantly operates. The
functional and reporting currency is 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 to meet its day to day commitments for at least 12 months
from the date of approval of the financial statements. During the
year the Company entered into a 364 day loan facility of GBP2.7
million from TPLP, a separate fund which is managed by the
Investment Manager. GBP2.3 million was drawn during the year.
The current key loan terms are a length of 364 days and an
interest rate of 4.5%. The loan is due for repayment on 17 March
2021. At the reporting date, the Company does not have sufficient
liquid resources to enable repayment of the outstanding loan
balance. While the board are confident the lender will extend the
current loan term, to mitigate this risk the Company has entered
into a separate facility agreement with an alternative lender. The
facility has the same key terms and includes a two year
availability period. This enables the Company to draw on this
facility should the existing loan not be extended by the existing
lender.
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 impact of
COVID-19 has been considered, more detail on these considerations
can be found under the Principal Risks and Uncertainties section on
page 25. This is also discussed in the Chairman's Statement on
pages 9 to 15, the Going Concern statement on pages 27 to 28 and
note 23 to financial statements.
The Financial Statements of the Company for the year to 31 March
2020 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 October 2019.
The Financial Statements are prepared on a historical cost basis
except that investments are shown at fair value through profit or
loss ("FVTPL").
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; and
-- 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.
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 12.
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 EU.
These accounting policies have been applied consistently in
preparing these Financial Statements.
New and amended standards and interpretations applied
There were no new standards or interpretations effective for the
rst time for periods beginning on or after 1 January 2019 that had
a signi cant effect on the Company's nancial statements.
Furthermore, none of the amendments to standards that are effective
from that date had a signi cant effect on the nancial
statements.
IFRS 16 "Leases" was issued and became effective for accounting
periods beginning on or after 1 January 2019. As the Company's
investments are held at fair value through pro t or loss and any
operating leases are held at SPV level, the introduction of IFRS 16
has had no impact on the reported results and nancial position of
the Company.
New and amended standards and interpretations not applied
Other accounting standards and interpretations have been
published and will be mandatory for the Company's accounting
periods beginning on or after 1 January 2020 or later periods. The
impact of these standards is not expected to be material to the
reported results and nancial position of the Company.
Presentation of Statement of Comprehensive Income
In order better to reflect the activities of a VCT, 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.
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 pages 17 to 19 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.
-- 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 price of recent transactions,
discounted cash flows, cost, and initial cost of investment;
and
-- Listed investments are fair valued at bid price on the relevant date.
The Board believes 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 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 2019.
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.
The Company has taken the exemption permitted by IAS 28
"Investments in Associates and Joint Ventures" and IFRS11 "Joint
Arrangements" for entities similar to investment entities and
measures its investments in associates and joint ventures at fair
value. The Directors consider an associate to be an entity over
which the Group has signi cant in uence, through an ownership of
between 20% and 50%. The Company's Subsidiary, associates and joint
ventures are disclosed in note 15.
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.
Property income includes tax which is withheld at source.
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 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.
Finance costs
Borrowing costs are recognised in the Statement of Comprehensive
Income in the period to which they relate on an accruals basis.
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 2019.
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.
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 31
March 2020 and 31 March 2019 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.
Financial Assets
The classi cation of nancial assets at initial recognition
depends on the purpose for which the nancial asset was acquired and
its characteristics. All nancial assets are initially recognised at
fair value. All purchases of nancial assets are recorded at the
date on which the Company became party to the contractual
requirements of the nancial asset.
The Company's nancial assets principally comprise of investments
held at fair value through pro t or loss and financial assets held
at amortised cost.
Investments are designated upon initial recognition as held at
fair value through pro t or loss. Gains or losses resulting from
the movement in fair value are recognised in the Statement of
Comprehensive Income at each valuation date.
The Company's loan and equity investments are held at fair value
through pro t or loss. Gains or losses resulting from the movement
in fair value are recognised in the Company's Statement of
Comprehensive Income at each valuation date.
Financial assets are recognised/derecognised at the date of the
purchase/disposal. Investments are initially recognised at cost,
being the fair value of consideration given. Transaction costs are
recognised in the Consolidated Statement of Comprehensive Income as
incurred.
Fair value is de ned as the amount for which an asset could be
exchanged between knowledgeable willing parties in an arm's length
transaction. Fair value is calculated on an unlevered, discounted
cash ow basis in accordance with IFRS 13 and IFRS 9.
Derecognition of nancial assets (in whole or in part) takes
effect:
-- When the Group has transferred substantially all the risks
and rewards of ownership; or
-- When it has neither transferred or retained substantially all
the risks and rewards and when it no longer has control over the
assets or a portion of the asset; or
-- When the contractual right to receive cash ow has
expired.
Financial liabilities
Financial liabilities are classi ed according to the substance
of the contractual agreements entered into and are recorded on the
date on which the Company becomes party to the contractual
requirements of the nancial liability.
All loans and borrowings are initially recognised at cost, being
fair value of the consideration received, less issue costs where
applicable. After initial recognition, all interest-bearing loans
and borrowings are subsequently measured at amortised cost using
the effective interest rate method.
Although not appropriate for this reporting date, loan balances
at the year-end would not usually be discounted to re ect amortised
cost, as the amounts would not usually be materially different from
the outstanding balances.
The Company's other nancial liabilities measured at amortised
cost include trade and other payables which are initially
recognised at fair value and subsequently measured at amortised
cost using the effective interest rate method.
A nancial liability (in whole or in part) is derecognised when
the Group has extinguished its contractual obligations, it expires
or is cancelled. Any gain or loss on derecognition is taken to the
Consolidated Statement of Comprehensive Income.
Performance fees due to the Investment Manager
TPIM provides investment management and administration services
to the Company under an Investment Management Agreement effective 6
February 2008 and deeds of variation to that agreement effective 21
November 2012, 28 October 2014, 7 October 2016 and 27 April 2020.
The agreement allows for performance fees to be payable to the
manager upon successful realisation of the hurdle applicable to
each class of shares. More information is disclosed in note 5 to
the financial statements.
Performance fees will begin to be accrued following
distributions from the Company to investors exceeding 100 pence per
share in each share class. For the avoidance of any doubt, this
does not include the initial tax relief available to investors and
relates solely to distributions from the Company to investors.
Issued Share Capital
C Shares, D Shares and E 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 comprise cash balances, deposits held
on call with banks and other short-term highly liquid deposits with
original maturities of 3 months or less, that are readily
convertible to a known amount of cash and are subject to an insigni
cant risk of changes in value.
Reserves
The revenue reserve (retained earnings) and capital reserve
reflect the guidance in the AIC SORP 2019. 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, share redemption reserve and
share premium reserve are not distributable. The special
distributable reserve was created on court cancellation of the
share premium account.
The revenue, special distributable and realised capital reserves
are distributable by way of dividend.
Consolidated Financial Statements
The Directors have concluded that the Company has control over
one company in which it has invested, as prescribed by IFRS 10
"Consolidated Financial Statements". The Company continues to
satisfy the criteria to be regarded as an investment entity as
defined in IFRS 10.
Subsidiaries are therefore measured at fair value through profit
or loss, in accordance with IFRS 13 "Fair Value measurement" and
IFRS 9 "Financial Instruments".
Dividends
Dividends payable are recognised as distributions in the nancial
statements when the Company's obligation to make payment has been
established.
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
Ord Shares C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March 2020
Loan stock interest - 655 771 637 2,063
Dividends receivable - 331 - 40 371
Interest receivable on bank
balances - 2 9 35 46
Other Investment Income - - - 63 63
Property Income - - - 200 200
- 988 780 975 2,743
Year ended 31 March 2019
Loan stock interest 4 733 918 531 2,186
Dividends receivable - 393 - - 393
Interest receivable on bank
balances 19 1 1 42 63
Other Investment Income - - - 123 123
Property Income - - - 158 158
23 1,127 919 854 2,923
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 6
February 2008 and deeds of variation to that agreement effective 21
November 2012, 28 October 2014, 7 October 2016 and 27 April
2020.
C Shares: The agreement provides for an administration and
investment management fee of 2% per annum of net assets payable
quarterly in arrear for an appointment of at least six years from
the admission of those shares. Subject to distributions to the C
Shareholders exceeding the C Share hurdle of 100 pence per share,
the Investment Manager will be entitled to a performance incentive
fee of 20%. This does not include the initial tax relief available
to investors.
D Shares: The agreement provides for an administration and
investment management fee of 2% per annum of net assets payable
quarterly in arrear for an appointment of at least six years from
the admission of those shares. Subject to distributions to the D
Shareholders exceeding the D Share hurdle of 100 pence per share,
the Investment Manager will be entitled to a performance incentive
fee of 20%. This does not include the initial tax relief available
to investors.
E Shares: The agreement provides for an administration and
investment management fee of 2% per annum of net assets payable
quarterly in arrear for an appointment of at least six years from
the admission of those shares. Subject to distributions to the E
Shareholders exceeding the E Share hurdle of 100 pence per share,
the Investment Manager will be entitled to a performance incentive
fee of 20%. This does not include the initial tax relief available
to investors.
To date there have been no performance fees paid. No provision
has been made as the Board believes any performance fees will not
fall due for the foreseeable future.
An administration fee equal to 0.25% per annum of the Company's
net assets is payable quarterly in arrears.
Fees paid to the Investment Manager for administrative and other
services during the year were GBP188,000 (2019: GBP177,000). During
the year TPIM waived management fees in the sum of GBPNil (2019:
GBP84,849) in relation to the Company's investment in Green
Highland Shenval Limited.
Ord Shares C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March 2020
Investment Management
Fees - 347 317 529 1,193
- 347 317 529 1,193
Year ended 31 March 2019
Investment Management
Fees (12) 305 231 504 1,028
(12) 305 231 504 1,028
Disclosure by share class is unaudited
6. Operating Expenses
All expenses are accounted for on an accruals basis.
Expenses are charged wholly to revenue, apart from management
fees which are charged 25% to capital and 75% to revenue, any
performance fees incurred are charged wholly to capital.
Transaction costs incurred when selling assets are written off to
the Income Statement in the period that they occur.
Year ended Year ended
31 March 2020 31 March 2019
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial and regulation costs 48 - 48 37 - 37
General administration 222 - 222 190 - 190
Fees payable to the Company's
auditor for audit services 32 - 32 29 - 29
Company secretarial services 9 - 9 9 - 9
Other professional fees 27 - 27 11 - 11
Directors fees 55 - 55 55 - 55
393 - 393 331 - 331
The Ongoing Charges Ratio for the Company for the year to 31
March 2020 was 2.70% (2019: 2.15%). Total annual running costs are
capped at 3.5% of the Company's net assets.
The Company's annual running costs will continue to be capped at
3.5% of NAV (excluding any performance fees payable to Triple
Point). Any excess will be met by the Investment Manager by way of
a reduction in future management fees.
VAT has been removed from the Audit fees and allocated to
General Administration expenses.
7. Finance Costs
During the year the Company entered into a loan facility with
TPLP. On 20 March 2020 GBP2.3 million was drawn on the facility.
The loan attracts interest at a rate of 4.5%.
Interest of GBP3,119 was charged on the loan for the year ending
31 March 2020.
8. Legal and Professional Fees
Legal and professional fees include remuneration paid to the
Company's auditor, BDO LLP as shown in the following table:
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March 2020
Fees payable to the Company's
auditor:
- for the audit of the financial
statements 9 8 15 32
9 8 15 32
Year ended 31 March 2019
Fees payable to the Company's
auditor:
- for the audit of the financial
statements 6 7 16 29
6 7 16 29
VAT has been removed from the Audit fees and allocated to
General Administration expenses.
Disclosure by share class is unaudited
9. Directors' Remuneration
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March 2020
David Frank 5 5 10 20
Simon Acland 5 5 8 18
Michael Stanes 5 4 8 17
15 14 26 55
Year ended 31 March 2019
David Frank 5 4 10 19
Simon Acland 4 4 10 18
Michael Stanes 4 4 10 18
13 12 30 55
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.
Disclosure by share class is unaudited
10. Taxation
Ord Shares C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March 2020
Profit on ordinary activities
before tax - 746 86 1,217 2,049
Corporation tax @ 19% - 142 15 231 388
Effect of:
Capital (gains) not taxable - (41) 53 (181) (169)
Income received not taxable - (63) - (8) (71)
Unrelieved tax losses arising
in the year - (2) - - (2)
Prior year adjustment - - - (23) (23)
Tax charge/(credit) - 36 68 19 123
Year ended 31 March 2019
Profit/(loss) on ordinary activities
before tax 35 3,652 2,083 1,263 7,033
Corporation tax @ 19% 7 694 396 240 1,337
Effect of:
Capital (gains) not taxable - (553) (280) (205) (1,038)
Income received not taxable - (75) - - (75)
Unrelieved tax losses arising
in the year - - - (1) (1)
Prior year adjustment 13 (7) - - 6
Tax charge 20 59 116 34 229
Capital gains and losses are exempt from corporation tax due to
the Company's status as a VCT.
Disclosure by share class is unaudited
11. Earnings/(loss) per Share
Earnings per C Share are 5.29p (2019: 26.74p) based on the
profit after tax of GBP710,000 (2019: GBP3,593,000) and on the
weighted average number of shares in issue during the period of
13,441,438 (2019: 13,441,438).
Earnings per D Share are 0.12p (2019: 14.37p) based on the
profit after tax of GBP16,000 (2019: GBP1,967,000) and on the
weighted average number of shares in issue during the period of
13,701,636 (2019: 13,701,636).
Earnings per E Share are 4.13p (2019: 4.24p) based on the profit
after tax of GBP1,197,000 (2019: GBP1,226,000) and on the weighted
average number of shares in issue during the period of 28,949,575
(2019: 28,949,575).
There are no potentially dilutive capital instruments in issue
and, therefore, no diluted return per share figures are included in
these Financial Statements.
12. 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, with the
exception of the investment in Triple Point Social Housing REIT plc
which is classified as level 1. Further details of the types of
investments are provided in the Investment Manager's Review on
pages 32 to 44.
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.
Unconsolidated subsidiaries consist of Aeris Power Limited,
included in investments as per the company's accounting policy. The
Company has a loan investment totalling GBP157,500 in this company.
The loan has an interest rate of 11.66%.
Valuation techniques and unobservable
inputs:
Inter relationship
between significant
Significant unobservable unobservable inputs
Sector Valuation Techniques inputs and fair value measurement
Estimated fair value
would increase/(decrease)
if:
Hydroelectric
Power * Discounted cash flows: The valuation model considers * Discount rate 6.75% (2019: 7.25%) * The discount rate was lower/(higher)
the present value of expected payment, discounted
using a risk-adjusted discount rate.
* Inflation rate: OBR 5-year forecast, 2.75% * The inflation rate was higher/(lower)
long term
(2019: OBR 5-year forecast, 2.75% long term
).
Gas Power
* Discounted cash flows: The valuation model considers * Discount rate 10% (2019: 8.5%) * The discount rate was lower/(higher)
the present value of expected payment, discounted
using a risk-adjusted discount rate.
* Inflation rate: OBR 5-year forecast, 2.75% * The inflation rate was higher/(lower)
long term
(2019: Inflation rate: OBR 5-year forecast,
2.75%
long term).
Solar
* Discounted cash flows: The valuation model considers * Discount rate 6.25% (2019: 6.75%) * The discount rate was lower/(higher)
the present value of expected payment, discounted
using a risk-adjusted discount rate.
* Inflation rate: OBR 5-year forecast, 2.75% * The inflation rate was higher/(lower)
long term
(2019: Inflation rate: OBR 5-year forecast,
2.75%
long term).
The Company's Vertical Growing investment in Perfectly Fresh
Cheshire Limited has been valued on a gross asset multiple.
Valuation data on the sector is difficult to source as this is a
new and developing industry, the Company has used data available to
it and knowledge of comparable transactions in the sector and the
Board believes the valuation methodology to be reasonable.
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 as to 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 1%. 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 GBP2.974 million or 8.4%. Using the upside
alternative, the aggregate value of the unquoted investments would
be an increase of GBP3.47 million or 9.90%.
Due to the nature and structure of the investment in Perfectly
Fresh Cheshire Limited, there has been no sensitivity performed on
any inputs into the valuation. There are limited data points to
reference in the vertical growing sector making alternative inputs
difficult to apply. The potential future returns on the investment
are calculated in accordance with agreements between the Company
and Perfectly Fresh Cheshire Limited.
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 31 March 2020 were as follows:
Year ended 31 March 2020
Level 1 Quoted Investments
Ord Shares C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening cost - - - 6,001 6,001
Opening investment holding
gains - - - (100) (100)
Opening fair value - - - 5,901 5,901
Transfers between share
classes - - - - -
Purchases at cost - - - - -
Disposal proceeds - - - (2,500) (2,500)
Realised loss - - - (181) (181)
Investment holding losses - - - (293) (293)
Closing fair value at 31
March 2020 - - - 2,927 2,927
Closing cost - - - 3,319 3,319
Closing investment holding
gains - - - (392) (392)
Level 3 Unquoted Investments
Ord Shares C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening cost - 12,755 12,626 16,883 42,264
Opening investment holding
gains - 4,659 2,109 2,003 8,771
Opening fair value - 17,414 14,735 18,886 51,035
Transfers between share
classes - (5,901) (1,531) 7,432 -
Purchases at cost - - - - -
Disposal proceeds - (229) (2,781) (1,559) (4,569)
Realised gains - - - - -
Investment holding gains - 218 (277) 1,428 1,369
Closing fair value at 31
March 2020 - 11,502 10,146 26,187 47,835
Closing cost - 7,640 8,357 22,065 38,062
Closing investment holding
gains - 3,862 1,789 4,122 9,773
Year ended 31 March
2019
Ord Shares C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening cost - - - 6,001 6,001
Opening investment holding
gains - - - (117) (117)
Opening fair value - - - 5,884 5,884
Investment holding gains - - - 17 17
Closing fair value at
31 March 2019 - - - 5,901 5,901
Closing cost - - - 6,001 6,001
Closing investment holding
gains - - - (100) (100)
Year ended 31 March
2019 Level 3 Unquoted Investments
Ord Shares A Shares C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening cost 10,081 - 12,844 13,089 6,875 42,889
Opening investment holding
gains 1,017 - 1,746 634 (26) 3,371
Opening fair value 11,098 - 14,590 13,723 6,849 46,260
Transfers between share
classes (11,098) - - (457) 11,555 -
Disposal proceeds - - (89) (6) (581) (676)
Realised gains - - - - 420 420
Investment holding gains - - 2,913 1,475 643 5,031
Closing fair value at
31 March 2019 - - 17,414 14,735 18,886 51,035
Closing cost - - 12,755 12,626 16,883 42,264
Closing investment holding
gains - - 4,659 2,109 2,003 8,771
All investments are designated at 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 32 to
44 and 46 to 47, and details of entities over which the VCT has
significant influence are included in note 15.
Disclosure by share class is unaudited
13. Receivables
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
31 March 2020
Other debtors 63 376 301 740
Prepayments and accrued
income 3 2 40 45
66 378 341 785
31 March 2019
Other debtors 78 816 270 1,164
Prepayments and accrued
income 5 5 76 86
83 821 346 1,250
Other debtors relate to interest receivable on investment
loans.
14. Cash and Cash Equivalents
Cash and cash equivalents comprise deposits with The Royal Bank
of Scotland plc ("RBS") and Cater Allen Private Bank.
15. Unconsolidated, subsidiaries, associates and joint ventures
The following table shows subsidiaries, associates and joint
ventures of the Company which have been recognised at fair value as
permitted by IAS 28 "Investments in Associates and Joint
Ventures".
As the Company is regarded as an Investment Entity as referred
to in note 2, the Company's only subsidiary Aeris Power Limited has
not been consolidated in the preparation of the nancial
statements.
The principal undertakings in which the Company's interest at
the year-end is 20% or more are as follows:
Name Registered address Holding
30 Camp Road, Farnborough, Hampshire,
Aeris Power Limited GU14 6EW 100.00%
Broadpoint 2 Limited 1 King William Street, London, EC4N 7AF 49.00%
30 Camp Road, Farnborough, Hampshire,
Digima Limited GU14 6EW 30.87%
Digital Screen Solutions 30 Camp Road, Farnborough, Hampshire,
Limited GU14 6EW 35.36%
Elementary Energy Limited 1 King William Street, London, EC4N 7AF 49.93%
Funding Path Limited 1 King William Street, London, EC4N 7AF 49.00%
Furnace Managed Services 30 Buckland Gardens, Ryde, Isle of Wight,
Limited PO33 3AG 40.05%
Green Energy for Education
Limited 1 King William Street, London, EC4N 7AF 50.00%
Green Highland Allt Choire Q Court, 3 Quality Street, Edinburgh,
A Bhalachain Limited EH4 5BP 49.90%
Green Highland Allt Ladaidh Q Court, 3 Quality Street, Edinburgh,
(1148) Limited EH4 5BP 35.17%
Green Highland Allt Luaidhe Q Court, 3 Quality Street, Edinburgh,
(228) Limited EH4 5BP 35.18%
Green Highland Allt Phochachain Q Court, 3 Quality Street, Edinburgh,
(1015) Limited EH4 5BP 42.70%
Inveralmond Road, Inveralmond Industrial
Achnacarry Hydro Ltd Estate, Perth, PH1 3TW 40.65%
Green Highland Shenval Q Court, 3 Quality Street, Edinburgh,
Limited EH4 5BP 28.16%
Green Peak Generation Q Court, 3 Quality Street, Edinburgh,
Limited EH4 5BP 48.26%
Perfectly Fresh Cheshire
Limited 1 King William Street, London, EC4N 7AF 49.97%
-- All investments are held in the UK.
-- The investments are a combination of debt and equity.
-- Equity holding is equal to the voting rights.
16. Payables and Accrued Expenses
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
31 March 2020
Payables 3 56 320 379
Other taxes and SS 3 2 3 8
Accrued expenses 11 11 21 43
17 69 344 430
31 March 2019
Payables 91 72 123 286
Other taxes and SS 2 2 3 7
Accrued expenses 10 8 16 34
-
103 82 142 327
Disclosure by share class is unaudited
17. Borrowings
In line with t he Company's initial mandate for the C and D
Share Classes the Company has entered into a short-term loan
facility of GBP2.3 million which has repayment terms of 364 days.
The loan attracts interest at a rate of 4.5% per annum.
The loan and liquidity risk surrounding this loan in discussed
in more detail in the Principal Risks and Uncertainties section on
page 25.
18. Share Capital
31 March 2020 31 March 2019
C Shares of GBP0.01 each
Issued & Fully Paid
Number of shares 13,441,438 13,441,438
Par Value GBP'000 135 135
D Shares of GBP0.01 each
Issued & Fully Paid
Number of shares 13,701,636 13,701,636
Par Value GBP'000 137 137
E Shares of GBP0.01 each
Issued & Fully Paid
Number of shares 28,949,575 28,949,575
Par Value GBP'000 290 290
Total Shares of GBP0.01 each
Issued & Fully Paid
Number of shares 56,092,649 56,092,649
Par Value GBP'000 562 562
The rights attached to each class of share are disclosed in the
Directors' Report on pages 71 and 75.
19. 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 pages 17 and 19.
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 12) 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.
Financial Financial Designated
assets held liabilities at fair value
at amortised held at amortised through profit
Total value cost cost or loss
31 March 2020
Assets:
Financial assets
at fair value through
profit or loss 50,763 - - 50,763
Receivables 740 - - 740
Cash and cash equivalents 701 701 - -
52,204 701 - 51,503
Liabilities:
Other payables 379 - 379 -
Taxation payable 112 - 112 -
Loan facility 2,300 - 2,300 -
Accrued expenses 43 - 43 -
2,834 - 2,834 -
31 March 2019
Assets:
Financial assets
at fair value through
profit or loss 52,144 - - 52,144
Assets held for Sale - - - -
Receivables 1,336 - - 1,336
Cash and cash equivalents 6,188 6,188 - -
59,668 6,188 - 53,480
Liabilities:
Other payables 286 - 286 -
Accrued expenses 210 210 -
496 - 496 -
Market Risk
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.
Sensitivity analysis surrounding inputs such as inflation and
discount rates is included in note 12.
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 46 and
47.
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 GBP11,519,000
(2019: GBP12,239,000) 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
GBP6,232,000 (2018: GBP8,067,000) 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:
31 March 31 March
2020 2019
GBP'000 GBP'000
Cash on deposit 701 6,188
701 6,188
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 31 March 2020. The Board believes that in the current
economic climate a movement of 1% is a reasonable illustration.
The Company currently has a loan facility in place with TPLP,
the loan attracts interest at fixed rate of 4.5%. The length of
this agreement is 364 days, therefore there is a risk that the
facility may be renewed at a higher interest rate, should interest
rates increase in the wider market. The Board are of the opinion
that this risk is low.
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.
31 March 2020 31 March 2019
GBP'000 GBP'000
Qualifying Investment loans 11,519 26,215
Non-Qualifying Investment
loans 6,232 14,411
Cash on deposit 701 6,188
Receivables 740 1,164
19,192 47,969
The Company's loan to Broadpoint 3 Limited of GBP2.01 million
was due for repayment on 31 March 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 RBS and Cater
Allen Private Bank. Should the credit quality or financial position
of RBS or Cater Allen 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.
Further information surrounding going concern and liquidity can
be found in note 2 to the financial statements on pages 95 to
98
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. During the year, the
Company entered into a loan facility with TPLP, the loan facility
is secured against the portfolio of Hydroelectric investments.
While the loan facility falls due within 12 months, the Board and
the Investment Manager continue to maintain an open dialogue with
the lender and believe the loan facility will be extended if the
requirement is needed. The Company's ongoing cash flows are
sufficient to meet the ongoing liquidity needs and therefore the
Board believe liquidity risk is minimal. The cash position at the
reporting date reflects the timing of dividends paid to investors
on 25 March 2020.
The Board maintains a liquidity management policy where cash and
future cash flows from operating activities will be sufficient to
pay expenses. At 31 March 2020 cash amounted to GBP701,000 (2019:
GBP6,188,000).
Foreign Currency Risk
The Company does not have exposure to material foreign currency
risks.
20. Net Asset Value per Share
The Net Asset Value per C Share is 84.87p (2019: 134.58p) and is
based on Net Assets of GBP11,406,000 (2019: GBP18,088,000) divided
by the 13,441,438 (2019: 13,441,438) C Shares in issue.
The Net Asset Value per D Share is 62.46p (2019: 117.34p) and is
based on Net Assets of GBP8,559,000 (2019: GBP16,077,000) divided
by the 13,701,636 (2019: 13,701,636) D Shares in issue.
The Net Asset Value per E Share is 101.69p (2019: 102.56p) and
is based on Net Assets of GBP29,442,000 (2019: GBP29,610,000)
divided by the 28,949,575 (2019: 28,949,575) E Shares in issue.
21. Relationship with Investment Manager
During the period, TPIM received GBP1,193,478 which has been
expensed (2019: GBP1,195,410) for providing management and
administrative services to the Company. At 31 March 2020 GBP369,339
was owing to TPIM (2019: GBP284,451). During the year TPIM waived
management fees in the sum of GBPNil (2019: GBP84,849) in relation
to the Company's investment in Green Highland Shenval Limited.
During the year, the Company entered into a facility agreement
with another entity managed by the Investment Manager, TPLP. The
facility, secured over the Hydroelectric portfolio, is for GBP2.7
million at a fixed rate of 4.5% per annum. To date, the Company has
drawn GBP2.3 million against the facility.
The facility was put in place to aid in the refinancing of the
hydro investments and enable the Company to pay dividends to
Shareholders in line with the original mandate of the Company.
Interest of GBP3,119 was charged on amounts drawn during the
period.
22. Related Party Transactions
The Directors' Remuneration Report on pages 66 to 70 discloses
the Directors' remuneration and shareholdings.
There were no other related party transactions during the
period.
23. Post Balance Sheet Events
The Company has considered the COVID-19 pandemic, and the
ongoing impact that this will have on the investment portfolio.
While the Company acknowledges the fact that COVID-19 and the
economic impact was underway before the Company's year end the
Company continues to monitor the ongoing economic uncertainty
caused by the virus.
Following the Balance Sheet date, the Company has disposed of a
further 2.6 million shares of its E Share Class investment in
Triple Point Social Housing REIT plc. The sale realised proceeds
for the Company of GBP2.55 million, the Company continues to hold
552,000 shares.
After the Balance Sheet date the Company entered into a facility
agreement with TP Leasing Limited, a fund which is also managed by
the Investment Manager. The purpose of this facility was to
eliminate the risk that the existing 364 day loan facility was not
extended by the lender. The terms of this facility include a 2 year
availability period with a 3 year loan term. The interest rate on
the facility is 4.5%, in line with the terms of the existing
loan.
24. Dividends
C Shares:
During the year, the Company paid dividends to C Class
Shareholders of GBP7,392,791 equal to 55p per share. The Board has
resolved to pay a dividend of GBP470,450 equal to 3.5p per share on
30 June 2020 to Shareholders on the register on 12 June 2020.
D Shares:
During the year, the Company paid a dividend to D Class
Shareholders of GBP7,535,900 equal to 55p per share. The Board has
resolved to pay a third dividend of GBP685,082 equal to 5p per
share 30 June 2020 to Shareholders on the register on 12 June
2020.
E Shares:
The Company paid a dividend to E Class Shareholders of
GBP1,447,479, equal to 5p per share, on 25 March 2020 and also
declared a further dividend of 6.5p per share to be paid on 30 June
2020 to Shareholders on the register on 12 June 2020.
This takes total dividends paid to E Share Class holders to
11.5p per share.
Forward Looking Statements
The Front Section of this report (including but not limited to
the Chairman's Statement, Strategic Report, Investment Manager's
Review and Directors' Report) has been prepared to provide
additional information to Shareholders to assess the Company's
strategies and the potential for those strategies to succeed. These
should not be relied on by any other party or for any other
purpose.
The Review Section may include statements that are, or may be
deemed to be, "forward looking statements". These forward-looking
statements can be identi ed by the use of forward-looking
terminology, including the terms "believes", "estimates",
"anticipates", "expects", "intends", "may", "will" or "should" or,
in each case, their negative or other variations or comparable
terminology.
These forward looking statements include all matters that are
not historical facts. They appear in a number of places throughout
this document and include statements regarding the intentions,
beliefs or current expectations of the Directors and the Investment
Manager concerning, amongst other things, the investment objectives
and Investment Policy, nancing strategies, investment performance,
results of operations, nancial condition, liquidity, prospects, and
distribution policy of the Company and the markets in which it
invests.
By their nature, forward looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. Forward
looking statements are not guarantees of future performance. The
Company's actual investment performance, results of operations,
nancial condition, liquidity, distribution policy and the
development of its nancing strategies may differ materially from
the impression created by the forward looking statements contained
in this document.
Subject to their legal and regulatory obligations, the Directors
and the Investment Manager expressly disclaim any obligations to
update or revise any forward looking statement contained herein to
re ect any change in expectations with regard thereto or any change
in events, conditions or circumstances on which any statement is
based.
In addition, the Review Section may include target gures for
future nancial periods. Any such gures are targets only and are not
forecasts. This Annual Report has been prepared for the Company as
a whole and therefore gives greater emphasis to those matters which
are signi cant in respect of Triple Point Income VCT plc.
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.
END
FR EASKSFFLEEFA
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