TIDMTPVE TIDMTPVC TIDMTPVD
RNS Number : 6199C
Triple Point Inc VCT - TPVE
22 June 2021
22 June 2021
Triple Point Income VCT plc
(the "Company")
RESULTS FOR THE YEARED 31 MARCH 2021
The financial information set out in these statements does not
constitute the Company's statutory accounts for the year ended 31
March 2021, 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 2021.
These results were approved by the Board of Directors on 21 June
2021.
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)
Jonathan Parr
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
2021
C Shares D Shares E Shares Total
Net assets GBP'000 11,194 8,106 27,382 46,682
Net asset value per
share Pence 83.30p 59.59p 94.59p
---------- ---------- ---------- --------
Net profit before
tax GBP'000 267 349 (174) 442
Earnings/(loss) per
share Pence 1.93p 2.08p (0.61p)
---------- ---------- ---------- --------
Cumulative return to Shareholders
(p)
Net asset value per
share 83.30p 59.59p 94.59p
Dividends paid 73.50p 70.00p 11.50p
Net asset value plus dividends
paid 156.80p 129.59p 106.09p
--------------------------------------- ---------- ---------- ---------- --------
Year ended 31 March
2020
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
---------- ---------- ---------- --------
Net profit before
tax GBP'000 746 86 1,217 2,049
Earnings per share Pence 5.29p 0.12p 4.13p
---------- ---------- ---------- --------
Cumulative return to Shareholders
(p)
Net asset value per
share 84.87p 62.46p 101.69p
Total Dividends paid 70.00p 65.00p 5.00p
Net asset value plus dividends
paid 154.87p 127.46p 106.69p
--------------------------------------- ---------- ---------- ---------- --------
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 8 to 49, the Corporate Governance
Statement on pages 52 to 55, the Directors' Remuneration Report on
pages 61 to 65 and the Directors' Report on pages 66 to 69. 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
2021.
Key Highlights
-- Dividends per C Share: 3.50p (Year ended 31 March 2020: 55.00p)
-- Net Asset Value per C Share: 83.30p (Year ended 31 March 2020: 84.87p)
-- Total Return per C Share(2) : 156.80p (Year ended 31 March 2020: 154.87p)
-- Dividends per D Share: 5.00p (Year ended 31 March 2020: 55.00p)
-- Net Asset Value per D Share: 59.59p (Year ended 31 March 2020: 62.46p)
-- Total Return per D Share(2) : 129.59p (Year ended 31 March 2020: 127.46p)
-- Dividends per E Share: 6.50p (Year ended 31 March 2020: 5.00p)
-- Net Asset Value per E Share: 94.59p (Year ended 31 March 2020: 101.69p)
-- Total Return(2) per E Share: 106.09p (Year ended 31 March 2020: 106.69p)
-- Realisation proceeds GBP2.98M. Realisations of investments
and loan repayments generated total proceeds for the Company of
GBP2.98 million.
-- Ongoing Charges Ratio(1) : 2.88% (2020: 2.70%)
(1) Total Return and Ongoing Charges Ratio are defined as APMs.
The Board considers Total Return to be the primary measure of
shareholder value.
(2) Total Return is made up by current Net Asset Value plus
Dividends paid to date.
Strategic Report
Chair's Statement
I am writing to present the Financial Statements for the Company
for the year ended 31 March 2021.
Following the challenges that both business and society have
faced during the COVID-19 pandemic ("the pandemic"), it appears we
can now begin to be more optimistic with the gradual reopening of
businesses and the restrictions on lockdown easing. Advances in
treatment of the virus and the rollout of effective vaccines seem
likely to bring us out of this crisis as 2021 progresses.
We would be remiss not to consider other fast moving world
events such as the UK-EU's developing relationship, and the impact
this may have on the small businesses in which we invest. As such,
traits which we have long viewed as desirable, such as flexibility
and a long-term mind-set, have become essential for companies if
they are to survive and thrive.
It is not yet clear how much the pandemic has permanently
changed our lives, or to what extent we will return to "normal"
over the coming year, but 2020 will undoubtedly go down as the most
tumultuous year in living memory.
Our portfolio of renewable energy investments has consistently
generated electricity in a satisfactory manner. At the other end of
the spectrum, our investment in Perfectly Fresh Cheshire Limited
("PFC"), the vertical growing business, has been greatly impacted
by the pandemic. The valuation of the Company has remained stable,
due to the nature of potential return structure in place. As the
majority of the working population have been working from home,
this change has unfortunately had a knock-on effect on consumer
habits, in particular, on packaged sandwiches for which PFC
supplies ingredients. This is discussed in greater detail in the
Investment Manager's Review.
During the period, the Board commissioned an independent
financial adviser to undertake an independent valuation of the
Company's hydroelectric assets held across the Share Classes. As a
result of this process, we have left the valuations for the Hydro
companies unchanged from the prior year.
Proposed amendments to the Company's Investment Policy
The Company's current investment policy ("Investment Policy")
sets out the holding periods for the assets in the C and D share
classes, being 16 years following investment, and 10 to 12 years
for the E share class with, in the case of the E shares, a possible
early partial return of funds to shareholders if market conditions
present such an opportunity. At the time of investment it was not
envisaged that there would be a full exit of the C and D share
classes, and consequent return of capital to shareholders, at an
earlier point. However, the Board now considers that it is an
opportune time to explore a potential portfolio sale of the
hydroelectric assets in order to take advantage of favourable
market conditions. In order to do so, the Company must first amend
its Investment Policy to remove the 16-year holding period for the
C and D share classes, which are wholly invested in hydroelectric
assets, to provide the Board with the flexibility to proceed with a
sale at any time where it believes that this would be in the best
interests of shareholders.
It should be noted that, in accordance with the Investment
Policy and as previously communicated to the C and D share class
shareholders, a partial return of funds to those shareholders after
6 years has already taken place. No change is required to the
Investment Policy in respect of the E share class, as a sale of the
hydroelectric assets in the E share class would be a partial return
of funds to shareholders, with other assets being held in the E
share class portfolio.
The Board believes that there are a number of benefits for a
sale of the hydroelectric assets at the present time as set out
below:-
a) The Company has undertaken a detailed analysis and considers
that the internal rate of return ("IRR") to investors would be
higher following a disposal of the hydroelectric assets now in
comparison to holding to full-term under the current Investment
Policy. The Company has modelled the return to investors on the
basis of an independent report setting out the potential disposal
value of the hydroelectric assets.
b) A sale of the hydroelectric assets at the present time would
enable shareholders to capitalise on the current favourable market
conditions reflecting low discount rates, scarcity of in demand
hydroelectric assets with inflation linked Feed-in-Tariff (FiT)
income, and a long circa 15 year remaining FiT period all of which
should make these assets attractive to a buyer.
c) A sale of the hydroelectric assets and return of proceeds
would provide investors with liquidity which is advantageous during
periods of economic uncertainty.
d) Shareholders in several share classes would save on future
fees payable, including investment management fees, adviser fees
and other ongoing running costs.
e) It would remove shareholders from being exposed to future
operational risks of the hydroelectric assets and portfolio risks
such as Scottish independence and further removals of business rate
discounts.
A resolution will be proposed at the Company's 2021 Annual
General Meeting ("AGM") in respect of this change to the Investment
Policy. Should this resolution pass and a favourable sale price and
terms be achieved, the proposed Investment Policy will allow the
Board to complete a sale of the hydroelectric assets in the C, D
and E share classes, with the intention to return the full proceeds
of investment to C, D and E share class shareholders. This would
result in a partial return of funds to E share class shareholders
with other assets being held in the E share class portfolio. It is
further noted that the Company will ensure that the VCT qualifying
investment level is managed following a sale of assets to remain
above the requisite 80% level. Further details are set out in the
Notice of Meeting.
Investment Portfolio
The Company's funds at 31 March 2021 are 98.9% invested in a
portfolio of VCT qualifying and non-qualifying quoted and unquoted
investments.
The Investment Manager's review on pages 30 to 40 gives an
update on the portfolio of investments in 17 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 portfolio has recorded a profit over the
period of 1.93 pence per share and as at 31 March 2021, the NAV
stood at 83.30 pence per share. Total dividends paid to C
Shareholders to date are 73.50 pence per share.
During the year, C Class Shareholders were paid total dividends
of 3.50 pence per share. This follows the 55.00 pence per share
paid during the last financial year, which was made possible by a
combination of investment realisations and a small amount of
borrowing, which continues to be utilised.
During the previous year, the Company put in place a loan
facility for GBP2.7 million in order to help achieve the dividend
and realisation target. GBP2.3 million of this facility was drawn
during the period. Of the GBP2.3 million drawn, the C Share Class
owes GBP300k. The loan attracts interest at 4.5% and it is not
envisaged the Company will draw the remaining funds available under
the current facility. The loan remains in place, and no capital
payments have been made during the year. The Company has in place
an additional facility agreement, which is in place until 11 June
2023, which can be drawn on if the existing lender does not extend
the current agreement.
As was expected, profit has reduced due to income generating
assets being realised to repay capital to Shareholders and reduce
the amount of debt required within the Company to achieve the
refinancing. As a result, the interim dividend of 1.75 pence per
share to be paid to C Share Class shareholders on 30 July 2021 is
below the targeted 3.50 pence per share. Despite this, the C Share
Class will seek to pay a further 1.75 pence per share dividend to
shareholders later in the year.
Further information on the C Share Class investments is included
in the Investment Manager's Review on pages 30 to 40.
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 .
The D Share Class portfolio has recorded a profit over the
period of 2.08 pence per share and as at 31 March 2021, the NAV
stood at 59.59 pence per share. Total dividends paid to D
Shareholders to date are 70.00 pence per share.
During the year, the Company paid a 5.00 pence per share
dividend to Shareholders, this follows two separate distributions
in the previous year of a 5.00 pence per share dividend and a
significant return of capital of 50.00 pence per share.
During the previous year, the Company put in place a loan
facility for GBP2.7 million in order to help achieve the dividend
and realisation target. GBP2.3 million of this facility was drawn
during the period. Of the GBP2.3 million drawn, the D Share Class
owes GBP2 million. The loan attracts interest at 4.5% and it is not
envisaged the Company will draw the remaining funds available under
the current facility. The loan remains in place, and no capital
payments have been made during the year. The Company has in place
an additional facility agreement, which is in place until 11 June
2023, which can be drawn on if the existing lender does not extend
the current agreement.
Following the realisation of some of the D Share Class assets
during the previous financial year, as was expected, profit has
reduced, due to income generating assets being realised to repay
capital to Shareholders and reduce the amount of debt required
within the Company to achieve the refinancing. As a result, the
interim dividend of 1.75 pence per share to be paid to D Share
Class shareholders on 30 July 2021 is below the targeted 3.50 pence
per share. Despite this, the D Share Class will seek to pay a
further 1.75 pence per share dividend to shareholders later in the
year.
Further information on the D Share Class investments is included
in the Investment Manager's Review on pages 30 to 40.
E Share Class
The E Share Class has a portfolio of investments spanning
Hydroelectric Power, Crematorium Management, Gas Fired Energy
Centres, Solar PV, Vertical Growing and SME Lending.
The E Share Class portfolio has recorded a loss over the period
of 0.61 pence per share and as at 31 March 2021, the NAV stood at
94.59 pence per share. Total dividends paid to E Shareholders to
date are 11.50 pence per share. A further interim dividend of 3.50
pence per share will be paid on 30 July 2021, I am delighted to say
that this takes total dividends paid to E Shareholders to 15.00
pence per share in line with our target.
The Company's renewable energy assets have performed as expected
during the period, with no large variations in performance seen
during the year. During the period we received disappointing news
regarding the valuation of the E Share Class investment in Green
Peak Generation Limited ("Green Peak"), which operates a gas fired
energy centre. The revised valuation resulted in a write down to
the investment valuation of circa GBP650,000. The revised valuation
considered feedback received from independent advisers and market
participants as part of a sales process started last year, where a
portfolio of nine companies including Green Peak were brought
together for sale. The Board has been disappointed by the feedback
from this sales process and the resulting indicative valuation for
Shareholders. To ensure Shareholder interests are protected, an
independent report was commissioned to gauge the market interest
and value attributable to these companies and unfortunately this
report corroborated the bids we had seen during the process. The
sales process is ongoing.
Further information on the E Share Class investments is included
in the Investment Manager's Review on pages 30 to 40.
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.
During the year, the Company bought back and cancelled 96,999 D
Ordinary Shares at a price of 52.23 pence per share. As a result of
this buy back, the total return to this Shareholder was 122.23
pence per share (inclusive of D class dividends paid to date of
70p), in line with the Investment Management Agreement between the
Company and the Manager, a performance fee of GBP4,992 has been
accrued 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.
The Company is fully deployed and as a result has not made any
new investment during the year.
We will continue to work closely with the Investment Manager to
ensure the Company maintains compliance with the scheme rules.
Outlook
The experience of 2020 as a result of the pandemic has taught
all of us that there are difficulties in making predictions in such
an uncertain world. Unfortunately, the effects of the pandemic are
likely to remain the dominant theme for 2021, along with concerns
about the duration and severity of its legacy on the global
economy. It does, however, now appear that a K-shaped recovery is
underway. This undoubtedly means both winners and losers. The
unique shape of the COVID-19 crisis and accompanying recession has
meant some industries have thrived whilst others have suffered.
As this applies to the wider economy, this is also true of our
portfolio of investments. Our hydro portfolio has continued to
perform robustly. By contrast the write down of our gas fired
energy centre company, although not specifically related to the
pandemic, and the uncertainty surrounding our vertical growing
company, show the potential divergence in our portfolio.
I would like to take this opportunity to thank Shareholders for
their continued support, and our Investment Manager for their
support and commitment during a challenging year.
If you have any questions about your investment, please do not
hesitate to contact the Investment Manager on 020 7201 8990.
David Frank
Chair
21 June 2021
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 ("Section 172").
The Directors assess the Company's success in meeting its
objectives in relation to returns, stability, VCT qualification
and, ultimately, exit.
The Company's Investment Policy was adopted and approved by
Shareholders before changes to the rules for VCT-qualifying
investments effective from 1 April 2019 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.
The Company is proposing a resolution at the upcoming AGM in
respect of proposed amendments to the Investment Policy. Further
details can be found on page 9 and the Notice of Meeting.
A copy of the Investment Policy is below.
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 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.
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. The Company 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.
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 12 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 no impact on the
portfolio's valuation as the Company has not made any investments
recently and used the recent investment round. The majority of our
portfolio is valued on a discounted cash flow basis.
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.
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 2021, 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 84.87 pence
per share at 31 March 2020 to 83.30 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 154.87
pence per share at 31 March 2020 to 156.80 pence per share at the
reporting date.
This represents an increase of 1.25%. Whilst Net Asset Value has
fallen, Total Shareholder Return has continued to increase. Profits
during the year were attributable to the income received on the C
Share Class Hydro Investments.
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.
D Share Class
The Net Asset Value per D Share has decreased from 62.46 pence
per share at 31 March 2020 to 59.59 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 127.46
pence per share at 31 March 2020 to 129.59 pence per share at the
reporting date.
This represents an increase of 1.67 %. Whilst Net Asset Value
has fallen, Total Shareholder Return has continued to increase,
albeit at a slightly slower rate. Profits during the year were
attributable to the income received on the D Share Class Hydro
Investments.
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.
E Share Class
The Net Asset Value per E Share has decreased from 101.69 pence
per share at 31 March 2020 to 94.59 pence per share at the
reporting date. After making an adjustment for dividends paid
during the year the E Shares Total Return has decreased from 106.69
pence per share at 31 March 2020 to 106.09 pence per share at the
reporting date. The reduction in Total Return, is a result of the
valuation write down of Green Peak and a loss on the part disposal
of the Company's holding in Triple Point Social Housing REIT plc.
This represents a decrease of 0.56% in Total Shareholder Return
from the previous year.
The Board and the Investment Manager continue to closely monitor
the portfolio and seek to maximise value where possible.
Total C Share Class D Share Class E Share Class
return
Date NAV per Cumulative Total NAV per Cumulative Total NAV per Cumulative Total
share dividends share dividends share dividends
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-14 97.62 - 97.62 - - - - - -
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-15 99.76 - 99.76 98.15 - 98.15 - - -
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-16 105.03 - 105.03 101.26 - 101.26 - - -
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-17 106.49 5.00 111.49 105.19 - 105.19 - - -
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-18 112.84 10.00 122.84 107.98 5.00 112.98 98.32 - 98.32
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-19 134.58 15.00 149.58 117.34 10.00 127.34 102.55 - 102.55
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-20 84.87 70.00 154.87 62.46 65.00 127.46 101.69 5.00 106.69
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-21 83.30 73.50 156.80 59.59 70.00 129.59 94.59 11.50 106.09
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
Earnings per Share
The Charts show the Company's earnings per share by share class
for the year ended 31 March 2021. 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.
Earnings C Share Class D Share Class E Share Class
per Share
Revenue Capital Total Revenue Capital Total Revenue Capital Total
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-14 (1.70p) (0.46p) (2.16p) - - - - - -
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-15 1.22p (0.44p) 0.78p (0.28p) (0.44p) (0.72p) - - -
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-16 3.31p 1.96p 5.27p 2.82p (0.63p) 2.19p - - -
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-17 3.06p 3.40p 6.46p 4.01p (0.08p) 3.93p - - -
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-18 5.02p 6.32p 11.34p 3.85p 3.94p 7.79p (0.92p) (0.78p) (1.70p)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-19 5.53p 21.21p 26.74p 3.93p 10.43p 14.36p 0.86p 3.38p 4.24p
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-20 4.18p 1.11p 5.29p 2.61p (2.49p) 0.12p 1.21p 2.92p 4.13p
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-21 2.27p (0.34p) 1.93p 2.35p (0.27p) 2.08p 1.08p (1.69p) (0.61p)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Compliance with VCT legislation
By making an investment in a Venture Capital Trust, 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 can confirm that throughout the year ended
31 March 2021, the Company continued to meet the relevant
tests.
To achieve compliance, the Company must meet a number of tests
set by Her Majesty's Revenue and Customs ("HMRC"). A summary of
these is set out on page 68 under "VCT Regulation".
Ongoing Charges Ratio
The Ongoing Charges Ratio(3) 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 2.88 % (2020: 2.70%) of the average net assets.
The increase during the year is due to an increase in general
administration costs of the Company.
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.
(3) This ratio is calculated using the AIC's "Ongoing Charges"
methodology which can be found on their website
https://www.theaic.co.uk/ . The Ongoing Charges ratio is deemed an
alternative performance measure.
Investment classification for the C Share Class by asset value
and sector value:
Investment Portfolio - C Share Class
C Share class
Qualifying Investments 99%
Non-Qualifying Holdings 0%
Cash 1%
Investments by Sector - C Share Class
Hydroelectric Power 100%
Investment classification for the D Share Class by asset value
and sector value :
Investment Portfolio - D Share Class
D Share class
Qualifying Investments 100%
------------------------- ------
Investments by Sector - D Share Class
Hydroelectric Power 100%
Investment classification for the E Share Class by asset value
and sector value:
Investment Portfolio - E Share Class
E Share class
Qualifying Investments 71%
Non-Qualifying Holdings 27%
Cash 1%
** Please note that the percentage of qualifying investments in
the above bar chart is not representative of the Company as a
whole, whose total qualifying investments exceed the requisite 80%
threshold.
Investments by Sector - E Share Class
Crematorium Management 1%
Vertical Growing 23%
Quoted Investments 2%
Hydroelectric Power 22%
SME Funding - Hydroelectric
Power 13%
SME Funding - Other 13%
Electricity Generation
- Other 26%
------------------------------
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.
The Company has been approved as a VCT by HMRC. 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. For accounting periods
ending on or after 6 April 2018, the minimum percentage is 70% in
all cases. However, holdings acquired before 6 April 2018 using
certain "protected monies" - holdings acquired using monies raised,
or derived from monies raised, by the VCT before 6 April 2011 - are
ignored when determining whether the VCT meets the 70% eligible
shares condition. This investment criterion continues to be
met.
Exit Programme
During the previous year, the Company took steps to achieve a
partial realisation for the C and D Class Shareholders. These
distributions, along with initial tax relief equates to a return to
C and D Class Shareholders of at least 100 pence per share.
The Company's exit programme is discussed in greater detail in
the Investment Manager's Review on pages 30 to 40 and a copy of the
Company's Share Realisation Policy is on page 17.
The valuation of, and potential exit routes for, the Company's
portfolio of investments are reviewed and discussed at Board
meetings. The Investment Manager has successfully implemented exit
plans for other VCTs under its management.
Borrowing
During the previous 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. This agreement has been extended
with TPLP and at the year-end there was GBP2.3 million outstanding,
with a further GBP0.4m of the facility still in place. As a
precautionary measure, the Company had entered into a similar
facility agreement with a different lender on the same key terms,
but which included 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.
This agreement has now been extended by a further 12 months at no
additional cost. The facility agreement now expires on 11 June
2023.
Principal Risks, Uncertainties and Emerging Risks
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 detailed below. The Board does not
consider the likelihood or impact of these risks to have changed in
the year.
The Board maintains a comprehensive risk register which sets out
the risks affecting both the Company and the investee companies in
which it is invested. The risk register is reviewed and updated at
least twice a year to ensure that procedures are in place to
identify principal and emerging risks. The purpose of the Company's
risk management policies and procedures is not to eliminate risks,
but to reduce them and to ensure that the Company is adequately
prepared to respond to such risks and to minimise any impact if the
risk materialises.
The Company does not consider Brexit to continue to be a
principal or emerging risk as the Company invests into UK-based
companies insulating it from any potential future deals negotiated
with the EU, and because of the certainty from the Brexit deal
reached at the end of 2020. Although Brexit is not deemed to be a
principal risk for the majority of the portfolio, the Board
acknowledges the fact that Brexit has had an impact on the
operations of their Vertical Growing Investment. The Board
continues to monitor the progress of PFC and receive updates from
the Investment Manager on a quarterly basis.
Details of the Company's internal controls are contained in the
Corporate Governance Internal Control section on page 55 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 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. 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. Where possible, a member of the Investment Manager
holds a seat on the board of the portfolio companies.
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 involve a medium to
long-term commitment and are 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.
COVID-19 pandemic:
The COVID-19 pandemic has caused and could continue to cause
economic disruption and depression, closure of businesses, staff
absences, unemployment, reduction of consumer demand, and sectoral
restructuring. This may impact on investee companies' performance
and valuation metrics, ability to exit investments on a timely
basis, ability to raise new funds and ability to make new
investments.
Mitigation: Deployment of funds into a number of investee
companies across a diverse range of sectors. TPIM has been in close
contact with investee companies to ensure that they are able to
maximise their runway during the disruption caused by the Covid-19
pandemic, and the Company regularly monitors their performance and
appropriateness of their valuations.
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 twice a year 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
Company, 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 GBP521k 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.
This facility agreement has been extended by an additional 12
months at no additional cost to the Company. This now expires on 11
June 2023.
Climate Change and related legislation: Taking into account the
potential impact of climate change and any related legislation
which may be enacted in respect of meeting the UK's climate change
targets, an assessment of the key risks for each share class has
been considered. If a change in Government renewable energy policy
were applied retrospectively to current operating projects
including those in the Share Classes, this could adversely impact
the market price for the Hydro and Solar Assets or the value of the
green benefits earned from generating renewable energy. Further,
performance of hydroelectric Assets may be adversely affected by
lower or more concentrated rainfall in Scotland. Nevertheless, the
hydro companies continue to perform well, and as such performance
will continue to be monitored closely.
A negative impact of climate change can be seen with the
Company's investment in a Gas Fired Energy Centre, originally
intended to bridge the transition gap to renewable energy. The
market is moving away from these types of assets to a green
alternative such as battery storage. This has had a negative impact
on the valuation of this business.
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 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.
The Company entered into a loan facility during the previous
period. More detail on this can be found in the Strategic Report on
page 22. 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. A separate
facility agreement is in place to cover the possibility that the
existing loan agreement was not extended. If a hydro disposal were
not to occur, a repayment schedule would be agreed under the terms
of the facility agreement. The proposed repayment profile would
utilise cash generated from the hydro portfolio. The facility
agreement is in place until 11 June 2023.
The Company's revenue comes from predominantly secure and
reliable counterparties across all three of its share classes. The
Hydro portfolio revenue 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 schemes. We have experienced minimal disruption to these
revenue streams as a result of the COVID-19 pandemic.
The pandemic has highlighted the need for greater food security
here in the UK. PFC has continued to refine its operations and has
remained operational during the pandemic. Unfortunately, demand for
its product from its main customer has reduced as a result of the
reduction in demand for packaged sandwiches due to the pandemic. We
do expect the heightened scrutiny of the food and farming sector to
continue, from both a food security and an environmental point of
view. PFC has diversified its customer base, taking on a new
customer, but the capital intensive nature of operating a vertical
growing facility remains challenging.
The Company had net current liabilities of GBP1.34 million
(2020: net current liabilities of GBP1.35 million) and had cash
balances of GBP521k (2020: GBP700k) (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,
uncertainties and emerging risks section on page 23.
The major cash out ows of the Company are the payment of
dividends, which is 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. These 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. Scenarios have been run including a hydro disposal
scenario and alternatively a scenario in which the hydroelectric
assets are held to maturity. Under both scenarios, the Company has
sufficient resources to continue as a going concern for at least
the next 12 months.
The Company has an existing 364-day loan facility in place. This
has recently been renewed by the lender. As was the case last year,
due to the short-term nature of the loan agreement, the Company
entered into a similar facility agreement with a different lender
which includes a two-year availability period. Following the year
end, the Board sought an extension to the alternative facility
agreement at no additional cost to the Company. This alternative
facility agreement remains in place until 11 June 2023.
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 prospects 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 three 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
which will have elapsed within the next three years.
The Board has determined that three years up to 31 March 2024 is
the maximum timescale over which the future position of the Company
can be forecast with a material degree of accuracy and therefore
this is the appropriate period over which to consider its
viability. During the next three years both the C and D Share Class
will have completed their income generation phase. Further, the
Company has proposed a resolution at the AGM that would allow the
Company to explore a potential portfolio sale of the hydroelectric
assets in the C and D Shares Classes in order to take advantage of
favourable market conditions. Such a sale would likely see a full
exit of the share classes and the capital being returned to
Shareholders. 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 three years.
As part of the assessment the Company undertook various scenario
testing, with regard to the Company's financing facility, this
included both a sale and a hold to maturity case. In the hold
scenario it was assumed that the Company would draw on the existing
alternative facility with TP Leasing Limited ("TPLL") on the same
terms and an agreed amortisation schedule would be put in place to
be paid down utilising income from the hydro portfolio. On a sale,
it was assumed that the loan would be repaid in full using proceeds
realised from a sale.
In order to assess this requirement, the Board regularly
considers the Company's strategy and considers the Company's
current position. It also 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.
To provide this assessment the Board has considered the
Company's financial position and ability to meet its expenses as
they fall due as well as considering longer-term viability:
-- The expenses of the Company are predictable and modest in
comparison with the assets and there are no capital commitments
foreseen which would alter that position;
-- The Company has no employees, only Non-Executive Directors,
and consequently does not have redundancy or other employment
related liabilities or responsibilities;
-- Most of the Company's investments will involve a medium to
long-term commitment and will be relatively illiquid but the Board
reduces the risk as a whole by careful selection and timely
realisation of investments;
-- 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 risk,
uncertainties and emerging risks section on page 23.
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.
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) of the
Companies Act 2006 when performing their duty and forms the
directors' statement required under section 414CZA of that 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.
Stakeholder Engagement
This section describes how the Board engages with its key
stakeholders, how it considers their interests and the outcome of
the engagement when making its decisions, the likely consequences
of any decision in the long-term, and further ensures that it
maintains a reputation for high standards of business conduct.
Stakeholder Importance Board Engagement
Shareholders Continued shareholder support The Board is committed to maintaining
is critical to the sustainability open channels of communication
of the Company and the delivery with Shareholders.
of its strategy.
Formal updates are provided
to Shareholders as part of
the Annual or Interim Reports,
and the Board and the Investment
Manager will also respond to
any written queries made by
Shareholders during the course
of the year. The Board receives
shareholder communications
from the Investment Manager
on a quarterly basis. The Chair
provides this 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
in consideration when making
investments into and from investee
companies, approving offers
for subscription and declaring
declarations.
Annual General Meeting ("AGM")
Whilst shareholder engagement
has been more challenging during
the COVID-19 pandemic, the
Board continues to engage with
shareholders through its Annual
and Interim Reports, RNS communications,
and encourages shareholders
to attend where possible, or
subject to UK Government Guidance
during the COVID-19 pandemic,
submit questions in advance
of an AGM.
-------------------------------------- -------------------------------------------
Investment Manager The Investment Manager's The Board has delegated the
performance is critical authority for the day-to-day
to the Company to enable running of the Company to the
it to successfully deliver Investment Manager. The Board
its investment strategy then engages with the Investment
and meet its long-term investment manager in reviewing, setting,
objectives of capital growth approving, and overseeing the
and tax-free dividends. execution of the Investment
Policy and strategy of the
Company.
The Investment Manager attends
both Board and other committee
meetings to update the Board
on the performance of the Company
and its portfolio. At every
quarterly Board meeting, a
review of financial and operating
performance of the Company
and its investments is undertaken,
including a review of legal
and regulatory compliance.
The Board also reviews other
areas including the Company's
strategy; key risks; corporate
responsibility; compliance
and legal matters.
-------------------------------------- -------------------------------------------
Investee companies The Company via its Investment The Investment Manager obtains
Manager has important relationships monthly operational reports
with individuals responsible from the Operation & Maintenance
for the maintenance and ("O&M") providers. Site visits
performance of its investee are undertaken at least annually
companies. by representatives from the
Investment Manager including
the Investor Directors and
portfolio management team.
The Investment Manager is in
As part of achieving its regular contact with the O&M
investment objectives, the providers. Management accounts
Company provides funding and performance reports are
to a number of investee provided to the Directors of
companies and as such, has investee companies on a quarterly
debtor relationships with basis.
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.
-------------------------------------- -------------------------------------------
External Service To function as a VCT with The Company has a number of
Providers a premium listing on the service providers which include
London Stock Exchange, the the Investment Manager and
Company relies on external Company Secretary, Registrar,
service providers for support Legal Advisers, VCT Compliance
in meeting all relevant Adviser and the Auditor.
obligations.
The Board has regular contact
These service providers with the two main service providers,
are fundamental to ensuring the Investment Manager, and
that Company meets the high the Company Secretary through
standards of conduct that quarterly Board meetings and
the Board sets. more regular discussions with
the Board.
This relationship has been
of particular importance this
year as a result of the challenges
experienced due to the COVID-19
pandemic.
-------------------------------------- -------------------------------------------
Lenders The Company values its relationships The Investment Manager engaged
with its debt providers. with and ensured the Company
Prudent debt financing is met its obligations in relation
important to effectively to the loan facility agreement
manage the Company's capital which was put in place during
and achieve the target return the year. The Company entered
promised to Shareholders. into and received a loan facility
from TPLP on 11 June 2020.
This is disclosed further in
note 2 to the Financial Statements.
The Company also has a loan
facility agreement with TPLL
which was entered into on 18
March 2020.
-------------------------------------- -------------------------------------------
Community The Directors recognise The Board is cognisant of the
that the long-term success impact of the Company's operations
of the Company is linked and of the companies in which
to the success of the communities it invests and believes that
in which the Company, and its investment activities have
its investee companies, many positive benefits beyond
operate. the returns delivered for Shareholders.
-------------------------------------- -------------------------------------------
Regulators The Company can only operate The Company engages an external
with the approval of its adviser to report on its compliance
regulators. with the VCT rules.
-------------------------------------- -------------------------------------------
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.
Dividends
The Company declared dividends during the year to C Share Class
holders of 3.50 pence per share, D Share Class holders of 5.00
pence per share and the E Share Class dividend of 6.50 pence per
share.
This decision represented the culmination of a significant
return of Capital for D Share Class holders, taking total
distributions to 70.00 pence per share, and the continuing payment
of an annual dividend for E Share Class holders. It represented the
first dividend of the income generation phase for the C Share
Class. Consideration was given to the reserve position of the
Company to be able to facilitate these distributions.
The Company will declare further interim dividends to
Shareholders of 1.75 pence per share for each of the C and D Share
Class Shareholders and 3.50 pence per share for the E Share Class
Shareholders.
Impact of COVID-19
During the year, the Board has had to give consideration to the
potential impact on the Company and its portfolio companies from
the global pandemic. The Board has continued to meet regularly
during the year to discuss, amongst other things, the crisis and
the impact which it has had on the portfolio companies and
implement any necessary actions to mitigate the impact of COVID-19.
The Portfolio has been relatively unaffected by the impacts of the
pandemic.
During the lockdown period, the Board ensured its main service
providers had all effectively implemented their business continuity
plans and were able to continue working remotely, with no impact to
the services provided to the Company.
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
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
----------
Investments
realised
during the
period
--------------- ------------- ---------- --------------- ----------- --------------- --------- ------------- -------------
C Shares - - (258) - - - - (258)
D Shares - - (110) - - - - (110)
E Shares - - (69) - - - (2,546) (2,615)
-------------
Total
disposals - - (437) - - - (2,546) (2,983)
----------
Investments
revalued
during the
period
--------------- ------------- ---------- --------------- ----------- --------------- --------- ------------- -------------
C Shares - - - - - - - -
D Shares - - - - - - - -
E Shares 15 187 - (637) - 500 177 242
-------------
Total
revaluations 15 187 - (637) - 500 177 242
----------
Investments
at 31 March
2021
--------------- ------------- ---------- --------------- ----------- --------------- --------- ------------- -------------
C Shares - - 11,244 - - - - 11,244
D Shares - - 10,036 - - - - 10,036
E Shares 112 6,469 5,803 7,235 3,348 3,217 558 26,742
Total 112 6,469 27,083 7,235 3,348 3,217 558 48,022
Total
investments
% 0.23% 13.47% 56.40% 15.07% 6.97% 6.70% 1.16% 100.00%
------------- ---------- --------------- ----------- --------------- --------- -------------
We have the pleasure of presenting our annual review for the
year ended 31 March 2021.
Our portfolio has, on the whole, remained relatively resilient
against the worst effects of the pandemic.. Although power prices
experienced volatility, the majority of our renewable assets are in
receipt of FiTs and ROCS and fixed power purchase agreements with
one of the big six energy providers. The Company and the Investment
Manager will continue to monitor the ongoing operation of all the
Share Class investments.
C Share Class
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 34 to 35.
D Share Class
The D Share Class has investments in five 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 34 to 35.
E Share Class
The E Share Class has a diverse portfolio consisting of 18
companies spanning 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
Triple Point Social Housing REIT plc 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.
Review of Portfolio
Solar Energy
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 Company has investments in seven hydroelectric companies
which operate ten schemes.
The hydroelectric assets across the Company's Share classes have
finite lives and due to the recent changes in VCT legislation, the
Company is unable to make new investments into renewables.
Consequently, the NAV of the Company's Share Classes, being the
present value of all the future cash flows generated by the assets
will begin to fall as the remaining FiT periods begin to approach
expiry and the operating lives of the assets begin to decrease.
However, as the assets continue to operate and generate a track
record, and as demand for such FiT bearing assets increase, the
discount rates applied to future cash flows which determine the
valuation of these assets has the positive effect of improving
valuations.
The Board and the Investment Manager have considered the
potential returns and risks for Shareholders from remaining
invested in, as compared to selling the assets, and a detailed
analysis of returns on a sale scenario and a hold to maturity
scenario has been run. As such, we think there are compelling
reasons to explore potential sale options and to present those to
Shareholders for consideration. Further details can be found in the
Chair's Statement on page 9.
The ten 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 2021, the hydroelectric companies
generated 20,151 MWh of electricity. Based on an average of 3.8 MWh
annual use per household, the companies generated enough
electricity for 5,302 homes during the period.
The Hydro companies benefit from government backed 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.
Gas Fired Energy Centre
The Company has an investment which has constructed a gas fired
energy centre owned by Green Peak This provides a reliable and
secure energy supply. This gas fired 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.
During the year TPIM began to explore potential sale
opportunities for this gas fired energy centre and sought the
appointment of an experienced corporate finance adviser on the
project. Green Peak was added to a portfolio of eight other similar
companies managed by TPIM as the Board wanted to attempt to take
advantage of a wider project to sell similar assets managed by TPIM
in the expectation that a portfolio premium would be realised for
Shareholders. Unfortunately, during this process potential bidders
attributed a lower indicative valuation to Green Peak than
previously expected. The indication from the valuation process is
that headwinds for the energy sector will continue over the next
1-2 years, including potential changes to the taxation of carbon
emissions and changes to the calculation of electricity network
charges. Alongside the regulatory uncertainty, Green Peak has
suffered from availability issues, and the impact of this lower
availability has been factored into the valuations.
The revised valuation in our view considers the feedback
received from market participants as part of the sales process and
a summary of the key reasons for the downward movement in value are
set out below:
-- The cost of constructing and operating new energy centres.
-- Reducing project life expectations following an acceleration
of the Government and public consensus on the phasing out of fossil
fuel generation and achieving Net Zero.
-- Ofgem's review of the embedded benefits regime, future
Balancing Market revenues, Brexit uncertainty, assumed terminal
values and site-specific factors based on whether the assets are
located in a local area where demand is generally higher than
supply or vice versa.
In order to corroborate the information received during the
bidding process we engaged an independent financial adviser to
undertake an independent valuation of Green Peak. The valuation
considered the Enterprise Valuation ranges for Green Peak to
reflect the fair market value as at the Valuation Date considering
observed market comparator benchmarks and asset-specific risks,
which have been reflected in the discount rate range. However, it
was noted that due to the capacity and nature of the asset relative
to market comparators, we would expect the valuation of the asset
to sit at the lower end of the enterprise value ranges
outlined.
We have used this information to guide our valuation of the
company. Disappointingly, as a result of this the valuation has
fallen 46% to GBP1.2 million from GBP2.37 million. The valuation of
this investment is included in the "Other Electric Power" column on
page 30. This column also includes the Company's solar assets.
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. Growing indoors is not a new
concept, as greenhouse-based agriculture has been in existence for
some time.
What PFC is aiming to achieve that differs radically from what
now exists is to scale up the concept of indoor growing, 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
growing, 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 it to the consumer and will
eliminate forever the need for fossil fuels during the act of
farming (i.e. ploughing, applying fertiliser, seeding, weeding,
harvesting).
PFC's 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 and salad leaves.
PFC has, like many businesses in the UK been affected by the
pandemic. PFC's main customer has reduced its demand for PFC's
product during the year in consequence of a reduction in the demand
of packaged sandwiches following the UK's shift to employees
working from home. As a result of this reduction in demand, PFC has
not been able to increase its yields as was intended, resulting in
little to no growth during the year.
The capital-intensive nature of the facility has required that
PFC take on additional financing at market rates from another TPIM
managed business. While cash flow has been of concern during the
period, PFC continues to be supported by TPIM and Joint Venture
Partners in the vertical growing sector. While we do firmly believe
in this opportunity, we must be cognisant that raising additional
equity funding in the future will be necessary to continue to
support PFC and its future development plans, at present, the
business continues to have the backing of both TPIM and the Joint
Venture Partners, who are continuing to fund the growth and
development of the company.
In recent months there has been a significant increase in
activity in the Vertical Growing Sector, with companies operating
in the sector raising, and looking to raise large amounts of
capital at significant valuations. Despite the short-term liquidity
issue that are often typical in a company in a transformative
sector, we believe there continues to be value in the company and
in its plans for the future.
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 continue receiving
dividends from FMS.
If you have any questions, please do not hesitate to call us on
020 7201 8990.
Jonathan Parr
Head of Energy
Triple Point Investment Management LLP
21 June 2021
Responsible Investing
PRI Signatory Status
Foundational to the Investment Manager's role of being a
sustainable and responsible investor is its status as a PRI
signatory which underpins its Environmental, Social and Governance
(ESG) commitment across all investment strategies.
In 2019, TPIM became a signatory to the PRI. The Investment
Manager believes these principles are helpful in guiding and
demonstrating best practice in investor ESG integration. They also
help promote a closer alignment between the objectives of
institutional investors and those of society at large. The
principles are voluntary and intended to be actionable and
measurable.
TPIM seeks to promote these principles throughout its business
and all investment strategies.
ESG Integration Approach
The Investment Manager aligns international standards and good
industry practice, including monitoring industry regulation (such
as the UK Bribery Act and UK Companies Act) and investor-led
initiatives (such as the PRI), as the foundation of its ESG
integration approach. Using these foundational principles, TPIM has
developed an in-house approach to drawing out maximum value from
ESG integration. It places proportionate expectations on the
investment companies into which it invests, according to its
sector, size and stage of growth. The careful crafting of its
method adds, it believes, a further strength to the investment
process.
To ensure the effective and consistent application of this
approach, The Investment Manager operates ESG Integration Policies.
Each details how ESG considerations are taken in to account
throughout investment processes, from the point of origination to
exit. The Investment Manager takes a practical, proportionate, and
material approach to ESG integration to manage the identification
of associated risks and opportunities. There are two pillars of
management to the approach:
1. Management (culture, capacity & governance): this refers
to the allocation of appropriate resourcing, training and senior
support for ESG integration. It demonstrates TPIM's actions have
integrity aligned with the strategic position of the Investment
Manager.
2. Investment process (process & reporting): this refers to
action taken in the investment process to assess and improve ESG
factors affecting the target asset, how these might affect
investment decisions and, how TPIM captures decisions and changes
to ESG factors during asset ownership.
TPIM is committed to evaluating the success of its
approaches.
The investment teams report to our ESG Committee on selected ESG
KPIs and where possible TPIM measures and reports where it believes
that it has influenced better or faster progress towards greater
sustainability either as a business, an employer, or an
investor.
Strategic Report - Investment Portfolio Summary
31 March 2021 31 March 2020
---------------------------------------- ----------------------------------------
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted qualifying holdings 30,936 79.89 40,649 83.75 30,980 73.62 41,144 79.95
Quoted non-qualifying holdings 570 1.47 558 1.15 3,319 7.89 2,927 5.69
Unquoted non-qualifying
holdings 6,690 17.28 6,815 14.03 7,082 16.83 6,692 13.00
Financial assets at fair value
through profit or loss 38,196 98.64 48,022 98.93 41,381 98.34 50,763 98.64
Cash and cash equivalents 521 1.36 521 1.07 701 1.66 701 1.36
38,717 100.00 48,543 100.00 42,082 100.00 51,464 100.00
========= ======== ========= ======== ========= ======== ========= ========
Qualifying Holdings
Unquoted
Solar
Digima Limited 1,262 3.26 1,716 3.54 1,262 3.00 1,661 3.23
Digital Screen Solutions
Limited 2,020 5.22 2,776 5.72 2,020 4.80 2,586 5.02
Green Energy for Education
Limited 475 1.23 1,404 2.89 475 1.13 1,260 2.45
Hydroelectric Power
Elementary Energy Limited 2,060 5.32 2,461 5.07 2,060 4.90 2,461 4.78
Green Highland Allt Choire
A Bhalachain (225) Limited 3,130 8.08 3,763 7.75 3,130 7.44 3,763 7.31
Green Highland Allt Ladaidh
(1148) Limited 3,500 9.04 4,771 9.83 3,500 8.32 4,771 9.27
Green Highland Allt Luaidhe
(228) Limited 1,995 5.15 2,425 5.00 1,995 4.74 2,425 4.71
Green Highland Allt Phocachain
(1015) Limited 3,931 10.15 4,989 10.28 3,932 9.34 4,989 9.69
Green Highland Shenval Limited 1,120 2.89 739 1.52 1,120 2.66 739 1.44
Achnacarry Hydro Ltd 4,243 10.96 7,797 16.06 4,286 10.18 7,841 15.24
Gas Fired Energy Centre
Green Peak Generation Limited 2,200 5.68 1,339 2.76 2,200 5.23 2,366 4.60
Vertical Growing
Perfectly Fresh Cheshire
Limited 5,000 12.91 6,469 13.33 5,000 11.88 6,282 12.21
30,936 79.89 40,649 83.75 30,980 73.62 41,144 79.95
========= ======== ========= ======== ========= ======== ========= ========
31 March 2021 31 March 2020
-------------------------------------- --------------------------------------
Cost Valuation Cost Valuation
Non-Qualifying Holdings GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Quoted
Investment property
TP Social Housing REIT Plc Equity 570 1.47 558 1.15 3,319 7.89 2,927 5.69
570 1.47 558 1.15 3,319 7.89 2,927 5.69
========= ======= ========= ======= ========= ======= ========= =======
Unquoted
Crematorium Management
Furnace Managed Services Limited 488 1.26 113 0.23 486 1.15 97 0.19
Hydroelectric Power
Elementary Energy Ltd 140 0.36 140 0.29 200 0.48 199 0.39
Green Highland Allt Choire A
Bhalachain
(225) Limited - - - - 223 0.53 223 0.43
Green Highland Allt Luaidhe (228)
Limited - - - - 109 0.26 110 0.21
SME Funding
Hydroelectric Power:
Broadpoint 2 Limited 1,334 3.45 1,449 2.98 1,335 3.17 1,334 2.59
Broadpoint 3 Limited 2,010 5.19 2,010 4.14 2,010 4.78 2,010 3.91
Other:
Aeris Power Limited 518 1.34 602 1.24 519 1.23 519 1.01
Funding Path Limited 2,200 5.68 2,501 5.15 2,200 5.23 2,200 4.27
6,690 17.28 6,815 14.03 7,082 16.83 6,692 13.00
--------- ------- --------- ------- --------- ------- --------- -------
Financial Assets are measured at fair value through profit or
loss. The initial best estimate of fair value of these investments
that are either quoted or unquoted on an active market is the
transaction price (i.e., cost). The fair value of these investments
is subsequently measured by reference to the enterprise value of
the investee company, which is best deemed to reflect the fair
value. Where the Board considers the investee company's enterprise
value should remain unchanged since acquisition, investments
continue to be held at cost less any loan repayments received.
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 7,797,000 Cash Flow 100 40.65 40.65
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2019*:
Turnover 1,969
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 1,363
Profit before tax 863
Net assets before VCT loans 4,335
Net assets 3,038
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 FiT and other revenues from the generation and
export of electricity to the National Grid.
*Statutory Accounts for Achnacarry Hydro for September 2020 had yet to
be prepared at the Annual Report publishing date.
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 Income TP Income managed
for the % funds %
year GBP'000
Revenue
21 November 2017 5,000,000 6,469,000 multiple Nil 49.97 49.97
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2020:
Turnover 35
Loss before interest, tax, amortisation and depreciation
(EBITDA) (974)
Loss before tax (1,355)
Net assets before VCT loans 3,120
Net assets 1,620
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 310 42.70 100
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2020:
Turnover 805
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 620
Loss before tax (25)
Net assets before VCT loans 3,798
Net assets 2,361
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 FiT and other revenues 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 294 35.17 50.25
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2020:
Turnover 638
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 473
Loss before tax (110)
Net assets before VCT loans 4,494
Net assets 2,275
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 FiT 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 Income TP Income managed
for the % funds %
year GBP'000
Discounted
18 July 2014 3,130,000 3,763,000 Cash Flow 239 49.90 100
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2020:
Turnover 419
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 308
Loss before tax (116)
Net assets before VCT loans 1,921
Net assets 973
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 FiT
and other revenues from the generation and export of electricity to the
National Grid.
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 Income TP Income managed
for the % funds %
year GBP'000
Discounted
12 February 2014 2,020,000 2,776,000 Cash Flow 83 35.36 98
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2020:
Turnover 174
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 136
Loss before tax (11)
Net assets before VCT loans 2,178
Net assets 764
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 185 49.93 99.22
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2020:
Turnover 331
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 250
Loss before tax (2)
Net assets before VCT loans 1,850
Net assets 310
Elementary Energy Limited is currently operating a 500 kW 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 FiT 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 managed
by TP Income TP Income funds %
for the %
year GBP'000
Discounted
18-Mar-2015 1,995,000 2,425,000 Cash Flow 151 35.18 100
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2020:
Turnover 419
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 310
Loss before tax (74)
Net assets before VCT loans 1,903
Net assets 1,048
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 FiT and other revenues from
the generation and export of electricity to the National Grid.
-----------------------------------------------------------------------------------------------------------
Funding Path Limited
Date of first Cost GBP Valuation Valuation Income Equity Equity Held
investment GBP Method recognised Held by by TPIM managed
by TP Income TP Income funds %
for the %
year GBP'000
Discounted
02-Apr-2015 2,200,000 2,501,000 Cash Flow* Nil 49 98
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2020:
Turnover 56
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 81
Profit before tax 55
Net assets before VCT loans 2,214
Net assets 14
Funding Path Limited is a VCT non-qualifying investment, which has invested
in an LLP that provides finance to small and medium sized enterprises
(SME's).
------------------------------------------------------------------------------------------------------------
Broadpoint 3 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
17 November 2017 2,200,000 2,501,000 Cash flow* Nil Nil Nil
Summary of Information from Investee Company Financial Statements GBP'000
ending in 2020:
Turnover Not disclosed
Earnings before interest, tax, amortisation and depreciation Not disclosed
(EBITDA)
Profit before tax Not disclosed
Net assets Not disclosed
Broadpoint 3 Limited owns equity stakes in hydroelectric power companies
and one digital deployment company.
--------------------------------------------------------------------------------------------------------------------
*The Directors consider the fair value to be equivalent to the
par value.
The Strategic Report has been approved by the Board and signed
on their behalf by the Chair.
David Frank
Chair
21 June 2021
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 Chair 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 specialising in the fight against climate
change and global warming. 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, 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 Chair, 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
Chair, serve as intermediaries between
Directors and Shareholders, and
evaluate the Chair's performance
as part of the Board's annual evaluation.
--------------------------------------------
Chair of the Audit Committee (Provision The Chair of the Board is the Chair
29) 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 51 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, considering 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 Chair, David Frank, leads the Board and is responsible for
its overall effectiveness in directing the Company. The Chair leads
the process in determining its strategy and the achievement of its
objectives. The Chair 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 Chair 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 Chair
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 video 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 Chair 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 AGM.
Independence of Directors
The Board has a Non-Executive Chair 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 does 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.
Policy on Tenure of the Chair
The Board considers that the length of time each Director,
including the Chair, 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 61 to 65.
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, Chair 8/8
Simon Acland 8/8
Michael Stanes 8/8
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.
Performance Evaluation
The Board, led by the Chair, 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 a 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 Chair, 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:
-- Information flows outside of the Board Meetings should be
enhanced. The Board will be provided with monthly updates on
ongoing exit processes the Investment Manager.
-- Greater focus should be given to considering the overall
strategy of the Company. The Board agreed to hold an annual
strategy meeting to consider the long-term strategic options for
the future of the Company and its share classes.
Succession Plan
As part of the annual evaluation in 2020, the Directors
considered length of service of the Board as a whole and prepared a
succession plan that addresses the regular refreshment of the Board
membership.
The Board considered that, due to potential asset sales and exit
opportunities, that there was a benefit of historical knowledge and
continuity of Directors. Subject to the proposed change to the
Investment Policy, the Board's succession plan will be updated to
align with the long-term strategic direction of the Company
cognisant of the need for regular refreshment of the Board.
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 41.
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 a bi-annual review of
the 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, uncertainties and emerging risks
identified from the risk register and a description of the Group's
risk management procedures can be found on pages 22 to 23.
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 and Shareholder Engagement
Stakeholder and Shareholder engagement is set out in the Section
172(1) statement on pages 26 to 28.
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
Chair
21 June 2021
Audit Committee Report
The Audit Committee consists of the Chair, 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 2021, 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 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 Venture Capital Trust status.
-- Valuation and existence of unquoted investments.
-- Net Asset Value of C, D and E Share Classes.
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 AGM.
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 and this is the audit partner's 4(th)
year.
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.
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, Chair 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 have 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 2021 and has reported to the Board that it
considers it 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 Chair
21 June 2021
Directors' Remuneration Report
Statement of the Chair
I am pleased to present the Remuneration Report on behalf of the
Board for the year ended 31 March 2021.
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
2021. 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 that has been in
place since 23 July 2020 following approval by shareholders.
-- Annual Remuneration Report - This sets out how our Directors
were paid for the period ended 31 March 2021. There will be an
advisory shareholder vote on this section of the report at our 2021
AGM.
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
Chair
21 June 2021
Directors' Remuneration Policy
Approval of Remuneration Policy
The Company's Remuneration Policy was last approved on 23 July
2020 at the AGM.
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. There
are no planned changes to the Remuneration Policy last approved by
shareholders at the 2020 AGM.
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 AGM 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 Chair is
paid more than the other Directors to reflect the additional
responsibilities of the role. The below annual fees for the
Directors are fixed.
Policy on
Unexpired Term Annual Rate of Payment For
Date of Contract of Contract Directors' Fees Loss of Office
GBP
David Frank, Chair 11-Nov-10 none 24,000 none
Simon Acland 12-Mar-09 none 21,000 none
Michael Stanes 21-Nov-12 none 21,000 none
-------------------- ----------------- ---------------- ------------------ -----------------
Single Total Figure (audited information)
The fees paid to Directors in respect of the year ended 31 March
2021 and the prior year are shown below:
Emoluments Emoluments
for the year Change for the year
ended 31 March from prior ended 31
2021 year March 2020
GBP GBP
David Frank 24,000 20.00% 20,000
Simon Acland 21,000 20.00% 17,500
Michael Stanes 21,000 20.00% 17,500
66,000 20.00% 55,000
Employers' NI contributions 1,470 44.69% 1,016
-------------
Total Emoluments 67,470 20.45% 56,016
------------------------------- ----------------- -------------
For the period ending 31 March 2020, as part of the performance
evaluation undertaken by the Board, the remuneration of the
Directors was reviewed, considering the Company and individual
performance.
The Board agreed that the fees of the Non-Executive Directors
and the Chair should be increased to reflect the time commitment
and responsibilities of the role. The fee for the Non-Executive
Directors (excluding the chair) was increased from GBP17,500 to
GBP21,000 and the fee for the Chair 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.
The Company has no executive Directors or employees.
Directors' emoluments compared to payments to Shareholders:
Unaudited 31 March 2021 31 March 2020
GBP'000 GBP'000
Total Dividends paid: 3,037 16,376
Directors' emoluments 67 56
------------------------- ---------------------------------
Directors' Share Interests (audited information)
At 31 March 2021, the Directors held no shares in the Company
(2020: Nil).
At 31 March 2021, Simon Acland's wife held 48,750 D Class Shares
(2020: 48,750).
There are no other connected parties to the Directors that held
any shares at 31 March 2021. 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 2021 with the Total Return from notional investments in
the FTSE SmallCap Index and FTSE All Share Index over the same
period. The indices chosen are considered to be the most
appropriate broad equity markets for comparative purposes.
Shareholders should be reminded that shares in VCTs 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.
FTSE All
FTSE SmallCap Share C Share Class
-----------------------------------------
Rebased at Rebased at Nav + Rebased at
Date 100 100 NAV Div Div 100
--------------- ------------ -------- ------- -------- ------------
31-Mar-14 100.00 100.00 97.62 97.62 100.00
--------------- ------------ -------- ------- -------- ------------
30-Sep-14 97.87 99.39 98.45 98.45 100.85
--------------- ------------ -------- ------- -------- ------------
31-Mar-15 102.81 103.04 99.76 99.76 102.19
--------------- ------------ -------- ------- -------- ------------
30-Sep-15 100.22 93.82 101.16 101.16 103.62
--------------- ------------ -------- ------- -------- ------------
31-Mar-16 101.56 95.49 105.03 105.03 107.58
--------------- ------------ -------- ------- -------- ------------
30-Sep-16 111.22 105.62 101.37 5.00 106.37 108.95
--------------- ------------ -------- ------- -------- ------------
31-Mar-17 121.41 112.22 106.49 0.00 111.49 114.19
--------------- ------------ -------- ------- -------- ------------
30-Sep-17 127.71 113.90 104.92 5.00 114.92 117.70
--------------- ------------ -------- ------- -------- ------------
31-Mar-18 125.04 109.52 112.84 0.00 122.84 125.81
--------------- ------------ -------- ------- -------- ------------
30-Sep-18 130.16 116.09 111.83 0.00 121.83 124.78
--------------- ------------ -------- ------- -------- ------------
31-Mar-19 122.21 111.88 134.58 5.00 149.58 153.20
--------------- ------------ -------- ------- -------- ------------
30-Sep-19 122.24 114.23 132.80 0.00 147.80 151.38
--------------- ------------ -------- ------- -------- ------------
31-Mar-20 95.30 87.39 84.87 55.00 154.87 158.62
--------------- ------------ -------- ------- -------- ------------
30-Sep-20 112.68 92.31 83.19 3.50 156.69 160.48
--------------- ------------ -------- ------- -------- ------------
31-Mar-21 151.59 107.74 83.30 0.00 156.80 160.59
--------------- ------------ -------- ------- -------- ------------
FTSE All
FTSE SmallCap Share D Share Class
Rebased at Rebased at Nav + Rebased at
Date 100 100 NAV Div Div 100
--------------- ------------ -------- ------- -------- ------------
31-Mar-15 100.00 100.00 98.15 98.15 100.00
--------------- ------------ -------- ------- -------- ------------
30-Sep-15 97.48 91.06 99.85 99.85 101.73
--------------- ------------ -------- ------- -------- ------------
31-Mar-16 98.78 92.68 101.26 101.26 103.17
--------------- ------------ -------- ------- -------- ------------
30-Sep-16 108.17 102.51 103.08 103.08 105.02
--------------- ------------ -------- ------- -------- ------------
31-Mar-17 118.08 108.92 105.19 105.19 107.17
--------------- ------------ -------- ------- -------- ------------
30-Sep-17 124.21 110.55 101.90 5.00 106.90 108.91
--------------- ------------ -------- ------- -------- ------------
31-Mar-18 121.62 106.30 107.98 0.00 112.98 115.10
--------------- ------------ -------- ------- -------- ------------
30-Sep-18 126.60 112.68 104.82 0.00 109.82 111.88
--------------- ------------ -------- ------- -------- ------------
31-Mar-19 118.87 108.60 117.34 5.00 127.34 129.73
--------------- ------------ -------- ------- -------- ------------
30-Sep-19 118.90 110.88 113.54 5.00 128.54 130.95
--------------- ------------ -------- ------- -------- ------------
31-Mar-20 92.69 84.83 62.46 50.00 127.46 129.85
--------------- ------------ -------- ------- -------- ------------
30-Sep-20 109.59 89.60 58.60 5.00 128.60 131.01
--------------- ------------ -------- ------- -------- ------------
31-Mar-21 147.43 104.58 59.59 0.00 129.59 132.02
--------------- ------------ -------- ------- -------- ------------
FTSE SmallCap FTSE All Share E Share Class
Rebased at Rebased at Nav + Rebased at
Date 100 100 NAV Div Div 100
--------------- ---------------- -------- ------ -------- ------------
30-Sep-17 100.00 100.00 99.25 99.25 100.00
--------------- ---------------- -------- ------ -------- ------------
31-Mar-18 97.91 96.15 98.32 98.32 99.06
--------------- ---------------- -------- ------ -------- ------------
30-Sep-18 101.92 101.92 99.34 99.34 100.09
--------------- ---------------- -------- ------ -------- ------------
31-Mar-19 95.69 98.23 102.55 102.55 103.32
--------------- ---------------- -------- ------ -------- ------------
30-Sep-19 95.71 100.29 101.35 101.35 102.11
--------------- ---------------- -------- ------ -------- ------------
31-Mar-20 74.61 76.73 101.69 5.00 106.69 107.49
--------------- ---------------- -------- ------ -------- ------------
30-Sep-20 88.21 81.05 96.31 6.50 107.81 108.62
--------------- ---------------- -------- ------ -------- ------------
31-Mar-21 118.67 94.60 94.59 106.09 106.89
--------------- ---------------- -------- ------ -------- ------------
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 pages 5 to 49.
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
and the Directors' Remuneration Policy was passed at the AGM on 23
July 2020 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 99.72% 0.28% 9,578
------------ ---------------- ----------------
Remuneration
Policy 97.56% 2.44% 24,277
------------ ---------------- ----------------
During the year, the Company did not receive any communications
from Shareholders specifically regarding Directors' pay.
On behalf of the Board,
David Frank
Chair
21 June 2021
Directors' Report
The Directors are pleased to present the Directors' Report for
the year ended 31 March 2021.
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 52 to 55 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 68.
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
Further details of post balance sheet events can be seen in note
23 to the Financial Statements.
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 (2020: 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 Company 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 AGM 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.
Streamlined Energy and Carbon Reporting
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. The Company has
outsourced operations to third parties, there are no significant
greenhouse gas emissions to report from the operations of the
Company. The Group qualifies as a low energy user at under 40,000
kWh and is therefore exempt from disclosures on greenhouse gas
emissions and energy consumption.
To note, the Company has invested in renewable energy, through
its portfolio of hydroelectric companies. It has also invested in
two companies which operate gas fired energy centres. 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 growing 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 substantially
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
30 to 40.
Share Capital
As at 31 March 2021 the Company's issued shares amounted to
55,995,650 consisting of 13,441,438 C Shares of 1p each, 13,604,637
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
The 2021 AGM will be held on 28 July 2021.
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 AGM of the Company
following his or her appointment. Thereafter all Directors are
subject to re-election at each AGM 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 AGM.
Going Concern
After making the necessary enquiries, the Directors confirm that
they are satisfied that the Company has adequate resources to
continue in business for at least the next 12 months.
The Board receives regular reports from the 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. Further
information on the going concern of the Company can be found in the
Strategic report on page 24.
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 2021 are received and adopted by the Shareholders. A
resolution concerning this will be proposed at the forthcoming
AGM.
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.
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.
Co-Investment
The Company co-invests with other venture capital trusts 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 8 to 13
----------------
On behalf of the Board.
David Frank
Chair
21 June 2021
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 accounting standards in conformity with the
requirements of the Companies Act 2006. 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 IAS in
conformity with the requirements of the Companies Act 2006, 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
Chair
21 June 2021
Statement of Comprehensive Income
For the year ended 31 March 2021
Year ended Year ended
31 March 2021 31 March 2020
------------------------------- -------------------------------
Note Rev. Cap. Total Rev. Cap. Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income
Investment income 4 2,274 - 2,274 2,743 - 2,743
Loss arising on the disposal
of investments during the year 12 - (204) (204) - (181) (181)
(Loss)/gain arising on the
revaluation of investments
at the year end 12 - (173) (173) - 1,076 1,076
Investment return 2,274 (377) 1,897 2,743 895 3,638
--------- --------- --------- --------- --------- ---------
Investment management fees 5 708 236 944 896 297 1,193
Other expenses 6 402 5 407 393 - 393
Finance costs 7 104 - 104 3 - 3
1,214 241 1,455 1,292 297 1,589
--------- --------- --------- --------- --------- ---------
Profit/(loss) before taxation 1,060 (618) 442 1,451 598 2,049
--------- --------- --------- --------- --------- ---------
Taxation 10 (125) 46 (79) (180) 57 (123)
Profit/(loss) after taxation 935 (572) 363 1,271 655 1,926
--------- --------- --------- --------- --------- ---------
Other comprehensive income - - - - - -
Total comprehensive income/(loss) 935 (572) 363 1,271 655 1,926
--------- --------- --------- --------- --------- ---------
Basic and diluted earnings/(loss)
per share (pence)
C Share 11 2.27p (0.34p) 1.93p 4.18p 1.11p 5.29p
D Share 11 2.35p (0.27p) 2.08p 2.61p (2.49p) 0.12p
E Share 11 1.08p (1.69p) (0.61p) 1.21p 2.92p 4.13p
5.70p (2.30p) 3.40p 8.00p 1.54p 9.54p
The total column of this statement is the Statement of
Comprehensive Income of the Company prepared in accordance with
IFRS. The supplementary revenue return and capital columns have
been prepared in accordance with the Association of Investment
Companies Statement of Recommended Practice (AIC SORP) in so far as
it does not conflict with IFRS.
All revenue and capital items in the above statement derive from
continuing operations.
This Statement of Comprehensive Income includes all recognised
gains and losses.The accompanying notes are an integral part of
these statements.
Balance Sheet
at 31 March 2021
31 March 2021 31 March 2020
Note GBP'000 GBP'000
Non-current assets
Financial assets at fair
value through profit or
loss 12 48,022 50,763
--------------- ---------------
Current assets
Receivables 13 984 785
Cash and cash equivalents 14 521 701
1,505 1,486
--------------- ---------------
Total Assets 49,527 52,249
--------------- ---------------
Current liabilities
Payables and accrued expenses 16 452 430
Current taxation payable 93 112
Short-term debt facility 2,300 2,300
2,845 2,842
--------------- ---------------
Net Assets 46,682 49,407
=============== ===============
Equity attributable to
equity holders of the
parent
Share capital 18 560 561
Share redemption reserve 1 -
Share premium 28,661 28,661
Special distributable
reserve 10,555 12,960
Capital reserve 6,891 6,844
Revenue reserve 14 381
Total equity 46,682 49,407
=============== ===============
Shareholder' funds
C Share 20 83.30p 84.87p
D Share 20 59.59p 62.46p
E Share 20 94.59p 101.69p
The statements were approved by the Directors and authorised for
issue on 21 June 2021 and are signed on behalf of the Board by:
David Frank
Chair
21 June 2021
The accompanying notes on pages 91 to 106 are an integral part
of this statement.
Statement of Changes in Shareholders' Equity
For the year ended 31 March 2021
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
2021
Opening balance 561 - 28,661 12,960 6,844 381 49,407
---------- ------------------ ---------- ---------------- ---------- ---------- ----------
Purchase of own
shares (1) 1 - - - (51) (51)
Dividends paid - - - (2,405) - (632) (3,037)
Transfer from
revenue
to unrealised - - - - 619 (619) -
Transactions with
owners (1) 1 - (2,405) 619 (1,302) (3,088)
---------- ------------------ ---------- ---------------- ---------- ---------- ----------
(Loss)/profit for
the
year - - - - (572) 935 363
Other
comprehensive
income - - - - - - -
(Loss)/profit and
total
comprehensive
income
for the year - - - - (572) 935 363
---------- ------------------ ---------- ---------------- ---------- ---------- ----------
Balance at 31
March
2021 560 1 28,661 10,555 6,891 14 46,682
========== ================== ========== ================ ========== ========== ==========
Capital reserve
consists
of:
Investment holding
gains 9,825
Other realised
losses (2,934)
6,891
==========
Year ended 31
March
2020
Opening balance 561 - 28,661 26,887 6,189 1,557 63,855
---------- ------------------ ---------- ---------------- ---------- ---------- ----------
Dividend paid - - - (13,927) - (2,447) (16,374)
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
==========
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 2021 the total reserves available for distribution
are GBP7,635,000 (2020: 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 2021
Year ended Year ended
31 March
31 March 2021 2020
GBP'000 GBP'000
Cash flows from operating activities
Profit before taxation 442 2,049
Adjustments for:
Add back financing costs 104 3
Movement in accrued income recognised
as an unrealised gain (619) -
Loss arising on the disposal of
investments during the period 204 181
Loss/(gain) arising on the revaluation
of investments at the period end 173 (1,076)
Cashflow generated by operations 304 1,157
(Increase)/decrease in receivables (198) 465
Increase in payables 22 103
Cash flows generated from operating
activities 128 1,725
--------------- ------------
Tax paid (98) (204)
Net cash flows generated from operating
activities 30 1,521
--------------- ------------
Cash flow from investing activities
Proceeds of sale of financial assets
at fair value through profit or
loss 2,982 7,069
Net cash flows from investing activities 2,982 7,069
--------------- ------------
Cash flows from financing activities
Repayment of capital (51) -
Dividends paid (3,037) (16,374)
Financing costs (104) (3)
Proceeds from short-term debt - 2,300
Net cash flows from financing activities (3,192) (14,077)
--------------- ------------
Net decrease in cash and cash equivalents (180) (5,487)
=============== ============
Reconciliation of net cash flow
to movements in cash and cash equivalents
Opening cash and cash equivalents 701 6,188
Net decrease in cash and cash equivalents (180) (5,487)
Closing cash and cash equivalents 521 701
=============== ============
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 2021 31 March 2020
------------------------------- -------------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 602 - 602 988 - 988
Unrealised gain on investments - - - - 218 218
Investment return 602 - 602 988 218 1,206
Investment management
fees (217) (56) (273) (316) (86) (402)
Other expenses (62) - (62) (58) - (58)
Profit/(loss) before taxation 323 (56) 267 614 132 746
Taxation (20) 11 (9) (53) 17 (36)
Profit/(loss) after taxation 303 (45) 258 561 149 710
Profit and total comprehensive
income/(loss) for the
period 303 (45) 258 561 149 710
--------- --------- --------- --------- --------- ---------
Basic and diluted earnings/(loss)
per share 2.27p (0.34p) 1.93p 4.18p 1.11p 5.29p
--------- --------- --------- --------- --------- ---------
Balance Sheet 31 March 2021 31 March 2020
GBP'000 GBP'000
Non-current assets
Financial assets at fair
value through profit or
loss 11,244 11,502
--------- ---------
Current assets
Receivables 252 66
Cash and cash equivalents 120 193
372 259
Current liabilities
Payables (113) (17)
Corporation tax (9) (38)
Short-term debt facility (300) (300)
--------- ---------
Net assets 11,194 11,406
--------- ---------
Equity attributable to
equity holders 11,194 11,406
--------- ---------
Net asset value per share 83.30p 84.87p
--------- ---------
Statement of Changes in
Shareholders' Equity 31 March 2021 31 March 2020
GBP'000 GBP'000
Opening shareholders'
funds 11,406 18,088
Profit for the period 258 710
Dividends paid (470) (7,392)
Closing shareholders'
funds 11,194 11,406
--------- ---------
Unaudited Non-Statutory Analysis of - The C Ordinary Share
Fund
Investment Portfolio 31 March 2021 31 March 2020
---------------------------------------- ----------------------------------------
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted qualifying
holdings 7,384 98.40 11,244 98.95 7,417 94.69 11,279 96.44
Unquoted non-qualifying
holdings - - - - 223 2.85 223 1.91
Financial assets at
fair value through
profit or loss 7,384 98.40 11,244 98.95 7,640 97.54 11,502 98.35
Cash and cash equivalents 120 1.60 120 1.05 193 2.46 193 1.65
7,504 100.00 11,364 100.00 7,833 100.00 11,695 100.00
Qualifying Holdings
Unquoted
Hydroelectric Power
Green Highland Allt
Choire A Bhalachain
(225) Limited 2,466 32.86 2,965 26.09 2,466 31.48 2,965 25.35
Green Highland Allt
Phocachain (1015) Limited 1,576 21.00 2,136 18.80 1,576 20.12 2,136 18.26
Achnacarry Hydro Ltd 3,342 44.54 6,143 54.06 3,375 43.09 6,178 52.83
7,384 98.40 11,244 98.95 7,417 94.69 11,279 96.44
Non-Qualifying Holdings
Unquoted
Hydroelectric Power
Green Highland Allt
Choire A Bhalachain
(225) Limited - - - - 223 2.85 223 1.91
- - - - 223 2.85 223 1.91
Unaudited Non-Statutory Analysis of - The D Ordinary Share
Fund
Statement of Comprehensive
Income
Year ended Year ended
31 March 2021 31 March 2020
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 676 - 676 780 - 780
Unrealised loss on investments - - - - (277) (277)
Investment return 676 - 676 780 (277) 503
Investment management
fees (236) (46) (282) (286) (79) (365)
Other expenses (45) - (45) (52) - (52)
Profit/(loss) before
taxation 395 (46) 349 442 (356) 86
Taxation (75) 9 (66) (83) 15 (68)
Profit/(loss) after taxation 320 (37) 283 359 (341) 18
Profit and total comprehensive
income for the period 320 (37) 283 359 (341) 18
Basic and diluted earnings/(loss)
per share 2.35p (0.27p) 2.08p 2.61p (2.49p) 0.12p
Balance Sheet 31 March 2021 31 March 2020
GBP'000 GBP'000
Non-current assets
Financial assets at fair
value through profit
or loss 10,036 10,146
Current assets
Receivables 206 378
Cash and cash equivalents 17 173
223 551
Current liabilities
Payables (86) (69)
Corporation tax (67) (69)
Short-term debt facility (2,000) (2,000)
Net assets 8,106 8,559
Equity attributable to
equity holders 8,106 8,559
Net asset value per share 59.59p 62.46p
Statement of Changes
in
Shareholders' equity 31 March 2021 31 March 2020
GBP'000 GBP'000
Opening shareholders'
funds 8,559 16,077
Purchase of own shares (51) -
Profit for the period 283 18
Dividends paid (685) (7,536)
Closing shareholders'
funds 8,106 8,559
Unaudited Non-Statutory Analysis of - The D Ordinary Share
Fund
Investment Portfolio 31 March 2021 31 March 2020
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted qualifying holdings 8,247 99.80 10,036 99.83 8,248 96.69 10,036 97.25
Unquoted non-qualifying
holdings - - - - 109 1.28 110 1.07
Financial assets at fair value
through profit or loss 8,247 99.80 10,036 99.83 8,357 97.97 10,146 98.32
Cash and cash equivalents 17 0.20 17 0.17 173 2.03 173 1.68
8,264 100.00 10,053 100.00 8,530 100.00 10,319 100.00
Qualifying Holdings
Unquoted
Hydroelectric Power
Elementary Energy 337 4.08 380 3.78 337 3.95 380 3.68
Green Highland Allt Ladaidh
(1148)
Limited 3,374 40.83 4,622 45.98 3,374 39.55 4,622 44.79
Green Highland Allt Luaidhe
(228)
Limited 1,918 23.21 2,341 23.29 1,918 22.49 2,341 22.69
Green Highland Allt Phocachain
(1015) Limited 1,857 22.47 2,191 21.79 1,858 21.78 2,191 21.23
Green Highland Shenval Limited 761 9.21 502 4.99 761 8.92 502 4.86
8,247 99.80 10,036 99.83 8,248 96.69 10,036 97.25
Investment Portfolio 31 March 2021 31 March 2020
Non-Qualifying Holdings
Unquoted
Hydroelectric Power
Green Highland Allt Luaidhe
(228)
Limited - - - - 109 1.28 110 1.07
- - - - 109 1.28 110 1.07
Unaudited Non-Statutory Analysis of - The E Ordinary Share
Fund
Statement of Comprehensive
Income
Year ended Year ended
31 March 2021 31 March 2020
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 996 - 996 975 - 975
Realised loss on investments - (204) (204) - (181) (181)
Unrealised loss on investments - (173) (173) - 1,135 1,135
Investment return 996 (377) 619 975 954 1,929
Investment management
fees (502) (139) (641) (485) (132) (617)
Other expenses (152) - (152) (95) - (95)
Profit/(loss) before
taxation 342 (516) (174) 395 822 1,217
Taxation (30) 26 (4) (44) 25 (19)
Profit/(loss) after taxation 312 (490) (178) 351 847 1,198
Profit/(loss) and total
comprehensive income
for the period 312 (490) (178) 351 847 1,198
Basic and diluted earnings/(loss)
per share 1.08p (1.69p) (0.61p) 1.21p 2.92p 4.13p
Balance Sheet 31 March 2021 31 March 2020
GBP'000 GBP'000
Non-current assets
Financial assets at fair
value through profit
or loss 26,742 29,115
Current assets
Receivables 526 341
Cash and cash equivalents 384 335
910 676
Current liabilities
Payables (253) (344)
Corporation tax (17) (5)
Net assets 27,382 29,442
Equity attributable to
equity holders 27,382 29,442
Net asset value per share 94.59p 101.69p
Statement of Changes
in
Shareholders' equity 31 March 2021 31 March 2020
GBP'000 GBP'000
Opening shareholders'
funds 29,442 29,691
(Loss)/profit for the
period (178) 1,198
Dividends paid (1,882) (1,447)
Closing shareholders'
funds 27,382 29,442
Unaudited Non-Statutory Analysis of - The E Ordinary Share
Fund
Investment Portfolio 31 March 2021 31 March 2020
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted qualifying holdings 15,305 66.70 19,369 71.41 15,315 59.55 19,829 67.34
Quoted non-qualifying holdings 570 2.48 558 2.06 3,319 12.90 2,927 9.94
Unquoted non-qualifying
holdings 6,690 29.16 6,815 25.13 6,750 26.25 6,359 21.60
Financial assets at fair value
through profit or loss 22,565 98.34 26,742 98.60 25,384 98.70 29,115 98.88
Cash and cash equivalents 384 1.66 384 1.40 335 1.30 335 1.12
22,949 100.00 27,126 100.00 25,719 100.00 29,450 100.00
Qualifying Holdings
Unquoted
Solar
Digima Limited 1,262 5.50 1,716 6.33 1,262 4.91 1,661 5.64
Digital Screen Solutions
Limited 2,020 8.80 2,776 10.23 2,020 7.85 2,586 8.78
Green Energy for Education
Limited 475 2.07 1,404 5.18 475 1.85 1,260 4.28
Hydroelectric Power
Elementary Energy Limited 1,723 7.51 2,081 7.67 1,723 6.70 2,081 7.07
Green Highland Shenval Limited 359 1.56 237 0.87 359 1.40 237 0.80
Green Highland Allt Choire A
Bhalachain (225) Limited 664 2.89 798 2.94 664 2.58 798 2.71
Green Highland Allt Ladaidh
(1148)
Limited 126 0.55 149 0.55 126 0.49 149 0.51
Green Highland Allt Luaidhe
(228)
Limited 77 0.34 84 0.31 77 0.30 84 0.29
Green Highland Allt Phocachain
(1015) Limited 498 2.17 662 2.44 498 1.94 662 2.25
Achnacarry Hydro Ltd 901 3.93 1,654 6.10 911 3.54 1,663 5.65
Gas Fired Energy Centre
Green Peak Generation Limited 2,200 9.59 1,339 4.94 2,200 8.55 2,366 8.03
Vertical Growing
Perfectly Fresh Cheshire
Limited 5,000 21.79 6,469 23.85 5,000 19.44 6,282 21.33
15,305 66.70 19,369 71.41 15,315 59.55 19,829 67.34
Investment Portfolio 31 March 2021 31 March 2020
Non-Qualifying Holdings
Quoted
Investment Property
TP Social Housing REIT Plc
Equity 570 2.48 558 2.06 3,319 12.90 2,927 9.94
570 2.48 558 2.06 3,319 12.90 2,927 9.94
Unquoted
Crematorium Management
Furnace Managed Services
Limited 488 2.13 113 0.42 486 1.89 97 0.33
Hydroelectric Power
Elementary Energy Limited 140 0.61 140 0.52 200 0.78 199 0.68
SME Funding
Hydroelectric Power:
Broadpoint 2 Limited 1,334 5.81 1,449 5.34 1,335 5.19 1,334 4.53
Other:
Funding Path Limited 2,200 9.59 2,501 9.22 2,200 8.55 2,200 7.47
Aeris Power Limited 518 2.26 602 2.22 519 2.02 519 1.76
Broadpoint 3 Limited 2,010 8.76 2,010 7.41 2,010 7.82 2,010 6.83
6,690 29.16 6,815 25.13 6,750 26.25 6,359 21.60
Notes to the Financial Statements
1. Corporate Information
The Financial Statements of the Company for the year ended 31
March 2021 were authorised for issue in accordance with a
resolution of the Directors on 21 June 2021.
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
The financial statements have been prepared in accordance with
IAS in conformity with the requirements of the Companies Act
2006.
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
previous 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 previous
year and has remained in place during the current year. No capital
payments have been made on this loan.
The current key loan terms were a length of 364 days and an
interest rate of 4.5%. The loan was due for repayment on 17 March
2021. This loan has been extended by the lender for a further 364
days. 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 continue to
extend the current loan term, to mitigate this risk the Company
entered into a separate facility agreement with an alternative
lender. The facility has the same key terms and included a two-year
availability period, at the year end, the Board has sought a 12
month extension to the alternative facility agreement. This
alternative facility agreement now remains in place until 11 June
2023.
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 and more detail on these
considerations can be found under the Principal Risks,
Uncertainties and Emerging Risks section on pages 22 to 23. This is
also discussed in the Chair's Statement on pages 8 to 13, the Going
Concern statement on page 24..
The Financial Statements of the Company for the year to 31 March
2021 have been prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006 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
12; 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.
Useful lives of the Company's Hydro and Gas Fired Energy Centre
portfolio are based on the Investment Manager's estimates of the
period over which the assets will generate revenue which are
periodically reviewed for continued appropriateness.
Climate Change may have an impact on the estimated useful life
of these assets. As discussed in the Strategic Report the
increasing emergence of battery technologies and the UK
Government's desire to phase out fossil fuels has affected the
forecast useful life of the Gas Fired Energy Centre company. The
actual useful lives may be a shorter or longer period depending on
the actual operating conditions experienced by the asset. The
valuations of the Company's renewable assets currently incorporate
the expected impact of climate change through the use of power
prices.
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 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
first time for periods beginning on or after 1 April
2020 that had a significant effect on the Company's financial
statements. Furthermore, none of the amendments to standards that
are effective from that date had a significant effect on the
financial statements.
New and amended standards and interpretations not applied
"Interest Rate Benchmark Reform - Phase 2" was issued and will
become effective for accounting periods beginning on or after 1
January 2021. The amendments require additional disclosures that
address issues that might affect financial reporting after the
reform of an interest rate benchmark, including its replacement
with alternative benchmark rates. They also provide relief to the
Group in respect of certain loans whose contractual terms are
affected by interest benchmark reform.
Other accounting standards and interpretations have been
published and will be mandatory for the Company's accounting
periods beginning on or after 1 January 2021 or later periods. The
impact of these standards is not expected to be material to the
reported results and financial 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 8 to 49 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 2021 and 31 March 2020, 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.
During the year performance fees of GBP4,991 were accrued in the
financial statements. This performance fee was the result of a
share buyback by the Company, which, when including dividends paid
resulted in the return of 122.23 pence per share to the
investor.
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 representing cash available at less
than 3 months' notice are classified as Financial Assets at
amortised cost under IFRS 9.
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
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March 2021
Loan stock interest 382 676 860 1,918
Dividends receivable 220 - 99 319
Other Investment Income - - 22 22
Property Income - - 15 15
602 676 996 2,274
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
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% of any upside above 100 pence per share. 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% of any upside above 100 pence per share. 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% of any upside above 100 pence per share. This does not
include the initial tax relief available to investors.
To date there have been no performance fees paid by the Company,
but during the period the Company accrued GBP4,991 of performance
fees to be paid to the Investment Manager on a successful full exit
for the D Share Class. The Performance fee was accrued as a result
of a buyback of 96,999 D Ordinary Shares, which returned a total of
122.23 pence per share to the investor.
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 GBP143,000 (2020: GBP188,000).
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March 2021
Investment Management
Fees 225 163 556 944
225 163 556 944
Year ended 31 March 2020
Investment Management
Fees 347 317 529 1,193
347 317 529 1,193
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 2021 31 March 2020
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
TPIM: Accrued performance
fee - 5 5 - - -
Financial and regulation
costs 59 - 59 48 - 48
General administration 182 - 182 222 - 222
Fees payable to the
Company's auditor for
audit services 39 - 39 32 - 32
Company secretarial
services 18 - 18 9 - 9
Other professional
fees 38 - 38 27 - 27
Directors fees 66 - 66 55 - 55
402 5 407 393 - 393
The Ongoing Charges Ratio for the Company for the year to 31
March 2021 was 2.88 % (2020: 2.70%). The calculation excludes the
performance fees due to the Manager. 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 re-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%. During the year,
interest of GBP103,500 (2020: GBP3,119) was charged and paid by the
Company.
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 2021
Fees payable to the Company's
auditor:
- for the audit of the financial
statements 9 7 23 39
9 7 23 39
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
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 2021
David Frank 6 4 14 24
Simon Acland 5 4 12 21
Michael Stanes 5 3 13 21
16 11 39 66
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
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
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March 2021
Profit on ordinary activities
before tax 267 349 (174) 442
Corporation tax @ 19% 51 66 (33) 84
Effect of:
Capital (gains) not taxable - - 72 72
Income received not taxable (42) - (19) (61)
Prior year adjustment - - (16) (16)
Tax charge 9 66 4 79
Year ended 31 March 2020
Profit/(loss) 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 36 68 19 123
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 1.93p (2020: 5.29p) based on the profit
after tax of GBP258,000 (2020: GBP710,000) and on the weighted
average number of shares in issue during the period of 13,441,438
(2020: 13,441,438).
Earnings per D Share are 2.08p (2020: 0.12p) based on the profit
after tax of GBP283,000 (2020: GBP16,000) and on the weighted
average number of shares in issue during the period of 13,636,793
(2020: 13,701,636).
Loss/earnings per E Share are 0.61p (2020: 4.13p) based on the
Loss/profit after tax of GBP178,000 (2020: GBP1,197,000) and on the
weighted average number of shares in issue during the period of
28,949,575 (2020: 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 30 to 40.
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 unobservable
Significant unobservable inputs and fair value
Sector Valuation Techniques inputs measurement
Estimated fair value
would increase/(decrease)
if:
Hydroelectric
Power * Discounted cash flows: * Discount rate 6.75% * The discount rate was lower/(higher).
The valuation model (2020: 6.75%).
considers the present * Inflation rate: OBR 5-year forecast, 2.7 * The inflation rate was higher/(lower)
value of expected 5% long term .
payment, discounted (2020: OBR 5-year
using a risk-adjusted
discount rate.
forecast, 2.75%
long term).
Gas Fired
Energy * Discounted cash flows: * Discount rate 14.9% * The discount rate was lower/(higher).
Centre
The valuation model (2020: 10%).
considers the present * Inflation rate: OBR 5-year forecast,
value of expected 2.75% long term * The inflation rate was higher/(lower)
payment, discounted (2020: Inflation rate: OBR .
using a risk-adjusted
discount rate.
5-year forecast,
2.75%
long term).
Solar
* Discounted cash flows: * Discount rate 6.00% (2020: 6.75%). * The discount rate was lower/(higher).
The valuation model * Inflation rate: OBR 5-year forecast, * The inflation rate was higher/(lower)
considers the present 2.75% long term
value of expected (2020: Inflation rate: OBR
payment, discounted
using a risk-adjusted
discount rate. 5-year forecast,
2.75%
long term).
The Company's Vertical Growing investment in PFC has been valued
on using a revenue multiple approach. 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 to the hydro portfolio, the
aggregate change in value of the unquoted investments would be a
reduction in the value of the portfolio of GBP588,000 or 2.17%.
Using the upside alternative, the aggregate value of the hydro
portfolio would be an increase of GBP841,000 or 3.1%.
-- For the upside case relating to the Company's investment in
Green Peak, the assumptions were flexed 2% and for the downside
scenarios the assumptions were flexed by 1% representing the
conservative discount rates applied. Using the upside alternative,
the aggregate value of the investments would be an increase of
GBP249,000 or 19%. Applying the downside alternative, the aggregate
change in value of the unquoted investments would be a reduction in
the value of the portfolio of GBP103,000 or 8%.
-- For the upside case relating to the Company's solar assets,
the assumptions were flexed 1% for both the upside and downside
cases. Using the upside alternative, the aggregate value of the
investments would increase by GBP337,000 or 6%. Using the downside
alternative, the aggregate value of the investments would fall
GBP305,000 or 5%.
-- 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 PFC.
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 2021 were as follows:
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Opening cost - - 3,319 3,319
Opening investment holding
losses - - (392) (392)
Opening fair value - - 2,927 2,927
Disposal proceeds - - (2,546) (2,546)
Realised loss - - (204) (204)
Investment holding gains - - 381 381
Closing fair value at 31
March 2021 - - 558 558
Closing cost - - 570 570
Closing investment holding
losses - - (12) (12)
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Opening cost 7,640 8,357 22,065 38,062
Opening investment holding
gains 3,862 1,789 4,122 9,773
Opening fair value 11,502 10,146 26,187 47,835
Transfers from revenue reserve
to unrealised - - 619 619
Disposal proceeds (257) (110) (69) (436)
Investment holding losses - - (554) (554)
Closing fair value at 31
March 2021 11,245 10,036 26,183 47,464
Closing cost 7,384 8,247 21,995 37,626
Closing investment holding
gains 3,861 1,789 4,188 9,838
Year ended 31 March
2020
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Opening cost - - 6,001 6,001
Opening investment holding
losses - - (100) (100)
Opening fair value - - 5,901 5,901
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
losses - - (392) (392)
C Shares D Shares E Shares Total
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 -
Disposal proceeds (229) (2,781) (1,559) (4,569)
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
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 30 to
40 and 42 to 43, 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 2021
Other debtors 247 202 467 916
Prepayments and accrued
income 5 4 59 68
252 206 526 984
31 March 2020
Other debtors 63 376 301 740
Prepayments and accrued
income 3 2 40 45
66 378 341 785
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, GU14
Aeris Power Limited 6EW 100.00%
Broadpoint 2 Limited 1 King William Street, London, EC4N 7AF 49.00%
30 Camp Road, Farnborough, Hampshire, GU14
Digima Limited 6EW 30.87%
Digital Screen Solutions 30 Camp Road, Farnborough, Hampshire, GU14
Limited 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 A Bhalachain Q Court, 3 Quality Street, Edinburgh, EH4
Limited 5BP 49.90%
Green Highland Allt Q Court, 3 Quality Street, Edinburgh, EH4
Ladaidh (1148) Limited 5BP 35.17%
Green Highland Allt Q Court, 3 Quality Street, Edinburgh, EH4
Luaidhe (228) Limited 5BP 35.18%
Green Highland Allt Q Court, 3 Quality Street, Edinburgh, EH4
Phochachain (1015) Limited 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, EH4
Limited 5BP 28.16%
Green Peak Generation Q Court, 3 Quality Street, Edinburgh, EH4
Limited 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 2021
Payables 99 71 218 388
Other taxes and Social
Security 2 1 4 7
Accrued expenses 12 9 31 57
113 81 253 452
31 March 2020
Payables 3 56 320 379
Other taxes and Social
Security 3 2 3 8
Accrued expenses 11 11 21 43
17 69 344 430
Disclosure by share class is unaudited
17. Borrowings
In line with the Company's initial mandate for the C and D Share
Classes the Company has re-entered into a short-term loan facility
of GBP2.3 million which has a repayment term of 364 days. The loan
is secured against the Company's investment in the Hydro companies
The loan attracts interest at a rate of 4.5% per annum. There is
also an undrawn facility in place, which expires on 11 June 2023 of
GBP2.7m.
During the year, interest of GBP103,500 (2020: GBP3,119) was
charged and paid by the Company.
There are no loan covenants applicable to the above described
loan.
18. Share Capital
31 March 2021 31 March 2021
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 13,604,637 13,701,636
Par Value GBP'000 136 137
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 55,995,650 56,092,649
Par Value GBP'000 560 562
The rights attached to each class of share are disclosed in the
Directors' Report on pages 66 to 69.
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 15 and 16.
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 2021
Assets:
Financial assets at
fair value through profit
or loss 48,022 - - 48,022
Receivables 916 - - 916
Cash and cash equivalents 521 521 - -
49,459 521 - 48,938
Liabilities:
Other payables 388 - 388 -
Loan facility 2,300 - 2,300 -
Accrued expenses 57 - 57 -
2,745 - 2,745 -
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 -
Loan facility 2,300 - 2,300 -
Accrued expenses 43 - 43 -
2,722 - 2,722 -
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 page 43.
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 GBP11,365,000
(2020: GBP11,519,000) and is subject to fixed interest rates of
between 21.6% and 29.5% for between 5 to 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
GBP5,842,000 (2020: GBP6,232,000) which carry interest rates
between 7.75% and 13.5% for between 5 to15 years.
The amounts held in variable rate investments at the balance
sheet date are as follows:
31 March 31 March
2021 2021
GBP'000 GBP'000
Cash on deposit 521 701
521 701
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 2021. 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 a 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 2021 31 March 2020
GBP'000 GBP'000
Qualifying Investment loans 11,365 11,519
Non-Qualifying Investment
loans 5,842 6,232
Cash on deposit 521 701
Receivables 916 740
18,644 19,192
The Company's loan to Broadpoint 3 Limited of GBP2.01 million
was due for repayment on 31 March 2020. 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 page 24.
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.
To mitigate the risk further, the Company has in place an
additional facility agreement with TPLL which is in place until 11
June 2023. This would allow funds to be drawn against this
facility, should the loan from TPLP not be extended.
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 2021 cash amounted to GBP521,000 (2020:
GBP701,000).
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 83.30p (2020: 84.87p) and is
based on Net Assets of GBP11,196,000 (2020: GBP11,406,000) divided
by the 13,441,438 (2020: 13,441,438) C Shares in issue.
The Net Asset Value per D Share is 59.59p (2020: 62.46p) and is
based on Net Assets of GBP8,106,000 (2020: GBP8,559,000) divided by
the 13,604,637 (2020: 13,701,636) D Shares in issue.
The Net Asset Value per E Share is 94.59 (2020: 101.69p) and is
based on Net Assets of GBP27,382,000 (2020: GBP29,442,000) divided
by the 28,949,575 (2020: 28,949,575) E Shares in issue.
21. Relationship with Investment Manager
During the period, TPIM received GBP943,367 which has been
expensed (2020: GBP1,193,478) for providing management and
administrative services to the Company. At 31 March 2021,
GBP382,129 was owing to TPIM (2020: GBP396,339).
During the year, the Company bought back and cancelled 96,999 D
Ordinary Shares at a price of 52.23 pence per share. As a result of
this buy back, and the return of 125.73 pence per share to this
Shareholder, in line with the Investment Management Agreement
between the Company and the Manager, a performance fee of GBP4,992
has been accrued during the year. This will not become payable to
TPIM until a full exit has taken place for the D Shares.
During the year, the Company re-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 GBP103,500 (2020: GBP3,119) was charged on amounts
drawn during the period.
22. Related Party Transactions
The Directors' Remuneration Report on pages 61 to 65 discloses
the Directors' remuneration and shareholdings.
There were no other related party transactions during the
period.
23. Post Balance Sheet Events
Following the reporting date the existing facility agreement
with TPLL was extended for a further 12 months at no additional
cost. The facility agreement will now expire on 11 June 2023.
24. Dividends
C Shares:
During the year, the Company paid dividends to C Class
Shareholders of GBP470,450 equal to 3.5p per share. The Board has
resolved to pay an interim dividend of GBP235,235 equal to 1.75p
per share on 30 July 2021 to C Shareholders on the register on 16
July 2021.
D Shares:
During the year, the Company paid a dividend to D Class
Shareholders of GBP685,082 equal to 5.00p per share. The Board has
resolved to pay an interim dividend of GBP239,225 equal to 1.75p
per share on 30 July 2021 to D Shareholders on the register on 16
July 2021.
E Shares:
During the year the Company paid a dividend to E Class
Shareholders of GBP1,881,722, equal to 6.5p per share. The Board
has resolved to pay an interim dividend of GBP1,013,235 equal to
3.50p per share on 30 July 2021 to E Shareholders on the register
on 16 July 2021.
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END
FR EANKFALKFEFA
(END) Dow Jones Newswires
June 22, 2021 02:00 ET (06:00 GMT)
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