TIDMTP5
RNS Number : 4679I
TP5 VCT PLC
30 May 2014
TP5 VCT plc
Final Results
TP5 VCT plc managed by Triple Point Investment Management LLP
today announces the final results for the year ended 31 March
2014.
These results were approved by the Board of Directors on 29 May
2014.
You may view the Annual Report in on the Triple Point website
www.triplepoint.co.uk at
http://www.triplepoint.co.uk/investment-products/venture-capital-trust/tp5/.
About TP5 VCT plc
TP5 VCT plc ("the Company") is a Venture Capital Trust ("VCT").
The investment manager is Triple Point Investment Management LLP.
The Company was incorporated in June 2008 and raised GBP17.8m
million (net of expenses) through an offer for subscription.
Details of the Fund's progress are discussed in the Strategic
Report forming part of the extract from the Financial Statements
which follows.
Venture Capital Trusts (VCTs)
VCTs were introduced in the Finance Act 1995 to provide a means
for private individuals to invest in unlisted companies in the UK.
Subsequent Finance Acts have introduced changes to VCT legislation.
The tax benefits currently available to eligible new investors in
VCTs include:
-- upfront income tax relief of 30%
-- exemption from income tax on dividends paid; and
-- exemption from capital gains tax on disposals of shares in VCTs
The Company has been provisionally approved as a VCT by HM
Revenue & Customs. In order to maintain its approval, the
Company must comply with certain requirements on a continuing
basis. Above all, the Company is required at all times to hold 70%
of its investments (as defined in the legislation) in VCT
qualifying holdings, of which at least 30% must comprise eligible
ordinary shares.
Financial Summary
Year ended Year ended
31 March 2014 31 March 2013
--------------------------------- -----------------------------
Ord.
Ord. Shares B Shares Total Shares B Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net assets 15,480 3,107 18,587 16,097 2,984 19,081
Net profit before tax 362 123 485 124 86 210
------------ --------- -------- -------- --------- --------
Movement in net asset value
per share (p)
Opening net asset value per
share 85.57p 86.54p 87.41p 84.04p
Dividend per share paid during
the year (5.00p) - (2.50p) -
Earnings per share 1.93p 3.53p 0.66p 2.50p
Closing net asset value per
share 82.50p 90.07p 85.57p 86.54p
------------ --------- -------- ---------
Cumulative return to shareholders
(p)
Net asset value per share 82.50p 90.07p 85.57p 86.54p
Total dividends paid 9.51p - 4.51p -
Net asset value plus dividends
paid 92.01p 90.07p 90.08p 86.54p
------------ --------- -------- ---------
For a GBP1 investment per share, with a sufficient income tax
liability in the relevant year, shareholders will have received a
30p tax credit, which for Ordinary shareholders taken together with
the first dividend of 2.01p, a second dividend of 2.5p, a third
dividend of 5p and the current NAV of 82.50p totals 122.01p and for
B class shareholders taken together with the current NAV of 90.07p
totals 120.07p.
TP5 VCT plc ("the Company") is a Venture Capital Trust ("VCT").
The Investment Manager is Triple Point Investment Management LLP
("TPIM"). The Company was launched in September 2008 and raised
GBP17.8 million (net of expenses) through an offer for
subscription. In September 2009 it acquired the assets and
liabilities of TP70 2009 VCT plc with a net asset value of GBP3.3m
in exchange for the issue of B shares in the Company to the
shareholders in TP70 2009 VCT plc.
The Strategic Report on pages 2 to 16, the Directors' Report on
pages 17 to 26 and the Directors' Remuneration Report on pages 27
to 29 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 TP5 VCT plc.
The Directors submit to the members their Annual Report and
Financial Statements for the Company for the year ended 31 March
2014.
Strategic Report
The Strategic Report, on pages 2 to 16, has been prepared in
accordance with the requirements of Section 414c of the Companies
Act 2006. Its purpose is to inform the members of the Company and
help them to assess how the directors have performed their duty to
promote the success of the Company, in accordance with Section 172
of the Companies Act 2006.
Chairman's Statement
I am writing to present the Financial Statements for TP5 VCT plc
("the Company") for the year ended 31 March 2014.
Portfolio
We are pleased to report that the Company's funds are 96%
invested in a portfolio of qualifying and non-qualifying unquoted
investments. The qualifying investments include companies which
generate renewable electricity from roof-mounted solar photovoltaic
panels and companies which provide cinema digitisation. These
investments were selected for their ability to yield high quality,
predictable cash flows. The Company's portfolio of qualifying
investments accounts for 93% of net assets, thus maintaining its
VCT qualifying status by satisfying the test of being at least 70%
invested in VCT qualifying investments. More information on the
Company's investment portfolio is given in the Investment Manager's
Review.
Net Asset Value
During the year the Company made a profit before tax of
GBP485,000, of which GBP362,000 was a profit for Ordinary shares
and GBP123,000 was a profit for B shares. The profit for the B
shares was driven by the performance of GAM Diversity 2.5XL.
At 31 March 2014 the Net Asset Value ("NAV") per Ordinary Share
stood at 82.50p. Adding back the payment of the 5p per share
dividend during the year the Ordinary share NAV would have been
87.50p per share.
At 31 March 2014 the NAV per B Share stood at 90.07p. The B
Share NAV increased in the year by the profit of 3.53p per
share.
Dividend
A third dividend to Ordinary Share Class holders of GBP940,551
or 5p per share was paid on 26 July 2013. This brings the total
distributed by dividend to 9.512p per share.
Risks
The Board believes that the principal risks facing the Company
are:
-- investment risk associated with undertaking VCT qualifying investments;
-- failure to continue to satisfy the requirements to qualify as a VCT; and
-- ability to realise investments in order to return funds to
investors after the five year holding period.
The Board continues to work closely with the Investment Manager
to minimise either the likelihood or potential impact of these
risks, within the scope of the Company's established investment
strategy.
Outlook
By 1 July 2014 all of the Company's shareholders will have held
their shares for the required five years in order to secure up
front income tax relief. In accordance with shareholder
expectations, the Board and Investment Manager are planning to
return funds to shareholders as soon as practicable thereafter,
through the payment of a series of dividends to shareholders as the
Company's investments are realised. These Financial Statements have
been prepared on a break up basis to reflect the intention to
realise the assets of the Company within the next six to twelve
months.
If you have any queries or comments, please do not hesitate to
telephone Triple Point Investment Management LLP on 020 7201
8989.
Sir John Lucas-Tooth
Chairman
29 May 2014
Strategic Report - Company Strategy and Business Model
The Directors assess the Company's success in meeting its
objectives in relation to returns, stability, VCT qualification
and, ultimately, exit.
Performance Update
At launch the Company targeted a return of 9% to 10 % pa
including the benefit of tax relief for the Ordinary Share Class to
be delivered from a combination of managed cash investments and
unquoted qualifying investments. On a weighted average share price
using a 9% return this is broadly equivalent to a total return to
investors at exit of 109.2p. This compares to a net asset value per
share at 31 March 2014 of 82.50p and cumulative dividend payments
of 9.51p, making a total return to date of 92.01p. The Ordinary
Share Class reported an income return of 0.67p and a capital return
of 1.26p for the year to 31 March 2014. This compared with an
aggregate return for the previous year of 0.66p. The small
improvement is due to an increase in the valuation of some of the
unquoted investments.
At launch the Company targeted a return of 9.6% to 14.4% pa
including the benefit of tax relief for the B Share Class to be
delivered from a combination of exposure to the GAM Diversity fund
of hedge funds strategy and unquoted qualifying investments. On a
weighted average share price using a 9.6% return this is broadly
equivalent to 111.9p at exit. This compares to a net asset value
per share at 31 March 2014 of 90.07p. The B Share Class reported an
income loss of (0.56p) and a capital return of 4.09p for the year
to 31 March 2014. This compared with an aggregate return for the
previous year of 2.50p. The improvement is due to the performance
of GAM 2.5XL and an increase in the valuation of some of the
unquoted investments. In order to return funds to the B class
shareholders as soon as practicable thereafter, instructions were
given to dispose of the B Fund's exposure to GAM Diversity 2.5XL in
two tranches at December 2013 and March 2014.
The Board and the Investment Manager are both committed to
ensuring that returns on the investment portfolio are optimised and
that the VCT remains fully invested, in order to continue to be
managed in line with the Company's investment strategy and risk
profile.
When TP5's target returns were set in 2008, interest rates stood
at 5%, and the length and depth of the recent recession had not
been fully anticipated. The lower than targeted returns on cash,
and on the unquoted investments have meant that, whilst each
investment has achieved the Company's objective of capital
preservation, the combined return has not, over time, been
sufficient to cover the Company's costs. In addition, neither the
GSAM LIBOR Plus strategy, nor the GAM Diversity strategy has met
the returns targeted in 2008.
The Board expects the Investment Manager to deliver a
performance which meets the objective of achieving long-term
investment returns, including tax free dividends. A review of the
performance of the Company's investments during the financial year,
the position of the Company at the year end and the outlook for the
coming year is contained within the Chairman's statement on page 2
and the Investment Manager's Review on pages 8 to 9.
Dividend Policy
The Board aims to deliver an annual 5% dividend on the Ordinary
shares if possible, but this depends primarily on the Company's
level of realisations and cash flow. There may be variations in the
amount of dividends paid year on year.
The Board's dividend policy for the B shares is to pay
shareholders the required distribution for VCT status. No more than
15% of income from shares and securities may be retained. To date
there have been no dividend payments as there are no distributable
profits.
Investment Policy
To comply with VCT rules, the Company must within a three year
period have (and subsequently maintain) at least 70% of its
investments represented by qualifying investments. It was the
Directors' objective to achieve this target, typically in
investments ranging between GBP500,000 and GBP2,000,000 between the
Ordinary Share Fund and the B Share Fund, in less than three years.
The investment strategies for the non-VCT qualifying investments
are different for the Ordinary Share Fund and the B Share Fund.
This Company's strategy for VCT qualifying holdings aimed to
deliver more secure returns than is generally the case in venture
capital investments, combined in the case of the B Share Fund with
the potential for enhanced returns through a leveraged exposure to
a fund of hedge funds.
In seeking to achieve the Company's objectives, TPIM sought to
invest in venture capital investments (which represent qualifying
investments) on the basis of certain conservative principles.
In respect of venture capital investments (which represent
qualifying investments under the tax rules applying to VCTs) TPIM
sought:
-- investments in which robust due diligence has been undertaken on target investments;
-- investments in which there is a high level of access to
material financial and other information on an ongoing basis;
-- investments in which the risk of losses is minimised through
careful analysis of the collateral available to investee companies;
and
-- investments in which there is a strong relationship with the key decision makers.
B Share Fund
In respect of fund of hedge fund investments (which represent
non-qualifying investments under the tax rules applying to VCTs)
GAM was appointed as TPIM's sub-adviser to advise on the selection
of GAM funds of hedge funds.
There is no loss or any exposure to GAM Diversity 2.5XL as this
was disposed of in two tranches in December 2013 and March
2014.
Ordinary Share Fund
GSAM was appointed as TPIM's sub-adviser to manage the cash and
fixed income investments of the Ordinary Share Fund, prior to the
investment in qualifying investments.
Tax Benefits
The Company's objective is to provide shareholders with an
attractive income and capital return by investing its funds in a
broad spread of unlisted UK companies which meet the relevant
criteria for investment by Venture Capital Trusts.
Investing in a VCT brings the benefit of tax-free dividends, as
well as up-front income tax relief. The Company has over 70% of its
net asset value invested in VCT qualifying investments and
continues to meet the VCT qualification requirements which are
continuously monitored by the Investment Manager and reviewed by
the Directors.
VCT Regulation
VCTs were 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 tax benefits
available to eligible investors in VCTs include:
-- up-front income tax relief of 30%
-- exemption from income tax on dividends received
-- exemption from capital gains tax on disposals of shares in VCTs.
The Company was provisionally approved as a VCT by Her Majesty's
Revenue and Customs. In order to secure final approval the Company
must comply with certain requirements on a continuing basis. Within
three years from the effective date of provisional approval or
later allotment at least 70% of the Company's investments must
comprise "qualifying holdings" of which at least 30% must be in
eligible ordinary shares. This investment criterion has now been
achieved.
VCT qualifying status risk: the Company is required at all times
to observe the conditions laid down in the Income Tax Act 2007 for
the maintenance of approved VCT status. The loss of such approval
could lead to the Company losing its exemption from corporation tax
on capital gains, to investors being liable to pay income tax on
dividends received from the Company and, in certain circumstances,
to investors being required to repay the initial income tax relief
on their investment. The Investment Manager keeps the Company's VCT
qualifying status under continual review and reports to the Board
on a quarterly basis. The Board has also retained
PricewaterhouseCoopers LLP to undertake an independent VCT status
monitoring role.
Exit Programme
The Company is committed to realising its investments and
returning funds to shareholders as soon as practicable after the
end of the five year holding period, which will be 30 June 2014.
The Directors and the Investment Manager are developing a plan for
implementation of an investment realisation programme for the
qualifying investments with the intention of completing these
realisations within six to twelve months. The B Fund's exposure to
GAM Diversity was disposed of in two tranches at December 2013 and
March 2014, realising total proceeds of GBP1.1 million. The
Company's investments in unquoted companies are valued at GBP17.2
million in aggregate.
Following the realisation of the Company's investments and
return of funds to shareholders during the six to twelve months
following the end of the five year holding period, the Board
intends to bring forward resolutions to place the Company into
Members Voluntary Liquidation. Hence the Financial Statements have
been prepared to reflect the realisation of the assets and to
include a provision for the liquidation of the Company.
Principal Risks and Risk Management
The Directors carry out a regular review of the environment in
which the Company operates. 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.
Investment risk: the Company's VCT qualifying investments will
be held in small and medium-sized unquoted companies which, by
their nature, entail a higher level of risk and lower liquidity
than investments in large quoted companies. The Directors and
Investment Manager aim to limit the risk attached to the portfolio
as a whole by careful selection and timely realisation of
investments, by carrying out rigorous due diligence procedures and
by maintaining a spread of holdings in terms of industry sector and
geographical location. The Board reviews the investment portfolio
with the Investment Manager on a regular basis.
Financial instrument risk: Financial instrument risks are
described in note 15.
Financial risk: as most of the Company's investments will
involve a medium to long-term commitment and will be relatively
illiquid, the Directors consider that it is inappropriate to
finance the Company's activities through borrowing.
Internal control 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.
Share Buy-Back Discount Policy
The Company has a share buy-back facility, committing to buy
back shares at no more than a 10% discount to the prevailing NAV,
subject to the Directors' discretion. We will be asking
shareholders at the Annual General Meeting to extend the facility
for the Company to purchase shares in the market for
cancellation.
Shareholders should note that if they sell their shares within
five years of subscription they forfeit any tax relief obtained. If
you are considering selling your shares please contact TPIM on 020
7201 8989.
Environmental, Social, Employee and Human Rights Issues
Due to the nature of the Company's activities and having no
employees and only 3 Non-Executive Directors, there are no Human
Rights Issues to report. Its investment in companies engaged in the
energy generation from renewable sources means it will contribute
to the reduction in carbon emissions.
Gender Diversity
The Board of Directors comprises 3 male Directors. The
Investment Manager has a female managing partner and has 35
employees and members of whom 20 are men and 15 are women.
InvestmentManager's Review
At 31 March 2014, qualifying investments represented 93% of net
assets, ensuring that the Company continues to satisfy the
requirement to be 70% invested in qualifying investments.
The portfolio of small, unquoted investments is split between 16
companies across two sectors: cinema digitisation and renewable
electricity generation both from solar PV and anaerobic
digestion.
Each of these investments meets the Company's investment
criteria, with projected revenues generated by good quality
customers and the potential for steady returns.
Sector Analysis
The unquoted investment portfolio can be analysed as
follows:
Electricity Generation
Anaerobic Total Unquoted
Industry Sector Cinema Digitisation Solar PV Digestion Investments
------------------------- -------------------- ----------- ------------ ---------------
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------------------- ---------------
Investments at 1 April
2013 7,310 7,215 3,275 17,800
------------------------- -------------------- ----------- ------------ ---------------
Investment revaluations
during the year 86 254 - 340
------------------------- -------------------- ----------- ------------ ---------------
Investments disposed of
during the year (705) - (196) (901)
------------------------- -------------------- ----------- ------------ ---------------
Investments at 31 March
2014 6,691 7,469 3,079 17,239
------------------------- -------------------- ----------- ------------ ---------------
Unquoted Investments % 38.81% 43.33% 17.86% 100.00%
------------------------- -------------------- ----------- ------------ ---------------
VCT Sector Portfolio
Cinema Digitisation
The cinema digitisation portfolio continues to perform as
intended, with the investee companies benefitting from regular and
reliable revenues. The majority of these revenues come from the six
major investment grade Hollywood Studios under the globally
recognised Virtual Print Fee model, through which film studios pay
for the cost of the deployment of digital conversion over a number
of years. The companies in its portfolio own maintain and operate
digital equipment in cinemas in the UK, Germany, Austria, Italy and
Ireland.
Solar PV
The Company's investment portfolio includes 8 holdings in
businesses generating renewable electricity from residential solar
PV panels. We are pleased to report that the solar investment
portfolio continues to perform in line with expectations for
generating revenues, which are derived from the receipt of
index-linked Feed-in Tariffs (FiTs). We continue to monitor closely
the performance of each of these businesses.
Anaerobic Digestion
Since the publication of the last report, we are pleased that
the anaerobic digestion plants have continued to perform well and
have operated for a full season post start-up in line with
expectations. This is as a result of a good maize harvest in 2013
providing new feed stock improving the quality of the plants'
'fuel'. All three renewable energy generating companies operate 1
MW plants which generate electricity for sale to a utility company.
The electricity generation also attracts Feed-in Tariffs which
provide RPI linked revenues for a 20 year period from
commissioning.
Outlook
By 30 June 2014 all of the Company's shareholders will have held
their shares for the five years required in order to secure
up-front income tax relief. In order to return funds to
shareholders as soon as practicable thereafter, instructions were
given to dispose of the B Fund's exposure to GAM Diversity 2.5XL in
two tranches at December 2013 and March 2014, whilst the
realisation of the Company's VCT qualifying investments is being
planned to take effect after 30 June 2014. In order to incentivise
the Investment Manager to secure a prompt exit on the best terms
available its annual management fee ceased to accrue after 30
September 2014, and is replaced by a one-off fee of 1% of amounts
returned to shareholders after 30 September 2014.
If you have any questions, please do not hesitate to call us on
020 7201 8989.
Claire Ainsworth
Managing Partner
for Triple Point Investment Management LLP
29 May 2014
Investment Portfolio Summary
Year ended Year ended
31 March 2014 31 March 2013
------------------------------------ ------------------------------------
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted Qualifying Holdings 16,875 95.45 17,235 95.83 17,580 93.02 17,600 92.43
Non-Qualifying Holdings
Unquoted Non Qualifying
Holdings 60 0.34 4 0.02 200 1.06 200 1.05
GAM Diversity 2.5XL - - - - 877 4.64 1,004 5.27
Financial assets at fair
value through profit
or loss 16,935 95.79 17,239 95.85 18,657 98.72 18,804 98.75
Cash and cash equivalents 747 4.21 747 4.15 235 1.28 235 1.25
17,682 100.00 17,986 100.00 18,892 100.00 19,039 100.00
======== ======= ======== ======= ======== ======= ======== =======
Unquoted Qualifying Holdings
Electricity Generation:
Solar
Campus Link Ltd 1,310 7.41 1,445 8.03 1,310 6.93 1,390 7.30
Convertibox Services
Ltd 1,000 5.66 950 5.28 1,000 5.29 915 4.81
Flowers Power Ltd 1,000 5.66 1,077 5.99 1,000 5.29 1,034 5.43
Green Energy for Education
Ltd 1,310 7.41 1,282 7.13 1,310 6.93 1,248 6.55
Helioflair Ltd 200 1.13 199 1.11 200 1.06 192 1.01
New Energy Network Ltd 1,000 5.66 1,063 5.91 1,000 5.29 1,027 5.39
Ranmore Environmental
Ltd 375 2.12 374 2.08 375 1.98 360 1.89
September Star Energy
Ltd 1,000 5.66 1,079 6.00 1,000 5.29 1,049 5.51
Anaerobic Digestion
Biomass Future Generation
Ltd 1,300 7.35 1,300 7.23 1,300 6.88 1,300 6.83
GreenTec Energy Ltd 500 2.83 500 2.78 500 2.65 500 2.63
Katharos Organic Ltd 1,275 7.21 1,275 7.09 1,275 6.75 1,275 6.70
Cinema Digitisation :
21st Century Cinema Ltd - - - - 1,000 5.29 1,000 5.25
Big Screen Digital Services
Ltd - - - - 1,000 5.29 1,000 5.25
Cinematic Services Ltd 2,000 11.31 1,964 10.92 2,000 10.59 2,000 10.50
Digima Ltd 1,647 9.31 1,648 9.16 1,000 5.29 1,000 5.25
Digital Screen Solutions
Ltd 1,648 9.32 1,662 9.24 1,000 5.29 1,000 5.25
DLN Digital Ltd 1,310 7.41 1,417 7.88 1,310 6.93 1,310 6.88
16,875 95.45 17,235 95.83 17,580 93.02 17,600 92.43
======== ======= ======== ======= ======== ======= ======== =======
Cost Valuation Cost Valuation
Unquoted Non-Qualifying GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Anaerobic digestion
Drumnahare Biogas Ltd 60 0.34 4 0.02 200 1.06 200 1.05
60 0.34 4 0.02 200 1.06 200 1.05
======== ======= ======== ======= ======== ======= ======== =======
Financial Assets are measured at fair value through profit or
loss. The initial best estimate of fair value of these investments
that are either quoted or not quoted on an active market is the
transaction price (i.e. cost). The fair value of these investments
is subsequently measured by reference to the enterprise value of
the investee company, which is best deemed to reflect the fair
value. Where the Board considers the investee company's enterprise
value to remain unchanged since acquisition, investments continue
to be held at cost less any loan repayments received. Where the
Board considers the investee company's enterprise value has changed
since acquisition, investments are held at a value measured using a
discounted cash flow model.
A breakdown of investments between the Ordinary Share Class and
the B Share Class is shown in note 10. When an investment is made
the split between the Ordinary Shares the B Shares is calculated
using the net asset value of each share class at the time of
investment.
Unquoted Investments with a Value greater than 5% of the
Portfolio
Biomass Future Generation
Ltd
Equity
Income recognised Held Equity Held
Date of Valuation Valuation by TP5 for by TP5 by TPIM managed
first investment Cost GBP GBP Method the year GBP'000 % funds %
24-Feb-10 1,300,000 1,300,000 At cost 45 28.31 96.92
Summary of Information from Investee Company Financial
Statements ending in 2012: GBP'000
Turnover 460
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 24
Loss before tax (155)
Net assets before
VCT loans 2,875
Net assets 1,154
Biomass Future Generation Ltd has funded the construction of a farm
based Anaerobic Digestion plant in Hertfordshire. The plant is fully
operational and utilises agricultural feed stocks which are converted
into a methane rich biogas in order to produce green electricity using
a 1 MW Jenbacher CHP (combined heat and power) engine. The business
derives its revenues from both the export and sale of the electricity
it produces, as well as from Feed-in Tariffs that it is entitled to
for the production of green electricity; these provide the company with
20 years of RPI linked cash flows. At the current time, having been
operational through a full season post start-up and with new harvest
feedstock having been delivered, the plant is operating well.
--------------------------------------------------------------------------------------------------------
Campus Link Ltd
Equity
Income recognised Held Equity Held
Date of Valuation Valuation by TP5 for by TP5 by TPIM managed
first investment Cost GBP GBP Method the year GBP'000 % funds %
Discounted
24-Feb-10 1,310,000 1,445,000 cashflow 46 32.89 98.66
Summary of Information from Investee Company Financial
Statements ending in 2013: GBP'000
Turnover 353
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 325
Loss before tax (98)
Net assets before
VCT loans 2,788
Net assets 688
Campus Link Ltd is a small venture capital funded business with an established
portfolio of roof mounted, residential solar PV systems which have been
generating electricity since 2011. Its revenues are generated from the
sale of the electricity and the receipt of the Feed-in Tariffs. It expanded
its business with the purchase of additional solar PV systems in 2012
and in 2013.
-----------------------------------------------------------------------------------------------------------
Cinematic Services
Ltd
Equity
Income recognised Held Equity Held
Date of first Valuation Valuation by TP5 for by TP5 by TPIM managed
investment Cost GBP GBP Method the year GBP'000 % funds %
24-Dec-10 2,000,000 1,964,000 At cost 91 48.12 96.24
Summary of Information from Investee Company Financial
Statements ending in 2013: GBP'000
Turnover 1,391
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 1,616
Profit before tax 208
Net assets before
VCT loans 4,942
Net assets 742
Cinematic Services Ltd owns, maintains and operates digital equipment
at cinemas in the UK, Germany and Italy, covering 115 screens. It continues
to perform in line with its objectives. Digital cinema projection conversion
is paid for under the globally recognised Virtual Print Fee model, through
which film studios pay for the cost of the deployment over a number
of years with the majority of the company's revenues deriving ultimately
from the six major investment grade Hollywood Studios.
----------------------------------------------------------------------------------------------------
Convertibox Services
Ltd
Income recognised Equity Equity Held
Date of Valuation Valuation by TP5 for Held by by TPIM managed
first investment Cost GBP GBP Method the year GBP'000 TP5 % funds %
Discounted
30-Mar-11 1,000,000 950,000 cashflow 42 48.48 96.96
Summary of Information from Investee Company Financial
Statements ending in 2013: GBP'000
Turnover 200
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 211
Profit before tax 45
Net assets before
VCT loans 1,777
Net assets 377
Convertibox Services Limited has been generating renewable electricity
from its portfolio of roof mounted solar PV systems since 2011. Generating
electricity provides the company with a reliable, long term index-linked
revenue stream with the support of the Feed-in Tariffs.
----------------------------------------------------------------------------------------------------------
Digima
Ltd
Equity
Income recognised Held Equity Held
Date of Valuation Valuation by TP5 for by TP5 by TPIM managed
first investment Cost GBP GBP Method the year GBP'000 % funds %
10-Oct-11 1,647,000 1,648,000 At cost 44 19.76 67.74
Summary of Information from Investee Company Financial
Statements ending in 2013: GBP'000
Turnover 1,862
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 1,781
Profit before tax 133
Net assets before
VCT loans 3,271
Net assets 1,340
Digima Ltd provides digital projection systems to the cinema industry.
It owns, operates and maintains the equipment, upgrading the projection
room from traditional 35mm film projectors to a fully DCI (Digital Cinema
Initiative) compliant digital cinema system. During the year, it acquired
the whole of the share capital of a smaller company, Big Screen Digital
Services Ltd, whose installations are in the UK and Italy. It operates
across the UK and Italy, now covering 231 screens.
--------------------------------------------------------------------------------------------------------
Digital Screen Solutions
Ltd
Equity
Income recognised Held Equity Held
Date of Valuation Valuation by TP5 for by TP5 by TPIM managed
first investment Cost GBP GBP Method the year GBP'000 % funds %
11-Oct-11 1,648,000 1,662,000 At cost 44 18.43 83.43
Summary of Information from Investee Company Financial
Statements ending in 2013: GBP'000
Turnover 1,858
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 1,771
Loss before tax (103)
Net assets before
VCT loans 5,474
Net assets 1,274
Digital Screen Solutions Ltd is a provider of cinema digitisation equipment.
During the year, it acquired the whole of the share capital of a smaller
company, 21st Century Cinema Ltd, all of whose installations are in
the UK. It now owns, maintains and operates digital projection equipment
at cinemas in the UK and Italy, covering 229 screens. Digital cinema
projection conversion is paid for under the globally recognised Virtual
Print Fee model, through which film studios pay for the cost of the
deployment over a number of years with the majority of the company's
revenues deriving ultimately from the six major investment grade Hollywood
Studios.
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DLN Digital Ltd
Income recognised Equity Equity Held
Date of Valuation Valuation by TP5 for Held by by TPIM managed
first investment Cost GBP GBP Method the year GBP'000 TP5 % funds %
24-Feb-10 1,310,000 1,417,000 At cost 46 29.70 97.71
Summary of Information from Investee Company Financial
Statements ending in 2013: GBP'000
Turnover 1,673
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 951
Profit before tax 422
Net assets before
VCT loans 6,444
Net assets 2,027
DLN Digital Ltd owns, maintains and operates digital equipment at cinemas
in the UK, Ireland and Italy, covering 190 screens. It continues to perform
in line with its objectives. Digital cinema projection conversion is paid
for under the globally recognised Virtual Print Fee model, through which
film studios pay for the cost of the deployment over a number of years
with the majority of the company's revenues deriving ultimately from the
six major investment grade Hollywood Studios.
---------------------------------------------------------------------------------------------------------
Flowers Power Ltd
Equity
Income recognised Held Equity Held
Date of Valuation Valuation by TP5 for by TP5 by TPIM managed
first investment Cost GBP GBP Method the year GBP'000 % funds %
Discounted
14-Nov-11 1,000,000 1,077,000 cashflow 35 49.02 98.04
Summary of Information from Investee Company Financial
Statements ending in 2013: GBP'000
Turnover 190
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 141
Profit before tax 3
Net assets before
VCT loans 1,916
Net assets 516
Flowers Power Ltd has been generating renewable electricity from its
portfolio of roof mounted solar PV systems
since 2011. Generating electricity provides the company with a reliable,
long term index-linked revenue stream with the support of the Feed-in
Tariffs. It expanded its business with the purchase of additional solar
PV systems in 2013.
---------------------------------------------------------------------------------------------------------
Green Energy for Education
Ltd
Equity
Income recognised Held Equity Held
Date of first Valuation Valuation by TP5 for by TP5 by TPIM managed
investment Cost GBP GBP Method the year GBP'000 % funds %
Discounted
26-Feb-10 1,310,000 1,282,000 cashflow 46 49.23 98.47
Summary of Information from Investee Company Financial
Statements ending in 2013: GBP'000
Turnover 271
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 255
Loss before tax (10)
Net assets before
VCT loans 1,893
Net assets 276
Green Energy for Education Ltd generates renewable electricity from
its portfolio of residential roof mounted solar PV systems which it
owns and operates at sites across the UK. It has a reliable, long term
index-linked revenue stream supported by receipt of the Feed-in Tariffs.
Green Energy for Education established its network of solar PV systems
in 2011, since when the business has expanded with further purchases
in both 2012 and 2013.
-----------------------------------------------------------------------------------------------------
Katharos Organic
Ltd
Equity
Income recognised Held Equity Held
Date of Valuation Valuation by TP5 for by TP5 by TPIM managed
first investment Cost GBP GBP Method the year GBP'000 % funds %
26-Feb-10 1,275,000 1,275,000 At cost 45 29.96 98.68
Summary of Information from Investee Company Financial
Statements ending in 2012: GBP'000
Turnover 3
Earnings before interest, tax, amortisation and depreciation
(EBITDA) (353)
Loss before tax (544)
Net assets before
VCT loans 3,253
Net assets 453
Katharos Organic Ltd has funded the construction of a farm based Anaerobic
Digestion plant in Essex. The plant is fully operational and utilises
agricultural feed stocks which are converted into a methane rich biogas
in order to produce green electricity using a 1 MW Jenbacher CHP engine.
The business derives its revenues from both the export and sale of the
electricity it produces, as well as from Feed-in Tariffs that it is
entitled to for the production of green electricity; these provide the
company with 20 years of RPI linked cash flows. At the current time,
having been operational through a full season post start up and with
new harvest feedstock having been delivered, the plant is operating
well.
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New Energy Network
Ltd
Equity
Income recognised Held Equity Held
Date of first Valuation Valuation by TP5 for by TP5 by TPIM managed
investment Cost GBP GBP Method the year GBP'000 % funds %
Discounted
14-Nov-11 1,000,000 1,063,000 cashflow 36 49.02 98.04
Summary of Information from Investee Company Financial
Statements ending in 2013: GBP'000
Turnover 196
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 144
Profit before tax 9
Net assets before
VCT loans 1,914
Net assets 514
New Energy Network Ltd generates renewable electricity from its portfolio
of residential roof mounted solar PV systems which it owns and operates
at sites across the UK. It has a reliable, long term index-linked revenue
stream supported by receipt of the Feed-in Tariffs. New Energy Network
established its network of solar PV systems in 2011, since when the
business has expanded with further purchases in 2013.
-----------------------------------------------------------------------------------------------------
September Star Energy
Ltd
Equity
Income recognised Held Equity Held
Date of Valuation Valuation by TP5 for by TP5 by TPIM managed
first investment Cost GBP GBP Method the year GBP'000 % funds %
Discounted
14-Nov-11 1,000,000 1,079,000 cashflow 35 49.02 98.04
Summary of Information from Investee Company Financial
Statements ending in 2013: GBP'000
Turnover 200
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 151
Profit before tax 13
Net assets before
VCT loans 1,916
Net assets 516
September Star Energy Ltd is a small venture capital funded business
with an established portfolio of roof mounted, residential solar PV
systems which have been generating electricity since 2011. Its revenues
are generated from the sale of the electricity and the receipt of the
Feed-in Tariffs. It expanded its business with the purchase of additional
solar PV systems in 2013.
---------------------------------------------------------------------------------------------------------
-- The investments are a combination of debt and equity.
-- Equity holding is equal to the voting rights.
The Strategic Report has been approved by the Board and signed
on their behalf by the Chairman.
Sir John Lucas-Tooth
Chairman
29 May 2014
Report of the Directors
The Directors present their Report and the audited Financial
Statements for the year ended 31 March 2014.
Details of Directors
Sir John Lucas-Tooth is Chairman of the Company. After selling
his scientific instrument business, Telsec, to Bausch & Lomb,
he became a consultant for Lazard Brothers and a director of Lazard
Investments Limited, a subsidiary for their private equity
holdings. For the last 16 years Sir John has been a managing
director of various companies in the Loewenstein Company. Latterly,
he has been assisting in the setting up of Cunningham Loewenstein
Asset Management plc which is FCA authorised. He is now
semi-retired but maintains interests in several small high
technology enterprises and is a trustee of several charities.
Robert Reid, is the founder of an independent corporate
development advisory business. After graduating from the European
Business School, he joined S.G. Warburg & Co. and has over 17
years corporate finance experience in both the corporate and
advisory fields. His most recent roles include director of
corporate finance at Avis Europe plc and director of corporate
finance at Hurst Morrison Thomson, Chartered Accountants. Robert is
a Director of TP10 VCT plc and was previously a Director of TP70
2008(II) VCT plc.
Christopher Harris graduated in Social and Political Sciences
from Cambridge University. He then trained as a lawyer with
Slaughter and May before joining a law practice in Jersey. He has
specialised in tax work involving complex trust structures, captive
insurance and the management of holding companies for UK quoted
entities. Following the sale of the firm's trust company to
Rathbone Brothers plc he became managing director of Rathbone Trust
Company (Jersey) Limited from 2002 to 2004 and a director of
Rathbone Investment Management (Channel Islands) Limited from 2003
to 2006.
Robert Reid being a Director of another TPIM managed VCT is not
considered independent. Therefore he will retire and offer himself
for re-election at the Annual General Meeting to be held on 24 July
2014. Christopher Harris having not been re-elected for 3 years
must also retire and offer himself for re-election at the
forthcoming Annual General Meeting.
The Board has considered provision B.7.2 of the UK Corporate
Governance Code (September 2012) and believes that all the
Directors continue to be effective and to demonstrate commitment to
their roles, the Board and the Company. The Directors are discussed
further within the Corporate Governance report on page 21 which
demonstrates the Boards compliance with the UK Corporate Governance
code.
Activities and Status
The Company is a Venture Capital Trust and its main activity is
investing.
The Company has been provisionally approved as a VCT by
HMRC.
The Company is registered in England as a Public Limited Company
(Registration number 6614532). The Directors have managed, and
intend to continue to manage, the Company's affairs in such a
manner as to comply with Section 274 of the Income Tax Act 2007
which grants approval as a VCT.
The Company was not at any time up to the date of this report a
close company within the meaning of S439 of the Corporation Tax Act
2010.
Post Balance Sheet Events
Post balance sheet events are detailed in note 20.
Directors' and Officers' Liability Insurance
The Company has, as permitted by S233 of the Companies Act 2006,
maintained insurance cover on behalf of the Directors and Company
Secretary, indemnifying them against certain liabilities which may
be incurred by them in relation to their offices with the
Company.
Matters Covered in the Strategic Report
Dividends and financial risk management have both been discussed
within the Strategic Report on pages 2 and 6.
Report of the Directors
Management
TPIM acts as Investment Manager to the Company. The principal
terms of the Company's management agreement with TPIM are set out
in note 5 to the Financial Statements.
The Board has evaluated the performance of the Investment
Manager based on the returns generated since taking on the
management of the Fund and a review of the management contract and
the services provided in accordance with its terms. As required by
the Listing Rules, the Directors confirm that in their opinion the
continuing appointment of TPIM as Investment Manager is in the best
interests of the shareholders as a whole. In reaching this
conclusion the Directors have taken into account the performance of
other VCTs managed by TPIM and the service provided by TPIM to the
Company.
Substantial Shareholdings
As at the date of this report no disclosures of major
shareholdings had been made to the Company under Disclosure and
Transparency Rule 5 (Vote Holder and Issuer Notification
Rules).
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from the
operations of its Company, nor does it have responsibility for any
other emission producing sources under the Companies Act 2006
(Strategic Report and Directors' Reports) Regulations 2013.
Annual General Meeting
Notice convening the 2014 Annual General Meeting of the Company
and a form of proxy in respect of that meeting can each be found at
the end of this document.
Share Capital, Rights Attaching to the Shares and Restrictions
on Voting and Transfer
The Company's share capital is GBP600,000 divided into
55,000,000 Ordinary shares of 1p each and 5,000,000 B shares of 1p
each. 18,761,011 Ordinary shares and 3,448,044 B shares were in
issue at 31 March 2014. As at that date none of the issued shares
was held by the Company as treasury shares. Subject to any
suspension or abrogation of rights pursuant to relevant law or the
Company's articles of association, the shares confer on their
holders (other than the Company in respect of any treasury shares)
the following principal rights:
a) the right of Ordinary and B class shareholders to receive out
of profits available for distribution respectively from the assets
available from the Ordinary and B class share funds such dividends
as may be agreed to be paid (in the case of a final dividend in an
amount not exceeding the amount recommended by the Board as
approved by shareholders in general meeting or in the case of an
interim dividend in an amount determined by the Board). All
dividends unclaimed for a period of 12 years after having become
due for payment are forfeited automatically and cease to remain
owing by the Company;
b) the right of Ordinary and B class shareholders on a return of
assets on a liquidation, reduction of capital or otherwise, to
share in the surplus assets respectively from the assets available
from the Ordinary and B class share funds of the Company remaining
after payment of its liabilities; and
c) the right to receive notice of and to attend and speak and
vote in person or on a poll by proxy at any general meeting of the
Company. On a show of hands every member present or represented and
voting has one vote and on a poll every member present or
represented and voting has one vote for every share of which that
member is the holder; the validly executed appointment of a proxy
must be received not less than 48 hours before the time of the
holding of the relevant meeting or adjourned meeting or, in the
case of a poll taken otherwise than at or on the same day as the
relevant meeting or adjourned meeting, be received after the poll
has been demanded and not less than 24 hours before the time
appointed for the taking of the poll.
These rights can be suspended. If a member, or any other person
appearing to be interested in shares held by that member, has
failed to comply within the time limits specified in the Company's
articles of association with a notice pursuant to S793 of the
Companies Act 2006 (notice by a Company requiring information about
interests in its shares), the Company can until the default ceases
suspend the right to attend and speak and vote at a general meeting
and if the shares represent at least 0.25% of their class the
Company can also withhold any dividend or other money payable in
respect of the shares (without any obligation to pay interest) and
refuse to accept certain transfers of the relevant shares.
During the year TP5 VCT plc acquired 50,000 of its own shares
for GBP38,000.
Shareholders, either alone or with other shareholders, have
other rights as set out in the Company's articles of association
and in company law, principally the Companies Act 2006.
A member may choose whether his or her shares are evidenced by
share certificates (certificated shares) or held in electronic
(uncertificated) form in CREST (the UK electronic settlement
system). Any member may transfer all or any of his or her shares,
subject in the case of certificated shares to the rules set out in
the Company's articles of association or in the case of
uncertificated shares to the regulations governing the operation of
CREST (which allow the Directors to refuse to register a transfer
as therein set out); the transferor remains the holder of the
shares until the name of the transferee is entered in the register
of members. The Directors may refuse to register a share transfer
if it is in respect of a certificated share which is not fully paid
up or on which the Company has a lien provided that, where the
share transfer is in respect of any share admitted to the Official
List maintained by the UK Listing Authority, any such discretion
may not be exercised so as to prevent dealings taking place on an
open and proper basis, or if in the opinion of the Directors (and
with the concurrence of the UK Listing Authority) exceptional
circumstances so warrant, provided that the exercise of such power
will not disturb the market in those shares. Whilst there are no
squeeze-out and sell-out rules relating to the shares in the
Company's articles of association, shareholders are subject to the
compulsory acquisition provisions in S974 to S991 of the Companies
Act 2006.
Amendment of Articles of Association
The Company's articles of association may be amended by the
members of the Company by special resolution (requiring a majority
of at least 75% of the persons voting on the relevant
resolution).
Appointment and Replacement of Directors
A person may be appointed as a Director of the Company by the
shareholders in general meeting by ordinary resolution (requiring a
simple majority of the persons voting on the relevant resolution)
or by the Directors; no person, other than a Director retiring by
rotation or otherwise, shall be appointed or re-appointed a
Director at any general meeting unless he or she is recommended by
the Directors or, not less than 7 nor more than 42 clear days
before the date appointed for the meeting, notice is given to the
Company of the intention to propose that person for appointment or
re-appointment in the form and manner set out in the Company's
articles of association.
Each Director who is appointed by the Directors (and who has not
been elected as a Director of the Company by the members at a
general meeting held in the interval since his appointment as a
Director of the Company) is to be subject to election as a Director
of the Company by the members at the first Annual General Meeting
of the Company following his or her appointment. At each Annual
General Meeting of the Company one third of the Directors for the
time being, or if their number is not three or an integral multiple
of three the number nearest to but not exceeding one-third, are to
be subject to re-election.
The Companies Act allows shareholders in general meeting by
ordinary resolution (requiring a simple majority of the persons
voting on the relevant resolution) to remove any Director before
the expiry of his or her period of office, but without prejudice to
any claim for damages which the Director may have for breach of any
contract of service between him or her and the Company.
A person also ceases to be a Director if he or she resigns in
writing, ceases to be a Director by virtue of any provision of the
Companies Act, becomes prohibited by law from being a Director,
becomes bankrupt or is the subject of a relevant insolvency
procedure, or becomes of unsound mind, or if the Board so decides
following at least six months' absence without leave or if he or
she becomes subject to relevant procedures under the mental health
laws, as set out in the Company's articles of association.
Powers of the Directors
Subject to the provisions of the Companies Act, the memorandum
and articles of association of the Company and any directions given
by shareholders by special resolution, the articles of association
specify that the business of the Company is to be managed by the
Directors, who may exercise all the powers of the Company, whether
relating to the management of the business or not. In particular,
the Directors may exercise on behalf of the Company its powers to
purchase its own shares to the extent permitted by
shareholders.
Auditor
Grant Thornton UK LLP offers itself for reappointment as
auditor. In accordance with S489(4) of the Companies Act 2006 a
resolution to reappoint Grant Thornton UK LLP as auditor and to
authorise the Directors to fix their remuneration will be proposed
at the forthcoming Annual General Meeting.
On behalf of the Board.
Sir John Lucas-Tooth
Director
29 May 2014
Corporate Governance
The Board of TP5 VCT plc has considered the principles and
recommendations of the Association of Investment Companies Code of
Corporate Governance (AIC Code) by reference to the Association of
Investment Companies Corporate Governance Guide for Investment
Companies (AIC Guide). The AIC Code, as explained by the AIC Guide,
addresses all the principles set out in the UK Corporate Governance
Code (September 2012), as well as setting out additional principles
and recommendations on issues that are of specific relevance to the
Company. The Board considers that reporting against principles and
recommendations of the AIC Code, by reference to the AIC Guide,
which incorporates the UK Corporate Governance Code (September
2012), will provide improved reporting to shareholders.
The Company is committed to maintaining high standards in
corporate governance and has complied with the recommendations of
the AIC Code and the relevant provisions of the UK Corporate
Governance Code (September 2012), except as set out at the end of
this report in the Compliance Statement.
The Corporate Governance Report forms part of the Report of the
Directors.
Board of Directors
The Company has a Board of three Non-Executive Directors. Since
all Directors are Non-Executive and day-to-day management
responsibilities are sub-contracted to the Investment Manager, the
Company does not have a Chief Executive Officer. The Directors have
a range of business and financial skills which are relevant to the
Company; these are described on page 17 of this report. Directors
are provided with key information on the Company's activities,
including regulatory and statutory requirements, by the Investment
Manager. The Board has direct access to company secretarial advice
and compliance services provided by the Investment Manager which is
responsible for ensuring that Board procedures are followed and
applicable regulations complied with. All Directors are able to
take independent professional advice in furtherance of their
duties.
Any appointment of new Directors to the Board is conducted, and
appointments made, on merit and with due regard for the benefits of
diversity on the Board, including gender. All Directors are able to
allocate sufficient time to the Company to discharge their
responsibilities.
The Board meets regularly on a quarterly basis, and on other
occasions as required, to review the investment performance and
monitor compliance with the investment policy laid down by the
Board. There is a formal schedule of matters reserved for Board
decision and the agreement between the Company and the Investment
Manager has authority limits beyond which Board approval must be
sought.
The Investment Manager has authority over the management of the
investment portfolio, the organisation of custodial services,
accounting, secretarial and administrative services. In practice
the Investment Manager makes investment recommendations for the
Board's approval. In addition all investment decisions involving
other VCTs managed by the Investment Manager are taken by the Board
rather than the Investment Manager. Other matters reserved for the
Board include:
-- the consideration and approval of future developments or
changes to the investment policy, including risk and asset
allocation;
-- consideration of corporate strategy;
-- approval of any dividend or return of capital to be paid to the shareholders;
-- the appointment, evaluation, removal and remuneration of the Investment Manager;
-- the performance of the Company, including monitoring the net asset value per share; and
-- monitoring shareholder profiles and considering shareholder communications.
The Chairman leads the Board in the determination of its
strategy and in the achievement of its objectives. The Chairman is
responsible for organising the business of the Board, ensuring its
effectiveness and setting its agenda and has no involvement in the
day to day business of the Company. He facilitates the effective
contribution of the Directors and ensures that they receive
accurate, timely and clear information and that they communicate
effectively with shareholders. The Chairman does not have
significant commitments conflicting with his obligations to the
Company.
The Company Secretary is responsible for advising the Board on
all governance matters. All of the Directors have access to the
advice and services of the Company Secretary which has
administrative responsibility for the meetings of the Board and its
committees. As all of the Directors are Non-Executive, it is not
considered appropriate to identify a member of the Board as the
senior Non-Executive Director of the Company.
The Company's articles of association and the schedule of
matters reserved to the Board for decision provide that the
appointment and removal of the Company Secretary is a matter for
the full Board.
The Company's articles of association require that one third of
the Directors should retire by rotation each year and seek
re-election at the Annual General Meeting and that Directors newly
appointed by the Board should seek re-appointment at the next
Annual General Meeting. The Board complies with the requirement of
the UK Corporate Governance Code (September 2012) that all
Directors are required to submit themselves for re-election at
least every three years.
During the period covered by these Financial Statements the
following meetings were held:
Directors present 4 Full Board 2 Audit Committee
Meetings Meetings
Sir John Lucas-Tooth,
Chairman 4 2
Robert Reid 4 2
Christopher Harris 4 2
Audit Committee
The Board has appointed an audit committee of which Sir John
Lucas-Tooth is Chairman, which deals with matters relating to
audit, financial reporting and internal control systems. The
Committee meets as required and has direct access to Grant Thornton
UK LLP, the Company's auditor.
The audit committee safeguards the objectivity and independence
of the auditor by reviewing the nature and extent of non-audit
services supplied by the external auditor to the Company. The audit
committee has reviewed the non-audit service provided by the
external auditor, being corporation tax, and does not believe it is
sufficient to influence their independence or objectivity due to
the fee being an immaterial expense.
When considering whether to recommend the reappointment of the
external auditor the audit committee takes into account their
current fee tender compared to the external audit fees paid by
other similar companies. The audit committee will then recommend to
the Board the appointment of an external auditor which is ratified
at the Annual General Meeting.
The Auditing Practices Board requires the audit partner to
rotate every five years. The audit partner rotated this year, which
is a year ahead of the five year requirement. No audit tender has
been undertaken since the Company was incorporated.
The effectiveness of the external audit is assessed as part of
the Board evaluation conducted annually and by the quality and
content of the audit plan provided to the audit committee by the
external auditor and the discussions then held on topics raised.
The audit committee will challenge the external auditor at the
audit committee meeting if appropriate.
The audit committee's terms of reference include the following
roles and responsibilities:
-- reviewing and making recommendations to the Board in relation
to the Company's published Financial Statements and other formal
announcements or regulatory returns relating to the Company's
financial performance, reviewing significant financial reporting
judgements contained in them;
-- reviewing and making recommendations to the Board in relation
to the Company's internal control (including internal financial
control) and risk management systems;
-- periodically considering the need for an internal audit function;
-- making recommendations to the Board in relation to the
appointment, re-appointment and removal of the external auditor and
approving the remuneration and terms of engagement of the external
auditor;
-- reviewing and monitoring the external auditor's independence
and objectivity and the effectiveness of the audit process, taking
into consideration relevant UK professional regulatory
requirements;
-- monitoring the extent to which the external auditor is
engaged to supply non-audit services; and
-- ensuring that the Investment Manager has arrangements in
place for the investigation and follow-up of any concerns raised
confidentially by staff in relation to propriety of financial
reporting or other matters.
The committee reviews its terms of reference and effectiveness
annually and recommends to the Board any changes required as a
result of the review. The terms of reference are available on
request from the Company Secretary.
The Board considers that the members of the committee
collectively have the skills and experience required to discharge
their duties effectively, and that the Chairman of the committee
meets the requirements of the UK Corporate Governance Code
(September 2012) as to relevant financial experience.
The Company does not have an independent internal audit function
as it is not deemed appropriate given the size of the Company and
the nature of the Company's business. However, the committee
considers annually whether there is a need for such a function and,
if there were, would recommend it be established.
In respect of the year ended 31 March 2014, the audit committee
discharged its responsibilities by:
-- reviewing and approving the external auditor's terms of
engagement and remuneration and independence;
-- reviewing the external auditor's plan for the audit of the Financial Statements, including identification of key risks and confirmation of auditor independence;
-- reviewing TPIM's statement of internal controls operated in
relation to the Company's business and assessing those controls in
minimising the impact of key risks;
-- reviewing periodic reports on the effectiveness of TPIM's compliance procedures;
-- reviewing the appropriateness of the Company's accounting policies;
-- reviewing the Company's half-yearly results and draft annual
Financial Statements prior to Board approval;
-- reviewing the external auditor's audit plan document to the
audit committee on the annual Financial Statements; and
-- reviewing the Company's going concern status.
The audit committee is responsible for considering and reporting
on any significant issues that arise in relation to the Financial
Statements.
The key areas of risk that have been identified and considered
by the audit committee in relation to the business activities and
the Financial Statements of the Company are as follows:
-- valuation and existence of unquoted investments;
-- compliance with HM Revenue & Customs conditions for
maintenance of approved Venture Capital Trust status; and
-- ability to realise unquoted investments.
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 has reviewed the valuations and discussed them
with both the Investment Manager and the external auditor to
confirm the valuation of the unquoted investments and the existence
of those investments.
The Investment Manager has confirmed to the audit committee that
the conditions for maintaining the Company's status as an approved
Venture Capital Trust had been complied with throughout the year.
The position is also reviewed by PricewaterhouseCoopers LLP in its
capacity as adviser to the Company on taxation matters.
The audit committee has considered the whole Report and Accounts
for the year ended 31 March 2014 and has reported to the Board that
it considers them to be fair, balanced and understandable providing
the information necessary for shareholders to assess the Company's
performance, business model and strategy.
Internal Control
The Directors have overall responsibility for keeping under
review the effectiveness of the Company's systems of internal
controls. The purpose of these controls is to ensure that proper
accounting records are maintained, the Company's assets are
safeguarded and the financial information used within the business
and for publication is accurate and reliable; such a system can
only provide reasonable and not absolute assurance against material
misstatement or loss. The system of internal controls is designed
to manage rather than eliminate the risk of failure to achieve
business objectives. As part of this process an annual review of
the internal control systems is carried out. The review covers all
material controls including financial, operational and risk
management systems. The Directors regularly review financial
results and investment performance with the Investment Manager.
The Directors have established an ongoing process designed to
meet the particular needs of the Company in identifying, evaluating
and managing risks to which it is exposed. The process adopted is
one whereby the Directors identify the risks to which the Company
is exposed including, among others, market risk, VCT qualifying
investment risk and operational risks which are recorded on a risk
register. The controls employed to mitigate these risks are
identified and the residual risks are rated taking into account the
impact of the mitigating factors. The risk register is updated
twice a year.
TPIM is engaged to provide administrative including accounting
services and retains physical custody of the documents of title
relating to investments.
The Directors regularly review the system of internal controls,
both financial and non-financial, operated by the Company and the
Investment Manager. These include controls designed to ensure that
the Company's assets are safeguarded and that proper accounting
records are maintained.
Internal control systems include the production and review of
quarterly bank reconciliations and management accounts. The VCT is
subject to a full annual audit. The auditors are the same auditors
as used by other VCTs managed by the Investment Manager. The
Investment Manager's procedures are subject to internal compliance
checks.
Going Concern
In advance of the completion of shareholders' five year holding
period, steps have been taken to realise the Company's investments.
After the realisation of the investments distributions will be made
to shareholders and then the Board will propose resolutions to
place the Company into Members' Voluntary Liquidation, which will
require shareholders' approval. Thereafter all further funds will
be returned to shareholders by way of capital distribution by the
liquidators. In the circumstances these Financial Statements have
been prepared on a break-up basis taking into account the expected
costs of the Company's liquidation.
Relations with Shareholders
The Board recognises the value of maintaining regular
communications with shareholders. In addition to the formal
business of the Annual General Meeting, an opportunity is given to
all shareholders to question the Board and the Investment Manager
on matters relating to the Company's operation and performance. The
Board and the Investment Manager will also respond to any written
queries made by shareholders during the course of the year and both
can be contacted at 4-5 Grosvenor Place, London, SW1X 7HJ or on 020
7201 8989.
Compliance Statement
The Listing Rules require the Board to report on compliance with
the UK Corporate Governance Code (September 2012) provisions
throughout the accounting period. With the exception of the limited
items outlined below, the Directors consider that the Company has
complied throughout the period under review with the provisions set
out in the UK Corporate Governance Code (September 2012).
1. New Directors do not receive a full, formal and tailored
induction on joining the Board. Such matters are addressed on an
individual basis as they arise (B.4.1).
2. Due to the size of the Board and the nature of the Company's
business, a formal performance evaluation of the Board, its
committees, the individual Directors and the Chairman has not been
undertaken. Specific performance issues are dealt with as they
arise (B.6.1, B.6.3).
3. The Company does not have a senior Independent Director. The
Board does not consider such an appointment appropriate for the
Company (A.4.1).
4. The Company conducts a formal review as to whether there is a
need for an internal audit function. The Directors do not consider
that an internal audit would be an appropriate control for a
Venture Capital Trust (C.3.6).
5. As all the Directors are Non-Executive, it is not considered
appropriate to appoint a Nomination or Remuneration Committee
(B.2.1 and D.2.1).
6. The audit committee includes three Non-Executive Directors,
one of which is not considered independent. The Board regularly
reviews the independence of its Directors but does not consider it
appropriate to appoint an additional Director to the audit
committee (C.3.1).
On behalf of the Board
Sir John Lucas-Tooth
Chairman
29 May 2014
Directors' Responsibility Statement
The Directors are responsible for preparing the Strategic
Report, the Directors' Report, the Directors' Remuneration Report
and the Financial Statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law the Directors
have elected to prepare the Financial Statements in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union. Under company law the Directors must not
approve the Financial Statements unless they are satisfied that
they give a true and fair view of the state of affairs and profit
or loss of the Company for that year. In preparing these Financial
Statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRS have been followed, subject to
any material departures disclosed and explained in the Financial
Statements; and
-- prepare the Financial Statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the Financial Statements and the Remuneration report comply with
the Companies Act 2006. They are also responsible for safeguarding
the assets of the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors 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.
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
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 IFRS as
adopted by the European Union, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Company; and
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties that it faces.
On behalf of the Board
Sir John Lucas-Tooth
Chairman
29 May 2014
Directors' Remuneration Report
Introduction
This report is submitted in accordance with schedule 8 of the
Large and Medium Sized Companies and Groups (Accounts and Reports)
Regulations 2008, in respect of the year ended 31 March 2014. This
report also meets the Financial Conduct Authority's Listing Rules
and describes how the Board has applied the principles relating to
Directors' remuneration set out in UK Corporate Governance Code
(issued September 2012). The new reporting requirements require two
sections to be included, a Policy Report and an Annual Remuneration
Report which are presented below.
Directors' Remuneration Policy Report
This statement of the Directors' Remuneration Policy is intended
to take effect following approval by shareholders at the Annual
General Meeting on 24 July 2014. The Board currently comprises
three Directors, all of whom are Non-Executive. The Board does not
have a separate remuneration committee as the Company has no
employees or executive directors. The Board has not retained
external advisers in relation to remuneration matters but has
access to information about Directors' fees paid by other companies
of a similar size and type. No views which are relevant to the
formulation of the Directors' remuneration policy have been
expressed to the Company by shareholders, whether at a general
meeting or otherwise.
The Board's policy is that the remuneration of Non-Executive
Directors should reflect the experience of the Board as a whole, be
fair and be comparable with that of other relevant Venture Capital
Trusts that are similar in size and have similar investment
objectives and structures. Furthermore, the level of remuneration
should be sufficient to attract and retain the Directors needed to
oversee the Company properly and to reflect the specific
circumstances of the Company, the duties and responsibilities of
the Directors and the value and amount of time committed to the
Company's affairs. The articles of association provide that the
Directors shall be paid in aggregate a sum not exceeding GBP100,000
per annum. None of the Directors is eligible for bonuses, pension
benefits, share options, long-term incentive schemes or other
benefits in respect of their services as Non-Executive Directors of
the Company.
The articles of association provide that Directors shall retire
and be subject to re-election at the first Annual General Meeting
after their appointment and that any Director who has not been
re-elected for three years shall retire and be subject to
re-election at the Annual General Meeting. Also any Director not
considered independent shall retire each year and offer himself for
re-election at the Annual General Meeting. The Directors' service
contracts provide for an appointment of twelve months, after which
three months written notice must be given by either party. A
Director who ceases to hold office is not entitled to receive any
payment other than accrued fees (if any) for past services. The
same policies will apply if a new Director is appointed.
Details of each of the Director's contract is shown below. The
Chairman is paid more than the other Directors to reflect the
additional responsibilities of that role. There are no other fees
payable to the Directors for additional services outside of their
contracts.
The information within this
table is audited:
Unexpired term Annual rate
Date of of contract at of Directors'
Contract 31 March 2014 fees
GBP
Sir John Lucas-Tooth
(Chairman) 12-Sep-2008 none 15,000
Robert Reid 12-Sep-2008 none 12,500
Christopher Harris 02-Jun-2011 none 12,500
---------------------- -------------- ----------------- ---------------
Annual Remuneration Report
The remuneration policy described above will be implemented with
effect from 24 July 2014 subject to approval at the Annual General
Meeting and remain unchanged for a three year period. The Board
will review the remuneration of the Directors in line with the VCT
industry on an annual basis, if thought appropriate. Otherwise,
only a change in role is likely to incur a change in remuneration
of any one Director.
The fees paid to Directors in respect of the year ended 31 March
2014 and the prior year are shown below:
Emoluments Emoluments
for the year for the year
ended 31 March ended 31 March
2014 2013
GBP GBP
Sir John Lucas-Tooth
(Chairman) 15,000 15,000
Robert Reid 12,500 12,500
Christopher Harris 12,500 12,500
40,000 40,000
Employer's NI contributions 1,671 1,728
Total 41,671 41,728
----------------------------- ---------------- ----------------
None of the Directors is eligible for bonuses, pension benefits,
share options, long-term incentive schemes or other benefits in
respect of their services as Non-Executive Directors of the
Company.
Information required on executive Directors, including the Chief
Executive Officer and employees, has been omitted because the
Company has neither and therefore it is not relevant.
Directors emoluments compared to payments to shareholders:
31 March 2014 31 March 2013
GBP'000 GBP'000
Dividends paid:
Ordinary Shareholders 941 941
B Shareholders - -
-------------- ---------------
Total Dividends paid 941 941
Share buy-backs 38 -
-------------- ---------------
Total payments to
shareholders 979 941
-------------- ---------------
Total Directors' emoluments 40 40
-------------- ---------------
Directors' Share Interests (audited information)
At 31 March 2014 The Directors held no shares in the Company
(2013: none). At 31 March 2014 no connected parties to the
Directors held any shares (2013: nil). There have been no changes
in the holdings of the Directors between 31 March 2014 and the date
of this report. There are no requirements or restrictions on
Directors holding shares in the Company.
Company Performance
There have been no trades in the Company's shares to date.
Therefore, no performance graph comparing the share price of the
Company over the year ended 31 March 2014 with the total return
from a notional investment in the FTSE All-Share index over the
same period has been included.
No market maker has been appointed and therefore no current bid
and offer price is available for the Company's shares. However the
Board's policy is to buy back shares from shareholders at a 10%
discount to net asset value. The Company will produce a graph of
its share performance once there is sufficient activity that the
graph would be meaningful to shareholders.
Statement of Voting at the Annual General Meeting
The 2013 Remuneration Report was presented to the Annual General
Meeting in July 2013 and received shareholder approval following a
vote on a show of hands. There were no objections and 98,784 shares
abstained.
Statement of the Chairman
The Directors' fees are fixed at GBP15,000 per annum for the
Chairman and GBP12,500 per annum for other Directors. There have
been no changes in their fees since the date of their appointment.
The remuneration of the Directors reflects the experience of the
Board as a whole, is fair and comparable with that of other
relevant Venture Capital Trusts that are similar in size and have
similar investment objectives and structures. The fees are
sufficient to attract and retain the Directors needed to oversee
the Company's affairs.
On behalf of the Board
Sir John Lucas-Tooth
Chairman
29 May 2014
Independent Auditor's Report to the Members of TP5 VCT plc
We have audited the financial statements of TP5 VCT plc for the
year ended 31 March 2014 which comprise the Statement of
Comprehensive income, the Balance Sheet, the Statement of Changes
in Shareholders' Equity, the Statement of Cash Flows and the
related notes. The financial reporting framework that has been
applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union.
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of Directors and auditor
As explained more fully in the Directors' Responsibility
Statement set out on page 26 the Directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view. Our responsibility is to audit
and express an opinion on the financial statements in accordance
with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing
Practices Board's Ethical Standards for Auditors.
Scope of the audit of the Financial Statements
A description of the scope of an audit of Financial Statements
is provided on the Financial Reporting Council's website at
www.frc.org.uk/apb/scope/private.cfm.
Auditor commentary
An overview of the scope of our audit
Our audit approach was based on a thorough understanding of the
Company's business and is risk-based. The day-to-day management of
the Company's investment portfolio, the custody of its investments
and the maintenance of the Company's accounting records is
outsourced to a third-party service provider. Accordingly, our
audit work is focussed on obtaining an understanding of, and
evaluating, internal controls at the Company and the third-party
service provider, and inspecting records and documents held by the
third-party service provider. We undertook substantive testing on
significant transactions, balances and disclosures, the extent of
which was based on various factors such as our overall assessment
of the control environment, the design effectiveness of controls
over individual systems and the management of specific risks.
Our application of materiality
We apply the concept of materiality in planning and performing
our audit, in evaluating the effect of any identified misstatements
and in forming our opinion. For the purpose of determining whether
the financial statements are free from material misstatement we
define materiality as the magnitude of a misstatement or an
omission from the financial statements or related disclosures that
would make it probable that the judgement of a reasonable person,
relying on the information would have been changed or influenced by
the misstatement or omission. We also determine a level of
performance materiality which we use to determine the extent of
testing needed to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a
whole.
We established materiality for the financial statements as a
whole to be GBP186,000, which is 1% of the Company's net assets.
For the income statement we determined that misstatements for a
lesser amount than materiality for the financial statements as a
whole would make it probable that the judgement of a reasonable
person, relying on the information, would have been changed or
influenced by the misstatement or omission. Accordingly, we
established materiality for the revenue column of the income
statement to be GBP46,000.
We have determined the threshold at which we communicate
misstatements to the Audit Committee to be GBP2,300. In addition,
we communicate misstatements below that threshold that, in our
view, warrant reporting on qualitative grounds.
Our assessment of risk
Without modifying our opinion, we highlight the following
matters that are, in our judgement, likely to be most important to
users' understanding of our audit. Our audit procedures relating to
these matters were designed in the context of our audit of the
financial statements as a whole, and not to express an opinion on
individual transactions, account balances or disclosures.
Valuation of unquoted investments
Investments are the largest asset in the financial statements,
and they are designated as being at fair value through profit or
loss in accordance with IAS 39 'Financial instruments: recognition
and measurement'. Measurement of the value of an unquoted
investment includes significant assumptions and judgements. We
therefore identified the valuation of unquoted investments as a
significant risk; requiring special audit consideration.
Our audit work included, but was not restricted to, obtaining an
understanding of how the valuations were performed, consideration
of whether they were made in accordance with published guidance,
discussions with the investment manager, and reviewing and
challenging the basis and reasonableness of the assumptions made by
the investment manager in conjunction with available supporting
information.
The Company's accounting policy on the valuation of unquoted
investments is included in note 2, and its disclosures about
unquoted investments held at the year end are included in note
10.
Recognition of revenue from investments
Investment income is the Company's major source of revenue and
consists of interest earned on loans to investee companies and cash
balances. Revenue recognition is considered to be a significant
risk requiring special audit consideration as it is often a key
factor in demonstrating the performance of the portfolio.
Our audit work included, but was not restricted to, assessing
whether the Company's accounting policy for revenue recognition is
in accordance with IAS 18 'Revenue'; obtaining an understanding of
management's process to recognise revenue in accordance with the
stated accounting policy and the internal controls over that
process; and, for a sample of income, determining that the income
has been recognised in accordance with that policy by agreeing
interest income to bank statements and information used to compute
loan interest income to loan agreements.
The accounting policy on the recognition of income is shown in
note 2 and the components of that revenue are included in note
4.
Management override of internal controls
Under ISAs (UK & Ireland), for all our audits we are
required to consider the risk of management override of financial
controls. Due to the unpredictable nature of this risk we are
required to assess it as a significant risk requiring special audit
consideration.
Our audit work included, but was not restricted to, specific
procedures relating to this risk as required by ISA 240 'The
auditor's responsibilities relating to fraud in an audit of
financial statements'. This included tests of journal entries, the
evaluation of judgements and assumptions in management's estimates
and tests of significant transactions outside the normal course of
business.
Opinion on Financial Statements
In our opinion the Financial Statements:
-- give a true and fair view of the state of the Company's
affairs as at 31 March 2014 and of its profit for the year then
ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Emphasis of matter - break up basis
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosures made
in Note 2 to the financial statements. As explained in Note 2,
following completion of shareholders five year holding period,
steps will be taken by the Board to realise the Company's
investments. The Board intends to propose resolutions to place the
Company into Members Voluntary Liquidation after completion of the
realisation of unquoted investments which will require
shareholders' approval. Accordingly, the Company ceases to be a
going concern and the financial statements have been prepared on a
break up basis taking into account the expected costs of the
Company's liquidation. The financial statements include adjustments
for costs of closure and write down of assets to net realisable
values.
Other reporting responsibilities
Opinion on other matters prescribed by the Companies Act
2006
In our opinion:
-- the part of the Directors' Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act
2006;
-- the information given in the Strategic Report and Directors'
Report for the financial year for which the Financial Statements
are prepared is consistent with the Financial Statements; and
-- the information given in the Corporate Governance Statement
set out on page 21 with respect to internal control and risk
management systems in relation to financial reporting processes and
about share capital structures is consistent with the Financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the ISAs (UK and Ireland), we are required to report to
you if, in our opinion, information in the annual report is:
-- materially inconsistent with the information in the audited Financial Statements; or
-- apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the Company acquired in the
course of performing our audit; or
-- is otherwise misleading.
In particular, we are required to consider whether we have
identified any inconsistencies between our knowledge acquired
during the audit and the Directors' statement that they consider
the annual report is fair, balanced and understandable and whether
the annual report appropriately discloses those matters that were
communicated to the audit committee which we consider should have
been disclosed.
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the Financial Statements and the part of the Directors'
Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
-- certain disclosures of Directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit; or
-- a Corporate Governance Statement has not been prepared by the Company.
Under the Listing Rules, we are required to review:
-- the Directors' statement, set out on page 26, in relation to going concern;
-- the part of the Corporate Governance Statement relating to
the Company's compliance with the nine provisions of the UK
Corporate Governance Code specified for our review.
Paul Creasey
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Oxford
29 May 2014
Non-Statutory Analysis of - The Ordinary Share Fund
Year ended Year ended
Statement of Comprehensive
Income Note 31 March 2014 31 March 2013
---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 4 585 - 585 603 - 603
Unrealised gain on investments - 303 303 - 18 18
Investment return 585 303 888 603 18 621
Investment management
fees 5 (290) (97) (387) (303) (102) (405)
Other expenses (139) - (139) (92) - (92)
Profit/(loss) before
taxation 156 206 362 208 (84) 124
Taxation 8 (31) 31 - (48) 48 -
Profit/(loss) after taxation 125 237 362 160 (36) 124
-------- -------- -------- -------- -------- --------
Profit and total comprehensive
income/(loss) for the
year 125 237 362 160 (36) 124
-------- -------- -------- -------- -------- --------
Basic and diluted earnings/(loss)
per share 9 0.67p 1.26p 1.93p 0.85p (0.19p) 0.66p
-------- -------- -------- -------- -------- --------
Balance Sheet Note 31 March 2014 31 March 2013
GBP'000 GBP'000
Non-current assets
Financial assets at fair
value through profit
or loss 10 15,343 15,842
-------- --------
Current assets
Receivables 11 115 62
Cash and cash equivalents 12 101 214
216 276
-------- --------
Current liabilities
Payables 13 (79) (21)
-------- --------
Net assets 15,480 16,097
-------- --------
Equity attributable to equity
holders 15,480 16,097
-------- --------
Net asset value per share 16 82.50p 85.57p
-------- --------
Statement of Changes
in Shareholders' Equity
31 March 2014 31 March 2013
GBP'000 GBP'000
Opening shareholders'
funds 16,097 16,443
Purchase of own shares (38) -
Profit for the period 362 124
Dividend paid (941) (470)
Closing shareholders'
funds 15,480 16,097
-------- --------
Non-Statutory Analysis of - The B Share Fund
Year ended Year ended
Statement of Comprehensive
Income Note 31 March 2014 31 March 2013
---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 4 72 - 72 82 - 82
Realised gain(loss) on
investments - 123 123 - (31) (31)
Unrealised gain on investments - 37 37 - 129 129
-------- --------
Investment return/(loss) 72 160 232 82 98 180
Investment management
fees 5 (57) (19) (76) (54) (18) (72)
Other expenses (33) - (33) (22) - (22)
(Loss)/profit before taxation (18) 141 123 6 80 86
Taxation 8 - - - - - -
(Loss)/profit after taxation (18) 141 123 6 80 86
-------- -------- -------- -------- -------- --------
Profit and total comprehensive
(loss)/income for the
year (18) 141 123 6 80 86
-------- -------- -------- -------- -------- --------
Basic and diluted (loss)/earnings
per share 9 (0.56p) 4.09p 3.53p 0.17p 2.33p 2.50p
-------- -------- -------- -------- -------- --------
Balance Sheet
Note 31 March 2014 31 March 2013
Non-current assets GBP'000 GBP'000
Financial assets at fair
value through profit or
loss 10 1,896 2,962
-------- --------
Current assets
Receivables 11 576 8
Cash and cash equivalents 12 646 21
1,222 29
-------- --------
Current liabilities
Payables 13 (11) (7)
-------- --------
Net assets 3,107 2,984
-------- --------
Equity attributable to
equity holders 3,107 2,984
-------- --------
Net asset value per share 16 90.07p 86.54p
-------- --------
Statement of Changes in
Shareholders' Equity
31 March 2014 31 March 2013
GBP'000 GBP'000
Opening shareholders'
funds 2,984 2,898
Profit for the year 123 86
Closing shareholders'
funds 3,107 2,984
-------- --------
Statement of Comprehensive Income
Year ended Year ended
31 March 2014 31 March 2013
---------------------------- ----------------------------
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income
Investment income 4 657 - 657 685 - 685
Profit/(loss) arising
on the disposal of
investments during
the year - 123 123 - (31) (31)
Gain arising on the
revaluation of investments
at the year end - 340 340 - 147 147
Investment return 657 463 1,120 685 116 801
-------- -------- -------- -------- -------- --------
Expenses
Investment management
fees 5 347 116 463 357 120 477
Financial and regulatory
costs 27 - 27 27 - 27
General administration 13 - 13 16 - 16
Legal and professional
fees 6 92 - 92 31 - 31
Directors' remuneration 7 40 - 40 40 - 40
Operating expenses 519 116 635 471 120 591
-------- -------- -------- -------- -------- --------
Profit/(loss) before
taxation 138 347 485 214 (4) 210
Taxation 8 (31) 31 - (48) 48 -
Profit after taxation 107 378 485 166 44 210
-------- -------- -------- -------- -------- --------
Profit and total comprehensive
income for the year 107 378 485 166 44 210
-------- -------- -------- -------- -------- --------
Basic & diluted earnings
per share 9 n/a n/a n/a n/a n/a n/a
-------- -------- -------- -------- -------- --------
The total column of this statement is the Statement of
Comprehensive Income of the Company prepared in accordance with
International Financial Reporting Standards (IFRS). The
supplementary revenue return and capital columns have been prepared
in accordance with the Association of Investment Companies
Statement of Recommended Practice (AIC SORP).
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
31 March
Notes 31 March 2014 2013
GBP'000 GBP'000
Non-current assets
Financial assets
at fair value through
profit or loss 10 17,239 18,804
-------------- ---------
Current assets
Receivables 11 691 70
Cash and cash equivalents 12 747 235
1,438 305
-------------- ---------
Total assets 18,677 19,109
-------------- ---------
Current liabilities
Payables 13 (90) (28)
-------------- ---------
Net assets 18,587 19,081
-------------- ---------
Equity attributable
to equity holders
Share capital 14 221 222
Capital redemption
reserve 2 1
Share premium 3,230 3,230
Special distributable
reserve 15,936 16,827
Capital reserve (909) (1,287)
Revenue reserve 107 88
Total equity 18,587 19,081
-------------- ---------
The statements were approved by the Directors and authorised for
issue on 29 May 2014 and are signed on their behalf by:
Sir John Lucas-Tooth
Chairman
29 May 2014
Company registration number 6614532.
The accompanying notes are an integral part of this
statement.
Statement of Changes in Shareholders' Equity
Capital Special
Year ended 31 March Share Redemption Share Distributable Capital Revenue
2014 Capital Reserve Premium Reserve Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening Balance 222 1 3,230 16,827 (1,287) 88 19,081
--------- ------------ --------- --------------- --------- --------- --------
Purchase of own shares (1) 1 - (38) - - (38)
Dividend paid - - (853) (88) (941)
Transactions with owners (1) 1 - (891) - (88) (979)
--------- ------------ --------- --------------- --------- --------- --------
Profit for the year - - - - 378 107 485
--------- ------------ --------- --------------- --------- --------- --------
Total comprehensive
income for the year - - - 378 107 485
--------- ------------ --------- --------------- --------- --------- --------
Balance at 31 March
2014 221 2 3,230 15,936 (909) 107 18,587
========= ============ ========= =============== ========= ========= ========
Capital reserve consists
of: Investment holding gains 360
Other realised
losses (1,269)
(909)
=========
Capital Special
Year ended 31 March Share Redemption Share Distributable Capital Revenue
2013 Capital Reserve Premium Reserve Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening Balance 222 1 3,230 17,189 (1,331) 30 19,341
--------- ------------ --------- --------------- --------- --------- --------
Dividends paid - - - (362) - (108) (470)
Transactions with owners - - - (362) - (108) (470)
--------- ------------ --------- --------------- --------- --------- --------
Profit for the year - - - - 44 166 210
--------- ------------ --------- --------------- --------- --------- --------
Total comprehensive
income for the year - - - - 44 166 210
--------- ------------ --------- --------------- --------- --------- --------
Balance at 31 March
2013 222 1 3,230 16,827 (1,287) 88 19,081
========= ============ ========= =============== ========= ========= ========
Capital reserve consists
of: Investment holding gains 147
Other realised losses (1,434)
(1,287)
=========
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
capital reserve is not distributable. The special distributable
reserve was created on court cancellation of the share premium
account. The revenue and special distributable reserve are
distributable by way of dividend.
Statement of Cash Flows
Year ended Year ended
31 March 2014 31 March 2013
GBP'000 GBP'000
Cash flow from operating activities
Profit before tax 485 210
(Gain)/loss arising on the disposal
of investments during the year (123) 31
(Gain) arising on the revaluation
of investments at the year end (340) (147)
Cash generated by operations 22 94
(Increase) in receivables (60) (55)
Increase/(decrease) in payables 62 (28)
Net cash flows from operating
activities 24 11
-------------- --------------
Cash flow from investing activities
Purchase of financial assets
at fair value through profit
or loss (2,000) (400)
Proceeds of sale of financial
assets at fair value through
profit or loss 3,467 (15)
Net cash flows from investing
activities 1,467 (415)
-------------- --------------
Cash flow from financing activities
Purchase of own shares (38) -
Dividends paid (941) (470)
Net cash flow from financing (979) (470)
-------------- --------------
Net cash increase/(decrease)
in cash and cash equivalents 512 (874)
-------------- --------------
Reconciliation of net cash flow
to movements in cash and cash
equivalents
Net cash increase/(decrease)
in cash and cash equivalents 512 (874)
Cash and cash equivalents brought
forward 235 1,109
Cash and cash equivalents 747 235
-------------- --------------
The accompanying notes are an integral part of these
statements.
Notes to the Financial Statements
1. Corporate Information
The Financial Statements of the Company for the year ended 31
March 2014 were authorised for issue in accordance with a
resolution of the Directors on 29 May 2014.
The Company was admitted for listing on the London Stock
Exchange on 14 November 2008.
TP5 VCT Plc is incorporated and domiciled in Great Britain and
registered in England and Wales. The address of TP5 VCT plc's
registered office, which is also its principal place of business,
is 4-5 Grosvenor Place, London, SW1X 7HJ.
TP5 VCT plc's Financial Statements are presented in Pounds
Sterling (GBP), rounded to the nearest thousand.
The principal activity of the Company is investment.
The Ordinary Share Fund's investment policy from launch has been
to invest at least 70% of its funds into VCT qualifying companies
within three years and a maximum of 30% of its funds into
non-qualifying investments. Prior to deployment in VCT qualifying
investments, the Fund's objective was to expose all of its
investments to non-qualifying Goldman Sachs Assets Management
("GSAM") managed funds, with the objective of generating returns
equivalent to or greater than LIBOR, (the 'LIBOR plus'
portfolio).
The investment policy for the B Share Fund follows TP70 2009 VCT
plc's original investment policy of investing 70% of its funds into
VCT qualifying companies within three years. Prior to deployment in
VCT qualifying investments, 70% of the Fund was to be invested into
cash and fixed interest funds selected for credit qualifying,
liquidity and returns. The remaining 30% of the B Share Fund
remained exposed directly or indirectly to GAM Diversity GBP 2.5XL
until 31 March 2014.
2. Basis of Preparation and Accounting Policies
Basis of Preparation
Following completion of shareholders five year holding period,
steps have been taken to realise the Company's investments. The
Board's intention will be to propose resolutions to place the
Company into Members Voluntary Liquidation after completion of the
realisation of unquoted investments which will require shareholders
approval. Thereafter all funds will be returned to shareholders by
way of capital distribution by the liquidators. In the
circumstances these Financial Statements have been prepared on a
break up basis taking into account the expected costs of the
Company's liquidation.
The Financial Statements of the Company for the year to 31 March
2014 have been prepared in accordance with International Financial
Reporting Standards ("IFRS") adopted for use in the European Union
and comply with the Statement of Recommended Practice: "Financial
Statements of Investment Trust Companies and Venture Capital
Trusts" (SORP) issued by the Association of Investment Companies
(AIC) in January 2009, in so far as this does not conflict with
IFRS.
The Financial Statements are prepared on a historical cost basis
except that investments are shown at fair value through profit or
loss.
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 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 (in the section headed "non-current asset investments");
-- the recognition or otherwise of accrued income on loan notes
and similar instruments granted to investee companies which is
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. The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the
revision affects that period or in the period of revision and
future periods if the revision affects both current and future
periods. The carrying value of investments is disclosed in note
10.
The Directors do not believe that there are any further key
judgements made in applying accounting policies or estimates in
respect of the Financial Statements.
These Financial Statements have been prepared in accordance with
the accounting policies set out below which are based on the
recognition and measurement principles of IFRS in issue as adopted
by the European Union (EU).
These accounting policies have been applied consistently in
preparing these Financial Statements.
Standards issued but not yet effective
The following new standards, amendments to standards and
interpretations are not yet effective for the year ended 31 March
2014, and have not been applied in preparing these Financial
Statements
-- IFRS 9 Financial Instruments (no mandatory effective date).
-- IAS 27 (revised), Separate Financial Statements (IASB effective date 1 January 2013).
-- Investment Entities - Amendments to IFRS 10, IFRS 12 and IAS
27 (effective 1 January 2014).
-- Offsetting Financial Assets and Financial Liabilities -
Amendments to IAS 32 (effective 1 January 2014).
-- Recoverable Amount Disclosures for Non-Financial Assets
(Amendments to IAS 36) (effective 1 January 2014).
-- Novation of Derivatives and Continuation of Hedge Accounting
(Amendments to IAS 39) (effective 1 January 2014).
-- Annual Improvements to IFRS 2010-2012 Cycle (effective 1 July 2014).
-- Annual Improvements to IFRS 2011-2013 Cycle (effective 1 July 2014).
All of these changes will be applied by the Company from the
effective date but none of them are expected to have a significant
impact on the Company's Financial Statements.
Presentation of Statement of Comprehensive Income
In order better to reflect the activities of a Venture Capital
Trust, and in accordance with the guidance issued by the
Association of Investment Companies, supplementary information
which analyses the Statement of Comprehensive Income between items
of a revenue and capital nature has been presented alongside the
Income Statement.
Capital Management
Capital management is monitored and controlled using the
internal control procedures set out on page 24. The capital being
managed includes equity and fixed interest VCT qualifying
investments, cash balances and liquid resources including debtors
and creditors.
The Company's objectives when managing capital are:
-- to safeguard its ability to continue as a going concern so
that it can continue to provide returns to shareholders and
benefits for other stakeholders; and
-- to ensure sufficient liquid resources are available to meet
the funding requirements of its investments and to fund new
investments where identified.
The Company has no external debt; consequently all capital is
represented by the value of share capital, distributable and other
reserves. Total shareholder equity at 31 March 2014 was GBP18.6
million (2013: GBP19.1 million).
Non-Current Asset Investments
The Company invests in financial assets with a view to profiting
from their total return through income and capital growth. These
investments are managed and their performance is evaluated on a
fair value basis in accordance with the investment policy detailed
in the Strategic Report on page 3 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 designated by the Company as "at fair value through
profit or loss" in accordance with IAS39, "Financial instruments
recognition and measurement". 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 if an asset
is sold or paid to transfer a liability (exit price) in an orderly
transaction between market participants at the measurement date.
This is measured as follows:
-- 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.
Where securities are designated upon initial recognition as at
fair value through profit or loss, gains and losses arising from
changes in fair value are included in the Statement of
Comprehensive Income for the year as capital items in accordance
with the AIC SORP. 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.
Income
Investment income includes interest earned on bank balances and
money market funds and includes income tax withheld at source.
Dividend income is shown net of any related tax credit and is
brought into account on the ex-dividend date.
Fixed returns on investment loans, debt and money market funds
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 (2013: 75% revenue, 25% capital) 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 Ordinary
Share Fund and B Share Fund using the original net assets value of
each Share Class divided by the total net asset value of the
Company.
Taxation
Corporation tax payable is applied to profits chargeable to
corporation tax, if any, at the current rate in accordance with IAS
12, "Income Taxes". The tax effect of different items of
income/gain and expenditure/loss is allocated between capital and
revenue on the "marginal" basis as recommended by the SORP.
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
into. An equity instrument is any contract that evidences a
residual interest in the assets of the entity after deducting all
of its financial liabilities. Where the contractual terms of share
capital do not have any terms meeting the definition of a financial
liability then this is classed as an equity instrument. Dividends
and distributions relating to equity instruments are debited direct
to equity.
Issued Share Capital
Ordinary shares are classified as equity because they do not
contain an obligation to transfer cash or another financial asset.
Issue costs associated with the allotment of shares have been
deducted from the share premium account in accordance with IAS
32.
Cash and Cash Equivalents
Cash and cash equivalents representing cash available at less
than 3 months' notice are classified as loans and receivables under
IAS 39.
Reserves
The revenue reserve (retained earnings) and capital reserve
reflect the guidance in the AIC SORP. 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 capital reserve is not
distributable. The special distributable reserve was created on
court cancellation of the share premium account. The revenue and
special distributable reserve are distributable by way of
dividend.
3. Segmental Reporting
The Company only has one class of business, being investment
activity. All revenues and assets are generated and held in the
UK.
4. Investment Income
Year ended Year ended
31 March 2014 31 March 2013
----------------------------- -----------------------------
Ord. Ord.
Shares B Shares Total Shares B Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loan Stock Interest 584 72 656 602 82 684
Bank interest 1 - 1 1 - 1
585 72 657 603 82 685
-------- --------- -------- -------- --------- --------
5. Investment Management Fees
TPIM provides investment management and administration services
to the Company under an Investment Management Agreement effective
14 November 2008. The agreement provides for an administration and
investment management fee of 2.5% per annum of net assets for both
Ordinary and B shares, calculated and payable quarterly in arrear
and runs for the period up to 1 October 2014 and may be terminated
at any time thereafter by not less than twelve months' notice given
by either party. Should such notice be given, the Investment
Manager would perform its duties under the Investment Management
Agreement and receive its contractual fee during the notice
period.
6. Legal and Professional Fees
Legal and professional fees include remuneration paid to the
Company's auditor, Grant Thornton UK LLP as shown in the following
table:
Year ended Year ended
31 March 2014 31 March 2013
----------------------------- -----------------------------
Ord. Ord.
Shares B Shares Total Shares B Shares Total
Fees payable to the
Company's auditor: GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
- for the audit of
the Financial Statements 15 3 18 13 2 15
- for taxation compliance
services 2 - 2 3 1 4
17 3 20 16 3 19
-------- --------- -------- -------- --------- --------
7. Directors' Remuneration
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.
Year ended Year ended
31 March 2014 31 March 2013
----------------------------- -----------------------------
Ord. Ord.
Shares B Shares Total Shares B Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Sir John Lucas-Tooth
(Chairman) 13 2 15 13 2 15
Robert Reid 11 2 13 11 2 13
Christopher Harris 10 2 12 10 2 12
34 6 40 34 6 40
-------- --------- -------- -------- --------- --------
8. Taxation
Capital gains and losses are exempt from corporation tax due to
the Company's status as a Venture Capital Trust.
Year ended Year ended
31 March 2014 31 March 2013
----------------------------- -----------------------------
Ord. Ord.
Shares B Shares Total Shares B Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit before taxation 362 123 485 124 86 210
-------- --------- -------- -------- --------- --------
Corporation tax at
20% 72 24 96 25 17 42
Effect of:
Capital gains not
taxable (60) (32) (92) (4) (20) (24)
Utilisation of tax
losses brought forward (12) 8 (4) (21) 3 (18)
Tax charge in the
period - - - - - -
-------- --------- -------- -------- --------- --------
Excess management charges of GBP899,000 (2013: GBP919,565) have
been carried forward at 31 March 2014 and are available for offset
against future taxable income subject to agreement with HM Revenue
& Customs.
9. Earnings/(loss) per Share
The profit per share is not included on a total basis in the
Statement of Comprehensive Income as the profit per share by class
is deemed to be a more accurate reflection of the results. The
profit per share for Ordinary shares is based on the profit after
tax of GBP362,000 (2013: GBP124,000), and on the weighted average
number of shares in issue during the period of 18,780,737 (2013:
18,811,011).
The profit per share for B shares is based on the profit after
tax of GBP123,000 (2013: GBP86,000), and on the weighted average
number of shares in issue during the period of 3,448,044 (2013:
3,448,044).
The weighted average number of shares in issue during the period
for the Ordinary Shares and the B Shares were:
No. of Shares
Date of Issue Issued No. of Weighted Average
----------------------- -----------------------
Ordinary B Days Ordinary B
01-Apr-13 18,811,011 3,448,044 365 18,811,011 3,448,044
23-Aug-13 (50,000) - 221 (30,274) -
31-Mar-14 18,761,011 3,448,044 365 18,780,737 3,448,044
----------- ---------- ----------- ----------
10. Financial Assets at Fair Value through Profit or Loss
Investments
Fair Value Hierarchy:
Level 1: quoted prices on active markets for identical assets or
liabilities. The fair value of financial instruments traded on
active markets is based on quoted market prices at the balance
sheet date. A market is regarded as active where the market in
which transactions for the asset or liability takes place with
sufficient frequency and volume to provide pricing information on
an ongoing basis. The quoted market price used for financial assets
held by the Company is the current bid price. These instruments are
included in level 1.
Level 2: the fair value of financial instruments that are not
traded on active markets is determined by using valuation
techniques. These valuation techniques maximise the use of
observable inputs including market data where it is available
either directly or indirectly and rely as little as possible on
entity specific estimates. If all significant inputs required to
fair value an instrument are observable, the instrument is included
in level 2.
Level 3: the fair value of financial instruments that are not
traded on an active market (for example, investments in unquoted
companies) is determined by using valuation techniques such as
discounted cash flows. If one or more of the significant inputs is
based on unobservable inputs including market data, the instrument
is included in level 3.
There have been no transfers between these classifications in
the period. Any change in fair value is recognised through the
Statement of Comprehensive Income.
Further details of these investments are provided in the
Investment Manager's Review and Investment Portfolio.
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
cashflows or price of recent transactions.
Consideration has been given whether the effect of changing one
or more inputs to reasonably possible alternative assumptions would
result in a significant change to the fair value measurement. Each
unquoted portfolio company has been reviewed in order to identify
the sensitivity of the valuation methodology to using alternative
assumptions. Where discount rates have been applied to 82% of the
unquoted investments, alternative discount rates have been
considered. Two alternative scenarios for each investment have been
modelled, a more prudent assumption (downside case) and a more
optimistic assumption (upside case). Applying the downside
alternative, the aggregate value of the unquoted investment would
be GBP0.5 million or 2.9 per cent lower. Using the upside
alternative the aggregate value of the unquoted investments would
be GBP1.1 million or 6.5 per cent higher.
Movements in investments held at fair value through the profit
or loss during the year to 31 March 2014 were as follows:
Total
Quoted
Level 1 Level 2 Level 3 &
Quoted Quoted Unquoted Unquoted
Investments Investments Investments Investments
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March 2014
Investments held by Ordinary
Share Fund
Opening cost - - 15,824 15,824
Opening investment holding
gains - - 18 18
Opening fair value - - 15,842 15,842
Purchases at cost - - 1,780 1,780
Disposal proceeds - - (2,582) (2,582)
Investment holding gains - - 303 303
Closing fair value at 31
March 2014 - - 15,343 15,343
============ ============ ============ ============
Closing cost - - 15,023 15,023
Closing investment holding
gains - - 320 320
Investments held by B Share
Fund
Opening cost 877 - 1,956 2,833
Opening investment holding
gains 127 - 2 129
Opening fair value 1,004 - 1,958 2,962
Purchases at cost - - 220 220
Disposal proceeds (1,133) - (313) (1,446)
Gain/(loss) arising from
the disposal of investments 129 - (6) 123
Investment holding gains - - 37 37
Closing fair value at 31
March 2014 - - 1,896 1,896
============ ============ ============ ============
Closing cost - - 1,856 1,856
Closing investment holding
gains - - 40 40
Total Investments
Opening cost 877 - 17,780 18,657
Opening investment holding
gains 127 - 20 147
Opening fair value 1,004 - 17,800 18,804
Purchases at cost - - 2,000 2,000
Disposal proceeds (1,133) - (2,895) (4,028)
Gain/(loss) arising from
the disposal of investments 129 - (6) 123
Investment holding gains - - 340 340
Closing fair value at 31
March 2014 - - 17,239 17,239
============ ============ ============ ============
Closing cost - - 16,879 16,879
Closing investment holding
gains - - 360 360
------------ ------------ ------------ ------------
Year ended 31 March 2013
Total
Quoted
Level 1 Level 2 Level 3 &
Quoted Quoted Unquoted Unquoted
Investments Investments Investments Investments
GBP'000 GBP'000 GBP'000 GBP'000
Investments held by Ordinary
Share Fund
Opening cost - - 14,765 14,765
Opening fair value - - 14,765 14,765
Purchases at cost - - 340 340
Transfer of Investments
from B shares - - 719 719
Investment holding gains - - 18 18
Closing fair value at 31
March 2013 - - 15,842 15,842
============ ============ ============ ============
Closing cost - - 15,824 15,824
Closing investment holding
gains - - 18 18
Investments held by B Share
Fund
Opening cost - 1,015 2,615 3,630
Opening investment holding
(losses) - (122) - (122)
Opening fair value - 893 2,615 3,508
Purchases at cost 877 - 60 937
Disposal proceeds - (862) - (862)
Transfer of investments
to Ordinary shares - - (719) (719)
(Losses) arising from the
disposal of investments - (31) - (31)
Investment holding gains 127 - 2 129
Closing fair value at 31
March 2013 1,004 - 1,958 2,962
============ ============ ============ ============
Closing cost 877 - 1,956 2,833
Closing investment holding
gains 127 - 2 129
Total Investments
Opening cost - 1,015 17,380 18,395
Opening investment holding
(losses) - (122) - (122)
Opening fair value - 893 17,380 18,273
Purchases at cost 877 - 400 1,277
Disposal proceeds - (862) - (862)
Losses arising from the
disposal of investments - (31) - (31)
Investment holding gains 127 - 20 147
Closing fair value at 31
March 2013 1,004 - 17,800 18,804
============ ============ ============ ============
Closing cost 877 - 17,780 18,657
Closing investment holding
gains 127 - 20 147
------------ ------------ ------------ ------------
11. Receivables
Year ended Year ended
31 March 2014 31 March 2013
-------------------------------- --------------------------------
Ord.Shares B Shares Total Ord.Shares B Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Receivables 112 574 686 59 7 66
Prepaid expenses 3 2 5 3 1 4
115 576 691 62 8 70
----------- --------- -------- ----------- --------- --------
12. Cash and Cash Equivalents
Cash and cash equivalents comprise deposits with The Royal Bank
of Scotland plc.
13. Payables and Accrued Expenses
Year ended Year ended
31 March 2014 31 March 2013
-------------------------------- --------------------------------
Ord.Shares B Shares Total Ord.Shares B Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Other taxation
and Social Security 6 (3) 3 5 1 6
Accrued expenses
& deferred income 73 14 87 16 6 22
79 11 90 21 7 28
----------- -----------
14. Share Capital
31 March 2014 31 March 2013
Ord.Shares B Shares Total Ord.Shares B Shares Total
Authorised:
Number of
shares 55,000,000 5,000,000 60,000,000 55,000,000 5,000,000 60,000,000
Par Value
GBP'000 550 50 600 550 50 600
Issued & Fully
Paid:
Number of
shares 18,761,011 3,448,044 22,209,055 18,811,011 3,448,044 22,259,055
Par Value
GBP'000 187 34 221 188 34 222
The rights attached to each class of share are disclosed in the
Directors' Report on page 18.
On 23 August 2013 50,000 Ordinary Shares were purchased by the
Company for cancellation.
15. Financial Instruments and Risk Management
The following table discloses the financial assets and
liabilities of the Company in the categories defined by
IAS 39, "Financial Instruments; Recognition &
Measurement."
Financial
liabilities Fair value
held at through
Loan and amortised profit
Total Value receivables cost or loss
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March
2014
Assets:
Financial assets at
fair value through
profit or loss 17,239 - - 17,239
Receivables 686 686 - -
Cash and cash equivalents 747 747 - -
Total 18,672 1,433 - 17,239
Liabilities:
Taxation payable (3) - (3) -
Accrued expenses (87) - (87) -
Total (90) - (90) -
Year ended 31 March
2013
Assets:
Financial assets at
fair value through
profit or loss 18,804 - - 18,804
Receivables 66 66 - -
Cash and cash equivalents 235 235 - -
Total 19,105 301 - 18,804
Liabilities:
Other payables (6) - (6) -
Accrued expenses (22) - (22) -
Total (28) - (28) -
The Company's financial instruments comprise VCT qualifying
investments, cash balances and liquid resources including debtors
and creditors. The Company holds financial assets in accordance
with its investment policy detailed in the Strategic Report on page
3.
Non current asset investments (see note 10) are valued at fair
value. Unquoted investments are carried at fair value as determined
by the Directors in accordance with current venture capital
industry guidelines. The fair value of all other financial assets
and liabilities is represented by their carrying value in 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.
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.
Market Risk
The Company's VCT qualifying investments are held in small and
medium-sized unquoted companies which, by their nature, entail a
higher level of risk and lower liquidity than investments in large
quoted companies. The Directors and Investment Manager aim to limit
the risk attached to the portfolio as a whole by careful selection
and timely realisation of investments, by carrying out rigorous due
diligence procedures and by maintaining a spread of holdings in
terms of industry sector and geographical location. The Board
reviews the investment portfolio with the Investment Manager on a
regular basis. Details of the Company's investment portfolio at the
balance sheet date are set out on pages 8 to 9.
An increase of 1% in the value of investments would increase the
capital profits for the period and the net asset value at 31 March
2014 by GBP172,000. A decrease of 1% would reduce the capital
profits and net asset value by the same amount. A movement of 1% is
used as a multiple to demonstrate the impact of varying changes on
the capital profits and net asset value of the Company.
Interest Rate Risk
Some of the Company's financial assets are interest bearing, of
which some are at fixed rates and some at variable rates. As a
result, the Company is exposed to interest rate risk arising from
fluctuations in the prevailing levels of market interest rates.
Investments made into VCT qualifying holdings are part equity
and part loan. The loan element of investments totals GBP11,601,000
(2013: GBP12,446,000) and is subject to fixed interest rates for
the five year loan terms and as a result there is no cashflow
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 amounts held in variable rate investments at the balance
sheet date are as follows:
31 March 31 March
2014 2013
GBP'000 GBP'000
Cash on deposit 747 235
747 235
An increase or decrease in interest rates of 1% would not have a
material effect on the revenue profits for the year and the net
asset value at 31 March 2014. The Board believes that in the
current economic climate a movement of 1% is a reasonable
illustration.
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 31 March
2014 2013
GBP'000 GBP'000
Qualifying Investments - Loans 11,601 12,446
Cash on deposit 747 235
Receivables 686 66
GAM Diversity GBP 2.5XL - 1,004
13,034 13,751
The Company's bank accounts are maintained with The Royal Bank
of Scotland plc ("RBS"). Should the credit quality or financial
position of RBS deteriorate significantly, the Investment Manager
will move the cash holdings to another bank.
Credit risk arising on unquoted loan stock held within unlisted
investments is considered to be part of market risk as disclosed
above.
Liquidity Risk
The Company's financial assets include investments in unquoted
equity securities which are not traded on a recognised stock
exchange and which are illiquid. The Company's unquoted investments
have been valued at GBP17.2 million and the Company's realisation
of these investments is planned and will commence after the end of
the five year holding period which is 30 June 2014.
The Company's liquidity risk is managed on a continuing basis by
the Investment Manager in accordance with policies and procedures
laid down by the Board. The Company's overall liquidity risks are
monitored by the Board on a quarterly basis.
The Board maintains a liquidity management policy in which cash
and future cash flows for operating activities will be sufficient
to pay expenses. At 31 March 2014 cash amounted to GBP747,000
(2013: GBP235,000).
Foreign Currency Risk
The Company does not have exposure to material foreign currency
risks.
16. Net Asset Value per Share
The net asset value per share on a total basis is not included
on the balance sheet as the value by class of share is deemed to be
a more accurate reflection of the position of the Company.
The calculation of the Company's net asset value per share for
Ordinary shares is based on the Company's net assets attributable
to the Ordinary shares of GBP15,480,000 (2013: GBP16,097,000)
divided by the 18,761,011 (2013: 18,811,011) Ordinary shares in
issue.
The calculation of the Company's net asset value per share for B
shares is based on the Company's net assets attributable to the B
shares of GBP3,107,000 (2013: GBP2,984,000) divided by the
3,448,044 (2013: 3,448,044) B shares in issue.
17. Commitments and Contingencies
The Company has no outstanding commitments or contingent
liabilities.
18. Relationship with Investment Manager
During the year the Investment Manager, TPIM, received
GBP463,000 (2013: GBP476,000) for providing management and
administrative services to the Company. At 31 March 2014 GBP114,000
(2013: GBP5,000) was due to TPIM.
19. Related Party Transactions
There are no related party transactions which require
disclosure.
20. Post Balance Sheet Events
On 29 April 2014 shareholders approved the cancellation of the
Company's share premium account.
21. Dividends
A third dividend was paid on 26 July 2013 to the Ordinary Share
Class holders for GBP940,551 or 5p per share.
Information
Details of Advisers
Secretary and Registered Office:
Triple Point Investment Management LLP
4-5 Grosvenor Place
London
SW1X 7HJ
Registered Number
6614532
Investment Manager and Administrator
Triple Point Investment Management LLP
4-5 Grosvenor Place
London
SW1X 7HJ
Tel: 020 7201 8989
Independent Auditor
Grant Thornton UK LLP
Chartered Accountants and Statutory Auditor
3140 Rowan Place
John Smith Drive
Oxford Business Park South
Oxford
OX4 2WB
Solicitors
Howard Kennedy FSI LLP
19a Cavendish Square
London
W1A 2AW
Registrars
Neville Registars Limited
Neville House
18 Laurel Lane
Halesowen
West Midlands
B63 3DA
VCT Taxation Advisers
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RN
Bankers
The Royal Bank of Scotland plc
54 Lime Street
London
EC3M 7NQ
Shareholder Information
The Company
TP5 VCT plc is a Venture Capital Trust. The Investment Manager
is Triple Point Investment Management LLP. The Company was launched
in September 2008 and raised GBP17.8 million after issue costs
through an offer for subscription.
The Company's investment strategy is to invest at least 70% of
its funds into VCT qualifying companies within three years of
launch and a maximum of 30% of its funds into non-qualifying
investments. Prior to deployment in VCT qualifying investments, the
fund's objective for the Ordinary shares was to expose all of its
investments to non-VCT qualifying Goldman Sachs Assets Management
("GSAM") managed funds with the objective of generating returns
equivalent to or greater than LIBOR, (the 'LIBOR plus' portfolio).
For the B shares up to 70% was to be invested into cash and fixed
interest funds selected for credit quality, liquidity and returns.
The remaining 30% of the B Share Fund was to have an exposure
directly or indirectly to GAM Diversity GBP 2.5XL.
Financial Calendar
The Company's financial calendar is as follows:
24 July 2014 Annual General Meeting
November 2014 Interim report for the six months ending 30
September 2014 despatched
June 2015 Results for the year to 31 March 2015 announced; Annual Report and Financial
Statements published.
Notice of Annual General Meeting
NOTICE is hereby given that the Annual General Meeting of TP5
VCT plc will be held at 18 St. Swithin's Lane, EC4N 8AD at 12pm on
Thursday, 24 July 2014 for the following purposes:
Ordinary Business
1. To receive, consider and adopt the Report of the Directors
and Financial Statements for the year ended 31 March 2014 (Ordinary
Resolution).
2. To approve the Directors' Remuneration Report for the year
ended 31 March 2014 (Ordinary Resolution).
3. To approve the Directors' Remuneration Policy (Ordinary
Resolution).
4. To re-elect Robert Reid as a Director (Ordinary
Resolution).
5. To re-elect Christopher Harris as a Director (Ordinary
Resolution).
6. To re-appoint Grant Thornton UK LLP as auditor and authorise
the Directors to agree their remuneration (Ordinary
Resolution).
Special Business
7. That the Company be and is hereby authorised in accordance
with S701 of the Companies Act 2006 (the "Act") to make one or more
market purchases (as defined in S693(4) of the Act) of Ordinary
shares and B shares of 1 pence each in the Company provided
that:
(i) the maximum aggregate number of Ordinary shares and B shares
authorised to be purchased is an amount equal to 10% of the issued
capital as at the date hereof;
(ii) the minimum price which may be paid for an Ordinary share
or a B share is 1 pence; and
(iii) the maximum price, exclusive of expenses, that may be paid
for an Ordinary share or a B share shall not be more than 105% of
the average of the middle market prices for the Ordinary shares or
B shares as derived from the Daily Official List of the UK Listing
Authority for the five business days immediately preceding the day
on which the Ordinary share or B share is purchased.
This authority shall expire at the conclusion of the next Annual
General Meeting of the Company or 15 months following the date of
the passing of this Resolution, whichever is the first to occur
(unless previously renewed, varied or revoked by the Company in
general meeting), provided that the Company may, before such
expiry, make a contract to purchase its own shares which would or
might be executed wholly or partly after such expiry, and the
Company may make a purchase of its own shares in pursuance of such
contract as if the authority hereby conferred had not expired
(Special Resolution).
8. That in addition to existing authorities, the Directors of
the Company be and hereby are generally and unconditionally
authorised in accordance with Section 551 of the Act to exercise
all the powers of the Company to allot and issue shares in the
capital of the Company and to grant rights to subscribe for or to
convert any security into shares in the Company up to an aggregate
nominal amount of GBP30,200, provided that the authority conferred
by this Resolution 8 shall expire on the conclusion of the Annual
General Meeting of the Company to be held in 2015 (unless renewed,
varied or revoked by the Company in a general meeting) but so that
this authority shall allow the Company to make before the expiry of
this authority offers or agreements which would or might require
shares to be allotted or rights to be granted after such expiry
(Special Resolution).
9. That the Directors of the Company be and hereby are empowered
pursuant to Sections 570 and 573 of the Act to allot or make offers
to or agreements to allot equity securities (which expression shall
have the meaning ascribed to it in Section 560(1) of the Act) for
cash pursuant to the authority given pursuant to Resolution 8, as
if Section 561(1) of the CA 2006 did not apply to such allotment,
provided that the power provided by this Resolution 9 shall expire
on the conclusion of the Annual General Meeting of the Company to
be held in 2015 (unless renewed, varied or revoked by the Company
in general meeting) (Special Resolution).
By Order of the Board
Sir John Lucas-Tooth
Director
Registered Office:
4-5 Grosvenor Place
London, SW1X 7HJ 29 May 2014
Notes:
(i) A member entitled to vote at the Meeting is entitled to
appoint one or more proxies to attend and, on a poll, vote on his
or her behalf. A proxy need not be a member of the Company.
(ii) A form of proxy is enclosed. To be effective, the
instrument appointing a proxy (together with the power of attorney
or other authority, if any, under which it is signed, or a
certified copy of such power or authority) must be deposited at or
posted to the office of the registrars of the Company, Neville
Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West
Midlands B63 3DA, so as to be received not less than 48 hours
before the time fixed for the Meeting. Completion and return of the
form of proxy will not preclude a member from attending or voting
at the Meeting in person if he or she so wishes.
(iii) Members who hold their shares in uncertificated form must
be entered in the Company's register of Members 48 hours before the
Meeting to be entitled to attend or vote at the Meeting. Such
shareholders may only cast votes in respect of Ordinary Shares held
by them at such time.
(iv) Copies of the service contracts of each of the Directors,
the register of Directors' interests in shares of the Company kept
in accordance with the Listing Rules and a copy of the Memorandum
and Articles of Association of the Company, will be available for
inspection at the registered offer of the Company during usual
business hours on any week day (Saturdays. Sundays and public
holidays excepted) from the date of this notice until the date of
the Annual General Meeting and at the place of the Annual General
Meeting from at least 15 minutes prior to and until the conclusion
of the Annual General Meeting.
Form of Proxy
Relating to the 2014 Annual General Meeting of TP5 VCT plc
I/We..........................................................................................................................................
BLOCK CAPITALS PLEASE - Name in which shares registered
of..........................................................................................................................................
hereby
appoint.....................................................................................................................
or failing him/her the Chairman of the meeting to be my/our
proxy and vote for me/us on my/our behalf at the Annual General
Meeting of the Company to be held on 12pm on Thursday 24 July 2014,
notice of which was sent to shareholders with the Directors' Report
and the Accounts for the period ended 31 March 2014, and at any
adjournment thereof. The proxy will vote as indicated below in
respect of the resolutions set out in the notice of meeting:
Resolution number For Against Withheld
1. To receive, consider and adopt the
Report of the Directors and the Financial
Statements for the year ended 31 March
2014.
2. To approve the Directors' Remuneration
Report for the year ended 31 March
2014.
3. To approve the Directors' Remuneration
Policy.
4. To re-elect Robert Reid as a Director.
5. To re-elect Christopher Harris as
a Director.
6. To re-appoint Grant Thornton UK LLP
as auditor and authorise the Directors
to agree their remuneration.
7. To authorise the Directors to make
market purchases of the Company's
own shares (Special Resolution).
8. To authorise the Directors to allot
and issue shares in the capital of
the Company (Special Resolution).
9. To disapply pre-emption rights in
relation to the issue of shares (Special
Resolution).
Signed:
.......................................................................
Dated: ................................................ ..2014
Notes
1. A member wishing to appoint a person other than the Chairman
of the meeting as proxy should insert the name and address of such
person in the space provided.
2. Use of the proxy form does not preclude a member from attending and voting in person.
3. Where this form of proxy is executed by a corporation it must
be either under its seal or under the hand of an officer or
attorney duly authorised.
4. If the proxy form is signed and returned without any
indication as to how the proxy shall vote, the proxy will exercise
his/her discretion as to whether and how he/she votes.
5. To be valid, the proxy form must be received by Neville
Registrars at Neville House, 18 Laurel Lane, Halesowen, West
Midlands B63 3DA no later than 48 hours before the commencement of
the meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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