TIDMTPVE TIDMTPVD TIDMTPVC
RNS Number : 2161T
Triple Point Income VCT PLC
21 July 2022
21 July 2022
Triple Point Income VCT plc
(the "Company")
RESULTS FOR THE YEARED 31 MARCH 2022
The financial information set out in these statements does not
constitute the Company's statutory accounts for the year ended 31
March 2022, prepared in accordance with section 435 of the
Companies Act 2006, but is derived from those accounts. Statutory
accounts will be delivered to the Registrar of Companies in due
course. The auditors have reported on these accounts and their
report was unqualified and did not contain a statement under
section 498(2) of the Companies Act 2006.
Results
Triple Point Income VCT plc, managed by Triple Point Investment
Management LLP, today announces the results for the year ended 31
March 2022.
These results were approved by the Board of Directors on 20 July
2022.
You may view the Annual Report in due course on the Triple Point
website www.triplepoint.co.uk . Please note that page numbers in
this announcement are in reference to the Annual Report.
FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:
Triple Point Investment Management Tel: 020 7201 8989
LLP
(Investment Manager)
Jonathan Parr
Belinda Thomas
The Company's LEI is 213800IXD8S5WY88L245
Further information on the Company can be found on its website
https://www.triplepoint.co.uk/current-vcts/triple-point-income-vct-plc/s1238/
.
Financial Summary
Year ended 31 March
2022
C Shares D Shares E Shares Total
Net assets GBP'000 1,035 1,178 22,218 24,431
Net asset value per
share Pence 7.75p 8.67p 76.76p
---------- ---------- ---------- --------
Net profit before
tax GBP'000 (179) (568) 928 181
Earnings/(loss) per
share Pence (1.32p) (4.17p) 3.17p
---------- ---------- ---------- --------
Cumulative return to Shareholders
(p)
Net asset value per
share 7.75p 8.67p 76.76p
Dividends paid 147.75p 116.75p 32.50p
Net asset value plus dividends
paid 155.50p 125.42p 109.26p
--------------------------------------- ---------- ---------- ---------- --------
Year ended 31 March
2021
C Shares D Shares E Shares Total
Net assets GBP'000 11,194 8,106 27,382 46,682
Net asset value per
share Pence 83.30p 59.59p 94.59p
---------- ---------- ---------- --------
Net profit before
tax GBP'000 267 349 (174) 442
Earnings per share Pence 1.93p 2.08p (0.61p)
---------- ---------- ---------- --------
Cumulative return to Shareholders
(p)
Net asset value per
share 83.30p 59.59p 94.59p
Total Dividends paid 73.50p 70.00p 11.50p
Net asset value plus dividends
paid 156.80p 129.59p 106.09p
--------------------------------------- ---------- ---------- ---------- --------
Triple Point Income VCT plc ("the Company") is a Venture Capital
Trust ("VCT"). The Investment Manager is Triple Point Investment
Management LLP ("TPIM"). The Company was incorporated in November
2007 and has three share classes .
-- C Ordinary Share Fund ("C Shares"): these are the shares
issued in the Offer that closed on 27 May 2014. A total of GBP14
million was raised and 13,441,438 C Shares were issued. On 24 June
2021, a buyback of 28,350 shares was made at 74.97p per share
bringing the total shares in issue to 13,413,088.
-- D Ordinary Share Fund ("D Shares"): these are the shares
issued in the Offer that closed on 30 April 2015. A total of
GBP14.3 million was raised and 13,701,636 D Shares were issued.
-- E Ordinary Share Fund ("E Shares"): these are the shares
issued in the Offer that closed on 15 May 2017. Just under GBP30
million was raised and 28,949,575 E Shares were issued. On 24 June
2021, a buyback of 9,499 shares was made at 85.13p per share
bringing the total shares in issue to 28,940,076.
The Strategic Report, the Corporate Governance Statement, the
Directors' Remuneration Report on pages and the Directors' Report
have each been drawn up in accordance with the requirements of
English law and liability in respect thereof is also governed by
English law. In particular, the responsibility of the Directors for
these reports is owed solely to Triple Point Income VCT plc.
The Directors submit to the members their Annual Report and
Financial Statements for the Company for the year ended 31 March
2022.
Key Highlights
-- Dividends per C Share: 74.25p (Year ended 31 March 2021: 3.50p)
-- Net Asset Value per C Share: 7.75p (Year ended 31 March 2021: 83.30p)
-- Total Return per C Share (1) : 155.50p (Year ended 31 March 2021: 156.80p)
-- Dividends per D Share: 46.75p (Year ended 31 March 2021: 5.00p)
-- Net Asset Value per D Share: 8.67p (Year ended 31 March 2021: 59.59p)
-- Total Return per D Share (1) : 125.42p (Year ended 31 March 2021: 129.59p)
-- Dividends per E Share: 21.00p (Year ended 31 March 2021: 6.50p)
-- Net Asset Value per E Share: 76.76p (Year ended 31 March 2021: 94.59p)
-- Total Return per E Share (1) : 109.26p (Year ended 31 March 2020: 106.09p)
-- Realisations of investments and loan repayments generated
total proceeds for the Company of GBP2.98 million.
-- Ongoing Charges Ratio (2) : 3.48% (2021: 2.88%)
(1) Total Return is made up by current Net Asset Value plus
Dividends paid to date. Total Return is defined as an Alternative
Performance Measure ("APM"). Total Return, calculated by reference
to the cumulative dividends paid plus net asset value (excluding
tax reliefs received by shareholders), is the primary measure of
performance in the VCT industry and Board considers Total Return to
be the primary measure of shareholder value. The value to be
distributed will also be subject to the performance fee payable on
distribution and other relevant fees and costs, as a result the
Total Return may be lower than indicated in this Annual Report.
(2) Ongoing Charges Ratio is defined as an APM.
Strategic Report
Chair's Statement
I am writing to present the Financial Statements for the Company
for the year ended 31 March 2022.
I am pleased to announce that during the year we completed the
sale of a substantial part of our hydroelectric power portfolio
("Hydro Assets") held in the C, D, and E Ordinary Share Classes,
following which a significant portion of the proceeds were
distributed to shareholders during the year. This was achieved
following the passing of a resolution at the 2021 Annual General
Meeting to change the Company's Investment Policy. This removed the
16-year holding period for the C and D share classes which were
wholly invested in Hydro Assets.
It is intended that the C and D Ordinary Share Classes be wound
down and cancelled and residual cash distributed to the
shareholders. Further details of this are provided on the next
pages under each respective share class.
The Company's funds at 31 March 2022 are 83.98% invested in a
portfolio of VCT qualifying and non-qualifying quoted and unquoted
investments.
The Investment Manager's Review gives an update on the portfolio
of investments in 10 small unquoted businesses.
C Share Class
During the year all the assets held in the C Shares, consisting
of three hydroelectric companies in the Scottish Highlands, were
sold. The Company had a loan facility in place for GBP0.3 million
as at 1 April 2021 which was fully repaid in the year using
proceeds from the disposal of the Hydro Assets.
.
The Hydro Assets were sold at a premium to their carrying value
for GBP29.85 million, which was based on an independent valuation
of the assets undertaken in the prior year and reflected increased
interest in the sector over recent months. We are delighted with
this result for C shareholders which delivered a Total Return of
155.50 pence per share excluding tax relief as at 31 March 2022.
The Investment Manager receives a performance fee of 20% on
distributions made to investors over a hurdle of GBP1 per share
and, therefore, the return for the year showed a small reduction
over the period with a loss of 1.3 pence per share. As at 31 March
2022, the NAV stood at 7.75 pence per share (3) and total dividends
paid to C Shareholders to date are 147.75 pence per share.
The Company declared three separate dividends to C Class
Shareholders totaling 74.25 pence per share in respect of the
financial year. 1.75 pence per share was paid on 30 July 2021, 32.5
pence per share was paid on 23 December 2021 and 40 pence per share
was paid on 14 January 2022. The payments made in December 2021 and
January 2022 were distributions of the majority of the sales
proceeds of the Hydro Assets. These dividends followed the 3.50
pence per share dividend paid during the last financial year.
A small amount of cash has been retained to ensure the C Share
Class can meet all its working capital requirements. The Company
will seek shareholder approval, at a general meeting, to wind down
and ultimately cancel the C Share Class in due course. This process
is expected to commence before the end of 2022.
Further information on the C Share Class is included in the
Investment Manager's Review.
D Share Class
During the year, the majority of the assets held in the D
Shares, consisting of five hydroelectric companies in the Scottish
Highlands, were sold. The Share Class has one residual investment
in Green Highland Shenval Ltd ("Shenval"). The Company had a loan
facility in place for GBP2.0 million as at 1 April 2021 which was
fully repaid in the year using proceeds from the disposal of the
Hydro Assets.
We are delighted with this result for D shareholders which
delivered a Total Return of 125.42 pence per share excluding tax
relief as at 31 March 2022. The Investment Manager receives a
performance fee of 20% on distributions made to investors over a
hurdle of GBP1 per share and, therefore, the return for the year
showed a reduction over the period with a loss of 4.17 pence per
share. As at 31 March 2022, the NAV stood at 8.67 pence per share
(3) and total dividends paid to D Shareholders to date are 116.75
pence per share.
The Company declared two separate dividends to D Class
Shareholders totalling 46.75 pence per share during the financial
year. 1.75 pence per share was paid on 30 July 2021 and 45.00 pence
per share was paid on 23 December 2021. The payment made in
December 2021 was a distribution of the majority of the sales
proceeds from the sale of the Hydro Assets. These payments followed
the 5.00 pence per share dividend paid during the last financial
year.
It is intended that the D Share Class transfers its investment
in Shenval to the E Share Class in return for cash which will
enable the D Shareholders to fully exit their investment. Following
this realisation, the Company will seek shareholder approval, at a
general meeting, to wind down and ultimately cancel the D Share
Class. This process is expected to commence before the end of
2022.
Further information on the remaining D Share Class investment is
included in the Investment Manager's Review.
(3) To align its interests with Shareholders, the Investment
Manager earns a performance fee of 20% on all distributions over
100 pence per share.
E Share Class
The E Share Class has a portfolio of investments spanning
hydroelectric power, crematorium management, gas fired energy
generation, solar photovoltaic ("PV") energy generation, controlled
environment agriculture, and lending to small and medium-sized
enterprises. Most of the Hydro Assets were sold during the year,
leaving one remaining investment.
The E Share Class portfolio has recorded a profit over the
period of 3.17 pence per share and as at 31 March 2022, the NAV
stood at 76.76 pence per share. Total dividends paid to E
Shareholders to date are 32.50 pence per share.
The Company declared three separate dividends to E Class
Shareholders totalling 21.00 pence per share during the financial
year. 3.50 pence per share was paid on 30 July 2021, 12.00 pence
per share was paid on 23 December 2021 and 5.50 pence per share was
paid on 14 January 2022. The payments made in December 2021 and
January 2022 were a distribution of the majority of the sales
proceeds of the Hydro Assets. These dividends follow the 6.50 pence
per share paid during the last financial year.
It is intended that the E Share Class consolidates its
investment in Shenval in return for cash and provide the E Share
Class with a valuable asset which is generating income.
As reported in our 2021 Interim Report, availability issues
impacted one of the engines at Green Peak Generation Limited
("Green Peak") following a water ingress issue. We are pleased to
confirm that the fault has been resolved and the insurers have
agreed to pay the full insurance claim for property damage and
business interruption to the end of January 2022 (the Investment
Manager's Report has further details). We are working with the
Investment Manager to consider potential disposal options for the
asset in order to return funds to E Share Class shareholders. In
addition, where the Board receives excess cash generated from the
gas fired energy centre or other assets in the share class, it will
consider whether it is appropriate to declare an additional
dividend.
The conflict in Ukraine has placed stress on the energy sector,
with gas prices in particular seeing their highs from the end of
2021 being sustained. Whilst this has also caused increased
buoyancy in electricity prices, the spread between gas and
electricity has reduced on average and so the conflict has
indirectly affected Green Peak. That said, the increased volatility
in markets also provides opportunities to generate electricity in
highly profitable periods and Green Peak is progressing talks with
a new electricity trader to maximise these opportunities.
The Company's investments in rooftop solar companies continue to
benefit from inflation linked subsidised revenue streams via four
portfolios of rooftop solar PV systems that generate electricity
across the United Kingdom. We continue to work with those companies
to identify new portfolio opportunities, as there is an increased
demand for companies to decarbonise their energy footprint.
The Company's investment in Perfectly Fresh Cheshire ("PFC")
encountered several challenges over the last year, in relation to a
significant period of scheduled downtime whilst improvement works
were carried out, poor profitability, and slow progress on
fundraising. Balancing that, it achieved a series of positive
milestones including establishing strong product lines with a
leading retailer, carrying out improvements to the existing growing
facilities, and developing a robust business plan to give the
company greater confidence in raising finance to enable a planned
expansion to take place.
Further information on all E Share Class investments is included
in the Investment Manager's Review.
Dividends
The Company declared and paid interim dividends during the year
to C Share Class holders of 74.25 pence per share, D Share Class
holders of 46.75 pence per share and the E Share Class holders of
21.00 pence per share.
It was discovered during the year that the Company had paid
these distributions without having sufficient "distributable"
reserves as defined under and required by the Companies Act 2006
(the "CA 2006"). As a result, the proportion of the dividends paid
that were not "distributable" reserves at the time they were paid
are technically unlawful distributions for the purposes of the CA
2006.
Share buy-backs
The Company, subject to distributable reserves and liquidity,
considers individual cases to buy back the Company's shares in the
market at a target price of a 10% discount to NAV.
During the year, the Company bought back and cancelled 28,350 C
Shares at a price of 74.97 pence per share and 9,499 E Shares at a
price of 85.13 pence per share.
VCT qualifying status
The Company has maintained its approved VCT status with HM
Revenue & Customs. The Company's compliance with the VCT
qualifying conditions is closely monitored by the Board, who
receive regular reports from the Investment Manager and a report
annually from our VCT tax compliance advisers Philip Hare &
Associates LLP. We will continue to work closely with the
Investment Manager to ensure the Company maintains compliance with
the scheme rules.
Outlook
The Board is pleased to have completed the sale of all of the
Hydro Assets within the C Share Class and a substantial proportion
in the D and E Share Classes enabling dividends to be paid to all
shareholders. As previously discussed, It is intended that the E
Share Class will consolidate its investment in Shenval which will
enable the D Share Class to realise its final investment allowing
both the C and D Share Classes to wind down and be cancelled at a
General Meeting which should commence in 2022.
The Board will be focused on optimising value for E Shareholders
from their portfolio of assets including monitoring the proposed
disposal of the remaining gas fired energy centre.
I would like to take this opportunity to thank Shareholders for
their continued support, and our Investment Manager for their
support and commitment.
If you have any questions about your investment, please do not
hesitate to contact the Investment Manager on 020 7201 8990.
David Frank
Chair
20 July 2022
Company Strategy and Business Model
The Strategic Report has been prepared in accordance with the
requirements of section 414C of the Companies Act 2006. Its purpose
is to inform the members of the Company and help them to assess how
the Directors have performed their duty to promote the success of
the Company, in accordance with section 172 of the Companies Act
2006 ("Section 172").
The Directors assess the Company's success in meeting its
objectives in relation to returns, stability, VCT qualification
and, ultimately, exit.
Investment Policy
Investment Objectives
The Company's main focus is to generate returns from a portfolio
of investments in companies based in the UK in order to make
regular tax-free dividends.
The key objectives of the Company are to:
a) Pay regular tax-free dividends to investors;
b) Maintain VCT status to enable investors to benefit from the associated tax reliefs;
c) Reduce the volatility normally associated with early stage
investments by applying its Investment Policy;
d) In respect of the C Shares and the D Shares, provide
investors with the opportunity to exit if market conditions present
such an opportunity; and
e) In respect of the E Shares, provide investors with the
opportunity to exit between 10 and 12 years* following investment
with a possible early partial return of funds to Shareholders if
market conditions present such an opportunity.
*The E Share Class is fully invested and the Company will not be
making any further investments.
The Company will not vary these objectives to any material
extent without the approval of the Shareholders.
The Company's Investment Policy has been designed to satisfy the
legislative requirements of the VCT scheme and to provide stable
and readily realisable returns. The Company's Investment Policy is
directed towards new investments into cash generative businesses
which are operating in stable or mature fields with a high-quality
customer base and which can provide a positive return to investors.
The Board may on occasion, where deemed appropriate, invest in less
mature or stable fields where there is the opportunity for
substantial growth and development. The investments will be made
with the intention of growing and developing the revenues and
profitability of the target businesses to enable them to be
considered for traditional forms of bank finance and other funding.
This, in turn, should enable the Company to benefit from refinance
gains or from a favourable sale to a third party.
Although the landscape of VCTs has been affected, the Investment
Policy of the Company will continue to aim for regular tax-free
dividends, maintenance of the VCT qualifying status and to minimise
the volatility associated with early stage investments.
In respect of Qualifying Investments, the Company will seek:
a) Investments on which robust due diligence has been undertaken;
b) Investments where there is access to regular material financial and other information;
c) Investments where it may be possible to mitigate capital
losses through careful analysis of the collateral available;
and
d) Investments where there is a strong relationship with the key decision makers.
Target Asset Allocation
The Company aims to invest its capital fully in VCT Qualifying
Investments. Where this is not practicable, the long-term
investment profile of the Company is expected to be:
-- At least 80% in VCT Qualifying Investments; and
-- A maximum of 20% in permitted Non-Qualifying Investments, cash or cash-based similar liquid
investments.
Qualifying Investments
The key ongoing objective of the Company is to generate an
attractive return for investors, through a combination of tax-free
income and capital appreciation.
The Company will pursue investments in a range of industries but
the type of business being targeted is subject to the specific
investment criteria discussed below. The objective is to build a
portfolio of unquoted companies which are cash generative and,
therefore, capable of producing income and capital repayments to
the Company prior to their disposal by the Company.
Although invested in diverse industries, it is intended that the
Company's portfolio will comprise companies with certain
characteristics, for example clear commercial and financial
objectives, strong customer relationships and, where possible,
tangible assets with value. The Company will focus on identifying
businesses typically with contractual revenues from financially
sound counterparties or a stream of predictable transactions with
multiple clients.
Businesses with assets providing valuable security may also be
considered. The objective is to reduce the risk of losses through
reliability of cash flows or quality of asset backing and to
provide investors with tax-free income.
The criteria against which investment targets would be assessed
will include the following:
a) An attractive valuation at the time of the investment;
b) Managed risk of capital losses;
c) The quality of the company's cash flows;
d) The quality of the businesses' counterparties, suppliers and market position;
e) The sector in which the business is active;
f) The quality of the company's assets;
g) The opportunity to structure an investment that can produce distributable income;
h) The potential for growing and developing the revenues and
profitability of the company to enable it to be considered for
traditional forms of bank finance and other funding; and
i) The ability to facilitate an exit which enables the Company
to meet its key investment objective of returning funds in line
with shareholder expectations.
As the value of investments increase the Company's Investment
Manager will monitor opportunities for the Company to realise
capital gains to enable the Company to make tax-free distributions
to Shareholders.
Non-Qualifying Investments
The Non-Qualifying Investments will be managed with the
intention of generating a positive return. The Non-Qualifying
Investments will comprise from time to time a variety of assets
including (a) short-term deposits of money, shares or units in
alternative investment funds (which have the meaning given by
regulation 3 of the Alternative Investment Fund Managers
Regulations 2013) or in undertakings for the collective investment
in transferable securities (which have the meaning given by Section
363A(4) of the Taxation (International and Other Provisions) Act
2010), which may be repurchased, redeemed, or paid out on no more
than seven days' notice; and (b) ordinary shares or securities in a
company which are acquired on a regulated market (defined in
Section S274(4) ITA 2007).
Borrowing Powers
To the extent that borrowing is required, the Directors will
restrict the borrowings of the Company and exercise all voting and
other rights or powers of control over its subsidiary undertakings
(if any) to ensure that the aggregate amount of money borrowed by
the Group, being the Company and any subsidiary undertakings for
the time being, (excluding intra-Group borrowings), shall not
without the previous sanction of an ordinary resolution of the
Company exceed 30% of its NAV at the time of any borrowing.
Risk Diversification
The Company aims to invest in a number of different businesses
within different industry sectors but may focus investments in a
single sector where appropriate to do so. No single investment by
the Company will represent more than 15% of the aggregate NAV of
the Company at the time the investment is made.
Valuation Policy
All unquoted investments will be valued in accordance with BVCA
or similar guidelines under which investments are not normally
re-valued above cost within 12 months of acquisition unless third
party funding has occurred. A brief summary of the BVCA guidelines
as it applies to investments is as follows:
-- Investments should be reported at fair value where this can
be reliably determined by the Board on the recommendation of the
Investment Manager;
-- That this price is a proxy for fair value;
-- In estimating fair value for an investment, the valuation
methodology applied should be the most appropriate for a particular
investment. Such methodologies, including the price of the recent
investment, earnings multiples, net assets, discounted cash flows
or earnings and industry valuation benchmarks, should be applied
consistently; and
-- If fair value cannot be reliably measured, transaction price
is used for valuing investments where it is believed that this
price is a proxy for fair value.
The December 2018 update to the IPEV Guidelines discourages the
use of cost or price of a recent investment as a primary
methodology for valuation. That change has had no impact on the
portfolio's valuation as the Company has not made any investments
recently and used the recent investment round. The majority of our
portfolio is valued on a discounted cash flow basis.
Any quoted investments, if made, will be valued at prevailing
bid prices.
Co-Investment Policy
The Company may invest alongside other funds or entities managed
or advised by the Investment Manager which would help the Company
to broaden its range of investments or the scale of opportunities
more than if it were investing on its own.
It is possible that conflicts may arise in these circumstances
between different funds or between the Company and the Investment
Manager. The Investment Manager maintains robust conflict of
interest procedures to manage potential conflicts and issues are
resolved at the discretion of the independent Board of the
Company.
Dividend Policy
The Company will distribute, by way of dividend, such amount as
ensures that it retains not more than 15% of its income from shares
and securities. The Directors aim to maximise tax-free
distributions of income and/or realised gains to Shareholders. It
is envisaged that the Company will distribute most of its net
income each year by way of dividend, subject to liquidity.
The Company's ability to pay dividends is subject to the
existence of realised profits, legislative requirements, and the
available cash reserves.
Share Realisation Policy
TPIM intends to identify opportunities to realise investments in
order to exit investors in the most efficient way possible.
Exits will typically be realised through sales to businesses,
acquisitions by private equity or other investment funds. The
proceeds of any realisation will be used to repay borrowings if
applicable and to pay dividends to Investors.
Key Performance Indicators ("KPIs")
As a VCT, the Company's objectives are to provide Shareholders
with up front tax relief, an attractive income and returns through
capital appreciation and the payment of dividends.
The Board expects the Investment Manager to deliver a
performance which meets the objectives of providing Shareholders
with an attractive income and capital return. The Board has
identified four primary KPIs, which are net asset value plus
dividends paid, earnings per share, compliance with VCT legislation
and ongoing charges ratio that it uses in its own assessment of the
Company's performance.
These are intended to provide Shareholders with sufficient
information to assess how the Company has performed against its
objectives in the year to 31 March 2022, and over the longer term,
through the application of its investment and other principal
policies.
Total Return
NAV plus dividends paid is a measure of shareholder value that
includes the current NAV plus cumulative dividends paid to
Shareholders to date. The Charts show how the Total Return of each
Share Class has developed since launch. Total Return is deemed an
alternative performance measure.
C Share Class
The Net Asset Value per C Share is 7.75 pence per share as at 31
March 2022 compared to 83.30 pence per share at 31 March 2021
following substantial distributions being paid to shareholders. The
Total Return is 155.50 pence per share as at 31 March 2022 compared
to 156.80 pence per share at 31 March 2021. The small reduction in
Total Return is a result of the Hydro Assets being sold for more
than their carrying value and being offset by the Investment
Manager's performance fee due on distributions (4) .
D Share Class
The Net Asset Value per D Share is 8.67 pence per share as at 31
March 2022 compared to 59.59 pence per share at 31 March 2021
following substantial dividends being paid to shareholders. The
Total Return is 125.42 pence per share at 31 March 2022 compared to
129.59 pence per share at 31 March 2021. The reduction in Total
Return is a result of the Hydro Assets being sold at more than
their carrying value and being offset by the Investment Manager's
performance fee which is due on distributions (4) .
(4) The Investment Manager earns a performance fee of 20% on all
distributions over 100 pence per share.
E Share Class
The Net Asset Value per E Share is 76.76 pence per share as at
31 March 2022 compared to 94.59 pence per share at 31 March 2021
following dividends of 21 pence per share being paid during the
financial year. The Total Return has increased to 109.26 pence per
share as at the reporting date from 106.09 pence per share as at 31
March 2021.
The Board and the Investment Manager continue to closely monitor
the portfolio and seek to maximise value where possible.
Total C Share Class D Share Class E Share Class
return
Date NAV Cumulative Total NAV Cumulative Total NAV Cumulative Total
per dividends per dividends per dividends
share share share
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-14 97.62 - 97.62 - - - - - -
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-15 99.76 - 99.76 98.15 - 98.15 - - -
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-16 105.03 - 105.03 101.26 - 101.26 - - -
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-17 106.49 5.00 111.49 105.19 - 105.19 - - -
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-18 112.84 10.00 122.84 107.98 5.00 112.98 98.32 - 98.32
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-19 134.58 15.00 149.58 117.34 10.00 127.34 102.55 - 102.55
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-20 84.87 70.00 154.87 62.46 65.00 127.46 101.69 5.00 106.69
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-21 83.30 73.50 156.80 59.59 70.00 129.59 94.59 11.50 106.09
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
31-Mar-22 7.75 147.75 155.50 8.67 116.75 125.42 76.76 32.5 109.26
-------------- --------------------- -------------------- --------------------- --------------------- ------------ ------------ --------------------- ---------------------
Earnings per Share
The charts show the Company's earnings per share by share class
and also shows the distinction between earnings generated by
revenue and earnings generated by capital movements for the year
ended 31 March 2022. The C Share Class and the D Share Class were
established to provide an annual yield of five pence per share for
the first six years, followed by a large capital distribution and
then a smaller regular yield beyond that. An exit was secured for
investors which realised a significant capital gain for investors
in the year to 31 March 2022 which exceeded original returns
expectations. The E Share Class was established to provide an
annual return of five pence per share and to seek an exit realising
capital for investors over a 10 to 12-year time horizon. The
Company has realised some of the investments made to date and is
seeking further opportunities to return funds to investors.
Earnings per C Share Class D Share Class E Share Class
Share
Revenue Capital Total Revenue Capital Total Revenue Capital Total
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-14 (1.70p) (0.46p) (2.16p) - - - - - -
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-15 1.22p (0.44p) 0.78p (0.28p) (0.44p) (0.72p) - - -
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-16 3.31p 1.96p 5.27p 2.82p (0.63p) 2.19p - - -
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-17 3.06p 3.40p 6.46p 4.01p (0.08p) 3.93p - - -
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-18 5.02p 6.32p 11.34p 3.85p 3.94p 7.79p (0.92p) (0.78p) (1.70p)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-19 5.53p 21.21p 26.74p 3.93p 10.43p 14.36p 0.86p 3.38p 4.24p
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-20 4.18p 1.11p 5.29p 2.61p (2.49p) 0.12p 1.21p 2.92p 4.13p
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-21 2.27p (0.34p) 1.93p 2.35p (0.27p) 2.08p 1.08p (1.69p) (0.61p)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
31-Mar-22 (0.92p) (0.40p) (1.32p) 0.45p (4.62p) (4.17p) 0.73p 2.44p 3.17p
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Compliance with VCT legislation
By making an investment in a Venture Capital Trust, Shareholders
become eligible for several tax benefits under VCT tax legislation.
This is, however, contingent on the Company complying with VCT tax
legislation. The Board can confirm that throughout the year ended
31 March 2022, the Company continued to meet the relevant
tests.
To achieve compliance, the Company must meet a number of tests
set by Her Majesty's Revenue and Customs ("HMRC"). A summary of
these steps is set out under "VCT Regulation".
Ongoing Charges Ratio
The Ongoing Charges Ratio(5) is a ratio of annualised ongoing
charges expressed as a percentage of the average Net Asset Value
throughout the period. The annual running costs of the Company are
capped at 3.5% of the Company's NAV, above which the Investment
Manager will bear any excess costs.
The ongoing charges of the Company for the financial year under
review represented 3.48% (2021: 2.88%) of the average net assets.
The increase during the year is largely due to performance fees
paid to TPIM and a reduction in NAV from distributions made
Tax Benefits
The Company's objective is to provide Shareholders with an
attractive income and capital return by investing its funds in a
broad spread of unlisted UK companies which meet the relevant
criteria for investment by VCTs.
Investing in a VCT brings the benefit of tax-free dividends, as
well as up-front income tax relief. The Company continues to meet
the VCT qualification requirements which are continuously monitored
by the Investment Manager and reviewed by the Directors. Investment
classification by asset value and sector value are shown over the
following pages.
(5) This ratio is calculated using the AIC's "Ongoing Charges"
methodology which can be found on their website
https://www.theaic.co.uk/ . The Ongoing Charges ratio is deemed an
alternative performance measure.
Investment classification for the C Share Class by asset
value:
Investment Portfolio - C Share Class
C Share class
Cash 100%
---------------- ------
Investment classification for the D Share Class by asset value
and sector value:
Investment Portfolio - D Share Class
D Share class
Qualifying Investments 54%
------------------------- -----
Cash 46%
------------------------- -----
Investments by Sector - D Share Class
Hydroelectric Power 100%
Investment classification for the E Share Class by asset value
and sector value:
Investment Portfolio - E Share Class
E Share class
Qualifying Investments 67%
Non-Qualifying Holdings 21%
Cash 12%
** Please note that the percentage of qualifying investments in
the above bar chart is not representative of the Company as a
whole, whose total qualifying investments exceed the requisite 80%
threshold.
Investments by Sector - E Share Class
Crematorium Management 1%
Vertical Growing 35%
Hydroelectric Power 1%
SME Funding - Hydroelectric
Power 7%
SME Funding - Other 17%
Electricity Generation
- Other 39%
------------------------------
VCT Regulation
VCTs were first introduced in the Finance Act 1995 to provide a
means for private individuals to invest in unquoted companies in
the UK. The Finance Act 2004 introduced changes to VCT legislation
designed to make VCTs more attractive to investors. The current tax
benefits available to eligible investors in VCTs include:
-- Up-front income tax relief of 30% on a maximum investment of
GBP200,000 per tax year on newly issued shares;
-- Exemption from income tax on dividends received; and
-- Exemption from capital gains tax on disposals of shares in VCTs.
Since the Finance Act 2004, the VCT rules have subsequently been
amended under the Finance Act 2014 and The Finance (No 2) Act 2015.
The Investment Manager, utilising advice from Philip Hare &
Associates LLP, ensures continued compliance with any legislative
changes.
The Company has been approved as a VCT by HMRC. To maintain this
approval, the Company must comply with certain requirements on a
continuing basis. Within three years from the effective date of
provisional approval or later allotment at least 80% (from 1 March
2020, the percentage of the Company's investments held in
"qualifying holdings" increased to 80% from 70%) of the Company's
investments must comprise "qualifying holdings" of which at least
30% must be in eligible Ordinary Shares. Holdings acquired before 6
April 2018 using certain "protected monies" - holdings acquired
using monies raised, or derived from monies raised, by the VCT
before 6 April 2011 - are ignored when determining whether the VCT
meets the 70% eligible shares condition. These investment criteria
continue to be met.
Exit Programme
Although the initial mandate for the C and D Share Class was to
hold the hydroelectric investments for up to 16 years, the Board
put forward a resolution which was approved by shareholders at the
2021 AGM to remove this time period and proceed with a full
disposal of the hydroelectric assets. As a result, during the year,
the Company achieved a full exit for the C Class Shareholders and
partial realisation for the D and E Class Shareholders following a
disposal of the Hydro Assets.
The Company's exit programme is discussed in greater detail in
the Investment Manager's Review and a copy of the Company's Share
Realisation Policy is above.
The valuation of, and potential exit routes for, the Company's
remaining investments are reviewed and discussed at Board meetings.
The Investment Manager has successfully implemented exit plans for
other VCTs under its management.
Borrowing
During the year, the Company repaid its secured facility of
GBP2.3 million at a fixed rate of 4.5% per annum with Triple Point
Lease Partners ("TPLP") on 1 February 2022 following the disposal
of the hydroelectric assets.
Principal Risks, Uncertainties and Emerging Risks
The Directors seek to mitigate the Company's principal risks by
regularly reviewing performance and monitoring progress and
compliance. In the mitigation and management of these risks, the
Directors carry out a robust assessment of the Company's emerging
and principal risks , including those that would threaten its
business model, future performance, solvency or liquidity.
The main areas of risk identified by them, along with the risks
to which the Company is exposed through its operational and
investing activities, are detailed in the table. The Board does not
consider the likelihood or impact of these risks to have changed in
the year.
The Board maintains a comprehensive risk register which sets out
the risks affecting both the Company and the investee companies in
which it is invested. The risk register is reviewed and updated at
least twice a year to ensure that procedures are in place to
identify principal and emerging risks. The purpose of the Company's
risk management policies and procedures is not to eliminate risks,
but to reduce them and to ensure that the Company is adequately
prepared to respond to such risks and to minimise any impact if the
risk materialises.
Details of the Company's internal controls are contained in the
Corporate Governance Internal Control section and further
information on exposure to risks including those associated with
financial instruments is given in note 19 of the financial
statements.
VCT Qualifying Status Risk : The Company is required at all
times to observe the conditions laid down in the Income Tax Act
2007 for the maintenance of approved VCT status. The loss of such
approval could lead to the Company losing its exemption from
corporation tax on capital gains, to investors being liable to pay
income tax on dividends received from the Company and, in certain
circumstances, to investors being required to repay the initial
income tax relief on their investment.
Mitigation: The Investment Manager keeps the Company's VCT
qualifying status under continual review and reports to the Board
on a quarterly basis. The Board has also appointed Philip Hare
& Associates LLP to undertake an independent VCT status
monitoring role.
Investment Risk : The Company's VCT qualifying investments are
held in small and medium-sized unquoted investments which, by their
nature, entail a higher level of risk and lower liquidity than
investments in large, quoted companies. This could make it
difficult to realise investments in line with the relevant
strategy.
Mitigation: The Directors and Investment Manager aim to limit
the risk attached to the portfolio as a whole by careful selection
and timely realisation of investments, by carrying out rigorous due
diligence procedures and by maintaining a spread of holdings in
terms of industry sector and geographical location. The Board
reviews the investment portfolio with the Investment Manager on a
regular basis. Where possible, a member of the Investment Manager
holds a seat on the board of the portfolio companies.
Financial Risk : As a VCT the Company is exposed to market price
risk, credit risk, fair value risk, liquidity risk and interest
rate risk. As most of the Company's investments involve a medium to
long-term commitment and are relatively illiquid, the Directors
consider that it is inappropriate to finance the Company's
activities through borrowing, other than for short-term
liquidity.
Mitigation: The key elements of financial risk are discussed in
more detail in note 19.
Failure of Internal Controls Risk : The Board regularly reviews
the system of internal controls, both financial and non-financial,
operated by the Company and the Investment Manager. These include
controls designed to ensure that the Company's assets are
safeguarded and that proper accounting records are maintained.
Mitigation: The Board maintains a risk register which sets out
the risks affecting both the Company and the investee companies in
which the Company is invested. This risk register is reviewed and
updated at least twice a year to ensure that procedures are in
place to identify the principal risks which may affect the Company
and its portfolio companies, mitigate and minimise the impact of
those risks should they crystallise and to identify emerging risks
and to determine whether any actions are required. This enables the
Board to carry out a robust assessment of the risks facing the
Company, including those risks that would threaten its business
model, future performance, solvency or liquidity.
Liquidity Risk: The Company's financial assets include
investments in unquoted equity securities which are not traded on a
recognised stock exchange and which are illiquid. As a result, the
Company may not be able to realise some of its investments in these
instruments quickly at an amount close to their fair value in order
to meet its liquidity requirements.
Mitigation: The Investment Manager reviews the cash flow
forecasts, in the short and long term on a continuing basis. The
Directors have reviewed these cash flow forecasts on a quarterly
basis. The Company is comfortable that it will generate sufficient
cash flow from its current investments to service shareholder
returns and working capital requirements.
Emerging Risks
Climate Change and related legislation
The potential impact of climate change and any related
legislation which may be enacted in respect of meeting the UK's
climate change targets has been taken into account and an
assessment of the key risks for each share class has been
considered.
If a change in the Government's renewable energy policy were
applied retrospectively to current operating projects this could
adversely impact the market price for Shenval or the value of the
green benefits earned from generating renewable energy. Further,
performance of Shenval may be adversely affected by lower or more
concentrated rainfall in Scotland. Nevertheless, the remaining
hydroelectric asset continues to perform well, and as such
performance will continue to be monitored closely. In respect of
Green Peak, whilst increased penetration of battery energy storage
systems may lead to increased competition with gas fired energy
centre assets in the flexible generation market, they have the
advantage of not having to be charged so may be likely to still
have its place from a security of supply perspective. Related
climate change policy risk may include increased carbon costs such
as potential removal of the UK ETS exemption that the gas fired
energy centre asset currently benefits from (by way of being below
the 20MWth capacity threshold). Increasing ambient temperatures
will have a negative impact on the efficiency and operating
performance of both the gas fired energy centre and the solar PV
systems.
The Controlled Environment Agriculture asset is protected from
the impact of climate change as the climate is controlled and grown
indoors in a sealed environment. The ambient CO2 levels are
controlled and the facility inside is not impacted by floods or
droughts.
As the Company has sold a substantial part of its Hydro Assets
and has the intention of selling Green Peak once a favourable price
and terms can be achieved, the emerging risk of climate change and
related legislation has reduced.
Ukraine-Russia War (new)
In late February 2022, Russia began an invasion of Ukraine with
devastating consequences for the country's citizens and major
implications for wider humanity, the global economy and capital
markets. The Company does not have any direct exposure to Russia,
however, the Company is monitoring the potential wider
macroeconomic consequences on the Company and its investee
companies closely, including energy price volatility and further
sanctions. Please refer the Investment Manager's Review, which
illustrates the wider effects of the Ukraine-Russia war on the
Company and its wider investments.
Going Concern
The Company's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Investment Manager's Report.
The nancial risk management objectives and policies of the
Company, including exposure to price risk, interest rate risk,
credit risk and liquidity risk are discussed in note 19 to the
nancial statements.
The Company repaid its loan facility in full during the current
year. More detail on this can be found in the Strategic Report. The
Company continues to meet day-to-day liquidity needs through its
cash resources and income from its investment portfolio.
In February 2022 there was a disposal of hydroelectric assets
and accordingly, the C Share Class now hold no assets and the one
remaining hydroelectric asset within the D Share Class will be
transferred to the E Share Class following the publication of the
Annual Report. The Company's revenue comes from predominantly
secure and reliable counterparties. The hydroelectric revenue is
contractual, with inflation linked Feed-in Tariff ("FiT") income
and export income from a 12-month power purchase agreement. The
rooftop solar business also benefits from contractual, and
inflation linked income through the government FiT and Renewable
Obligation Certification ("ROC") schemes.
PFC has in the year made progress in both establishing their
product and improving on Research & Development ("R&D"),
amidst the continued challenging food sector environment facing
increase in price of raw materials and logistics costs. We do
expect the heightened scrutiny of the food and farming sector to
continue, from both a food security and an environmental point of
view. PFC has presented a new business plan to help secure funding
including diversification of the business into new sectors to open
up to greater market opportunities and risk spreading.
The Company had net current assets of GBP4.30 million (2021: net
current liabilities of GBP1.34 million) and had cash balances of
GBP3,831k (2021: GBP521k) (this does not include cash balances held
within investee companies), which the Board believes are suf cient
to meet current obligations as they fall due. Further detail on
liquidity risk can be found in the principal risks, uncertainties
and emerging risks section.
The only major cash out ow of the Company are the payment of
management fees and discretionary dividends.
The Directors have reviewed cash flow projections which cover a
period of at least 12 months from the date of approval of this
report. These show that the Company has suf cient nancial resources
to continue to meet its day-to-day commitments for at least the
next 12 months. Scenarios have been run which include the disposal
of PFC and alternative scenario whereby PFC is held. Under both
scenarios, the Company has sufficient resources to continue as a
going concern for at least the next 12 months.
Viability Statement
The Association of Investment Companies Code of Corporate
Governance 2019 requires the Board to assess the Company's
viability over an appropriate period. The Directors have assessed
the prospects of the Company over a longer period than 12 months
required by the Going Concern provision.
The Board conducted this review for a period of five years,
which is an appropriate time horizon, as investors are required to
hold their investment for a period of five years in order to
benefit from the associated tax reliefs which will have elapsed
within this period.
The Board has determined that five years up to 31 March 2027 is
the maximum timescale over which the future position of the Company
can be forecast with a material degree of accuracy and therefore
this is the appropriate period over which to consider its
viability. The process to wind up the C and D share classes is
expected to happen by the end of 2022 and a resolution will be put
forward to shareholders following the transfer of the remaining
asset in the D Share Class to the E Share class.
As part of the assessment, the Company undertook various
scenario testing with regards to the disposal of PFC. In the hold
scenario it was assumed that the Company would make no further
distributions to shareholders until investments are exited. On
realisation, it was assumed a distribution to shareholders is made
and sized to ensure enough cash is retained to meet the working
capital needs of the VCT for the next 5 years.
In order to assess this requirement, the Board regularly
considers the Company's strategy and considers the Company's
current position. It also carries out a robust assessment of the
principal risks, including future performance and liquidity.
Consideration has also been given to the Company's reliance on, and
close working relationship with, the Investment Manager. This has
enabled the Directors to state that they have a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the period of their
assessment. The Board has considered both the Company's long-term
and short-term cash flow projections and considers these to be
realistic and reasonable.
To provide this assessment the Board has considered the
Company's financial position and ability to meet its expenses as
they fall due as well as considering longer-term viability:
-- The expenses of the Company are predictable and modest in
comparison with the assets and there are no capital commitments
foreseen which would alter that position;
-- The Company has no employees, only Non-Executive Directors,
and consequently does not have redundancy or other employment
related liabilities or responsibilities;
-- Most of the Company's investments will involve a medium to
long-term commitment and will be relatively illiquid but the Board
reduces the risk as a whole by careful selection and timely
realisation of investments;
-- The Directors will continue to monitor closely changes in the
VCT legislation and adapt to any changes to ensure the Company
maintains approval. The Directors have appointed an independent
adviser to undertake the VCT status monitoring role; and
Based on the results of this review, the Directors have a
reasonable expectation that the Company will be able to continue
its operations and meet its expenses and liabilities as they fall
due over the period of their assessment.
Section 172(1) Statement
The following disclosure describes how the Directors have had
regard to the matters set out in section 172(1)(a) to (f) of the CA
2006 when performing their duty and forms the directors' statement
required under section 414CZA of that CA 2006.
Stakeholder Engagement
This section describes how the Board engages with its key
stakeholders, how it considers their interests and the outcome of
the engagement when making its decisions, the likely consequences
of any decision in the long-term, and further ensures that it
maintains a reputation for high standards of business conduct.
Stakeholder Importance Board Engagement
Shareholders Continued shareholder support The Board is committed to maintaining
is critical to the sustainability open channels of communication
of the Company and the delivery with Shareholders.
of its strategy.
Formal updates are provided
to Shareholders as part of
the Annual or Interim Reports,
and the Board and the Investment
Manager will also respond to
any written queries made by
Shareholders during the course
of the year. The Board receives
shareholder communications
from the Investment Manager
on a quarterly basis. The Chair
provides this feedback to the
Board and is responsible for
providing a clear understanding
of the views of Shareholders
to the Board. The Board recognises
the importance of providing
strong financial returns to
Shareholders and the eligible
tax benefits under VCT tax
legislation.
Annual General Meeting ("AGM")
Whilst shareholder engagement
has been more challenging during
the COVID-19 pandemic, the
Board continues to engage with
shareholders through its Annual
and Interim Reports, RNS communications,
and encourages shareholders
to attend where possible.
-------------------------------------- -------------------------------------------
Investment Manager The Investment Manager's The Board has delegated the
performance is critical authority for the day-to-day
to the Company to enable running of the Company to the
it to successfully deliver Investment Manager. The Board
its investment strategy then engages with the Investment
and meet its long-term investment Manager in reviewing, setting,
objectives of capital growth approving, and overseeing the
and tax-free dividends. execution of the Investment
Policy and strategy of the
Company.
The Investment Manager attends
both Board and other committee
meetings to update the Board
on the performance of the Company
and its portfolio. At every
quarterly Board meeting, a
review of financial and operating
performance of the Company
and its investments is undertaken,
including a review of legal
and regulatory compliance.
The Board also reviews other
areas including the Company's
strategy; key risks; corporate
responsibility; compliance
and legal matters.
-------------------------------------- -------------------------------------------
Investee companies The Company via its Investment The Investment Manager obtains
Manager has important relationships monthly operational reports
with individuals responsible from the Operation & Maintenance
for the maintenance and ("O&M") providers. Site visits
performance of its investee are undertaken at least annually
companies. by representatives from the
Investment Manager including
the Investor Directors and
portfolio management team.
The Investment Manager is in
As part of achieving its regular contact with the O&M
investment objectives, the providers. Management accounts
Company provides funding and performance reports are
to a number of investee provided to the Directors of
companies and as such, has investee companies on a quarterly
debtor relationships with basis.
several companies.
Should issues arise with payment
deadlines, the Investment Manager,
on behalf of the Company, will
consider appropriate measures
to engage with any debtors
and take into consideration
their circumstances, with the
aim of not causing detriment
to the Company's long-term
sustainable success.
-------------------------------------- -------------------------------------------
External Service To function as a VCT with The Company has a number of
Providers a premium listing on the service providers which include
London Stock Exchange, the the Investment Manager and
Company relies on external Company Secretary, Registrar,
service providers for support Legal Advisers, VCT Compliance
in meeting all relevant Adviser and the Auditor.
obligations.
The Board has regular contact
These service providers with the two main service providers,
are fundamental to ensuring the Investment Manager, and
that the Company meets the the Company Secretary through
high standards of conduct quarterly Board meetings and
that the Board sets. more regular discussions with
the Board.
-------------------------------------- -------------------------------------------
Lenders The Company values its relationships The Investment Manager engaged
with its debt providers. with and ensured the Company
Prudent debt financing is met its obligations in relation
important to effectively to the loan facility agreements.
manage the Company's capital
and achieve the target return
promised to Shareholders.
-------------------------------------- -------------------------------------------
Community The Directors recognise The Board is cognisant of the
that the long-term success impact of the Company's operations
of the Company is linked and of the companies in which
to the success of the communities it invests and believes that
in which the Company, and its investment activities have
its investee companies, many positive benefits beyond
operate. the returns delivered for Shareholders.
-------------------------------------- -------------------------------------------
Regulators The Company can only operate The Company engages an external
with the approval of its adviser to report on its compliance
regulators. with the VCT rules.
-------------------------------------- -------------------------------------------
Principal Decisions
Below are the principal decisions made or approved by the
Directors during the year. In taking these decisions, the Directors
considered their duties under section 172 of the CA 2006. Principal
decisions have been defined as those that have a material impact to
the Company and its key stakeholders.
Dividends
The Company declared and paid interim dividends during the year
to C Share Class holders of 74.25 pence per share, D Share Class
holders of 46.75 pence per share and the E Share Class dividend of
21.00 pence per share.
It was discovered during the year that the Company had paid
these distributions without having sufficient "distributable"
reserves as defined under and required by the CA 2006. As a result,
these distributions are technically unlawfully distributions under
the CA 2006. The Company will propose resolutions at a general
meeting on 2 September 2022 to rectify the payment of the unlawful
distributions and release the directors of the Company (who were
directors of the Company at the time the unlawful distributions
were made) and the shareholders who received them, from any and all
liability arising thereunder. The Investment Manager has also
implemented internal controls to ensure this issue is not repeated
in the future. Further information is detailed in note 24 to the
financial statements.
Amendment of Company's Investment Policy and Disposal of
hydroelectric portfolio
As noted in the Chair's statement, all of the Hydro Assets in
the C Share Class and a substantial part of the Hydro Assets in the
D and E Share Class were sold. This was achieved following a
passing of a resolution at the 2021 Annual General Meeting to
change the Company's Investment Policy which removed the 16-year
holding period for the C and D share classes which are wholly
invested in the hydroelectric portfolio. This sale formed part of a
competitive sales process where a number of bids were submitted.
The Board carefully considered all bids during the process and
selected the preferred bidder based on a number of important
criteria including total consideration, level of offer
conditionality and acceptance of share purchase agreement
terms.
Investment Manager's Review
Sector Analysis
Electricity
Generation SME Funding
Controlled Other
Industry Crematorium Environment Hydroelectric Electric Hydroelectric Quoted Total
Sector Management Agriculture Power Power Power Other Investments Investments
--------------- ------------- --------------- ----------- --------------- --------- ------------- -------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- --------------- --------- ------------- -------------
Investments
at 31 March
2021
--------------- ------------- ------------- --------------- ----------- --------------- --------- ------------- -------------
C Shares - - 11,244 - - - - 11,244
D Shares - - 10,037 - - - - 10,037
E Shares 112 6,469 5,665 7,236 3,598 2,717 558 26,741
Total 112 6,469 26,946 7,236 3,598 2,717 558 48,022
-------------
Investments
realised
during the
period
--------------- ------------- ------------- --------------- ----------- --------------- --------- ------------- -------------
C Shares - - (11,244) - - - - (11,244)
D Shares - - (9,535) - - - - (9,535)
E Shares - - (5,429) (75) (2,325) - (558) (8,387)
-------------
Total
disposals - - (26,208) (75) (2,325) - (558) (29,165)
-------------
Investments
revalued
during the
period
--------------- ------------- ------------- --------------- ----------- --------------- --------- ------------- -------------
C Shares - - - - - - - -
D Shares - - 7 - - - - -
E Shares (53) 319 3 680 106 215 - 1,270
-------------
Total
revaluations (53) 319 10 680 106 215 - 1,277
-------------
Investments
at 31 March
2022
--------------- ------------- ------------- --------------- ----------- --------------- --------- ------------- -------------
C Shares - - - - - - - -
D Shares - - 509 - - - - 509
E Shares 60 6,788 239 7,841 1,379 3,318 0 19,625
Total 60 6,788 748 7,841 1,379 3,318 0 20,134
Total
investments
% 0.30% 33.71% 3.72% 38.94% 6.85% 16.48% 0.00% 100.00%
------------- ------------- --------------- ----------- --------------- --------- -------------
We are pleased to present our annual review for the year ended
31 March 2022.
This year we sold a majority of hydroelectric assets in the C,
D, and E Share Class enabling the return of net proceeds to
shareholders following which the investment in PFC becomes the
largest investment holding within the Company. Further information
on the next steps for all the Share Classes are set out below and
in the Chair's Statement.
Although we were very fortunate to be able to operate
effectively with remote and home working through the Covid-19
restrictions, we were excited to see a return to the office for our
staff to bring everyone back together again. Nevertheless, we saw
the benefit of staff being able to work from home, and as such, we
currently operate with employees working 50% of their time in the
office and 50% at home.
As noted in the Chair's Statement, the C Share Class has now
fully divested of all the remaining hydroelectric assets, the D
Share Class has only one hydroelectric asset remaining and the E
Share Class has a diverse portfolio of 10 companies spanning
hydroelectric power, rooftop solar, crematoria, and controlled
environment agriculture. It is intended that the C and D Ordinary
Share Classes be wound down and cancelled and residual cash
distributed to the shareholders. In respect of the D Share Class,
this will require the realisation of its remaining holding in
Shenval, which is also held partly by the E Share Class. It is
intended that the E Share Class consolidate its investment in
Shenval in return for cash which will enable the D Share Class to
fully exit and provide the E Share Class with a valuable asset
generating an income. The Company will seek share approval, at a
general meeting, to wind down and ultimately cancel the C and D
Share Classes in due course. It is anticipated that the
cancellation will commence in late 2022.
C Share Class
As set out in the Chair's Statement, during the year all the C
Share Class assets, consisting of three hydroelectric companies in
the Scottish Highlands, were sold. A small amount of cash has been
retained to ensure the C Share Class can meet all its working
capital requirements.
D Share Class
During the year, the majority of D Share Class assets,
consisting of five hydroelectric companies in the Scottish
Highlands were sold. The Share Class has an interest in Shenval
which remains.
It is intended that the E Share Class consolidate its investment
in Shenval in return for cash which will enable the D Share Class
to fully exit, and provide the E Share Class with a valuable asset
generating an income.
Review of Portfolio
E Share Class
Solar Energy
The Company holds an investment in four portfolios of rooftop
solar PV systems through the following investee companies:
-- Green Energy for Education Limited ("GEFE"), which owns a
portfolio of 103 systems on residential rooftops in East
Anglia;
-- Campus Link Limited ("CMP"), which owns a portfolio of 36
systems on residential rooftops in South West England;
-- Digima Limited ("DIG"), which owns a portfolio of 104 systems
on residential rooftops in East Anglia; and
-- Digital Screen Solutions Limited ("DSS"), which owns a
portfolio of 323 systems on residential rooftops in Northern
Ireland.
The Investment Manager has helped the companies to negotiate and
appoint new asset management contracts with an experienced third
party, which are designed to improve portfolio reporting and
performance. There are several individual sites which have not been
communicating and a programme is being developed to ensure these
can be brought back online. The Investment Manager on behalf of DSS
is also engaging with Ofgem relating to the Company's 2020/2021
yearly submission for ROC, which is being challenged. In terms of
performance overall, GEFE is performing in line with expectations,
CMP is exceeding expectations, and DIG and DSS are slightly behind
expectations.
Hydroelectric Power
The Board, supported by the Investment Manager, put forward a
resolution at the 2021 AGM to amend the Company's investment policy
to reduce the holding period of the assets in the C and D Share
Class which allowed for the disposal and sale of the hydroelectric
assets which was considered an opportune time to optimise value for
shareholders. This was on the basis of favourable market
conditions, reflecting low discount rates, scarcity of in demand
hydroelectric assets with inflation-linked FiT Income and demand
for assets with a long c.15 year remaining FiT period.
As announced on 29 November 2021 and 13 December 2021, a
substantial part of the hydroelectric assets in the C, D and E
Ordinary Share Class, were sold in two tranches for a total
consideration of GBP31,419,183. Following these sales, the
remaining hydroelectric asset is Shenval which is held by the D and
E Share Classes. The hydroelectric asset sale followed a
competitive process, whereby bids were received from all invited
bidders comprising some of the leading energy infrastructure
investors in the UK with a strong understanding of small scale run
of the river hydroelectric assets. Following an analysis of the
bids, Triple Point Energy Efficiency Infrastructure Company plc
("TEEC") were chosen as the preferred bidder with reference to key
criteria of: consideration, conditionality of the bid and
acceptance of share price agreement terms. At the conclusion of the
process, TEEC's final offer was considered the most attractive for
the Company. TEEC is also managed by TPIM, and therefore additional
measures were implemented from the outset and carefully monitored
to manage any potential conflict of interest appropriately,
including obtaining a third-party valuation.
We are very pleased with the outcome of the sales process for
the Shareholders, and the consequential return of the net proceeds
to them. At the appropriate time, a resolution for the wind down
and cancellation of the C and D Share Class will be put forward to
shareholders.
Shenval, the remaining hydroelectric interest in the D and E
Share Classes, is a scheme in the Scottish Highlands, which has
been commissioned and is operational. Small-scale hydroelectric is
highly efficient, and it remains one of the cheapest forms of
renewable electricity per unit. Shenval continues to benefit from
UK government backed FiT payments based on output and from the sale
of the electricity produced to utilities or other power companies
under power purchase agreements. Shenval underperformed during the
12 months to 31 March 2022 at c.24% below revenue expectations
mainly due to adverse weather conditions. Hydroelectric power
generation from run-of-river schemes such as the site operated by
Shenval is weather dependent and one year's performance should not
be taken as indicative of future performance. The turbine itself is
operating well, however, the nine months to December 2021 were
exceptionally dry across the Scottish Highlands. In addition, the
site was unable to generate electricity for six weeks between April
and May 2021 due to Scottish and Southern Electricity grid
constraints, a factor outside of Shenval's control.
Hydroelectric companies, together with other industry members
and the British Hydropower Association ("BHA") have continued to
lobby the Scottish Government over the last year on business rates
in the hydroelectric sector. However, the assessors have become
entrenched in their position and furthermore appeals against the
2010 valuations are yet to resolved and cases from 2017 are nowhere
near consideration. It now looks unlikely that the assessors are
going to relent to reduce valuations for the hydroelectric sector
to bring them into line with other renewable technologies. The 60%
relief introduced by the Scottish Government in 2018 was extended
to 2032 in the 2021 Scottish Budget. Whilst the relief is welcome
and is sufficient to individual schemes, it does not benefit
multiple schemes grouped within a portfolio due to the post-Brexit
State Aid rules. It is however unlikely that any progress will be
made until the temporary support has expired.
Gas Fired Energy Centre
The Company has an investment in a company called Green Peak
which owns and operates a gas fired energy centre. Green Peak was
commissioned during May 2018 and it consists of containerised gas
combustion engines that generate electricity for onward sale,
especially at times when there is high demand for power. Further to
the update provided in the Company's 2021 Interim Report, the water
ingress issues which previously caused one of the engines to be
offline at Green Peak have now been resolved and all three engines
are fully available. We are also pleased to report that full
insurance coverage subject to deductions has been confirmed by the
insurer for both property damage and business interruption. Whilst
the site has experienced some availability issues which are being
addressed, the strong electricity market has offset the
underperformance with the company achieving gross profits in excess
of expectations for the 12-month period to 31 December 2021.
We are continuing to pursue solutions to improve the site's
operations and increase availability. As such, from May 2022, Green
Peak has transitioned to a new power optimisation company,
responsible for the trading and dispatch of the site, and a new
operations and maintenance contractor after continued
underperformance. Over the 2021/22 winter period, the significantly
rising costs of gas put pressure on the European electricity
market, causing prices to increase in line. As a result, the spark
spread, that is, the price of electricity less the cost of gas,
remained positive and in cases even widened. Throughout this winter
period the company was able to remain profitable, despite lower
availability and the resulting lower electricity production than
originally forecast. Toward the end of the period, after the war in
Ukraine began, gas prices remained high. However, high wind output
and warmer temperatures meant that the price of electricity came
off its winter highs. This put pressure on the spark spread and the
number of profitable periods in which the company was called to
trade accordingly decreased. The company does however benefit from
a high-priced Capacity Market contract, won in the 2021 year ahead
auctions which helps offset the reduced trading performance through
regular monthly cash flows.
In line with the Company's Investment Policy, which allows for a
partial return of funds within the E Share Class should market
conditions present such an opportunity, we are considering disposal
options for Green Peak following renewed transaction activity and
interest against the backdrop of a strong electricity market. A
sale of the assets will enable a dividend of the net proceeds to be
paid to E Shareholders.
The valuation of Green Peak has been held at the same carrying
value as determined at 31 March 2021. The carrying values were in
line with the independent report commissioned in early 2021 from an
experienced corporate finance adviser to gauge the market interest
and value attributable to these companies.
The valuation model was first adjusted by actual cash flow
forecasts to date and a reduction in the future residual value of
the asset at the end of the life. This was to provide a
conservative view on future decommissioning costs. A reduction in
expected project life to 20 years was then applied, which the
company's' Corporate Finance Adviser, after recently marketing the
company as well as others over the past years, advised is the
current market view on the useful operating life of this asset
class. The discount rates used to value the projects were then
adjusted to reflect the reduced long-term risk of a shorter
operating life. Additionally, the company's energy market advisers
are predicting significant short-term upside on market
profitability versus the market analysis at the time of the
independent report commissioned in early 2021. As well as being
future predictions, these strong market prices have been realised
in the second half of the reporting period and will continue to be
captured in the short term and so the discount rate of the cash
flows forecasts has been reduced. After applying all these changes
to the cash flow forecasts, the valuation returned was in line with
prior year carrying value, and the independent report commissioned
in early 2021.
Controlled Environment Agriculture
Controlled Environment Agriculture is the practice of producing
food in a controlled indoor growing facility where all inputs
(water, light, and nutrients) meet the optimum needs of the crop.
The advantages of this type of growing are that: it reduces "food
miles"; it allows crops to be reliably grown all year round
regardless of the weather or season; it avoids pests (which removes
the need for pesticides or washing which can spoil taste); and its
crops have higher yields and materially longer shelf-life for both
retailers and end-customers. This type of growing is highly
efficient. Depending on the crop, one acre of controlled
environment agriculture could be equivalent to as many as 10 to 20
traditional soil-based acres.
The Company has invested in a controlled environment agriculture
business called PFC, which trades under the brand name, Perfectly
Fresh. In the past year we have not seen the progress in expanding
the business and getting closer to profitability that was
planned.
Challenges :
-- Cheshire facility offline: The existing production facility
at Alderley Edge was closed for eight months (August 2021 to April
2022) for refurbishment and improvement. Further details are
provided below.
-- Expansion: Profitability has always been predicated on
expansion, either of PFC or on the basis of revenue sharing, and
the development of a second larger facility has been delayed whilst
further technical improvements have been worked on and the strategy
refined.
-- Fundraising: Fund raising has been postponed whilst further
technical improvements were implemented and the brand
relaunched.
Positive milestones:
-- Product established : In April 2021, Perfectly Fresh launched
the UK's first controlled environment agriculture mixed salad bag
(in two varieties), with over 100,000 bags sold to a leading
retailer, over the course of 2021, with no complaints received.
Overall, this product quality gives Perfectly Fresh a strong
competitive advantage and foothold in the market.
-- Alderley Edge improvements : In August 2021, the facility was
closed in order to carry out a number of improvements including: a
deep clean, simplified packaging, streamlined growing, better
irrigation cleaning systems, and better humidifying, all of which
will improve growing availability and reduce labour costs. A
specialist in operational systems has advised on how the new
facility can drive efficiencies. After the period end, the facility
re-opened with a simplified range and more consistent yields, with
delivery to PFC's customers re-started in April 2022.
-- R&D progress : The 4-person R&D team is continuously
testing improvements in seeds, hygiene, and growing techniques.
These improvements are being fed into the growing strategy for both
Alderley Edge and further plants, ensuring that Perfectly Fresh's
product has a competitive edge over alternatives.
-- Branding developed : Perfectly Fresh has been working with
brand consultants and has made significant progress in developing
its brand, which will enable it to broaden its customer base and
conduct a professional fundraising round.
Customer relationships strengthened : The strength of Perfectly
Fresh's business and product, as set out above, has been reflected
in increasingly strong customer relationships. Perfectly Fresh's
main customer, a leading UK supermarket, is involved with and
supports the company's plan for growth.
Valuation
The investment in PFC is valued on the basis of (i) a
restructuring which is in the process of documentation, and which
relates to PFC's priority share in the value of the Perfectly Fresh
business, and (ii) the value at which the management expects to
able to raise funds later this year.
Post year end developments
Shortly after the Company's year end, the Perfectly Fresh senior
team has expanded, and has refined the strategy to help the company
scale, and to raise funds for the development of a new facility in
the coming year. Pending the raising of funds for the new facility,
PFC has continued to be funded by Triple Point and P3P
Partners.
Crematorium Management
The Company has an investment in a business called Furnace
Managed Services Limited ("FMS") that provides crematory and
mercury abatement services for the crematoria of a London Borough.
This investment receives revenues from local authorities and has
consistently generated a steady return over the years it has been
held. Looking ahead, FMS is expected to start the winding up
process imminently following the final payment from Lambeth Local
Authority and will in due course declare a final dividend to the
Company.
If you have any questions, please do not hesitate to call us on
020 7201 8990.
Jonathan Parr
Head of Energy
Triple Point Investment Management LLP
20 July 2022
Responsible Investing
The Investment Manager is committed to being a sustainable and
responsible investor. To demonstrate commitment the Investment
Manager is a United Nations Principles for Responsible Investment
("PRI") signatory which underpins its Environmental, Social and
Governance (ESG) commitment across all investment strategies.
The Investment Manager believes these principles are helpful in
guiding and demonstrating best practice in investor ESG
integration. They also help promote a closer alignment between the
objectives of institutional investors and those of society at
large. The principles are voluntary and intended to be actionable
and measurable. TPIM seeks to promote these principles throughout
its business and all investment strategies.
ESG Integration Approach
The Investment Manager aligns international standards and good
industry practice, including monitoring industry regulation (such
as the Bribery Act 2010 and CA 2006) and investor-led initiatives
(such as the PRI), as the foundation of its ESG integration
approach. Using these foundational principles, TPIM has developed
an in-house approach to ESG integration which is proportionate and
relevant to each investment strategy.
To ensure the effective and consistent application of this
approach, the Investment Manager operates ESG Integration Policies.
Each details how ESG considerations are taken in to account
throughout investment processes, from the point of origination to
exit. The Investment Manager takes a practical, proportionate, and
material approach to ESG integration to manage the identification
of associated risks and opportunities. There are two pillars of
management to the approach:
1. Management (culture, capacity & governance): this refers
to the allocation of appropriate resourcing, training and senior
support for ESG integration. It demonstrates TPIM's actions have
integrity aligned with the strategic position of the Investment
Manager.
2. Investment process (process & reporting): this refers to
action taken in the investment process to assess and improve ESG
factors affecting the target asset, how these might affect
investment decisions, and how TPIM captures decisions and changes
to ESG factors during asset ownership.
As the Company no longer makes new investments, the current
focus is on the management and exit processes associated with
assets within the investment strategy. TPIM reviews ESG integration
processes formally every 12 to 18 months, in addition to informal
on-going review. Oversight is managed by TPIM's Sustainability Team
and the Sustainability Group and its associated subgroup.
Investment Portfolio Summary
31 March 2022 31 March 2021
---------------------------------------- ----------------------------------------
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted qualifying holdings 12,002 59.42 15,379 64.17 30,936 79.89 40,649 83.75
Quoted non-qualifying holdings - - - - 570 1.47 558 1.15
Unquoted non-qualifying
holdings 4,365 21.61 4,755 19.84 6,690 17.28 6,815 14.03
Financial assets at fair value
through profit or loss 16,367 81.03 20,134 84.01 38,196 98.64 48,022 98.93
Cash and cash equivalents 3,831 18.97 3,831 15.99 521 1.36 521 1.07
20,198 100.00 23,965 100.00 38,717 100.00 48,543 100.00
========= ======== ========= ======== ========= ======== ========= ========
Qualifying Holdings
Unquoted
Solar
Digima Limited 1,262 6.25 2,139 8.93 1,262 3.26 1,716 3.54
Digital Screen Solutions
Limited 2,020 10.00 3,061 12.77 2,020 5.22 2,776 5.72
Green Energy for Education
Limited 400 1.98 1,435 5.99 475 1.23 1,404 2.89
Hydroelectric Power
Elementary Energy Limited - - - - 2,060 5.32 2,461 5.07
Green Highland Allt Choire A
Bhalachain (255) Limited - - - - 3,130 8.08 3,763 7.75
Green Highland Allt Ladaidh
(1148) Limited - - - - 3,500 9.04 4,771 9.83
Green Highland Allt Luaidhe
(228) Limited - - - - 1,995 5.15 2,425 5.00
Green Highland Allt Phocachain
(1015) Limited - - - - 3,931 10.15 4,989 10.28
Green Highland Shenval Limited 1,120 5.55 750 3.13 1,120 2.89 739 1.52
Achnacarry Hydro Ltd - - - - 4,243 10.96 7,797 16.06
Gas Fired Energy Centre
Green Peak Generation Limited 2,200 10.89 1,206 5.03 2,200 5.68 1,339 2.76
Vertical Growing
Perfectly Fresh Cheshire
Limited 5,000 24.75 6,788 28.32 5,000 12.91 6,469 13.33
12,002 59.42 15,379 64.17 30,936 79.89 40,649 83.75
========= ======== ========= ======== ========= ======== ========= ========
31 March 2022 31 March 2021
Cost Valuation Cost Valuation
Non-Qualifying Holdings GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Quoted
Investment property
TP Social Housing REIT Plc Equity - - - - 570 1.47 558 1.15
- - - - 570 1.47 558 1.15
Unquoted
Crematorium Management
Furnace Managed Services Limited 488 2.42 60 0.25 488 1.26 113 0.23
Hydroelectric Power
Elementary Energy Ltd - - - - 140 0.36 140 0.29
Green Highland Allt Choire A
Bhalachain (225) Limited - - - - - - - -
Green Highland Allt Luaidhe (228)
Limited - - - - - - - -
SME Funding
Hydroelectric Power:
Broadpoint 2 Limited 1,159 5.74 1,379 5.75 1,334 3.45 1,449 2.98
Broadpoint 3 Limited - - - - 2,010 5.19 2,010 4.14
Other:
Aeris Power Limited 518 2.56 644 2.69 518 1.34 602 1.24
Funding Path Limited 2,200 10.89 2,672 11.15 2,200 5.68 2,501 5.15
4,365 21.61 4,755 19.84 6,690 17.28 6,815 14.03
Top Investments
DIGIMA LIMITED
Capital Owned 38.87%
Summary of Information from Investee Company Financial Statements: GBP'000
Turnover 138
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 78
Loss before tax (11)
Net assets before VCT loans 1,364
Net assets 195
DIGITAL SCREEN SOLUTIONS LIMITED
Capital Owned 35.36%
Summary of Information from Investee Company Financial Statements: GBP'000
Turnover 160
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 135
Loss before tax (13)
Net assets before VCT loans 2,166
Net assets 751
GREEN ENERGY FOR EDUCATION LIMITED
Capital Owned 50.00%
Summary of Information from Investee Company Financial Statements: GBP'000
Turnover 233
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 150
Profit before tax 138
Net assets before VCT loans 778
Net assets 678
BROADPOINT 2 LIMITED
Capital Owned 49.00%
Summary of Information from Investee Company Financial Statements: GBP'000
Turnover -
Earnings before interest, tax, amortisation and depreciation
(EBITDA) (12)
Profit before tax 167
Net assets before VCT loans 1,283
Net assets 123
FUNDING PATH LIMITED
Capital Owned 49.00%
Summary of Information from Investee Company Financial Statements: GBP'000
Turnover -
Earnings before interest, tax, amortisation and depreciation
(EBITDA) (9)
Profit before tax 56
Net assets before VCT loans 2,260
Net assets 60
GREEN PEAK GENERATION LIMITED
Capital Owned 49.00%
Summary of Information from Investee Company Financial Statements: GBP'000
Turnover 1,884
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 239
Loss before tax (147)
Net assets before VCT loans 3,805
Net assets 2,575
PERFECTLY FRESH CHESHIRE LIMITED
Capital Owned 49.97%
Summary of Information from Investee Company Financial Statements: GBP'000
Turnover 194
Earnings before interest, tax, amortisation and depreciation
(EBITDA) (1,107)
Loss before tax (2,810)
Net assets before VCT loans 310
Net assets (1,190)
Financial Assets are measured at fair value through profit or
loss. The initial best estimate of fair value of these investments
that are either quoted or unquoted on an active market is the
transaction price (i.e. cost). The fair value of these investments
is subsequently measured by reference to the enterprise value of
the investee company, which is best deemed to reflect the fair
value. Where the Board considers the investee company's enterprise
value should remain unchanged since acquisition, investments
continue to be held at cost less any loan repayments received.
The Strategic Report has been approved by the Board and signed
on their behalf by the Chair.
David Frank
Chair
20 July 2022
GOVERNANCE
Board of Directors
Michael Stanes has been an Investment Director at
Heartwood/Handelsbanken Investment Management, a London-based firm
providing investment management and wealth structuring services for
high net worth individuals, from 2010 to 2021. He began his career
at Warburg Investment Management (which became Mercury Asset
Management) where he ran equity portfolios in London and Tokyo. He
then moved to the US where he founded a business on behalf of
Merrill Lynch offering equity portfolio management to high net
worth individuals. In 2002 he joined Goldman Sachs Asset Management
in London running global equity portfolios for a range of
institutional and individual clients before joining a new fund
management partnership as CEO.
David Frank is the Chair of the Board. He was a partner in
Slaughter and May for 22 years before retiring from the firm in
2008. As well as being the firm's first Practice Partner from 2001
to 2008, his practice involved acting for several venture capital
houses, including 3i and Schroder Ventures. He was also involved in
several flotations in the venture capital sector, including 3i,
Baronsmead and SVG Capital. Since retiring from legal practice, he
has established a portfolio of voluntary roles.
Simon Acland has over 30 years' experience in venture capital,
primarily at Quester, where he became Managing Director. When
Quester was sold in 2007 it had GBP200 million under management and
was one of the leading UK venture capital and VCT investment
managers. Simon was a director of over 20 companies in Quester's
portfolio, many of which achieved successful exits through
flotation or trade sales. Simon is currently a director of several
private companies, including the Satellite Applications Catapult,
and is a member of the investment committee of the Angel Co-Fund.
Simon is a Founder and Director of Green Angel Syndicate, the UK's
only business angel group specialising in the fight against climate
change and global warming. He also acts as an Adviser to the Triple
Point Impact EIS Fund.
CORPORATE GOVERNANCE
Compliance Statement
The Board of Triple Point Income VCT plc has considered the
Principles and Provisions of the Association of Investment
Companies Code of Corporate Governance 2019 (AIC Code). The AIC
Code addresses the Principles and Provisions set out in the UK
Corporate Governance Code (the UK Code), as well as setting out
additional Provisions on issues that are of specific relevance to
Triple Point Income VCT plc.
The Board considers that reporting against the Principles and
Provisions of the AIC Code, which has been endorsed by the
Financial Reporting Council, will provide improved reporting to
Shareholders.
The Company has complied with the Principles and Provisions of
the AIC Code except as set out below:
AIC Code of Corporate Governance Explanation
The appointment of a Senior Independent As there are only two independent
Director (Provision 14) Non-Executive Directors, excluding
the Chair, it is not considered
appropriate to identify a member
of the Board as senior independent
Director. Both independent Non-Executive
Directors, as appropriate, will
act as a sounding board for the
Chair, serve as intermediaries between
Directors and Shareholders, and
evaluate the Chair's performance
as part of the Board's annual evaluation.
--------------------------------------------
Chair of the Audit Committee (Provision The Chair of the Board is the Chair
29) of the Audit Committee. The Board
considers this appointment appropriate
given the size and complexity of
the Company.
--------------------------------------------
The AIC Code is available on the AIC website ( www.theaic.co.uk
). It includes an explanation of how the AIC Code adapts the
Principles and Provisions set out in the UK Code to make them
relevant for investment companies.
Board of Directors
The Board comprises three Non-Executive Directors.
The Board's role is to promote the long-term sustainable success
of the Company, generating value for its Shareholders and
contributing to wider society.
All Directors are considered independent and day-to-day
management responsibilities are delegated to the Investment
Manager. The Directors have a combination of skills, experience and
knowledge which are relevant to the Company. Biographies of each
director are presented on page 45 of this report.
The Directors are provided with key operational information on
the Company's activities, including regulatory and statutory
requirements, by the Investment Manager and Company Secretary.
The Board has direct access to the Company Secretary and may
also take independent professional advice at the Company's expense
where necessary in the performance of their duties. During the
year, the Board was satisfied that all Directors were able to
commit sufficient time to discharge their responsibilities
effectively having given due consideration to their other
significant commitments. The Directors were advised on appointment
of the expected time required to fulfil their roles and have
confirmed that they remain able to make that commitment. No
external appointments accepted during the year were considered to
be significant for the relevant Directors, considering the expected
time commitment and nature of these roles.
All Directors have sufficient time to meet their Board
responsibilities and provide constructive challenge, strategic
guidance, offer specialist advice and hold third party service
providers to account.
The Chair, David Frank, leads the Board and is responsible for
its overall effectiveness in directing the Company. The Chair leads
the process in determining its strategy and the achievement of its
objectives. The Chair is responsible for setting the Board agenda
focusing on strategy, performance, value creation, culture,
stakeholders and ensuring that issues relevant to these areas are
reserved for Board decision. The Chair facilitates constructive
Board relations and the effective contribution of all Directors,
encouraging a culture of openness and debate and ensures the
Directors receive accurate, timely and clear information. The Chair
does not have significant commitments which conflict with his Board
responsibilities.
Appointment of New Directors
Any appointment to the Board is subject to a formal, rigorous
and transparent procedure and is based on merit and objective
criteria which promotes diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths.
Company's Operations
The Investment Manager has authority over the management of the
investment portfolio, the organisation of custodial services,
accounting and administrative services. The Investment Manager
makes investment recommendations for the Board's approval.
The Board meets regularly in person or via video conference call
at least four times a year, and on other occasions as required, to
review the investment performance and monitor compliance with the
Investment Policy laid down by the Board.
The Board's main focus is to promote the long-term sustainable
success of the Company, to deliver value for shareholders and
contribute to wider society. The Board does not routinely involve
itself in day-to-day business decisions but there is a formal
schedule of matters that requires the Board's specific approval, as
well as decisions that can be delegated to the Board
Committees.
The key matters reserved to the Board, include but are not
limited to:
-- Review investment performance and monitor compliance with the Investment Policy;
-- The consideration and approval of future developments or
changes to the Investment Policy, including risk and asset
allocation;
-- Consideration of corporate strategy;
-- Approval of any dividend or return of capital to be paid to the Shareholders;
-- The appointment, evaluation, removal and remuneration of the
Investment Manager and the Company Secretary;
-- The performance of the Company, including monitoring the Net Asset Value per share;
-- Monitoring shareholder profiles and considering shareholder communications; and
-- Approving major investments.
The Company Secretary, Hanway Advisory Limited, is responsible
for ensuring that Board procedures are complied with, advising the
Board on all governance matters, supporting the Chair and helping
the Board and its Committees to function effectively. The Company
Secretary will also provide the Board with support in ensuring that
it has the policies, processes, information, time and resources it
needs in order to function effectively.
The Company's articles of association and the schedule of
matters reserved to the Board for decision provide that the
appointment and removal of the Company Secretary is a matter for
the full Board.
The Board reviews the performance of the Investment Manager
annually taking into consideration the contractual arrangements and
scrutinises their performance. The Board as a whole carries out
this review and due to the size of the Board, does not consider it
appropriate to establish a separate Management Engagement
Committee.
Discussions of the Board
During the period, the following were the key matters considered
by the Board:
-- Approval of investee company valuations;
-- Approval of NAV;
-- Declaration of interim dividends;
-- Approval of the Company's annual report and accounts;
-- Approval of changes to Company's Investment Policy;
-- Approval of disposal of the hydroelectric portfolio; and
-- Approval of the E Share Class Premium Cancellation to create distributable reserves.
Re-election of Directors
Directors' retirement and re-election is subject to the
Company's articles of association and the AIC Code. The AIC Code
requires that all Directors should be subject to an annual
re-election. The Directors have therefore agreed to submit
themselves for annual re-election at the next AGM.
Independence of Directors
The Board has a Non-Executive Chair and two other Non-Executive
Directors, all of whom were considered independent on their
appointment. A majority of the Directors are independent of the
Investment Manager.
Simon Acland acts as an Adviser to the Triple Point Impact EIS
Service that is an Alternative Investment Fund managed by the
Investment Manager. He therefore has a business relationship with
the Investment Manager. The Board nonetheless considers Simon
Acland to be independent as the Triple Point Impact EIS Service is
an area of the Investment Manager's business which is not directly
related to that of the Company and as such does not create a
conflict between his interests as an Adviser and that of the
Company. Furthermore, the Board does not consider that such
relationship is material both with regards to remuneration or time
and would therefore be unlikely to impair his judgement.
The AIC Code outlines further circumstances that are likely to
impair a director's independence including whether a director has
served on the board for more than nine years from the date of their
first appointment. All of the Non-Executive Directors have served
on the Board for nine years or more. Length of service is currently
one of several indicators the Board considers when assessing
independence. The Board is of the view that a term of service in
excess of nine years does not in itself compromise independence and
notes the positive contribution that their long service offers. In
particular that they are better able to serve the needs of the
Company and its Shareholders by providing experience across the
business/economic cycle. The nature of the Company's business is
such that the Directors' experience and continuity is critical to
promote the long-term sustainable success and future viability of
the Company. The Board regularly reviews the independence of its
Directors and is satisfied that the Board as a whole is
independent, including in character and judgement.
Policy on Tenure of the Chair
The Board considers that the length of time each Director,
including the Chair, serves on the Board should not be limited and
has not set a finite tenure policy. Continuity, self-examination
and ability to do the job are the relevant criteria on which the
Board assesses a Director's independence. Length of service of
current Directors and future succession planning will be reviewed
each year as part of the Board evaluation process.
Board Committees
The Board only has one committee which is the Audit Committee.
The Directors consider that due to the size of the Board, there
being no employees or executive directors, it is not necessary to
appoint a separate Remuneration Committee or Nomination
Committee.
Board Meeting Attendance
During the period the following Board meetings were held and the
number attended by each Director compared with the maximum possible
attendance:
Directors Board
Meetings
David Frank, Chair 10/10
Simon Acland 8/10
Michael Stanes 10/10
The Board holds four meetings during the year on a quarterly
basis. These meetings are arranged in advance of the start of the
financial year. However, from time to time further ad hoc meetings
are scheduled to deal with transactional and specific events for
which arrangements are put in place on shorter notice and subject
to the availability of those directors available at the time.
Performance Evaluation
The Board, led by the Chair, established a formal process for a
formal and rigorous annual evaluation of the performance of the
Board, individual Directors and the Audit Committee. The evaluation
considered the composition, diversity, investment matters,
development and how effectively each member works together to
achieve its objectives.
During the period, the Board conducted a performance evaluation
by completing a written questionnaire to appraise and gather useful
learnings on the functioning of the Board, the Audit Committee and
individual Directors.
The Chair, supported by the Company Secretary, acted on the
results of the evaluation. The results of the questionnaire
demonstrated that there is a consensus that the performance and
functioning of the Board remains effective. However, the following
areas of improvement were identified with the appropriate action
approved by the Board:
Challenges and Opportunities 2022 Development Points
The Company should develop a formal Develop a formal emergency contingency
emergency succession plan to safeguard plan for the unexpected departure
short-term stability of the Board. of Directors as the sale of assets
are being managed.
----------------------------------------
Regular o versight of the Company's A short update to be provided to
investments as the disposal of assets the Board regularly to keep the Board
and investment realisations progress. up to date on developments, as well
as ensuring the actions taken by
the investment are appropriate.
----------------------------------------
Closer monitoring of the Company's An additional annual Audit Committee
service providers to ensure high quality meeting to review the performance
and effective service is provided of each service provider.
to the Company.
----------------------------------------
Succession Plan
As part of the annual evaluation in 2022, the Directors
considered length of service of the Board as a whole and considered
the regular refreshment of the Board membership.
The Board considered that, due to potential asset sales and exit
opportunities, there was a benefit of historical knowledge and
continuity of Directors, however, acknowledged that an emergency
succession plan should be prepared for the unexpected departure of
Directors.
Corporate Social Responsibility
The Board is committed to integrating environmental, social and
governance matters in the Company's business operations, including
the Company itself and the companies it invests in.
Internal Control and Risk Management
The Board has overall responsibility for establishing procedures
to manage risk, overseeing the internal control framework,
determining the nature and extent of the principal risks the
Company is willing to take in order to achieve its long-term
strategic objectives, and identifying emerging risks. The purpose
of an internal control framework is to ensure that proper
accounting records are maintained, the Company's assets are
safeguarded, and the financial information used within the business
and for publication is accurate and reliable; such a system can
only provide reasonable and not absolute assurance against material
misstatement or loss. Emerging risks are regularly monitored, and
to the extent possible or practicable, mitigating actions are
implemented.
The system of risk management and internal control is designed
to manage rather than eliminate the risk of failure to achieve
business objectives. As part of this process a bi-annual review of
the internal control systems is carried out. The review covers all
material controls including financial, operational and compliance
controls.
Following the distributions made during the financial year which
were not in compliance with the CA 2006, the Investment Manager has
implemented controls and procedures to mitigate against the risk
and ensure the omission is not repeated in the future. Further
details can be found in the Section 172 Statement.
The Directors regularly review financial results and investment
performance with the Investment Manager.
The Directors have established an ongoing process designed to
meet the particular needs of the Company in identifying, evaluating
and managing the significant and emerging risks to which it is
exposed including, among others, market risk, VCT qualifying
investment risk and operational risks which are recorded on a risk
register. The controls employed to mitigate these risks are
identified and the residual risks are rated taking into account the
impact of the mitigating factors. The risk register is reviewed
bi-annually.
The Directors regularly review the system of internal controls,
both financial and non-financial, operated by the Company and the
Investment Manager. These include controls designed to ensure that
the Company's assets are safeguarded and that proper accounting
records are maintained. Internal control systems include the
production and review of quarterly bank reconciliations and
management accounts. The Investment Manager is engaged to provide
accounting services, and the Company Secretary provides secretarial
services and retains physical custody of the documents of title
relating to investments.
Capital management is monitored and controlled by the Investment
Manager. The capital being managed includes equity and fixed
interest VCT qualifying investments, cash balances and liquid
resources including debtors and creditors. The Investment Manager's
procedures are subject to internal compliance checks.
The Company's objectives when managing capital are:
-- To safeguard its ability to continue as a going concern, so
that it can continue to provide returns to Shareholders and
benefits for other stakeholders; and
-- To ensure sufficient liquid resources are available to meet
the funding requirements of its investments and to fund new
investments where identified.
Stakeholder and Shareholder Engagement
The Company continuously interacts with a variety of
stakeholders important to its success. This includes regular
engagement with the Company's Shareholders and other stakeholders
by the Board and the Investment Manager. The Directors are
responsible for acting in a way that they consider, in good faith,
is the most likely to promote the success of the Company for the
benefit of its members. In doing so, they have regard for the needs
of stakeholders and the wider society along with the matters set
out in the Section 172(1) statement.
The Company is committed to understanding the views of its
stakeholders and maintaining effective dialogue with its key
stakeholders of which include: Shareholders; investee companies;
the Investment Manager; lenders; and the wider communities in which
the Company and its investee companies operate.
Shareholders are encouraged to attend and vote at the Company's
Annual General Meeting, along with the Company's other shareholder
meetings, so they can discuss governance and strategy and the Board
can enhance its understanding of shareholder views. The Board will
attend the Company's shareholder meetings to answer any shareholder
questions and the Chair will make himself available, as necessary,
outside of these meetings to speak to shareholders.
All investor documentation is available to download from the
Company's website:
https://www.triplepoint.co.uk/current-vcts/triple-point-income-vct-plc/s1238/.
Directors' Share Interests
The Company has not set out any formal requirements or
guidelines to Directors concerning their ownership of shares in the
Company.
On behalf of the Board
David Frank
Chair
20 July 2022
Audit Committee Report
The Audit Committee consists of the Chair, David Frank, and the
Non-Executive Directors, Simon Acland and Michael Stanes. The Audit
Committee deals with matters relating to audit, financial reporting
and internal control systems. The Committee meets at least twice a
year and as required. The Audit Committee also has direct access to
BDO LLP, the Company's auditor.
Audit Committee Role and Responsibilities
The Audit Committee has the primary responsibility for reviewing
the financial statements and the accounting principles and
practices underlying them, liaising with the external auditors and
reviewing the effectiveness of internal controls.
In respect of the year ended 31 March 2022, the Audit Committee
discharged its responsibilities by:
-- Reviewing the external auditor's plan for the audit of the
financial statements, including identification of key risks and
confirmation of auditor independence;
-- Monitoring the integrity of the financial statements of the
Company and any formal announcements relating to the Company's
financial performance, and reviewing significant financial
reporting judgements contained in them;
-- Reviewing the Company's internal financial controls and
internal control and risk management systems operated in relation
to the Company's business and assessing those controls in
minimising the impact of key risks;
-- Reviewing the appropriateness of the Company's accounting
policies;
-- Providing advice on whether the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable, and
provides the information necessary for Shareholders to assess the
Company's position and performance, business model and
strategy;
-- Reviewing the Company's half-yearly results and draft annual
financial statements prior to Board approval;
-- Making recommendations to the Board regarding the
reappointment of the external auditor and approving their
remuneration;
-- Reviewing and monitoring the external auditor's independence
and objectivity;
-- Reviewing the effectiveness of the external audit process,
taking into consideration relevant UK professional and regulatory
requirements;
-- Reviewing the Company's going concern status; and
-- Reviewing the external auditor's findings document.
Financial Reporting
The primary role of the Audit Committee in relation to financial
reporting is to review with the Investment Manager and the Auditor
the appropriateness of the half year report and Annual Report,
concentrating on, amongst other matters:
-- Compliance with financial reporting standards and relevant
financial and governance reporting requirements;
-- Amendments to legislation and corporate governance reporting
requirements;
-- The impact of any new and proposed amendments to accounting
standards which affect the Company;
-- Material areas in which significant judgements have been
applied;
-- Whether the Committee believes that proper and appropriate
processes and procedures have been followed in the preparation of
the Annual Report; and
-- Considering and recommending the contents of the Annual
Report for approval.
Significant Matters Considered by the Audit Committee in
Relation to Financial Reporting
The Audit Committee is responsible for considering and reporting
on any significant issues that arise in relation to the Financial
Statements and how they have been addressed.
The following key issues were discussed:
-- Compliance with HM Revenue & Customs conditions for
maintenance of approved Venture Capital Trust status;
-- Valuation and existence of unquoted investments; and
-- Net Asset Value of C, D and E Share Classes.
Going concern and viability statement
The Board is required to consider and report on the longer-term
viability of the business as well as assess the appropriateness of
applying the going concern assumption.
The Audit Committee has taken account of the solvency and
liquidity position of the Company from the financial statements and
the information provided by the Investment Manager on the
forecasted cash flow for the Company and expected pipeline. As a
result, the Audit Committee consider that it is appropriate to
adopt the going concern basis of preparation of the financial
statements.
External Audit
It is the Audit Committee's responsibility to monitor the
performance, objectivity, and independence of the external auditors
and this is assessed by the Committee each year. In evaluating
BDO's performance the Committee examines the effectiveness of the
audit process, independence and objectivity of the auditor, taking
into consideration the length of tenure of the external auditors,
the non-audit services undertaken during the year and relevant UK
professional and regulatory requirements, and the quality of
delivery of its services.
BDO LLP attended 1 of the 2 formal Audit Committee meetings held
during the year. Matters typically discussed include the Auditor's
assessment of the transparency and openness of the Investment
Manager, con rmation that there has been no restriction in scope
placed on them, the independence of their audit and how they have
exercised professional scepticism.
When considering whether to recommend the reappointment of the
external auditor, the Audit Committee takes into account their
current fee compared to the external audit fees paid by other
similar companies. The quality and competence of the external
auditor is also taken into consideration. The Audit Committee will
then recommend to the Board the appointment of an external auditor
which is approved by Shareholders at the forthcoming AGM.
The FRC's Ethical Standard requires the audit partner to rotate
every five years. The first audit engagement for BDO LLP was for
the year ended 31 March 2018 and this is the audit partner's fifth
year, and therefore, final year. The Audit Committee will discuss
and agree the appointment of the new audit partners with BDO in
advance of the next audit.
The independence and effectiveness of the external audit process
is assessed as part of the Board evaluation conducted annually and
by the quality and content of the audit plan provided to the Audit
Committee by the auditor and the discussions then held on topics
raised. The Audit Committee will challenge the auditor at the Audit
Committee meeting if appropriate.
The Audit Committee's terms of reference include the following
roles and responsibilities:
-- Periodically considering the need for an internal audit
function;
-- Reviewing and monitoring the external auditor's independence
and objectivity and the effectiveness of the audit process, taking
into consideration relevant UK professional regulatory
requirements;
-- Monitoring the extent to which the external auditor is
engaged to supply non-audit services; and
-- Ensuring that the Investment Manager has arrangements in
place for the investigation and follow-up of any concerns raised
confidentially by staff in relation to propriety of financial
reporting or other matters.
The Committee reviews its terms of reference and effectiveness
annually and recommends to the Board any changes required as a
result of the review.
The Board considers that the members of the Committee
collectively have the skills and experience required to discharge
their duties effectively and the Committee as a whole has
competence relevant to the sector in which it operates.
The Company does not have an independent internal audit function
as it is not deemed appropriate given the size of the Company and
the nature of the Company's business. However, the Committee
considers annually whether there is a need for such a function and,
if there were, would recommend it be established.
Non-Audit Services
The Audit Committee safeguards the objectivity and independence
of the auditor by reviewing the nature and extent of non-audit
services supplied by the external auditor to the Company.
There were no non-audit services performed during the year.
Independence
The Audit Committee is required to consider the independence of
the external auditor. In fulfilling this requirement, the Audit
Committee has considered the Audit Strategy report from BDO LLP
which describes their arrangements to identify, report and manage
any conflict of interest and their independence.
Audit Committee Meeting Attendance
During the period, the following Audit Committee meetings were
held, and the number attended by each director compared with the
maximum possible attendance:
Directors Audit Committee
Meetings
David Frank, Chair 2/2
Simon Acland 2/2
Michael Stanes 2/2
The Audit Committee relies on the Investment Manager to assess
the valuation of unquoted investments and the existence of those
investments. The Investment Manager, where appropriate, has a
director on the board of the investee companies and meets regularly
with the other directors and hence has an oversight of all the
investments made. The Audit Committee have reviewed the valuations
and discussed them with both the Investment Manager and the
external auditor to confirm their assessment of the valuation of
the unquoted investments and the existence of those
investments.
The Investment Manager has confirmed to the Audit Committee that
the conditions for maintaining the Company's status as an approved
VCT have been complied with throughout the year. The position has
been reviewed by Philip Hare & Associates LLP in its capacity
as adviser to the Company on taxation matters.
The Audit Committee has considered the Annual Report for the
year ended 31 March 2022 and has reported to the Board that it
considers it to be fair, balanced and understandable providing the
information necessary for Shareholders to assess the Company's
position, performance, business model and strategy.
On behalf of the Board.
David Frank
Audit Committee Chair
20 July 2022
Directors' Remuneration Report
Statement of the Chair
I am pleased to present the Remuneration Report on behalf of the
Board for the year ended 31 March 2022.
This report is submitted in accordance with schedule 8 of the
Large and Medium Sized Companies and Groups (Accounts and Reports)
(amendment) Regulations 2013 and The Companies (Miscellaneous
Reporting) Regulations 2018, in respect of the year ended 31 March
2022. This report also meets the Financial Conduct Authority's
Listing Rules and describes how the Board has applied the
Principles and Provisions relating to Directors' remuneration set
out in the AIC Code. The reporting requirements require two
sections to be included:
-- Directors' Remuneration Policy - This sets out our
Remuneration Policy for Directors of the Company that has been in
place since 23 July 2020 following approval by shareholders.
-- Annual Remuneration Report - This sets out how our Directors
were paid for the period ended 31 March 2022. There will be an
advisory shareholder vote on this section of the report at our 2022
AGM.
We value engagement with our Shareholders and for the
constructive feedback we receive and look forward to your support
at the forthcoming AGM.
David Frank
Chair
20 July 2022
Directors' Remuneration Policy
Approval of Remuneration Policy
The Company's Remuneration Policy was last approved on 23 July
2020 at the AGM.
Remuneration Policy Overview
The Board currently comprises three Directors, all of whom are
Non-Executive. The Board's policy is that the remuneration of
Non-Executive Directors should reflect the experience of the Board
as a whole, be fair and be comparable with that of other relevant
VCT that are similar in size and have similar investment objectives
and structures. Furthermore, the level of remuneration should be
sufficient to attract and retain the Directors needed to oversee
the Company properly and to reflect the specific circumstances of
the Company, the duties and responsibilities of the Directors and
the value and amount of time committed to the Company's affairs.
The articles of association provide that the Directors shall be
paid in aggregate a sum not exceeding GBP100,000 per annum. None of
the Directors are eligible for bonuses, pension benefits, share
options, long-term incentive schemes or other benefits in respect
of their services as Non-Executive Directors of the Company. There
are no planned changes to the Remuneration Policy last approved by
shareholders at the 2020 AGM.
Consideration of Remuneration
The Board does not have a separate Remuneration Committee, as
the Company has no employees or executive Directors. The Board has
not retained external advisers in relation to remuneration matters
but has access to information about directors' fees paid by other
companies of a similar size and type. As such, the Board as a whole
will consider the remuneration of the Directors, however no
Director is involved in determining their own remuneration. The
Board will review the remuneration of the Directors in line with
the VCT industry on an annual basis, if thought appropriate.
Otherwise, only a change in responsibilities is likely to incur a
change in remuneration of any one Director or the Remuneration
Policy itself.
Directors' Service Contracts
The Directors are engaged under letters of appointment and do
not have service contracts with the Company.
Directors' Term of Office
The Directors' letters of appointment provide for an appointment
of 12 months, after which three months' written notice must be
given by either party. Each Director will be subject to annual
re-election by Shareholders at the Company's AGM in each financial
year.
Policy on Payment for Loss of Office
A Director who ceases to hold office is not entitled to receive
any payment other than accrued fees (if any) for past services.
Consideration of Shareholder Views
The Company is committed to ongoing shareholder dialogue and
takes an active interest in voting outcomes. Where there are
substantial votes against resolutions in relation to directors'
remuneration, the Group will seek the reasons for any such vote and
will detail any resulting actions in the Directors' Remuneration
Report. No views which are relevant to the formulation of the
Directors' Remuneration Policy have been expressed to the Company
by Shareholders, whether at a general meeting or otherwise.
Future Policy Table
The Directors are entitled only to the fees as set out in the
table below. No element of Directors' remuneration is subject to
performance factors. There are no other fees payable to the
Directors for additional services outside of their contracts.
Component How it Operates Maximum Fee Link to Strategy Provisions
to Recover
or Withhold
Sums
Annual Fee Each Director receives The total aggregate The level of the There are
a basic fee which fees that can annual fee has no provisions
is paid on a quarterly be paid to the been set to attract to recover
basis. Directors is and retain high or withhold
calculated in calibre Directors sums.
accordance with with the skills
the articles and experience
of association. necessary for
the role. The
fee has been benchmarked
against companies
of a similar size.
------------------------- -------------------------- ---------------------------
Other Benefits The Directors shall Article 89 of In line with market
be entitled to be the Company's practice, the
repaid expenses. Articles of Association Company will reimburse
permits for any the Directors
director to be for expenses to
repaid reasonable ensure that they
expenses incurred are able to carry
in attending out their duties
or returning effectively.
from meetings
of the Board,
Committees of
the Board or
Shareholder meetings
or otherwise
in connection
with the performance
of their duties
as Directors
of the Company.
------------------------- -------------------------- --------------------------- ----------------
Annual Remuneration Report
Directors' Fees
Details of each Director's contract is shown below. The Chair is
paid more than the other Directors to reflect the additional
responsibilities of the role. The below annual fees for the
Directors are fixed.
Annual Rate Policy on
Date of Unexpired of Directors' Payment For
Contract Term of Contract Fees Loss of Office
GBP
David Frank, Chair 11-Nov-10 none 24,000 none
Simon Acland 12-Mar-09 none 21,000 none
Michael Stanes 21-Nov-12 none 21,000 none
-------------------- ----------- ------------------- ---------------- -----------------
Single Total Figure (audited information)
The fees paid to Directors in respect of the year ended 31 March
2022 and the prior year are shown below:
Emoluments Emoluments Emoluments
for the Change for the for the Emoluments Emoluments
year ended from year ended year ended for the year for the year
31 March prior 31 March 31 March ended 31 March ended 31
2022 year 2021 2020 2019 March 2018
GBP GBP
David Frank 24,000 0% 24,000 20,000 20,000 20,000
Simon Acland 21,000 0% 21,000 17,500 17,500 17,500
Michael Stanes 21,000 0% 21,000 17,500 17,500 17,500
66,000 0% 66,000 55,000 55,000 55,000
Employers'
NI contributions 1,448 -1.50% 1,470 1,016 1,102 1,210
--------
Total Emoluments 67,448 -0.03% 67,470 56,016 56,102 56,210
--------------------- ------------- --------
The Company has no executive Directors or employees.
Directors' emoluments compared to payments to Shareholders:
Unaudited 31 March 2022 31 March 2021
GBP'000 GBP'000
Total Dividends paid: 22,396 3,037
Directors' emoluments 66 67
------------------------- ---------------------------------
Directors' Share Interests (audited information)
At 31 March 2022, the Directors held no shares in the Company
(2021: Nil). Simon Acland's wife held 48,750 D Class Shares (2021:
48,750).
There are no other connected parties to the Directors that held
any shares at 31 March 2022. There are no requirements or
restrictions on Directors holding shares in the Company.
Company Performance
The following performance charts compare the Total Return of the
Company's C, D and E Share Classes over the period from admission
to 31 March 2022 with the Total Return from notional investments in
the FTSE SmallCap Index and FTSE All Share Index over the same
period. The indices chosen are considered to be the most
appropriate broad equity markets for comparative purposes.
Shareholders should be reminded that shares in VCTs generally
continue to trade at a discount to the NAV of the Company.
The Total Return does not include the initial 30% tax relief
available to Shareholders.
FTSE All
FTSE SmallCap Share C Share Class
-----------------------------------------
Rebased at Rebased at Nav + Rebased at
Date 100 100 NAV Div Div 100
--------------- ------------ -------- ------- -------- ------------
31-Mar-14 100.00 100.00 97.62 97.62 100.00
--------------- ------------ -------- ------- -------- ------------
30-Sep-14 97.87 99.39 98.45 98.45 100.85
--------------- ------------ -------- ------- -------- ------------
31-Mar-15 102.81 103.04 99.76 99.76 102.19
--------------- ------------ -------- ------- -------- ------------
30-Sep-15 100.22 93.82 101.16 101.16 103.62
--------------- ------------ -------- ------- -------- ------------
31-Mar-16 101.56 95.49 105.03 105.03 107.58
--------------- ------------ -------- ------- -------- ------------
30-Sep-16 111.22 105.62 101.37 5.00 106.37 108.95
--------------- ------------ -------- ------- -------- ------------
31-Mar-17 121.41 112.22 106.49 0.00 111.49 114.19
--------------- ------------ -------- ------- -------- ------------
30-Sep-17 127.71 113.90 104.92 5.00 114.92 117.70
--------------- ------------ -------- ------- -------- ------------
31-Mar-18 125.04 109.52 112.84 0.00 122.84 125.81
--------------- ------------ -------- ------- -------- ------------
30-Sep-18 130.16 116.09 111.83 0.00 121.83 124.78
--------------- ------------ -------- ------- -------- ------------
31-Mar-19 122.21 111.88 134.58 5.00 149.58 153.20
--------------- ------------ -------- ------- -------- ------------
30-Sep-19 122.24 114.23 132.80 0.00 147.80 151.38
--------------- ------------ -------- ------- -------- ------------
31-Mar-20 95.30 87.39 84.87 55.00 154.87 158.62
--------------- ------------ -------- ------- -------- ------------
30-Sep-20 112.68 92.31 83.19 3.50 156.69 160.48
--------------- ------------ -------- ------- -------- ------------
31-Mar-21 151.59 107.74 83.30 0.00 156.80 160.59
--------------- ------------ -------- ------- -------- ------------
30-Sep-21 166.74 114.15 81.56 1.75 156.81 160.60
--------------- ------------ -------- ------- -------- ------------
31-Mar-22 155.47 117.77 7.75 72.50 155.50 159.26
--------------- ------------ -------- ------- -------- ------------
FTSE All
FTSE SmallCap Share D Share Class
Rebased at Rebased at Nav + Rebased at
Date 100 100 NAV Div Div 100
--------------- ------------ -------- ------- -------- ------------
31-Mar-15 100.00 100.00 98.15 98.15 100.00
--------------- ------------ -------- ------- -------- ------------
30-Sep-15 97.48 91.06 99.85 99.85 101.73
--------------- ------------ -------- ------- -------- ------------
31-Mar-16 98.78 92.68 101.26 101.26 103.17
--------------- ------------ -------- ------- -------- ------------
30-Sep-16 108.17 102.51 103.08 103.08 105.02
--------------- ------------ -------- ------- -------- ------------
31-Mar-17 118.08 108.92 105.19 105.19 107.17
--------------- ------------ -------- ------- -------- ------------
30-Sep-17 124.21 110.55 101.90 5.00 106.90 108.91
--------------- ------------ -------- ------- -------- ------------
31-Mar-18 121.62 106.30 107.98 0.00 112.98 115.10
--------------- ------------ -------- ------- -------- ------------
30-Sep-18 126.60 112.68 104.82 0.00 109.82 111.88
--------------- ------------ -------- ------- -------- ------------
31-Mar-19 118.87 108.60 117.34 5.00 127.34 129.73
--------------- ------------ -------- ------- -------- ------------
30-Sep-19 118.90 110.88 113.54 5.00 128.54 130.95
--------------- ------------ -------- ------- -------- ------------
31-Mar-20 92.69 84.83 62.46 50.00 127.46 129.85
--------------- ------------ -------- ------- -------- ------------
30-Sep-20 109.59 89.60 58.60 5.00 128.60 131.01
--------------- ------------ -------- ------- -------- ------------
31-Mar-21 147.43 104.58 59.59 0.00 129.59 132.02
--------------- ------------ -------- ------- -------- ------------
30-Sep-21 162.17 110.80 58.57 1.75 130.32 132.76
--------------- ------------ -------- ------- -------- ------------
31-Mar-22 151.20 114.32 8.67 45.00 125.42 127.77
--------------- ------------ -------- ------- -------- ------------
FTSE SmallCap FTSE All Share E Share Class
Rebased at Rebased at Nav + Rebased at
Date 100 100 NAV Div Div 100
--------------- ---------------- -------- ------- -------- ------------
30-Sep-17 100.00 100.00 99.25 99.25 100.00
--------------- ---------------- -------- ------- -------- ------------
31-Mar-18 97.91 96.15 98.32 98.32 99.06
--------------- ---------------- -------- ------- -------- ------------
30-Sep-18 101.92 101.92 99.34 99.34 100.09
--------------- ---------------- -------- ------- -------- ------------
31-Mar-19 95.69 98.23 102.55 102.55 103.32
--------------- ---------------- -------- ------- -------- ------------
30-Sep-19 95.71 100.29 101.35 101.35 102.11
--------------- ---------------- -------- ------- -------- ------------
31-Mar-20 74.61 76.73 101.69 5.00 106.69 107.49
--------------- ---------------- -------- ------- -------- ------------
30-Sep-20 88.21 81.05 96.31 6.50 107.81 108.62
--------------- ---------------- -------- ------- -------- ------------
31-Mar-21 118.67 94.60 94.59 106.09 106.89
--------------- ---------------- -------- ------- -------- ------------
30-Sep-21 130.53 100.23 91.38 3.50 106.38 107.18
--------------- ---------------- -------- ------- -------- ------------
31-Mar-22 121.70 103.41 76.76 17.50 109.26 110.08
--------------- ---------------- -------- ------- -------- ------------
These charts have been prepared in accordance with Part 3 to
Schedule 8 of the CA 2006. The Company measures its performance
against its target returns as detailed in the Strategic Report.
The charts do not take in to account the tax benefit of
investing in a VCT.
Statement of Voting at the Annual General Meeting
The resolutions to approve the Directors' Remuneration Report
was passed at the AGM on 28 July 2021 and the Directors'
Remuneration Policy was passed at the AGM on 23 July 2020 on a show
of hands. Details of the proxy votes in respect of the resolution
are as set out below:
Voting for Voting Against Votes Withheld
Remuneration
Report 99.91% 0.09% 24,278
------------ ---------------- ----------------
Remuneration
Policy 97.56% 2.44% 24,277
------------ ---------------- ----------------
During the year, the Company did not receive any communications
from Shareholders specifically regarding Directors' pay.
On behalf of the Board,
David Frank
Chair
20 July 2022
Directors' Report
The Directors are pleased to present the Directors' Report for
the year ended 31 March 2022.
The information that fulfils the requirements of the Corporate
Governance Statement in accordance with rule 7.2 of the DTR can be
found in this Directors' Report and in the Governance section all
of which is incorporated into this Directors' Report by
reference.
Directors
The Directors of the Company during the period were David Frank,
Simon Acland and Michael Stanes.
Principal Activity and Status
The principal activity of the Company is that of a VCT and its
main activity is investing in companies involved in renewable
energy, energy production, controlled environment agriculture, and
SME funding.
The Company has been approved as a VCT by HMRC, in accordance
with Section 274 of the Income Tax Act 2007 and, in the opinion of
the Directors, has conducted its affairs so as to enable it to
continue to obtain such approval. In order to maintain its status
under VCT legislation, a VCT must comply on a continuing basis with
the provisions of Section 274.
The Company is registered in England as a Public Limited Company
(Registration number 06421083) and its shares are listed on the
main market of the London Stock Exchange.
The Company was not at any time up to the date of this report a
close company within the meaning of S439 of the Corporation Tax Act
2010.
Post Balance Sheet Events
Further details of post balance sheet events can be seen in note
23 to the Financial Statements.
Directors' and Officers' Liability Insurance
The Company has, as permitted by Section 233 of the CA 2006,
maintained insurance cover on behalf of the Directors and Company
Secretary, indemnifying them against certain liabilities which may
be incurred by them in relation to their offices with the
Company.
Research and Development
No expenditure on research and development was made during the
year (2021: Nil).
Management
TPIM acts as Investment Manager to the Company and has done
since incorporation. The principal terms of the Company's
management agreement with TPIM are set out in note 5 to the
Financial Statements.
The Board has evaluated the performance of the Investment
Manager based on the returns generated since taking on the
management of the Company and a review of the management contract
and the services provided in accordance with its terms. As required
by the Listing Rules, the Directors confirm that in their opinion
the continuing appointment of TPIM as Investment Manager is in the
best interests of the Shareholders as a whole. In reaching this
conclusion the Directors have taken into account the performance of
other VCTs managed by TPIM and the service provided by TPIM to the
Company.
Substantial Shareholdings
As at the date of this report no disclosures of major
shareholdings had been made to the Company under Disclosure and
Transparency rule 5 (Vote Holder and Issuer Notification
Rules).
Share Price Discount Policy
The Company has a share buy-back facility, committing to buy
back shares at no more than a 10% discount to the prevailing NAV,
subject to the Directors' discretion. We will be asking
Shareholders at the AGM to extend the facility for the Company to
purchase shares in the market for cancellation. Shareholders should
note that if they sell their shares within five years of
subscription, they forfeit any tax relief obtained. If you are
considering selling your shares, please contact TPIM on 020 7201
8989.
Purchase of Own Shares
The Directors may exercise on behalf of the Company its powers
to purchase its own shares to the extent permitted by Shareholders
and the articles of association.
Streamlined Energy and Carbon Reporting
The Company has no greenhouse gas emissions to report from its
operations, nor does it have responsibility for any other emission
producing sources under the CA 2006 (Strategic Report and
Directors' Reports) Regulations 2013. The Company has outsourced
operations to third parties, there are no significant greenhouse
gas emissions to report from the operations of the Company. The
Group qualifies as a low energy user at under 40,000 kWh and is
therefore exempt from disclosures on greenhouse gas emissions and
energy consumption.
To note, the Company has invested in renewable energy, through
its portfolio of hydroelectric companies. It has also invested in a
company that operates a gas fired energy centre. Natural gas neatly
bridges the gap between environmentally unfriendly fossil fuels and
more irregular solar and wind power. Gas fired energy centres play
an important role in balancing the UK electricity network, which is
growing ever more reliant on renewable energy sources, as the
nation shifts towards a low-carbon economy.
The Company also has an investment in a controlled environment
agriculture business. Controlled environment agriculture is
beneficial for the environment because it massively reduces the
amount of fossil fuels needed for farming equipment which is not
required to sow, fertilise, weed or harvest crops. A controlled
environment agriculture facility offers the opportunity to
completely eliminate the need for pesticides as pests cannot enter
the controlled environment to cause crop damage and fungal diseases
struggle to develop. When it comes to food production, the
last-mile delivery is usually the most expensive part of the supply
chain and it is not uncommon for crops to be shipped across
continents and oceans. Growing food closer to where the consumer
lives is a benefit as it can substantially reduce transportation
costs, CO2 emissions and reduce the need for refrigerated
storage.
More information on the Company's hydroelectric portfolio, gas
fired energy centres, rooftop solar panels and the controlled
environment agriculture facility can be found in the Investment
Manager's Review.
Share Capital
As at 31 March 2022 the Company's issued shares amounted to
55,957,801 consisting of 13,413,088 C Shares of 1p each, 13,604,637
D Shares of 1p each and 28,940,076 E Shares of 1p each.
As at that date none of the issued shares were held by the
Company as treasury shares.
There are no restrictions on the transfer of securities in the
Company other than the Group's Share Dealing Code and other certain
restrictions which may be impaired by law, for example, the Market
Abuse Regulations.
The Company is not aware of any agreements between holders of
securities that may result in restrictions on transferring
securities in the Company. There are no securities of the Company
carrying special rights with regards to the control of the Company
in issue.
Dividends
During the year the directors identified an accounting issue in
respect of the payment of certain interim dividends to shareholders
between 30 July 2021 to 14 January 2022 which were made otherwise
than in accordance with the CA 2006. As part of the process of
rectifying the dividend the Company is entering into a deed of
release with the Directors to release all liabilities. The entering
into of the deed of release constitutes a related party transaction
for the purposes of the Listing Rules, and therefore, the circular
will be approved by the Financial Conduct Authority. The Company
will propose resolutions at a general meeting to be held on 2
September 2022 to rectify the payment of the unlawful distributions
as follows: (i) to appropriate the newly created distributable
reserves to the payment of the unlawful distributions, (ii) to
release the directors of the Company at the time the unlawful
distributions were made from any and all potential liability
arising from the unlawful distributions, and (iii) to release the
shareholders (and if deceased, their successors in title) who
received the unlawful distributions from any and all potential
liability arising from the unlawful distributions.
Annual General Meeting
The 2022 AGM will be held on 2 September 2022.
Amendment of Articles of Association
The Company's articles of association may be amended by the
members of the Company by special resolution (requiring a majority
of at least 75% of the persons voting on the relevant
resolution).
Appointment and Replacement of Directors
A person may be appointed as a Director of the Company by the
Shareholders in general meeting by ordinary resolution (requiring a
simple majority of the persons voting on the relevant resolution)
or by the Directors. No person, other than a Director retiring by
rotation or otherwise, shall be appointed or re-appointed a
Director at any general meeting unless he is recommended by the
Directors or, not less than seven nor more than 42 clear days
before the date appointed for the meeting, notice is given to the
Company of the intention to propose that person for appointment or
re-appointment in the form and manner set out in the Company's
articles of association.
Each Director who is appointed by the Directors (and who has not
been elected as a Director of the Company by the members at a
general meeting held in the interval since his appointment as a
Director of the Company) is to be subject to election as a Director
of the Company by the members at the first AGM of the Company
following his or her appointment. Thereafter all Directors are
subject to re-election at each AGM of the Company.
A person also ceases to be a Director if he or she resigns in
writing, ceases to be a Director by virtue of any provision of the
Companies Act, becomes prohibited by law from being a Director,
becomes bankrupt or is the subject of a relevant insolvency
procedure, or becomes of unsound mind, or if the Board so decides
following at least six months' absence without leave or if he or
she becomes subject to relevant procedures under the mental health
laws, as set out in the Company's articles of association.
Powers of the Directors
Subject to the provisions of the CA 2006, the memorandum and
articles of association of the Company and any directions given by
Shareholders by special resolution, the articles of association
specify that the business of the Company is to be managed by the
Directors, who may exercise all the powers of the Company, whether
relating to the management of the business or not.
Conflicts of Interest
The Directors review the disclosure of conflicts of interest
quarterly, with changes reviewed and noted at the beginning of each
Board meeting. A Director who has a potential conflict of interest
has the interest authorised and acknowledged by the Board.
Procedures to disclose and authorise conflicts have been adhered to
throughout the year.
Directors' Responsibilities
The Directors confirm that:
-- So far as each of the Directors is aware there is no relevant
audit information of which the Company's auditor is unaware;
and
-- The Directors have taken all steps that they ought to have
taken as Directors in order to make themselves aware of any
relevant audit information and to establish that the auditor is
aware of that information.
Auditor
BDO LLP is the appointed auditor of the Company and offer
themselves for reappointment. In accordance with section 489 (4) of
the CA 2006 a resolution to reappoint BDO LLP as auditor and to
authorise the Directors to fix their remuneration will be proposed
at the forthcoming AGM.
Going Concern
After making the necessary enquiries, the Directors confirm that
they are satisfied that the Company has adequate resources to
continue in business for at least the next 12 months.
The Board receives regular reports from the Investment Manager
and the Directors believe that, as no material uncertainties
leading to significant doubt about going concern have been
identified, it is appropriate to continue to apply the going
concern basis in preparing the Financial Statements. Further
information on the going concern of the Company can be found in the
Strategic report.
Annual Report
The Board is of the opinion that the Annual Report, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for Shareholders to assess the position,
performance, strategy and business model of the Company.
The Board recommends that the Annual Report, the Directors'
Report and the Independent Auditor's Report for the year ended 31
March 2022 are received and adopted by the Shareholders. A
resolution concerning this will be proposed at the forthcoming
AGM.
VCT Regulation
The Investment Policy is designed to ensure that the Company
continues to qualify and is approved as a VCT by HMRC. In order to
maintain its status under VCT legislation, a VCT must comply on a
continuing basis with the provisions of section 274 of the Income
Tax Act 2007 as follows:
(1) The Company's income must be derived wholly or mainly from shares and securities;
(2) At least 80% of the HMRC value of its investments must have
been represented throughout the year by shares or securities that
are classified as "qualifying holdings". This increased from 70%
from 1 March 2020;
(3) At least 70% by HMRC value of its total qualifying holdings
must have been represented throughout the year by holdings of
"eligible share". Investments made before 6 April 2018 from funds
raised before 6 April 2011 are excluded from this requirement;
(4) At least 30% of funds raised in accounting periods beginning
on or after 6 April 2018 must be invested in qualifying holdings by
the anniversary of the end of the accounting period in which funds
were raised;
(5) At the time of investment, or addition to an investment, the
Company's holdings in any one company must not have exceeded 15% by
HMRC value of its investments;
(6) The Company must not have retained greater than 15% of its
income earned in the year from shares and securities;
(7) The Company's shares, throughout the year, must have been
listed on a regulated European market;
(8) An investment in any company must not cause that company to
receive more than GBP5 million in state aid risk finance in the 12
months up to date of the investment, nor more than GBP12 million in
total (the limits are GBP10 million and GBP20 million respectively
for a "knowledge intensive" company);
(9) The Company must not invest in a company whose trade is more
than seven years old (ten years for a "knowledge intensive"
company) unless the Company previously received state and risk
finance in its first seven years, or the company is entering a new
market and a turnover test is satisfied;
(10) The Company's investment in another company must not be
used to acquire another business, or shares in another company;
and
(11) The Company may only make qualifying investments or certain
non-qualifying investments permitted by section 274 of the Income
Tax Act 2007.
Environment
The management and administration of the Company is undertaken
by the Investment Manager. TPIM recognises the importance of its
environmental responsibilities, monitors its impact on the
environment, and designs and implements policies to reduce any
damage that might be caused by its activities. Initiatives designed
to minimise the Company's impact on the environment include
recycling and reducing energy consumption.
Anti-Bribery Policy
The Company has a zero-tolerance approach to bribery, and will
not tolerate bribery under any circumstances in any transaction the
Company is involved in.
TPIM reviews the anti-bribery policies and procedures of all
portfolio companies.
Environmental, Social, Employee and Human Rights Issues
As an externally managed investment company with no employees
the Company does not maintain specific policies in relation to
these matters. Due to the nature of the Company's activities, there
being no employees and only three Non-Executive Directors, there
are no Human Rights issues to report. Its investment in companies
engaged in energy generation from renewable sources means it will
contribute to the reduction in carbon emissions.
Diversity
The Company is an externally managed investment company which
does not have any employees or office space. As such the Company
does not operate a diversity policy with regards to any
administrative, management and supervisory functions.
Employees
The Company has no employees and accordingly no requirement to
separately report on this area.
The Investment Manager is an equal opportunities employer who
respects and seeks to empower each individual and the diverse
cultures, perspectives, skills and experiences within its
workforce. The Investment Manager places great importance on
Company culture and the wellbeing of its employees and considers
various initiatives and events to ensure a positive work
environment.
Co-Investment
The Company co-invests with other venture capital trusts and
funds managed by TPIM.
Matters Covered in the Strategic Report
The information that fulfils the reporting requirements relating
to the following matters can be found on the pages identified.
Matter Page Reference
Future Developments 8 to 12
----------------
On behalf of the Board.
David Frank
Chair
20 July 2022
Directors' Responsibility Statement
The Directors are responsible for preparing the annual report
and the financial statements in accordance with UK adopted
international accounting standards and applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Company financial statements in
accordance with UK adopted international accounting standards.
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 of the Company and of the profit or
loss for the Company for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with UK
adopted international accounting standards, subject to any material
departures disclosed and explained in the financial statements;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business; and
-- prepare a Directors' report, a strategic report and
directors' remuneration report which comply with the requirements
of the CA 2006.
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 comply with the CA 2006.
They are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities. The Directors are
responsible for ensuring that the annual report and accounts, taken
as a whole, are fair, balanced, and understandable and provides the
information necessary for Shareholders to assess the Company's
performance, business model and strategy.
The Directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
The Directors have delegated the hosting and maintenance of the
Company's website content to TPIM and its materials are published
on the TPIM website www.triplepoint.co.uk . Legislation in the
United Kingdom governing the preparation and dissemination of
Financial Statements may differ from legislation in other
jurisdictions.
Directors' responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
-- the financial statements have been prepared in accordance
with the applicable set of accounting standards , give a true and
fair view of the assets, liabilities, financial position and profit
and loss of the Company ; and
-- the annual report includes a fair review of the development
and performance of the business and the financial position of the
Company, together with a description of the principal risks and
uncertainties that they face .
On behalf of the Board.
David Frank
Chair
20 July 2022
Statement of Comprehensive Income
For the year ended 31 March 2022
Year ended Year ended
31 March 2022 31 March 2021
------------------------------- -------------------------------
Note Rev. Cap. Total Rev. Cap. Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income
Investment income 4 1,488 - 1,488 2,274 - 2,274
Gain/(loss) arising on the
disposal of investments during
the year 12 - 1,254 1,254 - (204) (204)
Gain/(Loss) arising on the
revaluation of investments
at the year end 12 - 683 683 - (173) (173)
Investment return/(loss) 1,488 1,937 3,425 2,274 (377) 1,897
--------- --------- --------- --------- --------- ---------
Investment management fees 5 616 205 821 708 236 944
Performance Fees 6 - 1,732 1,732 - 5 5
Other expenses 6 575 - 575 402 - 402
Finance costs 7 116 - 116 104 - 104
1,307 1,937 3,244 1,214 241 1,455
--------- --------- --------- --------- --------- ---------
Profit/(loss) before taxation 181 - 181 1,060 (618) 442
--------- --------- --------- --------- --------- ---------
Taxation 10 (30) 23 (7) (125) 46 (79)
Profit/(loss) after taxation 151 23 174 935 (572) 363
--------- --------- --------- --------- --------- ---------
Other comprehensive income - - - - - -
Total comprehensive income/(loss) 151 23 174 935 (572) 363
--------- --------- --------- --------- --------- ---------
Basic and diluted earnings/(loss)
per share (pence)
C Share 11 (0.92p) (0.40p) (1.32p) 2.27p (0.34p) 1.93p
D Share 11 0.45p (4.62p) (4.17p) 2.35p (0.27p) 2.08p
E Share 11 0.73p 2.44p 3.17p 1.08p (1.69p) (0.61p)
The total column of this statement is the Statement of
Comprehensive Income of the Company prepared in accordance with
UK-adopted International AccountingStandards (IFRS). The
supplementary revenue return and capital columns have been prepared
in accordance with the Association of Investment Companies
Statement of Recommended Practice (AIC SORP) in so far as it does
not conflict with IFRS.
All revenue and capital items in the above statement derive from
continuing operations.
This Statement of Comprehensive Income includes all recognised
gains and losses.The accompanying notes are an integral part of
these statements.
Balance Sheet
at 31 March 2022
31 March
31 March 2022 2021
Note GBP'000 GBP'000
Non-current assets
Financial assets at fair
value through profit or
loss 12 20,134 48,022
--------------- ----------
Current assets
Receivables 13 725 984
Cash and cash equivalents 14 3,831 521
4,556 1,505
--------------- ----------
Total Assets 24,690 49,527
--------------- ----------
Current liabilities
Payables and accrued expenses 16 248 452
Current taxation payable 11 93
Short-term debt facility - 2,300
259 2,845
--------------- ----------
Net Assets 24,431 46,682
=============== ==========
Equity attributable to
equity holders of the
parent
Share capital 18 560 560
Share redemption reserve 1 1
Share premium - 28,661
Special distributable
reserve 23,628 10,555
Capital reserve 7,505 6,891
Revenue reserve (7,263) 14
Total equity 24,431 46,682
=============== ==========
Shareholder' funds
C Share 20 7.75p 83.30p
D Share 20 8.67p 59.59p
E Share 20 76.76p 94.59p
The statements were approved by the Directors and authorised for
issue on 20 July 2022 and are signed on behalf of the Board by:
David Frank
Chair
20 July 2022
The accompanying notes are an integral part of this
statement
Statement of Changes in Shareholders' Equity
For the year ended 31 March 2022
Share Special
Issued Redemption Share Distributable Capital Revenue
Capital Reserve Premium Reserve Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31
March 2022
Opening balance 560 1 28,661 10,555 6,891 14 46,682
Purchase of own
shares - - - - - (29) (29)
Cancellation of
share premium - - (28,661) 28,661 - - -
Dividends paid - - - (15,588) - (6,808) (22,396)
Transfer from
revenue to
unrealised* - - - - 591 (591) -
Transactions
with
owners - - (28,661) 13,073 591 (7,428) (22,425)
(Loss)/profit
for the year - - - - 23 151 174
Other
comprehensive
income - - - - - - -
(Loss)/profit
and total
comprehensive
income for the
year - - - - 23 151 174
Balance at 31
March 2022 560 1 - 23,628 7,505 (7,263) 24,431
Capital reserve
consists of:
Investment
holding
gains 3,762
Other realised
gains 3,743
7,505
Year ended 31
March 2021
Opening balance 561 - 28,661 12,960 6,844 381 49,407
Purchase of own
shares (1) 1 - - - (51) (51)
Dividends paid - - - (2,405) - (632) (3,037)
Transfer from
revenue to
unrealised* - - - - 619 (619) -
Transactions
with
owners (1) 1 - (2,405) 619 (1,302) (3,088)
(Loss)/profit
for the year - - - - (572) 935 363
Other
comprehensive
income - - - - - - -
(Loss)/profit
and total
comprehensive
income for the
year - - - - (572) 935 363
Balance at 31
March 2021 560 1 28,661 10,555 6,891 14 46,682
Capital reserve
consists of:
Investment
holding
gains 9,825
Other realised
losses (2,934)
6,891
*Transfer from revenue reserve to capital reserve relates to
capitalised interest on investment loans which is unrealised to
unrealised relates to capitalisation of accrued interest on
investment loans.
The capital reserve represents the proportion of investment
management fees charged against capital and realised/unrealised
gains or losses on the disposal/revaluation of investments. The
unrealised element of the capital reserve is not distributable. The
special distributable reserve was created on court cancellation of
the share premium account. The revenue, special distributable and
realised capital reserves are distributable by way of dividend.
At 31 March 2022, the total reserves available for distribution
are GBP20,108,000 (2021: GBP7,635,000). This consists of the
special distributable reserve net of the realised capital loss and
revenue reserve. To maintain VCT status amounts, the special
distributable reserves are not distributable until after the third
accounting period following the relevant allotments of share
capital.
Statement of Cash Flows
For the year ended 31 March 2021
Year ended Year ended
31 March
31 March 2022 2021
GBP'000 GBP'000
Cash flows from operating activities
Profit before taxation 181 442
Adjustments for:
Add back financing costs 116 104
Movement in accrued income recognised
as an unrealised gain (591) (619)
(Loss)/Gain arising on the disposal
of investments during the period (1,254) 204
(Loss)/Gain arising on the revaluation
of investments at the period end (683) 173
Cash flow generated by operations (2,231) 304
Decrease/(Increase) in receivables 256 (198)
(Decrease)/increase in payables (204) 22
Cash flows generated from operating
activities (2,179) 128
--------------------------- ------------
Tax paid (89) (98)
Net cash flows (used in)/generated
from operating activities (2,268) 30
--------------------------- ------------
Cash flow from investing activities
Proceeds of sale of financial assets
at fair value through profit or
loss 30,419 2,982
Net cash flows generated from investing
activities 30,419 2,982
--------------------------- ------------
Cash flows from financing activities
Repayment of capital (29) (51)
Dividends paid (22,396) (3,037)
Repayment of loan (2,300) -
Financing costs (116) (104)
Net cash flows used in financing
activities (24,841) (3,192)
--------------------------- ------------
Net increase/(decrease) in cash
and cash equivalents 3,310 (180)
=========================== ============
Reconciliation of net cash flow
to movements in cash and cash equivalents
Opening cash and cash equivalents 521 701
Net increase/(decrease) in cash
and cash equivalents 3,310 (180)
Closing cash and cash equivalents 3,831 521
=========================== ============
The accompanying notes are an integral part of these
statements.
Unaudited Non-Statutory Analysis of - The C Shares
Statement of Comprehensive
Income
Year ended Year ended
31 March 2022 31 March 2021
------------------------------------ -------------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 175 - 175 GBP'000 GBP'000 GBP'000
Realised gain on investments - 1,277 1,277 602 - 602
Unrealised loss on
investments - - - - - -
Investment return 175 1,277 1,452 602 - 602
Investment management
fees (180) (1,331) (1,511) (217) (56) (273)
Other expenses (120) - (120) (62) - (62)
(Loss)/profit before
taxation (125) (54) (179) 323 (56) 267
Taxation - - - (20) 11 (9)
(Loss)/profit after
taxation (125) (54) (179) 303 (45) 258
(Loss)/profit and
total comprehensive
(loss)/income for
the period (125) (54) (179) 303 (45) 258
--------- --------- ---------- --------- --------- ---------
Basic and diluted
(loss)/earnings per
share (0.92p) (0.40p) (1.32p) 2.27p (0.34p) 1.93p
--------- --------- ---------- --------- --------- ---------
Balance Sheet 31 March 2022 31 March 2021
GBP'000 GBP'000
Non-current assets
Financial assets at
fair value through
profit or loss - 11,244
---------- ---------
Current assets
Receivables 255 252
Cash and cash equivalents 835 120
1,090 372
Current liabilities
Payables (55) (113)
Corporation tax - (9)
Short-term debt facility - (300)
---------- ---------
Net assets 1,035 11,194
---------- ---------
Equity attributable
to equity holders 1,035 11,194
---------- ---------
Net asset value per
share 7.75p 83.30p
---------- ---------
Statement of Changes in
31 March
Shareholders' Equity 31 March 2022 2021
GBP'000 GBP'000
Opening shareholders' funds 11,194 11,406
Purchase of shares (21)
(Loss)/profit for the period (179) 258
Dividends paid (9,959) (470)
Closing shareholders' funds 1,035 11,194
--------------- ----------
Unaudited Non-Statutory Analysis of - The C Shares
Investment
Portfolio 31 March 2022 31 March 2022
---------------------------------------- ----------------------------------------
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted
qualifying
holdings - - - - 7,384 98.40 11,244 98.95
Unquoted
non-qualifying
holdings - - - - - - - -
Financial
assets at
fair value
through profit
or loss - - - - 7,384 98.40 11,244 98.95
Cash and cash
equivalents 835 100.00 835 100.00 120 1.60 120 1.05
835 100.00 835 100.00 7,504 100.00 11,364 100.00
Qualifying
Holdings
Unquoted
Hydroelectric
Power
Green Highland
Allt
Choire A
Bhalachain
(255) Limited - - - - 2,466 32.86 2,965 26.09
Green Highland
Allt
Phocachain
(1015) Limited - - - - 1,576 21.00 2,136 18.80
Achnacarry
Hydro Ltd - - - - 3,342 44.54 6,143 54.06
- - - - 7,384 98.40 11,244 98.95
Unaudited Non-Statutory Analysis of - The D Shares
Statement of
Comprehensive
Income
Year ended Year ended
31 March 2022 31 March 2021
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 337 - 337 676 - 676
Realised loss on
investment - (153) (153) - - -
Unrealised loss on
investments - 7 7 - - -
Investment return 337 (146) 191 676 - 676
Investment management
fees (115) (483) (598) (236) (46) (282)
Other expenses (161) - (161) (45) - (45)
Profit/(loss) before
taxation 61 (629) (568) 395 (46) 349
Taxation - - - (75) 9 (66)
Profit/(loss) after
taxation 61 (629) (568) 320 (37) 283
Profit/(loss) and
total comprehensive
income/(loss) for
the period 61 (629) (568) 320 (37) 283
Basic and diluted
earnings/(loss) per
share 0.45p (4.62p) (4.17p) 2.35p (0.27p) 2.08p
Balance Sheet 31 March 2022 31 March 2021
GBP'000 GBP'000
Non-current assets
Financial assets at
fair value through
profit or loss 509 10,036
Current assets
Receivables 258 206
Cash and cash
equivalents 431 17
689 223
Current liabilities
Payables (20) (86)
Corporation tax - (67)
Short-term debt
facility - (2,000)
Net assets 1,178 8,106
Equity attributable
to equity holders 1,178 8,106
Net asset value per
share 8.67p 59.59p
Statement of Changes
in
Shareholders' equity 31 March 2022 31 March 2021
GBP'000 GBP'000
Opening shareholders'
funds 8,106 8,559
Purchase of own shares - (51)
(Loss)/profit for
the period (568) 283
Dividends paid (6,360) (685)
Closing shareholders'
funds 1,178 8,106
Unaudited Non-Statutory Analysis of - The D Shares
Investment
Portfolio 31 March 2022 31 March 2021
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted
qualifying
holdings 761 63.84 509 54.15 8,247 99.80 10,036 99.83
Unquoted
non-qualifying
holdings - - - - - - - -
Financial assets
at fair value
through
profit or loss 761 63.84 509 54.15 8,247 99.80 10,036 99.83
Cash and cash
equivalents 431 36.16 431 45.85 17 0.20 17 0.17
1,192 100.00 940 100.00 8,264 100.00 10,053 100.00
Qualifying
Holdings
Unquoted
Hydroelectric
Power
Elementary
Energy - - - - 337 4.08 380 3.78
Green Highland
Allt
Ladaidh (1148)
Limited - - - - 3,374 40.83 4,622 45.98
Green Highland
Allt
Luaidhe (228)
Limited - - - - 1,918 23.21 2,341 23.29
Green Highland
Allt
Phocachain
(1015)
Limited - - - - 1,857 22.47 2,191 21.79
Green Highland
Shenval Limited 761 63.84 509 54.15 761 9.21 502 4.99
761 63.84 509 54.15 8,247 99.80 10,036 99.83
Unaudited Non-Statutory Analysis of - The E Shares
Statement of
Comprehensive
Income
Year ended Year ended
31 March 2022 31 March 2021
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 976 - 976 996 - 996
Realised
gain/(loss)
on investments - 130 130 - (204) (204)
Unrealised
gain/(loss)
on investments - 676 676 - (173) (173)
Investment return 976 806 1,782 996 (377) 619
Investment
management
fees (448) (123) (571) (502) (139) (641)
Other expenses (283) - (283) (152) - (152)
Profit/(loss)
before
taxation 245 683 928 342 (516) (174)
Taxation (30) 23 (7) (30) 26 (4)
Profit/(loss)
after
taxation 215 706 921 312 (490) (178)
Profit/(loss) and
total
comprehensive
income/(loss) for
the period 215 706 921 312 (490) (178)
Basic and diluted
earnings/(loss)
per
share 0.73p 2.44p 3.17p 1.08p (1.69p) (0.61p)
Balance Sheet 31 March 2022 31 March 2021
GBP'000 GBP'000
Non-current
assets
Financial assets
at
fair value
through
profit or loss 19,625 26,742
Current assets
Receivables 212 526
Cash and cash
equivalents 2,565 384
2,777 910
Current
liabilities
Payables (173) (253)
Corporation tax (11) (17)
Net assets 22,218 27,382
Equity
attributable
to equity holders 22,218 27,382
Net asset value
per
share 76.76p 94.59p
Statement of
Changes
in
Shareholders'
equity 31 March 2022 31 March 2021
GBP'000 GBP'000
Opening
shareholders'
funds 27,382 29,442
Purchase of own
share (8) -
Profit/(Loss) for
the period 921 (178)
Dividends paid (6,077) (1,882)
Closing
shareholders'
funds 22,218 27,382
Unaudited Non-Statutory Analysis of - The E Shares
Investment
Portfolio 31 March 2022 31 March 2021
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted qualifying
holdings 11,241 61.88 14,870 67.01 15,305 66.70 19,369 71.41
Quoted non-qualifying
holdings - - - - 570 2.48 558 2.06
Unquoted non-qualifying
holdings 4,365 24,03 4,755 21.42 6,690 29.16 6,815 25.13
Financial assets at
fair value through
profit or loss 15,606 85.91 19,625 88.43 22,565 98.34 26,742 98.60
Cash and cash equivalents 2,565 14.09 2,565 11.57 384 1.66 384 1.40
18,171 100.00 22,190 100.00 22,949 100.00 27,126 100.00
Qualifying Holdings
Unquoted
Solar
Digima Limited 1,262 6.95 2,139 9.64 1,262 5.50 1,716 6.33
Digital Screen
Solutions
Limited 2,020 11.12 3,061 13.79 2,020 8.80 2,776 10.23
Green Energy for
Education Limited 400 2.20 1,435 6.47 475 2.07 1,404 5.18
Hydroelectric Power
Elementary Energy
Limited - - - - 1,723 7.51 2,081 7.67
Green Highland
Shenval
Limited 359 1.98 241 1.09 359 1.56 237 0.87
Green Highland Allt
Choire A
Bhalachain
(255) Limited - - - - 664 2.89 798 2.94
Green Highland Allt
Ladaidh (1148)
Limited - - - - 126 0.55 149 0.55
Green Highland Allt
Luaidhe (228)
Limited - - - - 77 0.34 84 0.31
Green Highland Allt
Phocachain (1015)
Limited - - - - 498 2.17 662 2.44
Achnacarry Hydro
Ltd - - - - 901 3.93 1,654 6.10
Gas Fired Energy
Centre
Green Peak
Generation
Limited 2,200 12.11 1,206 5.43 2,200 9.59 1,339 4.94
Controlled
Environment
Agriculture
Perfectly Fresh
Cheshire
Limited 5,000 27.52 6,788 30.59 5,000 21.79 6,469 23.85
11,241 61.88 14,870 67.01 15,305 66.70 19,369 71.41
Investment
Portfolio 31 March 2022 31 March 2021
Non-Qualifying
Holdings
Quoted
Investment Property
TP Social Housing
REIT Plc Equity - - - - 570 2.48 558 2.06
- - - - 570 2.48 558 2.06
Unquoted
Crematorium
Management
Furnace Managed
Services Limited 488 2.69 60 0.27 488 2.13 113 0.42
Hydroelectric Power
Elementary Energy
Limited - - - - 140 0.61 140 0.52
SME Funding
Hydroelectric
Power:
Broadpoint 2
Limited 1,159 6.38 1,379 6.21 1,334 5.81 1,449 5.34
Other:
Funding Path
Limited 2,200 12.11 2,672 12.04 2,200 9.59 2,501 9.22
Aeris Power Limited 518 2.85 644 2.90 518 2.26 602 2.22
Broadpoint 3
Limited - - - - 2,010 8.76 2,010 7.41
4,365 24.03 4,755 21.42 6,690 29.16 6,815 25.13
Notes to the Financial Statements
1. Corporate Information
The Financial Statements of the Company for the year ended 31
March 2022 were authorised for issue in accordance with a
resolution of the Directors on 20 July 2022.
The Company was admitted for listing on the London Stock
Exchange on 6 February 2008.
The Company is incorporated and domiciled in the United Kingdom
and registered in England and Wales. The address of its registered
office, which is also its principal place of business, is 1 King
William Street, London EC4N 7AF.
The Company is required to nominate a functional currency, being
the currency in which the Company predominantly operates. The
functional and reporting currency is sterling, reflecting the
primary economic environment in which the Company operates.
The principal activity of the Company is investment. The
Company's investment strategy is to offer combined exposure to cash
or cash-based funds and venture capital investments focused on
companies with contractual revenues from financially secure
counterparties.
2. Basis of Preparation and Accounting Policies
Basis of Preparation
The financial statements have been prepared in accordance with
UK-adopted international accounting standards and the applicable
legal requirements of the CA 2006.
After making the necessary enquiries, the Directors confirm that
they are satisfied that the Company has adequate resources to
continue to meet its day-to-day commitments for at least 12 months.
During the year, the Company repaid its drawdown GBP2.3 million
loan from TPLP, a separate fund which is managed by the Investment
Manager.
The impact on the business of the Ukraine-Russia war is set out
further in the Chair's Statement and Investment Managers
Review.
The Financial Statements of the Company for the year to 31 March
2022 have been prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006 adopted for use in the European Union and comply with the
Statement of Recommended Practice: "Financial Statements of
Investment Trust Companies and Venture Capital Trusts" (SORP)
issued by the Association of Investment Companies (AIC) in April
2021.
The Financial Statements are prepared on a historical cost basis
except that investments are shown at fair value through profit or
loss ("FVTPL").
The preparation of Financial Statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and the reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
various other factors believed to be reasonable under the
circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ
from these judgements.
The judgements, estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities relate to:
-- The valuation of unlisted financial investments held at fair
value through profit or loss, which are valued on the basis noted
below (under the heading Non-Current Asset Investments) and in note
12 ; and
-- The recognition or otherwise of accrued income on loan notes
and similar instruments granted to investee companies, which are
assessed in conjunction with the overall valuation of unlisted
financial investments as noted above.
The key judgements made by Directors are in the valuation of
non-current assets and the assessment of realised losses. The
estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects
that period or in the period of revision and future periods if the
revision affects both current and future periods. The carrying
value of investments is disclosed in note 12 .
Useful lives of the Company's hydroelectric and gas fired energy
centre portfolio are based on the Investment Manager's estimates of
the period over which the assets will generate revenue which are
periodically reviewed for continued appropriateness.
Climate Change may have an impact on the estimated useful life
of these assets. As discussed in the Strategic Report, the
increasing emergence of battery technologies and the UK
Government's desire to phase out fossil fuels has affected the
forecasted useful life of the gas fired energy centre company. The
actual useful lives may be a shorter or longer period depending on
the actual operating conditions experienced by the asset. The
valuations of the Company's renewable assets currently incorporate
the expected impact of climate change through the use of power
prices. The controlled environment agriculture asset is protected
from the impact of climate change as the climate is controlled and
grown indoors in a sealed environment. The ambient CO2 levels are
controlled and the facility inside is not impacted by floods or
droughts.
The Directors do not believe that there are any further key
judgements made in applying accounting policies or estimates in
respect of the Financial Statements.
These accounting policies have been applied consistently in
preparing these Financial Statements.
New and amended standards and interpretations applied
The Interest Rate Benchmark Reform (Phase II) - Amendments to
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 was effective for annual
periods beginning on or after 1 January 2021, and provide a number
of reliefs, all of which apply to all hedging relationships that
are directly affected by interest rate benchmark reform. These
amendments have had no impact on the financial statements of the
Company.
A number of new standards and amendments to standards are
effective for the annual periods beginning after 1 January 2022.
None of these are expected to have a significant effect on the
measurement of the amounts recognised in the financial statements
of the Company. The Company intends to adopt the standards and
interpretations in the reporting period when they become effective
and the Board does not anticipate that the adoption of these
standards and interpretations in future periods will materially
impact the Company's financial results in the period of initial
application although there may be revised presentations to the
financial statements and additional disclosures.
New and amended standards and interpretations not applied
The relevant new and amended standards and interpretations that
are issued, but not yet effective, up to the date of issuance of
the Company's financial statements are disclosed below. These
standards are not expected to have a material impact on the entity
in future reporting periods and on foreseeable future
transactions.
Amendments to IAS 1: Classification of Liabilities as Current or
Non-current
In January 2020, the IASB issued amendments to paragraphs 69 to
76 of IAS 1 to specify the requirements for classifying liabilities
as current or non-current. The amendments are effective for annual
reporting periods beginning on or after 1 January 2023.
Reference to the Conceptual Framework - Amendments to IFRS 3
In May 2020, the IASB issued Amendments to IFRS 3 Business
Combinations - Reference to the Conceptual Framework. The
amendments are effective for annual reporting periods beginning on
or after 1 January 2022.
Definition of Accounting Estimates - Amendments to IAS 8
In February 2021, the IASB issued amendments to IAS 8, in which
it introduces a definition of "accounting estimates". The
amendments are effective for annual reporting periods beginning on
or after 1 January 2023.
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2
In February 2021, the IASB issued amendments to IAS 1 and IFRS
Practice Statement 2 Making Materiality Judgements. The amendments
to IAS 1 are applicable for annual periods beginning on or after 1
January 2023.
Presentation of Statement of Comprehensive Income
In order better to reflect the activities of a VCT, and in
accordance with the guidance issued by the Association of
Investment Companies, supplementary information which analyses the
Statement of Comprehensive Income between items of a revenue and
capital nature has been presented alongside the Income
Statement.
Non-Current Asset Investments
The Company invests in financial assets with a view to profiting
from their Total Return through income and capital growth. These
investments are managed, and their performance is evaluated on a
fair value basis in accordance with the Investment Policy detailed
in the Strategic Report and information about the portfolio is
provided internally on that basis to the Company's Board of
Directors. Accordingly, upon initial recognition the investments
are classified by the Company as "at fair value through profit or
loss" in accordance with IFRS 9.
They are included initially at fair value, which is taken to be
their cost (excluding expenses incidental to the acquisition which
are written off in the Statement of Comprehensive Income and
allocated to "capital" at the time of acquisition). Subsequently
the investments are valued at "fair value" which is the price that
would be received to sell an asset or paid to transfer a liability
(exit price) in an orderly transaction between market participants
at the measurement date.
-- Unlisted investments are fair valued by the Directors in
accordance with the International Private Equity and Venture
Capital Valuation Guidelines. Fair value is established by using
measurements of value such as price of recent transactions,
discounted cash flows, cost, and initial cost of investment;
and
-- Listed investments are fair valued at bid price on the relevant date.
The Board believes that those investments valued based on the
transaction price are done so because the transaction price is
still representative of fair value.
Where securities are classified upon initial recognition at fair
value through profit or loss, gains and losses arising from changes
in fair value are included in the Statement of Comprehensive Income
for the year as capital items in accordance with the AIC SORP April
2021. The profit or loss on disposal is calculated net of
transaction costs of disposal.
Investments are recognised as financial assets on legal
completion of the investment contract and are de-recognised on
legal completion of the sale of an investment.
The Company has taken the exemption permitted by IAS 28
"Investments in Associates and Joint Ventures" and IFRS11 "Joint
Arrangements" for entities similar to investment entities and
measures its investments in associates and joint ventures at fair
value. The Directors consider an associate to be an entity over
which the Group has signi cant in uence, through an ownership of
between 20% and 50%. The Company's Subsidiary, associates and joint
ventures are disclosed in note 15 .
Income
Investment income includes interest earned on bank balances and
investment loans and includes income tax withheld at source.
Dividend income is shown net of any related tax credit and is
brought into account on the ex-dividend date.
Property income includes tax which is withheld at source.
Fixed returns on investment loans and debt are recognised on a
time apportionment basis so as to reflect the effective yield,
provided there is no reasonable doubt that payment will be received
in due course.
Expenses
All expenses are accounted for on the accruals basis. Expenses
are charged to revenue with the exception of the investment
management fee which has been charged 75% to the revenue account
and 25% to the capital account to reflect, in the Directors'
opinion, the expected long-term split of returns in the form of
income and capital gains respectively from the investment
portfolio.
The Company's general expenses are split between the Share
Classes using the Net Asset Value of each Share Class divided by
the total Net Asset Value of the Company.
Finance costs
Borrowing costs are recognised in the Statement of Comprehensive
Income in the period to which they relate on an accruals basis.
Taxation
Corporation tax payable is applied to profits chargeable to
corporation tax, if any, at the current rate in accordance with IAS
12 "Income Taxes". The tax effect of different items of income/gain
and expenditure/loss is allocated between capital and revenue on
the "marginal" basis as recommended by the AIC SORP April 2021.
In accordance with IAS 12, deferred tax is recognised using the
balance sheet method providing for temporary differences between
the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. A
deferred tax asset is recognised to the extent that it is probable
that future taxable profits will be available against which the
temporary difference can be utilised. Deferred tax is measured at
the tax rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting date. The
Directors have considered the requirements of IAS 12 and do not
believe that any provision should be made.
Financial Instruments
The Company's principal financial assets are its investments and
the accounting policies in relation to those assets are set out
above. Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements
entered.
An equity instrument is any contract that evidences a residual
interest in the assets of the entity after deducting all of its
financial liabilities.
Where the contractual terms of share capital do not have any
terms meeting the definition of a financial liability then this is
classed as an equity instrument.
Financial assets and financial liabilities are recognised in the
Company's Statement of Financial Position when the Company becomes
a party to the contractual provisions of the instrument. At 31
March 2022 and 31 March 2021, the carrying amounts of cash and cash
equivalents, receivables, payables, accrued expenses and short-term
borrowings reflected in the financial statements are reasonable
estimates of fair value in view of the nature of these instruments
or the relatively short period of time between the original
instruments and their expected realisation.
Financial Assets
The classi cation of nancial assets at initial recognition
depends on the purpose for which the nancial asset was acquired and
its characteristics. All nancial assets are initially recognised at
fair value. All purchases of nancial assets are recorded at the
date on which the Company became party to the contractual
requirements of the nancial asset.
The Company's nancial assets principally comprise of investments
held at fair value through pro t or loss and financial assets held
at amortised cost.
The Company holds trade receivables with the objective to
collect the contractual cash flows and therefore measures them
subsequently at amortised cost using the effective interest
method.
Investments are designated upon initial recognition as held at
fair value through pro t or loss. Gains or losses resulting from
the movement in fair value are recognised in the Statement of
Comprehensive Income at each valuation date.
The Company's loan and equity investments are held at fair value
through pro t or loss. Gains or losses resulting from the movement
in fair value are recognised in the Company's Statement of
Comprehensive Income at each valuation date.
Financial assets are recognised/derecognised at the date of the
purchase/disposal. Investments are initially recognised at cost,
being the fair value of consideration given. Transaction costs are
recognised in the Consolidated Statement of Comprehensive Income as
incurred.
Fair value is de ned as the amount for which an asset could be
exchanged between knowledgeable willing parties in an arm's length
transaction. Fair value is calculated on an unlevered, discounted
cash ow basis in accordance with IFRS 13 and IFRS 9.
Derecognition of nancial assets (in whole or in part) takes
effect:
-- When the Group has transferred substantially all the risks
and rewards of ownership; or
-- When it has neither transferred or retained substantially all
the risks and rewards and when it no longer has control over the
assets or a portion of the asset; or
-- When the contractual right to receive cash ow has
expired.
Financial liabilities
Financial liabilities are classi ed according to the substance
of the contractual agreements entered into and are recorded on the
date on which the Company becomes party to the contractual
requirements of the nancial liability.
All loans and borrowings are initially recognised at cost, being
fair value of the consideration received, less issue costs where
applicable. After initial recognition, all interest-bearing loans
and borrowings are subsequently measured at amortised cost using
the effective interest rate method.
Although not appropriate for this reporting date, loan balances
at the year-end would not usually be discounted to re ect amortised
cost, as the amounts would not usually be materially different from
the outstanding balances.
The Company's other nancial liabilities measured at amortised
cost include trade and other payables which are initially
recognised at fair value and subsequently measured at amortised
cost using the effective interest rate method.
A nancial liability (in whole or in part) is derecognised when
the Group has extinguished its contractual obligations, it expires
or is cancelled. Any gain or loss on derecognition is taken to the
Consolidated Statement of Comprehensive Income.
Issued Share Capital
C Shares, D Shares and E Shares are classified as equity because
they do not contain an obligation to transfer cash or another
financial asset. Issue costs associated with the allotment of
shares have been deducted from the share premium account in
accordance with IAS 32.
Cash and Cash Equivalents
Cash and cash equivalents representing cash available at less
than 3 months' notice are classified as Financial Assets at
amortised cost under IFRS 9.
Reserves
The revenue reserve (retained earnings) and capital reserve
reflect the guidance in the AIC SORP April 2021. The capital
reserve represents the proportion of Investment Management fees
charged against capital and realised/unrealised gains or losses on
the disposal/revaluation of investments.
The unrealised capital reserve, share redemption reserve and
share premium reserve are not distributable. The special
distributable reserve was created on court cancellation of the
share premium account.
The revenue, special distributable and realised capital reserves
are distributable by way of dividend.
Consolidated Financial Statements
The Directors have concluded that the Company has control over
one company in which it has invested, as prescribed by IFRS 10
"Consolidated Financial Statements". The Company continues to
satisfy the criteria to be regarded as an investment entity as
defined in IFRS 10.
Subsidiaries are therefore measured at fair value through profit
or loss, in accordance with IFRS 13 "Fair Value measurement" and
IFRS 9 "Financial Instruments".
Dividends
Dividends payable are recognised as distributions in the nancial
statements when the Company's obligation to make payment has been
established.
3. Segmental Reporting
The Directors are of the opinion that the Company only has a
single operating segment of business, being investment
activity.
All revenues and assets are generated and held in the UK.
4. Investment Income
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March 2022
Loan stock interest 169 337 916 1,422
Dividends receivable 6 - 60 66
Other Investment Income - - - -
Property Income - - - -
175 337 976 1,488
Year ended 31 March 2021
Loan stock interest 382 676 860 1,918
Dividends receivable 220 - 99 319
Other Investment Income - - 22 22
Property Income - - 15 15
602 676 996 2,274
Disclosure by share class is unaudited
5. Investment Management Fees
TPIM provides investment management and administration services
to the Company under an Investment Management Agreement effective 6
February 2008 and deeds of variation to that agreement effective 21
November 2012, 28 October 2014, 7 October 2016 and 27 April
2020.
C Shares: The agreement provides for an administration and
investment management fee of 2% per annum of net assets payable
quarterly in arrear for an appointment of at least six years from
the admission of those shares. Subject to distributions to the C
Shareholders exceeding the C Share hurdle of 100 pence per share,
the Investment Manager will be entitled to a performance incentive
fee of 20% of any upside above 100 pence per share. This does not
include the initial tax relief available to investors.
D Shares: The agreement provides for an administration and
investment management fee of 2% per annum of net assets payable
quarterly in arrear for an appointment of at least six years from
the admission of those shares. Subject to distributions to the D
Shareholders exceeding the D Share hurdle of 100 pence per share,
the Investment Manager will be entitled to a performance incentive
fee of 20% of any upside above 100 pence per share. This does not
include the initial tax relief available to investors.
E Shares: The agreement provides for an administration and
investment management fee of 2% per annum of net assets payable
quarterly in arrear for an appointment of at least six years from
the admission of those shares. Subject to distributions to the E
Shareholders exceeding the E Share hurdle of 100 pence per share,
the Investment Manager will be entitled to a performance incentive
fee of 20% of any upside above 100 pence per share. This does not
include the initial tax relief available to investors.
An administration fee equal to 0.25% per annum of the Company's
net assets is payable quarterly in arrears.
Fees paid to the Investment Manager for administrative and other
services during the year were GBP127,000 (2021: GBP143,000).
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March
2022
Management Fees 200 128 493 821
Performance Fees 1,281 451 - 1,732
Investment Management
Fees 1,481 579 493 2,553
Year ended 31 March
2021
Investment Management
Fees 225 163 556 944
Performance Fees - 5 - 5
Investment Management
Fees 225 168 556 949
Disclosure by share class is unaudited
6. Operating Expenses
All expenses are accounted for on an accruals basis.
Expenses are charged wholly to revenue, apart from management
fees which are charged 25% to capital and 75% to revenue, any
performance fees incurred are charged wholly to capital.
Transaction costs incurred when selling assets are written off to
the Income Statement in the period that they occur.
Year ended Year ended
31 March 2022 31 March 2021
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
TPIM: Accrued performance
fee - 1,732 1,732 - 5 5
Financial and regulation
costs 57 - 57 59 - 59
General administration 143 - 1432 182 - 182
Fees payable to the
Company's auditor
for audit services 40 - 40 39 - 39
Company secretarial
services 18 - 18 18 - 18
Other professional
fees 208 - 208 38 - 38
Directors fees 66 - 66 66 - 66
Bad debt expenses 43 - 43 - - -
575 1,732 2,307 402 5 407
The Ongoing Charges Ratio for the Company for the year to 31
March 2022 was 3.48 % (2021: 2.88%). The calculation excludes the
performance fees due to the Manager and costs associated with the
sale of the hydroelectric portfolio. Total annual running costs are
capped at 3.5% of the Company's net assets.
The Company's annual running costs will continue to be capped at
3.5% of NAV (excluding any performance fees payable to Triple
Point).
Any excess will be met by the Investment Manager by way of a
reduction in future management fees.
VAT has been removed from the Audit fees and allocated to
General Administration expenses.
7. Finance Costs
The Company re-entered into a loan facility with TPLP. On 20
March 2020 GBP2.3 million was drawn on the facility. The loan
attracts interest at a rate of 4.5%. During the year, interest of
GBP116,198 (2021: GBP103,500) was charged and paid by the
Company.
8. Legal and Professional Fees
Legal and professional fees include remuneration paid to the
Company's auditor, BDO LLP as shown in the following table:
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March 2022
Fees payable to the Company's
auditor:
- for the audit of the financial
statements 9 6 25 40
9 6 25 40
Year ended 31 March 2021
Fees payable to the Company's
auditor:
- for the audit of the financial
statements 9 7 23 39
9 7 23 39
VAT has been removed from the Audit fees and allocated to
General Administration expenses.
Disclosure by share class is unaudited
9. Directors' Remuneration
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March
2022
David Frank 6 3 15 24
Simon Acland 5 3 13 21
Michael Stanes 5 3 13 21
16 9 41 66
Year ended 31 March
2021
David Frank 6 4 14 24
Simon Acland 5 4 12 21
Michael Stanes 5 3 13 21
16 11 39 66
The only remuneration received by the Directors was their
Directors' fees. The Company has no employees other than the
Non-Executive Directors. The average number of Non-Executive
Directors in the year was three. Full disclosure of Directors'
remuneration is included in the Directors' Remuneration Report.
Disclosure by share class is unaudited
10. Taxation
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March 2022
Profit on ordinary activities
before tax (179) (568) 928 181
Corporation tax @ 19% (34) (108) 176 34
Effect of:
Capital (gains)/losses not
taxable (243) 28 (154) (369)
Income received not taxable (1) - (11) (12)
Prior year adjustment - - (4) (4)
Excess management expense on
which deferred tax not recognised 278 80 - 358
Tax charge - - 7 7
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March 2021
Profit on ordinary activities
before tax 267 349 (174) 442
Corporation tax @ 19% 51 66 (33) 84
Effect of:
Capital (gains) not taxable - - 72 72
Income received not taxable (42) - (19) (61)
Prior year adjustment - - (16) (16)
Tax charge 9 66 4 79
Capital gains and losses are exempt from corporation tax due to
the Company's status as a VCT. Per IAS 12, deferred tax asset of
GBP357,432 (2021: GBPnil) has not been recognised in the year and a
write down of deferred tax asset from prior periods of GBP4,902 as
there is no probable future taxable profit against which the
deductible temporary difference can be utilised. The tax loss
carried forward is GBPnil (2021: GBPnil). With effect from 1 April
2023 the corporation tax rate will increase to 25%.
Disclosure by share class is unaudited
11. Earnings/(loss) per Share
The loss per C Share is (1.32p) (2021: 1.93p) based on the
profit after tax of GBP1 79,000 (2021: GBP258,000) and on the
weighted average number of shares in issue during the period of
13,413,088 (2021: 13,441,438).
The loss per D Share is (4.17p) (2021: 2.08p) based on the
profit after tax of GBP 568,000 (2021: GBP283,000) and on the
weighted average number of shares in issue during the period of
13,604,637 (2021: 13,636,793).
The profit per E Share is 3.17p (2021: (0.61p)) based on the
profit after tax of GBP921,000 (2021: (GBP178,000)) and on the
weighted average number of shares in issue during the period of
28,940,076 (2021: 28,949,575).
The total loss per Share is (0.31p) (2021: 0.66p) based on the
profit after tax of GBP174,000 (2021: GBP363,000) and on the
weighted average number of shares in issue during the period of
55,966,511 (2021: 56,027,806).
There are no potentially dilutive capital instruments in issue
and, therefore, no diluted return per share figures are included in
these Financial Statements.
12. Financial Assets at Fair Value through Profit or Loss
Investments
Fair Value Hierarchy:
Level 1: quoted prices on active markets for identical assets or
liabilities. The fair value of financial instruments traded on
active markets is based on quoted market prices at the balance
sheet date. A market is regarded as active where the market in
which transactions for the asset or liability takes place with
sufficient frequency and volume to provide pricing information on
an ongoing basis. The quoted market price used for financial assets
held by the Company is the current bid price. These instruments are
included in Level 1.
Level 2: the fair value of financial instruments that are not
traded on active markets is determined by using valuation
techniques. These valuation techniques maximise the use of
observable inputs including market data where it is available
either directly or indirectly and rely as little as possible on
entity specific estimates. If all significant inputs required to
fair value an instrument are observable, the instrument is included
in Level 2.
Level 3: the fair value of financial instruments that are not
traded on an active market (for example, investments in unquoted
companies) is determined by using valuation techniques such as
discounted cash flows. If one or more of the significant inputs is
based on unobservable inputs including market data, the instrument
is included in Level 3.
There have been no transfers between these classifications in
the period. Any change in fair value is recognised through the
Statement of Comprehensive Income.
The portfolio of the Company is classified as Level 3, with the
exception of the investment in Triple Point Social Housing REIT plc
which is classified as Level 1 and which was fully disposed during
the year. Further details of the types of investments are provided
in the Investment Manager's Review.
The Company's Investment Manager performs valuations of
financial items for financial reporting purposes, including Level 3
fair values. Valuation techniques are selected based on the
characteristics of each instrument, with the overall objective of
maximising the use of market-based information.
Level 3 valuations include assumptions based on non-observable
data with the majority of investments being valued
on discounted cash flows while PFC being valued by calibrating
to the initial cost with management's judgement for the adjustment
of the fair value based on the investee company's performance,
liquidity stage and other economic factors.
Unconsolidated subsidiaries consist of Aeris Power Limited,
included in investments as per the company's accounting policy. The
Company has a loan investment totalling GBP157,500 in this company.
The loan has an interest rate of 11.66%.
Valuation techniques and unobservable
inputs:
Inter relationship
between significant
Significant unobservable unobservable inputs
Sector Valuation Techniques inputs and fair value measurement
Estimated fair
value would increase/(decrease)
if:
Hydroelectric
Power * Discounted cash flows: The valuation model considers * Discount rate 6.75% * The discount rate was lower/(higher).
the present value of expected payment, discounted
using a risk-adjusted discount rate.
(2021: 6.75%).
* Inflation rate: OBR 5-year forecast, 2.7 * The inflation rate was higher/(lower)
5% long term .
(2021: OBR 5-year forecast, 2.75% long t
erm).
Gas Fired
Energy * Discounted cash flows: The valuation model considers * Discount rate 12.1% * The discount rate was lower/(higher).
Centre the present value of expected payment, discounted
using a risk-adjusted discount rate.
(2021: 14.9%).
* Inflation rate: OBR 5-year forecast,
2.75% long term * The inflation rate was higher/(lower)
(2021: Inflation rate: OBR .
5-year forecast, 2.75%
long term).
Solar
* Discounted cash flows: The valuation model considers * Discount rate 5.50% (2021: 6.00%). * The discount rate was lower/(higher).
the present value of expected payment, discounted
using a risk-adjusted discount rate.
* Inflation rate: OBR 5-year forecast, * The inflation rate was higher/(lower)
2.75% long term
(2021: Inflation rate: OBR
5-year forecast, 2.75%
long term).
The Company's controlled environment agriculture investment in
PFC is valued on the basis of (i) a restructuring which is in the
process of documentation, and which relates to PFC's priority share
in the value of the Perfectly Fresh business, and (ii) the value at
which the management expects to able to raise funds later this
year.
The Board considers the discount rates used reflect the current
levels of risk and life expectancy of the investments and to be in
line with market expectations. However, consideration has been
given as to whether the effect of changing one or more inputs to
reasonably possible alternative assumptions would result in a
significant change to the fair value measurement. Each unquoted
portfolio company has been reviewed in order to identify the
sensitivity of the valuation methodology to using alternative
assumptions. On this basis, where discount rates have been applied
to the unquoted investments, alternative discount rates have been
considered, an upside case and a downside case. For the upside
case, the assumptions were flexed 1% and for the downside scenarios
the assumptions were flexed by 1%. No sensitivity has been
performed on other key assumptions such as asset life and P50
because the Directors believe the asset life assumptions and
discount rate applied interact appropriately with one another to
give an appropriate valuation.
The two alternative scenarios for each investment have been
modelled with the resulting movements as follows:
-- Applying the downside alternative to the hydroelectric
portfolio, the aggregate change in value of the unquoted
investments would be a reduction in the value of the portfolio of
GBP17,534 or 2.3%. Using the upside alternative, the aggregate
value of the hydroelectric portfolio would be an increase of
GBP18,304 or 2.4%.
-- For the upside case relating to the Company's investment in
Green Peak, the assumptions were flexed 2% and for the downside
scenarios the assumptions were flexed by 1% representing the
conservative discount rates applied. Using the upside alternative,
the aggregate value of the investments would be an increase of
GBP186,008 or 15.1%. Applying the downside alternative, the
aggregate change in value of the unquoted investments would be a
reduction in the value of the portfolio of GBP80,227 or 6.5%.
-- For the upside case relating to the Company's solar assets,
the assumptions were flexed 1% for both the upside and downside
cases. Using the upside alternative, the aggregate value of the
investments would increase by GBP334,590 or 5.0%. Using the
downside alternative, the aggregate value of the investments would
fall GBP293,718 or 4.6%.
-- Due to the nature and structure of the investment in PFC,
there has been no sensitivity performed on any inputs into the
valuation. There are limited data points to reference in the
controlled environment agriculture sector making alternative inputs
difficult to apply. The potential future returns on the investment
are calculated in accordance with agreements between the Company
and PFC.
It is considered that, due to the prudent selection of discount
rates by the Board, the sensitivity discussed above provides the
most meaningful potential impact of the possible changes across the
portfolio.
Movements in investments held at fair value through the profit
or loss during the year to 31 March 2022 were as follows:
Level 1 Quoted Investments
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Opening cost - - 570 570
Opening investment holding
losses - - (12) (12)
Opening fair value - - 558 558
Disposal proceeds - - (574) (574)
Realised loss - - 4 4
Investment holding gains - - 12 12
Closing fair value at 31
March 2022 - - - -
Closing cost - - - -
Closing investment holding
losses - - - -
Level 3 Unquoted Investments
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Opening cost 7,384 8,247 21,995 37,626
Opening investment holding
gains 3,861 1,789 4,188 9,838
Opening fair value 11,245 10,036 26,183 47,464
Transfers from revenue reserve
to unrealised - - 591 591
Disposal proceeds (12,521) (9,382) (7,942) (29,845)
Realised gains 5,137 1,898 1,556 8,591
Investment holding losses (3,861) (2,040) (766) (6,667)
Closing fair value at 31
March 2022 - 512 19,622 20,134
Closing cost - 761 15,606 16,367
Closing investment holding
gains - (249) 4,016 3,767
Level 1 Quoted Investments
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Opening cost - - 3,319 3,319
Opening investment holding
losses - - (392) (392)
Opening fair value - - 2,927 2,927
Disposal proceeds - - (2,546) (2,546)
Realised loss - - (204) (204)
Investment holding gains - - 381 381
Closing fair value at 31
March 2021 - - 558 558
Closing cost - - 570 570
Closing investment holding
losses - - (12) (12)
Level 1 Unquoted Investments
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Opening cost 7,640 8,357 22,065 38,062
Opening investment holding
gains 3,862 1,789 4,122 9,773
Opening fair value 11,502 10,146 26,187 47,835
Transfers from revenue reserve
to unrealised - - 619 619
Disposal proceeds (257) (110) (69) (436)
Investment holding losses - - (554) (554)
Closing fair value at 31
March 2021 11,245 10,036 26,183 47,464
Closing cost 7,384 8,247 21,995 37,626
Closing investment holding
gains 3,861 1,789 4,188 9,838
All investments are designated at fair value through profit or
loss at the time of acquisition and all capital gains or losses
arising on investments are so designated. Given the nature of the
Company's venture capital investments, the changes in fair values
of such investments recognised in these Financial Statements are
not considered to be readily convertible to cash in full at the
balance sheet date and accordingly any gains or losses on these
items are treated as unrealised.
Further details of the types of investments are provided in the
Investment Manager's Review and the Investment Portfolio Summary
and details of entities over which the VCT has significant
influence are included in note 15 .
Disclosure by share class is unaudited
13. Receivables
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
31 March 2022
Other debtors 245 233 200 678
Prepayments and accrued
income 10 25 12 47
255 258 212 725
31 March 2021
Other debtors 247 202 467 916
Prepayments and accrued
income 5 4 59 68
252 206 526 984
Other debtors relate to interest receivable on investment loans
which is classified as financial assets through profit and
loss.
14. Cash and Cash Equivalents
Cash and cash equivalents comprise deposits with The Royal Bank
of Scotland plc with a rating of A-2 (short-term) and Cater Allen
Private Bank with a rating of A-1.
15. Unconsolidated subsidiaries, associates and joint ventures
The following table shows subsidiaries, associates and joint
ventures of the Company which have been recognised at fair value as
permitted by IAS 28 "Investments in Associates and Joint
Ventures".
As the Company is regarded as an Investment Entity as referred
to in note 2 , the Company's only subsidiary Aeris Power Limited
has not been consolidated in the preparation of the nancial
statements.
The principal undertakings in which the Company's interest at
the year-end is 20% or more are as follows:
Name Registered address Holding
250 Fowler Avenue, Farnborough, Hampshire,
Aeris Power Limited GU14 7JP 100.00%
Broadpoint 2 Limited 1 King William Street, London, EC4N 7AF 49.00%
250 Fowler Avenue, Farnborough, Hampshire,
Digima Limited GU14 7JP 30.87%
Digital Screen Solutions 250 Fowler Avenue , Farnborough, Hampshire,
Limited GU14 7JP 35.36%
Funding Path Limited 1 King William Street, London, EC4N 7AF 49.00%
Furnace Managed Services 30 Buckland Gardens, Ryde, Isle of Wight,
Limited PO33 3AG 40.05%
Green Energy for Education
Limited 1 King William Street, London, EC4N 7AF 50.00%
Green Highland Shenval Q Court, 3 Quality Street, Edinburgh, EH4
Limited 5BP 28.16%
Green Peak Generation Q Court, 3 Quality Street, Edinburgh, EH4
Limited 5BP 48.26%
Perfectly Fresh Cheshire
Limited 1 King William Street, London, EC4N 7AF 49.97%
-- All investments are held in the UK.
-- The investments are a combination of debt and equity.
-- Equity holding is equal to the voting rights.
16. Payables and Accrued Expenses
C Shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
31 March 2022
Payables 44 12 147 203
Other taxes and Social
Security 2 1 4 7
Accrued expenses 9 7 22 38
55 20 173 248
31 March 2021
Payables 99 71 218 388
Other taxes and Social
Security 2 1 4 7
Accrued expenses 12 9 31 52
113 81 253 447
Disclosure by share class is unaudited
17. Borrowings
The Company repaid its GBP2.3 million loan from TPLP on 1
February 2022.
During the year, interest of GBP116,198 (2021: GBP103,500) was
charged and paid by the Company.
There are no loan covenants applicable to the above described
loan.
18. Share Capital
Unaudited
31 March 2022
C shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
GBP0.01 GBP0.01 GBP0.01
each GBP0.01 each each each
Ordinary shares
Allotted and
fully paid
up
Brought forward 134 136 290 560
Shares issued - - - -
Shares repurchased - - - -
Carried forwarded 134 136 290 560
Unaudited
31 March 2021
C shares D Shares E Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
GBP0.01
GBP0.01 each GBP0.01 each GBP0.01 each each
Ordinary shares
Allotted and
fully paid up
Brought forward 135 136 290 560
Shares issued - - - -
Shares repurchased - - - -
Carried forwarded 135 136 290 560
Each share class has full voting, dividend and capital
distribution rights.
In the year, Triple Point Income VCT plc repurchased 28,350 C
shares and 9,499 E shares at 10% discount to NAV totalling GBP37.8k
representing 0.07%.
The rights attached to each class of share are disclosed in the
Directors' Report.
19. Financial Instruments and Risk Management
The Company's financial instruments comprise VCT qualifying
investments and non-qualifying investments, cash balances and
liquid resources including debtors and creditors. The Company holds
financial assets in accordance with its Investment Policy detailed
in the Strategic Report.
The following table discloses the financial assets and
liabilities of the Company in the categories defined by IFRS 9,
"Financial Instruments".
Fixed Asset Investments (see note 12 ) are valued at fair value.
Unquoted investments are carried at fair value as determined by the
Directors in accordance with current venture capital industry
guidelines. The fair value of all other financial assets and
liabilities is represented by their carrying value on the balance
sheet.
The Directors believe that where an investee company's
enterprise value, which is equivalent to fair value, remains
unchanged since acquisition that investment should continue to be
held at cost less any loan repayments received. Where they consider
the investee company's enterprise value has changed since
acquisition, that should be reflected by the investment being held
at a value measured using a discounted cash flow model or a recent
transaction price.
In carrying out its investment activities, the Company is
exposed to various types of risk associated with the financial
instruments and markets in which it invests. The Company's approach
to managing its risks is set out below together with a description
of the nature of the financial instruments held at the balance
sheet date.
Financial Financial Designated
assets liabilities at fair
held at held at value through
amortised amortised profit or
Total value cost cost loss
31 March 2022
Assets:
Financial assets
at fair value
through profit
or loss 20,134 - - 20,134
Receivables 678 - - 678
Cash and cash
equivalents 3,831 3,831 - -
24,643 3,831 - 20,812
Liabilities:
Other payables 203 - 203 -
Accrued expenses 38 - 38 -
241 - 241 -
31 March 2021
Assets:
Financial assets
at fair value
through profit
or loss 48,022 - - 48,022
Receivables 916 - - 916
Cash and cash
equivalents 521 521 - -
49,459 521 - 48,938
Liabilities:
Other payables 388 - 388 -
Loan facility 2,300 - 2,300 -
Accrued expenses 57 - 57 -
2,745 - 2,745 -
Market Risk
The Company's VCT qualifying investments are held in small and
medium-sized unquoted investments which, by their nature, entail a
higher level of risk and lower liquidity than investments in large
quoted companies. The Directors and Investment Manager aim to limit
the risk attached to the portfolio as a whole by careful selection
and timely realisation of investments, by carrying out rigorous due
diligence procedures and by maintaining a spread of holdings in
terms of industry sector and geographical location.
Sensitivity analysis surrounding inputs such as inflation and
discount rates is included in note 12.
The Board reviews the investment portfolio with the Investment
Manager on a regular basis.
Interest Rate Risk
Some of the Company's financial assets are interest bearing, of
which some are at fixed rates and some at variable rates. As a
result, the Company is exposed to interest rate risk arising from
fluctuations in the prevailing levels of market interest rates.
Investments made into qualifying holdings are part equity and
part loan. The loan element of investments totals GBP5,399,000
(2021: GBP11,365,000) and is subject to fixed interest rates and,
as a result, there is no cash flow interest rate risk. As the loans
are held in conjunction with equity and are valued in combination
as part of the enterprise value, fair value risk is considered part
of market risk.
The Company also has non-qualifying loan investments of
GBP4,221,000 (2021: GBP5,842,000) which carry fixed rates of
interest.
The amounts held in variable rate investments at the balance
sheet date are as follows:
31 March 31 March
2022 2021
GBP'000 GBP'000
Cash on deposit 3,831 521
3,831 521
An increase in interest rates of 1% per annum would not have a
material effect either on the revenue for the year or the net asset
value at 31 March 2022. 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 2022 31 March 2021
GBP'000 GBP'000
Qualifying Investment loans 5,399 11,365
Non-Qualifying Investment
loans 4,221 5,842
Cash on deposit 3,831 521
Receivables 678 916
14,129 18,644
The Company's bank accounts are maintained with RBS and Cater
Allen Private Bank. Should the credit quality or financial position
of RBS or Cater Allen deteriorate significantly, the Investment
Manager will move the cash holdings to another bank.
Credit risk arising on unquoted loan stock held within unlisted
investments is considered to be part of Market risk as disclosed
above.
Liquidity Risk
The Company's financial assets include investments in unquoted
equity securities which are not traded on a recognised stock
exchange and which are illiquid. As a result, the Company may not
be able to realise some of its investments in these instruments
quickly at an amount close to their fair value in order to meet its
liquidity requirements.
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 Company's ongoing cash flows are sufficient to meet the
ongoing liquidity needs and therefore the Board believe liquidity
risk is minimal.
The Board maintains a liquidity management policy where cash and
future cash flows from operating activities will be sufficient to
pay expenses. At 31 March 2022 cash amounted to GBP3,831,000 (2021:
GBP521,000).
Foreign Currency Risk
The Company does not have exposure to material foreign currency
risks.
20. Net Asset Value per Share
The Net Asset Value per C Share is 7.75p (2021: 83.30p) and is
based on Net Assets of GBP1,039,000 (2021: GBP11,194,000) divided
by the 13,413,088 (2021: 13,441,438) C Shares in issue.
The Net Asset Value per D Share is 8.67p (2021: 59.59p) and is
based on Net Assets of GBP1,179,000 (2020: GBP8,106,000) divided by
the 13,604,637 (2021: 13,604,637) D Shares in issue.
The Net Asset Value per E Share is 76.76p (2021: 94.59p) and is
based on Net Assets of GBP22,213,000 (2021: GBP27,382,000) divided
by the 28,940,076 (2021: 28,949,575) E Shares in issue.
21. Relationship with Investment Manager
During the period, TPIM received GBP821,385 which has been
expensed (2021: GBP943,367) for providing management and
administrative services to the Company. At 31 March 2022,
GBP177,302 was owing to TPIM (2021: GBP382,129).
During the year, the Company bought back and cancelled 28,350 C
Ordinary Shares at a price of 74.97 pence per share, and 9,499 E
Ordinary Shares at a price of 85.13 pence per share. As a result of
this buy back, and the return of 125.73 pence per share to the
Shareholders.
In line with the Investment Management Agreement between the
Company and the Manager, a performance fee of GBP1,731,713 has been
accrued and paid during the year.
During the year, the Company repaid its GBP2.3m loan from TPLP
who is also managed by the investment manager on 1 February
2022.
Interest of GBP116,198 (2021: GBP103,500) was charged on amounts
drawn during the period.
22. Related Party Transactions
The Directors' Remuneration Report on pages discloses the
Directors' remuneration and shareholdings.
During the year, the Company completed the sale of a substantial
part of its hydroelectric power portfolio held in the C, D and E
Ordinary Share Classes for a total consideration of GBP31 ,419,183,
being GBP12,292,483 for the C Ordinary Share Class, GBP9,409,513
for the D Ordinary Share Class and GBP9,717,187 for the E Ordinary
Share Class to TEEC of whom is also managed by Triple Point
Investment Management LLP. The transaction followed a full
conflicts process, with two separate teams within the Investment
Manager dealing with the sale and purchase. The two teams were
segregated, with distinct independent reporting lines and separate
access to the electronic files relevant to the transaction.
23. Post Balance Sheet Events
There are no events to disclose post the balance sheet date.
24. Dividends
C Shares:
During the year, the Company paid three interim dividends to C
Class Shareholders. GBP234,729 equal to 1.75p per shares was paid
on 30 July 2021 to C Shareholders on the register on 16 July 2021,
GBP4,359,254 equal to 32.5p per share was paid on 23 December 2021
to C Shareholders on the register on 10 December 2021, and
GBP5,365,235 equal to 40p per share was paid on 14 January 2022 to
C Shareholders on the register on 24 December 2021.
D Shares:
During the year, the Company paid two interim dividends to D
Class Shareholders. GBP238,081 equal to 1.75p per shares was paid
on 30 July 2021 to C Shareholders on the register on 16 July 2021,
and GBP6,122,087 equal to 45p per share was paid on 23 December
2021 to D Shareholders on the register 10 December 2021.
E Shares:
During the year the Company paid three interim dividends to E
Class Shareholders. GBP1,012,903 equal to 3.5p per share was paid
on 30 July 2021 to E Shareholders on the register on 16 July 2021,
GBP3,472,809 equal to 12p per share was paid on 23 December 2021 to
E Shareholders on the register of 10 December 2021 and GBP1,591,704
equal to 5.5p per share was paid on 14 January 2022 to E
Shareholders on the register on 24 December 2021.
During the year the directors identified an accounting issue in
respect of the payment of certain interim dividends to shareholders
between 30 July 2021 to 14 January 2022 which were made otherwise
than in accordance with the CA 2006. While the Company had more
than sufficient reserves to pay the dividends , it was discovered
during the year that not all of those reserves were "distributable"
reserves for the purposes of the CA 2006. Therefore, the proportion
of the dividends paid that were not "distributable" reserves at the
time they were paid and are technically unlawful distributions for
the purposes of the CA 2006. The total amount of unlawful
distributions amount to GBP11,841,932.
The Company has since created sufficient "distributable"
reserves to cover the payment of the unlawful distributions by
cancelling its share premium account in accordance with the CA 2006
which was approved by Shareholders at a General Meeting on 28
February 2022 and sanctioned by the Court on 28 March 2022. The
Company will propose resolutions at a general meeting to be held on
2 September 2022 to rectify the payment of the unlawful
distributions as follows: (i) to appropriate the newly created
distributable reserves to the payment of the unlawful
distributions, (ii) to release the Directors of the Company at the
time the unlawful distributions were made from any and all
potential liability arising from the unlawful distributions, and
(iii) to release the shareholders (and if deceased, their
successors in title) who received the unlawful distributions from
any and all potential liability arising from the unlawful
distributions.
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END
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July 21, 2022 02:00 ET (06:00 GMT)
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