ANNUAL REPORT
TRIPLE POINT
INCOME VCT PLC
FOR THE YEAR ENDED
31 MARCH
2022
Overview
Financial Summary
Key Highlights
Strategic Report
Chair’s Statement
Company Strategy and Business Model
Investment Manager’s Review
Responsible Investing
Investment Portfolio Summary
Governance
Board of Directors
Corporate Governance Report
Audit Committee Report
Directors’ Remuneration Report
Directors’ Report
Directors’ Responsibility Statement
Independent Auditor’s Report
Financial Statements
Statement of Comprehensive Income
Balance Sheet
Statement of Changes in Shareholders’ Equity
Statement of Cash Flows
Notes to the Financial Statements
Unaudited Non-Statutory Analysis of
The C Ordinary Share Fund
The D Ordinary Share Fund
The E Ordinary Share Fund
Information
Shareholder Information
5
6
8
15
30
39
40
45
46
51
55
60
64
66
73
74
75
76
85
78
80
82
101
CONTENTS
OVERVIEW
Triple Point Income VCT plc
Triple Point Income VCT plc
OVERVIEW
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 £14 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 £14.3 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 £30 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 on pages 8 to 43, the Corporate
Governance Statement on pages 46 to 49, the Directors’
Remuneration Report on pages 55 to 59, and the
Directors’ Report on pages 60 to 63 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.
YEAR ENDED 31 MARCH 2022
C
Shares
D
Shares
E
Shares
Total
Net assets
£’000
1,035
1,178
22,218
24,431
Net asset value per share
Pence
7.75p
8.67p
76.76p
–
Net Profit/(loss) before tax
£’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
£’000
11,194
8,106
27,382
46,682
Net asset value per share
Pence
83.30p
59.59p
94.59p
–
Net Profit/(loss) before tax
£’000
267
349
(174)
442
Earnings/(loss) per share
Pence
1.93p
2.08p
(0.61p)
–
Cumulative return to Shareholders (p)
Net asset value per share
83.30p
59.59p
94.59p
–
Dividends paid
73.50p
70.00p
11.50p
–
Net asset value plus dividends paid
156.80p
129.59p
106.09p
–
FINANCIAL
SUMMARY
OVERVIEW
Triple Point Income VCT plc
| 5
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.
KEY
HIGHLIGHTS
Dividend per
C Share
74.25p
(Year ended 31 Mar 2021: 3.50p)
Dividend per
D Share
46.75p
(Year ended 31 Mar 2021: 5.00p)
Dividend per
E Share
21.00p
(Year ended 31 Mar 2021: 6.50p)
Net Asset Value per
C Share
7.75p
(Year ended 31 Mar 2021: 83.30p)
Net Asset Value per
D Share
8.67p
(Year ended 31 Mar 2021: 59.59p)
Net Asset Value per
E Share
76.76p
(Year ended 31 Mar 2021: 94.59p)
Total Return per
C Share
1
155.50p
(Year ended 31 Mar 2021: 156.80p)
Total Return per
D Share
1
125.42p
(Year ended 31 Mar 2021: 129.59p)
Total Return per
E Share
1
109.26p
(Year ended 31 Mar 2021: 106.09p)
Realisation Proceeds
£30.42m
Realisations of investments and loan
repayments generated total proceeds
for the Company of £30.42 million.
Ongoing Charges Ratio
2
3.48%
The ongoing charges ratio is a ratio of
annualised ongoing charges expressed
as a percentage of average net asset
values throughout the year.
(2021: 2.88%)
OVERVIEW
6 |
Triple Point Income VCT plc
CHAIR’S STATEMENT
David Frank
Chair
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 signifi
cant 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 on pages 30 to 39
gives an update on the portfolio of investments in 10
small unquoted businesses.
CHAIR’S
STATEMENT
8 |
Triple Point Income VCT plc
STRATEGIC REPORT
Chair’s Statement
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 £0.3 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 £29.85 million,
which was based on an independent
valuation of the assets undertaken in
the prior year and refl
ected 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 £1 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.
Hydroelectric Power
Total Dividends of
147.75 Pence Per Share
Dividend Payments
3
To align its interests with Shareholders, the Investment Manager earns a performance fee of 20% on all distributions over 100 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 on pages 30 to 39.
5.00p
8 Jul 2016
5.00p
14 Jul 2017
5.00p
26 Jul 2018
5.00p
25 Jul 2019
21.00p
19 Dec 2019
29.00p
25 Mar 2020
3.50p
30 June 2020
1.75p
30 July 2021
32.50p
23 December 2021
40.00p
14 January 2022
Triple Point Income VCT plc
| 9
STRATEGIC REPORT
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
£2.0 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 £1 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
4
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 on pages 30 to 39.
Hydroelectric Power
Total Dividends of
116.75 Pence Per Share
Dividend Payments
Chair’s Statement
4
To align its interests with Shareholders, the Investment Manager earns a performance fee of 20% on all distributions over 100 pence per share.
5.00p
14 Jul 2017
5.00p
26 Jul 2018
5.00p
25 Jul 2019
50.00p
25 Mar 2020
5.00p
30 June 2020
1.75p
30 July 2021
45.00p
23 December 2021
10 |
Triple Point Income VCT plc
STRATEGIC REPORT
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 profi
t 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.
Dividend Payments
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 on pages 30 to 39). 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.
Chair’s Statement
Hydroelectric
Power
Gas Fired
Energy Centre
Solar PV
Controlled
Environment
Agriculture
Total Dividends of
32.50 Pence Per Share
5.00p
25 Mar 2020
6.50p
30 June 2020
3.50p
30 July 2021
12.00p
23 December 2021
5.50p
14 January 2022
| 11
STRATEGIC REPORT
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
E Share Class (continued)
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 on pages 30
to 39.
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. Further detail on the steps the Company will
be taking to resolve this matter is explained on pages 28
and 100.
Chair’s Statement
12 |
Triple Point Income VCT plc
STRATEGIC REPORT
Chair’s Statement
STRATEGIC REPORT
COMPANY STRATEGY AND
BUSINESS MODEL
The Strategic Report has been prepared in accordance
with the requirements of section 414C of the CA 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 CA 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
STRATEGY AND
BUSINESS MODEL
Triple Point Income VCT plc
| 15
STRATEGIC REPORT
Company Strategy and Business Model
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.
16 |
Triple Point Income VCT plc
STRATEGIC REPORT
Company Strategy and Business Model
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.
Triple Point Income VCT plc
| 17
STRATEGIC REPORT
Company Strategy and Business Model
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.
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 Hydro Assets being sold for
more than their carrying value and being offset by the Investment Manager’s performance fee due on distributions
5
.
C Share Class
Total Return
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 was 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.
100%
Invested in
Hydroelectric
Power
Investment classification for the C Share Class by asset value and sector value:
Cash 100%
A
5
The Investment Manager earns a performance fee of 20% on all distributions over 100 pence per share.
97.62
99.76
105.03
106.49
112.84
134.58
84.87
83.30
7.75
-
-
-
5.00
10.00
15.00
70.00
73.50
147.75
-
40.00
80.00
120.00
160.00
200.00
31 Mar
2014
31 Mar
2015
31 Mar
2016
31 Mar
2017
31 Mar
2018
31 Mar
2019
31 Mar
2020
31 Mar
2021
31 Mar
2022
NAV per share
Cumulative dividends
(1.70p)
1.22p
3.31p
3.06p
5.02p
5.53p
4.18p
2.27p
(0.92p)
(0.46p)
(0.44p)
1.96p
3.40p
6.32p
21.21p
1.11p
(0.34p)
(0.40p)
(4.00p)
-
4.00p
8.00p
12.00p
16.00p
20.00p
24.00p
28.00p
32.00p
31 Mar
2014
31 Mar
2015
31 Mar
2016
31 Mar
2017
31 Mar
2018
31 Mar
2019
31 Mar
2020
31 Mar
2021
31 Mar
2022
Revenue
Capital
18 |
Triple Point Income VCT plc
STRATEGIC REPORT
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.
6
Total Return
Earnings per share
Investment classification for the D Share Class by asset value and sector value:
Company Strategy and Business Model
100%
Invested in
Hydroelectric
Power
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.
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
D Share Class was 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.
Qualifying
Investments 54%
Cash 46%
+
A
6
The Investment Manager earns a performance fee of 20% on all distributions over 100 pence per share.
98.15
101.26
105.19
107.98
117.34
62.46
59.59
8.67
-
-
-
5.00
10.00
65.00
70.00
116.75
-
40.00
80.00
120.00
160.00
31 Mar
2015
31 Mar
2016
31 Mar
2017
31 Mar
2018
31 Mar
2019
31 Mar
2020
31 Mar
2021
31 Mar
2022
NAV per share
Cumulative dividends
(0.28p)
2.82p
4.01p
3.85p
3.93p
2.61p
2.35p
0.45p
(0.44p)
(0.63p)
(0.08p)
3.94p
10.43p
(2.49p)
(0.27p)
(4.62p)
(8.00p)
(4.00p)
-
4.00p
8.00p
12.00p
16.00p
31 Mar
2015
31 Mar
2016
31 Mar
2017
31 Mar
2018
31 Mar
2019
31 Mar
2020
31 Mar
2021
31 Mar
2022
Revenue
Capital
Triple Point Income VCT plc
| 19
STRATEGIC REPORT
Total Return
Earnings per Share
Company Strategy and Business Model
Investment classification for the E Share Class by asset value and sector value:
Crematorium Management 1%
Hydroelectric Power 1%
Vertical Growing 35%
SME Funding – Hydroelectric Power 7%
Electricity Generation – Other 39%
SME Funding – Other 17%
Qualifying Investments
67%
Non-Qualifying Investments
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.
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.
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.
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 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.
1
7
A
E Share Class
98.32
102.55
101.69
94.59
76.60
-
-
5.00
11.50
32.50
-
40.00
80.00
20.00
31 Mar 2018
31 Mar 2019
31 Mar 2020
31 Mar 2021
31 Mar 2022
NAV per share
Cumulative dividends
(0.92p)
0.86p
1.21p
1.08p
0.73p
(0.78p)
3.38p
2.92p
(1.69p)
2.44p
(4.00p)
-
4.00p
8.00p
31 Mar 2018
31 Mar 2019
31 Mar 2020
31 Mar 2021
31 Mar 2022
Revenue
Capital
20 |
20 |
Triple Point Income VCT plc
Triple Point Income VCT plc
STRATEGIC REPORT
Company Strategy and Business Model
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
on page 62 under “VCT Regulation”.
Ongoing Charges Ratio
The Ongoing Charges Ratio
7
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.
VCT Regulation
VCTs were first introduced in the Finance Act 1995
to provide a means for private individuals to invest in
unquoted companies in the UK. The Finance Act 2004
introduced changes to VCT legislation designed to make
VCTs more attractive to investors. The current tax benefits
available to eligible investors in VCTs include:
•
up-front income tax relief of 30% on a maximum
investment of £200,000 per tax year on newly issued
shares;
•
exemption from income tax on dividends received;
and
•
exemption from capital gains tax on disposals of
shares in VCTs.
Since the Finance Act 2004, the VCT rules have
subsequently been amended under the Finance Act
2014 and The Finance (No 2) Act 2015. The Investment
Manager, utilising advice from Philip Hare & Associates
LLP, ensures continued compliance with any legislative
changes.
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.
7
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.
| 21
STRATEGIC REPORT
Company Strategy and Business Model
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 on pages 30 to
39 and a copy of the Company’s Share Realisation Policy
is on page 17.
The valuation of, and potential exit routes for, the
Company’s 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 £2.3 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
on page 48 and further information on exposure to risks
including those associated with financial instruments is
given in note 19 of the financial statements.
22 |
Triple Point Income VCT plc
STRATEGIC REPORT
Company Strategy and Business Model
Risk
Overview
Mitigation
VCT Qualifying
Status Risk
The Company is required at all times to observe the
conditions laid down in the Income Tax Act 2007 for the
maintenance of approved VCT status. The loss of such
approval could lead to the Company losing its exemption
from corporation tax on capital gains, to investors being
liable to pay income tax on dividends received from the
Company and, in certain circumstances, to investors
being required to repay the initial income tax relief on
their investment.
The Investment Manager keeps the Company’s VCT
qualifying status under continual review and reports
to the Board on a quarterly basis. The Board has also
appointed Philip Hare & Associates LLP to undertake an
independent VCT status monitoring role.
Investment
Risk
The Company’s VCT qualifying investments 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.
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.
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.
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.
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.
Triple Point Income VCT plc
| 23
STRATEGIC REPORT
Company Strategy and Business Model
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 to pages
30 to 39 of 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 financial 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 financial statements.
The Company repaid its loan facility in full during the
current year. More detail on this can be found in the
Strategic Report on page 22. 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 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 £4.30 million
(2021: net current liabilities of £1.34 million) and had cash
balances of £3,831k (2021: £521k) (this does not include
cash balances held within investee companies), which the
Board believes are sufficient to meet current obligations
as they fall due. Further detail on liquidity risk can be
found in the principal risks, uncertainties and emerging
risks section on pages 22 to 23.
The only major cash outflow 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 sufficient financial resources to continue to meet its
day-to-day commitments for at least the next 12 months.
24 |
Triple Point Income VCT plc
STRATEGIC REPORT
Company Strategy and Business Model
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.
Triple Point Income VCT plc
| 25
STRATEGIC REPORT
Company Strategy and Business Model
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, and how it considers their interests when
making its decisions. Further, it demonstrates how the Board takes into consideration the long-term impact of its
decisions, and its desire to maintain a reputation for high standards of business conduct.
Stakeholder
Importance
Board Engagement
Shareholders
Continued shareholder support is critical to the
sustainability of the Company and the delivery
of its strategy.
The Board is committed to maintaining open channels of
communication with Shareholders.
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 performance
is critical to the Company to enable it to
successfully deliver its investment strategy
and meet its long-term investment objectives
of capital growth and tax-free dividends.
The Board has delegated the authority for the day-to-
day running of the Company to the Investment Manager.
The Board then engages with the Investment Manager in
reviewing, setting, approving, and overseeing the 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.
26 |
Triple Point Income VCT plc
STRATEGIC REPORT
Investee companies
The Company via its Investment Manager
has important relationships with individuals
responsible for the maintenance and
performance of its investee companies.
As part of achieving its investment objectives,
the Company provides funding to a number
of investee companies and as such, has
debtor relationships with several companies.
The Investment Manager obtains monthly operational reports
from the Operation & Maintenance (“O&M”) providers. Site
visits are undertaken at least annually by representatives from
the Investment Manager including the Investor Directors
and portfolio management team. The Investment Manager
is in regular contact with the O&M providers. Management
accounts and performance reports are provided to the
Directors of investee companies on a quarterly basis.
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
Providers
To function as a VCT with a premium
listing on the London Stock Exchange,
the Company relies on external service
providers for support in meeting all relevant
obligations.
These service providers are fundamental to
ensuring that the Company meets the high
standards of conduct that the Board sets.
The Company has a number of service providers which include
the Investment Manager and Company Secretary, Registrar,
Legal Advisers, VCT Compliance Adviser and the Auditor.
The Board has regular contact with the two main service
providers, the Investment Manager, and the Company
Secretary through quarterly Board meetings and more regular
discussions with the Board.
Lenders
The Company values its relationships with
its debt providers. Prudent debt financing
is important to effectively manage the
Company’s capital and achieve the target
return promised to Shareholders.
The Investment Manager engaged with and ensured the
Company met its obligations in relation to the loan facility
agreements. Further details on the Company’s loan facilities
can be found on page 96.
Community
The Directors recognise that the long-term
success of the Company is linked to the
success of the communities in which the
Company, and its investee companies,
operate.
The Board is cognisant of the impact of the Company’s
operations and of the companies in which it invests and
believes that its investment activities have many positive
benefits beyond the returns delivered for Shareholders.
Regulators
The Company can only operate with the
approval of its regulators.
The Company engages an external adviser to report on its
compliance with the VCT rules.
Company Strategy and Business Model
Triple Point Income VCT plc
| 27
STRATEGIC REPORT
Company Strategy and Business Model
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 enough distributable reserves as a result of an accounting error, and therefore
was not compliant with 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.
28 |
Triple Point Income VCT plc
STRATEGIC REPORT
INVESTMENT MANAGER’S
REVIEW
Sector Analysis
Electricity Generation
SME Funding
Industry Sector
Crematorium
Management
Controlled
Environment
Agriculture
Hydroelectric
Power
Other Electric
Power
Hydroelectric
Power
Other
Quoted
Investments
Total
Investments
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’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
3,103
558
26,741
Total
112
6,469
26,946
7,236
3,598
3,103
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
–
–
–
–
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%
30 |
Triple Point Income VCT plc
STRATEGIC REPORT
Investment Manager’s Review
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 on pages 8 to 12.
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.
Jonathan Parr
Head of Energy
Triple Point Investment Management LLP
| 31
STRATEGIC REPORT
Review of Portfolio
E Share Class
Solar Energy
The Company holds investments 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.
1. Solar panels convert
sunlight to DC electricity
2. An inverter converts DC electricity
produced
by the panels to AC electricity used by
appliances
5. Excess electricity sold to
the grid
3. Energy needed is used in the home
4. A meter within the house and
connector to the grid
STRATEGIC REPORT
Solar Energy
Green Energy for Education Limited
East Anglia
Number of Systems
103
Peak Capacity
278 kWp
Digima Limited
East Anglia
Number of Systems
104
Peak Capacity
306 kWp
Campus Link Limited
South West
Number of Systems
36
Peak Capacity
120 kWp
Digital Screen Solutions Limited
Northern Ireland
Number of Systems
323
Peak Capacity
1,361 kWp
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.
Triple Point Income VCT plc
| 33
STRATEGIC REPORT
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 £31,419,183. 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
Power to Grid
Run off from
Mountains
Intake
Penstock
Powerhouse
1
4
6
2
3
Outfall
5
STRATEGIC REPORT
34 |
Triple Point Income VCT plc
Hydroelectric Power
Green Highland
Shenval
(Kinlochteacuis)
Green Highland Allt
Choire a Bhalachain
Green Highland Allt Phocachain
Allt Phocachain
Green Highland Allt Phocachain
Allt Larairidh
Green Highland Allt
Luaidhe
Green Highland
Allt Ladaidh
SCOTTISH
HIGHLANDS
POWERING
1,757 HOMES
WITH ELECTRICITY GENERATED DURING THE YEAR.
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
be 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.
3,648
MWH OF ELECTRICITY
BASED ON A 3.8 MWH ANNUAL USE PER HOUSEHOLD
Triple Point Income VCT plc
| 35
STRATEGIC REPORT
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
Gas Supply in
Electricity out
Power to Grid
1
The Generator
4
6
5
The Gas
Engine
2
Exhaust Stacks
3
36 |
Triple Point Income VCT plc
STRATEGIC REPORT
Gas Fired Energy Centre
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.
BASED ON A 3.8 MWH ANNUAL USE PER HOUSEHOLD
44,841 HOMES
POWERED WITH ELECTRICITY
170,395
MWH OF ELECTRICITY
Triple Point Income VCT plc
| 37
STRATEGIC REPORT
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 pro-
vided 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.
Fund raising:
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 irriga-
tion 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
restarted in April 2022.
R&D progress:
The 4-person R&D team is continuously testing improve-
ments 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 consult-
ants and has made significant progress in developing its
brand, which will enable it to broaden its customer base
and conduct a professional fund-raising 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.
38 |
Triple Point Income VCT plc
STRATEGIC REPORT
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.
Triple Point Income VCT plc
| 39
STRATEGIC REPORT
Investment Portfolio Summary
31 March 2022
31 March 2021
Cost
Valuation
Cost
Valuation
£’000
%
£’000
%
£’000
%
£,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
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
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
Green Peak Generation Limited
2,200
10.89
1,206
5.03
2,200
5.68
1,339
2.76
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
Non-qualifying Holdings – Quoted
TP Social Housing REIT Plc Equity
–
–
–
–
570
1.47
558
1.15
–
–
–
–
570
1.47
558
1.15
Non-qualifying Holdings – Unquoted
Furnace Managed Services Limited
488
2.42
60
0.25
488
1.26
113
0.23
Elementary Energy Ltd
–
–
–
–
140
0.36
140
0.29
Green Highland Allt Choire A Bhalachain (255) Limited
–
–
–
–
–
–
–
–
Green Highland Allt Luaidhe (228) Limited
–
–
–
–
–
–
–
–
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
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
40 |
Triple Point Income VCT plc
STRATEGIC REPORT
SOLAR
HYDROELECTRIC POWER
GAS FIRED ENERGY CENTRE
CONTROLLED ENVIRONMENT AGRICULTURE
INVESTMENT PROPERTY
CREMATORIUM MANAGEMENT
HYDROELECTRIC POWER
SME FUNDING
OTHER
Investment Portfolio Summary
| 41
| 41
STRATEGIC REPORT
DIGIMA LIMITED
Capital Owned
38.87%
Summary of Information from Investee Company Financial Statements:
£'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:
£'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:
£'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:
£'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
Top Investments
42 |
Triple Point Income VCT plc
STRATEGIC REPORT
FUNDING PATH LIMITED
Capital Owned
49.00%
Summary of Information from Investee Company Financial Statements:
£'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:
£'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:
£'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
Triple Point Income VCT plc
| 43
STRATEGIC REPORT
GOVERNANCE
Board of Directors
GOVERNANCE
Michael Stanes
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
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
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 £200
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.
Triple Point Income VCT plc
| 45
Corporate Governance Report
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 Director (Provision 14)
As there are only two independent 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 29)
The Chair of the Board is the Chair 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.
46 |
Triple Point Income VCT plc
Corporate Governance Report
GOVERNANCE
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. The
Remuneration Report is detailed on pages 55 to 59.
Triple Point Income VCT plc
| 47
Corporate Governance Report
GOVERNANCE
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
emergency succession plan
to safeguard short term
stability of the Board.
•
Develop a formal
emergency contingency
plan for the unexpected
departure of Directors as
the sale of assets are being
managed.
•
Regular oversight of the
Company’s investments as
the disposal of assets and
investment realisations
progress.
•
A short update to be
provided to the Board
regularly to keep the Board
up to date on
developments, as well as
ensuring the actions taken
by the investment are
appropriate.
•
Closer monitoring of the
Company’s service
providers to ensure high
quality and effective service
is provided to the
Company.
•
An additional annual Audit
Committee meeting to
review the performance of
each service provider.
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. Details on the
Company’s responsible investing can be found on page 39.
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 on page 28 and note 24 on
page 100.
The Directors regularly review financial results and investment
performance with the Investment Manager.
The Directors have established an ongoing process designed to meet
the particular needs of the Company in identifying, evaluating and
managing the significant and emerging risks to which it is exposed
including, among others, market risk, VCT qualifying investment risk
and operational risks which are recorded on a risk register. The
controls employed to mitigate these risks are identified and the
residual risks are rated taking into account the impact of the
mitigating factors. The risk register is reviewed bi-annually. The
principal risks, uncertainties and emerging risks identified from the risk
register and a description of the Group’s risk management procedures
can be found on pages 22 to 23.
48 |
Triple Point Income VCT plc
Corporate Governance Report
GOVERNANCE
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 on
pages 26 to 27.
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
Triple Point Income VCT plc
| 49
AUDIT
COMMITTEE
REPORT
Audit Committee Report
GOVERNANCE
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.
Triple Point Income VCT plc
| 51
Audit Committee Report
GOVERNANCE
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, confirmation 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.
52 |
Triple Point Income VCT plc
Audit Committee Report
GOVERNANCE
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
Triple Point Income VCT plc
| 53
DIRECTORS’
REMUNERATION
REPORT
Directors’ Remuneration Report
GOVERNANCE
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
Triple Point Income VCT plc
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Directors’ Remuneration Report
GOVERNANCE
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 £100,000 per annum. None of the Directors are eligible for
bonuses, pension benefits, share options, long-term incentive schemes
or other benefits in respect of their services as Non-Executive Directors
of the Company. 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 a basic
fee which is paid
on a quarterly
basis.
The total aggregate fees that can be
paid to the Directors is calculated in
accordance with the articles of
association.
The level of the annual fee has been
set to attract and retain high calibre
Directors with the skills and
experience necessary for the role.
The fee has been benchmarked
against companies of a similar size.
There are no provisions
to recover or withhold
sums.
Other Benefits
The Directors shall
be entitled to be
repaid expenses.
Article 89 of the Company’s Articles of
Association permits for any director to
be repaid reasonable expenses
incurred in attending or returning 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.
In line with market practice, the
Company will reimburse the
Directors for expenses to ensure
that they are able to carry out their
duties effectively.
56 |
Triple Point Income VCT plc
Directors’ Remuneration Report
GOVERNANCE
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.
Date of Contract
Unexpired Term
of Contract
Annual Rate of
Directors’ Fees £
Policy on
Payment For
Loss of Office
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 for
the year ended
31 March 2022
Change from
prior year
Emoluments for
the year ended
31 March 2021
Emoluments for
the year ended
31 March 2020
Emoluments for
the year ended
31 March 2019
Emoluments for
the year ended
31 March 2018
£
£
£
£
£
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
£’000
£’000
Total Dividends paid:
22,396
3,037
Directors’ emoluments
66
67
Triple Point Income VCT plc
| 57
Directors’ Remuneration Report
GOVERNANCE
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.
60.00
80.00
100.00
120.00
140.00
160.00
180.00
01-Mar-14
01-Sept-14
01-Mar-15
01-Sept-15
01-Mar-16
01-Sept-16
01-Mar-17
01-Sept-17
01-Mar-18
01-Sept-18
01-Mar-19
01-Sept-19
01-Mar-20
01-Sept-20
01-Mar-21
01-Sept-21
01-Mar-22
Total Return (p)
C Ordinary Share NAV Total Return rebased to 100p at launch
FTSE Small-Cap Total Return rebased to 100p at launch
FTSE All Share Total Return rebased to 100p at launch
C Ordinary Share Net Asset Value Total Return since launch against the FTSE
Small-Cap Index Total Return
60.00
70.00
80.00
90.00
100.00
110.00
120.00
130.00
140.00
150.00
160.00
170.00
01-Mar-15
01-Sept-15
01-Mar-16
01-Sept-16
01-Mar-17
01-Sept-17
01-Mar-18
01-Sept-18
01-Mar-19
01-Sept-19
01-Mar-20
01-Sept-20
01-Mar-21
01-Sept-21
01-Mar-22
Total Return (p)
D Ordinary Share NAV Total Return rebased to 100p at launch
FTSE Small-Cap Total Return rebased to 100p at launch
FTSE All Share Total Return rebased to 100p at launch
D Ordinary Share Net Asset Value Total Return since launch against the FTSE
Small-Cap & FTSE All Share Index Total Return
58 |
Triple Point Income VCT plc
Directors’ Remuneration Report
GOVERNANCE
E Ordinary Share Net Asset Value Total Return since launch against the FTSE
Small-Cap & FTSE All Share Index Total Return
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
01-Sept-17
01-Mar-18
01-Sept-18
01-Mar-19
01-Sept-19
01-Mar-20
01-Sept-20
01-Mar-21
01-Sept-21
01-Mar-22
Total Return (p)
E Ordinary Share NAV Total Return rebased to 100p at launch
FTSE Small-Cap Total Return rebased to 100p at launch
FTSE All Share Total Return rebased to 100p at launch
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 on pages 6 to 43.
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
Triple Point Income VCT plc
| 59
Directors’ Report
GOVERNANCE
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 on
pages 46 to 49 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 and further details can be found on page
62.
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
60 |
Triple Point Income VCT plc
Directors’ Report
GOVERNANCE
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
on pages 30 to 39.
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. Further information is included on pages 28
and 100.
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.
Triple Point Income VCT plc
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Directors’ Report
GOVERNANCE
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 on pages 24 and
25.
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 £5 million in state aid risk finance in the 12
months up to date of the investment, nor more than £12 million
in total (the limits are £10 million and £20 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.
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Directors’ Report
GOVERNANCE
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
Triple Point Income VCT plc
| 63
Directors’ Responsibility Statement
GOVERNANCE
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
64 |
Triple Point Income VCT plc
Page
INDEPENDENT
AUDITOR’S
REPORT
Independent auditor’s report
to the members of Triple Point Income VCT Plc
GOVERNANCE
Opinion on the financial statements
In our opinion, the financial statements:
•
give a true and fair view of the state of the Company’s affairs
as at 31 March 2022 and of its profit for the year then ended;
•
have been properly prepared in accordance with UK adopted
international accounting standards; and
•
have been prepared in accordance with the requirements of
the Companies Act 2006.
We have audited the financial statements of Triple Point Income VCT
Plc for the year ended 31 March 2022 which comprise the Statement
of Comprehensive Income, Balance Sheet, Statement of Changes in
Shareholders’ Equity, Statement of Cash Flows and notes to the
financial statements, including summary of significant accounting
policies. The financial reporting framework that has been applied in
their preparation is applicable law and UK adopted international
accounting standards.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our
report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion. Our
audit opinion is consistent with the additional report to the audit
committee.
Independence
Following the recommendation of the audit committee, we were
appointed by the directors on 9 November 2017 to audit the financial
statements for the year ended 31 March 2018 and subsequent
financial periods. We were re-appointed by shareholders at the AGM
held on 14 June 2021 to audit the financial statements for the year
ending 31 March 2022. The period of total uninterrupted
engagement including retenders and reappointments is five years,
covering the years ending 31 March 2018 to 31 March 2022. We
remain independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to listed
public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. The non-audit
services prohibited by that standard were not provided to the
Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Company’s
ability
to continue to adopt the going concern basis of accounting included:
•
Obtaining the VCT compliance reports (prepared by
management’s experts) during the year and as at year end
reviewing the calculations therein to ensure that the Company
was meeting its requirements to retain VCT status.
•
Consideration of the Company’s expected future compliance
with VCT legislation, the absence of bank debt, contingencies
and commitments and any market or reputational risks.
•
Reviewing the forecasted cash flows that support the Directors’
assessment of going concern, challenging assumptions and
judgements made in the forecasts, and assessing them for
reasonableness. In particular, we considered the available cash
resources relative to forecast expenditure which was assessed
against the prior year for reasonableness.
•
Evaluating directors’ method of assessing the going concern in
light of market volatility and the present uncertainties in
economic recovery created by the ongoing Covid-19
pandemic, war in Ukraine and high inflation.
•
Calculating financial ratios to ascertain the financial health of
the Company.
•
Performing stress testing of extreme downside scenarios and
cash flow forecasts, as well as conducting a robust review of
the Company’s liquidity position.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Company’s ability to
continue as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue.
In relation to the Company’s reporting on how it has applied the UK
Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the Directors’ statement in the financial
statements about whether the Directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of this
report.
Overview
Key audit
matters
2022
2021
Valuation of
unquoted investments
Yes
Yes
Materiality
Company financial statements
£486k (2021:£960k) based on 2% of net assets
(2021: 2% of the value of the Investment
portfolio).
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Triple Point Income VCT plc
Independent auditor’s report
to the members of Triple Point Income VCT Plc
GOVERNANCE
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system of internal control, and
assessing the risks of material misstatement in the financial statements.
We also addressed the risk of management override of internal controls,
including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including
those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the
engagement team. This matter was addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on this matter.
Key audit matter
How the scope of our audit addressed the key audit matter
Valuation of
Investments
See note 12 and
accounting policy
on page 86
The investments balance is a
significant balance in the
financial statements with
100% of the underlying
investment portfolio
represented by unquoted
equity and loan stock.
These investments have
been classified within level 3
as they are not traded and
contain certain unobservable
inputs and there is a high
level of estimation
uncertainty involved in
determining the unquoted
equity and loan investments.
The Investment Manager’s
fee is based on the value of
the net assets of the VCT.
The Investment Manager is
responsible for preparing the
valuation of investments
which are reviewed and
approved by the Board.
Notwithstanding this review,
there is a potential risk of
misstatement in the
investment valuations.
We, therefore, have
determined the valuation of
investments to be a key
audit matter.
In respect of the investments valued using discounted cash flow models (“DCF”)
(representing 55% of the portfolio), we have tested all the investments and performed the
following procedures:
•
Considered the appropriateness of overall fair value and valuation movement in the
period;
•
Reviewed and challenged the key assumptions including discount factors, inflation,
asset life, energy yield and power price applied by benchmarking to available
industry data and verifying these to supporting evidence;
•
Consulted with our internal valuations specialists on the appropriateness of the
assumptions including the discount rate, inflation, power price and asset life;
•
Used spreadsheet analysis tools to assess the integrity of the models;
•
Performed sensitivity analyses by adjusting certain key inputs in order to calculate a
reasonable range of possible valuations where appropriate, and
•
Considered the accuracy of forecasting by comparing previous forecasts to actual
results.
•
For those investments valued using methodology other than a DCF method (i.e.
remaining 45% of the portfolio), we have performed the following procedures:
•
Agreed inputs to valuations to third party data such as board packs of underlying
investee companies where appropriate;
•
Considered whether the valuation methodology was the most appropriate in the
circumstances under the International Private Equity and Venture Capital Valuation
(“IPEV”) Guidelines and IFRS 13 – Fair Value Measurement (“IFRS 13”);
•
Re-performed the calculation of the value attributable to the company;
•
Verified and benchmarked key inputs and estimates to independent information and
our own research;
•
Reviewed and challenged the inputs to the valuation and assessed the impact of the
estimation uncertainty concerning these assumptions;
•
Where appropriate, performed sensitivity analysis on the valuation calculations where
there is sufficient evidence to suggest reasonable alternative inputs might exist; and
•
Considered the economic environment in which the investment operates to identify
factors that could impact the investment valuation.
Key Observations:
Based on the procedures performed, we did not identify any indicators that would suggest
the valuation of investments were materially misstated.
Triple Point Income VCT plc
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Independent auditor’s report
to the members of Triple Point Income VCT Plc
GOVERNANCE
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
We consider
materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are
taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated
as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
2022
2021
Materiality
£486,000
£960,000
Basis for determining materiality
2% of net assets
2% of the value of the investment portfolio
Rationale for the benchmark
applied
•
In setting materiality, we have had regard to the nature and disposition of the investment portfolio.
Given that the VCT’s portfolio is comprised of unquoted investments which would typically have a
wider spread of reasonable alternative possible valuations, we have applied a percentage of 2% of
net assets (2021: 2% of the investment portfolio).
•
This was changed from the prior year’s benchmark of gross investment value to align with a
standardised benchmark across the investment company sector.
Performance materiality
£365,000
£720,000
Basis for determining
performance materiality
75% of Materiality
Risk assessment of the control environment and
consideration of the number of historical errors
identified.
75% of Materiality
Risk assessment of the control environment and
consideration of the number of historical errors
identified.
Specific materiality
We also determined that for items impacting realised return, a misstatement of less than materiality for the financial statements as a whole, specific
materiality, could influence the economic decisions of users. As a result, we determined materiality for these items to be £75,000 based on 5% of
total expenditure excluding expenditure one-off in nature i.e, performance fees (2021: 40,000 based on 10% of revenue return before tax). We
further applied a performance materiality level of 75% of specific materiality to ensure that the risk of errors exceeding specific materiality was
appropriately mitigated.
Reporting Threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £9,700 (2021:£18,000). We also
agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in the Annual Report other than
the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except
to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on
the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
68 |
Triple Point Income VCT plc
Independent auditor’s report
to the members of Triple Point Income VCT Plc
GOVERNANCE
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Statement specified for our
review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement
is materially consistent with the financial statements or our knowledge obtained during the audit.
Going concern and
longer-term viability
•
The Directors’ statement with regards to the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on pages 24 to 25; and
•
The Directors’ explanation as to its assessment of the entity’s prospects, the period this assessment covers
and why they period is appropriate set out on page 25.
Other Code provisions
•
Directors’ statement on fair, balanced and understandable set out on page 64;
•
Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set
out on page 25;
•
The section of the annual report that describes the review of the effectiveness of risk management and
internal control systems set out on pages 48 to 49; and
•
The section describing the work of the audit committee set out on page 51.
Triple Point Income VCT plc
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Independent auditor’s report
to the members of Triple Point Income VCT Plc
GOVERNANCE
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006
and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Strategic report and the Directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
•
the Strategic report and the Directors’ report have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic report or the Directors’ report.
Directors’ remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance
with the Companies Act 2006.
Matters on which we
are required to report
by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us
to report to you if, in our opinion:
•
adequate accounting records have not been kept by the Company, or returns adequate for our audit have not
been received from branches not visited by us; or
•
the Company’s financial statements and the part of the Directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
•
certain disclosures of Directors’ remuneration specified by law are not made; or
•
we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ Responsibility Statement, the
Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view,
and for such internal control as the Directors determine is necessary
to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either
intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of
the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Extent to which the audit was capable of
detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with
laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is
detailed below:
We gained an understanding of the legal and regulatory framework
applicable to the Company and the industry in which it operates, and
considered the risk of acts by the Company which were contrary to
applicable laws and regulations, including fraud. These included but
were not limited to compliance with the Companies Act 2006, the
FCA listing and DTR rules, the principles of the UK Corporate
Governance Code, industry practice represented by the Association
of Investment Companies’ Statement of Recommended practice:
Financial Statements of Investment Trust Companies and Venture
Capital Trusts (“the SORP”) and updated in February 2018 with
consequential amendments, requirements of s1158 of the
Corporation Tax Act and the applicable financial reporting framework.
We also considered the risk that the valuation of the investment
portfolio was subject to bias from the Investment Manager, as
described in the Key Audit Matter section above. Lastly, we
considered the Company’s qualification as a VCT under UK tax
legislation.
We focused on laws and regulations that could give rise to a material
misstatement in the Company’s financial statements. Our tests
included but were not limited to:
70 |
Triple Point Income VCT plc
Independent auditor’s report
to the members of Triple Point Income VCT Plc
GOVERNANCE
•
Obtaining an understanding of the control environment in
monitoring compliance with laws and regulations;
•
Agreement of the financial statement disclosures to underlying
supporting documentation;
•
Enquiries of directors and those charged with governance of
their knowledge of actual or suspected fraud or instances of
non-compliance with laws and regulations;
•
Obtaining the VCT compliance reports prepared by
management’s experts during the year and at year-end
reviewing their calculations to check that the Company was
meeting its requirements to meet VCT status; and
•
Review of minutes of board meetings and legal
correspondence and invoices throughout the period to identify
any instances of non-compliance with laws and regulations and
corroborate our above enquiries.
We assessed the susceptibility of the financial statement to material
misstatement including fraud and considered the fraud risk areas to
be the valuation of unquoted investments and management override
of controls.
Our tests included, but were not limited to:
•
The procedures set out in the Key Audit Matters section
above;
•
Obtaining independent evidence to support the ownership of
investments;
•
Recalculating investment management fees in total;
•
Obtaining independent confirmation of bank balances; and
•
Testing journals which met defined risk criteria by agreeing to
supporting documentation and evaluating whether there was
evidence of bias by the Investment Manager and Directors
that represented a risk of material misstatement due to fraud.
We also communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members and remained
alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk of
not detecting a material misstatement due to fraud is higher than the
risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery, misrepresentations
or through collusion. There are inherent limitations in the audit
procedures performed and the further removed non-compliance with
laws and regulations is from the events and transactions reflected in
the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the
Financial Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities.
This description forms part of our auditor’s
report.
Use of our report
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Parent Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose.
To the fullest
extent permitted by law, we do not accept or assume responsibility to
anyone other than the Parent Company and the Parent Company’s
members as a body, for our audit work, for this report, or for the
opinions we have formed.
Peter Smith
(Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
20 July 2022
BDO LLP is a limited liability partnership registered in England and
Wales (with registered number OC305127).
Triple Point Income VCT plc
| 71
FINANCIAL
STATEMENTS
FINANCIALS
Statement of Comprehensive Income
Year ended
31 March 2022
Year ended
31 March 2021
Note
Revenue
Capital
Total
Revenue
Capital
Total
Income
£’000
£’000
£’000
£’000
£’000
£’000
Investment income
4
Gain/(loss) arising on the disposal of
investments during the year
12
(204 )
(204 )
Gain/(loss) arising on the revaluation
of investments at the year end
12
(173 )
(173 )
Investment return/(loss)
(377 )
Investment management fees
5
Performance Fees
6
Other expenses
6
Finance costs
7
Profit(loss) Defore taxation
(618 )
Taxation
10
(30 )
(7 )
(125 )
(79 )
Profit(loss) after taxation
(572 )
Other comprehensive income
Total comprehensive income/(loss)
(572 )
Basic and diluted earnings/(loss) per share (pence)
C Share
11
(0.92 p)
(0.40 p)
(1.32 p)
(0.34 p)
D Share
11
(4.62 p)
(4.17 p)
(0.27 p)
E Share
11
(1.69 p)
(0.61 p)
The total column of this statement is the Statement of Comprehensive Income of the Company prepared in accordance with UK-adopted
International Accounting Standards (IFRS). The supplementary revenue return and capital columns have been prepared in accordance with the
Association of Investment Companies Statement of Recommended Practice (AIC SORP) in so far as it does not conflict with IFRS.
All revenue and capital items in the above statement derive from continuing operations.
This Statement of Comprehensive Income includes all recognised gains and losses.The accompanying notes are an integral part of these
statements.
Triple Point Income VCT plc
| 73
FINANCIALS
Balance Sheet
31 March 2022
31 March 2021
Note
£’000
£’000
Non-current assets
Financial assets at fair value through profit or loss
12
Current assets
Receivables
13
Cash and cash equivalents
14
Total Assets
Current liabilities
Payables and accrued expenses
16
Current taxation payable
Short-term debt facility
Net Assets
Equity attributable to equity holders of the parent
Share capital
18
Share redemption reserve
Share premium
Special distributable reserve
Capital reserve
Revenue reserve
(7,263 )
Total equity
Shareholders’ funds
C Share
20
D Share
20
E Share
20
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 on pages 85 to 100 are an integral part of this statement.
74 |
Triple Point Income VCT plc
FINANCIALS
Statement of Changes in Shareholders’ Equity
Issued
Capital
Share
Redemption
Reserve
Share
Premium
Special
Distributable
Reserve
Capital
Reserve
Revenue
Reserve
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Year ended 31 March 2022
Opening balance
Purchase of own shares
(29 )
(29 )
Cancellation of share premium
(28,661 )
Dividends paid
(15,588 )
(6,808 )
(22,396 )
Transfer from revenue to unrealised*
(591 )
Transactions with owners
(28,661 )
(7,428 )
(22,425 )
(Loss)/profit for the year
Other comprehensive income
(Loss)/profit and total comprehensive income
for the year
Balance at 31 March 2022
(7,263 )
Capital reserve consists of:
Investment holding gains
3,762
Other realised gains
3,743
7,505
Year ended 31 March 2021
Opening balance
Purchase of own shares
(1 )
(51 )
(51 )
Dividends paid
(2,405 )
(632 )
(3,037 )
Transfer from revenue to unrealised*
(619 )
Transactions with owners
(1 )
(2,405 )
(1,302 )
(3,088 )
(Loss)/profit for the year
(572 )
Other comprehensive income
(Loss)/profit and total comprehensive income
for the year
(572 )
Balance at 31 March 2021
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 £20,108,000 (2021: £7,635,000).
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.
Triple Point Income VCT plc
| 75
FINANCIALS
Statement of Cash Flows
Year ended
31 March 2022
Year ended
31 March 2021
£’000
£’000
Cash flows from operating activities
Profit before taxation
Adjustments for:
Add back financing costs
Movement in accrued income recognised as an unrealised gain
(591 )
(619 )
(Loss)/gain arising on the disposal of investments during the period
(1,254 )
(Loss)/gain arising on the revaluation of investments at the period end
(683 )
Cashflow generated by operations
(2,231 )
Decrease/(Increase) in receivables
(198 )
(Decrease)/increase in payables
(204 )
Cash flows generated from operating activities
(2,179 )
Tax paid
(89 )
(98 )
Net cash flows (used in)/generated from operating activities
(2,268 )
Cash flow from investing activities
Proceeds of sale of financial assets at fair value through profit or loss
Net cash flows generated from investing activities
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
(180 )
Reconciliation of net cash flow to movements in cash and cash equivalents
Opening cash and cash equivalents
Net increase/(decrease) in cash and cash equivalents
(180 )
Closing cash and cash equivalents
The accompanying notes are an integral part of these statements.
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Triple Point Income VCT plc
Page
UNAUDITED
NON-STATUTORY
ANALYSIS
Unaudited Non-Statutory Analysis of
The C Shares
NON-STATUTORY ANALYSIS
Statement of Comprehensive Income
Year ended
31 March 2022
Year ended
31 March 2021
Revenue
Capital
Total
Revenue
Capital
Total
£’000
£’000
£’000
£’000
£’000
£’000
Investment income
175
–
175
602
–
602
Realised gain on investments
–
1,277
1,277
–
–
–
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
£’000
£’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 Shareholders’ Equity
31 March 2022
31 March 2021
£’000
£’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
Triple Point Income VCT plc
Unaudited Non-Statutory Analysis of
The C Shares
NON-STATUTORY ANALYSIS
Investment Portfolio
31 March 2022
31 March 2021
Cost
Valuation
Cost
Valuation
£’000
%
£’000
%
£’000
%
£’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
Triple Point Income VCT plc
| 79
Unaudited Non-Statutory Analysis of
The D Shares
NON-STATUTORY ANALYSIS
Statement of Comprehensive Income
Year ended
31 March 2022
Year ended
31 March 2021
Revenue
Capital
Total
Revenue
Capital
Total
£’000
£’000
£’000
£’000
£’000
£’000
Investment income
337
–
337
676
–
676
Realised loss on investments
–
(153)
(153)
–
–
–
Unrealised gain 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
£’000
£’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
£’000
£’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
80 |
Triple Point Income VCT plc
Unaudited Non-Statutory Analysis of
The D Shares
NON-STATUTORY ANALYSIS
Investment Portfolio
31 March 2022
31 March 2021
Cost
Valuation
Cost
Valuation
£’000
%
£’000
%
£’000
%
£’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 Limited
–
–
–
–
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
Triple Point Income VCT plc
| 81
Unaudited Non-Statutory Analysis of
The E Shares
NON-STATUTORY ANALYSIS
Statement of Comprehensive Income
Year ended
31 March 2022
Year ended
31 March 2021
Revenue
Capital
Total
Revenue
Capital
Total
£’000
£’000
£’000
£’000
£’000
£’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
2.44
3.17p
1.08p
(1.69p)
(0.61p)
Balance Sheet
31 March 2022
31 March 2021
£’000
£’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
£’000
£’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
Triple Point Income VCT plc
Unaudited Non-Statutory Analysis of
The E Shares
NON-STATUTORY ANALYSIS
Investment Portfolio
31 March 2022
31 March 2021
Cost
Valuation
Cost
Valuation
£’000
%
£’000
%
£’000
%
£’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
Non-Qualifying Holdings
Quoted
Investment Property
Triple Point 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
Triple Point Income VCT plc
| 83
NOTES TO THE
FINANCIAL
STATEMENTS
FINANCIALS
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
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 month. During the
year, the Company repaid its drawdown £2.3 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 on pages 8
to 13 and 30 to 39.
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. 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.
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.
Triple Point Income VCT plc
| 85
FINANCIALS
Notes to the Financial Statements
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 on pages 8 to 43 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 IFRS 11 “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 significant influence, through an ownership of between 20% and
50%. The Company’s Subsidiary, associates and joint ventures are
disclosed in note 15.
86 |
Triple Point Income VCT plc
FINANCIALS
Notes to the Financial Statements
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 classification of financial assets at initial recognition depends on
the purpose for which the financial asset was acquired and its
characteristics. All financial assets are initially recognised at fair value.
All purchases of financial assets are recorded at the date on which the
Company became party to the contractual requirements of the
financial asset.
The Company’s financial assets principally comprise of investments
held at fair value through profit 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 profit 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 profit 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 defined 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
flow basis in accordance with IFRS 13 and IFRS 9.
Derecognition of financial 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 flow has expired.
Triple Point Income VCT plc
| 87
FINANCIALS
Notes to the Financial Statements
Financial liabilities
Financial liabilities are classified 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 financial 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 reflect amortised cost, as the
amounts would not usually be materially different from the outstanding balances.
The Company’s other financial 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 financial 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 financial 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.
88 |
Triple Point Income VCT plc
FINANCIALS
Notes to the Financial Statements
4. Investment Income
C
Shares
D
Shares
E
Shares
Total
£’000
£’000
£’000
£’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
C
Shares
D
Shares
E
Shares
Total
£’000
£’000
£’000
£’000
Year ended 31 March 2021
Loan stock interest
382
676
860
1,918
Dividends receivable
220
–
99
319
Other Investment Income
–
–
22
22
Property Income
–
–
15
15
602
676
996
2,274
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 £127,000 (2021: £143,000).
C
Shares
D
Shares
E
Shares
Total
£’000
£’000
£’000
£’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
Triple Point Income VCT plc
| 89
FINANCIALS
Notes to the Financial Statements
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
31 March 2022
Year ended
31 March 2021
Revenue
Capital
Total
Revenue
Capital
Total
£’000
£’000
£’000
£’000
£’000
£’000
TPIM: Accrued performance fee
–
1,732
1,732
–
5
5
Financial and regulation costs
57
–
57
59
–
59
General administration
143
–
143
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 £2.3 million was drawn on the facility. The loan attracts interest at a rate of
4.5%. During the year, interest of £116,198 (2021: £103,500) 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
£’000
£’000
£’000
£’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
90 |
Triple Point Income VCT plc
FINANCIALS
Notes to the Financial Statements
9. Directors’ Remuneration
C
Shares
D
Shares
E
Shares
Total
£’000
£’000
£’000
£’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
£’000
£’000
£’000
£’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
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 £nil (2021: £nil)
has been recognised in the year and a write down of deferred tax asset from prior periods of £4,902 as there is no probable future taxable profit
against which the deductible temporary difference can be utilised. The tax loss carried forward is £nil (2021: £nil). With effect from 1 April 2023 the
corporation tax rate will increase to 25%.
Disclosure by share class is unaudited
Triple Point Income VCT plc
| 91
FINANCIALS
Notes to the Financial Statements
11. Earnings/(loss) per Share
The loss per C Share is (1.32p) (2021:
1.93p) based on the loss after tax of £179,000 (2021: £258,000) 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 loss after tax of £568,000 (2021: £283,000) 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 £921,000 (2021: (£178,000)) 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 £174,000 (2021: £363,000) 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
on pages 30 to 39.
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 £157,500 in this company. The loan has an interest rate of 11.66%.
92 |
Triple Point Income VCT plc
FINANCIALS
Notes to the Financial Statements
Valuation techniques and unobservable inputs:
Sector
Valuation Techniques
Significant unobservable inputs
Inter relationship between
significant unobservable inputs
and fair value measurement
Estimated fair value would
increase/(decrease) if:
Hydroelectric Power
•
Discounted cash flows: The
valuation model considers the
present value of expected
payment, discounted using a
risk-adjusted discount rate.
•
Discount rate 6.75%
(2021: 6.75%).
•
Inflation rate: OBR 5-year forecast,
2.75% long term (2021: OBR
5-year forecast, 2.75% long term).
•
The discount rate was
lower/(higher).
•
The inflation rate was
higher/(lower).
Gas Fired Energy
Centre
•
Discounted cash flows: The
valuation model considers the
present value of expected
payment, discounted using a
risk-adjusted discount rate.
•
Discount rate 12.1%
(2021: 14.9%).
•
Inflation rate: OBR 5-year forecast,
2.75% long term (2021: Inflation
rate: OBR 5-year forecast, 2.75%
long term).
•
The discount rate was
lower/(higher).
•
The inflation rate was
higher/(lower).
Solar
•
Discounted cash flows: The
valuation model considers the
present value of expected
payment, discounted using a
risk-adjusted discount rate.
•
Discount rate 5.50%
(2021: 6.00%).
•
Inflation rate: OBR 5-year forecast,
2.75% long term (2021: Inflation
rate: OBR 5-year forecast, 2.75%
long term).
•
The discount rate was
lower/(higher).
•
The inflation rate was
higher/(lower
).
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 £17,534 or 2.3%. Using the upside alternative, the aggregate value of the hydroelectric portfolio
would be an increase of £18,304 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 £186,008 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 £80,227 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 £323,220 or 5.0%. Using the downside alternative, the
aggregate value of the investments would fall £293,718 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.
Triple Point Income VCT plc
| 93
FINANCIALS
Notes to the Financial Statements
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
£’000
£’000
£’000
£’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
£’000
£’000
£’000
£’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
£’000
£’000
£’000
£’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)
94 |
Triple Point Income VCT plc
FINANCIALS
Notes to the Financial Statements
Level 3 Unquoted Investments
C
Shares
D
Shares
E
Shares
Total
£’000
£’000
£’000
£’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 on pages 30 to
39 and 40 to 41, 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
£’000
£’000
£’000
£’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.
Triple Point Income VCT plc
| 95
FINANCIALS
Notes to the Financial Statements
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 financial 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
Aeris Power Limited
250 Fowler Avenue, Farnborough, Hampshire, GU14 7JP
100.00%
Broadpoint 2 Limited
1 King William Street, London, EC4N 7AF
49.00%
Digima Limited
250 Fowler Avenue, Farnborough, Hampshire, GU14 7JP
30.87%
Digital Screen Solutions Limited
250 Fowler Avenue, Farnborough, Hampshire, GU14 7JP
35.36%
Funding Path Limited
1 King William Street, London, EC4N 7AF
49.00%
Furnace Managed Services Limited
30 Buckland Gardens, Ryde, Isle of Wight, PO33 3AG
40.05%
Green Energy for Education Limited
1 King William Street, London, EC4N 7AF
50.00%
Green Highland Shenval Limited
Q Court, 3 Quality Street, Edinburgh, EH4 5BP
28.16%
Green Peak Generation Limited
Q Court, 3 Quality Street, Edinburgh, EH4 5BP
48.26%
Perfectly Fresh Cheshire Limited
1 King William Street, London, EC4N 7AF
49.97%
•
All investments are held in the UK.
•
The investments are a combination of debt and equity.
•
Equity holding is equal to the voting rights.
16. Payables and Accrued Expenses
C
Shares
D
Shares
E
Shares
Total
£’000
£’000
£’000
£’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 £2.3 million loan from TPLP on 1 February 2022.
During the year, interest of £116,198 (2021: £103,500) was charged and paid by the Company.
There are no loan covenants applicable to the above described loan.
96 |
Triple Point Income VCT plc
FINANCIALS
Notes to the Financial Statements
18. Share Capital
Unaudited
31 March 2022
C
Shares
D
Shares
E
Shares
Total
£’000
£0.01 each
£’000
£’000
£’000
Ordinary shares
£0.01 each
£0.01 each
£0.01 each
Allotted and fully paid up
Brought forward
134
136
290
560
Shares issued
–
–
–
–
Shares repurchased
–
–
–
–
Carried forward
134
136
290
560
Unaudited
31 March 2021
C
Shares
D
Shares
E
Shares
Total
£’000
£’000
£’000
£’000
Ordinary shares
£0.01 each
£0.01 each
£0.01 each
£0.01 each
Allotted and fully paid up
Brought forward
135
136
290
560
Shares issued
–
–
–
–
Shares repurchased
–
–
–
–
Carried forward
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 £37.8k representing
0.07%.
The rights attached to each class of share are disclosed in the Directors’ Report on pages 60 to 63.
19.
Financial Instruments and Risk Management
The Company’s financial instruments comprise VCT qualifying investments and non-qualifying investments, cash balances and liquid resources
including debtors and creditors. The Company holds financial assets in accordance with its Investment Policy detailed in the Strategic Report on
pages 8 and 43.
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.
Triple Point Income VCT plc
| 97
FINANCIALS
Notes to the Financial Statements
Total value
Financial assets held at
amortised cost
Financial liabilities held at
amortised cost
Designated at fair value
through profit or 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. Details of the Company’s investment
portfolio at the balance sheet date are set out on pages 40 to 41.
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 £5,399,000 (2021:
£11,365,000) 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 £4,221,000
(2021: £5,842,000) which carry fixed rates of interest.
The amounts held in variable rate investments at the balance sheet
date are as follows:
31 March 2022
31 March 2021
£’000
£’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.
98 |
Triple Point Income VCT plc
FINANCIALS
Notes to the Financial Statements
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
£’000
£’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.
Further information surrounding going concern and liquidity can be
found in note 2 to the financial statements on page 24.
The Company’s liquidity risk is managed on a continuing basis by the
Investment Manager in accordance with policies and procedures laid
down by the Board. The Company’s overall liquidity risks are
monitored by the Board on a quarterly basis.
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 £3,831,000 (2021:
£521,000).
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 £1,039,000 (2021: £11,194,000) 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 £1,179,000 (2020: £8,106,000) 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 £22,213,000 (2021: £27,382,000) divided by
the 28,940,076 (2021: 28,949,575) E Shares in issue.
21. Relationship with Investment Manager
During the period, TPIM received £821,385 which has been expensed
(2021: £943,367 ) for providing management and administrative
services to the Company. At 31 March 2022, £177,302 was owing to
TPIM (2021: £382,129).
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 £1,731,713 has
been accrued and paid during the year.
During the year, the Company repaid its £2.3 million loan from TPLP
who is also managed by the investment manager on 1 February 2022.
Interest of £116,198 (2021: £103,500) was charged on amounts drawn
during the period.
22. Related Party Transactions
The Directors’ Remuneration Report on pages 55 to 59 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 £31,419,183,
being £12,292,483 for the C Ordinary Share Class, £9,409,513 for the
D Ordinary Share Class and £9,717,187 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.
Triple Point Income VCT plc
| 99
FINANCIALS
Notes to the Financial Statements
24. Dividends
C Shares:
During the year, the Company paid three interim dividends to C Class
Shareholders. £234,729 equal to 1.75p per share was paid on 30 July
2021 to C Shareholders on the register on 16 July 2021, £4,359,254
equal to 32.5p per share was paid on 23 December 2021 to
C Shareholders on the register on 10 December 2021, and
£5,365,235 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. £238,081 equal to 1.75p per share was paid on
30 July 2021 to C Shareholders on the register on 16 July 2021,
and £6,122,087 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. £1,012,903 equal to 3.5p per share was paid on 30 July
2021 to E Shareholders on the register on 16 July 2021, £3,472,809
equal to 12p per share was paid on 23 December 2021 to E
Shareholders on the register of 10 December 2021 and £1,591,704
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
£11,841,932.
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 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.
Triple Point Income VCT plc
INFORMATION
Shareholder Information
Details of Advisers
Company Secretary and Registered Office
Hanway Advisory Limited
1 King William Street
London
EC4N 7AF
Registered Number
06421083
FCA Registration Number
659457
Investment Manager
Triple Point Investment Management LLP
1 King William Street
London
EC4N 7AF
Tel: 020 7201 8989
Independent Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Financial Calendar
Key events
Dates
Annual General Meeting
2 September 2022
Financial Half Year End
31 August 2022
Announcement of Half-yearly Results
15 November 2022
Financial Year End
31 March 2023
Solicitors
Howard Kennedy LLP
No. 1 London Bridge
London
SE1 9BG
Registrars
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol
BS99 6ZY
VCT Taxation Advisers
Philip Hare & Associates LLP
First floor
4-6 Staple Inn
Holborn
London
WC1V 7QH
Bankers
The Royal Bank of Scotland plc
54 Lime Street
London
EC3M 7NQ
Triple Point Income VCT plc
| 101
Something happens when people come together.
From the connections we make spring ideas. Fresh
solutions to big problems, from how to improve global
communications and heat our homes, to how to support
businesses and drive the economy. And from solutions
like these flow opportunities to c
reate value.
We call it the Triple Point. It’s the place where
people, purpose, and pr
ofit meet. Since 2004, we’ve
been targeting this Triple Point in areas like digital
infrastructure, ener
gy efficiency and social housing,
unlocking investment opportunities that make
a difference.
Big problems create strong demand.
Strong demand drives good investments.
Good investments solve big problems.
It means that investors never have to choose between
financial
returns and social impact. You achieve one by
achieving the other.
For more information about Triple Point
please contact a member of the Team
Triple Point Income VCT plc
1 King William Street
London
EC4N 7AF
Advisor and Investor Enquiries
020 7201 8990
contact@triplepoint.co.uk