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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Triple Point 11 | LSE:TPO | London | Ordinary Share | GB00B54ST296 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMTPO
RNS Number : 3401F
Triple Point VCT 2011 Plc
16 May 2017
Triple Point VCT 2011 plc
LEI: 213800AOOAQA5XQDEA89
Final Results
Triple Point VCT 2011 plc managed by Triple Point Investment Management LLP today announces the final results for the year ended 28 February 2017.
These results were approved by the Board of Directors on 16 May 2017.
You may view the Annual Report in due course on the Triple Point website www.triplepoint.co.uk
Financial Summary
Hot Features
Premium
Year ended Year ended
28 February 2017 29 February 2016
Ordinary Ordinary
Shares A Shares B Shares Total Shares A Shares B Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net assets 2,304 10,356 6,808 19,468 7,176 10,005 - 17,181
Profit/(loss)
before tax (56) 431 (27) 348 41 137 - 178
--------- --------- --------- -------- --------- --------- --------- --------
Earnings/(loss)
per share 0.06p 3.53p (0.27p) n/a 0.33p 1.20p - n/a
--------- --------- --------- -------- --------- --------- --------- --------
Cumulative return
to shareholders
(p)
Net asset value
per share 11.32p 104.07p 99.76p 35.26p 100.54p -
Total dividends
paid 103.75p - - 79.75p - -
Net asset value
plus dividends
paid 115.07p 104.07p 99.76p 115.01p 100.54p -
--------- --------- --------- --------- --------- ---------
Triple Point VCT 2011 plc ("the Company") is a Venture Capital Trust ("VCT"). The Investment Manager is Triple Point Investment Management LLP ("TPIM" and "Triple Point"). The Company was incorporated in July 2010.
-- Ordinary Shares: On 28 April 2011 the Company raised GBP19.3 million and as at the date of this report has a total of 20,349,869 Ordinary Shares in issue from that offer. By 28 February 2017 a total of GBP21.1 million had been returned to the Ordinary Shareholders.
-- A Shares: On 30 April 2015 a new A Share Class offer closed having raised GBP10.3 million with a total of 9,951,133 A Shares being issued.
-- B Shares: On 29 April 2016 a new B Share Class offer closed having raised GBP6,972,311 with a total of 6,824,266 B Shares being issued.
The Strategic Report on pages 2 to 21, the Directors' Report on pages 22 to 26, the Corporate Governance report on pages 27 to 31 and the Directors' Remuneration Report on pages 32 to 34 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 VCT 2011 plc.
The Directors submit to the members their Annual Report and Financial Statements for the Company for the year ended 28 February 2017.
Strategic Report
The Strategic Report, on pages 2 to 21, has been prepared in accordance with the requirements of section 414c of the Companies Act 2006. Its purpose is to inform the members of the Company and help them to assess how the Directors have performed their duty to promote the success of the Company, in accordance with section 172 of the Companies Act 2006.
Chairman's Statement
I am writing to present the Financial Statements for Triple Point VCT 2011 plc ("the Company") for the year ended 28 February 2017.
During the year the Company has continued to make progress with the realisation of the investment portfolio attributable to the Ordinary Share Class, whilst investing funds raised through last year's B Share Class Offer and continuing to monitor the ongoing operation of the A Share Class investments.
Investment Portfolio
The Company's funds at 28 February 2017 were 92% invested in a portfolio of VCT qualifying and non-qualifying unquoted investments. It continues to meet the condition that 70% of relevant funds must be invested in qualifying investments. At 28 February 2017 qualifying investments represented 64% of the total Investment Portfolio and 98% of the funds that are required to meet the 70% condition.
The Investment Manager's review on pages 12 to 14 gives an update on the portfolio of investments in 14 small unquoted businesses.
Ordinary Share Class
The Company and the Investment Manager have successfully realised a further GBP6.4 million of investments during the year. The remaining assets are expected to be realised by the end of 2017.
At the year end the net asset value ("NAV") per share stood at 11.32p. Taken together with the cumulative dividends paid of 103.75p per share this gives an equivalent NAV per share total return of 115.07p.
On 11 November 2016 a dividend of GBP4.9 million equal to 24p per share was paid to the Ordinary Class Shareholders. Since the year end, on 13 April 2017 a dividend of GBP1.0 million equal to 5p per share was paid to Ordinary Class Shareholders. The Board has resolved to pay a further dividend to Ordinary Class Shareholders of GBP406,997 equal to 2p per share which will be paid on 23 June 2017 to shareholders on the register on 9 June 2017. When all remaining assets have been realised the Ordinary Shares will pay a final dividend following which the shares will be cancelled.
A Share Class
The A Share Class has investments in six companies in the Hydroelectric Power sector which between them own seven hydroelectric schemes in the Scottish Highlands. As expected six of the schemes have been successfully commissioned and are operational, with one due to be commissioned in June 2017.
The A Share Class has recorded a profit over the period of 3.53p per share. At the year end the net asset value ("NAV") per share stood at 104.07p. The Board has resolved to pay the first dividend to A Class Shareholders of GBP398,045 equal to 4p per share which will be paid on 23 June 2017 to shareholders on the register on 9 June 2017.
The A share class, during the initial deployment stage, is targeting a cash return to investors of 100p by the end of year six from a mixture of the initial income tax rebate, tax-free dividends and a capital realisation. In the following Income Generation stage the target is to distribute an average annual dividend of around 7% of the NAV for nine years and a final payment of circa 50p per share in 2030. At the outset the Board anticipated average annual dividends of 5p per annum in the initial deployment stage. The declared dividend is marginally lower than the anticipated average due to its payment being restricted to the distributable profits of the A Share Class.
B Share Class
The B Share Class has invested GBP5.1 million into companies exploring opportunities in gas power projects ("Gas Power") in the UK and GBP1.7 million into SME funding. During May 2017 Green Peak Generation Ltd reached financial close on a 7.5 MW gas power plant in Cumbria, which is expected to be commissioned during Q1 2018.
The B Share Class offer closed on 29 April 2016 with a total of 6,824,266 B Shares being issued. The B Share Class has recorded a small loss over the period of 0.27p per share due to running costs exceeding income while investments are being sought. The net asset value ("NAV") per share stood at 99.76p.
Principal Risks
The Board believes that the principal risks facing the Company are:
-- investment risk associated with the VCT's portfolio of unquoted investments; -- risk of failure to maintain approval as a qualifying VCT;
-- risk of inability to realise investments in order to return funds to investors in line with expectations.
The Board believes these risks are manageable and, with the Investment Manager, continues to work to minimise either the likelihood or potential impact of these risks within the scope of the Company's established investment strategy.
Outlook
The Company and the Investment Manager continue to focus on: successful realisation of the remaining Ordinary Share Class investments and subsequent distribution; monitoring ongoing operation of the A Share Class investments in Hydroelectricity generation businesses; and ensuring that the companies in which the B Share Class has invested develop their businesses in line with the Company's strategy and the requirements of the VCT legislation.
If you have any questions about your investment, please do not hesitate to contact Triple Point on 020 7201 8990.
Jane Owen
Chairman
16 May 2017
The Directors assess the Company's success in meeting its objectives in relation to returns, stability, VCT qualification and, ultimately, exit.
Performance Update
At launch the Company targeted post-tax returns for Ordinary Shares of 9% to 11% pa. On a weighted average share price using a 9% return this is broadly equivalent to a total return to investors of 108.4p. This compares to the net asset value per share at 28 February 2017 of 11.32p and cumulative dividend payments of 103.75p, bringing the total return to date to 115.07p.
The Ordinary Share Class reported an income return of 2.71p and a capital loss of 2.65p for the year to 28 February 2017. The income return includes dividends received from the two companies which resulted in a corresponding capital loss to write down the assets by the same amount. This compares with an aggregate return for the previous year of 0.33p.
The target for the A Share Class is to pay dividends of an average 5p per share from 2017 for four years, followed by a partial realisation targeted to bring the aggregate distribution from the Company to 70p per A Share after five years. Thereafter an ongoing dividend yield of 7% per annum of net asset value is targeted for a further nine years. The A Share Class reported an income return of 3.61p and a capital loss of 0.08p for the year to 28 February 2017. The net asset value per share for the A Share Class at 28 February 2017 stood at 104.07p.
The target for the B Share Class is to pay dividends of an average 5p per share from 2019. The B Share Class reported an income loss of 0.37p and a capital profit of 0.10p for the year to 28 February 2017. The net asset value per share for the B Share Class at 28 February 2017 stood at 99.76p.
The Board and the Investment Manager are both committed to ensuring that returns on the investment portfolio are optimised and that the VCT continues to be managed in line with the Company's investment strategy and risk profile.
The Board expects the Investment Manager to deliver a performance which meets the objective of achieving long-term investment returns, including tax-free dividends. A review of the performance of the Company's investments during the financial year, the position of the Company at the year end and the outlook for the coming year is contained within the Chairman's Statement on page 2 to 3 and the Investment Manager's Review on pages 12 to 14.
Dividend Policy
Generally, a VCT must distribute by way of dividend such amounts as to ensure that it retains not more than 15% of its income from shares and securities. The Directors aim to maximise tax free distributions to shareholders of income or realised gains. It is envisaged that the Company will distribute most of its net income each year by way of dividend, subject to liquidity.
Investment Policy
The key objectives of the Company are to:
-- Pay regular tax-free dividends to investors;
-- Maintain VCT status to enable investors to benefit from the associated tax reliefs;
-- Reduce the volatility normally associated with early stage investments by applying its Investment Policy; and
-- In respect of the Ordinary Share Fund and the B Share Fund, provide investors with the option to exit shortly after 5 years following investment.
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 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.
In respect of Qualifying Investments the Company will seek:
(a) investments in which robust due diligence has been undertaken into target investments;
(b) investments where there is a high level of access to regular material financial and other information;
(c) investments where the risk of capital losses is minimised through careful analysis of the collateral available; and
(d) investments where there is a strong relationship with the key decision makers.
Target Asset Allocation
At least 70% of the Company's net assets will be invested in Qualifying Investments. The remaining assets will be exposed either to (i) cash or cash-based similar liquid investments or (ii) investments originated in line with The Company's Qualifying Investment policy but with realisation dates which fit with the liquidity needs of the Company.
Qualifying Investments will typically range between GBP500,000 and GBP5,000,000 and encompass businesses with strong asset bases, predictable revenue streams or with contractual revenues from financially sound counterparties. No single investment by the Company will represent more than 15 per cent of the aggregate net asset value of the Company at the time the investment is made.
Qualifying Investments
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. Triple Point 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 flow or quality of asset backing and to provide investors with tax-free income.
The criteria against which investment targets would be assessed include the following:
(a) an attractive valuation at the time of the investment; (b) minimising the risk of capital losses; (c) the predictability and reliability of the company's cash flows; (d) the quality of the business's counterparties, suppliers; (e) the sector in which the business is active; (f) the quality of the company's assets; (g) the opportunity to structure an investment to produce distributable income;
(h) 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;
(i) in respect of the Ordinary Share Fund, the prospect of achieving an exit after 5 years of the life of the Ordinary Share Fund; and
(j) in respect of the B Share Fund, the prospect of achieving an exit after 5 years of the life of the B Share Fund.
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 investments following Triple Point's Navigator Strategy, quoted or unquoted investments (direct or indirect) in cash and highly liquid interest bearing investments, secured loans, bonds, equities, and collective investment schemes.
Borrowing Powers
The Company has no present intention of utilising direct borrowing as a strategy for improving or enhancing returns. 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), will not, without shareholder approval, exceed 30 per cent 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 per cent of the aggregate NAV of the Company at the time the investment is made.
The above Investment Policy does not take into account the changes to the VCT rules relating to non-qualifying investments that took effect on 6 April 2016. The Investment Manager will make sure that all non-qualifying investments made after that date meet the new requirements.
Tax Benefits
The Company's objective is to provide shareholders with an attractive income and capital return by investing its funds in a broad spread of unlisted UK companies which meet the relevant criteria for investment by Venture Capital Trusts.
Investing in a VCT brings the benefit of tax-free dividends, as well as up-front income tax relief. The Company continues to meet the VCT qualification requirements which are continuously monitored by the Investment Manager and reviewed by the Directors.
Investment classification by asset value and sector value are shown below:
Investment Portfolio - Ordinary Share Class
VCT qualifying investments 12% Cash 88%
Investments by Sector - Ordinary Share Class
Cinema Digitisation 97% SME Lending - other 3%
Investment Portfolio - A Share Class
VCT qualifying investments 65% VCT non qualifying investments 35%
Investments by Sector - A Share Class
Hydro electric power ` 64% SME Lending - hydro electric power 20% SME Lending - other 16%
Investment Portfolio - B Share Class
VCT qualifying investments 74% VCT non qualifying investments 25% Cash 1%
Investments by Sector - B Share Class
Gas power ` 75% SME Lending - other 25%
VCT Regulation
VCTs were introduced in the Finance Act 1995 to provide a means for private individuals to invest in unquoted companies in the UK. The Finance Act 2004 introduced changes to VCT legislation designed to make VCTs more attractive to investors. The tax benefits available to eligible investors in VCTs include:
-- up-front income tax relief of 30% -- exemption from income tax on dividends received -- exemption from capital gains tax on disposals of shares in VCTs.
The Company was provisionally approved as a VCT by Her Majesty's Revenue and Customs. In order to secure final approval the Company must comply with certain requirements on a continuing basis. Within three years from the effective date of provisional approval or later allotment at least 70% of the Company's investments must comprise "qualifying holdings" of which at least 30% must be in eligible Ordinary Shares. This investment criterion continues to be met.
FCA Regulation
On 22 July 2014 Triple Point VCT 2011 plc registered with the Financial Conduct Authority as a small Alternative Investment Fund Manager ("AIFM") under the AIFM Directive.
Exit Programme
The Company and Investment Manager are committed to ensuring a timely exit and return of funds to Ordinary Class Shareholders and B Class Shareholders as soon as practicable after the end of the minimum five year holding period. The Investment Manager has a strong track record in managing such exits. In relation to the A Share Class the Company is intending to secure a partial realisation after five years but plans to retain its investment in the Hydro companies until 2030.
The Directors and the Investment Manager put in place a programme to manage the investment realisations for the Ordinary Class Shareholders over the course of 2016, which is expected to complete during 2017.
Principal Risks and Risk Management
The Directors carry out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The main areas of risk identified by them, along with the risks to which the Company is exposed through its operational and investing activities, are detailed below.
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 will be held in small and medium-sized unquoted investments which, by their nature, entail a higher level of risk and lower liquidity than investments in large quoted companies. The Directors and Investment Manager aim to limit the risk attached to the portfolio as a whole by careful selection and timely realisation of investments, by carrying out rigorous due diligence procedures and by maintaining a spread of holdings in terms of industry sector and geographical location. The Board reviews the investment portfolio with the Investment Manager on a regular basis.
Financial instrument risk: Financial Instrument risks are described in note 16.
Financial risk: as most of the Company's investments will involve a medium to long-term commitment and will be relatively illiquid, the Directors consider that it is inappropriate to finance the Company's activities through borrowing, other than for short term liquidity.
Internal control risk: the Board regularly reviews the system of internal controls, both financial and non-financial, operated by the Company and the Investment Manager. These include controls designed to ensure that the Company's assets are safeguarded and that proper accounting records are maintained.
Viability Statement
In accordance with provision C.2.2 of the 2014 revision to the Corporate Governance Code, the Directors have assessed the prospect of the Company over a longer period than 12 months required by the Going Concern provision. In order to assess the new requirement, the Board takes into account the Company's current position and the principal risks as set out on page 10 so that the Directors may 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.
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; and
-- 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.
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. During the next five years the Ordinary and B Share Class will reach their 5 year holding period and the A Share Class will partially exit, based on this the Directors believe it is reasonable to make their assessment over 5 years.
Share Price Discount Policy
The Company has a share buy-back facility, committing to buy back shares at no more than a 10% discount to the prevailing NAV, subject to the Directors' discretion. We will be asking shareholders at the Annual General Meeting to extend the facility for the Company to purchase shares in the market for cancellation. Shareholders should note that if they sell their shares within five years of subscription they forfeit any tax relief obtained. If you are considering selling your shares please contact TPIM on 020 7201 8989.
Environmental, Social, Employee and Human Rights Issues
Due to the nature of the Company's activities, there being no employees and only 3 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.
Gender Diversity
The Board of Directors comprises 1 female and 2 male Directors. The Investment Manager has 56 staff of whom 31 are men and 25 are women.
Investment Manager's Review
Sector Analysis
The unquoted investment portfolio can be analysed as follows:
Electricity
Generation SME Funding
Hydro Total
Industry Cinema Project Hydroelectric Hydroelectric Unquoted
Sector Digitisation Management Power Other Power Other Investments
--------------- -------------- ------------ -------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------------- ------------ -------------- -------- -------------- -------- -------------
Investments
at 29
February
2016
---------------
Ordinary
Shares 141 1,099 1,342 2,696 - 1,265 6,543
A shares - - 6,661 - 1,805 1,000 9,466
--------------- -------------- ------------ -------- -------------
141 1,099 8,003 2,696 1,805 2,265 16,009
--------------- -------------- ------------ -------------- -------- -------------- -------- -------------
Investments
made during
the period
--------------- -------------- ------------ -------------- -------- -------------- --------
Ordinary
Shares - - - - - - -
A Shares - - 920 - 6 500 1,426
B Shares - - - 5,100 - 2,650 7,750
-------------
- - 920 5,100 6 3,150 9,176
--------------- -------------- ------------ -------------- -------- -------------- -------- -------------
Investments
disposed
of during
the period
--------------- -------------- ------------ -------- -------------
Ordinary
Shares - (1,157) (1,342) (2,726) - (1,137) (6,362)
A shares - - (1,258) - 138 - (1,120)
B Shares - - - - - (990) (990)
-------------- ------------ -------------- -------- -------------- -------- -------------
- (1,157) (2,600) (2,726) 138 (2,127) (8,472)
--------------- -------------- ------------ -------------- -------- -------------- -------- -------------
Investment
revaluations
during
the period
--------------- -------------- ------------ -------------- -------- -------------- -------- -------------
Ordinary
Shares 50 58 - 30 - (123) 15
A shares - - 12 - - 18 30
B Shares - - - - - 26 26
-------------
50 58 12 30 (79) 71
--------------- -------------- ------------ -------------- -------- -------------- -------- -------------
Investments
at 28
February
2017
--------------- ------------ -------- -------------
Ordinary
Shares 191 - - - - 5 196
A Shares - - 6,335 - 1,949 1,518 9,802
B Shares - - - 5,100 - 1,686 6,786
191 - 6,335 5,100 1,949 3,209 16,784
--------------- -------------- ------------ -------------- -------- -------------- -------- -------------
Unquoted
Investments
% 1.14% 0.00% 37.74% 30.39% 11.61% 19.12% 100.00%
--------------- -------------- ------------ -------------- -------- -------------- -------- -------------
The Company's funds at 28 February 2017 were 92% invested in a portfolio of VCT qualifying and non-qualifying unquoted investments. It continues to meet the condition that 70% of relevant funds must be invested in qualifying investments. At 28 February 2017 qualifying investments represented 64% of the total Investment Portfolio and 98% of the funds that are required to meet the 70% condition.
The VCT was established to fund small and medium sized enterprises. It has three share classes each invested in their own portfolio as detailed on page 12. At the year end the overall portfolio comprised investments in 14 small, unquoted companies in three sectors: cinema digitisation; electricity generation; and SME funding.
The Company's portfolio is spread between businesses which are at start-up stage and those which are more mature, and where the Company is looking for potential exits. Generally performance during the year across the portfolio has been satisfactory, with the A and Ordinary Share Classes recording an uplift in net asset value from the performance of their portfolios.
Review & Outlook
Ordinary Share Class
The coming year will see the Company and the Investment Manager continuing to focus on the successful realisation of the Ordinary Share Class investments. April 2016 marked the end of the Company's five year minimum VCT holding period. In line with its investment strategy we are working towards facilitating a rapid exit for shareholders.
To date the Company has distributed to the Ordinary Class Shareholders 108.75p per share. A further dividend of 2p per share has been declared, payable on 23 June 2017. Over the next few months the Investment Manager will work to collect the remaining deferred consideration relating to the solar company sales, as well as realise the Ordinary Share Class investment in cinema digitisation. Once both of these have been completed the VCT will look to pay a dividend to the Ordinary Shareholders, expected to be before the end of the calendar year.
A Share Class
The A share class, during the initial deployment stage, is targeting a cash return to investors of 100p by the end of year six from a mixture of the initial income tax rebate, tax-free dividends and a capital realisation. At the outset the Investment Manager anticipated average annual dividends of 5p per annum in the Initial deployment stage. The dividend declared of 4p per share is marginally lower than the anticipated average due to its payment being restricted to the distributable profits of the A Share Class.
The A Share Class has investments in six companies which between them own seven hydroelectric schemes in the Scottish Highlands. The last scheme is due to be commissioned in June 2017.
Hydroelectric Power
2016 was a mixed year for the VCTs hydro portfolio. All the relevant schemes were commissioned on time and within budget, snagging issues were addressed early in the year and the schemes performed well when operating, however, the autumn and winter periods were uncharacteristically dry, and river levels were significantly below the long term average. Whilst reduced generation in the first full year of operation is frustrating, we remain confident in our long term forecasts and the original hydrology studies that the schemes were based on.
During the year there were major upgrade works carried out on the Transmission Network by SSE, and consequently five of the schemes were restricted to just 50kW of output for periods of up to 11 to 59 days. Although the majority of restricted generation occurred on days when there was little or no river flow, it has had a negative impact on revenue generation nonetheless. We are not expecting this to be a continuing issue for the schemes as the majority of works have now been completed.
In addition to earning RPI-linked Feed-in Tariffs, the schemes have also earned revenue through the sale of electricity under Power Purchase Agreements. At outset, the companies expected to earn a total of 5p per kWh for the sale of electricity and embedded benefits, and we are pleased to report that on average the schemes have been earning 6.62p per kWh.
In December 2016, the Scottish Assessor announced new draft business rates that in some instances were 2.5 times the current level. Over the past few months there has been extensive lobbying by the industry as a whole, and it is expected that existing schemes under 1MW will be limited to an increase of 12.5%, which is good news for the majority of the portfolio. The position of new schemes and schemes over 1MW remains unclear.
Looking forward to the coming year, we will focus our attention on aligning and optimising the power purchase agreements for the portfolio of companies, looking at ways to increase performance through asset management, and working with Green Highland Renewables and the British Hydro Association to assess and potentially challenge the proposed new business rates.
B Share Class
Going forward, the Company and the Investment Manager are focused on ensuring that the proceeds of the B Share Class offer are invested in line with the Company's strategy and the requirements of the VCT legislation.
Gas Power
The Company has invested in two companies looking to construct and operate gas power projects. The projects that the B Share Class investment companies are targeting utilise simple technology, typically provided by Clarke Energy or Rolls Royce, to provide a reliable and secure energy supply. The first power plant is under construction and expected to start generating in Q1 2018. The second company is targeting construction commencement in Q3 this year. A more detailed review will be included once the plants are commissioned.
Non Qualifying Investments
SME Funding
The Company has investments in four finance companies which provide short and medium term funding to a range of small and medium sized businesses.
If you have any questions, please do not hesitate to call us on 020 7201 8990.
Ben Beaton
Managing Partner
For Triple Point Investment Management LLP
16 May 2017
Investment Portfolio Summary
28 February 2017 29 February 2016
------------------------------------ ------------------------------------
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted Qualifying
Holdings 11,723 63.85 11,626 63.51 10,637 65.72 10,672 65.27
Unquoted Non Qualifying
Holdings 5,109 27.84 5,158 28.18 5,208 32.19 5,337 32.65
16,832 91.69 16,784 91.69 15,845 97.91 16,009 97.92
Cash and cash equivalents 1,525 8.31 1,525 8.31 337 2.09 337 2.08
18,357 100.00 18,309 100.00 16,182 100.00 16,346 100.00
======== ======= ======== ======= ======== ======= ======== =======
Unquoted Qualifying
Holdings
Cinema Digitisation
DLN Digital Ltd * 300 1.63 191 1.04 300 1.85 141 0.86
Hydro Project Management
Highland Hydro Services
Ltd - - - - 813 5.02 1,099 6.72
Landfill Gas
Aeris Power Ltd - - - - 575 3.55 464 2.84
Craigahulliar Energy
Ltd - - - - 310 1.92 329 2.01
Hydroelectric Power
Green Highland Allt
Choire A Bhalachain
(255) Ltd 30 0.16 29 0.16 30 0.19 30 0.18
Green Highland Allt
Garbh Ltd 2,250 12.26 2,250 12.29 2,250 13.90 2,250 13.76
Green Highland Allt
Ladaidh (1148) Ltd 1,470 8.01 1,470 8.03 1,470 9.08 1,470 8.99
Green Highland Allt
Luaidhe (228) Ltd 855 4.66 877 4.79 855 5.28 855 5.23
Green Highland Allt
Phocachain (1015) Ltd 858 4.67 849 4.64 858 5.30 858 5.25
Green Highland Shenval
Ltd 860 4.68 860 4.70 1,276 7.89 1,276 7.81
Gas Power
Distributed Generators
Ltd 3,200 17.43 3,200 17.48 - - - -
Green Peak Generation
Ltd 1,900 10.35 1,900 10.38 1,900 11.74 1,900 11.62
11,723 63.85 11,626 63.51 10,637 65.72 10,672 65.27
======== ======= ======== ======= ======== ======= ======== =======
Unquoted Non Qualifying
Holdings
Hydroelectric Power
Green Highland Allt
Choire A Bhalachain
(255) Ltd 3 0.02 3 0.02 3 0.02 3 0.02
Green Highland Allt
Phocachain (1015) Ltd 3 0.02 3 0.02 3 0.02 3 0.02
Green Highland Allt
Ladaidh (1148) Ltd 30 0.16 30 0.16 30 0.19 30 0.18
Green Highland Allt
Luaidhe (228) Ltd 61 0.33 61 0.33 61 0.38 61 0.37
Kinlochteacius Hydro
Ltd 47 0.26 47 0.26 1,167 7.21 1,167 7.14
Gas Power
Green Peak Generation
Ltd - - - - 3 0.02 3 0.02
SME Funding:
Hydroelectric Power
Broadpoint 2 Ltd 800 4.36 800 4.37 800 4.94 800 4.89
Broadpoint 3 Ltd 1,005 5.47 1,005 5.49 1,005 6.21 1,005 6.15
Other
Broadpoint Ltd - - 5 0.03 1,136 7.02 1,265 7.74
Funding Path Ltd 1,000 5.45 1,010 5.52 1,000 6.18 1,000 6.12
Modern Power Generation
Ltd 2,160 11.77 2,194 11.98 - - - -
5,109 27.84 5,158 28.18 5,208 32.19 5,337 32.65
======== ======= ======== ======= ======== ======= ======== =======
* Assets held for sale
Financial Assets including those held for sale 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 to remain unchanged since acquisition, investments continue to be held at cost less any loan repayments received. Where the Board considers the investee company's enterprise value has changed since acquisition, investments are held at a value measured using a discounted cash flow model or the value to be realised on disposal which is equivalent to fair value.
Investment Portfolio Ten Largest Unquoted Investments
Distributed Generators
Ltd
Date of Cost Valuation Valuation Income recognised Equity Equity
first investment GBP GBP Method by TP11 Held Held
for the by TP11 by TPIM
year GBP'000 % managed
funds
%
02 April
2016 3,200,000 3,200,000 Cost 4 49.90 49.90
Summary of Information from Investee Company
Financial Statements:
None available
Distributed Generators Ltd is exploring opportunities
to construct and operate a Gas Power plant.
-------------------------------------------------------------------------------------- ---------
Green Highland Allt Garbh
Ltd
Date of Cost Valuation Valuation Income recognised Equity Equity
first investment GBP GBP Method by TP11 Held Held by
for the by TPIM managed
year GBP'000 TP11 funds
% %
01 April
2015 2,250,000 2,250,000 Cost 157 22.79 50.25
Summary of Information from Investee Company GBP'000
Financial Statements ending in 2016:
Turnover -
Earnings before interest, tax, amortisation
and depreciation (EBITDA) (7)
Profit before tax 339
Net assets before VCT loans 4,958
Net assets 3,471
Green Highland Allt Garbh Ltd is constructing a run-of-river
Hydroelectric Power plant near Glen Affric, Cannich.
The 1,500kW Allt Garbh scheme reached commercial close
and has begun construction and is scheduled to be
commissioned in June 2017. The company will earn Feed-in-Tariffs
and other revenues from the generation and export
of electricity.
----------------------------------------------------------------------------------------------------
Modern Power Generation
Ltd
Date of Cost Valuation Valuation Income recognised Equity Equity
first investment GBP GBP Method by TP11 Held Held by
for the by TPIM managed
year GBP'000 TP11 funds
% %
04 April Share of
2016 2,160,000 2,194,000 net assets 81 49.90 49.90
Summary of Information from Investee Company
Financial Statements
None available
Modern Power Generations Ltd is a VCT non-qualifying
investment which has invested in an LLP that provides
finance to small and medium sizes enterprises (SME's)
------------------------------------------------------------------------------------------------------
Green Peak Generation
Ltd
Date of Cost Valuation Valuation Income recognised Equity Equity
first investment GBP GBP Method by TP11 Held Held by
for the by TPIM managed
year GBP'000 TP11 funds
% %
02 April
2015 1,900,000 1,900,000 Cost 17 23.28 50.25
Summary of Information from Investee Company GBP'000
Financial Statements ending in 2016:
Turnover -
Earnings before interest, tax, amortisation
and depreciation (EBITDA) (5)
Profit before tax 9
Net assets before VCT loans 4,108
Net assets 2,878
Green Peak Generation Ltd reached financial close
during May 2017 on a 7.5 MW gas power plant in Cumbria,
which is expected to be commissioned during Q1 2018.
----------------------------------------------------------------------------------------------------
Green Highland Allt Ladaidh
(1148) Ltd
Date of Cost Valuation Valuation Income recognised Equity Equity
first investment GBP GBP Method by TP11 Held Held by
for the by TPIM managed
year GBP'000 TP11 funds
% %
19 March
2015 1,470,000 1,470,000 Cost 120 15.07 50.25
Summary of Information from Investee Company GBP'000
Financial Statements ending in 2016:
Turnover 34
Earnings before interest, tax, amortisation
and depreciation (EBITDA) 11
Profit before tax (28)
Net assets before VCT loans 4,855
Net assets 3,355
Green Highland Allt Ladaidh (1148) Ltd has constructed
a run-of-river Hydroelectric Power plant near Loch
Garry, Invergarry in the Scottish Highlands. The 1,300kW
Allt Ladaidh scheme completed construction and was
commissioned in August 2016. The company earns Feed-in-Tariffs
and other revenues from the generation and export
of electricity.
----------------------------------------------------------------------------------------------------
Funding Path Ltd
Date of first Cost Valuation Valuation Income recognised Equity Equity
investment GBP GBP Method by TP11 Held Held by
for the by TPIM managed
year GBP'000 TP11 funds
% %
29 January Share of
2016 1,000,000 1,010,000 net assets 77 49.00 98.00
Summary of Information from Investee Company GBP'000
Financial Statements ending in 2016:
Turnover 275
Earnings before interest, tax, amortisation
and depreciation (EBITDA) 268
Profit before tax 41
Net assets before VCT loans 3,232
Net assets 32
Funding Path Ltd is a VCT non-qualifying investment
which has invested in an LLP that provides finance
to small and medium sized enterprises (SME's)
--------------------------------------------------------------------------------------------------
Broadpoint 3 Ltd
Date of first Cost Valuation Valuation Income recognised Equity Equity
investment GBP GBP Method by TP11 Held Held by
for the by TPIM managed
year GBP'000 TP11 funds
% %
08 January Share of
2016 1,005,000 1,005,000 net assets - 0.00 0.00
Summary of Information from Investee Company GBP'000
Financial Statements ending in 2016:
Turnover -
Earnings before interest, tax, amortisation
and depreciation (EBITDA) (8)
Profit before tax (8)
Net assets before VCT loans 3,007
Net assets (8)
Broadpoint 3 Ltd owns equity stakes in Hydroelectric
Power companies, DDC companies and one Landfill Gas
company.
--------------------------------------------------------------------------------------------------
Green Highland Allt Luaidhe
(228) Ltd
Date of first Cost Valuation Valuation Income recognised Equity Equity
investment GBP GBP Method by TP11 Held Held by
for the by TPIM managed
year GBP'000 TP11 funds
% %
18 March Discounted
2015 855,000 877,000 Cash Flow 74 15.08 100.00
Summary of Information from Investee Company GBP'000
Financial Statements ending in 2016:
Turnover 218
Earnings before interest, tax, amortisation
and depreciation (EBITDA) 151
Profit before tax (179)
Net assets before VCT loans 2,546
Net assets 1,691
Green Highland Allt Luaidhe (228) Ltd has constructed
a run-of-river Hydroelectric Power plant located in
Knockie, Whitebridge near Inverness in the Scottish
Highlands. The 500kw Allt Luaidhe scheme was commissioned
in December 2015. The company earns Feed-in-Tariffs
from the generation and export of electricity.
-----------------------------------------------------------------------------------------------
Green Highland Shenval
Ltd
Date of Cost Valuation Valuation Income recognised Equity Equity
first investment GBP GBP Method by TP11 Held Held by
for the by TPIM managed
year GBP'000 TP11 funds
% %
01 April
2015 860,000 860,000 Cost 5 22.09 50.25
Summary of Information from Investee Company GBP'000
Financial Statements ending in 2016:
Turnover -
Earnings before interest, tax, amortisation
and depreciation (EBITDA) 334
Profit before tax 339
Net assets before VCT loans 1,969
Net assets 1,369
Green Highland Shenval Ltd has acquired a subsidiary
Kinlochteacius Ltd which has constructed a 300kW hydro
site near the Morvern Peninsula. The scheme was commissioned
in September 2016. The company will earn Feed-in-Tariffs
and other revenues from the generation and export
of electricity.
--------------------------------------------------------------------------------------------------
Green Highland Allt Phocachain
(1015) Ltd
Date of first Cost Valuation Valuation Income recognised Equity Equity
investment GBP GBP Method by TP11 Held Held by
for the by TPIM managed
year GBP'000 TP11 funds
% %
13 November Discounted
2014 858,000 849,000 Cash Flow 76 7.97 100.00
Summary of Information from Investee Company GBP'000
Financial Statements ending in 2016:
Turnover 383
Earnings before interest, tax, amortisation
and depreciation (EBITDA) 259
Profit before tax (295)
Net assets before VCT loans 4,722
Net assets 2,832
Green Highland Allt Phocachain (1015) Ltd has constructed
two separate 500kw run-of-river Hydroelectric Power
plants located in Glen Moriston, Scottish Highlands. Both schemes were commissioned on schedule in December 2015. The company will earn Feed-in-Tariffs from the generation and export of electricity. ----------------------------------------------------------------------------------------------- -- The investments are a combination of debt and equity. -- Equity holding is equal to the voting rights. -- All investments are held in the UK.
The Strategic Report has been approved by the Board and signed on their behalf by the Chairman.
Jane Owen
Chairman
16 May 2017
Report of the Directors
The Directors present their Report and the audited Financial Statements for the year ended 28 February 2017.
Details of Directors
Jane Owen is the Chairman of the Board of the Company. After graduating in law from Oxford University, Jane was called to the Bar in 1978 and until 1989 was a practising barrister in the chambers of Sir Andrew Leggatt (now 3 Verulam Buildings). Subsequently Jane became UK group legal director at Alexander & Alexander Services, and was appointed Aon's General Counsel in the UK in 1997, a position she held until 2008, where she was also a director of Aon Limited from 2001 to 2008. She is also a Non-Executive Director of TWG Europe Ltd and related companies and a Governor of James Allen's Girls' School.
Chad Murrin graduated in law from Cambridge University, and then qualified as a barrister. He worked for 3i Group plc from 1986-2004, the last five years as 3i's Corporate Development Director. In 2004, he set up his own corporate advisory business, Murrin Associates Limited. He holds the Advanced Diploma in Corporate Finance from The Corporate Finance Faculty of the ICAEW. He is a Non-Executive Director of Beard Construction, Procom-IM Limited and other companies.
Tim Clarke is a graduate of Oxford University in PPE. He joined Panmure Gordon & Co plc in 1979 as an equities analyst, subsequently becoming a Partner and Head of Research. He moved to Bass plc in 1990 and worked in a number of roles in the hotel, pub and restaurant divisions and became Chief Executive in 2000. Following its demerger he was Chief Executive of Mitchells & Butlers plc until 2009. He is currently the Senior Independent Non-Executive Director of Associated British Foods plc, and a Non-Executive Director of Hall & Woodhouse Ltd and Timothy Taylor & Co Ltd. He is a Trustee Director and Vice-Chairman of The Foundation of the Schools of King Edward VI in Birmingham.
All Directors are considered to be independent.
The Board has considered provision B.7.2 of the UK Corporate Governance Code (September 2014) and believes that all the Directors continue to be effective and to demonstrate commitment to their roles, the Board and the Company. The Directors are discussed further within the Corporate Governance report on page 27 which demonstrates the Boards compliance with the UK Corporate Governance code.
Activities and Status
The Company is a Venture Capital Trust and its main activity is investing.
The Company has been provisionally approved as a VCT by HMRC.
The Company is registered in England as a Public Limited Company (Registration number 07324448). The Directors have managed, and intend to continue to manage, the Company's affairs in such a manner as to comply with Section 274 of the Income Tax Act 2007 which grants approval as a VCT.
The Company was not at any time up to the date of this report a close company within the meaning of S439 of the Corporation Tax Act 2010.
Post Balance Sheet Events
For details of post balance sheet events see note 21 on page 63 to the Financial Statements.
Directors' and Officers' Liability Insurance
The Company has, as permitted by S233 of the Companies Act 2006, maintained insurance cover on behalf of the Directors and Company Secretary, indemnifying them against certain liabilities which may be incurred by them in relation to their offices with the Company.
Matters Covered in the Strategic Report
Dividends and financial risk management have both been discussed within the Strategic Report on pages 4 and 10.
Management
TPIM acts as Investment Manager to the Company. The principal terms of the Company's management agreement with TPIM are set out in note 5 to the Financial Statements.
The Board has evaluated the performance of the Investment Manager based on the returns generated since taking on the management of the Fund and a review of the management contract and the services provided in accordance with its terms. As required by the Listing Rules, the Directors confirm that in their opinion the continuing appointment of TPIM as Investment Manager is in the best interests of the shareholders as a whole. In reaching this conclusion the Directors have taken into account the performance of other VCTs managed by TPIM and the service provided by TPIM to the Company.
Substantial Shareholdings
As at the date of this report no disclosures of major shareholdings had been made to the Company under Disclosure and Transparency Rule 5 (Vote Holder and Issuer Notification Rules).
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from the operations of its Company, nor does it have responsibility for any other emission producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.
Annual General Meeting
Notice convening the 2017 Annual General Meeting of the Company and a form of proxy in respect of that meeting can each be found at the end of this document.
Share Capital, Rights Attaching to the Shares and Restrictions on Voting and Transfer
The Ordinary Share capital is GBP600,000 divided into 60,000,000 shares of 1p each, of which 20,349,869 shares were in issue at 28 February 2017. The A Share capital is GBP100,000 divided into 10,000,000 shares of 1p each, of which 9,951,133 shares were in issue at 28 February 2017. The B Share capital is GBP100,000 divided into 10,000,000 shares of 1p each, of which 6,824,266 shares were in issue at 28 February 2017. As at that date none of the issued shares were held by the Company as treasury shares. Subject to any suspension or abrogation of rights pursuant to relevant law or the Company's articles of association, the shares confer on their holders (other than the Company in respect of any treasury shares) the following principal rights:
a) the right to receive out of profits available for distribution such dividends as may be agreed to be paid (in the case of a final dividend in an amount not exceeding the amount recommended by the Board as approved by shareholders in general meeting or in the case of an interim dividend in an amount determined by the Board). All dividends unclaimed for a period of 12 years after having become due for payment are forfeited automatically and cease to remain owing by the Company;
b) the right, on a return of assets on a liquidation, reduction of capital or otherwise, to share in the surplus assets of the Company remaining after payment of its liabilities pari passu with other holders of Ordinary Shares of that class and A Shares of that class; and
c) the right to receive notice of and to attend and speak and vote in person or on a poll by proxy at any general meeting of the Company. On a show of hands every member present or represented and voting has one vote and on a poll every member present or represented and voting has one vote for every share of which that member is the holder; the validly executed appointment of a proxy must be received not less than 48 hours before the time of the holding of the relevant meeting or adjourned meeting or, in the case of a poll taken otherwise than at or on the same day as the relevant meeting or adjourned meeting, be received after the poll has been demanded and not less than 24 hours before the time appointed for the taking of the poll.
These rights can be suspended. If a member, or any other person appearing to be interested in shares held by that member, has failed to comply within the time limits specified in the Company's articles of association with a notice pursuant to S793 of the Companies Act 2006 (notice by a Company requiring information about interests in its shares), the Company can until the default ceases suspend the right to attend and speak and vote at a general meeting and if the shares represent at least 0.25% of their class the Company can also withhold any dividend or other money payable in respect of the shares (without any obligation to pay interest) and refuse to accept certain transfers of the relevant shares.
Shareholders, either alone or with other shareholders, have other rights as set out in the Company's articles of association and in company law. (Principally, the Companies Act 2006).
A member may choose whether his or her shares are evidenced by share certificates (certificated shares) or held in electronic (uncertificated) form in CREST (the UK electronic settlement system). Any member may transfer all or any of his or her shares, subject in the case of certificated shares to the rules set out in the Company's articles of association or in the case of uncertificated shares to the regulations governing the operation of CREST (which allow the Directors to refuse to register a transfer as therein set out); the transferor remains the holder of the shares until the name of the transferee is entered in the register of members. The Directors may refuse to register a share transfer if it is in respect of a certificated share which is not fully paid up or on which the Company has a lien provided that, where the share transfer is in respect of any share admitted to the Official List maintained by the UK Listing Authority, any such discretion may not be exercised so as to prevent dealings taking place on an open and proper basis, or if in the opinion of the Directors (and with the concurrence of the UK Listing Authority) exceptional circumstances so warrant, provided that the exercise of such power will not disturb the market in those
shares. Whilst there are no squeeze-out and sell out rules relating to the shares in the Company's articles of association, shareholders are subject to the compulsory acquisition provisions in S974 to S991 of the Companies Act 2006.
Amendment of Articles of Association
The Company's articles of association may be amended by the members of the Company by special resolution (requiring a majority of at least 75% of the persons voting on the relevant resolution).
Appointment and Replacement of Directors
A person may be appointed as a Director of the Company by the shareholders in general meeting by ordinary resolution (requiring a simple majority of the persons voting on the relevant resolution) or by the Directors. No person, other than a Director retiring by rotation or otherwise, shall be appointed or re-appointed a Director at any general meeting unless he is recommended by the Directors or, not less than seven nor more than 42 clear days before the date appointed for the meeting, notice is given to the Company of the intention to propose that person for appointment or re-appointment in the form and manner set out in the Company's articles of association.
Each Director who is appointed by the Directors (and who has not been elected as a Director of the Company by the members at a general meeting held in the interval since his appointment as a Director of the Company) is to be subject to election as a Director of the Company by the members at the first Annual General Meeting of the Company following his or her appointment. At each Annual General Meeting of the Company one third of the Directors for the time being, or if their number is not three or an integral multiple of three the number nearest to but not exceeding one-third, are to be subject to re-election.
The Companies Act allows shareholders in general meeting by ordinary resolution (requiring a simple majority of the persons voting on the relevant resolution) to remove any Director before the expiring of his or her period of office, but without prejudice to any claim for damages which the Director may have for breach of any contract of service between him or her and the Company.
A person also ceases to be a Director if he or she resigns in writing, ceases to be a Director by virtue of any provision of the Companies Act, becomes prohibited by law from being a Director, becomes bankrupt or is the subject of a relevant insolvency procedure, or becomes of unsound mind, or if the Board so decides following at least six months' absence without leave or if he or she becomes subject to relevant procedures under the mental health laws, as set out in the Company's articles of association.
Powers of the Directors
Subject to the provisions of the Companies Act, the memorandum and articles of association of the Company and any directions given by shareholders by special resolution, the articles of association specify that the business of the Company is to be managed by the Directors, who may exercise all the powers of the Company, whether relating to the management of the business or not. In particular, the Directors may exercise on behalf of the Company its powers to purchase its own shares to the extent permitted by shareholders.
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
Grant Thornton UK LLP offers itself for reappointment as auditor. In accordance with S489(4) of the Companies Act 2006 a resolution to reappoint Grant Thornton UK LLP as auditor and to authorise the Directors to fix their remuneration will be proposed at the forthcoming Annual General Meeting.
On behalf of the Board.
Jane Owen
Director
16 May 2017
Directors' Responsibility Statement
The Directors are responsible for preparing the Strategic Report, the Directors' Report, the Directors' Remuneration Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have elected to prepare the Financial Statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company for that year. In preparing these Financial Statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently; -- make judgments and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRS have been followed, subject to any material departures disclosed and explained in the Financial Statements;
-- prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements and the Remuneration report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for preparing the Annual Report in accordance with applicable law and regulations. The Directors consider the Annual Report and the Financial Statements, taken as a whole, provide the information necessary to assess the Company's position, performance, business model and strategy and are fair balanced and understandable.
The Company's Financial Statements are published on the TPIM website, www.triplepoint.co.uk. The maintenance and integrity of this website is the responsibility of TPIM and not of the Company. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.
To the best of our knowledge:
-- the Financial Statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
-- the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
On behalf of the Board.
Jane Owen
Chairman
16 May 2017
Corporate Governance
The Board of Triple Point VCT 2011 plc has considered the principles and recommendations of the Association of Investment Companies Code of Corporate Governance (AIC Code 2015) by reference to the Association of Investment Companies Corporate Governance Guide for Investment Companies (AIC Guide). The AIC Code 2015, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code (September 2014), as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company. The Board considers that reporting against principles and recommendations of the AIC Code 2015, by reference to the AIC Guide, which incorporates the UK Corporate Governance Code (September 2014), will provide improved reporting to shareholders.
The Company is committed to maintaining high standards in corporate governance and has complied with the recommendations of the AIC Code 2015 and the relevant provisions of the UK Corporate Governance Code (September 2014), except as set out at the end of this report in the Compliance Statement.
Board of Directors
The Company has a Board of three Non-Executive Directors. Since all Directors are Non-Executive and day-to-day management responsibilities are sub-contracted to the Investment Manager, the Company does not have a Chief Executive Officer. The Directors have a range of business and financial skills which are relevant to the Company; these are described on page 22 of this report. Directors are provided with key information on the Company's activities, including regulatory and statutory requirements, by the Investment Manager. The Board has direct access to company secretarial advice and compliance services provided by the Investment Manager which is responsible for ensuring that Board procedures are followed and applicable regulations complied with. All Directors are able to take independent professional advice in furtherance of their duties.
Any appointment of new Directors to the Board is conducted, and appointments made, on merit and with due regard for the benefits of diversity on the Board, including gender. All Directors are able to allocate sufficient time to the Company to discharge their responsibilities.
The Board meets regularly on a quarterly basis, and on other occasions as required, to review the investment performance and monitor compliance with the investment policy laid down by the Board. There is a formal schedule of matters reserved for Board decision and the agreement between the Company and the Manager has authority limits beyond which Board approval must be sought.
The Investment Manager has authority over the management of the investment portfolio, the organisation of custodial services, accounting, secretarial and administrative services. In practice the Investment Manager makes investment recommendations for the Board's approval. In addition all investment decisions involving other VCTs managed by the Investment Manager are taken by the Board rather than the Investment Manager. Other matters reserved for the Board include:
-- the consideration and approval of future developments or changes to the investment policy, including risk and asset allocation;
-- consideration of corporate strategy; -- approval of any dividend or return of capital to be paid to the shareholders; -- the appointment, evaluation, removal and remuneration of the Investment Manager; -- the performance of the Company, including monitoring the net asset value per share; and -- monitoring shareholder profiles and considering shareholder communications.
The Chairman leads the Board in the determination of its strategy and in the achievement of its objectives. The Chairman is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda and has no involvement in the day to day business of the Company. She facilitates the effective contribution of the Directors and ensures that they receive accurate, timely and clear information and that they communicate effectively with shareholders. The Chairman does not have significant commitments conflicting with her obligations to the Company.
The Company Secretary is responsible for advising the Board on all governance matters. All of the Directors have access to the advice and services of the Company Secretary which has administrative responsibility for the meetings of the Board and its committees. Directors may also take independent professional advice at the Company's expense where necessary in the performance of their duties. As all of the Directors are Non-Executive, it is not considered appropriate to identify a member of the Board as the senior Non-Executive Director of the Company.
The Company's articles of association and the schedule of matters reserved to the Board for decision provide that the appointment and removal of the Company Secretary is a matter for the full Board.
The Company's articles of association require that one third of the Directors should retire by rotation each year and seek re-election at the Annual General Meeting and that Directors newly appointed by the Board should seek re-appointment at the next Annual General Meeting. The Board complies with the requirement of the UK Corporate Governance Code (September 2014) that all Directors are required to submit themselves for re-election at least every three years.
During the period covered by these Financial Statements the following meetings were held:
Directors present 4 Full Board 2 Audit Committee
Meetings Meetings
Jane Owen, Chairman 4 2
Chad Murrin 4 2
Tim Clarke 4 2
Audit Committee
The Board has appointed an audit committee of which Jane Owen is Chairman, which deals with matters relating to audit, financial reporting and internal control systems. The Committee meets as required and has direct access to Grant Thornton UK LLP, the Company's auditor.
The audit committee safeguards the objectivity and independence of the auditor by reviewing the nature and extent of non-audit services supplied by the external auditor to the Company. The audit committee has reviewed the non- audit service provided by the external auditor, being the corporation tax return for the year ended 29 February 2016, and does not believe it is sufficient to influence their independence or objectivity due to the fee being an immaterial expense.
When considering whether to recommend the reappointment of the external auditor the audit committee takes into account their current fee tender compared to the external audit fees paid by other similar companies. The audit committee will then recommend to the Board the appointment of an external auditor which is ratified at the Annual General Meeting.
The Auditing Practices Board requires the audit partner to rotate every five years. The audit partner has completed three years. No audit tender has been undertaken since the Company was incorporated.
The effectiveness of the external audit is assessed as part of the Board evaluation conducted annually and by the quality and content of the audit plan provided to the audit committee by the external auditor and the discussions then held on topics raised. The audit committee will challenge the external auditor at the audit committee meeting if appropriate.
The Audit Committee's terms of reference include the following roles and responsibilities:
-- reviewing and making recommendations to the Board in relation to the Company's published Financial Statements and other formal announcements or regulatory returns relating to the Company's financial performance, reviewing significant financial reporting judgements contained in them;
-- reviewing and making recommendations to the Board in relation to the Company's internal control (including internal financial control) and risk management systems;
-- periodically considering the need for an internal audit function;
-- making recommendations to the Board in relation to the appointment, re-appointment and removal of the external auditor and approving the remuneration and terms of engagement of the external auditor;
-- reviewing and monitoring the external auditor's independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK professional regulatory requirements;
-- monitoring the extent to which the external auditor is engaged to supply non-audit services; and
-- ensuring that the Investment Manager has arrangements in place for the investigation and follow-up of any concerns raised confidentially by staff in relation to propriety of financial reporting or other matters.
The committee reviews its terms of reference and effectiveness annually and recommends to the Board any changes required as a result of the review. The terms of reference are available on request from the Company Secretary.
The Board considers that the members of the committee collectively have the skills and experience required to discharge their duties effectively, and that the Chairman of the committee meets the requirements of the UK Corporate Governance Code (September 2014) as to relevant financial experience.
The Company does not have an independent internal audit function as it is not deemed appropriate given the size of the Company and the nature of the Company's business. However, the committee considers annually whether there is a need for such a function and, if there were, would recommend it be established.
In respect of the year ended 28 February 2017, the audit committee discharged its responsibilities by:
-- reviewing and approving the external auditor's terms of engagement and remuneration and independence;
-- reviewing the external auditor's plan for the audit of the Financial Statements, including identification of key risks and confirmation of auditor independence;
-- reviewing TPIM's statement of internal controls operated in relation to the Company's business and assessing those controls in minimising the impact of key risks;
-- reviewing periodic reports on the effectiveness of TPIM's compliance procedures; -- reviewing the appropriateness of the Company's accounting policies;
-- reviewing the Company's half-yearly results and draft annual Financial Statements prior to Board approval;
-- reviewing the external auditor's audit plan document to the audit committee on the annual Financial Statements; and
-- reviewing the Company's going concern status.
The audit committee is responsible for considering and reporting on any significant issues that arise in relation to the Financial Statements.
The key areas of risk that have been identified and considered by the audit committee in relation to the business activities and the Financial Statements of the Company are as follows:
-- valuation and existence of unquoted investments; and
-- compliance with HM Revenue & Customs conditions for maintenance of approved Venture Capital Trust status.
The audit committee relies on the Investment Manager to assess the valuation of unquoted investments and the existence of those investments. The Investment Manager has a director on the board of all the investee companies and meets regularly with the other directors and hence has an oversight of all the investments made. The audit committee have reviewed the valuations and discussed them with both the Investment Manager and the external auditor to confirm the valuation of the unquoted investments and the existence of those investments.
The Investment Manager has confirmed to the audit committee that the conditions for maintaining the Company's status as an approved Venture Capital Trust had been complied with throughout the year. The position 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 whole Report and Accounts for the year ended 28 February 2017 and has reported to the Board that it considers them to be fair, balanced and understandable providing the information necessary for shareholders to assess the Company's position, performance, business model and strategy.
Internal Control
The Directors have overall responsibility for keeping under review the effectiveness of the Company's systems of internal controls. The purpose of these controls is to ensure that proper accounting records are maintained, the Company's assets are safeguarded and the financial information used within the business and for publication is accurate and reliable; such a system can only provide reasonable and not absolute assurance against material misstatement or loss. The system of internal controls is designed to manage rather than eliminate the risk of failure to achieve business objectives. As part of this process an annual review of the internal control systems is carried out. The review covers all material controls including financial, operational and risk management systems. The Directors regularly review financial results and investment performance with the Investment Manager.
The Directors have established an ongoing process designed to meet the particular needs of the Company in identifying, evaluating and managing risks to which it is exposed. The process adopted is one whereby the Directors identify the risks to which the Company is exposed including, among others, market risk, VCT qualifying investment risk and operational risks which are recorded on a risk register. The controls employed to mitigate these risks are identified and the residual risks are rated taking into account the impact of the mitigating factors. The risk register is updated twice a year.
TPIM is engaged to provide administrative including accounting services and retains physical custody of the documents of title relating to investments.
The Directors regularly review the system of internal controls, both financial and non-financial, operated by the Company and the Investment Manager. These include controls designed to ensure that the Company's assets are safeguarded and that proper accounting records are maintained.
Internal control systems include the production and review of quarterly bank reconciliations and management accounts. The VCT is subject to a full annual audit. The auditors are the same auditors as other VCTs managed by the Investment Manager. The Investment Manager's procedures are subject to internal compliance checks.
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 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.
Relations with Shareholders
The Board recognises the value of maintaining regular communications with shareholders. In addition to the formal business of the Annual General Meeting, an opportunity is given to all shareholders to question the Board and the Investment Manager on matters relating to the Company's operation and performance. The Board and the Investment Manager will also respond to any written queries made by shareholders during the course of the year and both can be contacted at 18 St Swithin's Lane, London EC4N 8AD or on 020 7201 8989.
Compliance Statement
The Listing Rules require the Board to report on compliance with the UK Corporate Governance Code (September 2014) provisions throughout the accounting period. With the exception of the limited items outlined below, the Directors consider that the Company has complied throughout the period under review with the provisions set out in the UK Corporate Governance Code (September 2014).
1. New Directors do not receive a full, formal and tailored induction on joining the Board. Such matters are addressed on an individual basis as they arise (B.4.1).
2. Due to the size of the Board and the nature of the Company's business, a formal performance evaluation of the Board, its committees, the individual Directors and the Chairman has not been undertaken. Specific performance issues are dealt with as they arise (B.6.1, B.6.3).
3. The Company does not have a senior independent director. The Board does not consider such an appointment appropriate for the Company (A.4.1).
4. The Company conducts a formal review as to whether there is a need for an internal audit function. The Directors do not consider that an internal audit would be an appropriate control for a Venture Capital Trust (C.3.6).
5. As all the Directors are Non-Executive, it is not considered appropriate to appoint a Nomination or Remuneration Committee (B.2.1 and D.2.1).
6. The Audit committee includes three Non-Executive Directors, all of whom are considered independent. Jane Owen who is chairman is also chairman of the audit committee but it is not considered appropriate to appoint another independent Director. The Board regularly reviews the independence of its Directors (C.3.1).
On behalf of the Board.
Jane Owen,
Chairman
16 May 2017
Directors' Remuneration Report
Introduction
This report is submitted in accordance with schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008, in respect of the year ended 28 February 2017. This report also meets the Financial Conduct Authority's Listing Rules and describes how the Board has applied the principles relating to Directors' remuneration set out in UK Corporate Governance Code (issued September 2014). The reporting requirements require two sections to be included, a Policy Report and an Annual Remuneration Report which are presented below.
Directors' Remuneration Policy Report
This statement of the Directors' Remuneration Policy took effect following approval by shareholders at the Annual General Meeting on 24 July 2014. The Board currently comprises three Directors, all of whom are Non-Executive. The Board does not have a separate remuneration committee, as the Company has no employees or executive directors. The Board has not retained external advisers in relation to remuneration matters but has access to information about Directors' fees paid by other companies of a similar size and type. No views which are relevant to the formulation of the Directors' remuneration policy have been expressed to the Company by shareholders, whether at a general meeting or otherwise.
The Board's policy is that the remuneration of Non-Executive Directors should reflect the experience of the Board as a whole, be fair and be comparable with that of other relevant Venture Capital Trusts that are similar in size and have similar investment objectives and structures. Furthermore, the level of remuneration should be sufficient to attract and retain the Directors needed to oversee the Company properly and to reflect the specific circumstances of the Company, the duties and responsibilities of the Directors and the value and amount of time committed to the Company's affairs. The articles of association provide that the Directors shall be paid in aggregate a sum not exceeding GBP100,000 per annum. None of the Directors is eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits in respect of their services as Non-Executive Directors of the Company.
The articles of association provide that Directors shall retire and be subject to re-election at the first Annual General Meeting after their appointment and that any Director who has not been re-elected for three years shall retire and be subject to re-election at the Annual General Meeting. Also any Director not considered independent shall retire each year and offer himself for re-election at the Annual General Meeting. The Directors' service contracts provide for an appointment of 12 months, after which three months written notice must be given by either party. A Director who ceases to hold office is not entitled to receive any payment other than accrued fees (if any) for past services. The same policies will apply if a new Director is appointed.
Details of each Director's contract is shown below. The Chairman is paid more than the other Directors to reflect the additional responsibilities of that role. There are no other fees payable to the Directors for additional services outside of their contracts.
Policy
Unexpired Annual rate on payment
Date term of of Directors' for loss
of Contract contract fees of office
GBP
Jane Owen,
Chairman 23-Sep-10 none 17,500 none
Chad Murrin 23-Sep-10 none 15,000 none
Tim Clarke 05-May-11 none 15,000 none
Annual Remuneration Report
The remuneration policy described above has not changed during the last three years. Approval to renew the policy will be sought on 13 July 2017 at the Annual General Meeting and will remain unchanged for another three year period. The Board will review the remuneration of the Directors in line with the VCT industry on an annual basis, if thought appropriate. Otherwise, only a change in role is likely to incur a change in remuneration of any one Director.
Directors' Remuneration (audited information)
The fees paid to Directors in respect of the year ended 28 February 2017 and the prior year are shown below:
Emoluments Emoluments
for the for the
year ended year ended
28 February 29 February
2017 2016
GBP GBP
Jane Owen,
Chairman 17,269 15,000
Chad Murrin 14,769 12,500
Tim Clarke 14,769 12,500
46,807 40,000
Employers'
NI contributions 101 162
Total Emoluments 46,908 40,162
-------------------- ------------- -------------
None of the Directors are eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits in respect of their services as Non-Executive Directors of the Company.
Information required on executive Directors, including the Chief Executive Officer and employees has been omitted because the Company has neither and therefore it is not relevant.
Directors' emoluments compared to payments to shareholders:
28 February 29 February
2017 2016
GBP'000 GBP'000
Total Dividends
paid 4,884 13,445
Total Directors'
emoluments 47 40
Directors' Share Interests (audited information)
At the 28 February 2017 Jane Owen held 25,375 Ordinary Shares, 24,624 A Ordinary Shares and 24,378 B Ordinary Shares (2016: 25,375 Ordinary Shares; 24,624 A Ordinary Shares) and Tim Clarke held 15,300 Ordinary Shares and 24,624 B Shares (2016: 15,300 Ordinary Shares) and Chad Murrin held 24,874 A Ordinary Shares and 24,624 B Ordinary Shares (2016: 24,874 A Ordinary Shares). At 28 February 2017 Jane Owen's husband held 25,375 Ordinary Shares (2016: 25,375). No other connected parties to the Directors held any shares at 28 February 2017 (2016: nil). Any shares owned by the Directors were purchased at the same price offered to investors. There are no requirements or restrictions on Directors holding shares in the Company.
Company Performance
There have been no trades in the Company's shares to date. Therefore, no performance graph comparing the share price of the Company over the year ended 28 February 2017 with the total return from a notional investment in the FTSE All-Share index over the same period has been included.
No market maker has been appointed and therefore no current bid and offer price is available for the Company's shares. However the Board's policy is to buy back shares from shareholders at a 10% discount to net asset value. The Company will produce a graph of its share performance once there is sufficient activity that the graph would be meaningful to shareholders.
Statement of Voting at the Annual General Meeting
The 2016 Remuneration Report was presented to the Annual General Meeting in July 2016 and received shareholder approval following a vote 100% in favour and none abstained.
The 2014 Remuneration Policy was presented to the Annual General Meeting in July 2014 and received shareholder approval following a vote 100% in favour and none abstained.
Statement of the Chairman
The Directors' fees were GBP17,500 per annum for the Chairman and GBP15,000 per annum for other Directors from 5 April 2016. The remuneration of the Director's increased by GBP2,500 for each Director when the B Share Offer became effective on 5 April 2016.The remuneration of the Directors reflects the experience of the Board as a whole, is fair and comparable with that of other relevant Venture Capital Trusts that are similar in size and have similar investment objectives and structures.
On behalf of the Board.
Jane Owen
Chairman
16 May 2017
Independent auditor's report to the members of Triple Point VCT 2011 plc
Our opinion on the financial statements is unmodified
In our opinion the financial statements:
* give a true and fair view of the state of the
Company's affairs as at 28 February 2017 and of its
profit for the year then ended;
* have been properly prepared in accordance with
International Financial Reporting Standards (IFRSs)
as adopted by the European Union; and
* have been prepared in accordance with the
requirements of the Companies Act 2006.
============================================================
Who we are reporting to
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
What we have audited
Triple Point VCT 2011 plc's financial statements for the year ended 28 February 2017 comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Shareholders' Equity, the Statement of Cash Flows and the related notes.
The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European Union.
Overview of our audit approach
* Overall materiality: GBP195,000, which represents
approximately 1% of the Company's net assets; and
* Key audit risks were identified as valuation of
unquoted investments and completeness of investment
income.
===========================================================
Our assessment of risk
In arriving at our opinions set out in this report, we highlight the following risks that, in our judgement, had the greatest effect on our audit:
Audit risk How we responded to the
risk
------------------------------------- --------------------------------------------------------------
Valuation of unquoted investments
The Company's objective Our audit work included,
is to build a portfolio but was not restricted
of unquoted companies which to:
are cash generative and, * assessing whether the Company's accounting policy for
therefore, capable of producing unquoted investments is in accordance with the
income and capital repayments requirements of IFRSs as adopted by the European
to the Company prior to Union and the Association of Investment Companies
their disposal by the Company. (AIC) Statement of Recommended Practice (SORP) and
Unquoted investments amount, testing whether the Company has accounted for
by value, to 85% of the unquoted investments in accordance with the policy;
Company's total assets,
and are designated as being
at fair value through profit * ascertaining an understanding of how the valuations
or loss. Measurement of were performed by obtaining the underlying models
the value of an unquoted from the investment manager, discussing the review
investment includes significant process and consideration of whether they were made
assumptions and judgements. in accordance with published guidance, in particular
We therefore identified the International Private Equity and Venture Capital
the valuation of unquoted (IPEVC) Valuation Guidelines;
investments as a significant
risk requiring special
audit consideration. * reviewing and challenging the basis and
reasonableness of the assumptions made by the
investment manager in conjunction with available
supporting information, such as the corroboration of
financial inputs to the relevant investee company
management accounts or offer letters from the
potential buyer as applicable; and
* engaging our valuation specialists to test a sample
of investments, their inputs and assumptions.
The Company's accounting
policies on non-current
asset investments and
assets held for sale are
included in note 2, and
its disclosures about
unquoted investments held
at the year end are included
in note 10. The Audit
Committee also identified
and considered the valuation
and existence of unquoted
investments as a key area
of risk in the Corporate
Governance Statement on
page 29.
------------------------------------- --------------------------------------------------------------
Completeness of investment
income Our audit work included,
Revenue consists of interest but was not restricted
earned on loans and cash to:
balances, and dividend * assessing whether the Company's accounting policy for
income received from investee revenue recognition is in accordance with the IFRSs
companies. Under International as adopted by the European Union and the AIC SORP and
Standard on Auditing (ISA) testing its correct application during the year;
240 'The auditor's responsibilities
relating to fraud in an
audit of financial statements', * performing substantive audit testing on interest
there is a presumed risk income recognised during the year by comparing the
of fraud in revenue recognition. actual to expected income, calculated using the
Revenue is also a key factor interest rates in the loan instruments;
in demonstrating the performance
of the Company's portfolio
and considered a significant * testing recorded dividend income to the Company' bank
risk requiring special statements, agreeing the amounts to the minutes of
audit consideration. the meetings of the relevant investee companies and
corroborating the amounts to the respective
underlying investee companies' accounts; and
* for accrued interest income, reviewing management's
assessment of recoverability by checking to post year
end receipts and also discussion with management.
The Company's accounting
policy on income, including
its recognition, is included
in note 2, and its disclosures
about investment income
recognised in the year
are included in note 4.
------------------------------------- --------------------------------------------------------------
Our application of materiality and an overview of the scope of our audit
Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and extent of our audit work and in evaluating the results of that work.
We determined materiality for the audit of the financial statements as a whole to be GBP195,000, which is approximately 1% of the Company's net assets. This benchmark is considered the most appropriate because net assets, which are primarily composed of the Company's investment portfolio, is considered to be the key driver of the Company's total return performance.
Materiality for the current year is higher than the level that we determined for the year ended 29 February 2016 to reflect the increase in the Company's net assets.
We use a different level of materiality, performance materiality, to drive the extent of our testing and this was set at 75% of financial statement materiality. We also determine a lower level of specific materiality for certain areas such as the statement of total comprehensive income, directors' remuneration and related party transactions.
We determined the threshold at which we will communicate misstatements to the audit committee to be GBP9,000. In addition, we will communicate misstatements below that threshold that, in our view, warrant reporting on qualitative grounds.
Overview of the scope of our audit
A description of the generic scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate.
We conducted our audit in accordance with International Standards on Auditing (ISAs) (UK and Ireland). Our responsibilities under those standards are further described in the 'Responsibilities for the financial statements and the audit' section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Company in accordance with the Auditing Practices Board's Ethical Standards for Auditors, and we have fulfilled our other ethical responsibilities in accordance with those Ethical Standards.
Our audit approach was based on a thorough understanding of the Company's business and is risk based. The day-to-day management of the Company's investment portfolio and the maintenance of the Company's accounting records is outsourced to third-party service providers. Accordingly, our audit work included:
-- obtaining an understanding of and evaluating design and implementation of controls in place at the relevant third party service providers around key audit risks areas; and
-- undertaking substantive testing on significant transactions, balances and disclosures, the extent of which was based on various factors such as our overall assessment of risk of material misstatement and the effectiveness of design and implementation of controls around such areas.
Other reporting required by regulations
Our opinions on other matters prescribed by the
Companies Act 2006 are unmodified
In our opinion, the part of the Directors' Remuneration
Report to be audited has been properly prepared
in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in
the course of the audit:
* the information given in the Strategic Report and the
Report of the Directors for the financial year for
which the financial statements are prepared is
consistent with the financial statements;
* the Strategic Report and the Report of the Directors
have been prepared in accordance with applicable
legal requirements;
* the information about internal control and risk
management systems in relation to financial reporting
processes and about share capital structures, given
in compliance with rules 7.2.5 and 7.2.6 in the
Disclosure Rules and Transparency Rules sourcebook
made by the Financial Conduct Authority (the FCA
Rules), is consistent with the financial statements
and has been prepared in accordance with applicable
legal requirements; and
* information about the Company's corporate governance
code and practices and about its administrative,
management and supervisory bodies and their
committees complies with rules 7.2.2, 7.2.3 and 7.2.7
of the FCA Rules.
===============================================================
Matter on which we are required to report under the Companies Act 2006
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 Report of the Directors.
Matters
Under the Companies Act 2006 we are required to report to you if, in our opinion:
-- adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-- the financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or -- we have not received all the information and explanations we require for our audit.
Under the Listing Rules, we are required to review:
-- the directors' statements in relation to going concern and longer-term viability set out on pages 30 and 11 respectively; and
-- the part of the Corporate Governance Statement relating to the Company's compliance with the provisions of the UK Corporate Governance Code specified for our review.
Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is:
-- materially inconsistent with the information in the audited financial statements; or
-- apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Company acquired in the course of performing our audit; or
-- otherwise misleading.
In particular, we are required to report to you if:
-- we have identified any inconsistencies between our knowledge acquired during the audit and the directors' statement that they consider the annual report is fair, balanced and understandable; or
-- the annual report does not appropriately disclose those matters that were communicated to the audit committee which we consider should have been disclosed.
We have nothing to report in respect of any of the above matters.
We also confirm that we do not have anything material to add or to draw attention to in relation to:
-- the directors' confirmation in the annual report that they have carried out a robust assessment of the principal risks facing the Company including those that would threaten its business model, future performance, solvency or liquidity;
-- the disclosures in the annual report that describe those risks and explain how they are being managed or mitigated;
-- the directors' statement in the financial statements about whether they have considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the Company's ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; and
-- the directors' explanation in the annual report as to how they have assessed the prospects of the Company, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether 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, including any related disclosures drawing attention to any necessary qualifications or assumptions.
Responsibilities for the financial statements and the audit
What the directors are responsible for:
As explained more fully in the Directors' Responsibilities Statement set out on page 26, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.
What we are responsible for:
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Nicholas Page
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
16 May 2017
Unaudited Non-Statutory Analysis of - The Ordinary Share Fund
Statement of
Comprehensive Year ended 28 February Year ended 29
Income 2017 February 2016
---------------------------- -----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 685 - 685 1,943 - 1,943
Realised (loss)
on investments - (429) (429) - (1,589) (1,589)
Unrealised (loss)/gain
on investments - (74) (74) - 228 228
Investment return 685 (503) 182 1,943 (1,361) 582
Investment management
fees (80) (92) (172) (267) (171) (438)
Other expenses (66) - (66) (96) (7) (103)
Profit/(loss)
before taxation 539 (595) (56) 1,580 (1,539) 41
Taxation 11 57 68 16 11 27
Profit/(loss)
after taxation 550 (538) 12 1,596 (1,528) 68
Profit and total
comprehensive
income/(loss)
for the year 550 (538) 12 1,596 (1,528) 68
Basic and diluted
earnings/(loss)
per share 2.71p (2.65p) 0.06p 7.84p (7.51p) 0.33p
-------- -------- -------- -------- -------- ---------
Balance Sheet 28 February 2017 29 February 2016
GBP'000 GBP'000
Non-current
assets
Financial assets
at fair value
through profit
or loss 5 5,750
-------- ---------
Current assets
Assets held
for sale 191 793
Receivables 674 681
Corporation
Tax 68 -
Cash and cash
equivalents 1,448 30
2,381 1,504
-------- ---------
Current liabilities
Payables (82) (78)
-------- ---------
Net assets 2,304 7,176
-------- ---------
Equity attributable
to equity holders 2,304 7,176
-------- ---------
Net asset value
per share 11.32p 35.26p
-------- ---------
Statement of
Changes in Shareholders'
Equity
29 February
28 February 2017 2016
GBP'000 GBP'000
Opening shareholders'
funds 7,176 20,553
Profit/(loss)
for the year 12 68
Dividend paid (4,884) (13,445)
Closing shareholders'
funds 2,304 7,176
-------- ---------
Investment Portfolio
28 February 2017 29 February 2016
------------------------------------ ------------------------------------
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted Qualifying
Holdings 300 17.16 191 11.62 5,234 81.68 5,269 80.18
Unquoted Non Qualifying
Holdings - - 5 0.30 1,145 17.88 1,274 19.40
300 17.16 196 11.92 6,379 99.56 6,543 99.58
Cash and cash equivalents 1,448 82.84 1,448 88.08 30 0.44 30 0.42
1,748 100.00 1,644 100.00 6,409 100.00 6,573 100.00
======== ======= ======== ======= ======== ======= ======== =======
Unquoted Qualifying
Holdings
Cinema Digitisation
DLN Digital Ltd 300 17.16 191 11.62 300 4.68 141 2.15
Hydro Project Management
Highland Hydro Services
Ltd - - - - 813 12.69 1,099 16.72
Landfill Gas
Aeris Power Ltd - - - - 575 8.97 464 7.06
Craigahulliar Energy
Ltd - - - - 310 4.84 329 5.01
Hydroelectric Power
Green Highland Allt
Choire A Bhalachain
(255) Ltd - - - - 30 0.47 30 0.46
Green Highland Allt
Phocachain (1015)
Ltd - - - - 30 0.47 30 0.46
Green Highland Shenval
Ltd - - - - 1,276 19.91 1,276 19.41
Gas Power
Green Peak Generation
Ltd - - - - 1,900 29.65 1,900 28.91
300 17.16 191 11.62 5,234 81.68 5,269 80.18
======== ======= ======== ======= ======== ======= ======== =======
28 February 2017 29 February 2016
------------------------------------ ------------------------------------
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted Non Qualifying
Holdings
Hydroelectric Power
Green Highland Allt
Choire A Bhalachain
(255) Ltd - - - - 3 0.05 3 0.05
Green Highland Allt
Phocachain (1015)
Ltd - - - - 3 0.05 3 0.05
Gas Power
Green Peak Generation
Ltd - - - - 3 0.05 3 0.05
SME funding:
Other
Broadpoint Ltd - - 5 0.30 1,136 17.73 1,265 19.25
- 0.00 5 0.30 1,145 17.88 1,274 19.40
======== ======= ======== ======= ======== ======= ======== =======
Unaudited Non-Statutory Analysis of - The A Share Fund
Statement of
Comprehensive Year ended 28 February Year ended 29
Income 2017 February 2016
---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 663 - 663 322 - 322
Realised gain
on investments - - - - 1 1
Unrealised gain
on investments - 30 30 - - -
Investment return 663 30 693 322 1 323
Investment management
fees (163) (47) (210) (65) (22) (87)
Other expenses (52) - (52) (87) (12) (99)
Profit/(loss)
before taxation 448 (17) 431 170 (33) 137
Taxation (90) 10 (80) (34) 7 (27)
Profit/(loss)
after taxation 358 (7) 351 136 (26) 110
Profit and total
comprehensive
income/(loss)
for the year 358 (7) 351 136 (26) 110
Basic and diluted
earnings/(loss)
per share 3.61p (0.08p) 3.53p 1.49p (0.29p) 1.20p
-------- -------- -------- -------- -------- --------
Balance Sheet 28 February 2017 29 February 2016
GBP'000 GBP'000
Non-current assets
Financial assets
at fair value
through profit
or loss 9,802 9,466
-------- --------
Current assets
Receivables 678 276
Cash and cash
equivalents 29 307
707 583
-------- --------
Current liabilities
Payables (73) (44)
Corporation Tax (80) -
-------- --------
Net assets 10,356 10,005
-------- --------
Equity attributable
to equity holders 10,356 10,005
-------- --------
Net asset value
per share 104.07p 100.54p
-------- --------
Statement of
Changes in Shareholders'
Equity
29 February
28 February 2017 2016
GBP'000 GBP'000
Opening shareholders'
funds 10,005 -
Issue of new
shares - 9,895
Profit for the
year 351 110
Closing shareholders'
funds 10,356 10,005
-------- --------
Investment Portfolio 28 February 2017 29 February 2016
------------------------------------ ------------------------------------
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted Qualifying
Holdings 6,323 64.51 6,335 64.44 5,403 55.28 5,403 55.28
Unquoted Non Qualifying
Holdings 3,449 35.18 3,467 35.27 4,063 41.57 4,063 41.57
9,772 99.69 9,802 99.71 9,466 96.85 9,466 96.85
Cash and cash equivalents 29 0.31 29 0.29 307 3.15 307 3.15
9,801 100.00 9,831 100.00 9,773 100.00 9,773 100.00
======== ======= ======== ======= ======== ======= ======== =======
Unquoted Qualifying
Holdings
Hydroelectric Power
Green Highland Allt
Choire A Bhalachain
Ltd 30 0.31 29 0.29 - - - -
Green Highland Allt
Garbh Ltd 2,250 22.96 2,250 22.89 2,250 23.02 2,250 23.02
Green Highland Allt
Ladaidh (1148) Ltd 1,470 15.00 1,470 14.95 1,470 15.04 1,470 15.04
Green Highland Allt
Luaidhe (228) Ltd 855 8.72 877 8.92 855 8.75 855 8.75
Green Highland Allt
Phocachain (1015)
Ltd 858 8.75 849 8.64 828 8.47 828 8.47
Green Highland Shenval
Ltd 860 8.77 860 8.75 - - - -
6,323 64.51 6,335 64.44 5,403 55.28 5,403 55.28
======== ======= ======== ======= ======== ======= ======== =======
28 February 2017 29 February 2016
------------------------------------ ------------------------------------
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted Non Qualifying
Holdings
Hydroelectric Power
Green Highland Allt
Choire A Bhalachain
Ltd 3 0.03 3 0.03 - - - -
Green Highland Allt
Ladaidh (1148) Ltd 30 0.31 30 0.31 30 0.31 30 0.31
Green Highland Allt
Luaidhe (228) Ltd 61 0.62 61 0.62 61 0.62 61 0.62
Green Highland Allt
Phocachain (1015)
Ltd 3 0.03 3 0.03 - - - -
Kinlochteacius Hydro
Ltd 47 0.48 47 0.48 1,167 11.94 1,167 11.94
SME Funding: - -
Hydroelectric Power - -
Broadpoint 2 Ltd 800 8.16 800 8.14 800 8.19 800 8.19
Broadpoint 3 Ltd 1,005 10.25 1,005 10.22 1,005 10.28 1,005 10.28
Other - -
Funding Path Ltd 1,000 10.20 1,010 10.27 1,000 10.23 1,000 10.23
Modern Power Generation
Ltd 500 5.10 508 5.17 - - - -
3,449 35.18 3,467 35.27 4,063 41.57 4,063 41.57
======== ======= ======== ======= ======== ======= ======== =======
Unaudited Non-Statutory Analysis of - The B Share Fund
Statement of
Comprehensive Year ended 28 February Year ended 29
Income 2017 February 2016
---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 89 - 89 - - -
Unrealised gain
on investments - 26 26 - - -
Investment return 89 26 115 - - -
Investment management
fees (87) (25) (112) - - -
Other expenses (30) - (30) - - -
(Loss)/gain
before taxation (28) 1 (27) - - -
Taxation 6 5 11 - - -
(Loss)/gain
after taxation (22) 6 (16) - - -
Loss and total
comprehensive
(loss)/income
for the year (22) 6 (16) - - -
Basic and diluted
(loss)/earnings
per share (0.37p) 0.10p (0.27p) - - -
-------- -------- -------- -------- -------- --------
Balance Sheet 28 February 2017 29 February 2016
GBP'000 GBP'000
Non-current
assets
Financial assets
at fair value
through profit
or loss 6,786 -
-------- --------
Current assets
Assets held
for sale - -
Receivables 23 -
Corporation
Tax 11
Cash and cash
equivalents 48 -
82 -
-------- --------
Current liabilities
Payables (60) -
-------- --------
Net assets 6,808 -
-------- --------
Equity attributable
to equity holders 6,808 -
-------- --------
Net asset value
per share 99.76p -
-------- --------
Statement of
Changes in Shareholders'
Equity
29 February
28 February 2017 2016
GBP'000 GBP'000
Opening shareholders'
funds - -
Issue of new
shares 6,824 -
Loss for the
year (16) -
Closing shareholders'
funds 6,808 -
-------- --------
Investment Portfolio
28 February 2017 29 February 2016
------------------------------------ --------------------------------
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted Qualifying
Holdings 5,100 74.91 5,100 74.62 - - - -
Unquoted Non Qualifying
Holdings 1,660 24.38 1,686 24.67 - - - -
6,760 99.29 6,786 99.29 - - - -
Cash and cash equivalents 48 0.71 48 0.71 - - - -
6,808 100.00 6,834 100.00 - - - -
======== ======= ======== ======= ========== ============
Unquoted Qualifying
Holdings
Gas Power
Distributed Generators
Ltd 3,200 47.00 3,200 46.82 - - - -
Green Peak Generation
Ltd 1,900 27.91 1,900 27.80 - - - -
5,100 74.91 5,100 74.62 - - - -
======== ======= ======== ======= ========== ============
28 February 2017 29 February 2016
------------------------------------ --------------------------------
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted Non Qualifying
Holdings
SME Funding
Other
Modern Power Generation
Ltd 1,660 24.38 1,686 24.67 - - - -
1,660 24.38 1,686 24.67 - - - -
======== ======= ======== ======= ========== ============
Statement of Comprehensive Income
Year ended Year ended
28 February 29 February
2017 2016
---------------------------- ----------------------------
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 4 1,437 - 1,437 2,265 - 2,265
Loss arising on
the realisation
of investments
during the year - (429) (429) - (1,588) (1,588)
(Loss)/gain arising
on the revaluation
of investments
at the year end - (18) (18) - 228 228
Investment return 1,437 (447) 990 2,265 (1,360) 905
-------- -------- -------- -------- -------- --------
Investment management
fees 5 330 164 494 332 193 525
Financial and regulatory
costs 28 - 28 27 - 27
General administration 4 - 4 12 - 12
Legal and professional
fees 6 69 - 69 46 19 65
Directors' remuneration 7 47 - 47 40 - 40
Interest payable - - - 58 - 58
Operating expenses 478 164 642 515 212 727
-------- -------- -------- -------- -------- --------
Profit/(loss) before
taxation 959 (611) 348 1,750 (1,572) 178
Taxation 8 (73) 72 (1) (18) 18 -
Profit/(loss) after
taxation 886 (539) 347 1,732 (1,554) 178
-------- -------- -------- -------- -------- --------
Profit and total
comprehensive income/(loss)
for the year 886 (539) 347 1,732 (1,554) 178
-------- -------- -------- -------- -------- --------
Basic & diluted
earnings per share 9 n/a n/a n/a n/a n/a n/a
-------- -------- -------- -------- -------- --------
The total column of this statement is the Statement of Comprehensive Income of the Company prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The supplementary revenue return and capital columns have been prepared in accordance with the Association of Investment Companies Statement of Recommended Practice (AIC SORP 2014).
All revenue and capital items in the above statement derive from continuing operations.
This Statement of Comprehensive Income includes all recognised gains and losses.
The accompanying notes are an integral part of these statements.
Balance Sheet
28 February 29 February
2017 2016
Note GBP'000 GBP'000
Non current assets
Financial assets
at fair value through
profit or loss 10 16,593 15,216
------------ ------------
Current assets
Assets held for sale 11 191 793
Receivables 12 1,375 957
Cash and cash equivalents 13 1,525 337
3,091 2,087
------------ ------------
Total assets 19,684 17,303
------------ ------------
Current liabilities
Payables and accrued
expenses 14 215 122
Current taxation
payable 1 -
216 122
------------ ------------
Net assets 19,468 17,181
============ ============
Equity attributable
to equity holders
Share capital 15 371 303
Share Premium 16,683 9,927
Share redemption
reserve 1 1
Special distributable
reserve 255 4,900
Capital reserve 1,443 1,982
Revenue reserve 715 68
Total equity 19,468 17,181
============ ============
Net asset value per
share (pence) 17 n/a n/a
The statements were approved by the Directors and authorised for issue on 16 May 2017 and are signed on their behalf by:
Jane Owen
Chairman
16 May 2017
Company registration number 07324448.
The accompanying notes are an integral part of this statement.
Statement of Changes in Shareholders' Equity
Share Special
Issued Share Redemption Distributable Capital Revenue
Capital Premium Reserve Reserve Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 28 February
2017
Opening balance 303 9,927 1 4,900 1,982 68 17,181
---------- ---------- ------------- ---------------- ---------- ---------- ----------
Issue of share
capital 68 6,904 - - - - 6,972
Cost of issue
of shares - (148) - - - - (148)
Dividends paid - - - (4,645) - (239) (4,884)
Transactions
with owners 68 6,756 - (4,645) - (239) 1,940
---------- ---------- ------------- ---------------- ---------- ---------- ----------
(Loss)/profit
after taxation - - - - (539) 886 347
Total comprehensive
(loss)/profit
for the year - - - - (539) 886 347
---------- ---------- ------------- ---------------- ---------- ---------- ----------
Balance at 28
February 2017 371 16,683 1 255 1,443 715 19,468
========== ========== ============= ================ ========== ========== ==========
The Capital
Reserve consists
of:
Investment holding
losses (48)
Other realised gains 1,491
1,443
----------
Year ended 29
February 2016
Opening balance 203 - 1 16,630 3,536 183 20,553
---------- ---------- ------------- ---------------- ---------- ---------- ----------
Issue of share
capital 100 10,168 - - - - 10,268
Cost of issue
of shares - (241) - (132) - - (373)
Dividend Paid - - - (11,598) - (1,847) (13,445)
Transactions
with owners 100 9,927 - (11,730) - (1,847) (3,550)
---------- ---------- ------------- ---------------- ---------- ---------- ----------
(Loss)/profit
after taxation - - - - (1,554) 1,732 178
Total comprehensive
(loss)/profit
for the year - - - - (1,554) 1,732 178
---------- ---------- ------------- ---------------- ---------- ---------- ----------
Balance at 29
February 2016 303 9,927 1 4,900 1,982 68 17,181
========== ========== ============= ================ ========== ========== ==========
The Capital
Reserve consists
of:
Investment holding
gains 164
Other realised gains 1,818
1,982
----------
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 is not distributable. The special distributable reserve was created on court cancellation of the share premium account. The revenue reserve, realised capital reserve and special distributable reserve are distributable by way of dividend.
Statement of Cash Flows
Year ended Year ended
29 February
28 February 2017 2016
GBP'000 GBP'000
Cash flows from operating
activities
Profit before taxation 348 178
Loss arising on the disposal of investments during the year 429 1,588
Loss/(gain) arising on the revaluation of investments at the year end 18 (228)
Cash generated by operations 795 1,538
(Increase) in receivables (424) (187)
Increase/(decrease)
in payables 93 (16)
Net cash flows from operating activities 464 1,335
Cash flows from investing activities
Purchase of financial assets at fair value through profit or loss (5,850) (17,636)
Sales of financial assets at fair value through profit or loss 4,634 20,171
Net cash flows from investing activities (1,216) 2,535
Cash flows from financing activities
Issue of shares 6,824 9,895
Dividends paid (4,884) (13,445)
Net cash flows from
financing activities 1,940 (3,550)
Net increase in cash and cash equivalents 1,188 320
Reconciliation of net cash flow to movements in cash and cash equivalents
Cash and cash equivalents at 1 March 2016 337 17
Net increase in cash and cash equivalents 1,188 320
Cash and cash equivalents at 28 February 2017 1,525 337
The accompanying notes are an integral part of these statements.
Notes to the Financial Statements
1. Corporate Information
The Financial Statements of the Company for the year ended 28 February 2017 were authorised for issue in accordance with a resolution of the Directors on 16 May 2017.
The Company applied for listing on the London Stock Exchange on 24 December 2010.
Triple Point VCT 2011 plc is incorporated and domiciled in Great Britain and registered in England and Wales. The address of the Company's registered office, which is also its principal place of business, is 18 St Swithin's Lane, London EC4N 8AD.
The Company is required to nominate a functional currency, being the currency in which the Company predominately operates. The functional and reporting currency is sterling, reflecting the primary economic environment in which the Company operates.
The principal activity of the Company is investment. The Company's investment strategy is to offer combined exposure to cash or cash based funds and venture capital investments focused on companies with contractual revenues from financially secure counterparties.
2. Basis of Preparation and Accounting Policies
Basis of Preparation
After making the necessary enquiries, the Directors confirm that they are satisfied that the Company has adequate resources to continue in business for the foreseeable future. The Board receives regular reports from the Investment Manager and the Directors believe that, as no material uncertainties leading to significant doubt about going concern have been identified, it is appropriate to continue to apply the going concern basis in preparing the Financial Statements.
The Financial Statements of the Company for the year to 28 February 2017 have been prepared in accordance with International Financial Reporting Standards ("IFRS") adopted for use in the European Union and complied 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 November 2014 and updated in January 2017, in so far as this does not conflict with IFRS.
The Financial Statements are prepared on a historical cost basis except that investments are shown at fair value through profit or loss.
The preparation of Financial Statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgements.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities relate to:
-- the valuation of unlisted financial investments held at fair value through profit or loss, which are valued on the basis noted below (under the heading Non-Current Asset Investments) and in note 10.
-- 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. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects that period or in the period of revision and future periods if the revision affects both current and future periods. The carrying value of investments is disclosed in note 10.
The Directors do not believe that there are any further key judgements made in applying accounting policies or estimates in respect of the Financial Statements.
These Financial Statements have been prepared in accordance with the accounting policies set out below which are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union (EU).
These accounting policies have been applied consistently in preparing these Financial Statements.
Standards issued but not yet effective
The following new standards, amendments to standards and interpretations are not yet effective for the year ended 28 February 2017, and have not been applied in preparing these Financial Statements.
-- IFRS 9 Financial Instruments (1 January 2018)
-- IFRS 15 Revenue from contracts with customers (1 January 2018)
-- IFRS 16 Leases (1 January 2019)
All of these changes will be applied by the Company from the effective date but none of them are expected to have a significant impact on the Company's Financial Statements.
Presentation of Statement of Comprehensive Income
In order better to reflect the activities of a Venture Capital Trust, and in accordance with the guidance issued by the Association of Investment Companies, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Income Statement.
Capital Management
Capital management is monitored and controlled using the internal control procedures set out on page 30. The capital being managed includes equity and fixed interest VCT qualifying investments, cash balances and liquid resources including debtors and creditors.
The Company's objectives when managing capital are:
-- to safeguard its ability to continue as a going concern, so that it can continue to provide returns to shareholders and benefits for other stakeholders;
-- to ensure sufficient liquid resources are available to meet the funding requirements of its investments and to fund new investments where identified.
The Company has no external debt; consequently all capital is represented by the value of share capital, distributable and other reserves. Total shareholder equity at 28 February 2017 was GBP19.5 million (2016: GBP17.2 million).
Non-Current Asset Investments
The Company invests in financial assets with a view to profiting from their total return through income and capital growth. These investments are managed and their performance is evaluated on a fair value basis in accordance with the investment policy detailed in the Strategic Report on page 4 and information about the portfolio is provided internally on that basis to the Company's Board of Directors. Accordingly upon initial recognition the investments are designated by the Company as "at fair value through profit or loss" in accordance with IAS39 "Financial instruments recognition and measurement". They are included initially at fair value, which is taken to be their cost (excluding expenses incidental to the acquisition which are written off in the Statement of Comprehensive Income and allocated to "capital" at the time of acquisition). Subsequently the investments are valued at "fair value" which is the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. This is measured as follows:
-- unlisted investments are fair valued by the Directors in accordance with the International Private Equity and Venture Capital Valuation Guidelines. Fair value is established by using measurements of value such as price of recent transactions, discounted cash flows, cost, and initial cost of investment.
-- listed investments are fair valued at bid price on the relevant date.
Where securities are designated upon initial recognition as at fair value through profit or loss, gains and losses arising from changes in fair value are included in the Statement of Comprehensive Income for the year as capital items in accordance with the AIC SORP 2014. 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.
Assets Held for Sale
Current assets classified as held for sale are presented separately and measured at the value expected to be realised on disposal which is equivalent to its fair value.
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.
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 exit fee which has been charged to the capital account and 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.
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 2014.
In accordance with IAS 12, deferred tax is recognised using the balance sheet method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. The Directors have considered the requirements of IAS 12 and do not believe that any provision should be made.
Financial Instruments
The Company's principal financial assets are its investments and the accounting policies in relation to those assets are set out above. Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities. Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.
Issued Share Capital
Ordinary Shares, A Shares and B Shares are classified as equity because they do not contain an obligation to transfer cash or another financial asset. Issue costs associated with the allotment of shares have been deducted from the share premium account in accordance with IAS 32.
Cash and Cash Equivalents
Cash and cash equivalents representing cash available at less than 3 months' notice are classified as loans and receivables under IAS 39.
Reserves
The revenue reserve (retained earnings) and capital reserve reflect the guidance in the AIC SORP 2014. 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 is not distributable. The special distributable reserve was created on court cancellation of the share premium account. The revenue reserve, realised capital reserve and special distributable reserve are distributable by way of dividend.
3. Segmental Reporting
The Company only has one class of business, being investment activity. All revenues and assets are generated and held in the UK.
4. Investment Income
Year ended Year ended
28 February 2017 29 February 2016
Ordinary Shares A Shares B Shares Total Ordinary Shares A Shares B Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Interest receivable on
bank balances - - - - 3 2 - 5
Loan stock interest 52 663 89 804 281 320 - 601
Dividend Income 633 - - 633 1,659 - - 1,659
685 663 89 1,437 1,943 322 - 2,265
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 23 September 2010 and a deed of variation to that agreement effective 23 December 2015.
Ordinary Shares: The agreement provides for an investment management fee of 2.25% per annum of net assets payable quarterly in arrear for Ordinary Shares until 1 October 2016 and thereafter a 1% exit fee on all funds returned to shareholders.
A Shares: The agreement provides for an investment management fee of 2.00% per annum of net assets payable quarterly in arrear for A Shares. For A Shares the appointment shall continue for a period of at least 6 years from the admission of those shares.
B Shares: The agreement provides for an investment management fee of 1.90% per annum of net assets payable quarterly in arrear for B Shares. For B Shares the appointment shall continue for a period of at least 6 years from the admission of those shares.
An administration fee of GBP37,500 per annum is payable quarterly in arrear. The administration fee for the year ended 28 February 2017 includes a fee relating to the prior year that was not charged, explaining why it is a higher value in the table below.
Investment Management
Fees Year ended Year ended
28 February 2017 29 February 2016
Ordinary Shares A Shares B Shares Total Ordinary Shares A Shares B Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment Management
Fees 90 189 100 379 320 76 - 396
Administration Fees 12 21 12 45 36 11 - 47
Exit fees 70 - - 70 82 - - 82
Total 172 210 112 494 438 87 - 525
6. Legal and Professional Fees
Legal and professional fees include remuneration paid to the Company's auditor, Grant Thornton UK LLP as shown in the following table:
Year ended Year ended
28 February 2017 29 February 2016
Ordinary A B Ordinary A B
Shares Shares Shares Total Shares Shares Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fees payable to the Company's auditor:
* for the audit of the Financial Statements 5 8 4 17 12 15 - 27
* for taxation compliance services - - - - 2 2 - 4
5 8 4 17 14 17 - 31
7. Directors' Remuneration
Year ended Year ended
28 February 2017 29 February 2016
Ordinary Shares A Shares B Shares Total Ordinary Shares A Shares B Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Jane Owen 4 8 5 17 8 7 - 15
Chad Murrin 4 7 4 15 7 6 - 13
Tim Clarke 4 7 4 15 5 7 - 12
Total 12 22 13 47 20 20 - 40
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.
8. Taxation
Year ended Year ended
28 February 2017 29 February 2016
Ordinary Shares A Shares B Shares Total Ordinary Shares A Shares B Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit/(loss) on
ordinary activities
before tax (55) 431 (27) 348 41 137 - 178
Corporation tax @ 20% (11) 86 (5) 70 8 27 - 35
Effect of: - - - - -
Utilisation of tax
losses brought forward (38) - - (38) - - - -
Capital losses/(gains)
not taxable 100 (6) (6) 88 272 - - 272
Dividends received not
taxable (126) - - (126) (332) - - (332)
Disallowed expenditure 7 - - 7 - - - -
Unrelieved tax losses
arising in the year - - - - 25 - - 25
Tax charge / credit for
the year (68) 80 (11) 1 (27) 27 - -
Capital gains and losses are exempt from corporation tax due to the Company's status as a Venture Capital Trust.
Disclosure by share class is unaudited
9. Earnings per Share
The earnings per Ordinary Share is 0.06p (2016: 0.33p) and is based on a profit from ordinary activities after tax of GBP12,675 (2016: GBP67,915), and on the weighted average number of Ordinary Shares in issue during the period of 20,349,869 (2016: 20,349,869).
The earnings per A Share is 3.53p (2016: 1.20p) and is based on a profit from ordinary activities after tax of GBP350,664 (2016: GBP109,838), and on the weighted average number of A Shares in issue during the period of 9,951,133 (2016: 9,117,520).
The loss per B Share is 0.27p (2016: nil) and is based on a loss from ordinary activities after tax of GBP16,246 (2016: GBPnil), and on the weighted average number of B Shares in issue during the period of 6,109,517 (2016: nil).
The table below shows the calculation of the weighted average number of shares.
Ordinary Shares A Shares B Shares
Shares No. of Weighted Shares No. of Weighted Shares No. of Weighted
Issued Days Average Issued Days Average Issued Days Average
01-Mar-16 20,349,869 365 20,349,869 9,951,133 365 9,951,133 - 365 -
04-Apr-16 - 331 - - 331 - 5,768,291 331 5,230,971
05-Apr-16 - 330 - - 330 - 63,037 330 56,992
03-May-16 - 302 - - 302 - 992,938 302 821,554
28-Feb-17 20,349,869 365 20,349,869 9,951,133 365 9,951,133 6,824,266 365 6,109,517
10. Financial Assets at Fair Value through Profit or Loss
Investments
Fair Value Hierarchy:
Level 1: quoted prices on active markets for identical assets or liabilities. The fair value of financial instruments traded on active markets is based on quoted market prices at the balance sheet date. A market is regarded as active where the market in which transactions for the asset or liability takes place with sufficient frequency and volume to provide pricing information on an ongoing basis. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in level 1.
Level 2: the fair value of financial instruments that are not traded on active markets is determined by using valuation techniques. These valuation techniques maximise the use of observable inputs including market data where it is available either directly or indirectly and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: the fair value of financial instruments that are not traded on an active market (for example, investments in unquoted companies) is determined by using valuation techniques such as discounted cash flows. If one or more of the significant inputs is based on unobservable inputs including market data, the instrument is included in level 3.
There have been no transfers between these classifications in the period. Any change in fair value is recognised through the Statement of Comprehensive Income.
Further details of these investments are provided in the Investment Manager's Review and Investment Portfolio.
The Company's Investment Manager performs valuations of financial items for financial reporting purposes, including Level 3 fair values. Valuation techniques are selected based on the characteristics of each instrument, with the overall objective of maximising the use of market-based information.
Level 3 valuations include assumptions based on non-observable data with the majority of investments being valued on discounted cashflows or price of recent transactions.
Valuation techniques and
unobservable inputs:
Inter relationship between significant
Valuation Significant unobservable unobservable inputs and fair value
Sector Techniques inputs measurement
Estimated fair value would
increase/(decrease) if:
Cinema -- Discounted
Digitisation cash flows: * Discount rate 4.50% * The discount rate was lower/(higher)
The valuation
model
considers the
present value
of expected
payment,
discounted
using a
risk-adjusted
discount rate.
Hydroelectric -- Discounted
Power cash flows: The * Discount rate 10% * The discount rate was lower/(higher)
valuation model
considers the
present value of
expected * Inflation rate 2%
payment, * The inflation rate was higher/(lower)
discounted using
a risk-adjusted
discount rate.
Consideration has been given whether the effect of changing one or more inputs to reasonably possible alternative assumptions would result in a significant change to the fair value measurement. Each unquoted portfolio company has been reviewed in order to identify the sensitivity of the valuation methodology to using alternative assumptions.
Discount rates have been applied reflecting levels of risk and life expectancy of the investment.
Where discount rates have been applied to the unquoted investments, alternative discount rates have been considered. Two alternative scenarios for each investment have been modelled, a more prudent assumption (downside case) and a more optimistic assumption (upside case). Applying the downside alternative, the aggregate change in value of the unquoted investments would be GBP115,000 or 5.9 per cent lower. Using the upside alternative the aggregate value of the unquoted investments would be GBP255,000 or 13.1 per cent higher.
Movements in investments held at fair value through the profit or loss during the year to 28 February 2017 were as follows:
Level 3 Unquoted Investments Ordinary Shares A Shares B Shares Total
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 28 February 2017
Opening Cost 5,494 9,466 - 14,960
Opening unrealised profit 256 - - 256
Opening fair value at 1 March 2016 5,750 9,466 - 15,216
Purchases at cost - - 5,850 5,850
Disposal proceeds (2,195) (1,120) (490) (3,805)
Transfers between share classes (2,826) 1,426 1,400 -
Realised loss on disposal (459) - - (459)
Investment holding losses (124) 30 26 (68)
Reclassification as assets held for sale (141) - - (141)
Closing fair value at 28 February 2017 5 9,802 6,786 16,593
Closing cost - 9,772 6,760 16,532
Closing investment holding gains 5 30 26 61
Year ended 29 February 2016
Opening Cost 4,311 - - 4,311
Opening unrealised (loss) (64) - - (64)
Opening fair value at 1 March 2015 4,247 - - 4,247
Purchases at cost 5,919 11,717 - 17,636
Disposal proceeds (3,852) (2,252) - (6,104)
Realised gain on disposals 1 1 - 2
Investment holding gains 228 - - 228
Reclassification as assets held for sale (793) - - (793)
Closing fair value at 29 February 2016 5,750 9,466 - 15,216
Closing cost 5,494 9,466 - 14,960
Closing investment holding gains 256 - - 256
All investments are designated as fair value through the 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.
Material disposals during the year
Cost Opening Valuation Disposal Realised Loss
GBP'000 GBP'000 GBP'000 GBP'000
Green Highland Shenval Ltd 416 416 416 -
Highland Hydro Services Ltd 813 1,099 640 (459)
1,229 1,515 1,056 (459)
The loss shown on the sale of Highland Hydro Services Ltd was due to a dividend of GBP515,064 being declared prior to the sale and subsequently received. The realised losses shown in the table above and the realised gain shown in note 11 under Assets Held for Sale equal the total realised losses shown in the Statement of Comprehensive Income on page 46.
Disclosure by share class is unaudited
11. Assets Held for Sale
Assets held for Sale are measured at fair value through profit or loss at the discounted price expected to be achieved through the sale after the year end and are classified as Level 3 Unquoted Investments.
Material disposals during the year
Investee Company Cost Opening Valuation Disposal Realised Gain
GBP'000 GBP'000 GBP'000 GBP'000
Aeris Power Ltd 575 464 494 30
Craigahulliar Energy Ltd 310 329 329 -
885 793 823 30
Income for the year relating to these disposals amounted to GBP10,000 and expenses were GBPnil.
DLN Digital Ltd, a cinema digitisation company previously treated as Financial Assets at fair value through profit or loss has been reclassified as an asset held for sale at 28 February 2017 following the Investment Managers commitment to sell this company. It is highly probable that a sale will complete within 12 months. Subsequent to reclassification, in line with IFRS 5, the company will continue to be measured in line with IAS 39. Income for the year relating to the investment amounted to GBPnil and expenses were GBPnil. This asset is fair value through profit and loss and classified as Level 3 (2016: Level 3).
12. Receivables
28 February 2017 29 February 2016
Ordinary Shares A Shares B Shares Total Ordinary Shares A Shares B Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Accrued income 2 102 18 122 17 85 - 102
Prepaid expenses 2 2 1 5 3 1 - 4
Other debtors 670 574 4 1,248 661 190 - 851
674 678 23 1,375 681 276 - 957
13. Cash and Cash Equivalents
Cash and cash equivalents comprise deposits with The Royal Bank of Scotland plc.
14. Payables and Accrued Expenses
Year ended Year ended
28 February 2017 29 February 2016
Ordinary Shares A Shares B Shares Total Ordinary Shares A Shares B Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade Creditors 5 59 51 115 - - - -
Other taxation and
social security 2 2 1 5 3 1 - 4
Accrued expenses &
deferred income 75 12 8 95 75 43 - 118
82 73 60 215 78 44 - 122
Disclosure by share class is unaudited
15. Share Capital
28 February 2017 29 February 2016
Ordinary Shares of GBP0.01 each
Issued & Fully Paid
Number of shares 20,349,869 20,349,869
Par Value GBP'000 203 203
Authorised
Number of shares 60,000,000 60,000,000
Par Value GBP'000 600 600
A Ordinary Shares of GBP0.01 each
Issued & Fully Paid
Number of shares 9,951,133 9,951,133
Par Value GBP'000 100 100
Authorised
Number of shares 10,000,000 10,000,000
Par Value GBP'000 100 100
B Ordinary Shares of GBP0.01 each
Issued & Fully Paid
Number of shares 6,824,256 -
Par Value GBP'000 68 -
Authorised
Number of shares 10,000,000 -
Par Value GBP'000 100 -
Company Total Shares of GBP0.01 each
Issued & Fully Paid
Number of shares 371,252,258 303,010,002
Par Value GBP'000 371 303
On 29 April 2016 the B Share Class offer closed with a total of 6,824,266 B Shares being issued.
16. 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 page 4.
The following table discloses the financial assets and liabilities of the Company in the categories defined by IAS 39, "Financial Instruments; Recognition & Measurement."
Financial Liabilities held Fair value through profit
Total value Loan and receivables at amortised cost or loss
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 28 February 2017
Assets:
Financial assets at fair
value through profit or
loss 16,593 - - 16,593
Assets held for sale 191 191
Receivables 1,370 1,370 - -
Cash and cash equivalents 1,525 1,525 - -
19,679 2,895 - 16,784
Liabilities:
Taxation payable 5 - 5 -
Other Payables 210 - 210 -
215 - 215 -
Year ended 29 February 2016
Assets:
Financial assets at fair
value through profit or
loss 15,216 - - 15,216
Assets held for sale 793 - - 793
Receivables 953 953 - -
Cash and cash equivalents 337 337 - -
17,299 1,290 - 16,009
Liabilities:
Taxation payable 3 - 3 -
Other Payables 119 - 119 -
122 - 122 -
Fixed Asset Investments (see note 10) are valued at fair value. Unquoted investments are carried at fair value as determined by the Directors in accordance with current venture capital industry guidelines. The fair value of all other financial assets and liabilities is represented by their carrying value in the balance sheet. The Directors believe that where an investee company's enterprise value, which is equivalent to fair value, remains unchanged since acquisition that investment should continue to be held at cost less any loan repayments received. Where they consider the investee company's enterprise value has changed since acquisition, that should be reflected by the investment being held at a value measured using a discounted cash flow model 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.
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. 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 15 to 21.
An increase of 1% in the value of investments would increase the capital profits for the period and the net asset value at 28 February 2017 by GBP16,800. A decrease of 1% would reduce the capital profits and net asset value by the same amount. A movement of 1% is used as a multiple to demonstrate the impact of varying changes on the capital profits and net asset value of the Company.
Interest Rate Risk
Some of the Company's financial assets are interest bearing, of which some are at fixed rates and some at variable rates. As a result, the Company is exposed to interest rate risk arising from fluctuations in the prevailing levels of market interest rates.
Investments made into qualifying holdings are part equity and part loan. The loan element of investments totals GBP7,141,000 (2016: GBP8,399,000) and is subject to fixed interest rates for the five year loan terms 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 amounts held in variable rate investments at the balance sheet date are as follows:
28 February 2017 29 February 2016
GBP'000 GBP'000
Cash on Deposit 1,525 337
1,525 337
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 28 February 2017. The Board believes that in the current economic climate a movement of 1% is reasonably possible.
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.
28 February 2017 29 February 2016
GBP'000 GBP'000
Non Qualifying investment loans 3,744 5,209
Qualifying Investment loans 3,397 3,190
Cash on Deposit 1,525 337
Receivables 1,370 953
10,036 9,689
The Company's bank accounts are maintained with The Royal Bank of Scotland plc ("RBS"). Should the credit quality or financial position of RBS deteriorate significantly, the Investment Manager will move the cash holdings to another bank. Credit risk arising on unquoted loan stock held within unlisted investments is considered to be part of
Market risk as disclosed above.
Liquidity Risk
The Company's financial assets include investments in unquoted equity securities which are not traded on a recognised stock exchange and which are illiquid. As a result the Company may not be able to realise some of its investments in these instruments quickly at an amount close to their fair value in order to meet its liquidity requirements.
The Company's liquidity risk is managed on a continuing basis by the Investment Manager in accordance with policies and procedures laid down by the Board. The Company's overall liquidity risks are monitored by the Board on a quarterly basis.
The Board maintains a liquidity management policy where cash and future cash flows from operating activities will be sufficient to pay expenses. At 28 February 2017 cash held by the Company amounted to GBP1,525,000.
Foreign Currency Risk
The Company does not have exposure to material foreign currency risks.
17. Net Asset Value per Share
The net asset value per Ordinary Share is 11.32p (2016: 35.26p) and is based on net assets of GBP2,304,000 (2016: GBP7,176,000) divided by the 20,349,869 (2016: 20,349,869) Ordinary Shares in issue.
The net asset value per A Share is 104.07p (2016: 100.54p) and is based on net assets of GBP10,356,000 (2016: GBP10,005,000) divided by the 9,951,133 (2016: 9,951,133) A Shares in issue.
The net asset value per B Share is 99.76p (2016: nil) and is based on net assets of GBP6,808,000 (2016: GBPnil) divided by the 6,824,256 (2016: nil) B Shares in issue.
18. Commitments and Contingencies
The Company has no outstanding commitments or contingent liabilities.
19. Relationship with Investment Manager
During the period, TPIM received GBP494,509 which has been expensed (2016: GBP525,210), for providing management and administrative services, to the Company. At 28 February 2017 GBP115,441 was owing to TPIM (2016: GBP85,020).
20. Related Party Transactions
The Directors Remuneration Statement on pages 32 to 34 discloses the Directors' remuneration and shareholdings.
21. Post Balance Sheet Events
Since the year end, on 13 April 2017 a dividend of GBP1.0 million equal to 5p per share has been paid to Ordinary Class Shareholders.
22. Dividend
On 11 November 2016 a dividend of GBP4.9 million equal to 24p per share was paid to the Ordinary Class Shareholders. Since the year end, on 13 April 2017 a dividend of GBP1.0 million equal to 5p per share has been paid to Ordinary Class Shareholders. The Board has resolved to pay a further dividend to Ordinary Class Shareholders of GBP406,997 equal to 2p per share which will be paid on 23 June 2017 to shareholders on the register on 9 June 2017. This will bring the total paid by way of dividends to the Ordinary Class Shareholders to 110.75p per share.
The Board has resolved to pay the first dividend to A Class Shareholders of GBP398,045 equal to 4p per share which will be paid on 23 June 2017 to shareholders on the register on 9 June 2017.
Information
Details of Advisers
Secretary and Registered Office:
Triple Point Investment Management LLP
18 St Swithin's Lane
London
EC4N 8AD
Registered Number
07324448
FCA Registration number
659605
Investment Manager and Administrator
Triple Point Investment Management LLP
18 St Swithin's Lane
London
EC4N 8AD
Tel: 020 7201 8989
Independent Auditor
Grant Thornton UK LLP
Chartered Accountants and Statutory Auditor
30 Finsbury Square
London
EC2P 2YU
Solicitors
Howard Kennedy LLP
No. 1 London Bridge
London
SE1 9BG
Registrars
Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen
West Midlands
B63 3DA
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
Shareholder Information
The Company
Triple Point VCT 2011 plc is a Venture Capital Trust. The Investment Manager is Triple Point Investment Management LLP. The Company was incorporated on 23 July 2010.
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. The Company continues to meet the condition that 70% of relevant funds must be invested in qualifying investments.
Financial Calendar
The Company's financial calendar is as follows:
13 July 2017 Annual General Meeting October 2017 Interim report for the six months ending 31 August 2017 despatched May 2018 Results for the year to 28 February 2018 announced; Annual Report and Financial
Statements published.
Notice of Annual General Meeting
NOTICE is hereby given that the Annual General Meeting of Triple Point VCT 2011 plc will be held at 18 St Swithin's Lane, London, EC4N 8AD at 10.45am on Thursday 13 July 2017 for the following purposes:
Ordinary Business
1. To receive, consider and adopt the Report of the Directors and Financial Statements of the Company for the year ended 28 February 2017 together with the Independent Auditors Report thereon (Ordinary Resolution).
2. To approve the Directors' Remuneration Report for the year ended 28 February 2017 (Ordinary Resolution).
3. To approve the Directors' Remuneration Policy (Ordinary Resolution)
4. To re-elect Chad Murrin as a Director (Ordinary Resolution).
5. To re-elect Tim Clarke as a Director (Ordinary Resolution).
6. To re-appoint Grant Thornton UK LLP as Auditor and determine their remuneration (Ordinary Resolution).
Special Business
7. That the Company be and is hereby authorised in accordance with s701 of the Companies Act 2006 (the "Act") to make one or more market purchases (as defined in section 693(4) of the Act) of Ordinary Shares, A Shares or B Shares provided that:
(i) the maximum aggregate number of Ordinary Shares authorised to be purchased is an amount equal to 10% of the issued Ordinary Shares as at the date of this Resolution;
(ii) the maximum aggregate number of A Shares authorised to be purchased is an amount equal to 10% of the issued A Shares as at the date of this Resolution;
(iii) the maximum aggregate number of B Shares authorised to be purchased is an amount equal to 10% of the issued B Shares as at the date of this Resolution;
(iv) the minimum price which may be paid for an Ordinary Share, A Share or B Share is 1 pence;
(v) the maximum price which may be paid for an Ordinary Share, A Share or B Share is an amount, exclusive of expenses, equal to 105 per cent. of the average of the middle market prices for the Ordinary Shares, A Shares and B Shares as derived from the Daily Official List of the UK Listing Authority for the five business days immediately preceding the day on which that Ordinary Share, A Share or B Share (as applicable) is purchased; and
(vi) this authority shall expire either at the conclusion of the next Annual General Meeting of the Company or 15 months following the date of the passing of this Resolution, whichever is the first to occur (unless previously renewed, varied or revoked by the Company in general meeting), provided that the Company may, before such expiry, make a contract to purchase its own shares which would or might be executed wholly or partly after such expiry, and the Company may make a purchase of its own shares in pursuance of such contract as if the authority hereby conferred had not expired. (Special Resolution).
By Order of the Board
Jane Owen
Director
Registered Office:
18 St Swithin's Lane
London EC4N 8AD 16 May 2017
Notes:
(i) A member entitled to vote at the Meeting is entitled to appoint one or more proxies to attend and, on a poll, vote on his or her behalf. A proxy need not be a member of the Company.
(ii) A form of proxy is enclosed. To be effective, the instrument appointing a proxy (together with the power of attorney or other authority, if any, under which it is signed, or a certified copy of such power or authority) must be deposited at or posted to the office of the registrars of the Company, Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA, so as to be received not less than 48 hours before the time fixed for the Meeting. Completion and return of the form of proxy will not preclude a member from attending or voting at the Meeting in person if he or she so wishes.
(iii) Members who hold their shares in uncertificated form must be entered in the Company's register of Members 48 hours before the Meeting to be entitled to attend or vote at the Meeting. Such shareholders may only cast votes in respect of Ordinary Shares held by them at such time.
(iv) Copies of the service contracts of each of the Directors, the register of Directors' interests in shares of the Company kept in accordance with the Listing Rules and a copy of the Memorandum and Articles of Association of the Company, will be available for inspection at the registered offer of the Company during usual business hours on any week day (Saturdays, Sundays and public holidays excepted) from the date of this notice until the date of the Annual General Meeting and at the place of the Annual General Meeting from at least 15 minutes prior to and until the conclusion of the Annual General Meeting.
Form of Proxy
Relating to the 2017 Annual General Meeting of Triple Point VCT 2011 plc
I/We..........................................................................................................................................
BLOCK CAPITALS PLEASE - Name in which shares registered
of.............................................................................................................................................
................................................................................................................................................
or failing him/her the Chairman of the meeting to be my/our proxy and vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held on 10.45am on Thursday 13 July 2017, notice of which was sent to shareholders with the Directors' Report and the accounts for the period ended 28 February 2017, and at any adjournment thereof. The proxy will vote as indicated below in respect of the resolutions set out in the notice of meeting:
Resolution number For Against Withheld
1. To receive, consider and adopt the Report of the Directors and the Financial Statements
for
the year ended 28 February 2017.
2. To approve the implementation report set out in the Directors' Remuneration Report for the
year ended 28 February 2017.
3. To approve the Directors' Remuneration Policy
4. To re-elect Chad Murrin as a Director
5. To re-elect Tim Clarke as a Director
6. To re-appoint Grant Thornton UK LLP as auditor and authorise the Directors to agree their
remuneration.
7. To authorise the Directors to make market purchases of the Company's own shares (Special
Resolution).
Signed: ....................................................................... Dated: ................................................ ..2017
Notes
1. A member wishing to appoint a person other than the Chairman of the meeting as proxy should insert the name and address of such person in the space provided.
2. Use of the proxy form does not preclude a member from attending and voting in person.
3. Where this form of proxy is executed by a corporation it must be either under its seal or under the hand of an officer or attorney duly authorised.
4. If the proxy form is signed and returned without any indication as to how the proxy shall vote, the proxy will exercise his/her discretion as to whether and how he/she votes.
5. To be valid, the proxy form must be received by Neville Registrars at Neville House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA no later than 48 hours before the commencement of the meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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May 16, 2017 12:47 ET (16:47 GMT)
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