Annual Report • May 30, 2014
Annual Report
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RNS Number : 4655I
Triple Point Income VCT PLC
30 May 2014
Triple Point Income VCT plc
Final Results
Triple Point Income VCT plc managed by Triple Point Investment Management LLP today announces the final results for the year ended 31 March 2014.
These results were approved by the Board of Directors on 29 May 2014.
You may view the Annual Report on the Triple Point website www.triplepoint.co.uk at http://www.triplepoint.co.uk/investment-products/venture-capital-trust/triple-point-income-vct/.
About Triple Point Income VCT plc
Triple Point Income VCT plc ("the Company") is a Venture Capital Trust ("VCT"). The investment manager is Triple Point Investment Management LLP. The Company was launched in November 2007 and raised £23 million (net of expenses) through an offer for subscription.
Details of the Fund's progress are discussed in the Strategic Report forming part of the extract from the Financial Statements which follows.
Venture Capital Trusts (VCTs)
VCTs were introduced in the Finance Act 1995 to provide a means for private individuals to invest in unlisted companies in the UK. Subsequent Finance Acts have introduced changes to VCT legislation. The tax benefits currently available to eligible new investors in VCTs include:
· upfront income tax relief of 30%
· exemption from income tax on dividends paid; and
· exemption from capital gains tax on disposals of shares in VCTs
The Company has been provisionally approved as a VCT by HM Revenue & Customs. In order to maintain its approval, the Company must comply with certain requirements on a continuing basis. Above all, the Company is required at all times to hold 70% of its investments (as defined in the legislation) in VCT qualifying holdings, of which at least 30% must comprise eligible ordinary shares.
Financial Summary
| Year ended 31 March 2014 | Year ended 31 March 2013 | ||||||||
| Ord. Shares | A Shares | C Shares | Total | Ord. Shares | A Shares | C Shares | Total | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
| Net assets | 15,587 | 4,215 | 6,873 | 26,675 | 40,479 | 4,221 | - | 44,700 | |
| Net asset value per share | 79.03p | 82.15p | 98.38p | n/a | 81.08p | 82.26p | - | n/a | |
| Net profit/(loss) before tax | 778 | 141 | (21) | 898 | 545 | 91 | - | 636 | |
| Dividend paid | (4.11p) | (5.00p) | - | n/a | (1.35p) | - | - | n/a | |
| Earnings/(loss) per share | 1.72p | 2.55p | (2.16p) | n/a | 1.50p | 4.90p | - | n/a |
Triple Point Income VCT plc ("the Company") is a Venture Capital Trust ("VCT"). The Investment Manager is Triple Point Investment Management LLP ("TPIM").
During the year the Company's shareholders approved proposals for a Tender Offer for Ordinary shareholders who had satisfied their five year holding period and wished to realise their investment. At a price of 80.8955p per share based on the Net Asset Value ("NAV") on 31 July 2013, a total of 34,195,496 shares were purchased by the Company in two tranches on 18 October 2013 and 29 November 2013.
During the year the Company's shareholders approved proposals for the B shares to be converted into Ordinary shares. On 31 October 2013 7,263,471 B shares were converted into Ordinary shares at a conversion rate of 1.140169, creating a further 8,281,584 Ordinary shares.
During the year the Company's shareholders approved proposals for a new C class of share to be issued. At 31 March 2014 a total of 6,986,522 C shares had been issued. Since the year end a further 6,454,916 C shares were issued. The offer closed on 27 May 2014 and in total £14.0 million was raised and 13,441,438 C shares were issued.
The Strategic Report on pages 2 to 18, the Directors' Report on pages 19 to 28 and the Directors' Remuneration Report on pages 29 to 31 have each been drawn up in accordance with the requirements of English law and liability in respect thereof is also governed by English law. In particular, the responsibility of the Directors for these reports is owed solely to Triple Point Income VCT plc.
The Directors submit to the members their Annual Report and Financial Statements for the Company for the year ended 31 March 2014.
Strategic Report
The Strategic Report, on pages 2 to 18, 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 Income VCT plc ("the Company") for the year ended 31 March 2014.
First of all, I would like to thank Ordinary and A Class Shareholders for your continued assistance over a period of unusually high corporate activity as the Company underwent a reorganisation. I have set out below an update on each of these projects and its relevance to each class of shareholder.
Ordinary Share Class
Ordinary Class shareholders who satisfied their minimum five year VCT holding period in 2013 were provided with the opportunity to take up an Enhanced Share Buy Back ("ESBB"), which allowed them to re-invest for a further five years. Approximately one third of those shareholders took up the ESBB. The Board then focused on realising investments in order to return funds to those shareholders who chose not to participate. The Company purchased 34,195,496 Ordinary Shares at a price of 80.8955p per share based on the Net Asset Value ("NAV") on 31 July 2013 in two tranches on 18 October 2013 and 29 November 2013.
B Share Class
The B Share Class consisted of shares issued to investors who took up the B Share Offer which closed on 30 April 2013. In August 2013 the Board put forward proposals for the conversion of B shares into Ordinary shares to simplify the Company's administration. The proposal was approved and the conversion effected on 31 October 2013.
Ordinary Share Qualifying Investments
As at 31 March 2014 (and after the B share conversion) VCT qualifying investments represented 92% of the Ordinary Fund's investment portfolio. The diversified investment portfolio retained by the Ordinary Share Class continues to perform in line with expectations. More information on the investment portfolio is given on pages 12 to 18 of the Strategic Report.
A dividend was paid to the Ordinary Class shareholders of £812,978, equal to 4.11p per share, on 10 January 2014.
At 31 March 2014 the net asset value stood at 79.03p. Adding back the dividend payment of 4.11p during the year the net asset value would have been 83.14p.
A Share Class
A Class shareholders retain exposure to their discrete investment portfolio in the renewable energy sector. As at 31 March 2014 VCT qualifying investments represented 86% of the A Fund's investment portfolio. More information on the investment portfolio is given on pages 12 to18 of the Strategic Report.
At 31 March 2014 the net asset value stood at 82.15p. Adding back the dividend payment of 5p per share paid during the year the net asset value would have been 87.15p.
A dividend was paid to the A Class shareholders of £256,568, equal to 5p per share, on 26 July 2013. The Board has resolved to pay a second dividend to A Share Class shareholders of £318,144 equal to 6.2p per share which will be paid on 25 July 2014 to shareholders on the register on 11 July 2014.
C Share Class
Shareholders approved the issue of up to 30,000,000 C Class shares and as at 31 March 2014 6,986,522 shares had been issued. Since the year end a further 6,454,916 C shares have been issued bringing the total to 13,441,438 C Class shares. This was part of a new share issue offer.
At 31 March 2014 the C Share class had £6.9 million in cash which will be deployed into companies investing in small scale hydro electric power projects in Scotland.
Risks
The Board believes that the principal risks facing the Company are:
· investment risk associated with holding VCT qualifying investments
· failure to maintain approval as a VCT
The Board and the Investment Manager continue to work to minimise the likelihood and potential impact of these risks.
Outlook
With the reorganisation of the Company complete and earlier vintage shareholders having exited, the Company is now established as a diversified VCT designed to meet the investment objectives of shareholders in each of its three share classes. Our focus as your Board is, therefore, to ensure that the strategy is executed successfully and that the Company continues to build and maintain a portfolio of qualifying holdings which perform in line with our expectations.
If you have any queries or comments, please do not hesitate to telephone Triple Point Investment Management LLP on 020 7201 8989.
David Frank
Chairman
29 May 2014
Company Strategy and Business Model
The Directors assess the Company's success in meeting its objectives in relation to returns, stability, VCT qualification and, ultimately, exit.
Performance Update
Although each Share Class follows the same investment strategy its execution of the strategy varies for each Share Class and therefore the returns may vary.
The Company targets returns for the Ordinary Share Class of 8% to 10% pa including the benefit of tax relief. At a weighted average share price at acquisition or conversion of 83.6p and on a weighted average return this is broadly equivalent to a total target return to investors in 2018 of 90.4p. This compares to a net asset value per share for the Ordinary Share Class at 31 March 2014 of 79.03p and a dividend payment of 4.11p, bringing the total return at 31 March 2014 to 83.14p.
The net asset value per share for the A Share Class at 31 March 2014 stood at 82.15p and a dividend payment of 5p, making a total return at 31 March 2014 of 87.15p. The targeted return for the original investment in TP12 (I) VCT plc was 9% to 12%. At a return of 9% on a weighted average share price at conversion of 86.4p, it broadly equates to a total target return to investors in 2017 of 97.6p.
The net asset value per share for the C Share Class at 31 March 2014 stood at 98.38p. The target for the C Share Class is to pay dividends of 5% to 7% of net asset value each year from 2016 for 15 years, and in addition to secure a partial realisation targeted to be 50% after five years.
The Board and the Investment Manager are both committed to ensuring that returns on the investment portfolio are optimised and that the VCT remains fully invested and continues to be managed in line with the Company's investment strategy and risk profile.
The Company's objective has been to build a portfolio of investments which target capital preservation. The Company's qualifying and non-qualifying investments are both meeting this objective. Some of the unquoted investments are showing some small appreciation in line with market valuations, whilst the remainder of the portfolio has maintained its value and is valued at cost.
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 pages 2 to 3 and the Investment Manager's Review on pages 10 to 11.
Dividend Policy
The Board aims to deliver an annual 5% dividend for the Ordinary Share Class and the A Share Class and a dividend of 5% to 7% for the C Share Class from 2016, but this depends primarily on the Company's level of realisations as well as profitability and cash flow. There may be variations in the amount of dividends paid year on year.
Investment Policy
The Company's Investment Policy as set out in the prospectuses circulated to shareholders is set out below.
At least 70% of the Company's net assets will be invested in unquoted companies. The remaining assets will be exposed either to (i) cash or similar cash-based liquid investments or (ii) investments originated in line with the Company's VCT qualifying investment policy.
To comply with VCT Rules, the Company will seek to acquire (and subsequently maintain) a portfolio of VCT qualifying company investments equivalent to a minimum of 70% of the value of its investments over a period not exceeding three years. These VCT qualifying investments will typically be in investments ranging between £500,000 and £5,000,000 and will encompass businesses with cash generative ability, arising from a niche position or the market in which they operate. No single investment by the Company will represent more than 15% of the aggregate value of all the investments of the Company at the time any investment is made or added to. It is possible that investments may be made in more than one company in the same sector.
In seeking to achieve its objectives, the Company will invest on the basis of the following conservative principles:
(a) TPIM will seek investments where robust due diligence has been undertaken;
(b) TPIM will favour investments where there is a high level of access to material financial and other information on an ongoing basis (as a condition for investing in a company, the Company may nominate directors to the boards of investee companies);
(c) TPIM will seek to minimise the risk of losses when investing through careful analysis of the collateral available to investee companies;
(d) TPIM will target investments where there is a strong relationship with the key decision makers.
Qualifying Investments
The Company pursues investments in a range of sectors that meet its investment criteria. The objective is to build a diversified portfolio of unquoted companies which are cash generative and, therefore, capable of producing predictable income for the Company prior to their realisation or exit.
Although investments will be sought in a range of diverse industries, the Company's portfolio will comprise companies with certain characteristics, for example clear commercial and financial objectives, strong contractual customer relationships and, where possible, tangible assets with value. The Company will focus on identifying businesses typically with predictable revenues from a high-quality customer base. Businesses with assets providing valuable security may also be considered. The objective is to reduce the risk of capital value volatility by selecting businesses with stable valuation characteristics and to provide investors with an attractive income stream.
The criteria against which investment targets would be assessed will include the following:
(a) an attractive valuation at the time of the investment;
(b) managed risk of capital losses;
(c) predictability and reliability of the company's cash flows;
(d) the quality of the business's counterparties, suppliers and market position;
(e) the sector in which the business is active. The Company will focus on sectors where its capital can be used to create growth but not where returns are speculative. Key target sectors include energy, entertainment and social enterprise;
(f) the quality of the company's assets;
(g) the opportunity to structure an investment that can produce distributable income;
(h) the prospect of achieving an exit after 5 years.
Non-Qualifying Investments
The non-qualifying investments will consist of cash, cash-based similar liquid investments and investments of a similar profile to the qualifying investments with an expected realisation date which meets the liquidity requirements of the VCT.
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), shall not without the previous sanction of an ordinary resolution of the Company exceed 30% of its net asset value at the time of any borrowing.
VCT Regulation and Tax Benefits
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.
VCT qualifying status risk: the Company is required at all times to observe the conditions laid down in the Income Tax Act 2007 for the maintenance of approved VCT status. The loss of such approval could lead to the Company losing its exemption from corporation tax on capital gains, to investors being liable to pay income tax on dividends received from the Company and, in certain circumstances, to investors being required to repay the initial income tax relief on their investment. The Investment Manager keeps the Company's VCT qualifying status under continual review and reports to the Board on a quarterly basis. The Board has also retained PricewaterhouseCoopers LLP to undertake an independent VCT status monitoring role.
Exit Programme
The Company is committed to realising its investments and returning funds to Ordinary shareholders and A shareholders as soon as practicable after the end of the five year holding period which will be 30 April 2017 for the A shares and 30 April 2018 for the Ordinary shares. In relation to the C Share Class the Company is intending to secure a partial realisation of 50p per share after five years but plans to retain its investment in the Hydro companies for 25 years.
The valuation of and potential exit routes for the Company's portfolio of investments are reviewed and discussed at each Board meeting. The Investment Manager has successfully implemented exit plans for other VCTs under its management.
Principal Risk and Risk Management
The Directors carry out a regular review of the environment in which the Company operates. The main areas of risk identified by them, along with the risks to which the Company is exposed through its operational and investing activities, are detailed below.
Investment risk: the Company's VCT qualifying investments will be held in small and medium-sized unquoted companies which, by their nature, entail a higher level of risk and lower liquidity than investments in large quoted companies. The Directors and Investment Manager aim to limit the risk attached to the portfolio as a whole by careful selection and timely realisation of investments, by carrying out rigorous due diligence procedures and by maintaining a spread of holdings in terms of industry sector and geographical location. The Board reviews the investment portfolio with the Investment Manager on a regular basis.
Financial instrument risk: Financial Instrument risks are described in note 15.
Financial risk: as most of the Company's investments will involve a medium to long-term commitment and will be relatively illiquid, the Directors consider that it is inappropriate to finance the Company's activities through borrowing. Accordingly a proportion of the Company's assets are maintained in cash or cash equivalents in order to be in a position to take advantage of unquoted investment opportunities as they arise.
Internal control risk: the Board regularly reviews the system of internal controls, both financial and non-financial, operated by the Company and the Investment Manager. These include controls designed to ensure that the Company's assets are safeguarded and that proper accounting records are maintained.
Share Buy-Back Discount Policy
The Company has a share buy-back facility, committing to buy back shares at no more than a 10% discount to the prevailing NAV, subject to the Directors' discretion. We will be asking shareholders at the Annual General Meeting to extend the facility for the Company to purchase shares in the market for cancellation.
Shareholders should note that if they sell their shares within five years of subscription they forfeit any tax relief obtained. If you are considering selling your shares please contact TPIM on 020 7201 8989.
Environmental, Social, Employee and Human Rights Issues
Due to the nature of the Company's activities and having no employees and only 3 Non-Executive Directors, there are no Human Rights Issues to report. Its investment in companies engaged in energy generation from renewable sources means it will contribute to the reduction in carbon emissions.
Gender Diversity
The Board of Directors comprises 3 male Directors. The Investment Manager has a female managing partner and has 35 employees and members of whom 20 are men and 15 are women.
InvestmentManager's Review
At 31 March 2014, qualifying investments represented 67% of net assets. This includes £6.9 million of cash from the issue of C shares which has three years from the date the shares were issued to be invested in qualifying investments. If the C share cash is excluded from the calculation then qualifying investments represented 90% of net assets thus ensuring that the Company continues to satisfy the requirement to be 70% invested in qualifying investments.
The last year has seen considerable movement in the portfolio in preparation for the return of funds to exiting Ordinary Class shareholders in October and November 2013, with the realisation of £16 million of investments in cinema digitisation companies.
Following the disposals, the Company retains investments in two companies engaged in cinema digitisation. It has a single holding in an enterprise providing crematorium management, whilst the remaining portfolio of unquoted investments comprises companies all involved in renewable electricity generation from sources including solar PV, anaerobic digestion, landfill gas and hydro electric power.
Each of these investments meets the Company's investment criteria, with projected revenues generated by good quality customers and the potential for steady returns.
Sector Analysis
The unquoted qualifying investments can be analysed as follows:
| Electricity Generation | ||||||||
| Industry Sector | Cinema Digitisation | Crematorium Management | Solar PV | Anaerobic Digestion | Landfill Gas | Hydro Electric Power | SME Lending | Total Unquoted Investments |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Investments at 31 March 2013 | ||||||||
| Ordinary shares | 19,167 | 1,320 | 4,031 | 3,550 | 0 | 1,000 | - | 29,068 |
| A shares | - | - | 2,085 | 1,125 | 875 | - | - | 4,085 |
| 19,167 | 1,320 | 6,116 | 4,675 | 875 | 1,000 | - | 33,153 | |
| Investments made during the year | ||||||||
| Ordinary shares | - | - | 1,005 | - | - | 1,253 | 250 | 2,508 |
| A shares | - | - | - | - | - | - | - | - |
| - | - | 1,005 | - | - | 1,253 | 250 | 2,508 | |
| Investments realised during the year | ||||||||
| Ordinary shares | (16,042) | (150) | - | - | - | - | (250) | (16,442) |
| A shares | - | - | - | (304) | - | - | - | (304) |
| (16,042) | (150) | - | (304) | - | - | (250) | (16,746) | |
| Investment revaluations during the year | ||||||||
| Ordinary shares | 152 | (32) | 215 | - | - | - | - | 335 |
| A shares | - | - | 72 | - | 15 | - | - | 87 |
| 152 | (32) | 287 | - | 15 | - | - | 422 | |
| Investments at 31 March 2014 | ||||||||
| Ordinary shares | 3,277 | 1,138 | 5,251 | 3,550 | - | 2,253 | - | 15,469 |
| A shares | - | - | 2,157 | 821 | 890 | - | - | 3,868 |
| Total £ | 3,277 | 1,138 | 7,408 | 4,371 | 890 | 2,253 | 0 | 19,337 |
| Total % | 16.95% | 5.89% | 38.31% | 22.60% | 4.60% | 11.65% | 0.00% | 100.00% |
VCT Sector Portfolio
Cinema Digitisation
The cinema digitisation portfolio continues to perform as intended, with the investee companies benefitting from regular and reliable revenues. The majority of these revenues come from the six major investment grade Hollywood Studios under the globally recognised Virtual Print Fee model, through which film studios pay for the cost of the deployment of digital conversion over a number of years. The companies in its portfolio own maintain and operate digital equipment in cinemas in the UK, Germany, Italy and Ireland.
Crematorium Management
The Company has one investment in a business that provides crematory and mercury abatement services for the crematoria of a London Borough.
Solar PV
The Company's investment portfolio includes 10 holdings in businesses generating renewable electricity from residential solar PV panels. We are pleased to report that the solar investment portfolio continues to perform in line with expectations for generating revenues, which are derived from the receipt of index-linked Feed-in Tariffs (FiTs). We continue to monitor closely the performance of each of these businesses.
Anaerobic Digestion
Since the publication of the last report, we are pleased that the anaerobic digestion plants have continued to perform well and have operated for a full season post start-up in line with expectations. This is as a result of a good maize harvest in 2013 providing new feed stock improving the quality of the plants' 'fuel'. All three renewable energy generating companies operate 1 MW plants which generate electricity for sale to a utility company. The electricity generation also attracts Feed-in Tariffs which provide RPI linked revenues for a 20 year period from commissioning.
Landfill Gas
The Company has invested in Craigahulliar Energy Ltd and Aeris Power Ltd, which are both small ventures which have taken advantage of the opportunity to generate renewable electricity from landfill gas from sites owned by public bodies in Northern Ireland. This business line gives access to long term, reliable cash flows generated from strong counterparties through Government promoted legislation Renewable Obligation Certificates ("ROCs"), the sale of electricity to a utility company and the potential for sale of electricity to local authorities. Craigahulliar Energy Ltd's plant has been generating electricity for export to the National Grid since 2012 and Aeris Power Ltd's began earlier this year.
Hydro Electric Power
Elementary Energy Ltd is constructing and then will operate a small-scale hydro-electricity plant in the Highlands of Scotland.
Outlook
In line with its investment strategy the Company has a diversified portfolio of VCT qualifying investments. Looking ahead to the coming year, for the Ordinary and A share class portfolios, we will monitor and manage their established holdings to ensure they continue to meet our investment objectives. For the C share class our focus is to invest shareholders' funds to build the portfolio of companies which will construct and operate small-scale hydro-electric installations in the Scottish Highlands.
If you have any questions, please do not hesitate to call us on 020 7201 8989.
Claire Ainsworth
Managing Partner
for Triple Point Investment Management LLP
29 May 2014
Investment Portfolio Summary
| 31 March 2014 | 31 March 2013 | ||||||||
| Cost | Valuation | Cost | Valuation | ||||||
| £'000 | % | £'000 | % | £'000 | % | £'000 | % | ||
| Unquoted Holdings | |||||||||
| Unquoted qualifying holdings | 17,580 | 66.61 | 17,978 | 67.27 | 32,760 | 78.32 | 32,628 | 78.24 | |
| Unquoted non-qualifying holdings | 1,391 | 5.27 | 1,359 | 5.09 | 525 | 1.26 | 525 | 1.26 | |
| Financial assets at fair value through profit or loss | 18,971 | 71.88 | 19,337 | 72.36 | 33,285 | 79.58 | 33,153 | 79.50 | |
| Cash and cash equivalents | 7,426 | 28.12 | 7,426 | 27.64 | 8,540 | 20.42 | 8,540 | 20.50 | |
| 26,397 | 100.00 | 26,763 | 100.00 | 41,825 | 100.00 | 41,693 | 100.00 | ||
| Unquoted Qualifying Holdings | £'000 | % | £'000 | % | £'000 | % | £'000 | % | |
| Cinema digitisation | |||||||||
| 21st Century Cinema Ltd | - | - | - | - | 4,000 | 9.56 | 3,954 | 9.48 | |
| Big Screen Digital Services Ltd | - | - | - | - | 3,400 | 8.14 | 3,295 | 7.90 | |
| Cinematic Services Ltd | - | - | - | - | 2,000 | 4.78 | 1,990 | 4.77 | |
| Digima Ltd | 1,262 | 4.78 | 1,249 | 4.67 | 4,000 | 9.56 | 3,961 | 9.50 | |
| Digital Screen Solutions Ltd | 2,020 | 7.65 | 2,028 | 7.58 | 4,000 | 9.56 | 3,932 | 9.43 | |
| DLN Digital Ltd | - | - | - | - | 2,000 | 4.78 | 2,035 | 4.88 | |
| Electricity Generation | |||||||||
| Solar | |||||||||
| Arraze Ltd | 600 | 2.27 | 651 | 2.47 | 600 | 1.43 | 628 | 1.50 | |
| Bandspace Ltd | 1,200 | 4.55 | 1,353 | 5.06 | 1,200 | 2.87 | 1,302 | 3.12 | |
| Bridge Power Ltd | 725 | 2.75 | 778 | 2.91 | 725 | 1.73 | 755 | 1.81 | |
| Campus Link Ltd | 690 | 2.61 | 761 | 2.84 | 690 | 1.65 | 732 | 1.76 | |
| Convertibox Services Ltd | 1,000 | 3.79 | 950 | 3.55 | 1,000 | 2.39 | 915 | 2.19 | |
| Core Generation Ltd | 600 | 2.27 | 649 | 2.46 | 600 | 1.43 | 626 | 1.50 | |
| C More Energy Ltd | 1,000 | 3.79 | 1,069 | 3.99 | - | - | - | - | |
| Green Energy for Education Ltd | 1,000 | 3.79 | 979 | 3.66 | 1,000 | 2.39 | 952 | 2.28 | |
| PJC Renewable Energy Ltd | 5 | 0.02 | 5 | 0.02 | - | - | - | - | |
| Trym Power Ltd | 200 | 0.76 | 213 | 0.81 | 200 | 0.48 | 206 | 0.49 | |
| Anaerobic Digestion | |||||||||
| Biomass Future Generation Ltd | 2,150 | 8.14 | 2,150 | 8.03 | 2,150 | 5.14 | 2,150 | 5.16 | |
| GreenTec Energy Ltd | 1,000 | 3.79 | 1,000 | 3.74 | 1,000 | 2.39 | 1,000 | 2.40 | |
| Katharos Organic Ltd | 1,000 | 3.79 | 1,000 | 3.74 | 1,000 | 2.39 | 1,000 | 2.40 | |
| Landfill Gas | |||||||||
| Aeris Power Ltd | 525 | 1.99 | 525 | 1.96 | 525 | 1.26 | 525 | 1.26 | |
| Craigahulliar Energy Ltd | 350 | 1.33 | 365 | 1.36 | 350 | 0.84 | 350 | 0.84 | |
| Hydro Electric Power | |||||||||
| Elementary Energy Ltd | 2,253 | 8.54 | 2,253 | 8.42 | 1,000 | 2.39 | 1,000 | 2.40 | |
| Crematorium Management | |||||||||
| Furnace Managed Services Ltd | - | - | - | - | 1,320 | 3.16 | 1,320 | 3.17 | |
| 17,580 | 66.61 | 17,978 | 67.27 | 32,760 | 78.32 | 32,628 | 78.24 |
| 31 March 2014 | 31 March 2013 | ||||||||
| Unquoted Non-Qualifying Holdings | Cost | Valuation | Cost | Valuation | |||||
| £'000 | % | £'000 | % | £'000 | % | £'000 | % | ||
| Anaerobic Digestion | |||||||||
| Drumnahare Biogas Ltd | 221 | 0.84 | 221 | 0.84 | 525 | 1.26 | 525 | 1.26 | |
| Crematorium Management | |||||||||
| Furnace Managed Services Ltd | 1,170 | 4.43 | 1,138 | 4.25 | - | - | - | - | |
| 1,391 | 5.27 | 1,359 | 5.09 | 525 | 1.26 | 525 | 1.26 | ||
Financial Assets are measured at fair value through profit or loss. The initial best estimate of fair value of these investments that are either quoted or not quoted on an active market is the transaction price (i.e. cost). The fair value of these investments is subsequently measured by reference to the enterprise value of the investee company, which is best deemed to reflect the fair value. Where the Board considers the investee company's enterprise value to remain unchanged since acquisition, investments continue to be held at cost less any loan repayments received. Where the Board considers the investee company's enterprise value has changed since acquisition, investments are held at a value measured using a discounted cash flow model.
Investment Portfolio's Ten Largest VCT Unquoted Investments
| Bandspace Ltd | ||||||
| Date of first investment | Cost £ | Valuation £ | Valuation Method | Income recognised by TP Income for the year £'000 | Equity Held by TP Income % | Equity Held by TPIM managed funds % |
| 05-Apr-12 | 1,200,000 | 1,353,000 | Discounted cashflow | 42 | 37.03 | 98.75 |
| Summary of Information from Investee Company Financial Statements ending in 2013: | £'000 | |||||
| Turnover | 327 | |||||
| Earnings before interest, tax, amortisation and depreciation (EBITDA) | 265 | |||||
| Profit before tax | 35 | |||||
| Net assets before VCT loans | 3,164 | |||||
| Net assets | 924 | |||||
| Bandspace Ltd is a small business that owns a portfolio of roof mounted solar PV systems which have generated renewable electricity since 2011. It has a reliable, long term index-linked revenue stream supported by receipt of the Feed-in Tariffs. It expanded its business with the purchase of additional solar PV systems in 2012 and in 2013. |
| Biomass Future Generations Ltd | ||||||
| Date of first investment | Cost £ | Valuation £ | Valuation Method | Income recognised by TP Income for the year £'000 | Equity Held by TP Income % | Equity Held by TPIM managed funds % |
| 30-Mar-11 | 2,150,000 | 2,150,000 | At cost | 74 | 46.83 | 96.92 |
| Summary of Information from Investee Company Financial Statements ending in 2012: | £'000 | |||||
| Turnover | 460 | |||||
| Earnings before interest, tax, amortisation and depreciation (EBITDA) | 24 | |||||
| Loss before tax | (155) | |||||
| Net assets before VCT loans | 4,029 | |||||
| Net assets | 1,154 | |||||
| Biomass Future Generation Ltd has funded the construction of a farm based Anaerobic Digestion plant in Hertfordshire. The plant is fully operational and utilises agricultural feed stocks, which are converted into a methane rich biogas, in order to produce green electricity using a 1 MW Jenbacher CHP (combined heat and power) engine. The business derives its revenues from both the export and sale of the electricity it produces, as well as from Feed-in Tariffs to which it is entitled for the production of green electricity; these provide the company with 20 years of RPI linked cash flows. At the current time, having been operational through a full season post start-up and with new harvest feedstock having been delivered, the plant is operating well. |
| Cmore Energy Ltd | ||||||
| Date of first investment | Cost £ | Valuation £ | Valuation Method | Income recognised by TP Income for the year £'000 | Equity Held by TP Income % | Equity Held by TPIM managed funds % |
| 03-Apr-13 | 1,000,000 | 1,069,000 | Discounted cashflow | 0 | 21.21 | 21.21 |
| Summary of Information from Investee Company Financial Statements ending in 2013: | £'000 | |||||
| Turnover | 0 | |||||
| Earnings before interest, tax, amortisation and depreciation (EBITDA) | (54) | |||||
| Loss before tax | (51) | |||||
| Net assets before VCT loans | 4,228 | |||||
| Net assets | 4,228 | |||||
| Cmore Energy Ltd is a renewable electricity generator which owns and operates a ground mount solar PV site in Herefordshire. The company acquired the solar farm in July 2013 and receives revenues from the sale of power and associated renewable energy certificates, namely ROCs and LECs. |
| Digima Ltd | ||||||
| Date of first investment | Cost £ | Valuation £ | Valuation Method | Income recognised by TP Income for the year £'000 | Equity Held by TP Income % | Equity Held by TPIM managed funds % |
| 31-Mar-09 | 1,262,000 | 1,249,000 | Discounted cashflow | 113 | 18.42 | 67.74 |
| Summary of Information from Investee Company Financial Statements ending in 2013: | £'000 | |||||
| Turnover | 1,862 | |||||
| Earnings before interest, tax, amortisation and depreciation (EBITDA) | 1,781 | |||||
| Profit before tax | 133 | |||||
| Net assets before VCT loans | 3,271 | |||||
| Net assets | 1,340 | |||||
| Digima Ltd provides digital projection systems to the cinema industry. It owns, operates and maintains the equipment, upgrading the projection room from traditional 35mm film projectors to a fully DCI (Digital Cinema Initiative) compliant digital cinema system. During the year, it acquired the whole of the share capital of a smaller company, Big Screen Digital Services Ltd, whose installations are in the UK and Italy. It operates across the UK and Italy, now covering 231 screens. |
| Digital Screen Solutions Ltd | ||||||||
| Date of first investment | Cost £ | Valuation £ | Valuation Method | Income recognised by TP Income for the year £'000 | Equity Held by TP Income % | Equity Held by TPIM managed funds % | ||
| 31-Mar-09 | 2,020,000 | 2,028,000 | Discounted cashflow | 133 | 23.40 | 83.43 | ||
| Summary of Information from Investee Company Financial Statements ending in 2013: | £'000 | |||||||
| Turnover | 1,858 | |||||||
| Earnings before interest, tax, amortisation and depreciation (EBITDA) | 1,771 | |||||||
| Loss before tax | (103) | |||||||
| Net assets before VCT loans | 3,271 | |||||||
| Net assets | 1,340 | |||||||
| Digital Screen Solutions Ltd is a provider of cinema digitisation equipment. During the year, it acquired the whole of the share capital of a smaller company, 21st Century Cinema Ltd, all of whose installations are in the UK. It now owns, maintains and operates digital projection equipment at cinemas in the UK and Italy, covering 229 screens. Digital cinema projection conversion is paid for under the globally recognised Virtual Print Fee model, through which film studios pay for the cost of the deployment over a number of years with the majority of the company's revenues deriving ultimately from the six major investment grade Hollywood Studios. | ||||||||
| Elementary Energy Ltd | ||||||
| Date of first investment | Cost £ | Valuation £ | Valuation Method | Income recognised by TP Income for the year £'000 | Equity Held by TP Income % | Equity Held by TPIM managed funds % |
| 18-Mar-13 | 2,253,000 | 2,253,000 | At cost | 53 | 49.97 | 49.97 |
| Summary of Information from Investee Company Financial Statements ending in 2013: | £'000 | |||||
| Turnover | 0 | |||||
| Earnings before interest, tax, amortisation and depreciation (EBITDA) | (29) | |||||
| Loss before tax | (32) | |||||
| Net assets before VCT loans | 2,163 | |||||
| Net assets | 623 | |||||
| Elementary Energy Limited is currently constructing a 500kw run-of-river hydro-electric power plant near Fort William. The plant is forecast to start operating in December 2014 and will earn Feed-in-Tariffs from the generation and export of electricity. |
| Furnace Managed Services Ltd | ||||||
| Date of first investment | Cost £ | Valuation £ | Valuation Method | Income recognised by TP Income for the year £'000 | Equity Held by TP Income % | Equity Held by TPIM managed funds % |
| 17-Mar-10 | 1,170,000 | 1,138,000 | Discounted cashflow | 73 | 49 | 98 |
| Summary of Information from Investee Company Financial Statements ending in 2013: | £'000 | |||||
| Turnover | 291 | |||||
| Earnings before interest, tax, amortisation and depreciation (EBITDA) | 276 | |||||
| Profit before tax | 4 | |||||
| Net assets before VCT loans | 865 | |||||
| Net assets | 91 | |||||
| Furnace Managed Services Ltd specialises in the provision of crematory and mercury abatement services (pollution control). Since 2008 the company has been providing these services to three crematoria owned by a London Borough. |
| GreenTec Energy Ltd | ||||||
| Date of first investment | Cost £ | Valuation £ | Valuation Method | Income recognised by TP Income for the year £'000 | Equity Held by TP Income % | Equity Held by TPIM managed funds % |
| 27-Feb-12 | 1,000,000 | 1,000,000 | At cost | 42 | 24.63 | 97.54 |
| Summary of Information from Investee Company Financial Statements ending in 2012: | £'000 | |||||
| Turnover | 0 | |||||
| Earnings before interest, tax, amortisation and depreciation (EBITDA) | (25) | |||||
| Loss before tax | (16) | |||||
| Net assets before VCT loans | 3,983 | |||||
| Net assets | 1,183 | |||||
| GreenTec Energy Ltd is a holding company which owns a 100% stake in Trinity Hall Biogas Limited ('THB'). THB owns and operates a farm-based anaerobic digestion plant in Bedfordshire which utilises agricultural feedstocks that are converted into a methane rich biogas, in order to produce green electricity using a 1 MW Jenbacher CHP engine. The business derives its revenues from both the export and sale of the electricity it produces, as well as from Feed-in Tariffs that to which it is entitled for the production of green electricity; FiTs provide the company with 20 years of RPI linked cash flows. At the current time, having been operational through a full season post start-up and with new harvest feed stock having been delivered, the plant is operating well. |
| Green Energy for Education Ltd | ||||||
| Date of first investment | Cost £ | Valuation £ | Valuation Method | Income recognised by TP Income for the year £'000 | Equity Held by TP Income % | Equity Held by TPIM managed funds % |
| 30-Mar-11 | 1,000,000 | 979,000 | Discounted cashflow | 35 | 37.58 | 98.47 |
| Summary of Information from Investee Company Financial Statements ending in 2013: | £'000 | |||||
| Turnover | 271 | |||||
| Earnings before interest, tax, amortisation and depreciation (EBITDA) | 255 | |||||
| Loss before tax | (10) | |||||
| Net assets before VCT loans | 1,893 | |||||
| Net assets | 276 | |||||
| Green Energy for Education Ltd generates renewable electricity from its portfolio of residential roof mounted solar PV systems which it owns and operates at sites across the UK. It has a reliable, long term index-linked revenue stream supported by receipt of the Feed-in Tariffs. Green Energy for Education established its network of solar PV systems in 2011, since when the business has expanded with further purchases in both 2012 and 2013. |
| Katharos Organic Ltd | ||||||
| Date of first investment | Cost £ | Valuation £ | Valuation Method | Income recognised by TP Income for the year £'000 | Equity Held by TP Income % | Equity Held by TPIM managed funds % |
| 30-Mar-11 | 1,000,000 | 1,000,000 | At cost | 27 | 23.50 | 98.68 |
| Summary of Information from Investee Company Financial Statements ending in 2012: | £'000 | |||||
| Turnover | 3 | |||||
| Earnings before interest, tax, amortisation and depreciation (EBITDA) | (353) | |||||
| Loss before tax | (544) | |||||
| Net assets before VCT loans | 3,253 | |||||
| Net assets | 453 | |||||
| Katharos Organic Ltd has funded the construction of a farm based anaerobic digestion plant in Essex. The plant is fully operational and utilises agricultural feed stocks, which are converted into a methane rich biogas, in order to produce green electricity using a 1 MW Jenbacher CHP engine. The business derives its revenues from both the export and sale of the electricity it produces, as well as from Feed-in Tariffs to which it is entitled for the production of green electricity; these provide the company with 20 years of RPI linked cash flows. At the current time, having been operational through a full season post start up and with new harvest feedstock having been delivered, the plant is operating well. |
· The investments are a combination of debt and equity.
· Equity holding is equal to the voting rights.
The Strategic Report has been approved by the Board and signed on their behalf by the Chairman.
David Frank
Chairman
29 May 2014
Report of the Directors
The Directors present their Report and the audited Financial Statements for the year ended 31 March 2014.
Details of Directors
David Frankwas a partner in Slaughter and May for 22 years before retiring from the firm in 2008. As well as being the firm's first Practice Partner from 2001 to 2008, his practice involved acting for several venture capital houses, including 3i and Schroder Ventures. He was also involved in several flotations in the venture capital sector, including 3i, Baronsmead and SVG Capital. Since retiring from legal practice, he has established a portfolio of voluntary roles, ranging from a governorship of a hospital to a trusteeship of a community foundation. He has been a Director and Chairman of the Company since 11 November 2010.
Simon Acland has over twenty-five years' experience in venture capital, primarily at Quester, where he became Managing Director. When Quester was sold in 2007 it had £200m under management and was one of the leading UK venture capital and VCT investment managers. Simon was a director of over 20 companies in Quester's portfolio, many of which achieved successful exits through flotation or trade sales. Simon is also a director of TP70 2010 VCT plc, and various other private companies and charities, and a member of the investment committee of the British Business Bank's Angel Co-Fund.
Michael Stanes has been an Investment Director at Heartwood Investment Management, a London-based firm providing investment management and wealth structuring services for high net worth individuals, since 2010. He began his career at Warburg Investment Management (which became Mercury Asset Management) where he ran equity portfolios in London and Tokyo. He then moved to the US where he founded a business on behalf of Merrill Lynch offering equity portfolio management to high net worth individuals. In 2002 he joined Goldman Sachs Asset Management in London running global equity portfolios for a range of institutional and individual clients before joining a new fund management partnership as CEO. Michael was appointed a Director on 21 November 2012.
Simon Acland being a Director of another TPIM managed VCT is not considered independent. Therefore he will retire and offer himself for re-election at the Annual General Meeting to be held on 24 July 2014. David Frank having not been re-elected for 3 years must also retire and offer himself for re-election at the forthcoming Annual General Meeting.
The Board has considered provision B.7.2 of the UK Corporate Governance Code (September 2012) and believes that all the Directors continue to be effective and to demonstrate commitment to their roles, the Board and the Company. The Directors are discussed further within the Corporate Governance report on page 20 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 6421083). The Directors have managed, and intend to continue to manage, the Company's affairs in such a manner as to comply with Section 274 of the Income Tax Act 2007 which grants approval as a VCT.
The Company was not at any time up to the date of this report a close company within the meaning of S439 of the Corporation Tax Act 2010.
Post Balance Sheet Events
Post balance sheet events are detailed in note 20.
Directors' and Officers' Liability Insurance
The Company has, as permitted by S233 of the Companies Act 2006, maintained insurance cover on behalf of the Directors and Company Secretary, indemnifying them against certain liabilities which may be incurred by them in relation to their offices with the Company.
Matters Covered in the Strategic Report
Dividends and financial risk management have both been discussed within the Strategic Report on pages 4 and 9.
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 one disclosure of a major shareholding had been made to the Company under Disclosure and Transparency Rule 5 (Vote Holder and Issuer Notification Rules). On 21 February 2014 the Company was notified that Cazenove Capital Management Limited owned 1,439,843 Ordinary shares which represented 4.889% of the shares in issue at that date.
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from the operations of its Company, nor does it have responsibility for any other emission producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.
Annual General Meeting
Notice convening the 2014 Annual General Meeting of the Company and a form of proxy in respect of that meeting can each be found at the end of this document.
Share Capital, Rights Attaching to the Shares and Restrictions on Voting and Transfer
The Company had in issue 19,722,809 Ordinary Shares, 5,131,353 A Ordinary Shares and 6,986,522 C Ordinary Shares at 31 March 2014 (see note 14). As at that date none of the issued shares was held by the Company as treasury shares. Subject to any suspension or abrogation of rights pursuant to relevant law or the Company's articles of association, the shares confer on their holders (other than the Company in respect of any treasury shares) the following principal rights:
a) the right 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
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.
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 expiry of his or her period of office, but without prejudice to any claim for damages which the Director may have for breach of any contract of service between him or her and the Company.
A person also ceases to be a Director if he or she resigns in writing, ceases to be a Director by virtue of any provision of the Companies Act, becomes prohibited by law from being a Director, becomes bankrupt or is the subject of a relevant insolvency procedure, or becomes of unsound mind, or if the Board so decides following at least six months' absence without leave or if he or she becomes subject to relevant procedures under the mental health laws, as set out in the Company's articles of association.
Powers of the Directors
Subject to the provisions of the Companies Act, the memorandum and articles of association of the Company and any directions given by shareholders by special resolution, the articles of association specify that the business of the Company is to be managed by the Directors, who may exercise all the powers of the Company, whether relating to the management of the business or not. In particular, the Directors may exercise on behalf of the Company its powers to purchase its own shares to the extent permitted by shareholders.
Auditor
Grant Thornton UK LLP offers itself for reappointment as auditor. In accordance with S489(4) of the Companies Act 2006 a resolution to reappoint Grant Thornton UK LLP as auditor and to authorise the Directors to fix their remuneration will be proposed at the forthcoming Annual General Meeting.
On behalf of the Board.
David Frank
Director
29 May 2014
Corporate Governance
The Board of Triple Point Income VCT plc has considered the principles and recommendations of the Association of Investment Companies Code of Corporate Governance (AIC Code) by reference to the Association of Investment Companies Corporate Governance Guide for Investment Companies (AIC Guide). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code (September 2012), as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company. The Board considers that reporting against principles and recommendations of the AIC Code, by reference to the AIC Guide, which incorporates the UK Corporate Governance Code (September 2012), will provide improved reporting to shareholders.
The Company is committed to maintaining high standards in corporate governance and has complied with the recommendations of the AIC Code and the relevant provisions of the UK Corporate Governance Code (September 2012), except as set out at the end of this report in the Compliance Statement.
The Corporate Governance Report forms part of the Report of the Directors.
Board of Directors
The Company has a Board of three Non-Executive Directors. Since all Directors are Non-Executive and day-to-day management responsibilities are sub-contracted to the Investment Manager, the Company does not have a Chief Executive Officer. The Directors have a range of business and financial skills which are relevant to the Company; these are described on page 19 of this report. Directors are provided with key information on the Company's activities, including regulatory and statutory requirements, by the Investment Manager. The Board has direct access to company secretarial advice and compliance services provided by the Investment Manager which is responsible for ensuring that Board procedures are followed and applicable regulations complied with. All Directors are able to take independent professional advice in furtherance of their duties.
Any appointment of new Directors to the Board is conducted, and appointments made, on merit and with due regard for the benefits of diversity on the Board, including gender. All Directors are able to allocate sufficient time to the Company to discharge their responsibilities.
The Board meets regularly on a quarterly basis, and on other occasions as required, to review the investment performance and monitor compliance with the investment policy laid down by the Board. There is a formal schedule of matters reserved for Board decision and the agreement between the Company and the Investment Manager has authority limits beyond which Board approval must be sought.
The Investment Manager has authority over the management of the investment portfolio, the organisation of custodial services, accounting, secretarial and administrative services. In practice the Investment Manager makes investment recommendations for the Board's approval. In addition all investment decisions involving other VCTs managed by the Investment Manager are taken by the Board rather than the Investment Manager. Other matters reserved for the Board include:
· the consideration and approval of future developments or changes to the investment policy, including risk and asset allocation;
· consideration of corporate strategy;
· approval of any dividend or return of capital to be paid to the shareholders;
· the appointment, evaluation, removal and remuneration of the Investment Manager;
· the performance of the Company, including monitoring the net asset value per share; and
· monitoring shareholder profiles and considering shareholder communications.
The Chairman leads the Board in the determination of its strategy and in the achievement of its objectives. The Chairman is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda and has no involvement in the day to day business of the Company. He facilitates the effective contribution of the Directors and ensures that they receive accurate, timely and clear information and that they communicate effectively with shareholders. The Chairman does not have significant commitments conflicting with his obligations to the Company.
The Company Secretary is responsible for advising the Board on all governance matters. All of the Directors have access to the advice and services of the Company Secretary which has administrative responsibility for the meetings of the Board and its committees. 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 2012) that all Directors are required to submit themselves for re-election at least every three years.
During the period covered by these Financial Statements the following meetings were held:
| Directors present | 4 Full Board | 2 Audit Committee |
| Meetings | Meetings | |
| David Frank, Chairman | 4 | 2 |
| Simon Acland | 3 (of 4) | 1 (of 2) |
| Michael Stanes | 4 | 2 |
Audit Committee
The Board has appointed an audit committee of which David Frank is Chairman, which deals with matters relating to audit, financial reporting and internal control systems. The Committee meets as required and has direct access to Grant Thornton UK LLP, the Company's auditor.
The audit committee safeguards the objectivity and independence of the auditor by reviewing the nature and extent of non-audit services supplied by the external auditor to the Company. The audit committee has reviewed the non-audit service provided by the external auditor, being corporation tax, and does not believe it is sufficient to influence its 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 its current fee tender compared to the external audit fees paid by other similar companies. The audit committee will then recommend to the Board the appointment of an external auditor which is ratified at the Annual General Meeting.
The Auditing Practices Board requires the audit partner to rotate every five years. The audit partner rotated this year, which is a year ahead of the five year requirement. No audit tender has been undertaken since the Company was incorporated.
The effectiveness of the external audit is assessed as part of the Board evaluation conducted annually and by the quality and content of the audit plan provided to the audit committee by the external auditor and the discussions then held on topics raised. The audit committee will challenge the external auditor at the audit committee meeting if appropriate.
The Audit Committee's terms of reference include the following roles and responsibilities:
· reviewing and making recommendations to the Board in relation to the Company's published Financial Statements and other formal announcements or regulatory returns relating to the Company's financial performance, reviewing significant financial reporting judgements contained in them;
· reviewing and making recommendations to the Board in relation to the Company's internal control (including internal financial control) and risk management systems;
· periodically considering the need for an internal audit function;
· making recommendations to the Board in relation to the appointment, re-appointment and removal of the external auditor and approving the remuneration and terms of engagement of the external auditor;
· reviewing and monitoring the external auditor's independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK professional regulatory requirements;
· monitoring the extent to which the external auditor is engaged to supply non-audit services; and
· ensuring that the Investment Manager has arrangements in place for the investigation and follow-up of any concerns raised confidentially by staff in relation to propriety of financial reporting or other matters.
The committee reviews its terms of reference and effectiveness annually and recommends to the Board any changes required as a result of the review. The terms of reference are available on request from the Company Secretary.
The Board considers that the members of the committee collectively have the skills and experience required to discharge their duties effectively, and that the Chairman of the committee meets the requirements of the UK Corporate Governance Code (September 2012) as to relevant financial experience.
The Company does not have an independent internal audit function as it is not deemed appropriate given the size of the Company and the nature of the Company's business. However, the committee considers annually whether there is a need for such a function and, if there were, would recommend it be established.
In respect of the year ended 31 March 2014, the audit committee discharged its responsibilities by:
· reviewing and approving the external auditor's terms of engagement and remuneration and independence;
· reviewing the external auditor's plan for the audit of the Financial Statements, including identification of key risks and confirmation of auditor independence;
· reviewing TPIM's statement of internal controls operated in relation to the Company's business and assessing those controls in minimising the impact of key risks;
· reviewing periodic reports on the effectiveness of TPIM's compliance procedures;
· reviewing the appropriateness of the Company's accounting policies;
· reviewing the Company's half-yearly results and draft annual Financial Statements prior to Board approval;
· reviewing the external auditor's audit plan document to the audit committee on the annual Financial Statements; and
· reviewing the Company's going concern status.
The audit committee is responsible for considering and reporting on any significant issues that arise in relation to the Financial Statements.
The key areas of risk that have been identified and considered by the audit committee in relation to the business activities and the Financial Statements of the Company are as follows:
· valuation and existence of unquoted investments; 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 is also reviewed by PricewaterhouseCoopers LLP in its capacity as adviser to the Company on taxation matters.
The audit committee has considered the whole Report and Accounts for the year ended 31 March 2014 and has reported to the Board that it considers them to be fair, balanced and understandable providing the information necessary for shareholders to assess the Company's performance, business model and strategy.
Internal Control
The Directors have overall responsibility for keeping under review the effectiveness of the Company's systems of internal controls. The purpose of these controls is to ensure that proper accounting records are maintained, the Company's assets are safeguarded and the financial information used within the business and for publication is accurate and reliable; such a system can only provide reasonable and not absolute assurance against material misstatement or loss. The system of internal controls is designed to manage rather than eliminate the risk of failure to achieve business objectives. As part of this process an annual review of the internal control systems is carried out. The review covers all material controls including financial, operational and risk management systems. The Directors regularly review financial results and investment performance with the Investment Manager.
The Directors have established an ongoing process designed to meet the particular needs of the Company in identifying, evaluating and managing risks to which it is exposed. The process adopted is one whereby the Directors identify the risks to which the Company is exposed including, among others, market risk, VCT qualifying investment risk and operational risks which are recorded on a risk register. The controls employed to mitigate these risks are identified and the residual risks are rated taking into account the impact of the mitigating factors. The risk register is updated twice a year.
TPIM is engaged to provide administrative including accounting services and retains physical custody of the documents of title relating to investments.
The Directors regularly review the system of internal controls, both financial and non-financial, operated by the Company and the Investment Manager. These include controls designed to ensure that the Company's assets are safeguarded and that proper accounting records are maintained.
Internal control systems include the production and review of quarterly bank reconciliations and management accounts. The VCT is subject to a full annual audit. The auditors are the same auditors as 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 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. There are no borrowings or banking facilities in place nor are they anticipated to be required in future.
Relations with Shareholders
The Board recognises the value of maintaining regular communications with shareholders. In addition to the formal business of the Annual General Meeting, an opportunity is given to all shareholders to question the Board and the Investment Manager on matters relating to the Company's operation and performance. The Board and the Investment Manager will also respond to any written queries made by shareholders during the course of the year and both can be contacted at 4-5 Grosvenor Place, London, SW1X 7HJ or on 020 7201 8989.
Compliance Statement
The Listing Rules require the Board to report on compliance with the UK Corporate Governance Code (September 2012) provisions throughout the accounting period. With the exception of the limited items outlined below, the Directors consider that the Company has complied throughout the period under review with the provisions set out in the UK Corporate Governance Code (September 2012).
1. New Directors do not receive a full, formal and tailored induction on joining the Board. Such matters are addressed on an individual basis as they arise (B.4.1).
2. Due to the size of the Board and the nature of the Company's business, a formal performance evaluation of the Board, its committees, the individual Directors and the Chairman has not been undertaken. Specific performance issues are dealt with as they arise (B.6.1, B.6.3).
3. The Company does not have a senior Independent Director. The Board does not consider such an appointment appropriate for the Company (A.4.1).
4. The Company conducts a formal review as to whether there is a need for an internal audit function. The Directors do not consider that an internal audit would be an appropriate control for a Venture Capital Trust (C.3.6).
5. As all the Directors are Non-Executive, it is not considered appropriate to appoint a Nomination or Remuneration Committee (B.2.1 and D.2.1).
6. The Audit committee includes three Non-Executive Directors, one of whom is not considered independent. The Board regularly reviews the independence of its Directors but does not consider it appropriate to appoint an additional Director to the Audit committee (C.3.1).
On behalf of the Board
David Frank
Chairman
29 May 2014
Directors' Responsibility Statement
The Directors are responsible for preparing the Strategic Report, the Directors' Report, the Directors' Remuneration Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have elected to prepare the Financial Statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company for that year. In preparing these Financial Statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgments and accounting estimates that are reasonable and prudent;
· state whether applicable IFRS have been followed, subject to any material departures disclosed and explained in the Financial Statements;
· prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements and the Remuneration report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors confirm that:
· so far as each of the Directors is aware there is no relevant audit information of which the Company's auditor is unaware; and
· the Directors have taken all steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.
The Directors are responsible for preparing the Annual Report in accordance with applicable law and regulations. The Directors consider the Annual Report and the Financial Statements, taken as a whole, provide the information necessary to assess the Company's performance, business model and strategy and are fair balanced and understandable.
The Company's Financial Statements are published on the TPIM website, www.triplepoint.co.uk. The maintenance and integrity of this website is the responsibility of TPIM and not of the Company. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.
To the best of our knowledge:
· the Financial Statements, prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
· the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
On behalf of the Board
David Frank
Chairman
29 May 2014
Directors' Remuneration Report
Introduction
This report is submitted in accordance with schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008, in respect of the year ended 31 March 2014. This report also meets the Financial Conduct Authority's Listing Rules and describes how the Board has applied the principles relating to Directors' remuneration set out in UK Corporate Governance Code (issued September 2012). The new reporting requirements require two sections to be included, a Policy Report and an Annual Remuneration Report which are presented below.
Directors' Remuneration Policy Report
This statement of the Directors' Remuneration Policy is intended to take effect following approval by shareholders at the Annual General Meeting on 24 July 2014. The Board currently comprises three Directors, all of whom are Non-Executive. The Board does not have a separate remuneration committee as the Company has no employees or executive directors. The Board has not retained external advisers in relation to remuneration matters but has access to information about Directors' fees paid by other companies of a similar size and type. No views which are relevant to the formulation of the Directors' remuneration policy have been expressed to the Company by shareholders, whether at a general meeting or otherwise.
The Board's policy is that the remuneration of Non-Executive Directors should reflect the experience of the Board as a whole, be fair and be comparable with that of other relevant Venture Capital Trusts that are similar in size and have similar investment objectives and structures. Furthermore, the level of remuneration should be sufficient to attract and retain the Directors needed to oversee the Company properly and to reflect the specific circumstances of the Company, the duties and responsibilities of the Directors and the value and amount of time committed to the Company's affairs. The articles of association provide that the Directors shall be paid in aggregate a sum not exceeding £100,000 per annum. None of the Directors is eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits in respect of their services as Non-Executive Directors of the Company.
The articles of association provide that Directors shall retire and be subject to re-election at the first Annual General Meeting after their appointment and that any Director who has not been re-elected for three years shall retire and be subject to re-election at the Annual General Meeting. Also any Director not considered independent shall retire each year and offer himself for re-election at the Annual General Meeting. The Directors' service contracts provide for an appointment of twelve months, after which three months' written notice must be given by either party. A Director who ceases to hold office is not entitled to receive any payment other than accrued fees (if any) for past services. The same policies will apply if a new Director is appointed.
Details of each Director's contract are 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.
| Date of Contract | Unexpired term of contract at 31 March 2014 | Annual rate of Directors' fees if net assets exceed £25 million | Annual rate of Directors' fees if net assets are less than £25 million | |
| £ | £ | |||
| David Frank, Chairman | 11-Nov-10 | None | 17,500 | 15,000 |
| Simon Acland | 13-Mar-09 | None | 15,000 | 12,500 |
| Michael Stanes | 21-Nov-12 | None | 15,000 | 12,500 |
Following the Tender Offer, it was agree that the Directors' remuneration would increase, in the case of David Frank, to £17,500 and in the case of the other Directors to £15,000 if the Company's net asset value exceeds £25 million. After the C share allotment on 28 March 2014 the net asset value exceeded £25 million and therefore the annual rate of Directors' fees has now increased to the higher level.
Annual Remuneration Report
The remuneration policy described above will be implemented with effect from 24 July 2014 subject to approval at the Annual General Meeting and remain unchanged for a three year period. The Board will review the remuneration of the Directors in line with the VCT industry on an annual basis, if thought appropriate. Otherwise, only a change in role is likely to incur a change in remuneration of any one Director.
Directors' Remuneration (audited information)
The fees paid to Directors in respect of the year ended 31 March 2014 and the prior year are shown below:
| Emoluments for the year ended 31 March 2014 | Emoluments for the year ended 31 March 2013 | ||
| £ | £ | ||
| David Frank | 15,000 | 15,000 | |
| Simon Acland | 12,500 | 12,500 | |
| Philip Marsden (resigned on 21 November 2012) | - | 8,016 | |
| Michael Stanes | 12,500 | 4,484 | |
| 40,000 | 40,000 | ||
| Employer's NI contributions | 2,334 | 2,477 | |
| Total Emoluments | 42,334 | 42,477 |
None of the Directors is eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits in respect of their services as Non-Executive Directors of the Company.
Information required on executive Directors, including the Chief Executive Officer and employees, has been omitted because the Company has neither and therefore it is not relevant.
Directors' emoluments compared to payments to shareholders:
| 31 March 2014 | 31 March 2013 | ||
| £'000 | £'000 | ||
| Dividends paid: | |||
| · Ordinary Shareholders | 813 | 312 | |
| · A Shareholders | 256 | - | |
| Share buy-backs | 47 | 47 | |
| Total paid to shareholders | 1,116 | 359 | |
| Directors' emoluments | 40 | 40 |
Directors' Share Interests (audited information)
At 31 March 2014 The Directors held no shares in the Company (2013: none). At 31 March 2014 no connected parties to the Directors held any shares (2013: none). There have been no changes in the holdings of the Directors between 31 March 2014 and the date of this report. There are no requirements or restrictions on Directors holding shares in the Company.
Company Performance
Apart from transactions relating to the ESBB and the Tender Offer there have been no material trades in the Company's shares to date. Therefore, no performance graph comparing the share price of the Company over the year ended 31 March 2014 with the total return from a notional investment in the FTSE All-Share index over the same period has been included.
No market maker has been appointed and therefore no current bid and offer price is available for the Company's shares. However the Board's policy is to buy back shares from shareholders at a 10% discount to net asset value. The Company will produce a graph of its share performance once there is sufficient activity that the graph would be meaningful to shareholders.
Statement of Voting at the Annual General Meeting
The 2013 Remuneration Report was presented to the Annual General Meeting in July 2013 and received shareholder approval following a vote on a show of hands. There were no objections and 80,831 abstentions.
Statement of the Chairman
The Directors' fees were fixed at £15,000 per annum for the Chairman and £12,500 per annum for other Directors. Following the Tender Offer, their remuneration will increase, in the case of David Frank, to £17,500 and, in the case of the other Directors, to £15,000 so long as the Company's net asset value exceeds £25 million. After the C share allotment on 28 March 2014 the net asset value exceeded the £25 million, as such the Directors' remuneration increased accordingly. The remuneration of the Directors reflects the experience of the Board as a whole, is fair and comparable with that of other relevant Venture Capital Trusts that are similar in size and have similar investment objectives and structures. The fees are sufficient to attract and retain the Directors needed to oversee the Company's affairs.
On behalf of the Board
David Frank
Chairman
29 May 2014
Independent Auditor's Report to the Members of Triple Point Income VCT plc
We have audited the financial statements of Triple Point Income VCT plc for the year ended 31 March 2014 which comprise the Statement of Comprehensive income, the Balance Sheet, the Statement of Changes in Shareholders' Equity, the Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
As explained more fully in the Directors' Responsibility Statement set out on page 28 the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors
A description of the scope of an audit of Financial Statements is provided on the Financial Reporting Council's website at www.frc.org.uk/apb/scope/private.cfm.
Our audit approach was based on a thorough understanding of the Company's business and is risk-based. The day-to-day management of the Company's investment portfolio, the custody of its investments and the maintenance of the Company's accounting records is outsourced to a third-party service provider. Accordingly, our audit work is focussed on obtaining an understanding of, and evaluating, internal controls at the Company and the third-party service provider, and inspecting records and documents held by the third-party service provider. We undertook substantive testing on significant transactions, balances and disclosures, the extent of which was based on various factors such as our overall assessment of the control environment, the design effectiveness of controls over individual systems and the management of specific risks.
Our application of materiality
We apply the concept of materiality in planning and performing our audit, in evaluating the effect of any identified misstatements and in forming our opinion. For the purpose of determining whether the financial statements are free from material misstatement we define materiality as the magnitude of a misstatement or an omission from the financial statements or related disclosures that would make it probable that the judgement of a reasonable person, relying on the information would have been changed or influenced by the misstatement or omission. We also determine a level of performance materiality which we use to determine the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole.
We established materiality for the financial statements as a whole to be £267,000, which is 1% of the Company's net assets. For the income statement we determined that misstatements for a lesser amount than materiality for the financial statements as a whole would make it probable that the judgement of a reasonable person, relying on the information, would have been changed or influenced by the misstatement or omission. Accordingly, we established materiality for the revenue column of the income statement to be £67,000.
We have determined the threshold at which we communicate misstatements to the Audit Committee to be £3,300. In addition, we communicate misstatements below that threshold that, in our view, warrant reporting on qualitative grounds.
Our assessment of risk
Without modifying our opinion, we highlight the following matters that are, in our judgement, likely to be most important to users' understanding of our audit. Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole, and not to express an opinion on individual transactions, account balances or disclosures.
Valuation of unquoted investments
Investments are the largest asset in the financial statements, and they are designated as being at fair value through profit or loss in accordance with IAS 39 'financial instruments: recognition and measurement'. Measurement of the value of an unquoted investment includes significant assumptions and judgements. We therefore identified the valuation of unquoted investments as a significant risk requiring special audit consideration.
Our audit work included, but was not restricted to, obtaining an understanding of how the valuations were performed, consideration of whether they were made in accordance with published guidance, discussions with the investment manager, and reviewing and challenging the basis and reasonableness of the assumptions made by the investment manager in conjunction with available supporting information.
The Company's accounting policy on the valuation of unquoted investments is included in note 2, and its disclosures about unquoted investments held at the year end are included in note 10.
Recognition of revenue from investments
Investment income is the Company's major source of revenue and consists of interest earned on loans to investee companies and cash balances. Revenue recognition is considered to be a significant risk requiring special audit consideration as it is often a key factor in demonstrating the performance of the portfolio.
Our audit work included, but was not restricted to, assessing whether the Company's accounting policy for revenue recognition is in accordance with IAS 18 'Revenue'; obtaining an understanding of management's process to recognise revenue in accordance with the stated accounting policy and the internal controls over that process; and, for a sample of income, determining that the income has been recognised in accordance with that policy by agreeing interest income to bank statements and information used to compute loan interest income to loan agreements loan interest income to loan agreements.
The accounting policy on the recognition of income is shown in note 2 and the components of that revenue are included in note 4.
Management override of internal controls
Under ISAs (UK & Ireland), for all our audits we are required to consider the risk of management override of financial controls. Due to the unpredictable nature of this risk we are required to assess it as a significant risk requiring special audit consideration.
Our audit work included, but was not restricted to, specific procedures relating to this risk as required by ISA 240 'The auditor's responsibilities relating to fraud in an audit of financial statements'. This included tests of journal entries, the evaluation of judgements and assumptions in management's estimates and tests of significant transactions outside the normal course of business.
In our opinion the Financial Statements:
· give a true and fair view of the state of the Company's affairs as at 31 March 2014 and of its profit for the year then ended;
· have been properly prepared in accordance with IFRSs as adopted by the European Union; and
· have been prepared in accordance with the requirements of the Companies Act 2006.
In our opinion:
· the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006;
· the information given in the Strategic Report and Directors' Report for the financial year for which the Financial Statements are prepared is consistent with the Financial Statements; and
· the information given in the Corporate Governance Statement set out on page 23 with respect to internal control and risk management systems in relation to financial reporting processes and about share capital structures is consistent with the Financial Statements.
We have nothing to report in respect of the following:
Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is:
· materially inconsistent with the information in the audited Financial Statements; or
· apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Company acquired in the course of performing our audit; or
· is otherwise misleading.
In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the Directors' statement that they consider the annual report is fair, balanced and understandable and whether the annual report appropriately discloses those matters that were communicated to the audit committee which we consider should have been disclosed.
Under the Companies Act 2006 we are required to report to you if, in our opinion:
· adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
· the Financial Statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or
· certain disclosures of Directors' remuneration specified by law are not made; or
· we have not received all the information and explanations we require for our audit; or
· a Corporate Governance Statement has not been prepared by the Company.
Under the Listing Rules, we are required to review:
· the Directors' statement, set out on page 28, in relation to going concern;
· the part of the Corporate Governance Statement relating to the Company's compliance with the nine provisions of the UK Corporate Governance Code specified for our review.
Paul Creasey
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Oxford
29 May 2014
Non-Statutory Analysis of - The Ordinary Share Fund
| Statement of Comprehensive Income | Year ended | Year ended | ||||||
| Note | 31 March 2014 | 31 March 2013 | ||||||
| Revenue | Capital | Total | Revenue | Capital | Total | |||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||
| Investment income | 4 | 865 | - | 865 | 902 | - | 902 | |
| Realised gain on investments | - | 111 | 111 | - | 403 | 403 | ||
| Unrealised gain/(loss) on investments | - | 224 | 224 | - | (217) | (217) | ||
| Investment return | 865 | 335 | 1,200 | 902 | 186 | 1,088 | ||
| Investment management fees | 5 | (227) | (76) | (303) | (321) | (107) | (428) | |
| Other expenses | (119) | - | (119) | (115) | - | (115) | ||
| Profit before taxation | 519 | 259 | 778 | 466 | 79 | 545 | ||
| Taxation | 8 | (107) | 15 | (92) | (93) | 22 | (71) | |
| Profit after taxation | 412 | 274 | 686 | 373 | 101 | 474 | ||
| Total comprehensive profit for the period | 412 | 274 | 686 | 373 | 101 | 474 | ||
| Basic and diluted earnings per share | 9 | 1.03p | 0.69p | 1.72p | 1.18p | 0.32p | 1.50p | |
| Comparative before conversion of shares: B share class |
(1.07p) | (0.32p) | (1.39p) | |||||
| Ordinary share class | 1.20p | 0.32p | 1.52p | |||||
| Balance Sheet | Note | 31 March 2014 | 31 March 2013 | |||||
| £'000 | £'000 | |||||||
| Non-current assets | ||||||||
| Financial assets at fair value through profit or loss | 10 | 15,469 | 29,068 | |||||
| Current assets | ||||||||
| Receivables | 11 | 162 | 3,255 | |||||
| Cash and cash equivalents | 12 | 147 | 8,254 | |||||
| 309 | 11,509 | |||||||
| Current liabilities | ||||||||
| Payables | 13 | (191) | (98) | |||||
| Net assets | 15,587 | 40,479 | ||||||
| Equity attributable to equity holders | 15,587 | 40,479 | ||||||
| Net asset value per share | 16 | 79.03p | 81.08p | |||||
| Statement of Changes in Shareholders' Equity | ||||||||
| 31 March 2014 | 31 March 2013 | |||||||
| £'000 | £'000 | |||||||
| Opening shareholders' funds | 37,193 | 18,805 | ||||||
| Purchase of own shares | (35,132) | (1,702) | ||||||
| Issue of new shares | 6,855 | 23,214 | ||||||
| Conversion of shares | 6,798 | - | ||||||
| Profit for the period | 686 | 474 | ||||||
| Dividend paid | (813) | (312) | ||||||
| Closing shareholders' funds | 15,587 | 40,479 |
The prior year figures have been restated to reflect the conversion of the B Shares into Ordinary Shares effective on 31 October 2013 during the current financial year.
Investment Portfolio
| 31 March 2014 | 31 March 2013 | ||||||||
| Cost | Valuation | Cost | Valuation | ||||||
| £'000 | % | £'000 | % | £'000 | % | £'000 | % | ||
| Unquoted qualifying holdings | 14,105 | 91.43 | 14,331 | 91.77 | 29,285 | 78.02 | 29,068 | 77.88 | |
| Unquoted non-qualifying holdings | 1,170 | 7.59 | 1,138 | 7.29 | - | - | - | - | |
| Financial assets at fair value through profit or loss | 15,275 | 99.02 | 15,469 | 99.06 | 29,285 | 78.02 | 29,068 | 77.88 | |
| Cash and cash equivalents | 147 | 0.98 | 147 | 0.94 | 8,254 | 21.98 | 8,254 | 22.12 | |
| 15,422 | 100.00 | 15,616 | 100.00 | 37,539 | 100.00 | 37,322 | 100.00 | ||
| Unquoted Qualifying Holdings | £'000 | % | £'000 | % | £'000 | % | £'000 | % | |
| Cinema digitisation | |||||||||
| 21st Century Cinema Ltd | - | - | - | - | 4,000 | 10.66 | 3,954 | 10.59 | |
| Big Screen Digital Services Ltd | - | - | - | - | 3,400 | 9.06 | 3,295 | 8.83 | |
| Cinematic Services Ltd | - | - | - | - | 2,000 | 5.33 | 1,990 | 5.33 | |
| Digima Ltd | 1,262 | 8.18 | 1,249 | 8.00 | 4,000 | 10.66 | 3,961 | 10.61 | |
| Digital Screen Solutions Ltd | 2,020 | 13.10 | 2,028 | 12.99 | 4,000 | 10.66 | 3,932 | 10.54 | |
| DLN Digital Ltd | - | - | - | - | 2,000 | 5.33 | 2,035 | 5.45 | |
| Electricity Generation | |||||||||
| Solar | |||||||||
| Bandspace Ltd | 1,200 | 7.78 | 1,353 | 8.66 | 1,200 | 3.20 | 1,302 | 3.49 | |
| Bridge Power Ltd | 125 | 0.81 | 134 | 0.86 | 125 | 0.33 | 130 | 0.35 | |
| Campus Link Ltd | 690 | 4.47 | 761 | 4.87 | 690 | 1.84 | 732 | 1.96 | |
| Convertibox Services Ltd | 1,000 | 6.48 | 950 | 6.08 | 1,000 | 2.66 | 915 | 2.45 | |
| C More Energy Ltd | 1,000 | 6.48 | 1,069 | 6.85 | - | - | - | - | |
| Green Energy for Education Ltd | 1,000 | 6.48 | 979 | 6.27 | 1,000 | 2.66 | 952 | 2.55 | |
| PJC Renewable Energy Ltd | 5 | 0.03 | 5 | 0.03 | - | - | - | - | |
| Anaerobic Digestion | |||||||||
| Biomass Future Generation Ltd | 1,550 | 10.05 | 1,550 | 9.93 | 1,550 | 4.13 | 1,550 | 4.15 | |
| GreenTec Energy Ltd | 1,000 | 6.48 | 1,000 | 6.40 | 1,000 | 2.66 | 1,000 | 2.68 | |
| Katharos Organic Ltd | 1,000 | 6.48 | 1,000 | 6.40 | 1,000 | 2.66 | 1,000 | 2.68 | |
| Hydro Electric Power | |||||||||
| Elementary Energy Ltd | 2,253 | 14.61 | 2,253 | 14.43 | 1,000 | 2.66 | 1,000 | 2.68 | |
| Crematorium Management | |||||||||
| Furnace Managed Services Ltd | - | - | - | - | 1,320 | 3.52 | 1,320 | 3.54 | |
| 14,105 | 91.43 | 14,331 | 91.77 | 29,285 | 78.02 | 29,068 | 77.88 | ||
| Unquoted Non-Qualifying Holdings | £'000 | % | £'000 | % | £'000 | % | £'000 | % | |
| Crematorium Management | |||||||||
| Furnace Managed Services Ltd | 1,170 | 7.59 | 1,138 | 7.29 | - | - | - | - | |
| 1,170 | 7.59 | 1,138 | 7.29 | - | - | - | - |
Non-Statutory Analysis of - The A Ordinary Share Fund
| Statement of Comprehensive Income | Year ended | Year ended | ||||||
| Note | 31 March 2014 | 31 March 2013 | ||||||
| Revenue | Capital | Total | Revenue | Capital | Total | |||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||
| Investment income | 4 | 108 | - | 108 | 37 | - | 37 | |
| Realised profit on investments | - | - | - | - | - | - | ||
| Unrealised (loss)/gain on investments | - | 87 | 87 | - | 85 | 85 | ||
| Investment return | 108 | 87 | 195 | 37 | 85 | 122 | ||
| Investment management fees | 5 | (29) | (10) | (39) | (19) | (7) | (26) | |
| Other expenses | (15) | - | (15) | (5) | - | (5) | ||
| Profit before taxation | 64 | 77 | 141 | 13 | 78 | 91 | ||
| Taxation | 8 | (13) | 2 | (11) | (2) | 1 | (1) | |
| Profit after taxation | 51 | 79 | 130 | 11 | 79 | 90 | ||
| Total comprehensive profit for the period | 51 | 79 | 130 | 11 | 79 | 90 | ||
| Basic and diluted earnings per share | 9 | 1.00p | 1.55p | 2.55p | 0.57p | 4.33p | 4.90p | |
| Balance Sheet | Note | 31 March 2014 | 31 March 2013 | |||||
| £'000 | £'000 | |||||||
| Non-current assets | ||||||||
| Financial assets at fair value through profit or loss | 10 | 3,868 | 4,085 | |||||
| Current assets | ||||||||
| Receivables | 11 | 7 | 8 | |||||
| Cash and cash equivalents | 12 | 377 | 286 | |||||
| 384 | 294 | |||||||
| Current liabilities | ||||||||
| Payables | 13 | (37) | (158) | |||||
| Net assets | 4,215 | 4,221 | ||||||
| Equity attributable to equity holders | 4,215 | 4,221 | ||||||
| Net asset value per share | 16 | 82.15p | 82.26p | |||||
| Statement of Changes in Shareholders' Equity | 31 March 2014 | 31 March 2013 | ||||||
| £'000 | £'000 | |||||||
| Opening shareholders' funds | 4,221 | - | ||||||
| Issue of new shares | 120 | 4,131 | ||||||
| Profit for the period | 130 | 90 | ||||||
| Dividend paid | (256) | - | ||||||
| Closing shareholders' funds | 4,215 | 4,221 | ||||||
Investment Portfolio
| 31 March 2014 | 31 March 2013 | ||||||||
| Cost | Valuation | Cost | Valuation | ||||||
| £'000 | % | £'000 | % | £'000 | % | £'000 | % | ||
| Unquoted qualifying holdings | 3,475 | 85.31 | 3,647 | 85.92 | 3,475 | 81.09 | 3,560 | 81.45 | |
| Unquoted non-qualifying holdings | 221 | 5.43 | 221 | 5.21 | 525 | 12.25 | 525 | 12.01 | |
| Financial assets at fair value through profit or loss | 3,696 | 90.74 | 3,868 | 91.13 | 4,000 | 93.34 | 4,085 | 93.46 | |
| Cash and cash equivalents | 377 | 9.26 | 377 | 8.87 | 286 | 6.66 | 286 | 6.54 | |
| 4,073 | 100.00 | 4,245 | 100.00 | 4,286 | 100.00 | 4,371 | 100.00 | ||
| Unquoted Qualifying Holdings | £'000 | % | £'000 | % | £'000 | % | £'000 | % | |
| Electricity Generation | |||||||||
| Solar | |||||||||
| Arraze Ltd | 600 | 14.73 | 651 | 15.34 | 600 | 14.00 | 628 | 14.37 | |
| Bridge Power Ltd | 600 | 14.73 | 644 | 15.17 | 600 | 14.00 | 625 | 14.30 | |
| Core Generation Ltd | 600 | 14.73 | 649 | 15.29 | 600 | 14.00 | 626 | 14.32 | |
| Trym Power Ltd | 200 | 4.91 | 213 | 5.02 | 200 | 4.67 | 206 | 4.71 | |
| Anaerobic Digestion | |||||||||
| BioMass Future Generation Ltd | 600 | 14.73 | 600 | 14.13 | 600 | 14.00 | 600 | 13.73 | |
| Landfill Gas | |||||||||
| Aeris Power Ltd | 525 | 12.89 | 525 | 12.37 | 525 | 12.25 | 525 | 12.01 | |
| Craigahulliar Energy Ltd | 350 | 8.59 | 365 | 8.60 | 350 | 8.17 | 350 | 8.01 | |
| 3,475 | 85.31 | 3,647 | 85.92 | 3,475 | 81.09 | 3,560 | 81.45 | ||
| Unquoted Non-Qualifying Holdings | £'000 | % | £'000 | % | £'000 | % | £'000 | % | |
| Anaerobic Digestion | - | - | |||||||
| Drumnahare Biogas Ltd | 221 | 5.43 | 221 | 5.21 | 525 | 12.25 | 525 | 12.01 | |
| 221 | 5.43 | 221 | 5.21 | 525 | 12.25 | 525 | 12.01 |
Non-Statutory Analysis of - The C Ordinary Share Fund
| Statement of Comprehensive Income | Year ended | Year ended | ||||||
| Note | 31 March 2014 | 31 March 2013 | ||||||
| Revenue | Capital | Total | Revenue | Capital | Total | |||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||
| Investment management fees | 5 | (13) | (5) | (18) | - | - | - | |
| Other expenses | (3) | - | (3) | - | - | - | ||
| Loss before taxation | (16) | (5) | (21) | - | - | - | ||
| Taxation | 8 | 3 | 1 | 4 | - | - | - | |
| Loss after taxation | (13) | (4) | (17) | - | - | - | ||
| Total comprehensive loss | (13) | (4) | (17) | - | - | - | ||
| Basic and diluted loss per share | 9 | (1.70p) | (0.46p) | (2.16p) | - | - | - | |
| Balance Sheet | Note | 31 March 2014 | 31 March 2013 | |||||
| £'000 | £'000 | |||||||
| Current assets | ||||||||
| Receivables | 11 | 1 | - | |||||
| Cash and cash equivalents | 12 | 6,902 | - | |||||
| 6,903 | - | |||||||
| Current liabilities | ||||||||
| Payables | 13 | (30) | - | |||||
| Net assets | 6,873 | - | ||||||
| Equity attributable to equity holders | 6,873 | - | ||||||
| Net asset value per share | 16 | 98.38p | - | |||||
| Statement of Changes in Shareholders' Equity | 31 March 2014 | 31 March 2013 | ||||||
| £'000 | £'000 | |||||||
| Opening shareholders' funds | - | - | ||||||
| Issue of new shares | 6,890 | - | ||||||
| Loss for the year | (17) | - | ||||||
| Closing shareholders' funds | 6,873 | - |
Statement of Comprehensive Income
| Year ended | Year ended | |||||||
| 31 March 2014 | 31 March 2013 | |||||||
| Note | Revenue | Capital | Total | Revenue | Capital | Total | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||
| Income | ||||||||
| Investment income | 4 | 973 | - | 973 | 939 | - | 939 | |
| Gain arising on the disposal of investments during the year | - | 111 | 111 | - | 355 | 355 | ||
| Gain/loss arising on the revaluation of investments at the year end | - | 311 | 311 | - | (132) | (132) | ||
| Gain arising on the disposal of derivatives during the year | - | - | - | - | 48 | 48 | ||
| Investment return | 973 | 422 | 1,395 | 939 | 271 | 1,210 | ||
| Expenses | ||||||||
| Investment management fees | 5 | 269 | 91 | 360 | 340 | 114 | 454 | |
| Financial and regulatory costs | 30 | - | 30 | 29 | - | 29 | ||
| General administration | 30 | - | 30 | 16 | - | 16 | ||
| Legal and professional fees | 6 | 37 | - | 37 | 35 | - | 35 | |
| Directors' remuneration | 7 | 40 | - | 40 | 40 | - | 40 | |
| Operating expenses | 406 | 91 | 497 | 460 | 114 | 574 | ||
| Profit before taxation | 567 | 331 | 898 | 479 | 157 | 636 | ||
| Taxation | 8 | (117) | 18 | (99) | (95) | 23 | (72) | |
| Profit after taxation | 450 | 349 | 799 | 384 | 180 | 564 | ||
| Total comprehensive income for the year | 450 | 349 | 799 | 384 | 180 | 564 |
The total column of this statement is the Statement of Comprehensive Income of the Company prepared in accordance with International Financial Reporting Standards (IFRS). The supplementary revenue return and capital columns have been prepared in accordance with the Association of Investment Companies Statement of Recommended Practice (AIC SORP).
All revenue and capital items in the above statement derive from continuing operations.
This Statement of Comprehensive Income includes all recognised gains and losses.
The accompanying notes are an integral part of these statements.
Balance Sheet
| 31 March 2014 | 31 March 2013 | |||
| Note | £'000 | £'000 | ||
| Non-current assets | ||||
| Financial assets at fair value through profit or loss | 10 | 19,337 | 33,153 | |
| Current assets | ||||
| Receivables | 11 | 170 | 3,263 | |
| Cash and cash equivalents | 12 | 7,426 | 8,540 | |
| 7,596 | 11,803 | |||
| Total Assets | 26,933 | 44,956 | ||
| Current liabilities | ||||
| Payables and accrued expenses | 13 | 158 | 183 | |
| Current taxation payable | 100 | 73 | ||
| 258 | 256 | |||
| Net Assets | 26,675 | 44,700 | ||
| Equity attributable to equity holders of the parent | ||||
| Share capital | 14 | 318 | 545 | |
| Share redemption reserve | 449 | 21 | ||
| Share premium | 20,875 | 3,696 | ||
| Special distributable reserve | 7,502 | 43,389 | ||
| Capital reserve | (2,919) | (3,268) | ||
| Revenue reserve | 450 | 317 | ||
| Total equity | 26,675 | 44,700 |
The statements were approved by the Directors and authorised for issue on 29 May 2014 and are signed on their behalf by:
David Frank
Chairman
29 May 2014
Company registration number 6421083.
The accompanying notes are an integral part of this statement.
Statement of Changes in Shareholders' Equity
| Issued Capital | Share Redemption Reserve | Share Premium | Special Distributable Reserve | Capital Reserve | Revenue Reserve | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Year ended 31 March 2014 | |||||||
| Opening balance | 545 | 21 | 3,696 | 43,389 | (3,268) | 317 | 44,700 |
| Issue of new shares | 191 | - | 17,179 | - | - | - | 17,370 |
| Purchase of own shares | (428) | 428 | - | (35,125) | - | - | (35,125) |
| Conversion of B shares | 10 | - | - | (10) | - | - | - |
| Dividends paid | - | - | - | (752) | - | (317) | (1,069) |
| Transactions with owners | (227) | 428 | 17,179 | (35,887) | - | (317) | (18,824) |
| Profit for the year | - | - | - | - | 349 | 450 | 799 |
| Total comprehensive income for the year | - | - | - | - | 349 | 450 | 799 |
| Balance at 31 March 2014 | 318 | 449 | 20,875 | 7,502 | (2,919) | 450 | 26,675 |
| Capital reserve consists of: | |||||||
| Investment holding gains | 366 | ||||||
| Other realised losses | (3,285) | ||||||
| (2,919) | |||||||
| Year ended 31 March 2013 | |||||||
| Opening balance | 231 | - | - | 21,777 | (3,448) | 245 | 18,805 |
| Issue of new shares | 335 | - | 27,010 | - | - | - | 27,345 |
| Purchase of own shares | (21) | 21 | - | (1,702) | - | - | (1,702) |
| Cancellation of share premium | - | - | (23,314) | 23,314 | - | - | - |
| Dividend paid | - | - | - | - | - | (312) | (312) |
| Transactions with owners | 314 | 21 | 3,696 | 21,612 | - | (312) | 25,331 |
| Profit for the year | - | - | - | 180 | 384 | 564 | |
| Total comprehensive income for the year | - | - | - | 180 | 384 | 564 | |
| Balance at 31 March 2013 | 545 | 21 | 3,696 | 43,389 | (3,268) | 317 | 44,700 |
| Capital reserve consists of: | |||||||
| Investment holding losses | (132) | ||||||
| Other realised losses | (3,136) | ||||||
| (3,268) | |||||||
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 special distributable reserve was created on court cancellation of the share premium account. The revenue, capital and special distributable reserve are distributable by way of dividend.
Statement of Cash Flows
| Year ended | Year ended | ||
| 31 March 2014 | 31 March 2013 | ||
| £'000 | £'000 | ||
| Cash flows from operating activities | |||
| Profit before taxation | 898 | 636 | |
| (Gain) arising on the disposal of investments in the year | (111) | (403) | |
| (Gain)/loss arising on the revaluation of investments at the year end | (311) | 132 | |
| Cashflow generated by operations | 476 | 365 | |
| Decrease/(increase) in receivables | 37 | (44) | |
| (Decrease) in payables | (25) | (157) | |
| Taxation (paid) | (72) | (28) | |
| Net cash flows from operating activities | 416 | 136 | |
| Cash flow from investing activities | |||
| Purchase of financial assets at fair value through profit or loss | (2,508) | (3,727) | |
| Proceeds of sale of financial assets at fair value through profit or loss | 16,746 | 10,567 | |
| Decrease/(Increase) in amounts receivable on the disposal of investments | 3,056 | (3,056) | |
| Net cash flows from investing activities | 17,294 | 3,784 | |
| Cash flows from financing activities | |||
| Issue of new shares | 17,377 | 4,825 | |
| Purchase of own shares | (35,132) | (1,702) | |
| Cash acquired on merger | - | 1,635 | |
| Dividend paid | (1,069) | (312) | |
| Net cash flows from financing activities | (18,824) | 4,446 | |
| Net (decrease)/increase in cash and cash equivalents | (1,114) | 8,366 | |
| Reconciliation of net cash flow to movements in cash and cash equivalents | |||
| Opening cash and cash equivalents | 8,540 | 174 | |
| Net (decrease)/increase in cash and cash equivalents | (1,114) | 8,366 | |
| Closing cash and cash equivalents | 7,426 | 8,540 |
The accompanying notes are an integral part of these statements.
Notes to the Financial Statements
1. Corporate Information
The Financial Statements of the Company for the year ended 31 March 2014 were authorised for issue in accordance with a resolution of the Directors on 29 May 2014.
The Company was admitted for listing on the London Stock Exchange on 6 February 2008.
The Company is incorporated and domiciled in Great Britain and registered in England and Wales. The address of its registered office, which is also its principal place of business, is 4-5 Grosvenor Place, London, SW1X 7HJ.
The Company's Financial Statements are presented in Pounds Sterling (£) which is also the functional currency of the Company.
The principal activity of the Company is investment. The Company's investment strategy is that at least 70% of the Company's net assets are or will be invested in VCT qualifying unquoted companies. The remaining assets are exposed either to cash or cash-based similar liquid investments or investments originated in line with the Company's VCT Qualifying Investment Policy.
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. There are no borrowings or banking facilities in place nor are they anticipated to be required in future.
The Financial Statements of the Company for the year to 31 March 2014 have been prepared in accordance with International Financial Reporting Standards ("IFRS") adopted for use in the European Union and 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 January 2009, in so far as this does not conflict with IFRS.
The Financial Statements are prepared on a historical cost basis except that investments are shown at fair value through profit or loss.
The preparation of Financial Statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgements.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities relate to:
· the valuation of unlisted financial investments held at fair value through profit or loss, which are valued on the basis noted below (in the section headed "non-current asset investments").
· the recognition or otherwise of accrued income on loan notes and similar instruments granted to investee companies which is assessed in conjunction with the overall valuation of unlisted financial investments as noted above.
The key judgements made by Directors are in the valuation of non-current assets. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects that period or in the period of revision and future periods if the revision affects both current and future periods. The carrying value of investments is disclosed in note 10.
The Directors do not believe that there are any further key judgements made in applying accounting policies or estimates in respect of the Financial Statements.
These Financial Statements have been prepared in accordance with the accounting policies set out below which are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union (EU).
These accounting policies have been applied consistently in preparing these Financial Statements.
Standards issued but not yet effective
The following new standards, amendments to standards and interpretations are not yet effective for the year ended 31 March 2014, and have not been applied in preparing these Financial Statements
· IFRS 9 Financial Instruments (no mandatory effective date)
· IAS 27 (revised), Separate Financial Statements (IASB effective date 1 January 2013)
· Investment Entities - Amendments to IFRS 10, IFRS 12 and IAS 27 (effective 1 January 2014)
· Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32 (effective 1 January 2014)
· Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) (effective 1 January 2014)
· Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39) (effective 1 January 2014)
· Annual Improvements to IFRSs 2010-2012 Cycle (effective 1 July 2014)
· Annual Improvements to IFRSs 2011-2013 Cycle (effective 1 July 2014)
All of these changes will be applied by the Company from the effective date but none of them are expected to have a significant impact on the Company's Financial Statements.
Presentation of Statement of Comprehensive Income
In order better to reflect the activities of a Venture Capital Trust, and in accordance with the guidance issued by the Association of Investment Companies, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Income Statement.
Capital Management
Capital management is monitored and controlled using the internal control procedures set out on page 26. 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 31 March 2014 was £26.7 million (2013: £44.7 million).
Non-Current Asset Investments
The Company invests in financial assets with a view to profiting from their total return through income and capital growth. These investments are managed and their performance is evaluated on a fair value basis in accordance with the investment policy detailed in the Strategic Report on page 3 and information about the portfolio is provided internally on that basis to the Company's Board of Directors. Accordingly upon initial recognition the investments are designated by the Company as "at fair value through profit or loss" in accordance with IAS39 "Financial instruments recognition and measurement". They are included initially at fair value, which is taken to be their cost (excluding expenses incidental to the acquisition which are written off in the Statement of Comprehensive Income and allocated to "capital" at the time of acquisition). Subsequently the investments are valued at "fair value" which is the price that would be received 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. The profit or loss on disposal is calculated net of transaction costs of disposal.
Investments are recognised as financial assets on legal completion of the investment contract and are de-recognised on legal completion of the sale of an investment.
Income
Investment income includes interest earned on bank balances and money market funds and includes income tax withheld at source. Dividend income is shown net of any related tax credit and is brought into account on the ex-dividend date.
Fixed returns on investment loans, debt and money market funds are recognised on a time apportionment basis so as to reflect the effective yield, provided there is no reasonable doubt that payment will be received in due course.
Expenses
All expenses are accounted for on the accruals basis. Expenses are charged to revenue with the exception of the investment management fee, which has been charged 75% to the revenue account and 25% to the capital account (2013: 75% revenue, 25% capital) to reflect, in the Directors' opinion, the expected long term split of returns in the form of income and capital gains respectively from the investment portfolio.
Taxation
Corporation tax payable is applied to profits chargeable to corporation tax, if any, at the current rate in accordance with IAS 12 "Income Taxes". The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue on the "marginal" basis as recommended by the SORP.
In accordance with IAS 12, deferred tax is recognised using the balance sheet method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. The Directors have considered the requirements of IAS 12 and do not believe that any provision should be made.
Financial Instruments
The Company's principal financial assets are its investments and the accounting policies in relation to those assets are set out above. Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities. Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.
Issued Share Capital
Ordinary shares are classified as equity because they do not contain an obligation to transfer cash or another financial asset. Issue costs associated with the allotment of shares have been deducted from the share premium account in accordance with IAS 32.
Cash and Cash Equivalents
Cash and cash equivalents representing cash available at less than 3 months' notice are classified as loans and receivables under IAS 39.
Reserves
The revenue reserve (retained earnings) and capital reserve reflect the guidance in the AIC SORP. The capital reserve represents the proportion of Investment Management fees charged against capital and realised/unrealised gains or losses on the disposal/revaluation of investments. The special distributable reserve was created on court cancellation of the share premium account. The revenue, capital and special distributable reserve are distributable by way of dividend.
3. Segmental Reporting
The Company only has one class of business, being investment activity. All revenues and assets are generated and held in the UK.
4. Investment Income
| Year ended | Year ended | ||||||||
| 31 March 2014 | 31 March 2013 | ||||||||
| Ord. | A | C | Ord. | A | C | ||||
| Shares | Shares | Shares | Total | Shares | Shares | Shares | Total | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
| Loan stock interest | 833 | 105 | - | 938 | 896 | 36 | - | 932 | |
| Interest receivable on bank balances | 32 | 3 | - | 35 | 6 | 1 | - | 7 | |
| 865 | 108 | - | 973 | 902 | 37 | - | 939 |
5. Investment Management Fees
TPIM provides investment management and administration services to the Company under an Investment Management Agreement effective 6 February 2008 and a deed of variation to that agreement effective 21 November 2012. The agreement provides for an administration and investment management fee of 1.75% per annum of net assets payable quarterly in arrear for both Ordinary Shares and A Ordinary shares. For the Ordinary Shares issued under the 2007 offer the agreement ran until 6 February 2013 and may be terminated at any time thereafter by not less than twelve months' notice being given by either party. Should such notice be given the Investment Manager would continue to perform its duties under the Investment Management Agreement and to receive its contractual fee during the notice period. For all other Ordinary Shares it runs for a period of at least 6 years from the date of admission of those shares. For A Ordinary Shares the appointment shall continue until at least 30 April 2018. The agreement provides for an administration and investment management fee of 2.25% per annum of net assets payable quarterly in arrear for C Ordinary Shares. For C Ordinary Shares the appointment shall continue for a period of at least 6 years from the admission of those shares.
6. Legal and Professional Fees
Legal and professional fees include remuneration paid to the Company's auditor, Grant Thornton UK LLP as shown in the following table:
| Year ended | Year ended | ||||||||
| 31 March 2014 | 31 March 2013 | ||||||||
| Ord. | A | C | Ord. | A | C | ||||
| Shares | Shares | Shares | Total | Shares | Shares | Shares | Total | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
| Fees payable to the Company's auditor: | |||||||||
| - for the audit of the Financial Statements | 19 | 2 | 1 | 22 | 18 | 1 | - | 19 | |
| - for taxation compliance services | 5 | - | - | 5 | 4 | - | - | 4 | |
| 24 | 2 | 1 | 27 | 22 | 1 | - | 23 |
7. Directors' Remuneration
The only remuneration received by the Directors was their Directors' fees. The Company has no employees other than the Non-Executive Directors. The average number of Non-Executive Directors in the year was three. Full disclosure of Directors' remuneration is included in the Directors' Remuneration report.
| Year ended | Year ended | ||||||||
| 31 March 2014 | 31 March 2013 | ||||||||
| Ord. | A | C | Ord. | A | C | ||||
| Shares | Shares | Shares | Total | Shares | Shares | Shares | Total | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
| D T Frank | 13 | 2 | - | 15 | 14 | 1 | - | 15 | |
| S Acland | 11 | 1 | - | 12 | 13 | - | - | 13 | |
| P Marsden | - | - | - | - | 8 | - | - | 8 | |
| M Stanes | 11 | 2 | - | 13 | 4 | - | - | 4 | |
| Total | 35 | 5 | - | 40 | 39 | 1 | - | 40 | |
8. Taxation
| Year ended | Year ended | ||||||||
| 31 March 2014 | 31 March 2013 | ||||||||
| Ord. | A | C | Ord. | A | C | ||||
| Shares | Shares | Shares | Total | Shares | Shares | Shares | Total | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
| Profit/(loss) on ordinary activities before tax | 778 | 141 | (21) | 898 | 545 | 91 | - | 636 | |
| Corporation tax @ 20% | 156 | 28 | (4) | 180 | 109 | 18 | - | 127 | |
| Effect of: | |||||||||
| Capital gains not taxable | (67) | (17) | - | (84) | (38) | (17) | - | (55) | |
| Prior year adjustment | 3 | - | - | 3 | - | - | - | - | |
| Tax charge/credit for the period | 92 | 11 | (4) | 99 | 71 | 1 | - | 72 |
Capital gains and losses are exempt from corporation tax due to the Company's status as a Venture Capital Trust.
9. Earnings/(loss) per Share
Earnings per Ordinary Share is based on the profit after tax of £686,000 (2013: £477,000) and on the weighted average number of shares in issue during the period of 40,028,573 (2013: 31,290,165). The loss per B Ordinary Share is £nil due to the conversion to Ordinary Shares (2013: loss £3,000) and on a weighted average number of shares during the year of nil (2013: 244,230). Earnings per A Ordinary Share are based on the profit after tax of £130,000 (2013: £90,000) and on the weighted average number of shares in issue during the period of 5,131,353 (2013: 1,841,664). The loss per C Ordinary Share is based on the loss after tax of £17,000 (2013: £nil) and on the weighted average number of shares in issue during the period of 740,933 (2013: nil).
The weighted average number of shares in issue during the period for the Ordinary Shares, the A Ordinary Shares and the C Ordinary Shares were:
| Ordinary Shares | A Shares | C Shares | |||||||||
| Shares | No. Of | Weighted | Shares | No. Of | Weighted | Shares | No. Of | Weighted | |||
| Issued | Days | Average | Issued | Days | Average | Issued | Days | Average | |||
| 01-Apr-13 | 45,882,640 | 365 | 45,882,640 | 5,131,353 | 365 | 5,131,353 | - | - | - | ||
| 01-Apr-13 | 4,040,693 | 365 | 4,040,693 | - | - | - | - | - | - | ||
| 05-Apr-13 | (5,802,831) | 361 | (5,739,238) | - | - | - | - | - | - | ||
| 05-Apr-13 | 5,687,894 | 361 | 5,625,561 | - | - | - | - | - | - | ||
| 05-Apr-13 | 4,062,087 | 361 | 4,017,571 | - | - | - | - | - | - | ||
| 01-May-13 | 335 | - | - | - | - | - | - | - | |||
| 01-May-13 | 178,804 | 335 | 164,108 | - | - | - | - | - | - | ||
| 15-May-13 | (2,753,340) | 321 | (2,421,431) | - | - | - | - | - | - | ||
| 15-May-13 | 2,684,890 | 321 | 2,361,232 | - | - | - | - | - | - | ||
| 17-Oct-13 | (20,141,487) | 166 | (9,160,238) | - | - | - | - | - | - | ||
| 29-Nov-13 | (14,054,009) | 123 | (4,736,009) | - | - | - | - | - | - | ||
| 06-Feb-14 | - | - | - | - | - | - | 4,572,408 | 54 | 676,466 | ||
| 17-Feb-14 | (39,962) | 43 | (4,708) | - | - | - | - | - | - | ||
| 06-Mar-14 | (22,570) | 26 | (1,608) | - | - | - | - | - | - | ||
| 17-Mar-14 | - | - | - | - | - | - | 1,261,258 | 15 | 51,833 | ||
| 28-Mar-14 | - | - | - | - | - | - | 1,152,856 | 4 | 12,634 | ||
| 31-Mar-14 | 19,722,809 | 365 | 40,028,573 | 5,131,353 | 365 | 5,131,353 | 6,986,522 | 365 | 740,933 |
There are no potentially dilutive capital instruments in issue and, therefore, no diluted return per share figures are included in these Financial Statements.
Since 31 March 2014 further C Ordinary Shares have been issued (see note 14), which will have a dilutive effect going forward on the earnings per share of the relevant share class.
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.
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.
The Company's Investment Manager performs valuations of financial items for financial reporting purposes, including Level 3 fair values. Valuation techniques are selected based on the characteristics of each instrument, with the overall objective of maximising the use of market-based information
Level 3 valuations include assumptions based on non-observable data with the majority of investments being valued on discounted cash flows or price of recent transactions.
Consideration has been given whether the effect of changing one or more inputs to reasonably possible alternative assumptions would result in a significant change to the fair value measurement. Each unquoted portfolio company has been reviewed in order to identify the sensitivity of the valuation methodology to using alternative assumptions. Where discount rates have been applied alternative discount rates have been considered. Two alternative scenarios for each investment have been modelled, a more prudent assumption (downside case) and a more optimistic assumption (upside case). Applying the downside alternative, the aggregate value of the unquoted investment would be £0.4 million or 2.3 per cent lower. Using the upside alternative the aggregate value of the unquoted investments would be £1 million or 5.5 per cent higher.
Movements in investments held at fair value through the profit or loss during the year to 31 March 2014 were as follows:
| Year ended 31 March 2014 | Total | ||||
| Level 1 | Level 2 | Level 3 | |||
| Quoted | Derivative | Unquoted | Total | ||
| Investments | Transaction | Investments | Investments | ||
| £'000 | £'000 | £'000 | £'000 | ||
| Opening cost | - | - | 33,285 | 33,285 | |
| Opening investment holding losses | - | - | (132) | (132) | |
| Opening fair value | - | - | 33,153 | 33,153 | |
| Purchases at cost | - | - | 2,508 | 2,508 | |
| Disposal proceeds | - | - | (16,746) | (16,746) | |
| Realised gains | - | - | 111 | 111 | |
| Investment holding gains | - | - | 311 | 311 | |
| Closing fair value at 31 March 2014 | - | - | 19,337 | 19,337 | |
| Closing cost | - | - | 18,971 | 18,971 | |
| Closing investment holding gains | - | - | 366 | 366 |
| Ordinary Shares | |||||
| Level 1 | Level 2 | Level 3 | |||
| Quoted | Derivative | Unquoted | Total | ||
| Investments | Transaction | Investments | Investments | ||
| £'000 | £'000 | £'000 | £'000 | ||
| Opening cost | - | - | 29,285 | 29,285 | |
| Opening investment holding losses | - | - | (217) | (217) | |
| Opening fair value | - | - | 29,068 | 29,068 | |
| Purchases at cost | - | - | 2,508 | 2,508 | |
| Disposal proceeds | - | - | (16,442) | (16,442) | |
| Realised gains | - | - | 111 | 111 | |
| Investment holding gains | - | - | 224 | 224 | |
| Closing fair value at 31 March 2014 | - | - | 15,469 | 15,469 | |
| Closing cost | - | - | 15,275 | 15,275 | |
| Closing investment holding gains | - | - | 194 | 194 | |
| A Shares | |||||
| Level 1 | Level 2 | Level 3 | |||
| Quoted | Derivative | Unquoted | Total | ||
| Investments | Transaction | Investments | Investments | ||
| £'000 | £'000 | £'000 | £'000 | ||
| Opening cost | - | - | 4,000 | 4,000 | |
| Opening investment holding gains | - | - | 85 | 85 | |
| Opening fair value | - | - | 4,085 | 4,085 | |
| Disposal proceeds | - | - | (304) | (304) | |
| Investment holding gains | - | - | 87 | 87 | |
| Closing fair value at 31 March 2014 | - | - | 3,868 | 3,868 | |
| Closing cost | - | - | 3,696 | 3,696 | |
| Closing investment holding gains | - | - | 172 | 172 | |
| Year ended 31 March 2013 | Total | ||||
| Level 1 | Level 2 | Level 3 | |||
| Quoted | Derivative | Unquoted | Total | ||
| Investments | Transaction | Investments | Investments | ||
| £'000 | £'000 | £'000 | £'000 | ||
| Opening cost | - | 3,292 | 18,622 | 21,914 | |
| Opening investment holding losses | - | (1,239) | (1,990) | (3,229) | |
| Opening fair value | - | 2,053 | 16,632 | 18,685 | |
| Purchases at cost | 4,011 | - | 3,727 | 7,738 | |
| Acquired in Merger | - | 673 | 20,364 | 21,037 | |
| Disposal proceeds | (4,465) | (2,774) | (7,339) | (14,578) | |
| Realised gains/(losses) | 454 | 48 | (99) | 403 | |
| Investment holding losses | - | - | (132) | (132) | |
| Closing fair value at 31 March 2013 | - | - | 33,153 | 33,153 | |
| Closing cost | - | - | 33,285 | 33,285 | |
| Closing investment holding losses | - | - | (132) | (132) | |
| Ordinary Shares | |||||
| Level 1 | Level 2 | Level 3 | |||
| Quoted | Derivative | Unquoted | Total | ||
| Investments | Transaction | Investments | Investments | ||
| £'000 | £'000 | £'000 | £'000 | ||
| Opening cost | - | 3,292 | 18,622 | 21,914 | |
| Opening investment holding losses | - | (1,239) | (1,990) | (3,229) | |
| Opening fair value | - | 2,053 | 16,632 | 18,685 | |
| Purchases at cost | 4,011 | - | 3,727 | 7,738 | |
| Acquired in Merger | - | 673 | 16,364 | 17,037 | |
| Disposal proceeds | (4,465) | (2,774) | (7,339) | (14,578) | |
| Realised gains/(losses) | 454 | 48 | (99) | 403 | |
| Investment holding losses | - | - | (217) | (217) | |
| Closing fair value at 31 March 2013 | - | - | 29,068 | 29,068 | |
| Closing cost | - | - | 29,285 | 29,285 | |
| Closing investment holding losses | - | - | (217) | (217) | |
| A Shares | |||||
| Level 1 | Level 2 | Level 3 | |||
| Quoted | Derivative | Unquoted | Total | ||
| Investments | Transaction | Investments | Investments | ||
| £'000 | £'000 | £'000 | £'000 | ||
| Acquired in Merger | - | - | 4,000 | 4,000 | |
| Investment holding gains | - | - | 85 | 85 | |
| Closing fair value at 31 March 2013 | - | - | 4,085 | 4,085 | |
| Closing cost | - | - | 4,000 | 4,000 | |
| Closing investment holding gains | - | - | 85 | 85 |
At 31 March 2014 the fair value of Drumnahare Biogas Ltd reflects the proceeds received in relation to the equity element of the investment which was disposed of subsequent to the year end.
11. Receivables
| 31 March 2014 | 31 March 2013 | ||||||||
| Ord. Shares | A Shares | C Shares | Total | Ord. Shares | A Shares | C Shares | Total | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
| Receivables | 160 | 6 | - | 166 | 122 | - | - | 122 | |
| Amounts Receivable from the disposal of investments | - | - | - | - | 3,056 | - | - | 3,056 | |
| Prepayments and accrued income | 2 | 1 | 1 | 4 | 77 | 8 | - | 85 | |
| 162 | 7 | 1 | 170 | 3,255 | 8 | - | 3,263 |
12. Cash and Cash Equivalents
Cash and cash equivalents comprise deposits with The Royal Bank of Scotland plc.
13. Payables and Accrued Expenses
| 31 March 2014 | 31 March 2013 | ||||||||
| Ord. Shares | A Shares | C Shares | Total | Ord. Shares | A Shares | C Shares | Total | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
| Payables | 21 | 5 | - | 26 | 3 | - | - | 3 | |
| Taxation payable | 93 | 11 | (4) | 100 | 73 | - | - | 73 | |
| Accrued expenses | 77 | 21 | 34 | 132 | 22 | 158 | - | 180 | |
| 191 | 37 | 30 | 258 | 98 | 158 | - | 256 |
14. Share Capital
| Issued & Fully Paid | Ordinary Shares | A Ordinary Shares | B Ordinary Shares | C Ordinary Shares | Total shares |
| Number of Shares in issue at 1 April 2013 | 45,882,640 | 5,131,353 | 3,543,942 | - | 54,557,935 |
| Movements during the period | |||||
| Shares bought back under ESBB | (8,556,171) | - | - | - | (8,556,171) |
| Shares issued under ESBB | 8,372,784 | - | - | - | 8,372,784 |
| Shares issued under the B share Offer | - | - | 3,719,529 | - | 3,719,529 |
| Conversion of B shares | 8,281,584 | - | (7,263,471) | - | 1,018,113 |
| Tender Offer | (34,195,496) | - | - | - | (34,195,496) |
| Share buy backs | (62,532) | - | - | - | (62,532) |
| Shares issued under the C share Offer | - | - | - | 6,986,522 | 6,986,522 |
| Number of Shares in issue at 31 March 2014 | 19,722,809 | 5,131,353 | - | 6,986,522 | 31,840,684 |
| Movements after the year end | |||||
| Shares issued under the C share Offer | - | - | - | 6,454,916 | 6,454,916 |
| Number of Shares in issue at the date of this report | 19,722,809 | 5,131,353 | - | 13,441,438 | 38,295,600 |
| Par Value £'000 31 March 2014 | 197 | 51 | - | 134 | 382 |
The rights attached to each class of share are disclosed in the Directors Report on page 20.
On 17 February 2014 39,962 shares were purchased by the Company for cancellation. On 6 March 2014 22,570 shares were purchased by the Company for cancellation.
On 31 October 2013 7,263,471 B shares were converted into Ordinary shares at a conversion rate of 1.140169, creating a further 8,281,584 Ordinary shares.
At 31 March 2014 a total of 6,986,522 C Shares had been issued under a new share offer. Since the year end a further 6,454,916 C Shares were issued bringing the total C Shares issued to 13,441,438 at the date of this report.
15. Financial Instruments and Risk Management
The Company's financial instruments comprise VCT qualifying investments, cash balances and liquid resources including debtors and creditors. The Company holds financial assets in accordance with its investment policy detailed in the Strategic Report on page 4.
The following table discloses the financial assets and liabilities of the Company in the categories defined by
IAS 39, "Financial Instruments; Recognition & Measurement."
| Total value | Held for trading | Loan and receivables | Financial liabilities held at amortised cost | Designated at fair value through profit or loss | |
| 31 March 2014 | |||||
| Assets: | |||||
| Financial assets at fair value through profit or loss | 19,337 | - | - | - | 19,337 |
| Receivables | 166 | - | 166 | - | - |
| Cash and cash equivalents | 7,426 | - | 7,426 | - | - |
| 26,929 | - | 7,592 | - | 19,337 | |
| Liabilities: | |||||
| Other payables | 26 | - | - | 26 | - |
| Taxation payable | 100 | - | - | 100 | - |
| Accrued expenses | 132 | - | - | 132 | - |
| 258 | - | - | 258 | - | |
| 31 March 2013 | |||||
| Assets: | |||||
| Financial assets at fair value through profit or loss | 33,153 | - | - | - | 33,153 |
| Receivables | 3,178 | - | 3,178 | - | - |
| Cash and cash equivalents | 8,540 | - | 8,540 | - | - |
| 44,871 | - | 11,718 | - | 33,153 | |
| Liabilities: | |||||
| Other payables | 3 | - | - | 3 | - |
| Taxation payable | 73 | - | - | 73 | - |
| Accrued expenses | 180 | - | - | 180 | - |
| 256 | - | - | 256 | - |
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.
In carrying out its investment activities, the Company is exposed to various types of risk associated with the financial instruments and markets in which it invests. The Company's approach to managing its risks is set out below together with a description of the nature of the financial instruments held at the balance sheet date:
Market Risk
The Company's VCT qualifying investments are held in small and medium-sized unquoted companies which, by their nature, entail a higher level of risk and lower liquidity than investments in large quoted companies. The Directors and Investment Manager aim to limit the risk attached to the portfolio as a whole by careful selection and timely realisation of investments by carrying out rigorous due diligence procedures and by maintaining a spread of holdings in terms of industry sector and geographical location. The Board reviews the investment portfolio with the Investment Manager on a regular basis. Details of the Company's investment portfolio at the balance sheet date are set out on pages 12 and 13.
An increase of 1% in the value of investments would increase the capital profits for the period and the net asset value at 31 March 2014 by £193,000. A decrease of 1% would reduce the capital profits and net asset value by the same amount. A movement of 1% is used as a multiple to demonstrate the impact of varying changes on the capital profits and net asset value of the Company.
Interest Rate Risk
Some of the Company's financial assets are interest bearing, of which some are at fixed rates and some at variable rates. As a result, the Company is exposed to interest rate risk arising from fluctuations in the prevailing levels of market interest rates.
Investments made into VCT qualifying holdings are part equity and part loan. The loan element of investments totals £10,175,000 (2013: £21,550,000) and is subject to fixed interest rates for the five year loan terms and as a result there is no cashflow interest rate risk. As the loans are held in conjunction with equity and are valued in combination as part of the enterprise value, fair value risk is considered part of market risk.
The amounts held in variable rate investments at the balance sheet date are as follows:
| 31 March 2014 | 31 March 2013 | ||
| £'000 | £'000 | ||
| Cash on deposit | 7,426 | 8,540 | |
| 7,426 | 8,540 |
An increase in interest rates of 1% would increase the revenue profits for the year and the net asset value at 31 March 2014 by £74,000. A decrease of 1% would reduce the revenue profits and net asset value by the same amount. The Board believes that in the current economic climate a movement of 1% is a reasonable illustration.
Credit Risk
Credit risk is the risk that a counterparty will fail to discharge an obligation or commitment that it has entered into with the Company. The Investment Manager and the Board carry out a regular review of counterparty risk. The carrying value of the financial assets represent the maximum credit risk exposure at the balance sheet date.
| 31 March 2014 | 31 March 2013 | ||
| £'000 | £'000 | ||
| Qualifying investments - loans | 10,229 | 21,550 | |
| Cash on deposit | 7,426 | 8,540 | |
| Receivables | 166 | 3,178 | |
| 17,821 | 33,268 |
The Company's bank accounts are maintained with The Royal Bank of Scotland plc ("RBS") whose credit quality and financial position are monitored by the Investment Manager.
Credit risk arising on unquoted loan stock held within unlisted investments is considered to be part of market risk as disclosed above.
Foreign Currency Risk
The Company does not have exposure to material foreign currency risks.
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 31 March 2014 cash amounted to £7,426,000 (2013: £8,540,000).
16. Net Asset Value per Share
The calculation of net asset value per share for the Ordinary Shares is based on Net Assets of £15,587,000 (2013: £40,479,000) divided by the 19,722,809 (2013: 45,882,640) Ordinary Shares in issue. Prior to the B share conversion the 2013 comparative net asset value per share for the Ordinary Shares was based on Net Assets of £37,193,000 divided by 45,882,640 Ordinary shares in issue. The 2013 comparative net asset value per share for the B Shares was based on Net Assets of £3,286,000 divided by 3,543,942 B Shares in issue.
The calculation of net asset value per share for the A Ordinary Shares is based on Net Assets of £4,215,000 (2013: £4,221,000) divided by the 5,131,353 (2013: 5,131,353) A Ordinary Shares in issue.
The calculation of net asset value per share for the C Ordinary Shares is based on Net Assets of £6,873,000 (2013: £nil) divided by the 6,986,522 (2013: nil) C Ordinary Shares in issue.
17. Commitments and Contingencies
The Company has no outstanding commitments or contingent liabilities.
18. Relationship with Investment Manager
During the period, TPIM received £358,497 which has been expensed (2013: £453,290) for providing management and administrative services to the Company. At 31 March 2014 £100,453 was owing to TPIM (2013: £100,963).
19. Related Party Transactions
There are no related party transactions which require disclosure.
20. Post Balance Sheet Events
Following the year end a further 6,454,916 C Shares have been issued as detailed in Note 14.
21. Dividends
The Board paid a dividend on 26 July 2013 to the A Share Class holders on the register on 12 July 2013 of £256,568 equal to 5p per share.
The Board paid a dividend on 10 January 2014 to the Ordinary Share Class holders on the register on 27 December 2013 of £812,978 equal to 4.11p per share. There was no dividend paid to B shareholders prior to the conversion.
The Board has resolved to pay a dividend to A Class shareholders of £318,144 equal to 6.2p per share which will be paid on 25 July 2014 to shareholders on the register on 11 July 2014.
Information
Details of Advisers
Secretary and Registered Office:
Triple Point Investment Management LLP
4-5 Grosvenor Place
London
SW1X 7HJ
Registered Number
6421083
Investment Manager and Administrator
Triple Point Investment Management LLP
4-5 Grosvenor Place
London
SW1X 7HJ
Tel: 020 7201 8989
Independent Auditor
Grant Thornton UK LLP
Chartered Accountants and Statutory Auditor
3140 Rowan Place
John Smith Drive
Oxford Business Park South
Oxford
OX4 2WB
Solicitors
Howard Kennedy FSI LLP
19a Cavendish Square
London
W1A 2AW
Registrars
Neville Registars Limited
Neville House
18 Laurel Lane
Halesowen
West Midlands
B63 3DA
VCT Taxation Advisers
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RN
Bankers
The Royal Bank of Scotland plc
54 Lime Street
London
EC3M 7NQ
Shareholder Information
The Company
Triple Point Income VCT plc (formerly TP70 2008(I) VCT plc) is a Venture Capital Trust. The Investment Manager is Triple Point Investment Management LLP.
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. Initially investment exposure was intended to be predominantly to cash and cash based funds. By the end of the accounting period commencing no more than three years after VCT approval was given it was intended that at least 70% of the fund would be committed to VCT qualifying holdings with up to 30% remaining exposed to cash and cash based funds.
Financial Calendar
The Company's financial calendar is as follows:
24 July 2014 Annual General Meeting
November 2014 Interim report for the six months ending 30 September 2014 despatched
June 2015 Results for the year to 31 March 2015 announced; Annual Report and Financial Statements published.
Notice of Annual General Meeting
NOTICE is hereby given that the Annual General Meeting of Triple Point Income VCT plc will be held at 18 St. Swithin's Lane, EC4N 8AD at 10.30am on Thursday, 24 July 2014 for the following purposes:
Ordinary Business
1. To receive, consider and adopt the Report of the Directors and Financial Statements for the year ended 31 March 2014 (Ordinary Resolution).
2. To approve the Directors' Remuneration Report for the year ended 31 March 2014 (Ordinary Resolution).
3. To approve the Directors' Remuneration Policy (Ordinary Resolution).
4. To re-elect Simon Acland as a Director (Ordinary Resolution).
5. To re-elect David Frank as a Director (Ordinary Resolution).
6. To re-appoint Grant Thornton UK LLP as auditor and authorise the Directors to agree their remuneration (Ordinary Resolution).
Special Business
7. That the Company be and is hereby authorised in accordance with S701 of the Companies Act 2006 (the "Act") to make one or more market purchases (as defined in S693(4) of the Act) of Ordinary shares, A Ordinary shares and C Ordinary shares of 1 pence each in the Company provided that:
(i) the maximum aggregate number of Ordinary shares, A Ordinary shares and C Ordinary shares authorised to be purchased is an amount equal to 10% of the issued capital as at the date hereof;
(ii) the minimum price which may be paid for such Ordinary shares, A Ordinary shares or C Ordinary shares is 1 pence; and
(iii) the maximum price, exclusive of expenses, that may be paid for an Ordinary shares, A Ordinary shares or C Ordinary shares shall not be more than 105% of the average of the middle market prices for the shares as derived from the Daily Official List of the UK Listing Authority for the five business days immediately preceding the day on which the share is purchased.
This authority shall expire at the conclusion of the next Annual General Meeting of the Company or 15 months following the date of the passing of this Resolution, whichever is the first to occur (unless previously renewed, varied or revoked by the Company in general meeting), provided that the Company may, before such expiry, make a contract to purchase its own shares which would or might be executed wholly or partly after such expiry, and the Company may make a purchase of its own shares in pursuance of such contract as if the authority hereby conferred had not expired (Special Resolution).
8. That in addition to existing authorities, the Directors of the Company be and hereby are generally and unconditionally authorised in accordance with Section 551 of the Act to exercise all the powers of the Company to allot and issue shares in the capital of the Company and to grant rights to subscribe for or to convert any security into shares in the Company up to an aggregate nominal amount of £30,200, provided that the authority conferred by this resolution 8 shall expire on the conclusion of the Annual General Meeting of the Company to be held in 2015 (unless renewed, varied or revoked by the Company in a general meeting) but so that this authority shall allow the Company to make before the expiry of this authority offers or agreements which would or might require shares to be allotted or rights to be granted after such expiry (Special Resolution).
9. That the Directors of the Company be and hereby are empowered pursuant to Sections 570 and 573 of the Act to allot or make offers to or agreements to allot equity securities (which expression shall have the meaning ascribed to it in Section 560(1) of the Act) for cash pursuant to the authority given pursuant to resolution 8, as if Section 561(1) of the CA 2006 did not apply to such allotment, provided that the power provided by this resolution 9 shall expire on the conclusion of the Annual General Meeting of the Company to be held in 2015 (unless renewed, varied or revoked by the Company in general meeting) (Special Resolution).
10. That, the Directors of the Company be and hereby are generally and unconditionally authorised, subject to approval of the High Court of Justice, to cancel such amounts standing to the credit of the share premium account of the Company as maybe set out in the Court Order granting the cancellation (Special Resolution).
By Order of the Board
David Frank
Director
Registered Office:
4-5 Grosvenor Place
London
SW1X 7HJ
29 May 2014
Notes:
(i) A member entitled to vote at the Meeting is entitled to appoint one or more proxies to attend and, on a poll, vote on his or her behalf. A proxy need not be a member of the Company.
(ii) A form of proxy is enclosed. To be effective, the instrument appointing a proxy (together with the power of attorney or other authority, if any, under which it is signed, or a certified copy of such power or authority) must be deposited at or posted to the office of the registrars of the Company, Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA, so as to be received not less than 48 hours before the time fixed for the Meeting. Completion and return of the form of proxy will not preclude a member from attending or voting at the Meeting in person if he or she so wishes.
(iii) Members who hold their shares in uncertificated form must be entered in the Company's register of Members 48 hours before the Meeting to be entitled to attend or vote at the Meeting. Such shareholders may only cast votes in respect of Ordinary Shares held by them at such time.
(iv) Copies of the service contracts of each of the Directors, the register of Directors' interests in shares of the Company kept in accordance with the Listing Rules and a copy of the Memorandum and Articles of Association of the Company, will be available for inspection at the registered offer of the Company during usual business hours on any week day (Saturdays, Sundays and public holidays excepted) from the date of this notice until the date of the Annual General Meeting and at the place of the Annual General Meeting from at least 15 minutes prior to and until the conclusion of the Annual General Meeting.
Form of Proxy
Relating to the 2014 Annual General Meeting of Triple Point Income VCT plc
I/We…………………………………………………………………………………………………………………………
BLOCK CAPITALS PLEASE - Name in which shares registered
of……………………………………………………………………………………………………………………………
hereby appoint……………………………………………………………………………………………………………
or failing him/her the Chairman of the meeting to be my/our proxy and vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at 10.30am on Thursday 24 July 2014, notice of which was sent to shareholders with the Directors' Report and the Accounts for the period ended 31 March 2014, and at any adjournment thereof. The proxy will vote as indicated below in respect of the resolutions set out in the notice of meeting:
| Resolution number | For | Against | Withheld | |
| 1. | To receive, consider and adopt the Report of the Directors and the Financial Statements for the year ended 31 March 2014. | |||
| 2. | To approve the Directors' Remuneration Report for the year ended 31 March 2014. | |||
| 3. | To approve the Directors' Remuneration Policy. | |||
| 4. | To re-elect Simon Acland as a Director. | |||
| 5. | To re-elect David Frank as a Director. | |||
| 6. | To re-appoint Grant Thornton UK LLP as auditor and authorise the Directors to agree their remuneration. | |||
| 7. | To authorise the Directors to make market purchases of the Company's own shares (Special Resolution). | |||
| 8. | To authorise the Directors to allot and issue shares in the capital of the Company (Special Resolution). | |||
| 9. | To disapply pre-emption rights in relation to the issue of shares (Special Resolution). | |||
| 10. | To approve the cancellation of the share premium account. (Special Resolution). |
Signed: ....................................................................... Dated: ................................................ ..2014
Notes
1. A member wishing to appoint a person other than the Chairman of the meeting as proxy should insert the name and address of such person in the space provided.
2. Use of the proxy form does not preclude a member from attending and voting in person.
3. Where this form of proxy is executed by a corporation it must be either under its seal or under the hand of an officer or attorney duly authorised.
4. If the proxy form is signed and returned without any indication as to how the proxy shall vote, the proxy will exercise his/her discretion as to whether and how he/she votes.
5. To be valid, the proxy form must be received by Neville Registrars at Neville House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA no later than 48 hours before the commencement of the meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SDASUSFLSEII
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