Regulatory Filings • Oct 29, 2014
Regulatory Filings
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Offer for subscription to raise up to £10,000,000 by issue of Hydro 2 Shares of 1 pence each
29 October 2014
This document constitutes a registration document (the "Registration Document"). Additional information relating to the Company is contained in a securities note (the "Securities Note"). A brief summary conveying the essential characteristics of, and risks associated with, the Company and the new Hydro 2 Shares which are being offered for subscription (the "Offer") is contained in a summary note (the "Summary"). The Registration Document, the Securities Note and the Summary together constitute a prospectus dated 29 October 2014 (the "Prospectus") which has been prepared in accordance with the Prospectus Rules made under Part VI of FSMA and has been approved for publication by the Financial Conduct Authority as a Prospectus under the Prospectus Rules on 29 October 2014.
The Company and the Directors, whose names appear on page 12 of this document, accept responsibility for the information contained in the Registration Document. To the best of the knowledge and belief of the Company and the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.
Persons receiving this document should note that Howard Kennedy Corporate Services LLP, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as sponsor for the Company and no-one else and will not, subject to the responsibilities and liabilities imposed by FSMA or the regulatory regime established thereunder, be responsible to any other person for providing the protections afforded to customers of Howard Kennedy Corporate Services LLP or providing advice in connection with any matters referred to herein.
The Ordinary Shares, the A Ordinary Shares and the C Ordinary Shares in issue at the date of this document are listed on the premium segment of the Official List of the UK Listing Authority and traded on the London Stock Exchange's main market for listed securities. Application has been made to the UK Listing Authority for all of the Hydro 2 Shares to be listed on the premium segment of the Official List and application will be made to the London Stock Exchange for the Hydro 2 Shares to be admitted to trading on its main market for listed securities. It is expected that such admission will become effective and that trading will commence, in respect of the Hydro 2 Shares, within ten Business Days of their allotment.
The attention of persons receiving this document who are resident in, or who are citizens of, territories outside the United Kingdom is drawn to the information under the heading "Investors not resident in the UK" in Section B of Part 1 of the Securities Note. In particular, the Hydro 2 Shares have not and will not be registered under the United States Securities Act 1933 (as amended) or the United States Investment Company Act 1940 (as amended). The attention of persons receiving this document is also drawn to the risk factors on pages 4 to 6 of this document.
Copies of this document are available for inspection on the National Storage Mechanism's website http://www.morningstar.co.uk/uk/NSM following the date of publication and may be obtained free of charge for the duration of the Offer, by collection from:
| Howard Kennedy Corporate Services LLP | The Triple Point Group |
|---|---|
| 19 Cavendish Square | 18 St. Swithin's Lane, |
| London W1A 2AW | London EC4N 8AD |
*If the Offer is over-subscribed, the Offer may be increased at the discretion of the Directors by up to a further £10,000,000.
| CONTENTS | Page | |
|---|---|---|
| RISK FACTORS | 4 | |
| INFORMATION RELATING TO THE COMPANY | 7 | |
| PART 1 | THE MANAGER AND THE DIRECTORS | 8 |
| PART 2 | INVESTMENT POLICY | 16 |
| PART 3 | FINANCIAL INFORMATION ON THE COMPANY | 19 |
| PART 4 | INVESTMENT PORTFOLIO AND PRINCIPAL INVESTMENTS OF THE COMPANY |
21 |
| PART 5 | GENERAL INFORMATION | 24 |
| PART 6 | DEFINITIONS | 39 |
The Company and the Directors consider the following risks to be material to the Company. Material risks relating to the Hydro 2 Shares are set out in the Securities Note. Additional risks and uncertainties currently unknown to the Company and the Directors (such as changes in legal, regulatory or tax requirements), or which the Company and the Directors currently believe are immaterial to the Company, may also have a materially adverse effect on the financial condition or prospects of the Company.
accordance with the agreement regulating the provision of these services, the performance of the Company and/or its ability to achieve or maintain VCT status, may be adversely affected.
The Company will be subject to risks associated with hydro-electric power projects, which may adversely affect expected returns. Such risks include, but are not limited to, lower or more variable precipitation, increasing severity of weather and/or climate change, blocking of the intake structure that controls water flow or of the enclosed pipe that delivers water to hydraulic turbines by foreign or other matter, turbine or other mechanical/electrical malfunctions, lower than projected generator efficiency, higher than projected generator downtime, increased operational costs, lack of availability of power purchase agreements, and counterparty risk with grid connection providers. These risks may adversely affect expected returns. The development and operation of hydroelectric power projects is a specialist field and the Manager, in advising on investments, will engage with, and may rely on advice given and input provided by, technical and other third party specialist advisers and contractors.
| Directors (all non-executive) | David Frank (Chairman) Michael Stanes Simon Acland |
|---|---|
| all of: Registered Office | 18 St. Swithin's Lane London EC4N 8AD |
| Sponsor | Howard Kennedy Corporate Services LLP 19 Cavendish Square London W1A 2AW |
| Solicitors | HowardKennedyFsi LLP 19 Cavendish Square London W1A 2AW |
| Investment Manager, Administrator and Company Secretary |
Triple Point Investment Management LLP 18 St. Swithin's Lane London EC4N 8AD |
| VCT Tax Adviser | PricewaterhouseCoopers LLP 1 Embankment Place London WC2N 6RH |
| Auditors | Grant Thornton UK LLP 3140 Rowan Place John Smith Drive Oxford Business Park South Oxford OX4 2WB |
| Registrars | Neville Registrars Limited Neville House 18 Laurel Lane Halesowen West Midlands B63 3DA |
Triple Point is the investment manager to the Company, responsible for the management of the Non-Qualifying Investments. Triple Point advises the Board on Qualifying Investments, with the Board taking decisions on such investments. Triple Point is a specialist investment manager and was established in 2004 to bring together complementary skills and experience in three core disciplines: structured finance, tax and investment. Triple Point is authorised and regulated by the FCA.
Triple Point specialises in finding and managing private company investments in which capital value volatility is reduced and the possibility of exit enhanced, typically by the cash generative characteristics of the underlying businesses. Triple Point seeks such investments for individuals or institutions, including private company investments which qualify under the VCT, EIS, and business property relief rules.
Triple Point's origination of investments derives both from its own network and from a network of intermediaries introducing thoroughly researched and carefully sourced opportunities in Triple Point's target sectors. In the last three years Triple Point has originated over £80 million of such investments for the VCTs it manages and over £30 million of such investments for the EIS funds it manages either raised directly or through the Triple Point EIS service. Investments have been concluded in the energy, leisure, and environment sectors.
The pace with which Triple Point delivers Qualifying Investments and EIS qualifying investments has accelerated, so that by 5 April 2013 all Triple Point managed VCTs were fully invested in Qualifying Investments (exceeding the 70% threshold to maintain VCT qualifying status), whilst TP12, which received £4,400,000 of new subscriptions, invested £4,000,000 in Qualifying Investments immediately after the closing of its offer for subscription.
Triple Point currently has a potential pipeline of Qualifying Investment opportunities in Scotland for the Hydro 2 Share Fund, concentrated in renewable energy and environment. These opportunities are in various stages of maturity from early discussions to final negotiations.
In addition, the VCTs that are managed by Triple Point, and the EIS companies for which Triple Point has arranged funding, have a strong record of returning funds to shareholders at the end of the minimum five and three year holding periods for VCT and EIS shareholders respectively, the majority of such funds being returned within six to nine months after the end of those holding periods.
The Investment Management Team includes individuals with significant experience in private equity, stock market investment, infrastructure finance, public sector financing, and business management.
A summary of the relevant experience for each of the senior members of the Investment Management Team, the majority of whom are principals of Triple Point, is shown below:
Partner, Head of Investment and member of the Investment Committee
Under an agreement dated 14 December 2007 (the "IMA"), as amended by deeds of variation dated 15 October 2012 and 20 December 2013, Triple Point was appointed as the Company's investment manager and administrator for a period of ten years from admission of the C Ordinary Shares to the Official List, which can be terminated by not less than twelve months' notice. Under the terms of the IMA:
in respect of the fund representing the Ordinary Shares issued prior to the ESBB, Triple Point will receive investment management fees (exclusive of VAT) equal to 1.5% per annum of that fund's NAV up to 30 April 2013 and thereafter 1% of any amounts returned to holders of Ordinary Shares issued prior to the ESBB;
Triple Point may retain arrangement fees paid by investee companies of up to 3% of the sum invested which it receives in connection with investments made into unquoted companies. Whilst such charges are not payable by the Company, the effect may be to reduce modestly the net assets of the companies in which the Company invests. The Triple Point Group may also benefit from the receipt of business administration fees charged against such companies, the level of which may, in the case of a particular investee company, be related to that company's performance.
Any investment or other asset of any description of the Company will be held in the Company's name although in exceptional circumstances Triple Point may hold such investments or assets in the name of Triple Point or other FCA authorised person acting as custodian where, due to the nature of the law or market practice of an overseas jurisdiction, it is in the best interests of the Company to do so or it is not feasible to do otherwise.
Triple Point will also provide certain administrative services to the Company in respect of the period from Admission until termination of the IMA for an annual fee of 0.25% of the Company's NAV and acts as company secretary of the Company for an annual fee of £7,500 plus VAT at the relevant rate. All fees are payable quarterly in arrear.
Triple Point has agreed to indemnify the Company to the extent that the Annual Running Costs excluding VAT of the Company exceed 3.5% of the Company's NAV.
Under an agreement dated 28 October 2014, the IMA will, subject to the Offer becoming effective and subject to the approval of Shareholders at the General Meeting, be varied to provide for the following:
to Execution Only Brokers and (iii) the upfront commission paid to those advising professional investors in respect of subscriptions under the Offer. From this sum, Triple Point will discharge all external costs, and its own costs, in respect of the Offer. Triple Point has agreed to indemnify the Company against the costs of the Offer excluding VAT exceeding 5.5% of the funds it raises.
Triple Point will also be entitled to receive a Performance Incentive Fee based upon returns to holders of Hydro 2 Shares. The amount of the Performance Incentive Fee payable is based on distributions made to holders of Hydro 2 Shares.
To the extent that, on any distributions made to holders of Hydro 2 Shares, the total of all distributions per Hydro 2 Share made to holders of Hydro 2 Shares (including the distribution in question being made) exceeds a hurdle, being at the time of any distribution to holders of Hydro 2 Shares the higher of (i) 100 pence per Hydro 2 Share and (ii) the total of all distributions per Hydro 2 Share made to holders of Hydro 2 Shares prior to that distribution (the "Hurdle"), Triple Point will be entitled to receive a sum equal to 20% of the excess over the Hurdle.
The amount of Performance Incentive Fee payable per Hydro 2 Share in respect of indicative distributions for the first 15 years is set out in the table below (this is shown for the first fifteen years for illustrative purposes only) and the actual Performance Incentive Fee will apply indefinitely and will depend on the actual distributions made in respect of the Hydro 2 Shares (not including the 30% VCT income tax relief available to investors):
| Date | Cumulative distributions per Hydro 2 Share paid to holders of Hydro 2 Shares |
Hurdle | Excess over Hurdle |
20% of the excess (payable to Triple Point) |
|---|---|---|---|---|
| Immediately following investment |
0.0p | 100.0p | 0.0p | 0.0p |
| Year 2 | 7.0p | 100.0p | 0.0p | 0.0p |
| Year 3 | 14.5p | 100.0p | 0.0p | 0.0p |
| Year 4 | 22.5p | 100.0p | 0.0p | 0.0p |
| Year 5 | 31.0p | 100.0p | 0.0p | 0.0p |
| Year 6 | 40.0p | 100.0p | 0.0p | 0.0p |
| Year 7 | 49.5p | 100.0p | 0.0p | 0.0p |
| Year 8 | 59.5p | 100.0p | 0.0p | 0.0p |
| Year 9 | 70.0p | 100.0p | 0.0p | 0.0p |
| Year 10 | 81.0p | 100.0p | 0.0p | 0.0p |
| Year 11 | 92.5p | 100.0p | 0.0p | 0.0p |
| Year 12 | 104.5p | 100.0p | 4.5p | 0.9p |
| Year 13 | 117.0p | 104.5p | 12.5p | 2.5p |
| Year 14 | 130.0p | 117.0p | 13.0p | 2.6p |
| Year 15 | 143.5p | 130.0p | 13.5p | 2.7p |
Assuming £20,000,000 is raised under the Offer and that the costs of the Offer are 5.5%, the Directors estimate that the Annual Running Costs will be approximately 2.5% of the Company's NAV (excluding VAT) as opposed to 2.6% of the Company's NAV (excluding VAT) prior to the Offer. Such running costs of the Company will include the management and administration fees described above as well as fees for Directors, the auditors, taxation advisers, registrar, other direct costs incurred in the management/running of the VCT and the costs of communicating with Shareholders. Triple Point has agreed to indemnify the Company in respect of any annual costs (but excluding any exceptional and extraordinary costs) in excess of 3.5% of the Company's NAV (excluding VAT).
The Board consists of three highly experienced Directors, all of whom are non-executive and the majority of whom are independent of the Manager. The Board is responsible for the overall control and management of the Company with responsibility for its affairs, including determining its investment policy. Primary responsibility for the execution of the Company's investment policy lies with Triple Point, with the Board overseeing its activities. The Board will meet at least four times a year. Additionally, special meetings will
take place or other arrangements will be made when Board decisions are required in advance of regular meetings.
Simon Acland has over 20 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.
David Frank was a partner in Slaughter and May for 22 years before retiring from the firm in 2008. As well as being the firm's first Practice Partner from 2001 to 2008, his practice involved acting for several venture capital houses, including 3i and Schroder Ventures. He was also involved in several flotations in the venture capital sector, including 3i, Baronsmead and SVG Capital. Since retiring from legal practice, he has established a portfolio of voluntary roles, ranging from a governorship of a hospital to the chairmanship of a community foundation. He has been a director and chairman of the Company since 11 November 2010.
Michael Stanes joined 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 and in 2010, following a brief period as CEO of a new fund management partnership, joined Heartwood Investment Management, a London-based firm providing investment management and wealth structuring services for high net worth individuals and charities, as Investment Director. Michael was appointed a Director of the Company on 21 November 2012.
In addition to their directorships of the Company the Directors currently hold, and during the five years preceding the date of this document have held, the following directorships, partnerships or been a member of the senior management:
| Name | Position | Name of company/partnership |
Position still held (Y/N) |
|---|---|---|---|
| Simon Hugh Verdon Acland |
Director | TP70 2010 VCT plc | Y |
| Director | Westco Medical Holdings Limited (in administration) |
Y | |
| Director | Plantlife International – The Wild Plant Conservation Charity |
Y | |
| Director | TP12(I) VCT plc (dissolved) |
N | |
| Director | Elektron Technology plc | N | |
| Director | The Environment Industries Group Limited (dissolved) |
N | |
| Director | TP70 2009 VCT plc (dissolved) |
N | |
| Director | Celona Technologies Limited (dissolved) |
N | |
| Director | Bond Fabrications Limited | N |
| Director | Plaxica Limited | N | |
|---|---|---|---|
| Director | Young Enterprise London Ltd (dissolved) |
N | |
| David Thomas | Director | The Gatton Trust Limited | Y |
| Frank | Member of Senior Management |
The Royal Alexandra and Albert School |
Y |
| Director | Community Foundation for Surrey |
Y | |
| Michael John Stanes |
Director | Marc Stanes Limited | Y |
| Director | TP70 2008(II) VCT plc (dissolved) |
N | |
| Director | TP5 VCT plc | N |
The business address of all the Directors is 18 St. Swithin's Lane, London EC4N 8AD.
None of the Directors has at any time within the last five years:
There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any Director was selected as a member of the administrative, management or supervisory bodies or member of senior management.
There are no outstanding loans or guarantees provided by the Company for the benefit of any of the Directors nor are there any loans or any guarantees provided by any of the Directors for the Company.
The Directors and members of the Investment Management Team do not have any conflicts of interest between their duties to the Company and their private interests or other duties including duties owed by them to third parties.
For the financial year ended 31 March 2014, the remuneration of David Frank was £15,000, the remuneration for Michael Stanes was £12,500 and the remuneration for Simon Acland was £12,500. The remuneration of the Directors will increase by £2,500 for each Director for so long as the Company's NAV exceeds £25,000,000. No amounts have been set aside or have been accrued by the Company to provide pension, retirement or similar benefits to the Directors.
None of the Directors has a service contract with the Company and no such contract is proposed. Each of the Directors has been appointed on terms which can be terminated by either party on three months' notice.
The Directors are not entitled to compensation other than payment in lieu of notice on termination of their directorships.
The UK Corporate Governance Code published by the Financial Reporting Council in September 2012 (the "Code") applies to the Company. The Directors acknowledge the section headed "Comply or Explain" in the preamble to the Code which acknowledges that some provisions may have less relevance for investment companies and, in particular, consider some areas inappropriate to the size and nature of the business of the Company. Accordingly, the provisions of the Code are complied with save that (i) 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), (ii) the Company does not have a senior independent Director, (iii) the Company does not conduct a formal review as to whether there is a need for an internal audit function as the Directors do not consider that an internal audit would be an appropriate control for a venture capital trust and (iv) as all the Directors are non-executive it is not considered appropriate to appoint a nomination or remuneration committee.
The audit committee of the Company comprises the Board and meets at least twice a year. The Company's auditors may be required to attend such meetings. The audit committee prepares a report each year addressed to the Shareholders for inclusion in the Company's annual report and accounts. The duties of the audit committee are, inter alia:
To date no nomination or remuneration committees have been established. Recommendations for the reelection of Directors are considered by the Board. Matters relating to remuneration of Directors are considered by the Board and any Director is excluded from meetings whose purpose is the setting of his own remuneration.
Generally, a VCT must distribute by way of dividend such amount as to ensure that it retains not more than 15% of its income from shares and securities. The Directors aim to maximise tax free distributions to Shareholders of income or realised gains. It is envisaged that the Company will distribute most of its net income each year by way of dividend, subject to liquidity.
Investors who wish to have dividends paid directly into a bank account, rather than by cheque to their registered address, should complete the dividend mandate form which it is expected will be sent to an investor within 30 days of an allotment. Further dividend mandate forms can be obtained upon request from the registered office of the Company.
The Company aims, but is not committed, to offer liquidity to Shareholders through on-going buy-backs, subject to the availability of distributable reserves, at a target discount of 10% to net asset value.
The Directors believe that communication with Shareholders is important. A copy of the Company's annual report and financial statements (expected to be published each June) and a copy of the Company's unaudited interim financial report (expected to be published each November) will be made available on the Company's website at www.triplepoint.co.uk and sent to those Shareholders who have requested a hard copy. The Company's annual report and financial statements, made up to 31 March in each year, and interim financial reports, made up to 30 September in each year, will each detail the NAV per Share. Information on the NAV per Share will also be included in interim management statements expected to be made up to 30 June and 31 December in each year and published on the above website.
The Directors intend to manage the Company's affairs in order that it, and there are internal controls in place to help ensure that the Company, complies with the legislation applicable to VCTs. In this regard PricewaterhouseCoopers has been appointed to advise on tax matters generally and, in particular, on the Company's VCT status. The Company must continue to satisfy the requirements to qualify as a VCT or lose such status.
The Company's Investment Policy 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 cash-based similar 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 per cent 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 per cent 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:
The Company will pursue 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:
(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;
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.
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 per cent of its NAV at the time of any borrowing.
It is proposed to amend the Company's investment policy at the General Meeting so that the criteria against which investment targets would be assessed referred to above that relates to the prospect of achieving an exit after 5 years shall be restricted to the Ordinary Share Fund and the A Ordinary Share Fund.
The Company's Investment Policy to be adopted at the General Meeting 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 cash-based similar 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 per cent 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 per cent 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:
The Company will pursue 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:
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.
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 per cent of its NAV at the time of any borrowing.
Audited financial information on the Company is published in the annual reports for the years ended 31 March 2012, 31 March 2013 and 31 March 2014.
These annual reports were audited by Grant Thornton UK LLP of 3140 Rowan Place, John Smith Drive, Oxford Business Park South, Oxford OX4 2WB. All reports were without qualification and contained no statements under section 498(2) or (3) of the CA 2006.
The annual reports referred to above were prepared in accordance with IFRS, the fair value rules of the CA 2006 and the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies'. The annual reports contain a description of the Company's financial condition, changes in financial condition and results of operation for each relevant financial year and the pages of these referred to below are being incorporated by reference and can be accessed at the following website: www.triplepoint.co.uk.
Where these documents make reference to other documents, such other documents, together with those pages of the annual reports that are not referred to below, are not relevant to investors and are not incorporated into and do not form part of this document.
| Annual report for the year ended 31 March 2012 |
Annual report for the year ended 31 March 2013 |
Annual report for the year ended 31 |
|
|---|---|---|---|
| March 2014 | |||
| Balance sheet |
Page 26 | Page 30 | Page 32 |
| Income statement or equivalent |
Page 25 | Page 29 | Page 31 |
| Statement showing all changes in equity (or equivalent note |
Page 27 | Page 31 | Page 33 |
| Cash flow statement |
Page 28 | Page 32 | Page 34 |
| Accounting policies and notes |
Page 29 | Page 33 | Page 35 |
| Auditor's report |
Page 24 | Page 23 | Page 24 |
Such information includes the following:
The information in the annual reports has been prepared in a form consistent with that which will be adopted in the Company's next published annual financial statements with regard to accounting standards and policies and legislation applicable to those financial statements.
Such information also includes operating/financial reviews as follows:
| Annual report | Annual report for | Annual report | |
|---|---|---|---|
| for the year | the year ended | for the year | |
| ended 31 March | 31 March 2013 | ended 31 | |
| 2012 | March 2014 | ||
| Financial | Page 1 | Page 1 | Page 1 |
| summary | |||
| Chairman's | Page 2 | Page 2 | Page 2 |
| statement | |||
| Investment | Page 12 | Page 14 | Page 3 |
| policy | |||
| Investment | Page 6 | Page 5 | Page 6 |
| manager's |
| review | |||
|---|---|---|---|
| Investment portfolio |
Page 9 | Page 7 | Page 8 |
| Business review |
Page 12 | Page 14 | Page 3 |
| Valuation policy |
Page 31 | Page 34 | Page 41 |
As at 31 March 2014, the date to which the most recent audited financial information on the Company has been drawn up, the NAV per Ordinary Share, per A Ordinary Share and per C Ordinary Share was 79.03p, 82.15p and 98.38p respectively.
There has been no significant change in the financial or trading position of the Company since 31 March 2014 (being the date on which audited financial information was last published).
The investment portfolio of the Ordinary Share Fund as at the date this document is set out in the table below (the valuations being the audited valuations as at 31 March 2014, the latest date for which valuations have been announced).
| 31 March 2014 | ||||
|---|---|---|---|---|
| Cost | Valuation | |||
| £'000 | % | £'000 | % | |
| Unquoted qualifying holdings | 14,105 | 91.43 | 14,331 | 91.77 |
| 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 |
| Cash and cash equivalents | 147 | 0.98 | 147 | 0.94 |
| 15,422 | 100.00 | 15,616 | 100.00 | |
| Unquoted Qualifying Holdings | £'000 | % | £'000 | % |
| Cinema digitisation | ||||
| 21st Century Cinema Ltd | - | - | - | - |
| Big Screen Digital Services Ltd | - | - | - | - |
| Cinematic Services Ltd | - | - | - | - |
| Digima Ltd | 1,262 | 8.18 | 1,249 | 8.00 |
| Digital Screen Solutions Ltd | 2,020 | 13.10 | 2,028 | 12.99 |
| DLN Digital Ltd | - | - | - | - |
| Electricity Generation | ||||
| Solar | ||||
| Bandspace Ltd | 1,200 | 7.78 | 1,353 | 8.66 |
| Bridge Power Ltd | 125 | 0.81 | 134 | 0.86 |
| Campus Link Ltd | 690 | 4.47 | 761 | 4.87 |
| Convertibox Services Ltd | 1,000 | 6.48 | 950 | 6.08 |
| C More Energy Ltd | 1,000 | 6.48 | 1,069 | 6.85 |
| Green Energy for Education Ltd | 1,000 | 6.48 | 979 | 6.27 |
| PJC Renewable Energy Ltd | 5 | 0.03 | 5 | 0.03 |
| Anaerobic Digestion | ||||
| Biomass Future Generation Ltd | 1,550 | 10.05 | 1,550 | 9.93 |
| GreenTec Energy Ltd | 1,000 | 6.48 | 1,000 | 6.40 |
| Katharos Organic Ltd | 1,000 | 6.48 | 1,000 | 6.40 |
| Hydro Electric Power | ||||
| Elementary Energy Ltd | 2,253 | 14.61 | 2,253 | 14.43 |
| Crematorium Management | ||||
| Furnace Managed Services Ltd | - | - | - | - |
| 14,105 | 91.43 | 14,331 | 91.77 | |
| Unquoted Non-Qualifying Holdings Crematorium Management |
£'000 | % | £'000 | % |
| Furnace Managed Services Ltd | 1,170 | 7.59 | 1,138 | 7.29 |
| 1,170 | 7.59 | 1,138 | 7.29 |
Since 31 March 2014, two realisations were made by the Ordinary Share Fund from Furnace Managed Services Ltd of £50,000 each on 14 May 2014 and 19 September 2014 and each represented by a loan repayment.
Since 31 March 2014, further investment by the Ordinary Share Fund of approximately £47,000, in the form of rolled-up interest, was made in Elementary Energy Ltd.
Save in respect of these realisations and investments, no further investments or realisations in the above portfolio have been made by the Company in respect of the Ordinary Share Fund since 31 March 2014, the latest date for which audited valuations have been announced.
Since 31 March 2014 there has been no significant change in the value of the unquoted investments in the Ordinary Share portfolio.
The investment portfolio of the A Ordinary Share Fund as at the date this document is set out in the table below (the valuations being the audited valuations as at 31 March 2014, the latest date for which valuations have been announced).
| 31 March 2014 | ||||
|---|---|---|---|---|
| Cost | Valuation | |||
| £'000 | % | £'000 | % | |
| Unquoted qualifying holdings | 3,475 | 85.31 | 3,647 | 85.92 |
| Unquoted non-qualifying holdings | 221 | 5.43 | 221 | 5.21 |
| Financial assets at fair value through profit | ||||
| or loss | 3,696 | 90.74 | 3,868 | 91.13 |
| Cash and cash equivalents | 377 | 9.26 | 377 | 8.87 |
| 4,073 | 100.00 | 4,245 | 100.00 | |
| Unquoted Qualifying Holdings | £'000 | % | £'000 | % |
| Electricity Generation | ||||
| Solar | ||||
| Arraze Ltd | 600 | 14.73 | 651 | 15.34 |
| Bridge Power Ltd | 600 | 14.73 | 644 | 15.17 |
| Core Generation Ltd | 600 | 14.73 | 649 | 15.29 |
| Trym Power Ltd | 200 | 4.91 | 213 | 5.02 |
| Anaerobic Digestion | ||||
| BioMass Future Generation Ltd Landfill Gas |
600 | 14.73 | 600 | 14.13 |
| Aeris Power Ltd | 525 | 12.89 | 525 | 12.37 |
| Craigahulliar Energy Ltd | 350 | 8.59 | 365 | 8.60 |
| 3,475 | 85.31 | 3,647 | 85.92 | |
| Unquoted Non-Qualifying Holdings Anaerobic Digestion |
£'000 | % | £'000 | % |
| Drumnahare Biogas Ltd | 221 | 5.43 | 221 | 5.21 |
| 221 | 5.43 | 221 | 5.21 |
Since 31 March 2014, a realisation was made by the A Ordinary Share Fund from Drumnahare Biogas Ltd, when the remaining equity of £220,505, valued at cost, was disposed. Save in respect of this realisation, no further investments or realisations in the above portfolio have been made by the Company in respect of the A Ordinary Share Fund after 31 March 2014, the latest date for which valuations have been announced.
Since 31 March 2014 there has been no significant change in the value of the unquoted investments in the A Ordinary Share portfolio.
The investment portfolio of the C Ordinary Share Fund as at the date this document is set out in the table below (the valuations being the audited valuations as at 31 March 2014, the latest date for which valuations have been announced).
| Statement of Comprehensive | Year ended | |||
|---|---|---|---|---|
| Income | Note | 31 March 2014 | ||
| Revenue | Capital | Total | ||
| £'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 | ||
| £'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 |
Since 31 March 2014, the following further investments were made by the C Ordinary Share Fund:
Save in respect of these investments, no further investments or realisations in the above portfolio have been made by the Company in respect of the C Ordinary Share Fund after 31 March 2014, the latest date for which audited valuations have been announced.
Since 31 March 2014 there has been no significant change in the value of the unquoted investments in the C Ordinary Share portfolio.
The information set out in this Part 4 has been extracted from the Company's audited accounts as at 31 March 2014.
and Part III of the Circular, be approved.
| Class of Share |
Nominal value (£) |
Number | Amount (£'000) |
|---|---|---|---|
| Ordinary | £0.01 | 19,474,883 | 194,749 |
| Shares | |||
| A Ordinary | £0.01 | 5,131,353 | 51,314 |
| Shares | |||
| C Ordinary | £0.01 | 13,441,438 | 134,414 |
| Shares |
3.5. The issued fully paid share capital of the Company immediately after the Offer has closed (assuming £20,000,000 is raised under the Offer, a NAV per Hydro 2 Share of 100 pence for the purpose of the calculation of the price of the Hydro 2 Shares, that all of the subscription monies are received by 16 January 2015, that £19,000,000 of the subscription monies are for allotment of Hydro 2 Shares in the 2014/2015 tax year, that £1,000,000 of the subscription monies are for allotment of Hydro 2 Shares in the 2015/2016 tax year, that the issue costs per Hydro 2 Share are 5.5% and that no Shares are bought back by the Company or issued outside of the Offer) will be as follows:
| Class of Share |
Nominal value (£) |
Number | Amount (£',000) |
|---|---|---|---|
| Ordinary Shares |
£0.01 | 19,474,883 | 194,749 |
| A Ordinary Shares |
£0.01 | 5,131,353 | 51,314 |
| C Ordinary Shares |
£0.01 | 13,441,438 | 134,414 |
| Hydro 2 Shares |
£0.01 | 19,020,009 | 190,200 |
3.15. The ISIN and SEDOL Codes of the Hydro 2 Shares are GB00BNCBFH30 and BNCBFH3 respectively.
Subject to any disenfranchisement as provided in paragraph 4.2.4 below the Shares shall carry the right to receive notice of or to attend or vote at any general meeting of the Company and on a show of hands every holder of Shares present in person (or being a corporation, present by authorised representative) shall have one vote and, on a poll, every holder of Shares who is present in person or by proxy shall have one vote for every Share of which he is the holder. The Shares shall rank pari-passu as to rights to attend and vote at any general meeting of the Company.
4.2.2.Transfer of Shares
The Shares are in registered form and will be freely transferable free of all liens. All transfers of Shares must be effected by a transfer in writing in any usual form or any other form approved by the Directors. The instrument of transfer of a Share shall be executed by or on behalf of the transferor and, in the case of a partly paid Share, by or on behalf of the transferee. The Directors may refuse to register any transfer of a partly paid Share, provided that such refusal does not prevent dealings taking place on an open and proper basis, and may also refuse to register any instrument of transfer unless:
The Company may in general meeting by ordinary resolution declare dividends to be paid to members in accordance with the Articles, provided that no dividend shall be payable in excess of the amount recommended by the Directors. The Directors may pay such interim dividends as appear to them to be justified. No dividend or other monies payable in respect of a Share shall bear interest as against the Company. There are no fixed dates on which entitlement to a dividend arises. All dividends unclaimed for a period of twelve years after being declared or becoming due for payment shall be forfeited and shall revert to the Company.
The Ordinary Shares shall entitle their holders to receive such dividends as the Directors may resolve to pay out of the net assets attributable to the Ordinary Shares and from income received and accrued which is attributable to the Ordinary Shares.
The A Ordinary Shares shall entitle their holders to receive such dividends as the Directors may resolve to pay out of the net assets attributable to the A Ordinary Shares and from income received and accrued which is attributable to the A Ordinary Shares.
The C Ordinary Shares shall entitle their holders to receive such dividends as the Directors may resolve to pay out of the net assets attributable to the C Ordinary Shares and from income received and accrued which is attributable to the C Ordinary Shares.
Subject to Resolution 4 being passed at the General Meeting, the Hydro 2 Shares shall entitle their holders to receive such dividends as the Directors may resolve to pay out of the net assets attributable to the Hydro 2 Shares and from income received and accrued which is attributable to the Hydro 2 Shares.
The Directors may, with the prior sanction of an ordinary resolution of the Company, offer Shareholders the right to elect to receive, in respect of all or part of their holding of Shares, additional Shares credited as fully paid instead of cash in respect of all or part of such dividend or dividends and (subject as hereinafter provided) upon such terms and conditions and in such manner as may be specified in such ordinary resolution. The ordinary resolution shall confer the said power on the Directors in respect of all or part of a particular dividend or in respect of all or any dividends (or any part of such dividends) declared or paid within a specified period but such period may not end later than the date of the annual general meeting next following the date of the general meeting at which such ordinary resolution is passed.
4.2.4. Disclosure of Interest in Shares
If any Shareholder or other person appearing to be interested in Shares is in default in supplying within 14 days after the date of service of a notice requiring such member or other person to supply to the Company in writing all or any such information as is referred to in Section 793 of the CA 2006, the Directors may, for such period as the default shall continue, impose restrictions upon the relevant Shares.
The restrictions available are the suspension of voting or other rights conferred by membership in relation to meetings of the Company in respect of the relevant Shares and additionally in the case of a Shareholder representing at least 0.25% by nominal value of any class of shares of the Company then in issue, the withholding of payment of any dividends on, and the restriction of transfer of, the relevant Shares.
4.2.5. Distribution of Assets on Liquidation
On a winding-up any surplus assets will be divided amongst the holders of each class of Shares in the Company according to the respective numbers of Shares held by them and in accordance with the provisions of the Act, subject to the rights of any shares which may be issued with special rights or privileges.
To the extent that there are Ordinary Shares, an amount equivalent to the aggregate Net Asset Value of the Ordinary Shares, calculated in accordance with the Company's usual accounting policies and adjusted for any amounts as the liquidator may consider appropriate so as to be a fair value for the Ordinary Shares, will be divided amongst the holders of the Ordinary Shares.
To the extent that there are A Ordinary Shares, an amount equivalent to the aggregate Net Asset Value of the A Ordinary Shares, calculated in accordance with the Company's usual accounting policies and adjusted for any amounts as the liquidator may consider appropriate so as to be a fair value for the A Ordinary Shares, will be divided amongst the holders of the A Ordinary Shares.
To the extent that there are C Ordinary Shares, an amount equivalent to the aggregate Net Asset Value of the C Ordinary Shares, calculated in accordance with the Company's usual accounting policies and adjusted for any amounts as the liquidator may consider appropriate so as to be a fair value for the C Ordinary Shares, will be divided amongst the holders of the C Ordinary Shares.
Subject to Resolution 4 being passed at the General Meeting, to the extent that there are Hydro 2 Shares, an amount equivalent to the aggregate Net Asset Value of the Hydro 2 Shares, calculated in accordance with the Company's usual accounting policies and adjusted for any amounts as the liquidator may consider appropriate so as to be a fair value for the Hydro 2 Shares, will be divided amongst the holders of the Hydro 2 Shares.
The Articles provide that the liquidator may, with the sanction of a special resolution and any other sanction required by the Act, divide amongst the members in specie the whole or any part of the assets of the Company in such manner as he may determine.
Whenever the capital of the Company is divided into different classes of Shares, the rights attached to any class may (unless otherwise provided by the terms of issue of that class) be varied or abrogated either with the consent in writing of the holders of not less than threefourths of the nominal amount of the issued Shares of the class or with the sanction of a resolution passed at a separate meeting of such holders.
Each class of Shares, save in respect of the Hydro 2 Shares, may, subject to the approval of appropriate class meetings of the Shareholders, be converted, in accordance with the provisions of the Articles, into Shares of another class at a date to be determined by the Directors.
Unless and until otherwise determined by the Company in general meeting, pursuant to Article 122, the number of Directors shall not be fewer than two or more than ten. The continuing Directors may act notwithstanding any vacancy in their body, provided that if the number of the Directors be fewer than the prescribed minimum the remaining Director or Directors shall forthwith appoint an additional Director or additional Directors to make up such minimum or shall convene a general meeting of the Company for the purpose of making such appointment.
Any Director may in writing under his hand appoint (a) any other Director, or (b) any other person who is approved by the Board as hereinafter provided, to be his alternate. A Director may at any time revoke the appointment of an alternate appointed by him. Every person acting as an alternate Director of the Company shall be an officer of the Company, shall alone be responsible to the Company for his own acts and defaults, and shall not be deemed to be the agent of or for the Director appointing him.
Subject to the provisions of the Statutes (as defined in the Company's articles of association), the Directors may from time to time appoint one or more of their body to be managing director or joint managing directors of the Company or to hold such other executive office in relation to the management of the business of the Company as they may decide.
A Director may continue or become a Director or other officer, servant or member of any company promoted by the Company or in which they may be interested as a vendor, shareholder, or otherwise, and no such Director shall be accountable for any remuneration or other benefits derived as Director or other officer, servant or member of such company.
The Directors may from time to time appoint a chairman of the Company (who need not be a Director of the Company) and may determine his duties and remuneration and the period for which he is to hold office.
The Directors may from time to time provide for the management and transaction of the affairs of the Company in any specified locality, whether at home or abroad, in such manner as they think fit.
4.2.10.3. A Director shall not vote nor be counted in the quorum at a meeting of the Directors in respect of a matter in which he has any material interest otherwise than by virtue of his interest in shares, debentures or other securities of, or otherwise in or through the Company, unless his interest arises only because the case falls within one or more of the following paragraphs:
(f) any arrangement for purchasing or maintaining for any officer or auditor of the Company or any of its subsidiaries insurance against any liability which by virtue of any rule of law would otherwise attach to him in respect of any negligence, breach of duty or breach of trust for which he may be guilty in relation to the Company or any of its subsidiaries of which he is a Director, officer or auditor.
At the annual general meeting of the Company next following the appointment of a Director he shall retire from office. A Director shall also retire from office at or before the third annual general meeting following the annual general meeting at which he last retired and was reelected. A retiring Director shall be eligible for re-election. A Director shall be capable of being appointed or re-appointed despite having attained any particular age and shall not be required to retire by reason of his having attained any particular age, subject to the provisions of the Act.
4.2.13. Borrowing Powers
Subject as provided below, the Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital. The Directors shall restrict the borrowings of the Company and exercise all voting and other rights or powers of control over its subsidiary undertakings (if any) so as to secure 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 a sum equal to 30% of the Company's NAV at the time of any borrowing.
4.2.14. Distribution of Realised Capital Profits
In respect of any period prior to 5 April 2012, at any time when the Company has given notice in the prescribed form (which has not been revoked) to the Registrar of Companies of its intention to carry on business as an investment company ("a Relevant Period") the distribution of the Company's capital profits shall be prohibited. The Board shall establish a reserve to be called the capital reserve. ("Capital Reserve"). During a Relevant Period, all surpluses arising from the realisation or revaluation of investments and all other monies realised on or derived from the realisation, payment or other dealing with any capital asset in excess of the book value thereof and all other monies which are considered by the Board to be in the nature of accretion to capital shall be credited to the Capital Reserve. Subject to the Act, the Board may determine whether any amount received by the Companies is to be dealt with as income or capital or partly one way and partly the other. During a Relevant Period, any loss realised on the realisation or payment or other dealing with investments, or other capital losses, and, subject to the Act, any expenses, loss or liability (or provision therefor) which the Board considers to relate to a capital item or which the Board otherwise considers appropriate to be debited to the Capital Reserve shall be carried to the debit of the Capital Reserve. During a Relevant Period, all sums carried and standing to the credit of the Capital Reserve may be applied for any of the purposes for which sums standing to any revenue reserve are applicable except and provided that during a Relevant Period no part of the Capital Reserve or any other money in the nature of accretion to capital shall be transferred to the revenue reserves of the Company or be regarded or treated as profits of the Company available for distribution except for the purpose of redeeming or purchasing its own shares in accordance with Sections 687 and 692 of the CA 2006 or applied in paying dividends on any shares in the Company. In periods other than a Relevant Period, any amount standing to the credit of the Capital Reserve may be transferred to the revenue reserves of the Company or be regarded or treated as profits of the Company available for distribution or applied in paying dividends on any shares in the Company.
Article 182 of the Articles provides that at any time after 5 April 2018, in the case of A Ordinary Shares, and at any time after 5 April 2019, in the case of Ordinary Shares, the holders representing at least 5% of the A Ordinary Shares or the Ordinary Shares, as the case may be, may require the Company to make a tender offer to the holders of their class of Shares to purchase those Shares at a price reflecting the then prevailing NAV of those Shares. Any voluntary winding-up of the Company shall require either the consent in writing of the holders of at least three-fourths of the nominal amount of the issued shares of each class of Shares or the sanction of a special resolution passed at a separate meeting of the holders of each class of Shares.
Annual general meetings shall be held at such time and place as may be determined by the Directors and not more than fifteen months shall elapse between the date of one annual general meeting and that of the next. The Directors may, whenever they think fit, convene a general meeting of the Company, and general meetings shall also be convened on such requisition or in default may be convened by requisition as are provided by the Statutes, as defined in the Company's articles of association. Any meeting so convened by requisition shall be convened in the same manner as nearly as possible as that in which meetings are to be convened by the Directors.
An annual general meeting and a general meeting called for the passing of a special resolution shall be called by not less than twenty-one days' notice in writing, and all other general meetings of the Company shall be called by not less-than fourteen days' notice in writing. The notice shall be exclusive of the day on which it is given and of the day of the meeting and shall specify the place, the day and hour of meeting, and, in case of special business, the general nature of such business. The notice shall be given to the members, other than those who, under the provisions of the Company's articles or the terms of issue of the shares they hold, are not entitled to receive notice from the Company, to the Directors and to the Auditors. A notice calling an annual general meeting shall specify the meeting as such and the notice convening a meeting to pass a special resolution or an ordinary resolution as the case may be shall specify the intention to propose the resolution as such.
In every notice calling a meeting of the Company or any class of the members of the Company there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint one or more proxies to attend and, on a poll, vote instead of him and that a proxy need not also be a member.
If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened by or upon the requisition of members, shall be dissolved. In any other case it shall stand adjourned to such time (being not less than fourteen days and not more than twenty-eight days hence) and at such place as the Chairman shall appoint. At any such adjourned meeting the member or members present in person or by proxy and entitled to vote shall have power to decide upon all matters which could properly have been disposed of at the meeting from which the adjournment took place. The Company shall give not less than seven clear days' notice of any meeting adjourned for the want of a quorum and the notice shall state that the member or members present as aforesaid shall form a quorum.
The chairman may, with the consent of the meeting (and shall, if so directed by the meeting), adjourn any meeting from time to time and from place to place. No business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.
CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by a written instrument. The Articles are consistent with CREST membership and allow for the holding and transfer of Shares in un-certificated form pursuant to the Uncertified Securities Regulations 1995. The Hydro 2 Shares have been made eligible for settlement in CREST.
The Company does not have any subsidiaries.
Under an offer agreement dated 29 October 2014, between the Company, the Directors, Howard Kennedy, Triple Point and the Investment Management Team, Howard Kennedy has agreed to act as sponsor to the Offer and Triple Point has agreed, as agent of the Company, to use its reasonable endeavours to procure subscribers for the Hydro 2 Shares on the terms and subject to the conditions set out in the Prospectus (the "Offer Agreement").
Under the Offer Agreement, which may be terminated by Howard Kennedy in certain circumstances of breach, Triple Point, the Investment Management Team and the Directors have given certain warranties, customary for this type of agreement, relating to the accuracy and completeness of the information contained in the Prospectus. Warranty claims must be made by no later than 30 days after the date of the publication of the audited accounts of the Company for the accounting year ending 2016. The liability of the Directors and each member of the Investment Management Team in respect of a breach of a warranty or representation is limited to £12,500 each. The Company has also agreed to indemnify Howard Kennedy, without limit in time or amount, in respect of its role as Sponsor and in respect of certain losses arising under the Offer Agreement. The Offer Agreement may be terminated if any statement in the Prospectus is untrue, any material omission from the Prospectus arises or any breach of warranty in the Offer Agreement occurs and provided that such termination takes place prior to Admission.
The City Code on Takeovers and Mergers (the "Code") applies to all takeover and merger transactions in relation to the Company and operates principally to ensure that shareholders are treated fairly and are not denied an opportunity to decide on the merits of a takeover and that shareholders of the same class are afforded equivalent treatment. The Code provides an orderly framework within which takeovers are conducted and the Panel on Takeovers and Mergers has now been placed on a statutory footing. The Takeovers Directive was implemented in the UK in May 2006 and since 6 April 2007 has effect through the CA 2006. The Directive applies to takeovers of companies registered in an EU member state and admitted to trading on a regulated market in the EU or EEA.
The Code is based upon a number of General Principles which are essentially statements of standards of commercial behaviour. General Principle One states that all holders of securities of an offeree company of the same class must be afforded equivalent treatment and if a person acquires control of a company the other holders of securities must be protected. This is reinforced by Rule 9 of the Code which requires that a person, together with persons acting in concert with him, who acquires shares carrying voting rights which amount to 30% or more of the voting rights to make a general offer. "Voting rights" for these purposes means all the voting rights attributable to the share capital of a company which are currently exercisable at a general meeting. A general offer will also be required where a person who, together with persons acting in concert with him, holds not less than 30% but not more than 50% of the voting rights, acquires additional shares which increase his percentage of the voting rights. Unless the Panel consents, the offer must be made to all other shareholders, be in cash (or have a cash alternative) and cannot be conditional on anything other than the securing of acceptances which will result in the offeror and persons acting in concert with him holding shares carrying more than 50% of the voting rights.
There are not in existence any current mandatory takeover bids in relation to the Company.
Section 979 of the CA 2006 provides that if, within certain time limits, an offer is made for the share capital of the Company, the offeror is entitled to acquire compulsorily any remaining shares if it has, by virtue of acceptances of the offer, acquired or unconditionally contracted to acquire not less than 90% in value of the shares to which the offer relates and in a case where the shares to which the offer relates are voting shares, not less than 90%, of the voting rights carried by those shares. The offeror would effect the compulsory acquisition by sending a notice to outstanding shareholders telling them that it will compulsorily acquire their shares and then, six weeks from the date of the notice, pay the consideration for the shares to the relevant Company to hold on trust for the outstanding shareholders. The consideration offered to shareholders whose shares are compulsorily acquired under the CA 2006 must, in general, be the same as the consideration available under the takeover offer.
Section 983 of the CA 2006 permits a minority shareholder to require an offeror to acquire its shares if the offeror has acquired or contracted to acquire shares in a company which amount to
not less than 90% in value of all the voting shares in the company and carry not less than 90%, of the voting rights. Certain time limits apply to this entitlement. If a shareholder exercises its rights under these provisions, the offeror is bound to acquire those shares on the terms of the offer or on such other terms as may be agreed.
The provisions of DTR 3 will apply to the Company and its shareholders. DTR 3 sets out the notification requirements for shareholders and the Company where the voting rights of a shareholder exceed, reach or fall below the threshold of 3% and each 1% thereafter up to 100%. DTR 5 provides that disclosure by a shareholder to the Company must be made within two trading days of the event giving rise to the notification requirement and the Company must release details to a Regulatory Information Service as soon as possible following receipt of a notification and by no later than the end of the trading day following such receipt.
The following are the only contracts (not being contracts entered into in the ordinary course of business) which have been entered into by the Company in the two years immediately preceding the date of this document or which are expected to be entered into prior to Admission and which are, or may be, material or which have been entered into at any time by the Company and which contain any provision under which the Company has any obligation or entitlement which is, or may be, material to the Company as at the date of this document:
Under the C Ordinary Share Offer Agreement, which may be terminated by Howard Kennedy in certain circumstances of breach, Triple Point, the Investment Management Team and the Directors gave certain warranties, customary for this type of agreement, relating to the accuracy and completeness of the information contained in the C Ordinary Share Prospectus. Warranty claims must be made by no later than 30 days after the date of the publication of the audited accounts of the Company for the accounting year ending 2015. The liability of the Directors and each member of the Investment Management Team in respect of a breach of a warranty or representation is limited to £12,500 each. The Company also agreed to indemnify Howard Kennedy, without limit in time or amount, in respect of its role as Sponsor and in respect of certain losses arising under the C Ordinary Share Offer Agreement.
11.3. Under an offer agreement dated 15 October 2012, between the Company, the Directors, Howard Kennedy, Triple Point and the Investment Management Team, Howard Kennedy agreed to act as sponsor to the B Ordinary Share Offer (the "B Ordinary Share Offer Agreement").
The Company agreed to pay all other costs and expenses of or incidental to the B Ordinary Share Offer and admission of the B Ordinary Shares pursuant to the B Ordinary Share Offer. Triple Point agreed to indemnify, and keep indemnified, the Company in respect of the amount by which the costs of the B Ordinary Share Offer excluding VAT exceed the aggregate of (i) 2.5% of the aggregate value of accepted applications for B Ordinary Share issued under the B Ordinary Share Offer and (ii) the upfront commission paid to financial advisers (such aggregate amount being the "Triple Point Indemnity Amount"), and in consideration the Company agreed to pay Triple Point such amount, if any, by which the Triple Point Indemnity Amount exceeds the initial costs of the B Ordinary Share Offer excluding VAT.
Under the B Ordinary Share Offer Agreement, which could have been terminated by Howard Kennedy in certain circumstances of breach, the Investment Management Team and the Directors gave certain warranties, customary for this type of agreement, relating to the accuracy and completeness of the information contained in the B Ordinary Share Prospectus. Warranty claims must be made by no later than 30 days after the date of the publication of the audited
accounts of the Company for the accounting year ending 2013. The liability of the Directors and each member of the Investment Management Team in respect of a breach of a warranty or representation is limited to £12,500 each. The Company also agreed to indemnify Howard Kennedy, without limit in time or amount, in respect of its role as Sponsor and in respect of certain losses arising under the B Ordinary Share Offer Agreement.
11.4. The investment management and administration agreement and supplemental agreement relating thereto, set out at pages 9 to 11.
Under transfer agreements dated 21 November 2012 between the Company and each of TP70 2008(II) and TP12(I) (acting through the Liquidators), the assets and liabilities of TP70 2008(II) and TP12(I) were transferred to the Company pursuant to the Scheme in consideration for the issue of Ordinary Shares to the shareholders of TP70 2008(II) and A Ordinary Shares to the shareholders of TP12(I), as described in Part 2 of the B Ordinary Share Prospectus. The Liquidators agreed under these agreements that all sale proceeds and/or dividends received in respect of the underlying assets of TP70 2008(II) and TP12(I) will be transferred on receipt to the Company as part of the Scheme.
Under a deed of indemnity dated 21 November 2012 between the Company and the Liquidators, the Company agreed to indemnify the Liquidators for expenses and costs incurred by them in connection with the Scheme.
11.7 Directors' Letters of Appointment
The Directors' letters of appointment set out at page 14.
Other than the agreements referred to at paragraphs 11.1 to 11.4 and 11.7 above, there have been no related party transactions relating to the Company during the period covered by the statutory accounts referred to in paragraph 15.1 below and up to the date of this document.
professional advisers of or to the Manager or any company in the Manager's group or any other investment entity which they manage.
There are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) during the period since the Company's incorporation which may have, or have had in the recent past, significant effects on the Company's financial position or profitability.
15.2. There has been no significant change in the financial or trading position of the Company since 31 March 2014, the date to which the last audited financial statements have been published, to the date of this document.
15.3. There have been no significant factors, whether governmental, economic, fiscal, monetary or political, including unusual or infrequent events or new developments nor any known trends, uncertainties, demands, commitments or events that are reasonably likely to have an effect on the Company's prospects or which have materially affected the Company's income from operations so far as the Company and the Directors are aware. There have been no important developments, so far as the Company and the Directors are aware, relating to the development of the Company or its business.
Copies of the following documents will be available for inspection during normal Business Hours at the registered office of the Company and at the offices of Howard Kennedy, 19 Cavendish Square, London, W1A 2AW whilst the Offer remains open:
"A Ordinary Shares" A ordinary shares of 1 pence in the capital of the Company
"A Ordinary Share Fund" the net assets of the Company represented by the A Ordinary Shares
"A Ordinary Share Fund Qualifying Investments" Qualifying Investments comprised within the A Ordinary Share Fund
"Admission" the admission of the Hydro 2 Shares allotted pursuant to the Offer to a premium listing on the Official List and to trading on the London Stock Exchange's main market for listed securities
"Annual Running Costs" annual costs and expenses incurred by the Company in the ordinary course of its business (including irrecoverable value added tax)
"Articles" the articles of association of the Company, as amended from time to time
"B Ordinary Shares" B ordinary shares of 1 pence each in the capital of the Company
"B Ordinary Share Offer" the offer for subscription for B Ordinary Shares as set out in the B Ordinary Share Prospectus
"B Ordinary Share Prospectus" the prospectus detailing the B Ordinary Share Offer that was issued by the Company on 15 October 2012
"Board" or "Directors" the board of directors of the Company
'Business Day'' any day (other than a Saturday) on which clearing banks are open for normal banking business in sterling
"Business Hours" the hours between 09:00 to 18:00 on any Business Day
"BVCA" the British Venture Capital Association
"CA 2006" Companies Act 2006 (as amended)
"Company" Triple Point Income VCT plc
"C Ordinary Shares" C ordinary shares of 1 pence each in the capital of the Company
"C Ordinary Share Fund" the net assets of the Company represented by the Hydro Shares
"C Share Fund Qualifying Investments" the Qualifying Investments acquired by the Hydro Share Fund
"C Ordinary Share Offer" the offer for subscription for C Ordinary Shares as set out in the C Ordinary Share Prospectus
"C Ordinary Share Prospectus" the prospectus detailing the C Ordinary Share Offer that was issued by the Company on 20 December 2013
"EIS" the Enterprise Investment Scheme, satisfying the requirements of Part 5 of ITA 2007
"ESBB" the Company's enhanced share buyback scheme which completed on 15 May 2013, the terms of which were set out in a circular to Shareholders dated 7 December 2012
"FCA" the Financial Conduct Authority
"FSMA" the Financial Services and Markets Act 1986 (as amended)
"General Meeting" the general meeting of the Company convened for 25 November 2014 (or any adjournment thereof)
"HMRC" Her Majesty's Revenue and Customs
"Howard Kennedy" Howard Kennedy Corporate Services LLP
"Hurdle" at the time of any payment of a dividend to holders of Hydro 2 Shares the higher of (i) 100 pence per Hydro 2 Share or (ii) the total of all dividends per Hydro 2 Share made to holders of Hydro 2 Shares prior to that dividend
"Hydro 2 Shares" D ordinary shares of 1 pence each in the capital of the Company
"Hydro 2 Share Fund" the net assets of the Company represented by the Hydro 2 Shares
"Hydro 2 Share Fund Qualifying Investments" the Qualifying Investments acquired by the Hydro 2 Share Fund
"IFRS" International Financial Reporting Standards as adopted by the European Union
"Investment Management Team" those members of Triple Point's investment management team whose details are set out on pages 8 and 9
"Investment Policy" the investment policy adopted by the Company
"ITA 2007" Income Tax Act 2007 (as amended)
"Liquidators" David Merrygold and James Money of PKF (UK) LLP, Farringdon Place, 20 Farringdon Road, London EC1M 3AP
"Listing Rules" the listing rules of the UKLA
"London Stock Exchange" London Stock Exchange plc
"NAV" net asset value
"New Articles" the articles of association of the Company as amended by Resolution 2 at the General Meeting
"Non-Qualifying Investments" the assets of the Company that are not Qualifying Investments
"Offer" the offer for subscription by the Company as described in this document
"Official List" the official list of the UKLA
"Ordinary Share Fund" the net assets of the Company represented by the Ordinary Shares
"Ordinary Share Fund Qualifying Investments" Qualifying Investments comprised within the Ordinary Share Fund
"Ordinary Shares" ordinary shares of 1 pence each in the capital of the Company
"Performance Incentive Fee" the performance-related incentive fee payable to Triple Point as described in the subsection headed "Performance Incentive Fee on Hydro 2 Shares" on page 11
"Prospectus" this document, relating to the Offer
"Prospectus Rules" the prospectus rules of the FCA
"Qualifying Company" a company satisfying the requirements of Chapter 4 of Part 6 of ITA 2007
"Qualifying Investments" shares in, or securities of, a Qualifying Company held by a VCT which meets the requirements described in chapter 4 of Part 6 ITA 2007
"Regulatory Information Service" a regulatory information service that is on the list of regulatory information services maintained by the FCA
"Resolutions" the resolutions to be proposed at the General Meeting
"Scheme" or "Merger" the merger of the Company with TP70 2008(II) and TP12 by means of placing TP70 2008(II) and TP12 into members' voluntary liquidation pursuant to Section 110 of the Insolvency Act 1986 and the acquisition by the Company of all of TP70 2008(II)'s and TP12's assets and liabilities in consideration for new Ordinary Shares and A Ordinary Shares which completed on 21 November 2012
"Shareholder" a holder of Shares
"Shares" Ordinary Shares, A Ordinary Shares, C Ordinary Shares and Hydro 2 Shares as the context may require (and each a "Share")
"TPAL" Triple Point Administration LLP
"TP12" TP12(I) VCT plc
"TP70 2008(II)" TP70 2008(II) VCT plc
"Triple Point" or "Manager" Triple Point Investment Management LLP of 18 St. Swithin's Lane, London EC4N 8AD
"Triple Point Group" Triple Point, Triple Point LLP and TPAL
"UK" the United Kingdom
"UKLA" or "UK Listing Authority" the UK Listing Authority, being the FCA acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Market Act 2000
"unquoted" private or public companies not quoted on any market or exchange
"VCT" or "venture capital trust" a company satisfying the requirements of Chapter 3 of Part 6 of ITA 2007 for venture capital trusts
"VCT Rules" Part 6 ITA 2007 and every other statute (including any orders, regulations or other subordinate legislation made under them) for the time being in force concerning VCTs
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