REG - Triple Point Inc VCT - Final Results <Origin Href="QuoteRef">TPV1.L</Origin> - Part 5
09/06/2016 16:10
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significant inputs
required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: the fair value of financial instruments that are not traded on an active market (for example, investments in
unquoted companies) is determined by using valuation techniques such as discounted cash flows. If one or more of the
significant inputs is based on unobservable inputs including market data, the instrument is included in level 3.
There have been no transfers between these classifications in the period. Any change in fair value is recognised through
the Statement of Comprehensive Income.
Further details of these investments are provided in the Investment Manager's Review and Investment Portfolio.
The Company's Investment Manager performs valuations of financial items for financial reporting purposes, including Level 3
fair values. Valuation techniques are selected based on the characteristics of each instrument, with the overall objective
of maximising the use of market-based information.
Level 3 valuations include assumptions based on non-observable data with the majority of investments being valued on
discounted cash flows or price of recent transactions.
Valuation techniques and unobservable inputs:
Sector Valuation Techniques Significant unobservable inputs Inter relationship between significant unobservable inputs and fair value measurement
Estimated fair value would increase/(decrease) if:
Cinema Digitisation · Discounted cash flows: The valuation model considers the present value of expected payment, discounted using a risk-adjusted discount rate. · Discount rate 4.50% · The discount rate was lower/(higher)
Hydro Electric Power · Discounted cash flows: The valuation model considers the present value of expected payment, discounted using a risk-adjusted discount rate. · Discount rate between 9% and 11.10% · Inflation rate 2% · The discount rate was lower/(higher) · The inflation rate was higher/(lower)
Solar · Discounted cash flows: The valuation model considers the present value of expected payment, discounted using a risk-adjusted discount rate. · Discount rate 8% · Inflation rate 2% · The discount rate was lower/(higher)· The inflation rate was higher/(lower)
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 to the unquoted investments, alternative discount rates have been considered. Two
alternative scenarios for each investment have been modelled, a more prudent assumption (downside case) and a more
optimistic assumption (upside case). Applying the downside alternative, the aggregate change in value of the unquoted
investments would be £1.3 million or 6.3 per cent lower. Using the upside alternative the aggregate value of the unquoted
investments would be £2.5 million or 12 per cent higher.
Movements in investments held at fair value through the profit or loss during the year to 31 March 2016 were as follows:
Year ended 31 March 2016 Level 3 Unquoted Investments
Ord Shares A Shares C Shares D Shares Total
£'000 £'000 £'000 £'000 £'000
Opening cost 7,759 875 13,126 7,432 29,192
Opening investment holding losses 128 15 - - 143
Opening fair value 7,887 890 13,126 7,432 29,335
Purchases at cost 5,878 950 1,511 8,368 16,707
Disposal proceeds (1,849) - (830) (2,711) (5,390)
Realised gains 1 - - 1 2
Investment holding gains 75 (101) 325 - 299
Reclassification as assets held for sale - (789) - - (789)
Closing fair value at 31 March 2016 11,992 950 14,132 13,090 40,164
Closing cost 11,789 950 13,807 13,090 39,636
Closing investment holding gains 203 - 325 - 528
Year ended 31 March 2015 Level 3 Unquoted Investments
Ord Shares A Shares C Shares D Shares Total
£'000 £'000 £'000 £'000 £'000
Opening cost 15,275 3,696 - - 18,971
Opening investment holding (losses)/gains 194 172 - - 366
Opening fair value 15,469 3,868 - - 19,337
Purchases at cost 199 - 13,276 7,432 20,907
Disposal proceeds (150) (220) (150) - (520)
Realised gains/(losses) - (1) - - (1)
Investment holding losses 926 541 - - 1,467
Reclassification as assets held for sale (8,557) (3,298) - - (11,855)
Closing fair value at 31 March 2015 7,887 890 13,126 7,432 29,335
Closing cost 7,759 875 13,126 7,432 29,192
Closing investment holding losses 128 15 - - 143
All investments are designated as fair value through the profit or loss at the time of acquisition and all capital gains or
losses arising on investments are so designated. Given the nature of the Company's venture capital investments, the changes
in fair values of such investments recognised in these Financial Statements are not considered to be readily convertible to
cash in full at the balance sheet date and accordingly any gains or losses on these items are treated as unrealised.
Material disposals during the year
Investee Company Cost Disposal Realised Gain
£'000 £'000 £'000
Green Highland Hydro Power Ltd 1,600 1,601 1
Green Highland AGN Fiadh (365) Ltd 2,710 2,711 1
Broadpoint 2 Ltd 800 800 -
Furnace Managed Services Ltd 200 200 -
5,310 5,312 2
11. Assets Held for Sale
31 March 2016 31 March 2015
Ord. Shares A Shares C Shares D Shares Total Ord. Shares A Shares C Shares D Shares Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Landfill Gas
Aeris Power Ltd - 424 - - 424 - - - - -
Craigahulliar Energy Ltd - 365 - - 365 - - - - -
Solar
Arraze Ltd - - - - - 800 - - 800
Bandspace Ltd - - - - - 1,650 - - - 1,650
Bridge Power Ltd - - - - - 167 801 - - 968
Campus Link Ltd - - - - - 892 - - - 892
Convertibox Services Ltd - - - - - 1,170 - - - 1,170
Core Generation Ltd - - - - - - 823 - - 823
Green Energy for Education Ltd 608 - - - 608 1,128 - - - 1,128
Trym Power Ltd - - - - - - 274 - - 274
Anaerobic Digestion
Biomass Future Generation Ltd - - - - - 1,550 600 - - 2,150
GreenTec Energy Ltd - - - - - 1,000 - - - 1,000
Katharos Organic Ltd - - - - - 1,000 - - - 1,000
608 789 - - 1,397 8,557 3,298 - - 11,855
The Landfill Gas companies that were previously treated as Financial Assets at Fair Value through profit or loss have been
reclassified as Financial Assets Held for Sale as at 29 February 2016 following the Investment Manager's commitment to sell
these companies. A third party buyer has been identified and negotiations are taking place and it is highly probable that
a sale will complete within 12 months.
Assets held for Sale are measured at fair value through profit and loss at the discounted price expected to be achieved
through the expected sale after the year end.
During June 2015 the investee companies which generated renewable electricity from residential solar PV panels were sold
and as a result of this sale, a total of £7.1 million was realised, of which £0.7 million was received as dividend income
and not included in the table below but treated as investment income.
* The Company's investments in three Anaerobic Digestion businesses were sold in June 2015. The sale realised £4.8 million
which contributed to an uplift of 2.75p per Ordinary Share and 1.76p per A Share, equivalent to £646,000.
Material disposals during the year
Investee Company Cost Opening Valuation Disposal Realised Gain/(loss)
**Solar £'000 £'000 £'000 £'000
Arraze Ltd 600 800 677 (123)
Bandspace Ltd 1,200 1,650 1,460 (190)
Bridge Power Ltd 725 968 805 (163)
Campus Link Ltd 690 892 901 9
Convertibox Services Ltd 1,000 1,170 1,165 (5)
Core Generation Ltd 600 823 652 (171)
Green Energy for Education Ltd 525 525 525 0
Trym Power Ltd 200 274 250 (24)
* Anaerobic Digestion
Biomass Future Generation Ltd 2,150 2,150 2,484 334
GreenTec Energy Ltd 1,000 1,000 1,156 156
Katharos Organic Ltd 1,000 1,000 1,156 156
9,690 11,252 11,231 (21)
**In the above table the loss shown on the sale of the solar companies was due to a dividend being declared by these
companies prior to the sale. The dividends received were £666,183 which offsets the losses on the solar companies shown
above.
12. Receivables
31 March 2016 31 March 2015
Ord. Shares A Shares C Shares D Shares Total Ord. Shares A Shares C Shares D Shares Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Receivables 321 313 1 545 1,180 32 5 64 62 163
Prepayments and accrued income 13 - 1 16 30 1 - 1 - 2
334 313 2 561 1,210 33 5 65 62 165
13. Cash and Cash Equivalents
Cash and cash equivalents comprise deposits with The Royal Bank of Scotland plc.
14. Payables and Accrued Expenses
31 March 2016 31 March 2015
Ord. Shares A Shares C Shares D Shares Total Ord. Shares A Shares C Shares D Shares Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Payables - - 77 - 77 3 - - 2,296 2,299
Accrued expenses 67 14 90 68 239 77 21 86 28 212
67 14 167 68 316 80 21 86 2,324 2,511
15. Share Capital
Issued & Fully Paid Ordinary Shares A Shares C Shares D Shares Total
Number of Shares in issue at 1 April 2015 19,474,883 5,131,353 13,441,438 5,296,574 43,344,248
Movements during the period:
Share buyback (11,763) (11,763)
Shares issued under the D share Offer - - - 8,405,062 8,405,062
Number of Shares in issue at 31 March 2016 19,463,120 5,131,353 13,441,438 13,701,636 51,737,457
Nominal value £'000 at 31 March 2016 195 51 135 137 518
The nominal value for each share is £0.01 each.
The rights attached to each class of share are disclosed in the Directors Report on pages 22 and 23.
On 30 March 2016 11,763 Ordinary shares were purchased by the Company for cancellation.
16. Financial Instruments and Risk Management
The Company's financial instruments comprise VCT qualifying investments and non qualifying investments, cash balances and
liquid resources including debtors and creditors. The Company holds financial assets in accordance with its investment
policy detailed in the Strategic Report on page 4.
The following table discloses the financial assets and liabilities of the Company in the categories defined by
IAS 39, "Financial Instruments; Recognition & Measurement."
Total value Loan and receivables Financial liabilities held at amortised cost Designated at fair value through profit or loss
31 March 2016
Assets:
Financial assets at fair value through profit or loss 40,164 - - 40,164
Assets held for Sale 1,397 - - 1,397
Receivables 1,180 1,180 - -
Cash and cash equivalents 1,032 1,032 - -
43,773 2,212 - 41,561
Liabilities:
Other payables 77 - 77 -
77 - 77 -
31 March 2015
Assets:
Financial assets at fair value through profit or loss 29,335 - - 29,335
Assets held for Sale 11,855 - - 11,855
Receivables 163 163 - -
Cash and cash equivalents 993 993 - -
42,346 1,156 - 41,190
Liabilities:
Other payables 2,299 - 2,299 -
2,299 - 2,299 -
Fixed Asset Investments (see note 10 and note 11) 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 14 to 20.
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 2016 by £416,000. 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
£19,252,000 (2015: £15,092,000) 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 2016 31 March 2015
£'000 £'000
Cash on deposit 1,032 993
1,032 993
An increase in interest rates of 1% per annum would not have a material effect either on the revenue for the year or the
net asset value at 31 March 2016. 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 2016 31 March 2015
£'000 £'000
Investments - Loans 19,252 15,092
Cash on deposit 1,032 993
Receivables 1,180 163
21,464 16,248
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 2016 cash amounted to £1,032,000 (2015: £993,000).
17. Net Asset Value per Share
The calculation of net asset value per share for the Ordinary Shares is based on Net Assets of £13,175,000 (2015:
£16,649,000) divided by the 19,463,120 (2015: 19,474,883) Ordinary Shares in issue.
The calculation of net asset value per share for the A Ordinary Shares is based on Net Assets of £2,118,000 (2015:
£4,465,000) divided by the 5,131,353 (2015: 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 £14,118,000 (2015:
£13,409,000) divided by the 13,441,438 (2015: 13,441,438) C Ordinary Shares in issue.
The calculation of net asset value per share for the D Ordinary Shares is based on Net Assets of £13,875,000 (2015:
£5,198,000) divided by the 13,701,636 (2015: 5,296,574) D Ordinary Shares in issue.
18. Commitments and Contingencies
The Company has no outstanding commitments or contingent liabilities.
19. Relationship with Investment Manager
During the period, TPIM received £790,444 which has been expensed (2015: £612,188) for providing management and
administrative services to the Company. At 31 March 2016 £278,385 was owing to TPIM (2015: £288,397).
20. Related Party Transactions
During the year the Company entered into a short term loan agreement with Triple Point Lease Partners ("TPLP"). TPIM is
the Investment Manager of the Company and is the operator of TPLP.
The Directors Remuneration Report on pages 31 to 33 discloses the Directors remuneration and shareholdings.
21. Post Balance Sheet Events
There were no post balance sheet events.
22. Dividends
During the year there were two dividends paid to Ordinary Share Class holders. On 24 July 2015 a dividend of 5p per share
and on 18 December 2015 a dividend of 16.45p per share was paid, bringing the total dividends paid to Ordinary Shareholders
to 25.56p per share.
During the year there were two dividends paid to A Share Class holders. On 24 July 2015 a dividend of 5p per share and on
21 August 2015 a dividend of 40p per share was paid, bringing the total dividends paid to A Shareholders to 56.20p per
share.
The Board has resolved to pay the first dividend to C Class Shareholders of £672,072 equal to 5p per share which will be
paid on 8 July 2016 to shareholders on the register on 24 June 2016.
Registrars
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. During the year this was achieved with 82% invested
in VCT qualifying holdings.
Financial Calendar
The Company's financial calendar is as follows:
28 July 2016 Annual General Meeting
November 2016 Interim report for the six months ending 30 September 2016 despatched
June 2017 Results for the year to 31 March 2017 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 10.15 am on Thursday, 28 July 2016 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 2016
together with the Independent Auditors Report thereon (Ordinary Resolution).
2. To approve the the Directors' Remuneration Report for the year ended 31 March 2016 (Ordinary Resolution).
3. To re-elect Michael Stanes as a Director (Ordinary Resolution).
4. To re-appoint Grant Thornton UK LLP as auditor and determine their remuneration (Ordinary Resolution).
Special Business
5. That the Company be and is hereby authorised in accordance with s701 of the Companies Act 2006 (the "Act") to make one
or more market purchases (as defined in section 693(4) of the Act) of Ordinary Shares, A Shares, C Shares and D Shares
provided that:
(i) the maximum aggregate number of Ordinary Shares authorised to be purchased is an amount equal to 10% of the
issued Ordinary Shares as at the date of this Resolution;
(ii) the maximum aggregate number of A Shares authorised to be purchased is an amount equal to 10% of the issued A
Shares as at the date of this Resolution;
(iii) the maximum aggregate number of C Shares authorised to be purchased is an amount equal to 10% of the issued C
Shares as at the date of this Resolution;
(iv) the maximum aggregate number of D Shares authorised to be purchased is an amount equal to 10% of the issued D
Shares as at the date of this Resolution;
(v) the minimum price which may be paid for an Ordinary Share, A Share, C Share or D Share is 1 pence;
(vi) the maximum price which may be paid for an Ordinary Share, A Share, C Share or D Share is an amount, exclusive
of expenses, equal to 105 per cent. of the average of the middle market prices for the Ordinary Shares, A Shares, C Shares
and D Shares as derived from the Daily Official List of the UK Listing Authority for the five business days immediately
preceding the day on which that Ordinary Share, A Share, C Share or D Share (as applicable) is purchased; and
(vii) this authority shall expire either at the conclusion of the next Annual General Meeting of the Company or 15
months following the date of the passing of this Resolution, whichever is the first to occur (unless previously renewed,
varied or revoked by the Company in general meeting), provided that the Company may, before such expiry, make a contract to
purchase its own shares which would or might be executed wholly or partly after such expiry, and the Company may make a
purchase of its own shares in pursuance of such contract as if the authority hereby conferred had not expired. (Special
Resolution).
Notice of Annual General Meeting
By Order of the Board
David Frank
Director
Registered Office:
18 St Swithin's Lane
London
EC4N 8AD
9 June 2016
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 office 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 2016 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 10.15am on Thursday 28 July 2016, notice of which was sent to shareholders with the
Directors' Report and the Accounts for the period ended 31 March 2016, 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 2016 together with the Independent Auditors Report.
2. To approve the report set out in the Directors' Remuneration Report for the year ended 31 March 2016.
3. To re-elect Michael Stanes as a Director.
4. To re-appoint Grant Thornton UK LLP as auditor and determine their remuneration.
5. To authorise the Directors to make market purchases of the Company's own shares (Special Resolution).
Signed: ....................................................................... Dated:
................................................ ..2016
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.
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