REG - Triple Point Venture - Final Results for the year ended 29 February 2024
03/06/2024 07:00
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RNS Number : 7450Q Triple Point Venture VCT PLC 03 June 2024
3 June 2024
Triple Point Venture VCT Plc
(the "Company")
RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2024
The financial information set out in these statements does not constitute the
Company's statutory accounts for the year ended 29 February 2024, prepared in
accordance with section 435 of the Companies Act 2006, but is derived from
those accounts. Statutory accounts will be delivered to the Registrar of
Companies in due course. The auditors have reported on these accounts and
their report was unqualified and did not contain a statement under section
498(2) of the Companies Act 2006.
Results
Triple Point Venture VCT plc managed by Triple Point Investment Management
LLP today announces the results for the year ended 29 February 2024.
These results were approved by the Board of Directors on 31 May 2024.
You may view the Annual Report in due course on the Triple Point
website www.triplepoint.co.uk (http://www.triplepoint.co.uk/) . Please note
that page numbers in this announcement are in reference to the Annual Report.
FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT
Triple Point Investment Management LLP Tel: 020 7201 8989
(Investment Manager)
Ian McLennan
Jack Rose
The Company's LEI is 213800AOOAQA5XQDEA89
Further information on the Company can be found on its
website https://www.triplepoint.co.uk/current-vcts/triple-point-venture-vct-plc/s2539/
(https://www.triplepoint.co.uk/current-vcts/triple-point-venture-vct-plc/s2539/)
NOTES:
The Company is a Venture Capital Trust incorporated in July 2010 and was
established to fund small and medium sized enterprises. The Investment Manager
is Triple Point Investment Management LLP.
Financial Summary
Year ended 29 February 2024
A Shares B Shares Venture Shares Total
Net assets £'000 - - 62,196 62,196
Net asset value per share Pence - - 98.55
(Loss) before tax £'000 - - (785) (785)
(Loss) per share Pence - - (1.46)
Cumulative return to Shareholders (p)
Net asset value per share - - 98.55
Total dividends paid - - 11.00
Net asset value plus dividends paid (Total Return) 1 - - 109.55
Year ended 28 February 2023
A Shares B Shares Venture Shares Total
Net assets £'000 94 69 43,654 43,817
Net asset value per share (NAV) Pence 1.00 1.00 102.17
Profit/(Loss) before tax £'000 (275) 2,183 (3,273) (1,365)
Earnings/(Loss) per share Pence (2.83) 32.31 (8.47)
Cumulative return to Shareholders (p)
Net asset value per share 1.00 1.00 102.17
Total dividends paid/payable 115.92 99.00 9.00
Net asset value plus dividends paid/payable (Total Return) 116.92 100.00 111.17
Triple Point Venture VCT plc ("the Company" or "TPV") is a Venture Capital
Trust ("VCT"). The Investment Manager is Triple Point Investment Management
LLP ("TPIM" or "Triple Point"). The Company was incorporated in July 2010.
During the year ended 29 February 2024, the Company issued a total of
20,200,780 new Venture shares, raising gross proceeds of £20.7 million with
an average price per share of £1.03. Additionally, a Dividend Reinvestment
Scheme ("DRIS") on 4 September 2023 saw a further 210,732 shares issued at an
average price of £0.95. A total of 18,138 Venture Shares were repurchased by
the Company for cancellation during the year, at a price of 5% discount to
NAV.
The period under review included the wind down and cancellation of the A and B
Share Classes, as approved by Shareholders at the Company's general meeting
held on 9 February 2023 and the A and B Share Class meetings held on 1 March
2023. The cancellations were effective on 30 March 2023, and all funds
including nominal capital have now been returned to the A and B Share Class
Shareholders.
The Strategic Report on pages 4 to 42 the Directors' Report on pages 62 to 65,
the Corporate Governance Report on pages 43 to 52 and the Directors'
Remuneration Report on pages 57 to 61 have each been drawn up in accordance
with the requirements of English law and liability in respect thereof is also
governed by English law. In particular, the responsibility of the Directors
for these reports is owed solely to Triple Point Venture VCT plc.
The Directors submit to the members their Annual Report and Financial
Statements for the Company for the year ended 29 February 2024 ("Annual
Report").
Key Highlights
As at 29 February 2024
· Dividend per Venture Share paid during the year ended 29 February
2024 2 : 2.00p (Year ended 28 Feb 2023: 3.00p).
· Ongoing Charges Ratio 3 : 3:23%. The ongoing charges ratio is a
ratio of annualised ongoing charges expressed as a percentage of average net
asset values throughout the year (2023: 3.21%).
· Net Asset Value per Venture Share: 98.55p (Year ended 28 Feb
2023: 102.17p).
· Total Return per Venture Share: 109.55p(Year ended 28 Feb
2023:111.17p).
· Total funds deployed during the year: £11.9 million (2023:
£11.4 million).
· Fundraising: £20.2 million (Year ended 28 Feb 2023: £18.3
million).
Strategic Report - Chair's Statement
I am pleased to present the Annual Report and Audited Financial Statements for
the Company for the year ended 29 February 2024.
The Company now has a single share class (the "Venture Shares") investing in
early-stage venture opportunities. The portfolio has continued to grow and
diversify, with eight new qualifying investments made this year and
participation in 11 follow-on funding rounds with existing portfolio companies
at a total value of £11.9m. Further detail can be found in the Investment
Manager's Review on pages 26 to 32.
The Venture total return NAV per share (plus cash dividends paid to
Shareholders) has declined by 1.46% (from 111.17p to 109.55p) over the period
since 28 February 2023, but has increased by 0.87% (108.61p to 109.55p) since
31 August 2023. The decline in the first half of the year in review reflected
a number of downward fair value adjustments for companies that suffered from
the mix of the more challenging macroeconomic environment and the reduction in
frequency of new venture equity funding rounds. These downward adjustments
outweighed several portfolio companies with upward valuations resulting from
good commercial traction and successful new funding rounds. Later in the year
net portfolio performance improved, with more companies raising capital at
higher valuations, and it is this improved performance that accounts for the
marginal increase in total return NAV since 31 August 2023. We continue to be
confident in the underlying growth prospects of our portfolio companies, and
there are signs that the more difficult period that many venture-backed
businesses faced in 2022-23 may be coming towards an end. The Investment
Manager's Review on pages 26 to 32 gives a more detailed update on the
Company's portfolio of 48 investments.
As at 29 February 2024, the Company's assets were 71% invested in a portfolio
of VCT Qualifying and Non-Qualifying unquoted investments. 29% of the
Company's assets are currently held in money markets and cash. Over the last
year, the investment manager has opened accounts with three large investment
managers to manage the Company's uninvested cash in lower risk liquidity
funds.
Board Changes
The Board has undertaken a formal succession and recruitment process, with the
assistance of an Independent external search consultancy Tyzack Partners
Limited, and we were pleased to welcome Sam Smith to the Board as Independent
Non-executive Director on 8 February 2024. Sam was also appointed as Senior
Independent Non-executive Director and member of the Audit Committee with
effect from the same date. Sam undertook a formal induction process upon
joining the Board. Sam's biographical details can be found on page 44.
As announced on 8 February 2024, I will not be standing for re-election at the
Company's 2024 Annual General Meeting ("AGM"), to be held on 23 July 2024, and
will step down from the Board following the conclusion of the AGM. I would
like to say thank you to the Board and Investment Manager for their continued
support and I am pleased to announce that Jamie Brooke will be my successor as
Non-executive Chair of the Board, to take effect immediately following
completion of the AGM. The three other Directors will stand for re-election at
the Company's AGM.
Appointment of Triple Point Investment Management LLP as AIFM
From 12 September 2023, the Investment Manager was appointed as the Company's
Alternative Investment Fund Manager ("AIFM") and is now responsible for the
Company's risk management and portfolio management. Therefore, the Investment
Manager has full discretion under the Investment Management Agreement to make
investments in accordance with the Company's Investment Policy from time to
time. In addition, the Company has appointed a depositary 4 , Indos Financial
Limited, and their details can be found on page 99. There are no changes to
Triple Point's fees as a result of their appointment as AIFM. Further details
can be found in note 6.
Wind down of A Share Class and B Share Classes
Following approval by Shareholders, the process to wind down and cancel the A
and B Share Classes was undertaken. Court proceedings to wind down the A and B
Share Classes commenced on 8 March 2023, and the cancellations were effective
on 30 March 2023. These shares were subsequently removed from the Official
List of the Financial Conduct Authority ("FCA") and from trading on the London
Stock Exchange ("LSE") with effect from 13 April 2023. All funds, including
nominal capital, have now been returned to the A and B Share Class
Shareholders.
Venture Portfolio
This was the fifth year of our Venture strategy. High interest rates, energy
prices and inflation continued to dominate the narrative in the early part of
this year. Those factors had contributed to a more difficult funding
environment for early-stage companies in 2022 and 2023, as a result of which
founders entered the year generally a little less optimistic when compared
with previous years.
The collapse of Silicon Valley Bank ("SVB") in March 2023 caused further
shockwaves in the wider ventures market. SVB was a crucial provider of loans
to start ups in the UK as well as the USA. While a number of portfolio
companies held accounts with SVB UK, the prompt acquisition of SVB's UK
business by HSBC meant there was no impact on our investees' access to
liquidity. The Investment Manager worked with a number of portfolio businesses
to review their banking relationships, which at that stressful time was, I
know, much appreciated.
A reduced number of exits in the market since 2021/22 has meant a liquidity
crunch for some angel investors, and this has had a dampening effect on the
important "friends and family" funding network upon which so many founders
rely for their first funding rounds. More trade sales would certainly benefit
the seed-stage market by recycling investment and maintaining inflow of angel
cash. Nevertheless, many companies selling software as a service ("SaaS") are
finding the funding they need as an increasing number of investors seek the
holy trinity of high gross margins, recurring revenue and an impressive
founding team.
In the second half of the year in review, large cap tech shares rallied in the
stock market, on the back of optimism about the growth opportunities from
Artificial Intelligence ("AI") and the relative resilience of economies,
particularly the US, in the face of higher interest rates. An additional boost
was provided by forecasts and by markets beginning to talk of a peak in
interest rates. Perhaps not coincidentally, we started to see more activity in
our portfolio towards the end of the year, with an increasing number of
companies able to close investment rounds at an uplift to previous company
valuations even while an acceptance of the need for more down-rounds has grown
among founders and investors. While it's still very early days, and while
getting deals done has not been as straight forward as it has been in previous
years, there are growing signs of the market beginning to normalise. Start-ups
with compelling founding teams and business models can still raise funds at
healthy valuations; indeed, we have seen an increase in competition among
Venture Capitalists to fund the better opportunities. The Triple Point team
continues to think of new ways to gain a competitive edge within the start-up
community.
As we have previously stated, companies failing is part and parcel of venture
investing, yet despite this tougher investment environment, of the 51
companies invested in by the Company to date, only one portfolio, Anorak,
company has completely failed. This is testament to the focus that the
investment team places on the quality of the teams that we back and the
continued support provided to portfolio companies. No doubt there will be more
failures ahead but, despite being a young portfolio, our companies have proven
fairly resilient to the many shocks that came their way in the years between
2020 and 2023.
As I mentioned, the Triple Point team continued to be active during the year,
making a total of 19 investments, of which eight were investments in new
companies and 11 were follow-on investments in existing portfolio companies.
As expected, the number and proportion of follow-on investments has increased
with the size of our portfolio. We do not back every portfolio company every
time they raise; we are selective, but of course our bias is to support our
businesses where they have delivered.
As far as sectors are concerned, health-tech has performed well with regards
to valuation growth as investor interest remains robust and growth
opportunities plentiful. Scan.com raised a further funding round and Pelago
raised a $58m Series C funding round. There is a further health-tech company
in the portfolio that is, at the time of writing, working to close a Series B
round. In the case of Scan.com, this was the second up-round since the
portfolio originally invested and was priced at a 1.9x share price uplift to
its prior funding round which closed just eight months earlier. As a number of
portfolio companies graduate through the stages of Venture Capital funding, we
expect to see an increase in later funding rounds.
As already mentioned above, this has also been an exciting year for AI, with a
number of our portfolio companies adopting and experimenting with Large
Language Models ("LLMs"), not least to enhance efficiencies and information
around their existing core software products. Please see the 'Outlook' section
below for some further thoughts on AI. We also had a strong performer in the
Energy Transition sector, with Modo, the all-in-one software platform for
battery energy storage analysis, raising funds at a significantly higher
valuation after showing strong revenue growth and expanding into the US.
It has generally been a tougher year for Fintech, including Insurtech; the
portfolio suffered two significant down valuations, one due to commercial poor
performance and another as a result of the founder deciding to quit due to
exhaustion, leading to a quick sale of the business, which the investment
manager has been supporting. We are well aware of the mental strain that
starting and growing a company can bring, and Triple Point actively does what
it can to support its companies in these, hopefully rare, cases.
VCTs and our new offer
The overall VCT market itself continues to be robust, with any doubts about
the continuation of the EIS and VCT tax relief scheme beyond 2025 (when the
current EIS/VCT "Sunset Clause" was due to expire) now thankfully resolved
following the enactment of the Finance Act 2023, which extended the VCT tax
reliefs until 6 April 2035. We should note that this is still pending EU
Approval, at the time of writing, which the UK Government thought it prudent
to obtain given the special status of Northern Ireland post Brexit. Investors
should remain aware that NAV volatility will remain, and that investments may
be impacted by trends in global venture capital valuations as well as by the
portfolio companies' own underlying commercial performance.
The Company's fifth offer for subscription closed on 28 July 2023 having
raised £14.6m and over the full year to 29 February 2024 the Company raised
£20.2m. The sixth offer for subscription opened in September 2023 and I am
pleased to report that it is progressing well with a total of £0.8 million
raised in March and £6.7 million raised in April. We believe the recent
fundraising puts the Company in a strong financial position (see Liquidity
section below on page 10).
The Venture Strategy's aim is to continue building a portfolio of qualifying
Investments in early-stage companies capable of generating significant
long-term capital growth with a focus on the business-to-business technology
sector, while enabling investors to take advantage of the substantial tax
reliefs available to investors in VCTs, including 30% income tax relief on
amounts invested.
In line with the Company's key objectives, a second interim dividend of 2
pence per share was declared by the Company on 3 January 2024 and paid to
Shareholders on 18 March 2024, thus total dividends declared in the current
financial year were 4 pence per share, an increase of 33% from 2023, of which
2 pence per share was paid as at 29 February 2024. The Board aims to declare
further dividends in the year to February 2025, contingent on availability of
distributable reserves and realised gains. The VCT continues to target a
dividend of 5 pence per Share in the medium term, again contingent on the
availability of distributable reserves and realised gains.
A snapshot of the new companies into which the Company has invested during the
year is set out below.
Portfolio Company Investment Amount Date of Investment Location Description
£'000
Modo Energy* 2,250 Mar-23 Birmingham Modo Energy are building a global data analytics platform for renewable energy
assets.
Virtual Science 182 Mar-23 London Virtual Science enables international pharmaceutical companies to roll out
hybrid advisory boards across the world and analyse video and text feedback
for insights in days - rather than weeks with medical writers.
Fertifa 1,000 Apr-23 London Fertifa is an employer benefit business that provides i) fertility &
family forming, ii) menopause and iii) men's reproductive health services to
employees.
Nory 1,527 May-23 Dublin Nory provide AI-enabled software for hospitality businesses to manage their
business and restaurant operations.
Tuza (formerly Statement) 150 Jun-23 London Tuza is a small/medium-sized business ("SMB") payment provider switching
service, being built to capitalise on the fact that SMB overcharging is very
common in the card processing sector.
SeeChange 1,500 Sept-23 Manchester SeeChange are building a general-purpose recognition platform for real-world
application of computer vision (which is the analysis and understanding of
digital images) starting with use cases for retailers.
Heat Geek (formerly Skoon) 1,000 Oct-23 London Heat Geek is a heat pump installer software that helps heat engineers install
high-efficiency heat pumps better and faster.
Abtrace 700 Nov-23 London Abtrace is a population health monitoring tool for primary care providers.
*The total investment into new company Modo Energy during the year consists of
an initial investment on 3 March 2023 of £1,500,088 and a follow-on
investment of £749,996 on 26 October 2023.
Liquidity
The Company has sufficient liquidity, predominantly from its fundraising, with
cash and cash equivalents totalling £18.2 million (29% of net asset value) at
29 February 2024. This means that the Company will be able to respond quickly
to new investment opportunities for the portfolio as they arise.
Share Buy-Backs
We continue to maintain our aim, subject to distributable reserves and
liquidity, of being willing to buy back the Company's Shares in the market at
a 5% discount to NAV.
During the year ended 29 February 2024, a total of 18,138 Venture Shares were
repurchased by the Company for cancellation at a 5% discount to NAV. The
average prices paid for the buy-back of Shares were as follows:
Date Number of Venture Shares Average Price per Share (£)
4 August 2023 6,958 0.95
3 November 2023 10,306 0.94
7 December 2023 874 0.93
These transactions represent 0.04% of the opening issued Share capital of the
Company.
VCT Qualifying Status
The Company has maintained its approved venture capital trust status with HM
Revenue & Customs. The Company's compliance with the VCT-qualifying
conditions is closely monitored by the Board, who receive regular reports from
the Investment Manager and a report annually from our VCT tax compliance
advisers, Philip Hare & Associates LLP.
VCT Legislation and Regulation
Following continuous dialogue with HMRC, the VCT industry benefits from
greater clarification around the operation of the new VCT rules introduced in
2015. As a result, the majority of investments are now made on the basis of
self-assuring their qualifying status, subject to the receipt of professional
advice from our Tax Advisers.
We will continue to work closely with the Investment Manager to ensure the
Company remains compliant with the scheme rules.
Post Year End Update
Following the year-end, the Company has allotted a further 8,130,242 Shares
into the Venture Strategy, raising additional net proceeds of £7.6 million
for the Company during March and April 2024. The offer will remain open until
31 July 2024, unless fully subscribed at an earlier date.
Allotment Date Shares Allotted Net Investment (£)
5 March 2024 879,639 844,097
18 March 2024 (DRIS payment) 241,772 n/a
2 April 2024 3,769,252 3,616,848
4 April 2024 1,954,264 1,875,258
5 April 2024 1,285,315 1,233,382
The Company has seen the completion of two additional investments post
year-end, both in March 2024. The first was a follow-on investment in Tuza
(formerly Statement), which is an SMB payment provider switching service,
based in London, being built to capitalise on the fact that SMB overcharging
is very common in the card processing sector. The second was an investment in
Treefera. Treefera is a London based forestry data company that aggregates
global satellite data and images to bring transparency, accuracy, and trust to
carbon offset projects and supply chains.
A two pence per share dividend was declared in January 2024, and following the
period end, was paid to the Shareholders on 18 March 2024.
Outlook
While investment activity in UK seed and growth companies was down on the
previous year (in line with international trends), a record number of
companies were incorporated in the UK in 2023, and the investment team
continues to identify compelling opportunities. Looking forward into 2024, we
continue to see considerable opportunities in AI, Climate tech,
software-enabled Biotech and Digital Health in particular.
This year has seen significant investment appetite for the transformative
technology of AI. While there has been a significant amount of hype, it does
seem that we are on the cusp of an internet-type moment; AI looks to
fundamentally transform our society and is already being widely used in
offices and homes. We expect this trend to continue, albeit the rush of AI
related start-ups may be followed by something of a shake-out in 2025. The
global push to reduce carbon means we would equally expect to see continued
innovation in the cleantech and energy transition sectors - there is
undoubtedly an urgent need for sustainable solutions.
We are supportive of the growing efforts to promote gender equality. More
female founders are being encouraged to enter the venture ecosystem and there
is an increasing number of accelerators, incubators and mentorship programmes
focused on female entrepreneurs. There are also a record number of female
scale ups in 2023, which are those that have reached £10m+ of revenues and/or
£5.2m assets as well as a record number of women setting up new businesses.
We are keen to back all entrepreneurs with good businesses and encourage
female founders to speak to us. We believe that this can be only a positive.
Towards the end of the year in review a new investment was completed in
Treefera, a business that sports both a compelling cleantech solution and a
female co-founder.
As markets and businesses begin to look towards the possibility of lower
interest rates later in 2024, we have already seen a normalisation and
stabilisation in listed sector SaaS valuations (as recognised by the BVP Cloud
Index (https://cloudindex.bvp.com/) ) which collapsed in 2022 and were steady
in 2023. Add to that the bottom-up increase in activity that we have seen
within the Venture Strategy's own portfolio, together with the innovation that
Generative AI is supporting, and we look to the coming year with more
confidence.
If you have any questions about your investment, please do not hesitate to
contact the Investment Manager, Triple Point, on 020 7201 8990. I would like
to take this opportunity to thank Shareholders and the Investment Manager for
their continued support and I look forward to welcoming further Shareholders
during the months ahead.
Jane Owen
Chair
31 May 2024
Strategic Report - Company Strategy and Business Model
The Strategic Report has been prepared in accordance with the requirements of
Section 414c of the Companies Act 2006. Its purpose is to inform the members
of the Company and help them to assess how the Directors have performed their
duty to promote the success of the Company in accordance with Section 172 of
the Companies Act 2006.
The Directors assess the Company's success in meeting its objectives in
relation to returns, stability, VCT qualification and realised exits.
Investment Policy
Investment Objectives
The Company's Investment Policy is directed towards new investments in
businesses which have the potential for high growth with the development or
use of new technology being at the core of the commercial opportunity. All
investments must provide the potential for a strong, positive, risk-adjusted
return to investors. All investments will be made with the intention of
growing and developing the revenues and profitability of the target
businesses.
The Company focuses on providing funding to unquoted companies at an early
stage in their lifecycle to help them grow and scale. The Company will
typically make initial investments of between £100,000 and £2 million and
may make further follow-on investments into existing portfolio companies. The
intention is to build a portfolio of predominantly unquoted companies with
significant growth potential across a diversified range of sectors.
The Company will not vary these objectives to any material extent without the
approval of the Shareholders.
Target Asset Allocation
The Company aims to invest most of its capital fully in VCT-Qualifying
Investments. The long-term investment profile of the Company is expected to
be:
· at least 80% in VCT-Qualifying Investments, with a focus on
unquoted companies with high growth potential; and
· a maximum of 20% in permitted Non-Qualifying Investments, cash or
cash-based similar liquid investments.
Qualifying Investments
Investment decisions made must adhere to HMRC's VCT qualification rules. In
considering a prospective investment in a company, particular regard is given
to:
· the track record, expertise and ability of the management team
with clear commercial and financial objectives;
· a significant, often global, total addressable market for the
product or service;
· the ability of the company to create and sustain a competitive
advantage;
· the quality of the company's assets, in particular where
appropriate, the ownership and effective use of proprietary technology and/or
an innovative product;
· the high likelihood of a transformational corporate contract and
established market fit and then the opportunity to develop regular, repeated
income from new clients, leading to growth and long-term profitability;
· a high level of access to regular financial and other information
during the holding period;
· an attractive valuation at the time of the investment;
· the long-term prospect of being sold or listed in the future at a
significant multiple of the initial investment value; and
· no more than 10% of the NAV of the Company will be invested in
companies which are not revenue-generating (at the point of investment) or
where there is no expectation of revenues being generated in the near future.
As the value of investments increase, Triple Point will monitor opportunities
for the Company to realise capital gains to enable the Company to make
tax-free distributions to Shareholders.
Non-Qualifying Investments
The Non-Qualifying Investments will be managed with the intention of
generating a positive return. The Non-Qualifying Investments will comprise
from time to time a variety of assets including (a) short-term deposits of
money, Shares or units in alternative investment funds (which have the meaning
given by regulation 3 of the Alternative Investment Fund Managers Regulations
2013) or in undertakings for the collective investment in transferable
securities (which have the meaning given by Section 363A(4) of the Taxation
(International and Other Provisions) Act 2010), which may be repurchased,
redeemed, or paid out on no more than seven days' notice; and (b) ordinary
Shares or securities in a company which are acquired on a regulated market
(defined in Section S274(4) ITA 2007).
Borrowing Powers
Any borrowing by the Company for the purposes of making investments will be in
accordance with the Company's articles of association. 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 Company, being the Company and any subsidiary undertakings for
the time being (excluding intra-Company borrowings), will not, without
Shareholder approval, exceed 30% of its NAV at the time of any borrowing.
Risk Diversification
The Company aims to invest in a number of different businesses within a
variety of industry sectors but may focus investments in a single sector where
appropriate to do so. No single investment by the Company will represent more
than 15% of the aggregate NAV of the Company at the time the investment is
made.
Valuation Policy
All unquoted investments are valued in accordance with International Private
Equity & Venture Capital (IPEV) or similar guidelines. A brief summary of
the IPEV guidelines as it applies to the Company's investments is as follows:
· investments should be reported at fair value where this can be
reliably determined by the Board on the recommendation of the Investment
Manager;
· in estimating fair value for an investment, the valuation
methodology applied should be the most appropriate for a particular
investment. Such methodologies, including the price of the recent investment,
revenue multiples, net assets, discounted cash flows or earnings and industry
valuation benchmarks, should be applied consistently. The price of recent
transactions should not be assumed and should be calibrated against a
scorecard or other appropriate measures;
· where the valuation is based on the price of a recent investment
this may be adjusted to reflect subsequent business performance and variations
from expectations at the time of investment.
Co-Investment Policy
The Company may invest alongside other funds or entities managed or advised by
the Investment Manager which would help the Company to broaden its range of
investments or the scale of opportunities more than if it were investing on
its own.
It is possible that conflicts may arise in these circumstances between
different funds or between the Company and the Investment Manager. The
Investment Manager maintains robust conflict of interest procedures to manage
potential conflicts and issues are resolved at the discretion of the
independent board of the Company.
Dividend Policy
The Company will distribute by way of dividend, where there are sufficient
applicable reserves, such amount as ensures that it retains not more than 15%
of its income from shares and securities. The Directors aim to maximise
tax-free distributions 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.
The Company intends to distribute regular dividends of up to 5 pence per share
per annum in the medium term. The Company's ability to pay dividends is
subject to the existence of realised profits, legislative requirements, and
the available cash reserves.
Share Buy-Back Policy
The Company aims, but is not committed, to offer liquidity to Shareholders
through buy-backs, subject to the availability of distributable reserves, at a
target price of a 5% discount to NAV.
Share Realisation Policy
After an anticipated holding period of between five and seven years, which may
include follow-on investments into investee companies as appropriate, Triple
Point will generally seek to identify opportunities to exit investments.
Exits will typically be realised through trade sales to businesses,
acquisitions by private equity funds, or selling shareholdings to later stage
venture and growth capital funds during the course of further investee company
fundraising activity. Sales during the course of further investee company
fundraising activity may include investee companies buying back Shares at a
price reflecting the valuation at that stage. The proceeds of any realisation
will be used to identify further investment opportunities and to pay dividends
to investors.
Key Performance Indicators ("KPIs")
As a VCT, the Company's objectives are to provide Shareholders with up front
tax relief and returns through capital appreciation and the payment of
dividends. The Company aims to meet these criteria by investing its funds in
line with the Company's investment policy, more detail of which can be found
on pages 14 to 15.
The Board expects the Investment Manager to deliver a performance which meets
the objectives of providing investors with an attractive income and capital
return. The Board has identified four primary KPIs, which are total return,
Net Asset Value per Share, earnings per Share and ongoing charges ratio, that
it uses in its own assessment of the Company's performance, set out below. Of
these KPIs, total return and ongoing charges ratio are classified as
Alternative Performance Measures and are detailed further under Alternative
Performance Measures at the end of this report.
These are intended to provide Shareholders with sufficient information to
assess how the Company has performed against its objectives in the year to 29
February 2024, and over the longer term, through the application of its
investment and other principal policies.
KPI AND DEFINITION RELEVANCE TO STRATEGY PERFORMANCE COMMENT
1. Total return (%)(5)
The change in NAV in the period and dividends paid per share in the period. The total return highlights the underlying performance of the portfolio's (1.46%) year to 29 February 2024 (2023: (7.01%)) The negative total return is due to the decrease in the NAV per share of the
investment valuations, including dividends paid. Company. Which as described below, is due to an increase in NAV based fees as
a result of the increasing capital base of the Company.
The Company did pay interim dividends of 2.0 pence per share during the
period, taking total dividends paid by the Company to 11.0 pence per share at
the year end.
2. Earnings per share (pence)
The post-tax earnings attributable to shareholders divided by weighted average The EPS reflects the Company's ability to generate earnings from its The Venture Shares made a loss of 1.46 pence per Share for the year (2023: The main driver in the loss per share for the year was costs incurred during
number of shares in issue over the period. investments, including valuation increases. 8.47). the period. The valuation of the Company's investment portfolio remained flat
with a moderate increase, but this was not sufficient to offset the increased
costs incurred during the year.
3. NAV per share (pence)
NAV divided by number of shares outstanding as at the period end. The NAV per share reflects our ability to grow the portfolio and to add value The NAV per share as at 29 February 2024 was 98.55p (2023: 102.17p). The NAV per share fell as a result of the costs incurred during the period.
to it throughout the life cycle of our assets. The valuation of the Company's investment portfolio remained broadly flat with
a moderate increase, but this was not sufficient to offset the costs incurred
during the year.
4. Ongoing Charges Ratio 5
Annualised ongoing charges are the Company's management fee and all other Ongoing charges show the drag on performance caused by the operational The ongoing charges of the Company for the financial year under review A key measure of Operational performance.
operating expenses (i.e. excluding acquisition costs and other non-recurring expenses incurred by the Company. represented 3.23% (2023: 3.21%) of the average net assets.
items) expressed as a percentage of the average published undiluted NAV in the
period, calculated in accordance with Association of Investment Companies
guidelines.
The annual running costs of the Company are capped at 3.5% of the Company's
NAV, above which, the Investment Manager will bear any excess costs. This is calculated in line with AICs guidance. Ongoing charges are those
expenses of a type which are likely to recur in the foreseeable future,
whether charged to capital or revenue, and which relate to the operation of
the Company excluding the costs of acquisition and disposal of investments,
financing charges and gains/losses arising on investments.
VCT Regulation
Compliance with VCT legislation
By making an investment in a Venture Capital Trust, Shareholders become
eligible for several tax benefits under VCT tax legislation. This is, however,
contingent on the Company complying with VCT tax legislation.
To achieve compliance, the Company must meet a number of tests set by HMRC. A
summary of these steps is set out on page 64 under "VCT Regulation".
The Board can confirm that throughout the year ended 29 February 2024 the
Company continued to meet these legislative requirements.
Tax Benefits
The Company's objective is to provide Shareholders with an attractive income
and capital return by investing its funds in a broad spread of unlisted UK
companies which meet the relevant criteria for investment by Venture Capital
Trusts.
Investing in a VCT brings the benefit of tax-free dividends, as well as
up-front income tax relief and exemption from capital gains tax on disposal.
Investors can invest up to £200,000 in VCTs per tax year and receive tax
relief of up to £60,000 (30%). To benefit from the relief, an investor must
have paid or owe as much tax during the tax year in which you invest. To keep
the relief, VCT investments must be held for at least five years.
Although VCTs are typically growth investments, and any capital growth is tax
free, the majority of returns are normally paid through tax-free dividends.
After the sale of a successful company within the portfolio, the profit can be
distributed to investors as a larger or special dividend, and the remaining
capital reinvested in new opportunities. A sale of VCT shares after the five
year holding period is exempt from capital gains tax.
The Investment Manager, utilising advice from Philip Hare & Associates
LLP, ensures continued compliance with any legislative changes.
The Company has been approved as a VCT by His Majesty's Revenue and Customs.
Principal Risks and Uncertainties and Emerging Risks
The Directors seek to mitigate the Company's principal risks by regularly
reviewing performance and monitoring progress and compliance. In the
mitigation and management of these risks, the Directors carry out a robust
assessment of the Company's emerging and principal risks, including those that
would threaten its business model, future performance, solvency or liquidity
and reputation.
The main areas of risk identified by them, along with the risks to which the
Company is exposed through its operational and investing activities, are
detailed below. The Board maintains a comprehensive risk register which sets
out the risks affecting both the Company and the investee companies in which
it is invested. The risk register is updated at least twice a year and
reviewed by the Audit Committee to ensure that procedures are in place to
identify principal risks and to mitigate and minimise the impact of those
risks should they crystallise.
The risk register also identifies emerging risks to determine whether any
actions are required. As it is not possible to eliminate risks completely,
the purpose of the Company's risk management policies and procedures is to
identify and manage risks, reducing possible adverse impacts.
Details of the Company's internal controls are contained in the Corporate
Governance section on pages 45 to 52 and further information on exposure to
risks including those associated with financial instruments is given in note
17 of the financial statements.
Going forward, the Board has reviewed and approved some enhancements to the
current risk management framework, which became effective from March 2024.
These enhancements will underpin the approach to the identification and
categorisation of risks, together with changes to the assessment approach -
being more reflective of the individual nature of the risks being considered.
This will enable the Board to view the risks through the lens of Strategic
risks, Financial risks (Investment, Capital & Liquidity) and Non-Financial
risks (Operational, Legal & Regulatory). In turn, the Board will be
re-assessing risk appetites for its most material risks.
The Directors have reviewed the current register and can confirm that the risk
landscape has not changed and the risks presented remain stable with no
material changes to report.
VCT Qualifying Status Risk The Company is always required to observe the
conditions laid down in the Income Tax Act 2007 for the maintenance of
approved VCT status. The loss of such approval could lead to the Company
losing its exemption from corporation tax on capital gains, to investors being
liable to pay income tax on dividends received from the Company and, in
certain circumstances, to investors being required to repay the initial income
tax relief on their investment.
Mitigation: The Investment Manager keeps the Company's VCT-qualifying status
under continual review and reports to the Board at Board Meetings. Philip Hare
& Associates LLP undertake an independent annual review on the VCT status.
Any new Venture investments are reviewed by legal advisers, and their opinion
sought on whether the investment meets the criteria to be a qualifying
investment.
Investment Risk The Company's VCT-qualifying investments will be held in small
and medium-sized unquoted investments which, by their nature, entail a higher
level of risk and lower liquidity than investments in large, quoted companies,
impacting both returns and timings.
Mitigation: The Directors and Investment Manager aim to limit the risk
attached to the portfolio by careful selection and timely realisation of
investments, by carrying out due diligence procedures appropriate to the size
of each investment and by maintaining a spread of holdings both in terms of
industry and in terms of the total number of portfolio companies which is now
approaching 50. The Board reviews the investment portfolio with the Investment
Manager on a regular basis. Where possible, a member of the Investment Manager
team either holds a seat on the board of the portfolio companies or has the
right to act as a Board Observer. This enables the Investment Manager to
observe developments at the portfolio company and offer assistance when and
where this may be required. The Venture Strategy aims to mitigate some of the
risks typically associated with venture capital investing by proactively
working with businesses with the potential for high growth that are typically
actively solving problems for established corporates, increasing their chances
of success, as set out in further detail on pages 26 to 32.
Financial Risk As a VCT, the Company is exposed to market price risk, interest
rate risk, credit risk, foreign currency risk and liquidity risk. As most of
the Company's investments will involve a medium to long-term commitment and
will be relatively illiquid, the Directors consider that it is inappropriate
to finance the Company's activities through borrowing, other than for
short-term liquidity.
Mitigation: The key elements of financial risk are discussed in more detail in
note 17. At the reporting date, the Company had no borrowings and substantial
liquid funds on the Statement of Financial Position.
Legislation Risk There is a risk of changes to legislation and/or Government
Policy, caused by future governments taking a different approach which could
result in changes to the tax status of or rules governing VCTs.
Mitigation: There is a practice of consultation before any major changes are
implemented. It is important that the Company can respond proactively to any
changes and understand what, if any, impact they will have.
Emerging Risks
Climate Change Risk
Due to the medium to long-term time horizon of Climate Change this risk is
deemed as an emerging risk.
Climate Change or related legislation is considered unlikely to have a major
near-term impact on the Company, as the vast majority of the portfolio is made
up of a diversified range of software-based businesses. Each prospective new
company holding is considered with regard to how it may be impacted by climate
change, particularly in relation to sources of energy associated with data
storage, and how this could in turn affect future growth.
Triple Point as Investment Manager is committed to sound management of climate
risk and opportunity to ensure the long-term protection of asset value through
reduction of exposure to the risk and also to contribute to essential carbon
reduction requirements. The Investment Manager has now set near-term
science-aligned Net Zero targets. The targets have been submitted to the Net
Zero Asset Managers Initiative and at the time of reporting the business was
awaiting acceptance of the submitted targets. Triple Point also publish a
Carbon Reduction Plan which is available on its website.
Macroeconomic Conditions
A further deterioration in macroeconomic conditions, such as a severe
recession or stagnant inflation ("stagflation"), could have both a direct and
indirect impact on existing portfolio companies, particularly in the event
that investor risk appetite declines, as this would make it harder to secure
new venture funds or other capital, which is often necessary for their
continued long-term operations.
The ongoing and increasing level of global tension and conflict has proven to
impact the global supply chains and dynamically influence the macroeconomic
landscape, all of which has knock on impacts to both the performance of our
portfolio companies and appetite of our investor base.
In addition to macroeconomic risk, any sustained deterioration of trust,
liquidity or capital in the banking sector could have a material impact on
existing portfolio companies given their reliance on existing cash reserves to
fund regular outgoings. The Investment Manager continues to closely monitor
the cash position of portfolio companies.
Going Concern
The Company's business activities, together with the factors likely to affect
its future development, performance and position, are set out in the
Investment Manager's Review. The Company faces a number of risks and
uncertainties, as set out above.
The Company's going concern position is also discussed in note 2 to the
financial statements.
The Financial Risk Management objectives and policies of the Company,
including exposure to price risk, interest rate risk, credit risk and
liquidity risk are discussed in note 19 to the financial statements.
The Company continues to meet day-to-day liquidity needs through its cash
resources on hand. The Company takes an active approach to manage liquidity
and increase the return on cash held.
The Company continues to raise funds via new share issues to investors, and at
the reporting date the Company had cash of £18.2 million and net current
assets of £18.1 million (2023: £11.8 million). A further £7.6 million has
been raised since the reporting date, further strengthening the Company's
liquidity position.
The major cash outflows of the Company continue to be the payment of
dividends to Shareholders, costs relating to the funding of investments and
management fees due to the Investment Manager. Dividends and, for the most
part, new investments are discretionary.
The Directors have reviewed cash flow projections, including various scenarios
comprising a plausible downside scenario where fundraising is at a reduced
level and inflation remains higher for longer and a severe downside scenario,
whereby the Company does not raise any future capital and inflation remains
higher for longer. In both downside scenarios, the Company has sufficient
financial resources to meet its obligations for at least 12 months from the
date of this report being the end of May 2025.
Accordingly, the Directors continue to adopt the going concern basis in
preparing the financial statements.
Viability Statement
In accordance with the FRC UK Corporate Governance Code published in 2018 and
provision 36 of the AIC Code of Corporate Governance, the Directors have
assessed the prospects of the Company over a period of five years, consistent
with the expected minimum investment holding period of a VCT investor. Under
VCT rules, subscribing investors are required to hold their investment for a
five-year period in order to benefit from the associated tax reliefs. The
Board regularly considers strategy, including investor demand for the
Company's shares, and the Board considers five years as a reasonable time
period for reviewing the Company's prospects.
In order to assess this requirement, the Board regularly considers the
Company's strategy and considers the Company's current position. The Board has
carried out a robust assessment of the principal and emerging risks, including
those that would threaten the Company's business model, future performance,
solvency or liquidity and reputation. Consideration has also been given to the
Company's reliance on, and close working relationship with, the Investment
Manager. This has enabled the Directors to state that they have a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the period of their assessment.
More information on the principal risks of the Company is set out on pages 18
to 19
The Board has considered both the Company's long-term and short-term cash flow
projections and considers these to be realistic and reasonable.
To provide this assessment the Board has considered the Company's financial
position and ability to meet its expenses as they fall due as well as
considering longer-term viability. Factors taken into account include:
· the expenses of the Company are predictable and modest in comparison
with the assets and there are no capital commitments foreseen which would
alter that position;
· the Company has no employees, only Non-Executive Directors, and
consequently does not have redundancy or other employment related liabilities
or responsibilities;
· most of the Company's investments will involve a medium to
long-term commitment and will be relatively illiquid but the Company reduces
the risk as a whole by careful selection and timely realisation of
investments;
· the Directors will continue to monitor closely changes in the VCT
legislation and adapt to any changes to ensure the Company maintains approval.
The Directors have appointed an independent adviser to undertake the VCT
status monitoring role; and
· the Directors have considered the ongoing and future effects of
external events (such as global tensions and conflicts)on the Company and its
longer-term viability. More detail on this is included in the Principal Risks
and Uncertainties section on pages 18 to 19.
Based on the results of this review, the Directors have a reasonable
expectation that the Company will be able to continue its operations and meet
its expenses and liabilities as they fall due over the period of their
assessment.
Section 172(1) Statement
The following disclosure describes how the Directors have had regard to the
matters set out in Section 172(1)(a) to (f) when performing their duty under
Section 172 and forms the directors' statement required under Section 414CZA
of the Companies Act 2006.
Stakeholder Engagement
This section describes how the Board engages with its key stakeholders, and
how it considers their interests when making its decisions. Further, it
demonstrates how the Board takes into consideration the long-term impact of
its decisions, and its desire to maintain a reputation for high standards of
business conduct.
.
Stakeholder Importance Board Engagement
Shareholders Continued Shareholder support is critical to the sustainability of the Company The Board is committed to maintaining open channels of communication with
and the delivery of its strategy. Shareholders.
Formal updates are provided to Shareholders on a quarterly basis or as part of
the Annual or Interim Reports, and the Board and the Investment Manager will
also respond to any written queries made by Shareholders during the course of
the year. The Chair provides feedback to the Board and is responsible for
providing a clear understanding of the views of Shareholders to the Board. The
Board recognises the importance of providing strong financial returns to
Shareholders and the eligible tax benefits under VCT tax legislation and takes
this into consideration when making investments into investee companies,
approving offers for subscription and declaring dividends.
The Board continues to engage with Shareholders through its Annual and Interim
Reports, RNS communications, and encourages Shareholders to attend AGMs.
Investment Manager The Investment Manager's performance is critical to the Company to enable it The Board has delegated the authority for the day-to-day running of the
to successfully deliver its investment strategy and meet its long-term Company to the Investment Manager. The Board then engages with the Investment
investment objectives of capital growth and tax-free dividends. Manager in reviewing, setting, approving and overseeing the execution of the
Investment Policy and strategy of the Company.
The Investment Manager attends both Board and other committee meetings to
update the Board on the performance of the Company and its portfolio. At each
quarterly Board meeting, a review of financial and operating performance of
the Company and its investments is undertaken, including a review of legal and
regulatory compliance.
The Board also reviews other areas including the Company's strategy, key
risks, corporate responsibility, compliance and legal matters.
Investee companies The Company through its Investment Manager has important relationships with The Investment Manager maintains regular contact with portfolio companies and,
individuals responsible for the management and performance of its investee where appropriate, sits on the Board of those companies, and receives regular
companies. performance reports.
External Service Providers To function as a VCT with a premium listing on the London Stock Exchange, the The Company has a number of service providers which include the Investment
Company relies on external service providers for support in meeting all Manager, Company Secretary, Depositary, Registrar, Legal Advisers, VCT
relevant obligations. Compliance Adviser and the Auditor. The Board receives periodic reports from
other service providers on their activities and performance.
These service providers are fundamental to ensuring that the Company meets the
high standards of conduct that the Board sets. The Board has regular contact with the two main service providers, the
Investment Manager and the Company Secretary through quarterly Board meetings
and more regular discussions with the Board.
Community The Directors recognise that the long-term success of the Company is linked to The Board encourages the responsible investment ethos of the Investment
the success of the communities in which the Company and its investee Manager. The Board is cognisant of the impact of the Company's operations and
companies, operate. of the companies in which it invests and believes that its investment
activities have many positive benefits beyond the returns delivered for
Shareholders.
Regulators Good governance and compliance with regulations is essential to achieving The Company engages an external adviser to report on its compliance with the
continued success. VCT rules.
Principal Decisions
Below are the principal decisions made or approved by the Directors during the
year. In taking these decisions, the Directors considered their duties under
Section 172 of the Act. Principal decisions have been defined as those that
have a material impact to the Company and its key stakeholders, as defined
above.
Director appointment
During the period, the Board undertook a recruitment process for a new
director, with the assistance of an external search consultancy. Sam Smith was
appointed to the Board as Independent Non-Executive Director effective 8
February 2024. Sam was also appointed as a member of the Audit Committee and
Senior Independent Non-Executive Director effective the same date. Sam's bio
can be found on page 44.
Change of AIFM arrangements
During the period, effective 12 September 2023, the Investment Manager was
appointed as the Company's AIFM and is now responsible for risk management and
portfolio management. Therefore, the Investment Manager has full discretion
under the Investment Management Agreement to make investments in accordance
with the Company's Investment Policy from time to time. In addition, the
Company has appointed a depositary Indos Financial Limited, and their details
can be found on page 99.
Payment of dividends
During the year, the Company paid a 2 pence per Share interim dividend on 4
September 2023 and declared a further 2 pence per Share interim dividend on 3
January 2024, which was paid shortly after the period end on 18 March 2024.
Strategic Report
Investment Manager's Review
Sector Analysis
The unquoted investment portfolio can be analysed as follows:
* Under current VCT regulations the Company has three years before undeployed
cash counts towards the qualifying status of the Company. Undeployed cash is
therefore not taken into account in determining the Current Qualifying status
percentage of the Company, which at the year-end was above 80%.
The year under review was the fifth for the Venture strategy. Against a
backdrop of continued softness in the macro environment during the year, which
also saw a drop in the overall number of venture capital deals in the UK and
US, Triple Point's Venture team continued to make good progress in deploying
the Company's cash. The team completed eight new qualifying investments as
well as 11 follow-on investments into a diverse range of sectors spanning
climate, health, hospitality operations, business intelligence, fintech and
HR-Tech. As at the end of February 2024, the portfolio consists of stakes in
48 qualifying technology businesses.
The Company distributed £1.1m to Shareholders during the year by way of
dividends, as well as distributing the final returns to the A and B Share
classes.
Strategy
The Company looks to maximise Shareholder returns by investing in innovative
early-stage businesses, typically at the point where they have achieved some
market validation for their product or service, with one or more contracts
secured with a corporate customer. The core investment focus for the Company
has thus been at the Seed and Series A stage funding rounds, investing in
business-to-business technology companies - often with a specialist software
product - that are raising funds to drive product and sales development in
order to take their revenues to the next level. The Company also seeks to
invest in a select number of so-called "Pre-Seed" technology businesses every
year which may be pre-revenue but where there is a particularly compelling
opportunity, perhaps because of the founding team, or the product opportunity,
or the feedback we have received from potential customer due diligence.
Net asset value and the funding environment
The Venture NAV per Share declined to 98.55 pence from 102.17 pence at the end
of last year representing a 3.5% reduction. The total return for the Company,
being NAV plus cumulative dividends paid up to 29 February 2024 of 11 pence
per Share, is 109.55 pence per Share (2023: 111.17 pence per Share). Last
September's 2 pence per Share interim dividend payment was the fourth dividend
for the Venture Shares, with an additional fifth interim dividend of 2 pence
per Share paid in March 2024, bringing total dividends paid to date to 13
pence per Share. The Venture Shares went ex-dividend on 15 February 2024.
The decline in NAV per Share over the year was driven by the 2 pence per Share
of interim dividends paid during the year, as well as the net running costs of
the Company. The net portfolio values remained broadly flat during the year
with a small valuation gain, which reflected a continued fairly challenging
venture funding environment in the first six months of the year in review as a
result of higher interest rates and the hangover from the listed tech equity
valuation correction of 2022.
The first half of the year was impacted by further consecutive interest rate
rises, peaking in August 2023, with other major central banks following a very
similar trajectory. Consequently, the fundraising environment had become more
testing for many start-up founders as many venture funds were deploying
capital at a slower rate and became much more challenging in their assessment
of what "good" looks like at each stage of the venture journey. The benchmarks
for success sought by venture capital investors (VCs) changed, shifting the
emphasis from pure growth potential to capital efficiency in early 2023. As a
result, many venture backed businesses, including many of those in our
portfolio, took action to reduce their cash burn rates in order to extend
their cash runway. That phase, broadly from mid-2022 through to mid-2023, also
saw a trend towards more fundraises being carried out via convertible loan
notes (CLNs, a form of loan that can be converted to equity in the future in
certain circumstances) which, by providing loans, defer a new price being set
for a company's equity issuance. It should also be said that despite the
slightly sluggish overall environment, tech start-ups with either convincing
traction (i.e. 100% plus revenue growth year-on-year) and/or compelling
founding teams, were not struggling to raise the funding that they needed.
During the second half of the period under review, the market received a boost
in light of forecasts that interest rates may have peaked and might decline as
2024 progresses. This development potentially lowers the cost of capital for
start-ups and, more importantly, allows investors to begin to look forward to
economic recovery rather than focus on fears of prolonged recession. Alongside
this, there was a sustained rally in large-cap tech shares in global stock
markets, driven at least partly by a period of optimism about the potential
growth opportunities arising from AI. Not coincidentally, we are beginning to
witness increased activity in the venture capital funding market. During the
period, several strongly performing portfolio companies attracted capital from
new investors at significant valuation uplifts. We are pleased to report that
seven portfolio companies raised additional equity funding at higher
valuations during the period as they mature through the venture capital
lifecycle. These companies were SonicJobs, Konfir, Kamma, Fluent (formerly
Channel), Modo Energy, Scan.com and Visibly. This is up from just three
portfolio companies that had material valuation gains in the 2022/23 financial
year, highlighting the increased market activity year-on-year.
It appears also that the trend of CLNs and companies extending cash runway has
begun to reverse as we experience more companies returning to the market to
raise equity funding. One example from our own portfolio is Modo Energy. The
Company first invested in Modo early in 2023 via a CLN. In October that same
year, Modo raised a £12m priced equity round in which the Company's CLN
converted into equity. The Ventures team has also seen some increase in
competition to fund the better opportunities as investors are returning to the
market.
At the same time, we have started to see a few flatter or "down-rounds", where
founders and investors accept that in order to raise further funds the
valuations achieved for the new funds may be lower than they were in 2020-21.
While this is naturally disappointing in individual cases, and impacts
valuations, we believe this increased activity and acceptance is positive for
the ecosystem, allowing some founders to raise the necessary capital to pursue
growth after a period of reducing costs and focusing on extension of cash
runway.
Valuations
As mentioned above, we continued to see more activity in the market as the
period progressed, with seven companies raising additional equity funding at
higher valuations during the period. Several strongly performing portfolio
companies, such as Modo Energy and Scan.com, with strong revenue growth and
compelling founding teams, raised funding at significantly higher valuations.
Both companies will use the fresh funding to pursue ambitious growth plans in
the US. In the case of Scan.com, this was the second up-round since the
Company originally invested. At the time of writing, several other portfolio
companies have also received signed term sheets for fresh equity funding at
higher valuations. As a result, we have seen a slight increase in the NAV per
Share since August.
There have also been a number of portfolio companies which have not met our
expectations. We have initiated or increased existing downward fair-value
adjustments to 17 portfolio companies during the year where we believe that
growth rates are not sufficient to offset market valuation declines or that
the risks associated with shortening cash runway are high or rising. And, as
mentioned in the Chair's statement, one Fintech company has been exited at a
loss as a result of founder "burn-out".
As previously reported, the portfolio contains some companies which benefitted
from the very positive valuation climate for fundraising back in 2021. We are
pleased to report that one of these companies raised a Series C funding round
during the period following a successful year. The business grew invoiced
revenues over 170% year-on-year and contracted revenues by nearly 300%.
However, we have continued to maintain varying fair-value downward adjustments
(versus observed transaction price) on such companies where the observed
valuations have looked particularly stretched.
Portfolio Support
We have continued to actively support the Company's portfolio companies
wherever we can by participating in Board meetings, by helping them share best
practice through hosting regular events and by making relevant introductions
where necessary, be it through suppliers, potential customers or via investor
introductions for further fundraising rounds. The fact that we have made 11
follow-on investments during the period is testament to our willingness to
support portfolio companies that perform to or near to plan. We do not,
however, provide follow-on investment to all our portfolio companies - if our
experience since investment suggests that our original investment thesis was
flawed, then we will not make further investments and "put good money after
bad".
Deal Origination and Deployment
As the Company's portfolio has grown, so too has the number of follow-on
investment opportunities. But the Ventures team also continues to actively
originate new deal flow through a mixture of outbound origination and through
leveraging the team's network in the early-stage tech investing sector. More
active outbound origination specifically has allowed us to continue to uncover
compelling founders and innovations. Where possible we are using digital tools
to help us with outbound origination, for example to identify and monitor new
start-ups being created by founders who have left well-regarded larger
venture-backed businesses. We also make outbound origination contact in
sub-sectors that excite us, rather than waiting for start-ups to come to us.
In the period under review, the team successfully completed eight new
investments. These included investments as part of a Seed stage investment
round for Fluent (formerly Channel, an AI analyst software for data), an
investment into Scan.com (an infrastructure layer to connect the global
diagnostic imaging market) and a Seed round for Visibly (a training and
supervision software for field engineers).
New investments also included a machine learning and clinical innovation
software to reshape the delivery of primary care (Abtrace), a heat pump
installer software (Heat Geek), a core operations platform for restaurants
(Nory), and a recognition platform for real-world applications of computer
vision (SeeChange).
The Company provided follow-on funding to three portfolio companies early in
the period via CLNs (discussed above), with one example being Semble, a clinic
management system, which helps healthcare practices manage all aspects of
their administration in once place. Semble continues to grow steadily and the
additional funding is being used to help the business to pursue European
expansion.
Examples of sectors in which we continue to take an active interest are AI and
data, Healthcare Analytics, Energy transition and climate related software,
and Biotech (or "Techbio" as it is known when the tech does most of the work).
The advances in AI make us keener than ever on companies that have a data
angle - more and better data and information is the feedstock required to
train useful AI models. Thus, we actively look for companies that generate
specialist data, even if it is, to begin with, more of a by-product of their
core service than an objective. While we will surely see the benefits of a
whole range of new drugs and materials being discovered over the coming years,
it is important that we recognise the risks and limitations of AI and ensure
that its benefits are harnessed responsibly.
While renewables now contribute a greater share of UK energy mix than fossil
fuels, significant ongoing investment is still required to build the smart
cities and grid that a net zero world requires. Our preferred business models
for investment in this area remain software solutions or perhaps niche
hardware that supports the wider infrastructure development.
Portfolio
Since inception of the Venture strategy, the Company has made 51 venture
investments. The year in review saw no complete failures (company in
administration with 100% loss) by our portfolio companies. In fact, we have
experienced only one complete failure since inception. This is testament to
the focus that the investment team places on quality of teams and the
continued support we provide to our portfolio companies that deserve it.
However, the Company did experience a crystallised loss, exiting Localz in the
logistics sector, which was acquired by Descartes Systems Group at a 39% loss.
That was the best option given Localz was unable to raise new venture funding
and we were able to return some proceeds to the Company from a business which
suffered in the aftermath of the Covid-19 pandemic. During the period, we also
took a full write-down on one portfolio company, which we expect to enter into
an orderly wind down in the coming months. While disappointing, we view the
failure of some investments as an inevitable part of venture investing, which
is why we always look for new investments to have the potential to provide
significant return multiples on initial in investment costs.
The most active sub-sectors for deployment during the period were Healthtech,
where £4.05m was deployed, and Climate, where £3.55m was deployed. At the
end of the year the largest sub-sectors in terms of portfolio value were again
Fintech and Healthtech, two sectors in which the Triple Point has particular
experience. However, while there were some notable gains in Health, it has
been a tougher year for the Fintech sector, with the portfolio recording two
down valuations.
Of the eight new investments made this year, six were made at Seed stage and
two at pre-Seed. While the Seed focus is clear for new investments, the
Company also continues to back later stage deals via its existing portfolio
companies; during the period, there were six Series A follow-on funding
rounds, and one Series B round. It is worth noting that different investors
attribute different nomenclature to different rounds, and Seed stage for one
investor might be Series A for another. Our focus continues to be on those
companies that have early evidence of product-market fit and are looking to
raise between £1 million and £5 million to take them to the next level. We
very much continue to see ourselves as a Seed stage investor. Many of the
businesses in which the Company invests involve the use of leading-edge
technology and would be classified as "knowledge-intensive" by HMRC rules -
very much the types of innovative UK businesses that the government wishes to
see backed by VCT capital, and which allows investors to benefit from
substantial tax reliefs. Such investing comes with risks to capital, some of
which we aim to mitigate by focusing investment on businesses that are
actively solving significant problems for commercial customers.
Liquidity Management
In light of higher interest rates, we have taken active steps to manage
liquidity. Throughout the period, the majority of the Company's liquid funds
awaiting deployment have been invested in money market funds and a corporate
bond fund. The Company has opened accounts and invested in the BlackRock
International Cash Series Sterling Government Liquidity Fund, the BlackRock
International Cash Series Sterling Liquidity Fund, the Vanguard UK Short-Term
Investment Grade Bond Index Fund, and the HSBC Sterling ESG Liquidity Fund. In
today's interest rate environment this improves the return on the Company's
cash (relative to bank deposits) whilst complying with VCT rules on sources of
income. These funds provide easy access to the Company's liquidity, while
ensuring there is no cash drag on funds awaiting deployment into qualifying
investments.
ESG
Both the Board and the Investment Manager believe Environmental, Social and
Governance ("ESG") considerations are important, and they are taken into
account through the investment process within the Company. Whilst early-stage
companies do not have the scale or resources to adopt the full scale of ESG
initiatives open to large corporates, we always consider the processes and
policies they have in place to ensure that they are proportionate to their
size and activities, and recognise that acting when small lays the foundation
of good ESG for the future. It also provides a competitive advantage for small
companies seeking business with large corporates who have ESG supply chain
requirements. Please see the section on ESG and Responsible Investing on pages
41 to 42 for further information.
Outlook
As discussed above, 2022-23 was a challenging period at the macro level and
for many start-ups seeking venture funding. Despite that, we have continued to
see entrepreneurial activity and innovation thrive, evidenced by the number of
investment opportunities that we continue to find and invest in from the
Company. What's more, larger corporates are actively increasing spend on
productivity-enhancing software solutions (despite a tougher economic
environment and focus on costs). We believe this leaves the portfolio well
positioned for future growth.
While the economic backdrop remains soft, interest rates now appear to have
peaked. It is increasingly looking like the Bank of England will start to cut
interest rates in the second half of 2024, and forecasts suggest the economy
is likely to gather a bit of pace as 2024 progresses. We have already seen a
strong recovery in listed tech stocks; indeed the NASDAQ index is near new
highs as we write. While that rally has been dominated by the mega-cap tech
stocks rather than the smaller caps that may be better analogies for our
unquoted venture investments, we have also seen a stabilisation in mid-cap
Saas stock valuations and a modest recovery in the Initial Public Offering
market.
While venture deal volumes remained down year-on-year in Q4 2023, we believe
the aforementioned modest signs of optimism have more recently begun to be
apparent in the venture funding markets. We have already described the
increased activity that the Company's portfolio witnessed in the second half
of the year in review; the balance of which was positive for the first time in
18 months, suggesting the market is beginning to normalise. Even the
willingness in some cases of founders and boards to accept funding rounds at
lower valuations than previous rounds in order to move their businesses
forward is symptomatic of a world where business people are ready to move on.
And there is a clear enthusiasm around AI and the businesses that can exploit
it, both in the listed sector and in our own venture niche. Even looking
outside our technology niche, there are signs of M&A and restructuring
picking up in other sectors.
All-in-all then, there appears to be a far better case for forward-looking
optimism about the venture capital and start-up world than there was a year
ago.
It is early days and risks remain, as ever. We would highlight (i) the risk
that services and wage inflation is more persistent than hoped in the UK and
US this year, which could dent current optimism about the likely trajectory of
interest rates, (ii) the continued risk from geopolitical events after we
escaped from the Ukraine-invasion inspired mini energy-shock of 2022 with less
damage than was expected and (iii) the risk of markets and venture capitalists
getting carried away again about the latest craze, centred this time on AI.
Regarding the latter, we think that it is too early to be overly concerned,
that there are plenty of interesting investment opportunities around AI beyond
just the pure-play investments, and that we can be careful regarding the
valuations paid for opportunities that are over-popular.
Deal flow remains strong and there continues to be no shortage of companies
with innovative business ideas seeking funding. As the VCT's fundraise draws
to a close, the Company is in a healthy cash position to access these
innovative companies, particularly where some investors are yet to return to
the market. As ever, our focus continues to be on finding and backing software
start-ups that we believe have the potential to generate returns of at least
10x our investment cost, that are operating in large markets and that have
strong founding teams.
There are a number of areas where we see particular promise. We are searching
for software that can enable the energy transition and carbon management; we
are interested in businesses using end-to-end vertical software to
revolutionise business models in services sectors, perhaps by delivering the
whole service themselves in a tech-enabled way, rather than just selling
software to another service business; we are looking for companies in all
niches, but particularly health, where data is a significant by-product of
their core product - companies with the best access to data will be better
able to exploit AI opportunities in the future. Finally, we are talking to
companies that combine software with hardware, perhaps with the software
replicating part of what the hardware currently does (for example
laboratory-based testing).
It is an exciting time to be a seed-focused venture investor.
Ian McLennan
Partner
For Triple Point Investment Management LLP
31 May 2024
Strategic Report - Investment Portfolio Summary
Qualifying holdings
29 February 2024 28 February 2023
Cost Valuation Cost Valuation
£'000 % £'000 % £'000 % £'000 %
Unquoted qualifying holdings 38,426 67.30 43,333 69.87 27,291 59.34 31,498 62.74
Non-Qualifying holdings 470 0.82 491 0.79 471 1.02 481 0.96
Financial assets at fair value through profit or loss 38,896 68.12 43,824 70.66 27,762 60.36 31,979 63.70
Cash and cash equivalents 18,199 31.88 18,199 29.34 18,222 39.64 18,222 36.30
57,095 100.00 62,023 100.00 45,984 100.00 50,201 100.00
29 February 2024 28 February 2023
Cost Valuation Cost Valuation
£'000 % £'000 % £'000 % £'000 %
Non-Qualifying holdings
Modern Power Generation Ltd 470 0.82 491 0.79 471 1.02 481 0.96
29 February 2024 28 February 2023
Qualifying Holdings Cost Valuation Cost Valuation
Venture Investments £'000 % £'000 % £'000 % £'000 %
Degreed 300 0.53 411 0.66 300 0.65 432 0.86
Augnet 300 0.53 29 0.05 300 0.65 100 0.20
Aptem 150 0.26 441 0.71 150 0.33 441 0.88
Counting Up 920 1.61 641 1.03 920 2.00 1,044 2.08
Ably Real Time 1,312 2.30 2,452 3.95 1,312 2.85 3,153 6.28
Semble 1,760 3.08 2,374 3.83 760 1.65 1,374 2.74
Vyne Technologies 1,752 3.07 1,585 2.56 1,752 3.81 3,233 6.44
Pelago 1,245 2.18 2,399 3.87 1,245 2.71 2,565 5.11
Realforce 799 1.40 223 0.36 799 1.74 638 1.27
Airly 987 1.73 853 1.38 987 2.15 999 1.99
Biorelate 1,000 1.75 1,000 1.61 1,000 2.17 1,000 1.99
Artificial Artists 150 0.26 75 0.12 150 0.33 150 0.30
Veremark 910 1.59 2,095 3.38 910 1.98 1,529 3.05
Sealit 200 0.35 50 0.08 200 0.43 100 0.20
Bkwai 250 0.44 - - 250 0.54 91 0.18
Exate 500 0.88 250 0.40 500 1.09 400 0.80
Expression Insurance 1,000 1.75 573 0.92 1,000 2.17 118 0.24
Kamma 800 1.40 902 1.45 500 1.09 200 0.40
Seedata 150 0.26 75 0.12 150 0.33 150 0.30
Stepex 499 0.87 350 0.56 499 1.09 399 0.79
Ryde 2,000 3.50 1,800 2.90 1,988 4.32 1,988 3.96
Payaable 343 0.60 219 0.35 343 0.75 438 0.87
Tickitto 1,000 1.75 500 0.81 1,000 2.17 800 1.59
SonicJobs 600 1.05 788 1.27 450 0.98 638 1.27
Catalyst 224 0.39 112 0.18 224 0.49 224 0.45
Knok 684 1.20 947 1.53 513 1.12 640 1.27
Learnerbly 200 0.35 235 0.38 200 0.43 200 0.40
Pixie 915 1.60 487 0.79 915 1.99 915 1.82
PetsApp 1,000 1.75 1,000 1.61 1,000 2.17 1,000 1.99
Ramp 309 0.54 309 0.50 308 0.67 308 0.61
Konfir 800 1.40 838 1.35 500 1.09 519 1.02
Konstructly 300 0.53 300 0.48 300 0.65 300 0.60
Visibly Tech 541 0.95 1,047 1.69 300 0.65 300 0.60
Crowd Data 500 0.88 350 0.56 500 1.09 500 1.00
Trumpet 220 0.39 220 0.35 120 0.26 120 0.24
Fluent (formerly Channel) 700 1.23 1,489 2.40 400 0.87 400 0.80
Scan.com 1,800 3.15 3,370 5.44 800 1.74 1,000 1.99
OutThink 1,000 1.75 1,000 1.61 1,000 2.17 1,000 1.99
Shenval* 497 0.87 258 0.42 497 1.08 292 0.58
AeroCloud 1,500 2.63 1,500 2.42 1,500 3.26 1,500 2.99
Modo Energy 2,250 3.94 2,968 4.80 - - - -
Virtual Science AI 182 0.32 182 0.29 - - - -
Fertifa 1,000 1.75 1,000 1.61 - - - -
Nory 1,527 2.67 2,116 3.41 - - - -
SeeChange 1,500 2.63 1,500 2.42 - - - -
Heat Geek (formerly Skoon) 1,000 1.75 1,000 1.61 - - - -
Tuza (formerly Statement) 150 0.26 320 0.52 - - - -
Abtrace 700 1.23 700 1.13 - - - -
Localz - - - - 750 1.63 300 0.60
38,426 67.30 43,333 69.87 27,291 59.34 31,498 62.74
*Green Highland Shenval Ltd was transferred from A Shares to the Venture
Shares in November 2022 following a valuation adjustment. It was acquired by
the Company in February 2017 for £860k.
Financial Assets are measured at fair value through profit or loss. The
initial best estimate of fair value of these investments that are either
quoted or unquoted on an active market is the transaction price (i.e. cost).
The fair value of these investments is subsequently measured by reference to
the enterprise value of the investee company, which is best deemed to reflect
the fair value. Where the Board considers the investee company's enterprise
value to remain unchanged since acquisition, investments continue to be held
at cost (less any loan repayments received).
Strategic Report - Investment Portfolio Ten Largest Investments
National MRI Scan Limited
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TPV for the year £'000 Equity Held by TPV % Other Equity Held by TPIM managed funds %
27-Jul-2022 1,799,990 3,369,415 Last Equity Raise - 3.30% -
Summary of Information from Investee Company Financial Statements*: £'000
Net assets as at 31 Dec 2022 (2,259)
Net assets as at 31 Dec 2021 1,341
Scan.com is building the infrastructure layer to connect the global diagnostic
imaging market, aiming to solve the lack of price transparency for imaging,
long waiting lists and reliance on archaic workflows.
* The Investees are required only to submit Small Companies Accounts to
Companies House hence only net assets have been disclosed.
Modo Energy Ltd
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TPV for the year £'000 Equity Held by TPV % Other Equity Held by TPIM managed funds %
03-Mar-2023 2,250,084 2,968,446 Last Equity Raise - 5.34% -
Summary of Information from Investee Company Financial Statements*: £'000
Net assets as at 31 Oct 2023 8,787
Net assets as at 31 Oct 2022 2,708
Modo are creating a complete platform for energy market and asset performance
data.
* The Investees are required only to submit Small Companies Accounts to
Companies House hence only net assets have been disclosed.
Ably Real-Time Ltd
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TPV for the year £'000 Equity Held by TPV % Other Equity Held by TPIM managed funds %
30-Oct-2019 1,312,027 2,452,322 Last Equity Raise adjusted for fair value - 2.05% -
Summary of Information from Investee Company Financial Statements: £'000
Turnover to year end 31 Jan 2023 8,997
Turnover to year end 31 Dec 2021 5,203
Earnings before interest, tax, amortisation and depreciation (EBITDA) to year (17,372)
end 31 Jan 2023
(8,003)
Earnings before interest, tax, amortisation and depreciation (EBITDA) to year
end 31 Dec 2021
Profit before tax to year end 31 Jan 2023 (17,308)
Proft before tax to year end 31 Dec 2021 (8,061)
Net assets as at 31 Jan 2023 15,606
Net assets as at 31 Dec 2021 31,357
Ably is a real time data delivery service provider.
.
Digital Therapeutics Inc (Pelago Health)
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TPV for the year £'000 Equity Held by TPV % Other Equity Held by TPIM managed funds %
14-Feb-2020 1,245,285 2,399,112 Last Equity Raise adjusted for fair value - 1.28% -
Summary of Information from Investee Company Financial Statements*: £'000
Pelago is a virtual clinic for substance use management. Pelago is
transforming substance use support-from prevention to treatment-delivering
education, management skills, and opportunities for positive change to members
struggling with substance use.
* This company is exempt from publishing accounts and hence no financial
details are disclosed.
Semble Technology Limited
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TPV for the year £'000 Equity Held by TPV % Other Equity Held by TPIM managed funds %
20-Nov-2019 1,760,016 2,374,445 Last Equity Raise - 5.98% -
Summary of Information from latest available Investee Company Financial £'000
Statements*:
Net assets as at 31 Dec 2022 2,008
Net assets as at 31 Dec 2021 5,104
Semble is a clinical system (EHR) built to enable medical clinicians and admin
staff to complete their day-to-day work in one place rather than needing to
use multiple systems. The software covers the entire patient journey, saving
the medical clinicians time, enabling them to spend more time treating
patients.
* The Investees are required only to submit Small Companies Accounts to
Companies House hence only net assets have been disclosed.
Hospitality Growth Services Ltd (Nory AI
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TPV for the year £'000 Equity Held by TPV % Other Equity Held by TPIM managed funds %
09-May-2023 1,527,229 2,116,036 Last Equity Raise adjusted for fair value - 7.23% -
Summary of Information from latest available Investee Company Financial £'000
Statements*:
Nory provide AI-enabled software for hospitality businesses to manage their
business and restaurant operations.
* The company is yet to publish public accounts.
Veremark Limited
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TPV for the year £'000 Equity Held by TPV % Other Equity Held by TPIM managed funds %
12-Aug-2020 909,906 2,095,145 Last Equity Raise - 5.28% -
Summary of Information from Investee Company Financial Statements*: £'000
Net assets as at 31 Dec 2022 5,257
Net assets as at 31 Dec 2021 1,547
Veremark is an employment background checking software for checks such as
credit ratings and criminal records.
* The Investees are required only to submit Small Companies Accounts to
Companies House hence only net assets have been disclosed.
Gameplan Technology Limited (Ryde)
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TPV for the year £'000 Equity Held by TPV % Other Equity Held by TPIM managed funds %
27-Jul-2021 2,000,002 1,800,002 Cost adjusted for fair-value - 7.34% -
Summary of Information from Investee Company Financial Statements*: £'000
Net assets as at 31 Dec 2022 1,409
Net assets as at 31 December 2021 2,368
Ryde provides a fully integrated delivery management platform combining the
best of fleet management software, third party logistics software and a
flexible workforce to Ecommerce companies requiring deliveries.
* The Investees are required only to submit Small Companies Accounts to
Companies House hence only net assets have been disclosed.
Vyne Technologies Limited
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TPV for the year £'000 Equity Held by TPV % Other Equity Held by TPIM managed funds %
25-Nov-2019 1,752,185 1,584,809 Last Equity Raise adjusted for fair value - 7.95% -
Summary of Information from Investee Company Financial Statements*: £'000
Net assets as at 31 Mar 2023 2,734
Net assets as at 31 Mar 2022 5,549
Vyne is a payments business that uses Open Banking APIs to transfer money
directly from the bank accounts of consumers to the bank accounts of the
online merchants from which they are purchasing items or services.
* The Investees are required only to submit Small Companies Accounts to
Companies House hence only net assets have been disclosed.
Seechange Technologies Limited
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TPV for the year £'000 Equity Held by TPV % Other Equity Held by TPIM managed funds %
26-Sep-2023 1,500,000 1,500,000 Cost - 5.0% -
Summary of Information from Investee Company Financial Statements*: £'000
Net assets as at 31 Dec 2022 (2,191)
Net assets as at 31 Oct 2021 188
SeeChange are building a general-purpose recognition platform for real-world
application of computer vision, starting with use cases for retailers.
* The Investees are required only to submit Small Companies Accounts to
Companies House hence only net assets have been disclosed.
Strategic Report - ESG and Responsible Investing
Investment Manager approach to ESG and responsible investing
Triple Point is founded on the principle of people, purpose and profit. The
manager strives to identify and unlock investment opportunities that have
purpose, so we can help people and planet while generating profit for
investors.
Triple Point has committed to the following frameworks to demonstrate
commitment to responsible investment:
· Triple Point is a certified B Corp with a score of 97.6.
Certified B Corporations are businesses that meet the highest standards of
verified social and environmental performance, public transparency, and legal
accountability to balance profit and purpose.
· Triple Point is a signatory to the Principles for Responsible
Investment ("PRI"). This commitment was made in 2019 and requires Triple Point
to uphold and demonstrate progress on the six principles which seek best
practice in investor ESG integration and contribution to a more sustainable
global financial system. Triple Point seeks to promote these principles
throughout its business, and they are reflected in its Sustainability Blue
Book and annual report of its sustainability approach and outcomes 6 . These
principles ensure all investment processes have sound and appropriate
integration of ESG practice and are overseen by the Sustainability Team who
report findings to the Triple Point Sustainability Group. This means
investment teams are aware of, and can make informed investments decisions
about, key ESG risks and opportunities.
· Triple Point is a signatory of the Net Zero Asset Managers
Initiative ("NZAM"). This is an international group of asset managers
committed to supporting the goal of net zero greenhouse gas emissions. Triple
Point has now set near-term science-aligned net zero targets.
Triple Point recognise the importance of strong governance in the successful
and consistent implementation of sustainability action. The Triple Point
Sustainability Group acts as the oversight body, with a dedicated
Sustainability Team responsible for implementation strategy and support. The
Sustainability Group comprises senior partners and managers from across Triple
Point, who meet twice a quarter. The Group is chaired by Triple Point's
Co-Managing Partner Ben Beaton. Also reporting to this Group are the
Sustainable Investment Subgroup which comprises senior investment team members
from across Triple Point and is chaired by Triple Point's Head of
Sustainability. This subgroup shares best practice and learning in
sustainability and ESG integration from across the business, acting as source
of sustainability insight, collaboration and review which stretches across the
entire business.
In the view of the Sustainability Group, successful ESG integration means:
· allocated resource at a strategy level to integrate, monitor and
report on ESG issues;
· integrating ESG considerations throughout investment processes;
· ensuring decision-making captures ESG risks and opportunities,
learning from decisions and reporting to continually enhance ESG integration;
· pro-actively engaging with investors to understand their ESG
requirements; and
· challenging systemic issues which slow uptake of ESG practices by
asking questions, offering alternative solutions, or engaging at a policy
level.
ESG Integration Approach for the Company
Overall business conduct (such as alignment with best practice like the UK
Bribery Act and UK Modern Slavery Act) is assessed for all companies in the
portfolio at the point of investment, with continuing oversight from the
Investment Manager which ranges from board directors or observers to quarterly
or periodic business updates.
ESG Integration by the Investment Manager
The Investment Manager has also implemented ESG Integration processes
specifically associated to the needs of understanding ESG risk and opportunity
for small, seed-stage companies.
We place proportionate expectations on our investee companies, across a range
of environmental, social and governance factors according to the sector, size,
stage of growth, and future growth and development trajectory of the company.
It is the Investment Manager's belief that retrofitting a sustainable business
mindset and model can be time consuming and challenging further down the line.
We invest for growth and so we take a considered judgement that these issues
could come to bear during ownership or at exit, if they are not considered at
the point of investment.
The aim of the Company is to invest in smaller UK businesses to help them
grow, with the primary objective of delivering strong financial returns.
However, the Company and the Investment Manager are increasingly mindful of
the impact that the activities and those of the businesses in which they
invest have not just on the environment, but also on their employees,
communities, and society at large.
The Company believes that its investment activities have many positive
benefits beyond the returns it delivers for Shareholders. Our Venture
Investments help create new employment, develop and implement new technologies
and products, and improve productivity, all of which contribute to the UK
economy and benefit those employed in those businesses and in their supply
chains. This is achieved most effectively if the company exhibits responsible
business behaviour. The investment team assesses this proportionately and
materially depending on the company size and sector, and the scale of the
investment being made, through an environmental, social and governance (ESG)
review.
In addition, some companies are developing products and solutions which help
to create a more sustainable economy. We use the Sustainable Development Goals
to assess if companies we invest in offer this additional benefit. We note
this is not a selection criterion for the team, but it can increase the appeal
of an opportunity, alongside the other required financial strengths.
The Investment Manager also recognises that businesses can have negative
impacts or contribute to wider systemic issues which can create negative
impact. The ESG integration approach seeks to minimise risk to investments
through exposure to themes and activities which may impact the future growth
of a business, minimise negative impacts by seeking to avoid businesses with
poor business behaviours and maximise the potential to support businesses
which make positive contributions. The strategy also explicitly states the
Investment Manager will not invest in adult content, gambling (excluding
charitable lotteries funding good causes or raising funds), animal testing,
controversial weapons and tobacco.
To ensure the effective and consistent application of this approach, the
Investment Manager operates an ESG Integration Policy which details how ESG
considerations are taken into account throughout the investment process, from
the point of origination to exit. This policy is available on the Tripe Point
website 7 and approaches the challenge through two themes:
1. Management (Culture, Capacity & Governance) - this refers to the
allocation of appropriate resourcing, training and senior support for ESG
integration. It demonstrates that Triple Point's actions have integrity and
are aligned with the strategic position of the Company and oversight from
senior management. Examples of which include:
a. training across the investment team on ESG;
b. training for the Investment Committee on ESG; and
c. providing greater transparency on the approach to ESG.
2. Investment (Process & Reporting) - this refers to action taken in
the investment process to assess and improve ESG factors affecting the target
asset, how these might affect an investment decision and how decisions and
changes to ESG factors are captured during our asset ownership. Examples
include:
a. formal reviews by the team of ESG trends and topics at a micro, macro
and sector level to feed into the origination process;
b. ESG due diligence process with results included at Investment
Committee; and
c. sharing areas of weakness, with constructive guidance on how to
progress so awareness on a range of ESG issues develops with ownership.
Triple Point is committed to evaluating the success of the approach. The
investment teams report to the Sustainability Group through an annual review
process to ensure adherence to the process. This ESG integration review, along
with on-going guidance to each investment team, is provided by Triple Point's
dedicated Sustainability Team.
Alignment to Sustainable Development Goals ("SDGs")
During the year we invested in a number of businesses with sustainability
alignment (as shown by alignment to the SDGs), including:
SDG 3 - good health and wellbeing: Virtual Science - an AI platform delivering
faster, clearer and more actionable healthcare stakeholder insights to speed
the delivery of solutions from the life sciences industry; Abtrace - a health
monitoring tool for primary care providers to improve clinical decision
making, reduce variation in care and improve patient outcomes; Fertifa - an
employer benefit business specialising in reproductive healthcare.
SDG 7/13 - Affordable and clean energy and climate action: Heat Geek (formerly
Skoon) - heat pump installer software that helps heat engineers install
high-efficiency heat pumps better and faster.
The Strategic Report has been approved by the Board and signed on their behalf
by the Chair.
Jane Owen
Chair
31 May 2024
GOVERNANCE
Board of Directors
Jane Owen is the Chair of the Board of the Company. After graduating in law
from Oxford University, Jane was called to the Bar in 1978 and until 1989 was
a practising barrister in the chambers that are now 3 Verulam Buildings.
Subsequently, Jane became UK group legal director at Alexander & Alexander
Services, and was appointed Aon's General Counsel in the UK in 1997, a
position she held until 2008, where she was also a director of Aon Limited
from 2001 to 2008. She was also a Non-Executive Director of TWG Europe Ltd and
related companies and a Governor of James Allen's Girls' School.
Julian Bartlett has significant financial, assurance and advisory experience
gained from over 30 years as a Partner at Grant Thornton UK LLP and formerly
at RSM Robson Rhodes and Deloitte. He has an extensive understanding of listed
and financial services companies including VCTs. He is the Chair of Invesco
Fund Managers Limited, and a Director of Invesco Pensions Limited and Lindsell
Train Limited. He was formerly a Non-Executive Director of FFI Holdings plc
from August 2017 until it ceased trading on AIM in August 2019. Julian is a
Fellow of the Institute of Chartered Accountants in England and Wales.
Jamie Brooke has gained over 25 years' investment experience throughout his
career. He previously worked at 3i and Quester in the venture and leveraged
buyout divisions, and was formerly lead fund manager for the Hanover Catalyst
Fund, prior to which he was at Lombard Odier where, as a fund manager, he
specialised in strategic UK small cap equity investing, having moved with the
Volantis team from Henderson Global, and before that, Gartmore. Jamie has held
directorships on over 20 boards, and is currently on the Board of Kelso Group
Holdings plc, Flowtech Fluidpower plc and Chair of the Audit Committee of
Chapel Down Group plc, listed on the Aquis Stock Exchange, and Oryx
International Growth Fund.
Sam Smith is an entrepreneur with over 25 years' business and capital markets
experience and is specialised in advising small and mid-cap growth companies.
Sam was previously Chief Executive Officer of FinnCap Group PLC which, under
her leadership, has become one of the largest brokers for companies listed on
the Alternative Investment Market ("AIM") of the London Stock Exchange. Sam is
currently a non-executive director of Solid State PLC listed on AIM, Sumer
Group Holdings Ltd a professional services firm supporting SMEs with
accounting and other services, Griffin Markets Limited, an OTC wholesale
European energy trading business and of 55 Redefined Ltd.
Corporate Governance Report
Compliance Statement
The Board of Triple Point Venture VCT plc has considered the principles and
provisions of the Association of Investment Companies Code of Corporate
Governance 2019 ("AIC Code"). The AIC Code addresses the principles and
provisions set out in the UK Corporate Governance Code (the "UK Code"), as
well as setting out additional provisions on issues that are of specific
relevance to investment companies like Triple Point Venture VCT Plc. It is
acknowledged that the UK Code was updated in January 2024 and it is anticipate
the AIC Code will also be updated accordingly. The Board will monitor this and
report against the update AIC Code once available.
The Board considers that reporting against the principles and provisions of
the AIC Code, which has been endorsed by the Financial Reporting Council, will
provide improved reporting to Shareholders.
The Company has complied with the principles and provisions of the AIC Code or
provided an explanation for non-compliance below:
AIC Code of Corporate Governance Explanation
If the Chair of the Board is a member of the Audit Committee, the Board should Jane Owen is a member of the Audit Committee and Chair of the Board. Jane Owen
explain in the annual report why it believes this is appropriate (Provision is an independent Non-Executive Director, and was deemed independent on
29) appointment, and therefore is permitted to be a member of the Committee under
provision 29 of the Code. Given the size and structure of the Board it was
also deemed in best interest of Shareholders to have the breadth of experience
of all Directors throughout the audit process.
The AIC Code is available on the AIC website (www.theaic.co.uk
(http://www.theaic.co.uk) ). It includes an explanation of how the AIC Code
adapts the principles and provisions set out in the UK Code to make them
relevant for investment companies.
The Board
In identifying suitable candidates for an appointment to the Board an
independent external search consultancy, Tyzack Partners Limited, was engaged
for the recruitment of a Non-Executive Director role during the period.
Following a formal recruitment process, Sam Smith was appointed to the Board
as Independent Non-executive Director on 8 February 2024. Sam was also
appointed as Senior Independent Non-executive Director and member of the Audit
Committee with effect from the same date. Sam undertook a formal induction
process upon joining the Board. Following Sam's appointment, the Board
comprised four Non-Executive Directors. The Board confirms that there is no
connection between the Company, or any individual Directors and the external
search consultancy used for Director appointments during the period, or to
facilitate the candidate search for the role of Non-Executive Director.
As announced on 8 February 2024, following an orderly succession period, Jane
Owen, Non-Executive Director of the Company, will not stand for re-election at
the Company's AGM expected to be held in July 2024 and will step down
immediately following the conclusion of the AGM when the Board will again
comprise three Non-Executive Directors. Jamie Brooke will be appointed as
Non-Executive Chair of the Board, immediately following completion of the AGM.
All Directors are considered independent and day-to-day management
responsibilities are delegated to the Investment Manager. The Directors have a
combination of skills, experience and knowledge which are relevant to the
Company. Biographies of each director are presented on page 44 of this report.
The Directors are provided with key information on the Company's activities,
including regulatory and statutory requirements, by the Investment Manager and
Company Secretary, Hanway Advisory Limited.
The Board has direct access to the Company Secretary and may also take
independent professional advice at the Company's expense where necessary in
the performance of their duties. During the year, the Board was satisfied that
all Directors were able to commit sufficient time to discharge their
responsibilities effectively having given due consideration to their other
significant commitments. The Directors were advised on appointment of the
expected time required to fulfil their roles and have confirmed that they
remain able to make that commitment. No external appointments accepted during
the year were considered to be significant for the relevant Directors, taking
into account the expected time commitment and nature of these roles.
The Directors' other principal commitments are listed on pages 44.
The Chair, Jane Owen, leads the Board and is responsible for its overall
effectiveness in directing the affairs of the Company. The Chair leads the
process in determining its strategy and the achievement of its objectives. The
Chair is responsible for setting the Board agenda focusing on strategy,
performance, value creation, culture, stakeholders and ensuring that issues
relevant to these areas are reserved for Board decision. The Chair facilitates
constructive Board relations and the effective contribution of all the
Directors, encouraging a culture of openness and debate and ensures the
Directors receive accurate, timely and clear information. The Chair does not
have significant commitments which conflict with her Board responsibilities.
Appointment of New Directors
Any appointment to the Board is subject to a formal, rigorous and transparent
procedure and is based on merit and objective criteria which promotes
diversity of gender, social and ethnic backgrounds, cognitive and personal
strengths.
FCA Listing Rule diversity targets
The following table sets out the gender and ethnic diversity of the Board as
at 29 February 2024, in accordance with the FCA's Listing Rules, the
disclosure of which in this report having been approved by each of the
Directors
Number of Board members Percentage of the Board Number of senior positions of the Board 8
Gender Diversity
Men 2 50% 0
Women 2 50% 2
Not specified/prefer not to say - - -
Ethnic Diversity
White British or other White 4 100% 2
(including minority white groups)
Mixed/Multiple Ethnic Groups - - -
Asian/Asian British - - -
Black/African/Caribbean/Black British - - -
Other ethnic group, including Arab - - -
Not specified/prefer not to say - - -
The Company has reported against the Listing Rules on diversity and has
complied with the targets or otherwise explained non-compliance below.
Requirement Explanation
A minimum of one board member is from a minority ethnic background The size of the Company and of the Board make achieving this target
challenging. The Company recognise the importance of this requirement and
ensure that any recruitment processes for Directors actively encourage a
diverse pool of candidates.
at least 40% of the Board are women As at the report date, the Company is compliant due to recruitment of a fourth
director in the period, in line with Company succession planning. Following
conclusion of the Company's 2024 AGM, when Jane Owen is due to step down from
the Board, this target will no longer be met, as there will be three
Directors, with only one female director (33.3% of the Board). The Board
believes it has the appropriate mix of skills, knowledge and experience to
discharge its responsibilities and given the size of the Company the
appointment of an additional director would not be deemed appropriate at this
time.
Company's Operations
The Board is responsible for leading and controlling the Company and has
oversight of the management and conduct of the Company's business, strategy
and development. The Board determines the Investment Objectives and Investment
Policy and risk appetite and has overall responsibility for the Company's
activities, including review of investment activity and performance.
The Board is also responsible for the control and supervision of the
Investment Manager (who is also the Company's AIFM) and compliance with the
principles and recommendations of the AIC Code. The Board ensures the
maintenance of a sound system of internal controls and risk management
(including financial, operational and compliance controls) and reviews the
overall effectiveness of systems in place. The Board is responsible for
approval of any changes to the capital, corporate and/or management structure
of the Company.
The Investment Manager is responsible for making investments in line with the
Investment Objectives, Investment Policy and Board approved risk appetite,
portfolio management and risk management of the Company pursuant to AIFMD.
The Board's main focus is to promote the long-term sustainable success of the
Company, to deliver value for Shareholders and contribute to wider society.
The Board does not routinely involve itself in day-to-day business decisions
but there is a formal schedule of matters that requires the Board's specific
approval, as well as decisions that can be delegated to the Board Committees.
The key matters reserved to the Board, include but are not limited to:
• review investment performance and monitor compliance with the
investment policy;
• the consideration and approval of future developments or changes
to the investment policy, including risk and asset allocation;
• overall leadership of the Company and setting of its purpose,
culture, values and standards;
• approval of any dividend or return of capital to be paid to the
Shareholders;
• the appointment, evaluation, removal and remuneration of the
Investment Manager and the Company Secretary;
• Board membership and powers including the appointment and removal
of Board members;
• ensuring adequate Board succession planning;
• ensuring the maintenance of a system of internal controls and risk
management;
• approval and issue of the annual and half yearly results;
• review of the Company's corporate governance arrangements and
annual review of continuing compliance with the AIC Code of Corporate
Governance published by the AIC from time to time;
• the performance of the Company, including monitoring the net asset
value per share; and
• monitoring Shareholder profiles and considering Shareholder
communications.
The Company Secretary is responsible for ensuring that Board procedures are
complied with, advising the Board on all governance matters, supporting the
Chair and helping the Board and its committees to function effectively. The
Company Secretary will also provide the Board with support in ensuring that it
has the policies, processes, information, time and resources it needs in order
to function effectively.
The Company's articles of association and the schedule of matters reserved to
the Board for decision provide that the appointment and removal of the Company
Secretary is a matter for the full Board.
The Board reviews the performance of the Investment Manager annually taking
into consideration the contractual arrangements and scrutinises performance.
The Board as a whole carries out this review, and due to the size of the
Board, does not consider it appropriate to establish a separate management
engagement committee.
Discussions of the Board
During the period, the following were the key matters considered by the Board:
· approval of the change of AIFM arrangements of the Company, and
appointment of TPIM as the Company's AIFM;
· approval of Company policies;
· succession planning and appointment of Sam Smith and Jamie Brooke
as Non-Executive Directors;
· matters in relation to the Company's Offer for Venture Shares;
· annual and half year reports to Shareholders;
· quarterly and, where applicable, ad hoc approval of NAVs; and
· approval of dividends payable to Shareholders.
Re-election of Directors
Directors' retirement and re-election is subject to the Company's articles of
association and the AIC Code. The AIC Code requires that all Directors should
be subject to an annual re-election. In line with the Company's succession
plan, Jane Owen will not stand for re-election at the Company's AGM expected
to be held on 23 July 2024 and will step down immediately following the
conclusion of the AGM.
Independence of Directors
The Board has a Non-executive Chair and three other Non-executive Directors,
all of whom were considered independent since their appointment. All of the
Directors are independent of the Investment Manager.
The AIC Code outlines circumstances that are likely to impair a Director's
independence including whether a Director has served on the Board for more
than nine years from the date of their first appointment. Jane Owen has served
on the Board for more than nine years. Length of service is currently one of
several indicators the Board considers when assessing independence. The Board
is of the view that a term of service in excess of nine years does not in
itself compromise independence and notes the positive contribution that long
service can offer. The Board regularly reviews the independence of its
Directors and is satisfied that all Directors remain independent, including in
character and judgement. Jane Owen will step down from the Board at the
Company's 2024 AGM, and the three remaining Directors will have served on the
Board for less than nine years.
Policy on Tenure of the Chair
The Board considers that the length of time each Director, including the
Chair, serves on the Board should not be limited and has not set a finite
tenure policy. Continuity, self-examination and ability to do the job are the
relevant criteria on which the Board assesses a Director's independence.
Length of service of current Directors and future succession planning will be
reviewed each year as part of the Board evaluation process.
Succession Plan
The Board has aimed to achieve a progressive refreshing of the Board, taking
into account the challenges and opportunities facing the Company, the balance
of skills and expertise, and the need for a diverse pipeline for succession
balanced against the benefit of historical knowledge. The Board is pleased to
have made positive progress on the gradual refreshing of the Board this year
through the appointment of Jamie Brooke and Sam Smith during the period, in
line with its succession plan.
Board Committees
The Board has only one committee, which is the Audit Committee. The Directors
consider that due to the size of the Board, there being no employees or
executive directors, it is not necessary to appoint a separate nomination
committee, management engagement committee or remuneration committee, these
functions being carried out by the full Board The remuneration report is
detailed on pages 57 to 61.
Board Meeting Attendance
The Board has regular meetings on a quarterly basis, with additional meetings
as required from time to time.
During the period the following Board meetings were held and the number
attended by each Director compared with the maximum possible attendance:
Directors Board Audit
Meetings Committee
Jane Owen, Chair 5/5 3/3
Julian Bartlett* 4/5 3/3
Chad Murrin** 1/1 1/1
Jamie Brooke*** 4/4 2/2
Sam Smith**** 1/1 1/1
*Julian Bartlett was unable to attend all meetings due to illness.
**Chad Murrin stepped down from the Board of the Company effective 19 July
2023.
***Jamie Brooke was appointed as Non-Executive Director of the Company on 8
June 2023.
****Sam Smith was appointed as Non-Executive Director of the Company effective
8 February 2024.
Performance Evaluation
The Board, led by the Chair, established a formal process for a formal and
rigorous annual evaluation of the performance of the Board, individual
Directors and the Audit Committee. The evaluation considered the composition,
diversity, investment matters, development and how effectively each member
works together to achieve its objectives.
During the period, the Board conducted a performance evaluation by completing
a written questionnaire to appraise and gather useful learnings on the
functioning of the Board, the Audit Committee and individual Directors, and
the Chair.
The Chair, supported by the Company Secretary, acted on the results of the
evaluation. Having conducted its performance evaluation, the Board believes
that it has been effective in carrying out its objectives and that each
individual Director has been effective and demonstrated commitment to the
role.
The Board discussed the key challenges and opportunities that were identified
through the performance evaluation and agreed appropriate development points
on which progress will be assessed in the next financial period.
Challenges 2024 Development Points
Finding sufficient time in quarterly board meetings to give due consideration To organise a strategy day in 2025, to dedicate sufficient time to consider
to longer term Company strategy. the Company's purpose and strategy and to aid the Board in both short and long
term decision-making.
Significant changes to Board composition during the period, and in the coming As two new Directors have joined the Board in the previous year, and Jane Owen
months. is due to step down from the Board at the upcoming AGM, the Board are
encouraged to dedicate time to developing the Board relationship to ensure
members are working together effectively both inside and outside of quarterly
meetings.
Change of Company Chair The new proposed Chair, Jamie Brooke, should meet with the Investment Manager
and Company Secretary in advance of taking on the role of Chair to discuss
ways of working and ensure a sufficient and smooth handover process.
The progress the Board has made against its 2023 development points is set out
below:
2023 Development points Progress Made
The Board will undertake a deep dive into the risk management process to During the period, enhanced risk reporting was provided by the Investment
ensure enhanced risk management to adequately monitor current and emerging Manager. The Board reviewed and approved enhancements to the risk management
risks facing the Company. framework of the Company which became effective from March 2024. These
enhancements will underpin the approach to the identification and
categorisation of risks, together with changes to the assessment approach -
being more reflective of the individual nature of the risks being considered.
Consideration will be given to using an external search consultancy for the During the period, the recruitment of a fourth Non-Executive Director, in line
recruitment of a new Board Director, in line with succession planning, to with the Company's succession plan, was undertaken. An independent search
actively encourage a diverse pool of candidates. consultancy, Tyzack Partners, was used for the recruitment of Sam Smith as a
Director. The recruitment process encouraged a diverse pool of candidates.
Director training to be held on key legal, regulatory and governance issues During the period Director training was held on a number of matters, including
facing the Company or expected to impact the Company in the future. on Director's responsibilities. Further training will be undertaken by the
Board on key issues impacting the Company in the future, and the general
Venture market.
Corporate Social Responsibility
The Board is committed to integrating ESG matters in the Company's business
operations, including the Company itself and the companies in which it
invests. The Board actively seeks ways to interact with their stakeholders.
The Board seeks to avoid investing in companies which do not operate within
ethical, environmental and social legislation. Details on the Company's
responsible investing can be found on pages 41 to 42.
Internal Control and Risk Management
The Board has overall responsibility for establishing procedures to manage
risk, overseeing the internal control framework, determining the nature and
extent of the principal risks the Company is willing to take in order to
achieve its long-term strategic objectives, and identifying emerging risks.
The purpose of an internal control framework is to ensure that proper
accounting records are maintained, the Company's assets are safeguarded, and
the financial information used within the business and for publication is
accurate and reliable; such a system can only provide reasonable and not
absolute assurance against material misstatement or loss. Emerging risks are
regularly monitored, and to the extent possible or practicable, mitigating
actions are implemented.
The Company has put a process in place for identifying, evaluating and
managing the principal and emerging risks it faces, and determining the nature
and extent of the principal risks the Company is willing to take in order to
achieve its long-term strategic objectives. During the year, the Board
satisfied itself that the procedures for identifying the information needed to
monitor the business and manage risk so as to make proper judgements on the
financial position and prospects were robust. The purpose of an internal
control framework is to ensure that proper accounting records are maintained,
the Company's assets are safeguarded, and the financial information used
within the business and for publication is accurate and reliable; such a
system can only provide reasonable and not absolute assurance against material
misstatement or loss. Emerging risks are regularly monitored, and to the
extent possible or practicable, mitigating actions are implemented.
The system of risk management and internal control is designed to manage
rather than eliminate the risk of failure to achieve business objectives. As
part of this process an annual review of the risk management and internal
control systems is carried out. The review covers all material controls
including financial, operational and compliance controls.
The Directors regularly review financial results and investment performance
with the Investment Manager.
The Directors have established an ongoing process designed to meet the
particular needs of the Company in evaluating the significant and emerging
risks to which it is exposed, including, among others, market risk, VCT
qualifying investment risk and operational risks, which are recorded in a risk
register. The controls employed to mitigate these risks are identified and the
residual risks are rated taking into account the impact of the mitigating
factors. The risk register is reviewed bi-annually, along with the risk
appetites. The principal risks and uncertainties including emerging risks
identified from the risk register and a description of the Company's risk
management procedures can be found on pages 18 to 19.
The Directors regularly review the system of internal controls, both financial
and non-financial, operated by the Company and the Investment Manager. The
Investment Manager is engaged to provide accounting services and the Company
Secretary provides secretarial services and retains physical custody of the
documents of title relating to investments.
Capital management is monitored and controlled by the Investment Manager. The
capital being managed includes equity and fixed interest VCT-qualifying
investments, cash balances and liquid resources including debtors and
creditors. The Investment Manager's procedures are subject to internal
compliance checks.
The Company's objectives when managing capital are:
· to safeguard its ability to continue as a going concern, so that
it can continue to provide returns to Shareholders and benefits for other
stakeholders;
· to ensure sufficient liquid resources are available to meet the
funding requirements of its investments and to fund new investments where
identified.
Stakeholder Engagement
The Company continuously interacts with a variety of stakeholders important to
its success. This includes regular
engagement with the Company's Shareholders and other stakeholders by the Board
and the Investment Manager. The Directors are responsible for acting in a way
that they consider, in good faith, is the most likely to promote the success
of the Company for the benefit of its members. In doing so, they have regard
for the needs of stakeholders and the wider society.
The Company is committed to understanding the views of its stakeholders and
maintaining effective dialogue with its key stakeholders, which include:
Shareholders, investee companies; the Investment Manager; lenders; and the
wider communities in which the Company and its investee companies operate.
Shareholders are encouraged to attend and vote at the Company's Annual General
Meeting, along with the Company's other Shareholder meetings, so they can
discuss governance and strategy and the Board can enhance its understanding of
Shareholder views. The Board will attend the Company's Shareholder meetings to
answer any Shareholder questions and the Chair will make herself available, as
necessary, outside of these meetings to speak to Shareholders.
The Board is committed to providing investors with regular announcements of
significant events affecting the Company and its investee companies.
All investor documentation is available to download from the Company's
website:
https://www.triplepoint.co.uk/current-vcts/triple-point-venture-vct-plc/s2539/
(https://www.triplepoint.co.uk/current-vcts/triple-point-venture-vct-plc/s2539/)
Stakeholder engagement is set out in the Section 172(1) statement on pages 22
to 23.
The Board has considered the AIC Code recommendations in respect of
arrangements by which staff of the Investment Manager and Administrator may,
in confidence, raise concerns within their organisations about possible
improprieties in matters of financial reporting or other matters. It has
concluded that adequate arrangements are in place for the proportionate and
independent investigation of such matters and, where necessary, for
appropriate follow-up action to be taken within their organisations.
Directors' Share Interests
All of the Directors' Share interests were held beneficially and they are
actively encouraged to own Shares. Details of the Directors' Share interests
can be found in the remuneration report on pages 57 to 61. The Company has not
set out any formal requirements or guidelines to Directors concerning their
ownership of Shares in the Company.
On behalf of the Board.
Jane Owen
Chair
31 May 2024
Audit Committee Report
The following pages set out the Audit Committee's report on how it has
discharged its duties in accordance with the AIC Code and its activities in
respect of the period ended 29 February 2024.
Julian Bartlett chairs the Audit Committee. Jane Owen, Non-Executive Chair of
the Board, who was independent on appointment, is a member of the Audit
Committee due to the size and structure of the Board, along with Non-Executive
Directors Sam Smith and Jamie Brooke.
The Audit Committee deals with matters relating to audit, financial reporting
and internal control systems. The Audit Committee meets at least twice a year
and as required. The Audit Committee also has direct access to BDO LLP, the
Company's external auditor.
The Audit Committee has been in operation throughout the period and operates
within clearly defined terms of reference.
Audit Committee Role and Responsibilities
The Audit Committee has the primary responsibility for reviewing the financial
statements and the accounting principles and practices underlying them,
liaising with the external auditors and reviewing the effectiveness of
internal controls.
It should be noted that although initial responsibility for valuations sits
with the Investment Manager as AIFM, the Audit Committee oversees the
valuation approach and its implementation. The Audit Committee's terms of
reference include the following roles and responsibilities:
· periodically considering the need for an internal audit function;
· monitor the integrity of the financial statements of the Company
and any formal announcements relating to the financial performance and
reviewing significant financial reporting judgements contained in them;
· oversee the relationship with the external auditor including, but
not limited to, assessing annually their independence and objectivity, taking
into account relevant professional and regulatory requirements and the overall
relationship with the auditor, including the provision of any non-audit
services;
· monitoring the extent to which the external auditor is engaged to
supply non-audit services;
· ensuring that the Investment Manager has arrangements in place
for the investigation and follow-up of any concerns raised confidentially by
staff in relation to propriety of financial reporting or other matters;
· keep under review the Company's internal financial controls and
review the adequacy and effectiveness of the Company's internal control and
risk management systems and monitor the proposed implementation of such
controls;
· report to the Board on significant issues relating to the
financial statements and how they were addressed; its assessment of the
effectiveness of the audit process; any key matters raised by the external
auditor; and any other issues on which the Board has requested the Audit
Committee's opinion; and
· report to the Board on how it has discharged its
responsibilities.
The Audit Committee reviews its terms of reference and effectiveness annually
and recommends to the Board any changes required as a result of the review.
The terms of reference are available on request from the Company Secretary.
In respect of the year ended 29 February 2024, the Audit Committee discharged
its responsibilities by:
· reviewing the external auditor's plan for the audit of the
financial statements, including identification of key risks and confirmation
of auditor independence;
· reviewing the external auditor's audit fees in relation to the
audit of the financial statements;
· monitoring the integrity of the financial statements of the
Company and any formal announcements relating to the Company's financial
performance, and reviewing significant financial reporting judgements
contained in them;
· reviewing the Company's internal financial controls and internal
control and risk management systems operated in relation to the Company's
business and assessing those controls in minimising the impact of key risks;
· reviewing periodic reports on the effectiveness of TPIM's
internal control and risk management procedures;
· reviewing the appropriateness of the Company's accounting
policies;
· providing advice to the Board on whether the annual report (and
accounts), taken as a whole, is fair, balanced and understandable, and
provides the information necessary for Shareholders to assess the Company's
position and performance, business model and strategy;
· reviewing the Company's annual and half-yearly results prior to
Board approval;
· making recommendations to the Board regarding the reappointment
of the external auditor and approving their remuneration;
· reviewing and monitoring the external auditor's independence and
objectivity;
· reviewing the effectiveness of the external audit process, taking
into consideration relevant UK professional and regulatory requirements;
· reviewing the Company's going concern and viability status; and
· reviewing and discussing the external auditor's findings.
The Committee has considered the whole annual report and financial statements
for the year ended 29 February 2024 and has reported to the Board that it
considers them to be fair, balanced and understandable, providing the
information necessary for shareholders to assess the Company's financial
position, performance, business model and strategy.
The Board considers that the members of the Audit Committee collectively have
the skills and experience required to discharge their duties effectively and
the Audit Committee as a whole has competence relevant to the sector in which
it operates.
Internal controls
The Directors have overall responsibility for keeping under review the
effectiveness of the Company's systems of risk management and internal
controls. The purpose of these controls is to make sure that proper accounting
records are maintained, assets are safeguarded and the financial information
used within the business and for publication is accurate and reliable; such a
system can only provide reasonable and not absolute assurance against material
misstatement or loss.
The systems of risk management and internal control are designed to manage
rather than eliminate the risk of failure to achieve the business objectives.
These internal controls have been in place throughout the period under review
and up to the date of this report. The Board regularly reviews financial
results and investment performance with the Investment Manager. The Investment
Manager identifies the investment opportunities, monitors the portfolio of
investments and manages the assets of the Company on a discretionary basis.
The Investment Manager is engaged to carry out the accounting function and
retains physical custody of the documents of title relating to unquoted
investments. The Directors confirm that they have established a continuing
process throughout the year and up to the date of this report for identifying,
evaluating and managing the significant potential risks faced by the Company
and have reviewed the effectiveness of the risk management and internal
control systems.
As well as there being controls operated by the Investment Manager, the
Company's depositary, INDOS Financial Limited, are responsible for cash
monitoring, asset verification and oversight of the Company and the Investment
Manager in performing its function under the AIFMD. The Depositary reports its
findings on a quarterly basis to the Board on its monitoring and verification
of all new acquisitions, share issues, loan facilities, shareholder
distributions and other key events. In addition, on an ongoing basis, the
Depositary tests the quarterly management accounts, bank reconciliations and
performs a quarterly review of the Group when discharging its duties.
The Board does not consider it appropriate to have an internal audit function
due to the size and nature of the Company's transactions. The risk management
and internal control systems include the production and review of bank
payments and management accounts. All outflows made from the Company's
accounts require the authority of two approved signatories from the Investment
Manager.
Financial Reporting
The primary role of the Audit Committee in relation to financial reporting is
to review with the Investment Manager and Administrator and the Auditor, the
appropriateness of the annual report and financial statements, concentrating
on, amongst other matters:
· compliance with financial reporting standards and relevant
financial and governance reporting requirements;
· amendments to legislation and corporate governance reporting
requirements;
· the impact of any new and proposed amendments to accounting
standards which affect the Company;
· material areas in which significant judgements have been applied;
· whether the Audit Committee believes that proper and appropriate
processes and procedures have been followed in the preparation of the annual
report; and
· considering and recommending the contents of the annual report
and financial statements for approval.
Significant Issues Raised by the Audit Committee
The Audit Committee is responsible for considering and reporting on any
significant issues that arise in relation to the Financial Statements and how
they have been addressed.
The following key issues were discussed:
· compliance with HM Revenue & Customs conditions for
maintenance of approved Venture Capital Trust status;
· valuation and existence of unquoted investments; and
· Management override of financial controls.
Compliance with HMRC Conditions
The Investment Manager provides the Board with regular qualifying investment
updates. This report shows the current qualifying percentage position of the
Company and highlights and actions which may be required to maintain this
position in the future. The Board also assesses the future qualifying position
of the Company with assumptions on divestment of assets. The qualifying
position of the Company is a recurring agenda item at Board meetings.
The Company also has in place an engagement with Philip Hare and Associates
LLP. The Board seeks their opinion before undertaking any material transaction
which may affect the qualifying status of the Company. The Company also seeks
the opinion of Shoosmiths LLP when making any new Investments.
Valuation & Future Cash Flow Projections
The Company's unquoted Investment portfolio is valued in line with the
International Private Equity Valuation guidelines. The Company's accounting
policy is to classify investments at fair value through profit or loss.
Therefore, the most significant risk in the financial statements is whether
its investments are fairly valued. Being unquoted, there is uncertainty and
estimation involved in determining the investment valuations.
There is also an inherent risk of management override as the Investment
Manager's fee is calculated based on NAV as disclosed in note 6 to the
financial statements. The Investment Manager is responsible for calculating
the NAV, prior to approval by the Triple Point Valuation Committee, before
being submitted to the Board for approval.
On a quarterly basis, the Investment Manager provides a detailed analysis of
the NAV highlighting any movements and assumption changes from the previous
quarter's NAV, including assessing any impact of macroeconomic developments.
This analysis and the rationale for any changes made is considered and
challenged and ultimately approved by the Board.
Management override of Controls
The Committee reviews all significant accounting estimates that form part of
the financial statements and considers any material judgements applied by
management during the completion of the financial statements.
These issues were discussed with the Investment Manager and the auditor at the
conclusion of the audit of the financial statements.
Going concern and viability statement
The Board is required to consider and report on the longer-term viability of
the business as well as assess the appropriateness of applying the going
concern assumption.
The Audit Committee has taken account of the solvency and liquidity position
of the Company shown in the financial statements and the information provided
by the Investment Manager on the forecast cashflows for the Company and
expected pipeline. The Audit Committee considers that it is appropriate to
adopt the going concern basis of preparation of the financial statements.
External Audit
It is the Audit Committee's responsibility to monitor the performance,
objectivity and independence of the external auditors and this is assessed by
the Audit Committee each year. In evaluating BDO LLP's performance, the Audit
Committee examines effectiveness of the audit process, independence and
objectivity of the auditor, taking into consideration the length of tenure of
the external auditors, the non-audit services undertaken during the year and
relevant UK professional and regulatory requirements, and the quality of
delivery of its services.
BDO LLP attended two of the three formal Audit Committee meetings held during
the year. Matters typically discussed include the Auditor's assessment of the
transparency and openness of the Investment Manager, confirmation that there
has been no restriction in scope placed on them, the independence of their
audit and how they have exercised professional scepticism.
When considering whether to recommend the reappointment of the external
auditor, the Audit Committee takes into account their current fee compared to
the external audit fees paid by other similar companies. The quality and
competence of the external auditor is also taken into consideration. The Audit
Committee will then recommend to the Board the appointment of an external
auditor which is approved by Shareholders at the Annual General Meeting.
The FRC's Ethical Standard requires the audit partner to rotate every five
years. BDO were recommended for re-appointment at the 2023 AGM and the
resolution was duly passed. This is the audit partner, Elizabeth Hooper's
second year.
The independence and effectiveness of the external audit process is assessed
as part of the Board evaluation conducted annually and by the quality and
content of the audit scoping and findings report provided to the Audit
Committee by the external auditor and the discussions then held on topics
raised. The Audit Committee will challenge the external auditor at the Audit
Committee meeting if appropriate.
Non-Audit Services
The Audit Committee safeguards the objectivity and independence of the auditor
by reviewing the nature and extent of non-audit services supplied by the
external auditor to the Company. Details of fees paid to BDO LLP during the
year are disclosed in note 8 to the financial statements. There were no
non-audit services paid to BDO LLP during the year.
Audit Fee
The audit fee for the year was £74,890 net of VAT (2023: £65,856). BDO LLP
have primarily attributed the increase in fees to inflation, the increased
time and complexity of audit given the growth of the Venture Shares and wider
general market fee increases for audit services. The significant increase in
fees have been considered, and the Committee will evaluate all available
options to ensure that the cost for the services provided remain appropriate
and in the best interests of Shareholders.
Independence
The Audit Committee is required to consider the independence of the external
auditor. In fulfilling this requirement, the Audit Committee has considered
the Audit Plan from BDO LLP which describes their arrangements to identify,
report and manage their independence.
Audit Committee Meeting Attendance
During the period, the following Audit Committee meetings were held, and the
number attended by each Director compared with the maximum possible
attendance:
Directors Audit Committee
Meetings
Jane Owen, Chair 3/3
Julian Bartlett 3/3
Chad Murrin* 1/1
Jamie Brooke** 2/2
Sam Smith*** 1/1
**Chad Murrin stepped down from the Board of the Company effective 19 July
2023.
***Jamie Brooke was appointed as Non-Executive Director of the Company on 8
June 2023.
****Sam Smith was appointed as Non-Executive Director of the Company effective
8 February 2024.
The Audit Committee oversees the Investment Manager's assessment of valuation
of the unquoted investments and the existence of those investments and
considers and challenges the information provided by the Investment Manager.
The Investment Manager will usually have either Director or Board Observer
rights to attend portfolio companies' Board meetings, will always have
information rights when investments are first made and will maintain contact
with the senior executives of investees, and has oversight of all the
investments made. The Audit Committee has reviewed the valuations and
discussed them with both the Investment Manager and the external auditor to
confirm their assessment of the valuation of the unquoted investments and the
existence of those investments.
The Investment Manager has confirmed to the Audit Committee that the
conditions for maintaining the Company's status as an approved Venture Capital
Trust has been complied with throughout the year. The position has been
reviewed by Philip Hare & Associates LLP in its capacity as adviser to the
Company on taxation matters.
The Audit Committee has considered the whole Report and Accounts for the year
ended 29 February 2024 and has reported to the Board that it considers them to
be fair, balanced and understandable providing the information necessary for
Shareholders to assess the Company's position, performance, business model and
strategy.
On behalf of the Board.
Julian Bartlett
Audit Committee Chair
31 May 2024
Directors' Remuneration Report
Statement of the Chair
I am pleased to present the Remuneration Report on behalf of the Board for the
year ended 29 February 2024.
This report is submitted in accordance with schedule 8 of the Large and Medium
Sized Companies and Groups (Accounts and Reports) (amendment) Regulations 2013
and The Companies (Miscellaneous Reporting) Regulations 2018, in respect of
the year ended 29 February 2024. This report also meets the Financial Conduct
Authority's Listing Rules and describes how the Board has applied the
principles and provisions relating to Directors' remuneration set out in the
AIC Code. The reporting requirements require two sections to be included:
· Directors' Remuneration Policy - This sets out our Remuneration
Policy for Directors of the Company that has been in place since 19 July 2023
following approval by Shareholders.
· Annual Remuneration Report - This sets out how our Directors were
paid for the period ended 29 February 2024. There will be an advisory
Shareholder vote on this section of the report at our 2024 AGM.
We value engagement with our Shareholders and for the constructive feedback we
receive and look forward to your support at the forthcoming AGM.
Jane Owen
Chair
31 May 2024
Directors' Remuneration Policy
Remuneration Policy Overview
The Board currently comprises four Directors, all of whom are Non-Executive.
The Board's policy is that the remuneration of Non-Executive Directors should
reflect the experience of the Board as a whole, be fair and be comparable with
that of other relevant Venture Capital Trusts that are similar in size and
have similar investment objectives and structures. Furthermore, the level of
remuneration should be sufficient to attract and retain the Directors needed
to oversee the Company properly and to reflect the specific circumstances of
the Company, the duties and responsibilities of the Directors and the value
and amount of time committed to the Company's affairs. The articles of
association provide that the Directors shall be paid in aggregate a sum not
exceeding £100,000 per annum. None of the Directors are eligible for bonuses,
pension benefits, Share options, long-term incentive schemes or other benefits
in respect of their services as Non-Executive Directors of the Company. There
are no planned changes to the Remuneration Policy last approved by
Shareholders at the 2023 AGM.
Consideration of Remuneration
The Board does not have a separate Remuneration Committee, as the Company has
no employees or executive directors. The Board has not retained external
advisers in relation to remuneration matters but has access to information
about Directors' fees paid by other companies of a similar size and type. As
such, the Board as a whole will consider the remuneration of the Directors,
however no director is involved in determining their own remuneration. The
Board will review the remuneration of the Directors in line with the VCT
industry on an annual basis, if thought appropriate. Otherwise, only a change
in responsibilities is likely to incur a change in remuneration of any one
Director or the remuneration policy itself.
Directors' Service Contracts
The Directors are engaged under letters of appointment and do not have service
contracts with the Company.
Directors' Term of Office
The Directors' letters of appointment provide for three months written notice
to be given by either party. Each Director will be subject to annual
re-election by Shareholders at the Company's Annual General Meeting in each
financial year.
Policy on Payment for Loss of Office
A Director who ceases to hold office is not entitled to receive any payment
other than accrued fees (if any) for past services.
Consideration of Shareholder Views
The Company is committed to ongoing Shareholder dialogue and takes an active
interest in voting outcomes. Where there are substantial votes against
resolutions in relation to Directors' remuneration, the Company will seek the
reasons for any such vote and will detail any resulting actions in the
Directors' Remuneration Report. No views which are relevant to the formulation
of the Directors' remuneration policy have been expressed to the Company by
Shareholders, whether at a general meeting or otherwise.
Future Policy Table
The Directors are entitled only to the fees as set out in the table below. No
element of Directors' remuneration is subject to performance factors. There
are no other fees payable to the Directors for additional services outside of
their contracts.
Component How it Operates Maximum Fee Link to Strategy Provisions to Recover or Withhold Sums
Annual Fee Each Director receives a basic fee which is paid on a quarterly basis. The total aggregate fees that can be paid to the Directors is calculated in The level of the annual fee has been set to attract and retain high calibre There are no provisions to recover or withhold sums.
accordance with the articles of association. Directors with the skills and experience necessary for the role. The fee has
been benchmarked against companies of a similar size.
Other benefits The Directors shall be entitled to be repaid expenses. Article 89 of the Company's Articles of Association permits for any director In line with market practice, the Company will reimburse the Directors for
to be repaid reasonable expenses incurred in attending or returning from expenses to ensure that they are able to carry out their duties effectively.
meetings of the Board, committees of the Board or Shareholder meetings or
otherwise in connection with the performance of their duties as Directors of
the Company.
Annual Remuneration Report
Directors' Fees
Details of each Director's contract is shown below. The Audit Committee Chair
is entitled to an additional £2,000 and the Chair is paid an additional
£5,000 to reflect the additional responsibilities of their role.
Date of Contract Unexpired term of contract Annual rate of Directors' fees* Policy on payment for loss of office
£
Jane Owen, Chair 23-Sep-10 none 25,000 none
Chad Murrin* 23-Sep-10 none 20,000 none
Julian Bartlett 08-Feb-22 none 22,000 none
Jamie Brooke 08-Jun-23 none 20,000 none
Sam Smith 08-Feb-24 none 20,000 none
*Chad Murrin stepped down as a Non-Executive Director of the Company on 19
July 2024.
Single Total Figure (audited information)
The fees paid to Directors in respect of the year ended 29 February 2024 and
the prior year are shown below:
Emoluments for the year ended 28 February 2023 % Change from 2022-2023 Emoluments for the Year ended 28 February 2022 % Change from 2021-2022 Emoluments for the Year ended 28 February 2021 % Change from 2020-2021 Emoluments for the Year ended 29 February 2020
Emoluments for the year ended 29 February 2024* % Change from 2023-2024
£ % £ % £ % £ % £
Jane Owen, Chair 25,000 4 24,000 7 22,500 - 22,500 - 22,500
Chad Murrin* 7,778 n/a 19,000 6 18,000 - 18,000 - 18,000
Julian Bartlett 22,000 8 20,300 n/a 1,038 n/a n/a n/a n/a
Tim Clarke* - n/a 6,600 n/a 18,000 - 18,000 - 18,000
Jamie Brooke** 14,762 n/a - n/a - n/a - n/a -
Sam Smith** 1,260 n/a - n/a - n/a - n/a -
70,800 69,900 59,538 58,500 58,500
Employer's NI contributions 754 250 - 435 1,499
Total emoluments 71,554 70,150 59,538 58,935 59,999
None of the Directors are eligible for bonuses, pension benefits, share
options, long-term incentive schemes or other benefits in respect of their
services as Non-Executive Directors of the Company.
* Chad Murrin and Tim Clarke stepped down from their positions as
Non-Executive Directors on 19 July 2023 and 14 July 2022, respectively.
** Jamie Brooke and Sam Smith were appointed as Non-Executive Directors
effective 8 June 2023 and 8 February 2024, respectively.
Information required on executive Directors, including the Chief Executive
Officer and employees has been omitted because the Company has neither and
therefore it is not relevant.
Directors' emoluments compared to payments to Shareholders:
28 February 2023
29 February 2024
£'000 £'000
Total Dividends paid/payable 1,075 8,123
Total Directors' emoluments 72 70
Directors' Share Interests (audited information)
At 29 February 2024, Jane Owen held 94,534 Venture Shares (2023: 82,563
Venture Shares, 24,624 A Shares, 24,378 B Shares), Julian Bartlett held 56,861
Venture Shares (2023: 36,413 Venture Shares), and Jamie Brooke and Sam Smith
held nil Venture Shares as at 29 February 2024 (2023: nil).
No other connected parties to the Directors held any Shares at 29 February
2024 (2023: nil). Any Shares owned by the Directors were purchased at the same
price offered to investors. There are no requirements or restrictions on
Directors holding Shares in the Company.
Company Performance
The following performance charts compare the Total Return of the Venture Share
Class over the period from 1 March 2017 to 29 February 2024 with the Total
Return from notional investments in the FTSE All-Share index and FTSE
Small-Cap index over the same period. The indices chosen are considered to be
the most appropriate broad equity markets for comparative purposes.
Investors should be reminded that Shares in Venture Capital Trusts generally
continue to trade at a discount to the NAV of the Company.
The Total Return does not include the initial 30% tax relief available to
investors.
These charts have been prepared in accordance with Part 3 to Schedule 8 of the
Companies Act 2006. The Company measures its performance against its target
returns as detailed in the Strategic Report.
As highlighted above, the charts do not take into account the tax benefit of
investing in a VCT.
Statement of Voting at the Annual General Meeting
The resolutions to approve the Directors' Remuneration Report and Directors'
Remuneration Policy were passed at the Annual General Meeting on 19 July 2023.
Details of the proxy votes in respect of the resolutions are as set out below:
Voting for Voting Against Vote Withheld
Remuneration Report 99.79% 0.21% 0.03%
Remuneration Policy 97.51% 2.49% 0.03%
During the year, the Company did not receive any communications from
Shareholders specifically regarding Directors' pay.
On behalf of the Board.
Jane Owen
Chair
31 May 2024
Directors' Report
The Directors are pleased to present the Directors' Report for the year ended
29 February 2024.
The information that fulfils the requirements of the Corporate Governance
statement in accordance with rule 7.2 of the DTR can be found in this
Directors' report on page 62 to 65 and in the Corporate Governance report on
pages 43 to 52 all of which is incorporated into this Directors' report by
reference.
Directors
The Directors of the Company during the year were Jane Owen, Chad Murrin,
Julian Bartlett, Jamie Brooke and Sam Smith. Chad Murrin stepped down as
Non-Executive Director on 19 July 2023.Jamie Brooke and Sam Smith were
appointed to the Board on 8 June 2023 and 8 February 2024 respectively.
Principal Activity and Status
The principal activity of the Company is that of a Venture Capital Trust
("VCT") and its main activity is venture capital investment and management.
The Company has been approved as a VCT by HMRC, in accordance with Section 274
of the Income Tax Act 2007 and, in the opinion of the Directors, has conducted
its affairs so as to enable it to continue to obtain such approval. In order
to maintain its status under VCT legislation, a VCT must comply on a
continuing basis with the provisions of Section 274 and further details can be
found on page 62.
The Company is registered in England as a Public Limited Company (Registration
number 07324448) and its Shares are listed on the main market of the London
Stock Exchange.
The Company was not at any time up to the date of this report a close company
within the meaning of S439 of the Corporation Tax Act 2010.
Post Balance Sheet Events
Details of post balance sheet events can be seen in note 25 to the Financial
Statements.
Directors' indemnity
The Company has indemnified Directors against certain liabilities within its
Articles of Association which may be incurred in the execution of their
office. This indemnity remains in force as at the date of this report and will
also indemnify any new directors that join the Board. The Company has, as
permitted by Section 233 of the Companies Act 2006, maintained insurance cover
on behalf of the Directors and Company Secretary, indemnifying them against
certain liabilities which may be incurred by them in relation to the execution
of their duties.
Research and Development
No expenditure on research and development was made during the year (2023:
Nil).
Management arrangements
TPIM acts as Investment Manager to the Company and has done since
incorporation, and as AIFM to the Company effective 12 September 2023.
To align its interests with Shareholders, TPIM earns a performance fee for the
Venture Share Class if the total return (Net Asset Value plus distributions
made) to holders of the Venture Shares exceeds their net initial subscription
price by an annual threshold of 3% per annum, calculated on a compound basis.
To the extent that the total return exceeds the threshold over the relevant
period then a performance incentive fee of 20% of the excess is payable to
TPIM. In addition, TPIM earned a performance fee for the A Share Class of 20%
on distributions exceeding 100 pence per Share. The other principal terms of
the Company's management agreement with TPIM are set out in note 6 to the
Financial Statements.
The Board has evaluated the performance of the Investment Manager and reviewed
the management contract. As required by the Listing Rules, the Directors
confirm that in their opinion the continuing appointment of TPIM as Investment
Manager on the terms agreed is in the best interests of the Shareholders as a
whole. In reaching this conclusion the Directors have taken into account the
performance of the Company, and the service provided by TPIM to the Company.
Substantial Shareholdings
As at the date of this report no disclosures of major shareholdings had been
made to the Company under Disclosure and Transparency rule 5 (Vote Holder and
Issuer Notification Rules).
Share Price Discount Policy
The Company has a share buy-back facility, allowing the buy back of Shares at
no more than a 5% discount to the prevailing NAV, subject to the Directors'
discretion, and within limits approved by Shareholders at the AGM.
Shareholders should note that if they sell their Shares within five years of
subscription, they forfeit any tax relief obtained. If you are considering
selling your Shares, please contact the Investment Manager on 020 7201 8989.
Purchase of Own Shares
During the year, the Company purchased for cancellation 18,138 Venture Shares.
The Directors may exercise on behalf of the Company its powers to purchase its
own Shares to the extent permitted by Shareholders and the articles of
association.
Streamlined Energy and Carbon Reporting
The Company has outsourced operations to third parties and has no significant
greenhouse gas emissions from its direct operations and so qualifies as a low
energy user at under 40,000kWh and is therefore exempt from disclosures on
greenhouse gas emissions and energy consumption.
During the year under review, the Company had investments in renewable energy,
through its investment in a hydroelectric company. It also had investments in
two companies which operate gas fired energy centres which have now been
exited.
Share Capital
As at 29 February 2024 the Company's issued Share capital amounted to
63,113,620, Venture Shares of 1p each. As at that date none of the issued
Shares were held by the Company as treasury Shares.
As at 29May 2024 the Company's issued Share capital amounted to 71,243,862
Venture Shares of 1p each. As at that date none of the issued Shares were held
by the Company as treasury Shares.
There are no restrictions on the transfer of securities in the Company other
than the Company's Share Dealing Code and other certain restrictions which may
be impaired by law, for example, the Market Abuse Regulation.
The Company is not aware of any agreements between holders of securities that
may result in restrictions on transferring securities in the Company. There
are no securities of the Company carrying special rights with regards to the
control of the Company in issue.
Annual General Meeting
The 2024 annual general meeting will be held on 23 July 2024.
Amendment of Articles of Association
The Company's articles of association may be amended by the members of the
Company by special resolution (requiring a majority of at least 75% of the
persons voting on the relevant resolution).
Appointment and Replacement of Directors
A person may be appointed as a Director of the Company by the Shareholders in
general meeting by ordinary resolution (requiring a simple majority of the
persons voting on the relevant resolution) or by the Directors. No person,
other than a Director retiring by rotation or otherwise, shall be appointed or
re-appointed a Director at any general meeting unless he is recommended by the
Directors or, not less than seven nor more than 42 clear days before the date
appointed for the meeting, notice is given to the Company of the intention to
propose that person for appointment or re-appointment in the form and manner
set out in the Company's articles of association.
Each Director who is appointed by the Directors (and who has not been elected
as a Director of the Company by the members at a general meeting held in the
interval since his appointment as a Director of the Company) is to be subject
to election as a Director of the Company by the members at the first Annual
General Meeting of the Company following his or her appointment. Thereafter
all Directors are subject to re-election at each Annual General Meeting of the
Company.
A person also ceases to be a Director if he or she resigns in writing, ceases
to be a Director by virtue of any provision of the Companies Act 2006, becomes
prohibited by law from being a Director, becomes bankrupt or is the subject of
a relevant insolvency procedure, or becomes of unsound mind, or if the Board
so decides following at least six months' absence without leave or if he or
she becomes subject to relevant procedures under the mental health laws, as
set out in the Company's articles of association.
Powers of the Directors
Subject to the provisions of the Companies Act, the memorandum and articles of
association of the Company and any directions given by Shareholders by special
resolution, the articles of association specify that the business of the
Company is to be managed by the Directors, who may exercise all the powers of
the Company, whether relating to the management of the business or not.
Conflicts of Interests
The Directors review the disclosure of conflicts of interest quarterly, with
changes reviewed and noted at the beginning of each Board meeting. A Director
who has a potential conflict of interest has the interest authorised and
acknowledged by the Board. Procedures to disclose and authorise conflicts have
been adhered to throughout the year.
Directors' Responsibilities
The Directors confirm that:
· so far as each of the Directors is aware there is no relevant
audit information of which the Company's auditor is unaware; and
· the Directors have taken all steps that they ought to have taken
as Directors in order to make themselves aware of any relevant audit
information and to establish that the auditor is aware of that information.
Auditor
BDO LLP is the appointed auditor of the Company and offer themselves for
reappointment. In accordance with section 489 (4) of the Companies Act 2006 a
resolution to reappoint BDO LLP as auditor and to authorise the Directors to
fix their remuneration will be proposed at the forthcoming Annual General
Meeting.
Going Concern
After making the necessary enquiries, the Directors confirm that they are
satisfied that the Company has adequate resources to continue in business for
at least the next 12 months from the date of approval of these financial
statements to 31 May 2025. The Board receives regular reports from the
Investment Manager, and the Directors believe that, as no material
uncertainties leading to significant doubt about going concern have been
identified, it is appropriate to continue to apply the going concern basis in
preparing the Financial Statements. Further information on the Going Concern
of the Company can be found in the Strategic report on pages 4 to 41and note 2
to the financial statements on page 82.
Annual Report
The Board is of the opinion that the Annual Report, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
Shareholders to assess the position, performance, strategy and business model
of the Company.
The Board recommends that the Annual Report, the Report of the Directors and
the Independent Auditor's Report for the year ended 29 February 2024 are
received and adopted by the Shareholders. A resolution concerning this will be
proposed at the forthcoming Annual General Meeting.
VCT Regulation
The Investment Policy is designed to ensure that the Company continues to
qualify and is approved as a VCT by HMRC. In order to maintain its status
under Venture Capital Trust legislation, a VCT must comply on a continuing
basis with the provisions of section 274 of the Income Tax Act 2007 as
follows:
(1) the Company's income must be derived wholly or mainly from shares and
securities;
(2) at least 80% of the HMRC value of its investments must have been
represented throughout the year by shares or securities that are classified as
"qualifying holdings";
(3) at least 70% by HMRC value of its total qualifying holdings must have
been represented throughout the year by holdings of "eligible shares";
(4) at least 30% of funds raised in each accounting period must be invested
in qualifying holdings by the anniversary of the end of the accounting period
in which funds were raised;
(5) at the time of investment, or addition to an investment, the Company's
holdings in any one company must not have exceeded 15% by HMRC value of its
investments;
(6) the Company must not have retained greater than 15% of its income earned
in the year from shares and securities;
(7) the Company's shares throughout the year must have been listed on a
regulated European market;
(8) an investment in any company must not cause that company to receive more
than £5 million in State aid risk finance in the 12 months up to date of the
investment, nor more than £12 million in total (the limits are £10 million
and £20 million respectively for a "knowledge intensive" company);
(9) the Company must not invest in a company whose trade is more than seven
years old (ten years for a "knowledge intensive" company) unless the company
previously received State and risk finance in its first seven years, or the
company is entering a new market and a turnover test is satisfied;
(10) the Company's investment in a company must not be used to acquire another
business, or shares in another company; and
(11) the Company may only make qualifying investments or certain
non-qualifying investments permitted by section 274 of the Income Tax Act
2007.
Environment
The management and administration of the Company is undertaken by the
Investment Manager. TPIM recognises the importance of its environmental
responsibilities, monitors its impact on the environment, and designs and
implements policies to reduce any damage that might be caused by its
activities. Initiatives designed to minimise the Company's impact on the
environment include recycling and reducing energy consumption.
Anti-bribery Policy
The Company will not tolerate bribery under any circumstances in any
transaction in which the Company is involved.
TPIM reviews the anti-bribery policies and procedures of all portfolio
companies.
Environmental, Social, Employee and Human Rights Issues
As the Company has no employees, it does not maintain specific policies in
relation to these matters. Due to the nature of the Company's activities,
there being no employees and only four Non-Executive Directors, there are no
Human Rights issues to report. Its investment in a company engaged in energy
generation from renewable sources contributed to a reduction in carbon
emissions.
Diversity
The Board of Directors comprises two female and two male Directors.
The Company does not have any employees or office space. As such the Company
does not operate a diversity policy with regards to any administrative,
management and supervisory functions.
Employees
The Company has no employees and accordingly has no requirement to separately
report on this area.
The Investment Manager is an equal opportunities employer who respects and
seeks to empower each individual and the diverse cultures, perspectives,
skills and experiences within its workforce. The Investment Manager places
great importance on company culture and the wellbeing of its employees and
considers various initiatives and events to support a positive work
environment.
Investment and Co-Investment
The Company may co-invest with other funds managed by TPIM.
Matters Covered in the Strategic Report
The information that fulfils the reporting requirements relating to the
following matters can be found on the pages identified.
Matter Page Reference
Future Developments 4 to 11
Financial risk management objectives 94 to 96
Information on exposure to price risk, liquidity risk and cashflow risk 18 to 19
Jane Owen
Chair
31 May 2024
Information Disclosures under the AIFM Directive
The Company AIFM, Triple Point Investment Management LLP, is authorised by the
FCA under the AIFM directive. The Company is an Alternative Investment Fund
("AIF") managed by the AIFM.
The Triple Point Group has an established Remuneration Policy which applies to
all staff of Triple Point Investment Management LLP (the AIFM of the
Company). The purpose of this policy is to ensure that the remuneration of its
staff complies with various rules and regulations in place, including the
AIFMD Remuneration Code (which can be located in SYSC 19B) (the "Code"), is
consistent with and promotes sound and effective risk management and does not
encourage risk-taking which is inconsistent with the risk profiles, rules or
instruments of incorporation of the AIFM and the AIFs it manages.
Employee remuneration disclosure
The table below provides an overview of the following for all staff that carry
out activities for or on behalf of the Company:
· The total amount of remuneration for the financial year, split
into fixed and variable remuneration, including the number of staff.
· The aggregate amount of remuneration for, and the number of Code
Staff.
The AIFM has calculated the proportionate amount of relevant staff's
remuneration who carry out activities for the AIF.
Total Remuneration Headcount Remuneration (£)
Fixed remuneration 31 1,019,446
Variable remuneration 26 448,102
Code Staff Remuneration Headcount Remuneration (£)
Fixed remuneration 6 240,027
Variable remuneration 4 300,655
Directors' Responsibility Statement
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with UK adopted international accounting
standards and applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors are required to prepare the
Company financial statements in accordance with UK adopted international
accounting standards. Under company law the Directors must not approve the
financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or loss for the
Company for that period.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether they have been prepared in accordance with UK
adopted international accounting standards, subject to any material departures
disclosed and explained in the financial statements;
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business;
· prepare a Directors' report, a strategic report and Directors'
remuneration report which comply with the requirements of the Companies Act
2006.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the company's transactions and disclose with
reasonable accuracy at any time the financial position of the company and
enable them to ensure that the financial statements comply with the Companies
Act 2006.
They are also responsible for safeguarding the assets of the company and hence
for taking reasonable steps for the prevention and detection of fraud and
other irregularities. The Directors are responsible for ensuring that the
Annual Report and accounts, taken as a whole, are fair, balanced, and
understandable and provides the information necessary for Shareholders to
assess the Company's performance, business model and strategy.
The Directors are responsible for ensuring the Annual Report and the financial
statements are made available on a website. Financial statements are published
on the Company's website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of
the Company's website is the responsibility of the Directors. The Directors'
responsibility also extends to the ongoing integrity of the financial
statements contained therein.
The Directors have delegated the hosting and maintenance of the Company's
website content to the Investment Manager and its materials are published on
the Triple Point website www.triplepoint.co.uk (http://www.triplepoint.co.uk/)
.
Directors' responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
· the financial statements have been prepared in accordance with
the applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit and loss of the Company;
and
· the Annual Report includes a fair review of the development and
performance of the business and the financial position of the Company,
together with a description of the principal risks and uncertainties that they
face.
On behalf of the Board.
Jane Owen
Chair
31 May 2024
Statement of Comprehensive Income
For the year ended 29 February 2024
29 February 2024 28 February 2023
Note Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment income 5 682 - 682 213 - 213
Gains on investments 12 - 261 261 - 187 187
Investment return 682 261 943 213 187 400
Investment management fees 6 102 922 1,024 113 1,014 1,127
Other expenses 7 704 - 704 638 - 638
806 922 1,728 751 1,014 1,765
Loss before taxation (124) (661) (785) (538) (827) (1,365)
Taxation 10 - - - - - -
Loss after taxation (124) (661) (785) (538) (827) (1,365)
Other comprehensive income - - - - - -
Total comprehensive loss (124) (661) (785) (538) (827) (1,365)
Basic & diluted (loss)/earnings per Share
A Shares (wound down) - - - 0.10p (2.93p) (2.83p)
B Shares (wound down) - - - (1.44p) 33.75p 32.31p
Venture Shares 11 (0.23p) (1.23p) (1.46p) (1.17p) (7.30p) (8.47p)
The total column of this statement is the Statement of Comprehensive Income of
the Company prepared in accordance with UK-adopted International Accounting
Standards (IAS). The supplementary revenue return and capital columns have
been prepared in accordance with the Association of Investment Companies
Statement of Recommended Practice ("AIC SORP" updated July 2022) in so far as
it does not conflict with IAS.
All revenue and capital items in the above statement derive from continuing
operations.
The Company has only one class of business and derives its income from
investments made in shares and securities as well as from bank deposits and
money market funds.
The accompanying notes on pages 82 to 97 form an integral part of these
statements.
Statement of Financial Position
At 29 February 2024
Company No: 07324448
29 February 2024 28 February 2023
Note £'000 £'000
Non-current assets
Financial assets at fair value through profit or loss 12 43,824 31,979
Current assets
Receivables 14 356 667
Cash and cash equivalents 15 18,199 18,222
Deferred proceeds 300 -
18,855 18,889
Total assets 62,679 50,868
Current liabilities
Payables and accrued expenses 16 483 7,035
Current taxation payable - 16
483 7,051
Net assets 62,196 43,817
Equity attributable to equity holders
Share capital 17 632 593
Share premium 23,714 3,497
Share redemption reserve 174 9
Special distributable reserve 36,418 37,675
Capital reserve 3,119 3,780
Revenue reserve (1,861) (1,737)
Total equity 62,196 43,817
Shareholders' funds
Net asset value per A Share - 1.00p
Net asset value per B Share - 1.00p
Net asset value per Venture Share 20 98.55p 102.17p
The statements were approved by the Directors and authorised for issue on 31
May 2024 and are signed on their behalf by:
Jane Owen
Chair
31 May 2024
The accompanying notes on pages 82 to 97 form an integral part of these
statements.
Statement of Changes in Shareholders' Equity
For the year ended 29 February 2024
Issued Capital Share Premium Share Redemption Reserve Special Distributable Reserve Capital Reserve Revenue Reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Year ended 29 February 2024
Opening balance 593 3,497 9 37,675 3,780 (1,737) 43,817
Issue of Share capital 204 20,710 - - - - 20,914
Cost of issue of Shares - (493) - - - - (493)
Share buybacks - - - (17) - - (17)
Cancellation of Shares (165) - 165 (165) - - (165)
Dividends paid/payable - - - (1,075) - - (1,075)
Transactions with owners 39 20,217 165 (1,257) - - 19,164
Loss before taxation - - - - (661) (124) (785)
Taxation - - - - - - -
Loss after taxation - - - - (661) (124) (785)
Other comprehensive income - - - - - - -
Total comprehensive loss for the period - - - - (661) (124) (785)
Balance at 29 February 2024 632 23,714 174 36,418 3,119 (1,861) 62,196
The Capital Reserve consists of:
Investment holding gains 5,514
Other realised losses* (2,395)
3,119
Issued Capital Share Premium Share Redemption Reserve Special Distributable Reserve Capital Reserve Revenue Reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Year ended 28 February 2023
Opening balance 430 26,328 7 5,052 4,607 (1,199) 35,225
Issue of Share capital 165 18,587 - - - - 18,752
Cost of issue of Shares - (461) - - - - (461)
Share buybacks (2) - 2 (211) - - (211)
Cancellation of Share premium - (40,957) - 40,957 - - -
Dividends paid/payable - - - (8,123) - - (8,123)
Transactions with owners 163 (22,831) 2 32,623 - - 9,957
Loss before taxation - - - - (827) (538) (1,365)
Taxation - - - - - - -
Loss after taxation - - - - (827) (538) (1,365)
Other comprehensive income - - - - - - -
Total comprehensive loss for the period - - - - (827) (538) (1,365)
Balance at 28 February 2023 593 3,497 9 37,675 3,780 (1,737) 43,817
The Capital Reserve consists of:
Investment holding gains 4,445
Other realised losses (665)
3,780
*Contained within total other realised losses are the following that occurred
during the year ended 29 February 2024: £239k relating to Shenval; £374k
relating to Pixie; and £191k relating to Localz.
The capital reserve represents the proportion of Investment Management fees
charged against capital and realised/unrealised gains or losses on the
disposal/revaluation of investments. The unrealised element of the capital
reserve is not distributable. The special distributable reserve was created on
court cancellation of the Share premium account. The revenue reserve realised
capital reserve and special distributable reserve are distributable by way of
dividend.
At 29 February 2024 the total reserves available for distribution under the
Companies Act are £32,162,000 (2023: £35,273,000). This consists of the
special distributable reserve less the realised capital loss and less the
revenue loss.
At 29 February 2024 the total reserves available for distribution under the
VCT rules are £2,303,000 (2023: £3,561,000). To maintain VCT status, amounts
in the special distributable reserve are not distributable until after the
third accounting period following the relevant allotments of Share capital.
Further information can be found in note 18.
Statement of Cash Flows
For the year ended 29 February 2024
Year ended Year ended
29 February 2024 28 February 2023
£'000 £'000
Cash flows from operating activities
(Loss) before taxation (785) (1,365)
Net (gain) on investments during the period (261) (187)
Adjustment for: Interest on fixed deposits and money market funds (576) (66)
Cash flow used in operations (1,622) (1,618)
Decrease/(increase) in receivables 311 (391)
(Decrease) in payables (292) (488)
Cash flow used in operating activities (1,603) (2,497)
Adjustment for non-cash items:
(Decrease)/Increase in taxation (16) 1
Net cash flows used in operating activities (1,619) (2,496)
Cash flows from investing activities
Purchase of financial assets at fair value through profit or loss (11,884) (11,381)
Disposal of financial assets at fair value through profit or loss - 9,570
Interest on fixed deposits and money market funds 576 66
Net cash flows used in investing activities (11,308) (1,745)
Cash flows from financing activities
Issue of Shares* 20,222 18,086
Buyback of Shares (182) (211)
Dividends paid (7,136) (1,659)
Net cash flows from financing activities 12,904 16,216
Net (decrease)/increase in cash and cash equivalents (23) 11,975
Reconciliation of net cash flow to movements in cash and cash equivalents
Cash and cash equivalents at 1 March 2023 18,222 6,247
Net (decrease)/increase in cash and cash equivalents (23) 11,975
Cash and cash equivalents at 29 February 2024 18,199 18,222
* Net of Share issue costs and dividend reinvestment
The accompanying notes on pages 82 to 97 form an integral part of these
statements.
Notes to the Financial Statements
1. Corporate Information
The Financial Statements of the Company for the year ended 29 February 2024
were authorised for issue in accordance with a resolution of the Directors on
31 May 2024.
The Company applied for listing on the London Stock Exchange on 24 December
2010.
Triple Point Venture VCT plc is incorporated and domiciled in Great Britain
and registered in England and Wales. The address of the Company's registered
office, which is also its principal place of business, is 1 King William
Street, London, EC4N 7AF.
The Company is required to nominate a functional currency, being the currency
in which the Company predominantly operates. The functional and reporting
currency is pounds sterling (£), reflecting the primary economic environment
in which the Company operates.
The principal activity of the Company is investment. The Company's investment
strategy is to offer exposure to venture capital investments and to maintain
liquidity in cash or cash-based funds.
2. Basis of Preparation and Accounting Policies
Basis of Preparation
The Financial Statements of the Company for the year to 29 February 2024 have
been prepared in accordance with UK-adopted international accounting standards
and the applicable legal requirements of the Companies Act 2006 and comply
with the Statement of Recommended Practice ("SORP"): "Financial Statements of
Investment Trust Companies and Venture Capital Trusts" issued by the
Association of Investment Companies ("AIC") in July 2022.
The Financial Statements are prepared on a historical cost basis except that
investments are shown at fair value through profit or loss ("FVTPL"). The
Company presents its Income Statement in a tri-columnar format to give
Shareholders additional detail of the performance of the Company, split
between items of a revenue or capital nature as required by the SORP.
From 1 January 2023, IAS 1 has been amended to introduce the concept Material
Accounting Policy Information. The Company has performed a review of its
existing accounting policies and updated where relevant. Other new standards
coming into force during the year and future standards that come into effect
after the year-end have not had a material impact on these financial
statements. The Company has carried out an assessment of accounting standards,
amendments and interpretations that have been issued by the International
Accounting Standards Board and that are effective for the current reporting
period. The Company has determined that the transitional effects of the
standards do not have a material impact.
Going Concern
The Company's business activities, together with the factors likely to affect
its future development, performance and position, are set out in the
Investment Manager's Review. The Directors have a reasonable expectation that
the Company has adequate resources to continue in operational existence for
the next five years. Accordingly, they continue to adopt the going concern
basis in preparing the financial statements.
The Financial Risk Management objectives and policies of the Company,
including exposure to price risk, interest rate risk, credit risk and
liquidity risk are discussed in note 19 to the financial statements.
The Company continues to meet day-to-day liquidity needs through its cash
resources on hand. The Company's revenue comes predominantly from interest
earned on its cash and liquid resources and to a lesser extent from the
investments in Shenval (Hydroelectric power) and Modern Power Generation
("MPG"), a small lending business. The Company takes an active approach to
manage liquidity and increase the return on cash held.
The Company continues to raise funds via new share issues to investors, and at
the reporting date the Company had cash of £18.2 million and net current
assets of £18.1 million (2023: £11.8 million). A further £7.6 million has
been raised since the reporting date, further strengthening the Company's
liquidity position. This cash is more than sufficient to enable the Company to
continue as a going concern for the foreseeable future.
The major cash outflows of the Company continue to be the payment of
dividends to Shareholders, costs relating to the funding of investments and
management fees due to the Investment Manager. Dividends and, for the most
part, new investments are discretionary and, in a time of stress the
Investment Manager may allow the Company to defer payment of management fees.
The Directors have reviewed cash flow projections, including various scenarios
comprising a plausible downside scenario and a severe downside scenario,
whereby the Company does not raise any future capital. In both downside
scenarios, the Company has sufficient financial resources to meet its
obligations for at least 12 months from the date of this report being end of
May 2025.
Accordingly, the Directors continue to adopt the going concern basis in
preparing the financial statements.
Critical Accounting Judgements and estimates
The preparation of Financial Statements in conformity with UK-adopted
international accounting standards requires management to make judgements,
estimates and assumptions that affect the application of policies and the
reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience
and various other factors believed to be reasonable under the circumstances,
the results of which form the basis of making the judgements about carrying
values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these judgements.
The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities relate
to:
· the valuation of unlisted financial investments held at fair
value through profit or loss, which are valued on the basis noted below (under
the heading Non-Current Asset Investments) and in note 12;
· the recognition or otherwise of accrued income on loan notes and
similar instruments granted to investee companies, which are assessed in
conjunction with the overall valuation of unlisted financial investments as
noted above.
The key estimates made by Directors are in the valuation of non-current assets
and the assessment of unrealised gains and losses. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is
revised if the revision affects that period or in the period of revision and
future periods if the revision affects both current and future periods.
The carrying value of investments is disclosed in note 12. The critical
accounting policies that are declared will not necessarily result in material
changes to the financial statements in any given period but rather contain a
potential for material change.
The main accounting and valuation policies used by the Company are disclosed
in the notes below. Whilst not all of the significant accounting policies
require subjective or complex judgements, the Company considers that the
following accounting policies should be considered critical.
The Company has designated all fixed asset investments as being held at fair
value through profit or loss; therefore, all gains and losses arising from
investments held are taken to the Income Statement in the period in which they
occur. Accordingly, all interest income, fee income, expenses and investment
gains and losses are attributable to assets designated as being at fair value
through profit or loss.
Investments are regularly reviewed to ensure that the fair values are
appropriately stated. Unquoted investments are valued in accordance with
current IPEV valuation guidelines, although this does rely on subjective
estimates such as appropriate sector earnings or revenue-based multiples,
forecast results of portfolio companies, asset values of subsidiary companies
and liquidity or marketability of the investments held. Although the Company
believes that the assumptions concerning the business environment and
estimates of future cash flows are appropriate, changes in estimates and
assumptions could require changes in the stated values.
This could lead to additional changes in fair value in the future. The
Directors do not believe that there are any further key judgements made in
applying accounting policies or estimates in respect of the Financial
Statements.
Material Accounting Policies
These accounting policies have been applied consistently in preparing these
Financial Statements.
New and amended standards and interpretations
A number of amended standards became applicable for the current reporting
period. The Company did not have to change its accounting policies or make
retrospective adjustments as a result of adopting these amended standards. The
Board do not expect that these new or amended standards will have a material
impact on the Company's financial statements.
The most significant of these standards are set out below:
New standards and amendments - applicable 1 January 2023
(a) IFRS 17 Insurance Contracts
(b) Classification of Liabilities as Current or Non-current -
Amendments to IAS 1
(c) Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2
(d) Definition of Accounting Estimates - Amendments to IAS 8
(e) Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - Amendments to IAS 12
(f) Sale or contribution of assets between an investor and its
associate or joint venture - Amendments to IFRS 10 and IAS 28
FORTHCOMING REQUIREMENTS
The following standards and interpretations had been issued but were not
mandatory for annual reporting periods ending on or before 29 February 2024.
(a) Amendments to IAS 1 Presentation of Financial Statements
· Non-current liabilities with covenants
· Deferral of Effective Date Amendment (published 15 July
2020)
· Classification of liabilities as Current or Non-current
(Amendment to IAS1)
(b) Lease liability in a Sale and Leaseback (Amendment to IFRS 16)
(c) IAS 7 "Statement of Cash Flows" and IFRS 7 "Financial
Instruments: Disclosures (Amendment - Supplier Finance Arrangements)".
Non-Current Asset Investments
The Company invests in financial assets with a view to profiting from their
total return through capital growth. Consistent with the business model, these
investments are managed, and their performance is evaluated on a fair value
basis. Accordingly, upon initial recognition the investments are classified by
the Company as "at fair value through profit or loss" in accordance with IFRS
9.
Non-current asset investments are included initially at fair value, which is
taken to be their cost (excluding expenses incidental to the acquisition which
are written off in the Statement of Comprehensive Income and allocated to
"capital" at the time of acquisition). Subsequently the investments are valued
at "fair value" which is the price that would be received to sell an asset or
paid to transfer a liability (exit price) in an orderly transaction between
market participants at the measurement date.
In the case of unquoted investments, fair value is established by using
measures of value such as price of recent transaction, earnings or
revenue-based multiples, discounted cash flows and net assets. This is
consistent with IPEV valuation guidelines. Where price of recent transaction
is used, the valuation is calibrated to a valid methodology. The Board believe
that those investments valued based on the transaction price adjusted for
business performance and market indicators are done so because the transaction
price is still representative of fair value.
Where securities are classified upon initial recognition at fair value through
profit or loss, gains and losses arising from changes in fair value are
included in the Statement of Comprehensive Income for the year as capital
items in accordance with the SORP. The profit or loss on disposal is
calculated net of transaction costs of disposal. Investments are recognised as
financial assets on legal completion of the investment contract and are
de-recognised on legal completion of the sale of an investment.
The Company has taken the exemption permitted by IAS 28 "Investments in
Associates and Joint Ventures" and IFRS 11 "Joint Arrangements" for entities
similar to investment entities and measures its investments in associates and
joint ventures at fair value. The Directors consider an associate to be an
entity over which the Company has significant influence, through an
ownership of between 20% and 50%. The Company's associates and joint ventures
are disclosed in note 13.
Income
Investment income includes interest earned on bank balances, money market
funds and investment loans and includes income tax withheld at source where
appropriate. Dividend income is shown net of any related tax credit and is
brought into account on the ex-dividend date.
Fixed returns on investment loans and debt are recognised on a time
apportionment basis so as to reflect the effective yield, provided there is no
reasonable doubt that payment will be received in due course.
Expenses
All expenses are accounted for on the accruals basis. Expenses are charged to
revenue with the exception of the investment management fee which is charged
10% to the revenue account and 90% to the capital account recognising the
significant increase to the Venture investments and the expected nature of
returns from them.
The transaction costs incurred when purchasing or selling assets are written
off to the Income Statement in the period that they occur.
Taxation
Corporation tax payable is applied to profits chargeable to corporation tax,
if any, at the current rate in accordance with IAS 12 "Income Taxes". The tax
effect of different items of income/gain and expenditure/loss is allocated
between capital and revenue on the "marginal" basis as recommended by the
SORP.
In accordance with IAS 12, deferred tax is recognised using the balance sheet
method providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. A deferred tax asset is recognised to the extent that
it is probable that future taxable profits will be available against which the
temporary difference can be utilised. Deferred tax is measured at the tax
rates that are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by
the reporting date. The Directors have considered the requirements of IAS 12
and do not believe that any provision for deferred tax should be made.
Financial Instruments
The Company's principal financial assets are its investments and the
accounting policies in relation to those assets are set out above. Financial
liabilities and equity instruments are classified according to the substance
of the contractual arrangements entered.
An equity instrument is any contract that evidences a residual interest in the
assets of the entity after deducting all of its financial liabilities. Where
the contractual terms of share capital do not have any terms meeting the
definition of a financial liability then this is classed as an equity
instrument.
Financial assets and financial liabilities are recognised in the Company's
Statement of Financial Position when the Company becomes a party to the
contractual provisions of the instrument. At 29 February 2024 and 28 February
2023 the carrying amounts of cash and cash equivalents, receivables, payables,
accrued expenses and short-term borrowings reflected in the financial
statements are reasonable estimates of fair value in view of the nature of
these instruments or the relatively short period of time between the original
instruments and their expected realisation.
Financial Assets
The classification of financial assets at initial recognition depends on the
purpose for which the financial asset was acquired and its characteristics.
All financial assets are initially recognised at fair value. All purchases of
financial assets are recorded at the date on which the Company became party
to the contractual requirements of the financial asset.
The Company's financial assets principally comprise investments held at fair
value and loans and receivables. The Company holds trade receivables with the
objective to collect the contractual cash flows and therefore measures them
subsequently at amortised cost using the effective interest method. The
Company's loan and equity investments are held at fair value. Gains or losses
resulting from the movement in fair value are recognised in the Company's
Statement of Comprehensive Income at each valuation date.
Financial assets are recognised/derecognised at the date of the
purchase/disposal. Investments are initially recognised at cost, being the
fair value of consideration given. Transaction costs are recognised in the
Consolidated Statement of Comprehensive Income as incurred.
Fair value is defined as the amount for which an asset could be exchanged
between knowledgeable willing parties in an arm's length transaction. Fair
value is calculated on an unlevered, discounted cash flow basis in accordance
with IFRS 13 and IFRS 9.
Derecognition of financial assets (in whole or in part) takes effect:
• when the Company has transferred substantially all the risks and rewards
of ownership; or
• when the contractual right to receive cash flow has expired.
Financial liabilities
Financial liabilities are classified according to the substance of the
contractual agreements entered into and are recorded on the date on which the
Company becomes party to the contractual requirements of the financial
liability.
All loans and borrowings are initially recognised at cost, being fair value of
the consideration received, less issue costs where applicable. After initial
recognition, all interest-bearing loans and borrowings are subsequently
measured at amortised cost using the effective interest rate method.
The Company's other financial liabilities measured at amortised cost include
trade and other payables which are initially recognised at fair value and
subsequently measured at amortised cost using the effective interest rate
method. A financial liability (in whole or in part) is derecognised when the
Company has extinguished its contractual obligations, it expires or is
cancelled. Any gain or loss on derecognition is taken to the Statement of
Comprehensive Income.
Issued Share Capital
The Company has now cancelled and repaid Shareholders in respect of both the A
Shares and B Shares, and as a result the Company now only has one class of
shares being the Venture Shares.
Venture Shares are classified as equity because they do not contain an
obligation to transfer cash or another financial asset and each share has full
voting, dividend and capital distribution rights.
Issue costs associated with the allotment of Shares have been deducted from
the Share premium account in accordance with IAS 32. The Company had no
external debt at the reporting date; consequently, all capital is represented
by the value of Share capital, distributable and other reserves. Total
Shareholder equity at 29 February 2024 was £62.2 million (2023: £43.8
million).
Cash and Cash Equivalents
Cash and cash equivalents representing cash available at less than three
months' notice are classified as Financial Assets at amortised cost under IFRS
9.
Cash and cash equivalents comprises cash at bank and other highly liquid
short-term investments redeemable or with a maturity of three months or less
at the date of acquisition and subject to insignificant changes in fair value.
For the purpose of the Cash Flow Statement, cash and cash equivalents
comprises, cash at bank and money market funds. The carrying amount
approximates fair value.
Reserves
The revenue reserve (retained earnings) and capital reserve reflect the
guidance in the SORP. The capital reserve represents the proportion of
Investment Management fees charged against capital and any realised/unrealised
gains or losses on the disposal/revaluation of investments.
The special distributable reserve was created on court cancellations of the
Share premium account, most recently and during the financial year on 16
August 2022 in respect of the Venture Share Class.
The revenue reserve, the portion of the capital reserve representing realised
capital profits and losses less unrealised gains and the special distributable
reserve are distributable by way of dividend. More information on the
Company's available reserves is in note 18.
Foreign currencies
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the
reporting date are translated at the foreign exchange rate ruling at that
date. Foreign exchange differences arising on translation are recognised in
the Statement of Comprehensive Income under Revenue or Capital column wherever
appropriate.
Dividends
Dividends payable are recognised as distributions in the financial statements
when the Company's obligation to make payment has been established. Typically
this is not until payment is made as the Company usually declares interim
dividends opposed to final dividends.
3. Segmental Reporting
The Directors are of the opinion that the Company only has a single operating
segment of business, being investment activity.
4. Significant risk changes in the current reporting period
The Company has reviewed its exposure to climate related and other emerging
business risks, but has not identified any new significant risks that could
impact the financial performance or position of the Company as at 29 February
2024.
For a detailed discussion about the Company's performance please refer to the
Chair's statement on pages 4 to 11. The financial position of the Company can
be found on page 78.
All revenues and assets are generated and held in the UK.
5. Investment Income
Year Ended 29 February 2024 Year Ended 28 February 2023
Total Total
£'000 £'000
Interest receivable on bank balances 183 34
Liquidity Fund Holdings interest 403 -
Loan interest 96 179
682 213
6. Investment Management Fees
Year ended 29 February 2024 Year ended 28 February 2023
Total Total
£'000 £'000
Investment Management Fees 1,024 1,127
TPIM provides investment management services to the Company under an
Investment Management Agreement dated 12 September 2023. From 12 September
2023, the Investment Manager was appointed AIFM and is now responsible for
risk management and portfolio management.
The Investment Manager has full discretion under the Investment Management
Agreement to make investments in accordance with the Company's Investment
Policy from time to time. The agreement provides for an investment management
fee of 2.00% per annum of net assets, payable quarterly in arrears. The
appointment shall continue for a period of at least six years from the date of
first admission of Venture Shares which was on 12 April 2019.
Performance fee
Triple Point earns a performance fee if the total return (net asset value plus
distributions made) to holders of the Venture Shares exceeds their net initial
subscription price by an annual threshold of 3% per annum, calculated on a
compound basis. To the extent that the total return exceeds the threshold over
the relevant period then a performance incentive fee of 20% of the excess is
payable to Triple Point. Performance fees are assessed based on the VCT's
audited year-end valuations (i.e. in February each year) and will be accrued
in the accounts of the Company. High water marks apply. No performance fees
have been earned by Triple Point in the current or prior year.
Fees paid to the Investment Manager for administrative and other services
during the year were £142,000 (2023: £100,000).
The Investment Manager did not receive fees for services to investee companies
in the current or prior year.
7. Operating Expenses
All expenses are accounted for on an accruals basis.
Expenses are charged wholly to revenue, apart from management fees which are
charged 90% to capital and 10% to revenue; any performance fees incurred are
charged wholly to capital. Transaction costs incurred when selling assets are
written off to the Income Statement in the period that they occur.
Operating expenses Year ended Year ended
29 February 2024 28 February 2023
Total Total
£'000 £'000
Financial and regulation costs 133 136
General administration 56 23
Fees payable to the Company's auditor for audit services 75 65
Fees payable to the Company's auditor for audit-related assurance services - 13
Company secretarial services 24 22
Other professional fees 344 305
Directors' fees 71 70
Interest write-off - 4
Interest payable 1 -
704 638
VAT has been removed from the current year Audit fees and allocated to General
Administration expenses.
8. Auditor Remuneration
Fees paid to the Company's auditor, BDO LLP, are as follows:
Year ended 29 February 2024 Year ended 28 February 2023
Total Total
£'000 £'000
Fees payable to the Company's auditor:
for the audit of the Financial Statements 75 65
for other services - 13
75 78
BDO LLP were not appointed to provide any non-audit services to the Company
during the year.
For the year ended 29 February 2024, fees (excluding VAT) payable to the
Company's auditor for audit services were £74,890 (2023: £65,856). Fees
payable to the Company's auditor for audit-related assurance services during
the year were nil (2023: £12,500).
9. Directors' Remuneration
Year ended 29 February 2024 Year ended 28 February 2023
Total Total
£'000 £'000
Jane Owen 25 24
Chad Murrin* 8 19
Tim Clarke** - 7
Julian Bartlett 22 20
Jamie Brooke*** 15 -
Sam Smith**** 1 -
71 70
*Resigned as a Director effective 19 July 2023
**Resigned as a Director effective 14 July 2022
***Appointed as a Director effective 8 June 2023
****Appointed as a Director effective 8 February 2024
The only remuneration received by the Directors was their Directors' fees. The
Company has no employees other than the Non-Executive Directors. The average
number of Non-Executive Directors in the year was three. Full disclosure of
Directors' remuneration is included in the Directors' Remuneration report.
10. Taxation
Audited Audited
Year ended 29 February 2024 Year ended 28 February 2023
Total Total
£'000 £'000
Loss on ordinary activities before tax (785) (1,365)
Corporation tax @ 25% (28 Feb 2023 - 19%) (196) (259)
Effect of:
Capital gains not taxable (65) (35)
Disallowed expenditure 21 10
Unrelieved tax losses arising in the period - (3)
Excess management expenses on which deferred tax not recognised 240 287
Tax charge/(credit) for the period - -
Capital gains and losses are exempt from corporation tax due to the Company's
status as a Venture Capital Trust.
Investment companies which have been approved by HM Revenue & Customs
under section 1158 of the Corporation Tax Act 2010 are exempt from tax on
capital gains. The Directors are of the opinion that the Company has complied
with the requirements for maintaining investment trust status for the
purposes of section 1158 of the Corporation Tax Act 2010.
The Company has not provided for deferred tax on any capital gains or losses
arising on the revaluation of investments.
Deferred tax asset of £1.1 million (2023: £0.9 million) has not been
recognised as it is unlikely that the Company will generate sufficient taxable
profits in the future to utilise these expenses.
11. Earnings per Share
The loss per Venture Share is 1.46p (2023: loss of 8.47p) and is based on a
loss from ordinary activities after tax of £0.8 million (2023: £3.3 million
loss) and on the weighted average number of Venture Shares in issue during the
period of 53,729,274 (2023: 38,672,163).
There is no difference between basic or diluted Earnings per Share as there
are no convertible securities.
12. Financial Assets at Fair Value through Profit or Loss
Investments
Fair Value Hierarchy:
IFRS 13 requires disclosure of fair value measurement by level. The level of
fair value hierarchy within the financial assets or financial liabilities is
determined on the basis of the lowest level input that is significant to the
fair value measurement.
Financial assets and financial liabilities are classified in their entirety
into only one of the following three levels:
Level 1: quoted prices on active markets for identical assets or liabilities.
The fair value of financial instruments traded on active markets is based on
quoted market prices at the date of the Statement of Financial Position. A
market is regarded as active where the market in which transactions for the
asset or liability takes place with sufficient frequency and volume to provide
pricing information on an ongoing basis. The quoted market price used for
financial assets held by the Company is the current bid price.
Level 2: the fair value of financial instruments that are not traded on active
markets is determined by using valuation techniques. These valuation
techniques maximise the use of observable inputs including market data where
it is available either directly or indirectly and rely as little as possible
on entity specific estimates. If all significant inputs required to fair value
an instrument are observable, the instrument is included in Level 2.
Level 3: the fair value of financial instruments that are not traded on an
active market (for example, investments in unquoted companies) is determined
by using valuation techniques such as discounted cash flows. If one or more of
the significant inputs is based on unobservable inputs including market data,
the instrument is included in Level 3.
There have been no transfers between these classifications in the period. Any
change in fair value is recognised through the Statement of Comprehensive
Income.
All items held at fair value through profit or loss were designated as such
upon initial recognition. Movements in investments at fair value through
profit or loss during the year to 29 February 2024 are summarised below. The
most critical estimates, assumptions and judgements relate to the
determination of the carrying value of investments at "fair value through
profit and loss" (FVTPL).
All investments held by the Company are classified as FVTPL and measured in
accordance with the International Private Equity and Venture Capital (IPEV)
valuation guidelines, as updated in December 2022. For investments actively
traded on organised financial markets, fair value is generally determined by
reference to Stock Exchange market quoted bid prices at the close of business
on the date of the Statement of Financial Position, the Company does not have
any quoted investments at the reporting date.
Unquoted investments are stated at fair value by the Directors at each
measurement date in accordance with appropriate valuation techniques, which
are consistent with the IPEV valuation guidelines:
i. the price of a recent investment, if resulting from an orderly
transaction, is assumed to represent fair value as of the transaction date. At
every subsequent measurement date, the recent investment price may remain an
appropriate indicator of fair value, however as its validity is eroded over
time, adequate consideration will be given to the current facts and
circumstances, including, but not limited to, changes in the market or changes
in the performance of the portfolio company. We may solely rely on the most
recent price for certain investments where other valuation methodologies may
not be possible, notably where there are no current or short-term future
revenues expected;
ii. where a recent transaction is not deemed to be representative of fair
value, a market approach may be considered. This technique involves the
application of an appropriate multiple to a performance measure (typically
revenue, but potentially also EBITDA) in order to derive the value of the
business. Appropriate multiples are usually derived by reference to a current
market-based multiple, as reflected in market valuations of comparable quoted
companies or the price at which comparable companies have changed ownership,
to the extent this information is publicly available. It must be acknowledged
that as we invest in companies looking to disrupt their respective sectors or
enter new technologies, direct comparators often do not exist. In the absence
of relevant comparable calibration to the recent investment price validates
that the valuation techniques using contemporaneous market inputs generate
fair value at the investment date and that the same valuation techniques using
updated market inputs as of each subsequent reporting date will generate fair
value at each such date. This approach will notably help capture any risks
associated with a lack of liquidity in the minority holding of an unquoted
investment and may be further adjusted to reflect the trading performance of
the portfolio company versus expectations as at the investment;
iii. for investments in early or development stages, where there are no
current or short-term future revenues expected, the most appropriate valuation
approach to measure fair value may be based on calibrating the latest pricing
round using qualitative milestones. These milestones provide a directional
indication of the movement in fair value;
iv. where a number of discreet outcomes can be expected for an investment, a
simplified probability-weighted expected return model may be used to determine
fair value; and
v. where appropriate, an income approach may be used.
Capital gains and losses on investments, whether realised or unrealised, are
dealt with in the revenue and revaluation reserves and movements in the period
are shown in the Income Statement. All figures are shown net of any applicable
transaction costs incurred.
All investments are initially recognised at transaction price and subsequently
measured at fair value. Changes in fair value are recognised in the Income
Statement. A key judgement made in applying the above accounting policy
relates to investments that are permanently written off. Where the value of an
investment has fallen permanently below the price of investment, the loss is
treated as a realised loss, even if the investment is still held.
The Board assesses the portfolio for such investments and, after agreement
with the Investment Manager, will agree the values that represent the extent
to which an investment loss has become realised. This is based upon an
assessment of objective evidence of that investment's future prospects, to
determine whether there is potential for the investment to recover in value.
Movements in Level 3 investments held at fair value through the profit or loss
during the year to 29 February 2024 were as follows:
Venture Shares
Cost Gains Fair Value
£'000 £'000 £'000
Year ended 29 February 2024:
Opening cost 27,762 27,762
Opening investment holding gains 4,217 4,217
Opening value at 1 March 2023* 27,762 4,217 31,979
Purchases at cost 11,884 11,884
Disposal** (750) (750)
Loss on disposal recognised in prior year 450 450
Net investment gains in current year 261 261
Closing value at 29 February 2024 38,896 4,928 43,824
A Shares B Shares Venture Shares Total
£'000 £'000 £'000 £'000
Year ended 28 February 2023:
Opening Cost 860 6,105 17,785 24,750
Opening investment holding gains/(losses) (94) (2,040) 7,366 5,232
Opening fair value at 1 March 2022 766 4,065 25,151 29,982
Purchases at cost - - 11,381 11,381
Disposal proceeds (233) (6,656) (2,681) (9,570)
Adjustments between Share Classes (246) - 245 (1)
Realised (loss)/gain on disposal (130) 551 592 1,013
Investment holding (losses)/gains (157) 2,040 (2,709) (826)
Closing fair value at 28 February 2023 - - 31,979 31,979
Closing cost - - 27,512 27,512
Closing investment holding gains - - 4,467 4,467
* The split between opening cost and investment holding gains as at 1 March
2023 has been reallocated. The net effect of this adjustment on the opening
fair value is nil.
** During the year ended 29 February 2024, the investment in Localz was
disposed of for expected proceeds of £456k which have been valued at £300k
to take into consideration uncertainties in future cash flows. Thus, a total
loss of £450k when compared to the original investment cost of £750k has
been recorded. As at the prior year ended 28 February 2023, £259k was
classified as a realised loss with the balance of £191k being recognised as
an unrealised loss. As at the year ended 29 February 2024, the remaining
£191k has been reclassified as a realised loss under the Statement of Changes
in Shareholders Equity.
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 Statement of
Financial Position date and accordingly any gains or losses on these items are
treated as unrealised.
Unquoted investments in the portfolio are considered Level 3 assets, such that
their values are not directly observable but are estimated using a combination
of valuation methodologies which notably extrapolate from observable market
data for comparable assets. The sensitivity of these valuations to a
reasonable possible change in such assumptions is given in note 19.
Further details of the types of investments are provided in the Investment
Manager's review and investment portfolio on pages 29 to 32 and 34 to 40 and
details of entities over which the VCT has significant influence are included
in note 13.
13. Unconsolidated associates and joint ventures
The principal undertakings in which the Company's interest at the year-end is
20% or more are as follows:
Name Registered address Holding
Green Highland Shenval Limited Q Court, 3 Quality Street, Edinburgh, EH4 5BP 22.09%
· The investment is a combination of debt and equity.
· Equity holding is equal to the voting rights.
· The investment is held in the UK.
14. Receivables
29 February 2024 28 February 2023
Total Total
£'000 £'000
Accrued income 23 -
Prepaid expenses 42 26
Other debtors* 291 641
356 667
*Other debtors relate to interest receivable on investment loans.
15. Cash and Cash Equivalents
29 February 2024 28 February 2023
Total Total
£'000 £'000
Cash at bank 18 18,222
Money Market funds 18,181 -
18,199 18,222
Cash and cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and that are subject to a lower
risk of changes in value. Therefore, an investment normally qualifies as a
cash equivalent only when it has a short maturity of, say, three months or
less from the date of acquisition.
This comprises investment grade bonds and investments in money market funds.
16. Payables and Accrued Expenses
29 February 2024 28 February 2023
Total Total
£'000 £'000
Trade Creditors 88 50
Other taxation and social security 6 -
Accrued expenses & deferred income 389 6,985
483 7,035
17. Share Capital
Ordinary shares of £0.01.
Year ended 29 February 2024
As at 1 March 2023 No of Venture Shares No of A Shares No of B Shares Total Shares Amount £'000
42,720,246 9,777,285 6,758,795 59,256,326 593
Allotted during the period
20 March 2023 5,831,295 - - 5,831,295 58
4 April 2023 2,093,574 - - 2,093,574 21
5 April 2023 464,579 - - 464,579 5
24 April 2023 161,021 - - 161,021 2
6 July 2023 1,138,499 - - 1,138,499 11
28 July 2023 1,347,801 - - 1,347,801 13
4 September 2023 (DRIS) 210,732 - - 210,732 2
27 October 2023 1,124,122 - - 1,124,122 11
30 November 2023 2,118,892 - - 2,118,892 21
21 December 2023 1,673,802 - - 1,673,802 17
13 February 2024 4,247,195 - - 4,247,195 42
Shares bought back and cancelled
10 March 2023 - (9,777,285) - (9,777,285) (97)
10 March 2023 - - (6,758,795) (6,758,795) (68)
4 August 2023 (6,958) - - (6,958) -
3 November 2023 (10,306) - - (10,306) -
12 December 2023 (874) - - (874) -
Ordinary Share Capital 29 February 2024 63,113,620 - - 63,113,620 631
Year ended 28 February 2023
As at 1 March 2022 No of Venture Shares No of A Shares No of B Shares Total Shares Amount
£'000
26,445,431 9,777,285 6,758,795 42,981,511 430
Allotted during the period
1 March 2022 3,034,337 - - 3,034,337 30
15 March 2022 1,172,794 - - 1,172,794 12
1 April 2022 4,067,490 - - 4,067,490 41
5 April 2022 1,698,756 - - 1,698,756 17
8 July 2022 1,755,825 - - 1,755,825 18
27 July 2022 698,271 - - 698,271 7
29 July 2022 692,265 - - 692,265 7
5 September 2022 196,331 - - 196,331 2
4 November 2022 1,308,744 - - 1,308,744 13
13 December 2022 1,859,708 - - 1,859,708 19
Shares bought back and cancelled
18 August 2022 (17,665) - - (17,665) (1)
18 November 2022 (192,041) - - (192,041) (2)
Ordinary Share Capital 28 February 2023 42,720,246 9,777,285 6,758,795 59,256,326 593
At the reporting the date, the Company had one class of share, being the
Venture Shares which have full voting, dividend and capital distribution
rights.
During the year 20,200,780 new Venture Shares were issued at an average price
per share of £1.03. The gross consideration received was £20.74 million (net
£20.22 million). An additional 210,732 Venture Shares were issued in the year
by way of a Dividend Reinvestment Scheme at an average price of £0.95. In the
year Triple Point Venture VCT plc repurchased 18,138 Venture Shares at an
average price per share of £0.94.
18. Dividends
Year ended 29 February 2024 Year ended 28 February 2023
£'000 £'000
Venture Share Dividend 2.00p per share (2023: 3.00p) 1,075 1,187
A Share Dividend 9.42p per share - 921
B Share Dividend 10.00p per share - 676
B Share Dividend 79.00p per share - 5,339
Total Dividend Paid 1,075 8,123
The Board announced an interim dividend of 2p per share, equivalent to
£1,043,319 to Shareholders on 3 January 2024. The interim dividend was paid
on 18 March 2024 to Shareholders on the register at the close of business on
29 February 2024 and as a result is not included in the table above.
At the reporting date, the Company had distributable reserves of £2,302,793.
Following the year end, a further £8 million of previously converted share
premium came available for distribution under the VCT rules.
19. Financial Instruments and Risk Management
The Company's financial instruments comprise equity and fixed-interest
investments, cash balances and liquid resources including debtors and
creditors. The Company holds financial assets in accordance with its
investment policy of investing mainly in a portfolio of VCT qualifying
unquoted securities whilst holding a proportion of its assets in cash or
near-cash investments in order to provide a reserve of liquidity.
The Investment Manager reports to the Board on a quarterly basis and provides
information to the Board which allows it to monitor and manage financial
risks relating to its operations. The Company's activities expose it to a
variety of financial risks including market risk (comprising price risk,
interest rate risk and foreign currency risk), credit risk and liquidity risk.
Fixed Asset Investments (see note 12) are valued at fair value. Unquoted
investments are carried at fair value as determined by the Directors in
accordance with current venture capital industry guidelines. The fair value of
all other financial assets and liabilities is approximated by their carrying
value on the Statement of Financial Position.
Classification of Financial Instruments
The following table discloses the financial assets and liabilities of the
Company in the categories defined by IFRS 9, "Financial Instruments".
Total value Financial Assets at amortised cost Financial Liabilities at amortised cost Fair value through profit or loss
£'000 £'000 £'000 £'000
Year ended 29 February 2024
Assets:
Financial assets at fair value through profit or loss 43,824 - - 43,824
Receivables 356 356 - -
Cash and cash equivalents 18,199 18,199 - -
62,379 18,555 - 43,824
Liabilities:
Other Payables 483 - 483 -
483 - 483 -
Year ended 28 February 2023
Assets:
Financial assets at fair value through profit or loss 31,979 - - 31,979
Receivables 667 667 - -
Cash and cash equivalents 18,222 18,222 - -
50,868 18,889 - 31,979
Liabilities:
Other Payables 7,035 - 7,035 -
7,035 - 7,035 -
Fixed and current asset investments (see note 12) are valued at fair value.
Unquoted investments are carried at fair value as determined by the Directors
in accordance with IPEV guidelines as detailed within the Investment Manager's
Review and note 12. The fair value of all other financial assets and
liabilities are represented by their carrying value in the Statement of
Financial Position. The Directors believe that the fair value of the assets
held at the year-end is equal to their carrying value. The Company's creditors
and debtors are initially recognised at fair value, which is usually
transaction cost and subsequently measured at amortised cost using the
effective interest method.
In carrying on its investment activities, the Company is exposed to various
types of risk associated with the financial instruments and markets in which
it invests. The most significant types of financial risk facing the Company
are market risk, interest rate risk, credit risk and liquidity risk. The
Company's approach to managing these risks is set out below together with a
description of the nature and amount of the financial instruments held at the
date of the Statement of Financial Position.
Market Risk
The Company's strategy for managing investment risk is determined with regard
to the Company's investment policy, as outlined on page 14. The management of
market risk is part of the investment management process and is a central
feature of venture capital investment. The Company's portfolio is managed in
accordance with the policies and procedures described in the Directors' Report
on pages 62 to 65, having regard to the possible effects of adverse price
movements, with the objective of maximising overall returns to shareholders.
Investments in smaller companies, by their nature, usually involve a higher
degree of risk than investments in larger companies quoted on a recognised
stock exchange, though the risk can be mitigated to a certain extent by
diversifying the portfolio across business sectors and asset classes. The
overall disposition of the Company's assets is regularly monitored by the
Board.
Details of the Company's investment portfolio at the Statement of Financial
Position date are set out on page 78.
70.5% (2023: 73.0%) by value of the Company's net assets comprises investments
in unquoted companies held at fair value. In the context of continued market
uncertainties caused by macroeconomic factors, we have used a sensitivity
analysis of 20%.
A 20% overall decrease in the valuation of the unquoted investments at 29
February 2024 would have decreased net assets and the total profit for the
year by £8.8 million (2023: £6.4 million). An equivalent change in the
opposite direction would have increased net assets and the total profit for
the year by the same amount.
10.0% of net assets (14.1% of portfolio value) is exposed to changes in the
foreign exchange rate. An increase in the foreign exchange rate of 5% would
decrease the net asset value by 0.5% (£0.3 million). A decrease in the
foreign exchange rate of 5% would have the opposite effect, increasing the net
asset value by 0.5% (£0.3 million). The 5% sensitivity used provides the most
meaningful impact of average foreign exchange rate changes across the
portfolio.
20.0% of the VCT's net assets (28.4% of portfolio value) are valued after
assessing the developments of the investee company against performance
milestone (e.g. cash or revenue targets) including PRI calibration. An
increase in the average multiple used by 15% would increase the net asset
value by 3.0%. A decrease in the average multiple used by 15% would decrease
the net asset value by 3.0%. The 15% sensitivity used provides the most
meaningful impact of average multiple changes across the portfolio.
50.3% of net assets (71.6% of portfolio value) is valued using Price of Recent
Investment (PRI), and an increase in the average PRI used by 15% would
increase the net asset value by 7.5%. A decrease in the average PRI used by
15% would decrease the asset value by 7.5%. However, the impact on the
portfolio value might be less given that most investments have some downside
protection in the form of liquidation preference. The 15% sensitivity used
provides the most meaningful impact of average PRI changes across the
portfolio.
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.
Fixed Rate
The table below summarised the weighted average effective interest rates for
its fixed interest-bearing financial instruments:
The Company has two fixed interest investment loans, one in relation to its
investment in Modern Power Generation and the other in relation to its
investment in Green Highland Shenval. The weighted average interest rate
applicable to these loans is 19.2% (2023:19.2%).
Floating Rate
The Company's floating rate investments as at 29 February 2024 comprised
interest-bearing money market funds. The Company's cash held at bank earns no
interest due to the HMRC VCT rule which prohibits a VCT from earning more than
30% of its income in non-VCT qualifying income, and interest earned on bank
balances is non-qualifying income.
The benchmark rate which determines the rate of interest receivable on its
money market investment is the Bank of England base rate, which was 5.25% at
29 February. The amounts held in floating rate investments at the Statement of
Financial Position date were as
follows:
29 February 2024 28 February 2023
£'000 £'000
Cash on Deposit 19 18,222
Money Market funds 18,180 -
18,199 18,222
A 1% change in the base rate would increase/decrease income receivable from
these investments and the net assets for the year by £182,000 (2023:
£182,000).
Foreign Currency Risk
Foreign currency risk is defined as the risk that the fair values of future
cash flows will fluctuate because of changes in foreign exchange rates. With
the exception of Adfenix AB, whose investment is denominated in Swedish Kroner
("SEK"), and Digital Therapeutics Inc (trading as Quit Genius), Airly Inc, and
Degreed Inc, which are denominated in US dollars ("USD"), and Knok LDA, whose
investments are denominated in Euros, the Company's financial assets and
liabilities are in GBP. Substantially all of its revenues and expenses are
also denominated in GBP, except for the aforementioned exceptions.
The Company's investments denominated in foreign currency comprise 14.1% of
the Company's Investment Portfolio, not including cash. As a result, the
Company does not consider the investments in Adfenix AB, Digital Therapeutics
Inc (t/a Quit Genius), Airly Inc, Degreed Inc, Knok LDA and Nory to materially
expose the Company to foreign currency risk.
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 Statement of Financial Position date.
29 February 2024 28 February 2023
£'000 £'000
Non-Qualifying investment loans 172 172
Qualifying investment loans 1,076 883
Cash on Deposit 19 18,222
Money Market funds 18,180 -
Receivables 356 667
19,803 19,944
The Company's bank accounts are maintained with The Royal Bank of Scotland plc
("RBS") and Cater Allen Private Bank. Should the credit quality or financial
position of RBS or Cater Allen deteriorate significantly, the Investment
Manager will move the cash holdings to another bank.
Credit risk relating to listed money market funds is mitigated by investing in
a portfolio of investment instruments of high credit quality, comprising
securities issued by major UK companies and institutions. Credit risk relating
to loans to and preference shares in unquoted companies is considered to be
part of market risk.
Liquidity Risk
Liquidity risk is the risk that the Company may not be able to meet its
financial obligations as they fall due. Prudent liquidity risk management
implies maintaining sufficient cash and marketable securities and the
availability of funding through an adequate amount of committed credit
facilities to meet obligations when due and to close out market positions.
The Investment Manager and the Board continuously monitor forecast and actual
cash flows from operating, financing, and investing activities to consider
payment of dividends, repayment of trade and other payables or funding further
investing activities. The Company ensures it maintains adequate reserves and
will put in place banking facilities and it will continuously monitor forecast
and actual cash flows to seek to match the maturity profiles of financial
assets and liabilities. Further analysis on the Company's liquidity is
included within the Going Concern assessment.
The Company's listed money market funds are considered to be readily
realisable as they are of high credit quality as outlined above. 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 on a quarterly basis by the Board. The Company
maintains sufficient investments in cash and readily realisable securities to
pay accounts payable and accrued expenses. At 29 February 2024, these
investments were valued at £18.2 million (2023: £nil).
20. Net Asset Value per Share
Year ended 29 February 2024 Year ended 28 February 2023
Net asset value per share (p) Venture Shares 98.55 102.17
The net asset value per Share for the Venture Shares is 98.55p (2023: 102.17p)
and is calculated based on net assets of £62.196 million (2023: £43.817
million) divided by the 63,113,620 Venture Shares in issue.
21. Relationship with Investment
Manager
During the period, TPIM received £1.2 million (2023: £1.2 million) (which
has been expensed by the Company) for providing management and administrative
services to the Company, of which £0.3 million remained outstanding at the
year end.
The Investment Manager charged £24,000 (2023: £18,000) for the provision of
Company Secretarial services.
In addition, TPIM received £352,245 (2023: £335,880) of arrangement fees on
Venture Share allotments during the year.
22. Ultimate controlling party
In the opinion of the Board, on the basis of the shareholdings advised to
them, the Company has no ultimate controlling party.
23. Related Party Transactions
The Directors Remuneration Report on page 57 to 61 discloses the Directors'
remuneration and shareholdings and transactions with the Investment Manager
are disclosed in note 21.
24. Commitments and Contingencies
There were no commitments or contingencies in place at the end of the
financial year.
25. Post Balance Sheet Events
The following events occurred between the balance sheet date and the signing
of these financial statements:
The Company paid an interim dividend of 2 pence per share equivalent to £1.04
million on 18 March 2024.
The Company issued 8,130,242 shares following the year end. At the date of
this report, the Company had 71,243,862 shares in issue.
The Company has made three investments since the period end: a £1.015m new
investment into Treefera; a £150k follow-on investment into Tuza (formerly
Statement); and an £804k follow-on investment into Nory.
Alternative Performance Measures
1. ONGOING CHARGES RATIO
29 February 2024 28 February 2023
£'000 £'000
Management fee 1,024 1,127
Other operating expenses 704 347
Total management fee and other operating expenses (a) 1,728 1,474
Average undiluted net assets (b) 53,551,396 45,917,974
Ongoing charges ratio % (c = a/b) (c) 3.23% 3.21%
The ongoing charges ratio for the Company for the year to 29 February 2024 was
3.23% (2023: 3.21%). Total annual running costs are capped at 3.50% of the
Company's net assets. The ratio is calculated by dividing annualised ongoing
charges by the average net asset value in the period.
The annualised ongoing charges represent the total expense for the year with
the exclusion of performance and arrangement fees payable to Triple Point
Investment Management LLP. No performance or arrangement fees were charged
during the year.
Any excess will be met by Triple Point by way of a reduction in future
management fees.
2. TOTAL RETURN
29 February 2024 28 February 2023
Closing NAV per share (pence) 98.55 102.17
Add back dividends paid (pence) 11.00 9.00
Adjusted closing NAV (pence) 109.55 111.17
Adjusted NAV per share as at the period end less NAV per share at 28 February (a) (109.55 - 111.17) (111.17 - 119.55)
2023 (28 February 2022)
NAV per share at 28 February 2023 (28 February 2022) (b) 111.17 119.55
Total return % (c = a/b) (c) (1.46%) (7.01%)
Shareholder Information
Board
Jane Owen (Chair)
Sam Smith
Julian Bartlett
Jamie Brooke
Administrator, Company Secretary and Registered Office:
Hanway Advisory Limited
1 King William Street
London EC4N 7AF
Registered Number
07324448
FCA Registration number
659605
Investment Manager
Triple Point Investment Management LLP
1 King William Street
London EC4N 7AF
Tel: 020 7201 8989
Independent Auditor
BDO LLP
55 Baker Street
London W1U 7EU
Solicitors
Howard Kennedy LLP
No. 1 London Bridge
London SE1 9BG
Registrars
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol BS13 8AE
VCT Taxation Advisers
Philip Hare & Associates LLP
6 Snow Hill
London EC1A 2AY
Bankers
The Royal Bank of Scotland plc
54 Lime Street
London EC3M 7NQ
Adviser (Venture Investments)
Shoosmiths LLP
1 Bow Churchyard
London EC4M 9DQ
Depositary
Indos Financial Limited
The Scalpel
18th Floor
52 Lime Street
London EC3M 7AF
Financial Calendar
Key Events Date
Annual General Meeting 23 July 2024
Financial half-year end 31 August 2024
Announcement of half-year results October 2024
Financial year end 28 February 2025
1 Further detail provided under Alternative Performance Measures at the end
of this report.
2 A further 2p interim dividend was declared on 3 January 2024 and paid on
18 March 2024.
3 Further detail provided under Alternative Performance Measures at the end
of this report
4 Following TPIM's appointment as AIFM and as required under the Alternative
Investment Fund Management Directive, the Company has appointed a depositary
which is an independent third party that is responsible for the safekeeping of
assets of the Company, performing the cash flow monitoring and the oversight
duties of the Company.
5 Further detail provided under Alternative Performance Measures at the end
of this report.
6 The 2023 Blue Book is available here:
https://www.triplepoint.co.uk/filedownload.php?a=3045-65392af81a322
7 The Triple Point Ventures ESG Integration Policy is available here:
https://www.triplepoint.co.uk/filedownload.php?a=3021-64f0b16fc02cd
8 Senior positions include Chair and Senior Independent Director
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