Triple Point VCT2011 - Final Results for the year ended 28 February 2023
08/06/2023 07:00
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RNS Number : 0123C Triple Point VCT 2011 PLC 08 June 2023
8 June 2023
Triple Point VCT 2011 plc
(the "Company")
RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2023
The financial information set out in these statements does not constitute the
Company's statutory accounts for the year ended 28 February 2023, 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 VCT 2011 plc managed by Triple Point Investment Management LLP
today announces the results for the year ended 28 February 2023.
These results were approved by the Board of Directors on 7 June 2023.
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
Belinda Thomas
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-vct-2011-plc/s2539/
(https://www.triplepoint.co.uk/current-vcts/triple-point-vct-2011-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 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
Year ended 28 February 2022
A Shares B Shares Venture Shares Total
Net assets £'000 1,291 3,903 30,031 35,225
Net asset value per share Pence 13.25p 57.69p 113.55p
Profit/(Loss) before tax £'000 (269) 5 5,240 4,976
Earnings/(Loss) per share Pence (2.71p) 0.31p 22.57p
Cumulative return to Shareholders (p)
Net asset value per share 13.25p 57.69p 113.55p
Total dividends paid 106.50p 10.00p 6.00p
Net asset value plus dividends paid (Total Return) 119.75p 67.69p 119.55p
Triple Point VCT 2011 plc ("the Company" or "TP11") 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.
· A Ordinary Shares ("A Shares"): On 30 April 2015 the A Share Class
offer closed having raised £10.3 million with a total of 9,951,133 A Shares
being issued.
· B Ordinary Shares ("B Shares"): On 29 April 2016 the B Share Class
offer closed having raised £6.97 million with a total of 6,824,266 B Shares
being issued.
· Venture Fund: On 29 July 2022 the fourth Venture Fund offer closed
having raised gross proceeds of £18.55 million with a total of 16,477,301
additional Venture Shares being issued. Since this offer closed, the Venture
Fund has allotted further Shares, with 51,270,715 in issue as at the date of
this report.
The Strategic Report on pages 5 to 51, the Directors' Report on pages 70 to
73, the Corporate Governance Report on pages 55 to 59 and the Directors'
Remuneration Report on pages 64 to 69 have each been drawn up in accordance
with the requirements of English law and liability in respect thereof is also
governed by English law. In particular, the responsibility of the Directors
for these reports is owed solely to Triple Point VCT 2011 plc.
The Directors submit to the members their Annual Report and Financial
Statements for the Company for the year ended 28 February 2023 ("Annual
Report").
Key Highlights
As at 28 February 2023
· Dividend per Venture Share paid during the year ended 28 February
2023: 3.00p (Year ended 28 Feb 2022: 3.00p)
· Net Asset Value per Venture Share: 102.17p (Year ended 28 Feb
2022: 113.55p)
· Total Return per Venture Shar: 111.17p (Year ended 28 Feb 2022:
119.55p)
· Ongoing Charges Ratio: 3:21%. The ongoing charges ratio is a ratio of
annualised ongoing charges expressed as a percentage of average net asset
values throughout the year.(2022: 2.94%)
· Realisation Proceeds: £9.6m. Realisations of investments and loan
repayments generated total proceeds for the Company. (2022: £3.96m).
· Fundraising: £18.3 million (Year ended 28 Feb 2022: £11.6
million)
Strategic Report -
Chair's Statement
I am writing to present the Financial Statements for the Company for the year
ended 28 February 2023.
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 wind down and cancellation of the A
and B Share Classes was approved by Shareholders. 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, and 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.
The Company's focus going forward is the Venture Share Class ("the Venture
Fund") where our portfolio has continued to grow and diversify, with 13 new
qualifying investments this year and participation in five follow-on funding
rounds with existing portfolio companies. The Venture portfolio also had its
first cash exit early during the year under review; further detail on that
sale can be found below and in the Investment Manager's Review on pages 26 to
35.
The Venture total return NAV (NAV per Share plus cash dividends paid to
Shareholders) has declined by 7.0% since the end of February 2022 and by 2.5%
since August 2022. The decline reflects the tougher macroeconomic and venture
funding market environments, leading to (i) a general fall in software company
valuation multiples over the period, and (ii) the reduction in the frequency
of new equity funding rounds by venture capital backed companies, including
for TP11's Venture portfolio. As a consequence the fair market values of our
investments has in some cases declined or remained static even where the
company itself has been making good progress. Despite this year's reduction in
NAV, we remain confident in the underlying growth of our portfolio and in our
core theme of investing in technological innovation in the business sector.
The Investment Manager's Review on pages 26 to 35 gives a more detailed update
on the portfolio of 43 investments, in 41 venture capital backed startups, and
2 small income generating businesses.
As at 28 February 2023 the Venture Fund's assets were 63.7% invested in a
portfolio of VCT Qualifying and non-qualifying unquoted investments. This
proportion has since decreased after distributing the final dividend and
capital return to the A and B Share Class Shareholders after the year end. The
overall ratio includes money raised over the last three years, which is
excluded from the formal test to determine VCT Qualifying investments as a
percentage of VCT total assets. At 28 February 2023, 87.7% of the Company's
assets included in that formal test were represented by VCT Qualifying
investments.
Board Changes
As announced today, Chad Murrin will not be standing for re-election at the
Company's 2023 Annual General Meeting. On behalf of the Board, I wish Chad
well and would like to thank him for his valuable and significant contribution
to the Company over the years that he has served on the Board.
The Board has undertaken a succession and recruitment process and we are
pleased to welcome Jamie Brooke as Independent Non-executive Director of the
Company effective 8 June 2023. All Directors, including Jamie, will stand for
re-election at the Company's AGM. Jamie read mathematics at Oxford University,
and qualified as an Accountant with Deloitte. Jamie 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.
Update on A Share Class and B Share Class Investment Realisations
On 10 October 2022, the Company successfully completed the sale of its
investments in Green Peak Generation Limited for total consideration of
£2,274,000 and Distributed Generators Limited for total consideration of
£3,260,000, both within the B Share Class as part of a wider portfolio sale
of gas-fired energy generation companies. This concluded the B Share Class
exit process. The final distribution of proceeds was made to the B Share Class
Holders on 10 March 2023. The repayment of the 1 pence nominal value of
B Shares was made to B Share Class holders on 21 April 2023.
On 3 November 2022, the Company transferred its investment in Green Highland
Shenval Limited ("Shenval"), a hydroelectric power company, from the A Share
Fund to the Venture Share Fund at a value that reflected its most recent
audited value and other commercial factors arising subsequent to that
valuation. This concluded the A Share Class exit process and provided the
Venture Share Fund with an income-generating VCT-qualifying investment. The
final distribution of proceeds was made to the A Share Class Holders on 10
March 2023. The repayment of the 1 pence nominal value of A Shares was made to
A Share Class holders on 21 April 2023.
Venture Fund
This was the fourth year for our Venture Fund. Following the significant NAV
gain achieved by the portfolio in the previous year, this year proved more
challenging, partly as a result of some of the concerns that we had flagged in
last year's report, such as the growing impact that sharply rising government
bond yields were having on listed tech sector valuations.
At the start of the period in review, the focus of macro concerns had moved
from the impact of Covid-19 related lockdowns to the potential consequences of
the Russia-Ukraine invasion for risk appetite as well as energy prices and
inflation at a time when interest rates were already beginning to rise. Whilst
the direct impact on the tech sector and our portfolio of power price
increases was limited, as expected the indirect effect of the economic
situation on skilled wage inflation was a concern in 2022 for rapidly growing
start-ups. In addition, tightening monetary policy led to higher bond yields
which in turn led to lower valuation multiples for stock market listed tech
and growth companies as some of the heady optimism of the 2021 tech boom was
deflated. That resulted in reduced Venture Capital investment activity and a
tighter funding market for start-ups.
The Investment Manager worked with a number of portfolio companies during the
year, where appropriate, to adjust business and funding plans accordingly. The
venture capital market remained active, albeit at lower than previous levels
and with greater caution exhibited by investors. Opportunities continue to
abound for seed stage investments and the existing portfolio remains well
positioned for future growth.
Portfolio sectors that performed well overall, despite that backdrop, included
Health-tech, logistics and innovations around human resources management,
areas where both end demand and venture capital investor interest remained
robust. One sector within the portfolio that did not perform so well during
the year was Fintech, where, after perhaps excessive enthusiasm by investors
and entrepreneurs between 2019 and 2021, funding became markedly more
difficult to come by for companies that were demonstrating anything less than
top tier revenue growth rates. Meanwhile, the handful of later stage portfolio
holdings - so-called Series B or Series C stage companies - were more impacted
by the fall in listed software company valuations, regardless of their
fundamental operating performance. On a more positive note, the Venture Fund
completed its first cash exit early in the period, as Credit Kudos Limited
("Credit Kudos"), itself a Fintech company, was sold for an over 5x return
multiple just two years after our investment had been made.
The fourth Venture Fund offer for subscription closed on 29 July 2022 having
raised £18.55 million, the largest raise achieved to date for the Fund. The
fifth offer for subscription opened in September 2022. Over the financial year
to 28 February 2023 new funds raised for the Venture Fund were up by 58.0%
from the prior year. The current fund raise is progressing well with a total
of £5.9 million raised in March and £3 million raised in April. However, a
comparison of new subscriptions during the same period in 2022 reveals an
overall slowing in VCT investments when compared to the record levels seen in
the 2021-22 tax year. Nevertheless, we believe the recent fund raising puts
the Company in a strong financial position (see Liquidity below).
The Venture Fund'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 whilst 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 Venture Share Class's key objectives, I am pleased to
announce that a further dividend of 2 pence per Share will be paid on 4
September 2023, and the Board expect that a further dividend will be paid
later in the financial year.
A snapshot of the new companies the Venture Fund has invested into during the
year is set out below.
Portfolio Company Investment Amount Description
£'000
Konfir Ltd 500 Verification platform that enables instant employment history and prior income
checks.
Konstructly 300 Workforce management and hiring platform that connects tradesmen and
construction companies.
Visibly Tech Ltd 300 Platform designed for field service engineers and their employers to evaluate
and improve engineering skills.
Crowd Data Systems Ltd 500 Provider of a cloud-based treasury management software solution built for
medium and large enterprise.
Trumpet Software Ltd 120 Sales tool which enables organisations to easily create online sales
microsites or "Pods" personalised to each customer.
Artickl Ltd 400 Making data more accessible by allowing anyone to query their databases in
plain English using GPT-3.
National MRI Scan Ltd 800 Infrastructure layer to connect the global health diagnostic imaging market.
OutThink Ltd 1000 Cybersecurity human risk management platform, developed specifically to
identify and measure human risk and affect behaviour change.
PetsApp Ltd 1000 Client communication and digital payments solution for veterinary clinics,
enabling them to better engage with pet owners.
Ramp Software Ltd 309 Provides business to consumer ("B2C") companies with plug and play automated
user and revenue forecasting.
Biorelate Ltd 1000 Provider of a deep tech software platform which analyses and curates big data
from an array of published biomedical literature for use by Pharma and Biotech
companies in the drug discovery process.
Airly Inc 987 Provides pollution monitoring devices to governments and businesses via a
distributed network of devices that sends pollution data to its clients in
real time for monitoring.
AeroCloud Systems Ltd 1500 Provider of an operations management SaaS solution for airports worldwide.
Liquidity
The Company has sufficient liquidity, predominantly from the Venture Fund
raise, with cash and cash equivalents totalling £18.2 million (42% of net
asset value) at 28 February 2023. This means that the Company will be able to
react quickly to new investment opportunities for the Venture Fund as they
arise, particularly as subsequent funds raised exceed the final payments to A
and B Shareholders.
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 price of 5% discount to NAV.
During the year ended 28 February 2023 a total of nil A Shares, nil B Shares
and 209,706 Venture Shares were repurchased by the Company for cancellation at
a price of a 5% discount to NAV. The average price paid for the buy-back of
Shares were as follows:
Date Number of Shares Share Class Average Price per Share
18 August 2022 17,665 Venture 104.2 pence
18 November 2022 192,041 Venture 99.74 pence
These transactions represent 0.49% 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 8,550469 Shares
into the Venture Fund. Shares were issued on 20 March, 4 April, 5 April and 24
April 2023; these further allotments raised additional net proceeds of £9
million for the Company. The offer will remain open until 28 July 2023, unless
fully subscribed at an earlier date.
The Venture Share Class has seen the completion of three additional
investments post year-end. The first was a £1.5million convertible loan note
("CLN") investment into Modo Energy Ltd, which has software serving businesses
that are at the forefront of the energy transition, the second was a £500k
follow-on investment into National MRI Scan Ltd and the third was a £182k
investment in Virtual Science AI Ltd. The latter two companies both operate in
the Health-tech sector.
Following the period end, interim dividends were paid to the A Shareholders
and B Shareholders in respect of asset sales from their portfolios and a final
return of capital of 1 pence per Share for the A and B Share Class was paid to
Shareholders on 21 April 2023 following the wind down and cancellation of the
A and B Share Class. This concludes the return of capital to the A and B Share
Class Shareholders.
Outlook
The Board will continue to consider dividends for Venture Shareholders,
subject to realised profits, legislative requirements and liquidity. I am
delighted to announce that a further dividend of 2 pence per Share will be
paid on 4 September 2023 to Venture Shareholders, and the Board expect that a
further dividend will be paid later in the financial year.
As I noted above, macroeconomic factors and notably higher interest rates have
had some indirect effect on the portfolio. As those higher interest rates take
effect more broadly, there are a number of forecasters who still expect a
recession in the coming months in both the UK and the USA, despite economies
having been more resilient than expected 6-to-9 months ago. We expect the
majority of our portfolio companies to be able to thrive in such an
environment, where cost-effective software solutions are likely still to be to
the fore and where the wage costs for the skilled labour that our companies
require may ease. The Investment Manager continues to monitor portfolio
developments carefully, particularly with regard to investee liquidity, given
the current uncertainties (see Investment Manager's Review on pages 26 to
35).
We believe that the Company's existing portfolio remains well positioned for
future growth and that the recent fundraise leaves the Venture Share class in
a strong position to support not only the best of our existing portfolio, but
also new opportunities as they arise. As we noted above, the Company has
completed investments into a number of promising new portfolio businesses of
late and the Investment Manager reports that their investment origination work
continues to uncover compelling founders and innovations.
In a positive development for the long-term future of the Company, the
Chancellor's Autumn Statement of 2022 confirmed the Government's intention for
EIS and VCT tax relief to continue beyond 2025 (when the current EIS/VCT
"Sunset Clause" is due to expire).
At the Company's Annual General Meeting to be held on 19 July 2023, a
resolution will be put to Shareholders proposing to change the Company's name
to Triple Point Venture VCT Plc .
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
7 June 2023
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 either: (i) have the potential for high growth, or (ii) are
cashflow generative businesses with a high-quality customer base. 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 Venture Fund will
typically make initial investments of between £50,000 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 for the Venture Fund; 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 TP11'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,
earnings 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. 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
TP11 aims, but is not committed, to offer liquidity to Shareholders through
on-going buy-backs, subject to the availability of distributable reserves, at
a target price of a 5% discount to net asset value.
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 intends 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, an attractive income 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 Net Asset Value
per share, total return, earnings per Share and ongoing charges ratio, that it
uses in its own assessment of the Company's performance, set out below.
These are intended to provide Shareholders with sufficient information to
assess how the Company has performed against its objectives in the year to 28
February 2023, and over the longer term, through the application of its
investment and other principal policies.
Total Return
NAV plus dividends paid is a measure of Shareholder value that includes the
current NAV plus cumulative dividends paid to Shareholders to date. The charts
show how the Total Return of the Venture Share Class has developed since
launch. Total Return is deemed an alternative performance measure.
Decrease in Net Asset Value "NAV"
The NAV per Venture Share has decreased from 113.55 pence per Share at 28
February 2022 to 102.17 pence per Share at 28 February 2023. During the period
a 3.0 pence per Share dividend was paid to Venture Shareholders on 5 September
2022. After making an adjustment for dividends paid during the year the
Ventures Share's total return has decreased by 7.0%.
The decrease in NAV is attributable to a reduction in the overall value of
portfolio holdings from provisions being made and in one case a loss being
realised. These elements outweighed the uplifts in valuations for other
portfolio companies during the review period which was one of reduced activity
in venture capital markets.
As discussed further in the Investment Manager's Review, (see pages 26 to 35)
valuation provisions made in some cases simply reflected a fall in the
valuation multiples considered fair for portfolio companies and in other cases
reflected signs of commercial underperformance at some businesses
The final returns for the A and B share classes were 116.92p and 100.00p
respectively.
Total Dividends Paid/Payable
A Shares B Shares Venture Shares
Total Dividends Paid/Payable (pence) 115.92 99.00 9.00
From the inception of the Share Classes up until 28 February 2023, the A Share
Class had disbursed dividends amounting to 106.50 pence, whereas the B Share
Class and the Venture Fund had disbursed dividends of 20.00 pence and 9.00
pence, respectively. Following the year end the Company paid final dividends
of 9.42p and 79.00p and the final return of capital of 1 pence per Share to
the A and B Shareholders and these Shares have now been cancelled.
Earnings per share
The A Share Class returned a loss per share of 2.83p due to the hydro asset
disposal prior to exit, whereas the B Share Class reported a profit of 32.31p
per share as a result of the successful disposal of the gas peaking assets.
The Venture Share Class made a loss of 8.47p per share due to more challenging
market conditions.
Ongoing charges ratio
The ongoing charges ratio is a ratio of annualised ongoing charges expressed
as a percentage of the average net asset value throughout the period. 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.
The ongoing charges of the Company for the financial year under review
represented 3.21% (2022: 2.94%) of the average net assets. As the B share
class reached a total return of 100p, a portion of the previously waived
management fees became chargeable to the investment manager during the
financial year. This is excluded from the ongoing charges ratio for this year
as it relates to prior periods.
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. The Board can
confirm that throughout the year ended 28 February 2023, the Company continued
to meet these tests.
To achieve compliance, the Company must meet a number of tests set by HMRC. A
summary of these steps is set out on page 72 under "VCT Regulation".
Tax Benefits
The Company's objective is to provide Shareholders with an attractive income
and capital return by investing its funds in a broad spread of unlisted UK
companies which meet the relevant criteria for investment by Venture Capital
Trusts.
Investing in a VCT brings the benefit of tax-free dividends, as well as
up-front income tax relief. The Company continues to meet the VCT
qualification requirements which are continuously monitored by the Investment
Manager and reviewed by the Directors.
Investment classification by asset value and sector value are shown on the
following pages:
Investment Portfolio
** Please note that the percentage of qualifying investments in the above
graphs are not representative of the Company as a whole. 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%.
Investments by Sector
VCT Regulation
VCTs were first introduced in the Finance Act 1995 to provide a means for
private individuals to invest in unquoted companies in the UK. The Finance Act
2004 introduced changes to VCT legislation designed to make VCTs more
attractive to investors. The current tax benefits available to eligible
investors in VCTs include:
· up-front income tax relief of 30% on a maximum investment of
£200,000 per tax year on newly issued Shares;
· exemption from income tax on dividends received; and
· exemption from capital gains tax on disposals of Shares in VCTs.
Since the Finance Act 2004, the VCT rules have subsequently been amended under
the Finance Act 2014 and The Finance (No 2) Act 2015. The Investment Manager,
utilising advice from Philip Hare & Associates LLP, ensures continued
compliance with any legislative changes. The Company will continue to ensure
its compliance with the qualification requirements.
The Company has been approved as a VCT by Her Majesty's Revenue and Customs.
To maintain this approval, the Company must comply with certain requirements
on a continuing basis. The current limits require that within three years
from the effective date of provisional approval or later allotment at least
80% of the Company's investments must comprise qualifying holdings. In all
cases 70% of these investments must be in eligible Ordinary Shares and this
investment criterion continues to be met.
FCA Regulation
On 22 July 2014 Triple Point VCT 2011 plc registered with the Financial
Conduct Authority as a small Alternative Investment Fund Manager ("AIFM")
under the AIFM Directive.
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. This enables the Board to carry out a robust assessment
of the risks facing the Company, including those risks that would threaten its
business model, future performance, solvency or liquidity. 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 55 to 79 and further information on exposure to
risks including those associated with financial instruments is given in note
17 of the financial statements.
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 in terms of
industry. 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 Fund 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 35.
Financial Risk As a VCT, the Company is exposed to market price risk, interest
rate risk, credit risk, foreign currency risk and liquidity risk, ass 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
cash on the balance sheet.
Failure of Internal Controls Risk Controls designed to ensure that the
Company's assets are safeguarded and that proper accounting records are
maintained.
Mitigation: The Board regularly reviews the system of internal controls,
both financial and non-financial, operated by the Company.
Emerging Risks
Climate Change and related legislation
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 is in the process of
setting Net Zero targets across its entire portfolio, which will cover the
Company's assets. The intention is to follow the most up to date guidance from
the Science Based Targets Initiative ("SBTi"), which at the time of
publication will result in a short-term emissions reduction target up to 2030.
Additional longer-term targets will be set following the release of the
relevant guidance, or prior if perceived possible.
If a change in Government renewable energy policy were applied retrospectively
to current operating projects this could adversely impact the market price for
Shenval or the value of the green benefits earned from generating renewable
energy. Further, performance of the remaining Shenval assets may be adversely
affected by lower or more concentrated rainfall in Scotland. Nevertheless,
Shenval continues to perform in line with expectations, and performance will
continue to be monitored closely.
Climate Change or related legislation is considered unlikely to have a major
near-term impact on the Venture Share Class, 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 and how this could in turn affect future growth.
Russia-Ukraine invasion
The Russia-Ukraine invasion in February 2022 has resulted in wider
macroeconomic consequences and uncertainty which the Company is monitoring
closely to evaluate the impact on both the Company and the investee companies.
Inflation, rising interest rates, slow growth and a possible recession could
impact investee companies' performance and valuation metrics, ability to raise
new funds (and the valuation of such raises), and ability to grow e.g. due to
the cost of specialist staff, staff turnover and supply chain impacts, as well
as the availability of sufficient new capital to meet objectives.
Economic 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. 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 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 17 to the financial statements.
The Company continues to meet day-to-day liquidity needs through its cash
resources and income from its investment portfolio and cash and cash
equivalents. The Company's revenue comes predominantly from interest earned on
its cash and liquid resources and from the Venture Share Class investments in
Shenval and Modern Power Generation ("MPG"), a small lending business. The
Company also continues to raise funds into the Venture Share Class, and at the
reporting date the Company had cash of £18.2 million (2022: £6.2 million)
and net current assets of £11.8 million (2022: £5.24 million). A further £9
million has been raised since the reporting date, which exceeds the £6.4
million combined final payments to A and B shareholders. 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 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 which show the Company has
sufficient financial resources to meet its obligations for at least 12 months
from the date of this report. Accordingly, the Directors continue to adopt the
going concern basis in preparing the financial statements.
Viability Statement
The AIC's Code of Corporate Governance requires the Board to assess the
Company's viability over an appropriate period longer than 12 months required
by the Going Concern provision.
The Board conducted this review for a period of five years, which was
considered to be an appropriate time horizon as investors in VCTs are required
to hold their investment for a period of five years in order to benefit from
the associated tax reliefs, and a longer period would be less meaningful.
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 20
to 22.
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 Board 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 such
as the Russia-Ukraine invasion- on the Company and its longer-term viability.
More detail on this is included in the Principal Risks and Uncertainties
section on pages 20 to 22.
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 Act.
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 longterm impact of its
decisions, and its desire to maintain a reputation for high standards of
business conduct.
Stakeholder Engagement
This section describes how the Board engages with its key stakeholders, how it
considers their interests and the outcome of the engagement when making its
decisions, the likely consequences of any decision in the long-term, and
further ensures that it maintains 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 and from 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 where
possible.
The Board further engaged with Shareholders to understand their views on
particular items that impact the Company's strategy. During the period, class
meetings were held to seek approval from the A and B Share Class holders for
the wind down and cancellation of the Company's A and B Share classes. This
was approved and the cancellation of the Share Classes was effective on 30
March 2023
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 via its Investment Manager has important relationships with We maintain regular contact with Venture portfolio companies, and where
individuals responsible for the maintenance and performance of its investee appropriate, sit on the Board of the portfolio companies, and receive 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 and Company Secretary, Registrar, Legal Advisers, VCT Compliance
relevant obligations. Adviser and the Auditor.
These service providers are fundamental to ensuring that the Company meets the The Board has regular contact with the two main service providers, the
high standards of conduct that the Board sets. 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 The Company can only operate with the approval of its regulators. The Company engages an external adviser to report on its compliance with the
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.
Gas Fired Energy Asset Sale and subsequent cancellation of Share Classes
During the year, the Company successfully completed the sale of its
investments in Green Peak Generation Limited for total consideration of
£2,274,000 and Distributed Generators Limited for total consideration of
£3,260,000 both within the B Share Class as part of a wider portfolio sale of
gas-fired energy generation companies. This concluded the B Share Class exit
project. Following the sale, the A and B Share Classes have been wound down
and cancelled, as approved by Shareholders at a General Meeting held on 9
February 2023 and Class Meetings held on 1 March 2023. The cancellation of the
Share Classes was effective on 30 March 2023.
Dividends and return of nominal capital to A and B Share Class Shareholders
During the year, the Company distributed a dividend of 10.00 pence per share
to the B Share Class holders and a dividend of 3.00 pence per share to the
Venture Share Class holders. Following the Gas Fired Energy Asset Sale, B
Share Class holders received a dividend of 79 pence per share, while A Share
Class holders received a dividend of 9.42 pence per share on 10 March 2023.
Investments
During the year, the Company made 13 new qualifying Venture Fund investments
and five follow-on investments into existing portfolio companies. The
Directors considered that each investment could generate significant long-term
capital growth for Shareholders, whilst enabling investors to take advantage
of the substantial tax reliefs available to investors in VCTs. When approving
the proposed acquisitions, the Board considered the exit potential and
valuation of the investee companies in addition to considering whether there
were any particular societal impacts from each investment.
Strategic Report
Investment Manager's Review
Sector Analysis
The unquoted investment portfolio can be analysed as follows:
Industry Sector EdTech Fintech Middleware Health HR Logistics Cybersecurity Other-(SaaS) Other-(Non-SaaS) Total Unquoted Investments
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investments at 28 February 2023
Venture Class 1,074 7,593 3,953 6,579 2,688 2,288 1,650 5,283 871 31,979
Unquoted investment 3% 24% 12% 21% 8% 7% 5% 17% 3% 100.00%
We have pleasure in presenting our annual review for the year ended 28
February 2023.
Regarding the older Share Classes we have, as described below, successfully
concluded the wind down and cancellation of the A and B Share Classes.
The year under review was the fourth for the Venture Share Class. Despite the
macroeconomic impact of the Russia-Ukraine invasion, Triple Point's Venture
team continued to make good progress in deploying the Fund's liquidity during
the year; the team completed 13 new qualifying investments plus 5 follow-on
investments into a diverse range of sectors spanning Cyber Security, Digital
Health, Airport operations, Logistics and HR-Tech. The Venture portfolio also
saw its first cash exit during the year under review and its first failure. As
at the end of February 2023, the portfolio consists of 43 qualifying
companies.
The net cash distributed to Shareholders for the year was £1.66m. The Company
allotted an additional £12.6 million under the latest Venture Fund offer for
subscription, meaning that the Company and the Venture Fund remain well
capitalised to take advantage of new and follow-on investment opportunities.
Venture Fund
Strategy
The Fund looks to maximise Shareholder returns by investing in innovative
early-stage businesses, typically at the point where they have achieved some
market validation, with one or more contracts secured with a corporate
customer. The core investment focus for the Fund has thus been Seed and Series
A stage, investing in business-to-business software companies. This typically
involves companies that have established that there is demand for the core
product with their initial customer base and that are raising funds to drive
product and sales development that will take revenues to the next level.
Net asset value and the funding environment
The Fund's NAV per Share declined to 102.17 pence from 113.55 at the end of
last year representing a 10% reduction. The total return for the Venture Fund
(NAV and dividends paid to date) is 111.17 pence per Share taking into account
the 9 pence per Share of dividends that have been paid to date. Last
September's 3 pence per Share dividend payment was the third dividend for the
Share Class, fulfilling intentions set out in our investor communications.
The decline in NAV per share, especially when compared to last year's
increase, other than the 3 pence per Share dividend paid during the year,
reflects the tougher macro and funding market environment; specifically,
software company valuation multiples declined globally as a result of the
crash in tech stock valuations in the US during the period. While this
principally affected listed stocks, larger private tech companies also felt
the brunt in terms of valuations at which they were able to raise subsequent
rounds of funding. Whilst earlier stage tech companies of the type in which
the Venture Fund invests did not suffer a fall in value of the same size,
there was some impact on the portfolio, notably on the (relatively few) later
stage holdings, such as Degreed and Quit Genius, where their valuations were
reduced. At the same time, the yardstick for success sought after by Venture
Capital investors (VCs) changed from growth for growth's sake to more emphasis
on capital efficiency, clear visibility on when companies might reach
breakeven and preservation of cash. Within the Venture Fund's own mainly
Seed/Series A venture landscape, VCs have become more selective about the
companies that they will back; for example, investors are more cautious about
companies that have not met their revenue growth targets and about those with
high rates of cash burn.
Given the more challenging fundraise environment, venture backed businesses,
including many of those in our portfolio, have taken action to reduce cash
burn in order to extend runway and defer fund-raising needs. This year we have
also seen a trend towards more fundraises being carried out via convertible
loan notes (CLNs) and similar arrangements which, by providing loans, defer a
new price being set for a company's equity issuance. One result of the reduced
volume of investment activity, the softening of valuations and the rise of
CLNs is that there has also been a reduction in the upward momentum in
valuations, even for companies that are growing.
IPEV Guidelines and Valuations
IPEV guidelines require us to price investments at "fair value". Ryde (a
logistics business providing software and other resources for fleet and
workforce management) is one example of a portfolio company that saw
significant growth in revenues during the year in review but where we believed
that the fair valuation approach was to continue to hold the investment at the
Fund's original cost. Ryde recently won a contract from a FTSE 250 company
which had already resulted in a significant increase in revenues towards the
end of the period. However, the comparable revenue multiple valuations for
such logistics businesses came down over the year, such that the increase in
revenues broadly offset the decline in applicable valuation multiples. Fair
value was also the basis for our first and to date only up-valuation of a
portfolio company without valuation confirmation from the company having a
new, priced fund raise. Knok Healthcare, the company in question, delivered
revenue growth of 3.1x over the year following the Company's investment.
Silver linings
While the funding environment described above was more difficult for the
portfolio NAV in the year under review, the fact that start-up valuations are
now lower than they were in the heady days of 2021 is in our view a positive
for the Fund's future investments, the pricing of which may offer larger
potential for gain. A silver lining to the weaker macro environment is that
tech layoffs have resulted in our portfolio companies finding it easier to
hire senior talent as well as being the catalyst for a flurry of new
businesses (and investment opportunities for the Company) as qualified
engineers and product people from large tech companies have been nudged into
entrepreneurialism. We should also note that VCTs have, over the years, proven
to be adaptable and responsive to economic shocks.
Portfolio Support
We have continued to actively support the Fund's portfolio companies wherever
we can, by participating in Board meetings, by helping them share best
practice through regular events and by making relevant introductions where
necessary, be it through suppliers, potential customers or via investor
introductions for further fundraising rounds.
Deal Origination and Deployment
Triple Point's Venture team 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. Active outbound origination
specifically has allowed us to continue to uncover compelling founders and
innovations. In the period under review, the team successfully completed 13
investments in addition to five follow-on investments. The latter included a
Series A investment round for Veremark (a fully automated global background
check platform) and CLN investments into Vyne Technologies (a full-stack
account-to-account e-payment solution) and Ryde. In the case of Veremark, this
was the company's second up-round since the Venture Fund originally invested,
this time at a 2.6x multiple of the initial Share price. This period also saw
the exit for cash of open-banking credit referencing specialist Credit Kudos
for a return multiple of over 5x in just two years after the investment was
made.
New investments in the period under review include an operating system for
small airports (Aerocloud), an engagement and communications platform for
veterinary surgeons (PetsApp) and an air pollution monitoring company for
local councils and businesses (Airly).
Examples of sectors in which we are taking an active interest are Payment
Orchestration (integrating and managing the end-to-end payment process,
including authorising payments, routing transactions, and handling
settlements) which helps companies reduce transaction costs as well as be more
agile and scale more rapidly; Healthcare Analytics (the process of analysing
current and historical industry data to predict trends, improve outreach); and
energy related software (e.g. around the evolution of the grid to continue
coping with more renewable and stored power).
Portfolio
With the Venture Fund having made 44 venture investments since launch, this
year saw the first portfolio write-off. The company, Anorak, was sold in a
distressed sale process to a larger German insure-tech company and there were
no proceeds for the Venture Fund. The company lost a key B2B customer and then
chose to pivot to a direct-to-consumer model which proved too
capital-intensive to be sustainable. We view the failure of some investments
as an inevitable part of venture investing, which is why we always look for
the Fund's new investments to have the potential to make significant multiple
returns on initial investment cost.
The most active sub-sectors for deployment during the period were Health-tech
where £1.8 million was deployed, HRTech (£1.7 million) and Fintech (£800k).
While at the end of the year the largest sub-sectors in terms of portfolio
value were again Fintech and Health-tech, two sectors where the ventures team
has particular experience. Fintech saw less aggressive growth when compared to
previous years.
In the year under review the Fund has made more Series A stage investments
than in previous years. This year saw five Series A investments, four Seed
stage investments and four pre-seed investments. It is important to note here
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 proven product-market fit and are
looking to raise between £1million and £5million to take them to the next
level. We very much continue to see ourselves as a seed stage investor and
promote ourselves as such.
Many of the businesses in which the Fund invests involve the use of
cutting-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.
Biorelate
What does the company do?
Manchester-based Biorelate has developed an IP-rich deep tech software
platform which combines natural language processing (NLP), machine learning
and human labelling and checking to analyse and curate big data from an array
of published biomedical literature for use by Pharma and Biotech companies to
speed up the drug discovery process.
Problem being solved
Modern drug development faces an increasingly costly data problem. With
scientific articles output doubling every nine years and c100m articles
already in existence, manual review of relevant literature leaves most of the
information in the dark and hard to access for drug discovery. Traditional
search engines are not specified to accurately identify biomedical concepts
and the relationships between them. Accurate manual curation of journal
references to biomedical concepts and relationships between them does take
place at large scale but it is costly and slow. Efficient drug discovery
processes therefore require a software solution that can increase speed and
find novel insights.
Company solution
A suite of disruptive knowledge curation products underpinned by Biorelate's
AI powered proprietary data and insights software Galactic AI. This combines
proprietary concept labelling with a Deep Learning NLP platform which
automatically curates cause-and-effect data regarding chemicals genes,
proteins, cells, phenotypes and diseases. The platform regularly processes
millions of text articles to reveal such connections. Completely novel
insights and causal links not foreseen by experts can be illuminated and then
investigated.
Visibly
What does the company do?
Visibly has developed a platform designed for field service engineers and
their employers to evaluate and improve engineering skills. Through the
Visibly platform, weekly quality checks are assigned to employees, which are
completed to confirm training and compliance with standards.
Problem being solved
Businesses face a shortage of skilled field engineers to facilitate major
infrastructure transitions (such as the move to fibre, 5G and the transition
to net zero). The resulting need to reskill and train new engineers has
increased the need for adequate supervision, to ensure compliance and quality
standards are adhered to. However, supervision is currently carried out
physically, which is expensive, slow and difficult to scale with current
labour shortages. Failure to adhere to industry standards results in
reputational harm and can cause financial damage.
Company solution
Through the Visibly platform, weekly quality checks are assigned to employees,
which are completed to confirm training and compliance with standards. Using
Visibly's app, field engineers simply record themselves completing the
assigned tasks and submit the recordings for review. Reviews are then randomly
allocated to another employee with every tenth "challenge to review" being
re-reviewed to ensure quality. Through the Visibly dashboard businesses gain
real time insights into the capabilities of their workforce, helping to inform
resource allocation and remedy weaknesses pre-emptively. The platform also
features a community function, which will act as a forum for field engineers
to share best practices, ask for advice or gain social validation for their
professional competency. For the average field engineer, who works for four or
five different businesses at any one time, gaining this track record can be
particularly attractive to improve future employability opportunities.
Offer for subscription
The Venture Fund Share Class is still a relatively new member of the VCT
sector. While fundraising has benefited from the Fund's differentiating
Seed-stage focussed B2B investment strategy discussed above, the VCT
fundraising environment was slightly less buoyant towards the end of the
2022-23 tax year.
The fourth Venture Fund offer for subscription closed on 29 July 2022 having
raised £18.55 million and the fifth offer for subscription opened in
September 2022 and remains open to new investors. This new offer had a
promising start with 3.4 million Venture Shares allotted under the fifth offer
for subscription to December 2022, raising £3.6 million. Following the
February 2023 year end, the Company allotted an additional 8.5 million Venture
Shares raising £9 million, this takes the total number of Venture Shares in
issue to 51,270,715. In light of this the VCT Board triggered the
over-allotment facility on 14 March 2023, raising the amount that can be
raised under the offer for subscription to £15 million, allowing the Fund to
meet on-going demand towards the end of the tax year.
This offer has to date resulted in funds being raised in excess of £12.6
million and 11,915,252 new Shares allotted. For all investments in the 2023/24
tax year, the Offer will remain open until 28 July 2023, unless fully
subscribed at an earlier date. The Board has the discretion to extend the open
offer to 20 September 2023 if required.
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 Venture Fund. 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. Please see the section on
Responsible Investing on pages 36 to 38 for further information.
Sunset Clause
The 2015 Finance (No.2) Act contains a sunset clause, which states that
eligibility for VCT and Enterprise Investment Scheme (EIS) tax relief will
only apply to shares that are issued before 6 April 2025 unless the
legislation is amended to make the scheme permanent or the "sunset clause" is
extended. We are happy to report that the Chancellor's Autumn Statement of
2022 confirmed the Government's intention for EIS and VCT tax relief to
continue beyond 2025 (when the current EIS/VCT "Sunset Clause" is due to
expire).
Outlook
The economic and investment environment has been buffeted by a series of
challenges in recent years with concerns over sharply higher interest rates
and potential recession following the impact of the Russia-Ukraine invasion
and the Covid-19 lockdowns in 2020 and 2021. Throughout this we have continued
to see entrepreneurial activity and innovation thrive, even in the tougher
start-up funding environment of 2022 and early 2023, as evidenced by the
number of investment opportunities that we continue to find, review and action
for the Venture Fund.
The majority of economic forecasters now foresee a recession in the UK and US
at some point in 2023 as an eventual result of the significant interest rate
rises seen in the last year or more. We know from history that we should not
rely totally on such forecasts, indeed in late 2022 and early 2023 both those
economies proved more resilient than most forecasters had expected. We proceed
to make new investments but with caution and by sticking to what we know which
is (a) finding and backing software start-ups that we believe have the
potential ultimately to generate returns of at least 10x our investment cost
and have founders that we expect to be able to navigate challenging
circumstances, while (b) bearing in mind that there has been a true sea-change
in the interest rate environment which, by raising the cost of capital and
somewhat reducing investor risk appetite, has made venture fundraising more
challenging for some start-ups in 2023 and will do so perhaps into 2024.
There are also positives. First, reduced valuations in some areas mean that we
expect to see opportunities to invest in great business ideas at sensible
valuations in the year ahead. Second, one of the concerns for start-ups that
we have been talking about for a while - scarcity and cost inflation for
skilled labour in areas such as software development and digital marketing and
sales - is gradually easing as economies slow. Recruiting great talent is
still somewhat difficult, but the situation is improving for employers, not
least because of the significant and somewhat indiscriminate job cuts
announced by some of the larger, listed technology companies that now have
pressure from their Shareholders to focus on profit. Some of our portfolio
companies have been taking advantage of this to hire top quality people.
As ever, we are of the view that times of change and macro uncertainty tend to
be good rather than bad for the rate and significance of innovation. While the
corporate sector that constitutes the customer base for most of our portfolio
companies is more cost-focused, we continue to see that larger businesses are
willing to increase spend on technology and specifically
productivity-enhancing software solutions. The media has increasingly picked
up on advances in easily accessible Artificial Intelligence ("AI") software
products such as GPT and Google's equivalent, Bard. A number of our
traditional software companies are already planning to make use of new
advances in AI in order to provide enhanced service options to their customers
and thereby grow revenues.
In the year to February 2023, the bulk of Venture deployment was into new
investments, partly because many of the existing portfolio companies acted to
stretch out their cash runway and postpone fundraising. We expect follow-on
investments to make up a greater proportion of our deployment in the coming
year.
Ian McLennan
Partner
For Triple Point Investment Management LLP
7 June 2023
Responsible Investing
Investment Manager commitment to responsible investment
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 Sustainable Business
Objectives document. These principles ensure all investment processes have
sound and appropriate integration of ESG practice and are overseen by the
Sustainability Team who report 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. As
stated earlier in the report, Triple Point is currently in the process of
preparing Group targets which align with Science Based Targets.
Triple Point's overall commitment to sustainable business and approach to ESG
within all investment strategies is captured in the Sustainable Business
Objectives document, which is overseen by the Triple Point Sustainability
Group. This Group comprises senior partners and managers from across Triple
Point, who meet monthly. 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 the Company, 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.
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 reviewed annually, 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 our investment team on ESG;
b. training for our Investment Committee on ESG; and
c. providing greater transparency on our 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 we capture
decisions and changes to ESG factors 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 Company awareness on a range of ESG issues develops with
ownership.
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, arms trade and tobacco.
Details of the investment team's assessment of ESG for each deal must be
captured within investment committee papers.
We are committed to evaluating the success of our approach. Our investment
teams report to our Sustainability Group through an annual review process to
ensure adherence to the process and to share detail on where we believe we
have influenced better or faster progress towards greater sustainability. This
ESG integration review, along with on-going guidance to each investment team,
is provided by Triple Point's dedicated Sustainability Team.
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. In the case of the
Venture fund investments, these businesses 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 their supply chains. 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.
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: Biorelate - a pharma and biotech research
curation platform creating efficiency in drug discovery; Airly - an air
quality monitoring App designed to help Governments and businesses monitor and
reduce harmful air emissions and protect public health;
SDG 8 - decent work and economic growth: Visibly - software providing
programmes that engage employees to better adapt to cultural and strategic
changes (such as hybrid or remote working) and drive better business
performance; Konfir and Veremark - software systems that speed up and secure
employment processes for the employer (empowering growth, while reducing risk)
and employee (increasing access to work); Expression Insurance - providing
specialist insurance to independent businesses such as coffee shops and cafes.
SDG 16 - peace, justice and strong institutions: Outthink - a provider of
innovative cybersecurity training and awareness targeting human behaviours to
prevent breaches by understanding people
Investment Portfolio Summary
Qualifying holdings
Investment Portfolio 28 February 2023 28 February 2022
Cost Valuation Cost Valuation
£'000 % £'000 % £'000 % £'000 %
Unquoted qualifying holdings 27,725 59.73 31,498 62.74 23,274 75.09 28,169 77.76
Non-Qualifying holdings 471 1.01 481 0.96 1,476 4.76 1,813 5.00
Financial assets at fair value through profit or loss 28,196 60.74 31,979 63.70 24,750 79.85 29,982 82.76
Cash and cash equivalents 18,222 39.26 18,222 36.30 6,246 20.15 6,247 17.24
46,418 100.00 50,201 100.00 30,996 100.00 36,229 100.00
Qualifying Holdings
Unquoted
Venture Investments
Vyne Technologies Ltd 1,752 3.77 3,233 6.44 1,127 3.64 3,725 10.28
Ably Real Time Ltd 1,312 2.83 3,153 6.28 1,312 4.23 3,153 8.70
Digital Therapeutics Inc (t/a Quit Genius) 1,245 2.68 2,565 5.11 1,245 4.02 2,755 7.60
Ryders 1,988 4.28 1,988 3.96 1,000 3.23 1,000 2.76
Veremark 910 1.96 1,529 3.05 450 1.45 471 1.30
AeroCloud 1,500 3.23 1,500 2.99
Semble (previously Heydoc Ltd) 760 1.64 1,374 2.74 760 2.45 1,374 3.79
Counting Ltd (t/a Counting Up) 920 1.98 1,044 2.08 920 2.97 835 2.30
Scan.com 800 1.72 1,000 1.99 - - - -
OutThink 1,000 2.15 1,000 1.99 - - - -
PetsApp 1,000 2.15 1,000 1.99 - - - -
Biorelate 1,000 2.15 1,000 1.99 - - - -
Airly 987 2.13 999 1.99 - - - -
Pixie 915 1.97 915 1.82 915 2.95 915 2.53
Tickitto 1,000 2.15 800 1.59 1,000 3.23 1,000 2.76
Knok Healthcare 513 1.11 640 1.27 513 1.65 513 1.42
Adfenix AB 799 1.72 638 1.27 799 2.58 673 1.86
SonicJobs 450 0.97 638 1.27 450 1.45 450 1.24
Konfir 500 1.08 519 1.02 - - - -
Crowd Data 500 1.08 500 1.00 - - - -
MWS Technology Ltd 150 0.32 441 0.88 150 0.48 353 0.97
Nook 343 0.74 438 0.87 250 0.81 250 0.69
Degreed Inc. 300 0.65 432 0.86 300 0.97 533 1.47
Exate 500 1.08 400 0.80 500 1.61 400 1.10
Rhubarb 400 0.86 400 0.80 - - - -
Stepex 499 1.08 399 0.79 499 1.61 499 1.38
Ramp 308 0.66 308 0.61 - - - -
Localz 750 1.62 300 0.60 750 2.42 750 2.07
Konstructly 300 0.65 300 0.60 - - - -
Visibly Tech 300 0.65 300 0.60 - - - -
Catalyst 224 0.48 224 0.45 224 0.72 224 0.62
Kamma 500 1.08 200 0.40 500 1.61 250 0.69
Learnerbly 200 0.43 200 0.40 200 0.65 200 0.55
Artifical Artists 150 0.32 150 0.30 150 0.48 120 0.33
Seedata 150 0.32 150 0.30 150 0.48 150 0.41
Trumpet 120 0.26 120 0.24 - - - -
Expression Insurance 1000 2.15 118 0.24 500 1.61 681 1.88
Augnet Ltd 300 0.65 100 0.20 300 0.97 - -
Sealit 200 0.43 100 0.20 200 0.65 180 0.50
Bkwai 250 0.54 91 0.18 250 0.81 170 0.47
Homelyfe Limited (t/a Aventus) 70 0.15 - - 700 2.26 - -
Credit Kudos - - - - 500 1.61 2,518 6.95
Anorak - - - - 700 2.26 525 1.45
Hydroelectric Power
Green Highland Shenval Ltd * 860 1.85 292 0.58 860 2.77 534 1.47
Gas Power
Distributed Generators Ltd 3,200 10.32 1,925 5.31
Green Peak Generation Ltd 1,900 6.13 1,044 2.88
27,725 59.73 31,498 62.74 23,274 75.09 28,169 77.76
*Green Highland Shenval Ltd was transferred from the A share class to the
Venture share class in November 2022 following a valuation adjustment. It was
acquired by the company in February 2017 for £860k.
Strategic Report - Investment Portfolio Summary
Non-qualifying holdings
Investment Portfolio 28 February 2023 28 February 2022
Cost Valuation Cost Valuation
£'000 % £'000 % £'000 % £'000 %
Non-Qualifying Holdings
Unquoted
SME Funding:
Hydroelectric Power
Broadpoint 3 Ltd - - - - 1,005 3.24 1,329 3.67
Other
Modern Power Generation Ltd 471 1.03 481 0.96 471 1.52 484 1.33
471 1.03 481 0.96 1,476 4.76 1,813 5.00
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.
Investment Portfolio Ten Largest Investments
Vyne Technologies Limited
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TP11 for the year £'000 Equity Held by TP11 % Equity Held by TPIM managed funds %
28-Nov-2019 1,752,185 3,232,849 Last Equity Raise adjusted for fair value - 9.80 -
Summary of Information from Investee Company Financial Statements: £'000
Turnover* Not disclosed
Earnings before interest, tax, amortisation and depreciation (EBITDA)* Not disclosed
Profit before tax* Not disclosed
Net assets before VCT loans* Not disclosed
Net assets as at 31 March 2022 5,489
Vyne is a payments business that uses Open Banking application programming
interface ("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.
Ably Real Time Ltd
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TP11 for the year £'000 Equity Held by TP11 % Equity Held by TPIM managed funds %
30-Oct-2019 1,312,027 3,152,986 Last Equity Raise adjusted for fair value - 2.05 -
Summary of Information from Investee Company Financial Statements: £'000
Turnover* Not disclosed
Earnings before interest, tax, amortisation and depreciation (EBITDA)* Not disclosed
Profit before tax* Not disclosed
Net assets before VCT loans* Not disclosed
Net assets as at 31 December 2021 31,411
Ably is the provider of a suite of APIs to build, extend, and deliver digital
experiences in real time for more than 250 million devices each month.
* The Investees are required only to submit Small Companies Accounts to
Companies House hence only net assets have been disclosed.
Digital Therapeutics Inc (Quit Genius)
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TP11 for the year £'000 Equity Held by TP11 % Equity Held by TPIM managed funds %
14-Feb-2020 1,245,285 2,565,079 Last Equity Raise adjusted for fair value - 1.67 -
Summary of Information from Investee Company Financial Statements: £'000
Turnover* Not disclosed
Earnings before interest, tax, amortisation and depreciation (EBITDA)* Not disclosed
Profit before tax* Not disclosed
Net assets before VCT loans* Not disclosed
Net assets* Not disclosed
Quit Genius is the provider of an online digital therapeutics tool that helps
users quit smoking and vaping. The app provides behaviour tracking, tips and
encouragement to users.
* This company is exempt from publishing accounts and hence no financial
details are disclosed.
Gameplan Tecnhology Ltd
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TP11 for the year £'000 Equity Held by TP11 % Equity Held by TPIM managed funds %
27-Jul-2021 1,987,989 1,987,989 Cost - 7.34% -
Summary of Information from Investee Company Financial Statements: £'000
Turnover* Not disclosed
Earnings before interest, tax, amortisation and depreciation (EBITDA)* Not disclosed
Profit before tax* Not disclosed
Net assets before VCT loans* Not disclosed
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 e-commerce companies requiring deliveries.
* The Investees are required only to submit Small Companies Accounts to
Companies House hence only net assets have been disclosed.
Veremark Ltd
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TP11 for the year £'000 Equity Held by TP11 % Equity Held by TPIM managed funds %
12-Aug-2020 909,906 1,529,429 Last Equity Raise - 5.66 -
Summary of Information from latest available Investee Company Financial £'000
Statements:
Turnover* Not disclosed
Earnings before interest, tax, amortisation and depreciation (EBITDA)* Not disclosed
Profit before tax* Not disclosed
Net assets before VCT loans* Not disclosed
Net assets as at 31 December 2021 1,547
Veremark is a global background screening and reference checking platform.
* The Investees are required only to submit Small Companies Accounts to
Companies House hence only net assets have been disclosed.
AeroCloud Systems Ltd
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TP11 for the year £'000 Equity Held by TP11 % Equity Held by TPIM managed funds %
14-Dec-2022 1,499,999 1,499,999 Cost - 3.03 -
Summary of Information from latest available Investee Company Financial £'000
Statements:
Turnover* Not disclosed
Earnings before interest, tax, amortisation and depreciation (EBITDA)* Not disclosed
Profit before tax* Not disclosed
Net assets before VCT loans* Not disclosed
Net assets as at 31 December 2022 11,186
AeroCloud is the provider of an operations management SaaS solution for
airports worldwide.
* The Investees are required only to submit Small Companies Accounts to
Companies House hence only net assets have been disclosed.
SembleTechnology Ltd (previously Heydoc)
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TP11 for the year £'000 Equity Held by TP11 % Equity Held by TPIM managed funds %
20-Nov-2019 760,016 1,374,016 Last Equity Raise - 5.98 -
Summary of Information from Investee Company Financial Statements: £'000
Turnover* Not disclosed
Earnings before interest, tax, amortisation and depreciation (EBITDA)* Not disclosed
Profit before tax* Not disclosed
Net assets before VCT loans* Not disclosed
Net assets as at 31 December 2022 2,009
Semble is a clinical system built to enable medical clinicians and
administrative 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.
* The Investees are required only to submit Small Companies Accounts to
Companies House hence only net assets have been disclosed.
Counting Ltd
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TP11 for the year £'000 Equity Held by TP11 % Equity Held by TPIM managed funds %
06-Jun-2019 920,177 1,043,625 Last Equity Raise - 2.45 -
Summary of Information from Investee Company Financial Statements: £'000
Turnover* Not disclosed
Earnings before interest, tax, amortisation and depreciation (EBITDA)* Not disclosed
Profit before tax* Not disclosed
Net assets before VCT loans* Not disclosed
Net assets as at 31 March 2022 5,962
Counting Ltd provides micro businesses with a fully integrated accounting
system and business bank account in one app. The solution provides automated
bookkeeping, quick and easy invoicing and simple expense management.
* The Investees are required only to submit Small Companies Accounts to
Companies House hence only net assets have been disclosed.
National MRI Scan Ltd
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TP11 for the year £'000 Equity Held by TP11 % Equity Held by TPIM managed funds %
27-Jul-2022 800,000 1,000,000 Last Equity Raise - N/A -
Summary of Information from Investee Company Financial Statements: £'000
Turnover* Not disclosed
Earnings before interest, tax, amortisation and depreciation (EBITDA)* Not disclosed
Profit before tax* Not disclosed
Net assets before VCT loans* Not disclosed
Net assets as at 31 December 2021 1,341
Scan.com provides a platform 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.
Biorelate Ltd
Date of first investment Cost £ Valuation £ Valuation Method Income recognised by TP11 for the year £'000 Equity Held by TP11 % Equity Held by TPIM managed funds %
22-Nov-2022 999,998 999,998 Cost - 5.01 -
Summary of Information from Investee Company Financial Statements: £'000
Turnover* Not disclosed
Earnings before interest, tax, amortisation and depreciation (EBITDA)* Not disclosed
Profit before tax* Not disclosed
Net assets before VCT loans* Not disclosed
Net assets as at 31 March 2022 13
Biorelate is the provider of a deep tech software platform which analyses and
curates big data from an array of published biomedical literature for use by
Pharma and Biotech companies in the drug discovery process.
* The Investees are required only to submit Small Companies Accounts to
Companies House hence only net assets have been disclosed.
The Strategic Report has been approved by the Board and signed on their behalf
by the Chair.
Jane Owen
Chair
7 June 2023
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.
Chad Murrin graduated in law from Cambridge University, and then qualified as
a barrister. He worked for 3i Group plc from 1986-2004, the last five years as
3i's Corporate Development Director. In 2004, he set up his own corporate
advisory business, Murrin Associates Limited. He holds the Advanced Diploma in
Corporate Finance from The Corporate Finance Faculty of the ICAEW. He is a
Non-Executive Director of Keytask Management Limited, E.W. Beard (Holdings)
Limited and other companies. Chad Murrin will not stand for re-election at
the Company's AGM expected to be held in July 2023 and will step down
immediately following the conclusion of the AGM.
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, Director and Chair of the Audit and Risk Committee of
Invesco Pensions Limited and Director of 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 (to be appointed on 8 June 2023) 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.
Corporate Governance Report
Compliance Statement
The Board of Triple Point VCT 2011 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 Triple Point VCT 2011 plc.
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
The appointment of a Senior Independent Director (Provision 14) As there are only three independent Non-Executive Directors, excluding the
Chair, with one Non-Executive Director intending to step down immediately
following the 2023 AGM, it is not considered appropriate to identify a member
of the Board as senior independent Director. The independent Non-Executive
Directors, as appropriate, will act as a sounding board for the Chair, serve
as intermediaries between Directors and Shareholders, and evaluate the Chair's
performance as part of the Board's annual evaluation.
An external search consultancy should generally be used for the appointment of The Board considered the use of an external search consultancy when looking to
non-executive directors (Provision 25) appoint a new non-executive Director to the Board. However, it was decided
that suitable candidates for the role could be sourced without the use of a
search consultancy, and the significant cost of using a search consultancy was
not deemed appropriate for the Company at this time. The Board will consider
the use of an external search consultancy for future Board appointments.
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. Given the
explain in the annual report why it believes this is appropriate (Provision size and structure of the Board it was deemed in best interest of Shareholders
29) 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
As announced today, Chad Murrin will not be standing for re-election at the
Company's 2023 Annual General Meeting. The Board, has undertaken a succession
and recruitment process and are pleased to report that Jamie Brooke will be
appointed as Independent Non-Executive Director with effect from 8 June 2023.
Jamie's biography can be found on page 54.
The Board considered the use of an external search consultancy (provision 25
of the AIC Code) when looking to appoint a new Non-Executive Director to the
Board. However, it was decided that a suitable candidate for the role could be
sourced without the use of a search consultancy, and the significant cost of
using a search consultancy was not deemed appropriate for the Company at this
time. The Board will consider the use of an external search consultancy for
future Board appointments.
Following Jamie's appointment, the Board will comprise four Non-Executive
Directors.
Following an orderly succession period, Chad Murrin, Non-Executive Director of
the Company, will not stand for re-election at the Company's AGM expected to
be held in July 2023 and will step down immediately following the conclusion
of the AGM when the Board will again comprise three Non-Executive Directors.
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 54 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 54.
The Chair, Jane Owen, leads the Board and is responsible for its overall
effectiveness in directing 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.
Company's Operations
The Investment Manager has authority over the management of the investment
portfolio, the organisation of custodial services, accounting and
administrative services. The Investment Manager makes investment
recommendations for the Board's approval.
The Board meets regularly in person or via video conference call at least four
times a year, and on other occasions as required, to discuss and approve new
or follow-on investments, and review the investment performance and monitor
compliance with the investment policy laid down by the Board.
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;
• monitoring Shareholder profiles and considering Shareholder
communications; and
• approving investments.
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 Company policies;
· approval of the disposal of Gas Fired Energy Assets;
· succession planning and appointment of Jamie Brooke as a
Non-Executive Director;
· matters in relation to the wind down and cancellation of the
Company's A and B Share Classes;
· matters in relation to the Company's Offer for Venture Shares;
· approval of Venture Share Class investments;
· 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, Chad Murrin will not stand for re-election at the Company's AGM expected
to be held in July 2023 and will step down immediately following the
conclusion of the AGM.
Independence of Directors
The Board has a non-executive Chair and two 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. All Directors,
except newly appointed Julian Bartlett, have served on the Board for nine
years or more. Once Jamie Brooke has been appointed to the Board and Chad
Murrin has stepped down then only Jane Owen will have served 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 their long-service offers. The Board
regularly reviews the independence of its Directors and is satisfied that all
Directors remain independent, including in character and judgement.
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 continues to seek 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, due to take effect on 8
June 2023, 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. The
remuneration report is detailed on pages 64 to 69.
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
Chad Murrin 5/5 3/3
Julian Bartlett 5/5 3/3
Tim Clarke* 3/3 1/1
-
*Tim Clarke resigned as Non-Executive Director on 14 July 2022
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 2023 Development Points
Managing risks in a volatile macroeconomic environment The Board will undertake a deep dive into the risk management process to
ensure enhanced risk management to adequately monitor current and emerging
risks facing the Company.
Whilst the Board has the right mix of skills, experience and expertise, Consideration will be giving to using an external search consultancy for the
diversity could be increased to further enhance the composition and balance of recruitment of a new Board Director, in line with succession planning, to
the Board. actively encourage a diverse pool of candidates.
Further enhancement of Director understanding of legal and regulatory changes Director training to be held on key legal, regulatory and governance issues
in the wider environment. facing the Company or expected to impact the Company in the future.
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 36 to 39.
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 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 identifying, evaluating and managing 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 on a risk register. The controls employed to mitigate these
risks are identified and the residual risks are rated taking into account the
impact of the mitigating factors. The risk register is reviewed bi-annually.
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 20 to 22.
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-vct-2011-plc/s2539/
(https://www.triplepoint.co.uk/current-vcts/triple-point-vct-2011-plc/s2539/)
Stakeholder engagement is set out in the Section 172(1) statement on pages 25
to 25.
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 page 67. 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
7 June2023
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 28 February 2023.
Julian Bartlett Chairs the Audit Committee. Jane Owen, 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 Director Chad
Murrin. Following an orderly succession period, Chad Murrin will not stand for
re-election at the Company's AGM expected to be held in July 2023, and will
step down from the Board and Audit Committee following the conclusion of the
AGM. Jamie Brooke will be appointed as a member of the Audit Committee,
following his appointment to the Board on 8 June 2023.
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.
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 28 February 2023, 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 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 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.
The Company does not have an independent internal audit function as it is not
deemed appropriate given the size of the Company and the nature of the
Company's business. However, the Audit Committee considers annually whether
there is a need for such a function and, if there were, would recommend it be
established.
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 half year report and 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;
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 Venture Fund 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 5 to the
financial statements. The Investment Manager is responsible for calculating
the NAV, prior to approval by the Board.
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.
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 cashflow for the Company and
expected pipeline. As a result, 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 one of the two 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. The first audit engagement for BDO LLP was for the year ended 28
February 2018. BDO were recommended for re-appointment at the 2022 AGM and the
resolution was duly passed. We have transitioned our lead BDO partner for
this year's audit following completion of the previous audit partner's
five-year term. I would like to thank Peter Smith for his leadership of the
external audit and welcome Elizabeth Hooper as our new lead audit partner.
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 7 to the financial statements. During the year, BDO
LLP was appointed to perform certain agreed-upon procedures with regards to
the Net Asset Value of the Venture fund as at 15 January 2023 as part of the
Board's consideration of the appropriateness of the issue price for the most
recent Venture Fund allotment. The Audit Committee approved these fees after a
review of the level and nature of work to be performed and were satisfied that
they are appropriate for the scope of the work required. The Audit Committee
was satisfied that BDO LLP had adequate safeguards in place and that provision
of these non-audit services did not affect the objectivity or independence of
the external auditor.
Audit Fee
The audit fee for the year was £64,250, (2022: £30,000) BDO have primarily
attributed the increase in fees to inflation, the increased time and
complexity of audit given the growth of the Venture Share Fund 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
Chad Murrin 3/3
Julian Bartlett 3/3
Tim Clarke* 1/1
*Tim Clarke resigned as Non-Executive Director on 14 July 2022
The Audit Committee relies on the Investment Manager to assess the valuation
of unquoted investments and the existence of those investments, however the
Audit Committee considers, and challenges information provided by the
Investment Manager, and ultimate approval for decisions is given by the Board.
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 28 February 2023 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
7 June 2023
Directors' Remuneration Report
Statement of the Chair
I am pleased to present the Remuneration Report on behalf of the Board for the
year ended 28 February 2023.
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 28 February 2023. 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 9 July 2020
following approval by Shareholders.
· Annual Remuneration Report - This sets out how our Directors were
paid for the period ended 28 February 2023. There will be an advisory
Shareholder vote on this section of the report at our 2023 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
Directors' Remuneration Policy
Approval of Remuneration Policy
Our Directors' Remuneration Policy was last approved by shareholders at the
2020 AGM of the Company held on 9 July 2020 and became effective from the
conclusion of the AGM.
In accordance with section 439A of the Companies Act 2006, a resolution to
approve this Directors' Remuneration Policy will be proposed at the AGM of the
Company to be held on 19 July 2023. If the resolution is passed, the
provisions of the policy will apply until they are next put to shareholders
for renewal of that approval, which must be at intervals of not more than
three years, or if the Remuneration Policy is varied, in which event
Shareholder approval for the new Remuneration Policy will be sought.
The policy applies to the Non-executive Directors; the Company has no
Executive Directors or employees.
Remuneration Policy Overview
The Board currently comprises three 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 2020 AGM. A resolution to approve the Directors'
Remuneration Policy will be proposed at the AGM of the Company to be held on
19 July 2023.
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. Following a remuneration
benchmarking exercise, the Board agreed in the period to increase Director
fees effective 1 August 2022 to ensure that the Company can retain and attract
Directors of the requisite merit, and with the skills, knowledge and
experience required for the role. The increase in remuneration is in line with
the size of the Company and Director fees of comparable companies. 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.
The increase in Directors remuneration is in line with the Company's
remuneration policy.
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
Single Total Figure (audited information)
The fees paid to Directors in respect of the year ended 28 February 2023 and
the prior year are shown below:
Emoluments for the year ended 28 February 2022 % Change from 2021-2022 Emoluments for the Year ended 28 February 2021 Emoluments for the Year ended 28 February 2020 Emoluments for the Year ended 28 February 2019
Emoluments for the year ended 28 February 2023* % Change from 2022-2023
£ % £ % £ £ £
Jane Owen, Chairman 22,500 - 22,500 22,500 17,500
24,000 7%
Chad Murrin 18,000 - 18,000 18,000 15,000
19,000 6%
Tim Clarke* 18,000 - 18,000 18,000 15,000
6,600 n/a
Julian Bartlett* 20,300 n/a 1,038 n/a n/a n/a n/a
69,900 59,538 2 58,500 58,500 47,500
Employer's NI contributions - 435 1,499 112
250
Total emoluments 59,538 58,935 59,999 47,612
70,150
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.
* On 8 February 2022, Julian Bartlett was appointed as a Non-Executive
Director while Tim Clarke stepped down from his position as Non-Executive
Director on 14 July 2022.
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:
Unaudited 28 February 2022
28 February 2023
£'000 £'000
Total Dividends paid/payable 8,123 4,249
Total Directors' emoluments 70 60
Directors' Share Interests (audited information)
At 28 February 2023, Jane Owen held 24,624 A Shares, 24,378 B Shares and
82,563 Venture Shares (2022: 24,624 A Shares, 24,378 B Shares and 73,086
Venture Shares)
Chad Murrin held 24,874 A Shares, 24,624 B Shares and 48,291 Venture Shares
(2022: 24,874 A Shares, 24,624 B Shares and 46,938 Venture Shares)
Julian Bartlett held 36,413 Venture Shares (2022: nil)
No other connected parties to the Directors held any Shares at 28 February
2023 (2022: 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 28 February 2023 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 was passed at
the Annual General Meeting on 14 July 2022 and the Directors' Remuneration
Policy was passed at the Annual General Meeting on 9 July 2020. Details of the
proxy votes in respect of the resolutions are as set out below:
Voting for Voting Against Vote Withheld
Remuneration Report 98.32% 1.68% 0%
Remuneration Policy 99.47% 0.53% 0%
During the year, the Company did not receive any communications from
Shareholders specifically regarding Directors' pay.
On behalf of the Board.
Jane Owen
Chair
7 June2023
Directors' Report
The Directors are pleased to present the Directors' Report for the year ended
28 February 2023.
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 70 to 73 and in the Corporate Governance report on
pages 55 to 59 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, Tim
Clarke and Julian Bartlett. Tim Clarke resigned as Non-Executive Director on
14 July 2022.
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 72.
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 23 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 office.
Research and Development
No expenditure on research and development was made during the year (2022:
Nil).
Management
TPIM acts as Investment Manager to the Company and has done since
incorporation.
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 5 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, other VCTs managed by TPIM, and the service
provided by TPIM to the Company.
Substantial Shareholdings
As at the date of this report no disclosures of major shareholdings had been
made to the Company under Disclosure and Transparency rule 5 (Vote Holder and
Issuer Notification Rules).
Share Price Discount Policy
The Company has a share buy-back facility, committing to buy back Shares at no
more than a 5% discount to the prevailing NAV, subject to the Directors'
discretion, and approval 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, 209,706 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. These investments have
now been exited.
Share Capital
As at 28 February 2023 the Company's issued Share capital amounted to
59,256,326, consisting of 9,777,285 A Shares of 1p each, 6,758,795 B shares of
1p each and 42,720,246 Venture Shares of 1p each. As at that date none of the
issued Shares were held by the Company as treasury Shares.
As at 7 June the Company's issued Share capital amounted to 51,270,715 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 2022 annual general meeting will be held on 19 July 2023.
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. 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 20 to 23 and note 2 to the financial
statements on pages 87 to 90.
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 28 February 2023 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 accounting periods beginning on or after
6 April 2018 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 three 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 one 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 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 co-invests with other venture capital trusts and 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 7 to 13
Financial risk management objectives 95 to 96
Information on exposure to price risk, liquidity risk and cashflow risk 20
Jane Owen
Chair
7 June 2023
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/)
. Legislation in the United Kingdom governing the preparation and
dissemination of Financial Statements may differ from legislation in other
jurisdictions.
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
7 June 2023
Statement of Comprehensive Income
For the year ended 28 February 2023
28 February 2023 28 February 2022
Note Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment income 4 213 - 213 235 - 235
Realised gains/(losses) on investment - 1,013 1,013 - (334) (334)
Investment holding (losses)/gains - (826) (826) - 7,453 7,453
Investment return/(loss) 213 187 400 235 7,119 7,354
Investment management fees 5 113 1,014 1,127 403 135 538
Other expenses 6 638 - 638 774 774
Performance Fee 5 - - - - 1,066 1,066
751 1,014 1,765 1,177 1,201 2,378
(Loss)/profit before taxation (538) (827) (1,365) (942) 5,918 4,976
Taxation 9 - - - (58) (15) (73)
(Loss)/profit after taxation (538) (827) (1,365) (1,000) 5,903 4,903
Other comprehensive income - - - - - -
Total comprehensive (loss)/income (538) (827) (1,365) (1,000) 5,903 4,903
(334)
(334)
Investment holding (losses)/gains
-
(826)
(826)
-
7,453
7,453
Investment return/(loss)
213
187
400
235
7,119
7,354
Investment management fees
5
113
1,014
1,127
403
135
538
Other expenses
6
638
-
638
774
774
Performance Fee
5
-
-
-
-
1,066
1,066
751
1,014
1,765
1,177
1,201
2,378
(Loss)/profit before taxation
(538)
(827)
(1,365)
(942)
5,918
4,976
Taxation
9
-
-
-
(58)
(15)
(73)
(Loss)/profit after taxation
(538)
(827)
(1,365)
(1,000)
5,903
4,903
Other comprehensive income
-
-
-
-
-
-
Total comprehensive (loss)/income
(538)
(827)
(1,365)
(1,000)
5,903
4,903
Basic & diluted earnings/(loss) per Share (pence)
A Share 10 0.10p (2.93p) (2.83p) 0.46p (3.17p) (2.71)p
B Share 10 (1.44p) 33.75p 32.31p (1.04p) 1.35p 0.31p
Venture Share 10 (1.17p) (7.30p) (8.47p) (4.26p) 26.84p 22.57p
The total column of this statement is the Statement of Comprehensive Income of
the Company prepared in accordance with UK-adopted International Financial
Reporting Standards (IFRS). The supplementary revenue return and capital
columns have been prepared in accordance with the Association of Investment
Companies Statement of Recommended Practice ("AIC SORP") in so far as it does
not conflict with IFRS.
All revenue and capital items in the above statement derive from continuing
operations.
This Statement of Comprehensive Income includes all recognised gains and
losses.
The loss on investment includes £2.1m of gains resulting from prior year
losses reversed on disposal. The realised gains are net of £0.9m of losses
realised this year on assets still to be disposed of.
The accompanying notes on pages 87 to 97 form an integral part of these
statements
Balance Sheet
At 28 February 2023
Company No: 07324448
28 February 2023 28 February 2022
Note £'000 £'000
Non-current assets
Financial assets at fair value through profit or loss 11 31,979 29,982
Current assets
Receivables 13 667 276
Cash and cash equivalents 14 18,222 6,247
18,889 6,523
Total assets 50,868 36,505
Current liabilities
Payables and accrued expenses 15 7,035 1,265
Current taxation payable 16 15
7,051 1,280
Net assets 43,817 35,225
Equity attributable to equity holders
Share capital 16 593 430
Share Premium 3,497 26,328
Share redemption reserve 9 7
Special distributable reserve 37,675 5,052
Capital reserve 3,780 4,607
Revenue reserve (1,737) (1,199)
Total equity 43,817 35,225
Shareholders' funds
Net asset value per A Share 18 1.00p 13.25p
Net asset value per B Share 18 1.00p 57.69p
Net asset value per Venture Share 18 102.17p 113.55p
28 February 2023
28 February 2022
Note
£'000
£'000
Non-current assets
Financial assets at fair value through profit or loss
11
31,979
29,982
Current assets
Receivables
13
667
276
Cash and cash equivalents
14
18,222
6,247
18,889
6,523
Total assets
50,868
36,505
Current liabilities
Payables and accrued expenses
15
7,035
1,265
Current taxation payable
16
15
7,051
1,280
Net assets
43,817
35,225
Equity attributable to equity holders
Share capital
16
593
430
Share Premium
3,497
26,328
Share redemption reserve
9
7
Special distributable reserve
37,675
5,052
Capital reserve
3,780
4,607
Revenue reserve
(1,737)
(1,199)
Total equity
43,817
35,225
Shareholders' funds
Net asset value per A Share
18
1.00p
13.25p
Net asset value per B Share
18
1.00p
57.69p
Net asset value per Venture Share
18
102.17p
113.55p
The statements were approved by the Directors and authorised for issue on 7
June 2023 and are signed on their behalf by:
Jane Owen
Chair
7 June 2023
The accompanying notes on pages 87 to 97 form an integral part of these
statements.
Statement of Changes in Shareholders' Equity
For the year ended 28 February 2023
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
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 2022
Opening balance 320 14,847 2 9,657 (1,296) (199) 23,331
Issue of Share capital 115 11,821 - - - - 11,936
Cost of issue of Shares - (340) - - - - (340)
Share buybacks (5) - 5 (356) - - (356)
Dividends paid/payable - - - (4,249) - - (4,249)
Transactions with owners 110 11,481 - (4,605) - - 6,991
Profit/(loss) before taxation - - - - 5,918 (942) 4,976
Taxation - - - - (15) (58) (73)
Profit/(loss) after taxation - - - - 5,903 (1,000) 4,903
Other comprehensive income - - - - - - -
Total comprehensive profit/(loss) for the period - - - - 5,903 (1,000) 4,903
Balance at 28 February 2022 430 26,328 7 5,052 4,607 (1,199) 35,225
The Capital Reserve consists of:
Investment holding gains 5,272
Other realised losses (665)
4,607
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 28 February 2023 the total reserves available for distribution under the
Companies Act are £35,273,000 (2022: £3,228,000). This consists of the
special distributable reserve less the realised capital loss and less the
revenue loss.
At 28 February 2023 the total reserves available for distribution under the
VCT rules are £3,560,976 (2022: £3,187,371). To maintain VCT status amounts
in the special distributable reserve are not distributable until after the 3rd
accounting period following the relevant allotments of Share capital.
Statement of Cash Flows
For the year ended 28 February 2023
Year ended Year ended
28 February 2023 28 February 2022
£'000 £'000
Cash flows from operating activities
Profit/(loss) before taxation (1,365) 4,976
(Profit)/loss realised on investments during the period (1,013) 334
(Gain)/loss arising on the revaluation of investments at the period end 826 (7,453)
Adjustment for: Interest on cash deposits (66) -
Cash flow utilised in operations (1,618) (2,143)
(Increase)/decrease in receivables (391) 169
Increase in payables* (488) 806
Cash flow (utilised in)/operating activities (2,497) (1,168)
Adjustment for non-cash items:
Increase/(decrease) in taxation 1 -
Net cash flows used in operating activities (2,496) (1,168)
Cash flows from investing activities
Purchase of financial assets at fair value through profit or loss (11,381) (8,988)
Disposal of financial assets at fair value through profit or loss 9,570 3,961
Interest on cash deposits: 66
Net cash flows used in investing activities (1,745) (5,027)
Cash flows from financing activities
Issue of Shares** 18,086 11,596
Buyback of Shares (211) (356)
Dividends paid (1,659) (4,249)
Net cash flows from financing activities 16,216 6,991
Net increase in cash and cash equivalents 11,975 796
Reconciliation of net cash flow to movements in cash and cash equivalents
Cash and cash equivalents at 1 March 2022 6,247 5,451
Net increase in cash and cash equivalents 11,975 796
Cash and cash equivalents at 28 February 2023 18,222 6,247
* Trade payables excluding dividend accrued
** Net of Share issue cost and dividend re-investment
The accompanying notes on pages 87 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 28 February 2023
were authorised for issue in accordance with a resolution of the Directors on
7 June 2023.
The Company applied for listing on the London Stock Exchange on 24 December
2010.
Triple Point VCT 2011 plc is incorporated and domiciled in Great Britain and
registered in England and Wales. The address of the Company's registered
office, which is also its principal place of business, is 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 combined exposure to cash, or cash-based funds and
venture capital investments.
2. Basis of Preparation and Accounting Policies
Basis of Preparation
The Financial Statements of the Company for the year to 28 February 2023 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: "Financial Statements of
Investment Trust Companies and Venture Capital Trusts" ("SORP") 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").
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 12 months from the date of approval of these financial statements.
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.
At the Balance Sheet date, the Company had a cash Balance of £18.2 million.
Following the period end, the Company has also raised further capital of circa
£9 million. Whilst 30% of this new fund raise needs to be deployed in 12
months under VCT legislation, this still leaves the Company a sufficient cash
runway to continue to meet its liabilities as they fall due. Other than
Investment Management fees & dividends, the Company has a low level of
non-discretionary cash outflows. Should cash flow come under pressure, the
Company has the option to suspend dividends and negotiate deferral of
investment management fees. The impact on the business of the -Russia-Ukraine
invasion is set out further in the Chair's statement on pages 6 to 13 and
Investment Manager's review on pages 26 to 35.
On this basis, the Directors believe the going concern basis is and continues
to be appropriate.
Critical Accounting Judgements and estimates
The preparation of Financial Statements in conformity with UK-adopted IFRS
requires management to make judgements, estimates and assumptions that affect
the application of policies and the reported amounts of assets and
liabilities, income and expenses. The estimates and associated assumptions are
based on historical experience and various other factors believed to be
reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from
these judgements.
The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities relate
to:
· the valuation of unlisted financial investments held at fair value
through profit or loss, which are valued on the basis noted below (under the
heading Non-Current Asset Investments) and in note 11;
· 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; and
The key estimates made by Directors are in the valuation of non-current assets
and the assessment of unrealised 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 11.
Useful lives of the Company's Hydro investment are based on the Investment
Manager's estimates of the period over which the assets will generate revenue
which are periodically reviewed for continued appropriateness. Climate
Change may have an impact on the estimated useful life of these assets. The
actual useful lives may be a shorter or longer period depending on the actual
operating conditions experienced by the asset.
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.
Accounting Policies
These accounting policies have been applied consistently in preparing these
Financial Statements.
New and amended standards and interpretations
A number of new standards and amendments to standards are effective for the
annual periods beginning after 1 January 2023. None of these are expected to
have a significant effect on the measurement of the amounts recognised in the
financial statements of the Company. The Company intends to adopt the
standards and interpretations in the reporting period when they become
effective and the Board does not anticipate that the adoption of these
standards and interpretations in future periods will materially impact the
Company's financial results in the period of initial application although
there may be revised presentations to the financial statements and additional
disclosures.
New and amended standards and interpretations not applied
The relevant new and amended standards and interpretations that are issued,
but not yet effective, up to the date of issuance of the Company's financial
statements are disclosed below. These standards are not expected to have a
material impact on the entity in future reporting periods and on foreseeable
future transactions.
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to
specify the requirements for classifying liabilities as current or
non-current. The amendments are effective for annual reporting periods
beginning on or after 1 January 2023.
Definition of Accounting Estimates - Amendments to IAS 8
In February 2021, the IASB issued amendments to IAS 8, in which it introduces
a definition of "accounting estimates". The amendments are effective for
annual reporting periods beginning on or after 1 January 2023.
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice
Statement 2
In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice
Statement 2 Making Materiality Judgements. The amendments to IAS 1 are
applicable for annual periods beginning on or after 1 January 2023.
Presentation of Statement of Comprehensive Income
In order better to reflect the activities of a Venture Capital Trust, and in
accordance with the guidance issued by the Association of Investment
Companies, supplementary information which analyses the Statement of
Comprehensive Income between items of a revenue and capital nature has been
presented alongside the Income Statement.
Non-Current Asset Investments
The Company invests in financial assets with a view to profiting from their
total return through income and 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.
They are included initially at fair value, which is taken to be their cost
(excluding expenses incidental to the acquisition which are written off in the
Statement of Comprehensive Income and allocated to "capital" at the time of
acquisition). Subsequently the investments are valued at "fair value" which
is the price that would be received to sell an asset or paid to transfer a
liability (exit price) in an orderly transaction between market participants
at the measurement date.
This is measured as follows:
Unlisted investments are fair valued by the Directors in accordance with the
International Private Equity and Venture Capital Valuation Guidelines. Fair
value is established by using measurements of value such as calibrating to the
initial cost of investment, latest funding rounds for our Venture investments
and discounted cash flows.
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 AIC SORP 2022. 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 12.
Income
Investment income includes interest earned on bank balances and investment
loans and includes income tax withheld at source. Dividend income is shown net
of any related tax credit and is brought into account on the ex-dividend date.
Fixed returns on investment loans and debt are recognised on a time
apportionment basis so as to reflect the effective yield, provided there is no
reasonable doubt that payment will be received in due course.
Expenses
All expenses are accounted for on the accruals basis. Expenses are charged to
revenue with the exception of the investment management exit fee which has
been charged to the capital account and the investment management fee which
was previously charged 75% to the revenue account and 25% to the capital
account to reflect, in the Directors' opinion, the expected long-term split of
returns in the form of income and capital gains respectively from the
investment portfolio. From 1 March 2022, the investment management fee has
been 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 Company's general expenses are split between the Share Classes using the
net asset value of each Share Class divided by the total net asset value of
the Company.
Taxation
Corporation tax payable is applied to profits chargeable to corporation tax,
if any, at the current rate in accordance with IAS 12 "Income Taxes". The tax
effect of different items of income/gain and expenditure/loss is allocated
between capital and revenue on the "marginal" basis as recommended by the AIC
SORP 2022.
In accordance with IAS 12, deferred tax is recognised using the balance sheet
method providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. A deferred tax asset is recognised to the extent that
it is probable that future taxable profits will be available against which the
temporary difference can be utilised. Deferred tax is measured at the tax
rates that are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by
the reporting date. The Directors have considered the requirements of IAS 12
and do not believe that any provision should be made.
Financial Instruments
The Company's principal financial assets are its investments and the
accounting policies in relation to those assets are set out above. Financial
liabilities and equity instruments are classified according to the substance
of the contractual arrangements entered.
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 28 February 2023 and 28 February
2022 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 of 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
A Shares, B Shares and Venture Shares are classified as equity because they do
not contain an obligation to transfer cash or another financial asset.
Issue costs associated with the allotment of Shares have been deducted from
the Share premium account in accordance with IAS 32.
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 28 February 2023 was £50.07 million
(2022: £35.17 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.
Reserves
The revenue reserve (retained earnings) and capital reserve reflect the
guidance in the AIC SORP. The capital reserve represents the proportion of
Investment Management fees charged against capital and realised/unrealised
gains or losses on the disposal/revaluation of investments.
The special distributable reserve was created on court 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.
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.
3. Segmental Reporting
The Directors are of the opinion that the Company only has a single operating
segment of business, being investment activity.
All revenues and assets are generated and held in the UK.
4. Investment Income
Year Ended 28 February 2023 Year Ended 28 February 2022
Total Total
£'000's £'000's
Interest receivable on bank balance 34 3
Loan interest and fixed deposit interest 179 232
213 235
Disclosure by Share Class is unaudited.
5. Investment Management Fees
TPIM provides investment management and administration services to the Company
under an Investment Management Agreement effective 23 September 2010 and a
deed of variation to that agreement effective 14 September 2018.
A Shares: The agreement provides for an investment management fee of 2.00% per
annum of net assets payable quarterly in arrear for A Shares. For A Shares,
the appointment shall continue for a period of at least 6 years from the
admission of those Shares.
B Shares: The agreement provides for an investment management fee of 1.90% per
annum of net assets payable quarterly in arrear for B Shares. For B Shares,
the appointment shall continue for a period of at least 6 years from the
admission of those Shares.
Venture: The agreement provides for an investment management fee of 2.00% per
annum of net assets payable quarterly in arrear for Venture Shares. For
Venture Shares, the appointment shall continue for a period of at least 6
years from the admission of those Shares.
Following a deed of variation to the Investment Management agreement, dated 14
September 2018. An administration fee equal to 0.25% of the Company's NAV
replaces the previously charged £37,500 per annum.
Year ended 28 February 2023 Year ended 28 February 2022
Total Total
£'000 £'000
Investment Management Fees 1,127 538
Performance Fees - 1,066
TPIM agreed not to charge their management fees from 1 January 2017 on the
amounts invested in gas power projects, which represents circa 75% of the B
Share Class NAV, until these investments started to generate income.
The total fee waived to date for the B Share Class is £496,000.
Fees paid to the Investment Manager for administrative and other services
during the year was £100,000 (2022: £80,000).
The Investment Manager did not receive fees for services to investee companies
in the current or prior year.
6. Operating Expenses
All expenses are accounted for on an accruals basis.
Expenses are charged wholly to revenue, apart from management fees which are
charged 25% to capital and 75% 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
28 February 2023 28 February 2022
Total Total
£'000 £'000
Financial and regulation costs 136 68
General administration 23 111
Fees payable to the Company's auditor for audit services 65 30
Fees payable to the Company's auditor for audit-related assurance services 13 21
Company secretarial services 22 18
Other professional fees 305 466
Directors' fees 70 60
Interest write-off 4 -
638 774
The ongoing charges ratio for the Company for the year to 28 February 2023 was
3.21% (2022: 2.94%). Total annual running costs are capped at 3.21% 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 represented the total expense for the year with
the exclusion of performance and arrangement fees payable by Triple Point
Investment Management LLP.
Any excess will be met by Triple Point by way of a reduction in future
management fees.
As the B share class reached the total return of 100p, a portion of the
previously waived management fee became chargeable to the investment manager
during the financial year. This is excluded from the ongoing charges ratio for
the year as it relates to prior periods.
VAT has been removed from the Audit fees and allocated to General
Administration expenses.
7. Auditor Remuneration
Fees paid to the Company's auditor, BDO LLP, are as follows:
Year ended 28 February 2023 Year ended 28 February 2022
Total Total
£'000 £'000
Fees payable to the Company's auditor:
for the audit of the Financial Statements 65 30
other services 13 21
78 51
During the year, BDO LLP were appointed to perform certain agreed-upon
procedures with regards to the Net Asset Value of the Venture Fund as at 15
January 2023, as part of the Board's consideration of the appropriateness of
the issue price for the most recent Venture Fund allotment.
8. Directors' Remuneration
Year ended 28 February 2023 Year ended 28 February 2022
Total Total
£'000 £'000
Jane Owen 24 23
Chad Murrin 19 18
Tim Clarke 7 18
Julian Bartlett 20 1
70 60
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.
9. Taxation
Year ended 28 February 2023 Year ended 28 February 2022
Total Total
£'000 £'000
Profit/(loss) on ordinary activities before tax (1,365) 4,976
Corporation tax @ 19% (259) 945
Effect of:
Utilisation of tax losses brought forward - -
Capital gains/(losses) not taxable (35) (1,335)
Dividends received not taxable - -
Disallowed expenditure 10 38
Unrelieved tax losses arising in the year (3) 1
Excess management expense on which deferred tax not recognised 287 335
Derecognition of prior periods deferred tax asset - 89
Tax charge/(credit) for the period - 73
Capital gains and losses are exempt from corporation tax due to the Company's
status as a Venture Capital Trust. Deferred tax asset of £906,157 (2022:
£318,462) has not been recognised in the year. A write down of deferred tax
asset from prior period was not required (2022: £89,675).
We note the UK's main rate of corporation tax will increase from 19% to 25%
with effect from 1 April 2023.
10. Earnings per Share
The loss per A Share is 2.83p (2022: 2.71p) and is based on a loss from
ordinary activities after tax of £275,000(2022: £269,000) and on the
weighted average number of A Shares in issue during the period of 9,777,285
(2022: 9,831,106).
The earnings per B Share is 32.31p (2022: 0.31p) and is based on a profit from
ordinary activities after tax of £2,183,000 (2022: £21,000) and on the
weighted average number of B Shares in issue during the period of 6,758,795
(2022: 6,773,208).
The loss per Venture Share is 8.47p (2022: earnings of 22.57p) and is based on
a loss from ordinary activities after tax of £3,273,000 (2021: profit
£5,151,000) and on the weighted average number of Venture Shares in issue
during the period of 38,672,163 (2022: 22,816,854).
Both basic and diluted earnings per Share are the same.
Disclosure by Share Class is unaudited.
11. 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 balance sheet date. A market is regarded as active
where the market in which transactions for the asset or liability takes place
with sufficient frequency and volume to provide pricing information on an
ongoing basis. The quoted market price used for financial assets held by the
Company is the current bid price.
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.
The portfolio of the Company is classified as level 3 and further details of
the types of investments are provided in the Investment Manager's Review and
Investment Portfolio on pages 26 to 35.
The Company's Investment Manager performs valuations of financial items for
financial reporting purposes, including level 3 fair values. Valuation
techniques are selected based on the characteristics of each instrument, with
the overall objective of maximising the use of market-based information. The
International Private Equity & Venture Capital Valuation Guidelines (IPEV
guidelines) provide a framework to support our valuations techniques. Please
refer to the Strategic report on page 28 for further detail.
A 10% increase in investment valuations would result in an increase in net
assets of £3,198,000. A 10% decrease would result in a decrease in net assets
of £3,198,000.
Movements in level 3 investments held at fair value through the profit or loss
during the year to 28 February 2023 were as
follows:
Year ended 28 February 2023 Year ended 28 February 2022
A Shares B Shares Venture Shares Total A Shares B Shares Venture Shares Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Opening Cost 860 6,105 17,785 24,750 4,073 6,105 8,797 18,975
Opening investment holding gains/(losses) (94) (2,040) 7,366 5,232 815 (2,131) 178 (1,138)
Opening fair value at 1 March 2022 766 4,065 25,151 29,982 4,888 3,974 8,975 17,837
Purchases at cost - - 11,381 11,381 - - 8,988 8,988
Disposal proceeds (233) (6,656) (2,681) (9,570) (3,962) - - (3,962)
Adjustments between Share Classes (246) - 245 (1) - - - -
Realised (loss)/gain on disposal (130) 551 592 1,013 (334) - - (334)
Investment holding (losses)/gains (157) 2,040 (2,709) (826) 174 91 7,188 7,453
Closing fair value at 28 February 2023 - - 31,979 31,979 766 4,065 25,151 29,982
Closing cost - - 27,512 27,512 860 6,105 17,785 24,750
Closing investment holding gains/(losses) - - 4,467 4,467 (94) (2,040) 7,366 5,232
Given the nature of the Company's venture capital investments, the changes in
fair values of such investments recognised in these Financial Statements are
not considered to be readily convertible to cash in full at the balance sheet
date and accordingly any gains or losses on these items are treated as
unrealised.
Further details of the types of investments are provided in the Investment
Manager's review and investment portfolio on pages 26 to 35 and 40 to 51, and
details of entities over which the VCT has significant influence are included
on pages 40 to 41.
12. 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 investments are a combination of debt and equity.
· Equity holding is equal to the voting rights.
· The investment is held in the UK.
13. Receivables
28 February 2023 28 February 2022
Total Total
£'000 £'000
Accrued income - 22
Prepaid expenses 26 24
Other debtors* 641 230
667 276
*Other debtors relate to interest receivable on investment loans as well as
other receivables from disposal of investments
14. Cash and Cash Equivalents
Cash and cash equivalents comprise deposits with banks. Any deposits over 90
days remain easily realisable through break clauses and therefore are still
recognised as cash equivalents through liquidity. Of the amount of cash and
cash equivalents of £18.22m, £7.67m is with institutions rated A-2 and
£10.55m rated BBB.
£17.3m of deposits are held in an account in the name of the investment
manager but purely for Company purposes, as approved under Board mandate.
Since these are liquid funds controlled by the Company they have been deemed
cash.
15. Payables and Accrued Expenses
28 February 2023 28 February 2022
Total Total
£'000 £'000
Trade Creditors 50 257
Other taxation and social security - 13
Accrued expenses & deferred income 6,985 995
7,035 1,265
16. Share Capital
Year ended 28 February 2023
A Shares B Shares Venture Shares Total
£'000 £'000 £'000 £'000
Ordinary shares £0.01 each £0.01 each £0.01 each £0.01 each
Allotted and fully paid up
Brought forward 98 68 264 430
Shares issued - - 165 165
Shares repurchased - - (2) (2)
Carried forward 98 68 427 593
9,777,285 6,758,795 42,720,246 59,256,326
Total number of shares
% of total capital 17% 11% 72% 100%
28 February 2022
A Shares B Shares Venture Shares Total
£'000 £'000 £'000 £'000
Ordinary shares £0.01 each £0.01 each £0.01 each £0.01 each
Allotted and fully paid up
Brought forward 100 68 152 320
Shares issued - - 115 115
Shares repurchased (2) - (3) (5)
98 68 264 430
9,777,285 6,758,795 26,445,431 42,981,511
Total number of shares
% of total capital 22% 16% 62% 100%
Brought forward
100
68
152
320
Shares issued
-
-
115
115
Shares repurchased
(2)
-
(3)
(5)
98
68
264
430
Total number of shares
9,777,285
6,758,795
26,445,431
42,981,511
% of total capital
22%
16%
62%
100%
Each Share Class has full voting, dividend and capital distribution rights.
During the year 16,484,521 new Venture Shares were issued at an average price
of £1.11.
The gross consideration received was £18.8 million (net £18.4 million).
In the year Triple Point VCT 2011 plc repurchased 209,706 Venture Shares at
nominal value totalling £211,000 representing 0.49%.
17. Financial Instruments and Risk Management
The Company's financial instruments comprise VCT qualifying investments and
non-qualifying investments, cash balances and liquid resources including
debtors and creditors. The Company holds financial assets in accordance with
its investment policy detailed in the Strategic Report on pages 14 to 15.
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 11) are valued at fair value. Unquoted
investments are carried at fair value as determined by the Directors in
accordance with current venture capital industry guidelines. The fair value of
all other financial assets and liabilities is approximated by their carrying
value on the balance sheet.
The Directors believe that where an investee company's enterprise value, which
is equivalent to fair value, remains unchanged since acquisition that
investment should continue to be held at cost less any distribution or loan
repayments received. Where they consider the investee company's enterprise
value has changed since acquisition, that should be reflected by the
investment being held at a value measured using a discounted cash flow model
or a recent transaction price or a recent transaction price adjusted for
better or worse operating performance or market factors.
In carrying out its investment activities, the Company is exposed to various
types of risk associated with the financial instruments and markets in which
it invests. The Company's approach to managing its risks is set out below
together with a description of the nature of the financial instruments held at
the balance sheet date.
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 held at amortised cost Fair value through profit or loss
£'000 £'000 £'000 £'000
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 7,037 - 7,037 -
7,037 - 7,037 -
Year ended 28 February 2022
Assets:
Financial assets at fair value through profit or loss 29,982 - - 29,982
Receivables 252 252 - -
Cash and cash equivalents 6,247 6,247 - -
36,481 6,499 - 29,982
Liabilities:
Other Payables 1,265 - 1,265 -
1,265 - 1,265 -
Market Risk
Price Risk
The Company's VCT qualifying investments are held in small and medium-sized
unquoted investments which, by their nature, entail a higher level of risk and
lower liquidity than investments in large quoted companies. The Directors and
Investment Manager aim to limit the risk attached to the portfolio as a whole
by careful selection and timely realisation of investments, by carrying out
rigorous due diligence procedures and by maintaining a spread of holdings in
terms of industry sector.
The Board reviews the investment portfolio with the Investment Manager on a
regular basis. Details of the Company's investment portfolio at the balance
sheet date are set out on pages 40 to 41. Please refer to note 11 for
sensitivity analysis performed.
Interest Rate Risk
Some of the Company's financial assets are interest bearing, of which some are
at fixed rates and some at variable rates. As a result, the Company is exposed
to interest rate risk arising from fluctuations in the prevailing levels of
market interest rates.
Investments made into qualifying holdings are part equity and part loan. The
loan element of investments totals £883,000 (2022: £1,788,000) and is
subject to fixed interest rates of between 21.6% and 29.5% for between 5 - 20
years and, as a result, there is no cash flow interest rate risk. As the loans
are held in conjunction with equity and are valued in combination as part of
the enterprise value, fair value risk is considered part of market risk.
The Company also has non-qualifying loan investments of £171,500 (2022:
£1,176,500) which carry interest rates between 7.75% and 13.5% for between 5
- 15 years.
The amounts held in variable rate investments at the balance sheet date are as
follows:
28 February 2023 28 February 2022
£'000 £'000
Cash on Deposit 18,222 6,247
18,222 6,247
An increase in interest rates of 1% per annum would not have a material effect
either on the revenue for the year or the net asset value at 28 February 2023.
The Board believes that in the current economic climate a movement of 1% is
reasonably possible.
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 does not consider the investments in Adfenix AB, Digital
Therapeutics Inc (t/a Quit Genius) Airly Inc, Degreed Inc and Knok LDA 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 balance sheet date.
28 February 2023 28 February 2022
£'000 £'000
Non-Qualifying investment loans 172 1,501
Qualifying investment loans 883 1,788
Cash on Deposit 18,222 6,247
Receivables* 667 252
19,944 9,788
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 arising on unquoted loan stock held within unlisted investments is
considered to be part of Market risk as disclosed above.
Liquidity Risk
The Company's financial assets include investments in unquoted equity
securities which are not traded on a recognised stock exchange and which are
illiquid. As a result, the Company may not be able to realise some of its
investments in these instruments quickly at an amount close to their fair
value in order to meet its liquidity requirements.
The Company's liquidity risk is managed on a continuing basis by the
Investment Manager in accordance with policies and procedures laid down by the
Board. The Company's overall liquidity risks are monitored by the Board on a
quarterly basis.
The Board maintains a liquidity management policy where cash and future cash
flows from operating activities will be sufficient to pay expenses. At 28
February 2023 cash held by the Company amounted to £18.2 million.
18. Net Asset Value per Share
The net asset value per Share for the A Shares is 1.00p (2022: 13.25p) and is
calculated based on net assets of £94,000 (2022: £1,291,000) divided by the
9,777,285 A Shares in issue.
The net asset value per Share for the B Shares is 1.00p (2022: 57.69p) and is
calculated on net assets of £69,000 (2022: £3,903,000) divided by the
6,758,795 B Shares in issue.
The net asset value per Share for the Venture Shares is 102.17p (2022:
113.55p) and is calculated based on net assets of £43,654,000 (2022:
£30,031,000) divided by the 42,720,246 Venture Shares in issue.
19. Commitments and
Contingencies
There were no commitments or contingencies in place at the end of the
financial year.
20. Relationship with Investment
Manager
During the period, TPIM received £1,226,730 (2022: £538,265) (which has been
expensed by the Company) for providing management and administrative services
to the Company.
The Investment Manager charged £18,000 excluding VAT (2022: £15,000) for the
provision of Company Secretarial services.
At the Balance Sheet date, the total fees which have been waived by the
Investment Manager stood at £750,000 (2022: £745,300).
During the period, TPIM received £nil (2022: £127,105) in relation to
performance-related incentive fees from the A Share Class.
During the period, TPIM received £nil (2022: £198,000) of arrangement fees
on Venture investments.
In addition, TPIM received £335,880 (2022: £200,000) of arrangement fees on
Venture Share allotments during the year.
21. 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.
22. Related Party Transactions
The Directors Remuneration Report on page 67 discloses the Directors'
remuneration and shareholdings and transactions with the Investment Manager
are disclosed in Note 20.
23. Post Balance Sheet Events
The following events occurred between the balance sheet date and the signing
of these financial statements:
· Final returns to the A and B shareholders totalling £0.92million and
£5.4million respectively were distributed after the year end and these share
classes no longer exist.
· 5.8 million Venture Shares were issued on 20 March 2023 at an
allotment price of 104.87p under the Offer closing on 28 July 2023.
· £0.3 million additional consideration was received on 30 March
2023 from the sale of Credit Kudos.
· 2.1 million Venture Shares were issued on 4 April 2023 at an
allotment price of 105.22 under the Offer closing on 28 July 2023.
· 0.4 million Venture Shares were issued on 5 April 2023 at an
allotment price of 105.26 pence under the Offer which closing on 28 July 2023.
· 0.1 million Venture Shares were issued on 25 April 2023 at an
allotment price of 105.09 pence per share.
· 3 new Venture Share Class investments completed totalling £4.2
million.
· 4 Venture Share Class follow-on investment completed totalling
£0.87 million.
Unaudited Non-Statutory Analysis of - The A Share Fund
Statement of Comprehensive Income
Year ended 28 February 2023 Year ended 28 February 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment income 24 - 24 209 - 209
Realised loss - (130) (130) - (334) (334)
Investment holding gain/(loss) - (156) (156) - 174 174
Investment return 24 (286) (262) 209 (160) 49
Investment management fees - - - (74) (25) (99)
Other expenses (13) - (13) (92) (127) (219)
Profit/(loss) before taxation 11 (286) (275) 43 (312) (269)
Taxation - - - - - -
Profit/(loss) after taxation 11 (286) (275) 43 (312) (269)
Profit/(loss) and total comprehensive income 11 (286) (275) 43 (312) (269)
Basic and diluted earnings per share 0.10p (2.93p) (2.83p) 0.46p (3.17p) (2.71p)
28 February 2023 28 February 2022
Balance Sheet
£'000 £'000
Non-current assets
Financial assets at fair value through profit or loss - 766
Current assets
Receivables 20 228
Cash and cash equivalents 996 433
1,016 661
Current liabilities
Payables (921) (74)
Corporation Tax - (62)
Net assets 94 1,291
Equity attributable to equity holders 94 1,291
Net asset value per share 1.00p 13.25p
Statement of Changes in Shareholders' Equity
28 February 2023 28 February 2022
£'000 £'000
Opening Shareholders' funds 1,291 5,216
Purchase of own Shares - (81)
Profit/(loss) for the year (275) (269)
Dividend paid/payable (921) (3,575)
Closing Shareholders' funds 94 1,291
Unaudited Non-Statutory Analysis of - The A Share Fund
Investment Portfolio
28 February 2023 28 February 2022
Cost Valuation Cost Valuation
£'000 % £'000 % £'000 % £'000 %
Unquoted qualifying holdings - - - - 860 66.51 533 44.45
Non-Qualifying holdings - - - - - - 233 19.43
Financial assets at fair value through profit or loss - - - - 860 66.51 766 63.89
Cash and cash equivalents 996 100.00 996 100.00 433 33.49 433 36.11
996 100.00 996 100.00 1,293 100.00 1,199 100.00
Qualifying Holdings
Unquoted
Hydroelectric Power
Green Highland Shenval Ltd - - - - 860 66.51 533 44.45
- - - - 860 66.51 533 44.45
28 February 2023 28 February 2022
Cost Valuation Cost Valuation
Non-Qualifying Holdings £'000 % £'000 % £'000 % £'000 %
Unquoted
SME Funding:
Hydroelectric Power
Broadpoint 3 Ltd - - - - - - 233 19.43
- - - - - - 233 19.43
Unaudited Non-Statutory Analysis of - The B Share Fund
Statement of Comprehensive Income Year ended 28 February 2023 Year ended 28 February 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment income 7 - 7 - - -
Realised gain/(loss) 551 551 - - -
Investment holding gain/(loss) - 2,040 2,040 - 91 91
Investment return 7 2,591 2,598 - 91 91
Investment management fees (35) (310) (345) - - -
Other expenses (70) - (70) (86) - (86)
Profit/(loss) before taxation (98) 2,281 2,183 (86) 91 5
Taxation - - - 16 - 16
Profit/(loss) after taxation (98) 2,281 2,183 (70) 91 21
(Loss)/profit and total comprehensive Income (98) 2,281 2,183 (70) 91 21
Basic and diluted (loss)/earnings per share (1.44p) 33.75p 32.31p (1.04p) 1.35p 0.31p
Balance Sheet 28 February 2023 29 February 2022
£'000 £'000
Non-current assets
Financial assets at fair value through profit or loss - 4,065
Current assets
Receivables - 3
Corporation Tax - 47
Cash and cash equivalents 5,788 (31)
5,788 19
Current liabilities
Payables (5,719) (181)
Net assets 69 3,903
Equity attributable to equity holders 69 3,903
Net asset value per share 1.00p 57.69p
Statement of Changes in Shareholders' Equity 28 February 2023 28 February 2022
£'000 £'000
Opening Shareholders' funds 3,903 3,907
Share buybacks - (25)
Profit/(loss) for the year 2,183 21
Dividend paid/payable (6,017) -
Closing Shareholders' funds 69 3,903
Unaudited Non-Statutory Analysis of - The B Share Fund
Investment Portfolio 28 February 2023 28 February 2022
Cost Valuation Cost Valuation
£'000 % £'000 % £'000 % £'000 %
Unquoted qualifying holdings - - - - 5,100 83.96 2,969 73.60
Non-Qualifying holdings - - - - 1,005 16.55 1,096 27.17
Financial assets at fair value through profit or loss - - - - 6,105 100.51 4,065 100.77
Cash and cash equivalents 5,788 100.00 5,788 100.00 (31) (0.51) (31) (0.77)
5,788 100.00 5,788 100.00 6,074 100.00 4,034 100.00
Qualifying Holdings
Unquoted
Gas Power
Distributed Generators Ltd - - - - 3,200 52.68 1,925 47.72
Green Peak Generation Ltd - - - - 1,900 31.28 1,044 25.88
- - - - 5,100 83.96 2,969 73.60
Investment Portfolio 28 February 2023 28 February 2022
Cost Valuation Cost Valuation
Non-Qualifying Holdings £'000 % £'000 % £'000 % £'000 %
Unquoted
SME Funding
Hydroelectric Power
Broadpoint 3 Ltd - - - - 1,005 16.55 1,096 27.17
- - - - 1,005 16.55 1,096 27.17
Unaudited Non-Statutory Analysis of - The Venture Fund
Statement of Comprehensive Income
Year ended 28 February 2023 Year ended 28 February 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment income 182 - 182 26 - 26
Realised gain - 592 592
Investment holding gain/(loss) - (2,709) (2,709) - 7,188 7,188
Investment return 182 (2,117) (1,935) 26 7,188 7,214
Investment management fees (79) (704) (783) (329) (110) (439)
Other expenses (555) - (555) (596) - (596)
Performance Fee - - - - (939) (939)
Profit/(loss) before taxation (452) (2,821) (3,273) (899) 6,139 5,240
Taxation - - - (74) (15) (89)
Profit/(loss) after taxation (452) (2,821) (3,273) (973) 6,124 5,151
Profit/(loss) and total comprehensive income (452) (2,821) (3,273) (973) 6,124 5,151
Basic and diluted (loss)/gain per share (1.17p) (7.30p) (8.47p) (4.26p) 26.84p 22.57p
Balance Sheet 28 February 2023 28 February 2022
£'000 £'000
Non-current assets
Financial assets at fair value through profit or loss 31,979 25,151
Current assets
Receivables 649 45
Cash and cash equivalents 11,438 5,845
12,087 5,890
Current liabilities
Payables (396) (1,010)
Corporation tax (16)
Net assets 43,654 30,031
Equity attributable to equity holders 43,654 30,031
Net asset value per share 102.17p 113.55p
Statement of Changes in Shareholders' Equity
28 February 2023 28 February 2022
£'000 £'000
Opening Shareholders' funds 30,031 14,208
Issue of new Shares 18,291 11,596
Share buyback & cancellation (211) (250)
Profit/(loss) for the year (3,273) 5,151
Dividend paid (1,184) (674)
Closing Shareholders' funds 43,654 30,031
Unaudited Non-Statutory Analysis of - The Venture Fund
Investment Portfolio 28 February 2023 28 February 2022
Cost Valuation Cost Valuation
£'000 % £'000 % £'000 % £'000 %
Unquoted qualifying holdings 27,111 69.48 31,498 72.55 17,314 73.27 24,667 79.58
Non-Qualifying holdings 471 1.20 481 1.11 471 1.99 484 1.56
Financial assets at fair value through profit or loss 27,582 70.68 31,979 73.66 17,785 75.26 25,151 81.14
Cash and cash equivalents 11,438 29.32 11,438 26.34 5,845 24.74 5,845 18.86
39,020 100.00 43,417 100.00 23,630 100.00 30,996 100.00
Qualifying Holdings
Unquoted
Venture Investments
Vyne Technologies Ltd 1,752 4.49 3,233 7.45 1,127 4.77 3,725 12.02
Ably Real Time Ltd 1,312 3.36 3,153 7.26 1,312 5.55 3,153 10.17
Digital Therapeutics Inc (t/a Quit Genius) 1,245 3.19 2,565 5.91 1,245 5.27 2,755 8.89
Ryders 1,988 5.10 1,988 4.58 1,000 4.23 1,000 3.23
Veremark 910 2.33 1,529 3.52 450 1.90 471 1.52
AeroCloud 1,500 3.85 1,500 3.45
Heydoc Ltd 760 1.95 1,374 3.16 760 3.22 1,374 4.43
Counting Ltd (t/a Counting Up) 920 2.36 1,044 2.40 920 3.89 835 2.69
Scan.com 800 2.05 1,000 2.30 - - - -
OutThink 1,000 2.56 1,000 2.30 - - - -
PetsApp 1,000 2.56 1,000 2.30 - - - -
Biorelate 1,000 2.56 1,000 2.30 - - - -
Airly 987 2.53 999 2.30 - - - -
Pixie 915 2.35 915 2.11 915 3.87 915 2.95
Tickitto 1,000 2.56 800 1.84 1,000 4.23 1,000 3.23
Knok Healthcare 513 1.32 640 1.47 513 2.17 513 1.66
Adfenix AB 799 2.05 638 1.47 799 3.38 673 2.17
SonicJobs 450 1.15 638 1.47 450 1.90 450 1.45
Konfir 500 1.28 519 1.20 - - - -
Crowd Data 500 1.28 500 1.15 - - - -
MWS Technology Ltd 150 0.38 441 1.02 150 0.63 353 1.14
Nook 343 0.88 438 1.01 250 1.06 250 0.81
Degreed Inc. 300 0.77 432 1.00 300 1.27 533 1.72
Exate 500 1.28 400 0.92 500 2.12 400 1.29
Rhubarb 400 1.03 400 0.92 - - - -
Stepex 499 1.28 399 0.92 499 2.11 499 1.61
Ramp 308 0.79 308 0.71 - - - -
Localz 750 1.92 300 0.69 750 3.17 750 2.42
Konstructly 300 0.77 300 0.69 - - - -
Visibly Tech 300 0.77 300 0.69 - - - -
Green Highland Shenval* 246 0.63 292 0.67
Kamma 500 1.28 200 0.46 500 2.12 250 0.81
Catalyst 224 0.58 224 0.52 224 0.95 224 0.72
Learnerbly 200 0.51 200 0.46 200 0.85 200 0.65
Artifical Artists 150 0.38 150 0.35 150 0.63 120 0.39
Seedata 150 0.38 150 0.35 150 0.63 150 0.48
Trumpet 120 0.31 120 0.29 - - - -
Expression Insurance 1,000 2.56 118 0.27 500 2.12 681 2.20
Augnet Ltd 300 0.77 100 0.23 300 1.27 - -
Sealit 200 0.51 100 0.23 200 0.85 180 0.58
Bkwai 250 0.64 91 0.21 250 1.06 170 0.55
Homelyfe Limited (t/a Aventus) 70 0.18 - - 700 2.96 - -
Credit Kudos - - - - 500 2.12 2,518 8.12
Anorak - - - - 700 2.96 525 1.69
27,111 69.48 31,498 72.55 17,314 73.27 24,667 79.58
Investment Portfolio 28 February 2023 28 February 2022
Cost Valuation Cost Valuation
£'000 % £'000 % £'000 % £'000 %
Non-Qualifying Holdings
Unquoted
Other
Modern Power Generation Ltd 471 1.21 481 1.11 471 1.99 484 1.56
471 1.21 481 1.11 471 1.99 484 1.56
*Green Highland Shenval Ltd was transferred from the A share class to the
Venture share class in November 2022 following a valuation adjustment. It was
acquired by the company in February 2017 for £860k.
Shareholder Information
Board
Jane Owen (Chair)
Julian Bartlett
Chad Murrin
Company Secretary and Registered Office:
Hanway Advisory Limited
1 King William Street
London EC4N 7AF
Registered Number
07324448
FCA Registration number
659605
Investment Manager and Administrator
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,
England,
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
Financial Calendar
Key Events Date
Annual General Meeting 17 July 2023
Financial half-year end 31 August 2023
Announcement of half-year results 19 October 2023
Financial year end 28 February 2024
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. END FR EAKKXELNDEFA
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