3 June 2024

 

Triple Point Venture VCT Plc

(the "Company")

RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2024

The financial information set out in these statements does not constitute the Company's statutory accounts for the year ended 29 February 2024, prepared in accordance with section 435 of the Companies Act 2006, but is derived from those accounts.  Statutory accounts will be delivered to the Registrar of Companies in due course. The auditors have reported on these accounts and their report was unqualified and did not contain a statement under section 498(2) of the Companies Act 2006.

Results

 

Triple Point Venture VCT plc managed by Triple Point Investment Management LLP today announces the results for the year ended 29 February 2024.

 

These results were approved by the Board of Directors on 31 May 2024.

 

You may view the Annual Report in due course on the Triple Point website www.triplepoint.co.uk. 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   (Investment Manager)	Tel: 020 7201 8989
Ian McLennan   Jack Rose

  

The Company's LEI is 213800AOOAQA5XQDEA89

 

Further information on the Company can be found on its website https://www.triplepoint.co.uk/current-vcts/triple-point-venture-vct-plc/s2539/  

NOTES:

The Company is a Venture Capital Trust incorporated in July 2010 and was established to fund small and medium sized enterprises. The Investment Manager is Triple Point Investment Management LLP.

Financial Summary

Year ended 29 February 2024
		A Shares	B Shares	Venture Shares		Total
Net assets	£'000	-	-	62,196		62,196
Net asset value per share	Pence	-	-	98.55
(Loss) before tax	£'000	-	-	(785)		(785)
(Loss) per share	Pence	-	-	(1.46)
Cumulative return to Shareholders (p)
Net asset value per share		-	-	98.55
Total dividends paid		-	-	11.00
Net asset value plus dividends paid (Total Return)[1]		-	-	109.55

 

Year ended 28 February 2023
		A Shares	B Shares	Venture Shares		Total
Net assets	£'000	94	69	43,654		43,817
Net asset value per share (NAV)	Pence	1.00	1.00	102.17
Profit/(Loss) before tax	£'000	(275)	2,183	(3,273)		(1,365)
Earnings/(Loss) per share	Pence	(2.83)	32.31	(8.47)
Cumulative return to Shareholders (p)
Net asset value per share		1.00	1.00	102.17
Total dividends paid/payable		115.92	99.00	9.00
Net asset value plus dividends paid/payable (Total Return)		116.92	100.00	111.17

 

Triple Point Venture VCT plc ("the Company" or "TPV") is a Venture Capital Trust ("VCT"). The Investment Manager is Triple Point Investment Management LLP ("TPIM" or "Triple Point"). The Company was incorporated in July 2010.

 

During the year ended 29 February 2024, the Company issued a total of 20,200,780 new Venture shares, raising gross proceeds of £20.7 million with an average price per share of £1.03. Additionally, a Dividend Reinvestment Scheme ("DRIS") on 4 September 2023 saw a further 210,732 shares issued at an average price of £0.95. A total of 18,138 Venture Shares were repurchased by the Company for cancellation during the year, at a price of 5% discount to NAV.

 

The period under review included the wind down and cancellation of the A and B Share Classes, as approved by Shareholders at the Company's general meeting held on 9 February 2023 and the A and B Share Class meetings held on 1 March 2023. The cancellations were effective on 30 March 2023, and all funds including nominal capital have now been returned to the A and B Share Class Shareholders.

 

The Strategic Report on pages 4 to 42 the Directors' Report on pages 62 to 65, the Corporate Governance Report on pages 43 to 52 and the Directors' Remuneration Report on pages 57 to 61 have each been drawn up in accordance with the requirements of English law and liability in respect thereof is also governed by English law. In particular, the responsibility of the Directors for these reports is owed solely to Triple Point Venture VCT plc.

 

The Directors submit to the members their Annual Report and Financial Statements for the Company for the year ended 29 February 2024 ("Annual Report").

 

Key Highlights

As at 29 February 2024

·      Dividend per Venture Share paid during the year ended 29 February 2024[2]: 2.00p (Year ended 28 Feb 2023: 3.00p).

·      Ongoing Charges Ratio[3]: 3:23%. The ongoing charges ratio is a ratio of annualised ongoing charges expressed as a percentage of average net asset values throughout the year (2023: 3.21%).

·      Net Asset Value per Venture Share: 98.55p (Year ended 28 Feb 2023: 102.17p).

·      Total Return per Venture Share: 109.55p(Year ended 28 Feb 2023:111.17p).

·      Total funds deployed during the year: £11.9 million (2023: £11.4 million).

·      Fundraising: £20.2 million (Year ended 28 Feb 2023: £18.3 million).

 

Strategic Report - Chair's Statement

 

I am pleased to present the Annual Report and Audited Financial Statements for the Company for the year ended 29 February 2024.

 

The Company now has a single share class (the "Venture Shares") investing in early-stage venture opportunities. The portfolio has continued to grow and diversify, with eight new qualifying investments made this year and participation in 11 follow-on funding rounds with existing portfolio companies at a total value of £11.9m. Further detail can be found in the Investment Manager's Review on pages 26 to 32.

 

The Venture total return NAV per share (plus cash dividends paid to Shareholders) has declined by 1.46% (from 111.17p to 109.55p) over the period since 28 February 2023, but has increased by 0.87% (108.61p to 109.55p) since 31 August 2023. The decline in the first half of the year in review reflected a number of downward fair value adjustments for companies that suffered from the mix of the more challenging macroeconomic environment and the reduction in frequency of new venture equity funding rounds. These downward adjustments outweighed several portfolio companies with upward valuations resulting from good commercial traction and successful new funding rounds. Later in the year net portfolio performance improved, with more companies raising capital at higher valuations, and it is this improved performance that accounts for the marginal increase in total return NAV since 31 August 2023. We continue to be confident in the underlying growth prospects of our portfolio companies, and there are signs that the more difficult period that many venture-backed businesses faced in 2022-23 may be coming towards an end. The Investment Manager's Review on pages 26 to 32 gives a more detailed update on the Company's portfolio of 48 investments.

 

As at 29 February 2024, the Company's assets were 71% invested in a portfolio of VCT Qualifying and Non-Qualifying unquoted investments. 29% of the Company's assets are currently held in money markets and cash. Over the last year, the investment manager has opened accounts with three large investment managers to manage the Company's uninvested cash in lower risk liquidity funds.

 

Board Changes

 

The Board has undertaken a formal succession and recruitment process, with the assistance of an Independent external search consultancy Tyzack Partners Limited, and we were pleased to welcome Sam Smith to the Board as Independent Non-executive Director on 8 February 2024. Sam was also appointed as Senior Independent Non-executive Director and member of the Audit Committee with effect from the same date. Sam undertook a formal induction process upon joining the Board. Sam's biographical details can be found on page 44.

 

As announced on 8 February 2024, I will not be standing for re-election at the Company's 2024 Annual General Meeting ("AGM"), to be held on 23 July 2024, and will step down from the Board following the conclusion of the AGM. I would like to say thank you to the Board and Investment Manager for their continued support and I am pleased to announce that Jamie Brooke will be my successor as Non-executive Chair of the Board, to take effect immediately following completion of the AGM. The three other Directors will stand for re-election at the Company's AGM.

 

Appointment of Triple Point Investment Management LLP as AIFM

 

From 12 September 2023, the Investment Manager was appointed as the Company's Alternative Investment Fund Manager ("AIFM") and is now responsible for the Company's risk management and portfolio management. Therefore, the Investment Manager has full discretion under the Investment Management Agreement to make investments in accordance with the Company's Investment Policy from time to time. In addition, the Company has appointed a depositary[4], Indos Financial Limited, and their details can be found on page 99. There are no changes to Triple Point's fees as a result of their appointment as AIFM. Further details can be found in note 6.

 

Wind down of A Share Class and B Share Classes

 

Following approval by Shareholders, the process to wind down and cancel the A and B Share Classes was undertaken. Court proceedings to wind down the A and B Share Classes commenced on 8 March 2023, and the cancellations were effective on 30 March 2023. These shares were subsequently removed from the Official List of the Financial Conduct Authority ("FCA") and from trading on the London Stock Exchange ("LSE") with effect from 13 April 2023. All funds, including nominal capital, have now been returned to the A and B Share Class Shareholders.

 

Venture Portfolio

 

This was the fifth year of our Venture strategy. High interest rates, energy prices and inflation continued to dominate the narrative in the early part of this year. Those factors had contributed to a more difficult funding environment for early-stage companies in 2022 and 2023, as a result of which founders entered the year generally a little less optimistic when compared with previous years.

 

The collapse of Silicon Valley Bank ("SVB") in March 2023 caused further shockwaves in the wider ventures market. SVB was a crucial provider of loans to start ups in the UK as well as the USA. While a number of portfolio companies held accounts with SVB UK, the prompt acquisition of SVB's UK business by HSBC meant there was no impact on our investees' access to liquidity. The Investment Manager worked with a number of portfolio businesses to review their banking relationships, which at that stressful time was, I know, much appreciated.

 

A reduced number of exits in the market since 2021/22 has meant a liquidity crunch for some angel investors, and this has had a dampening effect on the important "friends and family" funding network upon which so many founders rely for their first funding rounds. More trade sales would certainly benefit the seed-stage market by recycling investment and maintaining inflow of angel cash. Nevertheless, many companies selling software as a service ("SaaS") are finding the funding they need as an increasing number of investors seek the holy trinity of high gross margins, recurring revenue and an impressive founding team.

 

In the second half of the year in review, large cap tech shares rallied in the stock market, on the back of optimism about the growth opportunities from Artificial Intelligence ("AI") and the relative resilience of economies, particularly the US, in the face of higher interest rates. An additional boost was provided by forecasts and by markets beginning to talk of a peak in interest rates. Perhaps not coincidentally, we started to see more activity in our portfolio towards the end of the year, with an increasing number of companies able to close investment rounds at an uplift to previous company valuations even while an acceptance of the need for more down-rounds has grown among founders and investors. While it's still very early days, and while getting deals done has not been as straight forward as it has been in previous years, there are growing signs of the market beginning to normalise. Start-ups with compelling founding teams and business models can still raise funds at healthy valuations; indeed, we have seen an increase in competition among Venture Capitalists to fund the better opportunities. The Triple Point team continues to think of new ways to gain a competitive edge within the start-up community.

 

As we have previously stated, companies failing is part and parcel of venture investing, yet despite this tougher investment environment, of the 51 companies invested in by the Company to date, only one portfolio, Anorak, company has completely failed. This is testament to the focus that the investment team places on the quality of the teams that we back and the continued support provided to portfolio companies. No doubt there will be more failures ahead but, despite being a young portfolio, our companies have proven fairly resilient to the many shocks that came their way in the years between 2020 and 2023.

 

As I mentioned, the Triple Point team continued to be active during the year, making a total of 19 investments, of which eight were investments in new companies and 11 were follow-on investments in existing portfolio companies. As expected, the number and proportion of follow-on investments has increased with the size of our portfolio. We do not back every portfolio company every time they raise; we are selective, but of course our bias is to support our businesses where they have delivered.

 

As far as sectors are concerned, health-tech has performed well with regards to valuation growth as investor interest remains robust and growth opportunities plentiful. Scan.com raised a further funding round and Pelago raised a $58m Series C funding round. There is a further health-tech company in the portfolio that is, at the time of writing, working to close a Series B round. In the case of Scan.com, this was the second up-round since the portfolio originally invested and was priced at a 1.9x share price uplift to its prior funding round which closed just eight months earlier. As a number of portfolio companies graduate through the stages of Venture Capital funding, we expect to see an increase in later funding rounds.

 

As already mentioned above, this has also been an exciting year for AI, with a number of our portfolio companies adopting and experimenting with Large Language Models ("LLMs"), not least to enhance efficiencies and information around their existing core software products. Please see the 'Outlook' section below for some further thoughts on AI. We also had a strong performer in the Energy Transition sector, with Modo, the all-in-one software platform for battery energy storage analysis, raising funds at a significantly higher valuation after showing strong revenue growth and expanding into the US.

 

It has generally been a tougher year for Fintech, including Insurtech; the portfolio suffered two significant down valuations, one due to commercial poor performance and another as a result of the founder deciding to quit due to exhaustion, leading to a quick sale of the business, which the investment manager has been supporting. We are well aware of the mental strain that starting and growing a company can bring, and Triple Point actively does what it can to support its companies in these, hopefully rare, cases.

 

VCTs and our new offer

 

The overall VCT market itself continues to be robust, with any doubts about the continuation of the EIS and VCT tax relief scheme beyond 2025 (when the current EIS/VCT "Sunset Clause" was due to expire) now thankfully resolved following the enactment of the Finance Act 2023, which extended the VCT tax reliefs until 6 April 2035. We should note that this is still pending EU Approval, at the time of writing, which the UK Government thought it prudent to obtain given the special status of Northern Ireland post Brexit. Investors should remain aware that NAV volatility will remain, and that investments may be impacted by trends in global venture capital valuations as well as by the portfolio companies' own underlying commercial performance.

 

The Company's fifth offer for subscription closed on 28 July 2023 having raised £14.6m and over the full year to 29 February 2024 the Company raised £20.2m. The sixth offer for subscription opened in September 2023 and I am pleased to report that it is progressing well with a total of £0.8 million raised in March and £6.7 million raised in April. We believe the recent fundraising puts the Company in a strong financial position (see Liquidity section below on page 10).

 

The Venture Strategy's aim is to continue building a portfolio of qualifying Investments in early-stage companies capable of generating significant long-term capital growth with a focus on the business-to-business technology sector, while enabling investors to take advantage of the substantial tax reliefs available to investors in VCTs, including 30% income tax relief on amounts invested.

 

In line with the Company's key objectives, a second interim dividend of 2 pence per share was declared by the Company on 3 January 2024 and paid to Shareholders on 18 March 2024, thus total dividends declared in the current financial year were 4 pence per share, an increase of 33% from 2023, of which 2 pence per share was paid as at 29 February 2024. The Board aims to declare further dividends in the year to February 2025, contingent on availability of distributable reserves and realised gains. The VCT continues to target a dividend of 5 pence per Share in the medium term, again contingent on the availability of distributable reserves and realised gains.

 

A snapshot of the new companies into which the Company has invested during the year is set out below.

 

Portfolio Company	Investment Amount £'000	Date of Investment	Location	Description
Modo Energy*	2,250	Mar-23	Birmingham	Modo Energy are building a global data analytics platform for renewable energy assets.
Virtual Science	182	Mar-23	London	Virtual Science enables international pharmaceutical companies to roll out hybrid advisory boards across the world and analyse video and text feedback for insights in days - rather than weeks with medical writers.
Fertifa	1,000	Apr-23	London	Fertifa is an employer benefit business that provides i) fertility & family forming, ii) menopause and iii) men's reproductive health services to employees.
Nory	1,527	May-23	Dublin	Nory provide AI-enabled software for hospitality businesses to manage their business and restaurant operations.
Tuza (formerly Statement)	150	Jun-23	London	Tuza is a small/medium-sized business ("SMB") payment provider switching service, being built to capitalise on the fact that SMB overcharging is very common in the card processing sector.
SeeChange	1,500	Sept-23	Manchester	SeeChange are building a general-purpose recognition platform for real-world application of computer vision (which is the analysis and understanding of digital images) starting with use cases for retailers.
Heat Geek (formerly Skoon)	1,000	Oct-23	London	Heat Geek is a heat pump installer software that helps heat engineers install high-efficiency heat pumps better and faster.
Abtrace	700	Nov-23	London	Abtrace is a population health monitoring tool for primary care providers.

 

\* The total investment into new company Modo Energy during the year consists of an initial investment on 3 March 2023 of £1,500,088 and a follow-on investment of £749,996 on 26 October 2023.

 

Liquidity

 

The Company has sufficient liquidity, predominantly from its fundraising, with cash and cash equivalents totalling £18.2 million (29% of net asset value) at 29 February 2024. This means that the Company will be able to respond quickly to new investment opportunities for the portfolio as they arise.

 

Share Buy-Backs

 

We continue to maintain our aim, subject to distributable reserves and liquidity, of being willing to buy back the Company's Shares in the market at a 5% discount to NAV.

 

During the year ended 29 February 2024, a total of 18,138 Venture Shares were repurchased by the Company for cancellation at a 5% discount to NAV. The average prices paid for the buy-back of Shares were as follows:

 

Date	Number of Venture Shares	Average Price per Share (£)
4 August 2023	6,958	0.95
3 November 2023	10,306	0.94
7 December 2023	874	0.93

 

These transactions represent 0.04% of the opening issued Share capital of the Company.

 

VCT Qualifying Status

 

The Company has maintained its approved venture capital trust status with HM Revenue & Customs. The Company's compliance with the VCT-qualifying conditions is closely monitored by the Board, who receive regular reports from the Investment Manager and a report annually from our VCT tax compliance advisers, Philip Hare & Associates LLP.

 

VCT Legislation and Regulation

 

Following continuous dialogue with HMRC, the VCT industry benefits from greater clarification around the operation of the new VCT rules introduced in 2015. As a result, the majority of investments are now made on the basis of self-assuring their qualifying status, subject to the receipt of professional advice from our Tax Advisers.

 

We will continue to work closely with the Investment Manager to ensure the Company remains compliant with the scheme rules.

 

Post Year End Update

 

Following the year-end, the Company has allotted a further 8,130,242 Shares into the Venture Strategy, raising additional net proceeds of £7.6 million for the Company during March and April 2024. The offer will remain open until 31 July 2024, unless fully subscribed at an earlier date.

 

Allotment Date	Shares Allotted	Net Investment (£)
5 March 2024	879,639	844,097
18 March 2024 (DRIS payment)	241,772	n/a
2 April 2024	3,769,252	3,616,848
4 April 2024	1,954,264	1,875,258
5 April 2024	1,285,315	1,233,382

 

The Company has seen the completion of two additional investments post year-end, both in March 2024. The first was a follow-on investment in Tuza (formerly Statement), which is an SMB payment provider switching service, based in London, being built to capitalise on the fact that SMB overcharging is very common in the card processing sector. The second was an investment in Treefera. Treefera is a London based forestry data company that aggregates global satellite data and images to bring transparency, accuracy, and trust to carbon offset projects and supply chains.

 

A two pence per share dividend was declared in January 2024, and following the period end, was paid to the Shareholders on 18 March 2024.

 

Outlook

 

While investment activity in UK seed and growth companies was down on the previous year (in line with international trends), a record number of companies were incorporated in the UK in 2023, and the investment team continues to identify compelling opportunities. Looking forward into 2024, we continue to see considerable opportunities in AI, Climate tech, software-enabled Biotech and Digital Health in particular.

 

This year has seen significant investment appetite for the transformative technology of AI. While there has been a significant amount of hype, it does seem that we are on the cusp of an internet-type moment; AI looks to fundamentally transform our society and is already being widely used in offices and homes. We expect this trend to continue, albeit the rush of AI related start-ups may be followed by something of a shake-out in 2025. The global push to reduce carbon means we would equally expect to see continued innovation in the cleantech and energy transition sectors - there is undoubtedly an urgent need for sustainable solutions. 

 

We are supportive of the growing efforts to promote gender equality. More female founders are being encouraged to enter the venture ecosystem and there is an increasing number of accelerators, incubators and mentorship programmes focused on female entrepreneurs. There are also a record number of female scale ups in 2023, which are those that have reached £10m+ of revenues and/or £5.2m assets as well as a record number of women setting up new businesses. We are keen to back all entrepreneurs with good businesses and encourage female founders to speak to us. We believe that this can be only a positive. Towards the end of the year in review a new investment was completed in Treefera, a business that sports both a compelling cleantech solution and a female co-founder.

 

As markets and businesses begin to look towards the possibility of lower interest rates later in 2024, we have already seen a normalisation and stabilisation in listed sector SaaS valuations (as recognised by the BVP Cloud Index) which collapsed in 2022 and were steady in 2023. Add to that the bottom-up increase in activity that we have seen within the Venture Strategy's own portfolio, together with the innovation that Generative AI is supporting, and we look to the coming year with more confidence. 

 

If you have any questions about your investment, please do not hesitate to contact the Investment Manager, Triple Point, on 020 7201 8990. I would like to take this opportunity to thank Shareholders and the Investment Manager for their continued support and I look forward to welcoming further Shareholders during the months ahead.

 

Jane Owen

Chair

31 May 2024

 

 

Strategic Report - Company Strategy and Business Model

 

The Strategic Report has been prepared in accordance with the requirements of Section 414c of the Companies Act 2006. Its purpose is to inform the members of the Company and help them to assess how the Directors have performed their duty to promote the success of the Company in accordance with Section 172 of the Companies Act 2006.

 

The Directors assess the Company's success in meeting its objectives in relation to returns, stability, VCT qualification and realised exits.

 

Investment Policy

 

Investment Objectives

 

The Company's Investment Policy is directed towards new investments in businesses which have the potential for high growth with the development or use of new technology being at the core of the commercial opportunity. All investments must provide the potential for a strong, positive, risk-adjusted return to investors. All investments will be made with the intention of growing and developing the revenues and profitability of the target businesses.

 

The Company focuses on providing funding to unquoted companies at an early stage in their lifecycle to help them grow and scale. The Company will typically make initial investments of between £100,000 and £2 million and may make further follow-on investments into existing portfolio companies. The intention is to build a portfolio of predominantly unquoted companies with significant growth potential across a diversified range of sectors.

 

The Company will not vary these objectives to any material extent without the approval of the Shareholders.

 

Target Asset Allocation

 

The Company aims to invest most of its capital fully in VCT-Qualifying Investments. The long-term investment profile of the Company is expected to be:

 

·      at least 80% in VCT-Qualifying Investments, with a focus on unquoted companies with high growth potential; and

·      a maximum of 20% in permitted Non-Qualifying Investments, cash or cash-based similar liquid investments.

 

Qualifying Investments

 

Investment decisions made must adhere to HMRC's VCT qualification rules. In considering a prospective investment in a company, particular regard is given to:

 

·      the track record, expertise and ability of the management team with clear commercial and financial objectives;

·      a significant, often global, total addressable market for the product or service;

·      the ability of the company to create and sustain a competitive advantage;

·      the quality of the company's assets, in particular where appropriate, the ownership and effective use of proprietary technology and/or an innovative product;

·      the high likelihood of a transformational corporate contract and established market fit and then the opportunity to develop regular, repeated income from new clients, leading to growth and long-term profitability;

·      a high level of access to regular financial and other information during the holding period;

·      an attractive valuation at the time of the investment;

·      the long-term prospect of being sold or listed in the future at a significant multiple of the initial investment value; and

·      no more than 10% of the NAV of the Company will be invested in companies which are not revenue-generating (at the point of investment) or where there is no expectation of revenues being generated in the near future.

 

As the value of investments increase, Triple Point will monitor opportunities for the Company to realise capital gains to enable the Company to make tax-free distributions to Shareholders.

 

Non-Qualifying Investments

 

The Non-Qualifying Investments will be managed with the intention of generating a positive return. The Non-Qualifying Investments will comprise from time to time a variety of assets including (a) short-term deposits of money, Shares or units in alternative investment funds (which have the meaning given by regulation 3 of the Alternative Investment Fund Managers Regulations 2013) or in undertakings for the collective investment in transferable securities (which have the meaning given by Section 363A(4) of the Taxation (International and Other Provisions) Act 2010), which may be repurchased, redeemed, or paid out on no more than seven days' notice; and (b) ordinary Shares or securities in a company which are acquired on a regulated market (defined in Section S274(4) ITA 2007).

 

Borrowing Powers

 

Any borrowing by the Company for the purposes of making investments will be in accordance with the Company's articles of association. To the extent that borrowing is required, the Directors will restrict the borrowings of the Company and exercise all voting and other rights or powers of control over its subsidiary undertakings (if any) to ensure that the aggregate amount of money borrowed by the Company, being the Company and any subsidiary undertakings for the time being (excluding intra-Company borrowings), will not, without Shareholder approval, exceed 30% of its NAV at the time of any borrowing.

 

Risk Diversification

 

The Company aims to invest in a number of different businesses within a variety of industry sectors but may focus investments in a single sector where appropriate to do so. No single investment by the Company will represent more than 15% of the aggregate NAV of the Company at the time the investment is made.

 

Valuation Policy

 

All unquoted investments are valued in accordance with International Private Equity & Venture Capital (IPEV) or similar guidelines. A brief summary of the IPEV guidelines as it applies to the Company's investments is as follows:

 

·      investments should be reported at fair value where this can be reliably determined by the Board on the recommendation of the Investment Manager;

·      in estimating fair value for an investment, the valuation methodology applied should be the most appropriate for a particular investment. Such methodologies, including the price of the recent investment, revenue multiples, net assets, discounted cash flows or earnings and industry valuation benchmarks, should be applied consistently. The price of recent transactions should not be assumed and should be calibrated against a scorecard or other appropriate measures;

·      where the valuation is based on the price of a recent investment this may be adjusted to reflect subsequent business performance and variations from expectations at the time of investment.

 

Co-Investment Policy

 

The Company may invest alongside other funds or entities managed or advised by the Investment Manager which would help the Company to broaden its range of investments or the scale of opportunities more than if it were investing on its own.

 

It is possible that conflicts may arise in these circumstances between different funds or between the Company and the Investment Manager. The Investment Manager maintains robust conflict of interest procedures to manage potential conflicts and issues are resolved at the discretion of the independent board of the Company.

 

Dividend Policy

 

The Company will distribute by way of dividend, where there are sufficient applicable reserves, such amount as ensures that it retains not more than 15% of its income from shares and securities. The Directors aim to maximise tax-free distributions to Shareholders of income or realised gains. It is envisaged that the Company will distribute most of its net income each year by way of dividend, subject to liquidity.

 

The Company intends to distribute regular dividends of up to 5 pence per share per annum in the medium term. The Company's ability to pay dividends is subject to the existence of realised profits, legislative requirements, and the available cash reserves.

 

Share Buy-Back Policy

 

The Company aims, but is not committed, to offer liquidity to Shareholders through buy-backs, subject to the availability of distributable reserves, at a target price of a 5% discount to NAV.

 

Share Realisation Policy

 

After an anticipated holding period of between five and seven years, which may include follow-on investments into investee companies as appropriate, Triple Point will generally seek to identify opportunities to exit investments.

 

Exits will typically be realised through trade sales to businesses, acquisitions by private equity funds, or selling shareholdings to later stage venture and growth capital funds during the course of further investee company fundraising activity. Sales during the course of further investee company fundraising activity may include investee companies buying back Shares at a price reflecting the valuation at that stage. The proceeds of any realisation will be used to identify further investment opportunities and to pay dividends to investors.

 

Key Performance Indicators ("KPIs")

 

As a VCT, the Company's objectives are to provide Shareholders with up front tax relief and returns through capital appreciation and the payment of dividends. The Company aims to meet these criteria by investing its funds in line with the Company's investment policy, more detail of which can be found on pages 14 to 15.

 

The Board expects the Investment Manager to deliver a performance which meets the objectives of providing investors with an attractive income and capital return. The Board has identified four primary KPIs, which are total return, Net Asset Value per Share, earnings per Share and ongoing charges ratio, that it uses in its own assessment of the Company's performance, set out below. Of these KPIs, total return and ongoing charges ratio are classified as Alternative Performance Measures and are detailed further under Alternative Performance Measures at the end of this report.

 

These are intended to provide Shareholders with sufficient information to assess how the Company has performed against its objectives in the year to 29 February 2024, and over the longer term, through the application of its investment and other principal policies.

 

KPI AND DEFINITION	RELEVANCE TO STRATEGY	PERFORMANCE	COMMENT
1. Total return (%)5
The change in NAV in the period and dividends paid per share in the period.	The total return highlights the underlying performance of the portfolio's investment valuations, including dividends paid.	(1.46%) year to 29 February 2024 (2023: (7.01%))	The negative total return is due to the decrease in the NAV per share of the Company. Which as described below, is due to an increase in NAV based fees as a result of the increasing capital base of the Company.   The Company did pay interim dividends of 2.0 pence per share during the period, taking total dividends paid by the Company to 11.0 pence per share at the year end.
2. Earnings per share (pence)
The post-tax earnings attributable to shareholders divided by weighted average number of shares in issue over the period.	The EPS reflects the Company's ability to generate earnings from its investments, including valuation increases.	The Venture Shares made a loss of 1.46 pence per Share for the year (2023: 8.47).	The main driver in the loss per share for the year was costs incurred during the period. The valuation of the Company's investment portfolio remained flat with a moderate increase, but this was not sufficient to offset the increased costs incurred during the year.
3. NAV per share (pence)
NAV divided by number of shares outstanding as at the period end.	The NAV per share reflects our ability to grow the portfolio and to add value to it throughout the life cycle of our assets.	The NAV per share as at 29 February 2024 was 98.55p (2023: 102.17p).	The NAV per share fell as a result of the costs incurred during the period. The valuation of the Company's investment portfolio remained broadly flat with a moderate increase, but this was not sufficient to offset the costs incurred during the year.
4. Ongoing Charges Ratio[5]
Annualised ongoing charges are the Company's management fee and all other operating expenses (i.e. excluding acquisition costs and other non-recurring items) expressed as a percentage of the average published undiluted NAV in the period, calculated in accordance with Association of Investment Companies guidelines.	Ongoing charges show the drag on performance caused by the operational expenses incurred by the Company.	The ongoing charges of the Company for the financial year under review represented 3.23% (2023: 3.21%) of the average net assets.   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.		A key measure of Operational performance.     This is calculated in line with AICs guidance. Ongoing charges are those expenses of a type which are likely to recur in the foreseeable future, whether charged to capital or revenue, and which relate to the operation of the Company excluding the costs of acquisition and disposal of investments, financing charges and gains/losses arising on investments.

 

VCT Regulation

 

Compliance with VCT legislation

 

By making an investment in a Venture Capital Trust, Shareholders become eligible for several tax benefits under VCT tax legislation. This is, however, contingent on the Company complying with VCT tax legislation.

 

To achieve compliance, the Company must meet a number of tests set by HMRC. A summary of these steps is set out on page 64 under "VCT Regulation".

 

The Board can confirm that throughout the year ended 29 February 2024 the Company continued to meet these legislative requirements.

 

Tax Benefits

 

The Company's objective is to provide Shareholders with an attractive income and capital return by investing its funds in a broad spread of unlisted UK companies which meet the relevant criteria for investment by Venture Capital Trusts.

 

Investing in a VCT brings the benefit of tax-free dividends, as well as up-front income tax relief and exemption from capital gains tax on disposal.

 

Investors can invest up to £200,000 in VCTs per tax year and receive tax relief of up to £60,000 (30%). To benefit from the relief, an investor must have paid or owe as much tax during the tax year in which you invest. To keep the relief, VCT investments must be held for at least five years.

 

Although VCTs are typically growth investments, and any capital growth is tax free, the majority of returns are normally paid through tax-free dividends. After the sale of a successful company within the portfolio, the profit can be distributed to investors as a larger or special dividend, and the remaining capital reinvested in new opportunities. A sale of VCT shares after the five year holding period is exempt from capital gains tax.

 

The Investment Manager, utilising advice from Philip Hare & Associates LLP, ensures continued compliance with any legislative changes.

 

The Company has been approved as a VCT by His Majesty's Revenue and Customs.

 

Principal Risks and Uncertainties and Emerging Risks

 

The Directors seek to mitigate the Company's principal risks by regularly reviewing performance and monitoring progress and compliance. In the mitigation and management of these risks, the Directors carry out a robust assessment of the Company's emerging and principal risks, including those that would threaten its business model, future performance, solvency or liquidity and reputation.

 

The main areas of risk identified by them, along with the risks to which the Company is exposed through its operational and investing activities, are detailed below. The Board maintains a comprehensive risk register which sets out the risks affecting both the Company and the investee companies in which it is invested. The risk register is updated at least twice a year and reviewed by the Audit Committee to ensure that procedures are in place to identify principal risks and to mitigate and minimise the impact of those risks should they crystallise.

 

The risk register also identifies emerging risks to determine whether any actions are required.  As it is not possible to eliminate risks completely, the purpose of the Company's risk management policies and procedures is to identify and manage risks, reducing possible adverse impacts.

 

Details of the Company's internal controls are contained in the Corporate Governance section on pages 45 to 52 and further information on exposure to risks including those associated with financial instruments is given in note 17 of the financial statements.

 

Going forward, the Board has reviewed and approved some enhancements to the current risk management framework, which became effective from March 2024. These enhancements will underpin the approach to the identification and categorisation of risks, together with changes to the assessment approach - being more reflective of the individual nature of the risks being considered. This will enable the Board to view the risks through the lens of Strategic risks, Financial risks (Investment, Capital & Liquidity) and Non-Financial risks (Operational, Legal & Regulatory). In turn, the Board will be re-assessing risk appetites for its most material risks.

 

The Directors have reviewed the current register and can confirm that the risk landscape has not changed and the risks presented remain stable with no material changes to report.

 

VCT Qualifying Status Risk The Company is always required to observe the conditions laid down in the Income Tax Act 2007 for the maintenance of approved VCT status. The loss of such approval could lead to the Company losing its exemption from corporation tax on capital gains, to investors being liable to pay income tax on dividends received from the Company and, in certain circumstances, to investors being required to repay the initial income tax relief on their investment. 

 

Mitigation: The Investment Manager keeps the Company's VCT-qualifying status under continual review and reports to the Board at Board Meetings. Philip Hare & Associates LLP undertake an independent annual review on the VCT status. Any new Venture investments are reviewed by legal advisers, and their opinion sought on whether the investment meets the criteria to be a qualifying investment.

 

Investment Risk The Company's VCT-qualifying investments will be held in small and medium-sized unquoted investments which, by their nature, entail a higher level of risk and lower liquidity than investments in large, quoted companies, impacting both returns and timings.

 

Mitigation: The Directors and Investment Manager aim to limit the risk attached to the portfolio by careful selection and timely realisation of investments, by carrying out due diligence procedures appropriate to the size of each investment and by maintaining a spread of holdings both in terms of industry and in terms of the total number of portfolio companies which is now approaching 50. The Board reviews the investment portfolio with the Investment Manager on a regular basis. Where possible, a member of the Investment Manager team either holds a seat on the board of the portfolio companies or has the right to act as a Board Observer. This enables the Investment Manager to observe developments at the portfolio company and offer assistance when and where this may be required. The Venture Strategy aims to mitigate some of the risks typically associated with venture capital investing by proactively working with businesses with the potential for high growth that are typically actively solving problems for established corporates, increasing their chances of success, as set out in further detail on pages 26 to 32.

 

Financial Risk As a VCT, the Company is exposed to market price risk, interest rate risk, credit risk, foreign currency risk and liquidity risk. As most of the Company's investments will involve a medium to long-term commitment and will be relatively illiquid, the Directors consider that it is inappropriate to finance the Company's activities through borrowing, other than for short-term liquidity.

 

Mitigation: The key elements of financial risk are discussed in more detail in note 17. At the reporting date, the Company had no borrowings and substantial liquid funds on the Statement of Financial Position.

 

Legislation Risk There is a risk of changes to legislation and/or Government Policy, caused by future governments taking a different approach which could result in changes to the tax status of or rules governing VCTs. 

 

Mitigation: There is a practice of consultation before any major changes are implemented. It is important that the Company can respond proactively to any changes and understand what, if any, impact they will have.  

 

 

Emerging Risks

 

Climate Change Risk

 

Due to the medium to long-term time horizon of Climate Change this risk is deemed as an emerging risk.

 

Climate Change or related legislation is considered unlikely to have a major near-term impact on the Company, as the vast majority of the portfolio is made up of a diversified range of software-based businesses. Each prospective new company holding is considered with regard to how it may be impacted by climate change, particularly in relation to sources of energy associated with data storage, and how this could in turn affect future growth.

 

Triple Point as Investment Manager is committed to sound management of climate risk and opportunity to ensure the long-term protection of asset value through reduction of exposure to the risk and also to contribute to essential carbon reduction requirements. The Investment Manager has now set near-term science-aligned Net Zero targets. The targets have been submitted to the Net Zero Asset Managers Initiative and at the time of reporting the business was awaiting acceptance of the submitted targets. Triple Point also publish a Carbon Reduction Plan which is available on its website.

 

Macroeconomic Conditions

 

A further deterioration in macroeconomic conditions, such as a severe recession or stagnant inflation ("stagflation"), could have both a direct and indirect impact on existing portfolio companies, particularly in the event that investor risk appetite declines, as this would make it harder to secure new venture funds or other capital, which is often necessary for their continued long-term operations.

 

The ongoing and increasing level of global tension and conflict has proven to impact the global supply chains and dynamically influence the macroeconomic landscape, all of which has knock on impacts to both the performance of our portfolio companies and appetite of our investor base.

 

In addition to macroeconomic risk, any sustained deterioration of trust, liquidity or capital in the banking sector could have a material impact on existing portfolio companies given their reliance on existing cash reserves to fund regular outgoings. The Investment Manager continues to closely monitor the cash position of portfolio companies.

 

Going Concern

 

The Company's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Investment Manager's Review. The Company faces a number of risks and uncertainties, as set out above.

 

The Company's going concern position is also discussed in note 2 to the financial statements.

 

The Financial Risk Management objectives and policies of the Company, including exposure to price risk, interest rate risk, credit risk and liquidity risk are discussed in note 19 to the financial statements.

 

The Company continues to meet day-to-day liquidity needs through its cash resources on hand. The Company takes an active approach to manage liquidity and increase the return on cash held.

 

The Company continues to raise funds via new share issues to investors, and at the reporting date the Company had cash of £18.2 million and net current assets of £18.1 million (2023: £11.8 million). A further £7.6 million has been raised since the reporting date, further strengthening the Company's liquidity position.

 

The major cash outflows of the Company continue to be the payment of dividends to Shareholders, costs relating to the funding of investments and management fees due to the Investment Manager. Dividends and, for the most part, new investments are discretionary.

 

The Directors have reviewed cash flow projections, including various scenarios comprising a plausible downside scenario where fundraising is at a reduced level and inflation remains higher for longer and a severe downside scenario, whereby the Company does not raise any future capital and inflation remains higher for longer. In both downside scenarios, the Company has sufficient financial resources to meet its obligations for at least 12 months from the date of this report being the end of May 2025.

 

Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements.

 

Viability Statement

 

In accordance with the FRC UK Corporate Governance Code published in 2018 and provision 36 of the AIC Code of Corporate Governance, the Directors have assessed the prospects of the Company over a period of five years, consistent with the expected minimum investment holding period of a VCT investor. Under VCT rules, subscribing investors are required to hold their investment for a five-year period in order to benefit from the associated tax reliefs. The Board regularly considers strategy, including investor demand for the Company's shares, and the Board considers five years as a reasonable time period for reviewing the Company's prospects.  

 

In order to assess this requirement, the Board regularly considers the Company's strategy and considers the Company's current position. The Board has carried out a robust assessment of the principal and emerging risks, including those that would threaten the Company's business model, future performance, solvency or liquidity and reputation. Consideration has also been given to the Company's reliance on, and close working relationship with, the Investment Manager. This has enabled the Directors to state that they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment. 

 

More information on the principal risks of the Company is set out on pages 18 to 19

 

The Board has considered both the Company's long-term and short-term cash flow projections and considers these to be realistic and reasonable.

 

To provide this assessment the Board has considered the Company's financial position and ability to meet its expenses as they fall due as well as considering longer-term viability. Factors taken into account include:

 

·    the expenses of the Company are predictable and modest in comparison with the assets and there are no capital commitments foreseen which would alter that position;

·      the Company has no employees, only Non-Executive Directors, and consequently does not have redundancy or other employment related liabilities or responsibilities;

·      most of the Company's investments will involve a medium to long-term commitment and will be relatively illiquid but the Company reduces the risk as a whole by careful selection and timely realisation of investments;

·      the Directors will continue to monitor closely changes in the VCT legislation and adapt to any changes to ensure the Company maintains approval. The Directors have appointed an independent adviser to undertake the VCT status monitoring role; and

·      the Directors have considered the ongoing and future effects of external events (such as global tensions and conflicts)on the Company and its longer-term viability. More detail on this is included in the Principal Risks and Uncertainties section on pages 18 to 19.

 

Based on the results of this review, the Directors have a reasonable expectation that the Company will be able to continue its operations and meet its expenses and liabilities as they fall due over the period of their assessment.

 

Section 172(1) Statement

 

The following disclosure describes how the Directors have had regard to the matters set out in Section 172(1)(a) to (f) when performing their duty under Section 172 and forms the directors' statement required under Section 414CZA of the Companies Act 2006.  

 

Stakeholder Engagement

 

This section describes how the Board engages with its key stakeholders, and how it considers their interests when making its decisions. Further, it demonstrates how the Board takes into consideration the long-term impact of its decisions, and its desire to maintain a reputation for high standards of business conduct.

.

Stakeholder	Importance	Board Engagement
Shareholders	Continued Shareholder support is critical to the sustainability of the Company and the delivery of its strategy.	The Board is committed to maintaining open channels of communication with Shareholders.   Formal updates are provided to Shareholders on a quarterly basis or as part of the Annual or Interim Reports, and the Board and the Investment Manager will also respond to any written queries made by Shareholders during the course of the year. The Chair provides feedback to the Board and is responsible for providing a clear understanding of the views of Shareholders to the Board. The Board recognises the importance of providing strong financial returns to Shareholders and the eligible tax benefits under VCT tax legislation and takes this into consideration when making investments into investee companies, approving offers for subscription and declaring dividends.   The Board continues to engage with Shareholders through its Annual and Interim Reports, RNS communications, and encourages Shareholders to attend AGMs.
Investment Manager	The Investment Manager's performance is critical to the Company to enable it to successfully deliver its investment strategy and meet its long-term investment objectives of capital growth and tax-free dividends.	The Board has delegated the authority for the day-to-day running of the Company to the Investment Manager. The Board then engages with the Investment Manager in reviewing, setting, approving and overseeing the execution of the Investment Policy and strategy of the Company.   The Investment Manager attends both Board and other committee meetings to update the Board on the performance of the Company and its portfolio. At each quarterly Board meeting, a review of financial and operating performance of the Company and its investments is undertaken, including a review of legal and regulatory compliance.   The Board also reviews other areas including the Company's strategy, key risks, corporate responsibility, compliance and legal matters.
Investee companies	The Company through its Investment Manager has important relationships with individuals responsible for the management and performance of its investee companies.	The Investment Manager maintains regular contact with portfolio companies and, where appropriate, sits on the Board of those companies, and receives regular performance reports.
External Service Providers	To function as a VCT with a premium listing on the London Stock Exchange, the Company relies on external service providers for support in meeting all relevant obligations.   These service providers are fundamental to ensuring that the Company meets the high standards of conduct that the Board sets.	The Company has a number of service providers which include the Investment Manager, Company Secretary, Depositary, Registrar, Legal Advisers, VCT Compliance Adviser and the Auditor. The Board receives periodic reports from other service providers on their activities and performance.   The Board has regular contact with the two main service providers, the Investment Manager and the Company Secretary through quarterly Board meetings and more regular discussions with the Board.
Community	The Directors recognise that the long-term success of the Company is linked to the success of the communities in which the Company and its investee companies, operate.	The Board encourages the responsible investment ethos of the Investment Manager. The Board is cognisant of the impact of the Company's operations and of the companies in which it invests and believes that its investment activities have many positive benefits beyond the returns delivered for Shareholders.
Regulators	Good governance and compliance with regulations is essential to achieving continued success.	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.

 

Director appointment

During the period, the Board undertook a recruitment process for a new director, with the assistance of an external search consultancy. Sam Smith was appointed to the Board as Independent Non-Executive Director effective 8 February 2024. Sam was also appointed as a member of the Audit Committee and Senior Independent Non-Executive Director effective the same date. Sam's bio can be found on page 44. 

 

Change of AIFM arrangements

During the period, effective 12 September 2023, the Investment Manager was appointed as the Company's AIFM and is now responsible for risk management and portfolio management. Therefore, the Investment Manager has full discretion under the Investment Management Agreement to make investments in accordance with the Company's Investment Policy from time to time. In addition, the Company has appointed a depositary Indos Financial Limited, and their details can be found on page 99.

 

Payment of dividends

During the year, the Company paid a 2 pence per Share interim dividend on 4 September 2023 and declared a further 2 pence per Share interim dividend on 3 January 2024, which was paid shortly after the period end on 18 March 2024.

 

 

Strategic Report 

 

Investment Manager's Review

 

Sector Analysis

 

The unquoted investment portfolio can be analysed as follows:

 

       

 

 

* Under current VCT regulations the Company has three years before undeployed cash counts towards the qualifying status of the Company. Undeployed cash is therefore not taken into account in determining the Current Qualifying status percentage of the Company, which at the year-end was above 80%.

 

The year under review was the fifth for the Venture strategy. Against a backdrop of continued softness in the macro environment during the year, which also saw a drop in the overall number of venture capital deals in the UK and US, Triple Point's Venture team continued to make good progress in deploying the Company's cash. The team completed eight new qualifying investments as well as 11 follow-on investments into a diverse range of sectors spanning climate, health, hospitality operations, business intelligence, fintech and HR-Tech. As at the end of February 2024, the portfolio consists of stakes in 48 qualifying technology businesses.

The Company distributed £1.1m to Shareholders during the year by way of dividends, as well as distributing the final returns to the A and B Share classes.

Strategy

 

The Company looks to maximise Shareholder returns by investing in innovative early-stage businesses, typically at the point where they have achieved some market validation for their product or service, with one or more contracts secured with a corporate customer. The core investment focus for the Company has thus been at the Seed and Series A stage funding rounds, investing in business-to-business technology companies - often with a specialist software product - that are raising funds to drive product and sales development in order to take their revenues to the next level. The Company also seeks to invest in a select number of so-called "Pre-Seed" technology businesses every year which may be pre-revenue but where there is a particularly compelling opportunity, perhaps because of the founding team, or the product opportunity, or the feedback we have received from potential customer due diligence.

Net asset value and the funding environment

 

The Venture NAV per Share declined to 98.55 pence from 102.17 pence at the end of last year representing a 3.5% reduction. The total return for the Company, being NAV plus cumulative dividends paid up to 29 February 2024 of 11 pence per Share, is 109.55 pence per Share (2023: 111.17 pence per Share). Last September's 2 pence per Share interim dividend payment was the fourth dividend for the Venture Shares, with an additional fifth interim dividend of 2 pence per Share paid in March 2024, bringing total dividends paid to date to 13 pence per Share. The Venture Shares went ex-dividend on 15 February 2024.

The decline in NAV per Share over the year was driven by the 2 pence per Share of interim dividends paid during the year, as well as the net running costs of the Company. The net portfolio values remained broadly flat during the year with a small valuation gain, which reflected a continued fairly challenging venture funding environment in the first six months of the year in review as a result of higher interest rates and the hangover from the listed tech equity valuation correction of 2022.

The first half of the year was impacted by further consecutive interest rate rises, peaking in August 2023, with other major central banks following a very similar trajectory. Consequently, the fundraising environment had become more testing for many start-up founders as many venture funds were deploying capital at a slower rate and became much more challenging in their assessment of what "good" looks like at each stage of the venture journey. The benchmarks for success sought by venture capital investors (VCs) changed, shifting the emphasis from pure growth potential to capital efficiency in early 2023. As a result, many venture backed businesses, including many of those in our portfolio, took action to reduce their cash burn rates in order to extend their cash runway. That phase, broadly from mid-2022 through to mid-2023, also saw a trend towards more fundraises being carried out via convertible loan notes (CLNs, a form of loan that can be converted to equity in the future in certain circumstances) which, by providing loans, defer a new price being set for a company's equity issuance. It should also be said that despite the slightly sluggish overall environment, tech start-ups with either convincing traction (i.e. 100% plus revenue growth year-on-year) and/or compelling founding teams, were not struggling to raise the funding that they needed.

During the second half of the period under review, the market received a boost in light of forecasts that interest rates may have peaked and might decline as 2024 progresses. This development potentially lowers the cost of capital for start-ups and, more importantly, allows investors to begin to look forward to economic recovery rather than focus on fears of prolonged recession. Alongside this, there was a sustained rally in large-cap tech shares in global stock markets, driven at least partly by a period of optimism about the potential growth opportunities arising from AI. Not coincidentally, we are beginning to witness increased activity in the venture capital funding market. During the period, several strongly performing portfolio companies attracted capital from new investors at significant valuation uplifts. We are pleased to report that seven portfolio companies raised additional equity funding at higher valuations during the period as they mature through the venture capital lifecycle. These companies were SonicJobs, Konfir, Kamma, Fluent (formerly Channel), Modo Energy, Scan.com and Visibly. This is up from just three portfolio companies that had material valuation gains in the 2022/23 financial year, highlighting the increased market activity year-on-year.

It appears also that the trend of CLNs and companies extending cash runway has begun to reverse as we experience more companies returning to the market to raise equity funding. One example from our own portfolio is Modo Energy. The Company first invested in Modo early in 2023 via a CLN. In October that same year, Modo raised a £12m priced equity round in which the Company's CLN converted into equity. The Ventures team has also seen some increase in competition to fund the better opportunities as investors are returning to the market.

At the same time, we have started to see a few flatter or "down-rounds", where founders and investors accept that in order to raise further funds the valuations achieved for the new funds may be lower than they were in 2020-21. While this is naturally disappointing in individual cases, and impacts valuations, we believe this increased activity and acceptance is positive for the ecosystem, allowing some founders to raise the necessary capital to pursue growth after a period of reducing costs and focusing on extension of cash runway.

Valuations

 

As mentioned above, we continued to see more activity in the market as the period progressed, with seven companies raising additional equity funding at higher valuations during the period. Several strongly performing portfolio companies, such as Modo Energy and Scan.com, with strong revenue growth and compelling founding teams, raised funding at significantly higher valuations. Both companies will use the fresh funding to pursue ambitious growth plans in the US. In the case of Scan.com, this was the second up-round since the Company originally invested. At the time of writing, several other portfolio companies have also received signed term sheets for fresh equity funding at higher valuations. As a result, we have seen a slight increase in the NAV per Share since August.

There have also been a number of portfolio companies which have not met our expectations. We have initiated or increased existing downward fair-value adjustments to 17 portfolio companies during the year where we believe that growth rates are not sufficient to offset market valuation declines or that the risks associated with shortening cash runway are high or rising. And, as mentioned in the Chair's statement, one Fintech company has been exited at a loss as a result of founder "burn-out".

As previously reported, the portfolio contains some companies which benefitted from the very positive valuation climate for fundraising back in 2021. We are pleased to report that one of these companies raised a Series C funding round during the period following a successful year. The business grew invoiced revenues over 170% year-on-year and contracted revenues by nearly 300%. However, we have continued to maintain varying fair-value downward adjustments (versus observed transaction price) on such companies where the observed valuations have looked particularly stretched.

 

Portfolio Support

 

We have continued to actively support the Company's portfolio companies wherever we can by participating in Board meetings, by helping them share best practice through hosting regular events and by making relevant introductions where necessary, be it through suppliers, potential customers or via investor introductions for further fundraising rounds. The fact that we have made 11 follow-on investments during the period is testament to our willingness to support portfolio companies that perform to or near to plan. We do not, however, provide follow-on investment to all our portfolio companies - if our experience since investment suggests that our original investment thesis was flawed, then we will not make further investments and "put good money after bad".

 

Deal Origination and Deployment

 

As the Company's portfolio has grown, so too has the number of follow-on investment opportunities. But the Ventures team also continues to actively originate new deal flow through a mixture of outbound origination and through leveraging the team's network in the early-stage tech investing sector. More active outbound origination specifically has allowed us to continue to uncover compelling founders and innovations. Where possible we are using digital tools to help us with outbound origination, for example to identify and monitor new start-ups being created by founders who have left well-regarded larger venture-backed businesses. We also make outbound origination contact in sub-sectors that excite us, rather than waiting for start-ups to come to us.

In the period under review, the team successfully completed eight new investments. These included investments as part of a Seed stage investment round for Fluent (formerly Channel, an AI analyst software for data), an investment into Scan.com (an infrastructure layer to connect the global diagnostic imaging market) and a Seed round for Visibly (a training and supervision software for field engineers).

New investments also included a machine learning and clinical innovation software to reshape the delivery of primary care (Abtrace), a heat pump installer software (Heat Geek), a core operations platform for restaurants (Nory), and a recognition platform for real-world applications of computer vision (SeeChange).

The Company provided follow-on funding to three portfolio companies early in the period via CLNs (discussed above), with one example being Semble, a clinic management system, which helps healthcare practices manage all aspects of their administration in once place. Semble continues to grow steadily and the additional funding is being used to help the business to pursue European expansion.

Examples of sectors in which we continue to take an active interest are AI and data, Healthcare Analytics, Energy transition and climate related software, and Biotech (or "Techbio" as it is known when the tech does most of the work). The advances in AI make us keener than ever on companies that have a data angle - more and better data and information is the feedstock required to train useful AI models. Thus, we actively look for companies that generate specialist data, even if it is, to begin with, more of a by-product of their core service than an objective. While we will surely see the benefits of a whole range of new drugs and materials being discovered over the coming years, it is important that we recognise the risks and limitations of AI and ensure that its benefits are harnessed responsibly.

While renewables now contribute a greater share of UK energy mix than fossil fuels, significant ongoing investment is still required to build the smart cities and grid that a net zero world requires. Our preferred business models for investment in this area remain software solutions or perhaps niche hardware that supports the wider infrastructure development.

 

Portfolio

Since inception of the Venture strategy, the Company has made 51 venture investments. The year in review saw no complete failures (company in administration with 100% loss) by our portfolio companies. In fact, we have experienced only one complete failure since inception. This is testament to the focus that the investment team places on quality of teams and the continued support we provide to our portfolio companies that deserve it. However, the Company did experience a crystallised loss, exiting Localz in the logistics sector, which was acquired by Descartes Systems Group at a 39% loss. That was the best option given Localz was unable to raise new venture funding and we were able to return some proceeds to the Company from a business which suffered in the aftermath of the Covid-19 pandemic. During the period, we also took a full write-down on one portfolio company, which we expect to enter into an orderly wind down in the coming months. While disappointing, we view the failure of some investments as an inevitable part of venture investing, which is why we always look for new investments to have the potential to provide significant return multiples on initial in investment costs.

The most active sub-sectors for deployment during the period were Healthtech, where £4.05m was deployed, and Climate, where £3.55m was deployed. At the end of the year the largest sub-sectors in terms of portfolio value were again Fintech and Healthtech, two sectors in which the Triple Point has particular experience. However, while there were some notable gains in Health, it has been a tougher year for the Fintech sector, with the portfolio recording two down valuations.

Of the eight new investments made this year, six were made at Seed stage and two at pre-Seed. While the Seed focus is clear for new investments, the Company also continues to back later stage deals via its existing portfolio companies; during the period, there were six Series A follow-on funding rounds, and one Series B round. It is worth noting that different investors attribute different nomenclature to different rounds, and Seed stage for one investor might be Series A for another. Our focus continues to be on those companies that have early evidence of product-market fit and are looking to raise between £1 million and £5 million to take them to the next level. We very much continue to see ourselves as a Seed stage investor. Many of the businesses in which the Company invests involve the use of leading-edge technology and would be classified as "knowledge-intensive" by HMRC rules - very much the types of innovative UK businesses that the government wishes to see backed by VCT capital, and which allows investors to benefit from substantial tax reliefs. Such investing comes with risks to capital, some of which we aim to mitigate by focusing investment on businesses that are actively solving significant problems for commercial customers.

Liquidity Management

In light of higher interest rates, we have taken active steps to manage liquidity. Throughout the period, the majority of the Company's liquid funds awaiting deployment have been invested in money market funds and a corporate bond fund. The Company has opened accounts and invested in the BlackRock International Cash Series Sterling Government Liquidity Fund, the BlackRock International Cash Series Sterling Liquidity Fund, the Vanguard UK Short-Term Investment Grade Bond Index Fund, and the HSBC Sterling ESG Liquidity Fund. In today's interest rate environment this improves the return on the Company's cash (relative to bank deposits) whilst complying with VCT rules on sources of income. These funds provide easy access to the Company's liquidity, while ensuring there is no cash drag on funds awaiting deployment into qualifying investments.

 

ESG

 

Both the Board and the Investment Manager believe Environmental, Social and Governance ("ESG") considerations are important, and they are taken into account through the investment process within the Company. Whilst early-stage companies do not have the scale or resources to adopt the full scale of ESG initiatives open to large corporates, we always consider the processes and policies they have in place to ensure that they are proportionate to their size and activities, and recognise that acting when small lays the foundation of good ESG for the future. It also provides a competitive advantage for small companies seeking business with large corporates who have ESG supply chain requirements. Please see the section on ESG and Responsible Investing on pages 41 to 42 for further information.

 

Outlook

 

As discussed above, 2022-23 was a challenging period at the macro level and for many start-ups seeking venture funding. Despite that, we have continued to see entrepreneurial activity and innovation thrive, evidenced by the number of investment opportunities that we continue to find and invest in from the Company. What's more, larger corporates are actively increasing spend on productivity-enhancing software solutions (despite a tougher economic environment and focus on costs). We believe this leaves the portfolio well positioned for future growth.

While the economic backdrop remains soft, interest rates now appear to have peaked. It is increasingly looking like the Bank of England will start to cut interest rates in the second half of 2024, and forecasts suggest the economy is likely to gather a bit of pace as 2024 progresses. We have already seen a strong recovery in listed tech stocks; indeed the NASDAQ index is near new highs as we write. While that rally has been dominated by the mega-cap tech stocks rather than the smaller caps that may be better analogies for our unquoted venture investments, we have also seen a stabilisation in mid-cap Saas stock valuations and a modest recovery in the Initial Public Offering market.

While venture deal volumes remained down year-on-year in Q4 2023, we believe the aforementioned modest signs of optimism have more recently begun to be apparent in the venture funding markets. We have already described the increased activity that the Company's portfolio witnessed in the second half of the year in review; the balance of which was positive for the first time in 18 months, suggesting the market is beginning to normalise. Even the willingness in some cases of founders and boards to accept funding rounds at lower valuations than previous rounds in order to move their businesses forward is symptomatic of a world where business people are ready to move on. And there is a clear enthusiasm around AI and the businesses that can exploit it, both in the listed sector and in our own venture niche. Even looking outside our technology niche, there are signs of M&A and restructuring picking up in other sectors.

All-in-all then, there appears to be a far better case for forward-looking optimism about the venture capital and start-up world than there was a year ago.

It is early days and risks remain, as ever. We would highlight (i) the risk that services and wage inflation is more persistent than hoped in the UK and US this year, which could dent current optimism about the likely trajectory of interest rates, (ii) the continued risk from geopolitical events after we escaped from the Ukraine-invasion inspired mini energy-shock of 2022 with less damage than was expected and (iii) the risk of markets and venture capitalists getting carried away again about the latest craze, centred this time on AI. Regarding the latter, we think that it is too early to be overly concerned, that there are plenty of interesting investment opportunities around AI beyond just the pure-play investments, and that we can be careful regarding the valuations paid for opportunities that are over-popular.

Deal flow remains strong and there continues to be no shortage of companies with innovative business ideas seeking funding. As the VCT's fundraise draws to a close, the Company is in a healthy cash position to access these innovative companies, particularly where some investors are yet to return to the market. As ever, our focus continues to be on finding and backing software start-ups that we believe have the potential to generate returns of at least 10x our investment cost, that are operating in large markets and that have strong founding teams.

There are a number of areas where we see particular promise. We are searching for software that can enable the energy transition and carbon management; we are interested in businesses using end-to-end vertical software to revolutionise business models in services sectors, perhaps by delivering the whole service themselves in a tech-enabled way, rather than just selling software to another service business; we are looking for companies in all niches, but particularly health, where data is a significant by-product of their core product - companies with the best access to data will be better able to exploit AI opportunities in the future. Finally, we are talking to companies that combine software with hardware, perhaps with the software replicating part of what the hardware currently does (for example laboratory-based testing).

It is an exciting time to be a seed-focused venture investor.

 

Ian McLennan

Partner

For Triple Point Investment Management LLP

31 May 2024

 

Strategic Report - Investment Portfolio Summary

Qualifying holdings

 

 

	29 February 2024					28 February 2023
	Cost		Valuation			Cost		Valuation
	£'000	%	£'000	%		£'000	%	£'000	%
Unquoted qualifying holdings	38,426	67.30	43,333	69.87		27,291	59.34	31,498	62.74
Non-Qualifying holdings	470	0.82	491	0.79		471	1.02	481	0.96
Financial assets at fair value through profit or loss	38,896	68.12	43,824	70.66		27,762	60.36	31,979	63.70
Cash and cash equivalents	18,199	31.88	18,199	29.34		18,222	39.64	18,222	36.30
	57,095	100.00	62,023	100.00		45,984	100.00	50,201	100.00

 

	29 February 2024					28 February 2023
	Cost		Valuation			Cost		Valuation
	£'000	%	£'000	%		£'000	%	£'000	%
Non-Qualifying holdings
Modern Power Generation Ltd	470	0.82	491	0.79		471	1.02	481	0.96

 

	29 February 2024					28 February 2023
Qualifying Holdings	Cost		Valuation			Cost		Valuation
Venture Investments	£'000	%	£'000	%		£'000	%	£'000	%
Degreed	300	0.53	411	0.66		300	0.65	432	0.86
Augnet	300	0.53	29	0.05		300	0.65	100	0.20
Aptem	150	0.26	441	0.71		150	0.33	441	0.88
Counting Up	920	1.61	641	1.03		920	2.00	1,044	2.08
Ably Real Time	1,312	2.30	2,452	3.95		1,312	2.85	3,153	6.28
Semble	1,760	3.08	2,374	3.83		760	1.65	1,374	2.74
Vyne Technologies	1,752	3.07	1,585	2.56		1,752	3.81	3,233	6.44
Pelago	1,245	2.18	2,399	3.87		1,245	2.71	2,565	5.11
Realforce	799	1.40	223	0.36		799	1.74	638	1.27
Airly	987	1.73	853	1.38		987	2.15	999	1.99
Biorelate	1,000	1.75	1,000	1.61		1,000	2.17	1,000	1.99
Artificial Artists	150	0.26	75	0.12		150	0.33	150	0.30
Veremark	910	1.59	2,095	3.38		910	1.98	1,529	3.05
Sealit	200	0.35	50	0.08		200	0.43	100	0.20
Bkwai	250	0.44	-	-		250	0.54	91	0.18
Exate	500	0.88	250	0.40		500	1.09	400	0.80
Expression Insurance	1,000	1.75	573	0.92		1,000	2.17	118	0.24
Kamma	800	1.40	902	1.45		500	1.09	200	0.40
Seedata	150	0.26	75	0.12		150	0.33	150	0.30
Stepex	499	0.87	350	0.56		499	1.09	399	0.79
Ryde	2,000	3.50	1,800	2.90		1,988	4.32	1,988	3.96
Payaable	343	0.60	219	0.35		343	0.75	438	0.87
Tickitto	1,000	1.75	500	0.81		1,000	2.17	800	1.59
SonicJobs	600	1.05	788	1.27		450	0.98	638	1.27
Catalyst	224	0.39	112	0.18		224	0.49	224	0.45
Knok	684	1.20	947	1.53		513	1.12	640	1.27
Learnerbly	200	0.35	235	0.38		200	0.43	200	0.40
Pixie	915	1.60	487	0.79		915	1.99	915	1.82
PetsApp	1,000	1.75	1,000	1.61		1,000	2.17	1,000	1.99
Ramp	309	0.54	309	0.50		308	0.67	308	0.61
Konfir	800	1.40	838	1.35		500	1.09	519	1.02
Konstructly	300	0.53	300	0.48		300	0.65	300	0.60
Visibly Tech	541	0.95	1,047	1.69		300	0.65	300	0.60
Crowd Data	500	0.88	350	0.56		500	1.09	500	1.00
Trumpet	220	0.39	220	0.35		120	0.26	120	0.24
Fluent (formerly Channel)	700	1.23	1,489	2.40		400	0.87	400	0.80
Scan.com	1,800	3.15	3,370	5.44		800	1.74	1,000	1.99
OutThink	1,000	1.75	1,000	1.61		1,000	2.17	1,000	1.99
Shenval*	497	0.87	258	0.42		497	1.08	292	0.58
AeroCloud	1,500	2.63	1,500	2.42		1,500	3.26	1,500	2.99
Modo Energy	2,250	3.94	2,968	4.80		-	-	-	-
Virtual Science AI	182	0.32	182	0.29		-	-	-	-
Fertifa	1,000	1.75	1,000	1.61		-	-	-	-
Nory	1,527	2.67	2,116	3.41		-	-	-	-
SeeChange	1,500	2.63	1,500	2.42		-	-	-	-
Heat Geek (formerly Skoon)	1,000	1.75	1,000	1.61		-	-	-	-
Tuza (formerly Statement)	150	0.26	320	0.52		-	-	-	-
Abtrace	700	1.23	700	1.13		-	-	-	-
Localz	-	-	-	-		750	1.63	300	0.60
	38,426	67.30	43,333	69.87		27,291	59.34	31,498	62.74

 

*Green Highland Shenval Ltd was transferred from A Shares to the Venture Shares in November 2022 following a valuation adjustment. It was acquired by the Company in February 2017 for £860k.

 

Financial Assets are measured at fair value through profit or loss. The initial best estimate of fair value of these investments that are either quoted or unquoted on an active market is the transaction price (i.e. cost). The fair value of these investments is subsequently measured by reference to the enterprise value of the investee company, which is best deemed to reflect the fair value. Where the Board considers the investee company's enterprise value to remain unchanged since acquisition, investments continue to be held at cost (less any loan repayments received).

Strategic Report - Investment Portfolio Ten Largest Investments

National MRI Scan Limited
Date of first investment	Cost £	Valuation £	Valuation Method	Income recognised by TPV for the year £'000	Equity Held by TPV %	Other Equity Held by TPIM managed funds %
27-Jul-2022	1,799,990	3,369,415	Last Equity Raise	-	3.30%	-
Summary of Information from Investee Company Financial Statements*:						£'000
Net assets as at 31 Dec 2022 Net assets as at 31 Dec 2021						(2,259) 1,341
Scan.com is building the infrastructure layer to connect the global diagnostic imaging market, aiming to solve the lack of price transparency for imaging, long waiting lists and reliance on archaic workflows.      * The Investees are required only to submit Small Companies Accounts to Companies House hence only net assets have been disclosed.

 

 

Modo Energy Ltd
Date of first investment	Cost £	Valuation £	Valuation Method	Income recognised by TPV for the year £'000	Equity Held by TPV %	Other Equity Held by TPIM managed funds %
03-Mar-2023	2,250,084	2,968,446	Last Equity Raise	-	5.34%	-
Summary of Information from Investee Company Financial Statements*:						£'000
Net assets as at 31 Oct 2023 Net assets as at 31 Oct 2022						8,787 2,708
Modo are creating a complete platform for energy market and asset performance data.   * The Investees are required only to submit Small Companies Accounts to Companies House hence only net assets have been disclosed.

 

 

Ably Real-Time Ltd
Date of first investment	Cost £	Valuation £	Valuation Method	Income recognised by TPV for the year £'000	Equity Held by TPV %	Other Equity Held by TPIM managed funds %
30-Oct-2019	1,312,027	2,452,322	Last Equity Raise adjusted for fair value	-	2.05%	-
Summary of Information from Investee Company Financial Statements:						£'000
Turnover to year end 31 Jan 2023 Turnover to year end 31 Dec 2021						8,997 5,203
Earnings before interest, tax, amortisation and depreciation (EBITDA) to year end 31 Jan 2023 Earnings before interest, tax, amortisation and depreciation (EBITDA) to year end 31 Dec 2021						(17,372) (8,003)
Profit before tax to year end 31 Jan 2023 Proft before tax to year end 31 Dec 2021						(17,308) (8,061)
Net assets as at 31 Jan 2023 Net assets as at 31 Dec 2021						15,606 31,357
Ably is a real time data delivery service provider.

.

Digital Therapeutics Inc (Pelago Health)
Date of first investment	Cost £	Valuation £	Valuation Method	Income recognised by TPV for the year £'000	Equity Held by TPV %	Other Equity Held by TPIM managed funds %
14-Feb-2020	1,245,285	2,399,112	Last Equity Raise adjusted for fair value	-	1.28%	-
Summary of Information from Investee Company Financial Statements*:						£'000
Pelago is a virtual clinic for substance use management. Pelago is transforming substance use support-from prevention to treatment-delivering education, management skills, and opportunities for positive change to members struggling with substance use.   * This company is exempt from publishing accounts and hence no financial details are disclosed.

 

Semble Technology Limited
Date of first investment	Cost £	Valuation £	Valuation Method	Income recognised by TPV for the year £'000	Equity Held by TPV %	Other Equity Held by TPIM managed funds %
20-Nov-2019	1,760,016	2,374,445	Last Equity Raise	-	5.98%	-
Summary of Information from latest available Investee Company Financial Statements*:						£'000
Net assets as at 31 Dec 2022 Net assets as at 31 Dec 2021						2,008 5,104
Semble is a clinical system (EHR) built to enable medical clinicians and admin staff to complete their day-to-day work in one place rather than needing to use multiple systems. The software covers the entire patient journey, saving the medical clinicians time, enabling them to spend more time treating patients.   * The Investees are required only to submit Small Companies Accounts to Companies House hence only net assets have been disclosed.

 

 

Hospitality Growth Services Ltd (Nory AI
Date of first investment	Cost £	Valuation £	Valuation Method	Income recognised by TPV for the year £'000	Equity Held by TPV %	Other Equity Held by TPIM managed funds %
09-May-2023	1,527,229	2,116,036	Last Equity Raise adjusted for fair value	-	7.23%	-
Summary of Information from latest available Investee Company Financial Statements*:						£'000
Nory provide AI-enabled software for hospitality businesses to manage their business and restaurant operations.   * The company is yet to publish public accounts.

 

Veremark Limited
Date of first investment	Cost £	Valuation £	Valuation Method	Income recognised by TPV for the year £'000	Equity Held by TPV %	Other Equity Held by TPIM managed funds %
12-Aug-2020	909,906	2,095,145	Last Equity Raise	-	5.28%	-
Summary of Information from Investee Company Financial Statements*:						£'000
Net assets as at 31 Dec 2022 Net assets as at 31 Dec 2021						5,257 1,547
Veremark is an employment background checking software for checks such as credit ratings and criminal records.   * The Investees are required only to submit Small Companies Accounts to Companies House hence only net assets have been disclosed.

 

 

Gameplan Technology Limited (Ryde)
Date of first investment	Cost £	Valuation £	Valuation Method	Income recognised by TPV for the year £'000	Equity Held by TPV %	Other Equity Held by TPIM managed funds %
27-Jul-2021	2,000,002	1,800,002	Cost adjusted for fair-value	-	7.34%	-
Summary of Information from Investee Company Financial Statements*:						£'000
Net assets as at 31 Dec 2022 Net assets as at 31 December 2021						1,409 2,368
Ryde provides a fully integrated delivery management platform combining the best of fleet management software, third party logistics software and a flexible workforce to Ecommerce companies requiring deliveries.   * The Investees are required only to submit Small Companies Accounts to Companies House hence only net assets have been disclosed.

 

 

Vyne Technologies Limited
Date of first investment	Cost £	Valuation £	Valuation Method	Income recognised by TPV for the year £'000	Equity Held by TPV %	Other Equity Held by TPIM managed funds %
25-Nov-2019	1,752,185	1,584,809	Last Equity Raise adjusted for fair value	-	7.95%	-
Summary of Information from Investee Company Financial Statements*:						£'000
Net assets as at 31 Mar 2023 Net assets as at 31 Mar 2022						2,734 5,549
Vyne is a payments business that uses Open Banking APIs to transfer money directly from the bank accounts of consumers to the bank accounts of the online merchants from which they are purchasing items or services.
* The Investees are required only to submit Small Companies Accounts to Companies House hence only net assets have been disclosed.

 

 

 

Seechange Technologies Limited
Date of first investment	Cost £	Valuation £	Valuation Method	Income recognised by TPV for the year £'000	Equity Held by TPV %	Other Equity Held by TPIM managed funds %
26-Sep-2023	1,500,000	1,500,000	Cost	-	5.0%	-
Summary of Information from Investee Company Financial Statements*:						£'000
Net assets as at 31 Dec 2022 Net assets as at 31 Oct 2021						(2,191) 188
SeeChange are building a general-purpose recognition platform for real-world application of computer vision, starting with use cases for retailers.   * The Investees are required only to submit Small Companies Accounts to Companies House hence only net assets have been disclosed.

 

  Strategic Report - ESG and Responsible Investing

 

Investment Manager approach to ESG and responsible investing

 

Triple Point is founded on the principle of people, purpose and profit. The manager strives to identify and unlock investment opportunities that have purpose, so we can help people and planet while generating profit for investors.

 

Triple Point has committed to the following frameworks to demonstrate commitment to responsible investment:

 

·      Triple Point is a certified B Corp with a score of 97.6. Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.

 

·      Triple Point is a signatory to the Principles for Responsible Investment ("PRI"). This commitment was made in 2019 and requires Triple Point to uphold and demonstrate progress on the six principles which seek best practice in investor ESG integration and contribution to a more sustainable global financial system. Triple Point seeks to promote these principles throughout its business, and they are reflected in its Sustainability Blue Book and annual report of its sustainability approach and outcomes[6]. These principles ensure all investment processes have sound and appropriate integration of ESG practice and are overseen by the Sustainability Team who report findings to the Triple Point Sustainability Group. This means investment teams are aware of, and can make informed investments decisions about, key ESG risks and opportunities.

 

·      Triple Point is a signatory of the Net Zero Asset Managers Initiative ("NZAM"). This is an international group of asset managers committed to supporting the goal of net zero greenhouse gas emissions. Triple Point has now set near-term science-aligned net zero targets.

 

Triple Point recognise the importance of strong governance in the successful and consistent implementation of sustainability action. The Triple Point Sustainability Group acts as the oversight body, with a dedicated Sustainability Team responsible for implementation strategy and support. The Sustainability Group comprises senior partners and managers from across Triple Point, who meet twice a quarter. The Group is chaired by Triple Point's Co-Managing Partner Ben Beaton. Also reporting to this Group are the Sustainable Investment Subgroup which comprises senior investment team members from across Triple Point and is chaired by Triple Point's Head of Sustainability. This subgroup shares best practice and learning in sustainability and ESG integration from across the business, acting as source of sustainability insight, collaboration and review which stretches across the entire business.  

 

In the view of the Sustainability Group, successful ESG integration means:

 

·      allocated resource at a strategy level to integrate, monitor and report on ESG issues;

·      integrating ESG considerations throughout investment processes;

·      ensuring decision-making captures ESG risks and opportunities, learning from decisions and reporting to continually enhance ESG integration;

·      pro-actively engaging with investors to understand their ESG requirements; and 

·      challenging systemic issues which slow uptake of ESG practices by asking questions, offering alternative solutions, or engaging at a policy level.

 

 

ESG Integration Approach for the Company

 

Overall business conduct (such as alignment with best practice like the UK Bribery Act and UK Modern Slavery Act) is assessed for all companies in the portfolio at the point of investment, with continuing oversight from the Investment Manager which ranges from board directors or observers to quarterly or periodic business updates.

 

ESG Integration by the Investment Manager

 

The Investment Manager has also implemented ESG Integration processes specifically associated to the needs of understanding ESG risk and opportunity for small, seed-stage companies.

 

We place proportionate expectations on our investee companies, across a range of environmental, social and governance factors according to the sector, size, stage of growth, and future growth and development trajectory of the company.

 

It is the Investment Manager's belief that retrofitting a sustainable business mindset and model can be time consuming and challenging further down the line. We invest for growth and so we take a considered judgement that these issues could come to bear during ownership or at exit, if they are not considered at the point of investment.

 

The aim of the Company is to invest in smaller UK businesses to help them grow, with the primary objective of delivering strong financial returns. However, the Company and the Investment Manager are increasingly mindful of the impact that the activities and those of the businesses in which they invest have not just on the environment, but also on their employees, communities, and society at large.

 

The Company believes that its investment activities have many positive benefits beyond the returns it delivers for Shareholders. Our Venture Investments help create new employment, develop and implement new technologies and products, and improve productivity, all of which contribute to the UK economy and benefit those employed in those businesses and in their supply chains. This is achieved most effectively if the company exhibits responsible business behaviour. The investment team assesses this proportionately and materially depending on the company size and sector, and the scale of the investment being made, through an environmental, social and governance (ESG) review.

 

In addition, some companies are developing products and solutions which help to create a more sustainable economy. We use the Sustainable Development Goals to assess if companies we invest in offer this additional benefit. We note this is not a selection criterion for the team, but it can increase the appeal of an opportunity, alongside the other required financial strengths.

 

The Investment Manager also recognises that businesses can have negative impacts or contribute to wider systemic issues which can create negative impact. The ESG integration approach seeks to minimise risk to investments through exposure to themes and activities which may impact the future growth of a business, minimise negative impacts by seeking to avoid businesses with poor business behaviours and maximise the potential to support businesses which make positive contributions. The strategy also explicitly states the Investment Manager will not invest in adult content, gambling (excluding charitable lotteries funding good causes or raising funds), animal testing, controversial weapons and tobacco.

 

To ensure the effective and consistent application of this approach, the Investment Manager operates an ESG Integration Policy which details how ESG considerations are taken into account throughout the investment process, from the point of origination to exit. This policy is available on the Tripe Point website[7] and approaches the challenge through two themes:

 

1.   Management (Culture, Capacity & Governance) - this refers to the allocation of appropriate resourcing, training and senior support for ESG integration. It demonstrates that Triple Point's actions have integrity and are aligned with the strategic position of the Company and oversight from senior management. Examples of which include:

a.   training across the investment team on ESG;

b.   training for the Investment Committee on ESG; and

c.   providing greater transparency on the approach to ESG.

 

2.   Investment (Process & Reporting) - this refers to action taken in the investment process to assess and improve ESG factors affecting the target asset, how these might affect an investment decision and how decisions and changes to ESG factors are captured during our asset ownership. Examples include:

 

a.   formal reviews by the team of ESG trends and topics at a micro, macro and sector level to feed into the origination process;

b.   ESG due diligence process with results included at Investment Committee; and

c.   sharing areas of weakness, with constructive guidance on how to progress so awareness on a range of ESG issues develops with ownership.

 

 

Triple Point is committed to evaluating the success of the approach. The investment teams report to the Sustainability Group through an annual review process to ensure adherence to the process. This ESG integration review, along with on-going guidance to each investment team, is provided by Triple Point's dedicated Sustainability Team.

 

 

Alignment to Sustainable Development Goals ("SDGs")

 

During the year we invested in a number of businesses with sustainability alignment (as shown by alignment to the SDGs), including:

 

SDG 3 - good health and wellbeing: Virtual Science - an AI platform delivering faster, clearer and more actionable healthcare stakeholder insights to speed the delivery of solutions from the life sciences industry; Abtrace - a health monitoring tool for primary care providers to improve clinical decision making, reduce variation in care and improve patient outcomes; Fertifa - an employer benefit business specialising in reproductive healthcare.    

 

 

SDG 7/13 - Affordable and clean energy and climate action: Heat Geek (formerly Skoon) - heat pump installer software that helps heat engineers install high-efficiency heat pumps better and faster.

 

 

The Strategic Report has been approved by the Board and signed on their behalf by the Chair.

 

 

Jane Owen

Chair

31 May 2024

 

 

GOVERNANCE

 

Board of Directors

 

Jane Owen is the Chair of the Board of the Company. After graduating in law from Oxford University, Jane was called to the Bar in 1978 and until 1989 was a practising barrister in the chambers that are now 3 Verulam Buildings. Subsequently, Jane became UK group legal director at Alexander & Alexander Services, and was appointed Aon's General Counsel in the UK in 1997, a position she held until 2008, where she was also a director of Aon Limited from 2001 to 2008. She was also a Non-Executive Director of TWG Europe Ltd and related companies and a Governor of James Allen's Girls' School.

 

Julian Bartlett has significant financial, assurance and advisory experience gained from over 30 years as a Partner at Grant Thornton UK LLP and formerly at RSM Robson Rhodes and Deloitte. He has an extensive understanding of listed and financial services companies including VCTs. He is the Chair of Invesco Fund Managers Limited, and a Director of Invesco Pensions Limited and Lindsell Train Limited. He was formerly a Non-Executive Director of FFI Holdings plc from August 2017 until it ceased trading on AIM in August 2019. Julian is a Fellow of the Institute of Chartered Accountants in England and Wales.

 

Jamie Brooke has gained over 25 years' investment experience throughout his career. He previously worked at 3i and Quester in the venture and leveraged buyout divisions, and was formerly lead fund manager for the Hanover Catalyst Fund, prior to which he was at Lombard Odier where, as a fund manager, he specialised in strategic UK small cap equity investing, having moved with the Volantis team from Henderson Global, and before that, Gartmore. Jamie has held directorships on over 20 boards, and is currently on the Board of Kelso Group Holdings plc, Flowtech Fluidpower plc and Chair of the Audit Committee of Chapel Down Group plc, listed on the Aquis Stock Exchange, and Oryx International Growth Fund.

 

Sam Smith is an entrepreneur with over 25 years' business and capital markets experience and is specialised in advising small and mid-cap growth companies. Sam was previously Chief Executive Officer of FinnCap Group PLC which, under her leadership, has become one of the largest brokers for companies listed on the Alternative Investment Market ("AIM") of the London Stock Exchange. Sam is currently a non-executive director of Solid State PLC listed on AIM, Sumer Group Holdings Ltd a professional services firm supporting SMEs with accounting and other services, Griffin Markets Limited, an OTC wholesale European energy trading business and of 55 Redefined Ltd.

 

 

Corporate Governance Report

 

Compliance Statement

 

The Board of Triple Point Venture VCT plc has considered the principles and provisions of the Association of Investment Companies Code of Corporate Governance 2019 ("AIC Code"). The AIC Code addresses the principles and provisions set out in the UK Corporate Governance Code (the "UK Code"), as well as setting out additional provisions on issues that are of specific relevance to investment companies like Triple Point Venture VCT Plc. It is acknowledged that the UK Code was updated in January 2024 and it is anticipate the AIC Code will also be updated accordingly. The Board will monitor this and report against the update AIC Code once available.  

 

The Board considers that reporting against the principles and provisions of the AIC Code, which has been endorsed by the Financial Reporting Council, will provide improved reporting to Shareholders.

 

The Company has complied with the principles and provisions of the AIC Code or provided an explanation for non-compliance below:

 

AIC Code of Corporate Governance	Explanation
If the Chair of the Board is a member of the Audit Committee, the Board should explain in the annual report why it believes this is appropriate (Provision 29)	Jane Owen is a member of the Audit Committee and Chair of the Board. Jane Owen is an independent Non-Executive Director, and was deemed independent on appointment, and therefore is permitted to be a member of the Committee under provision 29 of the Code. Given the size and structure of the Board it was also deemed in best interest of Shareholders to have the breadth of experience of all Directors throughout the audit process.

 

The AIC Code is available on the AIC website (www.theaic.co.uk). It includes an explanation of how the AIC Code adapts the principles and provisions set out in the UK Code to make them relevant for investment companies.

 

The Board  

 

In identifying suitable candidates for an appointment to the Board an independent external search consultancy, Tyzack Partners Limited, was engaged for the recruitment of a Non-Executive Director role during the period. Following a formal recruitment process, Sam Smith was appointed to the Board as Independent Non-executive Director on 8 February 2024. Sam was also appointed as Senior Independent Non-executive Director and member of the Audit Committee with effect from the same date. Sam undertook a formal induction process upon joining the Board. Following Sam's appointment, the Board comprised four Non-Executive Directors. The Board confirms that there is no connection between the Company, or any individual Directors and the external search consultancy used for Director appointments during the period, or to facilitate the candidate search for the role of Non-Executive Director.

 

As announced on 8 February 2024, following an orderly succession period, Jane Owen, Non-Executive Director of the Company, will not stand for re-election at the Company's AGM expected to be held in July 2024 and will step down immediately following the conclusion of the AGM when the Board will again comprise three Non-Executive Directors. Jamie Brooke will be appointed as Non-Executive Chair of the Board, immediately following completion of the AGM.

 

All Directors are considered independent and day-to-day management responsibilities are delegated to the Investment Manager. The Directors have a combination of skills, experience and knowledge which are relevant to the Company. Biographies of each director are presented on page 44 of this report.

 

The Directors are provided with key information on the Company's activities, including regulatory and statutory requirements, by the Investment Manager and Company Secretary, Hanway Advisory Limited.

 

The Board has direct access to the Company Secretary and may also take independent professional advice at the Company's expense where necessary in the performance of their duties. During the year, the Board was satisfied that all Directors were able to commit sufficient time to discharge their responsibilities effectively having given due consideration to their other significant commitments. The Directors were advised on appointment of the expected time required to fulfil their roles and have confirmed that they remain able to make that commitment. No external appointments accepted during the year were considered to be significant for the relevant Directors, taking into account the expected time commitment and nature of these roles.

 

The Directors' other principal commitments are listed on pages 44.

 

The Chair, Jane Owen, leads the Board and is responsible for its overall effectiveness in directing the affairs of the Company. The Chair leads the process in determining its strategy and the achievement of its objectives. The Chair is responsible for setting the Board agenda focusing on strategy, performance, value creation, culture, stakeholders and ensuring that issues relevant to these areas are reserved for Board decision. The Chair facilitates constructive Board relations and the effective contribution of all the Directors, encouraging a culture of openness and debate and ensures the Directors receive accurate, timely and clear information. The Chair does not have significant commitments which conflict with her Board responsibilities.

 

Appointment of New Directors

 

Any appointment to the Board is subject to a formal, rigorous and transparent procedure and is based on merit and objective criteria which promotes diversity of gender, social and ethnic backgrounds, cognitive and personal strengths.

 

 

FCA Listing Rule diversity targets

 

The following table sets out the gender and ethnic diversity of the Board as at 29 February 2024, in accordance with the FCA's Listing Rules, the disclosure of which in this report having been approved by each of the Directors

 

	Number of Board members	Percentage of the Board	Number of senior positions of the Board[8]
Gender Diversity
Men	2	50%	0
Women	2	50%	2
Not specified/prefer not to say	-	-	-
Ethnic Diversity
White British or other White (including minority white groups)	4	100%	2
Mixed/Multiple Ethnic Groups	-	-	-
Asian/Asian British	-	-	-
Black/African/Caribbean/Black British	-	-	-
Other ethnic group, including Arab	-	-	-
Not specified/prefer not to say	-	-	-

The Company has reported against the Listing Rules on diversity and has complied with the targets or otherwise explained non-compliance below.

 

Requirement	Explanation
A minimum of one board member is from a minority ethnic background	The size of the Company and of the Board make achieving this target challenging. The Company recognise the importance of this requirement and ensure that any recruitment processes for Directors actively encourage a diverse pool of candidates.
at least 40% of the Board are women	As at the report date, the Company is compliant due to recruitment of a fourth director in the period, in line with Company succession planning. Following conclusion of the Company's 2024 AGM, when Jane Owen is due to step down from the Board, this target will no longer be met, as there will be three Directors, with only one female director (33.3% of the Board). The Board believes it has the appropriate mix of skills, knowledge and experience to discharge its responsibilities and given the size of the Company the appointment of an additional director would not be deemed appropriate at this time.

 

Company's Operations

 

The Board is responsible for leading and controlling the Company and has oversight of the management and conduct of the Company's business, strategy and development. The Board determines the Investment Objectives and Investment Policy and risk appetite and has overall responsibility for the Company's activities, including review of investment activity and performance.

 

The Board is also responsible for the control and supervision of the Investment Manager (who is also the Company's AIFM) and compliance with the principles and recommendations of the AIC Code. The Board ensures the maintenance of a sound system of internal controls and risk management (including financial, operational and compliance controls) and reviews the overall effectiveness of systems in place. The Board is responsible for approval of any changes to the capital, corporate and/or management structure of the Company.

 

The Investment Manager is responsible for making investments in line with the Investment Objectives, Investment Policy and Board approved risk appetite, portfolio management and risk management of the Company pursuant to AIFMD.

 

The Board's main focus is to promote the long-term sustainable success of the Company, to deliver value for Shareholders and contribute to wider society. The Board does not routinely involve itself in day-to-day business decisions but there is a formal schedule of matters that requires the Board's specific approval, as well as decisions that can be delegated to the Board Committees.

 

The key matters reserved to the Board, include but are not limited to:

•     review investment performance and monitor compliance with the investment policy;

•     the consideration and approval of future developments or changes to the investment policy, including risk and asset allocation;

•     overall leadership of the Company and setting of its purpose, culture, values and standards;

•     approval of any dividend or return of capital to be paid to the Shareholders;

•     the appointment, evaluation, removal and remuneration of the Investment Manager and the Company Secretary;

•     Board membership and powers including the appointment and removal of Board members;

•     ensuring adequate Board succession planning;

•     ensuring the maintenance of a system of internal controls and risk management;

•     approval and issue of the annual and half yearly results;

•     review of the Company's corporate governance arrangements and annual review of continuing compliance with the AIC Code of Corporate Governance published by the AIC from time to time;

•     the performance of the Company, including monitoring the net asset value per share; and

•     monitoring Shareholder profiles and considering Shareholder communications.

The Company Secretary is responsible for ensuring that Board procedures are complied with, advising the Board on all governance matters, supporting the Chair and helping the Board and its committees to function effectively. The Company Secretary will also provide the Board with support in ensuring that it has the policies, processes, information, time and resources it needs in order to function effectively.

 

The Company's articles of association and the schedule of matters reserved to the Board for decision provide that the appointment and removal of the Company Secretary is a matter for the full Board.

 

The Board reviews the performance of the Investment Manager annually taking into consideration the contractual arrangements and scrutinises performance. The Board as a whole carries out this review, and due to the size of the Board, does not consider it appropriate to establish a separate management engagement committee.

 

Discussions of the Board

 

During the period, the following were the key matters considered by the Board:

 

·      approval of the change of AIFM arrangements of the Company, and appointment of TPIM as the Company's AIFM;

·      approval of Company policies;

·      succession planning and appointment of Sam Smith and Jamie Brooke as Non-Executive Directors;

·      matters in relation to the Company's Offer for Venture Shares;

·      annual and half year reports to Shareholders;

·      quarterly and, where applicable, ad hoc approval of NAVs; and

·      approval of dividends payable to Shareholders.

 

Re-election of Directors

 

Directors' retirement and re-election is subject to the Company's articles of association and the AIC Code. The AIC Code requires that all Directors should be subject to an annual re-election. In line with the Company's succession plan, Jane Owen will not stand for re-election at the Company's AGM expected to be held on 23 July 2024 and will step down immediately following the conclusion of the AGM.

 

Independence of Directors

 

The Board has a Non-executive Chair and three other Non-executive Directors, all of whom were considered independent since their appointment. All of the Directors are independent of the Investment Manager.

 

The AIC Code outlines circumstances that are likely to impair a Director's independence including whether a Director has served on the Board for more than nine years from the date of their first appointment. Jane Owen has served on the Board for more than nine years. Length of service is currently one of several indicators the Board considers when assessing independence. The Board is of the view that a term of service in excess of nine years does not in itself compromise independence and notes the positive contribution that long service can offer. The Board regularly reviews the independence of its Directors and is satisfied that all Directors remain independent, including in character and judgement. Jane Owen will step down from the Board at the Company's 2024 AGM, and the three remaining Directors will have served on the Board for less than nine years.

 

Policy on Tenure of the Chair

 

The Board considers that the length of time each Director, including the Chair, serves on the Board should not be limited and has not set a finite tenure policy. Continuity, self-examination and ability to do the job are the relevant criteria on which the Board assesses a Director's independence. Length of service of current Directors and future succession planning will be reviewed each year as part of the Board evaluation process.

 

Succession Plan

 

The Board has aimed to achieve a progressive refreshing of the Board, taking into account the challenges and opportunities facing the Company, the balance of skills and expertise, and the need for a diverse pipeline for succession balanced against the benefit of historical knowledge. The Board is pleased to have made positive progress on the gradual refreshing of the Board this year through the appointment of Jamie Brooke and Sam Smith during the period, in line with its succession plan.

 

Board Committees

 

The Board has only one committee, which is the Audit Committee. The Directors consider that due to the size of the Board, there being no employees or executive directors, it is not necessary to appoint a separate nomination committee, management engagement committee or remuneration committee, these functions being carried out by the full Board The remuneration report is detailed on pages 57 to 61.  

 

Board Meeting Attendance

 

The Board has regular meetings on a quarterly basis, with additional meetings as required from time to time.

During the period the following Board meetings were held and the number attended by each Director compared with the maximum possible attendance:

 

Directors	Board	Audit
	Meetings	Committee
Jane Owen, Chair	5/5	3/3
Julian Bartlett*	4/5	3/3
Chad Murrin**	1/1	1/1
Jamie Brooke***	4/4	2/2
Sam Smith****	1/1	1/1

 

*Julian Bartlett was unable to attend all meetings due to illness.

**Chad Murrin stepped down from the Board of the Company effective 19 July 2023.

***Jamie Brooke was appointed as Non-Executive Director of the Company on 8 June 2023.

****Sam Smith was appointed as Non-Executive Director of the Company effective 8 February 2024.

 

Performance Evaluation

 

The Board, led by the Chair, established a formal process for a formal and rigorous annual evaluation of the performance of the Board, individual Directors and the Audit Committee. The evaluation considered the composition, diversity, investment matters, development and how effectively each member works together to achieve its objectives.

 

During the period, the Board conducted a performance evaluation by completing a written questionnaire to appraise and gather useful learnings on the functioning of the Board, the Audit Committee and individual Directors, and the Chair.

 

The Chair, supported by the Company Secretary, acted on the results of the evaluation. Having conducted its performance evaluation, the Board believes that it has been effective in carrying out its objectives and that each individual Director has been effective and demonstrated commitment to the role. 

 

The Board discussed the key challenges and opportunities that were identified through the performance evaluation and agreed appropriate development points on which progress will be assessed in the next financial period.

 

Challenges	2024 Development Points
Finding sufficient time in quarterly board meetings to give due consideration to longer term Company strategy.	To organise a strategy day in 2025, to dedicate sufficient time to consider the Company's purpose and strategy and to aid the Board in both short and long term decision-making.
Significant changes to Board composition during the period, and in the coming months.	As two new Directors have joined the Board in the previous year, and Jane Owen is due to step down from the Board at the upcoming AGM, the Board are encouraged to dedicate time to developing the Board relationship to ensure members are working together effectively both inside and outside of quarterly meetings.
Change of Company Chair	The new proposed Chair, Jamie Brooke, should meet with the Investment Manager and Company Secretary in advance of taking on the role of Chair to discuss ways of working and ensure a sufficient and smooth handover process.

 

The progress the Board has made against its 2023 development points is set out below:

 

2023 Development points	Progress Made
The Board will undertake a deep dive into the risk management process to ensure enhanced risk management to adequately monitor current and emerging risks facing the Company.	During the period, enhanced risk reporting was provided by the Investment Manager. The Board reviewed and approved enhancements to the risk management framework of the Company which became effective from March 2024. These enhancements will underpin the approach to the identification and categorisation of risks, together with changes to the assessment approach - being more reflective of the individual nature of the risks being considered.
Consideration will be given to using an external search consultancy for the recruitment of a new Board Director, in line with succession planning, to actively encourage a diverse pool of candidates.	During the period, the recruitment of a fourth Non-Executive Director, in line with the Company's succession plan, was undertaken. An independent search consultancy, Tyzack Partners, was used for the recruitment of Sam Smith as a Director. The recruitment process encouraged a diverse pool of candidates.
Director training to be held on key legal, regulatory and governance issues facing the Company or expected to impact the Company in the future.	During the period Director training was held on a number of matters, including on Director's responsibilities. Further training will be undertaken by the Board on key issues impacting the Company in the future, and the general Venture market.

 

 

Corporate Social Responsibility

 

The Board is committed to integrating ESG matters in the Company's business operations, including the Company itself and the companies in which it invests. The Board actively seeks ways to interact with their stakeholders. The Board seeks to avoid investing in companies which do not operate within ethical, environmental and social legislation. Details on the Company's responsible investing can be found on pages 41 to 42.  

 

Internal Control and Risk Management

 

The Board has overall responsibility for establishing procedures to manage risk, overseeing the internal control framework, determining the nature and extent of the principal risks the Company is willing to take in order to achieve its long-term strategic objectives, and identifying emerging risks. The purpose of an internal control framework is to ensure that proper accounting records are maintained, the Company's assets are safeguarded, and the financial information used within the business and for publication is accurate and reliable; such a system can only provide reasonable and not absolute assurance against material misstatement or loss. Emerging risks are regularly monitored, and to the extent possible or practicable, mitigating actions are implemented. 

 

The Company has put a process in place for identifying, evaluating and managing the principal and emerging risks it faces, and determining the nature and extent of the principal risks the Company is willing to take in order to achieve its long-term strategic objectives. During the year, the Board satisfied itself that the procedures for identifying the information needed to monitor the business and manage risk so as to make proper judgements on the financial position and prospects were robust. The purpose of an internal control framework is to ensure that proper accounting records are maintained, the Company's assets are safeguarded, and the financial information used within the business and for publication is accurate and reliable; such a system can only provide reasonable and not absolute assurance against material misstatement or loss. Emerging risks are regularly monitored, and to the extent possible or practicable, mitigating actions are implemented. 

 

The system of risk management and internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives. As part of this process an annual review of the risk management and internal control systems is carried out. The review covers all material controls including financial, operational and compliance controls.

 

The Directors regularly review financial results and investment performance with the Investment Manager.

 

The Directors have established an ongoing process designed to meet the particular needs of the Company in evaluating the significant and emerging risks to which it is exposed, including, among others, market risk, VCT qualifying investment risk and operational risks, which are recorded in a risk register. The controls employed to mitigate these risks are identified and the residual risks are rated taking into account the impact of the mitigating factors. The risk register is reviewed bi-annually, along with the risk appetites. The principal risks and uncertainties including emerging risks identified from the risk register and a description of the Company's risk management procedures can be found on pages 18 to 19.

 

The Directors regularly review the system of internal controls, both financial and non-financial, operated by the Company and the Investment Manager. The Investment Manager is engaged to provide accounting services and the Company Secretary provides secretarial services and retains physical custody of the documents of title relating to investments.

 

Capital management is monitored and controlled by the Investment Manager. The capital being managed includes equity and fixed interest VCT-qualifying investments, cash balances and liquid resources including debtors and creditors. The Investment Manager's procedures are subject to internal compliance checks.

 

The Company's objectives when managing capital are:

·      to safeguard its ability to continue as a going concern, so that it can continue to provide returns to Shareholders and benefits for other stakeholders;

·      to ensure sufficient liquid resources are available to meet the funding requirements of its investments and to fund new investments where identified.

 

Stakeholder Engagement

 

The Company continuously interacts with a variety of stakeholders important to its success. This includes regular

engagement with the Company's Shareholders and other stakeholders by the Board and the Investment Manager. The Directors are responsible for acting in a way that they consider, in good faith, is the most likely to promote the success of the Company for the benefit of its members. In doing so, they have regard for the needs of stakeholders and the wider society.

 

The Company is committed to understanding the views of its stakeholders and maintaining effective dialogue with its key stakeholders, which include: Shareholders, investee companies; the Investment Manager; lenders; and the wider communities in which the Company and its investee companies operate.

 

Shareholders are encouraged to attend and vote at the Company's Annual General Meeting, along with the Company's other Shareholder meetings, so they can discuss governance and strategy and the Board can enhance its understanding of Shareholder views. The Board will attend the Company's Shareholder meetings to answer any Shareholder questions and the Chair will make herself available, as necessary, outside of these meetings to speak to Shareholders.

 

The Board is committed to providing investors with regular announcements of significant events affecting the Company and its investee companies.

 

All investor documentation is available to download from the Company's website:

https://www.triplepoint.co.uk/current-vcts/triple-point-venture-vct-plc/s2539/

 

Stakeholder engagement is set out in the Section 172(1) statement on pages 22 to 23.

 

The Board has considered the AIC Code recommendations in respect of arrangements by which staff of the Investment Manager and Administrator may, in confidence, raise concerns within their organisations about possible improprieties in matters of financial reporting or other matters. It has concluded that adequate arrangements are in place for the proportionate and independent investigation of such matters and, where necessary, for appropriate follow-up action to be taken within their organisations.

 

Directors' Share Interests

 

All of the Directors' Share interests were held beneficially and they are actively encouraged to own Shares. Details of the Directors' Share interests can be found in the remuneration report on pages 57 to 61. The Company has not set out any formal requirements or guidelines to Directors concerning their ownership of Shares in the Company.

 

On behalf of the Board.

 

Jane Owen

Chair

31 May 2024

 

Audit Committee Report

 

The following pages set out the Audit Committee's report on how it has discharged its duties in accordance with the AIC Code and its activities in respect of the period ended 29 February 2024.

 

Julian Bartlett chairs the Audit Committee. Jane Owen, Non-Executive Chair of the Board, who was independent on appointment, is a member of the Audit Committee due to the size and structure of the Board, along with Non-Executive Directors Sam Smith and Jamie Brooke.

 

The Audit Committee deals with matters relating to audit, financial reporting and internal control systems. The Audit Committee meets at least twice a year and as required. The Audit Committee also has direct access to BDO LLP, the Company's external auditor.

 

The Audit Committee has been in operation throughout the period and operates within clearly defined terms of reference.

 

Audit Committee Role and Responsibilities

 

The Audit Committee has the primary responsibility for reviewing the financial statements and the accounting principles and practices underlying them, liaising with the external auditors and reviewing the effectiveness of internal controls.

 

It should be noted that although initial responsibility for valuations sits with the Investment Manager as AIFM, the Audit Committee oversees the valuation approach and its implementation. The Audit Committee's terms of reference include the following roles and responsibilities:

·      periodically considering the need for an internal audit function;

·      monitor the integrity of the financial statements of the Company and any formal announcements relating to the financial performance and reviewing significant financial reporting judgements contained in them;

·      oversee the relationship with the external auditor including, but not limited to, assessing annually their independence and objectivity, taking into account relevant professional and regulatory requirements and the overall relationship with the auditor, including the provision of any non-audit services;

·      monitoring the extent to which the external auditor is engaged to supply non-audit services;

·      ensuring that the Investment Manager has arrangements in place for the investigation and follow-up of any concerns raised confidentially by staff in relation to propriety of financial reporting or other matters;

·      keep under review the Company's internal financial controls and review the adequacy and effectiveness of the Company's internal control and risk management systems and monitor the proposed implementation of such controls;

·      report to the Board on significant issues relating to the financial statements and how they were addressed; its assessment of the effectiveness of the audit process; any key matters raised by the external auditor; and any other issues on which the Board has requested the Audit Committee's opinion; and

·      report to the Board on how it has discharged its responsibilities.

 

The Audit Committee reviews its terms of reference and effectiveness annually and recommends to the Board any changes required as a result of the review. The terms of reference are available on request from the Company Secretary.

 

In respect of the year ended 29 February 2024, the Audit Committee discharged its responsibilities by:

 

·      reviewing the external auditor's plan for the audit of the financial statements, including identification of key risks and confirmation of auditor independence;

·      reviewing the external auditor's audit fees in relation to the audit of the financial statements;

·      monitoring the integrity of the financial statements of the Company and any formal announcements relating to the Company's financial performance, and reviewing significant financial reporting judgements contained in them;

·      reviewing the Company's internal financial controls and internal control and risk management systems operated in relation to the Company's business and assessing those controls in minimising the impact of key risks;

·      reviewing periodic reports on the effectiveness of TPIM's internal control and risk management procedures;

·      reviewing the appropriateness of the Company's accounting policies;

·      providing advice to the Board on whether the annual report (and accounts), taken as a whole, is fair, balanced and understandable, and provides the information necessary for Shareholders to assess the Company's position and performance, business model and strategy;

·      reviewing the Company's annual and half-yearly results prior to Board approval;

·      making recommendations to the Board regarding the reappointment of the external auditor and approving their remuneration;

·      reviewing and monitoring the external auditor's independence and objectivity;

·      reviewing the effectiveness of the external audit process, taking into consideration relevant UK professional and regulatory requirements;

·      reviewing the Company's going concern and viability status; and

·      reviewing and discussing the external auditor's findings.

 

The Committee has considered the whole annual report and financial statements for the year ended 29 February 2024 and has reported to the Board that it considers them to be fair, balanced and understandable, providing the information necessary for shareholders to assess the Company's financial position, performance, business model and strategy.

 

The Board considers that the members of the Audit Committee collectively have the skills and experience required to discharge their duties effectively and the Audit Committee as a whole has competence relevant to the sector in which it operates.

 

Internal controls

 

The Directors have overall responsibility for keeping under review the effectiveness of the Company's systems of risk management and internal controls. The purpose of these controls is to make sure that proper accounting records are maintained, assets are safeguarded and the financial information used within the business and for publication is accurate and reliable; such a system can only provide reasonable and not absolute assurance against material misstatement or loss.

 

The systems of risk management and internal control are designed to manage rather than eliminate the risk of failure to achieve the business objectives. These internal controls have been in place throughout the period under review and up to the date of this report. The Board regularly reviews financial results and investment performance with the Investment Manager. The Investment Manager identifies the investment opportunities, monitors the portfolio of investments and manages the assets of the Company on a discretionary basis.

 

The Investment Manager is engaged to carry out the accounting function and retains physical custody of the documents of title relating to unquoted investments. The Directors confirm that they have established a continuing process throughout the year and up to the date of this report for identifying, evaluating and managing the significant potential risks faced by the Company and have reviewed the effectiveness of the risk management and internal control systems.

 

As well as there being controls operated by the Investment Manager, the Company's depositary, INDOS Financial Limited, are responsible for cash monitoring, asset verification and oversight of the Company and the Investment Manager in performing its function under the AIFMD. The Depositary reports its findings on a quarterly basis to the Board on its monitoring and verification of all new acquisitions,  share issues, loan facilities, shareholder distributions and other key events. In addition, on an ongoing basis, the Depositary tests the quarterly management accounts, bank reconciliations and performs a quarterly review of the Group when discharging its duties.

 

The Board does not consider it appropriate to have an internal audit function due to the size and nature of the Company's transactions. The risk management and internal control systems include the production and review of bank payments and management accounts. All outflows made from the Company's accounts require the authority of two approved signatories from the Investment Manager.

 

Financial Reporting

 

The primary role of the Audit Committee in relation to financial reporting is to review with the Investment Manager and Administrator and the Auditor, the appropriateness of the annual report and financial statements, concentrating on, amongst other matters:

 

·      compliance with financial reporting standards and relevant financial and governance reporting requirements;

·      amendments to legislation and corporate governance reporting requirements;

·      the impact of any new and proposed amendments to accounting standards which affect the Company;

·      material areas in which significant judgements have been applied;

·      whether the Audit Committee believes that proper and appropriate processes and procedures have been followed in the preparation of the annual report; and

·      considering and recommending the contents of the annual report and financial statements for approval.

 

Significant Issues Raised by the Audit Committee

 

The Audit Committee is responsible for considering and reporting on any significant issues that arise in relation to the Financial Statements and how they have been addressed.

 

The following key issues were discussed:

 

·      compliance with HM Revenue & Customs conditions for maintenance of approved Venture Capital Trust status;

·      valuation and existence of unquoted investments; and

·      Management override of financial controls.

 

Compliance with HMRC Conditions

The Investment Manager provides the Board with regular qualifying investment updates. This report shows the current qualifying percentage position of the Company and highlights and actions which may be required to maintain this position in the future. The Board also assesses the future qualifying position of the Company with assumptions on divestment of assets. The qualifying position of the Company is a recurring agenda item at Board meetings.

 

The Company also has in place an engagement with Philip Hare and Associates LLP. The Board seeks their opinion before undertaking any material transaction which may affect the qualifying status of the Company. The Company also seeks the opinion of Shoosmiths LLP when making any new Investments.

 

Valuation & Future Cash Flow Projections

The Company's unquoted Investment portfolio is valued in line with the International Private Equity Valuation guidelines. The Company's accounting policy is to classify investments at fair value through profit or loss. Therefore, the most significant risk in the financial statements is whether its investments are fairly valued. Being unquoted, there is uncertainty and estimation involved in determining the investment valuations.

 

There is also an inherent risk of management override as the Investment Manager's fee is calculated based on NAV as disclosed in note 6 to the financial statements. The Investment Manager is responsible for calculating the NAV, prior to approval by the Triple Point Valuation Committee, before being submitted to the Board for approval.

 

On a quarterly basis, the Investment Manager provides a detailed analysis of the NAV highlighting any movements and assumption changes from the previous quarter's NAV, including assessing any impact of macroeconomic developments. This analysis and the rationale for any changes made is considered and challenged and ultimately approved by the Board.

 

Management override of Controls

The Committee reviews all significant accounting estimates that form part of the financial statements and considers any material judgements applied by management during the completion of the financial statements.

 

These issues were discussed with the Investment Manager and the auditor at the conclusion of the audit of the financial statements.

 

Going concern and viability statement

 

The Board is required to consider and report on the longer-term viability of the business as well as assess the appropriateness of applying the going concern assumption.

 

The Audit Committee has taken account of the solvency and liquidity position of the Company shown in the financial statements and the information provided by the Investment Manager on the forecast cashflows for the Company and expected pipeline. The Audit Committee considers that it is appropriate to adopt the going concern basis of preparation of the financial statements.

 

External Audit

 

It is the Audit Committee's responsibility to monitor the performance, objectivity and independence of the external auditors and this is assessed by the Audit Committee each year. In evaluating BDO LLP's performance, the Audit Committee examines effectiveness of the audit process, independence and objectivity of the auditor, taking into consideration the length of tenure of the external auditors, the non-audit services undertaken during the year and relevant UK professional and regulatory requirements, and the quality of delivery of its services.

 

BDO LLP attended two of the three formal Audit Committee meetings held during the year. Matters typically discussed include the Auditor's assessment of the transparency and openness of the Investment Manager, confirmation that there has been no restriction in scope placed on them, the independence of their audit and how they have exercised professional scepticism.

 

When considering whether to recommend the reappointment of the external auditor, the Audit Committee takes into account their current fee compared to the external audit fees paid by other similar companies. The quality and competence of the external auditor is also taken into consideration. The Audit Committee will then recommend to the Board the appointment of an external auditor which is approved by Shareholders at the Annual General Meeting.

 

The FRC's Ethical Standard requires the audit partner to rotate every five years. BDO were recommended for re-appointment at the 2023 AGM and the resolution was duly passed. This is the audit partner, Elizabeth Hooper's second year.

 

The independence and effectiveness of the external audit process is assessed as part of the Board evaluation conducted annually and by the quality and content of the audit scoping and findings report provided to the Audit Committee by the external auditor and the discussions then held on topics raised. The Audit Committee will challenge the external auditor at the Audit Committee meeting if appropriate.

 

Non-Audit Services

 

The Audit Committee safeguards the objectivity and independence of the auditor by reviewing the nature and extent of non-audit services supplied by the external auditor to the Company. Details of fees paid to BDO LLP during the year are disclosed in note 8 to the financial statements. There were no non-audit services paid to BDO LLP during the year.

 

Audit Fee 

 

The audit fee for the year was £74,890 net of VAT (2023: £65,856). BDO LLP have primarily attributed the increase in fees to inflation, the increased time and complexity of audit given the growth of the Venture Shares and wider general market fee increases for audit services. The significant increase in fees have been considered, and the Committee will evaluate all available options to ensure that the cost for the services provided remain appropriate and in the best interests of Shareholders. 

 

Independence

 

The Audit Committee is required to consider the independence of the external auditor. In fulfilling this requirement, the Audit Committee has considered the Audit Plan from BDO LLP which describes their arrangements to identify, report and manage their independence.

 

Audit Committee Meeting Attendance

 

During the period, the following Audit Committee meetings were held, and the number attended by each Director compared with the maximum possible attendance:

 

Directors	Audit Committee
	Meetings
Jane Owen, Chair	3/3
Julian Bartlett	3/3
Chad Murrin*	1/1
Jamie Brooke**	2/2
Sam Smith***	1/1

 

**Chad Murrin stepped down from the Board of the Company effective 19 July 2023.

***Jamie Brooke was appointed as Non-Executive Director of the Company on 8 June 2023.

****Sam Smith was appointed as Non-Executive Director of the Company effective 8 February 2024.

 

The Audit Committee oversees the Investment Manager's assessment of valuation of the unquoted investments and the existence of those investments and considers and challenges the information provided by the Investment Manager. The Investment Manager will usually have either Director or Board Observer rights to attend portfolio companies' Board meetings, will always have information rights when investments are first made and will maintain contact with the senior executives of investees, and has oversight of all the investments made. The Audit Committee has reviewed the valuations and discussed them with both the Investment Manager and the external auditor to confirm their assessment of the valuation of the unquoted investments and the existence of those investments.

 

The Investment Manager has confirmed to the Audit Committee that the conditions for maintaining the Company's status as an approved Venture Capital Trust has been complied with throughout the year. The position has been reviewed by Philip Hare & Associates LLP in its capacity as adviser to the Company on taxation matters.

 

The Audit Committee has considered the whole Report and Accounts for the year ended 29 February 2024 and has reported to the Board that it considers them to be fair, balanced and understandable providing the information necessary for Shareholders to assess the Company's position, performance, business model and strategy.

 

On behalf of the Board.

 

Julian Bartlett

Audit Committee Chair

31 May 2024

 

Directors' Remuneration Report

 

Statement of the Chair

 

I am pleased to present the Remuneration Report on behalf of the Board for the year ended 29 February 2024.

 

This report is submitted in accordance with schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) (amendment) Regulations 2013 and The Companies (Miscellaneous Reporting) Regulations 2018, in respect of the year ended 29 February 2024. This report also meets the Financial Conduct Authority's Listing Rules and describes how the Board has applied the principles and provisions relating to Directors' remuneration set out in the AIC Code. The reporting requirements require two sections to be included:

 

·      Directors' Remuneration Policy - This sets out our Remuneration Policy for Directors of the Company that has been in place since 19 July 2023 following approval by Shareholders.

 

·      Annual Remuneration Report - This sets out how our Directors were paid for the period ended 29 February 2024. There will be an advisory Shareholder vote on this section of the report at our 2024 AGM.

 

We value engagement with our Shareholders and for the constructive feedback we receive and look forward to your support at the forthcoming AGM.

 

Jane Owen

Chair

31 May 2024

 

Directors' Remuneration Policy

 

Remuneration Policy Overview

 

The Board currently comprises four Directors, all of whom are Non-Executive. The Board's policy is that the remuneration of Non-Executive Directors should reflect the experience of the Board as a whole, be fair and be comparable with that of other relevant Venture Capital Trusts that are similar in size and have similar investment objectives and structures. Furthermore, the level of remuneration should be sufficient to attract and retain the Directors needed to oversee the Company properly and to reflect the specific circumstances of the Company, the duties and responsibilities of the Directors and the value and amount of time committed to the Company's affairs. The articles of association provide that the Directors shall be paid in aggregate a sum not exceeding £100,000 per annum. None of the Directors are eligible for bonuses, pension benefits, Share options, long-term incentive schemes or other benefits in respect of their services as Non-Executive Directors of the Company. There are no planned changes to the Remuneration Policy last approved by Shareholders at the 2023 AGM.

 

Consideration of Remuneration

 

The Board does not have a separate Remuneration Committee, as the Company has no employees or executive directors. The Board has not retained external advisers in relation to remuneration matters but has access to information about Directors' fees paid by other companies of a similar size and type. As such, the Board as a whole will consider the remuneration of the Directors, however no director is involved in determining their own remuneration. The Board will review the remuneration of the Directors in line with the VCT industry on an annual basis, if thought appropriate. Otherwise, only a change in responsibilities is likely to incur a change in remuneration of any one Director or the remuneration policy itself.

 

Directors' Service Contracts

 

The Directors are engaged under letters of appointment and do not have service contracts with the Company.

 

Directors' Term of Office

 

The Directors' letters of appointment provide for three months written notice to be given by either party. Each Director will be subject to annual re-election by Shareholders at the Company's Annual General Meeting in each financial year.

 

Policy on Payment for Loss of Office

 

A Director who ceases to hold office is not entitled to receive any payment other than accrued fees (if any) for past services.

 

Consideration of Shareholder Views

 

The Company is committed to ongoing Shareholder dialogue and takes an active interest in voting outcomes. Where there are substantial votes against resolutions in relation to Directors' remuneration, the Company will seek the reasons for any such vote and will detail any resulting actions in the Directors' Remuneration Report. No views which are relevant to the formulation of the Directors' remuneration policy have been expressed to the Company by Shareholders, whether at a general meeting or otherwise.

 

Future Policy Table

 

The Directors are entitled only to the fees as set out in the table below. No element of Directors' remuneration is subject to performance factors. There are no other fees payable to the Directors for additional services outside of their contracts.

 

Component	How it Operates	Maximum Fee	Link to Strategy	Provisions to Recover or Withhold Sums
Annual Fee	Each Director receives a basic fee which is paid on a quarterly basis.	The total aggregate fees that can be paid to the Directors is calculated in accordance with the articles of association.	The level of the annual fee has been set to attract and retain high calibre Directors with the skills and experience necessary for the role. The fee has been benchmarked against companies of a similar size.	There are no provisions to recover or withhold sums.
Other benefits	The Directors shall be entitled to be repaid expenses.	Article 89 of the Company's Articles of Association permits for any director to be repaid reasonable expenses incurred in attending or returning from 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.	In line with market practice, the Company will reimburse the Directors for expenses to ensure that they are able to carry out their duties effectively.

 

 

Annual Remuneration Report

 

Directors' Fees

 

Details of each Director's contract is shown below. The Audit Committee Chair is entitled to an additional £2,000 and the Chair is paid an additional £5,000 to reflect the additional responsibilities of their role.  

 

	Date of Contract	Unexpired term of contract	Annual rate of Directors' fees*	Policy on payment for loss of office
			£
Jane Owen, Chair	23-Sep-10	none	25,000	none
Chad Murrin*	23-Sep-10	none	20,000	none
Julian Bartlett	08-Feb-22	none	22,000	none
Jamie Brooke	08-Jun-23	none	20,000	none
Sam Smith	08-Feb-24	none	20,000	none

 

*Chad Murrin stepped down as a Non-Executive Director of the Company on 19 July 2024.  

 

Single Total Figure (audited information)

 

The fees paid to Directors in respect of the year ended 29 February 2024 and the prior year are shown below:

 

	Emoluments for the year ended 29 February 2024*	% Change from 2023-2024	Emoluments for the year ended 28 February 2023	% Change from 2022-2023	Emoluments for the Year ended 28 February 2022	% Change from 2021-2022	Emoluments for the Year ended 28 February 2021	% Change from 2020-2021	Emoluments for the Year ended 29 February 2020
	£	%	£	%	£	%	£	%	£
Jane Owen, Chair	25,000	4	24,000	7	22,500	-	22,500	-	22,500
Chad Murrin*	7,778	n/a	19,000	6	18,000	-	18,000	-	18,000
Julian Bartlett	22,000	8	20,300	n/a	1,038	n/a	n/a	n/a	n/a
Tim Clarke*	-	n/a	6,600	n/a	18,000	-	18,000	-	18,000
Jamie Brooke**	14,762	n/a	-	n/a	-	n/a	-	n/a	-
Sam Smith**	1,260	n/a	-	n/a	-	n/a	-	n/a	-
	70,800		69,900		59,538		58,500		58,500
Employer's NI contributions	754		250		-		435		1,499
Total emoluments	71,554		70,150		59,538		58,935		59,999

 

None of the Directors are eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits in respect of their services as Non-Executive Directors of the Company.

 

* Chad Murrin and Tim Clarke stepped down from their positions as Non-Executive Directors on 19 July 2023 and 14 July 2022, respectively.

** Jamie Brooke and Sam Smith were appointed as Non-Executive Directors effective 8 June 2023 and 8 February 2024, respectively.

 

Information required on executive Directors, including the Chief Executive Officer and employees has been omitted because the Company has neither and therefore it is not relevant.

 

Directors' emoluments compared to payments to Shareholders:

 

		29 February 2024	28 February 2023
		£'000	£'000
Total Dividends paid/payable		1,075	8,123
Total Directors' emoluments		72	70

 

Directors' Share Interests (audited information)

 

At 29 February 2024, Jane Owen held 94,534 Venture Shares (2023: 82,563 Venture Shares, 24,624 A Shares, 24,378 B Shares), Julian Bartlett held 56,861 Venture Shares (2023: 36,413 Venture Shares), and Jamie Brooke and Sam Smith held nil Venture Shares as at 29 February 2024 (2023: nil).

 

No other connected parties to the Directors held any Shares at 29 February 2024 (2023: nil). Any Shares owned by the Directors were purchased at the same price offered to investors. There are no requirements or restrictions on Directors holding Shares in the Company.

 

Company Performance

 

The following performance charts compare the Total Return of the Venture Share Class over the period from 1 March 2017 to 29 February 2024 with the Total Return from notional investments in the FTSE All-Share index and FTSE Small-Cap index over the same period. The indices chosen are considered to be the most appropriate broad equity markets for comparative purposes.

 

Investors should be reminded that Shares in Venture Capital Trusts generally continue to trade at a discount to the NAV of the Company.

 

The Total Return does not include the initial 30% tax relief available to investors.

 

 

 

These charts have been prepared in accordance with Part 3 to Schedule 8 of the Companies Act 2006. The Company measures its performance against its target returns as detailed in the Strategic Report.

 

As highlighted above, the charts do not take into account the tax benefit of investing in a VCT.

 

Statement of Voting at the Annual General Meeting

 

The resolutions to approve the Directors' Remuneration Report and Directors' Remuneration Policy were passed at the Annual General Meeting on 19 July 2023. Details of the proxy votes in respect of the resolutions are as set out below:

 

	Voting for	Voting Against	Vote Withheld
Remuneration Report	99.79%	0.21%	0.03%
Remuneration Policy	97.51%	2.49%	0.03%

 

During the year, the Company did not receive any communications from Shareholders specifically regarding Directors' pay.

 

 

On behalf of the Board.

 

 

 

Jane Owen

Chair

31 May 2024

 

Directors' Report

 

The Directors are pleased to present the Directors' Report for the year ended 29 February 2024.

 

The information that fulfils the requirements of the Corporate Governance statement in accordance with rule 7.2 of the DTR can be found in this Directors' report on page 62 to 65 and in the Corporate Governance report on pages 43 to 52 all of which is incorporated into this Directors' report by reference.

 

Directors

 

The Directors of the Company during the year were Jane Owen, Chad Murrin, Julian Bartlett, Jamie Brooke and Sam Smith. Chad Murrin stepped down as Non-Executive Director on 19 July 2023.Jamie Brooke and Sam Smith were appointed to the Board on 8 June 2023 and 8 February 2024 respectively.

 

Principal Activity and Status

 

The principal activity of the Company is that of a Venture Capital Trust ("VCT") and its main activity is venture capital investment and management.

 

The Company has been approved as a VCT by HMRC, in accordance with Section 274 of the Income Tax Act 2007 and, in the opinion of the Directors, has conducted its affairs so as to enable it to continue to obtain such approval. In order to maintain its status under VCT legislation, a VCT must comply on a continuing basis with the provisions of Section 274 and further details can be found on page 62.

 

The Company is registered in England as a Public Limited Company (Registration number 07324448) and its Shares are listed on the main market of the London Stock Exchange.

 

The Company was not at any time up to the date of this report a close company within the meaning of S439 of the Corporation Tax Act 2010.

 

Post Balance Sheet Events

 

Details of post balance sheet events can be seen in note 25 to the Financial Statements.

 

Directors' indemnity

 

The Company has indemnified Directors against certain liabilities within its Articles of Association which may be incurred in the execution of their office. This indemnity remains in force as at the date of this report and will also indemnify any new directors that join the Board. The Company has, as permitted by Section 233 of the Companies Act 2006, maintained insurance cover on behalf of the Directors and Company Secretary, indemnifying them against certain liabilities which may be incurred by them in relation to the execution of their duties.

 

Research and Development

 

No expenditure on research and development was made during the year (2023: Nil).

 

Management arrangements

 

TPIM acts as Investment Manager to the Company and has done since incorporation, and as AIFM to the Company effective 12 September 2023.

 

To align its interests with Shareholders, TPIM earns a performance fee for the Venture Share Class if the total return (Net Asset Value plus distributions made) to holders of the Venture Shares exceeds their net initial subscription price by an annual threshold of 3% per annum, calculated on a compound basis. To the extent that the total return exceeds the threshold over the relevant period then a performance incentive fee of 20% of the excess is payable to TPIM. In addition, TPIM earned a performance fee for the A Share Class of 20% on distributions exceeding 100 pence per Share. The other principal terms of the Company's management agreement with TPIM are set out in note 6 to the Financial Statements.

 

The Board has evaluated the performance of the Investment Manager and reviewed the management contract. As required by the Listing Rules, the Directors confirm that in their opinion the continuing appointment of TPIM as Investment Manager on the terms agreed is in the best interests of the Shareholders as a whole. In reaching this conclusion the Directors have taken into account the performance of the Company, and the service provided by TPIM to the Company.

 

Substantial Shareholdings

 

As at the date of this report no disclosures of major shareholdings had been made to the Company under Disclosure and Transparency rule 5 (Vote Holder and Issuer Notification Rules).

 

Share Price Discount Policy

 

The Company has a share buy-back facility, allowing the buy back of Shares at no more than a 5% discount to the prevailing NAV, subject to the Directors' discretion, and within limits approved by Shareholders at the AGM. Shareholders should note that if they sell their Shares within five years of subscription, they forfeit any tax relief obtained. If you are considering selling your Shares, please contact the Investment Manager on 020 7201 8989.

 

Purchase of Own Shares

 

During the year, the Company purchased for cancellation 18,138 Venture Shares.

 

The Directors may exercise on behalf of the Company its powers to purchase its own Shares to the extent permitted by Shareholders and the articles of association.

 

Streamlined Energy and Carbon Reporting

 

The Company has outsourced operations to third parties and has no significant greenhouse gas emissions from its direct operations and so qualifies as a low energy user at under 40,000kWh and is therefore exempt from disclosures on greenhouse gas emissions and energy consumption.

 

During the year under review, the Company had investments in renewable energy, through its investment in a hydroelectric company. It also had investments in two companies which operate gas fired energy centres which have now been exited.

 

Share Capital

 

As at 29 February 2024 the Company's issued Share capital amounted to 63,113,620, Venture Shares of 1p each. As at that date none of the issued Shares were held by the Company as treasury Shares.

 

As at 29May 2024 the Company's issued Share capital amounted to 71,243,862 Venture Shares of 1p each. As at that date none of the issued Shares were held by the Company as treasury Shares.

 

There are no restrictions on the transfer of securities in the Company other than the Company's Share Dealing Code and other certain restrictions which may be impaired by law, for example, the Market Abuse Regulation.

 

The Company is not aware of any agreements between holders of securities that may result in restrictions on transferring securities in the Company. There are no securities of the Company carrying special rights with regards to the control of the Company in issue.

 

Annual General Meeting

 

The 2024 annual general meeting will be held on 23 July 2024.

 

Amendment of Articles of Association

 

The Company's articles of association may be amended by the members of the Company by special resolution (requiring a majority of at least 75% of the persons voting on the relevant resolution).

 

Appointment and Replacement of Directors

 

A person may be appointed as a Director of the Company by the Shareholders in general meeting by ordinary resolution (requiring a simple majority of the persons voting on the relevant resolution) or by the Directors. No person, other than a Director retiring by rotation or otherwise, shall be appointed or re-appointed a Director at any general meeting unless he is recommended by the Directors or, not less than seven nor more than 42 clear days before the date appointed for the meeting, notice is given to the Company of the intention to propose that person for appointment or re-appointment in the form and manner set out in the Company's articles of association.

 

Each Director who is appointed by the Directors (and who has not been elected as a Director of the Company by the members at a general meeting held in the interval since his appointment as a Director of the Company) is to be subject to election as a Director of the Company by the members at the first Annual General Meeting of the Company following his or her appointment. Thereafter all Directors are subject to re-election at each Annual General Meeting of the Company.

 

A person also ceases to be a Director if he or she resigns in writing, ceases to be a Director by virtue of any provision of the Companies Act 2006, becomes prohibited by law from being a Director, becomes bankrupt or is the subject of a relevant insolvency procedure, or becomes of unsound mind, or if the Board so decides following at least six months' absence without leave or if he or she becomes subject to relevant procedures under the mental health laws, as set out in the Company's articles of association.

 

Powers of the Directors

 

Subject to the provisions of the Companies Act, the memorandum and articles of association of the Company and any directions given by Shareholders by special resolution, the articles of association specify that the business of the Company is to be managed by the Directors, who may exercise all the powers of the Company, whether relating to the management of the business or not.

 

Conflicts of Interests

 

The Directors review the disclosure of conflicts of interest quarterly, with changes reviewed and noted at the beginning of each Board meeting. A Director who has a potential conflict of interest has the interest authorised and acknowledged by the Board. Procedures to disclose and authorise conflicts have been adhered to throughout the year.

 

Directors' Responsibilities

 

The Directors confirm that:

 

·      so far as each of the Directors is aware there is no relevant audit information of which the Company's auditor is unaware; and

·      the Directors have taken all steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

 

Auditor

 

BDO LLP is the appointed auditor of the Company and offer themselves for reappointment. In accordance with section 489 (4) of the Companies Act 2006 a resolution to reappoint BDO LLP as auditor and to authorise the Directors to fix their remuneration will be proposed at the forthcoming Annual General Meeting.

 

Going Concern

 

After making the necessary enquiries, the Directors confirm that they are satisfied that the Company has adequate resources to continue in business for at least the next 12 months from the date of approval of these financial statements to 31 May 2025. The Board receives regular reports from the Investment Manager, and the Directors believe that, as no material uncertainties leading to significant doubt about going concern have been identified, it is appropriate to continue to apply the going concern basis in preparing the Financial Statements. Further information on the Going Concern of the Company can be found in the Strategic report on pages 4 to 41and note 2 to the financial statements on page 82.

 

Annual Report

 

The Board is of the opinion that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the position, performance, strategy and business model of the Company.

 

The Board recommends that the Annual Report, the Report of the Directors and the Independent Auditor's Report for the year ended 29 February 2024 are received and adopted by the Shareholders. A resolution concerning this will be proposed at the forthcoming Annual General Meeting.

 

VCT Regulation

 

The Investment Policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HMRC. In order to maintain its status under Venture Capital Trust legislation, a VCT must comply on a continuing basis with the provisions of section 274 of the Income Tax Act 2007 as follows:

 

(1)  the Company's income must be derived wholly or mainly from shares and securities;

(2)  at least 80% of the HMRC value of its investments must have been represented throughout the year by shares or securities that are classified as "qualifying holdings";

(3)  at least 70% by HMRC value of its total qualifying holdings must have been represented throughout the year by holdings of "eligible shares";

(4)  at least 30% of funds raised in each accounting period must be invested in qualifying holdings by the anniversary of the end of the accounting period in which funds were raised;

(5)  at the time of investment, or addition to an investment, the Company's holdings in any one company must not have exceeded 15% by HMRC value of its investments;

(6)  the Company must not have retained greater than 15% of its income earned in the year from shares and securities;

(7)  the Company's shares throughout the year must have been listed on a regulated European market;

(8)  an investment in any company must not cause that company to receive more than £5 million in State aid risk finance in the 12 months up to date of the investment, nor more than £12 million in total (the limits are £10 million and £20 million respectively for a "knowledge intensive" company);

(9)  the Company must not invest in a company whose trade is more than seven years old (ten years for a "knowledge intensive" company) unless the company previously received State and risk finance in its first seven years, or the company is entering a new market and a turnover test is satisfied;

(10) the Company's investment in a company must not be used to acquire another business, or shares in another company; and

(11) the Company may only make qualifying investments or certain non-qualifying investments permitted by section 274 of the Income Tax Act 2007.

 

Environment

 

The management and administration of the Company is undertaken by the Investment Manager. TPIM recognises the importance of its environmental responsibilities, monitors its impact on the environment, and designs and implements policies to reduce any damage that might be caused by its activities. Initiatives designed to minimise the Company's impact on the environment include recycling and reducing energy consumption.

 

Anti-bribery Policy

 

The Company will not tolerate bribery under any circumstances in any transaction in which the Company is involved.

 

TPIM reviews the anti-bribery policies and procedures of all portfolio companies.

 

Environmental, Social, Employee and Human Rights Issues

 

As the Company has no employees, it does not maintain specific policies in relation to these matters. Due to the nature of the Company's activities, there being no employees and only four Non-Executive Directors, there are no Human Rights issues to report. Its investment in a company engaged in energy generation from renewable sources contributed to a reduction in carbon emissions.

 

Diversity

 

The Board of Directors comprises two female and two male Directors.

 

The Company does not have any employees or office space. As such the Company does not operate a diversity policy with regards to any administrative, management and supervisory functions. 

 

Employees

 

The Company has no employees and accordingly has no requirement to separately report on this area.

 

The Investment Manager is an equal opportunities employer who respects and seeks to empower each individual and the diverse cultures, perspectives, skills and experiences within its workforce. The Investment Manager places great importance on company culture and the wellbeing of its employees and considers various initiatives and events to support a positive work environment.

 

Investment and Co-Investment

 

The Company may co-invest with other funds managed by TPIM.

 

Matters Covered in the Strategic Report

 

The information that fulfils the reporting requirements relating to the following matters can be found on the pages identified.

 

Matter	Page Reference
Future Developments	4 to 11
Financial risk management objectives	94 to 96
Information on exposure to price risk, liquidity risk and cashflow risk	18 to 19

 

                                                                                            

Jane Owen

Chair

31 May 2024

 

Information Disclosures under the AIFM Directive

 

The Company AIFM, Triple Point Investment Management LLP, is authorised by the FCA under the AIFM directive. The Company is an Alternative Investment Fund ("AIF") managed by the AIFM. 

 

The Triple Point Group has an established Remuneration Policy which applies to all staff of Triple Point Investment Management LLP (the AIFM of the Company). The purpose of this policy is to ensure that the remuneration of its staff complies with various rules and regulations in place, including the AIFMD Remuneration Code (which can be located in SYSC 19B) (the "Code"), is consistent with and promotes sound and effective risk management and does not encourage risk-taking which is inconsistent with the risk profiles, rules or instruments of incorporation of the AIFM and the AIFs it manages. 

 

Employee remuneration disclosure 

 

The table below provides an overview of the following for all staff that carry out activities for or on behalf of the Company: 

·      The total amount of remuneration for the financial year, split into fixed and variable remuneration, including the number of staff.

·      The aggregate amount of remuneration for, and the number of Code Staff.

 

The AIFM has calculated the proportionate amount of relevant staff's remuneration who carry out activities for the AIF.

 

Total Remuneration	Headcount	Remuneration (£)
Fixed remuneration	31	1,019,446
Variable remuneration	26	448,102

 

Code Staff Remuneration	Headcount	Remuneration (£)
Fixed remuneration	6	240,027
Variable remuneration	4	300,655

 

 

Directors' Responsibility Statement

 

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with UK adopted international accounting standards and applicable law and regulations.

 

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Company financial statements in accordance with UK adopted international accounting standards. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss for the Company for that period.

 

In preparing these financial statements, the Directors are required to:

 

·      select suitable accounting policies and then apply them consistently;

·      make judgements and accounting estimates that are reasonable and prudent;

·      state whether they have been prepared in accordance with UK adopted international accounting standards, subject to any material departures disclosed and explained in the financial statements;

·      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business;

·      prepare a Directors' report, a strategic report and Directors' remuneration report which comply with the requirements of the Companies Act 2006.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006.

 

They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the Annual Report and accounts, taken as a whole, are fair, balanced, and understandable and provides the information necessary for Shareholders to assess the Company's performance, business model and strategy.

 

The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

 

The Directors have delegated the hosting and maintenance of the Company's website content to the Investment Manager and its materials are published on the Triple Point website www.triplepoint.co.uk.

 

Directors' responsibilities pursuant to DTR4

 

The Directors confirm to the best of their knowledge:

 

·      the financial statements have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company; and

 

·      the Annual Report includes a fair review of the development and performance of the business and the financial position of the Company, together with a description of the principal risks and uncertainties that they face.

 

On behalf of the Board.

 

Jane Owen
Chair
31 May 2024

 

Statement of Comprehensive Income

For the year ended 29 February 2024

 

		29 February 2024				28 February 2023
	Note	Revenue	Capital	Total		Revenue	Capital	Total
		£'000	£'000	£'000		£'000	£'000	£'000
Investment income	5	682	-	682		213	-	213
Gains on investments	12	-	261	261		-	187	187
Investment return		682	261	943		213	187	400
Investment management fees	6	102	922	1,024		113	1,014	1,127
Other expenses	7	704	-	704		638	-	638
		806	922	1,728		751	1,014	1,765
Loss before taxation		(124)	(661)	(785)		(538)	(827)	(1,365)
Taxation	10	-	-	-		-	-	-
Loss after taxation		(124)	(661)	(785)		(538)	(827)	(1,365)
Other comprehensive income		-	-	-		-	-	-
Total comprehensive loss		(124)	(661)	(785)		(538)	(827)	(1,365)
Basic & diluted (loss)/earnings per Share
A Shares (wound down)		-	-	-		0.10p	(2.93p)	(2.83p)
B Shares (wound down)		-	-	-		(1.44p)	33.75p	32.31p
Venture Shares	11	(0.23p)	(1.23p)	(1.46p)		(1.17p)	(7.30p)	(8.47p)

 

 

The total column of this statement is the Statement of Comprehensive Income of the Company prepared in accordance with UK-adopted International Accounting Standards (IAS). The supplementary revenue return and capital columns have been prepared in accordance with the Association of Investment Companies Statement of Recommended Practice ("AIC SORP" updated July 2022) in so far as it does not conflict with IAS.

 

All revenue and capital items in the above statement derive from continuing operations.

 

The Company has only one class of business and derives its income from investments made in shares and securities as well as from bank deposits and money market funds.

 

The accompanying notes on pages 82 to 97 form an integral part of these statements.

 

Statement of Financial Position

At 29 February 2024

Company No: 07324448

 

		29 February 2024		28 February 2023
	Note	£'000		£'000
Non-current assets
Financial assets at fair value through profit or loss	12	43,824		31,979
Current assets
Receivables	14	356		667
Cash and cash equivalents	15	18,199		18,222
Deferred proceeds		300		-
		18,855		18,889
Total assets		62,679		50,868
Current liabilities
Payables and accrued expenses	16	483		7,035
Current taxation payable		-		16
		483		7,051
Net assets		62,196		43,817
Equity attributable to equity holders
Share capital	17	632		593
Share premium		23,714		3,497
Share redemption reserve		174		9
Special distributable reserve		36,418		37,675
Capital reserve		3,119		3,780
Revenue reserve		(1,861)		(1,737)
Total equity		62,196		43,817
Shareholders' funds
Net asset value per A Share		-		1.00p
Net asset value per B Share		-		1.00p
Net asset value per Venture Share	20	98.55p		102.17p

 

 

The statements were approved by the Directors and authorised for issue on 31 May 2024 and are signed on their behalf by:

 

 

Jane Owen

Chair

31 May 2024

 

 

The accompanying notes on pages 82 to 97 form an integral part of these statements.

 

Statement of Changes in Shareholders' Equity

For the year ended 29 February 2024

 

	Issued Capital	Share Premium	Share Redemption Reserve	Special Distributable Reserve	Capital Reserve	Revenue Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Year ended 29 February 2024
Opening balance	593	3,497	9	37,675	3,780	(1,737)	43,817
Issue of Share capital	204	20,710	-	-	-	-	20,914
Cost of issue of Shares	-	(493)	-	-	-	-	(493)
Share buybacks	-	-	-	(17)	-	-	(17)
Cancellation of Shares	(165)	-	165	(165)	-	-	(165)
Dividends paid/payable	-	-	-	(1,075)	-	-	(1,075)
Transactions with owners	39	20,217	165	(1,257)	-	-	19,164
Loss before taxation	-	-	-	-	(661)	(124)	(785)
Taxation	-	-	-	-	-	-	-
Loss after taxation	-	-	-	-	(661)	(124)	(785)
Other comprehensive income	-	-	-	-	-	-	-
Total comprehensive loss for the period	-	-	-	-	(661)	(124)	(785)
Balance at 29 February 2024	632	23,714	174	36,418	3,119	(1,861)	62,196
The Capital Reserve consists of:
Investment holding gains					5,514
Other realised losses*					(2,395)
					3,119

 

 

	Issued Capital	Share Premium	Share Redemption Reserve	Special Distributable Reserve	Capital Reserve	Revenue Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Year ended 28 February 2023
Opening balance	430	26,328	7	5,052	4,607	(1,199)	35,225
Issue of Share capital	165	18,587	-	-	-	-	18,752
Cost of issue of Shares	-	(461)	-	-	-	-	(461)
Share buybacks	(2)	-	2	(211)	-	-	(211)
Cancellation of Share premium	-	(40,957)	-	40,957	-	-	-
Dividends paid/payable	-	-	-	(8,123)	-	-	(8,123)
Transactions with owners	163	(22,831)	2	32,623	-	-	9,957
Loss before taxation	-	-	-	-	(827)	(538)	(1,365)
Taxation	-	-	-	-	-	-	-
Loss after taxation	-	-	-	-	(827)	(538)	(1,365)
Other comprehensive income	-	-	-	-	-	-	-
Total comprehensive loss for the period	-	-	-	-	(827)	(538)	(1,365)
Balance at 28 February 2023	593	3,497	9	37,675	3,780	(1,737)	43,817
The Capital Reserve consists of:
Investment holding gains					4,445
Other realised losses					(665)
					3,780

 

*Contained within total other realised losses are the following that occurred during the year ended 29 February 2024: £239k relating to Shenval; £374k relating to Pixie; and £191k relating to Localz.

 

The capital reserve represents the proportion of Investment Management fees charged against capital and realised/unrealised gains or losses on the disposal/revaluation of investments. The unrealised element of the capital reserve is not distributable. The special distributable reserve was created on court cancellation of the Share premium account. The revenue reserve realised capital reserve and special distributable reserve are distributable by way of dividend.

 

At 29 February 2024 the total reserves available for distribution under the Companies Act are £32,162,000 (2023: £35,273,000). This consists of the special distributable reserve less the realised capital loss and less the revenue loss.

 

At 29 February 2024 the total reserves available for distribution under the VCT rules are £2,303,000 (2023: £3,561,000). To maintain VCT status, amounts in the special distributable reserve are not distributable until after the third accounting period following the relevant allotments of Share capital. Further information can be found in note 18.

 

Statement of Cash Flows

For the year ended 29 February 2024

 

	Year ended		Year ended
29 February 2024			28 February 2023
	£'000		£'000
Cash flows from operating activities
(Loss) before taxation	(785)		(1,365)
Net (gain) on investments during the period	(261)		(187)
Adjustment for: Interest on fixed deposits and money market funds	(576)		(66)
Cash flow used in operations	(1,622)		(1,618)
Decrease/(increase) in receivables	311		(391)
(Decrease) in payables	(292)		(488)
Cash flow used in operating activities	(1,603)		(2,497)
Adjustment for non-cash items:
(Decrease)/Increase in taxation	(16)		1
Net cash flows used in operating activities	(1,619)		(2,496)
Cash flows from investing activities
Purchase of financial assets at fair value through profit or loss	(11,884)		(11,381)
Disposal of financial assets at fair value through profit or loss	-		9,570
Interest on fixed deposits and money market funds	576		66
Net cash flows used in investing activities	(11,308)		(1,745)
Cash flows from financing activities
Issue of Shares*	20,222		18,086
Buyback of Shares	(182)		(211)
Dividends paid	(7,136)		(1,659)
Net cash flows from financing activities	12,904		16,216
Net (decrease)/increase in cash and cash equivalents	(23)		11,975
Reconciliation of net cash flow to movements in cash and cash equivalents
Cash and cash equivalents at 1 March 2023	18,222		6,247
Net (decrease)/increase in cash and cash equivalents	(23)		11,975
Cash and cash equivalents at 29 February 2024	18,199		18,222
* Net of Share issue costs and dividend reinvestment

 

The accompanying notes on pages 82 to 97 form an integral part of these statements.

 

Notes to the Financial Statements

 

1.       Corporate Information                     

 

The Financial Statements of the Company for the year ended 29 February 2024 were authorised for issue in accordance with a resolution of the Directors on 31 May 2024.

 

The Company applied for listing on the London Stock Exchange on 24 December 2010.

 

Triple Point Venture VCT plc is incorporated and domiciled in Great Britain and registered in England and Wales.  The address of the Company's registered office, which is also its principal place of business, is 1 King William Street, London, EC4N 7AF.

 

The Company is required to nominate a functional currency, being the currency in which the Company predominantly operates. The functional and reporting currency is pounds sterling (£), reflecting the primary economic environment in which the Company operates.

 

The principal activity of the Company is investment. The Company's investment strategy is to offer exposure to venture capital investments and to maintain liquidity in cash or cash-based funds.

 

2.       Basis of Preparation and Accounting Policies

 

Basis of Preparation

 

The Financial Statements of the Company for the year to 29 February 2024 have been prepared in accordance with UK-adopted international accounting standards and the applicable legal requirements of the Companies Act 2006 and comply with the Statement of Recommended Practice ("SORP"): "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued by the Association of Investment Companies ("AIC") in July 2022.

 

The Financial Statements are prepared on a historical cost basis except that investments are shown at fair value through profit or loss ("FVTPL"). The Company presents its Income Statement in a tri-columnar format to give Shareholders additional detail of the performance of the Company, split between items of a revenue or capital nature as required by the SORP.

 

From 1 January 2023, IAS 1 has been amended to introduce the concept Material Accounting Policy Information. The Company has performed a review of its existing accounting policies and updated where relevant. Other new standards coming into force during the year and future standards that come into effect after the year-end have not had a material impact on these financial statements. The Company has carried out an assessment of accounting standards, amendments and interpretations that have been issued by the International Accounting Standards Board and that are effective for the current reporting period. The Company has determined that the transitional effects of the standards do not have a material impact.

 

Going Concern

 

The Company's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Investment Manager's Review. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the next five years. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

 

The Financial Risk Management objectives and policies of the Company, including exposure to price risk, interest rate risk, credit risk and liquidity risk are discussed in note 19 to the financial statements.

 

The Company continues to meet day-to-day liquidity needs through its cash resources on hand. The Company's revenue comes predominantly from interest earned on its cash and liquid resources and to a lesser extent from the investments in Shenval (Hydroelectric power) and Modern Power Generation ("MPG"), a small lending business. The Company takes an active approach to manage liquidity and increase the return on cash held.

 

The Company continues to raise funds via new share issues to investors, and at the reporting date the Company had cash of £18.2 million and net current assets of £18.1 million (2023: £11.8 million). A further £7.6 million has been raised since the reporting date, further strengthening the Company's liquidity position. This cash is more than sufficient to enable the Company to continue as a going concern for the foreseeable future.

 

The major cash outflows of the Company continue to be the payment of dividends to Shareholders, costs relating to the funding of investments and management fees due to the Investment Manager. Dividends and, for the most part, new investments are discretionary and, in a time of stress the Investment Manager may allow the Company to defer payment of management fees.

 

The Directors have reviewed cash flow projections, including various scenarios comprising a plausible downside scenario and a severe downside scenario, whereby the Company does not raise any future capital. In both downside scenarios, the Company has sufficient financial resources to meet its obligations for at least 12 months from the date of this report being end of May 2025.

 

Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements.

 

Critical Accounting Judgements and estimates

 

The preparation of Financial Statements in conformity with UK-adopted international accounting standards requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses.

 

The estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgements.

 

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities relate to:

 

·      the valuation of unlisted financial investments held at fair value through profit or loss, which are valued on the basis noted below (under the heading Non-Current Asset Investments) and in note 12;

·      the recognition or otherwise of accrued income on loan notes and similar instruments granted to investee companies, which are assessed in conjunction with the overall valuation of unlisted financial investments as noted above.

 

The key estimates made by Directors are in the valuation of non-current assets and the assessment of unrealised gains and losses. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects that period or in the period of revision and future periods if the revision affects both current and future periods.

 

The carrying value of investments is disclosed in note 12. The critical accounting policies that are declared will not necessarily result in material changes to the financial statements in any given period but rather contain a potential for material change.

 

The main accounting and valuation policies used by the Company are disclosed in the notes below. Whilst not all of the significant accounting policies require subjective or complex judgements, the Company considers that the following accounting policies should be considered critical.

 

The Company has designated all fixed asset investments as being held at fair value through profit or loss; therefore, all gains and losses arising from investments held are taken to the Income Statement in the period in which they occur. Accordingly, all interest income, fee income, expenses and investment gains and losses are attributable to assets designated as being at fair value through profit or loss.

 

Investments are regularly reviewed to ensure that the fair values are appropriately stated. Unquoted investments are valued in accordance with current IPEV valuation guidelines, although this does rely on subjective estimates such as appropriate sector earnings or revenue-based multiples, forecast results of portfolio companies, asset values of subsidiary companies and liquidity or marketability of the investments held. Although the Company believes that the assumptions concerning the business environment and estimates of future cash flows are appropriate, changes in estimates and assumptions could require changes in the stated values.

 

This could lead to additional changes in fair value in the future. The Directors do not believe that there are any further key judgements made in applying accounting policies or estimates in respect of the Financial Statements.

 

Material Accounting Policies

 

These accounting policies have been applied consistently in preparing these Financial Statements.

 

New and amended standards and interpretations

 

A number of amended standards became applicable for the current reporting period. The Company did not have to change its accounting policies or make retrospective adjustments as a result of adopting these amended standards. The Board do not expect that these new or amended standards will have a material impact on the Company's financial statements.

 

The most significant of these standards are set out below:

 

New standards and amendments - applicable 1 January 2023

 

(a)      IFRS 17 Insurance Contracts

 

(b)      Classification of Liabilities as Current or Non-current - Amendments to IAS 1

 

(c)      Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2

 

(d)      Definition of Accounting Estimates - Amendments to IAS 8

 

(e)      Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to IAS 12

 

(f)      Sale or contribution of assets between an investor and its associate or joint venture - Amendments to IFRS 10 and IAS 28

 

FORTHCOMING REQUIREMENTS

 

The following standards and interpretations had been issued but were not mandatory for annual reporting periods ending on or before 29 February 2024.

 

(a)      Amendments to IAS 1 Presentation of Financial Statements

 

·           Non-current liabilities with covenants

·           Deferral of Effective Date Amendment (published 15 July 2020)

·           Classification of liabilities as Current or Non-current (Amendment to IAS1)

 

(b)      Lease liability in a Sale and Leaseback (Amendment to IFRS 16)

 

(c)      IAS 7 "Statement of Cash Flows" and IFRS 7 "Financial Instruments: Disclosures (Amendment - Supplier Finance Arrangements)".

 

Non-Current Asset Investments

 

The Company invests in financial assets with a view to profiting from their total return through capital growth. Consistent with the business model, these investments are managed, and their performance is evaluated on a fair value basis. Accordingly, upon initial recognition the investments are classified by the Company as "at fair value through profit or loss" in accordance with IFRS 9.

 

Non-current asset investments are included initially at fair value, which is taken to be their cost (excluding expenses incidental to the acquisition which are written off in the Statement of Comprehensive Income and allocated to "capital" at the time of acquisition). Subsequently the investments are valued at "fair value" which is the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date.

 

In the case of unquoted investments, fair value is established by using measures of value such as price of recent transaction, earnings or revenue-based multiples, discounted cash flows and net assets. This is consistent with IPEV valuation guidelines. Where price of recent transaction is used, the valuation is calibrated to a valid methodology. The Board believe that those investments valued based on the transaction price adjusted for business performance and market indicators are done so because the transaction price is still representative of fair value.

 

Where securities are classified upon initial recognition at fair value through profit or loss, gains and losses arising from changes in fair value are included in the Statement of Comprehensive Income for the year as capital items in accordance with the SORP. The profit or loss on disposal is calculated net of transaction costs of disposal. Investments are recognised as financial assets on legal completion of the investment contract and are de-recognised on legal completion of the sale of an investment.

 

The Company has taken the exemption permitted by IAS 28 "Investments in Associates and Joint Ventures" and IFRS 11 "Joint Arrangements" for entities similar to investment entities and measures its investments in associates and joint ventures at fair value. The Directors consider an associate to be an entity over which the Company has significant influence, through an ownership of between 20% and 50%. The Company's associates and joint ventures are disclosed in note 13.

 

Income

 

Investment income includes interest earned on bank balances, money market funds and investment loans and includes income tax withheld at source where appropriate. Dividend income is shown net of any related tax credit and is brought into account on the ex-dividend date.

 

Fixed returns on investment loans and debt are recognised on a time apportionment basis so as to reflect the effective yield, provided there is no reasonable doubt that payment will be received in due course.

 

Expenses

 

All expenses are accounted for on the accruals basis. Expenses are charged to revenue with the exception of the investment management fee which is charged 10% to the revenue account and 90% to the capital account recognising the significant increase to the Venture investments and the expected nature of returns from them.

 

The transaction costs incurred when purchasing or selling assets are written off to the Income Statement in the period that they occur.

 

Taxation

 

Corporation tax payable is applied to profits chargeable to corporation tax, if any, at the current rate in accordance with IAS 12 "Income Taxes". The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue on the "marginal" basis as recommended by the SORP.

 

In accordance with IAS 12, deferred tax is recognised using the balance sheet method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. The Directors have considered the requirements of IAS 12 and do not believe that any provision for deferred tax should be made.

 

Financial Instruments

 

The Company's principal financial assets are its investments and the accounting policies in relation to those assets are set out above. Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered.

 

An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities. Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument.

 

Financial assets and financial liabilities are recognised in the Company's Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument. At 29 February 2024 and 28 February 2023 the carrying amounts of cash and cash equivalents, receivables, payables, accrued expenses and short-term borrowings reflected in the financial statements are reasonable estimates of fair value in view of the nature of these instruments or the relatively short period of time between the original instruments and their expected realisation.

 

Financial Assets

 

The classification of financial assets at initial recognition depends on the purpose for which the financial asset was acquired and its characteristics. All financial assets are initially recognised at fair value. All purchases of financial assets are recorded at the date on which the Company became party to the contractual requirements of the financial asset.

 

The Company's financial assets principally comprise investments held at fair value and loans and receivables. The Company holds trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. The Company's loan and equity investments are held at fair value. Gains or losses resulting from the movement in fair value are recognised in the Company's Statement of Comprehensive Income at each valuation date.

 

Financial assets are recognised/derecognised at the date of the purchase/disposal. Investments are initially recognised at cost, being the fair value of consideration given. Transaction costs are recognised in the Consolidated Statement of Comprehensive Income as incurred.

 

Fair value is defined as the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction. Fair value is calculated on an unlevered, discounted cash flow basis in accordance with IFRS 13 and IFRS 9.

 

Derecognition of financial assets (in whole or in part) takes effect:

 

• when the Company has transferred substantially all the risks and rewards of ownership; or

• when the contractual right to receive cash flow has expired.

 

Financial liabilities

 

Financial liabilities are classified according to the substance of the contractual agreements entered into and are recorded on the date on which the Company becomes party to the contractual requirements of the financial liability.

 

All loans and borrowings are initially recognised at cost, being fair value of the consideration received, less issue costs where applicable. After initial recognition, all interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method.

 

The Company's other financial liabilities measured at amortised cost include trade and other payables which are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method. A financial liability (in whole or in part) is derecognised when the Company has extinguished its contractual obligations, it expires or is cancelled. Any gain or loss on derecognition is taken to the Statement of Comprehensive Income.

 

Issued Share Capital

 

The Company has now cancelled and repaid Shareholders in respect of both the A Shares and B Shares, and as a result the Company now only has one class of shares being the Venture Shares.

 

Venture Shares are classified as equity because they do not contain an obligation to transfer cash or another financial asset and each share has full voting, dividend and capital distribution rights.

 

Issue costs associated with the allotment of Shares have been deducted from the Share premium account in accordance with IAS 32. The Company had no external debt at the reporting date; consequently, all capital is represented by the value of Share capital, distributable and other reserves. Total Shareholder equity at 29 February 2024 was £62.2 million (2023: £43.8 million).

 

Cash and Cash Equivalents

 

Cash and cash equivalents representing cash available at less than three months' notice are classified as Financial Assets at amortised cost under IFRS 9.

 

Cash and cash equivalents comprises cash at bank and other highly liquid short-term investments redeemable or with a maturity of three months or less at the date of acquisition and subject to insignificant changes in fair value. For the purpose of the Cash Flow Statement, cash and cash equivalents comprises, cash at bank and money market funds. The carrying amount approximates fair value.

 

Reserves

 

The revenue reserve (retained earnings) and capital reserve reflect the guidance in the SORP. The capital reserve represents the proportion of Investment Management fees charged against capital and any realised/unrealised gains or losses on the disposal/revaluation of investments.

 

The special distributable reserve was created on court cancellations of the Share premium account, most recently and during the financial year on 16 August 2022 in respect of the Venture Share Class.

 

The revenue reserve, the portion of the capital reserve representing realised capital profits and losses less unrealised gains and the special distributable reserve are distributable by way of dividend. More information on the Company's available reserves is in note 18.

 

Foreign currencies

 

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction.

 

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Statement of Comprehensive Income under Revenue or Capital column wherever appropriate.

 

Dividends

 

Dividends payable are recognised as distributions in the financial statements when the Company's obligation to make payment has been established. Typically this is not until payment is made as the Company usually declares interim dividends opposed to final dividends.

 

3.       Segmental Reporting

 

The Directors are of the opinion that the Company only has a single operating segment of business, being investment activity.

 

4. Significant risk changes in the current reporting period

 

The Company has reviewed its exposure to climate related and other emerging business risks, but has not identified any new significant risks that could impact the financial performance or position of the Company as at 29 February 2024.

 

For a detailed discussion about the Company's performance please refer to the Chair's statement on pages 4 to 11. The financial position of the Company can be found on page 78.

 

All revenues and assets are generated and held in the UK. 

 

5.            Investment Income

 

	Year Ended 29 February 2024					Year Ended 28 February 2023
				Total					Total
				£'000					£'000
Interest receivable on bank balances				183					34
Liquidity Fund Holdings interest				403					-
Loan interest				96					179
				682					213

 

 

6.       Investment Management Fees

 

	Year ended 29 February 2024						Year ended 28 February 2023
					Total						Total
					£'000						£'000
Investment Management Fees					1,024						1,127

 

 

TPIM provides investment management services to the Company under an Investment Management Agreement dated 12 September 2023. From 12 September 2023, the Investment Manager was appointed AIFM and is now responsible for risk management and portfolio management.

 

The Investment Manager has full discretion under the Investment Management Agreement to make investments in accordance with the Company's Investment Policy from time to time. The agreement provides for an investment management fee of 2.00% per annum of net assets, payable quarterly in arrears. The appointment shall continue for a period of at least six years from the date of first admission of Venture Shares which was on 12 April 2019.

 

Performance fee

 

Triple Point earns a performance fee if the total return (net asset value plus distributions made) to holders of the Venture Shares exceeds their net initial subscription price by an annual threshold of 3% per annum, calculated on a compound basis. To the extent that the total return exceeds the threshold over the relevant period then a performance incentive fee of 20% of the excess is payable to Triple Point. Performance fees are assessed based on the VCT's audited year-end valuations (i.e. in February each year) and will be accrued in the accounts of the Company. High water marks apply. No performance fees have been earned by Triple Point in the current or prior year.

 

Fees paid to the Investment Manager for administrative and other services during the year were £142,000 (2023: £100,000).

 

The Investment Manager did not receive fees for services to investee companies in the current or prior year.

 

7.       Operating Expenses

 

All expenses are accounted for on an accruals basis.

 

Expenses are charged wholly to revenue, apart from management fees which are charged 90% to capital and 10% to revenue; any performance fees incurred are charged wholly to capital. Transaction costs incurred when selling assets are written off to the Income Statement in the period that they occur.

 

Operating expenses	Year ended				Year ended
	29 February 2024				28 February 2023
			Total				Total
			£'000				£'000
Financial and regulation costs			133				136
General administration			56				23
Fees payable to the Company's auditor for audit services			75				65
Fees payable to the Company's auditor for audit-related assurance services			-				13
Company secretarial services			24				22
Other professional fees			344				305
Directors' fees			71				70
Interest write-off			-				4
Interest payable			1				-
			704				638

 

VAT has been removed from the current year Audit fees and allocated to General Administration expenses.

 

8.       Auditor Remuneration

 

Fees paid to the Company's auditor, BDO LLP, are as follows:

 

	Year ended 29 February 2024						Year ended 28 February 2023
					Total						Total
					£'000						£'000
Fees payable to the Company's auditor:
for the audit of the Financial Statements					75						65
for other services					-						13
					75						78

 

BDO LLP were not appointed to provide any non-audit services to the Company during the year.

 

For the year ended 29 February 2024, fees (excluding VAT) payable to the Company's auditor for audit services were £74,890 (2023: £65,856). Fees payable to the Company's auditor for audit-related assurance services during the year were nil (2023: £12,500).

 

9.       Directors' Remuneration

 

	Year ended 29 February 2024		Year ended 28 February 2023
	Total		Total
	£'000		£'000
Jane Owen	25		24
Chad Murrin*	8		19
Tim Clarke**	-		7
Julian Bartlett	22		20
Jamie Brooke***	15		-
Sam Smith****	1		-
	71		70

 

*Resigned as a Director effective 19 July 2023

**Resigned as a Director effective 14 July 2022

***Appointed as a Director effective 8 June 2023

****Appointed as a Director effective 8 February 2024

 

The only remuneration received by the Directors was their Directors' fees. The Company has no employees other than the Non-Executive Directors. The average number of Non-Executive Directors in the year was three. Full disclosure of Directors' remuneration is included in the Directors' Remuneration report.

 

10.     Taxation

 

	Audited Year ended 29 February 2024	Audited Year ended 28 February 2023
	Total	Total
	£'000	£'000
Loss on ordinary activities before tax	(785)	(1,365)
Corporation tax @ 25% (28 Feb 2023 - 19%) Effect of:	(196)	(259)
Capital gains not taxable	(65)	(35)
Disallowed expenditure	21	10
Unrelieved tax losses arising in the period	-	(3)
Excess management expenses on which deferred tax not recognised	240	287
Tax charge/(credit) for the period	-	-

 

Capital gains and losses are exempt from corporation tax due to the Company's status as a Venture Capital Trust.

Investment companies which have been approved by HM Revenue & Customs under section 1158 of the Corporation Tax Act 2010 are exempt from tax on capital gains. The Directors are of the opinion that the Company has complied with the requirements for maintaining investment trust status for the purposes of section 1158 of the Corporation Tax Act 2010.

 

The Company has not provided for deferred tax on any capital gains or losses arising on the revaluation of investments.

 

Deferred tax asset of £1.1 million (2023: £0.9 million) has not been recognised as it is unlikely that the Company will generate sufficient taxable profits in the future to utilise these expenses.

 

11.     Earnings per Share

 

The loss per Venture Share is 1.46p (2023: loss of 8.47p) and is based on a loss from ordinary activities after tax of £0.8 million (2023: £3.3 million loss) and on the weighted average number of Venture Shares in issue during the period of 53,729,274 (2023: 38,672,163).  

 

There is no difference between basic or diluted Earnings per Share as there are no convertible securities.

 

 

12.     Financial Assets at Fair Value through Profit or Loss

 

Investments

Fair Value Hierarchy:

IFRS 13 requires disclosure of fair value measurement by level. The level of fair value hierarchy within the financial assets or financial liabilities is determined on the basis of the lowest level input that is significant to the fair value measurement.

Financial assets and financial liabilities are classified in their entirety into only one of the following three levels:

Level 1: quoted prices on active markets for identical assets or liabilities. The fair value of financial instruments traded on active markets is based on quoted market prices at the date of the Statement of Financial Position. A market is regarded as active where the market in which transactions for the asset or liability takes place with sufficient frequency and volume to provide pricing information on an ongoing basis. The quoted market price used for financial assets held by the Company is the current bid price.

Level 2: the fair value of financial instruments that are not traded on active markets is determined by using valuation techniques. These valuation techniques maximise the use of observable inputs including market data where it is available either directly or indirectly and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

Level 3: the fair value of financial instruments that are not traded on an active market (for example, investments in unquoted companies) is determined by using valuation techniques such as discounted cash flows. If one or more of the significant inputs is based on unobservable inputs including market data, the instrument is included in Level 3.

 

There have been no transfers between these classifications in the period. Any change in fair value is recognised through the Statement of Comprehensive Income.

 

All items held at fair value through profit or loss were designated as such upon initial recognition. Movements in investments at fair value through profit or loss during the year to 29 February 2024 are summarised below. The most critical estimates, assumptions and judgements relate to the determination of the carrying value of investments at "fair value through profit and loss" (FVTPL).

 

All investments held by the Company are classified as FVTPL and measured in accordance with the International Private Equity and Venture Capital (IPEV) valuation guidelines, as updated in December 2022. For investments actively traded on organised financial markets, fair value is generally determined by reference to Stock Exchange market quoted bid prices at the close of business on the date of the Statement of Financial Position, the Company does not have any quoted investments at the reporting date.

 

Unquoted investments are stated at fair value by the Directors at each measurement date in accordance with appropriate valuation techniques, which are consistent with the IPEV valuation guidelines:

i.   the price of a recent investment, if resulting from an orderly transaction, is assumed to represent fair value as of the transaction date. At every subsequent measurement date, the recent investment price may remain an appropriate indicator of fair value, however as its validity is eroded over time, adequate consideration will be given to the current facts and circumstances, including, but not limited to, changes in the market or changes in the performance of the portfolio company. We may solely rely on the most recent price for certain investments where other valuation methodologies may not be possible, notably where there are no current or short-term future revenues expected;

 

ii.  where a recent transaction is not deemed to be representative of fair value, a market approach may be considered. This technique involves the application of an appropriate multiple to a performance measure (typically revenue, but potentially also EBITDA) in order to derive the value of the business. Appropriate multiples are usually derived by reference to a current market-based multiple, as reflected in market valuations of comparable quoted companies or the price at which comparable companies have changed ownership, to the extent this information is publicly available. It must be acknowledged that as we invest in companies looking to disrupt their respective sectors or enter new technologies, direct comparators often do not exist. In the absence of relevant comparable calibration to the recent investment price validates that the valuation techniques using contemporaneous market inputs generate fair value at the investment date and that the same valuation techniques using updated market inputs as of each subsequent reporting date will generate fair value at each such date. This approach will notably help capture any risks associated with a lack of liquidity in the minority holding of an unquoted investment and may be further adjusted to reflect the trading performance of the portfolio company versus expectations as at the investment;

 

iii.  for investments in early or development stages, where there are no current or short-term future revenues expected, the most appropriate valuation approach to measure fair value may be based on calibrating the latest pricing round using qualitative milestones. These milestones provide a directional indication of the movement in fair value;

 

iv. where a number of discreet outcomes can be expected for an investment, a simplified probability-weighted expected return model may be used to determine fair value; and

 

v.  where appropriate, an income approach may be used.

 

Capital gains and losses on investments, whether realised or unrealised, are dealt with in the revenue and revaluation reserves and movements in the period are shown in the Income Statement. All figures are shown net of any applicable transaction costs incurred.

 

All investments are initially recognised at transaction price and subsequently measured at fair value. Changes in fair value are recognised in the Income Statement. A key judgement made in applying the above accounting policy relates to investments that are permanently written off. Where the value of an investment has fallen permanently below the price of investment, the loss is treated as a realised loss, even if the investment is still held.

 

The Board assesses the portfolio for such investments and, after agreement with the Investment Manager, will agree the values that represent the extent to which an investment loss has become realised. This is based upon an assessment of objective evidence of that investment's future prospects, to determine whether there is potential for the investment to recover in value.

 

Movements in Level 3 investments held at fair value through the profit or loss during the year to 29 February 2024 were as follows:

 

		Venture Shares
		Cost	Gains		Fair Value
		£'000	£'000		£'000
Year ended 29 February 2024:
Opening cost		27,762			27,762
Opening investment holding gains			4,217		4,217
Opening value at 1 March 2023*		27,762	4,217		31,979
Purchases at cost		11,884			11,884
Disposal**		(750)			(750)
Loss on disposal recognised in prior year			450		450
Net investment gains in current year			261		261
Closing value at 29 February 2024		38,896	4,928		43,824

 

		A Shares		B Shares		Venture Shares	Total
		£'000		£'000		£'000	£'000
Year ended 28 February 2023:
Opening Cost		860		6,105		17,785	24,750
Opening investment holding gains/(losses)		(94)		(2,040)		7,366	5,232
Opening fair value at 1 March 2022		766		4,065		25,151	29,982
Purchases at cost		-		-		11,381	11,381
Disposal proceeds		(233)		(6,656)		(2,681)	(9,570)
Adjustments between Share Classes		(246)		-		245	(1)
Realised (loss)/gain on disposal		(130)		551		592	1,013
Investment holding (losses)/gains		(157)		2,040		(2,709)	(826)
Closing fair value at 28 February 2023		-		-		31,979	31,979
Closing cost		-		-		27,512	27,512
Closing investment holding gains		-		-		4,467	4,467

 

* The split between opening cost and investment holding gains as at 1 March 2023 has been reallocated. The net effect of this adjustment on the opening fair value is nil.

 

** During the year ended 29 February 2024, the investment in Localz was disposed of for expected proceeds of £456k which have been valued at £300k to take into consideration uncertainties in future cash flows. Thus, a total loss of £450k when compared to the original investment cost of £750k has been recorded. As at the prior year ended 28 February 2023, £259k was classified as a realised loss with the balance of £191k being recognised as an unrealised loss. As at the year ended 29 February 2024, the remaining £191k has been reclassified as a realised loss under the Statement of Changes in Shareholders Equity.

 

Given the nature of the Company's venture capital investments, the changes in fair values of such investments recognised in these Financial Statements are not considered to be readily convertible to cash in full at the Statement of Financial Position date and accordingly any gains or losses on these items are treated as unrealised.

 

Unquoted investments in the portfolio are considered Level 3 assets, such that their values are not directly observable but are estimated using a combination of valuation methodologies which notably extrapolate from observable market data for comparable assets. The sensitivity of these valuations to a reasonable possible change in such assumptions is given in note 19.

 

Further details of the types of investments are provided in the Investment Manager's review and investment portfolio on pages 29 to 32 and 34 to 40 and details of entities over which the VCT has significant influence are included in note 13.

 

13.     Unconsolidated associates and joint ventures

 

The principal undertakings in which the Company's interest at the year-end is 20% or more are as follows:

 

Name	Registered address	Holding
Green Highland Shenval Limited	Q Court, 3 Quality Street, Edinburgh, EH4 5BP	22.09%

 

·      The investment is a combination of debt and equity.

·      Equity holding is equal to the voting rights.

·      The investment is held in the UK.

 

14.     Receivables

	29 February 2024						28 February 2023
					Total						Total
					£'000						£'000
Accrued income					23						-
Prepaid expenses					42						26
Other debtors*					291						641
					356						667

 

*Other debtors relate to interest receivable on investment loans.

15.     Cash and Cash Equivalents

 

	29 February 2024						28 February 2023
					Total						Total
					£'000						£'000
Cash at bank					18						18,222
Money Market funds					18,181						-
					18,199						18,222

 

Cash and cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to a lower risk of changes in value. Therefore, an investment normally qualifies as a cash equivalent only when it has a short maturity of, say, three months or less from the date of acquisition.

 

This comprises investment grade bonds and investments in money market funds.

 

16.          Payables and Accrued Expenses

 

	29 February 2024						28 February 2023
					Total						Total
					£'000						£'000
Trade Creditors					88						50
Other taxation and social security					6						-
Accrued expenses & deferred income					389						6,985
					483						7,035

 

 

17.    Share Capital

 

Ordinary shares of £0.01.
Year ended 29 February 2024
As at 1 March 2023	No of Venture Shares	No of A Shares	No of B Shares	Total Shares	Amount £'000
	42,720,246	9,777,285	6,758,795	59,256,326	593
Allotted during the period
20 March 2023	5,831,295	-	-	5,831,295	58
4 April 2023	2,093,574	-	-	2,093,574	21
5 April 2023	464,579	-	-	464,579	5
24 April 2023	161,021	-	-	161,021	2
6 July 2023	1,138,499	-	-	1,138,499	11
28 July 2023	1,347,801	-	-	1,347,801	13
4 September 2023 (DRIS)	210,732	-	-	210,732	2
27 October 2023	1,124,122	-	-	1,124,122	11
30 November 2023	2,118,892	-	-	2,118,892	21
21 December 2023	1,673,802	-	-	1,673,802	17
13 February 2024	4,247,195	-	-	4,247,195	42
Shares bought back and cancelled
10 March 2023	-	(9,777,285)	-	(9,777,285)	(97)
10 March 2023	-	-	(6,758,795)	(6,758,795)	(68)
4 August 2023	(6,958)	-	-	(6,958)	-
3 November 2023	(10,306)	-	-	(10,306)	-
12 December 2023	(874)	-	-	(874)	-
Ordinary Share Capital 29 February 2024	63,113,620	-	-	63,113,620	631

 

 

Year ended 28 February 2023

 

As at 1 March 2022	No of Venture Shares	No of A Shares	No of B Shares	Total Shares	Amount £'000
	26,445,431	9,777,285	6,758,795	42,981,511	430
Allotted during the period
1 March 2022	3,034,337	-	-	3,034,337	30
15 March 2022	1,172,794	-	-	1,172,794	12
1 April 2022	4,067,490	-	-	4,067,490	41
5 April 2022	1,698,756	-	-	1,698,756	17
8 July 2022	1,755,825	-	-	1,755,825	18
27 July 2022	698,271	-	-	698,271	7
29 July 2022	692,265	-	-	692,265	7
5 September 2022	196,331	-	-	196,331	2
4 November 2022	1,308,744	-	-	1,308,744	13
13 December 2022	1,859,708	-	-	1,859,708	19
Shares bought back and cancelled
18 August 2022	(17,665)	-	-	(17,665)	(1)
18 November 2022	(192,041)	-	-	(192,041)	(2)
Ordinary Share Capital 28 February 2023	42,720,246	9,777,285	6,758,795	59,256,326	593

 

 

At the reporting the date, the Company had one class of share, being the Venture Shares which have full voting, dividend and capital distribution rights.

 

During the year 20,200,780 new Venture Shares were issued at an average price per share of £1.03. The gross consideration received was £20.74 million (net £20.22 million). An additional 210,732 Venture Shares were issued in the year by way of a Dividend Reinvestment Scheme at an average price of £0.95. In the year Triple Point Venture VCT plc repurchased 18,138 Venture Shares at an average price per share of £0.94.

 

18.    Dividends

 

	Year ended 29 February 2024	Year ended 28 February 2023
	£'000	£'000
Venture Share Dividend 2.00p per share (2023: 3.00p)	1,075	1,187
A Share Dividend 9.42p per share	-	921
B Share Dividend 10.00p per share	-	676
B Share Dividend 79.00p per share	-	5,339
Total Dividend Paid	1,075	8,123

 

The Board announced an interim dividend of 2p per share, equivalent to £1,043,319 to Shareholders on 3 January 2024. The interim dividend was paid on 18 March 2024 to Shareholders on the register at the close of business on 29 February 2024 and as a result is not included in the table above.

 

At the reporting date, the Company had distributable reserves of £2,302,793. Following the year end, a further £8 million of previously converted share premium came available for distribution under the VCT rules.

 

 

19.    Financial Instruments and Risk Management

 

The Company's financial instruments comprise equity and fixed-interest investments, cash balances and liquid resources including debtors and creditors. The Company holds financial assets in accordance with its investment policy of investing mainly in a portfolio of VCT qualifying unquoted securities whilst holding a proportion of its assets in cash or near-cash investments in order to provide a reserve of liquidity.

 

The Investment Manager reports to the Board on a quarterly basis and provides information to the Board which allows it to monitor and manage financial risks relating to its operations. The Company's activities expose it to a variety of financial risks including market risk (comprising price risk, interest rate risk and foreign currency risk), credit risk and liquidity risk. Fixed Asset Investments (see note 12) are valued at fair value. Unquoted investments are carried at fair value as determined by the Directors in accordance with current venture capital industry guidelines. The fair value of all other financial assets and liabilities is approximated by their carrying value on the Statement of Financial Position.

 

Classification of Financial Instruments

 

The following table discloses the financial assets and liabilities of the Company in the categories defined by IFRS 9, "Financial Instruments".

 

	Total value	Financial Assets at amortised cost	Financial Liabilities at amortised cost	Fair value through profit or loss
	£'000	£'000	£'000	£'000
Year ended 29 February 2024
Assets:
Financial assets at fair value through profit or loss	43,824	-	-	43,824
Receivables	356	356	-	-
Cash and cash equivalents	18,199	18,199	-	-
	62,379	18,555	-	43,824
Liabilities:
Other Payables	483	-	483	-
	483	-	483	-
Year ended 28 February 2023
Assets:
Financial assets at fair value through profit or loss	31,979	-	-	31,979
Receivables	667	667	-	-
Cash and cash equivalents	18,222	18,222	-	-
	50,868	18,889	-	31,979
Liabilities:
Other Payables	7,035	-	7,035	-
	7,035	-	7,035	-

 

 

Fixed and current asset investments (see note 12) are valued at fair value. Unquoted investments are carried at fair value as determined by the Directors in accordance with IPEV guidelines as detailed within the Investment Manager's Review and note 12. The fair value of all other financial assets and liabilities are represented by their carrying value in the Statement of Financial Position. The Directors believe that the fair value of the assets held at the year-end is equal to their carrying value. The Company's creditors and debtors are initially recognised at fair value, which is usually transaction cost and subsequently measured at amortised cost using the effective interest method.

 

In carrying on its investment activities, the Company is exposed to various types of risk associated with the financial instruments and markets in which it invests. The most significant types of financial risk facing the Company are market risk, interest rate risk, credit risk and liquidity risk. The Company's approach to managing these risks is set out below together with a description of the nature and amount of the financial instruments held at the date of the Statement of Financial Position.

 

Market Risk

The Company's strategy for managing investment risk is determined with regard to the Company's investment policy, as outlined on page 14. The management of market risk is part of the investment management process and is a central feature of venture capital investment. The Company's portfolio is managed in accordance with the policies and procedures described in the Directors' Report on pages 62 to 65, having regard to the possible effects of adverse price movements, with the objective of maximising overall returns to shareholders.

 

Investments in smaller companies, by their nature, usually involve a higher degree of risk than investments in larger companies quoted on a recognised stock exchange, though the risk can be mitigated to a certain extent by diversifying the portfolio across business sectors and asset classes. The overall disposition of the Company's assets is regularly monitored by the Board.

 

Details of the Company's investment portfolio at the Statement of Financial Position date are set out on page 78.

 

70.5% (2023: 73.0%) by value of the Company's net assets comprises investments in unquoted companies held at fair value. In the context of continued market uncertainties caused by macroeconomic factors, we have used a sensitivity analysis of 20%.

 

A 20% overall decrease in the valuation of the unquoted investments at 29 February 2024 would have decreased net assets and the total profit for the year by £8.8 million (2023: £6.4 million). An equivalent change in the opposite direction would have increased net assets and the total profit for the year by the same amount.

 

10.0% of net assets (14.1% of portfolio value) is exposed to changes in the foreign exchange rate. An increase in the foreign exchange rate of 5% would decrease the net asset value by 0.5% (£0.3 million). A decrease in the foreign exchange rate of 5% would have the opposite effect, increasing the net asset value by 0.5% (£0.3 million). The 5% sensitivity used provides the most meaningful impact of average foreign exchange rate changes across the portfolio.

 

20.0% of the VCT's net assets (28.4% of portfolio value) are valued after assessing the developments of the investee company against performance milestone (e.g. cash or revenue targets) including PRI calibration. An increase in the average multiple used by 15% would increase the net asset value by 3.0%. A decrease in the average multiple used by 15% would decrease the net asset value by 3.0%. The 15% sensitivity used provides the most meaningful impact of average multiple changes across the portfolio.

 

50.3% of net assets (71.6% of portfolio value) is valued using Price of Recent Investment (PRI), and an increase in the average PRI used by 15% would increase the net asset value by 7.5%. A decrease in the average PRI used by 15% would decrease the asset value by 7.5%. However, the impact on the portfolio value might be less given that most investments have some downside protection in the form of liquidation preference. The 15% sensitivity used provides the most meaningful impact of average PRI changes across the portfolio.

 

Interest Rate Risk

 

Some of the Company's financial assets are interest bearing, of which some are at fixed rates and some at variable rates. As a result, the Company is exposed to interest rate risk arising from fluctuations in the prevailing levels of market interest rates.

 

Fixed Rate

The table below summarised the weighted average effective interest rates for its fixed interest-bearing financial instruments:

 

The Company has two fixed interest investment loans, one in relation to its investment in Modern Power Generation and the other in relation to its investment in Green Highland Shenval. The weighted average interest rate applicable to these loans is 19.2% (2023:19.2%).

 

Floating Rate

The Company's floating rate investments as at 29 February 2024 comprised interest-bearing money market funds. The Company's cash held at bank earns no interest due to the HMRC VCT rule which prohibits a VCT from earning more than 30% of its income in non-VCT qualifying income, and interest earned on bank balances is non-qualifying income.

 

The benchmark rate which determines the rate of interest receivable on its money market investment is the Bank of England base rate, which was 5.25% at 29 February. The amounts held in floating rate investments at the Statement of Financial Position date were as follows:                     

      

	29 February 2024		28 February 2023
	£'000		£'000
Cash on Deposit	19		18,222
Money Market funds	18,180		-
	18,199		18,222

 

A 1% change in the base rate would increase/decrease income receivable from these investments and the net assets for the year by £182,000 (2023: £182,000).

 

Foreign Currency Risk

 

Foreign currency risk is defined as the risk that the fair values of future cash flows will fluctuate because of changes in foreign exchange rates. With the exception of Adfenix AB, whose investment is denominated in Swedish Kroner ("SEK"), and Digital Therapeutics Inc (trading as Quit Genius), Airly Inc, and Degreed Inc, which are denominated in US dollars ("USD"), and Knok LDA, whose investments are denominated in Euros, the Company's financial assets and liabilities are in GBP. Substantially all of its revenues and expenses are also denominated in GBP, except for the aforementioned exceptions.

 

The Company's investments denominated in foreign currency comprise 14.1% of the Company's Investment Portfolio, not including cash. As a result, the Company does not consider the investments in Adfenix AB, Digital Therapeutics Inc (t/a Quit Genius), Airly Inc, Degreed Inc, Knok LDA and Nory to materially expose the Company to foreign currency risk.

 

Credit Risk

 

Credit risk is the risk that a counterparty will fail to discharge an obligation or commitment that it has entered into with the Company. The Investment Manager and the Board carry out a regular review of counterparty risk. The carrying value of the financial assets represent the maximum credit risk exposure at the Statement of Financial Position date.

 

	29 February 2024		28 February 2023
	£'000		£'000
Non-Qualifying investment loans	172		172
Qualifying investment loans	1,076		883
Cash on Deposit	19		18,222
Money Market funds	18,180		-
Receivables	356		667
	19,803		19,944

 

The Company's bank accounts are maintained with The Royal Bank of Scotland plc ("RBS") and Cater Allen Private Bank. Should the credit quality or financial position of RBS or Cater Allen deteriorate significantly, the Investment Manager will move the cash holdings to another bank. 

 

Credit risk relating to listed money market funds is mitigated by investing in a portfolio of investment instruments of high credit quality, comprising securities issued by major UK companies and institutions. Credit risk relating to loans to and preference shares in unquoted companies is considered to be part of market risk.

 

 

Liquidity Risk

 

Liquidity risk is the risk that the Company may not be able to meet its financial obligations as they fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions.

 

The Investment Manager and the Board continuously monitor forecast and actual cash flows from operating, financing, and investing activities to consider payment of dividends, repayment of trade and other payables or funding further investing activities. The Company ensures it maintains adequate reserves and will put in place banking facilities and it will continuously monitor forecast and actual cash flows to seek to match the maturity profiles of financial assets and liabilities. Further analysis on the Company's liquidity is included within the Going Concern assessment.

 

The Company's listed money market funds are considered to be readily realisable as they are of high credit quality as outlined above. Liquidity risk is managed on a continuing basis by the Investment Manager in accordance with policies and procedures laid down by the Board. The Company's overall liquidity risks are monitored on a quarterly basis by the Board. The Company maintains sufficient investments in cash and readily realisable securities to pay accounts payable and accrued expenses. At 29 February 2024, these investments were valued at £18.2 million (2023: £nil).

 

20.     Net Asset Value per Share

 

	Year ended 29 February 2024	Year ended 28 February 2023
Net asset value per share (p) Venture Shares	98.55	102.17

 

The net asset value per Share for the Venture Shares is 98.55p (2023: 102.17p) and is calculated based on net assets of £62.196 million (2023: £43.817 million) divided by the 63,113,620 Venture Shares in issue.

 

21.    Relationship with Investment Manager                         

 

During the period, TPIM received £1.2 million (2023: £1.2 million) (which has been expensed by the Company) for providing management and administrative services to the Company, of which £0.3 million remained outstanding at the year end.

 

The Investment Manager charged £24,000 (2023: £18,000) for the provision of Company Secretarial services. 

 

In addition, TPIM received £352,245 (2023: £335,880) of arrangement fees on Venture Share allotments during the year.

 

22.     Ultimate controlling party

 

In the opinion of the Board, on the basis of the shareholdings advised to them, the Company has no ultimate controlling party.

 

23.     Related Party Transactions

 

The Directors Remuneration Report on page 57 to 61 discloses the Directors' remuneration and shareholdings and transactions with the Investment Manager are disclosed in note 21.

 

24.     Commitments and Contingencies

 

There were no commitments or contingencies in place at the end of the financial year.

 

25.     Post Balance Sheet Events

 

The following events occurred between the balance sheet date and the signing of these financial statements:

 

The Company paid an interim dividend of 2 pence per share equivalent to £1.04 million on 18 March 2024.

 

The Company issued 8,130,242 shares following the year end. At the date of this report, the Company had 71,243,862 shares in issue.

 

The Company has made three investments since the period end: a £1.015m new investment into Treefera; a £150k follow-on investment into Tuza (formerly Statement); and an £804k follow-on investment into Nory.

 

Alternative Performance Measures

 

1.       ONGOING CHARGES RATIO

 

		29 February 2024		28 February 2023
		£'000		£'000
Management fee		1,024		1,127
Other operating expenses		704		347
Total management fee and other operating expenses	(a)	1,728		1,474
Average undiluted net assets	(b)	53,551,396		45,917,974
Ongoing charges ratio % (c = a/b)	(c)	3.23%		3.21%

 

The ongoing charges ratio for the Company for the year to 29 February 2024 was 3.23% (2023: 3.21%). Total annual running costs are capped at 3.50% of the Company's net assets. The ratio is calculated by dividing annualised ongoing charges by the average net asset value in the period.

 

The annualised ongoing charges represent the total expense for the year with the exclusion of performance and arrangement fees payable to Triple Point Investment Management LLP. No performance or arrangement fees were charged during the year.

 

Any excess will be met by Triple Point by way of a reduction in future management fees.

 

2.       TOTAL RETURN

 

		29 February 2024		28 February 2023
Closing NAV per share (pence)		98.55		102.17
Add back dividends paid (pence)		11.00		9.00
Adjusted closing NAV (pence)		109.55		111.17
Adjusted NAV per share as at the period end less NAV per share at 28 February 2023 (28 February 2022)	(a)	(109.55 - 111.17)		(111.17 - 119.55)
NAV per share at 28 February 2023 (28 February 2022)	(b)	111.17		119.55
Total return % (c = a/b)	(c)	(1.46%)		(7.01%)

 

 

Shareholder Information

 

Board

Jane Owen (Chair)

Sam Smith

Julian Bartlett

Jamie Brooke

 

Administrator, Company Secretary and Registered Office: 

Hanway Advisory Limited

1 King William Street

London EC4N 7AF

 

Registered Number

07324448

 

FCA Registration number

659605

 

Investment Manager

Triple Point Investment Management LLP

1 King William Street

London EC4N 7AF

 

Tel: 020 7201 8989

 

Independent Auditor

BDO LLP

55 Baker Street

London W1U 7EU

 

Solicitors

Howard Kennedy LLP

No. 1 London Bridge

London SE1 9BG

 

Registrars

Computershare Investor Services plc

The Pavilions

Bridgwater Road

Bristol BS13 8AE

 

VCT Taxation Advisers

Philip Hare & Associates LLP

6 Snow Hill

London EC1A 2AY

 

Bankers

The Royal Bank of Scotland plc

54 Lime Street

London EC3M 7NQ

 

Adviser (Venture Investments)

Shoosmiths LLP

1 Bow Churchyard

London EC4M 9DQ

 

Depositary

Indos Financial Limited

The Scalpel

18th Floor

52 Lime Street

London EC3M 7AF

 

Financial Calendar

 

Key Events		Date
Annual General Meeting		23 July 2024
Financial half-year end		31 August 2024
Announcement of half-year results		October 2024
Financial year end		28 February 2025