Investment risk: the Company's VCT qualifying investments will
be held in small and medium-sized unquoted companies which, by
their nature, entail a higher level of risk and lower liquidity
than investments in large quoted companies. The Directors and
Investment Manager aim to limit the risk attached to the portfolio
as a whole by careful selection and timely realisation of
investments, by carrying out rigorous due diligence procedures and
by maintaining a spread of holdings in terms of industry sector and
geographical location. The Board reviews the investment portfolio
with the Investment Manager on a regular basis.
Financial instrument risk: Financial Instrument risks are
described in note 15.
Financial 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. Accordingly a
proportion of the Company's assets are maintained in cash or cash
equivalents in order to be in a position to take advantage of
unquoted investment opportunities as they arise.
Internal control risk: the Board regularly reviews the system of
internal controls, both financial and non-financial, operated by
the Company and the Investment Manager. These include controls
designed to ensure that the Company's assets are safeguarded and
that proper accounting records are maintained.
Share Buy-Back Discount Policy
The Company has a share buy-back facility, committing to buy
back shares at no more than a 10% discount to the prevailing NAV,
subject to the Directors' discretion. We will be asking
shareholders at the Annual General Meeting to extend the facility
for the Company to purchase shares in the market for
cancellation.
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 TPIM on 020
7201 8989.
Environmental, Social, Employee and Human Rights Issues
Due to the nature of the Company's activities and having no
employees and only 3 Non-Executive Directors, there are no Human
Rights Issues to report. Its investment in companies engaged in
energy generation from renewable sources means it will contribute
to the reduction in carbon emissions.
Gender Diversity
The Board of Directors comprises 3 male Directors. The
Investment Manager has a female managing partner and has 35
employees and members of whom 20 are men and 15 are women.
InvestmentManager's Review
At 31 March 2014, qualifying investments represented 67% of net
assets. This includes GBP6.9 million of cash from the issue of C
shares which has three years from the date the shares were issued
to be invested in qualifying investments. If the C share cash is
excluded from the calculation then qualifying investments
represented 90% of net assets thus ensuring that the Company
continues to satisfy the requirement to be 70% invested in
qualifying investments.
The last year has seen considerable movement in the portfolio in
preparation for the return of funds to exiting Ordinary Class
shareholders in October and November 2013, with the realisation of
GBP16 million of investments in cinema digitisation companies.
Following the disposals, the Company retains investments in two
companies engaged in cinema digitisation. It has a single holding
in an enterprise providing crematorium management, whilst the
remaining portfolio of unquoted investments comprises companies all
involved in renewable electricity generation from sources including
solar PV, anaerobic digestion, landfill gas and hydro electric
power.
Each of these investments meets the Company's investment
criteria, with projected revenues generated by good quality
customers and the potential for steady returns.
Sector Analysis
The unquoted qualifying investments can be analysed as
follows:
Electricity Generation
Hydro Total
Industry Cinema Crematorium Solar Anaerobic Landfill Electric SME Unquoted
Sector Digitisation Management PV Digestion Gas Power Lending Investments
--------------- ------------- -------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------------- ----------- ---------- -------------
Investments
at 31 March
2013
--------- ----------- ---------- -----------
Ordinary
shares 19,167 1,320 4,031 3,550 0 1,000 - 29,068
A shares - - 2,085 1,125 875 - - 4,085
19,167 1,320 6,116 4,675 875 1,000 - 33,153
-------------- ----------- ---------- -----------
Investments
made during
the year
-------------- ------------- --------- ----------- ---------- ----------- -------------
Ordinary
shares - - 1,005 - - 1,253 250 2,508
A shares - - - - - - - -
- - 1,005 - - 1,253 250 2,508
-------------- ----------- ---------- -----------
Investments
realised
during
the year
-------------- ------------- --------- ----------- ---------- ----------- -------------
Ordinary
shares (16,042) (150) - - - - (250) (16,442)
A shares - - - (304) - - - (304)
(16,042) (150) - (304) - - (250) (16,746)
-------------- ----------- ---------- -----------
Investment
revaluations
during the
year
-------------- ------------- --------- ----------- ---------- ----------- -------------
Ordinary
shares 152 (32) 215 - - - - 335
A shares - - 72 - 15 - - 87
152 (32) 287 - 15 - - 422
-------------- ----------- ---------- -----------
Investments
at 31 March
2014
------------- -----------
Ordinary
shares 3,277 1,138 5,251 3,550 - 2,253 - 15,469
A shares - - 2,157 821 890 - - 3,868
Total GBP 3,277 1,138 7,408 4,371 890 2,253 0 19,337
------------- ----------- ---------- -----------
Total % 16.95% 5.89% 38.31% 22.60% 4.60% 11.65% 0.00% 100.00%
-------------- ------------- --------- ----------- ---------- ----------- -------------
VCT Sector Portfolio
Cinema Digitisation
The cinema digitisation portfolio continues to perform as
intended, with the investee companies benefitting from regular and
reliable revenues. The majority of these revenues come from the six
major investment grade Hollywood Studios under the globally
recognised Virtual Print Fee model, through which film studios pay
for the cost of the deployment of digital conversion over a number
of years. The companies in its portfolio own maintain and operate
digital equipment in cinemas in the UK, Germany, Italy and
Ireland.
Crematorium Management
The Company has one investment in a business that provides
crematory and mercury abatement services for the crematoria of a
London Borough.
Solar PV
The Company's investment portfolio includes 10 holdings in
businesses generating renewable electricity from residential solar
PV panels. We are pleased to report that the solar investment
portfolio continues to perform in line with expectations for
generating revenues, which are derived from the receipt of
index-linked Feed-in Tariffs (FiTs). We continue to monitor closely
the performance of each of these businesses.
Anaerobic Digestion
Since the publication of the last report, we are pleased that
the anaerobic digestion plants have continued to perform well and
have operated for a full season post start-up in line with
expectations. This is as a result of a good maize harvest in 2013
providing new feed stock improving the quality of the plants'
'fuel'. All three renewable energy generating companies operate 1
MW plants which generate electricity for sale to a utility company.
The electricity generation also attracts Feed-in Tariffs which
provide RPI linked revenues for a 20 year period from
commissioning.
Landfill Gas
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