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Triple Point VCT 2011 plc

LEI: 213800AOOAQA5XQDEA89

Interim Results

The directors of Triple Point VCT 2011 VCT plc are pleased to announce its Interim results for the six months to 31 August 2018.

For further information please contact Triple Point Investment Management LLP on 020 7201 8989. The Interim report will be available in full at www.triplepoint.co.uk

Financial Summary

Triple Point VCT 2011 plc ("the Company") is a Venture Capital Trust ("VCT"). The Investment Manager is Triple Point Investment Management LLP ("TPIM" and "Triple Point"). The Company was incorporated in July 2010.

· A Shares: On 30 April 2015 the A Share Class offer closed having raised £10.3 million with a total of 9,951,133 A Shares being issued.

· B Shares: On 29 April 2017 the B Share Class offer closed having raised £6.97 million with a total of 6,824,266 B Shares being issued.

Chairman's Statement

I am writing to present the Interim Financial Report for Triple Point VCT 2011 plc ("the Company") for the period ended 31 August 2018.

During the period the Company continued to monitor the ongoing operation of the A Share Class investments and completed the commissioning of the gas power plants in the B Share Class portfolio. We are pleased to report, both the A Share Class and the B Share Class portfolios remain fully invested and are performing in line with expectations. 

Furthermore during the period, the Company and Investment Manager were pleased to announce, subject to Shareholder approval, the launch of an Offer for subscription into the Venture Fund, a newly established share class within the Company. The new share class aims to invest in a portfolio of early stage businesses, with the potential for significant long term tax-free capital growth and long term tax-free income. Launching an Offer for the Venture Fund within the Company, as opposed to an offer by a new VCT, has amongst others, the benefit of cost savings for all shareholders.

Investment Portfolio

The Company's funds at 31 August 2018 were 98% invested in a portfolio of VCT qualifying and non-qualifying unquoted investments. It continues to meet the condition that 70% of relevant funds must be invested in qualifying investments.

The Investment Manager's review on pages 4 to 7 gives an update on the portfolio of investments in 12 small unquoted businesses.

A Share Class

The A Share Class has investments in six companies in the Hydroelectric Power sector which between them own seven hydroelectric schemes in the Scottish Highlands.

I am pleased to report the A Share Class has recorded a profit over the period of 1.62p per share and as at 31 August 2018 the NAV per share stood at 105.77p. On 28 June 2018 the A Class Shareholders were paid their second dividend of £273,656 equal to 2.75p per share, taking total dividends paid to A Shareholders to 6.75p per share. As previously reported, the Company's distributable reserves are restricted until March 2019, after which the Board expects the Company to be able to pay dividends at higher levels in order to meet the A Share Class target.

B Share Class

The B Share Class has investments in two companies that have each constructed a gas fired energy centre. In May 2018 both energy centres were successfully commissioned and are now fully operational.

The B Share Class has recorded a small loss over the period of 0.07p per share due to running costs of the Share Class exceeding income while investments are in their start up periods. At 31 August 2018 the NAV per share stood at 99.93p.

Specific Risks

The Board believes that the specific risks facing the Company are:

· Investment risk associated with the VCT's portfolio of unquoted investments;

· Risk of failure to maintain approval as a qualifying VCT; and

· Risk of inability to realise investments in order to return funds to investors in line with expectations.

The Board believes these risks are manageable and, with the Investment Manager, continues to work to minimise either the likelihood or potential impact of these risks within the scope of the Company's established investment strategy.

Outlook

In the Financial Accounts for the period ended 28 February 2018 we highlighted changes to the VCT landscape with the government, through its 'Financing Growth in Innovative Firms' consultation ("the Patient Capital Review") which emphasised the importance of VCT's in helping to provide investments into SMEs. Several changes proposed, including increasing a VCT's minimum qualifying percentage threshold from 70% to 80% which will come into effect for the Company from 6 April 2020.

Another key finding of the Patient Capital Review is that qualifying investments (from 6 April 2018) must now adhere to new deployment timelines with 30% of new funds required to be invested within the first 12 months compared to the previous timeframe of 3 years.

The Company, along with the Investment Manager, has identified and is currently in the process of introducing new procedures to ensure the transition required will have a minimal effect on the Company. The Board is pleased to report good progress has been made and the Company is on track to implement the required changes.

Venture Fund

In September 2018 the Company launched a new Venture Fund Offer of up to £15 million with an over-allotment facility of a further £15 million. Subject to shareholder approval, the intention of the Offer is to raise capital to acquire a portfolio of Qualifying Investments in early stage companies, capable of generating significant long term capital growth, whilst enabling investors to take advantage of the substantial tax reliefs available to Investors in VCT's, including 30% income tax relief on amounts invested.

The new Venture Fund share class targets significant capital growth by investing in innovative companies. These companies are sourced from Triple Point's Venture Network and have the potential to deliver ground-breaking technology or products, at scale, and to transform markets. The Offer builds on the Investment Manager's strong track record of early stage investing with a distinct approach.

If you have any questions about your investment, please do not hesitate to contact Triple Point on 020 7201 8990.

Jane Owen

Chairman

11 October 2018

Investment Manager's Review

Sector Analysis

During the period there has been no changes to the Unquoted Investment portfolio.

The unquoted investment portfolio can be analysed as follows:

* Other SME funding includes £1,515,000 of A Ordinary Share Class investments and £1,710,000 of B Ordinary Share Class investment in to a UK based LLP which provides finance to small and medium sized enterprises.

A Share Class

Hydro Electric Power - 67%

SME Funding Hydro Electric Power - 17%

SME Funding - Other - 16%

B Share Class

Gas Power - 75%

SME Funding - Other - 25%

The VCT was established to fund small and medium sized enterprises. It has two share classes with separate portfolios as detailed on page 4. At the period end the overall portfolio comprised investments in 12 small, unquoted companies in two sectors: electricity generation and SME funding.

On 18 September 2018 the Company launched an Offer for a new Venture Fund Share Class. This is discussed further in the Review & Outlook Section below.

With both remaining share classes fully invested, the Company and the Investment Manager continue to focus on asset optimisation and portfolio management.

The Company's portfolio consists of businesses which are fully operational and revenue generating. Generally, performance during the period across the portfolio has been in line with expectations with the A Share Class recording an uplift in NAV (including dividends) from the performance of its portfolio from 110.90p per share to 112.52p per share. The B Share Class recorded a 0.07p loss which has reduced the NAV from 100.00p per share to 99.93p due to the ongoing operational costs exceeding revenues during the construction phase of the assets.

Review & Outlook

A Share Class

The A Share Class has investments in six hydro-electric companies which between them own seven hydro-electric schemes in the Scottish Highlands. All seven schemes have been commissioned and are operational. The A Share Class also has investments in two other companies which provide funding to SMEs.

We are pleased to report that the performance of the hydro schemes has improved over the course of early 2018. Overall the A Share Class is pleased to have recorded a profit of 1.62p per share for the period.

The seven hydro-electric schemes are "run of river" plants which capture river flow agreed above a certain level as determined by the Scottish Environment Protection Agency (SEPA). Water flow is generally captured before a descent and flows down the penstock (pipe) to a turbine engine which produces electricity. The water is then returned to the river. The hydro companies benefit from government backed Feed-in Tariff payments based on output and also from the sale of the electricity produced to utilities or other power companies under Power Purchase Agreements (PPAs). The companies have continued to obtain better power prices than were originally forecast, currently earning an average of 6.19 pence per kWh compared to an expected 5 pence per kWh at the outset of the projects.

The hydro companies remain highly focussed on seeking further efficiencies and operating improvements.

The companies, together with other industry members and the British Hydropower Association, are continuing to lobby the Scottish Government to recognise the concern on business rates in the Hydro sector.

Two schemes received rateable values for business rates at the end of 2017-18 and the Scottish Government has applied a 25% relief for this year. From 1st April 2018, a 60% relief on business rates for hydro schemes has been applied. Longer term, the Scottish Government has confirmed that it will work alongside industry organisations to fast track a review of the Plant and Machinery Order, which should address business rates in the Hydro sector.

Although it was a very dry, May, June and July, overall we are pleased with the performance of the portfolio to date and we believe that, as the portfolio matures, there remains the opportunity to further enhance its value through continued strategic operational management.

B Share Class

The B Share Class remains fully invested with one Non-Qualifying Investment and two Qualifying Investments in companies operating gas fired energy centres. Both energy centres have now completed construction and were successfully commissioned during May 2018. These energy centres are containerised gas combustion engines that generate electricity for onward sale, especially at times when there is high demand for power. The UK is aiming to close its coal-fired power plants by 2025, and it is therefore expected that there will be a shortage in the supply of energy in the UK. Although renewable energy makes an increasing contribution, the irregular nature of its production means that other baseload sources will also be required to make up the deficit.

The companies have taken advantage of a gap in the market by constructing and operating gas fired energy centres to produce and sell electricity to customers. The energy centres utilise simple technology, provided by Rolls Royce, to deliver a reliable and secure energy supply.

Gas will be purchased from the National Transmission System and combusted in the engines. The electricity will then be exported to the National Grid and sold under a power purchase agreement. The companies will receive revenues from the sale of electricity and income from embedded benefits.

Embedded benefits cover a range of payments available to small electricity generators connected to the distribution network, rather than the transmission grid. Benefits can be earned for generating at peak times and for local distribution.

In addition generators can earn additional revenues by operating outside the peak 4-7pm hours to take advantage of 'intraday' and 'post-gate closure' price volatility.

Both qualifying companies detailed below completed the construction of their gas fired energy centres in May 2018 and are fully operational. The construction had been delayed, but to compensate for loss of revenue, liquidated damages are being charged to the contractor in accordance with the terms of the contract. A more detailed review will be included once the energy centres have sufficient operating history for meaningful analysis.

In the year ahead our focus will be on working with the companies to attempt to maximise their performance in line with the return targets of the Share Class.

TPIM have agreed to continue not to charge its management fees for the period on the amounts invested in gas power projects. These investments represent circa 75% of the B Share Class NAV, this position will be reviewed once these investments start to generate income for the B Share Class.

Non-Qualifying Investments

SME Funding

The Company has non-qualifying investments in four finance companies. These companies provide funds to a dedicated non-bank SME lending business which aims to address the financing needs of the UK SME market by providing business critical loans and asset finance to over 100,000 UK Corporate and SME customers.

Venture Fund

The Venture Fund was launched in September 2018, and subject to Shareholder approval, will primarily focus on providing funding to unquoted companies at an early stage in their lifecycle to help them grow and scale. For early stage companies, the journey from start-up to scale-up is usually the most uncertain time in its lifecycle. The Venture Fund's investment strategy was developed to help start-ups establish market fit faster and increase their chances of reaching scale. The Company's Venture Fund will typically make initial investments of between £50,000 and £2 million.

Working with industry experts, the Investment Manager has established a network of innovation specialists and venture capitalists (the "Triple Point Venture Network") which will work proactively with high-growth companies that are actively solving problems for large corporates. Together with the Triple Point Venture Network, the Investment Manager, on behalf of the Venture Fund, will identify innovative small businesses and make investment recommendations into small businesses once their products are validated by the market.

Launching an Offer for the Venture Fund within the Company, as opposed to an offer by a new VCT, has amongst other benefits, the potential for cost savings for all investors. Over the lifetime of the Company, there should be a saving per A Share and B Share in the fixed operating costs, as these will be shared with the Venture Fund. Furthermore, as part of introducing the Venture Fund and to improve liquidity, all shareholders will benefit from a proposed improved share buy-back facility, with a reduction in the target discount applied to NAV from 10% to 5%.

If you have any questions, please do not hesitate to call us on 020 7201 8990.

Claire Ainsworth

Partner

For Triple Point Investment Management LLP

11 October 2018

Investment Portfolio

Financial Assets including those held for sale 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. Where the Board considers the investee company's enterprise value has changed since acquisition, investments are held at a value measured using a discounted cash flow model or the value to be realised on disposal which is equivalent to fair value.

Directors' Responsibility Statement

The Directors have elected to prepare the Interim Financial Report for the Company in accordance with International Financial Reporting Standards ("IFRS").

In preparing the Interim Financial Report for the 6 month period to 31 August 2018, the Directors confirm that to the best of their knowledge this condensed set of financial statements has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union and that the Chairman's statement on pages 2 and 3 includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 of the Disclosure and Transparency rules of the United Kingdom's Financial Conduct Authority namely:

a) the Interim Financial Report includes a fair review of important events during the period and their effect on the Financial Statements and a description of specific risks and uncertainties for the remainder of the accounting period;

b) the Interim Financial Report gives a true and fair view in accordance with IFRS of the assets, liabilities, financial position and of the results of the Company for the period and complies with IFRS and the Companies Act 2006;

c) the Interim Financial Report includes a fair review of related party transactions and changes therein. There were no related party transactions for the accounting period; and

d) the Directors believe that the Company has sufficient financial resources to manage its business risks in the current uncertain economic outlook.

The Directors have reasonable expectations that the Company has adequate resources to continue in operational existence for at least the next 12 months. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.

This Interim Financial Report has not been audited or reviewed by the auditors.

Jane Owen

Chairman

11 October 2018

Uaudited Statement of Comprehensive Income

The total column of this statement is the Statement of Comprehensive Income of the Company prepared in accordance with International Financial Reporting Standards (IFRS). The supplementary revenue return and capital columns have been prepared in accordance with the Association of Investment Companies Statement of Recommended Practice (AIC SORP). All revenue and capital items in the above statement derive from continuing operations. This Statement of Comprehensive Income includes all recognised gains and losses. The accompanying notes are an integral part of this statement.

Unaudited Balance Sheet

The statements were approved by the Directors and authorised for issue on 11 October 2018 and are signed on their behalf by:

Jane Owen

Chairman

11 October 2018

The accompanying notes are an integral part of this statement.

Unaudited Statement of Changes in Shareholders' Equity

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 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 31 August 2018 the total reserves available for distribution are £176,000. This consists of the distributable revenue reserve net of the realised capital loss.

Unaudited Statement of Cash Flows

The accompanying notes are an integral part of this statement.

Non-Statutory Analysis - The A Share Fund

Non-Statutory Analysis - The B Share Fund