TPVC.L Regulatory News (TPVC)

21 July 2022

Triple Point Income VCT plc

(the "Company")

RESULTS FOR THE YEAR ENDED 31 MARCH 2022

The financial information set out in these statements does not constitute the Company's statutory accounts for the year ended 31 March 2022, 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 Income VCT plc, managed by Triple Point Investment Management LLP, today announces the results for the year ended 31 March 2022.

These results were approved by the Board of Directors on 20 July 2022.

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:

The Company's LEI is 213800IXD8S5WY88L245

Further information on the Company can be found on its website https://www.triplepoint.co.uk/current-vcts/triple-point-income-vct-plc/s1238/.

Financial Summary

Triple Point Income VCT plc ("the Company") is a Venture Capital Trust ("VCT"). The Investment Manager is Triple Point Investment Management LLP ("TPIM"). The Company was incorporated in November 2007 and has three share classes.

· C Ordinary Share Fund ("C Shares"): these are the shares issued in the Offer that closed on 27 May 2014. A total of £14 million was raised and 13,441,438 C Shares were issued. On 24 June 2021, a buyback of 28,350 shares was made at 74.97p per share bringing the total shares in issue to 13,413,088.

· D Ordinary Share Fund ("D Shares"): these are the shares issued in the Offer that closed on 30 April 2015. A total of £14.3 million was raised and 13,701,636 D Shares were issued.

· E Ordinary Share Fund ("E Shares"): these are the shares issued in the Offer that closed on 15 May 2017. Just under £30 million was raised and 28,949,575 E Shares were issued. On 24 June 2021, a buyback of 9,499 shares was made at 85.13p per share bringing the total shares in issue to 28,940,076.

The Strategic Report, the Corporate Governance Statement, the Directors' Remuneration Report on pages and the Directors' Report 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 Income VCT plc.

The Directors submit to the members their Annual Report and Financial Statements for the Company for the year ended 31 March 2022.

Key Highlights

· Dividends per C Share: 74.25p (Year ended 31 March 2021: 3.50p)

· Net Asset Value per C Share: 7.75p (Year ended 31 March 2021: 83.30p)

· Total Return per C Share1: 155.50p (Year ended 31 March 2021: 156.80p)

· Dividends per D Share: 46.75p (Year ended 31 March 2021: 5.00p)

· Net Asset Value per D Share: 8.67p (Year ended 31 March 2021: 59.59p)

· Total Return per D Share1: 125.42p (Year ended 31 March 2021: 129.59p)

· Dividends per E Share: 21.00p (Year ended 31 March 2021: 6.50p)

· Net Asset Value per E Share: 76.76p (Year ended 31 March 2021: 94.59p)

· Total Return per E Share1: 109.26p (Year ended 31 March 2020: 106.09p)

· Realisations of investments and loan repayments generated total proceeds for the Company of £2.98 million.

· Ongoing Charges Ratio2: 3.48% (2021: 2.88%)

1 Total Return is made up by current Net Asset Value plus Dividends paid to date. Total Return is defined as an Alternative Performance Measure ("APM"). Total Return, calculated by reference to the cumulative dividends paid plus net asset value (excluding tax reliefs received by shareholders), is the primary measure of performance in the VCT industry and Board considers Total Return to be the primary measure of shareholder value. The value to be distributed will also be subject to the performance fee payable on distribution and other relevant fees and costs, as a result the Total Return may be lower than indicated in this Annual Report.

2 Ongoing Charges Ratio is defined as an APM.

Strategic Report

Chair's Statement

I am writing to present the Financial Statements for the Company for the year ended 31 March 2022.

I am pleased to announce that during the year we completed the sale of a substantial part of our hydroelectric power portfolio ("Hydro Assets") held in the C, D, and E Ordinary Share Classes, following which a significant portion of the proceeds were distributed to shareholders during the year. This was achieved following the passing of a resolution at the 2021 Annual General Meeting to change the Company's Investment Policy. This removed the 16-year holding period for the C and D share classes which were wholly invested in Hydro Assets.

It is intended that the C and D Ordinary Share Classes be wound down and cancelled and residual cash distributed to the shareholders. Further details of this are provided on the next pages under each respective share class.

The Company's funds at 31 March 2022 are 83.98% invested in a portfolio of VCT qualifying and non-qualifying quoted and unquoted investments.

The Investment Manager's Review gives an update on the portfolio of investments in 10 small unquoted businesses.

C Share Class

During the year all the assets held in the C Shares, consisting of three hydroelectric companies in the Scottish Highlands, were sold. The Company had a loan facility in place for £0.3 million as at 1 April 2021 which was fully repaid in the year using proceeds from the disposal of the Hydro Assets.

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The Hydro Assets were sold at a premium to their carrying value for £29.85 million, which was based on an independent valuation of the assets undertaken in the prior year and reflected increased interest in the sector over recent months. We are delighted with this result for C shareholders which delivered a Total Return of 155.50 pence per share excluding tax relief as at 31 March 2022. The Investment Manager receives a performance fee of 20% on distributions made to investors over a hurdle of £1 per share and, therefore, the return for the year showed a small reduction over the period with a loss of 1.3 pence per share. As at 31 March 2022, the NAV stood at 7.75 pence per share3 and total dividends paid to C Shareholders to date are 147.75 pence per share.

The Company declared three separate dividends to C Class Shareholders totaling 74.25 pence per share in respect of the financial year. 1.75 pence per share was paid on 30 July 2021, 32.5 pence per share was paid on 23 December 2021 and 40 pence per share was paid on 14 January 2022. The payments made in December 2021 and January 2022 were distributions of the majority of the sales proceeds of the Hydro Assets. These dividends followed the 3.50 pence per share dividend paid during the last financial year.

A small amount of cash has been retained to ensure the C Share Class can meet all its working capital requirements. The Company will seek shareholder approval, at a general meeting, to wind down and ultimately cancel the C Share Class in due course. This process is expected to commence before the end of 2022.

Further information on the C Share Class is included in the Investment Manager's Review.

D Share Class

During the year, the majority of the assets held in the D Shares, consisting of five hydroelectric companies in the Scottish Highlands, were sold. The Share Class has one residual investment in Green Highland Shenval Ltd ("Shenval"). The Company had a loan facility in place for £2.0 million as at 1 April 2021 which was fully repaid in the year using proceeds from the disposal of the Hydro Assets.

We are delighted with this result for D shareholders which delivered a Total Return of 125.42 pence per share excluding tax relief as at 31 March 2022. The Investment Manager receives a performance fee of 20% on distributions made to investors over a hurdle of £1 per share and, therefore, the return for the year showed a reduction over the period with a loss of 4.17 pence per share. As at 31 March 2022, the NAV stood at 8.67 pence per share3 and total dividends paid to D Shareholders to date are 116.75 pence per share.

The Company declared two separate dividends to D Class Shareholders totalling 46.75 pence per share during the financial year. 1.75 pence per share was paid on 30 July 2021 and 45.00 pence per share was paid on 23 December 2021. The payment made in December 2021 was a distribution of the majority of the sales proceeds from the sale of the Hydro Assets. These payments followed the 5.00 pence per share dividend paid during the last financial year.

It is intended that the D Share Class transfers its investment in Shenval to the E Share Class in return for cash which will enable the D Shareholders to fully exit their investment. Following this realisation, the Company will seek shareholder approval, at a general meeting, to wind down and ultimately cancel the D Share Class. This process is expected to commence before the end of 2022.

Further information on the remaining D Share Class investment is included in the Investment Manager's Review.

3 To align its interests with Shareholders, the Investment Manager earns a performance fee of 20% on all distributions over 100 pence per share.

E Share Class

The E Share Class has a portfolio of investments spanning hydroelectric power, crematorium management, gas fired energy generation, solar photovoltaic ("PV") energy generation, controlled environment agriculture, and lending to small and medium-sized enterprises. Most of the Hydro Assets were sold during the year, leaving one remaining investment.

The E Share Class portfolio has recorded a profit over the period of 3.17 pence per share and as at 31 March 2022, the NAV stood at 76.76 pence per share. Total dividends paid to E Shareholders to date are 32.50 pence per share.

The Company declared three separate dividends to E Class Shareholders totalling 21.00 pence per share during the financial year. 3.50 pence per share was paid on 30 July 2021, 12.00 pence per share was paid on 23 December 2021 and 5.50 pence per share was paid on 14 January 2022. The payments made in December 2021 and January 2022 were a distribution of the majority of the sales proceeds of the Hydro Assets. These dividends follow the 6.50 pence per share paid during the last financial year.

It is intended that the E Share Class consolidates its investment in Shenval in return for cash and provide the E Share Class with a valuable asset which is generating income.

As reported in our 2021 Interim Report, availability issues impacted one of the engines at Green Peak Generation Limited ("Green Peak") following a water ingress issue. We are pleased to confirm that the fault has been resolved and the insurers have agreed to pay the full insurance claim for property damage and business interruption to the end of January 2022 (the Investment Manager's Report has further details). We are working with the Investment Manager to consider potential disposal options for the asset in order to return funds to E Share Class shareholders. In addition, where the Board receives excess cash generated from the gas fired energy centre or other assets in the share class, it will consider whether it is appropriate to declare an additional dividend.

The conflict in Ukraine has placed stress on the energy sector, with gas prices in particular seeing their highs from the end of 2021 being sustained. Whilst this has also caused increased buoyancy in electricity prices, the spread between gas and electricity has reduced on average and so the conflict has indirectly affected Green Peak. That said, the increased volatility in markets also provides opportunities to generate electricity in highly profitable periods and Green Peak is progressing talks with a new electricity trader to maximise these opportunities.

The Company's investments in rooftop solar companies continue to benefit from inflation linked subsidised revenue streams via four portfolios of rooftop solar PV systems that generate electricity across the United Kingdom. We continue to work with those companies to identify new portfolio opportunities, as there is an increased demand for companies to decarbonise their energy footprint.

The Company's investment in Perfectly Fresh Cheshire ("PFC") encountered several challenges over the last year, in relation to a significant period of scheduled downtime whilst improvement works were carried out, poor profitability, and slow progress on fundraising. Balancing that, it achieved a series of positive milestones including establishing strong product lines with a leading retailer, carrying out improvements to the existing growing facilities, and developing a robust business plan to give the company greater confidence in raising finance to enable a planned expansion to take place.

Further information on all E Share Class investments is included in the Investment Manager's Review.

Dividends

The Company declared and paid interim dividends during the year to C Share Class holders of 74.25 pence per share, D Share Class holders of 46.75 pence per share and the E Share Class holders of 21.00 pence per share.

It was discovered during the year that the Company had paid these distributions without having sufficient "distributable" reserves as defined under and required by the Companies Act 2006 (the "CA 2006"). As a result, the proportion of the dividends paid that were not "distributable" reserves at the time they were paid are technically unlawful distributions for the purposes of the CA 2006.

Share buy-backs

The Company, subject to distributable reserves and liquidity, considers individual cases to buy back the Company's shares in the market at a target price of a 10% discount to NAV.

During the year, the Company bought back and cancelled 28,350 C Shares at a price of 74.97 pence per share and 9,499 E Shares at a price of 85.13 pence per share.

VCT qualifying status

The Company has maintained its approved VCT 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. We will continue to work closely with the Investment Manager to ensure the Company maintains compliance with the scheme rules.

Outlook

The Board is pleased to have completed the sale of all of the Hydro Assets within the C Share Class and a substantial proportion in the D and E Share Classes enabling dividends to be paid to all shareholders. As previously discussed, It is intended that the E Share Class will consolidate its investment in Shenval which will enable the D Share Class to realise its final investment allowing both the C and D Share Classes to wind down and be cancelled at a General Meeting which should commence in 2022. 

The Board will be focused on optimising value for E Shareholders from their portfolio of assets including monitoring the proposed disposal of the remaining gas fired energy centre.

I would like to take this opportunity to thank Shareholders for their continued support, and our Investment Manager for their support and commitment.

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

David Frank

Chair

20 July 2022

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 ("Section 172").

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

Investment Policy

Investment Objectives

The Company's main focus is to generate returns from a portfolio of investments in companies based in the UK in order to make regular tax-free dividends.

The key objectives of the Company are to:

a) Pay regular tax-free dividends to investors;

b) Maintain VCT status to enable investors to benefit from the associated tax reliefs;

c) Reduce the volatility normally associated with early stage investments by applying its Investment Policy;

d) In respect of the C Shares and the D Shares, provide investors with the opportunity to exit if market conditions present such an opportunity; and

e) In respect of the E Shares, provide investors with the opportunity to exit between 10 and 12 years* following investment with a possible early partial return of funds to Shareholders if market conditions present such an opportunity.

\* The E Share Class is fully invested and the Company will not be making any further investments. 

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

The Company's Investment Policy has been designed to satisfy the legislative requirements of the VCT scheme and to provide stable and readily realisable returns. The Company's Investment Policy is directed towards new investments into cash generative businesses which are operating in stable or mature fields with a high-quality customer base and which can provide a positive return to investors. The Board may on occasion, where deemed appropriate, invest in less mature or stable fields where there is the opportunity for substantial growth and development. The investments will be made with the intention of growing and developing the revenues and profitability of the target businesses to enable them to be considered for traditional forms of bank finance and other funding. This, in turn, should enable the Company to benefit from refinance gains or from a favourable sale to a third party.

Although the landscape of VCTs has been affected, the Investment Policy of the Company will continue to aim for regular tax-free dividends, maintenance of the VCT qualifying status and to minimise the volatility associated with early stage investments.

In respect of Qualifying Investments, the Company will seek:

a) Investments on which robust due diligence has been undertaken;

b) Investments where there is access to regular material financial and other information;

c) Investments where it may be possible to mitigate capital losses through careful analysis of the collateral available; and

d) Investments where there is a strong relationship with the key decision makers.

Target Asset Allocation

The Company aims to invest its capital fully in VCT Qualifying Investments. Where this is not practicable, the long-term investment profile of the Company is expected to be:

· At least 80% in VCT Qualifying Investments; and

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

investments.

Qualifying Investments

The key ongoing objective of the Company is to generate an attractive return for investors, through a combination of tax-free income and capital appreciation.

The Company will pursue investments in a range of industries but the type of business being targeted is subject to the specific investment criteria discussed below. The objective is to build a portfolio of unquoted companies which are cash generative and, therefore, capable of producing income and capital repayments to the Company prior to their disposal by the Company.

Although invested in diverse industries, it is intended that the Company's portfolio will comprise companies with certain characteristics, for example clear commercial and financial objectives, strong customer relationships and, where possible, tangible assets with value. The Company will focus on identifying businesses typically with contractual revenues from financially sound counterparties or a stream of predictable transactions with multiple clients.

Businesses with assets providing valuable security may also be considered. The objective is to reduce the risk of losses through reliability of cash flows or quality of asset backing and to provide investors with tax-free income.

The criteria against which investment targets would be assessed will include the following:

a) An attractive valuation at the time of the investment;

b) Managed risk of capital losses;

c) The quality of the company's cash flows;

d) The quality of the businesses' counterparties, suppliers and market position;

e) The sector in which the business is active;

f) The quality of the company's assets;

g) The opportunity to structure an investment that can produce distributable income;

h) The potential for growing and developing the revenues and profitability of the company to enable it to be considered for traditional forms of bank finance and other funding; and

i) The ability to facilitate an exit which enables the Company to meet its key investment objective of returning funds in line with shareholder expectations.

As the value of investments increase the Company's Investment Manager 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

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 Group, being the Company and any subsidiary undertakings for the time being, (excluding intra-Group borrowings), shall not without the previous sanction of an ordinary resolution of the Company 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 different 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 will be valued in accordance with BVCA or similar guidelines under which investments are not normally re-valued above cost within 12 months of acquisition unless third party funding has occurred. A brief summary of the BVCA guidelines as it applies to 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;

· That this price is a proxy for fair value;

· In estimating fair value for an investment, the valuation methodology applied should be the most appropriate for a particular investment. Such methodologies, including the price of the recent investment, earnings multiples, net assets, discounted cash flows or earnings and industry valuation benchmarks, should be applied consistently; and

· If fair value cannot be reliably measured, transaction price is used for valuing investments where it is believed that this price is a proxy for fair value.

The December 2018 update to the IPEV Guidelines discourages the use of cost or price of a recent investment as a primary methodology for valuation. That change has had no impact on the portfolio's valuation as the Company has not made any investments recently and used the recent investment round. The majority of our portfolio is valued on a discounted cash flow basis.

Any quoted investments, if made, will be valued at prevailing bid prices.

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, 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 of income and/or realised gains to Shareholders. It is envisaged that the Company will distribute most of its net income each year by way of dividend, subject to liquidity.

The Company's ability to pay dividends is subject to the existence of realised profits, legislative requirements, and the available cash reserves.

Share Realisation Policy

TPIM intends to identify opportunities to realise investments in order to exit investors in the most efficient way possible.

Exits will typically be realised through sales to businesses, acquisitions by private equity or other investment funds. The proceeds of any realisation will be used to repay borrowings if applicable and to pay dividends to Investors.

Key Performance Indicators ("KPIs")

As a VCT, the Company's objectives are to provide Shareholders with up front tax relief, an attractive income and returns through capital appreciation and the payment of dividends.

The Board expects the Investment Manager to deliver a performance which meets the objectives of providing Shareholders with an attractive income and capital return. The Board has identified four primary KPIs, which are net asset value plus dividends paid, earnings per share, compliance with VCT legislation and ongoing charges ratio that it uses in its own assessment of the Company's performance.

These are intended to provide Shareholders with sufficient information to assess how the Company has performed against its objectives in the year to 31 March 2022, and over the longer term, through the application of its investment and other principal policies.

Total Return

NAV plus dividends paid is a measure of shareholder value that includes the current NAV plus cumulative dividends paid to Shareholders to date. The Charts show how the Total Return of each Share Class has developed since launch. Total Return is deemed an alternative performance measure.

C Share Class

The Net Asset Value per C Share is 7.75 pence per share as at 31 March 2022 compared to 83.30 pence per share at 31 March 2021 following substantial distributions being paid to shareholders. The Total Return is 155.50 pence per share as at 31 March 2022 compared to 156.80 pence per share at 31 March 2021. The small reduction in Total Return is a result of the Hydro Assets being sold for more than their carrying value and being offset by the Investment Manager's performance fee due on distributions4.

D Share Class

The Net Asset Value per D Share is 8.67 pence per share as at 31 March 2022 compared to 59.59 pence per share at 31 March 2021 following substantial dividends being paid to shareholders. The Total Return is 125.42 pence per share at 31 March 2022 compared to 129.59 pence per share at 31 March 2021. The reduction in Total Return is a result of the Hydro Assets being sold at more than their carrying value and being offset by the Investment Manager's performance fee which is due on distributions4.

4 The Investment Manager earns a performance fee of 20% on all distributions over 100 pence per share.

E Share Class

The Net Asset Value per E Share is 76.76 pence per share as at 31 March 2022 compared to 94.59 pence per share at 31 March 2021 following dividends of 21 pence per share being paid during the financial year. The Total Return has increased to 109.26 pence per share as at the reporting date from 106.09 pence per share as at 31 March 2021.

The Board and the Investment Manager continue to closely monitor the portfolio and seek to maximise value where possible.

Earnings per Share

The charts show the Company's earnings per share by share class and also shows the distinction between earnings generated by revenue and earnings generated by capital movements for the year ended 31 March 2022. The C Share Class and the D Share Class were established to provide an annual yield of five pence per share for the first six years, followed by a large capital distribution and then a smaller regular yield beyond that. An exit was secured for investors which realised a significant capital gain for investors in the year to 31 March 2022 which exceeded original returns expectations. The E Share Class was established to provide an annual return of five pence per share and to seek an exit realising capital for investors over a 10 to 12-year time horizon. The Company has realised some of the investments made to date and is seeking further opportunities to return funds to investors.

Compliance with VCT legislation

By making an investment in a Venture Capital Trust, Shareholders become eligible for several tax benefits under VCT tax legislation. This is, however, contingent on the Company complying with VCT tax legislation. The Board can confirm that throughout the year ended 31 March 2022, the Company continued to meet the relevant tests.

To achieve compliance, the Company must meet a number of tests set by Her Majesty's Revenue and Customs ("HMRC"). A summary of these steps is set out under "VCT Regulation".

Ongoing Charges Ratio

The Ongoing Charges Ratio5 is a ratio of annualised ongoing charges expressed as a percentage of the average Net Asset Value throughout the period. The annual running costs of the Company are capped at 3.5% of the Company's NAV, above which the Investment Manager will bear any excess costs.

The ongoing charges of the Company for the financial year under review represented 3.48% (2021: 2.88%) of the average net assets. The increase during the year is largely due to performance fees paid to TPIM and a reduction in NAV from distributions made

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 VCTs.

Investing in a VCT brings the benefit of tax-free dividends, as well as up-front income tax relief. The Company continues to meet the VCT qualification requirements which are continuously monitored by the Investment Manager and reviewed by the Directors. Investment classification by asset value and sector value are shown over the following pages.

5 This ratio is calculated using the AIC's "Ongoing Charges" methodology which can be found on their website https://www.theaic.co.uk/.  The Ongoing Charges ratio is deemed an alternative performance measure.

Investment classification for the C Share Class by asset value:

Investment Portfolio - C Share Class

Investment classification for the D Share Class by asset value and sector value:

Investment Portfolio - D Share Class

Investments by Sector - D Share Class

Investment classification for the E Share Class by asset value and sector value:

Investment Portfolio - E Share Class

** Please note that the percentage of qualifying investments in the above bar chart is not representative of the Company as a whole, whose total qualifying investments exceed the requisite 80% threshold.

Investments by Sector - E Share Class

VCT Regulation

VCTs were first introduced in the Finance Act 1995 to provide a means for private individuals to invest in unquoted companies in the UK. The Finance Act 2004 introduced changes to VCT legislation designed to make VCTs more attractive to investors. The current tax benefits available to eligible investors in VCTs include:

· Up-front income tax relief of 30% on a maximum investment of £200,000 per tax year on newly issued shares;

· Exemption from income tax on dividends received; and

· Exemption from capital gains tax on disposals of shares in VCTs.

Since the Finance Act 2004, the VCT rules have subsequently been amended under the Finance Act 2014 and The Finance (No 2) Act 2015. The Investment Manager, utilising advice from Philip Hare & Associates LLP, ensures continued compliance with any legislative changes.

The Company has been approved as a VCT by HMRC. To maintain this approval, the Company must comply with certain requirements on a continuing basis. Within three years from the effective date of provisional approval or later allotment at least 80% (from 1 March 2020, the percentage of the Company's investments held in "qualifying holdings" increased to 80% from 70%) of the Company's investments must comprise "qualifying holdings" of which at least 30% must be in eligible Ordinary Shares. Holdings acquired before 6 April 2018 using certain "protected monies" - holdings acquired using monies raised, or derived from monies raised, by the VCT before 6 April 2011 - are ignored when determining whether the VCT meets the 70% eligible shares condition. These investment criteria continue to be met.

Exit Programme

Although the initial mandate for the C and D Share Class was to hold the hydroelectric investments for up to 16 years, the Board put forward a resolution which was approved by shareholders at the 2021 AGM to remove this time period and proceed with a full disposal of the hydroelectric assets. As a result, during the year, the Company achieved a full exit for the C Class Shareholders and partial realisation for the D and E Class Shareholders following a disposal of the Hydro Assets.

The Company's exit programme is discussed in greater detail in the Investment Manager's Review and a copy of the Company's Share Realisation Policy is above.

The valuation of, and potential exit routes for, the Company's remaining investments are reviewed and discussed at Board meetings. The Investment Manager has successfully implemented exit plans for other VCTs under its management.

Borrowing

During the year, the Company repaid its secured facility of £2.3 million at a fixed rate of 4.5% per annum with Triple Point Lease Partners ("TPLP") on 1 February 2022 following the disposal of the hydroelectric assets.

Principal Risks, 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.

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 in the table. The Board does not consider the likelihood or impact of these risks to have changed in the year.

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 reviewed and updated at least twice a year to ensure that procedures are in place to identify principal and emerging risks. The purpose of the Company's risk management policies and procedures is not to eliminate risks, but to reduce them and to ensure that the Company is adequately prepared to respond to such risks and to minimise any impact if the risk materialises.

Details of the Company's internal controls are contained in the Corporate Governance Internal Control section and further information on exposure to risks including those associated with financial instruments is given in note 19 of the financial statements.

VCT Qualifying Status Risk: The Company is required at all times 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 on a quarterly basis. The Board has also appointed Philip Hare & Associates LLP to undertake an independent VCT status monitoring role.

Investment Risk: The Company's VCT qualifying investments are held in small and medium-sized unquoted investments which, by their nature, entail a higher level of risk and lower liquidity than investments in large, quoted companies. This could make it difficult to realise investments in line with the relevant strategy.

Mitigation: 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. Where possible, a member of the Investment Manager holds a seat on the board of the portfolio companies.

Financial Risk: As a VCT the Company is exposed to market price risk, credit risk, fair value risk, liquidity risk and interest rate risk. As most of the Company's investments involve a medium to long-term commitment and are 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 19.

Failure of Internal Controls 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.

Mitigation: The Board maintains a risk register which sets out the risks affecting both the Company and the investee companies in which the Company is invested. This risk register is reviewed and updated at least twice a year to ensure that procedures are in place to identify the principal risks which may affect the Company and its portfolio companies, mitigate and minimise the impact of those risks should they crystallise and to identify emerging risks and to determine whether any actions are required. This enables the Board to carry out a robust assessment of the risks facing the Company, including those risks that would threaten its business model, future performance, solvency or liquidity.

Liquidity Risk: The Company's financial assets include investments in unquoted equity securities which are not traded on a recognised stock exchange and which are illiquid. As a result, the Company may not be able to realise some of its investments in these instruments quickly at an amount close to their fair value in order to meet its liquidity requirements.

Mitigation: The Investment Manager reviews the cash flow forecasts, in the short and long term on a continuing basis. The Directors have reviewed these cash flow forecasts on a quarterly basis. The Company is comfortable that it will generate sufficient cash flow from its current investments to service shareholder returns and working capital requirements.

Emerging Risks

Climate Change and related legislation

The potential impact of climate change and any related legislation which may be enacted in respect of meeting the UK's climate change targets has been taken into account and an assessment of the key risks for each share class has been considered.

If a change in the Government's renewable energy policy were applied retrospectively to current operating projects this could adversely impact the market price for Shenval or the value of the green benefits earned from generating renewable energy. Further, performance of Shenval may be adversely affected by lower or more concentrated rainfall in Scotland. Nevertheless, the remaining hydroelectric asset continues to perform well, and as such performance will continue to be monitored closely. In respect of Green Peak, whilst increased penetration of battery energy storage systems may lead to increased competition with gas fired energy centre assets in the flexible generation market, they have the advantage of not having to be charged so may be likely to still have its place from a security of supply perspective. Related climate change policy risk may include increased carbon costs such as potential removal of the UK ETS exemption that the gas fired energy centre asset currently benefits from (by way of being below the 20MWth capacity threshold). Increasing ambient temperatures will have a negative impact on the efficiency and operating performance of both the gas fired energy centre and the solar PV systems.

The Controlled Environment Agriculture asset is protected from the impact of climate change as the climate is controlled and grown indoors in a sealed environment. The ambient CO2 levels are controlled and the facility inside is not impacted by floods or droughts.

As the Company has sold a substantial part of its Hydro Assets and has the intention of selling Green Peak once a favourable price and terms can be achieved, the emerging risk of climate change and related legislation has reduced.

Ukraine-Russia War (new)

In late February 2022, Russia began an invasion of Ukraine with devastating consequences for the country's citizens and major implications for wider humanity, the global economy and capital markets. The Company does not have any direct exposure to Russia, however, the Company is monitoring the potential wider macroeconomic consequences on the Company and its investee companies closely, including energy price volatility and further sanctions. Please refer the Investment Manager's Review, which illustrates the wider effects of the Ukraine-Russia war on the Company and its wider investments.

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 Report.

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 repaid its loan facility in full during the current year. More detail on this can be found in the Strategic Report. The Company continues to meet day-to-day liquidity needs through its cash resources and income from its investment portfolio.

In February 2022 there was a disposal of hydroelectric assets and accordingly, the C Share Class now hold no assets and the one remaining hydroelectric asset within the D Share Class will be transferred to the E Share Class following the publication of the Annual Report. The Company's revenue comes from predominantly secure and reliable counterparties. The hydroelectric revenue is contractual, with inflation linked Feed-in Tariff ("FiT") income and export income from a 12-month power purchase agreement. The rooftop solar business also benefits from contractual, and inflation linked income through the government FiT and Renewable Obligation Certification ("ROC") schemes.

PFC has in the year made progress in both establishing their product and improving on Research & Development ("R&D"), amidst the continued challenging food sector environment facing increase in price of raw materials and logistics costs. We do expect the heightened scrutiny of the food and farming sector to continue, from both a food security and an environmental point of view. PFC has presented a new business plan to help secure funding including diversification of the business into new sectors to open up to greater market opportunities and risk spreading. 

The Company had net current assets of £4.30 million (2021: net current liabilities of £1.34 million) and had cash balances of £3,831k (2021: £521k) (this does not include cash balances held within investee companies), which the Board believes are sufficient to meet current obligations as they fall due. Further detail on liquidity risk can be found in the principal risks, uncertainties and emerging risks section.

The only major cash outflow of the Company are the payment of management fees and discretionary dividends.

The Directors have reviewed cash flow projections which cover a period of at least 12 months from the date of approval of this report. These show that the Company has sufficient financial resources to continue to meet its day-to-day commitments for at least the next 12 months. Scenarios have been run which include the disposal of PFC and alternative scenario whereby PFC is held. Under both scenarios, the Company has sufficient resources to continue as a going concern for at least the next 12 months.

Viability Statement

The Association of Investment Companies Code of Corporate Governance 2019 requires the Board to assess the Company's viability over an appropriate period. The Directors have assessed the prospects of the Company over a longer period than 12 months required by the Going Concern provision.

The Board conducted this review for a period of five years, which is an appropriate time horizon, as investors are required to hold their investment for a period of five years in order to benefit from the associated tax reliefs which will have elapsed within this period.

The Board has determined that five years up to 31 March 2027 is the maximum timescale over which the future position of the Company can be forecast with a material degree of accuracy and therefore this is the appropriate period over which to consider its viability. The process to wind up the C and D share classes is expected to happen by the end of 2022 and a resolution will be put forward to shareholders following the transfer of the remaining asset in the D Share Class to the E Share class.

As part of the assessment, the Company undertook various scenario testing with regards to the disposal of PFC. In the hold scenario it was assumed that the Company would make no further distributions to shareholders until investments are exited. On realisation, it was assumed a distribution to shareholders is made and sized to ensure enough cash is retained to meet the working capital needs of the VCT for the next 5 years.

In order to assess this requirement, the Board regularly considers the Company's strategy and considers the Company's current position. It also carries out a robust assessment of the principal risks, including future performance and liquidity. 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. 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:

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

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

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

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

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) of the CA 2006 when performing their duty and forms the directors' statement required under section 414CZA of that CA 2006.

Stakeholder Engagement

This section describes how the Board engages with its key stakeholders, how it considers their interests and the outcome of the engagement when making its decisions, the likely consequences of any decision in the long-term, and further ensures that it maintains a reputation for high standards of business conduct.

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 CA 2006. Principal decisions have been defined as those that have a material impact to the Company and its key stakeholders.

Dividends

The Company declared and paid interim dividends during the year to C Share Class holders of 74.25 pence per share, D Share Class holders of 46.75 pence per share and the E Share Class dividend of 21.00 pence per share.

It was discovered during the year that the Company had paid these distributions without having sufficient "distributable" reserves as defined under and required by the CA 2006. As a result, these distributions are technically unlawfully distributions under the CA 2006. The Company will propose resolutions at a general meeting on 2 September 2022 to rectify the payment of the unlawful distributions and release the directors of the Company (who were directors of the Company at the time the unlawful distributions were made) and the shareholders who received them, from any and all liability arising thereunder. The Investment Manager has also implemented internal controls to ensure this issue is not repeated in the future. Further information is detailed in note 24 to the financial statements.

Amendment of Company's Investment Policy and Disposal of hydroelectric portfolio

As noted in the Chair's statement, all of the Hydro Assets in the C Share Class and a substantial part of the Hydro Assets in the D and E Share Class were sold. This was achieved following a passing of a resolution at the 2021 Annual General Meeting to change the Company's Investment Policy which removed the 16-year holding period for the C and D share classes which are wholly invested in the hydroelectric portfolio. This sale formed part of a competitive sales process where a number of bids were submitted. The Board carefully considered all bids during the process and selected the preferred bidder based on a number of important criteria including total consideration, level of offer conditionality and acceptance of share purchase agreement terms.

Investment Manager's Review

Sector Analysis

We are pleased to present our annual review for the year ended 31 March 2022.

This year we sold a majority of hydroelectric assets in the C, D, and E Share Class enabling the return of net proceeds to shareholders following which the investment in PFC becomes the largest investment holding within the Company. Further information on the next steps for all the Share Classes are set out below and in the Chair's Statement.

Although we were very fortunate to be able to operate effectively with remote and home working through the Covid-19 restrictions, we were excited to see a return to the office for our staff to bring everyone back together again. Nevertheless, we saw the benefit of staff being able to work from home, and as such, we currently operate with employees working 50% of their time in the office and 50% at home.

As noted in the Chair's Statement, the C Share Class has now fully divested of all the remaining hydroelectric assets, the D Share Class has only one hydroelectric asset remaining and the E Share Class has a diverse portfolio of 10 companies spanning hydroelectric power, rooftop solar, crematoria, and controlled environment agriculture. It is intended that the C and D Ordinary Share Classes be wound down and cancelled and residual cash distributed to the shareholders. In respect of the D Share Class, this will require the realisation of its remaining holding in Shenval, which is also held partly by the E Share Class. It is intended that the E Share Class consolidate its investment in Shenval in return for cash which will enable the D Share Class to fully exit and provide the E Share Class with a valuable asset generating an income. The Company will seek share approval, at a general meeting, to wind down and ultimately cancel the C and D Share Classes in due course. It is anticipated that the cancellation will commence in late 2022.

C Share Class

As set out in the Chair's Statement, during the year all the C Share Class assets, consisting of three hydroelectric companies in the Scottish Highlands, were sold. A small amount of cash has been retained to ensure the C Share Class can meet all its working capital requirements.

D Share Class

During the year, the majority of D Share Class assets, consisting of five hydroelectric companies in the Scottish Highlands were sold. The Share Class has an interest in Shenval which remains.

It is intended that the E Share Class consolidate its investment in Shenval in return for cash which will enable the D Share Class to fully exit, and provide the E Share Class with a valuable asset generating an income. 

Review of Portfolio

E Share Class

Solar Energy

The Company holds an investment in four portfolios of rooftop solar PV systems through the following investee companies:

· Green Energy for Education Limited ("GEFE"), which owns a portfolio of 103 systems on residential rooftops in East Anglia;

· Campus Link Limited ("CMP"), which owns a portfolio of 36 systems on residential rooftops in South West England;

· Digima Limited ("DIG"), which owns a portfolio of 104 systems on residential rooftops in East Anglia; and

· Digital Screen Solutions Limited ("DSS"), which owns a portfolio of 323 systems on residential rooftops in Northern Ireland.

The Investment Manager has helped the companies to negotiate and appoint new asset management contracts with an experienced third party, which are designed to improve portfolio reporting and performance. There are several individual sites which have not been communicating and a programme is being developed to ensure these can be brought back online. The Investment Manager on behalf of DSS is also engaging with Ofgem relating to the Company's 2020/2021 yearly submission for ROC, which is being challenged. In terms of performance overall, GEFE is performing in line with expectations, CMP is exceeding expectations, and DIG and DSS are slightly behind expectations.

Hydroelectric Power

The Board, supported by the Investment Manager, put forward a resolution at the 2021 AGM to amend the Company's investment policy to reduce the holding period of the assets in the C and D Share Class which allowed for the disposal and sale of the hydroelectric assets which was considered an opportune time to optimise value for shareholders. This was on the basis of favourable market conditions, reflecting low discount rates, scarcity of in demand hydroelectric assets with inflation-linked FiT Income and demand for assets with a long c.15 year remaining FiT period.

As announced on 29 November 2021 and 13 December 2021, a substantial part of the hydroelectric assets in the C, D and E Ordinary Share Class, were sold in two tranches for a total consideration of £31,419,183. Following these sales, the remaining hydroelectric asset is Shenval which is held by the D and E Share Classes. The hydroelectric asset sale followed a competitive process, whereby bids were received from all invited bidders comprising some of the leading energy infrastructure investors in the UK with a strong understanding of small scale run of the river hydroelectric assets. Following an analysis of the bids, Triple Point Energy Efficiency Infrastructure Company plc ("TEEC") were chosen as the preferred bidder with reference to key criteria of: consideration, conditionality of the bid and acceptance of share price agreement terms. At the conclusion of the process, TEEC's final offer was considered the most attractive for the Company. TEEC is also managed by TPIM, and therefore additional measures were implemented from the outset and carefully monitored to manage any potential conflict of interest appropriately, including obtaining a third-party valuation.

We are very pleased with the outcome of the sales process for the Shareholders, and the consequential return of the net proceeds to them. At the appropriate time, a resolution for the wind down and cancellation of the C and D Share Class will be put forward to shareholders.

Shenval, the remaining hydroelectric interest in the D and E Share Classes, is a scheme in the Scottish Highlands, which has been commissioned and is operational. Small-scale hydroelectric is highly efficient, and it remains one of the cheapest forms of renewable electricity per unit. Shenval continues to benefit from UK government backed FiT payments based on output and from the sale of the electricity produced to utilities or other power companies under power purchase agreements. Shenval underperformed during the 12 months to 31 March 2022 at c.24% below revenue expectations mainly due to adverse weather conditions. Hydroelectric power generation from run-of-river schemes such as the site operated by Shenval is weather dependent and one year's performance should not be taken as indicative of future performance. The turbine itself is operating well, however, the nine months to December 2021 were exceptionally dry across the Scottish Highlands. In addition, the site was unable to generate electricity for six weeks between April and May 2021 due to Scottish and Southern Electricity grid constraints, a factor outside of Shenval's control.

Hydroelectric companies, together with other industry members and the British Hydropower Association ("BHA") have continued to lobby the Scottish Government over the last year on business rates in the hydroelectric sector. However, the assessors have become entrenched in their position and furthermore appeals against the 2010 valuations are yet to resolved and cases from 2017 are nowhere near consideration. It now looks unlikely that the assessors are going to relent to reduce valuations for the hydroelectric sector to bring them into line with other renewable technologies. The 60% relief introduced by the Scottish Government in 2018 was extended to 2032 in the 2021 Scottish Budget. Whilst the relief is welcome and is sufficient to individual schemes, it does not benefit multiple schemes grouped within a portfolio due to the post-Brexit State Aid rules. It is however unlikely that any progress will be made until the temporary support has expired.

Gas Fired Energy Centre

The Company has an investment in a company called Green Peak which owns and operates a gas fired energy centre. Green Peak was commissioned during May 2018 and it consists of containerised gas combustion engines that generate electricity for onward sale, especially at times when there is high demand for power. Further to the update provided in the Company's 2021 Interim Report, the water ingress issues which previously caused one of the engines to be offline at Green Peak have now been resolved and all three engines are fully available. We are also pleased to report that full insurance coverage subject to deductions has been confirmed by the insurer for both property damage and business interruption. Whilst the site has experienced some availability issues which are being addressed, the strong electricity market has offset the underperformance with the company achieving gross profits in excess of expectations for the 12-month period to 31 December 2021.

We are continuing to pursue solutions to improve the site's operations and increase availability. As such, from May 2022, Green Peak has transitioned to a new power optimisation company, responsible for the trading and dispatch of the site, and a new operations and maintenance contractor after continued underperformance. Over the 2021/22 winter period, the significantly rising costs of gas put pressure on the European electricity market, causing prices to increase in line. As a result, the spark spread, that is, the price of electricity less the cost of gas, remained positive and in cases even widened. Throughout this winter period the company was able to remain profitable, despite lower availability and the resulting lower electricity production than originally forecast. Toward the end of the period, after the war in Ukraine began, gas prices remained high. However, high wind output and warmer temperatures meant that the price of electricity came off its winter highs. This put pressure on the spark spread and the number of profitable periods in which the company was called to trade accordingly decreased. The company does however benefit from a high-priced Capacity Market contract, won in the 2021 year ahead auctions which helps offset the reduced trading performance through regular monthly cash flows.

In line with the Company's Investment Policy, which allows for a partial return of funds within the E Share Class should market conditions present such an opportunity, we are considering disposal options for Green Peak following renewed transaction activity and interest against the backdrop of a strong electricity market. A sale of the assets will enable a dividend of the net proceeds to be paid to E Shareholders.

The valuation of Green Peak has been held at the same carrying value as determined at 31 March 2021. The carrying values were in line with the independent report commissioned in early 2021 from an experienced corporate finance adviser to gauge the market interest and value attributable to these companies. 

The valuation model was first adjusted by actual cash flow forecasts to date and a reduction in the future residual value of the asset at the end of the life. This was to provide a conservative view on future decommissioning costs. A reduction in expected project life to 20 years was then applied, which the company's' Corporate Finance Adviser, after recently marketing the company as well as others over the past years, advised is the current market view on the useful operating life of this asset class. The discount rates used to value the projects were then adjusted to reflect the reduced long-term risk of a shorter operating life. Additionally, the company's energy market advisers are predicting significant short-term upside on market profitability versus the market analysis at the time of the independent report commissioned in early 2021. As well as being future predictions, these strong market prices have been realised in the second half of the reporting period and will continue to be captured in the short term and so the discount rate of the cash flows forecasts has been reduced. After applying all these changes to the cash flow forecasts, the valuation returned was in line with prior year carrying value, and the independent report commissioned in early 2021.

Controlled Environment Agriculture

Controlled Environment Agriculture is the practice of producing food in a controlled indoor growing facility where all inputs (water, light, and nutrients) meet the optimum needs of the crop. The advantages of this type of growing are that: it reduces "food miles"; it allows crops to be reliably grown all year round regardless of the weather or season; it avoids pests (which removes the need for pesticides or washing which can spoil taste); and its crops have higher yields and materially longer shelf-life for both retailers and end-customers. This type of growing is highly efficient. Depending on the crop, one acre of controlled environment agriculture could be equivalent to as many as 10 to 20 traditional soil-based acres.

The Company has invested in a controlled environment agriculture business called PFC, which trades under the brand name, Perfectly Fresh. In the past year we have not seen the progress in expanding the business and getting closer to profitability that was planned.

Challenges:

· Cheshire facility offline: The existing production facility at Alderley Edge was closed for eight months (August 2021 to April 2022) for refurbishment and improvement. Further details are provided below.

· Expansion:  Profitability has always been predicated on expansion, either of PFC or on the basis of revenue sharing, and the development of a second larger facility has been delayed whilst further technical improvements have been worked on and the strategy refined.

· Fundraising: Fund raising has been postponed whilst further technical improvements were implemented and the brand relaunched.

Positive milestones:

· Product established: In April 2021, Perfectly Fresh launched the UK's first controlled environment agriculture mixed salad bag (in two varieties), with over 100,000 bags sold to a leading retailer, over the course of 2021, with no complaints received. Overall, this product quality gives Perfectly Fresh a strong competitive advantage and foothold in the market.

· Alderley Edge improvements: In August 2021, the facility was closed in order to carry out a number of improvements including: a deep clean, simplified packaging, streamlined growing, better irrigation cleaning systems, and better humidifying, all of which will improve growing availability and reduce labour costs. A specialist in operational systems has advised on how the new facility can drive efficiencies. After the period end, the facility re-opened with a simplified range and more consistent yields, with delivery to PFC's customers re-started in April 2022.

· R&D progress: The 4-person R&D team is continuously testing improvements in seeds, hygiene, and growing techniques. These improvements are being fed into the growing strategy for both Alderley Edge and further plants, ensuring that Perfectly Fresh's product has a competitive edge over alternatives.

· Branding developed: Perfectly Fresh has been working with brand consultants and has made significant progress in developing its brand, which will enable it to broaden its customer base and conduct a professional fundraising round. 

Customer relationships strengthened: The strength of Perfectly Fresh's business and product, as set out above, has been reflected in increasingly strong customer relationships. Perfectly Fresh's main customer, a leading UK supermarket, is involved with and supports the company's plan for growth.  

Valuation

The investment in PFC is valued on the basis of (i) a restructuring which is in the process of documentation, and which relates to PFC's priority share in the value of the Perfectly Fresh business, and (ii) the value at which the management expects to able to raise funds later this year.

Post year end developments

Shortly after the Company's year end, the Perfectly Fresh senior team has expanded, and has refined the strategy to help the company scale, and to raise funds for the development of a new facility in the coming year. Pending the raising of funds for the new facility, PFC has continued to be funded by Triple Point and P3P Partners.

Crematorium Management

The Company has an investment in a business called Furnace Managed Services Limited ("FMS") that provides crematory and mercury abatement services for the crematoria of a London Borough. This investment receives revenues from local authorities and has consistently generated a steady return over the years it has been held. Looking ahead, FMS is expected to start the winding up process imminently following the final payment from Lambeth Local Authority and will in due course declare a final dividend to the Company. 

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

Jonathan Parr

Head of Energy

Triple Point Investment Management LLP

20 July 2022

Responsible Investing

The Investment Manager is committed to being a sustainable and responsible investor. To demonstrate commitment the Investment Manager is a United Nations Principles for Responsible Investment ("PRI") signatory which underpins its Environmental, Social and Governance (ESG) commitment across all investment strategies.

The Investment Manager believes these principles are helpful in guiding and demonstrating best practice in investor ESG integration. They also help promote a closer alignment between the objectives of institutional investors and those of society at large. The principles are voluntary and intended to be actionable and measurable. TPIM seeks to promote these principles throughout its business and all investment strategies.

ESG Integration Approach

The Investment Manager aligns international standards and good industry practice, including monitoring industry regulation (such as the Bribery Act 2010 and CA 2006) and investor-led initiatives (such as the PRI), as the foundation of its ESG integration approach. Using these foundational principles, TPIM has developed an in-house approach to ESG integration which is proportionate and relevant to each investment strategy.

To ensure the effective and consistent application of this approach, the Investment Manager operates ESG Integration Policies. Each details how ESG considerations are taken in to account throughout investment processes, from the point of origination to exit. The Investment Manager takes a practical, proportionate, and material approach to ESG integration to manage the identification of associated risks and opportunities. There are two pillars of management to the approach:

1. Management (culture, capacity & governance): this refers to the allocation of appropriate resourcing, training and senior support for ESG integration. It demonstrates TPIM's actions have integrity aligned with the strategic position of the Investment Manager.

2. Investment process (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 investment decisions, and how TPIM captures decisions and changes to ESG factors during asset ownership.

As the Company no longer makes new investments, the current focus is on the management and exit processes associated with assets within the investment strategy. TPIM reviews ESG integration processes formally every 12 to 18 months, in addition to informal on-going review. Oversight is managed by TPIM's Sustainability Team and the Sustainability Group and its associated subgroup.

Investment Portfolio Summary

Top Investments

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 should remain unchanged since acquisition, investments continue to be held at cost less any loan repayments received.

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

David Frank

Chair

20 July 2022

GOVERNANCE

Board of Directors

Michael Stanes has been an Investment Director at Heartwood/Handelsbanken Investment Management, a London-based firm providing investment management and wealth structuring services for high net worth individuals, from 2010 to 2021. He began his career at Warburg Investment Management (which became Mercury Asset Management) where he ran equity portfolios in London and Tokyo. He then moved to the US where he founded a business on behalf of Merrill Lynch offering equity portfolio management to high net worth individuals. In 2002 he joined Goldman Sachs Asset Management in London running global equity portfolios for a range of institutional and individual clients before joining a new fund management partnership as CEO.

David Frank is the Chair of the Board. He was a partner in Slaughter and May for 22 years before retiring from the firm in 2008. As well as being the firm's first Practice Partner from 2001 to 2008, his practice involved acting for several venture capital houses, including 3i and Schroder Ventures. He was also involved in several flotations in the venture capital sector, including 3i, Baronsmead and SVG Capital. Since retiring from legal practice, he has established a portfolio of voluntary roles.

Simon Acland has over 30 years' experience in venture capital, primarily at Quester, where he became Managing Director. When Quester was sold in 2007 it had £200 million under management and was one of the leading UK venture capital and VCT investment managers. Simon was a director of over 20 companies in Quester's portfolio, many of which achieved successful exits through flotation or trade sales. Simon is currently a director of several private companies, including the Satellite Applications Catapult, and is a member of the investment committee of the Angel Co-Fund. Simon is a Founder and Director of Green Angel Syndicate, the UK's only business angel group specialising in the fight against climate change and global warming. He also acts as an Adviser to the Triple Point Impact EIS Fund.

CORPORATE GOVERNANCE

Compliance Statement

The Board of Triple Point Income 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 Triple Point Income VCT plc.

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

The Company has complied with the Principles and Provisions of the AIC Code except as set out below:

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.

Board of Directors

The Board comprises three Non-Executive Directors.

The Board's role is to promote the long-term sustainable success of the Company, generating value for its Shareholders and contributing to wider society.

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 45 of this report.

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

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, considering the expected time commitment and nature of these roles.

All Directors have sufficient time to meet their Board responsibilities and provide constructive challenge, strategic guidance, offer specialist advice and hold third party service providers to account.

The Chair, David Frank, leads the Board and is responsible for its overall effectiveness in directing the Company. The Chair leads the process in determining its strategy and the achievement of its objectives. The Chair is responsible for setting the Board agenda focusing on strategy, performance, value creation, culture, stakeholders and ensuring that issues relevant to these areas are reserved for Board decision. The Chair facilitates constructive Board relations and the effective contribution of all 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 his Board responsibilities.

Appointment of New Directors

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

Company's Operations

The Investment Manager has authority over the management of the investment portfolio, the organisation of custodial services, accounting and administrative services. The Investment Manager makes investment recommendations for the Board's approval.

The Board meets regularly in person or via video conference call at least four times a year, and on other occasions as required, to review the investment performance and monitor compliance with the Investment Policy laid down by the Board.

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

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

• Review investment performance and monitor compliance with the Investment Policy;

• The consideration and approval of future developments or changes to the Investment Policy, including risk and asset

allocation;

• Consideration of corporate strategy;

• 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;

• The performance of the Company, including monitoring the Net Asset Value per share;

• Monitoring shareholder profiles and considering shareholder communications; and

• Approving major investments.

The Company Secretary, Hanway Advisory Limited, 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 their 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 investee company valuations;

• Approval of NAV;

• Declaration of interim dividends;

• Approval of the Company's annual report and accounts;

• Approval of changes to Company's Investment Policy;

• Approval of disposal of the hydroelectric portfolio; and

• Approval of the E Share Class Premium Cancellation to create distributable reserves.

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. The Directors have therefore agreed to submit themselves for annual re-election at the next AGM.

Independence of Directors

The Board has a Non-Executive Chair and two other Non-Executive Directors, all of whom were considered independent on their appointment. A majority of the Directors are independent of the Investment Manager.

Simon Acland acts as an Adviser to the Triple Point Impact EIS Service that is an Alternative Investment Fund managed by the Investment Manager. He therefore has a business relationship with the Investment Manager. The Board nonetheless considers Simon Acland to be independent as the Triple Point Impact EIS Service is an area of the Investment Manager's business which is not directly related to that of the Company and as such does not create a conflict between his interests as an Adviser and that of the Company. Furthermore, the Board does not consider that such relationship is material both with regards to remuneration or time and would therefore be unlikely to impair his judgement.

The AIC Code outlines further circumstances that are likely to impair a director's independence including whether a director has served on the board for more than nine years from the date of their first appointment. All of the Non-Executive Directors have served on the Board for nine years or more. Length of service is currently one of several indicators the Board considers when assessing independence. The Board is of the view that a term of service in excess of nine years does not in itself compromise independence and notes the positive contribution that their long service offers. In particular that they are better able to serve the needs of the Company and its Shareholders by providing experience across the business/economic cycle. The nature of the Company's business is such that the Directors' experience and continuity is critical to promote the long-term sustainable success and future viability of the Company. The Board regularly reviews the independence of its Directors and is satisfied that the Board as a whole is independent, including in character and judgement.

Policy on Tenure of the Chair

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

Board Committees

The Board only has 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 Remuneration Committee or Nomination Committee.

Board Meeting Attendance

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

The Board holds four meetings during the year on a quarterly basis. These meetings are arranged in advance of the start of the financial year. However, from time to time further ad hoc meetings are scheduled to deal with transactional and specific events for which arrangements are put in place on shorter notice and subject to the availability of those directors available at the time.

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.

The Chair, supported by the Company Secretary, acted on the results of the evaluation. The results of the questionnaire demonstrated that there is a consensus that the performance and functioning of the Board remains effective. However, the following areas of improvement were identified with the appropriate action approved by the Board:

Succession Plan

As part of the annual evaluation in 2022, the Directors considered length of service of the Board as a whole and considered the regular refreshment of the Board membership.

The Board considered that, due to potential asset sales and exit opportunities, there was a benefit of historical knowledge and continuity of Directors, however, acknowledged that an emergency succession plan should be prepared for the unexpected departure of Directors.

Corporate Social Responsibility

The Board is committed to integrating environmental, social and governance matters in the Company's business operations, including the Company itself and the companies it invests in.

Internal Control and Risk Management

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

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

Following the distributions made during the financial year which were not in compliance with the CA 2006, the Investment Manager has implemented controls and procedures to mitigate against the risk and ensure the omission is not repeated in the future. Further details can be found in the Section 172 Statement.

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

The Directors have established an ongoing process designed to meet the particular needs of the Company in identifying, evaluating and managing the significant and emerging risks to which it is exposed including, among others, market risk, VCT qualifying investment risk and operational risks which are recorded on a risk register. The controls employed to mitigate these risks are identified and the residual risks are rated taking into account the impact of the mitigating factors. The risk register is reviewed bi-annually.

The Directors regularly review 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. Internal control systems include the production and review of quarterly bank reconciliations and management accounts. 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; and

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

Stakeholder and Shareholder 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 along with the matters set out in the Section 172(1) statement.

The Company is committed to understanding the views of its stakeholders and maintaining effective dialogue with its key stakeholders of 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 himself available, as necessary, outside of these meetings to speak to shareholders.

All investor documentation is available to download from the Company's website: https://www.triplepoint.co.uk/current-vcts/triple-point-income-vct-plc/s1238/.

Directors' Share Interests

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

David Frank

Chair

20 July 2022

Audit Committee Report

The Audit Committee consists of the Chair, David Frank, and the Non-Executive Directors, Simon Acland and Michael Stanes. The Audit Committee deals with matters relating to audit, financial reporting and internal control systems. The Committee meets at least twice a year and as required. The Audit Committee also has direct access to BDO LLP, the Company's auditor.

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.

In respect of the year ended 31 March 2022, 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;

· 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 the appropriateness of the Company's accounting policies;

· Providing advice on whether the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for Shareholders to assess the Company's position and performance, business model and strategy;

· Reviewing the Company's half-yearly results and draft annual financial statements 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 status; and

· Reviewing the external auditor's findings document.

Financial Reporting

The primary role of the Audit Committee in relation to financial reporting is to review with the Investment Manager and the Auditor the appropriateness of the half year report and Annual Report, 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 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 for approval.

Significant Matters Considered by the Audit Committee in Relation to Financial Reporting

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

· Net Asset Value of C, D and E Share Classes.

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 from the financial statements and the information provided by the Investment Manager on the forecasted cash flow for the Company and expected pipeline. As a result, the Audit Committee consider 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 Committee each year. In evaluating BDO's performance the Committee examines the 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 1 of the 2 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 forthcoming AGM.

The FRC's Ethical Standard requires the audit partner to rotate every five years. The first audit engagement for BDO LLP was for the year ended 31 March 2018 and this is the audit partner's fifth year, and therefore, final year. The Audit Committee will discuss and agree the appointment of the new audit partners with BDO in advance of the next audit.

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 plan provided to the Audit Committee by the auditor and the discussions then held on topics raised. The Audit Committee will challenge the auditor at the Audit Committee meeting if appropriate.

The Audit Committee's terms of reference include the following roles and responsibilities:

· Periodically considering the need for an internal audit function;

· Reviewing and monitoring the external auditor's independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK professional regulatory requirements;

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

· 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.

The Committee reviews its terms of reference and effectiveness annually and recommends to the Board any changes required as a result of the review. 

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

The Company does not have an independent internal audit function as it is not deemed appropriate given the size of the Company and the nature of the Company's business. However, the Committee considers annually whether there is a need for such a function and, if there were, would recommend it be established.

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.

There were no non-audit services performed during the year.

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 Strategy report from BDO LLP which describes their arrangements to identify, report and manage any conflict of interest and 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:

The Audit Committee relies on the Investment Manager to assess the valuation of unquoted investments and the existence of those investments. The Investment Manager, where appropriate, has a director on the board of the investee companies and meets regularly with the other directors and hence has an oversight of all the investments made. The Audit Committee have 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 VCT have 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 Annual Report for the year ended 31 March 2022 and has reported to the Board that it considers it 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.

David Frank

Audit Committee Chair

20 July 2022

Directors' Remuneration Report

Statement of the Chair

I am pleased to present the Remuneration Report on behalf of the Board for the year ended 31 March 2022.

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 31 March 2022. 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 23 July 2020 following approval by shareholders.

· Annual Remuneration Report - This sets out how our Directors were paid for the period ended 31 March 2022. There will be an advisory shareholder vote on this section of the report at our 2022 AGM.

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

David Frank

Chair

20 July 2022

Directors' Remuneration Policy

Approval of Remuneration Policy

The Company's Remuneration Policy was last approved on 23 July 2020 at the AGM.

Remuneration Policy Overview

The Board currently comprises three Directors, all of whom are Non-Executive. The Board's policy is that the remuneration of Non-Executive Directors should reflect the experience of the Board as a whole, be fair and be comparable with that of other relevant VCT that are similar in size and have similar investment objectives and structures. Furthermore, the level of remuneration should be sufficient to attract and retain the Directors needed to oversee the Company properly and to reflect the specific circumstances of the Company, the duties and responsibilities of the Directors and the value and amount of time committed to the Company's affairs. The articles of association provide that the Directors shall be paid in aggregate a sum not exceeding £100,000 per annum. None of the Directors are eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits in respect of their services as Non-Executive Directors of the Company. There are no planned changes to the Remuneration Policy last approved by shareholders at the 2020 AGM.

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 an appointment of 12 months, after which three months' written notice must be given by either party. Each Director will be subject to annual re-election by Shareholders at the Company's AGM 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 Group 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.