TPVE.L Regulatory News (TPVE)

15 June 2020

Triple Point Income VCT plc

(the "Company")

RESULTS FOR THE YEAR ENDED 31 MARCH 2020

The financial information set out in these statements does not constitute the Company's statutory accounts for the year ended 31 March 2020, 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 2020.

These results were approved by the Board of Directors on 15 June 2020.

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.

· 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.

· 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.

The Strategic Report on pages 9 to 53, the Directors' Report on pages 71 to 74, the Corporate Governance Statement on pages 56 to 60 and the Directors' Remuneration Report on pages 66 to 70 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 2020.

Key Highlights

· Dividend per C Share 55.00p (Year ended 31 Mar 2019: 5.00p)

· Dividend per D Share 55.00p (Year ended 31 Mar 2019: 5.00p)

· Dividend per E Share 5.00p (Year ended 31 Mar 2019: Nil)

· Net Asset Value per C Share 84.87p (Year ended 31 Mar 2019: 134.58p)

· Net Asset Value per D Share 62.46p (Year ended 31 Mar 2019: 117.34p)

· Net Asset Value per E Share 101.69p (Year ended 31 Mar 2019: 102.56p)

· Total Return* per C Share 154.87p (Year ended 31 Mar 2019: 149.58p)

· Total Return* per D Share 127.46p (Year ended 31 Mar 2019: 127.34p)

· Total Return* per E Share106.69p (Year ended 31 Mar 2019: 102.56p)

· Realisation Proceeds £7.07 million

· Ongoing Charges Ratio** 2.70%

\* Total Return is made up by current Net Asset Value plus Dividends paid to date. More information on Total Return is on page 21.

Total Return and **Ongoing Charges Ratio are defined as Alternative Performance Measures ("APM"). The Board considers Total Return to be the primary measure of shareholder value. The Ongoing Charges Ratio ("OCR") shows the drag on performance caused by operational expenses. This OCR shows the annual costs of the VCT as a percentage of its average asset value during the year.

The Annual Report contains a number of APMs. APMs are financial measures that are in addition to those defined or specified in the Company's reporting framework.

Chairman's Statement

I am writing to present the Financial Statements for Triple Point Income VCT plc for the year ended 31 March 2020.

I am writing this at a time when we have all been facing unprecedented, uncertain and challenging times, as a result of the COVID-19 pandemic. Businesses, economies, supply chains and consumer habits in the UK and globally are unquestionably facing challenges greater than most will have seen before. Given the rapid and continuing evolution of the situation, it is difficult to know the full extent of the economic impact that the COVID-19 pandemic will have on the UK and businesses or how long it may last. Society and industry will of course recover, but now more than ever is the time to be grateful for stability.

In the short term many companies across the economy are facing varying degrees of pressure on their revenue lines. For some it will just be a slow-down in their sales growth as acquiring new customers becomes difficult in the next few months, while for others it will be an actual contraction in sales. Despite the current challenges that many businesses will be currently facing, discussed above, the Board and the Company believe that there has been minimal impact across all share classes as a result of COVID-19. We believe that the revenue lines of our investee companies are robust and will continue despite the pandemic.

All of our share classes have exposure to hydroelectric companies. The companies currently benefit from inflation linked Feed in Tariff ("FiTs") Income and have all recently signed up to new 12-month fixed price power purchase agreements ("Export") with one of the "big six" energy providers. The revenue stack of our Hydro assets is currently weighted c.75% FiT and c.25% Export. Both the FiT element and the portion of the Export tariff, which is made up by embedded benefits, should not be affected by the fall in energy prices. Consequently, we do not expect the hydroelectric companies to be materially impacted by the current volatility we are witnessing in the energy markets.

Our E Share Class holds a gas power company, in a sector which has exposure to the recent decline in wholesale energy prices. Spark-spreads (the difference between the price of gas used to produce electricity and the electricity produced) have narrowed, reducing gross margins, although despite the changing electricity demand profile, it still remains highly profitable for our gas power asset to run during the evening peak. Over the long term industry experts believe prices will revert to historical norms and therefore the recent volatility is expected to have only a negligible impact on this business.

The E Share Class also holds investments in several businesses which operate rooftop solar installations. These solar installations require a relatively low level of human presence and we therefore expect to be able to maintain normal operations without significant disruption and impairment to revenues. There are risks, albeit low, surrounding repair or maintenance work due to potential supply chain constraints. This risk is consistent across the portfolio but is considered minor.

The rooftop solar assets are the beneficiaries of inflation linked income through FITs or Renewable Obligation Certificates. The impact of COVID-19, and the Government's response to it, should therefore be relatively minor on these revenue streams and not materially impact the ongoing NAV of these businesses.

We continue to monitor the risk of disruption, particularly to international supply chains for spares, but to date neither site visits nor maintenance requirements have been significantly affected by the pandemic.

Around 50% of food in the UK is imported and the COVID-19 pandemic has highlighted the need for greater food security here in the UK. The UK food chain is changing rapidly and dramatically as a result. The UK currently is heavily reliant on imports of fresh fruit and vegetables, especially during March to May when food importing hits its annual peak. In addition to this, the farming industry is predominantly staffed by overseas workers and with both Brexit and COVID-19, seasonal workers are struggling to travel into the UK. The food system in the UK is under great strain and it is impossible to predict the time frame within which the food system will return to a stable footing.

The E Share Class investment into the vertical growing solution, Perfectly Fresh Cheshire Limited ("PFC"), is helping bridge this gap. The business continues to operate despite the obstacles provided by COVID-19; however, its high care nature does bring additional complications. The team have been working around the clock to ensure business continues as normal where possible. Through this period, PFC has liaised closely with its main customer in its response to COVID-19, and I am delighted to say that they have been able to greatly support them with the product continuing to be grown, delivered on time and as requested.

As the UK begins to return to a sense of normality, society and industry will of course recover from the crisis, but now is the time to look towards long-term opportunity. As the need for greater food security is increased and this issue becomes more prevalent on the Government agenda, we believe PFC is in a position to exploit these opportunities, as a solution that looks to offer a guaranteed food yield and a lower environmental impact.

I am pleased to say that all our Share Classes are fully invested, and all companies are fully operational. We believe that these companies should continue to operate as normal.

Investment Portfolio

The Company's funds at 31 March 2020 are 99% invested in a portfolio of VCT qualifying and non-qualifying quoted and unquoted investments.

The Investment Manager's review on pages 31 to 44 gives an update on the portfolio of investments in 18 small unquoted businesses and one quoted Real Estate Investment Trust.

C Share Class

The C Share Class has investments in three companies in the Hydroelectric Power sector which between them own six hydroelectric schemes in the Scottish Highlands. The C Share Class has also invested in companies which provide SME funding to the Hydroelectric Power sector.

I am pleased to report the C Share Class portfolio continues to perform well and has recorded a profit over the period of 5.29 pence per share and as at 31 March 2020 the NAV per share stood at 84.87 pence per share.

During the year C Class Shareholders were paid total dividends of 55 pence per share. This was enabled by a combination of investment realisations and a small amount of borrowing: more detail on the borrowing can be seen in the upcoming D Share Class Section.

In total during the year £7.39 million was returned to C Class Shareholders, taking total dividends paid to C Shareholders to date to 70 pence per share.

One of the core targets of the C Share Class was to deliver to investors a cash return of 100 pence per share by the end of year six. It was initially intended that this return would be derived from a combination of the initial income tax rebate, tax-free dividends in years two, three, four and five, followed by a substantial capital realisation in year six.

During the year, we achieved our goal of returning to C Share Shareholders (including the initial income tax relief) 100 pence per share. This is an excellent achievement and I would like to thank the Investment Manager for all their hard work in helping the Company reach this milestone for its C Class Shareholders.

Looking to the future, the C Share Class now moves into its income generation stage, where we are targeting an ongoing dividend of ~3.50p per annum. I am delighted to say we have achieved this target and can announce a further dividend of 3.5 pence per share will be paid on 30 June 2020.

D Share Class

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

I am pleased to report the D Share Class portfolio continues to perform and has recorded a profit over the period of 0.12 pence per share and as at 31 March 2020 the NAV per share stood at 62.46 pence per share.

During the year, the Company paid two dividends to Shareholders, its third 5 pence per share dividend along with a significant return of capital worth 50 pence per share.

Along with the C Share Class, one of the core targets of the D Share Class was to deliver to Shareholders a cash return of 100 pence per share by the end of year six. It was initially intended that this return would be derived from a combination of the initial income tax rebate, tax-free dividends in years two, three, four and five, followed by a substantial capital realisation in year six.

I am delighted to say that with the declaration of the latest 5 pence per share dividend we have achieved this target. In order to help achieve the dividend and partial realisation target, the Company put in place a loan facility for £2.7 million. Of this facility £2.3 million was drawn during the period. The loan attracts interest at 4.5%, it is not envisaged the Company will draw the remaining funds available under the current facility.

Following the payment of the next 5 pence per share dividend, we will have achieved our goal of returning to Shareholders (including the initial income tax relief) 100 pence per share. This result has been achieved a year ahead of target and represents an excellent achievement. I would like to thank the Investment Manager for all their hard work in helping the Company reach this milestone for its D Class Shareholders.

Looking to the future, the D Share Class now moves into its income generation stage, where we are targeting an ongoing dividend of ~3.50p per annum.

Another highlight during the year for the D Share Class, in line with the way the investment was structured, was the sale of its holding in one of the hydroelectric schemes, Green Highland allt Garbh Limited. The D Share Class received net proceeds in excess of £2.71 million from the sale. This disposal helped to contribute significantly to the dividend and partial realisation target I discussed earlier.

E Share Class

The E Share Class benefits by being the owner of an established, income-producing portfolio of investments spanning Hydroelectric Power, Crematorium Management, Gas Fired Energy Centres, Solar PV, Vertical Growing and SME Lending.

The construction of a pioneering Vertical Growing facility by PFC is now complete. The company continues to work towards achieving full capacity and has the full support of its main customer.  Vertical growing produces crops in a controlled environment ensuring optimal growing conditions all year round. PFC provides their customers with a sustainable, resource efficient premium product, which is helping reduce their carbon footprint, with distribution from within the UK. The business has seen an uplift of £1.28 million on its valuation. This represents a 10% annual return on the initial investment of £5 million. The investment is structured in such a way that the Company will benefit from a priority return up to 10% per annum and will share in any excess above this hurdle rate.

Further information on this investment is included in the Investment Manager's Review on pages 32 to 43.

The E Share Class declared a second dividend of 6.5 pence per share on 4 June 2020. This dividend will be paid to Shareholders on 30 June 2020. This will take total dividends paid to E Shareholders of 11.5 pence per share.

Share buy-backs

The Company aims, subject to distributable reserves and liquidity, to be willing to buy back the Company's shares in the market at a 10% discount to NAV.

There were no Share buy-backs made during the year.

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 from our VCT taxation advisers Philip Hare & Associates LLP.

VCT legislation and regulation

In previous communications with Shareholders we have highlighted changes to the VCT landscape with the government, through its "Financing Growth in Innovative Firms" consultation ("the Patient Capital Review") emphasising the importance of VCTs in helping to provide investments into SMEs.

As part of the Patient Capital Review, several changes were introduced, including increasing a VCT's minimum qualifying percentage threshold from 70% to 80%. This change came into effect for the Company from 1 April 2020. The Investment Manager has been monitoring this target very closely since it was announced and I am pleased to say that the Company complied fully during the year and now also continues to comply with the updated rules since the year end.

A number of other measures have also applied to the Company for the first time in the current financial year. From 1 April 2020, the Company benefited from an increased disregard period available before the proceeds of investment disposals become non-qualifying. This disregard period was increased from six months to twelve months.

This additional time may prove helpful in the event of any future significant disposals.

In the case of the D Share class disposal of Green Highland Allt Garbh Limited, the proceeds of this disposal were paid out to Shareholders during the year, within six months of disposal.

We will continue to work closely with the Investment Manager to ensure the Company maintains compliance with the VCT scheme rules.

Outlook

The future has never been more uncertain. The Company is very mindful that the economic disruption in the next few months will be severe and many small companies, including those across the UK and beyond, will have to assume that sales opportunities could be greatly diminished.

The recovery from COVID-19 may be slow, depending on how policies associated with virus containment evolve. We are fortunate that our portfolio of electricity generating assets can continue to produce electricity and should give the Company stability in turbulent times.

We will also be focusing on the positives that will come from this crisis. An economic shock like this will no doubt change some behaviours permanently and may lead many to think hard about how they run their businesses. We believe that through our investment in PFC we will be in a position to capitalise on the positives to emerge from this crisis.

We are optimistic that PFC can play an important part, during what we expect to be a paradigm shift from industrial agriculture to diversified agroecological and enhanced technological systems as this becomes prominent and on the agenda of governments.

Brexit

Whilst it would seem that Brexit has taken a back seat in the UK, along with COVID-19, the political and economic environment continues to remain uncertain. Despite this, it is still very unclear as to what the eventual result of the ongoing negotiations between Britain and the rest of the EU will look like. Given the UK focus of the Company and the sectors the Company operates within, we do not expect that Brexit will have a significant impact on the current operations of the Company.

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

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

David Frank

Chairman

15 June 2020

Strategic Report - Company Strategy and Business Model

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

The Directors assess the Company's success in meeting its objectives in relation to returns, stability, VCT qualification and, 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 Company's Investment Policy was adopted and approved by Shareholders before recent changes to the rules for VCT-qualifying investments and applies to the existing investment portfolio. The Company recognises that it is likely that any new Qualifying Investments would require amendment to the Investment Policy. In order for the Company to amend the Investment Policy, any amendments would require Shareholder approval. As the Company is fully invested and has no intention, at present, to raise additional funds, it is unlikely that the Investment Policy will be amended in the medium term.

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 shortly after 16 years following investment with a partial return of funds to Shareholders after 6 years; 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 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.

As identified in the Chairman's Statement, the outcome of the Government's Patient Capital Review was announced in the Autumn Budget in 2017. 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. TPIM 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.

During the year, the Company entered into a short-term facility agreement with Triple Point Lease Partners ("TPLP"). TPLP is a business that specialises in leasing, lending and infrastructure financing with the public sector (Local Authorities and the NHS) and corporates and is also managed by the Investment Manager.

The secured facility was for £2.7 million at a fixed rate of 4.5% per annum. The facility was put in place to refinance a portfolio of the hydroelectric assets to enable the C and D Share Classes to pay a dividend. This was in line with the original mandate of both share classes. At the year-end there was £2.3 million outstanding, with a further £0.4m of the facility still in place. More information on this can be found on page 95 in the notes to the financial statements. The facility is a short-term facility, and the Company will maintain an active dialogue with the lender surrounding the timing of future repayment of the facility. While the Company may not currently have sufficient resources to repay the loan without realising investments, the Board and the Investment Manager believe that the risk around the facility not being extended is extremely low. As a precautionary measure, the Company has entered into a similar facility agreement with a different lender on the same key terms, but which includes a two year availability period and a three year term. This agreement was put in place to mitigate the risk of the existing loan facility not being extended by the existing lender.

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 twelve 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 little impact on the portfolio's valuation as we have calibrated the valuation basis used to the recent investment round.

We would only usually expect significant adjustments to recent investment values where an investment is significantly under- or over-performing compared to our expectation at the time of investment.

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

After an anticipated holding period of between five and seven years, which may include follow-on investments into investee companies as appropriate, 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 Company aims to meet these criteria by investing its funds in line with the Company's Investment Policy, more detail of which can be found on pages 17 to 19.

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 KPIs 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 2020, and over the longer term, through the application of its investment and other principal policies:

The primary KPIs in meeting these objectives are:

· Net Asset Value ("NAV") plus dividends paid ("Total Return");

· Earnings per Share;

· Compliance with VCT Legislation; and

· Ongoing Charges Ratio.

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 has decreased from 134.58 pence per share at 31 March 2019 to 84.87 pence per share at the reporting date. After making an adjustment for dividends paid during the year the C Shares Total Return has increased from 149.58 pence per share at 31 March 2019 to 154.87 pence per share at the reporting date. This represents an increase of 3.54%. Whilst Net Asset Value has fallen, Total Shareholder Return has continued to increase.

The increase in the Total Return for the C Shareholders is in line with the Company's long-term objectives to achieve both capital growth and pay dividends to Shareholders. The Board is pleased with this performance.

D Share Class

The Net Asset Value per D Share has decreased from 117.34 pence per share at 31 March 2019 to 62.46 pence per share at the reporting date. After making an adjustment for dividends paid during the year the D Shares Total Return has increased from 127.34 pence per share at 31 March 2020 to 127.46 pence per share at the reporting date. This represents an increase of 0.09%. Whilst Net Asset Value has fallen, Total Shareholder Return has continued to increase, albeit at a slightly slower rate.

The increase in the Total Return for the D Shareholders is in line with the Company's long-term objectives to achieve both capital growth and pay dividends to Shareholders. The Board is pleased with this performance.

E Share Class

The Net Asset Value per E Share has decreased from 102.56 pence per share at 31 March 2019 to 101.69 pence per share at the reporting date. After making an adjustment for dividends paid during the year the E Shares Total Return has increased from 102.56 pence per share at 31 March 2020 to 106.69 pence per share at the reporting date. This represents an increase of 3.96%.

The Net Asset Value of the E Share Class decreased due to the payment of dividends in the sum of 5 pence per share. Whilst Net Asset Value has fallen, Total Shareholder Return has continued to increase. A large part of the increase can be attributed to the valuation increase of Perfectly Fresh Cheshire Limited. This is the first year that the company has been valued above cost.

The increase in the Total Return for the E Shareholders is in line with the Company's long-term objectives to achieve both capital growth and pay dividends to Shareholders. The Board is pleased with this performance.

Earnings per Share

The Charts below show the Company's earnings per share by share class for the year ended 31 March 2020. The longer-term trend of performance on this measure is shown in the charts below. This also shows the distinction between earnings generated by revenue and earnings generated by capital movements.

Compliance with VCT legislation

By making an investment in a VCT, 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 is of the opinion that the main business risk facing the Company at present is the retention of VCT qualifying status. In order to mitigate this risk, the Board receives regular updates and reports on compliance with the VCT legislative tests from the Investment Manager. In addition, the Board receives formal reports from its VCT Tax Compliance Adviser, Philip Hare & Associates LLP, once a year.

When making new investments, the Company seeks advice from our Tax Compliance Adviser and other Legal Advisers to ensure all new investments made are in compliance with the VCT legislative tests.

The Board can confirm that throughout the year ended 31 March 2020, the Company continued to meet these tests.

To achieve compliance, the Company must meet a number of tests set by HMRC. A summary of these steps is set out on page 73 under "VCT Regulation".

Ongoing Charges Ratio

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

The ongoing charges of the Company for the financial year under review represented 2.70% (2019: 2.15%) of the average net assets. The increase during the year is due to an increase in general administration costs of the Company.

This ratio is calculated using the AIC's "Ongoing Charges" methodology which can be found on their website.  The Ongoing Charges Ratio is deemed an alternative performance measure. 

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:

Investment classification for the C Share Class by asset value and sector value are shown below:

Investment Portfolio - C Share Class

Investments by Sector - C Share Class

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

Investment Portfolio - D Share Class

Investments by Sector - D Share Class

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

Investment Portfolio - E Share Class

** Please note that the percentage of qualifying investments in the above graph is not representative of the Company as a whole, whose 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.

As referred to in the Chairman's Statement on page 9 to 15, further changes have been introduced with effect from 6 April 2019. The Company will continue to ensure its compliance with the qualification requirements.

The Company has been approved as a VCT by Her Majesty's Revenue and Customs. In order 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. This investment criterion continues to be met.

FCA Regulation

On 1 April 2014 the Company registered with the Financial Conduct Authority as a small Alternative Investment Fund Manager ("AIFM") under the AIFM Directive.

Exit Programme

During the year the Company successfully secured a partial realisation for both the C and D Share Classes.

The Company benefitted from economies of scale in refinancing the hydro investments for both share classes at the same time, both share classes intend to retain their investment in the Hydro companies until 2030. 

The declaration of the latest dividend for the D Share Class holders takes total distributions to Shareholders to 70 pence per share in each of the share classes. These distributions, along with initial tax relief, equates to a return to both sets of Shareholders of 100 pence per share.

In relation to the E Share Class the Company is intending to return funds to the E Shareholders as soon as practicable after their ten to twelve year holding period.

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

Principal Risks and Uncertainties

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 on pages 26.

Details of the Company's internal controls are contained in the Corporate Governance Report on pages 56 and 60 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 will be held in small and medium-sized unquoted investments which, by their nature, entail a higher level of risk and lower liquidity than investments in large quoted companies. 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.

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 will involve a medium to long-term commitment and will be relatively illiquid, the Directors consider that it is inappropriate to finance the Company's activities through borrowing, other than for short-term liquidity.

Mitigation: The key elements of financial risk are discussed in more detail in note 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 annually 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 Group, including those risks that would threaten its business model, future performance, solvency or liquidity.

Liquidity Risk: In line with the Company's initial mandate for the C and D Share Classes the Company has entered into a short-term loan facility of £2.3 million which has repayment terms of 364 days. The Company currently has £700k of cash. This therefore poses a slight risk to the Company's liquidity and cash flow prospects.

Mitigation: The Company and the lender have reviewed longer-term cash flow forecasts and the Company is comfortable that it will generate sufficient cash flow from its current investments to service and repay the borrowing. The Company keeps an open dialogue with the lender and will continue to update the lender on the outlook for its loan and on the performance of the Company's investment portfolio. The lender has indicated its willingness to extend the facility if required. The company has entered into a similar facility agreement with a different lender which includes the same key terms, but also has a two year availability period. This agreement was put in place to mitigate the risk of the existing loan facility not being extended by the existing lender.

Emerging Risks

Investee companies

The risks of Brexit and COVID-19 are relevant to not just the Company, but also the companies in which we invest.

The risks to the portfolio companies are discussed in more detail in the Investment Manager's Review on pages 32 to 44

COVID-19

The impact of COVID-19 is discussed at length in both the Chairman's Statement on pages 9 to 10 and the Investment Manager's Review on pages 32 to 33.

Brexit

Following the United Kingdom's withdrawal from the European Union ("EU") on 31 January 2020, the Investment Manager and the Board continue to keep the impact of Brexit on the Company under review. Despite the UK having now left the EU the current economic outlook and potential impact from Brexit is relatively unknown as the terms of the UK's exit has not been finalised with the EU. Any potential impact of the UK's withdrawal is difficult to quantify.

The Company's strategy of investing in small UK-based businesses, however, means that it is unlikely to be directly exposed to the terms of any future deals negotiated with the EU. We are, however, going through a period of some political and economic uncertainty.

We believe that by investing carefully, monitoring our portfolio rigorously and providing support to the businesses in which we have invested, we can minimise the effects of this uncertainty.

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 Company faces a number of risks and uncertainties, as set out above.

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.

Liquidity risk in relation to the loan facility is also discussed further in the principal risks and uncertainties section above.

The Company entered into a loan facility during the period. More detail on this can be found in the Strategic Report on page 18. The borrowing was in line with the original mandate for the C and D Shareholders. The Company continues to meet day-to-day liquidity needs through its cash resources and income from its investment portfolio, although, at present it does not have sufficient cash to repay the facility other than through a realisation of investments in the hydro portfolio.

More information surrounding this is included in the principal risks section on page 27.

As highlighted in the Chairman's Statement, the Company's revenue comes from predominantly secure and reliable counterparties across all three of its share classes. The Hydro portfolio is contractual, with inflation linked FiT income and export income from a recently signed 12-month power purchase agreement. The rooftop solar business also benefits from contractual and inflation linked income through the government FiT and ROC scheme. We expect minimal disruption to these revenue streams as a result of COVID-19.

As highlighted in the Chairman's Statement we expect the pandemic to highlight the need for greater food security here in the UK. PFC continues to refine its operation and increase its output. We expect the heightened scrutiny of the food and farming sector following the crisis to lead to potentially improved valuations in the vertical growing sector.

The Company had net current liabilities of £1.35 million (2019: net current assets of £1.25 million) and had cash balances of £700k (2019: £6.18m) (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 and uncertainties section.

The major cash outflows of the Company are the payment of dividends and costs relating to the acquisition of new assets, both of which are discretionary and can be scaled back if required. The interest on the loan facility amount is payable quarterly and has been factored into cash flow projections produced by the Company.

The Directors have reviewed cash flow projections which cover a period of at least 12 months from the date of approval of this report, which show that the Company has sufficient financial resources to continue to meet its day to day commitments for at least the next 12 months. Further information on this can be found in the notes to the financial statements on page 95. The Company has an existing 364 day loan facility in place. Due to the short term nature of the loan agreement, the Company has entered into a similar facility agreement with a different lender which includes a 2 year availability period. This agreement was put in place to mitigate the risk of the existing loan facility not being extended. The Directors therefore continue to adopt the going concern basis in preparing these financial statements.

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 prospect 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 was considered to be 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.

The Board has determined that five years up to 31 March 2025 is the maximum timescale over which the future position of the Company can be forecast with a material degree of accuracy and therefore is the appropriate period over which to consider its viability. During the next five years both the C and D Share Class will reach their income generation phase and look to pay investors c3.5 pence per annum. The E Share Class will also reach its five year holding period. Based on this the Directors believe it is reasonable to make their assessment over five years.

In order to assess this requirement, the Board regularly considers the Company's strategy and takes into account the Company's current position and 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.

More information on the principal risks of the Company is set out on page 26 and above.

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 other than the loan facility which is in place and is described in detail in the going concern section above;

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

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

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

· The Directors have considered the ongoing and future effects of the COVID-19 pandemic on the Company and its longer-term viability. More detail on this is included in the Principal Risks and Uncertainties section on page 25.

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. This is discussed further in note 2 on page 95 to 97.

Section 172(1) Statement

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

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

The Company's objective is to provide the potential for a strong, positive, risk-adjusted return to investors by making investments with the intention of growing and developing the revenues and profitability of the target businesses and adhering to HMRC's VCT qualification rules. By making an investment in a VCT, Shareholders are eligible for several tax benefits under VCT tax legislation and therefore encourage investment indirectly in a range of unquoted smaller, higher risk trading companies.

All Share Classes are fully invested in companies spanning hydroelectric power, gas power, rooftop solar and vertical growing. Such investment increases the resources and capital dedicated to the development of renewable energy and contributes to the reduction of greenhouse gas emissions or in the case of gas power, bridges the gap between environmentally unfriendly fossil fuels and more irregular solar and wind power helping to solve these short-term peaks in the electricity demand profile. Vertical growing aims to reduce the risk to food security in the UK along with reducing emissions from the distribution process as vertical farms can be based in and around our cities.

Section 172(1) Principal Decisions

Below are the principal decisions made or approved by the Directors during the year. In taking these decisions, the Directors considered their duties under section 172 of the Act. Principal decisions have been defined as those that have a material impact to the Company and its key stakeholders, as defined on pages 59 to 60

Dividends

The Company declared dividends during the year to all of its Shareholders, 55 pence per C share, 55 pence per D share and 5 pence per E share. This decision represented a significant return of capital for C and D Share Class holders and the first payment of an annual dividend for E Share Class holders.

Sale of Green Highland allt Garbh Limited

The Company completed the sale of its holding in Green Highland allt Garbh Limited. Following recommendation from the Investment Manager, the Directors considered the sale in the context of the Company's Investment Policy, availability of financing and the potential returns to investors.

The D Share Class received net proceeds in excess of £2.71 million from the sale and it contributed significantly to the dividend and partial realisation target which were paid out to Shareholders within six months of the disposal. In considering the need to treat all members fairly, the Directors also considered the qualifying investment requirement of the Company following the disposal and the likely consequence of any decision in the long term.

Facility Agreement

During the year, the Company entered into a facility agreement with TPLP. The secured facility was for £2.7 million at a fixed rate of 4.5% per annum. The Board believed that the facility was in the best interest of those Shareholders and followed the initial mandate of the C and D Share Classes to refinance the hydro portfolio.

The Company utilised £2.3 million of this facility in March 2020 which enabled the Company to return in excess of £12.2 million to Shareholders and meet the initial target set by the Company for all share classes. The Company maintained an active dialogue for the lender to appraise the Company's business model and its portfolio.

Alongside this existing facility, the company has entered into a similar facility agreement with a different lender which includes the same key terms, but also has a two year availability period. This agreement was put in place to mitigate the risk of the existing 364 day loan facility not being extended by the existing lender.

Strategic Report - Investment Manager's Review

Sector Analysis

We have pleasure in presenting our annual review for the year ended 31 March 2020.

As the Chairman highlighted in his statement to Shareholders on pages 9 to 15 we are all currently facing unprecedented, uncertain and challenging times as a result of the ongoing COVID-19 pandemic.

At Triple Point Investment Management, we believe we are well equipped to deal with this challenging situation. The majority of our revenues are recurring, giving us a high level of predictability in our income streams. TPIM can operate effectively with remote, or home working, and as such we do not depend heavily on the regular physical presence of staff in one specific location though, of course, the sales process is often impacted by the lack of face-to-face meetings.

We are well positioned to continue managing the Company efficiently and effectively.

Like many businesses we are facing unprecedented circumstances. Many of our ongoing projects and work streams will no doubt face delays, and whilst this may be challenging, we believe, fundamentally that the types of assets and businesses we fund, the predictable returns we generate, and the impact we have, will never be more attractive to investors.

We are confident that the investee companies invested in by the Company will be resilient and be minimally affected by the COVID-19 pandemic. All Share Classes remain fully invested in companies providing electricity generation in the hydroelectric power, gas power, rooftop solar and vertical growing sectors. Despite the ongoing COVID-19 crisis, investments across all share classes continue to generate electricity and produce output.

As many of the working population are now getting used to working from home, the electricity demand pattern is expected to take a new shape. It is widely anticipated that the electricity demand in the coming weeks and months will largely resemble the consumption pattern on the weekends as more adjust to life working at home.

While we expect the electricity generating companies to be minimally affected by the COVID-19 pandemic, it is inevitable that they may suffer some minor operational delays, as a result of the crisis. Global supply chain disruptions could potentially lead to delays in the sourcing of key components for both the hydroelectric and gas power projects. Key manufacturing hubs are in China, where previous quarantines slowed production to a halt, though some are beginning to reopen, with lower production rates. We continue to liaise with our Operation and Maintenance contractors across all companies to try and avert any potential future delays in the procurement process.

The E Share Class is also invested in a vertical growing business PFC, which we believe is well-placed to contribute in a revised future. The COVID-19 crisis is not only a health crisis but also an economic crisis and a food crisis. Major governance gaps have emerged, first and foremost in regard to insufficient investment in public health, but also in food security.

While extraordinary steps have been taken by some public authorities to secure food provisioning, the crisis has also seen many people left wholly reliant on the charity and solidarity of their neighbours.

What started as a crisis response must be transposed into the new foundations of public governance. Billions of pounds are now being injected into the economy through bailouts, stimulus packages, and quantitative easing. The opportunity cannot be missed to use this money to transform the economy, not simply bail it out. Already, ambitious policy reforms are being devised in the EU and the US to spark the shift towards sustainable food and agricultural systems. These reform packages are now more relevant than ever and should be the vehicle for delivering resilience.

Given supply chain uncertainties and an unpredictable future, many smaller and middle-sized agri-food companies may be on the edge of bankruptcy or under considerable shareholder pressure to act. PFC is able to capitalise on this with its existing strong customer relationships and short growing cycle, enabling it to reliably produce crops for its customers with little disruption and year-round crop production.

When it comes to food production, the last-mile delivery is usually the most expensive part of the supply chain. And it's not uncommon for crops to be shipped across continents and oceans. Growing food closer to where the consumer lives is a substantial vertical growing benefit as it can significantly reduce transportation costs, CO2 emissions and reduce the need for refrigerated storage - making produce fresher and more profitable.

Looking back over the year the net cash outflows to Shareholders for the year were £16.4 million. This represents a significant return of funds to investors. We are proud of this achievement.

Review and Future Developments

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, the Company is expected to receive dividends from FMS.

Solar

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 105 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 GEFE, CMP and DSS portfolios are currently performing in line with, or slightly above, expectations. The DIG portfolio is performing slightly below expectations, and DIG is working closely with its Operations & Maintenance provider in an effort to improve this performance going forward.

Hydroelectric Power

The eleven hydroelectric schemes are "Run of River" plants which capture river flow agreed above a certain level as determined by the Scottish Environment Protection Agency (SEPA). Water flow is generally captured before a descent and flows down the penstock (pipe) to a turbine engine which produces electricity. The water is then returned to the river.

Run of River systems have the advantage of a long operational lifetime, with minimal maintenance. Also, these systems tend to generate the most electricity in the colder months when the demand is greater for electrical heating and extra lighting. 

During the period to 31 March 2020, the hydroelectric companies generated 23,038 MWh of electricity. Based on an average of 3.8 MWh annual use per household, the companies generated enough electricity for 6,062 homes during the period.

The hydro companies benefit from government backed Feed-in Tariff (FiT) payments based on output and from the sale of the electricity produced to utilities or other power companies under Power Purchase Agreements (PPAs). 

The last 12 months have seen lower than expected rainfall across the Scottish Highlands. Rainfall variability is to be expected over the 40 year period of generation which our investee companies are expected to experience overall, and we continue to be pleased with the efficiency of the hydro plants owned by them. The hydroelectric companies remain highly focused on improving efficiencies and maximising output and continue working alongside hydro experts to further enhance performance where possible.

Industry Update

As we highlighted in our Interim Report the hydroelectric companies, together with other industry members and the British Hydropower Association, had been lobbying the Scottish Government to recognise the concern on business rates in the hydro sector. As a result of this, the Tretton Review report was published in January 2020, which unfortunately found that no changes to business rates would be applied.

This was very disappointing news for us and the Hydro Companies.

The report suggests temporary government reliefs, which don't apply equally across the sector and are not guaranteed, should continue, rather than recommending an industry-preferred permanent solution to the unfair rateable value increase in 2017 which far outstripped that faced by other businesses.

The British Hydropower Association along with other industry members continues to pursue this matter and is putting forward different ideas to the Scottish Government.

Solutions put forward by the sector, but which were not mentioned by the Tretton Review include rateable values of 8-10% being prescribed for the small hydro sector, or the wording in current legislation being changed to ensure key components of plant and machinery in hydro construction - the turbine, generator and penstock - are not rateable.

Whilst this is obviously not the outcome that we hoped for, for the financial year 2019/20, the hydroelectric companies received a 60% relief and it is expected that this relief will continue to be applied for the financial year 2020/21.

Gas Power

The Company has an investment which has constructed a gas fired energy centre which will provide a reliable and secure energy supply. The energy centre 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.

In June 2019 the UK Government became the first major economy in the world to pass laws to end its contribution to global warming by 2050. The target will require the UK to bring all greenhouse gas emissions to net zero by 2050, compared with the previous target of at least 80% reduction from 1990 levels.

As a result of this, the UK is aiming to close its coal-fired power plants by 2025, and it is therefore expected that there will be increased pressure on the supply of energy in the UK during periods of peak demand. Although renewable energy makes an increasing contribution, the irregular nature of its production means that other baseload sources will also be required to help make up the deficit.

The UK still experiences significant peaks and troughs in energy consumption. From unexpected cold snaps that prompt consumers to turn up their heating, to the mass switching on of televisions between 4-7pm when people return home from work.

Gas fired energy centres help to solve these short-term peaks in the electricity demand profile. These are small power plants fuelled by gas, and generally run only when there is a high demand for electricity. They bypass the nationwide transmission system to deliver power direct to local distribution networks. Natural gas neatly bridges the gap between environmentally unfriendly fossil fuels and more irregular solar and wind power.

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

Gas fired energy centres play an important role in balancing the UK electricity network, which is growing ever more reliant on renewable energy sources, as the nation shifts towards a low-carbon economy. The National Grid is keen to develop a smart, easily accessible flexible system of supplementary services, which make optimum use of the peaks and troughs of energy demand. With gas fired energy centres fitting the bill for reliable and environmentally friendly energy solutions, the popularity and usage of these plants is significantly increasing around the UK.

This enables greater solar, hydro and wind power generation overall, as the gas fired energy centres are an important facilitator of green energy base load.

How does it work?

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

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

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

Highlights

During the period to 31 March 2020, Green Peak Generation Limited generated 15,150 MWh of electricity. Based on an average of 3.8 MWh annual use per household, the energy centre generated enough electricity for 3,986 homes during the period.

During the period, the company contracted with a market leading Operation & Maintenance ("O&M") provider. The new service provider currently manages a large fleet of the same engines. Following their appointment, both the operational performance and quality of maintenance have significantly improved. We are hopeful that this improved service quality will result in a longer useful life of the equipment.

Historical performance of the asset versus the technical expectations has been modest. Since moving to the new O&M provider there has been an uptick in availability and therefore generation. This is through faster response and repair times with the O&M provider having a greater depth of experience. There has been a reduction in number of faults through better preventative maintenance procedures. Looking forward, we hope to continue working closely with the new provider to continue to improve operational efficiencies and performance across both companies.

Industry Update

In our interim update, we reported on the current status of the Capacity Market. The Capacity Market was originally introduced to provide an insurance policy against the possibility of future blackouts - for example, during periods of low wind and high demand this was to ensure that consumers continued to benefit from reliable electricity supplies at an affordable price.

The Capacity Market is designed to ensure sufficient reliable capacity is available by providing payments to encourage investment in new capacity or for existing capacity to remain open.

On 15 November 2018, the European Court of Justice unexpectedly announced that it did not believe that sufficient work had been undertaken when the European Commission ("EC") approved the UK's Capacity Market scheme. This led to a halt of all payments under the scheme.

On 24 October 2019, the UK reinstated the capacity market scheme following approval by the EC under state aid rules. Following a lengthy and in-depth investigation, the EC found that the scheme is necessary to guarantee security of electricity supply in the UK and is in line with EU energy policy objectives.

We are pleased to announce that Green Peak Generation Limited won a one-year agreement in the recent auctions for the 2022/23 and 2023/24 delivery years.

Vertical Growing

Vertical Growing is the practice of producing food in an indoor growing facility where all inputs (water, light, and nutrients) meet the optimum needs of the crop. Farming indoors is not a new concept, as greenhouse-based agriculture has been in existence for some time.

What PFC is aiming to achieve here that differs radically from what now exists is to scale up the concept of indoor farming, in which a wide variety of produce is harvested in quantity enough to sustain even the largest of cities without significantly relying on resources beyond the city limits. Currently, in traditional farming, maximising crop production takes place over an annual growth cycle that is wholly dependent upon what happens outside - climate and local weather conditions.

Vertical Growing promises to eliminate external natural processes as confounding elements in the production of food, since crops will be grown indoors under carefully selected and well-monitored conditions, ensuring an optimal growth rate for each type of crop year-round. It is estimated that one acre of vertical farm could be equivalent to as many as ten to twenty traditional soil-based acres, depending upon which crop species is considered. Growing food close to home will lower significantly the amount of fossil fuels needed to deliver them to the consumer, and will eliminate forever the need for fossil fuels during the act of farming (i.e., ploughing, applying fertilizer, seeding, weeding, harvesting).

Our Vertical Growing facility is designed to have a sealed environment, meaning that the product is grown under controlled conditions, with positive air pressure to prevent any pests entering the facility. This ensures that insects and other pests cannot attack the crop, removing both the need to use pesticides and to wash the crop before distribution therefore increasing its shelf life. A large variety of produce can be grown using this method including herbs, salad leaves, and beyond. By combining flexible designs and short growing cycles, vertical growing facilities enable the grower to quickly respond to the demands of customers, switching between different products with minimal notice.

As highlighted above, following the COVID-19 pandemic, it is expected that food security will be an item high on the government agenda. This is backed up by the fact that the government is planning to introduce a legal requirement to measure and report on "food security", meaning how much food is available in the UK. The landmark Agriculture Bill currently going through Parliament is the first new legislation on British food and farming post-Brexit. One of the provisions of the Agriculture Bill puts a legal requirement on the government to measure and report on "food security". We believe that PFC is poised to capitalise on this changing landscape while it could see an active increase in valuations across the sector.

We believe PFC is one of the front-runners in the industry and boasts significant technology and know-how developed within its first facility. The construction of the first facility presented many challenges, which was to be expected when considering the innovative and high-tech nature of the build. The initial construction challenges have now been rectified and the facility is up and running and regularly distributing crops to its main customer. The PFC team are now looking towards operational improvements and increasing yield.

"Our mission is to grow the best quality, highly nutritious produce, whilst improving food security in times of economic and political uncertainty. Everything we grow is produced in optimum conditions for that specific crop, without compromise. We strive for zero carbon, producing close to the point of supply, harvesting more, wasting less, with sustainable resource efficient year-round production. Ultimately, we are producing food that tastes great, that you can feel good about eating."

Phill Davies, Chief Agronomist, Perfectly Fresh Cheshire

The investment in PFC has been valued this year at £6.28 million, a £1.28 million increase on the initial £5 million cost of this investment. This represents an equivalent compounded annual return of 10%.

C Share Class

The Company and the Investment Manager will monitor the ongoing operation and efficiency of the C Share Class investments. The C Share Class has investments in three companies which between them own six hydroelectric schemes in the Scottish Highlands.

Further updates on this sector are detailed in the Hydroelectric Power section on pages 36 to 37.

D Share Class

The Company and the Investment Manager will monitor the ongoing operation and efficiency of the D Share Class investments. The D Share Class has investments in three companies which between them own five hydroelectric schemes in the Scottish Highlands.

Further updates on this sector are detailed in the Hydroelectric Power section on pages 36 to 37.

E Share Class

The E Share Class has a diverse portfolio consisting of hydroelectric power, rooftop solar, crematoria, vertical growing and social housing through its investment in a REIT.

TPIM is paid an annual management fee as Investment Manager to the REIT and consequently has agreed to rebate a corresponding part of its management fee relating to this investment, to ensure VCT Investors are not bearing additional fees.

Brexit

While it may seem that Brexit has taken a back seat due to recent circumstances, the Investment Manager and the Board continue to keep the possible impact of Brexit on the Company under review. The Company's strategy of investing in small UK based businesses means that it is unlikely to be directly exposed to the terms of an exit from the EU. We are, however, going through a period of some political and, potentially, economic uncertainty. This has now been exacerbated by the ongoing COVID-19 pandemic.

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

Ben Beaton

Managing Partner

Triple Point Investment Management LLP

15 June 2020

Responsible Investing

UN Sustainable Development Goals

Never before have environmental and social considerations played such a prominent role in the world of finance and investing. This mirrors the shift we are observing in the investment community towards applying an ESG lens to capital allocation.

Triple Point's investment ethos is based on the 17 UN Sustainable Development Goals ("SDGs") and focuses on the four themes of health, environment, children & young people and inequality. We invest in companies that meet our impact threshold and measure their impact on an ongoing basis. Our aim is to provide an estimate of a company's impact that is measurable, comparable and is delivered at an appropriate level of resource.

What are the SDGs?

The 17 UN SDGs sit at the heart of the 2030 Agenda for Sustainable Development. Adopted by all United Nations Member States in 2015, the SDGs provide the blueprint for a more sustainable future by tackling some of the biggest and most urgent global challenges we face, such as poverty, inequality, climate change and environmental degradation.

Climate change will influence the achievement of most, if not all, of the SDGs.

The SDGs were agreed by all UN Member States as the blueprint to achieve a better and more sustainable future for all.

The SDGs can be broadly grouped into five overarching elements: people, planet, prosperity, peace and partnership and are made up of 17 inter-related and mutually supporting goals.

The SDGs are emerging as a global framework for investors and corporations to prioritise agendas, and report on their impact. 72% of respondents to the Global Impact Investing Network ("GIIN") investor survey use the SDGs to measure and report on their impact.

The UN Sustainable Development Goals lists the need for achieving food security, improved nutrition and promoting sustainable agriculture globally. The organisation aims to seek sustainable solutions to end hunger by 2030. With declining arable land, retreating quality of existing farmland, soil erosion, erratic climate and rainfall, vertical growing techniques with low dependence on climate are being looked at as solutions to improve quality of life. With progressive solutions and implementation, the European vertical growing market holds the largest demand, with over one-third of the entire global share. This is due to the presence of extensive R&D centres and availability of funding.

Strategic Report - Investment Portfolio Summary

Strategic Report - Investment Portfolio Summary

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 not quoted on an active market is the transaction price (i.e. cost). The fair value of these investments is subsequently measured by reference to the enterprise value of the investee company, which is best deemed to reflect the fair value. Where the Board considers the investee company's enterprise value to remain unchanged since acquisition, investments continue to be held at cost less any loan repayments received. Where the Board considers the investee company's enterprise value has changed since acquisition, investments are held at a value measured using a discounted cash flow model or the value expected to be realised on disposal which is equivalent to fair value.

For accounting periods commencing 1 January 2019 onwards, updated International Private Equity and Venture Capital Valuation ("IPEV") guidelines no longer allow "cost" and "price of a recent investment" to be used as the primary valuation technique when valuing investments. This is discussed further in note 10.

10 Largest Investments

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

David Frank

Chairman

15 June 2020

GOVERNANCE

Board of Directors

Michael Stanes has been an Investment Director at Heartwood Investment Management, a London-based firm providing investment management and wealth structuring services for high net worth individuals, since 2010. 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 Chairman 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 focused on investing in the green economy. 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 and 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 55 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, taking into account 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 Chairman, David Frank, leads the Board and is responsible for its overall effectiveness in directing the Company. The Chairman leads the process in determining its strategy and the achievement of its objectives. The Chairman 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 Chairman 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 Chairman 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 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. There is a schedule of matters reserved for the Board which includes:

• 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 Chairman 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.

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 Annual General Meeting.

Independence of Directors

The Board has a Non-Executive Chairman 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 do 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. Two of the three 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.

As part of the annual evaluation, the Directors considered length of service of the Board as a whole and agreed to implement a succession plan that addresses the regular refreshment of Board membership whilst maintaining continuity.

Policy on Tenure of the Chairman

The Board considers that the length of time each Director, including the Chairman, 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. The Remuneration Report is detailed on pages 66 to 70.

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.

The attendance of the Audit Committee is detailed in the Audit Committee report on pages 62 to 64.

Performance Evaluation

The Board, led by the Chairman, 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 its first 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 Chairman, 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:

· Greater focus should be given to the tenure of the Board to ensure that membership is regularly refreshed. The Board agreed that a clear succession plan in the immediate and longer term be established that considers diversity of gender, social and ethnic backgrounds with the intention to gradually refresh Board membership.

· Further training on an ongoing basis and regular updates on legal, regulatory and governance matters should be provided to the Board. The Board agreed that additional governance and compliance reports and training be provided at future Board meetings.

· The feedback and views of Shareholders be further understood. The Board agreed that additional reporting from the Investment Manager be provided and engagement increased where applicable.

Corporate Social Responsibility

The Board is committed to integrating social, environmental and governance matters in the Company's business operations, including the Company itself and the companies it invests in. The Board is actively seeking ways to interact with their stakeholders. The Board seeks to avoid investing in companies which do not operate within ethical, environmental and social legislation. Details on the Company's responsible investing can be found on page 45

Internal Control and Risk Management

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

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

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

The Directors have established an ongoing process designed to meet the particular needs of the Company in identifying, evaluating and managing the significant and emerging risks to which it is exposed including, among others, market risk, VCT qualifying investment risk and operational risks which are recorded on a risk register. The controls employed to mitigate these risks are identified and the residual risks are rated taking into account the impact of the mitigating factors. The risk register is reviewed bi-annually. The principal risks and uncertainties including emerging risks identified from the risk register and a description of the Group's risk management procedures can be found on pages 26 to 27.

TPIM is engaged to provide accounting services, and Hanway Advisory Limited is engaged to provide secretarial services and retains physical custody of the documents of title relating to investments.

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.

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 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 statement on pages 29.

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 

In addition to the formal business of the Annual General Meeting where Shareholders have an opportunity to question the Board and the Investment Manager on matters relating to the Company's operation and performance, formal updates are provided to Shareholders on a quarterly basis. The Board and the Investment Manager will also respond to any written queries made by Shareholders during the course of the year. The Chairman provides feedback to the Board and is responsible for providing a clear understanding of the views of Shareholders to the Board. The Board recognises the importance of providing strong financial returns to Shareholders and the eligible tax benefits under VCT tax legislation and takes this into consideration when making investments into and from investee companies, approving offers for subscription and declaring declarations.

Investee Companies

The Company via its Investment Manager has important relationships with individuals responsible for the maintenance and performance of its investee companies. This includes monthly operational reports from the Operation & Maintenance ("O&M") providers. Site visits are undertaken at least annually by representatives from the Investment Manager including the Investor Directors and portfolio management team. The Investment Manager is in regular contact with the O&M providers.

Management accounts and performance reports are provided to the directors of investee companies on a quarterly basis.

As part of achieving its investment objectives, the Company provides funding to a number of investee companies and as such, has debtor relationships with several companies. Should issues arise with payment deadlines, the Investment Manager, on behalf of the Company will consider appropriate measures to engage with any debtors and take into consideration their circumstances, with the aim of not causing detriment to the Company's long term sustainable success.

Investment Manager

The Company maintains a good relationship with the Investment Manager, Triple Point Investment Management LLP and regularly considers its performance. The Investment Manager attends every Board meeting and presents a detailed portfolio analysis and reports on key issues such as VCT compliance, investment pipeline and valuations.

Community

The Directors recognise that the long term success of the Company is linked to the success of the communities in which the Group, and its investee companies, operate. The Board encourages the responsible investment ethos of the Investment Manager that is based on the 17 UN Sustainable Development Goals. The Board is cognisant of the impact of the Company's operations and of the companies in which it invests and believes that its investment activities have many positive benefits beyond the returns delivered for Shareholders.

Directors' Share Interests

All of the Directors' share interests were held beneficially and they are actively encouraged to own shares. 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

Chairman 

15 June 2020

Audit Committee Report

The Audit Committee consists of the Chairman, 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

In respect of the year ended 31 March 2020, 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 periodic reports on the effectiveness of TPIM's compliance procedures;

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

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

· Reviewing the Company's 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 VCT status;

· Valuation and existence of unquoted investments; and

· Net asset value projections of the C, D and E Share classes.

Compliance with HMRC Conditions

The Investment Manager provides the Board with monthly qualifying investment updates. This report shows the current qualifying percentage position of the Company and highlights actions which may be required to maintain this position in the future. The qualifying position of the Company is a recurring agenda item at Board meetings and is often discussed by the Board at length.

The Company also has in place an engagement with Philip Hare and Associates LLP, the Board seek their opinion before undertaking any material transaction which may affect the qualifying status of the Company.

Valuation & Net Asset Value Projections

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

There is also an inherent risk of management override as the Investment Manager's fee is calculated based on NAV as disclosed in note 5 to the financial statements. The Investment Manager is responsible for calculating the NAV, prior to approval by the Board.

On a quarterly basis, the Investment Manager provides a detailed analysis of the NAV highlighting any movements and assumption changes from the previous quarter's NAV. This analysis and the rationale for any changes made is considered and challenged by the Chairman of the Audit Committee and subsequently considered and approved by the Board.

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 Annual General Meeting.

The FRC's Ethical Standard requires the audit partner to rotate every five years. The first audit engagement for BDO LLP was for the year ended 31 March 2018.

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 terms of reference are available on request from the Company Secretary.

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. Details of fees paid to BDO LLP during the year are disclosed in note 8 to the financial statements.

There were no non-audit services 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 has a director on the board of all 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 had 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 2020 and has reported to the Board that it considers them to be fair, balanced and understandable providing the information necessary for Shareholders to assess the Company's position, performance, business model and strategy.

On behalf of the Board.

David Frank

Audit Committee Chairman 

15 June 2020

Directors' Remuneration Report

Statement of the Chairman

I am pleased to present the Remuneration Report on behalf of the Board for the year ended 31 March 2020.

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 2020. 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 for the future and will be subject to a binding shareholder vote at our 2020 AGM. There have been no changes to the policy since its approval by Shareholders at the 2017 AGM other than presentational amendments to display the policy in a simple and transparent manner.

· Annual Remuneration Report - This sets out how our Directors were paid for the period ended 31 March 2020. There will be an advisory shareholder vote on this section of the report at our 2020 AGM.

The Company's auditor, BDO LLP, is required to give their opinion on certain information included in this report, comprising the Directors' emoluments section and their shareholdings below. Their report on these and other matters is set out on pages 76-81.

During the period, as part of the performance evaluation undertaken by the Board, the remuneration of the Directors was reviewed, taking into account the Company and individual performance.

The Board agreed that the fees of the Non-Executive Directors and the Chairman should be increased to reflect the time commitment and responsibilities of the role. The fee for the Non-Executive Directors (excluding the chairman) was increased from £17,500 to £21,000 and the fee for the Chairman was increased from £20,000 to £24,000.

This fee increase took effect from 1 April 2020. The increased remuneration of the Directors reflects the findings of a benchmarking exercise undertaken by the Company Secretary in which the remuneration of directors of comparable VCT of a similar size, objective and structure were evaluated against those of the Company's Directors.

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

Chairman

15 June 2020

Directors' Remuneration Policy

Approval of Remuneration Policy

The Company's Remuneration Policy was last approved on 24 August 2017 at the Annual General Meeting. In accordance with section 439A of the Companies Act 2006, a resolution to approve this Directors' Remuneration Policy will be proposed at the Annual General Meeting of the Group to be held on 23 July 2020. If the resolution is passed, the provisions of the policy will apply until they are next put to Shareholders for renewal of that approval, which must be at intervals of not more than three years, or if the Remuneration Policy is varied, in which event Shareholder approval for the new Remuneration Policy will be sought.

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.

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 Annual General Meeting in each financial year.

Policy on Payment for Loss of Office

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

Consideration of Shareholder Views

The Company is committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. Where there are substantial votes against resolutions in relation to directors' remuneration, the 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.

Future Policy Table

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

Annual Remuneration Report

Directors' Fees

Details of each Director's contract is shown below. The Chairman is paid more than the other Directors to reflect the additional responsibilities of the role.