Annual Financial Report

Triple Point VCT 2011 plc

LEI: 213800AOOAQA5XQDEA89

The financial information set out in these statements does not constitute the Company's statutory accounts for the year ended 28 February 2019, prepared in accordance with section 435 of the Companies Act 2006, but is derived from those accounts. Statutory accounts will sent 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.

Final Results

Triple Point VCT 2011 plc managed by Triple Point Investment Management LLP today announces the final results for the year ended 28 February 2019.

These results were approved by the Board of Directors on 23 May 2019.

You may view the Annual Report in due course on the Triple Point website www.triplepoint.co.uk

Financial Summary

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

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

· B Shares: On 29 April 2016 the B Share Class offer closed having raised £6,972,311 with a total of 6,824,266 B Shares being issued.

The Strategic Report on pages 2 to 23, the Directors' Report on pages 24 to 27, the Corporate Governance report on pages 29 to 32 and the Directors' Remuneration Report on pages 35 to 38 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 VCT 2011 plc.

The Directors submit to the members their Annual Report and Financial Statements for the Company for the year ended 28 February 2019.

Strategic Report

The Strategic Report, on pages 2 to 23, 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.

Chairman's Statement

I am writing to present the Financial Statements for Triple Point VCT 2011 plc ("the Company") for the year ended 28 February 2019.

During the year the Company launched a new Venture Fund offer which has raised £6m to date. The first allotment from these funds took place after the year end in March 2019.

There were no significant changes in the investment holdings of the A Share Class or the B Share Class which continue to perform broadly in line with expectations. 

Investment Portfolio

The Company's funds at 28 February 2019 were 99% invested in a portfolio of VCT qualifying and non-qualifying unquoted investments. It continues to meet the condition that 70% of relevant funds must be invested in qualifying investments, which will increase to 80% for the Company from 1st March 2020.

The Investment Manager's review on pages 12 to 16 gives an update on the portfolio of investments in 12 small unquoted businesses.

A Share Class

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

The A Share Class has recorded a profit over the period of 7.34p per share and as at 28 February 2019 the NAV per share stood at 110.49p, which when taken with dividends paid to date provides a total shareholder return of 118.24p.

On 22 December 2018, the Company, by way of a special resolution, cancelled its Share Premium account relating to the A Share Class creating a special distributable reserve. The cancellation of the Share Premium will enable the Company to pay dividends at higher levels in order to meet the A Share Class dividend payment target.

The Company's distributable reserves were restricted until after 1 March 2019, when the restriction period under VCT legislation will end for the Share Class.

The Board has resolved to pay a fourth dividend of 4.00p. This represents a significant increase on the dividend paid last summer when distributions were restricted by a lack of distributable reserves. The A share class, during the initial deployment stage, is targeting an aggregate cash return to investors of 100.00p including the initial tax rebate of 30.00p, by the end of year six from a mixture of tax-free dividends and a capital realisation. This is discussed further on page 4.

This dividend announcement brings the total dividends paid to date to 11.75p per share from a combination of the annual dividends and a special dividend which was paid in February 2019.

B Share Class

The B Share Class has investments in two companies that have each constructed a gas fired energy centre. In May 2018 both energy centres were successfully commissioned and are now fully operational. Following this period of successful operation and the reduction of construction risk, the Board is pleased to announce an uplift in valuation for both companies.

The B Share Class has recorded a profit over the year of 6.10p per share, predominantly due to an uplift in the valuation of the two companies which operate gas fired energy centres.

The NAV per share at 28 February 2019 was 106.10p compared to 100.00p at 28 February 2018.

The Board has resolved to pay the B Shareholders their first dividend of 5.00p in line with the B Share Class return target.

Specific Risks

The principal risks which the Board feel the Company is facing are discussed in further detail on page 10. In particular the Board consider specific risks to be;

· Compliance risk of failure to maintain approval as a qualifying VCT;

· Investment risk associated with the VCT's portfolio of unquoted investments, including the inability to invest funds raised and the inability to realise funds to facilitate return to investors;

· Financial risk of investing on a medium to long-term basis; and

· Risk of failure of internal controls.

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

Outlook

In the Financial Accounts for the year ended 28 February 2018 we highlighted changes to the VCT landscape with the government, through its 'Financing Growth in Innovative Firms' consultation ("the Patient Capital Review") emphasising the importance of VCT's in helping to provide investments into SMEs. Several changes were introduced, including increasing a VCT's minimum qualifying percentage threshold from 70% to 80% which will come into effect for the Company from 1 March 2020.

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

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

The Company and the Investment Manager will ensure that the Company is compliant with the new rules as they come into force in relation to the new Venture Fund and the VCT as a whole.

Venture Fund

In September 2018 the Company launched a new Venture Fund Offer targeting investment in early stage businesses. The Venture Fund offer will close on 31 August 2019 and has raised £6 million to date. The first allotment from these funds took place after the year end in March 2019.

The funds aim is to acquire a portfolio of Qualifying Investments in early stage companies, capable of generating significant long-term capital growth, whilst enabling investors to take advantage of the substantial tax reliefs available to Investors in VCTs, including 30% income tax relief on amounts invested. To date £450,000 has been invested into such qualifying companies.

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

Jane Owen

Chairman

23 May 2019

Strategic Report - Company Strategy and Business Model

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

Performance Update

The target for the A Share Class is to pay dividends of an average 5p per share from 2017 for four years, followed by a partial realisation targeted to bring the aggregate distribution from the Company to 70p per A Share after five years. Thereafter an ongoing dividend of 3.50p per annum of net asset value is targeted for a further nine years. The A Share Class reported a strong return of 3.39p on income and 3.95p on capital return for the year to 28 February 2019. The net asset value per share for the A Share Class at 28 February 2019 stood at 110.49p.

The target for the B Share Class is to pay dividends of an average 5p per share from 2019. The B Share Class reported an income loss of 0.09p and a capital return of 6.19p for the year to 28 February 2019. The net asset value per share for the B Share Class at 28 February 2019 stood at 106.10p.

The Board and the Investment Manager are both committed to ensuring that returns on the investment portfolio are optimised and that the VCT continues to be managed in line with the Company's investment strategy and risk profile.

The Board expects the Investment Manager to deliver a performance which meets the objective of achieving long-term investment returns, including tax-free dividends. A review of the performance of the Company's investments during the financial year, the position of the Company at the year end and the outlook for the coming year is contained within the Chairman's Statement on page 2 to 3 and the Investment Manager's Review on pages 12 to 16.

Investment Policy

Investment Objectives

The Company's Investment Policy is directed towards new investments in businesses which either: (i) have the potential for high growth, or (ii) are cash flow generative businesses with a high-quality customer base. All investments must provide the potential for a strong, positive, risk-adjusted return to investors. All investments will be made with the intention of growing and developing the revenues and profitability of the target businesses.

Venture Fund

The Company's Venture Fund focuses on providing funding to unquoted companies at an early stage in their lifecycle to help them grow and scale. The Venture Fund will typically make initial investments of between £50,000 and £2 million and may make further follow-on investments into existing portfolio companies. The intention is to build a portfolio of predominantly unquoted companies with significant growth potential across a diversified range of sectors.

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

A & B Shares

The key objectives of the Company's A Share Fund and B Share Fund are to:

· Pay regular tax-free dividends to investors;

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

· Reduce the volatility normally associated with early stage investments by applying its Investment

Policy;

· Make investments typically in the range of £500,000 to £5 million in companies with contractual

revenues from financially sound counterparties; and

· In respect of the B Share Fund only, provide investors with the option to exit shortly after 5 years

following investment.

The Company will not vary any of the above objectives for the Venture Fund, A Share Fund or B Share Fund to any

material extent without the approval of the Shareholders.

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, with a focus on unquoted companies with high growth

potential for the Venture Fund; and

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

investments.

Qualifying Investments

Investment decisions made must adhere to HMRC's VCT qualification rules. In considering a prospective

investment in a company, particular regard is made to:

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

· a significant, often global, total addressable market;

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

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

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

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

· an attractive valuation at the time of the investment;

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

· in respect of the B Share Fund, the prospect of achieving an exit after 5 years of the life of the B Share Fund.

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

As the value of investments increase, Triple Point will monitor opportunities for the Company to realise capital gains to enable TP11 to make tax-free distributions to shareholders.

Non-Qualifying Investments

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

Borrowing Powers

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

Risk Diversification

The Company aims to invest in a number of different businesses within different industry sectors but may focus investments in a single sector where appropriate to do so. No single investment by the Company will represent more than 15 per cent 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 TP11's investments is as follows:

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

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

· 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.

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

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 when valuing investments. This is discussed further in note 10.

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

For the Venture Fund, the Company intends to distribute 3 pence per Venture Share in the financial year ending 28 February 2021, 3 pence per Venture Share in the financial year ending 28 February 2022, followed by regular dividends of up to 5 pence per Venture Share per annum. The Company's ability to pay dividends is subject to the existence of realised profits, legislative requirements, and the available cash reserves.

Share Buy-Back Policy

TP11 aims, but is not committed, to offer liquidity to Shareholders through on-going buy-backs, subject to the availability of distributable reserves, at a target discount of 5% to net asset value.

Share Realisation Policy

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

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

Key Performance Indicators

As a VCT the Company's objectives are providing Shareholders with up front tax relief and returns through capital appreciation and the payment of dividends.

The main KPIs in meeting these objectives are:

· Net Asset Value plus dividends paid; and

· Earnings per share

A record of these indicators is detailed on page 1 entitled Financial Summary.

Tax Benefits

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

Investing in a VCT brings the benefit of tax-free dividends, as well as up-front income tax relief. 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 on the following pages:

Investment Portfolio - A Share Class

VCT Qualifying Investments 69%

VCT Non-Qualifying Investments 31%

Cash 0%

** Please note that the percentage of qualifying investments above is not representative of the Company as a whole, whose qualifying investments exceed the requisite 70% threshold.

Investments by Sector - A Share Class

Hydro Electric Power 69%

SME Funding Hydro Electric Power 17%

SME Funding Other 14%

Investment Portfolio - B Share Class

VCT Qualifying Investments 75%

VCT Non-Qualifying Investments 24%

Cash 1%

Investments by Sector - B Share Class

Gas Power 76%

SME Funding - Other 24%

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 3, 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 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. From the 1 March 2020, the percentage of the Company's investments held in "qualifying holdings" will increase to 80% from 70%.

FCA Regulation

On 22 July 2014 Triple Point VCT 2011 plc registered with the Financial Conduct Authority as a small Alternative Investment Fund Manager ("AIFM") under the AIFM Directive.

Exit Programme

The Company and Investment Manager continue to be committed to ensuring a timely exit and return of funds to B Class Shareholders as soon as practicable after the end of the minimum five-year holding period. The Investment Manager has a strong track record in managing such exits. In relation to the A Share Class the Company is intending to secure a partial realisation after five years but plans to retain its investment in the Hydro companies until 2030.

Principal Risks and uncertainties

The Directors carry out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The main areas of risk identified by them, along with the risks to which the Company is exposed through its operational and investing activities, are detailed below.

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. 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. 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. The key elements of financial risk are discussed in more detail in note 15.

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.

Viability Statement

In accordance with provision C.2.2 of the 2016 revision to the UK Corporate Governance Code, 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 29 February 2024, 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 the viability. During the next five years, the B Share Class will reach its 5-year holding period and the A Share Class will partially exit, based on this the Directors believe it is reasonable to make their assessment over 5 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 10.

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

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

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

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

· 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.

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.

Share Price Discount Policy

The Company has a share buy-back facility, committing to buy back shares at no more than a 10% discount to the prevailing NAV, subject to the Directors' discretion. We will be asking shareholders at the Annual General Meeting to extend the facility for the Company to purchase shares in the market for cancellation. Shareholders should note that if they sell their shares within five years of subscription, they forfeit any tax relief obtained. If you are considering selling your shares, please contact TPIM on 020 7201 8989.

Environmental, Social, Employee and Human Rights Issues

As an externally managed investment company with no employees the Company does not maintain specific policies in relation to these matters. Due to the nature of the Company's activities, there being no employees and only 3 Non-Executive Directors, there are no Human Rights Issues to report. Its investment in companies engaged in energy generation from renewable sources means it will contribute to the reduction in carbon emissions.

Gender Diversity

The Board of Directors comprises 1 female and 2 male Directors. The Investment Manager has 93 staff of whom 50 are men and 43 are women.

Strategic Report - Investment Manager's Review

Sector Analysis

The unquoted investment portfolio can be analysed as follows:

* Other SME funding includes £1,445,000 of A Ordinary Share Class investments and £1,726,000 of B Ordinary Share Class investment in to a UK based LLP which provides finance to small and medium sized enterprises.

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

This year the Company elected to raise funds for new investments. The Venture Fund was launched in September 2018 and will primarily focus on providing funding to unquoted companies at an early stage in their lifecycle to help them grow and scale. The Venture Fund's investment strategy was developed to help start-ups establish market fit faster and increase their chances of reaching scale.

A number of new requirements were put in place following the Patient Capital Review, including an increase in the threshold for qualifying investments from 70% to 80% for accounting periods commencing after 6 April 2019. The Investment Manager monitors compliance with all qualification conditions closely and maintains a forward-looking Qualifying Investment Tracker. We are confident that we can ensure continuing compliance with all conditions.

The Company's A & B Share Class portfolio consists of businesses which are fully operational and revenue generating. Generally, performance during the year across the portfolio has been in line with expectations with the A Share Class recording an uplift in NAV (including dividends) from the performance of its portfolio from 110.90p per share to 118.24p per share. The B Share Class recorded an uplift from 100.00p per share to 106.10p per share due to the revaluation of its qualifying investments from a cost basis to a discounted cash flow basis following completion of construction in both cases.

Review & Outlook

A Share Class

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

The seven hydro-electric schemes are "run of river" plants which capture river flow agreed above a certain level as determined by the Scottish Environment Protection Agency (SEPA). Water flow is generally captured before a descent and flows down the penstock (pipe) to a turbine engine which produces electricity. The water is then returned to the river. The hydro companies benefit from government backed Feed-in Tariff (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 companies have continued to obtain better power prices than were originally forecast, currently earning an average of 6.3 pence per kWh compared to an expected 5 pence per kWh at the outset of the projects.

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 hydro-electric companies remain highly focussed on improving efficiencies and maximising output and are working alongside hydro experts to further enhance performance.

Industry Update

The hydro-electric companies, together with other industry members and the British Hydropower Association, are continuing to lobby the Scottish Government to recognise the concern on business rates in the hydro sector. For the financial year 2018/19, the hydro-electric companies received a 60% relief and it is expected that this relief will continue to be applied for the financial year 2019/20 and until such time as the Scottish Government address the issues of the business rates in the hydro sector.

In July 2018, the government announced the end of the FiT scheme for renewable energy from 31st March 2019. All businesses that already have FiT registrations will continue to receive payments for the remainder of their agreement. Therefore, as the companies entered in to 20-year agreements prior to this announcement, the seven hydro-electric companies are unaffected by this change.

B Share Class

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

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

Gas 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.

Both qualifying companies are fully operational. During the six-month period to 31 December 2018, Green Peak Generation Ltd generated 4,483 MWh of electricity, and Distributed Generators Ltd generated 2,923 MWh of electricity. Based on an average of 3.8 MWh annual use per household, the energy centres generated enough electricity for 2,359 and 1,538 homes respectively during the period.

Green Peak Generation is working with the contractor to replace the engine silencers, at no cost to Green Peak Generation owing to their poor acoustic performance. This is expected to be completed in June 2019.

Industry Update

The Capacity Market consists of fixed payments to power generators to ensure they are available during periods of high demand. Eligible power generators must bid in an auction process to win a contract, they will then receive these payments in exchange for ensuring the generator is available during the peak demand periods.

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, leading to a halt to all payments under the scheme.

The UK's Department for Business, Energy and Industrial Strategy ('BEIS') have indicated they are working closely with the EC to secure approval and have suggested they anticipate securing this approval by the end of 2019 (including making the currently frozen Capacity Market payments). As the expected impact of this announcement is only a delay in payments which will be received by the projects, it is not anticipated that this will have a material impact on investor returns, but there is currently uncertainty over the timing of when these revenues will be received.

In addition, Ofgem completed its review of embedded benefits available to small generators and announced certain planned changes. Albeit a relatively small element of the revenue generated by the companies, embedded benefits form another income stream which the energy centres receive. Assuming these changes are implemented, this will have the effect of reducing the income the energy centres are able to earn as well as introducing a small cost for each MWh of electricity that is generated. This is expected to have a minor negative impact on investor returns.

Non-Qualifying Investments

SME Funding

The Company has non-qualifying investments in four finance companies. These four finance companies provide funding for business critical loans and asset finance to over 75,000 UK Corporate and SME customers.

Brexit

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. 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.

Venture Fund

The Company made the first allotments into its new Venture share class in late March 2019 and completed its first two investments in early April 2019 into MWS Technology Limited and Augnet Limited.

The Venture share class (known as the Venture Fund) targets significant capital growth by investing in innovative businesses that are solving real-world corporate challenges. To underpin the investment opportunity flow for the new share class, the Company and the Investment Manager have established relationships with several new Venture Partners who specialise in advising larger corporate and public sector organisations on how to use products and services from start-up and SME companies to drive innovation and efficiency gains. The Company will have the opportunity to consider investing in many of the smaller, growth orientated companies.

Many, though not all that the venture fund invests, of the companies that we invest in will involve the use of new technology and be knowledge-intensive, very much the types of innovative British businesses that the Government wishes to see backed by VCT capital. One particular area of focus for the Venture Fund will be companies delivering software-as-a-service, helping to automate and improve workplace practises. Most investee companies will already be generating revenues from their core products.

The Venture Fund's dividend policy is to target a 3 pence per share dividend in 2020 and 2021 with dividend payments thereafter being dependent on the realisation of gains from within the investment portfolio.

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

Ben Beaton

Managing Partner

For Triple Point Investment Management LLP

23 May 2019

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 unquoted on an active market is the transaction price (i.e. cost). The fair value of these investments is subsequently measured by reference to the enterprise value of the investee company, which is best deemed to reflect the fair value. Where the Board considers the investee company's enterprise value to remain unchanged since acquisition, investments continue to be held at cost less any loan repayments received. Where the Board considers the investee company's enterprise value has changed since acquisition, investments are held at a value measured using a discounted cash flow model or the value to be realised on disposal which is equivalent to fair value.

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.

Strategic Report - Investment Portfolio Ten Largest Unquoted Investments

* The investment is valued on a discounted cash flow basis, but is restricted to cost due to the drag along rights held by a co-owner.

\* The directors consider the fair value to be equivalent to the par value.

\* The directors consider the fair value to be equivalent to the par value.

Strategic Report -Significant Influence

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

· The investments are a combination of debt and equity.

· Equity holding is equal to the voting rights.

· All investments are held in the UK.

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

Jane Owen

Chairman

23 May 2019

Report of the Directors

The Directors present their Report and the audited Financial Statements for the year ended 28 February 2019.

Details of Directors

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

Chad Murrin graduated in law from Cambridge University, and then qualified as a barrister. He worked for 3i Group plc from 1986-2004, the last five years as 3i's Corporate Development Director. In 2004, he set up his own corporate advisory business, Murrin Associates Limited. He holds the Advanced Diploma in Corporate Finance from The Corporate Finance Faculty of the ICAEW. He is a Non-Executive Director of Keytask Management Limited, E.W. Beard (Holdings) Limited, Procom-IM Limited and other companies.

Tim Clarke graduated in PPE from Oxford University. He joined Panmure Gordon & Co as an equities analyst, subsequently becoming a Partner and Head of Research. He joined Bass PLC in 1990, holding a number of operating roles in the Hotels, Pub and Restaurant divisions before becoming Chief Executive in 2000. Following its demerger he was Chief Executive of Mitchells & Butlers PLC until 2009. He was a Non-Executive Director of Associated British Foods PLC from 2004 until 2017. He is currently Chairman of Birmingham Airport, Chairman of Timothy Taylor & Co Ltd, and a Non-Executive Director of Hall & Woodhouse Ltd. He is Vice-Chairman of the Foundation of the Schools of King Edward VI in Birmingham. 

All Directors are considered to be independent.

The Board has considered provision B.7.2 of the UK Corporate Governance Code (April 2016) and believes that all the Directors continue to be effective and to demonstrate commitment to their roles, the Board and the Company. The Directors are discussed further within the Corporate Governance report on pages 29 to 32 which demonstrates the Boards compliance with the UK Corporate Governance code.

Activities and Status

The Company is a Venture Capital Trust and its main activity is investing. The Company has chosen to focus its investing activities towards companies involved in renewable energy, energy production and SME funding.

The Company has been approved as a VCT by HMRC and, in the opinion of the Directors, has conducted its affairs so as to enable it to continue to obtain such approval.

The Company is registered in England as a Public Limited Company (Registration number 07324448). The Directors have managed, and intend to continue to manage, the Company's affairs in such a manner as to comply with Section 274 of the Income Tax Act 2007 which grants approval as a VCT.

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

Post Balance Sheet Events

For details of post balance sheet events see note 20 to the Financial Statements.

Directors' and Officers' Liability Insurance

The Company has, as permitted by S233 of the Companies Act 2006, maintained insurance cover on behalf of the Directors and Company Secretary, indemnifying them against certain liabilities which may be incurred by them in relation to their offices with the Company.

Matters Covered in the Strategic Report

Dividends and financial risk management have both been discussed within the Strategic Report on page 6.

Management

TPIM acts as Investment Manager to the Company. The principal terms of the Company's management agreement with TPIM are set out in note 5 to the Financial Statements.

The Board has evaluated the performance of the Investment Manager based on the returns generated since taking on the management of the Fund and a review of the management contract and the services provided in accordance with its terms. As required by the Listing Rules, the Directors confirm that in their opinion the continuing appointment of TPIM as Investment Manager is in the best interests of the shareholders as a whole. In reaching this conclusion the Directors have taken into account the performance of other VCTs managed by TPIM and the service provided by TPIM to the Company.

Substantial Shareholdings

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

Global Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from the operations of its Company, nor does it have responsibility for any other emission producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

Annual General Meeting

Notice convening the 2019 Annual General Meeting of the Company and a form of proxy in respect of that meeting can each be found at the end of this document.

Share Capital, Rights Attaching to the Shares and Restrictions on Voting and Transfer

The A Share capital is £100,000 divided into 10,000,000 shares of 1p each, of which 9,951,133 shares were in issue at 28 February 2019. The B Share capital is £100,000 divided into 10,000,000 shares of 1p each, of which 6,824,266 shares were in issue at 28 February 2019. As at that date none of the issued shares were held by the Company as treasury shares. Subject to any suspension or abrogation of rights pursuant to relevant law or the Company's articles of association, the shares confer on their holders (other than the Company in respect of any treasury shares) the following principal rights:

a) the right to receive, out of profits available for distribution, such dividends as may be agreed to be paid (in the case of a final dividend in an amount not exceeding the amount recommended by the Board as approved by shareholders in general meeting or in the case of an interim dividend in an amount determined by the Board). All dividends unclaimed for a period of 12 years after having become due for payment are forfeited automatically and cease to remain owing by the Company;

b) the right, on a return of assets on a liquidation, reduction of capital or otherwise, to share in the surplus assets of the Company remaining after payment of its liabilities pari passu with other holders of A Shares of that class and B Shares of that class.

c) the right to receive notice of and to attend and speak and vote in person or on a poll by proxy at any general meeting of the Company. On a show of hands every member present or represented and voting has one vote and on a poll every member present or represented and voting has one vote for every share of which that member is the holder; the validly executed appointment of a proxy must be received not less than 48 hours before the time of the holding of the relevant meeting or adjourned meeting or, in the case of a poll taken otherwise than at or on the same day as the relevant meeting or adjourned meeting, be received after the poll has been demanded and not less than 24 hours before the time appointed for the taking of the poll.

These rights can be suspended. If a member, or any other person appearing to be interested in shares held by that member, has failed to comply within the time limits specified in the Company's articles of association with a notice pursuant to S793 of the Companies Act 2006 (notice by a Company requiring information about interests in its shares), the Company can, until the default ceases, suspend the right to attend and speak and vote at a general meeting and if the shares represent at least 0.25% of their class the Company can also withhold any dividend or other money payable in respect of the shares (without any obligation to pay interest) and refuse to accept certain transfers of the relevant shares.

Shareholders, either alone or with other shareholders, have other rights as set out in the Company's articles of association and in company law. (Principally, the Companies Act 2006).

A member may choose whether his or her shares are evidenced by share certificates (certificated shares) or held in electronic (uncertificated) form in CREST (the UK electronic settlement system). Any member may transfer all or any of his or her shares, subject in the case of certificated shares to the rules set out in the Company's articles of association or in the case of uncertificated shares to the regulations governing the operation of CREST (which allow the Directors to refuse to register a transfer as therein set out); the transferor remains the holder of the shares until the name of the transferee is entered in the register of members. The Directors may refuse to register a share transfer if it is in respect of a certificated share which is not fully paid up or on which the Company has a lien provided that, where the share transfer is in respect of any share admitted to the Official List maintained by the UK Listing Authority, any such discretion may not be exercised so as to prevent dealings taking place on an open and proper basis, or if in the opinion of the Directors (and with the concurrence of the UK Listing Authority) exceptional circumstances so warrant, provided that the exercise of such power will not disturb the market in those shares. Whilst there are no squeeze-out and sell out rules relating to the shares in the Company's articles of association, shareholders are subject to the compulsory acquisition provisions in S974 to S991 of the Companies Act 2006.

Amendment of Articles of Association

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

Appointment and Replacement of Directors

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

Each Director who is appointed by the Directors (and who has not been elected as a Director of the Company by the members at a general meeting held in the interval since his appointment as a Director of the Company) is to be subject to election as a Director of the Company by the members at the first Annual General Meeting of the Company following his or her appointment. At each Annual General Meeting of the Company one third of the Directors for the time being, or if their number is not three or an integral multiple of three the number nearest to but not exceeding one-third, are to be subject to re-election.

The Companies Act allows shareholders in general meeting by ordinary resolution (requiring a simple majority of the persons voting on the relevant resolution) to remove any Director before the expiring of his or her period of office, but without prejudice to any claim for damages which the Director may have for breach of any contract of service between him or her and the Company.

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

Powers of the Directors

Subject to the provisions of the Companies Act, the memorandum and articles of association of the Company and any directions given by shareholders by special resolution, the articles of association specify that the business of the Company is to be managed by the Directors, who may exercise all the powers of the Company, whether relating to the management of the business or not. In particular, the Directors may exercise on behalf of the Company its powers to purchase its own shares to the extent permitted by shareholders.

Directors Responsibilities

The Directors confirm that: 

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

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

Auditor

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

Jane Owen

Director

23 May 2019

Directors' Responsibility Statement

The Directors are responsible for preparing the Strategic Report, the Directors' Report, the Directors' Remuneration Report and the Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have elected to prepare the Financial Statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company for that year. In preparing these Financial Statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

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

· state whether applicable IFRS have been followed, subject to any material departures disclosed and explained in the Financial Statements; and

· prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements and the Remuneration report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for preparing the Annual Report in accordance with applicable law and regulations. The Directors consider the Annual Report and the Financial Statements, taken as a whole, provide the information necessary to assess the Company's position, performance, business model and strategy and are fair, balanced and understandable.

The Company's Financial Statements are published on the TPIM website, www.triplepoint.co.uk. The maintenance and integrity of this website is the responsibility of TPIM and not of the Company. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions. 

To the best of our knowledge:

· The Financial Statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

· The Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

On behalf of the Board.

Jane Owen

Chairman

23 May 2019

Corporate Governance

This Corporate Governance Report forms part of the Directors' Report on pages 24-27.

The Financial Conduct Authority requires all listed companies to disclose how they have applied the principles and complied with the provisions of the UK Corporate Governance Code (the 'Code') issued by the Financial Reporting Council (FRC) in 2016.

The Board of Triple Point VCT 2011 plc has considered the principles and recommendations of the Association of Investment Companies Code of Corporate Governance (AIC Code 2016) by reference to the Association of Investment Companies Corporate Governance Guide for Investment Companies (AIC Guide). The AIC Code 2016, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code (April 2016), as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company.

The Board considers that reporting against principles and recommendations of the AIC Code 2016, by reference to the AIC Guide, which incorporates the UK Corporate Governance Code (April 2016), will provide improved reporting to shareholders. The Company has complied with the recommendations of the AIC Code and the relevant provisions of the code, except as set out on pages 31 and 32 under the heading Compliance Statement.

The Company is committed to maintaining high standards in corporate governance and has complied with the recommendations of the AIC Code 2016 and the relevant provisions of the UK Corporate Governance Code (April 2016), except as set out at the end of this report in the Compliance Statement.

The 2018 Corporate Governance code will apply from the next financial reporting period. The Board are currently taking steps to ensure the requirements of the code are met.

Board of Directors

The Company has a Board of three Non-Executive Directors. Since all Directors are Non-Executive and day-to-day management responsibilities are sub-contracted to the Investment Manager, the Company does not have a Chief Executive Officer. The Directors have a range of business and financial skills which are relevant to the Company; these are described on page 24 of this report. Directors are provided with key information on the Company's activities, including regulatory and statutory requirements, by the Investment Manager. The Board has direct access to company secretarial advice and compliance services provided by the Investment Manager which is responsible for ensuring that Board procedures are followed and applicable regulations complied with. All Directors are able to take independent professional advice in furtherance of their duties.

Any appointment of new Directors to the Board is conducted, and appointments made, on merit and with due regard for the benefits of diversity on the Board, including gender. All Directors are able to allocate sufficient time to the Company to discharge their responsibilities.

The Board meets regularly on a quarterly basis, 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 formal schedule of matters reserved for Board decision and the agreement between the Company and the Manager has authority limits beyond which Board approval must be sought.

The Investment Manager has authority over the management of the investment portfolio, the organisation of custodial services, accounting, secretarial and administrative services. In practice the Investment Manager makes investment recommendations for the Board's approval. In addition all investment decisions involving other VCTs managed by the Investment Manager are taken by the Board rather than the Investment Manager. Other matters reserved for the Board include:

• 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;

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

• monitoring shareholder profiles and considering shareholder communications.

The Chairman leads the Board in the determination of its strategy and in the achievement of its objectives. The Chairman is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda and has no involvement in the day to day business of the Company. She facilitates the effective contribution of the Directors and ensures that they receive accurate, timely and clear information and that they communicate effectively with shareholders. The Chairman does not have significant commitments conflicting with her obligations to the Company.

The Company Secretary is responsible for advising the Board on all governance matters. All of the Directors have access to the advice and services of the Company Secretary which has administrative responsibility for the meetings of the Board and its committees. Directors may also take independent professional advice at the Company's expense where necessary in the performance of their duties. As all of the Directors are Non-Executive, it is not considered appropriate to identify a member of the Board as the senior Non-Executive Director of the Company.

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 Company's articles of association require that one third of the Directors should retire by rotation each year and seek re-election at the Annual General Meeting and that Directors newly appointed by the Board should seek re-appointment at the next Annual General Meeting. The Board complies with the requirement of the UK Corporate Governance Code (April 2016) that all Directors are required to submit themselves for re-election at least every three years.

During the period covered by these Financial Statements the following meetings were held:

Internal Control

The Directors have overall responsibility for keeping under review the effectiveness of the Company's systems of internal controls. The purpose of these controls 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. The system of internal controls 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 internal control systems is carried out. The review covers all material controls including financial, operational and risk management systems. 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 risks to which it is exposed. The process adopted is one whereby the Directors identify the risks to which the Company 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 updated twice a year.

TPIM is engaged to provide administrative (including accounting) 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.

The Investment Manager's procedures are subject to internal compliance checks.

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 Company's objectives when managing capital are:

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

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

Going Concern

After making the necessary enquiries, the Directors confirm that they are satisfied that the Company has adequate resources to continue in business for at least the next 12 months. The Board receives regular reports from the Manager and the Directors believe that, as no material uncertainties leading to significant doubt about going concern have been identified, it is appropriate to continue to apply the going concern basis in preparing the Financial Statements.

Relations with Shareholders

The Board recognises the value of maintaining regular communications with shareholders. In addition to the formal business of the Annual General Meeting, an opportunity is given to all shareholders to question the Board and the Investment Manager on matters relating to the Company's operation and performance. The Board and the Investment Manager will also respond to any written queries made by shareholders during the course of the year and both can be contacted at 1 King William Street, London, EC4N 7AF or on 020 7201 8989.

Compliance Statement

The Listing Rules require the Board to report on compliance with the UK Corporate Governance Code (April 2016) provisions throughout the accounting period. The UK Corporate Governance Code does, however, acknowledge that some provisions may have less relevance for investment companies, adding that the AIC Code and AIC Guide can assist in meeting the obligations under The UK Corporate Governance Code. With the exception of the limited items outlined below, the Directors consider that the Company has complied throughout the period under review with the provisions set out in the UK Corporate Governance Code (April 2016). The section references to The UK Corporate Governance Code are shown in brackets. 

1. New Directors do not receive a full, formal and tailored induction on joining the Board. Such matters are addressed on an individual basis as they arise (B.4.1).

2. Due to the size of the Board and the nature of the Company's business, a formal performance evaluation of the Board, its committees, the individual Directors and the Chairman has not been undertaken. Specific performance issues are dealt with as they arise (B.6.1, B.6.3).

3. The Company does not have a senior independent director. The Board does not consider such an appointment appropriate for the Company (A.4.1).

4. The Company conducts a formal review as to whether there is a need for an internal audit function. The Directors do not consider that an internal audit would be an appropriate control for a Venture Capital Trust (C.3.6).

5. As all the Directors are Non-Executive, it is not considered appropriate to appoint a Nomination or Remuneration Committee (B.2.1 and D.2.1).

6. The Audit committee includes three Non-Executive Directors, all of whom are considered independent. Jane Owen, who is chairman, is also chairman of the audit committee but it is not considered appropriate to appoint another independent Director. The Board regularly reviews the independence of its Directors (C.3.1).

On behalf of the Board.

Jane Owen

Chairman 

23 May 2019

Report of the Audit Committee

The Board has appointed an audit committee of which Jane Owen is Chairman, which deals with matters relating to audit, financial reporting and internal control systems. The Committee meets as required and has direct access to BDO LLP, the Company's auditor.

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. BDO LLP do not provide any non-audit services to the company.

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 ratified 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 28 February 2018.

The effectiveness of the external audit 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 external auditor and the discussions then held on topics raised. The audit committee will challenge the external auditor at the audit committee meeting if appropriate.

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

· reviewing and making recommendations to the Board in relation to the Company's published Financial Statements and other formal announcements or regulatory returns relating to the Company's financial performance, reviewing significant financial reporting judgements contained in them;

· reviewing and making recommendations to the Board in relation to the Company's internal control (including internal financial control) and risk management systems;

· periodically considering the need for an internal audit function;

· making recommendations to the Board in relation to the appointment, re-appointment and removal of the external auditor and approving the remuneration and terms of engagement of the external auditor;

· 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 that the Chairman of the committee meets the requirements of the UK Corporate Governance Code (April 2016) as to relevant financial experience.

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.

In respect of the year ended 28 February 2019, the audit committee discharged its responsibilities by:

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

· reviewing TPIM's statement of internal controls 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;

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

· reviewing the external auditor's audit plan document to the audit committee on the annual Financial Statements;

· reviewing the Company's going concern status; and

· reviewing the external auditor's findings document.

The audit committee is responsible for considering and reporting on any significant issues that arise in relation to the Financial Statements.

The key areas of risk that have been identified and considered by the audit committee in relation to the business activities and the Financial Statements of the Company are as follows:

· valuation and existence of unquoted investments; and

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

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 Venture Capital Trust 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 whole Report and Accounts for the year ended 28 February 2019 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.

Jane Owen

Audit Committee Chairman 

23 May 2019

Directors' Remuneration Report

Introduction

This report is submitted in accordance with schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) (amendment) Regulations 2013, in respect of the year ended 28 February 2019. This report also meets the Financial Conduct Authority's Listing Rules and describes how the Board has applied the principles relating to Directors' remuneration set out in UK Corporate Governance Code (issued April 2016). The reporting requirements require two sections to be included, a Policy Report and an Annual Remuneration Report which are presented below.

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 39 to 44.

Directors' Remuneration Policy Report

This statement of the Directors' Remuneration Policy took effect following approval by shareholders at the Annual General Meeting on 12 July 2018. The Board currently comprises three Directors, all of whom are Non-Executive. 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. 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.

The Board's policy is that the remuneration of Non-Executive Directors should reflect the experience of the Board as a whole, be fair and be comparable with that of other relevant Venture Capital Trusts that are similar in size and have similar investment objectives and structures. Furthermore, the level of remuneration should be sufficient to attract and retain the Directors needed to oversee the Company properly and to reflect the specific circumstances of the Company, the duties and responsibilities of the Directors and the value and amount of time committed to the Company's affairs. The articles of association provide that the Directors shall be paid in aggregate a sum not exceeding £100,000 per annum. None of the Directors are eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits in respect of their services as Non-Executive Directors of the Company.

The articles of association provide that Directors shall retire and be subject to re-election at the first Annual General Meeting after their appointment and that any Director who has not been re-elected for three years shall retire and be subject to re-election at the Annual General Meeting. Also, any Director not considered independent shall retire each year and offer himself for re-election at the Annual General Meeting. The Directors' service contracts provide for an appointment of 12 months, after which three months written notice must be given by either party. A Director who ceases to hold office is not entitled to receive any payment other than accrued fees (if any) for past services. The same policies will apply if a new Director is appointed.

Details of each Director's contract is shown below. The Chairman is paid more than the other Directors to reflect the additional responsibilities of that role. There are no other fees payable to the Directors for additional services outside of their contracts.

Annual Remuneration Report

The remuneration policy described above was approved on 13 July 2017 at the Annual General Meeting and will remain unchanged for a three-year period from that date. 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 role is likely to incur a change in remuneration of any one Director.

Directors' Remuneration (audited information)

The fees paid to Directors in respect of the year ended 28 February 2019 and the prior year are shown below:

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.

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

Directors' emoluments compared to payments to shareholders:

Directors' Share Interests (audited information)

At 28 February 2019 Jane Owen held 24,624 A Ordinary Shares and 24,378 B Ordinary Shares (2018: 24,624 A Ordinary Shares; 24,378 B Ordinary Shares).

Tim Clarke held 24,624 B Ordinary Shares (2018: 24,624 B Ordinary Shares).

Chad Murrin held 24,874 A Ordinary Shares and 24,624 B Ordinary Shares (2018: 24,874 A Ordinary Shares; 24,624 B Ordinary Shares).

No other connected parties to the Directors held any shares at 28 February 2019 (2018: nil). Any shares owned by the Directors were purchased at the same price offered to investors. There are no requirements or restrictions on Directors holding shares in the Company.

Company Performance

The following performance charts compare the total return of the A & B Share Classes over the period from 1 March 2015 to 28 February 2019 with the total return from notional investments in the FTSE All-Share index and FTSE Small-Cap index over the same period.

Investors should be reminded that shares in venture capital trusts generally continue to trade at a discount to the NAV of the Company.

These charts have been prepared in accordance with part 3 to schedule 8 of the Companies Act 2006. The Company measures its performance against its target returns as detailed in the Strategic Report on page 7. The charts do not take in to account the tax benefit of investing in a VCT.

Statement of Voting at the Annual General Meeting

The 2018 Remuneration Report was presented to the Annual General Meeting in July 2018 and received shareholder approval following a vote 99% in favour and none abstained.

Statement of the Chairman

The Directors' fees were £17,500 per annum for the Chairman and £15,000 per annum for other Directors from 5 April 2016. The remuneration of the Directors reflects the experience of the Board as a whole, is fair and comparable with that of other relevant Venture Capital Trusts that are similar in size and have similar investment objectives and structures.

On behalf of the Board.

Jane Owen

Chairman 

23 May 2019

Statement of Comprehensive Income

For the year ended 28 February 2019

The total column of this statement is the Statement of Comprehensive Income of the Company prepared in accordance with International Financial Reporting Standards (IFRS). The supplementary revenue return and capital columns have been prepared in accordance with the Association of Investment Companies Statement of Recommended Practice (AIC SORP) in so far as it does not conflict with IFRS.

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

This Statement of Comprehensive Income includes all recognised gains and losses.

The accompanying notes on pages 53 to 66 form an integral part of these statements.

Balance Sheet

At 28 February 2019

Company No: 07324448

The statements were approved by the Directors and authorised for issue on 23 May 2019 and are signed on their behalf by:

Jane Owen

Chairman

23 May 2019

The accompanying notes on pages 53 to 66 form an integral part of these statements.

Statement of Changes in Shareholders' Equity

For the year ended 28 February 2019