TIDMROOF
RNS Number : 4727C
Atrato Onsite Energy PLC
13 June 2023
LEI: 213800IE1PPREDIIZB62
ATRATO ONSITE ENERGY PLC
INTERIM RESULTS FOR THE SIX MONTHSED 31 MARCH 2023
FULLY COMMITTED PORTFOLIO
Atrato Onsite Energy plc (the "Company" or "ROOF") is pleased to
announce its unaudited interim results for the six months ended 31
March 2023 (the "Period").
Key metrics
As at 31 As at 30
March September
2023 2022
(unaudited) (audited)
----------------------------------- --- --- ------------- -----------
Net Asset Value ("NAV") 140.7 m 139.1m
NAV per Ordinary Share (p) 93.8 p 92.8p
Ordinary Share price (p) 85.6 p 99.5p
Ordinary Share price discount
to NAV (8.7) % 7.2%
Target dividends per Ordinary Share
(p) FY 2023 5.0 p 5.0p
Ongoing charges ratio [1] 1.6 % 1.4%
--------------------------------------------- ------------- -----------
The Company has now fully committed its IPO proceeds
-- Deployed into operational assets, committed to installation
assets or allocated to the Company's executed framework
agreements
-- Post period end, a greed head of terms for a Revolving Credit
Facility with a large UK bank to maintain current deal momentum and
to fund further growth. Expected to close by early July 2023.
High quality portfolio with highly contracted index linked long
income [2]
-- 98% of annual revenue contracted, of which 95% has inflation linked or fixed uplifts(4)
-- 12-year average Power Purchase Agreement ("PPA") duration
with high quality institutional grade off-takers : one of the
longest in the sector (3)
-- 4% portfolio sensitivity to wholesale power prices; the lowest in the sector [3]
Advancing our sustainability objectives (2) (,)
-- Forecast 139GWh annual clean energy generation providing an estimated [4] :
- 28,000 tonnes of carbon avoided [5]
- 48,000 equivalent homes powered by clean energy [6]
- Equivalent to 1,100,000 new trees [7]
-- The supply of solar energy is expected to save our
behind-the-meter customers GBP87 million during the life of the
contract term [8]
-- The Board committed to the Net Zero Asset Manager's
Initiative ("NZAM") and will publish its targets in the 2023 Annual
Report
Financial performance
-- Portfolio valued at GBP63.4 million as at 31 March 2023,
reflecting an unlevered discount rate of 6.2% (30 September 2022:
6.6%)
-- Full-year 2023 target dividend of 5.0 pence per share
-- Prospective forward looking 12-month dividend cover of 1.1x
following energisation of all assets under installation [9] ,
expected March 2024 [10]
Favourable growth tailwinds
-- Available pipeline of opportunities has grown to over GBP340 million
-- Executed two large-scale framework agreements, including
appointment as Tesco's provider for next phase of its solar PV
roll-out
-- Shareholder approval for investment policy amendment to
invest in solar assets commercialised through long-term PPAs
connected via the grid
Juliet Davenport, Chair of Atrato Onsite Energy plc
commented:
"I am very pleased to report that, post period end, we have
fully committed the balance of our IPO proceeds.
The global net zero ambition coupled with the drive for better
domestic energy security, provide strong tailwinds for the UK
renewables sector. Atrato Onsite Energy remains ideally positioned
to help facilitate the UK's shift to renewables and we look forward
to the continued growth of the Company through 2023 and
beyond."
Results presentation today
There will be an in-person presentation for sell side analysts
at 8.30 a.m. today, 13 June 2023. Please contact Kaso Legg
Communications using the details provided below if you would like
to attend.
The presentation will be simulcast online with Q&A function
for anybody wishing to join. The webcast can be accessed here:
https://brrmedia.news/ROOF_INTERIM .
The results presentation will be available in the Investor
Centre section of the Company's website.
There will be a virtual Investor Meet Company presentation for
investors at 4.00pm on 14 June 2023, please visit the link below to
register:
https://www.investormeetcompany.com/atrato-onsite-energy-plc/register-investor
For further information please contact
Atrato Partners ir@atratopartners.com
Gurpreet Gujral +44 (0)77 959 75560
Christopher Fearon
Berenberg
Gillian Martin
Ben Wright
Dan Gee-Summons +44 (0)20 3207 7800
Kaso Legg Communications atrato@kl-communications.com
Charles Gorman +44 (0)20 3995 6699
Charlotte Francis
About the Company
Atrato Onsite Energy plc (LSE: ROOF) is an investment company
focused on clean energy generation with 100% carbon traceability.
The Company specialises in UK commercial solar, helping its
corporate clients achieve net zero and reduce their energy
bills.
The Company aims to provide investors with attractive capital
growth and long dated, index-linked income, targeting a 5% dividend
yield and a NAV total return of 8 - 10%.
Atrato Partners Limited is the Company's Investment Adviser.
Further information is available on the Company's website
www.atratoroof.com
CHAIR'S STATEMENT
I am pleased to present the unaudited interim results for the
Company for the six months ended 31 March 2023.
The Ukraine-Russia conflict had a profound impact on the global
energy sector in 2022. The conflict drove power prices to record
highs, leading to various government interventions across Europe
including taxation on generators and price caps for consumers. The
increases in both business and retail energy prices propelled
inflation higher, sparking a response by central banks to increase
interest rates. This increase in interest rates has had various
impacts, but for us specifically it affected our 2022 asset
valuations as a result of higher discount rates.
Our job during this period was to keep calm, stick to the plan
and remain focused on delivering our targets. The Company has fully
committed the balance of its IPO proceeds post period end, which,
although behind the original IPO target of being fully committed by
the end of 2022, is commendable given the market uncertainty
experienced in the second half of 2022.
Portfolio update
The Company committed a further GBP30 million into solar PV
systems during the Period, with an additional GBP39 million being
committed post period end. The IPO proceeds are now fully committed
across a combination of operational projects, installation projects
as well as capital allocated to the Company's executed framework
agreements.
In March, shareholders approved an investment policy amendment
to capture the growth of opportunities in front-of-the-meter assets
available to be commercialised through long-term PPA's. This is a
new and exciting renewables market development for the Company, and
we expect it to provide an increasingly important source of
pipeline going forwards. Our onsite generation deal pipeline
remains strong with onsite solar offering the most competitive
energy price for the off-taker.
Financials
The Company's NAV grew during the Period, reflecting the
acquisitions made to date together with an improvement in discount
rates across the portfolio. During the Period the Company declared
a dividend of 2.52 pence and a further dividend post the Period of
1.23 pence. The Company remains on track to pay total dividends of
5 pence per Ordinary Share in its second financial year as targeted
at IPO.
The uncertain economic backdrop has caused share prices across
the renewables sector to fall. The total shareholder return for the
Period was (8.9)% In contrast, our NAV total return was +0.9% and
the Company remains well positioned to benefit from the strong
growth being experienced in the UK renewables market.
Full details of the Company's financial performance are detailed
in the Investment Adviser's report below.
Directors
Post the period end, Duncan Neale was appointed as independent
Non-executive Director of the Company. Duncan has joined the Audit
Committee and Management Engagement Committee and holds the
position of Audit Chair.
Duncan is a chief financial officer and finance director with
over 20 years of public and private markets experience. Duncan is
currently a Non-executive Director and Audit Chair of Gresham House
Energy Storage Fund plc.
Portfolio performance
We benefitted from a strong operational performance for the
Period with our operational assets producing 8,847MWh, which is
9.5% above budget.
Outlook
We are delighted to now be fully committed. Once our
installation projects become fully operational (expected by March
2024), the Company anticipate to be circa 1.1x covered on its
dividend on a 12 month forward looking basis [11] .
The Company is experiencing very strong demand for new green
energy generation from its corporate client base and has an
extensive GBP340+ million of potential pipeline opportunities
available to it. We expect this pipeline to grow further throughout
2023. In order to fund this further growth, the Company has agreed
terms for an RCF with a large UK bank, that is attractively priced,
reflecting the highly contracted nature of our revenue streams and
the high credit quality of our counterparties.
As the Ukraine-Russia conflict continues, the case for domestic
energy security has never been stronger. Accelerated investment in
additional UK renewable energy capacity is essential to avoid a
repeat of the current crisis and when combined with the global net
zero ambition, it's clear that the renewables sector continues to
benefit from significant tailwinds. ROOF remains ideally positioned
to facilitate the UK's shift to renewable energy and we look
forward to the continued growth of the Company through 2023 and
beyond.
Juliet Davenport OBE
Chair
12 June 2023
INVESTMENT ADVISER'S REPORT
Atrato Partners Limited is the Investment Adviser to Atrato
Onsite Energy plc and is pleased to report on the operations of the
Company for the Period.
The Investment Adviser is responsible for the sourcing and
acquisition of assets as well as the day-to-day management of the
Company's investment portfolio. Further details can be found on the
Investment Adviser's website at www.atratogroup.com.
Investment Portfolio
Despite the significant volatility we have experienced in
wholesale power prices, interest rates and the regulatory
environment, we have made significant progress against our targets,
having now committed the Company's IPO proceeds into a diversified
portfolio of solar assets whilst maintaining the lowest sensitivity
to power price movements in the sector.
During the Period, the Company committed GBP30 million to
developing 30MW of solar PV capacity across 3 installation assets.
Post the Balance Sheet date, the Company has maintained momentum,
committing a further GBP39 million to a 50MW installation project,
its largest solar energy project to date. To date, GBP118m has been
deployed into operational assets or contractually committed to
installation projects. The remaining capital has been allocated to
the Company's executed framework agreements which have a maximum
value of GBP28m, taking total projected commitments to GBP146
million. Further details can be found in the post balance sheet
section below.
Including the post period end investments, the Company's
portfolio comprises 40 individual projects with a total capacity of
142 MW. 32% of the portfolio is operating and 68% is in the
installation phase. The portfolio now spans 21 counties, ensuring
geographic diversification across the UK and is split between 10
off-takers across multiple industries.
We have built a high-quality portfolio of clean energy assets
with highly contracted long-term income. Including the investments
made post period end, 98% of annual revenue is contracted under
PPAs and subsidies with 95% of revenue subject to inflation or
fixed uplifts [12] . The weighted average unexpired PPA term is 12
years.
The table below outlines the Company's investment portfolio to
date, including post balance sheet events :
Off-taker Location Sector Capacity Status Expected Remaining
(MWp) Energisation term
date
As at 31 March 2023
----------------- --------- ------------- -------------- ----------
Amazon 7 sites Tech 12 Operational Energised 18
------------------ ----------------- --------- ------------- -------------- ----------
Anglian
Water 7 sites Utility 14 Operational Energised 22
------------------ ----------------- --------- ------------- -------------- ----------
Beverage
Company Northamptonshire FMCG 29 Installation Dec-23 10
------------------ ----------------- --------- ------------- -------------- ----------
Gardner Derbyshire Aerospace 1 Operational Energised 24
------------------ ----------------- --------- ------------- -------------- ----------
Huntapac Lancashire FMCG 1 Installation Sep-23 15
------------------ ----------------- --------- ------------- -------------- ----------
Marks &
Spencer Leicestershire Grocery 6 Operational Energised 12
------------------ ----------------- --------- ------------- -------------- ----------
Nissan County Durham Autos 20 Installation Jul-23 20
------------------ ----------------- --------- ------------- -------------- ----------
Recipharm Cheshire Pharmaceuticals 1 Operational Energised 25
------------------ ----------------- --------- ------------- -------------- ----------
Tesco 19 sites Grocery 7 Operational Aug-23 [13] 18
------------------ ----------------- --------- ------------- -------------- ----------
Vale of
Mowbray North Yorkshire FMCG 1 Operational Energised 24
------------------ ----------------- --------- ------------- -------------- ----------
Total as at 31 March
2023 93 16
----------------- --------- ------------- -------------- ----------
Utility
company North Yorkshire Utility 50 Installation Mar-24 3
------------------ ----------------- --------- ------------- -------------- ----------
Vale of
Mowbray
- (buy-out) North Yorkshire Food production (1) Operational Energised (24)
------------------ ----------------- --------- ------------- -------------- ----------
Total
[14] 142 12
--------- ------------- -------------- ----------
All of the Company's installation projects are expected to be
fully operational by the end of March 2024. At the point that the
invested portfolio is fully operational, the Company expects to be
circa 1.1x covered on its dividend on a 12-month forward looking
basis [15] . Investments made post period-end increased the
Company's power price sensitivity to c. 4.0% (0.3% as at 30
September 2022), in line with the Company's long-term target at IPO
of 4.0%. Despite this adjustment, the Company maintains the lowest
power price sensitivity in the sector.
Investment policy amendment
The Company's target investment market is fast-moving and
dynamic, with new developments continuing to emerge. The Investment
Adviser monitors developments to ensure that the Company's
commercial offering remains as attractive and competitive as
possible. One such development has been grid connected solar PV
systems that share the same technology as onsite solar assets and
are commercialised through long-term PPAs with the same type of
contract counterparty as the onsite assets ("Long-Term Grid
Assets").
At the time of IPO, typical grid connected PPAs were 1-3 years
in duration. Since then, the Investment Adviser has seen an
increase in demand from corporates for 10-15-year PPAs of this
type, many of which originate from initial discussions around
onsite energy solutions. As a result of this structural change, the
Investment Adviser worked with the Company to expand its product
offering and react to this new and exciting source of demand.
At the Company's AGM in March 2023, shareholders approved an
amendment of the investment policy to enable the Company to acquire
Long-Term Grid Assets as part of its core strategy. These assets
enable the Company to generate green energy for corporates in
excess of what may be possible onsite. An example of this is the
London Road project which will be commercialised under a c. 10 year
PPA with a beverage company. The agreement will save the beverage
company an estimated 6,500 tonnes of CO(2) a year and provide a
material energy cost saving.
Team update
The Investment Adviser's renewable's team consists of nine
dedicated professionals, with the necessary skills and experience
to deliver on the Company's strategy. The team's expertise spans
engineering, sustainability, project delivery, business development
and financial analysis. The Investment Adviser also benefits from
the wider resource of the Atrato Group platform, utilising central
resource as required across finance, legal, compliance, human
resources, investor relations and management.
Portfolio performance
In the Period, the portfolio generated 8,847 MWh of clean
energy. The portfolio's operational assets performed above
expectations for the Period with electricity generated from our
operational assets 9.5% above the budgeted generation.
Net production variance vs. expected (GWh) for the Period
Actual Budget GWh above % above expectation
(GWh) (GWh) expectation
Operating assets 8.077
total 8.847 GWh GWh 0.769 9.5%
----------- --------- ------------- --------------------
Avoided emissions in the period (Scope 2, excluding Scope 3,
savings from avoided transmission and distribution losses on
behind-the-meter assets) were 1,700t CO(2) e which is an equivalent
emission saving of 5.8 million miles in a medium petrol-powered car
or 75,000 trees planted.
Our Nissan installation project experienced some weather and
grid related delays and is now expected to be fully energised by
July 2023. All other installation projects are progressing as
expected.
Pipeline
The Company continues to progress a significant pipeline of UK
solar assets currently totalling 420MW (GBP340+ million). 86MW of
the pipeline relate to operational assets, while the remaining
334MW relates to new installations. Demand remains very strong for
the Company's green energy solutions and attractive PPA pricing,
with the Investment Adviser now receiving 17 new enquiries per
month on average.
During the Period, the Company committed GBP30 million to new
installation projects to take the total committed IPO proceeds to
GBP80 million at 31 March 2023. Subsequently, as announced on
14(th) April 2023, the Company committed GBP39 million to a 50MW
ground mounted project in North Yorkshire, taking total commitments
to date of GBP118 million. In addition, the Company signed
framework agreements during the period with a potential maximum
value of GBP28 million. These sites are exclusive to the Company
and are undergoing detailed design and contract negotiation prior
to a financial commitment being contractually confirmed. These
framework projects have taken the Company's total projected
commitment to GBP146 million and will be funded out of remaining
cash and the RCF facility.
Future pipeline opportunities will be funded via the remaining
RCF facility, which also benefits from an accordion feature.
Financial performance
The financial statements of the Company for the six months ended
31 March 2023 are set out in this interim report. These interim
financial statements have been prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and the applicable legal
requirements.
For the six months ending 31 March 2023, the Company's
operational portfolio generated revenues of GBP0.9 million, 9%
above budget. Operational expenditure for the Period totalled
GBP0.7 million, EBITDA for the portfolio over the six months ending
31 March 2023 was GBP0.2 million. The Company has included this
alternative performance indicator for the first time to provide
insight to earnings generated at the project level.
During the Period the Company's NAV increased from GBP139.1
million to GBP140.7 million or 93.8 pence per Ordinary Share
(September 2022: 92.8p). NAV increases were driven by an
improvement in discount rates, the addition of new assets and the
re-rating of installation assets as they became operational. The
overall positive NAV increase was GBP4.0 million. This was offset
by the GBP3.78 million in dividends paid in the Period. Further
details on the portfolio valuation are provided below.
Dividends
The Company aims to provide investors with capital growth
alongside a progressive dividend, underpinned by the contractual
inflation and fixed uplifts within its PPA agreements.
Once the installation assets become fully operational, the
current dividend target (5p per Ordinary Share) is projected to be
1.1x covered from project revenues [16] .
Portfolio valuation
The valuation of the Portfolio as at 31 March 2023 was GBP63.4
million. The table below shows a breakdown of the Portfolio
valuation during the Period.
For the six Period from
months ended Incorporation
31 March 2023 on 16 September
2021 to 31
March 2022
GBPm GBPm
------------------------------------------ --------------- -----------------
Portfolio valuation as at 30 September 47.1 -
Investments in the period 11.7 0.9
Interest receivable 0.7 -
Portfolio fair value movement (September
2022: (GBP1.8m)) 3.9 0.1
------------------------------------------ --------------- -----------------
Portfolio valuation as at 31 March 63.4 1.0
------------------------------------------ --------------- -----------------
The valuation of the Company's Portfolio is performed on a
semi-annual basis at 31 March and 30 September. The Investment
Adviser is responsible for advising the Board in determining the
valuation of the Portfolio and, when required, carrying out the
fair market valuation of the Company's investments.
A discounted cash flow ("DCF") valuation methodology is applied
to determine the fair value of each investment which is customary
for valuing privately owned renewable energy assets and considered
consistent with the requirements of compliance with International
Financial Reporting Standard ("IFRS") 9 and IFRS 13.
Using the DCF methodology, the fair value is derived from the
present value of each investment's expected future cash flows,
using reasonable assumptions and forecasts for revenues and
operating costs and an appropriate discount rate. Key macroeconomic
and fiscal assumptions for the valuations are set out in Note 13 to
the financial statements.
The Company's NAV as at 31 March 2023 is GBP140.7 million or
93.8 pence per ordinary share.
The Company's portfolio of assets was valued at GBP 63.4 million
[17] , reflecting acquisitions, planned milestone payments for the
installation assets and interest of GBP12.4 million. The NAV also
reflects changes to economic, wholesale energy and asset specific
assumptions and is net of distributions to shareholders.
Portfolio acquisitions in the period
The Company made three new installation commitments during the
period; a 1.3MW site at Huntapac Produce Ltd in Lancashire, a 0.4MW
site at Tesco Thetford and the 28.4MW London Road site in
Northamptonshire. These new projects totalled GBP30 million of
capital commitments.
There were GBP0.6 million of ongoing installation payments in
relation to the Recipharm, Gardner and Nissan sites.
Valuation e conomic assumptions
The main economic assumptions used in the portfolio valuation
are discount rates, annual energy production, merchant power
prices, various operating expenses and associated annual escalation
rates. These are consistent with those outlined on page 14 of the
30 September 2022 Annual Report.
Weighted average discount rate for valuation
A range of discount rates are applied in calculating the fair
value of the investments, considering the location, technology and
lifecycle stage of each asset as well as leverage and the
counterparty risk. The weighted average discount rate as at 31
March 2023 is 6.2% (30 September 2022: 6.6%).
The elevated macro-economic volatility, higher inflation
expectations and UK political uncertainty experienced in the fourth
quarter of 2022 has settled, stabilising the UK risk free rates and
economic outlook. This has allowed the Investment Adviser to
reassess the impact on the portfolio and release some of the
premium applied previously, reducing the weighted average unlevered
discount rate to 6.2%.
Portfolio valuation sensitivities
The figure below shows the impact on the portfolio valuation of
changes to the key input assumptions ("Sensitivities"). The
Sensitivities are based on the Portfolio as at 31 March 2023. For
each sensitivity illustrated, it is assumed that potential changes
occur independently with no effect on any other assumption. The low
sensitivity to changes in merchant power prices reflects the
long-term contracted revenues in the Company's Portfolio.
Similarly, the moderate impacts due to variations in operational
expenses, reflects the Company's assets having a majority of fixed
price, long-term operating expenses including operations and
maintenance ("O&M") and property leases.
Volumes
Each asset's valuation assumes a "P50" level of electricity
output based on yield assessments prepared by technical advisers.
The P50 output is the estimated annual amount of electricity
generation that has a 50% probability of being exceeded - both in
any single year and over the long term - and a 50% probability of
being underachieved. The P50 provides an expected level of
generation over the longer term.
The P90 (90% probability of exceedance) and P10 (10% probability
of exceedance) sensitivities reflect the future variability of
solar irradiation and the associated impact on output, along with
the uncertainty associated with the long-term data sources used to
calculate the P50 forecast. The Sensitivities shown assume that the
output of each asset in the portfolio is in line with the P10 or
P90 output forecast respectively for each asset life.
Power price curve
The Company uses independent and widely used market consultants'
technology-specific capture price forecasts, for the longer term.
In the short term, two years from October 2023, the Bloomberg ELUB
prices have been used. The industry standard sensitivity metric
assumes a 10% increase or decrease in power prices relative to the
base case for each year of the asset life.
Inflation
The sensitivity assumes a 50bps increase or decrease in
inflation relative to the base case for each year of the asset
life.
Net assets
Company net assets were GBP140.7 million as at 31 March
2023.
The net assets comprise the fair value of the Company's
investments of GBP 63.4 million, the Company's cash balance of GBP
76.6 million and other net receivables of GBP 0.7 million.
Analysis of the Company's net assets
Unaudited Audited
31 March 30 September
2023 2022
GBPm GBPm
----------------------------------- ---------- --------------
Fair value of investments 63.4 47.1
----------------------------------- ---------- --------------
Cash 76.6 89.4
Net working capital 0.7 2.7
----------------------------------- ---------- --------------
Net asset value 140.7 139.1
----------------------------------- ---------- --------------
Number of shares 150.0 150.0
Net asset value per share (pence) 93.8 92.8
----------------------------------- ---------- --------------
NAV Bridge from 30 September 2022 to 31 March 2023
Movement in Net Asset Value GBPm Pence per
share
----------------------------- ------ ----------
NAV at September 2022 139.1 92.8
----------------------------- ------ ----------
Dividends paid (3.8) (2.5)
----------------------------- ------ ----------
Discount rate movement 3.9 2.6
----------------------------- ------ ----------
Re-rate on yield 3.3 2.2
----------------------------- ------ ----------
Net operating cash flow (1.8) (1.3)
----------------------------- ------ ----------
NAV as at 31 March 2023 140.7 93.8
----------------------------- ------ ----------
Dividends paid: Dividends of GBP3.8 million (2.5 pence per
share) were paid during the Period in respect of the period to 30
September 2022 declared in November 2022 and the period to 31
December 2022, declared in January 2023. In addition, after the
period end, the Company declared a further dividend of 1.23 pence
per share in respect of the quarter ended 31 March 2023.
Discount rate movement - The reduction in the weighted average
discount rate from 6.6% to 6.2%, has increased the portfolio
valuation by GBP3.9 million (2.6 pence per share). For further
information please see Note 8.
Re-rate on yield: Represents the difference between the invested
capital and the discounted future cash flows for new acquisitions,
which has provided a GBP3.3 million increase in NAV (2.2 pence per
share).
Net operating cash flow: Represents the net cashflows of the
Company and its subsidiaries in relation to other operating
activities.
Income
In accordance with the Statement of Recommended Practice:
Financial Statements of Investment Trust Companies and Venture
Capital Trusts ("SORP") issued in July 2022 by the Association of
Investment Companies ("AIC"), the statement of comprehensive income
differentiates between the 'revenue' account and the 'capital'
account and the sum of both items equals the Company's profit for
the period. Items classified as capital in nature either relate
directly to the Company's investment portfolio or are costs deemed
attributable to the long-term capital growth of the Company (such
as a portion of the Investment Adviser fee).
In the six-month period ending 31 March 2023, the Company's
operating income was GBP2.5 million (period from incorporation to
31 March 2022 ("previous HY period"): GBPnil), including interest
income of GBP2.5 million (previous HY period: GBPnil) and net
profit on the movement of fair value of investments of GBP4.0
million (previous HY period: GBP0.1 million). The operating
expenses included in the statement of comprehensive income for the
period were GBP1.2 million (previous HY period: GBP1.0 million).
These comprise GBP0.7 million Investment Adviser fees (previous HY
period: GBP0.4 million) and GBP0.5 million operating expenses
(previous HY period: GBP0.6 million). The details of how the
Investment Adviser fees are charged are set out in Note 9 to the
financial statements.
Ongoing charges
The ongoing charges ratio ("OCR") is a measure, expressed as a
percentage of average net assets, of the regular, recurring annual
costs of running the Company. It has been calculated and disclosed
in accordance with the AIC methodology, as annualised ongoing
charges (i.e. excluding acquisitions costs and other non-recurring
items) divided by the average published undiluted Net Asset Value
in the period. The ratio was 1.4% for the period from IPO (November
2021) to 30 September 2022, and it is anticipated that the
full-year ratio for the year ended 30 September 2023 will increase
to 1.6%.
Dividends
During the Period, interim dividends totalling GBP3.8 million
were paid (representing 2.52p per share). The table below outlines
the dividends paid during the period and post period end.
Amount (per
Ordinary
Period share) Amount (total)
---------------------- ------------ ---------------
During the Period
1 July to 30 Sep 2022 1.26p GBP1.89m
1 Oct to 31 Dec 2022 1.26p GBP1.89m
---------------------- ------------ ---------------
Post period end
1 Jan to 31 Mar 2023 1.23p GBP1.85m
---------------------- ------------ ---------------
Post period end, a further interim dividend of 1.23p per share
was paid on 26 May 2023 in respect of the quarter to 31 March 2023
to shareholders recorded on the register on 28 April 2023. The
total number of ordinary shares in issue on that record date was
150,000,000 and the total dividend paid to shareholders amounted to
GBP1.85 million.
As such, dividends totalling GBP3.78 million have been paid in
respect of the six-month period under review.
Operating cashflow from the portfolio of assets in the six-month
period totalled GBP1.5 million.
Decarbonisation and the investment opportunity
Wholesale electricity prices remained volatile during the Period
as geopolitical factors and weather conditions continued to impact
the market. The average monthly price volatility for the day-ahead
baseload price in Q4 2022 was more than 2.5 times the long-term
average volatility for the fourth quarter (from 2014 to 2020
inclusive).
Although average prices in March 2023 fell to their lowest level
since August 2021, they remain elevated compared to long-term
norms, being 2.75 times the average value for March from 2014 to
2020 (inclusive).
Against this backdrop, energy costs remain a top risk factor for
the majority of UK businesses, with wholesale costs and market
volatility constituting the top two subcategories of concern for
businesses in a 2023 survey. Almost three quarters of businesses
surveyed expect costs to continue rising over the next 12 months,
despite some continued protection in the form of the revised Energy
Bills Discount Scheme (the "EBDS") which replaced the more generous
Energy Bill Relief Scheme from 1 April 2023. The EBDS provides
relief of up to GBP19.61 per MWh when wholesale costs exceed GBP302
per MWh, meaning that the threshold for relief remains
significantly higher than the levelized cost of generation for
solar energy in the UK.
Alongside the cost savings and price certainty, there has been
continued growth in demand for corporate decarbonisation. The
Science Based Targets Initiative ("SBTi") now reports 829 UK
companies taking action, of which 430 have had their targets
independently validated by the SBTi.
The UK government has recognised solar energy's role as a
cost-effective contributor to a net zero energy mix and stated an
ambition to deploy 70GW of solar generation by 2035, a significant
increase on the existing 14GW of installed capacity. In support of
this, a solar roadmap will be published in 2024, setting out a
step-by-step deployment trajectory, and a dedicated taskforce made
up of industry and government members is to be established to drive
forward both rooftop and ground-mounted capacity. A consultation is
already underway to simplify planning processes and expand
permitted development rights for large commercial rooftop solar
projects and solar car-port structures. Constraints imposed by the
grid connection process are also due to be addressed, with the
government publishing an action plan this summer and reduced
connection application costs having come into force from 1 April
2023.
Financing
The Company is in advanced discussions for a Revolving Credit
Facility ("RCF") with an accordion, raised at Atrato Onsite Energy
Holdco Limited level. This facility will allow the Group to
continue to secure new investments. The RCF will be available for
three years with an option to extend, with a competitive margin for
the life of the loan on a floating interest rate over the
period.
Going concern
The Directors have adopted the going concern basis in preparing
the interim financial statements. The following is a summary of the
Directors' assessment of the going concern status of the
Company.
The Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for at
least twelve months from the date of this report. In reaching this
conclusion, the Directors have considered the liquidity of the
Company's portfolio of investments as well as its cash position,
income and expense flows. The Company's net assets at 31 March 2023
were GBP140.7 million (30 September 2022: GBP139.1 million). As at
31 March 2023, the Company held GBP76.6 million (30 September 2022:
GBP89.4 million) in cash. The total expenses for the period ended
31 March 2023 were GBP1.2 million (31 March 2022: GBP1.0
million).
Post the balance sheet date the Company increased its total
contractual commitment to fund projects under installation to GBP59
million, as a result of the GBP39 million investment in project
Skeeby. At the date of approval of this report, based on the
aggregate of investments, capital commitments and cash held, the
Company has substantial operating expenses cover.
Future revenue is principally expected to be derived through
loan interest and dividends from profit generated by underlying
investments held within the SPVs. Having regard to the current
portfolio combined with current cash balances, the Directors
consider the Company to be in a position to meet its current and
future liabilities over the next 12-month period.
In light of the ongoing conflict of Russia and Ukraine, the
Directors have considered any potential impact on the portfolio's
operations and procurement processes, and do not foresee any
material adverse impact for next 12 months. Energy prices can
fluctuate as a result of the conflict, which the Directors maintain
under close review; however, no material adverse impact on the
business is expected.
Sustainability Report
Introduction
The Company invests in onsite sustainable energy solutions that
facilitate savings in greenhouse gases and contribute to the net
zero transition. These investments help corporates and landlords to
decarbonise their buildings and operations. Investors in the
Company are therefore supporting the transition towards sustainable
methods of energy generation. The Company aims to increase
investment into the renewable energy space, this will help
companies and the UK achieve its commitment to reducing its carbon
intensity.
The Company's sustainability strategy is focused on four ESG
principles linked to the UN SDGs that underpin its activities. The
Company has identified specific areas of focus in relation to each
principle against which it annually benchmarks its progress.
Principle 1 Principle 2 Principle 3 Principle 4
Support the attainment Facilitate the efficient Bring value to Deliver the Company's
of the UK emissions and considered use the communities investment objective
targets through of finite resources in which we are through a robust
the creation of active governance framework
new sustainable that recognises
energy resource. its moral and
ethical responsibilities
to all stakeholders
-------------------------- -------------------- -------------------------
Affordable Climate Life on Responsible Gender Decent
and clean Action Land production equality work and
energy UN SDG UN SDG and consumption UN SDG economic
UN SDG 13 15 UN SDG 12 5 growth
7 UN SDG8
--------- -------- ---------------- --------- --------- -------------------------
Principle 1 - Support the attainment of the UK emissions targets
through the creation of new sustainable energy resource
The Board has committed to adopt the Net Zero Asset Managers
Initiative ("NZAM"). NZAM focuses on the role of the investment
community in delivering the goals of the Paris Agreement, a global
commitment to achieving a world that exists with net zero
greenhouse gas emissions, by 2050 or sooner. This commitment
requires the Company to set targets, supported by a road map of
achieving net zero operations. This pledge outlines the key
objective which is supported by the Task Force on Climate-related
Financial Disclosures ("TCFD"). The Company will integrate Science
Based Targets into the investment process.
Principle 2 - Facilitate the efficient and considered use of
finite resources
With the expansion of the Company's mandate to allow for
investment in ground mounted projects, the Investment Adviser is in
the process of reviewing the sustainability strategy to ensure that
it remains appropriate. One area that has been identified for
review is the Company's approach to the management of biodiversity
risk. The Company intends to provide further details on its
approach by the end of the financial year.
Principle 3 - Bring value to the communities in which we are
active
The Company through the Investment Adviser is active supporter
of education initiatives that align with the Company's objective to
support both gender equality and the right to decent work.
During May 2023 the Investment Adviser held a work experience
event for Into University at their offices. Into University seeks
to provide children from Britain's least privileged neighbourhood
with the educational support they need to succeed, breaking the
poverty circle. The event was attended by 17 year nine students and
run by members of the Investment Adviser's team. The focus of the
event was to provide exposure to a career in investment management
and the skills needed in order to support it. Members of the
investment advisory team are also providing mentoring to support
individuals starting in higher education.
The Investment Adviser has also supported similar career focused
events for STEM learning at locations across the country. STEM aims
to improve young people's lives through the power of stem. The
Investment Adviser's involvement with STEM also supports the
Company's focus on diversity given only 27% of the STEM workforce
are female and 12% from ethnic minorities.(1)
Establishment of the Investment Adviser foundation has
progressed, and the Company will work with the Trustees of the
foundation to develop a volunteering and donation strategy for its
that aligns with its objectives prior to the Company's financial
year end.
Principle 4 - Robust Governance Framework
During the prior period the Investment Adviser focused on the
implementation of its Module Procurement Policy, evaluating modern
slavery and forced labour practices risks within the Company's
supply chain. This policy will remain under review and will be
updated to reflect developments in this area.
The Investment Adviser is now focused on the development of a
wider set of policies in conjunction with a third-party service
that will support the delivery of the investment objective in line
with the Company's sustainability principles. These materials will
be published on the Investment Adviser's website or that of the
Company's as appropriate once available.
In Q2 2023 the Board commissioned a peer review to obtain a
benchmark of the Company's position relative to the market. The
review will provide valuable guidance on the governance areas on
which the Company and the Investment Adviser. The Company also
intends to use the review as a method of assessing its performance
and that of the investment adviser in delivery of its
sustainability objectives.
The Board and the Investment Adviser are working to expand the
scope of the Investment Adviser's integrated Sustainable Investment
Management System ("SIMS"). The system documents how ESG risks are
identified, mitigated and measured against company policies and
commitments. The development of the SIMS will be completed in H2
2023 and will be reviewed annually to ensure systems
performance.
Regulations
The Company has several key developments in regulations and
standards that will be material drivers in how the Company reports
its ESG performance in the future. These include:
TCFD
While the FCA listing rules do not require the Company to make
disclosures under the TCFD framework for the financial year
2022/2023, it intends to do so on a voluntarily basis. Work,
including undertaking a carbon inventory calculation, scenario
analysis and climate change risk analysis to enable, is ongoing
with the Investment Adviser to ensure compliance with this
obligation.
UN PRI
The Investment Adviser will submit its first report under the UN
PRI framework for the financial year 2022/23. The Company and the
Investment Adviser will then seek to implement improvements that
result from the review prior to its first published report in
2024.
SDR
The Company notes proposals published by the FCA in relation to
the implementation of the Sustainability Disclosure Requirements.
The Company agrees that consumers must be able to trust sustainable
products and supports the sentiment of the proposals outlined by
the FCA in is consultation papers. The Company and the Investment
Adviser are developing a strategy for compliance with this
regulation and the attainment of an investment label aligned with
the sustainability objectives of the Company.
Atrato Partners Limited
Investment Adviser
12 June 2023
Interim Management Report
The Directors are required to provide an Interim Management
Report in accordance with the Financial Conduct Authority ("FCA")
Disclosure Guidance and Transparency Rules ("DTR"). The Chair's
Statement and the Investment Advisers' Report in this interim
report provide details of the important events which have occurred
during the period and their impact on the financial statements. The
following statements on risks and risk management, related party
transactions, going concern and the Directors' Responsibility
Statement below, together constitute the Interim Management Report
for the Company for the six months ended 31 March 2023. The outlook
for the Company for the remaining six months of the year ending 30
September 2023 is discussed in the Chair's Statement and the
Investment Adviser's Report.
Risk and Risk Management
The Company's approach to risk governance and its risk review
process are set out in the risks and risk management section of the
2022 Annual Report. The principal risks to the achievement of the
Company's objectives are mostly unchanged from those reported on
pages 30 to 32 of the 2022 Annual Report, with the key principal
risks being:
-- Increased procurement costs - Due to high levels of
inflation, the cost of procuring materials necessary for solar PV
installations may be higher than at IPO. Where the Company is
unable to offset the increased procurement cost through an
increased PPA price, the Company's project level target returns may
not be met.
-- Inflation - If current levels of inflation are maintained,
potential off-takers may be unwilling to enter into
inflation-linked PPAs. This may result in the Company securing
fewer inflation-linked cashflows.
-- Contract counterparty credit risk - The Company's revenues
are dependent on onsite or sleeved users that are contracted under
PPAs to pay for electricity generated by solar PV systems. If such
counterparties do not fulfil their contractual obligations, the
Company may be forced to seek recourse against them.
-- Risks relating to pre-installation assets - A significant
proportion of the Company's pipeline consists of pre-installation
assets, which are assets which do not yet have all the necessary
consents, rights, and agreements to proceed to the installation
phase. There is a risk that these assets may take more time than
anticipated to develop into installation assets.
-- Geopolitical risk - The ongoing conflict in Ukraine has led
to higher power prices, which in turn has led to price caps and
windfall taxes on UK energy producers.
-- Government policy change - The Company's renewable
investments generate revenue from private PPAs and in some cases,
government supported subsidies. There may be changes in government
policy which could impact the value of the Company's
investments.
-- Power Prices - The risk that the income and value of the
Company's investments may be adversely impacted by changes in the
prevailing market prices of electricity and prices achievable for
off-taker contracts.
-- Asset specific risks - Circumstances may arise that adversely
affect the performance of the relevant renewable energy asset.
These include health and safety, grid connection, material damage
or degradation, equipment failures and environmental risks.
The risks outlined here and in the 2022 Annual Report are
mitigated by the Investment Adviser's strategy, experience and the
diversification of the Company's pipeline as set out on pages 30 to
32 in the 2022 Annual Report.
Related party transactions
The Company's Investment Adviser ("IA") is considered a related
party under the Listing Rules. Under the Investment Adviser
Agreement ("IAA"), the IA receives a per annum management fee of
0.7125% of the adjusted NAV up to and including GBP500 million; and
0.5625% of the adjusted NAV above GBP500 million, invoiced monthly
in arrears. The Investment Adviser also receives a management fee
of 0.2375% of the last published NAV up to and including GBP500
million; and 0.1875% of the last published NAV above GBP500
million, each invoiced semi-annually in arrears. With the agreement
of the Company, Holdco and the Adviser, this semi-annual fee shall
be applied by the Adviser in acquiring ordinary shares at the
absolute discretion of the Board by any combination of methods as
set out in the IAA.
The Investment Adviser receives an accounting and administration
fee of GBP50,000 per annum plus 0.02% of the adjusted NAV in excess
of GBP200 million up to and including GBP500 million plus 0.015% of
adjusted NAV in excess of GBP500 million. An accounting and
administration fee of GBP800 per Clean Energy Asset held by Holdco
up to 100 Clean Energy Assets and GBP650 per Clean Energy Asset
above 100.
No performance fee or asset level fees are payable to the IA
under the IAA.
Details of the amounts paid to the Company's IA and the
Directors during the period are included in the Note 4 to the
Interim Financial Statements.
Alternative Investment Fund Manager (the "AIFM")
JTC Global AIFM Solutions Limited was appointed with effect from
IPO as the AIFM under the terms of the AIFM agreement and in
accordance with the AIFM Directive.
The AIFM is authorised and regulated by the Guernsey Financial
Services Commission.
The AIFM is responsible for the day-to-day management of the
Company's investments, subject to the investment objective and
investment policy and the overall supervision of the Directors. The
AIFM is also required to comply with on-going capital, reporting
and transparency obligations and a range of organisational
requirements and conduct of business rules. The AIFM must also
adopt a range of policies and procedures addressing areas such as
risk management, liquidity management, conflicts of interest,
valuations, compliance, internal audit and remuneration.
Directors' responsibility statement
The Directors acknowledge responsibility for the interim results
and approve this interim report. The Directors confirm that to the
best of their knowledge:
a) the condensed interim financial statements have been prepared
in accordance with IAS 34 "Interim Financial Reporting" as
contained in UK-adopted IFRS and give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Company as required by the FCA's Disclosure Guidance and
Transparency Rules DTR 4.2.4R; and
b) the interim management report, including the Chair's
Statement and Investment Adviser's Report, includes a fair review
of the information required by DTR 4.2.7R and DTR 4.2.8R.
This responsibility statement has been approved by the Board of
Directors
For and on behalf of the Board of Directors
Duncan Neale
Director
12 June 2023
Independent Review Report to Atrato Onsite Energy Plc
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
March 2023 is not prepared, in all material respects, in accordance
with UK adopted International Accounting Standards 34 and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 March 2023, which comprises Condensed Statement
of Comprehensive Income, the Condensed Statement of Financial
Position, the Condensed Statement of Changes in Equity, the
Condensed Cash Flow Statement and the related notes.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the
Company are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the Directors have inappropriately
adopted the going concern basis of accounting or that the Directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410, however future events or conditions
may cause the group to cease to continue as a going concern.
Responsibilities of directors
The Directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the Directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statement in the half-yearly financial report. Our
conclusion, including our Conclusions relating to going concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
BDO LLP
Chartered Accountants
London, UK
12 June 2023
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Results
Condensed Statement of Comprehensive Income
For the six-month For the period from incorporation
period ended 31 March on 16 September 2021 to
2023 (unaudited) 31 March 2022 (unaudited)
Notes Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----- -------- ------- ------- ----------- ----------- -----------
Fair value of investments 8 - 3,990 3,990 - 103 103
Investment Income 3 2,473 - 2,473
Investment advisory
fees 4 (692) - (692) (382) - (382)
Other expenses 4 (467) - (467) (210) (401) (611)
---------------------------- ----- -------- ------- ------- ----------- ----------- -----------
Profit / (loss) on ordinary
activities before taxation 1,314 3,990 5,304 (592) (298) (890)
Taxation 5 - - - - - -
---------------------------- ----- -------- ------- ------- ----------- ----------- -----------
Profit / (loss) on ordinary
activities after taxation 1,314 3,990 5,304 (592) (298) (890)
Profit / (loss) per
share 7 0.88 2.66 3.54 (0.01) - (0.01)
---------------------------- ----- -------- ------- ------- ----------- ----------- -----------
The "Total" column of the Condensed Statement of Comprehensive
Income is the profit and loss account of the Company.
All revenue and capital items in the above statement derive from
continuing operations.
Profit / (loss) on ordinary activities after taxation is also
the "Total comprehensive profit / (loss) for the Period".
The accompanying notes are an integral part of these interim
financial statements.
Incorporated in England and Wales with registered number
13624999
Condensed Statement of Financial Position
As at 31 March 2023
As at As at
30 September
31 March 2023 2022
(unaudited) (audited)
Notes GBP'000 GBP'000
------------------------------------- ----- ------------- ------------
Non-current assets
Investments at fair value through
profit or loss 8 63,415 47,105
Current assets
Fixed deposits - 20,000
Cash and cash equivalents 76,611 69,361
Trade and other receivables 1,043 3,215
------------------------------------- ----- ------------- ------------
77,654 92,576
Current liabilities: amounts falling
due within one year
Trade and other payables (419) (555)
------------------------------------- ----- ------------- ------------
(419) (555)
------------------------------------- ----- ------------- ------------
Net current assets 77,235 92,021
------------------------------------- ----- ------------- ------------
Net assets 140,650 139,126
------------------------------------- ----- ------------- ------------
Capital and reserves
Share capital 10 1,500 1,500
Capital reduction reserve 11 137,285 141,065
Revenue and capital reserve 1,865 (3,439)
------------------------------------- ----- ------------- ------------
Shareholders' funds 140,650 139,126
Net assets per Ordinary Shares (GBP
pence) 12 93.8 92.8
------------------------------------- ----- ------------- ------------
The unaudited interim financial statements were approved by the
Board of Directors and authorised for issue on 12 June 2023 and
were signed on its behalf by:
Duncan Neale
Director
The accompanying notes are an integral part of these interim
financial statements .
Incorporated in England and Wales with registered number
13624999.
Condensed Statement of Changes in Equity
For the six-months ended 31 March 2023 (unaudited)
Share Capital
Share premium reduction Capital Revenue
capital account reserve reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening equity
as at 30 September
2022 10 1,500 - 141,065 (2,251) (1,188) 139,126
Total comprehensive
income/(expense)
for the Period - - - 3,990 1,314 5,304
Dividends paid 6 - - (3,780) - - (3,780)
--------------------- ------ --------- --------- ----------- --------- --------- ---------
Closing equity
as at 31 March
2023 1,500 137,285 1,739 126 140,650
--------------------- ------ --------- --------- ----------- --------- --------- ---------
For the period from Incorporation on 16 September 2021 to 31
March 2022 (unaudited)
Share Capital
Share premium reduction Capital Revenue
capital account reserve reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------ --------- ---------- ----------- --------- --------- ---------
Opening equity
as at 16 September
2021 - - - - - -
Shares issued
in the Period 10 1,500 148,500 - - - 150,000
Share issue cost 10 - (2,968) - - - (2,968)
Transfer to capital
reduction reserve 11 - (145,532) 145,532 - - -
Profit/(loss)
for the Period - - - (298) (592) (890)
Closing equity
as at 31 March
2022 1,500 - 145,532 (298) (592) 146,142
--------------------- ------ --------- ---------- ----------- --------- --------- ---------
The Company's distributable reserves consist of the capital
reduction reserve, capital reserves attributable to realised gains
and revenue reserve and totals GBP137 million at 31 March 2023. All
capital reserves are unrealised.
The accompanying notes are an integral part of these interim
financial statements.
Condensed Statement of Cash Flows
Period
of Incorporation
For the from 16
six months September
ended 31 2021 - 31
March 2023 March 2022
(unaudited) (unaudited)
Notes GBP'000 GBP'000
------------------------------------------ -------- ----------------- -------------------
Operating activities cash flows
Profit / (loss) on ordinary activities
before taxation 5,304 (890)
Adjustments for:
Movement in fair value of investments 8 (3,990) (103)
Interest income 3 (2,473) -
Decrease / (increase) in trade and
other receivables 1,991 (6)
(Decrease) / increase in trade and
other payables (46) 716
------------------------------------------ -------- ----------------- -------------------
Net cash inflow/(outflow) from operating
activities 786 (283)
Investing activities
Purchase of investments (11,691) (921)
Decrease in fixed deposit 20,000 -
Interest income received 1,935 -
Net cash inflow / (outflow) from
investing activities 10,244 (921)
Financing activities
Proceeds of share issues - 150,000
Share issue costs - (2,968)
Dividends paid 6 (3,780) -
------------------------------------------ -------- ----------------- -------------------
Net cash (outflow) / inflow from
financing activities (3,780) 147,032
Increase in cash 7,250 145,828
------------------------------------------ -------- ----------------- -------------------
Cash and cash equivalents at beginning
of the Period 69,361 -
Cash and cash equivalents at end
of the Period 76,611 145,828
------------------------------------------ -------- ----------------- -------------------
The accompanying notes are an integral part of the interim
financial statements.
Notes to the condensed unaudited financial statements
For the six months ended 31 March 2023
1 General information
Atrato Onsite Energy Plc (the "Company") is a closed-ended
investment company domiciled and incorporated in the United Kingdom
on 16 September 2021 with registered number 13624999. The
registered office of the Company is 6(th) Floor, 125 London Wall,
London, EC2Y 5AS. Its share capital is denominated in Pounds
Sterling (GBP) and currently consists of one class of ordinary
shares. The shares are publicly traded on the London Stock Exchange
under a premium listing. These unaudited interim financial
statements of the Company are for the six months ended 31 March
2023 and have been prepared on the basis of the accounting policies
set out below. The financial statements comprise only the results
of the Company as its investment in Atrato Onsite Energy Holdco
Limited ("Holdco") is measured at fair value as detailed in the
significant accounting policies below. The Company and its
subsidiaries invest in a diversified portfolio of onsite energy
assets generally on the rooftop of UK commercial buildings, which
benefit from long-term growing income streams with limited exposure
to wholesale power prices.
Atrato Partners Limited (the "Investment Adviser") provides
investment advisory services and JTC Global AIFM Solution Limited
as the AIFM provides investment management services to the Company,
each under the terms of the agreement between it and the
Company.
2 Basis of preparation
The interim financial statements included in this report have
been prepared in accordance with UK adopted IAS 34 "Interim
Financial Reporting". The interim financial statements have been
prepared under the historical cost convention, as modified by the
revaluation of financial assets and financial liabilities at fair
value through profit and loss.
The interim financial statements have also been prepared as far
as is relevant and applicable to the Company in accordance with the
Statement of Recommended Practice ("SORP") "Financial Statements of
Investment trust companies and Venture Capital Trusts" issued in
July 2022 by the Association of Investment Companies ("AIC").
The interim financial statements are prepared on the historical
cost basis, except for the revaluation of certain financial
instruments at fair value through profit and loss. The principal
accounting policies adopted are set out below. These policies have
been consistently applied throughout the six months to 31 March
2023.
The interim financial statements are prepared on the going
concern basis in accordance with international accounting standards
.
These condensed financial statements do not include all
information and disclosures required in the annual financial
statements. The financial information contained in this interim
report does not constitute statutory accounts as defined in section
434 of the Companies Act 2006. The financial information for the
six months ended 31 March 2023 has not been audited.
The currency of the primary economic environment in which the
Company operates and where its investments are located (the
functional currency) is Pounds Sterling. The financial statements
are presented in Pounds Sterling and rounded to the nearest
thousand.
Estimates and underlying assumptions are reviewed regularly on
an on-going basis. Revisions to accounting estimates are recognised
in the period in which the estimates are revised and in any future
periods affected. The significant estimates, judgments or
assumptions for the Period are set out below under Critical
accounting judgements, estimates and assumptions.
Going concern
The Directors have adopted the going concern basis in preparing
the interim financial statements. The following is a summary of the
Directors' assessment of the going concern status of the
Company.
The Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for at
least twelve months from the date of this report. In reaching this
conclusion, the Directors have considered the liquidity of the
Company's portfolio of investments as well as its cash position,
income and expense flows. The Company's net assets at 31 March 2023
were GBP140.7 million (30 September 2022: GBP139.1 million). As at
31 March 2023, the Company held GBP76.6 million (30 September 2022:
GBP89.4 million) in cash. The total expenses for the period ended
31 March 2023 were GBP1.2 million (31 March 2022: GBP1.0
million).
Post the balance sheet date the Company increased its total
contractual commitment to fund projects under installation to GBP59
million, as a result of the GBP39 million investment in project
Skeeby. At the date of approval of this report, based on the
aggregate of investments, capital commitments and cash held, the
Company has substantial operating expenses cover.
Future revenue is principally expected to be derived through
loan interest and dividends from profit generated by underlying
investments held within the SPVs. Having regard to the current
portfolio combined with current cash balances, the Directors
consider the Company to be in a position to meet its current and
future liabilities over the next 12-month period.
In light of the ongoing conflict of Russia and Ukraine, the
Directors have considered any potential impact on the portfolio's
operations and procurement processes, and do not foresee any
material adverse impact for next 12 months. Energy prices can
fluctuate as a result of the conflict, which the Directors maintain
under close review; however, no material adverse impact on the
business is expected.
Critical accounting judgments, estimates and assumptions
The preparation of the interim financial statements requires
management to make judgments, estimates and assumptions that affect
the application of accounting policies and the reported amount of
assets, liabilities, income and expenses. Estimates, by their
nature, are based on judgment and available information; hence
actual results may differ from these judgments, estimates and
assumptions. The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying value of
assets and liabilities are those used to determine the fair value
of the investments. There have been no changes to the significant
estimates, judgements and assumptions to those set out on pages 68
to 71 of the 2022 Annual Report; a summary of these is provided
below:
Key estimation: Fair value estimation for investments at fair
value
The Company's investments in unquoted investments are valued by
reference to valuation techniques approved by the Directors and in
accordance with the International Private Equity and Venture
Capital Valuation Guidelines.
Discounted cash flow ("DCF") models are used to determine the
fair value of the underlying assets in HoldCo. The value of HoldCo
includes any working capital not accounted for in the DCF models,
such as cash or entity level payable and receivables. Unobservable
inputs used within the DCF models include the discount rate. An
increase or decrease in the discount rate would lead to a
corresponding decrease or increase in the fair value of the
investments. The Company's investments at fair value are not traded
in active markets.
Key judgement: Basis of non-consolidation
The Company has adopted the amendments to IFRS 10, which states
that investment entities should measure all of their subsidiaries
that are themselves investment entities at fair value.
The Company owns 100% of its subsidiary HoldCo. The Company
invests in special purpose vehicles through its investment in
HoldCo. The Company and HoldCo meet the definition of an investment
entity as described by IFRS 10. Under IFRS 10 investment entities
measure subsidiaries at fair value rather than being consolidated
on a line-by-line basis, meaning HoldCo's working capital balances
are included in the fair value of the investment rather than in the
Company's current assets. HoldCo has one investor, which is the
Company. However, in substance, HoldCo is investing the funds of
the investors of the Company on its behalf and is effectively
performing investment management services on behalf of many
unrelated beneficiary investors.
Key judgement: Characteristics of an investment entity
Under the definition of an investment entity, the entity should
satisfy all three of the following tests:
a) The Company obtains funds from one or more investors for the
purpose of providing those investors with investment management
services;
b) The Company commits to its investors that its business
purpose is to invest funds solely for returns from capital
appreciation, investment income, or both (including having an exit
strategy for investments); and
c) The Company measures and evaluates the performance of
substantially all of its investments on a fair value basis .
In assessing whether the Company meets the definition of an
investment entity set out in IFRS 10, the Directors note that:
a) The Company has multiple investors and obtains funds from a
diverse group of shareholders who would otherwise be less able to
individually invest in renewable energy and/ or infrastructure
assets;
b) The Company's purpose is to invest funds for both investment
income and capital appreciation. HoldCo and the future SPVs will
have indefinite lives. However, the underlying assets do not have
unlimited life and have minimal residual value at the end of that
life, meaning they will not be held indefinitely. The Company
intends to hold the renewable assets on a long-term basis to
achieve its investment objectives. Depending on the circumstances
of each renewable asset, decisions will be made whether to extend
leases and repower assets as they approach the end of their useful
life or sell the assets to interested parties who may take a more
optimistic view of asset value; and
c) The Company measures and evaluates the performance of all of
its investments on a fair value basis, which is the most relevant
for investors in the Company. The Directors use fair value
information as a primary measurement to evaluate the performance of
all the investments and in decision-making.
The Directors are of the opinion that the Company meets all the
typical characteristics of an investment entity and therefore meets
the definition set out in IFRS 10.
The Directors agree that investment entity accounting treatment
reflects the Company's activities as an investment trust.
The Directors believe the treatment outlined above provides the
most relevant information to investors.
Segmental reporting
The Board is of the opinion that the Company is engaged in a
single segment of business, being investment in renewable energy
infrastructure assets to generate investment returns whilst
preserving capital. The financial information used by the Board to
manage the Company presents the business as a single segment.
Adoption of new and revised standards
At the date of approval of these financial statements, there
were no new or revised standards or interpretations relevant to the
Company which had come into effect.
3 Investment Income
For the period from
For the six-month period incorporation on 16 September
ended 31 March 2023 2021 to 31 March 2022
(unaudited) (unaudited)
---------------------------- ----------------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- -------- -------- ---------- ---------- ----------
Interest income from
investments 1,666 - 1,666 - - -
Interest income from
deposits 807 - 807
------------------------ -------- -------- -------- ---------- ---------- ----------
Total investment income 2,473 - 2,473 - - -
------------------------ -------- -------- -------- ---------- ---------- ----------
4 Operating expenses
For the period from
For the six-month period incorporation on 16 September
ended 31 March 2023 2021 to 31 March 2022
(unaudited) (unaudited)
---------------------------- ----------------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- -------- -------- -------- ---------- ---------- ----------
Investment management
fees 692 - 692 382 - 382
Director's fees 88 - 88 67 - 67
Company's auditors fees:
* in respect of audit services 39 - 39 - - -
* in respect of non-audit services 45 - 45 55 - 55
Other operating expenses 295 - 295 88 401 489
---------------------------------------------- -------- -------- -------- ---------- ---------- ----------
Total operating expenses 1,159 - 1,159 592 401 993
---------------------------------------------- -------- -------- -------- ---------- ---------- ----------
5 Taxation
(a) Analysis of charge /(credit) in the period
For the period from
For the six-month period incorporation on 16
ended September 2021 to
31 March 2023 (unaudited) 31 March 2022 (unaudited)
----------------------------- -----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ --------- -------- -------- --------- -------- --------
Corporation tax 289 878 1167 - - -
------------------------ --------- -------- -------- --------- -------- --------
Tax charge/(credit) for
the period - - - - - -
------------------------ --------- -------- -------- --------- -------- --------
(b) Factors affecting total tax charge for the period:
The effective UK corporation tax rate applicable to the Company
for the year is 22% (2022: 19%), a blended rate of 19% to 31 March
2023 and 25% for April to September 2023. The tax charge/(credit)
differs from the charge/(credit) resulting from applying the
standard rate of UK corporation tax for an investment trust
company. The differences are explained below:
For the period from
For the six-month incorporation on 16
period ended September 2021 to
31 March 2023 (unaudited) 31 March 2022 (unaudited)
----------------------------- -----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- -------- -------- --------- -------- --------
Profit/(loss) before
taxation 1,314 3,990 5,304 (592) (298) (890)
-------------------------- --------- -------- -------- --------- -------- --------
Corporation tax at 22%
(PY:19%) 289 878 1,167 (112) (57) (169)
Effects of:
Profit / (loss) on
investments held at
fair value not taxable - (878) (878)
Expenses not deductible
for tax purposes - - - - - -
Excess expenses relieved
from prior year - - - - - -
Interest distributions (289) - (289) 112 57 -
-------------------------- --------- -------- -------- --------- -------- --------
Total tax charge/(credit)
for the period - - - - - -
-------------------------- --------- -------- -------- --------- -------- --------
6 Dividends
For the period from
For the six-month incorporation on 16
period ended September 2021 to
31 March 2023 (unaudited) 31 March 2022 (unaudited)
------------------------------ ------------------------------
Pence Pence
per Ordinary Capital per Ordinary Capital
Share reserve Total Share reserve Total
------------------------- ------------- -------- ----- ------------- -------- -----
Q4 2022 Dividend - paid
16 December 2022 (2022:
nil) 1.26 1,890 1,890 - - -
Q1 2023 Dividend - paid
24 February 2023 (2022:
nil 1.26 1,890 1,890 - - -
Total 2.52 3,780 3,780 - - -
------------------------- ------------- -------- ----- ------------- -------- -----
On 19 April 2023, the Company declared an interim dividend in
respect of the period from 1 January 2023 to 31 March 2023 of 1.23
pence per Ordinary Share, paid on 26 May 2023 to Shareholders on
the register on 28 April 2023. On that record date, the number of
Ordinary Shares in issue was 150,000,000 and the total dividend
paid to Shareholders amounted to GBP1.8 million. The dividend has
not been included as a liability at 31 March 2023.
7 Earnings per share
Earnings per Ordinary Share is calculated by dividing the profit
attributable to equity shareholders of the Company by the weighted
average number of Ordinary Shares in issue during the period as
follows:
For the period from
For the six-month incorporation on 16
period ended September 2021 to
31 March 2023 (unaudited) 31 March 2022 (unaudited)
----------------------------- -----------------------------
Revenue Capital Total Revenue Capital Total
--------------------------- --------- -------- -------- --------- --------- -------
Profit/(loss) attributable
to the equity holders
of the Company (GBP'000) 1,314 3,990 5,304 (592) (298) (890)
Weighted average number
of Ordinary Shares in
issue (000) 150,000 150,000 150,000 98,233 98,233 98,233
Earnings/(loss) per
Ordinary Share (pence)
- basic and diluted 0.88 2.66 3.54 (0.01) - (0.01)
--------------------------- --------- -------- -------- --------- --------- -------
8 Investment held at fair value through profit or loss
As set out in note 2, the Company accounts for its interest in
its wholly owned direct subsidiaries as an investment at fair value
through profit and loss.
(a) Summary of valuation
As at As at
31 March 30 September
2023 (unaudited) 2022 (audited)
GBP'000 GBP'000
------------------------------------------------- ------------------ ----------------
Opening balance 47,105 -
Portfolio assets acquired 10,891 48,955
Additional investment in intermediary 800 -
Interest receivable 629 -
Movement in fair value of investments 3,990 (1,850)
------------------------------------------------- ------------------ ----------------
Total investments at the end of the period/year 63,415 47,105
------------------------------------------------- ------------------ ----------------
* Distributions received in the period relates to interest paid
on shareholder loans.
(b) Reconciliation of movement in fair value of portfolio of
assets
The table below shows the movement in the fair value of the
Company's portfolio of renewable energy assets. These assets are
held through intermediate holding companies.
As at As at
31 March 30 September
2023 (unaudited) 2022 (audited)
GBP'000 GBP'000
------------------------------------------------ ------------------ ----------------
Opening balance 47,105 -
Portfolio assets acquired 11,691 48,955
Distributions received (1,521) -
Movement in fair value 6,579 (1,739)
------------------------------------------------ ------------------ ----------------
Fair value of portfolio of assets at
the end of the period/year 63,854 47,216
Cash held in intermediate holding companies 154 -
Fair value of other net assets in intermediate
holding companies (593) (111)
------------------------------------------------ ------------------ ----------------
Fair value of Company's investments at
the end of the period/year 63,415 47,105
------------------------------------------------ ------------------ ----------------
(c) Investment gains / (losses) in the period
As at As at
31 March 30 September
2023 (unaudited) 2022 (audited)
GBP'000 GBP'000
--------------------------------------- ------------------ ----------------
Movement in fair value of investments 3,990 (1,850)
Fair value of portfolio of assets
The Investment Adviser has carried out fair market valuations of
the investments as at 31 March 2023.
The Directors have satisfied themselves as to the methodology
used, the discount rates applied and the valuation. All investments
are in renewable energy assets and are valued using a discounted
cash flow methodology. The Company's holding of an investment
represents its interest in both the equity and debt instruments of
the investment. The equity and debt instruments are valued as a
whole using a blended discount rate. The weighted average cost of
capital applied to the portfolio of assets range from 5. 55% to
7.00%.
The Company has modelled the enacted corporation tax rates of
19% for the period to 31 March 2023 and 25% thereafter.
Inflation rates are assumed based on available market forecasts
of the inflation indices (RPI and CPI, where applicable) and capped
where a cap exists in the contract.
The power price forecasts used in the valuations are based on
market forward prices from independent and widely used market
expert consultants' relevant technology-specific capture price
forecasts for each asset.
Fair value of intermediate holding company
The other net assets in the intermediate holding company
substantially comprise working capital balances ; therefore the
Directors consider the fair value to be equal to the book values.
The sensitivity to unobservable inputs is based on management's
expectations of reasonable possible shifts in these inputs. The
valuation sensitivity of each assumption is shown in Note 13.
9 Investment advisory fee
For the period from
For the six-month incorporation on 16
period ended September 2021 to
31 March 2023 (unaudited) 31 March 2022 (unaudited)
----------------------------- -----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- --------- -------- -------- --------- -------- --------
Investment advisory
fee 692 - 692 382 - 382
-------------------- --------- -------- -------- --------- -------- --------
The Investment Advisory Agreement (" IAA ") dated 1 November
2021 between the Company and Atrato Partners Limited as the
Investment Adviser and JTC Global AIFM Solutions Limited as the
AIFM, appointed the Investment Adviser to act as the Company's
investment adviser. The AIFM has been appointed pursuant to the
AIFM agreement dated 1 November 2021 between the AIFM and the
Company as the alternative investment fund manager for the purposes
of the AIFM Directive. Accordingly, the AIFM is responsible for
providing portfolio management and risk management services to the
Company.
The fees relating to the IAA are set out in the Investment
Adviser report and the Annual Report for 30 September 2022. No
amendments have been made during the period.
10 Share capital
As at 31 March 2023
(unaudited) As at 30 September 2022 (audited)
-------------------------- -----------------------------------
Nominal Nominal
Allotted, issued and Number of value of value of
fully paid: shares shares (GBP) Number of shares shares (GBP)
Opening Balance 150,000,000 1,500,000 - -
------------------------------ ----------- ------------- ------------------- --------------
Allotted upon incorporation
Shares of GBP0.01 each
(ordinary shares) - - 1 0.01
Issue of redeemable
preference shares - - 50,000 50,000
Allotted / redeemed
following admission
to LSE
Shares issued - - 149,999,999 1,500,000
Initial redeemable preference
shares redeemed - - (50,000) (50,000)
------------------------------ ----------- ------------- ------------------- --------------
Closing balance 150,000,000 1,500,000 150,000,000 1,500,000
------------------------------ ----------- ------------- ------------------- --------------
Ordinary shareholders are entitled to all dividends declared by
the Company and to all of the Company's assets after repayment of
its borrowings and ordinary creditors. Ordinary shareholders have
the right to vote at meetings of the Company. All Ordinary Shares
carry equal voting rights.
11 Capital reduction reserve
As indicated in the Prospectus, following admission of the
Company's shares to trading on the LSE, the Directors applied to
the Court and obtained a judgement on 28 January 2022 to cancel the
amount standing to the credit of the share premium account of the
Company. The amount of the share premium account cancelled and
credited to the Company's Capital reduction reserve was
GBP145,579,902, which is being utilised to fund distributions to
the Company's Shareholders.
12 Net assets per Ordinary Share
As at As at
31 March 2023 30 September
(unaudited) 2022 (audited)
-------------------------------------- --------------- ----------------
Total shareholders' equity (GBP'000) 140,650 139,126
Number of Ordinary Shares in issued
('000) 150,000 150,000
-------------------------------------- --------------- ----------------
Net asset value per Ordinary Share
(pence) 93.8 92.8
-------------------------------------- --------------- ----------------
13 Financial instruments by category
The Company held the following financial instruments at fair
value at 31 March 2023. There have been no transfers of financial
instruments between levels of the fair value hierarchy. There are
no non-recurring fair value measurements.
a. Financial instruments by category
As at 31 March 2023 (unaudited)
Financial
assets at Financial Financial
fair value asset at liabilities
through profit amortised at amortised
& loss cost cost Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------------- ----------- -------------- --------
Non-current assets
Investments at fair
value through profit
or loss (Level 3) 63,415 - - 63,415
Current assets
Other receivables and
prepayments - 1,043 - 1,043
Fixed deposits - - - -
Cash and cash equivalents - 76,611 - 76,611
--------------------------- ---------------- ----------- -------------- --------
Total assets 63,415 77,654 - 141,069
--------------------------- ---------------- ----------- -------------- --------
Current liabilities
Trade and other payables - - (419) (419)
--------------------------- ---------------- ----------- -------------- --------
Total liabilities - - (419) (419)
--------------------------- ---------------- ----------- -------------- --------
Net assets 63,415 77,654 (419) 140,650
--------------------------- ---------------- ----------- -------------- --------
As at 30 September 2022 (audited)
Financial
assets at Financial Financial
fair value asset at liabilities
through profit amortised at amortised
& loss cost cost Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------------- ----------- -------------- --------
Non-current assets
Investments at fair
value through profit
or loss (Level 3) 47,105 - - 47,105
Current assets
Other receivables and
prepayments - 3,215 - 3,215
Fixed deposits - 20,000 - 20,000
Cash and cash equivalents - 69,361 - 69,361
--------------------------- ---------------- ----------- -------------- --------
Total assets 47,105 92,576 - 139,681
--------------------------- ---------------- ----------- -------------- --------
Current liabilities
Trade and other payables - - (555) (555)
--------------------------- ---------------- ----------- -------------- --------
Total liabilities - - (555) (555)
--------------------------- ---------------- ----------- -------------- --------
Net assets 47,105 92,576 (555) 139,126
--------------------------- ---------------- ----------- -------------- --------
The above tables provide an analysis of financial instruments
that are measured subsequent to their initial recognition at fair
value as follows:
-- Level 1: fair value measurements are those derived from
quoted prices (unadjusted) in active markets for identical assets
or liabilities;
-- Level 2: fair value measurements are those derived from
inputs other than quoted prices included within Level 1 that are
observable for the assets or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices; and
-- Level 3: fair value measurements are those derived from
valuation techniques that include inputs to the asset or liability
that are not based on observable market data (unobservable
inputs).
There were no Level 1 assets or liabilities during the period.
There were no transfers between Level 1 and 2, Level 1 and 3 or
Level 2 and 3 during the period.
The Company's financial assets and liabilities as summarised
above are expected to be realised within 12 months of the reporting
date, excluding those held in FVTPL. The financial assets and
financial liabilities measured at amortised cost's carrying amount
is approximated to its fair value which is classified at level 3 at
the fair value hierarchy.
The Level 3 fair value measurements derive from valuation
techniques that include inputs to the asset or liability that are
not based on observable market data (unobservable inputs).
Reconciliation of Level 3 fair value measurement of financial
assets and liabilities
An analysis of the movement between opening and closing balances
of the investments at fair value through profit or loss is given in
note 8.
The fair value of the investments at fair value through profit
or loss includes the use of Level 3 inputs. Please refer to note 4
for details of the valuation methodology and sensitivities.
Valuation sensitivities
The sensitivities are based on the existing portfolio of assets
as at 31 March 2023 as well as cash flows of conditional
acquisitions, and as such may not be representative of the
sensitivities once the Company is fully invested and geared. For
each of the sensitivities shown, it is assumed that potential
changes occur independently with no effect on any other
assumption.
The below figures show the impact to NAV of changes to the key
input assumptions (sensitivities). The sensitivities are based on
the existing portfolio of assets as at 31 March 2023.
Discount rate
The discount rate is considered the most significant
unobservable input through which an increase or decrease would have
a material impact on the fair value of the investments at a fair
value through profit or loss. The weighted average cost of capital
applied to the portfolio of assets range from 5. 55% to 7.00%.
An increase of 0.5% in the discount rate would cause a decrease
in total portfolio value of 2.2 pence per Ordinary Share and a
decrease of 0.5% would cause an increase of 2.3 pence per Ordinary
Share.
Discount Rate + 50 bps - 50 bps
================================== ======== ========
Increase/(decrease) in NAV (GBPm) (3.2) 3.5
NAV per share 91.6p 96.1p
NAV per share change (2.2p) 2.3p
Change (2.3)% 2.5%
Energy production
Energy production, as measured in MWh per annum, assumed in the
DCF valuations is based on a P50 energy yield profile, representing
a 50% probability that the energy production estimate will be met
or exceeded over time. An independent engineer has derived this
energy yield estimate for each asset by considering a range of
irradiation, weather data, ground-based measurements and
design/site-specific loss factors including module performance,
module mismatch, inverter losses, and transformer losses, among
others. The P50 energy yield case includes a 0.5% annual
degradation through the entirety of the useful life. In addition,
the P50 energy yield case includes an assumption of availability,
which ranges from 99% to 100%, as determined reasonable by an
independent engineer at the time of underwriting the asset.
Solar assets are subject to variation in energy production over
time. An assumed "P90" level of energy yield (i.e. a level of
energy production that is below the "P50", with a 90% probability
of being exceeded) would cause a decrease in the total portfolio
valuation of 2.8 pence per Ordinary Share, while an assumed "P10"
level of power output (i.e. a level of energy production that is
above the "P50", with a 10% probability of being achieved) would
cause an increase of 2.6 pence per Ordinary Share in the total
portfolio valuation.
Energy production P90 P10
================================== ====== =====
Increase/(decrease) in NAV (GBPm) (4.2) 4.0
NAV per share 91.0p 96.4p
NAV per share change (2.8p) 2.6p
Change (3.0)% 2.8%
Power price curve
The power price forecasts for each asset are based on a number
of inputs. The sensitivity assumes a 10% increase or decrease in
power prices relative to the base case for each year of the asset
life.
For an increase in power prices by 10%, there is a 0.9 pence per
Ordinary Share increase in NAV, while a decrease of 10% in power
prices has a decrease of 0.8 pence per Ordinary Share in NAV, due
to low merchant power price exposure.
Power price curve +10% -10%
================================== ====== =====
Increase/(decrease) in NAV (GBPm) (1.2) 1.4
NAV per share 93.0p 94.7p
NAV per share change (0.8p) 0.9p
Change (0.9)% 1.0%
Inflation
The sensitivity assumes a 50bps increase or decrease in
inflation relative to the base case for each year of the asset
life.
A 50bps increase in inflation would result in a 1.3% increase in
NAV while a 50bps decrease would decrease the NAV by 1.2%.
Inflation +10% -10%
================================== ====== =====
Increase/(decrease) in NAV (GBPm) (1.7) 1.9
NAV per share 92.7p 95.0p
NAV per share change (1.1p) 1.2p
Change (1.2)% 1.3%
14 Financial risk management
The Company's activities expose it to a variety of financial
risks, including credit, liquidity and market risk. These financial
risks form part of the Company's overall principal risks .
The Investment Adviser, AFIM and the Administrator report to the
Board on a bi-annual basis and provide information to the Board,
which allows it to monitor and manage financial risks relating to
the Company's operations.
Credit risk
Credit risk is the risk that financial loss arises from the
failure of a customer or counterparty to meet its obligations under
a contract.
The Company's credit risk exposure, in relation to cash holdings
is minimised by dealing with financial institutions with investment
grade credit rating. The Company has no significant credit exposure
at the current time. Exposure in relation to customers will be
mitigated by a combination of due diligence procedures performed at
inception of a PPA and diversity of counterparties in the
portfolio.
As at 31 March 2023, the Company's maximum exposure is the cash
and cash equivalents stated at the balance sheet. Appropriate
credit checks are required to be made on all counterparties to the
Company. Cash is held in accounts with HSBC Bank Plc, which has a
credit rating as per Moody's Investor Services of A1. During the
six months ended 31 March 2023, there are no balances past due or
impaired.
Liquidity risk
The objective of liquidity management is to ensure that all
commitments which are required to be funded can be met out of
readily available and secure sources of funding.
The Company's approach to managing liquidity is to ensure, as
far as possible, that it will always have sufficient liquidity to
meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage
to the Company's reputation.
The Company's trade and other payables with third parties at the
reporting date are considered operational in nature and are due and
payable within 12 months of the reporting date. As at 31 March
2023, the Company has financial assets of cash and cash equivalents
without contractual maturity that can meet the current expected
financial liabilities.
Market risk
Market risk is the risk that changes in market prices, such as
interest and foreign currency rates and property valuations, will
affect the Company's financial performance or the value of its
holdings of financial instruments. The objective is to minimise
market risk through managing and controlling these risks within
acceptable parameters, whilst optimising returns.
The Company uses financial instruments in the ordinary course of
business, and also incurs financial liabilities, in order to manage
market risks. The Company's interest rate risk on interest bearing
financial assets is limited to interest earned on fixed cash
deposits. The Interest Rate Benchmark Reform - Phase 2 did not have
a material impact on the Company's reported results as the exposure
to interest rates is limited to interest earned on fixed
deposits.
Interest rate risk
Interest rate risk is the risk that the value of a financial
instrument will fluctuate due to changes in market interest rates.
The Company's interest rate risk on interest bearing financial
assets is limited to interest earned on fixed cash deposits.
Currency risk
Currency risk is the risk that the value of a financial
instrument will fluctuate due to changes in foreign exchange rates.
All transactions during the current period were denominated in GBP,
thus no foreign exchange differences arose.
Capital management
The Company manages its capital to ensure that it will be able
to continue as a going concern while maximising the return to its
shareholders through the optimisation of the debt and equity
balances. The Company is not subject to any externally imposed
capital requirements.
Equity includes all capital and reserves of the Company that are
managed as capital.
15 Related party transactions
Following admission of the Ordinary Shares (refer to note 10),
the Company and the Directors are not aware of any person who,
directly or indirectly, jointly or severally, exercises or could
exercise control over the Company. The Company does not have an
ultimate controlling party.
Details of related parties are set out below.
a) Accounting, secretarial and directors
Atrato Partners Limited has been appointed to act as an
administrator for the Company under the terms of the IAA, more
details are set out below.
Apex Secretaries LLP is currently the secretary of the
Company.
Juliet Davenport, Chair of the Board of Directors of the
Company, is paid director's remuneration of GBP50,000 per annum,
Faye Goss is paid director's remuneration of GBP37,500 per annum,
Marlene Wood is paid director's remuneration of GBP42,500 per
annum. Post 31 March 2023, the Company appointed Duncan Neale as a
new non-executive director and Audit Chair. As Audit Chair, he is
paid director's remuneration of GBP42,500 and Marlene Wood's
remuneration changed to GBP37,500 per annum. Total directors'
remuneration of GBP65,000 was incurred in respect to the Period.
Any expenses incurred by Directors which are related to business
are also reimbursed.
The interests (all of which are or will be beneficial unless
otherwise stated) of the current Directors in the ordinary share
capital of the Company as at 31 March 2023 were as follows:
Shares held
at 31 March
Director 2023
------------------ -------------
Juliet Davenport 33,000
Faye Goss 20,000
Marlene Wood 20,000
------------------ -------------
During the period, Juliet Davenport acquired 13,000 new shares
in the Company.
b) Investment Adviser
Fees payable to the Investment Adviser by the Company under the
IAA are shown in the Statement of Comprehensive Income and detailed
in note 9.
During the Period, investment advisory fees amounted to
GBP702,053 with GBP249,433 outstanding and payable as at 31 March
2023.
Details of the direct and indirect interests of the Directors of
the Investment Adviser and their close families in the ordinary
shares of one pence each in the Company at 31 March 2023 were as
follows:
Benedict Luke Green, a director of the Investment Adviser:
694,960 shares 0.46 % of the issued share capital).
Steve Peter Windsor, a director of the Investment Adviser:
1,347,128 shares 0.90 % of the issued share capital).
Gurpreet Gujral, Fund manager of the Investment Adviser: 92,862
shares (0.06% of issued share capital).
Natalie Markham, a director of Holdco and SPVs: 18,250 shares
(0.01% of issued share capital)
Lara Townsend, a director of Holdco and SPVs: 8,664 shares
(0.01% of issued share capital)
c) Amounts payable to related parties
Amounts payable to the Investment Adviser represent expense paid
on behalf of the Company and amounted to GBP249,433 at the Period
end.
d) Amounts receivable from related parties
The Company has provided a loan to Holdco for GBP125 million at
7% interest, of which GBP10.9 million was drawn during the period,
leaving GBP53.4 million outstanding as at 31 March 2023. The
Company additionally provided funding to Holdco for working capital
and VAT. The balance outstanding at Period end was GBP546,624.
16 Unconsolidated Subsidiaries, Associates and Other Entity
The following table shows subsidiaries of the Company as at 31
March 2023. As the Company is regarded as an investment entity as
referred to in note 2, these subsidiaries have not been
consolidated in the preparation of the financial statements. The
Company is the ultimate parent undertaking of these entities.
Ownership Country
of
Name Interest Investment Category incorporation Registered address
----------------- --------- -------------------- ------------- ---------------------
Atrato Onsite 100% Holdco subsidiary UK 6th Floor, 125 London
Energy Holdco entity Wall, London, EC2Y
Ltd 5AS
Atrato Rooftop 100% Operating subsidiary UK 6th Floor, 125 London
Solar 1 Ltd entity, owned by Wall, London, EC2Y
Holdco 5AS
EMDC Solar 100% Operating subsidiary UK 6th Floor, 125 London
Ltd entity, owned by Wall, London, EC2Y
Holdco 5AS
Hylton Plantation 100% Operating subsidiary UK 6th Floor, 125 London
Solar Farm entity, owned by Wall, London, EC2Y
Ltd Holdco 5AS
Sonne Solar 100% Operating subsidiary UK 6th Floor, 125 London
Ltd entity, owned by Wall, London, EC2Y
Holdco 5AS
London Road 100% Operating subsidiary UK 6th Floor, 125 London
Energy Centre entity, owned by Wall, London, EC2Y
Holdco 5AS
----------------- --------- -------------------- ------------- ---------------------
Guarantees provided by the Company in relation to liabilities
that may arise in Hylton Plantation Solar Farm Ltd or Sonne Solar
Ltd have been provided in the table below. The expected economic or
cash outflow from the Company is expected to be nil.
Provider Investment Beneficiary Nature Purpose Amount
GBP'000
------------ ------------- ------------ ---------- --------------- ---------------
The Company Hylton Nissan Guarantee PPA 10,000
The Company Sonne Solar Tesco Guarantee Framework PPAs 10,000
The Company Sonne Solar Tesco Guarantee PPA 6,000 to 10,000
The Company Sonne - LCY2 Amazon Guarantee PPA 30,000
The Company Sonne - LTN4 Amazon Guarantee PPA 30,000
The Company Sonne - EDI1 Amazon Guarantee PPA 30,000
The Company Sonne -MAN2 Amazon Guarantee PPA 30,000
The Company Sonne -BHX2 Amazon Guarantee PPA 30,000
The Company Sonne -BHX3 Amazon Guarantee PPA 30,000
The Company Sonne -BHX4 Amazon Guarantee PPA 30,000
17 Commitments and contingencies
As at 31 March 2023, the Company's subsidiaries had future
investment obligations totaling GBP19.6 million (30 September 2023:
GBP1.4 million) relating to its solar investments currently
undergoing installation.
18 Post balance sheet events
In April, the Company appointed Duncan Neale to the board as a
non-executive director and as the new Chair to the Audit
Committee.
On 13 April 2023, the Company acquired 100% of the shares in
Skeeby Solar Limited ("Skeeby"), which is a special purpose vehicle
to develop a 50MW solar PV system. The acquisition will see the
Company invest GBP39.4 million, over a twelve month installation
period.
On 19 April 2023, the Company declared an interim dividend in
respect of the period from 1 January 2023 to 31 March 2023 of 1.23
pence per Ordinary Share, paid on 26 May 2023 to Shareholders on
the register on 28 April 2023. On that record date, the number of
Ordinary Shares in issue was 150,000,000 and the total dividend
paid to Shareholders amounted to GBP1.8 million. The dividend has
not been included as a liability at 31 March 2023.
On 11 May 2023, the new owner of the Vale of Mowbray site
exercised the buy-out option in the lease to acquire the solar
panels installed at the site for GBP0.9m.
No other significant events have occurred between 31 March 2023
and the date when the interim accounts were authorised by the Board
of Directors, which would require adjustments to, or disclosure in,
the Company's interim accounts.
Alternative Performance Measures
In reporting financial information, the Company presents
alternative performance measures ("APMs") which are not defined or
specified under the requirements of IFRS. The Company believes that
these APMs, which are not considered to be a substitute for or
superior to IFRS measures, provide stakeholders with additional
helpful information on the performance of the Company. The APMs
presented in this report are shown below:
Premium/Discount
The amount, expressed as a percentage, by which the share price
at 31 March 2023, is greater or less the NAV per share.
As at As at
31 March 30 September
2023 2022
---------------------- ------------- --------- -------------
NAV per share (pence) a 93.8 92.8
Share price (pence) b 85.6 99.5
---------------------- ------------- --------- -------------
(Discount) / Premium (b÷a)-1 (8.7%) 7.2%
---------------------- ------------- --------- -------------
Total return
Total return is a measure of performance that includes both
income and capital returns. It considers capital gains and the
assumed reinvestment of dividends paid out by the Company into its
shares on the ex-dividend date. The total return is shown below,
calculated on both a share price and NAV basis.
Share price
For the period from IPO to 31 March
2023 (pence) NAV (pence)
------------------------------------ ------------- ----------- -----------
Value at IPO a 100.0 98.1
Closing at 31 March 2023 b 85.6 93.8
Dividends paid since IPO c 5.5 5.5
Adjusted closing (d=b + c) d 91.1 99.3
------------------------------------ ------------- ----------- -----------
Total return (d÷a)-1 (8.9) % 0.9 %
------------------------------------ ------------- ----------- -----------
Share price
For the period from IPO to 30 September
2022 (pence) NAV (pence)
---------------------------------------- ------------- ----------- -----------
Value at IPO a 100.0 98.1
Closing at 30 September 2022 b 99.5 92.8
Dividends paid since IPO c 3.0 3.0
Adjusted closing (d=b + c) d 102.5 95.8
---------------------------------------- ------------- ----------- -----------
Total return (d÷a)-1 2.5% (2.3)%
---------------------------------------- ------------- ----------- -----------
Ongoing charges ratio
A measure, expressed as a percentage of average NAV, of the
regular, recurring annual costs of running an investment
company.
For the
period
from IPO
to
31 March
2023
------------------------ ----------- --------
Average NAV (GBP'000) a 139,888
Ongoing fees* (GBP'000) b 2,277
------------------------ ----------- --------
Ongoing charges ratio (b÷a) 1.6%
------------------------ ----------- --------
*Ongoing fees for the six months to 31 March 2023 annualised.
Consisting of investment management fees and other recurring
expenses.
[1] OCR for 30 September 2022 includes the period prior to IPO
when no expenses were incurred
[2] Including post balance sheet events and excluding
commitments under framework agreements
[3] Investment Adviser research. Sector comprises UK listed
solar focussed renewables companies
[4] Based on the Company's first full year of operations
[5] Based on GOV UK publications for scope 1 and 2 emission
conversion factors
[6] Based on Ofgem average UK annual household energy
consumption of 2,900kWh
[7] Estimated based on 28,000t of carbon avoided. Assumes 0.025t
of carbon consumed annually per tree
[8] Calculated as the difference between the PPA price and
Aurora's latest wholesale price forecast plus a GBP70/MWh
non-commodity cost in each respective period, discounted to present
value
[9] Including post balance sheet events and excluding
commitments under framework agreements
[10] Dividend cover is net of ongoing fund costs
[11] Dividend cover is net of ongoing fund costs
[12] Based on the Company' first full year of operations
[13] One Tesco site is currently under installation and is due
to be operational August 2023
[14] As at announcement date
[15] Dividend cover is net of ongoing fund costs
[16] Dividend cover is net of ongoing fund costs
[17] This is the value of funds injected into the SPVs as at 31
March 2023 and not the full committed amount to projects
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END
IR NKBBPKBKBKAD
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