TIDMTENT
RNS Number : 3471I
Triple Point Energy Transition PLC
02 December 2022
THIS ANNOUNCEMENT HAS BEEN DETERMINED TO CONTAIN INSIDE
INFORMATION FOR THE PURPOSES OF THE UK VERSION OF THE MARKET ABUSE
REGULATION (EU) NO. 596/2014.
2 December 2022
Triple Point Energy Transition plc
("TENT" or the "Company" or, together with its subsidiaries, the
"Group")
RESULTS FOR THE SIX MONTHSED 30 SEPTEMBER 2022
The Board of Triple Point Energy Transition plc (ticker: TENT)
is pleased to announce its unaudited results for the six months
ended 30 September 2022.
30 September
2022 31 March 2022 30 September 2021
------------------------------------------- ------------- -------------- ------------------
Net Asset Value ("NAV") GBP100.3m GBP96.1m GBP94.5m
NAV per share 100.26 pence 96.12 pence 94.50 pence
V alu e of the portfolio GBP84.1m GBP78.8m GBP28.5m
Ongoing charges ratio (annualised) (1) 1.89% 1.38% 1.16%
Dividend declared per s hare 2.75 pence 5.50 pence 2.75 pence
Capital committed awaiting deployment (1) GBP44.9m GBP44.9m -
Fully invested portfolio valuation
(including commitments at cost) (1) GBP129.0m GBP123.6m GBP28.5m
(1) Alternative performance measures
Highlights
-- Dividends paid, in the six months ended 30 September 2022,
substantially covered, at 0.98x, by cash flows generated from the
portfolio, net of cash expenses and cash finance costs of the Group
.
-- The Company has declared an interim dividend for the period
from 1 July to 30 September 2022 of 1.375 pence per Ordinary Share,
payable on or around 6 January 2023 to holders of Ordinary Shares
on the register on 16 December 2022.
-- Total NAV return of 7.2% for the six months ended 30
September 2022 (31 March 2022: 4.9%, 30 September 2021: 0.4 %
).
-- Weighted average project life remaining of 31.3 years,
underpinned by strong contractual cashflows.
-- Discount rate in respect of Hydroelectric Portfolio increased by 50bps.
-- No impact expected from Electricity Generator Levy based on
information published to date.
-- Robust portfolio performance despite volatile markets.
-- Further portfolio diversification via an additional
investment in efficient lighting, completed post the period end
.
-- On 25 August 2022, shareholders approved an amended
Investment Policy and associated change to the Company's name,
which provides a broader mandate of "energy transition" reflecting
better the nature of the current portfolio of investments and
offering a greater number of opportunities for investment.
-- Following the period end, on 28 October 2022, the Company's
shares transferred to trading on the Premium Segment of the Main
Market of the LSE and were admitted to the premium listing segment
of the Official List of the Financial Conduct Authority.
John Robert s, the Company's Chair, commented:
" We are pleased to announce strong results for the six months
ended 30 September 2022, which have been delivered during a period
of extreme geo-politcal and economic volatility. The results
reflect the strength and defensive nature of the portfolio, which
has been constructed to faciliate the energy transition and help
corporates to reduce their energy costs. "
For further information, please contact:
Triple Point Investment Management LLP
Jonathan Hick
Ben Beaton +44 (0) 20 7201 8989
J.P. Morgan Cazenove (Corporate Broker)
William Simmonds / Jérémie Birnbaum
(Corporate Finance)
James Bouverat / Liam MacDonald-Raggett
(Sales) +44 (0) 20 7742 4000
Akur Limited (Financial Adviser)
Tom Frost
Anthony Richardson
Siobhan Sergeant +44 (0) 20 7493 3631
Sapience Communications (PR Adviser)
Richard Morgan Evans +44 (0) 20 3195 3240
Jamie Gittings +44 (0) 73 0850 9608
LEI: 213800UDP142E67X9X28
Further information on the Company can be found on its website:
http://www.tpenergytransition.com/
NOTES:
The Company is an investment trust which aims to invest in
assets that support the transition to a lower carbon, more
efficient energy system and help the UK achieve Net Zero.
Since its IPO in October 2020, the Company has made the
following investments and commitments:
-- Harvest and Glasshouse : provision of GBP21m of senior debt
finance to two established combined heat and power ("CHP") assets,
located on the Isle of Wight, supplying heat, electricity and
carbon dioxide to the UK's largest tomato grower, APS Salads
("APS") - March 2021
-- Spark Steam : provision of GBP8m of senior debt finance to an
established CHP asset in Teesside supplying APS, as well as a
further power purchase agreement through a private wire arrangement
with another food manufacturer - June 2021
-- Hydroelectric Portfolio (1) : acquisition of six operational,
Feed in Tariff ("FiT") accredited, "run of the river" hydroelectric
power projects in Scotland, with total installed capacity of 4.1MW,
for an aggregate consideration of GBP26.6m (excluding costs) -
November 2021
-- Hydroelectric Portfolio (2) : acquisition of a further three
operational, FiT accredited, "run of the river" hydroelectric power
projects in Scotland, with total installed capacity of 2.5MW, for
an aggregate consideration of GBP19.6m (excluding costs) - December
2021
-- BESS Portfolio : commitment to provide a debt facility of
GBP45.6m to a subsidiary of Virmati Energy Ltd (trading as
"Field"), for the purposes of building a portfolio of four
geographically diverse Battery Energy Storage System ("BESS")
assets in the UK with a total capacity of 110MW - March 2022
-- Energy Efficient Lighting (1): Funding of c.GBP1m to a
lighting solutions provider to install efficient lighting and
controls at a leading logistics company - September 2022.
-- Energy Efficient Lighting (2): Commitment of c.GBP1m to a
lighting solutions provider to install efficient lighting and
controls at a leading logistics company, of which GBP0.3m invested
to date - November 2022.
The Investment Manager is Triple Point Investment Management LLP
("Triple Point") which is authorised and regulated by the Financial
Conduct Authority. Triple Point manages private, institutional, and
public capital.
Following its IPO on 19 October 2020, the Company was admitted
on the premium listing segment of the Official List of the
Financial Conduct Authority and was admitted to trading on the
Premium Segment of the Main Market of the London Stock Exchange on
28 October 2022. The Company was also awarded the London Stock
Exchange's Green Economy Mark.
CHAIR'S STATEMENT
Introduction
On behalf of the Board, I am pleased to present the interim
report of the Company covering the period from 1 April 2022 to 30
September 2022.
During the period, following approval by shareholders, the
Company adopted a revised investment policy which broadened its
scope, to cover the wider energy transition sector. The Company
also changed its name to Triple Point Energy Transition plc, from
Triple Point Energy Efficiency Infrastructure Company plc to better
reflect the nature of our existing portfolio and the revised
investment policy.
Investment Activity
During the period, the Company made an investment of over GBP1
million into accounts receivable financing, purchasing the rights
to future receivable payments from a lighting service provider. The
transaction funded the installation of Light Emitting Diodes
("LEDs") at a warehouse operated by one of the UK's leading
logistics businesses.
At a time when many businesses are seeing significant increases
in their energy bills, providing solutions that reduce energy costs
and accelerate the transition to Net Zero are actions the Company
is keen to accelerate.
This investment furthers the Company's diversification in the
sources of income and types of technology.
Financial Results
The six months ended 30 September 2022 saw a high level of
market volatility, manifesting at the end of the period in sharp
rises in gilt and bond yields, high levels of inflation and growing
concern around the depth and length of a recession. This has been
reflected in bond markets through inverted yield curves and in
equity markets through share price falls.
Despite the deterioration in the macroeconomic environment, the
strong contractual and defensive nature of the Company's investment
portfolio has facilitated a strong financial performance over the
period.
We are delighted to have returned a NAV per share of 100.26
pence for the period ended 30 September 2022 (31 March 2022: 9 6.12
pence). This combined with the 2.75 pence per share dividends paid
has delivered a total NAV return of 7.2% over the six months.
An improved outlook for power forecasts, by independent market
advisors, along with the higher inflation expectations, from the
Office for Budget Responsibility, underpinned a GBP4.8 million
increase in the valuation of the portfolio. This has negated the
impact of higher discount rates, which in the energy sector
generally have started to increase following many years of
compression.
Profit before tax was GBP6.9 million (30 September 2021: GBP0.4
million), with earnings per share of 6.88 pence (30 September 2021:
0.004 pence). Revaluation of the Company's wholly owned subsidiary
contributed GBP5.0m to the profit before tax, with the balance
being represented by earnings from the Hydroelectric and CHP
Portfolios, offset by expenses incurred at Company level.
The operating expenses for the six months ended 30 September
2022 amounted to GBP0.9 million (31 September 2021: GBP0.6m). The
Company's ongoing charges ratio ("OCR") is 1.89% (30 September
2021: 1.16%). In accordance with the Investment Management
Agreement, following deployment of more than 75% of IPO proceeds,
the management fee is now charged on full NAV. This has been the
lead driver of the increase in the OCR versus the corresponding six
months ended 30 September 2021, where it was charged in reference
to deployed funds as the 75% threshold was not met until December
2021.
Distributions
Cash dividend cover, represented by cash income from the
portfolio, net of Company and subsidiary expenses and finance
costs, increased significantly to 0.98x in the six months ended 30
September 2022. This was facilitated by the maiden dividend
distribution received from the Hydroelectric Portfolio and a full
contribution, over the period, from investments completed in the
year ended 31 March 2022.
As stated previously , the Board is targeting total dividends of
5.50 pence per share (2) for the year ending 31 March 202 3. We
remain focused on our ambition that our dividend should be covered
by cash earnings as soon as practicable, and to that end, note that
this financial year will not only benefit from a full year of
earnings from the Hydroelectric and CHP Portfolios, but will also
benefit from income from the BESS Portfolio as the investment
commitment is deployed.
Whilst the Company's share price has fallen along with other
energy investment trusts following recent market turbulence, the
substantially covered dividend, when considered along side the
growth in NAV over the period, show s the strong underlying
fundamentals of the Company in the current operating environment.
The Board continue s to closely monitor the Company's share price
discount to NAV and will keep under consideration the best
interests of shareholders.
Notes:
(2) The dividend and return targets stated are Pound Sterling
denominated returns targets only and not a profit forecast. There
can be no assurance that these targets will be met, and they should
not be taken as an indication of the Company's expected future
results.
Environmental, Social and Governance ("ESG")
The emphasis on energy transition is reflected in the
sustainability and ESG approach adopted by the Investment Manager.
Our focus remains on ensuring that the Investment Manager continues
to integrate climate change into its investment decision making.
Taking into account the risks and opportunities associated with
climate change is important for protecting our assets and
maximising their potential. The details of the Investment Manager's
approach to ESG integration, including climate analysis and
disclosures in line with Task Force on Climate related Financial
Disclosure ("TCFD") will be reported in the annual report for the
year ending 31 March 2023.
Post Balance Sheet
On 28 October 2022, the Company was admitted to the premium
listing segment of the Official List of the Financial Conduct
Authority and migrated to trading on the Premium Segment of the
Main Market of the London Stock Exchange. This will enable the
Company to attract capital from a wider range of investors, such as
retail investors. In addition, admission to the Premium Listing
Segment is a key criterion to facilitate the Company's inclusion in
the FTSE indices. A small number of minor amendments to the
investment policy were approved by the Board following discussions
with the FCA regarding the migration. The investment policy can be
found on the Company' website:
https://www.tpenergytransition.com/investors/72/
In November 2022, the Company also committed to further
follow-on investments of, c.GBP1 million into accounts receivable
financing, purchasing the rights to future receivable payments from
a lighting service provider. As at the date of this report GBP0.3m
of that commitment has been deployed. The investments will enable
the installation of LEDs at additional logistics warehouses, with
the same counterparties as the previous efficient lighting
transaction.
GBP5.5m of the BESS Portfolio facility commitment was deployed
following the commissioning of the first energy storage asset in
mid-November 2022.
Outlook
Significant economic volatility, centered around energy markets
caused by the ongoing conflict in Ukraine has manifested itself in
both higher wholesale energy prices in the UK and much of Europe,
as well higher rates of inflation across the wider economy.
Market forecasters expect inflation and energy prices to remain
elevated over the coming 12-24 months, which provides an attractive
operating environment given the nature of its underlying revenues.
These two factors have driven much of the increase in the forecast
cashflows for the Group and accordingly the NAV uplift, as outlined
above and covered in further detail in the Investment Manager's
report. Given the forecast contraction in UK Gross Domestic Product
over the coming 6-12 months, the attractiveness of energy
infrastructure assets, where returns are typically not correlated
to the wider economy and benefit from rising inflation, presents an
attractive area of opportunity for investors.
This also facilitates attractive pipeline opportunities across a
range of areas in the Company's target sectors, due to two factors.
Firstly, the expected returns that can be achieved by generation
and storage assets have increased, making more projects
commercially viable. Secondly, higher energy prices are encouraging
companies to reduce their energy costs through behind the meter
solutions such as on-site solar and LED lighting to reduce
demand.
Driven by these tailwinds, the Company has a pipeline of
opportunities totalling GBP634m, with assets across a diverse range
of transition technologies including solar, CHP, LED lighting,
BESS, hydrogen electrolysers, electric vehicle charging, biomass
and heat pumps.
The Review of Electricity Market Arrangements ("REMA")
consultation that was launched during the period is the largest
review of the electricity market for some decades, as it seeks to
review in particular the way that electricity prices are set and
over what geographic regions. Whilst the consultation has only
recently closed, it would be reasonable to assume there will be a
range of impacts on energy infrastructure, which further supports
the rationale for the Company's strategy of owning and operating a
diverse range of assets. The Company will continue to monitor the
outcomes of the consultation closely.
The Company is reviewing the recently announced Electricity
Generator Levy and awaits further detailed drafting of the relevant
legislation in due course. Based on the information announced to
date, the Company does not expect to be impacted by this levy.
John Roberts
Chai r
1 December 2022
INVESTMENT MANAGER'S REPORT
Portfolio Performance
As at 30 September 2022, the Company had committed capital into
17 different assets spread across combined heat and power,
hydroelectric power, battery energy storage and LED lighting.
Combined Heat and Power:
The investee companies have benefited from attractive trading
conditions during the period, driven by the higher-than-expected
prices seen on the wholesale electricity markets. The income stream
from power trading is currently exceeding the revenues derived from
the behind the meter contracts through the heat and power supply to
the co-located glasshouses. The latest available projections from
the investee companies, based on third party power market research
forecasts, indicate continued attractive trading conditions over
the projection period.
Hydroelectric:
The nine run of the river schemes forming the Hydroelectric
Portfolio have generated a combined power output of 4,893 MWh of
green electricity during the six month period to 30 September
2022.
During the period, the Investment Manager has been working with
the long-standing partner operating the Hydroelectric Portfolio to
renegotiate the operation and maintenance (O&M) contracts. The
renegotiated contracts include more monitoring and reporting on
agreed KPIs.
In parallel, the Investment manager has restarted the
development of an optimisation project at the Loch Blair
hydroelectric scheme. If consented, the construction of a small dam
upstream of the plant intake will increase the generation from the
newly created attenuation capacity.
BESS:
The development and construction of the Battery Energy Storage
System Portfolio has continued during the period. The first asset
reached Commercial Operations Date ("COD") in mid-November 2022,
following sign off by the BESS operator and the independent
technical advisor. This will enable the asset to benefit from the
expected volatility in power markets over the upcoming winter
period. The Investment Manager has been actively working with
Field, the developer and sponsor, on the remaining three assets
which are expected to be commissioned in H2 FY24.
LED:
During the period, the Company's lighting service partner
completed the installation of LED lighting at a logistics
warehouse, totalling c.GBP1m and in September the Company received
the first monthly payment, with income contracted over the next
five years. Since 30 September 2022, further funding commitments to
the lighting specialist to enable the installation of LEDs at
additional warehouses with the same counterparty have been made,
with GBP0.3m drawn down in the post balance sheet period against
these commitments and a further c.GBP0.8m expected in respect of
further installations by the end of the financial year.
Pipeline
The Company invests across the energy infrastructure system,
from supply to demand.
The three target segments for the Company are:
-- Low Carbon Generation- as the UK moves to a lower carbon,
decentralised, energy system as part of the transition to Net Zero.
This will involve investing in renewable energy assets, rather than
centralised fossil fuel generation.
-- Transmission and Storage- the energy from renewables needs to
be available to consumers when required, not based on the
availability of wind, water and solar resources. Balancing the
supply and demand for energy is vital in enabling the transition to
Net Zero, for example through BESS.
-- Onsite supply and demand reduction - reducing demand through
"Behind the Meter" investments are an important factor in the
transition to Net Zero, particularly at a time of higher energy
prices. Technologies like solar PV enable business and consumers to
generate their energy requirement on site, giving additional
security of supply and lower cost energy. Technologies such as LED
lighting enable customers to reduce the amount of energy
consumed.
By investing across the energy infrastructure system, the
Company enables its shareholders to benefit from a broad range of
different risk and return profiles, as well as diversifying its
exposure away from any one single technology or part of the power
system. Accordingly, the Company has a pipeline of opportunities
totalling GBP634m, with assets across a diverse range of transition
technologies as demonstrated in the chart below.
Gearing
As at 30 September 2022, the Company had not drawn on the GBP40m
Revolving Credit Facility ("RCF") that it secured in March 2022 at
a fixed all-in drawn interest rate of 4.5% (excluding drawn
monitoring fee of 0.25%). The RCF is expected to be largely drawn
to fund BESS Portfolio commitments during FY24 as well as other
future investments.
The RCF matures in March 2024 and the Company has been in
discussions with the lender in relation to the extension of the
facility. These discussions are expected to successfully conclude
prior to 31 March 2023, with the lender having expressed appetite
to extend. Given the rising interest rate environment, it is
anticipated that the interest rate on the extension would increase
when compared to the current borrowing rate. Based on current
benchmark rates as at the date of this report, this is not forecast
to alter the Company's ability to pay a covered dividend.
As at 30 September 2022, the undrawn RCF and group cash balances
totalled GBP55.6m with remaining investment commitments of
GBP44.9m.
Portfolio Valuation
The Investment Manager is responsible for carrying out the fair
market valuation of the Group's investments. The Company engages
Mazars as an external, independent, and qualified valuer to assess
the validity of the discount rates used by the Investment Manager
in the determination of fair value. Portfolio valuations are
carried out on a semi-annual basis on 31 March and 30 September
each year.
For non-market traded investments (being all the investments in
the current portfolio), the valuation is based on a discounted cash
flow methodology and adjusted in accordance with the International
Private Equity Valuation Guidelines, where appropriate, to comply
with IFRS 13 and IFRS 10, given the special nature of portfolio
investments.
The valuation for each investment in the portfolio is derived
from the application of an appropriate discount rate to reflect the
perceived risk to the investment's future cash flows to give the
present value of those cash flows. The Investment Manager exercises
its judgement in assessing the expected future cash flows from each
investment based on its expected life and the financial model
produced by each project entity. In determining the appropriate
discount rate to apply to a given investment the Investment Manager
considers the relative risks associated with the revenues.
While Gilt yields rose sharply at the end of September 2022, in
part, as a market reaction to the UK Government's mini budget of 23
September 2022, transaction discount rates, at 30 September 2022,
did not reflect a similar increase. Accordingly, we have seen a
smaller incremental change in discount rates relative to the change
in the risk-free rate. The Company's choice of discount rates also
reflects the approach taken to both power price and inflation
forecasting.
For the six months ended 30 September 2022, the discount rates
range from 5.50% to 8.25% (31 March 2022: 5.0% to 8.25%) and the
weighted average portfolio discount rate is 6.41% (31 March 2022:
6.11%). This increase was driven by 50 bps increase in the discount
rate used in the Hydroelectric Portfolio. If the BESS Portfolio had
been fully drawn at 30 September 2022, the weighted average
portfolio discount rate would have been c.7%.
The valuation of the portfolio by the Investment Manager and
reviewed and supported by the Directors as at 30 September 2022 was
GBP84.1 million (31 March 2022: GBP78.8 million).
Valuation movements
The CHP Portfolio has been held at par. The underlying risk
-free rate has increased but conversely there has been a reduction
in the in the risk premium attached to the borrowers. The CHP
Portfolio performed strongly in the six months ended 30 September
2022, contributing to improved debt service cover ratios, beyond
those anticipated at financial close, thereby supporting a par
valuation. The latest forecasts prepared for the Company, by the
borrower, also project an improved operating environment going
forward, based on independent market forecasts for such assets. The
CHP assets are in line with other similar energy assets over the
same period and has led to a significant increase in the cash
reserves of the borrowers, given the restrictions on distribution
to shareholders under the terms of our debt.
The initial deployment into the BESS Portfolio continues to be
valued at par as the initial drawdown took place on financial close
in March 2022, with fair value being equal to the upfront costs
incurred on the transaction.
The valuation of the energy efficient lighting portfolio has
seen a write down of GBP0.1m due to an increase in the discount
rate applied. The increase has been made in reference to recent
comparable transactional activity, at the valuation date, being
higher than the effective interest rate.
As a result of the majority of the debt investments being valued
at or around par, the fair value movements for the six months ended
30 September 2022 are principally attributable to the equity
investment into the Hydroelectric Portfolio. A breakdown of the
movement in the Directors' valuation is detailed and explained
below.
Valuation Movement in the six months ended 30 September 2022
The opening valuation as at 31 March 2022 was GBP78.8 million.
Allowing for cash movements relating to investments completed in
the six months ended 30 September 2022 (comprising a lighting as a
service debt investment into energy efficient lighting of GBP1.1
million and GBP0.6 million of principal repayments from the CHP
Portfolio), the rebased valuation as at 30 September 2022 was
GBP79.3 million.
Each movement between the rebased valuation of GBP79.3 million
and the 30 September 2022 valuation of GBP84.1 million is
considered, in turn, below:
Inflation
The ongoing crisis in Ukraine, in addition to the multiple
primary impacts felt in Ukraine itself, has driven an increase in
energy and commodity prices. This, along with supply chain
bottlenecks has continued to place significant upward pressure on
inflation.
Given the quantum of the increase, consensus amongst the
forecasters and broad increases across prices in multiple sectors,
portfolio inflation assumptions have been updated. The methodology
adopted in relation to inflation, for both RPI and CPI, follows the
latest available (November 2022) Office for Budget Responsibility
forecast for the 12 months from the 30 September 2022 valuation
date. Thereafter, a long term 3.00% assumption is made in relation
to RPI, dropping to 2.40% in 2031 to reflect the 0.60% reduction as
RPI is phased out and replaced with CPIH.
Our long-term assumption for CPI remains at 2.25% and stays flat
thereafter. We also model a power curve indexation assumption, as
wholesale power prices are not intrinsically linked to consumers'
prices, of 3.00% staying flat thereafter . The updated inflation
assumptions have been accretive to the valuation of the
Hydroelectric Portfolio by GBP4.1 million.
Power Prices
The valuation as at 30 September 2022 applies long-term, forward
looking power prices from a leading third -party consultant. A
blend of the last two quarters' central case forecasts is taken and
applied. Where fixed price arrangements are in place, the financial
model reflects this price for the relevant time and subsequently
reverts to the power price forecast using the methodology
described. The updated power price forecast has been accretive to
the valuation of the Hydroelectric Portfolio by GBP2.7 million.
Discount Rates
The GBP2.4m reduction in the valuation of the portfolio,
attributable to movement in discount rates, has been principally
due to the Hydroelectric Portfolio. As at 30 September 2022 a
discount rate of 5.50% has been applied to the Hydroelectric
Portfolio (31 March 2022: 5.00%), and a discount rate of 6.50% in
respect of the optimisation at the Loch Blair scheme, which is
subject to further planning consents. The increase in the discount
rate has been driven by a combination of a review of discount rates
on recently completed comparable transactions and proprietary
information derived from participation in market transactions and
the elevated regulatory / policy risk.
Balance of Portfolio Return
This refers to the balance of valuation movements in the six
months ended 30 September 2022 (excluding the above) which has been
accretive to valuations of GBP0.4 million. The balance of portfolio
return is calculated as the expected return, reflecting the net
present value of future cashflows brought forward to the valuation
date at the prevailing discount rate.
The main driver of the portfolio return has been a combination
of the unwinding of the discount rate as it is brought forward to
30 September 2022, along with updated cost forecasts reflecting
agreements entered, in relation to the Hydroelectric Portfolio
during the six-month period.
Investment Commitment
As at 30 September 2022, the Company had outstanding investment
commitments , in relation to the BESS Portfolio which has a total
capacity of 110 MW.
BESS asset Battery hour Location Size in MW Operational
duration date
1(st) BESS One hour North of England 20 MW November 2022
asset
------------- ----------------- ----------- --------------
2(nd) BESS Two hours Scotland 50 MW H2 FY24
asset
------------- ----------------- ----------- --------------
3(rd) BESS Two hours Wales 20 MW H2 FY24
asset
------------- ----------------- ----------- --------------
4(th) BESS One hour South-East 20 MW H2 FY24 .
asset England
------------- ----------------- ----------- --------------
Please refer to Note 11 for further information
Fully Invested Portfolio Valuation
The valuation of the portfolio on a fully invested basis can be
derived by adding the valuation at 31 March 2022 and the expected
outstanding commitments are as follows:
GBP'000
---------------------------------------- -------
Portfolio valuation as at 30 September
2022 84,140
Future investment commitments at cost 44,941
Portfolio valuation once fully invested 129,081
------------------------------------------ -------
Key Sensitivities
The following chart illustrates the sensitivity of the Company's
NAV per share to changes in key input assumptions (with labels
indicating the impact on the NAV in pence per share).
For each of the sensitivities, it is assumed that potential
changes occur independently of each other with no effect on any
other base case assumption, and that the number of investments in
the portfolio remains static throughout the modelled life.
Financial Review
The Company applies IFRS 10 and qualifies as an investment
entity. IFRS 10 requires that investment entities measure
investments, including subsidiaries that are themselves investment
entities, at fair value except for subsidiaries that provide
investment services which are required to be consolidated.
The Company's single, direct subsidiary, TEEC Holdings, is the
ultimate holding company for all the Company's investments.
It is, itself, an investment entity and is therefore measured at
fair value.
NAV
The Company's NAV as well as the valuation of the investment
portfolio are calculated semi-annually on 31 March and 30 September
each year. Valuations are provided by the Investment Manager and
are subject to review by Mazars with the other assets and
liabilities of the Company calculated by the Administrator.
The NAV is reviewed and approved by the Board. All variables
relating to the performance of the underlying assets are reviewed
and incorporated in the process of identifying relevant drivers of
the discounted cash flow valuation.
NAV Bridge for the six months ended 30 September 2022
The movement in NAV was driven by the following factors:
Investment income of GBP2.8 million comprising GBP1.6 million of
interest income to TENT, via TEEC Holdings, from the interest on
the CHP Portfolio and the shareholder loans to the Hydroelectric
Portfolio together with a GBP1.1 million of dividend received, via
TEEC Holdings, from distributions originating from the
Hydroelectric Portfolio. Fund expenses of GBP0.9 million and
dividends paid in the period of GBP2.8 million. The revaluation of
the portfolio, via TEEC Holdings, contributed a further GBP5.0m to
NAV. The aggregated impact of the investment income earned, company
expenses, dividends paid and revaluation of the portfolio led to a
4.3% increase in NAV from GBP96.1 million to GBP100.3 million.
Operating Results
Profit before tax was GBP6.9 million (30 September 2021: GBP0.4
million), with earnings per share of 6.88 pence (30 September 2021:
0.004 pence). Revaluation of the Company's wholly owned subsidiary
contributed GBP5.0m to the Profit before tax, with the remainder
being represented by earnings from Hydroelectric and CHP Portfolios
offset by expenses incurred at Company level. The earnings from the
BESS Portfolio, which predominantly comprised non utilisation fees
on the commitments awaiting deployment, and Energy Efficient
Lighting Portfolio were recognized in their entirety at the
Company's subsidiary, TEEC Holdings Limited, level together with
subsidiary entity level expenses and finance costs. The portfolio
earnings and expenses at subsidiary level are reflected within the
GBP5.0 million revaluation.
Operating Expense and Ongoing Charges
The operating expenses for the six months ended 30 September
2022 amounted to GBP0.9 million (30 September 2021: GBP0.6m). The
Company's ongoing charges ratio ("OCR") for the period is 1.89% (30
September 2021: 1.16%). Management fees are now charged on full
NAV. This has been the predominate driver of the increase in the
OCR, versus the corresponding six months ended 30 September 2021,
during which the management fee was charged in reference to
deployed funds in accordance with the Investment Management
Agreement until deployment of IPO proceeds exceeded 75% (from
December 2021) .
Cash Dividend Cover(1)
The Company measures dividend cover on a look through basis to
include the income and operating expenses of TEEC Holdings, which
is its wholly owned subsidiary. Summarised below are the cash
income, cash expenses and finance costs incurred by the Company and
TEEC Holdings in the six months ended 30 September 2022. The
cashflow statement for the Company alone does not capture the total
income and expenses of the Group as the interest income, financing
costs and further expenses are received and paid for by TEEC
Holdings.
Six months ended
30 September 2022
Operating Cash Income Received from Investments GBP'000
CHP Portfolio - Loan Interest 1,570
Hydroelectric Portfolio - Dividend 1,148
Hydroelectric Portfolio - Loan Interest (Holdco) 613
BESS Portfolio - Non utilisation fees and drawn
interest (Holdco) 637
Energy Efficient Lighting Portfolio - Lighting
as a service (Holdco) 11
(A) Total Investment Cash 3,979
-------------------
Operating Cash Expenses and Finance Costs
Company expenses - cash paid (915)
Subsidiary expenses - cash paid (Holdco) (169)
RCF Non utilisation fees - cash paid* (Holdco) (203)
(B) Total Expenses and Finance Costs Cash (1,287)
-------------------
(C) (A - B) Net Cash 2,692
-----
(D) Dividends Paid (2,750)
-------
(E) (C / - D) Cash Dividend Cover 0.98x
-----
(1) Alternative performance measure
*One off RCF arrangement fee cash paid in the six months ended
30 September 2022 of GBP454k excluded.
The Company's dividends paid in the six months ended 30
September 2022 of GBP2.8 million (2.750 pence per share) have been
predominately covered by cash flows generated from the portfolio
net of expenses and finance costs at company and subsidiary
level.
The Company remains focused on dividend cover being in excess of
1.0x and note the Company, via its subsidiary, will benefit from
additional operating cash contribution from further deployment of
the GBP44.9 million commitments into the BESS Portfolio.
Sustainability and the approach to Environmental, Social and
Governance
Triple Point as Investment Manager remains committed to best
practice in responsible investment.
Sustainability Disclosures
A disclosure for the Company in line with the European Union's
Sustainable Financial Disclosure Regulation ("SFDR") requirements
for Article 6 and Article 8, is publicly available on our website
https://www.tpenergytransition.com/. The Company keeps under review
the Articles against which it discloses.
TENT publishes an annual Task Force on Climate-related Financial
Disclosure (TCFD) report. The next disclosure will appear within
the Company's annual report for the year ending 31 March 2023.
Although not presently required to publish these disclosures, we
believe it is important to provide transparency on our
sustainability approach wherever possible.
TENT's approach and alignment to sustainable practices
The Investment Manager continues to review and evolve TENT's
sustainability approach, reflecting the Investment Manager's belief
that the process contributes value to the strategy and presents an
opportunity to differentiate.
As the Company moves forward with its new name, there is a
renewed focus on demonstrating alignment and success in
contributing to the energy transition system. TENT will explicitly
track asset selection against the UK Climate Change Committee
("CCC") 6th carbon budget balanced pathway.
Asset type* TENT universe alignment UK CCC balanced pathway
alignment
CHP Portfolio Onsite energy generation Use of surplus electricity
& efficient consumption
------------------------------ ----------------------------
Hydroelectric Distributed energy generation Low carbon & decentralised
Portfolio
------------------------------ ----------------------------
BESS Portfolio Energy storage & distribution A more flexible electricity
system
------------------------------ ----------------------------
Lighting solutions Onsite energy generation Decarbonise industry
& efficient consumption
------------------------------ ----------------------------
* Based on current portfolio asset exposure
The Company's contribution to this energy transition view will
be demonstrated using lifetime tCO(2) e avoided (to be reported in
the annual report). Transition contribution will include embodied
(for assets constructed under the Investment Manager's exposure)
and Scope 3 carbon and this data will be estimated where it cannot
yet be acquired and accounted for according to current Partnership
for Carbon Accounting Financials ("PCAF") standards, or equivalent
best practice if appropriate. On-going consideration of technology
phase-out timelines will also be reflected in decision making and
deal structure, to ensure no more than marginal exposure to
technologies after any known phase out dates. As the Investment
Manager identifies opportunities in Europe, the team will apply
equivalent appropriate carbon budgets and phase out pathways.
Assessment of each investment for operational quality through
additional ESG analysis and asset optimisation
Alongside ascertaining the energy transition alignment and scale
for each investment, the wider operational ESG risks and
opportunities associated with each asset are assessed using a
combination of in-house expertise and materiality-based
sustainability frameworks. Where weaker behaviours may be
identified, these results will feed into asset optimisation
activity, where the Investment Manager will look to use its
investor influence to improve behaviours and outcomes (for example
improving the avoided carbon, improving health & safety
approaches and outcomes, improving community relations, identifying
opportunities to benefit a just transition). Strong portfolio asset
management is also expected to further increase the quality of the
data available to evidence the outcomes of the assets in relation
to the energy efficiency and transition theme and engagement work.
Outcomes will continue to be reported as tCO2e avoided and an
aggregated lifetime tCO(2) e avoided, in addition to asset specific
outcomes including annual reporting of asset alignment to the
Sustainable Development Goals.
Climate analysis
Our ESG analysis also includes climate analysis. Possible
impacts of climate change on the investments are considered through
scenario analysis in order to quantify the possible physical and
financial impacts on an asset and establish a sensible path of
mitigation.
The Investment Manager continues to develop and improve its
approach to climate analysis, with a current focus on the
development of transitional and physical risk registers and
application of scenario analysis using dedicated tools. The annual
TCFD report will contain details of the refined approach.
Sustainability transparency commitment
In summary, the Investment Manager remains committed to a strong
approach to information sharing and oversight for sustainability
across Triple Point and for TENT, as outlined in the disclosures
committed to and the processes described. The Investment Manager
will continue to review alignment to existing regulation and
emergence of new regulation and endeavours to respond in a timely
and appropriate way to all changes.
The Company will also share asset specific performance data
which demonstrates alignment to the carbon transition pathway and
contribution the Investment Manager has had in improving
sustainability performance.
All related data and reporting will be provided annually.
Market Review
European energy markets have been going through a very volatile
period. The ongoing conflict in Ukraine and the knock-on impact to
the restriction of the supply of gas from Russia to Europe have
pushed gas prices to unprecedented levels. This has further
impacted inflation, which central banks are fighting through
raising interest rates. Financial markets have been in turmoil.
The UK Government announced in October 2022 a new Energy Prices
Bill to help households, businesses and others with energy costs.
The Bill puts into law the support measures that have been
announced over the last few months, including the Energy Price
Guarantee for domestic consumers and the Energy Bill Relief Scheme
for businesses and non-domestic properties. The Bill includes
powers to stop volatile and high gas prices setting the cost of
electricity produced by much cheaper renewables. A new
Cost-Plus-Revenue Limit in England and Wales, if enacted would
ensure consumers are not paying significantly more for electricity
generated from renewables and nuclear and it will reduce the impact
of the unprecedented wholesale prices on consumers.
However, on 17 November 2022 the UK Government elected to not
avail itself of the provisions of the Energy Prices Bill but
instead announced an Electricity Generator Levy on nuclear,
renewables and biomass generation . The levy will apply to what the
government believes to be exceptional generation receipts over
GBP75 per MWh, albeit mitigated by an allowance, from 2023-2028.
Such exceptional income would be taxed at a rate of 45%. The
Company has considered the announcement and considers this not to
impact its tax liabilities based on its projections, and it notes
that the levy only applies to groups generating more than 100 GWh,
which is in excess of the Hydroelectric Portfolio annual
generation.
The UK Government is currently digesting the feedback from the
consultation that took place between July and October 2022 on the
Review of Electricity Market Arrangements to identify reforms
needed to transition to a decarbonised, cost effective and secure
electricity system. There are a range of options being considered
to deliver an enduring electricity market framework that will work
for businesses, industry and households. A move toward different
forms of geographic pricing - either regional or nodal - has been
put forward by the Electricity System Operator ("ESO"), National
Grid, and others as a way to accelerate progress towards Net Zero.
We consider that this would create both winners and losers and
highlights the importance of a diversified portfolio of
technologies spread across different parts of the UK. Other
potential outcomes could be changes to Short Run Marginal Cost
pricing, where gas generators no longer set the price for the whole
generation fleet. It is expected that many of the complex reforms
envisaged by REMA will take some years to progress and fully
implement.
Finally, we are starting to see energy security concerns play a
meaningful role in energy procurement, with a rise in our pipeline
segment that focuses on on-site solutions, such as rooftop solar
and battery storage located behind the meter. Given that some
scenario forecasts by the ESO envisage temporary rota load shedding
(blackouts) in January 2023, businesses are seeking to ensure they
are less reliant on energy from the grid. This is in addition to
the more obvious benefits of significantly cheaper and greener
energy from such projects.
We remain confident in the long-term attractiveness of the
energy transition sector, with Net Zero transition commitments
enshrined in law in the UK, and believe TENT is well placed to take
advantage of the opportunities that those commitments
necessitate.
Outlook
The positive outlook for the Company is driven by three primary
factors:
-- Energy prices are forecast, by independent market
forecasters, to remain at elevated levels over the medium term. For
the existing portfolio, this offers the prospect of higher than
budgeted returns. In respect of the Company's pipeline this offers
particular opportunities in respect of the onsite generation and
energy efficiency segment as businesses and consumers look to
reduce their energy consumption and bills.
-- Inflation is also expected to remain high over the next 12-24
months. In the event that inflation turns out to be higher than
forecast in the Company's projections, this would be accretive to
NAV given the component of RPI linked revenues in the Company's
portfolio.
-- The diversified business model of the Company leaves it well
placed in the face of an increasingly uncertain regulatory
environment. This has been evidenced by the recently announced
Electricity Generation Levy which, based on information published
to date, will not impact the Company. We also believe the Company
is well placed in the face of further regulatory changes, such as
those that might arise from REMA. The broader government focus on
energy security and resilience, is also expected to benefit the
Company's pipeline.
Jonathan Hick
TENT Fund Manager
Triple Point Investment Management LLP
1 December 2022
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties for the Company continue
to be those outlined on pages 67 -73 of the Annual Report for the
year ended 31 March 2022 and the Board expects those to remain
valid for the remainder of
the year. Below provides an update on any changes to the risks in the period.
Ability to raise additional finance (Net impact: Moderate to
High , Likelihood: Moderate)
The impact and likelihood scores for this risk have increased in
the period for two key reasons. The Company's share price is
currently trading below the Net Asset Value, which impacts the
Company's ability to issue shares, and potentially to fully
implement the strategy. In response to the current share price, the
Company continues to issue positive market announcements, to
demonstrate the continued performance of the underlying assets and
the dividend cover. Additionally, a strong pipeline of investment
opportunities has been built, ready for when future capital becomes
available.
The Company's RCF matures in March 2024, which presents a
refinancing risk. The Company has been in discussions with the
lender in relation to the extension of the facility. These
discussions are expected to successfully conclude prior to 31 March
2023, with the lender having expressed appetite to extend. Given
the rising interest rate environment, it is anticipated that the
interest rate on the extension would increase when compared to the
current borrowing rate. Based on current benchmark rates as at the
date of this report, this is not forecast to alter the Company's
ability to pay a covered dividend.
Weather changes impacting renewable energy production levels
(Net Impact: Moderate, Likelihood: Moderate to High)
The increased seasonality of rainfall and river flows in the
Scottish Highlands has the potential to improve or worsen the
production levels in the Hydroelectric Portfolio. The Investment
Manager has a programme of optimisation projects to smooth the
impact of intermittent rainfall e.g. through the use of log
barriers in key locations to expand the pooling storage of water
reserves.
Since the last Annual Report, the following risks have been
removed from the Principal Risks:
Geopolitical changes causing economic disruption
At the last reporting date, the Company considered the potential
disruption to supply chains and energy markets from the invasion of
Ukraine to be a notable risk. As this development has unfolded, the
impact on the Company's portfolio has been limited.
Significant abortive costs in terms of financial cost and
time
The Company does not consider abort costs to be a material risk
given the nature of the assets in its pipeline and the exclusivity
arrangements over pipeline that the Company benefits from.
Emerging risks
The emerging risks identified on page 73 of the Annual Report
for the year ended 31 March 2022, continue to be closely monitored
and below provides an update on how some of the emerging risks have
developed in the period.
Change to energy market regulation and policies
On the 18 July 2022 the Government launched the Review of
Electricity Market Arrangements ("REMA") consultation, which closed
in October of this year. REMA could represent a material change in
the way that energy prices are set, including de-coupling gas
prices from renewables prices, reforming the capacity market and
considering regional or nodal pricing. The Company believes its
diversified portfolio of assets - with different technologies in
different energy market segments, spread across different regions
of the UK - leave it well positioned to withstand regulatory
changes. It will continue to monitor REMA as it develops, which is
expected to be over a number of years, noting the potential impacts
could increase or decrease revenues for different asset
classes.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge this
condensed set of financial statements which have been prepared in
accordance with IAS 34 as adopted by the UK, give a true and fair
view of the assets, labilities, financial position and profit or
loss of the Company. T he operating and financial review includes a
fair review of the information required by DTR 4.2.7 and DTR 4.2.8
of the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority namely: an indication of
important events that have occurred during the period and their
impact on the condensed financial statements and a description of
the principal risks and uncertainties for the remaining six months
of the financial year; and material related party transactions in
the period as disclosed in Note 11 .
The Directors, all of whom are independent and non-executive,
are:
-- Dr John Roberts (Chair)
-- Rosemary Boot (Senior Independent Director)
-- Sonia McCorquodale
-- Dr Anthony White
Shareholder information is as disclosed on the Triple Point
Energy Transition plc website.
Approval
This Directors' responsibilities statement was approved by the
Board of Directors and signed on its behalf by:
John Roberts
Chair
1 December 2022
INDEPENT REVIEW REPORT TO TRIPLE POINT ENERGY TRANSITION PLC
Introduction
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 30 September 2022 which comprises the Interim
Condensed Statement of Comprehensive Income, Interim Condensed
Statement of Financial Position, Interim Condensed Statement of
Changes in Equity, Interim Condensed Statement of Cash Flows and
notes to Interim Financial Statements.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of and
has been approved by the 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.
As disclosed in note 2, the annual financial statements of the
Company will be prepared in accordance with UK adopted
international accounting standards. The condensed set of financial
statements included in this interim financial report has been
prepared in accordance with UK adopted International Accounting
Standard 34, "Interim Financial Reporting".
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Financial Reporting Council for use
in the United Kingdom. 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.
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 30
September 2022 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34 and
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting its responsibilities in
respect of half-yearly financial reporting in accordance with 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
Date: 1 December 2022
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Interim Condensed Statement of Comprehensive Income
For the six months ended 30 September 2022 (unaudited)
For the six months For the six months
ended ended
30 September 2022 30 September 2021
Unaudited Unaudited
Notes Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 3 2,793 - 2,793 1,019 - 1,019
Profit / (loss) arising
on the revaluation
of investments at
the period end 9 - 5,016 5,016 - (83) (83)
Investment return 2,793 5,016 7,809 1,019 (83) 936
------- ------- ------- --------- -------- ---------
Investment management
fees 4 326 109 435 90 30 120
Other expenses 4 48 2 10 49 2 418 16 434
80 8 119 92 7 508 46 554
Profit/(loss) before 1,98
t axation 5 4,897 6,882 511 (129) 382
------- ------- ------- --------- -------- ---------
Taxation 5 - - - - - -
Profit/(loss) after 1,98
taxation 5 4,897 6,882 511 (129) 382
------- ------- ------- --------- -------- ---------
Other comprehensive
income - - - - - -
Total comprehensive 1,98
Income / (loss) 5 4,897 6,882 511 (129) 382
------- ------- ------- --------- -------- ---------
Basic & diluted
earnings / (loss)
per share (pence) 6 1.99p 4.90 p 6.88 p 0.005p (0.001p) 0.004p
------- ------- ------- --------- -------- ---------
The total column of this statement is the Income Statement of
the Company prepared in accordance with International Financial
Reporting Standards ( IFRS ) as adopted by the UK . The
supplementary revenue return and capital columns have been prepared
in accordance with the Association of Investment Companies
Statement of
Recommended Practice (AIC SORP).
Interim Condensed Statement of Financial Position
As at 30 September 202 2 (unaudited)
As at 30 September As at 31 March
2022 2022
Unaudited Audited
Note GBP'000 GBP'000
Non-current assets
Investments at fair value through
profit or loss 9 84,872 78,952
------------------ ----------------------------------------------------
Current assets
Trade and other receivables 466 453
Cash and cash equivalents 15,348 17,144
15,814 17,597
------------------ ----------------------------------------------------
Total assets 100,686 96,549
------------------ ----------------------------------------------------
Current liabilities
Trade and other payables (41 7 ) (412)
(41 7 ) ( 412 )
------------------ ----------------------------------------------------
Net assets 100,269 96,137
================== ====================================================
Equity attributable to equity
holders
Share capital 10 1,000 1,000
Share premium 13 13
Special distributable reserve 90,190 91,444
Capital reserve 8,216 3,319
Revenue reserve 8 50 361
Total equity 100,269 96,137
================== ====================================================
Shareholders' funds
Net asset value per Ordinary Share 8 100.26 p 9 6 . 12 p
The statements were approved by the Directors and authorised for
issue on 1 December 202 2 and are
signed on behalf of the Board by:
Dr John Roberts
Chair
Company registration number: 12693305
Interim Condensed Statement of Changes in Equity
For the six months ended 30 September 2022 (unaudited)
Special
Issued Share Distributable Capital Revenue
Capital Premium Reserve Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April 2022 1,000 13 91,444 3,319 361 96,137
-------- -------- -------------- -------- -------- -------
Distributions to
/ Contributions
from owners
Issue of share capital - - - - - -
(1,49 6
Dividends paid (1,254) ) (2,750)
-------- -------- -------------- -------- -------- -------
Sub-total - - (1,254) - (1,496) (2,750)
-------- -------- -------------- -------- -------- -------
Total comprehensive
income for the period - - - 4,897 1,98 5 6,882
As at 30 September
2022 1,000 13 90,190 8,216 85 0 100,269
======== ======== ============== ======== ======== =======
For the six month ended 30 September 2021 (unaudited)
Special
Issued Share Distributable Capital Revenue
Capital Premium Reserve Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April 2021 1,000 - 97,009 ( 185) ( 336) 97,488
-------- -------- -------------- -------- -------- -------
Distributions to
/ Contributions from
owners
Issue of share capital* - 1 - - - 1
D ividends paid - - (3,375) - - (3,375)
-------- -------- -------------- -------- -------- -------
Sub-total - 1 (3,375) - - (3,374)
-------- -------- -------------- -------- -------- -------
Total comprehensive
income / (loss) for
the period - - - (129) 511 382
As at 30 September
2021 1,000 1 93,634 (314) 175 94,496
======== ======== ============== ======== ======== =======
* - 675 Ordinary 1 pence shares issued for GBP658
The Company's distributable reserves consist of the Special
distributable reserve, Capital reserve attributable to realised
gains and Revenue reserve. There have been no realised gains or
losses at the reporting date.
Interim Condensed Statement of Cash Flows
For the six months ended 30 September 2022
For the six For the six
months ended months ended
30 September 30 September
2022 (Unaudited) 2021 (Unaudited)
Note GBP'000 GBP'000
Cash flows from operating activities
Profit before taxation 6,882 382
(Gain) / Loss arising on the revaluation
of investments at the period end 9 ( 5,016 ) 83
Cash flow Generated by operations 1,86 6 465
Interest income (1,644) (1,019)
Interest received 1,640 605
Dividend income (1,148) -
Dividend received 1,148
(Increase)/decrease in receivables ( 9 ) 3
Increase in payables 5 67
Net cash flows from / (used in)
operating activities 1,85 8 121
--------------------------------- -----------------
Cash flows from investing activities
Purchase of financial assets at
fair value through profit or loss 9 (1,469) (8,232)
Loan Principal repaid 565 637
Net cash flows (used in) investing
activities (904) (7,595)
--------------------------------- -----------------
Cash flows from financing activities
Issue of shares - 1
Costs of Share Issue - -
Dividends paid (2,750) (3,375)
Net cash flows from financing activities (2,750) (3,374)
--------------------------------- -----------------
Net (decrease) in cash and cash
equivalents (1,796) (10,848)
Reconciliation of net cash flow
to movements in cash and cash equivalents
Cash and cash equivalents at beginning
of period 17,144 76,553
Net (decrease) in cash and cash
equivalents (1,796) (10,848)
--------------------------------- -----------------
Cash and cash equivalents at end
of the period 15,348 65,705
================================= =================
Notes to the Interim Financial Statements
For the six months ended 30 September 2022
1. General Information
The Company is registered in England and Wales under number
12693305 pursuant to the Companies Act 2006. The address of its
registered office, which is also its principal place of business,
is 1 King William Street, London EC4N 7AF.
The Company's Ordinary Shares were first admitted to trading on
the Specialist Fund Segment of the Main Market of the London Stock
Exchange under the ticker TEEC on 19 October 2020. On 30 August
2022 following approval by shareholders at the AG M , held on the
25 August 2022, Triple Point Energy Efficiency Infrastructure
Company plc changed its name to Triple Point Energy Transition plc
, trading on the Specialist Fund Segment of the Main Market of the
London Stock Exchange under the ticker TENT . On 28 October 2022
the Ordinary Shares of the Company were admitted to the premium
listing segment of the Official List of the Financial Conduct
Authority and were admitted to the Premium Segment of the Main
Market of the London Stock Exchange.
The Company's Objective is to generate an attractive total
return for investors comprising stable dividend income and capital
preservation, with the opportunity for capital growth through
acquiring and realising value from of a diversified portfolio of
energy transition investments in the United Kingdom and Europe
.
The Company currently makes its investments through its sole
holding company TEEC Holdings. The Company controls the investment
policy of TEEC Holdings to ensure it acts in a manner consistent
with the investment policy of the Company.
The Company has appointed Triple Point Investment Management LLP
as its Investment Manager pursuant to the Investment Management
Agreement dated 25 August 2020. The Investment Manager is
registered in England and Wales under number OC321250 pursuant to
the Companies Act 2006. The Investment Manager is regulated by the
FCA, number 456597.
2. Basis of Preparation
The interim financial statements included in this report have
been prepared in accordance with IAS 34 Interim Financial
Reporting. The interim financial statements have been prepared
under historical cost convention, as modified by the revaluation of
financial assets at fair value through profit or loss.
The interim financial statements have also been prepared as far
as relevant and applicable to the Company in accordance with the
Statement of Recommended Practice: Financial Statements of
Investment Trust Companies and Venture Capital Trusts ("SORP")
issued in April 2021 by the Association of Investment Companies
("AIC").
The interim financial statements are presented in sterling,
which is the Company's functional currency and rounded to the
nearest thousand, unless otherwise stated. The accounting policies,
significant judgements, key assumptions are consistent with those
used in the latest audited financial statements to 31 March 2022
and should be read in conjunction with the Company's annual audited
financial statements for the year ended 31 March 2022.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 March 2023 or
2022 but is derived from those accounts. Statutory accounts for
2022 and 2021 have been delivered to the Registrar of Companies.
The auditors have reported on those accounts: their reports were
unqualified, did not draw attention to any matters by way of
emphasis and did not contain statements under s498(2 ) or (3) of
the Companies Act 2006 .
Ba sis of Consolidation
The objective of the Company through its subsidiary TEEC
Holdings Limited is to invest, via individual corporate entities
for equity investments, or through advancing proceeds to corporate
entities for debt investments, in Energy Transition Assets. TEEC
Holdings typically will issue equity and will borrow to finance its
investments.
The Directors have concluded that in accordance with IFRS 10,
the Company meets the definition of an investment entity having
evaluated the criteria that needs to be satisfied. Under IFRS 10,
investment entities are required to hold subsidiaries at fair value
through profit or loss rather than consolidate them on a
line-by-line basis, meaning TEEC Holdings' cash and working capital
balances are included in the fair value of the investment rather
than in the Company's assets and liabilities. TEEC Holdings has one
investor which is the Company. However, in substance, TEEC Holdings
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 ultimate beneficiary investors.
Going Concern
The Directors, in their consideration of going concern, have
reviewed comprehensive cash flow forecasts prepared by the
Company's Investment Manager and believe that it is appropriate to
prepare the financial statements of the Company on a going concern
basis.
In arriving at their conclusion that the Company has adequate
financial resources, the Directors were mindful that the Group had
outstanding commitments in relation to the BESS Portfolio of
GBP44.9 million, unrestricted cash of GBP15.6 million as at 30
September 2022 and an undrawn revolving credit facility ("RCF")
(available for investment in new or existing projects and working
capital) of GBP40.0 million through TEEC Holdings. The heightened
inflationary environment, is a tailwind for the C ompany by virtue
of the inflation linked revenue from the Hydro electric P ortfolio,
which in absolute terms is greater than the inflation linked costs
incurred by the Company. The Company's net assets at 30 September
2022 were GBP100.3 million and total expenses for the period were
GBP 0.9 million, which when annualised represented approximately
1.89% of average net assets during the period.
At the date of approval of this document, based on the aggregate
of investments and cash held, the Company has substantial operating
expenses cover. The Directors are satisfied the Company has
sufficient resources to continue to operate for the foreseeable
future, a period of not less than 12 months from the date of this
report. Accordingly, they continue to adopt the going concern basis
in preparing these financial statements.
Segmental reporting
The Chief Operating Decision Maker (the "CODM") being the Board
of Directors, is of the opinion that the Company is engaged in a
single segment of business, being investment in Energy Transition
Assets.
The Company has no single major customer. The internal financial
information used by the CODM on a quarterly basis to allocate
resources, across performance and manage the Company presents the
business as a single segment comprising the portfolio of
investments in Energy Transition Assets.
Seasonal and cyclical variations
The Company's results do not vary significantly during reporting
periods.
3. Investment Income
For the six months end For the six months end
ed 30 ed 30
September 2022 (Unaudited) September 2021 (Unaudited)
------------------------------- --------------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Interest on cash
deposits 7 - 7 4 - 4
Interest income
from investments 1,638 - 1,638 1,015 - 1,015
Dividend income
from investments 1,148 - 1,148 - - -
2,793 - 2,793 1,019 - 1,019
------- ------------- ------- -------- ------------- -------
4. Operating Expenses
For the six months end For the six months end
ed 30 ed 30
September 2022 (Unaudited) September 2021 (Unaudited)
------------------------------- -------------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment Management
fees 326 109 435 90 30 120
Directors' fees 100 - 100 100 - 100
Company's audit fees:
- statutory audit
of the group financial
statements 38 - 38 38 - 38
- Assurance-related
services pursuant
to legislation 35 - 35 25 - 25
Other operating expenses 29 7 10 30 7 225 10 235
Irrecoverable VAT
on Administration
fees 12 - 12 30 6 36
80 8 119 92 7 508 46 554
---------- --------- -------- ------------- -------- -------
The Directors' fees exclude employer's national insurance
contribution and travel expenses which are included
as appropriate in other operating expenses. There were no other emoluments.
5. Taxation
The tax for the period shown in the statement of Comprehensive
Income is as follows.
For the six months end For the six months
ed 30 end ed 30
September 2022 (Unaudited) September 2021 (Unaudited)
-------------------------------- --------------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit / (Loss) before
taxation 1,98 5 4,897 6,882 511 (129) 382
---------- --------- -------- ----------- --------- --------
Corporation tax at
19% 377 931 1,308 97 (25) 72
Effect of:
Tax relief for dividends
designated as interest
distributions (312) - (312) (97) - (97)
Dividends not taxable (218) - (218) - - -
Capital losses / (gains) ( 953
not deductible - ) ( 953 ) - 16 16
Disallowed expenditure - - -
Surrendering of Tax
losses to unconsolidated
subsidiaries 153 22 175 - 9 9
---------- --------- -------- ----------- --------- --------
UK Corporation Tax - - - - - -
---------- --------- -------- ----------- --------- --------
6. Earnings Per Share
For the six months ended
30 For the six months ended
September 2022 (Unaudited) 30 September 2021 (unaudited)
-------------------------------- -----------------------------------
Revenue Capital Total Revenue Capital Total
Profit / (Loss) attributable
to the equity holders
of the Company (GBP'000) 1,985 4,897 6,882 511 (129) 382
Weighted average
number of Ordinary
Shares in issue ('000) 100,014 100,014 100,014 100,000 100,000 100,000
Profit / (Loss)
per Ordinary Share
(pence) - basic and
diluted 1.99p 4.90p 6.88p 0.005p (0.001p) 0.004p
There is no difference between the weighted average Ordinary or
diluted number of Shares.
7. Dividends
Interim dividends paid during Dividend per Total dividend
the share GBP'000
period ended 30 September 2022 Pence
With respect to the quarter ended
31 March 2022 - paid 8 July 2022 1.375 1,375
With respect to the quarter ended
30 June 2022 - paid 30 September
2022 1.375 1,375
------------- ---------------
2.750 2,750
------------- ---------------
Interim dividends declared after Dividend per Total dividend
30 September 2022 and not accrued share GBP'000
in the period Pence
With respect to the quarter ended
30 September 2022 1.375 1,375
1.375 1,375
------------- ---------------
Interim dividends paid during Dividend per Total dividend
the share GBP'000
period ended 30 September 2021 Pence
With respect to the quarter ended
31 March 2021 2.000 2,000
2.000 2,000
------------- ---------------
On 2 December 2022 , the Board declared an interim dividend of
1.375 pence per share with respect to the period ended 30 September
2022. The dividend is expected to be paid on or around 6 January
2023 to shareholders on the register on 16 December 2022 . The
ex-dividend date is 15 December 2022.
8. Net assets per Ordinary share
The basic total assets per ordinary share is based on the total
net assets attributable to equity shareholders as at 30 September
2022 of GBP 100,269,000 (31 March 2022: GBP96,13 7 ,00 0 ) and
ordinary shares of 100,014,079 in issue at 30 September 2022 (31 Ma
r ch 202 2 : 100,014,079).
There is no dilution effect and therefore no difference between
the diluted net assets per ordinary share and the basic total net
assets per ordinary share
9. Investments at Fair Value through Profit or Loss
The Company designates its interest in its wholly owned direct
subsidiary as an investment at fair value through profit or
loss.
Summary of the Company's valuation is below :
30 September
2022 31 March 2022
(Unaudited) (Audited)
------------- -----------------------------------
GBP'000 GBP'000
Brought forward investment at fair
value
through profit or loss 78,952 20,883
Loan advanced to TEEC Holdings Limited - 32,704
Shareholding in TEEC Holdings Limited 1,469 23,315
Capitalised interest - 519
Loan principal repaid (565) (2,103)
Movement in fair value of investments 5,016 3,634
Closing investment at fair value
through
profit or loss 84,872 78,952
--------------------------------------- ------------- -----------------------------------
Reconciliation of movement in fair value :
30 September
2022 31 March 2022
(Unaudited) (Audited)
-------------- ---------------
GBP'000 GBP'000
Fair value at the start of the
period 78,952 20,883
Loan advanced to TEEC Holdings
Limited - 32,704
Shareholding in TEEC Holdings
Limited 1,469 23,315
Capitalised interest - 519
Loan principal repaid (565) -
------------------------------------ -------------- ---------------
Fair value of portfolio 79,856 75,318
Cash held in intermediate holding
company 249 293
Fair value of other net assets
in intermediate holding companies 4,767 3,341
------------------------------------ -------------- ---------------
Investment at fair value 84,872 78,952
------------------------------------ -------------- ---------------
The Company owns five shares in TEEC Holdings Limited,
representing 100% of issued share capital, allotted for a
consideration of GBP24,784,000. The fair value of the Company's
equity in TEEC Holdings on 30 September 2022 is GBP33,322,000 (31
March 2022: GBP26,836,000) and the fair value of the Company's debt
interest in TEEC Holdings at 30 September 2022 is GBP51,551,000 (31
March 2022: GBP52,116,000).
Capitalised interest represents interest recognised in the
income statement but not paid. This is instead added to the loan
balance on which interest for future periods is computed. The loan
from the Company to TEEC Holdings, which enabled TEEC Holdings to
complete investments into Harvest, Glasshouse and Spark Steam,
carry commensurate terms and repayment profiles. All payments from
the borrower and capitalised interest are in accordance and in line
with the contractual repayments with the respective underlying
facility agreements with Harvest, Glasshouse and Spark Steam as
agreed at inception.
Reconciliation of Portfolio Valuation :
30 September 2022 31 March 2022
(Unaudited) (Audited)
------------------ -----------------------------------
GBP'000 GBP'000
Portfolio Valuation 84,140 78,787
Intermediate holding company cash 249 293
Intermediate holding company debt* 340 454
Intermediate holding company net
working capital 143 (582)
Fair Value of Company's investments
as end of period 84,872 78,952
------------------------------------ ------------------ -----------------------------------
*Debt arrangement costs of GBP340,000 (31 March 2022: 454,000)
which are capitalised and expensed to profit or loss under
amortised cost. At 30 September 2022 nil debt was drawn (31 March
2022: nil).
Fair Value measurements
The Company accounts for its interest in its wholly owned direct
subsidiary, TEEC Holdings, as an investment at fair value through
profit or loss.
IFRS 13 requires disclosure of fair value measurement by level.
The level of fair value hierarchy within the financial assets or
financial liabilities is determined on the basis of the lowest
level input that is significant to the fair value measurement.
Financial assets and financial liabilities are classified in
their
entirety into only one of the following 3 levels:
-- level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
-- level 2 - inputs other than quoted prices included within
Level 1 that are observable for the assets or
liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
-- level 3 - inputs for assets or liabilities that are not based
on observable market data (unobservable inputs).
The determination of what constitutes 'observable' requires
significant judgement by the Company. Observable data is considered
to be market data that is readily available, regularly distributed
or updated, reliable and verifiable, not proprietary, and provided
by independent sources that are actively involved in the relevant
market.
The financial instruments held at fair value are the instruments
held by the Group in the SPVs, which are fair valued at each
reporting date. The investments have been classified within level 3
as the investments are not traded and contain certain unobservable
inputs. The Company's investments in TEEC Holdings are also
considered to be level 3 assets.
As the fair value of the Company's equity and loan investments
in TEEC Holdings is ultimately determined by the underlying fair
values of the equity and loan investments, made by TEEC Holdings,
the Company's sensitivity analysis of reasonably possible
alternative input assumptions is the same as for those
investments.
There have been no transfers between levels during the
period.
Valuations are derived using a discounted cashflow methodology
in line with IPEV Valuation Guidelines and consider, inter alia,
the following:
i. due diligence findings where relevant;
ii. the terms of any material contracts including PPAs;
iii. asset performance
iv. power price forecasts from leading consultants; and
v. the economic, taxation or regulatory environment
The DCF valuation of the Group's investments represents the
largest component of GAV and the key sensitivities are considered
to be the discount rate used in the DCF valuation and assumptions
relating to inflation, energy yield and power prices.
The shareholder loan and equity investments, in TEEC Holdings,
are valued as a single asset class at fair value in accordance with
IFRS 13 Fair Value Measurement.
Sensitivity
Sensitivity analysis is produced to show the impact of changes
in key assumptions adopted to arrive at the valuation. For each of
the sensitivities, it is assumed that potential changes occur
independently of each other with no effect on any other base case
assumption, and that the number of investments in the portfolio
remains static throughout the modelled life.
The analysis below shows the sensitivity of the portfolio value
(and its impact on NAV) to changes in key assumptions as
follows:
Discount rate
The weighted average valuation discount rate applied to
calculate the portfolio valuation is 6.42% (31 March 22:
6.11%).
An increase or decrease in this rate by 0.5% has the following
effect on valuation
-0.5% Total +0.5%
NAV per change portfolio change NAV per
Discount Rate share impact value share impact
-------------- -------- ---------- -------- --------------
Pence GBP'000s GBP'000s GBP'000s Pence
Valuation - September 2022 3.34 3,343 84,872 (3,068) (3.07)
Energy yield
The table below shows the sensitivity of the Hydroelectric
Portfolio valuation to a sustained decrease or increase of energy
generation by minus or plus 5% on the valuation, with all other
variables held constant. The fair value of the Hydroelectric
Portfolio is assessed on a "P50" level of electricity generation,
representing the expected level of generation over the long
term.
A change in the forecast energy yield assumptions by plus or
minus 5% has the following effect.
-5% Total +5%
NAV per change portfolio change NAV per
Energy Yield share impact value share impact
-------------- -------- ---------- -------- --------------
Pence GBP'000s GBP'000s GBP'000s Pence
Valuation - September 2022 (3.41) (3,408) 84,872 3,407 3.41
Power Prices
The valuation as at 30 September 2022 applies long-term, forward
looking power prices from a leading third -party consultant. A
blend of the last two quarters' central case forecasts is taken and
applied
Where fixed price arrangements are in place, the financial model
reflects this price for the relevant time and subsequently reverts
to the power price forecast using the methodology described.
The sensitivity considers a flat 10% movement in power prices
for all years, i.e. the effect of adjusting the forecast
electricity price assumptions applicable to the Hydroelectric
Portfolio down by 10% and up by 10% from the base case assumptions
for each year throughout the operating life of the Hydroelectric
Portfolio.
A change in the forecast electricity price assumptions by plus
or minus 10% has the following effect.
NAV per -10% change Total portfolio +10% change NAV per
Power Prices share impact value share impact
-------------- ----------- --------------- ----------- --------------
Pence GBP'000s GBP'000s GBP'000s Pence
Valuation - September 2022 (3.14) (3,136) 84,872 3,156 3.16
Inflation
The Hydroelectric Portfolio's income streams are principally
subsidy based, which is amended each year with inflation and power
prices, which the sensitivity assumes will move with inflation.
Operating expenses relating to the Hydroelectric Portfolio,
typically move with inflation, but debt payments on the shareholder
loans are fixed. This results in the portfolio returns and
valuations being positively correlated to inflation. The average
long-term inflation assumption across the portfolio is 3.00% for
RPI from 1 October 2023 to 2030 and 2.40% thereafter, 2.25% for CPI
from 1 October 2023. The Company also models a Power Curve
Indexation set at 3.00% from 2023, as wholesale power prices are
not intrinsically linked to consumer prices, unlike costs of sales
and labour.
The sensitivity illustrates the effect of a 0.5% decrease and a
0.5% increase from the assumed annual inflation rates in the
financial model throughout the operating life of the portfolio.
-0.5% Total +0.5%
NAV per change portfolio change NAV per
Inflation share impact value share impact
-------------- -------- ---------- -------- --------------
Pence GBP'000s GBP'000s GBP'000s Pence
Valuation - September 2022 (2.51) (2,515) 84,872 2,747 2.75
10. Share Capital
For the s ix m onth s ended 30 September 202 2 (Unaudited)
Nominal value
Allotted, issued and fully paid: Number of shares of shares (GBP)
Ordinary shares of 1 pence each
Opening balance at 1 April 2022 100,014,079 1,000,141
Ordinary Shares issued - -
Closing balance of Ordinary
Shares at
30 September 2022 100,014,079 1,000,141
--------------------------------- ------------------ ------------------------------------
For the s ix m onth s ended 30 September 2021 (Unaudited)
Nominal value
Allotted, issued and fully paid: Number of shares of shares (GBP)
Ordinary shares of 1 pence each
Opening balance at 1 April 2021 100,000,000 1,000,000
Ordinary Shares issued (see note
11) 675 6.75
Closing balance of Ordinary
Shares at
30 September 2021 100,000,675 1,000,006.75
--------------------------------- ------------------ -------------------------------------
Shareholders are entitled to all dividends paid by the Company
and, on a winding up, provided the Company has satisfied all its
liabilities, the shareholders are entitled to all of the residual
assets of the Company.
11. Related Party Transactions
Directors Fees
The amounts incurred in respect of Directors fees during the
period to 30 September 2022 was GBP100,000 (30 September 2021:
GBP100,000). These amounts have been fully paid at 30 September
2022. The amounts paid to individual directors during the period
were as follows:
For the six months For the six months
ended 30 September ended 30 September
2022 2021
Dr John Roberts (Chair) GBP37,500 GBP37,500
Rosemary Boot GBP22,500 GBP22,500
Sonia McCorquodale GBP20,000 GBP20,000
Dr Anthony White GBP20,000 GBP20,000
Directors Expenses
The expenses claimed by the Directors during the period to 30
September 2022 was GBP190 (30 September 2021: nil). These amounts
were fully paid at 30 September 2022. The amounts paid to
individual directors during the period were as follows:
For the six months For the six months
ended ended 30 September
30 September 2022 2021
Dr John Roberts (Chair) GBP28 -
Rosemary Boot GBP61 -
Sonia McCorquodale GBP75 -
Dr Anthony White GBP26 -
Directors' interests
Details of the direct and indirect interest of the Directors and
their close families in the ordinary share of one pence each in the
Company at 30 September 2022 were as follows:
% of Issued share
Number of Shares Capital
Dr John Roberts (Chair) 40,000 0.04%
Rosemary Boot 40,000 0.04%
Sonia McCorquodale 10,000 0.01%
Dr Anthony White 40,000 0.04%
The Company and Subsidiaries
During the period interest totalling GBP1,637,644 was earned on
the Company's long-term interest-bearing loan between the Company
and its subsidiary (30 September 2021: GBP1,015,370) . At the
period end, GBP343,481 was outstanding (31 March 2022: GBP344,105)
.
The loans to TEEC Holdings are unsecured ; the underlying loan
from TEEC Holdings to Harvest Generation Limited, Glasshouse
Generation Services Limited and Spark Steam Limited are secured
against the assets of the
companies by a fixed and floating charge.
On 13 April 2022, the Company subscribed for 1 ordinary share
for a total consideration of GBP1,000,000 in TEEC Holdings Limited.
The share subscription was used to fund payment of the subsidiary's
arrangement fees in connection with the revolving credit facility
and to partially fund the first drawdowns into the LED lighting
portfolio. A further share subscription of 1 ordinary share, was
executed on 26 August 2022, for a total consideration of GBP469,281
in TEEC Holdings. The subsidiary used the proceeds to fund the
remaining deployment into the Efficient Energy Lighting Portfolio
.
On 22 September 2022, TEEC Holdings paid a GBP1,148,426 dividend
to the Company. The dividend represented a commensurate dividend
received by TEEC Holdings from the Hydro electric portfolio in the
same period.
The AIFM and Investment Manager
The Company and Triple Point Investment Management LLP have
entered into the Investment Management Agreement pursuant to which
the Investment Manager has been given responsibility, subject to
the overall supervision of the Board, for active discretionary
investment management of the Company's Portfolio in accordance with
the
Company's Investment Objective and Policy.
As the entity appointed to be responsible for risk management
and portfolio management, the Investment Manager is the Company's
AIFM. The Investment Manager has full discretion under the
Investment Management Agreement to
make investments in accordance with the Company's Investment Policy from time to time.
This discretion is, however, subject to: (i) the Board's ability
to give instructions to the Investment Manager from time to time;
and (ii) the requirement of the Board to approve certain
investments where the Investment Manager has a conflict of interest
in accordance with the terms of the Investment Management
Agreement.
Under the terms of the Investment Management Agreement, the
Investment Manager will be entitled to a fee calculated at the rate
of:
-- 0.9 per cent, per annum of the adjusted NAV in respect of the
Net Asset Value of up to, and including, GBP650 million; and
-- 0.8 per cent, per annum of the adjusted NAV in respect of the
Net Asset Value in excess of GBP650 million.
The management fee is calculated and accrues quarterly and is
invoiced quarterly in arrears. During the six months ended 30
September 2022, management fees of GBP434,840 were incurred (30
September 2021: GBP119,496) of which GBP219,122 (30 September 2021:
GBP65,849) was payable at the period end .
No annual management fee shall accrue or be changed on any
undeployed cash funds until such time as 75% or more of the IPO
proceeds have been deployed. For these purposes, "deployed" shall
mean invested in the acquisition or development of Energy
Transition Assets. The 75% threshold was met in December 2021
following completion of the acquisition of the Hydroelectric
Portfolio.
Investment Manager 's Interest in shares of the Company
Pursuant to the Investment Management agreement, whereby the
Investment Manager is required to acquire shares in the company for
a consideration equal to 20% of the value of the management fee
earned, net of taxes, on 29 September 2022 the Investment Manager
purchased, on the secondary market, 41,550 ordinary shares of
GBP0.01 each in the capital of the Company at an average price of
GBP0.80865 pence per share.
Details of the interests of the Investment Manager, held by an
entity within the Wider Triple Point Group, in the ordinary shares
of one pence each in the Company as at 30 September 2022 were as
follows:
% of Issued share
Number of Shares Capital
Perihelion One Limited 714,512 0.71%
Perihelion One Limited is a company within the Wider Triple
Point Group.
Guarantees and other commitments
The Company is the guarantor of the GBP40 million RCF between
its sole wholly owned subsidiary TEEC Holdings Limited and TP
Leasing Limited. The RCF was entered into on 29 March 2022 and has
remained undrawn since financial close.
TP Leasing Limited is an established private credit and asset
leasing business which is managed by the Investment Manager and, as
a result, is deemed to be a related party as defined in the Listing
Rules. The RCF is deemed to be a "smaller related party
transaction" for the purposes of LR11.1.10R. As set out in the IPO
Prospectus, the Company has adopted a related party policy pursuant
to which, prior to entering into the Facility Agreement, (i) the
RCF was approved by the Directors and (ii) the Company obtained a
fair and reasonable opinion from a qualified, independent adviser.
The Board was satisfied with the conflict management procedures put
in place, including team segregation within the Investment Manager
and obtaining independent third-party pricing validation.
TEEC Holdings entered into a GBP45.6 million investment
commitment, to fund the b uild of a portfolio of four
geographically diverse BESS assets in the UK. GBP44.9 million of
the commitment is outstanding and is forecast to be deployed by the
end of 2023. The commitment is expected to be funded via the
undrawn GBP40 million RCF available to TEEC Holdings and cash
reserves of the Company.
12. Events after the Reporting period
On 28 October 2022 the Ordinary Shares of the Company were
admitted to the premium listing segment of the Official List of the
Financial Conduct Authority and were admitted to the Premium
Segment of the Main Market of the London Stock Exchange.
In November, t he Company also committed further follow-on
investments, totalling over GBP1 million of accounts receivable
financing, purchasing the rights to future receivable payments from
a lighting service provider. The transactions will enable the
installation of LEDs at additional logistics warehouses, with the
same counterparties as the previous LED transaction.
GBP5.5m of the BESS Portfolio facility commitment was deployed
following the commissioning of the first energy storage asset in
mid-November 2022.
The Company has declared an interim dividend in respect of the
period from 1 July 2022 to 30 September 2022 of 1.375 pence per
Ordinary share, payable on or around 6 January 2023 to holders of
Ordinary shares on the register on 16 December 2022. The
ex-dividend date will be 15 December 2022.
Glossary
The Act Companies Act 2006
AIC Code The AIC Code of Corporate Governance produced
by the Association of Investment Companies
--------------------------------------------------------
AIFM The alternative investment fund manager of
the Company, Triple Point Investment Management
LLP
--------------------------------------------------------
AIFMD The EU Alternative Investment Fund Managers
Directive 2011/61/EU
--------------------------------------------------------
BESS Battery Energy Storage Systems
--------------------------------------------------------
BESS Portfolio GBP45.6 million debt facility to a subsidiary
of Virmati Energy Ltd (trading as Field), to
fund a portfolio of four Battery Energy Storage
Systems assets
--------------------------------------------------------
CCC Climate Change Committee
--------------------------------------------------------
CHP Combined heat and power
--------------------------------------------------------
CHP Portfolio A total debt investment of GBP29 million into
Harvest and Glasshouse and Spark Steam
--------------------------------------------------------
The Company Triple Point Energy Transition plc (company
number 12693305).
--------------------------------------------------------
DCF Discounted Cash Flow
--------------------------------------------------------
E nergy Transition A project which falls within the parameters
Asset of the Company's investment policy
--------------------------------------------------------
ESG Environmental, Social and Governance
--------------------------------------------------------
EU European Union
--------------------------------------------------------
EV Electric Vehicle
--------------------------------------------------------
FCA Financial Conduct Authority
--------------------------------------------------------
FRC Financial Reporting Council
--------------------------------------------------------
GAV Gross Asset Value
--------------------------------------------------------
GHG Green House Gas
--------------------------------------------------------
Group The Company and any subsidiary undertakings
from time to time
--------------------------------------------------------
Harvest and Glasshouse Harvest Generation Services Limited and Glasshouse
Generation Limited
--------------------------------------------------------
HVAC Heating, Ventilation and Air Conditioning
--------------------------------------------------------
Hydroelectric Portfolio Elementary Energy Limited
Green Highland Allt Ladaidh (1148) Limited
Green Highland Allt Choire A Bhalachain (255)
Limited
Green Highland Allt Phocachain (1015) Limited
Green Highland Allt Luaidhe (228) Limited
Achnacarry Hydro Limited
--------------------------------------------------------
ITC Investment Trust Company
--------------------------------------------------------
Investment Manager Triple Point Investment Management LLP
--------------------------------------------------------
IPO The admission by the Company of 100 million
Ordinary Shares to trading on the Specialist
Fund Segment of the Main Market, which were
the subject of the Company's initial public
offering on 19 October 2020
--------------------------------------------------------
IPO Prospectus The Company's Prospectus for its initial public
offering, published on 25 August 2020.
--------------------------------------------------------
kWh Kilowatt-hour
--------------------------------------------------------
LED Light-emitting Diode
--------------------------------------------------------
Listing Rules Financial Conduct Authority Listing Rules
--------------------------------------------------------
MW Megawatt
--------------------------------------------------------
MWh Megawatt-hour
--------------------------------------------------------
NAV The net asset value, as at any date, of the
assets of the Company after deduction of all
liabilities determined in accordance with the
accounting policies adopted by the Company
from time-to-time.
--------------------------------------------------------
Net Zero A target of completely negating the amount
of greenhouse gases produced by human activity,
to be achieved by reducing emissions and implementing
methods of absorbing carbon dioxide from the
atmosphere
--------------------------------------------------------
OCR Ongoing charges ratio.
--------------------------------------------------------
PPA Power Purchase Agreement.
--------------------------------------------------------
PRI Principals for Responsible Investing
--------------------------------------------------------
Project SPV Special Purpose Vehicle in which energy transition
assets are held.
--------------------------------------------------------
RCF Revolving Credit Facility
--------------------------------------------------------
RES Renewable Energy Systems
--------------------------------------------------------
SDG Sustainable Development Goals.
--------------------------------------------------------
SFDR Sustainable Finance Disclosure Regulation
--------------------------------------------------------
SONIA Sterling Overnight Index Average
--------------------------------------------------------
SORP Statement of Recommended Practice
--------------------------------------------------------
Spark Steam Spark Steam Limited
--------------------------------------------------------
TCFD Task Force on Climate-related Financial Disclosures.
--------------------------------------------------------
TEEC Holdings The wholly owned subsidiary of the Company:
TEEC Holdings Limited (company number 12695849).
--------------------------------------------------------
Wider Triple Point Triple Point LLP (company number OC310549)
Group and any subsidiary undertakings from time to
time.
--------------------------------------------------------
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