TIDMTEEC
RNS Number : 6500A
Triple Point Energy Efficiency
03 June 2021
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.
The financial information set out in these statements does not
constitute the Company's statutory accounts for the year ended 31
March 2021, prepared in accordance with section 435 of the
Companies Act 2006, but is derived from those accounts. Statutory
accounts will be delivered to the Registrar of Companies in due
course. The auditors have reported on these accounts and their
report was unqualified and did not contain a statement under
section 498(2) of the Companies Act 2006.
3 June 2021
Triple Point Energy Efficiency Infrastructure Company plc
("TEEC" or the "Company" or, together with its subsidiaries, the
"Group")
RESULTS FOR THE PERIODED 31 MARCH 2021
The Board of Triple Point Energy Efficiency Infrastructure
Company plc (ticker: TEEC) is pleased to announce the Company's
audited results for the period ended 31 March 2021. This was the
Company's inaugural financial year and a shortened period.
31 March 2021
------------------------------------ --------------
Net Asset Value ("NAV") GBP97.49m
NAV per share 97.49p
V alu e of the portfolio GBP20.88m
Ongoing charges ratio (annualised) 1.07%
Dividend declared per s hare 2.00p
H ighlights
-- The Company was admitted to trading on the Specialist Fund
Segment of the Main Market of the London Stock Exchange on 19
October 2020, having raised gross proceeds of GBP100 million (GBP98
million of net proceeds) at an issue price of 100 pence per share
(" IPO ").
-- Net Asset Value as at 31 March 2021 was GBP97.49 million,
equal to a NAV per share of 97.49 pence, reflecting costs incurred
during the period as the Company continues to deploy its IPO
proceeds.
-- The portfolio, held via the Company's subsidiary TEEC
Holdings Limite d, consist ed of two debt investments in Harvest
Generation Services Limited (" Harvest ") and Glasshouse Generation
Limited (" Glasshouse ") valued at GBP20.88 million as at 31 March
2021. Harvest and Glasshouse hold operational, established energy
centres located on the Isle of Wight, supplying heat, electricity
and carbon dioxide to the UK's largest tomato grower, APS Salads ("
APS "), pursuant to an Energy Services Agreement, with a remaining
term of approximately 15 years.
-- The Company hel d cash of GBP76.55 million as at 31 March 2021.
-- Post period-end, on 28 May 2021, the Group completed a
GBP8.032 million senior debt investment in an operational Combined
Heat and Power (" CHP ") Energy Centre, Spark Steam Limited , which
supplies heat, electricity and carbon dioxide to APS.
Dividend Declaration
-- The Company today declares a dividend of 2.0 pence per
ordinary share in respect of the period from admission on 19
October 2020 to 31 March 2021, in line with the Company's target
for the period, as set out at IPO. The Company is targe ting a
dividend of 5.5 pence per Ordinary Share for the year ending 31
March 2022 (1) .
-- This dividend will be paid on 30 June 20 21 to shareholders
on the register at 11 June 20 21 .
Notes:
(1) 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.
John Robert s, the Company's Chair, commented:
" We were delighted to welcome such a broad range of
shareholders to the register on IPO. Since launch we have been busy
implementing our strategy by identifying, investigating, and
investing in Energy Efficiency Projects in the UK, and in doing so,
contributing towards the transition to a low carbon economy and
assisting in the acceleration of the UK achieving its net-zero
targets.
The role of energy efficiency in helping to achieve the
ambitious targets set by Government cannot be overstated and as we
look forward to executing on our pipeline, growing the scale of the
Company, and delivering returns to our shareholders ; we do so in
the knowledge that as well as being profitable we will help meet
decarbonisation goals and unlock wider environmental and social
benefits . "
FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:
Triple Point Investment Management (via FTI below)
LLP
(Investment Manager)
Jonathan Parr
Jonathan Hick
Akur Capital (Financial Adviser) Tel: 020 7493 3631
Tom Frost
Anthony Richardson
Siobhan Sergeant
RBC Capital Markets (Joint Broker) Tel: 020 7 653 4000
Matthew Coakes
Jill Li
Kathryn Deegan
Winterflood Securities (Joint Broker) Tel: 020 3100 0000
Neil Langford
Hande Derinkok
FTI Consulting
Ed Berry Tel: 07703 330 199
Mitch Barltrop Tel: 07807 296 032
The Company's LEI is 213800UDP142E67X9X28 .
Further information on the Company can be found on its website at www.tpenergyefficiency.com .
NOTES:
The Company is a n investment trust which invests exclusively in
a diversified portfolio of Energy Efficiency Projects in the UK,
which have a positive environmental impact. The Company's
investments will focus on the core sectors of: low carbon heat
distribution; social housing retrofit and industrial energy
efficiency; and distributed generation.
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, and has a proven track record of investment in
Energy Efficiency and decentralised energy generation projects. In
2018, Triple Point was appointed as the Delivery Partner to BEIS, a
department of the UK government, to deliver the GBP320 million Heat
Networks Investment Project ("HNIP").
The Company was admitted to trading on the Specialist Fund
Segment of the Main Market of the London Stock Exchange on 19
October 2020 and was awarded the London Stock Exchange's Green
Economy Mark.
CHAIRMAN'S STATEMENT
Dear shareholder,
On behalf of the Board, it is a pleasure to write to you in our
maiden annual report. We were delighted to welcome such a broad
range of shareholders to the register on IPO. Since launch we have
been busy implementing our strategy by identifying, investigating,
and investing in Energy Efficiency Projects in the UK, and in doing
so, contributing towards the transition to a low carbon economy and
assisting in the acceleration of the UK achieving its net-zero
targets.
Investment Activity
In March 2021 we successfully completed our first investments
into the target Combined Heat and Power assets identified at IPO.
The transactions were structured differently from that indicated in
the IPO prospectus, such that the Company, via its holding company
TEEC Holdings, provided GBP21 million of senior debt finance to
Harvest Generation Services Limited (" Harvest ") and Glasshouse
Generation Limited (" Glasshouse "), rather than acquiring the
associated equity interests. The Board considered this to be an
attractive investment which not only generates a return within the
target range but also provides a greater level of security.
Harvest and Glasshouse provided attractive first investments for
us, being high quality assets, which are significantly more
efficient than the engines they replaced. The new engines are
almost 90% efficient (90% of the fuel energy is converted into
electricity and hot water) and are less carbon intensive. The
investments are a great example of the Company's focus on building
a diversified portfolio of energy efficiency assets with a positive
environmental impact.
We are pleased to report that since the period end, the Group
completed a GBP8.032 m illion senior debt investment in an
operational Combined Heat and Power (" CHP ") Energy Centre, Spark
Steam Limited (" Spark Steam "). Spark Steam fully provides tomato
grower APS Salads with its heat and electricity requirements, as
well as supplying carbon dioxide produced by the CHP+ system to
enhance crop yields. The transaction follows on from similar
investments this year in Harvest and Glasshouse, also CHP
businesses supplying heat and power to APS Salads and managed by
P3P Partners, illustrating the Company's approach to building
scalable partnerships with leading developers and offtakers.
Pipeline
We continue to be highly focused on reaching full deployment of
IPO proceeds. O ur Investment Manager continues to selectively
target those opportunities that will deliver the greatest value to
shareholders. Many opportunities are off-market projects that are
not part of a competitive process and consequently can take longer
to execute and ensure that the necessary robust due diligence is
carried out. While this, among other factors, has slowed down
deployment, we have every confidence that the remaining funds will
be deployed in the short term and look forward to updating the
market on the next investments.
The Company has circa GBP300 million of pipeline opportunities,
including approximately GBP100 million of more immediate pipeline
opportunities that the Investment Manager is actively progressing,
of which approximately GBP 26 million have signed heads of terms.
The pipeline is spread across a diverse range of target sectors,
including traditional power generation technologies such as
hydroelectric power generation, combined heat and power, solar,
onshore wind, anaerobic digestion and energy from waste. It also
includes more emergent areas such as electric vehicle charging and
fuel cells technologies.
We remain encouraged by the significant pipeline that the
Company's investment strategy presents and look forward to our
Investment Manager executing some exciting opportunities in the
coming months.
For further details on the pipeline please see the Investment
Manager's report.
Financial Results
This was the Company's inaugural financial year, and a shortened
period. The NAV per share was 97.49 pence per share at 31 March
2021. The portfolio, consisting of two investments held via the
Company's subsidiary TEEC Holdings, was valued at GBP20.88 million
as at 31 March 2021 and the Company held cash of GBP76.55 million
at the reporting date.
The Company made a loss before tax of GBP521k for the period,
equal to 0.01 pence per share, resulting from costs incurred during
the period and the first investments closing on 19 March 2021, with
a minimal amount of income received.
The Company's annualised OCR was 1.07% As the Company enters a
full financial year, we expect the OCR to increase proportionately
in line with the operational costs of the Company. The Board will
continue to monitor the OCR closely as we seek to grow the Company
and deliver value to our shareholders.
Share Price and Distributions
Our share price has performed well and maintained a modest
premium to NAV, reflective of our strong shareholder base since we
launched as the first investment trust IPO post the Covid-19 hiatus
in 2020. We continue to believe there is a significant market
opportunity for energy efficiency investments and are confident
that delivering on our outlined strategy will continue to support
our share price performance. I am also pleased to announce, as
indicated in the Prospectus, that the Company will pay its first
interim dividend of 2.00 pence per share in respect of the period
from IPO to 31 March 2021.
In future, the Board anticipates paying quarterly interim
dividends, targeting total dividends of 5.50 pence per share (2)
for the year ending March 2022 underpinned by robust long-term
contractual payments that are expected to be availability,
government subsidy or savings based. This dividend target is an
increase on the 5 pence per share set out in the Prospectus. As we
maintain our focus on deploying our remaining capital in the short
term, we will be equally focused on our ambition to fully cover our
dividend by cash earnings as soon as practicable.
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
The Investment Manager has long been an advocate of investing in
sectors that have a positive social impact and has been aware of
the value added by strong sustainability credentials and how they
play a significant role in the long-term performance of
investments. The Company is a direct product of this approach.
There is a global demand for sustainability, and it is at the
heart of the Company's Investment Objectives, which also benefit
from long-term contracted revenue from reliable counterparties. The
Investment Manager continues to build and enhance our research and
investment due diligence process to better assess the most material
issues related to corporate sustainability each proposed investment
may face. That work has informed our assessments and investment
views and complements the broad framework for assessing ESG risks
which the Investment Manager has developed. More information can be
found in our sustainability report.
We are proud that, in October 2020, the Company was awarded the
Green Economy Mark by the London Stock Exchange (" LSE "), which
recognises listed companies and funds which derive 50% or more of
their revenues from environmental solutions.
Outlook
Energy efficiency improvement opportunities are abundant and are
often the cheapest and greenest energy resource that we have.
Making our infrastructure more energy efficient and coming up with
more efficient ways to structure and organise our society is
perhaps the most important way we can reduce the UK's carbon
dependency.
The role of energy efficiency in helping to achieve the
ambitious targets set by Government cannot be overstated and as we
look forward to executing on our pipeline, growing the scale of the
Company, and delivering returns to our shareholders ; we do so in
the knowledge that as well as being profitable we will help meet
decarbonisation goals and unlock wider environmental and social
benefits .
John Roberts
Chai r
2 June 2021
STRATEGY AND BUSINESS MODEL
The Board is responsible for the Company's Investment Objective
and Investment Policy and has overall responsibility for ensuring
the Company's activities are in line with such overall strategy.
The Group's Investment Policy and Investment Objective are
published below.
Investment Objective
The Company's Investment Objective is to generate a total return
for investors comprising sustainable and growing income and capital
growth.
Investment Policy
The Company intends to achieve its Investment Objective by
investing in a diversified portfolio of energy efficiency
investments in the United Kingdom. The term energy efficiency
refers to assets or processes which reduce primary energy input for
a given output, thereby reducing or eliminating energy waste.
Energy efficiency is one of the cornerstones of the global drive to
addressing the climate emergency. The cleanest or greenest energy
is the energy that is never used - the projects and assets which
deliver such savings are the focus of the Company.
The Group will invest in a range of assets which will contribute
or are already contributing to energy efficiency in sub-sectors
including electricity and heat generation, distribution and end
user consumption, and which meet the following criteria:
-- contribute towards demonstrable energy (and financial)
savings over a "business as usual" scenario;
-- are established technologies (the Group will not invest in unproven technologies);
-- provide long-term contracts based predominantly on
availability, government subsidy or savings-based contracts with
high quality industrial, governmental, and corporate
counterparties, including counterparties which represent multiple
end-users; and
-- entitle the Company to receive stable, predictable Pounds
Sterling cash flows over the medium to long-term.
The Group's returns will typically take the form of contractual
payments by counterparties in respect of equipment, usually
installed at their premises (and which may provide index-linked,
rental payments), as well as payments under off-take agreements in
respect of energy generated and, where available, the Group will
capitalise on government incentive programmes.
Contractual payments by counterparties are expected to be
predominantly availability, government subsidy or savings-based.
Availability payments will be receivable on the basis that the
equipment is available and in suitable working order to deliver the
applicable outputs; savings-based payments work by setting an
agreed baseline for savings in KWhs up-front and are then ascribed
a monetary value by applying the prevailing energy cost, with
annual increases based on an agreed energy price index insulating
the Company from any changes in the cost of energy.
The Group will invest predominantly in operational Energy
Efficiency Projects. It will invest in either single assets or
portfolios of multiple assets, via debt and/or equity structures.
The Group may, under certain circumstances, invest in Energy
Efficiency Projects that are in the development phase, the
construction phase or the stabilisation phase, either directly or
through funding of a third-party developer, where such investments
will deliver an attractive risk adjusted return. In addition, the
Group may invest in or acquire minority interests in companies with
a strategy that aligns with the Company's overarching Investment
Objective, such as developers, operators or managers of Energy
Efficiency Projects, subject to the restrictions set out below.
In respect of each type of investment, the Group will seek to
diversify its commercial exposure by contracting, where
practicable, with a range of different equipment manufacturers,
project developers and other service providers, as well as
off-takers.
Investments may be acquired from a single or a range of vendors
and the Group may also enter into joint venture arrangements
alongside one or more co-investors, where the Group retains control
or has strong minority protections.
Investment Restrictions
The Company will invest and manage its assets with the objective
of spreading risk and, in doing so, will maintain the following
investment restrictions:
-- no single Energy Efficiency Project investment by the Group
will represent more than 20% of GAV;
-- the aggregate maximum exposure to any counterparty will not
exceed 20% of GAV (and where an Energy Efficiency Project derives
revenues from more than one source, the relevant counterparty
exposure in each case shall be calculated by reference to the
proportion of revenues derived from payments received from the
counterparty, rather than any other source);
-- the aggregate maximum exposure to Energy Efficiency Projects
in the development phase and the construction phase will not
exceed, in aggregate, 25% of GAV, provided that, the aggregate
maximum exposure to projects in the development phase will not
exceed 5% of GAV, and the aggregate exposure to any one developer
will not exceed 10% of GAV;
-- the Group will not invest more than 5% of GAV, in aggregate,
in the acquisition of minority stakes in other related companies,
and at all times such investments will only be made with
appropriate minority protections in place;
-- neither the Company nor any of its subsidiaries will invest
in any UK listed closed-ended investment companies; and
-- the Company will not conduct any trading activities which are
significant in the context of the Group as a whole.
The investment restrictions set out above apply following full
investment of the Net Proceeds and following the Group becoming
substantially geared (meaning for this purpose borrowings by way of
long-term structural debt of 20% of GAV being put in place).
Compliance with the above investment limits will be measured at
the time of investment and non-compliance resulting from changes in
the price or value of assets following investment will not be
considered as a breach of the investment limits.
Gearing
The Directors intend to use gearing to enhance the potential for
income returns and long-term capital growth, and to provide capital
flexibility. However, the Company will always follow a prudent
approach for the asset class with regards to gearing, and the Group
will maintain a conservative level of aggregate borrowings.
Gearing will be employed at the level of the Company, at the
level of any intermediate wholly owned subsidiary of the Company or
at the level of the relevant Project SPV, and any limits set out in
this document shall apply on a look-through basis. The Company's
target medium term gearing for the Group will be up to 40% of GAV,
calculated at the time of drawdown.
The Group may enter into borrowing facilities at a higher level
of gearing at the intermediate subsidiary level or at the Project
SPV level, provided that the aggregate borrowing of the Group shall
not exceed a maximum of 45% of GAV, calculated at the time of
drawdown.
Debt may be secured with or without a charge over some or all
the Group's assets, depending on the optimal structure for the
Group and having consideration to key metrics including lender
diversity, cost of debt, debt type and maturity profiles.
Intra-group debt between the Company and subsidiaries will not be
included in the definition of borrowings for these purposes.
Use of Derivatives
The Group may use Derivatives for efficient portfolio
management. The Group will only enter into hedging contracts (in
particular, in respect of inflation, interest rates, power prices
and commodity price hedging) and other derivative contracts when
they are available in a timely manner and on acceptable terms. The
Company reserves the right to terminate any hedging arrangement in
its absolute discretion. Any such hedging transactions will not be
undertaken for speculative purposes. The Company will not employ
derivatives for investment purposes.
Cash Management
Whilst it is the intention of the Company to be fully or near
fully invested in normal market conditions, the Company may hold
cash on deposit and may invest in cash equivalent investments,
which may include government issued treasury bills, money market
collective investment schemes, other money market instruments and
short-term investments in money market type funds ("Cash and Cash
Equivalents").
There is no restriction on the amount of Cash and Cash
Equivalents that the Company may hold and there may be times when
it is appropriate for the Company to have a significant Cash and
Cash Equivalent position instead of being fully or near fully
invested.
Changes to and compliance with the Investment Policy
Any material changes to the Company's Investment Policy set out
above will require the approval of shareholders by way of an
ordinary resolution at a general meeting.
In the event of a breach of the investment guidelines and/or the
investment restrictions set out above, the Investment Manager shall
inform the Board as soon as practicable upon becoming aware of any
breach. If the Board considers the breach to be material,
notification will be made through an announcement via a Regulatory
Information Service.
Business Model
The Company is a United Kingdom registered investment company
and its Ordinary Shares trade on the Specialist Fund Segment of the
Main Market of the London Stock Exchange. The Company's investments
are held indirectly via its sole direct subsidiary and main
investment vehicle, TEEC Holdings Limited (" TEEC Holdings "), a
limited company incorporated in England and wholly owned by the
Company, (the Company and TEEC Holdings, together, the " Group ").
TEEC Holdings is, itself, an investment entity and is therefore
measured at fair value. Triple Point Investment Management LLP (the
" Investment Manager ", " AIFM " or " TPIM ") and Hanway Advisory
Limited (' 'Hanway ") are third party service providers appointed
by the Company via, respectively, an investment management
agreement and an administration and company secretarial services
agreement.
Payments to Investee Companies will typically take the form of
contractual payments by counterparties in respect of equipment,
usually installed at their premises (and which may provide
index-linked, rental payments), as well as payments under off-take
agreements in respect of energy generated and, where available, the
Group will capitalise on government incentive programmes.
The Company has a 31 March financial year end, announces full
year results in June and half year results in December.
The Company intends to pay dividends quarterly, targeting
payments in June, September, December and March each year (3) .
Notes:
(3) Investors should note that references to "dividends" and
"distributions" are intended to cover both dividend income and
income which is designated as an interest distribution for UK tax
purposes and therefore subject to the interest streaming regime
applicable to investment trusts.
Investment Process
The Investment Manager has an extensive network of relationships
which it leverages with the aim of delivering new potential
investment opportunities.
The Investment Manager targets predominantly operational assets,
either as single assets or portfolios of assets which, typically,
have an existing operator in place. The Company has taken a
conservative approach in applying the investment restriction limit
on construction projects and, as such, whilst this limit does not
become effective until such time as debt had been realised and IPO
proceeds deployed, the Board has agreed the Company will apply an
exposure limit on construction projects which assumes that debt has
been put in place at 45% of GAV.
The Investment Manager considers Environmental, Social and
Governance (" ESG ") factors when identifying investments. While
considering the individual nature of a target asset, for example,
the size and type of asset, region, operational environment and
stage of project cycle, there are certain factors which the
Investment Manager will also consider in order to understand the
longevity of the value of an Energy Efficiency Project and its
compatibility with the UK government's overall environmental
targets moving to reduce greenhouse gas emissions to net zero by
2050.
Specifically, the Investment Manager will be mindful of the
following factors, as appropriate:
Environmental : greenhouse gas emissions and air pollution, and
their creation, management and monitoring during build and asset
life including climate risk analysis. Use, generation and intensity
of energy, and the nature of the energy (e.g., renewable) along
with water use and its pollution. Levels of waste generated,
avoided and disposed of, approach to raw material sourcing and
supply chain sustainability. Build impacts on biodiversity and
habitat, understanding management and protection measures.
Social : quality and fit of an asset with a more sustainable
economy, including relevance/ appropriateness to the locality. Good
customer and stakeholder relations, including management of land
rights and accessibility and social inclusion of access to the
asset. Strong management and reporting of health and safety (during
and after build) as well as sound labour management including staff
wellbeing, diversity and inclusion practices, appropriate training,
and presence of fair pay, including reassurance of the absence of
modern slavery.
Governance : promotion of a corporate governance structure that
is accountable and responsive to stakeholders, considering board
structure, remuneration policy, ownership and accounting practices.
Business ethics with evidence of best practice in approaches to tax
policy, management of bribery and corruption risk, conflicts of
interest and appropriate senior level ownership of ESG issues.
The Group may also finance the development or construction of
new Energy Efficiency Projects in circumstances where the
Investment Manager has identified an attractive opportunity which
meets the Company's Investment Objective and the criteria set out
in the Investment Policy.
The Board have overall responsibility for the management of the
Company and oversee compliance with the Company's Investment
Objective and Investment Policy. When any potential investment is
identified by the Investment Manager, an initial due
diligence/analysis on the investment opportunity is undertaken to
verify that it meets the Company's Investment Objective and
Investment Policy and is commercially sound.
The Investment Manager will be responsible for further business
due diligence, while the appropriate financial, environmental,
social, governance, tax, legal, technical and other due diligence
processes may be conducted by third party firms and/or advisers
under the supervision of the Investment Manager.
If the outcome of the initial due diligence/analysis process is
positive, the Investment Manager seeks to agree indicative terms
for the investment opportunity and seeks to enter into a period of
exclusivity.
When the Investment Manager expects that an investment
opportunity is likely to complete, it delivers to the Board, as
soon as reasonably practicable, a report on the investment
opportunity. The Report includes a written confirmation from the
Investment Manager that the investment opportunity falls within the
scope of the Investment Objective, Investment Policy and the
Board's risk appetite. Any decision to proceed with the investment
opportunity is the sole responsibility of the Investment Manager
but is only made having taken account of observations and comments
from the Board.
Where the Investment Manager intends to acquire projects from
any of its other clients, the Investment Manager approaches the
Board at the earliest opportunity to discuss any additional
diligence or additional comfort, such as independent valuation or
audits required. The Investment Manager does not execute an
acquisition of any project from one of its other clients without
prior Board approval.
KEY PERFORMANCE INDICATORS
The Company sets out below its KPIs which it uses to track the
performance of the Company over time against the objectives , as
described in the Strategic Report.
The Board believes that the KPIs detailed below provide
shareholders with sufficient information to assess how effectively
the Company is meeting its objectives. The Board monitors these
KPIs on an ongoing basis .
KPI AND DEFINITION RELEVANCE TO STRATEGY PERFORMANCE EXPLANATION
Dividend s per share (pence)
--------------------------------------------------------------------------------------------------------------------
Dividends paid to The dividend reflects the The Company will pay a 2 The Company will pay a
shareholders and declared Company's ability to pence per share dividend in dividend of 2 pence per
in relation to the period . deliver a low risk but respect of the period to 31 share in respect of the
growing income stream March 2021. period to 31 March
from the portfolio. 2021 and is targeting a
5.5 pence per share
dividend in respect of its
first full financial
year to 31 March 2022 (4)
.
--------------------------- ---------------------------- ---------------------------
Total NAV return (%) (5)
--------------------------------------------------------- ---------------------------- ---------------------------
NAV growth and dividends The total NAV return (2.5% ) The Company's NAV has
paid per share in the year. measure highlights the declined due to costs
gross return to investors incurred during the period
including dividends as the Company continues
paid. to deploy its IPO proceeds
.
--------------------------- ---------------------------- ---------------------------
NAV per share (pence)
NAV divided by number of The NAV per share reflects 97.49 pence per share GBP97.49 million/ 97.49
shares outstanding as at our ability to grow the pence per share as at 31
the period end. portfolio and to add value March 2021.
to it throughout
the life cycle of our
assets.
Cash dividend cover (5)
--------------------------------------------------------------------------------------------------------------------
Operational cash flow Reflects the Company's The Company will monitor The Company's first
divided by dividends paid ability to cover its dividend cover as the dividend will be paid from
to shareholders during the dividends from the income Company continues to deploy capital as it continues to
year. received from its funds. deploy IPO proceeds
portfolio. into Energy Efficiency
Projects.
--------------------------- ---------------------------- ---------------------------
Weighted average project life (5)
--------------------------------------------------------- ---------------------------- ---------------------------
Weighted average number of The weighted average 10 years at 31 March 2021. On 19 March 2021, the
years assumed to be project life is a key Company entered 10 year
remaining in project measure of the quality of secured loan agreements
contracts . our portfolio. Long lease with Harvest and
or loan terms help Glasshouse.
underpin the security of
our income stream.
--------------------------- ---------------------------- ---------------------------
Ongoing Charges Ratio (5)
--------------------------------------------------------- ---------------------------- ---------------------------
Annualised ongoing charges Ongoing charges shows the 1.07% annualised Company level budgets are
(i.e., excluding drag on performance caused approved annually by the
acquisition costs and other by the operational Board and actual spend is
non-recurring items) expenses incurred reviewed quarterly.
divided by the average by the Company. Transaction budgets are
published undiluted NAV in approved by the Board and
the period, calculated in potential abort exposure
accordance with is carefully monitored.
Association of Investment
Companies guidelines.
--------------------------- ---------------------------- ---------------------------
Avoided emissions (5)
--------------------------------------------------------- ---------------------------- ---------------------------
The carbon emissions A measure of our success 0 tCO2e Although not possible over
mitigated by the Company's in investing in projects the shortened reporting
investments into Energy that have a positive period, the Company
Efficiency Projects. environmental impact intends to measure
and reduce energy usage. the energy efficiency of
the projects in which it
invests.
--------------------------- ---------------------------- ---------------------------
Exposure to development and construction phase assets (%)
----------------------------------------------------------------------------------------------------------------------
The aggregate exposure of the Acquisitions may include a number 0% At the period end, the Company had
portfolio that is in development or of construction assets expected to no exposure to any assets in the
construction phase of a deliver growth as they development or construction
project as a percentage of GAV. reach operations and are de-risked. phase.
------------------------------------ --- ------------------------------------
Gross loan to value ("LTV") (5)
----------------------------------------------------------------------------------------------------------------------
The proportion of our GAV that is The LTV measures the prudence of 0% The target LTV is 40% and will
funded by borrowings. our financing strategy, balancing always be below the maximum of 45%
the potential amplification
of returns and portfolio
diversification that come with
using debt against the need to
manage
risk successfully.
------------------------------------ --- ------------------------------------
Notes:
(4) The target dividend is a target only and not a forecast.
There can be no assurance that the target will be met and it should
not be taken as an indication of the Company's expected or actual
future results.
(5) KPI and Definition is an Alternative Performance
Measure.
INVESTMENT MANAGER'S REPORT
Review of the Period
Since IPO in October 2020, the Group has begun implementing its
strategy of investing in good quality Energy Efficiency Projects.
As at the period end, we had deployed GBP21 million of the IPO
proceeds and expect the remaining proceeds to be deployed well
before the end of this calendar year.
We are pleased to report that since the period end, the Group
completed a GBP8.032 m illion senior debt investment in an
operational Combined Heat and Power (" CHP ") Energy Centre, Spark
Steam Limited (" Spark Steam "). Spark Steam fully provides tomato
grower APS Salads with its heat and electricity requirements, as
well as supplying carbon dioxide produced by the CHP+ system to
enhance crop yields. The transaction follows on from similar
investments this year in Harvest and Glasshouse, also CHP
businesses supplying heat and power to APS Salads and managed by
P3P Partners, illustrating the Company's approach to building
scalable partnerships with leading developers and offtakers.
Market Review
In November 2020, Prime Minister, Boris Johnson, announced the
government's unambiguous 10-point plan for a green industrial
revolution. Outlined in the plan is the government's vision to
become a global leader in green technologies and details targets
for different sectors including offshore wind, hydrogen, transport,
carbon capture and buildings.
The plan also outlined ambitious funding plans, including GBP12
billion of Government investment to help create and support up to
250,000 green jobs. I t is vitally important that our recovery from
the pandemic simultaneously grows the low carbon and climate
resilient economy and t he announcement was a positive first step
in that direction.
The month thereafter saw the publication of a body of mutually
reinforcing policy announcements that would make clear the
government's view on what is required to meet net zero:
The National Infrastructure Strategy (subtitled Faster, Greener,
Fairer) signalled the creation of a new infrastructure bank to
underpin the infrastructure revolution albeit with a clear mandate
to crowd-in private capital.
That was followed by the Climate Change Committee's 6th Carbon
Budget suggesting a "balanced net zero pathway" for a 78% reduction
in carbon reductions from 1990 levels , by 2035, a recommendation
that was subsequently enshrined in policy and rightly described as
the "world's most ambitious climate change target". In their Carbon
Budget, the Committee claimed that investment of up to GBP50bn per
year would be required to afford the transition to net zero.
The long-awaited Energy White Paper - Powering our Net Zero
Future was published in December.
The document builds on the Prime Minister's 10-point plan and
the National Infrastructure Strategy to give 'further clarity on
the Prime Minister's measures and puts in place a strategy for the
wider energy system'.
Published just three days later, HM Treasury's Net Zero Interim
Review considered "how the costs of achieving net zero emissions
are distributed and the benefits returned... the fiscal impacts,
risks of competitiveness effects and the impacts of decarbonisation
across the whole economy" and "the full range of policy levers,
including carbon pricing, taxes, financial incentives, public
spending, regulation and information provision." The review
concluded that much of the funding required could, and should, come
from the private sector.
With the Heat and Buildings Strategy expected imminently, there
is a unified and unifying policy tailwind being established after
many years of comparative inaction with the UK demonstrating bona
fide international leadership in a year that will draw to an end
with its hosting of the 26th UN Climate Change Conference of the
Parties (COP26).
Energy efficiency is now being recognised as a priority by
governments and investors around the world.
The Company was deliberately conceived and developed against
this backdrop. The Government's demonstrable support of the sector
is both an endorsement of our strategy and an exciting catalyst of
investable opportunities now and in the future.
Pipeline
Activity and competition around quality Energy Efficiency
Projects remains strong, particularly as the wider sector is seen
as a safe-haven in times of economic turmoil. We nevertheless have
a good pipeline of opportunities, and have sufficient retained
liquidity to take advantage of them.
The majority of that pipeline is comprised of projects seeking
equity investments to afford the acquisition of operational or
construction assets.
Users of energy, whether they be industrial, commercial or
domestic, do not want or need electricity or fuel per se, they want
or need the services that energy delivers. Shifting the focus onto
the services required helps to reduce the total cost and total
energy input to provide them, thereby reducing the absolute power
input requirement from producers of energy.
We have also responded to a perceived gap in the market for
flexible debt financing in some technology segments, for example
where a developer wishes to retain an interest in an asset it has
developed. The Company has circa GBP300 million of pipeline,
including approximately GBP100 million of more immediate pipeline
that the Investment Manager is actively progressing . The Company
has GBP26 million of opportunities in heads of terms , including
one large financing transaction which is in the final stages of due
diligence.
We are also exploring significant opportunities in private
wire/PPA backed solar rooftop opportunities. We believe this market
is underserved by existing funding providers, and offers attractive
risk adjusted returns through long term, indexed linked cashflows,
rather than exposing investors to the volatility experienced in
recent wholesale power markets. We continue to seek to develop
framework agreements with developers to provide a consistent flow
of high-quality proprietary pipeline opportunities, working with
trusted construction and maintenance partners to reduce cost and
enhance returns.
The Company has a strong pipeline of assets across a range of
sub-sectors within its investment mandate . In assessing our
pipeline, we remain cognisant of our investment restriction limits
to construction projects, this is something the Board has carefully
considered and is discussed in further detail below .
Investment
During the period, the Company closed its first investments,
using proceeds raised at IPO. The Group provided secured loans to
two companies, Harvest and Glasshouse, which both own and operate
combined heat and power ("CHP+") energy centres. Under the terms of
the investments, the Group provided an aggregate GBP21 million of
senior debt finance, secured against Harvest and Glasshouse, the
underlying assets, equipment, and contracts. The interest rate is
7.75% per annum, each loan carries a term of 10 years, and each
loan is amortising over 14 years, with the residual amount to be
repaid at maturity. Approximately 25% of the refinanced debt was
held by a Company advised by the Investment Manager and therefore
the transaction underwent detailed conflict procedures and
arrangements to ensure the transaction was on an arms' length basis
and at fair market value, in addition to being subject to Board
approval.
Harvest and Glasshouse each own and operate energy centres which
supply power, heat and carbon dioxide to the UK's leading tomato
grower. The two projects consist of energy centres at adjacent
growing sites on the Isle of Wight. The energy centres each contain
two 5.5 MW Rolls-Royce gas engines, together with two 8MWth backup
gas boilers (for use when the CHPs are down for maintenance or are
not being run to exploit any differences between the input fuel
costs and the wholesale power prices).
The projects derive their primary revenues from 20-year energy
services agreements, which commenced in April 2016 (when the energy
centres were commissioned) and expire in April 2036.
Gearing
At the reporting date, the Company had not utilised any gearing.
Although, in the interests of capital efficiency and to enhance
income returns and long-term capital growth, the Company expects to
utilise gearing in the medium term and has a maximum gearing level
of 45%
Environmental, Social and Governance
In October 2020 we were delighted that the Company was awarded
the Green Economy Mark by the London Stock Exchange ("LSE"). The
award recognises listed companies and funds which derive 50% or
more of their revenues from environmental solutions.
In conjunction with the Board's endorsement, the Investment
Manager has been developing its ESG integration policy for the
Company's investments. Within this policy, the Investment Manager
has set out principles which it will seek to incorporate throughout
its business. Further, incorporated within the ESG integration
policy, the Investment Manager has become a signatory to the United
Nations Principles for Responsible Investment, committing to the
principles set out therein to show dedication to strengthening
environmental, social and governance considerations into its
business.
Further detail on the Company's ESG approach to due diligence
and investments can be found in the sustainability report.
Personnel Changes
In January 2021, Charles Herriott left the Investment Manager on
good terms and was replaced by senior investment professional and
Investment Director, Jonathan Hick. Jonathan brings with him a
strong background in leading the investment process from
origination and execution through to asset management in the clean
technology and renewable energy sector. We welcome Jonathan and
look forward to his support as we move closer to deploying the
Company's IPO proceeds into high-quality assets. We also look
forward to welcoming a new Fund Finance Director in June 2021 and a
further new Investment Director in September 2021. These new hires
reflect our ambition to grow our capabilities as being at the
forefront of energy efficiency investing.
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.
Ongoing Charges
Ongoing charges, in accordance with the Association of
Investment Companies' ("AIC") guidance, are defined as annualised
ongoing charges (i.e., excluding acquisition costs and other
non-recurring items) divided by the average published undiluted net
asset value in the year.
The Company's annualised OCR was 1.07% As the Company enters a
full financial year, we expect the OCR to increase proportionately
in line with the operational costs of the Company. The Board will
continue to monitor the OCR closely as we seek to grow the Company
and deliver value to our shareholders.
Valuation
The Investment Manager is responsible for carrying out the fair
market valuation of the Group's investments, this is presented to
the Board for their consideration and comment in advance of formal
approval. The valuation of the portfolio is to be carried out on a
six-monthly basis as at 31 March and 30 September each year.
At the period end, the Company has made two debt investments
into Harvest and Glasshouse totalling GBP21 million.
Investments made by the Company through TEEC Holdings are
expected to be predominantly non-market traded investments, such
that these investments are valued using a discounted cash flow
analysis of the forecast investment cash flows from each
project.
When valuing equity investments, the key macro-economic and
fiscal factors expected to affect the forecast of each portfolio
company's cash flows are inflation rates, interest rates, power
price assumptions, and corporation tax rates. The Investment
Manager makes forecast assumptions for each of these external
metrics, based on market data and relevant economic forecasts where
available.
The Investment Manager exercises judgement in assessing the
expected future cash flows from each investment, based on the
detailed financial models produced for each portfolio company and
adjusting where necessary to reflect the broader macro-economic and
fiscal assumptions as well as any specific operating assumptions
that may be relevant to the individual projects.
The fair value for each investment is then derived from the
application of an appropriate market discount rate. Due to the
Company investing solely in projects based in the United Kingdom,
there are no foreign exchange assumptions required. The discount
rate used considers risks associated with the financing of an
investment such as investment risks (e.g., liquidity, inflation,
interest rate risks, market appetite) and any risks to the
investment's earnings (e.g., predictability of the revenues and
factors affecting these), all of which may be differentiated by the
phase of the investment's life (e.g., in development/construction
or in the operational phase).
The Investment Manager uses its judgement in arriving at the
appropriate discount rate. This is based on its knowledge of the
market, considering insights gained from its investment activities,
discussions with its financial advisers and publicly available
information on relevant transactions.
Outlook
As highlighted above, Prime Minister Boris Johnson confirmed in
April 2021 that based on the CCC's recommendations the target , of
reducing emissions by 78% by 2035, would be introduced and is
planned to be enshrined into law by the end of June 2021. It
continues to build on the UK's commitment to net zero, which will
see the nation reduce emissions by 68% by 2030, compared to 1990
levels.
While we view these targets as ambitious, we believe they are
necessary and achievable, and they present the Company with a great
opportunity to assist in filling the delivery gap. Meeting the
Budget's requirements will require all new cars, vans and
replacement boilers to be zero-carbon in operation by the early
2030s. UK electricity production must then reach Net Zero by 2035,
in line with the National Grid ESO's vision, and the majority of
existing UK homes will also need to be retrofitted in some way.
The Investment Manager hopes to utilise the skills and knowledge
it has developed in this area, through the Heat Networks Investment
Project to capitalise on the drive for energy efficient
technologies.
Our current pipeline, which includes a wide range of low carbon
and energy efficient technologies; including EV charging
infrastructure, CHP, energy from waste, hydro, solar, waste heat
recovery, heat networks and lighting has over GBP 300 million of
prospective opportunities, which should comfortably enable us to
deploy the balance of our IPO proceeds.
Jonathan Parr
Partner and Head of Energy
2 June 2021
SUSTAINABILITY REPORT
The Investment Manager's business mission is that through its
people, and the partnerships it builds, it unlocks investment
opportunities that have purpose, while generating profit for
investors. The Company is a direct product of this way of thinking.
There is a global demand for sustainability which includes the
rapid transition to a lower carbon economy.
Sustainability and the Investment Manager
Investors choose funds managed by TPIM for the Investment
Manager's ability to generate stable and consistent financial
returns through a range of investment strategies. Inherent to the
growth of its business has been a desire to develop investment
products not only generating these strong returns, but which also
serve a positive societal function.
Most relevant to the Company is TPIM's strategy of being a
sustainable Investment Manager: Environmental, Social and
Governance (ESG) are factored into each investment opportunity to
support the Investment Objective of the Company.
The transition to Net Zero
Energy efficiency is critical to meeting the UK government's
target of reducing greenhouse gas emissions to Net Zero by 2050.
The Investment Manager and the Board believe that the investment
case for energy efficiency is significant and can be deployed
throughout business across the UK. Whilst the UK has made
noticeable progress in the decarbonisation of electricity
generation, we acknowledge the immense challenge of improving
energy efficiency in order to achieve the Net Zero target by 2050.
It was announced in April 2021 that the UK committed to deliver a
78% reduction in emissions by 2035 (as proposed by the CCC if it is
to meet its long-term net-zero commitment).
In the UK, 54% of the energy used to provide electricity is
wasted. This is primarily due to generation and transmission losses
associated with the UK's centralised grid, with lost heat
contributing significantly to the total losses. Substantial and
continuing investment is needed to finance the transition to a low
carbon economy in order to reduce these energy losses in
generation, distribution, and consumption. Of the $120 trillion
global investment the International Renewable Energy Agency ("
IRENA ") believes is needed to meet the Paris climate accords, 44%
is expected to come from energy efficiency.
The International Labour Organisation (" ILO "), the United
Nations' agency for the world of work, estimates that action to
meet the Paris goals may create 24 million jobs in clean energy
generation, electric vehicles and energy efficiency and lead to job
losses of just 6 million, a net gain of 18 million jobs. Energy
efficiency solutions provide an important opportunity to
significantly impact the transition to a low carbon economy and are
at the core of the Company's mission .
ESG integration into the investment process
The Investment Manager with input from the Board integrates
thorough and in depth ESG analysis into all potential investments.
Potential investments are first assessed against broad thematic ESG
criteria. If these criteria are not met, opportunities will not be
pursued further. Throughout the due diligence process the analysis
becomes specific, featuring quantitative savings compared to the
counterfactual, and more detailed environmental, social and
governance due diligence. Included in this analysis is an
assessment of climate risk to ensure the physical implications of
climate change and the transition effects of the move to a low
carbon economy have been accounted for in the Investment Manager's
assessment of a project.
The results of this due diligence and analysis process are
shared with the Investment Manager's Investment Committee and the
Board, before an investment is executed. This ensures that the
Investment Manager's high standards of ESG and sustainability are
used during the investment process for the Company.
Sustainable Development Goals
In 2015, the United Nations adopted the 2030 Agenda for
Sustainable Development, in which 17 Global Sustainable Development
Goals ("SDG's") were characterised, describing the areas and themes
in which humanity needed to focus development to ensure prosperity
of people and the planet now and for the future.
The Board, the Company and the Investment Manager are fully
aware of the 17 SDGs and make investments promoting development
across combinations of areas which are targeted by the SDGs, such
as: Affordable Clean Energy (SDG 7); Decent work and economic
growth (SDG 8), and Industry, Innovation, and Infrastructure (SDG
9).
Although the purpose of the Company is not specifically to align
to these SDGs, the investments the Company makes will help address
specific targets within each goal, such as:
-- 7.2 By 2030, increase substantially the share of renewable
energy in the global energy mix;
-- 7.3 By 2030, double the rate of improvement in energy efficiency;
-- 8.4 Improve progressively, through 2030, global resource
efficiency in consumption and production and endeavour to decouple
economic growth from environmental degradation, in accordance with
the 10-year framework of programmes on sustainable consumption and
production, with developed countries taking the lead;
-- 8.5 By 2030, achieve full and productive employment and
decent work for all women and men, including for young people and
persons with disabilities, and equal pay for work of equal
value;
-- 8.7 Take immediate and effective measures to eradicate forced
labour, end modern slavery and human trafficking and secure the
prohibition and elimination of the worst forms of child labour,
including recruitment and use of child soldiers, and by 2025 end
child labour in all its forms;
-- 8.8 Protect labour rights and promote safe and secure working
environments for all workers, including migrant workers, in
particular women migrants, and those in precarious employment;
-- 9.1 Develop quality, reliable, sustainable and resilient
infrastructure, including regional and transborder infrastructure,
to support economic development and human well-being, with a focus
on affordable and equitable access for all; and
-- 9.4 By 2030, upgrade infrastructure and retrofit industries
to make them sustainable, with increased resource-use efficiency
and greater adoption of clean and environmentally sound
technologies and industrial processes, with all countries taking
action in accordance with their respective capabilities.
Investment Targets
Increase energy efficiency
Energy efficiency is the cheapest, fastest to deploy and lowest
risk energy solution. One of the Company's stated aims is to
increase energy efficiency in existing assets, rather than develop
brand new renewable infrastructure; this aids the transition over
the medium-term towards the achievement of Net Zero by the UK.
The Company targets investments across multiple areas from
reduction of transmission losses, energy used in transport to
inefficient homes and factories, with a focus on bringing energy
efficiency to energy intensive technologies and solutions.
Have a positive environmental impact
In line with the Company's Investment Policy the Investment
Manager and the Board expect all investments to have a positive
environmental impact that goes beyond energy and GHG emissions.
Greenhouse Gas ("GHG") emissions
Through the application of the Company's Investment Policy, and
the fulfilment of the Company's Investment Objectives, the Company
aims to reduce energy waste and thereby mitigate GHG emissions. It
is a target criterion in every investment that the proposed project
will reduce the GHG emissions compared to an appropriate
counterfactual, across scope 1, 2 and 3 (where measurable)
emissions.
Environment
Planet, biodiversity and climate change
The overarching objective of the Company's investment mandate is
a focus on investments in increased energy efficiency technologies
and hence a reduction in carbon emissions. The Board and the
Investment Manager also realise that through the investment
decisions made, the Company has the opportunity to enable further
environmental benefits beyond that of energy and/or carbon
efficiency improvements.
The Investment Manager, with the input of the Board, is working
to develop asset specific management plans that will aim to ensure
that our investee companies mitigate pollution to land, water and
air as much as possible and at all times within the requirements of
legislation set by the Environment Agency or other institutions.
Infrastructure projects also create an opportunity to give benefits
to local biodiversity through the introduction of insects and other
species to closed off areas of unused land, allowing biodiversity
to flourish.
Social
The Investment Manager and the Board remain cognisant of the
fact that the Company's investments can be an opportunity to
promote positive social outcomes to enable a just transition to a
zero -carbon economy, as called for by the 2015 Paris Climate
Agreement.
The Just Transition asks investors to recognise the social
impact of the shift to zero carbon, through technological and
business model change causing heavy numbers of anticipated job
losses in the fossil fuel industry to the necessity to ensure that
new jobs created are decent and contribute to resilient
communities.
During ESG due diligence, the Investment Manager reviews all
existing people related policies and will work with a counterparty
to improve provisions or create new appropriate policies where they
may be lacking. Such policies might include Health and Safety,
Inclusion and Diversity, Equal Opportunities and Anti-Slavery and
Human Trafficking to ensure workforces are being treated as fairly
as possible.
Further social outcomes can be achieved by contracting, where
possible, with local companies to facilitate local employment, thus
maintaining a skilled local workforce that are not left behind by
the energy transition. It's also about engaging with communities
and stakeholders where the transition to net zero may ultimately
lead to change in technologies and lead to job losses or changes in
the local job market - we intent to help stakeholders to understand
this. By doing this we expect to build goodwill and relationships
with local communities which could be further expanded with
donations towards local community groups or further investment into
local communities.
Our first investment is in senior debt in Harvest and
Glasshouse; those two companies employ 3 people between them, who
live locally on the Isle of Wight and manage the day-to-day
operations of site. Due to the low maintenance requirements of the
assets, the Harvest and Glasshouse assets can be managed
satisfactorily by these 3 employees. Most of the workforce on the
site however, are employed by the grower. The Investment Manager
will always perform due diligence on relevant counterparties.
Due to the nature of harvesting vegetables, many of the
employees at the grower on the Isle of Wight are seasonal workers
from Europe. Unfortunately, in the UK, European seasonal workers
are often subject to a higher risk of modern slavery. It was
important to the Board and the Investment Manager that these
workers have appropriate working standards and so the Investment
Manager conducted due diligence into employment practices,
policies, and spoke with members of staff at the grower.
Governance
The Company aims to invest in well governed, fair and safe
businesses, with low-risk supply chains and reliable stakeholders.
Details of the Company's Anti-Bribery Policy can be found in the
Corporate Governance Report .
The implementation of the Company's Investment Objectives,
involve contracting with high-quality industrial, government and
corporate counterparties. The Investment Manager works alongside
over 75 Local Authorities and over 50% of its counterparties across
the funds managed are in the public sector.
We will invest in sustainable businesses and focus on
financially robust companies with a strong business model to
weather economic downturns or recessions, that have several years
of profitability and a successful track record of operations with
an established management team.
We target established technologies backed by stable regulatory
frameworks with predictable, long term cash flows underpinned by
predominantly contracted revenues for financial sustainable
investment. We work alongside investee companies to ensure they
meet the Company's ESG objectives by seeking formal commitment from
investee companies. This is done by incorporating ESG into deal
documentation. For longer term concerns we will collaboratively
work with the investee company to establish a roadmap for
improvement over a three to five-year horizon with clear process
benchmarks.
We are an externally managed business and do not have any
employees or office space. As such the Group does not operate a
diversity policy with regards to any administrative, management and
supervisory functions. A description of the Board's policy on
diversity can be found in the Corporate Governance Report .
Approach to reporting
The Board and the Investment Manager are committed to providing
appropriate and transparent sustainability reporting. In addition
to the Key Performance Indicators highlighted above , we will
follow other industry best practice in our reporting, as
follows:
Task Force on Climate-related Financial Disclosures ("TCFD")
Separately to the internal analysis and due -diligence that the
Investment Manager conducts, both the Investment Manager and the
Board support the recommendations of the TCFD. The TCFD is the most
globally supported framework for climate related risk analysis and
follows all existing best practice on climate emission calculations
and reporting, including that of the Partnership for Carbon
Accounting Financials (" PCAF ").
The TCFD framework recommends that organisations should seek to
understand the impact of climate-related financial risks and
opportunities and disclose the 'actual and potential impacts' of
those risks and opportunities. Financial risks from climate change
arise through two primary channels, or 'risk factors': physical and
transitional.
The Investment Manager with input from the Board analyses
climate related physical and transitional risks and opportunities
when looking at potential future investments. The physical risks
are based on physical changes which the UK is predicted to
experience due to climate change as reported in the Climate Change
Committee's 6th Carbon budget. The transitional risks are
legislative changes that research shows are likely to occur and
which we think would affect the investment. Where possible the
Investment Manager looks to integrate these sensitivities into our
financial models so that we can easily see the financial risks, or
opportunities, that an investment may have due to the physical and
transitional effects of climate change.
Given the Company's short financial period and the nature of the
Company's initial investment portfolio at 31 March 2021, the Board
believe that full disclosure against the requirements of TCFD
reporting will not provide shareholders with useful information as
to the Company's environmental impact. The Company intends to
report against TCFD requirements for the full financial year ending
31 March 2022.
EU Taxonomy
The EU Taxonomy Regulation establishes an EU-wide classification
system or "framework" intended to provide businesses and investors
with a common language to identify to what degree economic
activities can be considered environmentally sustainable. Broader
disclosure obligations are laid out in the Regulation on
Sustainability-Related Disclosures in the Financial Services Sector
(" SFDR "). SFDR requirements include pre-contractual, website and
periodic reporting obligations.
Under the current regulatory requirements, the Company is not
required to disclose under SFDR, however we intend to make a
disclosure in the coming months, which will be available on the
Company's website and in subsequent interim and annual reports.
Although the UK is no longer subject to EU regulations, the UK
is expected to mandate a similar Taxonomy Regulation aligned with
scientific metrics in the EU taxonomy or with similar global
standards. Once introduced, the Company will also disclose in line
with these requirements.
Continued Commitment
Sustainability is intended to be at the heart of every
investment made by the Company. Through the Investment Manager's
and the Company's ESG approach to investments, and alignment with
globally renowned frameworks, The Manager and the Company are at
the start of a journey, in aiming to fulfil the objective of having
a positive and sustainable impact on the United Kingdom.
SECTION 172(1) STATEMENT
The Board is committed to promoting the long-term success of the
Company whilst conducting business in a fair, ethical, and
transparent manner.
The Board makes every effort to understand the views of the
Company's key stakeholders and to take into consideration these
views as part of its decision making process.
As an investment company, the Company does not have any
employees and conducts its core activities through third-party
service providers. The Board seeks to ensure each service provider
has an established track record and, through regulatory oversight
is required to have in place suitable policies and procedures to
ensure they maintain high standards of business conduct, treat
shareholders fairly, and employ corporate governance best
practice.
The following disclosure describes how the Directors have had
regard to the matters set out in section 172(1) (a) to (f) when
performing their duty under s172 and forms the Directors' statement
required under section 414CZA of the Act.
Stakeholder Engagement
Stakeholder Why is it How have the What were the What was the
important Investment key topics feedback
to engage? Manager/Directors of engagement? obtained
engaged? and the
outcome
of the
engagement?
Shareholders Shareholders The way in Following
and their which we engage * Several investor meetings were held prior to IPO to feedback
continued with our engage shareholders with the Company's strategy. received at
support are shareholders investor
critical to is set out meetings
the continuing in the Corporate * Discussions regarding the dividend target. the target
existence of Governance dividend was
the business Report. increased
and delivery from
of our long 5.00 pence
term strategy. to 5.50 pence
per share.
--------------- ------------------ ---------------------------------------------------------- --------------
Investment The Investment The Board In addition The
Manager Manager is maintains to all matters Investment
responsible regular and related to Manager
for executing open dialogue the execution produces
the Investment with the of the Company's reports to
Objective Investment Investment the Board
within Manager at Objective, every
the Investment Board meetings the Board engaged quarter on
Policy of the and has regular with the Investment various
Company. contact on Manager on governance
operational the structure and
and investment of the Group, operational
matters outside the interpretation matters.
of meetings. of investment
restrictions
and updates
to the pipeline.
--------------- ------------------ ---------------------------------------------------------- --------------
Service As an The Board Being the inaugural The audit
Providers externally maintains annual report process
managed regular contact for the Company ran smoothly
Company, with its service the Audit Committee, and
we are reliant providers, in particular effectively.
on our service both through the Chair,
providers to Board and have been engaged The Board has
conduct our Committee with the external built strong
core meetings, as auditors to relationships
activities. well as outside ensure the with the
We believe the regular process was Company's
that fostering meeting cycle. undertaken service
constructive effectively. providers
and The Management which has
collaborative Engagement The Board sought allowed
relationships Committee is advice from for open
with our responsible the Company's communication
service for conducting Broker, Financial and for the
providers will periodic reviews Adviser and Company to
assist in the of service Legal Counsel operate
promotion of providers. in respect effectively
the success During the of various in the
of the period, the matters, including period.
Company. Management the interpretation
Engagement of investment
Committee restrictions.
assessed
that the
continued
appointment
of all service
providers
remained
in the best
interests of
the Company
and its
shareholders.
--------------- ------------------ ---------------------------------------------------------- --------------
Asset-level Asset-level The Group made The key engagement A thorough
counterparties counterparties its first with asset-level due diligence
are an investment counterparties process was
essential on 19 March was during conducted
stakeholder 2021. As a the due diligence with
group and result, during process prior open
engagement the reporting to completing communication
with them is period the investment. flows.
important to communications
ensure assets with asset-level
are operating counterparties
safely and have been
effectively. limited.
As part of
continual
monitoring
of future
investments,
we expect a
regular dialogue
with these
counterparties.
--------------- ------------------ ---------------------------------------------------------- --------------
Investee Investee The Board and The Investment The
Companies companies Investment Manager engaged engagement
/ Borrowers are companies Manager visited with the boards provided a
in which TEEC the Harvest and management clear path
Holdings owns and Glasshouse of the investee for the
equity, they sites on the companies to ongoing
are an Isle of Wight discuss the relationship
essential relationship with investee
stakeholder going forward, companies and
and engagement including frequency expectations
with them, of reporting. of the
particularly content
the and frequency
individuals of reporting.
responsible
for their
operations,
is important
to ensure the
maintenance
and
performance
of each
investee
company.
--------------- ------------------ ---------------------------------------------------------- --------------
Principal Decisions
Principal decisions have been defined as those that have a
material impact to the Group and its key stakeholders. In taking
these decisions, the Directors considered their duties under
section 172 of the Act.
Deployment of IPO proceeds
During the year, the Group invested, by way of secured debt into
two companies who operate CHP engines. Following a recommendation
from the Investment Manager, the Directors considered the
investment in the context of the Company's Investment Policy,
availability of financing and the potential returns to investors.
They also considered the investment in the context of
sustainability.
Dividends
Following the reporting date, the Board has approved the
Company's first dividend to shareholders of 2 pence per share with
respect to the period ending 31 March 2021. The Board is confident
that, with the Company's pipeline and forecast cash flows, the
Company can target a dividend of 5.5 pence per share for the
financial year ending 31 March 2022, which the Board expects to
contribute to the Company's target return to investors of an IRR of
7 % to 8 % , net of fees and expenses (6) .
Note:
(6) The target dividend is a target only and not a forecast.
There can be no assurance that the target will be met and it should
not be taken as an indication of the Company's expected or actual
future results.
RISK MANAGEMENT
Risk is described as the potential for events to occur that may
result in damage, liability or loss. Should these events occur, the
Company may well be adversely impacted, potentially leading to the
disruption of the Company's business model, as well as potential
damage to the reputation or financial standing of the Company.
The benefit of a risk management framework is that it allows for
potential risks to be identified in advance and may enable these
risks to either be mitigated or possibly even converted into
opportunities. The Prospectus (available on the Company website)
detailed the potential risks that the Directors considered were
material that could occur during the process of implementing the
Company's Investment Policy. The Directors have identified below
what they consider to be the current top risks to the Company and
the mitigations in place.
As an externally managed Investment Company the Company
delegates portfolio management and risk monitoring activities to
the Investment Manager and Administrator, therefore the Company
places reliance on the controls of service providers. In the normal
course of business, each individual Energy Efficiency Project
invested in will have developed a rigorous risk management
framework including a comprehensive risk register that is reviewed
and updated regularly and approved by the investee company
board.
Risk appetite
The Board is responsible for setting the Company's risk appetite
supplementing on the Investment Policy and investment restrictions.
During the period, the Board focused on clarifying its views on
technology risk. An initial articulation of broader risk appetite
was then discussed and agreed at the Board meeting in May 2021. It
sets the amount of risk the Company is willing to take, and the
parameters which the Board determines that the Investment Manager
must operate within.
Identification, assessment and management of risk are integral
aspects of the Investment Manager's and the Administrator's work in
both managing the existing portfolio on a day-to-day basis and
pursuing new investment opportunities. The Board approved risk
appetite, together with the Investment Policy and restrictions
provides the framework for the Company and how the Investment
Manager deploys the proceeds from the IPO in order to meet the
Company's Investment Objectives. Adherence to the risk limits is
reported regularly to the Board through the quarterly AIFM risk
management report.
As a full scope UK AIFM, the Investment Manager has established
a Risk and Valuation Committee that meets on a quarterly basis to
discuss, amongst other matters, the risk framework of the Group and
investee companies including processes for identifying, assessing
and managing risks.
Principal Risks and Uncertainties
It is not possible to eliminate all risks that may be faced by
the Company. The objective of the Company's risk management
framework and policies adopted by the Company is to identify risks
and enable the Board to respond to risks with mitigating actions to
reduce the potential impacts should any of the risks
materialise.
The Board regularly reviews the Company's risk register, with a
focus on ensuring appropriate controls are in place to mitigate
each risk. Taking considered risk is the essence of all business
and investment activity. The Board is ultimately responsible for
setting the risk appetite and for the oversight of the Company's
system of internal control and for reviewing the effectiveness of
the Company's system of internal control in the light of the risks
identified.
Procedures to identify principal or emerging risks
In order for the Company to capture new and emerging risks and
their potential implications the Administrator, Company Secretary
and Investment Manager consider risk as a matter of good practice;
and report these to the Board at the quarterly Board meetings. The
AIFM has responsibility for identifying potential risks at an early
stage, escalating risks or changes to risks and any other relevant
considerations to the Board for recording in the Company's risk
register. Where relevant the financial model will be stress tested
against the likelihood of occurrence and graded suitably. The Board
will regularly review the risk register to ensure grading and
mitigations remain appropriate and it reflects all relevant
risks.
The AIFM undertakes risk management functions for the Company as
defined under the AIFM Directive, including but not limited to the
provision of the following risk management services to the
Company:
-- implementing adequate risk management systems to identify,
measure, manage and monitor risks relevant to the Company's
investment strategy and to which the Company may be exposed;
-- reviewing the performance of the portfolio management
function and reporting to the Board of the Company in respect of
the performance;
-- ensuring that the risks of each investment of the Company and
its effect on the portfolio can be identified, measured, managed
and monitored on an on-going basis, including the appropriate
stress test modelling;
-- implementing an appropriate, documented and routinely updated
due diligence policy and procedure which is followed by all
relevant parties in the making of investment decisions relating to
or on behalf of the Company according to the investment strategy,
the objectives and risk profile of the Company;
-- regularly monitoring the compliance by the portfolio
management function with the Investment Objective and limitations
and restrictions and the Board approved risk appetite and reporting
any instances of non-compliance promptly to the Board;
-- identifying and proposing qualitative risk limits for the
Company appropriate for all relevant risks and subject to Board
approval, establishing and implementing such limits; and
-- periodically reviewing the risk management systems described
above to ensure that any modifications necessary are
implemented.
The Board considers the following to be the principal risks
faced by the Company along with the potential impact of these risks
and the steps taken to mitigate them.
Post Mitigation
Risk Identified Risk Description Risk Impact Mitigation Impact Likelihood
------------------ ------------------- ------------------- ----------------- ----------------
1. Exposure to The Group makes Changes in market The majority of Moderate Low
power prices and investments in demand for the Company's
risk to hedging projects and electricity, portfolio of
power prices concessions with including changes Energy Efficiency
revenue exposure in consumer demand Projects should
to power prices. patterns could benefit from
The market price have a material fixed price
of electricity is adverse effect on arrangements.
volatile and is the Company's
affected by a profitability, the In addition, the
variety of Net Asset Value, Group believe that
factors, the Company's the transition to
including market earnings and a low carbon
demand for returns to economy increased
electricity, the shareholders. usage
generation mix of of smart grids and
power plants, To the extent that residential
government the Group enters participation in
support into contracts to renewable energy
for various forms fix the price that generation should
of power it receives on the all positively
generation, as electricity impact demand
well as generated or levels and
fluctuations in enters into patterns for
the market prices derivatives with a electricity.
of commodities view to hedging
and against
foreign exchange. fluctuations
in power prices,
the Group will be
exposed to risk
related to
delivering an
amount of
electricity
over a specific
period. If there
are periods of
non-production the
Group may need to
pay the
difference between
the price it has
sold the power at
and the market
price at that time
.
------------------ ------------------- ------------------- ----------------- ----------------
2. Expensive or Expensive or lack Without sufficient When raising debt Moderate Low
lack of debt of debt finance debt funding at finance the
finance may limit our sustainable rates, Investment Manager
ability to grow we will be unable will adopt a
and achieve a to pursue suitable flexible approach
fully covered investments in involving
dividend. line with our speaking to
Investment Policy. multiple funders
This would offering various
significantly rates, structures
impair our ability and tenors. This
to pay dividends will allow
to shareholders at the Investment
the targeted rate. Manager to
maintain maximum
competitive
tension between
funders.
The Board also
keeps liquidity
under constant
review to ensure
that we have a
level of
protection
in the event of
adverse
fund-raising
conditions.
------------------ ------------------- ------------------- ----------------- ----------------
3. Reliance on the We rely on the The performance of Unless there is a High Moderate
Investment Manager Investment the Company default, either
Manager's depends, in part, party may
services and its on the ability of terminate the
reputation in the the Investment Investment
energy and Manager Management
infrastructure to provide Agreement
market. As a competent and by giving not less
result, our efficient services than 12 months'
performance will, to the Company. written notice,
to a large such notice not
extent, depend on The departure of being served
the Investment any of the key before the
Manager's personnel of the fourth anniversary
abilities in the Investment Manager of the date of
energy efficiency without adequate Admission.
market. replacement
may also have a The Board
material adverse regularly reviews
effect on the and monitors the
Company's Investment
performance. In Manager's
addition, if any performance. In
such personnel addition,
were to do the Board meets
anything or were regularly with the
alleged to have Investment Manager
done something to ensure that we
that may be the maintain a
subject of public positive
criticism or other working
negative publicity relationship.
or may lead
to investigation, The key personnel
litigation or of the Investment
sanction, this may Manager are
have an adverse subject to a t
impact on the least a three
Company and -month notice
its reputation by period which sh
association. ould provide
sufficient time in
Termination of the which to find a
Investment suitable
Management replacement with
Agreement would relevant industry
severely affect experience.
our ability to
effectively
manage our
operations and may
have a negative
impact on the
share price of the
Company .
------------------ ------------------- ------------------- ----------------- ----------------
4. Introduction A technological The future As part of the Moderate to High Low to Moderate
of, or amendment or regulatory legislative Group's
to laws, change could prohibition or tax acquisition
regulations, or occur which could of particular process, the
technology have the effect fuels (such as Investment Manager
(especially in of rendering natural gas) or as conducts a
relation an Energy a result of thorough due
to climate change) Efficiency technological diligence process
Project in which innovation or on all projects
the Group has otherwise by that takes account
invested obsolete changes to law and of the technology,
or materially regulation that regulatory
change renders environment,
the way in an Energy potential future
which a service Efficiency Project regulatory changes
or product is obsolete could , carbon pricing
delivered or threaten the scenarios and the
alter the return profitability of robustness of any
profile of an such an Energy Government
investment. Efficiency subsidy.
Project, in
In addition, particular due to The Company's
environmental the financing Investment
regulators may projections that Strategy focuses
seek to impose are dependent on on a diverse range
injunctions or an extended of assets across
other sanctions project life. If various energy
on an Energy such a change were efficiency
Efficiency to occur, these sub-sectors. Which
Project's assets would have in turn reduces
operation due to very few the impact on the
changes in laws alternative Group's operations
or regulations uses should they should
that may have a become obsolete. the introduction
material adverse of, or amendment
effect on to laws,
its financial regulations, or
condition. technology impact
any one sector.
------------------ ------------------- ------------------- ----------------- ----------------
5. Counterparties' The Group's The failure by a The Investment Moderate Low
ability to make revenue derives counterparty to Manager will look
contractual from the Energy pay the to build in
payments Efficiency contractual suitable
Projects in the payments due, or mechanisms to
portfolio, the the early protect the
Group termination Group's income
will be exposed of an Energy stream from the
to the financial Efficiency Project relevant Energy
strength of the due to insolvency, Efficiency
counterparties to may materially Project, which may
such projects and affect the value include parent
their of the guarantees and
ability to meet portfolio and liquidated damages
their contractual could have a payments on
payment material adverse termination.
obligations effect on the
performance of the The Group's
Company, the exposure to
Net Asset Value, defaults may be
the Company's further mitigated
earnings and by contracting
returns to with
shareholders. counterparties
who are public
sector or
quasi-public
sector bodies or
who are able to
draw upon
government
subsidies to
partly fund
contractual
payments.
As part of the
Group's
acquisition
process, the
Investment Manager
conducts a
thorough due
diligence process
on all projects
that includes a
credit check on
counterparties.
------------------ ------------------- ------------------- ----------------- ----------------
6. Portfolio of Due diligence The Group may Prior to making an Moderate Low
new assets undertaken by the acquire Energy investment, the
acquired which may Investment Efficiency Investment Manager
include risks not Manager may not Projects with will undertake
fully identified uncover all of unknown commercial,
in due diligence the material liabilities and financial,
process risks without any technical and
affecting such recourse, or with legal due
project and/or limited recourse, diligence on the
such risks may with respect to relevant Energy
not be adequately unknown Efficiency
protected against liabilities. If an Project. In
in the unknown liability addition,
acquisition was later asserted the Investment
or investment in respect of the Manager undertakes
documentation. relevant Energy scenario testing
Efficiency as part of the
Project, the Group investment
might by appraisal to
required to pay account for
substantial sums unforeseen risks
to settle it or to the extent
enter into possible.
litigation
proceedings, which The Investment
could adversely Manager will also
affect cash flow commission due
and the result of diligence reports
its operations. prepared by
professional
Accordingly, in advisers in
the event that relation to an
material risks are Energy Efficiency
not uncovered Project.
and/or such risks
are not Once the legal
adequately documentation and
protected against, confirmatory due
this may have a diligence is
material adverse completed, the
effect on the Board will
Energy Efficiency undertake
Project and a final review of
consequently a a transaction with
material adverse the Investment
effect on the Manager before the
performance of the Investment
Company, the Manager proceeds
Net Asset Value, with completion of
the Company's the transaction.
earnings and
returns to
Shareholders.
------------------ ------------------- ------------------- ----------------- ----------------
7. Construction Energy Efficiency Should completion The engineering, Moderate to High Low
risks for certain Projects that are of any project procurement and
Energy Efficiency in the overrun (both in construction
Projects Construction terms of time and obligations
Phase or the budget), there is relating to an
Development Phase a risk Energy Efficiency
may that payments may Project in the
be exposed to be required to be Construction Phase
certain risks, made to (or or the Development
such as cost withheld by) a Phase will be
overruns, counterparty in undertaken by
construction relation to third party
delay and the late EPC Contractors
construction installation of appointed by the
defects the relevant Group, who will be
that may be assets and outside the direct
outside the infrastructure. If control of the
Group's control. the completion of Group.
a project The Group will
overruns, it would seek to contract
also result in a with EPC
delayed start of Contractors of
contractual good standing and
payments due to with a strong
the Group, track
which could affect record, and will
the Company's seek to ensure
ability to achieve that any contract
its target with the EPC
returns, depending Contractor, and
on the nature the other
and scale of such contracts
delay. relating to the
relevant project,
In addition, any will contain
error or deviation sufficient
from project protections to
specifications ensure that the
during the Group
Construction Phase will be adequately
may lead to compensated should
additional costs it suffer any
or expenses being losses due to any
incurred by the delays or defects
Group and could in
thus result the completion of
in a lower profit the Energy
for the Group. Efficiency
Project, or if
commissioning of
the Energy
Efficiency
Project is never
completed.
------------------ ------------------- ------------------- ----------------- ----------------
8. Risks relating Machinery or If the machinery The Investment High Low to Moderate
to installing, equipment may and equipment Manager will
operating, and not be properly installed as part procure that the
decommissioning and adequately of an Energy Group uses proven
energy efficiency installed, Efficiency Project technologies,
equipment maintained or fails, this typically backed
otherwise could give rise to by manufacturer
underperform. remediation rights warranties, when
for the installing
counterparty, the machinery and
withholding of equipment as part
part or all of an Energy
of the contractual Efficiency
payment payable to Project.
the Group,
termination of the The Group will
relevant contract also implement a
for maintenance
the default of the programme for each
Group and/or Energy Efficiency
additional Project and
maintenance will typically
expenditure. This appoint O&M
could have a Contractors with a
material strong track
adverse effect on record to carry
the performance of out such
the Company, the maintenance
Net Asset Value, pursuant to an O&M
the Company's Contract.
earnings
and returns to Typically, the O&M
shareholders. Contract will
contain
Additional costs back-to-back KPIs
and expenses, against the same
carrying out performance
repairs, lack of criteria
warranty cover contained in the
and/or operational correlating Energy
failures or Efficiency
malfunction of an Project, to enable
Energy Efficiency the Group to
Project and delays pursue the
in the production O&M Contractor,
or supply often on a
of energy may have liquidated damages
a material adverse basis, for any
effect on the loss of revenue
performance of the caused by a
Company, the Net failure
Asset to meet all KPIs.
Value, the
Company's earnings
and returns to
shareholders.
------------------ ------------------- ------------------- ----------------- ----------------
9. Lack of Competition for If the Investment The Investment High Moderate
availability of Energy Efficiency Manager is not Manager has a
suitable energy Project in the able to source a strong track
efficiency primary sufficient number record and
projects investment or of suitable experience in
secondary investments asset and project
investment within a finance,
markets, may reasonable portfolio
result in the timeframe whether management and
Company being by reason of lack structured
unable to make of demand, investments, with
investments or competition or Energy and
investments on otherwise, Infrastructure
terms a greater being a principal
that enable the proportion of the area of focus.
target returns to Company's assets Through extensive
be delivered. will be held in industry
cash for longer relationships the
than anticipated Investment Manager
and the Company's provides access
ability to achieve to a significant
its Investment pipeline of
Objective will be investment
adversely opportunities.
affected.
Furthermore, the
Company will use
of leverage to
increase the
return profile of
Energy Efficiency
Projects.
------------------ ------------------- ------------------- ----------------- ----------------
10. Cyber and Attempts may be Increased Cyber security Low to Moderate Low to Moderate
other security made to access regulation, laws, policies and
risks the IT systems rules and procedures
and data used by standards related implemented by key
the Investment to cyber security, service providers
Manager, could impact the are reported to
Administrator Company's the Board
and other service reputation or regularly to
providers through result in ensure conformity.
a cyber attack or financial loss Thorough
malicious through the third-party due
breaches of imposition of diligence is
confidentiality. fines. Suffering carried out on all
a cyber breach suppliers engaged
will also to service the
generally incur Company. All
costs associated providers have
with repairing processes in place
affected systems, to identify cyber
networks and security risks
devices. The and apply and
effect of a Cyber monitor
Security breach appropriate risk
may result in plans.
reputational
damage
which may affect
relationships the
Company has with
partners,
investors and
other third
parties.
Cyber security
policies and
procedures
implemented by key
service providers
are reported to
the Board
regularly to
ensure conformity.
Thorough
third-party due
diligence is
carried out
on all suppliers
engaged to service
the Company. All
providers have
processes in place
to
identify cyber
security risks and
apply, and monitor
appropriate risk
plans.
------------------ ------------------- ------------------- ----------------- ----------------
Emerging Risks
Emerging risks are characterised by a degree of uncertainty and
the Investment Manager and the Board consider new and emerging
risks every six months, the risk register is then updated to
include these considerations.
The United Kingdom's withdrawal from the European Union
The Board has continued to monitor the potential risks
associated with Brexit. Despite the trade deal reached on 24
December 2020 between the UK and EU, it still remains unclear as to
the extent or precise nature of the impact of Brexit on the UK
economy or the Company. Nevertheless, Energy Efficiency Projects,
being UK based, the Group remains relatively insulated from the
impact of Brexit.
The Board will continue to monitor the ongoing developments
between the UK and the EU and the wider potential impact of Brexit
on the Group and its stakeholder base.
Covid-19 and global pandemic risk
The outbreak of Covid-19 in early 2020 has negatively impacted
economic conditions globally and is having an adverse and
disruptive effect on the UK economy (triggering a technical
recession after the second quarter of 2020). The Board has
considered the potential significant and wide-ranging adverse
effect on the Group, including the operating issues arising
directly from the pandemic (including health and safety related
impacts) and the longer-term impacts in relation to portfolio
investments, from the economic consequences of the global pandemic.
The Directors have performed an assessment of the ability of the
Company to continue as a going concern, which includes the impact
of Covid-19 further details of which can be found in Note 2 .
The Board will continue to monitor economic conditions and
implement appropriate controls and processes in order to mitigate
the potential impact of the pandemic on the Group.
Physical effects of climate change
While efforts to mitigate climate change continue to progress,
the physical impacts are already emerging in the form of changing
weather patterns. Extreme weather events can result in flooding,
drought, fires and storm damage, which may potentially impair the
operations of borrowers and future portfolio companies at a certain
location or impacting locations of companies within their supply
chain.
GOING CONCERN AND VIABILITY STATEMENT
Going Concern
The Strategic Report and financial statements have set out the
current financial position of the Company. The Board regularly
reviews the position of the Company and its ability to continue as
a going concern in Board meetings throughout the year. The Company
is targeting investments in Energy Efficiency Projects that aim to
meet its target return expectations and will continue to analyse
investment opportunities to ensure that they are the right fit for
the Company.
The Directors, in their consideration of going concern, have
reviewed comprehensive cash flow models for the Company and its
intermediate holding company prepared by the Company's Investment
Manager, which are based on market data and the Managers assessment
of the current pipeline of opportunities, based on these forecasts
and the assessment of the principal risks described in this report,
that it is appropriate to prepare the financial statements of the
Company on the going concern basis. At the reporting date the
Company had GBP76.55 million in cash and cash equivalents.
The Directors confirm they have carried out a robust assessment
of the emerging and principal risks facing the Company, including
those that would threaten its business model, future performance,
solvency, liquidity and dividend cover for a five-year period. The
Directors' assessment has been made with reference to the principal
risks and uncertainties and emerging risks summarised above and how
they could impact the prospects of the Company.
The Board believes that there are currently no material
uncertainties in relation to the Company's ability to continue for
a period of at least 12 months from the date of the approval of the
financial statements and, therefore, has adopted the going concern
basis in the preparation of the financial statements.
Viability Statement
In accordance with Principle 21 of the AIC Code, the Board has
assessed the prospects of the Company over a period longer than 12
months required by the relevant "Going Concern" provisions. The
Board has considered the nature of the Company's assets and
liabilities, and associated cash flows, and has determined that
five years, up to 31 March 2026, is the maximum timescale over
which the performance of the Company can be forecast with a
material degree of accuracy and therefore is the appropriate period
over which to consider the viability.
When making the loan investment into Harvest and Glasshouse,
through the Company's main subsidiary TEEC Holdings, the business
model of the borrower was subject to a number of key assumptions
underlying the forecasts of the borrowers. The sensitivities
performed were designed to provide the Directors with an
understanding of the borrower's ability to service the debt in the
event of a severe but plausible downturn scenario.
Downside sensitivities have been carried out based on a 10%
adverse movement in electricity and gas prices. In this adverse
scenario, the companies would be able to continue servicing their
loans. In a downturn scenario, mitigating actions to reduce
variable costs could be actioned to enable the Group to continue to
meet its future liabilities. Harvest and Glasshouse have
considerable cash balances and their revenues are approximately 49%
exposed to power price volatility, with the balance being a fixed
PPA with the offtaker.
Based on the results of the analysis, the Directors have a
reasonable expectation that the Group and Company will be able to
continue in operation and meet its liabilities as they fall due for
the next five years.
In considering the prospects of the Company, the Directors
looked at the key risks facing both the Company and the portfolio
as detailed above , focusing on the likelihood and impact of each
risk as well as any key contracts, future events or timescales that
may be assigned to each key risk.
As an Investment Company , part of the Company's objective is to
produce stable dividends while preserving the capital value of its
investment portfolio on a real basis to deliver a total NAV return
of 7-8% per annum. Following regular pipeline updates from the
Investment Manager, the Directors believe that the Company is well
placed to manage its business risks successfully over both the
short and long term, the Board has a reasonable expectation that
the Company will be able to continue in operation and to meet its
liabilities as they fall due for a period of at least 5 years.
While the Directors have no reason to believe that the Company will
not be viable over a longer period, they are of the opinion that it
would be difficult to foresee the economic viability of any company
with any degree of certainty for a period of time greater than five
years.
Board Approval of the Strategic Report
The Strategic Report has been approved by the Board of Directors
and signed on its behalf by the Chair.
John Roberts
Chair
2 June 2021
FINANCIAL STATEMENTS
INCOME STATEMENT
For the period ended 31 March 2021
Note Revenue Capital Total
GBP'000 GBP'000 GBP'000
----------------------------------- ----- -------- -------- --------
Investment income 5 57 - 57
Loss arising on the revaluation
of investments at the period end 12 - (113) (113)
-------- -------- --------
Investment return 57 (113) (56)
Investment management fees 4 5 1 6
Other expenses 6 388 71 459
-------- --------
393 72 465
Loss before taxation (336) (185) (521)
-------- --------
Taxation 8 - - -
Loss before taxation (336) (185) (521)
-------- -------- --------
Other comprehensive income - - -
T otal comprehensive loss (336) (185) (521)
======== ======== ========
Basic & diluted e arnings per
share (pence) 9 (0.01)p (0.00)p (0.01)p
The total column of this statement is the Income Statement of
the Company prepared in accordance with IAS in conformity with the
requirements of the Act and in accordance with IFRS adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the EU.
The supplementary revenue return and capital columns have been
prepared in accordance with the Association of Investment Companies
Statement of Recommended Practice (AIC SORP).
All revenue and capital items in the above statement derive from
continuing operations.
This Income Statement includes all recognised gains and
losses.
The accompanying Notes are an integral part of this
statement.
BALANCE SHEET
At 31 March 2021
Company Number: 12693305
31 March
2021
Note GBP'000
----------------------------------- ----- ---------
Non-current assets
Investments at fair value through
profit or loss 12 20,883
---------
Current assets
Trade and other receivables 13 201
Cash and cash equivalents 76,553
---------
76,754
Total assets 97,637
=========
Current liabilities
Trade and other payables 14 (149)
(149)
N et assets 97,488
=========
Equity attributable to equity
holders
Share capital 15 1,000
Share premium -
Special distributable reserve 97,009
Capital reserve (185)
Revenue reserve (336)
---------
Total Equity 97,488
=========
Shareholders' funds
Net asset value per Ordinary
S hare 11 97.49 p
The s tatements were approved by the Directors and authorised
for issue on 2 June 202 1 and are signed on behalf of the Board
by:
Dr John Roberts
Chair
2 June 202 1
The accompanying N otes are an integral part of this s tatement.
S TATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the period ended 31 March 2021
Special
Issued Share distributable Capital Revenue Tota
capital premium reserve reserve reserve l
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ----- --------- --------- --------------- --------- --------- --------
Opening b alance - - - - - -
--------- --------- --------------- --------- --------- --------
Issue of share capital 15 1,000 99,000 - - - 100,000
Cost of issue of
shares - (1,991) - - - (1,991)
Transfer to special
distributable reserve 17 - (97,009) 97,009 - - -
Total comprehensive
income/(loss) for
the period - - - (185) (336) (521)
--------- --------- --------------- --------- --------- --------
Balance at 31 March
2021 1,000 - 97,009 (185) (336) 97,488
========= ========= =============== ========= ========= ========
The capital reserve represents the proportion of Investment
Management fees and other expenses, where applicable, charged
against capital and realised/unrealised gains or losses on the
disposal/revaluation of investments. The unrealised element of the
capital reserve is not distributable. The special distributable
reserve was created on court cancellation of the share premium
account. The revenue, special distributable and realised capital
reserves are distributable by way of dividend.
The accompanying N otes are an integral part of th is s tatement.
STATEMENT OF CASH FLOWS
For the period ended 31 March 2021
Period ended
31 March 2021
Note GBP'000
-------------------------------------------- ----- ---------------
Cash flows from operating activities
Loss before taxation (521)
Loss arising on the revaluation
of investments at the period end 12 113
---------------
Cash flow (used in) operations (408)
(Increase) in receivables 13 (201)
Increase in payables 14 149
Net cash flow generated from operating
activities (460)
---------------
Cash flows from investing activities
Purchase of financial assets at
fair value through profit or loss (20,996)
Net cash flow used in investing
activities (20,996)
---------------
Cash flows from financing activities
I ssue of s hares 15 100,000
C osts of share issue (1,991)
Net cash flow generated from financing
activities 98,009
---------------
Net increase in c ash and cash
equivalents 76,553
===============
Reconciliation of net cash flow
to movements in cash and cash equivalents
Cash and cash equivalents at 23
June 2020 -
Net increase in cash and cash equivalents 76,553
---------------
Cash and cash equivalents at 31
March 2021 76,553
===============
The accompanying N otes are an integral part of th is s tatement.
NOTES TO THE F INANCIAL STATEMENTS
1. CORPORATE INFORMATION
The Financial Statements of the Company for the period ended 31
March 2021 were authorised for issue in accordance with a
resolution of the Directors on 2 June 2021.
The Company is incorporated and domiciled in the United Kingdom
and registered in England and Wales under number 12693305 pursuant
to the Act. The address of its registered office, which is also its
principal place of business, is 1 King William Street, London EC4N
7AF.
The Company was incorporated on 23 June 2020 and is a Public
Company and the ultimate controlling party of the Group. The
Company's Ordinary Shares were 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, following its
IPO which raised gross proceeds of GBP100 million.
The financial statements comprise only the results of the
Company, as its investment in TEEC Holdings Limited (" TEEC
Holdings ") is included at fair value through profit or loss as
detailed in the key accounting policies below.
The Company has appointed Triple Point Investment Management LLP
as its Investment Manager (the " 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 Act. The Investment Manager is regulated
by the FCA, number 456597.
The Company intends to achieve its Investment Objective by
investing in a diversified portfolio of energy efficiency
investments in the United Kingdom. The Company, through TEEC
Holdings, will invest in a range of energy efficiency assets which
will contribute, or are already contributing, to energy efficiency
in sub-sectors including electricity and heat generation,
distribution, and end user consumption.
The current year financial information is from the period of
incorporation on 23 June 2020 to 31 March 2021; there is no
comparative information for this period. The Company is required to
nominate a functional currency, being the currency in which the
Company predominantly operates. The functional and reporting
currency is pounds sterling, reflecting the primary economic
environment in which the Company operates.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
2.
The financial information contained in this announcement has
been prepared on the basis of the accounting policies set out in
the statutory accounts for the period ended 31 March 2021 . Whilst
the financial information included in this announcement has been
computed in accordance with International Financial Reporting
Standards (IFRS), as adopted by the European Union, this
announcement does not itself contain sufficient information to
comply with IFRS. The financial information does not constitute the
Company's statutory accounts for the period ended 31 March 2021 ,
but is derived from those accounts. Those accounts give a true and
fair view of the assets, liabilities, financial position and profit
and loss of the Company. Statutory accounts for the period ended 31
March 2021 will be delivered to the Registrar of Companies
following approval by the Directors . The auditor's report on 20 21
accounts was 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.
After making the necessary enquiries, the Directors confirm that
they are satisfied that the Company has adequate resources to
continue to meet its day-to-day commitments for at least 12 months
from the date of approval of the financial statements.
The financial statements, which aim to give a true and fair
view, have been prepared in accordance with IAS in conformity with
the requirements of the Act and in accordance with IFRS adopted
pursuant to Regulation (EC) No 1606/2002, as it applies in the EU,
using the historical cost basis, except for financial instruments
and any subsidiaries classified at fair value through profit or
loss, which are included at fair value through the Income
Statement.
The principal accounting policies to be adopted are set out
below and will be consistently applied, subject to changes in
accordance with any amendments in IFRS.
IFRS 13 defines fair value as the price that would be received
to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (an
exit price). When measuring fair value, the Company takes into
consideration the characteristics of the asset or liability if
market participants would take those characteristics into account
when pricing the asset or liability at the measurement date,
including assumptions about risk.
The Company accounts for its investment in its wholly owned
direct subsidiary TEEC Holdings at fair value. The investment in
TEEC Holdings which will principally comprise working capital
balances and investments in Energy Efficiency Projects, are
required to be included at fair value in the carrying value of
investments. Consequently, the Company does not consolidate its
subsidiary, which is itself an investment entity or apply IFRS 3
Business Combinations when it obtains control of another entity as
it is considered to be an investment entity under IFRS. Instead,
the Company includes its investment in its subsidiary at fair value
through profit or loss.
The financial statements incorporate the financial statements of
the Company only, the financial statements are presented in pounds
sterling, which is the Company's functional currency and are
rounded to the nearest thousand, unless otherwise stated.
TEEC Holdings is itself an investment entity. Consequently, the
Company need not have an exit strategy for its investment in TEEC
Holdings.
Each investment indirectly held has a finite life. For the
Energy Efficiency Projects in which the Group holds debt
investments, the debt is expected to mature towards the end of the
concession, and at the end of the concession it is expected that
the investment will be fully repaid. In the case of Energy
Efficiency Projects in which the Group holds equity, the life of
the project is based on the expected useful asset life alongside
the land lease term. After expiry, it is anticipated the investment
may be dissolved. The Board and the Investment Manager will monitor
the market and where possible look to maximise value for
shareholders.
The exit strategy is that investments will normally be held to
the end of the concession unless the Company sees an opportunity in
the market to dispose of investments. The Company's Investment
Manager, and the Company's Board will regularly review the market
and consider whether any disposals should be made.
Based on analysis and advice from the Administrator, the
Directors will consider on an ongoing basis whether the Company
demonstrates the characteristics and meets the requirements to be
considered an investment entity.
IFRS 10, Investment Entities
The sole objective of the Company and through its subsidiary
TEEC Holdings is to enter Energy Efficiency Projects, via
individual corporate entities. TEEC Holdings typically will issue
equity and loans to finance its investments in the Energy
Efficiency Projects.
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 met (see below). Under IFRS
10, investment entities are required to hold subsidiaries at fair
value through the Income Statement rather than consolidate them on
a line-by-line basis. There are three key conditions to be met by
the Company for it to meet the definition of an investment
entity.
For each reporting period, the Directors will continue to assess
whether the Company continues to meet these conditions:
1. It obtains funds from one or more investors for the purpose
of providing these investors with professional investment
management services;
2. It commits to its investors that its business purpose is to
invest its funds solely for returns (including having an exit
strategy for investments) from capital appreciation, investment
income or both; and
3. It measures and evaluates the performance of substantially
all its investments on a fair value basis.
In satisfying the second criteria, the notion of an investment
time frame is critical. An investment entity should not hold its
investments indefinitely but should have an exit strategy for their
realisation. Although the Company through TEEC Holdings has
currently made two debt investments, it is the intention to seek
equity interests in Energy Efficiency Projects that have an
indefinite life; the underlying assets that it invests in have an
expected life of between 10-30 years. The Company intends to hold
these for the remainder of their useful life to preserve the
capital value of the portfolio. However, as the energy efficiency
assets are expected to have no residual value after their life, the
Directors consider that this demonstrates a clear exit strategy
from these investments.
Subsidiaries are therefore measured at fair value through profit
or loss, in accordance with IFRS 13 "Fair Value Measurement", IFRS
10 "Consolidated Financial Statements" and IFRS 9 "Financial
Instruments".
Going Concern
The Company's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Investment Manager's Review.
The Company faces a number of risks and uncertainties, as set
out in the Strategic Report. The financial risk management
objectives and policies of the Company, including exposure to price
risk, interest rate risk, credit risk and liquidity risk are
discussed in Note 18 to the financial statements.
Following the successful IPO of the Company on 19 October 2020,
The Company continues to meet day-to-day liquidity needs through
its cash resources. As at 31 March 2021, the Company had net
current assets of GBP76.8 million (which reflected a high level of
cash within the Company, whilst the Investment Manager pursues
suitable investment opportunities) and had cash balances of GBP76.6
million.
The major cash outflows of the Company are the payment of
dividends, fees and costs relating to the acquisition of new
assets, both of which are discretionary.
In the period since early 2020 and up to the date of this
report, the outbreak of Covid-19 has had a negative impact on the
global economy. The Directors and Investment Manager continue to
actively monitor the situation and its potential effect on the
Company and its investments if applicable.
The Company was admitted to trading on the Specialist Fund
Segment of the Main market of the London Stock Exchange on 19
October 2020, which was after the UK had been in its first lockdown
in response to the Covid-19 pandemic. As a result, the Investment
Manager and Administrator had already successfully implemented
business continuity plans to ensure business disruption was
minimised and had been operating effectively whilst working
remotely. All staff were able to continue to assume their
day-to-day responsibilities.
Based on the assessment outlined above, including the various
risk mitigation measures in place, the Directors do not consider
that the effects of Covid-19 have created a material uncertainty
over the assessment of the Company as a going concern. The
Directors have reviewed Company forecasts and pipeline projections
which cover a period of at least 12 months from the date of
approval of this report, considering foreseeable changes in
investment and the wider pipeline, which show that the Company has
sufficient financial resources to continue in operation for at
least the next 12 months from the date of approval of this
report.
On the basis of this review, the Directors have a reasonable
expectation that the Company has adequate resources to continue in
operational existence for at least 12 months from the date of
approval of this report. Accordingly, they continue to adopt the
going concern basis in preparing the financial statements.
Financial Instruments
Financial assets and financial liabilities are recognised on the
Company's statement of financial position when the Company becomes
a party to the contractual provisions of the instrument. Financial
assets are to be de-recognised when the contractual rights to the
cash flows from the instrument expire or the asset is transferred,
and the transfer qualifies for de-recognition in accordance with
IFRS 9 Financial Instruments and IFRS 13 Fair Value
Measurement.
Derivative financial instruments
The Company may use derivative financial instruments to hedge
risks associated with interest rate fluctuations. The Company will
not hold any derivative financial instruments for trading or
speculative purposes. Specifically, the Company may utilise
interest rate swaps to help manage its interest rate risk.
All derivatives are initially recognised at fair value at the
date that the derivative is entered into and are subsequently
re-measured to their fair value at each balance sheet date. The
method of recognising the resulting gain or loss depends on whether
the derivative is designated as a hedging instrument. Since future
derivatives held by the Company may not qualify for hedge
accounting, gains or losses are to be recognised in profit or loss
in the Income Statement.
Fair values of derivative financial instruments will be based on
valuation statements provided by third party expert advisers.
The level in the fair value hierarchy into which these interest
rate swaps are categorised is Level 2, being inputs other than
quoted prices included in Level 1 that are observable for the asset
or liability, either directly or indirectly.
The Company did not use any derivative financial instruments
during the period.
Financial assets
The Company classifies its financial assets as either
investments at fair value through profit or loss or financial
assets at amortised cost. The classification depends on the purpose
for which the financial assets are acquired. Management determines
the classification of its financial assets at initial
recognition.
Investments at fair value through profit or loss
At initial recognition, the Company measures investments in
Energy Efficiency Projects, through its investment in TEEC
Holdings, at fair value through profit or loss and any transaction
costs are expensed to profit or loss. The Company will subsequently
continue to measure all investments at fair value and any changes
in the fair value are to be recognised as gains or losses on
investments at fair value through profit or loss within investment
income.
Investments at fair value through profit or loss are recognised
upon initial recognition as financial assets at fair value through
profit or loss in accordance with IFRS 10. Investments held at fair
value through profit or loss consist of the Company's subsidiary,
TEEC Holdings.
The Company's investment in TEEC Holdings comprises both equity
and loan notes. The Company measures its investment as a single
class of financial asset at fair value in accordance with IFRS 13
Fair Value Measurement.
Through TEEC Holdings, the Company has made secured loan
investments to two companies which own and operate CHP energy
centres. Both elements are exposed to the same primary risk, being
performance risk. This risk is to be taken into consideration when
determining the discount rate applied to the forecast cash flows,
alongside the decision to set the interest rates on any loan
investments.
In determining the fair value, the Board will consider any
observable market transactions and will measure fair value using
assumptions that market participants would use when pricing the
asset, including any assumptions regarding risk surrounding the
transaction.
Financial assets at amortised cost
Trade receivables, loans and other receivables that are
non-derivative financial assets and that have fixed or determinable
payments that are not quoted in an active market are classified as
"financial assets at amortised cost". Trade receivables, loans and
other receivables are measured at amortised cost using the
effective interest method, less any impairment. They are included
in current assets, except where maturities are greater than 12
months after the reporting date, in which case they are to be
classified as non-current assets. The Company's financial assets
held at amortised cost comprise "trade and other receivables" and
"cash and cash equivalents" in the statement of financial
position.
Financial liabilities and equity
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangement.
Equity instruments
The Company's Ordinary Shares are classified as equity and are
not redeemable. Costs associated or directly attributable to the
issue of new equity shares are recognised as a deduction in equity
and are charged from the share premium account.
Financial liabilities
Financial liabilities are classified as other financial
liabilities, comprising:
-- loans and borrowings which are recognised initially at the
fair value of the consideration received, less transaction costs.
Subsequent to initial recognition, loans and borrowings are to be
stated at amortised cost, with any difference between cost and
redemption value being recognised in the income statement over the
period of the borrowings on an effective interest basis; and
-- other non-derivative financial instruments, including trade
and other payables, which are to be measured at amortised cost
using the effective interest method.
Finance expenses
Borrowing costs are recognised in the Income Statement in the
period to which they relate on an accruals basis.
Effective interest method
The effective interest rate is the rate that exactly discounts
estimated future cash payments or receipts through the expected
life of the financial instrument to the relevant asset's carrying
amount.
Fair value estimation for investments at fair value
The Company's investments at fair value are not typically traded
in active markets. Fair value is calculated by discounting at an
appropriate discount rate future cash flows expected to be received
from the Company's intermediate holding in TEEC Holdings, from
which the underlying cash flows are from investments in both equity
(dividends and equity redemptions), shareholder and inter-company
loans (interest and repayments) in Energy Efficiency P rojects.
The discount rates used in the valuation exercise will represent
the Investment Manager's and the Board's best assessment of the
rate of return in the market for assets with similar
characteristics and risk profile. The discount rates are to be
reviewed on a regular basis and updated, where appropriate, to
reflect changes in the market and in the project risk
characteristics.
Revenue Recognition
Gains and losses on fair value of investments in the income
statement will represent gains or losses that arise from the
movement in the fair value of the Company's investment in TEEC
Holdings.
Dividends from TEEC Holdings are recognised when the Company's
right to receive payment has been established.
Investment income comprises interest income and dividend income
received from the Company's subsidiary. Interest income is
recognised in the Income Statement using the effective interest
method.
Share capital and share premium
The Company's Ordinary Shares are classified as equity and are
not redeemable. Costs associated or directly attributable to the
issue of new equity shares are recognised as a deduction in equity
and are charged from the share premium account.
The costs incurred in relation to the Company's IPO were charged
to the share premium account.
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 Efficiency
Projects.
The Company has no single major customer. The internal financial
information to be used by the CODM on a quarterly basis to allocate
resources, assess performance and manage the Company will present
the business as a single segment comprising the portfolio of
investments in energy efficiency assets.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held
on call with banks and other short-term highly liquid deposits with
original maturities of three months or less. Bank overdrafts that
are repayable on demand are included as a component of cash and
cash equivalents for the purpose of the cash flow statements.
Deposits to be held with original maturities of greater than
three months are included in other financial assets.
There are no expected credit losses as the bank institutions
will have high credit ratings assigned by international credit
rating agencies.
Foreign currencies
Items included in the financial statements are presented in
Pounds Sterling because that is the currency of the primary
economic environment in which the Company operates and is the
Company's functional currency.
Transactions and balances
Transactions in foreign currencies are translated at the foreign
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the
reporting date are translated at the foreign exchange rate ruling
at that date. Foreign exchange differences arising on translation
are recognised in the Income Statement.
Dividends
Dividends to the Company's shareholders are recognised when they
become legally payable. In the case of interim dividends, this is
when they are paid. In the case of final dividends, this is when
they are approved by the shareholders at the Annual General
Meeting.
Fund Expenses
Expenses are accounted for on an accruals basis. Share issue
expenses of the Company directly attributable to the issue and
listing of shares are charged to the share premium account. The
Company's investment management fee, administration fees and all
other expenses are charged through the Income Statement.
Investment Management Fees
As per the Company's Investment Objective, it is expected that
income returns will make up the majority of the Company's long-term
return. Therefore, based on the estimated split of future returns
(which cannot be guaranteed), 25% of the investment management fee
is charged as a capital item within the Income Statement.
Taxation
Under the current system of taxation in the UK, the Company is
liable to taxation on its operations in the UK. Current tax is the
expected tax payable on the taxable income for the period, using
tax rates that have been enacted or substantively enacted at the
date of the Statement of Financial Position.
Deferred tax is the tax expected to be payable or recoverable on
temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit. Deferred tax
liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Deferred
tax assets and liabilities are not recognised if the temporary
differences arise from goodwill or from the initial recognition of
other assets and liabilities in a transaction that affects neither
the tax profit or the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments, except where the Company is
able to control the timing of the reversal of the difference and it
is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax is calculated at the tax rates
that are expected to apply in the period when the liability is
settled, or the asset is realised. Deferred tax is charged or
credited to the Income Statement except when it relates to items
charged or credited directly to equity, in which case the deferred
tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off tax assets against tax
liabilities and when they relate to income taxes levied by the same
taxation authority and the Company intends to settle its current
tax assets and liabilities on a net basis.
Deferred tax assets and liabilities are not discounted.
Acquisition Costs
In line with IFRS 9, acquisition costs are expensed to the
Income Statement as they are incurred for investments which are
held at fair value through profit or loss.
New and revised standards applied
There were no new standards or interpretations effective for the
first time for periods beginning on or after 23 June 2020 that had
a significant effect on the Group's or Company's financial
statements. Furthermore, none of the amendments to standards that
are effective from that date had a significant effect on the
financial statements.
New and revised standards not applied
"Interest Rate Benchmark Reform - Phase 2" was issued and will
become effective for accounting periods beginning on or after 1
January 2021. The amendments require additional disclosures that
address issues that might affect financial reporting after the
reform of an interest rate benchmark, including its replacement
with alternative benchmark rates. They also provide relief to the
Group in respect of certain loans whose contractual terms are
affected by interest benchmark reform.
Other accounting standards and interpretations have been
published and will be mandatory for the Company's accounting
periods beginning on or after 1 January 2021 or later periods. The
impact of these standards is not expected to be material to the
reported results and financial position of the Company.
3. CRITICAL ACCOUNTING ESTIMATES, JUDGEMENTS AND ASSUMPTIONS
In the application of the Company's accounting policies, which
are described in Note 2, the Directors are required to make
judgements, estimates and assumptions about the fair value of
assets and liabilities that affect reported amounts. It is
possible, that actual results may differ from these estimates.
Key sources of estimation uncertainty
The estimates and underlying assumptions underpinning our
investments are reviewed on an ongoing basis by both the Board and
the Investment Manager. Revisions to any accounting estimates are
recognised in the period in which the estimate is revised if the
revision affects only that period, or in the period of the revision
and future periods if the revision affects both current and future
periods.
Investments at fair value through profit or loss
The fair value of investments in Energy Efficiency Projects is
calculated by discounting at an appropriate discount rate future
cash flows expected to be received by the Company's Subsidiary,
TEEC Holdings, from investments in both equity (dividends and
equity redemptions), shareholder and inter-company loans (interest
and repayments).
Estimates such as the cash flows are believed to be reasonable
under the circumstances, the results of which form the basis of
making judgements about the fair value of assets not readily
available from other sources. Discount rates used in the valuation
represent the Investment Manager's and the Board's assessment of
the rate of return in the market for assets with similar
characteristics and risk profile. The discount rate is deemed to be
one of the most significant unobservable inputs and any change
could have a material impact on the fair value of investments.
Critical accounting judgements
Equity and debt investment in TEEC Holdings
In applying their judgement, the Directors have satisfied
themselves that the equity and debt investments in TEEC Holdings
share the same investment characteristics and, as such, constitute
a single asset class for IFRS 7 disclosure purposes.
Please refer to the accounting policies in Note 2 for further
detail.
Investment Entity
As discussed above in Note 2, the Directors have concluded that
the company continues to meet the definition of an investment
entity as defined in IFRS 10.
This assessment involves an element of judgement as to whether
the Company continues to meet the criteria outlined in the
accounting standards.
4. INVESTMENT MANAGEMENT FEES
The Company and the Investment Manager entered into an
Investment Management Agreement on 25 August 2020.
Following the IPO of the Company, no Annual Management Fee has
been accrued or shall accrue or be charged on the undeployed cash
funds arising from the IPO until such time as 75% or more of the
net proceeds have been deployed.
Under the terms of the agreement, the Investment Manager must
use 20% of the management fee received to acquire shares in the
Company. On a semi-annual basis, following the announcement of the
Net Asset Value for the semi-annual periods ending 31 March and 30
September in each year, the Investment Manager shall procure that
the Wider Triple Point Group shall apply an amount, in aggregate,
equal to 20% of the Annual Management Fee for the relevant
six-month period as follows:
(a) where the Ordinary Shares are trading at, or at a premium
to, the latest published Net Asset Value per Ordinary Share; the
Investment Manager shall procure that the Wider Triple Point Group
shall use the relevant amount to subscribe for new Ordinary Shares
issued at the latest published Net Asset Value per Ordinary Share
applicable at the date of issuance; or
(b) where the Ordinary Shares are trading at a discount to the
latest published Net Asset Value per Ordinary Share; the Investment
Manager shall procure that the Wider Triple Point Group shall, as
soon as reasonably practicable use the relevant amount to make
market purchases of Ordinary Shares within four months of the
relevant Net Asset Value publication date;
Even though the Annual Management Fee is payable on a monthly
basis, Ordinary Shares will only be acquired by the Wider Triple
Point Group on a half-yearly basis. In addition, any such Ordinary
Shares acquired by the Wider Triple Point Group are subject to a
minimum lock-in period of 12 months.
Investment management fees paid or accrued during the year were
as follows:
For the period ended
31 March 2021
-------------------------
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Cash element 5 1 6
Equity element - - -
5 1 6
------- ------- -------
5. INVESTMENT INCOME
For the period ended
31 March 2021
-------------------------
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Interest on cash deposits 4 - 4
Interest income from investments 53 - 53
57 - 57
------- ------- -------
6. OPERATING EXPENSES
For the period ended
31 March 2021
-------------------------
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Investment Management fees 5 1 6
Directors' fees 91 - 91
Company's audit fees:
* In respect of audit services 60 - 60
Other operating expenses 225 71 296
Irrecoverable VAT on Administration
& Management fees 12 - 12
393 72 465
------- ------- -------
In addition to the fees disclosed above, GBP 12.5 k is payable
to the Company's auditors in respect of audit services provided to
unconsolidated subsidiaries and therefore is not included within
the Company's expenses above.
The Company has no employees. Full detail on Directors' fees is
provided in the Directors' Remuneration Report. The Directors' fees
exclude employer's national insurance contribution which is
included as appropriate in other operating expenses. There were no
other emoluments.
7. EMPLOYEES
The Company had no employees during the period.
Full detail on Directors' fees is provided in Note 17. The
Directors' fees exclude employer's national insurance contribution
which is included as appropriate in other operating expenses. There
were no other emoluments during the period .
8. TAXATION
Analysis of charge in the period.
For the period ended
31 March 2021
-------------------------
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Corporation tax - - -
------- ------- -------
The effective UK corporation tax rate applicable to the Company
for the period is 19% . The tax charge differs from the charge
resulting from applying the standard rate of UK corporation tax for
an investment trust company. The differences are explained
below:
For the period ended
31 March 2021
-------------------------
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Loss before taxation (336) (185) (521)
------- ------- -------
Corporation tax at 19% (64) (35) (99)
Effect of:
Utilisation of tax losses
brought forward - - -
Capital losses not deductible - 22 22
Dividends received not deductible - - -
Disallowed expenditure - 12 12
Surrendering of Tax losses
to unconsolidated subsidiaries 64 1 65
Tax charge/(credit) for the
period - - -
------- ------- -------
The Directors are of the opinion that the Company has complied
with the requirements for maintaining investment trust status for
the purposes of section 1158 of the Corporation Tax Act 2010. This
allows certain capital profits of the Company to be exempt from UK
tax.
Additionally, the Company may utilise the interest streaming
election which allows the Company to designate dividends wholly or
partly as interest distributions for UK tax purposes. Interest
distributions are treated as tax deductions against taxable income
of the Company so that investors do not suffer double taxation on
their returns.
The financial statements do not directly include the tax charges
for the Company's intermediate holding company, as TEEC Holdings is
held at fair value. TEEC Holdings is subject to taxation in the
United Kingdom.
9. EARNINGS PER SHARE
For the period ended
31 March 2021
-------------------------
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Loss attributable to the equity
holders of the Company (GBP'000) (336) (185) (521)
Weighted average number of
Ordinary Shares in issue ('000) 58,156 58,156 58,156
Loss per Ordinary Share (pence)
- basic and diluted (0.01)p (0.00)p (0.01)p
------- ------- -------
Dilution of the earnings per share as a result of the equity
element of the investment management fee as disclosed in Note 4, is
not expected to have a material impact on the basic earnings per
share.
There is no difference between the weighted average Ordinary or
diluted number of Shares.
10. DIVIDS
On 3 June 2021 , the Company announced an interim dividend of
2.00 pence per share with respect to the period ending 31 March
2021 to be paid on 30 June 2021 to shareholders on the register on
11 June 2021 . This is the Company's first distribution and is in
line with the expectation set out during the Company's IPO
process.
This dividend will result in a payment to shareholders of GBP2
million. Going forward, the Board anticipates paying quarterly
interim dividends, targeting total dividends of 5.50 pence per
share for the year ending March 2022.
Dividend
per share Total dividend
pence GBP'000
Interim dividends declared after 31
March 2021 and not accrued in the year 2.00 2,000
11. NET ASSETS PER ORDINARY SHARE
31 March 2021
-------------
GBP'000
Total shareholders' equity (GBP'000) 97,488
Number of Ordinary Shares in issue
('000) 100,000
Net asset value per Ordinary Share
(pence) 97.49p
-------------
12. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
As set out in Note 2, 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:
For the period ended
31 March 2021
--------------------
GBP'000
Opening Balance on Incorporation -
Investments made 20,998
Movement in fair value of investments (113)
Total investments as at 31 March 2021 20,883
--------------------
Reconciliation of movement in fair value
Period ended
31 March 2021
--------------
GBP'000
Opening Balance on Incorporation -
Investments made 20,998
--------------
Fair value of portfolio as at 31 March
2021 20,996
Cash held in intermediate holding company 80
Fair value of other net assets in intermediate
holding companies (193)
Fair Value of Company's investments
as at 31 March 2021 20,883
--------------
Valuation methodology
The Directors have satisfied themselves as to the methodology
used and the discount rates and key assumptions applied in
producing the valuations. All investments are at fair value through
profit or loss.
For non-market traded investments (being all the investments
made during the period), the valuation is based on a discounted
cash flow methodology and adjusted in accordance with the IPEV
(International Private Equity and Venture Capital) valuation
guidelines where appropriate to comply with IFRS 13 and IFRS 9,
given the special nature of energy efficiency investments. Where an
investment is traded in an open market, a market quote is used.
The Investment Manager exercises its judgment in assessing the
expected future cash flows from each investment based on the
project's expected life and the financial models produced for each
project company and adjusts the cash flows where necessary to
consider key external macro-economic assumptions and specific
operating assumptions.
The fair value for each investment is then derived from the
application of an appropriate market discount rate to reflect the
perceived risk to the investment's future cash flows to give the
present value of those cash flows. The discount rate considers
risks associated with the financing of an investment such as
investment risks (e.g. liquidity, interest rate risks, market
appetite), and any risks to the investment's earnings (e.g.
predictability and covenant of the income) and a thorough
assessment of counterparty credit risk, all of which may be
differentiated by the phase of the investment.
The Company records the fair value of TEEC Holdings by
calculating and aggregating the fair value of each of the
individual investments in which the Company holds an indirect
investment. The total change in the value of the investment in TEEC
Holdings is recorded through profit and loss in the Income
Statement.
13. TRADE AND OTHER RECEIVABLES
For the period ended
31 March 2021
--------------------
GBP'000
Prepayments 148
Other receivables 53
201
--------------------
14. TRADE AND OTHER PAY ABLES
For the period ended
31 March 2021
--------------------
GBP'000
Accrued expenses 72
Other payables 77
149
--------------------
15. SHARE CAPITAL AND RESERVES
Nominal value
Number of of shares
Allotted, issued and fully paid: shares (GBP)
-------------------------------------- ----------- -------------
Opening balance as at 23 June 2020 - -
Allotted upon incorporation
Ordinary Shares of 1p each 1 0.01
Management shares 50,000 50,000.00
Allotted/redeemed following admission
to LSE
Ordinary Shares of 1p each 99,999,999 999,999.99
Management shares (50,000) (50,000.00)
Closing balance of Ordinary Shares
at 31 March 2021 100,000,000 1,000,000.00
-------------------------------------- ----------- -------------
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.
16. FINANCIAL INSTRUMENTS
The table below sets out the classifications of the carrying
amounts of the Company's financial assets and financial liabilities
into categories of financial instruments.
Financial
Assets
Financial at
Financial Liabilities fair value
Assets held at through
Cash and at amortised amortised profit Tota l
bank balances cost cost or loss value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- --------------- -------------- ------------- ------------ --------
Period ended 31
March 2021
Non-current Assets:
Financial assets
at fair value through
profit or loss - - - 20,883 20,883
Current Assets:
Receivables - 201 - - 201
Cash and cash equivalents 76,553 - - - 76,553
--------------- -------------- ------------- ------------ --------
Total Assets 76,553 201 - 20,883 97,637
--------------- -------------- ------------- ------------ --------
Current Liabilities
Taxation payable - - - - -
Trade and other
payables - - 149 - 149
--------------- -------------- ------------- ------------ --------
Total Liabilities - - 149 - 149
--------------- -------------- ------------- ------------ --------
Net Assets 76,553 201 (149) 20,883 97,488
=============== ============== ============= ============ ========
Fair Value measurements
As set out in Note 2, the Company accounts for its interest in
its wholly owned direct subsidiary 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. The Company considers
observable data 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.
There were no Level 1 or Level 2 assets or liabilities during
the period. There were no transfers between Level 1 and 2, Level 1
and 3 or Level 2 and 3 during the period.
Reconciliation of Level 3 fair value measurement of financial
assets and liabilities
An analysis of the movement between opening to closing balances
of the investments at fair value through profit or loss (all
classified as Level 3) is given in Note 12.
The fair value of the investments at fair value through profit
or loss includes the use of Level 3 inputs. Refer to Note 12 for
details on the valuation methodology.
Given the proximity of the transactions in which the investments
were made to the period end date, and the fact that the discount
rate at which the investments are being valued is the discount
intrinsic in the transactions, we do not consider there to be
reasonable alternative discount rate inputs that would materially
impact the valuation of investments.
17. SPECIAL DISTRIBUTABLE RESERVE
As indicated in the Company's prospectus dated 25 August 2020,
following admission of the Company's Ordinary Shares to trading on
the London Stock Exchange, the Directors applied to the Court and
obtained a judgement on 12 January 2021 to cancel the amount
standing to the credit of the share premium account of the
Company.
As stated by the Institute of Chartered Accountants in England
and Wales (" ICAEW ") and the Institute of Chartered Accountants in
Scotland (" ICAS ") in the technical release TECH 02/17BL, The
Companies (Reduction of Share Capital) Order 2008 SI 2008/1915
("the Order ") specifies the cases in which a reserve arising from
a reduction in a company's capital (i.e., share capital, share
premium account, capital redemption reserve or redenomination
reserve) is to be treated as a realised profit as a matter of
law.
The Order also disapplies the general prohibition in section 654
on the distribution of a reserve arising from a reduction of
capital. The Order provides that if a limited company having a
share capital reduces its capital and the reduction is confirmed by
order of court, the reserve arising from the reduction is treated
as a realised profit unless the court orders otherwise.
The amount of the share premium account cancelled and credited
to the Company's Special reserve is GBP97.0 million which can be
utilised to fund distributions by way of dividends to the Company's
shareholders.
18. FINANCIAL RISK MANAGEMENT
The Company's investment activities expose it to a variety of
financial risks; including, interest rate risk, power price risk,
credit risk and liquidity risk. The Board of Directors has overall
responsibility for overseeing the management of financial risks,
however the review and management of financial risks are delegated
to the AIFM. Each risk and its management are summarised below.
Interest rate risk
The Company's interest rate risk on interest bearing financial
assets is limited to interest earned on cash and loan investments
into project companies, which yield interest at a fixed rate. At
the period end, the Company had secured loan investments into two
CHP companies. The CHP companies cash flows are continually
monitored and reforecast, both over the near future and the long
term, to analyse the cash flow returns from investments. The
interest rate applicable to the Company's loan to TEEC Holdings,
reflects the rate attached to the project company loans.
The Company may use borrowings to finance the acquisition of
investments. At the period end, there was no borrowing in place.
Looking ahead the Company's policy is to ensure that interest rates
are sufficiently hedged to protect net interest margins from
significant fluctuations when entering into material medium/ long
term borrowings. This may include engaging in interest rate swaps
or other interest rate derivative contracts.
Interest Non-interest
bearing bearing Total value
-------- ------------ -----------
GBP'000 GBP'000 GBP'000
For the period ended 31 March
2021
Assets:
Investments at fair value
through profit or loss 20,883 - 20,883
Receivables - 201 201
Cash and cash equivalents 76,553 - 76,553
-------- ------------ -----------
Total Assets 97,436 201 97,637
-------- ------------ -----------
Liabilities:
Trade and other payables - 149 149
Total Liabilities - 149 149
-------- ------------ -----------
Power Price risk
The wholesale market price of electricity and gas is volatile
and is affected by a variety of factors, including market demand
for electricity and gas, the generation mix of power plants,
government support for various forms of power generation, as well
as fluctuations in the market prices of commodities and foreign
exchange. At the period end the Company was not directly exposed to
power price risk, as the investments made by TEEC Holdings during
the period were fixed rate secured loans. The investee companies,
Harvest and Glasshouse are exposed to power price risk. A
significant fall in power prices may result in Harvest and
Glasshouse being unable to service the debt provided by the Group
and as a result could affect the fair value of the Company's
investments. As the Company deploys further funds, the Investment
Manager intends to continually monitor energy price forecasts and
aims to put in place mitigating strategies, such as hedging
arrangements or fixed PPA contracts to reduce the exposure of the
Company to this risk.
Credit Risk
Credit risk is the risk that a counterparty of the Company will
be unable or unwilling to meet a commitment that it has entered
into with the Company. It is a key part of the pre-investment due
diligence. The credit standing of the companies which we intend to
lend or invest is reviewed, and the risk of default estimated for
each significant counterparty position. Monitoring is on-going, and
period end positions are reported to the Board on a quarterly
basis.
Credit risk also arises from cash and cash equivalents,
derivative financial instruments and deposits with banks and
financial institutions. The Company and its subsidiaries may
mitigate their risk on cash investments and derivative transactions
by only transacting with major international financial institutions
with high credit ratings assigned by international credit rating
agencies.
The Company had no derivatives during the period.
The carrying value of the investments, trade and other
receivables and cash represent the Company's maximum exposure to
credit risk.
Liquidity risk
Liquidity risk is the risk that the Company may not be able to
meet its financial obligations as they fall due. The AIFM and the
Board continuously monitor forecast and actual cash flows from
operating, financing, and investing activities to consider payment
of dividends, repayment of trade and other payables or funding
further investing activities. The Company ensures it maintains
adequate reserves and will put in place banking facilities and it
will continuously monitor forecast and actual cash flows to seek to
match the maturity profiles of financial assets and
liabilities.
At the period end, the Company's investments were in secured
loan investments to private companies, in which there is no listed
market and therefore such investments would take time to realise,
and there is no assurance that the valuations placed on the
investments would be achieved from any such sale process. The
Company's direct subsidiary TEEC Holdings, is the entity through
which the Company holds its investments, the liquidity of TEEC
Holdings is reflective of the investments in which it holds.
Financial assets and liabilities by maturity at the period end
are shown below:
Less than More than
1 year 1-5 years 5 years Total
--------- --------- --------- -------
GBP'000 GBP'000 GBP'000 GBP'000
Assets:
Investments at fair value
through profit or loss - - 20,883 20,883
Receivables 201 - - 201
Cash and cash equivalents 76,553 - - 76,553
--------- --------- --------- -------
Liabilities:
Trade and other payables (149) - - (149)
76,605 - 20,883 97,488
--------- --------- --------- -------
19. SUBSIDIARIES
At the reporting date, the Company had one subsidiary, being its
100% investment in TEEC Holdings, the Company's intermediate
holding company.
The following table shows subsidiaries of the Company. As the
Company is regarded as an Investment Entity as referred to in Note
2, this subsidiary has not been consolidated in the preparation of
the financial statements.
Ownership interest
as at 31 March
Investment Place of Business 2021
--------------- ------------------ ------------------
TEEC Holdings United Kingdom 100%
20. RELATED PARTY TRANSACTIONS
During the period interest totalling GBP53,497 was earned on the
Company's long-term interest-bearing loan between the Company and
its subsidiary. At the period end, GBP53,497 was outstanding.
The loan to TEEC Holdings Limited is unsecured; the underlying
loan from TEEC Holding Limited to Harvest and Glasshouse is secured
against the assets of the companies by a fixed and floating
charge.
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 annum of the adjusted NAV in respect of the Net
Asset Value of up to, and including, GBP650 million; and
-- 0.8 % , 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 monthly and is
invoiced monthly in arrears. During the period ended 31 March 2021,
management fees of GBP6,213 was incurred of which GBP6,213 was
payable at the period end.
No annual management fee shall accrue or be charged 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
Efficiency Projects.
21. EVENTS AFTER THE REPORTING PERIOD
On 28 May 2021, the Company completed a GBP8.032m senior debt
investment in an operational Combined Heat and Power (" CHP ")
Energy Centre, Spark Steam Limited (" Spark Steam "). This
investment was made via the Company's subsidiary TEEC Holdings
Ltd.
Dividend
The Company will pay an interim dividend in respect of the
period from 23 June 2020 to 31 March 2021 of 2.00 pence per
Ordinary Share, payable on 30 June 2021 to holders of Ordinary
Shares on the register on 11 June 2021. The ex-dividend date will
be 10 June 2021.
22. ULTIMATE CONTROLLING PARTY
In the opinion of the Board, on the basis of the shareholdings
advised to them, the Company has no ultimate controlling party.
GLOSSARY AND DEFINITIONS
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.
--------------------------------------------------------
CCC Climate Change Committee
--------------------------------------------------------
CHP Combined heat and power
--------------------------------------------------------
The Company Triple Point Energy Efficiency Infrastructure
Company plc (company number 12693305).
--------------------------------------------------------
DCF Discounted Cash Flow
--------------------------------------------------------
Energy Efficiency A project which falls within the parameters
Project of the Company's investment policy
--------------------------------------------------------
ESG Environmental, Social and Governance
--------------------------------------------------------
EU European Union
--------------------------------------------------------
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 (company
number 09353790) and Glasshouse Generation Limited
(company number 09352996)
--------------------------------------------------------
ITC Investment Trust Company
--------------------------------------------------------
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.
--------------------------------------------------------
kWh Kilowatt-hour
--------------------------------------------------------
LED Light-emitting Diode
--------------------------------------------------------
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.
--------------------------------------------------------
Project SPV Special Purpose Vehicle in which energy efficiency
assets are held.
--------------------------------------------------------
SDG Sustainable Development Goals.
--------------------------------------------------------
SORP Statement of Recommended Practice.
--------------------------------------------------------
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) and
Group any subsidiary undertakings from time to time.
--------------------------------------------------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR UURARAOUNRUR
(END) Dow Jones Newswires
June 03, 2021 02:00 ET (06:00 GMT)
Triple Point Energy Effi... (LSE:TEEC)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Triple Point Energy Effi... (LSE:TEEC)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
