TIDMTEEC
RNS Number : 0460Q
Triple Point Energy Efficiency
24 June 2022
THIS ANNOUNCEMENT HAS BEEN DETERMINED TO CONTAIN INSIDE
INFORMATION FOR THE PURPOSES OF THE UK VERSION OF THE MARKET ABUSE
REGULATION (EU) NO. 596/2014.
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR
INDIRECTLY, IN OR TO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN,
THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE
PUBLICATION, DISTRIBUTION OR RELEASE OF THIS ANNOUNCEMENT WOULD BE
UNLAWFUL.
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.
24 June 2022
Triple Point Energy Efficiency Infrastructure Company plc
("TEEC" or the "Company" or, together with its subsidiaries, the
"Group")
RESULTS FOR THE YEARED 31 MARCH 2022
The Board of Triple Point Energy Efficiency Infrastructure
Company plc (ticker: TEEC) is pleased to announce the Company's
audited results for the year ended 31 March 2022.
31 March 2022 31 March 2021*
------------------------------------ -------------- ---------------
Net Asset Value ("NAV") GBP96.1m GBP97.49m
NAV per share 96.12p 97.49p
Value of the portfolio GBP78.8m GBP20.88m
Ongoing charges ratio (annualised) 1.38% 1.07%
Dividend declared per share 5.50p 2.0p
* The results for the period 31 March 2021 were not for a full
12 months and, therefore, are not directly comparable to the
results for the year ended 31 March 2022
Highlights
-- The Company made significant progress in the deployment of capital:
o Capital committed during the year ended 31 March 2022 amounted
to GBP100.2 million (2021: GBP21 million)
o June 2021: GBP8.0 million fixed rate debt investment in Spark
Steam Limited, a company which owns and operates a combined heat
and power asset
o November 2021: GBP26.6 million acquisition of six operational,
Feed in Tariff accredited, "run of the river" hydroelectric power
projects in Scotland
o December 2021: GBP19.6 million acquisition of a further three
operational, Feed in Tariff accredited, "run of the river"
hydroelectric power projects in Scotland
o March 2022: signed contracts to provide a GBP45.6 million
fixed rate debt facility to a subsidiary of Virmati Energy Ltd
(trading as "Field"), for the purposes of building a 110MW
portfolio of four geographically diverse Battery Energy Storage
System (" BESS ") assets in the UK
-- The portfolio valuation as at 31 March 2022 was GBP78.8 million (2021: GBP20.88 million)
o Adjusting for commitments, at the year ended 31 March 2022,
the portfolio valuation would amount to GBP124 million
-- In March 2022, the Company entered into a loan facility
agreement for a GBP40 million Revolving Credit Facility ("RCF")
from TP Leasing Limited
-- Dividends declared in respect of the year ended 31 March 2022
totalled 5.5p per share, in line with the Company's target for the
year
-- Net Asset Value as at 31 March 202 2 was GBP96.1 million
(2021: GBP97.49 million ) , equal to a NAV per share of 96.12 pence
(2021: 97.49 pence ) , largely reflecting the impact of uncovered
dividends paid as a result of slower than expected deployment
offsetting the uplift in valuation
-- The Group's activities resulted in:
o Energy saved: 7,113 MWh
o CO (2) avoided: 17,074 tonnes of CO (2) avoided through lower
emissions
o Renewable energy generated: 9,425 MWh
-- Post period-end, in June 2022, the Company committed GBP1
million to a lighting solutions provider to fund the installation
of efficient lighting and control at a leading logistics
company
-- Looking towards the future, today, the Company also announced:
o J.P. Morgan Cazenove has been appointed as the Company's sole
broker with immediate effect
o The Investment Manager will be consulting key shareholders
regarding proposed amendments to the Company's Investment Policy,
evolving to an "energy transition" mandate to reflect better the
nature of the current portfolio and the pipeline of investment
opportunities
o Conditional on the amendment of the Investment Policy, a
proposed change of name to "Triple Point Energy Transition plc"
o Both the proposed amended Investment Policy and the new name
will be put to shareholders for approval at the Annual General
Meeting due to take place in August 2022
John Roberts, the Company's Chair, commented:
" In the last 12 months the Board has been pleased with the
depth and breadth of the investment opportunities that have been
sourced across a range of technologies and from a variety of
partners. The diversity of our portfolio of lower carbon and energy
efficient projects has enabled us to achieve our objective of
contributing towards the transition to a lower carbon economy and
assisting in the acceleration of the UK achieving its Net Zero
targets.
With the IPO proceeds fully committed, as well as the majority
of the RCF, and the strong performance of our existing portfolio,
we look ahead with optimism as the Company maintains its focus on
delivering a dividend fully covered by cash earnings and a total
NAV return target of 7-8% for investors comprising sustainable and
growing income and capital growth.
We thank our shareholders for their continued support and look
forward to consulting with them regarding the amendments to our
existing Investment Policy which we believe better reflects the
nature of our existing portfolio and the exciting pipeline of
opportunities ."
For further information, please contact:
Triple Point Investment Management LLP
Jonathan Hick
Ben Beaton +44 (0) 20 7201 8989
J.P. Morgan Cazenove (Corporate Broker
William Simmonds / Jérémie Birnbaum
(Corporate Finance)
James Bouverat / Liam MacDonald-Raggett
(Sales) +44 (0) 20 7742 4000
Akur Limited (Financial Adviser)
Tom Frost
Anthony Richardson
Siobhan Sergeant +44 (0) 20 7493 3631
LEI: 213800UDP142E67X9X28
Further information on the Company can be found on its website:
www.tpenergyefficiency.com
NOTES:
The Company is an investment trust which aims to have a positive
environmental impact by investing in assets that support the
transition to a lower carbon, more efficient energy system and help
the UK achieve Net Zero.
Since its IPO in October 2020, the Company has made the
following investments and commitments:
-- Harvest and Glasshouse : provision of GBP21m of senior debt
finance to two established combined heat and power ("CHP") assets,
located on the Isle of Wight, supplying heat, electricity and
carbon dioxide to the UK's largest tomato grower, APS Salads
("APS") - March 2021
-- Spark Steam : provision of GBP8m of senior debt finance to an
established CHP asset in Teesside supplying APS, as well as a
further power purchase agreement through a private wire arrangement
with another food manufacturer - June 2021
-- Hydroelectric Portfolio (1) : acquisition of six operational,
Feed in Tariff ("FiT") accredited, "run of the river" hydroelectric
power projects in Scotland, with total installed capacity of 4.1MW,
for an aggregate consideration of GBP26.6m (excluding costs) -
November 2021
-- Hydroelectric Portfolio (2) : acquisition of a further three
operational, FiT accredited, "run of the river" hydroelectric power
projects in Scotland, with total installed capacity of 2.5MW, for
an aggregate consideration of GBP19.6m (excluding costs) - December
2021
-- BESS Portfolio : provision of a debt facility of GBP45.6m to
a subsidiary of Virmati Energy Ltd (trading as "Field"), for the
purposes of building a portfolio of four geographically diverse
Battery Energy Storage System ("BESS") assets in the UK with a
total capacity of 110MW - March 2022
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 projects.
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.
CHAIR'S STATEMENT
Dear Shareholder,
I am pleased to present the results for Triple Point Energy
Efficiency Infrastructure Company plc ("TEEC" or the "Company") for
the year ended 31 March 2022. The past year has been one of
significant events. COP26 in November 2021 brought together global
leaders to address the challenges of climate change and the move to
a low carbon economy. The devastating war in Ukraine has called
attention to the need for greater energy security, whilst the
volatile energy markets have underlined the need for energy
efficiency to assist in cutting escalating energy costs. In April
2022, the UK Government's British Energy Security Strategy laid out
ambitious plans to achieve Net Zero and secure clean, green and
UK-made energy. For TEEC, each of these events provides a
significant opportunity to contribute to the energy transition
through the deployment of capital in a diversified portfolio of
assets which are targeted to generate a long-term and consistent
return profile for investors.
Investment Activity
There has been significant deployment and increasing
diversification for the Company over the last year. The Company has
now fully committed the proceeds from its IPO, as well as most of a
new GBP40 million Revolving Credit Facility ("RCF") made available
to the Company's sole wholly owned subsidiary TEEC Holdings Limited
("TEEC Holdings").
We have remained focused on maintaining strong investment
discipline to ensure the portfolio is robust, diverse, and provides
a good risk-adjusted return for our shareholders. Commitments
during the year have been made into assets that support the
transition to a low carbon, more efficient energy system: an GBP8
million senior debt investment into a combined heat and power plant
("Spark Steam"); a GBP47 million equity investment into nine hydro
assets (the "Hydroelectric Portfolio"); and a GBP45.6 million debt
facility to a subsidiary of Virmati Energy Ltd (trading as Field),
to fund a 110MW portfolio of four BESS assets (the "BESS Portfolio
"). The weighted average contract length of the operational assets
in the portfolio is 31.6 years.
The Hydroelectric Portfolio brings recurring revenues with 96%
of them underpinned by Government supported long-term Feed in
Tariffs which are index linked, and PPAs with utility-grade
counterparties. This was an important investment bringing
diversification to the portfolio, inflation protection, and the
security of revenues underpinned by long-term Government contracts
- we are pleased to have such assets in our portfolio, particularly
in the volatile markets that we are currently experiencing.
The Hydroelectric Portfolio was owned by entities advised by the
Investment Manager and, as a result, a potential conflict of
interest existed. In accordance with the provisions set out in the
IPO Prospectus, the Board were required to approve the transaction
and we were given comfort by the steps taken to manage and mitigate
the conflict, which included separate dedicated buy and sell side
teams within the Investment Manager and third-party valuations.
At the end of the period, we made a significant investment
commitment into energy storage assets, a key growth area in the
energy sector which efficiently manages the generation of power
from renewables. TEEC has committed to provide GBP45.6 million to
Field and has obtained exclusivity over a further 390MW/470MWh of
energy storage opportunities.
Portfolio Performance
The existing portfolio has performed well, notably with the
profitability of the CHP Portfolio significantly exceeding budget
driven by the higher-than-expected power prices. The offtaker, APS,
like many other agricultural producers, experienced a challenging
year but remains well positioned, it being a leading supplier of
British tomatoes to major UK food retailers including Aldi,
Iceland, Lidl, M&S, Morrisons, Ocado, Sainsbury's, Tesco and
Waitrose.
For the Hydroelectric Portfolio, in the period from 1 October to
31 March 2022, generation was 10% ahead of budget. In the final
quarter of the year ended 31 March 2022, revenues were 8% below
expectations given some technical issues, which have been resolved,
and the uncharacteristically dry period in March.
The Investment Manager is exploring portfolio optimisation
opportunities, including for instance in the Hydroelectric
Portfolio to optimise the flow from the catchment area from an
initial three sites to provide a better generation profile.
Please see the Investment Manager's Report for further
details.
Gearing
As announced to the market on the 30 March 2022, the Group, via
TEEC Holdings, has entered into a loan facility agreement for a
GBP40 million Revolving Credit Facility (RCF) with TP Leasing
Limited.
TP Leasing Ltd is an established private credit and asset
leasing business which is managed by the Investment Manager and, as
a result, is deemed to be a related party as defined in the Listing
Rules. The RCF is deemed to be a "smaller related party
transaction" for the purposes of LR11.1.10R. As set out in the IPO
Prospectus, the Company has adopted a related party policy pursuant
to which, prior to entering into the facility agreement, (i) the
RCF was approved by the Directors and (ii) the Company obtained a
fair and reasonable opinion from a qualified, independent adviser.
The Board was satisfied with the conflict management procedures put
in place, including team segregation within the Investment Manager
and obtaining independent third-party pricing validation.
The RCF has a two-year term, with the possibility to be
extended. The interest rate on the RCF is 4.5%(1) based on the
Sterling Overnight Index Average ("SONIA") 2-year fixed rate of 2%
and a margin of 2.5%.
The Group will make use of the RCF to fund the BESS portfolio
and some of its growing pipeline of high-quality investment
opportunities. The Group will follow a prudent approach to gearing
with a target medium-term gearing of up to 40% of Gross Asset Value
("GAV") and a maximum gearing that will not exceed 45% of GAV at
the time of drawdown.
As at 31 March 2022, the RCF had not been drawn. It is expected
that the RCF will be substantially utilised during the financial
year ending 31 March 2023.
Notes:
(1) Excluding fees
Pipeline
Our Investment Manager has built up an attractive pipeline of
circa GBP500 million of opportunities across a variety of
technologies and sectors with strong counterparties.
The pipeline includes a range of technologies including energy
storage, solar, combined heat and power, EV charging, lighting,
heat networks and other technologies. The projects are at different
development stages and are a mixture of equity and debt, as well as
public and private sector opportunities.
Given the large market opportunity to invest into energy
storage, and the compatibility with other technologies such as
solar photovoltaic panels, we believe that energy storage presents
an attractive asset class to add to the TEEC portfolio which can
help unlock the true potential of renewable energy and will play a
fundamental role in the move to a clean energy future.
Please see the Investment Manager's Report for further
details.
Financial Results
This was the Company's first full financial year. The NAV per
share was 96.12 pence per share as at 31 March 2022 (31 March 2021:
97.49 pence per share). The NAV includes an uplift in valuation as
a result of the Hydroelectric Portfolio being valued upwards by
GBP4.1 million, largely due to the heightened inflationary
environment we are now operating within and the increased forecast
power prices which have been exacerbated by the Russian invasion of
Ukraine. This offsets the negative impact of the dividend payments
which have, to date, largely been paid out of capital while the
Company has ramped up its deployment.
The portfolio, consisting of 12 funded assets (and four unfunded
but committed assets) held via the Company's subsidiary TEEC
Holdings, was valued at GBP78.8 million as at 31 March 2022 (31
March 2021: GBP21.0 million) and the Company held cash of GBP17.1
million as at 31 March 2022 (31 March 2021: GBP76.6 million). The
Company made a profit before tax of GBP4.8 million for the year (31
March 2021: loss of GBP0.5 million), equal to 4.76 pence per share
(31 March 2021: 0.01p loss).
The Company's annualised operating cost ratio ("OCR") was 1.38%
(31 March 2021: 1.07%). The increase in the OCR is predominately
driven by the increase in management fees payable to the Investment
Manager. In accordance with the Investment Management Agreement,
upon reaching 75% deployment of the IPO proceeds, the management
fee is calculated by reference to the Company's NAV. This point was
reached in December 2021, whereas it was previously charged on
deployed proceeds only. The Board will continue to monitor the OCR
closely as we seek to grow the Company and achieve economies of
scale on fixed costs, delivering value to our shareholders.
Share Price and Distributions
Our share price has experienced a volatile period, as has much
of the market due to macro-economic market conditions.
In February 2022, the Investment Manager purchased 158,882
Ordinary Shares at an average price of 94.4 pence per share.
For the year ended 31 March 2022, we declared a total dividend
of 5.50 pence per share, in line with our target.
The Board anticipates paying quarterly interim dividends,
targeting total dividends of 5.50 pence per share for the year
ending March 2023(2) . We remain focused on delivering a dividend
fully covered by cash earnings as soon as practicable and to that
end, notes that in the year ending 31 March 2023, the Company will
benefit from a full year of income from the CHP Portfolio and
Hydroelectric portfolio, as well as income from the BESS
Portfolio.
Notes:
(2) The dividend and return targets stated are Pounds Sterling
denominated returns targets only and not a profit forecast. There
can be no assurance that these targets will be met, and they should
not be taken as an indication of the Company's expected future
results.
Environmental, Social and Governance ("ESG")
The Company has adopted an approach to ESG which reflects the
importance of sustainability to the investment policy and to
maximise the potential for our ESG integration to add value to the
strategy.
A current key focus is ensuring the Investment Manager continues
to refine its approach to the integration of climate change into
investment decision making. Accounting for the risks and
opportunities associated with our changing climate is important for
protecting the Company's assets and maximising their potential. We
will continue to hold the Investment Manager to account on this
issue and expect continued progression in the maturity of climate
analysis for TEEC. Details on the Investment Manager's approach to
ESG integration, including climate analysis and the Task Force on
Climate-related Financial Disclosure (TCFD), are shared in the
Sustainability Report.
Proposed amendments to the Group's Investment Policy
Since the Company's IPO in October 2020, we have seen a rapid
evolution in clean energy policy, the commitment to addressing the
global climate emergency, concerns regarding energy security and
the opportunities that exist for investments which both contribute
to energy transition and deliver returns to our shareholders.
Therefore, as we have announced today, the Investment Manager is
undertaking a consultation with key shareholders regarding amending
our existing Investment Policy to reflect better the nature of our
existing portfolio and pipeline of opportunities.
The key aspects of the proposed amendments include: confirming
the scope of the Company's investment mandate to reflect the wider
energy transition sector; expanding our geographical reach to
enable the Company to make appropriate investments in Europe,
albeit the United Kingdom will remain the core focus of the
Company; clarify the structures that the Company is able to invest
into, including both debt and equity; and including a definition of
"Adjusted Gross Asset Value" in place of "Gross Asset Value" for
the purposes of applying the Investment Policy restrictions.
In conjunction with (and dependent on approval of) the proposed
changes to the Investment Policy, the Company's name will change to
"Triple Point Energy Transition plc" (ticker: TENT) to reflect the
revised mandate.
Subject to the outcome of the consultation and Board decision,
the proposals to amend the Investment Policy and name of the
Company (the " Proposals") will be put to the vote of all
shareholders at the Company's Annual General Meeting to be held in
August 2022.
Full details of the Proposals will be notified via a further
announcement to the market and set out in the circular accompanying
the Notice of AGM to be sent to shareholders in due course.
Appointment of Sole Corporate Broker
Today, the Board was pleased to announce the appointment of J.P.
Morgan Securities plc (which conducts its UK investment banking
activities as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove") as
sole corporate broker to the Company with immediate effect. We look
forward to working with J.P. Morgan Cazenove as the Company embarks
on the next phase of its growth,
Outlook
The Board is pleased to have fully committed the IPO proceeds,
as well as the majority of the RCF, in the Company's first full
year of operation. The investments made to date into hydroelectric
power, energy storage and onsite heat and power generation
exemplify the Company's strategy of investing into lower carbon,
efficient energy systems. We are also satisfied by the total NAV
return of 4.9% achieved in the year and are well positioned to
achieve our objective of a 7-8% total NAV return, as the Company is
now fully committed.
In 2021, Jonathan Hick joined Triple Point with the intention
that he would assume the position as the TEEC Fund Manager,
following a comprehensive induction period. The Board are pleased
that following a successful transition he will become the Company's
fund manager effective immediately, replacing Jonathan Parr who
will assume a new role at Triple Point focused on the Investment
Manager's wider product strategy. The Board would like to thank
Jonathan Parr for his management during the launch and throughout
TEEC's first full financial year.
The recent record high energy prices, as well as higher
expectations for power prices over the next few years, provide
significant tailwinds for the Company, both with respect to its
existing assets as well as its pipeline. Energy is increasingly
becoming too valuable to waste, and whether that means storing it
more effectively to better match demand, producing it onsite, or
reducing demand, we are seeing businesses and government
organisations prioritising the efficient use of energy. The
Company's pipeline of circa GBP500 million, spread across a diverse
range of technologies, demonstrates this increased focus.
The devastating events in Ukraine have also highlighted the
importance of a low carbon, efficient energy system to energy
security. This is partly achieved through reducing our exposure to
fossil fuels through increased renewable generation, and through
reducing energy usage, making the energy generated go further and
optimising energy generation locally. TEEC's portfolio and pipeline
illustrate how this can be achieved in practice.
In addition to the beneficial tailwinds from the energy pricing
and the focus on energy security, a significant proportion of the
Company's investments also benefit from a rising inflationary
environment. This can be through the explicit contractual linkage
to inflation, for example the Feed in Tariff contracts that the
Hydroelectric Portfolio benefit from RPI indexation, or through the
broader correlation between inflation and wholesale energy
prices.
COP26 signaled the intention to transition to a new energy
system, one that the Company is well positioned to take advantage
of.
I would like to thank shareholders for their continued support
of the Company, and I look forward to reporting on the achievement
of our objectives in the year ending 31 March 2023.
John Roberts
Chair
23 June 2022
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 Objective and Investment Policy are
published below.
As noted in the Chair's statement, the Investment Manager is
undertaking a consultation with key shareholders regarding the
proposed amendment of the Company's investment policy, following
which a resolution will be proposed at the upcoming AGM. The
Company's existing investment policy is set out below.
Investment Objective
The Company's Investment Objective is to generate a total return
for investors comprising sustainable and growing income and capital
growth. The Company intends to achieve its Investment Objective by
investing in a diversified portfolio of energy efficiency
investments in the United Kingdom.
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 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 Gross Asset Value;
-- the aggregate maximum exposure to any Counterparty will not
exceed 20% of Gross Asset Value (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 Gross Asset Value, provided that, the
aggregate maximum exposure to projects in the development phase
will not exceed 5% of Gross Asset Value, and the aggregate exposure
to any one developer will not exceed 10% of Gross Asset Value;
-- the Group will not invest more than 5% of Gross Asset Value,
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 limits 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 Gross Asset Value 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 shall
apply on a look-through basis. The Company's target medium term
gearing for the Group will be up to 40% of Gross Asset Value,
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 Gross Asset Value, 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 rate, electricity
price 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
TEEC sources opportunities to deploy investors' capital into
energy efficiency and distributed energy projects that support the
transition to a sustainable energy future. We interact with a wide
variety of energy market participants, from individual project
developers with a single-technology solution, to large corporations
with multi-technology opportunities. The energy transition to a
more sustainable future is a huge challenge and at the same time it
is a great opportunity. It is dependent on multiple parties working
together to design, finance, install and maintain energy
infrastructure to more efficiently generate, store, distribute and
use energy with equipment that does so as efficiently as possible.
This will reduce the amount of wastage of energy and other
resources and help to protect the environment from further
damage.
TEEC is well positioned to make a significant contribution to
the energy transition as it is focused on investing into onsite
energy generation and efficient consumption, distributed energy
generation and energy storage and distribution. It is the
deployment of capital to fund technological solutions such as
energy storage, hydroelectric power, CHP plants, lighting, building
management systems, solar, wind or other energy efficient
technologies, that enables the transition to a sustainable energy
future.
TEEC focuses on investment opportunities that contribute to our
total NAV return for investors of between 7-8%. The investments
made by the Group fund technologies which provide solutions for
counterparties who contract through TEEC investee companies to pay
for these solutions. The payments are, for instance, through
interest and principal debt repayments from a counterparty that is
borrowing money from the Group, or through returns from an equity
investment that is providing a solution for a counterparty, or for
example through generating energy supplied to the grid. Contractual
structures include power purchase agreements, energy services
agreements or other such structures, which in some cases may
provide index-linked payments. The cash flows generated from the
contracts with the counterparties pay for the investment made by
the Group and enable TEEC to pay dividends to its shareholders.
To reduce risks involved with the investments made by the Group,
we seek strong counterparties and diversify the portfolio by
counterparty, technology, location, type of investment as well as
other measures dependent on the specificities of each investment.
In addition, we carry out due diligence as required for each
investment to properly understand the risks and opportunities of
the project. We particularly focus on the ESG aspects of the
investment opportunity and go through a risk and opportunities
assessment from an ESG perspective. The due diligence process,
dependent on the requirements of each investment, can involve ESG,
legal, technological, financial, accounting, tax, or other types of
due diligence, involving both internal Triple Point employees as
well as third party specialist firms.
The combination of the need to transition to sustainable energy
generation and usage, along with TEEC's ability to fund this
transition, make for a great opportunity to be optimised.
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
Dividends per share (3)
--------------------------------------------------------------------------------------------------------------------
Dividends paid to The dividend reflects the The Company is paying a The Company's target was
shareholders and declared Company's ability to 5.50 pence per share to pay a dividend of 5.50
in relation to the year. deliver a low -risk income dividend in respect of the pence per share in respect
stream from the year ended 31 March of the year
portfolio 2022 (2.00 pence per share to 31 March 2022, which it
for the period to 31 March achieved.
2021 ).
--------------------------- ---------------------------- ---------------------------
Total NAV return (4)
--------------------------------------------------------- ---------------------------- ---------------------------
NAV growth and dividends The total NAV return 4.9% (Negative 2.5% for Dividends paid in the year
paid per share in the year. measure highlights the the year to 31 March 2021) contributed 6.3% to total
gross return to investors NAV return which was
including dividends partially offset
paid. by a 1.4% reduction in
NAV. The target total NAV
return is 7% - 8% per
annum. Underperformance
was attributable to
dividends paid in the
year, being substantially
uncovered. During the
year, the proceeds from
the IPO and a majority of
the RCF have been
committed, which on an
annualised basis will be
accretive to NAV.
--------------------------- ---------------------------- ---------------------------
NAV per share
NAV divided by number of The NAV per share shows 96.12 pence per share. GBP96.1 million/ 96.12
shares outstanding as at our ability to grow the (97.49 pence per share for pence per share as at 31
the period end. portfolio and to add value the year to 31 March 2021) March 2022
to it throughout
the life cycle of our
assets
Cash dividend cover (3) (4)
--------------------------------------------------------------------------------------------------------------------
Operational cash flow Reflects the Company's 0.14x.The Company will The Company maintained its
divided by dividends paid ability to cover its monitor dividend cover as dividend target, despite
to shareholders during the dividends from the income the Company continues to slower than originally
year. received from its deploy funds. (N/A anticipated commitment
portfolio. for the year to 31 March of IPO proceeds. Now the
2021) Company is substantially
committed on a levered
basis, cash dividend
cover is forecast to
improve significantly. The
Company will be fully
dividend covered by
cash flows generated in
the underlying investments
as soon as practicable and
to that end,
note that in the year
ending 31 March 2023, the
Company will benefit from
a full year of income
from the CHP Portfolio and
Hydroelectric portfolio,
as well as income from the
BESS Portfolio.
--------------------------- ---------------------------- ---------------------------
Weighted average project life ("WAL") (4)
--------------------------------------------------------- ---------------------------- ---------------------------
Weighted average number of The weighted average 31.6 years (10.0 years for The Portfolio WAL is
years assumed to be project life is a key the year to 31 March 2021) driven by the long project
remaining in project measure of the quality of life of the Hydroelectric
contracts. our portfolio. Long lease Portfolio and debt
or loan terms help investments providing long
underpin the security of term cash flows. Growth in
our income stream. the WAL has been largely
delivered through
deployment into the
Hydroelectric portfolio
which have attractive long
term cash flows.
--------------------------- ---------------------------- ---------------------------
Ongoing Charges Ratio ("OCR") (4)
--------------------------------------------------------- ---------------------------- ---------------------------
Annualised ongoing charges Ongoing charges shows the 1.38% annualised (1.07% for Company level budgets are
(i.e., excluding effect of the operational the year to 31 March 2021) approved annually by the
acquisition costs and other expenses incurred by the Board and actual spend is
non-recurring items) Company. reviewed quarterly.
divided by the average This is a key measure of
published undiluted NAV in our operational
the period, calculated in performance. Keeping costs
accordance with low supports our ability
Association of Investment to pay dividends. The
Companies guidelines. increase in OCR has been
driven by the management
fee being measured
in reference to NAV, as
IPO proceeds were
substantially deployed in
the year, prior to this
they were charged in
reference to deployment.
--------------------------- ---------------------------- ---------------------------
Avoided emissions (4)
--------------------------------------------------------- ---------------------------- ---------------------------
The carbon emissions A measure of our success 17,074 tonnes CO (2) The t CO (2) avoided has
avoided by the Company's in investing in projects avoided in the year ended increased compared to end
investments. that have a positive 31 March 2022 (0 tonnes CO of year 2021 as expected,
environmental impact (2) avoided for given the Company's
through a decrease in CO the year to 31 March 2021) continued deployment.
(2) emissions compared to
an equivalent asset.
--------------------------- ---------------------------- ---------------------------
Gross loan to value ("LTV") (4)
----------------------------------------------------------------------------------------------------------------------
The proportion of our GAV The LTV measures the 0% (0% for the year to 31 The Group will follow a
that is funded by prudence of our financing March 2021) prudent approach to
borrowings. strategy, balancing the gearing with a target
potential amplification medium-term gearing of
of returns and portfolio up to 40% of GAV and a
diversification that come maximum gearing that will
with using debt against the not exceed 45% of GAV at
need to the time of drawdown.
successfully manage risk. On full drawdown of the
RCF Gross LTV is expected
to be around 30% based on
prevailing NAV
and future funding of the
BESS Portfolio.
---------------------------- ---------------------------- ----------------------------
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.
(4) Alternative Performance Measure.
INVESTMENT MANAGER'S REPORT
Review of the Period
Late last year, COP26 in Glasgow closed with a renewed
commitment to limiting global warming to 1.5 degrees above
pre-industrial levels. The UK has committed to Net Zero emissions
by 2050. That is an ambitious target that will require a "historic
surge" in clean energy investment. The adoption of renewable energy
will be key to our Net Zero ambitions, but for any push to Net Zero
it is crucial we make better use of the energy we produce. We need
to be more energy efficient. The government has a large part to
play, of course, by committing to long-term policies that encourage
investment in clean energy infrastructure, but private capital is
also a key component to driving decarbonisation and supporting the
Net Zero mission.
We have now fully committed the IPO proceeds, in addition to the
majority of the proceeds from the RCF that were put in place at the
end of the year. Proceeds have been committed while maintaining
strong investment discipline to ensure the portfolio construct is
robust, diverse and provides a good risk adjusted return for our
shareholders. As a result of being committed on a levered basis,
the portfolio is well positioned to deliver financial returns on an
annualised basis. Harvest & Glasshouse and Spark Steam have
shown their ability to perform and deliver strong returns despite
high gas prices, as a result of the even higher electricity prices
and benefitting from the spark spread. The Hydroelectric Portfolio
has demonstrated the attractiveness of stable long-term revenues
from government supported Feed in Tariffs. The BESS Portfolio will
be able to store energy and supply it when needed rather than
energy and revenues being wasted when there is a surplus of
production.
The war in the Ukraine and the embargo on Russian oil and gas
have raised the importance of energy security. Energy prices have
significantly increased, due to geopolitical risk, as well as the
strong demand for natural gas. Gas supply is limited and there is
strong demand from many countries given low existing stocks as well
as a strong internal demand. TEEC's portfolio contributes to
strengthening the UK's energy infrastructure through efficient
energy generation and energy storage, providing greater energy
security.
From a technology perspective, we are seeing a number of
technologies where prices have been increasing as a result of
supply and demand imbalances and the shortage of semiconductors. An
example is solar photovoltaic prices, which have seen price
increases in solar panel costs from China. Where we are investing
in such projects, TEEC will sign fixed price contracts to ensure it
is protected from further price volatility at the point of
investment. From a longer-term perspective, however, we have seen
price decreases as efficiencies in production and economies of
scale have worked to reduce costs.
What is clearly not in debate is the need to deploy energy
efficiency measures on a massive scale in order to be able to
transition to a sustainable energy infrastructure and to improve
energy security. TEEC is well positioned to assist in that
transition and we have an attractive pipeline of opportunities in
which to invest.
Investments
Spark Steam
In May 2021, and building on the previous year's debt
investments in Harvest and Glasshouse, TEEC invested GBP8 million
of senior debt finance into Spark Steam, a CHP providing heat,
power and carbon dioxide to APS which is the UK's leading supplier
of British tomatoes and has over 65 years of operational
experience. APS owns and operates over six million sq. ft. of
glasshouses and distributes to all major UK food retailers
including Aldi, Iceland, Lidl, M&S, Morrisons, Ocado,
Sainsbury's, Tesco and Waitrose. CHPs ensure an efficient use of
energy to provide on-site power generation with use of heat and
carbon dioxide to enhance crop yields rather than being vented into
the atmosphere.
In addition, there is a Power Purchase Agreement ("PPA") with a
well-known, large food manufacturer through a private wire
arrangement. This arrangement benefits the food manufacturer by
providing it with savings against its electricity costs, whilst
enabling Spark Steam to benefit from a greater level of contractual
cash flows at more attractive rates. Based on National Grid
Electricity Transmission data avoidance of the electricity
transmission system (or grid) is likely to result in approximately
2.25% efficiency increase. Reducing transmission traffic also helps
to bring marginal benefits of reduced congestion on the grid which
increases its energy efficiency.
Hydroelectric Portfolio
In November 2021, TEEC invested GBP27 million in the purchase of
six operational hydroelectric assets. This was followed in December
2021 with a second investment into a further three operational
hydroelectric assets for GBP20 million. The Hydroelectric Portfolio
brings recurring revenues with 96% of them underpinned by
Government supported long-term Feed in Tariffs which are index
linked, and PPAs with utility counterparties. This was an important
investment bringing diversification to the portfolio from an
attractive asset class.
The Hydroelectric Portfolio consists of run-of-the-river
hydroelectric schemes located across the Scottish Highlands. The
schemes were developed by Green Highland Renewables, who continue
to provide operations and maintenance services. The schemes were
commissioned during 2015 and 2016 and range from 0.4MW to 1.35MW
output. The performance of a hydroelectric scheme is primarily
driven by the availability of a scheme and the flow of water
available.
BESS Portfolio
In March 2022, TEEC committed GBP45.6 million to fund a
portfolio of four geographically diverse BESS assets in the UK. The
portfolio has a total capacity of 110MW. The first BESS asset,
which is a one-hour duration battery, is expected to become
operational in Q2 of the financial year ending 31 March 2023. It is
located in the North of England and has a total capacity of 20MW.
The other three BESS assets are located in Scotland (two-hour
duration battery; total capacity 50MW), Wales (two-hour duration
battery; total capacity 20MW), and the South-East of England
(one-hour duration battery; total capacity 20MW). These are
expected to become operational during 2023.
Portfolio Overview
Credit Counterparty
As at 31 March 2022
Non-Investment Grade
- Unrated 29.3%
Investment Grade - Rated 52.8%
------
Cash 17.9%
------
Investment Type
As at 31 March 2022
Debt 29.3%
Equity 52.8%
------
Cash 17.9%
------
Lifecycle Stage
As at 31 March 2022
Operating 81.4%
Construction 0.7%
------
Cash 17.9%
------
Technology Exposure
As at 31 March 2022
CHP 28.6%
Hydro 52.8%
------
BESS 0.7%
------
Cash 17.9%
------
Asset Exposure
As at 31 March 2022
Harvest 10.7%
Glasshouse 10.1%
------
Spark Steam 7.8%
------
Green Highland Allt Choire A Bhalachain
(255) Limited 4.2%
------
Elementary Energy Limited 3.0%
------
Green Highland Allt Ladaidh (1148)
Limited 7.8%
------
Green Highland Allt Luaidhe (228)
Limited 4.5%
------
Green Highland Allt Phocachain (1015)
Limited 9.1%
------
Achnacarry Hydro Limited 24.2%
------
BESS 0.7%
------
Cash 17.9%
------
Portfolio performance
Harvest and Glasshouse
Harvest and Glasshouse revenues and EBITDA significantly
exceeded budget driven by the higher-than-expected power prices .
The primary off-taker is APS which is the UK's leading supplier of
British tomatoes and, like other businesses in the agricultural and
food production sectors, it has experienced a challenging year,
citing labour shortages and lower than expected crop yields. It is,
however, well-positioned for future growth, producing approximately
one third of the UK's tomato production with distribution to the
major UK food retailers.
Spark Steam
Spark Steam revenue and EBITDA exceeded budget driven by the
higher-than-expected power prices . The off-takers include APS, the
leading supplier of British tomatoes and a well-known large food
manufacturer. Both companies are well-positioned as suppliers of
food items to leading UK supermarkets. This year Spark Steam has
avoided 1,891 t CO (2) carbon emissions.
Hydroelectric Portfolio
TEEC completed the acquisition of the Hydroelectric Portfolio at
the end of 2021, but with economic ownership effective from 1
October 2021. In the period from 1 October to 31 March 2022,
generation was 10% ahead of budget. In the final quarter of the
year ended 31 March 2022, revenues were 8% below expectations given
some technical issues, which have been resolved, and the
uncharacteristically dry period in March. Prior to acquisition, we
commissioned new hydrology studies to give confidence in the
long-term generation capability. The operations and maintenance
team remain confident that variance in rainfall over a long period
(e.g., 10 years) is generally low and therefore the 40-year average
rainfall is expected to be achieved. Extreme weather with
exceptionally high rainfall can result in not all the water being
utilised, which provides improvement opportunities.
In the coming year, attention will be focused on how to boost
performance through asset management and working with the
operations and maintenance team at Green Highland Renewables. Work
has commenced to establish the cost/benefit of enhancing the
performance of the Hydroelectric Portfolio further, which includes
the reinstatement of peatland, that has associated environmental
benefits.
96% of revenues for the Hydroelectric Portfolio are underpinned
by Government supported Feed in Tariffs with a remaining period of
c.14 years.
All Feed in Tariff revenues enjoy annual indexation to UK RPI.
With the current high level of UK RPI, this has resulted in Feed in
Tariff rates being adjusted upwards by RPI of 7.5%, effective from
1 April 2022, which has given an uplift to revenues and underpins
the highly defensive and attractive nature of this portfolio.
Portfolio Valuation
The Investment Manager is responsible for carrying out the fair
market valuation of the Group's investments. The Company engages
Mazars as an external, independent, and qualified valuer to assess
the validity of the discount rates used by the Investment Manager
in determination of fair value. Portfolio valuations are carried
out on a semi-annual basis as at 31 March and 30 September each
year.
For non-market traded investments (being all the investments in
the current portfolio), the valuation is based on a discounted cash
flow methodology and adjusted in accordance with the International
Private Equity Valuation Guidelines where appropriate to comply
with IFRS 13 and IFRS 10, given the special nature of portfolio
investments.
The valuation for each investment in the portfolio is derived
from the application of an appropriate discount rate to reflect the
perceived risk to the investment's future cash flows to give the
present value of those cash flows. The Investment Manager exercises
its judgement in assessing the expected future cash flows from each
investment based on the project's expected life and the financial
model produced by each project entity. In determining the
appropriate discount rate to apply to a given investment the
Investment Manager takes into account the relative risks associated
with the revenues. For the year ending 31 March 2022, the discount
rates range from 5% to 8% (31 March 2021: 8%).
The valuation of the portfolio by the Investment Manager and
reviewed and supported by the Directors as at 31 March 2022 was
GBP78.8 million (31 March 2021: GBP21.0 million).
Valuation movements
The CHP Portfolio has been held at par, while there is scope for
a discount rate that are lower than the interest rates on the CHP
Portfolio which derive a par valuation, this is offset by
relatively limited prepayment protections supporting a par
valuation. The small initial loan to the BESS Portfolio has been
valued at par as the initial drawdown took place on 31 March 2022
with fair value being equal to the upfront costs. As a result of
the loan investments, being valued at par, the fair value movements
in the year are attributable, in its entirety, to revised cash
flows in relation to the Hydroelectric portfolio. The discount rate
on the Hydroelectric Portfolio has remained equal to the discount
rate at acquisition.
The breakdown of the movement in the Directors' valuation can be
found in the Annual Report.
The opening valuation as at 31 March 2021 was GBP21.0 million.
Allowing for, in year cash investments comprising a debt investment
in Spark Steam of GBP8.0 million, GBP46.5 million into the
Hydroelectric Portfolio, GBP0.7 million into the BESS Portfolio and
GBP1.6 million of principal repayments from the CHP Portfolio, the
rebased valuation at 31 March 2022 was GBP74.7 million.
Each movement between the rebased valuation of GBP74.7 million
and the 31 March 2022 valuation of GBP78.8 million is considered in
turn below:
Inflation
Over 2021, as the initial impacts of the pandemic fall out of
the inflation figures, and supply constraints take hold, inflation
has increased markedly. Feed in Tariff rates, for example, were
adjusted upwards by RPI of 7.5%, effective from 1 April 2022. In
February 2022, the Russian invasion of Ukraine, in addition to the
multiple primary impacts felt in Ukraine itself, has placed
significant upward pressure on inflation, in part due to the
sharply higher cost of energy and some commodities.
Given the quantum of the increase, consensus amongst the
forecasters and broad increases across prices in multiple sectors,
portfolio inflation assumptions have been updated. Our assumption
for long-term RPI has moved to 3.00% for 2023, through to 2030,
before falling to 2.40%. Our assumption for CPI has moved to 2.25%,
for 2023 and stays flat thereafter. We also model a power curve
indexation assumption, as wholesale power prices are not
intrinsically linked to consumers' prices, of 2.75% for 2023
staying flat thereafter. The updated inflation assumptions have
been accretive to the valuation of the Hydroelectric Portfolio by
GBP5.1 million.
Power Prices
The valuation as at 31 March 2022 applies long-term, forward
looking power prices from a leading third -party consultant. A
blend of the last three quarters central case forecasts is taken.
Where fixed price arrangements are in place, the financial model
will reflect this price for the relevant time and subsequently
revert to the power price using the methodology described. The
updated power price forecast has been accretive to the valuation of
the Hydroelectric Portfolio by GBP0.3 million.
Energy Yields
For the Hydroelectric Portfolio, the energy yield assumption is
predicated on a P50 level of electricity output based on reports
prepared by technical advisers prior to acquisition. Since
acquisition, TEEC has made a prudent adjustment (5%) to that energy
yield, primarily to enable it to obtain further comfort as to the
appropriate ongoing assumption with respect to curtailment across
the portfolio. The P50 output is the estimated annual amount of
electricity generation that has a 50% probability of being exceeded
and a 50% probability of being underachieved over the life of the
asset .
Balance of Portfolio Return
This refers to the balance of valuation movements in the year
ending 31 March 2022 (excluding the above) which has been accretive
to valuations of GBP2.0 million. The balance of portfolio return is
calculated as the expected return, reflecting the net present value
of future cash flows brought forward to the valuation date at the
prevailing discount rate.
The main drivers of the portfolio return have been updated cost
forecasts reflecting agreements entered into in relation to the
Hydroelectric Portfolio post acquisition and the impact of an
optimised capital structure which includes shareholder loans.
Investment Obligations
At 31 March 2022, the Company had outstanding investment
commitments , in relation to the BESS Portfolio which has a total
capacity of 110 MW.
BESS asset Battery hour Location Size in MW Expected
duration operational
date
1(st) BESS One hour North of England 20 MW Q2 FY2023
asset
------------- ----------------- ----------- -------------
2(nd) BESS Two hours Scotland 50 MW 2023
asset
------------- ----------------- ----------- -------------
3(rd) BESS Two hours Wales 20 MW 2023
asset
------------- ----------------- ----------- -------------
4(th) BESS One hour South-East 20 MW 2023
asset England
------------- ----------------- ----------- -------------
The investment into the BESS Portfolio amounts to GBP45.6
million via a fixed rate debt facility.
Key terms of the debt facility include:
-- funding will only occur once key Engineering, Procurement and
Construction ("EPC") milestones have been approved . It is expected
that draw down will take place substantially over the financial
year ending 31 March 2023;
-- committed amortising term of 18.25 years following an initial 1-year period;
-- increased yield in the event of inflation (consumer price
index) exceeding base case expectations, subject to a cap;
-- security including, amongst other rights, charges over the assets of the Borrower;
-- TEEC Holdings will receive an arrangement fee, annual
monitoring fees, and a non-utilisation fee on undrawn amounts of
the facility; and
-- Field benefits from an ESG margin ratchet which delivers a
potential reduction in the rate payable if ambitious avoided carbon
targets are met during trading.
Fully Invested Portfolio Valuation
The valuation of the portfolio on a fully invested basis can be
derived by adding the valuation at 31 March 2022 and the expected
outstanding commitments are as follows:
GBP'000
Portfolio valuation as at 31 March 2022 78,787
Future investment commitments at cost 44,941
Portfolio valuation once fully invested 123,728
------------------------------------------ -------
Key Sensitivities
The following table illustrates the sensitivity of the Company's
NAV per share to changes in key input assumptions (with labels
indicating the impact on the NAV in pence per share of the
sensitivities):
Discount rate +0.5% -0.5%
NAV sensitivity (3.0p) 3.3p
------- ------
Energy Yields +10% -10%
NAV sensitivity 3.1p (3.2p)
----- -------
Power prices +10% -10%
NAV sensitivity 2.6p (2.2p)
----- -------
Inflation +0.5% -0.5%
NAV sensitivity 2.5p (2.3p)
------ -------
For each of the sensitivities, it is assumed that potential
changes occur independently of each other with no effect on any
other base case assumption, and that the number of investments in
the portfolio remains static throughout the modelled life.
Financial Review
The Company applies IFRS 10 and qualifies as an investment
entity. IFRS 10 requires that investment entities measure
investments, including subsidiaries that are themselves investment
entities, at fair value except for subsidiaries that provide
investment services which are required to be consolidated.
The Company's single, direct subsidiary, TEEC Holdings, is the
ultimate holding company for all the Company's investments.
It is, itself, an investment entity and is therefore measured at
fair value.
NAV
The Company's NAV as well as the valuation of the investment
portfolio are calculated semi-annually on 30 September and 31 March
each year. Valuations are provided by the Investment Manager and
are subject to review by Mazars with the other assets and
liabilities of the Company calculated by the Administrator. The NAV
is reviewed and approved by the Board. All variables relating to
the performance of the underlying assets are reviewed and
incorporated in the process of identifying relevant drivers of the
discounted cash flow valuation.
NAV Bridge for the year ended 31 March 2022
The NAV bridge can be found in the Annual Report.
The movement in NAV was driven by the following factors:
Investment income of GBP2.5 million representing interest income
to TEEC , via TEEC Holdings, from the interest on the CHP Portfolio
and the shareholder loans to the Hydroelectric Portfolio.
Fund expenses of GBP1.3 million and dividends paid in the year
of GBP6.1 million.
The net impact of investment income, fund expenses and dividends
paid led to a reduction in NAV of GBP4.9 million. This was
partially offset by upward revaluation of GBP3.6 million of the
Company's, sole, wholly owned subsidiary TEEC Holdings, the entity
through which investments are purchased and measured at fair
value.
The Company's NAV also benefitted from a relatively immaterial
GBP13,000 uplift through the issuance of new shares to the
Investment Manager in accordance with the Investment Management
Agreement under which 20% of the management fee is applied to the
purchase of shares in the Company. During periods where the
Company's shares trade at a premium to NAV, the Company issues new
shares at the prevailing NAV. During periods where the Company's
trade at a discount to NAV, the Investment Manager purchases shares
in the secondary market.
Operating Results
The Company was incorporated on 23 June 2020. The comparative
figures cover the period from 23 June 2020 to 31 March 2021,
therefore are not comparable with the amounts presented for the
full year ended 31 March 2022.
Profit before tax was GBP4.8 million (31 March 2021: GBP0.5
million loss), with earnings per share of 4.76 pence (31 March
2021: 0.01 pence loss).
Operating Expense and Ongoing Charges
The operating expenses for the year ended 31 March 2022 amounted
to GBP1.3 million (31 March 2021: GBP0.5m). The Company's ongoing
charges ratio ("OCR") is 1.38% (31 March 2021: 1.07%) and reflects
a full year's operating expenses. With the exception of the
management fee, fund operating expenses are predominantly fixed and
known, accordingly via scale the OCR will decline. Absent of
further fundraising, the OCR is expected to increase, on a constant
NAV basis, in the year ending 31 Mach 2023 as the management fee on
the IPO proceeds is now charged on full NAV.
Cash Dividend Cover
31 March 2022
GBP'000
Cash income 2,165
Total expenses as per Statement of Comprehensive
Income (1,324)
Dividends paid per Statement of Changes in
Equity 6,125
Cash dividend cover 0.14x
---------------
The Company's dividends paid in the year of GBP6.1 million
(6.125 pence per share) have been predominately paid from
capital.
During the financial year ending 31 March 2022, deployment of
GBP55.3 million has been achieved, on which the Company will
benefit from an annualised return going forward, along with
contribution from a further deployment on the GBP44.9 million of
commitments at 31 March 2022. The Company remains focused on being
fully dividend covered by cash flows generated in the underlying
investments, as soon as practicable and to that end, note that in
the year ending 31 March 2023, the Company will benefit from a full
year of income from the CHP Portfolio and Hydroelectric portfolio,
as well as income from the BESS Portfolio.
Gearing and Liquidity
At the year ending 31 March 2022, the Group had cash balances of
GBP17.4 million (31 March 2021: GBP76.6 million).
As announced on the 30 March 2022, the Group, via TEEC Holdings,
has entered into a loan facility agreement for a GBP40 million
Revolving Credit Facility ("RCF") with TP Leasing Limited.
The RCF has a two-year term, with the possibility to be
extended. The interest rate on the RCF is 4.5%(5) based on the
Sterling Overnight Index Average ("SONIA") 2-year fixed rate of 2%
and a margin of 2.5%.
The Group will make use of the RCF to fund the BESS Portfolio
and some of its growing pipeline of high-quality investment
opportunities. The Group will follow a prudent approach to gearing
with a target medium-term gearing of up to 40% of GAV and a maximum
gearing that will not exceed 45% of GAV at time of drawdown.
As at the end of March 2022, the RCF had not been drawn. It is
expected that the RCF will be substantially utilised during the
financial year ending 31 March 2023.
Notes:
(5) Excluding fees
Pipeline
We have continued to build our pipeline and have established a
variety of investment opportunities across different technologies,
counterparties, structures and locations to create an attractive
diversified portfolio of opportunities. The Company has circa
GBP500 million of pipeline of opportunities across a variety of
technologies including energy storage, solar lighting, EV charging,
district heating, energy from waste, hydrogen production, and
CHP.
These investment opportunities are from a variety of sources
including from off-market and competitive processes as well as
through the Triple Point Group network of contacts. Several
opportunities include further deal flow that will follow as a
result of longer-term relations.
The distributed energy segment has experienced a significant
increase in both the volume and average deal size per opportunity.
Solar photovoltaic projects, as well as biomass and energy from
waste projects are notable components of the opportunity set.
Through working with its developer, corporate and construction
partners, TEEC is well placed to achieve attractive rates of
returns in these sectors.
The onsite consumption and demand segment pipeline has seen
notable recent growth as energy prices have increased in recent
months. Businesses are looking both to reduce the amount of energy
they consume, and to generate more of it on site, materially
reducing the bill they pay for that energy through avoided levies
and transmission costs. As well as enhancing energy security and
reducing costs for businesses, these opportunities both drive
decarbonisation and improve energy efficiency.
The energy storage segment has also grown significantly, with
the maturing of the storage business case and attractive returns
driving new developments and investments in this space. The
electrification of transportation is creating new investment
opportunities while also adding pressure to grow renewable
generation and use the energy generated more efficiently. The rise
in the adoption of EV, is creating the opportunity to fund EV
charging networks. There is also greater usage of heating,
ventilation and air conditioning ("HVAC"), which companies have
sought to improve in part to protect against the spread of Covid-19
through better ventilation. Other technologies are also being
highlighted for future growth such as heat pumps. These
technologies present opportunities for TEEC to finance the
installation of new energy efficient equipment which could use the
increasing supply of renewable energy thus reducing the carbon
footprint and improving the environment.
Environmental, Social and Governance
Triple Point is committed to promoting ESG when assessing
investment opportunities and has been a signatory to the United
Nations' Principles for Responsible Investing ("PRI") since
2019.
In addition, Triple Point has applied to become a B Corp which
formalises Triple Point's consideration of social and environmental
impact.
In addition, TEEC is considering the climate change strategy of
its portfolio including a review of its climate risks and
opportunities. The initial TCFD report is set out in the
Sustainability Report of the Annual Report.
A disclosure for TEEC in line with the European Union's
Sustainable Financial Disclosure Regulation ("SFDR") requirements
for Article 6 and Article 8, is publicly available on our website
https://www.tpenergyefficiency.com/. Although not required to do
so, we think it is important to provide transparency on our
sustainability approach wherever possible. Data points for TEEC,
aligned with the SFDR, are also provided in the Sustainability
Report.
We have continued to focus on our ESG impact through the TEEC
portfolio and in 2021 we enhanced the portfolio from an ESG
perspective through the acquisition of the Hydroelectric Portfolio
which has 6.6 MW of hydroelectric power generation from nine
operational run of river generators in Scotland. We are exploring
further ESG improvements such as using peat restoration to improve
income through optimisation of the flow rate at an initial three
sites whilst acting as a carbon-sink - a natural capital solution
for a better environment and financial performance.
The overall TEEC portfolio generated 9,425 MWh of renewable
energy and avoided 17,074 tonnes of CO (2) in the year ended 31
March 2022.
We continue to develop our ESG processes to ensure we select the
highest quality and sustainable energy efficient assets.
Outlook
We are pleased with the progress that the Company has achieved
and we look forward to the further deployment of capital in the
pipeline that has been built up. The depth and breadth of the
investment opportunities that have been sourced from a variety of
partners and for different technologies ensures confidence in the
ability to build on and diversify the existing TEEC portfolio of
lower carbon and efficient energy projects.
The UK Government has committed to getting to Net Zero by 2050
and many companies have made more aggressive deadlines. There are a
vast number of green initiatives and a greater demand for reporting
on ESG. This all helps to focus minds on implementing
sustainability projects.
TEEC can make a significant contribution to the energy
transition as it is focused on investing into onsite energy
generation and consumption, distributed energy generation and
energy storage and distribution. We are well positioned to execute
on these types of opportunities and to drive the implementation of
energy efficiency which will help reduce costs, save carbon and to
make our infrastructure more resilient and provide better energy
security.
Jonathan Hick
TEEC Fund Manager
Jonathan Parr
Partner
23 June 2022
SUSTAINABILITY REPORT
A Committed Investment Manager
Triple Point's mission statement is: "Through our people, and
the partnerships we build, Triple Point unlocks investment
opportunities that have purpose, while generating profits for
investors".
In line with this business mission and the commitment to
responsible investment, the Investment Manager has applied to
become a B Corporation (status pending) and became a signatory to
the Principles for Responsible Investing ("PRI") in 2019, to
demonstrate best practice in investor ESG integration and guide
continued improvement.
Sustainability Table 1: Triple Point's adoption of the six
Principles for Responsible Investment
Signatory of PRI: PRI Principle How Triple Point adopts
Principles for Responsible the principles for
Investment TEEC
PRI is recognised 1 We will incorporate ESG analysis is considered
as the leading global ESG issues into investment by the investment team
network for investors analysis and decision-making and shared in Investment
who are committed processes. Committee papers to
to integrating ESG inform the final investment
considerations into decision.
their investment
practices and ownership
policies. The principles
demonstrate best
practice in ESG
integration, guide
signatories in improvements
and promote closer
alignment between
the objectives of
institutional investors
and those of society
at large.
Triple Point became
a member of PRI
in 2019. The first
Assessment Report
period of 2020-2021
was a fallow reporting
year for PRI to
accommodate the
launch of a new
reporting and scoring
system. Triple Point's
first assessment
report will be published
in 2023.
----------------------------------------- -------------------------------
2 We will be active Tripe Point acts as
owners and incorporate asset manager on behalf
ESG issues into our of the Company and
ownership policies uses initial ESG analysis
and practices. to understand how operational
control of the asset
can be improved to
enhance ESG behaviours
and/or outcomes.
----------------------------------------- -------------------------------
3 We will seek appropriate ESG topics are investigated
disclosure on ESG in all due diligence
issues by the entities of acquisitions/investments.
in which we invest. ESG topics are monitored
through Board meetings
and the ESG engagement
programme and reported
on annually.
----------------------------------------- -------------------------------
4 We will promote acceptance The value of the principles
and implementation and importance of the
of the principles role of ESG factors
within the investment in good decision making
community are proactively promoted.
----------------------------------------- -------------------------------
5 We will work together TEEC uses the best
to enhance the effectiveness practice promoted by
in implementing the the principles to inform
principles. asset optimisation
recommendations.
----------------------------------------- -------------------------------
6 We will each report The Company has committed
on our activities to reporting annually
towards implementing on ESG activities.
the principles. The Investment Manager
reports on responsible
investments activities
annually through the
PRI assessment process.
The next and first
published assessment
report for Triple Point
will be in 2023.
----------------------------------------- -------------------------------
The importance of sustainability to TEEC
The level of commitment the Investment Manager has to
sustainability extends to each of the strategies it manages. As a
result, the Investment Manager has implemented a robust approach to
the integration of sustainability for the Company, which is based
on the following four pillars:
1. Energy Efficiency and a sustainable energy transition
2. ESG research, analysis and integration
3. Asset optimisation and sustainable outcomes
4. Transparency and Governance
1. Energy Efficiency and a sustainable energy transition
Energy Efficiency, the bigger picture
The Company seeks to provide financial backing to projects and
technologies which deliver reductions in generated emissions.
Succeeding in carbon reduction targets requires midterm
solutions which reduce carbon consumption through more efficient
energy usage, and the application of energy utilising technologies
which minimise carbon emissions. This transition pathway to Net
Zero recognises that carbon intensive industries require immediate
solutions to reduce their footprint through energy use, whilst
renewable energy generation and resource recycling technologies
scales. The Company takes a holistic approach to energy transition
and how energy efficiency solutions can contribute to the UK energy
system. Assets offering solutions across the chain are sought, from
distributed energy generation, and energy storage to onsite
generation and consumption.
By investing in all aspects of the transition pathway, we seek
to contribute to the longer-term commitment for a UK economy which
can half its carbon emissions by 2030, compared to pre-industrial
levels, and reduce them to Net Zero by 2050.
The carbon crisis is a complex challenge, which requires
immediate attention across the economy. Latest analysis from the
Intergovernmental Panel on Climate Change ("IPCC") indicates
remaining within the 1.5(o) C target is increasingly challenging.
To hold within 1.6(o) C and even 2(o) C degrees will require
significant efforts, and Part III of the IPCC's 6(th) Assessment
Report refers to the important role of low emission energy sources,
energy efficiency solutions and electrification.
There is a clear and current geopolitical threat to continued
emission reductions with pricing pressure bringing into question
the pace of the energy transition in the face of energy shortages
and rising prices. The strength of policy and change and technology
implemented will determine how successful we will be at remaining
within the 1.5(o) C target, but all scenarios demonstrate a need
for rapid emissions reduction.
The pressure for energy security has never been more pressing.
Public and political support for energy solutions which offer
competitive pricing, sound environmental solutions and energy
security will increasingly be favoured.
Energy Efficiency Alignment
A key aspect of TEEC's ESG Analysis, irrespective of the
investment type, is if the asset saves Carbon Dioxide equivalents
(" CO (2) e") emissions against the appropriate counterfactual.
CO (2) e savings (also known as CO (2) e avoidance), are a
crucial part of our strategy, offering a useful metric to show how
TEEC has helped counterparties to avoid emitting greenhouse
gases.
TEEC measures these in accordance with the GHG Protocol and
Partnership for Carbon Accounting Financials ("PCAF"), which
provide an industry-standard approach to accounting for financed
emissions, ensuring a robust, transparent, and comparable approach.
PCAF stress this is crucial because measuring financed emissions is
an important step to assess climate-related risks and
opportunities, set targets in line with the Paris Agreement, and
develop effective strategies to support the decarbonisation of
society.
The Investment Manager is aware that for certain asset types,
such as hydroelectric schemes or solar power, the majority of CO
(2) e emissions that can be associated with that investment might
be generated, and locked up in the materials used, during the
construction phase. When investing into the construction and
ongoing life of an asset, TEEC will endeavour to capture the
emissions associated with this phase where possible and will work
with the chosen technical adviser to achieve the most in depth
analysis that is practically possible. How the Company approaches
accounting for construction emissions will continue to be reviewed
and improved.
TEEC's approach to carbon is to reduce absolute emissions
through its selection of investments and to collect and report on
the required data to demonstrate this, but that we do not currently
intend to offset any outstanding carbon emissions, in line with
industry expectation. If possible and appropriate TEEC may seek to
offset at the project level, but not the fund level.
Energy Efficiency Evidence
To demonstrate the energy efficiency of assets, the Company has
committed to tracking and reporting on a selection of energy data
points.
Sustainability Table 4: TEEC investments operating energy
efficiency performance from point of investment to the reporting
year end 31 March 2022.
Asset type CO (2) Avoided Renewable Energy Energy Saved
(t CO (2) ) Generated (MWh) (MWh)
Hydroelectric 3,578 9,425 -
--------------- ----------------- -------------
CHP 13,496 - 7,113
--------------- ----------------- -------------
Energy Storage * - -
--------------- ----------------- -------------
TOTAL 17,074 9,425 7,113
--------------- ----------------- -------------
* this is currently an investment commitment and no assets are
yet operational
Based on average annual UK household electricity consumption,
the combined MWh of renewable energy generated and MWh of energy
saved would be enough to power 5,335 homes.
Based on the average UK petrol car travelling the average annual
mileage the avoided carbon dioxide is the equivalent to taking
8,951 cars off the road for a year.
For more detail on the avoided emission and energy calculations
please refer to the Methodology Principles provided in Annex 1 of
the Annual Report.
Contributing to a Sustainable Energy Transition
The provision of energy efficiency solutions contributes to the
energy transition, a critical contributor in tackling climate
change and providing cleaner, safer and more secure sustainable
sources of energy for use throughout society and the economy. Such
benefits, if realised, also align with a number of the UN
Sustainable Development Goals ("SDGs").
In 2015, world leaders gathered at the UN to adopt 17 SDGs to
achieve several objectives by 2030 including to: end poverty,
promote prosperity and well-being for all, and protect the planet.
The UN SDGs have been adapted by 193 countries. TEEC's asset
selection helps to address SDGs 7, 9, 11, 12 and 13. The below
table details how TEEC assets can contribute.
Sustainability Table 2: TEEC asset's SDG alignment
opportunity
UN SDG UN SDG UN SDG UN SDG Target How TEEC contributes TEEC assets that
Target to this Goal and can align
Target
Investing in renewable
energy assets which
feed into the
electricity
grid contributes
to the renewable
energy mix.
Investing in energy
storage technology
provides greater
Affordable supply consistency,
& Clean Energy: By 2030, increase acts as an enabler
Ensure access substantially to grid decarbonisation
to affordable, the share and can contribute
reliable, sustainable of renewable to reduced wasted
and modern energy in renewable electricity Hydroelectric
energy for the global in the event of Portfolio
7 all 7.2 energy mix overproduction. BESS Portfolio
----------------------- -------- --------------------- ------------------------ -------------------------
7.3 By 2030, double Our combined Heat CHP Portfolio
the global and Power plants
rate of improvement provide a route
in energy for the efficient
efficiency use of the fuel
burnt, to provide
usable heating
solutions alongside
the electricity
production
----------------------- -------- --------------------- ------------------------ -------------------------
7.a By 2030, enhance The investment All assets
international strategy of TEEC
cooperation has been conceived
to facilitate with the express
access to purpose of contributing
clean energy to energy efficiency
research and and transition
technology, solutions.
including
renewable
energy, energy
efficiency
and advanced
and cleaner
fossil-fuel
technology,
and promote
investment
in energy
infrastructure
and clean
energy technology
----------------------- -------- --------------------- ------------------------ -------------------------
By 2030, upgrade
infrastructure
and retrofit
industries
to make them
sustainable,
with increased
resource-use The investment
efficiency strategy of TEEC
and greater has been conceived
adoption of with the express
clean and purpose of contributing
environmentally to energy efficiency
sound technologies and transition
and industrial solutions, which
Build resilient processes, can be applied
infrastructure, with all countries to existing industry
promote inclusive taking action and infrastructure
and sustainable in accordance to reduce their
industrialization with their reliance and use
and foster respective of carbon-based
9 innovation 9.4 capabilities fuels. All assets
----------------------- -------- --------------------- ------------------------ -------------------------
Clean energy solutions
such as the Company's
hydroelectric assets,
reduce the need
for more polluting
energy sources.
Energy efficiency
solutions such
By 2030, reduce as our CHPs, reduce
the adverse the amount of energy
per capita used for industrial
environmental processes reducing
impact of pollution created
Sustainable cities, including energy storage
Cities & Communities: by paying contributes to
Make cities special attention the efficiency
and human settlements to air quality of a decarbonised
inclusive, and municipal grid and creates
safe, resilient and other resiliency in the
11 and sustainable 11.6 waste management energy system All assets
----------------------- -------- --------------------- ------------------------ -------------------------
Investing in
responsibly
managed and sustainable
assets that enable
other manufacturers
to improve their
production efficiency
contributes to
a reduction in
Responsible natural resource
Consumption By 2030, achieve use.
& Production: the sustainable Seeking best practice
Ensure sustainable management in circular economy
consumption and efficient production and
and production use of natural end of life in
12 patterns 12.2 resources our assets. All assets
----------------------- -------- --------------------- ------------------------ -------------------------
Investing
in assets
which support
national
ambitions
to reduce
GHGs in
economic
activity
Take urgent contributes
action to combat Integrate climate change measures to action
climate change into national policies, strategies on climate All
13 and its impacts 13.2 and planning change assets
----------------------- -------- ----------------------------------------------- --------------- --------
2. ESG integration and the investment process
ESG integration delivers value during the initial investment
decision-making process and on an ongoing basis.
The Investment Manager's approach to ESG integration is to
ensure it is embedded at each stage of the investment process. Each
step of the investment process represents an opportunity to
consider how ESG factors may influence the short and long-term
success of a project.
Topics of assessment
While the approach to ESG must take into account the individual
nature of the target asset, for example, its size and type, region,
operational environment and stage of project cycle, there are
common measures that can be systematically applied to calculate the
longevity of an infrastructure asset's value. For responsible
infrastructure investments, the following areas are considered
relevant:
Environmental
We consider use, generation type, and intensity of energy, along
with water use and its pollution. We also look at levels of waste
generated, avoided and disposed of approach to raw material
sourcing and supply chain sustainability, and build in impacts on
biodiversity and habitat by understanding management and protection
measures. Carbon analysis is also carried out to ensure the asset
will save emissions compared to an appropriate counterfactual.
Social
We consider the asset quality and fit with a more sustainable
economy, including relevance/appropriateness to the locality. We
seek reassurance of good customer and stakeholder relations,
including management of land rights, accessibility, and social
inclusion of access to the asset. We expect strong management and
reporting of health and safety (during and after build) as well as
good labour management. This includes staff wellbeing, good
diversity and inclusion practices, appropriate training, and
presence of fair pay, including reassurance of the absence of
modern slavery.
Governance
We scrutinise management's approach to responsibility and
ability to promote a corporate governance structure that is
accountable and responsive to stakeholders by addressing issues
such as Boards & Trustees, pay structure, ownership and
accounting practices. Examination of governance also reveals
important information on a company's business ethics, and we look
for evidence of best practice in approaches to tax policy,
management of bribery and corruption, conflicts of interest and
appropriate senior level ownership of ESG issues.
Climate analysis
Within initial deal scanning and on-going pre acquisition due
diligence, the Investment Manager considers the implications of
climate change on the long-term value of the company.
Possible impacts of climate change on the strategy's assets are
accounted for through scenario analysis, which combines the
investment team's carbon analysis work with the ESG integration
work to test the resilience of a project based on potential changes
to the physical and regulatory environment they operate within.
This process looks to quantify how future climate change could
impact an assets performance over the short, medium and long
term.
Details on our approach to date in the management of climate
risk and opportunity are captured in our Task Force on
Climate-related Financial Disclosure ("TCFD") report in the Annual
Report.
3. Asset Optimisation and Sustainability Outcomes
Continued improvements in the sustainability credentials of the
Company's assets are an important aspect of portfolio management
undertaken by the Investment Manager. Any improvement in assets is
driven through the Operations and Management ("O&M") provider,
as the assets commonly have no employees.
Asset optimisation requires long-term commitments and outcomes
are not typically quick. The assets within the portfolio are
currently undergoing a review to establish where we can implement
optimisation. To date, opportunities have emerged within our BESS
Portfolio and Hydroelectric Portfolio; we have detailed this
potential and how the action would create further alignment to the
SDGs.
Optimisation potential
Integrating sustainable behaviours in the BESS Portfolio.
Energy Storage plays a crucial role in enabling the
decarbonisation of the electricity grid. The supply of renewable
energy is intermittent and weather dependent and as traditional
synchronous generation sources go offline, the resiliency of the
grid to changes in frequency is reduced.
Batteries can respond to these challenges by storing energy
generated when supply is high and demand is low - on nights
experiencing high volumes of wind, for example. The carbon saving
credentials of an energy storage system, however, are dependent on
the way the system is run. To encourage the most sustainable
behaviours in the borrower and set clear expectations on carbon
saving requirements, in the BESS Portfolio, the Investment Manager
negotiated a carbon-ratchet mechanism in the debt facility. This
financially incentivises carbon avoidance through responsible use
of the assets. We believe this to be a market-first.
The borrower will only receive interest rate reductions if they
perform well on the carbon arbitrage metric - a maximum reduction
of up to 25bps can be achieved. Maximum reductions are only
awarded, for example, if the average Field trade is within 17% of
the maximum available carbon arbitrage.
Optimisation potential
Peat Restoration at three sites in the Hydroelectric Portfolio:
Cheanna Mhuir, Ladaidh and Choire a Bhalachain
Sustainability outcomes linked to SDG 13 (Climate action: take
urgent action to combat climate change and its impacts) and SDG 15
(Life on Land: Protect, restore and promote sustainable use of
terrestrial ecosystems, sustainably manage forests, combat
desertification, and halt and reverse land degradation and halt
biodiversity loss). Following the acquisition of the hydro sites we
are exploring the potential to optimise the flow from the catchment
area through the implementation of natural capital solutions to
provide a better generation profile for the assets. A particular
solution being explored for viability being the re-instatement of
peatland which has associated environmental benefits related to
biodiversity and carbon sequestration.
5. Transparency and Governance
There is a strong approach to information sharing and oversight
for sustainability across Triple Point and TEEC.
The Investment Manager as AIFM has determined that TEEC is
subject to Article 8 of the EU Sustainable Finance Disclosure
Regulation. Article 8 applies where a financial product promotes,
among other characteristics, environmental or social
characteristics, or a combination of those characteristics,
provided that the companies in which the investments are made
follow good governance practices. We continue to monitor the
portfolio and the emerging details of this regulation to determine
if we will amend our disclosure to Article 9. Our full disclosure
is on our website: https://www.tpenergyefficiency.com/ .
Responsibility for the ESG integration strategy across Triple
Point sits with the Head of Sustainability, Lindsay Smart, who
leads the Triple Point Sustainability Team. There are a number of
oversight functions in place to ensure the effective implementation
of ESG by Investment Teams with the support of the Sustainability
Team.
Triple Point operates a Sustainability Group which consists of
senior partners and managers from across the Investment Manager.
This Group meets monthly to discuss Sustainability initiatives and
concerns from across the company. The Group is chaired by Triple
Point's Co-Managing Partner; and both Managing Partners sit on the
Group. The Sustainable Investment Subgroup reports to this Group.
The subgroup consists of senior investment team members from across
Triple Point's investment strategies. This Group meets every eight
weeks to share best practice, latest industry activity and ESG
ideas from across the business. This Group can also be called to
review a deal which has received a critical level of ESG flag at
the due diligence stage, or to act as a sounding board for critical
debate should a deal present a complex sustainability profile.
The Sustainability Team conducts an annual ESG monitoring
programme to assess the effectiveness of ESG integration across
each of Triple Point's strategies, including TEEC. Each strategy is
subject to a review of their adherence to their strategy's ESG
integration policy, and opportunity for development and evolution.
The findings of this audit are presented to the Sustainability
Group for discussion and further action if appropriate.
The Sustainability Team are also subject to quarterly risk
reviews by the risk team, and any identified sustainability risks
are recorded on the Triple Point Group risk register, which is
reviewed quarterly by the Group's Risk Committee.
The Head of Sustainability also sits on the Risk Committee to
ensure that the Group outlook for risk appropriately considers
sustainability issues.
The Board are also kept informed of sustainability risks and
opportunities facing portfolio companies through updates provided
by the investment team and Triple Point's Head of Sustainability,
including deep dives into sustainability integration, engagement,
target setting and performance.
For further details on Governance please refer to the Corporate
Governance Report in the Annual Report.
The transparency of TEEC's sustainability activities is an
important aspect of the Investment Manager's commitment. The data
provided reflects energy efficiency commitments and the disclosure
expectations the Investment Manager responds to in relation to EU
Taxonomy requirements and those associated with being subject to
Article 8 of the EU Sustainable Finance Disclosure Regulation
(SFDR). The SFDR has set out a series of KPIs which it expects
aligning entities to disclose against. The list of KPIs is set and
to conform with the disclosure we present the list in the exact way
the disclosure prescribes.
Sustainability Table 3. SFDR-aligned KPIs. Where investments
were made during the reporting year, data presented is for TEEC
assets from the point of investment to 31 March 2022. Where
investments were made during previous reporting years, data
presented is for the full reporting year. All energy use and
emissions occur within the UK.
Climate and other environment-related indicators
Greenhouse Avoided emissions t CO
gas emissions (6) 17,074 (2)
---------------- ----------------------------------- ------------------------------ ----------------- -----------
Total Energy
Consumption 206,634 MWh
---------------- ----------------------------------- ------------------------------ ----------------- -----------
GHG emissions t CO
(7) Scope 1 GHG 37,855 (2) e
----------------------------------- ------------------------------ ----------------- -----------
t CO
Scope 2 GHG (location-based) 79 (2) e
----------------------------------- ------------------------------ ----------------- -----------
t CO
Scope 2 GHG (market-based) 117 (2)
------------------------------ ----------------- -----------
t CO
Total GHG 37,933 (2) e
------------------------------ ----------------- -----------
g CO
(2) e/kWh
Emissions intensity 215 generated
----------------------------------- ------------------------------ ----------------- -----------
Exposure to Share of investments
companies active in companies active
in the fossil in the fossil fuel
fuel sector sector 0%
----------------------------------- ----------------------------------------------- ----------------- -----------
Share of non-renewable
energy consumption
and production(8) 96%
------------------------------------------------------------------- --------------- ----------------- -----------
Activities negatively
affecting biodiversity-sensitive
Biodiversity areas 0%(9)
---------------- ------------------------------------------------------------------- ----------------- -----------
Emissions to
Water water 0%
---------------- ------------------------------------------------------------------- ----------------- -----------
Waste Hazardous Waste 0%
---------------- ------------------------------------------------------------------- ----------------- -----------
(6) Avoided emissions for this reporting period are as a result
of the operating activities of the Hydroelectric Portfolio and CHP
Portfolio
(7) GHG emissions for this reporting period are as a result of
3.34 tonnes of scope 2 (location-based) emissions from the imported
energy for the Hydroelectric Portfolio, and the remainder from the
CHP Portfolio. As the BESS Portfolio that we have committed to fund
is not yet operational, no emissions are currently tracked.
(8) The Hydroelectric Portfolio is located within or close to a
number of biodiversity sensitive areas, notably: Easter Ness Forest
SSSI, West Inverness-shire Lochs SPA and Drimnin to Kilundine Woods
SSSI. Strict protections from the Scottish Environmental Protection
Agency (SEPA) ensure that the activities of these sites do not
negatively affect the local ecology.
(9) Percentage of total energy production and consumption that
is from non-renewable sources. Energy consumption is defined as the
energy in the natural gas burned by the CHP assets, and the
electricity drawn from the grid as parasitic load by the CHP and
hydroelectric assets. Both of these sources are assumed to be 100%
non-renewable. Energy production is defined as the energy produced
by hydroelectric generation and exported to the grid, which is 100%
renewable. Heat and electrical energy generated by the CHPs are
excluded to avoid double-counting.
For further details on assumptions associated with the reporting
of these indicators please refer to Reporting Principles and
Methodologies detail in Annex 1 of the Annual Report.
In accordance with the TCFD we also collate and report our
approach to climate risk management. Our TCFD disclosure is
contained within the Annual Report.
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.
Section 172(1) Description
a. The likely consequences of any decision The aim of the Board and of the Investment Manager is
in the long term to ensure the long-term sustainable success of the Company.
As a result, the likely long-term consequences are also
a key consideration in decision making.
--------------------------------------------------------------
b. The interests of the Company's employees As a closed-ended investment company, the Company does
not have any employees and so this matter is not applicable.
--------------------------------------------------------------
c. the need to foster the company's The Company's primary suppliers are our service providers,
business relationships with suppliers, principally the Investment Manager and Administrator.
customers and others The Board engaged regularly with both, including at its
Board meetings.
Further detail on the Board's approach is described under
'Stakeholder Engagement' below.
--------------------------------------------------------------
d. The impact of the company's operations Having a positive environmental impact is central to
on the community and the environment the Company's operations, given that it its strategy
is to invest in assets support the transition to a lower
carbon economy and help the UK achieve Net Zero.
Please refer to the Sustainability Report for further
information.
--------------------------------------------------------------
e. the desirability of the company maintaining The Directors have a duty to promote the success of the
a reputation for high standards of business Company for the benefit of shareholders. As such they
conduct are dedicated to ensuring the maintenance of high standards
of business conduct and corporate governance.
--------------------------------------------------------------
f. the need to act fairly as between During the period, the Investment Manager conducted a
members of the company roadshow offering to meet with investors.
Further detail on the Board's approach is described under
'Stakeholder Engagement' below.
--------------------------------------------------------------
Stakeholder Engagement
Stakeholder Shareholders
Why is it important to engage? Shareholders and their continued support is critical to the continuing
existence of the business and delivery of our long-term strategy.
-----------------------------------------------------------------------
How have the Investment The way in which we engage with our shareholders is set out on in
Manager/Directors engaged? the Corporate Governance Report of the Annual Report.
-----------------------------------------------------------------------
What were the key topics During the year, the Investment Manager met with the majority of
of engagement? existing shareholders as well as prospective investors to discuss
Company's investment thesis and forward looking strategy.
-----------------------------------------------------------------------
What was the feedback obtained During those meetings, discussions were held to establish whether
and the outcome of the engagement? there was appetite for TEEC investing in BESS assets. The feedback
was positive. Subsequently, the Group completed its first investment
into BESS assets in March 2022.
-----------------------------------------------------------------------
Stakeholder Investment Manager
Why is it important to engage? The Investment Manager is responsible for executing the Investment
Objective within the Investment Policy of the Company.
-----------------------------------------------------------------------------
How have the Investment The Board maintains regular and open dialogue with the Investment
Manager/Directors engaged? Manager at Board meetings and has regular contact on operational
and investment matters outside of meetings.
-----------------------------------------------------------------------------
What were the key topics During the year there were a number of additional meetings held
of engagement? to consider various matters, including Spark Steam, the Hydroelectric
Portfolio and the RCF which were all transactions where other parts
of the Triple Point Group were involved. As a result, the Board
considered the conflict management procedures and approved the transactions
to ensure the fairness and reasonableness to TEEC shareholders.
-----------------------------------------------------------------------------
What was the feedback obtained Following feedback from the Board, various pieces of work were undertaken
and the outcome of the engagement? by third-party advisers to provide additional assurances that the
transactions were priced fairly and ultimately in the best interests
of TEEC shareholders.
-----------------------------------------------------------------------------
Stakeholder Service Providers
Why is it important to engage? As an externally managed Company, we are reliant on our service
providers to conduct our core activities. We believe that fostering
constructive and collaborative relationships with our service providers
will assist in the promotion of the success of the Company.
-------------------------------------------------------------------------
How have the Investment The Board maintains regular contact with its service providers,
Manager/Directors engaged? both through Board and Committee meetings, as well as outside the
regular meeting cycle.
The Management Engagement Committee is responsible for conducting
periodic reviews of service providers.
-------------------------------------------------------------------------
What were the key topics The Board and Investment Manager engaged with the Company's brokers
of engagement? and financial advisers in respect of the Company's share price discount
to NAV and proposed strategies to increase the share price.
-------------------------------------------------------------------------
What was the feedback obtained Following advice from the brokers and financial advisers, the Investment
and the outcome of the engagement? Manager met with the majority of existing shareholders as well as
prospective investors to discuss Company's investment thesis and
forward looking strategy.
-------------------------------------------------------------------------
Stakeholder Asset-level counterparties
Why is it important to engage? Asset-level counterparties are an essential stakeholder group and
engagement with them is important to ensure assets are operating
safely and effectively.
------------------------------------------------------------------------
How have the Investment The Investment Manager has developed strong working relationships
Manager/Directors engaged? with the asset-level counterparties and has regular communication
with them to ensure the assets are being managed appropriately.
------------------------------------------------------------------------
What were the key topics A 100-day asset management integration plan has been implemented
of engagement? for the Hydroelectric Portfolio which will seek to make improvements
based on recommendations from the due diligence process.
------------------------------------------------------------------------
What was the feedback obtained The 100-day asset management integration plan has raised the need
and the outcome of the engagement? to carry out further investigation into the potential to optimise
the flow from the catchment area through the natural capital solutions
to provide a better generation profile for the assets. A particular
solution being explored for viability being the re-instatement of
peatland which has associated environmental benefits related to
biodiversity and carbon sequestration.
------------------------------------------------------------------------
Stakeholder Investee Companies/Borrowers
Why is it important to engage? Investee companies and borrowers are companies in which TEEC Holdings
has invested either by debt or equity. They are an essential stakeholder
and engagement with them, particularly the individuals responsible
for their operations, is important to ensure the maintenance and
performance of each investee company.
--------------------------------------------------------------------------
How have the Investment The Investment Manager holds a Board observer position on Harvest
Manager/Directors engaged? and Glasshouse and holds Board positions on the Hydroelectric Portfolio.
Each investee company and borrower has certain reporting obligations
to the Group.
--------------------------------------------------------------------------
What were the key topics The Investment Manager engaged with the boards and management of
of engagement? the investee companies to discuss the relationship going forward,
including frequency of reporting.
--------------------------------------------------------------------------
What was the feedback obtained During the year the Board have provided feedback on what portfolio
and the outcome of the engagement? reporting they expected to see and the investee companies have worked
to fulfil those expectations.
--------------------------------------------------------------------------
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.
Conflicted transactions
During the year the Group acquired Spark Steam and the
Hydroelectric Portfolio. In both circumstances the transactions
involved other Triple Point managed entities and as such the Board
had to consider the conflict of interest that existed and whether
the measures put in place by the Investment Manager were sufficient
to mitigate the conflict of interest.
The Group entered into a loan facility agreement for a GBP40
million RCF with TP Leasing Limited. The RCF was deemed to be a
"smaller related party transaction" for the purposes of LR11.1.10R
of the Listing Rules. The Company obtained a fair and reasonable
opinion from a qualified, independent adviser and the Board
satisfied itself that the conflict management procedures in place
were effective.
The engagement from the Board on these matters (supported by
third party advice as appropriate) provided assurance that the
Investment Manager acted appropriately and that the transactions
terms were fair and reasonable and were in the best interests of
shareholders.
Investment into BESS Portfolio
As has been discussed throughout the Report, there is
significant opportunity to invest in energy storage assets and this
was something the Company were keen to embrace. The Board and
Investment Manager held extensive discussions as to whether energy
storage was an appropriate investment for TEEC as it was not a
sector specifically referenced within the Company's Investment
Policy. The Investment Manager held investor meetings, during which
shareholder appetite for the Company investing into BESS assets was
discussed. The feedback was positive and in March 2022 the Group
committed GBP45.6 million to four projects.
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 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 investment 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
upper and lower limits 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 available funds 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
regularly reviews 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.
Risk Identified Risk Description Risk Impact Mitigation Post
Mitigation
Exposure to The Group makes investments Changes in market demand for The majority of the Impact
power prices in projects and concessions electricity, including Company's Moderate
and risk to with revenue exposure to changes in consumer demand investments should
hedging power power prices. patterns, could benefit from fixed Likelihood
prices The market price of have a material adverse price arrangements. Moderate
electricity is volatile and effect on the Company's
is affected by a variety of profitability, the Net Asset In addition, the Change in
factors, Value, the Company's Group believe that year
including market demand for earnings and returns to the transition to a Stable
electricity, the generation shareholders. low carbon economy,
mix of power plants, increased usage
government support To the extent that the Group of smart grids and
for various forms of power enters into contracts to fix residential
generation, as well as the price that it receives on participation in
fluctuations in the market the renewable energy
prices of commodities electricity generated or generation should
and enters into derivatives with all positively
foreign exchange. a view to hedging against impact demand
fluctuations levels and patterns
in power prices, the Group for electricity.
will be exposed to risk
related to delivering an The Group aims to
amount of electricity spread credit risk
over a specific period. If by putting in place
there are periods of PPAs with a range
non-production the Group may of counterparties.
need to pay the
difference between the price
it has sold the power at and
the market price at that
time.
------------------------------ ------------------------------ -------------------- --------------
Ability to Ability to raise additional Without sufficient funding, The Board keeps Impact
raise finance, either debt or the Group will be unable to liquidity under Moderate
additional equity, may limit the Group's pursue suitable investments constant review to
finance ability in line ensure that we have Likelihood
to grow and achieve a fully with its Investment Policy. a level of Moderate to
covered dividend. This would significantly protection High
impair the Group's ability to in the event of
pay dividends adverse fundraising Change in
to shareholders. conditions and year
dividend cover is Increase
also closely
monitored.
When raising debt
finance, the Group
adopted a flexible
approach involving
speaking to
multiple
funders offering
various rates,
structures and
tenors. This
allowed the Group
to maintain
maximum competitive
tension between
funders and obtain
the best debt
possible.
------------------------------ ------------------------------ -------------------- --------------
Reliance on the The Group relies on the The performance of the Group Unless there is a Impact
Investment Investment Manager's services depends, in part, on the default, either High
Manager and its reputation in the ability of the Investment party may terminate
energy and Manager to the Investment Likelihood
infrastructure market. As a provide competent and Management Moderate
result, the Group's efficient services to the Agreement
performance will, to a large Group. by giving not less Change in
extent, depend than 12 months' year
on the Investment Manager's The departure of any of the written notice, Stable
abilities in the energy key personnel of the such notice not
efficiency market. Investment Manager without being served before
adequate replacement the
may also have a material fourth anniversary
adverse effect on the Group's of the date of
performance. In addition, if Admission (which
any such was October 2020).
personnel were to do anything
or were alleged to have done The Board regularly
something that may be the reviews and
subject monitors the
of public criticism or other Investment
negative publicity or may Manager's
lead performance. In
to investigation, litigation addition,
or sanction, this may have an the Board meets
adverse impact on the Group regularly with the
and Investment Manager
its reputation by to ensure that we
association. maintain a positive
working
Termination of the Investment relationship.
Management Agreement would
severely affect the Group's The key personnel
ability of the Investment
to effectively manage its Manager are subject
operations and may have a to a six -month
negative impact on the share notice period which
price of would provide
the Company. sufficient time for
the Investment
Manager to find a
suitable
replacement with
relevant industry
experience.
------------------------------ ------------------------------ -------------------- --------------
Introduction A technological or regulatory The future legislative As part of the Impact
of, or change could occur which prohibition or tax of Group's acquisition Moderate
amendment to could have the effect of particular fuels (such as process, the
laws, rendering natural gas) or as Investment Manager Likelihood
regulations, or an investment in which the a result of technological conducts a thorough Moderate to
technology Group has invested obsolete innovation or otherwise by due High
(especially in or materially change the way changes to law and regulation diligence process
relation in that renders on all projects Change in
to climate which a service or product is an investment obsolete could that takes account Year
change) delivered or alter the return threaten the profitability of of the technology, Stable
profile of an investment. such an investment, in regulatory
particular environment,
In addition, environmental due to the financing potential future
regulators may seek to impose projections that are regulatory changes
injunctions or other dependent on an extended and the robustness
sanctions on an investment's project life. If such a of any Government
operation change were to occur, these subsidy. In
due to changes in laws or assets would have very few particular,
regulations that may have a alternative uses should they the Group considers
material adverse effect on become how to manage the
its financial obsolete. risk of carbon
condition. Carbon pricing is pricing through
a particular risk. using carbon price
forecasts
and offsetting
carbon cost risk to
off-takers where
possible. The Group
monitors government
guidance and is
looking to build
the portfolio in
line with this
guidance.
The Group's
Investment Strategy
focuses on a
diverse range of
assets across
various energy
efficiency
sub-sectors, which
reduces the impact
on the Group should
any such changes
impact
any one sector.
------------------------------ ------------------------------ -------------------- --------------
Counterparties' The Group's revenue derives The failure by a counterparty The Investment Impact
ability to make from the investments in the to pay the contractual Manager will look Moderate
contractual portfolio, and the Group is payments due, or the early to
payments exposed termination build in suitable Likelihood
to the financial strength of of mechanisms to Moderate
the counterparties to such an investment due to protect the Group's
projects and their ability to insolvency, may materially income stream from Change in
meet affect the value of the the relevant year
their contractual payment portfolio and could investment, Stable
obligations. have a material adverse which may include
effect on the performance of parent guarantees
the Group, the Net Asset and liquidated
Value, the Group's damages payments on
earnings and returns to s termination.
hareholders.
The Group's
exposure to
defaults may be
further mitigated
by contracting with
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.
Following
asset acquisitions,
the Investment
Manager puts in
place, and follows,
an ongoing
management
plan tailored to
the specific asset.
------------------------------ ------------------------------ -------------------- --------------
Geopolitical Geopolitical changes - Rising energy costs and High gas prices Impact
changes causing including the war in Ukraine inflation could result in the have been Moderate
economic - could affect economies deterioration of the credit accompanied by
disruption worldwide, including quality high electricity Likelihood
the UK economy, by, for of the Group's counterparties prices, resulting Moderate
example, pushing up energy through increasing their in some of the
prices and causing inflation. input prices, which increases Group's assets Change in
the risk trading ahead of year
of underperformance or the budget. In New
financial difficulty of the addition, the
Group's counterparties. Ukraine war is
putting greater
focus
on the need for
energy cost
reduction and
energy security
which has raised
the need for
implementation
of energy
efficiency and
distributed energy
solutions.
------------------------------ ------------------------------ -------------------- --------------
Investments are The Group's performance may Different technologies are at The Group's Impact
concentrated in be negatively impacted if its risk of poor operational and portfolio is being Moderate
a particular portfolio is overly financial performance in the built up in phases
technology concentrated event with technology Likelihood
in any one technology type. of a change in legislation or exposure being Moderate
regulation, or mechanical monitored
breakdown, or obsolescence and a variety of Change in
caused technologies in its year
by disruptive technologies. investment New
This would affect their pipeline.
ability to perform as well as
expected,
causing detriment to the
revenues and Net Asset Value
of the Group.
------------------------------ ------------------------------ -------------------- --------------
Significant The Group may spend If the Group expends time and All due diligence Impact
abortive costs significant time and money on money on assets which are not expenditure must be Moderate
in terms of assets that are ultimately acquired, this affects the approved by the
financial cost not acquired. Group's Investment Likelihood
and time returns to investors as well Committee. The risk Moderate
as distracting the Group from of aborts
acquiring other assets. is monitored as Change in
part of transaction year
sourcing and the New
due diligence
process. Internal
due diligence
is completed before
external advisers
are paid to conduct
due diligence.
------------------------------ ------------------------------ -------------------- --------------
Target returns The Group's targeted returns Paying returns which are There are regular Impact
are not met are targets only, based on lower than the targeted reviews of the Moderate
estimates and assumptions returns will reduce the investment
which are income due to investors, environment, Likelihood
subject to significant and could affect the share competition, the Moderate
uncertainties, including price of the Company, which pipeline, the
competitive market pricing would affect its ability to portfolio, Change in
being lower than raise further and future cash year
targeted returns, and actual finance. flow focused on New
returns may be materially enabling the Group
lower than targeted returns. to meet its
targeted returns.
The Group
has the flexibility
to structure
investments to be
as competitive as
possible through
the
overall terms of a
funding solution
rather than just on
price.
In addition, the
Group's Revolving
Credit Facility has
given the Group
access to funding
with
a cheaper cost of
capital which will
help the Group
achieve its target
returns.
------------------------------ ------------------------------ -------------------- --------------
The valuation The valuation of assets is Changes in values attributed The Investment Impact
of investments inherently subjective to investments during each Manager is Moderate
is subject to leading to uncertainty about six-month period may result responsible for
uncertainties how projects in volatility carrying out the Likelihood
are valued from period to in the Net Asset Values that fair market Moderate
period. These uncertainties the Group reports from valuation of the
arise from project valuation period to period. Group's Change in
assumptions investments, but year
and as well as the Group engages New
macro-economic factors, such external
as inflation and interest independent
rates, which feed into valuers to assess
operating assumptions and the validity of
discount rates, with higher these valuations,
discount rates leading to with six-monthly
lower Net reviews and annual
Asset Values. audits. Valuations
are prepared using
external market
benchmarks and
externally-sourced
power market
curves from
reputable
providers
or a blend from
more than one. The
fair valuation of
investments is
calculated in
accordance
with IPEV
(International
Private Equity and
Venture Capital)
valuation
guidelines.
------------------------------ ------------------------------ -------------------- --------------
Since the last Annual Report, the following risks have been
removed from the Principal Risks table:
-- Portfolio of new assets acquired which may include risks not
fully identified in due diligence process;
-- Risks relating to installing, operating, and decommissioning energy efficiency equipment;
-- Lack of availability of suitable investments; and
-- Cyber and other security risks.
Each of these risks are still being actively managed through our
risk management process.
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.
Physical effects of climate change
While efforts to mitigate climate change continue to progress,
the physical impacts are 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.
Growth of green hydrogen and the potential impact on business
cases
Once green hydrogen reaches a substantial supply level, it could
displace other green energy sources that are intermittent and so
reduce the demand for them. The emergence of this technology will
be monitored with the portfolio adapted as necessary.
Changes to energy market regulation and policies
As part the of transition to Net Zero, government policy is
likely to evolve to accelerate the transition whilst mitigating
costs to consumers. A number of potential options are under
discussion including regional or nodal pricing, windfall taxes and
the current approach to price setting in the market through
marginal pricing. Many of these potential changes are at very
initial stages of policy development and the Group will monitor how
these evolve, as well as position the Group to adapt to these
risks.
For example, if regional or nodal grid pricing is introduced, it
will impact power prices for generation assets depending on the
geographic location of those assets. This could increase or
decrease income. The Group will continue to invest in a
geographically diversified portfolio to mitigate this risk and put
in place appropriate offtake agreements.
GOING CONCERN AND VIABILITY STATEMENT
Going Concern
The Directors have adopted the going concern basis in preparing
the Annual report. In reaching this conclusion, the Directors have
considered the liquidity of the Company's portfolio of investments
as well as its cash position, income and expense flows.
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Investment Manager's Report. The Group faces a
number of risks and uncertainties, as set out in the Strategic
Report. The financial risk management objectives and policies of
the Group, including exposure to credit risk, price risk and market
risk are disclosed in note 17 to the financial statements.
The Group continues to meet day to day liquidity needs through
its cash resources.
As at 31 March 2022, the Company had net assets of GBP96.1
million including cash balances of GBP17.1 million. The Company's
sole, wholly owned, subsidiary TEEC Holdings has a GBP40 million
RCF which is undrawn and a GBP0.3 million cash balance which, on a
Group basis, are sufficient to meet current obligations, including
the GBP44.9 million investment commitments, as they fall due. The
covenants on the RCF are limited to gearing and interest cover and
the Group is expecting to comply with these covenants on drawdown
and in future periods.
The Groups investments comprise fixed rate debt investments with
contractual maturities between 2031 and 2035, together with a
portfolio of hydroelectric assets which are fully operational and
have remaining economic lives well in excess of thirty years. As a
result, the Group benefits from long-term cash flows and a set of
risks that can be identified and assessed. The loan investments
contribute a fixed return, and the Hydroelectric Portfolio benefits
from an upward only RPI linked revenue flow under a UK government
subsidy. The Hydroelectric Portfolio also benefits from fixed price
PPAs, with institutional counterparties, for the next two years.
Forecast revenues thereafter are subject to wholesale power prices
which are based upon qualified independent forecasts.
The major cash outflows of the Group, aside from
non-discretionary operating expenses, are the payment of dividends
and costs relating to the acquisition of new assets, both of which
are entirely discretionary.
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.
In late February 2022, Russia began an invasion of Ukraine with
devastating consequences for the country's citizens and major
implications for wider humanity, the global economy and capital
markets. The Company does not have any direct exposure to Russia,
however, the Company is monitoring the potential wider
macroeconomic consequences on the Company and its investment
portfolio closely, including energy price volatility and further
sanctions. Please refer to the Investment Manager's review, which
illustrates the wider effects of the Russia Ukraine conflict on the
Company and its investments. The Directors do not consider that the
effects of the conflict have created a material uncertainty over
the assessment of the Company as a going concern.
On the basis of this review, and after making due enquiries, 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.
Viability Statement
The Directors have assessed the viability of the Group over a
five-year period to March 2027.
In making this statement the Directors have considered the
resilience of the Group, taking account of its current position,
the principal risks facing the business (especially the level of
future energy prices and our counterparties' ability to make
contractual payments), in severe but plausible downside scenarios
and the effectiveness of any mitigating actions.
The Directors have determined that the five-year period to March
2027 is an appropriate period over which to provide this viability
statement as this period accords with the Group's business planning
exercises and is appropriate for the investments owned by the
Group. The Group's risk management processes, described in the Risk
Management section, consider the key risks during this five-year
period and beyond. These include sustainability-related risks that
take into account ESG considerations, including the physical and
transition risks of climate change (in line with the
recommendations of the Task Force on Climate-related Financial
Disclosures ("TCFD")).
The viability analysis has been prepared on the assumption that
the revolving credit facility, available to TEEC Holdings, which
has a contractual maturity of March 2024, is refinanced for the
remainder of the forecast period at the same rate. Supporting the
assumption are the Groups investments comprising fixed rate debt
investments and a portfolio of hydroelectric assets which are fully
operational with economic lives well in excess of the period being
considered. As a result, the Group benefits from long-term cash
flows and a set of risks that can be identified and assessed. Over
the next five years, the loan investments contribute a fixed
return, and the Hydroelectric Portfolio contributes returns based
on its upward only RPI linked revenue flow under a UK government
subsidy. The Hydroelectric Portfolio also benefits from fixed price
PPAs, with institutional counterparties, for the next two years.
Forecast revenues thereafter are subject to wholesale power prices
which are based upon qualified independent forecasts. The projects
are each supported by detailed financial models. The Directors
believe that portfolio diversification with fixed rate debt in
different energy efficiency technologies and equity investments in
hydroelectric assets helps to withstand and mitigate risks it is
most likely to meet.
The Investment Manager prepares and considers, and the Board
reviews, summary cash flow projections each year as part of
management reporting, business planning and dividend approval
processes. The projections consider cash balances, key covenants
and limits, dividend cover, investment policy compliance and other
key financial indicators over the five-year period. Sensitivity
analysis considers the potential impact of the Group's principal
risks occurring. These projections are based on the Investment
Manager's expectations of future asset performance, income and
costs, and are consistent with the methodology applied to produce
the valuation of the investments.
The Directors consider the risk to the value of the Company's
investments, its ability to operate its projects and generate
revenue, presented by the Covid-19 pandemic, there has been minor
disruption to the business to date and the risk-mitigating
activities have served to reduce the impact.
The Directors continue to encourage the Investment Manager to
ensure that the portfolio of investments is able to operate as
effectively as possible. The Investment Manager has performed
downside risk scenario planning encompassing a range of potential
outcomes and these demonstrate that whilst profitability may be
adversely affected, the Company and its investments are expected to
remain viable.
Based on this review, the Directors confirm that they have a
reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the
five-year period to March 2027.
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
23 June 2022
FINANCIAL STATEMENTS
INCOME STATEMENT
For the period ended 31 March 2022
Year Ended Year Ended
31 March 2022 31 March 2021
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------- ----- ------------ -------- -------- -------- -------- --------
Investment income 5 2,451 - 2,451 57 - 57
Profit/(Loss) arising on the revaluation of
investments at the period end 12 - 3,634 3,634 - (113) (113)
------------ -------- -------- -------- -------- --------
Investment return 2,451 3,634 6,085 57 (113) (56)
------------ -------- -------- -------- -------- --------
Investment management fees 4 327 109 436 5 1 6
Other expenses 6 867 21 888 388 71 459
------------ -------- -------- -------- -------- --------
1,194 130 1,324 393 72 465
Profit/(Loss) before taxation 1,257 3,504 4,761 (336) (185) (521)
------------ -------- -------- -------- -------- --------
Taxation 8 - - - - - -
Profit/(Loss) Loss after taxation 1,257 3,504 4,761 (336) (185) (521)
------------ -------- -------- -------- -------- --------
Other comprehensive income - - - - - -
Total comprehensive income/(loss) 1,257 3,504 4,761 (336) (185) (521)
------------ -------- -------- ======== ======== ========
Basic & diluted earnings per share (pence) 9 1.26p 3.50p 4.76p (0.58p) (0.32p) (0.90p)
The total column of this statement is the Income Statement of
the Company prepared in accordance with the requirements of the Act
and in accordance with the UK adopted international accounting
standards. 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 2022
Company Number: 12693305
31 March 2022 31 March 2021
Note GBP'000 GBP'000
-------------------------------------------------- ----- -------------- --------------
Non-current assets
Investments at fair value through profit or loss 12 78,952 20,883
-------------- --------------
Current assets
Trade and other receivables 13 453 201
Cash and cash equivalents 17,144 76,553
-------------- --------------
17,597 76,754
--------------
Total assets 96,549 97,637
============== ==============
Current liabilities
Trade and other payables 14 (412) (149)
(412) (149)
Net assets 96,137 97,488
============== ==============
Equity attributable to equity holders
Share capital 15 1,000 1,000
Share premium 13 -
Special distributable reserve 91,444 97,009
Capital reserve 3,319 (185)
Revenue reserve 361 (336)
-------------- --------------
Total Equity 96,137 97,488
============== ==============
Shareholders' funds
Net asset value per Ordinary Share 11 96.12p 97.49p
The statements were approved by the Directors and authorised for
issue on 23 June 2022 and are signed on behalf of the Board by:
Dr John Roberts
Chair
23 June 2022
The accompanying Notes are an integral part of this
statement.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended 31 March 2022
Special
Issued Share distributable Capital Revenue
capital premium reserve reserve reserve Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ----- --------- --------- --------------- --------- --------- --------
For year ended 31 March
2022
Opening balance 1,000 97,009 (185) (336) 97,488
--------- --------- --------------- --------- --------- --------
Issue of share capital 15 - 13 - - - 13
Total comprehensive
income/(loss) for
the period - - - 3,504 1,257 4,761
Dividends Paid 10 - - (5,565) - (560) (6,125)
--------- --------- --------------- --------- --------- --------
Balance at 31 March
2022 1,000 13 91,444 3,319 361 96,137
========= ========= =============== ========= ========= ========
Special
Issued Share distributable Capital Revenue
capital premium reserve reserve reserve Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ----- --------- --------- --------------- --------- --------- --------
For period ended 31
March 2021
Opening balance - - - - - -
--------- --------- --------------- --------- --------- --------
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 - (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 and total
GBP91,603,000 (31 March 21: GBP96,601,000).
The accompanying Notes are an integral part of this
statement.
STATEMENT OF CASH FLOWS
For the year ended 31 March 2022
Year ended Period ended
31 March 31 March
2022 2021
Note GBP'000 GBP'000
-------------------------------------------- ----- ----------- -------------
Cash flows from operating activities
Profit/(Loss) before taxation 4,761 (521)
Profit/(Loss) arising on the revaluation
of investments at the period end 12 (3,634) 113
----------- -------------
Cash flow generated by/(used in)
operations 1,127 (408)
Interest income 5 (2,451) (57)
Interest received 1,646 4
Decrease/(Increase) in receivables 13 34 (148)
Increase in payables 14 263 149
Net cash flow from/(used in) operating
activities 619 (460)
----------- -------------
Cash flows from investing activities
Purchase of financial assets at
fair value through profit or loss 12 (56,019) (20,996)
Loan principal repaid 12 2,103 -
Net cash flow used in investing
activities (53,916) (20,996)
----------- -------------
Cash flows from financing activities
Issue of shares 15 13 100,000
Costs of share issue (1,991)
Dividends paid (6,125) -
Net cash flow generated from financing
activities (6,112) 98,009
----------- -------------
Net (decrease)/increase in cash
and cash equivalents (59,409) 76,553
=========== =============
Reconciliation of net cash flow
to movements in cash and cash equivalents
Cash and cash equivalents at beginning
of year/period 76,553 -
Net (decrease)/increase in cash
and cash equivalents (59,409) 76,553
----------- -------------
Cash and cash equivalents at end
of period 17,144 76,553
=========== =============
The accompanying Notes are an integral part of this
statement.
NOTES TO THE FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
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's ordinary shares were first admitted to the premium
segment of the UK Listing Authority's Official List and to trading
on the Specialist Fund Segment of the Main Market of the London
Stock Exchange under the ticker TEEC on 19 October 2020.
The financial statements comprise only the results of the
Company, as its investment in 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.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
2.
The financial statements, which aim to give a true and fair
view, have been prepared in accordance with UK-adopted
international accounting standards and the applicable legal
requirements of the Companies Act 2006.
On 31 December 2020, IFRS as adopted by the European Union as
adopted at that date was brought into UK law and became UK-adopted
International Accounting Standards in its Company Financial
Statements on 1 January 2021. The change constitutes a change in
accounting framework. However, there is no impact on recognition,
measurement or disclosure in the period reported as a result of the
change in framework.
The financial statements have also been prepared as far as is
relevant and applicable to the Company in accordance with the
Statement of Recommended Practice: Financial Statements of
Investment Trust Companies and Venture Capital Trusts ("SORP")
issued in April 2021 by the Association of Investment Companies
("AIC").
The financial statements are prepared on the historical cost
basis, except for revaluation of certain financial investments at
fair value through profit or loss. The principal accounting
policies adopted are set out below and consistently applied,
subject to changes in accordance with any amendments in IFRS.
The Company was incorporated on 23 June 2020. The comparative
amounts, presented in the financial statements and the related note
disclosures, cover the period from 23 June 2020 to 31 March 2021,
therefore are not comparable with the amounts presented for the
year ended 31 March 2022.
Estimates and underlying assumptions are reviewed regularly on
an on-going basis. Revisions to accounting estimates are recognised
in the period in which the estimates are revised and future period
affected. The significant estimates, judgement or assumptions for
the period are set out below.
Basis of Consolidation
The sole objective of the Company, through its subsidiary TEEC
Holdings, is to make investments, via individual corporate
entities. The Company typically will subscribe for equity in or
issue loans to TEEC Holdings in order for it to finance its
investments.
The Directors have concluded that in accordance with IFRS 10,
the Company meets the definition of an investment entity having
evaluated the criteria that needs to be 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, meaning TEEC Holdings' cash, debt and working
capital balances are included in the fair value of the investment
rather than in the Company's assets and liabilities. However, in
substance, TEEC Holdings is investing the funds of the investors of
the Company on its behalf and is effectively performing investment
management services on behalf of many unrelated beneficiary
investors.
Characteristics of an investment entity
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. 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".
The Directors believe the treatment outlined above provides the
most relevant information to investors.
Going Concern
The Directors have adopted the going concern basis in preparing
the Annual report. In reaching this conclusion, the Directors have
considered the liquidity of the Company's portfolio of investments
as well as its cash position, income and expense flows.
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Investment Manager's Report. The Group faces a
number of risks and uncertainties, as set out in the Strategic
Report. The financial risk management objectives and policies of
the Group, including exposure to credit risk, price risk and market
risk are disclosed in note 17 to the financial statements.
The Group continues to meet day to day liquidity needs through
its cash resources.
As at 31 March 2022, the Company had net assets of GBP96.1
million including cash balances of GBP17.1. The Company's sole,
wholly owned, subsidiary TEEC Holdings has a GBP40 million RCF
which is undrawn and a GBP0.3 million cash balance which, on a
Group basis, are sufficient to meet current obligations, including
the GBP44.9 million investment commitments, as they fall due. The
covenants on the RCF are limited to gearing and interest cover and
the Group is expecting to comply with these covenants on drawdown
and in future periods.
The Group's investments comprise fixed rate debt investments
with contractual maturities between 2031 and 2035, together with a
portfolio of hydroelectric assets which are fully operational and
have remaining economic lives well in excess of thirty years. As a
result, the Group benefits from long-term cash flows and a set of
risks that can be identified and assessed. The loan investments
contribute a fixed return, and the Hydroelectric Portfolio benefits
from upward only RPI linked revenue flow under a UK government
subsidy. The Hydroelectric Portfolio also benefits from fixed price
PPAs, with institutional counterparties, for the next two years.
Forecast revenues thereafter are subject to wholesale power prices
which are based upon qualified independent forecasts.
The major cash outflows of the Group are the payment of
dividends and costs relating to the acquisition of new assets, both
of which are entirely discretionary.
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.
In late February 2022, Russia began an invasion of Ukraine with
devastating consequences for the country's citizens and major
implications for wider humanity, the global economy and capital
markets. The Company does not have any direct exposure to Russia,
however, the Company is monitoring the potential wider
macroeconomic consequences on the Company and its investment
portfolio closely, including energy price volatility and further
sanctions. Please refer to the Investment Manager's review, which
illustrates the wider effects of the Russia Ukraine conflict on the
Company and its investments. The Directors do not consider that the
effects of the conflict have created a material uncertainty over
the assessment of the Company as a going concern.
On the basis of this review, and after making due enquiries, 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.
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 its investments,
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, through its investment in TEEC
Holdings, continue to measure all investments at fair value and any
changes in the fair value are to be recognized 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 recognized
upon initial recognition as financial assets at fair value through
profit or loss in accordance with IFRS 9. 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.
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.
Financial liabilities
Financial liabilities are classified as other financial
liabilities, comprising:
-- other non-derivative financial instruments, including trade
and other payables, which are to be measured at amortised cost
using the effective interest method.
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 Group's investments 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, by TEEC
Holdings, from the investment portfolio. The underlying cash flows
are from investments in both equity (dividends and equity
redemptions), shareholder, inter-company and third-party loans
(interest and repayments). The valuations are based on the expected
future cash flows, using reasonable assumptions and forecasts for
revenues, operating costs, macro-level factors and an appropriate
discount rate.
The discount rates used in the valuation exercise represent the
Investment Manager's best assessment of the rate of return in the
market for assets with similar characteristics and risk profile.
The discount rates are reviewed on a regular basis and updated,
where appropriate, to reflect changes in the market and in the
project risk characteristics.
Investments, which are entered into by TEEC Holdings, are
designated upon initial recognition as held at fair value through
profit or loss. Gains or losses resulting from the movement in fair
value of the investments are reflected in the valuation of TEEC
Holdings and recognised in the Statement of Comprehensive Income at
each semi-annual valuation point.
The Company's loan and equity investment in TEEC Holdings is
held at fair value through profit or loss which is measured by
reference to the net asset value of TEEC Holdings. Gains or losses
resulting from the movement in fair value are recognised in the
Company's Statement of Comprehensive Income at each semi-annual
valuation point.
For the year end and half-year accounts the Company engages
external, independent and qualified valuers to assess the validity
of the forecast cash flow assumptions and discount rates used by
the Investment Manager in determination of fair value. The Board
reviews and approves the valuations following appropriate challenge
and examination
Revenue Recognition
Gains and losses on fair value of investments in the income
statement 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.
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. At 31 March 2022, the
Company's cash balances were held in the Company's bank current
account.
There are no expected credit losses as the bank institutions
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.
New, revised and amended standards applicable to future
reporting periods
There were no new standards or interpretations effective for the
first time in the year that have had a significant impact on the
Company's financial statements. Furthermore, none of the amendments
to the standards summarised below have had a significant effect on
the financial statements.
New and revised standards not applied
At the date of authorisation of these financial statements, the
following amendments had been published and will be mandatory for
future accounting periods beginning on or after 1 January 2022:
-- A number of narrow-scope amendments to IFRS 3 "Business
Combinations", IAS 16 "Property, plant and equipment", IAS 37
Provisions, contingent liabilities and contingent assets" and
annual improvements on IFRS 1 "First-time Adoption of IFRS", IFRS 9
"Financial instruments, IAS 41 "Agriculture" and illustrative
examples accompanying IFRS 16 "Leases".
Effective for accounting periods beginning on or after 1 January
2023:
-- Narrow-scope amendments to IAS 1 "Presentation of Financial
Statements", practise statement 2 and IAS 8 "Accounting Policies,
Changes in Accounting Estimates and Errors".
-- Amendments to IAS 12 "Income Taxes" - deferred tax related to
assets and liabilities arising from a single transaction.
-- Amendments to IFRS 17, "Insurance contracts" - this standard
replaced IFRS 4, which currently permits a wide variety of
practices in accounting for insurance contracts.
Effective for accounting periods beginning on or after 1 January
2024:
-- Amendments to IAS 1 on classification of liabilities clarify
that liabilities are classified as either current or non-current,
depending on the rights that exist at the end of the reporting
period.
The impact of these standards is not expected to be material to
the reported results of the Company.
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. All the investments
are based in the UK.
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.
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.
The preparation of the financial statements requires the Board
to make judgements, estimates and assumptions that affect the
application of the accounting policies and the reported amount of
assets, liabilities, income and expenses. Estimates, by their
nature, are based on judgement and available information, hence
actual results may differ from these judgements, estimates and
assumptions.
The key estimates that have a significant impact on the carrying
values of underlying investments that are valued by reference to
the discounted value of future cash flows are the useful life of
the assets, the discount rates, the rate of inflation, the price at
which the power and associated benefits can be sold and the amount
of electricity the assets are expected to produce. The sensitivity
analysis of these key assumptions is outlined in note 12 to the
financial statements.
For equity investments, entered into by TEEC Holdings, useful
lives are based on the Investment Manger's estimates of the period
over which the assets will generate revenue which are periodically
reviewed for continued appropriateness. Where land is leased from
an external landlord, the operational life assumed for the purposed
of the asset valuations is valued at lease expiry or end of
contractual extension options. For the loan investments the future
cash flows are as per contractual maturity of the facility.
The discount rates are subjective and therefore it is feasible
that a reasonable alternative assumption may be used resulting in a
different value. The discount rates applied to cash flows are
reviewed regularly by the Investment Manager to ensure they are at
an appropriate level. The Investment Manager will take into
consideration market transactions, of similar nature, when
considering changes to the discount rates used. For the year end
and half-year accounts the Company engages external, independent
and qualified valuers to assess the validity of the discount rates
used by the Investment Manager in determination of fair value.
For equity investments, by TEEC Holdings, the revenues and
expenditure of the investee companies are frequently or wholly
subject to indexation and an assumption is made as to near term and
long-term rates. For debt investments, by TEEC Holdings, the cash
flows are determined by reference to contractual arrangements.
The price at which the output from the generating equity assets
is sold is a factor of both wholesale electricity prices and the
revenue received from the Government support regimes such as the
Feed in Tariffs. Future power prices are estimated using external
third-party forecasts which take the form of special consultancy
reports, which reflect various factors including gas prices, carbon
prices and renewables deployment.
TEEC Holdings' investments in unquoted investments are valued by
reference to valuation techniques approved by the Directors and in
accordance with the International Private Equity and Venture
Capital ("IPEV") Guidelines.
As noted above, the Board has concluded that the Company meets
the definition of an investment entity as defined in IFRS 10. This
conclusion involved a degree of judgement and assessment as to
whether the Company meets 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 was
accrued or charged on the undeployed cash funds arising from the
IPO until such time as 75 % or more of the net proceeds were
deployed. The 75% threshold was reached on 10 December 2021,
following completion of the GBP19.6 million acquisition of the
final three hydro assets acquired in the year.
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 are only 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 year ended For the period ended
31 March 2022 31 March 2021
------------------------- -------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ------- ------- ------- -------
Cash element 317 106 423 5 1 6
Equity element 10 3 13 - - -
327 109 436 5 1 6
------- ------- ------- ------- ------- -------
5. INVESTMENT INCOME
For the year ended For the period ended
31 March 2022 31 March 2021
------------------------- -------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ------- ------- ------- -------
Interest on cash deposits 5 - 5 4 - 4
Interest income from
investments 2,446 - 2,446 53 - 53
2,451 - 2,451 57 - 57
------- ------- ------- ------- ------- -------
6. OPERATING EXPENSES
For the year ended For the period ended
31 March 2022 31 March 2021
------------------------- -------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment Management fees 327 109 436 5 1 6
Directors' fees* 200 - 200 91 - 91
Company's audit fees:
* In respect of audit services 70 - 70 60 - 60
* In respect of non-audit services 25 - 25 - - -
Other operating expenses 549 21 570 225 71 296
Irrecoverable VAT on Administration & Management fees 23 - 23 12 - 12
1,194 130 1,324 393 72 465
------- ------- ------- ------- ------- -------
*Directors' fees exclude employer's national insurance
contributions and travel expenses which are included as appropriate
in other operating expenses. Travel expenses for the year ended 31
March 2022 totaled GBP643 (31 March 2021: nil).
7. EMPLOYEES
The Company had no employees during the period.
Full detail on Directors' fees is provided in Note 19. 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 year ended For the period ended
31 March 2022 31 March 2021
------------------------- -------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 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 year ended For the period ended
31 March 2022 31 March 2021
------------------------- -------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit/(Loss) before
taxation 1,257 3,504 4,761 (336) (185) (521)
------- ------- ------- ------- ------- -------
Corporation tax at
19% 239 666 905 (64) (35) (99)
Effect of:
Capital (gain)/loss
not deductible - (690) (690) - 22 22
Interest deductions (239) - (239) - - -
Disallowed expenditure - 12 12
Surrendering of Tax
losses to unconsolidated
subsidiaries - 24 24 64 1 65
Tax charge 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 has in the financial year utilised 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 at the current main rate of 19%.
9. EARNINGS PER SHARE
For the year ended For the period ended
31 March 2022 31 March 2021
------------------------- -------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit / (Loss) attributable
to the equity holders
of the Company (GBP'000) 1,257 3,504 4,761 (336) (185) (521)
Weighted average number
of Ordinary Shares
in issue (000) 100,004 100,004 100,004 58,156 58,156 58,156
Profit / (Loss) per
Ordinary share (pence)
- basic and diluted 1.26p 3.50p 4.76p (0.58p) (0.32p) (0.90p)
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 and
diluted number of Shares.
10. DIVIDS AND INTEREST DISTRIBUTIONS
Dividend per Interest distribution
Interim dividends paid during share per share Total dividend
year ended 31 March 2022 pence pence GBP'000
Interim dividend for the period
ended 31 March 2021 2.00 - 2,000
First quarter interim dividend
for year ended 31 March 2022 1.375 - 1,375
Second quarter interim dividend
for year ended 31 March 2022 1.375 - 1,375
Third quarter interim dividend
for year ended 31 March 2022 0.815 0.560 1,375
5.565 0.560 6,125
------------ --------------------- --------------
Interim dividends declared Dividend per Interest distribution
after 31 March 2022 and not share per share Total dividend
accrued in the year pence pence GBP'000
Fourth quarter interim dividend
for the year ended 31 March
2022 0.678 0.697 1,375
0.678 0.697 1,375
------------ --------------------- --------------
On 14 June 2022, the Board declared a fourth quarter interim
dividend of 1.375 pence per share with respect to the period ended
31 March 2022. The dividend is expected to be paid on or around 8
July 2022 to shareholders on the register on 24 June 2022. The
ex-dividend date is 23 June 2022. The Company has chosen to
designate part of this interim dividend as an interest
distribution. 0.697 pence per share will be paid as an interest
payment and 0.678 as an ordinary dividend.
Shareholders in receipt of an interest distribution will be
treated for UK tax purposed as though they received a payment of
interest. This will result in a reduction in the corporation tax
payable by the Company.
11. NET ASSETS PER ORDINARY SHARE
31 March 2022 31 March 2021
------------- -------------
GBP'000 GBP'000
Total shareholders' equity (GBP'000) 96,137 97,488
Number of Ordinary Shares in issue ('000) 100,014 100,000
Net asset value per Ordinary Share (pence) 96.12p 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:
31 March 2022 31 March 2021
------------- -------------
GBP'000 GBP'000
Fair value at the start of the period 20,883 -
Loans advanced to TEEC Holdings Limited 32,704 20,996
Shareholding in TEEC Holdings Limited 23,315 -
Capitalised interest 519 -
Loan principal repaid (2,103) -
Movement in fair value of investments 3,634 (113)
Total investments as at end of the period 78,952 20,883
------------- -------------
Reconciliation of movement in fair value
31 March 2022 31 March 2021
------------- -------------
GBP'000 GBP'000
Fair value at start of the period 20,883 -
Loan advanced to TEEC Holdings Limited 32,704 20,996
Shareholding in TEEC Holdings Limited 23,315 -
Capitalised interest 519 -
Loan principal repaid (2,103) -
------------- -------------
Fair value of portfolio at end of the
period 75,318 20,996
Cash held in intermediate holding company 293 80
Fair value of other net assets in intermediate
holding company 3,341 (193)
Fair Value of Company's investments
as at end of the period 78,952 20,883
------------- -------------
Loans advanced to TEEC Holdings in the year totalled
GBP32,704,000, GBP200,000 was advanced as a working capital loan at
a 0% interest rate. GBP8,032,000, was advanced at an interest rate
of 7.375% to enable TEEC Holdings to complete the loan investment
in Spark Steam Limited on commensurate terms. GBP24,473,000 was
advanced to enable TEEC Holdings to advance shareholder loans into
the Hydroelectric portfolio of GBP24,473,000, on which TEEC
Holdings charges interest of 5.00% and the Company charges interest
of 4.75%.
The Company owns three shares in TEEC Holdings Limited,
representing 100% of issued share capital, allotted for a
consideration of GBP23,315,000. The fair value of the Company's
equity in TEEC Holdings Limited on 31 March 2022 is GBP26,836,000
(31 March 21: minus GBP113,000) and the fair value of the Company's
debt interest in TEEC Holdings Limited at 31 March 2022 is
GBP52,116,000 (31 March 21: GBP20,996,000),
Capitalised interest represents interest recognised in the
income statement but not paid. This is instead added to the loan
balance on which interest for future periods is computed. The loan
from the Company to TEEC Holdings, which enabled TEEC Holdings to
complete investments into Harvest, Glasshouse and Spark Steam,
carry commensurate terms and repayment profiles. All payments from
the borrower and capitalised interest are in accordance and in line
with the contractual repayments with the respective underlying
facility agreements with Harvest, Glasshouse and Spark Steam as
agreed at inception
Reconciliation of Portfolio Valuation
31 March 2022 31 March 2021
------------- -----------------------------
GBP'000 GBP'000
Portfolio Valuation 78,787 20,996
Intermediate holding company cash 293 80
Intermediate holding company debt* 454 -
Intermediate holding company net working
capital (582) (193)
Fair Value of Company's investments as
at end of the period 78,952 20,883
------------- -----------------------------
*Debt arrangement costs of GBP454,000 (31 March 2021: nil) which
are capitalised and expensed to profit or loss under amortised
cost. At 31 March 2022 nil debt was drawn (31 March 2022: nil).
Fair Value measurements
As set out in Note 2, the Company accounts for its interest in
its wholly owned direct subsidiary, TEEC Holdings,
as an investment at fair value through profit or loss.
IFRS 13 requires disclosure of fair value measurement by level.
The level of fair value hierarchy within the financial assets or
financial liabilities is determined on the basis of the lowest
level input that is significant to the fair value measurement.
Financial assets and financial liabilities are classified in
their
entirety into only one of the following 3 levels:
-- level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
-- level 2 - inputs other than quoted prices included within
Level 1 that are observable for the assets or
liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
-- level 3 - inputs for assets or liabilities that are not based
on observable market data (unobservable inputs).
The determination of what constitutes 'observable' requires
significant judgement by the Company. Observable data is considered
to be market data that is readily available, regularly distributed
or updated, reliable and verifiable, not proprietary, and provided
by independent sources that are actively involved in the relevant
market.
The financial instruments held at fair value are the instruments
held by the Group in the SPVs, which are fair valued at each
reporting date. The investments have been classified within level 3
as the investments are not traded and contain certain unobservable
inputs. The Company's investments in TEEC Holdings are also
considered to be level 3 assets.
As the fair value of the Company's equity and loan investments
in TEEC Holdings is ultimately determined by the underlying fair
values of the equity and loan investments, made by TEEC Holdings,
the Company's sensitivity analysis of reasonably possible
alternative input assumptions is the same as for those
investments.
There have been no transfers between levels during the
period.
Valuations are derived using a discounted cash flow methodology
in line with IPEV Valuation Guidelines and consider, inter alia,
the following:
i. due diligence findings where relevant;
ii. the terms of any material contracts including PPAs;
iii. asset performance
iv. power pirce forecasts from leading consultants; and
v. the economic, taxation or regulatory environment
The DCF valuation of the Group's investments represents the
largest component of GAV and the key sensitivities are considered
to be the discount rate used in the DCF valuation and assumptions
relating to inflation, energy yield and power prices.
The shareholder loan and equity investments, in TEEC Holdings,
are valued as a single asset class at fair value in accordance with
IFRS 13 Fair Value Measurement.
Sensitivity
Sensitivity analysis is produced to show the impact of changes
in key assumptions adopted to arrive at the valuation. For each of
the sensitivities, it is assumed that potential changes occur
independently of each other with no effect on any other base case
assumption, and that the number of investments in the portfolio
remains static throughout the modelled life.
The analysis below shows the sensitivity of the portfolio value
(and its impact on NAV) to changes in key assumptions as
follows:
Discount rate
The weighted average valuation discount rate applied to
calculate the portfolio valuation is 6.11% (31 March 21:
7.98%).
An increase or decrease in this rate by 0.5% points has the
following effect on valuation
Total
NAV per -0.5% portfolio +0.5% NAV per
Discount Rate share impact change value change share impact
pence GBP'000 GBP'000 GBP'000 pence
Valuation - March
2022 3.33 3,330 78,952 (3,042) (3.04)
Energy yield
The table below shows the sensitivity of the Hydroelectric
Portfolio valuation to a sustained decrease or increase of energy
generation by minus or plus 5% on the valuation, with all other
variables held constant. The fair value of the Hydroelectric
Portfolio is assessed on a "P50" level of electricity generation,
representing the expected level of generation over the long
term.
A change in the forecast energy yield assumptions by plus or
minus 5% has the following effect.
Total
NAV per -5% portfolio NAV per
Energy Yield share impact change value +5% change share impact
pence GBP'000 GBP'000 GBP'000 pence
Valuation - March
2022 (3.16) (3,164) 78,952 3,150 3.15
Power Prices
The sensitivity considers a flat 10% movement in power prices
for all years, i.e. the effect of adjusting the forecast
electricity price assumptions applicable to the Hydroelectric
Portfolio down by 10% and up by 10% from the base case assumptions
for each year throughout the operating life of the Hydroelectric
Portfolio.
A change in the forecast electricity price assumptions by plus
or minus 10% has the following effect.
Total
NAV per portfolio NAV per
Power Prices share impact -10% change value +10% change share impact
pence GBP'000 GBP'000 GBP'000 pence
Valuation - March
2022 (2.16) (2,157) 78,952 2,638 2.64
Inflation
The Hydroelectric Portfolio's income streams are principally
subsidy based, which is amended each year with inflation and power
prices, which the sensitivity assumes will move with inflation.
Operating expenses relating to the Hydroelectric Portfolio,
typically move with inflation, but debt payments on the shareholder
loans are fixed. This results in the portfolio returns and
valuations being positively correlated to inflation. The average
long-term inflation assumption across the portfolio are 3.00% for
RPI from 2023 to 2030 and 2.40% thereafter, 2.25% for CPI from
2023. The Company also models a Power Curve Indexation set at 2.75%
from 2023, as wholesale power prices are not intrinsically linked
to consumer prices, unlike costs of sales and labour.
The sensitivity illustrates the effect of a 0.5% decrease and a
0.5% increase from he assumed annual inflation rates in the
financial model throughout the operating life of the portfolio.
Total
NAV per -0.5% portfolio +0.5% NAV per
Inflation share impact change value change share impact
pence GBP'000 GBP'000 GBP'000 pence
Valuation - March
2022 (2.31) (2,309) 78,952 2,549 2.55
13. TRADE AND OTHER RECEIVABLES
For the year ended For the period ended
31 March 2022 31 March 2021
------------------ --------------------
GBP'000 GBP'000
Prepayments 114 148
Other receivables 339 53
453 201
------------------ --------------------
14. TRADE AND OTHER PAYABLES
For the year ended For the period ended
31 March 2022 31 March 2021
------------------ --------------------
GBP'000 GBP'000
Accrued expenses 125 72
Other payables 287 77
412 149
------------------ --------------------
15. SHARE CAPITAL AND RESERVES
For the year ended 31 March 2022
----------------------------------- ---------------- ----------------
Nominal value
Allotted, issued and fully paid: Number of shares of shares (GBP)
----------------------------------- ---------------- ----------------
Opening balance as at 1 April 2021 100,000,000 1,000,000.00
Ordinary Shares of 1p each 14,079 140.79
Closing balance of Ordinary Shares
at 31 March 2022 100,014,079 1,000,140.79
----------------------------------- ---------------- ----------------
For the period ended 31 March 2021
----------------------------------- ---------------- ----------------
Nominal value
Allotted, issued and fully paid: Number of shares of 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 Specialist Fund Segment
of the 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
----------------------------------- ---------------- ----------------
The initial placing of 100,000,000 ordinary shares of GBP0.01,
took place on 19 October 2020, raising gross proceeds of
GBP100,000,000.
The Company issued 14,079 shares of GBP0.01 each to the
Investment Manager in year ending March 2022 raising proceeds of
GBP13,325 creating share premium of GBP13,184 (see note 19).
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. SPECIAL DISTRIBUTABLE RESERVE
Following admission of the Company's Ordinary Shares to trading
on the Specialist Fund Segment of 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 was GBP97 .0 million which can be
utilised to fund distributions by way of dividends to the Company's
shareholders. As at year ending 31 March 2022, the special
distributable reserve balance is GBP91.4m.
17. 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
Interest rate risk arises from the possibility that changes in
interest rates will affect future cash flows or the fair values of
financial instruments. The Company is exposed to interest rate risk
on its cash balances held with counterparties, bank deposits,
advances to counterparties through loans to its subsidiaries. The
Company may be exposed to changes in variable market rates of
interest of interest as this could impact the discount rate and
therefore the valuation of the investments as well as the fair
value of the loan receivable. The Company is not considered to be
materially exposed to interest rate risk so no sensitivity has been
performed. Sensitivity analysis is disclosed in note 12 to show the
impact of changes in key assumptions adopted to arrive at the
valuation of investments.
The Company's interest and non-interest-bearing assets and
liabilities are summarised below:
Interest Non-interest
bearing bearing Total value
GBP'000 GBP'000 GBP'000
For the year ended 31 March 2022
Assets:
Investments at fair value
through profit or loss 52,116 26,836 78,952
Other receivables 339 339
Cash and cash equivalents 17,144 - 17,144
Total Assets 69,260 27,175 96,435
--------- ------------- ------------
Liabilities:
Trade and other payables - 412 412
Total Liabilities - 412 412
--------- ------------- ------------
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
Other 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
--------- ------------- ------------
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 has
through TEEC Holdings put in place a revolving credit facility. The
Company 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, through TEEC
Holdings, were in equity and secured loan investments in 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 which it holds.
Financial assets and liabilities by maturity at the period end
are shown below:
Less than More than
For year ended March 2022 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 - - 78,952 78,952
Receivables 339 - - 339
Cash and cash equivalents 17,144 - - 17,144
Liabilities:
Trade and other Payables (412) - - (412)
--------- --------- --------- -------
17,071 - 78,952 96,023
--------- --------- --------- -------
Less than More than
For period ended March 2021 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
--------- --------- --------- -------
Credit Risk
Credit risk is the risk that a counterparty of the Group will be
unable or unwilling to meet a commitment that it has entered into
with the Group. It is a key part of the pre-investment due
diligence. The credit standing of the companies which the Group
intends to lend to or invest in 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, loan investments held through
TEEC Holdings 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 and the
Company's cash balances were held in the Company's current
account.
The carrying value of the investments, trade and other
receivables and cash represent the Company's maximum exposure to
credit risk.
Price Risk
Price risk is defined as the risk that the fair value of a
financial instrument held by the Group will fluctuate. Investments
are measured at fair value through profit and loss. As at the 31
March 2022, the Company held nine indirect investments through its
intermediary holding company, TEEC Holdings. The value of the
investments held by TEEC Holdings will vary according to a number
of factors including: discount rate used, asset performance and
forecast power prices. Sensitivity analysis is disclosed in note
12.
Capital Risk Management
The capital structure of the Company at the year-end consists of
equity attributable to equity holders of the Company, comprising
issued capital and reserves. The Board continues to monitor the
balance of the overall capital structure so as to maintain investor
and market confidence. The Company is not subject to any external
capital requirements.
Market Risk
Returns from the Company's indirect investments are affected by
the price at which the investments are acquired. The value of these
investments will be a function of the discounted value of their
expected future cash flows, and as such will vary with, inter-alia,
movements in interest rates, market prices and competition for such
assets. The Investment Manager carries out a full valuation
semi-annually and this valuation exercise takes into account such
changes.
18. SUBSIDIARIES
The following table shows subsidiaries of the Group. As the
Company is regarded as an Investment Entity as referred to in Note
2, the subsidiaries have not been consolidated in the preparation
of the financial statements.
Place Ownership interest
Investment of Business as at 31 March 2022
TEEC Holdings * UK 100.00%
Achnacarry Hydro Limited** UK 100.00%
Elementary Energy Limited** UK 99.32%
Green Highland ALLT Choire A Bhalachain
(255) Limited** UK 100.00%
Green Highland ALLT Ladaidh (1148) Limited** UK 100.00%
Green Highland ALLT Luaidhe (228) Limited** UK 100.00%
Green Highland ALLT Phocachain (1015)
Limited** UK 100.00%
Place Ownership interest
Investment of Business as at 31 March 2021
TEEC Holdings* UK 100.00%
*Direct shareholding in a financial services investment holding
company.
** Indirect shareholding in an electricity production
company.
19. RELATED PARTY TRANSACTIONS
Directors Fees
The amounts incurred in respect of Directors fees during the
period to 31 March 2022 was GBP200,000 (31 March 2021: GBP91,026).
These amounts have been fully paid at 31 March 2022. The amounts
paid to individual directors during the period were as follows:
For the year For the period
ended 31 March ended 31 March
2022 2021
Dr John Roberts (Chair) GBP75,000 GBP34,135
Rosemary Boot GBP45,000 GBP20,481
Sonia McCorquodale GBP40,000 GBP18,205
Dr Anthony White GBP40,000 GBP18,205
Directors Expenses
The expenses claimed by the Directors during the period to 31
March 2022 was GBP643 (31 March 2021: nil). These amounts have been
fully paid at 31 March 2022. The amounts paid to individual
directors during the period were as follows:
For the year For the period
ended 31 March ended 31 March
2022 2021
Dr John Roberts (Chair) GBP551 -
Rosemary Boot GBP51 -
Sonia McCorquodale - -
Dr Anthony White GBP41 -
Directors' interests
Details of the direct and indirect interest of the Directors and
their close families in the ordinary share of one pence each in the
Company at 31 March 2022 were as follows:
% of Issued
Number of Shares share Capital
Dr John Roberts (Chair) 40,000 0.04%
Rosemary Boot 40,000 0.04%
Sonia McCorquodale 10,000 0.01%
Dr Anthony White 40,000 0.04%
The 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 is 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 quarterly and is
invoiced quarterly in arrears. During the period ended 31 March
2022, management fees of GBP436,478 (31 March 2021: GBP6,213) were
incurred of which GBP207,765 (31 March 2021: GBP6,213) was payable
at the period end.
No annual management fee can 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 assets. From 10
December 2021, following completion of the GBP19.6 million
acquisition of the final three hydro assets acquired in the year,
the Management fee has been charged by reference to the Company
NAV.
In June 2021, the Company completed a GBP8.0 million senior debt
investment in Spark Steam Limited, a company that owns and operates
a CHP asset which was part of the pipeline identified at IPO. The
transaction followed on from similar investments made in March 2021
in Harvest Generation Services Limited and Glasshouse Generation
Limited. The transaction refinanced debt previously provided in
part by investees of other funds under the management of the
Investment Manager and was approved by the Board in line with the
Company's conflict of interest procedures.
In November 2021 and December 2021, the Company acquired a
portfolio of operational, Feed in Tariff accredited, hydroelectric
power project for a total consideration of GBP46.5 million. The
acquisition included the purchase of the entire equity interest
from Triple Point 2011 VCT plc and Triple Point Income VCT plc who
are managed by Triple Point Investment Management. The transaction
followed a full conflicts process, with two separate teams within
the Investment Manager dealing with the sale and purchase, The two
teams were segregated, with distinct independent reporting lines
and separate access to the electronic files relevant to the
transaction. The transaction was approved by the Board in line with
the Company's conflict of interest procedures.
Investment Managers Interest in shares of the Company
On the 18 June 2021, the Company issued 675 Ordinary Shares to
the Investment Manager in accordance with the terms of the
Investment Management Agreement pursuant to which 20%. Of the
management fee paid is used to acquire new ordinary shares of
GBP0.01 each in the capital of the Company. The issue price per
Investment Management Ordinary Share was GBP0.9749 (being the
prevailing Net Asset Value per share), in accordance with the terms
of the Investment Management Agreement.
On the 16 December 2021, the Company issued 13,404 Ordinary
Shares to the Investment Manager in accordance with the terms of
the Investment Management Agreement pursuant to which 20%. Of the
management fee paid is used to acquire new ordinary shares of
GBP0.01 each in the capital of the Company. The issue price per
Investment Management Ordinary Share was GBP0.9450 (being the
prevailing Net Asset Value per share), in accordance with the terms
of the Investment Management Agreement.
On the 7 February 2022, the Investment Manager purchased, on the
secondary market, 158,882 ordinary shares of GBP0.01 each in the
capital of the Company at an average price of GBP0.9440 pence per
share.
Details of the interests of the Investment Manager, held by an
entity within the Wider Triple Point Group, in the ordinary shares
of one pence each in the Company as at 31 March 2022 were as
follows:
% of Issued share
Number of Shares Capital
Perihelion One Limited 672,962 0.67%
Perihelion One Limited is a company within the Wider Triple
Point Group.
Guarantees and other commitments
The Company is the guarantor of the GBP40 million RCF between
its sole wholly owned subsidiary TEEC Holdings Limited and TP
Leasing Limited. The RCF was entered into on the 29 March 2022 and
is undrawn.
TP Leasing Limited is an established private credit and asset
leasing business which is managed by the Investment Manager and, as
a result, is deemed to be a related party as defined in the Listing
Rules. The RCF is deemed to be a "smaller related party
transaction" for the purposes of LR11.1.10R. As set out in the IPO
Prospectus, the Company has adopted a related party policy pursuant
to which, prior to entering into the Facility Agreement, (i) the
RCF was approved by the Directors and (ii) the Company obtained a
fair and reasonable opinion from a qualified, independent adviser.
The Board was satisfied with the conflict management procedures put
in place, including team segregation within the Investment Manager
and obtaining independent third-party pricing validation.
On the 31 March 2022, TEEC Holdings entered into a GBP45.6
million investment commitment, to fund the b uild of a portfolio of
four geographically diverse BESS assets in the UK. GBP44.9 million
of the commitment is outstanding and due to be deployed during the
year ending 31 March 2023. The commitment is expected to be funded
via the undrawn GBP40 million RCF available to TEEC Holdings and
cash reserves of the Company.
20. EVENTS AFTER THE REPORTING PERIOD
On 9 June 2022, the Company's sole wholly owned subsidiary, TEEC
Holdings Limited, entered into an agreement to fund its first
energy efficient lighting opportunity. The Company has committed to
fund GBP1 million to a lighting solutions provider who will install
efficient lighting and controls at a logistics company.
Dividend
On 14 June 2022, the Board declared a fourth quarter interim
dividend of 1.375 pence per share with respect to the period ended
31 March 2022. The dividend is expected to be paid on or around 8
July 2022 to shareholders on the register on 24 June 2022. The
ex-dividend date is 23 June 2022. The Company has chosen to
designate part of this interim dividend as an interest
distribution. 0.697 pence per share will be paid as an interest
payment and 0.678 as an ordinary dividend.
21. 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
------------------------------------------------------
BESS Battery Energy Storage Systems
------------------------------------------------------
BESS Portfolio GBP45.6 million debt facility to a subsidiary
of Virmati Energy Ltd (trading as Field), to
fund a portfolio of four Battery Energy Storage
Systems assets
------------------------------------------------------
CCC Climate Change Committee
------------------------------------------------------
CHP Combined heat and power
------------------------------------------------------
CHP Portfolio A total debt investment of GBP29 million into
Harvest and Glasshouse and Spark Steam
------------------------------------------------------
The Company Triple Point Energy Efficiency Infrastructure
Company plc (company number 12693305).
------------------------------------------------------
DCF Discounted Cash Flow
------------------------------------------------------
ESG Environmental, Social and Governance
------------------------------------------------------
EU European Union
------------------------------------------------------
EV Electric Vehicle
------------------------------------------------------
FCA Financial Conduct Authority
------------------------------------------------------
FRC Financial Reporting Council
------------------------------------------------------
GAV Gross Asset Value
------------------------------------------------------
GHG Green House Gas
------------------------------------------------------
Group The Company and any subsidiary undertakings
from time to time
------------------------------------------------------
Harvest and Glasshouse Harvest Generation Services Limited and Glasshouse
Generation Limited
------------------------------------------------------
HVAC Heating, Ventilation and Air Conditioning
------------------------------------------------------
Hydroelectric Portfolio Elementary Energy Limited
Green Highland Allt Ladaidh (1148) Limited
Green Highland Allt Choire A Bhalachain (255)
Limited
Green Highland Allt Phocachain (1015) Limited
Green Highland Allt Luaidhe (228) Limited
Achnacarry Hydro Limited
------------------------------------------------------
ITC Investment Trust Company
------------------------------------------------------
Investment Manager Triple Point Investment Management LLP
------------------------------------------------------
IPO The admission by the Company of 100 million
Ordinary Shares to trading on the Specialist
Fund Segment of the Main Market, which were
the subject of the Company's initial public
offering on 19 October 2020
------------------------------------------------------
IPO Prospectus The Company's Prospectus for its initial public
offering, published on 25 August 2020.
------------------------------------------------------
kWh Kilowatt-hour
------------------------------------------------------
LED Light-emitting Diode
------------------------------------------------------
Listing Rules Financial Conduct Authority Listing Rules
------------------------------------------------------
MW Megawatt
------------------------------------------------------
MWh Megawatt-hour
------------------------------------------------------
NAV The net asset value, as at any date, of the
assets of the Company after deduction of all
liabilities determined in accordance with the
accounting policies adopted by the Company
from time-to-time.
------------------------------------------------------
Net Zero A target of completely negating the amount
of greenhouse gases produced by human activity,
to be achieved by reducing emissions and implementing
methods of absorbing carbon dioxide from the
atmosphere
------------------------------------------------------
OCR Ongoing charges ratio.
------------------------------------------------------
PPA Power Purchase Agreement.
------------------------------------------------------
PRI Principals for Responsible Investing
------------------------------------------------------
Project SPV Special Purpose Vehicle in which energy efficiency
assets are held.
------------------------------------------------------
RES Renewable Energy Systems
------------------------------------------------------
SDG Sustainable Development Goals.
------------------------------------------------------
SFDR Sustainable Finance Disclosure Regulation
------------------------------------------------------
SONIA Sterling Overnight Index Average
------------------------------------------------------
SORP Statement of Recommended Practise.
------------------------------------------------------
Spark Steam Spark Steam Limited
------------------------------------------------------
TCFD Task Force on Climate-related Financial Disclosures.
------------------------------------------------------
TEEC Holdings The wholly owned subsidiary of the Company:
TEEC Holdings Limited (company number 12695849).
------------------------------------------------------
Wider Triple Point Triple Point LLP (company number OC310549)
Group and any subsidiary undertakings from time to
time.
------------------------------------------------------
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END
FR EAFKDASLAEAA
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