REG - Atrato Onsite Energy - Interim Results to 31 March 2024
20/06/2024 07:00
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RNS Number : 1319T Atrato Onsite Energy PLC 20 June 2024
LEI: 213800IE1PPREDIIZB62
ATRATO ONSITE ENERGY PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2024
UK'S LEADING PLATFORM FOR COMMERCIAL AND INDUSTRIAL (C&I) SOLAR
Atrato Onsite Energy plc (the "Company" or "ROOF") is pleased to announce its
unaudited interim results for the six months ended 31 March 2024 (the
"Period").
Results presentation today
There will be a virtual presentation for sell side analysts at 8.30 a.m.
today, 20 June 2024.
The live presentation will be viewable online with Q&A function for
anybody wishing to join. The webcast can be accessed here:
https://stream.brrmedia.co.uk/broadcast/6655a64a173fd460b81149cd
(https://stream.brrmedia.co.uk/broadcast/6655a64a173fd460b81149cd)
The results presentation will be available to view in the Investor Centre
section of the Company's website following the presentation.
Key metrics
As at As at As at
31 March 31 March 30 September
2024 2023 2023
(unaudited) (unaudited) (audited)
Gross Asset Value ("GAV") 1 210.8m 140.7m 138.1m
Net Asset Value ("NAV") 135.1m 140.7m 138.1m
NAV per share 1 (p) 90.0p 93.8p 92.0p
Dividends per share (p) 2.63p 2.52p 5.0p
Key metrics in the period Six months Six months ended 12 months
ended 31 March ended
31 March 2023 30 September
2024 2023
NAV total return (%) 0.7% 3.5% 4.6%
Generation (GWh) 24.0 8.8 36.3
Tonnes of CO(2) avoided 5,300 2,000 7,627
Ongoing charges ratio1 1.9% 1.6% 1.8%
Continued growth in our commercial and industrial solar platform
· Increased capacity from 147MW to 182MW at Period end and 204MW
post balance sheet 2
o 34MW operational private wire portfolio acquired in October 2023 ("ASG
portfolio")
o 7MW operational private wire portfolio acquired in May 2024
o 2MW financial close on three further Tesco stores in May 2024
o 13MW mixed operational portfolio acquired in June 2024
· 4 projects comprising 50MW of installation assets fully energised
in the Period
· 74% fully operational portfolio and 26% under installation 3 -
set to complete July 2024
· Target dividend of 5.5 pence (March 2023: 5.0 pence) per share
reaffirmed
o An increase of 10% on the previous year
o 1.41x covered from expected earnings 4
Generating highly contracted index-linked long income
· 93% of revenue is contracted under long term PPA or subsidy(3)
· 11-year average unexpired contracted term, longest in the
sector(3,) 5
· 3.9% sensitivity to merchant prices, lowest in the sector 6
· 91% of revenues subject to annual index linked uplifts, 48% are
uncapped RPI or CPI(3)
Robust balance sheet
· Gearing of 36% as at 31 March 2024
o £30 million drawn under the Revolving Credit Facility ("RCF")
o £45.7 million of term debt, acquired as part of the ASG portfolio
o 3.8% weighted average cost of debt, 60% of drawn debt fixed
· RCF facility increased to £40 million with a further £10
million available via accordion
Portfolio valuation decline reflects the impact from higher market discount
rates
· Portfolio valued at £134.4 million as at 31 March 2024
(September 2023: £99.2 million), verified by independent valuer
· 2.0 pence decrease in NAV per share to 90.0 pence (September
2023: 92.0 pence)
· NAV decrease impacted by a 50-bps increase in the weighted
average discount rate to 7.9% (30 September 2023: 7.4%), predominantly due to
RCF debt being drawn
Sustainability at our core 7
· Our purpose is to build a clean energy portfolio that generates
sustainable returns and contributes to our net zero future
· Forecast 191GWh annual clean energy generation providing an
estimated 8 :
o 41,000 tonnes of carbon avoided 9
o 71,000 equivalent homes powered by clean energy(9)
· The Company became a member of the Solar Stewardship Initiative
("SSI"), an industry initiative established by SolarPower Europe and Solar
Energy UK which aims to drive a more responsible, transparent and sustainable
solar value chain
Juliet Davenport, Chair of Atrato Onsite Energy plc commented:
"Our focus on C&I solar has enabled us to assemble a high quality
diversified solar portfolio, offering one of the longest and most secure
income profiles in the UK listed solar sector with one of the lowest
sensitivities to volatile merchant power prices.
We are proud to be the partner of choice for some of the largest blue-chip
corporations in the UK to help them deliver on their net zero targets."
About the Company
Atrato Onsite Energy plc (LSE: ROOF) is an investment company focused on clean
energy generation with 100% carbon traceability. The Company specialises in UK
commercial and industrial solar, helping its corporate clients achieve net
zero and reduce their energy bills.
The Company aims to provide investors with attractive capital growth and long
dated, index-linked income, targeting an annualised dividend 5.5 pence per
share for FY2024 and an annual NAV total return of 8 - 10%.
Atrato Partners Limited is the Company's Investment Adviser.
Further information is available on the Company's website
www.atratorenewables.com (http://www.atratorenewables.com)
For further information please contact
Atrato Partners Limited
Gurpreet
Gujral
ir@atratopartners.com
Christopher Fearon +44
(0)77 959 75560
Stifel Nicolaus Europe Limited
Mark
Young
+44 (0)20 7710 7600
Rajpal Padam
Madison Kominski
Greenhouse Communications atrato@greenhouse.agency
(mailto:atrato@greenhouse.agency)
Jessie
Wilson
+44 (0) 7763 540 629
CHAIR'S STATEMENT
I am pleased to present the unaudited interim results for the Company for the
six months ended 31 March 2024.
We have continued to build on our position as the leading C&I solar
platform in the UK. As of today, we have increased our solar PV capacity to
204MW and our GAV to £216.3 10 million, furthering our aim of generating
sustainable shareholder returns whilst contributing to a net zero future.
We are witnessing remarkable changes in the UK's electricity markets and how
they are supplied. The emergence of renewables as a significant contributor to
Britain's electricity mix as we near net zero goals, and the accelerating
trend in companies choosing to procure their renewable energy directly from
independent generators, means there has never been more opportunity.
Against this backdrop, we are proud to be the partner of choice for some of
the UK's largest blue-chip corporations looking to transform, the
sustainability, affordability and security of their energy supply at scale.
Our pipeline of opportunities continues to grow, currently at 516MW or a value
of c.£429 million of which 438MW relates to new installation projects. During
the period, we have drawn £30 million under the RCF to fund additional
acquisitions.
In the last six months, we have concluded our 28MW solar project with Britvic,
energising 75% of its British operations and commercialised under a 10-year
corporate PPA and our 20MW private wire project for Nissan which is expected
to generate c.20% of the power needed for the Company's Sunderland plant. We
also energised our 19(th) Tesco store and reached financial close on a further
three stores with an additional 66 in the framework agreement to be
commercialised under 20-year private wire PPA agreements.
Despite a 2.7x increase in total generation to 23,997 MWh of clean energy in
the period, abnormal rainfall over the winter has caused a reduction in UK
solar irradiation, which in line with our peer group, has resulted in actual
production falling 10% below our operational target.
We have continued our strong track record on installation assets energising
50MW in the period with our portfolio now 74% operational. Mobilisation at the
remaining 55MW Skeeby solar farm installation commenced in mid-August with
full energisation expected in July. Like others in the sector, we have not
been immune to supply chain disruption and equipment delays have pushed back
this target date by three months with the delay costs substantially covered by
our EPC contractors.
Our truly differentiated strategy provides a highly contracted portfolio. Our
average contract duration is 11 years, one of the longest in the sector, and
one of the least sensitive to wholesale electricity prices, whilst providing
income which is 91% linked to annual inflation or fixed uplifts.
This supports our objective of providing long-term sustainable dividend growth
and I am pleased to reaffirm our target dividend of 5.5 pence per Ordinary
Share for FY24, an increase of 10% over the previous year with the 12-month
forward-looking dividend cover expected to be in excess of 1.4x (1.3x as at 30
September 2023).
The Company's 31 March 2024 NAV was £135.1 million or 90.0 pence per share
(30 September 2023: £138.1 million or 92.0 pence per share). Overall, our NAV
per share declined by 2.0 pence, driven by higher market discount rates, lower
inflation expectations and the inclusion of leverage within the portfolio. The
portfolio discount rate for the Period was 7.9% levered (30 September 2023:
7.4% unlevered).
Outlook
As a business, we are very well positioned to play a key role in supporting
the UK's path to net zero in the years to come. Our purpose is to build a
clean energy portfolio that generates sustainable returns, decarbonises the
operations of businesses across the UK, and contributes to our net zero
future.
The Company has built a diversified solar portfolio generating high levels of
clean energy, with the lowest exposure to wholesale power prices in the UK
listed solar sector whilst producing significant free cash flow. Despite this,
both the Board and the Investment Adviser recognise that in common with the
majority of the renewable investment trust sector, the share price remains
detached from the underlying value of the Company's assets.
The Company continues to deliver on its investment objective of providing a
progressive dividend through its highly contracted and growing income streams.
However, the Directors have also remained focused on initiatives to address
the discount to NAV at which the Company's shares have traded and to place the
fund in the best possible financial position to support shareholders'
interests. Considering this and the pending discontinuation vote due in the
first quarter of 2025, the Directors are working with the Investment Adviser
to explore opportunities to optimise the returns to shareholders. These
include joint venture partnership, recycling capital from operational assets
into installation assets to provide enhanced capital growth or earlier capital
returns to shareholders.
Juliet Davenport OBE
Chair
19 June 2024
INVESTMENT ADVISER'S REPORT
Atrato Partners Limited is the Investment Adviser to Atrato Onsite Energy plc
and is pleased to report on the operations of the Company for the Period.
The Investment Adviser is responsible for sourcing and acquiring assets as
well as the day-to-day management of the Company's investment portfolio.
Further details can be found on the Investment Adviser's website at
www.atratogroup.com (http://www.atratogroup.com) .
Investment Portfolio
We have continued to grow the Company, facilitated by the RCF, and create a
diversified portfolio of UK solar assets with one of the lowest sensitivities
to merchant power price in the sector.
As at 31 March 2024, £198m had been committed or deployed into UK solar
across 41 projects with a combined capacity of 182MW. During the Period, the
Company invested £77.3 million into a 34MW operational private wire solar
portfolio (the "ASG portfolio"), the Company's largest acquisition to date.
Post the balance sheet date, we also completed three solar investments for a
combined consideration of £16.9m, comprising 22.1MW of solar capacity and
increasing our total to 204MW.
During the Period, the Company's portfolio has made the transition from being
primarily at an installation stage to being primarily an operational
portfolio. The Company's portfolio is 72% operational as at 31 March 2024 and
is due to be fully operational by the end of July 2024 following completion of
the 55MW OVO Energy solar farm project.
We have built a high-quality portfolio of clean energy assets with highly
contracted long-term income. Post the balance sheet date, 93% of annual
revenue is contracted (with a weighted average unexpired contract term of 11
years) with 91% 11 of revenue subject to annual index linked uplifts.
The table below outlines the Company's investment portfolio to date:
Off-taker Location Sector Capacity (MW) 12 Status Remaining contracted term (years) 13 Revenue type
Amazon UK Services Ltd. Northamptonshire Distribution 0.6 Operational 15.8 PPA
Amazon UK Services Ltd. Essex Distribution 3.1 Operational 16.5 PPA
Amazon UK Services Ltd. Warwickshire Distribution 1.6 Operational 16.6 PPA
Amazon UK Services Ltd. Fife Distribution 1.6 Operational 16.8 PPA
Amazon UK Services Ltd. Cheshire Distribution 1.5 Operational 16.8 PPA
Amazon UK Services Ltd. Luton Distribution 1.5 Operational 16.9 PPA
Amazon UK Services Ltd. Leicestershire Distribution 2.2 Operational 17.7 PPA
Anglian Water Services Limited Cambridgeshire Utility 11.7 Operational 21.5 PPA
Anglian Water Services Limited Essex Utility 0.5 Operational 19.3 PPA / FiT
Anglian Water Services Limited Cambridgeshire Utility 0.2 Operational 19.6 PPA / FiT
Anglian Water Services Limited Cambridgeshire Utility 0.2 Operational 19.6 PPA / FiT
Anglian Water Services Limited Lincolnshire Utility 0.2 Operational 20.1 PPA / FiT
Anglian Water Services Limited Northamptonshire Utility 0.6 Operational 20.1 PPA / FiT
Anglian Water Services Limited Essex Utility 0.9 Operational 20.5 PPA / FiT
Bentley Motors Limited Cheshire Manufacturing 2.7 Operational 23.7 PPA
Britvic Soft Drinks Ltd Northamptonshire Food and beverage 28.4 Operational 9.8 PPA
Gardner Group Limited Derbyshire Manufacturing 1.3 Operational 23.5 PPA
Good Energy Worcestershire Utility 1.7 Operational 13.0 PPA / ROC
Good Energy Gwent Utility 3.3 Operational 0.25 PPA
Huntapac Produce Limited Lancashire Food production 1.3 Operational 14.5 PPA
Marks & Spencer Plc Leicestershire Grocery 6.1 Operational 11.0 PPA / ROC
Nissan Motor Manufacturing UK Limited County Durham Manufacturing 20.0 Operational 19.5 PPA
OVO Energy North Yorkshire Utility 55.5 Installation 2.7 PPA
Recipharm HC Ltd Cheshire Pharmaceuticals 1.0 Operational 24.0 PPA
Residential portfolio Various Residential 42.0 Operational 10.9 FiT
Tesco Stores Limited Kent Grocery 0.1 Operational 15.7 PPA
Tesco Stores Limited Stockport Grocery 0.9 Installation 20.0 PPA
Tesco Stores Limited Wisbech Grocery 0.7 Installation 20.0 PPA
Tesco Stores Limited Kings Lynn Grocery 0.6 Installation 20.0 PPA
Tesco Stores Limited Essex Grocery 0.3 Operational 15.7 PPA
Tesco Stores Limited Essex Grocery 0.4 Operational 15.8 PPA
Tesco Stores Limited Essex Grocery 0.1 Operational 15.8 PPA
Tesco Stores Limited Kent Grocery 0.3 Operational 15.8 PPA
Tesco Stores Limited Wiltshire Grocery 0.3 Operational 15.9 PPA
Tesco Stores Limited Kent Grocery 0.4 Operational 16.0 PPA
Tesco Stores Limited Lincolnshire Grocery 0.5 Operational 16.0 PPA
Tesco Stores Limited Somerset Grocery 0.3 Operational 16.1 PPA
Tesco Stores Limited Greater Manchester Grocery 0.2 Operational 16.1 PPA
Tesco Stores Limited Suffolk Grocery 0.4 Operational 16.2 PPA
Tesco Stores Limited Kent Grocery 0.3 Operational 16.3 PPA
Tesco Stores Limited Greater London Grocery 0.5 Operational 16.3 PPA
Tesco Stores Limited Greater Manchester Grocery 0.7 Operational 16.3 PPA
Tesco Stores Limited Kent Grocery 0.3 Operational 17.3 PPA
Tesco Stores Limited Lincolnshire Grocery 0.6 Operational 17.8 PPA
Tesco Stores Limited Nottinghamshire Grocery 0.7 Operational 17.7 PPA
Tesco Stores Limited North Yorkshire Grocery 0.5 Operational 17.8 PPA
Tesco Stores Limited Norfolk Grocery 0.4 Operational 19.5 PPA
Unipres (UK) Limited County Durham Manufacturing 4.6 Operational 17.2 PPA
Total 203.7 10.9 average 14
All of the Company's installation projects are expected to be fully
operational by the end of July 2024. Once the invested portfolio is fully
operational, the Company expects to be circa 1.41x covered on its dividend on
a 12-month forward looking basis 15 . Investments made during the Period
decreased the Company's power price sensitivity to 3.9% 16 (4.6% as at 30
September 2023). At this level, the Company maintains one of the lowest
sensitivities to power prices in the UK renewables sector.
Portfolio performance
In the Period, the portfolio generated 23,997 MWh of clean energy representing
a 270% increase over the same period last year following the expansion of the
Company's operational portfolio.
Despite the overall increase in total generation for the Company, generation
for the 6 months to 31 March 2024 was 12.9% below our budgeted generation.
Abnormal weather patterns in the UK during October and December have resulted
in lower irradiation levels across the UK solar sector and some 5.2% lower
than our budgeted levels. This lower level of irradiation and availability
contributed to generation being some 10% lower than budgeted for the 6-months
to 31 March 2023. The remaining 2.9% was due to delays in energisation of our
London Road site, the cost of which was substantially covered by delay
liquidated damages payable by the EPC contractor.
Net production variance vs. expected (GWh) for the Period
Actual Budget (GWh) GWh (below) / above expectation % (below) / above expectation
(GWh)
Operating assets for the six-month period ended 31 March 2024 23.997 GWh 27.559 GWh (3.562) (12.9%)
Operating assets for the six-month period ended 31 March 2023 8.847 GWh 8.077 GWh 0.769 9.5%
During the Period, avoided emissions were c.5,300t CO(2)e which is the
equivalent to powering 8,900 homes with clean energy.
Energisations in the Period
During the Period, the Company successfully installed and fully energised 50MW
of installation projects increasing the Company's operational portfolio to
126MW 17 (#_ftn17) . This includes:
· 20MW project at Nissan in Sunderland in October 2023. The ground
mount system is expected to generate a fifth of the energy required for
Nissan's Sunderland plant. The project has been commercialised through a
20-year private wire PPA with Nissan Motor Manufacturing for an 100%
take-or-pay arrangement.
· Two behind-the-meter rooftop sites in October 2023; a 0.4MW
system at Tesco, Thetford and a 1.3MW system at Huntapac. The Tesco Thetford
installation is the Company's 19(th) Tesco private wire asset and the first
under the Tesco framework agreement.
· 28MW project at London Road, Wellingborough, Northamptonshire in
December. This installation was the Company's first grid-connected asset
completed and has been commercialised under an innovative sleeved 10-year PPA
to Britvic. The project is expected to generate 33GWh of clean energy per
annum energising 75% of Britvic's production operations in Great Britain.
Portfolio acquisitions in the Period
The Company made one acquisition during the Period: a 34MW operational private
wire solar portfolio. The project was acquired for a total value of £77.3
million, including £47.1 million of term debt and benefitting from payments
from the government's feed-in-tariff ("FiT") scheme. These payments provide
the Company with highly contracted revenue streams underpinned by government-
backed income with annual, uncapped RPI uplifts and are payable directly to
the Company from the respective utility companies. The portfolio was acquired
with a 12-year unexpired term.
Pipeline
The Company continues to maintain a significant pipeline of UK
behind-the-meter and front-of-the-meter solar assets. At the full year results
in September 2023, the Company announced a pipeline of 485MW (over £400
million). The pipeline has since grown to 516MW at a value of c.£429 million.
438MW of the pipeline relates to new installation projects, while the
remaining 78MW relate to operational projects. Of this pipeline, the
Investment Adviser has a near-term pipeline of over £130 million. If these
projects are progressed, they are expected to be funded by the remaining
liquidity available from the Company's RCF headroom of £10 million.
Despite the decline in wholesale energy prices, the Company continues to see
strong corporate demand for long-term clean energy PPAs.
Financial performance
The financial statements of the Company for the six months ended 31 March 2024
are set out in this interim report. These interim financial statements have
been prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and the applicable
legal requirements.
For the six months ending 31 March 2024, the Company's operational portfolio
generated revenues of £4.1 million. Operational expenditure for the Period
totalled £1.2 million, EBITDA for the portfolio over the six months ending 31
March 2024 was £2.8 million. The Company has included this information for
the first time to provide insight to earnings generated at the project level.
During the Period the Company's NAV decreased from £138.1 million to £135.1
million or 90.0 pence per Ordinary Share (September 2023: 92.0 pence). The NAV
decrease was driven by the leverage premium applied to the discount rates,
dividend and fund costs paid during the Period, lower power prices, changes in
the inflation assumptions which were offset by the realisation of operating
cash and time value realised by unwinding discount on future cash flows by
moving the valuation date from September 2023 to March 2024. Further details
on the portfolio valuation are provided below.
Dividends
The Company aims to provide investors with capital growth alongside a
progressive dividend, underpinned by the contractual inflation and fixed
uplifts within its PPA agreements.
Once the installation assets become fully operational, the current dividend
target (5.5p per Ordinary Share) is projected to be 1.41x covered from project
revenues 18 .
Portfolio valuation
The valuation of the Portfolio as at 31 March 2024 was £134.4 million. The
table below shows a breakdown of the Portfolio valuation during the Period.
For the six months ended 31 March For the six months ended 31 March For the 12 months ended 30 September 2023
2024 2023
£m £m £m
Portfolio valuation as at 30 September 99.3 47.1 47.1
Investments in the period 37.6 11.7 46.8
Interest receivable 2.0 0.7 2.4
Repayment of shareholder loan (3.1) - (0.7)
Portfolio fair value movement (1.4) 3.9 3.7
Portfolio valuation as at 31 March 134.4 63.4 99.3
The valuation of the Company's Portfolio is performed on a semi-annual basis
at 31 March and 30 September. The Investment Adviser is responsible for
advising the Board in determining the valuation of the Portfolio and, when
required, carrying out the fair market valuation of the Company's investments.
The valuation has been supported by an independent valuation firm.
A discounted cash flow ("DCF") valuation methodology is applied to determine
the fair value of each investment which is customary for valuing privately
owned renewable energy assets and considered consistent with the requirements
of compliance with International Financial Reporting Standard ("IFRS") 9 and
IFRS 13.
Using the DCF methodology, the fair value is derived from the present value of
each investment's expected future cash flows, using reasonable assumptions and
forecasts for revenues and operating costs and an appropriate discount rate.
Key macroeconomic and fiscal assumptions for the valuations are set out in
Note 13 to the financial statements.
The Company's NAV as at 31 March 2024 is £135.1 million or 90.0 pence per
ordinary share.
The Company's portfolio valuation per the table 19 , reflects acquisitions and
planned milestone payments for the installation assets. The NAV also reflects
changes to economic, wholesale energy and asset specific assumptions and is
net of distributions to shareholders.
Valuation economic assumptions
The main economic assumptions used in the portfolio valuation are discount
rates, annual energy production, merchant power prices, various operating
expenses and associated annual escalation rates. These are consistent with
those outlined in the FY 2023 Annual Report.
Weighted average discount rate for valuation
A range of discount rates are applied in calculating the fair value of the
investments, considering the location, technology, and lifecycle stage of each
asset as well as leverage and the counterparty risk. The weighted average
discount rate as at 31 March 2024 is 7.9% (30 September 2023: 7.4%).
The elevated macro-economic volatility, experienced in the fourth quarter of
2022 has settled, stabilising the UK risk free rates and economic outlook.
This has allowed the Investment Adviser to hold the discount rate consistent
in terms of movements for risk free rates; however due to the introduction of
debt through the acquisition of the ASG portfolio and utilising the RCF for
new acquisitions has resulted in an increase of the weighted average to a
levered 7.9% (September 2023: unlevered 7.4%)
Portfolio valuation sensitivities
The figure below shows the impact on the portfolio valuation of changes to the
key input assumptions ("Sensitivities"). The Sensitivities are based on the
Portfolio as at 31 March 2024.
(as of 31 March 2024)
For each sensitivity illustrated, it is assumed that potential changes occur
independently with no effect on any other assumption. The low sensitivity to
changes in merchant power prices reflects the long-term contracted revenues in
the Company's Portfolio. Additionally, the Company's sensitivity to variations
in operational expenses, reflects the Company's assets having fixed price,
long-term contracts in place with operations and maintenance ("O&M")
contractors.
Volumes
Each asset's valuation assumes a "P50" level of electricity output based on
yield assessments prepared by technical advisers. The P50 output is the
estimated annual amount of electricity generation that has a 50% probability
of being exceeded - both in any single year and over the long term - and a 50%
probability of being underachieved. The P50 provides an expected level of
generation over the longer term.
The P90 (90% probability of exceedance) and P10 (10% probability of
exceedance) sensitivities reflect the future variability of solar irradiation
and the associated impact on output, along with the uncertainty associated
with the long-term data sources used to calculate the P50 forecast. The
Sensitivities shown assume that the output of each asset in the portfolio is
in line with the P10 or P90 output forecast respectively for each asset life.
Power price curve
The Company derives long-term power prices from independent and widely used
market consultants' technology-specific capture price forecasts, for the
longer term. In the short term, the two years from March 2024, the UK baseload
electricity forward prices have been used. The industry standard sensitivity
metric assumes a 10% increase or decrease in power prices relative to the base
case for each year of the asset life.
Inflation
The sensitivity assumes a 50bps increase or decrease in inflation relative to
the base case for each year of the asset life.
Net assets
Company net assets were £135.1 million as at 31 March 2024.
The net assets comprise the fair value of the Company's investments of £134.4
million, the Company's cash balance of £10.4 million and other net
receivables of £9.3 million.
Analysis of the Company's net assets
Unaudited 31 March 2024 Audited
30 September 2023
£m £m
Fair value of investments 134.4 99.3
Cash 10.5 37.9
Net working capital (9.8) 0.9
Net asset value 135.1 138.1
Number of shares 150.0 150.0
Net asset value per share (pence) 90.0 92.0
NAV Bridge from 30 September 2023 to 31 March 2024
Movement in Net Asset Value £m Pence per share
NAV at September 2023 138.1 92.0
Operational cash flow 2.4 1.6
Time value 3.4 2.3
Dividends paid (3.9) (2.6)
Power prices (1.9) (1.3)
Inflation (1.8) (1.2)
Discount rate movement (1.6) (1.1)
Other 0.4 0.3
NAV as at 31 March 2024 135.1 90.0
Operational cash flow: represents the cash realised through operational
activity during the period of £2.4 million (1.6 pence per share).
Time value - a value uplift of £3.4 million (2.3 pence per share), resulting
from the roll forward effect of cash flows since the prior valuation date.
Dividends paid: Dividends of £3.9 million (2.6 pence per share) were paid in
respect of the quarterly period to 30 September 2023, declared in November
2023 and the quarterly period to 31 December 2023, declared in January 2024.
Power prices: Reflects the movement of the portfolio value during the Period
due to movements in the industry standard power price curves. The decrease in
forward power price curves during the period has reduced the portfolio value
by £1.9 million (1.3 pence per share).
The Company has the lowest sensitivity to merchant power price in the UK
listed solar sector. Its high levels of contracted revenue limit its exposure
to power price volatility and hence a 10% reduction in power prices would only
have a 4.3% impact on the Company's NAV as at 31 March 2024.
Inflation - Reflects the impact of the movement in the inflation curves during
the period. The Company uses market forecast curves for UK CPI and RPI. The
decrease has reduced the portfolio value by £1.8 million (12 pence per
share).
Discount rate - Represents the impact on the fair value from changes to the
discount rate due to movements in interest rates, transactional prices
observed in the sector and the macro-economic environment. The increase in the
weighted average discount rate from 7.4% to 7.9% has reduced the portfolio
valuation by £1.6 million (1.1 pence per share). One of the main drivers of
the increase in the weighted average discount rate during the period was the
introduction of leverage through the NatWest RCF and the project finance
relating to the ASG Portfolio, totaling £75.7 million.
Other: Represents the impact of other immaterial portfolio adjustments
resulting in an increase of £0.4 million (0.3 pence per share).
Income
In accordance with the Statement of Recommended Practice, Financial Statements
of Investment Trust Companies and Venture Capital Trusts ("SORP") issued in
July 2022 by the Association of Investment Companies ("AIC"), the statement of
comprehensive income differentiates between the 'revenue' account and the
'capital' account, and the sum of both items equals the Company's profit for
the period. Items classified as capital in nature either relate directly to
the Company's investment portfolio or are costs deemed attributable to the
long-term capital growth of the Company (such as a portion of the Investment
Adviser fee).
In the six-month period ending 31 March 2024, the Company's operating income
was £2.3 million (31 March 2023: £6.5 million), including interest income of
£3.7 million (31 March 2023: £2.5 million) and net loss on the movement of
fair value of investments of £1.4 million (31 March 2023: gain £4.0
million). The operating expenses included in the statement of comprehensive
income for the period were £1.4 million (31 March 2023: £1.2 million). These
comprise £0.7 million Investment Adviser fees (31 March 2023: £0.7 million)
and £0.7 million operating expenses (31 March 2023: £0.7 million). The
details of how the Investment Adviser fees are charged are set out in Note 9
to the financial statements.
Ongoing charges
The ongoing charges ratio ("OCR") is a measure, expressed as a percentage of
average net assets, of the regular, recurring annual costs of running the
Company. It has been calculated and disclosed in accordance with the AIC
methodology, as annualised ongoing charges (i.e. excluding acquisitions costs
and other non-recurring items) divided by the average published undiluted Net
Asset Value in the period. The ratio was 1.8% in the prior year to 30
September 2023, and it is anticipated that the full-year ratio for the year
ended 30 September 2024 will increase to 1.9%.
Dividends
During the Period, interim dividends totalling £3.9 million were paid
(representing 2.63p per share). The table below outlines the dividends paid
during the period and post period end.
Period Amount (per Ordinary share) Amount (total)
During the Period
1 July to 30 Sep 2023 1.26 1,890,000
1 Oct to 31 Dec 2023 1.37 2,055,000
Post period end
1 Jan to 31 Mar 2024 1.37 2,055,000
Post period end, a further interim dividend of 1.37p per share was paid on 28
May 2024 in respect of the quarter to 31 March 2024 to shareholders recorded
on the register on 3 May 2024. The total number of ordinary shares in issue on
that record date was 150,000,000 and the total dividend paid to shareholders
amounted to £2.055 million.
As such, dividends totalling £3.9 million (HY 2023: £3.8 million) have been
paid in respect of the six-month period under review.
Operating cashflow from the portfolio of assets in the six-month period
totalled £2.8 million.
The investment opportunity
Despite the decline in wholesale electricity prices, the Company's continues
to experience strong corporate demand for its PPAs. The Company's PPAs offer a
fully funded solution for corporates providing them directly with clean
energy. The PPA option is attractive for corporates as they look to meet their
sustainability goals whilst improving their energy security and affordability.
The UK government continues to recognise solar's role in the UK's path to net
zero. In the Autumn Statement, the UK government announced an action plan to
cut grid connection delays with a target of halving the time it takes to build
new grid infrastructure to 7 years which will alleviate the build-up of solar
projects awaiting grid connection. It is estimated that this will cut grid
delays by 90%.
Financing
Atrato Onsite Energy Holdco Limited ("Holdco") secured £10 million of the
total £20 million accordion available under the RCF taking the facility to a
total of £40 million, with £10 million remaining as an accordion option. Of
the £40 million available to draw, £30 million has been drawn as at 31 March
2024 (31 March 2023: £nil).
The £40 million secured facility has an initial term of three years with a
one-year extension option. The facility is priced at 1.3% margin over SONIA,
which is one of the lowest in the sector and is unhedged.
Going concern
The Directors have adopted the going concern basis in preparing the interim
financial statements. The following is a summary of the Directors' assessment
of the going concern status of the Company.
The Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for at least twelve months from
the date of this report. In reaching this conclusion, the Directors have
considered the liquidity of the Company's portfolio of investments as well as
its cash position, income, and expense flows. The Company's net assets at 31
March 2024 were £135.1 million (30 September 2023: £138.1 million). As at 31
March 2024, the Company held £10.5 million (30 September 2023: £37.9
million) in cash. The total expenses for the period ended 31 March 2024 were
£1.4 million (31 March 2023: £1.2 million).
Post the balance sheet date the Company acquired two operational assets for
£4.7 million by utilising the funds drawn on the RCF in March 2024. At the
date of approval of this report, based on the aggregate of investments,
capital commitments and cash held, the Company has substantial operating
expenses cover.
Future revenue is principally expected to be derived through loan interest and
dividends from profit generated by underlying investments held within the
SPVs. Having regard to the current portfolio combined with current cash
balances, the Directors consider the Company to be in a position to meet its
current and future liabilities over the next 12-month period.
In light of the ongoing conflicts in the Middle East and Ukraine, the
Directors have considered any potential impact on the portfolio's operations
and procurement processes, and do not foresee any material adverse impact for
next 12 months. Energy prices can fluctuate as a result of the conflict, which
the Directors maintain under close review; however, no material adverse impact
on the business is expected.
Material uncertainty in relation to Going Concern
The Company continues to deliver on its investment objective of providing a
progressive dividend through its highly contracted and growing income streams.
However, the Directors have also remained focused on initiatives to address
the discount to NAV at which the Company's shares have traded and to place the
fund in the best possible financial position to support shareholders'
interests. Considering this and the pending discontinuation vote due in the
first quarter of 2025, the Directors are working with the Investment Adviser
to explore opportunities to optimise the returns to shareholders. These
include joint venture partnership, recycling capital from operational assets
into installation assets to provide enhanced capital growth or earlier capital
returns to shareholders.
It is possible that one of the outcomes could result in the sale of some or
all of the Company's assets. As a result, a material uncertainty exists which
may cast significant doubt on the Company's ability to continue as a going
concern. In such an event, the Company will realise its assets and use the
funds to discharge its liabilities rather than discharge the liabilities in
the normal course of business. However, there is no certainty around timing,
outcome, and effects of these opportunities, if any, and therefore the
Directors have prepared the interim financial statements on a going concern
basis.
The interim financial statements do not include the adjustments that would be
required should the going concern basis of preparation no longer be
appropriate.
Sustainability Report
Introduction
Purpose: to build a clean energy portfolio that generates sustainable returns
and contributes to our net zero future.
As a clean energy fund, the Company has an intrinsic sustainability focus. All
investments in the portfolio are contributing to the net zero transition and
helping to accelerate the decarbonisation of our off-takers.
The Company's sustainability strategy is focused on four ESG principles linked
to the UN SDGs that it believes are most material to its activities. The
Company has identified specific ESG reporting metrics in relation to each
principle and will disclose the FY24 results in the next Annual Report.
Principle 1: Climate Change/Net Zero Transition Principle 2: Environment Principle 3: Social Principle 4; Governance
Support the attainment of the UK emissions targets through the creation of new Facilitate the efficient and considered use of finite resources Bring value to the communities in which we are active Deliver the Company's investment objective through a robust governance
sustainable energy resource. framework that recognises its responsibilities to all stakeholders
Affordable and clean energy Climate Action Life on Land Responsible production and consumption Decent work and Sustainable cities and communities Gender equality
UN SDG 7 UN SDG 13 UN SDG 15 UN SDG 12 economic growth UN SDG 11 UN SDG 5
UN SDG 8
The Company has continued to deliver on its sustainability strategy and target
performance improvement across these four ESG principles.
ESG Principle 1 - Climate/Net Zero
· Support the attainment of the UK emissions targets through the
creation of new sustainable energy resource
The Company's last Annual Report and Accounts included the Company's Task
Force on Climate-related Financial Disclosures ("TCFD") report, with
disclosures made across all 11 TCFD recommendations. Included within this
report was the Company's GHG Inventory disclosures, across Scope 1, 2 and 3
emissions. As part of the Company's commitment to further developing its
mechanisms to identify, manage and respond to climate-related risks, TCFD and
climate risk training was rolled out to the Investment Adviser and completed
by the full team in May 2024.
The Science Based Target Initiative (SBTi) has not yet published guidance for
the renewables sector. The Company continues to monitor the development of
available sector guidance by SBTi. In the absence of available sector
guidance, the Company's key climate-related target is to continue to provide
100% of electricity generation finance for only renewable electricity through
2030.
ESG Principle 2 - Environment
· Facilitate the efficient and considered use of finite resources
The Company acknowledges that society, business, and finance depend on
nature's assets and the services they provide. As part of the planning and
consent process for ground mounted solar sites, ecological appraisals and
nature/biodiversity plans are developed to identify ecological enhancement
opportunities. Additional species surveys such as for breeding and/or
wintering birds, bats, butterflies and Great Crested Newts, are also conducted
on a site specific basis as required. Landscaping works, including enhanced
hedgerow planting and habitat enhancements for Great Crested Newts, are
planned to take place at the London Road site in late 2024.
ESG Principle 3 - Social
· Bring value to the communities in which we are active
The Company through the Investment Adviser continues to support education
initiatives that align with the Company's objective to support both gender
equality and the right to decent work. In April 2024 the Investment Adviser
held a work experience event for Into University at their offices. Into
University seeks to provide children from Britain's least privileged
neighbourhood with the educational support they need to succeed, breaking the
poverty circle. The event was attended by more than 20 year nine students and
run by members of the Investment Adviser's team.
The Investment Adviser has established the Atrato Foundation, to provide
financial support to charitable organisations operating in England and Wales.
ESG Principle 4 - Governance
· Deliver the Company's investment objective through a robust
governance framework that recognises its responsibilities to all stakeholders
The Company's approach to sustainability is underpinned by the Board's
commitment to good stewardship and creating long-term value for our
stakeholders. The Company continues to support the commitments of its
Investment Adviser as a signatory to both the United Nations Principles for
Responsible Investment ("UNPRI") and Net Zero Asset Managers Initiative
("NZAM"). The Investment Adviser received the results of its first PRI Report
submission in January 2024 and will be reporting on its responsible investment
activities again in the next PRI reporting cycle. In January 2024, the
Investment Adviser also became part of the first cohort of endorsers of Spring
- a PRI stewardship initiative for nature.
In March 2024, the Company became a member of the Solar Stewardship Initiative
("SSI"). The SSI is an industry initiative established by SolarPower Europe
and Solar Energy UK which aims to drive a more responsible, transparent and
sustainable solar value chain. The Company also signed the latest UK Industry
Supply Chain Statement prepared by Solar Energy UK, reflecting the Company's
commitment to industry-wide action to complement individual Company efforts to
strengthen supply chain standards. 20
While the FCA listing rules do not require the Company to make disclosures
under the TCFD framework for the financial year 2023/2024, the Company intends
to continue to do so on a voluntarily basis. Work, including undertaking a
greenhouse gas inventory calculation and qualitative scenario analysis, to
enable TCFD disclosure is ongoing with the Investment Adviser.
The Company published its updated Modern Slavery Statement in December 2023.
The Investment Adviser is currently undertaking a review of its Module
Procurement Policy to ensure alignment with current best practice guidance
including the practical procurement guidance published by Action
Sustainability. 21
The Company published a number of additional ESG policies on its website in
December 2023 including Environment, Biodiversity, and Supply Chain Human
Rights Policies.
The Company continues to monitor the evolution of relevant ESG-related
regulation including the implementation of the Financial Conduct Authority's
UK Sustainability Disclosure Requirements ("SDR"). The Company supports the
introduction of the SDR anti-greenwashing rule and the FCA's efforts to ensure
that sustainability-related claims are fair, clear, and not misleading. The
Company is currently ineligible for a SDR investment label because the FCA
Handbook (ESG sourcebook section) stipulates that only funds with a UK
Alternative Investment Fund Manager ("AIFM") are in scope. However, the
Company will continue to monitor updates from the FCA should the scope be
expanded in future.
Atrato Partners Limited
Investment Adviser
19 June 2024
Interim Management Report
The Directors are required to provide an Interim Management Report in
accordance with the Financial Conduct Authority ("FCA") Disclosure Guidance
and Transparency Rules ("DTR"). The Chair's Statement and the Investment
Advisers' Report in this interim report provide details of the important
events which have occurred during the period and their impact on the financial
statements. The following statements on risks and risk management, related
party
transactions, going concern and the Directors' Responsibility Statement
below, together constitute the Interim Management Report for the Company for
the six months ended 31 March 2024. The outlook for the Company for the
remaining six months of the year ending 30 September 2024 is discussed in the
Chair's Statement and the Investment Adviser's Report.
Risk and Risk Management
The Company's approach to risk governance and its risk review process are set
out in the risks and risk management section of the 2023 Annual Report. The
principal risks to the achievement of the Company's objectives are mostly
unchanged and no further changes are expected in the remaining six-months of
the financial year from those reported on pages 49 to 52 of the 2023 Annual
Report, with the principal risks being:
· Performance and portfolio management risks:
o Electricity generation may not meet expectations;
o Valuation of the portfolio; and
o Performance and reliance on third party advisers and service providers as
the Company has no employees;
· Operational risks:
o Plant operational performance may be lower than expected;
o Counter-party credit risk as the Company's revenues are dependent on
onsite or sleeved users that contracted under PPAs to pay for electricity
generated; and
o Delays in developing installation assets may impact returns
· Market risks:
o The income and value of the Company's investments may be adversely
impacted by changes in the prevailing market prices of electricity and prices
achievable for off-taker contracts;
o Conflicts being experienced in Ukraine and the Middle East;
o Long-term consequences of Brexit; and
o Changes in regulations including the energy markets, tax legislation and
government policy.
The risks outlined here and in the 2023 Annual Report are mitigated by the
Investment Adviser's strategy, experience and the diversification of the
Company's pipeline as set out on pages 49 to 52 in the 2023 Annual Report.
Related party transactions
The Company's Investment Adviser ("IA") is considered a related party under
the Listing Rules. Under the Investment Adviser Agreement ("IAA"), the IA
receives a per annum management fee of 0.7125% of the adjusted NAV up to and
including £500 million; and 0.5625% of the adjusted NAV above £500 million,
invoiced monthly in arrears. The Investment Adviser also receives a management
fee of 0.2375% of the last published NAV up to and including £500 million;
and 0.1875% of the last published NAV above £500 million, each invoiced
semi-annually in arrears. With the agreement of the Company, Holdco and the
IA, this semi-annual fee shall be applied by the IA in acquiring ordinary
shares at the absolute discretion of the Board by any combination of methods
as set out in the IAA.
The Investment Adviser receives an accounting and administration fee of
£50,000 per annum plus 0.02% of the adjusted NAV in excess of £200 million
up to and including £500 million plus 0.015% of adjusted NAV in excess of
£500 million. An accounting and administration fee of £800 per Clean Energy
Asset held by Holdco up to 100 Clean Energy Assets and £650 per Clean Energy
Asset above 100.
No performance fee or asset level fees are payable to the IA under the IAA.
Details of the amounts paid to the Company's IA and the Directors during the
period are included in the Note 4 to the Interim Financial Statements.
Alternative Investment Fund Manager (the "AIFM")
JTC Global AIFM Solutions Limited was appointed with effect from IPO as the
AIFM under the terms of the AIFM agreement and in accordance with the AIFM
Directive.
The AIFM is authorised and regulated by the Guernsey Financial Services
Commission.
The AIFM is responsible for the day-to-day management of the Company's
investments, subject to the investment objective and investment policy and the
overall supervision of the Directors. The AIFM is also required to comply with
on-going capital, reporting and transparency obligations and a range of
organisational requirements and conduct of business rules. The AIFM must also
adopt a range of policies and procedures addressing areas such as risk
management, liquidity management, conflicts of interest, valuations,
compliance, internal audit, and remuneration.
Directors' responsibility statement
The Directors acknowledge responsibility for the interim results and approve
this interim report. The Directors confirm that to the best of their
knowledge:
a) the condensed interim financial statements have been prepared in accordance
with IAS 34 "Interim Financial Reporting" as contained in UK-adopted IFRS and
give a true and fair view of the assets, liabilities, financial position and
profit or loss of the Company as required by the FCA's Disclosure Guidance and
Transparency Rules DTR 4.2.4R; and
b) the interim management report, including the Chair's Statement and
Investment Adviser's Report, includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R.
This responsibility statement has been approved by the Board of Directors.
For and on behalf of the Board of Directors
Juliet Davenport
Director
19 June 2024
Independent Review Report to Atrato Onsite Energy Plc
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 March 2024 is not prepared, in
all material respects, in accordance with UK adopted International
Accounting Standards 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
March 2024, which comprises of the Condensed Statement of Comprehensive
Income, the Condensed Statement of Financial Position, the Condensed Statement
of Changes in Equity, the Condensed Cash Flow Statement, and the related
notes.
Basis for conclusion
We conducted our review in accordance with Revised International Standard on
Review Engagements (UK) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410
(Revised)"). A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not enable us
to obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 2, the annual financial statements of the Company are
prepared in accordance with UK adopted International Accounting Standards.
The condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with UK adopted
International Accounting Standard 34, "Interim Financial Reporting".
Material uncertainty related to going concern
We draw attention to Note 2 in the half-yearly financial statements, which
indicates that the Directors are exploring opportunities to optimise returns
to shareholders and as a result, it is possible that this could result in the
sale of some or all of the Company's assets. As stated in Note 2, these events
or conditions, along with other matters as set forth in Note 2, indicate that
a material uncertainty exists that may cast significant doubt on the Company's
ability to continue as a going concern.
Our conclusion is not modified in respect of this matter.
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the Directors have
inappropriately adopted the going concern basis of accounting.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410 (Revised), however future events or conditions may cause the
Company to cease to continue as a going concern.
Responsibilities of directors
The Directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the Directors are responsible
for assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to
liquidate the Company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
relating to going concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority and
for no other purpose. No person is entitled to rely on this report unless such
a person is a person entitled to rely upon this report by virtue of and for
the purpose of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other purpose
and we hereby expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
19 June 2024
BDO LLP is a limited liability partnership registered
in England and Wales (with registered number OC305127).
Results
Condensed Statement of Comprehensive Income
For the six-month period ended 31 March 2024 (unaudited) For the six-month period
ended 31 March 2023
(unaudited)
Notes Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Fair value of investments 8 - (1,402) (1,402) - 3,990 3,990
Investment Income 3 3,715 - 3,715 2,473 - 2,473
Investment advisory fees 9 (684) - (684) (692) - (692)
Other expenses 4 (689) - (689) (467) - (467)
Profit / (loss) on ordinary activities before taxation 2,342 (1,402) 940 1,314 3,990 5,304
Taxation 5 - - - - - -
Profit / (loss) on ordinary activities after taxation 2,342 (1,402) 940 1,314 3,990 5,304
Profit / (loss) per share 7 1.56 (0.93) 0.63 0.88 2.66 3.54
The "Total" column of the Condensed Statement of Comprehensive Income is the
profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing
operations.
Profit / (loss) on ordinary activities after taxation is also the "Total
comprehensive profit / (loss) for the Period."
The accompanying notes are an integral part of these interim financial
statements.
Incorporated in England and Wales with registered number 13624999
Condensed Statement of Financial Position
As at 31 March 2024
As at As at
31 March 2024 30 September 2023
(unaudited) (audited)
Notes £'000 £'000
Non-current assets
Investments at fair value through profit or loss 8 134,417 99,289
Current assets
Cash and cash equivalents 10,449 37,867
Trade and other receivables 97 1,549
10,546 39,416
Current liabilities: amounts falling due within one year
Trade and other payables (675) (648)
Other financial liabilities (9,236) -
(9,911) (648)
Net current assets 635 38,768
Net assets 135,052 138,057
Capital and reserves
Share capital 10 1,500 1,500
Capital reduction reserve 11 132,097 133,691
Revenue and capital reserve 1,455 2,866
Shareholders' funds 135,052 138,057
Net assets per Ordinary Shares (GBP pence) 12 90.0 92.0
The unaudited interim financial statements were approved by the Board of
Directors and authorised for issue on 19 June 2024 and were signed on its
behalf by:
Juliet Davenport
Director
The accompanying notes are an integral part of these interim financial
statements.
Incorporated in England and Wales with registered number 13624999.
Condensed Statement of Changes in Equity
For the six-months ended 31 March 2024 (unaudited)
Notes Share capital Share premium account Capital reduction reserve Capital reserve Revenue reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
Opening equity as at 30 September 2023 10 1,500 - 133,691 1,454 1,412 138,057
Total comprehensive income/(expense) for the Period - - - (1,402) 2,342 940
Dividends paid 6 - - (1,594) - (2,351) (3,945)
Closing equity as at 31 March 2024 1,500 - 132,097 52 1,403 135,052
For the period from 1 September 2022 to 31 March 2023 (unaudited)
Notes Share capital Share premium account Capital reduction reserve Capital reserve Revenue reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
Opening equity as at 30 September 2022 10 1,500 - 141,065 (2,251) (1,188) 139,126
Total comprehensive income/(expense) for the Period - - - 3,990 1,314 5,304
Dividends paid 6 - - (3,780) - - (3,780)
Closing equity as at 31 March 2023 1,500 - 137,285 1,739 126 140,650
The Company's distributable reserves consist of the capital reduction reserve,
capital reserves attributable to realised gains and revenue reserve and totals
£133.6 million at 31 March 2024 (March 2023: £139.2). All capital reserves
are unrealised.
The accompanying notes are an integral part of these interim financial
statements.
Condensed Statement of Cash Flows
For the six months ended 31 March 2024 (unaudited) For the six months ended 31 March 2023 (unaudited)
Notes £'000 £'000
Operating activities cash flows
Profit on ordinary activities before taxation 940 5,304
Adjustments for:
Movement in fair value of investments 8 1,402 (3,990)
Interest income 3 (3,715) (2,473)
(Increase) / Decrease in trade and other receivables (41) 1,991
Increase / (Decrease) in trade and other payables 26 (46)
Net cash (outflow) / inflow from operating activities (1,388) 786
Investing activities
Purchase of investments (37,640) (11,691)
Repayment of shareholder loans 3,157 -
Decrease in fixed deposit - 20,000
Decrease in intercompany receivable 1,479 -
Interest income received 1,669 1,935
Net cash (outflow) / inflow from investing activities (31,335) 10,244
Financing activities
Working capital financing 9,250 -
Dividends paid 6 (3,945) (3,780)
Net cash outflow from financing activities 5,305 (3,780)
(Decrease) / Increase in cash (27,418) 7,250
Cash and cash equivalents at beginning of the Period 37,867 69,361
Cash and cash equivalents at end of the Period 10,449 76,611
The accompanying notes are an integral part of the interim financial
statements.
Notes to the condensed unaudited financial statements
For the six months ended 31 March 2024
1 General information
Atrato Onsite Energy Plc (the "Company") is a closed-ended investment company
domiciled and incorporated in the United Kingdom on 16 September 2021 with
registered number 13624999. The registered office of the Company is 1 King
William Street, London, United Kingdom, EC4N 7AF. Its share capital is
denominated in Pounds Sterling (GBP) and currently consists of one class of
ordinary shares. The shares are publicly traded on the London Stock Exchange
under a premium listing. These unaudited interim financial statements of the
Company are for the six months ended 31 March 2024 and have been prepared on
the basis of the accounting policies set out below. The financial statements
comprise only the results of the Company as its investment in Atrato Onsite
Energy Holdco Limited ("Holdco") is measured at fair value as detailed in the
significant accounting policies below. The Company and its subsidiaries invest
in a diversified portfolio of onsite energy assets generally on the rooftop of
UK commercial buildings, which benefit from long-term growing income streams
with limited exposure to wholesale power prices.
Atrato Partners Limited (the "Investment Adviser") provides investment
advisory services and JTC Global AIFM Solution Limited as the AIFM provides
investment management services to the Company, each under the terms of the
agreement between it and the Company.
2 Basis of preparation
The interim financial statements included in this report have been prepared in
accordance with UK adopted IAS 34 "Interim Financial Reporting". The interim
financial statements have been prepared under the historical cost convention,
as modified by the revaluation of financial assets and financial liabilities
at fair value through profit and loss.
The interim financial statements have also been prepared as far as is relevant
and applicable to the Company in accordance with the Statement of Recommended
Practice ("SORP") "Financial Statements of Investment trust companies and
Venture Capital Trusts" issued in July 2022 by the Association of Investment
Companies ("AIC").
The interim financial statements are prepared on the historical cost basis,
except for the revaluation of certain financial instruments at fair value
through profit and loss. The principal accounting policies adopted are set out
below. These policies have been consistently applied throughout the six months
to 31 March 2024.
The interim financial statements are prepared on a going concern basis in
accordance with UK adopted international accounting standards (International
Financial Reporting Standards ("IFRS") and International Accounting Standards
("IAS")) and interpretations in force at the reporting date. From 1 January
2023, IAS 1 has been amended introducing the concept of Material Accounting
Policy Information. The Company has performed a review of the existing
accounting policies and updated where relevant. Other new standards coming
into force during the year and future standards that come into effect after
the year-end have not had a material impact on these financial statements.
The Company has carried out an assessment of accounting standards, amendments
and interpretations that have been issued by the IASB and that are effective
for the current reporting period. The Company has determined that the
transitional effects of the standards do not have a material impact.
The currency of the primary economic environment in which the Company operates
and where its investments are located (the functional currency) is Pounds
Sterling. The financial statements are presented in Pounds Sterling and
rounded to the nearest thousand.
Estimates and underlying assumptions are reviewed regularly on an on-going
basis. Revisions to accounting estimates are recognised in the period in which
the estimates are revised and in any future periods affected. The significant
estimates, judgments or assumptions for the Period are set out below under
Critical accounting judgements, estimates and assumptions.
Going concern
The Directors have adopted the going concern basis in preparing the interim
financial statements. The following is a summary of the Directors' assessment
of the going concern status of the Company.
The Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for at least twelve months from
the date of this report. In reaching this conclusion, the Directors have
considered the liquidity of the Company's portfolio of investments as well as
its cash position, income, and expense flows. The Company's net assets at 31
March 2024 were £135.1 million (30 September 2023: £138.1 million). As at 31
March 2024, the Company held £10.4 million (30 September 2023: £37.9
million) in cash. The total expenses for the period ended 31 March 2024 were
£1.4 million (31 March 2023: £1.2 million).
Post the balance sheet date the Company acquired a portfolio of operational
residential sites, four operational sites, two ground mount and two rooftop
for £14.0 million, out of the cash held at the period end and a further
£7.5m utilisation of the RCF. At the date of approval of this report, based
on the aggregate of investments, capital commitments and cash held, the
Company has cover for its operating expenses.
Future revenue is principally expected to be derived through loan interest and
dividends from profit generated by underlying investments held within the
SPVs. Having regard to the current portfolio combined with current cash
balances, the Directors consider the Company to be in a position to meet its
current and future liabilities over the next 12-month period.
In light of the ongoing conflict of Russia, Ukraine and Middle East, the
Directors have considered any potential impact on the portfolio's operations
and procurement processes, and do not foresee any material adverse impact for
next 12 months. Energy prices can fluctuate as a result of these conflicts,
which the Directors maintain under close review; however, no material adverse
impact on the business is expected.
Material uncertainty in relation to going concern
The Company continues to deliver on its investment objective of providing a
progressive dividend through its highly contracted and growing income streams.
However, the Directors have also remained focused on initiatives to address
the discount to NAV at which the Company's shares have traded and to place the
fund in the best possible financial position to support shareholders'
interests. Considering this and the pending discontinuation vote due in the
first quarter of 2025, the Directors are working with the Investment Adviser
to explore opportunities to optimise the returns to shareholders. These
include joint venture partnership, recycling capital from operational assets
into installation assets to provide enhanced capital growth or earlier capital
returns to shareholders.
It is possible that one of the outcomes could result in the sale of some or
all of the Company's assets. As a result, a material uncertainty exists which
may cast significant doubt on the Company's ability to continue as a going
concern. In such an event, the Company will realise its assets and use the
funds to discharge its liabilities rather than discharge the liabilities in
the normal course of business. However, there is no certainty around timing,
outcome, and effects of these opportunities, if any, and therefore the
Directors have prepared the interim financial statements on a going concern
basis.
The interim financial statements do not include the adjustments that would be
required should the going concern basis of preparation no longer be
appropriate.
Critical accounting judgments, estimates and assumptions
The preparation of the interim financial statements requires management to
make judgments, estimates and assumptions that affect the application of
accounting policies and the reported amount of assets, liabilities, income,
and expenses. Estimates, by their nature, are based on judgment and available
information; hence actual results may differ from these judgments, estimates
and assumptions. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying value of assets and liabilities
are those used to determine the fair value of the investments. There have been
no changes to the significant estimates, judgements, and assumptions to those
set out on pages 94 to 97 of the 2023 Annual Report; a summary of these is
provided below:
Key estimation: Fair value estimation for investments at fair value
The Company's investments in unquoted investments are valued by reference to
valuation techniques approved by the Directors and in accordance with the
International Private Equity and Venture Capital Valuation Guidelines.
Discounted cash flow ("DCF") models are used to determine the fair value of
the underlying assets in HoldCo. The value of HoldCo includes any working
capital not accounted for in the DCF models, such as cash or entity level
payable and receivables and bank debt at Holdco level. Unobservable inputs
used within the DCF models include the discount rate. An increase or decrease
in the discount rate would lead to a corresponding decrease or increase in the
fair value of the investments. The Company's investments at fair value are not
traded in active markets.
Key judgement: Basis of non-consolidation
The Company has adopted the amendments to IFRS 10, which states that
investment entities should measure all of their subsidiaries that are
themselves investment entities at fair value.
The Company owns 100% of its subsidiary HoldCo. The Company invests in special
purpose vehicles through its investment in HoldCo. The Company and HoldCo meet
the definition of an investment entity as described by IFRS 10. Under IFRS 10
investment entities measure subsidiaries at fair value rather than being
consolidated on a line-by-line basis, meaning HoldCo's working capital
balances are included in the fair value of the investment rather than in the
Company's current assets. HoldCo has one investor, which is the Company.
However, in substance, HoldCo is investing the funds of the investors of the
Company on its behalf and is effectively performing investment management
services on behalf of many unrelated beneficiary investors.
Key judgement: Characteristics of an investment entity
Under the definition of an investment entity, the entity should satisfy all
three of the following tests:
a) The Company obtains funds from one or more investors for the purpose of
providing those investors with investment management services;
b) The Company commits to its investors that its business purpose is to
invest funds solely for returns from capital appreciation, investment income,
or both (including having an exit strategy for investments); and
c) The Company measures and evaluates the performance of substantially all
of its investments on a fair value basis.
In assessing whether the Company meets the definition of an investment entity
set out in IFRS 10, the Directors note that:
a) The Company has multiple investors and obtains funds from a diverse
group of shareholders who would otherwise be less able to individually invest
in renewable energy and/ or infrastructure assets;
b) The Company's purpose is to invest funds for both investment income and
capital appreciation. HoldCo and the future SPVs will have indefinite lives.
However, the underlying assets do not have unlimited life and have minimal
residual value at the end of that life, meaning they will not be held
indefinitely. The Company intends to hold the renewable assets on a long-term
basis to achieve its investment objectives. Depending on the circumstances of
each renewable asset, decisions will be made whether to extend leases and
repower assets as they approach the end of their useful life or sell the
assets to interested parties who may take a more optimistic view of asset
value; and
c) The Company measures and evaluates the performance of all of its
investments on a fair value basis, which is the most relevant for investors in
the Company. The Directors use fair value information as a primary measurement
to evaluate the performance of all the investments and in decision-making.
The Directors are of the opinion that the Company meets all the typical
characteristics of an investment entity and therefore meets the definition set
out in IFRS 10.
The Directors agree that investment entity accounting treatment reflects the
Company's activities as an investment trust.
The Directors believe the treatment outlined above provides the most relevant
information to investors.
Segmental reporting
The Board is of the opinion that the Company is engaged in a single segment of
business, investment in renewable energy infrastructure assets to generate
investment returns whilst preserving capital. The financial information used
by the Board to manage the Company presents the business as a single segment.
New accounting policies
Other financial liabilities, are short term liabilities payable on demand. The
balances relate to working capital funding within the group to optimise
interest earned on cash balances at the Company level.
Adoption of new and revised standards
At the date of approval of these financial statements, there were no new or
revised standards or interpretations relevant to the Company which had come
into effect.
3 Investment Income
For the six-month period For the six-month period
ended 31 March 2024 (unaudited) ended 31 March 2023 (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Interest income from investments 3,500 - 3,500 1,666 - 1,666
Interest income from deposits 215 - 215 807 - 807
Total investment income 3,715 - 3715 2,473 - 2,473
4 Operating expenses
For the six-month period ended 31 March 2024 (unaudited) For the six-month period ended 31 March 2023 (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fees 684 - 684 692 - 692
Director's fees 87 - 87 88 - 88
Company's auditors' fees:
- in respect of audit services 107 - 107 39 - 39
- in respect of non-audit services 57 - 57 45 - 45
Other operating expenses 438 - 438 295 - 295
Total operating expenses 1,373 - 1,373 1,159 - 1,159
5 Taxation
(a) Analysis of charge /(credit) in the period
For the six-month period For the six-month period
ended 31 March 2024 (unaudited) ended 31 March 2023 (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Corporation tax 586 (350) 236 289 878 1,167
Tax charge/(credit) for the period - - - - - -
(b) Factors affecting total tax charge for the period:
The effective UK corporation tax rate applicable to the Company for the year
is 25% (2023: 19%). The tax charge/(credit) differs from the charge/(credit)
resulting from applying the standard rate of UK corporation tax for an
investment trust company. The differences are explained below:
For the six-month period For the six-month period
ended 31 March 2024 (unaudited) ended 31 March 2023 (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Profit/(loss) before taxation 2,342 (1,402) 940 1,314 3,990 5,304
Corporation tax at 25% (PY:19%) 586 (350) 236 289 878 1,167
Effects of:
Profit / (loss) on investments held at fair value not taxable - 350 350 - (878) (878)
Expenses not deductible for tax purposes 1 - 1 - - -
Utilised losses (75) - (75) - - -
Interest distributions (512) - (512) (289) - (289)
Total tax charge/(credit) for the period - - - - - -
6 Dividends
For the six-month period
ended 31 March 2024 (unaudited)
Pence per Ordinary Share Capital reduction reserve Revenue reserve Total
Q4 2023 Dividend - paid 18 December 2023 1.26 567 1,323 1,890
Q1 2024 Dividend - paid 1 March 2024 1.37 1,027 1,028 2.055
Total 2.63 1,594 2,351 3,945
The Company paid the following dividends during the Period ended 31 March
2023:
For the six-month period
ended 31 March 2023 (unaudited)
Pence per Ordinary Share Capital reduction reserve Revenue reserve Total
Q4 2022 Dividend - paid 16 December 2022 1.26 1,890 - 1,890
Q1 2023 Dividend - paid 24 February 2023 1.26 1,890 - 1,890
Total 2.52 3,780 - 3,780
On 23 April 2024, the Company declared an interim dividend in respect of the
period from 1 January 2024 to 31 March 2024 of 1.37 pence per Ordinary
Share, paid on 28 May 2024 to Shareholders on the register on 3 May 2024. On
that record date, the number of Ordinary Shares in issue were 150,000,000 and
the total dividend paid to Shareholders amounted to £2.06 million. The
dividend has not been included as a liability at 31 March 2024.
7 Earnings per share
Earnings per Ordinary Share is calculated by dividing the profit attributable
to equity shareholders of the Company by the weighted average number of
Ordinary Shares in issue during the period as follows:
For the six-month period For the six-month period
ended 31 March 2024 (unaudited) ended 31 March 2023 (unaudited)
Revenue Capital Total Revenue Capital Total
Profit/(loss) attributable to the equity holders of the Company (£'000) 2,342 (1,402) 940 1,314 3,990 5,304
Weighted average number of Ordinary Shares in issue (000) 150,000 150,000 150,000 150,000 150,000 150,000
Earnings/(loss) per Ordinary Share (pence) - basic and diluted 1.56 (0.93) 0.63 0.88 2.66 3.54
8 Investment held at fair value through profit or loss
As set out in note 2, the Company accounts for its interest in its wholly
owned direct subsidiaries as an investment at fair value through profit and
loss.
As at As at
31 March 30 September
2024 2023
£'000 £'000
(a) Summary of valuation
Analysis of closing balance:
Investment at fair value through profit or loss 134,417 99,289
Total investment 134,417 99,289
(b) Movements during the year:
Opening balance of investment 99,289 47,105
Additions, at cost 37,640 46,796
Capitalised interest 2,047 2,392
Closing balance of investment 138,976 96,293
Revaluation of investments to fair value:
Realised gain on sale of contract - (709)
Repayment of shareholder's loan (3,157) -
Unrealised movement in fair value of investment (1,402) 3,705
Fair value of investment 134,417 99,289
(c) Profits or loss on investment in the year:
Unrealised movement in fair value of investment (1,402) 3,705
(Loss) / profit on investment (1,402) 3,705
The investments made in underlying assets are carried at fair value through
profit and loss. The investments are typically made through a combination of
shareholder loans and equity into the SPVs which own the underlying asset. The
nominal value of the shareholder loan investments as at 31 March 2024 was
£63.1 million (March 2023: £52.6 million).
Fair value of portfolio of assets
The Investment Adviser has carried out fair market valuations of the
investments as at 31 March 2024.
The Directors have satisfied themselves as to the methodology used, the
discount rates applied and the valuation. All investments are in renewable
energy assets and are valued using a discounted cash flow methodology. The
Company's holding of an investment represents its interest in both the equity
and debt instruments of the investment. The equity and debt instruments are
valued as a whole using a blended discount rate. The weighted average cost of
capital applied to the portfolio of assets range from 6.95% to 9.50%.
In addition, Mazars LLP acted as independent valuer, providing a fair value
for all of the investments held within the portfolio.
The Company has modelled the enacted corporation tax rates of 25%.
Inflation rates are assumed based on available market forecasts of the
inflation indices (RPI and CPI, where applicable) and capped where a cap
exists in the contract.
The power price forecasts used in the valuations are based on market forward
prices from independent and widely used market expert consultants' relevant
technology-specific capture price forecasts for each asset.
Fair value of intermediate holding company
The other net assets in the intermediate holding company substantially
comprise working capital balances; therefore, the Directors consider the fair
value to be equal to the book values. The sensitivity to unobservable inputs
is based on management's expectations of reasonably possible shifts in these
inputs. The valuation sensitivity of each assumption is shown in Note 13.
9 Investment advisory fee
For the six-month period For the six-month period
ended 31 March 2024 (unaudited) ended 31 March 2023 (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment advisory fee 684 - 684 692 - 692
The Investment Advisory Agreement ("IAA") dated 1 November 2021 between the
Company and Atrato Partners Limited as the Investment Adviser and JTC Global
AIFM Solutions Limited as the AIFM, appointed the Investment Adviser to act as
the Company's investment adviser. The AIFM has been appointed pursuant to the
AIFM agreement dated 1 November 2021 between the AIFM and the Company as the
alternative investment fund manager for the purposes of the AIFM Directive.
Accordingly, the AIFM is responsible for providing portfolio management and
risk management services to the Company.
The fees relating to the IAA are set out in the Investment Adviser report and
the Annual Report for 30 September 2023. No amendments have been made during
the period.
10 Share capital
As at 31 March 2024 (unaudited) As at 30 September 2023
(audited)
Allotted, issued, and fully paid: Number of shares Nominal value of shares (£) Number of shares Nominal value
of shares (£)
Opening Balance 1,500,000 1,500,000 150,000,000 1,500,000
Allotted upon incorporation
Shares of £0.01 each (ordinary shares) - - - -
Issue of redeemable preference shares - - - -
Allotted / redeemed following admission to LSE
Shares issued - - - -
Initial redeemable preference shares redeemed - - - -
Closing balance 1,500,000 1,500,000 150,000,000 1,500,000
Ordinary shareholders are entitled to all dividends declared by the Company
and to all of the Company's assets after repayment of its borrowings and
ordinary creditors. Ordinary shareholders have the right to vote at meetings
of the Company. All Ordinary Shares carry equal voting rights.
11 Capital reduction reserve
As indicated in the Prospectus, following admission of the Company's shares to
trading on the LSE, the Directors applied to the Court and obtained a
judgement on 28 January 2022 to cancel the amount standing to the credit of
the share premium account of the Company.
During the period, £1.6 million (2023: £3.8 million) of dividends have been
paid out of the reserve, reducing the reserve to £132.1 million (2023:
£137.3 million).
12 Net assets per Ordinary Share
As at As at
31 March 2024 (unaudited) 30 September 2023 (audited)
Total shareholders' equity (£'000) 135,052 138,057
Number of Ordinary Shares in issued ('000) 1,500 1,500
Net asset value per Ordinary Share (pence) 90.0 92.0
13 Financial instruments by category
The Company held the following financial instruments at fair value at 31 March
2024. There have been no transfers of financial instruments between levels of
the fair value hierarchy. There are no non-recurring fair value measurements.
a. Financial instruments by category
As at 31 March 2024 (unaudited)
Financial assets at fair value through profit & loss Financial asset at amortised cost Financial liabilities at amortised cost Total
£'000 £'000 £'000 £'000
Non-current assets
Investments at fair value through profit or loss (Level 3) 134,417 - - 134,417
Current assets
Other receivables and prepayments - 97 - 97
Fixed deposits - - - -
Cash and cash equivalents - 10,449 - 10,449
Total assets 134,417 10,546 - 144,963
Current liabilities
Trade and other payables - - (9,911) (9,911)
Total liabilities - - (9,911) (9,911)
Net assets 134,417 10,546 (9,911) 135,052
As at 30 September 2023 (audited)
Financial assets at fair value through profit & loss Financial asset at amortised cost Financial liabilities at amortised cost Total
£'000 £'000 £'000 £'000
Non-current assets
Investments at fair value through profit or loss (Level 3) 99,289 - - 99,289
Current assets
Other receivables and prepayments - 1,549 - 1,549
Fixed deposits - - - -
Cash and cash equivalents - 37,867 - 37,867
Total assets 99,289 39,416 - 138,705
Current liabilities
Trade and other payables - - (648) (648)
Total liabilities - - (648) (648)
Net assets 99,289 39,416 (648) 138,057
The above tables provide an analysis of financial instruments that are
measured subsequent to their initial recognition at fair value as follows:
· Level 1: fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or liabilities;
· Level 2: fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are observable for the
assets or liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices; and
· Level 3: fair value measurements are those derived from valuation
techniques that include inputs to the asset or liability that are not based on
observable market data (unobservable inputs).
There were no Level 1 assets or liabilities during the period. There were no
transfers between Level 1 and 2, Level 1 and 3 or Level 2 and 3 during the
period.
The Company's financial assets and liabilities as summarised above are
expected to be realised within 12 months of the reporting date, excluding
those held in FVTPL. The financial assets and financial liabilities measured
at amortised cost's carrying amount is approximated to its fair value which is
classified at level 3 at the fair value hierarchy.
The Level 3 fair value measurements derive from valuation techniques that
include inputs to the asset or liability that are not based on observable
market data (unobservable inputs).
Reconciliation of Level 3 fair value measurement of financial assets and
liabilities
An analysis of the movement between opening and closing balances of the
investments at fair value through profit or loss is given in note 8.
The fair value of the investments at fair value through profit or loss
includes the use of Level 3 inputs. Please refer to note 4 for details of the
valuation methodology and sensitivities.
Valuation sensitivities
The sensitivities are based on the existing portfolio of assets as at 31 March
2024. For each of the sensitivities shown, it is assumed that potential
changes occur independently with no effect on any other assumption.
The below figures show the impact to NAV of changes to the key input
assumptions (sensitivities). The sensitivities are based on the existing
portfolio of assets as at 31 March 2024.
Discount rate
The discount rate is considered the most significant unobservable input
through which an increase or decrease would have a material impact on the fair
value of the investments at a fair value through profit or loss. The weighted
average cost of capital applied to the portfolio of assets range from 6.95% to
9.50%.
An increase of 0.5% in the discount rate would cause a decrease in total
portfolio value of 3.7 pence per Ordinary Share and a decrease of 0.5% would
cause an increase of 4.0 pence per Ordinary Share.
31 March 2024 30 September 2023
Discount Rate + 50 bps - 50 bps + 50 bps - 50 bps
Increase/(decrease) in NAV (£m) (5.6) 6.0 (5.1) 5.5
NAV per share 86.3p 94p 88.7p 95.7p
NAV per share change (3.7p) 4.0p (3.4p) 3.7p
Change (4.1)% 4.4% (3.7)% 4.0%
Energy production
Energy production, as measured in MWh per annum, assumed in the DCF valuations
is based on a P50 energy yield profile, representing a 50% probability that
the energy production estimate will be met or exceeded over time. An
independent engineer has derived this energy yield estimate for each asset by
considering a range of irradiation, weather data, ground-based measurements
and design/site-specific loss factors including module performance, module
mismatch, inverter losses, and transformer losses, among others. The P50
energy yield case includes a 0.5% annual degradation through the entirety of
the useful life. In addition, the P50 energy yield case includes an assumption
of availability, which ranges from 99% to 100%, as determined reasonable by an
independent engineer at the time of underwriting the asset.
Solar assets are subject to variation in energy production over time. An
assumed "P90" level of energy yield (i.e. a level of energy production that is
below the "P50", with a 90% probability of being exceeded) would cause a
decrease in the total portfolio valuation of 9.4 pence per Ordinary Share,
while an assumed "P10" level of power output (i.e. a level of energy
production that is above the "P50", with a 10% probability of being achieved)
would cause an increase of 8.0 pence per Ordinary Share in the total portfolio
valuation.
31 March 2024 30 September 2023
Energy production P90 P10 P90 P10
Increase/(decrease) in NAV (£m) (13.1) 12.0 (8.5) 8.1
NAV per share 81.3p 98.0p 86.4p 97.5p
NAV per share change (8.8p) 8.0p (5.6p) 5.4p
Change (9.7)% 8.9% (6.1)% 5.9%
Power price curve
The power price forecasts for each asset are based on a number of inputs. The
sensitivity assumes a 10% increase or decrease in power prices relative to the
base case for each year of the asset life.
For an increase in power prices by 10%, there is a 3.2 pence per Ordinary
Share increase in NAV, while a decrease of 10% in power prices has a decrease
of 3.8 pence per Ordinary Share in NAV, due to low merchant power price
exposure.
31 March 2024 30 September 2023
Power price curve +10% -10% +10% -10%
Increase/(decrease) in NAV (£m) 4.7 (5.7) (5.6) 5.5
NAV per share 93.2p 86.2p 88.3p 95.7p
NAV per share change 3.2p (3.8p) (3.7p) 3.7p
Change 3.5% (4.3%) (4.0)% 4.0%
Inflation
The sensitivity assumes a 50bps increase or decrease in inflation relative to
the base case for each year of the asset life.
A 50bps increase in inflation would result in a 2.6% increase in NAV while a
50bps decrease would decrease the NAV by 2.7%.
31 March 2024 30 September 2023
Inflation +50bps -50bps +50bps -50bps
Increase/(decrease) in NAV (£m) 3.4 (3.6) 4.6 (4.3)
NAV per share 92.3p 87.6p 95.1p 89.2p
NAV per share change 2.3p (2.4p) 3.1p (2.9p)
Change 2.6% (2.7)% 3.3% (3.1)%
14 Financial risk management
The Company's activities expose it to a variety of financial risks, including
credit, liquidity, and market risk. These financial risks form part of the
Company's overall principal risks.
The Investment Adviser, AFIM and the Administrator report to the Board on a
bi-annual basis and provide information to the Board, which allows it to
monitor and manage financial risks relating to the Company's operations.
Credit risk
Credit risk is the risk that financial loss arises from the failure of a
customer or counterparty to meet its obligations under a contract.
As at 31 March 2024, the Company's exposure to credit risk in the form of
shareholder loans, accrued shareholder loan interest, the cash and cash
equivalents and other receivables. Appropriate credit checks are required to
be made on all counterparties to the Company. Cash is held in accounts with
HSBC Bank Plc, which has a credit rating as per Moody's Investor Services of
A1. During the six months ended 31 March 2024, there are no balances past due
or impaired.
The Company's credit risk exposure in relation to cash holdings is minimised
by dealing with financial institutions with investment grade credit rating.
The Company has no significant credit exposure at the current time. Exposure
in relation to customers will be mitigated by a combination of due diligence
procedures performed at inception of a PPA and diversity of counterparties in
the portfolio. While credit risk in relation to contractors employed is
mitigated through due diligence procedures performed at inception, the length
of contract and the available alternative contractors. Where the strength of
an asset vendor is insufficient, warranty and indemnity insurance is
purchased.
Shareholder loans provided to Holdco and flowed down to project companies, is
secured through the procedures performed in monitoring the credit risk of PPA
counterparties. These procedures work to mitigate the credit risk that arises
due to intercompany lending to the underlying investments. The Company
regularly reviews the future cash flows and valuations of the investee
companies to gain comfort as to the recoverability of the loans. No balances
are past due or impaired.
Liquidity risk
The objective of liquidity management is to ensure that all commitments which
are required to be funded can be met out of readily available and secure
sources of funding.
The Company's approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its liabilities when
due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Company's reputation.
The Company's trade and other payables with third parties at the reporting
date are considered operational in nature and are due and payable within 12
months of the reporting date. As at 31 March 2024, the Company has financial
assets of cash and cash equivalents without contractual maturity that can meet
the current expected financial liabilities and £10 million available facility
from the RCF.
Market risk
Market risk is the risk that changes in market prices, such as interest and
foreign currency rates and property valuations, will affect the Company's
financial performance or the value of its holdings of financial instruments.
The objective is to minimise market risk through managing and controlling
these risks within acceptable parameters, whilst optimising returns.
The Company uses financial instruments in the ordinary course of business, and
also incurs financial liabilities, in order to manage market risks.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will
fluctuate due to changes in market interest rates. The Company's interest rate
risk on interest bearing financial assets is limited to interest earned on
fixed cash deposits.
The Company's interest rate risk on interest bearing financial assets is
limited to interest earned on fixed cash deposits. The Interest Rate Benchmark
Reform - Phase 2 did not have a material impact on the Company's reported
results as the exposure to interest rates is limited to interest earned on
fixed deposits.
Price risk
Price risk is defined as the risk that the fair value of a financial
instrument held by the Company will fluctuate.
Currency risk
Currency risk is the risk that the value of a financial instrument will
fluctuate due to changes in foreign exchange rates. All transactions during
the current period were denominated in GBP, thus no foreign exchange
differences arose.
Capital management
The Company manages its capital to ensure that it will be able to continue as
a going concern while maximising the return to its shareholders through the
optimisation of the debt and equity balances. The Company is not subject to
any externally imposed capital requirements.
Equity includes all capital and reserves of the Company that are managed as
capital.
15 Related party transactions
Following admission of the Ordinary Shares (refer to note 10), the Company and
the Directors are not aware of any person who, directly or indirectly,
jointly, or severally, exercises or could exercise control over the Company.
The Company does not have an ultimate controlling party.
Details of related parties are set out below.
a) Accounting, secretarial and directors
Atrato Partners Limited has been appointed to act as an administrator for the
Company under the terms of the IAA, more details are set out below.
Hanway Advisory Limited was appointed as the secretary of the Company on 1(st)
April 2024, prior to this Apex Secretaries LLP held the position.
Juliet Davenport, Chair of the Board of Directors of the Company, is paid
director's remuneration of £50,000 per annum (2023: £50,000), Faye Goss is
paid director's remuneration of £37,500 per annum (2023: £37,500), Duncan
Neale is paid director's remuneration of £37,500 per annum (2023: £37,500)
with an additional £5,000 per annum (2023: £5,000) for responsibilities as
Audit Committee Chair. Total directors' remuneration of £65,000 was incurred
in respect to the Period. Any expenses incurred by Directors which are related
to business are also reimbursed.
The interests (all of which are or will be beneficial unless otherwise stated)
of the current Directors in the ordinary share capital of the Company as at 31
March 2024 were as follows:
Director Shares held at 31 March 2024 Shares held at 30 September 2023
Juliet Davenport 50,000 33,000
Faye Goss 20,000 20,000
Duncan Neale 2,980 2,980
There have been no changes to the above holdings since the period end.
b) Investment Adviser
Fees payable to the Investment Adviser by the Company under the IAA are shown
in the Statement of Comprehensive Income and detailed in note 9.
During the Period, investment advisory fees amounted to £655,840 (31 March
2023: £702,053) with £244,692 outstanding and payable as at 31 March 2024.
Details of the direct and indirect interests of the Directors of the
Investment Adviser and their close families in the ordinary shares of one
pence each in the Company at 31 March 2024 were as follows:
Benedict Luke Green, a director of the Investment Adviser: 760,735 shares
(0.51 % of the issued share capital).
Steve Peter Windsor, a director of the Investment Adviser: 1,496,381 shares
(1.00 % of the issued share capital).
Gurpreet Gujral, Fund manager of the Investment Adviser: 100,544 shares (0.07%
of issued share capital).
Natalie Markham, a director of Holdco and SPVs: 27,852 shares (0.02% of issued
share capital).
Lara Townsend, a director of Holdco and SPVs: 18,266 shares (0.01% of issued
share capital).
c) Amounts payable to related parties
Amounts payable to the Investment Adviser represent expense paid on behalf of
the Company and amounted to £264,724 at the Period end.
d) Amounts receivable from related parties
The Company has provided a loan to Holdco for £125 million at 7% interest, of
which £90.5 million has been drawn to date (March 2023: £53.4 million),
£22.9 million (March 2023: £nil) has been repaid from cash generated or
share conversions, leaving £70.9 million outstanding as at 31 March 2024
(March 2023: £53.4 million). The Company has an intercompany loan payable to
Holdco of £9.2 million (March 2023: receivable £546,624), which is held on a
instant access deposit account and the Company level.
The Company has provided a loan to Rooftop Solar 2 Limited for £30.7 million
at 8% interest (March 2023: £nil), which is fully drawn.
16 Unconsolidated Subsidiaries, Associates and Other Entity
The following table shows subsidiaries of the Company as at 31 March 2024. As
the Company is regarded as an investment entity as referred to in note 2,
these subsidiaries have not been consolidated in the preparation of the
financial statements. The Company is the ultimate parent undertaking of these
entities.
Ownership Country of
Name Interest Investment Category incorporation Registered address
Atrato Onsite Energy Holdco Ltd 100% Holdco subsidiary entity UK 1 King William Street, London, EC4N 7AF
Atrato Rooftop Solar 1 Ltd 100% Operating subsidiary entity, owned by Holdco UK 1 King William Street, London, EC4N 7AF
EMDC Solar Ltd 100% Operating subsidiary entity, owned by Holdco UK 1 King William Street, London, EC4N 7AF
Hylton Plantation Solar Farm Ltd 100% Operating subsidiary entity, owned by Holdco UK 1 King William Street, London, EC4N 7AF
London Road Energy Centre 100% Operating subsidiary entity, owned by Holdco UK 1 King William Street, London, EC4N 7AF
Rooftop Solar 2 Ltd 100% Holding subsidiary entity, owned by Holdco UK 1 King William Street, London, EC4N 7AF
Sonne Solar Ltd 100% Operating subsidiary entity, owned by Holdco UK 1 King William Street, London, EC4N 7AF
Skeeby Solar Ltd 100% Operating subsidiary entity, owned by Holdco UK 1 King William Street, London, EC4N 7AF
HGPE ASG Finance Limited 100% Holding subsidiary entity, owned by Rooftop Solar 2 Limited UK 6th Floor Capital Tower, 91 Wateroo Road, Lndon, SE1 8RT
HGPE ASG Limited 100% Holding subsidiary entity, owned by HGPE ASG Finance Limited UK 6th Floor Capital Tower, 91 Wateroo Road, Lndon, SE1 8RT
A Shade Greener (F2) Limited 100% Operating subsidiary entity, owned by HGPE ASG Limited UK 6th Floor Capital Tower, 91 Wateroo Road, Lndon, SE1 8RT
HGPE ASG AssetCo Limited 100% Operating subsidiary entity, owned by HGPE ASG Limited UK 6th Floor Capital Tower, 91 Wateroo Road, Lndon, SE1 8RT
HGPE Steel Limited 100% Holding subsidiary entity, owned by Rooftop Solar 2 Limited UK 6th Floor Capital Tower, 91 Wateroo Road, Lndon, SE1 8RT
HGPE Steel Nominee Limited 100% Holding subsidiary entity, owned by Rooftop Solar 2 Limited UK 6th Floor Capital Tower, 91 Wateroo Road, Lndon, SE1 8RT
A Shade Greener (F8) LLP 100% Operating subsidiary entity, owned by HGPE Steel Limited and HGPE Steel UK 6th Floor Capital Tower, 91 Wateroo Road, Lndon, SE1 8RT
Nominee Limited
Empower Community Solar LLP 100% Operating subsidiary entity, owned by HGPE Steel Limited and HGPE Steel UK 6th Floor Capital Tower, 91 Wateroo Road, Lndon, SE1 8RT
Nominee Limited
HGPE ASG2 AssetCo LLP 100% Operating subsidiary entity, owned by HGPE Steel Limited and HGPE Steel UK 6th Floor Capital Tower, 91 Wateroo Road, Lndon, SE1 8RT
Nominee Limited
Guarantees provided by the Company in relation to liabilities that may arise
in Hylton Plantation Solar Farm Ltd or Sonne Solar Ltd have been provided in
the table below. The expected economic or cash outflow from the Company is
expected to be nil.
Provider Investment Beneficiary Nature Purpose Amount
£'000
The Company Hylton Nissan Guarantee PPA 10,000
The Company Sonne Solar Tesco Guarantee Framework PPAs 10,000
The Company Sonne Solar Tesco Guarantee PPA 6,000 to 10,000
The Company Sonne - LCY2 Amazon Guarantee PPA 30,000
The Company Sonne - LTN4 Amazon Guarantee PPA 30,000
The Company Sonne - EDI1 Amazon Guarantee PPA 30,000
The Company Sonne -MAN2 Amazon Guarantee PPA 30,000
The Company Sonne -BHX2 Amazon Guarantee PPA 30,000
The Company Sonne -BHX3 Amazon Guarantee PPA 30,000
The Company Sonne -BHX4 Amazon Guarantee PPA 30,000
The Company Skeeby Ovo Energy Guarantee PPA 2,500
17 Commitments and contingencies
As at 31 March 2024, the Company's subsidiaries had future investment
obligations totalling £5.0 million of future investment obligations in
relation to the Skeeby project in North Yorkshire. These amounts are capital
commitments within the portfolio to be funded by flows from the Company, at
the time of the final milestone payments, which are expected to be by July
2024.
18 Post balance sheet events
On 17 April 2024, the Company agreed to future investment obligations
totalling £1.9 million in relation to the installation of solar panels at 3
Tesco sites in Sonne Solar Limited's investment portfolio located in Kings
Lynn, Stockport and Wisbech respectively.
On 23 April 2024, the Company declared an interim dividend in respect of the
period from 1 January 2024 to 31 March 2024 of 1.37 pence per Ordinary
Share, paid on 24 May 2024 to Shareholders on the register on 3 May 2024. On
that record date, the number of Ordinary Shares in issue was 150,000,000 and
the total dividend paid to Shareholders amounted to £2.1 million. The
dividend has not been included as a liability at 31 March 2024.
On 10 May 2024, the Company completed on the acquisition of two operational
solar projects for £4.7 million. The assets have a total capacity of 7.3MW
and benefit from a corporate PPAs for 17 to 24 years.
On 3 June 2024, the Company completed on the acquisition of a mixed
operational portfolio for £9.3 million. The assets have a total capacity of
13MW and include ROC subsidised ground mount assets, and subsidy free ground
mount assets with a weighted average contract term of 10.4 years.
By the reporting date, the other financial liabilities have been fully paid.
No other significant events have occurred between 31 March 2024 and the date
when the interim accounts were authorised by the Board of Directors, which
would require adjustments to, or disclosure in, the Company's interim
accounts.
Alternative Performance Measures
In reporting financial information, the Company presents alternative
performance measures ("APMs") which are not defined or specified under the
requirements of IFRS. The Company believes that these APMs, which are not
considered to be a substitute for or superior to IFRS measures, provide
stakeholders with additional helpful information on the performance of the
Company. The APMs presented in this report are shown below:
Premium/Discount
The amount expressed as a percentage, by which the share price at 31 March
2024, is greater or less the NAV per share.
As at As at
31 March 30 September
2024 2023
NAV per share (pence) a 90.0 92.0
Share price (pence) b 74.6 71.4
(Discount) / Premium (b÷a)-1 (17.1%) (22.9%)
Total return
Total return is a measure of performance that includes both income and capital
returns. It considers capital gains and the assumed reinvestment of dividends
paid out by the Company into its shares on the ex-dividend date. The total
return is shown below, calculated on both a share price and NAV basis.
31 March 2024 31 March 2023 30 September 2023
pence pence pence
Ordinary share price at period/year end (a) 74.6 85.6 71.4
Dividend per ordinary share declared/paid in respect of period/year (b) 2.63 2.52 5.0
Ordinary share price at beginning of period/year (c) 71.4 99.5 99.5
Ordinary shareholder total return per share ((a + b - c) / c, expressed as a 8.2% (11.4%) (23.2%)
percentage)
31 March 2024 31 March 2023 30 September 2023
pence pence pence
NAV per ordinary share at period/year end as per Statement of Financial 90.0 93.8 92.0
Position (a)
Dividend per ordinary share declared in respect of period/year (b) 2.63 2.52 5.0
NAV per ordinary share at beginning of period/year end as per Statement of 92.0 92.8 92.8
Financial Position (c)
NAV total return per ordinary share ((a + b - c) / c, expressed as a 0.7% 3.8% 4.5%
percentage)
Ongoing charges ratio
A measure, expressed as a percentage of average NAV, of the regular, recurring
annual costs of running an investment company.
31 March 31 March 30 September
2024 2023 2023
Average NAV (£'000) (a) 136,555 139,888 138,591
Ongoing fees* (£'000) (b) 2,526 2,277 2,459
Ongoing charges ratio 1.9% 1.6% 1.8%
*Ongoing fees for the six months to 31 March 2024 annualised. Consisting of
investment management fees and other recurring expenses.
Gross Asset Value
The total value of all the assets of the Company, including the value of the
debt held in the subsidiaries (NAV £135.1 million plus £30 million RCF debt
and £45.7 million project debt).
1 The Gross and Net Asset Value per ordinary share, ordinary share price
premium to NAV and ongoing charges ratio as alternative performance measure
("APMs")
2 Figures do not cast due to rounding
3 Including post balance sheet events
4 Expected dividend cover 12 months to 30 September 2025
5 Sector comprises UK listed solar focussed funds
6 Sensitivity as at 31 March 2024
7 Avoided emissions compared to UK-specific electricity grid average. This
is calculated using the GOV UK conversion factors 2023: UK electricity grid
average factor (Scope 2) and transmission and distribution UK electricity
factor (Scope 3).
8 Once portfolio fully operational
9 Based on Ofgem average UK annual household energy consumption of
2,700kWh
10 Calculated as GAV at 31 March 2024, plus acquisitions and developments
post balance sheet at cost (excluding transaction costs), net of cash held at
balance sheet date.
11 12 months to 30 September 2025
12 Numbers rounded to one decimal place
13 From 31 March 2024
14 Weighted average unexpired contracted term
15 Dividend cover is net of ongoing fund costs, with the 12 months being
October 2024 to September 2025
16 Sensitivity average to a 10% increase / reduction in power prices
17 As at 31 March 2024
18 Dividend cover is net of ongoing fund costs
19 This is the value of funds injected into the SPVs as at 31 March 2024 and
not the full committed amount to projects
20 UK Industry Supply Chain Statement • Solar Energy UK
(https://solarenergyuk.org/supply-chain-statement/)
21 Practical Procurement Guidance Launched to Combat Modern Slavery in Solar
PV Supply Chains - Action Sustainability
(https://www.actionsustainability.com/solar-pv-guidance/)
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