REG - Triple Point Energy - Results for the year ended 31 March 2024
24/06/2024 07:00
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RNS Number : 4786T Triple Point Energy Transition PLC 24 June 2024
24 June 2024
Triple Point Energy Transition plc
("TENT" or the "Company" or, together with its subsidiaries, the "Group")
RESULTS FOR THE YEAR ENDED 31 MARCH 2024
The Board of Triple Point Energy Transition plc (ticker: TENT), announces
its audited results for the year ended 31 March 2024.
31 March 2024 31 March 2023
Net asset value ("NAV") £86.7 million £99.4 million
NAV per share 86.66 pence 99.44 pence
Dividend declared per share 5.50 pence 5.50 pence
Total NAV return 1 (7.3)% 9.2%
Cash dividend cover ratio(1 2 ) 1.04x 1.2x
Fully invested portfolio valuation £83.4 million £90.1 million
Company Wind-Down
· As the broader market environment became increasingly challenging for
investment trusts, the Company continued to grapple with trading at a deep
discount to NAV. In light of this, and considering shareholder feedback, at
the end of 2023 the Board commissioned a third-party review of the Company's
strategic options, and concluded that an orderly wind-down of the Company was
the best course, both financially and in terms of optimising shareholder value
o The wind-down proposals subsequently put to shareholders included a
renegotiated Investment Management Agreement which aligns the Investment
Manager's interests with those of shareholders in the context of the wind-down
· On 22 March 2024, the wind-down proposals received almost unanimous
support from shareholders who voted at the General Meeting
· As at the date of this announcement, the Group has realised £61.6
million through the disposal of the Boxed LED Facility, the BESS Portfolio and
the CHP Portfolio, as well as the repayment of the Innova Development Debt
Facility, in aggregate representing 52.2% of Gross Asset Value as at 31 March
2024
o Disposals to date have realised 92% of the value of those investments
o The only disposal below par was the CHP Portfolio, which has been
refinanced for a total of £17.5 million, comprising £14.5 million which has
been received and £3 million which is receivable in three instalments in
September 2024, June 2025 and September 2026, against the £23.1 million
outstanding. This reflects the deterioration in the credit standing of the
onsite counterparty since the interim results
· Following the disposal of the BESS Portfolio, the proceeds were used
to repay the Group's Revolving Credit Facility ("RCF") in full and cancel it
on 19 April 2024
· The remaining assets to be realised are the Hydroelectric Portfolio
and the remaining LED receivables finance facility - both are being actively
marketed
Dividend forecast and return of proceeds
Given the prompt progress of the realisation of assets, it is the current
intention of the Company to make a dividend payment for the quarter ending 30
June 2024 of 1.375 pence per share, which is consistent with prior dividends
paid. Future dividend payments will be evaluated on a quarterly basis, taking
into account the payout level required for investment trust status, the
progress of asset realisations and overall profitability for the period from
the remaining income generating assets.
It is also the intention to make an interim return of capital to shareholders
in the current financial year, after the disposal of the Hydroelectric
Portfolio and in advance of the anticipated members' voluntary liquidation.
Financial Highlights
· The NAV declined 12.8% to 86.66 pence per share as at 31 March 2024
(31 March 2023: 99.44 pence per share) resulting in a total NAV return of
negative 7.3% for year ended 31 March 2024 (31 March 2023: 9.2%). This
decline was predominantly driven by the fair value revaluation of the
investment portfolio reflecting the increased discount rate applied to the
Hydroelectric Portfolio and the impairment of the CHP Portfolio loans
· Dividends declared in respect of the year ended 31 March 2024
totalled 5.50 pence per Ordinary Share, covered 1.04x by operating cashflow
(net of expenses and finance costs for TENT and TENT Holdings, the Company's
wholly owned subsidiary, but excluding one off expenditure such as wind-down
expenses)
o Equivalent to a dividend yield of 8% on the share price at 31 March 2024
· At 31 March 2024, the Group had cash balances of £7.8 million (31
March 2023: £11.2 million) and had drawn £25.4 million of the RCF in TENT
Holdings
o As noted above, the RCF was subsequently repaid in full and cancelled on
19 April 2024
Operational Highlights
· The Hydroelectric Portfolio generated a total of 16,960MWh over the
year, c. 15% below the long-term generation forecast (P50). This was primarily
due to:
o lower-than-average rainfall in Scotland over the period (which does not
impact the long-term forecast); and
o two breakdowns at different sites which have subsequently been repaired
and in respect of which insurance claims have been made
· The construction of the portfolio of BESS assets progressed in line
with expectations:
o The operational 20MW asset at Oldham operated at high availability
o Gerrards Cross site moved into commissioning and testing at the end of the
period
o Two further BESS assets under construction, Newport (20MW/40MWh) and
Auchteraw (50MW/100MWh), are due to be commissioned later this year
o The assets now benefit from a generation licence, allowing the optimiser
to trade efficiently into all available markets
· The CHP energy service centre companies' operational and power
generation performances were in line with forecast for FY24 on the heat export
side and slightly below forecast on the power export side due to a temporary
power export curtailment at one site over the summer. While all debt payments
and covenants were met during the year, the aged debtors of Harvest,
Glasshouse and Spark Steam increased, as a function of the deterioration in
the credit quality of the on-site tomato grower.
John Roberts, the Company's Chair, commented:
"FY24 was another year of robust underlying performance from TENT's
diversified portfolio of assets as illustrated by the 1.04x cash dividend
cover. Looking ahead, however, our primary goal is to continue the strong
progress already made in completing our orderly wind-down in a timely fashion
and with diligence. We aim to optimise the value realised from our remaining
assets, with the objective of concluding the disposals efficiently and
responsibly, and returning value to shareholders."
For further information, please contact:
Triple Point Investment Management LLP +44 (0) 20 7201 8989
Jonathan Hick
Christophe Arnoult
Chloé Smith
J.P. Morgan Cazenove (Corporate Broker) +44 (0) 20 7742 4000
William Simmonds
Jérémie Birnbaum
Akur Limited (Financial Adviser) +44 (0) 20 7493 3631
Tom Frost
Siobhan Sergeant
LEI: 213800UDP142E67X9X28
Further information on the Company can be found on its
website: http://www.tpenergytransition.com/
(https://eur03.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.tpenergytransition.com%2F&data=05%7C01%7CRebecca.Lillington%40triplepoint.co.uk%7C5d7dc58447154d71da6108da8a648af1%7Ccde8812e0dbd4dc3b4463655beb81efb%7C0%7C0%7C637974461674664827%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=Qxux6XDdRNrDI2LBUqkiVrj0UyfH30KOouLRCg%2FPxmY%3D&reserved=0)
NOTES:
The Company is an investment trust which was established to invest in assets
that support the transition to a lower carbon, more efficient energy system
and help the UK achieve Net Zero.
The Investment Manager is Triple Point Investment Management LLP ("Triple
Point") which is authorised and regulated by the Financial Conduct Authority.
Triple Point manages private, institutional, and public capital, and has a
proven track record of investment in energy transition and decentralised
energy projects.
On 22 March 2024, shareholders approved the Company's proposed orderly
realisation of assets. Details of future divestments or returns of capital
will be announced via a Regulatory Information Service in due course.
You may view the Annual Report in due course on the Company's website.
http://www.tpenergytransition.com/
(https://eur03.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.tpenergytransition.com%2F&data=05%7C01%7CRebecca.Lillington%40triplepoint.co.uk%7C5d7dc58447154d71da6108da8a648af1%7Ccde8812e0dbd4dc3b4463655beb81efb%7C0%7C0%7C637974461674664827%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=Qxux6XDdRNrDI2LBUqkiVrj0UyfH30KOouLRCg%2FPxmY%3D&reserved=0)
Please note that page numbers in this announcement are in reference to the
Annual Report.
Strategic Report
Chair's Statement
Dear Shareholder,
I am pleased to present the results for Triple Point Energy Transition plc
("TENT" or the "Company") for the year ended 31 March 2024.
During the year, the Company has confronted a dynamic and evolving
macroeconomic landscape. Our target at launch in 2020 was to invest prudently
and to deliver attractive risk adjusted asset total NAV returns of 7-8% per
year. TENT achieved this for the year ended 31 March 2023 by investing in a
diversified and differentiated portfolio that contributed to addressing a
variety of the challenges raised by the energy transition (see KPIs on
renewable energy generated and avoided carbon for contribution outcomes). This
year the diversified portfolio strategy has proven robust in the face of a
decline in energy market conditions, with lower wholesale power prices
compared to the previous period. Despite these market conditions and slightly
lower generation from the Hydroelectric Portfolio, for the year ended 31 March
2024 the Company's cash earnings have again exceeded the dividends paid during
the year, with the cash dividend cover being 1.04x (excluding one-off costs).
As the broader market environment became increasingly challenging for
investment trusts, the Company, along with many of our peers, continued to
grapple with trading at a deep discount to NAV. This persistent undervaluation
occurred despite our efforts to engage with the market and expand our
shareholder base. Given these market conditions, it was not possible to grow
the business through further capital raises, or other corporate actions,
meaning that TENT has not been able to achieve the scale required to provide
sufficient liquidity for our investors. The lack of liquidity also made it
harder to attract buyers for TENT shares, meaning that the share price did
not, in our view, reflect the underlying performance of the Company and its
portfolio.
Faced with these realities, the Board, having considered shareholder feedback,
commissioned a third-party review of the Company's strategic options. In
December 2023, the Board proposed an orderly wind-down of the Company as the
best course of action, both financially and in terms of optimising shareholder
value. This proposal, reflecting a consensus that it was necessary to return
capital to our shareholders in the most efficient manner possible, received
almost unanimous support from shareholders who voted at the General Meeting on
22 March 2024. This decision was not taken lightly but was seen as the best
way forward in the face of the market headwinds our sector was facing and
continues to face.
Immediately following the General Meeting approvals, we embarked on a series
of asset disposals. We enlisted the corporate finance advisory expertise of
PwC to ensure these transactions are executed proficiently and with the best
possible outcomes for our shareholders. To date, we have exited from four
investments, representing 52.2% of our Gross Asset Value ("GAV"), which marks
substantial progress in our wind-down strategy. The repayment of the £5
million Development Debt Facility by Innova Renewables Limited ("Innova
Facility"), followed by the disposals of the LED receivables financing
facility to Boxed Light Services Limited ("Boxed LED Facility") and the £37.0
million debt facility to a subsidiary of Virmati Energy Ltd (trading as
Field), to fund a portfolio of four Battery Energy Storage Systems ("BESS")
assets ("BESS Portfolio") at their carrying values in an environment of high
base rates, is seen as a highly satisfactory outcome for shareholders. The
loans to Harvest, Glasshouse and Spark Steam (together the "CHP Portfolio")
have been refinanced for a total of £17.5 million, comprising £14.5 million
which has been received and £3 million which is receivable in three
instalments in September 2024, June 2025 and September 2026, against the
£23.1 million outstanding. This is a disappointing outcome which reflects the
deterioration in the credit standing of the onsite counterparty since the
interim results. The sale of the Hydroelectric Portfolio and the remaining LED
receivables finance facility are the only outstanding assets awaiting
disposal, demonstrating the efficiency of the Board, Investment Manager and
other advisers in progressing the orderly realisation of assets following
shareholder approval.
At the General Meeting, shareholders approved the revised Investment
Management Agreement, introducing a fee structure that aligns the management
team's incentives with shareholder interests. The new terms include a base fee
based on average market capitalisation and a success fee that depends on the
overall net realisation value achieved for shareholders, with the aggregate
fees payable to the Investment Manager capped at £1.351 million. This ensures
the Investment Manager's commitment to achieving the highest possible sale
values while maintaining cost efficiency. Further detail can be found on page
48 of the Annual Report.
Financing
As at 31 March 2024 the Group, via its wholly owned subsidiary, TENT Holdings
Limited ("TENT Holdings"), had a £40 million Revolving Credit Facility
("RCF") with TP Leasing Limited ("TPLL"). The interest rate on this facility
was a fixed rate coupon of 6% pa on drawn amounts.
As at 31 March 2024, £25.4 million was drawn under the facility (31 March
2023: £nil). The facility was utilised to fund the BESS Portfolio, which was
subsequently sold for par and the proceeds were utilised to fully repay the
RCF facility and the RCF was then cancelled on 19 April 2024.
Dividends
The Board is pleased to confirm the dividend in respect of the quarter to 31
March 2024 of 1.375 pence per share, payable on or around 19 July 2024 to
holders of Ordinary Shares on the register on 5 July 2024, bringing the total
annual dividend to the target of 5.50 pence per share.
Given the prompt progress of the realisation of assets, it is the current
intention of the Company to make a dividend payment for the quarter ending 30
June 2024 of 1.375 pence per share, which is consistent with prior dividends
paid. Future dividend payments will be evaluated on a quarterly basis, taking
into account the payout level required for investment trust status, the
progress of asset realisations and overall profitability for the period from
the remaining income generating assets.
It is also the intention to make an interim return of capital to shareholders
in the current financial year, after the disposal of the Hydroelectric
Portfolio and in advance of the anticipated members' voluntary liquidation.
Financial Results
During the year, TENT reported a total loss of £7.3 million (31 March 2023:
profit of £8.8 million). The loss reported is predominately driven by the
fair value decline of £12.2 million relating to the investments in the
Hydroelectric and CHP Portfolios. Further information on financial performance
can be found on pages 74 to 100 of the Annual Report.
The Company reported a NAV decline of 12.8%, resulting in a total negative NAV
return of 7.3%. The NAV per share was 86.66 pence per share as at 31 March
2024 (31 March 2023: 99.44 pence per share). The decline has predominately
been driven by the fair value revaluation in the investment portfolio.
TENT has delivered a dividend of 5.50 pence per share for the year, which was
1.04x cash dividend covered excluding one-off costs, such as wind-down
expenditure, costs associated with the Capital Markets Day and commissions
related to new investments (31 March 2023: 1.2x excluding one-off costs such
as Premium Segment listing fees and commissions related to new investments).
Environmental, Social and Governance ("ESG")
Since IPO, and under the previous strategy, the Company adopted an approach to
ESG that reflected the importance of sustainability and which sought to add
value to the portfolio.
As the Company enters wind-down, the focus is on continued efficiency of all
assets and taking a responsible approach to disposals.
In consultation with the Investment Manager, disclosures in this report have
been minimised to include only those required for regulatory purposes and we
note the decision to no longer disclose as an Article 8 fund. The Company is
aware of the incoming Sustainability Disclosure Requirements (SDR) and
labelling rules, yet to take effect, and will apply a proportionate approach
which takes into consideration the orderly wind-down. The Company does not
anticipate applying for a label under SDR.
The Board continues to engage on this important topic to ensure it is treated
proportionately and appropriately in the changing context of the Company. The
Sustainability Report is set out on pages 19 to 21 of the Annual Report.
Summary & Outlook
Looking ahead, our primary goal is to continue the strong progress already
made in completing our orderly wind-down in a timely fashion and with
diligence. We aim to optimise the value realised from our remaining assets,
with the objective of concluding the disposals efficiently and responsibly,
and returning value to shareholders.
On behalf of the Board, I would like to express our appreciation for the
continued support of our shareholders through this period of transition. We
have taken significant steps to ensure the strategic decisions made during
this process are in the best long-term interests of all our stakeholders. As
we continue the orderly wind-down, we are committed to clear and consistent
communication, ensuring that you remain informed of our progress.
John Roberts
Chair
21 June 2024
Strategy and Business Model
Changes to the Company's Investment Policy
At a General Meeting on 22 March 2024, shareholders approved various
resolutions including proposed amendments to the Company's Investment
Objective and Investment Policy. The changes to the Investment Objective and
Investment Policy enable the Company to proceed with the orderly wind-down of
the Company.
Investment Objective
To conduct an orderly realisation of the assets of the Group, to be effected
in a manner that seeks to achieve a balance between returning cash to
Shareholders promptly and maximising value, while maintaining an income return
for so long as the Group continues to own assets generating sufficient income.
Investment Policy
The Company's investments will be realised in an orderly manner, that is, with
a view to achieving a balance between returning cash to Shareholders promptly
and maximising value.
The Company may not make any new investments save that: (a) investments may be
made to honour existing documented contractual commitments to existing
portfolio companies, as appropriate; and (b) realised cash may be invested in
line with the Company's cash management policy pending its return to
Shareholders in accordance with the Company's investment objective.
Any return of proceeds to the Shareholders will be subject to compliance with
any existing gearing facilities and hedging arrangements, payment of expenses
and maintenance of reserves for potential liabilities.
Notwithstanding the requirement to spread investment risk, the Company will
continue to comply with all the requirements of the Listing Rules in order to
maintain the Company's admission to the Official List under Chapter 15 of the
Listing Rules.
Cash management
The Company may hold cash on deposit for working capital purposes and pending
return to Shareholders and, as well as cash deposits, may invest in cash
equivalent investments, which may include government issued treasury bills,
money market collective investment schemes, other money market instruments and
short-term investments in money market type funds ("Cash and Cash
Equivalents"). There is no restriction on the amount of Cash and Cash
Equivalents that the Company may hold and there may be times when it is
appropriate for the Company to have a significant Cash and Cash Equivalents
position.
Any further material change to the revised investment policy would require FCA
approval and Shareholder approval by an ordinary resolution in accordance with
the Listing Rules.
Key Performance Indicators ("KPIs")
The Company sets out below KPIs before the Company entered wind-down, which
were used to track the performance of the Company over time against its
previous investment objective.
The Board believes that the KPIs detailed below were relevant in the financial
year, before the Company entered wind-down and should provide shareholders
with sufficient information to assess how effectively the Company met its
objectives.
KPI AND DEFINITION RELEVANCE TO PREVIOUS STRATEGY PERFORMANCE COMMENT
Dividends per share (pence) 3 The dividend reflects the Company's ability to deliver a low-risk income The Company is paying a 5.50 pence per share dividend in respect of the year The Company's target was to pay a dividend of 5.50 pence per share in respect
stream from the portfolio. ended 31 March 2024 (5.50 pence per share for the year ended 31 March 2023). of the year to 31 March 2024, which it achieved.
Dividends paid to shareholders and
declared in relation to the year.
Total NAV return (%) 4 The total NAV return measure highlights the gross return to investors (7.3)% (9.2% for the year to 31 March 2023). Total NAV return for the year ended 31 March 2024 is negative 7.3%, which is
including dividends paid. below the target of 7% - 8%. This reflects the reduced valuations of the CHP
NAV growth and dividends paid per share in the year. and Hydroelectric Portfolios at 31 March 2024.
NAV per share (pence) The NAV per share was a measure to show how value was being added to the 86.66 pence per share. (99.44 pence per share for the year to 31 March 2023). NAV of £86.7 million or 86.66 pence per share as at 31 March 2024. This
Group's portfolio. reflects the reduced valuations of the CHP and Hydroelectric Portfolios at 31
NAV divided by number of shares outstanding as at the period end. March 2024.
Cash dividend cover(3 4) Reflects the Company's ability to cover its dividends from the income received 1.04x. TENT has delivered a dividend of 5.50 pence per share for the year, which was
in its wholly owned subsidiary, TENT Holdings, from the portfolio companies.
1.04x cash dividend covered excluding one-off costs, such as wind-down
Operational cash flow divided by dividends paid to shareholders during the expenditure, costs associated with the Capital Markets Day and commissions
year. related to new investments (31 March 2023: 1.2x excluding one-off costs such
as Premium Segment listing fees and commissions related to new investments).
Contractual Revenue The revenue contractually underpinned and received by the Group encompassing 100% of income received during the year was contractually underpinned. The Group has stable and predictable income stream from interest payments and
two key components: interest payments on debt facilities and government government subsidies.
Average percentage of underlying income contractually underpinned for the subsidies received by the equity investee companies.
year.
Ongoing Charges Ratio ("OCR")(4) Ongoing charges shows the effect of the operational expenses incurred by the 2.06% annualised (1.94% for the year to 31 March 2023). Company level budgets are approved annually by the Board and actual spend is
Company.
reviewed quarterly. This is a key measure of our operational performance.
Annualised ongoing charges (i.e., excluding wind-down costs and other one-off
costs) divided by the average published undiluted NAV in the period,
calculated in accordance with Association of Investment Companies guidelines.
Avoided emissions(4) A measure of the Company's alignment to the energy transition theme through 20,894 tonnes CO(2) avoided in the year ended 31 March 2024 (27,112 tonnes The tCO(2) avoided has decreased compared to end of year 2023, due to
CO(2) emissions avoided compared to an equivalent asset. CO(2) avoided for the year ended 31 March 2023). continued decarbonisation of the electricity generation mix (the reference
The carbon emissions avoided by the Company's investments.
point) and a lower generation volume by the Hydroelectric Portfolio.
Gross loan to value ("LTV")(4) The LTV measures the prudence of our financing strategy, balancing the 29.0% (0% for the year to 31 March 2023). In April 2024, the Group fully repaid and cancelled its RCF, meaning the LTV
potential amplification of returns and portfolio diversification that come has since reduced to 0%.
The proportion of our GAV that is funded by borrowings. with using debt against the need to successfully manage risk.
The Investment Manager
Jonathan Hick has a 15-year track record in investment in the energy
transition sector, from origination through to execution and asset management.
His previous experience was as an investment director at Armstrong Capital
(and investment management in the clean energy sector) and prior to that
companies including KPMG, Social and Sustainable Capital and PwC. He holds a
degree in Management with Chinese from Nottingham University, a master's in
finance from London Business School and is a chartered accountant.
Christophe Arnoult joined the Investment Manager in June 2022 as portfolio
director. He is an experienced portfolio director in the renewable energy
sector covering all major technologies and has a strong background in the
waste and bioenergy industry, ranging from operation to development, design
and construction. He was previously head of projects at enfinium, senior asset
manager at Equitix Energy Efficiency Fund and Energy Saving Investment and
delivery coordination manager at the Cornwall Energy Recovery Centre for
Vinci.
Ariane Brunel joined the Investment Manager as an investment director in
October 2022. Prior to that, she was an associate director in the energy
team of the European Bank of Reconstruction and Development ("EBRD") in
London. Ariane has over 12 years of experience investing in or financing
sustainable infrastructure assets internationally. She is a graduate of ESSEC
Business School (Paris & Singapore).
Chloe Smith is the Fund Finance Director at the Investment Manager and has
over 10 years of experience in the financial services sector. She spent 8
years at Close Brothers responsible for the Asset Finance division Financial
Control and later Financial Planning & Analysis and Investments, before
moving to Kvika Banki, where she led the UK finance team and held a board
position for a bridging lender. Chloe is fellow of ACCA and qualified in
audit.
Investment Manager's Report
During the initial part of the reporting period, TENT was actively engaged in
making strategic investments aimed at enhancing the portfolio's value and
generating robust returns. Key investments, made in the period, included a £5
million debt facility provided to Innova Renewables Limited to support their
expansion plans and the £2.3 million Boxed LED Facility. These projects
delivered stable, predictable returns and aligned with the energy transition
theme of the Company.
TENT also reduced its commitment to the BESS Portfolio, following a successful
equity raise by Field from DIF Capital Partners. The facility was resized from
£45.6 million to £37.0 million, secured over the assets of the four BESS
assets identified previously. This provided an opportunity for the Company to
deploy the balance into higher returning pipeline opportunities.
As market conditions evolved and became significantly more challenging, the
Board commissioned a third-party assessment of the Company's strategic
options, which resulted in the proposal to conduct an orderly wind-down, which
was approved by shareholders in March. In line with the strategic direction
set by the Board for the orderly wind-down, TENT amended its Investment
Objective and Policy to focus solely on the managed disposal of assets. This
marked a transition from active investment to prioritising asset management
and disposal, effectively halting new investments unless contractually
required. This strategic shift aimed to streamline operations, manage costs,
and address potential liabilities.
Disposal Process Update
Following the approval of the orderly wind-down, our priority has become both
managing existing investments and preparing the portfolio for divestment, to
maximise shareholder returns.
The Board will determine the most efficient way to return capital to
shareholders as the disposals progress. It is the current intention of the
Company to make an interim return of capital to shareholders in the current
year, following the sale of the Hydroelectric Portfolio and prior to entering
a members' voluntary liquidation.
BESS Portfolio Disposal
Significant steps in TENT's disposal strategy included the approval by
shareholders of the sale of the BESS Portfolio to TPLL for £37.0 million,
which matched its carrying value and included accrued interest. This
transaction facilitated the full repayment and subsequent cancellation of
TENT's Revolving Credit Facility, eliminating TENT's debt exposure.
Boxed LED Facility Disposal
TENT successfully executed the sale of the LED Facility to Boxed for its
carrying value of £2.1 million also to TPLL following shareholder approval,
in a strategic move that underscores TENT's ability to execute disposals
adeptly under the revised strategy.
CHP Portfolio Disposal
In June 2024, the Company refinanced the three CHP loans, which as at 31 March
2024 had an outstanding loan balance of £23.1 million including accrued loan
interest. The total repayment was £17.5 million, £14.5 million of which has
been received and £3 million of which is receivable in three equal
instalments in September 2024, June 2025 and September 2026. The impairment of
£6.1 million reflects the increase in the aged debtor profile of receivables
from the primary heat offtaker, as communicated in our circular to
shareholders in March 2024, as well as a narrowing of the spark spread and the
reduced attractiveness of gas fired generation assets to investors in the
energy transition.
Innova Facility Repayment
In accordance with the terms of the loan agreement, the Innova development
loan facility was repaid in full in March 2024.
So far, TENT has realised in excess of £61.6 million from asset disposals and
exits, representing the majority of its asset base, within 3 months of the
orderly wind-down being approved by shareholders.
Hydroelectric Portfolio Disposal
Following detailed preparations, the Hydroelectric Portfolio sales process
formally commenced in May 2024 and the Company has been encouraged by the
interest from a diverse range of bidders, as demonstrated through the receipt
of a number of non-binding offers for the assets. The Company is currently
shortlisting a small number of bidders to take through to the next round of
the process which will require the submission of binding offers and completion
of due diligence over the next few months.
LED Receivables Finance Facility Disposal
TENT is exploring options for disposing of the remaining LED receivables
finance facility and is in active discussions with a number of parties.
Portfolio performance
CHP Portfolio
The CHP energy service centre companies (Harvest, Glasshouse and Spark Steam)
reported operational and power generation performances in line with forecast
for FY24 on the heat export side and slightly below forecast on the power
export side due to a temporary power export curtailment at Harvest over the
summer. As a lender, rather than an equity investor, the Group is well
protected from performance variance against budget and all debt payments in
the year, falling due in July 2023 and October 2023, were met as well as the
covenant tests.
Gas and electricity prices are normalising slowly from the previously
witnessed historic highs. The spark spread - the net margin between the costs
of generation and the revenues - remains positive, however, meaning that the
companies generate gross profit from exporting electricity to the grid but at
a lower margin than in 2022/23. This increases the reliance of the business
model on the other revenue stream coming from the sale of heat to the tomato
grower on the sites.
Since the half year, the aged debtors of Harvest, Glasshouse and Spark Steam
increased, reflecting the deterioration in the credit quality of the heat
offtaker. P3P Partners LLP is the owner of the heat offtaker and also of
Harvest, Glasshouse and Spark Steam.
Hydroelectric Portfolio
The total generation for the year ended 31 March 2024 was 16,960MWh. This is
circa 15% below the long-term generation forecast (P50). This is primarily due
to lower-than-average rainfall during the period and secondarily from
breakdowns affecting some of the sites in Q2 and Q3. The long-term forecast
remains unaffected.
The first breakdown was the result of an isolation fault at Elementary Energy
Limited in July 2023, requiring the equipment to be taken offsite for repair.
The generator was reinstalled, and the plant restarted full production in
September 2023.
The other breakdown related to the bearing of one of the two turbines at
Ladaidh was damaged due to high vibration detected in September 2023. The
relevant components were repaired and reinstalled with some improvements to
prevent reoccurrence of the incidents. The turbine was restarted in January
2024. The second turbine, which represents 50% of the total installed capacity
remained online during that period.
Insurance claims for both breakdowns have been logged. The generator claim at
Elementary Energy Limited has been settled since the year end.
BESS Portfolio
During FY24, the construction of the portfolio of BESS assets continued to
progress in line with the planned timescales. The construction of the second
asset at Gerrards Cross moved into commissioning and testing at the end of the
period and Newport (20MW/40MWh) and Auchteraw (50MW/100MWh), the last two
assets and largest of the portfolio, are due to be commissioned later this
year.
Oldham, the first asset to be commissioned, has been operating since December
2022. In FY24 it benefitted from high operational availability. The revenues
of this asset have been affected by the general trading headwinds faced by the
industry but performed in line with the fleet of 1h storage duration operating
in the UK. All four BESS assets now benefit from a generation licence,
allowing the optimiser to trade efficiently into all available markets. There
was a noticeable increase in revenues in the final quarter thanks to improved
access to the balancing mechanism.
Following the year end, the BESS Portfolio was fully divested on 19 April
2024.
LED Portfolio
The portfolio of receivable finance assets continued to perform as per budgets
with payments made on time.
The Boxed LED Facility provided to refinance an existing portfolio of 54 LED
projects at Places for People Homes Limited sites was sold at its carrying
value of £2.1 million, to TPLL on 28 March 2024.
The second portfolio is a £1.1 million receivable finance facility provided
to a logistics company for the installation of LEDs at three of their sites.
It is being repaid with interest in line with its terms on a monthly basis and
the Investment Manager is actively looking for buyers.
Innova
The underlying asset base grew in value over the life of the loan. All
interest and capital repayments were received as scheduled prior to full
repayment on 26 March 2024.
Portfolio Valuation
The Investment Manager is responsible for conducting the fair market valuation
of the Group's investments. The Company engages Mazars LLP as an external,
independent valuer to assess the validity of the discount rates used by the
Investment Manager in the determination of fair value.
For non-market traded investments (being all the investments in the Group),
the valuation is based on a discounted cash flow ("DCF") methodology and
adjusted in accordance with the International Private Equity Valuation
("IPEV") Guidelines where appropriate to comply with IFRS 13, given the
special nature of portfolio investments.
The valuation of each investment within the portfolio is determined through
the application of a suitable discount rate, which accounts for the perceived
risk to the investment's future cash flows and by applying this discount rate,
the present value of the investment's expected cash flows is derived. The
Investment Manager exercises its judgement in assessing the expected future
cash flows from each investment based on the project's expected life and the
financial model produced by each project entity. In determining the
appropriate discount rate, the Investment Manager considers the relative risks
associated with the revenues. For the year ended 31 March 2024, the discount
rates for assets valued through the DCF methodology range from 6.5% to 8.5%
pa. (31 March 2023: range from 5.6% to 8.3%).
Under circumstances where an offer is received for an investment and the
Company deems this to be fair market value, the valuation method may change to
be based on the offer value. This can be demonstrated in the valuations of the
BESS Portfolio and also the CHP Portfolio, which are based on the offer
received to refinance these loans repaying a total of £17.5 million, £14.5
million of which has been received and £3 million of which is receivable in
three instalments in September 2024, June 2025 and September 2026.
The valuation of the portfolio approved by the Directors as at 31 March 2024
was £83.4 million (31 March 2023: £90.1 million).
Valuation movements
As noted above, the deterioration in the financial position of the tomato
grower and a forecast reduction in spark spread led to a reduction in the
valuation of the CHP Portfolio. This is reflected in the offer that was
accepted in June to refinance the loans, which represents an impairment of
£6.1 million.
During the financial year, the Group deployed the remainder of the committed
debt proceeds into the BESS Portfolio to reach the £37.0 million by 31 March
2024. The investment is valued at par and was realised at par value in April
2024.
The valuation of the debt financing for the receivables from the LED Portfolio
has largely stayed consistent throughout the financial year, with a small
change to the portfolio of receivables from the logistics company for the
installation of LEDs at their facilities. The discount rate has been increased
from 7.5% to 8.5% to reflect the effective discount rate for the value
realised on the Boxed LED Facility.
The discount rate used to value the Hydroelectric Portfolio has been increased
by 90bps over the period (6.50% at 31 March 2024). The adjustment is mostly
driven by the increase of the risk-free rate, with UK gilts increasing by
55bps since 31 March 2023 as well as an increase in discount rates used in
comparable renewable energy transactions. Valuation movements driven by
changes in power price forecast curves and short-term inflation assumptions
are shown in the valuation bridge below.
The remaining movements in the valuation predominantly relate to changes in
operating cost assumptions in respect of the Hydroelectric Portfolio and
changes in the fair value of TENT Holdings.
Valuation Movement in the year to 31 March 2024 (£millions)
The opening valuation as at 31 March 2023 was £90.1 million. When considering
the in-year cash investments through the Company's wholly owned subsidiary,
the rebased valuation was £95.5 million. Each movement between the valuation
at the start of the financial year and the rebased valuation is considered in
turn below, resulting in a closing valuation at 31 March 2024 of £83.4
million.
Power Prices
The valuation as at 31 March 2024 applies long-term, forward looking power
prices from a leading third-party consultant. A blend of the two most recent
quarters' central case forecasts is taken and applied, consistent with the
approach applied in previous periods. The Company adopts this approach due to
the unpredictability and fluctuations in power price forecasts. Where fixed
price arrangements are in place, the valuation model reflects this price for
the relevant time period and subsequently reverts to the power price forecast
using the methodology described. The updated power price forecast has led to a
reduction of the valuation of the Hydroelectric Portfolio by £1.1 million in
the year ended 31 March 2024. The Company notes that the outlook for power
prices has declined in respect of the near-term time horizon, but the
long-term outlook is above the forecast published in March 2023. The
short-term dip in the power curve is mitigated by power price hedging until
March 2025. Ultimately, the Hydroelectric Portfolio is underpinned by the
Feed-in-Tariff export rate acting as an effective floor on the price received
for electricity sales.
Inflation
During the financial period, the short-term inflation forecasts have declined
from a historic spike in 2022/23, but the long-term inflation forecast has
been revised upward resulting to a net increase in the portfolio valuation of
£0.9 million. The methodology adopted in relation to inflation, for both RPI
and CPI, follows the latest available (March 2024) Office for Budget
Responsibility forecast for the 12 months from the 31 March 2024 valuation
date. Thereafter, a long-term assumption of 3.25% is made in relation to RPI,
dropping to 2.65% in 2031 to reflect the 0.60% reduction as RPI is phased out.
The Company's long-term assumption for CPI remains at 2.25%. We also model a
power curve indexation assumption, as wholesale power prices are not
intrinsically linked to consumer prices, of 3.00% from 2031.
Discount Rates
A range of discount rates are used when calculating the fair value of the
portfolio valuations and are representative of the view of the Investment
Manager and Board, who benefit from Company's independent valuer's guidance.
The discount rates are indicative of the rate of return in the market for
assets with similar characteristics and risk profiles. The weighted average
discount rate of the portfolio in respect of assets valued through the DCF
methodology as at 31 March 2024 is 6.94%. This excludes the BESS and CHP
Portfolios which are held at realisable value.
During the financial year, the discount rate increase has caused a reduction
of valuation in the Hydroelectric Portfolio by £3.9 million. The discount
rate movement is reflective of the significant increase in gilt yields since
the prior financial year, and risk premium on the assets affecting the
realisation of the assets.
Financial Review
The Company applies IFRS 10 and qualifies as an investment entity. IFRS 10
requires that investment entities measure investments, including subsidiaries
that are themselves investment entities, at fair value except for subsidiaries
that provide investment services which are required to be consolidated.
The Company's single, wholly owned subsidiary, TENT Holdings, is the ultimate
holding company for all the Company's investments.
At a General Meeting on 22 March 2024, shareholders approved several
resolutions, including proposed amendments to the Company's Investment
Objective and Investment Policy. These changes allow the Company to proceed
with an orderly wind-down. As a result, while the Company remains an
investment entity measured at fair value, it will also use the IFRS5
accounting standard to recognise its investments as a current asset
held-for-sale.
NAV
The Company's NAV and investment portfolio valuations are now calculated on a
bi-annual basis on 31 March and 30 September each year. Valuations are
prepared by the Investment Manager and reviewed by Mazars LLP. The other
assets and liabilities of the Company are calculated by the Administrator. The
NAV is reviewed and approved by the Board. All variables relating to the
performance of the underlying assets are reviewed and incorporated in the
process of identifying relevant drivers of the DCF valuation.
NAV Bridge for the year ended 31 March 2024 (£millions)
The NAV at 31 March 2024 declined by £12.8 million (31 March 2023: increase
of £3.3 million). The NAV decline was mainly driven by the fair value
adjustment of £12.2 million. This was partly offset by investment income of
£7.4 million representing the interest and dividend income to the Company,
via TENT Holdings, the Company's wholly owned subsidiary. The Company incurred
fund expenditure of £2.5 million relating to the investment management fees
and other expenses (including £0.6 million of expenses related to the
wind-down proposal circular and other operating costs associated with asset
disposals). Dividends paid to shareholders during the year were £5.5 million.
The Group will incur additional expenses related to winding down the Company
and selling its investments.
Operating Results
The Company made a loss of £7.3 million during the year (31 March 2023:
profit of £8.8 million), with losses per share of 7.27 pence (31 March 2023:
earnings per share 8.81 pence).
Operating Expenses and Ongoing Charges
The operating expenses for the year ended 31 March 2024 amounted to £2.5
million (31 March 2023: £2.5 million), inclusive of £0.5 million of costs
relating to the managed wind-down of the Company.
During the majority of the financial year the management fee was calculated as
0.9% of the NAV.
At the Company's General Meeting on 22 March 2024, shareholders approved
amendments to the Investment Management Agreement on the terms summarised in
Part I of the Circular sent to shareholders on 5 March 2024. Further detail on
the terms of the new Investment Management Agreement can be found on page 48
of the Annual Report.
The Company's OCR is 2.06% (31 March 2023: 1.94%), which excludes one-off
costs such as wind-down expenditure. The primary factor contributing to the
increase is the decline in the Company's NAV. The ongoing charge ratio has
been calculated as an annualised ongoing charge (excluding one-off costs such
as wind-down expenditure), divided by the average Net Asset Value in the
period. With the exception of the management fee, the operating expenses of
the Company are predominantly fixed and predetermined.
Cash Dividend Cover
The Company measures dividend cover on a look through basis, by consolidating
the income and operating expenses of its sole wholly owned subsidiary, TENT
Holdings. The below table summarises the cash income, cash expenses and
finance costs incurred by the Company and TENT Holdings in the financial year
ended 31 March 2024, excluding one-off costs. The cash flow statement for the
Company alone does not capture the total income and expenses of the Group as
the interest income, financing costs and further expenses are received and
paid for by TENT Holdings.
In the year, the Company has delivered a cash dividend cover of 1.04x (2023:
1.2x). It is important to note that this calculation excludes one-off costs,
such as wind-down expenditure, costs associated with the Capital Markets Day
and commissions related to new investments (31 March 2023: 1.2x excluding
one-off costs such as Premium Segment listing fees and commissions related to
new investments).
The below table outlines the cash income and expenditure of the Company and
its wholly owned subsidiary TENT Holdings:
31 March 2024
£millions
Consolidated cash income 7.2
Consolidated operating Cash Expenses and Finance Costs (excluding costs (1.5)
relating to wind-down)
Net consolidated cash income 5.7
Dividends paid per Statement of Changes in Equity (5.5)
Cash dividend cover 1.04x
Gearing and Liquidity
At the year ended 31 March 2024, the Group had cash balances of £7.8 million
(31 March 2023: £11.2 million).
The Group's borrowing position, via an RCF in TENT Holdings, at 31 March 2024
was £25.4 million. This facility was fully repaid in April 2024 and
subsequently cancelled.
Summary Outlook
It has been a challenging year for investment trusts operating in the energy
transition space, given the listed marketplace conditions, and TENT has not
been immune from that. Wider energy market conditions have also been
challenging given the lower wholesale power market prices, against a backdrop
of higher base rates. Despite that, the TENT portfolio delivered a fully cash
covered dividend (excluding one-off costs), reflecting the highly cash
generative assets and the diversified approach across our three target
segments. This follows on from the robust results we announced a year ago.
The wider market backdrop however led the Board, supported by the Investment
Manager, to determine that the best course of action was to recommend a
managed wind-down to shareholders during the period, and we were pleased with
the near unanimous support for this strategy. Our focus has been to execute on
asset realisations in a timely fashion whilst securing best value for
shareholders. The progress made in disposing of 52.2% of the assets by GAV
within three months of the wind-down being approved shows that we are
delivering on that commitment, and with a number of offers being received in
respect of the Hydroelectric Portfolio, we remain confident of exiting the
remaining assets over the course of the current financial year.
Jonathan Hick
TENT Fund Manager
21 June 2024
Sustainability Report
The Investment Manager is committed to upholding good practice in relation to
environmental, social and governance actions.
For example, the Investment Manager has been a signatory to the United
Nations' Principles for Responsible Investing ("PRI") since 2019.
In addition, the Investment Manager is a certified B Corp which formalises its
consideration of and commitment to take into consideration how actions will
impact society and the environment alongside achieving desired financial
outcomes.
The assets held by the Company were selected against a range of requirements
including the Company's alignment to the energy transition theme. Asset
performance relative to this theme has been tracked through the measures of
avoided carbon and/or renewable energy generation.
The overall TENT portfolio generated 16,960 MWh of renewable energy and
avoided 20,894 tonnes of CO(2) in the year ended 31 March 2024.
The table below breaks down this data by each asset, owned at the time of
reporting.
Avoided carbon for reporting period Renewable energy generation
for reporting period
tCO2e MWh
2023 2024 2023 2024
CHP Harvest 5,396 5,891 / /
Glasshouse 7,900 6,232 / /
Spark Steam 4,802 2,791 / /
Hydroelectric 8,865 5,821 18,965 16,960
BESS -10 12 / /
Lighting 158 147 / /
The tCO(2) avoided has decreased compared to end of year 2023, due to
continued decarbonisation of the electricity generation mix (the reference
point) and a lower generation volume by the Hydroelectric Portfolio, noting
real time flow data is captured for the Hydroelectric Portfolio.
On behalf of the Company, the Investment Manager has sought to ensure
responsible operations in all assets which are tracked through a range of
operational environmental, social and governance metrics. The table below
details outcomes per asset for the year.
Environmental Social Governance
Environmental Incidents H&S incidents (RIDDOR/ NON RIDDOR) Modern Slavery Policy in place Local employment Apprenticeships H&S policy review audit Gender Diversity of SPV directors O&M contractors review/ audit
CHP Portfolio Harvest Unreported by Borrower Unreported by Borrower Unreported by Borrower Unreported by Borrower Unreported by Borrower Unreported by Borrower Unreported by Borrower Unreported by Borrower
Glasshouse Unreported by Borrower Unreported by Borrower Unreported by Borrower Unreported by Borrower Unreported by Borrower Unreported by Borrower Unreported by Borrower Unreported by Borrower
Spark Steam Unreported by Borrower Unreported by Borrower Unreported by Borrower Unreported by Borrower Unreported by Borrower Unreported by Borrower Unreported by Borrower Unreported by Borrower
Hydroelectric Portfolio 0 0 Yes Yes 2 Annually No No
BESS Portfolio Oldham 0 0 Yes - - Yes 1 Yes (tender stage)
Gerrards Cross 1 0 Yes - - Yes 1 Yes (tender stage)
Lighting LED project N/A N/A- N/A- N/A- N/A- N/A- N/A- N/A-
In the operational ESG performance provided there is no notable change to
outcomes compared to the previous year. The CHP Portfolio has chosen not to
report the requested data. The Investment Manager's portfolio manager has been
in close contact with the CHP Portfolio team throughout the year. The LED
Project reporting is provided on the installer, who has not acted on behalf of
the Company during the year and therefore data has not been disclosed.
Throughout the year the Investment Manager has continued to explore ways in
which the assets can improve their contribution to the energy transition.
Opportunities remained relatively limited given the size of the Company, the
scale of the assets, and the decision to enter wind-down and orderly
realisation of assets. However, the Company is pleased to share the amount of
money distributed to local community schemes by the Hydroelectric Portfolio
during the year.
Exit approach
As the Company enters wind-down and orderly realisation of assets, the
Investment Manager will ensure a responsible approach to the exit of assets,
in line with its own approach to responsible investment and PRI signatory
status. At all times, the process will recognise that the overall best
interests of the investors will drive decision making. The Investment Manager,
on behalf of the Company, will act transparently with potential purchasers to
share with them the energy transition benefits of the assets, including
supporting data wherever possible. The Company will have a preference for
purchasers who have an aligned sustainability ethos, balanced with the primary
requirement to return maximum value to shareholders.
Disclosures
Reflecting that the Company is entering wind-down and orderly realisation of
assets, disclosures in this report are only made where there is a regulatory
requirement which remains applicable and appropriate under such circumstances.
The Company will no longer disclose as an Article 8 fund. As asset acquisition
has ceased and assets are exited it is no longer practical or economical for
the Company to implement this disclosure, which is not a regulatory
requirement for the Company. Furthermore, as assets are exited the EU Taxonomy
alignment of the Company would require continuous review which it has been
deemed impractical to implement. Likewise, as the Company enters wind-down and
orderly realisation of assets, the management of the long-term impacts of any
future climate risks are no longer a material focus for the Company and
therefore for practicality and economic prudence there is no disclosure
against the TCFD Framework in this annual report. Requests for information on
either topic will be dealt with directly with any interested party in the
course of the managed wind-down. An appropriate and proportionate response to
the incoming, but not yet effective, Sustainability Disclosure Requirement
("SDR") and investment labels will be agreed between the Investment Manager
and the Board, with advice from external specialist consultants. The Company
does not anticipate applying for a label under SDR.
Section 172(1) Statement
The Board makes every effort to understand the views of the Company's key
stakeholders and to take into consideration these views as part of
its decision-making process. Our key stakeholders are our shareholders, the
Investment Manager, our service providers, the asset-level service
counterparties, the investee companies/borrowers and the lenders. Information
on our stakeholder engagement, including how the Board keeps itself informed
about stakeholders' views and how we take their views into account in
decision-making, can be found on pages 24 to 25 of the Annual Report.
The majority of the key stakeholder groups interface with the Company
primarily through the Investment Manager. The Investment Manager is
responsible for communicating stakeholder concerns to the Board, such that
they can input on actions as required.
As an investment company, the Company does not have any employees and conducts
its core activities through third-party service providers. The Board seeks to
ensure each service provider has an established track record and
is required to have in place suitable policies and procedures to ensure
they maintain high standards of business conduct, treat our shareholders
fairly, and employ corporate governance best practice.
The following disclosure describes how the Directors have had regard to the
matters set out in section 172(1) (a) to (f) when performing their duty under
s172 and forms the Directors' statement required under section 414CZA of the
Act.
The likely consequence of any decision in the long-term Please refer to the Investment Objectives and Investment Policy on page 8 of
the Annual Report.
The nature of our business means that the Board have to consider the long-term
impact of their decisions. Under the previous Investment Policy, it was
intended that investments were generally held for the long term.
In concluding that a managed wind-down was in the best interests of the
Company, the Board considered the long-term consequences and assessed those
against the alternative options available.
The interests of the Company's employees Please refer to stakeholder engagement section on pages 24 to 25 of the Annual
Report.
As a closed-ended investment company, the Company does not have any employees
but maintains close working relationships with the Investment Manager and
Administrator.
The need to foster the Company's business relationships with suppliers, Please refer to stakeholder engagement section on pages 24 to 25 of the Annual
customers and others Report.
The Company's primary suppliers are our service providers, principally the
Investment Manager and Administrator. The Board engages regularly with both,
as well as at its Board meetings.
The impact of the Company's operations on the community and the environment Please refer to the sustainability report on pages 19 to 21 of the Annual
Report.
Contributing to energy transition was central to the Company's operations..
The desirability of the Company maintaining a reputation for high standards of Please refer to page 34 of the Corporate Governance Statement in the Annual
business conduct Report.
The Directors are dedicated to ensuring the maintenance of high standards of
business conduct and corporate governance and will continue to do so as the
wind-down progresses.
The need to act fairly as between members of the Company Please refer to stakeholder engagement section on pages 24 to 25 of the Annual
Report.
The Board actively engages with shareholders and gave due consideration to
their interests in concluding to proceed with a managed wind-down. All
shareholders had the opportunity to vote on the managed wind-down at the
Company's General Meeting on 22 March 2024.
Principal Decisions
Principal decisions have been defined as those that have a material impact to
the Group and its key stakeholders. In taking these decisions,
the Directors considered their duties under section 172 of the Act. Below we
provide describe some of the principal decisions made by the Board in the year
and demonstrate how the Board took account of stakeholders' interest in making
those decisions.
Wind-down and orderly realisation of assets
The key decision taken during the year by the Board, was proposing an orderly
wind-down of the Company. Given the Company's persistent discount to NAV, the
Board closely monitored shareholder feedback and noted a number of
shareholders indicating a proactive approach to resolving the discount should
be taken, considering all options. Following the feedback received, the Board
commissioned a third-party review of the Company's strategic options. It was
determined that the most responsible course of action, both financially and in
terms of shareholder value, would be to initiate a wind-down. Following the
publication of the Circular on 5 March 2024, the Company engaged with
shareholders and the feedback was almost overwhelmingly positive.
Related party transactions
The disposals of the BESS Portfolio and the Boxed LED Facility were both to
TPLL, another member of the Triple Point Group, and therefore were related
party transactions. The Board carefully considered their obligations under
Chapter 11 of the Listing Rules and the transactions were considered fair and
reasonable by J.P. Morgan, in its capacity as the Company's sponsor. The Board
concluded that the transactions were in the best interests of shareholders as
each of the loans were sold for their carrying value. At the General Meeting
on 22 March 2024, shareholders voted on the transactions and the resolutions
were approved by over a 99% majority.
Reduction in size of BESS Portfolio
TENT and Field initiated discussions to assess the ongoing lending
requirements of the borrower, following Field having completed a successful
equity raise with DIF Capital Partners. Both parties arrived at a mutual
decision to resize the facility from £45.6 million to £37.0 million. This
was in the best interests of all involved and provided the Company with the
potential opportunity to deploy the balance of £8.6 million into higher
returning pipeline opportunities, ultimately benefiting the Company's
shareholders.
Stakeholder Engagement
Stakeholder Shareholders
Why is it important to engage? It is essential that Directors understand the views of shareholders in order
to be able to form a view of what is in the best interests of the Company.
How have the Investment Manager/Directors engaged? The way in which we engage with our shareholders is set out on page 43 of the
Annual Report.
During the year, the Investment Manager met with the majority of shareholders.
The Chair and the Senior Independent Director held several virtual meetings
with shareholders, facilitated by J.P. Morgan.
The Company held a capital markets day in September 2023, hosted by the
Investment Manager and with Directors present and attended by shareholders and
analysts.
In October 2023, feedback was collected from over 90% of the shareholder base
by J.P. Morgan, following the Company capital markets day in September 2023.
What were the key topics of engagement? The key topics of discussion included: liquidity, the Company's share price
discount to NAV and the future of the Company.
What was the feedback obtained and/or the outcome of the engagement? In the feedback collected, a majority of shareholders expressed the view that
the Company's lack of liquidity and size were significant issues and
encouraging more radical options be considered. Taking this into account, the
Board commissioned a third-party review of the options for the Group, drawing
on independent financial advice, and concluded that an orderly realisation of
the Group's assets and wind-down was in the best interest of the Company. On
22 March 2024 the shareholders approved the managed wind-down at a General
Meeting.
Stakeholder Investment Manager
Why is it important to engage? The Investment Manager is responsible for executing the Investment Objective
within the Investment Policy of the Company.
How have the Investment Manager/Directors engaged? The Board maintains regular and open dialogue with the Investment Manager at
Board meetings and has regular contact on operational and investment matters
outside of meetings.
The Management Engagement Committee is responsible for conducting periodic
reviews of the Investment Manager.
What were the key topics of engagement? The key topic of conversation during the year revolved around the future of
the Company and the ultimate decision to propose an orderly wind-down and the
amendments to the Investment Manager's fee arrangements.
What was the feedback obtained and/or the outcome of the engagement? The Investment Manager has worked collaboratively with the Board and other
advisers in respect of the Company's orderly wind-down and this is evidenced
by the progress made on disposals following shareholder approval to proceed on
22 March 2024.
The Investment Manager agreed a new fee arrangement with the Board, and
approved by shareholders, which incentivises the Investment Manager to execute
disposals in a timely manner and on terms that are in the best interests of
the Company and its shareholders. Further detail on the new fee arrangement
can be found on page 48 of the Annual Report.
Stakeholder Service Providers
Why is it important to engage? As an externally managed Company, we are reliant on our service providers to
conduct our core activities. We believe that fostering constructive and
collaborative relationships, will assist in bringing about the best outcomes
for the Company in its managed wind-down.
How have the Investment Manager/Directors engaged? The Board maintains regular contact with its service providers, both through
Board and Committee meetings, as well as outside the regular meeting
cycle.
The Management Engagement Committee is responsible for conducting periodic
reviews of service providers.
What were the key topics of engagement? The Board considered the appointment of advisers to assist with the wind-down.
What was the feedback obtained and/or the outcome of the engagement? The Company appointed PricewaterhouseCoopers LLP as corporate financial
adviser to assist with the disposal of the Group's assets, given their
expertise in the sector.
Stakeholder Asset-level service counterparties
Why is it important to engage? Asset-level counterparties are an essential stakeholder group and engagement
with them is important to ensure assets are operating safely and
effectively.
How have the Investment Manager/Directors engaged? The Investment Manager has developed strong working relationships with the
asset-level counterparties and has regular communication with them to ensure
the assets are being managed appropriately.
What were the key topics of engagement? The Investment Manager worked closely with the O&M contractors for the
Hydroelectric Portfolio regarding the breakdowns that occurred at some of the
sites.
What was the feedback obtained and/or the outcome of the engagement? The damaged components were repaired and reinstalled as efficiently as
possible and some improvements were made to prevent reoccurrence of the
incidents.
Stakeholder Investee Companies/Borrowers
Why is it important to engage? Investee companies and borrowers are companies in which TENT Holdings has
invested either through debt or equity. They are an essential stakeholder and
engagement with them, particularly the individuals responsible for their
operations, is important to ensure the maintenance and performance
of each investee company.
How have the Investment Manager/Directors engaged? The Investment Manager holds Board positions on the Hydroelectric Portfolio.
Each investee company and borrower have certain reporting obligations to the
Group.
What were the key topics of engagement? The Investment Manager worked closely with Field on a number of matters,
including the resizing of the facility to £37.0 million and the subsequent
sale to TPLL.
The Investment Manager engaged with Boxed to facilitate the sale of its
receivables finance facility to TPLL.
What was the feedback obtained and/or the outcome of the engagement? Field's co-operation assisted in ensuring positive outcomes for all parties
and the timely completion of the sale on 19 April 2024.
The Boxed LED Facility was successfully sold to TPLL, at its carrying value,
following shareholder approval on 22 March 2024.
Stakeholder Lenders
Why is it important to engage? The lenders provided an essential source of finance for the Group during the
year, allowing it to meet its investment obligations.
How have the Investment Manager/Directors engaged? The Investment Manager provided reporting to the Lender on covenant compliance
and held discussions with the lenders as required.
What were the key topics of engagement? The Group, via the Investment Manager, held discussions with the lenders
regarding the repayment and cancellation of the RCF.
What was the feedback obtained and/or the outcome of the engagement? The £40 million RCF was successfully repaid and cancelled on 19 April 2024.
Risk Management
The Board and the Investment Manager recognise that risk is inherent in the
operation of the Company and are committed to effective risk management to
ensure that shareholder value is protected and maximised.
As an externally managed investment company, the Company outsources key
services to the Investment Manager and other service providers and relies
primarily on their systems and controls. The Board has ultimate responsibility
for oversight of risk management and internal controls within the Company and
sets the risk appetite. Post period end and given the decision and change in
strategy, the risk appetite has been reviewed to ensure it aligns and supports
the shareholder outcomes.
Quarterly, the Investment Manager presents the Company's top risks, changes
since the previous quarter, risks outside of appetite and emerging risks to
the Board for their review. The Board assesses and challenges the
effectiveness of the Investment Manager's risk management and controls against
the risk appetite to manage risks within that appetite, particularly those
which would threaten its business model, future performance, solvency,
valuation, liquidity or cause reputational damage. Further details of the
Board's activities relating to risk can be found on pages 26 to 30 of the
Annual Report.
The Investment Manager has responsibility for identifying potential risks at
an early stage, escalating risks or changes to risk, and relevant
considerations and implementing appropriate mitigations which are recorded in
the Group's risk register.
Where relevant the financial model is stress tested to assess the potential
impact of certain risks against the likelihood of occurrence. In assessing
risks, both internal controls and external factors that could mitigate the
risk are considered. A post mitigation (residual) risk score is then
determined for each principal risk. The Group's detailed risk register
identifying risks and controls to mitigate their potential impact and/or
likelihood is maintained by the Investment Manager, and subject to an annual
review by the Board.
Risk appetite
Managing risk is fundamental to the delivery of the Company's strategy, and
this is achieved by defining risk appetite and managing risks within that
appetite. Risk appetite is the level of risk the Company is willing to take to
achieve its strategic objectives. The Board has defined its risk appetite
using a category of risks inherent to the environment in which the Company
operates. This enables the actual risks which are identified by the Investment
Manager to be compared to the defined appetite, to identify where any
additional mitigation activity is required and specifically where management
should focus their attention. The Company aims to manage its risks within the
tolerance set by the Board. Any risks outside of appetite are subject to
additional oversight and action planning.
The Board has reviewed the Company's appetite for each of the principal risks
set out below. The Company's risk management framework is designed to manage
rather than eliminate the risk of failure to achieve objectives and breaches
of risk appetite.
Principal Risks and Uncertainties
The table below sets out what we believe to be the principal risks and
uncertainties facing the Group. The table does not cover all of the risks that
the Group may face. The Board defines the Group's risk appetite, enabling the
Group, in both quantitative and qualitative terms, to judge the level of risk
it is prepared to take in achieving its overall objectives. Additional risks
and uncertainties not presently known to management or deemed to be less
material at the date of this report may also have an adverse effect on the
Group.
The risk heat map can be found on page 27 of the Annual Report.
Risk Identified Risk Description Mitigation Post Mitigation Change in year
Impact Likelihood
1. Sale of assets - realisation The Company's assets may not be realised at their carrying value or at all, The order of the overall sales process has been designed to optimise the Moderate Moderate to High New
due to macroeconomic considerations, niche nature of investments, changes in timings in order to realise best value for shareholders in a reasonable time
government, economic, fiscal, or political policy, operational mismanagement, frame. The advisers and Investment Manager closely monitor market conditions
structure of contracts or quality of counterparties, leading to a reduction in and will adjust the timing and strategy for asset sales to optimise the value.
the value of assets on sale. The Board has regular meetings with advisers and the Investment Manager to
oversee progress. Efforts are made in the individual sales processes to engage
with multiple potential buyers to enhance competitive tension and secure
favourable prices.
2. Volatility of Net Asset Value and/or share price Volatility in the Net Asset Value and/or share price as a result of possible The bi-annual valuation process is robust, supported by an independent adviser Moderate Moderate to High New
changes to the portfolio structure following the change in strategic and with challenge from the Board and the auditors. The Investment Manager
direction; influenced by loss of confidence in valuations, underperformance of implements robust risk management strategies and closely monitors the
asset or non-payment from underlying revenue counterparties, or of any portfolio's performance. There is transparent communication with shareholders
deferred consideration, leading to decreased investor confidence, and on underlying performance and valuation drivers is maintained to manage
fluctuation in the market value of the Company's shares. expectations and provide updates on mitigating actions.
3. Failure to manage competitive tensions Failure to manage competitive tensions, and maximise outcomes for An experienced third-party corporate finance adviser has been appointed to Low to Moderate Moderate to High New
shareholders, due to inadequate strategies to create and maintain tension manage the sales processes. The enhanced marketing efforts have led to
between buyers during the asset sale process, such as poor marketing, lack or engagement with a broad spectrum of potential buyers and employs experienced
outreach to a broad range of buyers, insufficient sales materials or negotiators to ensure competitive bidding and optional sale outcomes.
ineffective negotiation tactics, leading to lower sale prices, extended sales
process, weaker negotiation position, investor dissatisfaction and reduced
overall returns.
4. Inadequate or Inappropriate Execution of wind-down Inadequate or inappropriate execution of the wind-down (as a whole), due to The Investment Manager is overseeing a detailed wind-down plan, aligning Moderate to High Low to Moderate New
strategic misalignment, operational failures, resource constraints, strategic goals and operational processes. Third-party advisers have been
coordination failures and/or unexpected market conditions, leading to appointed. The Investment Manager is paid to be fully resourced. Regular
inability to meet objectives, operational disruptions, increased costs, progress reviews are conducted to identify and address resource constraints
stakeholder dissatisfaction and reputational damage. and coordination issues.
5. Inaccurate, inappropriate or untimely transactions during wind-down Inaccurate, inappropriate or untimely transactions during the execution of A structured wind-down plan is being implemented by a third-party expert to Moderate Moderate New
sale of assets, due to legal and regulatory challenges, valuation disputes, ensure timely and accurate transactions, minimising disruptions. The
due diligence findings, financing difficulties, and/or logistical issues, Investment Manager conducts thorough due diligence on the portfolio assets
leading to, transaction delays, increased costs, failed transactions, and, when appropriate, advises the Board to engage legal and financial
valuation disputes, regulatory penalties and operational disruption. advisors to navigate potential regulatory challenges and valuation disputes.
6. Post-sale liabilities The Company may incur additional post-sale liability due to the disposal of, The third-party adviser and Investment Manager carefully evaluate potential Moderate Moderate New
damage to or delays or deferred consideration in sales of investments, leading liabilities before finalising sales and negotiate terms to limit post-sale
to a potential increase in financial obligations post-disposal. obligations. Provisions are made to cover any unforeseen liabilities.
7. Asset Diversification during wind-down Asset diversification will be reduced as investments are realised and The new Investment Policy to implement the wind-down was approved by Low to Moderate Moderate to High New
concentrated in fewer holdings, due to the nature of wind-down, leading to shareholders. A structured wind-down process is being managed and overseen to
stranded assets and a reduction in overall value of the portfolio, in turn maximise values. A delisting will take place once the members' voluntary
impacting listing obligations. liquidation process starts at the end of the wind-down.
8. Reliance on the Investment Manager The Company's performance is highly dependent on the capabilities of the The Company ensures that the Investment Manager adheres to high standards of Moderate to High Low to Moderate Stable
Investment Manager, due to their ability to provide competent, attentive and performance through regular reviews and audits and the Board maintain and open
efficient services, leading to a direct impact on the company's operations and dialogue to ensure that there is continued engagement and focus on
success, operational inefficiencies, reduced investment returns and potential deliverables.
reputational damage.
9. Failure to maximise tax efficiency during wind-down Failure to maximise tax efficiency during wind-down, due to inadequate tax Specialist tax advisors have been engaged to ensure comprehensive tax planning Moderate to High Low to Moderate New
planning, lack of specialised tax knowledge, failure to identify and apply tax on the wind-down. Regular reviews and updates on tax strategies are conducted
reliefs and exemptions, poor coordination between tax advisors and other to identify and apply relevant tax reliefs and exemptions. Co-ordination
professionals, and/or insufficient time allocated for thorough tax planning, between advisors is prioritised to optimise tax efficiency.
leading to increased tax liability, decreased financial performance,
regulatory penalties, reduced investor confidence, and missed opportunity
costs.
10. Reliance on the performance of third-party service providers The Company is reliant on the performance of third-party service providers for The Company selects third-party providers through a rigorous vetting process, Moderate to High Low to Moderate New
its executive function and services, due to the Company setup being sets clear performance expectations, and conducts regular evaluations to
non-executive and no employees, leading to potential for operational ensure alignment with Company goals. Contracts include service level
disruptions, strategic misalignments if third parties underperform or fail to agreements (SLAs) to mitigate the risk of underperformance. The managed
meet expectations. wind-down process has a number of additional expert advisers being
co-ordinated by the Investment Manager. Regular all-party meetings are held to
minimise risks.
The annual report highlights the principal risks we have identified as being
material to the successful execution of the strategy and therefore are being
monitored more closely by the Board. It should be noted that there is a
broader set of lower rated risks, that are actively being managed and
monitored by the Investment Manager. Should there be a deviation in their
assessment or materiality, the Investment Manager will ensure suitable
notification to the Board for awareness outside of the usual reporting cycle.
As the Company transitions from an active phase to a wind-down stage, certain
risks identified in last year's annual report are no longer relevant and have
been retired. Consequently, new risks have emerged that more accurately
reflect the current status and challenges of the wind-down process. This shift
ensures that our risk management framework remains relevant and responsive to
the Company's evolving circumstances and has enabled us to manage alongside
the existing inherent risks, those that are pertinent to the winding down of
operations.
Emerging Risks
Emerging risks are characterised by a degree of uncertainty and the Investment
Manager and Board consider new and emerging risks every six-months. These
typically have a longer time horizon and are difficult to accurately assess
when they would impact the risk exposure. Given the change in strategic
direction and progress to date in delivering on the orderly realisation of
assets, there are no specific emerging risks that are of material concern to
the Board. Emerging risk will continue to feature in Board discussions,
especially if the sale of assets becomes protracted. We are vigilant to
aspects that may influence our ability to deliver the best possible outcomes
for shareholders.
Viability Statement
The Directors, with the support of the Investment Manager, have carried out a
robust assessment of the emerging and principal risks facing the Group that
would threaten its business model, future performance, solvency or liquidity.
The Board normally conducts a going concern and viability review, however
following the results of the General Meeting on 22 March 2024 where
shareholders approved the managed wind-down, the Company is no longer a going
concern and therefore a viability statement has been prepared for a period of
three years from the balance sheet date as developments are considered to be
reasonably foreseeable over this period. A period of three years is deemed
appropriate as this aligns with the final contractual payment due from the CHP
deferred consideration. Furthermore, if the sale of the Hydroelectric
Portfolio is delayed beyond the next financial year, the three-year period
should offer sufficient time to complete the disposal of the full portfolio
and complete the liquidation process. The Board considers that the Group will
remain viable until the point at which its assets are fully sold, and the
voluntary liquidation is completed.
In making the viability assessment, the Board and Investment Manager have
taken the following factors into consideration:
· the nature and liquidity of the remaining Company portfolio
(long-term, revenue generating Investments);
· the sales process currently underway to realise the remaining
investments;
· the potential impact of the principal risks and uncertainties;
· operating expenditure, particularly the costs associated with the
orderly wind-down process; and
· future dividends.
The viability analysis has been prepared on the assumption that the Group's
remaining investments, comprising of debt investments and the Hydroelectric
Portfolio, are fully operational with economic lives well in excess of the
expected wind-down period, the voluntary liquidation and the three-year
viability review period. The Group benefits from long-term cash flows and a
set of risks that can be identified and assessed. The loan investments
contribute a fixed return, and the Hydroelectric Portfolio contributes returns
based on its upward only RPI linked revenue flow under a UK government
arrangement. The Hydroelectric Portfolio also benefits from fixed price PPAs,
with institutional counterparties, until the end of FY25. Forecast revenues
thereafter are subject to wholesale power prices whose levels are based upon
qualified independent forecasts. The projects are each supported by detailed
financial models.
The Board is satisfied that, prior to their anticipated sale, the underlying
investments held will continue to be cash generative enabling the Group to
meet all financial obligations. Furthermore, the Group holds sufficient cash
reserves with a total cash balance of £18.7million at 31 May 2024, which is
deemed sufficient to support the Group during the managed wind-down period and
under a stressed scenario during the review period. The sale proceeds will add
to the available cash resources.
The Directors believe that the Company is well placed to manage its business
risks successfully. Based on the results, the Board confirms that, taking into
account the Company's current position and subject to the principal risks
faced by the business, the Company will be able to meet its liabilities as
they fall due for a period of at least three years from the balance sheet
date, notwithstanding that the Group is currently undergoing a managed
wind-down and expects to enter voluntary liquidation in this timeframe.
Board Approval of the Strategic Report
The Strategic Report has been approved by the Board of Directors and signed
on its behalf by the Chair.
John Roberts
Chair
21 June 2024
Statement of Comprehensive Income
For the year ended 31 March 2024
Year Ended Year Ended
31 March 2024 31 March 2023
Note Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment income 5 7,407 - 7,407 7,282 - 7,282
(Loss)/Profit arising on the revaluation of investments - (12,163) - 4,017 4,017
(12,163)
Investment return 7,407 (12,163) (4,756) 7,282 4,017 11,299
Investment management fees 4 648 216 864 662 221 883
Other expenses 6 1,631 21 1,652 1,581 22 1,603
2,279 237 2,516 2,243 243 2,486
Profit/(loss) before taxation 5,128 (12,400) (7,272) 5,039 3,774 8,813
Taxation 8 - - - - - -
Profit/(loss) after taxation 5,128 (12,400) (7,272) 5,039 3,774 8,813
Other comprehensive income - - - - - -
Total comprehensive income/(loss) 5,128 (12,400) (7,272) 5,039 3,774 8,813
Basic & diluted earnings/(losses) 9 5.13p (12.40p) (7.27p) 5.04p 3.78p 8.81p
per share (pence)
The total column of this statement is the Income Statement of the Company
prepared in accordance with the requirements of the Act and in accordance
with the UK adopted international accounting standards. The supplementary
revenue return and capital columns have been prepared in accordance with the
Association of Investment Companies Statement of Recommended Practice (AIC
SORP).
All revenue and capital items in the above statement derive from continuing
operations.
This Income Statement includes all recognised gains and losses.
The accompanying Notes are an integral part of this statement.
Balance Sheet
at 31 March 2024
Company Number: 12693305
31 March 2024 31 March 2023
Note £'000 £'000
Non-current assets
Investments at fair value through profit or loss 12 - 90,060
Current assets
Assets held-for-sale 12 83,367 -
Trade and other receivables 13 370 374
Cash and cash equivalents 3,713 9,257
87,450 9,631
Total assets 87,450 99,691
Current liabilities
Trade and other payables 14 (773) (242)
(773) (242)
Net assets 86,677 99,449
Equity attributable to equity holders
Share capital 15 1,000 1,000
Share premium 13 13
Special distributable reserve 89,815 91,037
Capital reserve (5,307) 7,093
Revenue reserve 1,156 306
Total equity 86,677 99,449
Shareholders' funds
Net asset value per Ordinary Share (pence) 11
86.66p 99.44p
The statements were approved by the Directors and authorised for
issue on 21 June 2024 and are signed on behalf of the Board by:
Dr John Roberts
Chair
21 June 2024
The accompanying Notes are an integral part of this statement.
Statement of Changes in Shareholders' Equity
For the year ended 31 March 2024
Issued Capital Share Premium Special Distributable Reserve Capital Reserve Revenue Reserve Total
Note £'000 £'000 £'000 £'000 £'000 £'000
For year ended 31 March 2024
Opening balance 1,000 13 91,037 7,093 306 99,449
Issue of share capital 15 - - - - - -
Total comprehensive income for the year - - - (12,400) 5,128 (7,272)
Dividends Paid 10 - - (1,222) - (4,278) (5,500)
Balance at 31 March 2024 1,000 13 89,815 (5,307) 1,156 86,677
Issued Capital Share Premium Special Distributable Reserve Capital Reserve Revenue Reserve Total
Note £'000 £'000 £'000 £'000 £'000 £'000
For year ended 31 March 2023
Opening balance 1,000 13 91,444 3,319 361 96,137
Issue of share capital 16 - - - - -
Total comprehensive income for the year - - - 3,774 5,039 8,813
Dividends Paid 11 - - (407) - (5,094) (5,501)
Balance at 31 March 2023 1,000 13 91,037 7,093 306 99,449
The capital reserve represents the proportion of Investment Management
fees and other expenses, where applicable, charged against capital and
realised/unrealised gains or losses on the disposal/revaluation of
investments. The unrealised element of the capital reserve is not
distributable. The special distributable reserve was created on court
cancellation of the share premium account. The revenue, special
distributable and realised capital reserves are distributable by way of
dividend and total £85.7 million (31 March 2023: £90.9 million).
The accompanying Notes are an integral part of this statement.
Statement of Cash Flows
For the year ended 31 March 2024
Year ended Year ended
31 March 2024 31 March 2023
Note £'000 £'000
Cash flows from operating activities
(Loss)/profit before taxation (7,272) 8,813
Loss/(gain) on revaluation of investments held for sale 12 12,163
(4,017)
Cash flows from operations 4,891 4,796
5 (4,459) (3,402)
Interest income
Interest received 3,574 2,541
(Increase)/Decrease in receivables 13 99 (57)
Increase / (Decrease) in payables 14 531 (170)
Net cash flows from operating activities 4,636 3,708
Cash flows from investing activities
Purchase of financial assets at fair value through profit or loss (9,229)
12 (9,433)
Loan principal repaid 12 4,549 3,339
Net cash flows used in investing activities (4,680) (6,094)
Cash flows used in financing activities
Issue of shares 15 -
-
Dividends paid (5,500) (5,501)
Net cash flows from financing activities (5,500) (5,501)
Net decrease in cash and cash equivalents (5,544) (7,887)
Reconciliation of net cash flow to movements in cash and cash equivalents
Cash and cash equivalents at beginning of year 9,257 17,144
Net decrease in cash and cash equivalents (5,544) (7,887)
Cash and cash equivalents at end of year 3,713 9,257
The accompanying Notes are an integral part of this statement.
Notes to the Financial Statements
1. Corporate Information
The Company is incorporated and domiciled in the United Kingdom, registered in
England and Wales under number 12693305 pursuant to the Act. The registered
office and principal place of business is located at 1 King William Street,
London EC4N 7AF.
On 28 October 2022, the Ordinary Shares of the Company were admitted to the
premium listing segment of the Official List of the Financial Conduct
Authority and to the Premium Segment of the Main Market of the London Stock
Exchange. Prior to this, from the IPO, the Company's Ordinary Shares traded on
the Specialist Fund Segment of the Main Market of the London Stock Exchange.
At the General Meeting on 22 March 2024, the Directors proposed an orderly
wind-down of the Company as the best course of action and shareholders voted
in favour of this proposal. This proposal received almost unanimous support
from the voting shareholders. Accordingly, the Company's financial statements
have been prepared on a basis other than that of going concern. Except for as
disclosed in the following paragraphs, no further adjustments were made in the
Company's financial statements in relation to the Company no longer being a
going concern.
Additionally, the Investment Management Agreement was restated following
shareholder approval at the General Meeting, with the amendments summarised in
Part I of the Circular published on 5 March 2024. Further details can be found
on page 48 of the Annual Report.
The Company aims to achieve its Investment Objective by conducting an orderly
realisation of the Group's assets, seeking to balance prompt cash returns to
Shareholders with value maximisation, while maintaining an income return as
long as the Group owns assets generating sufficient income.
Following the implementation of the managed wind-down and the new investment
policy, the Company will no longer make new investments. Furthermore, the
Company is actively seeking to dispose of its investments and has enlisted the
corporate finance advisory expertise of PwC to ensure these transactions are
executed proficiently and yield the best possible outcomes for shareholders.
Considering these events, the Company meets the criteria for an asset held for
sale under IFRS 5. This conclusion has been reached based on the following
IFRS 5 criteria:
· The Board is committed to a plan to sell the assets.
· The asset is available for immediate sale.
· An active programme to locate a buyer has been initiated.
· The sale is highly probable within 12 months of classification as
held for sale.
· Actions related to the sale plan indicate a low likelihood of
significant changes or cancellation.
To date, three investments have been repaid or disposed of, and PwC is
actively running a disposal process to sell the Hydroelectric Portfolio and
remaining LED receivables loan within the next 12 months.
As a result, the investments held at fair value through profit or loss were
transferred from non-current to current as assets held-for-sale in the
financial statements.
2. Material accounting policies
Basis of Preparation
The financial statements, which aim to give a true and fair
view, have been prepared in accordance with UK-adopted international
accounting standards and the applicable legal requirements of the Companies
Act 2006.
The Company prepares its financial statements in compliance with UK-adopted
International Accounting Standards.
From 1 January 2023 IAS1 has been amended introducing the concept Material
Accounting Policy Information. The Company has performed a review of its
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 assessment of accounting standards, amendments and
interpretations that have been issued by 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 financial statements have been prepared in accordance with the guidelines
outlined in the Statement of Recommended Practice: Financial Statements of
Investment Trust Companies and Venture Capital Trusts ("SORP") issued by the
Association of Investment Companies ("AIC") in April 2021 and to the extent
this does not conflict with IFRS. This ensures that the financial statements
are relevant and applicable to the Company.
In line with the SORP, supplementary information has been provided to analyse
the Statement of Comprehensive Income and distinguish between items of a
revenue and capital nature. This supplementary information is presented
alongside the total Statement of Comprehensive Income, allowing for a
comprehensive understanding of the Company's financial performance and the
breakdown between revenue and capital activities.
The financial statements are prepared on the historical cost basis, except for
revaluation of certain financial investments at fair value through profit or
loss. The principal accounting policies adopted are set out below and
consistently applied, subject to changes in accordance with any amendments in
IFRS.
The financial statements are presented in sterling and all values are rounded
to the nearest thousand (£000)
The Company regularly reviews estimates and underlying assumptions on an
ongoing basis. Any revisions to accounting estimates are recognised in the
period in which the estimates are revised and in future periods affected. The
significant estimates, judgments, or assumptions made during the period are
detailed on page 83 of the Annual Report.
Basis of Consolidation
The sole objective of the Company, through its subsidiary TENT
Holdings, was to make investments, via individual corporate entities. The
Company typically subscribed for equity in or issued loans to TENT Holdings
in order for it to finance its investments.
The Directors have concluded that in accordance with IFRS 10,
the Company meets the definition of an investment entity having evaluated
the criteria that need to be met (see below). Under IFRS 10, investment
entities are required to hold subsidiaries at fair value through
the Income Statement rather than consolidate them on
a line-by-line basis, meaning TENT Holdings' cash, debt and working capital
balances are included in the fair value of the investment rather than in the
Company's assets and liabilities. However, in substance, TENT Holdings is
investing the funds of the investors of the Company on its behalf and is
effectively performing investment management services on behalf of many
unrelated beneficiary investors. TENT Holdings Limited meets the criteria to
be classified as an independent investment entity in accordance with IFRS 10,
thereby meeting the criteria of exemption from consolidating its subsidiaries.
The Company therefore does not consolidate its Subsidiaries.
Characteristics of an investment entity
There are three key conditions to be met by the Company for it to meet the
definition of an investment entity. For each reporting period, the
Directors will continue to assess whether the Company continues to meet these
conditions:
1. It obtains funds from one or more investors for the purpose of
providing these investors with professional investment
management services;
2. It commits to its investors that its business purpose is to invest
its funds solely for returns (including having an exit strategy for
investments) from capital appreciation, investment income or both; and
3. It measures and evaluates the performance of substantially all its
investments on a fair value basis.
In satisfying the second criteria, the notion of an investment time frame is
critical. An investment entity should not hold its investments indefinitely
but should have an exit strategy for their realisation. Following the
shareholders' approval to change the Company's Investment Objective and
Investment Policy at a General Meeting on 22 March 2024, the Company is
conducting an orderly realisation of the assets of the Group, to be effected
in a manner that seeks to achieve a balance between returning cash to
Shareholders promptly and maximising value, while maintaining an income return
for so long as the Group continues to own assets generating sufficient income
The Company's subsidiaries are therefore measured at fair value through profit
or loss in accordance with IFRS 13 "Fair Value Measurement", IFRS 10
"Consolidated Financial Statements", IFRS 9 "Financial Instruments" and IFRS
5 "Non-current Assets Held for Sale and Discontinued Operations".
The Directors believe the treatment outlined above provides the most relevant
information to investors.
Financial Instruments
Financial assets and financial liabilities are recognised on the Company's
statement of financial position when the Company becomes a party to the
contractual provisions of the instrument. Financial assets are to be
de-recognised when the contractual rights to the cash flows from the
instrument expire or the asset is transferred, and the transfer qualifies for
de-recognition in accordance with IFRS 9 Financial Instruments.
Financial assets
The Company classifies its financial assets as either investments at fair
value through profit or loss or financial assets at amortised cost.
The classification depends on the purpose for which the financial assets are
acquired. The Investment Manager determines the classification of its
financial assets at initial recognition.
Assets held-for-sale
A non-current asset or disposal group is classified as held-for-sale when its
carrying amount will be recovered principally through a sale transaction. This
is the case when the asset is available for immediate sale in its present
condition subject only to terms that are usual and customary for sales of such
asset and its sale is highly probable. On initial classification as
held-for-sale, non-current assets are reclassified as current assets.
In accordance with IFRS 5 "Non-current Assets Held for Sale and Discontinued
Operations," the Company, which is currently in an orderly wind-down process,
now classifies Investments as current assets held-for-sale.
Investments at fair value through profit or loss
The Company measures its investments, through its investment in TENT
Holdings, at fair value through profit or loss. Any changes in the fair
value of the Investments are recognised as gains or losses on investments
at fair value through profit or loss within investment income.
Investments at fair value through profit or loss are recognised as financial
assets at fair value through profit or loss in accordance with IFRS 9.
Investments held at fair value through profit or loss consist of
the Company's subsidiary, TENT Holdings.
The Company's investment in TENT Holdings comprises both equity and loan
notes. The Company measures its investment as a single class of
financial asset at fair value in accordance with IFRS 13 Fair Value
Measurement, IFRS 9 "Financial Instruments" and IFRS 5 "Non-current Assets
Held for Sale and Discontinued Operations".
In determining the fair value, the Board will consider any observable market
transactions and will measure fair value using assumptions that market
participants would use when pricing the asset, including any assumptions
regarding risk surrounding the transaction.
Financial assets at amortised cost
Trade receivables, loans and other receivables that are non-derivative
financial assets and that have fixed or determinable payments that are not
quoted in an active market are classified as "financial assets at amortised
cost". Trade receivables, loans and other receivables are measured
at amortised cost using the effective interest method, less any impairment.
They are included in current assets, following the shareholder approval of the
orderly wind-down of the Company. The Company's financial assets held at
amortised cost comprise "trade and other receivables" and "cash and cash
equivalents" in the statement of financial position.
Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangement.
Financial liabilities
Financial liabilities are classified as other financial liabilities,
comprising other non-derivative financial instruments, including trade and
other payables, which are to be measured at amortised cost using the effective
interest method.
Effective interest method
The effective interest rate is the rate that exactly discounts estimated
future cash payments or receipts through the expected life of the financial
instrument to the relevant asset's carrying amount.
Fair value estimation for investments at fair value
The Group's investments are not typically traded in active markets. Fair
value is calculated by discounting at an appropriate discount rate future cash
flows expected to be received, by TENT Holdings, from the investment
portfolio. The underlying cash flows are from investments in both equity
(dividends and equity redemptions), shareholder, inter-company and third-party
loans (interest and repayments). The valuations are based on the expected
future cash flows, using reasonable assumptions and forecasts for revenues,
operating costs, macro-level factors and an appropriate discount rate. Under
circumstances where an offer is received for the Investment and the Company
deems this to be fair market value, the valuation method may change to be
based on the offer value. This can be demonstrated in the valuations of the
BESS Portfolio and the CHP Portfolio. The latter is based on the offer
received to refinance these debt facilities repaying a total of £17.5
million, £14.5 million of which has been received and £3 million of which is
receivable in three instalments in September 2024, June 2025 and September
2026.
The discount rates used in the valuation exercise represent the Investment
Manager's best assessment of the rate of return in the market for assets with
similar characteristics and risk profile. The discount rates are reviewed on a
regular basis and updated, where appropriate, to reflect changes in the
market and in the project risk characteristics.
Investments, which are entered into by TENT Holdings, are designated upon
initial recognition as held at fair value through profit or loss. Gains or
losses resulting from the movement in fair value of the investments are
reflected in the valuation of TENT Holdings and recognised in the Statement of
Comprehensive Income at each valuation point.
The Company's loan and equity investment in TENT Holdings is held at fair
value through profit or loss which is measured by reference to the net asset
value of TENT Holdings. Gains, losses or disposal expenditure, resulting from
the movement in fair value are recognised in the Company's Statement of
Comprehensive Income at each valuation point.
For each valuation period the Company engages external, independent and
qualified valuers to assess the validity of the forecast cash flow assumptions
and discount rates used by the Investment Manager in determination of fair
value. The Board reviews and approves the valuations following appropriate
challenge and examination.
Revenue Recognition
Gains and losses on fair value of investments in the income statement
represent gains or losses that arise from the movement in the fair value of
the Company's investment in TENT Holdings.
Investment income comprises interest income and dividend income received from
the Company's subsidiary, TENT Holdings. Interest income is recognised in
the Income Statement using the effective interest method.
Dividends from TENT Holdings are recognised when the Company's right to
receive payment has been established.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held on call with
banks and other short-term highly liquid deposits with original maturities of
three months or less. At 31 March 2024, the Company's cash balances were held
in the Company's bank current account.
There are no expected credit losses and the counterparty risk is mitigated
as the banking institution that the Company holds balances with has good
credit ratings assigned by international credit rating agencies.
Transactions and balances
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are translated at the
foreign exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the Income Statement.
Dividends
Dividends to the Company's shareholders are recognised when they become
legally payable. In the case of interim dividends, this is when they are paid.
In the case of final dividends, this is when they are approved by the
shareholders at the Annual General Meeting.
Fund Expenses
Expenses are accounted for on an accruals basis. Share issue expenses of the
Company directly attributable to the issue and listing of shares are charged
to the share premium account. The Company's investment management fee,
administration fees and all other expenses are charged through the Income
Statement.
Capital expenses
In accordance with the Company's original investment objective, income returns
in the financial year constitute the majority of the Company's return and
therefore only 25% of the investment management fee has been charged as a
capital item within the Income Statement.
All expenditures will be carefully assessed to determine whether they are
related to revenue or capital. Subsequently, the expenditure will be
appropriately allocated to the respective section in the income statement.
Taxation
Under the current system of taxation in the UK, the Company is liable to
taxation on its operations in the UK. Current tax is the expected tax payable
on the taxable income for the period, using tax rates that have been enacted
or substantively enacted at the date of the Statement of Financial
Position.
Deferred tax is the tax expected to be payable or recoverable on temporary
differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Deferred tax assets
and liabilities are not recognised if the temporary differences arise from
goodwill or from the initial recognition of other assets and liabilities in a
transaction that affects neither the tax profit nor the accounting
profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments, except where the Company is able to control the
timing of the reversal of the difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax is
calculated at the tax rates that are expected to apply in the period when the
liability is settled, or the asset is realised. Deferred tax is charged or
credited to the Income Statement except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also dealt with
in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off tax assets against tax liabilities and when they
relate to income taxes levied by the same taxation authority and
the Company intends to settle its current tax assets and liabilities on a
net basis.
Deferred tax assets and liabilities are not discounted.
New, revised and amended standards applicable in the period
A number of amended standards became applicable for the current reporting
period. The Company did not have to change its accounting policies or make
retrospective adjustments as a result of adopting these amended standards.
The most significant of these standards are set out below:
New standards and amendments - applicable 1 January 2023
· IFRS 17 Insurance Contracts
· Classification of Liabilities as Current or Non-current - Amendments to
IAS 1
· Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2
· Definition of Accounting Estimates - Amendments to IAS 8
· Deferred Tax related to Assets and Liabilities arising from a Single
Transaction - Amendments to IAS 12
· Sale or contribution of assets between an investor and its associate or
joint venture - Amendments to IFRS 10 and IAS 28
Forthcoming Requirements
The following standards and interpretations had been issued but were not
mandatory for annual reporting periods ending on or before 31 March 2024:
· Amendments to IAS 1 on classification of liabilities clarify that
liabilities are classified as either current or non-current, depending on the
rights that exist at the end of the reporting period and amendments to
Non-current Liabilities with covenants.
· Amendments to IFRS16 on Lease Liability in a Sale and Leaseback
· IAS 7 "Statement of Cash Flows" and IFRS 7 "Financial Instruments:
Disclosures (Amendment - Supplier Finance Arrangements)"
The impact of these standards is not material to the reported results of the
Company.
Segmental Reporting
The Chief Operating Decision Maker (the "CODM") being the Board of Directors,
is of the opinion that the Company is engaged in a single segment of business,
being investment. All the investments are based in the UK.
The Company has no single major customer. The internal financial information
to be used by the CODM on a quarterly basis to allocate resources, assess
performance and manage the Company will present the business as a single
segment comprising the portfolio of investments in energy
transition assets.
3. Critical accounting estimates, judgements and assumptions
In the application of the Company's accounting policies, which are described
in Note 2, the Directors are required to make judgements, estimates and
assumptions about the fair value of assets and liabilities that affect
reported amounts. It is possible that actual results may differ from these
estimates.
The preparation of the financial statements requires the Board to make
judgements, estimates and assumptions that affect the application of the
accounting policies and the reported amount of assets, liabilities, income and
expenses. Estimates, by their nature, are based on judgement and available
information, hence actual results may differ from these judgements, estimates
and assumptions.
The key estimates that have a significant impact on the carrying values of
underlying investments that are valued by reference to the discounted value of
future cashflows are the useful life of the assets, the discount rates, the
rate of inflation, the price at which the power and associated benefits can be
sold and the amount of electricity the assets are expected to produce. The
sensitivity analysis of these key assumptions is outlined in Note 12 to the
financial statements, on pages 88 to 91 of the Annual Report.
For equity investments, entered into by TENT Holdings, useful lives are based
on the Investment Manager's estimates of the period over which the assets will
generate revenue which are periodically reviewed for continued
appropriateness. Where land is leased from an external landlord, the
operational life assumed for the purposed of the asset valuations is valued at
lease expiry or end of contractual extension options. For the loan investments
the future cash flows are as per contractual maturity of the facility.
The discount rates are subjective and therefore it is feasible that a
reasonable alternative assumption may be used resulting in a different value.
The discount rates applied to cashflows are reviewed regularly by the
Investment Manager to ensure they are at an appropriate level. The Investment
Manager will take into consideration market transactions, of similar nature,
when considering changes to the discount rates used. For the year end and
half-year accounts, the Company engages external, independent valuers to
assess the validity of the discount rates used by the Investment Manager in
determination of fair value.
For equity investments, by TENT Holdings, the revenues and expenditure of the
investee companies are frequently or wholly subject to indexation and an
assumption is made as to near term and long-term rates. For debt investments,
by TENT Holdings, the cashflows are determined by reference to contractual
arrangements.
The price at which the output from the generating equity assets is sold is a
factor of both wholesale electricity prices and the revenue received from the
Government support regimes such as the Feed in Tariffs. Future power prices
are estimated using external third-party forecasts which take the form of
special consultancy reports, which reflect various factors including gas
prices, carbon prices and renewables deployment.
TENT Holdings' investments in unquoted investments are valued by reference to
valuation techniques approved by the Directors and in accordance with the
International Private Equity and Venture Capital ("IPEV") Guidelines.
As noted above, the Board has concluded that the Company meets the definition
of an investment entity as defined in IFRS 10. This conclusion involved a
degree of judgement and assessment as to whether the Company meets the
criteria outlined in the accounting standards.
4. Investment management fees
The Company and the Investment Manager entered into an Investment Management
Agreement on 25 August 2020.
During the majority of the financial year the management fee was calculated as
0.9% of the NAV.
At the Company's General Meeting on 22 March 2024, shareholders approved
amendments to the IMA on the terms summarised in Part I of the Circular
published to shareholders on 5 March 2024. The terms of the new IMA agreement
are summarised below:
· a fixed retainer fee:
o equal to 0.9% of the average market capitalisation of the Company during
the relevant month, which is payable in cash and on a monthly basis (the
"Retainer Fee"); and
· a success fee (the "Success Fee"):
o based on the aggregated value realised across the portfolio of assets
(including committed amounts) during the wind-down period, and calculated
using the percentage of the gross aggregated sale value of the Group's
investments, less the direct costs specifically associated with the sale of
such investments (for example, fees of professional and legal advisers),
against the value of the investments at the time of sale based on (i) the most
recent third party reviewed published asset level NAV (in the case of equity
investments) or (ii) drawn amounts, including repayments made since 30
September 2023 (in the case of debt investments) ("Carrying Value") (the
"Percentage Value Achieved").
o The Success Fee will be calculated using the following fee structure:
Success Fee payable
Percentage Value Achieved (percentage of Value Realised)
80% - 84.9% of Carrying Value 0.80%
85% - 89.9% of Carrying Value 0.90%
90% and above of Carrying Value 1.00%
· A minimum Fee (defined as Success Fee plus Retainer Fee) of £1.1
million will be payable to the Investment Manager, with any shortfall being
payable upon the final asset disposal by the Company or, if a termination
event occurs before such disposal, on the date of the termination of the
Investment Management Agreement in connection therewith.
· The aggregate Fee payable to the Investment Manager will be capped at
£1.351 million, which reflects the maximum fee the Investment Manager could
have received under the previous fee arrangements.
· The new Fee arrangement has been implemented and will remain valid
until the earlier of (i) the completion of the managed wind-down; (ii) 20
October 2025; and (iii) the termination of the Investment Management Agreement
in accordance with its terms.
· Any taxes applicable to the Fee will be applied as required.
· In the event that, prior to completion of the managed wind-down, the
Company is the subject of a takeover bid or a merger transaction under the
Takeover Code and such takeover bid or merger transaction becomes wholly
unconditional, the Company shall pay the maximum fee of £1.351 million to the
Investment Manager, less the cumulative total of any Retainer Fees that have
been paid to the Investment Manager prior to the takeover bid or merger
transaction becoming wholly unconditional, in full settlement of all services
rendered by the Investment Manager to such date.
In the event that, prior to the completion of the managed wind-down and the
Company's expected eventual liquidation, the Shareholders approve the
cancellation of the admission of the Ordinary Shares to the Official List and
to trading on the Main Market (the "De-Listing"), the Retainer Fee payable by
the Company will be adjusted so that it is equal to 0.9% of the market
capitalisation of the Company as at the date on which the De-Listing becomes
effective, subject to further adjustments that may be required, including
(without limitation), as a result of any future disposals and/or capital
reductions that may be undertaken by the Company.
In the prior financial year, the Annual Management Fee was calculated at 0.9%
of Net Asset Value. Under the terms of the old IMA agreement, the Investment
Manager must use 20% of the management fee received to acquire shares in the
Company.
The Annual Management Fee was payable on a quarterly basis, and Ordinary
Shares were acquired by the Wider Triple Point Group on a half-yearly basis.
Any such Ordinary Shares acquired by the Wider Triple Point Group are subject
to a minimum lock-in period of 12 months.
Investment management fees paid or accrued during the year were as
follows:
For the year ended For the year ended
31 March 2024 31 March 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Cash element 648 216 864 662 221 883
648 216 864 662 221 883
5. Investment Income
For the year ended For the year ended
31 March 2024 31 March 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Interest on cash deposits 46 - 46 48 - 48
Interest income from investments 4,413 - 4,413 3,354 - 3,354
Dividend income from investments 2,948 - 2,948 3,880 - 3,880
7,407 - 7,407 7,282 - 7,282
6. Operating Expenses
For the year ended For the year ended
31 March 2024 31 March 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment Management fees 648 216 864 662 221 883
Directors' fees* 200 - 200 200 - 200
Company's audit fees:
- in respect of audit services 137 - 137 109 - 109
- in respect of non-audit services 48 - 48 44 - 44
Premium Listing fees - - - 547 - 547
Other operating expenses** 1,246 21 1,267 681 22 703
2,279 237 2,516 2,243 243 2,486
*Directors' fees exclude employer's national insurance contributions and
travel expenses which are included as appropriate in other operating expenses.
Travel expenses for the year ended 31 March 2024 totalled £823 (31 March
2023: £485).
**The Company has recognised costs in relation to the wind-down of the
portfolio of investments of £0.5 million (2023: £nil) consisting of circular
related expenditure and other general costs associated with the sales of the
underlying investments.
7. Employees
The Company had no employees during the period.
Full detail on Directors' fees is provided in Note 19. The Directors' fees
exclude employer's national insurance contribution which is included as
appropriate in other operating expenses. There were no other emoluments
during the period.
8. Taxation
Analysis of charge in the period
For the year ended For the year ended
31 March 2024 31 March 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Corporation tax - - - - - -
The effective UK corporation tax rate applicable to the Company for the period
is 25% (31 March 2023: 19%). The tax charge differs from the charge
resulting from applying the standard rate of UK corporation tax for an
investment trust company. The differences are explained below:
For the year ended For the year ended
31 March 2024 31 March 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Profit before taxation 5,128 (12,400) (7,272) 5,039 3,774 8813
Corporation tax at 25% (2023:19%) 1,282 (3,100) (1,818) 957 717 1,674
Effect of:
Capital loss/ (gain) not deductible - 3,041 3,041 (763) (763)
Interest distributions (818) - (818) (646) - (646)
Dividends received not taxable (737) - (737) (737) - (737)
Disallowed expenditure 141 - 141 108 - 108
Excess of allowable management expenses 132 59 191 - - -
Group relief of excess management expenses - - - 318 46 364
Tax charge for the period - - - - - -
The Directors are of the opinion that the Company has complied with the
requirements for maintaining investment trust status for the purposes of
section 1158 of the Corporation Tax Act 2010. This allows certain capital
profits of the Company to be exempt from UK tax.
Additionally, the Company has in the financial year utilised the interest
streaming election which allows the Company to designate dividends wholly or
partly as interest distributions for UK tax purposes. Interest distributions
are treated as tax deductions against taxable income of the Company so that
investors do not suffer double taxation on their returns.
The Company has unrelieved excess management expenses of £767,000 for the
current year (2023: £232,000). It is unlikely that the Company will generate
sufficient taxable profits in the future to utilise these expenses and
therefore no deferred tax asset has been recognised.
The unrecognised deferred tax asset calculated using a tax rate of 25% amounts
to £250,000 (2023: £58,000).
The financial statements do not directly include the tax charges for the
Company's intermediate holding company, as TENT Holdings is held as an
investment at fair value. TENT Holdings is subject to taxation in
the United Kingdom at the current main rate of 25%.
9. Earnings per Share
For the year ended For the year ended
31 March 2024 31 March 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Profit attributable to the equity holders of the Company (£'000) 5,128 (12,400) (7,272) 5,039 3,774 8,813
Weighted average number of Ordinary Shares in issue ('000) 100,014 100,014 100,014 100,014 100,014 100,014
Profit per Ordinary share (pence) - basic and diluted 5.13 (12.40) (7.27) 5.04 8.81
3.77
There is no difference between the weighted average Ordinary and diluted
number of Shares.
10. Dividends and Interest Distributions
Dividend per share pence Total dividend £'000
Interim dividends paid during year ended Interest distribution per share pence
31 March 2024
Final quarter interim dividend for the 0.370 1,375
year ended 31 March 2023 1.005
First quarter interim dividend for the 0.238 1,375
year ended 31 March 2024 1.137
Second quarter interim dividend for the 0.307 1,375
year ended 31 March 2024 1.068
Third quarter interim dividend for the 0.307 1,375
year ended 31 March 2024 1.068
1.222 4.278 5,500
Dividend per share pence Total dividend £'000
Interim dividends declared after 31 March 2024 and not accrued in the year Interest distribution per share pence
Fourth quarter interim dividend for the 1.375 1,375
year ended 31 March 2024 -
1.375 - 1,375
As at the date of this report, the Board declared a fourth quarter interim
dividend of 1.375 pence per share with respect to the period ended 31 March
2024. The dividend is expected to be paid on or around 19 July 2024 to
shareholders on the register on 5 July 2024 The ex-dividend date is 4 July
2024.
11. Net assets per Ordinary share
31 March 2024 31 March 2023
Total shareholders' equity (£'000) 86,677 99,449
Number of Ordinary Shares in issue ('000) 100,014 100,014
Net asset value per Ordinary Share (pence) 86.66 99.44
12. Assets held-for-sale
As set out in Note 2, the Company designates its interest in its wholly
owned direct subsidiary as an investment at fair value through profit or
loss. The investment has been re-classified at the year-end as assets
held-for-sale following the Company entering an orderly wind-down.
Summary of the Company's valuation is below:
31 March 2024 31 March 2023
£'000 £'000
Fair value at start of the year 90,060 78,952
Loan advanced to TENT Holdings Limited in the year 9,229 7,964
Shareholding in TENT Holdings Limited invested in the year - 1,469
Capitalised interest 790 997
Loan principal repaid (4,549) (3,339)
Movement in fair value of other net assets in intermediate holding company (12,163) 4,017
Value of Company's investments as at end of the year 83,367 90,060
The valuation reflects the current assets held-for-sale. In the previous
financial year, these valuations were classified as non-current assets.
Loans advanced to TENT Holdings in the year totalled £9.2 million. The
advances were made to TENT Holdings to complete the loan investment in BESS
and LEDs.
The Company owns five shares in TENT Holdings, representing 100% of issued
share capital. The fair value of the debt and equity investments in TENT
Holdings on 31 March 2024 is £83.4 million (31 March 2023: £90.1 million)
Capitalised interest represents interest recognised in the income statement
but not paid. This is instead added to the loan balance on which interest for
future periods is computed. The loan from the Company to TENT Holdings, which
enabled TENT Holdings to complete investments into Harvest, Glasshouse and
Spark Steam, carry commensurate terms and repayment profiles. All payments
from the borrower and capitalised interest are in accordance and in line with
the contractual repayments with the respective underlying facility agreements
with Harvest, Glasshouse and Spark Steam as agreed at inception.
Reconciliation of Portfolio Valuation:
31 March 2024 31 March 2023
£'000 £'000
Portfolio Valuation 104,777 87,680
Intermediate holding company cash 4,102 1,982
Intermediate holding company debt* (25,234) 329
Intermediate holding company net working capital (278) 69
Fair Value of Company's investments as at end of the period 83,367 90,060
*At 31 March 2024, £25.4 million debt was drawn (31 March 2023: nil). The
debt balance represents the drawn balance and the arrangement fee which is
capitalised and expensed to profit or loss under amortised cost.
Fair Value measurements
As set out in Note 2, the Company accounts for its interest in its wholly
owned direct subsidiary, TENT Holdings, as an investment at fair value
through profit or loss.
IFRS 13 requires disclosure of fair value measurement by level. The level of
fair value hierarchy within the financial assets or financial liabilities is
determined on the basis of the lowest level input that is significant to the
fair value measurement. Financial assets and financial liabilities are
classified in their entirety into only one of the following 3 levels:
· level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
· level 2 - inputs other than quoted prices included within Level 1
that are observable for the assets or liabilities, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
· level 3 - inputs for assets or liabilities that are not based on
observable market data (unobservable inputs).
The determination of what constitutes 'observable' requires significant
judgement by the Company. Observable data is considered to be market data that
is readily available, regularly distributed or updated, reliable and
verifiable, not proprietary, and provided by independent sources that are
actively involved in the relevant market.
The financial instruments held at fair value are the instruments held by the
Group in the investee companies, which are fair valued at each reporting date.
The investments have been classified within level 3 as the investments are not
traded and contain certain unobservable inputs. The Company's investments in
TENT Holdings are also considered to be level 3 assets.
As the fair value of the Company's equity and loan investments in TENT
Holdings is ultimately determined by the underlying fair values of the equity
and loan investments, made by TENT Holdings, the Company's sensitivity
analysis of reasonably possible alternative input assumptions is the same as
for those investments.
There have been no transfers between levels during the period.
Valuations are derived using a discounted cashflow methodology in line with
IPEV Valuation Guidelines and consider, inter alia, the following:
i. due diligence findings where relevant;
ii. the terms of any material contracts including
PPAs;
iii. asset performance
iv. power price forecasts from leading consultants; and
v. the economic, taxation or regulatory environment
The DCF valuation of the Group's investments represents the largest component
of GAV and the key sensitivities are considered to be the discount rate used
in the DCF valuation and assumptions relating to inflation, energy yield and
power prices. If the Company receives an offer for an investment that is
deemed to represent fair market value and is considering accepting it, the
Company may adjust the investment valuation to reflect the offer value.
The shareholder loan and equity investments, in TENT Holdings, are valued as a
single asset class at fair value in accordance with IFRS 13 Fair Value
Measurement.
Sensitivity
Sensitivity analysis is produced to show the impact of changes in key
assumptions adopted to arrive at the valuation. For each of the sensitivities,
it is assumed that potential changes occur independently of each other with no
effect on any other base case assumption, and that the number of investments
in the portfolio remains static throughout the modelled life.
The analysis below shows the sensitivity of the portfolio value (and its
impact on NAV) to changes in key assumptions as follows:
Discount rate
The weighted average valuation discount rate (excludes investments held at
offer value) applied to calculate the portfolio valuation is 6.94%.
An increase or decrease in this rate by 0.5% points has the following effect
on valuation.
Discount Rate NAV per share impact -0.5% Total portfolio value +0.5% change NAV per share impact
change
pence £'000 £'000 £'000 pence
Valuation - March 2024 1.91 85,281 83,367 81,605 (1.76)
Energy yield
The table below shows the sensitivity of the Hydroelectric Portfolio valuation
to a sustained decrease or increase of energy generation by minus or plus 5%
on the valuation, with all other variables held constant. The fair value of
the Hydroelectric Portfolio is assessed on a "P50" level of electricity
generation, representing the expected level of generation over the long term.
A change in the forecast energy yield assumptions by plus or minus 5% has the
following effect.
Energy Yield NAV per share impact -5% Total portfolio value +5% change NAV per share impact
change
pence £'000 £'000 £'000 pence
Valuation - March 2024 (2.90) 80,468 83,367 86,242 2.87
Power Prices
The sensitivity considers a flat 10% movement in power prices for all years,
i.e. the effect of adjusting the forecast electricity price assumptions
applicable to the Hydroelectric Portfolio down by 10% and up by 10% from the
base case assumptions for each year throughout the operating life of the
Hydroelectric Portfolio.
A change in the forecast electricity price assumptions by plus or minus 10%
has the following effect.
Power Prices NAV per share impact -10% change Total portfolio value +10% change NAV per share impact
pence £'000 £'000 £'000 pence
Valuation - March 2024 (2.49) 80,880 83,367 85,818 2.45
Inflation
The Hydroelectric Portfolio's income streams are principally subsidy based,
which is amended each year with inflation, with the remaining income being
from the power price, which the sensitivity assumes will move with inflation.
Operating expenses relating to the Hydroelectric Portfolio, typically move
with inflation, but debt payments on the shareholder loans are fixed. This
results in the portfolio returns and valuations being positively correlated to
inflation. The average long-term inflation assumption across the portfolio is
3.00% for RPI from 2024 to 2030 (inclusive) and 2.40% thereafter, with 2.25%
for CPI from 2024. The Company models wholesale power prices inflating at 3%
from 2024 onwards as power prices are not intrinsically linked to consumer
prices, unlike costs of sales and labour.
The sensitivity illustrates the effect on the portfolio of a 0.5% decrease and
a 0.5% increase from he assumed annual inflation rates in the financial model
throughout the operating life of the portfolio.
Inflation NAV per share impact -0.5% change Total portfolio value +0.5% change NAV per share impact
pence £'000 £'000 £'000 pence
Valuation - March 2024 (2.08) 81,291 83,367 85,556 2.19
13. Trade and other Receivables
For the year ended For the year ended
31 March 2024 31 March 2023
£'000 £'000
Prepayments 79 111
Other receivables 291 263
370 374
14. Trade and other Payables
For the year ended For the year ended
31 March 2024 31 March 2023
£'000 £'000
Accrued expenses 367 219
Other payables 406 23
773 242
15. Share Capital and Reserves
For the year ended 31 March 2024 Number of shares Nominal value
of shares (£)
Allotted, issued and fully paid:
Opening balance as at 1 April 2023 100,014,079 1,000,140.79
Ordinary Shares of 1p each - -
Closing balance of Ordinary Shares at 31 March 2024 100,014,079 1,000,140.79
Number of shares Nominal value
For the year ended 31 March 2023 of shares (£)
Allotted, issued and fully paid:
Opening balance as at 1 April 2022 100,014,079 1,000,140.79
Ordinary Shares of 1p each - -
Closing balance of Ordinary Shares at 31 March 2023 100,014,079 1,000,140.79
The Company did not issue any new shares to the Investment Manager, under the
previous Investment Management Agreement, in the year ended 31 March 2024.
Shares acquired by the Investment Manager in the year, as required by the
previous Investment Management Agreement were purchased on the open market.
Shareholders are entitled to all dividends paid by the Company and, on a
winding up, provided the Company has satisfied all its liabilities, the
shareholders are entitled to all of the residual assets of the Company.
16. Special Distributable Reserve
On 19 October 2020 the Company's Ordinary Shares were admitted to trading on
the Specialist Fund Segment of the London Stock Exchange, the Directors
applied to the Court and obtained a judgement on 12 January 2021 to cancel
the amount standing to the credit of the share premium account of the
Company.
As stated by the Institute of Chartered Accountants in England and Wales
("ICAEW") and the Institute of Chartered Accountants in Scotland ("ICAS") in
the technical release TECH 02/17BL, the Companies (Reduction of Share
Capital) Order 2008 SI 2008/1915 ("the Order") specifies the cases in which a
reserve arising from a reduction in a company's capital (i.e., share capital,
share premium account, capital redemption reserve or redenomination reserve)
is to be treated as a realised profit as a matter of law.
The Order also disapplies the general prohibition in section 654 on the
distribution of a reserve arising from a reduction of capital. The
Order provides that if a limited company having a share capital reduces its
capital and the reduction is confirmed by order of court, the reserve
arising from the reduction is treated as a realised profit unless the court
orders otherwise.
As at the year ended 31 March 2024, the special distributable reserve balance
is £89.8 million (31 March 2023: £91.0 million).
17. Financial Risk Management
The Company's investment activities expose it to a variety of
financial risks, including interest rate risk, power price risk, credit
risk, liquidity risk, counterparty risk and disposal risk. The Board of
Directors has overall responsibility for overseeing the management of
financial risks, however the review and management of financial risks are
delegated to the AIFM.
Each risk and its management are summarised below.
Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates
will affect future cash flows or the fair values of financial instruments. The
Company is exposed to interest rate risk on its cash balances held with
counterparties, bank deposits, revolving credit facility, advances to
counterparties through loans to its subsidiary. The Company may be exposed to
changes in variable market rates of interest as this could impact the discount
rate and therefore the valuation of the investments as well as the fair value
of loans receivable. The Company is not considered to be materially exposed to
interest rate risk so no sensitivity has been performed. Sensitivity analysis
is disclosed in Note 12 to show the impact of changes in key assumptions
adopted to arrive at the valuation of investments.
The Company's interest and non-interest-bearing assets and liabilities are
summarised below:
Interest bearing Non-interest bearing Total value
£'000 £'000 £'000
For the year ended 31 March 2024
Assets: 63,007 20,360 83,367
Investments at fair value through profit or loss
Other receivables 291 291
Cash and cash equivalents 3,713 3,713
Total Assets 66,720 20,651 87,371
Liabilities:
Trade and other payables - 773 773
Total Liabilities - 773 773
Interest bearing Non-interest bearing Total value
£'000 £'000 £'000
For the year ended 31 March 2023
Assets: 57,537 32,523 90,060
Investments at fair value through profit or loss
Other receivables 263 263
Cash and cash equivalents 9,257 9,257
Total Assets 66,794 32,786 99,580
Liabilities:
Trade and other payables - 242 242
Total Liabilities - 242 242
Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its
financial obligations as they fall due. The AIFM and the Board regularly
monitor forecast and actual cash flows from operating, financing, and
investing activities to consider payment of dividends, repayment of trade and
other payables or funding further investing activities.
The Company maintains appropriate reserves and has through TENT Holdings
established a revolving credit facility. This facility was utilised to fund
the Group's investment commitments, ensuring sufficient liquidity to meet
obligations.
At the period end, the Company's investments, through TENT Holdings, were
in equity and secured loan investments in private companies, in which there is
no listed market. The Company's wholly owned subsidiary TENT Holdings,
is the entity through which the Company holds its investments.
The Company's financial liabilities by maturity at the period end are shown
below:
For year ended March 2024 Less than 1 year 1-5 years More than 5 years Total
£'000 £'000 £'000 £'000
Liabilities:
Trade and other Payables (773) - - (773)
For year ended March 2023 Less than 1 year 1-5 years More than 5 years Total
£'000 £'000 £'000 £'000
Liabilities:
Trade and other Payables (242) - - (242)
Credit Risk
Credit risk is the risk that a counterparty of the Group will be unable or
unwilling to meet a commitment that it has entered into with
the Group. It is a key part of the pre-investment due diligence. The credit
standing of the companies which the Group intends to lend to or invest
in is reviewed, and the risk of default estimated for each significant
counterparty position. Monitoring is on-going, and period end positions are
reported to the Board on a quarterly basis.
Credit risk also arises from cash and cash equivalents, derivative financial
instruments, loan investments held through TENT Holdings and deposits
with banks and financial institutions. The Company and its
subsidiaries may mitigate their risk on cash investments and derivative
transactions by only transacting with major international financial
institutions with high credit ratings assigned by international credit rating
agencies, including investment grade money market fund investments, this is in
line with the Company's treasury policy.
The Company had no derivatives during the period and the Company's cash
balances were held in the Company's current account.
To further mitigate counterparty risk, the credit rating and key financials
such as cash balance and net asset positions, of the banking provider is
reviewed on a regular basis.
The carrying value of the investments, trade and other receivables and cash
represent the Company's maximum exposure to credit risk.
As at 31 March 2024, the three CHP loans had an outstanding loan balance of
£23.1 million. The Company exited the investments for the consideration of
£17.5m in June 2024. £14.5 million has been received and £3 million is due
to be receivable in three instalments in September 2024, June 2025 and
September 2026. The impairment of £6.1 million reflects the increase in the
aged debtor profile of receivables from the primary customer for the heat,
which is a sign of the deterioration of the credit quality of the heat
offtaker as well as a narrowing of the spark spread and the reduced
attractiveness of these loan assets to gas fired generation assets to
investors in the energy transition.
Price Risk
Price risk is defined as the risk that the fair value of a financial
instrument held by the Group will fluctuate. Investments are measured at fair
value through profit and loss. As at the 31 March 2024, the Company held 12
indirect investments through its intermediary holding company, TENT Holdings.
The value of the investments held by TENT Holdings will vary according to a
number of factors including: discount rate used, asset performance and
forecast power prices. Sensitivity analysis is disclosed in Note 12.
Capital Risk Management
The capital structure of the Company at the year-end consists of equity
attributable to equity holders of the Company, comprising issued capital and
reserves. The Board continues to monitor the balance of the overall capital
structure so as to maintain investor and market confidence. The Company is not
subject to any external capital requirements.
Market Risk
Returns from the Company's indirect investments are affected by the price at
which the investments are acquired or sold. The value of these investments
will be a function of the discounted value of their expected future cash
flows, and as such will vary with, inter-alia, movements in interest rates,
market prices and competition for such assets. The Investment Manager carries
out a full valuation bi-annually and this valuation exercise takes into
account such changes.
In addition, there is significant market risk associated with selling assets
and winding down a company. Market conditions at the time of sale can greatly
influence the realised value of assets, potentially leading to lower returns
than anticipated if market prices are depressed. Furthermore, the liquidity of
certain assets may pose a challenge, as less liquid assets could take longer
to sell or may need to be sold at a discount, further impacting the Company's
ability to maximise returns.
18. Subsidiaries
The following table shows subsidiaries of the Group. As the Company is
regarded as an Investment Entity as referred to in Note 2, the subsidiaries
have not been consolidated in the preparation of the financial statements.
Investment Place of Ownership interest as at
Business 31 March 2024
TENT Holdings * UK 100.00%
Achnacarry Hydro Limited** UK 100.00%
Elementary Energy Limited** UK 99.32%
Green Highland ALLT Choire A Bhalachain (255) Limited** UK 100.00%
Green Highland ALLT Ladaidh (1148) Limited** UK 100.00%
Green Highland ALLT Luaidhe (228) Limited** UK 100.00%
Green Highland ALLT Phocachain (1015) Limited** UK 100.00%
Investment Place of Business Ownership interest as at
31 March 2023
TENT Holdings * UK 100.00%
Achnacarry Hydro Limited** UK 100.00%
Elementary Energy Limited** UK 99.32%
Green Highland ALLT Choire A Bhalachain (255) Limited** UK 100.00%
Green Highland ALLT Ladaidh (1148) Limited** UK 100.00%
Green Highland ALLT Luaidhe (228) Limited** UK 100.00%
Green Highland ALLT Phocachain (1015) Limited** UK 100.00%
*Direct shareholding in a financial services investment holding company.
** Indirect shareholding in an electricity production company.
19. Related Party Transactions
Director's Fees
The amounts incurred in respect of Directors' fees during the period to 31
March 2024 was £200,000 (31 March 2023: £200,000). These amounts have been
fully paid at 31 March 2024. The amounts paid to individual directors during
the period were as follows:
For the year ended For the year ended
31 March 2024 31 March 2023
Dr John Roberts (Chair) £75,000 £75,000
Rosemary Boot £45,000 £45,000
Sonia McCorquodale £40,000 £40,000
Dr Anthony White £40,000 £40,000
Director's Expenses
The expenses claimed by the Directors during the period to 31 March 2024 were
£823 (31 March 2023: £485). These amounts have been fully paid at 31 March
2024. The amounts paid to individual directors during the period were as
follows:
For the year ended For the year ended
31 March 2024 31 March 2023
Dr John Roberts (Chair) £555 £156
Rosemary Boot £60 £61
Sonia McCorquodale - £216
Dr Anthony White £208 £52
Directors' interests
Details of the direct and indirect interests of the Directors and their close
families in the ordinary shares of one pence each in the Company at 31 March
2024 were as follows:
Number of Shares % of issued
share capital
Dr John Roberts (Chair) 40,000 0.04%
Rosemary Boot 40,000 0.04%
Sonia McCorquodale 10,000 0.01%
Dr Anthony White 40,000 0.04%
The Company and Subsidiaries
During the year interest totalling £4,413,370 was earned on the
Company's long-term interest-bearing loan between the Company and its
subsidiary (31 March 2023: £3,353,665). At the period end, £290,524 was
outstanding (31 March 2023: £195,417).
During the year dividends totalling £2,947,593 were paid by TENT Holdings to
the Company. The dividends are commensurate to the dividends received by TENT
Holdings from the Hydroelectric Portfolio in the same period (31 March 2023:
£3,879,927).
The AIFM and Investment Manager
The Company and Triple Point Investment Management LLP have entered into the
Investment Management Agreement pursuant to which the Investment Manager has
been given responsibility, subject to the overall supervision of the Board,
for active discretionary investment management of the Company's Portfolio in
accordance with the Company's Investment Objective and Policy.
At the Company's General Meeting on 22 March 2024, shareholders approved
amendments to the Investment Management Agreement on the terms summarised in
Part I of the Circular published to shareholders on 5 March 2024. Further
detail can be found on page 48 of the Annual Report.
The Investment Manager is the Company's AIFM, and is the entity appointed to
be responsible for risk management and portfolio management. Following the
amendments to the Investment Management Agreement and to the Company's
Investment Objective and Policy, all disposals of assets will be subject to
the Board's approval.
The management fee is calculated and accrues monthly and is invoiced monthly
in arrears. During the year ended 31 March 2024, management fees of £863,438
(31 March 2023: £883,215) were incurred of which £15,203 (31 March 2023:
£nil) was payable at the period end.
Investment Manager's interest in shares of the Company
On the 23 August 2023, the Investment Manager purchased on the open market
79,338 Ordinary Shares in the Company in accordance with the terms of the
previous Investment Management Agreement pursuant to which 20 per cent of the
management fee paid was used to acquire new Ordinary Shares of £0.01 each in
the capital of the Company. The average price per Ordinary Share was £0.599.
Details of the interests of the Investment Manager, held by an entity within
the Wider Triple Point Group, in the Ordinary Shares of one pence each in the
Company as at 31 March 2024 were as follows:
Number of Shares % of Issued share Capital
Perihelion One Limited 1,296,170 1.30%
Perihelion One Limited is a company within the Wider Triple Point Group.
Post year-end, the Investment Manager purchased 65,017 Ordinary Shares in the
Company in accordance with the terms of the previous Investment Management
Agreement. The average price per Ordinary Share was £0.66. As at the date of
the report, the Investment Manager, through Perihelion One Limited, held a
total of 1,361,187 Ordinary Shares in the Company.
Guarantees and other commitments
At 31 March 2024 the Group, via its wholly owned subsidiary, TENT Holdings
Limited ("TENT Holdings"), had a £40 million Revolving Credit Facility
("RCF") with TP Leasing Limited expiring on 28 March 2025. The interest rate
charged of this facility was a fixed rate coupon of 6% pa on drawn amounts.
As at 31 March 2024, £25.4 million was drawn under the facility (31 March
2023: £nil). The facility was utilised to fund the BESS investment, which was
subsequently sold for par and the proceeds were utilised to fully repay the
RCF facility which was then cancelled on 19 April 2024.
20. Events after the Reporting period
On 19 April 2024 the Field loan was sold at par to TPLL.
On 19 April 2024 the Group fully repaid and called its RCF with TPLL.
In June 2024, the Company exited the three CHP loans, which as at 31 March
2024 had an outstanding loan balance of £23.1 million which has been fair
valued to net present value of £17.0m. The consideration for the loan
repayment was £17.5 million, £14.5 million of which has been received and
£3 million of which is receivable in three instalments in September 2024,
June 2025 and September 2026.
Dividend
As at the date of this report, the Board declared a fourth quarter interim
dividend of 1.375 pence per share with respect to the period ended 31 March
2024. The dividend is expected to be paid on or around 19 July 2024 to
shareholders on the register on 5 July 2024. The ex-dividend date is 4 July
2024.
21. Ultimate controlling party
In the opinion of the Board, on the basis of the shareholdings advised to
them, the Company has no ultimate controlling party.
Alternative Performance Measures
In reporting financial information, the Company presents alternative
performance measures, ("APMs"), which are 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:
Gross Asset Value or GAV
A measure of total asset value including third party debt held in
unconsolidated subsidiaries.
31 March 2024 £'000 31 March 2023
£'000
GAV 87,450 99,691
Gross Asset Value 87,450 99,691
Gross Loan to Value
A measure expressed as a percentage of the Group's financial debt relative to
GAV.
31 March 2024 £'000 31 March 2023
£'000
Drawn Debt held in unconsolidated subsidiaries a 25,397 -
Gross Asset Value b 87,450 99,691
Gross Loan to Value a/b 29.0% 0.0%
NAV Total Return
A measure of NAV performance over the reporting period (including dividends
paid). NAV total return is shown as a percentage change from the start of the
period.
31 March 2024 31 March 2023
Opening NAV pence a 99.44 96.12
Closing NAV pence b 86.66 99.44
Dividends paid pence c 5.50 5.50
Total NAV Return ((b + c)/a)-1 (7.3%) 9.2%
Ongoing Charges
A measure expressed as a percentage of average net assets, of the regular,
recurring annual costs of running the Company per Ordinary Share. The
calculation and disclosure have been performed following the AIC methodology,
wherein any one-time expenses have been excluded from the ongoing expenses:
31 March 2024 31 March 2023
£'000 £'000
Average NAV a 93,064 97,794
Ongoing Expenses b 1,922 1,895
Ongoing charges ratio b / a - 1 2.06% 1.94%
Cash Income
A measure which illustrates the cash generated by the Company's operations.
31 March 2024 £'000 31 March 2023
£'000
Investment income as per statement of comprehensive income a 7,407 7,282
Trade receivables at start of period b 263 339
Trade receivables at end of period c 291 263
Total Cash Income (a + b - c) 7,379 7,358
Cash Dividend Cover
A measure which illustrates the number of times the Company's cash flow can
cover dividend payments to Shareholders.
31 March 2024 £'000 31 March 2023
£'000
Cash income* a 7,191 8,975
Cash expenditure* b 1,474 2,495
Dividends paid per Statement of Changes in Equity c 5,500 5,501
Total Cash Income (a - b) / c 1.04x 1.18x
* Cash income and expenditure is representative of the Company and TENT
Holdings based on a look through methodology and excludes one-off costs, such
as wind-down expenditure, costs associated with the Capital markets Day and
commissions related to new investments (31 March 2023: 1.2x excluding one-off
costs such as Premium Segment listing fees and commissions related to new
investments).
This year the basis of calculation has been amended to exclude one-off costs.
The dividend cover for the year ended 31 March 2023 has therefore been
presented on a like for like basis.
Glossary and Definitions
The Act Companies Act 2006
AIC Code The AIC Code of Corporate Governance produced by the Association of Investment
Companies
AIFM The alternative investment fund manager of the Company, Triple Point
Investment Management LLP
AIFMD The EU Alternative Investment Fund Managers Directive 2011/61/EU
BESS Battery Energy Storage Systems
BESS Portfolio Debt facility to a subsidiary of Virmati Energy Ltd (trading as Field), to
fund a portfolio of four Battery Energy Storage Systems assets
Boxed LED Facility LED receivables financing facility to Boxed Light Services Limited.
CHP Combined heat and power
CHP Portfolio Debt investments into Harvest and Glasshouse and Spark Steam
CODM Chief Operating Decision Maker
Company Triple Point Energy Transition plc (company number 12693305).
DCF Discounted Cash Flow
DTR FCA Disclosure and Transparency Rules
ESG Environmental, Social and Governance
EU European Union
FCA Financial Conduct Authority
FRC Financial Reporting Council
GAV Gross Asset Value
GHG Green House Gas
Glasshouse Glasshouse Generation Limited
Group The Company and any subsidiary undertakings from time to time
Harvest and Harvest Generation Services Limited
Hydroelectric Portfolio Elementary Energy Limited
Green Highland Allt Ladaidh (1148) Limited
Green Highland Allt Choire A Bhalachain (255) Limited
Green Highland Allt Phocachain (1015) Limited
Green Highland Allt Luaidhe (228) Limited
Achnacarry Hydro Limited
Innova Innova Renewables Limited
Innova Facility £5 million Development Debt Facility to Innova Renewables Limited.
IPEV International Private Equity and Venture Capital
ITC Investment Trust Company
Investment Manager or TPIM Triple Point Investment Management LLP
IPO The admission by the Company of 100 million Ordinary Shares to trading on the
Specialist Fund Segment of the Main Market, which were the subject of the
Company's initial public offering on 19 October 2020
IPO Prospectus The Company's Prospectus for its initial public offering, published on 25
August 2020.
kWh Kilowatt-hour
LED Light-emitting Diode
Listing Rules Financial Conduct Authority Listing Rules
MW Megawatt
MWh Megawatt-hour
NAV The net asset value, as at any date, of the assets of the Company after
deduction of all liabilities determined in accordance with the accounting
policies adopted by the Company from time-to-time.
Net Zero A target of completely negating the amount of greenhouse gases produced by
human activity, to be achieved by reducing emissions and implementing methods
of absorbing carbon dioxide from the atmosphere
OCR Ongoing charges ratio.
O&M Operations & Maintenance
PPA Power Purchase Agreement.
PRI Principals for Responsible Investing
Project SPV Special Purpose Vehicle in which energy transition assets are held.
RCF The Group's £40 million Revolving Credit Facility, via TENT Holdings, with TP
Leasing Limited, subsequently cancelled on 19 April 2024.
SDG Sustainable Development Goals.
SDR Sustainable Disclosure Regulation.
SECR Streamlined Energy and Carbon Reporting
SFDR Sustainable Finance Disclosure Regulation.
SONIA Sterling Overnight Index Average
SORP Statement of Recommended Practise.
Spark Steam Spark Steam Limited
tCO(2) Tonnes of carbon dioxide emissions
tCO(2)e Tonnes of carbon dioxide equivalent. Emissions of all greenhouse gases,
expressed in units of carbon dioxide equivalence, based on global warming
potential.
TCFD Task Force on Climate-related Financial Disclosures.
TENT Holdings The wholly owned subsidiary of the Company: TENT Holdings Limited (company
number 12695849).
TPLL TP Leasing Limited
UN SDGs United Nations Sustainable Development Goals
Wider Triple Point Group Triple Point LLP (company number OC310549) and any subsidiary undertakings
from time to time.
1 calculated as total cash income, after expenditure and financing costs for
the Company and TENT Holdings (the Company's wholly owned subsidiary) (but
excluding one off expenditure), divided by dividends paid in the financial
year to 31 March 2024
2 Alternative Performance Measure
3 Investors should note that references to "dividends" and "distributions"
are intended to cover both dividend income and income which is designated as
an interest distribution for UK tax purposes and therefore subject to the
interest streaming regime applicable to investment trusts.
4 Alternative Performance Measure
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