ThomasLloyd Energy ThomasLloyd - TLEI ThomasLloyd EngyTLEP - Interim results for the period ended 30 June 2022
07/09/2022 07:01
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RNS Number : 5666Y ThomasLloyd Energy Impact Trust PLC 07 September 2022
LEI: 254900V23329JCBR9G82
7 September 2022
ThomasLloyd Energy Impact Trust PLC
Interim results for the period ended 30 June 2022
ThomasLloyd Energy Impact Trust plc ("TLEI" or the "Company"), the renewable
energy investment trust providing direct access to sustainable energy
infrastructure in fast-growing and emerging economies in Asia, is pleased to
announce its interim results for the period ended 30 June 2022.
Highlights (unaudited) 30 June 2022 31 March 2022 IPO
Net assets (US$ million) 115.2 106.2 113.1
NAV per share (cents)(1) 99.9 92.1 98.0
NAV total return per share(1) 2.4% (6.0%) n/a
Market capitalisation (US$ million)(1) 130.4 146.5 113.1
Share price (US$) 1.13 1.27 1.00
IPO proceeds committed(1) 66% 40% 40%
Pipeline opportunities (US$ million) 750+ c.750 750+
Operational and impact highlights Year to date Three-month period ended 30 June 2022 Three-month period ended 31 March 2022
30 June 2022
Installed renewable capacity (MWp)(1) 266 266 133
Emissions avoided (CO(2)e tonnes)(1) 90,566 49,728 40,838
Energy security (people provided with electricity)(1) 356,291 197,046 159,245
Employment opportunities created (full time jobs)(1) 335 335 169
(1)See 'Basis of Presentation and Alternative Performance Measures' section of
the June 2022 Interim Report for definitions, methodologies and
reconciliations.
Highlights
During the reporting period:
· Raised US$115.4 million in the IPO in December 2021.
· Awarded the London Stock Exchange's Green Economy Mark
in December 2021.
· In December 2021, completed the acquisition of a 40%
economic interest in NISPI, a Philippines platform with three operating solar
plants, for a cash consideration of US$25.4 million. The fair value of this
investment increased by 10% to 30 June 2022, driven by continued strengthening
of local wholesale electricity market prices.
· On 20 June 2022, agreed the acquisition of the remaining
57% economic interest in SolarArise, in addition to the acquisition of the 43%
economic interest committed to at the IPO. SolarArise is an Indian solar
platform with six operating plants and one construction-ready plant situated
in five states in India. The acquisition of the 57% economic interest will be
settled for a cash consideration of US$38.5 million, funded from existing cash
resources.
· Completed the cancellation of the share premium account
of US$112.0 million, creating a special distributable reserve which can be
used to fund dividend payments.
· Maiden quarterly interim dividend of 0.44 cents per share
paid in June 2022.
· Incorporation of TLEI Holdings Limited, a UK
incorporated wholly owned subsidiary of TLEI, as a holding company for
investments.
Events after 30 June 2022:
· Second quarterly interim dividend of 0.44 cents per share
announced today and will be paid on 30 September 2022.
· Acquisition of the 43% economic interest in SolarArise
completed on 19 August 2022. The acquisition price of US$32.9 million (equal
to the fair value of the interest at 30 June 2022) was settled by issuing
26,014,349 ordinary shares at US$1.16035 per share to the sellers and a cash
payment of US$2.7 million (withheld to fund withholding tax payable to the
Indian tax authorities by TLEI on behalf of the sellers).
· TLEI's market capitalisation on completion of the
acquisition of the 43% economic interest in SolarArise was US$168.3 million.
For illustrative purposes, if the ordinary shares issued in relation to the
acquisition had been in issue at 30 June 2022, TLEI's net assets would have
been US$144.8 million, resulting in a NAV per share of 102.4 cents.
Interim Report and Fact Sheet
The Company's Interim Report at 30 June 2022 and for the period ended 30 June
2022, along with the June 2022 Fact Sheet, will shortly be available on the
Company's website, http://www.tlenergyimpact.com
(http://www.tlenergyimpact.com/) .
Commenting on today's results,
Sue Inglis, Chair of ThomasLloyd Energy Impact Trust PLC, said:
"NISPI, the Philippines 80 MW platform with three operating solar plants that
we acquired a 40% interest in shortly after IPO is benefiting from strong
electricity prices, leading to a 10% increase in its fair value as at 30 June
2022.
With the completion of the acquisition of the 43% interest in SolarArise, the
434MW Indian platform with five operating solar plants and
one-construction-ready solar plant, in August, we have completed the
acquisitions of the seed assets identified at the time of our IPO. Including
our commitment to acquire the remaining 57% interest in Solarise, we have now
deployed 66% of the net IPO proceeds (including the shares issued on acquiring
the 43% interest in SolarArise).
We are at an advanced stage of negotiations and due diligence on other
investment opportunities, which will broaden our Investment Portfolio in terms
of countries, currencies and technologies and provide further visibility on
the revenue streams required to support our dividend targets. Accordingly, we
expect that the remaining IPO proceeds will be substantially deployed
shortly."
Enquiries:
ThomasLloyd Group
Anneliese Diedrichs +41 (0) 79 659 6513
Anneliese.diedrichs@thomas-lloyd.com
Shore Capital +44 (0) 20 7408 4050
Robert Finlay / Rose Ramsden (Corporate)
Adam Gill / Matthew Kinkead (Sales)
Fiona Conroy (Corporate Broking)
About ThomasLloyd Energy Impact Trust Plc
ThomasLloyd Energy Impact Trust plc (TLEI) listed on the premium segment of
the London Stock Exchange in December 2021 and was awarded the London Stock
Exchange's Green Economy Mark upon admission.
In 2021, ThomasLloyd Group participated in the Mobilising Institutional
Capital Through Listed Product Structures (MOBILIST)
(https://www.ukmobilist.com/) competition, which engaged financial
institutions in a search for the best sustainable infrastructure proposals
that can list either on the London Stock Exchange or local exchanges.
ThomasLloyd Group was the first fund manager to complete this process
successfully and received US$32.3 million in investment from the UK government
into TLEI.
The Company has a Triple Return investment objective which consists of:
· providing shareholders with attractive dividend growth and
prospects for long-term capital appreciation (the financial return);
· protecting natural resources and the environment (the
environmental return); and
· delivering economic and social progress, helping build resilient
communities and supporting purposeful activity (the social return).
The Company seeks to achieve its investment objective by investing directly in
a diversified portfolio of sustainable energy infrastructure assets in the
fast-growing and emerging economies in Asia. The Company invests in unlisted
sustainable energy infrastructure assets in the areas of renewable energy
generation, transmission infrastructure, energy storage and sustainable fuel
production, including utilising different technologies to reduce revenue
variability.
The Company aims to generate additional value for its investors through
focusing its investments on construction-ready or in-construction projects.
The Company only invests in such pre-operational assets where: (i) an offtake
agreement has been entered into; (ii) the land on which the project is
situated is identified or contractually secured where appropriate; and (iii)
all relevant permits have been granted. Offtake agreements will typically
benefit from long-term fixed-price power purchase agreements, capacity
contracts or other similar revenue contracts with creditworthy (primarily
investment grade) private and public sector buyers.
As is the case for all ThomasLloyd funds, the Company is expected to qualify
as an Article 9 fund under the EU Sustainable Finance Disclosure Regulation
(SFDR). Further information on the Company can be found on its website at
http://www.tlenergyimpact.com (http://www.tlenergyimpact.com/) .
About the Investment Manager
The Investment Manager is a wholly-owned subsidiary of ThomasLloyd Group
("ThomasLloyd" or the "Group"). Founded in 2003, the Group is a leading impact
investor and provider of climate financing. ThomasLloyd is a pure play impact
investor and aims to apply a robust, socially and environmentally responsible
investment approach that is geared towards reducing carbon emissions and
improving economic prospects, while reducing investment risk through
diversification across countries, sectors and technologies.
Over the last decade, ThomasLloyd has deployed over US$1 billion across 16
projects in renewable energy generation, transmission and sustainable fuel
production with a total capacity in excess of 700 MW.
Since 2013, ThomasLloyd has been measuring and reporting on the impact of its
investments, creating an empirical database showing the positive impact of
their investments in sustainable energy infrastructure in high growth and
emerging markets in Asia.
INTERIM REPORT - AT 30 JUNE 2022 AND FOR THE PERIOD ENDED 30 JUNE 2022
About the Company
ThomasLloyd Energy Impact Trust PLC ("TLEI" or the "Company") is the UK's
first and only listed renewable energy infrastructure investment company
focused solely on the fast-growing and emerging economies in Asia.
TLEI aims to deliver positive and measurable environmental and social impacts
along with attractive dividend growth and prospects for long-term capital
appreciation by principally investing in a diversified portfolio of
construction-ready, in-construction and operating sustainable energy
infrastructure assets. TLEI invests either directly or with trusted partners
through scalable investment platforms.
The Company is managed by ThomasLloyd Global Asset Management (Americas) LLC
("ThomasLloyd" or the "Investment Manager"), one of the longest-established
and most experienced investors in sustainable energy infrastructure in
emerging markets in Asia.
Highlights
During the reporting period:
· Raised US$115.4 million in the IPO in December 2021.
· Awarded the London Stock Exchange's Green Economy Mark
in December 2021.
· In December 2021, completed the acquisition of a 40%
economic interest in NISPI, a Philippines platform with three operating solar
plants, for a cash consideration of US$25.4 million. The fair value of this
investment increased by 10% to 30 June 2022, driven by continued strengthening
of local wholesale electricity market prices.
· On 20 June 2022, agreed the acquisition of the remaining
57% economic interest in SolarArise, in addition to the acquisition of the 43%
economic interest committed to at the IPO. SolarArise is an Indian solar
platform with six operating plants and one construction-ready plant situated
in five states in India. The acquisition of the 57% economic interest will be
settled for a cash consideration of US$38.5 million, funded from existing cash
resources.
· Completed the cancellation of the share premium account
of US$112.0 million, creating a special distributable reserve which can be
used to fund dividend payments.
· Maiden quarterly interim dividend of 0.44 cents per
share paid in June 2022.
· Incorporation of TLEI Holdings Limited, a UK
incorporated wholly owned subsidiary of TLEI, as a holding company for
investments.
Events after 30 June 2022:
· Second quarterly interim dividend of 0.44 cents per share
announced and will be paid on 30 September 2022.
· Acquisition of the 43% economic interest in SolarArise
completed on 19 August 2022. The acquisition price of US$32.9 million (equal
to the fair value of the interest at 30 June 2022) was settled by issuing
26,014,349 ordinary shares at US$1.16035 per share to the sellers and a cash
payment of US$2.7 million (withheld to fund withholding tax payable to the
Indian tax authorities by TLEI on behalf of the sellers).
· TLEI's market capitalisation on completion of the
acquisition of the 43% economic interest in SolarArise was US$168.3 million.
For illustrative purposes, if the ordinary shares issued in relation to the
acquisition had been in issue at 30 June 2022, TLEI's net assets would have
been US$144.8 million, resulting in a NAV per share of 102.4 cents.
Highlights (unaudited) 30 June 2022 31 March 2022 IPO
Net assets (US$ million) 115.2 106.2 113.1
NAV per share (cents)(1) 99.9 92.1 98.0
NAV total return per share(1) 2.4% (6.0%) n/a
Market capitalisation (US$ million)(1) 130.4 146.5 113.1
Share price (US$) 1.13 1.27 1.00
IPO proceeds committed(1) 66% 40% 40%
Pipeline opportunities (US$ million) 750+ c.750 750+
Impact highlights Year to date 30 June 2022 Three-month period ended 30 June 2022 Three-month period ended 31 March 2022
Installed renewable capacity (MWp)(1) 266 266 133
Emissions avoided (CO(2)e tonnes)(1) 90,566 49,728 40,838
Energy security (people provided with electricity)(1) 356,291 197,046 159,245
Employment opportunities created (full time jobs)(1) 335 335 169
(1)See 'Basis of Presentation and Alternative Performance Measures' section of
the Interim Report for definitions, methodologies and reconciliations.
Our Objectives
TLEI has a 'Triple Return' investment objective:
Financial Providing shareholders with attractive dividend growth and prospects for
long-term capital appreciation
Environmental Protecting natural resources and the environment
Social Delivering economic and social progress, helping build resilient communities
and supporting purposeful activity
We aim to provide shareholders with:
A sustainable and increasing dividend, paid quarterly - An annual target
dividend yield(1) of 2-3% for 2022, 5-6% for 2023 and at least 7% for 2024,
with the aim of progressively increasing this nominal target thereafter
An attractive NAV total return - A target NAV total return(1), once the
portfolio is fully operational on a fully invested and geared basis, of 10-12%
per annum (net of all fees, expenses and taxes)
(1) Based on the IPO issue price of US$1.00.
Investment Strategy
Diversification is a fundamental tenet of our strategy.
We invest in sustainable energy infrastructure assets in fast-growing and
emerging countries in Asia. We only invest in countries which our Investment
Manager considers as having a stable political system and transparent and
enforceable legal system, and which recognise the rights of foreign investors.
Our core target countries are India, Philippines and Vietnam, but we may also
invest in other fast-growing and emerging countries such as Bangladesh,
Indonesia and, once the current political and economic situation has
stabilised, Sri Lanka.
Our aim is to build a diversified portfolio of assets in the areas of
renewable energy generation (principally solar, wind and biomass),
transmission infrastructure, energy storage and sustainable fuel production.
In addition to investing in operational assets (largely with government or
quasi-government offtake agreements in place), we will seek to generate
additional value for shareholders through investing in construction-ready or
in-construction projects. However, we will only invest in pre-operational
assets where an offtake agreement is already in place, where appropriate the
land on which the project is situated has been identified or contractually
secured and all relevant permits or licenses have been granted. Our offtake
agreements typically benefit from long-term fixed-price power purchase
agreements, capacity contracts or other similar revenue contracts with
creditworthy (primarily investment grade) public or private sector buyers.
Whilst we may invest directly, taking 100% ownership of assets, normally we
will invest with trusted partners through scalable platforms investing in
sustainable energy infrastructure assets in our target countries. These
platforms provide us with a ready supply of new investment opportunities from
which the Investment Manager can select the most appropriate ones for TLEI.
Gearing is not used at the Company level. Gearing may be used on a
non-recourse basis at the asset level, either by the SPVs holding the assets
or intermediate holding companies, but will not exceed 65% of the Group's
gross asset value (which includes the proportionate share of the borrowings at
the level of the Company's investments), with the Company targeting below 50%
in the medium term. Borrowings will normally be denominated in the currency of
the relevant asset or US Dollars to help offset foreign currency exposure. In
addition, borrowings will typically be amortising over the term of the
associated offtake agreement.
We only invest in assets denominated in currencies that can be freely
converted or where, with central bank registration, the dividends and sale
proceeds from any investment are freely convertible, transferable and
repatriatable. Whilst the Company will not pursue long-term currency hedging,
the Investment Manager anticipates that it will substantially hedge future
dividend payments to shareholders where those payments are funded by non-US
Dollar denominated income. This hedging programme is expected to cover a
rolling two-year period.
Portfolio
Platform Technology Country Sites Revenue type Renewable energy generating capacity (MWp) Average remaining life of asset Economic ownership
NISPI Solar Philippines 3 (operational) Wholesale electricity spot market price 80 19 years 40%
SolarArise(1) Solar India 6 (operational) 25-year fixed price PPA 434 21 years 100%
1 (construction-ready)
(1)Represents the committed acquisition of a 43% economic interest in
SolarArise at date of IPO, subsequently completed on 19 August 2022, and the
remaining 57% economic interest committed to be acquired on 20 June 2022.
The global challenge
· Developing markets account for the majority of future global CO(2)
emissions but only receive 20% of clean energy infrastructure investment.
· We need to tackle the challenges at source if we are to reach the
goal of Net Zero by 2050.
Investment Case
By investing in TLEI, you are investing your money where it has the greatest
impact. By helping to fulfil the urgent need for sustainable energy
infrastructure finance in Asia, TLEI is helping to tackle the global climate
crisis with action where it is most required and most effective.
As the only London-listed sustainable energy infrastructure investment company
focused solely on the fast-growing and emerging economies in Asia, we provide
investors with a unique opportunity to gain exposure to this exciting
sub-sector.
TLEI also provides geographical diversification for investors who already have
exposure to developed market sustainable energy infrastructure.
We believe the following factors make TLEI a compelling investment:
Asia is the region with the most urgent need for investment in sustainable
energy infrastructure
· Asia's 4.6 billion people account for more than half of global energy
consumption - 85% comes from fossil fuels.
· CO(2) emissions in Asia now exceed those of Europe and North America
combined.
· Asia emits nearly 4x as much CO(2) for every US Dollar of GDP than
the four largest countries in Europe on average.
· Population growth, economic growth and urbanisation collectively are
causing a rapid increase in the demand for energy in Asia.
Asia is also the region where your capital will have the greatest impact
· In Asia, it is now 65% cheaper to build renewable energy power
capacity than it is to build new fossil fuel generated power. The recent spike
in oil and gas prices and the renewed focus on energy security makes this cost
differential even more favourable for renewable energy.
· A US Dollar invested in sustainable energy infrastructure in some
Asian countries, such as India and the Philippines, has more purchasing power
than the same US Dollar spent in Europe or North America - so it funds the
construction and operation of more renewable energy infrastructure assets,
generating more clean energy and creating a greater number of employment
opportunities.
· In fulfilling the urgent need for sustainable energy infrastructure
finance in Asia, TLEI is helping to tackle the global climate crisis with
action where it is most required, is most efficient and has a greater
environmental and social impact.
Attractive investment returns underpinned by strong fundamentals
· The amount of solar radiation available for electricity production is
highly dependent on location and climate - geography plays an important role
in the attractive economics of solar power in Asia.
· Lower costs of doing business, but not at the cost of providing
affordable energy and a positive social impact, also contribute to the
attractive economics of sustainable energy power in Asia.
· A large proportion of our financial returns are expected to be backed
by long-term, typically 20 to 25-year, power purchase agreements, giving a
high visibility of earnings - as these PPAs are frequently with central or
regional governments, the visibility is combined with strong security of
earnings.
· A strong US$750+ million pipeline is identified which comprises
attractive investment opportunities to support further portfolio and income
growth over the coming years.
Highly experienced Investment Manager with proven track record
· Our Investment Manager, ThomasLloyd, has deployed US$1+ billion in
sustainable energy infrastructure assets (700 MW+) in TLEI's target markets.
· ThomasLloyd's deep and longstanding relationships across our target
markets and on-the-ground presence with offices and representatives in India,
the Philippines, Hong Kong and Singapore ensure access to attractive new
projects.
Chair's Statement
"NISPI, the Philippines 80 MW platform with three operating solar plants that
we acquired a 40% interest in shortly after IPO is benefiting from strong
electricity prices, leading to a 10% increase in its fair value as at 30 June
2022.
With the completion of the acquisition of the 43% interest in SolarArise, the
434MW Indian platform with five operating solar plants and
one-construction-ready solar plant, in August, we have completed the
acquisitions of the seed assets identified at the time of our IPO. Including
our commitment to acquire the remaining 57% interest in Solarise, we have now
deployed 66% of the net IPO proceeds (including the shares issued on acquiring
the 43% interest in SolarArise).
We are at an advanced stage of negotiations and due diligence on other
investment opportunities, which will broaden our Investment Portfolio in terms
of countries, currencies and technologies and provide further visibility on
the revenue streams required to support our dividend targets. Accordingly, we
expect that the remaining IPO proceeds will be substantially deployed
shortly."
Sue Inglis, Chair, ThomasLloyd Energy Impact Trust Plc
On behalf of the Board, I am pleased to present our Interim Report for
ThomasLloyd Energy Impact Trust Plc covering the period from 1 November 2021
to 30 June 2022. This is our second Interim Report for the current financial
year, the first having covered the period from 1 November 2021 to 31 March
2022, as required by the Financial Conduct Authority's Disclosure Guidance and
Transparency Rules. We have elected to prepare this second Interim Report for
the period ended 30 June 2022 to provide a comparable period for future years.
Going forward, we will prepare our Interim Report for the six-month period
ending 30 June each year, and publish NAV updates for the quarters ending 31
March and 30 September.
IPO
On 14 December 2021, the Company listed on the premium segment of the London
Stock Exchange, raising gross cash proceeds of US$115.4 million from a
diversified institutional and retail investor base, as well as, the UK
Government's Foreign and Commonwealth Office. We are especially proud to have
achieved what we did given the challenging market conditions at the end of
last year.
At the time of the IPO, we had committed to acquire interests in portfolios of
assets in India and the Philippines for a combination of new ordinary shares
to be issued by the Company and cash. Since the IPO, the focus of both the
Board and the Investment Manager has been on completing those acquisitions,
committing the remaining net IPO cash proceeds and developing our pipeline to
increase the Investment Portfolio's diversification.
Investment progress
We completed the acquisition of a 40% economic interest in NISPI, the 80 MW
Philippines investment platform with three operating solar plants, for a cash
consideration of US$25.4 million on 18 December 2021. NISPI's solar plants
export electricity to the grid at the wholesale electricity spot market price.
Whilst we received approval from the Government of India for our acquisition
of a 43% economic interest in SolarArise, the 434 MW Indian investment
platform with six operating solar plants and one construction-ready solar
plant, in March 2022, we did not complete the acquisition until 19 August
2022. The delay in completing the acquisition was largely due to having
entered into discussions to acquire the remaining 57%. Under the shareholder
agreement terms, the sellers of the 57% were contractually entitled to sell at
the India Rupee initial consideration, being the valuation agreed at 19
November 2021.
Due to the delay in completing the acquisition of the 43% economic interest in
SolarArise, we were able to secure amendments to the original agreement to
update the fair value to a more recent date, being 30 June 2022. This reduced
the number of shares being issued as the US Dollar consideration had decreased
due to the US Dollar strengthening against the Indian Rupee. This amendment
represented a US$1.7 million reduction to a consideration of US$32.9 million
from US$34.6 million agreed at the IPO. On completion on 19 August 2022, the
Company issued 26,014,349 ordinary shares at US$1.16035 per share, being the
average share price for the 10-days prior to allotment of the shares. This
reflected the fair value of the 43% economic interest at 30 June 2022,
including accrued interest on convertible debt securities acquired, net of
US$2.7million of withholding tax payable by the Company to the Indian tax
authorities on behalf of the sellers. The Company's market capitalisation at
the close of business on the completion date was US$168.3 million.
Acquiring the remaining 57% economic interest in SolarArise was one of our
strategic objectives at the IPO. This was due to SolarArise's assets offering
predictable revenues under their long-term PPAs as well as its 200 MW
construction-ready asset which is expected to be NAV-accretive when it becomes
operational. On 20 June 2022, we committed to acquire the remaining 57%
economic interest, which included ordinary shares and convertible debt
instruments, for a cash consideration of US$38.5 million. The consideration
agreed for the 57% economic interest excluded accrued interest on the
convertible debt instruments which will be paid by SolarArise directly to the
sellers prior to completion. Excluding the impact of the settlement of the
accrued interest, the aggregate US Dollar acquisition value at 30 June 2022
for a 100% interest in SolarArise was equivalent to a discount of 5.2% to the
initial US Dollar consideration agreed in November 2021, whilst the underlying
Indian Rupee fair value remained substantially unchanged. Completion of this
acquisition is subject to regulatory approval and other completion procedures
and is expected to take place in the fourth quarter of this year.
Following completion of the acquisition of the remaining 57% economic
interest, the Company will own 100% of SolarArise and the TLEI portfolio will
include interests in 10 solar plants, with generating capacity of 514 MW in
two countries.
We have chosen, for the time being, not to be paid US$3.5 million of accrued
interest on convertible debt securities acquired as part of the 43% economic
interest in SolarArise. The cash retained in SolarArise, along with external
project finance, will be used to fund SolarArise's 200 MW construction-ready
solar plant. All necessary permits are in place and land has been secured for
this project. The SolarArise operator and management provider has secured
purchase commitments on construction materials and grown its team to support
this larger project to ensure scheduled timelines can be met. Construction is
expected to commence in the fourth quarter of this year, with a targeted
commercial operations date in the second half of 2023.
Pipeline
At 30 June 2022, the Company had deployed 66% of the net IPO proceeds,
including the share issue for the committed acquisition of the 43% economic
interest in SolarArise. The Company has in excess of US$750 million of
pipeline opportunities currently under consideration, of which more than
US$380 million is under exclusivity and the remainder is identified
opportunities in markets where the Investment Manager is already established
or has undertaken country level diligence.
We have made significant progress on opportunities in Vietnam with an initial
aggregate investment value of up to US$30 million, including a solar platform
that is building a pipeline of additional opportunities (we are in exclusive
discussions with this platform). Additionally, the Investment Manager has
exclusivity over more than US$350million of identified operational biomass
assets in the Philippines which are expected to deliver positive environmental
and social impacts. As the aggregate value of the immediate pipeline
opportunities exceeds the Company's uncommitted cash, such investments would
require further equity issuances.
Furthermore, there are near-term opportunities in India, the Philippines and
Vietnam with more medium to longer term opportunities identified in Bangladesh
and Indonesia. For further details on the pipeline, please see the Investment
Manager's report.
Portfolio performance
Since acquisition, the fair value of the investment in NISPI increased by
10.3% to US$28.0 million at 30 June 2022. This increase was driven by strong
wholesale electricity market prices resulting from demand outstripping supply
as the Philippines returns to post-pandemic demand levels and Negros, NISPI's
local market, continuing to be negatively impacted by the restricted
availability due to damage to the subsea cable connecting Negros and Cebu in
July 2021, offset partially by the US Dollar strengthening against the
Philippine Peso and a higher discount rate due to increasing government bond
yields. Net renewable energy generation for the six-month period ended 30 June
2022 was 41,061 MWh, down approximately 26% from the same period in 2021 due
to the damage to the Negros-Cebu subsea cable and curtailment in the weeks
following typhoon Rai, which hit the Philippines in December 2021. NISPI
generated revenues of US$5.4 million in the six-month period ended 30 June
2022. In line with expectations, NISPI did not distribute any amounts to the
Company during the period.
In the six-month period ended 30 June 2022, SolarArise's net renewable energy
generation exceeded budget by 3.0%, with underlying revenues increasing at the
same rate. On a US Dollar basis, revenues versus budget decreased by 2% to
US$9.3 million due to the strengthening of the US Dollar. No distributions
have been made to SolarArise shareholders since TLEI committed in November
2021 to acquire the 43% economic interest or will be made prior to the
completion of the acquisition of the 57% economic interest.
Results
Net assets at 30 June 2022 increased by 1.8% to US$115.2 million (IPO:
US$113.1 million).
At 30 June 2022, the NAV per share was 99.9 cents (IPO: 98.0 cents). For
illustrative purposes, if the ordinary shares issued in relation to the
acquisition of the 43% economic interest had been in issue at 30 June 2022,
the Company would have had net assets of US$144.8 million, resulting in a NAV
per share of 102.7 cents.
The NAV per share on a total return basis was 2.4%, which was driven by the
increase in the fair value of NISPI.
The share price at 30 June 2022 was US$1.13 (ticker: TLEI) and 87.5 pence
(ticker: TLEP).
The Company had a cash balance of US$86.9 million at 30 June 2022, of which
US$38.5 million was committed to be deployed for the acquisition of the 57%
economic interest in SolarArise. At the same date, the Company had no gearing
(NISPI is also ungeared). Had SolarArise been wholly owned by the Company at
30 June 2022, SolarArise's gearing would have represented 43.3% of the Group's
GAV (which includes the proportionate share of the borrowings at the level of
the Company's investments, including 100% of SolarArise).
The Company's profit before tax for the period was US$2.6 million, reflecting
a US$2.6 million net gain on investments held at fair value and foreign
exchange gains on the IPO proceeds not yet deployed, offset by ongoing
operating expenses. Earnings per share was 2.76 cents.
The annualised ongoing charges ratio was 2.3% at the period end. This
calculation does not take into account the subsequent US$29.6 million increase
in TLEI's net assets on completion of the acquisition of the 43% economic
interest in SolarArise, which will reduce the ongoing charges ratio. For
illustrative purposes, if this acquisition had completed at 30 June 2022, it
would have reduced the ongoing charges ratio to 1.8%. The Board will continue
to monitor the ongoing charges ratio closely as we seek to grow the Company,
deliver value to our shareholders and further reduce the ongoing charges
ratio.
Dividends
Our first interim dividend of 0.44 cents per share for the period to 31 March
2022 was paid on 24 June 2022 to shareholders on the register at the close of
business on 20 May 2022. We have today announced a second interim dividend of
0.44 cents per share, which will be paid on 30 September 2022 to shareholders
on the register at the close of business on 16 September 2022. As anticipated
at the time of the IPO, these interim dividends have or will be paid out of
the special distributable reserve created following the court-sanctioned
cancellation of the share premium reserve created at the IPO. We continue to
expect that, over the medium term, the target annual dividend will be covered
fully by revenue profits generated by the Investment Portfolio.
Impact Investing
The Board recognises the increasing importance of impact investing for
investors. Investing for a positive impact is at the heart of the Company's
investment strategy, given the inherent benefits of renewable energy assets.
The Company's assets do not require a trade-off between returns and
responsible investment and represents an attractive investment opportunity to
achieve strong financial returns whilst also delivering environmental and
social benefits. We are aiming to adopt reporting standards as they are
developed and adopted by the industry and to report in a transparent way,
making it easier for investors to assess and quantify the positive impact that
the Company is having on the environment and the communities in which our
assets are based.
Outlook
Our target markets are returning to growth with strong electricity demand and
pricing, although inflation and, for our existing investments the US Dollar
strengthening are proving to be headwinds currently. But a stronger US Dollar
is also creating the opportunity to acquire assets at more attractive prices.
The change in government in the Philippines, specifically the appointment of a
new Department of Energy Secretary, is seen as a positive with continued
affirmation of commitment to renewable energy targets. The Indian Government
has continued its support of the local solar sector and, to meet its targets,
it will need significant solar construction projects to be awarded across the
country. The renewable energy sector in Vietnam, which has one of the fastest
growing populations and GDP outlooks in Asia, is expected to grow by 8%
annually for the next five years. With no foreign ownership restrictions, this
is one of our most immediate and exciting target markets.
We are encouraged by our pipeline of investment opportunities and excited
about the scale of the market opportunity for TLEI and the outlook for the
future.
Sue Inglis
Chair, ThomasLloyd Energy Impact Trust Plc
7 September 2022
Q&A with the Investment Manager
Michael Sieg, Chair of the Investment Committee, ThomasLloyd Group
Q: Did you encounter specific complexities or difficulties in closing the 43%
stake in SolarArise as it seemed to take longer than expected?
Yes, it did take longer than expected but a number of amendments were also
made which overall have proved very beneficial to shareholders.
On signing the sale and purchase agreement on 19 November 2021, we applied for
Government of India approval of the transaction, which is required for all
acquisitions of holding company unlisted securities by foreign investors.
Approval was received in March 2022, once the Government offices re-opened in
Delhi following the lifting of pandemic restrictions.
Pending Government approval, we initiated negotiations to acquire the
remaining 57% stake, which raised a number of structuring points relating to
both transactions and delayed completing on the 43% until agreement on the
remaining interest was reached and the structuring points were resolved.
Cognisant of the delay, the consideration for the 43% stake was amended in
three ways. Firstly, the price paid by TLEI was reduced from US$34.6 million
(its fair value at 19 November 2021) to US$32.9 million (its most recently
calculated fair value, being as at 30 June 2022). Although the fair value of
SolarArise remained largely the same in local currency terms, the price
reduction was driven by the US Dollar strengthening against the Indian Rupee.
Secondly, the price at which the consideration shares were issued was
increased from US$1.00, being the IPO price, to US$1.16035 to address the
shares being consistently traded at a premium since the IPO, which reduced the
number of consideration shares issued.
Finally, the number of shares issued was further reduced to reflect that TLEI
agreed to settle directly the withholding tax due in cash to the Indian tax
authorities on behalf of the sellers.
These amendments ensured the acquisition cost was reflective of the current
fair value of SolarArise in US Dollar terms as well as ensuring that the
acquisition did not dilute shareholder value. The transaction closed on 19
August 2022. No distributions have been made to SolarArise shareholders
between 19 November 2021 and completion (or will be made prior to completion
of the acquisition of the remaining 57%), so TLEI will benefit from the net
cash flow retained in SolarArise over that period.
Q: TLEI has now committed to buying 100% of SolarArise - this must a be a key
acquisition for the development of the portfolio?
Acquiring the remaining stake in SolarArise was very important for a number of
reasons. Firstly, it provides us additional visibility of dividend cover, as
the acquisition represents 234 MW of operational assets, as well as portfolio
diversification from the 200 MW construction-ready project, which will support
the overall return of the Company.
Secondly, it also extends the ThomasLloyd development and management platforms
in India. As an Investment Manager, our on-the-ground skills and expertise is
a key differentiator for us. Our in-house technical, development and
operational skills and disciplines will be bolstered as ThomasLloyd will
assume and integrate the local management and development team therefore
maintaining the partnership ThomasLloyd has had with the SolarArise founders
since 2018.
On signing of the sale and purchase agreement for the remaining interest, we
have submitted the application for approval by the Government of India.
Therefore, we are optimistic that the acquisition will complete in the fourth
quarter of 2022.
Q: How has your pipeline changed since the IPO?
The pipeline has continued to evolve as you would expect. Some opportunities
fall away for a variety of reasons, for example as commercial terms are
explored or detailed due diligence undertaken. We also need to be alert to
changing political and macro conditions - Sri Lanka provides a good example.
The overall environment for the projects we look at is very favourable and
projects which have been removed have been replaced. We currently have a
pipeline in excess of US$750 million.
We remain on track to deliver the returns outlined in TLEI's prospectus and
are committed to increasing TLEI's geographical presence through new
investments in Vietnam, which will also provide additional currency
diversification. We continue to evaluate projects based on proven
technologies, such as solar, biomass and wind, as well as currently less
widely established technologies, such as battery storage.
The ThomasLloyd 'Triple Return' objective of providing attractive investment
returns for investors by investing where capital makes a meaningful,
measurable and significant impact remains the core objective of TLEI.
Q: It has taken more than six months to deploy the IPO proceeds - is this
normal for emerging markets and should we expect a similar deployment timeline
on future raises?
The emergence of the Omicron variant in December 2021 halted travel in the
first quarter of 2022 in most of our target markets and impacted businesses
and governments due to mandatory lock-downs. It was only at the start of the
second quarter that many countries opened their borders again to non-resident
visitors, since when we have been able to carry out very necessary face to
face meetings with both potential partners and acquisition opportunities. We
were also negatively impacted by the deteriorating political and economic
situation in Sri Lanka, which resulted in us taking the decision to step back
from a number of opportunities in the original near-term pipeline.
It is also important to note that we have an established investment decision
making process with detailed diligence requirements carried out both by the
Investment Manager and by external consultants. When investing in emerging
markets, it is essential not to compromise thorough risk assessment, planning
and preparation in order to accelerate investment decisions.
Moving forward, our current near-term pipeline contains tangible, quality
opportunities in India and the Philippines, countries which are well-known to
us, and Vietnam, where we have completed extensive country level diligence
prior to entering this market. We believe that delays caused by national
lockdowns or closure of borders will not recur but, to help mitigate against
timing risk, we have established a fund dedicated to investing in development
phase assets which can act as an incubator for construction-ready pipeline
assets for the Company.
Q: What are the key gating items to closing a deal in emerging market
countries?
In all countries, whether developed or fast growing and emerging, there are
differences in regulation, taxation and governance which will impact the
structure, timeline and commercials of an acquisition. Having said that, there
are specific points which we always consider, including regulatory approvals
or filings, foreign investment restrictions, availability of key suppliers,
assessment against impact and ESG criteria, tax and accounting implications
and operating language.
In relation to regulatory approvals, there are certain pre-closing approvals
required in India (as evidenced through the SolarArise acquisition), whereas
in the Philippines and Vietnam such approvals generally follow closing.
In certain countries there are restrictions on the size of shareholding that a
foreign investor may make. These restrictions vary depending on the type of
legal structure, operational readiness or size of investment opportunity.
While India and Vietnam do not have such restrictions, there are certain
restrictions in relation to some opportunities in the Philippines,
specifically solar investments. The restrictions may be subject to change and
therefore, we monitor and update our assessment of opportunities on an ongoing
basis.
As an active impact-focused investment manager, we believe deep and trusted
relationships with our external partners, being our plant operators, technical
advisors, other key service providers and suppliers and any co-investors, are
integral to the success of our investments. Therefore, ensuring from the
outset that we share the same values and standards of ethics is central to
this.
Q: As an impact investment manager, operating in emerging Asia, what do you
think are the key challenges?
We have seen a lot of financial market change and upheaval globally over the
last few years, first with COVID-19 and now with macroeconomic turbulence
generated by the Russian/Ukraine war and the impact it is having on rising
fuel and food prices, coupled with interest rates as financial authorities try
to deal with rising inflation. Therefore, there is a lot to think about as we
deal with these challenges and the knock-on impacts globally and more
particularly in Asia.
One of the macroeconomic factors we continuously monitor is the foreign
exchange rates in our local markets in comparison to the US Dollar, TLEI's
functional currency. We have seen the US Dollar strengthen in the last few
months to highs not seen since 2018. This has led to unrealised foreign
exchange losses in relation to TLEI's Philippine assets, although this has
been more than offset by increases in their value in local currency terms due
to continued strengthening of wholesale electricity market prices and overall
operating results. Although it is not efficient to hedge the currency risk to
capital values, we can mitigate against the risk of losses crystallising into
a cash loss by entering into a programme of cash flow hedges designed to
protect the value in US Dollars of the projected local currency inflows
through dividend income to TLEI. Additionally, we have built a depreciating
effect of such currency devaluations going forward into our financial models
to provide a buffer in our planning and forecasting activities.
But with challenge also comes opportunity - pipeline opportunities are now
becoming available at more attractive prices and this has been seen most
recently with the acquisition of the remaining interest in SolarArise. In
agreeing the acquisition of the remaining interest, where the fair value in
local currency terms has increased since the IPO, the acquisition
consideration agreed in US Dollars was 6% cheaper.
Another opportunity is the increased focus on energy security on a global
basis, which we believe increases the appetite in our target markets for the
locally sourced supply that renewable energy provides, especially as in those
markets renewable energy is significantly cheaper than the fossil fuel
equivalents.
A remaining challenge may be the risk of regulatory change driven by changes
in government or political parties. In Europe, we have seen governments
retract or revise their subsidy polices for renewable energy and, in some
cases, these changes have been made retroactively. This can have a largely
destabilising impact on investors' appetite for such investments. This is one
of the reasons we choose to invest where there are no subsidies therefore,
removing such uncertainty. While we cannot remove the risk of change
completely, having team members on the ground and ongoing communication with
our established local partners ensures that we have visibility of upcoming
change and this allows us to react and deal with such change in a timely
manner.
And lastly, we always have the health and wellbeing of our employees and
contractors and the communities in which we operate in our minds. Aside from
the pandemic, our employees are now seeing rising inflation rates impact their
quality of living so anything we can do to alleviate these pressures are front
and centre of our minds.
Investment Manager's Report
"The successful agreement to acquire the remaining 57% economic interest in
SolarArise, which increases our holding to 100%, puts us on track to create a
diversified portfolio with long-term PPAs that provides visibility and
predictability of dividend flow."
Nandita Sahgal Tully, member of the Investment Committee, ThomasLloyd Group
Investment highlights
· The fair value of the investment in NISPI increased by 10.3%
since acquisition to a fair value of US$28.0 million, reflecting continued
strong local market electricity prices.
· Commitment to acquire a 43% economic interest in SolarArise at
the IPO completed on 19 August 2022 with a consideration of US$32.9 million,
its fair value at 30 June 2022. This investment represents an interest in the
SolarArise solar platform of 234 MW of operational assets and 200 MW of
construction-ready assets across five states in India.
· On 20 June 2022, the Company committed to acquire the remaining
57% economic interest in SolarArise for US$38.5 million. An application for
approval of this acquisition has been submitted to the Government of India and
completion is expected in the fourth quarter of 2022.
· Final-stage diligence procedures being undertaken on exclusive
solar opportunities in Vietnam, both operational and in-construction projects.
Investment Portfolio
The following table provides details of the Company's Investment Portfolio, as
well as those investments which the Company had committed to acquire, at 30
June 2022. At that date, the Company's Investment Portfolio had a fair value
of US$28.0 million and its committed asset acquisitions had an aggregate fair
value of US$71.4 million.
Project Country Sector Ownership Commercial operations date Date of end of PPA Offtaker Total generating capacity (MWp)
Investment Portfolio
ISLASOL IA Philippines Solar 40% May 2016 n/a n/a 18
ISLASOL IB Philippines Solar 40% May 2016 n/a n/a 14
ISLASOL II Philippines Solar 40% June 2016 n/a n/a 48
Total Investment Portfolio 80
Committed asset acquisitions(1)
Telangana I India Solar 100% June 2016 June 2041 Southern Power Distribution Company of Telangana Limited(G) 12
Telangana II India Solar 100% June 2016 June 2041 Southern Power Distribution Company of Telangana Limited(G) 12
Maharashtra I India Solar 100% September 2017 September 2042 Solar Energy Corporation of India Limited(G) 67
Karnataka I India Solar 100% February 2018 February 2043 Solar Energy Corporation of India Limited(G) 41
Karnataka II India Solar 100% August 2019 August 2044 Bangalore Electricity Supply Company Limited(G) 27
Uttar Pradesh I India Solar 100% January 2021 January 2046 Uttar Pradesh Power Corporation Limited(G) 75
Madhya Pradesh 2 India Solar 100% September 2023 June 2048 1. M.P. Power Management Company Limited (G) 200
2. Indian Railways(G)
Total committed asset acquisitions 434
Total Investment Portfolio and committed asset acquisitions 514
(1) Represents the acquisition of a 43% economic interest in SolarArise,
completed on 19 August 2022, and the remaining 57% economic interest,
committed to be acquired on 20 June 2022 and expected to complete in the
fourth quarter 2022.
(2) Construction-ready project
(G) Government or quasi-government offtaker
Performance of the Investment Portfolio(1)
In December 2021, TLEI acquired a 40% economic interest in NISPI, one of its
seed assets at the IPO, for a cash consideration of US$25.4 million,
equivalent to its fair value at 19 November 2021. NISPI is an investment
platform with three operating solar plants situated on the island of Negros,
Philippines. All three solar plants export electricity to the grid at the
wholesale electricity spot market price. The total capacity of the NISPI
portfolio is 80 MW.
Transmission capacity has been limited since July 2021 between Negros and the
neighbouring island of Cebu, after a portion of the 138-kiloVolt high voltage
subsea cable connecting the two islands was damaged by dredging works
performed by a government department. While only one of the cable's two
circuits has been damaged, this has impacted the ability to export in the
short term. Completion of remediation works is now expected to be in late
2023.
Net renewable energy generation for the six-month period ended 30 June 2022
was 41,061 MWh (six-month period ended 30 June 2021: 54,664 MWh). In
comparison to budget, net renewable energy generation was marginally below
budget. The reduction in net renewable energy generation relative to the prior
period is largely the result of the damage to the subsea cable in July 2021
and generation being impacted in the first quarter of 2022 by typhoon Rai, a
category 5 super typhoon that hit the Philippines in December 2021. Although
damage across the Philippines was significant, NISPI's solar plants were
undamaged and local staff members and families were unharmed. Normal
operations were resumed relatively quickly, although there were some
short-term power transmission outages which impacted the first weeks of 2022.
Since acquisition in December 2021, NISPI has benefited from continued strong
wholesale electricity market prices. The average 12-month wholesale
electricity market price to 30 June 2022 was 6.36 PHP per KWh in comparison to
6.16 PHP per KWh in the 12 months to 31 March 2022. The increase in
electricity prices has been supported by demand outstripping supply due to the
ongoing curtailment resulting from the Negros-Cebu subsea cable damage. On
acquisition, the assumed wholesale electricity market price was 5.00 PHP per
KWh.
In the six-month period ended 30 June 2022, NISPI generated revenue of US$5.4
million, a decrease of 10% in comparison to the six-month period ended 30 June
2021 which generated US$6.1 million. This decrease was due to the US Dollar
strengthening and, on a PHP basis, revenue grew by 2% to PHP 298.8 million.
Therefore, on an underlying currency basis this was ahead of budget.
For the six-month period ended 30 June 2022, operating cash flows and cash
conversion ratio were US$3.1 million and 79% respectively (six-month period
ended 30 June 2021: US$3.2 million and 55% respectively). Cash conversion was
impacted by increased revenues generated and which are not due to be collected
until the following quarter. As at 30 June 2022, NISPI had cash, held in PHP,
of US$13.0 million. In line with expectations, NISPI did not distribute any
amounts to the Company during the period.
In June 2022, the Philippine Government initiated their first green energy
auction to award 2 GW of renewable energy capacity to renewable energy
providers. The accepted offer price for solar was 3.67 PHP per KWh and did not
include any inflator to the model. As the accepted offer price was
significantly lower than prices available in the market currently, NISPI did
not participate in the auction, and it is currently unlikely that NISPI will
participate in a green auction in the near term.
The construction of an additional subsea cable between Negros and Panay is
ongoing and is expected to be operational in the third quarter of 2022, which
is expected to alleviate grid congestion. This is part of a large project by
the Government to create an interconnection framework to accommodate
transmission of excess power from Negros and Panay to the rest of Visayas.
(1)Performance is based on 100% of NISPI.
Performance of committed assets(1)
At 30 June 2022, TLEI had a commitment to acquire a 43% economic interest in
SolarArise, its other seed asset at the IPO. That acquisition was completed on
19 August 2022, with the consideration of US$32.9 million. SolarArise is an
investment platform with six operating solar plants and one construction-ready
solar plant, situated in five states in India. All six operating plants have,
and the construction-ready plant will have, long-term, fixed-price PPAs in
place with government or quasi-government offtakers.
On 20 June 2022, TLEI committed to acquire the remaining 57% economic interest
in SolarArise for a cash consideration of US$38.5 million. That acquisition is
expected to complete in the fourth quarter of 2022.
The total capacity of the SolarArise portfolio is 434 MW, with 234 MW fully
operational at 30 June 2022 following the completion and grid connection of
the 75 MW plant at Uttar Pradesh in January 2021, and a further 200 MW
construction-ready.
Net renewable energy generation increased to 176,750 MWh in the six-month
period ended 30 June 2022 from 147,192 MWh in the prior year. In comparison to
budget, net renewable energy generation exceeded expectations by 3%.
In the six-month period ended 30 June 2022, revenue generated by the six
operational plants increased by 10%, or US$0.8 million, in comparison to the
six-month period ended 30 June 2021 to US$9.3 million due to Uttar Pradesh
operating throughout the 2022 period. This was 3% ahead of budget on a local
currency basis and 2% behind in US Dollar terms due to the strengthening of
the US Dollar in comparison to INR.
For the six-month period ended 30 June 2022, operating cash flows and the
cash conversion ratio were US$4.4 million and 56% respectively. At 30 June
2022, SolarArise had cash and short-term deposits, held in INR, of US$20.3
million, a decrease of US$3.3 million since 31 December 2021. A key reason
for the decrease in cash in the period was due to the depreciation of the INR
against the US Dollar, which resulted in a US$1.3 million reduction in the
value of the cash held at 31 December. No distributions have been made to
SolarArise shareholders since TLEI committed in November 2021 to acquire the
43% economic interest or will be made prior to the completion of the
acquisition of the 57% economic interest.
(1)Performance is based on 100% of SolarArise.
Valuation process
In accordance with the Company's valuation policy, the investment held at 30
June 2022 has been valued by the Investment Manager and reviewed by the
Company's independent valuation expert. The AIFM and the Directors have then
reviewed and approved the valuation used as at 30 June 2022.
The fair value for the Company's investment is derived using a discounted cash
flow methodology ("DCF"). In a DCF analysis, the fair value of the investment
is the present value of the expected future cash flows, based on a range of
operating assumptions for revenues, costs, leverage and any distributions,
before applying an appropriate discount rate.
A broad range of assumptions is used in the valuation models. Given the
long-term nature of sustainable energy infrastructure assets, valuations are
assessed using long-term historical data to reflect the asset life.
Investment Portfolio valuation at 30 June 2022
The Company's Investment Portfolio increased in value by 10% in the period
from acquisition to 30 June 2022 due to strengthening electricity prices in
the Philippines offset by changes to macroeconomic factors impacting the
discount rate and foreign exchange movements.
The Investment Portfolio, comprising a 40% interest in NISPI, which owns three
solar plants in the Philippines was valued at US$28.0 million at 30 June 2022.
The Investment Portfolio increased in value in the period to 30 June 2022 by
US$2.6 million, or 10%, in comparison to its acquisition price of US$25.4
million. The increase reflects the net impact of the strong wholesale
electricity market price realised over the last 12 months in the Philippines
offset by changes to macroeconomic factors that have adversely impacted the
discount rate and foreign exchange movements.
Investment Portfolio bridge 30 June 2022
US$'000s
Acquisition price of NISPI 25,382
Power prices 7,650
Renewable energy generation -
Discount rate (3,000)
Foreign exchange rates (2,316)
Other changes 284
Investment Portfolio valuation at 30 June 2022 28,000
Factors which are significantly impacted the valuation of the Investment
Portfolio are as follows:
- Power prices - NISPI currently generates revenue through the sale of power
to the grid at the wholesale electricity market price. In the absence of
available or published price forecasts for the Philippines, the valuation at
30 June 2022 reflects the Investment Manager's expected outlook for the future
operating years. The forecast assumes a base of the average price for the
preceding 12 months, with inflationary impacts applied. Utilising an average
market price of 6.36 PHP per KWh increased the valuation by US$7.6 million in
comparison to the acquisition model, which utilised a price of 5.0 PHP per
KWh. A flat 10% increase or decrease in market electricity prices from
forecasted levels over the remaining asset life of each plant has been used in
the sensitivity analysis. This sensitivity would increase or decrease the
Company's net assets by US$4.3 million and US$4.6 million respectively while
all other variables remain constant.
- Renewable energy generation - The valuation model assumes a 10% curtailment
on capacity to export due to the damaged subsea cable connecting Negros and
Cebu until the end of 2023, when the cable is expected to be returned to full
operations. There has been no material change to the renewable energy
generation outlook from that used in November 2021 acquisition model. A flat
10% increase or decrease in the renewable energy generation outlook over the
remaining asset life of each plant has been used in the sensitivity analysis.
This sensitivity would increase or decrease the Company's net assets by US$4.3
million or US$4.6 million respectively, while all other variables remain
constant.
- Discount rate - The discount rate used is the Investment Manager's,
Alternative Investment Fund Manager's and Directors' assessment of the rate of
return in the market for assets with similar characteristics and risk profile,
as reviewed quarterly by the Company's independent valuation expert. The
discount rate has been updated to reflect changes in the market at 30 June
2022. In the period since the IPO, the discount rate has increased from 8.00%
to a rate of 9.75% at 30 June 2022, due to macroeconomic inputs, principally
due to an increase in the 20-year government bond yield in the Philippines. A
flat decrease or increase of 0.5% in the discount rate over the remaining
asset life of each plant, while all other variables remain constant, would
increase or decrease the Company's net assets by US$0.8 million or US$1.1
million.
- Foreign exchange rate - Investments are expected to be held in the currency
of the territory in which the asset is located. Therefore, at 30 June 2022,
the Company was impacted by the US Dollar:Philippine Peso foreign exchange
rate as the US Dollar strengthened to US$1:PHP55.0207 from US$1:PHP50:6502 in
the acquisition model. A flat decrease or increase of 5% in the US Dollar:
Philippine Peso rate over the remaining asset life of each plant, while all
other variables remain constant, would increase or decrease the Company's net
assets by US$1.5 million and US$1.3 million respectively.
- Inflation - Most operating costs are contracted for a defined period of up
to five years and as such there is typically little variation in annual
operating costs. A flat increase or decrease in the inflation rate of 0.5% to
operating costs with an offsetting effect to accrete power prices, over the
remaining asset life of each plant, while all other variables remain constant,
would increase or decrease the Company's net assets by US$1.1 million or
US$1.4 million respectively.
Significant unobservable inputs Sensitivity Fair value Fair value (decrease) NAV NAV
increase per share per share
increase (decrease)
Power prices +/- 10% US$4.2 million US$(4.6) million 3.7 cents (4.0) cents
Renewable energy generation +/- 10% US$4.2 million US$(4.6) million 3.7 cents (4.0) cents
Discount rate -/+ 0.5% US$0.8 million US$(1.1) million 0.7 cents (0.9) cents
Foreign exchange rate -/+ 5% US$1.5 million US$(1.3) million 1.3 cents (1.2) cents
Inflation rate +/- 0.5% US$1.1 million US$(1.4) million 1.0 cents (1.2) cents
Pipeline opportunities
The Company's near-term target markets continue to be India, Philippines,
Vietnam, Bangladesh and Indonesia. The Company's pipeline is in excess of
US$750 million with more than 1,500 MW of electricity generating capacity, of
which more than US$380 million are under exclusive negotiations.
We have made significant progress on opportunities in Vietnam with an initial
aggregate investment value of up to US$30.0 million. In particular, we are in
final-stage exclusive negotiations for a controlling interest in a
locally-established investment platform, which will initially own a number of
operational and construction-ready solar investments. The platform is also
building a pipeline of additional opportunities.
The Investment Manager has in excess of US$350million of operational biomass
assets in the Philippines which are available to TLEI on an exclusive basis.
These assets deliver strong positive environmental and social impacts to the
country and local communities. Biomass technology is an important provider of
local energy resources as, different to solar technology, biomass plants
provide base load energy supply generated from local agricultural sources.
Biomass plants also directly support the local farming community, utilising
agricultural trash primarily from sugar cane farms left on the field after
harvesting, which is then mixed with other agricultural residues. These are
ground, shredded and mixed to prepare a biomass boiler fuel which is then fed
to high pressure boilers to convert water to steam to drive turbine generators
to produce new renewable energy. The organic ash which is a by-product is then
used to make an organic fertiliser for return to the fields. Additionally, the
biomass plants provide employment opportunities in the communities in which
they operate. Acquisitions of these assets would constitute related party
transactions under the Financial Conduct Authority's Listing Rules and would
require prior shareholder approval (ThomasLloyd and its related parties would
not be eligible to vote on the relevant resolutions). They would also be
subject to independent valuation reports.
As the aggregate value of the more immediate pipeline opportunities exceeds
the Company's uncommitted cash as well as TLEI's single asset and country
investment limits, such investments would require further equity issuances.
We also have more than US$350 million of near-term opportunities in India,
Philippines and Vietnam with more medium to longer term opportunities
identified in Bangladesh and Indonesia, which cover a range of technologies
such as solar, biomass and wind. Similar to the near-term pipeline these
opportunities include both operating assets as well as construction-ready
projects to create the right balance between furthering dividend cover and
driving double-digit total returns, whilst creating real positive impact.
Outlook
Electricity demand in the Philippines has continued to increase throughout
2022 across the residential, commercial, and utility sectors. We continue to
expect the renewable energy segment to witness significant growth during the
next five years as significant opportunities will be provided by the
Philippines' National Renewable Energy Program 2020-2040, which has set a
target to achieve a 35% share of renewable energy in the renewable energy
generation mix by 2030 and 50% by 2040. The Philippine renewable energy market
is expected to register a compound annual growth rate of more than 8.5% in the
next five years and we have existing deep existing relationships in the
Philippines which will allow us to continue our investment into the country.
Prior to the change in Government in the Philippines in June 2022, the first
green energy auction was held. Prices were capped at a rate significantly
below the wholesale electricity market price, which minimised industry
participation. Following the change of government, Raphael Lotilla, who had
previously served as Energy Secretary between 2012 to 2015, was appointed as
the new Department of Energy Secretary. Lotilla has been an active supporter
of renewable energy providers and has been vocal in his stance against
subsidies and price adjustments.
In addition to solar investment in the Philippines, and more specifically the
island of Negros, biomass technology is another important provider of local
energy resources and remains an important tool as it both contributes to the
fight for climate change and the establishment of energy security.
In India, the Government continues to target growth of the renewable energy
sector in order to meet their imminent targets of clean renewable generating
capability for 2030. The federal and state governments are committed to
increasing the ease of land acquisition and other legal permits and are
encouraging a significant amount of domestic and international investment
flowing into the industry. While TLEI's country investment restrictions will
halt near-term expansion of the Indian opportunities, India remains an
important growth area for us.
Vietnam is TLEI's immediate focus as it has one of the fastest growing
populations and GDP outlooks in Asia. There are a number of pipeline
opportunities of both operational as well as in-construction and
construction-ready assets, all of which would benefit from an offtake
agreement with the state-owned utility, Electricity of Vietnam. We remain
bullish about the outlook for the renewables sector, which is expected to grow
by 8% annually for the next five years. With no foreign ownership
restrictions, this is one of our most immediate and exciting target markets.
Bangladesh, Indonesia and Sri Lanka remain important focal points of our
investment strategy although there will be a longer lead time as they are
either less developed or there is political and economic uncertainty at this
point. We will continue to monitor and assess developments and opportunities
in these countries as they arise.
Tony Coveney
Head of Infrastructure Asset Management and member of the Investment
Committee, ThomasLloyd Group
7 September 2022
Impact Report
"Our research has demonstrated that recently launched impact-designated funds
and products globally have predominantly focused on investment in developed
markets, with South Asia only receiving 4% of available global renewable
energy investment. As Asia represents the fastest growing region with the
largest carbon emissions, we believe that investment is urgently needed now to
tackle the global climate crisis at source."
Nick Parsons, Chair of the ESG Stewardship Committee, ThomasLloyd Group
Highlights
The following performance measures for the period from 1 January 2022 to 30
June 2022, represent the impact created by:
· a 40% economic interest in NISPI, a Philippines platform with three
operating solar plants, which was acquired by TLEI in December 2021;
· a 43% economic interest in SolarArise, an Indian platform with six
operating and one construction-ready solar plants, which TLEI committed to
acquire at the IPO and which was completed on 19 August 2022; and
· a 57% economic interest in SolarArise from 20 June 2022, the date of
commitment to acquire.
Installed renewable capacity - MWp(1) Employment opportunities created - full-time jobs(1)
266
335
Renewable energy generated - MWh(1) Energy security - people supplied with electricity(1)
98,579 356,291
CO(2) emissions avoided - CO(2)e tonnes(1) ESG assessment criteria and factors assessed prior to commitment of
investment(1)
90,566
100%
(1)See 'Basis of Presentation and Alternative Performance Measures' section
for definitions, methodologies and reconciliations. There has been no change
in methodology in the current period from definitions applied or calculations
made in prior periods.
TLEI impact
As an impact investor, TLEI will invests in opportunities that deliver the
'Triple Return' of positive financial, environmental and social outcomes that
help facilitate the transformational changes required for a Net Zero,
inclusive, safe and prosperous society. By doing this, TLEI knows that it can
deliver positive change and accelerate global efforts to tackle society's
biggest challenges.
Both the Directors and the Investment Manager believe financial markets have a
critical role to play in driving global systemic change. That is why the
Investment Manager is focussed on creating genuine impact through innovative
direct investment in new projects, new companies and new markets. Right from
the start, the desire has been to deliver investment solutions where they are
most critically needed. That is why the Investment Manager's journey commenced
with a focus on sustainable energy infrastructure in Asia.
Carbon emissions in Asia are now greater than in Europe and North America
combined. Population growth, economic growth and urbanisation are collectively
causing a rapid increase in the demand for energy. Investing in
construction-ready and operational assets across renewable energy generation,
transmission infrastructure, energy storage and sustainable fuel production in
emerging Asia is therefore, vital on the journey towards a Net Zero emissions
world, whilst also making social progress, helping to build resilient and safe
communities and supporting job creation.
30 June 2022 impact review
The impact review of the six-month period ended 30 June 2022 covers the
Company's Investment Portfolio and the committed asset acquisitions (being
100% of SolarArise) at 30 June 2022. All numbers have been pro-rated based on
TLEI's economic share. Committed asset acquisitions have been included from
the date at which the commitment to invest was made by the Company, being 1
January 2022 for the 43% economic interest in SolarArise that completed on 19
August 2022, and 20 June 2022 for the remaining 57% economic interest. See
'Basis of Presentation and Alternative Performance Measures' section in the
Interim Report for definitions, methodologies and reconciliations.
Environmental
The Investment Portfolio, which consists of renewable energy generation
assets, is helping to provide clean energy to those who need it the most, in
areas which had previously been under-supplied or not supplied at all.
In addition to other ESG considerations, the Investment Manager has policies
to ensure responsible land acquisition and management, as do the Investment
Portfolio entities. The Investment Portfolio entities also carry out
biodiversity surveys prior to initiating a project where it is deemed
necessary.
Additionally, the Company will not print and distribute any paper copies of
the Interim Report in order to minimise its carbon footprint.
Six-month period to 30 June 2022 Installed renewable capacity - MWp Renewable energy generated - MWh CO(2) emissions avoided - CO(2)e tonnes
Investment Portfolio 32 16,424 11,697
Committed assets 234 82,155 78,869
Total 266 98,579 90,566
Social
By having a strategy geared towards investing in construction-ready projects,
a significant number of jobs are created and then sustained when the asset is
operational.
TLEI is committed to ensuring that the Investment Portfolio entities create
quality employment through promoting a commitment to high standards of health
and safety. The Investment Manager monitors that all investments have
appropriate health and safety policies and procedures in place. As an active
investor, the Investment Manager monitors their consistent application,
reports any lost time injuries on a timely basis and assesses whether remedial
action has been taken, as necessary.
Beyond this, the Investment Manager is also active in the communities in which
it operates and invests. Such activities include donations of a financial
nature, as well as the provision of supplies and time, to various programs and
initiatives.
Six-month period ended 30 June 2022 Employment opportunities created - full time jobs Energy security - people supplied with electricity
Investment Portfolio 44 73,242
Committed assets 291 283,049
Total 335 356,291
Case Study
As part of SolarArise's commitment to support local communities and society in
general, the SolarArise team regularly prepare and donate food kits to
villages near our solar plants.
Each food kit contains basic ingredients and supplies (including cereals,
pulses, spices, and oils) required to cook healthy and nutritious meals for a
family of four for 15 days, helping to protect families against malnutrition
and avoid hunger-related illnesses.
More recently, the SolarArise team at our plants in the state of Karnataka
prepared and delivered 1,000 food kits to Women's Self-Help Groups within a
number of villages, who in turn distributed those kits to women and families
that are most in need.
Governance
TLEI is committed to attaining the highest standards of corporate governance,
which provides a robust framework to ensure the long-term success of the
business and drive shareholder value.
TLEI always acts to ensure that trust and confidence in the Company's business
and business model is maintained. The Company is a member of the UK
Association of Investment Companies, and complies with the AIC's Code of
Corporate Governance to ensure best practice. Although the Company is not
required to report against the diversity targets under the Listing rules until
its Annual Report for the year ending 31 December 2023, the Board has resolved
to do so on a voluntary basis at 30 June 2022. In accordance with Listing Rule
9.8.6R (9), (10) and (11), the Board has provided the following information in
relation to its diversity.
Board gender at 30 June 2022(1) No. of Board members Percentage of the Board No. of senior positions on the Board
Men 2 50% 1
Women 2 50%(2) 1(3)
(1) The Company has opted not to disclose against the number of Directors in
executive management as this is not applicable for an investment trust.
(2) This meets the Listing Rules target of 40%.
(3) This meets the Listing Rules target of 1.
Board ethnic background at 30 June 2022(1) No. of Board members Percentage of the Board No. of senior positions on the Board
White British or other white (including minority-white groups) 3 75% 1
Asian/ Asian British 1(2) 25% 1
(1) The Company has opted not to disclose against the number of Directors in
executive management as this is not applicable for an investment trust.
(2) This meets the Listing Rules target of 1.
The information included in the tables above has been obtained following
confirmation from the individual Directors. As shown in the above tables, the
Company has already met the targets, which formally come into force for the
financial year ending 31 December 2023, in relation to the gender and the
ethnic background of the Board.
TLEI has zero tolerance towards corruption, fraud, bribery and unethical
behaviour, as does the Investment Manager. TLEI operates a whistleblowing
process which provides a route for reporting activity which is irregular or
contravenes the Company's Code of Conduct. In the period, there were no
whistleblowing events recorded.
As part of the investment decision-making process, ESG factors are assessed in
equal measure to any financial, legal and technical matters. In addition, ESG
factors are monitored on an ongoing basis, with at least quarterly
communication with the investment entities.
30 June 2022 TLEI governance target
ESG assessment criteria and factors assessed prior to commitment of investment 100% completion
Ongoing reporting and future developments
The Company's ESG Committee continues to monitor and assess the recent
significant developments in the EU's ongoing implementation of its framework
for sustainable energy investment, notably the publication of the delegated
acts under the EU's Taxonomy Regulation and the entry into force in the EU of
the Sustainable Finance Disclosure Regulation.
The Investment Manager is targeting the categorisation and monitoring of the
Investment Portfolio entities in line with the Taxonomy Regulation by 31
December 2022. Additionally, as part of its broader strategy for reporting on
climate-related and other impact and ESG matters, the Investment Manager
intends to further incorporate the TCFD disclosure requirements into the
Company's ongoing disclosures.
TLEI expects to qualify as an Article 9 fund under the EU's Sustainable
Finance Disclosure Regulation and is currently in the process of documenting
this aspiration.
Q&A with Anil Nayar, Executive Director and Founder, SolarArise
About SolarArise and Anil Nayar
SolarArise was founded in 2014 by Anil Nayar, James Abraham and Tanya Singhal.
The Company's aim, from inception, was to convert abandoned land into new
sources of affordable, clean solar power.
Anil is a Co-founder and Director, with key responsibilities including project
finance, finance and reporting and heads up a number of special projects.
Prior to co-founding SolarArise, Anil held the position of Senior
Vice-President and Head of Investor Relations, India at Genpact. Prior to
that, Anil was the Senior Partner of the Audit and Advisory Services business
of KPMG India. Anil has worked in a number of countries across a number
cultures and has more than 30 years of experience of advising companies across
the renewable sector.
Q: India has admirable and ambitious renewable energy targets, what impact has
this had on the construction and operation of solar plants?
While coal currently powers close to 70% of India's current electricity needs,
our Prime Minister, Narendra Modi, has recently pledged that, by 2030, India
will produce more energy through solar and other renewable energy sources than
the entire grid as it stands now. This is indeed ambitious but I believe that
it is also much needed if electricity supply is to keep up with the ever
growing demand for electricity from a growing urban population. The other
point is that our Government is also very focused on providing India with
security of its electricity supply.
Therefore, in order to meet these targets, there needs to be an acceleration
in the construction of more and larger solar plants - which is then coupled
with an increased need for solar panels, most of which are currently
manufactured in China. Governments globally, including ours, have identified
this as a risk to their energy transition targets as there have been delays in
supply, ESG governance challenges in global supply chains and pricing
challenges.
Consequently, as of last year, new regulations have been introduced in India
to support the growth and stability of the Indian solar sector. The Government
has introduced an import tariff of 40% on solar modules and 25% on solar
cells, which has resulted in locally manufactured components now being
competitively priced compared to imports. Further, the power ministry has also
introduced an approved list of module manufacturers, which requires that we
can only buy from solar panel manufacturers which have been formally approved
by the Indian authorities after due inspection of their manufacturing
facilities and processes. This therefore, limits the suppliers we can select
to those who manufacture and supply in India as approval processes for
overseas manufacturers have been limited due to COVID-19 lock-downs. The
Government has also provided for a Production Linked Incentive Scheme of
c.US$3 billion for achieving manufacturing capacity of GW scale in high
efficiency solar PV modules in India.
With all these initiatives, we are seeing increased production of solar module
manufacturing in India and more manufacturing facilities under
construction. This allows us greater oversight of production capabilities and
quality levels, as well as comfort over the supply of parts and work force
conditions.
Q: Have any of the recent developments in legislation or regulation had an
impact on progressing SolarArise's 200 MW construction-ready project?
SolarArise's 200 MW construction-ready project has the necessary permits and a
25-year power purchase agreement with a Government offtaker. The land
required for the project has already been secured and the project planning
team has developed relationships with local manufacturers, which in turn has
allowed us to get comfortable with their ability to deliver the capacity and
quality needed for the project. Currently all the commitments needed to meet
the current requirements of the project are in place, in addition to those
needed to satisfy SolarArise's future growth plans.
Although 200 MW is the largest plant SolarArise has constructed to date, it
has been under planning for the last 24 months. During this time, SolarArise,
through its management service provider, has grown its engineering,
procurement and construction capacity in anticipation. Therefore, we are
comfortable that the assembled teams are geared to develop and commission this
plant within the scheduled timelines.
Q: How do you manage construction so that you are providing a safe and
healthy working environment?
The safety of our employees is of paramount importance and we are very proud
that we have had no significant incidents during the construction of all six
of our now operating plants. The construction phase of a solar plant is very
labour-intensive with groundworks, foundations, perimeter securing and a
significant number of installation and pre-connection safety checks which must
be carried out. Installing solar panels and systems can be risky, unless
carried out in a controlled and observed manner.
At SolarArise, we have a detailed Environment, Safety and Health policy that
all employees are trained in. We provide personal protective equipment to all
personnel on site, including visitors. SolarArise's Environment, Safety and
Health policy is detailed in templates that are incorporated into the workflow
of construction, including with each of our sub-contractors. This ensures that
all processes adhere to our policy. This is further supplemented with
compulsory training and review at the site, with oversight provided on the
ground by internally trained staff.
Health and safety considerations are not only important during the
construction phase - these are daily considerations and ones that we take very
seriously.
Q: How do you attract new talent or how do you build a diverse and balanced
team? How do you develop and train your team?
The industry overall remains an attractive one for young professionals, so
there is little difficulty in attracting talent. We differentiate ourselves by
the work environment we foster. We believe our people are empowered to manage
their development and careers, giving them the freedom to grow and exercise
their creativity. Through this process, they gain a special ownership and
pride in the successes of the organisation.
To achieve the aim of building a diverse team, we ensure that diversity is
embedded into the culture of the Company and within our recruitment and
promotions processes. Although it may take longer, finding the right person
who will stand out, create value and promote the Company's vision is
worthwhile. Through our recruitment process, we have sought out people with
different backgrounds and experiences to allow us to bring in different
perspectives that ultimately help us to solve challenges!
Our development and training is focused on-the-job itself. Particularly during
the first year of employment, the focus is on learning the technical skills
and approaches that SolarArise uses. In subsequent years, staff select and
participate in specific technical trainings provided by industry partners.
They are also encouraged to attend industry fairs and meetings to develop
networks and learn from their peers.
We believe that we need to lead from the top and, as SolarArise is a
relatively young company, it has been an exciting journey so far - and one
which is still ongoing!
Financial Review
Portfolio valuation growth from the IPO 10.3%
Net assets US$115.2 million
NAV per share 99.9 cents
NAV total return per share 2.4%
Illustrative NAV per share - to show the impact of the acquisition of the 43% 102.4 cents
economic interest in SolarArise as if it had completed on 30 June 2022
Analysis of financial results
The Interim Financial Statements of the Company at 30 June 2022 and for the
period from 1 November 2021 to 30 June 2022 are set out in the Interim Report.
The Interim Financial Statements have been prepared in accordance with UK
adopted IFRS and UK adopted IAS 34 'Interim Financial Reporting'. The
comparative period is the period from incorporation, on 6 September 2021, to
31 October 2021, being the Company's first accounting date. On 16 November
2021, the Company extended its accounting period to 31 December 2022. The
Company did not commence its operating activities until the listing of its
ordinary shares on the London Stock Exchange on 14 December 2021 and,
therefore, there was no profit or loss up to this date.
Under the requirements of IAS 34, the Interim Financial Statements are
required to present a statement of comprehensive income for both the current
financial year to date and the current interim period, being the period since
the last interim results published. Accordingly, the Interim Financial
Statements are for the period from 1 November 2021 to 30 June 2022 and for the
three-month period from 1 April 2022 to 30 June 2022. The Interim Report has
not been reviewed or audited by the Company's Auditor.
Net assets analysis - IPO to 30 June 2022
Net assets at 30 June 2022 were US$115.2 million, increasing by US$2.1 million
from US$113.1 million at the IPO. NAV per share increased to 99.9 cents,
representing a 1.9% growth since the IPO. This growth was primarily driven by
an increase in the value of NISPI, as set out in the 'Portfolio valuation'
section of the Interim Report. An analysis of the Company's net assets is set
out in the table below.
IPO
Net assets analysis 30 June 2022
US$'000s except as noted
Fair value of investments 28,000 -
Cash 86,881 113,085
Other assets 1,149 -
Total assets 116,030 113,085
Other liabilities (795) -
Net assets 115,235 113,085
Number of shares 115,393,128 115,393,128
NAV per share (cents) 99.9 98.0
Increase in NAV per share since the IPO 1.8% n/a
The following table presents a reconciliation of the movement in the Company's
net assets from the IPO, when US$115.4 million of gross proceeds were received
by the Company, to 30 June 2022.
Net assets bridge
US$'000s IPO to 30 June 2021
IPO cash proceeds 115,393
IPO expenses (2,308)
Net assets at the IPO 113,085
Change in fair value of Investment Portfolio 2,618
Dividends paid to shareholders (508)
Management fees (778)
Other movements 757
Net assets at 30 June 2022 115,235
Investment Portfolio valuation
The Investment Portfolio had a fair value of US$28.0 million at 30 June 2022
and comprised the following assets:
· A 40% interest in NISPI, a Philippines solar platform with three
operating plants, that was acquired on 18 December 2021 for a cash
consideration of US$25.4 million and formed part of the seed assets at the
IPO.
· A wholly owned subsidiary, TLEI Holdings, that was incorporated in
May 2022 with 10 shares of a nominal value of US$0.01 per share.
It is intended that TLEI Holdings will be an intermediate holding company for
the Company's investments. It does not currently hold any investments, but the
Company's investments in NISPI and SolarArise are expected to be transferred
to TLEI Holdings in due course. No changes to the fair values of the
investments transferred or the Company's accounting methodology are expected
as a consequence of transfer
A reconciliation of the movement in the value of the Investment Portfolio in
the period to 30 June 2022 is shown in the table below:
Investment Portfolio valuation bridge IPO to 30 June 2021
US$'000s
Investment Portfolio valuation at beginning of period -
Acquisitions 25,382
Growth in portfolio valuation 2,618
Investment Portfolio valuation at end of period 28,000
Investment Portfolio valuation growth since acquisition 10.3%
The portfolio growth in the period is a result of an increase in the value of
NISPI, reflecting the strong electricity prices realised in 2022, offset by
unrealised foreign exchange losses due to the strengthening of the US Dollar
relative to the Philippine Peso.
A reconciliation of the factors contributing to the growth in the fair value
of the portfolio during the period is shown in the 'Financial Review' section
of the Interim Report.
Sensitivity analysis - impact on net assets at 30 June 2022
The Investment Portfolio is recognised at fair value through profit and loss.
The Company has elected to use an income valuation approach in assessing the
fair value of its investments, using discounted cash flow ("DCF") methodology
that is recognised as standard within the industry. This approach relies on a
number of inputs in valuing the individual assets within the Investment
Portfolio, with the key assumptions that the Directors have identified as
having a material impact upon the valuation being future power prices,
renewable energy generation, discount rate, cost inflation and foreign
exchange rates.
The following table shows the impact of changing these key input assumptions
on the net assets of the Company at 30 June 2022. The sensitivities are based
on the portfolio of assets held at 30 June 2022 and, as such, may not be
representative of the sensitivities once the Company is fully invested. For
each of the sensitivities shown, it is assumed that the potential change
occurs independently over the entire life of each of the Company's assets,
while all other assumptions remain constant.
Significant unobservable inputs Sensitivity Fair value Fair value (decrease) NAV NAV
increase per share per share
increase (decrease)
Power prices +/- 10% US$4.2 million US$(4.6) million 3.7 cents (4.0) cents
Renewable energy generation +/- 10% US$4.2 million US$(4.6) million 3.7 cents (4.0) cents
Discount rate -/+ 0.5% US$0.8 million US$(1.1) million 0.7 cents (0.9) cents
Foreign exchange rate -/+ 5% US$1.5 million US$(1.3) million 1.3 cents (1.2) cents
Inflation rate +/- 0.5% US$1.1 million US$(1.4) million 1.0 cents (1.2) cents
Profit for the period
US$'000s except as noted 30 June 2022
Net gain on investments at fair value 2,618
Operating income and gain on fair value of investments 2,618
Management fees (778)
Directors' fees (149)
Administration and professional fees (337)
Other operating gains - net 1,243
Total operating expenses - net (21)
Profit for the period 2,597
Earnings per share:
Profit per ordinary share - cents 2.76
The Company did not receive any distributions from its investments during the
period, although it is expected that dividend cover will be provided by cash
flows from investments in the near term.
Details on how the management fees are charged are set out in note 19d) to the
Interim Financial Statements.
Other operating gains - net for the period included realised foreign exchange
gains on the IPO proceeds not yet deployed of US$1.4 million, offset by
operating expenses, including Directors', administration and professional
fees.
Annualised ongoing charges
The annualised ongoing charges ratio is an indicator of the costs incurred in
the day-to-day management of the Company. It is calculated by dividing the
annualised ongoing charges of the Company by its average published net asset
value in the year to date. The calculation is based on the Association of
Investment Companies' recommended methodology. Based on that methodology,
ongoing charges exclude acquisition costs, share issuance costs and other
non-recurring items.
Based on the period from 1 November 2021 to 30 June 2022, the annualised
ongoing charges ratio was 2.2%, which is reflective of the current size and
stage of development of the Company.
The calculation of the ongoing charges ratio does not take into account the
acquisition of the 43% economic interest in SolarArise that completed on 19
August 2022. Had the acquisition completed on 30 June 2022, this would have
increased TLEI's net assets by USS$29.5 million, which would have reduced the
ongoing charges ratio to 1.8%. See 'Basis of Presentation and Alternative
Performance Measures' section of the Interim Report for definitions,
methodologies and reconciliations.
Cash flow
The Company had a total cash balance of US$86.9 million at 30 June 2022. The
breakdown of the movements in cash during the period is shown below.
Analysis of cash flows 30 June 2022
US$'000s
Net cash flow used in operating activities (1,745)
Proceeds from issuance of ordinary shares on the IPO 115,393
Share issue costs (2,247)
Acquisition of investments (25,382)
Dividends paid to shareholders (508)
Cash movement in period 85,511
Cash and cash equivalents at beginning of period -
Net foreign exchange gains on cash and cash equivalents 1,370
Cash and cash equivalents at end of period 86,881
Dividends
On 12 May 2022, the Board declared a first interim dividend of 0.44 cents per
share (or US$0.5 million) in respect of the period ended 31 March 2022. This
dividend was paid to shareholders on 24 June 2022 out of the special
distributable reserve.
The Board has declared a second interim dividend of 0.44 cents per share (or
US$0.6 million) in respect of the three-month period ended 30 June 2022. This
dividend will be paid on 30 September 2022 to shareholders on the register at
16 September 2022 out of the special distributable reserve.
Gearing
Gearing is not used at the Company level. Gearing may be used on a
non-recourse basis at the asset level, either by SPVs or intermediate holding
companies. At 30 June 2022, NISPI was ungeared. At 30 June 2022, SolarArise
had borrowings of US$114.0 million, excluding the convertible debt instruments
which will be wholly owned by TLEI on completion of the acquisition of the
remaining 57% economic interest. Had SolarArise been wholly owned by the
Company at that date, SolarArise's gearing would have represented 43.3% of the
Group's GAV (which includes the proportionate share of the borrowings at the
level of the Company's investments, including 100% of SolarArise).
Related party transactions
Details of transactions with related parties are set out in note 19 to the
Interim Financial Statements.
Events after the balance sheet date
The acquisition of the 43% economic interest in SolarArise, which was
committed at the IPO, completed on 19 August 2022. On completion, the Company
issued 26,014,349 ordinary shares at US$1.16035 per share, being the average
share price for the 10-days prior to allotment. This reflected the fair value
of the 43% economic interest at 30 June 2022, as valued by the Company's
independent valuation expert, of US$32.9 million, net of US$2.7 million of
withholding tax payable to the Indian tax authorities by the Company on behalf
of the sellers.
For illustrative purposes, if the ordinary shares issued in relation to the
acquisition had been in issue at 30 June 2022, the Company would have had net
assets of US$144.8 million, as reconciled below, with 141.4 million shares in
issue, resulting in a NAV per share of 102.4 cents.
Illustrative NAV had acquisition of 43% economic interest in SolarArise 30 June 2022
completed on 30 June 2022
US$'000s
Net assets 115,235
Fair value of 43% economic interest in SolarArise 32,854
Withholding tax of the sellers, payable by TLEI (2,668)
Share issue costs (604)
Illustrative NAV had acquisition of 43% economic interest in SolarArise 144,817
completed on 30 June 2022
Ordinary shares in issue 115,393,128
Ordinary shares issued as consideration for 43% economic interest in 26,014,349
SolarArise
Total ordinary shares 141,407,477
All other significant events occurring since 30 June 2022 are set out in note
22 to the Interim Financial Statements.
Principal risks and uncertainties
The principal and emerging risks and uncertainties that could have a material
impact on the Company's performance have not changed from those set out on
pages 31 to 32 of the Company's Interim Report March 2022.
Directors' Statement of Responsibility for the Interim Report
The Directors confirm that to the best of their knowledge:
· the condensed set of unaudited financial statements contained in the
Interim Report has been prepared in accordance with United Kingdom adopted
International Accounting Standard 34 'Interim Financial Reporting' as issued
by the International Accounting Standards Board and in accordance with the
accounting policies set out in the audited Annual Report for the period from
incorporation to 31 October 2021 or in the Interim Financial Statements at 30
June 2022 and for the period from 1 November 2021 to 30 June 2022 and for the
three-month period ended 30 June 2022; and
· the interim management report, comprising the Chair's Statement, the
Investment Manager's Report, the Financial Review and the Principal Risks and
Uncertainties, together with the Interim Financial Statements, includes a fair
review of the information required by DTR 4.2.7R and DTR 4.2.8R of the
Financial Conduct Authority's Disclosure Guidance and Transparency Rules,
namely:
- an indication of important events during the interim period and a
description of principal risks and uncertainties for the remaining period
of the financial year; and
- disclosure of material related party transactions (details of such
transactions are set out in note 19 to the Interim Financial Statements).
For and behalf of the Board of Directors
Sue Inglis
Chair
7 September 2022
Interim Financial Statements
Unaudited interim condensed statement of comprehensive income
for the period from 1 November 2021 to 30 June 2022
US$'000s Note Revenue Capital Total
(unaudited) (unaudited) (unaudited)
Operating income and gains on fair value of investments
Net gain on investments held at fair value through profit or loss 4 - 2,618 2,618
Operating income and gains on fair value of investments - 2,618 2,618
Operating expenses
Management fees 5 (389) (389) (778)
Directors' fees 6 (149) - (149)
Administration and professional fees 7 (337) - (337)
Other operating gains - net 8 1,243 - 1,243
Total operating gains/(expenses) - net 368 (389) (21)
Profit before taxation 368 2,229 2,597
Tax 10 - - -
Total comprehensive income attributable to shareholders 368 2,229 2,597
Earnings per ordinary share:
Profit per ordinary share (cents) - basic and diluted 11 2.8
The above statement of comprehensive income should be read in conjunction with
the accompanying notes.
The total column of the above statement of comprehensive income is the profit
or loss of the Company.
All revenue and capital items, including total results, are derived from
continuing operations.
No comparative information is presented as the Company was incorporated on 6
September 2021 and did not commence its operating activities until the listing
of its ordinary shares on the London Stock Exchange on 14 December 2021. As
there was no activity in the preceding period, no separate revenue or capital
profit or loss has been presented for this period.
There is no other comprehensive income in either the current period or the
preceding period, other than the profit for the period, and therefore no
separate statement of other comprehensive income has been presented.
Unaudited interim condensed statement of comprehensive income
for the three-month period ended 30 June 2022
US$'000s Note Revenue Capital Total
(unaudited) (unaudited) (unaudited)
Operating income and gains on fair value of investments
Net gain on investments held at fair value through profit or loss 4 - 862 862
Operating income and gains on fair value of investments - 862 862
Operating expenses
Management fees 5 (170) (170) (340)
Directors' fees 6 (68) - (68)
Administration and professional fees 7 (145) - (145)
Fair value gain on derivative financial liability 9 - 9,344 9,344
Other operating losses - net 8 (157) - (157)
Total operating (expenses)/gains - net (540) 9,174 8,634
(Loss)/profit before taxation (540) 10,036 9,496
Tax 10 - - -
Total comprehensive (loss)/income attributable to shareholders (540) 10,036 9,496
Earnings per ordinary share:
Profit per ordinary share (cents) - basic and diluted 11 8.2
The above statement of comprehensive income should be read in conjunction with
the accompanying notes.
The total column of the above statement of comprehensive income is the profit
or loss of the Company.
All revenue and capital items, including total results, are derived from
continuing operations.
No comparative information is presented as the Company was incorporated on 6
September 2021 and did not commence its operating activities until the listing
of its ordinary shares on the London Stock Exchange on 14 December 2021. As
there was no activity in the preceding period, no separate revenue or capital
profit or loss has been presented for this period.
There is no other comprehensive income in either the current period or the
preceding period, other than the profit for the period, and therefore no
separate statement of other comprehensive income has been presented.
Unaudited interim condensed statement of financial position
at 30 June 2022, with comparatives at 31 October 2021
US$'000s Notes 30 June 2022 31 October 2021
(unaudited) (audited)
Assets
Non-current assets
Investments at fair value through profit or loss 12a) 28,000 -
Total non-current assets 28,000 -
Current assets
Other receivables and prepayments 12b) 790 -
Sales tax receivable 359 -
Amounts receivable from related parties 14 - 66
Cash and cash equivalents 12c) 86,881 -
Total current assets 80,030 66
Total assets 116,030 66
Liabilities
Current liabilities
Trade and other payables 13a) (421) -
Amounts payable to related parties 13b) (374) -
Total liabilities (795) -
Net assets 115,235 66
Equity
Share capital 14 1,154 -
Preference shares 14 - 66
Special distributable reserve 15 111,484 -
Retained earnings 15 2,597 -
Equity attributable to owners of the Company 115,235 66
NAV per share (cents) 11 99.9 n/a
The above statement of financial position should be read in conjunction with
the accompanying notes.
These interim financial statements were approved by the Board of Directors and
authorised for issue on 7 September 2022. They were signed on its behalf by:
Sue Inglis Clifford Tompsett
Chair of the Board Director
Unaudited interim condensed statement of changes in equity
for the period from 1 November 2021 to 30 June 2022, with comparatives for the period from incorporation to 31 October 2021
US$'000s Share capital Preference shares Share premium Special distributable reserve Retained earnings Total
At incorporation (6 September 2021) - - - - - -
Issue of share capital - 66 - - - 66
At 31 October 2021 - 66 - - - 66
Issue of share capital 1,154 - 114,239 - - 115,393
Equity issue costs - - (2,247) (2,247)
Transfer to special distributable reserve - - (111,992) 111,992 - -
Cancellation of share capital - (66) - - - (66)
Dividends paid - - - (508) - (508)
Total comprehensive income for the period - - - - 2,597 2,597
At 30 June 2022 1,154 - - 111,484 2,597 115,235
The above statement of changes in equity should be read in conjunction with
the accompanying notes.
Unaudited interim condensed statement of cash flows
for the period from 1 November 2021 to 30 June 2022, with comparatives for the period from incorporation to 31 October 2021
US$'000s Notes 30 June 2022 31 October 2021
(unaudited) (audited)
Cash flows from operating activities
Profit for the period 2,597 -
Adjusted for:
Net gain on investments at fair value through profit or loss 4 (2,618) -
Foreign exchange gains on operating balances 8 (1,367)
Operating cash flows before movements in working capital (1,388) -
Movements in working capital:
Increase in trade and other receivables (1,145) -
Increase in trade and other payables 788 -
Net cash flows used in operating activities (1,745) -
Investing activities
Acquisition of investments 12a) (25,382) -
Net cash flows used in investing activities (25,382) -
Financing activities
Proceeds from issuance of ordinary share capital at a premium 14 115,393 -
Share issue costs 15 (2,247) -
Dividends paid to ordinary shareholders 16 (508) -
Net cash flows used in financing activities 112,638 -
Cash and cash equivalents at beginning of the period - -
Increase in cash and cash equivalents 85,511 -
Foreign exchange gains on cash and cash equivalents 1,370 -
Cash and cash equivalents at the end of the period 12c) 86,881 -
US$'000s Notes 30 June 2022 31 October 2021
Non-cash movements
Proceeds from issuance of preference shares 14 - 66
Cancellation of preference shares 14 (66) -
The above statement of cash flows should be read in conjunction with the
accompanying notes.
Notes to the unaudited interim condensed financial statements
for the period from 1 November 2021 to 30 June 2022
1. General information
a) Overview
ThomasLloyd Energy Impact Trust PLC ("TLEI" or the "Company") is a public
company limited by ordinary shares and incorporated in England and Wales on 6
September 2021 with registered number 13605841. The Company's principal
activity is to invest in a diversified Investment Portfolio of sustainable
energy infrastructure assets in fast-growing and emerging economies in Asia.
The Company's operating activities commenced when the Company's ordinary
shares were admitted to trading on the premium segment of the London Stock
Exchange on 14 December 2021 (the "IPO").
The Directors intend, at all times, to conduct the affairs of the Company to
enable it to qualify as an investment trust for the purposes of section 1158
of the Corporation Tax Act 2010. The registered office and principal place of
business of the Company is The Scalpel, 18(th) Floor, 52 Lime Street, London,
EC3M 7AF, United Kingdom.
The Company has a Triple Return investment objective which consists of: (i)
providing shareholders with attractive dividend growth and prospects for
long-term capital appreciation (the financial return); (ii) protecting natural
resources and the environment (the environmental return); and (iii) delivering
economic and social progress, helping build resilient communities and
supporting purposeful activity (the social return). The Company seeks to
achieve its investment objective by investing in a diversified Investment
Portfolio of sustainable energy infrastructure assets in fast-growing and
emerging economies in Asia.
The unaudited interim condensed financial statements of the Company (the
"Interim Financial Statements") are for the period from 1 November 2021 to 30
June 2022 and for the three-month period ended 30 June 2022. The comparative
period is the period from 6 September 2021 to 31 October 2021, being the
period from incorporation to the Company's first accounting date. On 16
November 2021, the Company extended its accounting period to 31 December 2022.
These Interim Financial Statements do not comprise statutory accounts within
the meaning of section 434 of the Companies Act 2006. Statutory accounts for
the period ended 31 October 2021 were approved by the Board of Directors of
the Company (the "Directors") on 8 November 2021 and delivered to the
Registrar of Companies. The report of the Company's auditor, Deloitte LLP (the
"Auditor"), on those accounts was unqualified and did not contain an emphasis
of matter paragraph and did not contain any statement under section 498 of the
Companies Act 2006.
The Interim Financial Statements have not been audited or reviewed by the
Company's Auditor. The last set of financial statements that were reviewed by
the Company's Auditor in accordance with International Standards of Review
Engagements (ISRE) 2410 were for the period from 1 November 2021 to 31 March
2022.
b) Authorisation of the Interim financial statements for issuance
These Interim Financial Statements were authorised for issue by the Board of
Directors on 7 September 2022.
c) Significant events in the financial period
During the period from 1 November 2021 to 30 June 2022 the following
significant events occurred, as disclosed in the relevant notes to these
Interim Financial Statements:
· IPO: The Company issued US$115.4 million of ordinary shares,
which were admitted to the Official List of the FCA and to trading on the
premium segment of the London Stock Exchange's main market for listed
securities on 14 December 2021.
· NISPI acquisition: On 18 December 2021, the Company completed its
acquisition of Negros Island Solar Power Inc. ("NISPI"), acquiring a 40%
economic interest through the acquisition of redeemable preference shares for
a cash consideration of US$25.4 million, funded by IPO proceeds. There is an
additional contingent cash consideration of up to US$22.0 million payable if
NISPI is awarded a Green Auction power purchase agreement prior to 1 June 2023
(see note 20c)).
· SolarArise acquisition (43% economic interest): On 19 November
2021, the Company entered into a binding agreement to acquire a 34% voting
interest and 43% economic interest in Solar Arise India Private Pte Ltd
("SolarArise"), a platform owning six operational solar plants and one solar
plant which is construction-ready. The sale and purchase agreement ("SPA") set
out that the purchase price of US$34.6 million would be settled through the
issuance of 34,606,872 ordinary shares. As the purchase price was to be
settled through the issuance of a fixed number of shares, at 31 March 2022 a
derivative financial liability of US$9.3 million existed in relation to the
acquisition, based on the closing share price at this date of US$1.27.
On 18 May 2022, the Company entered into an addendum to the agreement which
revised the consideration payable to reflect the issuance of a variable number
of ordinary shares, to be determined by reference to TLEI's share price,
utilising the average share price for the 10 business-days preceding the date
of issuance of the ordinary shares, and equating to the fair value of the 43%
economic interest in SolarArise on 31 March 2022 of US$34.1 million.
Consequently, the derivative financial liability of US$9.3 million was
extinguished at this date, as explained further in note 9.
Following the period end, a further addendum to the SPA was entered into on 15
August 2022 that updated the purchase price to be equal to the fair value at
30 June 2022, being US$32.9 million, and to provide for the number of ordinary
shares to be issued as consideration to be net of withholding tax of US$2.7
million, which was required to be withheld and remitted in cash to the tax
authorities by the Company on behalf of the sellers. The acquisition
subsequently completed on 19 August 2022 when 26.0 million ordinary shares
were issued by the Company in settlement of the US$32.9 million consideration
value (net of withholding tax). See note 19c) for further information.
SolarArise acquisition (57% economic interest): On 20 June 2022, the Company
entered into a binding agreement that committed it to acquire the remaining
57% economic interest in SolarArise for US$38.5 million, which will be funded
by IPO proceeds. The 100% fair value of SolarArise in Indian Rupees was
largely unchanged at 30 June 2022 in comparison to the value agreed for the
acquisition of the 43% economic interest. The consideration agreed for the 57%
economic interest excluded accrued interest on convertible debt instruments
which will be paid by SolarArise directly to the sellers prior to completion..
On completion of the transaction, the Company will hold 100% of the share
capital and voting rights in SolarArise. The acquisition is expected to close
in the fourth quarter of 2022, following receipt of regulatory approval and
other completion procedures.
· TLEI Holdings Limited ("TLEI Holdings"): On 5 May 2022, the
Company incorporated a wholly owned subsidiary, TLEI Holdings, a private
company limited by ordinary shares and incorporated in England and Wales with
registered number 13605841. TLEI Holdings' principal activity is to act as an
investment holding company for TLEI's diversified Investment Portfolio of
sustainable energy infrastructure assets and it is intended that, in due
course, it will hold the Company's investments.
2. Basis of preparation
The principal accounting policies applied in the preparation of these Interim
Financial Statements are set out below and in note 23 to these Interim
Financial Statements. These policies have been consistently applied to the
periods presented, unless otherwise stated.
a) Basis of preparation
The Interim Financial Statements have been prepared in accordance with UK
adopted International Accounting Standards ("IFRS"), UK adopted IAS 34
'Interim Financial Reporting' and, where relevant, in accordance with the
Statement of Recommended Practice: Financial Statements of Investment Trust
Companies and Venture Capital Trusts issued in April 2021 by the Association
of Investment Companies. The annual financial statements of the Company will
also be prepared in accordance with UK adopted International Accounting
Standards. The Interim Financial Statements have been prepared under the
historical cost convention, as modified by the revaluation of financial assets
and financial liabilities (including derivative instruments) at fair value
through profit or loss.
Under the requirements of IAS 34, interim financial statements are required to
present a statement of comprehensive income for both the current financial
year to date and the current interim period, being the period since the last
interim results were published. Accordingly, these Interim Financial
Statements are for the period from 1 November 2021 to 30 June 2022 and for the
three-month period from 1 April 2022 to 30 June 2022.
The preparation of the Interim Financial Statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also requires
the Directors to exercise their judgement in the process of applying the
Company's accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are
significant to the Interim Financial Statements, are disclosed in note 3 and
further detail is provided in the relevant notes to these financial
statements.
Additionally, expenses are accounted for on an accruals basis. Expenses are
charged to the revenue account except where they directly relate to the
acquisition or disposal of an investment, in which case they are charged to
the capital account. Expenses are charged to the capital account where a
connection with the maintenance or enhancement of the value of the investments
can be demonstrated. In this respect the management fee has been allocated 50%
to the capital account and 50% to the revenue account.
The Company is not significantly influenced by seasonality or cyclical
fluctuations throughout the year.
b) Change in functional and presentation currency
The Interim Financial Statements have applied consistently the accounting
policies as set out in the audited financial statements at 31 October 2021 and
for the period from incorporation to 31 October 2021 other than:
· On 14 December 2021, the date of the IPO, the Company changed its
functional and presentational currency to US Dollars ("US$") from Great
British Pound ("GBP"), with the change in functional currency being applied
prospectively. Further details are contained in note 2g).
c) New standards and amendments to existing standards effective from 1
November 2021 and 1 January 2022
There are no standards, amendments to standards or interpretations that are
effective for annual periods beginning on 1 November 2021 or 1 January 2022
that have a material effect on these Interim Financial Statements.
d) New standards, amendments and interpretations effective on or after 1
January 2023
Certain new standards, amendments to standards and interpretations have been
published that are effective for annual periods beginning on or after 1
January 2023 that have not been early adopted in preparing these Interim
Financial Statements. These standards are not expected to have a material
impact on the Company in the current or future reporting periods, or on
foreseeable future transactions.
e) Assessment of the Company as an investment entity
Entities that meet the definition of an investment entity within IFRS 10
'Consolidated Financial Statements' are required to measure their
subsidiaries, associates and joint ventures at fair value rather than
consolidate such entities, unless such entities provide investment related
services to the Company. To determine that the Company continues to meet the
definition of an investment entity, the Company is required to satisfy the
following three criteria:
1) the Company obtains funds from one or more investors for the purpose
of providing those investors with investment management services;
2) the Company commits to its investors that its business purpose is to
invest funds solely for returns from capital appreciation, investment income,
or both; and
3) the Company measures and evaluates the performance of substantially
all of its investments on a fair value basis.
Critical judgement: Assessment of the Company as an investment entity
The Directors believe the Company meets the criteria as set out in IFRS 10 as
follows:
· the Company provides investment management services and has
several investors who pool their funds through investing in the Company to
gain access to sustainable energy infrastructure assets in fast-growing and
emerging economies in Asia that they might not have had access to
individually;
· the stated strategy of the Company is to provide shareholders
with attractive dividend growth and prospects for long-term capital
appreciation; and
· the Company measures and evaluates the performance of all of its
investments on a fair value basis. The fair value method is used to represent
the Company's performance in its communication to the market, including
investor presentations. In addition, the Company reports fair value
information internally to the Directors, who use fair value as the primary
measure to evaluate investment performance.
The Directors are of the opinion that the Company has all the typical
characteristics of an investment entity and continues to meet the definition
in the standard. This conclusion will be reassessed on an annual basis.
In respect of the second criterion, the Company's purpose is to invest funds
for returns from capital appreciation and investment income. In respect of the
requirement that investments should not be held indefinitely but should have
an exit strategy for their realisation, the Company may hold these assets
until the end of their expected useful lives, unless there is an opportunity
in the market to dispose of the investments at a price that is considered
appropriate.
The Company accounts for its interest in its wholly owned subsidiary, TLEI
Holdings, and NISPI as investments at fair value through profit or loss.
In electing to account for TLEI Holdings at fair value through profit or loss
the Directors have satisfied themselves that TLEI Holdings also meets the
characteristic of an investment entity. TLEI Holdings has one investor, TLEI.
However, in substance, it is intended that TLEI Holdings will invest the funds
of the investors of TLEI on its behalf and will effectively be performing
investment management services on behalf of many unrelated beneficiary
investors. As TLEI Holdings is measured at fair value through profit or loss,
as opposed to being consolidated on a line-by-line basis, any cash and any
working capital balances it holds in the future will be included in the fair
value of investments rather than the Company's current assets.
f) Operating segment
The Chief Operating Decision Maker (the "CODM") comprises the Directors acting
collectively. The CODM is of the opinion that the Company is engaged in a
single segment of business, being investment in a diversified portfolio of
sustainable energy infrastructure assets in fast-growing and emerging
economies in Asia to generate investment returns with the aim of achieving its
'Triple Return' investment objective. The financial information used by the
CODM to allocate resources and manage the Company presents the business as a
single segment comprising a homogeneous investment portfolio.
g) Foreign currency
The currency of the primary economic environment in which the Company operates
(being the functional currency) is the US Dollar. The Directors consider the
US$ as the currency that most faithfully represents the economic effects of
the underlying transactions, events and conditions that impact upon the
Company. The Company's ordinary share capital is issued in US$ and its
performance is measured and reported to its investors in US$.
The US$ is also the presentation currency. The Interim Financial Statements
are presented in US$ rounded to the nearest thousand (US$'000), except where
otherwise indicated.
Critical judgements: Functional currency
The Directors consider that the US$ is the currency that most faithfully
represents the economic effect of the underlying transactions, events and
conditions.
The Company's ordinary share capital is issued in US Dollars. The primary
activity of the Company is to invest in unlisted equity securities issued by
companies involved in the construction or operation of sustainable renewable
energy infrastructure assets in fast-growing and emerging economies in Asia.
The US$ is the currency in which the Company measures its performance and
reports its results, as well as the currency in which it receives
subscriptions from its investors.
This determination also considers the cost structure of the Company and the
currencies in which it will pay dividends and receive dividend income. The
majority of operating expenses are denominated in US$ and the Company
announces dividend payments in US$ (although it may also settle in currencies
other than US$). It is expected that the Company will receive dividend
payments in currencies other than US$, although it will enter into a hedging
programme to mitigate against future volatility in those currencies in
comparison to the US$.
The functional currency assessment is reviewed periodically in light of
investments made and to be made.
It should be noted that prior to IPO the Company's functional and presentation
currency was GBP as the Company had issued share capital in GBP and had no
income or costs. At the date of IPO, 14 December 2021, this was changed to US$
for the above reasons.
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are retranslated into
the functional currency using the exchange rate prevailing at the statement of
financial position date. Foreign exchange gains and losses arising from
translation are included in the statement of comprehensive income.
Foreign exchange gains and losses relating to the financial assets carried at
fair value through profit or loss are presented in the statement of
comprehensive income. Further details on the accounting policies in relation
to financial assets at fair value through profit or loss are contained in note
12a).
At 30 June 2022 and 14 December 2021 (the date of the IPO), the key exchange
rates impacting the financial statements were:
30 June 2022 IPO
Closing Closing
US$:GBP 1:0.7621 1:0.7547
US$:PHP 1:55.0207 1:50.298
US$:EUR 1:0.9008 1:0.7639
h) Going concern
At 30 June 2022, the Company had net assets of US$115.2 million and cash
reserves of US$86.9 million. At this date, the Company also had the following
binding commitments:
· Contingent consideration in relation to NISPI's additional
purchase price of up to US$22.0 million, which has a fair value of US$ nil
(see note 20c)).
· The acquisition of a 43% economic interest in SolarArise for
US$32.9 million, the consideration for which will be settled through the issue
of new ordinary shares in the Company, net of US$2.7 million withholding tax
(see note 20a)). This transaction completed on 19 August 2022.
· The acquisition of an additional 57% economic interest in
SolarArise for US$38.5 million, the consideration for which will be settled
through the Company's existing cash resources. The transaction is expected to
complete in the fourth quarter of 2022 (see note 20b)).
The major cash outflows of the Company are the payment of operating expenses
(principally management fees) and costs relating to the acquisition of new
assets, which, to the extent not already committed to, are discretionary. The
Company continues to meet its day-to-day liquidity needs through its cash
reserves. At the date of these Interim Financial Statements, having reviewed
the Company's cash reserves, investment commitments and anticipated annualised
operating expenses, the Board is satisfied that the Company has substantial
operating expenses cover. On the basis of this review, the Directors have a
reasonable expectation that the Company has adequate resources to continue in
operational existence for at least 12 months from the date of approval of
these Interim Financial Statements. Accordingly, the Directors have adopted
the going concern basis in preparing the Interim Financial Statements.
3. Critical accounting estimates and judgements
The preparation of Interim Financial Statements in compliance with IFRS
requires the use of certain critical accounting estimates. It also requires
the Directors to exercise their judgement in the process of applying the
Company's accounting policies. The areas which involve a higher degree of
judgement or complexity and where assumptions and estimates are significant to
the Interim Financial Statements, are set out below, with further details
available in the relevant notes to these Interim Financial Statements.
Revisions to accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected. Estimates and
underlying assumptions are reviewed on an ongoing basis.
a) Critical accounting estimates and assumptions
The Directors and the Investment Manager make estimates and assumptions
concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that
have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities are as follows:
· Fair value of securities not quoted in an active market - see
note 12a).
b) Critical judgements
Judgements are made based on the Directors best knowledge of the facts and
circumstances at the date of the Interim Financial Statements, having regard
to prior experience. The judgements determined to be critical to these Interim
Financial Statements are as follows:
· Assessment of the Company as an investment entity - see note 2e).
· Functional currency - see note 2g).
· IPO costs recognised in equity as a cost associated with the
initial capital raise of the Company - see note 15.
· Contingent consideration in relation to NISPI - see note 20c).
4. Net gain on investments held at fair value through profit or loss
US$'000s For the period from For the three-month period ended
1 November 2021 30 June 2022
to 30 June 2022 (unaudited)
(unaudited)
Investments held at fair value through profit or loss
Unrealised gains from mark to market on financial assets held at fair value 4,934 2,292
through profit or loss
Unrealised foreign exchange losses on financial assets held at fair value (2,316) (1,430)
through profit or loss
Total net gain on investments held at fair value through profit or loss 2,618 862
At 30 June 2022, the Investment Portfolio comprised:
a) An investment in 33,691 class E redeemable preferred shares in NISPI,
a Philippines platform that owns three operational solar plants. The
investment was acquired on 18 December 2021 for an initial cash consideration
of US$25.4 million and an additional contingent cash consideration of up to
US$22.0 million. At 30 June 2022, the fair value of the investment was US$28.0
million (see note 12a)) and the fair value of the contingent consideration
liability was US$ nil (see note 20c)).
b) An investment in a wholly owned subsidiary, TLEI Holdings. The entity
was incorporated on 5 May 2022 with 10 shares with a nominal value of US$0.01
per share. The entity did not engage in any activity in the period from
incorporation to 30 June 2022.
Further details on the fair value calculation for the period, including the
key inputs and sensitivities, are disclosed in note 12a). Refer to note 18 for
the Company's valuation policy and methodology.
5. Management fees
Management fees are payable quarterly in arrears and are calculated based on
the published quarterly NAV. For the period from IPO to 30 June 2022, the
Investment Manager was entitled to a management fee of US$0.8 million. Of this
total fee, US$0.4 million had been paid by 30 June 2022, with the remaining
balance of US$0.4 million outstanding at the balance sheet date. See note 19d)
for details on how the management fees are calculated and charged.
Management fees have been allocated 50% to the capital account and 50% to the
revenue account, as detailed in note 2a).
6. Directors' fees
Total Directors' fees, including employer social security contributions, for
the period from IPO to 30 June 2022 were US$149,000, of which US$68,000
related to the three-month period ended 30 June 2022. In the period from
incorporation to 31 October 2021 and from 1 November 2021 until the date of
IPO, Directors' fees were US$ nil.
The Company had no employees during the period.
7. Administration and professional fees
US$'000s For the period from For the three-month period ended
1 November 2021 to 30 June 2022 30 June 2022
(unaudited) (unaudited)
Administration and company secretarial fees 72 57
AIFM fees 41 19
External Auditor fees 113 57
Other legal and professional fees 111 12
Total administration and professional fees 337 145
During the period, the Company's Auditor was paid £215,000 (US$282,000
equivalent) for their role as reporting accountant prior to the IPO. This fee
was recognised directly in equity as a cost associated with the initial
capital raising of the Company.
Other legal and professional fees include broker fees, valuation fees,
depositary fees and other ongoing operating expenses of advisors for the
period ended 30 June 2022.
8. Other operating gains or (losses) - net
US$'000s For the period from For the three-month period ended
1 November 2021 to 30 June 2022 30 June 2022
(unaudited) (unaudited)
Net foreign exchange gains/(losses) on operating balances (primarily cash) 1,367 (57)
Marketing expenses (91) (77)
Other expenses (33) (23)
Total other operating gains/(losses) - net 1,243 (157)
9. Extinguishment of the derivative liability held at 31 March 2022
Derivatives are initially recognised at fair value on the date that a
derivative contract is entered into and they are subsequently re-measured to
their fair value at the end of each reporting period. The accounting for
subsequent changes in fair value depends on whether the derivative is
designated as a hedging instrument.
Where derivatives do not meet the hedge accounting criteria, they are
classified as 'held for trading' for accounting purposes and are accounted for
at fair value through profit or loss, with any changes in fair value
recognised within the statement of comprehensive income. Derivatives are
presented as current assets or liabilities to the extent that they are
expected to be settled within 12 months from the balance sheet date.
At 31 March 2022, the Company held a derivative liability of US$9.3 million
relating to the acquisition of SolarArise. The liability arose due to the sale
and purchase agreement committing the Company to issue a fixed number of
ordinary shares, being 34,606,872 ordinary shares, that had been determined
based on a fair value of US$1.00 per share, in consideration for the
acquisition of a 43% economic interest in SolarArise. At 31 March 2022, the
market price of the Company's shares was US$1.27, and therefore a liability
existed in relation to the difference between the market price of the ordinary
shares being issued and the fair value of the investment to be acquired.
On 18 May 2022, the Company entered into an addendum to the agreement which
revised the consideration payable to reflect the issuance of a variable number
of ordinary shares, to be calculated utilising the average 10-day share price
for the period prior to issuance of the ordinary shares, and equating to the
fair value of SolarArise on 31 March 2022 of US$34.1 million. Therefore, the
derivative financial liability was extinguished on 18 May 2022. The gain on
extinguishment is reflected in the statement of comprehensive income for the
three-month period ended 30 June 2022. Refer to note 19c) for full details
regarding the SolarArise transaction.
10. Taxation
The Company is approved as an investment trust with effect at 9 November 2021
and is subject to tax at the UK corporation tax rate of 19%.
US$'000s For the period from For the three-month period ended
1 November 2021 to 30 June 2022 30 June 2022
(unaudited) (unaudited)
Tax charge in total comprehensive income
UK corporation tax at 19% - -
11. Earnings per share and net asset value per share
a) Earnings per share
Earnings per share is calculated by dividing the profit or loss for the period
attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares in issue during the period.
For the period from For the three-month period ended
1 November 2021 to 30 June 2022 30 June 2022
(unaudited) (unaudited)
Total comprehensive income attributable to shareholders (US$'000) 2,597 9,496
Weighted average number of shares in issue - basic and diluted 94,024,029 115,393,128
Earnings per share (cents) - basic and diluted 2.8 8.2
b) Net asset value per share
Net asset value ("NAV") per share is calculated by dividing the Company's net
assets as shown in the statement of financial position attributable to the
ordinary equity holders of the Company by the number of ordinary shares
outstanding at the end of the period.
30 June 2022
(unaudited)
Net assets (US$'000) 115,235
Number of shares in issue at 30 June 2022 - basic and diluted 115,393,128
Net asset value per share (cents) - basic and diluted 99.9
12. Financial assets
The financial assets held by the Company at 30 June 2022 are shown in the
table below. The Company classifies its financial assets into the following
measurement categories:
· those to be measured subsequently at fair value through profit or
loss; and
· those to be measured at amortised cost.
US$'000s 30 June 2022 31 October 2021
(unaudited) (unaudited)
Financial assets held at fair value through profit or loss
Investments held at fair value through profit or loss (note 12a)) 28,000 -
Financial assets at amortised cost
Other receivables and prepayments (note 12b)) 790 66
Cash and cash equivalents (note 12c)) 86,881 -
Total financial assets 115,671 66
The fair values of the financial assets held at 30 June 2022 equal their
carrying values.
a) Investments in financial assets held at fair value through profit or loss
Classification of investments in equities, preference shares and debt
securities
The Company classifies direct investments in equities, preference shares and
debt securities based on both the Company's business model for managing these
financial assets and their contractual cash flow characteristics. The
Investment Portfolio of financial assets is managed and its performance is
evaluated on a fair value basis. The Company is primarily focused on fair
value information and uses that information to assess the assets' performance
and to make decisions.
As the Company qualifies as an investment entity under the amendments to IFRS
10 'Consolidated Financial Statements', the Investment Manager, the AIFM and
the Directors manage the Investment Portfolio of financial assets and evaluate
their performance on a fair value basis, together with other related financial
information.
The Company has not taken the option to irrevocably designate any equity
securities at fair value through other comprehensive income.
Recognition, de-recognition and measurement
Purchases and sales of investments are recognised on the trade date - the date
on which the Company commits to purchase or sell the investment. This is
generally the settlement date. Financial assets at fair value through profit
or loss are initially recognised at fair value. Transaction costs are expensed
as incurred in the statement of comprehensive income, as applicable.
Subsequent to initial recognition, all financial assets held at fair value
through profit or loss are measured at fair value. Gains and losses arising
from changes in the fair value are presented in the statement of comprehensive
income in the period in which they arise.
Financial assets are derecognised when the rights to receive cash flows from
the investments have expired or the Company has transferred substantially all
risks and rewards of ownership.
Fair value estimation of investments
Fair value is the price that would be received to sell an asset in an orderly
transaction between market participants at the measurement date. The fair
value of financial assets related to unlisted debt or equity securities that
are not traded in an active market is determined by using valuation
techniques. The Company uses a variety of methods and makes assumptions that
are based on market conditions existing at each reporting date.
The fair value of securities not quoted in an active market may be valued by
the Company using its own models when no market data is available. Such models
are based on valuation methods and techniques generally recognised as standard
within the industry, specifically taking into account the International
Private Equity and Venture Capital Valuation guidelines, recommendations and
best practices.
The primary valuation technique used by the Company is discounted cash flow
models. However, in certain circumstances the use of comparable recent
ordinary transactions between market participants, reference to other
instruments that are substantially the same, option pricing models or other
valuation techniques commonly used by market participants making the maximum
use of market inputs may be acceptable. The models, including inputs, used to
determine fair values at the balance sheet date are reviewed and validated by
experienced personnel at an independent valuation expert.
The financial assets held at fair value through profit or loss by the Company
at 30 June 2022 are disclosed in the table below.
US$'000s 30 June 2022 31 October 2021
(unaudited) (unaudited)
Investments in financial assets held at fair value through profit or loss
Investment in NISPI 28,000 -
Investment in TLEI Holdings - -
Total financial assets held at fair value through profit or loss 28,000 -
The total fair value at 30 June 2022 includes the following movement for the
period:
Acquisition of NISPI (note 19b)) 25,382 -
Unrealised foreign exchange losses (note 4) (2,316) -
Unrealised gains from mark to market (note 4) 4,934 -
IFRS 13 requires the Company to disclose its investments under a fair value
hierarchy that reflects the significance of the inputs used in making the fair
value measurement. Both investments held at 30 June 2022 have been determined
to be Level 3 under the fair value hierarchy as the fair value of their
securities are not quoted in an active market and the valuation technique used
requires inputs that are not based on observable market data (see note 18).
Critical accounting estimates and assumptions: Fair value of securities not
quoted in an active market
The fair value of securities not quoted in an active market may be determined
by the Company using its own models, which are usually based on valuation
methods and techniques generally recognised as standard within the industry.
In assessing the valuation of the Company's investments, the following
valuation approaches were considered: income, market comparable, comparable
transaction and net asset value.
It was concluded that the income approach is the most relevant for valuing the
Company's investment in NISPI as its value is influenced by many factors,
including power prices and other contractual agreements, and the income
approach allows stress testing of the key value drivers. The Company's
investment in TLEI Holdings did not engage in any activity in the period from
its incorporation until 30 June 2022, therefore its fair value was determined
to be equal to that of its nominal share value at 30 June 2022 (see note 4).
The Company's valuation models use observable data, to the extent practicable.
However, areas such as credit risk (both own and counterparty), volatilities
and correlations require the Investment Manager, and ultimately the Directors,
to make estimates when assessing power prices, generation, inflation, foreign
exchange rates and the discount rates being applied to the financial models.
Changes in assumptions about these inputs or factors could affect the reported
fair value of financial instruments. The sensitivity to unobservable inputs is
based on the Investment Manager's expectation of reasonable possible shifts in
these inputs, taking into consideration historical volatility and estimations
of future market movements.
The Company uses discounted cash flow ("DCF") methodology for assessing the
fair value of its investments under the income valuation approach. At 30 June
2022, the Company's investment in NISPI was valued using this methodology. The
Company's investment in TLEI Holdings did not engage in any activity in the
period from its incorporation until 30 June 2022, therefore its fair value was
determined to be equal to that of its nominal share value at 30 June 2022 (see
note 4).
The key assumptions used in the DCF models that the Directors believe would
have a material impact upon the fair value of the investments should they
change are set out in the table below. The key unobservable inputs are future
power prices, power generation and discount rate. A sensitivity analysis has
also been presented. The sensitivities assume that the relevant input is
changed over the entire useful life of each of the underlying renewable energy
investments, while all other variables remain constant. All sensitivities have
been calculated independently of each other. Further details of the valuation
methodology are described in note 18.
Key assumptions used in the DCF models
Key assumption Description and sensitivity performed
Power prices For investments not under a PPA, e.g. NISPI, the Directors use long-term
electricity price forecasts in their determination of the fair value. These
forecasts are prepared by the Investment Manager in conjunction with the
investment entity's commercial operations department, and take account of
current market price, historic price trends and third-party price projections.
The sensitivities show the impact of an increase or decrease in power prices
for each year of the power price curve for each plant over the plant's
remaining economic life. A flat 10% increase or decrease in market electricity
prices from forecasted levels over the remaining asset life of all plants has
been used in the sensitivity analysis. It should be noted that a 10% increase
or decrease is not typical but this is an industry accepted sensitivity.
Renewable energy generation Each asset's valuation assumes a P90 level of electricity output over the life
of the asset, based on yield assessments prepared by technical advisors,
adjusted for any curtailment or operating provisions. The P90 output is the
estimated annual amount of electricity generation that has a 90% probability
of being exceeded - both in any single year and over the long term - and a 10%
probability of being underachieved.
A flat 10% increase or decrease in the generation profile across the life of
all assets has been used in the sensitivity analysis.
Discount rate The discount rate used in the DCF model reflects the current market assessment
of the time value of money and the risks specific to each investment. Key
inputs to the discount rates have been verified or provided by an independent
valuation expert.
The sensitivities demonstrate the impact of a change in the discount rate
applied to the pre-tax, equity cash flows from all of the Company's
investments. A flat 0.5% increase or decrease in the discount rate across the
life of all assets has been used in the sensitivity analysis.
Foreign exchange rate Daily foreign exchange rates used by the Company are taken from the Central
Bank of Europe. The DCF models are prepared in each investment's local
currency, with the fair value at the period end converted back to US$ at the
spot rate on the valuation date. Accordingly, the impact of foreign exchange
on the valuation is limited to movements in the spot exchange value between
valuation dates.
The sensitivities demonstrate the impact of a change in the value of the US
Dollar against the relevant local currency in which the investment is held. A
flat 5% increase or decrease in the foreign exchange rate across the life of
all assets has been used in the sensitivity analysis.
Inflation Historic inflation rates are published by the Government of each of the
countries in which the Company's investments are held. Forecast rates used in
the DCF models are based on a long-term average for each country.
A flat 0.5% increase or decrease in inflation relative to the base case for
each year of the asset life has been used in the sensitivity analysis.
Sensitivity analysis of the key inputs used in the DCF models
The following table presents the results of the sensitivity analysis completed
on the key inputs used in the DCF models. The impact of the sensitivity on the
fair value of the Investment Portfolio and on NAV per share of the Company has
been presented.
The sensitivities assume that the relevant input is changed over the entire
useful life of each of the underlying renewable energy investments, while all
other variables remain constant. All sensitivities have been calculated
independently of each other.
The Directors believe the changes in inputs calculated to be within a
reasonable expected range based on their understanding of market transactions.
However, this is not intended to imply the likelihood of change or that
possible changes in value would be restricted to the range considered.
Significant unobservable inputs Unobservable input and its relationship to fair value Fair value increase Fair value (decrease) NAV NAV
per share per share
increase (decrease)
Power prices The assumption used in the DCF model was 6.36 PHP per KWh, based on a 12-month US$4.2 US$(4.6) million 3.7 (4.0)
average wholesale electricity spot market price, plus future inflation.
million cents cents
An increase in the long-term power price used, in isolation, would result in
an increase in fair value.
The impact of a movement of +/- 10% in the market price of electricity across
the full life of each of the Company's assets is shown in the columns across.
Renewable energy generation The Company's assets are valued based on a forecast P90 solar energy US$4.2 million US$(4.6) million 3.7 (4.0)
generation profile (being a 90% probability that this generation estimate will
be met or exceeded). An increase in generation would result in an increase in cents cents
fair value.
Applying a +/- 10% movement to the generation profile across the full life of
each of the Company's assets is shown in the columns across.
Discount rate The discount rate used at 30 June 2022 was 9.75%. A decrease in the discount US$0.8 million US$(1.1) million 0.7 (0.9)
rate used would result in an increase to the fair value.
cents cents
The impact of changing the discount rate used by -/+ 0.5% across the full life
of each of the Company's assets is shown in the columns across.
Foreign exchange rate The exchange rate on 30 June 2022 was US$1:PHP55.0207. Deflation of the PHP US$1.5 million US$(1.3) million 1.3 (1.2)
against the US$ would result in an increase in fair value.
cents cents
The impact of a movement of -/+ 5% in the US$ to PHP rate across the full life
of each of the Company's assets is shown in the columns across.
Inflation rate Most operating expenses are contracted for a defined period of up to five US$1.1 million US$(1.4) million 1.0 (1.2)
years and as such there is typically little variation in annual operating
costs. Short-term inflation assumed in the model is 4.5%, with a longer-term cents cents
outlook forecast of 3.0%.
The impact of a movement of +/- 0.5% in the inflation rate across the full
life of each of the Company's assets is shown in the columns across.
b) Other receivables and prepayments
Other receivables generally arise from transactions outside the usual
operating activities of the Company.
Other receivables that have fixed or determinable payments that are not quoted
in an active market are classified as financial assets at amortised cost.
These assets are measured at amortised cost using the effective interest
method, less allowance for expected credit losses. Interest could be charged
at commercial rates where the terms of repayment exceed six months. Collateral
is not normally obtained.
2.
Prepayments arise from amounts paid in advance either as deposits or
securities.
30 June 2022 31 October 2021
US$'000s (unaudited) (unaudited)
Prepayments 789 -
Other receivables 1 -
Total other receivables and prepayments 790 -
C) Cash and cash equivalents
Cash and cash equivalents includes cash at bank, deposits with banks and other
short-term, highly liquid investments with original maturities of three months
or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
US$'000s 30 June 2022 31 October 2021
(unaudited) (unaudited)
Cash and cash equivalents 86,881 -
The above cash and cash equivalents were held in the following currencies:
US$'000s 30 June 2022 31 October 2021
(unaudited) (unaudited)
US$ 86,403 -
GBP 416 -
Euro 62 -
Total cash and cash equivalents 86,881 -
13. Financial liabilities
This note provides information about the Company's financial liabilities,
including:
· an overview of all financial liabilities held by the Company;
· specific information about each type of financial liability; and
· accounting policies.
The financial liabilities held by the Company at 30 June 2022 are shown in the
table below. All financial liabilities held at this date were measured at
amortised cost.
US$'000s 30 June 2022 31 October 2021
(unaudited) (unaudited)
Financial liabilities at amortised cost
Trade and other payables (note 13a)) 421 -
Amounts payable to related parties (note 13b)) 374 -
Total financial liabilities 795 -
The fair value of the financial liabilities held at 30 June 2022 equal their
carrying values.
a) Trade and other payables
Trade and other payables are recognised initially at fair value, net of
transaction costs, and subsequently stated at amortised cost using the
effective interest method. These liabilities have been designated as current,
being payable within 12 months.
US$'000s 30 June 2022 31 October 2021
(unaudited) (unaudited)
Trade and other payables
Accrued expenses 396 -
Other payables 25 -
Total trade and other payables 421 -
b) Amounts payable to related parties
Amounts payable to related parties are management fees accrued and payable to
the Investment Manager. See note 19d) for further information.
14. Equity
Equity instruments issued by the Company are recorded at the amount of the
proceeds received, net of directly attributable issue costs. Costs not
directly attributable to the issue are immediately expensed in the statement
of comprehensive income.
Share capital represents the nominal value of US$0.01 per ordinary share in
issue.
Number of ordinary shares Number of preference shares Preference shares
Ordinary shares US$'000s
US$'000s
Ordinary shares and preference shares
On incorporation (6 September 2021)(1) 1 - - -
Issue of share capital(2) 1 - 50,000 66
Cancellation of share capital(2) (1) - - -
At 31 October 2021 1 - 50,000 66
Issue of share capital(3) 115,393,127 1,154 - -
Cancellation of shares(4) - - (50,000) (66)
At 30 June 2022 115,393,128 1,154 - -
(
) (1)The Company was incorporated on 6 September 2021 with share capital of
£0.01, being one ordinary share of £0.01.
(2) On 18 October 2021, the Company issued US$0.01 of ordinary share capital,
being one ordinary share of US$0.01 and preference share capital of £50,000,
being 50,000 preference shares of £1.00. On this date the Company cancelled
the one ordinary share of £0.01.
(3) On 14 December 2021, the Board approved the placing and offer for
subscription of 115,393,127 ordinary shares of US$0.01 each in the capital of
the Company at a price of US$1.00 per ordinary share, raising gross proceeds
of US$115.4 million.
(4) On 22 March 2022, the Company effected a capital reduction process which
included the cancellation of the £50,000 preference shares and the related
reduction of an amount receivable from related parties of US$66,000 and the
reduction of the share premium reserve and related transfer to the special
distributable reserve of US$111,992,000 (see note 15). ( )
15. Reserves
The Company's capital is represented by the ordinary shares, share premium,
the special distributable reserve, retained earnings and other comprehensive
income.
Share premium account - Share premium includes the premium above nominal value
received by the Company on issuing shares, net of issue costs, to the extent
not subsequently cancelled and transferred to another reserve.
Special distributable reserve - The special distributable reserve arose
following court approval in March 2022 to transfer amounts from the share
premium account. This reserve is distributable and may be used, where the
Board considers it appropriate, by the Company for the purposes of paying
dividends to shareholders and, in particular, augmenting or smoothing payments
of dividends to shareholders. There is no guarantee that the Board will make
use of this reserve for the purpose of the payment of dividends to
shareholders. The special distributable reserve can also be used to fund the
cost of share buy-backs.
Retained earnings - Retained earnings are split between revenue and capital
reserves as follows:
· Revenue reserve - this reserve reflects all income and costs
which are recognised in the revenue column of the statement of comprehensive
income. This reserve is distributable by way of dividend.
· Capital reserve - this reserve includes gains and losses on
disposal of investments and changes in fair values of investments, foreign
exchange differences determined to be of a capital nature, and the capital
element of the management fee. Any associated tax relief is also credited to
this account
US$'000s Share premium Special distributable reserve Revenue reserve Capital reserve Total
At incorporation (6 September 2021) - - - - -
At 31 October 2021 - - - - -
Issue of share capital 114,239 - - - 114,239
Equity issue costs (2,247) - - - (2,247)
Transfer to special distributable reserve (111,992) 111,992 - - -
Dividends paid(1) (note 16) - (508) - - (508)
Total comprehensive income for the period - - 368 2,229 2,597
At 30 June 2022 - 111,484 368 2,229 114,081
(1 On 12 May 2022 the Company declared a dividend of 0.44 cents per share. The
dividend was paid in June 2022. See note 16 for details.)
Critical accounting judgement: IPO expenses recognised directly in equity as a
cost associated with the initial capital raising of the Company
IPO-related expenses were incurred by the Company in relation to the issuance
of shares, the listing of shares and the marketing of shares. Expenses
incurred which were directly attributable to the equity transaction and that
would have otherwise been avoided if the shares had not been issued include
broker fees and commissions, sponsor fees and amounts paid to lawyers,
accountants and other professional advisors in relation to IPO-related
diligence, including the diligence on the SolarArise assets that were to be
acquired through the issuance of ordinary shares. Such expenses have been
recognised directly in share premium. Other costs arising, such as marketing
expenses, have been expensed.
16. Dividends
Dividends declared and attributable to the shareholders are shown in the
statement of changes in equity. Dividends proposed are recognised when they
are appropriately authorised and no longer at the discretion of the Company.
At 30 June 2022 Cents per ordinary share Special distributable reserve
(US$'000)
Q1 2022 dividend - paid on 24 June 2022 0.44 508
Total 0.44 508
The Company paid its first interim dividend of 0.44 cents per share in respect
of the period from IPO until 31 March 2022, which totalled US$0.5 million, in
June 2022.
As disclosed in note 22, the Company declared a second interim dividend on 7
September 2022 of 0.44 cents per share in respect of the three-month period
from 1 April 2022 to 30 June 2022. The dividend totaling US$0.6 million is
expected to be paid on 30 September 2022.
17. Financial risk management
The Company is exposed to certain risks through the ordinary course of
business and the Company's financial risk management objective is to minimise
the effect of these risks on the Company's operations. The management of risks
is the responsibility of the Directors. Exposure to each financial risk
considered potentially material to the Company, how it arises and the policy
for managing it is summarised below:
a) Credit risk
The Company is exposed to third-party credit risk in several instances, and
the possibility that a counterparty with which the Company or its underlying
investments contract may fail to perform their obligations under a commitment
that it has entered into with the Company or its underlying investments, in
the manner anticipated by the Company.
Credit risk arises where capital commitments are being made and is managed by
diversifying exposures among a portfolio of counterparties and through
applying credit limits to those counterparties with a lower credit standing.
Counterparty credit risk exposure limits are determined based on the credit
rating of the counterparty. Counterparties are assessed and monitored on the
basis of their ratings from Standard & Poor's and/or Moody's. No financial
transactions are permitted with counterparties with a credit rating of less
than BBB- from Standard & Poor's or Baa3 from Moody's, unless specifically
approved by the Board.
Credit risk also arises from cash and other assets that are required to be
held in custody by banks and financial institutions. Cash and other assets may
not be treated as segregated assets and will therefore not be segregated from
the bank's own assets in the event of the insolvency of a custodian. Cash held
with the bank will not be treated as client money subject to the rules of the
FCA and may be used by the bank in the ordinary course of its own business.
The Company will therefore be subject to the creditworthiness of the bank. In
the event of the insolvency of the bank, the Company will rank as a general
creditor in relation thereto and may not be able to recover such cash in full,
or at all. In order to mitigate this risk, cash and bank deposits are only
held with major international financial institutions who each hold a Moody's
credit rating of A2 or higher.
The Company has assessed the expected credit loss model in IFRS 9 and does not
consider any material impact on these Interim Financial Statements. No
balances are past due or impaired.
b) Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its
financial obligations as they fall due. The objective of liquidity management
is, therefore, to ensure that all commitments which are required to be funded
can be met out of readily available and secure sources of funding.
At 30 June 2022, the Company's only financial liabilities were trade payables,
accrued expenses and other payables, including Directors' fees. The Company
also held a contingent liability in relation to contingent consideration
payable under the NISPI sale and purchase agreement. The fair value of this
liability was determined to be US$ nil at 30 June 2022 (see note 20c)) for
further information). The Company intends to hold sufficient cash to meet its
working capital needs over a horizon of at least the next six months. The
Company held cash and cash equivalents of US$86.9 million at 30 June 2022,
with total financial liabilities, including amounts payable to related
parties, of US$0.8 million.
Cash flow forecasts are prepared on a quarterly basis for a rolling six-month
period to assist in the ongoing analysis of short-term cash flow. The
Directors monitor forecast and actual cashflows from operating, financing and
investing activities to consider payment of dividends, payment of trade and
other payables or the funding of additional investing activities.
The Company also ensures that it maintains adequate reserves by monitoring the
forecast and actual cashflows. The following table shows the maturity analysis
of financial assets and liabilities held at 30 June 2022.
30 June 2022 Under 1 year 1-2 years 2-5 years Over 5 years Total
In US$'000s
Financial assets held at fair value through profit and loss - - - 28,000 28,000
Financial assets held at amortised cost 790 - - - 790
Cash and cash equivalents 86,881 - - - 86,881
Total financial assets 87,671 - - 28,000 115,671
Financial liabilities held at amortised cost (795) - - - (795)
Total net financial assets 86,876 - - 28,000 114,876
c) Market risk
i) Currency risk
The Company operates internationally and holds both monetary and non-monetary
assets denominated in currencies other than US$, the functional currency.
Foreign currency risk, as defined in IFRS 7, arises as the value of future
transactions and recognised monetary assets and monetary liabilities
denominated in other currencies fluctuate due to changes in foreign exchange
rates. IFRS 7 considers the foreign exchange exposure relating to non-monetary
assets and liabilities to be a component of market price risk and not foreign
currency risk. However, the Investment Manager monitors the exposure on all
foreign currency-denominated assets and liabilities.
Whilst the Company will not pursue long-term currency hedging, the Investment
Manager intends to substantially hedge future dividend payments to
shareholders where those payments are funded by non-US Dollar denominated
dividend income. This hedging programme is expected to cover a rolling
two-year period. At 30 June 2022, the Company had not entered into any foreign
exchange hedging transactions for the purpose of managing its exposure to
foreign exchange movements (both monetary and non-monetary).
In relation to local currency debt facilities held at the investment entity
level, these are and should be in the same currency as the offtake agreement,
which provides a natural offsetting hedge. The Investment Manager also
includes prevailing assumptions on annualised currency depreciation in its
financial projections, so that its financial models contain anticipated
changes in currency value.
When the Investment Manager formulates a view on the future direction of
foreign exchange rates and the potential impact on the Company, the Investment
Manager factors that into its investment portfolio allocation decisions. While
the Company has direct exposure to foreign exchange rate changes on the price
of non-US Dollar-denominated investments, it may also be indirectly affected
by the impact of foreign exchange rate changes on the earnings of certain
companies in which the Company invests and, therefore, the sensitivity
analysis below may not necessarily indicate the total effect on the Company's
net assets attributable to shareholders of future movements in foreign
exchange rates.
The tables below summarise the Company's assets and liabilities, both monetary
and non-monetary, denominated in the currencies the Company is exposed to:
30 June 2022 US$ GBP PHP Other Total
In US$'000s
Assets
Financial assets held at fair value through profit and loss - - 28,000 - 28,000
Financial assets held at amortised cost 97 693 - - 790
Cash and cash equivalents 86,403 416 - 62 86,881
Total financial assets 86,500 1,109 28,000 62 115,671
Sales tax receivable - 359 - - 359
Total assets 86,500 1,468 28,000 62 116,030
Liabilities
Financial liabilities held at amortised cost (374) (413) - (8) (795)
Net assets 86,126 1,055 28,000 54 115,235
% of NAV 74.74% 0.92% 24.30% 0.04% 100%
In accordance with the Company's policy, the Investment Manager monitors the
Company's monetary and non-monetary foreign exchange exposure on a daily
basis, and the Directors review it on a quarterly basis.
The sensitivity analysis of the Company's exposure to fluctuations in foreign
exchange rates is based on the assumption that the relevant foreign exchange
rate increased or decreased by a reasonable percentage, with all other
variables held constant. A 5% fluctuation represents the Investment Manager's
best estimate of a reasonable possible shift in the foreign exchange rates,
having regard to historical volatility of those rates.
The impact of a 5% increase or decrease in the spot foreign exchange rate on
the material foreign currency net assets held at 30 June 2022 is shown in the
table below:
5% appreciation of US$ against PHP 5% depreciation of US$ against PHP
30 June 2022 Net assets held in PHP Impact on net assets Impact on NAV per share Impact on net assets Impact on NAV per share
(US$'000) (US$'000) (cents) (US$'000) (cents)
Net assets held in PHP 28,000 (1,333) (1.2) 1,474 1.3
ii) Price risk
The Company is exposed to equity securities price risk and derivative price
risk. This arises from investments held by the Company for which prices in the
future are uncertain. Where non-monetary financial instruments - for example,
equity securities - are denominated in currencies other than the US Dollars,
the price initially expressed in foreign currency and then converted into US
Dollars will also fluctuate because of changes in foreign exchange rates.
The Company's investment policy is to manage price risk through
diversification and selection of securities and other financial instruments
within the specified limits set out in the Company's investment policy, or
otherwise set by the Board. Under the Company's investment policy, no more
than 50% of the Company's gross asset value ("GAV") (measured at the time of
investment) may be invested in any single country.
The Company's policy also limits individual investments to no more than 25% of
GAV, when the NAV is up to and including US$1 billion. This percentage reduces
once NAV exceeds US$1 billion.
The Company is also exposed to price risk on its investments, primarily being
future power prices. Wholesale electricity prices tend to be volatile and are
impacted by a variety of factors. This risk is further considered in note
12a).
iii) Interest rate risk
Interest rate risk arises from the effects of fluctuations in the prevailing
levels of market interest rates on the fair value of financial assets and
liabilities and on future cash flows. The Company had no borrowings at 30 June
2022, and all cash and cash equivalents were held at bank with a maturity of
less than one year. Therefore, the Company's exposure to interest rate risk is
limited.
Capital risk management
The capital structure of the Company at the period end consists of equity
attributable to equity holders of the Company, comprising issued capital,
reserves and accumulated earnings. 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.
18. Fair value estimation
IFRS 13 requires disclosure of fair value measurement under the following
hierarchy:
Level Fair value input description
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)
Level 3 Inputs for assets or liabilities that are not based on observable market data
(unobservable inputs)
The level of fair value hierarchy within which the financial asset or
financial liability is determined is on the basis of the lowest level input
that is significant to the overall fair value measurement. Financial assets
and financial liabilities are classified in their entirety into only one of
the three levels. No transfers between levels took place during the period.
The Company's wholly owned subsidiary, TLEI Holdings and its investment in
NISPI are recognised at fair value through profit or loss and are classified
as Level 3 in the fair value hierarchy.
In accordance with the guidelines of the Company's valuation policy,
experience personnel from independent valuation experts review and validate
the fair value models for each investment held at fair value at the balance
sheet date, including the inputs and assumptions used to determine the fair
values.
At 30 June 2022, TLEI Holdings holds no investments and therefore its fair
value was determined to be equal to that of the nominal value of its shares
(see note 4).
The Company uses discounted cash flow ("DCF") methodology for assessing the
fair value of its investments under the income valuation approach. At 30 June
2022, the Company's investment in NISPI was valued using this methodology. The
Company's investment in TLEI Holdings did not engage in any activity in the
period from its incorporation until 30 June 2022, therefore its fair value was
determined to be equal to that of its nominal share value at 30 June 2022 (see
note 4).
a) Valuation approach and methodology
Fair value for investments which are operational is derived using a discounted
cash flow methodology. For investments that are not yet operational or where
the completion of the acquisition by the Company has not occurred at the time
of valuation, the purchase price of the relevant investment, including, where
relevant, any subsequently incurred costs of construction, is normally used as
an appropriate estimate of fair value, provided no significant changes to key
underlying economic considerations (such as major construction impediments or
natural disasters) have arisen.
In a DCF analysis, the fair value of the investment is the present value of
the asset's expected future cash flows, based on a range of operating
assumptions for revenues and costs and an appropriate discount rate.
Given the long-term nature of the assets, valuations of operating assets are
assessed using historical data across the asset life. Where possible,
assumptions are based on observable market and technical data. The Investment
Manager may also engage technical experts, when possible, such as long-term
electricity price forecasters, to provide long-term data for use in its
valuations for the applicable market. The independent valuation expert
assesses these forecast prices for reasonableness against their own internal
forecasts and others in the marketplace.
The Investment Manager also reviews a range of sources in determining the
appropriate discount rate to use in the fair market valuation of the
investments, including but not limited to:
· discount rates publicly disclosed by the Company's global peers;
· discount rates applicable to comparable infrastructure asset
classes; and
· capital asset price model outputs and implied risk premium over
relevant risk-free rates.
b) Valuation process for the Investment Portfolio
The Investment Manager prepares a valuation model that calculates the fair
value of the Company's operating renewable energy assets, which is
subsequently reviewed by the Company's independent valuation expert. The
independent valuation expert then produces a range of fair values based on
their own financial model. The independent valuation expert has significant
experience in estimating the fair value of solar and other renewable energy
assets. In accordance with Company policy, the fair values of all operating
assets held at 30 June 2022 were reviewed by an independent valuation expert.
The resultant valuation has been calculated in accordance with IFRS and the
International Private Equity and Venture Capital Valuation guidelines.
The discount rates and other significant inputs used by the independent
valuation expert, along with a sensitivity analysis of these significant
inputs, are detailed in note 12a).
19. Related party transactions
The Company and the Directors are not aware of any person who, directly or
indirectly, jointly or severally, exercises or could exercise control over the
Company. The Company does not have an ultimate controlling party.
The related party transactions entered into by the Company in the period are
detailed below.
a) Non-executive Directors
Directors are each paid fees of £50,000 per annum. Total Directors' fees of
US$149,000, including relevant taxes, have been incurred in respect of the
period since IPO with US$23,000 outstanding and payable at 30 June 2022.
b) NISPI acquisition
On 19 November 2021, the Company entered into an agreement to purchase 33,691
class E redeemable preferred shares in NISPI from ThomasLloyd CTI Asia
Holdings Pte Ltd, a related party of the Investment Manager. The sale and
purchase agreement ("SPA") provided for an initial cash consideration of
US$25.4 million and an additional contingent cash consideration of up to
US$22.0 million. The initial consideration was supported by an independent
valuation opinion, which was included in the Company's prospectus dated 19
November 2021. On 18 December 2021, the Company completed the acquisition.
The contingent consideration is dependent on NISPI being awarded, before June
2023, a power purchase agreement pursuant to a Green Auction carried out by
the Department of Energy of the Philippines. Should this occur, an independent
valuation expert will be engaged to update the valuation opinion in the
Prospectus to reflect the terms of that power purchase agreement. If the
updated valuation is higher than the initial valuation, an amount equal to 85%
of the difference between to the initial valuation and updated valuation will
be paid in US$ as additional consideration, subject to a maximum cap of
US$22.0 million.
Under the SPA entered into on 19 November 2021, any contingent consideration
would have been payable 10 business days after the Green Auction purchase
price agreement having been awarded. On 10 June 2022, the parties to the SPA
agreed to extend the date for payment of any contingent consideration to the
earlier of (i) 31 December 2026 and (ii) 10 business days after a further
capital raise by the Company, the purpose of which includes funding payment of
contingent consideration (or, if the updated valuation has not been received
prior to such fund raise, 10 business days after the updated valuation has
been received).
c) SolarArise acquisition - 43% economic interest
On 19 November 2021, the Company entered into a sale and purchase agreement
("SPA") to acquire a 43% economic interest in SolarArise. The SPA provided for
the consideration of US$34.6 million to be settled by the issue of 34,606,872
ordinary shares in the Company (equivalent to an issue price of US$1.00 per
share). The initial consideration was supported by an independent valuation
opinion, which was included in the Company's prospectus dated 19 November
2021.
Under the sale and purchase agreement, completion of the acquisition was
subject to a longstop date of 19 May 2022. On 18 May 2022, the parties to the
SPA agreed to extend the longstop date to 19 August 2022, update the
consideration value to be equal to the value of the interest being acquired as
at 31 March 2022, as opined on by an independent valuation expert, and change
the number of ordinary shares to be issued as consideration from a fixed
number to a variable number.
As a result, under the revised SPA, the consideration value was changed to
US$34.1 million, which equaled the fair value of the interest being acquired
at 31 March 2022 using an exchange rate of USD1:INR 75.84, as opined on by the
independent valuation expert. The corresponding number of ordinary shares to
be issued under the SPA would be determined by the price at which they were
issued (the "issue price"), being the higher of (i) US$1.00 and (ii) the
average closing market price of the Company's ordinary shares on the 10
dealing days preceding the date of allotment of the shares (adjusted for any
dividends announced by the Company which had an ex-dividend date prior to
completion).
At 30 June 2022, the acquisition remained subject to final completion
procedures.
A further addendum to the SPA was entered into on 15 August 2022 that changed
the consideration value to be based on a fair value date of 30 June 2022. The
fair value of the 43% economic interest on this date, as opined by an
independent valuation expert, was US$32.9 million. The predominant reason for
the reduction in the fair value at 30 June 2022 was the strengthening of the
US$ against the INR, which increased from a rate of US$1.00:INR 75.8404 at 31
March 2022 to a rate of US$1.00:INR 79.0536 at 30 June 2022. Additionally, the
SPA was updated to provide for the number of ordinary shares to be issued as
consideration to be net of withholding tax of US$2.7 million, which was
required to be withheld and remitted by the Company to the tax authorities on
behalf of the sellers.
Subsequently, on 19 August 2022, the purchase of Solar Arise completed. At
this date, the issue price was determined at US$1.16035, which resulted in a
total number of 26,014,349 ordinary shares in the Company being issued, for a
value if US$30.2 million. This share issue, combined with the withholding tax
payment of US$2.7 million, represented the aggregate consideration value of
US$32.9 million.
d) Investment Manager
The Investment Manager's fee is disclosed in note 5. The fee is payable
quarterly in arrears, and is calculated at the following rates:
Fee based on net asset value
Up to US$700 million 1.3%
US$700 million to US$2.0 billion 1.1%
Over US$2.0 billion 1.0%
Amounts payable to the Investment Manager in respect of the Investment Manager
fee at 30 June 2022 were US$0.4 million.
During the period, the Investment Manager reimbursed the Company for IPO
expenses in excess of 2% of IPO proceeds. The amounts receivable had been
fully reimbursed by 31 March 2022.
20. Capital commitments and contingent assets and liabilities
a) SolarArise - acquisition of 43% seed asset
On 19 November 2021, the Company entered into an agreement to acquire a 43%
economic interest in SolarArise. Details of the acquisition, including the
consideration value and the number of ordinary shares to be issued by the
Company as consideration, are disclosed in note 19c). At 30 June 2022, the
acquisition remained subject to final completion procedures.
b) SolarArise - acquisition of an additional 57% economic stake
On 21 June 2022, the Company entered into an agreement which committed the
Company to acquire the remaining 57% economic interest in SolarArise for
US$38.5 million. The acquisition will be funded by the Company's existing cash
resources and is expected to close in the fourth quarter of 2022.
c) NISPI - contingent consideration
The Company has a contingent liability in respect of a contingent
consideration payable to the sellers of NISPI, as disclosed in note 19b). The
liability is capped at US$22.0 million and the fair value has been determined
to be US$ nil at 30 June 2022.
Critical judgement: Contingent consideration in relation to NISPI
A contingent liability has been recognised at US$ nil on the acquisition of
NISPI. As part of the sale and purchase agreement to acquire in NISPI, an
additional purchase price may be payable dependent on NISPI being awarded a
Green Auction power purchase agreement prior to 1 June 2023. The contingent
consideration is capped at US$22.0 million and the actual economic outflow is
dependent on a number of factors, including macro-economic, political and
operational. NISPI has not participated in a Green Auction during 2022 due to
the current elevated electricity prices and political uncertainty in the
Philippines. It is expected that these factors will prevail in the short-term
and, consequently, the likelihood that NISPI will participate in such an
auction prior to 1 June 2023 has been assessed as being low. As such, the
contingency is fair valued at US$ nil at 30 June 2022.
21. Investments
Details of the Company's underlying investments are listed below:
Name Category Place of business Voting ownership interest Economic ownership interest
TLEI Holdings Limited Investment holding company UK Direct - 100% 100%
("TLEI Holdings")
Negros Island Solar Power Inc. ("NISPI") Investment Philippines Direct - 34% 40%
22. Events after the balance sheet date
There have been no reportable events after the balance sheet date, other than
as described below:
· Dividend declared for 30 June 2022 - The Company declared, on 7
September 2022, a second interim dividend of 0.44 cents per ordinary share in
respect of the period from 1 April 2022 to 30 June 2022. The dividend is
expected to be paid on 30 September 2022.
· Acquisition of 43% economic interest in Solar Arise - The
acquisition of SolarArise completed on 19 August 2022. Full details of the
transaction can be found in note 19c).
23. Significant accounting policies
This note provides a list of the significant accounting policies adopted in
the preparation of these Interim Financial Statements. These policies have
been consistently applied to all the periods presented, unless otherwise
stated. The financial statements are for the Company only.
a) Basis of preparation
i) Compliance with IFRS
The Interim Financial Statements of the Company have been prepared in
accordance with UK adopted International Accounting Standards ("IFRS"), UK
adopted IAS 34 "Interim Financial Reporting" and where relevant, in accordance
with the Statement of Recommended Practice: Financial Statements of Investment
Trust Companies and Venture Capital Trusts issued in April 2021 by the
Association of Investment Companies. The annual financial statements of the
Company will also be prepared in accordance with UK adopted International
Accounting Standards.
ii) Historical cost convention
The Interim Financial Statements have been prepared under the historical cost
convention, as modified by the revaluation of financial assets and financial
liabilities (including derivative instruments) at fair value through profit or
loss.
iii) New and amended standards and interpretations effective from 1
November 2021 and 1 January 2022
There are no standards, amendments to standards or interpretations that are
effective for annual periods beginning on 1 November 2021 or 1 January 2022
that have a material effect on these Interim Financial Statements.
iv) New standards, amendments and interpretations effective on or after 1
January 2023
Certain new standards, amendments to standards and interpretations have been
published that are effective for annual periods beginning on or after 1
January 2023 that have not been early adopted in preparing these Interim
Financial Statements. These standards are not expected to have a material
impact on the Company in the current or future reporting periods, or on
foreseeable future transactions.
v) Going concern
The major cash outflows of the Company are the payment of operating expenses
(principally fees) and costs relating to the acquisition of new assets, which,
to the extent not already committed to, are discretionary. The Company
continues to meet its day-to-day liquidity needs through its cash reserves. At
the date of these Interim Financial Statements, having reviewed the Company's
cash reserves, investment commitments and anticipated annualised operating
expenses, the Board is satisfied that the Company has substantial operating
expenses cover. On the basis of this review, the Directors have a reasonable
expectation that the Company has adequate resources to continue in operational
existence for at least 12 months from the date of these Interim Financial
Statements. Accordingly, the Directors have adopted the going concern basis in
preparing the Interim Financial Statements.
vi) Assessment as an investment entity and subsidiaries
Subsidiaries and associates
Subsidiaries are entities (including structured entities) over which the
Company has control. The Company controls an entity where the Company is
exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its power to direct
the activities of the entity.
Associates are all entities over which the group has significant influence but
not control or joint control. This is generally the case where the group holds
between 20% and 50% of the voting rights.
Assessment as an investment entity
Entities that meet the definition of an investment entity within IFRS 10
'Consolidated Financial Statements' are required to measure their
subsidiaries, associates and joint ventures at fair value rather than
consolidate such entities, unless such entities provide investment related
services to the Company. To determine that the Company continues to meet the
definition of an investment entity, the Company is required to satisfy the
following three criteria:
· The Company obtains funds from one or more investors for the
purpose of providing those investors with investment management services;
· the Company commits to its investors that its business purpose is
to invest funds solely for returns from capital appreciation, investment
income, or both; and
· the Company measures and evaluates the performance of
substantially all of its investments on a fair value basis.
The Directors are of the opinion that the Company has all the typical
characteristics of an investment entity and continues to meet the definition
in IFRS 10. The Company therefore accounts for its interest in its wholly
owned direct subsidiary, TLEI Holdings, and its interest in NISPI as
investments at fair value through profit or loss.
In electing to account for TLEI Holdings at fair value through profit or loss
the Directors have satisfied themselves that TLEI Holdings also meets the
characteristic of an investment entity. TLEI Holdings has one investor, TLEI,
however, in substance TLEI Holdings is investing the funds of the investors of
TLEI on its behalf and is effectively performing investment management
services on behalf of many unrelated beneficiary investors. As TLEI Holdings
is measured at fair value through profit or loss, as opposed to being
consolidated on a line-by-line basis, its cash and any working capital
balances are included in the fair value of investments rather than the
Company's current assets.
vii) Segment reporting
The Chief Operating Decision Maker (the "CODM") comprises the Directors of the
Company acting collectively. The CODM is of the opinion that the Company is
engaged in a single segment of business, being investment in a diversified
portfolio of sustainable energy infrastructure assets in fast-growing and
emerging economies in Asia to generate investment returns with the aim of
achieving its 'Triple Return' investment objective. The financial information
used by the CODM to allocate resources and manage the Company presents the
business as a single segment comprising a homogeneous investment portfolio.
viii) Foreign currency translation
The currency of the primary economic environment in which the Company operates
(being the functional currency) is the US Dollar, which is also the
presentation currency. The Interim Financial Statements are presented in US
Dollars rounded to the nearest thousand (US$'000), except where otherwise
indicated.
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are retranslated into
the functional currency using the exchange rate prevailing at the statement of
financial position date. Foreign exchange gains and losses arising from
translation are included in the statement of comprehensive income. Foreign
exchange gains and losses relating to the financial assets carried at fair
value through profit or loss are presented in the statement of comprehensive
income.
b) Significant accounting policies
i) Investment income
Investment income comprises interest income and dividend income received from
the Company's subsidiaries and is recognised in the statement of comprehensive
income. Interest income is recognised using the effective interest rate
method. Dividend income is recognised when the Company's entitlement to
receive payment is established.
ii) Expenses
Expenses are accounted for on an accruals basis. Expenses are charged to the
revenue account except as follows:
Acquisition or disposal expenses - Where expenses directly relate to the
acquisition or disposal of an investment they will be charged to the capital
account.
Management fees - As per the Company's investment objective, it is expected
that capital returns will make up a portion of the Company's long-term
returns. Therefore, based on the estimated future returns, 50% of the
investment management fee is charged as a capital item within the statement of
comprehensive Income.
iii) Income tax
Investment trusts which have approval under section 1158 of the Corporation
Tax Act 2010 are not liable for taxation on capital gains. The Company has
successfully applied and has been granted approval as an investment trust by
HMRC.
The underlying intermediate holding companies and entities in which the
Company holds investments provide for and pay taxation at the appropriate
rates in the countries in which they operate. This is taken into account when
assessing the fair value of the subsidiaries and associates.
iv) Financial Assets
(1) Classification
The Company classifies its financial assets into the following measurement
categories:
· those to be measured subsequently at fair value (either through
profit or loss or through other comprehensive income); and
· those to be measured at amortised cost.
The classification depends on the Company's business model for managing the
financial assets and the contractual terms of the cash flows. For assets
measured at fair value, gains and losses are recorded either in profit or loss
or in other comprehensive income. For investments in equity instruments that
are not held for trading, this will depend on whether the Company has made an
irrevocable election at the time of initial recognition to account for the
equity investment at fair value through other comprehensive income. The
Company has not made such an election.
Classification of investments in equities, preference shares and debt
securities
The Company classifies direct investments in equities, preference shares and
debt securities based on both the Company's business model for managing these
financial assets and their contractual cash flow characteristics. The
Investment Portfolio of financial assets is managed and its performance is
evaluated on a fair value basis. The Company is primarily focused on fair
value information and uses that information to assess the assets' performance
and to make decisions.
As the Company qualifies as an investment entity under the amendments to IFRS
10 'Consolidated Financial Statements', the Investment Manager, the AIFM and
the Directors manage the Investment Portfolio of financial assets and evaluate
their performance on a fair value basis, together with other related financial
information.
The Company has not taken the option to irrevocably designate any equity
securities at fair value through other comprehensive income.
(2) Recognition, de-recognition and measurement
Purchases and sales of investments are recognised on the trade date - the date
on which the Company commits to purchase or sell the investment. This is
generally the settlement date. Financial assets at fair value through profit
or loss are initially recognised at fair value. Transaction costs are expensed
as incurred in the statement of comprehensive income, as applicable.
Subsequent to initial recognition, all financial assets held at fair value
through profit or loss are measured at fair value. Gains and losses arising
from changes in the fair value are presented in the statement of comprehensive
income in the period in which they arise.
Financial assets are derecognised when the rights to receive cash flows from
the investments have expired or the Company has transferred substantially all
risks and rewards of ownership.
(3) Fair value estimation of investments
Fair value is the price that would be received to sell an asset in an orderly
transaction between market participants at the measurement date. The fair
value of financial assets related to unlisted debt or equity securities that
are not traded in an active market is determined by using valuation
techniques. The Company uses a variety of methods and makes assumptions that
are based on market conditions existing at each reporting date.
The fair value of securities not quoted in an active market may be valued by
the Company using its own models when no market data is available. Such models
are based on valuation methods and techniques generally recognised as standard
within the industry, specifically taking into account the International
Private Equity and Venture Capital Valuation guidelines, recommendations and
best practices.
The primary valuation technique used by the Company is discounted cash flow
models. However, in certain circumstances, the use of comparable recent
ordinary transactions between market participants, reference to other
instruments that are substantially the same, option pricing models or other
valuation techniques commonly used by market participants making the maximum
use of market inputs, may be acceptable. The models used to determine fair
values are reviewed and validated by experienced personnel at an independent
valuation firm.
Refer to note 12a) for details of the Company's financial assets held at
amortised cost.
(4) Derivatives and hedging activities
Derivatives are initially recognised at fair value on the date that a
derivative contract is entered into and they are subsequently re-measured to
their fair value at the end of each reporting period. The accounting for
subsequent changes in fair value depends on whether the derivative is
designated as a hedging instrument.
Where derivatives do not meet the hedge accounting criteria, they are
classified as 'held for trading' for accounting purposes and are accounted for
at fair value through profit or loss, with any changes in fair value
recognised within the statement of comprehensive income. Derivatives are
presented as current assets or liabilities to the extent that they are
expected to be settled within 12 months from the balance sheet date.
The Company's derivative instruments are disclosed in note 9 of the Interim
Financial Statements.
(5) Cash and cash equivalents
Cash and cash equivalents includes cash at bank, deposits with banks and other
short-term, highly liquid investments with original maturities of three months
or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value. Cash and cash
equivalents are disclosed in note 12c) to the Interim Financial Statements.
(6) Other receivables
Other receivables generally arise from transactions outside the usual
operating activities of the Company.
Other receivables that have fixed or determinable payments that are not quoted
in an active market are classified as financial assets at amortised cost.
These assets are measured at amortised cost using the effective interest
method, less allowance for expected credit losses. Interest could be charged
at commercial rates where the terms of repayment exceed six months. Collateral
is not normally obtained. Due to the short-term nature of the current
receivables, their carrying amount is considered to be the same as their fair
value.
Other receivables are included in current assets, except where maturities are
greater than 12 months after the reporting date, in which case they are
classified as non-current assets. Other receivables are disclosed in note 12b)
to the Interim Financial Statements.
v) Prepayments
Prepayments arise from amounts paid in advance either as deposits or
securities. They are classified as current assets, except where maturities are
greater than 12 months after the reporting date, in which case they are
classified as non-current assets. Prepayments are disclosed in note 12b).
vi) Trade and other payables
Trade and other payables are recognised initially at fair value, net of
transaction costs, and subsequently stated at amortised cost using the
effective interest method. These liabilities have been designated as current,
being payable within 12 months.
Trade and other payables are disclosed in note 13a) to the Interim Financial
Statements.
vii) Equity
Equity instruments issued by the Company are recorded at the amount of the
proceeds received, net of directly attributable issue costs. Costs not
directly attributable to the issue are immediately expensed in the statement
of comprehensive income.
The Company's capital is represented by the ordinary shares, share premium,
the special distributable reserve, retained earnings and other comprehensive
income.
Share capital account - Share capital represents the nominal value of US$0.01
per ordinary share in issue.
Share premium account - Share premium includes the premium above nominal value
received by the Company on issuing shares, net of issue costs, to the extent
not subsequently cancelled and transferred to another reserve.
Special distributable reserve - The special distributable reserve arose
following court approval in March 2022 to transfer amounts from the share
premium account. This reserve is distributable and may be used, where the
Board considers it appropriate, by the Company for the purposes of paying
dividends to shareholders and, in particular, augmenting or smoothing payments
of dividends to shareholders. There is no guarantee that the Board will make
use of this reserve for the purpose of the payment of dividends to
shareholders. The special distributable reserve can also be used to fund the
cost of share buy-backs
Retained earnings - Retained earnings are split between the revenue and
capital reserves as follows:
· Revenue reserve - this reserve reflects all income and costs
which are recognised in the revenue column of the statement of comprehensive
income. This reserve is distributable by way of dividend.
· Capital reserve - this reserve includes gains and losses on
disposal of investments and changes in fair values of investments, foreign
exchange differences determined to be of a capital nature, and the capital
element of the management fee. Any associated tax relief is also credited to
this account
The Company's equity and ordinary share capital are disclosed in note 14 to
the Interim Financial Statements. Details of the Company's reserve accounts
are disclosed in note 15.
viii) Dividends
Dividends declared and attributable to the shareholders are shown in the
statement of changes in equity. Dividends proposed are recognised when they
are appropriately authorised and no longer at the discretion of the Company.
Dividends are disclosed in note 16 to the Interim Financial Statements.
ix) Earnings per share
Basic earnings per share is calculated by dividing:
· the profit or loss for the period attributable to ordinary equity
holders of the Company;
· by the weighted average number of ordinary shares in issue during
the period.
Diluted earnings per share adjusts the figures used in the determination of
basic earnings per share to take into account the weighted average number of
additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares. Earnings per share is
disclosed in note 11 to the Interim Financial Statements.
Additional Information
Investment Policy
The Company seeks to achieve its investment objective by investing directly,
predominantly via equity and equity-like instruments, in a diversified
portfolio of unlisted sustainable energy infrastructure assets in the areas of
renewable energy generation, transmission infrastructure, energy storage and
sustainable fuel production, with a geographic focus on the fast-growing and
emerging economies in Asia.
The Investment Manager aims to adopt an environmentally and socially
responsible investment approach that is geared towards sustainable business
values and reduces investment risk through diversification across countries,
sectors and technologies.
Investment restrictions
The Investment Manager will ensure that the Company's portfolio is
diversified, so as to ensure a sufficient diversification of investment risk,
while also taking into account impact-focused assessment criteria prior to
making the commitment to invest and the ongoing assessment to hold the
investment.
The following specific investment restrictions apply to the Company:
· the Company will only invest in sustainable energy infrastructure
assets in the areas of renewable energy generation, transmission
infrastructure, energy storage and sustainable fuel production situated in
fast-growing and emerging countries in Asia;
· investments in assets situated in any single country, any single
asset and in assets under contract with any single governmental or
quasi-governmental offtaker are subject to the following restrictions, which
are based on the Company's NAV:
% of GAV
NAV Single country Single asset Single offtaker
Up to and including US$1 billion 50% 25% 25%
Above US$1 billion and up to and including US$3 billion 40% 20% 20%
Above US$3 billion 30% 15% 15%
· investments in assets under contract with any single private
offtaker will not exceed 20% of GAV for investment grade offtakers and 10% of
GAV for non-investment grade offtakers;
· the Company will only invest in countries that the Investment
Manager considers as having a stable political system and a transparent and
enforceable legal system, and which recognise the rights of foreign investors;
· the Company will only invest in operational assets, or
in-construction phase assets where (i) an offtake agreement has been entered
into, (ii) the land on which the asset is situated is identified or
contractually-secured, where appropriate and (iii) all relevant permits have
been granted;
· the Company will only invest in technologies, such as solar
panels, wind turbines, boilers and steam turbine generators, the commercial
use of which has already been proven;
· the Company will only hold investments that are denominated in
currencies which are freely-transferable;
· the Company will not invest in other externally managed
investment companies or collective investment schemes; and
· the Company will not typically provide forward funding for
development projects and any such forward funding will not exceed 5% of GAV in
aggregate and 2.5% of GAV per development project and would only be undertaken
when supported by customary security.
The investment restrictions apply to the Group as a whole on a look-through
basis and, where relevant, are measured at the time a commitment to invest is
made.
The Company will not be required to dispose of any investment or to rebalance
the portfolio as a result of a change in the respective valuations of its
assets. However, in such circumstances, the Investment Manager will take such
steps as it considers appropriate to enable the Company to comply with its
investment restrictions, unless the Investment Manager reasonably believes
that doing so would be prejudicial to the interests of the Company and its
shareholders as a whole.
Borrowing and gearing
Gearing will not be employed at the Company level. Gearing may be employed at
the level of SPVs or intermediate holding companies and any such gearing will
be without recourse to the Company. The level of long-term gearing to be
employed in relation to any SPV or intermediate holding company will be
assessed so that it is commensurate with the terms of the offtake agreement
for the underlying investment entities. The aggregate borrowings across all
SPVs and intermediate holding companies will not exceed 65% of the Group's
GAV, with the Company targeting below 50% in the medium term, measured based
on the Group's GAV at the time any SPV or intermediate holding company enters
into the relevant facility.
The Company expects all borrowings to be denominated in the currency of the
relevant sustainable energy infrastructure asset or US Dollars to help offset
any foreign currency exposure. In addition, typically borrowings will be
amortising over the term of the associated offtake agreement.
Subject to the limits set out above, the Company will maintain gearing at a
level which the Directors and the Investment Manager consider to be
appropriate in order to enhance returns and to provide flexibility to make
investments and for cash management purposes.
For the avoidance of doubt, any investments by the Company in SPVs or
intermediate holding companies which are structured as debt will not be
considered gearing for these purposes and therefore, will not be subject to
the restrictions set out above.
Cash balances
Pending deployment or distribution, cash may be held on deposit or invested in
cash equivalents, which may include short-term investments in money market
funds and tradeable debt securities. The Company will deposit funds with
counterparties with a credit rating of BBB- from Standard & Poor's or Baa3
from Moody's or higher. 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 significant holdings of cash and cash
equivalents instead of being fully or near fully invested or contractually
committed. No financial transactions are permitted with counterparties with a
credit rating of less than BBB- from Standard & Poor's or Baa3 from
Moody's.
Amendments to and compliance with the investment policy
No material change will be made to the Company's investment policy without the
prior approval of shareholders by ordinary resolution and the Financial
Conduct Authority. Minor changes to the investment policy must be approved by
the Directors.
Basis of Presentation and Alternative Performance Measures
Impact definitions and methodologies
Installed renewable capacity - MWp
Represents the sum of each power plant's installed peak capacity at the end of
the reporting period, excluding any construction-ready or in-construction
projects. The aggregate capacity presented represents TLEI's proportion, based
on economic interest owned or committed to be owned in each investment at the
end of the reporting period. Therefore, at 30 June 2022 it includes 40% of the
installed capacity of NISPI's three solar plants and 100% of SolarArise's six
operating solar plants.
Renewable energy generated - MWh
Represents the sum of each power plant's renewable energy generation during
the reporting period, cumulatively or for the quarter. The aggregate renewable
energy generation presented represents TLEI's proportion, based on economic
interest owned or committed to be owned from the date of commitment, in each
investment for the year-to-date period. Therefore, it includes 40% of the
electricity generated by NISPI's three solar plants and 43% of SolarArise's
six operating solar plants for the six-month period ended 30 June 2022 and 57%
of SolarArise's renewable energy generation for the period from commitment on
20 June 2022 to 30 June 2022.
Emissions avoided - CO(2)e tonnes
Represents the sum of emissions avoided by each power plant during the
reporting period, cumulatively or for the quarter. Emissions avoided is
calculated by applying a relevant local or national grid operating margin grid
emission factor to the renewable energy generated by each power plant as
defined above. The relevant factor in the Philippines is 0.7122 extracted from
the Luzon-Visayas Grid 2015-2017 as published by the Department of Energy in
the Philippines. The relevant factor in India is 0.96 extracted from India
Grid FY2019-20 as published by the Central Electricity Authority of India.
Energy security - people provided with electricity
Represents the sum of people provided with renewable energy by each power
plant during the reporting period, cumulatively or for the quarter. People
provided with electricity is calculated by applying the average per capita
electricity consumption in the applicable country, apportioned for the period
presented, to the renewable energy generated. The relevant per capita
consumption rate in the Philippines is 897 KWh per annum as derived from the
2020 consumption rate as published by Statista on 1 June 2021. The relevant
factor in India is 1,161 KWh per annum derived from the relevant quarterly
consumption rate as published by the Central Electricity Authority of India.
Employment opportunities created - full time jobs
Represents full time equivalent employees at the end of the reporting period
based on hours worked of both direct employees and dedicated contractors. The
full time jobs presented represents TLEI's proportion, based on economic
interest owned or committed to be owned in each investment at the end of the
reporting period. Therefore, at 30 June 2022 it includes 40% of the installed
capacity of NISPI's three solar plants and 100% of SolarArise's six operating
solar plants.
Board diversity - gender and ethnicity
Represents the ratio of Directors on the relevant board who identify as the
relevant category of the numerical reporting tables as set out in the
Financial Conduct Authority's Policy Statement 22/3.
ESG assessment criteria and factors assessed prior to commitment of investment
Represents the percentage of total investment opportunities where the
Investment Manager has completed, amongst other things, a top-down analysis of
country risks and opportunities, including impact and ESG considerations,
screening against exclusion criteria and positive criteria, an assessment of
impact and ESG factors through investee company questionnaires and analysis
and a materiality assessment of impact and ESG matters prior to Investment
Committee consideration and commitment approval.
Alternative performance measures ("APMs")
We assess our performance using a variety of measures that are not specified
or specifically defined under IFRS. Such measures are termed as APMs. We
believe that our 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. It should be noted that our
APMs may not be comparable to other similarly titled measures of other
companies.
Net IPO proceeds committed
Calculated as the funds invested, or contractually committed to be invested,
at the period end as a percentage of the aggregate net IPO funds including the
consideration for the US$32.9 million acquisition of the 43% economic interest
in SolarArise which completed on 19 August 2022.
NAV per share
Actual and illustrative NAV per share to show the impact of the acquisition of
a 43% economic interest in SolarArise as if it had completed on 30 June 2022
30 June 2022
NAV per share Actual Illustrative
(US$'000s except as noted)
Net assets A 115,235 115,235
Fair value of 43% economic interest in SolarArise B - 32,854
Withholding tax of the sellers, payable by TLEI C - (2,668)
Share issue costs D - (604)
NAV E=A+B+C+D 115,235 144,817
Ordinary shares in issue F 115,393,128 115,393,128
Ordinary shares issued as consideration for 43% economic interest in G - 26,014,349
SolarArise
Ordinary shares after acquisition of 43% economic interest in SolarArise H=F+G 115,393,128 141,407,477
NAV per share (cents) I=E/H* 99.9 102.4
1,000
NAV total return per share
NAV total return per share represents the total return to shareholders, being
the combined effect of the rise or fall in the NAV per share over the relevant
period and any dividends paid in the relevant period, assuming they are
reinvested immediately in the Company at the prevailing NAV per share in
comparison to the NAV per share at the IPO.
Market capitalisation
Market capitalisation is calculated as the share price as at the reporting
date closing rate, being US$1.13 per share, multiplied by the number of
ordinary shares in issue, being 115,393,128.
Annualised ongoing charges
The ongoing charges ratio measures the Company's annualised day-to-day
operating costs (excluding the costs of buying and selling investments, any
non-recurring costs and the costs of issuing shares) as a percentage of the
average published net assets in the last 12 months. Ongoing charges are
calculated in accordance with the Association of Investment Companies
recommendations and guidance relating to calculation methodology.
The Company has published net assets at 31 March 2022, 31 May 2022 and 30 June
2022 and, therefore, an average of those values has been taken. The Company
had operating expenses from IPO and, therefore, total recurring operating
expenses reflect 6.5 months of operating expenses which have been annualised
below.
30 June 2022
Annualised ongoing charges Actual Illustrative
(US$'000s except as noted)
Operating expenses A 21 21
Realised foreign exchange gains B 1,370 1,370
Ongoing expenses to 30 June 2022 C=A-B 1,391 1,391
Annualised ongoing charges D=C/6.5*12 2,568 2,568
Average net assets E 112,730 112,730
Fair value of 43% economic interest in SolarArise F - 32,854
Withholding tax of the sellers, payable by TLEI G - (2,668)
Share issue costs H - (604)
NAV I=E+F+G+H 112,358 142,312
Ongoing charges ratio J=D/I, expressed as a % 2.3% 1.8%
Glossary and Definitions
AIC The Association of Investment Companies
AIFM Alternative Investment Fund Manager
APMs Alternative performance measures
CO(2) Carbon dioxide
CO(2)e The number of metric tonnes of CO(2) emissions with the same global warming
potential as one metric tonne of another greenhouse gas
DCF Discounted cash flow
Directors The Directors of the Company
ESG Environmental, social and governance
EU European Union
Fair value The price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date
GAV Gross asset value, being the sum of all investments held directly or
indirectly by the Company, together with any cash and cash equivalents,
determined in accordance with the Company's accounting policies
GBP Great British Pound
GDP Gross domestic product
Greenhouse gases Gases in Earth's atmosphere that trap heat (they let sunlight pass through the
atmosphere, but they prevent the heat that the sunlight brings from leaving
the atmosphere), including carbon dioxide
Group's GAV The sum of: (i) GAV; (ii) the aggregate borrowings of the Company's
intermediate holding companies; and (iii) the Company's proportionate share
of borrowings at the level of its sustainable energy infrastructure assets
GW Gigawatts
Group The Company, its intermediate holding companies (if any) and its proportionate
share of any SPVs through which it owns renewable energy infrastructure assets
IAS International Accounting Standard
IFRS UK-adopted International Accounting Standards
INR Indian Rupee
Investment Portfolio Investments held in sustainable energy infrastructure assets in fast-growing
and emerging countries in Asia in the period and at the period end
IPEV International Private Equity and Venture Capital
IPO Initial public offering, being 14 December 2021, the date on which the
Company's shares were admitted to trading on the London Stock Exchange
KPI Key performance indicator
KWh Kilowatt hour
Main Market London Stock Exchange's main market for listed securities
MW Megawatts
MWp Megawatts of electricity generated in the form of direct current
MWh Megawatt hour
NAV per share the net assets of the Company divided by the number of ordinary shares in
issue
Net Zero Cutting greenhouse gas emissions to as close to zero as possible, with any
remaining emissions re-absorbed from the atmosphere, for instance by oceans
and forests
NISPI Negros Island Solar Power Inc
Offtake agreement An agreement between the project company and the party buying the energy or
related products that the project will produce and deliver over time
PHP Philippine Peso
PPA Power purchase agreement
PV Photovoltaic
SDGs United Nations Sustainable Development Goals
SFDR Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27
November 2019 on sustainability-related disclosures in the financial services
sector
SolarArise SolarArise India Projects Private Limited
SPV Special purpose vehicle, owned in whole or in part by the Company or one of
its intermediate holding companies which is used as the project company for
the acquisition and holding of a sustainable energy infrastructure asset
ThomasLloyd Group ThomasLloyd Group Limited and its subsidiaries, including the Investment
Manager but not including TLEI
ThomasLloyd/Investment Manager ThomasLloyd Global Asset Management (Americas) LLC, including, where
appropriate, its associates in the ThomasLloyd group of companies (which does
not include TLEI)
TLEI/Company ThomasLloyd Energy Impact Trust PLC
TLEI Holdings TLEI Holdings Limited
Total return The total return to shareholders, being the combined effect of (i) the rise or
fall in the NAV per share or share price over the relevant period and (ii) any
dividends paid in the relevant period and assuming they are reinvested
immediately in the Company at the prevailing NAV per share or share price
US$ US Dollar
Shareholder Information
Share prices and NAV information
The Company's ordinary shares are traded in both US Dollars and Great British
Pounds on the London Stock Exchange's main market and its share price share
price is quoted in US$ and GBP and is available on the London Stock Exchange's
website.
www.londonstockexchange.com/stock/TLEI/thomaslloyd-energy-impact-trust-plc/company-page
(http://www.londonstockexchange.com/stock/TLEI/thomaslloyd-energy-impact-trust-plc/company-page)
US$ GBP
SEDOL number BLBJFZ2 BL5BF76
ISIN number GB00BLBJFZ25 GB00BLBJFZ25
Ticker TLEI TLEP
The Company announces its NAV quarterly. These and other Company announcements
are available on the London Stock Exchange's website, as well as via Reuters,
Bloomberg and other news services and on the Company's website.
https://tlenergyimpact.com/investor-information/regulatory-news-rns/
(https://tlenergyimpact.com/investor-information/regulatory-news-rns/)
Financial calendar
30 June 2022 Half-year end 2022
7 September 2022 Announcement of half-year 2022 results
November 2022 Announcement of September 2022 NAV
31 December 2022 Year end 2022
March 2023 Announcement of December 2022 NAV
April 2023 Publication of Annual Report 2022
Expected dividend timetable
Second quarter dividend Third quarter dividend
Announcement date 7 September 2022 10 November 2022
Ex-dividend date 15 September 2022 17 November 2022
Record date 16 September 2022 18 November 2022
Last date for currency election 20 September 2022 21 November 2022
Currency announcement date 22 September 2022 23 November 2022
Payment date 30 September 2022 02 December 2022
The Company pays dividends quarterly. Dividends are declared in and by default
payable in US Dollars, but the Company offers shareholders the option to
receive the dividends in either Great British Pound or Euro as an alternative.
Annual and Interim Reports and other Company information
Copies of the Company's interim and annual reports are or will be available
from the Company Secretary. Copies are or will also be available on the
Company's website (https://www.tlenergyimpact.com
(https://www.tlenergyimpact.com) ), together with the quarterly factsheet
published by the Investment Manager and other information.
Share transactions
The Company's shares may be dealt in directly through a stockbroker or
professional advisor acting on an investor's behalf, and through certain
online trading platforms as detailed on the Company's website.
Cautionary Statement
The Interim Report and the Company's website may contain certain
'forward-looking statements' with respect to the Company's financial
condition, results of its operations and business, and certain plans,
strategies, objectives, goals and expectations with respect to these items and
the markets in which the Company invests. Forward-looking statements are
sometimes, but not always, identified by their use of a date in the future or
such words as 'aims', 'anticipates', 'believes', 'estimates', 'expects',
'intends', 'targets', 'objective', 'could', 'may', 'should', 'will' or 'would'
or, in each case, their negative or other variations or comparable
terminology.
Forward-looking statements are not guarantees of future performance. By their
very nature forward-looking statements are inherently unpredictable,
speculative and involve risk and uncertainty because they relate to events and
depend on circumstances that will occur in the future. Many of these
assumptions, risks and uncertainties relate to factors that are beyond the
Company's ability to control or estimate precisely. There are a number of such
factors that could cause the Company's actual investment performance, results
of operations, financial condition, liquidity, dividend policy and financing
strategy to differ materially from those expressed or implied by these
forward-looking statements. These factors include, but are not limited to:
changes in the economies and markets in which the Company operates; changes in
the legal, regulatory and competition frameworks in which the Company
operates; changes in the markets from which the Company raises finance; the
impact of legal or other proceedings against or which affect the Company;
changes in accounting practices and interpretation of accounting standards
under IFRS; and changes in power prices and interest and exchange rates.
Any forward-looking statements made in the Interim Report or the Company's
website, or made subsequently, which are attributable to the Company, or
persons acting on its behalf (including the Investment Manager), are expressly
qualified in their entirety by the factors referred to above. Each
forward-looking statement speaks only as of the date it is made. Except as
required by its legal or statutory obligations, the Company does not intend to
update any forward-looking statements.
Nothing in the Interim Report or the Company's website should be construed as
a profit forecast or an invitation to deal in the securities of the Company.
Company Information
Registered office Directors
The Scalpel, 18th Floor Sue Inglis (Chair)
52 Lime Street Kirstine Damkjær
London EC3M 7AF Mukesh Rajani
United Kingdom Clifford Tompsett
Registered number: 13605841 (All non-executive and independent)
Website: https://tlenergyimpact.com (https://tlenergyimpact.com)
Investment Manager AIFM
ThomasLloyd Global Asset Management (Americas) LLC Adepa Asset Management S.A. R.C. B0114721
427 Bedford Road 6A, Rue Gabriel Lippmann
Pleasantville L-5365 Schuttrange-Munsbach
New York 10570 Grand Duchy of Luxembourg
United States of America
Administrator and Company Secretary Registrar
JTC UK Limited Computershare Investor Services PLC
The Scalpel, 18th Floor The Pavilions
52 Lime Street Bridgwater Road
London EC3M 7AF Bristol BS13 8AE
United Kingdom United Kingdom
Independent Valuer Independent Auditor
Duff and Phelps, a Kroll company Deloitte LLP
The Shard 1 New Street Square
32 London Bridge Street London EC4A 3HQ
London SE1 9SG United Kingdom
United Kingdom
Sponsor and Corporate Broker Depositary
Shore Capital and Corporate Limited INDOS Financial Limited
Cassini House 54 Fenchurch Street
57-58 St. James's Street London EC3M 3JY
London SW1A 1LD United Kingdom
United Kingdom
Legal Advisor Bank
Herbert Smith Freehills LLP Barclays Bank plc
Exchange House 1 Churchill Place
Primrose Street London E14 5HP
London EC2A 2EG United Kingdom
United Kingdom
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