REG - Atrato Onsite Energy - Interim results to 31 March 2023
13/06/2023 07:00
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RNS Number : 4727C Atrato Onsite Energy PLC 13 June 2023
LEI: 213800IE1PPREDIIZB62
ATRATO ONSITE ENERGY PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2023
FULLY COMMITTED PORTFOLIO
Atrato Onsite Energy plc (the "Company" or "ROOF") is pleased to announce its
unaudited interim results for the six months ended 31 March 2023 (the
"Period").
Key metrics
As at 31 As at 30
March September
2023 2022
(unaudited) (audited)
Net Asset Value ("NAV") 140.7m 139.1m
NAV per Ordinary Share (p) 93.8p 92.8p
Ordinary Share price (p) 85.6p 99.5p
Ordinary Share price discount to NAV (8.7)% 7.2%
Target dividends per Ordinary Share (p) FY 2023 5.0p 5.0p
Ongoing charges ratio 1 (#_ftn1) 1.6% 1.4%
The Company has now fully committed its IPO proceeds
· Deployed into operational assets, committed to installation
assets or allocated to the Company's executed framework agreements
· Post period end, agreed head of terms for a Revolving Credit
Facility with a large UK bank to maintain current deal momentum and to fund
further growth. Expected to close by early July 2023.
High quality portfolio with highly contracted index linked long income 2
(#_ftn2)
· 98% of annual revenue contracted, of which 95% has inflation
linked or fixed uplifts(4)
· 12-year average Power Purchase Agreement ("PPA") duration with
high quality institutional grade off-takers: one of the longest in the
sector(3)
· 4% portfolio sensitivity to wholesale power prices; the lowest in
the sector 3 (#_ftn3)
Advancing our sustainability objectives(2)(,)
· Forecast 139GWh annual clean energy generation providing an
estimated 4 (#_ftn4) :
- 28,000 tonnes of carbon avoided 5 (#_ftn5)
- 48,000 equivalent homes powered by clean energy 6 (#_ftn6)
- Equivalent to 1,100,000 new trees 7 (#_ftn7)
· The supply of solar energy is expected to save our
behind-the-meter customers £87 million during the life of the contract
term 8 (#_ftn8)
· The Board committed to the Net Zero Asset Manager's Initiative
("NZAM") and will publish its targets in the 2023 Annual Report
Financial performance
· Portfolio valued at £63.4 million as at 31 March 2023,
reflecting an unlevered discount rate of 6.2% (30 September 2022: 6.6%)
· Full-year 2023 target dividend of 5.0 pence per share
· Prospective forward looking 12-month dividend cover of 1.1x
following energisation of all assets under installation 9 (#_ftn9) , expected
March 2024 10 (#_ftn10)
Favourable growth tailwinds
· Available pipeline of opportunities has grown to over £340
million
· Executed two large-scale framework agreements, including
appointment as Tesco's provider for next phase of its solar PV roll-out
· Shareholder approval for investment policy amendment to invest in
solar assets commercialised through long-term PPAs connected via the grid
Juliet Davenport, Chair of Atrato Onsite Energy plc commented:
"I am very pleased to report that, post period end, we have fully committed
the balance of our IPO proceeds.
The global net zero ambition coupled with the drive for better domestic energy
security, provide strong tailwinds for the UK renewables sector. Atrato Onsite
Energy remains ideally positioned to help facilitate the UK's shift to
renewables and we look forward to the continued growth of the Company through
2023 and beyond."
Results presentation today
There will be an in-person presentation for sell side analysts at 8.30 a.m.
today, 13 June 2023. Please contact Kaso Legg Communications using the details
provided below if you would like to attend.
The presentation will be simulcast online with Q&A function for anybody
wishing to join. The webcast can be accessed here:
https://brrmedia.news/ROOF_INTERIM (https://brrmedia.news/ROOF_INTERIM) .
The results presentation will be available in the Investor Centre section of
the Company's website.
There will be a virtual Investor Meet Company presentation for investors at
4.00pm on 14 June 2023, please visit the link below to register:
https://www.investormeetcompany.com/atrato-onsite-energy-plc/register-investor
(https://www.investormeetcompany.com/atrato-onsite-energy-plc/register-investor)
For further information please contact
Atrato Partners ir@atratopartners.com
Gurpreet Gujral +44 (0)77 959 75560
Christopher Fearon
Berenberg +44 (0)20 3207 7800
Gillian Martin
Ben Wright
Dan Gee-Summons
Kaso Legg Communications atrato@kl-communications.com
Charles Gorman +44 (0)20 3995 6699
Charlotte Francis
About the Company
Atrato Onsite Energy plc (LSE: ROOF) is an investment company focused on clean
energy generation with 100% carbon traceability. The Company specialises in UK
commercial solar, helping its corporate clients achieve net zero and reduce
their energy bills.
The Company aims to provide investors with attractive capital growth and long
dated, index-linked income, targeting a 5% dividend yield and a NAV total
return of 8 - 10%.
Atrato Partners Limited is the Company's Investment Adviser.
Further information is available on the Company's website www.atratoroof.com
(http://www.atratoroof.com)
CHAIR'S STATEMENT
I am pleased to present the unaudited interim results for the Company for the
six months ended 31 March 2023.
The Ukraine-Russia conflict had a profound impact on the global energy sector
in 2022. The conflict drove power prices to record highs, leading to various
government interventions across Europe including taxation on generators and
price caps for consumers. The increases in both business and retail energy
prices propelled inflation higher, sparking a response by central banks to
increase interest rates. This increase in interest rates has had various
impacts, but for us specifically it affected our 2022 asset valuations as a
result of higher discount rates.
Our job during this period was to keep calm, stick to the plan and remain
focused on delivering our targets. The Company has fully committed the balance
of its IPO proceeds post period end, which, although behind the original IPO
target of being fully committed by the end of 2022, is commendable given the
market uncertainty experienced in the second half of 2022.
Portfolio update
The Company committed a further £30 million into solar PV systems during the
Period, with an additional £39 million being committed post period end. The
IPO proceeds are now fully committed across a combination of operational
projects, installation projects as well as capital allocated to the Company's
executed framework agreements.
In March, shareholders approved an investment policy amendment to capture the
growth of opportunities in front-of-the-meter assets available to be
commercialised through long-term PPA's. This is a new and exciting renewables
market development for the Company, and we expect it to provide an
increasingly important source of pipeline going forwards. Our onsite
generation deal pipeline remains strong with onsite solar offering the most
competitive energy price for the off-taker.
Financials
The Company's NAV grew during the Period, reflecting the acquisitions made to
date together with an improvement in discount rates across the portfolio.
During the Period the Company declared a dividend of 2.52 pence and a further
dividend post the Period of 1.23 pence. The Company remains on track to pay
total dividends of 5 pence per Ordinary Share in its second financial year as
targeted at IPO.
The uncertain economic backdrop has caused share prices across the renewables
sector to fall. The total shareholder return for the Period was (8.9)% In
contrast, our NAV total return was +0.9% and the Company remains well
positioned to benefit from the strong growth being experienced in the UK
renewables market.
Full details of the Company's financial performance are detailed in the
Investment Adviser's report below.
Directors
Post the period end, Duncan Neale was appointed as independent Non-executive
Director of the Company. Duncan has joined the Audit Committee and Management
Engagement Committee and holds the position of Audit Chair.
Duncan is a chief financial officer and finance director with over 20 years of
public and private markets experience. Duncan is currently a Non-executive
Director and Audit Chair of Gresham House Energy Storage Fund plc.
Portfolio performance
We benefitted from a strong operational performance for the Period with our
operational assets producing 8,847MWh, which is 9.5% above budget.
Outlook
We are delighted to now be fully committed. Once our installation projects
become fully operational (expected by March 2024), the Company anticipate to
be circa 1.1x covered on its dividend on a 12 month forward looking basis 11
(#_ftn11) .
The Company is experiencing very strong demand for new green energy generation
from its corporate client base and has an extensive £340+ million of
potential pipeline opportunities available to it. We expect this pipeline to
grow further throughout 2023. In order to fund this further growth, the
Company has agreed terms for an RCF with a large UK bank, that is attractively
priced, reflecting the highly contracted nature of our revenue streams and the
high credit quality of our counterparties.
As the Ukraine-Russia conflict continues, the case for domestic energy
security has never been stronger. Accelerated investment in additional UK
renewable energy capacity is essential to avoid a repeat of the current crisis
and when combined with the global net zero ambition, it's clear that the
renewables sector continues to benefit from significant tailwinds. ROOF
remains ideally positioned to facilitate the UK's shift to renewable energy
and we look forward to the continued growth of the Company through 2023 and
beyond.
Juliet Davenport OBE
Chair
12 June 2023
INVESTMENT ADVISER'S REPORT
Atrato Partners Limited is the Investment Adviser to Atrato Onsite Energy plc
and is pleased to report on the operations of the Company for the Period.
The Investment Adviser is responsible for the sourcing and acquisition of
assets as well as the day-to-day management of the Company's investment
portfolio. Further details can be found on the Investment Adviser's website at
www.atratogroup.com.
Investment Portfolio
Despite the significant volatility we have experienced in wholesale power
prices, interest rates and the regulatory environment, we have made
significant progress against our targets, having now committed the Company's
IPO proceeds into a diversified portfolio of solar assets whilst maintaining
the lowest sensitivity to power price movements in the sector.
During the Period, the Company committed £30 million to developing 30MW of
solar PV capacity across 3 installation assets. Post the Balance Sheet date,
the Company has maintained momentum, committing a further £39 million to a
50MW installation project, its largest solar energy project to date. To date,
£118m has been deployed into operational assets or contractually committed to
installation projects. The remaining capital has been allocated to the
Company's executed framework agreements which have a maximum value of £28m,
taking total projected commitments to £146 million. Further details can be
found in the post balance sheet section below.
Including the post period end investments, the Company's portfolio comprises
40 individual projects with a total capacity of 142 MW. 32% of the portfolio
is operating and 68% is in the installation phase. The portfolio now spans 21
counties, ensuring geographic diversification across the UK and is split
between 10 off-takers across multiple industries.
We have built a high-quality portfolio of clean energy assets with highly
contracted long-term income. Including the investments made post period end,
98% of annual revenue is contracted under PPAs and subsidies with 95% of
revenue subject to inflation or fixed uplifts 12 (#_ftn12) . The weighted
average unexpired PPA term is 12 years.
The table below outlines the Company's investment portfolio to date, including
post balance sheet events:
Off-taker Location Sector Capacity (MWp) Status Expected Energisation date Remaining term
As at 31 March 2023
Amazon 7 sites Tech 12 Operational Energised 18
Anglian Water 7 sites Utility 14 Operational Energised 22
Beverage Company Northamptonshire FMCG 29 Installation Dec-23 10
Gardner Derbyshire Aerospace 1 Operational Energised 24
Huntapac Lancashire FMCG 1 Installation Sep-23 15
Marks & Spencer Leicestershire Grocery 6 Operational Energised 12
Nissan County Durham Autos 20 Installation Jul-23 20
Recipharm Cheshire Pharmaceuticals 1 Operational Energised 25
Tesco 19 sites Grocery 7 Operational Aug-23 13 (#_ftn13) 18
Vale of Mowbray North Yorkshire FMCG 1 Operational Energised 24
Total as at 31 March 2023 93 16
Utility company North Yorkshire Utility 50 Installation Mar-24 3
Vale of Mowbray - (buy-out) North Yorkshire Food production (1) Operational Energised (24)
Total 14 (#_ftn14) 142 12
All of the Company's installation projects are expected to be fully
operational by the end of March 2024. At the point that the invested portfolio
is fully operational, the Company expects to be circa 1.1x covered on its
dividend on a 12-month forward looking basis 15 (#_ftn15) . Investments made
post period-end increased the Company's power price sensitivity to c. 4.0%
(0.3% as at 30 September 2022), in line with the Company's long-term target at
IPO of 4.0%. Despite this adjustment, the Company maintains the lowest power
price sensitivity in the sector.
Investment policy amendment
The Company's target investment market is fast-moving and dynamic, with new
developments continuing to emerge. The Investment Adviser monitors
developments to ensure that the Company's commercial offering remains as
attractive and competitive as possible. One such development has been grid
connected solar PV systems that share the same technology as onsite solar
assets and are commercialised through long-term PPAs with the same type of
contract counterparty as the onsite assets ("Long-Term Grid Assets").
At the time of IPO, typical grid connected PPAs were 1-3 years in duration.
Since then, the Investment Adviser has seen an increase in demand from
corporates for 10-15-year PPAs of this type, many of which originate from
initial discussions around onsite energy solutions. As a result of this
structural change, the Investment Adviser worked with the Company to expand
its product offering and react to this new and exciting source of demand.
At the Company's AGM in March 2023, shareholders approved an amendment of the
investment policy to enable the Company to acquire Long-Term Grid Assets as
part of its core strategy. These assets enable the Company to generate green
energy for corporates in excess of what may be possible onsite. An example of
this is the London Road project which will be commercialised under a c. 10
year PPA with a beverage company. The agreement will save the beverage company
an estimated 6,500 tonnes of CO(2) a year and provide a material energy cost
saving.
Team update
The Investment Adviser's renewable's team consists of nine dedicated
professionals, with the necessary skills and experience to deliver on the
Company's strategy. The team's expertise spans engineering, sustainability,
project delivery, business development and financial analysis. The Investment
Adviser also benefits from the wider resource of the Atrato Group platform,
utilising central resource as required across finance, legal, compliance,
human resources, investor relations and management.
Portfolio performance
In the Period, the portfolio generated 8,847 MWh of clean energy. The
portfolio's operational assets performed above expectations for the Period
with electricity generated from our operational assets 9.5% above the budgeted
generation.
Net production variance vs. expected (GWh) for the Period
Actual Budget (GWh) GWh above expectation % above expectation
(GWh)
Operating assets total 8.847 GWh 8.077 GWh 0.769 9.5%
Avoided emissions in the period (Scope 2, excluding Scope 3, savings from
avoided transmission and distribution losses on behind-the-meter assets) were
1,700t CO(2)e which is an equivalent emission saving of 5.8 million miles in a
medium petrol-powered car or 75,000 trees planted.
Our Nissan installation project experienced some weather and grid related
delays and is now expected to be fully energised by July 2023. All other
installation projects are progressing as expected.
Pipeline
The Company continues to progress a significant pipeline of UK solar assets
currently totalling 420MW (£340+ million). 86MW of the pipeline relate to
operational assets, while the remaining 334MW relates to new installations.
Demand remains very strong for the Company's green energy solutions and
attractive PPA pricing, with the Investment Adviser now receiving 17 new
enquiries per month on average.
During the Period, the Company committed £30 million to new installation
projects to take the total committed IPO proceeds to £80 million at 31 March
2023. Subsequently, as announced on 14(th) April 2023, the Company committed
£39 million to a 50MW ground mounted project in North Yorkshire, taking total
commitments to date of £118 million. In addition, the Company signed
framework agreements during the period with a potential maximum value of £28
million. These sites are exclusive to the Company and are undergoing detailed
design and contract negotiation prior to a financial commitment being
contractually confirmed. These framework projects have taken the Company's
total projected commitment to £146 million and will be funded out of
remaining cash and the RCF facility.
Future pipeline opportunities will be funded via the remaining RCF facility,
which also benefits from an accordion feature.
Financial performance
The financial statements of the Company for the six months ended 31 March 2023
are set out in this interim report. These interim financial statements have
been prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and the applicable
legal requirements.
For the six months ending 31 March 2023, the Company's operational portfolio
generated revenues of £0.9 million, 9% above budget. Operational expenditure
for the Period totalled £0.7 million, EBITDA for the portfolio over the six
months ending 31 March 2023 was £0.2 million. The Company has included this
alternative performance indicator for the first time to provide insight to
earnings generated at the project level.
During the Period the Company's NAV increased from £139.1 million to £140.7
million or 93.8 pence per Ordinary Share (September 2022: 92.8p). NAV
increases were driven by an improvement in discount rates, the addition of new
assets and the re-rating of installation assets as they became operational.
The overall positive NAV increase was £4.0 million. This was offset by the
£3.78 million in dividends paid in the Period. Further details on the
portfolio valuation are provided below.
Dividends
The Company aims to provide investors with capital growth alongside a
progressive dividend, underpinned by the contractual inflation and fixed
uplifts within its PPA agreements.
Once the installation assets become fully operational, the current dividend
target (5p per Ordinary Share) is projected to be 1.1x covered from project
revenues 16 (#_ftn16) .
Portfolio valuation
The valuation of the Portfolio as at 31 March 2023 was £63.4 million. The
table below shows a breakdown of the Portfolio valuation during the Period.
For the six months ended 31 March 2023 Period from Incorporation on 16 September 2021 to 31 March 2022
£m £m
Portfolio valuation as at 30 September 47.1 -
Investments in the period 11.7 0.9
Interest receivable 0.7 -
Portfolio fair value movement (September 2022: (£1.8m)) 3.9 0.1
Portfolio valuation as at 31 March 63.4 1.0
The valuation of the Company's Portfolio is performed on a semi-annual basis
at 31 March and 30 September. The Investment Adviser is responsible for
advising the Board in determining the valuation of the Portfolio and, when
required, carrying out the fair market valuation of the Company's investments.
A discounted cash flow ("DCF") valuation methodology is applied to determine
the fair value of each investment which is customary for valuing privately
owned renewable energy assets and considered consistent with the requirements
of compliance with International Financial Reporting Standard ("IFRS") 9 and
IFRS 13.
Using the DCF methodology, the fair value is derived from the present value of
each investment's expected future cash flows, using reasonable assumptions and
forecasts for revenues and operating costs and an appropriate discount rate.
Key macroeconomic and fiscal assumptions for the valuations are set out in
Note 13 to the financial statements.
The Company's NAV as at 31 March 2023 is £140.7 million or 93.8 pence per
ordinary share.
The Company's portfolio of assets was valued at £63.4 million 17 (#_ftn17) ,
reflecting acquisitions, planned milestone payments for the installation
assets and interest of £12.4 million. The NAV also reflects changes to
economic, wholesale energy and asset specific assumptions and is net of
distributions to shareholders.
Portfolio acquisitions in the period
The Company made three new installation commitments during the period; a 1.3MW
site at Huntapac Produce Ltd in Lancashire, a 0.4MW site at Tesco Thetford and
the 28.4MW London Road site in Northamptonshire. These new projects totalled
£30 million of capital commitments.
There were £0.6 million of ongoing installation payments in relation to the
Recipharm, Gardner and Nissan sites.
Valuation economic assumptions
The main economic assumptions used in the portfolio valuation are discount
rates, annual energy production, merchant power prices, various operating
expenses and associated annual escalation rates. These are consistent with
those outlined on page 14 of the 30 September 2022 Annual Report.
Weighted average discount rate for valuation
A range of discount rates are applied in calculating the fair value of the
investments, considering the location, technology and lifecycle stage of each
asset as well as leverage and the counterparty risk. The weighted average
discount rate as at 31 March 2023 is 6.2% (30 September 2022: 6.6%).
The elevated macro-economic volatility, higher inflation expectations and UK
political uncertainty experienced in the fourth quarter of 2022 has settled,
stabilising the UK risk free rates and economic outlook. This has allowed the
Investment Adviser to reassess the impact on the portfolio and release some of
the premium applied previously, reducing the weighted average unlevered
discount rate to 6.2%.
Portfolio valuation sensitivities
The figure below shows the impact on the portfolio valuation of changes to the key input assumptions ("Sensitivities"). The Sensitivities are based on the Portfolio as at 31 March 2023. For each sensitivity illustrated, it is assumed that potential changes occur independently with no effect on any other assumption. The low sensitivity to changes in merchant power prices reflects the long-term contracted revenues in the Company's Portfolio. Similarly, the moderate impacts due to variations in operational expenses, reflects the Company's assets having a majority of fixed price, long-term operating expenses including operations and maintenance ("O&M") and property leases.
Volumes
Each asset's valuation assumes a "P50" level of electricity output based on
yield assessments prepared by technical advisers. The P50 output is the
estimated annual amount of electricity generation that has a 50% probability
of being exceeded - both in any single year and over the long term - and a 50%
probability of being underachieved. The P50 provides an expected level of
generation over the longer term.
The P90 (90% probability of exceedance) and P10 (10% probability of
exceedance) sensitivities reflect the future variability of solar irradiation
and the associated impact on output, along with the uncertainty associated
with the long-term data sources used to calculate the P50 forecast. The
Sensitivities shown assume that the output of each asset in the portfolio is
in line with the P10 or P90 output forecast respectively for each asset life.
Power price curve
The Company uses independent and widely used market consultants'
technology-specific capture price forecasts, for the longer term. In the short
term, two years from October 2023, the Bloomberg ELUB prices have been used.
The industry standard sensitivity metric assumes a 10% increase or decrease in
power prices relative to the base case for each year of the asset life.
Inflation
The sensitivity assumes a 50bps increase or decrease in inflation relative to
the base case for each year of the asset life.
Net assets
Company net assets were £140.7 million as at 31 March 2023.
The net assets comprise the fair value of the Company's investments of £63.4
million, the Company's cash balance of £76.6 million and other net
receivables of £0.7 million.
Analysis of the Company's net assets
Unaudited 31 March 2023 Audited
30 September 2022
£m £m
Fair value of investments 63.4 47.1
Cash 76.6 89.4
Net working capital 0.7 2.7
Net asset value 140.7 139.1
Number of shares 150.0 150.0
Net asset value per share (pence) 93.8 92.8
NAV Bridge from 30 September 2022 to 31 March 2023
Movement in Net Asset Value £m Pence per share
NAV at September 2022 139.1 92.8
Dividends paid (3.8) (2.5)
Discount rate movement 3.9 2.6
Re-rate on yield 3.3 2.2
Net operating cash flow (1.8) (1.3)
NAV as at 31 March 2023 140.7 93.8
Dividends paid: Dividends of £3.8 million (2.5 pence per share) were paid
during the Period in respect of the period to 30 September 2022 declared in
November 2022 and the period to 31 December 2022, declared in January 2023. In
addition, after the period end, the Company declared a further dividend of
1.23 pence per share in respect of the quarter ended 31 March 2023.
Discount rate movement - The reduction in the weighted average discount rate
from 6.6% to 6.2%, has increased the portfolio valuation by £3.9 million (2.6
pence per share). For further information please see Note 8.
Re-rate on yield: Represents the difference between the invested capital and
the discounted future cash flows for new acquisitions, which has provided a
£3.3 million increase in NAV (2.2 pence per share).
Net operating cash flow: Represents the net cashflows of the Company and its
subsidiaries in relation to other operating activities.
Income
In accordance with the Statement of Recommended Practice: Financial Statements
of Investment Trust Companies and Venture Capital Trusts ("SORP") issued in
July 2022 by the Association of Investment Companies ("AIC"), the statement of
comprehensive income differentiates between the 'revenue' account and the
'capital' account and the sum of both items equals the Company's profit for
the period. Items classified as capital in nature either relate directly to
the Company's investment portfolio or are costs deemed attributable to the
long-term capital growth of the Company (such as a portion of the Investment
Adviser fee).
In the six-month period ending 31 March 2023, the Company's operating income
was £2.5 million (period from incorporation to 31 March 2022 ("previous HY
period"): £nil), including interest income of £2.5 million (previous HY
period: £nil) and net profit on the movement of fair value of investments of
£4.0 million (previous HY period: £0.1 million). The operating expenses
included in the statement of comprehensive income for the period were £1.2
million (previous HY period: £1.0 million). These comprise £0.7 million
Investment Adviser fees (previous HY period: £0.4 million) and £0.5 million
operating expenses (previous HY period: £0.6 million). The details of how the
Investment Adviser fees are charged are set out in Note 9 to the financial
statements.
Ongoing charges
The ongoing charges ratio ("OCR") is a measure, expressed as a percentage of
average net assets, of the regular, recurring annual costs of running the
Company. It has been calculated and disclosed in accordance with the AIC
methodology, as annualised ongoing charges (i.e. excluding acquisitions costs
and other non-recurring items) divided by the average published undiluted Net
Asset Value in the period. The ratio was 1.4% for the period from IPO
(November 2021) to 30 September 2022, and it is anticipated that the full-year
ratio for the year ended 30 September 2023 will increase to 1.6%.
Dividends
During the Period, interim dividends totalling £3.8 million were paid
(representing 2.52p per share). The table below outlines the dividends paid
during the period and post period end.
Period Amount (per Ordinary share) Amount (total)
During the Period
1 July to 30 Sep 2022 1.26p £1.89m
1 Oct to 31 Dec 2022 1.26p £1.89m
Post period end
1 Jan to 31 Mar 2023 1.23p £1.85m
Post period end, a further interim dividend of 1.23p per share was paid on 26
May 2023 in respect of the quarter to 31 March 2023 to shareholders recorded
on the register on 28 April 2023. The total number of ordinary shares in issue
on that record date was 150,000,000 and the total dividend paid to
shareholders amounted to £1.85 million.
As such, dividends totalling £3.78 million have been paid in respect of the
six-month period under review.
Operating cashflow from the portfolio of assets in the six-month period
totalled £1.5 million.
Decarbonisation and the investment opportunity
Wholesale electricity prices remained volatile during the Period as
geopolitical factors and weather conditions continued to impact the market.
The average monthly price volatility for the day-ahead baseload price in Q4
2022 was more than 2.5 times the long-term average volatility for the fourth
quarter (from 2014 to 2020 inclusive).
Although average prices in March 2023 fell to their lowest level since August
2021, they remain elevated compared to long-term norms, being 2.75 times the
average value for March from 2014 to 2020 (inclusive).
Against this backdrop, energy costs remain a top risk factor for the majority
of UK businesses, with wholesale costs and market volatility constituting the
top two subcategories of concern for businesses in a 2023 survey. Almost three
quarters of businesses surveyed expect costs to continue rising over the next
12 months, despite some continued protection in the form of the revised Energy
Bills Discount Scheme (the "EBDS") which replaced the more generous Energy
Bill Relief Scheme from 1 April 2023. The EBDS provides relief of up to
£19.61 per MWh when wholesale costs exceed £302 per MWh, meaning that the
threshold for relief remains significantly higher than the levelized cost of
generation for solar energy in the UK.
Alongside the cost savings and price certainty, there has been continued
growth in demand for corporate decarbonisation. The Science Based Targets
Initiative ("SBTi") now reports 829 UK companies taking action, of which 430
have had their targets independently validated by the SBTi.
The UK government has recognised solar energy's role as a cost-effective
contributor to a net zero energy mix and stated an ambition to deploy 70GW of
solar generation by 2035, a significant increase on the existing 14GW of
installed capacity. In support of this, a solar roadmap will be published in
2024, setting out a step-by-step deployment trajectory, and a dedicated
taskforce made up of industry and government members is to be established to
drive forward both rooftop and ground-mounted capacity. A consultation is
already underway to simplify planning processes and expand permitted
development rights for large commercial rooftop solar projects and solar
car-port structures. Constraints imposed by the grid connection process are
also due to be addressed, with the government publishing an action plan this
summer and reduced connection application costs having come into force from 1
April 2023.
Financing
The Company is in advanced discussions for a Revolving Credit Facility ("RCF")
with an accordion, raised at Atrato Onsite Energy Holdco Limited level. This
facility will allow the Group to continue to secure new investments. The RCF
will be available for three years with an option to extend, with a competitive
margin for the life of the loan on a floating interest rate over the period.
Going concern
The Directors have adopted the going concern basis in preparing the interim
financial statements. The following is a summary of the Directors' assessment
of the going concern status of the Company.
The Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for at least twelve months from
the date of this report. In reaching this conclusion, the Directors have
considered the liquidity of the Company's portfolio of investments as well as
its cash position, income and expense flows. The Company's net assets at 31
March 2023 were £140.7 million (30 September 2022: £139.1 million). As at 31
March 2023, the Company held £76.6 million (30 September 2022: £89.4
million) in cash. The total expenses for the period ended 31 March 2023 were
£1.2 million (31 March 2022: £1.0 million).
Post the balance sheet date the Company increased its total contractual
commitment to fund projects under installation to £59 million, as a result of
the £39 million investment in project Skeeby. At the date of approval of this
report, based on the aggregate of investments, capital commitments and cash
held, the Company has substantial operating expenses cover.
Future revenue is principally expected to be derived through loan interest and
dividends from profit generated by underlying investments held within the
SPVs. Having regard to the current portfolio combined with current cash
balances, the Directors consider the Company to be in a position to meet its
current and future liabilities over the next 12-month period.
In light of the ongoing conflict of Russia and Ukraine, the Directors have
considered any potential impact on the portfolio's operations and procurement
processes, and do not foresee any material adverse impact for next 12 months.
Energy prices can fluctuate as a result of the conflict, which the Directors
maintain under close review; however, no material adverse impact on the
business is expected.
Sustainability Report
Introduction
The Company invests in onsite sustainable energy solutions that facilitate
savings in greenhouse gases and contribute to the net zero transition. These
investments help corporates and landlords to decarbonise their buildings and
operations. Investors in the Company are therefore supporting the transition
towards sustainable methods of energy generation. The Company aims to increase
investment into the renewable energy space, this will help companies and the
UK achieve its commitment to reducing its carbon intensity.
The Company's sustainability strategy is focused on four ESG principles linked
to the UN SDGs that underpin its activities. The Company has identified
specific areas of focus in relation to each principle against which it
annually benchmarks its progress.
Principle 1 Principle 2 Principle 3 Principle 4
Support the attainment of the UK emissions targets through the creation of new Facilitate the efficient and considered use of finite resources Bring value to the communities in which we are active Deliver the Company's investment objective through a robust governance
sustainable energy resource. framework that recognises its moral and ethical responsibilities to all
stakeholders
Affordable and clean energy Climate Action Life on Land Responsible production and consumption Gender equality Decent work and economic growth
UN SDG 7 UN SDG 13 UN SDG 15 UN SDG 12 UN SDG 5 UN SDG8
Principle 1 - Support the attainment of the UK emissions targets through the
creation of new sustainable energy resource
The Board has committed to adopt the Net Zero Asset Managers Initiative
("NZAM"). NZAM focuses on the role of the investment community in delivering
the goals of the Paris Agreement, a global commitment to achieving a world
that exists with net zero greenhouse gas emissions, by 2050 or sooner. This
commitment requires the Company to set targets, supported by a road map of
achieving net zero operations. This pledge outlines the key objective which is
supported by the Task Force on Climate-related Financial Disclosures ("TCFD").
The Company will integrate Science Based Targets into the investment process.
Principle 2 - Facilitate the efficient and considered use of finite
resources
With the expansion of the Company's mandate to allow for investment in ground
mounted projects, the Investment Adviser is in the process of reviewing the
sustainability strategy to ensure that it remains appropriate. One area that
has been identified for review is the Company's approach to the management of
biodiversity risk. The Company intends to provide further details on its
approach by the end of the financial year.
Principle 3 - Bring value to the communities in which we are active
The Company through the Investment Adviser is active supporter of education
initiatives that align with the Company's objective to support both gender
equality and the right to decent work.
During May 2023 the Investment Adviser held a work experience event for Into
University at their offices. Into University seeks to provide children from
Britain's least privileged neighbourhood with the educational support they
need to succeed, breaking the poverty circle. The event was attended by 17
year nine students and run by members of the Investment Adviser's team. The
focus of the event was to provide exposure to a career in investment
management and the skills needed in order to support it. Members of the
investment advisory team are also providing mentoring to support individuals
starting in higher education.
The Investment Adviser has also supported similar career focused events for
STEM learning at locations across the country. STEM aims to improve young
people's lives through the power of stem. The Investment Adviser's involvement
with STEM also supports the Company's focus on diversity given only 27% of the
STEM workforce are female and 12% from ethnic minorities.(1)
Establishment of the Investment Adviser foundation has progressed, and the
Company will work with the Trustees of the foundation to develop a
volunteering and donation strategy for its that aligns with its objectives
prior to the Company's financial year end.
Principle 4 - Robust Governance Framework
During the prior period the Investment Adviser focused on the implementation
of its Module Procurement Policy, evaluating modern slavery and forced labour
practices risks within the Company's supply chain. This policy will remain
under review and will be updated to reflect developments in this area.
The Investment Adviser is now focused on the development of a wider set of
policies in conjunction with a third-party service that will support the
delivery of the investment objective in line with the Company's sustainability
principles. These materials will be published on the Investment Adviser's
website or that of the Company's as appropriate once available.
In Q2 2023 the Board commissioned a peer review to obtain a benchmark of the
Company's position relative to the market. The review will provide valuable
guidance on the governance areas on which the Company and the Investment
Adviser. The Company also intends to use the review as a method of assessing
its performance and that of the investment adviser in delivery of its
sustainability objectives.
The Board and the Investment Adviser are working to expand the scope of the
Investment Adviser's integrated Sustainable Investment Management System
("SIMS"). The system documents how ESG risks are identified, mitigated and
measured against company policies and commitments. The development of the SIMS
will be completed in H2 2023 and will be reviewed annually to ensure systems
performance.
Regulations
The Company has several key developments in regulations and standards that
will be material drivers in how the Company reports its ESG performance in the
future. These include:
TCFD
While the FCA listing rules do not require the Company to make disclosures
under the TCFD framework for the financial year 2022/2023, it intends to do so
on a voluntarily basis. Work, including undertaking a carbon inventory
calculation, scenario analysis and climate change risk analysis to enable, is
ongoing with the Investment Adviser to ensure compliance with this obligation.
UN PRI
The Investment Adviser will submit its first report under the UN PRI framework
for the financial year 2022/23. The Company and the Investment Adviser will
then seek to implement improvements that result from the review prior to its
first published report in 2024.
SDR
The Company notes proposals published by the FCA in relation to the
implementation of the Sustainability Disclosure Requirements. The Company
agrees that consumers must be able to trust sustainable products and supports
the sentiment of the proposals outlined by the FCA in is consultation
papers. The Company and the Investment Adviser are developing a strategy for
compliance with this regulation and the attainment of an investment label
aligned with the sustainability objectives of the Company.
Atrato Partners Limited
Investment Adviser
12 June 2023
Interim Management Report
The Directors are required to provide an Interim Management Report in
accordance with the Financial Conduct Authority ("FCA") Disclosure Guidance
and Transparency Rules ("DTR"). The Chair's Statement and the Investment
Advisers' Report in this interim report provide details of the important
events which have occurred during the period and their impact on the financial
statements. The following statements on risks and risk management, related
party transactions, going concern and the Directors' Responsibility Statement
below, together constitute the Interim Management Report for the Company for
the six months ended 31 March 2023. The outlook for the Company for the
remaining six months of the year ending 30 September 2023 is discussed in the
Chair's Statement and the Investment Adviser's Report.
Risk and Risk Management
The Company's approach to risk governance and its risk review process are set
out in the risks and risk management section of the 2022 Annual Report. The
principal risks to the achievement of the Company's objectives are mostly
unchanged from those reported on pages 30 to 32 of the 2022 Annual Report,
with the key principal risks being:
· Increased procurement costs - Due to high levels of inflation,
the cost of procuring materials necessary for solar PV installations may be
higher than at IPO. Where the Company is unable to offset the increased
procurement cost through an increased PPA price, the Company's project level
target returns may not be met.
· Inflation - If current levels of inflation are maintained,
potential off-takers may be unwilling to enter into inflation-linked PPAs.
This may result in the Company securing fewer inflation-linked cashflows.
· Contract counterparty credit risk - The Company's revenues are
dependent on onsite or sleeved users that are contracted under PPAs to pay for
electricity generated by solar PV systems. If such counterparties do not
fulfil their contractual obligations, the Company may be forced to seek
recourse against them.
· Risks relating to pre-installation assets - A significant
proportion of the Company's pipeline consists of pre-installation assets,
which are assets which do not yet have all the necessary consents, rights, and
agreements to proceed to the installation phase. There is a risk that these
assets may take more time than anticipated to develop into installation
assets.
· Geopolitical risk - The ongoing conflict in Ukraine has led to
higher power prices, which in turn has led to price caps and windfall taxes on
UK energy producers.
· Government policy change - The Company's renewable investments
generate revenue from private PPAs and in some cases, government supported
subsidies. There may be changes in government policy which could impact the
value of the Company's investments.
· Power Prices - The risk that the income and value of the
Company's investments may be adversely impacted by changes in the prevailing
market prices of electricity and prices achievable for off-taker contracts.
· Asset specific risks - Circumstances may arise that adversely
affect the performance of the relevant renewable energy asset. These include
health and safety, grid connection, material damage or degradation, equipment
failures and environmental risks.
The risks outlined here and in the 2022 Annual Report are mitigated by the
Investment Adviser's strategy, experience and the diversification of the
Company's pipeline as set out on pages 30 to 32 in the 2022 Annual Report.
Related party transactions
The Company's Investment Adviser ("IA") is considered a related party under
the Listing Rules. Under the Investment Adviser Agreement ("IAA"), the IA
receives a per annum management fee of 0.7125% of the adjusted NAV up to and
including £500 million; and 0.5625% of the adjusted NAV above £500 million,
invoiced monthly in arrears. The Investment Adviser also receives a management
fee of 0.2375% of the last published NAV up to and including £500 million;
and 0.1875% of the last published NAV above £500 million, each invoiced
semi-annually in arrears. With the agreement of the Company, Holdco and the
Adviser, this semi-annual fee shall be applied by the Adviser in acquiring
ordinary shares at the absolute discretion of the Board by any combination of
methods as set out in the IAA.
The Investment Adviser receives an accounting and administration fee of
£50,000 per annum plus 0.02% of the adjusted NAV in excess of £200 million
up to and including £500 million plus 0.015% of adjusted NAV in excess of
£500 million. An accounting and administration fee of £800 per Clean Energy
Asset held by Holdco up to 100 Clean Energy Assets and £650 per Clean Energy
Asset above 100.
No performance fee or asset level fees are payable to the IA under the IAA.
Details of the amounts paid to the Company's IA and the Directors during the
period are included in the Note 4 to the Interim Financial Statements.
Alternative Investment Fund Manager (the "AIFM")
JTC Global AIFM Solutions Limited was appointed with effect from IPO as the
AIFM under the terms of the AIFM agreement and in accordance with the AIFM
Directive.
The AIFM is authorised and regulated by the Guernsey Financial Services
Commission.
The AIFM is responsible for the day-to-day management of the Company's
investments, subject to the investment objective and investment policy and the
overall supervision of the Directors. The AIFM is also required to comply with
on-going capital, reporting and transparency obligations and a range of
organisational requirements and conduct of business rules. The AIFM must also
adopt a range of policies and procedures addressing areas such as risk
management, liquidity management, conflicts of interest, valuations,
compliance, internal audit and remuneration.
Directors' responsibility statement
The Directors acknowledge responsibility for the interim results and approve
this interim report. The Directors confirm that to the best of their
knowledge:
a) the condensed interim financial statements have been prepared in
accordance with IAS 34 "Interim Financial Reporting" as contained in
UK-adopted IFRS and give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company as required by the FCA's
Disclosure Guidance and Transparency Rules DTR 4.2.4R; and
b) the interim management report, including the Chair's Statement and
Investment Adviser's Report, includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R.
This responsibility statement has been approved by the Board of Directors
For and on behalf of the Board of Directors
Duncan Neale
Director
12 June 2023
Independent Review Report to Atrato Onsite Energy Plc
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 March 2023 is not prepared, in
all material respects, in accordance with UK adopted International
Accounting Standards 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
March 2023, which comprises Condensed Statement of Comprehensive Income, the
Condensed Statement of Financial Position, the Condensed Statement of Changes
in Equity, the Condensed Cash Flow Statement and the related notes.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the Company are
prepared in accordance with UK adopted international accounting standards.
The condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with UK adopted
International Accounting Standard 34, "Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the Directors have
inappropriately adopted the going concern basis of accounting or that the
Directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the group to
cease to continue as a going concern.
Responsibilities of directors
The Directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the Directors are responsible
for assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to
liquidate the Company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
relating to going concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority and
for no other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by virtue of and
for the purpose of our terms of engagement or has been expressly authorised to
do so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other purpose
and we hereby expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
12 June 2023
BDO LLP is a limited liability partnership registered
in England and Wales (with registered number OC305127).
Results
Condensed Statement of Comprehensive Income
For the six-month period ended 31 March 2023 (unaudited) For the period from incorporation on 16 September 2021 to 31 March 2022
(unaudited)
Notes Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Fair value of investments 8 - 3,990 3,990 - 103 103
Investment Income 3 2,473 - 2,473
Investment advisory fees 4 (692) - (692) (382) - (382)
Other expenses 4 (467) - (467) (210) (401) (611)
Profit / (loss) on ordinary activities before taxation 1,314 3,990 5,304 (592) (298) (890)
Taxation 5 - - - - - -
Profit / (loss) on ordinary activities after taxation 1,314 3,990 5,304 (592) (298) (890)
Profit / (loss) per share 7 0.88 2.66 3.54 (0.01) - (0.01)
The "Total" column of the Condensed Statement of Comprehensive Income is the
profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing
operations.
Profit / (loss) on ordinary activities after taxation is also the "Total
comprehensive profit / (loss) for the Period".
The accompanying notes are an integral part of these interim financial
statements.
Incorporated in England and Wales with registered number 13624999
Condensed Statement of Financial Position
As at 31 March 2023
As at As at
31 March 2023 30 September 2022
(unaudited) (audited)
Notes £'000 £'000
Non-current assets
Investments at fair value through profit or loss 8 63,415 47,105
Current assets
Fixed deposits - 20,000
Cash and cash equivalents 76,611 69,361
Trade and other receivables 1,043 3,215
77,654 92,576
Current liabilities: amounts falling due within one year
Trade and other payables (419) (555)
(419) (555)
Net current assets 77,235 92,021
Net assets 140,650 139,126
Capital and reserves
Share capital 10 1,500 1,500
Capital reduction reserve 11 137,285 141,065
Revenue and capital reserve 1,865 (3,439)
Shareholders' funds 140,650 139,126
Net assets per Ordinary Shares (GBP pence) 12 93.8 92.8
The unaudited interim financial statements were approved by the Board of
Directors and authorised for issue on 12 June 2023 and were signed on its
behalf by:
Duncan Neale
Director
The accompanying notes are an integral part of these interim financial
statements.
Incorporated in England and Wales with registered number 13624999.
Condensed Statement of Changes in Equity
For the six-months ended 31 March 2023 (unaudited)
Notes Share capital Share premium Capital reduction reserve Capital reserve Revenue reserve Total
£'000 account £'000 £'000 £'000 £'000
£'000
Opening equity as at 30 September 2022 10 1,500 - 141,065 (2,251) (1,188) 139,126
Total comprehensive income/(expense) for the Period - - - 3,990 1,314 5,304
Dividends paid 6 - - (3,780) - - (3,780)
Closing equity as at 31 March 2023 1,500 137,285 1,739 126 140,650
For the period from Incorporation on 16 September 2021 to 31 March 2022
(unaudited)
Notes Share capital Share premium Capital reduction reserve Capital reserve Revenue reserve Total
£'000 account £'000 £'000 £'000 £'000
£'000
Opening equity as at 16 September 2021 - - - - - -
Shares issued in the Period 10 1,500 148,500 - - - 150,000
Share issue cost 10 - (2,968) - - - (2,968)
Transfer to capital reduction reserve 11 - (145,532) 145,532 - - -
Profit/(loss) for the Period - - - (298) (592) (890)
Closing equity as at 31 March 2022 1,500 - 145,532 (298) (592) 146,142
The Company's distributable reserves consist of the capital reduction reserve,
capital reserves attributable to realised gains and revenue reserve and totals
£137 million at 31 March 2023. All capital reserves are unrealised.
The accompanying notes are an integral part of these interim financial
statements.
Condensed Statement of Cash Flows
For the six months ended 31 March 2023 (unaudited) Period of Incorporation from 16 September 2021 - 31 March 2022 (unaudited)
Notes £'000 £'000
Operating activities cash flows
Profit / (loss) on ordinary activities before taxation 5,304 (890)
Adjustments for:
Movement in fair value of investments 8 (3,990) (103)
Interest income 3 (2,473) -
Decrease / (increase) in trade and other receivables 1,991 (6)
(Decrease) / increase in trade and other payables (46) 716
Net cash inflow/(outflow) from operating activities 786 (283)
Investing activities
Purchase of investments (11,691) (921)
Decrease in fixed deposit 20,000 -
Interest income received 1,935 -
Net cash inflow / (outflow) from investing activities 10,244 (921)
Financing activities
Proceeds of share issues - 150,000
Share issue costs - (2,968)
Dividends paid 6 (3,780) -
Net cash (outflow) / inflow from financing activities (3,780) 147,032
Increase in cash 7,250 145,828
Cash and cash equivalents at beginning of the Period 69,361 -
Cash and cash equivalents at end of the Period 76,611 145,828
The accompanying notes are an integral part of the interim financial
statements.
Notes to the condensed unaudited financial statements
For the six months ended 31 March 2023
1 General information
Atrato Onsite Energy Plc (the "Company") is a closed-ended investment company
domiciled and incorporated in the United Kingdom on 16 September 2021 with
registered number 13624999. The registered office of the Company is 6(th)
Floor, 125 London Wall, London, EC2Y 5AS. Its share capital is denominated in
Pounds Sterling (GBP) and currently consists of one class of ordinary shares.
The shares are publicly traded on the London Stock Exchange under a premium
listing. These unaudited interim financial statements of the Company are for
the six months ended 31 March 2023 and have been prepared on the basis of the
accounting policies set out below. The financial statements comprise only the
results of the Company as its investment in Atrato Onsite Energy Holdco
Limited ("Holdco") is measured at fair value as detailed in the significant
accounting policies below. The Company and its subsidiaries invest in a
diversified portfolio of onsite energy assets generally on the rooftop of UK
commercial buildings, which benefit from long-term growing income streams with
limited exposure to wholesale power prices.
Atrato Partners Limited (the "Investment Adviser") provides investment
advisory services and JTC Global AIFM Solution Limited as the AIFM provides
investment management services to the Company, each under the terms of the
agreement between it and the Company.
2 Basis of preparation
The interim financial statements included in this report have been prepared in
accordance with UK adopted IAS 34 "Interim Financial Reporting". The interim
financial statements have been prepared under the historical cost convention,
as modified by the revaluation of financial assets and financial liabilities
at fair value through profit and loss.
The interim financial statements have also been prepared as far as is relevant
and applicable to the Company in accordance with the Statement of Recommended
Practice ("SORP") "Financial Statements of Investment trust companies and
Venture Capital Trusts" issued in July 2022 by the Association of Investment
Companies ("AIC").
The interim financial statements are prepared on the historical cost basis,
except for the revaluation of certain financial instruments at fair value
through profit and loss. The principal accounting policies adopted are set out
below. These policies have been consistently applied throughout the six months
to 31 March 2023.
The interim financial statements are prepared on the going concern basis in
accordance with international accounting standards.
These condensed financial statements do not include all information and
disclosures required in the annual financial statements. The financial
information contained in this interim report does not constitute statutory
accounts as defined in section 434 of the Companies Act 2006. The financial
information for the six months ended 31 March 2023 has not been audited.
The currency of the primary economic environment in which the Company operates
and where its investments are located (the functional currency) is Pounds
Sterling. The financial statements are presented in Pounds Sterling and
rounded to the nearest thousand.
Estimates and underlying assumptions are reviewed regularly on an on-going
basis. Revisions to accounting estimates are recognised in the period in which
the estimates are revised and in any future periods affected. The significant
estimates, judgments or assumptions for the Period are set out below under
Critical accounting judgements, estimates and assumptions.
Going concern
The Directors have adopted the going concern basis in preparing the interim
financial statements. The following is a summary of the Directors' assessment
of the going concern status of the Company.
The Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for at least twelve months from
the date of this report. In reaching this conclusion, the Directors have
considered the liquidity of the Company's portfolio of investments as well as
its cash position, income and expense flows. The Company's net assets at 31
March 2023 were £140.7 million (30 September 2022: £139.1 million). As at 31
March 2023, the Company held £76.6 million (30 September 2022: £89.4
million) in cash. The total expenses for the period ended 31 March 2023 were
£1.2 million (31 March 2022: £1.0 million).
Post the balance sheet date the Company increased its total contractual
commitment to fund projects under installation to £59 million, as a result of
the £39 million investment in project Skeeby. At the date of approval of this
report, based on the aggregate of investments, capital commitments and cash
held, the Company has substantial operating expenses cover.
Future revenue is principally expected to be derived through loan interest and
dividends from profit generated by underlying investments held within the
SPVs. Having regard to the current portfolio combined with current cash
balances, the Directors consider the Company to be in a position to meet its
current and future liabilities over the next 12-month period.
In light of the ongoing conflict of Russia and Ukraine, the Directors have
considered any potential impact on the portfolio's operations and procurement
processes, and do not foresee any material adverse impact for next 12 months.
Energy prices can fluctuate as a result of the conflict, which the Directors
maintain under close review; however, no material adverse impact on the
business is expected.
Critical accounting judgments, estimates and assumptions
The preparation of the interim financial statements requires management to
make judgments, estimates and assumptions that affect the application of
accounting policies and the reported amount of assets, liabilities, income and
expenses. Estimates, by their nature, are based on judgment and available
information; hence actual results may differ from these judgments, estimates
and assumptions. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying value of assets and liabilities
are those used to determine the fair value of the investments. There have been
no changes to the significant estimates, judgements and assumptions to those
set out on pages 68 to 71 of the 2022 Annual Report; a summary of these is
provided below:
Key estimation: Fair value estimation for investments at fair value
The Company's investments in unquoted investments are valued by reference to
valuation techniques approved by the Directors and in accordance with the
International Private Equity and Venture Capital Valuation Guidelines.
Discounted cash flow ("DCF") models are used to determine the fair value of
the underlying assets in HoldCo. The value of HoldCo includes any working
capital not accounted for in the DCF models, such as cash or entity level
payable and receivables. Unobservable inputs used within the DCF models
include the discount rate. An increase or decrease in the discount rate would
lead to a corresponding decrease or increase in the fair value of the
investments. The Company's investments at fair value are not traded in active
markets.
Key judgement: Basis of non-consolidation
The Company has adopted the amendments to IFRS 10, which states that
investment entities should measure all of their subsidiaries that are
themselves investment entities at fair value.
The Company owns 100% of its subsidiary HoldCo. The Company invests in special
purpose vehicles through its investment in HoldCo. The Company and HoldCo meet
the definition of an investment entity as described by IFRS 10. Under IFRS 10
investment entities measure subsidiaries at fair value rather than being
consolidated on a line-by-line basis, meaning HoldCo's working capital
balances are included in the fair value of the investment rather than in the
Company's current assets. HoldCo has one investor, which is the Company.
However, in substance, HoldCo is investing the funds of the investors of the
Company on its behalf and is effectively performing investment management
services on behalf of many unrelated beneficiary investors.
Key judgement: Characteristics of an investment entity
Under the definition of an investment entity, the entity should satisfy all
three of the following tests:
a) The Company obtains funds from one or more investors for the purpose of
providing those investors with investment management services;
b) The Company commits to its investors that its business purpose is to
invest funds solely for returns from capital appreciation, investment income,
or both (including having an exit strategy for investments); and
c) The Company measures and evaluates the performance of substantially all
of its investments on a fair value basis.
In assessing whether the Company meets the definition of an investment entity
set out in IFRS 10, the Directors note that:
a) The Company has multiple investors and obtains funds from a diverse
group of shareholders who would otherwise be less able to individually invest
in renewable energy and/ or infrastructure assets;
b) The Company's purpose is to invest funds for both investment income and
capital appreciation. HoldCo and the future SPVs will have indefinite lives.
However, the underlying assets do not have unlimited life and have minimal
residual value at the end of that life, meaning they will not be held
indefinitely. The Company intends to hold the renewable assets on a long-term
basis to achieve its investment objectives. Depending on the circumstances of
each renewable asset, decisions will be made whether to extend leases and
repower assets as they approach the end of their useful life or sell the
assets to interested parties who may take a more optimistic view of asset
value; and
c) The Company measures and evaluates the performance of all of its
investments on a fair value basis, which is the most relevant for investors in
the Company. The Directors use fair value information as a primary measurement
to evaluate the performance of all the investments and in decision-making.
The Directors are of the opinion that the Company meets all the typical
characteristics of an investment entity and therefore meets the definition set
out in IFRS 10.
The Directors agree that investment entity accounting treatment reflects the
Company's activities as an investment trust.
The Directors believe the treatment outlined above provides the most relevant
information to investors.
Segmental reporting
The Board is of the opinion that the Company is engaged in a single segment of
business, being investment in renewable energy infrastructure assets to
generate investment returns whilst preserving capital. The financial
information used by the Board to manage the Company presents the business as a
single segment.
Adoption of new and revised standards
At the date of approval of these financial statements, there were no new or
revised standards or interpretations relevant to the Company which had come
into effect.
3 Investment Income
For the six-month period ended 31 March 2023 (unaudited) For the period from incorporation on 16 September 2021 to 31 March 2022
(unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Interest income from investments 1,666 - 1,666 - - -
Interest income from deposits 807 - 807
Total investment income 2,473 - 2,473 - - -
4 Operating expenses
For the six-month period ended 31 March 2023 (unaudited) For the period from incorporation on 16 September 2021 to 31 March 2022
(unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fees 692 - 692 382 - 382
Director's fees 88 - 88 67 - 67
Company's auditors fees:
- in respect of audit services 39 - 39 - - -
- in respect of non-audit services 45 - 45 55 - 55
Other operating expenses 295 - 295 88 401 489
Total operating expenses 1,159 - 1,159 592 401 993
5 Taxation
(a) Analysis of charge /(credit) in the period
For the six-month period ended For the period from incorporation on 16 September 2021 to
31 March 2023 (unaudited) 31 March 2022 (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Corporation tax 289 878 1167 - - -
Tax charge/(credit) for the period - - - - - -
(b) Factors affecting total tax charge for the period:
The effective UK corporation tax rate applicable to the Company for the year
is 22% (2022: 19%), a blended rate of 19% to 31 March 2023 and 25% for April
to September 2023. The tax charge/(credit) differs from the charge/(credit)
resulting from applying the standard rate of UK corporation tax for an
investment trust company. The differences are explained below:
For the six-month period ended For the period from incorporation on 16 September 2021 to
31 March 2023 (unaudited) 31 March 2022 (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Profit/(loss) before taxation 1,314 3,990 5,304 (592) (298) (890)
Corporation tax at 22% (PY:19%) 289 878 1,167 (112) (57) (169)
Effects of:
Profit / (loss) on investments held at fair value not taxable - (878) (878)
Expenses not deductible for tax purposes - - - - - -
Excess expenses relieved from prior year - - - - - -
Interest distributions (289) - (289) 112 57 -
Total tax charge/(credit) for the period - - - - - -
6 Dividends
For the six-month period ended For the period from incorporation on 16 September 2021 to
31 March 2023 (unaudited) 31 March 2022 (unaudited)
Pence per Ordinary Share Capital reserve Total Pence per Ordinary Share Capital reserve Total
Q4 2022 Dividend - paid 16 December 2022 (2022: nil) 1.26 1,890 1,890 - - -
Q1 2023 Dividend - paid 24 February 2023 (2022: nil 1.26 1,890 1,890 - - -
Total 2.52 3,780 3,780 - - -
On 19 April 2023, the Company declared an interim dividend in respect of the
period from 1 January 2023 to 31 March 2023 of 1.23 pence per Ordinary
Share, paid on 26 May 2023 to Shareholders on the register on 28 April 2023.
On that record date, the number of Ordinary Shares in issue was 150,000,000
and the total dividend paid to Shareholders amounted to £1.8 million. The
dividend has not been included as a liability at 31 March 2023.
7 Earnings per share
Earnings per Ordinary Share is calculated by dividing the profit attributable
to equity shareholders of the Company by the weighted average number of
Ordinary Shares in issue during the period as follows:
For the six-month period ended For the period from incorporation on 16 September 2021 to
31 March 2023 (unaudited) 31 March 2022 (unaudited)
Revenue Capital Total Revenue Capital Total
Profit/(loss) attributable to the equity holders of the Company (£'000) 1,314 3,990 5,304 (592) (298) (890)
Weighted average number of Ordinary Shares in issue (000) 150,000 150,000 150,000 98,233 98,233 98,233
Earnings/(loss) per Ordinary Share (pence) - basic and diluted 0.88 2.66 3.54 (0.01) - (0.01)
8 Investment held at fair value through profit or loss
As set out in note 2, the Company accounts for its interest in its wholly
owned direct subsidiaries as an investment at fair value through profit and
loss.
(a) Summary of valuation
As at As at
31 March 2023 (unaudited) 30 September 2022 (audited)
£'000 £'000
Opening balance 47,105 -
Portfolio assets acquired 10,891 48,955
Additional investment in intermediary 800 -
Interest receivable 629 -
Movement in fair value of investments 3,990 (1,850)
Total investments at the end of the period/year 63,415 47,105
* Distributions received in the period relates to interest paid on shareholder
loans.
(b) Reconciliation of movement in fair value of portfolio of assets
The table below shows the movement in the fair value of the Company's
portfolio of renewable energy assets. These assets are held through
intermediate holding companies.
As at As at
31 March 2023 (unaudited) 30 September 2022 (audited)
£'000 £'000
Opening balance 47,105 -
Portfolio assets acquired 11,691 48,955
Distributions received (1,521) -
Movement in fair value 6,579 (1,739)
Fair value of portfolio of assets at the end of the period/year 63,854 47,216
Cash held in intermediate holding companies 154 -
Fair value of other net assets in intermediate holding companies (593) (111)
Fair value of Company's investments at the end of the period/year 63,415 47,105
(c) Investment gains / (losses) in the period
As at As at
31 March 2023 (unaudited) 30 September 2022 (audited)
£'000 £'000
Movement in fair value of investments 3,990 (1,850)
Fair value of portfolio of assets
The Investment Adviser has carried out fair market valuations of the
investments as at 31 March 2023.
The Directors have satisfied themselves as to the methodology used, the
discount rates applied and the valuation. All investments are in renewable
energy assets and are valued using a discounted cash flow methodology. The
Company's holding of an investment represents its interest in both the equity
and debt instruments of the investment. The equity and debt instruments are
valued as a whole using a blended discount rate. The weighted average cost of
capital applied to the portfolio of assets range from 5.55% to 7.00%.
The Company has modelled the enacted corporation tax rates of 19% for the
period to 31 March 2023 and 25% thereafter.
Inflation rates are assumed based on available market forecasts of the
inflation indices (RPI and CPI, where applicable) and capped where a cap
exists in the contract.
The power price forecasts used in the valuations are based on market forward
prices from independent and widely used market expert consultants' relevant
technology-specific capture price forecasts for each asset.
Fair value of intermediate holding company
The other net assets in the intermediate holding company substantially
comprise working capital balances; therefore the Directors consider the fair
value to be equal to the book values. The sensitivity to unobservable inputs
is based on management's expectations of reasonable possible shifts in these
inputs. The valuation sensitivity of each assumption is shown in Note 13.
9 Investment advisory fee
For the six-month period ended For the period from incorporation on 16 September 2021 to
31 March 2023 (unaudited) 31 March 2022 (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment advisory fee 692 - 692 382 - 382
The Investment Advisory Agreement ("IAA") dated 1 November 2021 between the
Company and Atrato Partners Limited as the Investment Adviser and JTC Global
AIFM Solutions Limited as the AIFM, appointed the Investment Adviser to act as
the Company's investment adviser. The AIFM has been appointed pursuant to the
AIFM agreement dated 1 November 2021 between the AIFM and the Company as the
alternative investment fund manager for the purposes of the AIFM Directive.
Accordingly, the AIFM is responsible for providing portfolio management and
risk management services to the Company.
The fees relating to the IAA are set out in the Investment Adviser report and
the Annual Report for 30 September 2022. No amendments have been made during
the period.
10 Share capital
As at 31 March 2023 (unaudited) As at 30 September 2022 (audited)
Allotted, issued and fully paid: Number of shares Nominal value of shares (£) Number of shares Nominal value of shares (£)
Opening Balance 150,000,000 1,500,000 - -
Allotted upon incorporation
Shares of £0.01 each (ordinary shares) - - 1 0.01
Issue of redeemable preference shares - - 50,000 50,000
Allotted / redeemed following admission to LSE
Shares issued - - 149,999,999 1,500,000
Initial redeemable preference shares redeemed - - (50,000) (50,000)
Closing balance 150,000,000 1,500,000 150,000,000 1,500,000
Ordinary shareholders are entitled to all dividends declared by the Company
and to all of the Company's assets after repayment of its borrowings and
ordinary creditors. Ordinary shareholders have the right to vote at meetings
of the Company. All Ordinary Shares carry equal voting rights.
11 Capital reduction reserve
As indicated in the Prospectus, following admission of the Company's shares to
trading on the LSE, the Directors applied to the Court and obtained a
judgement on 28 January 2022 to cancel the amount standing to the credit of
the share premium account of the Company. The amount of the share premium
account cancelled and credited to the Company's Capital reduction reserve was
£145,579,902, which is being utilised to fund distributions to the Company's
Shareholders.
12 Net assets per Ordinary Share
As at As at
31 March 2023 (unaudited) 30 September 2022 (audited)
Total shareholders' equity (£'000) 140,650 139,126
Number of Ordinary Shares in issued ('000) 150,000 150,000
Net asset value per Ordinary Share (pence) 93.8 92.8
13 Financial instruments by category
The Company held the following financial instruments at fair value at 31 March
2023. There have been no transfers of financial instruments between levels of
the fair value hierarchy. There are no non-recurring fair value measurements.
a. Financial instruments by category
As at 31 March 2023 (unaudited)
Financial assets at fair value through profit & loss Financial asset at amortised cost Financial liabilities at amortised cost Total
£'000 £'000 £'000 £'000
Non-current assets
Investments at fair value through profit or loss (Level 3) 63,415 - - 63,415
Current assets
Other receivables and prepayments - 1,043 - 1,043
Fixed deposits - - - -
Cash and cash equivalents - 76,611 - 76,611
Total assets 63,415 77,654 - 141,069
Current liabilities
Trade and other payables - - (419) (419)
Total liabilities - - (419) (419)
Net assets 63,415 77,654 (419) 140,650
As at 30 September 2022 (audited)
Financial assets at fair value through profit & loss Financial asset at amortised cost Financial liabilities at amortised cost Total
£'000 £'000 £'000 £'000
Non-current assets
Investments at fair value through profit or loss (Level 3) 47,105 - - 47,105
Current assets
Other receivables and prepayments - 3,215 - 3,215
Fixed deposits - 20,000 - 20,000
Cash and cash equivalents - 69,361 - 69,361
Total assets 47,105 92,576 - 139,681
Current liabilities
Trade and other payables - - (555) (555)
Total liabilities - - (555) (555)
Net assets 47,105 92,576 (555) 139,126
The above tables provide an analysis of financial instruments that are
measured subsequent to their initial recognition at fair value as follows:
· Level 1: fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or liabilities;
· Level 2: fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are observable for the
assets or liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices; and
· Level 3: fair value measurements are those derived from valuation
techniques that include inputs to the asset or liability that are not based on
observable market data (unobservable inputs).
There were no Level 1 assets or liabilities during the period. There were no
transfers between Level 1 and 2, Level 1 and 3 or Level 2 and 3 during the
period.
The Company's financial assets and liabilities as summarised above are
expected to be realised within 12 months of the reporting date, excluding
those held in FVTPL. The financial assets and financial liabilities measured
at amortised cost's carrying amount is approximated to its fair value which is
classified at level 3 at the fair value hierarchy.
The Level 3 fair value measurements derive from valuation techniques that
include inputs to the asset or liability that are not based on observable
market data (unobservable inputs).
Reconciliation of Level 3 fair value measurement of financial assets and
liabilities
An analysis of the movement between opening and closing balances of the
investments at fair value through profit or loss is given in note 8.
The fair value of the investments at fair value through profit or loss
includes the use of Level 3 inputs. Please refer to note 4 for details of the
valuation methodology and sensitivities.
Valuation sensitivities
The sensitivities are based on the existing portfolio of assets as at 31 March
2023 as well as cash flows of conditional acquisitions, and as such may not be
representative of the sensitivities once the Company is fully invested and
geared. For each of the sensitivities shown, it is assumed that potential
changes occur independently with no effect on any other assumption.
The below figures show the impact to NAV of changes to the key input
assumptions (sensitivities). The sensitivities are based on the existing
portfolio of assets as at 31 March 2023.
Discount rate
The discount rate is considered the most significant unobservable input
through which an increase or decrease would have a material impact on the fair
value of the investments at a fair value through profit or loss. The weighted
average cost of capital applied to the portfolio of assets range from 5.55% to
7.00%.
An increase of 0.5% in the discount rate would cause a decrease in total
portfolio value of 2.2 pence per Ordinary Share and a decrease of 0.5% would
cause an increase of 2.3 pence per Ordinary Share.
Discount Rate + 50 bps - 50 bps
Increase/(decrease) in NAV (£m) (3.2) 3.5
NAV per share 91.6p 96.1p
NAV per share change (2.2p) 2.3p
Change (2.3)% 2.5%
Energy production
Energy production, as measured in MWh per annum, assumed in the DCF valuations
is based on a P50 energy yield profile, representing a 50% probability that
the energy production estimate will be met or exceeded over time. An
independent engineer has derived this energy yield estimate for each asset by
considering a range of irradiation, weather data, ground-based measurements
and design/site-specific loss factors including module performance, module
mismatch, inverter losses, and transformer losses, among others. The P50
energy yield case includes a 0.5% annual degradation through the entirety of
the useful life. In addition, the P50 energy yield case includes an assumption
of availability, which ranges from 99% to 100%, as determined reasonable by an
independent engineer at the time of underwriting the asset.
Solar assets are subject to variation in energy production over time. An
assumed "P90" level of energy yield (i.e. a level of energy production that is
below the "P50", with a 90% probability of being exceeded) would cause a
decrease in the total portfolio valuation of 2.8 pence per Ordinary Share,
while an assumed "P10" level of power output (i.e. a level of energy
production that is above the "P50", with a 10% probability of being achieved)
would cause an increase of 2.6 pence per Ordinary Share in the total portfolio
valuation.
Energy production P90 P10
Increase/(decrease) in NAV (£m) (4.2) 4.0
NAV per share 91.0p 96.4p
NAV per share change (2.8p) 2.6p
Change (3.0)% 2.8%
Power price curve
The power price forecasts for each asset are based on a number of inputs. The
sensitivity assumes a 10% increase or decrease in power prices relative to the
base case for each year of the asset life.
For an increase in power prices by 10%, there is a 0.9 pence per Ordinary
Share increase in NAV, while a decrease of 10% in power prices has a decrease
of 0.8 pence per Ordinary Share in NAV, due to low merchant power price
exposure.
Power price curve +10% -10%
Increase/(decrease) in NAV (£m) (1.2) 1.4
NAV per share 93.0p 94.7p
NAV per share change (0.8p) 0.9p
Change (0.9)% 1.0%
Inflation
The sensitivity assumes a 50bps increase or decrease in inflation relative to
the base case for each year of the asset life.
A 50bps increase in inflation would result in a 1.3% increase in NAV while a
50bps decrease would decrease the NAV by 1.2%.
Inflation +10% -10%
Increase/(decrease) in NAV (£m) (1.7) 1.9
NAV per share 92.7p 95.0p
NAV per share change (1.1p) 1.2p
Change (1.2)% 1.3%
14 Financial risk management
The Company's activities expose it to a variety of financial risks, including
credit, liquidity and market risk. These financial risks form part of the
Company's overall principal risks .
The Investment Adviser, AFIM and the Administrator report to the Board on a
bi-annual basis and provide information to the Board, which allows it to
monitor and manage financial risks relating to the Company's operations.
Credit risk
Credit risk is the risk that financial loss arises from the failure of a
customer or counterparty to meet its obligations under a contract.
The Company's credit risk exposure, in relation to cash holdings is minimised
by dealing with financial institutions with investment grade credit rating.
The Company has no significant credit exposure at the current time. Exposure
in relation to customers will be mitigated by a combination of due diligence
procedures performed at inception of a PPA and diversity of counterparties in
the portfolio.
As at 31 March 2023, the Company's maximum exposure is the cash and cash
equivalents stated at the balance sheet. Appropriate credit checks are
required to be made on all counterparties to the Company. Cash is held in
accounts with HSBC Bank Plc, which has a credit rating as per Moody's Investor
Services of A1. During the six months ended 31 March 2023, there are no
balances past due or impaired.
Liquidity risk
The objective of liquidity management is to ensure that all commitments which
are required to be funded can be met out of readily available and secure
sources of funding.
The Company's approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its liabilities when
due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Company's reputation.
The Company's trade and other payables with third parties at the reporting
date are considered operational in nature and are due and payable within 12
months of the reporting date. As at 31 March 2023, the Company has financial
assets of cash and cash equivalents without contractual maturity that can meet
the current expected financial liabilities.
Market risk
Market risk is the risk that changes in market prices, such as interest and
foreign currency rates and property valuations, will affect the Company's
financial performance or the value of its holdings of financial instruments.
The objective is to minimise market risk through managing and controlling
these risks within acceptable parameters, whilst optimising returns.
The Company uses financial instruments in the ordinary course of business, and
also incurs financial liabilities, in order to manage market risks. The
Company's interest rate risk on interest bearing financial assets is limited
to interest earned on fixed cash deposits. The Interest Rate Benchmark Reform
- Phase 2 did not have a material impact on the Company's reported results as
the exposure to interest rates is limited to interest earned on fixed
deposits.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will
fluctuate due to changes in market interest rates. The Company's interest rate
risk on interest bearing financial assets is limited to interest earned on
fixed cash deposits.
Currency risk
Currency risk is the risk that the value of a financial instrument will
fluctuate due to changes in foreign exchange rates. All transactions during
the current period were denominated in GBP, thus no foreign exchange
differences arose.
Capital management
The Company manages its capital to ensure that it will be able to continue as
a going concern while maximising the return to its shareholders through the
optimisation of the debt and equity balances. The Company is not subject to
any externally imposed capital requirements.
Equity includes all capital and reserves of the Company that are managed as
capital.
15 Related party transactions
Following admission of the Ordinary Shares (refer to note 10), the Company and
the Directors are not aware of any person who, directly or indirectly, jointly
or severally, exercises or could exercise control over the Company. The
Company does not have an ultimate controlling party.
Details of related parties are set out below.
a) Accounting, secretarial and directors
Atrato Partners Limited has been appointed to act as an administrator for the
Company under the terms of the IAA, more details are set out below.
Apex Secretaries LLP is currently the secretary of the Company.
Juliet Davenport, Chair of the Board of Directors of the Company, is paid
director's remuneration of £50,000 per annum, Faye Goss is paid director's
remuneration of £37,500 per annum, Marlene Wood is paid director's
remuneration of £42,500 per annum. Post 31 March 2023, the Company appointed
Duncan Neale as a new non-executive director and Audit Chair. As Audit
Chair, he is paid director's remuneration of £42,500 and Marlene Wood's
remuneration changed to £37,500 per annum. Total directors' remuneration of
£65,000 was incurred in respect to the Period. Any expenses incurred by
Directors which are related to business are also reimbursed.
The interests (all of which are or will be beneficial unless otherwise stated)
of the current Directors in the ordinary share capital of the Company as at 31
March 2023 were as follows:
Director Shares held at 31 March 2023
Juliet Davenport 33,000
Faye Goss 20,000
Marlene Wood 20,000
During the period, Juliet Davenport acquired 13,000 new shares in the Company.
b) Investment Adviser
Fees payable to the Investment Adviser by the Company under the IAA are shown
in the Statement of Comprehensive Income and detailed in note 9.
During the Period, investment advisory fees amounted to £702,053 with
£249,433 outstanding and payable as at 31 March 2023.
Details of the direct and indirect interests of the Directors of the
Investment Adviser and their close families in the ordinary shares of one
pence each in the Company at 31 March 2023 were as follows:
Benedict Luke Green, a director of the Investment Adviser: 694,960 shares 0.46
% of the issued share capital).
Steve Peter Windsor, a director of the Investment Adviser: 1,347,128 shares
0.90 % of the issued share capital).
Gurpreet Gujral, Fund manager of the Investment Adviser: 92,862 shares (0.06%
of issued share capital).
Natalie Markham, a director of Holdco and SPVs: 18,250 shares (0.01% of issued
share capital)
Lara Townsend, a director of Holdco and SPVs: 8,664 shares (0.01% of issued
share capital)
c) Amounts payable to related parties
Amounts payable to the Investment Adviser represent expense paid on behalf of
the Company and amounted to £249,433 at the Period end.
d) Amounts receivable from related parties
The Company has provided a loan to Holdco for £125 million at 7% interest, of
which £10.9 million was drawn during the period, leaving £53.4 million
outstanding as at 31 March 2023. The Company additionally provided funding to
Holdco for working capital and VAT. The balance outstanding at Period end was
£546,624.
16 Unconsolidated Subsidiaries, Associates and Other Entity
The following table shows subsidiaries of the Company as at 31 March 2023. As
the Company is regarded as an investment entity as referred to in note 2,
these subsidiaries have not been consolidated in the preparation of the
financial statements. The Company is the ultimate parent undertaking of these
entities.
Ownership Country of
Name Interest Investment Category incorporation Registered address
Atrato Onsite Energy Holdco Ltd 100% Holdco subsidiary entity UK 6th Floor, 125 London Wall, London, EC2Y 5AS
Atrato Rooftop Solar 1 Ltd 100% Operating subsidiary entity, owned by Holdco UK 6th Floor, 125 London Wall, London, EC2Y 5AS
EMDC Solar Ltd 100% Operating subsidiary entity, owned by Holdco UK 6th Floor, 125 London Wall, London, EC2Y 5AS
Hylton Plantation Solar Farm Ltd 100% Operating subsidiary entity, owned by Holdco UK 6th Floor, 125 London Wall, London, EC2Y 5AS
Sonne Solar Ltd 100% Operating subsidiary entity, owned by Holdco UK 6th Floor, 125 London Wall, London, EC2Y 5AS
London Road Energy Centre 100% Operating subsidiary entity, owned by Holdco UK 6th Floor, 125 London Wall, London, EC2Y 5AS
Guarantees provided by the Company in relation to liabilities that may arise
in Hylton Plantation Solar Farm Ltd or Sonne Solar Ltd have been provided in
the table below. The expected economic or cash outflow from the Company is
expected to be nil.
Provider Investment Beneficiary Nature Purpose Amount
£'000
The Company Hylton Nissan Guarantee PPA 10,000
The Company Sonne Solar Tesco Guarantee Framework PPAs 10,000
The Company Sonne Solar Tesco Guarantee PPA 6,000 to 10,000
The Company Sonne - LCY2 Amazon Guarantee PPA 30,000
The Company Sonne - LTN4 Amazon Guarantee PPA 30,000
The Company Sonne - EDI1 Amazon Guarantee PPA 30,000
The Company Sonne -MAN2 Amazon Guarantee PPA 30,000
The Company Sonne -BHX2 Amazon Guarantee PPA 30,000
The Company Sonne -BHX3 Amazon Guarantee PPA 30,000
The Company Sonne -BHX4 Amazon Guarantee PPA 30,000
17 Commitments and contingencies
As at 31 March 2023, the Company's subsidiaries had future investment
obligations totaling £19.6 million (30 September 2023: £1.4 million)
relating to its solar investments currently undergoing installation.
18 Post balance sheet events
In April, the Company appointed Duncan Neale to the board as a non-executive
director and as the new Chair to the Audit Committee.
On 13 April 2023, the Company acquired 100% of the shares in Skeeby Solar
Limited ("Skeeby"), which is a special purpose vehicle to develop a 50MW solar
PV system. The acquisition will see the Company invest £39.4 million, over a
twelve month installation period.
On 19 April 2023, the Company declared an interim dividend in respect of the
period from 1 January 2023 to 31 March 2023 of 1.23 pence per Ordinary
Share, paid on 26 May 2023 to Shareholders on the register on 28 April 2023.
On that record date, the number of Ordinary Shares in issue was 150,000,000
and the total dividend paid to Shareholders amounted to £1.8 million. The
dividend has not been included as a liability at 31 March 2023.
On 11 May 2023, the new owner of the Vale of Mowbray site exercised the
buy-out option in the lease to acquire the solar panels installed at the site
for £0.9m.
No other significant events have occurred between 31 March 2023 and the date
when the interim accounts were authorised by the Board of Directors, which
would require adjustments to, or disclosure in, the Company's interim
accounts.
Alternative Performance Measures
In reporting financial information, the Company presents alternative
performance measures ("APMs") which are not defined or specified under the
requirements of IFRS. The Company believes that these APMs, which are not
considered to be a substitute for or superior to IFRS measures, provide
stakeholders with additional helpful information on the performance of the
Company. The APMs presented in this report are shown below:
Premium/Discount
The amount, expressed as a percentage, by which the share price at 31 March
2023, is greater or less the NAV per share.
As at As at
31 March 30 September
2023 2022
NAV per share (pence) a 93.8 92.8
Share price (pence) b 85.6 99.5
(Discount) / Premium (b÷a)-1 (8.7%) 7.2%
Total return
Total return is a measure of performance that includes both income and capital
returns. It considers capital gains and the assumed reinvestment of dividends
paid out by the Company into its shares on the ex-dividend date. The total
return is shown below, calculated on both a share price and NAV basis.
Share price
For the period from IPO to 31 March 2023 (pence) NAV (pence)
Value at IPO a 100.0 98.1
Closing at 31 March 2023 b 85.6 93.8
Dividends paid since IPO c 5.5 5.5
Adjusted closing (d=b + c) d 91.1 99.3
Total return (d÷a)-1 (8.9)% 0.9 %
Share price
For the period from IPO to 30 September 2022 (pence) NAV (pence)
Value at IPO a 100.0 98.1
Closing at 30 September 2022 b 99.5 92.8
Dividends paid since IPO c 3.0 3.0
Adjusted closing (d=b + c) d 102.5 95.8
Total return (d÷a)-1 2.5% (2.3)%
Ongoing charges ratio
A measure, expressed as a percentage of average NAV, of the regular, recurring
annual costs of running an investment company.
For the period
from IPO to
31 March
2023
Average NAV (£'000) a 139,888
Ongoing fees* (£'000) b 2,277
Ongoing charges ratio (b÷a) 1.6%
*Ongoing fees for the six months to 31 March 2023 annualised. Consisting of
investment management fees and other recurring expenses.
1 (#_ftnref1) OCR for 30 September 2022 includes the period prior to IPO
when no expenses were incurred
2 (#_ftnref2) Including post balance sheet events and excluding commitments
under framework agreements
3 (#_ftnref3) Investment Adviser research. Sector comprises UK listed solar
focussed renewables companies
4 (#_ftnref4) Based on the Company's first full year of operations
5 (#_ftnref5) Based on GOV UK publications for scope 1 and 2 emission
conversion factors
6 (#_ftnref6) Based on Ofgem average UK annual household energy consumption
of 2,900kWh
7 (#_ftnref7) Estimated based on 28,000t of carbon avoided. Assumes 0.025t
of carbon consumed annually per tree
8 (#_ftnref8) Calculated as the difference between the PPA price and
Aurora's latest wholesale price forecast plus a £70/MWh non-commodity cost in
each respective period, discounted to present value
9 (#_ftnref9) Including post balance sheet events and excluding commitments
under framework agreements
10 (#_ftnref10) Dividend cover is net of ongoing fund costs
11 (#_ftnref11) Dividend cover is net of ongoing fund costs
12 (#_ftnref12) Based on the Company' first full year of operations
13 (#_ftnref13) One Tesco site is currently under installation and is due to
be operational August 2023
14 (#_ftnref14) As at announcement date
15 (#_ftnref15) Dividend cover is net of ongoing fund costs
16 (#_ftnref16) Dividend cover is net of ongoing fund costs
17 (#_ftnref17) This is the value of funds injected into the SPVs as at 31
March 2023 and not the full committed amount to projects
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