REG - HydrogenOne Cap Gwth - Annual Results and Sustainability Report
18/04/2024 07:00
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RNS Number : 0449L HydrogenOne Capital Growth PLC 18 April 2024
LEI: 213800PMTT98U879SF45
HydrogenOne Capital Growth plc
("HydrogenOne" or the "Company")
Annual Results and Sustainability Report
For the year ended 31 December 2023
www.hydrogenonecapitalgrowthplc.com
HydrogenOne Capital Growth plc, the first London-listed fund investing in
clean hydrogen for a positive environmental impact, is pleased to announce its
audited results for the year ended 31 December 2023.
The Company has also produced its first standalone sustainability report for
the year ended 31 December 2023 aligned with the IFRS International
Sustainability Standards Board, available to read and download on the
Company's website:
https://hydrogenonecapitalgrowthplc.com/sustainability/our-approach/
(https://hydrogenonecapitalgrowthplc.com/sustainability/our-approach/)
Results presentation today
There will be a presentation for sell side analysts at 9.00 a.m. today, 18
April 2024. Please contact Buchanan for details on hgen@buchanancomms.co.uk
(mailto:hgen@buchanancomms.co.uk)
Additionally, there will be a live presentation open to all existing and
potential shareholders via the Investor Meet Company platform at 3pm.
Investors can sign up to Investor Meet Company for free and add to meet
HydrogenOne via:
https://www.investormeetcompany.com/hydrogenone-capital-growth-plc/register-investor
(https://www.investormeetcompany.com/hydrogenone-capital-growth-plc/register-investor)
A copy of the presentation is available to read and download on the Company's
website:
https://hydrogenonecapitalgrowthplc.com/investors/results-presentations-and-factsheets/
(https://hydrogenonecapitalgrowthplc.com/investors/results-presentations-and-factsheets/)
Company Overview
About us
HydrogenOne Capital Growth Plc ("HGEN", "the Company") is the first
London-listed fund investing in clean hydrogen for a positive environmental
impact.
The Company was launched in 2021 with an investment objective to deliver an
attractive level of capital growth by investing, directly or indirectly, in a
diversified portfolio of hydrogen and complementary hydrogen focussed assets
whilst integrating core ESG principles into its decision making and ownership
process. The Company is an Article 9 climate impact fund under the Sustainable
Finance Disclosure Regulation (the "SFDR").
· A unique offering to investors - leadership in a new green energy
technology sector from the first London-listed hydrogen fund.
· Strong orientation to ESG mandates, investing capital in
low-carbon growth and enabling the avoidance of GHG emissions.
· High quality portfolio with potential to deliver 10-15% average
NAV growth, including exits*.
· First mover advantage in the Hydrogen sector, which is
accelerating faster than anticipated with positive growth outlook.
· Investment Adviser's track record in energy and capital markets.
* For an investor in HGEN at IPO. The total NAV return target is a
target only and not a profit forecast.
£132.7m
Net Asset Value
SFDR Article 9
Climate impact fund
>91,000 tonnes
CO2e emissions avoided in FY2023
Investing in clean hydrogen for a climate-positive impact
Highlights
At a glance
Financial and operational highlights
· NAV increased by 5.8% from £125.4 million at 31 December 2022 to
£132.7 million at 31 December 2023 due to valuation uplifts in multiple
portfolio companies. NAV per share increased to 102.99p at 31 December 2023;
· The share price fell from 79.30p to 49.65p and the discount to
NAV increased from 18% to 52% as rising interest rates put pressure on
investment trust discounts;
· Positive progress on revenue growth from portfolio companies,
delivering an aggregate £74.0 million in total revenue in the year to 31
December 2023, an increase of 125% compared to the year to 31 December 2022;
· Investment activity centred on follow-ons, with one new
investment. During the year ended 31 December 2023, the Company successfully
completed its first investment in a private hydrogen project (Thierbach
project in Germany) and made follow-on investments in 5 Private Hydrogen
Assets in its portfolio, totalling £10.6 million;
· Strategic industrial investors have backed HydrogenOne portfolio
companies in 2023, including Cemex and HD Hyundai in HiiROC and Elcogen
respectively;
· At 31 December 2023, the total invested capital since IPO
amounted to £113.7 million;
· The portfolio weighted average discount rate at 31 December 2023
was 14.2% (31 December 2022: 13.0%) resulting in a 6.7 pence per share
reduction in NAV between 31 December 2022 and 31 December 2023;
· The Company has retained a cash position of £4.6 million as at
31 December 2023, and £2.3 million of listed hydrogen companies at the end of
the year;
· Post-period NanoSUN has been restructured to create a new
company, Swift Hydrogen;
· The fundamentals of the clean hydrogen sector continued to
strengthen, despite recent weak macro-economic conditions. The Company has
seen some $17 billion of financial investment in green hydrogen in 2023, an
over 400% increase over 2022 levels, underscoring the positive industry
outlook for clean hydrogen.
Environmental, Social and Governance (ESG) highlights
· Classified as an Article 9 Fund under the SFDR;
· 91,116 tonnes of Greenhouse Gas (tCO2e) emissions avoided in the
year ended 31 December 2023 (an increase of 113.13% from the prior year) and
141,695 tCO2e since IPO;
· 92% alignment with EU taxonomy for sustainable activities (the
"EU Taxonomy") assessment on Private Hydrogen Assets at 31 December 2023;
· £113.7m deployed in low-carbon growth (since fund inception);
· Potential 571,294 MWh lifetime clean energy capacity in year
ended 31 December 2023 and 797,294 MWh since IPO;
· 1,406 jobs supported; and
· Continued stewardship activity with portfolio companies to
further enhance ESG credentials and reporting, with 6 month reporting of key
metrics introduced.
SFDR Article 9
92% EU Taxonomy Aligned
141,695
Avoided GHG Emissions since IPO
£114m
Deployed in Low Carbon Growth
Key statistics as at 31 December 2023 At 31 December 31 December
2023(2) 2022 % change
NAV per Ordinary Share 102.99p 97.31p 5.8%
NAV £132.7m £125.4m 5.8%
Ordinary Share price 49.65p 79.30p (37.4)%
Market capitalisation £64.0m £102.2m (37.4)%
Share price premium/(discount) to NAV(1) (51.8)% (18.5)% (180.0)%
Total Shareholder NAV return per Ordinary Share(1) 5.8% 1.6% 262.5%
Ongoing Charges(1) 2.6% 2.5% 2.0%
Cumulative capital deployed in low-carbon growth since inception £113.7m £102.9m 10.5%
GHG emissions avoided 91,116 tCO2e 42,716 tCO2e 113.3%
The EU taxonomy alignment 92% 89% 3.4%
3 Year Performance
Key statistics as at 31 December 2023 At 31 December 31 December 31 December
2023(2) 2022 2021
NAV per Ordinary Share 102.99p 97.31p 95.75p
NAV £132.7m £125.4m £102.8m
Ordinary Share price 49.65p 79.3p 119.5p
Market capitalisation £64.0m £102.2m £128.3m
Share price premium/(discount) to NAV(1) (51.8)% (18.5)% 24.8%
Ongoing Charges(1) 2.6% 2.5% 2.1%
Total Shareholder NAV return per Ordinary Share(1) 5.8% 1.6% (2.3)%
Cumulative capital deployed in low-carbon growth since inception £113.7m
£102.9m £48.6m
GHG emissions avoided 91,116 tCO2e 42,716 tCO2e N/A
The EU taxonomy alignment 92% 89% N/A
1 Alternative Performance Measures ("APMs"). The disclosures above
are considered to represent the Company's APMs. Definitions of these APMs and
other performance measures used by the Company, together with how these
measures have been calculated, can be found in the annual report.
2 Total returns for the 12 months to 31 December 2023.
Portfolio at a Glance
Portfolio summary as at 31 December 2023
HydrogenOne has a unique and concentrated portfolio, invested across the
hydrogen value chain
Where we invest
· Revenue-generating equipment businesses
· Hydrogen production projects
· Co-investing with industrial strategics and institutions
· Diversified portfolio and geography
· Clear strategies to exit via IPO or trade sale
Chairman's Statement
On behalf of the Board, I am pleased to report on the performance and
activities of the Company in 2023.
Simon Hogan Chairman
On behalf of the Board, I had hoped to report an improved share price this
year. However, the share price remains at a steep discount, despite an
increase in NAV in 2023, as is the case for many listed funds presently. The
outlook for the clean hydrogen sector remains positive and we believe that the
portfolio can generate attractive returns over time. We fully support the
Investment Advisor's strategy of investing in a diversified portfolio of
hydrogen assets, across the value chain. Whilst macro-economic factors are
outside of our control, we believe that selective investment, stewardship of
the portfolio, and divestments can positively impact our NAV, and improve the
share price over time.
Hydrogen Industry Landscape
The outlook for the clean hydrogen sector remains positive, and industry
investment and capacity growth is accelerating in a sector that plays a key
role in the energy transition. The COP 28 meeting in Dubai at the end of 2023
concluded with a call to transition away from polluting fossil fuels and
accelerate growth in renewables, in order to mitigate the impact of climate
change. At the same time, government policies and funding in many regions
remain supportive of growth in clean hydrogen, as part of the push to 'net
zero'. The fundamentals of the hydrogen sector continue to strengthen, despite
weak macro-economic conditions. The Investment Advisor has tracked a 50%
increase in green hydrogen production in 2023 compared to 2022, and an over
400% increase in investment in the sector, underpinning further growth. All of
this underscores my view that the outlook for investment in clean hydrogen
remains positive, despite headwinds in markets more generally during 2023.
Share Price Discount
Whilst our share price traded at a premium to NAV in 2021 and early 2022, the
weakness seen towards the end of 2022 has continued throughout 2023. We
recognise that decline in our share price, which reflects wider moves in
equity markets and the listed funds sector, will have been disappointing for
our investors. Significant changes are underway in energy markets, with new
industry and political emphasis on energy security as a result of Russia's
invasion of Ukraine, with renewed market emphasis on fossil fuels.
Investors for the large part have allocated capital away from emerging
technology sectors, as a result of higher market discount rates and reduced
risk appetite, and this has impacted our share price. Factors, such as
inflation, discount rates, energy policies and the weak funding environment
also impact the underlying portfolio companies.
Nevertheless, I hope this Annual Report sets out the positive progress that we
are making with value creation in the Company's portfolio, with businesses
that we believe can generate substantial value for our investors over time.
The Company and the Investment Adviser continue to focus on increasing the
share price and attracting fresh capital into the Company. The Company, in
conjunction with portfolio companies, is planning to exit some positions
during 2024, which the Board believes will support the Company's objective of
delivering capital growth through investment in a diversified portfolio of
hydrogen assets. Subject to wider market conditions, strong NAV performance
over the long term may increase the Company's appeal to investors and underpin
renewed share price performance.
Our business model remains to invest in growth companies in the hydrogen
sector, with the aim to exit these positions over 3 to 5 years holding
periods, at multiples of invested capital, in order to generate 10-15% NAV
growth over time. While we are unable to influence the general market weakness
around us, we continue to ensure that the Company is positioned to weather the
current downturn and able to exploit growth opportunities when the market
recovers.
Performance
The Company remains well positioned to grow value for our investors. During
the period, the Company's NAV increased by 5.8%, from £125.4m to £132.7m
(97.3 pence per share to 103.0 pence per share) due to valuation uplifts in
multiple portfolio companies, as those management teams delivered on their
respective growth plans. Our diversified approach to portfolio construction
has contributed to a resilient valuation in 2023, despite weakness in
financial markets more generally. Overall, private investments contributed
£14.0 million or 10.8 pence per share to the valuation. This NAV growth was
delivered despite the negative impact on valuations as a result of a prudent
increase in discount rates, which had the effect of removing £8.6 million, or
some 6.7 pence per share from our 31 December 2023 valuation, compared to 31
December 2022.
The Company reported a gain after tax of £7.3m for the period, equal to 5.7
pence per share. The Company's dividend policy is to only pay dividends in
order to satisfy the ongoing requirements under the Investment Trust (Approved
Company) (Tax) Regulations 2011. The Company has paid no dividends during the
period, as we continue to focus on growth investments.
Eight of the Company's private investments are revenue generating, producing
equipment and technology solutions for clean hydrogen production. The
aggregate revenue from these investments was £74m in the 12-month period to
31 December 2023, an increase of 125% from the prior year. This growth is as
a result of portfolio companies converting their distinctive technologies into
orders from customers.
Investment Strategy and Update
The Company continues to invest in a diversified portfolio of hydrogen related
activities, predominantly in private companies and with a particular focus on
the innovative technologies that are needed to unlock profits in clean
hydrogen. Wherever possible, we have sought to protect the Company from
dilution of its interests, should we not be able to participate in funding
rounds.
With the majority of the Company's capital now deployed, our approach has
focused on incremental investments in existing portfolio companies, with
£10.6 million invested in 2023 backing these management teams to deliver
their growth plans. This comprised:
· The Company invested £3.5 million in a follow-on investment in
hydrogen flight innovator Cranfield Aerospace Solutions Ltd, alongside Safran
Corporate Ventures and the Strategic Development Fund;
· The Company committed to invest £2.5 million (EUR 2.8 million)
into a green hydrogen production project at Thierbach, in Germany, managed by
HH2E AG, in order to further progress this project, ahead of a final
investment decision. To date £1.9 million (EUR 2.1 million) has been drawn;
· The Company invested £2.5 million in a follow-on investment in
NanoSUN, a hydrogen technology, transportation and distribution business;
· The Company invested £1.8 million in a follow-on investment into
Sunfire AG, a leading electrolyzer developer and supplier;
· The Company invested £0.5 million in a follow-on investment in
Strohm, a low carbon pipeline innovator in the Netherlands; and
· The Company invested £0.4 million in a follow- on investment in
Gen2 Energy, a green hydrogen development company in Norway.
It was also pleasing to see new investment from industrial strategic players
in HydrogenOne's portfolio, such as HD Hyundai's backing of Elcogen, and Cemex
in HiiROC, further supporting the Company's investment case for these
investments. These investors not only bring growth capital, but also new
routes to market for these distinctive technologies.
Valuation
Listed funds continue to come under scrutiny from investors regarding the
valuation of portfolios of private investments. The Company applies a
consistent approach to portfolio valuation, centred on discounted cash flows,
using the International Private Equity and Venture Capital Valuation 2022
("IPEV") Guidelines. The weighted average discount rate at 31 December 2023
was 14.2%, compared to 13.0% at 31 December 2022, which reduced NAV by £8.6
million or 6.7 pence per share at 31 December 2023. The details of these
valuations are set out later in the annual report. The valuations in this
report have an implied forward multiple of 9.8 times 2025 expected revenues,
which is in line with listed hydrogen sector multiples, and underscores the
robust approach we are taking to valuations. The discount of the Company's
private investments to the listed peer group has narrowed over 2023, due to
weakness in listed hydrogen company share prices. Share prices in the listed
markets are reflected in the valuation of the Company through listed assets in
the portfolio.
The Board meets quarterly with the Company's Investment Adviser and holds
regular meetings to review all of the Company's investment valuations. The
Board also has regular contact with the Investment Adviser outside of formal
Board meetings. I and other Board members attended the Company's Capital
Markets Day in 2023, where we met some of our investors and analysts, and the
management teams of all the private companies that we have invested in.
The Investment Adviser has a dedicated investment team and has the right to
be represented on all of the boards of the private company investments.
Environment, Social & Governance
Since our launch in 2021 the Company has invested in clean hydrogen assets
which contribute to the energy transition and can lead to avoided GHG
emissions. ESG principles are integrated across the investment process. Our
commitment to positively contribute to climate change mitigation, whilst
integrating core ESG principles into our decision making and ownership
process, is at the core of everything that we do as a Company. The Company is
classified as an Article 9 Fund, the highest classification under the SFDR
regulation. We are a signatory of the PRI, a United Nations supported network
of financial institutions that promote sustainable investments, and disclosed
GHG information on the Carbon Disclosure Project ("CDP") for the first time in
2023. In collaboration with our portfolio companies, we will push forward with
our sustainable investment objectives as we continue to deploy capital in
low-carbon growth.
In addition to climate-positive impact, particular focus is placed on
engagement to deliver effective boards and the encouragement of sustainable
business practices. These, and other issues, are evaluated prior to any
investment decision, and managed thereafter through close relationships with
the Company's private company investments.
The Company's portfolio companies are supplying critical components, such as
electrolyzers and fuel cells, as well as services such as transportation and
storage of hydrogen, to clean hydrogen manufacturing projects and hydrogen
end-users. All of this results in the replacement of fossil fuels such as
diesel in the energy mix, and avoids greenhouse gas emissions, which have
totalled 141,695 CO2e since our IPO in 2021, presenting clear growth
opportunities for the broader sector.
We are tracking GHG emissions from portfolio companies, which totalled 99
tCO2e in 2023 (Scope 1 and 2) and are engaged with these management teams to
reduce GHG intensity over time. The Investment Advisor is represented on the
boards of all of the private investments and driving continuous improvement in
ESG delivery more generally.
The Company is dedicated to further developing and progressing our ESG
framework to achieve the highest reporting and performance levels. Alongside
this Annual Report, we are publishing a separate Sustainability Report, that
sets out our policy and track record in more detail.
Annual General Meeting
The Annual General Meeting will be held on 21 May 2024 at 12.00 noon at the
Company's registered office, 6(th) floor, 125 London Wall, London EC2Y 5AS,
and we look forward to welcoming shareholders to the event in person.
The meeting will consider the formal business of the AGM, as set out in the
Notice of the AGM, and thereafter the Investment Adviser will provide a
presentation on the Company's portfolio.
Events After the Period End
In February 2024, the Company implemented a restructuring of NanoSUN, and
re-launched the streamlined business, renamed as Swift Hydrogen Ltd ('Swift'),
which the Company owns. The carrying value of NanoSUN at 31 December 2023 is
£5.4 million, compared to £11.5 million at 31 December 2022.
In March 2024, Sunfire announced a funding round totalling more than EUR 500
million. The Company exercised its anti-dilution and conversion rights in
this round for #0.3 million. The Board resolved to make a non-material
modification to the Company's investment restrictions, so that investments in
Sunfire, measured at the time of investment, shall not exceed 21% of the
Company's GAV. The Company's existing restriction of an investment limit of
20% of GAV at the time of investment is unchanged for the remainder of the
portfolio.
In April 2024, the Company agreed to a restructuring of HH2E, ahead of planned
material third party fund raising for green hydrogen projects in Germany. The
Company has exchanged its development rights for five project SPVs, including
the Thierbach SPV for equity in HH2E. In parallel, the Lubmin SPV, which was
previously carved out of the Company's direct holdings, has also been combined
with HH2E in a non-cash transaction for the Company. The Company's
previously announced development loan to Thierbach, of which £1.9 million has
been drawn, will be reduced to £0.7 million, through a swap for equity in
HH2E. The Company's resulting equity share of HH2E is unchanged, at around
11% of an enlarged asset base and with a similar corporate structure, and with
direct exposure to the Lubmin project.
Outlook
Our diversified portfolio approach has proved resilient and our investment
case has been reinforced further by macro tailwinds and supportive regulatory
regimes in the clean hydrogen sector. There are considerable uncertainties on
the near-term macro-economic outlook, and a challenging funding environment in
private equity, which are affecting valuations across the listed funds sector.
Nevertheless, we remain confident that the Company is investing in a sector
with a favourable outlook and a substantial growth potential. New regulations
and funding for clean hydrogen are being rolled out in the USA, UK and EU.
Whilst market sentiment is outside of our control, the Company anticipates
that the continued solid performance of our portfolio, revenue growth and
delivery of key milestones will be catalysts for appreciation in our share
price.
As we move to exit selected portfolio companies, either partly or entirely,
the Board will be focused on protection of invested capital and realising
returns. This ambition frames our target to deliver 10-15% annual NAV growth
over time, and I believe that our Investment Adviser, whose principals have
over 60 years of combined specialist experience and track record, is well
placed to deliver on these projected targets.
On behalf of the Board, I would like to thank all of our shareholders for
their support, as we continue to develop our portfolio of unique and diverse
portfolio of clean hydrogen investments.
Simon Hogan
Chairman
17 April 2024
About Clean Hydrogen
· Clean hydrogen displaces fossil fuels, reducing CO2 emissions and
improving air quality
· Some 90 million tonnes per day of hydrogen is used today in
manufacturing of oil products, chemicals and steel. The demand to replace this
polluting 'grey' hydrogen, mostly produced from natural gas, with clean
hydrogen underpins growth in the clean hydrogen sector
· Clean hydrogen can also replace fossil fuels in hard to
decarbonise sectors such as power generation and transport
· Clean hydrogen is an energy carrier, that can store and
distribute intermittent renewable electricity at a large scale
· Hydrogen combined with renewables such as wind and solar provides
a domestic energy supply option for many countries, reducing reliance on
imported energy.
What is driving the hydrogen economy?
Putting all this together, clean hydrogen demand could increase by over 200
times between 2019 and 2030 as the energy transition gathers pace, abating
some 6 billion tonnes/year of CO2 emissions by 2050. Announcements at COP28,
calling for the transition away from fossil fuels and trebling of renewables,
all underpin the positive outlook for the clean hydrogen industry. Clean
hydrogen plays a key role in many corporate and country plans for Energy
Transition.
By 2050, the global hydrogen market could reach $2.5 trillion, dominated by
hydrogen producers, electrolyzer and fuel cell manufacturers. Replacing
today's c.$175 billion 'grey' hydrogen market with clean hydrogen could
mitigate over 800 million tonnes per annum of greenhouse gas emissions. Some
20 billion tonnes per annum of GHG emissions can be addressed with clean
hydrogen over time, which is over one third of all GHG emissions today.
Hydrogen market commentary and outlook
The clean hydrogen sector continues to grow rapidly, despite headwinds from
weak financial markets. The Investment Adviser has tracked $17 billion of new
investment into clean hydrogen in 2023, over 400% higher than in 2022. This
has included landmark project developments such as NEOM Green Hydrogen, which
is set to be a 4GW facility in Saudi Arabia, producing 600 tonnes per day of
green hydrogen and the go-ahead of a 1GW green hydrogen facility and green
steel facilities in Sweden, that will use 1 GW of green hydrogen for
electricity generation and as a reducing agent. Alongside these private
transactions, the 2023 IPO of ThyssenKrupp Nucera marked a new electrolyzer
entrant into public markets, with an enterprise value in excess of €2.5
billion.
Strong increase in investment in clean hydrogen in 2023
Some 1.2GW of green hydrogen production was on line globally at the end of
2023, a 50% increase year-on-year. This includes the start-up of the 260MW
Xinjiang Solar Hydrogen Project in China and new liquefied hydrogen facilities
in the USA. In addition, there are some 35GW of further projects in
development world-wide, an increase of 20% from 2022, which could result in
over 40 million tonnes per annum of avoided greenhouse gas emissions.
Policy makers and industry are converging on clean hydrogen as a core
technology to deliver net zero, improved air quality and enhanced energy
security.
The Paris Agreement in 2015 has led at least 40 countries to set out hydrogen
policies and US$70 billion of funding as part of net zero targets to deliver
the energy transition.
In response to the Russian invasion of Ukraine, the EU has reshaped its energy
policy to the REPowerEU 2030 plan, which calls for over 300GW of clean
hydrogen by 2030, compared to 80GW in previous plans. Some €5.4 billion in
hydrogen subsidies have recently been approved under Important Projects of
Common European Interest ("IPCEI"), which are expected to unlock a further
€8.8 billion of private investment. The Hy2Tech links 41 projects and 35
companies building out the hydrogen sector, and has qualified for IPCEI
funding. The EU's Hydrogen Bank began the auction of €800 million of opex
subsidy to green hydrogen in 2023. There are additional sources of grant
funding at a country level in multiple EU countries.
Germany, where the Company has 27% of its NAV, is a leader in this, and has
incorporated the RED III Delegated Act into national law, which confirmed a
42% target for use of renewable hydrogen in industry, and announced plans for
more stringent measures to curb GHG emissions, including a new hydrogen
pipeline system (the "Core Network"), and plans to blend hydrogen with the
natural gas grid. Germany's 3mtpa target for hydrogen in 2030 is the same size
as the entire US target for clean hydrogen.
In the Netherlands, where the Company has 15% of its NAV, the government has
set targets for 3GW to 4GW of electrolysis by 2030 with multi-billion-euro
funding support announced by the Netherlands government. The government is
providing €750 million of funding support for a "hydrogen backbone",
retrofitting existing natural gas pipelines to transport hydrogen between five
industrial clusters in the Netherlands, and at cross-border connection points.
In May 2023, the Dutch government unveiled a €28 billion climate package,
which included €7.5 billion for green hydrogen.
In the UK, 2030 clean hydrogen targets have been doubled during 2023 to 10GW.
The UK Government has announced a national clean hydrogen subsidy scheme
called Hydrogen Business Model ("HBM"), which will use a
contracts-for-difference style set-up to help fund an initial 1GW of clean
hydrogen projects, as part of the target to reach 10GW of low‑carbon
hydrogen by 2030, in a potentially £9 billion sector. This is in addition to
the Net Zero Hydrogen Fund ("NZHF") with up to £240 million of grant funding
to support the upfront costs of developing and building low carbon hydrogen
production projects.
All of this underscores the positive industry outlook and supportive
regulatory regimes for clean hydrogen. This improving outlook for clean
hydrogen demand underpins the order books in many of the Company's
investments, particularly in supply chain sectors such as electrolyzers, fuel
cells, storage and transportation businesses. Many of these businesses have
world-wide customer bases for their products, and are attracting investment
from international financial and strategic investors.
Q&A with the Investment Advisor
Dr JJ Traynor and Richard Hulf
In this section, we address some of the questions that we frequently hear from
investors and commentators in the hydrogen industry.
Is green hydrogen in production today, or is this just an emerging technology?
Yes, this is a producing industry, today, with very strong growth potential.
We are tracking 1.2GW of green hydrogen in production at the end of 2023,
which is an increase of 50% compared to 2022. Projects in design total 35GW, a
near 30‑fold increase should all this production come on stream. The UK,
where many of the readers of this report will be based, has not historically
been a leader in green hydrogen, but has plans and government funding in place
for 5GW of green hydrogen by 2030, compared to essentially zero today.
Who is buying green hydrogen?
Presently, most of the demand for green hydrogen comes from chemical plants,
oil refineries and the fertiliser sector, as these industries look to replace
polluting 'grey' hydrogen in their industrial processes with green hydrogen.
As an example, TotalEnergies announced a tender for 500,000 tonnes per year of
green hydrogen for its European refineries, in 2023, to decarbonise all of
the hydrogen used on these sites by 2030. We also see strong growth in demand
for green hydrogen in heavy ground transport, particularly in EU bus fleets
and commercial trucks, and in some regions in the United States. HydrogenOne
portfolio companies have supplied equipment for transportation of hydrogen in
Germany, during 2023, and signed supply agreements for green hydrogen there.
Will blue hydrogen remove the need for green hydrogen?
Blue hydrogen has been in production in North America for some 15 years, using
natural gas as a feedstock, and geological carbon capture for the resulting
CO2 emissions. This is not a new technology. We do expect further growth in
blue hydrogen, as well as green, especially in countries with legacy natural
gas production and geological sites for CCS. Energy transition policies in the
USA and UK support this trend. However, since blue hydrogen fundamentally
encourages more exploration and development of polluting fossil fuels, we
expect green hydrogen to dominate the supply picture and investment thinking
in the future, and to compete with blue on supply cost.
Will hydrogen break into the transport sector?
Yes. Battery electric is the best option for cars over short to medium
distances. However, batteries cannot store enough energy at a reasonable size
to move heavy vehicles over long distances. Hydrogen fuel cells are the best
option for trucks, trains (on tracks that are not electrified), fork lift and
SUV. Most auto companies are developing hydrogen fuel cell vehicles currently.
With some 80,000 fuel cell electric vehicles ("FCEV") in use worldwide today,
hydrogen has arrived as a viable transport fuel for medium to heavy trucks,
trains, and forklifts. The shipping market and aviation are fast emerging as
the next wave of hydrogen for transport applications.
Some 814 hydrogen refuelling stations are already in operation worldwide.
Concrete plans are already in place for 315 additional refuelling station
locations. Europe has 254 hydrogen stations currently, 105 of which are in
Germany. France is still second in Europe with 44 operating stations, followed
by the UK and the Netherlands with 17 each. The USA alone has over 100,000
gasoline stations and globally there could be 400,000 of these. The
incumbents, mostly oil companies, are looking for ways to green up these
otherwise-stranded assets.
Isn't clean hydrogen high cost and it won't be able to compete with fossil
fuels?
Economic recovery from COVID and Russia's invasion of Ukraine have resulted in
more 'normal' fossil fuel prices c.$80-$120 Brent. This is a
markedly-different position than the 2015-2020 "$40" world, and reflects the
real replacement cost of fossil fuels. As an example, all of the big oil
companies now have hydrogen and carbon capture strategies - ExxonMobil see
hydrogen as a $1tn market medium term; BP see hydrogen as up to 15% of the
energy mix long term. The debate has really shifted to the timescales, rather
than price competition.
Can you drill for native hydrogen, like you do for oil & gas?
Native hydrogen has been found in volcanic rocks, salt mines and sedimentary
rocks, most notably in water wells drilled in Mali in the 1980s, and recent
announcements of discoveries in France. This could be an important source of
hydrogen, that could have a role in stimulating the hydrogen market and
switching away from fossil fuels. The shipping costs of hydrogen over long
distances are prohibitive, as are the clean-up costs to make fuel cell purity
hydrogen, and there are considerable financial risks with exploration drilling
for hydrogen. All of this makes the outlook for native hydrogen uncertain, but
it could play an important role in the growth of this industry.
Will hydrogen be blended in natural gas networks and used in domestic boilers?
We are seeing hydrogen blending gathering pace in many countries, for
consumption in power plants and domestic environments. Town gas, made from
coal, is 20-50% hydrogen, and was used in the UK until the 1970s, and is in
use today in Hong Kong. Germany has authorized 10% hydrogen blending. In the
UK, the government is assessing next steps on blending, probably to 20%,
following testing led by Keele University and HyDeploy. Most domestic boilers
in the UK can burn 20% hydrogen blend today. Pure hydrogen networks (100%
hydrogen) are more likely to be for dedicated supply to industrial customers,
particularly refineries and chemicals plants, rather than domestic customers.
What is happening with policy support for clean hydrogen?
Globally we see at least 40 countries with hydrogen policies and some $70
billion of funding, all as part of government plans for energy transition.
There are a range of policies on the table for investors:
In the EU, the REPowerEU 2030 plan calls for over 300GW of clean hydrogen by
2030. Some EUR 5.4 billion in hydrogen subsidies have recently been approved
under Important Projects of Common European Interest ("IPCEI"), which are
expected to unlock a further EUR 8.8bn of private investment. The EU's
Hydrogen Bank auctioned EUR 800 million of opex subsidy to green hydrogen in
2023. There are additional sources of grant funding at a country level in
multiple EU countries.
In the United States, the Department of Energy has announced a US$8bn
programme to develop clean regional hydrogen hubs across the country, as part
of net zero ambitions by 2050. The 2022 Inflation Reduction Act set aside
US$369bn for climate and energy proposals. Within this Act, there is a tax
credit for clean hydrogen of US$0.6/kg to US$3/kg, depending on life cycle
emissions. This is expected to make green hydrogen cost competitive with grey
hydrogen and make US clean hydrogen amongst the lowest cost in the world.
In the UK, 2030 clean hydrogen targets have been doubled during 2023 to 10GW.
The UK Government has recently announced a national clean hydrogen subsidy
scheme called Hydrogen Business Model ("HBM"), which will use a
contracts-for-difference style set-up to help fund an initial 1GW of clean
hydrogen projects in 2023, as part of the target to reach 10GW of low-carbon
hydrogen by 2030, in a potentially £9 billion sector. This is in addition to
the Net Zero Hydrogen Fund ("NZHF") with up to £240 million of grant funding
to support the upfront costs of developing and building low carbon hydrogen
production projects.
Investment objective, policy, process and strategy
Investment objective
The Company's investment objective is to deliver an attractive level of
capital growth by investing, directly or indirectly, in a diversified
portfolio of hydrogen and complementary hydrogen focussed assets whilst
integrating core ESG principles into its decision making and ownership
process.
Investment policy
The Company will seek to achieve its investment objective through investment
in a diversified portfolio of hydrogen and complementary hydrogen focussed
assets, with an expected focus in developed markets in Europe, North America,
the GCC and Asia Pacific, comprising:
i. assets that produce clean hydrogen;
ii. large scale energy storage assets;
iii. carbon capture, use and storage assets;
iv. hydrogen distribution infrastructure assets;
v. assets involved in hydrogen supply chains, such as electrolyzers and
fuel cells; and
vi. businesses that utilise hydrogen applications such as transport, power
generation, feedstock and heat (together "Hydrogen Assets").
The Company intends to implement its investment policy through the acquisition
of hydrogen and complementary hydrogen focussed assets.
Private Hydrogen Assets
The Company invests in unquoted Hydrogen Assets, which may be operational
companies or hydrogen projects (completed or under construction) ("Private
Hydrogen Assets"). Investments are expected to be mainly in the form of
equity, although investments may be made by way of debt and/or convertible
securities. The Company may acquire a mix of controlling and non-controlling
interests in Private Hydrogen Assets, however the Company intends to invest
principally in non-controlling positions (with suitable minority protection
rights to, inter alia, ensure that the Private Hydrogen Assets are operated
and managed in a manner that is consistent with the Company's investment
policy).
Given the time frame required to fully maximise the value of an investment,
the Company expects that investments in Private Hydrogen Assets will be held
for the medium to long term, although short term disposals of assets cannot be
ruled out in exceptional or opportunistic circumstances. The Company intends
to re-invest the proceeds of disposals in accordance with the Company's
investment policy.
The Company observes the following investment restrictions, assessed at the
time of an investment, when making investments in Private Hydrogen Assets:
· no single Private Hydrogen Asset will account for more than 20
per cent. of Gross Asset Value;
· Private Hydrogen Assets located outside developed markets in
Europe, North America, the GCC and Asia Pacific will account for no more than
20 per cent. of Gross Asset Value; and
· at the time of an investment, the aggregate value of the
Company's investments in Private Hydrogen Assets under contract to any single
Offtaker will not exceed 40 per cent. of Gross Asset Value.
The Company will initially acquire Private Hydrogen Assets via HydrogenOne
Capital Growth Investments 1 LP (the 'HydrogenOne Partnership'), a wholly
owned subsidiary undertaking of the Company structured as an English limited
partnership which is controlled by the Company and advised by the Investment
Adviser. The HydrogenOne Partnership's investment policy and restrictions are
the same as the Company's investment policy and restrictions for Private
Hydrogen Assets and cannot be changed without the Company's consent. In due
course, the Company may acquire Private Hydrogen Assets directly or by way of
holdings in special purpose vehicles or intermediate holding entities
(including successor limited partnerships established on substantially the
same terms as the HydrogenOne Partnership) or, if the Company is considered a
'feeder fund' under the Listing Rules, other undertakings advised by the
Investment Adviser and, in such circumstances, the investment policy and
restrictions will also be applied on a look-through basis and such
undertaking(s) will also be managed in accordance with the Company's
investment policy.
Listed Hydrogen Assets
The Company also invests in quoted or traded Hydrogen Assets, which will
predominantly be equity securities but may also be corporate debt and/or other
financial instruments ("Listed Hydrogen Assets"). The Company is free to
invest in Listed Hydrogen Assets in any market or country with a market
capitalisation (at the time of investment) of at least US$100 million. The
Company's approach is to be a long-term investor and will not ordinarily adopt
short-term trading strategies. As the allocation to Private Hydrogen Assets
grows the Listed Hydrogen Assets are expected to include strategic equity
holdings derived from the listing of operational companies within the Private
Hydrogen Assets portfolio over time.
The Company observes the following investment restrictions, assessed at the
time of an investment, when making investments in Listed Hydrogen Assets:
· no single Listed Hydrogen Asset will account for more than 3 per
cent. of the Gross Asset Value;
· the portfolio of Listed Hydrogen Assets will typically comprise
no fewer than 10 Listed Hydrogen Assets at times when the Company is
substantially invested;
· each Listed Hydrogen Asset must derive at least 50 per cent. of
revenues from hydrogen and/or related technologies; and
· once fully invested, the target allocation to Listed Hydrogen
Assets will be approximately 10 per cent or less of Gross Asset Value, subject
to a maximum allocation of 30 per cent of Gross Asset Value.
Cash
During the initial Private Hydrogen Asset investment period after a capital
raise and/or a realisation of a Private Hydrogen Asset, the Company intends to
hold the relevant net proceeds of such capital raise/realisation in cash (in
accordance with the Company's cash management policy set out below) pending
subsequent investment in Private Hydrogen Assets.
Investment restrictions
The Company, in addition to the investment restrictions set out above, comply
with the following investment restrictions when investing in Hydrogen Assets:
· the Company will not conduct any trading activity which is
significant in the context of the Company as a whole;
· the Company will, at all times, invest and manage its assets
i. in a way which is consistent with its object of spreading investment
risk; and
ii. in accordance with its published investment policy;
· the Company will not invest in other UK listed closed-ended
investment companies; and
· no investments will be made in companies or projects that
generate revenues from the extraction or production of fossil fuels (mining,
drilling or other such extraction of thermal coal, oil or gas deposits).
Compliance with the above restrictions is measured at the time of investment
and non-compliance resulting from changes in the price or value of Hydrogen
Assets following investment will not be considered as a breach of the
investment policy or restrictions.
Borrowing policy
The Company may take on debt for general working capital purposes or to
finance investments and/or acquisitions, provided that at the time of drawing
down (or acquiring) any debt (including limited recourse debt), total debt
will not exceed 25 per cent of the prevailing Gross Asset Value at the time of
drawing down (or acquiring) such debt. For the avoidance of doubt, in
calculating gearing, no account will be taken of any investments in Hydrogen
Assets that are made by the Company by way of a debt investment.
Gearing may be employed at the level of a special purpose vehicle ("SPV") or
any intermediate subsidiary undertaking of the Company (such as the
HydrogenOne Partnership) or, if the Company is considered a 'feeder fund'
under the Listing Rules, other undertakings advised by the Investment Adviser
in which the Company has invested or the Company itself. The limits on debt
shall apply on a consolidated and look-through basis across the Company, the
SPV or any such intermediate holding entities (such as the HydrogenOne
Partnership) or, if the Company is considered a 'feeder fund' under the
Listing Rules, other undertakings advised by the Investment Adviser in which
the Company has invested but intra-group debt will not be counted.
Gearing of one or more Hydrogen Assets in which the Company has a
non-controlling interest will not count towards these borrowing restrictions.
However, in such circumstances, the matter will be brought to the attention of
the Board who will determine the appropriate course of action.
Currency and hedging policy
The Company has the ability to enter into hedging transactions for the purpose
of efficient portfolio management. In particular, the Company may engage in
currency, inflation, interest rates, energy prices and commodity prices
hedging. Any such hedging transactions will not be undertaken for speculative
purposes.
Cash management
The Company may hold cash on deposit and may invest in cash equivalent
investments, which may include short-term investments in money market type
funds ("Cash and Cash Equivalents").
There is no restriction on the amount of Cash and Cash Equivalents that the
Company may hold and there may be times when it is appropriate for the Company
to have a significant Cash and Cash Equivalents position. In particular, the
Company anticipates holding cash to cover the near-term capital requirements
of the Pipeline of Private Hydrogen Assets and in periods of high market
volatility. For the avoidance of doubt, the restrictions set out above in
relation to investing in UK listed closed-ended investment companies do not
apply to money market type funds.
Investment process
The Company follows a proven and successful process in order to access and
execute its distinctive deal flow. The Investment Adviser has specialist
insights and strong industry and market networks to access potential
investment opportunities. The Company typically invests alongside some of the
world's largest industrial corporations and investors. The Investment
Adviser's clear investment and ESG policies underpin and guide everything that
it does. The Investment Adviser, the Advisory Board, the technical advisors,
regulatory and legal counsel all combine to deliver the optimal deal
structures for the shareholders.
Strategy, business model and KPIs
A highly differentiated strategy, 100% focussed on clean hydrogen
The Company offers distinctive access to private investments, across the full
hydrogen value chain, and across the OECD. The investment objective is to
deliver an attractive level of capital growth by investing, directly or
indirectly, in a diversified portfolio of hydrogen and complementary hydrogen
focussed assets whilst, as a SFDR Article 9, PRI and Green Economy Mark
company, integrating core ESG principles into our decision making and
ownership process, for a positive environmental impact.
As the first UK listed investment company specialising in this sector, the
Company has a clear competitive advantage as an early mover into a complex
sector, and offers its investors a unique window into the private hydrogen
asset market. With its emphasis on Private Hydrogen Assets, the Company, gives
investors an opportunity to be exposed to liquidity and portfolio diversity in
hydrogen companies and projects, hard to access elsewhere, with strong growth
potential.
An investment in the Company offers exposure to the broader hydrogen sector
whilst, at the same time, diversifying risk for an investor. By targeting a
diversified portfolio of listed and private investments across different
jurisdictions and different technologies, the Company seeks to spread some of
the key underlying risks relating to clean hydrogen.
A focus on material ESG factors, and especially the deployment of capital to
deliver the energy transition to a low carbon economy, is at the heart of what
the Investment Adviser does, running hand in hand with a strategy to deliver
the target 10-15% per annum NAV growth for the investors over the medium to
long term.
The Investment Adviser is a specialist investor in this complex and
rapidly-developing growth sector. The Company believes that this specialised
approach is a competitive advantage that will only grow over time.
By excluding companies or projects that generate revenues from the extraction
or production of fossil fuels (mining, drilling or other such extraction of
thermal coal, oil or gas deposits) from the portfolio and taking on further
ESG screens, the portfolio is expected to be an early mover to Net Zero in the
energy transition, and will not be encumbered by the legacy greenhouse gas
emissions inherent in other players in the hydrogen sector.
The clean hydrogen industry in the short term is dominated by bespoke sources
of supply, financed by specialised offtakers, typically at 5MW to 100MW scale.
In the period from 2025 to 2030 the Investment Adviser expects these
facilities to be upscaled to 100MW to 500MW scale, and ultimately to 1GW to
5GW. The Investment Adviser also believes that energy storage and CCS projects
will also increase in scale in this timeframe, with the development of
compressed air energy storage followed by hydrogen storage and long-distance
transport through pipelines, as liquid hydrogen or as ammonia on ships.
Business model
The Company is an investment company and its purpose, strategy, investment
objective and policy are set out in the Annual Report. Any material change to
the investment policy requires shareholder approval.
The Company makes its investment in Private Hydrogen Assets through
HydrogenOne Capital Growth Investments (1) LP (the "HydrogenOne Partnership"
or the "Limited Partnership"), in which the Company is the sole limited
partner. The Company may also acquire Private Hydrogen Assets directly or by
way of holdings in special purpose vehicles or intermediate holding entities.
The General Partner of the Limited Partnership is HydrogenOne Capital Growth
(GP) Limited (the "General Partner"), a wholly owned subsidiary of the
Company. Details of the Company and Group structure are given in note 1 to the
Parent and Consolidated Financial Statements (the "Financial Statements").
Other than where specified, references to the Company in this document refer
to the Company together with its wholly-owned subsidiary and investment as
sole limited partner in the Limited Partnership.
The Company is governed by a Board of Directors (the "Board"), all of whom are
non-executive, and it has no employees. The business model adopted by the
Board to achieve the Company's objective has been to contract the services of
FundRock Management Company (Guernsey) Limited as the alternative investment
fund manager of the Company, pursuant to the AIFM Agreement (the "AIFM"). The
AIFM has appointed HydrogenOne Capital LLP to provide investment advisory
services in respect of the Company (the "Investment Adviser"). The Investment
Adviser will advise on the portfolio in accordance with the Board's strategy
and under its and the AIFM's oversight. The Principals of the Investment
Adviser responsible for the day-to-day monitoring of the portfolio are Dr John
Joseph "JJ" Traynor and Richard Hulf. The Board and the AIFM monitor adherence
to the Company's investment policy and regularly reviews the Company's
performance in meeting its investment objective.
All administrative support is provided by third parties under the oversight of
the Board. Company secretarial and administration services have been delegated
to Apex Listed Companies Services (UK) Limited ("Apex" or the
"Administrator"); custody services to Northern Trust Company ("Northern
Trust"); registrar services to Computershare Investor Services plc
("Computershare"); and effective 12 January 2023, the Company's broker is
Barclays Bank PLC ("Barclays" or the "Broker"). Prior to this date the
Company's broker was Panmure Gordon (UK) Limited.
The Board reviews the performance of the AIFM, the Investment Adviser and
other key service providers on an ongoing basis. Further details of the
material contracts of the Company are given in note 14 to the Financial
Statements.
KPIs
Objectives Principal risks
1 To deliver an attractive level of capital growth · Changes in the legislative and regulatory framework that affect
The Company is targeting a Net Asset Value total return of 10 per cent to 15 the hydrogen sector
per cent per annum over the medium to long-term.
· Operational risks in the portfolio
· Valuation risks (energy prices/inflation/ operational
performance)
· Investment process fails to identify new opportunities
· Lack of future pipeline and/or funding
· Increased competition for assets
2 A diversified portfolio of hydrogen and complementary hydrogen focussed · Lack of future pipeline and/or funding
assets
· Increased competition for assets
· Changes in the legislative and regulatory framework that affect
the hydrogen sector
3 Maintenance of a reasonable level of premium or discount of share price to · Investment performance
NAV
· Changes in the legislative and regulatory framework that affect
the hydrogen sector
· Lack of future pipeline and/or funding
4 Maintenance of a reasonable level of ongoing charges · Costs are inadequately controlled
· Failed investment processes leads to high level of abort costs
5 Environmental, Social and Governance policy integrated in investment Please refer ESG section of the Annual Report and 2023 Sustainability Report
decisions and asset monitoring for further details.
KPIs Review
NAV per share NAV Total return per annum The Board monitors both the NAV and share price performance. A review of
performance is undertaken at each quarterly Board meeting and the reasons for
relative under and over performance against various comparators is discussed.
102.99p 5.8%*
2022: 97.31p 2022: (1.6)%*
Share price return Index
(37.4)%* (36.6)%
2022: (33.6)%* 2022: (46.6)%
Return relative to Solactive Hydrogen Economy Index for year ended 31 Dec 2023
Number of investments Number of geographies The Board monitors the portfolio at each quarterly Board meeting and the
reasons for relative under and over performance of sectors and geographies
invested in, and performance of listed vs. private.
25 7
2022: 25 2022: 7
Invested portfolio split by value (Private: Listed)
98%:2%
2022: 97%:3%
Premium or (discount) of share price to NAV The Board monitors the premium or discount on an ongoing basis.
(51.8)%*
2022: (18.5)%*
Ongoing charges ratio Board meetings. The Board reviews the ongoing charges on a quarterly basis and
considers these to be reasonable in comparison to peers.
2.56%*
2022: 2.51%*
Robust ESG policy with established KPIs Avoided GHG The Board reviews compliance with the ESG policy ahead of each investment
decision, and in the Company on an ongoing basis. The Board additionally
monitors developments in the ESG landscape more broadly.
91,116 tCO2e avoided
(2022: 42,716 tCO2e avoided)
* The figures above are considered to represent the Company's APMs.
Definitions of these APMs and other performance measures used by the Company,
together with how these measures have been calculated, can be found in the
annual report.
Investment Adviser's Report
Introduction
The Company's Alternative Investment Fund Manager ("AIFM"), FundRock
Management Company (Guernsey) Limited, (part of Apex Group), has appointed
HydrogenOne Capital LLP as the Investment Adviser to the AIFM in respect of
the Company. Its key responsibilities are to originate, analyse, assess and
recommend suitable investments within the hydrogen sector, and advise the AIFM
accordingly. Additionally, the Investment Adviser performs asset management
services in relation to the investments in the portfolio or, to the extent
asset management is delegated to third parties, oversees and monitors such
asset management.
HydrogenOne Capital LLP was founded in 2020 as an alternative investment firm
focussed specifically on investing in hydrogen assets and their role in the
energy transition. As a responsible investor, HydrogenOne Capital LLP is
committed to contributing to the energy transition through the financing of
sustainable investments and by providing investment solutions that reduce
carbon emissions.
HydrogenOne Capital LLP employs a fully integrated investment and asset
management approach and integrates its focus on ESG criteria throughout the
entire investment process.
The Principals of the Investment Adviser
The Principals of the Investment Adviser have in excess of 60 years of
combined experience and a track record of success in the energy industry and
capital markets which are directly applicable to the hydrogen industry,
including acquisitions, mergers and divestments, development of growth energy
projects, supervision of profitable energy production, ESG track record,
investments in both listed and private companies and board advisory. Their
biographies are included in the annual report.
The Investment Adviser's team
The Principals have assembled an experienced team to support the Company. This
group brings a mixture of finance, technical and sector skills to support the
Investment Adviser in its day-to-day activity. The Investment Adviser has
established a team which is responsible for financial modelling, corporate and
asset valuation analysis, and opportunity assessment for the Company. The
Principals anticipate a further increase in headcount as the Company continues
to grow its activities.
Advisory Board of the Investment Adviser
The Principals of the Investment Adviser are supported by an experienced team
which comprises the Advisory Board.
The Advisory Board has been carefully selected to provide expert advice to the
Investment Adviser on the hydrogen sector, project finance and capital
markets. The Investment Adviser has appointed the members of the Advisory
Board to provide it with advice from time to time. No members of the Advisory
Board are directors, officers, employees or consultants of the Company, the
AIFM or the Investment Adviser. It is envisaged that the Advisory Board will
evolve over time, with additional experts being added or substituted as and
when required.
Portfolio summary
Company Country of incorporation Value of investment £'000
Private Hydrogen Assets held by the Limited Partnership at 31 December 2023
Sunfire GmbH Germany 27,068
Elcogen plc United Kingdom 24,430
Strohm The Netherlands 19,719
HiiROC Limited United Kingdom 13,701
Cranfield Aerospace Solutions Limited United Kingdom 11,870
Bramble Energy Limited United Kingdom 10,621
HH2E AG Germany 6,971
NanoSUN Limited United Kingdom 5,428
Gen2 Energy Norway 4,443
Thierbach Germany 1,955
Total 126,206
Company Country of main listing Market value % of net assets
£'000
Listed Hydrogen Assets held by the Company at 31 December 2023
SFC Energy AG-BR Germany 437 0.3
Hydrogen-Refueling-Solutions SA France 278 0.2
Doosan Fuel Cell Co Ltd South Korea 268 0.2
S-Fuelcell Co Ltd South Korea 233 0.2
AFC Energy plc United Kingdom 221 0.2
Hexagon Purus ASA Norway 186 0.1
Green Hydrogen Systems A/S Denmark 180 0.1
Fuelcell Energy Inc United States 113 0.1
Ballard Power Systems Inc Canada 100 0.1
McPhy Energy SA France 80 0.1
Ceres Power Holdings plc United Kingdom 77 0.1
Aker Horizons AS Norway 73 0.0
ITM Power plc United Kingdom 62 0.0
Enapter AG Germany 11 0.0
Cell Impact AB Sweden 3 0.0
Total listed investments 2,322 1.7
Private assets investment held by the Company at 31 December 2023
HydrogenOne Capital Growth Investments (1) LP United Kingdom 125,861 94.9
Total investments 128,183 96.6
Cash 4,626 3.5
Other net liabilities (139) (0.1)
Total net assets 132,670 100.0
Portfolio review, performance and valuation
Capital Deployment since IPO and Pipeline(1)
The Company has invested £113.7 million in ten Private Hydrogen Assets and a
portfolio of listed equities since its 2021 IPO to 31 December 2023, directly
or via the HydrogenOne Partnership. The private companies account for 95% of
the NAV of the Company, and span the full value chain in the clean hydrogen
sector. The portfolio is dominated by supply chain businesses, particularly
electrolyzer and fuel cell makers such as Elcogen and Sunfire. There are
further investments in storage and distribution businesses, such as Strohm,
and project developers setting up green hydrogen production facilities. Whilst
the UK accounts for over half of the portfolio by geography, the Investment
Advisor assesses that the bulk of sales from portfolio companies are derived
from the EU and Asia Pacific.
1 Capital deployed is comprised of the acquisition costs of Listed
Hydrogen Assets (2023: £nil, 2022: £nil, 2021: £9.4 million) and Private
Hydrogen Assets acquired by the Limited Partnership (2023: £10.6m, 2022:
£54.3 million, 2021: £39.2 million).
Distinctive and unique hydrogen portfolio
At the time of its IPO, the Company had an Investible Universe of c.120
Private Hydrogen Assets of private companies and hydrogen production projects.
Since the IPO, the Company has seen significant expansion of its opportunity
set in both private companies and hydrogen production projects, at least
double the number of opportunities since the IPO. At the same time, the
Company now sees material opportunities to invest in green hydrogen production
projects, with financial close and final investment decision expected in the
Company's portfolio developer businesses during 2024, in Norway and Germany.
These projects, alongside further hydrogen opportunities build out to an
investment pipeline of some £500 million available for the Company's
investors in the future.
Alongside this expansion in the opportunity set, the Company has seen the
arrival of multiple industrial investors into the hydrogen sector. This is
typically incumbent consumers of grey hydrogen, and companies seeking to
access clean hydrogen supplies and technologies. The Company is invested
alongside multiple industrial strategic investors today.
The Company has been investing in follow-ons in its existing portfolio during
2023, alongside existing investors, and new investors, against the backdrop of
a challenging environment for fund raising for the hydrogen sector and the
Company. The Company will likely require a fresh capital raise in order to
invest in any new pipeline opportunities.
Investing alongside blue-chip industrials and funds
The Company has invested in a range of private hydrogen businesses across the
value chain. Early-stage businesses, such as Cranfield Aerospace and HiiROC,
are developing high quality intellectual property and investing in
demonstrator facilities, ahead of full roll-out of commercial solutions. Mid
stage companies, for example Bramble, are commencing commercial sale of their
technology and products, and typically have single digit millions of pounds of
revenues, and negative EBITDA. Growth businesses are fundamentally larger and
more developed, with investment in order to build industrial scale factories
and world-wide customer bases for their products, with a clear visibility to
positive EBITDA. Whilst these growth businesses are best placed for IPO into
public markets in the coming years, which would mark an exit for the Company,
the Company also expects to be able to exit from earlier stage businesses
through trade sales, to industrial strategic investors.
Growing value for investors
% of invested portfolio (31 Dec 23) Activity Investments 2022-23 revenue growth (%)
Early stage 33% · IP demonstrators Cranfield +76%
· Project developers HiiROC
HH2E
Gen2 Energy
NanoSUN
Mid stage 10% · Manufacturing roll-out Thierbach >+1,000%
· Production project delineation Bramble
Growth 55% · Significant capacity growth Elcogen +119%
· Industrial scale and EBITDA Sunfire
Strohm
2023: £74m
(+125% vs 2022)
Valuation
As set out in note 4 of the Financial Statements, the Investment Adviser has
carried out fair market valuations of the Private Hydrogen Assets at 31
December 2023, which have been reviewed by the Valuation Committee, and the
Directors have satisfied themselves as to the methodology used, the discount
rates and key assumptions applied.
Private Hydrogen Assets at 31 December 2023 have been valued using either the
discounted cash flow ('DCF') methodology, the value of the loan principal plus
accrued interest for loans to Project Development companies or a scenario
based valuation incorporating DCF, indicative offers and net asset values
consistent with the International Private Equity and Venture Capital Valuation
("IPEV") Guidelines. The valuations are also benchmarked against listed peer
group valuations.
Listed Hydrogen Assets are valued at fair value, which is the bid market
price, or, if bid price is unavailable, last traded price on the relevant
exchange.
Our approach to valuation remains consistent and unchanged. Valuations are
updated for all Private Hydrogen Assets on a quarterly basis and approved by
the AIFM, the Valuation Committee and the Board, and are audited annually by
the Company's auditor, KPMG.
Discount rates are calculated using market parameters for each investment
domicile. The weighted average discount rate for 31 December 2023 was 14.2 %
compared with 13.0% at December 2022.
The Company notes that its NAV has been steadily increasing over the last
twelve months. This has been driven by organic growth in the Company's private
assets, despite headwinds from lower share prices of the listed portfolio
companies and higher discount rates. The share prices of listed hydrogen
companies, which we track with the Solactive Hydrogen Economy Index
("SOLGHYD"), have been volatile and declining since Q3 2021. This decline is
due to market allocation away from early-stage technology businesses as
interest rates have risen, and a correction to the high valuations seen in the
market in 2020-21.
The Company's own share price has tracked this decline in listed hydrogen
companies, and listed funds in general, despite the growth in NAV. In 2021-22,
the Company assessed that many listed hydrogen companies were trading on
higher valuations than its private portfolio companies, based on forward
multiples of revenues. At the end of 2023, the revenue multiples of the listed
hydrogen sector and the Company's private portfolio had converged, as the
listed hydrogen sector had de-rated.
The Company's approach to valuation remains consistent while market has seen
strong rise and correction
· Listed hydrogen company valuations have decreased in 2022-23,
whereas HGEN NAV has been steady, reflecting our consistent valuation
methodology
· Forward revenue multiple of c. 9.8X (2025E) in private portfolio
is in line with listed hydrogen companies
2023 Performance and 2024 outlook
NAV per share increased by 5.8% from 31 December 2022 to 31 December 2023
(97.31p to 102.99p), with NAV growing from £125.4 million to £132.7 million
over the period.
The NAV increase was driven primarily by valuation uplifts in nine private
companies, positively contributing 10.8 pence per share. The main factors
behind this growth were roll-forward of discounted cash flow ("DCF")
valuations, and improving financial performance from the portfolio companies.
Discount rates had a negative impact on valuation in 2023. The portfolio
weighted average discount rate at 31 December 2023 was 14.2%, higher than 31
December 2022 (13.0%), decreasing NAV by 6.7 pence per share, or £8.6
million.
Portfolio valuation changes 2022-23
During the 12 months to 31 December 2023, private portfolio companies
delivered an aggregate unaudited £74 million in revenue, a 125% increase
compared to the year ended 31 December 2022, on a pro-forma basis. Seven of
the ten private companies are revenue generating. Thierbach and Gen2 Energy
are project developers that are inherently pre-revenue businesses ahead of the
start-up of green hydrogen production, and HiiROC is expected to commence
revenue generation from its thermal plasma electrolyzer business from 2024.
These positive financial trends reflect the build out of capacity to meet
strong order books for hydrogen supply chain equipment.
The portfolio is revenue generating and has produced consistent growth
· 8 private companies are revenue-generating
· 2023 revenue growth +125% to £74m
Revenue 100% basis for private portfolio companies
Investments in 2023 totalled £10.6 million in 5 existing portfolio companies,
as well as one new position, the Thierbach Project, a green hydrogen
development in Germany, which is being managed by portfolio company HH2E.
Cash and cash equivalents were £4.6 million, with additionally £2.3 million
of listed hydrogen companies at the end of the year.
We continue to see strong investment interest from industrial strategic
investors in portfolio companies and the hydrogen industry at large in 2023,
and note that Cemex and HD Hyundai invested in HydrogenOne businesses during
the year, which underpin the investment cases and bring strategic partnerships
to the businesses.
The UK Government continues to support the development of clean hydrogen
supply, yet has elected to slow the pace of fossil fuel phase out in
transport, which has reduced the pace of deployment of clean hydrogen in the
UK into transport. In light of this development, and weak financial markets,
we have restructured NanoSUN and relaunched in early 2024 as Swift Hydrogen,
which has a lower cost base and simplified capital structure, for renewed
growth in the business, with customers in the EU in the near term. The
December 2023 valuation for NanoSUN reflects a scenarios based analysis of
potential outcomes for the business that existed as of the valuation date,
resulting in a reduction in the value for NanoSUN compared to 31 December
2022. The restructuring of NanoSUN was completed in February 2024, and will be
reported in the unaudited first quarter 2024 results.
At 31 December 2023, the Company has invested in ten private investments, in
the UK and Europe, representing 98.2% of its invested portfolio by value.
Additional investment in strategic, global hydrogen equities represented 1.8%
of the invested portfolio.
The Investment Adviser expects to exit from the majority of the Company's
listed hydrogen investments during 2024, as we implement the strategy to focus
on private investments over time. As the Company enters its third full year of
trading, following its 2021 IPO, the Investment Adviser is engaging with
portfolio companies for full or partial exits from the private portfolio.
Several portfolio companies have engaged investment banks for this purpose.
The portfolio continues to perform in line with the expectations of the
Investment Adviser, HydrogenOne Capital LLP, despite the challenging
conditions in private equity fundraising currently.
Portfolio review, performance and valuation
Our portfolio
Sunfire GmbH
www.sunfire.de
A German industrial electrolyzer producer, which offers both pressure alkaline
(AEL) and solid oxide electrolyzers (SOEC).
Total investment value £27.0m
% of NAV 20.4%
Change in NAV in 2023 £5.2 m
Date of investment October 2021
Co-investors Planet First Partners, Lightrock, SMS, Neste, Copenhagen Infrastructure
Partners, GIC, Carbon Direct Capital Management, Blue Earth Capital, Amazon
Climate Pledge Fund
Why we invested · Industry-leading electrolyzer manufacturer, investing for growth
and technology development.
· Material alkaline and solid oxide business, with revenues from a
growing international customer base in the global industrial electrolyzer
market.
· Strong product credentials backed by existing customer base and
generated by high quality in-house engineering and product design.
· 500MW / annum electrolyzer production site in EU - with a further
extension to gigawatt-scale already in planning.
Company strategy for value creation Committed to its mission "Electrolysis. Delivered. At Scale.", Sunfire targets
installing several gigawatts of electrolysis equipment by 2030 securing a
leading position in the fast-growing global electrolyzer market. The company
is serving large-scale green hydrogen projects with pressurized alkaline (AEL)
and solid oxide electrolyzers ("SOEC"). With this unique product portfolio and
a strong commitment to reliable execution and scaling with best-in-class
partners, Sunfire focuses on enabling efficient green hydrogen production at
competitive costs across different industrial applications - and thus, making
a significant contribution to generating green industrial growth and
prosperity.
Company ESG strategy Sunfire enables industrial clients to decarbonise. The electrolyzers the
company manufactures substantially contribute to avoiding greenhouse gas
emissions by producing renewable hydrogen. With that, Sunfire's electrolysis
technologies propel the energy transition in hard-to-abate sectors.
Furthermore, Sunfire strives to reduce its own carbon footprint, e.g., by
increasing energy efficiency and sourcing green energy. In 2023 the company
officially launched the series production of core electrolyzer components at
its site in Solingen where the company invested EUR 30 million in scaling up
an energy-efficient production capacity. Also, Sunfire procured about 1.7
gigawatt hours of certified renewable electricity.
Milestones delivered in 2023 · Sunfire made significant progress in 2023 with its projects,
totalling 190 MW Pressurized Alkaline + 250 KW SOEC.
· Sunfire started the construction of its €30 million Research
and Development centre at Dresden, Germany, including prototype testing and
manufacturing facilities.
· The GET H2 TransHyDE joint project, based in Lingen achieved
first hydrogen production, on the site of the RWE gas-fired power plant in
Emsland (KEM) using a high-temperature 250 KW SOEC from Sunfire.
· Secured a contract to supply a 100 MW pressurized alkaline
electrolyzer to a European refinery.
· Sunfire received a €169 million grant from IPCEI to support its
growth plans. Sunfire is investing in total around €400 million to establish
industrial series production of its technologies, and validating them in
Saxony and North Rhine-Westphalia, aiming for GW scale over time.
· Sunfire launched a new serial production facility in Solingen,
Germany with investment of €30m at the facility.
· Sunfire increased headcount by 30% across all locations,
particularly in R&D and industrialization.
Elcogen plc
www.elcogen.com
Fuel cell and electrolyzer manufacturer with presence in Estonia and Finland
Total investment value £24.4m
% of NAV 18.4%
Change in NAV in 2023 £4.0 m
Date of investment May 2022
Co-investors · Biofuel OÜ, VNTM Powerfund II, HD Hyundai Group, Baker Hughes
Why invested · Industry-leading innovator and supplier of solid oxide cells and
stacks, with manufacturing facilities in Finland and Estonia, ready for
expansion.
· High end offering based on advanced solid oxide ("SO") technology
with low operating temperatures and superior economics.
· Developed a reversible ceramic technology that converts hydrogen
into emission-free electricity and vice versa.
· Over 10-year track record.
· Over 60 established industrial customers worldwide.
Company strategy for value creation Elcogen believes in a future fuelled by green hydrogen and its ambition is to
become a leading global supplier of the underlying technology that can make
this future happen. This will be achieved through continued development of the
Group's solid oxide fuel cells ("SOFC") and SOEC technology platform and
manufacturing products at the lowest cost possible by securing the economies
of scale that come with volume production.
The Group will fund development costs, increased production and corporate
infrastructure through increasing its revenue base, growing its list of
customers and continuing to attract strategic investors, which provide both
revenue opportunities as well as growth capital.
Company ESG strategy Elcogen supplies the core technology that sits at the heart of energy security
and the transition away from fossil fuels.
The Group is committed to delivering the world's most efficient technology for
the production and use of green hydrogen, providing customers with affordable
energy solutions to meet net zero targets. Green hydrogen is promised to
decarbonise hard-to-abate sectors and provide a clear pathway away from fossil
fuel reliance.
Elcogen is committed to ensuring it makes a positive contribution to the
environment and society, and being sustainable means adopting best practices
that are filtered throughout all layers of the Group.
Milestones delivered in 2023 · Korea Shipbuilding & Offshore Engineering, a member of HD
Hyundai Group, invested €45m in Elcogen. This investment will be used to
expand Elcogen's manufacturing capacity, with a new factory facility in
Tallinn, Estonia, where preparations for construction have now commenced, to
add capacity of up to 360MW, with 100MW capacity planned for Phase 1. HD
Hyundai and Elcogen intend to further strengthen their collaboration with a
focus on marine propulsion systems and stationary power generation, based on
Elcogen's proprietary solid oxide fuel cell technology, with the intent to
manufacture products in South Korea.
· Elcogen signed Memorandum of Understanding ("MOU") with Bumhan
Fuel Cell Co, a South Korean company ("Bumhan"). The purpose of the
partnership is to cooperate towards the commercialisation of SOFC and SOEC
technology to catalyse the global transition to clean energy.
· The company signed a supply and R&D collaboration agreement
with the French company Genvia. The contract helps to further collaborate with
the goal to accelerate the production of affordable green hydrogen in the EU,
under the Important Project of Common European Interest.
· Elcogen was awarded funding from IPCEI for a €25.4 million
project to accelerate the deployment of its solid oxide technology, to enable
affordable green hydrogen production in Europe.
HiiROC Limited
www.hiiroc.com
UK-based thermal plasma electrolysis developer, with world-leading
(IP-protected) technology for low-cost, zero-emission hydrogen, also enabling
flare/waste gas mitigation and CO2 capture using biomethane.
Total investment value £13.7m
% of NAV 10.3%
Change in NAV in 2023 £0.8m
Date of investment November 2021
Co-investors Melrose Industries (GKN Aerospace), Centrica, Hyundai, Kia, Wintershall Dea,
VNG, CEMEX
Why invested · Proprietary technology to convert natural gas, flare gas and
biomethane into hydrogen and solid carbon black.
· Multiple applications across all sectors of hydrogen use from
blending in natural gas grids to industrial decarbonisation to transport.
· Opportunity to support methane reduction targets through the
global imperative to halt gas flaring and venting.
· Industrial off-takers of the product such as Centrica, Hyundai
and CEMEX also on the shareholder register.
· Highly scalable modular solution, producing 400kg / day of
hydrogen from a single unit through to large plants capable of 100's of tonnes
/ day of hydrogen, alongside carbon black.
Company strategy for value creation HiiROC is focused on addressing customer challenges - decarbonising production
of hydrogen and carbon black and reducing atmospheric GHGs through mitigation
and capture.
To do this, HiiROC is working with customers to meet their specific needs for
hydrogen and carbon black rather than building capacity without offtake.
Having demonstrated the versatility of Thermal Plasma Electrolysis (TPE)
across a number of use cases and feedstocks in 2023, we are moving to the roll
out of production plants in the UK and, to follow, in the USA and MENA.
Company ESG strategy HiiROC can help accelerate the transition to Net Zero through the deployment
of its technology at scale. HiiROC expects to make its most significant
contributions to SDGs 7 (Affordable & Clean Energy), 9 (Industry,
Innovation & Infrastructure) and 11 (Sustainable Cities &
Communities). In due course, these will be reported-on along with other
sustainability performance data, in-line with our Net Zero ambitions.
Milestones delivered in 2023 · Installed pilot units on client site during 2023, demonstrating
technology, and testing use cases in 2024, including decarbonising gas flares
and biomethane conversion.
· Hosted Lord Callanan, UK Minister for Energy Efficiency and Green
Finance, at our Hull headquarters, where he had the opportunity to meet the
team and learn about TPE, and then at our Brigg site, make hydrogen,
first-hand.
· HiiROC's technology was officially included within the scope of
the UK Government's Low Carbon Hydrogen Standard (LCHS), opening up the UK
market for HiiROC and laying the groundwork for similar discussions with the
US Department of Energy.
· CEMEX announced plans to decarbonise its Rugby cement kiln using
HiiROC's technology and completed an increase of its shareholding.
NanoSUN Limited
www.nanosun.co.uk
UK-based developer of hydrogen distribution and mobile refueling equipment
Total investment value £5.4m
% of NAV 4.1%
Change in NAV in 2023 (£6.1m)
Date of investment December 2021
Co-investors Westfalen Group
Why invested · NanoSUN technology allows for shipping of clean hydrogen from
production sites to customers, both cheaply and safely.
· Provides flexible and low-cost connection between hydrogen
customers such as truck stops, and concentrated hydrogen supply sources.
· Flat-bed solution with 60% lower cost than alternative systems.
· Accelerating large-scale roll out of fleets of hydrogen buses,
trucks, vans and forklifts.
· High quality order book with clients such as Westfalen, and
Octopus Hydrogen.
Company strategy for value creation Continued manufacture and delivery of Pioneer units, 11 units completed in
2023. Close collaboration with end users supporting field equipment,
generating data and learning from real world applications. To be used for
continuous improvement and future product development. Development of
after-market offering, including annual service contracts signed with end
users.
Initial stages of development for a data services offering.
Company ESG strategy NanoSUN participated in the European Innovation Council and European Institute
of Innovation and Technology (EIC-EIT Climate) Race to net Zero, which helped
us assess the climate impact of our products by validating our lifecycle
assessment. This demonstrated that every Pioneer fill saves 4.2-5.8 tCO2e and
just 10-13 Pioneer fills is required to offset the emissions generated during
manufacture.
Milestones delivered in 2023 · NanoSUN and IIT Hydrogen Bolzano signed an MOU to jointly explore
the operational use of NanoSUN's Pioneer hydrogen refuelling equipment across
a range of hydrogen applications in Italy, which could lead to the rapid
deployment of safe, reliable, and cost-effective hydrogen refuelling
infrastructure.
· Westfalen and NanoSUN have deployed 4 Pioneer Hydrogen Refuelling
Stations in German city Brühl, in the Cologne area, to fuel 6 new Solaris
Hydrogen City Buses. The filling station was developed in cooperation between
Westfalen Group and NanoSUN. The system will avoid emissions of 393 tons of
CO2 and 0.55.tons of NOx per year. Filling a fuel cell bus with the Pioneer
system less than 20 minutes.
Strohm Holding B.V
www.strohm.eu
The Netherlands-based hydrogen pipeline company
Total investment value £19.7m
% of NAV 14.9%
Change in NAV in 2023 £8.1m
Date of investment August & December 2022
Co-investors Shell Ventures, Chevron Technology Ventures, Evonik Venture Capital,
ING Corporate Investments
Why invested · Industry leaders in offshore hydrogen and CO2 pipelines, where we
see significant market growth.
· Thermoplastic composite pipe ("TCP") has c.50% less greenhouse
gas emissions than metal. Can transfer up to nine times the amount of hydrogen
energy compared to a cable.
· TCP's flexibility, lack of corrosion, fatigue and embrittlement
make it the superior pipeline solution for offshore wind farms, generating
hydrogen.
Company strategy for value creation The Strategy for Strohm is to enable the energy transition through proven high
end composite pipe technology. Strohm develops its technology on the basis of
being able to be used in both conventional energy applications, as well as in
renewable energy applications. This includes development, qualification, and
building up track record.
The company invests in product development and qualifications for renewable
energy applications including hydrogen, CO2 transport, ammonia transport, and
similar applications. Strohm does this by fully building on the qualifications
we already have. Today we already have the first offshore hydrogen pipeline
contract, and the first client qualifications for hydrogen transport. Strohn
invests in pilots for hydrogen and for CCS.
Strohm has unique benefits for both hydrogen and for CCS applications, in the
key attributes of our technology, the total lack of corrosion, of
embrittlement, of fatigue. These provide fundamental solutions to support the
transition. Once the market grows for these renewable energy applications, we
will be ready to support the growth by having a) a high Technology Readiness
Level ("TRL") product and b) fully de-risked and scaled production capacity.
Company ESG strategy Strohm is proud to be a Climate Neutral Certified organisation, as certified
according to the Climate Neutral Certification Standard from the Climate
Neutral Group (CNG). Strohm achieved compliance to the CNG standard to become
a recognised Climate Neutral Organisation in 2020 by implementing an ESG
strategy featuring key CO2 reduction initiatives, including an accredited
offsetting programme. Through these efforts, Strohm are making significant
progress towards achieving their next goal, to reduce our products CO2
footprint from a product life cycle point of view and invest in product
development to support the energy transition. Strohm do this across the
parameters of a) reducing the CO2 footprint of pipelines, b) enabling the
transition from fossil fuel to green energy, and c) reducing the CO2 footprint
of their own products.
Milestones delivered in 2023 · Strohm became the first company to receive DNV qualification for
deepwater TCP Flowline. Initial trials began in Brazil in 2018, aimed at
applications typical of the region's post-salt deep water fields. Almost 40
tests were carried out on Strohm's subsea flowlines, based on a product design
life of 30 years, with changing loads at different temperatures.
· TCP offers significant greenhouse gas emissions savings compared
to traditional solutions, and has significant growth prospects in transporting
offshore hydrogen and CO2.
· Strohm successfully installed its first deep-water / high
pressure TCP jumper in Guyana at water depths of 1,700m.
· The company was selected as partner for the Hydrogen Offshore
Production for Europe ("HOPE") project. HOPE is an important milestone in the
industry trend to produce green hydrogen in the offshore. The project is
planned to be 10MW (4 tonnes of hydrogen per day), installed off the port of
Ostend, in Belgium. The project has been selected by the European Clean
Hydrogen Partnership, under which it has been awarded a EUR20 million grant.
HOPE is being coordinated by Lhyfe, and implemented by eight European
partners: Alfa Laval, Plug Netherland, Strohm, EDP NEW, ERM, CEA,
POM-West-Vlaanderen and DWR eco.
· Strohm, alongside BW Offshore, Switch2, MARIN and TU Delft, have
received a EUR3 million grant from the Dutch government for project OFFSET -
an industrial scale floating green hydrogen and ammonia project, based on the
proven concept of a floating production and offloading vessel ("FPSO"). The
objective of the OFFSET project will be to demonstrate a decrease in the cost
of green fuel production and thereby increase its accessibility.
· Strohm was awarded a contract by PRIO (formerly known as
PetroRio) to provide its composite pipe solutions to support operations at its
Frade field, in Brazil.
· Strohm delivered a major milestone by completing its plant
expansion in the Netherlands. The new facility can produce some 140km of TCP
pipeline per year, a three-times increase on previous levels.
· 200% increase in revenue year-over-year and positive EBITDA
achieved in Q4 2023 for the first time.
Bramble Energy Limited
www.brambleenergy.com
UK-based fuel cell and portable power solutions company
Total investment value £10.6m
% of NAV 8.0%
Change in NAV in 2023 £0.6m
Date of investment February 2022
Co-investors IP Group, BGF, Parkwalk, UCL Technology Fund
Why invested · Pioneering revolutionary fuel cell design and manufacturing
techniques.
· Novel printed circuit board design PCBFC™ - low cost, scalable
and recyclable fuel cell modules.
· Leading global automotive businesses working closely with Bramble
to scale up product offering.
· Developing high-power density, mobility fuel cell systems.
Company strategy for value creation Bramble has developed the world's lowest cost fuel cell, suitable for every
application. It is manufacturable globally without capex, in existing
third-party facilities. Simplified stacks, means simplified systems, and that
means lower cost all round. Joint development agreements will lead to
technology licence agreements and royalties.
Company ESG strategy Bramble Energy conducts its business activities in a way that ensures, as far
as practicable, that the environmental impacts of it's operations are
positive, and any negative impact is mitigated. Bramble Energy has made the
SME Climate Commitment which recognises that climate change poses a threat to
the economy, nature and society-at-large, the company commits to take action
immediately in order to achieve and surpass:
· Halving our greenhouse gas emissions before 2030.
· Achieving net zero emissions before 2040.
· Disclosing our progress on a yearly basis.
Milestones delivered in 2023 · Bramble Energy and EDAG Group have signed an MOU to collaborate
on a digital investigation into using a hydrogen Printed Circuit Board Fuel
Cell (PCBFC™) within a standardized EV platform. The project, named
'FC-STORM', aims to create and showcase a design study of the 3D integration
of Bramble's cutting-edge hydrogen fuel cell system into EDAG's storage
platform designed for passenger vehicles and light commercial vehicles.
· Bramble Energy won The Gateley Business Transformation of the
Year Award 2023 and was also announced in the Deloitte UK Fast 50, one of the
UK's foremost technology awards programmes.
· The company announced the opening of its new state-of-the-art
headquarters in Crawley, West Sussex. The expansive new facility, which
includes a world-leading hydrogen innovation and development hub, and builds
on the company's strong growth since launching in 2016.
· Bramble Energy has secured £12 million UK Government funding to
provide fuel cell technology to hydrogen buses. Bramble Energy's innovative,
low-cost printed circuit board fuel cell ("PCBFC") technology will power an
all-new hydrogen double-decker bus, which will be developed in conjunction
with Equipmake, Aeristech and the University of Bath.
Cranfield Aerospace Solutions Limited
www.cranfifieldaerospace.com
UK-based passenger flight innovator, powering turboprop flight with hydrogen
Total investment value £11.9m
% of NAV 8.9%
Change in NAV in 2023 £5.6m
Date of investment March 2022, January 2023
Co-investors · Safran Ventures, Tawazun Strategic Development Fund, Motus
Ventures
Why invested · Cranfield is a technology leader in delivering hydrogen powered
turboprop flight.
· Aerospace market leader in the design and manufacture of new
aircraft design concepts, complex modifications to existing aircraft and
integration of cutting-edge technologies.
· Working on CAA certification of the Britten-Norman Islander
passenger aircraft using hydrogen powered fuel cells supplying electricity to
DC motors for rotational power.
Company strategy for value creation The company's mission is to deliver the world's first passenger carrying zero
emission aircraft using H2 fuel cell propulsion.
The strategy to achieve this is based on developing hydrogen fuel cell
electrically driven powertrains in a modular fashion that can be fitted to a
range of air vehicles. The powertrains will range in size from 125Kw through
to 500kW enabling them to be used in small passenger aircraft, cargo drones
and in auxiliary power units (APUs) for single and twin aisle aircraft.
Company ESG strategy The ESG strategy centers on sustainable practices, aiming for positive impact
across all facets of our operations. Environmentally, Cranfield is committed
to developing a zero emissions aircraft that will be a world first. More
locally the company commits to reducing their carbon footprint, minimizing
waste, and have launched cycle to work and EV car schemes. Socially, the
company prioritize diversity, equity, and inclusion, promoting employee
well-being and stakeholder engagement. Governance- wise, transparency, ethical
decision-making, and accountability are paramount. Continuous monitoring and
reporting ensure alignment with developing internal ESG standards. By
integrating ESG principles into its business model, Cranfield strives to
create long-term value for stakeholders, mitigate risks, and contribute to a
resilient, responsible, and prosperous future.
Developing a best practice approach to assessing and minimising the
environmental impact of our supply base. To be embedded in our supplier
assessment toolkit, the work on ESG will ensure compliance with requirements
and disclosure standards, and help develop a resilient supply chain.
Milestones delivered in 2023 · Cranfield and Reaction Engines signed an MOU to expand their
existing collaboration to explore additional aerospace applications for their
zero-emission propulsion technology.
· Memorandum Of Understanding signed with Dronamics to further
progress the application of the company's hydrogen-electric propulsion system
to the Dronamics Black Swan cargo drone aircraft. This agreement confirms the
position of the company as the preferred supplier of HFC propulsion systems to
Dronamics and includes a letter of intent for the supply of a substantial
number of propulsion systems from 2026. This opens a new route to market for
its hydrogen-electric propulsion system, alongside existing arrangements with
Britten-Norman.
· The company unveiled its newly refurbished hangar and R&D
facility for the development of zero emissions aircraft. The facility, leased
by the company, has undergone major refurbishments as part of Cranfield
University's decarbonisation plan, with significant investment into reducing
the building's carbon footprint;
· Three-party agreement with MONTE Aircraft Leasing (MONTE) and
Australian air charter company Torres Strait Air to convert up to ten
Britten-Norman Islander aircraft to hydrogen-electric power.
· Cranfield has adjusted its strategy, and intends to deploy its
innovative hydrogen flight technology across multiple platforms, and at the
same time to develop further IP in hydrogen powered flight. The
previously-announced plan to merge the company and Britten-Norman has been
replaced with the intent to further strengthen the strategic co-operation
between these two separate parties.
· In Q1 2023 HGEN invested £1.4m in the final tranche of a £14.4m
round, totalling £2.9m, alongside Safran Corporate Ventures and the Strategic
Development Fund.
HH2E AG
www.hh2e.de
German green hydrogen project developer with a focus on industrial customers
Total investment value £7.0m
% of NAV 5.2%
Change in NAV in 2023 £1.9m
Date of investment May 2022
Co-investors Foresight Group LLP
Why invested · A prominent leader in Germany focused on green hydrogen and
battery storage project development.
· HH2E has secured attractive German brownfield sites close to
hydrogen offtake with grid connections capable of 1 GW capacity.
· Provides HGEN with investment rights in multiple large-scale
green hydrogen based decarbonisation projects.
· The battery and alkaline electrolyzer combination enables
near-constant production using the cheapest hours of renewable electricity
supply.
Company strategy for value creation HH2E is at the vanguard of energy transition in Germany, aiming to become one
of largest green hydrogen producers in the country.
HH2E developed an innovative technology mix and a forward-thinking business
strategy, to exploit the surplus of solar and wind energy sources to produce
green hydrogen on a large scale, economically. This approach not only
addresses the challenge of renewable energy curtailment by utilising excess
capacity but also sets a benchmark for efficiency and sustainability in the
industry.
Backed by institutional investors, HH2E plans to develop several sites aiming
for a 4 GW capacity by 2030. Upon completion, the ongoing Final Investment
Decision process for the HH2E Lubmin project, which begins with an initial
capacity of 100 MW and is scalable to 1 GW, will mark a significant
advancement in enhancing green hydrogen production in Germany and Europe.
Company ESG strategy HH2E is committed to becoming a leader in the green energy sector with a
robust ESG strategy that underpins its mission to drive sustainable energy
transitions.
Environmentally, HH2E is focused on reducing carbon emissions by maximising
the potential of renewable energy sources for green hydrogen production,
contributing to eliminate curtailment, and aiming for zero-waste operations.
Socially, HH2E prioritise community engagement, ensuring their projects bring
opportunities to areas undergoing structural changes, thereby creating new
economic opportunities, fostering local employment, and adhering to the
highest safety and health standards.
Governance-wise, HH2E maintains transparent business practices, uphold ethical
standards, and ensure compliance with regulatory requirements. Through these
pillars, HH2E aspires to set industry benchmarks, contribute positively to
societal change, and promote sustainable growth.
Milestones delivered in 2023 · DHL Group, HH2E, and Sasol announced plans to collaborate for the
production of sustainable aviation fuels in Germany, using HH2E-supplied green
hydrogen, for an initial capacity of 200,000 tonnes per annum, with potential
to scale up to 500,000 tonnes per annum.
· HH2E announced plans for a supply agreement for green hydrogen
with Germany hydrogen refuelling leader H2 Mobility, aimed at the transport
sector.
· HH2E has placed an order with BASF Stationary Energy Storage GmbH
(BSES) for 93 MWh of high-capacity Sodium Sulphur batteries.
· HH2E secured funding for Lubmin FEED and Thierbach PID. HGEN
committed £2.5m (EUR 2.8m) for Thierbach alongside other institutional
investors and HH2E for engineering and commercial works.
· HH2E agreed to purchase of 120MW of alkaline electrolyzer
equipment from NEL ASA.
· Addition of over 25 specialists in crucial areas such as
technology, project management, energy procurement, sales, and finance,
significantly strengthening and doubling our team.
· Key equipment purchases and reservations were made to ensure
timely site setup, including electrolyzers, high-capacity batteries, and
high-voltage components from leading suppliers like Nel Hydrogen, BASF, and
Siemens Energy.
· HH2E secured multiple pivotal agreements covering power
procurement, hydrogen distribution, and offtake arrangements, alongside
forming strategic alliances with notable entities such as 50hertz, Gascade,
DHL, and H2 Mobility, marking significant strides in our operational and
strategic development.
Gen2 Energy
www.gen2energy.com
Norwegian green hydrogen project developer
Total investment value £4.4m
% of NAV 3.3%
Change in NAV in 2023 £1.0m
Date of investment March 2022
Co-investors HyCap, Vitol, Hoegh LNG, Knutsen Group
Why invested · The leading Norwegian green hydrogen project developer, with
clear plans to convert low-cost hydroelectric power to hydrogen, for export
and domestic use.
· Up to 925MW green hydrogen projects in Norway, with expected
production in 2026-2027.
· Specialist in low-cost 24/7 hydroelectric power.
· Co invested with Norwegian LNG and ship operators that provides
input to the Gen2 hydrogen export solution.
· HGEN has follow-on investment rights in multiple project SPVs.
Company strategy for value creation Gen2 Energy is set up to develop, build, own and operate production facilities
for green hydrogen and hydrogen derivatives, and to ensure an efficient
distribution of these products. The company aims to establish production
capacity at large-scale based on 100% renewable energy, and the long-term
target is to have an aggregate capacity of 1GW in production by 2030. Gen2
Energy believes that the technology, means of transport and market demand for
various green hydrogen derivatives will develop over time and has an
opportunistic approach to selecting solutions that optimise the relationship
between high value, low risk and low carbon emissions.
Company ESG strategy By utilizing Norwegian renewable electricity for hydrogen production, Gen2
Energy ensures future-proof business cases for its projects. The company's
long-term ambition is to be a net-zero company, and in order to reduce the
carbon footprint for the whole value chain from production to end-user, Gen2
Energy strives to be at the forefront of selecting available technology with
no/low carbon footprint. Gen2 Energy is of the view that zero-emission
solutions in most cases go hand in hand with high value. In 2023, the company
obtained pre-certification that the output from the company's initial
Nesbruket project RFNBO compliant under RED II/DA.
Milestones delivered in 2023 · Gen2 Energy and Securing Energy for Europe (SEFE) signed a
Transaction Term Sheet for the delivery of green hydrogen from Norway to
Germany.
· Post year end, Gen2 Energy and Norsk e-Fuel signed agreement on
green hydrogen supply for the production of sustainable aviation fuels.
· Entered agreement with Port of Helgeland on planning and design
of a new quay.
· Provaris Energy collaboration agreement for marine storage and
shipping solutions.
· Detailed zoning plan for Gen2 Energy's 100MW hydrogen facility in
Mosjøen approved.
· Signed agreement with Åfjord municipality for large-scale
production and shipping of green hydrogen.
Thierbach project
www.hh2e.de
Green hydrogen production project in Germany
Total investment value £2.0m
% of NAV 1.5%
Date of investment January 2023
Change in NAV 2023 £2.0m
Co-investors Foresight Group LLP, HH2E
Why invested · First direct project investment by the Company.
· Large-scale green hydrogen production opportunity with leading
players in the mobility sector, energy and industrial consumers as potential
offtakers.
· The technology mix and design developed by the operator (HH2E AG)
enables constant production of cost-competitive green hydrogen without a
permanent supply of power.
Company strategy for value creation Thierbach is a development project aimed at building an industrial-scale green
hydrogen production facility. Its initial input capacity is projected to be
100 MW by 2025, with the ability to ramp up to over 1 GW by 2030.
The plant will serve green hydrogen customers and offtakers, including leading
players in the mobility sector, large-scale energy and industrial consumers
such as the chemical industry and commercial air and road transport operators.
Company ESG strategy Thierbach adheres to HH2E's ESG strategy, which is committed to becoming a
leader in the green energy sector with a robust ESG strategy that underpins
its mission to drive sustainable energy transitions.
The plant is projected to have the capacity to produce c.6,000 tonnes of green
hydrogen per year, displacing fossil fuels and, therefore, avoiding harmful
greenhouse gas emissions. Further expansion phases could increase production
to more than 60,000 tonnes in the medium term, which could result in over 10
million tonnes of greenhouse gas emissions ("GHGs") avoided over the life of
the project.
Milestones delivered in 2023 · HH2E announced its second major green hydrogen production project
in Germany, a 100MW facility at Thierbach. HGEN committed £2.5m (EUR 2.8m)
alongside other institutional investors and HH2E for engineering and
commercial works.
· EUR 13m spend (HGEN EUR 2.8m) on Front End Engineering and Design
(FEED), land purchase, key equipment.
· FID planned for 2024 (Thierbach and Lubmin), subject to funding.
· Phase 1 (100MW): c.6,000Htpa ~ 60,000tpa avoided GHGs
(Thierbach).
Listed Hydrogen Assets
The Company holds investments in 15 global hydrogen sector listed equities
with an average market capitalisation of £270 million with minimum market
capitalisation of £8 million. These companies are key players in the
electrolysis, fuel cell and clean hydrogen projects sectors. The current
portfolio is valued at £2.3m.
Analysis of financial results
The Financial Statements of the Company for the year ended 31 December 2023
are set out in the annual report.
Net assets
Net assets increased from £125.4 million at 31 December 2022 to £132.7
million at 31 December 2023. The increase in net assets was driven primarily
by an increase in the value of the Private Hydrogen Assets, offset by the fall
in global stocks generally and the hydrogen sector more specifically.
The net assets of £132.7 million comprise £128.2 million portfolio value of
investments, including the holding in the HydrogenOne Partnership, and the
Company's cash balances of £4.6 million, and other net liabilities of £0.1
million.
The Limited Partnership's net assets of £125.9 million comprise £126.2
million portfolio value of investments, cash balances of £0.1 million and
liabilities of £0.4 million.
Cash
At 31 December 2023, the Company and the HydrogenOne Partnership (together the
'Group') had a total cash balance of £4.7 million (2022: £19.7 million),
including £0.1 million in the Limited Partnership, which is included in the
Company's balance sheet within 'investments held at fair value through profit
or loss'.
Profit for year
The Company's total profit before tax for the year ended 31 December 2023 is
£7.3 million (31 December 2022: £1.6 million), generating a return per
Ordinary Share of 5.68 pence (31 December 2022: profits of 1.27 pence per
share).
In the year to 31 December 2023, the gains on fair value of investments were
£9.2 million (31 December 2022: £3.2 million).
The expenses included in the income statement for the year were £2.0 million,
in line with expectations. These comprise £0.1 million Investment Adviser
fees and £1.9 million operating expenses. The details on how the Investment
Adviser fees are charged are as set out in note 6 to the Financial Statements.
Ongoing charges
The 'ongoing charges' ratio is an indicator of the costs incurred in the
day-to-day management of the Company.
The ongoing charges percentage for the year to 31 December 2023 was 2.56% (31
December 2022: 2.51%). The ongoing charges have been calculated, in accordance
with AIC guidance, as annualised ongoing charges (i.e. excluding acquisition
costs and other non-recurring items) divided by the average published
undiluted Net Asset Value in the period. The calculation is provided in the
annual report. The ongoing charges percentage has been calculated on the
amalgamated basis and therefore takes into consideration the expenses of
HydrogenOne Partnership as well as the Company.
Environmental, Social and Governance ("ESG")
ESG highlights:
HGEN is an SFDR Article 9 impact fund with a sustainable investment objective
aligned with the climate change mitigation goal of the EU Taxonomy.
· Reported to the Principles of Responsible Investment for the
first time and scored above median average for the peer group in each of the
three reported modules, including: Policy, Governance and Strategy; Confidence
Building Measures; and Direct Private Equity.
· Produced the Company's first standalone Sustainability Report for
FY 23 aligned with the IFRS International Sustainability Standards Board as an
early adopter.
· Undertook a physical climate risk assessment during the year
incorporating scenario analysis from the International Panel on Climate
Change's Shared Socioeconomic pathways.
· The Company's Board gender diversity remained 50%
Our Impact:
£113.7 million
Deployed in low-carbon growth;
91,116 tCO2e
Emissions avoided in FY 2023 and 141,695 tCO2e avoided since IPO;
571,294 MWh
Potential MWh lifetime clean energy capacity in FY2023 and 797,294 MWh since
IPO;
92% EU Taxonomy
Portfolio alignment with the EU taxonomy for FY 23 (89% FY 22);
2.22 tCO2e/£m
Carbon footprint (FY 22 1.9 tCO23 / £m);
Metrics 2023 2022
Greenhouse gas emissions
Scope 1 18 tCO2e 48 tCO2e
Scope 2 81 tCO2e 28 tCO2e
Scope 3(1) 180 tCO2e 134 tCO2e
Carbon footprint 2.2 tCO2e / £m Val(2) 1.9 tCO2e / £m Val
GHG Intensity 55.3 tCO2e / £m Rev(3) 0.8 tCO2e / £m Val
Avoided GHG in the year 91,116 tCO2e 42,716 tCO2e
Avoided Cumulative since IPO 141,695 tCO2e 50,579 tCO2e
Energy use - UK 268,669 kWh 93,383 kWh
Energy use - Global 2,157,604 kWh 750,563 kWh
1 Notwithstanding any mitigation action in the respective supply chains, we
expect that scope 3 emissions will increase as data gaps are closed and use of
estimates are reduced as more reliable data from Private Hydrogen Assets
becomes available.
2 Tonnes of carbon dioxide equivalent per £m of portfolio value
3 Tonnes of carbon dioxide equivalent per £m of share of portfolio
revenue.
Methodology
Emissions are calculated in line with the Greenhouse Gas Protocol but
disclosed in line with EU SFDR (which aggregates the Company's share of
emissions for each scope).
Principles of Responsible Investment
During the year the Company submitted its first reporting to the Principles of
Responsible Investment. The charts below show the scoring vs the peer group of
investment managers in the same jurisdiction with similar assets under
management. The results are favourable to the Company with performance above
the median average in all three categories and particularly strong results in
governance. Further work to enhance responsible investment performance will be
undertaken in FY 2024.
Stakeholder engagement (Section 172 Statement)
The Directors have a statutory duty to promote the success of the Company,
whilst also having regard to certain broader matters, including the need to
engage with employees, suppliers, customers, and others to their interests.
The Company has no employees and no customers in the traditional sense. In
accordance with the Company's nature as an investment trust the Board's
principal concern is the interests of the Company's shareholders taken as a
whole. In doing so, it has due regard to the impact of its actions on
shareholders, the environment and the wider community.
The Investment Adviser (in addition to the Board) has significant dealings
with our stakeholders and, therefore, is an integral point of contact between
the Company and our stakeholders. The Company's Corporate Broker, Barclays
Bank PLC, are also an integral point of contact between the Company and our
shareholders and, together with the Investment Adviser ensure that any
shareholder feedback or observations are collated.
The following disclosure describes how the Directors have had regard to the
matters set out in section 172(1)(a) to (f) when performing their duty under
s172 of the Companies Act 2006 and forms the Directors' statement required
under section 414CZA of the Companies Act 2006.
Stakeholder group Why is it important to engage? How has the Board communicated and engaged? Key topics of engagement and decisions made by the Board
Shareholders The significant shareholders of the Company are set out in the Annual Report. - Annual and Interim Reports; Through the communication and engagement with shareholders described, the
Company and Investment Advisor have provided data and information on topics
The Investment Adviser and the Board believe that Shareholders and their - Quarterly factsheets; including:
support is critical to the continuing existence of the business and delivery
of its long- term investment strategy. - Investor webcasts and presentations (through the Investment Adviser); - Market announcements, including quarterly NAV announcements;
It is important to the Company's continued success to have the potential to - Institutional investor meetings (one-to-one and group), primarily - Portfolio company valuation, financial performance and Company
access equity capital in order to expand the Company's portfolio over time in through the Investment Adviser and corporate broker; valuation methodology;
order to further diversify the investment portfolio and create economies of
scale. - Regular institutional investor feedback received from the Investment - Commentary on macro trends impacting the Hydrogen sector;
Adviser and corporate broker;
- Presentations by senior managers in portfolio companies at Capital
- Research analyst presentations through the Investment Adviser; Markets Day.
- AGM;
- Website;
- First Capital Markets Day held in February 2023.
Investment Adviser The Investment Adviser is the most significant service provider to the Company - Board and Committee meetings; In addition to all matters related to the execution of the Company's
and a description of its role can be found in the Annual Report.
Investment Objective, the Board engaged with the Investment Adviser in regards
- Regular reports and presentations from the Investment Adviser; to the Company's SFDR reporting and Article 9 classification. The Board held a
strategy day in early 2023 and a second in early 2024 to which the Investment
- Ad hoc meetings and calls. Adviser was invited to present and discuss with the Board the Company's future
strategy.
AIFM The AIFM is a critical service provider for the Company's long-term success - Board and Committee meetings; The AIFM is responsible for monitoring the risks faced by the Company and
and engages with the Board and the Investment Adviser for the purpose of
these are regularly discussed at meetings.
providing investment advisory services to the Company. - Regular reports and presentations from the AIFM.
The Board regularly monitors the Company's investment performance in relation
to its objectives, investment policy and strategy.
Other key service providers The Company does not have any direct employees and works closely with a number - Board and Committee meetings; The feedback given by the service providers is used to review the Company's
of key service providers, including the Administrator, Company Secretary,
policies and procedures to ensure open lines of communication, and operational
auditor and corporate broker. - Ad hoc meetings and calls; efficiency.
The independence, quality and timeliness of their service provision is - Annual review of performance based on a questionnaire; The Company is able to identify and resolve problems with service provider
critical to the success of the Company.
relationships, should they arise, via this process.
- The Company undertakes regular reviews of all material contracts for
service quality and value through the activities of the Management Engagement During the Company's annual report production, the Audit and Risk Committee
Committee. has engaged with the Company's external auditors to obtain feedback on the
quality and accuracy of the reporting and to ensure the reporting process was
undertaken effectively by all service providers.
During the year the Board appointed Barclays Bank as the Company's Broker.
Portfolio investments The Board considers each proposal against the Company's investment objective, - The Company's Board is presented with potential investment As at 31 December 2023, over 90% of the capital raised was invested. One new
and investment policy as disclosed in the Annual Report and with consideration opportunities that have been identified by the Investment Adviser and which investment was completed during the year.
for the wider group of stakeholders. have undergone a process of analysis, including considerations relating to
environmental, social and governance issues; As part of the ongoing portfolio performance monitoring, the feedback given by
the Investment Adviser is used to review the Company's policies and procedures
- The Board reviews the financial and operating performance of the to ensure open lines of communication, and operational efficiency regarding
Company's portfolio companies on a regular basis; its Portfolio Companies.
- In many cases, investments in Private Hydrogen Assets are linked to
operational and financial targets, which the Board monitors;
- A quarterly update on performance of portfolio companies is provided
in the Investment Adviser's Report within the Board Packs.
Society and the environment Ensuring our investment positively contributes to climate change mitigation See ESG section of the Annual Report and the 2023 Sustainability Report. See ESG section of the Annual Report and the 2023 Sustainability Report.
with an ESG policy integrated in investment decisions and asset monitoring.
Other Matters
Modern slavery disclosure
The Company is committed to maintaining the highest standards of ethical
behaviour and expects the same of its business partners. The use of slavery
and human trafficking is unacceptable and entirely incompatible with its
ethics as a business. The Company believes that all efforts should be made to
eliminate it from its supply chains.
The majority of services supplied to or on behalf of the Company are from the
financial services, energy and construction industries and other services
associated with those industries. Given what the Company understands to be a
low risk profile of anyone supplying it with services being involved in
slavery and/or human trafficking, it believes its current procedures and
ability to rely on regulatory oversight in relation to professional services
are sufficient in this regard.
Social, community and human rights issues
The Investment Adviser screens the Company's Investable Universe as part of
the Environmental Social and Governance analysis for any breaches of the
principles of the UN Global Compact, including human rights, labour rights,
environmental breaches and corruption. Any non-compliant companies are
excluded from investment.
Anti-bribery and corruption
In accordance with the UK Bribery Act 2010, the Company has developed
appropriate anti-bribery policies and procedures. The Company has a
zero-tolerance policy towards bribery and is committed to carrying out its
business fairly, honestly and openly. The anti-bribery policies and procedures
apply to all its officers and to those who represent the Company (including
its business partners). The Company expects those providing services to it, or
on its behalf, to undertake their business without bribery.
Prevention of the facilitation of tax evasion
The Criminal Finances Act (Commencement No. 1) Regulations 2017 (SI 2017/739)
brought Part 3 of the Criminal Finances Act 2017, the corporate offences of
failure to prevent facilitation of tax evasion, into force on 30 September
2017. The Company does not tolerate tax evasion in any of its forms in its
business. The Company complies with the relevant UK law and regulation in
relation to the prevention of facilitation of tax evasion and supports efforts
to eliminate the facilitation of tax evasion worldwide, and works to make sure
its business partners share this commitment.
Company information
HydrogenOne Capital Growth plc (the "Company" or "Parent") was incorporated in
England and Wales on 16 April 2021 with registered number 13340859 as a public
company limited by shares and is an investment company within the terms of
Section 833 of the Companies Act 2006 (the "Act"). The Company is listed and
began trading on the Main Market of the London Stock Exchange and was admitted
to the premium segment of the Official List on 30 July 2021 (the "IPO"). The
Company is an approved investment trust under sections 1158 and 1159 of the
Corporation Tax Act 2010 and Part 2 Chapter 1 of Statutory Instrument
2011/2999.
Asset allocation at year end
The breakdown of the structure of the portfolio at the Company's year end is
shown in the Annual Report.
Dividends and dividend policy
The Ordinary Shares carry a right to receive dividends. Interim dividends are
determined by the Board and a final dividend is subject to shareholder
approval at the AGM.
The Company is targeting a Net Asset Value total return of 10 to 15% per annum
over the medium to long-term with further upside potential. The Company
intends to invest in Hydrogen Assets with cash flow typically re-invested for
further accretive growth.
The Company only intends to pay dividends in order to satisfy the ongoing
requirements under the Investment Trust (Approved Company) (Tax) Regulations
2011 for it to be approved by HMRC as an investment trust save that, in the
medium term, the Company's Hydrogen Assets may also generate free cash flow
which the Company may decide not to re-invest and, in such case(s), the
Company currently intends to distribute these amounts to Shareholders.
The Company's revenue return after tax for the year amounted to a loss of
£1,328,000 (31 December 2022: loss of £1,405,000). The Company made a
capital gain after tax of £8,645,000 (2022: gain of £2,959,000). Therefore
the total return after tax for the Company was a profit of £7,317,000 (2022:
profit of £1,554,000). No dividends have been paid or are proposed for the
year to 31 December 2023 (2022: nil).
Risk and risk management
Principal risks and uncertainties
The Board, through delegation to the Audit and Risk Committee, has carried out
a robust assessment of the emerging and principal risks facing the Company.
These include those that would threaten its business model, future
performance, solvency and liquidity (see Audit and Risk Committee Report in
the Annual Report). The Audit and Risk Committee reviews ongoing monitoring of
both risks and controls. This ensures heightened and emerging risks are
identified outside of the normal cycle of Board and Audit and Risk Committee
meetings. The Audit and Risk Committee undertook a comprehensive review of the
Company's risk management framework and controls during the year. The risks
are documented on a risk register and each risk is rated by impact and
probability with the assessed risk given a risk score and a residual rating.
The risk register is reviewed on an ongoing basis in an attempt to capture all
risks and put appropriate mitigation in place. The review takes into account
changing factors including, but not restricted to, changes to markets (both
macro and micro), stakeholders, operations, regulation and emerging risks. The
top risks identified by this process are set out in the table below together
with the mitigated approach, and the Board considers these to be the principal
risks of the Company.
Principal Risks and Uncertainties Mitigation Risk Status
Regulatory The Board and Investment Adviser has significant experience in the energy Stable
sector and is familiar with its volatile political and regulatory environment.
Changes in political or environmental conditions in the hydrogen sector (for Extensive contacts across the sector inform its ongoing monitoring of these
example, changes in government policy or support) could affect the Company's risks, which are reported to the Board at least quarterly. More specific due
prospects. diligence occurs prior to any investments and during the lifetime of their
ownership.
The Administrator has a strong track record in administering listed companies
and the various rules and regulation required to be adhered to.
Policy support As noted under 'regulatory', the Investment Adviser has longstanding Stable
experience in the energy sector and monitors the policy environment closely.
The technologies required to produce and use green hydrogen need policy Such experience and awareness is also present among the Company's Non-
support to underpin the scale needed to drive stand-alone cost Executive Directors. It is the intent of the Investment Adviser to access a
competitiveness. Governments worldwide are showing such support today, but range of hydrogen projects in different countries and at different points in
that may be volatile over the investment time horizon of the Company. the emerging value chain, to further mitigate the risk of policy volatility.
Power price The Investment Adviser monitors the outlook for electricity and hydrogen Stable
prices. The exposure to fluctuating electricity and hydrogen prices may be
The income and value of the Company's investments may be affected by changes hedged at the hydrogen project level.
in the market prices of electricity and hydrogen, both current and expected.
As a result, the Investment Adviser oversee power revenues and monitor
Risks include refinancing risk, exposure to interest rate risk due to regularly against expectations.
fluctuations in the prevailing market rates, covenant breaches and possible
enhanced loss on poor performing assets. Portfolio allocations are monitored on an ongoing basis by both the Investment
Adviser and AIFM, to ensure compliance with investment limits. Reporting by
the Investment Adviser and AIFM are provided to the Board at least quarterly.
Operational The Investment Adviser conducts a vigorous due diligence process and works Stable
very closely with external and technically skilled consultancy firms to review
Initial pre-deal due diligence may not uncover all risks associated to a all potential transactions, with an aim to provide a fully scoped and informed
transaction. recommendation.
Investments are subject to operating and technical risks. While the Company The portfolio is constantly monitored by the Investment Adviser and the AIFM
will seek investments with creditworthy and appropriately insured to address risks as they are identified.
counterparties who bear the majority of these risks, there can be no assurance
that all risks can be mitigated. Diversification in counterparties and service providers ensures any impact is
limited. Furthermore, the Company invests in a diversified portfolio.
In addition, the long-term profitability of hydrogen investments will be
partly dependent upon the efficient operation and maintenance of the assets.
Inefficiency, or limitations in the skills, experience or resources of
operating companies, may reduce revenue.
As a result, profitability of the Company may be impaired leading to reduced
returns for Shareholders.
Performance The Board reviews at least quarterly the portfolio performance as well as Increasing
underlying key asset risks identified as part of the Company's risk register
Underperforming investment or investment strategy can lead to underperformance and how those risks are actively being mitigated which include but is not
to the Company's target return and ultimate investment objective. limited to:
Risk assessment has increased from macroeconomic impacts on portfolio · Non Controlling interest risk
investments from higher inflation and interest rates.
· Market risk
· Interest rate risk
· Inflation risk
At each Board meeting a report on risks, portfolio performance and any macro
and micro considerations is provided by the Investment Adviser and the AIFM,
and reviewed accordingly with the aim to mitigate such risks.
New investment recommendations are reviewed and approved in line with the
investment policy agreed with the Company and key parties.
Future acquisitions and capital raises The Company's Broker monitors the market for the Company's shares and reports Increasing
at quarterly meetings. The Board regularly reviews the relative level of
Ongoing capital raises are intended. The Company's share price trading at an discount against the sector and has the authority to buy back shares.
excessive discount to its net asset value may mean it is difficult to raise
further capital through share issues for onward investment. During the year, the Company's shares have traded at a discount to NAV which
has restricted the Company's ability to raise capital through the issue of new
Risk assessment has increased due to share price trading at a discount to net shares.
asset value.
The Board and AIFM oversee the investment pipeline and monitor its progress in
relation to Company targets.
Certain assets will be identified in advance by the Investment Adviser as
being potentially available for acquisition by the Company.
The pipeline is managed by the Investment Adviser and monitored by the AIFM,
with onward reporting to the Board.
The Board is unlikely to agree to capital raises without a strong pipeline.
Refinancing The Investment Adviser closely monitors the liquidity in the market and Increasing
portfolio valuations.
The operational risks of the Company including market, counterparty, credit
and liquidity risk. Should new credit not be forthcoming, liquidity may be gained through a
capital raise, or liquidation of an asset including the Company's Listed
Extreme market volatility can disrupt capital raising process and ability to Hydrogen Assets.
raise monies to repay a debt demand in full.
The Investment Adviser, AIFM and the Board continuously monitor forecast and
Investments in Private Hydrogen Assets are illiquid in nature and may take a actual cashflows from operating, financing, and investing activities to
longer period of time to realise in order to fund the Company's operations or consider payment of dividends, or further investing activities.
meet its expenses.
The Company may be forced to sell liquid assets to meet its expenses at a time
when valuations are low.
Risk assessment has increased due to market volatility and the Company's share
price trading at a discount to net asset value, delaying the Company's ability
to raise capital. Higher interest rates will increase the cost of finance to
the Company.
Service providers All counterparties to the Company are reviewed as part of the risk register. A Stable
material credit risk is that of banks holding un-invested cash, the credit
Disruption to, or failure of the Company's Administrator or other parties to rating and credit worthiness of these are considered. A review of operational
complete their role efficiently, on time and in line with expectation. counterparties such as the Administrator for operational procedures, disaster
recovery and system security is undertaken.
Counterparties of Company's Special Purpose Vehicles ("SPV") and underlying
assets are carried out as part of the investment due diligence process.
Portfolio valuation The Investment Adviser has significant experience in valuation of these Stable
assets.
Risk that portfolio asset valuations published do not represent the Fair
Market Values in accordance with the accounting requirements. The discount rate used in the valuations incorporates spot gilt rates for each
free cashflow based on maturity and country which mitigates the longer term
Investment valuations are based on modelling/ financial projections for the impact of rises in interest rates.
relevant investments. Projections will primarily be based on the Investment
Adviser's assessment and are only estimates of future results based on The valuation polices will be reviewed by the Valuation Committee on a
assumptions made at the time of the projection. Actual results may vary quarterly basis, together with signing off on the Private Hydrogen Asset
significantly from the projections, which may reduce the profitability of the values.
Company leading to reduced returns to Shareholders.
A rise in interest rates will lead to an increase in the Discount Rate applied
to the Private Hydrogen Assets' valuation, leading to a reduction in the
Company's net asset value.
Key person The Investment Adviser is committed to expand its business/ staffing levels in Stable
order to diversify knowledge across the expanding team.
The Investment Adviser is a newly formed Company, with minimum employees. As
such, there are significant Key Person risks at this time and should they This risk is covered in the risk register and reported on at each Board
become unavailable, this could have a negative impact on the Company's ability meeting.
to achieve its investment objective.
Tax The corporate structure of the Company is reviewed periodically by the Company Stable
and its advisors.
Breaches of Section 1158 of the Corporation Tax Act could result in loss of
investment trust status. All investments receive professional structural advice prior to investment.
Changes in tax legislation such as BEPS, WHT rules and structural requirements
result in increased tax and resulting in a drop in returns from the Company's
investments.
Political and associated economic risk The Board and Investment Adviser have reviewed the portfolio for exposure and Stable
will continue to keep this under review.
Exposure to Russia and/or Ukraine and the Middle East within the investment
portfolio could lead to losses on investments.
The impact on the global equity markets, and hydrogen stocks in particular, of
a prolonged downturn caused by the situation in Ukraine and the Middle East,
could lead to reduced valuations of the Company
Artificial intelligence The Company, its advisers and service providers will aim to utilise the power Increasing
of AI to enhance capabilities, rather than fall foul of the potential pitfalls
Risks that the emergence of increasingly advanced AI will lead to new risks to its emergence presents. Through careful monitoring of the new technologies
the Company, including but not limited to, decline in human autonomy, being released into the world, it will be the aim that the Company can utilize
increased cybersecurity vulnerabilities, algorithm perpetuated bias though AI to its benefit.
using historical data, insufficient training data to perform correctly and
algorithm driven price manipulation.
Viability statement
The Directors have assessed the viability of the Group for the period to 31
December 2028 (the "Viability Period"). The Board believes that the Viability
Period, being approximately five years, is an appropriate time horizon over
which to assess the viability of the Group, particularly when taking into
account the long-term nature of the Group's investment strategy, of investing
in private equity stakes of unlisted companies with a 3-5 year exit plan for
each investment, the principal risks outlined in the Annual Report and the
requirement to hold a continuation vote every five years.
In accordance with the Articles, the continuation of the Company is subject to
the approval of shareholders every five years, with the first vote to be
proposed as an ordinary resolution at the Company's AGM in 2026. If passed,
the Articles provide that the Directors propose an ordinary resolution that
the Company continue its business as presently constituted at each fifth
annual general meeting thereafter. Since the Company's IPO, the Company has
raised further equity capital of £21m and all AGM resolutions have been
passed with a substantial majority demonstrating the continued support for the
Company's investment objective and therefore, the Directors have no reason to
believe that the vote will not pass.
In its assessment of the prospects of the Group, the Board carried out a
robust assessment of the emerging and principal risks and considered each of
the uncertainties set out in the Annual Report which included consideration of
severe but plausible downside scenarios (such as a long-term market downturn,
significantly increased costs, delays in the realisation of assets and the
liquidity and solvency of the Group). The Board also considered the Group's
income and expenditure projections and cash projections. These metrics were
subjected to stress testing of the assumptions to evaluate the potential
impact on the Group, including long term downturn of the listed equity
markets, longer investment hold periods and increased inflation. Portfolio
changes, market developments, level of premium / discount to NAV and share
buybacks / share issues are discussed at quarterly Board meetings. The
internal control framework of the Group is subject to a formal review on at
least an annual basis.
The level of the ongoing charges is dependent to a large extent on the level
of net assets, the most significant contributor being the Investment Adviser
fee. The Group's cash realisable from the sale of its investments provide
cover to the Group's operating expenses, and any other costs likely to be
faced by the Group over the Viability Period of their assessment.
The Director's assessment considered the market risks associated with the
Russian invasion of Ukraine and the war in the Middle East. The ongoing market
volatility and uncertainty this has caused, including higher inflation and
interest rates, has been considered and will continue to be monitored. The
Investment Adviser has reviewed the investment portfolio for exposure and
while limited exposure has been identified the Board will keep the situation
under continued review.
Based on this assessment, the Directors have a reasonable expectation that the
Group will be able to continue to operate and to meet its liabilities as they
fall due over the Viability Period.
Employees
The Company has no employees. As at the date of this report, the Company had
four Directors, of whom two are male and two are female.
Outlook
The outlook for the Company is described in the Chairman's Statement and the
Investment Adviser's Report.
Strategic report
The Strategic Report set out in the Annual Report was approved by the Board of
Directors on 17 April 2024.
For and on behalf of the Board
Simon Hogan
Chairman
17 April 2024
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the Group
and Parent Company Financial Statements in accordance with applicable laws and
regulations.
Company law requires the Directors to prepare Group and Parent Company
financial statements for each financial year. Under that law they are required
to prepare the Group Financial Statements in accordance with UK-adopted
international accounting standards and applicable law and have elected to
prepare the parent Company financial statements on the same basis.
Under company law the Directors must not approve the Financial Statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and Parent Company and of the Group's profit or loss for
that year. In preparing each of the Group and Parent Company Financial
Statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and estimates which are reasonable relevant and
reliable;
· state whether they have been prepared in accordance with
UK-adopted international accounting standards;
· assess the Group and Parent Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern;
and
· use the going concern basis of accounting unless they either
intend to liquidate the Group or the Parent Company or to cease operations, or
have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and which disclose
with reasonable accuracy at any time the financial position of the Company and
enable them to ensure that its financial statements comply with the Companies
Act 2006. They are responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Group and to prevent and detect fraud and other
irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, Directors' Report, Directors' Remuneration
Report and Corporate Governance Statement that complies with that law and
those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company's website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the annual report
The Directors each confirm to the best of their knowledge that:
· the Financial Statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and
the undertakings included in the consolidation taken as a whole; and
· the Strategic Report includes a fair review of the development
and performance of the business and the position of the issuer and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
The Directors consider the annual report and accounts, taken as a whole, is
fair, balanced and understandable and provides the information necessary for
shareholders to assess the Group's position and performance, business model
and strategy.
For and on behalf of the Board
Simon Hogan
Chairman
17 April 2024
Financial statements
Parent and consolidated statement of comprehensive income
For the year ended 31 December 2023
Year ended 31 December 2023 Year ended 31 December 2022
Notes Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments 4 - 9,150 9,150 - 3,177 3,177
(Losses)/gains on currency movements - (5) (5) - 1 1
Gross investment gains - 9,145 9,145 - 3,178 3,178
Income 5 212 - 212 97 - 97
Total gain 212 9,145 9,357 97 3,178 3,275
Investment Adviser fee 6 (144) - (144) (343) - (343)
Other expenses 7 (1,396) (500) (1,896) (1,159) (219) (1,378)
(Loss)/profit before finance costs and taxation (1,328) 8,645 7,317 (1,405) 2,959 1,554
Finance costs - - - - - -
Operating (loss)/profit before taxation (1,328) 8,645 7,317 (1,405) 2,959 1,554
Taxation 8 - - - - - -
(Loss)/profit for the year (1,328) 8,645 7,317 (1,405) 2,959 1,554
Return per Ordinary Share (basic and diluted) 12 (1.03)p 6.71p 5.68p (1.14)p 2.41p 1.27p
There is no other comprehensive income and therefore the '(loss)/profit for
the year' is the total comprehensive income for the year.
The total column of the above statement is the Parent and Consolidated
Statement of Comprehensive Income, including the return per Ordinary Share,
which has been prepared in accordance with IFRS. The supplementary revenue and
capital columns, including the return per Ordinary Share, are prepared under
guidance from the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing
operations. The notes in the annual report form an integral part of these
Financial Statements.
Parent and consolidated statement of financial position
As at 31 December 2023
Notes 31 December 31 December
2023 2022
£'000 £'000
Assets
Non-current assets
Investments held at fair value through profit or loss 4 128,183 106,673
Current assets
Cash and cash equivalents 4,626 18,192
Trade and other receivables 9 51 641
Total current assets 4,677 18,833
Total assets 132,860 125,506
Current liabilities
Trade and other payables 10 (190) (153)
Total liabilities (190) (153)
Net assets 132,670 125,353
Equity
Share capital 11 1,288 1,288
Share premium account 124,928 124,928
Capital reserve 9,992 1,347
Revenue reserve (3,538) (2,210)
Total equity 132,670 125,353
Net asset value per Ordinary Share 13 102.99p 97.31p
Approved by the Board of Directors on and authorised for issue 17 April 2024
and signed on their behalf by:
Simon Hogan
Director
HydrogenOne Capital Growth plc is incorporated in England and Wales with
registration number 13340859.
The following notes form an integral part of these Financial Statements.
Parent and consolidated statement of changes in equity
For the year ended 31 December 2023
Share
Share premium Capital Revenue
Capital account reserve reserve Total
Notes £'000 £'000 £'000 £'000 £'000
Opening balance as at 1 January 2023 1,288 124,928 1,347 (2,210) 125,353
Profit/(loss) for the year - - 8,645 (1,328) 7,317
Closing balance as at 31 December 2023 1,288 124,928 9,992 (3,538) 132,670
For the year ended 31 December 2022
Share
Share premium Capital Revenue
Capital account reserve reserve Total
Notes £'000 £'000 £'000 £'000 £'000
Opening balance as at 1 January 2022 1,074 104,129 (1,612) (805) 102,786
Issue of Ordinary Shares 11 214 21,255 - - 21,469
Ordinary Share issue costs - (456) - - (456)
Profit/(loss) for the year - - 2,959 (1,405) 1,554
Closing balance as at 31 December 2022 1,288 124,928 1,347 (2,210) 125,353
The following notes form an integral part of these Financial Statements.
Parent and consolidated statement of cash flows
For the year ended 31 December 2023
Notes Year ended Year ended
31 December 31 December
2023 2022
£'000 £'000
Cash flows from operating activities
Interest income 211 96
Dividend income 1 1
Management expenses (2,040) (1,734)
Foreign exchange (losses)/gains (5) 1
Decrease/(increase) in trade and other receivables 590 (445)
Increase/(decrease) in trade and other payables 37 (93)
Net cash flow used in operating activities (1,206) (2,174)
Cash flows from investing activities
Purchase of investments (12,472) (36,718)
Sale of investments 112 2,052
Net cash flow used in investing activities (12,360) (34,666)
Cash flows from financing activities
Proceeds from issue of Ordinary Shares 11 - 21,469
Ordinary Share issue costs 11 - (456)
Net cash flow from financing activities - 21,013
Decrease in cash and cash equivalents (13,566) (15,827)
Cash and cash equivalents at start of year 18,192 34,019
Cash and cash equivalents at end of year 4,626 18,192
The following notes form an integral part of these Financial Statements.
Notes to the parent and consolidated financial statements
iii. 1. General information
Company information
HydrogenOne Capital Growth plc (the "Company" or "Parent") was incorporated in
England and Wales on 16 April 2021 with registered number 13340859 as a public
company limited by shares and is an investment company within the terms of
Section 833 of the Companies Act 2006 (the "Act"). The Company is listed and
began trading on the Main Market of the London Stock Exchange and was admitted
to the premium segment of the Official List on 30 July 2021 (the "IPO"). The
Company has applied for and been accepted as an approved investment trust
under sections 1158 and 1159 of the Corporation Tax Act 2010 and Part 2
Chapter 1 of Statutory Instrument 2011/2999.
FundRock Management Company (Guernsey) Limited acts as the Company's
Alternative Investment Fund Manager ("AIFM").
Apex Listed Companies Services (UK) Limited (the "Company Secretary and
Administrator") provides administrative and company secretarial services to
the Company.
The Company's Investment Adviser is HydrogenOne Capital LLP.
The Company's registered office is 6(th) Floor, 125 London Wall, London, EC2Y
5AS.
Investment objective
The Company's investment objective is to deliver an attractive level of
capital growth by investing, directly or indirectly, in a diversified
portfolio of hydrogen and complementary hydrogen focused assets whilst
integrating core environmental, social and governance ("ESG") principles into
its decision making and ownership process.
Company structure
The Company makes its investments in unquoted Hydrogen Assets ("Private
Hydrogen Assets") through HydrogenOne Capital Growth Investments (1) LP (the
"Limited Partnership"), in which the Company is the sole Limited Partner. The
Limited Partnership registered as a private fund limited partnership in
England and Wales under the Limited Partnerships Act 1907 with registered
number LP021814. The Limited Partnership has been established pursuant to the
Limited Partnership Agreement dated 5 July 2021 as amended and restated on 26
November 2021 (the "Limited Partnership Agreement") in order to make
investments pursuant to the investment policy of the Limited Partnership. The
Limited Partnership's investment policy and restrictions are consistent with
the Company's investment policy and restrictions for Private Hydrogen Assets.
The General Partner of the Limited Partnership is HydrogenOne Capital Growth
(GP) Limited (the "General Partner"), a wholly owned subsidiary of the
Company. The General Partner was incorporated in England and Wales on 19 May
2021 with company registered number 13407844. The General Partner undertakes
the responsibility for the management, operation and administration of the
business and affairs of the Limited Partnership. The General Partner's Profit
Share for each accounting period shall be an amount equal to 1.5% per annum of
the prevailing NAV of the Limited Partnership, which shall be allocated to the
General Partner as a first charge on the profits of the Limited Partnership.
For so long as the Company is the sole Limited Partner, the General Partner's
Profit Share shall be allocated and distributed to the Company rather than the
General Partner.
The carried interest partner of the Limited Partnership is HydrogenOne Capital
Growth (Carried Interest) LP (the "Carried Interest Partner") which, in
certain circumstances, will receive carried interest on the ocusedion of
Private Hydrogen Assets by the Limited Partnership. The Carried Interest
Partner has been set up for the benefit of the principals of the Investment
Adviser. Further details of the carried interest fees payable to the Carried
Interest Partner are given in Note 6 to the Financial Statements.
Private Hydrogen Assets
The Company invests via the Limited Partnership in Private Hydrogen Assets,
which may be operational companies or hydrogen projects. Investments are
mainly in the form of equity, although investments may be made by way of debt
and/ or convertible securities. The Company may acquire a mix of controlling
and non-controlling interests in Private Hydrogen Assets, however the Company
invests principally in non-controlling positions (with suitable minority
protection rights to, inter alia, ensure that the Private Hydrogen Assets are
operated and managed in a manner that is consistent with the Company's
investment policy).
The Company acquires Private Hydrogen Assets via the Limited Partnership. In
due course, the Company may acquire Private Hydrogen Assets directly or by way
of holdings in special purpose vehicles or intermediate holding entities
(including successor limited partnerships established on substantially the
same terms as the Limited Partnership) or, if the Company is considered a
'feeder fund' under the Listing Rules, other undertakings advised by the
Investment Adviser and, in such circumstances, the investment policy and
restrictions will also be applied on a look-through basis and such
undertaking(s) will also be managed in accordance with the Company's
investment policy.
Listed Hydrogen Assets
The Company also invests directly in quoted or traded Hydrogen Assets, which
are predominantly equity securities but may also be corporate debt and/or
other financial instruments ("Listed Hydrogen Assets"). The Company has the
ability to invest in Listed Hydrogen Assets in any market or country with a
market or country with a market capitalisation (at the time of investment) of
at least US$100 million. The Company's approach is to be a long-term investor
and does not ordinarily adopt short-term trading strategies.
Liquidity reserve
During the initial Private Hydrogen Asset investment period after a capital
raise and/or a realization of a Private Hydrogen Asset, the Company intends to
allocate the relevant net proceeds of such capital raise/realisation to cash
(in accordance with the Company's cash management policy) and/or additional
Listed Hydrogen Assets and related businesses pending subsequent investment in
Private Hydrogen Assets (the ''Liquidity Reserve'').
The Company anticipates holding cash to cover the near-term capital
requirements of the pipeline of Private Hydrogen Assets and in periods of high
market volatility.
2. Basis of preparation
The principal accounting policies are set out below:
Reporting entity
These Parent and Consolidated Financial Statements (the "Financial
Statements") present the results of both the Parent; and the Parent and the
General Partner (together referred to as the "Group").
As at 31 December 2023, the statement of financial position of the General
Partner consisted of issued share capital and corresponding share capital
receivable in the amount of £1 (2022:£1). The General Partner had no income,
expenditure or cash flows for the year (2022: nil).
Due to the immaterial balances of the General Partner there is no material
difference between the results of the Parent and the results of the Group. As
a result, the Financial Statements as presented represent both the Parent's
and the Group's financial position, performance and cash flows.
Basis of accounting
The Financial Statements have been prepared in accordance with UK-adopted
international accounting standards ("IFRS") and the applicable legal
requirements of the Companies Act 2006.
The Financial Statements have also been prepared as far as is relevant and
applicable to the Company and Group in accordance with the Statement of
Recommended Practice ('SORP') issued by the Association of Investment
Companies ("AIC") in July 2022.
The Financial Statements are prepared on the historical cost basis, except for
the revaluation of financial instruments measured at fair value through profit
or loss.
Fair value is the price that would be received on sale of an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date, regardless of whether that price is directly observable
or estimated using another valuation technique. In estimating the fair value
of an asset or liability, the Company and Group take into account the
characteristics of the asset or liability if market participants would take
those characteristics into account when pricing the asset or liability at the
measurement date. Fair value for measurement and/or disclosure purposes in
these Financial Statements is determined on such a basis.
The Financial Statements are presented in Pounds Sterling because that is the
currency of the primary economic environment in which the Company and Group
operate.
The principal accounting policies adopted are set out below. These policies
are consistently applied.
Accounting for subsidiaries
The Board of Directors has determined that the Company has all the elements of
control as prescribed by IFRS 10 in relation to:
1. the Limited Partnership; as the Company is the sole limited partner in
the Limited Partnership (100% of the Limited Partnership's commitments are
held by the Company), is exposed to and has rights to the returns of the
Limited Partnership, and has the ability through its control of the General
Partner to affect the amount of its returns from the Limited Partnership; and
2. the General Partner; as the Company wholly owns the General Partner, is
exposed to and has rights to the returns of the General Partner and has the
ability through its control of the General Partner's activities to affect the
amount of its returns from the General Partner.
The Investment entities exemption requires that an investment entity that has
determined that it is a parent under IFRS 10 shall not consolidate certain of
its subsidiaries; instead, it is required to measure its investment in these
subsidiaries at fair value through profit or loss in accordance with IFRS 9.
The criteria which define an investment entity are as follows:
(i) the company obtains funds from one or more investors for the purpose
of providing those investors with investment management services;
(ii) the company commits to its investors that its business purpose is to
invest funds solely for returns from capital appreciation, investment income,
or both; and
(iii) the company measures and evaluates the performance of substantially
all of its investments on a fair value basis.
The Company is an investment company, providing investors exposure to a
diversified portfolio of hydrogen and complementary hydrogen focused assets
that are managed for investment purposes. The investments were made in line
with the stated objective of the Company to deliver an attractive level of
capital growth in accordance with the strategy that has been set by the
Directors.
In assessing whether the Company meets the definition of an investment entity
set out in IFRS 10 the Directors' note that:
(i) the Company has multiple investors with shares issued publicly on
the London Stock Exchange and obtains funds from a diverse group of
shareholders who would otherwise not have access individually to investing in
hydrogen focussed assets;
(ii) the Company's purpose is to invest funds for capital appreciation but
with potential for some investment income. The Limited Partnership has a
ten-year life however the underlying assets have minimal residual value
because they do not have unlimited lives, are not to be held indefinitely and
have appropriate exit strategies in place; and
(iii) 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 of the investments and in decision making.
The Directors assess each new investment carefully to determine whether the
Company as a whole continues to meet the definition of an investment entity.
The Board of Directors has determined that the Company meets all the typical
characteristics of an investment entity and therefore meets the definition set
out in IFRS 10.
Accounting for the Limited Partnership
The Limited Partnership serves as an asset holding entity and does not provide
investment-related services. Therefore, when the Limited Partnership is
assessed based on the overall structure as a means of carrying out the
Company's activities, the Board of Directors has determined that the Limited
Partnership meets the definition of an investment entity. Accordingly, the
Company is required under IFRS 10 to hold its investment in the Limited
Partnership at fair value through the Statement of Comprehensive Income rather
than consolidate them. The Company has determined that the fair value of the
Limited Partnership is its net asset value and has concluded that it meets the
definition of an unconsolidated subsidiary under IFRS 12 and has made the
necessary disclosures in these Financial Statements.
Accounting for the General Partner
The General Partner provides investment related services to the Limited
Partnership on behalf of the Company. IFRS 10 requires subsidiaries that
provide services that relate to the investment entity's investment activities
to be consolidated. Accordingly, the Company is required under IFRS 10 to
consolidate the results of the General Partner.
The Directors agree that the investment entity accounting treatment outlined
above appropriately reflects the Company's activities as an investment trust
and provides the most relevant information to investors.
Going concern
The Directors consider that it is appropriate to adopt the going concern basis
in preparing the Financial Statements. In reaching this conclusion, the
Directors considered the income and expense projections and the liquidity of
the investment portfolio, and considered the impact to the Company and
portfolio of investments from the economic conditions such as higher interest
rates and inflationary pressures and market volatility arising from the
ongoing wars in Ukraine and the Middle East.
The Company and Group continue to meet day-to-day liquidity needs through its
cash resources. The Company and Group had at 31 December 2023 unrestricted
cash of £4.6 million (2022: £18.2 million) as well as £2.3 million (2022:
£3.7 million) in Listed Hydrogen Assets. The Company and Group's net assets
at 31 December 2023 were £132.7 million (2022: £125.4 million) and total
expenses for the year ended 31 December 2023 were £2.0 million (2022: £1.7
million), which represented approximately 1.5% (2022: 1.5%) of the average net
assets value of the Company in the year to 31 December 2023 of £129.4 million
(2022: £116.8 million).
At the date of approval of these Financial Statements, the Company and Group
had cash resources of £4.0 million and annual expenses are estimated to be
£3.6 million.
The Directors also recognise that the continuation of the Company is subject
to the approval of shareholders at the Annual General Meeting ("AGM") in 2026,
and every fifth AGM thereafter. The Board has considered the long term
prospects of the Company and has no reason to believe that the continuation
vote will fail.
Based on the foregoing, the Directors have adopted the going concern basis in
preparing the Financial Statements. The Directors have a reasonable
expectation that the Company and Group have adequate operational resources to
continue in operational existence for at least twelve months from the date of
approval of these Financial Statements.
Critical accounting judgements, estimates and assumptions
The preparation of Financial Statements in accordance with IFRS requires the
Directors to make judgements, estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the Financial Statements and the reported
amounts of income and expense during the period. Actual results could differ
from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision only affects that period or in the period
and future periods if the revision affects both current and future periods.
Judgements
Investment entity
In accordance with the Investment Entities exemption contained in IFRS 10, the
Board has determined that the Company satisfies the criteria to be regarded as
an investment entity and that the Company provides investment related services
and, as a result, measures its investment in the Limited Partnership at fair
value.
The Limited Partnership serves as an asset holding entity and does not provide
investment-related services. Therefore, when the Limited Partnership is
assessed based on the overall structure as a means of carrying out the
Company's activities, the Board of Directors has determined that the Limited
Partnership meets the definition of an investment entity. Accordingly, the
Company is required under IFRS 10 to hold its investment in the Limited
Partnership at fair value through the Statement of Comprehensive Income rather
than consolidate it.
The General Partner provides investment related services to the Limited
Partnership on behalf of the Company. IFRS 10 requires subsidiaries that
provide services that relate to the investment entity's investment activities
to be consolidated. Accordingly, the Board of Directors have determined that
the Company is required under IFRS 10 to consolidate the results of the
General Partner. As described in the Reporting Entity section, the Financial
Statements as presented represent both the Parent's and the Group's financial
position, performance and cash flows.
These conclusions involved a degree of judgement and assessment as to whether
the Company, the Limited Partnership and the General Partner met the criteria
outlined in the accounting standards.
Estimates
Investment valuations
The key estimate in the Financial Statements is the determination of the fair
value of the Private Hydrogen Assets, held by the Limited Partnership, by the
Investment Adviser for consideration by the Directors. This estimate is key as
it significantly impacts the valuation of the Limited Partnership at the year
end. The fair valuation process involves estimation using subjective inputs
that are unobservable (for which market data is unavailable). The key inputs
considered in the valuation are described in note 15.
New standards, interpretations and amendments adopted from 1 January 2023
Effective in the current financial year
The Board have assessed those new standards, interpretations, and/or
amendments which became effective during the financial year under review and
concluded they have no material impact to the Company.
New standards and amendments issued but not yet effective
The relevant new and amended standards and interpretations that are issued,
but not yet effective, up to the date of issuance of the financial statements
are disclosed below.
· Non-current Liabilities with Covenants - Amendments to IAS 1 and
Classification of Liabilities as Current or Non-current - Amendments to IAS 1
· Lease Liability in a Sale and Leaseback - Amendments to IFRS 16
· Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7
· IFRS S1* General Requirements for Disclosure of
Sustainability-related Financial Information and IFRS S2* Climate-related
Disclosures
* Adoption by the UK to be confirmed
The Board have assessed new but not yet effective standards applicable to the
Company and have concluded that they will not have a material impact to the
Company.
3. Material accounting policies
(a) Financial instruments
Financial assets - Classification, recognition, derecognition and measurement
The Company and Group's financial assets principally comprise of: investments
held at fair value through profit or loss (Listed Hydrogen Assets and the
Limited Partnership); and trade and other receivables, which are initially
recognised at fair value and subsequently measured at amortised cost.
Financial assets are recognised in the Statement of Financial Position when
the Company or Group become a party to the contractual provisions of the
instrument. Transaction costs that are directly attributable to the
acquisition or issue of financial assets (other than financial assets at fair
value through profit or loss) are added to or deducted from the fair value of
the financial assets, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets at fair
value through profit or loss are recognised immediately in profit or loss.
Subsequent to initial recognition, financial assets at fair value through
profit or loss are measured at fair value. Gains and losses resulting from the
movement in fair value are recognised in the Statement of Comprehensive Income
at each valuation point within 'gains/(losses) on investments'.
Financial assets are derecognised when the rights to receive cash flows from
the investments have expired or the Company or Group have transferred
substantially all risks and rewards of ownership.
Financial liabilities - Classification, recognition, derecognition and
measurement
The Company and Group's financial liabilities include trade and other payables
and other short term monetary liabilities which are initially recognised at
fair value and subsequently measured at amortised cost.
Financial liabilities are recognised in the Statement of Financial Position
when the Company or Group become a party to the contractual provisions of the
instrument. Transaction costs that are directly attributable to the
acquisition or issue of financial liabilities (other than financial
liabilities at fair value through profit or loss) are added to or deducted
from the fair value of the financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the acquisition of
financial liabilities at fair value through profit or loss are recognised
immediately in profit or loss. Financial liabilities are subsequently measured
at amortised cost.
A financial liability (in whole or in part) is derecognised when the Company
or Group have extinguished the contractual obligations, it expires or is
cancelled.
Valuation of Listed Hydrogen Assets
Upon initial recognition Listed Hydrogen Assets are classified by the Company
and Group 'at fair value through profit or loss'. They are accounted for on
the date they are traded and are included initially at fair value which is
taken to be their cost. Subsequently they are valued at fair value, which is
the bid market price, or if bid price is unavailable, last traded price on the
relevant exchange.
Valuation of the Limited Partnership
The Company may make investments in Private Hydrogen Assets directly, via the
Limited Partnership and/or by way of holdings in special purpose vehicles or
intermediate holding entities. Currently, all the Company's Private Hydrogen
Assets are held via the Limited Partnership.
The Company and Group has determined that the fair value of the Limited
Partnership is the Limited Partnership's Net Asset Value ("NAV"). The NAV of
the Limited Partnership is prepared in accordance with accounting policies
that are consistent with IFRS and consists of the fair value of its Private
Hydrogen Assets, and the carrying value of its assets and liabilities.
The Investment Adviser values the Private Hydrogen Assets according to IPEV
Guidelines. The valuation techniques available under IPEV Guidelines are set
out below and are followed by an explanation of how they are applied to the
Private Hydrogen Assets:
· Discounted cash flows ("DCF");
· Price of recent investment;
· Multiples;
· Industry Valuation Benchmarks;
· Available Market Prices; and
· Net Assets
The nature of the Private Hydrogen Assets will influence the valuation
technique applied. The valuation approach recognises that, as stated in the
IPEV Guidelines, the price of a recent investment, if resulting from an
orderly transaction, generally represents fair value as at the transaction
date and may be an appropriate starting point for estimating fair value at
subsequent measurement dates. Consideration is given to the facts and
circumstances as at the subsequent measurement date such as changes in the
market or performance of the investee company including whether maintainable
revenues and/ or earnings have been established. Milestone analysis is used,
where appropriate, to incorporate the operational progress of the investee
company into the valuation.
As a result, various techniques may be employed to derive the valuations.
However, an absence of relevant industry peers may preclude the application of
the industry valuation benchmarks technique and an absence of observable
prices may preclude the available market prices approach. All valuations are
calibrated and are cross-checked for reasonableness by employing relevant
alternative techniques.
Private Hydrogen Assets, which are operational companies, are valued using
either the price of recent investment; the DCF method; or a combination of the
DCF method and the price of recent investment. The valuations are weighted
towards the DCF method based on the time since the price of recent investment
until the full DCF valuation is applied (typically the valuations are tapered
from the price of recent investment to the full DCF valuation over four
calendar quarters after the price of recent investment). The impact of this
weighted approach is that there will be either an effective discount or a
premium to the full DCF valuation over the tapering period. The valuations
derived from this approach have been assessed for reasonableness against
relevant market comparables, where available, and calibrated against specific
milestones for indications of positive or negative performance which may
impact valuations. Where negative performance indicates that the valuation of
a Private Hydrogen Asset may have deteriorated substantially then alternative
valuation approaches may be incorporated into the valuation model that reflect
reasonable possible outcomes, such as net assets and indicative offers, and a
probability weighting is applied to each.
Private Hydrogen Assets, which are hydrogen project SPVs, are valued based on
the underlying project's stage of completion:
· prior to commercial operation date, hydrogen project SPVs are
valued using a risk adjusted DCF method;
· post commercial operation date, hydrogen project SPVs are valued
in the same way as Private Hydrogen Assets, which are operational companies,
as described above; and
· project development loans advanced directly by the Limited
Partnership to a project during the project development phase are held at cost
plus accrued interest (deemed to approximate fair value), and are reviewed at
each valuation date for any indicators that this approach may no longer be
representative of fair value.
In a DCF valuation, the fair value represents the present value of the
investment's expected future cash flows, based on appropriate assumptions for
revenues and costs, and suitable cost of capital assumptions. Judgement is
applied in arriving at appropriate discount rates, based on the knowledge of
the market, taking into account market intelligence gained from bidding
activities, discussions with financial advisers, consultants, accountants and
lawyers and publicly available information.
A range of sources are reviewed in determining the underlying assumptions to
apply in a DCF valuation used in calculating the fair value of a Private
Hydrogen Asset. These sources include but are not limited to:
· macroeconomic projections adopted by the market as disclosed in
publicly available resources;
· macroeconomic forecasts provided by expert third party economic
advisers;
· discount rates publicly disclosed in the global renewables
sector;
· discount rates applicable to comparable infrastructure asset
classes, which may be procured from public sources or independent third-party
expert advisers;
· discount rates publicly disclosed for comparable market
transactions of similar assets; and
· capital asset pricing model outputs and implied risk premia over
relevant risk-free rates. Where available, assumptions are based on observable
market and technical data.
(b) Foreign currency
Functional and presentation currency
Items included in the Financial Statements are measured using the currency of
the primary economic environment in which the entity operates, the functional
currency. The Financial Statements are presented in Pounds Sterling which is
the Company and Group's functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into Pounds Sterling using the
exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from
the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Statement of
Comprehensive Income.
(c) Income
Dividend income has been accounted for on an ex-dividend basis or when the
right to the income is established. Investment interest income for the year is
recognised in the Statement of Comprehensive Income using effective interest
method calculation. Bank interest income is recognised for the year in the
Statement of Comprehensive income on a receipts basis. Special dividends are
credited to capital or revenue in the Statement of Comprehensive Income,
according to the circumstances surrounding the payment of the dividend.
Overseas dividends are included gross of withholding tax recoverable.
(d) Dividend payable
Interim dividends are recognised when the Company pays the dividend. Final
dividends are recognised in the period in which they are approved by the
shareholders.
(e) Expenses
All expenses are accounted for on an accruals basis. Expenses directly related
to the acquisition or disposal of an investment (transaction costs) are taken
to the Statement of Comprehensive Income as a capital item. All other
expenses, including Investment Adviser fees, are taken to the Statement of
Comprehensive Income as a revenue item.
(f) Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. The tax currently payable is based on the taxable profit for the period.
Taxable profit differs from net profit as reported in the Statement of
Comprehensive Income because it excludes items of income or expenses that are
taxable or deductible in other years and it further excludes items that are
never taxable or deductible. The Company's liability for current tax is
calculated using tax rates that were applicable at the financial reporting
date.
Where expenses are allocated between capital and revenue any tax relief in
respect of the expenses is allocated between capital and revenue returns on
the marginal basis using the Company's effective rate of corporation taxation
for the relevant accounting period.
Deferred taxation is recognised in respect of all timing differences that have
originated but not reversed at the financial reporting date, where
transactions or events that result in an obligation to pay more tax in the
future or right to pay less tax in the future have occurred at the financial
reporting date. This is subject to deferred tax assets only being recognised
if it is considered more likely than not that there will be suitable profits
from which the future reversal of the timing differences can be deducted.
Deferred tax assets and liabilities are measured at the rates applicable to
the legal jurisdictions in which they arise.
Since the General Partner does not have any income or expenditure in the
period, the Group tax position is the same as the Company tax position.
(g) Segmental reporting
The Board has considered the requirements of IFRS 8 - 'Operating Segments'.
The Company has entered into an Investment Advisory Agreement with the
Investment Adviser under which the Investment Adviser is responsible for the
management of the Company's investment portfolio, subject to the overall
supervision of the Board of Directors. Subject to its terms and conditions,
the Investment Advisory Agreement requires the Investment Adviser to manage
the Company's investment portfolio in accordance with the Company's investment
guidelines as in effect from time to time, including the authority to purchase
and sell investments and to carry out other actions as appropriate to give
effect thereto. However, the Board retains full responsibility to ensure that
the Investment Adviser adheres to its mandate. Moreover, the Board is fully
responsible for the appointment and/or removal of the Investment Adviser.
Accordingly, the Board is deemed to be the 'Chief Operating Decision Maker' of
the Company.
The Directors are of the opinion that the Company is engaged in a single
segment of business being investment into the hydrogen focussed investments.
Segment information is measured on the same basis as that used in the
preparation of the Company's Financial Statements.
(h) Cash and cash equivalents
Cash comprises cash and demand deposits. Cash equivalents, include bank
overdrafts, and short-term, highly liquid investments that are readily
convertible to known amounts of cash, are subject to insignificant risks of
changes in value, and are held for the purpose of meeting short-term cash
commitments rather than for investment or other purposes.
(i) Nature and purpose of equity and reserves:
Share capital represents the 1p nominal value of the issued share capital.
The share premium account arose from the net proceeds of new shares issued.
Costs directly attributable to the issue of new shares are charged against the
value of the ordinary share premium.
The capital reserve reflects any:
· gains or losses on the disposal of investments;
· exchange movements of a capital nature;
· the increases and decreases in the fair value of investments
which have been recognised in the capital column of the Statement of
Comprehensive Income; and
· expenses which are capital in nature.
The revenue reserve reflects all income and expenditure recognised in the
revenue column of the Statement of Comprehensive Income and is distributable
by way of dividend.
The Company's distributable reserves consist of the revenue reserve and the
capital reserve. However any gains in the fair value of investments that are
not readily convertible to cash are treated as unrealised gains in the capital
reserve and are non-distributable.
Ordinary Shares are classified as equity.
4. Investments held at fair value through profit or loss
(a) Summary of valuation
31 December 31 December
2023 2022
£'000 £'000
Investments held at fair value through profit or loss
Listed Hydrogen Assets 2,322 3,667
Limited Partnership 125,861 103,006
Closing valuation of financial assets at fair value through profit or loss 128,183 106,673
(b) Movements in valuation
£'000 £'000
Opening valuation of financial assets at fair value through profit or loss 106,673 68,830
Opening unrealised (gain)/loss on investments (1,426) 1,608
Opening cost of financial assets at fair value through profit or loss 105,247 70,438
Additions, at cost - Listed Hydrogen Assets 74 137
Additions, at cost - Limited Partnership 12,398 36,581
Disposals, at cost - Listed Hydrogen Assets (142) (1,909)
Cost of financial assets at fair value through profit or loss at the end of 117,577 105,247
the year
Unrealised losses on investments - Listed Hydrogen Assets (5,299) (4,022)
Unrealised gains on investments - Limited Partnership 15,905 5,448
Closing valuation of financial assets at fair value through profit or loss 128,183 106,673
(c) Gain/(loss) on investments
£'000 £'000
Movement in unrealised loss - Listed Hydrogen Assets (1,277) (2,794)
Movement in unrealised gains - Limited Partnership 10,457 5,828
Realised (losses)/gains on investments - Listed Hydrogen Assets (30) 143
Total gain on investments 9,150 3,177
Under IFRS 13 'Fair Value Measurement', an entity is required to classify
investments using a fair value hierarchy that reflects the significance of the
inputs used in making the measurement decision.
The following shows the analysis of financial assets recognised at fair value
based on:
Level 1
The unadjusted quoted price in an active market for identical assets or
liabilities that the entity can access at the measurement date.
Level 2
Inputs other than quoted prices included within Level 1 that are observable
(i.e. developed using market data) for the asset or liability, either directly
or indirectly.
Level 3
Inputs are unobservable (i.e. for which market data is unavailable) for the
asset or liability.
Transfers between levels of the fair value hierarchy are recognised as at the
end of the reporting period during which the change has occurred. There have
been no transfers between levels during the year ended 31 December 2023 (2022:
no transfers).
The classification of the Company and Group's investments held at fair value
through profit or loss is detailed in the table below:
31 December 2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Listed Hydrogen Assets 2,322 - - 2,322
Limited Partnership - - 125,861 125,861
2,322 - 125,861 128,183
31 December 2022
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Listed Hydrogen Assets 3,667 - - 3,667
Limited Partnership - - 103,006 103,006
3,667 - 103,006 106,673
The Company and Group's Level 3 investment is the investment in the Limited
Partnership. The NAV of the Limited Partnership as of 31 December 2023 is
£125,861,000 (2022: £103,006,000). The movement on the Level 3 investments
during the year is shown below:
31 December 31 December
2023 2022
£'000 £'000
Opening balance 103,006 60,597
Investment in Limited Partnership 12,398 36,581
Movement in unrealised gains on investment in Limited Partnership 10,457 5,828
Closing balance 125,861 103,006
Look-through financial information
The NAV of the Limited Partnership consists of the fair value of its Private
Hydrogen Assets and the carrying value of its assets and liabilities. As at
the year end, the Limited Partnership held ten Private Hydrogen Assets (2022:
nine).
The following table reconciles the fair value of the Private Hydrogen Assets
and the NAV of the Limited Partnership.
31 December 31 December
2023 2022
£'000 £'000
Investment in Private Hydrogen Assets 126,206 103,115
Plus/(minus): net other assets/(liabilities) (345) (109)
NAV of the Limited Partnership 125,861 103,006
The Level 3 Private Hydrogen Assets are valued by the Investment Adviser using
the valuation techniques as outlined in note 3. The key inputs considered in
the valuation are described in note 15.
At 31 December 2023, the valuations of the Limited Partnership's underlying
investments in Private Hydrogen Assets were determined as follows:
Name Country of Value of Investment Primary valuation technique Significant unobservable inputs Range input
Incorporation
£'000
Sunfire GmbH Germany 27,068 DCF Discount rates 11.3%-12.4%
Elcogen Group plc United Kingdom 24,430 DCF Discount rates 13.1%-13.9%
Strohm Holding BV Netherlands 19,719 DCF Discount rates 14.4%-15.4%
HiiROC Limited United Kingdom 13,701 DCF Discount rates 13.8%-14.9%
Cranfield Aerospace Solutions Limited United Kingdom 11,870 DCF Discount rates 17.5%-18.6%
Bramble Energy Limited United Kingdom 10,621 DCF Discount rates 16.0%-17.1%
HH2E AG Germany 6,971 DCF Discount rates (project SPVs & Company) 12.0%; and 16.5%-17.6%
NanoSUN Limited United Kingdom 5,428 Probability weighted approach incorporating DCF, indicative offers and net Discount rates applied in DCF 15.3%-15.9%
assets*
Net Assets n/a
Weighting 10%-50%
GEN2 Energy AS Norway 4,443 DCF Discount rates (project SPVs & Company) 12.0%; and 16.7%-17.6%
HH2E Werk Thierbach GmbH Germany 1,955 Loan principal and accrued interest N/a N/a
At 31 December 2022, the valuation of the Limited Partnership's underlying
investment in Private Hydrogen Assets was determined as follows.
Name Country of Value of Investment Primary valuation technique Significant unobservable inputs Range input
Incorporation
£'000
Sunfire GmbH Germany 21,763 Weighted DCF and Price of Recent Investment Discount rates applied in full DCF valuation 12.1% - 12.4%
Weighting between Price of Recent Investment and DCF valuation(1) (4)%
Elcogen Group plc United Kingdom 20,430 Weighted DCF and Price of Recent Investment Discount rates applied in full DCF valuation 12.5% - 13.0%
Weighting between Price of Recent Investment and DCF valuation(1) 4%
* In deriving the fair value of NanoSUN a probability weighted
approach was applied whereby a valuation for the investment was derived from
each technique (DCF, indicative offers and assets), each of which represented
management's assessment of the fair value for the investment in the reasonable
possible scenarios that may have transpired, as of the valuation date. A
percentage likelihood (aggregating to 100% across each of the three
techniques) was then applied to each of these valuations, which represented
management's view of the probability of each scenario transpiring, as of the
valuation date. The range of inputs disclosed represent the lowest and highest
discreet percentages applied to the three scenarios.
Name Country of Value of Investment Primary valuation technique Significant unobservable inputs Range input
Incorporation
£'000
Strohm Holding BV Netherlands 11,606 Weighted DCF and Price of Recent Investment Discount rates applied in full DCF valuation 12.5% - 12.8%
Weighting between Price of Recent Investment and DCF valuation(1) (31)%
HiiROC Limited United Kingdom 12,914 DCF Discount rates 13.5%
Cranfield Aerospace Solutions Limited United Kingdom 6,296 Weighted DCF and Price of Recent Investment Discount rates applied in full DCF valuation 13.5%
Weighting between Price of Recent Investment and DCF valuation(1) (20)%
Bramble Energy Limited United Kingdom 10,032 Weighted DCF and Price of Recent Investment Discount rates applied in full DCF valuation 13.4% - 13.6%
Weighting between Price of Recent Investment and DCF valuation(1) 24%
HH2E AG Germany 5,134 Weighted DCF and Price of Recent Investment Discount rates applied in full DCF valuation 12.1% - 12.4%
Weighting between Price of Recent Investment and DCF valuation(1) 6%
NanoSUN Limited United Kingdom 11,519 Weighted DCF and Price of Recent Investment Discount rates applied in full DCF valuation 13.4% - 13.6%
Weighting between Price of Recent Investment and DCF valuation(1) (10)%
GEN2 Energy AS Norway 3,421 Weighted DCF and Price of Recent Investment Discount rates applied in full DCF valuation 13.0%
Weighting between Price of Recent Investment and DCF valuation(1) (10)%
1. This is the effective discount or premium to the full DCF
valuation, as a result of application of the weighted valuation in line with
the valuation methodology described in note 3. A negative percentage denotes
that the weighted valuation is at a discount to the full DCF valuation; whilst
a positive percentage denotes that the weighted valuation is at a premium to
the full DCF valuation.
The following table shows the Directors best estimate of the sensitivity of
the Level 3 Private Hydrogen Assets to changes in the principle unobservable
input, with all other variables held constant.
Effect on fair value of investments
£'000
Unobservable input Possible reasonable change in input 31 December 31 December
2023 2022
Discount rates applied in full DCF valuation +1% (7,767) (6,515)
-1% 8,584 7,815
Weighting between DCF, indicative offers and Net Asset valuation +/- 10% weighting to DCF 968/(968) n/a
+/- 10% weighting to indicative offers 124/(124) n/a
+/- 10% weighting to Net Assets 1,092/(1,092) n/a
Weighting between Price if Recent Plus one calendar quarter of tapering from Price of Recent Investment to full n/a (324)
DCF valuation
Investment and full DCF Valuation
Minus one calendar quarter of tapering from Price of Recent Investment to full n/a 286
DCF valuation
The European Central Bank ('ECB') and the Bank of England ('BOE') base rates
at 31 December 2023 were 4.5% and 5.25% respectively. We anticipate that the
base rates will ease and fall (based on independent research) reaching 2.50%
for ECB and 3.00% for BOE by end of 2025. Since long term gilt yields already
factor in long term forecasts, we have performed sensitivities of +/- 1% on
the discount rate assumptions for any shock events. At 31 December 2022, the
ECB and the BOE base rates were 2.5% and 3.5% respectively. We anticipated
that the terminal base rate hikes (based on independent research) could reach
3.75% for ECB and 4.75% for BOE and as such, performed sensitivities of +/- 1%
on the discount rate assumptions.
For the year ended 31 December 2023, the NanoSUN Limited valuation is weighted
between DCF, indicative offers and Net assets based on the expected likelihood
of each scenario occurring. We have applied a sensitivity of +/- 10%
weighting to each scenario, with the movement being shared equally with the
remaining two scenarios, as this is deemed to be a reasonable possible shift
in the scenario weightings as of the valuation date.
For the year ended 31 December 2022, the valuations are weighted towards the
full DCF valuation based on the time since the price of recent investment
until the full DCF valuation is applied (typically the valuations are tapered
from the price of recent investment to the full DCF valuation over four
calendar quarters after the price of recent investment). Accordingly, we have
applied a sensitivity of +/- one calendar quarter of this weighting as this is
deemed the most likely period by which the tapering may be delayed or brought
forward.
For those investments that have been fair valued using the price of a recent
investment based on unadjusted third-party pricing information and project
development loans held at cost plus accrued interest, the Company is not
required to disclose any quantitative information regarding the unobservable
inputs as they have not been developed by the Company and are not reasonably
available to the Company.
5. Income
Year ended 31 December Year ended 31 December
2023 2022
£'000 £'000
Overseas dividend income 1 1
Bank interest 211 96
Total income 212 97
6. Investment Adviser fee
Year ended 31 December 2023 Year ended 31 December 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment Adviser fee 144 - 144 343 - 343
At 31 December 2023 an amount of £nil (2022: £12,554) was payable to the
Investment Adviser in respect of the Investment Adviser fee.
Additionally, the Company agreed with the Investment Adviser that the costs
and expenses of the IPO would be capped at 2% of the gross proceeds received,
with any cost above this amount to be paid by the Investment Adviser by way of
rebate of its adviser fee. At 31 December 2023, £nil in respect of excess IPO
issue costs is due to be received from the Investment Adviser (2022:
£111,432).
Investment Adviser fee
The Company has entered into an Investment Adviser Agreement dated 5 July 2021
between the Company, the AIFM and the Investment Adviser (the "Investment
Adviser Agreement"), pursuant to which the Investment Adviser has been given
responsibility for investment advisory services in respect of any Private
Hydrogen Assets the Company invests in directly and the Listed Hydrogen Assets
(including Listed Hydrogen Assets forming part of the Liquidity Reserve and
uninvested cash) in accordance with the Company's investment policy, subject
to the overall control and supervision of the AIFM.
Under the Investment Adviser Agreement, the Investment Adviser receives from
the Company, quarterly in advance, an advisory fee equal to:
i. 1.0% of the Net Asset Value per annum of the Listed Hydrogen Assets
up to £100 million:
ii. 0.8% of the Net Asset Value per annum of the Listed Hydrogen Assets
from £100 million (save that the Investment Adviser has agreed to reduce this
fee to 0.5% in respect of the Liquidity Reserve pending their investment in
Private Hydrogen Assets for 18 months following Admission to 30 January 2023);
iii. 1.5% of the Net Asset Value per annum of any Private Hydrogen Assets
held by the Company directly (i.e. not held by the Limited Partnership or any
other undertaking advised by the Investment Adviser where the Investment
Adviser is receiving a separate advisory fee); and
iv. for so long as the Company is not considered a 'feeder fund' for the
purposes of the Listing Rules, 1.5% per annum of the Net Asset Value of the
Private Hydrogen Assets held by the Limited Partnership.
The Limited Partnership has entered into a Limited Partnership Investment
Adviser Agreement dated 5 July 2021 (the "Limited Partnership Investment
Adviser Agreement") between the General Partner (in its capacity as general
partner of the Limited Partnership), the AIFM and the Investment Adviser,
pursuant to which the Investment Adviser has been given responsibility for
investment advisory services in respect of the Private Hydrogen Assets in
accordance with the investment policy of the Limited Partnership, subject to
the overall control and supervision of the AIFM.
Under the Limited Partnership Investment Adviser Agreement, the Investment
Adviser, if the Company was considered a 'feeder fund' for the purposes of the
Listing Rules by virtue of additional investors co-investing via the Limited
Partnership in the future, shall receive from the Limited Partnership an
advisory fee equal to 1.5% per annum of the Net Asset Value of the Private
Hydrogen Assets held by the Limited Partnership, payable quarterly in advance.
Advisory fees paid or payable by the Limited Partnership are reflected through
the NAV of the Limited Partnership.
No performance fee is paid or payable to the Investment Adviser under either
the Investment Adviser Agreement or the Limited Partnership Investment Adviser
Agreement but the principals of the Investment Adviser are, subject to certain
performance conditions being met, entitled to carried interest fees from the
Limited Partnership. Refer to 'Carried Interest Partner Fees' section below.
Carried Interest Partner Fees
Pursuant to the terms of the Limited Partnership Agreement dated 5 July 2021
as amended and restated on 26 November 2021 (the "Limited Partnership
Agreement"), the Carried Interest Partner is, subject to the limited partners
of the Limited Partnership receiving an aggregate annualised 8% realised
return (i.e. the Company and, in due course, any additional co-investors),
entitled to a carried interest fee in respect of the performance of the
Private Hydrogen Assets.
Subject to certain exceptions, the Carried Interest Partner will receive, in
aggregate, 15% of the net realised cash profits from the Private Hydrogen
Assets held by the Limited Partnership once the limited partners of the
Limited Partnership (i.e. the Company and, in due course, any additional
co-investors) have received an aggregate annualised 8% realised return. This
return is subject to a 'catch-up' provision in Carried Interest Partner's
favour. Any realised or unrealised carried interest fee paid or payable to the
Carried Interest Partner is reflected through the NAV of the Limited
Partnership. As at 31 December 2023, in the Limited Partnership, there is
unrealised carried interest fee payable of £403,343 (year to 31 December
2022: £nil).
20% of any carried interest received (net of tax) will be used by the
principals of the Investment Adviser to acquire Ordinary Shares in the market.
Any such acquired shares will be subject to a 12-month lock-up from the date
of purchase.
General Partner's priority profit share
Under the Limited Partnership Agreement, the General Partner of the Limited
Partnership shall be entitled to a General Partner's Profit Share ("GPS"). The
GPS for each accounting period shall be an amount equal to 1.5% of the
prevailing NAV of the Limited Partnership. For so long as the Company is the
sole limited partner of the Limited Partnership, the GPS shall be distributed
to the Company rather than the General Partner. The Company is currently the
sole limited partner of the Limited Partnership. Therefore, under the
Investment Adviser Agreement, the investment adviser fee in relation to the
Private Hydrogen Assets held by the Limited Partnership is settled by the
Company which for the year totalled £1,723,369 (31 December 2022:
£1,181,069). During the year the Limited Partnership did not call any GPS
from the Company as the net effect of the calling and distributing GPS from/to
the Company is £nil (31 December 2022: £nil).
7. Other expenses
Year ended Year ended
31 December
31 December
2023 2022
£'000 £'000
Administration & Secretarial Fees 205 193
AIFM Fees 97 83
Directors' Fees 192 173
Custodian Charges 50 50
Brokers Fees 66 60
Registrar's Fees 21 23
Website Fees 39 44
Legal Fees 30 21
LSE Fees 15 11
Audit Fees 162 118
D & O Insurances 47 49
PR & Marketing 262 212
Printing Fees 38 30
Other expenses 172 92
Total revenue expenses 1,396 1,159
Expenses charged to capital:
Capital transaction costs 500 219
Total expenses 1,896 1,378
During the year, no non-audit service fees were paid.
Costs of £500,000, incurred during the year ended 31 December 2022,
applicable to the share issuance Circular and Prospectus published in
September 2022 (the "share issuance Circular and Prospectus"), which were
recognised as trade and other receivables as at 31 December 2022, were
released from trade and other receivables to abort costs in the Statement of
Comprehensive Income for the year ended 31 December 2023 as no shares had been
issued at the Circular and Prospectus expiry date in September 2023. These
costs included non-audit service costs applicable to the share issuance
Circular and Prospectus (KPMG UK LLP received £42,000 which was inclusive of
VAT of £7,000).
During the year to 31 December 2022, where non-audit services were carried out
in relation to a further secondary share issuance that was aborted, the costs
(KPMG received £75,000; and KPMG UK LLP received £108,000 which was
inclusive of VAT of £18,000) were treated as a capital expense (abort costs)
disclosed in the Statement of Comprehensive Income
Each of these non-audit services provided during the year to 31 December 2022
were required by law or regulation and were therefore permissible non-audit
services under the FRC Ethical Standard.
8. Taxation
(a) Analysis of charge in the year
Year ended 31 December 2023 Year ended 31 December 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Overseas tax - - - - - -
Total tax charge for the year - - - - - -
Factors affecting total tax charge for the year
Year ended 31 December 2023 Year ended 31 December 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(Loss)/profit on ordinary activities before taxation (1,328) 8,645 7,317 (1,405) 2,959 1,554
Corporation tax at 23.52% (312) 2,033 1,721 (267) 562 295
Effects of:
Non-taxable (gains)/losses on investments - (2,151) (2,151) - (604) (604)
Excess management expenses not utilised in year 312 30 342 267 - 267
Disallowable expenses - 88 88 - 42 42
Overseas tax - - - - - -
Total tax charge - - - - - -
The Company is not liable to tax on capital gains due to its status as an
investment trust. The Company and Group has an unrecognised deferred tax asset
of £963,000 (2022: £600,000) as a result of excess management expenses of
£3,853,000 (2022: 2,400,000), based on the long term prospective corporation
tax rate of 25%.
This asset has accumulated because deductible expenses exceeded taxable income
for the year ended 31 December 2023 and prior periods. No asset has been
recognised in the Financial Statements because, given the composition of the
Company and Group's portfolio, it is not likely that this asset will be
utilised in the foreseeable future.
9. Trade and other receivables
31 December 31 December
2023 2022
£'000
£'000
Prepayments 41 37
Other receivables 10 604
51 641
At 31 December 2022 other receivables included £470,000 in respect of costs
applicable to the share issuance Circular and Prospectus (£470,000) published
in September 2022 and expiring in September 2023. These costs were
reclassified as abort costs in the Statement of Comprehensive Income in 2023
as no shares had been issued at the Circular and Prospectus expiry date.
10. Trade and other payables
31 December 31 December
2023 2022
£'000 £'000
Amounts falling due within one year:
Accrued expenses 190 153
190 153
11. Share capital
31 December 2023 31 December 2022
Allotted, issued and fully paid Ordinary Shares of No. of shares Nominal value of Nominal value of
1p each: shares No. of shares shares
(£) (£)
Brought forward 128,819,999 1,288,199.99 107,350,000 1,073,500.00
Allotted/redeemed following admission to LSE
Ordinary Shares issued - - 21,469,999 214,699.99
Closing balance as at 31 December 128,819,999 1,288,199.99 128,819,999 1,288,199.99
The Company is permitted to hold Ordinary Shares acquired by way of market
purchase in treasury, rather than having to cancel them. Such Ordinary Shares
may be subsequently cancelled or sold for cash. No Ordinary Shares have been
repurchased during the year therefore there were no Treasury shares at the end
of the year.
Each Ordinary Share held entitles the holder to one vote. All shares carry
equal voting rights and there are no restrictions on those voting rights.
Costs applicable to the share issuance Circular and Prospectus issued in
September 2022 totaling £500,000 were treated as an other debtor at 31
December 2022 (£470,000) or accrued during the year (£30,000). These costs
were reclassified as abort costs in the Statement of Comprehensive Income for
the year ended 31 December 2023 as no shares had been issued at the Circular
and Prospectus expiry date in September 2023.
12. Return per ordinary share
Return per share is based on the weighted average number of Ordinary Shares in
issue during the year ended 31 December 2023 of 128,819,999 (2022:
122,878,985).
Year ended 31 December 2023 Year ended 31 December 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(Loss)/profit for the year(£'000) (1,328) 8,645 7,317 (1,405) 2,959 1,554
Return per Ordinary Share (1.03)p 6.71p 5.68p (1.14)p 2.41p 1.27p
There is no dilution to return per share as the Company has only Ordinary
Shares in issue.
13. Net asset value per ordinary share
31 December 31 December
2023 2022
£'000 £'000
Net Asset Value (£'000) 132,670 125,353
Ordinary Shares in issue 128,819,999 128,819,999
NAV per Ordinary Share 102.99p 97.31p
There is no diluted Net Asset Value per share as the Company has only Ordinary
Shares in issue.
14. Related party transactions and material contracts
Directors
During the year fees were payable to the Directors at an annual rate of
£68,250 to the Chairman (2022: £65,000), £57,750 to the Chairman of the
Audit and Risk Committee (2022: £55,000) and £47,250 to the other Directors
(2022: £45,000) with the exception of Mr Bucknall who is not remunerated for
his role as a Non-Executive Director. These fees were effective from 1 January
2023. Details of the Directors remuneration paid during the year is given in
note 7. At the year end, the Directors had the following holdings in the
Company:
Ordinary Shares at Ordinary Shares at
31 December 2023 31 December 2022
Simon Hogan 40,000 40,000
Afkenel Schipstra 10,100 10,100
Abigail Rotheroe 10,000 10,000
David Bucknall - -
Investment Adviser
Fees payable to the Investment Adviser are shown in the Statement of
Comprehensive Income. Fees details of the Investment Adviser are shown in note
6. At 31 December 2023, the principals of the Investment Adviser, Dr JJ
Traynor and Mr R Hulf, each held 100,000 Ordinary Shares of the Company (31
December 2022: 100,000 Ordinary Shares). Transactions between the Company and
the Investment Adviser during the year are disclosed in note 6.
INEOS Energy
The Relationship and Co-Investment Agreement dated 19 June 2021 between INEOS
UK E&P Holdings Limited ("INEOS Energy"), the Investment Adviser, the
Company and the General Partner (acting in its capacity as the general partner
of the Limited Partnership), pursuant to which the parties agreed that: (i)
INEOS Energy would subscribe for and/or shall procure that its associates
shall subscribe for at least 25 million Ordinary Shares in the IPO; (ii) such
Ordinary Shares subscribed by INEOS Energy would be subject to a 12 month
lock-up from the date of purchase pursuant to which INEOS Energy agreed that
it will not sell, grant options over or otherwise dispose of any interest in
any such Ordinary Shares purchased by them (subject to the usual carve-outs);
(iii) INEOS Energy was entitled to nominate one Non-Executive Director for
appointment to the Board; (iv) prior to making any co-investment opportunity
in relation to a Private Hydrogen Assets that is a project to any limited
partner of the Limited Partnership, the Company and the Investment Adviser
will give INEOS Energy a right of first refusal to acquire up to 100% of such
co-investment opportunity (provided that the 'related party transaction'
requirements set out in the Listing Rules are complied with); (v) INEOS Energy
are provided with certain information rights relating to Private Hydrogen
Assets and co-investment opportunities; and (vi) INEOS Energy shall be
entitled to second one or more employees to the Investment Adviser from
time-to-time. INEOS Energy has agreed that all transactions between INEOS
Energy and its associates and any member of the Company and Group and/or the
Investment Adviser are conducted at arm's length on normal commercial terms.
At the IPO, INEOS Energy subscribed for and received 25 million Ordinary
Shares of the Company. On 31 October 2022, INEOS Energy transferred its
holding of 25 Million Ordinary Shares to its immediate parent, INEOS Offshore
BCS Limited. At 31 December 2023, INEOS Offshore BCS held 25 million Ordinary
Shares of the Company (2022: 25 million Ordinary Shares).
David Bucknall is currently Chief Executive Officer of the INEOS Energy group
of companies and was appointed as the Board representative of INEOS Energy on
20 May 2022 pursuant to the Relationship and Co-Investment Agreement entered
into between, inter alia, INEOS Energy and the Company at the Company's
launch.
Carried Interest and General Partners
Details of the Carried Interest Parter and General Partner and any applicable
fees and unrealised carried interest are shown in note 6.
Alternative Investment Fund Manager
FundRock Management Company (Guernsey) Limited is appointed to act as the
Company's and the Limited Partnership's alternative investment fund manager
(the "AIFM") for the purposes of the UK AIFM Rules. The AIFM has delegated the
provision of portfolio management services to the Investment Adviser. The
AIFM, Company Secretary and Administrator are part of the same Apex Group.
Under the AIFM Agreement between the AIFM and the Company dated 5 July 2021,
and with effect from Admission, the AIFM shall be entitled to receive from
the Company a fee of 0.05% of Net Asset Value per annum up to £250 million,
0.03% of Net Asset Value per annum from £250 million up to £500 million and
0.015% of Net Asset Value per annum from £500 million, in each case adjusted
to exclude any Net Asset Value attributable to any Private Hydrogen Assets
held through the Limited Partnership and subject to a minimum annual fee of
£85,000.
Under the AIFM Agreement between the AIFM and the Limited Partnership dated 5
July 2021, the AIFM receives from the Limited Partnership a fee of 0.05% of
the net asset value of the Limited Partnership per annum up to £250 million,
0.03% of the net asset value of the Limited Partnership per annum from £250
million up to £500 million and 0.015% of the net asset value of the Limited
Partnership per annum from £500 million, subject to a minimum annual fee of
£25,000. AIFM fees paid or payable by the Limited Partnership are reflected
through the NAV of the Limited Partnership.
The AIFM is also entitled to reimbursement of reasonable expenses incurred by
it in the performance of its duties.
Administration and Company Secretarial services fee
The Company has entered into an Administration and Company Secretarial
Services Agreement dated 5 July 2021 (the "Administrator and Company Secretary
Agreement") between the Company and Apex Listed Companies Services (UK)
Limited (formerly Sanne Fund Services (UK) Limited (the "Company Secretary and
Administrator")) pursuant to which the Company Secretary and Administrator has
agreed to act as company secretary and administrator to the Company.
Under the terms of the Administration and Company Secretarial Services
Agreement, the Company Secretary and Administrator receives a fee from the
Company of 0.06% of Net Asset Value per annum up to £250 million, 0.05% of
Net Asset Value per annum from £250 million up to £500 million and 0.025% of
Net Asset Value per annum from £500 million and subject to a minimum annual
fee of £147,695 plus a further £10,000 per annum to operate the Company's
Liquidity Reserve.
Under the terms of the Limited Partnership Administration Agreement 5 July
2021, pursuant to which the Company Secretary and Administrator has agreed to
act as administrator to the Limited Partnership, the Company Secretary and
Administrator receives an annual fee from the Limited Partnership of £69,151
and of £16,596 (excluding VAT) in respect of the General Partner.
Administration fees paid or payable by the Limited Partnership are reflected
through the NAV of the Limited Partnership. For so long as the Company is the
sole Limited Partner, the administration fee in respect of the General Partner
shall be allocated settled by the Company rather than the General Partner.
Custodian fee
The Company has entered into a Custodian Agreement between the Company and The
Northern Trust Company (the "Custodian") dated 23 June 2021 (the "Custodian
Agreement"), pursuant to which the Custodian has agreed to act as custodian to
the Company.
The Custodian is entitled to a minimum annual fee of £50,000 (exclusive of
VAT) per annum. The Custodian is also entitled to a fee per transaction taken
on behalf of the Company.
Registrar fee
The Company utilises the services of Computershare Investor Services plc (the
"Registrar") as registrar to the transfer and settlement of Ordinary Shares.
Under the terms of the Registrar Agreement dated 5 July 2021, the Registrar is
entitled to a fee calculated based on the number of shareholders, the number
of transfers processed and any Common Reporting Standard on-boarding, filings
or changes. The annual minimum fee is £4,800 (exclusive of VAT). In addition,
the Registrar is entitled to certain other fees for ad hoc services rendered
from time to time.
15. Financial instruments and capital disclosures
Risk Management Policies and Procedures
The Board of Directors has overall responsibility for the establishment and
oversight of the Company and Group's risk management framework. The risk
management policies are established to identify and analyse the risks faced by
the Company and Group, to set appropriate risk limits and controls and to
monitor risks and adherence to limits. Risk management policies are reviewed
regularly to reflect changes in market conditions and the Company and Group's
activities.
The Investment Adviser, AIFM and the Administrator report to the Board on a
quarterly basis and provide information to the Board which allows it to
monitor and manage financial risks relating to its operations. The Company and
Group's activities expose it to a variety of financial risks: market risk
(including currency risk, interest rate risk and price risk), credit risk,
liquidity risk and operational risk. These risks are monitored by the AIFM.
Below is a non-exhaustive summary of the risks that the Company and Group are
exposed to as a result of its use of financial instruments:
The objectives, policies and processes for managing the risks, and the methods
used to measure the risks, are set out below:
Market Risks
(i) Currency risk
Foreign currency risk is defined as the risk that the fair values of future
cashflows will fluctuate because of changes in foreign exchange rates. The
financial assets and liabilities are predominantly denominated in Pounds
Sterling and substantially all revenues and expenses are in Pounds Sterling.
As at the 31 December 2023 and 31 December 2022, the Company and Group had
the following currency exposures, all of which are included in the Statement
of Financial Position at fair value based on the exchanges rates at the year
end.
31 December 2023 31 December 2022
Investments Cash Other assets & liabilities Total Investments Cash Other assets & liabilities Total
Currency £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Danish Krone 180 - - 180 132 - - 132
Euro 806 - - 806 1,246 - - 1,246
Korean Won 501 - - 501 667 - - 667
Norwegian Krone 259 - - 259 609 - - 609
Swedish Krona 3 - - 3 230 - - 230
US Dollar 213 - - 213 344 - - 344
1,962 - - 1,962 3,228 - - 3,228
The Company and Group mitigate the risk of loss due to exposure to a single
currency by way of diversification of the portfolio. The Limited Partnership's
non Pound Sterling denominated assets may have currency exposure hedged by
Forward Exchange Contracts so that impact from currency exchange rate
movements would be mitigated. At 31 December 2023, the Company and Group
have not hedged the value of non-Pound Sterling denominated investments. This
increases foreign currency risk and may increase volatility of the Company and
Group's net asset value. At 31 December 2022, the Limited Partnership's non
Pound Sterling denominated assets had currency exposure hedged by Forward
Exchange Contracts so that the impact from currency exchange rate movement was
mitigated.
At 31 December 2023, an exchange rate movement of +/-5% against Pounds
Sterling, which is a reasonable approximation of possible changes based on
observed volatility during the year, would have increased or decreased net
assets and total return by £98,100 (2022: £161,400).
(ii) Interest rate risk
The Company and Group's interest rate risk on interest bearing financial
assets is limited to interest earned on cash balances. At the year end, the
Company and Group had cash balances of £4,626,000 (£2022: £18,192,000). An
increase in interest rates of 2.0%, which is reasonable based upon changes in
interest rates observed in the year, would impact the profit or loss and net
assets of the Company and Group positively by £92,520, with a decrease of
2.0% having an equal and opposite effect (2022: an increase or decrease of 3%
would have had a positive or negative affect of £545,760).
The Company and Group's interest and non-interest bearing assets and
liabilities as at 31 December 2023 and 31 December 2022 are summarised below:
31 December 2023 31 December 2022
Interest Non-interest Interest Non-interest
bearing bearing Total bearing bearing Total
£'000 £'000 £'000 £'000 £'000 £'000
Assets
Cash and cash equivalents 4,626 - 4,626 18,192 - 18,192
Trade and other receivables - 51 51 - 641 641
Investments held at fair value through profit or loss - Listed Hydrogen Assets - 2,322 2,322 - 3,667 3,667
Investments held at fair value through profit or loss - Limited Partnership - 125,861 125,861 - 103,006 103,006
Total assets 4,626 128,234 132,860 18,192 107,314 125,506
Liabilities
Trade and other payables - (190) (190) - (153) (153)
Total liabilities - (190) (190) (153) (153)
(iii) Price risk
Listed Hydrogen Assets
Price risk is defined as the risk that the fair value of a financial
instrument held by the Company or Group will fluctuate. Listed Hydrogen Assets
are measured at fair value through profit or loss. As of 31 December 2023, the
Company and Group held Listed Hydrogen Assets with an aggregate fair value of
£2,322,000 (2022: £3,667,000).
All other things being equal, the effect of a 10% increase or decrease in the
value of the investments held at the year end would have been an increase or
decrease of £232,200 in the Company and Group's loss after taxation for the
year ended 31 December 2023 and the Company and Group's net assets at 31
December 2023 (2022: £366,700).
At 31 December 2023, the sensitivity rate of 10% is regarded as reasonable due
to the actual market price volatility experienced as a result of the economic
impact on the Listed Hydrogen Assets.
Private Hydrogen Assets
The Limited Partnership's portfolio of Private Hydrogen Assets is not
necessarily affected by market performance, however the valuations may be
affected by the performance of the underlying investments in line with the
valuation criteria in note 3.
The Private Hydrogen Assets sensitivity analysis in note 4 recognises that the
valuation methodologies employed involve different levels of subjectivity in
their inputs primarily driven by changes in discount rate assumptions and
weighting of the techniques employed.
Key variable inputs of Private Hydrogen Assets
The variable inputs applicable to each broad category of valuation basis will
vary depending on the particular circumstances of each Private Hydrogen Asset
valuation. An explanation of each of the key variable inputs is provided below
and includes an indication of the range in value for each input, where
relevant.
Selection of appropriate discount rates
The selection of an appropriate discount rate is assessed individually for
each Private Hydrogen Asset. Publicly disclosed discount rates in the relevant
sector and comparable asset classes, which may be procured from public sources
or independent third-party expert advisers or for comparable market
transactions of similar assets are used where available.
Selection of appropriate benchmarks
The selection of appropriate benchmarks is assessed individually for each
Private Hydrogen Asset. The industry and geography of each Private Hydrogen
Asset are key inputs to the benchmark selection, with either one or two key
indices or benchmarks being used for comparison.
Selection of comparable companies
The selection of comparable companies is assessed individually for each
Private Hydrogen Asset at the point of investment, and the relevance of the
comparable companies is continually evaluated at each valuation point. The key
criteria used in selecting appropriate comparable companies are the industry
sector in which they operate and the geography of the Private Hydrogen Asset's
operations.
Application of valuation basis
Each Private Hydrogen Asset is assessed, and the valuation basis applied will
vary depending on the circumstances of each Private Hydrogen Asset. DCF will
be considered where appropriate forecasts are available. The valuation will
also consider any recent transactions, where appropriate. For those Private
Hydrogen Assets where a trading multiples approach can be taken, the
methodology will factor in revenue, earnings or net assets as appropriate for
the Private Hydrogen Asset.
Estimated sustainable earnings and cash flows
The selection of sustainable revenue or earnings and cash flows will depend on
whether the Private Hydrogen Asset is sustainably profitable or not, and where
it is not then sustainable revenues will be used in the valuation. The
valuation approach will typically assess Private Hydrogen Assets based on the
last twelve months of revenue or earnings, as they are the most recent
available and therefore viewed as the most reliable. Where a Private Hydrogen
Asset has reliably forecasted earnings previously or there is a change in
circumstance at the business which will impact earnings going forward, then
forward estimated revenue or earnings may be used instead.
Application of liquidity discount
A liquidity discount may be applied either through the calibration of a
valuation against the most recent transaction, or by application of a specific
discount.
Credit risk
The Company and Group are exposed to credit risk in respect of trade and other
receivables and cash at bank. For risk management reporting purposes, the
Company and Group considers and aggregates all elements of credit risk
exposure (such as individual obligation default risk, country risk and sector
risk).
31 December 2023 31 December 2022
£'000 £'000
Trade and other receivables 51 641
Cash and cash equivalents 4,626 18,192
Total 4,677 18,833
The cash and cash equivalents are held with Northern Trust Bank, EFG
International Bank, Royal Bank of Scotland and through the Goldman Sachs-
Liquid reserve fund. The Fitch Rating credit rating of Northern Trust Bank is
AA (2022: AA), EFG international Bank is A (2022: A), Royal Bank of Scotland
A+ (2022: A+) and the Goldman Sachs Liquid reserve fund is AAA (2022: AAA).
At the year end there were no trade and receivables past due. The credit risk
exposure is minimised by dealing with financial institutions with investment
grade credit ratings.
Liquidity risks
Liquidity risk is the risk that the Company or Group may not be able to meet a
demand for cash or fund an obligation when due. The Investment Adviser, AIFM
and the Board continuously monitor forecast and actual cashflows from
operating, financing and investing activities to consider payment of
dividends, or further investing activities.
Financial assets and liabilities by maturity at the year end are shown below:
31 December 2023 31 December 2022
Less than Less than
1 year 1-5 years Total 1 year 1-5 years Total
£'000 £'000 £'000 £'000 £'000 £'000
Assets
Investments at fair value through profit or loss - Listed Hydrogen Assets 2,322 - 2,322 3,667 - 3,667
Investments at fair value through profit or loss - Limited Partnership - 125,861 125,861 - 103,006 103,006
Trade and other receivables 51 - 51 641 - 641
Cash and cash equivalents 4,626 - 4,626 18,192 - 18,192
Total assets 6,999 125,861 132,860 22,500 103,006 125,506
Liabilities
Trade and other payables (190) - (190) (153) - (153)
Total liabilities (190) - (190) (153) - (153)
Operational risk
Operational risk is the risk of direct or indirect loss arising from a wide
variety of causes associated with the processes, technology and infrastructure
supporting the activities relating to financial instruments, either internally
or on the part of service providers, and from external factors other than
credit, market and liquidity risks such as those arising from legal and
regulatory requirements and generally accepted standards of investment
management behaviour.
Operational risk is managed so as to balance the limiting of financial losses
and reputational damage with achieving the investment objective of generating
returns to investors. The AIFM works with the Board to identify the risks
facing the Company and the Limited Partnership. The key risks are documented
and updated in the Risk Matrix by the AIFM. The primary responsibility for the
development and implementation of controls over operational risk rests with
the Board.
This responsibility is supported by the development of overall standards for
the management of operational risk, which encompasses the controls and
processes at the service providers and the establishment of service levels
with the service providers. The Directors' assessment of the adequacy of the
controls and processes in place at service providers with respect to
operational risk is carried out through having discussions with and reviewing
reports, including those on their internal controls, from the service
providers.
Capital Management Policies and Procedures
The Company and Group's capital management objectives are to ensure that the
Company and Group will be able to continue as a going concern while maximising
the return to equity shareholders.
In accordance with the investment objective, the principal use of cash
(including the proceeds of the IPO and placings) is investing in hydrogen
focussed assets, as well as expenses related to the share issue when they
occur, ongoing operational expenses and payment of dividends and other
distributions to shareholders in accordance with the Company's dividend
policy.
The Company and Group considers their capital to comprise share capital,
distributable reserves and retained earnings. The Company and Group are not
subject to any externally imposed capital requirements. The Company and
Group's share capital, distributable reserves and retained earnings are shown
in the Statement of Financial Position at a total £132,670,000 (2022:
£125,353,000).
16. Subsidiary and related entities
Subsidiary
The Company owns 100% of HydrogenOne Capital Growth (GP) Limited as at 31
December 2023 and 31 December 2022.
Subsidiary name Effective Country of ownership Principal Issued Registered
ownership
activity
share capital
address
HydrogenOne Capital Growth 100% United General £1 6th Floor,
(GP) Limited Kingdom partner of 125 London
HydrogenOne Wall, London,
Capital Growth EC2Y 5AS
Investments
(1) LP
Related entities
The Company holds Private Hydrogen Assets through its investment in the
Limited Partnership, which has not been consolidated as a result of the
adoption of IFRS 10: Investment entities exemption to consolidation. There is
a cross guarantee in place between the Company and the Limited Partnership in
respect of margin requirements on the Limited Partnership's forward currency
contracts. At 31 December 2023 the Limited Partnership had no exposure to
forward currency contracts (2022: £1,451,927). There are no other cross
guarantees amongst related entities. Below are details of the unconsolidated
Private Hydrogen Asset held through the Limited Partnership.
31 December 2023
Name Purpose of Country of Incorporation Value of investment £'000 Total assets Effective Registered
the entity
as at 31 December
address
2023 ownership
(unaudited) £'000
(% rounded)
Sunfire GmbH Electrolyzer producer Germany 27,068 157,197 5% Gasanstaltstraße 2 01237 Dresden, Germany
Elcogen Group plc Solid oxide fuel cell supply United Kingdom 24,430 51,445 9% Highdown House, Yeoman Way, Worthing,
West Sussex,
BN99 3HH
Strohm Holding BV Supplier of thermoplastic composite pipe Netherlands 19,719 62,082 20% Monnickendamkade
1, 1976 EC IJmuiden
HiiROC Limited Supplier of clean hydrogen production technology United Kingdom 13,701 14,398 6% 22 Mount Ephraim, Tunbridge Wells, Kent, TN4 8AS
Cranfield Aerospace Solutions Limited Aviation design and maintenance United Kingdom 11,870 17,291 29% Hanger 2, Cranfield Airport, Cranfield, Bedfordshire,
MK43 0AL
Bramble Energy Limited Printed Circuit Board fuel cell solutions United Kingdom 10,621 21,361 12% 6 Satellite Business Village, Fleming Way, Crawley, England, RH10 9NE
HH2E AG Supplier of green electrolysis and energy storage facilities Germany 6,971 11,077 11% HRB 167243, Kaiser- Wilhelm-Straße 93, 20355 Hamburg
NanoSUN Limited Supplier of mobile hydrogen storage and refueling systems United Kingdom 5,428 5,045 22% Abraham Heights Farm, Westbourne Road, Lancaster,
LA1 5EF
GEN2 Energy AS Green Hydrogen development Norway 4,443 11,203 7% Raveien 205, 3184 Borre, Norway
HH2E Werk Thierbach GmbH Supplier of green electrolysis and energy storage facilities Germany 1,955 9,389 15% HRB 167243, Kaiser- Wilhelm-Straße 93, 20355 Hamburg
31 December 2022
Name Purpose of Country of Incorporation Value of investment £'000 Total assets Effective Registered
the entity
as at 31 December
address
2022 ownership
(unaudited) £'000
(% rounded)
Sunfire GmbH Electrolyzer producer Germany 21,763 137,838 4% Gasanstaltstraße 2 01237 Dresden, Germany
Elcogen Group plc Solid oxide fuel cell supply United Kingdom 20,430 22,306 11% Highdown House, Yeoman Way, Worthing, West Sussex, BN99 3HH
HiiROC Limited Supplier of clean hydrogen production technology United Kingdom 12,914 21,423 6% 22 Mount Ephraim, Tunbridge Wells, Kent, TN4 8AS
Bramble Energy Limited Printed Circuit Board fuel cell solutions United Kingdom 10,032 33,814 12% 6 Satellite Business Village, Fleming Way, Crawley, England, RH10 9NE
NanoSUN Limited Supplier of mobile hydrogen storage and refueling systems United Kingdom 11,519 7,150 23% Abraham Heights Farm, Westbourne Road, Lancaster,
LA1 5EF
Cranfield Aerospace Solutions Limited Aviation design and maintenance United Kingdom 6,296 6,248 29% Hanger 2, Cranfield Airport, Cranfield, Bedfordshire,
MK43 0AL
HH2E AG Supplier of green electrolysis and energy storage facilities Germany 5,134 6,107 11% HRB 167243, Kaiser- Wilhelm-Straße 93, 20355 Hamburg
GEN2 Energy AS Green Hydrogen development Norway 3,421 12,065 7% Raveien 205, 3184 Borre, Norway
Strohm Holding BV Supplier of thermoplastic composite pipe The Netherlands 11,606 90,257 24% Monnickendamkade
1, 1976 EC IJmuiden
The maximum exposure to loss from the unconsolidated entities is the carrying
amount of the financial assets held.
During the year the Company did not provide financial support and has no
intention of providing financial or other support to the subsidiary and the
unconsolidated Private Hydrogen Assets held through the Limited Partnership.
17. Commitments and contingencies
As at 31 December 2023 the Company had future commitments owing of £0.6m to
Cranfield Aerospace Solutions and £0.6m to HH2E Werk Thierbach.
At 31 December 2023 the Company had outstanding undrawn loan commitments of
£3,638,090 to the Limited Partnership (2022: £16,036,459).
18. Post balance sheet events
Since 31 December 2023, the Partnership has made additional investments in and
commitments to Private Hydrogen Assets amounting to £1.1m and £1.0m
respectively. In February 2024, the Company implemented a restructuring of
NanoSUN, and launched a new company named Swift Hydrogen Ltd ('Swift'). The
Company wholly owns Swift and it is led by previous senior managers from
NanoSUN.
In March 2024, Sunfire announced a funding round totalling more than EUR 500
million. The Company exercised its anti-dilution and conversion rights in
this round for £0.3 million. The Board resolved to make a non-material
modification to the Company's investment restrictions, so that investments in
Sunfire, measured t the time of investment, shall not exceed 21% of the
Company's GAV. The Company's existing restriction of an investment limit of
20% of GAV at the time of investment is unchanged for the remainder of the
portfolio.
In April 2024, the Company agreed to a restructuring of HH2E, ahead of planned
material third party fund raising for green hydrogen projects in Germany. The
Company has exchanged its development rights for five project SPVs, including
the Thierbach SPV for equity in HH2E, in parallel, the Lubmin SPV, which was
previously carved out of the Company's direct holdings, has also been combined
with HH2E. In a non-cash transaction for the Company. The Company's previously
announced development loan to Thierbach, of which £1.9 million has been
drawn, will be reduced to £0.7 million, through a swap for equity in HH2E.
The Company's resulting equity share of HH2E is unchanged, at around 11%, on
an enlarged asset base and with a simpler corporate structure, and with direct
exposure to the Lubmin project.
FINANCIAL INFORMATION
This announcement does not constitute the Company's statutory accounts. The
financial information for the year ended 31 December 2023 is derived from the
statutory accounts for the year, which will be delivered to the Registrar of
Companies. The auditors have reported on the 2022 accounts; their report was
unqualified and did not include a statement under Section 498(2) or (3) of the
Companies Act 2006.
The Annual Report for the Period ended 31 December 2023 was approved on 17
April 2024. The full Annual Report can be accessed via the Company's website
at: https://hydrogenonecapitalgrowthplc.com
The Annual Report will be submitted to the National Storage Mechanism and will
shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
This announcement contains regulated information under the Disclosure Guidance
and Transparency Rules of the FCA.
ANNUAL GENERAL MEETING ("AGM")
The AGM of the Company will be held at 6th Floor, 125 London Wall, London,
EC2Y 5AS on 21 May 2024 at 12.00 Noon.
Even if shareholders intend to attend the AGM, all shareholders are encouraged
to cast their vote by proxy and to appoint the "Chair of the Meeting" as their
proxy. Details of how to vote, either electronically, by proxy form or through
CREST, can be found in the Notes to the Notice of AGM in the Annual Report.
17 April 2024
For further information contact:
Secretary and registered office:
Apex Listed Companies Services (UK) Limited
6th Floor, 125 London Wall, London, EC2Y 5AS
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