REG - HydrogenOne Cap Gwth - Annual Results
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RNS Number : 7365G HydrogenOne Capital Growth PLC 30 April 2025
LEI: 213800PMTT98U879SF45
HydrogenOne Capital Growth plc
Annual Results
For the year ended 31 December 2024
www.hydrogenonecapitalgrowthplc.com (http://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 2024.
Results presentation today
There will be a presentation for sell side analysts at 9.00 a.m. today, 30
April 2025. 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
A copy of the presentation is available to read and download on the Company's website: https://hydrogenonecapitalgrowthplc.com/investors/results-presentations-and-factsheets/
Company Overview
About us
HydrogenOne Capital Growth Plc ("HGEN" or "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
portfolio of hydrogen and complementary hydrogen focussed assets, diversified
across the value chain, 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.
· Investments and pipeline to deliver 10-15% average NAV growth,
including exits*.
· First mover advantage in the Hydrogen sector, which is growing
rapidly.
· Investment Adviser's strong 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
£116.4m
Net Asset Value
SFDR Article 9
Climate impact fund
>132,800 tonnes
CO2e emissions avoided in FY2024
Investing in clean hydrogen for a climate-positive impact
Highlights
At a glance
Financial and operational highlights
· NAV decreased from £132.7 million at 31 December 2023 to £116.4
million at 31 December 2024. NAV per share decreased to 90.39p at 31 December
2024;
· Portfolio activity includes exit from green hydrogen developers
Gen2 Energy, which was sold, HH2E and Thierbach SPV, which entered
self-administration, and restructuring of transport specialist NanoSUN;
· NAV per share reduced by 12.6p, including the write-down of HH2E
and Thierbach SPV (6.9p), NanoSUN restructuring (4.2p), exchange rate impacts,
fund costs and other portfolio impacts;
· The share price fell from 49.65p to 21.65p and the discount to
NAV increased from 52% to 76% as the share prices of growth investment trusts
remained subdued, and in addition the Company's share price declined following
the write‑down of HH2E;
· Positive progress on revenue growth from portfolio companies,
delivering an aggregate £85 million in total revenue within the portfolio
companies in the year to 31 December 2024, an increase of 14.9% compared to
the year to 31 December 2023. Further portfolio revenue growth is expected in
2025;
· Investment activity centred on follow-ons. During the year ended
31 December 2024, the Company made further investments in 4 Private Hydrogen
Assets in its portfolio, totalling £2.6 million, and divested from its
remaining listed holdings;
· Portfolio companies have raised a total of c. £500 million in
new equity, loans and grants in 2024, underpinning the Company's valuations
and the attractive sector fundamentals;
· At 31 December 2024, the total invested capital since IPO
amounted to £116.3 million;
· The Company and its Group has retained a cash position of £3.1
million as at 31 December 2024;
· Growth in the clean hydrogen sector continued to accelerate,
despite recent project announcements, weak macroeconomic conditions and
political uncertainties. The Investment Adviser assesses that some £9 billion
was invested in clean hydrogen in 2024 world-wide, a 50% increase over 2023
levels and that policy announcements in 2024 totalled over $100 billion of
sector support. The Company expects green hydrogen production to reach
3.0 million tonnes per annum by 2027, an increase of 15x over 2024 levels,
underscoring the positive industry outlook for clean hydrogen.
Environmental, Social and Governance (ESG) highlights
· Classified as an Article 9 Fund under the SFDR;
· Over 132,839 tonnes of Greenhouse Gas (tCO2e) emissions avoided
in the year ended 31 December 2024, over 576 times the combined scope 1, 2 and
3 emissions of the Company in the same period, and 274,534tCO2e since IPO;
· 91% alignment with EU taxonomy for sustainable activities (the
"EU Taxonomy") assessment on Private Hydrogen Assets at 31 December 2024;
· £116.3m deployed in low-carbon growth (since fund inception);
· Potential 537,193 MWh lifetime clean energy capacity in year
ended 31 December 2024 and 1,334,487 MWh since IPO;
· 1,333 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
91% EU Taxonomy Aligned
274,534
Avoided GHG Emissions since IPO
£116m
Deployed in Low Carbon Growth
Key statistics as at 31 December 2024 At 31 December 31 December % change
2024(2) 2023
NAV per Ordinary Share 90.39p 102.99p (12.2)%
NAV £116.4m £132.7m (12.2)%
Ordinary Share price 21.65p 49.65p (56.4)%
Market capitalisation £27.9m £64.0m (56.4)%
Share price discount to NAV(1) 76.0% 51.8% (46.7)%
Total Shareholder NAV return per Ordinary Share(1) (12.2)% 5.8% n/a
Ongoing Charges(1) 2.5% 2.6% (1.2)%
Cumulative capital deployed in low-carbon growth since inception £116.3m £113.7m 2.3%
GHG emissions avoided 132,839 tCO2e 91,116 tCO2e 45.7%
The EU taxonomy alignment 91% 92% 1%
3 Year Performance
Key statistics as at 31 December 2024 At 31 December 2024(2) 31 December 31 December
2022
2023
NAV per Ordinary Share 90.39p 102.99p 97.31p
NAV £116.4m £132.7m £125.4m
Ordinary Share price 21.65p 49.65p 79.3p
Market capitalisation £27.9m £60.1m £102.2m
Share price discount to NAV(1) 76.0% 51.8% 18.5%
Ongoing Charges(1) 2.5% 2.6% 2.5%
Total Shareholder NAV return per Ordinary Share(1) (12.2)% 5.8% 1.6%
Cumulative capital deployed in low-carbon growth since inception £116.3m £113.7m £102.9m
GHG emissions avoided 132,839 tCO2e 91,116 tCO2e 42,716 tCO2e
The EU taxonomy alignment 91% 92% 89%
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 2024.
Portfolio at a Glance
Portfolio summary as at 31 December 2024
Unique and focused portfolio, invested across the hydrogen value chain
Where we invest
· Revenue-generating equipment businesses
· Co-investing with industrial strategics and institutions
· Diversified by hydrogen theme 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 2024.
Simon Hogan Chairman
On behalf of the Board, I must acknowledge that the share price remains at a
steep discount to the Company's Net Asset Value ('NAV'), as is the case for
many listed funds presently. This discount has widened substantially in 2024,
while the NAV has also reduced. Despite the headwinds we are experiencing, the
long-term 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 Adviser's strategy of investing in a portfolio of
hydrogen assets, across the value chain, and in their efforts to address the
share price performance through successful divestments.
Outlook for 2025
The Board supported the Investment Adviser's plans to combine with Cordiant
Capital Inc. ("Cordiant") to enhance the Company's future development.
Cordiant's unexpected decision not to complete this transaction, in April
2025, was disappointing and disruptive for the Company and its shareholders.
In recent months, the Board has engaged extensively with shareholders, who
have reaffirmed their support for the Company's distinctive focus on hydrogen.
At the same time, shareholders have provided valuable input on alternatives
and avenues to improve share price performance and unlock long-term value.
The Board and the Advisers are considering a wide range of options, with
urgency, to deliver shareholder value, (see more details in Note 2 Basis of
Preparation in the Financial Statements) and the Board will update at the AGM.
Hydrogen Industry Landscape
Recent months have been marked by a series of hydrogen project delays and
cancellations, as well as substantial US renewables policy changes, which have
impacted market sentiment and the funding available to hydrogen companies.
Nevertheless, the structural, long-term fundamentals of the sector,
underpinned by governmental policy responses to climate change, energy
security and air quality remains positive, despite these near-term challenges.
Clean hydrogen has a key role today in the decarbonisation of industrial
processes such as oil refining and chemicals. Over time, clean hydrogen will
also have a role in power generation, heat, the transport sector and natural
gas grid blending in some countries. Clean hydrogen is also emerging as a key
component in the production of synthetic fuels such as e-methanol, synthetic
aviation fuel ("e-SAF"), and green ammonia. Green hydrogen capacity world-wide
is set to reach over three million tonnes per annum in the next three years,
which is more than double the estimates a year ago. Global industry investment
in 2024 topped £9 billion, and some $100 billion of government support was
announced world-wide.
There are considerable uncertainties on the macro-economic outlook,
particularly for renewables and new tariffs in the United States. Whilst we
are not invested directly in the United States, our portfolio companies and
their supply chains are not immune from new US tariffs, should they arise. If
Russia's war with Ukraine ends in 2025, we would expect reduced volatility in
energy prices, and a renewed emphasis on energy security and decarbonisation
in many economies, which would be supportive for our sector.
Share Price Discount
Whilst our share price traded at a premium to NAV in 2021 and early 2022, the
price weakness that emerged towards the end of 2022 has continued throughout
2023 and 2024. We recognise that the decline in our share price will have been
disappointing for our investors and is of concern to the Board.
Listed investment companies focused on early-stage growth companies, including
HydrogenOne, are generally trading at discounts to NAV in part due to
macro-economic factors that are outside our control. More specifically,
hydrogen project delays impacting the supply chain have no doubt also played a
role in widening the discount to NAV.
During the year, we were disappointed to write off HH2E and the Thierbach SPV,
when these holdings failed to raise additional investment, which triggered
HH2E entering self-administration. The announcement, made at the end of 2024,
contributed to a sharp decline in our share price. However, we believe the
challenges faced by HH2E were specific to that company and are not reflective
of the performance or quality of the broader portfolio.
I hope this Annual Report sets out the progress that we are making with value
creation in the Company's portfolio, with businesses that the Board and the
Investment Adviser believe can generate substantial value for our investors
over time. The Company and the Investment Adviser continue to focus on
maximising returns for shareholders through realising the value of the
investments and managing costs.
Performance
During the period, the Company's NAV decreased by 12.2%, from £132.7m to
£116.4m (102.99 pence per share to 90.39 pence per share), with reductions
including the write-down of HH2E (6.9p), exchange rate impacts, fund costs and
other portfolio impacts. The Company reported a loss after tax of £16.2
million for the year, equal to 12.6 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.
The majority of the Company's private investments are revenue generating and
producing equipment and technology solutions for clean hydrogen production.
The aggregate revenue from these investments was £85m in the year to 31
December 2024, an increase of 14.9% from the prior year. This growth is as a
result of portfolio companies commercialising their distinctive technologies.
Investment Strategy and Update
The Company is invested in a diversified portfolio of hydrogen related
activities, in private companies and with a particular focus on the innovative
technologies such as fuel cells, electrolysers and gas pipelines that are
needed to unlock profits in clean hydrogen.
With the majority of the Company's capital now deployed, our approach has
focused on incremental investments in existing portfolio companies, with £2.4
million invested in 2024 backing these management teams to deliver their
growth plans.
At the same time, we sought to divest from green hydrogen developer businesses
HH2E and Gen2 Energy in 2024, to realise value and cash for our investors.
Major events in 2024 include:
• HH2E and Thierbach SPV write off of £7.1 million and cancellation of our
divestment plan
• Divestment of Gen2 Energy for c. £3 million to an existing investor
• Conversion of convertible loan notes in Sunfire £0.3 million as part of
£178 million Series E round
• Restructuring of NanoSUN into wholly-owned Swift Hydrogen
• Investment in Strohm of £0.6 million convertible loan notes as part of
£25 million Series I round
• Investment in Cranfield Aerospace of £0.6 million convertible loan notes
in internal funding round
• Exit from remaining listed hydrogen investments, realising £2 million
Valuation
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 2024 was 12.8%, compared to 14.2% at 31 December 2023, largely
due to falling interest rates, which increased NAV by £1.2 million or 0.9
pence per share at 31 December 2024. The details of these valuations are set
out later in the annual report.
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.
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 and improved air quality. The science behind this approach has not
changed, despite shifts in policies and politics. 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 second time in 2024.
The Company's portfolio companies are supplying critical components, such as
electrolysers 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 274,534 tCO2e avoided emissions since our IPO in 2021, an achievement
of which the Company is justifiably proud.
We are tracking GHG emissions from portfolio companies, which totalled 230
tCO2e in 2024 (Scope 1, 2 & 3) and are engaged with these management teams
to reduce GHG intensity over time.
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 27 June 2025 at 1.00pm at the
Company's registered office, 4th Floor, 140 Aldersgate Street, London, EC1A
4HY, 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
separate Circular and Notice of AGM, and thereafter the Investment Adviser
will provide a presentation on the Company's portfolio.
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 portfolio of
clean hydrogen investments and look forward to engaging with them further on
their views on next steps for the Company.
Simon Hogan
Chairman
29 April 2025
Key Portfolio Developments 2024
Q1 2024
· Sunfire announces a successful equity funding round, part of a
wider funding package totalling more than €500 million;
· NanoSUN restructuring to Swift Hydrogen;
Q2 2024
· Elcogen receives a major investment from Baker Hughes marking the
close of a €140 million funding round, underpinning the construction of a
new solid oxide plant in Estonia;
· HiiROC receives a strategic investment to accelerate its
expansion into the US;
· Strohm completes a €30 million funding round, led by new and
existing investors.
Q3 2024
· Sale of Gen2 Energy AS for c.£3 million;
· Sunfire wins a major contract for a 100MW electrolyser at RWE's
industrial-scale hydrogen site in Lingen;
· Strohm awarded the largest ever commercial award for pipe supply
with TotalEnergies, marking an entry into the ultra-deepwater and high CO2
markets for the first time.
Q4 2024
· Sunfire awarded a contract for 50MW electrolyser in Finland
· Elcogen awarded for €24.9 million grant from EU Innovation Fund
· HiiROC and Cemex Ventures announced launch of low carbon hydrogen
deployment at industrial scale
· HH2E and Thierbach SPV self-administration announced
About Clean Hydrogen
· Clean hydrogen displaces fossil fuels, reducing CO2 emissions and
improving air quality
· Some 97 million tonnes per annum ("mtpa") of hydrogen is used
today in manufacturing of oil products, chemicals and steel. The demand to
replace this polluting 'grey' hydrogen with clean hydrogen underpins the clean
hydrogen sector
· By 2027, some 3.0 mpta of green hydrogen is expected to be in
production, following investment of some £50 billion, representing c. 15x of
the current hydrogen market, and predominately used to replace grey hydrogen
· Clean hydrogen can replace fossil fuels in hard to decarbonise
sectors such as power generation and transport
· Clean hydrogen is a key component in the manufacture of clean
e-fuels, such as e-methanol and synthetic aviation fuel ("e-SAF");
· Clean hydrogen is an energy carrier, that can store and
distribute intermittent renewable electricity at a large scale
· Hydrogen, when combined with renewables such as wind and solar
provides, a domestic energy supply option for many countries, reducing
reliance on imported energy and improving energy security.
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 electrolysers 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;
· each Listed Hydrogen Asset must derive at least 50 per cent. of
revenues from hydrogen and/or related technologies; and
· 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.
During the year ended 31 December 2024, the Company realised its remaining
Listed Hydrogen Assets.
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 objective 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.
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 hydrogen supply, financed by specialised offtakers, typically at 5MW to
50MW 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 or
e-methanol 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. During the year, a new wholly owned subsidiary of the Company,
HydrogenOne Capital Growth Investments (1A) LP, was incorporated. Further
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 subsidiaries 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 hydrogen sector
The Company is targeting a Net Asset Value total return of 10 per cent to 15
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 for further details.
decisions and asset monitoring
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.
90.39p (12.2) %*
2023: 102.99p 2023: 5.8%*
Share price return Index
(56.4)%* (32.8)%
2023: (37.4)%* 2023: (36.6)%
Return relative to Solactive Hydrogen Economy Index for year ended 31 Dec 2024
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.
6 4
2023: 25 2023: 7
Invested portfolio split by value (Private: Listed)
100%:0%
2023: 98%:2%
Discount of share price to NAV The Board monitors the premium or discount on an ongoing basis.
76.0%*
2023: (51.8)%*
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.
2.53%*
2023: 2.56%*
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 on-going basis. The Board additionally
monitors developments in the ESG landscape more broadly.
132,839 tCO2e avoided
(2023: 91,116 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 should the Company 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.
Hydrogen sector landscape
An interplay of government policies and energy pricing continue to underpin
the growth rate in the clean hydrogen sector. Governments set frameworks and
funding for delivery of energy transition to net zero, improved air quality
and energy security. Industrial companies and financial markets seek to
capitalise on these policies, in order to offer customers price competitive,
safe and reliable energy and feedstocks.
Clean hydrogen has a key role today in decarbonisation of manufacturing
process such as oil refining and chemicals. Over time, clean hydrogen will
also have a role in heating, the transport sector and natural gas grid
blending. Clean hydrogen is also emerging as a key component in the
manufacture of synthetic fuels such e-methanol, synthetic aviation fuel
("e-SAF"), and green ammonia.
Despite this key present and future role for the clean hydrogen sector, recent
months have been marked by a series of project delays and cancellations in the
clean hydrogen sector. Albeit such announcements are typically from higher
cost and longer-term clean hydrogen opportunities. Equally, the new US
Government, which was elected in 2024, has rolled back on prior policies to
stimulate low carbon energy, instead placing renewed emphasis on fossil fuels.
Looking ahead to 2025, there is the prospect of lower oil & gas prices,
should Russia return to the international market, which could undermine the
case for higher cost renewables. However, the attractiveness of renewables for
energy security in regions such as the EU, which are importers of fossil
fuels, will be supportive. Many of these factors are short term in nature, but
are not helpful for market sentiment for the sector or the Company.
The structural, long-term fundamentals of the sector, remain positive, despite
these near-term effects. Evidencing this, landmark project announcements in
2024 include medium term proposals in Rajasthan, India, where Avaada Group is
intending to commit $12 billion to a Global Renewable Energy Hub, and a
TotalEnergies-led hydrogen and ammonia project in Morocco, costing some $11
billion, and a number of other projects primarily across Africa, Spain and
China.
By our estimates, there has been £9 billion of private sector investment in
clean hydrogen in 2024 alone, which is a 50% increase over 2023 levels. Policy
support announcements around the world exceeded $100 billion in 2024, albeit
much of this has yet to be deployed.
Some 200,000 tonnes per year of green hydrogen production (1.5 GW) was online
globally at the end of 2024, a 25% increase year-on-year. This includes the
start-up of the 110MW Shenghong Petrochemical Green Project, in China and a
new 40MW hydrogen plant in Camden County, Georgia, USA. Adding to this, a
further 2.8 million tonnes per annum of green hydrogen production (21.5 GW)
has passed Final Investment Decision, representing a 15 fold increase in
supplies, and a total investment of $69 billion. This represents an
approximately threefold increase on the outlook compared to end-2023. In
addition, there are some 46.8 mtpa (358GW) of further projects in development
world-wide, an increase of over 300GW from 2023, which could result in over 44
mtpa of hydrogen supply and 4.4 mpta avoided greenhouse gas emissions.
All of this underscores the positive industry outlook and supportive
regulatory regimes for clean hydrogen. This growth outlook for clean hydrogen
demand underpins the order books in many of the Company's investments,
particularly in supply chain sectors such as electrolysers, 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.
Portfolio summary
Company Country of incorporation Value of investment £'000
Private Hydrogen Assets held by the Limited Partnership at 31 December 2024
Sunfire GmbH Germany 32,337
HiiROC Limited United Kingdom 23,925
Elcogen plc United Kingdom 21,019
Strohm The Netherlands 13,885
Cranfield Aerospace Solutions Limited United Kingdom 12,366
Bramble Energy Limited United Kingdom 9,908
Swift Hydrogen Limited United Kingdom 50
Total 113,490
Private assets investment held by the Company at 31 December 2024
HydrogenOne Capital Growth Investments (1) LP United Kingdom 113,729 97.7
Total investments 113,729 97.7
Cash 2,833 3.4
Other net liabilities (123) (0.1)
Total net assets 116,439 100.0
Portfolio review, performance and valuation
Capital Deployment since IPO and Pipeline(1)
The Company has invested £116.3 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. In 2024, the Company decided to exit from
its remaining listed hydrogen holdings and to focus on private assets. The
private companies account for 98% 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 electrolyser and fuel cell makers such as
Elcogen and Sunfire. There are further investments in storage and distribution
businesses, such as Strohm. Green hydrogen accounts for some 28% of the
portfolio, 19.6% in transport-related technologies, and the remaining 50% in
businesses that are in the transition between traditional energy activities
and clean energy. Whilst the UK accounts for over one third of the portfolio
by geography, the Investment Advisor assesses that the bulk of sales from
portfolio companies are derived from the EU and the Asia Pacific region.
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 identified at IPO, with 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 clean hydrogen sector. These
are typically incumbent consumers of grey hydrogen, and companies seeking to
access clean hydrogen supplies and technologies. Accordingly, the Company is
invested alongside multiple industrial strategic investors today.
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 (2024: £2.6 million,
2023: £10.6 million, 2022: £54.3 million, 2021: £39.2 million).
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 2024, 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 2024 have been valued using either the
discounted cash flow ('DCF') methodology or 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. At 31 December 2024, the Company had no Listed Hydrogen Assets.
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 2024 was 12.8%
compared with 14.2% at 31 December 2023.
The Company notes that its NAV reflects portfolio company performance and our
consistent valuation methodology, driven by organic growth in the Company's
private assets, with some offsets from headwinds in the pace of market
development, and write downs in 2024.
By contrast, the share prices of listed hydrogen companies, which we track
with the SOLGHYD index, have been highly volatile and declining since Q3 2021.
Listed hydrogen shares are trading on market expectations rather than
bottom‑up fundamentals. This share price decline is in a large part 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. 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 has identified a basket of listed comparable hydrogen
companies for each private portfolio company, and keeps track of their
financials using Bloomberg. At the end of 2024, the forward exit revenue
multiples of our comparable list of hydrogen companies are trading higher than
their respective private portfolio companies. The average revenue exit
multiple of the private portfolio companies is 2.1x (based on the Company's
valuation models), whereas the average revenue multiple of the listed
comparable hydrogen companies is 3.8x (sourced from Bloomberg).
2024 Performance and 2025 outlook
The Company's NAV decreased by 12.2% from £132.7 million at 31 December 2023
to £116.4 million at 31 December 2024. NAV per share decreased to 90.39p at
31 December 2024. The NAV reduced by 12.6p from 31 December 2023 to 31
December 2024, including the write-down of HH2E (6.9p), exchange rate impacts,
fund costs and other portfolio impacts.
The Company followed a strategy to exit from green hydrogen developer
businesses Gen2 Energy and HH2E and the Thierbach SPV in 2024. The Company
invested in the Series A in both of these businesses, which used these funds
to prepare large scale green hydrogen projects for Final Investment Decision
("FID"). During 2024, the Company swapped its investment in HH2E's Thierbach
SPV for additional equity in HH2E. As Gen2 Energy and HH2E delineated FIDs
costing in excess of £100 million, the Company assessed that it would not be
in a position to invest at that scale, and hence sought to exit from these
businesses at or around the FIDs, in order to crystallise value for
shareholders, and provide further cash for the Company.
Gen2 Energy was sold as planned for c. £3 million in November 2024, which
reflected the unaudited carrying value at 30 June 2024. However, HH2E's major
shareholder's decision to cease funding for HH2E in November 2024 resulted in
the business entering self-administration, halting the Company's plans for a
divestment, and leading to an 8.4 pence per share write off of the Company's
NAV.
HH2E had over-invested in long-lead equipment ahead of its first FID, with
some £59m of shareholder loans committed. HH2E was unable to deliver the
hydrogen gas offtake agreements that new investors had sought in its Series B
funding round. The major shareholder declined to provide further funding to
bridge HH2E to its Series B, resulting in HH2E entering self‑administration.
The Company has assessed that HH2E's write off was due to company-specific
issues and should not impact the outlook for the remainder of its portfolio.
Electrolyser companies Sunfire and HiiROC saw increases in valuation in 2024,
boosting the Company's NAV, underpinned by fresh investment, order books and
financial performance. By contrast, the valuations of low carbon pipeline
manufacturer Strohm, and solid oxide fuel cell maker Elcogen were reduced as a
result of delays to order books and timing issues on manufacturing capacity
ramp ups. Strohm has adapted its strategy to reflect the slower pace in roll
out of offshore hydrogen, by focusing on traditional offshore energy and CCS
opportunities. Elcogen's strategy was adjusted in 2024 to focus on strong near
term growth in stationary power markets, using fuel cell, with reduced
near-term emphasis on sold oxide electrolysis offerings. The development of
the hydrogen transport sector has slowed, particularly in the United Kingdom,
as a result of the push back of Government targets for low carbon transport.
As a result, hydrogen transport and distribution company NanoSUN has been
restructured, taken out of administration into sole ownership by the Company
during 2024, rebranded as Swift Hydrogen and as held as an intellectual
property holding company. HiiROC continued to deploy its thermal plasma
electrolysis technology at two industrial sites in the UK, with Cemex and
Centrica. Cranfield Aerospace continued to develop its hydrogen electric
flight technology, and Bramble progressed innovation in printed circuit board
fuel cells.
Portfolio companies generally require fresh funding in order to sustain their
business models. In 2024, portfolio companies in total accessed over £500
million of funding from equity, debt and grants. Despite this, both NanoSUN
and HH2E failed to access sufficient capital to continue as going concerns in
2024, due to market conditions, and there can be no certainty that sufficient
funding will be available in the future, raising the risk of dilution of the
Company's holdings.
The Company exited its listed hydrogen holdings during 2024, as part of a
strategy to focus on cash management.
Portfolio companies delivered an aggregate £85 million in total revenue in
the year to 31 December 2024, an increase of 14.9% compared to the year to 31
December 2023. This growth was driven by order books in key technologies such
as electrolysers, fuel cells and low carbon pipelines.
The Company's investment activity centred on follow-ons in existing companies
during 2024. During the year ended 31 December 2024, the Company made £2.6
million investments in Sunfire, Strohm, Cranfield and Swift, including
investments made as convertible loans, to limit the impact of equity dilution
from future funding rounds.
Portfolio companies have raised a total of c. £500 million in 2024,
comprising c. £220 million in new equity, secured c. £180 million in grant
funding and c. £100 million in debt and bank guarantees, underpinning the
Company's valuations and the positive sector fundamentals.
We continue to see strong investment interest from industrial strategic
investors in portfolio companies and the hydrogen industry at large, and note
that Cemex and Baker Hughes invested in portfolio companies during the year,
which underpin the investment cases and bring strategic partnerships to the
portfolio.
Private portfolio companies are following strategies to substantially grow
their businesses in the short to medium term. The Investment Adviser
anticipates further operational and revenue growth from portfolio companies in
2025. The portfolio was in aggregate EBITDA negative in 2024, with EBITDA
losses expected to reduce in 2025.
As the Company enters its fourth full year of trading, following its 2021 IPO,
the Investment Adviser is maintaining a pipeline of future opportunities, and
continuing to focus on cost savings, full or partial exits from the current
private companies.
Our portfolio
Sunfire GmbH
www.sunfire.de
A German industrial electrolyser producer, which offers both pressure alkaline
(AEL) and solid oxide electrolysers (SOEC)
Total investment value £32m
% of NAV 28%
Increase in value in 2024 £5m
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 electrolyser 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 electrolyser
market
· Strong product credentials backed by existing customer base and
generated by high quality in-house engineering and product design
· 500MW / annum electrolyser 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 electrolyser market. The company
is serving large-scale green hydrogen projects with pressurized alkaline (AEL)
and solid oxide electrolysers ("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 decarbonize. The electrolysers 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 2024 Sunfire
procured.1.9 gigawatt hours of certified renewable electricity. Also, an ISO
50001 energy management system was successfully implemented and certified at
the production side in Solingen.
Milestones delivered in 2024 · Sunfire secured more than €500 million to accelerate its
growth, including Series E financing round totalling €215 million in equity,
€100 million from European Investment Bank and over €200m from previously
approved grant funding. This makes Sunfire one of the best capitalised
electrolyser manufacturers in the industry.
· Sunfire installed Finland's first industrial-scale electrolysis
plant in Harjavalta, with a 20MW pressurised alkaline electrolyser now in
place.
· Sunfire initiated a front-end engineering and design study
("FEED") for a customer's 500 MW hydrogen project in Europe, amongst the
largest in the sector, scheduled for operation by 2028.
· Sunfire was awarded a major contract for a 100MW pressurised
alkaline electrolyser at RWE's hydrogen site in Lingen, where the company
additionally installed and commissioned a 10MW pressurised alkaline
electrolyser.
· Sunfire secured a contract with Ren-Gas for a 50 MW electrolyser
for Ren-Gas's e-methane plant in Tampere, Finland, adding to Sunfire's order
book.
Elcogen plc
www.elcogen.com
Fuel cell and electrolyser manufacturer with presence in Estonia and Finland
Total investment value £21m
% of NAV 18%
Decrease in value in 2024 £3m
Date of investment May 2022
Co-investors · Hyundai, Baker Hughes, Biofuel OÜ, VNTM Powerfund II
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 cell ("SOFC") and electrolyser cell ("SOEC")
technology platform and manufacturing products at the lowest cost possible by
securing the economies of scale that come with volume production.
Today, this technology is already making a significant impact, particularly in
CHP systems and stationary power units, where the demand continues to grow -
especially in APAC and Europe. The technology is also expanding its reach into
critical areas such as biogas, data centers, EV charging, and marine
applications. Fuel cell applications are a particular focus for the company,
with longer term potential in electrolysers.
Company ESG strategy Elcogen supplies the core technology that sits at the heart of energy security
and the transition away from fossil fuels.
On route to a fossil-free future, Elcogen's offering enhances energy security
with scalable, eco‑friendly power solutions that support diverse fuels and
offer reliable, localized power with the ability to operate in island mode,
ensuring energy supply even during grid disruptions.
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 2024 · In April 2024, the Company announced a strategic investment by
Baker Hughes in Elcogen, part of an overall funding package totalling €140
million to continue to scale up Elcogen's leading solid oxide cell technology
for green hydrogen.
· During 2024, Elcogen was awarded a EUR24.9 million grant from the
EU Innovation Fund. The grant will support Elcogen's next phase in scaling up
its manufacturing capacity of solid oxide electrolyser cells (SOEC) and solid
oxide fuel cells (SOFC) in Estonia.
· Construction of a new 14000 m2 facility in Loovälja Industrial
Park started at the beginning of the year, with operations scheduled to
commence in 2026. This new factory will expand Elcogen's manufacturing
capacity from 10 MW to 360 MW.
· During 2024, Elcogen participated in 19 publicly funded Research
and Development (R&D) projects, collaborating with various European
technology companies and research institutes. Projects included the PilotSOEL
Project, aiming to upscale and automate high-temperature electrolyser
manufacturing for green hydrogen production, in partnership with the Technical
University of Denmark.
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 £24m
% of NAV 21%
Increase in value in 2024 £10m
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
industrial decarbonisation to power management to transport
· Opportunity to support emission 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 2023/24, they 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 2024 · In April 2024, new strategic investment to accelerate HiiROC's
expansion into the US.
· HiiROC and Cemex Ventures announced the launch of low carbon
hydrogen deployment using HiiROC's proprietary Thermal Plasma Electrolysis
technology. Low carbon hydrogen will be produced at Cemex's cement plant in
Rugby, UK, in order to demonstrate commercial deployment of HiiROC technology.
· HiiROC is also working with Centrica, at its Brigg Energy Park,
and with funding from the NZTC to demonstrate the decarbonisation of the Brigg
gas peaker plant using its TPE process.
· HiiROC and Siemens signed a Memorandum of Understanding to
provide advanced control technology and ensure the safe automation of hydrogen
production.
· HiiROC secured triple ISO certification from Lloyd's Register
Quality Assurance ("LRQA") for Quality Management (ISO 9001), Environmental
Management (ISO 14001), and Occupational Health and Safety (ISO 45001), as
part of its plans for commercial roll-out
Strohm Holding B.V
www.strohm.eu
Netherlands-based low carbon pipeline technology company
Total investment value £14m
% of NAV 12%
Decrease in value in 2024 £6m
Date of investment 2022 and 2024
Co-investors Shell Ventures, Chevron Technology Ventures, Evonik Venture Capital, ING
Corporate Investments, SENCO Hydrogen
Why invested · Industry leader in thermoplastic composite pipe ("TCP"), which
has c.50% less greenhouse gas emissions than metal, and is being deployed at
scale in the offshore oil & gas industry
· TCP has applications in the emerging offshore hydrogen and CO2
sectors, where we see significant market potential in the longer term
Company strategy for value creation Strohm is enabling 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 such as CO2 and H2. This includes development,
qualification, and building up track record.
Today Strohm has the first offshore hydrogen pipeline contract, and the first
client qualifications for hydrogen transport. Reflecting a slow-down in
offshore hydrogen, Strohm is focused on traditional energy and CCS.
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). We 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, we are making significant
progress towards achieving our 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. We 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 our own products.
Milestones delivered in 2024 · Secured €30 million in new capital raise. The round was led by
a €20 million investment by new investors, as well as existing shareholders,
including €1.2 million from HydrogenOne through convertibles
· Won third and largest ever thermoplastic composite pipe ("TCP")
contract from ExxonMobil Guyana.
· Added new TCP product based on carbon fibre and polyvinylidene
fluoride, to be used for carbon capture and storage applications to its
portfolio. The product is suitable for injecting CO2 offshore, both in
depleted gas fields and aquifers.
· Announced the award of a new thermoplastic composite pipe ("TCP")
contract by TotalEnergies - the largest commercial award for pipe supply in
Strohm's 16-year history. The contract is for the deployment of high CO2
specification flowlines in over 2,000 meters of water in Brazil, the first
time TCP has been deployed in ultra-deep water.
· Successfully completed installation of its TCP Jumper technology
at the Deepwater Sabah project offshore Malaysia.
Bramble Energy Limited
www.brambleenergy.com
UK-based fuel cell and portable power solutions company
Total investment value £10m
% of NAV 9%
Decrease in value in 2024 £1m
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 has made the SME Climate Commitment which recognises that
climate change poses a threat to the economy, nature and society-at-large, our
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 2024 · Launched PCBFC™ Gen. 2, a fuel cell that represents a 30% cost
reduction from Gen 1.
· Deployed its PCBFC™ technology in a hydrogen powered boat in
the HyTime project, working alongside custom engine builder Barrus.
· Successfully completed Scale-up Readiness Validation ("SuRV")
programme, funded by the Advanced Propulsion Centre UK. As part of SuRV,
Bramble Energy was awarded £1.8 million to develop an optimised fuel cell
stack assembly with the capacity to produce up to 2,000 50 kW stacks/year.
· As part of SuRV, awarded £2 million to develop an optimised fuel
cell stack assembly with the capacity to produce up to 2,000 50 kW
stacks/year. The completion of SuRV has seen Bramble Energy simplify its fuel
cell stack assembly, which includes integrated membrane electrode assembly
into unitised PCB modules (cells)
· PCBFC™ technology entered the third generation from inception,
with a power density of 5.7kW/L achieved in early phases and an industry
leading performance of 7.8 kW/ L achieved by the end of 2024. A new target of
8.5kW/L has been set for 2025 to continue furthering its performance metrics.
Cranfield Aerospace Solutions Limited
www.cranfieldaerospace.com
UK-based passenger flight innovator, powering turboprop flight with hydrogen
Total investment value £12m
% of NAV 11%
Increase in value in 2024 £0.5m
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 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 certified 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 Cranfield are committed to developing a zero emissions aircraft.. Continuous
monitoring and reporting ensure alignment with developing internal ESG
standards. By integrating ESG principles into our business model, we strive 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 2024 · Joined a consortium of 13 partners of the Sustainable Aviation
Test Environment, the UK's first low-carbon aviation test centre based at
Kirkwall Airport in Orkney.
· Cranfield University, a major shareholder in CAeS, was awarded
£69 million by Research England's Research Partnership Investment Fund, and
industry partners and academic institutions, to create the Cranfield Hydrogen
Integration Incubator, which is the largest financial injection for research
that Cranfield University has ever secured.
· Agreed to partner with Evia Aero in the development of airport
infrastructure to enable both electric and hydrogen-electric aircraft
operations at regional airports.
· Released UK Regional Air Mobility Opportunity report in
collaboration with Electric Aviation Maven. The analysis outlines that
hydrogen flight can access 90% of the 684 potential routes identified,
offering significant economic and environmental benefits.
Listed Hydrogen Assets
The Company fully realised the listed portfolio during 2024.
Analysis of financial results
The Financial Statements of the Company for the year ended 31 December 2024
are set out in the Annual Report.
Net assets
Net assets decreased from £132.7 million at 31 December 2023 to £116.4
million at 31 December 2024. The decrease in net assets was driven largely by
the write down of the investment in HH2E.
The net assets of £116.4 million comprise £113.7 million portfolio value of
investments, including the holding in the HydrogenOne Partnership, and the
Company's cash balances of £2.8 million, and other net liabilities of £0.1
million.
The Limited Partnership's net assets of £113.7 million comprise £113.5
million portfolio value of investments (including accrued interest), cash
balances of £0.3 million and liabilities of £56,000.
Cash
At 31 December 2024, the Company and the HydrogenOne Partnership (together the
'Group') had a total cash balance of £3.1 million (2023: £4.7 million),
including £0.3 million in the Limited Partnership, which is included in the
Company's balance sheet within 'investments held at fair value through profit
or loss'.
Loss for year
The Company's total loss before tax for the year ended 31 December 2024 is
£16.2 million (31 December 2023: profit of £7.3 million), generating a loss
per Ordinary Share of 12.60 pence (31 December 2023: return of 5.68 pence per
share).
In the year to 31 December 2024, the losses on fair value of investments were
£15.1 million (31 December 2023: gains of £9.1 million).
The expenses included in the income statement for the year were £1.3 million,
in line with expectations. These comprise £34,000 Investment Adviser fees and
£1.2 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 2024 was 2.53% (31
December 2023: 2.56%). 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.
· 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.
· Reported to the Principles of Responsible Investment (''PRI'')
for the second 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.
· Reported on Carbon Disclosure Project ("CDP"), SRI Services Fund
EcoMarket database ("SRI"), S&P Global Corporate Sustainability Assessment
("CSA") for the second time, in 2024.
· The Company's Board gender diversity remained 50%.
· Full details of the Company's sustainability performance and
strategy can be found in a separate Sustainability Report, which will be
available on the Company's website.
· 132,839 tonnes of Greenhouse Gas (tCO2e) emissions avoided in
FY2024 (FY2023: 91,116 tCO2e) (over 576 times the combined scope 1, 2 and 3
emissions of the Company in the same period) and 274,534 tCO2e (FY2023:
141,695) since IPO.
· Potential 537,193 megawatt-hour (MWh) lifetime clean energy
capacity in FY2024 (FY2023: 571,294 MWh) and 1,334,487 MWh (FY2023: 797,294)
since IPO;
· 6.70 megawatt (MW) of fuel cell and electrolyser units sold in
FY2024 (FY2023: 0.59 MW) and 11.60 MW since IPO (FY2023: 4.9 MW) - all
adjusted for the Company's shareholding; and
· Most of the Company's investments either directly or indirectly
displace fossil fuels, making a clear contribution to achieving the Paris
Accords target of limiting global temperature rises to below 2 degrees and
ideally limiting them to 1.5 degrees.
Our Impact:
£116.3 million
Deployed in low-carbon growth;
132,839 tCO2e
Emissions avoided in FY 2024 and 274,534 tCO2e avoided since IPO;
537,193 MWh
Potential MWh lifetime clean energy capacity in FY2024 and 1,334,487 MWh since
IPO;
91% EU Taxonomy
Portfolio alignment with the EU taxonomy for FY 24 (92% FY 23);
1.81 tCO2e/£m
Carbon footprint (FY 23 2.22 tCO2e/ £m);
Methodology
Emissions are calculated in line with the Greenhouse Gas Protocol. The Company
has no direct employees, operations, or permanent office space, resulting in
zero Scope 1 and 2 emissions. All material emissions are categorised as Scope
3, specifically comprising the investment portfolio of Private Hydrogen
Assets, which forms the focus of this report. In alignment with EU SFDR
requirements, portfolio emissions are presented on a look-through basis, with
emissions aggregated by scope and presented as Scope 1, 2, or 3, rather than
being consolidated within Scope 3 category 15 (investments). Further details
on the emissions calculation methodology is presented in the Annual Report.
2024 2023
Scope 1 26 tCO2e 18 tCO2e
Scope 2 59 tCO2e 81 tCO2e
Scope 3 146 tCO2e 180 tCO2e
Carbon footprint(4) 1.81 tCO2e/£m 2.22 tCO2e / £m Val
GHG Intensity 42.43 tCO2e/£m 55.3 tCO2e / £m Rev
Avoided GHG 132,839 tCO2e 91,116 tCO2e
Avoided Cumulative 274,534 tCO2e 141,695 tCO2e
Energy use - UK(2) 132,839 kWh 268,669 kWh
Energy use - Global(3) 678,000 kWh 2,157,604 kWh
Principles of Responsible Investment
During the year the Company submitted its 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 the current year. No specific energy efficiency actions have
been taken by the Company during the year.
Policy, Governance and Strategy
Confidence Building Measures
Direct - Private Equity
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 Carbon Footprint as per SFDR PAI Annex I tables
3 This metric reflects the electricity, energy, and fuel consumption
(including transportation) of Private Hydrogen Assets located within the UK,
presented proportionate to the Company's equity share.
4 Carbon footprint and GHG intensity are distinct metrics that
measure environmental impact. Carbon footprint represents the total emissions
of investee companies divided by the current value of all investments,
essentially showing emissions per value invested. GHG intensity measures
emissions in relation to company revenues, indicating how emissions relate to
economic output.
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; - Market announcements, including quarterly NAV announcements;
The Investment Adviser and the Board believe that Shareholders and their - Quarterly factsheets; - Portfolio company valuation, financial performance and Company
support is critical to the continuing existence of the business and delivery
valuation methodology;
of its long- term investment strategy. - Investor webcasts and presentations (through the Investment Adviser);
- Commentary on macro trends impacting the Hydrogen sector.
It is important to the Company's continued success to have the potential to - Institutional investor meetings (one-to-one and group), primarily
access equity capital in order to expand the Company's portfolio over time in through the Investment Adviser and corporate broker;
order to further diversify the investment portfolio and create economies of
scale. - Regular institutional investor feedback received from the Investment
Adviser and corporate broker;
- Research analyst presentations through the Investment Adviser.
- AGM; and
- Website.
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 regard
- Regular reports and presentations from the Investment Adviser; and to the Company's SFDR reporting and Article 9 classification. The Board holds
annual strategy days at which the Investment Adviser is invited to present and
- Ad hoc meetings and calls. 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; and 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; and 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.
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 2024, over 95% of the capital raised was invested. No new
and investment policy as disclosed in the Annual Report and with consideration opportunities that have been identified by the Investment Adviser and which investments were completed during the year, only follow on investments in
for the wider group of stakeholders. have undergone a process of analysis, including considerations relating to existing portfolio companies. Other investment opportunities were reviewed but
environmental, social and governance issues; were rejected as they did not pass the investment screening process.
- The Board reviews the financial and operating performance of the As part of the ongoing portfolio performance monitoring, the feedback given by
Company's portfolio companies on a regular basis; the Investment Adviser is used to review the Company's policies and procedures
to ensure open lines of communication, and operational efficiency regarding
- In many cases, investments in Private Hydrogen Assets are linked to its Portfolio Companies.
operational and financial targets, which the Board monitors; and
- 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. See ESG section of the Annual Report.
with an ESG policy integrated in investment decisions and asset monitoring.
The Company issues an annual Sustainability Report that sets out the Company
policy and track record in more detail.
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 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. If a dividend is to be
declared, interim dividends are determined by the Board and a final dividend
is subject to shareholder approval at the AGM.
Dividend policy
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
£1,130,000 (31 December 2023: loss of £1,328,000). The Company made a
capital loss after tax of £15,101,000 (2023: gain of 8,645,000). Therefore
the total return after tax for the Company was a loss of £16,231,000 (2023:
profit of £7,317,000). No dividends have been paid or are proposed for the
year to 31 December 2024 (2023: 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.
↑ Increasing ↔ Stable ↓ Reducing
Principal Risks and Uncertainties Mitigation
Regulatory The Board and Investment Adviser has significant experience in the energy ↔
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. In addition, greater regulation in the financial services industry diligence occurs prior to any investments and during the lifetime of their
could materially affect the Company's business. 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 ↑
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
support to underpin the scale needed to drive stand-alone cost Non‑Executive Directors. The Company's portfolio consists of a range of
competitiveness. Governments worldwide are showing such support today, but hydrogen projects in different countries and at different points in the
that may be volatile over the investment time horizon of the Company. emerging value chain, to further mitigate the risk of policy volatility.
Operational The Investment Adviser conducts a vigorous due diligence process and works ↑
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 ↑
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.
· 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. In addition, the
Investment Adviser has representation on each investee board either through a
director or board observer position.
Future acquisitions and capital raises The Company's Broker monitors the market for the Company's shares and reports ↑
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. The Board and AIFM oversee the investment pipeline and monitor its progress in
relation to Company targets.
Risk assessment has increased due to an increase in the share price discount
compared to the net asset value of the Company during the year. 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.
Liquidity and Refinancing The Investment Adviser closely monitors the liquidity in the market and ↑
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 assets.
Extreme market volatility can disrupt the capital raising process and ability
to raise monies to repay a debt demand in full. The Investment Adviser, AIFM and the Board continuously monitor forecast and
actual cashflows from operating, financing, and investing activities to
Investments in Private Hydrogen Assets are illiquid in nature and may take a consider payment of dividends, or further investing activities.
longer period of time to realise in order to fund the Company's operations or
meet its expenses.
The Company has and may continue to sell liquid assets to meet its expenses at
a time when valuations are lower for some assets. Should the Company no longer
have sufficient liquid assets available to meet a projected 12 months' worth
of expenditure, the going concern status of the company may be called into
question (see further details in Note 2 Basis of preparation in the Financial
Statements).
This risk has increased due to market volatility and the Company's share price
trading at a significant 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 ↔
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 key
complete their role efficiently, on time and in line with expectation operational counterparties, such as the Administrator, looking at 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 ↔
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 and utilises International Private Equity and Venture
Capital Valuation ("IPEV") methodologies to calculate fair value. Projections The valuation polices and valuations will be reviewed by the Valuation
will primarily be based on the Investment Adviser's assessment and are only Committee on a quarterly basis, together with signing off on the Private
estimates of future results based on assumptions made at the time of the Hydrogen Asset values.
projection. Actual results may vary significantly from the projections, which
may reduce the profitability of the 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 ↔
order to diversify knowledge across the expanding team.
The Investment Adviser is a small Company with minimum employees. As such,
there are significant Key Person risks and should they become unavailable, This risk is covered in the risk register and reported on at each Board
this could have a negative impact on the Company's ability to achieve its meeting.
investment objective.
Tax The corporate structure of the Company is reviewed periodically by the Company ↔
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 ↑
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.
The current US administration's aggressive foreign policy regarding trade
tariffs has had significant impact on financial markets and depending on where
tariff levels settle, may have a significant impact on the global trade
landscape.
Viability statement
The Directors have assessed the viability of the Group for the period to 31
December 2027 (the "Viability Period"). The Board believes that the Viability
Period, being approximately three 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 above and the continuation vote
due in 2026. The viability period has been reduced from five years on account
of the financial situation of the Company and the impending continuation vote.
This assessment has been made on the assumption that the cashflow shortfall is
resolved by the action plans laid out in Note 2 Basis of Preparation in the
Financial Statements, which the Board consider to be achievable, based on the
progress on cost cutting made to date and the Company's ability to realise
part of its investment portfolio through secondary sales.
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 as an ordinary resolution that
the Company continue its business as presently constituted at each fifth
annual general meeting thereafter that the Company continues its business as
presently constituted.
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 notes the current liquidity position of the Company and the high
discount to NAV of the current share price, and recognises this increases the
risk that the continuation vote will not be passed. The Board believe the
actions to improve liquidity described in Note 2 Basis of Preparation in the
Financial Statements will put the Company in a stronger position over the
coming year, and the performance of the remaining Private Hydrogen Assets and
the expected growth in the clean energy and hydrogen sectors, driven by
increased governmental support, mean the prospects for the Company remain
positive and this will be reflected in improved performance of the Company
over the next twelve months.
The Investment Adviser continues to implement all options to sustain the
financial position of the Company as described in Note 2 Basis of preparation
in the Financial Statements. Measures that are being undertaken include
reducing costs, a strategy to divest of portfolio positions in full or in
part.
The Board considered the Group's current financial position and its ability to
raise funds to meet the Group's liabilities over the next twelve months and
beyond. The Board considered each of the actions currently being taken to
address the financial situation, and the likelihood of success for each of the
actions. In addition, it considered the impact these actions would have on the
viability 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 and the tariffs
being implemented by the new US administration, 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's 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, along with the
likely impact of the current global government policy affecting the hydrogen
sector. 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 29 April 2025.
For and on behalf of the Board
Simon Hogan
Chairman
29 April 2025
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
29 April 2025
Financial statements
Parent and consolidated statement of comprehensive income
For the year ended 31 December 2024
Year ended 31 December 2024 Year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains on investments 4 - (14,873) (14,873) - 9,150 9,150
Losses on currency movements - (225) (225) - (5) (5)
Gross investment (losses)/ gains - (15,098) (15,098) - 9,145 9,145
Income 5 128 - 128 212 - 212
Total (losses)/gains 128 (15,098) (14,970) 212 9,145 9,357
Investment Adviser fee 6 (34) - (34) (144) - (144)
Other expenses 7 (1,224) (3) (1,227) (1,396) (500) (1,896)
(Loss)/profit before finance costs and taxation (1,130) (15,101) (16,231) (1,328) 8,645 7,317
Finance costs - - - - - -
Operating (loss)/profit before taxation (1,130) (15,101) (16,231) (1,328) 8,645 7,317
Taxation 8 - - - - - -
(Loss)/profit for the year (1,130) (15,101) (16,231) (1,328) 8,645 7,317
(Loss)/return per Ordinary Share (basic and diluted) 12 (0.88)p (11.72)p (12.60)p (1.03)p 6.71p 5.68p
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 form an integral part of these Financial Statements.
Parent and consolidated statement of financial position
As at 31 December 2024
Notes 31 December 31 December
2024 2023
£'000 £'000
Assets
Non-current assets
Investments held at fair value through profit or loss 4 113,729 128,183
Current assets
Cash and cash equivalents 2,833 4,626
Trade and other receivables 9 49 51
Total current assets 2,882 4,677
Total assets 116,611 132,860
Current liabilities
Trade and other payables 10 (172) (190)
Total liabilities (172) (190)
Net assets 116,439 132,670
Equity
Share capital 11 1,288 1,288
Share premium account 124,928 124,928
Capital reserve (5,109) 9,992
Revenue reserve (4,668) (3,538)
Total equity 116,439 132,670
Net asset value per Ordinary Share 13 90.39p 102.99p
Approved by the Board of Directors on and authorised for issue on 29 April
2025 and signed on their behalf by:
Simon Hogan
Director
HydrogenOne Capital Growth plc is incorporated in England and Wales with
registration number 13340859.
The notes form an integral part of these Financial Statements.
Parent and consolidated statement of changes in equity
For the year ended 31 December 2024
Share
Share premium Capital Revenue
Capital account reserve reserve Total
Notes £'000 £'000 £'000 £'000 £'000
Opening balance as at 1 January 2024 1,288 124,928 9,992 (3,538) 132,670
Loss for the year - - (15,101) (1,130) (16,231)
Closing balance as at 31 December 2024 1,288 124,928 (5,109) (4,668) 116,439
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
The notes form an integral part of these Financial Statements.
Parent and consolidated statement of cash flows
For the year ended 31 December 2024
Notes Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Cash flows from operating activities
Interest income 127 211
Dividend income 1 1
Management expenses (1,261) (2,040)
Foreign exchange (losses)/gains (225) (5)
Decrease in trade and other receivables 2 590
(Decrease)/increase in trade and other payables (18) 37
Net cash flow used in operating activities (1,374) (1,206)
Cash flows from investing activities
Purchase of investments (4,959) (12,472)
Sale of investments 4,540 112
Net cash flow used in investing activities (419) (12,360)
Decrease in cash and cash equivalents (1,793) (13,566)
Cash and cash equivalents at start of year 4,626 18,192
Cash and cash equivalents at end of year 2,833 4,626
The notes form an integral part of these Financial Statements.
Notes to the parent and consolidated financial statements
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 4th Floor, 140 Aldersgate Street, London,
EC1A 4HY.
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 investment 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 is 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 a
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 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 realisation 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.
During the year, a new wholly owned subsidiary of the Company, HydrogenOne
Capital Growth Investments (1A) LP ("Limited Partnership 1A"), was
incorporated pursuant to the sale of GEN2 Energy AS. Following the completion
of the sale during the year, the Company withdrew as a limited partner of
Limited Partnership 1A.
The General Partner of Limited Partnership 1A is HydrogenOne Capital Growth
Investments (1A) GP LLP (the "General Partner 1A"), a wholly owned subsidiary
of the Company. The General Partner 1A was incorporated in England and Wales
on 3 June 2024 with registered number OC452544. The General Partner 1A shares
the responsibility for the management, operation and administration of the
business and affairs of Limited Partnership 1A with a third party. General
Partner 1A is entitled to receive 1% of the proceeds received by Limited
Partnership 1A (if any).
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,
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 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.
Liquidity reserve
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
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, the
General Partner and General Partner 1A (together referred to as the "Group").
At 31 December 2024, the statement of financial position of the General
Partner and General Partner 1A consisted of issued share capital and
corresponding share capital receivable in the amount of £1 (2023: £1) and
£10 respectively. The General Partners had no income, expenditure or cash
flows for the period.
Due to the immaterial balances of the General Partners 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 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 and the General Partner 1A (together the 'General
Partners'); as the Company wholly owns the General Partners, is exposed to and
has rights to the returns of the General Partners and has the ability through
its control of the General Partners' activities to affect the amount of its
returns from the General Partners.
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 focussed 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 Partners
The General Partners provide investment related services to their respective
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 Partners.
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 Company and Group had at 31 December 2024 unrestricted cash of £3.1
million (2023: £4.6 million). At the date of approval of these Financial
Statements, the Company and Group had cash resources of £2.4 million and
annual expenses are estimated to be £3.1 million. Based on the current cash
position and the estimated expenses of the Company and the Group over the next
twelve months, the Board has determined that there will be a shortfall of cash
without any further action. The Directors have concluded that this
represents a material uncertainty that may cast significant doubt on the
Company and Group's ability to continue as a going concern. The Company's
strategy has been set to address this.
Further cost savings are anticipated in 2025. The Company continues to seek
both secondary sales of parts of its portfolio, and full exits from portfolio
companies. The Company continues to monitor opportunities for a fresh equity
raise, although the discount of the share price to the NAV may prevent this.
The Board and the Investment Adviser are considering a wide range of options,
with urgency, to deliver shareholder value, with confidential discussions
underway with third parties.
The Directors acknowledge that there are risks attached to each of these
plans. For example all the cost savings identified may not be achieved and may
be offset by inflationary cost rises elsewhere. However the Board and the
Investment Adviser are confident a secondary sale of part of one of the
investments in the portfolio can be achieved based on the Company's prior
experience of realising Gen2 Energy and ongoing secondary transactions in the
Private Hydrogen Assets. As such the Board believe the plans are achievable,
whether together or in isolation and will cover the cash shortfall.
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. The Board notes the current liquidity position of
the Company as described above, and also the high discount to NAV of the
current share price, and recognises this increases the risk that the
continuation vote will not be passed. However the Board believe the actions
described to improve liquidity will put the Company in a stronger position
over the coming year, and the performance of the remaining Private Hydrogen
Assets and the expected growth in the clean energy and hydrogen sectors mean
the prospects for the Company remain positive and this will be reflected in
improved performance of the Company over the next twelve months. In the event
that continuation vote is not passed, the Directors are required to draw up
proposals for shareholders' approval for the reconstruction or reorganisation
of the Company, which would require a special resolution of the shareholders.
Following the declaration of the Company's Net Asset Value as at the 31
December 2024, on 5 February 2025, the Company's share price was 21.95p
representing a 75.7% discount to the Net Asset Value (31 December 2024:
discount of 76.0%).
Based on the above, the Directors continue to adopt the going concern basis in
preparing these Financial Statements. Accordingly, these Financial Statements
do not include any adjustments to the carrying amount or classification of
assets and liabilities that would result if the Company and Group were unable
to continue as a going concern.
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 them.
The General Partners provide investment related services to their respective
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 Partners. 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 Partners met the criteria
outlined in the accounting standards.
Going Concern
As noted earlier in this note 2, the Board recognises the current financial
situation of the Company and notes the operational resources available to the
Company and Group are not currently adequate to cover the expenses of the
Company for at least twelve months from the date of approval of these
Financial Statements. The Board has reviewed the actions being taken to
address the current cash position and have concluded that the criteria for
preparing the Financial Statements on a going concern basis have been met.
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 2024
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.
• Amendments to IAS 21 - Lack of Exchangeability (effective for annual
periods beginning on or after 1 January 2025)
• Amendments to the Classification and Measurement of Financial Instruments
Amendments to IFRS 9 and IFRS 7 (effective for annual periods beginning on or
after 1 January 2026)
• IFRS 18 Presentation and Disclosure in Financial Statements (effective for
annual periods beginning on or after 1 January 2027). IFRS 18 will replace IAS
1 Presentation of Financial Statements.
The Board have assessed new but not yet effective standards applicable to the
Company and have concluded that, with the exception of IFRS 18 they will not
have a material impact to the Company. The Company is still in the process of
assessing the impact of IFRS 18, particularly with respect to the structure of
the Company's statement of comprehensive income, the statement of cash flows
and the additional disclosures required for MPMs. The Company is also
assessing the impact on how information is grouped in the financial
statements, including for items currently labelled as "other".
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. For Listed Hydrogen Assets,
realised (losses)/gains are calculated using the average cost method.
Distributions received from the Limited Partnership are treated as a return of
capital and reduce the cost basis of the Company's investment in the Limited
Partnership. If the Limited Partnership's cost basis if reduced to nil, any
subsequent distributions will be recorded as realised gains.
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 Partners do 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 focused 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
2024 2023
£'000 £'000
Investments held at fair value through profit or loss
Listed Hydrogen Assets - 2,322
Limited Partnership 113,729 125,861
Closing valuation of financial assets at fair value through profit or loss 113,729 128,183
(b) Movements in valuation
£'000 £'000
Opening valuation of financial assets at fair value through profit or loss 128,183 106,673
Less opening unrealised gain on investments (10,606) (1,426)
Opening cost of financial assets at fair value through profit or loss 117,577 105,247
Additions, at cost - Listed Hydrogen Assets - 74
Additions, at cost - Limited Partnership 4,959 12,398
Disposals, at cost - Listed Hydrogen Assets (7,620) (142)
Disposals, at cost - Limited Partnership (2,600) -
Cost of financial assets at fair value through profit or loss at the end of 112,316 117,577
the year
Unrealised loss on investments - Listed Hydrogen Assets - (5,299)
Unrealised gain on investments - Limited Partnership 1,413 15,905
Closing valuation of financial assets at fair value through profit or loss 113,729 128,183
(c) (Loss)/ Gain on investments
£'000 £'000
Movement in unrealised gains/(loss) - Listed Hydrogen Assets 5,299 (1,277)
Movement in unrealised (loss)/gains - Limited Partnership (14,492) 10,457
Realised loss on investments - Listed Hydrogen Assets (5,680) (30)
Total (loss)/gains on investments (14,873) 9,150
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 2024 (2023:
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 2024
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Listed Hydrogen Assets - - - -
Limited Partnership - - 113,729 113,729
- - 113,729 113,729
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
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 2024 is
£113,729,000 (2023: £125,861,000). The movement on the Level 3 investments
during the year is shown below:
31 December 31 December
2024 2023
£'000 £'000
Opening balance 125,861 103,006
Investment in Limited Partnership 4,959 12,398
Distribution from Limited Partnership (2,600) -
Movement in unrealised gains on investment in Limited Partnership (14,491) 10,457
Closing balance 113,729 125,861
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 seven Private Hydrogen Assets
(2023: ten).
The following table reconciles the fair value of the Private Hydrogen Assets
and the NAV of the Limited Partnership.
31 December 31 December
2024 2023
£'000 £'000
Investment in Private Hydrogen Assets 113,490 126,206
Plus/(minus): net other assets/(liabilities) 239 (345)
NAV of the Limited Partnership 113,729 125,861
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 2024, 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 32,337 DCF Discount rates 10.6-10.7%
Elcogen Group plc United Kingdom 21,019 DCF Discount rates 8.6-8.7%
HiiROC Limited United Kingdom 23,925 DCF Discount rates 12.8-13.0%
Strohm Holding BV Netherlands 13,885 DCF Discount rates 13.5-13.6%
Bramble Energy Limited United Kingdom 9,908 DCF Discount rates 15.3-15.5%
Cranfield Aerospace Solutions Limited United Kingdom 12,366 DCF Discount rates 16.8-16.9%
Swift Hydrogen Limited(1) United Kingdom 50 Net Assets n/a n/a
1 During the year NanoSUN Limited has been restructured, taken out of
administration into sole ownership by the Company and rebranded as Swift
Hydrogen Limited.
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
* 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.
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
2024 2023
Discount rates applied in full DCF valuation +1% (4,624) (7,767)
-1% 5,794 8,584
Weighting between DCF, indicative offers and Net Asset valuation +/- 10% weighting to DCF - 968/(968)
+/- 10% weighting to indicative offers - 124/(124)
+/- 10% weighting to Net Assets 1,092/(1,092)
The European Central Bank ('ECB') and the Bank of England ('BOE') base rates
at 31 December 2024 were 3.15% and 4.75% respectively. We anticipate that the
base rates will ease and fall (based on independent research) reaching 2.00%
for ECB and 4.00% 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 2023, the
ECB and the BOE base rates were 4.5% and 5.25% respectively. We anticipated
that the terminal base rate would ease and fall (based on independent
research) reaching 2.5% for ECB and 3.0% 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 was
weighted between DCF, indicative offers and Net assets based on the expected
likelihood of each scenario occurring. We applied a sensitivity of +/- 10%
weighting to each scenario, with the movement being shared equally with the
remaining two scenarios, as this was deemed to be a reasonable possible shift
in the scenario weightings as of the valuation date.
For those investments that have been fair valued using the price of a recent
investment based on unadjusted third-party pricing information, 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
2024 2023
£'000 £'000
Overseas dividend income 1 1
Bank interest 127 211
Total income 128 212
6. Investment Adviser fee
Year ended 31 December 2024 Year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment Adviser fee 34 - 34 144 - 144
At 31 December 2024 an amount of £nil (2023: £nil) was payable to the
Investment Adviser in respect of the Investment Adviser fee.
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 the 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. During the period no carried interest fees (31 December 2023:
£403,343) were accrued as payable to the Carried Interest Partner.
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 £1,957,439 (31 December 2023:
£1,723,369). 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 2023: £nil). The General Partner of Limited
Partnership 1A is entitled to receive 1% of the proceeds received by Limited
Partnership 1A (if any). No GPS was received from Limited partnership 1A
during the year.
7. Other expenses
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Administration & Secretarial Fees 209 205
Other expenses 181 191
Directors' Fees 173 173
Audit Fees 168 162
AIFM Fees 109 97
PR & Marketing 107 262
Brokers Fees 60 66
Custodian Charges 50 50
D & O Insurances 44 47
Printing Fees 38 38
Website Fees 32 39
Registrar's Fees 21 21
LSE Fees 20 15
Legal Fees 12 30
Total revenue expenses 1,224 1,396
Expenses charged to capital:
Capital transaction costs 3 500
Total expenses 1,227 1,896
During the year, no non-audit service fees were paid.
8. Taxation
(a) Analysis of charge in the year
Year ended 31 December 2024 Year ended 31 December 2023
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 2024 Year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(Loss)/profit on ordinary activities before taxation (1,130) (15,101) (16,231) (1,328) 8,645 7,317
Corporation tax at 25% (2023:23.55%) (283) (3,775) (4,058) (312) 2,033 1,721
Effects of:
Non-taxable (gains)/losses on investments - 3,774 3,774 - (2,151) (2,151)
Excess management expenses not utilised in year 283 - 283 312 30 342
Disallowable expenses - 1 1 - 88 88
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 £1,246,000 (2023: £963,000) as a result of excess management expenses of
£5,103,000 (2023: 3,853,000), 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 2024 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
2024 2023
£'000 £'000
Prepayments 42 41
Other receivables 7 10
49 51
10. Trade and other payables
31 December 31 December
2024 2023
£'000 £'000
Amounts falling due within one year:
Accrued expenses 172 190
172 190
11. Share capital
31 December 2024 31 December 2023
Allotted, issued and fully paid Ordinary Shares of Nominal value of Nominal value of
shares shares
1p each: No. of shares (£) No. of shares (£)
Brought forward 128,819,999 1,288,199.99 128,819,999 1,288,199.99
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.
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 2024 of 128,819,999 (2023:
128,819,999).
Year ended 31 December 2024 Year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(Loss)/profit for the year(£'000) (1,130) (15,101) (16,231) (1,328) 8,645 7,317
Return per Ordinary Share (0.88)p (11.72)p (12.60)p (1.03)p 6.71p 5.68p
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
2024 2023
£'000 £'000
Net Asset Value (£'000) 116,439 132,670
Ordinary Shares in issue 128,819,999 128,819,999
NAV per Ordinary Share 90.39p 102.99p
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 (2023: £68,250), £57,750 to the Chairman of the
Audit and Risk Committee (2023: £57,750) and £47,250 to the other Directors
(2023: £47,250) 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
2024. 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 31 December
2024 2023
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 2024, the principals of the Investment Adviser, Dr JJ
Traynor and Mr R Hulf, each held 100,000 Ordinary Shares of the Company (31
December 2023: 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 2024, INEOS Offshore BCS held 25 million Ordinary
Shares of the Company (2023: 25 million Ordinary Shares).
Throughout the year David Bucknall, Chief Executive Officer of the INEOS
Energy group of companies was the Board representative of INEOS Energy, having
been appointed 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. On 21 March 2025, David Bucknall stepped down as the
Board representative and Erik Magnesen was appointed in his place.
Carried Interest and General Partners
Details of the Carried Interest Partner 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 £69,867
and of £16,389 (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 had 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 had agreed to act as custodian to
the Company.
The Custodian was entitled to a minimum annual fee of £50,000 (exclusive of
VAT) per annum. The Custodian was also entitled to a fee per transaction taken
on behalf of the Company. Post year end, the Custodian Agreement has been
terminated following the realisations of the Listed Hydrogen Assets.
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 2024 and 31 December 2023, 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 2024 31 December 2023
Other assets Other assets
Investments Cash & liabilities Total Investments Cash & liabilities Total
Currency £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Danish Krone - - - - 180 - - 180
Euro - - - - 806 - - 806
Korean Won - - - - 501 - - 501
Norwegian Krone - - - - 259 - - 259
Swedish Krona - - - - 3 - - 3
US Dollar - - - - 213 - - 213
- - - - 1,962 - - 1,962
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 2024, the Limited Partnership's
non-Pound denominated investments amounted to £67,241,000 (2023:
£84,586,000). This increases foreign currency risk and may increase
volatility of the Company and Group's net asset value.
Notwithstanding the currency exposure of the Limited Partnership's non-Pound
Sterling denominated investments as explained in the preceding paragraph, at
31 December 2024, 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 £Nil (2023: £98,100).
(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 £3,100,000 (2023: £4,626,000). 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 £62,000, with a decrease of
2.0% having an equal and opposite effect (2023: an increase or decrease of 2%
would have had a positive or negative affect of £92,520).
The Company and Group's interest and non-interest bearing assets and
liabilities as at 31 December 2024 and 31 December 2023 are summarised below:
31 December 2024 31 December 2023
Interest Non-interest Interest Non-interest
bearing bearing Total bearing bearing Total
£'000 £'000 £'000 £'000 £'000 £'000
Assets
Cash and cash equivalents 2,833 - 2,833 4,626 - 4,626
Trade and other receivables - 49 49 - 51 51
Investments held at fair value through profit or loss - Listed Hydrogen Assets - - - - 2,322 2,322
Investments held at fair value through profit or loss - Limited Partnership - 113,729 113,729 - 125,861 125,861
Total assets 2,833 113,778 116,611 4,626 128,234 132,860
Liabilities
Trade and other payables - (172) (172) - (190) (190)
Total liabilities - (172) (172) - (190) (190)
(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 2024, the
Company and Group held Listed Hydrogen Assets with an aggregate fair value of
£nil (2023: £2,322,000).
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 £nil in the Company and Group's loss after taxation for the year
ended 31 December 2024 and the Company and Group's net assets at 31 December
2024 (2023: £232,200).
At 31 December 2024, 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 impact of market conditions on the Limited Partnership's portfolio of
Private Hydrogen Assets is reflected in the discount rate sensitivity analysis
as outlined in the unobservable inputs table in note 4. The valuations may
also 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 31 December
2024 2023
£'000 £'000
Trade and other receivables 49 51
Cash and cash equivalents 2,833 4,626
Total 2,882 4,677
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 (2023: AA), EFG international Bank is A (2023: A), Royal Bank of Scotland
A+ (2023: A+) and the Goldman Sachs Liquid reserve fund is AAA (2023: 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 2024 31 December 2023
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
Investments at fair value through profit or loss - Limited Partnership - 113,729 113,729 - 125,861 125,861
Trade and other receivables 49 - 49 51 - 51
Cash and cash equivalents 2,833 - 2,833 4,626 - 4,626
Total assets 2,882 113,729 116,611 6,999 125,861 132,860
Liabilities
Trade and other payables (172) - (172) (190) - (190)
Total liabilities (172) - (172) (190) - (190)
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
focused 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 £116,439,000 (2023:
£132,670,000).
16. Subsidiary and related entities
Subsidiary
The Company owns 100% of HydrogenOne Capital Growth (GP) Limited and as at 31
December 2024 and 31 December 2023 and HydrogenOne Capital Growth Investments
(1A) GP LLP as at 31 December 2024.
Effective Country of Issued share Registered
Subsidiary name ownership ownership Principal activity capital address
HydrogenOne Capital Growth 100% United General partner of HydrogenOne Capital Growth Investments (1) LP £1 4th Floor,
(GP) Limited Kingdom 140 Aldersgate
Street, London,
EC1A 4HY
HydrogenOne Capital Growth 100% United General partner of HydrogenOne Capital Growth Investments (1A) LP £10 4th Floor,
Investments (1A) GP LLP Kingdom 140 Aldersgate
Street, London,
EC1A 4HY
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. At 31
December2024 the Limited Partnership had no exposure to forward currency
contracts (2023: nil). 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 2024
Total assets
as at
31 December
Value of 2024 Effective
Purpose of Country of investment (unaudited) ownership Registered
Name the entity Incorporation £'000 £'000 (% rounded) address
Sunfire GmbH Electrolyzer producer Germany 32,337 250,033 4% Gasanstaltstraße 2 01237 Dresden, Germany
Elcogen Group plc Solid oxide fuel cell supply United Kingdom 21,019 54,600 8% Highdown House, Yeoman Way, Worthing, West Sussex, BN99 3HH
Strohm Holding BV Supplier of thermoplastic composite pipe Netherlands 13,885 63,062 15% Monnickendamkade 1, 1976 EC IJmuiden
HiiROC Limited Supplier of clean hydrogen production technology United Kingdom 23,925 4,225 5% 22 Mount Ephraim, Tunbridge Wells, Kent, TN4 8AS
Cranfield Aerospace Solutions Limited Aviation design and maintenance United Kingdom 12,366 13,588 29% Hanger 2, Cranfield Airport, Cranfield, Bedfordshire, MK43 0AL
Bramble Energy Limited Printed Circuit Board fuel cell solutions United Kingdom 9,908 10,303 12% 6 Satellite Business Village, Fleming Way, Crawley, England, RH10 9NE
Swift Hydrogen Limited Hydrogen storage intellectual property United Kingdom 50 N/a 100% 6th Floor 125 London Wall, London, England, England, EC2Y 5AS
31 December 2023
Total assets
as at
31 December
Value of 2023 Effective
Purpose of Country of investment (unaudited) ownership Registered
Name the entity Incorporation £'000 £'000 (% rounded) address
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
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 2024 the Company had no future commitments.
At 31 December 2024 the Company had outstanding undrawn loan commitments of
£2,358,399 to the Limited Partnership (2023: £3,638,090).
18. Post balance sheet events
Since 31 December 2024, the Partnership has made additional investments in and
commitments to Private Hydrogen Assets amounting to £nil.
FINANCIAL INFORMATION
This announcement does not constitute the Company's statutory accounts. The
financial information for the year ended 31 December 2024 is derived from the
statutory accounts for the year, which will be delivered to the Registrar of
Companies. The auditors have reported on the 2023 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 2024 was approved on 29
April 2025. 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 4(th) Floor, 140 Aldersgate Street,
London EC1A 4HY on 27 June 2025 at 1.00pm.
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.
29 April 2025
For further information contact:
Secretary and registered office:
Apex Listed Companies Services (UK) Limited
4(th) Floor, 140 Aldersgate Street, London EC1A 4HY
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