REG - Riverstone Credit - Final Results for the Year Ended 31 December 2024
26/02/2025 07:15
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RNS Number : 5184Y Riverstone Credit Opps. Inc PLC 26 February 2025
Riverstone Credit Opportunities Income PLC
(the "Company")
Full Year Results for the Year Ended 31 December 2024
At the Annual General Meeting ("AGM") held on 22 May 2024, Riverstone Credit
Opportunities Income Plc adopted the Wind-Down Investment Policy (the
"Wind-down Investment Policy") and entered into a managed wind-down.
The Company's investment objective and investment policy is now to realise the
Company's assets on a timely basis with the aim of making progressive returns
of cash to holders of Ordinary Shares as soon as practicable.
Highlights
· The NAV as at 31 December 2024 was $0.92 per share (2023: $1.06 per
share).
· The change in NAV was principally attributable to the reduction in
the Company's value for Harland & Wolff. After the period end, the four
shipyards owned by Harland & Wolff were successfully sold, resulting in
what will amount to a material return of capital to the Company in addition to
residual ownership in the Islandmagee gas storage asset.
· There were two full realisations executed during the period, Epic
Propane and Blackbuck Resources. These investments were realised at net IRRs
of 12.8% and 13.2% respectively.
· Dividend distribution of 4.72 cents per share (2023: 8.50 cents per
share) approved with respect to the year ended 31 December 2024.
· In August the Company announced its first return of capital equating
to circa 25% of the total issued share capital.
Key Financials
2024 2023
NAV as at 31 December $62.55m $96.02m
NAV per Share as at 31 December $0.92 $1.06
Market capitalisation as at 31 December $51.12m $78.77m
Share price at 31 December $0.76 $0.87
Total comprehensive (loss)/income for year ended 31 December ($4.74)m $5.72m
Distribution per share with respect to the year ended 31 December 4.72 cents 8.50 cents
About the Company
The Company's Ordinary Shares were admitted to the Specialist Fund Segment of
the London Stock Exchange plc's Main Market and incorporated and registered on
11 March 2019 in England and Wales with an unlimited life.
The Company's Investment Manager is Riverstone Investment Group LLC, which is
controlled by affiliates of Riverstone Holdings LLC ("Riverstone").
On 31 December 2023, Riverstone entered into a sub-management agreement with
Breakwall Capital LP ("Breakwall" or "Sub-Manager") for all the credit
vehicles managed by Riverstone.
Riverstone was founded in 2000 and is currently one of the world's largest and
most experienced investment firms focused on energy, power, infrastructure and
decarbonisation. The Firm has raised approximately $45 billion of capital and
committed approximately $45 billion to 200+ investments in North America,
South America, Europe, Africa, Asia and Australia. Headquartered in New York,
Riverstone has built a global platform with additional offices located in
Menlo Park, Houston, London, Amsterdam and Mexico City.
The registered office of the Company is 5th Floor, 20 Fenchurch Street,
London, England, EC3M 3BY.
Riverstone Credit Opportunities Income Plc
Annual Report and Financial Statements
For the year ended 31 December 2024
At a General Meeting held on 22 May 2024, Riverstone Credit Opportunities
Income Plc ("RCOI" or the "Company") adopted a revised Investment Objective in
order to facilitate a managed wind-down of the Company.
The Company aims to realise the Company's assets on a timely basis with the
aim of making progressive returns of cash to holders of Ordinary Shares as
soon as practicable.
Company number: 11874946
Riverstone Credit Opportunities Income PLC
Riverstone Credit Opportunities Income Plc is an externally managed
closed-ended investment company listed on the Main Market of the London Stock
Exchange.
The Company's Ordinary Shares were admitted to the Specialist Fund Segment of
the London Stock Exchange plc's Main Market and incorporated and registered on
11 March 2019 in England and Wales with an unlimited life.
At the Annual General Meeting ("AGM") held on 22 May 2024, Riverstone Credit
Opportunities Income Plc adopted the Wind-Down Investment Policy (the
"Wind-down Investment Policy") and entered into a managed wind-down.
The Company's investment objective and investment policy is now to realise the
Company's assets on a timely basis with the aim of making progressive returns
of cash to holders of Ordinary Shares as soon as practicable.
INVESTMENT MANAGER
The Company's Investment Manager is Riverstone Investment Group LLC, which is
controlled by affiliates of Riverstone Holdings LLC ("Riverstone").
On 31 December 2023, Riverstone entered into a sub-management agreement with
Breakwall Capital LP ("Breakwall" or "Sub-Manager") for all the credit
vehicles managed by Riverstone.
Riverstone was founded in 2000 and is currently one of the world's largest and
most experienced investment firms focused on energy, power, infrastructure and
decarbonisation. The Firm has raised approximately $45 billion of capital and
committed approximately $45 billion to 200+ investments in North America,
South America, Europe, Africa, Asia and Australia. Headquartered in New York,
Riverstone has built a global platform with additional offices located in
Menlo Park, Houston, London, Amsterdam and Mexico City.
The registered office of the Company is 5th Floor, 20 Fenchurch Street,
London, England, EC3M 3BY.
Key Financials
2024 2023
NAV as at 31 December $62.55m $96.02m
NAV per Share as at 31 December $0.92 $1.06
Market capitalisation as at 31 December $51.12m $78.77m
Share price at 31 December $0.75 $0.87
Total comprehensive (loss)/income for year ended 31 December ($4.74)m $5.72m
Distribution per share with respect to the year ended 31 December 4.72 cents 8.50 cents
Highlights
· The NAV as at 31 December 2024 was $0.92 per share (2023: $1.06
per share).
· Distribution of 4.72 cents per share (2023: 8.50 cents per share)
approved with respect to the year ended 31 December 2024.
· Following the outcome of the vote of the managed wind-down, the
Company had 90,805,237 Ordinary shares in issue. In September 2024, by way of
a Compulsory Redemption, the Company redeemed 22,648,201 of the Ordinary
shares equal to $1.017 per share, representing approximately 25 per cent. of
the Ordinary shares.
· There were 2 full realisations executed in the year ended 31
December 2024. The realisation during the year related to Epic Propane and
Blackbuck resources.
Chairman's Statement
Overview
On behalf of the Board, I would like to thank our shareholders for their
ongoing support. On 22 May 2024, following shareholder approval at the
Company's Annual General Meeting, the Company adopted the Wind-Down Investment
Policy and entered managed wind-down. We are very proud of the portfolio of
loans built by the Investment Manager to help support the energy transition
and we are committed to maximising shareholder value through the managed
wind-down process.
During the period, we are pleased that the Company completed a major milestone
towards this objective. At close of business on 9 September 2024 (the
"Redemption Date"), the Company redeemed (on a pro rata basis) 22,648,201
Ordinary Shares at a redemption price of US$1.017 per Ordinary Share. The
Ordinary Shares redeemed were equal to approximately 25 per cent. of the
Company's Ordinary Shares in issue as at the Redemption Date.
Following this initial redemption, the Company has 68,157,036 Ordinary Shares
in issue. Accordingly, the total number of voting rights in the Company is
68,157,036, which may be used by shareholders as the denominator for the
calculations by which they will determine if they are required to notify their
interest in, or a change to their interest in, the Company under the FCA's
Disclosure Guidance and Transparency Rules.
Operationally, we continue to be pleased with the financial performance of the
Company's portfolio as well as the beneficial impact its loans are having on
the journey towards greater environmental sustainability in global energy
infrastructure. During 2024, apart from the unrealised markdown of the
position in Harland & Wolff, the Company's performance remained stable
from 2023, posting consistent earnings for the period. After the period end,
the Investment Manager has successfully delivered a sale to realise a
substantial proportion of the value of the Harland & Wolff position and
the portfolio remains well positioned in the current environment. The Company
has delivered a NAV total return of 32.5% to investors since inception in May
2019 and 38.1 cents of income.
The Company will continue to focus on the realisation of the Company's assets
and return of capital to our shareholders.
Key Portfolio Developments
As at 31 December 2024, RCOI's NAV per share is $0.92 (31 December 2023:
$1.06). The NAV per share decline over the year was principally attributable
to the events surrounding the Company's investment in Harland & Wolff
described in full below and substantially resolved after the period end
following the successful sale of the business.
There were two successful realisations during 2024, Epic Propane and Blackbuck
Resources.
· Epic Propane was fully realised in April 2024 with a 16.9 per
cent gross IRR and a 12.8 per cent net IRR and 1.24x gross MOIC and 1.18x net
MOIC respectively.
· Blackbuck Resources was fully realised in September 2024 with a
17.3 per cent gross IRR and a 13.2 per cent net IRR and 1.46x gross MOIC and a
1.33x net MOIC.
These realisations further strengthen our compelling track record of
delivering attractive IRRs for our shareholders.
Performance
The Company reported a loss of $4.7 million for the period ending 31 December
2024, resulting from income received from the investment portfolio and changes
in the portfolio valuation. The Company's Net Asset Value ("NAV") ended the
period at $0.92 per share. The Company's reported loss over the year was
principally attributable to the $8.3 million reduction in value for Harland
& Wolff. The Company is paying distributions of 4.7 cents per share to
investors in 2024.
The current unrealised portfolio remains attractive, marked at an average
1.13x Gross MOIC and 1.02x Net MOIC. Characteristics of RCOI's investment
strategy, particularly the focus on a conservative LTV, diversified
sub-sectors and end-user base, as well as structured incentives for early
repayment, have helped mitigate negative portfolio impact from the broader
market fluctuations.
RCOI has executed 25 direct investments and participated in two secondary
investments since inception and cumulatively invested $253 million of capital
since the IPO in May 2019. The Company has now realised a total of 20
investments, delivering an average gross IRR of 14.0 per cent and net IRR of
7.9 per cent.
Outlook
The Company has adopted a Wind-Down Investment Policy and the Investment
Manager is actively seeking exit opportunities to realise the loans comprising
the Company's portfolio and returning the resulting proceeds to Shareholders.
The Investment Manager may dispose of loans in the secondary market where it
considers this to be in the best interests of the Company.
The precise mechanism for the return of cash to holders of Ordinary Shares in
a managed wind-down is at the Board's discretion but may include (subject to
compliance with all applicable legal requirements) a combination of capital
distributions, tender offers, mandatory share redemptions and share
repurchases. The return of proceeds to shareholders may require further
Shareholder approvals, depending on the methods proposed.
Although the NAV per share performance over the period is disappointing, we
are pleased to note the successful sale of Harland & Wolff after the end
of the period under review and the two successful realisations during the
course of 2024. We are also pleased that in August the Company carried out its
first return of capital equating to circa, 25% of the total issued share
capital, a strong start to delivering on our Managed Wind Down objectives. We
look forward to providing further updates on the progress of the Company's
managed wind-down in due course.
Reuben Jeffery, III
Chairman
25 February 2025
Strategic Report
The Directors present their Strategic Report for the year ended 31 December
2024. Details of the Directors who held office during the year and as at the
date of this report are given below.
Investment Objective and policy
Following the outcome of the vote held at the AGM on 22 May 2024, the Company
adopted a revised investment objective and investment policy in order to
facilitate a managed wind-down of the Company. The revised investment policy
is now "to realise the Company's assets on a timely basis with the aim of
making progressive returns of cash to holders of Ordinary Shares as soon as
practicable".
The Investment Manager is actively seeking exit opportunities to realise the
loans comprising the Company's portfolio and returning the resulting proceeds
to Shareholders. The Investment Manager may dispose of loans in the secondary
market, including through sales to other funds, vehicles or managed accounts.
The precise mechanism for the return of cash to holders of Ordinary Shares in
the managed wind-down is at the discretion of the Board, but includes a
combination of capital distributions, tender offers, mandatory share
redemptions and share repurchases. The return of proceeds to Shareholders may
require further Shareholder approvals, depending on the methods used.
The Company will continue to carry on its investment business with a view to
spreading risk during the managed wind-down.
Prior to the 2024 AGM, the Company's investment objective was to lend to
companies working to drive change and deliver solutions across the energy
sector, spanning renewable as well as conventional sources, with a primary
focus on infrastructure assets, by building a portfolio that generated as well
as driving an attractive and consistent risk adjusted return for investors, as
well as drive a positive action with regard to climate change by structuring
loans as Green Loans or Sustainability-Linked Loans.
Distribution policy
Subject to market conditions, applicable law and the Company's performance,
financial position and financial outlook, it is the Directors' intention to
declare distributions to Shareholders on a quarterly basis following
publication of the NAV per Ordinary Share calculated as of the final day of
the relevant quarter.
The Company intends to declare distributions with respect to 100 percent of
its net income (as calculated for UK tax purposes). The Board determines the
percentage of net income to distribute, ensuring that it would be in the
longer-term interests of the Company to do so (for instance, in the event of
any permanent loss of capital by the Company). In any calendar year the
Company may retain up to 15 percent of its net income (as calculated for UK
tax purposes), in accordance with Section 1158 of the Corporation Tax Act
2010.
As part of the new Wind-Down Investment Policy, proceeds from repayment or
realisation of any investments would not be reinvested and instead will be
returned to ordinary shareholders. The precise mechanism to return of cash to
shareholders in the managed wind-down will be at the discretion of the Board
but may include a combination of capital distributions, tender offers,
compulsory share redemptions and share buybacks.
The declaration of any distribution will be subject to payment of the
Company's expenses and any legal or regulatory restrictions at the relevant
time. The Company may elect to designate as an 'interest distribution' all or
part of any amount it distributes to Shareholders as distributions.
As disclosed in note 14 to the financial statements, on 26 February 2025 the
Board approved a distribution of 0.72 cents per share bringing the total
distribution declared with respect to the year to 31 December 2024 to 4.72
cents per share. The record date for the distribution is 7 March 2025 and the
payment date is 28 March 2025.
Structure
Prior to adopting the Wind-Down Investment Policy, the Company made its
investments through its SPVs. Riverstone International Credit Corp. ('US
Corp') is a corporation established in the State of Delaware and is a
wholly-owned subsidiary of the Company. US Corp, in turn, invested through
Riverstone International Credit - Direct L.P. ("RIC D"), a limited partnership
established in the State of Delaware in which US Corp is the sole limited
partner. Investments were also made through Riverstone International Credit
L.P, a wholly-owned subsidiary and limited partnership, established in the
State of Delaware in which the Company is the sole limited partner. The
general partner of each of the limited partnerships is a member of
Riverstone's group.
The Company has contributed or lent substantially all of its Net Issue
Proceeds (net of short-term working capital requirements) to its SPVs which,
in turn, made investments in accordance with the Company's former investment
policy. The Investment Manager and Sub-Manager draw on the resources and
expertise of the wider Riverstone and Breakwall groups.
Review of Business and Future Outlook
Details of the underlying portfolio and a review of the business in the year,
together with future outlook are covered in the Investment Manager's Report.
Key Performance Indicators
The Board believes that the key metrics detailed above, will provide
Shareholders with sufficient information to assess how effectively the Company
is meeting its objectives.
Ongoing Charges
Ongoing charges are an alternative performance measure and the ongoing charges
ratio of the Company is 2.35 percent, calculated as total expenses divided by
the weighted average NAV for the year to 31 December 2024. The weighted
average NAV used in this calculation is the mean of the published quarterly
NAVs for the year, at 31 December 2024 this was $78.6m (2023: $96.9m). Ongoing
charges are made up as follows and have been calculated using the AIC
recommended methodology.
31 December 2024 31 December 2023
$'000 % $'000 %
Profit Share - - 873 0.90
Directors' fees and expenses 156 0.20 160 0.16
Ongoing expenses 1,689 2.15 1,172 1.21
Total 1,845 2.35 2,205 2.27
The Investment Manager is entitled to a Profit Share when it meets relevant
performance targets as disclosed in note 12 to the financial statements.
Board Diversity
The RCOI Board strongly believes that having diversity in skills, experience
and gender has significant benefits. The Board consists of individuals from
relevant and complementary backgrounds offering experience in the investment
management of listed funds, as well as in the energy sector from both a public
policy and a commercial perspective. As at the date of this report, the Board
comprised 2 men and 1 woman, all non-executive Directors who are considered to
be independent of the Investment Manager and free from any business or other
relationship that could materially interfere with the exercise of their
independent judgement. Currently, the Audit and Risk Committee Chairman
position is held by a woman representing 33 percent of Directors on the Board.
The Board is cognisant that the percentage of women on the Board is below the
40% target in the FCA diversity guidelines and it also does not currently have
ethnic minority representation. The size of the Board is relatively small in
comparison to the wider FTSE350 indices.
The Board recognises the importance of an inclusive and diverse Board in
facilitating a collaborative culture and enhancing the delivery of the
Company's strategic objectives.
In accordance with Listing Rule 9.8.6R(10), as at the date of this report, and
as described above the composition of the Board is as follows:
Number of Board members in scope Percentage of the Board Number of senior positions on the Board (CEO, CFO, Number in executive management Percentage of executive management
SID and Chair) (1)
Men 2 67% 1 - -
Women 1 33% 1 - -
Not specified/prefer not to say - - - - -
Number of Board members in scope Percentage of the Board Number of senior positions on the Board (CEO, CFO, Number in executive management Percentage of executive management
SID and Chair)(1)
White British or other White (including minority-white groups) 3 100% 2 - -
Mixed/Multiple Ethnic Groups - - - - -
Asian/Asian British - - - - -
Black/African/Caribbean/ - - - - -
Black British
Other ethnic group - - - - -
Not specified/prefer not to say - - - - -
(1) The positions of CEO and CFO are not applicable to the Company as an
externally managed investment fund. Senior Board positions will continue to be
reviewed.
The above information is based on voluntary self-declaration from the
Directors.
The Company's policy on diversity is further detailed in the Corporate
Governance Report below.
Employees and Officers of the Company
The Company does not have any employees and therefore employee policies are
not required. The Directors of the Company are detailed below.
Principal, EMERGING Risks AND UNCERTAINTIES
Under the FCA's Disclosure Guidance and Transparency Rules, the Directors are
required to identify those material risks to which the Company is exposed and
take appropriate steps to mitigate those risks. Risks relating to the Company
are disclosed in the Company's prospectus which is available on the Company's
website https:// (https://www.riverstonecoi.com) www.riverstonecoi.com
(https://www.riverstonecoi.com) .
The Company's assets consist of investments, through SPVs, within the global
energy industry, with a particular focus on opportunities in the global
E&P and midstream energy sub-sectors. Its principal risks are therefore
related to market conditions in the energy sector in general, but also the
particular circumstances of the businesses in which it is invested.
The Investment Manager seeks to mitigate these risks through active asset
management initiatives.
The Board thoroughly considers the process for identifying, evaluating and
managing any significant and emerging risks faced by the Company on an ongoing
basis and has performed a robust assessment of those risks, which are reported
and discussed at Board meetings. The Board ensures that effective controls are
in place to mitigate these risks and that a satisfactory compliance regime
exists to ensure all applicable local and international laws and regulations
are upheld. During the year the Audit and Risk Committee has reviewed and made
minor updates to the Company's principal risks, which are outlined below.
For each material risk, the likelihood and consequences are identified,
management controls and frequency of monitoring are confirmed and results
reported and discussed at the quarterly Board meetings.
The key areas of risk faced by the Company and mitigating factors are
summarised below:
1. The Ordinary Shares may trade at a discount to NAV per Share for
reasons including but not limited to market conditions, liquidity concerns and
actual or expected Company performance. In its efforts to mitigate this risk,
the Investment Manager closely monitors and identifies the reasons for
significant fluctuations, and considers the Company's share repurchase program
when applicable and in the interests of Shareholders. As such, there can be no
guarantee that attempts to mitigate such discount will be successful or that
the use of discount control mechanisms will be possible, advisable or adopted
by the Company.
2. Investment decisions of the Investment Manager will depend upon the
ability of its employees and agents to gather relevant information. The
Company would carry on its investment business during the managed wind-down.
3. The Company's Investment objective and Wind-Down Investment Policy is
to "realise the Company's assets on a timely basis with the aim of making
progressive returns of cash to holders of Ordinary shares as soon as
practicable." The Investment Manager will manage current investments in
accordance with the Investment Policy, market conditions and the economic
environment. To mitigate the risk of realising investments not indicative of
the fair value, the Company's Investment Policy and investment restrictions
enable the Company to realise the loans comprising the Company's portfolio by
holding them until they come to term and returning the resulting proceeds to
Shareholders, with the precise mechanism for the return of cash to holders of
Ordinary Shares in the managed wind-down at the discretion of the Board.
4. Environmental exposures and existing and proposed environmental
legislation and regulation may adversely affect the operations of Borrowers.
Delay or failure to satisfy any regulatory conditions or other applicable
requirements could hinder the operations of certain Borrowers. To mitigate
this risk, the Investment Manager has usual and customary inspection rights
and affirmative covenants regarding environmental matters contained in credit
agreement documentation.
5. The valuations used to calculate the NAV on a quarterly basis will be
based on the Investment Manager's unaudited estimated fair market values of
the Company's investments and may be based on estimates which could be
inaccurate. To mitigate this risk, the Investment Manager has an extensive
valuation policy and also has engaged the independent valuation services of
Houlihan Lokey on a quarterly basis.
6. In today's global technological environment, the Company, its
investments and its engaged service providers are subject to risks associated
with cyber security. The effective operation of the Investment Manager and the
businesses of Borrowers are likely to be highly dependent on the availability
and operation of complex information and technological systems. To mitigate
this risk, the Audit and Risk Committee Chairman monitors cyber security risk
and best practices. Cyber security due diligence and ongoing monitoring is
performed on each potential and current borrower.
7. The Company may be exposed to fluctuations and volatility in commodity
prices through its investments, and adverse changes in global supply and
demand and prices for such commodities may adversely affect the business,
results of operations, and financial condition of the Company. To mitigate
this risk, the Investment Manager has created a diversified portfolio across
various energy subsectors, commodity exposures, technologies and end-markets
to provide natural synergies that aim to enhance the overall stability of the
portfolio.
8. The Company has only lent to Borrowers in the global energy sector and
such single industry concentration could affect the Company's ability to
generate returns. Adverse market conditions in the energy sector may delay or
prevent the Company from realising investments. To mitigate this risk, the
Investment Manager has created a diversified portfolio across various energy
subsectors, commodity exposures, technologies and end-markets to provide
natural synergies that aim to enhance the overall stability of the portfolio.
9. The performance of the Company may be affected by changes to interest
rates and credit spreads. To mitigate this risk, the Investment Manager
assesses credit risk and interest rate
risk on an ongoing basis and closely monitors each investment with the
assistance of each respective management team and the engaged service
providers.
10. The Company relies on a third-party provider for the key operational tasks
of the Company. The failure of any service provider to carry out their duty
may have a detrimental effect on the operation of the Company. To mitigate
these risks the Board will review the internal control reports, and consider
business continuity arrangements of the Company.
Managed Wind-Down
Following the AGM on 22 May 2024 the Company adopted a Wind-Down Investment
Policy. Details of the adoption of the managed wind-down are as follows:
· The Company's investment objective and investment policy is now
to realise the Company's assets on a timely basis with the aim of making
progressive returns of cash without reinvesting any realised cash to holders
of Ordinary Shares as soon as practicable.
· The Investment Manager is actively seeking exit opportunities to
realise the loans comprising the Company's portfolio and returning the
resulting proceeds to Shareholders. The Investment Manager may dispose of
loans in the secondary market.
· The Company will maintain its listing on the Specialist Fund
Segment and continue to conduct its affairs (including as regards payment of
dividends) so as to qualify as an investment trust for the purposes of section
1158 of the Corporation Tax Act 2010, in each case for as long as the Board
believes such status to be practicable and cost-effective for Shareholders.
· The unaudited net asset value of the Company will continue to be
calculated on a quarterly basis in accordance with the Company's accounting
policies per the notes to the financial statements and will be published
through a Regulatory News Service, although the Board would keep this net
asset value reporting policy under review in light of the diminishing size of
the Company's portfolio during the course of the managed wind-down.
· The precise mechanism for the return of cash to holders of
Ordinary Shares in a managed wind-down will be at the discretion of the Board,
but will include a combination of capital distributions, tender offers,
mandatory share redemptions and share buybacks. The return of proceeds to
Shareholders may require further Shareholder approvals, depending on the
methods used.
Going Concern
As of the date of the report, the Directors are required to consider whether
they have a reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. At the AGM held
on 22 May 2024 the Shareholders voted in favour of a change in the Company's
Investment Policy to a Wind-Down Investment Policy.
The Company's Investment objective and Wind-Down Investment Policy is to
"realise the Company's assets on a timely basis with the aim of making
progressive returns of cash to holders of Ordinary shares as soon as
practicable." The Investment Manager is actively seeking exit opportunities to
realise the loans comprising the Company's portfolio and returning the
resulting proceeds to Shareholders. The Company is therefore preparing its
financial statements on a basis other than going concern due to the Company
being in a managed wind-down.
The Company will continue to carry on its investment business during the
managed wind-down and with the expectation of realising the Company's assets
and returning of capital to its Shareholders.
The Directors consider that the change to the Company's objectives and
Investment Policy are in the best interests of Shareholders as a whole.
In conjunction with the Company amending its Investment Policy to a Wind-Down
Investment Policy, the senior secured revolving credit facility's credit
("RCF") agreement with the Company was also amended. The RCF credit agreement
was amended to allow an aggregate amount of borrowings of up to $500,000 in
order to optimise cash flows during the managed wind-down. The amendment also
sets forth a Utilisation Fee of one percent per annum due and payable
quarterly by the Company to the lender.
As of 31 December 2024, the Company has sufficient cash held in the SPVs
reflected in the value of the Company's investments in the SPVs. As of the
date of the financial statements, the Company and its SPVs have $15.7m cash
and cash equivalents available of which $14.3 is short-term money market fix
deposits and the remaining $1.4m in cash within the SPVs and the Company. The
Company's and its SPVs current cash will be able to meet the near-term current
liabilities when they become due.
Whilst the Directors are satisfied that the Company has adequate resources to
continue in operation throughout the wind-down period and will be able to meet
all of its liabilities as they fall due, given the Company is now in managed
wind-down, the Directors considered it appropriate to adopt a basis other than
going concern in preparing the financial statements. There were no material
changes in the valuation of investments held at fair value as a result of
ceasing to apply the going concern basis. All of the balance sheet items have
been recognised on a realisation basis, which is not materially different from
the carrying amount. The Directors and the Investment Manager have made the
appropriate provisions in order to bring about an orderly wind-down of the
Company and its operations.
As of 31 December 2024, the weighted average remaining contractual tenor of
the loans in the Company's portfolio is under one year. The Investment Manager
is actively seeking to realise the loans comprising the Company's portfolio by
holding them until they come to term or dispose in the secondary market where
it considers this to be in the best interests of the Company. The Company in
its best efforts, intends to realise and return to shareholders all proceeds
in respect to its investment portfolio within one year of entering into the
managed wind-down.
On 9 September 2024, the Company redeemed 22,648,201 Ordinary Shares, which
was approximately 25 per cent. of the Company's Ordinary Shares by way of a
Compulsory Redemption of Ordinary Shares. The Directors will make further
announcements on the progress of the managed wind-down strategy and the return
of cash to Shareholders in due course.
Longer Term Viability
As required by the AIC Code, the Directors have assessed the prospects of the
Company over a longer period than required by the going concern provision. On
22 May 2024, Shareholders voted in favour of a change in the Company's
Investment policy to a Wind-Down Investment Policy, allowing the Company to
realise the assets on a timely basis with the aim of making progressive
returns of cash to holders of Ordinary shares as soon as practicable. The
Company is therefore preparing its financial statements on a basis other than
going concern due to the Company being in a managed wind-down.
In making their assessment the Directors have considered the Company's status
as an investment entity, its investment objectives, the principal and emerging
risks it faces, its current position and
the time period over which its assets are likely to be realised and agreed
that a two-year period ending 31 December 2026 was appropriate.
Although the stated maturity dates of the Company's and its SPVs unrealised
investments are through to 2026, the Directors and Investment Manager expect
to realise the investments within 12 months of the reporting date. The
Investment manager has considered the expected maturity profile of the
Company's investments and believes liquidation of the Company will occur in
the second half of 2026 before the stated maturity dates.
In addition to cash and cash equivalents currently on hand, all investments
are expected to be realised before the end of the longer term viability
period, providing the Company with more than sufficient cash needs to pay
ongoing expenses over the longer term viability period and meeting quarterly
dividend payments to shareholders.
The Directors and the Company note that from the information presented above,
the Company has sufficient liquidity and reserves to meet its liabilities as
they fall due for the longer term viability.
In support of this statement, the Directors have taken into account all of the
principal and emerging risks and their mitigation as identified in the
Principal and Emerging Risk and Uncertainties section above, the nature of the
Company's business; including the cash reserves and money market deposits at
the SPVs, the potential of its portfolio of investments to generate future
income and capital proceeds, and the ability of the Directors to minimise the
level of cash outflows, if necessary.
Each quarter, the Board reviews threats to the Company's viability utilising
the risk matrix and updates as required due to recent developments and/or
changes in the global market. The Board
relies on periodic reports provided by the Investment Manager and
Administrator regarding risks faced by the Company. When required, experts are
utilised to gather relevant and necessary information, regarding tax, legal,
and other factors.
The Board considered the Company's viability over the two-year period, based
on a working capital model prepared by the Investment Manager. The working
capital model forecasts key cash flow drivers such as investment returns and
operating expenses. In connection with the preparation of the working capital
model, realisations, distribution payments and/or share buyback were assumed
to occur during the two year period.
Based on the aforementioned procedures and the existing internal controls of
the Company and Investment Manager, the Board has concluded there is a
reasonable expectation that the Company
will be able to continue in operation and meet its liabilities as they fall
due over the two-year period of the assessment.
Directors' Responsibilities Pursuant to Section 172 of the Companies Act 2006
The Directors are responsible for acting in a way that they consider, in good
faith, is the most likely to promote the success of the Company for the
benefit of its members. In doing so, they should have regard for the needs of
stakeholders and the wider society. Key decisions are those that are either
material to the Company or are significant to any of the Company's key
stakeholders. The Board consider the Company's key stakeholders to be: its
existing and potential new Shareholders, service providers (Investment
Manager, corporate broker, registrar and depositary), investee companies and
suppliers. It should be noted that the Company has no employees, aside from
the Directors.
Engagement with Stakeholders
As further disclosed in the Corporate Governance Report, the Company reports
to Shareholders in a number of formal ways, including its Annual Report,
Interim Report and regulatory news releases, all of which are approved by the
Board. The AGM, detailed below, is used as a forum for the Board and
Investment manager to communicate Company performance and future plans and
prospects.
It is expected members of the Board will be in attendance and will be
available to answer any Shareholder questions. The Company's website was
updated during the year and contains comprehensive information for
Shareholders and provides regular market commentary. In addition, the
Chairman's, Company Administrator's and Investment Manager's contact email
addresses are also available for Shareholders to contact, outside of the AGM.
The Board invites representatives from the Broker to provide regular analysis
of Shareholder movements, industry changes and contact
with investors. The Board seeks to engage with the Investment Manager and
other service providers in an open manner, encouraging constructive
discussion. This approach enhances service levels and strengthens
relationships to receive the highest standard of service at a competitive
cost, ensuring Shareholders interest are best served.
The below key decisions were made or approved by the Directors during the
year, with the overall aim of promoting the success of the Company while
considering the impact on its members, stakeholders and the wider society.
Investment policy
The Company's revised Investment Policy is now a Wind-down Investment Policy.
The Company completed two full realisations (2023: two) during the year. The
realisations during the year related to Epic Propane and Blackbuck Resources.
The Company reports to the Shareholders through regulatory news releases,
using the London Stock Exchange's Regulatory News Service and Interim and
Annual Reports. Portfolio updates, realisations, valuation updates and
distribution announcements are all communicated in a timely fashion through
this means.
Distributions
The Board has reviewed and approved distributions of 4.72 cents per share with
respect to the year (2023: 8.5 cents per share).
Board Committees
The Board's Audit and Risk Committee, Nomination Committee and Management
Engagement Committee continue to ensure a good corporate governance framework
for the Company. The Chairman of each committee will attend the AGM to answer
any questions on their committee's activities.
Share buyback programme
The Company stopped its share buyback programme in August 2022 where between
the period of 30 June 2022 - 31 August 2022 the Company repurchased 740,146
shares.
Return of Capital by way of a Compulsory Redemption of Ordinary Shares
Further to the announcement on 8 August 2024 and the commencement of the
managed wind-down of the Company, on 9 September 2024, the Company returned
$23.03m to holders of Ordinary Shares by way of a compulsory redemption of
Ordinary Shares, which was approximately 25 per cent. of the Company's total
issued share capital at the date of announcement.
Annual General Meeting
The AGM of the Company will be held at 14:00 BST on 22 May 2025 at the offices
of Hogan Lovells International LLP, Atlantic House, Holborn Viaduct, London
EC1A 2FG. In accordance with the Articles of Association details of the other
resolutions to be proposed at the AGM, together with explanations, will appear
in the notices of meetings to be distributed to Shareholders in April 2025. As
a matter of
good practice, all resolutions will be conducted on a poll and the results
will be announced to the market as soon as possible after the AGM.
It is expected that members of the Board will be in attendance and will be
available to answer Shareholder questions.
On behalf of the Board
Reuben Jeffery, III
Chairman
25 February 2025
Investment Manager's Report
ABOUT THE INVESTMENT MANAGER
Appointed in May 2019, the Investment Manager, an affiliate of Riverstone,
seeks to generate consistent shareholder returns predominantly in the form of
income distributions principally by making Green and Sustainability-Linked,
senior secured loans to energy transition businesses. Loans are classified as
Green Loans when they support environmentally sustainable economic activity
and Sustainability-Linked Loans when they contain sustainability performance
targets or other equivalent metrics to be monitored. RCOI has participated in
loans to companies working to drive change and deliver better solutions across
the energy sector, spanning renewable as well as conventional energy, with a
primary focus on infrastructure assets. The Company's aim was to build a
portfolio that generates an attractive and consistent risk-adjusted return for
investors, as well as drive positive impact regarding climate change by
structuring loans as Green Loans or Sustainability-Linked Loans.
On 31 December 2023, Riverstone Holdings LLC and their affiliate Riverstone
Investment Group (collectively, "Riverstone") entered into an agreement with
Breakwall Capital LP to provide sub-management services (the "Sub-Management
Agreement") for all credit vehicles managed by Riverstone, including RCOI (the
"Existing Credit Vehicles"). Breakwall is a newly formed independent
asset-management firm regulated by the SEC as a Registered Investment Advisor,
owned and operated by the former Riverstone Credit Partners team. Services
provided by Breakwall commenced on 2 January 2024.
Under the arrangement, Riverstone has remained the manager of RCOI on the
terms of RCOI's existing management agreement and all aspects of the ongoing
management of the Company, including the day-to-day investment team, have
remained consistent with current practices. There was no increase in fees
payable by RCOI as a result of the modified arrangements. The Board of RCOI
was involved in establishing the Sub-Management Agreement and are confident
that the structure of Riverstone as manager and Breakwall as the sub-manager
will continue to deliver strong returns for shareholders during this period of
managed wind-down.
INVESTMENT PORTFOLIO SUMMARY
As of 31 December 2024, the Company holds a diverse portfolio of investments
in six companies across energy infrastructure & infrastructure services
and energy transition assets as further discussed below. In addition, RCOI
holds the warrants of one investment where the loan was fully realised.
In the descriptions that follow, yield to maturity is inclusive of all upfront
fees, original issue discounts, drawn spreads and prepayment penalties through
the stated maturity of the loan. Most loans have incentives to be called
early. A portion of the loans have a "payment-in-kind" feature for drawn
coupons for a limited time period. Similarly, some of the loans have a
"delayed-draw" feature that allows the borrower to call capital over time, but
always with a hard deadline. Loans that are committed are loans with signed
definitive documentation where a structuring fee and/or original issue
discount have been earned and the Company earns an undrawn spread. Loans that
are invested are signed with definitive documentation and, where a structuring
fee and/or original issue discount have been earned, the Company has funded
the loan to the Borrower and the Company is earning a drawn coupon.
The Investment Manager expects that every loan it has made will advance the
cause of energy transition one way or another. For new green energy
infrastructure, or conversion of older assets to a more sustainable use, we
typically issue Green Loans. For existing hydrocarbon related businesses, we
typically issue Sustainability-Linked Loans that tie loan economics to meeting
specific sustainability performance targets. Both structures are based on LSTA
guidelines and are subject to third party independent opinion from Sustainable
Fitch, a division of Fitch Group focused on ESG.
Harland & Wolff - In March 2022, RCOI participated in a $35.0 million
first lien Green Term Loan to Harland & Wolff ("H&W"), an
infrastructure operator engaged in the development and operation of strategic
maritime assets across the United Kingdom. This loan has subsequently been
upsized to $140 million and was due December 2024.
At the initial closing RCOI committed $11.8 million. This has subsequently
been upsized to $14.6 million. As of 31 December 2024, $14.6 million remains
invested, reflecting 30.5 per cent of RCOI's overall commitments.
As part of the terms of the loan, RCOI has also been granted 5.1 million
warrants, which have been written down to zero given the Administration for
H&W that was filed on 14 January 2025. As of 31 December 2024, the total
fair value of Harland & Wolff to all RCP lenders was $112.7 million
Post period-end, on 29 January 2025, the assets of Harland & Wolff have
been sold for a cash consideration of $86.9 million, as well as the waiving of
the debt of $28.6 million by Navantia UK. Exclusivity was agreed in October
2024 in exchange for Navantia UK providing debt funding to the Harland &
Wolff Group, and this was linked to an agreement to share recoveries with
Navantia UK on a 50/50 basis in respect of Navantia UK's debt funding. As part
of the transaction, those rights were waived by Navantia UK.
Purchase price consideration along with cash left in the business, after
administrative and deal related expenses, are expected to result in recoveries
of c. $86.1 million to Riverstone Credit Partners ("RCP") and affiliated
funds, including RCOI. The Administrators made an initial distribution to RCP
of c. $54.4 million on 31 January 2025 and have estimated that future
distributions will total c. $31.7 million over the coming months. The initial
distribution will fully satisfy the super priority term loan and therefore all
future distributions will be shared pro rata amongst all the Riverstone funds
invested in Harland & Wolff. RCOI did not share in the initial
distribution but will receive $4.7 million in the coming months for its share
of the assets that have been sold.
In parallel to the process to sell the operating yards, Rothschild & Co
has also run a process to solicit interest in acquiring Harland & Wolff's
Islandmagee Gas Storage project. Once constructed and operational, Islandmagee
salt dome caverns will have the capacity to hold around 500 million cubic
meters of low carbon gas and/or hydrogen, increasing UK gas storage capacity
by c. 33%. Given the shortfall on amounts owed and security held over the
entirety of Harland & Wolff, RCP and affiliated funds hold the economic
interest in Islandmagee. As of 25 February 2025, the Islandmagee asset has not
yet been sold.
Seawolf Water Resources - In September 2022, RCOI made a secondary investment
in a stapled bundle of private securities in Seawolf Water Resources
("Seawolf"), a privately held water infrastructure services company with
operations primarily in Loving County, TX and southern New Mexico. The
investment includes a Sustainability-Linked first lien term loan along with
preferred stock and common equity, collectively purchased at a significant
discount to market value. The loan portion of the investment is due in March
2026 and was purchased at an estimated all-in yield to maturity of 10.6 per
cent to RCOI. The preferred stock and common equity are perpetual in nature
but benefit from excess cash returned to the shareholders from time to time.
Across the term loan, preferred stock, and common equity, RCOI committed a
total of $9.0 million, which has subsequently been reduced to $8.5 million via
repurchases of preferred stock by the company. This reflects 17.7 per cent of
RCOI's overall commitments as of 31 December 2024.
Hoover Circular Solutions ("Hoover CS") - In November 2022, RCOI participated
in a $160 million Sustainability-Linked first lien term loan to Hoover CS, a
leading provider of sustainable packaging and fleet management solutions, that
is paving the way for customers across the chemical, refining and general
industrial-end markets to move away from single-use containers. Sustainable
Fitch provided a Second Party Opinion ("SPO") on the loan. The loan is due in
November 2026 and was made at an estimated all-in yield to maturity of 10.6
per cent.
At closing, RCOI committed $13.7 million. As of 31 December 2024, the full
$13.7 million remains invested, reflecting 28.7 per cent of RCOI's overall
commitments.
Max Midstream - In December 2022, RCOI participated in a $28.3 million
Sustainability-Linked, first lien term loan (the "Term Loan") to a subsidiary
of Max Energy Industrial Holdings US LLC ("Max"). Max is developing the first
carbon-neutral crude oil export terminal on the Gulf Coast of Texas, which it
believes will lead to increased market share as crude consumers globally seek
to reduce their overall carbon footprint. At the time of close, the term loan
was SOFR+650 bps with all in coupon of 11.0 per cent.
At close, RCOI committed $5.0 million. As of 31 December 2024, the full $5.0
million remains invested, reflecting 10.5 per cent of RCOI's overall
commitments.
Streamline Innovations - In June 2023, RCOI participated in a $55 million
Green term loan to Streamline Innovations, a leader in
environmentally-advanced treatment solutions for the removal of hydrogen
sulfide (H2S) from natural gas, renewable fuels, wastewater, and industrial
processes. The facility was structured as a Green Loan with Sustainable Fitch
providing a Second Party Opinion. The loan is due in December 2026 and was
made at an estimated all-in yield to maturity of 12.5 per cent.
At closing, RCOI committed $9.9 million and funded $3.5 million. As of 31
December 2024, RCOI's commitment was reduced to $5.5 million, with $4.4
million unfunded commitment expiring on 31 December 2024, representing 11.2
per cent of RCOI's total commitments.
Imperium3 New York, Inc - In April 2021, RCOI participated in a $63.0 million
first lien delayed-draw Green term loan to Imperium 3 New York, Inc, as
lithium-ion battery company that will commercialise high performing
lithium-ion batteries by developing a large-scale manufacturing facility in
Endicott, NY. The loan was fully refinanced in April 2022, with a new source
of financing, resulting in a 32.5 per cent realised IRR and 1.25x realised
MOIC.
At closing RCOI committed $6.8 million. In addition, as part of the loan
terms, RCOI was granted warrants to purchase 0.4 per cent of the Imperium's
equity and 0.3 per cent of the equity in one of Imperium's parent company's
Charge CCCV. As of 31 December 2024, none of the loan is outstanding but the
warrants remain in the Company's portfolio.
On 27 January 2025, Imperium 3 New York, Inc. filed for Chapter 11 bankruptcy
protection. The warrants will be devalued to zero. As of December 2024, the
warrants held by RCOI in Imperium 3 New York represented less than 0.01
percent of the Company's NAV. However, as of the reporting date, the equity in
Charge CCCV retains value.
Caliber Midstream - In July 2019, RCOI participated in a $10.0 million upsize
of a $65.0 million first lien holding company term loan to Caliber Midstream
(the "HoldCo Term Loan"), a sponsor-backed Bakken focused midstream company
that provides crude oil and natural gas gathering and processing, produced
water transportation and disposal, and freshwater sourcing and transportation.
At closing, RCOI committed $3.4 million to the HoldCo Term Loan. Subsequently,
in April 2021, an additional $0.6 million was invested on a secondary basis in
a senior secured first lien loan made to Caliber (the "Opco Loan"), bringing
RCOI's total commitment to Caliber to $4.0 million.
In March 2021, Caliber's largest customer, Nine Point Energy, terminated their
midstream contract with Caliber and subsequently filed for Chapter 11
bankruptcy. In May 2021, RCOI and the other HoldCo Lenders completed a
recapitalisation of Caliber resulting in HoldCo Term Loan Lenders receiving
substantially all of the equity in HoldCo.
In March 2022, the Caliber and the OpCo Loan lenders subsequently closed a
second restructuring with the OpCo Loan lenders receiving approximately 100%
of the equity. Following the restructuring, new management was hired, a new
contract was executed and there remains increased focus on cost cutting
initiatives and new revenue opportunities.
As of 31 December 2024, the full $0.7 million commitment remains invested,
reflecting 1.4% of RCOI's overall commitments post restructuring.
SUBSEQUENT EVENTS AND OUTLOOK
Following shareholder approval at the Company's AGM, the Company's investment
objective and investment policy has been changed to now realise the Company's
assets on a timely basis with the aim of making progressive returns of cash to
holders of Ordinary Shares as soon as practicable.
As previously announced, the Company anticipates realising a significant
portion of its investment portfolio within the year of the managed wind-down.
In order to meet this objective, the Company will continue to carry on its
investment business with a view to spreading risk during the managed
wind-down. We look forward to providing regular updates on our progress to
towards this objective as well as plans for future distribution to
shareholders.
BoArd of Directors
Reuben Jeffery, III
CHAIRMAN
Mr. Jeffery has a broad range of financial services experience and in addition
brings extensive insight into the US political and regulatory environment. He
is chairman of Sumitomo Mitsui Banking Corporation Americas Holdings, Inc. and
is a former non-executive director of Barclays PLC. He was previously the
President and CEO of Rockefeller Financial Services, Inc. Mr. Jeffery has
served in the US government as Under Secretary of State for Economic, Energy
and Agricultural Affairs, as Chairman of the Commodity Futures Trading
Commission, and as a special assistant to the President on the staff of the
National Security Council.
Before his government service, Mr. Jeffery spent 18 years at Goldman Sachs
& Co where he was Managing Partner of Goldman Sachs in Paris and led the
firm's European Financial Institutions Group in London. Prior to joining
Goldman Sachs, Mr. Jeffery was a corporate attorney with Davis Polk &
Wardwell.
Mr. Jeffery is a graduate of Yale University and holds an M.B.A. and J.D. from
Stanford University.
Emma Davies
DIRECTOR, CHAIR OF AUDIT AND RISK COMMITTEE
Emma is the Chief Investment Officer at the Guy's & St Thomas' Foundation
leading the management of their £1bn charitable endowment.
Her previous role was at Octopus Ventures as co-CEO, before which she spent
5 years as a partner at Marylebone Partners, building and leading their direct
investing capability. Emma has a wealth of experience, expertise and networks
from a range of world class investment houses including J.P. Morgan, Perry
Capital, Big Society Capital (where she was the Chief Investment Officer) and
The Welcome Trust. She has a particular interest and focus on ESG, Impact and
Responsible Investment considerations.
Emma has an MA from Oxford University and an MSc from LSE.
Edward Cumming-Bruce
DIRECTOR, CHAIR OF NOMINATION COMMITTEE
Mr. Cumming-Bruce is the Vice Chairman of Gleacher Shacklock LLP, which he
joined in August 2003. Prior to this, he worked for 12 years at Dresdner
Kleinwort Wasserstein where he held a number of senior positions including a
Co-Head of Global Telecoms Investment Banking, Co-Head of UK Investment
Banking and Global Head of Equity Capital Markets.
Mr. Cumming-Bruce has extensive experience advising a range of major European
companies on capital markets and restructuring transactions as well as mergers
and acquisitions. Prior to Dresdner Kleinwort Wasserstein, he worked at
Schroders.
Mr. Cumming-Bruce is a graduate of Oxford University.
Report of the Directors
The Directors present their Annual Report and audited financial statements for
the Company for the year ended 31 December 2024. The Corporate Governance
Report forms part of this report.
Details of the Directors who held office during the year and as at the date of
this report are given above.
Capital Structure
To enable the Company to obtain a certificate to commence business and to
exercise its borrowing powers under section 761 CA 2006, on 11 March 2019, 1 E
Share of £1 and 50,000 shares of £1 each were allotted to Riverstone
Investment Group LLC and paid up in full, as Management Shares. The E Share
and Management Shares grant the registered holders the right to receive notice
of and to attend but, except where there are no other shares of the Company in
issue, not to speak or vote at any general meeting of the Company. The
Management Shares were redeemed in full on 28 May 2019. The E Shares are not
redeemable.
As at 31 December 2024, the Company's issued share capital comprised
68,157,036 Ordinary Shares (2023: 90,805,237) and 1 E Share (2023: 1).
Ordinary Shareholders are entitled to all distributions paid by the Company
and, on a winding up, provided the Company has satisfied all of its
liabilities, the Shareholders are entitled to all of the surplus assets of the
Company.
Ordinary Shareholders are entitled to attend and vote at all general meetings
of the Company and, on a poll, to one vote for each Ordinary Share held.
Authority to Purchase Own Shares
The current authority of the Company to make market purchases of its issued
share capital expires at the conclusion of the Company's AGM on 22 May 2025.
The Company's authority to generally and unconditionally make market purchases
(within the meaning of section 693(4) of the Companies Act 2006) of its
Ordinary Shares of $0.01 each in the capital of the Company, is subject to the
following conditions:
i. the maximum number of Ordinary Shares authorised to be
purchased is 13,611,705 representing 14.99 per cent of the Company's issued
ordinary share capital as at 22 April 2024;
ii. the minimum price (excluding expenses) which may be paid
for an Ordinary Share is $0.01;
iii. the maximum price (excluding expenses) which may be paid
for each Ordinary Share is the higher of: (i) an amount equal to 105 per cent
of the average of the middle-market quotations of an Ordinary Share as derived
from the London Stock Exchange Daily Official List for the five business days
immediately preceding the day on which the Ordinary Share is contracted to be
purchased; and (ii) an amount equal to the higher of the price of the last
independent trade of an Ordinary Share and the highest current independent bid
for an Ordinary Share on the trading venue where the purchase is carried out;
iv. the authority hereby conferred shall expire at the
conclusion of the next AGM of the Company after the passing of this
Resolution, or on the date which falls 15 months after the date on which this
Resolution 13 is passed, whichever is earlier (unless previously revoked,
varied or renewed by the Company in general meeting prior to such time); and
v. a contract to purchase Ordinary Shares under the
authority may be made before the expiry of the authority (as per paragraph iv
above), and concluded in whole or in part after the expiry of the authority
(as per paragraph iv above).
Further to the commencement of the managed wind-down of the Company, on 13
August the Company announced a return of capital by way of a Compulsory
Redemption of Ordinary Shares. On 9 September 2024, the Company redeemed
22,648,201 Ordinary Shares, which was approximately 25 per cent. of the
Company's Ordinary Shares. This compulsory redemption is in addition to the
Company's general authority to make market purchases of its issued shares. The
Directors will make further announcements on the progress of the managed
wind-down strategy and the return of cash to Shareholders in due course. Since
IPO, 31,842,964 shares were repurchased including the Compulsory Redemption
for a total cash consideration of $29,504,945.
Major Interests in Shares
Significant shareholdings as at 31 December 2024 are detailed below.
Ordinary Shares held %
31 December 2024
ND Capital Investments Ltd 11.01
Newton Investment Mgt 10.26
Mirabella Financial Services 9.63
Almitas Capital 9.11
Alder Investment Mgt 8.26
Metage Capital Mgt 7.17
Polar Capital 5.24
Jupiter Asset Mgt 4.40
HSBC Securities 3.22
Philip J Milton & Co 3.21
In addition, the Company also provides the same information as at 31 January
2025, being the most current information available.
Ordinary Shares held %
31 January 2025
ND Capital Investments Ltd (Tortola) 11.01
Newton Investment Mgt (London) 10.26
Mirabella Financial Services (London) 9.63
Almitas Capital (Santa Monica) 9.11
Alder Investment Mgt (London) 8.26
Metage Capital Mgt (London) 7.18
Polar Capital (London) 5.24
Jupiter Asset Mgt (London) 4.40
Philip J Milton & Co (Barnstaple) 3.41
HSBC Securities (London) 3.22
Companies Act 2006 Disclosures
In accordance with Schedule 7 of the Large and Medium Sized Companies and
Groups (Accounts and Reports) Regulations 2008, the Directors disclose the
following information:
· the Company's capital structure is detailed in note 8 to the
financial statements and all Shareholders have the same voting rights in
respect of the share capital of the Company, except that the holders of E
Shares have no right to speak or vote at any general meeting of the Company,
unless there are no other shares of the Company in issue. There are no
restrictions on voting rights that the Company is aware of, nor any agreement
between holders of securities that result in restrictions on the transfer of
securities or on voting rights;
· there exist no securities carrying special rights with regard to
the control of the Company;
· the Company does not have an employees' share scheme;
· the rules concerning the appointment and replacement of Directors
are contained in the Company's Articles of Association and the Companies Act
2006;
· Ordinary Shareholders are entitled to all dividends paid by the
Company;
· there exist no agreements to which the Company is party that may
affect its control following a takeover bid;
· there exist no agreements between the Company and its Directors
providing for compensation for loss of office that may occur because of a
takeover bid; and
· the Directors' responsibilities pursuant to Section 172 of the
Companies Act 2006, are as detailed in the Strategic Report.
Investment Trust Status
The Directors intend at all times to conduct the affairs of the Company so as
to enable it to qualify as an investment trust for the purposes of section
1158 of the Corporation Tax Act 2010, as amended and the Investment Trust
(Approved Company) (Tax) Regulations 2011. In particular, the Company must not
retain in respect of any accounting year or period an amount which is greater
than 15 percent of its eligible investment income.
Diversity and Business Review
A business review is detailed in the Investment Manager's Report and the
Company's policy on diversity is detailed in the Corporate Governance Report.
Directors' Indemnity
Directors' and Officers' liability insurance cover is in place in respect of
the Directors. The Company's Articles of Association provide, subject to the
provisions of UK legislation, an indemnity for Directors in respect of costs
which they may incur relating to the defence of any proceedings brought
against them arising out of their positions as Directors, in which they are
acquitted or judgement is given in their favour by the Court.
Except for such indemnity provisions in the Company's Articles of Association
and in the Directors' letters of appointment, there are no qualifying
third-party indemnity provisions in force.
Global Greenhouse Gas Emissions
As an investment trust, the Company's own direct environmental impact is
minimal. The Company has no greenhouse gas emissions to report from its
operations, nor does it have responsibility for any other emissions producing
sources under the Companies Act 2006 (Strategic Report and Directors' Reports)
Regulations 2013. For the same reasons as set out above, the Company has
performed an assessment and considers itself to be a low energy user under the
SECR regulations.
Risks and Risk Management
The Company is exposed to financial risks such as price risk, interest rate
risk, credit risk and liquidity risk and the management and monitoring of
these risks is detailed in note 15 to the Financial Statements.
Independent Auditor
The Directors will propose the re-appointment of Ernst & Young LLP as the
Company's Auditor and resolutions concerning this and the remuneration of the
Company's Auditor will be proposed at the AGM.
At the time that this report was approved, so far as each of the Directors is
aware:
· there is no relevant audit information of which the Auditor is
unaware; and
· they have taken all the steps they ought to have taken to make
themselves aware of any audit information and to establish that the Auditor is
aware of that information.
Annual Report
As disclosed in the Audit and Risk Committee Report, the Audit and Risk
Committee has given due consideration that the Annual Report, taken as a
whole, is fair, balanced and understandable. Therefore the Board is of the
opinion that the Annual Report provides the information necessary for
Shareholders to assess the performance, strategy and business model of the
Company.
The Board recommends that the Annual Report, the Report of the Directors and
the Independent Auditor's Report for the year ended 31 December 2024 are
received and adopted by the Shareholders and a resolution concerning this will
be proposed at the AGM.
Distribution
With respect to the quarter ended 31 December 2024 the Board has recommended a
distribution of $0.5 million, equivalent to 0.72 cents per share, as disclosed
in note 14 to the financial statements. This brings the total distribution
declared with respect to the year ended 31 December 2024 to 4.72 cents per
share.
Subsequent Events
There have been no significant subsequent events, other than those disclosed
in note 18 to the financial statements.
Strategic Report
A review of the business and future outlook, going concern statement and the
principal and emerging risks and uncertainties of the Company have not been
included in this report as they are disclosed in the Strategic Report.
On behalf of the Board
Reuben Jeffery, III
Chairman
25 February 2025
Directors' Remuneration Report
This report has been prepared by the Directors in accordance with the
requirements of the Companies Act 2006 and the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008. A resolution to
approve the Directors' Remuneration Report will be proposed at the Company's
AGM on 22 May 2025. At the AGM on 22 May 2024, Shareholders voted 99.99
percent in favour to approve the Directors' Remuneration Report for the year
ended 31 December 2024.
The Company's Auditor is required to give its opinion on the information
provided on Directors' remuneration this is specifically marked as audited on
this report and this is explained further in its report to Shareholders. The
remainder of this report is outside the scope of the external audit.
Annual Statement from the Chairman of the Board
The Board consists solely of non-executive Directors and is considered to be
entirely independent. The Board considers at least annually the level of the
Board's fees, in accordance with the AIC Code.
Remuneration Policy
As at the date of this report, the Board comprised three Directors, all of
whom are non-executive. Due to the size of the Company and the Board, there is
not a separate Remuneration Committee. Being wholly comprised of non-executive
Directors, the whole Board considers these matters.
Each Director receives a fixed fee per annum based on their roles and
responsibilities within the Company and the time commitment required. It is
not considered appropriate that Directors' remuneration should be performance
related and none of the Directors are eligible for pension benefits, share
options, long term incentive schemes or other benefits in respect of their
services as non-executive Directors of the Company.
The maximum annual limit of aggregate fees payable to the Directors was set at
the time of the Company's incorporation on 11 March 2019 at £500,000 per
annum. The Chairman is entitled to an additional fee of £10,000 per annum and
the Audit and Risk Committee Chair is entitled to an additional fee of £5,000
per annum. The Board may grant special remuneration to any Director who
performs any special or extra services to, or at, the request of the Company.
The Articles of Association provide that all Directors at the date of the
notice covering each AGM shall retire from office and each Director may offer
themselves for re-election, in accordance with corporate governance best
practice.
All of the Directors have been provided with letters of appointment, subject
to re-election by Shareholders.
A Director's appointment may at any time be terminated by and at the
discretion of either party upon written notice. A Director's appointment will
automatically end without any right to compensation whatsoever if they are not
re-elected by the Shareholders. A Director's appointment may also be
terminated with immediate effect and without compensation in certain other
circumstances. Being non-executive Directors, none of the Directors has a
service contract with the Company.
The Company's Remuneration Policy was approved at its fifth AGM on 22 May
2024, with Shareholders voting 99.92 percent in favour and 0.02 percent of
votes against. The terms and conditions of appointment of non-executive
Directors are available for inspection from the Company's registered office.
Annual Report on Remuneration (Audited Information)
The table below shows all remuneration earned by each individual Director
during the year:
Paid in the year to 31 December 2024 Change from prior year Paid in the year to 31 December 2023
$
Reuben Jeffery, III (Chairman) - £45k p.a. 57,695 3% 56,097
Emma Davies (Audit & Risk Committee Chair) - £40k p.a. 51,285 3% 49,864
Edward Cumming-Bruce (Nomination Committee Chair) - £35k p.a. 44,873 3% 43,630
Total 153,853 149,591
The Directors total annual remuneration has not changed from prior year. The
percent change detailed above is directly related to foreign exchange rate
movements in USD, as the Directors are paid in GBP.
The table below shows the change in total remuneration earned by each
individual Director over prior years:
2024 2023 2022 2021
% change from prior year
% change from prior year
% change from prior year
% change from prior year
Reuben Jeffery, III (Chairman) - £45k p.a. 3% 1% -10% 8%
Emma Davies (Audit & Risk Committee Chair) - £40k p.a. 3% 1% -10% 8%
Edward Cumming-Bruce (Nomination Committee Chair) - £35k p.a. 3% 1% -10% 8%
Amounts paid to Directors as reimbursement of travel and other incidental
expenses during the year were:
Paid in the year to 31 December 2024 Change from prior year Paid in the year to 31 December 2023
$ % $
Reuben Jeffery, III 1,840 -83% 10,541
Emma Davies - - -
Edward Cumming-Bruce - - -
Total 1,840 -83% 10,541
None of the Directors received any other remuneration or additional
discretionary payments during the year from the Company (2023: $Nil).
Directors' Interests (audited information)
Directors who held office during the year and had interests in the Ordinary
Shares of the Company as at 31 December 2024 are given in the table below.
There were no changes to the interests of each Director as at the date of this
report.
Ordinary Shares of $0.01 each held at 31 December 2024 Ordinary Shares of $0.01 each held at 31 December 2023
Reuben Jeffery, III 75,059 100,000
Emma Davies 33,777 45,000
Edward Cumming-Bruce 37,530 50,000
Relative Importance of Spend on Pay
The remuneration of the Directors with respect to the year totalled $153,853
(2023: $149,591) in comparison to distributions paid or declared to
Shareholders with respect to the year of $3.8 million (2023: $7.7 million).
Company Performance
The performance of the AIC Investment Trust Direct Lending sector index is
shown as a market reference for investors. The Company is primarily involved
in managing senior secured loans to energy-related companies through its SPVs.
Comparable peers making debt investments also use direct lending indexes for
benchmarking purposes and so the AIC Investment Trust Direct Lending sector
index is chosen for benchmarking purposes.
On behalf of the Board
Reuben Jeffery, III
Chairman
25 February 2025
Directors' Responsibilities Statement
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the
Company financial statements in accordance with UK-adopted IAS ("UK-adopted
IAS"). 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 Company and of the profit or loss for the Company
for that year.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies in accordance with IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors and then apply
them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable information;
· provide additional disclosures when compliance with the specific
requirements of UK-adopted IAS is insufficient to enable users to understand
the impact of particular transactions, other events and conditions on the
financial position and financial performance;
· state whether they have been prepared in accordance with
UK-adopted IAS, subject to any material departures disclosed and explained in
the financial statements;
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business;
· for the reasons stated in the Strategic Report and note 2, the
financial statements have not been prepared on a going concern basis; and
· prepare a Report of the Directors, a Strategic Report and
Directors' Remuneration Report which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities. The Directors are responsible for ensuring
that the Annual Report, taken as a whole, is fair, balanced and understandable
and provides the information necessary for Shareholders to assess the
Company's performance, business model and strategy.
Website Publication
The Directors are responsible for ensuring the Annual Report and the financial
statements are made available on a website. Financial statements are published
on the Company's website in accordance with legislation in the UK governing
the preparation and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of the
Company's website is the responsibility of the Directors. The Directors'
responsibilities also extend to the ongoing integrity of the financial
statements contained therein.
Directors' Responsibilities Pursuant to DTR4.1
The Directors confirm that to the best of their knowledge:
· the Company's financial statements have been prepared in
accordance with UK-adopted IAS and give a true and fair view of the assets,
liabilities, financial position and profit and loss of the Company; and
· the Annual Report includes a fair review of the development and
performance of the business and the financial position of the Company,
together with a description of the principal and emerging risks and
uncertainties that they face.
On behalf of the Board
Reuben Jeffery, III
Chairman
25 February 2025
Corporate Governance Report
This Corporate Governance Report forms part of the Report of the Directors.
The Board operates under a framework for corporate governance which is
appropriate for an investment company. The Company is not required to comply
with the UK Listing Rules, however as a matter of good corporate governance,
the Company voluntarily complies with the provisions of the Listing Rules
applicable to closed-ended investment companies.
The Company became a member of the AIC with effect from 28 May 2019 and has
therefore put in place arrangements to comply with the AIC Code and, in
accordance with the AIC Code, complies with the UK Code.
The AIC Code and the AIC Guide are available on the AIC's website,
https://www.theaic.co.uk (https://www.theaic.co.uk) .
The AIC Code, as explained by the AIC Guide, addresses all the principles set
out in the UK Code, as well as setting out additional principles and
recommendations on issues that are of specific relevance to investment
companies such as the Company. The Board considers that reporting against the
principles and recommendations of the AIC Code, by reference to the AIC Guide,
provides better information to Shareholders. The UK Code is available on the
Financial Reporting Council's website, https://www.frc.org.uk
(https://www.frc.org.uk) .
The Company has complied with the recommendations of the AIC Code and the
relevant provisions of the UK Code, except as set out below.
The UK Code includes provisions relating to:
· the role of the chief executive;
· executive directors' remuneration; and
· the need for an internal audit function.
For the reasons set out in the AIC Guide, and as explained in the UK Code, the
Board considers that the above provisions are not currently relevant to the
position of the Company, being an externally managed investment company, which
delegates most day-to-day functions to third parties.
The Company does not have a chief executive or any executive directors. The
Company has not established a separate remuneration committee as the Company
has no executive officers, nor has it established a Senior Independent
Director due to the size of the Board and the Company. The Board is satisfied
that any relevant issues that arise can be properly considered by the Board.
The Company has no employees or internal operations and has therefore not
reported further in respect of these provisions. The need for an internal
audit function is discussed in the Audit and Risk Committee Report.
The Board
The Company is led and controlled by a Board of Directors, which is
collectively responsible for the long-term success of the Company. It does so
by creating and preserving value, and has as its foremost principle, acting in
the interests of Shareholders, whilst having regard to the interests of wider
society.
The Company believes that the composition of the Board is a fundamental driver
of its success, as the Board must provide strong and effective leadership of
the Company. The current Board was selected, as their biographies illustrate,
to bring a breadth of knowledge, skills and business experience to the
Company. The non-executive Directors provide independent challenge and review,
bringing wide experience, specific expertise and a fresh objective
perspective.
As at the date of this report, the Board consists of three non-executive
Directors, all of whom are independent of the Company's Investment Manager.
All Directors were appointed on 2 April 2019 and served throughout the year.
The AIC Code requires that Directors be subject to an annual election by
Shareholders, and the Directors comply with this requirement. All of the
Directors, including the Chairman, shall offer themselves for re-election at
the forthcoming AGM. The strong and diverse mix of experienced individuals on
the current Board enables high calibre debate and constructive challenge.
Having considered their effectiveness, demonstration of commitment to the
role, length of service, attendance at meetings and contribution to the
Board's deliberations, the Board approves the nomination for re-election of
all of the Directors.
At each subsequent AGM of the Company, each of the Directors at the date of
the notice convening the AGM shall retire from office and may offer themselves
for election or re-election by the Shareholders, in accordance with corporate
governance best practice.
The Chairman of the Board is independent and is appointed in accordance with
the Company's Articles of Incorporation. Mr. Jeffery is considered to be
independent because he:
· has no current or historical employment with the Investment
Manager;
· has no current directorships or partnerships in any other
investment funds managed by the Investment Manager; and
· is not an executive of a self-managed company or an ex-employee
who has left the executive team of a self-managed company within the last five
years.
The Board meets at least four times a year for regular, scheduled meetings and
should the nature of the activity of the Company require it, additional
meetings may be held, some at short notice. At each meeting, the Board follows
a formal agenda that covers the business to be discussed. The Company
Secretary assists the Board and Committee Chairs in agreeing the agenda in
sufficient time before the meeting to enable input from key stakeholders. Care
is taken to ensure that presentation of papers are clear with the appropriate
level of detail to assist the Board and Committees in discharging their
duties. The Board utilises a web-based system which provides ready access to
Board and Committee papers and materials. The primary focus at Board
meetings is a review of investment performance and associated matters such as
asset allocation, share price discount/premium management, investor relations,
peer group information, gearing, industry issues and principal and emerging
risks and uncertainties in particular those identified in the Strategic
Report.
The Board may request to be supplied in a timely manner with information by
the Investment Manager, Administrator, Company Secretary and other advisers in
a form and of a quality to enable it to discharge its duties.
The Company has adopted a share dealing code based on the requirements of the
UK Market Abuse Regulation for the Board and will seek to ensure compliance by
the Board and relevant personnel of the Investment Manager and other third
party service providers with the terms of the share dealing code.
The Board also considers whether the Company has inside information and if an
announcement obligation has arisen. The Board reviews the scope and content of
disclosures in order to ensure that information released to the market by the
Company is appropriate. It is responsible for reviewing the systems,
procedures and controls in place to enable the Company to comply with its
legal and regulatory obligations in relation to inside information.
The Board is also responsible for reviewing and considering any actual or
potential conflicts of interest referred to it in accordance with the
Company's conflicts of interest policy and approving any such conflicts. At
least annually, the Board reviews the adequacy of disclosure to Shareholders
regarding potential conflicts of interest and the effectiveness of the
Company's conflicts of interest policy. In addition, the Board is responsible
for reviewing and approving any related party transactions. Other key matters
requiring Board approval include capital structure, the Company's distribution
policy and changes to the Investment Policy.
In the performance of its duties, the Board is committed to maintaining a good
understanding of the views of Shareholders and considerable importance is
attached to communicating with Shareholders.
The Culture
The Board discussed the Company's culture over the course of the year. It was
agreed that the Company's culture is built around that of the Investment
Manager, with a focus on long lasting relationships with a diverse investor
base; sustainable investment excellence; and a world class team demonstrating
extensive industry knowledge.
The Board continues to operate in a respectful, transparent and inclusive
manner, where constructive challenge of opinions is welcomed and differences
of perspectives are encouraged. The Board also undertakes continued
engagement with the Investment Manager and other advisors to ensure that
practices and behaviour throughout the business are aligned with the Company's
purpose and strategy.
The Board will continue to monitor the Company's culture on an annual basis
through continued engagement with Shareholders and management.
Diversity Policy
The Board monitors developments in corporate governance to ensure the Board
remains aligned with best practice especially with respect to the increased
focus on diversity. The Board acknowledges the importance of diversity,
(including gender, social and ethnic backgrounds and cognitive and personal
strengths) for the effective functioning of the Board and commits to
supporting diversity in the boardroom. It is the Board's ongoing aspiration to
have a well-diversified representation. The Board also values diversity of
business skills and experience because Directors with diverse skills sets,
capabilities and experience gained from different geographical backgrounds
enhance the Board by bringing a wide range of perspectives to the Company.
The Board recognises the importance of an inclusive and diverse Board in
facilitating a collaborative culture and enhancing the delivery of the
Company's strategic objectives. The Board will continue to monitor and
actively work on ensuring that it maintains and nurtures a Board that is as
diverse as possible. This baseline representation and understanding will help
inform the development of future initiatives on diversity and inclusion.
As at the date of this report, the Board comprised two men and one woman, all
non-executive Directors who are considered to be independent of the Investment
Manager and free from any business or other relationship that could materially
interfere with the exercise of their independent judgement.
The Investment Manager has a diverse employee base and continues to dedicate
recruitment resources to increasing diversity across all positions and levels.
Board Tenure and Re-election
As the Company was incorporated on 11 March 2019, there are no issues to be
considered by the Board with respect to long tenure. In accordance with the
AIC Code, in the event that any Director, including the Chairman, shall have
been in office (or on re-election would have been at the end of that term of
office) for more than nine years, the Company will consider further whether
there is a risk that such a Director might reasonably be deemed to have lost
independence through such long service. The Board will consider its
composition and succession planning on an ongoing basis. All Directors will
stand for annual re-election at each AGM. In accordance with the AIC Code, the
Board recognises that Directors serving nine years or more may appear to have
their independence impaired. However, the Board may nonetheless consider
Directors to remain independent and will provide a clear explanation within
future Annual Reports and financial statements as to its reasoning. A Director
who retires at an AGM may, if willing to continue to act, be elected or
re-elected at that meeting. If, at a general meeting at which a Director
retires, the Company neither re-elects that Director nor appoints another
person to the Board in the place of that Director, the retiring Director
shall, if willing to act, be deemed to have been re-elected unless at the
general meeting it is resolved
not to fill the vacancy or unless a resolution for the re-election of the
Director is put to the meeting and not passed. Directors are appointed under
letters of appointment.
The Board will consider its composition and succession planning on an ongoing
basis.
The Board recommends that Shareholders vote in favour of the re-election of
all Directors at the upcoming AGM of the Company.
Duties and Responsibilities
The Board has overall responsibility for the Company's activities, including
reviewing its investment
activity, performance, business conduct and policy. The Directors also review
and supervise the Company's delegates and service providers, including the
Investment Manager.
The Directors may delegate certain functions to other parties. In particular,
the Directors have delegated responsibility for management of the Company's
portfolio of investments to the Investment Manager.
The Board retains direct responsibility for certain matters, including (but
not limited to):
· approving the Company's long-term objective and any decisions of
a strategic nature including any change in investment objective, policy and
restrictions, including those which may need to be submitted to Shareholders
for approval;
· reviewing the performance of the Company in light of the
Company's strategic objectives and budgets ensuring that any necessary
corrective action is taken;
· ensuring appropriate internal controls and risk management
frameworks are in place to manage and continually assess risk;
· appointing, overall supervision and removal of key service
providers and any material amendments to the agreements or contractual
arrangements with any key delegates or service providers;
· approving quarterly distributions and the Company's distribution
policy;
· approving any transactions with 'related parties' for the
purposes of the Company's voluntary compliance with the applicable sections of
the UK Listing Rules;
· reviewing the Company's valuation policy and proposed valuations
of its investments;
· reviewing the Company's corporate governance arrangements;
· providing constructive challenge and strategic guidance and
offering specialist advice; and
· approving any actual or potential conflicts of interest.
The Directors have access to the advice and services of the Administrator, who
is responsible to the Board for ensuring that Board procedures are followed
and that it complies with applicable law and regulations of the LSE. Where
necessary, in carrying out their duties, the Directors may seek independent
professional advice and services at the expense of the Company. The Company
maintains Directors' and Officers' liability insurance in respect of legal
action against its Directors on an ongoing basis.
The Board's responsibilities for the Annual Report are set out in the
Directors' Responsibilities Statement. The Board has responsibility for
ensuring that the Company keeps proper accounting records which disclose with
reasonable accuracy at any time the financial position of the Company and
which enable it to ensure that the financial statements comply with applicable
regulations. It is the Board's responsibility to present a fair, balanced and
understandable Annual Report, which provides the information necessary for
Shareholders to assess the performance, strategy and business model of the
Company. This responsibility extends to the half-yearly financial reports,
quarterly portfolio valuations and other price-sensitive public reports.
Directors' attendance at Board and Committee Meetings
One of the key criteria the Company uses when selecting non-executive
Directors is their confirmation prior to their appointment that they will be
able to allocate sufficient time to the Company to discharge their
responsibilities in a timely and effective manner.
The Board formally met 9 times during the year.
Directors are encouraged when they are unable to attend a meeting to give the
Chairman their views and comments on matters to be discussed, in advance. In
addition to their meeting commitments, the non-executive Directors also liaise
with the Investment Manager whenever required and there is regular contact
outside the Board meeting schedule.
The number of meetings of the full Board and Committees in the period year to
31 December 2024 and attendance by each Director is set out below:
Board Audit and Risk Nomination Management
Meetings Committee Committee Engagement
(max 10) Meetings Meetings Committee Tenure as at 31 December 2024
(max 4) (max 1) Meetings
(max 1)
Director A B A B A B A B
9 9 4 4 1 1 1 1 5 years 9 months
Reuben Jeffery, III
9 9 4 4 1 1 1 1 5 years 9 months
Emma Davies
9 8 4 3 1 1 1 1 5 years 9 months
Edward Cumming-Bruce
Column A: indicated the number of meetings held during the year.
Column B: indicates the number of meetings attended by the Director during the
year.
A quorum is comprised of any two or more members of the Board from time to
time, to perform administrative and other routine functions on behalf of the
Board, subject to such limitations as the Board may expressly impose on this
committee from time to time.
Committees of the Board
The Board believes that it and its committees have an appropriate composition
and blend of skills, experience, independence and diversity of backgrounds to
discharge their duties and responsibilities effectively. The Board is of the
view that no one individual or small group dominates decision-making. The
Board keeps its membership, and that of its committees, under review to ensure
that an acceptable balance is maintained, and that the collective skills and
experience of its members continue to be refreshed. It is satisfied that all
Directors have sufficient time to devote to their roles and that undue
reliance is not placed on any individual.
The Board has three standing Committees, being the Audit and Risk Committee,
the Nomination Committee and the Management Engagement Committee. The roles
and responsibilities of each Committee are included in their respective
paragraphs below. Each committee of the Board has written terms of reference,
approved by the Board, summarising its objectives, remit and powers, which are
available on the Company's website and reviewed on an annual basis. All
committee members are provided with appropriate induction on joining their
respective committees, as well as on-going access to training. Minutes of all
meetings of the committees are made available to all Directors and feedback
from each of the committees is provided to the Board by the respective
committee Chairman at the next Board meeting. The Chairman of each committee
attends the AGM to answer any questions on their committee's activities.
The Board and its committees are supplied with regular, comprehensive and
timely information in a form and of a quality that enables them to discharge
their duties effectively. All Directors are able to make further enquiries of
management whenever necessary, and have access to the services of the Company
Secretary.
Audit and Risk Committee
The Audit and Risk Committee is chaired by Ms. Davies and comprises all the
non-executive Directors. The Audit and Risk Committee, the Investment Manager,
the Administrator and the external auditor, Ernst & Young LLP, have held
discussions regarding the audit approach and identified risks. The external
auditor attends Audit and Risk Committee meetings and a separate private
meeting is also held routinely to afford them the opportunity of discussions
without the presence of management. The Audit and Risk Committee activities
are contained in the Report of the Audit and Risk Committee.
The Company's Audit and Risk Committee, among other things, considers the
appointment, independence and remuneration of the independent auditors and
reviews the financial statements and accounting policies. The principal duties
of the Audit and Risk Committee are to consider the appointment of the
independent auditors, to discuss and agree with the independent auditors the
nature and scope of the audit, to keep under review the scope, results,
quality and effectiveness of the audit and the independence and objectivity of
the independent auditors, and to review the independent auditors' letter of
engagement, Audit Planning Report and Audit Results Report. The Audit and Risk
Committee also monitors and reviews the adequacy and effectiveness of internal
control and risk management systems and advises the Board on the Company's
overall risk appetite. The Audit and Risk Committee meets at least three times
a year.
Nomination Committee
The Nomination Committee meets at least once a year pursuant to its terms of
reference. The Nomination Committee is chaired by Mr. Cumming-Bruce and
comprises all of the non-executive Directors.
The Nomination Committee is convened for the purpose of considering the
appointment of additional Directors as and when considered appropriate. The
Nomination Committee recognises the continuing importance of planning for the
future and ensuring that succession plans are in place. With regard to Board
appointments, the Nomination Committee prepares specifications of the roles
and responsibilities, including expected time commitments, and consideration
is given to the existing experience, knowledge and background of current Board
members, as well as the strategic and business objectives of the Company. The
Committee would then use open advertising and/or an external search
consultancy to facilitate recruitment. In considering appointments to the
Board, the Nomination Committee will take into account the ongoing
requirements of the Company and evaluate the balance of skills, experience,
independence, and knowledge of each candidate while promoting diversity of
gender, and of social and ethnic background. Therefore, appointments will be
made on personal merit and against objective criteria with the aim of bringing
new skills and different perspectives to the Board whilst taking into account
the existing balance of knowledge, experience and diversity.
In the case of candidates for non-executive directorships, care will be taken
to ascertain that they have sufficient time to fulfil their Board and, where
relevant, committee responsibilities. The Board believes that the terms of
reference of the Nomination Committee ensure that it operates in a rigorous
and transparent manner. The Board believes that, as a whole, it comprises an
appropriate balance of skills, experience and knowledge. The Board also
believes that diversity of experience and approach, including gender
diversity, amongst Board members is of great importance and it is the
Company's policy to give careful consideration to issues of Board balance and
diversity when making new appointments.
The Nomination Committee has reviewed the composition, structure and diversity
of the Board, succession planning, the independence of the Directors and
whether each of the Directors has sufficient time available to discharge their
duties effectively. The Committee and the Board confirm that they believe that
the Board has an appropriate mix of skills and backgrounds and was selected
with that in mind, that a majority of Directors should be considered as
independent in accordance with the provisions of the AIC Code and that all
Directors have the time available to discharge their duties effectively.
Accordingly, the Board recommends that Shareholders vote in favour of the
election of all Directors at the upcoming AGM of the Company.
Management Engagement Committee
The Management Engagement Committee is chaired by Mr. Jeffery and comprises
all of the non‑executive Directors. The Management Engagement Committee
meets at least once a year pursuant to its terms of reference.
The Management Engagement Committee provides a formal mechanism for the review
of the performance of the Investment Manager and the Company's other advisers
and service providers. It carries out this review through consideration of a
number of objective and subjective criteria and through a review of the terms
and conditions of the advisers' appointments with the aim of evaluating
performance, identifying any weaknesses and ensuring value for money for the
Shareholders. On 13 November 2024, the Management Engagement Committee
formally reviewed the performance of the Investment Manager and other service
providers and confirmed that performance had been satisfactory to date.
Remuneration Committee
The AIC Code recommends that companies appoint a Remuneration Committee,
however the Board has not deemed this necessary, as being wholly comprised of
non-executive Directors, the whole Board considers these matters.
Board Performance and Evaluation
In accordance with Provision 26 of the AIC Code, the Board is required to
undertake a formal and rigorous evaluation of its performance on an annual
basis. Such an evaluation of the performance of the Board as whole, the Audit
and Risk Committee, the Nomination Committee, the Management Engagement
Committee, individual Directors and the Chairman is carried out under the
mandate of the Nomination Committee. The Board believes that the current mix
of skills, experience, knowledge and age of the Directors is appropriate to
the requirements of the Company.
On 20 February 2024, the Nomination Committee conducted an internal evaluation
of the Board and its Committee's and individual Directors. This was in the
form of performance appraisal, questionnaires and discussion to determine
effectiveness and performance in various areas, as well as the Directors'
continued independence and tenure. This process was facilitated by the Company
Secretary. The review concluded that the overall performance of the Board and
Audit and Risk Committee was satisfactory and the Board was confident in its
ability to continue to govern the Company effectively.
New Directors receive an induction on joining the Board and regularly meet
with the senior management employed by the Investment Manager both formally
and informally to ensure that the Board remains regularly updated on all
issues. All members of the Board are members of professional bodies and serve
on other Boards, which ensures they are kept abreast of the latest technical
developments in their areas of expertise.
The Board arranges for presentations from the Investment Manager, the
Company's brokers and other advisers on matters relevant to the Company's
business. The Board will assess the training needs of Directors on an annual
basis.
Internal Control and Financial Reporting
The Directors acknowledge that they are responsible for establishing and
maintaining the Company's system of internal control and reviewing its
effectiveness. Internal control systems are designed to manage rather than
eliminate the failure to achieve business objectives and can only provide
reasonable but not absolute assurance against material misstatements or loss.
However, the Board's objective is to ensure that the Company has appropriate
systems in place for the identification and management of risks. The Directors
carry out a robust assessment of the principal and emerging risks facing the
Company, including those that would threaten its business model, future
performance, solvency or liquidity. As further explained in the Audit and Risk
Committee Report, the risks of the Company are outlined in a risk matrix which
was reviewed and updated during the year. The Board continually reviews its
policy setting and updates the risk matrix at least quarterly to ensure that
procedures are in place with the intention of identifying, mitigating and
minimising the impact of risks should they crystallise.
The key procedures which have been established to provide internal control are
that:
· the Board has delegated the day-to-day operations of the Company
to the Administrator and Investment Manager; however, it retains
accountability for all functions it delegates;
· the Board clearly defines the duties and responsibilities of the
Company's agents and advisers and appointments are made by the Board after due
and careful consideration. The Board monitors the ongoing performance of such
agents and advisers and will continue to do so through the Management
Engagement Committee;
· the Board monitors the actions of the Investment Manager at
regular Board meetings and is given frequent updates on developments arising
from the operations and strategic direction of the underlying investee
companies;
· the Administrator provides administration and company secretarial
services to the Company;
· The Administrator maintains a system of internal control on which
they report to the Board;
· the Audit and Risk Committee monitors risks, including those of
the Administrator and Investment Manager; and
· the Board has reviewed the need for an internal audit function
and has decided that the systems and procedures employed by the Administrator
and Investment Manager, including their own internal controls and procedures,
provide sufficient assurance that an appropriate level of risk management and
internal control, which safeguards Shareholders' investments and the Company's
assets, is maintained. An internal audit function specific to the Company is
therefore considered unnecessary.
Internal controls over financial reporting are designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external reporting purposes. The Administrator and
Investment Manager both operate risk controlled frameworks on an ongoing basis
within a regulated environment. The Administrator formally reports to the
Board quarterly through a compliance report and holds the International
Standard on Assurance Engagements (ISAE) 3402 Type 2 certification. This
entails an independent rigorous examination and testing of their controls and
processes. The Investment Manager formally reports to the Board quarterly
including updates within Riverstone and also engages with the Board on an
ad-hoc basis as required. No weaknesses or failings within the Administrator
or Investment Manager have been identified.
The systems of control referred to above are designed to ensure effectiveness
and efficient operation, internal control and compliance with laws and
regulations. In establishing the systems of internal control, regard is paid
to the materiality of relevant risks, the likelihood of costs being incurred
and costs of control. It follows therefore that the systems of internal
control can only provide reasonable but not absolute assurance against the
risk of material misstatement or loss. This process has been in place for the
year under review and up to the date of approval of this Annual Report and
financial statements. It is reviewed by the Board and is in accordance with
the FRC's internal control publication: Guidance on Risk Management, Internal
Control and Related Financial and Business Reporting.
Investment Management Agreement
The Investment Manager has been appointed as the sole investment manager of
the Company and the SPVs. Pursuant to the Investment Management Agreement, the
Investment Manager has responsibility for and discretion over managing the
Company's and the SPVs' direct and indirect assets, subject to, and in
accordance with, the Company's revised investment policy. The Investment
Manager is entitled to delegate all or part of its functions under the
Investment Management Agreement to one or more of its affiliates. A summary of
fees paid to the Investment Manager is given in note 12 to the financial
statements.
The Investment Manager's appointment is terminable by the Investment Manager
or the Company on not less than 12 months' notice, and such notice is not to
expire prior to the third anniversary of
Admission. The Investment Management Agreement may be terminated with
immediate effect and without compensation, by either the Investment Manager or
the Company if the other party has gone into liquidation, administration or
receivership or has committed a material breach of the Investment Management
Agreement.
The Company has delegated the provision of all services to external service
providers whose work is overseen by the Management Engagement Committee at its
regular scheduled meetings. Each year, a detailed review of performance
pursuant to their terms of engagement is undertaken by the Management
Engagement Committee.
The Board as a whole reviewed the Company's compliance with the UK Code, the
Listing Rules, the Disclosure Guidance and Transparency Rules and the AIC
Code. In accordance with Listing Rule 15.6.2(2)R and having formally appraised
the performance and resources of the Investment Manager, in the opinion of the
Directors, the continuing appointment of the Investment Manager on the terms
agreed is in the interests of the Shareholders as a whole. The Board is
pleased with the performance of the Investment Manager, based on the selection
of high-quality E&P, midstream, energy services, solar, lithium-ion, power
and coal sectors.
SUB-MANAGEMENT AGREEMENT
On 31 December 2023, Riverstone Holdings LLC and their affiliate Riverstone
Investment Group (collectively, "Riverstone") entered into an agreement with
Breakwall Capital LP to provide sub-management services for all credit
vehicles managed by Riverstone, including RCOI. Breakwall is a newly formed
independent asset-management firm regulated by the SEC as a Registered
Investment Advisor, owned and operated by the existing Riverstone Credit
Partners team. Services provided by Breakwall commenced on 2 January 2024.
Under the arrangement, Riverstone has remained the Manager of RCOI on the
terms of RCOI's existing management agreement and all aspects of the ongoing
management of the Company, including the day-to-day investment team has
remained consistent with current practices. Breakwall, as Sub-Manager, in its
capacity as Sub-Manager to the Manager, the Sub-Manager shall recommend to the
Manager each and every action to be taken by the Manager pursuant to the
governing agreements of the Existing Credit Vehicles. There has been no
increase in fees payable by RCOI as a result of the modified arrangements. The
Board of RCOI was involved in establishing the Sub-Management agreement and
are confident that the structure of Riverstone as manager and Breakwall as the
sub-manager will continue to deliver strong returns for shareholders.
Relations with Shareholders
The Board welcomes Shareholders' views and places great importance on
communication with its Shareholders. The Company's AGM provides a forum for
Shareholders to meet and discuss issues with the Directors of the Company. The
Chairman and other Directors are also available to meet with Shareholders at
the AGM to hear their views and discuss any issues or concerns, including in
relation to Board composition, governance and strategy, or at other times, if
required.
The Company reports formally to Shareholders in a number of ways; regulatory
news releases through the London Stock Exchange's Regulatory News Service,
announcements are issued in response to events or routine reporting
obligations. Also, an Interim Report is published each year outlining
performance to 30 June and the Annual Report is published each 31 December
year-end, both of which are available on the Company's website. In addition,
the Company's website contains comprehensive information, including Company
notifications, share information, financial reports, investment objectives and
policy, investor contacts and information on the Board and corporate
governance. Shareholders and other interested parties can subscribe to email
news updates by registering online on the website.
The Directors and Investment Manager receive informal feedback from analysts
and investors, which is presented to the Board by the Company's Broker. The
Company Secretary also receives informal feedback via queries submitted
through the Company's website and these are addressed by the Board, the
Investment Manager or the Company Secretary, where applicable.
Other Stakeholders
The wider stakeholders of the Company comprise its service providers, investee
companies and suppliers and the Board recognises and values these
stakeholders.
As an investment trust with no employees, the Company's relationship with its
service providers, including the Investment Manager, is of particular
importance. Service providers have been selected and engaged based on due
diligence and references including consideration of their internal controls
and expertise. The Company has established a Management Engagement Committee,
who review the performance of each service provider annually and provide
feedback as appropriate, to maintain good working relationships.
The Company's investment helps to ensure that the investee companies have the
resources to perform well, which helps to drive the local economies in which
these companies are located. Responsible investing principles have been
applied to each of the investments made, which ensures that appropriate due
diligence has been conducted and that the terms of the investments are clearly
set out and agreed with investee companies in advance.
The Board recognises that relationships with suppliers are enhanced by prompt
payment and the Company's Administrator, in conjunction with the Investment
Manager, ensures all payments are processed within the contractual terms
agreed with the individual suppliers.
Whistleblowing
The Board has considered arrangements by which staff of the Investment Manager
or Administrator may, in confidence, raise concerns within their respective
organisations about possible improprieties in matters of financial reporting
or other matters. It has concluded that adequate arrangements are in place for
the proportionate and independent investigation of such matters and, where
necessary, for appropriate follow-up action to be taken within their
organisation.
By order of the Board
Reuben Jeffery, III
Chairman
25 February 2025
Audit and Risk Committee Report
The Audit and Risk Committee, chaired by Ms. Emma Davies, operates within
clearly defined terms of reference, which are available from the Company's
website, and include all matters indicated by Disclosure Guidance and
Transparency Rule 7.1, the AIC Code and the UK Code. Its other members are Mr.
Reuben Jeffery, III and Mr. Edward Cumming-Bruce. Members of the Audit and
Risk Committee must be independent of the Company's external auditor and
Investment Manager. Although Mr. Reuben Jeffery, III is Chairman of the
Company, the Board believes that it is appropriate for him to be a member of
the Audit and Risk Committee, given the size of the Company's Board. The Audit
and Risk Committee meets no less than three times in a year, and at such other
times as the Audit and Risk Committee Chair requires, and meets the external
auditor at least once a year.
The Committee members have considerable financial and business experience and
the Board has determined that the membership as a whole has sufficient recent
and relevant sector and financial experience to discharge its responsibilities
and that at least one member has competence in accounting or auditing.
Responsibilities
The main duties of the Audit and Risk Committee are to:
· monitor the integrity of the Company's financial statements and
regulatory announcements relating to its financial performance and review
significant financial reporting judgements;
· report to the Board on the appropriateness of the Company's
accounting policies and practices;
· consider the ongoing assessment of the Company as a going concern
and assessment of longer-term viability;
· review the valuations of the Company's investments prepared by
the Investment Manager, and provide a recommendation to the Board on the
valuation of the Company's investments;
· oversee the relationship with the external auditor, including
agreeing its remuneration and terms of engagement, review its reporting,
monitoring its independence, objectivity and effectiveness, ensuring that any
non-audit services are appropriately considered, and making recommendations to
the Board on its appointment, re-appointment or removal, for it to put to the
Shareholders in general meeting;
· monitor and consider annually whether there is a need for the
Company to have its own internal audit function;
· keep under review the effectiveness of the Company's internal
controls, including financial controls and risk management systems;
· review and consider the UK Code, the AIC Code, and the AIC
Guidance on Audit Committees; and
· report to the Board on how it has discharged its
responsibilities.
The Audit and Risk Committee is aware that certain sections of the Annual
Report are not subject to formal statutory audit, including the Chairman's
Statement, the Investment Manager's Report and certain sections of the
Directors' Remuneration Report. Financial information in these sections is
reviewed by the Audit and Risk Committee.
The Audit and Risk Committee is required to report its findings to the Board,
identifying any matters on which it considers that action or improvement is
needed, and make recommendations on the steps to be taken.
The external auditor was invited to attend the Audit and Risk Committee
meetings at which the Annual Report and Interim Financial Report were
considered. They have the opportunity to meet with the Committee without
representatives of the Investment Manager or Administrator being present at
least once per year.
Financial Reporting
The primary role of the Audit and Risk Committee in relation to financial
reporting is to review with the Administrator, the Investment Manager and the
external auditor and report to the Board on the appropriateness of the Annual
Report and financial statements and Interim Financial Report, concentrating
on, amongst other matters:
· the quality and acceptability of accounting policies and
practices;
· the clarity of the disclosures and compliance with financial
reporting standards and relevant financial and governance reporting
requirements;
· material areas in which significant judgements have been applied
or where there has been discussion with the external auditor including going
concern and viability statement;
· whether the Annual Report and financial statements, taken as a
whole, is fair, balanced and understandable and provides the information
necessary for Shareholders to assess the Company's performance, business model
and strategy; and
· any correspondence from regulators in relation to financial
reporting.
To aid its review, the Audit and Risk Committee considers reports from the
Administrator and the Investment Manager.
Meetings
During the year ended 31 December 2024, the Audit and Risk Committee met 4
times formally and there was ongoing liaison and discussion between the
external auditor and the Audit and Risk Committee Chair with regards to the
audit approach and the identified risks.
The matters discussed at those meetings include:
· review of the terms of reference of the Audit and Risk Committee
for approval by the Board;
· review of the accounting policies and format of the financial
statements;
· review and approval of the audit plan of the external auditor;
· discussion and approval of the fee for the external audit;
· detailed review of the valuations of the Company's investment
portfolio and recommendation for approval by the Board;
· detailed review of the Interim Report and quarterly portfolio
valuations, and recommendation for approval by the Board;
· assessment of the independence of the external auditor;
· assessment of the effectiveness of the external audit process as
described below; and
· review of the Company's key risks and internal controls.
The Audit and Risk Committee met on 25 February 2025 to review the results of
the audit and to consider and approve the Annual Report for the year ended 31
December 2024.
Significant Areas of Judgement Considered by the Audit and Risk Committee
The Audit and Risk Committee has determined that a key risk of misstatement of
the Company's financial statements relates to the valuation of its investments
at fair value through profit or loss, in the context of the judgements
necessary to evaluate market values of the underlying investments.
In view of the Company's investments and the nature of the assets, no
adjustment to the NAV of the investments has been made, as this is deemed
equivalent to fair value.
The Audit and Risk Committee reviews, considers and, if thought appropriate,
recommends for the purposes of the Company's financial statements, valuations
prepared by the Investment Manager in respect of the investments.
As outlined in note 4 to the financial statements, the total carrying value of
the investments at fair value through profit or loss at 31 December 2024 was
$62.7 million (2023: $94.6 million).
On a quarterly basis, the Investment Manager provides a detailed analysis of
the NAV. This analysis is considered and challenged by the Audit and Risk
Committee and subsequently approved by the Board. The Audit and Risk Committee
has satisfied itself that the key estimates and assumptions used in the
valuation model are appropriate and that the investments have been measured at
fair value.
The valuation for each individual investment held by the SPVs is determined by
reference to common industry valuation techniques, including comparable public
market valuation, comparable merger and acquisition transaction valuation, and
discounted cash flow valuation, as detailed in notes 2 and 4 to the financial
statements.
The valuation process and methodology was discussed with the Investment
Manager and with the external auditor at the Audit and Risk Committee meetings
held on, 7 August 2024 and 25 February 2025. Due to the illiquid and
subjective nature of the Company's SPV investments, the Investment Manager
uses an independent third-party valuation provider to prepare quarterly
valuations and has provided a detailed valuation report to the Company at each
quarter.
The external auditor has explained the results of their audit work on
valuations in the Independent Auditor's Report. There were no adjustments
proposed that were material in the context of the Annual Report and financial
statements as a whole.
Following the outcome of the vote held at the AGM on 22 May 2024, the Company
adopted a revised investment objective and investment policy in order to
facilitate a managed wind-down of the Company. As a result, the Audit and Risk
Committee recommended to the Directors that it was appropriate to adopt a
basis other than a going concern in preparing the financial statements.
Risk Management
The Board is accountable for carrying out a robust assessment of the principal
and emerging risks facing the Company, including those threatening its
business model, future performance, solvency and liquidity. On behalf of the
Board, the Audit and Risk Committee reviews the effectiveness of the Company's
risk management processes. The Company's risk assessment process and the way
in which significant business risks are managed is a key area of focus for the
Audit and Risk Committee. The work of the Audit and Risk Committee was driven
primarily by the Company's assessment of its principal risks and uncertainties
as set out in the Strategic Report. The Audit and Risk Committee receives
reports from the Investment Manager and Administrator on the Company's risk
evaluation process and reviews changes to significant risks identified.
Internal Audit
The Audit and Risk Committee considers at least once a year whether or not
there is a need for an internal audit function. Currently, the Audit and Risk
Committee does not consider there to be a need for an internal audit function,
given that there are no employees in the Company and all outsourced functions
are with parties who have their own internal controls and procedures.
External Audit
Ernst & Young LLP has been the Company's external auditor since the
Company's incorporation. This is the sixth year of audit.
The external auditor is required to rotate the audit partner every five years.
The previous Ernst & Young LLP lead audit partner Mike Gaylor ended his
rotation ended with the audit of the 2023 Annual Report and Financial
statements. Ahmer Huda is now the new Ernst & Young LLP lead audit
partner, starting his tenure in 2024, and his rotation will end with the audit
of 2028 or when the Company is fully wound up (whichever is earlier). There
are no contractual obligations restricting the choice of external auditor and
the Company will put the audit services contract out to tender at least every
ten years. Under Companies Law, the re-appointment of the external auditor is
subject to Shareholder approval at the AGM. The Audit and Risk Committee
continues to monitor the performance of the external auditor on an annual
basis and considers its independence and
objectivity, taking account of appropriate guidelines. In addition, the
Committee Chair continues to maintain regular contact with the lead audit
partner outside the formal Committee meeting schedule, not only to discuss
formal agenda items for upcoming meetings, but also to review any other
significant matters.
The Audit and Risk Committee reviews the scope and results of the audit, its
cost effectiveness and the independence and objectivity of the external
auditor, with particular regard to the level of any non-audit fees.
Notwithstanding such services, the Audit and Risk Committee considers Ernst
& Young LLP to be independent of the Company and that the provision of
such non-audit services is not a threat to the objectivity and independence of
the conduct of the audit.
To further safeguard the objectivity and independence of the external auditor
from becoming compromised, the Audit and Risk Committee are aware of the
Ethical Standard 2019 that imposes a cap on fees to be charged by a company's
external auditor for certain non-audit services at 70 percent of the average
statutory audit fees for the previous three years. This precludes Ernst &
Young LLP from providing any non-audit services not permissible under the
Ethical Standard 2019 which also sets a presumption that Ernst & Young LLP
should only be engaged for non-audit services where they are best placed to
provide those services, for example the interim review. Note 10 details
services provided by Ernst & Young LLP during the year.
To fulfil its responsibility regarding the independence of the external
auditor, the Audit and Risk Committee considers:
· discussions with or reports from the external auditor describing
its arrangements to identify, report and manage any conflicts of interest; and
· the extent of non-audit services provided by the external
auditor.
To assess the effectiveness of the external auditor, the committee reviews:
· the external auditor's fulfilment of the agreed audit plan and
variations from it;
· discussions or reports highlighting the major issues that arose
during the course of the audit; and
· feedback from other service providers evaluating the performance
of the audit team.
Fees paid to the Company's Auditor during the year are as follows:
For the year ended For the year ended
31 December 2024
31 December 2023
$'000 $'000
Fees to the Company's Auditor
for audit of the statutory financial statements 297 255
for other audit related services 31 29
328 284
Other fees paid to the Company's Auditor for other audit related services of
$31k (2023: $29k) were in relation to a review of the Interim Report. The fees
for other audit related services were in relation to a review of the Interim
Report. There were $nil fees paid for other non-audit services in the year (31
December 2023: $nil).
The Audit and Risk Committee is satisfied with Ernst & Young LLP's
effectiveness and independence as external auditor having considered the
degree of diligence and professional scepticism demonstrated. Having carried
out the review described above, and having satisfied itself that the external
auditor remains independent and effective.
The Audit and Risk Committee has provided the Board with its recommendation to
the Shareholders on the re-appointment of Ernst & Young LLP as external
auditor for the year ending 31 December 2024. Accordingly, a resolution
proposing the re-appointment of Ernst & Young LLP as the Company's
external auditor will be put to Shareholders at the AGM.
On behalf of the Audit and Risk Committee
Emma Davies
Audit and Risk Committee Chair
25 February 2025
Statement of Financial Position
As at 31 December 2024
31 December 2024 31 December 2023
Note $'000 $'000
Non-current assets
Investments at fair value through profit or loss 4 - 94,639
- 94,639
Current assets
Investments at fair value through profit or loss 4 62,735 -
Dividends receivable 4 - 1,728
Trade and other receivables 6 169 97
Cash and cash equivalents 328 627
63,232 2,452
Current liabilities
Trade and other payables 7 (678) (1,067)
Net current assets 62,554 1,385
Net assets 62,554 96,024
Equity
Share capital 8 682 908
Capital redemption reserve 8 318 92
Other distributable reserves 8 61,795 90,528
Retained (losses)/earnings 9 (241) 4,496
Total Shareholders' funds 62,554 96,024
Number of Shares in issue at year end 68,157,036 90,805,237
Net assets per share (cents) 13 91.78 105.75
The financial statements of the Company were approved and authorised for issue
by the Board of Directors on 25 February 2025 and signed on its behalf by:
Reuben Jeffery,
III
Emma Davies
Chairman
Director
Company number: 11874946
The accompanying notes below form an integral part of these financial
statements.
Statement of Comprehensive Income
For the year ended 31 December 2024
For the year ended For the year ended
31 December 2024
31 December 2023
Note Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'000
Investment (loss)
Change in fair value of investments at fair value through profit or loss 4 - (8,557) (8,557) - (1,334) (1,334)
- (8,557) (8,557) - (1,334) (1,334)
Income
Investment income 4 5,649 - 5,649 9,220 - 9,220
5,649 - 5,649 9,220 - 9,220
Expenses
Directors' fees and expenses 16 (156) - (156) (160) - (160)
Other operating expenses (1,222) - (1,222) (1,177) - (1,177)
Liquidation expenses (468) - (468) - - -
Profit share 12 - - - (873) - (873)
Total expenses (1,846) - (1,846) (2,210) - (2,210)
Operating (loss)/profit for the year 3,803 (8,557) (4,754) 7,010 (1,334) 5,676
Finance income
Interest income 17 - 17 44 - 44
Total finance income 17 - 17 44 - 44
(Loss)/profit for the year before tax 3,820 (8,557) (4,737) 7,054 (1,334) 5,720
Tax 11 - - - - - -
(Loss)/profit for the year after tax 3,820 (8,557) (4,737) 7,054 (1,334) 5,720
(Loss)/profit and total comprehensive (loss) / income for the year 3,820 (8,557) (4,737) 7,054 (1,334) 5,720
(Loss)/profit and total comprehensive (loss) / income for the year
attributable to:
Equity holders of the Company 3,820 (8,557) (4,737) 7,054 (1,334) 5,720
Earnings per share
Basic and diluted (loss) earnings per Share (cents) 13 (10.21) (5.65) (1.47) 6.30
4.56 7.77
The 'Total' column of this statement is the profit and loss account of the
Company and the 'Revenue' and 'Capital' columns represent supplementary
information prepared under guidance issued by the Association of Investment
Companies. Profit/(loss) for the year after tax also represents Total
Comprehensive Income.
The accompanying notes below form an integral part of these financial
statements.
Statement of Changes in Equity
For the year ended 31 December 2024
For the year ended Share capital Capital redemption reserve Other distributable reserves Retained earnings Total
31 December 2024
Note $'000 $'000 $'000 $'000 $'000
Opening net assets attributable to Shareholders 908 92 4,496 96,024
90,528
Share redemption (226) 226 (23,104) - (23,104)
Total comprehensive loss for the year - - - (4,737) (4,737)
Distributions paid in the year 14 - - (5,629) - (5,629)
Closing net assets attributable to Shareholders 682 318 (241) 62,554
61,795
Following the IPO of the Company, the share premium account was cancelled by a
court order dated 16 July 2019. The amount of $97,000 remaining in the share
premium account of the Company at this date was subsequently cancelled and
transferred to other distributable reserves. This may be applied in any manner
in which the Company's profits available for distribution are able to be
applied, as determined in accordance with the Companies Act 2006.
The Company's total distributable reserves comprise its other distributable
reserve and retained earnings, excluding unrealised movement on its
investments. After taking account of cumulative unrealised loss of $6.4m and
distributions made, the total amount of reserves that were distributable as at
31 December 2024 were $68.0m.
Details of the Company's retained earnings are shown in note 9.
Share capital Capital redemption reserve Other distributable reserves Retained earnings Total
For the year ended
31 December 2023
Note $'000 $'000 $'000 $'000 $'000
Opening net assets attributable to Shareholders 908 92 90,528 6,948 98,476
Share Redemption - - - - -
Total comprehensive income for the year - - - 5,720 5,720
Distributions paid in the year 14 - - - (8,172) (8,172)
Closing net assets attributable to Shareholders 908 92 90,528 4,496 96,024
After taking account of cumulative unrealised gains of $2.1m and distributions
made, the total amount of reserves that were distributable as at 31 December
2023 were $92.9m.
The accompanying notes below form an integral part of these financial
statements.
Statement of Cash Flows
For the year ended 31 December 2024
Note For the year ended For the year ended
31 December 2024
31 December 2023
$'000 $'000
Cash flows from operating activities
(Loss)/profit for the year before tax (4,737) 5,720
Adjustments for non-cash transactions in profit for the year before tax:
Interest income (17) (44)
Movement in fair value of investments 4 8,557 1,334
Investment income 4 (5,649) (9,220)
Adjustments for statement of financial position movement:
Movement in payables (389) (822)
Movement in receivables (74) 15
Bank interest received in cash 18 56
Loan interest received 4 5,370 5,366
Dividends received 2,322 5,437
Net cash generated from operating activities 5,401 7,842
Cash flows from investing activities
Investment proceeds 4 23,033 -
Net cash generated from investing activities 23,033 -
Cash flows from financing activities
Distributions paid 14 (5,629) (8,172)
Repurchase and cancellation of share capital 8 (23,104) -
Net cash used in financing activities (28,733) (8,172)
Net movement in cash and cash equivalents during the year (299) (330)
Cash and cash equivalents at the beginning of the year 627 957
Cash and cash equivalents at the end of the year 328 627
The accompanying notes below form an integral part of these financial
statements.
Notes to the Financial Statements
For the year ended 31 December 2024
1. General Information
The Company was incorporated and registered in England and Wales on 11 March
2019 with registered number 11874946 as a public company limited by shares
under the Companies Act 2006
(the ''Act''). The principal legislation under which the Company operates is
the Act. The Directors intend, at all times, to conduct the affairs of the
Company so as to enable it to qualify as an investment trust for the purposes
of section 1158 of the Corporation Tax Act 2010, as amended.
2. Material accounting policy information
Basis of preparation
The financial statements have been prepared in accordance with the provisions
of the Companies Act 2006, with the UK-adopted International Accounting
Standards, the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority. Where presentational guidance set out
in the AIC SORP, 2022 edition, is consistent with the requirements of
UK-adopted IAS, the Directors have sought to prepare the financial statements
on a basis compliant with the recommendations of the AIC SORP. In particular,
supplementary information which analyses the Statement of Comprehensive Income
between items of a revenue and capital nature has been presented alongside the
total Statement of Comprehensive Income.
The annual financial statements have been prepared on a realisation basis
(basis other than going concern). As a result of the change of basis and
considering the costs of the wind-down process a provision of liquidation
expenses of $343k has been recorded in trade and other payables. The
investments at fair value through profit or loss have been presented within
current assets as the loans in the Company's portfolio is expected to be
realised under one year. The Company in its best efforts, intends to realise
and return to shareholders proceeds in respect to its investment portfolio
within one year of entering into managed wind-down. No other material
adjustments to accounting policies or the valuation basis have arisen as a
result of ceasing to apply the going concern basis. All of the balance sheet
items have been recognised on a realisation basis, which is not materially
different from the fair valued carrying amount. This basis of preparation has
been amended from the Company's 2023 annual financial statements. The
comparative amounts to the annual financial statements have not been restated.
The Company's 2023 annual financial statements were prepared on the historic
cost basis, as modified for the measurement of certain financial instruments
at fair value through profit or loss and in accordance with UK-adopted IAS and
with those parts of the Companies Act 2006 applicable to companies under
UK-adopted IAS.
Going Concern
As of the date of the report, the Directors are required to consider whether
they have a reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. At the AGM held
on 22 May 2024 the Shareholders voted in favour of a change in the Company's
Investment Policy to a Wind-Down Investment Policy.
The Company's Investment objective and Wind-Down Investment Policy is to
"realise the Company's assets on a timely basis with the aim of making
progressive returns of cash to holders of Ordinary shares as soon as
practicable." The Investment Manager is actively seeking exit opportunities to
realise the loans comprising the Company's portfolio and returning the
resulting proceeds to Shareholders. The Company is therefore preparing its
financial statements on a basis other than going concern due to the Company
being in a managed wind-down.
The Company will continue to carry on its investment business during the
managed wind-down and with the expectation of realising the Company's assets
and returning of capital to its Shareholders.
The Directors consider that the change to the Company's objectives and
Investment Policy are in the best interests of Shareholders as a whole.
In conjunction with the Company amending its Investment Policy to a Wind-Down
Investment Policy, the senior secured revolving credit facility's credit
agreement with the Company was also amended. The RCF credit agreement was
amended to allow an aggregate amount of borrowings of up to $500,000 in order
to optimise cash flows during the managed wind-down. The amendment also sets
forth a Utilisation Fee of one percent per annum due and payable quarterly by
the Company to the lender.
As of 31 December 2024, the Company has sufficient cash held in the SPVs
reflected in the value of the Company's investments in the SPVs. As of the
date of the financial statements, the Company and its SPVs have $15.7m cash
and cash equivalents available of which $14.3 is short-term money market fix
deposits and the remaining $1.4m in cash within the SPVs and the Company. The
Company's and its SPVs current cash will be able to meet the near-term current
liabilities when they become due.
Whilst the Directors are satisfied that the Company has adequate resources to
continue in operation throughout the wind-down period and will be able to meet
all of its liabilities as they fall due, given the Company is now in managed
wind-down the Directors considered it appropriate to adopt a basis other than
going concern in preparing the financial statements. There were no material
changes in the valuation of investments held at fair value as a result of
ceasing to apply the going concern basis. All of the balance sheet items
have been recognised on a realisation basis, which is not materially different
from the carrying amount. The Directors and the Investment Manager have made
the appropriate provisions in order to bring about an orderly wind-down of the
Company and its operations.
As of 31 December 2024, the weighted average remaining contractual tenor of
the loans in the Company's portfolio is under one year. The Investment Manager
is actively seeking to realise the loans comprising the Company's portfolio by
holding them until they come to term or dispose in the secondary market
where it considers this to be in the best interests of the Company. The
Company in its best efforts, intends to realise and return to shareholders all
proceeds in respect to its investment portfolio within one year of entering
into the managed wind-down.
On 9 September 2024, the Company redeemed 22,648,201 Ordinary Shares, which
was approximately 25 per cent. of the Company's Ordinary Shares by way of a
Compulsory Redemption of Ordinary Shares. The Directors will make further
announcements on the progress of the managed wind-down strategy and the return
of cash to Shareholders in due course.
Foreign currencies
The functional currency of the Company is US Dollar reflecting the primary
economic environment in which the Company operates, where most transactions
are expected to take place in US Dollar. Additionally, the Ordinary Shares of
the Company are listed in US Dollar. The Company has chosen US Dollar as its
presentation currency for financial reporting purposes.
Transactions during the year, including income and expenses, are translated
into US Dollar at the rate of exchange prevailing on the date of the
transaction. Monetary assets and liabilities denominated in currencies other
than US Dollar are retranslated at the functional currency rate of exchange
ruling at the reporting date. Non-monetary items that are measured in terms of
historical
cost in a currency other than US Dollar are translated using the exchange
rates as at the dates of the initial transactions.
Transactions during the year, including income and expenses, are translated
into US Dollar at the rate of exchange prevailing on the date of the
transaction. Monetary assets and liabilities denominated in currencies other
than US Dollar are retranslated at the functional currency rate of exchange
ruling at the reporting date. Non-monetary items that are measured in terms of
historical
cost in a currency other than US Dollar are translated using the exchange
rates as at the dates of the initial transactions.
Non-monetary items measured at fair value in a currency other than US Dollar
are translated using the exchange rates at the date when the fair value was
determined. Foreign currency transaction gains and losses on financial
instruments classified as at fair value through profit or loss are included
in profit or loss in the Statement of Comprehensive Income as part of the
'Change in fair value of investments at fair value through profit or loss'.
Exchange differences on other financial instruments were immaterial and have
been included as other operating expenses in the Statement of Comprehensive
Income.
Financial instruments
In accordance with IFRS 9, financial assets and financial liabilities are
recognised in the Company's Statement of Financial Position when the Company
becomes a party to the contractual provisions of the instrument.
Financial assets
When financial assets are recognised initially, they are measured at fair
value. Fair value is defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
a) Investments at fair value through profit or loss
i. Classification and measurement
The Company's investments are classified as held at fair value through profit
or loss as they are managed in a portfolio of assets on a fair value basis.
Financial assets held at fair value through profit or loss are initially
recognised at fair value, which is normally the transaction price, and are
subsequently valued at fair value.
ii. Fair value estimation
The SPVs hold and manage the Company's underlying investments, which are
valued at fair value, based on IPEV Valuation Guidelines and the UK-adopted
IAS. The fair value of the SPVs is considered to be their net asset value
incorporating a fair valuation of the underlying investments. The Directors
believe that this is appropriate, as:
· the underlying investments within the SPVs are held on a fair
value basis as described below and have taken into account risks to fair
value, inclusive of liquidity discounts, through appropriate discount rates;
· the Company wholly owns the SPVs and thus is entitled to all of
their economic rights; and
· the Directors take all these items into consideration and would
make adjustments to net asset value, if deemed necessary.
Valuation process
The Investment Manager is responsible for proposing the valuation of the
assets held by the Company through the SPVs and the Directors are responsible
for reviewing the Company's valuation policy and approving the valuations.
Valuation specialist
Due to the illiquid and subjective nature of the Company's underlying
investments, the Investment Manager uses a third party valuation provider to
perform a full independent valuation of the underlying investments. This
includes the third party valuation provider selecting the valuation
methodology and/or comparable companies; identifying the cash flows and
appropriate discount
rate utilised in a yield analysis; and providing a final value range to the
Investment Manager. The valuation adviser independently values the assets and
provides analyses to support the methodology in addition to presenting
calculations used to generate output.
b) Cash and cash equivalents
Cash includes cash on hand and demand deposits. Cash equivalents comprise
other short-term highly liquid investments with an original maturity of three
months or less that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value.
Cash and cash equivalents are used for cash management purposes, primarily for
the payment of expenses and distributions.
c) Trade receivables
Trade receivables are classified as financial assets at amortised cost. They
are measured at amortised cost less impairment assessed using the simplified
approach of the expected credit loss model based on current circumstances and
expectations of future losses.
A financial asset is derecognised (in whole or in part) either:
· when the Company has transferred substantially all the risks and
rewards of ownership; or
· when it has neither transferred nor retained substantially all
the risks and rewards and when it no longer has control over the assets or a
portion of the asset; or
· when the contractual right to receive cash flow has expired.
Financial liabilities
Trade payables are classified as financial liabilities at amortised cost.
A financial liability is derecognised (in whole or in part) when the Company's
obligations is discharged, cancelled or expires. For example, by paying the
creditor or when the Company is legally released from primary responsibility
for the liability either by law or by the creditor.
Equity
The Company's Ordinary Shares are classified as equity and upon issuance, the
fair value of the consideration received is included in equity. All other
share issue costs of the Company, which were otherwise chargeable to equity,
were borne by the Investment Manager.
Capital Redemption Reserve
This is a non-distributable reserve, holding amounts that are transferred
following the purchase of the Company's own share capital out of distributable
reserves.
Distributable Reserves
Distributable reserves are those profits available for the purpose of a
distribution to Ordinary Shareholders. This includes its other distributable
reserve and retained earnings, excluding unrealised movement on its
investments. The Company's retained earnings include the revenue reserve and
the capital reserve. The Revenue reserve is the accumulation of distributable
profit and losses through the statement of comprehensive income and the
capital reserve is an accumulation of unrealised gains and losses in the fair
value of investments.
Repurchase of Ordinary Shares for cancellation
The cost of repurchasing Ordinary Shares including the related stamp duty and
transactions costs is charged to the 'Other distributable reserves' and
presented in the Statement of Changes in Equity. Share repurchase
transactions are accounted for on a trade date basis. The nominal value of
ordinary
share capital repurchased and cancelled is transferred out of 'Share capital'
and into the 'Capital redemption reserve'.
Distributions
Distributions payable are recognised as distributions in the financial
statements when the Company's obligation to make payment has been established.
Income recognition
Dividend income is recognised when the Company's entitlement to receive
payment is established. Interest income is recognised using the effective
interest method. Interest income due, but not received, is capitalised with
the principal amount of the loan. Dividend and interest income is allocated to
the Revenue column and are included within Investment income line on the
Statement of Comprehensive Income.
Expenses
Expenses include legal, accounting, auditing and other operating expenses.
They are recognised on an accruals basis in the Statement of Comprehensive
Income in the year in which they are incurred.
Expenses are charged through the Revenue account except those which are
capital in nature, including those which are incidental to the acquisition,
disposal or enhancement of an investment, which are accounted for through the
Capital account.
Profit Share
Profit Share is recognised on an accrual basis in the statement of
Comprehensive Income for the year and is based on the Company's income. The
Profit Share is payable quarterly, at the same time as the Company pays its
distributions. It is subject to an annual reconciliation of the year to date
Profit Share, calculated using the year to date net income, to the aggregate
quarterly Profit Share for the year. The Profit Share will be limited to a
maximum of 5 percent of the prevailing NAV in the last quarter of each year.
The Profit Share is also subject to a capital loss adjustment as explained in
note 12.
The amount payable in respect of the annual Profit Share is as detailed in
note 12.
Taxation
It is the intention of the Directors to conduct the affairs of the Company so
that it satisfies the conditions in section 1158 Corporation Tax Act 2010 and
the Investment Trust (Approved Company) (Tax) Regulations 2011 for it to be
approved by HMRC as an investment trust.
In respect of each accounting period for which the Company is and continues to
be approved by HMRC as an investment trust, the Company will be exempt from UK
corporation tax on its chargeable gains and its capital profits from creditor
loan relationships. The Company will, however, be subject to UK corporation
tax on its income (currently at a rate of 25 percent).
In principle, the Company will be liable to UK corporation tax on its dividend
income. However, there are broad-ranging exemptions from this charge which
would be expected to be applicable in respect of most of the distributions the
Company may receive.
A company that is an approved investment trust in respect of an accounting
period is able to take advantage of modified UK tax treatment in respect of
its ''qualifying interest income'' for an accounting period. It is expected
that the Company will have material amounts of qualifying interest income and
that it may, therefore, decide to designate some or all of the distribution
paid in respect of a given accounting period as interest distributions. To the
extent that the Company receives income from, or realises amounts on the
disposal of, investments in foreign countries it may be subject to foreign
withholding or other taxation in those jurisdictions. To the extent it relates
to income, this foreign tax may, to the extent not relievable under a double
tax treaty, be able to be
treated as an expense for UK corporation tax purposes, or it may be treated as
a credit against UK corporation tax up to certain limits and subject to
certain conditions.
Deferred tax is provided on all temporary differences at the balance sheet
date between the tax basis of assets and liabilities and their carrying amount
for financial reporting purposes. Deferred tax is calculated at the tax rates
that are expected to apply to the year when a liability is settled or an asset
is realised, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Segmental reporting
The chief operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been
identified as the Board of Directors, as a whole. The key measure of
performance used by the Board to assess the Company's performance and to
allocate resources is the Company's Net Asset Value, as calculated under
UK-adopted IAS, and therefore no reconciliation is required between the
measure of profit or loss used by the Board and that contained in the Annual
Report.
For management purposes, the Company is organised into one single operating
segment, which invests through its SPVs in a diversified portfolio of debt
instruments, issued by Borrowers operating in the energy sector.
All of the Company's investments are located in the United States. Due to the
Company's nature, it has no customers.
New and amended standards and interpretations
Accounting standards and interpretations have been published and are mandatory
for the Company's accounting periods beginning on or after 1 January 2024. The
following is the new or amended accounting standard or interpretation
applicable to the Company:
· Amendments to IAS 1 - Classification of Liabilities as Current or
Non-current and Non-current Liabilities with Covenants (effective for annual
periods beginning on or after 1 January 2024);
The impact of the above amendment was not material to the reported results and
financial position of the Company.
Certain new accounting standards and amendments to accounting standards have
been published that are not mandatory for 31 December 2024 reporting periods
and have not been early adopted by the Company. The new standard and
amendments are not expected to have a material impact, on the entity in future
reporting periods and on foreseeable future transactions.
· IFRS 18 - Presentation and Disclosure in Financial Statements
(replacing IAS 1 - Presentation of Financial Statements) (effective for annual
periods beginning on or after 1 January 2027);
· Amendments to IAS 21 -Lack of exchangeability (effective for
annual periods beginning on or after 1 January 2025);
· Amendments to IFRS 9 and IFRS 7 - Classification and Measurement
of Financial Instruments (effective for annual periods beginning on or after 1
January 2026);
· Annual Improvements to IFRS Accounting Standards- Volume 11
(effective for annual periods beginning on or after 1 January 2026).
2. Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expenses.
Estimates and judgements are continually evaluated and are based on management
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Judgements
In the process of applying the Company's accounting policies, management has
made the following judgements, which have the most significant effect on the
amounts recognised in the financial statements:
Assessment as an Investment Entity
IFRS 10 'Consolidated Financial Statements' sets out the following three
essential criteria that must be met, if a company is to be considered as an
Investment Entity:
1. it must obtain funds from multiple investors for the purpose of
providing those investors with investment management services;
2. it must commit to its investors that its business purpose is to invest
funds solely for returns from capital appreciation, investment income, or
both; and
3. it must measure and evaluate the performance of substantially all of
its investments on a fair value basis.
In satisfying the second essential criterion, the notion of an investment time
frame is critical and an Investment Entity should have an exit strategy for
the realisation of its investments. Also as set out in IFRS 10, further
consideration should be given to the typical characteristics of an Investment
Entity, which are that:
· it should have more than one investment, to diversify the risk
portfolio and maximise returns;
· it should have multiple investors, who pool their funds to
maximise investment opportunities;
· it should have investors that are not related parties of the
entity; and
· it should have ownership interests in the form of equity or
similar interests.
The Directors are of the opinion that the Company meets the essential criteria
and typical characteristics of an Investment Entity as noted above. Therefore
the SPVs are measured at fair value through profit or loss, in accordance with
IFRS 9 'Financial Instruments'. Fair value is measured in accordance with IFRS
13 'Fair Value Measurement'.
Judgement on Valuation of investments in SPVs
The Board's determination of whether a discount or premium should be applied
to the net asset value of the SPV involves a degree of judgement due to the
nature of the underlying investments and other assets and liabilities and the
valuation techniques and procedures adopted by the SPV.
The resulting accounting estimates will, by definition, seldom equal the
related actual results.
Assessment of the SPVs as structured entities
The Company considers the SPVs to be structured entities as defined by IFRS 12
'Disclosure of Interests in Other Entities'. Transfer of funds by the SPVs to
the Company is determined by the Investment Manager. The risks associated with
the Company's investment in the SPVs are disclosed in note 15. The summarised
financial information for the Company's investment in the SPVs is disclosed in
note 4.
Estimates and assumptions
The area involving a high degree of judgement or complexity and where
assumptions and estimates are significant to the financial statements has been
identified as the risk of misstatement of the valuation of the investments
(see note 4). Revisions to accounting estimates are recognised in the year in
which the estimate is revised and in any future years affected.
Climate change
In preparing the financial statements, the Directors have considered the
impact of climate change, particularly in the context of the climate change
risks.
As disclosed in the Strategic Report, the Company's positioning and investment
strategy is now focused towards managing energy-transition investments in
either Green Loans or Sustainability-Linked Loans, supporting the advancement
of decarbonisation and enhancing sustainability.
In preparing the financial statements, the Directors have considered the
medium and longer term cash flow impacts of climate change on a number of key
estimates within the financial statements, including:
· the estimates of future cash flows used in the assessment of fair
value of investments; and
· the estimates of future profitability used in the assessment of
distributable income and profit share.
These considerations did not have a material impact on the financial reporting
judgements and estimates in the current year. This reflects the conclusion
that climate change is not expected to have a significant impact on the
Company's short-term cash flows including those considered in the going
concern and viability assessments.
4. Investments at fair value through profit or loss
For the year ended For the year ended
31 December 2024
31 December 2023
Loans Equity Total Loans Equity Total
$'000 $'000 $'000 $'000 $'000 $'000
Opening balance 60,800 33,839 94,639 59,397 35,173 94,570
Reclassification of loan interest receivable - - - 1,263 - 1,263
Movement in loan interest receivable (315) - (315) 140 - 140
Investment proceeds (15,892) (7,140) (23,032) - - -
Unrealised movement in fair value of investments - (8,557) (8,557) - (1,334) (1,334)
44,593 18,142 62,735 60,800 33,839 94,639
The following table shows the reconciliation of the opening and closing
amounts of level 3 financial assets which are recorded at fair value.
As set out above the Company's investment in Riverstone International Credit
Corp. comprises of a loan investment and an equity investment and the
investment in Riverstone International Credit L.P. comprises of an equity
investment. The SPVs invest in a diversified portfolio of direct and indirect
investments in loans, notes, equity, bonds and debt instruments.
The investments are classified as current assets for the current year due to
the Company's expectation that the Investment's will be realised within 12
months.
Interest receivable on the loan investment at 31 December 2024 was $1.1m
(2023: $1.4m) and is included in investments at fair value through profit and
loss. The loan interest receivable at 31 December 2023 has been
re-presented as the reclassification of loan interest receivable of $1.3m
and the movement in loan interest receivable of $0.1m. The unrealised movement
in fair value of investments was shown in the Change in fair value of
investments at fair value through profit or loss in the Statement of
Comprehensive Income.
The dividend receivable on the equity investment at 31 December 2024 was $nil
(31 December 2023: $1.7m). The total unfunded commitments of the Company's
SPVs' investments as at 31 December 2024 is $nil (31 December 2023: $6.4m).
Reconciliation of investment income recognised in the year
For the year ended For the year ended
31 December 2024
31 December 2023
$'000 $'000
Movement in loan interest receivable at year end (315) 140
Loan interest received as cash 5,370 5,366
Total loan interest recognised in the year 5,055 5,506
Dividend income 594 3,714
Total investment income recognised in the year 5,649 9,220
Total cash received in relation to interest income in the year was $5.4m
(2023: $5.4m). This comprises $5.4m (2023: $5.4m) of loan interest recognised
in the year and $nil (2023: $nil) of amounts capitalised in the prior period.
Fair value measurements
IFRS 13 requires disclosure of fair value measurement by level. The level of
fair value hierarchy within the financial assets or financial liabilities is
determined on the basis of the lowest level input that is significant to the
fair value measurement. Financial assets and financial liabilities are
classified in their entirety into only one of the following 3 levels:
• Level 1 - quoted prices (unadjusted) in active markets for identical
assets or liabilities;
· Level 2 - inputs other than quoted prices included within Level 1
that are observable for the assets or liabilities, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
· Level 3 - inputs for assets or liabilities that are not based on
observable market data (unobservable inputs).
The Directors consider observable data to be market data that is readily
available, regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources that are actively involved in
the relevant market.
The only financial instruments held at fair value are the instruments held by
the Company in the SPVs, which are fair valued at each reporting date. The
Company's investments have been classified within level 3 as the investments
are not traded and contain unobservable inputs.
There have been no transfers between levels during the year (2023: none). Any
transfers between the levels would be accounted for on the last day of each
financial period.
Valuation methodology and process
Investments in SPVs
The Directors base the fair value of investment in the SPVs on the fair value
of their assets and liabilities, adjusted if necessary, to reflect liquidity,
future commitments, and other specific factors of the SPVs and Investment
Manager, in addition to cash and short-term money market fixed deposits. Any
fluctuation in the value of the SPVs' investments held will directly impact on
the value of the Company's investment in the SPVs.
The Company's investment in Riverstone International Credit Corp. comprises a
debt and an equity instrument and is valued as one unit of account.
Investments held by SPVs
The SPVs' investments are valued using the techniques described in the
Company's valuation policy, as outlined in note 2. The Investment Manager's
assessment of fair value of investments held by the SPVs is determined in
accordance with IPEV Valuation Guidelines. When valuing the SPVs' investments,
the Investment Manager reviews information provided by the underlying investee
companies and other business partners and applies IPEV methodologies, to
estimate a fair value as at the date of the Statement of Financial Position.
Initially, acquisitions are valued at fair value, which is normally the
transaction price. Subsequently, and as appropriate, the Investment Manager
values the investments on a quarterly basis using common industry valuation
techniques, including comparable public market valuation, comparable merger
and acquisition transaction valuation and discounted cash flow valuation. The
techniques used in determining the fair value of the Company's investments
through its SPVs are selected on an investment by investment basis so as to
maximise the use of market based observable inputs. These techniques also
reflect the impact of primary and transition risks on the portfolio, although
the impact of the risks is minimal as the maximum investment period is seven
years. As disclosed in note 2, due to the illiquid and subjective nature of
the Company's underlying investments, the Investment Manager uses a third
party valuation provider to perform a full independent valuation of the
underlying investments.
Quantitative information of significant unobservable inputs - Level 3 - SPV
31 December 2024 Valuation Unobservable Range / weighted
Description technique input average
$'000 $'000
SPV 62,735 Adjusted net asset value NAV 62,735
The Directors believe that it is appropriate to measure the SPVs at their
adjusted net asset value, incorporating a valuation of the underlying
investments which has taken into account risks to fair value, inclusive of
liquidity discounts, through appropriate discount rates.
Sensitivity analysis to significant changes in unobservable input within Level
3 hierarchy
The significant unobservable input used in the fair value measurement
categorised within Level 3 of the fair value hierarchy together with a
quantitative sensitivity analysis as at 31 December 2024 are as shown below:
Sensitivity Effect on
Description Input used fair value
$'000
SPV NAV -3% (1,882)
The Company's valuation policy is compliant with both UK-adopted IAS and IPEV
Valuation Guidelines and is applied consistently. As the Company's investments
are generally not publicly quoted, valuations require meaningful judgement to
establish a range of values, and the ultimate value at which an investment is
realised may differ from its most recent valuation and the difference may be
significant.
For the year ended 31 December 2024, the valuations of the Company's
investments, through its SPVs, are detailed in the Investment Manager's
Report.
The below table shows the investments held by SPVs fair value sensitivities to
a 100 BPS increase in the discount rate and 0.5x multiple decrease used for
each industry as at 31 December 2024.
Investments at Fair Value as of 31 December 2024 Effect on Fair Value
(In Thousands)
Range
Industry Valuation technique(s) Unobservable input(s) Low High
Infrastructure 5,727 Discounted cash flow Discount rate 7% 9% (53)
Recovery Approach EBITDA multiple 3.00x 6.00x
Infrastructure 28,379 Discounted cash flow Discount rate 6% 39% (2,192)
Services Option Pricing Model Risk Free Rate 0% 0%
Energy 8 Implied Equity Value NA NA NA (0)
Transition
Services 11,319 Discounted cash flow Discount Rate 6% 7% (783)
Public comparables EBITDA multiple 6.00x 7.00x
Waterfall Approach NA
NA NA
$45,433((a)) $(3,028)
((a)) The difference between the fair value of the SPVs of $62.7m and the fair
value of the underlying investments at 31 December 2024 is due to cash
balances of $1.1m, an unsettled trade receivable of $2.2m, a money market
investment of $14.3m and $0.3 of residual liabilities held within the SPVs.
The below table shows fair value sensitivities to a 100 BPS increase in the
discount rate used and 0.5x multiple decrease for each industry as at 31
December 2023.
Investments at Fair Value as of 31 December 2023 Effect on Fair Value
(In Thousands)
Range
Industry Valuation technique(s) Unobservable input(s) Low High
Infrastructure 29,097 Discounted cash flow Discount rate 7% 13% 349
Recovery Approach EBITDA multiple 2.75x 7.50x
Infrastructure 35,446 Discounted cash flow Discount rate 7% 51% (689)
Services Option Pricing Model Risk Free Rate 4% 4%
Energy 8 Implied Equity Value NA NA NA -
Transition
Services 12,119 Discounted cash flow Discount Rate 6% 7% (1,100)
Public comparables EBITDA multiple 5.00x 6.00x
Waterfall Approach NA NA
NA
$76,670((a)) $ (1,440)
((a) ) The difference between the fair value of the SPVs of $94.6m and the
fair value of the underlying investments at 31 December 2023 is due to cash
balances of $8.5m, an unsettled trade receivable of $3.2m, a money market
investment of $15.1m and residual liabilities including the RCF of $8.9m, held
within the SPVs.
5. Unconsolidated subsidiaries
The following table shows subsidiaries of the Company. As the Company is
regarded as an Investment Entity as referred to in note 3, these subsidiaries
have not been consolidated in the preparation of the financial statements:
Investment Place of business Ownership interest as at 31 December 2024 Ownership interest as at 31 December 2023
Held directly
Riverstone International Credit Corp. USA 100% 100%
Riverstone International Credit L.P. USA 100% 100%
Held indirectly
Riverstone International Credit - Direct L.P. USA 100% 100%
The registered office of the above subsidiaries is c/o The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware
19801.
Riverstone International Credit Corp. had a net asset value of $12.7m at 31
December 2024 (2023: $28.6m) with a loss of $10.2m (2023: $1.7m profit).
The amounts invested in the Company's unconsolidated subsidiaries during the
year and their carrying value at 31 December 2024 are as outlined in note 4,
comprising:
31 December 2024 31 December 2023
Riverstone International Credit Corp. Riverstone International Credit L.P. Total Riverstone International Credit Corp. Riverstone International Credit L.P. Total
$'000 $'000 $'000 $'000 $'000 $'000
Opening balance at 1 January 89,406 5,233 94,639 89,384 5,186 94,570
Movement in loan Interest receivable (315) - (315) 1,403 - 1,403
Investment proceeds (23,032) - (23,032) - - -
Movement in fair value (8,724) 167 (8,557) (1,381) 47 (1,334)
Closing balance at 31 December 57,335 5,400 62,735 89,406 5,233 94,639
During Q4 2022, the Company's SPVs entered a senior secured RCF agreement for
$15.0 million to enter into new commitments ahead of anticipated realisations,
enabling the Company to minimise the drag on returns of uninvested capital.
The borrowers as defined per the RCF agreement are Riverstone International
Credit - Direct L.P. and Riverstone International Credit L.P., and the
guarantors are the Company, Riverstone Credit Opportunities Income Partners -
Direct L.L.C., a Delaware limited liability company and Riverstone Credit
Opportunities Income Partners L.L.C., a Delaware limited liability company.
On 23 April 2024, the SPVs entered into an Amendment to the RCF agreement.
There is now a 'utilisation fee' of 1% per annum paid quarterly on the
difference between the amount of the commitment and the average daily
outstanding principal balance of the loan. There is also an amendment to limit
borrowings to only pay interest on the loans and fees expenses arising under
the agreement and for any follow-on investments.
At 31 December 2024, $nil (31 December 2023: $5m) of the senior secured RCF
was drawn at close and the remaining $15 million (31 December 2023: $10m)
undrawn commitment is available for future borrowings. Pursuant to the RCF
agreement, the interest rate per annum on each borrowing under the RCF can be
referenced to SOFR + 6.50% with a 100bps SOFR floor.
At 31 December 2024 the SPVs borrowed $nil (31 December 2023: $5 million), in
the year to 31 December 2024 the SPVs incurred $nil million (31 December 2023:
$nil million) in fees and $nil million (31 December 2023: $0.9 million) in
interest. Interest is recorded as an interest expense at the SPV level and is
also included in the SPVs' net asset value. The interest rate on 2024
borrowings was SOFR plus 6.50% (31 December 2023: SOFR plus 6.50%).
There are no restrictions on the ability of the Company's unconsolidated
subsidiaries to transfer funds in the form of cash distributions or repayment
of loans. All of the Company's interest income and dividend income is
receivable directly from the Company's SPVs.
5. Trade and other receivables
31 December 2024 31 December 2023
$'000 $'000
Prepayments 120 72
VAT receivable 47 22
Bank interest receivable 2 3
169 97
6. Trade and other payables
31 December 2024 31 December 2023
$'000 $'000
Provision for Liquidation costs 343 -
Profit share payable - 879
Other payables 335 188
678 1,067
7. Share capital and reserves
Date Issued and fully paid Number of shares issued Share capital Capital redemption reserve Other distributable reserves Total
GBP £'000 £'000 £'000 £'000
1 January 2024 1 - - - -
31 December 2024 1 - - - -
USD $'000 $'000 $'000 $'000
1 January 2024 90,805,237 908 92 90,528 91,528
Distributions paid in the year - - - (5,629) (5,629)
Share redemption (22,648,201) (226) 226 (23,104) (23,104)
31 December 2024 68,157,036 682 318 61,795 62,795
As at 31 December 2024 the Company's authorised and issued share capital
comprises 68,157,036 Ordinary Shares at $0.01 per share and 1 E Share at $1
per share. Ordinary Shareholders are entitled to all distributions paid by the
Company and, on a winding up, provided the Company has satisfied all of its
liabilities, the Shareholders are entitled to all of the surplus assets of the
Company. E shares are non-redeemable shares and grant the registered holders
the right to receive notice of and to attend but, except where there are no
other shares of the Company in issue, not to speak or vote (either in person
or by proxy) at any general meeting of the Company.
On 9 September 2024, the Company redeemed 22,648,201 Ordinary Shares, which
was approximately 25 per cent. of the Company's Ordinary Shares by way of a
Compulsory Redemption of Ordinary Shares
Date Issued and fully paid Number of shares issued Share capital Capital redemption reserve Other distributable reserves Total
GBP £'000 £'000 £'000 £'000
1 January 2023 1 - - - -
31 December 2023 1 - - - -
USD $'000 $'000 $'000 $'000
1 January 2023 90,805,237 908 92 90,528 91,528
31 December 2023 90,805,237 908 92 90,528 91,528
As at 31 December 2023 the Company's authorised and issued share capital
comprises 90,805,237 Ordinary Shares at $0.01 per share and 1 E Share at $1
per share.
8. Retained earnings
For the year ended For the year ended
31 December 2024
31 December 2023
Revenue reserve Capital reserve Total Revenue reserve Capital reserve Total
Note $'000 $'000 $'000 $'000 $'000 $'000
Opening balance 2,353 2,143 4,496 3,471 3,477 6,948
Profit / (loss) and total comprehensive income in the year 3,820 (8,557) (4,737) 7,054 (1,334) 5,720
Distributions paid in the year ((a)) - - - (8,172) - (8,172)
8
Closing balance 6,173 (6,414) (241) 2,353 2,143 4,496
((a)) Distributions paid in the current year are presented against other
distributable reserves.
9. Audit fees
Other operating expenses include fees payable to the Company's Auditor, which
can be analysed as follows:
For the year ended For the year ended
31 December 2024
31 December 2023
$'000 $'000
Fees to the Company's Auditor
for audit of the statutory financial statements 297 255
for other audit related services 31 29
328 284
Other fees paid to the Company's Auditor for other audit related services of
$31k (2023: $29k) were in relation to a review of the Interim Report.
The fees payable to the Company's Auditor include estimated accruals
proportioned across the year for the audit of the statutory financial
statements and the fees for other audit related services. There were $nil fees
paid for other non-audit services in the year (31 December 2023: $nil).
11. Tax
As an investment trust, the Company is exempt from UK corporation tax on
capital gains arising on the disposal of shares. Capital profits from its loan
relationships are exempt from UK tax where the profits are accounted for
through the Capital column of the Statement of Comprehensive Income, in
accordance with the AIC SORP.
The Company has made a streaming election to HMRC in respect of distributions
and is entitled to deduct interest distributions paid out of income profits
arising from its loan relationships in computing its UK corporation tax
liability. Therefore, no tax liability has been recognised in the financial
statements.
For the year ended For the year ended
31 December 2024
31 December 2023
Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'000
UK Corporation tax charge on profits for the year at 25% (2023: 19%/25%) - - - - - -
For the year ended For the year ended
31 December 2023
31 December 2022
Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'000
Return on ordinary activities before taxation 3,820 (8,557) (4,737) 7,054 (1,334) 5,720
Profit on ordinary activities multiplied by standard rate of corporation tax 955 (2,139) (1,184) 1,658 (313) 1,345
in the UK of 25% (2023: 19%/25%)
Effects of:
Non-taxable investment gains on investments - 2,139 2,139 - 313 313
Non-taxable dividend income (148) - (148) (873) - (873)
Tax deductible interest distributions (958) - (958) (1,299) - (1,299)
Movement in deferred tax not recognised 34 - 34 514 - 514
Non-taxable expenses 117 - 117 - - -
Total tax charge - - - - - -
As at 31 December 2024 the Company has excess management expenses of
$5,410,738 that are available to offset future taxable revenue. A deferred tax
asset of $1,352,685 measured at the standard corporation tax rate of 25% has
not been recognised in respect of these expenses since the Directors believe
that, due to the tax deductibility of interest distributions, there will be no
taxable profits in the future against which the deferred tax asset can be
offset.
Deferred tax is not provided on capital gains and losses arising on the
revaluation or disposal of investments because the Company meets (and intends
to continue to meet for the foreseeable future) the conditions for approval as
an Investment Trust company.
Taxes are based on the UK Corporate tax rates which existed as of the balance
sheet date which was 25%. The main rate of corporation tax changed from 19% to
25% from 1 April 2023 for companies with profits over £250,000.
12. Profit Share
Under the Investment Management Agreement, the Investment Manager will not
charge any base or other ongoing management fees but will be entitled to
reimbursement of reasonable expenses incurred by it in the performance of its
duties. The Investment Manager will receive from the Company, a Profit Share
based on the Company's income, as calculated for UK tax purposes and the
Company's Capital Account. The Profit Share will be payable quarterly at the
same time as the Company pays its distributions, subject to an annual
reconciliation as explained below, in the last quarter of each year.
The amount payable in respect of the annual Profit Share will be:
a) an amount equal to 20 percent of the amount by which the Distributable
Income exceeds an amount equal to 4 percent of the Company's Capital Amount;
plus
b) an additional amount equal to 10 percent of the amount by which the
Distributable Income exceeds an amount equal to 8 percent of the Capital
Amount.
The Capital Amount is equal to the gross proceeds of the issue of Ordinary
Shares at IPO, plus the net proceeds of any future issues of Ordinary Shares,
less any amounts expended by the Company on share buybacks and redemptions.
Annual reconciliation and cap
At the end of the Company's financial year, the Profit Share will undergo an
annual reconciliation of the year-to-date Profit Share calculation using the
year to date net income reconciled to the total taken Profit Share from the
sum of the year's quarter. In the event that the annual reconciliation results
in a reduction of the aggregate Profit Share payable to the Investment
Manager, the Profit Share payable in the fourth quarter will be reduced to no
less than zero by the relevant amount, with any remaining reduction carried
forward to Profit Shares otherwise payable in respect of future quarters. In
addition, the amount payable to the Investment Manager as a Profit Share in
any year will be limited to a maximum of 5 percent of the prevailing NAV.
Capital loss adjustment
If, in any financial year the Company suffers a capital loss which
(disregarding the impact of any distributions paid or payable by the Company)
causes the closing Net Asset Value per Ordinary Share for the year to fall
below the lower of: (a) $1.00; or (b) the closing Net Asset Value per Ordinary
Share for the prior year, then the amount of the Distributable Income for the
year equal to the amount by which the capital loss causes the Net Asset Value
to fall below that threshold amount will be ignored for the purposes of
calculating the Profit Share for that year. If the amount by which the capital
loss causes the Net Asset Value to fall below the threshold amount is greater
than the Distributable Income for the year, then the amount of any excess will
be carried forward to following years until it is set off against
Distributable Income in full. The capital loss test will be applied as a part
of the annual reconciliation of the Profit Share.
The NAV per share as at 31 December 2024 was $0.92 (2023: $1.06 per share).
The calculated profit share for 2024 was ineligible as a result of the
Company's NAV per share being under one dollar per share as stipulated in the
prospectus.
Amounts expensed as Profit Share during the year was $nil (2023: $873k). The
amounts paid as Profit Share during the year was $873k (2023: $1,679k). The
amounts paid in 2024 related to amounts accrued in the prior year.
13. Earnings per share and Net assets per share
Earnings per share
For the year ended For the year ended
31 December 2024
31 December 2023
Revenue Capital Total Revenue Capital Total
Profit/(loss) attributable to equity holders of the Company - $'000 3,820 (8,557) (4,737) 7,054 (1,334) 5,720
Weighted average number of Ordinary Shares in issue 83,812,760 90,805,237
Basic and diluted (loss)/earnings per Share from continuing operations in the 4.56 (10.21) (5.65) 7.77 (1.47) 6.30
year (cents)
There are no dilutive shares in issue.
Net assets per share
31 December 2024 31 December 2023
Net assets - $'000 62,554 96,024
Number of Ordinary Shares issued 68,157,036 90,805,237
Net assets per Share (cents) 91.78 105.75
14. Distributions declared with respect to the year
2024 2023
Distribution per share Total distribution Distribution per share Total distribution
Distributions paid during the year cents $'000 cents $'000
With respect to the period ended 31 December 2023 2.50 2,292 3.00 2,724
With respect to the quarter ended 31 March 2.00 1,816 2.00 1,816
With respect to the quarter ended 30 June 0.70 636 2.00 1,816
With respect to the quarter ended 30 September 1.30 885 2.00 1,816
6.50 5,629 9.00 8,172
2024 2023
Distribution per share Total distribution Distribution per share Total distribution
Distributions declared after 31 December 2024 and not accrued in the period cents $'000 cents $'000
With respect to the quarter ended 31 December 0.72 491 2.5 2,291
0.72 491 2.5 2,291
On 26 February 2025, the Board approved a distribution of 0.72 cents per share
in respect to the quarter ended 31 December 2024. The record date for the
distribution is 7 March 2025 and the payment date is 28 March 2025.
15. Financial risk management
Financial risk management objectives
The Company's investing activities, through its investment in the SPVs,
intentionally expose it to various types of risks that are associated with the
underlying investee companies of the SPVs. The Company makes the investment in
order to generate returns in accordance with its investment policy and
objectives.
The most significant types of financial risks to which the Company is exposed
are market risk (including price, interest rate and foreign currency risk),
liquidity risk and credit risk. The Board of Directors has overall
responsibility for the determination of the Company's risk management and sets
policy to manage that risk at an acceptable level to achieve those objectives.
The policy and process for measuring and mitigating each of the main risks are
described below.
The Investment Manager and the Administrator provide advice to the Company
which allows it to monitor and manage financial risks relating to its
operations through internal risk reports which analyse exposures by degree and
magnitude of risks. The Investment Manager and the Administrator report to the
Board on a quarterly basis.
Categories of financial instruments
For financial assets and liabilities carried at amortised cost, the Directors
are of the opinion that their carrying value approximates their fair value.
31 December 2024 31 December 2023
$'000 $'000
Financial assets
Investment at fair value through profit or loss:
Investment in the SPVs 62,735 94,639
Other financial assets:
Cash and cash equivalents 328 627
Dividends receivable - 1,728
Trade and other receivables 169 97
Financial liabilities
Financial liabilities:
Trade and other payables (678) (1,067)
Capital risk management
The Company manages its capital to ensure that it will be able to maximise the
capital return to Shareholders during the realisation period. The capital
structure of the Company consists of issued share capital, retained earnings
and other distributable reserves, as stated in the Statement of Financial
Position.
In order to maintain or adjust the capital structure, the Company may buy back
shares or issue new shares. There are no external capital requirements imposed
on the Company.
During the year ended 31 December 2024, the Company had $nil borrowings (2023:
$nil). The Company's SPVs had no new borrowings during the year, with
borrowings of $nil million as at 31 December 2024 (2023: $5m).
The Company's investment policy is set out in the Strategic Report.
Market risk
Market risk includes price risk, foreign currency risk and interest rate risk.
a) Price risk
The underlying investments held by the SPVs present a potential risk of loss
of capital to the SPVs and hence to the Company. The Company invests through
the SPVs and as outlined in note 4, investments in the SPVs are in the form of
senior loans and equity with protective provisions in place. Price risk arises
from uncertainty about future prices of underlying financial investments held
by the SPVs. As at 31 December 2024, the fair value of investments, excluding
cash and cash equivalents of SPVs, was $61,630k (2023: $71,013k) and a 3
percent decrease (2023: 3 percent increase / (decrease) in the price of
investments with all other variables held constant would result in a change to
the fair value of investments of ($1,849k) (2023: +/- $2,130k). A change in
interest rates could have an impact on the price risk associated with the
underlying investee companies, which is factored into the fair value of
investments. Please refer to note 4 for quantitative information about the
fair value measurements of the Company's Level 3 investments.
The SPVs are exposed to a variety of risks which may have an impact on the
carrying value of the Company's investments. The SPVs' risk factors are set
out in (a)(i) to (a)(iii) below.
i. Not actively traded
The SPVs' investments are not generally traded in an active market but are
indirectly exposed to market price risk arising from uncertainties about
future values of the investments held. The underlying investments of the SPVs
vary as to industry sub-sector, geographic distribution of operations and
size, all of which may impact the susceptibility of their valuation to
uncertainty.
ii. Concentration
The Company, through the SPVs, invests in the energy sector, with a particular
focus on businesses that engage in oil and gas E&P and midstream
investments in that sector. This means that the Company is exposed to the
concentration risk of only making investments in the energy sector, which
concentration risk may further relate to sub-sector, geography, and the
relative size of an investment or other factors. Whilst the Company is subject
to the investment and diversification restrictions in its investment policy,
within those limits, material concentrations of investments may arise. The
investments are monitored on a regular basis by the Investment Manager.
The Board and the Investment Manager monitor the concentration of the
investment in the SPVs on a quarterly basis to ensure compliance with the
investment policy.
iii. Liquidity
The Company's liquidity risk lies with its SPVs as the amount of cash invested
through the SPVs in the underlying investments is dynamic in nature. The SPVs
will maintain flexibility in funding by keeping sufficient liquidity in their
borrowings, cash and cash equivalents.
As at 31 December 2024, $15.4 million or 25 percent (2023: $23.6 million or 25
percent) of the SPVs' financial assets, were money market fixed deposits and
cash balances held on deposit with several A- or higher rated banks.
b) Foreign currency risk
The Company has exposure to foreign currency risk due to the payment of some
expenses in Pounds Sterling. Consequently, the Company is exposed to risks
that the exchange rate of its functional and presentation currency relative to
other foreign currencies may change in a manner that has an adverse effect on
the value of that portion of the Company's assets or liabilities denominated
in currencies other than the US Dollar. Any exposure to foreign currency risk
at the underlying investment level is captured within price risk.
The following table sets out, in US Dollars, the Company's total exposure to
foreign currency risk and the net exposure to foreign currencies of the
monetary assets and liabilities:
As at 31 December 2024 $ £ Total
$'000 $'000 $'000
Non-current assets
Investments at fair value through profit or loss - - -
Total non-current assets - - -
Current assets
Investments at fair value through profit or loss 62,735 - 62,735
Trade and other receivables 122 47 169
Dividends receivable - - -
Cash and cash equivalents 327 1 328
Total current assets 63,184 48 63,232
Current liabilities
Trade and other payables (673) (5) (678)
Total current liabilities (673) (5) (678)
Total net assets 62,511 43 62,554
As at 31 December 2023 $ £ Total
$'000 $'000 $'000
Non-current assets
Investments at fair value through profit or loss 94,639 - 94,639
Total non-current assets 94,639 - 94,639
Current assets
Trade and other receivables 75 22 97
Dividends receivable 1,728 - 1,728
Cash and cash equivalents 626 1 627
Total current assets 2,429 23 2,452
Current liabilities
Trade and other payables (1,064) (3) (1,067)
Total current liabilities (1,064) (3) (1,067)
Total net assets 96,004 20 96,024
The Directors do not consider that the foreign currency exchange risk at the
balance sheet date is material and therefore sensitivity analysis for the
foreign currency risk has not been provided.
c) Interest rate risk
The Company's exposure to interest rate risk relates to the Company's cash and
cash equivalents held directly and through the Company's SPVs as well as
interest expense on the Revolving Credit Facility held at the Company's SPV.
The Company is subject to risk due to fluctuations in the prevailing levels of
market interest rates. Any excess cash and cash equivalents are invested at
short-term market interest rates. As at the date of the Statement of Financial
Position, the majority of the SPVs' cash and cash equivalents were held on
interest bearing fixed deposit accounts. Any exposure to interest rate risk at
the underlying investment level is captured within price risk.
The Company has no other interest-bearing assets or liabilities as at the
reporting date. As a consequence, the Company is only exposed to variable
market interest rate risk. As at 31 December 2024, cash balance held by the
Company (including cash held at the SPVs) was $15.7 million (2023: $24.2
million). A 1.0 percent (2023: 1.0 percent) increase / (decrease) in interest
rates with all other variables held constant would result in a change to
interest received of + / - $157,657 (2023: $242,532) per annum. As at 31
December 2024, the RCF held by the Company's SPVs was $nil (2023: $5m). A 1.0
percent (2023: 1.0 percent) increase/ (decrease) in interest rate with all
other variables held would result in in a change to interest paid +/- of $nil
(2023: $50,000).
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the Board of
Directors.
Liquidity risk is defined as the risk that the Company may not be able to
settle or meet its obligations on time or at a reasonable price. The Company's
liabilities are made up of estimated accruals and trade creditors which are
due to be settled within three months of the year end.
Riverstone Credit Opportunities Income PLC is the guarantor for the Revolving
Credit Facility. The SPVs are required to maintain a LTV Ratio below the
Covenant LTV of 22% at each borrowing request date. The LTV Ratio is
calculated as the total outstanding principal and accrued interest on the
facility divided by the Aggregate NAV. At 31 December 2024, the SPVs were
compliant with the Covenant LTV and the full amount of the undrawn commitment
is available.
The Company adopts a prudent approach to liquidity management and through the
preparation of budgets and cash flow forecasts maintains sufficient cash
reserves to meet its obligations. The Company's SPVs has a Revolving Credit
Facility of $15m, with an undrawn amount as at 31 December 2024 of $15m (2023:
$10m). Cash balances held by the Company (including cash held at the SPVs) was
$1.4 million (2023: $24.2 million). This enables the Company to remain over
100% invested while still retaining the necessary liquidity to meet ongoing
expenses and future obligations under delay-draw loan commitments.
Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Company. Any
exposure to credit risk at the underlying investment level is captured within
price risk.
The carrying value of the underlying investments held by the SPVs as at 31
December 2024 was $45.4 million ((2023: $76.7 million).
Financial assets mainly consist of cash and cash equivalents and investments
at fair value through profit or loss. The Company's credit risk on liquid
funds is reduced and is considered immaterial as it can only deposit monies
with institutions with a minimum credit rating of 'A. The Company mitigates
its credit risk exposure on its investments at fair value through profit or
loss by the exercise of due diligence on the counterparties of the SPVs and
the Investment Manager.
The table below shows the material cash balances and the credit rating for the
counterparties used by the Company at the year-end date:
31 December 2024 31 December 2023
Location Rating $'000 Location Rating $'000
Counterparty
JPMorgan Chase Bank USA AA 328 USA AA 627
The Company's maximum exposure to loss of capital at the year-end is shown
below:
Carrying value and maximum exposure
31 December 2024 31 December 2023
$'000 $'000
31 December 2024
Investment at fair value through profit or loss
Investments in the SPVs 62,735 94,639
Other financial assets (including cash and equivalents but excluding 377 2,380
prepayments)
Gearing
As at the date of these financial statements the Company has no gearing (2023:
none).
16. Related Party Transactions
Directors
The Company has three non-executive Directors. Directors' fees for the year
ended 31 December 2024 amounted to $154k (2023: $150k), of which $nil was
outstanding at year end (2023: $nil). Amounts paid to Directors as
reimbursement of travel and other incidental expenses during the year amounted
to $2k (2023: $10k), of which $nil was outstanding at year end (2023: $nil).
SPVs
In 2019, the Company provided a loan to the US Corp. of $62.1m which accrues
interest at 9.27 percent. Any interest that is unable to be repaid at each
quarter end is capitalised and added to the loan balance. Total interest in
relation to the year was $5.1m (2023: $5.5m) of which $4.0m was received in
cash (2023: $4.1m), $nil was capitalised (2023: $nil) and $1.1m remained
outstanding at 31 December 2024 and will be received on 28 March 2025 (31
December 2023: $1.4m outstanding, received on 22 March 2024). The balance on
the loan investment at 31 December 2024 was $43.5m (2023: $59.4m). The Company
has equity investments, with the balance of these equity investments at 31
December 2024 being $18.1m (2023: $33.8m). During the year, the equity
investments had a fair value movement of $8.6m (2023: $1.3m).
During 2022, the SPVs entered into a Revolving Credit Facility ("facility")
Agreement for $15.0 million with BC Partners. The SPV borrowings from the
facility at 31 December 2024 were $nil (31 December 2023: $5.0 million),
leaving the remaining $15 million (31 December 2024: $10 million) undrawn
commitment for future borrowings. The guarantors are the Company, Riverstone
Credit Opportunities Income Partners - Direct L.L.C., a Delaware limited
liability company and Riverstone Credit Opportunities Income Partners L.L.C.,
a Delaware limited liability company. The SPVs are required to maintain a LTV
Ratio below the Covenant LTV of 22% at each borrowing request date.
The LTV Ratio is calculated as the total outstanding principal and accrued
interest on the facility divided by the Aggregate NAV. At 31 December 2024,
the SPVs were compliant with the Covenant LTV and the full amount of the
undrawn commitment is available.
Investment Manager
The Investment Manager is an affiliate of Riverstone and provides advice to
the Company on the management of the portfolio and on realisations, as well as
on funding requirements, subject to Board approval. For the provision of
services under the Investment Management Agreement, the Investment Manager
earns a Profit Share, as detailed in note 12. The Investment Manager is
entitled to reimbursement of any reasonable expenses incurred in relation to
management of the Company and amounts reimbursed during the year were $180k
(2023: $261k). Christopher Abbate and Jamie Brodsky, both portfolio managers
of RCOI transferred their shares from the Investment Manager to Breakwall
Capital LP on 1 January 2024. They purchased no new shares during 2024.
17. Ultimate controlling party
In the opinion of the Board, on the basis of the shareholdings advised to
them, the Company has no ultimate controlling party.
18. Subsequent events
On 27 January 2025, Imperium 3 New York, Inc. filed for Chapter 11 bankruptcy
protection. The warrants will be devalued to zero. As of December 2024, the
warrants held by RCOI in Imperium 3
New York represented less than 0.01 percent of the Company's NAV. However, as
of the reporting date, the equity in Charge CCCV retains value.
On 28 January 2025, the Company announced the successful sale of Harland &
Wolff's operating yards for a cash consideration of $86.9m. Purchase price
consideration along with cash left in the business, after administrative and
deal related expenses, are expected to result in recoveries of c. $86.1m to
RCP and affiliated funds, including RCOI. The Administrators made an initial
distribution to RCP of $54.4m and have estimated that future distributions
will total $31.7m over the coming months. The initial distribution will fully
satisfy the super priority term loan and therefore all future distributions
will be shared pro rata amongst all the Riverstone funds invested in Harland
& Wolff. RCOI did not share in the initial distribution but will receive
$4.7m in the coming months for its share of the assets that have been sold.
With the exception of above and the distributions declared and disclosed in
note 14, there are no other material subsequent events.
Glossary of Capitalised Defined Terms
Administrator means Ocorian Administration UK Limited
Admission means admission of the Ordinary Shares on 28 May 2019, to the
Official List and/or admission to trading on the Specialist Fund Segment of
the London Stock Exchange, as the context may require
AGM means Annual General Meeting
AIC means the Association of Investment Companies
AIC Code means the AIC Code of Corporate Governance
AIC SORP means the Statement of Recommended Practice issued by the AIC in
November 2014 and updated in January 2017 for the Financial Statements of
Investment Trust Companies and Venture Capital Trusts
Annual Report means the Company's yearly report and financial statements for
the year ended 31 December 2024
APLMA means Asia Pacific Loan Market Association
Auditor means Ernst & Young LLP or EY
Board means the Directors of the Company
Borrower means entities operating in the energy sector that issue loans,
notes, bonds, and other debt instruments including convertible debt
Breakwall means Breakwall Capital LP
Capital Amount means the amount of gross proceeds of the IPO, plus the net
proceeds of any future issues of Ordinary Shares, less any amounts expended by
the Company on share repurchases and redemptions or, following a Realisation
Election, attributable to Realisation Shares
Company or RCOI means Riverstone Credit Opportunities Income Plc
Compulsory Redemptions means the total issued share capital redeemed
Directors means the Directors of the Company
Distributable Income means the Company's income, as calculated for UK tax
purposes
DTR means the Disclosure Guidance and Transparency Rules sourcebook issued by
the Financial Conduct Authority
ESG means environmental, social and governance
E&P means exploration and production
FCA means the UK Financial Conduct Authority (or its successor bodies)
Firm or Investment Manager means Riverstone Investment Group LLC
GREEN LOAN means to align lending and environmental objectives. It refers to
any type of loan instrument made available exclusively to finance or
re-finance, in whole or in part, new and/or existing eligible Green Projects.
Green loans must align with the four components of the Green Loan Principles.
We strive to enhance the decarbonisation impact of our credit portfolio and
advance the energy transition infrastructure
GREEN LOAN PRINCIPLES means a clear framework of the characteristics of a
Green Loan with four core components 1. Use of Proceeds, 2. Process for the
Project Evaluation and Selection, 3. Management of Proceeds and 4. Reporting.
The Green Loan principles promote the development and integrity of the Green
Loan product through leading financial institutions active in the global loan
markets. Green Loan Principles (GLP) have been developed by an experienced
working party, consisting of representatives from leading financial
institutions active in the global syndicated loan markets, with a view to
promoting the development and integrity of the Green Loan product. The GLP
comprise voluntary recommended guidelines, to be applied by market
participants on a deal-by-deal basis depending on the underlying
characteristics of the transaction, which seek to promote integrity in the
development of the Green Loan market by clarifying the instances in which a
loan may be categorised as "green"
H&W means Harland and Wolff
Hoover CS means Hoover Circular Solution
IAS means the international accounting standards
IFRS means the International Financial Reporting Standards, being the
principles-based accounting standards, interpretations and the framework by
that name issued by the International Accounting Standards Board.
Investment Management Agreement means the Investment Management Agreement
entered into between the Investment Manager and the Company
IPEV Valuation Guidelines means the International Private Equity and Venture
Capital Valuation Guidelines
IPO means the initial public offering of shares by a private company to the
public
IRR means internal rate of return
Listing Rules means the listing rules made by the UK Listing Authority under
Section 73A of the Financial Services and Markets Act 2000
LMA means Loan Market Association
London Stock Exchange or LSE means London Stock Exchange plc
LSTA means Loan Syndications & Trading Association
LTV means loan to value ratio
Main Market means the main market of the London Stock Exchange
MAX means Max Energy Industrial Holdings US LLC
MOIC mean multiple on invested capital
NAV or Net Asset Value means the value of the assets of the Company less its
liabilities as calculated in accordance with the Company's valuation policy
and expressed in US dollars
Ordinary Shares means ordinary shares of $0.01 in the capital of the Company
issued and designated as 'Ordinary Shares' and having the rights, restrictions
and entitlements set out in the Company's articles of incorporation
Profit Share means the payments to which the Investment Manager is entitled in
the circumstances and as described in the notes to the financial statements
PEI means prospective financial information
RCF or Facility means Revolving Credit Facility
RCP means Riverstone Credit Partners
RCOI mean Riverstone Credit Opportunities Income plc or the Company
RIC D means Riverstone International Credit - Direct, L.P.
Riverstone means Riverstone Investment Group LLC or the Investment Manager
Realisation Shares means realisation shares of $0.01 in the capital of the
Company, as defined in the prospectus
Seawolf means Seawolf Water Resources
Specialist Fund Segment means the Specialist Fund Segment of the London Stock
Exchange's Main Market
SP0 means Second Party Opinion
SPV means any intermediate holding or investing entities that the Company may
establish from time to time for the purposes of efficient portfolio management
and to assist with tax planning generally and any subsidiary undertaking of
the Company from time to time
Sub-Manager means Breakwall Capital LP
Sustainability-Linked Loans or SLL means a loan with the aim to facilitate and
support environmentally and socially sustainable economic activity and growth.
We seek to enhance the decarbonisation impact of our credit portfolio and
enhance the energy transition infrastructure. Sustainability-Linked Loans
follow a set of Sustainability-Linked Loan Principles (SLLP) which were
originally published in 2019 and provide a framework to Sustainability-Linked
Loan structures. In order to promote the development of this product, and
underpin its integrity, the APLMA, LMA and LSTA considered it appropriate to
produce Guidance on the SLLP, to provide market practitioners with clarity on
their application and approach
Sustainability-Linked Loan Principles (SLLP) means principles originally
published in 2019 and provide a framework to Sustainability-Linked Loan
structures
Term Loan means Sustainability-Linked first lien term loan
UK or United Kingdom means the United Kingdom of Great Britain and Northern
Ireland
UK adopted IAS means UK-adopted International Accounting Standards
UK Code means the UK Corporate Governance Code issued by the FRC
US or United States means the United States of America, its territories and
possessions, any state of the United States and the District of Columbia
US Corp. means Riverstone International Credit Corp.
Warrants means detachable warrants over new ordinary shares in the Company
Wind-Down Investment Policy means the Company's investment policy is to
realise the Company's assets on a timely basis with the aim of making
progressive returns of cash to holders of Ordinary Shares as soon as possible.
Directors and General Information
Directors
Reuben Jeffery, III (Chairman) (appointed 2 April 2019)
Emma Davies (Audit and Risk Committee Chair) (appointed 2 April 2019)
Edward Cumming-Bruce (Nomination Committee Chair) (appointed 2 April 2019)
all independent and of the registered office below
Registered Office Website: www.riverstonecoi.com
5th Floor ISIN GB00BS0C7H78
20 Fenchurch Street Ticker RCOI
London Sedol BS0C7H7
EC3M 3BY Registered Company Number 11874946
Investment Manager Registrar
Riverstone Investment Group LLC Link Asset Services
c/o The Corporation Trust Company The Registry
Corporation Trust Center Central Square
1209 Orange Street 29 Wellington Street
Wilmington Leeds
Delaware 19801 LS1 4DL
Company Secretary and Administrator Sole Bookrunner
Ocorian Administration (UK) Limited J.P. Morgan Securities plc
5th Floor 25 Bank Street
20 Fenchurch Street Canary Wharf
London London
EC3M 3BY E14 5JP
Independent Auditor Receiving Agent
Ernst & Young LLP Link Asset Services
25 Churchill Place Corporate Actions
London The Registry
E14 5EY Central Square
29 Wellington Street
Legal Adviser to the Company Leeds
Hogan Lovells LLP LS1 4DL
Atlantic House
50 Holborn Viaduct Principal Banker and Custodian
J.P. Morgan Chase Bank, N.A.
Sub-investment Manager 270 Park Avenue
Breakwall Capital LP New York
174 Bellevue Avenue, Suite 200-A NY 10017-2014
Newport, RI 02840
Swiss supplement
ADDITIONAL INFORMATION FOR INVESTORS IN SWITZERLAND
This Swiss Supplement is supplemental to, forms part of and should be read in
conjunction with the annual report for the half year ended 31 December 2024
for Riverstone Credit Opportunities Income Plc (the 'Fund').
The Fund has appointed Société Générale as Swiss Representative and Paying
Agent. The Confidential Memorandum, the Articles of Association as well as the
annual report of the Fund can be obtained free of charge from the
representative in Switzerland, Société Générale, Paris, Zurich Branch,
Talacker 50, P.O. Box 5070, CH-8021 Zurich. The paying agent of the Fund in
Switzerland is Société Générale, Paris, Zurich Branch, Talacker 50, P.O.
Box 5070, CH-8021 Zurich. The Company may offer Shares only to qualified
investors in Switzerland. In respect of the Shares distributed in and from
Switzerland, the place of performance and jurisdiction is the registered
office of the Swiss Representative.
Cautionary Statement
The Chairman's Statement and Investment Manager's Report have been prepared
solely to provide additional information for Shareholders to assess the
Company's strategies and the potential for those strategies to succeed. These
should not be relied on by any other party or for any other purpose.
The Chairman's Statement and Investment Manager's Report may include
statements that are, or may be deemed to be, 'forward-looking statements'.
These forward-looking statements can be identified by the use of
forward-looking terminology, including the terms 'believes', 'estimates',
'anticipates', 'expects', 'intends', 'may', 'will' or 'should' or, in each
case, their negative or other variations or comparable terminology.
These forward-looking statements include all matters that are not historical
facts. They appear in a number of places throughout this document and include
statements regarding the intentions, beliefs or current expectations of the
Directors and the Investment Manager, concerning, amongst other things, the
investment objectives and investment policy, financing strategies, investment
performance, results of operations, financial condition, liquidity, prospects,
and distribution policy of the Company and the markets in which it invests.
By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not
occur in the future. Forward-looking statements are not guarantees of future
performance.
The Company's actual investment performance, results of operations, financial
condition, liquidity, distribution policy and the development of its financing
strategies may differ materially from the impression created by the
forward-looking statements contained in this document.
Subject to their legal and regulatory obligations, the Directors and the
Investment Manager expressly disclaim any obligations to update or revise any
forward-looking statement contained herein to reflect any change in
expectations with regard thereto or any change in events, conditions or
circumstances on which any statement is based.
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