Triple Point Energy - Results for the six months ended 30 September 2021
02/12/2021 06:59
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RNS Number : 2846U Triple Point Energy Efficiency 02 December 2021
THIS ANNOUNCEMENT HAS BEEN DETERMINED TO CONTAIN INSIDE INFORMATION FOR THE
PURPOSES OF THE UK VERSION OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014.
2 December 2021
Triple Point Energy Efficiency Infrastructure Company plc
("TEEC" or the "Company" or, together with its subsidiaries, the "Group")
RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021
The Board of Triple Point Energy Efficiency Infrastructure Company plc
(ticker: TEEC) is pleased to announce its unaudited results for the six months
ended 30 September 2021.
30 September 2021
Net Asset Value ("NAV") £94.5m
NAV per share 94.50 pence
Value of the portfolio £28.5m
Ongoing charges ratio (annualised)( 1) 1.16%
Dividend declared per share 2.75 pence
Highlights
· In June 2021, the Group announced the completion of a £8.032
million senior debt investment in an operational CHP+ energy centre, Spark
Steam Limited ("Spark Steam"), which supplies heat, electricity and carbon
dioxide to APS Salads.
· The Company expects to deploy further capital in the coming
weeks into projects which should see the Company reach full deployment.
· The Company held cash of £65.7 million as at 30 September
2021.
· The Company has circa £289 million of near term pipeline
opportunities of which approximately £48 million have signed heads of terms.
· The Company has today declared a dividend of 1.375 pence per
ordinary share in respect of the period from 1 July 2021 to 30 September 2021.
Post balance sheet events
In November 2021, the Group successfully completed investments totalling
£26.8m (excluding transaction costs) into a portfolio of six operational,
Feed in Tariff ("FiT") accredited, hydroelectric power projects in Scotland.
Within the next several weeks we expect to complete a further investment into
a portfolio of three additional, operational, FiT accredited hydroelectric
power projects, valued at up to £19.7m (excluding transaction costs). These
investments were identified in the IPO prospectus and formed part of the
original pipeline. Further details of the investment can be found in the
Investment Manager's Report below.
John Roberts, the Company's Chair, commented:
"I am pleased to present the Company's unaudited interim results for the six
months ended 30 September 2021. We have continued to focus on implementing our
strategy, deploying capital into attractive Energy Efficiency Projects and
have been working closely with a wide number of counterparties to build our
pipeline for future investments."
FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:
Triple Point Investment Management LLP (via FTI below)
(Investment Manager)
Jonathan Parr
Jonathan Hick
Akur Capital (Financial Adviser) Tel: 020 7493 3631
Tom Frost
Anthony Richardson
Siobhan Sergeant
RBC Capital Markets (Joint Broker) Tel: 020 7653 4000
Matthew Coakes
Jill Li
Kathryn Deegan
Winterflood Securities (Joint Broker) Tel: 020 3100 0000
Neil Langford
Hande Derinkok
FTI Consulting
Ed Berry Tel: 07703 330 199
Mitch Barltrop Tel: 07807 296 032
The Company's LEI is 213800UDP142E67X9X28.
Further information on the Company can be found on its website
at www.tpenergyefficiency.com (http://www.tpenergyefficiency.com) .
NOTES:
The Company is an investment trust which invests exclusively in a diversified
portfolio of Energy Efficiency Projects in the UK, which have a positive
environmental impact. The Company's investment strategy focuses on the core
sectors of: low carbon heat distribution; social housing retrofit and
industrial energy efficiency; and distributed generation.
The Investment Manager is Triple Point Investment Management LLP ("Triple
Point") which is authorised and regulated by the Financial Conduct Authority.
Triple Point manages private, institutional and public capital, and has a
proven track record of investment in Energy Efficiency and decentralised
energy generation projects. In 2018, Triple Point was appointed as the
Delivery Partner to BEIS, a department of the UK government, to deliver the
£320 million Heat Networks Investment Project ("HNIP").
The Company was admitted to trading on the Specialist Fund Segment of the Main
Market of the London Stock Exchange on 19 October 2020 and was awarded the
London Stock Exchange's Green Economy Mark.
CHAIR'S STATEMENT
Introduction
I am pleased to present the Company's unaudited interim results for the six
months ended 30 September 2021. During the period we have continued to focus
on implementing our strategy, through which we target NAV total return of
7-8% per annum and contribute towards the transition to a low carbon
economy.
In the period, we successfully deployed £8.032 million of capital and since
then, have deployed an additional £26.8 million into further assets that are
well aligned with the Company's Investment Policy. Following completion of the
three additional hydroelectric power projects valued at up to £19.7m, the IPO
proceeds will be substantially deployed.
Investment Activity
Since the Company's IPO in October 2020, the Investment Manager has reviewed
115 investment opportunities, of which 16 were reviewed by its Investment
Committee and Board.
In June 2021, we announced the completion of a £8.032 million senior debt
investment in Spark Steam Limited ("Spark Steam"), a company that owns and
operates a CHP+ asset and which was part of the pipeline identified at IPO.
Spark Steam provides tomato grower, APS Salads, with its heat and electricity
requirements, as well as supplying carbon dioxide produced by the CHP+ system
to enhance crop yields. The transaction followed on from similar investments
made in March 2021 in Harvest Generation Services Limited ("Harvest") and
Glasshouse Generation Limited ("Glasshouse").
The transaction refinanced debt previously provided in part by investees of
other funds under the management of the Investment Manager and was approved by
the Board in line with the Company's conflict of interest procedures.
In November 2021, we successfully completed investments totalling £26.8m
(excluding transaction costs) into a portfolio of six operational, Feed in
Tariff ("FiT") accredited, hydroelectric power projects in Scotland. Within
the next several weeks we expect to complete a further investment into a
portfolio of three additional, operational, FiT accredited hydroelectric power
projects, valued at up to £19.7m (excluding transaction costs). These
investments were identified in the IPO prospectus and formed part of the
original pipeline. Further details of the investment can be found in the
Investment Manager's Report below.
This opportunity has enabled the Group to acquire an operational portfolio
backed by long-term, inflation-linked FiT revenues, whilst generating 100%
renewable energy.
The portfolio of hydroelectric power projects was owned by entities advised by
the Investment Manager and, as a result, a potential conflict of interest
existed. In accordance with the IPO Prospectus, the Board were required to
approve the transaction and we were given comfort by the steps taken to manage
and mitigate the conflict, which included separate dedicated buy and sell side
teams within the Investment Manager and third-party valuations.
Since IPO, our Investment Manager has focused on the execution of proprietary
projects within the pipeline, demonstrated by our portfolio comprising three
CHP+ projects and six hydroelectric power projects. As a result of these
investments, and the further investments into the hydroelectric power projects
expected to complete in the next several weeks, the Company has deployed the
majority of the net proceeds from its IPO. As a percentage of the Net Asset
Value ("NAV"), grossed up by the Company's target medium term gearing of up to
40 percent of Gross Asset Value ("GAV"), CHP+ would represent 18% and
hydroelectric power (following the further investment) would represent 29%,
with 11% in cash and the remainder of the GAV amount representing gearing.
In light of the immediate pipeline, we are looking to put in place a debt
facility to allow for additional investment in projects from our pipeline once
the cash proceeds from the IPO have been invested. As we deploy more capital
into pipeline opportunities, we will be bringing further diversification to
the portfolio.
Pipeline
We are pleased with the investments made to date and our Investment Manager
continues to target selected opportunities that will deliver value to
shareholders, with several opportunities at advanced stages.
The Company has circa £289 million of pipeline opportunities of which
approximately £48 million have signed heads of terms. It is expected that
acquisitions arising from these opportunities will be funded with the proceeds
of the above-mentioned debt facility. The pipeline is spread across a diverse
range of target sectors, including traditional energy efficiency technologies,
combined heat and power, solar, anaerobic digestion, and energy from waste. It
also includes more emergent areas such as electric vehicle charging, battery,
and fuel cells technologies.
We remain excited by the significant pipeline that the Company's investment
strategy presents.
For further details on the pipeline please see the Investment Manager's
report.
Financial Results
The NAV per share was 94.50 pence on 30 September 2021 (31 March 2021: 97.49
pence). The portfolio, consisting of three secured loan investments held
by the Company's subsidiary TEEC Holdings Limited ("TEEC
Holdings"), was valued at £28.5 million on 30 September 2021 (31 March
2021: £20.9 million) and the Company held cash of £65.7 million at the
reporting date.
The performance of our three investments have been in line with expectations.
All payments of interest and capital have been made on time and in full.
The Company made a profit before tax of £0.4 million for the period (31
March 2021: £0.5m loss). The Company's annualised ongoing charges ratio
("OCR") was 1.16%. The investment management fee is calculated in reference
to deployed funds, until the IPO proceeds are substantially deployed at which
time the management fee calculation will be by reference to NAV. Hence, as the
Company continues to deploy capital, we expect the OCR to increase. The Board
will continue to monitor the OCR closely as we seek to grow the Company and
deliver value to our shareholders.
Share Price and Distributions
There continues to be significant market opportunity for energy efficiency
investments in the UK, which is reflected in our pipeline. The Company's
shares have traded at a premium to NAV over the period (and since launch) and
the Company has announced it will pay an interim dividend of 1.375 pence per
share in respect of the period from 1 July 2021 to 30 September 2021.
As stated previously, the Board is targeting total dividends of 5.50 pence per
share(2) for the year ending March 2022. We remain focused on our ambition
that our dividend should be covered by cash earnings as soon as practicable.
Notes:
(2 )The dividend and return targets stated are Pound Sterling denominated
returns targets only and not a profit forecast. There can be no assurance that
these targets will be met, and they should not be taken as an indication of
the Company's expected future results.
Environmental, Social and Governance ("ESG")
The importance of sustainability continues to grow, and we are proud that it
is at the heart of the Company's Investment Objective. The Investment Manager
has established investment due diligence processes that assess the most
material sustainability issues that each proposed investment may face. That
work has informed our assessments and investment views and also aligns with
the ESG integration strategy developed by the Investment Manager. More
information on the Investment Manager's integration of ESG into its investment
process can be found in the Investment Manager's Report.
The Company has been awarded the Green Economy Mark by the London Stock
Exchange ("LSE"), which recognises listed companies and funds which derive 50%
or more of their revenues from environmental solutions.
Outlook
The Government focus on achieiving its Net-Zero targets, particularly in light
of the 26(th) UN Climate Change Conference of the Parties ("COP26"), provides
an exciting outlook for the Company and this is supported by our strong
pipeline of investment opportunities.
Energy efficiency has been identified as one of the most significant levers to
achieving Net-Zero targets and we are excited to be able to contribute to the
achievement of those targets. We would like to take this opportunity to
thank our shareholders for their continued support over the period.
John Roberts
Chair
2 December 2021
INVESTMENT MANAGER'S REPORT
Review of the Period
The wider market has experienced some disruption during the period given the
ongoing economic impact from Covid-19 with the interruption of usual business
interaction, disruption to travel, forced absences from work because of health
reasons, and the knock-on impact throughout society. In addition, we have seen
the continuing impact of Brexit to the economy, backlog to supply chains,
increase in input and administration costs, longer and more expensive
transportation and shortages of workforce.
The challenges from Covid-19 and Brexit have been compounded by the enormous
volatility in energy prices. Individuals, companies and the government are
having to focus their attention on seeking solutions to mitigate the
volatility of energy prices and to seek a more robust and sustainable supply
and use of energy to reduce costs and the impact to the environment.
Although Covid-19, Brexit, and the volatile energy markets make for a
challenging environment, the Company has not been directly impacted. The
Company does not have its own employees and at the Investment Manager, we have
continued to perform our role through taking the necessary precautionary
measures and using technology to replace physical meetings where appropriate.
The supply chain issues caused by Brexit have also not noticeably impacted the
Company given the relatively low level of replacement items needed for the
existing projects. As for energy prices, by targeting opportunities which have
limited exposure to the price volatility of energy markets and by securing
revenues through long term contracts we have experienced minimal direct impact
to the value of investments or to the opportunities in the pipeline. We
target long-term contracts so that short-term market volatility is smoothed
out through the life of the project.
Despite the challenges faced, the Company has now completed investments in
three CHP+ projects and six hydroelectric power projects and, as a result of
these investments, and the further investments into the hydroelectric power
projects expected to complete in the next several weeks, the Company will have
deployed the majority of the net proceeds from its IPO.
Looking forward, we see many opportunities to continue to deliver on our
pipeline and create value for shareholders.
Market Review
It is a good time to be investing in Energy Efficiency Projects.
First, there is the policy imperative, led by government support for energy
efficiency measures, and which has been borne out of funding by government for
example into heat networks and energy efficiency. Second, there is the sheer
size of the opportunity, for example the need to decarbonise buildings across
the UK. Third, there is the ever-accelerating drive towards Net-Zero and the
requirement to decarbonise and improve efficiency and productivity.
In addition, with the possibility of inflation hanging over the economy as the
recovery gathers pace, Energy Efficiency Projects can provide a degree of
protection in this environment through contracted and inflation-linked cash
flows, which offer investors an attractive yield.
COP26 has focused minds on the importance of mitigating climate change. Energy
efficiency is a key lever to use to reduce the impact from the use of energy
by making it cleaner, more efficiently used and less expensive. We are having
active discussions with a number of technology providers and developers who
are seeing a growing demand for carbon reduction and better use of energy both
for climate change reasons but also for creating a more robust infrastructure.
This includes already widely used technologies such as solar, both ground
mounted and rooftop PV, but also for newer technologies such as battery energy
storage solutions. The latter is also seeing increasingly large projects being
developed in order to take advantage of the need to balance out the growing
level of reliance on renewable generation. This is also an opportunity for the
Company to grow with the expanding demand for climate change solutions.
Pipeline
The investments we target typically range from £5m to £30m and are
diversified across a range of sectors.
The Company has an immediate pipeline of £289 million, of which £48 million
have signed heads of terms. The Company continues to see attractive
opportunities across a variety of technologies including energy from waste,
combined heat and power plants, battery storage, solar, electric vehicle
charging infrastructure and other energy efficiency technologies. We have
witnessed a significant inflow of opportunities driven by the recent
volatility in energy prices, with some intensive energy users being charged as
much as 26p/kWh. These users are increasingly seeing the benefit of onsite
power and heat generation, for example through containerised combined heat and
power, or rooftop solar. Energy users in our pipeline projects could benefit
from electricity prices in single digit p/kWh over a 15-year period, providing
stability and affordability for those companies. At the same time, energy
users are keen to ensure that this onsite energy generation is low carbon. The
Company has also witnessed a number of sizeable opportunities in the energy
from waste sector driven by rising landfill prices and restrictions on
shipping waste overseas. More broadly, the Company believes that the recent
turbulence in energy markets will drive companies to take an interest in their
energy consumption in a way that they have not done previously, for example
further investigating energy efficiency measures to reduce the volume of power
consumed.
The Company continues to build on its strategy of establishing strong
relationships with developers and equipment manufacturers to order establish
proprietary pipeline. Given the yield compression witnessed in some segments
of the distributed generation market, for example subsidy-backed solar, we
believe that this will enable the Company to achieve more attractive
risk-adjusted returns.
Investment Review
On 1 June 2021, the Group announced that it had completed an investment in
Spark Steam Limited ("Spark Steam"), a company that owns and operates a CHP+
asset and which was part of the pipeline identified at IPO. Under the terms of
the investment, the Group has provided £8m of senior debt finance secured
against Spark Steam, the underlying assets, equipment, and contracts. The
interest rate is 7.375% per annum, and the loan carried a term of 10.5 years,
amortising over the term. Spark Steam owns an operational, established energy
centre located in Teesside, supplying heat, electricity, and also carbon
dioxide to the UK's largest tomato grower, APS Salads ("APS"), pursuant to an
energy services agreement, with a remaining term of approximately 15.5 years.
Spark Steam also has the potential to sell electricity to other energy users
under private wire connections. APS is also a customer of our initial two
investments, Harvest Generation Services Limited and Glasshouse Generation
Limited.
APS is responsible for approximately one third of the country's tomato
production and has over 65 years of operational experience. APS owns and
operates over six million sq. ft. of glasshouses and distributes to all major
UK food retailers including: Aldi, Iceland, Lidl, M&S, Ocado, Morrisons,
Sainsbury's, Tesco, and Waitrose. APS has itself faced its own challenges,
which include navigating through the impacts of Brexit and Covid-19 on working
arrangements, distribution, and the supply of workers generally. All of this
has had an impact on APS's near-term profitability, but we are assured by the
high-quality glasshouses and premium distribution enjoyed by APS from its
growing facilities.
An additional benefit of the Spark Steam CHP+ facility, much like previous
CHP+ investments made by the Company, is that the main waste product from
combustion, carbon dioxide, is used to enhance crop yields on site rather than
being vented into the atmosphere. The energy centre comprises two state of the
art Jenbacher gas engines and heat/carbon dioxide recovery and distribution
equipment.
The transaction is aligned with the Company's targeted risk/return profile and
objective of delivering secure investments that generate a total return for
investors. It also supports the transition to a low carbon economy in
accordance with the UK government's overall environmental targets.
In November 2021, we successfully completed investments into a portfolio of
six operational, FiT accredited, hydroelectric power projects in Scotland for
an aggregate consideration of £26.8 million (excluding transaction costs).
Within the next several weeks we expect to complete a further investment into
a portfolio of three additional, operational, FiT accredited hydroelectric
power projects, valued up to £19.7m (excluding transaction costs). These
investments were identified in the IPO prospectus and formed part of the
original pipeline.
Distributed renewable energy projects deliver greater efficiency through
proximity to both the source of energy and the point of grid connection, which
reduces the transmission losses and increases the efficiency of such projects.
Hydroelectric power projects are efficient as the inputs required to generate
electricity (potential energy of water) would not otherwise be used and no
additional energy is required to access them. As well as the benefits of the
more efficient generation of energy and the associated decarbonisation of the
grid, small-scale hydroelectric power projects also benefit from
well-understood technology with a long track record of performance.
These investment opportunities enable the Company to deploy a large portion
of its remaining IPO proceeds by acquiring an operational portfolio backed by
long-term, inflation-linked FiT revenues, whilst generating 100% renewable
energy.
The investments are generally supported by long-term and low volatility
contracts providing a predictable yield for investors.
The Company has found that the deployment of capital into housing association
energy efficiency to be a smaller market opportunity than expected. This is
partly because of cheap alternative funding or self-funding and also because
project sizes can be relatively small. That said, there may be opportunities
that do come in the future which may be of an attractive size, so we will
assess those opportunities when they arise. Similarly, the market opportunity
for projects in the heat networks sector is more of a medium-term opportunity
rather than near-term, given the long development timescales, lack of
committed offtake, and the availability of public funding meaning that there
is less need in the near-term for private funding. We continue to monitor the
heat network sector closely and to discuss opportunities for funding where
appropriate. Although housing association energy efficiency and heat networks
may be less attractive than originally expected, the wider energy efficiency
and distributed energy market opportunities are increasing in attractiveness
given the growing demand for widespread and deep decarbonisation solutions.
Gearing
At the reporting date, the Company had not utilised any gearing. In the
interests of capital efficiency and to enhance income returns and long-term
capital growth, the Company expects to utilise gearing in the near term and
has a maximum gearing level of 45% of GAV under the Investment Policy. We
are, therefore, in the process of seeking suitable debt financing which will
provide the Company with the flexibility to deploy capital into the pipeline
of investment opportunities.
Financial Review
The investment portfolio currently comprises three secured loan investments
commanding an attractive weighted average return on capital of 7.65%. This
contributed to a Profit before tax of £0.4 million for the period (31 March
2021: £0.5 million loss), equal to 0.004 pence per share (31 March 2021:
0.009 pence per share loss).
During the period, the Company' NAV per share fell by 2.99 pence to 94.50 (31
March 2021: 97.49 pence). The reduction in NAV was primarily driven by
dividend payments totalling 3.375 pence per share being partially offset by
0.382 pence per share of income.
The Company continues to maintain discipline and only deploy funds into
risk-adjusted Energy Efficiency Projects. Until the IPO proceeds are
substantially deployed, the Investment Manager fee will continue to be
calculated by reference to deployment, following which it will then revert to
a NAV based measurement.
The Company remains focused on its ambition to provide a dividend fully
covered by cash earnings as soon as practicable.
The Company applies IFRS 10 and qualifies as an investment entity. IFRS 10
requires that investment entities measure investments, including subsidiaries
that are themselves investment entities, at fair value except for subsidiaries
that provide investment services which are required to be consolidated.
The Company's single, direct subsidiary, TEEC Holdings, is the ultimate
holding company for all the Company's investments.
It is, itself, an investment entity and is therefore measured at fair value.
Sustainability and the approach to Environmental, Social and Governance
measures
Triple Point as Investment Manager has been developing and has started to
implement the Company's approach to ESG in its investment and asset management
processes. Refinement of this process has taken place over the period, and we
will continue to monitor it to ensure effectiveness. The full process is
captured in the Company's "ESG Framework" process documentation.
The key steps of this process are as follows:
Step 1: Screening
· The energy efficiency credentials of the project are checked with a
high-level assessment to confirm the investment would save carbon dioxide
equivalents compared to a counterfactual.
· Any potential deal is screened to ensure it does not present an
unacceptable ESG risk. Reputational risk is a particular consideration, where
the counterparty/off-taker sector are reviewed.
Step 2: Heads of Terms
· The main counterparty and/or end user is made aware that the Company
will require reporting of certain data. It is important a counterparty
understands these expectations early in the process, as this helps to align
expectations and values.
Step 3: Pre-Investment Due Diligence
· Carbon Analysis: A full counterfactual analysis is conducted to
establish a more detailed understanding of the carbon dioxide equivalent
savings from the project.
· ESG Assessment: An ESG risk and opportunities review is conducted.
The parameters of the assessment are set according to the type of project,
ensuring a focus on material topics of assessment. Areas of concern receive a
red flag resulting in further scrutiny or their selection as future areas of
engagement for improvement.
· Scenario Analysis: An investigation of the physical and transitional
risks which may impact project success takes place. The investment is tested
on multiple scenarios which are used as an overlay to the financial risks of
the projects, which are adjusted accordingly.
Results from the pre-investment due diligence analysis are included in
Investment Committee papers.
Step 4: Execution
Detail of the KPIs required, reporting frequency and areas of ESG improvement
(with financial incentive if appropriate) are incorporated into the investment
documentation.
Step 5: Monitoring and Reporting
Our approach to ESG KPI reporting is shaped by our commitment to energy
efficiency, our approach to ESG analysis and engagement, and our desire to
meet the wider needs of the market for growing transparency on these matters.
ESG data reporting will be annual.
· Energy Efficiency:
The Company should contribute to a more energy efficient economy, and this
will be demonstrated by reporting on avoided emissions, collected through a
counterfactual assessment process. We will also separately report on the
absolute emissions, for appropriate transparency and as a means to track and
monitor carbon exposure and potentially drive further carbon savings.
· ESG assessment and engagement:
The Company will draw on the red flags identified during the ESG assessment in
due diligence to focus and report subsequently on areas where improvements
were needed.
· Commitment to transparency:
The Company, and the Investment Manager as responsible investors, ensure that
we take a best practice approach to any regulation. We are working towards
the annual disclosure of the Group's portfolio according to the requirements
of TCFD (Task Force on Climate-related Financial Disclosure), SFDR
(Sustainable Financial Disclosure Regulation) and SECR (Streamlined Energy and
Carbon reporting). We also closely monitor the emergence of any further
regulation and will apply the same transparency-led approach.
Valuation
The Investment Manager is responsible for carrying out the fair market
valuation of the Company's investment in TEEC Holdings, which is presented to
the Board for its consideration and comment in advance of its formal approval.
The valuation of the portfolio held by TEEC Holdings and of the Company's
investment in TEEC Holdings itself is to be carried out on a six-monthly basis
at 31 March and 30 September each year.
At the period end, the Group's portfolio comprised three debt investments in
Harvest, Glasshouse, and Spark Steam totalling £29 million.
Investments made by the Company through TEEC Holdings are expected to be
predominantly non-market traded investments, such that these investments are
valued using a discounted cash flow analysis of the forecast investment cash
flows from each project.
When valuing equity investments, the key macro-economic and fiscal factors
expected to affect the forecast of each portfolio company's cash flows are
inflation rates, interest rates, power price assumptions, and corporation tax
rates. The Investment Manager makes forecast assumptions for each of these
external metrics, based on market data and relevant economic forecasts where
available.
When valuing debt investments, a discount rate is applied to future cash
flows. Determination of the discount rate is through consideration of the
expected internal rate of return over the life with an appropriate adjustment
with reference to market discount rates.
The Investment Manager exercises judgement in assessing the expected future
cash flows from each investment, based on the detailed financial models
produced for each portfolio company and adjusting where necessary to reflect
the broader macro-economic and fiscal assumptions as well as any specific
operating assumptions that may be relevant to the individual projects.
The fair value for each investment is then derived from the application of an
appropriate market discount rate. Due to the Company investing solely in
projects based in the United Kingdom, there are no foreign exchange
assumptions required. The discount rate used considers risks associated with
the financing of an investment such as investment risks (e.g., liquidity,
inflation, interest rate risks, market appetite) and any risks to the
investment's earnings (e.g., predictability of the revenues and factors
affecting these), all of which may be differentiated by the phase of the
investment's life (e.g., in development/construction or in the operational
phase).
The Investment Manager uses Its judgement in arriving at the appropriate
discount rate. This is based on its knowledge of the market, considering
insights gained from its investment activities, discussions with its financial
advisers and publicly available information on relevant transactions.
Outlook
The Government continues to be highly committed to achieving its Net-Zero
targets and the Company continues to be well positioned to assist in the
achievement of those goals. We are also confident in our pipeline, which
includes a wide range of low carbon and energy efficient technologies.
Jonathan Parr
Partner and Head of Energy
2 December 2021
PRINCIPAL RISKS AND UNCERTAINTIES
In the period, the Company has continued to develop its risk management
processes and as a result the principal risks and uncertainties presented on
pages 32-36 of the Annual Report for the period ended 31 March 2021 have been
reviewed and updated.
We have provided a summary below, highlighting the changes to the risks in the
period.
Exposure to power prices and risk to hedging power prices
On assessing the risk of exposure to power prices, the decision was taken to
increase the likelihood score from low to moderate. This was done in order to
rebalance the risk as we believed a likelihood score of low did not
appropriately represent the environment in which we operate.
The mitigants described in the Annual Report remain unchanged and are still
considered appropriate as the risk has been rebalanced as opposed to the
environment materially changing in the period.
Counterparties' ability to make contractual payments
In light of the challenges faced in the market and economy more broadly as a
result of Brexit and Covid-19, the likelihood score for the risk of
counterparties' ability to make contractual payments has been increased from
low to moderate.
The Group has received all its capital and interest payments for its three
senior debt investments in line with expectation.
In addition to the mitigations disclosed in the Annual Report, the Investment
Manager has in place processes to monitor the financial health of
counterparties and reports any concerns to the Board.
Construction risk for certain Energy Efficiency Projects
The impact score has been reduced from moderate to high to moderate, whilst
the likelihood score has increased from low to moderate. The reduction in the
impact score reflects the position of the Group, as it has substantially
deployed its IPO proceeds into operational assets, therefore reducing the
impact of construction risk on the portfolio. On the other hand, the
likelihood score has been increased, acknowledging that there are some
construction projects within the pipeline.
To the extent that the Group enters into Energy Efficiency Projects with
construction risk, it will engage third party EPC contractors and build into
the contracts provisions against construction associated losses.
Raising additional finance
The risk of expensive or lack of debt finance has been revised to the risk of
raising additional finance. In reviewing the risk register, it was
acknowledged that the risk was broader than just the Company's ability to
raise debt finance and that difficulty in raising additional finance, be that
debt or equity, could limit our ability to grow and achieve a fully covered
dividend.
In respect of mitigants, the Investment Manager will adopt a flexible approach
when raising debt financing and keep liquidity under constant review. The
decision to seek to raise further equity would be subject to multiple factors
and only be undertaken at such time as the Company were confident in its
ability to raise equity.
Emerging risks
The emerging risks identified on page 37 of the Annual Report for the period
ended 31 March 2021 have been updated to reflect the changing landscape in
which we operate.
The United Kingdom's withdrawal from the European Union and the Covid-19 and
global pandemic risk have both been removed as emerging risks. In each case,
the risk has existed since the Company's inception but has not resulted in a
material impact. The Board will continue to monitor both situations and
implement the appropriate controls and processes to mitigate any potential
impact on the Group.
The risk of physical effects of climate change remains an emerging risk and
continues to be closely monitored.
The following have been characterised as emerging risks in the period:
Supply chain pressures
As a result of both COVID-19 and Brexit, global supply chains are showing
increasing signs of pressure. This could result in delays in the supply of
key hardware required to maintain or improve assets. As part of our ongoing
monitoring of investments and assessment of new opportunities, supply chain
pressures will be considered and, where necessary, mitigating plans will be
put in place.
Disruptive Technology
The energy efficiency sector is constantly evolving. As a result, there is a
risk that disruptive technology emerges which results in current assets
becoming obsolete. The Board continue to monitor the emerging trends within
Energy Efficiency to ensure new investment opportunities are accurately
assessed.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge this condensed set
of financial statements which have been prepared in accordance with IAS 34 as
adopted by the UK, give a true and fair view of the assets, labilities,
financial position and profit or loss of the Company. The operating and
financial review on pages 22 to 39 includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8 of the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority
namely: an indication of important events that have occurred during the
period and their impact on the condensed financial statements and a
description of the principal risks and uncertainties for the remaining six
months of the financial year; and material related party transactions in the
period as disclosed in Note 11.
The Directors, all of whom are independent and non-executive, are:
· Dr John Roberts (Chair)
· Rosemary Boot (Senior Independent Director)
· Dr Anthony White
· Sonia McCorquodale
Shareholder information is as disclosed on the Triple Point Energy Efficiency
Infrastructure Company plc website.
Approval
This Directors' responsibilities statement was approved by the Board of
Directors and signed on its behalf by:
John Roberts
Chair
2 December 2021
INDEPENDENT REVIEW REPORT TO TRIPLE POINT ENERGY EFFICIENCY INFRASTRUCTURE
COMPANY PLC
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2021 which comprises of Interim Condensed Statement of Comprehensive
Income, Statement of Financial Position, Statement of Changes in Equity,
Statement of Cash Flow and notes to Condensed Financial Statements.
We have read the other information contained in the half-yearly financial
report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of
financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of and has been
approved by the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the Company will be
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this interim financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, ''Interim Financial Reporting''.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information
Performed by the Independent Auditor of the Entity'', issued by the Financial
Reporting Council for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2021 is not prepared,
in all material respects, in accordance with UK adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting its responsibilities in respect of half-yearly
financial reporting in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority and for
no other purpose. No person is entitled to rely on this report unless such a
person is a person entitled to rely upon this report by virtue of and for the
purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility
for this report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability
Peter Smith
BDO LLP
Chartered Accountants
London
2 December 2021
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Interim Condensed Statement of Comprehensive Income
For the Six Month period ended 30 September 2021
1 April 2021 to 23 June 2020 to 30 23 June 2020 to 31
30 September 2021 September 2020 March 2021
Unaudited Unaudited Audited
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investment income 3 1,019 - 1,019 - - - 57 - 57
Loss arising on the revaluation of investments at the period end 9 - (83) (83) - (113) (113)
- - -
Investment return 1,019 (83) 936 - - - 57 (113) (56)
Investment management fees 4 90 30 120 5 1 6
- - -
Other expenses 4 418 16 434 388 71 459
- - -
508 46 554 - - - 393 72 465
Profit/(loss) before taxation 511 (129) 382 (336) (185) (521)
Taxation 5 - - - - - - - - -
Profit/(loss) after taxation 511 (129) 382 - - - (336) (185) (521)
Other comprehensive income - - - - - - -
- -
Total comprehensive profit/ (loss) 511 (129) 382 - - - (336) (185) (521)
Basic & diluted earnings per share (pence) 6 0.005p (0.001p) 0.004p - - - (0.01p) (0.00p) (0.01p)
The total column of this statement is the Income Statement of the Company
prepared in accordance with IAS in conformity with the requirements of the
Act and in accordance with IFRS adopted by the UK. The supplementary revenue
return and capital columns have been prepared in accordance with the
Association of Investment Companies Statement of Recommended Practice (AIC
SORP).
All revenue and capital items in the above statement derive from continuing
operations.
This Income Statement includes all recognised gains and losses.
The accompanying Notes are an integral part of this statement.
Interim Condensed Statement of Financial Position
As at 30 September 2021
Company Number: 12693305
30 September 2021 31 March 2021 30 September 2020
Unaudited Audited Unaudited
Note £'000 £'000 £'000
Non-current assets
Investments at fair value through profit or loss 9 28,499 20,883 -
Current assets
Trade and other receivables 509 201 50
Cash and cash equivalents 65,705 76,553 -
66,214 76,754 50
Total assets 94,713 97,637 50
Current liabilities
Trade and other payables (217) (149) -
Current taxation payable - - -
(217) (149)
Net assets 94,496 97,488 50
Equity attributable to equity holders
Share capital 10 1,000 1,000 50
Share premium 1 - -
Special distributable reserve 93,634 97,009 -
Capital reserve (314) (185) -
Revenue reserve 175 (336) -
Total equity 94,496 97,488 50
Shareholders' funds
Net asset value per Ordinary Share 8 94.50p 97.49p 100p
The statements were approved by the Directors and authorised for
issue on 2 December 2021 and are signed on behalf of the Board by:
Dr John Roberts
Chair
2 December 2021
The accompanying Notes are an integral part of this statement.
Interim Condensed Statement of Changes in Equity
For the Six Month period ended 30 September 2021 (Unaudited)
Issued Capital Share Premium Special Distributable Reserve Capital Reserve Revenue Reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2021 1,000 - 97,009 (185) (336) 97,488
Issue of share capital* - 1 - - - 1
Total comprehensive income/(loss) for the period - - - (129) 511 382
Dividends paid - - (3,375) - - (3,375)
As at 30 September 2021 1,000 1 93,634 (314) 175 94,496
* - 675 Ordinary 1 pence shares issued for £658
For the period from 23 June to 30 September 2020 (Unaudited)
Issued Capital Share Premium Special Distributable Reserve Capital Reserve Revenue Reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
As at 23 June 2020 - - - - - -
Issue of share capital* 50 - - - - -
As at 30 September 2020 50 - - - - -
For the period from 23 June to 31 March 2021 (Audited)
Issued Capital Share Premium Special Distributable Reserve Capital Reserve Revenue Reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
As at 23 June 2020 - - - - - -
Issue of share capital* 1,000 99,000 - - - 100,000
Cost of issue of shares - (1,991) - - - (1,991)
Transfer to special distributable reserve - (97,009) 97,009 - - -
Total comprehensive (loss) for the period - - - (185) (336) (521)
As at 31 March 2021 1,000 - 97,009 (185) (336) 97,488
*The Company allotted 50,000 Management shares and 1 Ordinary share at the
date of incorporation 23 June 2020. The Management shares were redeemed on 19
October 2021 upon issue of 999,999 ordinary shares following the Company's
£100.0 million initial public offer. Please see note 10.
The capital reserve represents the proportion of Investment Management
fees and other expenses, where applicable, charged against capital and
realised/unrealised gains or losses on the disposal/revaluation of
investments. The unrealised element of the capital reserve is not
distributable. The special distributable reserve was created on court
cancellation of the share premium account. The revenue, special
distributable and realised capital reserves are distributable by way of
dividend.
The accompanying Notes are an integral part of this statement.
Interim Condensed Statement of Cash Flows
For the Six Month period ended 31 March 2021
1 April to 23 June to 23 June to
30 September 2021 30 September 2020 31 March 2021
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Cash flows from operating activities
Profit / (Loss) before taxation 382 - (521)
Loss arising on the revaluation of investments at the period end 9 83 - 113
Cash flow Generated by/(used in) operations 465 - (408)
Interest income (1,019) - (57)
Interest received 605 4
(Increase) in receivables 3 - (148)
Increase in payables 67 - 149
Net cash flows from / (used in) operating activities 121 - (460)
Cash flows from investing activities
Purchase of financial assets at fair value through profit or loss (8,232) - (20,996)
9
Loan Principal repaid 637 - -
Net cash flows from / (used in) investing activities (7,595) - (20,996)
Cash flows from financing activities
Issue of shares 1 - 100,000
Costs of Share Issue - - (1,991)
Dividends paid (3,375) - -
Net cash flows from financing activities (3,374) - 98,009
Net (decrease)/ increase in cash and cash equivalents (10,848) - 76,553
Reconciliation of net cash flow to movements in cash and cash equivalents
Cash and cash equivalents at beginning of period 76,553 - -
Net (decrease)/ increase in cash and cash equivalents (10,848) - 76,553
Cash and cash equivalents at end of the period 65,705 - 76,553
The accompanying Notes are an integral part of this statement.
1. General Information
The Company is registered in England and Wales under
number 12693305 pursuant to the Companies Act 2006. The address of its
registered office, which is also its principal place of business, is 1 King
William Street, London EC4N 7AF.
The Company's Ordinary Shares were first admitted to trading on
the Specialist Fund Segment of the Main Market of the London Stock Exchange
under the ticker TEEC on 19 October 2020.
The Company's Objective is to generate an attractive total return for
investors comprising stable dividend income and capital preservation, with the
opportunity for capital growth through acquiring and realising value from of a
diversified portfolio of energy efficiency investments in the United
Kingdom.
The Company currently makes its investments through its sole holding
company TEEC Holdings. The Company controls the investment policy of TEEC
Holdings to ensure it acts in a manner consistent with the investment policy
of the Company.
The Company has appointed Triple Point Investment Management LLP as its
Investment Manager (the "Investment Manager") pursuant to the Investment
Management Agreement dated 25 August 2020. The Investment Manager is
registered in England and Wales under number OC321250 pursuant to the
Companies Act 2006. The Investment Manager is regulated by the FCA,
number 456597.
2. Basis of accounting
These condensed interim financial statements do not comprise statutory
accounts as prescribed in section 434 of the Companies Act 2006. Statutory
accounts for the period ended 31 March 2021 were approved by the Board of
Directors on 2 June 2021 and delivered to the Registrar of Companies. The
report of the auditors on those accounts was unqualified, did not contain any
emphasis of matter paragraph and did not contain any statement under section
498 of the Companies Act 2006.
On the 31 December 2020, IFRS as adopted by the European Union at that date
was brought into UK law and became UK-adopted International Accounting
Standards, with future changes being subject to endorsement by the UK
Endorsement Board. The Company applied IAS in conformity with the requirements
of the Act and in accordance with IFRS adopted pursuant to Regulation (EC) No
1606/2002, as it applies in the EU in its maiden annual report for period end
31 March 2021. The Company transitioned to UK-adopted International Accounting
Standards in its consolidated financial statements on 1 April 2021.There is no
impact on recognition, measurement or disclosure in the period reported as a
result of the change in the framework.
The financial information set out in this report covers the six months to 30
September 2021, with comparative numbers amounts shown for the year to 31
March 2021 and the period from incorporation on 23 June 2020 to 30 September
2021. These condensed financial statements are unaudited and the financial
information for the six months ended September 2021 contained herein does not
constitute statutory accounts for as defined in section 434 of the Companies
Act 2006. The statutory accounts for the year ended 31 March 2021 have been
delivered to the Registrar of Companies. The independent auditors' report on
those accounts was unqualified, did not draw attention to any matters by way
of emphasis, and did not contain a statement under sections 498(2) or 498(3)
of the Companies Act 2006.
This condensed interim financial statement for the half-year reporting period
ended 30 September 2021 has been prepared in accordance with the UK-adopted
International Accounting Standard IAS 34, 'Interim Financial Reporting' and
the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. The interim financial statements have
also been prepared as far as is relevant and applicable to the Company in
accordance with the Statement of Recommended Practice: Financial Statements of
Investment Trust Companies and Venture Capital Trusts ("SORP") issued in
October 2019 by the Association of Investment Companies ("AIC").
The interim report does not include all of the notes of the type normally
included in an annual financial report. Accordingly, this report is to be read
in conjunction with the Annual Report for the period ended 31 March 2021,
which has been prepared in accordance with IFRSs adopted by the European Union
and applicable law, and any public announcements made by the Company during
the interim reporting period. The Company uses the historical cost basis,
except for certain investments and financial instruments measured at fair
value through the Statement of Comprehensive income.
The Company applies IFRS 10 and qualifies as an investment entity. IFRS 10
requires that investment entities measure investments, at fair value, except
for those that provide investment related services and are not themselves
investment entities.
The Company's single, direct subsidiary, TEEC Holdings, is the ultimate
holding company for all the Company's investment. It is, itself, an investment
entity and is therefore measured at fair value.
The condensed interim financial information has been prepared on the same
basis of the accounting policies, significant judgements, key assumptions
& estimates and presentation and methods of computation as compared to the
Company's annual financial statements for the period ended 31 March 2021 where
they are described in detail.
The Company's financial performance does not suffer materially from seasonal
fluctuations.
The condensed interim financial statements are presented in pounds sterling
because that is the currency of the economic environment in which the Company
operates and is the Company's functional currency.
The condensed interim financial statements have been reviewed by the Company's
independent auditor but not audited.
Segmental Reporting
The Chief Operating Decision Maker ("CODM") being the Board of Directors, is
of the opinion that the Company is engaged in a single segment of business,
being investment in in energy efficiency projects to generate investment
returns while preserving capital. The financial information used by the CODM
to manage the Company presents the business as a single segment.
Going Concern
The Directors have adopted the going concern basis in preparing the Interim
Report. In reaching this conclusion, the Directors have taken into
consideration cash flows generated from operations, the cash position, income
and expense flows of the Company. As at 30 September 2021, the Company had net
assets of £94.5 million including cash balances of £65.7 million. After post
balance sheet events, the Company's cash position totalled £40.2 million.
The Directors have reviewed detailed financial forecasts (in which a number of
general and specific assumptions were adopted) and cash flows that project
twelve months beyond the date of approving the financial statements.
The Company was admitted to trading on the Specialist Fund Segment of the Main
market of the London Stock Exchange on 19 October 2020, which was after the UK
had been in its first lockdown in response to the COVID-19 pandemic. As a
result, the Investment Manager and Administrator had already successfully
implemented business continuity plans to ensure business disruption was
minimised and had been operating effectively whilst working remotely. All
staff we are able to assume their day-to-day responsibilities.
Based on the evaluation outlined above, including various risk mitigation
measures in place, the Directors do not consider that the effects of Covid-19
have created a material uncertainty over the assessment of the Company as a
going concern.
On the basis of this review, and after making due enquiries, the Directors
have a reasonable expectation that the Company has adequate resources to
continue in operational existence for at least 12 months from the date of
approval of this report. Accordingly, they continue to adopt the going
concern basis in preparing the financial statements.
3. Investment Income
1 April 2021 to 30 23 June 2020 to 30 September 2020 (Unaudited) For the period ended
September 2021 (Unaudited) 31 March 2021 (Audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Interest on cash deposits 4 - 4 - - - 4 - 4
Interest income from investments 1,015 - 1,015 - - - 53 - 53
1,019 - 1,019 - - - 57 - 57
4. Operating Expenses
1 April 2021 to 30 September 2021 (Unaudited) 23 June 2020 to 30 September 2020 (Unaudited)
For the period
ended 31 March 2021
(Audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investment Management fees 90 30 120 - - - 5 1 6
Directors' fees 100 - 100 - - - 91 - 91
Company's audit fees:
- statutory audit of the group financial statements 38 - 38 60 - 60
- - -
- Assurance-related services pursuant to legislation 25 - 25
- - -
Other operating expenses 225 10 235 225 71 296
- - -
Irrecoverable VAT on Administration & Management fees 30 6 36 12 - 12
- - -
508 46 554 - - - 393 72 465
The Directors' fees exclude employer's national insurance contribution and
travel expenses which are included as appropriate in other operating expenses.
There were no other emoluments.
5. Taxation
The tax for the period shown in the statement of Comprehensive Income is as
follows.
1 April 2021 to 30 September 2021 (Unaudited) For the period
23 June 2020 to 30 ended 31 March 2021 (Audited)
September 2020
(Unaudited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Profit / (Loss) before taxation 511 (129) 382 (336) (185) (521)
- - -
Corporation tax at 19% 97 (25) 72 - - - (64) (35) (99)
Effect of:
Tax relief for dividends designated as interest distributions (97) - (97) - - - - - -
Capital losses not deductible - 16 16 - - - - 22 22
Disallowed expenditure - - - - - - - 12 12
Surrendering of Tax losses to unconsolidated subsidiaries - 9 9 - - - 64 1 65
UK Corporation Tax - - - - - - - - -
6. Earnings Per Share
1 April 2021 to 30 23 June 2020 to For the period
September 2021 30 September 2020 (Unaudited) ended 31 March 2021 (Audited)
(Unaudited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Profit / (Loss) attributable to the equity holders of the Company (£'000) 511 (129) 382 (336) (185) (521)
- - -
Weighted average number of Ordinary Shares in issue ('000) 100,000 100,000 100,000 58,156 58,156 58,156
- - -
Profit / (Loss) per Ordinary share (pence) - basic and diluted 0.005p (0.001p) 0.004p (0.01p) (0.00p) (0.01p)
- - -
There is no difference between the weighted average Ordinary or diluted number
of Shares.
7. Dividends
On 2 June 2021, the Company announced an interim dividend of 2.00 pence per
share with respect to the period ending 31 March 2021 which was paid on 30
June 2021 to shareholders on the register on 11 June 2021.
On 2 September 2021, the Company announced a first quarter interim dividend of
1.375 pence per share, which was paid on 30 September 2021 to shareholders on
the register on 10 September 2021.
Dividends paid on equity shares during the period were:
1 April 2021 to 30 September 2021 (unaudited) 23 June 2020 to 30 September 2020 (Unaudited) For the period
£'000 £'000 ended 31 March 2021 (audited)
£'000
Interim dividend for the period ended 31 March 2021 of 2.00 pence per ordinary 2,000 - -
share
First quarter interim dividend for the year ending 31 March 2022 of 1.375 1,375 - -
pence per ordinary share
3,375 - -
8. Net assets per Ordinary share
30 September 2021 31 March 2021 30 September 2020
(Unaudited) (Audited) (Unaudited)
Total Net Assets (£'000) 94,496 97,488 50
Number of Ordinary Shares in issue ('000) 100,000 100,000 50
Net asset value per Ordinary Share (pence) 94.50p 97.49p 100.00p
9. Investments at Fair Value through Profit or Loss
As set out in Note 2, the Company designates its interest in its wholly
owned direct subsidiary as an investment at fair value through profit or
loss.
Summary of the Company's valuation is below:
30 September 2021 31 March 2021
(Unaudited) (Audited)
30 September 2020
(Unaudited)
£'000 £'000 £'000
Brought forward investment at fair value through profit or loss 20,883 -
-
New investments in the period 8,232 20,996
-
Capitalised interest 104 - -
Loan principal repaid in period (637) - -
Movement in fair value (83) (113)
-
Closing investment at fair value through profit or loss 28,499 20,883
-
Reconciliation of movement in fair value:
30 September 2020
(Unaudited)
30 September 2021 31 March 2021
(Unaudited) (Audited)
£'000 £'000
£'000
Opening Balance - -
20,883
8,232 20,996 -
Investments made*
Capitalised interest** - -
104
Loan principal repaid in period - -
(637)
Fair value of portfolio 20,996 -
28,582
Cash held in intermediate holding company 80 -
85
Fair value of other net assets in intermediate holding companies (193) -
(168)
Investment at fair value 20,883 -
28,499
*Investments made in the period represent the loan investment to TEEC Holding
limited to enable the debt investment in Spark Steam limited of £8.032m and a
£0.200 million working capital loan to TEEC Holdings Limited.
**Capitalised interest represents, interest recognised in the income statement
but not paid. This is instead added to the loan balance on which the interest
for future periods are computed. All payments from the borrower are in
accordance with facility agreement.
Valuation methodology
The Directors have satisfied themselves as to the methodology used and the
discount rates and key assumptions applied in producing the valuations. All
investments are at fair value through profit or loss.
For non-market traded investments, the valuation is based on a discounted cash
flow methodology and adjusted in accordance with the IPEV (International
Private Equity and Venture Capital) valuation guidelines where appropriate to
comply with IFRS 13 and IFRS 9. Where an investment is traded in an open
market, a market quote is used.
IFRS 13 'Fair Value Measurement' requires disclosure of fair value measurement
by level. The level of fair value hierarchy within the financial assets or
financial liabilities ranges from level 1 to level 3 and is determined on the
basis of the lowest level input that is significant to the fair value
measurement.
The fair value of the Company's investments is ultimately determined by the
underlying net present values of the investments. Due to their nature, they
are always expected to be classified as level 3 as the investments are not
traded and contain unobservable inputs.
There have been no transfers between levels during the period. The fair value
hierarchy consists of the following three 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 asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices).
• Level 3 - Inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The Investment Manager exercises its judgment in assessing the expected future
cash flows from each investment based on the project's expected life and the
financial models produced for each project company and adjusts the cash flows
where necessary to consider key external macro-economic assumptions and
specific operating assumptions.
The fair value for each investment is then derived from the application of an
appropriate market discount rate to reflect the perceived risk to the
investment's future cash flows to give the present value of those cash flows.
The discount rate considers risks associated with the financing of an
investment such as investment risks (e.g. liquidity, interest rate risks,
market appetite), and any risks to the investment's earnings
(e.g. predictability and covenant of the income) and a thorough assessment of
counterparty credit risk, all of which may be differentiated by the phase of
the investment.
The key unobservable input in relation to the portfolio valuation as at 30
September is the discount rate. The discount rate has been determined by
separating the market and credit spread on the debt investments. Market rate
has been determined with reference to a comparable risk free rate such a Gilt
with an equivalent maturity. This is then deducted from the internal rate of
return at inception to determine the credit spread. There was no material move
in the period. As the investments are GBP denominated fixed rate loans,
inflation and tax rate are not applicable. Given the proximity of the balance
sheet date to the inception of the loans, and the fact that there has not been
a perceived change in risk profile associated with the loans since inception,
there is not considered to be a reasonable alternative discount rate that
could be applied that would have a significant impact on their valuation. As
such no sensitivities are included.
The Company records the fair value of TEEC Holdings by calculating its Net
Asset Value. The aggregate fair value of each of the
individual investments held by TEEC Holdings constitutes the majority of the
fair value attributed to the Company's investment in TEEC Holdings.
10. Share Capital
For the Six Month period ended 30 September 2021 (Unaudited)
Allotted, issued and fully paid: Number of shares Nominal value of shares (£)
Ordinary shares of 1 pence each
Opening balance at 1 April 2021 100,000,000 1,000,000
Ordinary Shares issued (see note 11) 675 6.75
Closing balance of Ordinary Shares at 30 September 2021 100,000,675 1,000,006.75
For the period from 23 June to 31 March 2021 (Audited)
Allotted, issued and fully paid: Number of shares Nominal value of shares (£)
Ordinary shares of 1 pence each
Opening balance at 23 June 2020 - -
Allotted upon incorporation
Ordinary Shares of 1p each (see note 11) 1 0.01
Management shares 50,000 50,000.00
Allotted/ redeemed following admission to LSE
Ordinary shares issued 99,999,999 99,999,999.99
Management shares redeemed (50,000)
(50,000.00)
Closing balance of Ordinary Shares at 31 March 2021 100,000,000 1,000,000.00
Shareholders are entitled to all dividends paid by the Company and, on a
winding up, provided the Company has satisfied all its liabilities, the
shareholders are entitled to all of the residual assets of the Company.
11. Related Party Transactions
During the period interest totalling £1,015,370 was earned on the
Company's long-term interest-bearing loan between the Company and its
subsidiary. At the period end, £363,967 was outstanding.
During the period the Company loaned £8,031,524 to its wholly owned
subsidiary TEEC Holdings. The proceeds were used by TEEC Holdings to complete
the commensurate senior debt investment to Spark Steam Limited. A further
£200,000 was advanced to TEEC Holdings for working capital purposes.
The loans to TEEC Holdings are unsecured; the underlying loan from TEEC
Holdings to Harvest Generation Limited, Glasshouse Generation Services Limited
and Spark Steam Limited are secured against the assets of the companies by
a fixed and floating charge.
On 18 June 2021, the Company issued 675 Ordinary Shares to the Investment
Manager in accordance with the terms of the Investment Management Agreement
pursuant to which 20 per cent. of the investment management fee paid is used
to acquire new ordinary shares of £0.01 each in the capital of the Company.
The issue price per Investment Management Ordinary Share was £0.9749 (being
the prevailing Net Asset Value per share), in accordance with the terms of the
Investment Management Agreement.
The AIFM and Investment Manager
The Company and Triple Point Investment Management LLP have entered into the
Investment Management Agreement pursuant to which the Investment Manager has
been given responsibility, subject to the overall supervision of the Board,
for active discretionary investment management of the Company's Portfolio in
accordance with the Company's Investment Objective and Policy.
As the entity appointed to be responsible for risk management and portfolio
management, the Investment Manager is the Company's AIFM. The Investment
Manager has full discretion under the Investment Management Agreement to make
investments in accordance with the Company's Investment Policy from time to
time.
This discretion is, however, subject to: (i) the Board's ability to give
instructions to the Investment Manager from time to time; and (ii) the
requirement of the Board to approve certain investments where the Investment
Manager has a conflict of interest in accordance with the terms of the
Investment Management Agreement.
Under the terms of the Investment Management Agreement, the Investment Manager
will be entitled to a fee calculated at the rate of:
· 0.9 per cent, per annum of the adjusted NAV in respect of the Net
Asset Value of up to, and including, £650 million; and
· 0.8 per cent, per annum of the adjusted NAV in respect of the Net
Asset Value in excess of £650 million.
The management fee is calculated and accrues monthly and is invoiced monthly
in arrears. During the period ended 30 September 2021, management fees of
£119,496 were incurred (30 September 2020: nil) of which £65,849 (30
September 2020: nil) was payable at the period end.
No annual management fee shall accrue or be charged on any undeployed
cash funds until such time as 75% or more of the IPO proceeds have
been deployed.
For these purposes, "Deployed" shall mean invested in the acquisition or
development of Energy Efficiency Projects.
12. Events after the Reporting period
On 26 November 2021, the Company completed investments totaling £26.8m
(excluding transaction costs) and including a £0.2m working capital loan
into a portfolio of six operational, Feed in Tariff ("FiT") accredited,
hydroelectric power projects in Scotland.
The Company will pay an interim dividend in respect of the period from 1 July
2021 to 30 September 2021 of 1.375 pence per Ordinary share, payable on 23
December 2021 to holders of Ordinary shares on the register on 10 December
2021. The ex-dividend date will be 9 December 2021.
GLOSSARY AND DEFINITIONS
The Act Companies Act 2006
AIC Code The AIC Code of Corporate Governance produced by the Association of Investment
Companies.
AIFM The alternative investment fund manager of the Company, Triple Point
Investment Management LLP.
AIFMD The EU Alternative Investment Fund Managers Directive 2011/61/EU.
CCC Climate Change Committee
CHP+ Combined heat and power
The Company Triple Point Energy Efficiency Infrastructure Company plc (company
number 12693305).
DCF Discounted Cash Flow
Energy Efficiency Project A project which falls within the parameters of the Company's investment
policy
ESG Environmental, Social and Governance
EU European Union
FCA Financial Conduct Authority
FiT Feed in Tariff
FRC Financial Reporting Council
GAV Gross Asset Value
GHG Green House Gas
Group The Company and any subsidiary undertakings from time to time
Harvest and Glasshouse Harvest Generation Services Limited (company number 09353790) and Glasshouse
Generation Limited (company number 09352996)
ITC Investment Trust Company
IPO The admission by the Company of 100 million Ordinary Shares to trading on the
Specialist Fund Segment of the Main Market, which were the subject of the
Company's initial public offering on 19 October 2020.
kWh Kilowatt-hour
LED Light-emitting Diode
NAV The net asset value, as at any date, of the assets of the Company after
deduction of all liabilities determined in accordance with the accounting
policies adopted by the Company from time-to-time.
Net-Zero A target of completely negating the amount of greenhouse gases produced by
human activity, to be achieved by reducing emissions and implementing methods
of absorbing carbon dioxide from the atmosphere
OCR Ongoing charges ratio. Represents operating costs, excluding acquisition costs
and other non-recurring items divided by the average published undiluted NAV
in the period, calculated in accordance with Association of Investment
Companies guidelines.
PPA Power Purchase Agreement.
Project SPV Special Purpose Vehicle in which energy efficiency assets are held.
SDG Sustainable Development Goals.
SORP Statement of Recommended Practice.
TCFD Task Force on Climate-related Financial Disclosures.
TEEC Holdings The wholly owned subsidiary of the Company: TEEC Holdings Limited (company
number 12695849).
Wider Triple Point Group Triple Point LLP (company number OC310549) and any subsidiary undertakings
from time to time.
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