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hydrogenonecapitalgrowthplc.com
HydrogenOne
Capital Growth plc
ANNUAL REPORT & ACCOUNTS 2023
HydrogenOne Capital Growth plc Annual Report & Accounts 2023
Contents
hydrogenonecapitalgrowthplc.com
Company overview
1
About us
2 Highlights
4 Portfolio at a glance
5 Chairman’s statement
8 Key portfolio milestones 2023
Strategic report
10
About clean hydrogen
12 Hydrogen market and commentary and outlook
14 Q&A with the Investment Advisor
16 Investment objective, policy, process and strategy
19 Strategy, business model and KPIs
22 Investment Adviser’s Report
22 Introduction
23 Portfolio summary
24 Portfolio review, performance and valuation
47 Environmental, Social and Governance
47 Highlights
48 Methodology and Principles of Responsible Investment
49 Stakeholder engagement (Section 172 Statement)
52 Risk and risk management
Governance
57
Board of Directors
58 Directors’ Report
62 Corporate Governance
66 Directors’ Remuneration Policy
67 Directors’ Remuneration Implementation Report
69 Report of the Audit and Risk Committee
71 Statement of Directors’ Responsibilities
72 Independent Auditor’s Report
Financial Statements
79
Parent and consolidated statement of comprehensive income
80 Parent and consolidated statement of financial position
81 Parent and consolidated statement of changes in equity
82 Parent and consolidated statement of cash flows
83 Notes to the parent and consolidated financial statements
Other information
110
Alternative Performance Measures
111 EU SFDR Disclosures
122 Glossary
124 Directors and advisers
125 Report of the Alternative Investment Fund Manager
126 Notice of Annual General Meeting
128 Notes to the notice of Annual General Meeting
Strategic Report
HydrogenOne Capital Growth plc Annual Report 2023
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1
Company Overview Strategic Report Governance Financial statements
Other information
Company Overview
About us
HydrogenOne Capital Growth Plc
(“HGEN”, “the Company”) is the
first London-listed fund investing
in clean hydrogen for a positive
environmental impact.
The Company was launched in 2021 with an investment
objective to deliver an attractive level of capital growth
by investing, directly or indirectly, in a diversified portfolio
of hydrogen and complementary hydrogen focussed
assets whilst integrating core ESG principles into its
decision making and ownership process. The Company
is an Article 9 climate impact fund under the Sustainable
Finance Disclosure Regulation (the “SFDR”).
• A unique offering to investors - leadership in a
new green energy technology sector from the first
London-listed hydrogen fund.
• Strong orientation to ESG mandates, investing capital
in low-carbon growth and enabling the avoidance of
GHG emissions.
• High quality portfolio with potential to deliver 10-15%
average NAV growth, including exits*.
• First mover advantage in the Hydrogen sector, which
is accelerating faster than anticipated with positive
growth outlook.
• Investment Adviser’s track record in energy and
capitalmarkets.
*For an investor in HGEN at IPO. The total NAV return target is a target only and not a profit forecast.
Investing in clean hydrogen for a climate-positive impactInvesting in clean hydrogen for a climate-positive impact
>91,000
tonnes
CO2e emissions avoided
in FY2023
SFDR
Article 9
Climate impact fund
£132.7m
Net Asset Value
HydrogenOne Capital Growth plc Annual Report 2023
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Highlights
Financial and operational highlights
• NAV increased by 5.8% from £125.4 million at 31 December
2022 to £132.7 million at 31 December 2023 due to
valuation uplifts in multiple portfolio companies. NAV per
share increased to 102.99p at 31 December 2023;
• The share price fell from 79.30p to 49.65p and the discount
to NAV increased from 18% to 52% as rising interest rates
put pressure on investment trust discounts;
• Positive progress on revenue growth from portfolio
companies, delivering an aggregate £74.0 million in total
revenue in the year to 31 December 2023, an increase of
125% compared to the year to 31 December 2022;
• Investment activity centred on follow-ons, with one new
investment. During the year ended 31 December 2023, the
Company successfully completed its first investment in a
private hydrogen project (Thierbach project in Germany)
and made follow-on investments in 5 Private Hydrogen
Assets in its portfolio, totalling £10.6 million;
• Strategic industrial investors have backed HydrogenOne
portfolio companies in 2023, including Cemex and HD
Hyundai in HiiROC and Elcogen respectively;
• At 31 December 2023, the total invested capital since IPO
amounted to £113.7 million;
• The portfolio weighted average discount rate at
31December 2023 was 14.2% (31 December 2022: 13.0%)
resulting in a 6.7 pence per share reduction in NAV between
31 December 2022 and 31 December 2023;
• The Company has retained a cash position of £4.6 million as
at 31 December 2023, and £2.3 million of listed hydrogen
companies at the end of the year;
• Post-period NanoSUN has been restructured to create a
new company, Swift Hydrogen;
• The fundamentals of the clean hydrogen sector continued
to strengthen, despite recent weak macro-economic
conditions. The Company has seen some $17 billion of
financial investment in green hydrogen in 2023, an over
400% increase over 2022 levels, underscoring the positive
industry outlook for clean hydrogen.
Environmental, Social and Governance
(ESG) highlights
• Classified as an Article 9 Fund under the SFDR;
• 91,116 tonnes of Greenhouse Gas (tCO2e) emissions avoided
in the year ended 31 December 2023 (an increase of 113.13%
from the prior year) and 141,695 tCO2e since IPO;
• 92% alignment with EU taxonomy for sustainable activities
(the “EU Taxonomy”) assessment on Private Hydrogen
Assets at 31 December 2023;
• £113.7m deployed in low-carbon growth (since fund
inception);
• Potential 571,294 MWh lifetime clean energy capacity in
year ended 31 December 2023 and 797,294 MWh since IPO;
• 1,406 jobs supported; and
• Continued stewardship activity with portfolio companies
to further enhance ESG credentials and reporting, with
6month reporting of key metrics introduced.
0
30
60
90
12
0
150
NAV (£m)
102.8
125.4
132.7
31-Dec-21 31-Dec-22 31-Dec-23
0
30
60
90
120
150
NAV per share (p)
95.75
97.31
102.99
31-Dec-2131-Dec-2231-Dec-23
0
30
60
90
120
150
31-Dec-21
Share price (p)
119.50
79.30
49.65
31-Dec-2231-Dec-23
At a glance
Key statistics as at 31 December 2023
At 31 December
2023
2
31 December
2022 % change
NAV per Ordinary Share 102.99p 97.31p 5.8%
NAV
£132.7m £125.4m 5.8%
Ordinary Share price
49.65p 79.30p (37.4)%
Market capitalisation
£64.0m £102.2m (37.4)%
Share price premium/(discount) to NAV
1
(51.8)% (18.5)% (180.0)%
Total Shareholder NAV return per Ordinary Share
1
5.8% 1.6% 262.5%
Ongoing Charges
1
2.6% 2.5% 2.0%
Cumulative capital deployed in low-carbon growth
sinceinception
£113.7m £102.9m 10.5%
GHG emissions avoided
91,116 tCO2e 42,716 tCO2e 113.3%
The EU taxonomy alignment
92% 89% 3.4%
3 Year Performance
Key statistics as at 31 December 2023
At 31December
2023
2
31December
2022
31December
2021
NAV per Ordinary Share 102.99p 97.31p 95.75p
NAV
£132.7m £125.4m £102.8m
Ordinary Share price
49.65p 79.3p 119.5p
Market capitalisation
£64.0m £102.2m £128.3m
Share price premium/(discount) to NAV
1
(51.8)% (18.5)% 24.8%
Ongoing Charges
1
2.6% 2.5% 2.1%
Total Shareholder NAV return per Ordinary Share
1
5.8% 1.6% (2.3)%
Cumulative capital deployed in low-carbon growth since
inception
£113.7m £102.9m £48.6m
GHG emissions avoided
91,116 tCO2e 42,716 tCO2e N/A
The EU taxonomy alignment
92% 89% N/A
1 AlternativePerformanceMeasures(“APMs”).ThedisclosuresaboveareconsideredtorepresenttheCompany’sAPMs.DefinitionsoftheseAPMsand
otherperformancemeasuresusedbytheCompany,togetherwithhowthesemeasureshavebeencalculated,canbefoundonpage110.
2 Totalreturnsforthe12monthsto31December2023.
SFDR
Article 9
92% EU Taxonomy Aligned
141,695
Avoided GHG Emissions since
IPO
£114m
Deployed in Low
CarbonGrowth
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HydrogenOne Capital Growth plc Annual Report 2023
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Portfolio at a Glance
Portfolio summary as at 31 December 2023
Access to a distinctive portfolio of private hydrogen businesses
20.4%
18.4%
14.9%
10.3%
8.9%
HydrogenOne has a unique and concentrated portfolio,
invested across the hydrogen value chain
Where we invest
• Revenue-generating equipment businesses
• Hydrogen production projects
• Co-investing with industrial strategics and institutions
• Diversified portfolio and geography
• Clear strategies to exit via IPO or trade sale
NAV
£132.7m
Thierbach
Top 5
72.9%
Top 10
95.1%
Others
4.9%
Portfolio segmentation by theme
Supply chain
Storage and distribution
Hydrogen production
Hydrogen applications
10%
60%
21%
9%
28%
15%
4%
52%
1%
Portfolio segmentation by geography
Germany
UK
Other
Scandinavia
Netherlands
Strategic Report
HydrogenOne Capital Growth plc Annual Report 2023
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Company Overview Strategic Report Governance Financial statements
Other information
Chairman’s Statement
On behalf of the Board, I am pleased to
report on the performance and activities
of the Company in 2023.
Simon Hogan Chairman
2022 has continued throughout 2023. We recognise that
decline in our share price, which reflects wider moves in
equity markets and the listed funds sector, will have been
disappointing for our investors. Significant changes are
underway in energy markets, with new industry and political
emphasis on energy security as a result of Russia’s invasion
of Ukraine, with renewed market emphasis on fossil fuels.
Investors for the large part have allocated capital away from
emerging technology sectors, as a result of higher market
discount rates and reduced risk appetite, and this has
impacted our share price. Factors, such as inflation, discount
rates, energy policies and the weak funding environment
also impact the underlying portfolio companies.
Nevertheless, I hope this Annual Report sets out the positive
progress that we are making with value creation in the
Company’s portfolio, with businesses that we believe can
generate substantial value for our investors over time.
The Company and the Investment Adviser continue to focus
on increasing the share price and attracting fresh capital into
the Company. The Company, in conjunction with portfolio
companies, is planning to exit some positions during 2024,
which the Board believes will support the Company’s
objective of delivering capital growth through investment in
a diversified portfolio of hydrogen assets. Subject to wider
market conditions, strong NAV performance over the long
term may increase the Company’s appeal to investors and
underpin renewed share price performance.
Our business model remains to invest in growth companies in
the hydrogen sector, with the aim to exit these positions over
3 to 5 years holding periods, at multiples of invested capital,
in order to generate 10-15% NAV growth over time. While we
are unable to influence the general market weakness around
us, we continue to ensure that the Company is positioned
to weather the current downturn and able to exploit growth
opportunities when the market recovers.
Performance
The Company remains well positioned to grow value for our
investors. During the period, the Company’s NAV increased
by 5.8%, from £125.4m to £132.7m (97.3 pence per share to
103.0 pence per share) due to valuation uplifts in multiple
portfolio companies, as those management teams delivered
on their respective growth plans. Our diversified approach
to portfolio construction has contributed to a resilient
valuation in 2023, despite weakness in financial markets
more generally. Overall, private investments contributed
£14.0 million or 10.8 pence per share to the valuation. This
NAV growth was delivered despite the negative impact on
valuations as a result of a prudent increase in discount rates,
which had the effect of removing £8.6 million, or some 6.7
pence per share from our 31December 2023 valuation,
compared to 31 December 2022.
The Company reported a gain after tax of £7.3m for the
period, equal to 5.7 pence per share. The Company’s
On behalf of the Board, I had hoped to report an improved
share price this year. However, the share price remains at
a steep discount, despite an increase in NAV in 2023, as is
the case for many listed funds presently. The outlook for the
clean hydrogen sector remains positive and we believe that
the portfolio can generate attractive returns over time. We
fully support the Investment Advisor’s strategy of investing
in a diversified portfolio of hydrogen assets, across the value
chain. Whilst macro-economic factors are outside of our
control, we believe that selective investment, stewardship
of the portfolio, and divestments can positively impact our
NAV, and improve the share price over time.
Hydrogen Industry Landscape
The outlook for the clean hydrogen sector remains positive,
and industry investment and capacity growth is accelerating
in a sector that plays a key role in the energy transition. The
COP 28 meeting in Dubai at the end of 2023 concluded
with a call to transition away from polluting fossil fuels and
accelerate growth in renewables, in order to mitigate the
impact of climate change. At the same time, government
policies and funding in many regions remain supportive
of growth in clean hydrogen, as part of the push to ‘net
zero’. The fundamentals of the hydrogen sector continue to
strengthen, despite weak macro-economic conditions. The
Investment Advisor has tracked a 50% increase in green
hydrogen production in 2023 compared to 2022, and an
over 400% increase in investment in the sector, underpinning
further growth. All of this underscores my view that the
outlook for investment in clean hydrogen remains positive,
despite headwinds in markets more generally during 2023.
Share Price Discount
Whilst our share price traded at a premium to NAV in 2021
and early 2022, the weakness seen towards the end of
HydrogenOne Capital Growth plc Annual Report 2023
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dividend policy is to only pay dividends in order to satisfy
the ongoing requirements under the Investment Trust
(Approved Company) (Tax) Regulations 2011. The Company
has paid no dividends during the period, as we continue to
focus on growth investments.
Eight of the Company’s private investments are revenue
generating, producing equipment and technology solutions
for clean hydrogen production. The aggregate revenue
from these investments was £74m in the 12-month period to
31December 2023, an increase of 125% from the prior year.
This growth is as a result of portfolio companies converting
their distinctive technologies into orders from customers.
Investment Strategy and Update
The Company continues to invest in a diversified portfolio
of hydrogen related activities, predominantly in private
companies and with a particular focus on the innovative
technologies that are needed to unlock profits in clean
hydrogen. Wherever possible, we have sought to protect
the Company from dilution of its interests, should we not be
able to participate in funding rounds.
With the majority of the Company’s capital now deployed,
our approach has focused on incremental investments in
existing portfolio companies, with £10.6 million invested in
2023 backing these management teams to deliver their
growth plans. This comprised:
• The Company invested £3.5 million in a follow-on
investment in hydrogen flight innovator Cranfield
Aerospace Solutions Ltd, alongside Safran Corporate
Ventures and the Strategic Development Fund;
• The Company committed to invest £2.5 million (EUR
2.8 million) into a green hydrogen production project at
Thierbach, in Germany, managed by HH2E AG, in order to
further progress this project, ahead of a final investment
decision. To date £1.9 million (EUR 2.1 million) has been
drawn;
• The Company invested £2.5 million in a follow-on
investment in NanoSUN, a hydrogen technology,
transportation and distribution business;
• The Company invested £1.8 million in a follow-on
investment into Sunfire AG, a leading electrolyzer
developer and supplier;
• The Company invested £0.5 million in a follow-on
investment in Strohm, a low carbon pipeline innovator in
the Netherlands; and
• The Company invested £0.4 million in a follow-
on investment in Gen2 Energy, a green hydrogen
development company in Norway.
It was also pleasing to see new investment from industrial
strategic players in HydrogenOne’s portfolio, such as HD
Hyundai’s backing of Elcogen, and Cemex in HiiROC, further
supporting the Company’s investment case for these
investments. These investors not only bring growth capital, but
also new routes to market for these distinctive technologies.
Valuation
Listed funds continue to come under scrutiny from investors
regarding the valuation of portfolios of private investments.
The Company applies a consistent approach to portfolio
valuation, centred on discounted cash flows, using the
International Private Equity and Venture Capital Valuation
2022 (“IPEV”) Guidelines. The weighted average discount
rate at 31 December 2023 was 14.2%, compared to 13.0%
at 31 December 2022, which reduced NAV by £8.6 million
or 6.7 pence per share at 31 December 2023. The details of
these valuations are set out later in the annual report. The
valuations in this report have an implied forward multiple
of 9.8 times 2025 expected revenues, which is in line with
listed hydrogen sector multiples, and underscores the
robust approach we are taking to valuations. The discount
of the Company’s private investments to the listed peer
group has narrowed over 2023, due to weakness in listed
hydrogen company share prices. Share prices in the listed
markets are reflected in the valuation of the Company
through listed assets in the portfolio.
The Board meets quarterly with the Company’s Investment
Adviser and holds regular meetings to review all of the
Company’s investment valuations. The Board also has
regular contact with the Investment Adviser outside of
formal Board meetings. I and other Board members
attended the Company’s Capital Markets Day in 2023,
where we met some of our investors and analysts, and the
management teams of all the private companies that we
have invested in. The Investment Adviser has a dedicated
investment team and has the right to be represented on all
of the boards of the private company investments.
Environment, Social & Governance
Since our launch in 2021 the Company has invested in clean
hydrogen assets which contribute to the energy transition
and can lead to avoided GHG emissions. ESG principles are
integrated across the investment process. Our commitment
to positively contribute to climate change mitigation, whilst
integrating core ESG principles into our decision making
and ownership process, is at the core of everything that we
do as a Company. The Company is classified as an Article 9
Fund, the highest classification under the SFDR regulation.
We are a signatory of the PRI, a United Nations supported
network of financial institutions that promote sustainable
investments, and disclosed GHG information on the Carbon
Disclosure Project (“CDP”) for the first time in 2023. In
collaboration with our portfolio companies, we will push
forward with our sustainable investment objectives as we
continue to deploy capital in low-carbon growth.
In addition to climate-positive impact, particular focus is
placed on engagement to deliver effective boards and the
encouragement of sustainable business practices. These,
Chairman’s Statement
Strategic Report
HydrogenOne Capital Growth plc Annual Report 2023
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7
Company Overview Strategic Report Governance Financial statements
Other information
and other issues, are evaluated prior to any investment
decision, and managed thereafter through close relationships
with the Company’s private company investments.
The Company’s portfolio companies are supplying critical
components, such as electrolyzers and fuel cells, as well as
services such as transportation and storage of hydrogen, to
clean hydrogen manufacturing projects and hydrogen end-
users. All of this results in the replacement of fossil fuels
such as diesel in the energy mix, and avoids greenhouse
gas emissions, which have totalled 141,695 CO2e since our
IPO in 2021, presenting clear growth opportunities for the
broader sector.
We are tracking GHG emissions from portfolio companies,
which totalled 99 tCO2e in 2023 (Scope 1 and 2) and are
engaged with these management teams to reduce GHG
intensity over time. The Investment Advisor is represented
on the boards of all of the private investments and driving
continuous improvement in ESG delivery more generally.
The Company is dedicated to further developing and
progressing our ESG framework to achieve the highest
reporting and performance levels. Alongside this Annual
Report, we are publishing a separate Sustainability Report,
that sets out our policy and track record in more detail.
Annual general meeting
The Annual General Meeting will be held on 21 May 2024
at 12.00 noon at the Company’s registered office, 6th floor,
125 London Wall, London EC2Y 5AS, and we look forward to
welcoming shareholders to the event in person.
The meeting will consider the formal business of the
AGM, as set out in the Notice of the AGM, and thereafter
the Investment Adviser will provide a presentation on the
Company’s portfolio.
Events After the Period End
In February 2024, the Company implemented a
restructuring of NanoSUN, and relaunched the streamlined
business, renamed as Swift Hydrogen Ltd (“Swift”), which
the Company owns. The carrying value of NanoSUN at
31December 2023 is £5.4 million, compared to £11.5 million
at 31 December 2022.
In March 2024, Sunfire announced a funding round totalling
more than EUR 500 million. The Company exercised
its anti-dilution and conversion rights in this round for
£0.3 million. The Board resolved to make a non-material
modification to the Company’s investment restrictions,
so that investments in Sunfire, measured at the time of
investment, shall not exceed 21% of the Company’s GAV.
The Company’s existing restriction of an investment limit of
20% of GAV at the time of investment is unchanged for the
remainder of the portfolio.
In April 2024, the Company agreed to a restructuring of
HH2E, ahead of planned material third party fund raising
for green hydrogen projects in Germany. The Company
has exchanged its development rights for five project
SPVs, including the Thierbach SPV for equity in HH2E. In
parallel, the Lubmin SPV, which was previously carved out
of the Company’s direct holdings, has also been combined
with HH2E in a non-cash transaction for the Company.
The Company’s previously announced development loan
to Thierbach, of which £1.9 million has been drawn, will
be reduced to £0.7 million, through a swap for equity in
HH2E. The Company’s resulting equity share of HH2E is
unchanged, at around 11%, on an enlarged asset base and
with a simpler corporate structure, and with direct exposure
to the Lubmin project.
Outlook
Our diversified portfolio approach has proved resilient and
our investment case has been reinforced further by macro
tailwinds and supportive regulatory regimes in the clean
hydrogen sector. There are considerable uncertainties on
the near-term macro-economic outlook, and a challenging
funding environment in private equity, which are affecting
valuations across the listed funds sector. Nevertheless, we
remain confident that the Company is investing in a sector
with a favourable outlook and a substantial growth potential.
New regulations and funding for clean hydrogen are being
rolled out in the USA, UK and EU.
Whilst market sentiment is outside of our control, the
Company anticipates that the continued solid performance of
our portfolio, revenue growth and delivery of key milestones
will be catalysts for appreciation in our share price.
As we move to exit selected portfolio companies, either
partly or entirely, the Board will be focused on protection of
invested capital and realising returns. This ambition frames
our target to deliver 10-15% annual NAV growth over time,
and I believe that our Investment Adviser, whose principals
have over 60 years of combined specialist experience and
track record, is well placed to deliver on these projected
targets.
On behalf of the Board, I would like to thank all of our
shareholders for their support, as we continue to develop
our portfolio of unique and diverse portfolio of clean
hydrogen investments.
Simon Hogan
Chairman
17
April 2024
HydrogenOne Capital Growth plc Annual Report 2023
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Q1 2023
• Elcogen signs MOU with Hyundai, one of the world’s largest shipbuilders.
Thierbach
• HH2E launches 100MW green hydrogen production project at Thierbach, Germany.
• Strohm completes its plant expansion in the Netherlands, for 140km/year of TCP pipeline.
• Sunfire launches new alkaline electrolysis plant in Solingen, Germany, targeting 500MW capacity.
Q2 2023
• Sunfire installs a 2.6MW solid oxide electrolyzer, the world's largest, in Rotterdam.
• Strohm selected for 10MW offshore hydrogen facility in Belgium “HOPE”.
• Cranfield Aerospace appoints Evolito as the motor and inverter supplier for its hydrogen-powered
aircraft demonstrator.
• Bramble Energy receives £12.0m UK Government funding to provide fuel cell technology to hydrogen
buses.
• Gen2 Energy receives zoning plan approval for a 100MW green hydrogen facility in Mosjøen, Norway.
Q3 2023
• Sunfire signs contract for 100 MW alkaline electrolyzer to a European refinery and receives a €169
million grant from IPCEI to support its growth plans.
• Elcogen awarded funding from IPCEI for a €25.4m to accelerate the deployment of its solid oxide
technology.
• Strohm installs its first deep-water TCP in Guyana at water depths of 1,700m.
• HH2E, DHL Group, and Sasol announce collaboration on sustainable aviation fuels in Germany, for
potentially 500,000 tonnes per annum.
Q4 2023
• Sunfire commences construction of €30m Research and Development centre at Dresden, Germany.
GET H2 TransHyDE joint project start-up achieved first hydrogen production, using a 250 KW solid oxide
electrolyzer from Sunfire.
• Elcogen receives €45m investment from strategic investor Hyundai, and groundworks commenced at
100MW facility in Estonia.
• HiiROC receives investment from strategic investor Cemex Ventures, which will deploy HiiROC equipment
in the UK.
• Cranfield Aerospace and Dronamics announce plans for hydrogen-electric propulsion system to the
Black Swan cargo drone aircraft.
• Bramble Energy wins The Gateley Business Transformation of the Year Award 2023 and included in the
Deloitte UK Fast 50.
• HH2E signs green hydrogen offtake agreement with Germany hydrogen refuelling leader H2 Mobility.
• Gen2 Energy and SEFE sign terms for delivery of green hydrogen from Norway to Germany.
Key Portfolio Milestones 2023
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Company Overview Strategic Report Governance Financial statements
Other information
Strategic report
10 About clean hydrogen
12 Hydrogen market commentary and outlook
14 Q&A with the Investment Advisor
16 Investment objective, policy, process and strategy
19 Strategy, business model and KPIs
22 Investment Adviser’s Report
47 Environmental, Social and Governance
49 Stakeholder engagement (Section 172 Statement)
52 Risk and risk management
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About Clean Hydrogen
• Clean hydrogen displaces fossil fuels, reducing CO2 emissions and improving air quality
• Some 90 million tonnes per day of hydrogen is used today in manufacturing of oil products, chemicals and steel.
The demand to replace this polluting ‘grey’ hydrogen, mostly produced from natural gas, with clean hydrogen
underpins growth in the clean hydrogen sector
• Clean hydrogen can also replace fossil fuels in hard to decarbonise sectors such as power generation and
transport
• Clean hydrogen is an energy carrier, that can store and distribute intermittent renewable electricity at a large
scale
• Hydrogen combined with renewables such as wind and solar provides a domestic energy supply option for
many countries, reducing reliance on imported energy.
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Company Overview Strategic Report Governance Financial statements
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Putting all this together, clean hydrogen demand could increase by over 200 times between 2019 and 2030 as the energy
transition gathers pace, abating some 6 billion tonnes/year of CO2 emissions by 2050. Announcements at COP28, calling
for the transition away from fossil fuels and trebling of renewables, all underpin the positive outlook for the clean hydrogen
industry. Clean hydrogen plays a key role in many corporate and country plans for Energy Transition.
By 2050, the global hydrogen market could reach $2.5 trillion, dominated by hydrogen producers, electrolyzer and fuel cell
manufacturers. Replacing today’s c.$175 billion ‘grey’ hydrogen market with clean hydrogen could mitigate over 800 million
tonnes per annum of greenhouse gas emissions. Some 20 billion tonnes per annum of GHG emissions can be addressed
with clean hydrogen over time, which is over one third of all GHG emissions today.
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Hydrogen market commentary
andoutlook
The clean hydrogen sector continues to grow rapidly, despite headwinds from weak financial markets. The Investment
Adviser has tracked $17 billion of new investment into clean hydrogen in 2023, over 400% higher than in 2022. This has
included landmark project developments such as NEOM Green Hydrogen, which is set to be a 4GW facility in Saudi Arabia,
producing 600 tonnes per day of green hydrogen and the go-ahead of a 1GW green hydrogen facility and green steel
facilities in Sweden, that will use 1 GW of green hydrogen for electricity generation and as a reducing agent. Alongside these
private transactions, the 2023 IPO of ThyssenKrupp Nucera marked a new electrolyzer entrant into public markets, with
anenterprise value in excess of €2.5 billion.
HydrogenOne’s deal flow tracker
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4,000
8,000
12,000
16,000
20,000
24,000
28,000
32,000
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2,500
5,000
7,500
10,000
12,500
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17,500
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2020 2021 2022 2023
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Amount raised - Private, $m Amount raised - Public, $m Cumulative, $m
Strong increase in investment in clean hydrogen in 2023
A total of $28.9 billion (c. £23 billion) of new investment has been committed into
clean hydrogen in 2023 (+440% vs FY 2022)
2020
NEL
AFC Energy
Ceres Power
PowerCell
Sweden AS
Ceres Power
HydrogenPro
McPhy
ITM Power
Plug Power
2021
Plug Power
HRS
Loop Energy
Ceres Power
GHS
HDF Energy
Sunfire
ITM Power
2022
Lhyfe
Hy2Gen
Electric Hydrogen
SFC Energy
ZeroAvia
HyGen
2023
NEL
Hexagon Purus
Amogy
NEOM
TKN
Ohmium
Avaada Energy
Ambient Fuels
SA-H2
H2 Green Steel
ANIL
ACME Group
ZeroAvia
Lhyfe
Some 1.2GW of green hydrogen production was on line globally at the end of 2023, a 50% increase year-on-year.
Thisincludes the start-up of the 260MW Xinjiang Solar Hydrogen Project in China and new liquefied hydrogen facilities in
the USA. In addition, there are some 35GW of further projects in development world-wide, an increase of 20% from 2022,
whichcould result in over 40 million tonnes per annum of avoided greenhouse gas emissions.
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Company Overview Strategic Report Governance Financial statements
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Policy makers and industry are converging on clean
hydrogen as a core technology to deliver net zero, improved
air quality and enhanced energy security.
The Paris Agreement in 2015 has led at least 40 countries
to set out hydrogen policies and US$70 billion of funding as
part of net zero targets to deliver the energy transition.
In response to the Russian invasion of Ukraine, theEU has
reshaped its energy policy to the REPowerEU 2030 plan,
which calls for over 300GW of clean hydrogen by 2030,
compared to 80GW in previous plans. Some €5.4billion
in hydrogen subsidies have recently been approved under
Important Projects of Common European Interest (“IPCEI”),
which are expected to unlock a further €8.8 billion of
private investment. The Hy2Tech links 41 projects and
35 companies building out the hydrogen sector, and has
qualified for IPCEI funding. The EU’s Hydrogen Bank began
the auction of €800 million of opex subsidy to green
hydrogen in 2023. There are additional sources of grant
funding at a country level in multiple EU countries.
Germany, where the Company has 27% of its NAV, is a
leader in this, and has incorporated the RED III Delegated
Act into national law, which confirmed a 42% target for use
of renewable hydrogen in industry, and announced plans for
more stringent measures to curb GHG emissions, including
a new hydrogen pipeline system (the “Core Network”),
and plans to blend hydrogen with the natural gas grid.
Germany’s 3mtpa target for hydrogen in 2030 is the same
size as the entire US target for clean hydrogen.
In the Netherlands, where the Company has 15% of its
NAV, the government has set targets for 3GW to 4GW
of electrolysis by 2030 with multi-billion-euro funding
support announced by the Netherlands government.
Thegovernment is providing €750 million of funding
support for a “hydrogen backbone”, retrofitting existing
natural gas pipelines to transport hydrogen between five
industrial clusters in the Netherlands, and at cross-border
connection points. In May 2023, the Dutch government
unveiled a €28 billion climate package, which included
€7.5billion for green hydrogen.
In the UK, 2030 clean hydrogen targets have been
doubled during 2023 to 10GW. The UK Government has
announced a national clean hydrogen subsidy scheme
called Hydrogen Business Model (“HBM”), which will use
a contracts-for-difference style set-up to help fund an
initial 1GW of clean hydrogen projects, as part of the target
to reach 10GW of low-carbon hydrogen by 2030, in a
potentially £9 billion sector. This is in addition to the Net
Zero Hydrogen Fund (“NZHF”) with up to £240 million of
grant funding to support the upfront costs of developing
and building low carbon hydrogen production projects.
All of this underscores the positive industry outlook and
supportive regulatory regimes for clean hydrogen. This
improving outlook for clean hydrogen demand underpins
the order books in many of the Company’s investments,
particularly in supply chain sectors such as electrolyzers,
fuel cells, storage and transportation businesses. Many of
these businesses have world-wide customer bases for their
products, and are attracting investment from international
financial and strategic investors.
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Q&A with the Investment Advisor
In this section, we address some of the questions that we
frequently hear from investors and commentators in the
hydrogen industry.
Is green hydrogen in production today, or is this
just an emerging technology?
Yes, this is a producing industry, today, with very strong
growth potential. We are tracking 1.2GW of green hydrogen
in production at the end of 2023, which is an increase of
50% compared to 2022. Projects in design total 35GW, a
near 30-fold increase should all this production come on
stream. The UK, where many of the readers of this report
will be based, has not historically been a leader in green
hydrogen, but has plans and government funding in
place for 5GW of green hydrogen by 2030, compared to
essentially zero today.
Who is buying green hydrogen?
Presently, most of the demand for green hydrogen comes
from chemical plants, oil refineries and the fertiliser sector,
as these industries look to replace polluting ‘grey’ hydrogen
in their industrial processes with green hydrogen. As an
example, TotalEnergies announced a tender for 500,000
tonnes per year of green hydrogen for its European
refineries, in 2023, to decarbonise all of the hydrogen
used on these sites by 2030. We also see strong growth
in demand for green hydrogen in heavy ground transport,
particularly in EU bus fleets and commercial trucks, and in
some regions in the United States. HydrogenOne portfolio
companies have supplied equipment for transportation
of hydrogen in Germany, during 2023, and signed supply
agreements for green hydrogen there.
Will blue hydrogen remove the need for green
hydrogen?
Blue hydrogen has been in production in North America
for some 15 years, using natural gas as a feedstock, and
geological carbon capture for the resulting CO2 emissions.
This is not a new technology. We do expect further growth
in blue hydrogen, as well as green, especially in countries
with legacy natural gas production and geological sites for
CCS. Energy transition policies in the USA and UK support
this trend. However, since blue hydrogen fundamentally
encourages more exploration and development of polluting
fossil fuels, we expect green hydrogen to dominate the
supply picture and investment thinking in the future, and to
compete with blue on supply cost.
Will hydrogen break into the transport sector?
Yes. Battery electric is the best option for cars over short to
medium distances. However, batteries cannot store enough
energy at a reasonable size to move heavy vehicles over
long distances. Hydrogen fuel cells are the best option
for trucks, trains (on tracks that are not electrified), fork lift
and SUV. Most auto companies are developing hydrogen
fuel cell vehicles currently. With some 80,000 fuel cell
electric vehicles (“FCEV”) in use worldwide today, hydrogen
has arrived as a viable transport fuel for medium to heavy
trucks, trains, and forklifts. The shipping market and
aviation are fast emerging as the next wave of hydrogen for
transport applications.
Some 814 hydrogen refuelling stations are already in
operation worldwide. Concrete plans are already in place for
315 additional refuelling station locations. Europe has 254
hydrogen stations currently, 105 of which are in Germany.
France is still second in Europe with 44 operating stations,
followed by the UK and the Netherlands with 17 each. The
USA alone has over 100,000 gasoline stations and globally
there could be 400,000 of these. The incumbents, mostly
oil companies, are looking for ways to green up these
otherwise-stranded assets.
Isn’t clean hydrogen high cost and it won’t be
able to compete with fossil fuels?
Economic recovery from COVID and Russia’s invasion of
Ukraine have resulted in more ‘normal’ fossil fuel prices
c.$80-$120 Brent. This is a markedly-different position
than the 2015-2020 “$40” world, and reflects the real
replacement cost of fossil fuels. As an example, all of
the big oil companies now have hydrogen and carbon
capture strategies – ExxonMobil see hydrogen as a $1tn
market medium term; BP see hydrogen as up to 15% of the
energy mix long term. The debate has really shifted to the
timescales, rather than price competition.
Can you drill for native hydrogen, like you do
foroil&gas?
Native hydrogen has been found in volcanic rocks, salt
mines and sedimentary rocks, most notably in water wells
drilled in Mali in the 1980s, and recent announcements of
discoveries in France. This could be an important source
of hydrogen, that could have a role in stimulating the
hydrogen market and switching away from fossil fuels.
The shipping costs of hydrogen over long distances are
prohibitive, as are the clean-up costs to make fuel cell
Dr JJ Traynor Richard Hulf
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Company Overview Strategic Report Governance Financial statements
Other information
purity hydrogen, and there are considerable financial risks
with exploration drilling for hydrogen. All of this makes the
outlook for native hydrogen uncertain, but it could play an
important role in the growth of this industry.
Will hydrogen be blended in natural gas
networks and used in domestic boilers?
We are seeing hydrogen blending gathering pace in many
countries, for consumption in power plants and domestic
environments. Town gas, made from coal, is 20-50%
hydrogen, and was used in the UK until the 1970s, and is
in use today in Hong Kong. Germany has authorized 10%
hydrogen blending. In the UK, the government is assessing
next steps on blending, probably to 20%, following testing
led by Keele University and HyDeploy. Most domestic
boilers in the UK can burn 20% hydrogen blend today.
Purehydrogen networks (100% hydrogen) are more likely to
be for dedicated supply to industrial customers, particularly
refineries and chemicals plants, rather than domestic
customers.
What is happening with policy support for clean
hydrogen?
Globally we see at least 40 countries with hydrogen policies
and some $70 billion of funding, all as part of government
plans for energy transition. There are a range of policies on
the table for investors:
In the EU, the REPowerEU 2030 plan calls for over 300GW
of clean hydrogen by 2030. Some EUR 5.4 billion in
hydrogen subsidies have recently been approved under
Important Projects of Common European Interest (“IPCEI”),
which are expected to unlock a further EUR 8.8bn of
private investment. The EU’s Hydrogen Bank auctioned
EUR800million of opex subsidy to green hydrogen in
2023. There are additional sources of grant funding at a
country level in multiple EU countries.
In the United States, the Department of Energy has
announced a US$8bn programme to develop clean
regional hydrogen hubs across the country, as part of
netzero ambitions by 2050. The 2022 Inflation Reduction
Act set aside US$369bn for climate and energy proposals.
Within this Act, there is a tax credit for clean hydrogen of
US$0.6/kg to US$3/kg, depending on life cycle emissions.
This is expected to make green hydrogen cost competitive
with grey hydrogen and make US clean hydrogen amongst
the lowest cost in the world.
In the UK, 2030 clean hydrogen targets have been doubled
during 2023 to 10GW. The UK Government has recently
announced a national clean hydrogen subsidy scheme
called Hydrogen Business Model (“HBM”), which will use a
contracts-for-difference style set-up to help fund an initial
1GW of clean hydrogen projects in 2023, as part of the
target to reach 10GW of low-carbon hydrogen by 2030,
ina potentially £9 billion sector. This is in addition to the Net
Zero Hydrogen Fund (“NZHF”) with up to £240 million of
grant funding to support the upfront costs of developing
and building low carbon hydrogen production projects.
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Investment objective
The Company’s investment objective is to deliver an
attractive level of capital growth by investing, directly
or indirectly, in a diversified portfolio of hydrogen and
complementary hydrogen focussed assets whilst
integrating core ESG principles into its decision making and
ownership process.
Investment policy
The Company will seek to achieve its investment objective
through investment in a diversified portfolio of hydrogen
and complementary hydrogen focussed assets, with
an expected focus in developed markets in Europe,
NorthAmerica, the GCC and Asia Pacific, comprising:
i. assets that produce clean hydrogen;
ii. large scale energy storage assets;
iii. carbon capture, use and storage assets;
iv. hydrogen distribution infrastructure assets;
v. assets involved in hydrogen supply chains, such as
electrolyzers and fuel cells; and
vi. businesses that utilise hydrogen applications such
as transport, power generation, feedstock and heat
(together “Hydrogen Assets”).
The Company intends to implement its investment policy
through the acquisition of hydrogen and complementary
hydrogen focussed assets.
Private Hydrogen Assets
The Company invests in unquoted Hydrogen Assets,
which may be operational companies or hydrogen projects
(completed or under construction) (“Private Hydrogen
Assets”). Investments are expected to be mainly in the form
of equity, although investments may be made by way of
debt and/or convertible securities. The Company may
acquire a mix of controlling and non-controlling interests in
Private Hydrogen Assets, however the Company intends to
invest principally in non-controlling positions (with suitable
minority protection rights to, inter alia, ensure that the Private
Hydrogen Assets are operated and managed in a manner
that is consistent with the Company’s investment policy).
Given the time frame required to fully maximise the value
of an investment, the Company expects that investments
in Private Hydrogen Assets will be held for the medium to
long term, although short term disposals of assets cannot
be ruled out in exceptional or opportunistic circumstances.
TheCompany intends to re-invest the proceeds of disposals
in accordance with the Company’s investment policy.
The Company observes the following investment restrictions,
assessed at the time of an investment, when making
investments in Private Hydrogen Assets:
• no single Private Hydrogen Asset will account for more
than 20 per cent. of Gross Asset Value;
• Private Hydrogen Assets located outside developed
markets in Europe, North America, the GCC and Asia
Pacific will account for no more than 20 per cent. of Gross
Asset Value; and
• at the time of an investment, the aggregate value of the
Company’s investments in Private Hydrogen Assets under
contract to any single Offtaker will not exceed 40 per cent.
of Gross Asset Value.
The Company will initially acquire Private Hydrogen Assets
via HydrogenOne Capital Growth Investments 1 LP (the
‘HydrogenOne Partnership’), a wholly owned subsidiary
undertaking of the Company structured as an English
limited partnership which is controlled by the Company
and advised by the Investment Adviser. The HydrogenOne
Partnership’s investment policy and restrictions are the
same as the Company’s investment policy and restrictions
for Private Hydrogen Assets and cannot be changed
without the Company’s consent. In due course, the
Company may acquire Private Hydrogen Assets directly
or by way of holdings in special purpose vehicles or
intermediate holding entities (including successor limited
partnerships established on substantially the same terms
as the HydrogenOne Partnership) or, if the Company is
considered a ‘feeder fund’ under the Listing Rules, other
undertakings advised by the Investment Adviser and, in
such circumstances, the investment policy and restrictions
will also be applied on a look-through basis and such
undertaking(s) will also be managed in accordance with the
Company’s investment policy.
Listed Hydrogen Assets
The Company also invests in quoted or traded Hydrogen
Assets, which will predominantly be equity securities
but may also be corporate debt and/or other financial
instruments (“Listed Hydrogen Assets”). The Company is free
to invest in Listed Hydrogen Assets in any market or country
with a market capitalisation (at the time of investment) of at
least US$100 million. The Company’s approach is to be a
long-term investor and will not ordinarily adopt short-term
trading strategies. As the allocation to Private Hydrogen
Assets grows the Listed Hydrogen Assets are expected to
include strategic equity holdings derived from the listing of
operational companies within the Private Hydrogen Assets
portfolio over time.
Investment objective, policy,
processandstrategy
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Company Overview Strategic Report Governance Financial statements
Other information
The Company observes the following investment
restrictions, assessed at the time of an investment,
whenmaking investments in Listed Hydrogen Assets:
• no single Listed Hydrogen Asset will account for more
than 3 per cent. of the Gross Asset Value;
• the portfolio of Listed Hydrogen Assets will typically
comprise no fewer than 10 Listed Hydrogen Assets at
times when the Company is substantially invested;
• each Listed Hydrogen Asset must derive at least
50per cent. of revenues from hydrogen and/or related
technologies; and
• once fully invested, the target allocation to Listed
Hydrogen Assets will be approximately 10 per cent or less
of Gross Asset Value, subject to a maximum allocation of
30 per cent of Gross Asset Value.
Cash
During the initial Private Hydrogen Asset investment
period after a capital raise and/or a realisation of a Private
Hydrogen Asset, the Company intends to hold the relevant
net proceeds of such capital raise/realisation in cash (in
accordance with the Company’s cash management policy
set out below) pending subsequent investment in Private
Hydrogen Assets.
Investment restrictions
The Company, in addition to the investment restrictions set
out above, comply with the following investment restrictions
when investing in Hydrogen Assets:
• the Company will not conduct any trading activity which is
significant in the context of the Company as a whole;
• the Company will, at all times, invest and manage its
assets
i. in a way which is consistent with its object of spreading
investment risk; and
ii. in accordance with its published investment policy;
• the Company will not invest in other UK listed closed-
ended investment companies; and
• no investments will be made in companies or projects
that generate revenues from the extraction or production
of fossil fuels (mining, drilling or other such extraction of
thermal coal, oil or gas deposits).
Compliance with the above restrictions is measured at the
time of investment and non-compliance resulting from
changes in the price or value of Hydrogen Assets following
investment will not be considered as a breach of the
investment policy or restrictions.
Borrowing policy
The Company may take on debt for general working capital
purposes or to finance investments and/or acquisitions,
provided that at the time of drawing down (or acquiring) any
debt (including limited recourse debt), total debt will not
exceed 25 per cent of the prevailing Gross Asset Value at
the time of drawing down (or acquiring) such debt. For the
avoidance of doubt, in calculating gearing, no account will
be taken of any investments in Hydrogen Assets that are
made by the Company by way of a debt investment.
Gearing may be employed at the level of a special purpose
vehicle (“SPV”) or any intermediate subsidiary undertaking
of the Company (such as the HydrogenOne Partnership)
or, if the Company is considered a ‘feeder fund’ under the
Listing Rules, other undertakings advised by the Investment
Adviser in which the Company has invested or the Company
itself. The limits on debt shall apply on a consolidated
and look-through basis across the Company, the SPV
or any such intermediate holding entities (such as the
HydrogenOne Partnership) or, if the Company is considered
a ‘feeder fund’ under the Listing Rules, other undertakings
advised by the Investment Adviser in which the Company
has invested but intra-group debt will not be counted.
Gearing of one or more Hydrogen Assets in which the
Company has a non-controlling interest will not count towards
these borrowing restrictions. However, in such circumstances,
the matter will be brought to the attention of the Board who
will determine the appropriate course of action.
Currency and hedging policy
The Company has the ability to enter into hedging
transactions for the purpose of efficient portfolio
management. In particular, the Company may engage
in currency, inflation, interest rates, energy prices and
commodity prices hedging. Any such hedging transactions
will not be undertaken for speculative purposes.
Cash management
The Company may hold cash on deposit and may invest in
cash equivalent investments, which may include short-term
investments in money market type funds (“Cash and Cash
Equivalents”).
There is no restriction on the amount of Cash and Cash
Equivalents that the Company may hold and there may
be times when it is appropriate for the Company to have a
significant Cash and Cash Equivalents position. In particular,
the Company anticipates holding cash to cover the
near-term capital requirements of the Pipeline of Private
Hydrogen Assets and in periods of high market volatility.
For the avoidance of doubt, the restrictions set out above in
relation to investing in UK listed closed-ended investment
companies do not apply to money market type funds.
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Investment process
The Company follows a proven and successful process
in order to access and execute its distinctive deal flow.
The Investment Adviser has specialist insights and
strong industry and market networks to access potential
investment opportunities. The Company typically invests
alongside some of the world’s largest industrial corporations
and investors. The Investment Adviser's clear investment
and ESG policies underpin and guide everything that it
does. The Investment Adviser, the Advisory Board, the
technical advisors, regulatory and legal counsel all combine
to deliver the optimal deal structures for the shareholders.
Wellestablishedinvestmentprocessandaccesstodealflow
Investment objective, policy,
processandstrategy
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Company Overview Strategic Report Governance Financial statements
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Strategy, business model and KPIs
Ahighlydifferentiatedstrategy,100%focussed
on clean hydrogen
The Company offers distinctive access to private
investments, across the full hydrogen value chain, and
across the OECD. The investment objective is to deliver
an attractive level of capital growth by investing, directly
or indirectly, in a diversified portfolio of hydrogen and
complementary hydrogen focussed assets whilst, as a
SFDR Article 9, PRI and Green Economy Mark company,
integrating core ESG principles into our decision making and
ownership process, for a positive environmental impact.
As the first UK listed investment company specialising in this
sector, the Company has a clear competitive advantage as
an early mover into a complex sector, and offers its investors
a unique window into the private hydrogen asset market.
With its emphasis on Private Hydrogen Assets, the Company,
gives investors an opportunity to be exposed to liquidity and
portfolio diversity in hydrogen companies and projects, hard
to access elsewhere, with strong growth potential.
An investment in the Company offers exposure to the
broader hydrogen sector whilst, at the same time, diversifying
risk for an investor. By targeting a diversified portfolio of listed
and private investments across different jurisdictions and
different technologies, the Company seeks to spread some
of the key underlying risks relating to clean hydrogen.
A focus on material ESG factors, and especially the
deployment of capital to deliver the energy transition to a
low carbon economy, is at the heart of what the Investment
Adviser does, running hand in hand with a strategy to deliver
the target 10-15% per annum NAV growth for the investors
over the medium to long term.
The Investment Adviser is a specialist investor in this
complex and rapidly-developing growth sector. The
Company believes that this specialised approach is a
competitive advantage that will only grow over time.
By excluding companies or projects that generate revenues
from the extraction or production of fossil fuels (mining,
drilling or other such extraction of thermal coal, oil or
gas deposits) from the portfolio and taking on further
ESG screens, the portfolio is expected to be an early
mover to Net Zero in the energy transition, and will not be
encumbered by the legacy greenhouse gas emissions
inherent in other players in the hydrogen sector.
The clean hydrogen industry in the short term is dominated
by bespoke sources of supply, financed by specialised
offtakers, typically at 5MW to 100MW scale. In the period
from 2025 to 2030 the Investment Adviser expects these
facilities to be upscaled to 100MW to 500MW scale, and
ultimately to 1GW to 5GW. The Investment Adviser also
believes that energy storage and CCS projects will also
increase in scale in this timeframe, with the development
of compressed air energy storage followed by hydrogen
storage and long-distance transport through pipelines,
asliquid hydrogen or as ammonia on ships.
Business model
The Company is an investment company and its purpose,
strategy, investment objective and policy are set out in
the Annual Report. Any material change to the investment
policy requires shareholder approval.
The Company makes its investment in Private Hydrogen
Assets through HydrogenOne Capital Growth Investments
(1) LP (the “HydrogenOne Partnership” or the “Limited
Partnership”), in which the Company is the sole limited
partner. The Company may also acquire Private Hydrogen
Assets directly or by way of holdings in special purpose
vehicles or intermediate holding entities.
The General Partner of the Limited Partnership is
HydrogenOne Capital Growth (GP) Limited (the “General
Partner”), a wholly owned subsidiary of the Company.
Details of the Company and Group structure are given in
note 1 to the Parent and Consolidated Financial Statements
(the “Financial Statements”). Other than where specified,
references to the Company in this document refer to the
Company together with its wholly-owned subsidiary and
investment as sole limited partner in the Limited Partnership.
The Company is governed by a Board of Directors (the
“Board”), all of whom are non-executive, and it has no
employees. The business model adopted by the Board to
achieve the Company’s objective has been to contract the
services of FundRock Management Company (Guernsey)
Limited as the alternative investment fund manager of
the Company, pursuant to the AIFM Agreement (the
“AIFM”). TheAIFM has appointed HydrogenOne Capital
LLP to provide investment advisory services in respect of
the Company (the “Investment Adviser”). The Investment
Adviser will advise on the portfolio in accordance with the
Board’s strategy and under its and the AIFM’s oversight.
The Principals of the Investment Adviser responsible for the
day-to-day monitoring of the portfolio are Dr John Joseph
“JJ” Traynor and Richard Hulf. The Board and the AIFM
monitor adherence to the Company’s investment policy and
regularly reviews the Company’s performance in meeting its
investment objective.
All administrative support is provided by third parties
under the oversight of the Board. Company secretarial
and administration services have been delegated to
Apex Listed Companies Services (UK) Limited (“Apex”
or the “Administrator”); custody services to Northern
Trust Company (“Northern Trust”); registrar services to
Computershare Investor Services plc (“Computershare”); and
effective 12 January 2023, the Company’s broker is Barclays
Bank PLC (“Barclays” or the “Broker”). Prior to this date the
Company’s broker was Panmure Gordon (UK) Limited.
The Board reviews the performance of the AIFM, the
Investment Adviser and other key service providers on an
ongoing basis. Further details of the material contracts of the
Company are given in note 14 to the Financial Statements.
HydrogenOne Capital Growth plc Annual Report 2023
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20
KPIs
Objectives Principal risks KPIs Review
1
To deliver an attractive level of capital growth
The Company is targeting a Net Asset Value total return of
10 per cent to 15 per cent per annum over the medium to
long-term.
• Changes in the legislative and regulatory framework that
affect the hydrogen sector
• Operational risks in the portfolio
• Valuation risks (energy prices/inflation/ operational
performance)
• Investment process fails to identify new opportunities
• Lack of future pipeline and/or funding
• Increased competition for assets
NAV per share
102.99p
2022: 97.31p
NAV Total return per annum
5.8%*
2022: (1.6)%*
The Board monitors both the NAV and share
price performance. A review of performance is
undertaken at each quarterly Board meeting
and the reasons for relative under and over
performance against various comparators is
discussed.
Share price return
(37.4)%*
2022: (33.6)%*
Index
(36.6)%
2022: (46.6)%
Return relative to Solactive Hydrogen Economy
Index for year ended 31 Dec 2023
2
Adiversifiedportfolioofhydrogenand
complementary hydrogen focussed assets
•
Lack of future pipeline and/or funding
• Increased competition for assets
• Changes in the legislative and regulatory framework that
affect the hydrogen sector
Number of investments
25
2022: 25
Number of geographies
7
2022: 7
The Board monitors the portfolio at each quarterly
Board meeting and the reasons for relative under
and over performance of sectors and geographies
invested in, and performance of listed vs. private.
Investedportfoliosplitbyvalue(Private:Listed)
98%:2%
2022: 97%:3%
3
Maintenance of a reasonable level of premium or
discount of share price to NAV
•
Investment performance
• Changes in the legislative and regulatory framework that
affect the hydrogen sector
• Lack of future pipeline and/or funding
Premiumor(discount)ofsharepricetoNAV
(51.8)%*
2022: (18.5)%*
The Board monitors the premium or discount on an
ongoing basis.
4
Maintenance of a reasonable level of ongoing
charges
•
Costs are inadequately controlled
• Failed investment processes leads to high level of abort
costs
Ongoing charges ratio
2.56%*
2022: 2.51%*
Board meetings. The Board reviews the ongoing
charges on a quarterly basis and considers these to
be reasonable in comparison to peers.
5
Environmental, Social and Governance policy
integrated in investment decisions and asset
monitoring
Please refer ESG section of the Annual Report and 2023
Sustainability Report for further details.
Robust ESG policy with established KPIs
Avoided GHG
91,116tCO2eavoided
(2022: 42,716 tCO2e avoided)
The Board reviews compliance with the ESG
policy ahead of each investment decision, and
in the Company on an ongoing basis. The Board
additionally monitors developments in the ESG
landscape more broadly.
Strategy, business model and KPIs
Strategic Report
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21
Company Overview Strategic Report Governance Financial statements
Other information
KPIs
Objectives Principal risks KPIs Review
1
To deliver an attractive level of capital growth
The Company is targeting a Net Asset Value total return of
10 per cent to 15 per cent per annum over the medium to
long-term.
• Changes in the legislative and regulatory framework that
affect the hydrogen sector
• Operational risks in the portfolio
• Valuation risks (energy prices/inflation/ operational
performance)
• Investment process fails to identify new opportunities
• Lack of future pipeline and/or funding
• Increased competition for assets
NAV per share
102.99p
2022: 97.31p
NAV Total return per annum
5.8%*
2022: (1.6)%*
The Board monitors both the NAV and share
price performance. A review of performance is
undertaken at each quarterly Board meeting
and the reasons for relative under and over
performance against various comparators is
discussed.
Share price return
(37.4)%*
2022: (33.6)%*
Index
(36.6)%
2022: (46.6)%
Return relative to Solactive Hydrogen Economy
Index for year ended 31 Dec 2023
2
Adiversifiedportfolioofhydrogenand
complementary hydrogen focussed assets
•
Lack of future pipeline and/or funding
• Increased competition for assets
• Changes in the legislative and regulatory framework that
affect the hydrogen sector
Number of investments
25
2022: 25
Number of geographies
7
2022: 7
The Board monitors the portfolio at each quarterly
Board meeting and the reasons for relative under
and over performance of sectors and geographies
invested in, and performance of listed vs. private.
Investedportfoliosplitbyvalue(Private:Listed)
98%:2%
2022: 97%:3%
3
Maintenance of a reasonable level of premium or
discount of share price to NAV
•
Investment performance
• Changes in the legislative and regulatory framework that
affect the hydrogen sector
• Lack of future pipeline and/or funding
Premiumor(discount)ofsharepricetoNAV
(51.8)%*
2022: (18.5)%*
The Board monitors the premium or discount on an
ongoing basis.
4
Maintenance of a reasonable level of ongoing
charges
•
Costs are inadequately controlled
• Failed investment processes leads to high level of abort
costs
Ongoing charges ratio
2.56%*
2022: 2.51%*
Board meetings. The Board reviews the ongoing
charges on a quarterly basis and considers these to
be reasonable in comparison to peers.
5
Environmental, Social and Governance policy
integrated in investment decisions and asset
monitoring
Please refer ESG section of the Annual Report and 2023
Sustainability Report for further details.
Robust ESG policy with established KPIs
Avoided GHG
91,116tCO2eavoided
(2022: 42,716 tCO2e avoided)
The Board reviews compliance with the ESG
policy ahead of each investment decision, and
in the Company on an ongoing basis. The Board
additionally monitors developments in the ESG
landscape more broadly.
* ThefiguresaboveareconsideredtorepresenttheCompany’sAPMs.DefinitionsoftheseAPMsandotherperformancemeasuresusedbytheCompany,
togetherwithhowthesemeasureshavebeencalculated,canbefoundonpage110.
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Investment Adviser’s Report
Introduction
The Company’s Alternative Investment Fund Manager
(“AIFM”), FundRock Management Company (Guernsey)
Limited, (part of Apex Group), has appointed HydrogenOne
Capital LLP as the Investment Adviser to the AIFM in respect
of the Company. Its key responsibilities are to originate,
analyse, assess and recommend suitable investments
within the hydrogen sector, and advise the AIFM
accordingly. Additionally, the Investment Adviser performs
asset management services in relation to the investments
in the portfolio or, to the extent asset management is
delegated to third parties, oversees and monitors such
asset management.
HydrogenOne Capital LLP was founded in 2020 as an
alternative investment firm focussed specifically on
investing in hydrogen assets and their role in the energy
transition. As a responsible investor, HydrogenOne Capital
LLP is committed to contributing to the energy transition
through the financing of sustainable investments and
by providing investment solutions that reduce carbon
emissions.
HydrogenOne Capital LLP employs a fully integrated
investment and asset management approach and
integrates its focus on ESG criteria throughout the entire
investment process.
The Principals of the Investment Adviser
The Principals of the Investment Adviser have in excess
of 60 years of combined experience and a track record of
success in the energy industry and capital markets which
are directly applicable to the hydrogen industry, including
acquisitions, mergers and divestments, development of
growth energy projects, supervision of profitable energy
production, ESG track record, investments in both listed and
private companies and board advisory. Their biographies are
included on page 57.
The Investment Adviser’s team
The Principals have assembled an experienced team
to support the Company. This group brings a mixture
of finance, technical and sector skills to support the
Investment Adviser in its day-to-day activity. The Investment
Adviser has established a team which is responsible
for financial modelling, corporate and asset valuation
analysis, and opportunity assessment for the Company.
The Principals anticipate a further increase in headcount as
theCompany continues to grow its activities.
Advisory Board of the Investment Adviser
The Principals of the Investment Adviser are supported by
an experienced team which comprises the Advisory Board.
The Advisory Board has been carefully selected to provide
expert advice to the Investment Adviser on the hydrogen
sector, project finance and capital markets. The Investment
Adviser has appointed the members of the Advisory Board
to provide it with advice from time to time. No members
of the Advisory Board are directors, officers, employees or
consultants of the Company, the AIFM or the Investment
Adviser. It is envisaged that the Advisory Board will
evolve over time, with additional experts being added or
substituted as and when required.
Company Country of incorporation Value of investment £’000
Private Hydrogen Assets held by the Limited Partnership at 31 December 2023Private Hydrogen Assets held by the Limited Partnership at 31 December 2023
Sunfire GmbH Germany 27,068
Elcogen plc United Kingdom 24,430
Strohm The Netherlands 19,719
HiiROC Limited United Kingdom 13,701
Cranfield Aerospace Solutions Limited United Kingdom 11,870
Bramble Energy Limited United Kingdom 10,621
HH2E AG Germany 6,971
NanoSUN Limited United Kingdom 5,428
Gen2 Energy Norway 4,443
Thierbach Germany 1,955
Total 126,206
Company Country of main listing
Market value
£’000 % of net assets
Listed Hydrogen Assets held by the Company at 31 December 2023Listed Hydrogen Assets held by the Company at 31 December 2023
SFC Energy AG-BR Germany 437 0.3
Hydrogen-Refueling-Solutions SA France 278 0.2
Doosan Fuel Cell Co Ltd South Korea 268 0.2
S-Fuelcell Co Ltd South Korea 233 0.2
AFC Energy plc United Kingdom 221 0.2
Hexagon Purus ASA Norway 186 0.1
Green Hydrogen Systems A/S Denmark 180 0.1
Fuelcell Energy Inc United States 113 0.1
Ballard Power Systems Inc Canada 100 0.1
McPhy Energy SA France 80 0.1
Ceres Power Holdings plc United Kingdom 77 0.1
Aker Horizons AS Norway 73 0.0
ITM Power plc United Kingdom 62 0.0
Enapter AG Germany 11 0.0
Cell Impact AB Sweden 3 0.0
Total listed investments 2,322 1.7
Private assets investment held by the Company at 31 December 2023Private assets investment held by the Company at 31 December 2023
HydrogenOne Capital Growth Investments (1) LP United Kingdom 125,861 94.9
Total investments 128,183 96.6
Cash 4,626 3.5
Other net liabilities (139) (0.1)
Total net assets 132,670 100.0
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Company Overview Strategic Report Governance Financial statements
Other information
Portfolio summary
HydrogenOne Capital Growth plc Annual Report 2023
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Portfolio review, performance
and valuation
1
Capital deployed is comprised of the acquisition costs of Listed Hydrogen Assets (2023: £nil, 2022: £nil, 2021: £9.4 million) and Private Hydrogen Assets
acquired by the Limited Partnership (2023: £10.6m, 2022: £54.3 million, 2021: £39.2 million).
At the time of its IPO, the Company had an Investible Universe of c.120 Private Hydrogen Assets of private companies and
hydrogen production projects. Since the IPO, the Company has seen significant expansion of its opportunity set in both
private companies and hydrogen production projects, at least double the number of opportunities since the IPO. At the same
time, the Company now sees material opportunities to invest in green hydrogen production projects, with financial close and
final investment decision expected in the Company’s portfolio developer businesses during 2024, in Norway and Germany.
These projects, alongside further hydrogen opportunities build out to an investment pipeline of some £500 million available
for the Company’s investors in the future.
Alongside this expansion in the opportunity set, the Company has seen the arrival of multiple industrial investors into the
hydrogen sector. This is typically incumbent consumers of grey hydrogen, and companies seeking to access clean hydrogen
supplies and technologies. The Company is invested alongside multiple industrial strategic investors today.
The Company has been investing in follow-ons in its existing portfolio during 2023, alongside existing investors, and new
investors, against the backdrop of a challenging environment for fund raising for the hydrogen sector and the Company. The
Company will likely require a fresh capital raise in order to invest in any new pipeline opportunities.
Capital Deployment since IPO and Pipeline
1
The Company has invested £113.7 million in ten Private Hydrogen Assets and a portfolio of listed equities since its 2021 IPO to
31 December 2023, directly or via the HydrogenOne Partnership. The private companies account for 95% of the NAV of the
Company, and span the full value chain in the clean hydrogen sector. The portfolio is dominated by supply chain businesses,
particularly electrolyzer and fuel cell makers such as Elcogen and Sunfire. There are further investments in storage and
distribution businesses, such as Strohm, and project developers setting up green hydrogen production facilities. Whilst the
UK accounts for over half of the portfolio by geography, the Investment Advisor assesses that the bulk of sales from portfolio
companies are derived from the EU and Asia Pacific.
Portfolio segmentation by theme
Supply chain
Storage and distribution
Hydrogen production
Hydrogen applications
Portfolio segmentation by geography
UK
Germany
Netherlands
Scandinavia
Other
10%
9%
60%
21%
28%
52%
15%
4%
1%
Strategic Report
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Company Overview Strategic Report Governance Financial statements
Other information
Investing alongside blue-chip industrials and funds
Investing alongside blue-chip industrials and funds
Hydrogen
production
Storage &
distribution
Invested companies
Supply
chain
Hydrogen
applications
Co-investors
The Company has invested in a range of private hydrogen businesses across the value chain. Early-stage businesses, such
as Cranfield Aerospace and HiiROC, are developing high quality intellectual property and investing in demonstrator facilities,
ahead of full roll-out of commercial solutions. Mid stage companies, for example Bramble, are commencing commercial
sale of their technology and products, and typically have single digit millions of pounds of revenues, and negative EBITDA.
Growth businesses are fundamentally larger and more developed, with investment in order to build industrial scale factories
and world-wide customer bases for their products, with a clear visibility to positive EBITDA. Whilst these growth businesses
are best placed for IPO into public markets in the coming years, which would mark an exit for the Company, the Company
also expects to be able to exit from earlier stage businesses through trade sales, to industrial strategic investors.
Growing value for investors
% of invested
portfolio (31
Dec 23)
Activity
Investments 2022-23 revenue
growth (%)
Early stage 33%
• IP demonstrators
• Project developers
Cranfield
HiiROC
HH2E
Gen2 Energy
NanoSUN
+76%
Mid stage 10%
• Manufacturing roll-out
• Production project
delineation
Thierbach
Bramble
>+1,000%
Growth 55%
• Significant capacity growth
• Industrial scale and EBITDA
Elcogen
Sunfire
Strohm
+119%
2023: £74m
(+125% vs 2022)
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26
Valuation
As set out in note 4 of the Financial Statements, the
Investment Adviser has carried out fair market valuations of
the Private Hydrogen Assets at 31 December 2023, which
have been reviewed by the Valuation Committee, and the
Directors have satisfied themselves as to the methodology
used, the discount rates and key assumptions applied.
Private Hydrogen Assets at 31 December 2023 have
been valued using either the discounted cash flow (‘DCF’)
methodology, the value of the loan principal plus accrued
interest for loans to Project Development companies or
a scenario based valuation incorporating DCF, indicative
offers and net asset values consistent with the International
Private Equity and Venture Capital Valuation (“IPEV”)
Guidelines. The valuations are also benchmarked against
listed peer group valuations.
Listed Hydrogen Assets are valued at fair value, which is the
bid market price, or, if bid price is unavailable, last traded
price on the relevant exchange.
Our approach to valuation remains consistent and
unchanged. Valuations are updated for all Private Hydrogen
Assets on a quarterly basis and approved by the AIFM,
the Valuation Committee and the Board, and are audited
annually by the Company’s auditor, KPMG.
Portfolio review, performance
and valuation
Valuation basis and performance since investment
9
Valuation basis At
investment
Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23
Sunfire GmbH investment (Supply Chain) PORI PORI PORI PORI PORI/DCF PORI/DCF PORI/DCF DCF DCF DCF
Elcogen Plc investment (Supply Chain) PORI PORI PORI PORI/DCF PORI/DCF DCF DCF DCF
Strohm Holding B.V. investment (Storage & Distribution) PORI PORI PORI/DCF PORI/DCF PORI/DCF DCF DCF
HiiROC Limited investment (Supply Chain) PORI PORI PORI/DCF PORI/DCF PORI/DCF DCF DCF DCF DCF DCF
Cranfield Aerospace Solutions Ltd (Hydrogen Applications) PORI PORI PORI/DCF PORI/DCF PORI/DCF DCF DCF DCF
Bramble Energy Limited (Supply Chain) PORI PORI PORI PORI/DCF PORI/DCF PORI/DCF DCF DCF DCF DCF
HH2E (TopCo) (Hydrogen Production) PORI PORI PORI PORI/DCF PORI/DCF DCF DCF DCF
NanoSUN Limited (Storage & Distribution) PORI PORI PORI PORI/DCF PORI/DCF PORI/DCF DCF DCF DCF DCF/Indicative
Offers/Net Assets
Gen2 Energy (Hydrogen Production) PORI PORI PORI PORI/DCF PORI/DCF PORI/DCF DCF DCF
HH2E Thierbach Project (Hydrogen Production) PORI At cost At cost At cost At cost + accrued
interest
Valuation movement At
investment
Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23
Sunfire GmbH investment (Supply Chain)
- - - Ç Ç Ç Ç Ç È Ç
Elcogen Plc investment (Supply Chain)
- Ç Ç È Ç Ç Ç Ç
Strohm Holding B.V. investment (Storage & Distribution)
- Ç Ç Ç Ç Ç -
HiiROC Limited investment (Supply Chain)
- - Ç Ç È Ç È È Ç Ç
Cranfield Aerospace Solutions Ltd (Hydrogen Applications)
- - È Ç Ç Ç Ç -
Bramble Energy Limited (Supply Chain)
- - - Ç - È È - - Ç
HH2E (TopCo) (Hydrogen Production)
- Ç Ç È È È - Ç
NanoSUN Limited (Storage & Distribution)
- - - Ç Ç Ç Ç È Ç È
Gen2 Energy (Hydrogen Production)
- È È Ç Ç È - Ç
HH2E Thierbach Project (Hydrogen Production)
- -
Ç
-
Ç
Valuation movements since investment
10
Company performance At
investment
Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23
Sunfire GmbH investment (Supply Chain)
- - - - È - È - È -
Elcogen Plc investment (Supply Chain)
- - È È È Ç Ç Ç
Strohm Holding B.V. investment (Storage & Distribution)
- - Ç Ç È È Ç
HiiROC Limited investment (Supply Chain)
- - Ç È Ç È È È Ç Ç
Cranfield Aerospace Solutions Ltd (Hydrogen Applications)
- - Ç Ç Ç Ç È È
Bramble Energy Limited (Supply Chain)
- - - Ç È È È È - Ç
HH2E (TopCo) (Hydrogen Production)
- - Ç È È Ç - Ç
NanoSUN Limited (Storage & Distribution)
- - - Ç È - - - Ç
Gen2 Energy (Hydrogen Production)
- - È È Ç È Ç Ç
HH2E Thierbach Project (Hydrogen Production)
- - - - -
Macroeconomics At
investment
Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23
Sunfire GmbH investment (Supply Chain)
- - - Ç Ç È È È - Ç
Elcogen Plc investment (Supply Chain)
- Ç Ç È Ç È - Ç
Strohm Holding B.V. investment (Storage & Distribution)
- Ç È Ç È Ç È
HiiROC Limited investment (Supply Chain)
- - - Ç È Ç È È Ç Ç
Cranfield Aerospace Solutions Ltd (Hydrogen Applications)
- - È Ç Ç È Ç È
Bramble Energy Limited (Supply Chain)
- - - Ç È Ç Ç È Ç Ç
HH2E (TopCo) (Hydrogen Production)
- Ç Ç È È È È È
NanoSUN Limited (Storage & Distribution)
- - - Ç È Ç Ç È Ç È
Gen2 Energy (Hydrogen Production)
- È È Ç Ç - È È
HH2E Thierbach Project (Hydrogen Production)
- - - - -
È
Company performance valuation movements reflect internal factors including actual and budgeted/forecast financial performance. Macroeconomic
valuation movements reflect external factors including inflation, discount rates and FX rates.
Strategic Report
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Company Overview Strategic Report Governance Financial statements
Other information
Discount rates are calculated using market parameters for each investment domicile. The weighted average discount rate for
31 December 2023 was 14.2 % compared with 13.0% at December 2022.
The Company notes that its NAV has been steadily increasing over the last twelve months. This has been driven by organic
growth in the Company’s private assets, despite headwinds from lower share prices of the listed portfolio companies and
higher discount rates. The share prices of listed hydrogen companies, which we track with the Solactive Hydrogen Economy
Index (“SOLGHYD”), have been volatile and declining since Q3 2021. This decline is due to market allocation away from
early-stage technology businesses as interest rates have risen, and a correction to the high valuations seen in the market in
2020-21.
The Company’s own share price has tracked this decline in listed hydrogen companies, and listed funds in general, despite
the growth in NAV. In 2021-22, the Company assessed that many listed hydrogen companies were trading on higher
valuations than its private portfolio companies, based on forward multiples of revenues. At the end of 2023, the revenue
multiples of the listed hydrogen sector and the Company’s private portfolio had converged, as the listed hydrogen sector
had de-rated.
The Company’s approach to valuation remains consistent
while market has seen strong rise and correction
-
0. 50
1. 00
1. 50
2. 00
2. 50
3. 00
3. 50
4. 00
Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23
Index
SO LGH YD Hydr ogen Pr od uctio n Supply Chain
St orag e & Dist ribu tion Hydr ogen Ap plicatio ns
HydrogenOne NAV/share vs listed hydrogen shares (SOLGHYD)
20
40
60
80
100
120
140
Jun-21 Sep-21 Dec-21 Ma r-2 2 Jun-22 Sep-22 Dec-22 Ma r-23 Jun-23 Sep-23 Dec-23
HGEN SOLGHYD NAVPS
Portfolio companies’ performance vs listed hydrogen shares (SOLGHYD)
• Listed hydrogen company valuations have decreased in 2022-23, whereas HGEN NAV has been steady, reflecting
our consistent valuation methodology
• Forward revenue multiple of c. 9.8X (2025E) in private portfolio is in line with listed hydrogen companies
2023 Performance and 2024 outlook
NAV per share increased by 5.8% from 31 December 2022 to 31 December 2023 (97.31p to 102.99p), with NAV growing from
£125.4 million to £132.7 million over the period.
The NAV increase was driven primarily by valuation uplifts in nine private companies, positively contributing 10.8 pence
per share. The main factors behind this growth were roll-forward of discounted cash flow (“DCF”) valuations, and improving
financial performance from the portfolio companies. Discount rates had a negative impact on valuation in 2023. The portfolio
weighted average discount rate at 31 December 2023 was 14.2%, higher than 31 December 2022 (13.0%), decreasing NAV by
6.7 pence per share, or £8.6 million.
HydrogenOne Capital Growth plc Annual Report 2023
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28
£21.8m
£5.3m
£27.1m
£12.9m
£0.8m
£13.7m
£11.5m
(£6.1m)
£5.4m
£10.0m
£0.6m
£10.6m
£3.4m
£1.0m
£4.4m
£6.3m
£5.6m
£11.9m
£20.4m
£4.0m
£24.4m
£5.1m
£1.8m
£7.0m
£11.6m
£8.1m
£19.7m
£1.9m
£0.0m
£1.9m
£3.7m
(£0.3m)
£3.4m
£3.2m
£132.7m
Portfolio valuation changes, 12 months ended 31 Dec 2023
Portfolio valuation changes 2022-23
Listed
Net current assets
NAV
Thierbach
During the 12 months to 31 December 2023, private portfolio companies delivered an aggregate unaudited £74 million in
revenue, a 125% increase compared to the year ended 31 December 2022, on a pro-forma basis. Seven of the ten private
companies are revenue generating. Thierbach and Gen2 Energy are project developers that are inherently pre-revenue
businesses ahead of the start-up of green hydrogen production, and HiiROC is expected to commence revenue generation
from its thermal plasma electrolyzer business from 2024. These positive financial trends reflect the build out of capacity to
meet strong order books for hydrogen supply chain equipment.
-
2
4
6
8
10
12
14
16
- 5 10 15 20 25
Increase in revenues since investment (0x)
Months since investment
The portfolio is revenue generating
and has produced consistent growth
Portfolio revenue
Growth in portfolio revenues since investment
£9m
£19m / +112%
£33m / +70%
£74m / +125%
-
20
40
60
80
2020 2021 2022 2023
Revenue, £m
• 8 private companies are revenue-generating
• 2023 revenue growth +125% to £74m
Revenue 100% basis for private portfolio companies
Portfolio review, performance
and valuation
Strategic Report
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Company Overview Strategic Report Governance Financial statements
Other information
Investments in 2023 totalled £10.6 million in 5 existing portfolio companies, as well as one new position, the Thierbach
Project, a green hydrogen development in Germany, which is being managed by portfolio company HH2E.
Cash and cash equivalents were £4.6 million, with additionally £2.3 million of listed hydrogen companies at the end of the year.
We continue to see strong investment interest from industrial strategic investors in portfolio companies and the hydrogen
industry at large in 2023, and note that Cemex and HD Hyundai invested in HydrogenOne businesses during the year, which
underpin the investment cases and bring strategic partnerships to the businesses.
The UK Government continues to support the development of clean hydrogen supply, yet has elected to slow the pace of
fossil fuel phase out in transport, which has reduced the pace of deployment of clean hydrogen in the UK into transport. In
light of this development, and weak financial markets, we have restructured NanoSUN and relaunched in early 2024 as Swift
Hydrogen, which has a lower cost base and simplified capital structure, for renewed growth in the business, with customers
in the EU in the near term. The December 2023 valuation for NanoSUN reflects a scenarios based analysis of potential
outcomes for the business that existed as of the valuation date, resulting in a reduction in the value for NanoSUN compared
to 31 December 2022. The restructuring of NanoSUN was completed in February 2024, and will be reported in the unaudited
first quarter 2024 results.
At 31 December 2023, the Company has invested in ten private investments, in the UK and Europe, representing 98.2%
of its invested portfolio by value. Additional investment in strategic, global hydrogen equities represented 1.8% of the
investedportfolio.
The Investment Adviser expects to exit from the majority of the Company’s listed hydrogen investments during 2024, as
we implement the strategy to focus on private investments over time. As the Company enters its third full year of trading,
following its 2021 IPO, the Investment Adviser is engaging with portfolio companies for full or partial exits from the private
portfolio. Several portfolio companies have engaged investment banks for this purpose.
The portfolio continues to perform in line with the expectations of the Investment Adviser, HydrogenOne Capital LLP, despite
the challenging conditions in private equity fundraising currently.
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Sunfire GmbH wSunfire GmbH www.sunfire.deww.sunfire.de
A German industrial electrolyzer producer, which offers both pressure alkaline (AEL) and solid oxide electrolyzers (SOEC).
Total investment value £27.0m
% of NAV 20.4%
Change in NAV in 2023 £5.2 m
Date of investment October 2021
Co-investors Planet First Partners, Lightrock, SMS, Neste, Copenhagen Infrastructure Partners, GIC, Carbon
Direct Capital Management, Blue Earth Capital, Amazon Climate Pledge Fund
Why we invested
• Industry-leading electrolyzer manufacturer, investing for growth and technology development.
• Material alkaline and solid oxide business, with revenues from a growing international customer
base in the global industrial electrolyzer market.
• Strong product credentials backed by existing customer base and generated by high quality
in-house engineering and product design.
• 500MW / annum electrolyzer production site in EU – with a further extension to gigawatt-scale
already in planning.
Company strategy for value
creation
Committed to its mission “Electrolysis. Delivered. At Scale.”, Sunfire targets installing several
gigawatts of electrolysis equipment by 2030 securing a leading position in the fast-growing global
electrolyzer market. The company is serving large-scale green hydrogen projects with pressurized
alkaline (AEL) and solid oxide electrolyzers (“SOEC”). With this unique product portfolio and a
strong commitment to reliable execution and scaling with best-in-class partners, Sunfire focuses
on enabling efficient green hydrogen production at competitive costs across different industrial
applications – and thus, making a significant contribution to generating green industrial growth and
prosperity.
Company ESG strategy Sunfire enables industrial clients to decarbonise. The electrolyzers the company manufactures
substantially contribute to avoiding greenhouse gas emissions by producing renewable hydrogen.
With that, Sunfire’s electrolysis technologies propel the energy transition in hard-to-abate sectors.
Furthermore, Sunfire strives to reduce its own carbon footprint, e.g., by increasing energy efficiency
and sourcing green energy. In 2023 the company officially launched the series production of core
electrolyzer components at its site in Solingen where the company invested EUR 30 million in
scaling up an energy-efficient production capacity. Also, Sunfire procured about 1.7 gigawatt hours
of certified renewable electricity.
Our portfolio
Strategic Report
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Company Overview Strategic Report Governance Financial statements
Other information
Milestones delivered in 2023 • Sunfire made significant progress in 2023 with its projects, totalling 190 MW Pressurized Alkaline
+ 250 KW SOEC.
• Sunfire started the construction of its €30 million Research and Development centre at Dresden,
Germany, including prototype testing and manufacturing facilities.
• The GET H2 TransHyDE joint project, based in Lingen achieved first hydrogen production, on the
site of the RWE gas-fired power plant in Emsland (KEM) using a high-temperature 250 KW SOEC
from Sunfire.
• Secured a contract to supply a 100 MW pressurized alkaline electrolyzer to a European refinery.
• Sunfire received a €169 million grant from IPCEI to support its growth plans. Sunfire is investing
in total around €400 million to establish industrial series production of its technologies, and
validating them in Saxony and North Rhine-Westphalia, aiming for GW scale over time.
• Sunfire launched a new serial production facility in Solingen, Germany with investment of €30m
at the facility.
• Sunfire increased headcount by 30% across all locations, particularly in R&D and industrialization.
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Elcogen plc Elcogen plc www.elcogen.comwww.elcogen.com
Fuel cell and electrolyzer manufacturer with presence in Estonia and Finland
Total investment value £24.4m
% of NAV 18.4%
Change in NAV in 2023 £4.0 m
Date of investment May 2022
Co-investors
• Biofuel OÜ, VNTM Powerfund II, HD Hyundai Group, Baker Hughes
Why invested
• Industry-leading innovator and supplier of solid oxide cells and stacks, with manufacturing
facilities in Finland and Estonia, ready for expansion.
• High end offering based on advanced solid oxide (“SO”) technology with low operating
temperatures and superior economics.
• Developed a reversible ceramic technology that converts hydrogen into emission-free electricity
and vice versa.
• Over 10-year track record.
• Over 60 established industrial customers worldwide.
Company strategy for value
creation
Elcogen believes in a future fuelled by green hydrogen and its ambition is to become a leading
global supplier of the underlying technology that can make this future happen. This will be
achieved through continued development of the Group’s solid oxide fuel cells (“SOFC”) and SOEC
technology platform and manufacturing products at the lowest cost possible by securing the
economies of scale that come with volume production.
The Group will fund development costs, increased production and corporate infrastructure
through increasing its revenue base, growing its list of customers and continuing to attract strategic
investors, which provide both revenue opportunities as well as growth capital.
Company ESG strategy Elcogen supplies the core technology that sits at the heart of energy security and the transition
away from fossil fuels.
The Group is committed to delivering the world’s most efficient technology for the production and
use of green hydrogen, providing customers with affordable energy solutions to meet net zero
targets. Green hydrogen is promised to decarbonise hard-to-abate sectors and provide a clear
pathway away from fossil fuel reliance.
Elcogen is committed to ensuring it makes a positive contribution to the environment and society,
and being sustainable means adopting best practices that are filtered throughout all layers of the
Group.
Portfolio review, performance
and valuation
Our portfolio
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Company Overview Strategic Report Governance Financial statements
Other information
Milestones delivered in 2023 • Korea Shipbuilding & Offshore Engineering, a member of HD Hyundai Group, invested €45m in
Elcogen. This investment will be used to expand Elcogen’s manufacturing capacity, with a new
factory facility in Tallinn, Estonia, where preparations for construction have now commenced,
to add capacity of up to 360MW, with 100MW capacity planned for Phase 1. HD Hyundai and
Elcogen intend to further strengthen their collaboration with a focus on marine propulsion
systems and stationary power generation, based on Elcogen’s proprietary solid oxide fuel cell
technology, with the intent to manufacture products in South Korea.
• Elcogen signed Memorandum of Understanding (“MOU”) with Bumhan Fuel Cell Co, a
SouthKorean company (“Bumhan”). The purpose of the partnership is to cooperate towards
the commercialisation of SOFC and SOEC technology to catalyse the global transition to clean
energy.
• The company signed a supply and R&D collaboration agreement with the French company
Genvia. The contract helps to further collaborate with the goal to accelerate the production of
affordable green hydrogen in the EU, under the Important Project of Common European Interest.
• Elcogen was awarded funding from IPCEI for a €25.4 million project to accelerate the
deployment of its solid oxide technology, to enable affordable green hydrogen production in
Europe.
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HiiROC Limited HiiROC Limited www.hiiroc.comwww.hiiroc.com
UK-based thermal plasma electrolysis developer, with world-leading (IP-protected) technology for low-cost, zero-emission
hydrogen, also enabling flare/waste gas mitigation and CO2 capture using biomethane.
Total investment value £13.7m
% of NAV 10.3%
Change in NAV in 2023 £0.8m
Date of investment November 2021
Co-investors Melrose Industries (GKN Aerospace), Centrica, Hyundai, Kia, Wintershall Dea, VNG, CEMEX
Why invested
• Proprietary technology to convert natural gas, flare gas and biomethane into hydrogen and solid
carbon black.
• Multiple applications across all sectors of hydrogen use from blending in natural gas grids to
industrial decarbonisation to transport.
• Opportunity to support methane reduction targets through the global imperative to halt gas
flaring and venting.
• Industrial off-takers of the product such as Centrica, Hyundai and CEMEX also on the
shareholder register.
• Highly scalable modular solution, producing 400kg / day of hydrogen from a single unit through
to large plants capable of 100’s of tonnes / day of hydrogen, alongside carbon black.
Company strategy for value
creation
HiiROC is focused on addressing customer challenges – decarbonising production of hydrogen
and carbon black and reducing atmospheric GHGs through mitigation and capture.
To do this, HiiROC is working with customers to meet their specific needs for hydrogen and carbon
black rather than building capacity without offtake. Having demonstrated the versatility of Thermal
Plasma Electrolysis (TPE) across a number of use cases and feedstocks in 2023, we are moving to
the roll out of production plants in the UK and, to follow, in the USA and MENA.
Company ESG strategy HiiROC can help accelerate the transition to Net Zero through the deployment of its technology
at scale. HiiROC expects to make its most significant contributions to SDGs 7 (Affordable & Clean
Energy), 9 (Industry, Innovation & Infrastructure) and 11 (Sustainable Cities & Communities). In due
course, these will be reported-on along with other sustainability performance data, in-line with our
Net Zero ambitions.
Milestones delivered in 2023
• Installed pilot units on client site during 2023, demonstrating technology, and testing use cases
in 2024, including decarbonising gas flares and biomethane conversion.
• Hosted Lord Callanan, UK Minister for Energy Efficiency and Green Finance, at our Hull
headquarters, where he had the opportunity to meet the team and learn about TPE, and then at
our Brigg site, make hydrogen, first-hand.
• HiiROC’s technology was officially included within the scope of the UK Government’s Low
Carbon Hydrogen Standard (LCHS), opening up the UK market for HiiROC and laying the
groundwork for similar discussions with the US Department of Energy.
• CEMEX announced plans to decarbonise its Rugby cement kiln using HiiROC’s technology and
completed an increase of its shareholding.
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Company Overview Strategic Report Governance Financial statements
Other information
NanoSUN Limited NanoSUN Limited www.nanosun.co.ukwww.nanosun.co.uk
UK-based developer of hydrogen distribution and mobile refueling equipment
Total investment value £5.4m
% of NAV 4.1%
Change in NAV in 2023 (£6.1m)
Date of investment December 2021
Co-investors Westfalen Group
Why invested
• NanoSUN technology allows for shipping of clean hydrogen from production sites to customers,
both cheaply and safely.
• Provides flexible and low-cost connection between hydrogen customers such as truck stops,
and concentrated hydrogen supply sources.
• Flat-bed solution with 60% lower cost than alternative systems.
• Accelerating large-scale roll out of fleets of hydrogen buses, trucks, vans and forklifts.
• High quality order book with clients such as Westfalen, and Octopus Hydrogen.
Company strategy for value
creation
Continued manufacture and delivery of Pioneer units, 11 units completed in 2023. Close
collaboration with end users supporting field equipment, generating data and learning from real
world applications. To be used for continuous improvement and future product development.
Development of after-market offering, including annual service contracts signed with end users.
Initial stages of development for a data services offering.
Company ESG strategy NanoSUN participated in the European Innovation Council and European Institute of Innovation
and Technology (EIC-EIT Climate) Race to net Zero, which helped us assess the climate impact
of our products by validating our lifecycle assessment. This demonstrated that every Pioneer fill
saves 4.2-5.8 tCO2e and just 10-13 Pioneer fills is required to offset the emissions generated during
manufacture.
Milestones delivered in 2023
• NanoSUN and IIT Hydrogen Bolzano signed an MOU to jointly explore the operational use of
NanoSUN’s Pioneer hydrogen refuelling equipment across a range of hydrogen applications in
Italy, which could lead to the rapid deployment of safe, reliable, and cost-effective hydrogen
refuelling infrastructure.
• Westfalen and NanoSUN have deployed 4 Pioneer Hydrogen Refuelling Stations in German
city Brühl, in the Cologne area, to fuel 6 new Solaris Hydrogen City Buses. The filling station
was developed in cooperation between Westfalen Group and NanoSUN. The system will avoid
emissions of 393 tons of CO2 and 0.55 tons of NOx per year. Filling a fuel cell bus with the
Pioneer system less than 20 minutes.
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Strohm Holding B.V Strohm Holding B.V www.strohm.euwww.strohm.eu
The Netherlands-based hydrogen pipeline company
Total investment value £19.7m
% of NAV 14.9%
Change in NAV in 2023 £8.1m
Date of investment August & December 2022
Co-investors Shell Ventures, Chevron Technology Ventures, Evonik Venture Capital, ING Corporate Investments
Why invested
• Industry leaders in offshore hydrogen and CO2 pipelines, where we see significant market
growth.
• Thermoplastic composite pipe (“TCP”) has c.50% less greenhouse gas emissions than metal. Can
transfer up to nine times the amount of hydrogen energy compared to a cable.
• TCP’s flexibility, lack of corrosion, fatigue and embrittlement make it the superior pipeline
solution for offshore wind farms, generating hydrogen.
Company strategy for value
creation
The Strategy for Strohm is to enable the energy transition through proven high end composite
pipe technology. Strohm develops its technology on the basis of being able to be used in both
conventional energy applications, as well as in renewable energy applications. This includes
development, qualification, and building up track record.
The company invests in product development and qualifications for renewable energy applications
including hydrogen, CO2 transport, ammonia transport, and similar applications. Strohm does this
by fully building on the qualifications we already have. Today we already have the first offshore
hydrogen pipeline contract, and the first client qualifications for hydrogen transport. Strohn invests
in pilots for hydrogen and for CCS.
Strohm has unique benefits for both hydrogen and for CCS applications, in the key attributes of our
technology, the total lack of corrosion, of embrittlement, of fatigue. These provide fundamental
solutions to support the transition. Once the market grows for these renewable energy
applications, we will be ready to support the growth by having a) a high Technology Readiness
Level (“TRL”) product and b) fully de-risked and scaled production capacity.
Company ESG strategy Strohm is proud to be a Climate Neutral Certified organisation, as certified according to the
Climate Neutral Certification Standard from the Climate Neutral Group (CNG). Strohm achieved
compliance to the CNG standard to become a recognised Climate Neutral Organisation in 2020
by implementing an ESG strategy featuring key CO2 reduction initiatives, including an accredited
offsetting programme. Through these efforts, Strohm are making significant progress towards
achieving their next goal, to reduce our products CO2 footprint from a product life cycle point of
view and invest in product development to support the energy transition. Strohm do this across the
parameters of a) reducing the CO2 footprint of pipelines, b) enabling the transition from fossil fuel
to green energy, and c) reducing the CO2 footprint of their own products.
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Company Overview Strategic Report Governance Financial statements
Other information
Milestones delivered in 2023 • Strohm became the first company to receive DNV qualification for deepwater TCP Flowline.
Initial trials began in Brazil in 2018, aimed at applications typical of the region’s post-salt deep
water fields. Almost 40 tests were carried out on Strohm’s subsea flowlines, based on a product
design life of 30 years, with changing loads at different temperatures.
• TCP offers significant greenhouse gas emissions savings compared to traditional solutions, and
has significant growth prospects in transporting offshore hydrogen and CO2.
• Strohm successfully installed its first deep-water / high pressure TCP jumper in Guyana at water
depths of 1,700m.
• The company was selected as partner for the Hydrogen Offshore Production for Europe (“HOPE”)
project. HOPE is an important milestone in the industry trend to produce green hydrogen in the
offshore. The project is planned to be 10MW (4 tonnes of hydrogen per day), installed off the
port of Ostend, in Belgium. The project has been selected by the European Clean Hydrogen
Partnership, under which it has been awarded a EUR20 million grant. HOPE is being coordinated
by Lhyfe, and implemented by eight European partners: Alfa Laval, Plug Netherland, Strohm,
EDP NEW, ERM, CEA, POM-West-Vlaanderen and DWR eco.
• Strohm, alongside BW Offshore, Switch2, MARIN and TU Delft, have received a EUR3 million
grant from the Dutch government for project OFFSET – an industrial scale floating green
hydrogen and ammonia project, based on the proven concept of a floating production and
offloading vessel (“FPSO”). The objective of the OFFSET project will be to demonstrate a
decrease in the cost of green fuel production and thereby increase its accessibility.
• Strohm was awarded a contract by PRIO (formerly known as PetroRio) to provide its composite
pipe solutions to support operations at its Frade field, in Brazil.
• Strohm delivered a major milestone by completing its plant expansion in the Netherlands.
The new facility can produce some 140km of TCP pipeline per year, a three-times increase on
previous levels.
• 200% increase in revenue year-over-year and positive EBITDA achieved in Q4 2023 for the
firsttime.
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Bramble Energy Limited Bramble Energy Limited www.brambleenergy.comwww.brambleenergy.com
UK-based fuel cell and portable power solutions company
Total investment value £10.6m
% of NAV 8.0%
Change in NAV in 2023 £0.6m
Date of investment February 2022
Co-investors IP Group, BGF, Parkwalk, UCL Technology Fund
Why invested
• Pioneering revolutionary fuel cell design and manufacturing techniques.
• Novel printed circuit board design PCBFC™ - low cost, scalable and recyclable fuel cell modules.
• Leading global automotive businesses working closely with Bramble to scale up product offering.
• Developing high-power density, mobility fuel cell systems.
Company strategy for value
creation
Bramble has developed the world’s lowest cost fuel cell, suitable for every application. It is
manufacturable globally without capex, in existing third-party facilities. Simplified stacks, means
simplified systems, and that means lower cost all round. Joint development agreements will lead
to technology licence agreements and royalties.
Company ESG strategy
Bramble Energy conducts its business activities in a way that ensures, as far as practicable,
that the environmental impacts of it’s operations are positive, and any negative impact is
mitigated. Bramble Energy has made the SME Climate Commitment which recognises that
climate change poses a threat to the economy, nature and society-at-large, the company
commits to take action immediately in order to achieve and surpass:
• Halving our greenhouse gas emissions before 2030.
• Achieving net zero emissions before 2040.
• Disclosing our progress on a yearly basis.
Portfolio review, performance
and valuation
Our portfolio
Strategic Report
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Company Overview Strategic Report Governance Financial statements
Other information
Milestones delivered in 2023 • Bramble Energy and EDAG Group have signed an MOU to collaborate on a digital investigation
into using a hydrogen Printed Circuit Board Fuel Cell (PCBFC™) within a standardized EV
platform. The project, named ‘FC-STORM’, aims to create and showcase a design study of the
3D integration of Bramble’s cutting-edge hydrogen fuel cell system into EDAG’s storage platform
designed for passenger vehicles and light commercial vehicles.
• Bramble Energy won The Gateley Business Transformation of the Year Award 2023 and was also
announced in the Deloitte UK Fast 50, one of the UK’s foremost technology awards programmes.
• The company announced the opening of its new state-of-the-art headquarters in Crawley, West
Sussex. The expansive new facility, which includes a world-leading hydrogen innovation and
development hub, and builds on the company’s strong growth since launching in 2016.
• Bramble Energy has secured £12 million UK Government funding to provide fuel cell technology
to hydrogen buses. Bramble Energy’s innovative, low-cost printed circuit board fuel cell
(“PCBFC”) technology will power an all-new hydrogen double-decker bus, which will be
developed in conjunction with Equipmake, Aeristech and the University of Bath.
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Our portfolio
Cranfield Aerospace Solutions Limited Cranfield Aerospace Solutions Limited www.cranfieldaerospace.comwww.cranfieldaerospace.com
UK-based passenger flight innovator, powering turboprop flight with hydrogen
Total investment value £11.9m
% of NAV 8.9%
Change in NAV in 2023 £5.6m
Date of investment March 2022, January 2023
Co-investors
• Safran Ventures, Tawazun Strategic Development Fund, Motus Ventures
Why invested
• Cranfield is a technology leader in delivering hydrogen powered turboprop flight.
• Aerospace market leader in the design and manufacture of new aircraft design concepts,
complex modifications to existing aircraft and integration of cutting-edge technologies.
• Working on CAA certification of the Britten-Norman Islander passenger aircraft using hydrogen
powered fuel cells supplying electricity to DC motors for rotational power.
Company strategy for value
creation
The company’s mission is to deliver the world’s first passenger carrying zero emission aircraft using
H2 fuel cell propulsion.
The strategy to achieve this is based on developing hydrogen fuel cell electrically driven
powertrains in a modular fashion that can be fitted to a range of air vehicles. The powertrains will
range in size from 125Kw through to 500kW enabling them to be used in small passenger aircraft,
cargo drones and in auxiliary power units (APUs) for single and twin aisle aircraft.
Company ESG strategy The ESG strategy centers on sustainable practices, aiming for positive impact across all facets of
our operations. Environmentally, Cranfield is committed to developing a zero emissions aircraft
that will be a world first. More locally the company commits to reducing their carbon footprint,
minimizing waste, and have launched cycle to work and EV car schemes. Socially, the company
prioritize diversity, equity, and inclusion, promoting employee well-being and stakeholder
engagement. Governance-wise, transparency, ethical decision-making, and accountability are
paramount. Continuous monitoring and reporting ensure alignment with developing internal
ESG standards. By integrating ESG principles into its business model, Cranfield strives to create
long-term value for stakeholders, mitigate risks, and contribute to a resilient, responsible, and
prosperous future.
Developing a best practice approach to assessing and minimising the environmental impact of
our supply base. To be embedded in our supplier assessment toolkit, the work on ESG will ensure
compliance with requirements and disclosure standards, and help develop a resilient supply chain.
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Company Overview Strategic Report Governance Financial statements
Other information
Milestones delivered in 2023 • Cranfield and Reaction Engines signed an MOU to expand their existing collaboration to explore
additional aerospace applications for their zero-emission propulsion technology.
• Memorandum Of Understanding signed with Dronamics to further progress the application of
the company’s hydrogen-electric propulsion system to the Dronamics Black Swan cargo drone
aircraft. This agreement confirms the position of the company as the preferred supplier of HFC
propulsion systems to Dronamics and includes a letter of intent for the supply of a substantial
number of propulsion systems from 2026. This opens a new route to market for its hydrogen-
electric propulsion system, alongside existing arrangements with Britten-Norman.
• The company unveiled its newly refurbished hangar and R&D facility for the development of zero
emissions aircraft. The facility, leased by the company, has undergone major refurbishments as
part of Cranfield University’s decarbonisation plan, with significant investment into reducing the
building’s carbon footprint.
• Three-party agreement with MONTE Aircraft Leasing (MONTE) and Australian air charter
company Torres Strait Air to convert up to ten Britten-Norman Islander aircraft to hydrogen-
electric power.
• Cranfield has adjusted its strategy, and intends to deploy its innovative hydrogen flight
technology across multiple platforms, and at the same time to develop further IP in hydrogen
powered flight. The previously-announced plan to merge the company and Britten-Norman has
been replaced with the intent to further strengthen the strategic co-operation between these
two separate parties.
• In Q1 2023 HGEN invested £1.4m in the final tranche of a £14.4m round, totalling £2.9m, alongside
Safran Corporate Ventures and the Strategic Development Fund.
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HH2E AG HH2E AG www.hh2e.dewww.hh2e.de
German green hydrogen project developer with a focus on industrial customers
Total investment value £7.0m
% of NAV 5.2%
Change in NAV in 2023 £1.9m
Date of investment May 2022
Co-investors Foresight Group LLP
Why invested
• A prominent leader in Germany focused on green hydrogen and battery storage project
development.
• HH2E has secured attractive German brownfield sites close to hydrogen offtake with grid
connections capable of 1 GW capacity.
• Provides HGEN with investment rights in multiple large-scale green hydrogen based
decarbonisation projects.
• The battery and alkaline electrolyzer combination enables near-constant production using the
cheapest hours of renewable electricity supply.
Company strategy for value
creation
HH2E is at the vanguard of energy transition in Germany, aiming to become one of largest green
hydrogen producers in the country.
HH2E developed an innovative technology mix and a forward-thinking business strategy, to
exploit the surplus of solar and wind energy sources to produce green hydrogen on a large scale,
economically. This approach not only addresses the challenge of renewable energy curtailment by
utilising excess capacity but also sets a benchmark for efficiency and sustainability in the industry.
Backed by institutional investors, HH2E plans to develop several sites aiming for a 4 GW capacity
by 2030. Upon completion, the ongoing Final Investment Decision process for the HH2E Lubmin
project, which begins with an initial capacity of 100 MW and is scalable to 1 GW, will mark a
significant advancement in enhancing green hydrogen production in Germany and Europe.
Company ESG strategy HH2E is committed to becoming a leader in the green energy sector with a robust ESG strategy
that underpins its mission to drive sustainable energy transitions.
Environmentally, HH2E is focused on reducing carbon emissions by maximising the potential of
renewable energy sources for green hydrogen production, contributing to eliminate curtailment,
and aiming for zero-waste operations.
Socially, HH2E prioritise community engagement, ensuring their projects bring opportunities to
areas undergoing structural changes, thereby creating new economic opportunities, fostering local
employment, and adhering to the highest safety and health standards.
Governance-wise, HH2E maintains transparent business practices, uphold ethical standards,
and ensure compliance with regulatory requirements. Through these pillars, HH2E aspires to set
industry benchmarks, contribute positively to societal change, and promote sustainable growth.
Portfolio review, performance
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Our portfolio
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Company Overview Strategic Report Governance Financial statements
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Milestones delivered in 2023 • DHL Group, HH2E, and Sasol announced plans to collaborate for the production of sustainable
aviation fuels in Germany, using HH2E-supplied green hydrogen, for an initial capacity of
200,000 tonnes per annum, with potential to scale up to 500,000 tonnes per annum.
• HH2E announced plans for a supply agreement for green hydrogen with Germany hydrogen
refuelling leader H2 Mobility, aimed at the transport sector.
• HH2E has placed an order with BASF Stationary Energy Storage GmbH (BSES) for 93 MWh of
high-capacity Sodium Sulphur batteries.
• HH2E secured funding for Lubmin FEED and Thierbach PID. HGEN committed £2.5m (EUR 2.8m)
for Thierbach alongside other institutional investors and HH2E for engineering and commercial
works.
• HH2E agreed to purchase of 120MW of alkaline electrolyzer equipment from NEL ASA.
• Addition of over 25 specialists in crucial areas such as technology, project management, energy
procurement, sales, and finance, significantly strengthening and doubling our team.
• Key equipment purchases and reservations were made to ensure timely site setup, including
electrolyzers, high-capacity batteries, and high-voltage components from leading suppliers like
Nel Hydrogen, BASF, and Siemens Energy.
• HH2E secured multiple pivotal agreements covering power procurement, hydrogen distribution,
and offtake arrangements, alongside forming strategic alliances with notable entities such
as 50hertz, Gascade, DHL, and H2 Mobility, marking significant strides in our operational and
strategic development.
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Gen2 Energy Gen2 Energy www.gen2energy.comwww.gen2energy.com
Norwegian green hydrogen project developer
Total investment value £4.4m
% of NAV 3.3%
Change in NAV in 2023 £1.0m
Date of investment March 2022
Co-investors HyCap, Vitol, Hoegh LNG, Knutsen Group
Why invested
• The leading Norwegian green hydrogen project developer, with clear plans to convert low-cost
hydroelectric power to hydrogen, for export and domestic use.
• Up to 925MW green hydrogen projects in Norway, with expected production in 2026-2027.
• Specialist in low-cost 24/7 hydroelectric power.
• Co invested with Norwegian LNG and ship operators that provides input to the Gen2 hydrogen
export solution.
• HGEN has follow-on investment rights in multiple project SPVs.
Company strategy for value
creation
Gen2 Energy is set up to develop, build, own and operate production facilities for green hydrogen
and hydrogen derivatives, and to ensure an efficient distribution of these products. The company
aims to establish production capacity at large-scale based on 100% renewable energy, and the
long-term target is to have an aggregate capacity of 1GW in production by 2030. Gen2 Energy
believes that the technology, means of transport and market demand for various green hydrogen
derivatives will develop over time and has an opportunistic approach to selecting solutions that
optimise the relationship between high value, low risk and low carbon emissions.
Company ESG strategy By utilizing Norwegian renewable electricity for hydrogen production, Gen2 Energy ensures
future-proof business cases for its projects. The company’s long-term ambition is to be a net-zero
company, and in order to reduce the carbon footprint for the whole value chain from production to
end-user, Gen2 Energy strives to be at the forefront of selecting available technology with no/low
carbon footprint. Gen2 Energy is of the view that zero-emission solutions in most cases go hand
in hand with high value. In 2023, the company obtained pre-certification that the output from the
company’s initial Nesbruket project RFNBO compliant under RED II/DA.
Milestones delivered in 2023
• Gen2 Energy and Securing Energy for Europe (SEFE) signed a Transaction Term Sheet for the
delivery of green hydrogen from Norway to Germany.
• Post year end, Gen2 Energy and Norsk e-Fuel signed agreement on green hydrogen supply for
the production of sustainable aviation fuels.
• Entered agreement with Port of Helgeland on planning and design of a new quay.
• Provaris Energy collaboration agreement for marine storage and shipping solutions.
• Detailed zoning plan for Gen2 Energy’s 100MW hydrogen facility in Mosjøen approved.
• Signed agreement with Åfjord municipality for large-scale production and shipping of green
hydrogen.
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Company Overview Strategic Report Governance Financial statements
Other information
HydrogenOne Capital Growth plc Annual Report 2023
Thierbach project www.hh2e.deThierbach project www.hh2e.de
Green hydrogen production project in Germany
Total investment value £2.0m
% of NAV 1.5%
Date of investment January 2023
Change in NAV in 2023 £2.0m
Co-investors Foresight Group LLP, HH2E
Why invested
• First direct project investment by the Company.
• Large-scale green hydrogen production opportunity with leading players in the mobility sector,
energy and industrial consumers as potential offtakers.
• The technology mix and design developed by the operator (HH2E AG) enables constant
production of cost-competitive green hydrogen without a permanent supply of power.
Company strategy for value
creation
Thierbach is a development project aimed at building an industrial-scale green hydrogen
production facility. Its initial input capacity is projected to be 100 MW by 2025, with the ability to
ramp up to over 1 GW by 2030.
The plant will serve green hydrogen customers and offtakers, including leading players in the
mobility sector, large-scale energy and industrial consumers such as the chemical industry and
commercial air and road transport operators.
Company ESG strategy Thierbach adheres to HH2E’s ESG strategy, which is committed to becoming a leader in the green
energy sector with a robust ESG strategy that underpins its mission to drive sustainable energy
transitions.
The plant is projected to have the capacity to produce c.6,000 tonnes of green hydrogen per
year, displacing fossil fuels and, therefore, avoiding harmful greenhouse gas emissions. Further
expansion phases could increase production to more than 60,000 tonnes in the medium term,
which could result in over 10 million tonnes of greenhouse gas emissions (“GHGs”) avoided over
the life of the project.
Milestones delivered in 2023
• HH2E announced its second major green hydrogen production project in Germany, a 100MW
facility at Thierbach. HGEN committed £2.5m (EUR 2.8m) alongside other institutional investors
and HH2E for engineering and commercial works.
• EUR 13m spend (HGEN EUR 2.8m) on Front End Engineering and Design (FEED), land purchase,
key equipment.
• FID planned for 2024 (Thierbach and Lubmin), subject to funding.
• Phase 1 (100MW): c.6,000Htpa ~ 60,000tpa avoided GHGs (Thierbach).
Listed Hydrogen Assets
The Company holds investments in 15 global hydrogen sector listed equities with an average market capitalisation of
£270million with minimum market capitalisation of £8 million. These companies are key players in the electrolysis, fuel cell
and clean hydrogen projects sectors. The current portfolio is valued at £2.3m.
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Analysis of financial results
The Financial Statements of the Company for the year ended 31 December 2023 are set out on pages 79 to 82.
Net assets
Net assets increased from £125.4 million at 31 December 2022 to £132.7 million at 31 December 2023. The increase in net
asse
ts was driven primarily by an increase in the value of the Private Hydrogen Assets, offset by the fall in global stocks
generally and the hydrogen sector more specifically.
The net assets of £132.7 million comprise £128.2 million portfolio value of investments, including the holding in the
HydrogenOne Partnership, and the Company’s cash balances of £4.6 million, and other net liabilities of £0.1 million.
The Limited Partnership’s net assets of £125.9 million comprise £126.2 million portfolio value of investments, cash balances of
£0.1 million and liabilities of £0.4 million.
Cash
At 31 December 2023, the Company and the HydrogenOne Partnership (together the ’Group’) had a total cash balance of
£
4.7 million (2022: £19.7 million), including £0.1 million in the Limited Partnership, which is included in the Company’s balance
sheet within ‘investments held at fair value through profit or loss’.
Profit for year
The Company’s total profit before tax for the year ended 31 December 2023 is £7.3 million (31 December 2022: £1.6million),
gener
ating a return per Ordinary Share of 5.68 pence (31 December 2022: profits of 1.27 pence per share).
In the year to 31 December 2023, the gains on fair value of investments were £9.2 million (31 December 2022: £3.2 million).
The expenses included in the income statement for the year were £2.0 million, in line with expectations. These comprise
£0.1 million Investment Adviser fees and £1.9 million operating expenses. The details on how the Investment Adviser fees are
charged are as set out in note 6 to the Financial Statements.
Ongoing charges
The ‘ongoing charges’ ratio is an indicator of the costs incurred in the day-to-day management of the Company.
The ongoing char
ges percentage for the year to 31 December 2023 was 2.56% (31 December 2022: 2.51%). The ongoing
charges have been calculated, in accordance with AIC guidance, as annualised ongoing charges (i.e. excluding acquisition
costs and other non-recurring items) divided by the average published undiluted Net Asset Value in the period. The
calculation is provided on page 110. The ongoing charges percentage has been calculated on the amalgamated basis and
therefore takes into consideration the expenses of HydrogenOne Partnership as well as the Company.
Portfolio review, performance
and valuation
Our portfolio
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Strategic Report Governance Financial statements
Other information
Our Impact:
£113.7 million
Deployed in low-carbon growth;
91,116 tCO2e
Emissions avoided in FY 2023 and 141,695 tCO2e
avoided since IPO;
571,294 MWh
Potential MWh lifetime clean energy capacity in
FY2023 and 797,294 MWh since IPO;
92% EU Taxonomy
Portfolio alignment with the EU taxonomy for
FY23 (89% FY 22);
2.22 tCO2e/£m
Carbon footprint (FY 22 1.9 tCO23 / £m);
ESG highlights:
• HGEN is an SFDR Article 9 impact fund with
a sustainable investment objective aligned
with the climate change mitigation goal of
the EU Taxonomy.
- Reported to the Principles of Responsible
Investment for the first time and scored
above median average for the peer group
in each of the three reported modules,
including: Policy, Governance and
Strategy; Confidence Building Measures;
and Direct Private Equity.
- Produced the Company’s first standalone
Sustainability Report for FY 23 aligned
with the IFRS International Sustainability
Standards Board as an early adopter.
- Undertook a physical climate risk
assessment during the year incorporating
scenario analysis from the International
Panel on Climate Change’s Shared
Socioeconomic pathways.
- The Company’s Board gender diversity
remained 50%
Environmental, Social and Governance
(“ESG”)
HydrogenOne Capital Growth plc Annual Report 2023
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Metrics
Greenhouse gas emissions:
2023 2022
Scope 1 18 tCO2e 48 tCO2e
Scope 2 81 tCO2e 28 tCO2e
Scope 3
1
180 tCO2e 134 tCO2e
Carbon footprint 2.2 tCO2e / £m Val
2
1.9 tCO2e / £m Val
GHG Intensity 55.3 tCO2e / £m Rev
3
0.8 tCO2e / £m Val
Avoided GHG in the year 91,116 tCO2e 42,716 tCO2e
Avoided Cumulative since IPO 141,695 tCO2e 50,579 tCO2e
Energy use – UK 268,669 kWh 93,383 kWh
Energy use - Global 2,157,604 kWh 750,563 kWh
Methodology
Emissions are calculated in line with the Greenhouse Gas Protocol but disclosed in line with EU SFDR (which aggregates the
Company’s share of emissions for each scope).
Principles of Responsible Investment
During the year the Company submitted its first reporting to the Principles of Responsible Investment. The charts below show
the scoring vs the peer group of investment managers in the same jurisdiction with similar assets under management. The
results are favourable to the Company with performance above the median average in all three categories and particularly
strong results in governance. Further work to enhance responsible investment performance will be undertaken in FY 2024.
1 Notwithstanding any mitigation action in the respective supply chains, we expect that scope 3 emissions will increase as data gaps are closed and
use of estimates are reduced as more reliable data from Private Hydrogen Assets becomes available.
2 Tonnes of carbon dioxide equivalent per £m of portfolio value.
3 Tonnes of carbon dioxide equivalent per £m of share of portfolio revenue.
Policy, Governance and Strategy
Confidence Building Measures
Direct – Private Equity
Environmental, Social and Governance
(“ESG”)
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Company Overview Strategic Report Governance Financial statements
Other information
Stakeholder engagement
(Section 172 Statement)
The Directors have a statutory duty to promote the success of the Company, whilst also having regard to certain broader matters,
including the need to engage with employees, suppliers, customers, and others to their interests.
The Company has no employees and no customers in the traditional sense. In accordance with the Company’s nature as an
investment trust the Board’s principal concern is the interests of the Company’s shareholders taken as a whole. In doing so, it has
due regard to the impact of its actions on shareholders, the environment and the wider community.
The Investment Adviser (in addition to the Board) has significant dealings with our stakeholders and, therefore, is an integral
point of contact between the Company and our stakeholders. The Company’s Corporate Broker, Barclays Bank PLC, are also an
integral point of contact between the Company and our shareholders and, together with the Investment Adviser ensure that any
shareholder feedback or observations are collated.
The following disclosure describes how the Directors have had regard to the matters set out in section 172(1)(a) to (f) when
performing their duty under s172 of the Companies Act 2006 and forms the Directors’ statement required under section 414CZA
of the Companies Act 2006.
Stakeholder
group
Why is it important to engage? How has the Board communicated and engaged?
Key topics of engagement and
decisions made by the Board
Shareholders The significant shareholders of
the Company are set out in the
Annual Report.
The Investment Adviser and the
Board believe that Shareholders
and their support is critical to
the continuing existence of the
business and delivery of its long-
term investment strategy.
It is important to the Company’s
continued success to have
the potential to access equity
capital in order to expand the
Company’s portfolio over time
in order to further diversify the
investment portfolio and create
economies of scale.
– Annual and Interim Reports;
– Quarterly factsheets;
– Investor webcasts and presentations (through the
Investment Adviser);
– Institutional investor meetings (one-to-one and group),
primarily through the Investment Adviser and corporate
broker;
– Regular institutional investor feedback received from
the Investment Adviser and corporate broker;
– Research analyst presentations through the Investment
Adviser;
– AGM;
– Website;
– First Capital Markets Day held in February 2023.
Through the communication and
engagement with shareholders
described, the Company and
Investment Advisor have provided
data and information on topics
including:
– Market announcements,
including quarterly NAV
announcements;
– Portfolio company valuation,
financial performance
and Company valuation
methodology;
– Commentary on macro trends
impacting the Hydrogen sector;
– Presentations by senior
managers in portfolio companies
at Capital Markets Day.
Investment
Adviser
The Investment Adviser is the
most significant service provider
to the Company and a description
of its role can be found in the
Annual Report.
– Board and Committee meetings;
– Regular reports and presentations from the Investment
Adviser;
– Ad hoc meetings and calls.
In addition to all matters related to
the execution of the Company’s
Investment Objective, the Board
engaged with the Investment
Adviser in regards to the
Company’s SFDR reporting and
Article 9 classification. The Board
held a strategy day in early 2023
and a second in early 2024 to
which the Investment Adviser was
invited to present and discuss with
the Board the Company’s future
strategy.
AIFM The AIFM is a critical service
provider for the Company’s long-
term success and engages with
the Board and the Investment
Adviser for the purpose of
providing investment advisory
services to the Company.
The Board regularly monitors
the Company’s investment
performance in relation to its
objectives, investment policy
and strategy.
– Board and Committee meetings;
– Regular reports and presentations from the AIFM.
The AIFM is responsible for
monitoring the risks faced by the
Company and these are regularly
discussed at meetings.
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Stakeholder engagement
(Section 172 Statement)
Stakeholder
group
Why is it important to engage? How has the Company communicated and engaged?
Key topics of engagement and
decisions made
Other key
service
providers
The Company does not have
any direct employees and works
closely with a number of key
service providers, including
the Administrator, Company
Secretary, auditor and corporate
broker.
The independence, quality
and timeliness of their service
provision is critical to the success
of the Company.
– Board and Committee meetings;
– Ad hoc meetings and calls;
– Annual review of performance based on a
questionnaire;
– The Company undertakes regular reviews of all
material contracts for service quality and value
through the activities of the Management Engagement
Committee.
The feedback given by the
service providers is used to review
the Company’s policies and
procedures to ensure open lines
of communication, and operational
efficiency.
The Company is able to identify
and resolve problems with service
provider relationships, should they
arise, via this process.
During the Company’s annual
report production, the Audit and
Risk Committee has engaged with
the Company’s external auditors
to obtain feedback on the quality
and accuracy of the reporting and
to ensure the reporting process
was undertaken effectively by all
service providers.
During the year the Board
appointed Barclays Bank as the
Company’s Broker.
Portfolio
investments
The Board considers each
proposal against the Company’s
investment objective, and
investment policy as disclosed
in the Annual Report and with
consideration for the wider group
of stakeholders.
– The Company’s Board is presented with potential
investment opportunities that have been identified by
the Investment Adviser and which have undergone a
process of analysis, including considerations relating to
environmental, social and governance issues;
– The Board reviews the financial and operating
performance of the Company’s portfolio companies on
a regular basis;
– In many cases, investments in Private Hydrogen Assets
are linked to operational and financial targets, which
the Board monitors;
– A quarterly update on performance of portfolio
companies is provided in the Investment Adviser’s
Report within the Board Packs.
As at 31 December 2023, over
90% of the capital raised was
invested. One new investment was
completed during the year.
As part of the ongoing portfolio
performance monitoring, the
feedback given by the Investment
Adviser is used to review
the Company’s policies and
procedures to ensure open lines
of communication, and operational
efficiency regarding its Portfolio
Companies.
Society and the
environment
Ensuring our investment
positively contributes to climate
change mitigation with an ESG
policy integrated in investment
decisions and asset monitoring.
See ESG section of the Annual Report and the 2023
Sustainability Report.
See ESG section of the Annual
Report and the 2023 Sustainability
Report.
Strategic Report
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Company Overview Strategic Report Governance Financial statements
Other information
Other Matters
Modern slavery disclosure
The Company is committed to maintaining the highest
standards of ethical behaviour and expects the same of its
business partners. The use of slavery and human trafficking
is unacceptable and entirely incompatible with its ethics as
a business. The Company believes that all efforts should be
made to eliminate it from its supply chains.
The majority of services supplied to or on behalf of the
Company are from the financial services, energy and
construction industries and other services associated with
those industries. Given what the Company understands to
be a low risk profile of anyone supplying it with services
being involved in slavery and/or human trafficking, it
believes its current procedures and ability to rely on
regulatory oversight in relation to professional services are
sufficient in this regard.
Social, community and human rights issues
The Investment Adviser screens the Company’s Investable
Universe as part of the Environmental Social and
Governance analysis for any breaches of the principles of
the UN Global Compact, including human rights, labour
rights, environmental breaches and corruption. Any
non-compliant companies are excluded from investment.
Anti-bribery and corruption
In accordance with the UK Bribery Act 2010, the Company
has developed appropriate anti-bribery policies and
procedures. The Company has a zero-tolerance policy
towards bribery and is committed to carrying out its
business fairly, honestly and openly. The anti-bribery policies
and procedures apply to all its officers and to those who
represent the Company (including its business partners).
TheCompany expects those providing services to it, or on
itsbehalf, to undertake their business without bribery.
Prevention of the facilitation of tax evasion
The Criminal Finances Act (Commencement No. 1)
Regulations 2017 (SI 2017/739) brought Part 3 of the
Criminal Finances Act 2017, the corporate offences of
failure to prevent facilitation of tax evasion, into force on
30 September 2017. The Company does not tolerate tax
evasion in any of its forms in its business. The Company
complies with the relevant UK law and regulation in relation
to the prevention of facilitation of tax evasion and supports
efforts to eliminate the facilitation of tax evasion worldwide,
and works to make sure its business partners share this
commitment.
Company information
HydrogenOne Capital Growth plc (the “Company” or
“Parent”) was incorporated in England and Wales on
16April 2021 with registered number 13340859 as a public
company limited by shares and is an investment company
within the terms of Section 833 of the Companies Act2006
(the “Act”). The Company is listed and began trading on
the Main Market of the London Stock Exchange and was
admitted to the premium segment of the Official List on
30 July 2021 (the “IPO”). The Company is an approved
investment trust under sections 1158 and 1159 of the
Corporation Tax Act 2010 and Part 2 Chapter 1 of Statutory
Instrument 2011/2999.
Asset allocation at year end
The breakdown of the structure of the portfolio at the
Company’s year end is shown in the Annual Report.
Dividends and dividend policy
The Ordinary Shares carry a right to receive dividends.
Interim dividends are determined by the Board and a final
dividend is subject to shareholder approval at the AGM.
The Company is targeting a Net Asset Value total return of
10 to 15% per annum over the medium to long-term with
further upside potential. The Company intends to invest in
Hydrogen Assets with cash flow typically re-invested for
further accretive growth.
The Company only intends to pay dividends in order to
satisfy the ongoing requirements under the Investment
Trust (Approved Company) (Tax) Regulations 2011 for it to
be approved by HMRC as an investment trust save that,
in the medium term, the Company’s Hydrogen Assets
may also generate free cash flow which the Company
may decide not to re-invest and, in such case(s), the
Company currently intends to distribute these amounts to
Shareholders.
The Company’s revenue return after tax for the year
amounted to a loss of £1,328,000 (31 December 2022: loss
of £1,405,000). The Company made a capital gain after
tax of £8,645,000 (2022: gain of £2,959,000). Therefore
the total return after tax for the Company was a profit of
£7,317,000 (2022: profit of £1,554,000). No dividends have
been paid or are proposed for the year to 31 December
2023 (2022: nil).
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Principal risks and uncertainties
The Board, through delegation to the Audit and Risk Committee, has carried out a robust assessment of the emerging
and principal risks facing the Company. These include those that would threaten its business model, future performance,
solvency and liquidity (see Audit and Risk Committee Report in the Annual Report). The Audit and Risk Committee reviews
ongoing monitoring of both risks and controls. This ensures heightened and emerging risks are identified outside of the
normal cycle of Board and Audit and Risk Committee meetings. The Audit and Risk Committee undertook a comprehensive
review of the Company’s risk management framework and controls during the year. The risks are documented on a risk
register and each risk is rated by impact and probability with the assessed risk given a risk score and a residual rating. The
risk register is reviewed on an ongoing basis in an attempt to capture all risks and put appropriate mitigation in place. The
review takes into account changing factors including, but not restricted to, changes to markets (both macro and micro),
stakeholders, operations, regulation and emerging risks. The top risks identified by this process are set out in the table below
together with the mitigated approach, and the Board considers these to be the principal risks of the Company.
Increasing   Stable   Reducing
Principal Risks and Uncertainties Mitigation Risk Status
Regulatory
Changes in political or environmental conditions in the
hydrogen sector (for example, changes in government policy
or support) could affect the Company’s prospects.
The Board and Investment Adviser has significant experience
in the energy sector and is familiar with its volatile political and
regulatory environment. Extensive contacts across the sector
inform its ongoing monitoring of these risks, which are reported
to the Board at least quarterly. More specific due diligence
occurs prior to any investments and during the lifetime of their
ownership.
The Administrator has a strong track record in administering
listed companies and the various rules and regulation required
to be adhered to.
Policy support
The technologies required to produce and use green
hydrogen need policy support to underpin the scale needed
to drive stand-alone cost competitiveness. Governments
worldwide are showing such support today, but that may be
volatile over the investment time horizon of the Company.
As noted under ‘regulatory’, the Investment Adviser has
longstanding experience in the energy sector and monitors
the policy environment closely. Such experience and
awareness is also present among the Company’s Non-
Executive Directors. It is the intent of the Investment Adviser
to access a range of hydrogen projects in different countries
and at different points in the emerging value chain, to further
mitigate the risk of policy volatility.
Power price
The income and value of the Company’s investments may
be affected by changes in the market prices of electricity and
hydrogen, both current and expected.
Risks include refinancing risk, exposure to interest rate risk
due to fluctuations in the prevailing market rates, covenant
breaches and possible enhanced loss on poor performing
assets.
The Investment Adviser monitors the outlook for electricity
and hydrogen prices. The exposure to fluctuating electricity
and hydrogen prices may be hedged at the hydrogen project
level.
As a result, the Investment Adviser oversee power revenues
and monitor regularly against expectations.
Portfolio allocations are monitored on an ongoing basis by
both the Investment Adviser and AIFM, to ensure compliance
with investment limits. Reporting by the Investment Adviser
and AIFM are provided to the Board at least quarterly.
Operational
Initial pre-deal due diligence may not uncover all risks
associated to a transaction.
Investments are subject to operating and technical risks.
While the Company will seek investments with creditworthy
and appropriately insured counterparties who bear the
majority of these risks, there can be no assurance that all risks
can be mitigated.
In addition, the long-term profitability of hydrogen
investments will be partly dependent upon the efficient
operation and maintenance of the assets. Inefficiency, or
limitations in the skills, experience or resources of operating
companies, may reduce revenue.
As a result, profitability of the Company may be impaired
leading to reduced returns for Shareholders.
The Investment Adviser conducts a vigorous due diligence
process and works very closely with external and technically
skilled consultancy firms to review all potential transactions,
with an aim to provide a fully scoped and informed
recommendation.
The portfolio is constantly monitored by the Investment
Adviser and the AIFM to address risks as they are identified.
Diversification in counterparties and service providers ensures
any impact is limited. Furthermore, the Company invests in a
diversified portfolio.
Risk and risk management
Strategic Report
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53
Company Overview Strategic Report Governance Financial statements
Other information
Principal Risks and Uncertainties Mitigation Risk Status
Performance
Underperforming investment or investment strategy can lead
to underperformance to the Company’s target return and
ultimate investment objective.
Risk assessment has increased from macroeconomic impacts
on portfolio investments from higher inflation and interest
rates.
The Board reviews at least quarterly the portfolio
performance as well as underlying key asset risks identified
as part of the Company’s risk register and how those risks are
actively being mitigated which include but is not limited to:
• Non Controlling interest risk • Market risk
• Interest rate risk • Inflation risk
At each Board meeting a report on risks, portfolio performance
and any macro and micro considerations is provided by the
Investment Adviser and the AIFM, and reviewed accordingly
with the aim to mitigate such risks.
New investment recommendations are reviewed and approved
in line with the investment policy agreed with the Company and
key parties.
Future acquisitions and capital raises
Ongoing capital raises are intended. The Company’s share
price trading at an excessive discount to its net asset value
may mean it is difficult to raise further capital through share
issues for onward investment.
Risk assessment has increased due to share price trading at a
discount to net asset value.
The Company’s Broker monitors the market for the
Company’s shares and reports at quarterly meetings. The
Board regularly reviews the relative level of discount against
the sector and has the authority to buy back shares.
During the year, the Company’s shares have traded at a
discount to NAV which has restricted the Company’s ability to
raise capital through the issue of new shares.
The Board and AIFM oversee the investment pipeline and
monitor its progress in relation to Company targets.
Certain assets will be identified in advance by the Investment
Adviser as being potentially available for acquisition by the
Company.
The pipeline is managed by the Investment Adviser and
monitored by the AIFM, with onward reporting to the Board.
The Board is unlikely to agree to capital raises without a
strong pipeline.
Refinancing
The operational risks of the Company including market,
counterparty, credit and liquidity risk.
Extreme market volatility can disrupt capital raising process
and ability to raise monies to repay a debt demand in full.
Investments in Private Hydrogen Assets are illiquid in nature
and may take a longer period of time to realise in order to
fund the Company’s operations or meet its expenses.
The Company may be forced to sell liquid assets to meet its
expenses at a time when valuations are low.
Risk assessment has increased due to market volatility and the
Company’s share price trading at a discount to net asset value,
delaying the Company’s ability to raise capital. Higher interest
rates will increase the cost of finance to the Company.
The Investment Adviser closely monitors the liquidity in the
market and portfolio valuations.
Should new credit not be forthcoming, liquidity may be
gained through a capital raise, or liquidation of an asset
including the Company’s Listed Hydrogen Assets.
The Investment Adviser, AIFM and the Board continuously
monitor forecast and actual cashflows from operating,
financing, and investing activities to consider payment of
dividends, or further investing activities.
Service providers
Disruption to, or failure of the Company’s Administrator or
other parties to complete their role efficiently, on time and in
line with expectation.
All counterparties to the Company are reviewed as part of
the risk register. A material credit risk is that of banks holding
un-invested cash, the credit rating and credit worthiness of
these are considered. A review of operational counterparties
such as the Administrator for operational procedures, disaster
recovery and system security is undertaken.
Counterparties of Company’s Special Purpose Vehicles
(“SPV”) and underlying assets are carried out as part of the
investment due diligence process.
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Risk and risk management
Principal Risks and Uncertainties Mitigation Risk Status
Portfolio valuation
Risk that portfolio asset valuations published do not represent
the Fair Market Values in accordance with the accounting
requirements.
Investment valuations are based on modelling / financial
projections for the relevant investments. Projections
will primarily be based on the Investment Adviser’s
assessment and are only estimates of future results based
on assumptions made at the time of the projection. Actual
results may vary significantly from the projections, which may
reduce the profitability of the Company leading to reduced
returns to Shareholders.
A rise in interest rates will lead to an increase in the Discount
Rate applied to the Private Hydrogen Assets’ valuation,
leading to a reduction in the Company’s net asset value.
The Investment Adviser has significant experience in valuation
of these assets.
The discount rate used in the valuations incorporates spot gilt
rates for each free cashflow based on maturity and country
which mitigates the longer term impact of rises in interest
rates.
The valuation polices will be reviewed by the Valuation
Committee on a quarterly basis, together with signing off on
the Private Hydrogen Asset values.
Key person
The Investment Adviser is a newly formed Company, with
minimum employees. As such, there are significant Key
Person risks at this time and should they become unavailable,
this could have a negative impact on the Company’s ability to
achieve its investment objective.
The Investment Adviser is committed to expand its business/
staffing levels in order to diversify knowledge across the
expanding team.
This risk is covered in the risk register and reported on at each
Board meeting.
Tax
Breaches of Section 1158 of the Corporation Tax Act could
result in loss of investment trust status.
Changes in tax legislation such as BEPS, WHT rules and
structural requirements result in increased tax and resulting in
a drop in returns from the Company’s investments.
The corporate structure of the Company is reviewed
periodically by the Company and its advisors.
All investments receive professional structural advice prior to
investment.
Political and associated economic risk
Exposure to Russia and/or Ukraine and the Middle East
within the investment portfolio could lead to losses on
investments.
The impact on the global equity markets, and hydrogen
stocks in particular, of a prolonged downturn caused by
the situation in Ukraine and the Middle East, could lead to
reduced valuations of the Company
The Board and Investment Adviser have reviewed the
portfolio for exposure and will continue to keep this under
review.
Artificial intelligence
Risks that the emergence of increasingly advanced AI will
lead to new risks to the Company, including but not limited
to, decline in human autonomy, increased cybersecurity
vulnerabilities, algorithm perpetuated bias though using
historical data, insufficient training data to perform correctly
and algorithm driven price manipulation.
The Company, its advisers and service providers will aim to
utilise the power of AI to enhance capabilities, rather than fall
foul of the potential pitfalls its emergence presents. Through
careful monitoring of the new technologies being released
into the world, it will be the aim that the Company can utilise
AI to its benefit.
Strategic Report
HydrogenOne Capital Growth plc Annual Report 2023
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Company Overview Strategic Report Governance Financial statements
Other information
Viability statement
The Directors have assessed the viability of the Group for
the period to 31 December 2028 (the “Viability Period”).
The Board believes that the Viability Period, being
approximately five years, is an appropriate time horizon
over which to assess the viability of the Group, particularly
when taking into account the long-term nature of the
Group’s investment strategy, of investing in private equity
stakes of unlisted companies with a 3-5 year exit plan for
each investment, the principal risks outlined in the Annual
Report and the requirement to hold a continuation vote
every five years.
In accordance with the Articles, the continuation of the
Company is subject to the approval of shareholders every
five years, with the first vote to be proposed as an ordinary
resolution at the Company’s AGM in 2026. If passed, the
Articles provide that the Directors propose an ordinary
resolution that the Company continue its business as
presently constituted at each fifth annual general meeting
thereafter. Since the Company’s IPO, the Company has
raised further equity capital of £21m and all AGM resolutions
have been passed with a substantial majority demonstrating
the continued support for the Company’s investment
objective and therefore, the Directors have no reason to
believe that the vote will not pass.
In its assessment of the prospects of the Group, the Board
carried out a robust assessment of the emerging and
principal risks and considered each of the uncertainties set
out in the Annual Report which included consideration of
severe but plausible downside scenarios (such as a long-
term market downturn, significantly increased costs, delays
in the realisation of assets and the liquidity and solvency of
the Group). The Board also considered the Group’s income
and expenditure projections and cash projections. These
metrics were subjected to stress testing of the assumptions
to evaluate the potential impact on the Group, including
long term downturn of the listed equity markets, longer
investment hold periods and increased inflation. Portfolio
changes, market developments, level of premium /
discount to NAV and share buybacks / share issues are
discussed at quarterly Board meetings. The internal control
framework of the Group is subject to a formal review on at
least an annual basis.
The level of the ongoing charges is dependent to a large
extent on the level of net assets, the most significant
contributor being the Investment Adviser fee. The Group’s
cash realisable from the sale of its investments provide
cover to the Group’s operating expenses, and any other
costs likely to be faced by the Group over the Viability
Period of their assessment.
The Director’s assessment considered the market risks
associated with the Russian invasion of Ukraine and the
war in the Middle East. The ongoing market volatility and
uncertainty this has caused, including higher inflation
and interest rates, has been considered and will continue
to be monitored. The Investment Adviser has reviewed
the investment portfolio for exposure and while limited
exposure has been identified the Board will keep the
situation under continued review.
Based on this assessment, the Directors have a reasonable
expectation that the Group will be able to continue to
operate and to meet its liabilities as they fall due over the
Viability Period.
Employees
The Company has no employees. As at the date of this
report, the Company had four Directors, of whom two are
male and two are female.
Outlook
The outlook for the Company is described in the Chairman’s
Statement and the Investment Adviser’s Report.
Strategic report
The Strategic Report set out in the Annual Report was
approved by the Board of Directors on 17 April 2024.
For and on behalf of the Board
Simon Hogan
Chairman
17
April 2024
Governance
57 Board of Directors
58 Directors’ Report
62 Corporate Governance
66 Directors’ Remuneration Policy
67 Directors’ Remuneration Implementation Report
69 Report of the Audit and Risk Committee
71 Statement of Directors’ Responsibilities
72 Independent Auditor’s Report
56
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview Strategic Report Governance Financial statements
Other information
The Principals of the
Investment Adviser
Dr JJ Traynor
Dr John Joseph “JJ” Traynor
has extensive experience in
energy, capital markets, project
management, and M&A. He has held
a series of senior energy and banking sector positions,
including Executive Vice President at Royal Dutch
Shell, where he led investor relations and established
the company’s ESG programme; Managing Director at
Deutsche Bank, where he was the number one ranked
analyst in European and Global oil & gas; Geologist
at BP, in the North Sea, West Africa and Asia Pacific.
He has a Geology BSc from Imperial College, a PhD
from Cambridge University. He attended the INSEAD
Advanced Management Programme, and is a Fellow of
the Geological Society of London.
Richard Hulf
Richard Hulf is a fund manager
with corporate finance and
engineering background. Richard
has 30 years of experience in the
Utilities and Energy sectors and
is a Chartered Engineer, originally
from Babcock Power and latterly
EXXon. In addition, his financial experience spans stock
broking, corporate finance and fund management with
Henderson Crosthwaite, Ernst & Young and Artemis
Investment Management, where he invested into
renewables companies. He has an MSc in Petroleum
Engineering from Imperial College.
Board of Directors
1. MemberoftheAuditandRisk,Valuation,ManagementEngagement,
NominationandRemunerationCommittees.
2.MrBucknallisnotamemberofthecommitteesoftheBoardbutattends
byinvitation.ConsideredindependentbytheBoard.Refertopage62for
anassessmentofindependenceforDavidBucknall.
3.EachDirectorhasalsobeenappointedasaDirectorofHydrogenOne
CapitalGrowth(GP)Limited(awhollyownedsubsidiaryoftheCompany
whichhasbeenappointedasthegeneralpartneroftheLimited
Partnership)inordertoensurethattheBoardareinapositionto
effectivelymonitorandmanagetheperformanceoftheserviceproviders
oftheHydrogenOnePartnershipinaccordancewiththeListingRules.
Simon Hogan
1,3
(Chairman of the Board and
Nomination Committee)
Appointed 20 May 2021
Mr Hogan has significant capital
markets, legal and management
experience. He was previously a
Managing Director of Morgan Stanley
and Chief Operating Officer across
their Commodities, Fixed Income and
Equity divisions. Mr Hogan has held multiple board positions
and was a member of the FCA Practitioners committee.
Mr Hogan’s contribution is invaluable to the Company
in formulating its short-term and long-term strategic
directionas well as managing a newly established Board
and Company.
Afkenel Schipstra
1,3
(Chairman of the Audit and Risk
Committee and the Valuation
Committee)
Appointed 20 May 2021
Mrs Schipstra has over 19 years’
experience in Energy in Europe and
Sub-Sahara Africa. She is the new
Hydrogen Lead at Uniper Benelux
B.V. Afkenel was previously SVP of Hydrogen Business
Development for the Netherlands at ENGIE, and held senior
positions at Gasunie, Shell and NAM.
Mrs Schipstra’s extensive knowledge of hydrogen
projectsstrengthens the Board’s commercial knowledge of
the sector.
Abigail Rotheroe
1,3
(Chairman of the Management
Engagement Committee and the
Remuneration Committee)
Appointed 8 February 2022
Ms Rotheroe has over 20 years of
investment experience and was
previously Investment Director at
Snowball Impact Management, a
sustainable and impact focussed
asset manager. Ms Rotheroe
was a Director of Threadneedle Investment, following
positions at HSBC Asset Management and Schroders and
has experience of institutional and retail investment. Ms
Rotheroe is a non-executive director of Baillie Gifford Shin
Nippon plc, Templeton Emerging Markets Investment Trust
plc and Greencoat UK Wind plc.
Ms Rotheroe also brings knowledge of fund governance,
manager selection and impact measurement.
David Bucknall
2,3
(Non-Executive Director)
Appointed 20 May 2022
Mr
Bucknall is currently Chief
Executive Officer of the INEOS
Energy group of companies and
has been nominated as the Board
representative of INEOS Offshore
BCS Limited (“INEOS Energy”)
pursuant to the relationship and
co-investment agreement entered into between, inter alia,
INEOS Energyand the Company at launch. Mr Bucknall
brings a wealth of commercial experience through his role
held at INEOS Energy.
HydrogenOne Capital Growth plc Annual Report 2023
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Directors’ Report
The Directors present their report and accounts for the Company and Group for
the year ended 31 December 2023.
Strategic report
The Directors’ Report should be read in conjunction with the
Strategic Report on pages 10 to 55.
Corporate governance
The Corporate Governance Statement on pages 62 to 65
forms part of this report.
Legal and taxation status
The Company is an investment company within the
meaning of Section 833 of the Companies Act 2006.
The Company conducts its affairs in order to meet the
requirements for approval as an investment trust under
section 1158 of the Corporation Tax Act 2010. The Company
has received approval as an investment trust and the
Company must meet eligibility conditions and ongoing
requirements in order for investment trust status to be
maintained. In the opinion of the Directors, the Company
has met the conditions and requirements for approval as an
investment trust for the year ended 31 December 2023.
Risk and risk management
The Principal Risks and Uncertainties for the Company and
their mitigation on pages 52 to 54 forms part of this report.
Viability statement
The Viability Statement is on page 55.
Market information
The Company’s Ordinary Shares are premium listed on
the London Stock Exchange (“LSE”). The NAV per Ordinary
Share is calculated in Pound Sterling. Up to 14 November
2022, the NAV per Ordinary Share was calculated on a
daily basis based upon the quarterly valuation of the Private
Hydrogen Assets and daily valuation of the Listed Hydrogen
Assets. Since 15 November 2022 the NAV per Ordinary
Share has been calculated on a quarterly basis based upon
the quarterly valuation of the Private Hydrogen Assets and
Listed Hydrogen Assets. The quarterly NAV per Ordinary
Share is published through a regulatory information service.
Retail distribution promotion
As a result of the Financial Conduct Authority (“FCA”) rules
determining which investment products can be promoted
to retail investors, certain investment products are classified
as ‘non-mainstream pooled investment’ products and face
restrictions on their promotion to retail investors.
The Company has concluded that the distribution of its
shares, being shares in an investment trust, is not restricted
as a result of the FCA rules described above.
The Company currently conducts its affairs so that the
shares issued by the Company can be recommended by
financial advisers to retail investors and intends to continue
to do so for the foreseeable future.
Shareholder relations and Annual General
Meeting (AGM)
The Board encourages all shareholders to attend the AGM
and generally seeks to provide twenty one clear days’
notice of that meeting.
The Notice of AGM sets out the business of the AGM and
any special business is explained in the Directors’ Report on
pages 58 to 61. Separate resolutions are proposed for each
substantive issue. The Investment Adviser has a programme
of meetings with shareholders and reports back to the
Board on its findings. The Board also welcomes direct
feedback from shareholders. The Chairman is available to
meet shareholders and may be contacted by email via the
Company Secretary at hydro1cosec@apexfs.group.
The Company’s AGM will be held at 20 May 2024 and the
Chairman’s Statement on page 7 sets out the arrangements
for the meeting. Details of how shareholders can cast their
votes can be found in the Notes to the Notice of Annual
General Meeting on pages 128 to 130. Shareholders will
also have the opportunity to hear a presentation from the
Investment Adviser, and ask questions of the Board and the
Investment Adviser.
Special business of the AGM
Authority to issue and purchase own shares
The Board recommends that the Company be granted
a new authority to allot up to a maximum of 12,881,999
Ordinary Shares (representing approximately 10% of the
Ordinary Shares in issue at the date of this document) and to
dis-apply pre-emption rights when allotting those Ordinary
Shares and/or selling Ordinary Shares from treasury.
Ordinary resolution 9 and special resolution 10 will be put
to shareholders at the AGM. Ordinary Shares will be issued
under this authority only at the Board’s discretion and when
it is deemed to be in the best interests of shareholders as a
whole to do so. The advantages are to lower the Company’s
ongoing charges as expenses are diluted and, in the
short term, to address volatility in the share price. Unless
otherwise authorised by shareholders, new Ordinary Shares
will not be issued at less than NAV and Ordinary Shares
held in treasury will not be sold at less than NAV.
The maximum number of Ordinary Shares which can be
admitted to trading on the London Stock Exchange without
the publication of a prospectus is 20% of the Ordinary
Shares on a rolling previous 12-month basis at the time of
admission of the Ordinary Shares.
The Directors recommend that a new authority to
purchase up to 19,310,117 Ordinary Shares (subject to
the condition that not more than 14.99% of the Ordinary
Shares in issue at the date of the AGM are purchased) be
granted and special resolution 11 to that effect will be put
to the AGM. AnyOrdinary Shares purchased will either be
cancelled or, ifthe Directors so determine, held in treasury.
Ordinary Shares are purchased at the discretion of the
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview Strategic Report Governance Financial statements
Other information
Board and when it is deemed to be in the best interests
of shareholders. Ordinary Shares will be purchased for
cancellation or for treasury only when the Ordinary Shares
are trading at a discount to the Net Asset Value.
The Companies Act 2006 allows companies to hold
shares acquired by way of market purchases as treasury
shares, rather than having to cancel them. This gives the
Company the ability to sell Ordinary Shares quickly and cost
effectively, thereby improving liquidity and providing the
Company with additional flexibility in the management of its
capital base. At the year end and at the date of this report,
no Ordinary Shares were held in treasury.
Notice of General Meetings
Special resolution 12 in the notice to the AGM is required to
reflect the requirements of the Shareholder Rights Directive.
The Company is currently able to call general meetings,
other than an AGM, on 14 clear days’ notice and would
like to preserve this ability. In order to be able to do so,
shareholders must have given their prior approval.
Special resolution 12 seeks such approval, which would be
effective until the Company’s next AGM, when it is intended
that a similar resolution will be proposed. The Company
will ensure that it offers the facility for shareholders to vote
by electronic means, and that this facility is accessible to
all shareholders, if it is to call general meetings on 14 days’
notice. Short notice of this kind will be used by the Board
only under appropriate circumstances.
Continuation vote
The Articles of Association require that an ordinary
resolution be proposed at every fifth AGM of the Company
that the Company should continue as an investment
trust for a further five-year period. In accordance with the
Articles of Association, the initial vote for the continuation
of the Company will be proposed at the AGM to be
held in 2026. In the event that such a resolution is not
passed, the Directors are required to draw up proposals
for shareholders’ approval for the voluntary liquidation or
unitisation or other reorganisation of the Company, which
would require a special resolution of shareholders.
Articles of association
Amendments to the Company’s Articles of Association
require an Ordinary Resolution to be passed by
Shareholders.
Management
The Board
The independent Board is responsible to Shareholders for
the overall management of the Company. The Board has
adopted a Schedule of Matters Reserved for the Board
which sets out the division of responsibilities between the
Board and its various committees, the Chairman and the
Chairmen of the various committees, together with the
duties of the Board, further details can be found on pages
62 and 63.
Through the Committees and the use of external
independent advisers, the Board manages risk and
governance of the Company.
Appointment of Board Members
The rules concerning the appointment of Directors are
contained in the Company’s Articles of Association which
require that a Director shall be subject to election at the first
AGM after appointment and annual re-election thereafter.
Further details of the Board’s process for the appointment of
Board members can be found on page 63.
Alternative Investment Fund Manager (“AIFM”)
FundRock Management Company (Guernsey) Limited has
been appointed as the Company’s and Limited Partnership’s
AIFM. The AIFM has delegated the provision of portfolio
management services to the Investment Adviser pursuant
to the Investment Adviser Agreement.
The AIFM Agreement shall continue in force until terminated
by either the AIFM or the Company by giving to the other
no less than six months’ prior written notice, provided that
such notice may not be served earlier than the date being
twelve months from the date of the AIFM Agreement. The
AIFM Agreement may be terminated earlier by either party
with immediate effect in certain circumstances, including,
ifthe other party shall go into liquidation or an order shall be
made or a resolution shall be passed to put the other party
into liquidation or the other party has committed a material
breach of any obligation the AIFM Agreement, and in the
case of a breach which is capable of remedy fails to remedy
it within 30 days. Details of the fee the AIFM is entitled to
receive are given in note 14 to the Financial Statements.
The AIFM shall maintain, at its cost, professional indemnity
insurance to cover any professional liability which it may
incur under the AIFM Agreement, with a limit not less than
£5,000,000. The Company has granted to the AIFM and
certain other indemnified parties, a customary indemnity
against losses which may arise in relation to the AIFM’s
performance of its duties under the AIFM Agreement.
The Board confirms that it has reviewed whether to retain
FundRock Management Company (Guernsey) Limited as
the AIFM of the Company. It has been concluded that it is
in the best interests of shareholders as a whole to continue
with the AIFM’s engagement.
Investment Adviser
The AIFM has appointed HydrogenOne Capital LLP as the
Investment Adviser. The Investment Adviser has been given
responsibility for investment advisory services in respect
of any Private Hydrogen Assets the Company invests in
directly or indirectly through holding entities and the Listed
Hydrogen Assets (including uninvested cash) in accordance
with the Company’s investment policy, subject to the
overall control and supervision of the AIFM. Details of the
Investment Advisory fees are given in note 6 to the Financial
Statements. As at 31 December 2023, Dr JJ Traynor held
100,000 Ordinary Shares and Mr Richard Hulf held 100,000
Ordinary Shares in the Company.
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HydrogenOne Capital Growth plc Annual Report 2023
The Limited Partnership has entered into a Limited
Partnership Investment Adviser Agreement dated 5 July
2021 and as amended on 26 November 2021 (the “Limited
Partnership Investment Adviser Agreement”) between the
General Partner (in its capacity as general partner of the
Limited Partnership), the AIFM and the Investment Adviser,
pursuant to which the Investment Adviser has been given
responsibility for investment advisory services in respect
of the Private Hydrogen Assets in accordance with the
investment policy of the Limited Partnership, subject to the
overall control and supervision of the AIFM.
The Investment Adviser Agreements are for an initial term of
four years from the date of Admission and thereafter subject
to termination on not less than twelve months’ written
notice by any party. The Investment Adviser Agreements
can be terminated at any time in the event of, inter alia, the
insolvency of the Company, the AIFM or the Investment
Adviser or if certain key members of the Investment
Adviser’s team cease to be involved in the provision
of services to the Company and are not replaced by
individuals satisfactory to the Company (acting reasonably).
The Company and the Limited Partnership have given
an indemnity in favour of the Investment Adviser (subject
to customary exceptions) in respect of the Investment
Adviser’s potential losses in carrying on its responsibilities
under the Investment Adviser Agreement.
The Board confirms that it has reviewed whether to retain
HydrogenOne Capital LLP as the Investment Adviser of
the Company and the Limited Partnership. It has been
concluded that, given the Investment Adviser’s depth
of knowledge in the sector and the recent growth and
performance record of the Company, it is in the best
interests of shareholders as a whole to continue with the
Investment Adviser’s engagement.
Alternative Investment Fund Portfolio Managers’
Directive (“AIFMD”)
In accordance with the AIFMD, the AIFM must ensure that
an annual report containing certain information on the
Company is made available to investors for each financial
year. The investment funds sourcebook of the FCA (the
“Sourcebook”) details the requirements of the annual report.
All the information required by those rules are included
in this Annual Report or will be made available on the
Company’s website.
Company Secretary and Administrator
Apex Listed Companies Services (UK) Limited has
been appointed to provide company secretarial and
administration services to the Company.
Custodian
The Northern Trust Company has been appointed as the
Company’s custodian for the Listed Hydrogen Assets.
Registrar
Computershare Investor Services plc has been appointed
as the Company’s registrar.
Continuing appointment of service providers
The Board has committed to undertake a detailed review
of the continued appointment of these service providers on
an annual basis to ensure these are in the best long term
interests of the Company’s Shareholders and undertook
a comprehensive service provider review during the year
ended 31 December 2023, concluding it was in the best
interest of shareholders to continue to engage the services
of the Company’s appointed service providers.
Capital structure and voting rights
At the year end and to the date of this report, the Company’s
issued share capital comprised 128,819,999 Ordinary Shares,
with no Ordinary Shares held in treasury. Each Ordinary Share
held entitles the holder to one vote. All Ordinary Shares carry
equal voting rights and there are no restrictions on those
voting rights. Voting deadlines are stated in the Noticeof
Meeting and Form of Proxy and are in accordance with
the Companies Act 2006. There are no restrictions on the
transfer of Ordinary Shares, nor are there any limitations or
special rights associated with the OrdinaryShares.
Notifiable interest
As at 31 December 2023 and 17 April 2024, the Directors have been formally notified of the following shareholdings
comprising3% or more of the issued share capital of the Company.
Company
Holding of
Ordinary
Shares – As at
31 December
2023
% Holding –
As at
31 December
2023
Holding of
Ordinary
Shares – As at
17 April
2024
% Holding –
As at
17 April
2024
INEOS Offshore BCS Limited 25,000,000 19.40 25,000,000 19.40
Rathbones Investment Management Ltd 14,762,893 11.50 14,169,838 10.99
City of Bradford - West Yorkshire Pension Fund 6,500,000 5.05 8,500,000 6.60
Stichting Juridisch Eigendom Privium Sustainable
Impact Fund
6,040,000 4.69 6,040,000 4.69
FS Wealth Management Limited 3,670,000 3.42 3,670,000 3.42
Directors’ Report
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview Strategic Report Governance Financial statements
Other information
Political donations
There were no political donations made during the financial
year to 31 December 2023.
Disclosure required by listing rule 9.8.4
The above rule requires listed companies to report certain
information in a single identifiable section of their annual
financial reports. The Company confirms that, there are no
further disclosures to be made other than those already
disclosed within the Annual Report for the year ended
31December 2023.
Future trends
Details of the main trends and factors likely to affect the
future development, performance and position of the
Company’s business can be found in the Investment
Adviser’s Report section of this Strategic Report. Further
details as to the risks affecting the Company are set out in
the ‘Principal Risks and Uncertainties’ on pages 52 to 54.
Directors’ indemnities
Subject to the provisions of the Companies Act 2006 and
certain provisions contained in the deeds of indemnity
issued by the Company, the Company has indemnified each
of the Directors against all liabilities which each Director may
suffer or incur arising out of or in connection with any claim
made or proceedings taken against them, or any application
made under sections 661(3), 661(4) or 1157 of the Companies
Act 2006 by them, on the grounds of their negligence,
default, breach of duty or breach of trust, in relation to the
Company or any associated company. The indemnities
would provide financial support from the Company after
the level of cover provided by the Company’s Directors’ and
Officers’ insurance policy has been fully utilised.
Going concern
The Directors consider that it is appropriate to adopt the
going concern basis in preparing the Financial Statements.
Details of the Directors’ assessment of the going concern
status of the Company and Group, which considered the
adequacy of the Company and Group’s resources, the
macro-economic effects, such as higher inflation and
interest rates that have occurred following the Russian
invasion of Ukraine and war in the Middle East, are given in
note 2 to the Financial Statements.
Auditor information
Each of the Directors at the date of the approval of this
report confirms that:
(i) so far as the Director is aware, there is no relevant audit
information of which the Company’s auditor is unaware;
and
(ii) the Director has taken all steps that he or she ought to
have taken as Director to make himself or herself aware
of any relevant information and to establish that the
Company’s auditor is aware of that information.
This confirmation is given and should be interpreted
in accordance with the provisions of Section 418 of the
Companies Act 2006.
Appointment of auditor
In accordance with Section 489 of the Companies Act
2006, a resolution will be put forward at the forthcoming
AGM on 21 May 2024 to re-appoint KPMG Channel Islands
Limited (“KPMG”) as auditor.
By order of the Board
Martin Darragh
For and on behalf of Apex Listed Companies Services (UK)
Limited, Company Secretary
17 April 2024
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HydrogenOne Capital Growth plc Annual Report 2023
Corporate Governance
Introduction
This Corporate Governance statement forms part of the
Directors’ Report.
The Listing Rules and the Disclosure Guidance and
Transparency Rules of the UK Listing Authority require listed
companies to disclose how they have applied the principles
and complied with the provisions of The UK Corporate
Governance Code 2018 (the “UK Code”), as issued by the
Financial Reporting Council (“FRC”). The UK Code can be
viewed on the FRC’s website.
The Board has considered the principles and provisions
of the AIC Code of Corporate Governance 2019 (the “AIC
Code”) which addresses those set out in the UK Code, as
well as setting out additional provisions on issues that are of
specific relevance to the Company, as an investment trust.
The Board considers that reporting against the AIC Code,
which has been endorsed by the Financial Reporting
Council, provides more relevant information to shareholders.
The AIC Code is available on the AIC website
(www. theaic. co.uk). It includes an explanation of how the
AIC Code adap
ts the Principles and Provisions set out in the
UK Code to make them relevant for investment companies.
The Company has complied with 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 (provision 14);
• the need for an internal audit function (provision 25); and
• executive Directors’ remuneration (provision 33).
The Board considers these provisions are not relevant to
the Company, being an externally managed investment
company with no employees. The Company has therefore
not reported further in respect of these provisions, other
than the need for an internal audit function specific to the
Company, which has been addressed on page 70.
The Board
Composition
At the date of this report the Board consists of four
Non-Executive Directors. The Chairman is Simon Hogan,
and the Directors are Afkenel Schipstra, Abigail Rotheroe
and David Bucknall. Mrs Schipstra is the Chairman of the
Audit and Risk Committee and the Valuation Committee
and Ms Rotheroe is the Chairman of the Management
Engagement Committee and Remuneration Committee.
Mr Hogan is Chairman of the Nomination Committee.
Dueto the size and nature of the Company’s business,
theBoard has not deemed it necessary to appoint a Senior
Independent Director as the role can be performed by the
Board as awhole.
Mr Hogan, and Mrs Schipstra were appointed as
Non-Executive Directors 22 May 2021, Ms Rotheroe
8February 2022 and Mr Bucknall 20 May 2022.
The Board believes that during the year ended
31December 2023 its composition was appropriate for an
investment company of the Company’s nature and size.
All of the Directors are independent of the Investment
Adviser and are able to allocate sufficient time to the
Company to discharge their responsibilities effectively. In
accordance with the Co-Investment Agreement between
INEOS Energy and the Company, Mr Bucknall will recuse
himself from any decision relating to a transaction by the
Company or any member of the Group with INEOS Energy
or any of its Associates. The Board has noted the inference
of the provisions in the AIC Code that Non-Executive
Directors who represent a significant shareholder should be
presumed not to be independent. However, it is the Board’s
assessment that the provisions in place to manage actual
or potential situational conflicts of interest are sufficiently
robust and always promote the success of the Company.
The Board has concluded that Mr Bucknall continues to
demonstrate independence of character and judgement.
His skills and experience have added significantly to the
strength of the Board and his continued service is invaluable
to the long-term success of the Company. The Directors
have a broad range of relevant experience to meet the
Company’s requirements and their biographies are given on
page 57.
In line with the AIC Code and the Articles of Association,
each Director is subject to election at the first AGM following
their appointment and annual re-election thereafter by
shareholders. The Board recommends all the Directors for
election or re-election.
The Directors have appointment letters which do not
provide for any specific term. Copies of the Directors’
appointment letters are available on request from the
Company Secretary. Upon joining the Board, any new
Director will receive an induction and relevant training is
available to Directors on an ongoing basis.
A policy of insurance against Directors’ and Officers’
liabilities is maintained by the Company.
The Directors, in the furtherance of their duties, may
take independent professional advice at the expense of
theCompany.
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview Strategic Report Governance Financial statements
Other information
Board Committees
The Board decides upon the membership and chairmanship
of its committees. Each Committee has adopted formal
terms of reference, which are reviewed at least annually,
and copies of these are available on the Company’s website
or on request from the Company Secretary.
Audit and Risk Committee
A report on pages 69 and 70 provides details of the role and
composition of the Audit and Risk Committee together with
a description of the work of the Audit and Risk Committee in
discharging its responsibilities.
Remuneration Committee
All of the Directors, except Mr Bucknall, are members
of this Committee, and Ms Rotheroe is the Chairman.
The Remuneration Committee has been established to
meet formally on at least an annual basis to review the
remuneration policy of the Company and consider the fees
of the Non-Executive Directors.
The Directors’ Remuneration Implementation Report is
included on pages 67 and 68.
Management Engagement Committee (“MEC”)
All of the Directors, except Mr Bucknall, are members of the
MEC, and Ms Rotheroe is the Chairman. The MEC has been
established to conduct a formal annual review of the AIFM
and the Investment Adviser, assessing investment and other
performance, the level and method of their remuneration and
the continued appointment of them as AIFM and Investment
Adviser to the Company. The MEC met and reviewed the AIFM
and Investment Adviser’s performance and remuneration
structure. In conclusion the Committee’s recommendation to
the Board was that it was in the best interests of shareholders
as a whole to continue with their engagements and that the
current management fee structure remained appropriate. (See
page 60 for further details).
During the year, the MEC also conducted an annual
detailed service review of the main service providers to the
Company and concluded that their continued appointment
remained in the best interest of shareholders.
Nomination Committee
All of the Directors, except Mr Bucknall, are members of this
Committee and Mr Hogan is the Chairman. The Nomination
Committee has been established for the purpose of
identifying and putting forward candidates for the office
of Director of the Company. The Nomination Committee
considers job specifications and assesses whether
candidates have the necessary skills and time available to
devote to the job. It also undertakes an annual performance
evaluation of the Board. An evaluation requiring the
Directors to complete detailed questionnaires on the
operation of the Board, its Committees and the individual
contribution of Directors as well as the performance of
the Chairman was undertaken during the year. The results
of theevaluation were reviewed by the Chairman and
discussed with the Board. Based upon the conclusions
of the most recent performance evaluation, which were
positive and demonstrated that the Directors showed the
necessary commitment for the effective fulfilment of their
duties, the Committee recommended that each of the
Directors be re-elected at the forthcoming AGM.
The Board succession plan is reviewed and maintained
through the Nomination Committee to promote regular
refreshment and diversity, whilst maintaining stability and
continuity of skills and knowledge on the Board.
Valuation Committee
All of the Directors, except Mr Bucknall, are members of this
Committee, and Mrs Schipstra is the Chairman. The Valuation
Committee has been established to meet formally on at
least a quarterly basis to formulate valuation policies for
investments of the Company, consider whether independent
valuation of the portfolio is required and approve the
valuations or valuation methodology of the Private and
Listed Hydrogen Assets. A summary of the valuation of the
Company’s investment portfolio is given on page 23.
Meeting attendance
Board
Audit and Risk
Committee
Remuneration
Committee
Management
Engagement
Committee
Nomination
Committee
Valuation
Committee
Number of meetings held
in 2023
7 3 1 1 1 4
Simon Hogan 7 3 1 1 1 4
Afkenel Schipstra 7 3 1 1 1 4
Abigail Rotheroe 7 3 1 1 1 4
David Bucknall
1
5 2 1 1 1 3
1. MrBucknallisnotamemberofthecommitteesoftheBoardbutattendsbyinvitation.HewasunabletoattendtwoBoardmeetingsduetoprior
commitments.
In addition, a number of ad hoc Board and committee meetings were held to deal with administrative matters and the formal
approval of documents.
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HydrogenOne Capital Growth plc Annual Report 2023
Board diversity
Appointments are based on merit with due regard to the
benefits of diversity. The Board considers many factors,
including the balance of skills, knowledge, experience,
gender, ethnicity, cognitive and personal strengths when
reviewing its composition and appointing new Directors.
The aim of the policy is to identify those with the best range
of skills and experience to complement existing Directors
in order to provide effective oversight of the Company
and constructive support and challenge to the Investment
Adviser. Summary biographical details of the Directors,
including their relevant experience, are set out on page 57.
The Board currently comprises four Non-Executive
Directors of which two are female thereby constituting 50%
female representation and complies with the Hampton-
Alexander target of 33% female membership. However,
although the Board has considered the recommendations
of the Davies and Hampton-Alexander reviews as well as
the Parker review, it does not consider it appropriate to
establish targets or quotas in these regards. The Company
has no employees.
The Board take account of the targets set out in the FCA’s
Listing Rules, that i) 40% of a board should be women,
ii) at least one senior role should be held by a woman;
and iii) at least one board member should be from a
non-white ethnic background as defined by the Office of
National Statistics criteria. The Board voluntarily discloses
the following information in relation to its diversity. As
an externally managed investment company, the Board
employs no executive staff, and therefore does not have
a chief executive officer (CEO) or a chief financial officer
(CFO)- both of which are deemed senior board positions
by the FCA. However, the Board considers the Chair of the
Audit and Risk Committee to be a senior board position and
the following disclosure is made on this basis. The other
applicable senior board position as recognised by the FCA
is Chair of the Board. In addition, the Board has resolved that
the Company’s year end date be the most appropriate date
for disclosure purposes. The following information has been
provided by each Director. There have been no changes
since 31 December 2023.
Board as at 31 December 2023
Number of
Board members
Percentage
of the Board
Number of
senior positions
on the Board
Men 2 50 1
Women 2 50 1
Prefer not to say – – –
Number of
Board members
Percentage
of the Board
Number of
senior positions
on the Board
White British
or Other White
(including minority-
white groups)
4 100 2
Prefer not to say – – –
The Company has met the Listing Rule targets i and ii in
respect of Gender equality but has not yet met the target
on ethnic diversity. The Board recognises the benefits of
having diverse representation reflecting wider society within
the Board and is committed to ensuring that its composition
reflects ethnic diversity, and it is looking to make meaningful
progress on this front when appropriate and as part of its
succession planning. Due to the nature and size of the
Company, the Board comprises of four directors. The Board
considers this to be the principal reason why the Listing
Rule target has not been met.
Tenure policy
It is the Board’s policy that all Directors, including the
Chairman, shall normally have tenure limited to nine
years from their appointment to the Board, except that
the Board may determine otherwise if it is considered
that the continued participation on the Board of an
individual Director is in the best interests of the Company
and its shareholders. This is also subject to the Director’s
re-election annually by shareholders. The Board considers
that this policy encourages regular refreshment and is
conducive to fostering diversity.
Internal control
The Board is responsible for establishing the Company’s
system of internal controls and for monitoring their
effectiveness. The system of internal controls is designed
to manage rather than eliminate the risk of failure to
achieve business objectives. It can provide only reasonable
assurance against material misstatement or loss. The Board,
through the Audit and Risk Committee, regularly reviews
the effectiveness of the internal control systems to identify,
evaluate and manage the Company’s significant risks. If any
significant failings or weaknesses are identified the Board,
and where required the Investment Adviser, ensure that
necessary action is taken to remedy the failings. Taking
into account the principal risks and uncertainties section
on pages 52 to 54 during the year, the Board – through the
Audit and Risk Committee – established the Company’s
risk management framework and controls. This identified a
detailed number of risks facing the Company and resulted
in enhanced risk documentation and reporting to the Board
and Audit and Risk Committee. Following its review, the
Board is not aware of any significant failings or weaknesses
arising in the year under review.
Corporate Governance
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview Strategic Report Governance Financial statements
Other information
The Board believes that the existing arrangements,
including those set out below, represent an appropriate
framework to meet the internal control requirements.
Bythese procedures the Directors have kept under review
the effectiveness of the internal control system throughout
the year and up to the date of this report.
Financial aspects of internal control
These are detailed in the Report of the Audit and
RiskCommittee.
Other aspects of internal control
The Board holds at least four regular meetings each
year, plus additional meetings as required. Between
thesemee
tings there is regular contact with the
InvestmentAdviser and the Company’s Administrator
andCompany Secretary.
The Administrator, Apex Listed Companies Services
(UK) Limited reports separately in writing to the Board
concerning risks and internal control matters within its remit,
including internal financial control procedures and company
secretarial matters. Additional ad hoc reports are received
as required and Directors have access at all times to the
advice and services of the Company Secretary, which is
responsible to the Board for ensuring that Board procedures
are followed and that applicable rules and regulations are
complied with.
The contact with the Investment Adviser, the AIFM and the
Administrator enable the Board to monitor the Company’s
progress towards its objectives and encompass an analysis
of the risks involved. The effectiveness of the Company’s
risk management and internal controls systems is
monitored regularly and a formal review, utilising a detailed
risk assessment programme, takes place at least annually.
This includes review of the internal controls reports of the
Administrator, the AIFM and the Registrar.
Principal risks
The Directors confirm that they have carried out a robust
assessment of the Company’s emerging and principal risks,
including those that would threaten its business model,
future performance, solvency or liquidity. The principal
risks and how they are being managed are set out in the
Strategic Report on pages 52 to 54.
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HydrogenOne Capital Growth plc Annual Report 2023
Directors’ Remuneration Policy
The remuneration policy (the “Policy”) must be put forward
for shareholder approval at its first AGM and thereafter
at a maximum interval of three years. The Policy was last
approved by shareholders at the AGM held on 23 May 2022
and will continue in force until the Annual General Meeting
to be held in May 2025. The provisions set out in the Policy
apply until they are next submitted for shareholder approval.
In the event of any proposed material variation to the Policy,
shareholder approval will be sought for the proposed new
policy prior to its implementation. The Policy sets out the
principles the Company follows in remunerating Directors
and the result of the shareholder vote on the Policy is
binding on the Company. The Remuneration Committee
will take account of any views expressed by shareholders in
formulating this policy.
All the Directors are Non-Executive Directors and the
Company has no other employees.
Service contracts
The Directors do not have service contracts with the
Company. The Directors have appointment letters and,
following initial election by shareholders, are subject to
annual re-election.
Fees
Directors’ fees are determined by the Board according to
their duties and responsibilities and by reference to the time
commitment required by each Director to carry out their
roles effectively. In setting fees, the Board also has regard
to the need to recruit and retain Directors with appropriate
knowledge and experience, the fees paid to Directors of
the Company’s peers and industry practice. Directors’ fees
are also subject to the aggregate annual limit set out in the
Company’s Articles of Association (the “Articles”), which is
currently £300,000. The aggregate limit of Directors’ fees in
the Articles can only be amended by an ordinary resolution
put to shareholders at a general meeting.
Directors are not eligible for bonuses, pension benefits,
share benefits, share options, long-term incentive schemes
or other benefits.
Directors’ fees are paid at fixed annual rates and do not
have any variable elements. Directors are also entitled to
be reimbursed for all reasonable out-of-pocket expenses
incurred in performance of their duties. These expenses are
unlikely to be of a significant amount.
Fees are payable from the date of appointment as a Director
of the Company and cease on the date of termination of
appointment. Any new Directors will be paid at the same
rate as existing Directors. Directors are not entitled to
compensation for loss of office, and there is no notice
period upon early termination of appointment.
No incentive fees will be paid to any person to encourage
them to become a Director of the Company. The Company
may, however, pay fees to external agencies to assist
the Board in the search and selection of Directors or in
reviewing remuneration. Where a consultant is appointed,
the consultant shall be identified in the Annual Report
alongside a statement about any other connection it has
with the Company or individual Directors. No consultants
were appointed during the year. Independent judgement
will be exercised when evaluating the advice of external
third parties.
Statement of consideration of conditions
elsewhere in the Company
As stated above, the Company has no employees.
Therefore, the process of consulting with employees on the
setting of the Remuneration Policy is not applicable.
Review of the Policy
This Policy will be reviewed on an annual basis by the
Remuneration Committee and any changes approved
by the Board. As part of the review, the Remuneration
Committee will consider whether the Policy supports
the long-term success of the Company and takes into
consideration all relevant regulatory requirements.
Any material change to the Policy must be approved by
shareholders.
Effective date
The Policy is effective from the date of approval by
shareholders.
Current and future policy
Component Director Purpose of reward Operation
Annual fee Chair of the Board For services as Chairman of a plc Determined by the Board
Annual fee Other Directors F
or services as
Non-Executive Directors of a plc
Determined by the Board
Additional fee Chair of the Audit
and R
isk Committee
For additional responsibility and time
commitment
Determined by the Board
Expenses All Directors R
eimbursement of expenses incurred
in the performance of duties
Submission of appropriate
supporting documentation
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview Strategic Report Governance Financial statements
Other information
Directors’ Remuneration
Implementation Report
This Directors’ Remuneration Implementation Report (“the Report”) has been prepared in accordance with Schedule 8 of
the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulation 2013. An ordinary
resolution for the approval of this Report will be put forward at the forthcoming AGM.
The Report is put forward for approval by shareholders on an annual basis. The result of the shareholder resolution on the
Report is non-binding on the Company, although it gives shareholders an opportunity to express their views, which will be
taken into account by the Board and the Remuneration Committee.
The law requires the Company’s auditor to audit certain of the disclosures provided. Where disclosures are audited they are
indicated as such. The auditor’s opinion is shown on pages 72 to 77.
Remuneration Committee
The Company currently has four (2022: four) Non-Executive Directors.
In accordance with clause 5 of the Relationship and Co-Investment Agreement, INEOS Energy is entitled to nominate one
Non-Executive Director for appointment to the Board. David Bucknall has been nominated for this purpose, and as set out in
his appointment letter, is not remunerated for his role as a Non-Executive Director.
During the year, the annual fee payable to the Chair of the Board was £68,250, the Chair of the Audit and Risk and
Valuation Committees, £57,750 and Chair of the Management Engagement and Remuneration Committees, £47,250. The
Remuneration Committee reviewed the level of Directors’ fees and recommended to the Board that no change should be
made to the rate of fees paid to directors.
The Remuneration Committee believes that the level of fees appropriately reflects prevailing market rates for an investment
trust of the Company’s complexity and size, the increasing complexity of regulation and resultant time spent by the Directors
on matters, and will also enable the Company to attract appropriately experienced additional Directors in the future.
The annual fees of the Directors from 1 January 2024 are as follows:
Name Role Fee
Simon Hogan Chair £68,250
Afkenel Schipstra Chair of the Audit and Risk and Valuation Committees £57,750
Abigail Rotheroe Chair of the Remuneration and Management Engagement Committee £47,250
David Bucknall Non-Executive Director –
The Remuneration Committee comprises the whole Board with the exception of Mr Bucknall. Further detail on the duties of
the Remuneration Committee can be found in the Corporate Governance statement on page 63.
The maximum level of fees payable, in aggregate, to the Directors of the Company is currently £300,000 per annum as set
out in the Company’s Articles of Association.
Directors’ appointment letters and shareholding rights
The Directors have appointment letters which do not provide for any specific term. The Directors are not entitled to
compensation on loss of office. There are no restrictions on transfers of the Company’s Ordinary Shares held by the Directors
or any special rights attached to such shares.
Performance
The chart below shows the performance of the Company’s share price by comparison to the Solactive Hydrogen Economy
Index on a total return basis. The Company does not have a specific benchmark but has deemed the Solactive Hydrogen
Economy Index to be the most appropriate as at least 60% of the companies included in the index generate 100% of their
revenue from clean Hydrogen.
Total return performance
HGEN Share Price vs NAV from date of listing to 31 December 2023
Total return performance
HydrogenOne NAV/share vs listed hydrogen shares (SOLGHYD)
20
30
40
50
60
70
80
90
100
110
120
130
07/29/21 09/26/21 11/24/21 01/22/22 03/22/22 05/20/22 07/18/22 09/15/22 11/13/22 01/11/23 03/11/23 05/09/23 07/07/23 09/04/23 11/02/23 12/31/23
HGEN Share Price SOLGHYD Index HGEN NAVPS
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HydrogenOne Capital Growth plc Annual Report 2023
Directors’ emoluments for the year (Audited)
The Directors who served during the year received the following remuneration for qualifying services, commencing from the
date of their appointment. The comparative period is for the year to the 31 December 2022.
2023 2022
Fees
£
Taxable
benefits
£
Total
£
Fees
£
Taxable
benefits
£
Total
£
Simon Hogan 68,250 – 68,250 65,000 – 65,000
David Bucknall
1
– – – – – –
Abigail Rotheroe
2
47,250 – 47,250 40,096 – 40,096
Afkenel Schipstra
3
57,750 4,856 62,606 52,282 2,261 54,543
Caroline Cook
4
– – – 14,808 342 15,150
Total 173,250 4,856 178,106 172,186 2,603 174,789
1. MrBucknallisnotremuneratedforhisservices.
2. AppointedChairoftheRemunerationandManagementEngagementCommittees7April2022.
3. AppointedChairoftheAuditandRiskandValuationCommittees7April2022.
4. Resigned7April2022.
There are no other taxable benefits payable by the
Company other than certain expenses which may be
deemed to be taxable such as travel expenses. None of the
above fees were paid to third parties.
Annual percentage change in Directors’ remuneration
(unaudited)
The following table sets out the annual percentage change
in Directors’ fees for the years ending 31 December 2022
and 31 December 2023. Directors’ fees were unchanged in
the period from inception to 31 December 2021.
% change from
2022 to 2023
% change from
2021 to 2022
Simon Hogan 5.0 72.8
David Bucknall
1
– –
Abigail Rotheroe
2
17.8 –
Afkenel Schipstra
3
10.5 89.2
Relative importance of spend on pay
The following table sets out the total level of Directors’
remuneration compared to the distributions to shareholders
by way of dividends and share buybacks, and the
management fees and other expenses incurred by the
Company during the year to 31 December 2023 (see
Statement of Comprehensive Income). The comparative
period is for the year to 31 December 2022.
2023
£’000
2022
£’000
Spend on Directors’ fees 178,106 174,789
Management fees and other
expenses
1,540,000 1,502,000
Dividends paid to shareholders – –
The disclosure of the information in the above table is
required under The Large and Medium-sized Companies
and Groups (Accounts and Reports) (Amendment)
Regulations 2013 with the exception of management fees
and other expenses which have been included to show the
total operating expenses of the Company.
Directors’ holdings (Audited)
At 31 December 2023 and at the date of this report the
Directors had the following holdings in the Company. All
holdings were beneficially owned.
Ordinary Shares at
31 Dec 2023
Ordinary Shares at
17 April 2024
Simon Hogan 40,000 40,000
David Bucknall – –
Abigail Rotheroe 10,000 10,000
Afkenel Schipstra 10,100 10,100
Statement
On behalf of the Board and in accordance with Part 2 of
Schedule 8 of the Large and Medium-sized Companies and
Groups (Accounts and Reports) (Amendment) Regulations
2013, I confirm that the above Remuneration Report and
Remuneration Policy summarises, as applicable, for the year
to 31 December 2023:
1. the major decisions on Directors’ remuneration;
2. any substantial changes relating to Directors’
remuneration made during the year; and
3. the context in which the changes occurred and decisions
have been taken.
Abigail Rotheroe
Chair of the Remuneration Committee
17 April 2024
Directors’ Remuneration
Implementation Report
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview Strategic Report Governance Financial statements
Other information
Report of the Audit and Risk Committee
As Chairman of the Audit and Risk Committee (the “Committee”), I am pleased to present
the Committee’s report to shareholders for the year ended 31 December 2023.
The Audit and Risk Committee
Composition
All of the Directors, except David Bucknall, are members
of the Committee. In accordance with the UK Code, the
Chairman of the Board should not be a member. However,
the AIC Code permits the Chairman of the Board to be
a member of, but not chair the Committee if they were
independent on appointment – which the Chairman was
and continues to be. In view of the size of the Board, the
Directors feel it is appropriate for him to continue as a
member, so that the Committee can continue to benefit
from his experience and knowledge.
The members of the Committee consider that they have the
requisite skills and experience to fulfil the responsibilities of
the Committee. The Committee considers that at least one
of its members has recent and relevant financial experience
and competence relevant to the sector in which the
Company operates.
Role and responsibilities
The main role and responsibilities of the Committee are
set out in the Committee’s terms of reference. The terms
are updated annually and are available on the Company’s
website or on request from the Company Secretary.
The Committee meets formally at least twice a year for the
purpose, amongst other things, of advising the Board on
the appointment, effectiveness, independence, objectivity
and remuneration of the external auditor. The Committee
monitors the integrity of the Financial Statements of the
Company and any formal announcements relating to the
Company’s financial performance, reviewing significant
financial reporting judgements contained in them. The
Committee also reviews the Company’s risk management,
internal financial controls and internal control systems
and reviews the Investment Adviser’s whistleblowing
arrangements. The provision of non-audit services by
the auditor are reviewed against the Committee’s policy
described overleaf.
Meetings
There were three Committee meetings during the year
ended 31 December 2023. In addition, the Committee met
the auditor, without any other party present, for a private
discussion and the Chairman of the Committee met with the
auditor prior to the Audit Committee meeting in March 2024.
Financial statements and significant accounting
matters
The Committee reviewed the Financial Statements and
considered the following significant accounting matters in
relation to the Company’s Financial Statements for the year
ended 31 December 2023.
Valuation of Private Hydrogen Assets investments
The Company’s investment through the Limited Partnership
at 31 December 2023 was £125,861,528 representing a
substantial portion of the Company’s net assets and as
such is the biggest factor in relation to the accuracy of
the Financial Statements. The valuation of the Company’s
Private Hydrogen Assets held through the Limited
Partnership is the most material matter in the production of
the Financial Statements.
The Board has appointed a Valuation Committee which sets
out the valuation policies and process. The Committee met
four times during the year to review the valuations at each
quarter end date. The process includes considering and
approving valuations or valuation methodology made by
the Investment Adviser and provided to the AIFM, using fair
market valuations of the Listed and Private Hydrogen Assets
on a quarterly basis as at 31 March, 30 June, 30 September
and 31 December each year. The valuation principles used
to calculate the fair value of the Private Hydrogen Assets are
based on IPEV Guidelines.
For Private Hydrogen Assets, as the Company typically
invests in early stage, pre or early revenue investments,
a number of valuation methodologies in line with IPEV
Guidelines have been considered and employed to value
the investments including the discounted cash flow
methodology, the value of the loan principal plus accrued
interest for loans to Project Development companies or
a scenario based valuation incorporating DCF, indicative
offers and net asset values. The Valuation Committee
reviewed and approved the appropriateness of the valuation
methodology employed and the assumptions made in
the calculation of the fair value of each of the Private
Hydrogen Assets. Details of the valuation methodology and
assumptions used for each of the Private Hydrogen Assets
at 31 December 2023 are given in note 3 to the Financial
Statements.
The Audit and Risk Committee reviewed, along with the
Valuation Committee, the procedures in place for ensuring
the appropriate valuation of investments and approved the
valuation of the Company’s Private Hydrogen Assets at the
year end with the Investment Adviser and AIFM.
Emerging risks
The Committee considered the risks and economic impacts
including higher inflation and interest rates arising from the
Russian invasion of Ukraine and war in the Middle East, on
the Company’s ability to continue in operation and impact
on the Company’s portfolio and concluded that these
had been properly reflected in the portfolio companies
valuations and the Company’s Financial Statements.
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HydrogenOne Capital Growth plc Annual Report 2023
As part of the annual report review, the Committee:
• obtained assurances from the Investment Adviser and
the Administrator that the Financial Statements had been
prepared appropriately;
• reviewed the consistency of, and any changes to,
accounting policies;
• reviewed the tax compliance of the Company during
the year with the eligibility conditions and ongoing
requirements in order for investment trust status to be
maintained;
• reviewed the Company’s financial resources and
concluded that it is appropriate for the Company’s
Financial Statements to be prepared on a going concern
basis as described in the Directors’ Report on page 61;
• considered the risk to the Company from economic
conditions such as higher interest rates and inflationary
pressures and market volatility arising from the ongoing
wars in Ukraine and the Middle East. The Board and
the Investment Adviser have reviewed the investment
portfolio and identified limited direct impact on the
portfolio but continue to monitor any impact to the
Company, the Group, its investee companies and overall
valuations; and
• concluded that the Annual Report for the year ended
31December 2023, taken as a whole, is fair, balanced
and understandable and provides the information
necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
The Committee reached this conclusion through a
process of review of the document and enquiries to the
various parties involved in the production of the Annual
Report, and the external auditor’s report thereon.
The Committee reported the results of this work, including
its assessment that the Annual Report is fair, balanced and
understandable, to the Board.
External auditor
This year’s audit was the third conducted by KPMG Channel
Islands Limited (“KPMG”) and by David Alexander as audit
Director, since KPMG was selected as the Company’s
auditor at the Company’s launch and formal appointment
on 15 June 2021. The appointment of the auditor is reviewed
annually by the Audit and Risk Committee and the Board
and is subject to approval by Shareholders. In accordance
with the FRC guidance, the audit will be put out to tender
within ten years of the initial appointment of KPMG.
Additionally, the audit Director must be rotated every five
years and is next eligible for rotation in 2026.
Effectiveness of audit
The Committee reviewed the audit planning and the
standing, skills and experience of the firm and the audit
team. The Committee also considered the independence
of KPMG and the objectivity of the audit process. KPMG has
confirmed that it is independent of the Company and has
complied with relevant auditing standards. No modifications
were required to the external audit approach. The Audit
Plan was presented to the Audit and Risk Committee at
its November 2023 Committee meeting, ahead of the
commencement of the Company’s year end audit. The
Audit Plan set out the audit process, materiality scope and
significant risks. A presentation of the results of the audit
following completion of the main audit testing was provided
at the March 2024 meeting. Additionally, the Committee
received feedback from the Investment Adviser and
Administrator regarding the effectiveness of the external
audit process.
The Audit Quality Review Team of the FRC performed a
review of the audit of the Company for the year ended
31December 2022 for which there were no significant
findings. In the opinion of the Audit & Risk Committee, the
outcome was satisfactory, which provides further comfort
on the quality of KPMG’s audit process.
The Committee is satisfied that KPMG has provided
effective independent challenge in carrying out its
responsibilities. After due consideration, the Committee
recommended the reappointment of KPMG and a resolution
will be put forward to the Company’s shareholders at the
2024 AGM.
Provision of non-audit services
The Committee has put in place a policy on the supply of
any non-audit services provided by the external auditor.
Non-audit services are considered on a case-by-case
basis and may only be provided to the Company if such
services meet the requirements of the FRC’s Revised Ethical
Standard 2019, including: at a reasonable and competitive
cost; do not constitute a conflict of interest for the auditor;
and all non-audit services must be approved in advance.
Nonon-audit services were provided to the Company
during the year to 31 December 2023.
Internal audit
The Audit and Risk Committee has considered the need
for an internal audit function and considers that this is not
appropriate given the nature and circumstances of the
Company as an externally managed investment company
with external service providers. The Audit and Risk
Committee keeps the need for an internal audit function
under periodic review.
Afkenel Schipstra
Audit and Risk Committee Chairman
17 April 2024
Report of the Audit and Risk Committee
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview Strategic Report Governance Financial statements
Other information
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual
Report and the Group and Parent Company Financial
Statements in accordance with applicable laws
andregulations.
Company law requires the Directors to prepare Group and
Parent Company financial statements for each financial
year. Under that law they are required to prepare the Group
Financial Statements in accordance with UK-adopted
international accounting standards and applicable law and
have elected to prepare the parent Company financial
statements on the same basis.
Under company law the Directors must not approve the
Financial Statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
Parent Company and of the Group’s profit or loss for that
year. In preparing each of the Group and Parent Company
Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates which are reasonable
relevant and reliable;
• state whether they have been prepared in accordance
with UK-adopted international accounting standards;
• assess the Group and Parent Company’s ability to
continue as a going concern, disclosing, as applicable,
matters related to going concern; and
• use the going concern basis of accounting unless
they either intend to liquidate the Group or the Parent
Company or to cease operations, or have no realistic
alternative but to do so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and which disclose with
reasonable accuracy at any time the financial position of
the Company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They are
responsible for such internal control as they determine is
necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking
such steps as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the Directors are
also responsible for preparing a Strategic Report, Directors’
Report, Directors’ Remuneration Report and Corporate
Governance Statement that complies with that law and
those regulations.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the company’s website. Legislation in the UK governing
the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in
respect of the annual report
The Directors each confirm to the best of their knowledge
that:
• the Financial Statements, prepared in accordance with
the applicable set of accounting standards, give a true
and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
• the Strategic Report includes a fair review of the
development and performance of the business and the
position of the issuer and the undertakings included
in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that
they face.
The Directors consider the annual report and accounts,
taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders
to assess the Group’s position and performance, business
model and strategy.
For and on behalf of the Board
Simon Hogan
Chairman
17 April 2024
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Independent auditor’s report
to the members of HydrogenOne Capital Growth plc
Our opinion is unmodified
We have audited the parent and consolidated financial statements of HydrogenOne Capital Growth plc (the “Company”) and
its subsidiary (together, the “Group”), which comprise the parent and consolidated statement of financial position as at 31
December 2023, parent and consolidated statements of comprehensive income, changes in equity and cash flows for the
year then ended, and notes, comprising material accounting policies and other explanatory information.
In our opinion, the accompanying parent and consolidated financial statements:
•
give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2023 and of the Group’s
and the Company’s profit for the year then ended;
• are properly prepared in accordance with UK-adopted international accounting standards; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate
basis for our opinion. Our audit opinion is consistent with our report to the audit committee.
We were first appointed as auditor by the Directors on 15 June 2021. The period of total uninterrupted engagement is for
the three financial years ended 31 December 2023. We have fulfilled our ethical responsibilities under, and we remain
independent of the Company and Group in accordance with, UK ethical requirements including the FRC Ethical Standard as
applied to public interest entities. No non-audit services prohibited by that standard were provided.
Key audit matters: our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the parent
and consolidated financial statements and include the most significant assessed risks of material misstatement (whether or
not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit matters
(unchanged from 2022), in arriving at our audit opinion above, together with our key audit procedures to address those
matters and, as required for public interest entities, our results from those procedures. These matters were addressed, and
our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the parent and
consolidated financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that
opinion, and we do not provide a separate opinion on these matters.
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Company Overview Strategic Report Governance Financial statements
Other information
Key audit matter The risk Our response
Valuation of Private
Hydrogen Assets held
through HydrogenOne
Capital Growth
Investments (1) LP (the
“Limited Partnership”)
£126,206,000; (2022
£103,115,000)
Refer to the Report of the
Audit and Risk Committee
(page 69), note3 (material
accounting policies), note4
(investments held at fair
value through profit or
loss) and note 15 (financial
instruments and capital
disclosures).
Basis:
The Group and Company’s investment in the
Limited Partnership is carried at fair value
through profit or loss and represents a significant
proportion of the Group and Company’s net
assets. The fair value of the Limited Partnership
has been determined as its net asset value,
the most significant component of which is
its underlying portfolio of non-controlling
positions in unquoted hydrogen assets valued
at £126,206,000 (2022: 103,115,000) (“Private
Hydrogen Assets”).
As Private Hydrogen Assets are unquoted and
illiquid, their fair values are determined through
the application of valuation techniques. The
application of valuation techniques requires
the exercise of judgements in relation to the
selection of the valuation technique employed
and the assumptions and data used in their
application.
For the year ended 31 December 2023, Private
Hydrogen Assets are valued, in accordance
with the International Private Equity and Venture
Capital Valuation 2022 (“IPEV”) Guidelines using
the approach laid out in the “Valuation of the
Limited Partnership” policy on pages 88 to 89,
utilising either a discounted cash flow (“DCF”)
technique; a probability weighted technique; or
a cost plus accrued interest technique, (each a
“Valuation Model”).
Risk:
The valuation of Private Hydrogen Assets is a
significant risk area of our audit given that they
represent a substantial portion of the Group and
Company’s net assets, and the selection and
application of valuation techniques requires the
exercise of judgements.
The judgements inherent in the valuation
approach may also expose the valuation of
Private Hydrogen Assets to management bias.
Therefore, there is a risk of material misstatement
through error as well as a potential for fraud
through possible management bias.
We determined that the valuation of Private
Hydrogen Assets have a high degree of
estimation uncertainty giving rise to a potential
range of reasonable outcomes greater than
our materiality for the financial statements as
a whole. The financial statements disclose in
note4 the sensitivities estimated by the Group
and Company.
Our audit procedures included:
Control evaluation
We assessed the design and implementation
of the Valuation Committee’s review control in
relation to the valuation of Private Hydrogen
Assets.
Challenging management’s valuation
approach
For each of the Private Hydrogen Assets, with the
support of our KPMG valuation specialist, we:
• held discussions with the Investment Adviser
to understand the valuation approach; and
• assessed and challenged the
appropriateness of the valuation approach
applied for compliance with IPEV.
Valuation Model integrity, inputs and
assumptions
For each of the Private Hydrogen Assets, we:
• tested the Valuation Model for mathematical
accuracy including but not limited to material
formula errors;
• corroborated material inputs used in
the Valuation Model to supporting
documentation;
• assessed and challenged the reasonableness
of the assumptions applied in the Valuation
Model; and
• with the support of our KPMG valuation
specialist, for those valued utilising a DCF
technique, benchmarked the discount rate
and key macro-economic assumptions
applied in the Valuation Model to observable
market data and our KPMG valuation
specialist’s experience in valuing similar
investments.
Assessing disclosures
We considered the appropriateness of the Group
and Company’s investment valuation policies
and the adequacy of the Group and Company’s
disclosures in relation to the use of estimates and
judgements in arriving at fair value.
We assessed whether the disclosures around
the sensitivities to changes in key assumptions
reflect the risks inherent in the valuation of the
Private Hydrogen Assets.
Our results
As a result of our procedures, we found the
valuation of Private Hydrogen Assets and related
disclosures to be acceptable.
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Our application of materiality and an overview of the scope of our audit
Materiality for the parent and consolidated financial statements as a whole was set at £2,590,000, determined with reference
to a benchmark of net assets of £132,670,000, of which it represents approximately 2.0% (2022: 2.0%).
In line with our audit methodology, our procedures on individual account balances and disclosures were performed to
a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material amount across the parent and consolidated financial
statements as a whole. Performance materiality for the Group and the Company was set at 75% (2022: 75%) of materiality for
the parent and consolidated financial statements as a whole, which equates to £1,940,000. We applied this percentage in
our determination of performance materiality because we did not identify any factors indicating an elevated level of risk.
We reported to the Audit and Risk Committee any corrected or uncorrected identified misstatements exceeding £129,000, in
addition to other identified misstatements that warranted reporting on qualitative grounds.
Our audit of the Group and Company was undertaken to the materiality level specified above, which has informed our
identification of significant risks of material misstatement and the associated audit procedures performed in those areas as
detailed above.
Going concern
The directors have prepared the parent and consolidated financial statements on the going concern basis as they do not
intend to liquidate the Group or the Company or to cease their operations, and as they have concluded that the Group and
the Company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties
that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of
approval of the parent and consolidated financial statements (the “going concern period”).
In our evaluation of the directors’ conclusions, we considered the inherent risks to the Group and the Company’s business
model and analysed how those risks might affect the Group and the Company’s financial resources or ability to continue
operations over the going concern period. The risk that we considered most likely to affect the Group and the Company’s
financial resources or ability to continue operations over this period was the availability of capital to meet operating costs and
other financial commitments.
We considered whether this risk could plausibly affect the liquidity in the going concern period by comparing severe, but
plausible downside scenarios that could arise from this risk individually and collectively against the level of available financial
resources indicated by the Company’s financial forecasts.
We considered whether the going concern disclosure in note 2 to the financial statements gives a full and accurate
description of the directors’ assessment of going concern.
Our conclusions based on this work:
• we consider that the directors’ use of the going concern basis of accounting in the preparation of the parent and
consolidated financial statements is appropriate;
• we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to
events or conditions that, individually or collectively, may cast significant doubt on the Group and the Company’s ability to
continue as a going concern for the going concern period; and
• we have nothing material to add or draw attention to in relation to the directors’ statement in the notes to the parent and
consolidated financial statements on the use of the going concern basis of accounting with no material uncertainties that
may cast significant doubt over the Group and the Company’s use of that basis for the going concern period, and that
statement is materially consistent with the parent and consolidated financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee
that the Group and the Company will continue in operation.
Independent auditor’s report
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Company Overview Strategic Report Governance Financial statements
Other information
Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
• enquiring of management as to the Group’s policies and procedures to prevent and detect fraud as well as enquiring
whether management have knowledge of any actual, suspected or alleged fraud;
• reading minutes of meetings of those charged with governance; and
• using analytical procedures to identify any unusual or unexpected relationships.
As required by auditing standards, and taking into account possible incentives or pressures to misstate performance and
our overall knowledge of the control environment, we perform procedures to address the risk of management override of
controls, in particular the risk that management may be in a position to make inappropriate accounting entries, and the risk
of bias in accounting estimates such as valuation of Private Hydrogen Assets. On this audit we do not believe there is a fraud
risk related to revenue recognition because the Group and Company’s revenue streams are simple in nature with respect to
accounting policy choice, and are easily verifiable to external data sources or agreements with little or no requirement for
estimation from management. We did not identify any additional fraud risks.
We performed procedures including:
• identifying journal entries and other adjustments to test based on risk criteria and comparing any identified entries to
supporting documentation;
• incorporating an element of unpredictability in our audit procedures; and
• assessing significant accounting estimates for bias
Further detail in respect of valuation of Private Hydrogen Assets is set out in the key audit matter section of this report.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the parent and
consolidated financial statements from our sector experience and through discussion with management (as required by
auditing standards), and from inspection of the Group’s regulatory and legal correspondence, if any, and discussed with
management the policies and procedures regarding compliance with laws and regulations. As the Group is regulated, our
assessment of risks involved gaining an understanding of the control environment including the entity’s procedures for
complying with regulatory requirements.
The Group is subject to laws and regulations that directly affect the parent and consolidated financial statements including
financial reporting legislation and taxation legislation and we assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial statement items.
The Group is subject to other laws and regulations where the consequences of non-compliance could have a material
effect on amounts or disclosures in the parent and consolidated financial statements, for instance through the imposition of
fines or litigation or impacts on the Group and the Company’s ability to operate. We identified financial services regulation
as being the area most likely to have such an effect, recognising the regulated nature of the Group’s activities and its legal
form. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to
enquiry of management and inspection of regulatory and legal correspondence, if any. Therefore if a breach of operational
regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material
misstatements in the parent and consolidated financial statements, even though we have properly planned and performed
our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the parent and consolidated financial statements, the less likely
the inherently limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
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Other information
The directors are responsible for the other information, which comprises the strategic report, the directors’ report and the
other information included in the annual report, but does not include the parent and consolidated financial statements
and our auditor’s report thereon. Our opinion on the parent and consolidated financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our parent and consolidated
financial statements audit work, the information therein is materially misstated or inconsistent with the parent and
consolidated financial statements or our audit knowledge. Based solely on that work:
• we have not identified material misstatements in the other information;
• in our opinion the information given in the strategic report and the directors’ report for the financial year is consistent with
the parent and consolidated financial statements; and
• in our opinion those reports have been prepared in accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Implementation Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Disclosures of emerging and principal risks and longer term viability
We are required to perform procedures to identify whether there is a material inconsistency between the directors’
disclosures in respect of emerging and principal risks and the viability statement, and the parent and consolidated financial
statements and our audit knowledge. We have nothing material to add or draw attention to in relation to:
• the directors’ confirmation within the viability statement (page 55) that they have carried out a robust assessment of the
emerging and principal risks facing the Group, including those that would threaten its business model, future performance,
solvency or liquidity;
• the emerging and principal risks disclosures describing these risks and explaining how they are being managed or
mitigated;
• the directors’ explanation in the viability statement (page 55) as to how they have assessed the prospects of the Group,
over what period they have done so and why they consider that period to be appropriate, and their statement as to
whether they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities
as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.
We are also required to review the viability statement, set out on page 55 under the Listing Rules. Based on the above
procedures, we have concluded that the above disclosures are materially consistent with the consolidated financial
statements and our audit knowledge.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material inconsistency between the directors’ corporate
governance disclosures and the parent and consolidated financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is materially consistent with the parent and
consolidated financial statements and our audit knowledge:
• the directors’ statement that they consider that the annual report and parent and consolidated financial statements taken
as a whole is fair, balanced and understandable, and provides the information necessary for shareholders to assess the
Group and Company’s position and performance, business model and strategy;
• the section of the annual report describing the work of the Audit and Risk Committee, including the significant issues that
the Audit and Risk Committee considered in relation to the financial statements, and how these issues were addressed;
and
• the section of the annual report that describes the review of the effectiveness of the Group and Company’s risk
management and internal control systems.
We are required to review the part of Corporate Governance Statement relating to the Group and Company’s compliance
with the provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to
report in this respect.
Independent auditor’s report
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Company Overview Strategic Report Governance Financial statements
Other information
We have nothing to report on other matters on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if, in our opinion:
• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches
not visited by us; or
• the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 71, the directors are responsible for: the preparation of the parent
and consolidated financial statements including being satisfied that they give a true and fair view; such internal control as
they determine is necessary to enable the preparation of parent and consolidated financial statements that are free from
material misstatement, whether due to fraud or error; assessing the Group and Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless
they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the parent and consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report.
Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of the parent and consolidated financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The purpose of this report and restrictions on its use by persons other than the Company’s members
as a body
This report is made solely to the Company’s members, as a body, in accordance with chapter 3 of part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company and its members, as a body, for our audit work, for this
report, or for the opinions we have formed.
David Alexander (Senior Statutory Auditor)
For and on behalf of KPMG Channel Islands Limited (Statutory
Auditor)
Chartered Accountants
Guernsey
1
7
April 2024
Financial
statements
79 Parent and consolidated statement of comprehensive income
80 Parent and consolidated statement of financial position
81 Parent and consolidated statement of changes in equity
82 Parent and consolidated statement of cash flows
83 Notes to the parent and consolidated financial statements
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HydrogenOne Capital Growth plc Annual Report 2023
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79
HydrogenOne Capital Growth plc Annual Report 2023
Company Overview Strategic Report Governance Financial statements
Other information
Parent and consolidated
statement of comprehensive income
For the year ended 31 December 2023
Year ended 31 December 2023
Year ended 31 December 2022
RevenueCapitalTotalRevenueCapitalTotal
Notes£’000£’000£’000£’000£’000£’000
Gains on investments
4
–
9,150
9,150
–
3,177
3,177
(Losses)/gains on currency
movements
–
(5)
(5)
–
1
1
Gross investment gains
–
9,1 45
9,1 45
–
3,178
3,178
Income
5
212
–
212
97
–
97
Total gain
212
9,145
9 ,357
97
3,178
3,275
Investment Adviser fee
6
(144)
–
(144)
(343)
–
(343)
Other expenses
7
(1,396)
(500)
(1,896)
(1,159)
(219)
(1,378)
(Loss)/profit before finance
costs and taxation
(1,328)
8,645
7 ,317
(1,405)
2,959
1,554
Finance costs
–
–
–
–
–
–
Operating (loss)/profit before
taxation
(1,328)
8,645
7 ,317
(1,405)
2,959
1,554
Taxation
8
–
–
–
–
–
–
(Loss)/profit for the year
(1,328)
8,645
7 ,317
(1,405)
2,959
1,554
Return per Ordinary Share
(basic and diluted)
12
(1.03)p
6.71p
5.68p
(1.14)p
2.41p
1.27p
There is no other comprehensive income and therefore the ’(loss)/profit for the year’ is the total comprehensive income for
the year.
The total column of the above statement is the Parent and Consolidated Statement of Comprehensive Income,
including the return per Ordinary Share, which has been prepared in accordance with IFRS. The supplementary revenue
and capitalcolumns, including the return per Ordinary Share, are prepared under guidance from the Association of
InvestmentCompanies.
All revenue and capital items in the above statement derive from continuing operations. The notes on pages 83 to 108 form
an integral part of these Financial Statements.
HydrogenOne Capital Growth plc Annual Report 2023
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HydrogenOne Capital Growth plc Annual Report 2023
Parent and consolidated
statement of financial position
As at 31 December 2023
Notes
31 December31 December
20232022
£’000£’000
Assets
Non-current assets
Investments held at fair value through profit or loss
4
128,183
106,673
Current assets
Cash and cash equivalents
4,626
18,192
Trade and other receivables
9
51
641
Total current assets
4,677
18,833
Total assets
132,860
125,506
Current liabilities
Trade and other payables
10
(190)
(153)
Total liabilities
(190)
(153)
Net assets
132,670
125,353
Equity
Share capital
11
1,288
1,288
Share premium account
124,928
12 4,928
Capital reserve
9,992
1,347
Revenue reserve
(3,538)
(2,210)
Total equity
132,670
125,353
Net asset value per Ordinary Share
13
102.99p
97 .31p
Approved by the Board of Directors on and authorised for issue 17 April 2024 and signed on their behalf by:
Simon Hogan
Director
HydrogenOne Capital Growth plc is incorporated in England and Wales with registration number 13340859.
The notes on pages 83 to 108 form an integral part of these Financial Statements.
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview Strategic Report Governance Financial statements
Other information
Parent and consolidated
statement of changes in equity
For the year ended 31 December 2023
Notes
Share
SharepremiumCapitalRevenue
CapitalaccountreservereserveTotal
£’000£’000£’000£’000£’000
Opening balance as at 1 January 2023
1,288
12 4,928
1,347
(2,210)
125,353
Profit/(loss) for the year
–
–
8,645
(1,328)
7 ,317
Closing balance as at 31 December 2023
1,288
124,928
9,992
(3,538)
132,67 0
For the year ended 31 December 2022
Notes
Share
SharepremiumCapitalRevenue
CapitalaccountreservereserveTotal
£’000£’000£’000£’000£’000
Opening balance as at 1 January 2022
1 , 074
104,129
(1,612)
(805)
102,786
Issue of Ordinary Shares
11
214
21,255
–
–
21,469
Ordinary Share issue costs
–
(456)
–
–
(456)
Profit/(loss) for the year
–
–
2,959
(1,405)
1,554
Closing balance as at 31 December 2022
1,288
124,928
1,347
(2,210)
125,353
The notes on pages 83 to 108 form an integral part of these Financial Statements.
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HydrogenOne Capital Growth plc Annual Report 2023
Notes
Year endedYear ended
31 December31 December
20232022
£’000£’000
Cash flows from operating activities
Interest income
211
96
Dividend income
1
1
Management expenses
(2,040)
(1,734)
Foreign exchange (losses)/gains
(5)
1
Decrease/(increase) in trade and other receivables
590
(445)
Increase/(decrease) in trade and other payables
37
(93)
Net cash flow used in operating activities
(1,206)
(2,17 4)
Cash flows from investing activities
Purchase of investments
(12,472)
(36,718)
Sale of investments
112
2,052
Net cash flow used in investing activities
(12,360)
(34,666)
Cash flows from financing activities
Proceeds from issue of Ordinary Shares
11
–
21,469
Ordinary Share issue costs
11
–
(456)
Net cash flow from financing activities
–
21,013
Decrease in cash and cash equivalents
(13,566)
(15,827)
Cash and cash equivalents at start of year
18,192
34,019
Cash and cash equivalents at end of year
4,626
18,192
The notes on pages 83 to 108 form an integral part of these Financial Statements.
Parent and consolidated
statement of cash flows
For the year ended 31 December 2023
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview
Strategic Report Governance Financial statements
Other information
1. General information
Company information
HydrogenOne Capital Growth plc (the “Company” or “Parent”) was incorporated in England and Wales on 16 April 2021
with registered number 13340859 as a public company limited by shares and is an investment company within the terms
of Section 833 of the Companies Act 2006 (the “Act”). The Company is listed and began trading on the Main Market of
the London Stock Exchange and was admitted to the premium segment of the Official List on 30 July 2021 (the “IPO”).
The Company has applied for and been accepted as an approved investment trust under sections 1158 and 1159 of the
Corporation Tax Act 2010 and Part 2 Chapter 1 of Statutory Instrument 2011/2999.
FundRock Management Company (Guernsey) Limited acts as the Company’s Alternative Investment Fund Manager (“AIFM”).
Apex Listed Companies Services (UK) Limited (the “Company Secretary and Administrator”) provides administrative and
company secretarial services to the Company.
The Company’s Investment Adviser is HydrogenOne Capital LLP.
The Company’s registered office is 6th Floor, 125 London Wall, London, EC2Y 5AS.
Investment objective
The Company’s investment objective is to deliver an attractive level of capital growth by investing, directly or indirectly, in
a diversified portfolio of hydrogen and complementary hydrogen focussed assets whilst integrating core environmental,
social and governance (“ESG”) principles into its decision making and ownership process.
Company structure
The Company makes its investments in unquoted Hydrogen Assets (“Private Hydrogen Assets”) through HydrogenOne
Capital Growth Investments (1) LP (the “Limited Partnership”), in which the Company is the sole Limited Partner. The Limited
Partnership registered as a private fund limited partnership in England and Wales under the Limited Partnerships Act 1907
with registered number LP021814. The Limited Partnership has been established pursuant to the Limited Partnership
Agreement dated 5 July 2021 as amended and restated on 26 November 2021 (the “Limited Partnership Agreement”)
in order to make investments pursuant to the investment policy of the Limited Partnership. The Limited Partnership’s
investment policy and restrictions are consistent with the Company’s investment policy and restrictions for Private
Hydrogen Assets.
The General Partner of the Limited Partnership is HydrogenOne Capital Growth (GP) Limited (the “General Partner”), a wholly
owned subsidiary of the Company. The General Partner was incorporated in England and Wales on 19 May 2021 with
company registered number 13407844. The General Partner undertakes the responsibility for the management, operation
and administration of the business and affairs of the Limited Partnership. The General Partner’s Profit Share for each
accounting period shall be an amount equal to 1.5% per annum of the prevailing NAV of the Limited Partnership, which shall
be allocated to the General Partner as a first charge on the profits of the Limited Partnership. For so long as the Company is
the sole Limited Partner, the General Partner’s Profit Share shall be allocated and distributed to the Company rather than the
General Partner.
The carried interest partner of the Limited Partnership is HydrogenOne Capital Growth (Carried Interest) LP (the “Carried
Interest Partner”) which, in certain circumstances, will receive carried interest on the realisation of Private Hydrogen Assets
by the Limited Partnership. The Carried Interest Partner has been set up for the benefit of the principals of the Investment
Adviser. Further details of the carried interest fees payable to the Carried Interest Partner are given in Note 6 to the
Financial Statements.
Private Hydrogen Assets
The Company invests via the Limited Partnership in Private Hydrogen Assets, which may be operational companies or
hydrogen projects. Investments are mainly in the form of equity, although investments may be made by way of debt and/
or convertible securities. The Company may acquire a mix of controlling and non-controlling interests in Private Hydrogen
Assets, however the Company invests principally in non-controlling positions (with suitable minority protection rights to, inter
alia, ensure that the Private Hydrogen Assets are operated and managed in a manner that is consistent with the Company’s
investment policy).
Notes to the parent and consolidated
financial statements
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HydrogenOne Capital Growth plc Annual Report 2023
Notes to the parent and consolidated
financial statements
The Company acquires Private Hydrogen Assets via the Limited Partnership. In due course, the Company may acquire
Private Hydrogen Assets directly or by way of holdings in special purpose vehicles or intermediate holding entities (including
successor limited partnerships established on substantially the same terms as the Limited Partnership) or, if the Company
is considered a ‘feeder fund’ under the Listing Rules, other undertakings advised by the Investment Adviser and, in such
circumstances, the investment policy and restrictions will also be applied on a look-through basis and such undertaking(s)
will also be managed in accordance with the Company’s investment policy.
Listed Hydrogen Assets
The Company also invests directly in quoted or traded Hydrogen Assets, which are predominantly equity securities but
may also be corporate debt and/or other financial instruments (“Listed Hydrogen Assets”). The Company has the ability to
invest in Listed Hydrogen Assets in any market or country with a market capitalisation (at the time of investment) of at least
US$100 million. The Company’s approach is to be a long-term investor and does not ordinarily adopt short-term trading
strategies.
Liquidity reserve
During the initial Private Hydrogen Asset investment period after a capital raise and/or a realisation of a Private Hydrogen
Asset, the Company intends to allocate the relevant net proceeds of such capital raise/realisation to cash (in accordance
with the Company’s cash management policy) and/or additional Listed Hydrogen Assets and related businesses pending
subsequent investment in Private Hydrogen Assets (the ‘’Liquidity Reserve’’).
The Company anticipates holding cash to cover the near-term capital requirements of the pipeline of Private Hydrogen
Assets and in periods of high market volatility.
2. Basis of preparation
The principal accounting policies are set out below:
Reporting entity
These Parent and Consolidated Financial Statements (the “Financial Statements”) present the results of both the Parent; and
the Parent and the General Partner (together referred to as the “Group”).
As at 31 December 2023, the statement of financial position of the General Partner consisted of issued share capital and
corresponding share capital receivable in the amount of £1 (2022:£1). The General Partner had no income, expenditure or
cash flows for the year (2022: nil).
Due to the immaterial balances of the General Partner there is no material difference between the results of the Parent and
the results of the Group. As a result, the Financial Statements as presented represent both the Parent’s and the Group’s
financial position, performance and cash flows.
Basis of accounting
The Financial Statements have been prepared in accordance with UK-adopted international accounting standards (“IFRS”)
and the applicable legal requirements of the Companies Act 2006.
The Financial Statements have also been prepared as far as is relevant and applicable to the Company and Group in
accordance with the Statement of Recommended Practice (‘SORP’) issued by the Association of Investment Companies
(“AIC”) in July 2022.
The Financial Statements are prepared on the historical cost basis, except for the revaluation of financial instruments
measured at fair value through profit or loss.
Fair value is the price that would be received on sale of an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or estimated
using another valuation technique. In estimating the fair value of an asset or liability, the Company and Group take into
account the characteristics of the asset or liability if market participants would take those characteristics into account when
pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these
Financial Statements is determined on such a basis.
The Financial Statements are presented in Pounds Sterling because that is the currency of the primary economic
environment in which the Company and Group operate.
The principal accounting policies adopted are set out below. These policies are consistently applied.
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Company Overview
Strategic Report Governance Financial statements
Other information
Accounting for subsidiaries
The Board of Directors has determined that the Company has all the elements of control as prescribed by IFRS 10 in
relation to:
1. the Limited Partnership; as the Company is the sole limited partner in the Limited Partnership (100% of the Limited
Partnership’s commitments are held by the Company), is exposed to and has rights to the returns of the Limited
Partnership, and has the ability through its control of the General Partner to affect the amount of its returns from the
Limited Partnership; and
2. the General Partner; as the Company wholly owns the General Partner, is exposed to and has rights to the returns of the
General Partner and has the ability through its control of the General Partner’s activities to affect the amount of its returns
from the General Partner.
The Investment entities exemption requires that an investment entity that has determined that it is a parent under IFRS 10
shall not consolidate certain of its subsidiaries; instead, it is required to measure its investment in these subsidiaries at fair
value through profit or loss in accordance with IFRS 9. The criteria which define an investment entity are as follows:
(i) the company obtains funds from one or more investors for the purpose of providing those investors with investment
management services;
(ii) the company commits to its investors that its business purpose is to invest funds solely for returns from capital
appreciation, investment income, or both; and
(iii) the company measures and evaluates the performance of substantially all of its investments on a fair value basis.
The Company is an investment company, providing investors exposure to a diversified portfolio of hydrogen and
complementary hydrogen focussed assets that are managed for investment purposes. The investments were made in line
with the stated objective of the Company to deliver an attractive level of capital growth in accordance with the strategy that
has been set by the Directors.
In assessing whether the Company meets the definition of an investment entity set out in IFRS 10 the Directors’ note that:
(i) the Company has multiple investors with shares issued publicly on the London Stock Exchange and obtains funds
from a diverse group of shareholders who would otherwise not have access individually to investing in hydrogen
focussed assets;
(ii) the Company’s purpose is to invest funds for capital appreciation but with potential for some investment income.
The Limited Partnership has a ten-year life however the underlying assets have minimal residual value because they do
not have unlimited lives, are not to be held indefinitely and have appropriate exit strategies in place; and
(iii) the Company measures and evaluates the performance of all of its investments on a fair value basis which is the most
relevant for investors in the Company. The Directors use fair value information as a primary measurement to evaluate the
performance of all of the investments and in decision making.
The Directors assess each new investment carefully to determine whether the Company as a whole continues to meet the
definition of an investment entity.
The Board of Directors has determined that the Company meets all the typical characteristics of an investment entity and
therefore meets the definition set out in IFRS 10.
Accounting for the Limited Partnership
The Limited Partnership serves as an asset holding entity and does not provide investment-related services. Therefore, when
the Limited Partnership is assessed based on the overall structure as a means of carrying out the Company’s activities, the
Board of Directors has determined that the Limited Partnership meets the definition of an investment entity. Accordingly,
the Company is required under IFRS 10 to hold its investment in the Limited Partnership at fair value through the Statement
of Comprehensive Income rather than consolidate them. The Company has determined that the fair value of the Limited
Partnership is its net asset value and has concluded that it meets the definition of an unconsolidated subsidiary under
IFRS 12 and has made the necessary disclosures in these Financial Statements.
Accounting for the General Partner
The General Partner provides investment related services to the Limited Partnership on behalf of the Company. IFRS 10
requires subsidiaries that provide services that relate to the investment entity’s investment activities to be consolidated.
Accordingly, the Company is required under IFRS 10 to consolidate the results of the General Partner.
The Directors agree that the investment entity accounting treatment outlined above appropriately reflects the Company’s
activities as an investment trust and provides the most relevant information to investors.
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HydrogenOne Capital Growth plc Annual Report 2023
Notes to the parent and consolidated
financial statements
Going concern
The Directors consider that it is appropriate to adopt the going concern basis in preparing the Financial Statements. In reaching
this conclusion, the Directors considered the income and expense projections and the liquidity of the investment portfolio, and
considered the impact to the Company and portfolio of investments from the economic conditions such as higher interest rates
and inflationary pressures and market volatility arising from the ongoing wars in Ukraine and the Middle East.
The Company and Group continue to meet day-to-day liquidity needs through its cash resources. The Company and Group
had at 31 December 2023 unrestricted cash of £4.6 million (2022: £18.2 million) as well as £2.3 million (2022: £3.7 million) in
Listed Hydrogen Assets. The Company and Group’s net assets at 31 December 2023 were £132.7 million (2022: £125.4 million)
and total expenses for the year ended 31 December 2023 were £2.0 million (2022: £1.7 million), which represented
approximately 1.5% (2022: 1.5%) of the average net assets value of the Company in the year to 31 December 2023 of
£129.4 million (2022: £116.8 million).
At the date of approval of these Financial Statements, the Company and Group had cash resources of £4.0 million and annual
expenses are estimated to be £3.6 million.
The Directors also recognise that the continuation of the Company is subject to the approval of shareholders at the Annual
General Meeting (“AGM”) in 2026, and every fifth AGM thereafter. The Board has considered the long term prospects of the
Company and has no reason to believe that the continuation vote will fail.
Based on the foregoing, the Directors have adopted the going concern basis in preparing the Financial Statements. The
Directors have a reasonable expectation that the Company and Group have adequate operational resources to continue in
operational existence for at least twelve months from the date of approval of these Financial Statements.
Critical accounting judgements, estimates and assumptions
The preparation of Financial Statements in accordance with IFRS requires the Directors to make judgements, estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the Financial Statements and the reported amounts of income and expense during the period. Actual results could
differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision only affects that period or in the period and future
periods if the revision affects both current and future periods.
Judgements
Investment entity
In accordance with the Investment Entities exemption contained in IFRS 10, the Board has determined that the Company
satisfies the criteria to be regarded as an investment entity and that the Company provides investment related services and,
as a result, measures its investment in the Limited Partnership at fair value.
The Limited Partnership serves as an asset holding entity and does not provide investment-related services. Therefore, when
the Limited Partnership is assessed based on the overall structure as a means of carrying out the Company’s activities, the
Board of Directors has determined that the Limited Partnership meets the definition of an investment entity. Accordingly, the
Company is required under IFRS 10 to hold its investment in the Limited Partnership at fair value through the Statement of
Comprehensive Income rather than consolidate it.
The General Partner provides investment related services to the Limited Partnership on behalf of the Company. IFRS 10
requires subsidiaries that provide services that relate to the investment entity’s investment activities to be consolidated.
Accordingly, the Board of Directors have determined that the Company is required under IFRS 10 to consolidate the results
of the General Partner. As described in the Reporting Entity section, the Financial Statements as presented represent both
the Parent’s and the Group’s financial position, performance and cash flows.
These conclusions involved a degree of judgement and assessment as to whether the Company, the Limited Partnership
and the General Partner met the criteria outlined in the accounting standards.
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview
Strategic Report Governance Financial statements
Other information
Estimates
Investment valuations
The key estimate in the Financial Statements is the determination of the fair value of the Private Hydrogen Assets, held by
the Limited Partnership, by the Investment Adviser for consideration by the Directors. This estimate is key as it significantly
impacts the valuation of the Limited Partnership at the year end. The fair valuation process involves estimation using
subjective inputs that are unobservable (for which market data is unavailable). The key inputs considered in the valuation are
described in note 15.
New standards, interpretations and amendments adopted from 1 January 2023
Effective in the current financial year
The Board have assessed those new standards, interpretations, and/or amendments which became effective during the
financial year under review and concluded they have no material impact to the Company.
New standards and amendments issued but not yet effective
The relevant new and amended standards and interpretations that are issued, but not yet effective, up to the date of
issuance of the financial statements are disclosed below.
• Non-current Liabilities with Covenants – Amendments to IAS 1 and Classification of Liabilities as Current or Non-current –
Amendments to IAS 1
• Lease Liability in a Sale and Leaseback – Amendments to IFRS 16
• Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7
• IFRS S1* General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2* Climate-related
Disclosures
*Adoption by the UK to be confirmed
The Board have assessed new but not yet effective standards applicable to the Company and have concluded that they will
not have a material impact to the Company.
3. Material accounting policies
(a) Financial instruments
Financial assets – Classification, recognition, derecognition and measurement
The Company and Group’s financial assets principally comprise of: investments held at fair value through profit or loss (Listed
Hydrogen Assets and the Limited Partnership); and trade and other receivables, which are initially recognised at fair value
and subsequently measured at amortised cost.
Financial assets are recognised in the Statement of Financial Position when the Company or Group become a party to the
contractual provisions of the instrument. Transaction costs that are directly attributable to the acquisition or issue of financial
assets (other than financial assets at fair value through profit or loss) are added to or deducted from the fair value of the
financial assets, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial
assets at fair value through profit or loss are recognised immediately in profit or loss.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Gains and
losses resulting from the movement in fair value are recognised in the Statement of Comprehensive Income at each
valuation point within ‘gains/(losses) on investments’.
Financial assets are derecognised when the rights to receive cash flows from the investments have expired or the Company
or Group have transferred substantially all risks and rewards of ownership.
Financial liabilities – Classification, recognition, derecognition and measurement
The Company and Group’s financial liabilities include trade and other payables and other short term monetary liabilities
which are initially recognised at fair value and subsequently measured at amortised cost.
Financial liabilities are recognised in the Statement of Financial Position when the Company or Group become a party to the
contractual provisions of the instrument. Transaction costs that are directly attributable to the acquisition or issue of financial
liabilities (other than financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the
financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial
liabilities at fair value through profit or loss are recognised immediately in profit or loss. Financial liabilities are subsequently
measured at amortised cost.
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HydrogenOne Capital Growth plc Annual Report 2023
Notes to the parent and consolidated
financial statements
A financial liability (in whole or in part) is derecognised when the Company or Group have extinguished the contractual
obligations, it expires or is cancelled.
Valuation of Listed Hydrogen Assets
Upon initial recognition Listed Hydrogen Assets are classified by the Company and Group ‘at fair value through profit or
loss’. They are accounted for on the date they are traded and are included initially at fair value which is taken to be their cost.
Subsequently they are valued at fair value, which is the bid market price, or if bid price is unavailable, last traded price on the
relevant exchange.
Valuation of the Limited Partnership
The Company may make investments in Private Hydrogen Assets directly, via the Limited Partnership and/or by way of
holdings in special purpose vehicles or intermediate holding entities. Currently, all the Company’s Private Hydrogen Assets
are held via the Limited Partnership.
The Company and Group has determined that the fair value of the Limited Partnership is the Limited Partnership’s Net Asset
Value (“NAV”). The NAV of the Limited Partnership is prepared in accordance with accounting policies that are consistent with
IFRS and consists of the fair value of its Private Hydrogen Assets, and the carrying value of its assets and liabilities.
The Investment Adviser values the Private Hydrogen Assets according to IPEV Guidelines. The valuation techniques available under
IPEV Guidelines are set out below and are followed by an explanation of how they are applied to the Private Hydrogen Assets:
• Discounted cash flows (“DCF”);
• Price of recent investment;
• Multiples;
• Industry Valuation Benchmarks;
• Available Market Prices; and
• Net Assets
The nature of the Private Hydrogen Assets will influence the valuation technique applied. The valuation approach recognises
that, as stated in the IPEV Guidelines, the price of a recent investment, if resulting from an orderly transaction, generally
represents fair value as at the transaction date and may be an appropriate starting point for estimating fair value at
subsequent measurement dates. Consideration is given to the facts and circumstances as at the subsequent measurement
date such as changes in the market or performance of the investee company including whether maintainable revenues and/
or earnings have been established. Milestone analysis is used, where appropriate, to incorporate the operational progress of
the investee company into the valuation.
As a result, various techniques may be employed to derive the valuations. However, an absence of relevant industry peers
may preclude the application of the industry valuation benchmarks technique and an absence of observable prices may
preclude the available market prices approach. All valuations are calibrated and are cross-checked for reasonableness by
employing relevant alternative techniques.
Private Hydrogen Assets, which are operational companies, are valued using either the price of recent investment; the DCF
method; or a combination of the DCF method and the price of recent investment. The valuations are weighted towards
the DCF method based on the time since the price of recent investment until the full DCF valuation is applied (typically
the valuations are tapered from the price of recent investment to the full DCF valuation over four calendar quarters after
the price of recent investment). The impact of this weighted approach is that there will be either an effective discount or a
premium to the full DCF valuation over the tapering period. The valuations derived from this approach have been assessed
for reasonableness against relevant market comparables, where available, and calibrated against specific milestones for
indications of positive or negative performance which may impact valuations. Where negative performance indicates that
the valuation of a Private Hydrogen Asset may have deteriorated substantially then alternative valuation approaches may be
incorporated into the valuation model that reflect reasonable possible outcomes, such as net assets and indicative offers,
and a probability weighting is applied to each.
Private Hydrogen Assets, which are hydrogen project SPVs, are valued based on the underlying project’s stage of completion:
• prior to commercial operation date, hydrogen project SPVs are valued using a risk adjusted DCF method;
• post commercial operation date, hydrogen project SPVs are valued in the same way as Private Hydrogen Assets, which are
operational companies, as described above; and
• project development loans advanced directly by the Limited Partnership to a project during the project development
phase are held at cost plus accrued interest (deemed to approximate fair value), and are reviewed at each valuation date
for any indicators that this approach may no longer be representative of fair value.
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Company Overview
Strategic Report Governance Financial statements
Other information
In a DCF valuation, the fair value represents the present value of the investment’s expected future cash flows, based on
appropriate assumptions for revenues and costs, and suitable cost of capital assumptions. Judgement is applied in arriving
at appropriate discount rates, based on the knowledge of the market, taking into account market intelligence gained
from bidding activities, discussions with financial advisers, consultants, accountants and lawyers and publicly available
information.
A range of sources are reviewed in determining the underlying assumptions to apply in a DCF valuation used in calculating
the fair value of a Private Hydrogen Asset. These sources include but are not limited to:
• macroeconomic projections adopted by the market as disclosed in publicly available resources;
• macroeconomic forecasts provided by expert third party economic advisers;
• discount rates publicly disclosed in the global renewables sector;
• discount rates applicable to comparable infrastructure asset classes, which may be procured from public sources or
independent third-party expert advisers;
• discount rates publicly disclosed for comparable market transactions of similar assets; and
• capital asset pricing model outputs and implied risk premia over relevant risk-free rates. Where available, assumptions are
based on observable market and technical data.
(b) Foreign currency
Functional and presentation currency
Items included in the Financial Statements are measured using the currency of the primary economic environment in
which the entity operates, the functional currency. The Financial Statements are presented in Pounds Sterling which is the
Company and Group’s functional and presentation currency .
Transactions and balances
Foreign currency transactions are translated into Pounds Sterling using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the
Statement of Comprehensive Income.
(c) Income
Dividend income has been accounted for on an ex-dividend basis or when the right to the income is established. Investment
interest income for the year is recognised in the Statement of Comprehensive Income using effective interest method
calculation. Bank interest income is recognised for the year in the Statement of Comprehensive income on a receipts
basis. Special dividends are credited to capital or revenue in the Statement of Comprehensive Income, according to
the circumstances surrounding the payment of the dividend. Overseas dividends are included gross of withholding tax
recoverable.
(d) Dividend payable
Interim dividends are recognised when the Company pays the dividend. Final dividends are recognised in the period in which
they are approved by the shareholders.
(e) Expenses
All expenses are accounted for on an accruals basis. Expenses directly related to the acquisition or disposal of an investment
(transaction costs) are taken to the Statement of Comprehensive Income as a capital item. All other expenses, including
Investment Adviser fees, are taken to the Statement of Comprehensive Income as a revenue item.
(f) Taxation
The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on
the taxable profit for the period. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income
because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items
that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that were applicable
at the financial reporting date.
Where expenses are allocated between capital and revenue any tax relief in respect of the expenses is allocated between
capital and revenue returns on the marginal basis using the Company’s effective rate of corporation taxation for the relevant
accounting period .
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Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the financial
reporting date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax
in the future have occurred at the financial reporting date. This is subject to deferred tax assets only being recognised if it
is considered more likely than not that there will be suitable profits from which the future reversal of the timing differences
can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which
they arise.
Since the General Partner does not have any income or expenditure in the period, the Group tax position is the same as the
Company tax position.
(g) Segmental reporting
The Board has considered the requirements of IFRS 8 – ‘Operating Segments’. The Company has entered into an Investment
Advisory Agreement with the Investment Adviser under which the Investment Adviser is responsible for the management
of the Company’s investment portfolio, subject to the overall supervision of the Board of Directors. Subject to its terms and
conditions, the Investment Advisory Agreement requires the Investment Adviser to manage the Company’s investment
portfolio in accordance with the Company’s investment guidelines as in effect from time to time, including the authority to
purchase and sell investments and to carry out other actions as appropriate to give effect thereto. However, the Board retains
full responsibility to ensure that the Investment Adviser adheres to its mandate. Moreover, the Board is fully responsible for
the appointment and/or removal of the Investment Adviser. Accordingly, the Board is deemed to be the ‘Chief Operating
Decision Maker’ of the Company.
The Directors are of the opinion that the Company is engaged in a single segment of business being investment into the
hydrogen focussed investments. Segment information is measured on the same basis as that used in the preparation of the
Company’s Financial Statements.
(h) Cash and cash equivalents
Cash comprises cash and demand deposits. Cash equivalents, include bank overdrafts, and short-term, highly liquid
investments that are readily convertible to known amounts of cash, are subject to insignificant risks of changes in value,
and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.
(i) Nature and purpose of equity and reserves:
Share capital represents the 1p nominal value of the issued share capital.
The share premium account arose from the net proceeds of new shares issued. Costs directly attributable to the issue of new
shares are charged against the value of the ordinary share premium.
The capital reserve reflects any:
• gains or losses on the disposal of investments;
• exchange movements of a capital nature;
• the increases and decreases in the fair value of investments which have been recognised in the capital column of the
Statement of Comprehensive Income; and
• expenses which are capital in nature.
The revenue reserve reflects all income and expenditure recognised in the revenue column of the Statement of
Comprehensive Income and is distributable by way of dividend.
The Company’s distributable reserves consist of the revenue reserve and the capital reserve. However any gains in the fair
value of investments that are not readily convertible to cash are treated as unrealised gains in the capital reserve and are
non-distributable.
Ordinary Shares are classified as equity.
Notes to the parent and consolidated
financial statements
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4. Investments held at fair value through profit or loss
(a) Summary of valuation
31 December 31 December
2023 2022
£’000 £’000
Investments held at fair value through profit or loss
Listed Hydrogen Assets
2,322
3,667
Limited Partnership
125,861
103,006
Closing valuation of financial assets at fair value through profit or loss
128,183
106,673
(b) Movements in valuation
£’000
£’000
Opening valuation of financial assets at fair value through profit or loss
106,673
68,830
Opening unrealised (gain)/loss on investments
(1,426)
1,608
Opening cost of financial assets at fair value through profit or loss
105,247
70,438
Additions, at cost – Listed Hydrogen Assets
74
137
Additions, at cost – Limited Partnership
12,398
36,581
Disposals, at cost – Listed Hydrogen Assets
(142)
(1,909)
Cost of financial assets at fair value through profit or loss at the end of the year
117,577
105,247
Unrealised losses on investments – Listed Hydrogen Assets
(5,299)
(4,022)
Unrealised gains on investments – Limited Partnership
15,905
5,448
Closing valuation of financial assets at fair value through profit or loss
128,183
106,673
(c) Gain/(loss) on investments
£’000
£’000
Movement in unrealised loss – Listed Hydrogen Assets
(1,277)
(2,794)
Movement in unrealised gains – Limited Partnership
10,457
5,828
Realised (losses)/gains on investments – Listed Hydrogen Assets
(30)
143
Total gain on investments
9,150
3,177
Under IFRS 13 ‘Fair Value Measurement’, an entity is required to classify investments using a fair value hierarchy that reflects
the significance of the inputs used in making the measurement decision.
The following shows the analysis of financial assets recognised at fair value based on:
Level 1
The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the
measurement date.
Level 2
Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or
liability, either directly or indirectly.
Notes to the parent and consolidated
financial statements
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Notes to the parent and consolidated
financial statements
Level 3
Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.
Transfers between levels of the fair value hierarchy are recognised as at the end of the reporting period during which the
change has occurred. There have been no transfers between levels during the year ended 31 December 2023 (2022: no
transfers).
The classification of the Company and Group’s investments held at fair value through profit or loss is detailed in the table
below:
31 December 2023
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Listed Hydrogen Assets
2,322
–
–
2,322
Limited Partnership
–
–
125,861
125,861
2,322
–
125,861
128,183
31 December 2022
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Listed Hydrogen Assets
3,667
–
–
3,667
Limited Partnership
–
–
103,006
103,006
3,667
–
103,006
106,673
The Company and Group’s Level 3 investment is the investment in the Limited Partnership. The NAV of the Limited
Partnership as of 31 December 2023 is £125,861,000 (2022: £103,006,000). The movement on the Level 3 investments
during the year is shown below:
31 December 31 December
2023 2022
£’000 £’000
Opening balance
103,006
60,597
Investment in Limited Partnership
12,398
36,581
Movement in unrealised gains on investment in Limited Partnership
10,457
5,828
Closing balance
125,861
103,006
Look-through financial information
The NAV of the Limited Partnership consists of the fair value of its Private Hydrogen Assets and the carrying value of its
assets and liabilities. As at the year end, the Limited Partnership held ten Private Hydrogen Assets (2022: nine).
The following table reconciles the fair value of the Private Hydrogen Assets and the NAV of the Limited Partnership.
31 December 31 December
2023 2022
£’000 £’000
Investment in Private Hydrogen Assets
126,206
103,115
Plus/(minus): net other assets/(liabilities)
(345)
(109)
NAV of the Limited Partnership
125,861
103,006
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The Level 3 Private Hydrogen Assets are valued by the Investment Adviser using the valuation techniques as outlined in note 3.
The key inputs considered in the valuation are described in note 15.
At 31 December 2023, the valuations of the Limited Partnership’s underlying investments in Private Hydrogen Assets were
determined as follows:
Value of
Country of Investment Primary valuation Significant unobservable
Name Incorporation £’000 technique
inputs
Range input
Sunfire GmbH
Germany
27,068
DCF
Discount rates
11.3%-12.4%
United
Elcogen Group plc
Kingdom
24,430
DCF
Discount rates
13.1%-13.9%
Strohm Holding BV
Netherlands
19,719
DCF
Discount rates
14.4%-15.4%
United
HiiROC Limited
Kingdom
13,701
DCF
Discount rates
13.8%-14.9%
Cranfield Aerospace
U
nited
Solutions Limited
Kingdom
11,870
DCF
Discount rates
17.5%-18.6%
United
Bramble Energy Limited
Kingdom
10,621
DCF
Discount rates
16.0%-17.1%
Discount rates
(project SPVs & 12.0%; and
HH2E AG
Germany
6,971
DCF
Company) 16.5%-17.6%
Discount rates
Probability
applied in DCF
15.3%-
15.9%
weighted approach
incorporating DCF,
Net Assets
n/a
indicative offers and
United net assets*
NanoSUN Limited
Kingdom
5,428
Weighting
10%-50%*
Discount rates
(project SPVs & 12.0%; and
GEN2 Energy AS
Norway
4,443
DCF
Company) 16.7%-17.6%
HH2E Werk Thierbach Loan principal and
GmbH
Germany
1,955
accrued interest
N/a
N/a
At 31 December 2022, the valuation of the Limited Partnership’s underlying investment in Private Hydrogen Assets was
determined as follows.
Value of
Country of Investment Significant unobservable
Name Incorporation
£’000
Primary valuation technique
inputs
Range input
Discount rates applied in
full DCF valuation
12.1% – 12.4%
Weighting between Price
Weighted DCF and Price of Recent Investment and
Sunfire GmbH
Germany
21,763
of Recent Investment DCF valuation (4)%
Discount rates applied in
full DCF valuation
12.5% – 13.0%
Weighting between Price
Elcogen Group United Weighted DCF and Price of Recent Investment and
plc
Kingdom
20,430
of Recent Investment DCF valuation 4%
1
1
*In deriving the fair value of NanoSUN a probability weighted approach was applied whereby a valuation for the investment was derived from each
technique (DCF, indicative offers and net assets), each of which represented management’s assessment of the fair value for the investment in the reasonable
possible scenarios that may have transpired, as of the valuation date. A percentage likelihood (aggregating to 100% across each of the three techniques)
was then applied to each of these valuations, which represented management’s view of the probability of each scenario transpiring, as of the valuation date.
The range of inputs disclosed represent the lowest and highest discreet percentages applied to the three scenarios .
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Notes to the parent and consolidated
financial statements
Value of
Country of Investment Significant unobservable
Name Incorporation
£’000
Primary valuation technique
inputs
Range input
Discount rates applied in
full DCF valuation
12.5% – 12.8%
Weighting between Price
Strohm Holding Weighted DCF and Price of Recent Investment and
BV
Netherlands
11,606
of Recent Investment DCF valuation (31)%
United
HiiROC Limited
Kingdom
12,914
DCF
Discount rates
13.5%
Discount rates applied in
full DCF valuation
13.5%
Cranfield
Aerospace Weighting between Price
Solutions United Weighted DCF and Price of Recent Investment and
Limited
Kingdom
6,296
of Recent Investment DCF valuation (20)%
Discount rates applied in
full DCF valuation
13.4% – 13.6%
Weighting between Price
Bramble United Weighted DCF and Price of Recent Investment and
Energy Limited
Kingdom
10,032
of Recent Investment DCF valuation 24%
Discount rates applied in
full DCF valuation
12.1% – 12.4%
Weighting between Price
Weighted DCF and Price of Recent Investment and
HH2E AG
Germany
5,134
of Recent Investment DCF valuation 6%
Discount rates applied in
full DCF valuation
13.4% – 13.6%
Weighting between Price
NanoSUN United Weighted DCF and Price of Recent Investment and
Limited
Kingdom
11,519
of Recent Investment DCF valuation (10)%
Discount rates applied in
full DCF valuation
13.0%
Weighting between Price
GEN2 Energy Weighted DCF and Price of Recent Investment and
AS
Norway
3,421
of Recent Investment DCF valuation (10)%
1
1
1
1
1
1
1. This is the effective discount or premium to the full DCF valuation, as a result of application of the weighted valuation in line with the valuation
methodology described in note 3. A negative percentage denotes that the weighted valuation is at a discount to the full DCF valuation; whilst a
positive percentage denotes that the weighted valuation is at a premium to the full DCF valuation.
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The following table shows the Directors best estimate of the sensitivity of the Level 3 Private Hydrogen Assets to changes in
the principle unobservable input, with all other variables held constant.
Effect on fair value of investments
£’000
31 December 31 December
Unobservable input
Possible reasonable change in input
2023 2022
Discount rates applied in full DCF valuation
+1%
(7,767)
(6,515)
-1%
8,584
7,815
Weighting between DCF, indicative offers
and Net Asset valuation
+/- 10% weighting to DCF
968/(968)
n/a
+/- 10% weighting to indicative
offers
124/(124)
n/a
+/- 10% weighting to Net Assets
(1,092)/1,092
n/a
plus one calendar quarter of
W
eighting between Price if Recent
tapering from Price of Recent
Investment and full DCF Valuation
Investment to full DCF valuation
n/a
(324)
minus one calendar quarter of
tapering from Price of Recent
Investment to full DCF valuation
n/a
286
The European Central Bank (‘ECB’) and the Bank of England (‘BOE’) base rates at 31 December 2023 were 4.5% and 5.25%
respectively. We anticipate that the base rates will ease and fall (based on independent research) reaching 2.50% for ECB and
3.00% for BOE by end of 2025. Since long term gilt yields already factor in long term forecasts, we have performed sensitivities
of +/- 1% on the discount rate assumptions for any shock events. At 31 December 2022, the ECB and the BOE base rates were
2.5% and 3.5% respectively. We anticipated that the terminal base rate hikes (based on independent research) could reach 3.75%
for ECB and 4.75% for BOE and as such, performed sensitivities of +/- 1% on the discount rate assumptions.
For the year ended 31 December 2023, the NanoSUN Limited valuation is weighted between DCF, indicative offers and
Net assets based on the expected likelihood of each scenario occurring. We have applied a sensitivity of +/- 10% weighting
to each scenario, with the movement being shared equally with the remaining two scenarios, as this is deemed to be a
reasonable possible shift in the scenario weightings as of the valuation date.
For the year ended 31 December 2022, the valuations are weighted towards the full DCF valuation based on the time since
the price of recent investment until the full DCF valuation is applied (typically the valuations are tapered from the price of
recent investment to the full DCF valuation over four calendar quarters after the price of recent investment). Accordingly, we
have applied a sensitivity of +/- one calendar quarter of this weighting as this is deemed the most likely period by which the
tapering may be delayed or brought forward.
For those investments that have been fair valued using the price of a recent investment based on unadjusted third-party
pricing information and project development loans held at cost plus accrued interest, the Company is not required to
disclose any quantitative information regarding the unobservable inputs as they have not been developed by the Company
and are not reasonably available to the Company.
5. Income
Year ended Year ended
31 December 31 December
2023 2022
£’000 £’000
Overseas dividend income
1
1
Bank interest
211
96
Total income
212
97
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Notes to the parent and consolidated
financial statements
6. Investment Adviser fee
Year ended 31 December 2023
Year ended 31 December 2022
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment Adviser fee
144
–
144
343
–
343
At 31 December 2023 an amount of £nil (2022: £12,554) was payable to the Investment Adviser in respect of the Investment
Adviser fee.
Additionally, the Company agreed with the Investment Adviser that the costs and expenses of the IPO would be capped at
2% of the gross proceeds received, with any cost above this amount to be paid by the Investment Adviser by way of rebate
of its adviser fee. At 31 December 2023, £nil in respect of excess IPO issue costs is due to be received from the Investment
Adviser (2022: £111,432).
Investment Adviser fee
The Company has entered into an Investment Adviser Agreement dated 5 July 2021 between the Company, the AIFM and
the Investment Adviser (the “Investment Adviser Agreement”), pursuant to which the Investment Adviser has been given
responsibility for investment advisory services in respect of any Private Hydrogen Assets the Company invests in directly and
the Listed Hydrogen Assets (including Listed Hydrogen Assets forming part of the Liquidity Reserve and uninvested cash) in
accordance with the Company’s investment policy, subject to the overall control and supervision of the AIFM.
Under the Investment Adviser Agreement, the Investment Adviser receives from the Company, quarterly in advance, an
advisory fee equal to:
i. 1.0% of the Net Asset Value per annum of the Listed Hydrogen Assets up to £100 million:
ii. 0.8% of the Net Asset Value per annum of the Listed Hydrogen Assets from £100 million (save that the Investment Adviser
has agreed to reduce this fee to 0.5% in respect of the Liquidity Reserve pending their investment in Private Hydrogen
Assets for 18 months following Admission to 30 January 2023);
iii. 1.5% of the Net Asset Value per annum of any Private Hydrogen Assets held by the Company directly (i.e. not held by the
Limited Partnership or any other undertaking advised by the Investment Adviser where the Investment Adviser is receiving
a separate advisory fee); and
iv. for so long as the Company is not considered a ‘feeder fund’ for the purposes of the Listing Rules, 1.5% per annum of the
Net Asset Value of the Private Hydrogen Assets held by the Limited Partnership.
The Limited Partnership has entered into a Limited Partnership Investment Adviser Agreement dated 5 July 2021 (the
“Limited Partnership Investment Adviser Agreement”) between the General Partner (in its capacity as general partner of
the Limited Partnership), the AIFM and the Investment Adviser, pursuant to which the Investment Adviser has been given
responsibility for investment advisory services in respect of the Private Hydrogen Assets in accordance with the investment
policy of the Limited Partnership, subject to the overall control and supervision of the AIFM.
Under the Limited Partnership Investment Adviser Agreement, the Investment Adviser, if the Company was considered a
‘feeder fund’ for the purposes of the Listing Rules by virtue of additional investors co-investing via the Limited Partnership in
the future, shall receive from the Limited Partnership an advisory fee equal to 1.5% per annum of the Net Asset Value of the
Private Hydrogen Assets held by the Limited Partnership, payable quarterly in advance. Advisory fees paid or payable by the
Limited Partnership are reflected through the NAV of the Limited Partnership.
No performance fee is paid or payable to the Investment Adviser under either the Investment Adviser Agreement or the
Limited Partnership Investment Adviser Agreement but the principals of the Investment Adviser are, subject to certain
performance conditions being met, entitled to carried interest fees from the Limited Partnership. Refer to ‘Carried Interest
Partner Fees’ section below.
Carried Interest Partner Fees
Pursuant to the terms of the Limited Partnership Agreement dated 5 July 2021 as amended and restated on 26 November
2021 (the “Limited Partnership Agreement”), the Carried Interest Partner is, subject to the limited partners of the Limited
Partnership receiving an aggregate annualised 8% realised return (i.e. the Company and, in due course, any additional
co-investors), entitled to a carried interest fee in respect of the performance of the Private Hydrogen Assets.
Subject to certain exceptions, the Carried Interest Partner will receive, in aggregate, 15% of the net realised cash profits from
the Private Hydrogen Assets held by the Limited Partnership once the limited partners of the Limited Partnership (i.e. the
Company and, in due course, any additional co-investors) have received an aggregate annualised 8% realised return. This
return is subject to a ‘catch-up’ provision in Carried Interest Partner’s favour. Any realised or unrealised carried interest fee
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paid or payable to the Carried Interest Partner is reflected through the NAV of the Limited Partnership. As at 31 December
2023, in the Limited Partnership, there is unrealised carried interest fee payable of £403,343 (year to 31 December 2022: £nil).
20% of any carried interest received (net of tax) will be used by the principals of the Investment Adviser to acquire Ordinary
Shares in the market. Any such acquired shares will be subject to a 12-month lock-up from the date of purchase.
General Partner’s priority profit share
Under the Limited Partnership Agreement, the General Partner of the Limited Partnership shall be entitled to a General
Partner’s Profit Share (“GPS”). The GPS for each accounting period shall be an amount equal to 1.5% of the prevailing NAV
of the Limited Partnership. For so long as the Company is the sole limited partner of the Limited Partnership, the GPS
shall be distributed to the Company rather than the General Partner. The Company is currently the sole limited partner of
the Limited Partnership. Therefore, under the Investment Adviser Agreement, the investment adviser fee in relation to the
Private Hydrogen Assets held by the Limited Partnership is settled by the Company which for the year totalled £1,723,369
(31 December 2022: £1,181,069). During the year the Limited Partnership did not call any GPS from the Company as the net
effect of the calling and distributing GPS from/to the Company is £nil (31 December 2022: £nil).
7. Other expenses
Year ended Year ended
31 December 31 December
2023 2022
£’000 £’000
Administration & Secretarial Fees
205
193
AIFM Fees
97
83
Directors’ Fees
192
173
Custodian Charges
50
50
Brokers Fees
66
60
Registrar’s Fees
21
23
Website Fees
39
44
Legal Fees
30
21
LSE Fees
15
11
Audit Fees
162
118
D & O Insurances
47
49
PR & Marketing
262
212
Printing Fees
38
30
Other expenses
172
92
Total revenue expenses
1,396
1,159
Expenses charged to capital:
Capital transaction costs
500
219
Total expenses
1,896
1,378
During the year, no non-audit service fees were paid.
Costs of £500,000, incurred during the year ended 31 December 2022, applicable to the share issuance Circular and
Prospectus published in September 2022 (the “share issuance Circular and Prospectus”), which were recognised as trade
and other receivables as at 31 December 2022, were released from trade and other receivables to abort costs in the
Statement of Comprehensive Income for the year ended 31 December 2023 as no shares had been issued at the Circular
and Prospectus expiry date in September 2023. These costs included non-audit service costs applicable to the share
issuance Circular and Prospectus (KPMG UK LLP received £42,000 which was inclusive of VAT of £7,000) .
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Notes to the parent and consolidated
financial statements
During the year to 31 December 2022, where non-audit services were carried out in relation to a further secondary share
issuance that was aborted, the costs (KPMG received £75,000; and KPMG UK LLP received £108,000 which was inclusive of
VAT of £18,000) were treated as a capital expense (abort costs) disclosed in the Statement of Comprehensive Income
Each of these non-audit services provided during the year to 31 December 2022 were required by law or regulation and
were therefore permissible non-audit services under the FRC Ethical Standard.
8. Taxation
(a) Analysis of charge in the year
Year ended 31 December 2023
Year ended 31 December 2022
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Overseas tax
–
–
–
–
–
–
Total tax charge for the year
–
–
–
–
–
–
Factors affecting total tax charge for the year
Year ended 31 December 2023
Year ended 31 December 2022
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
(Loss)/profit on ordinary activities
before taxation
(1,328)
8,645
7,317
(1,405)
2,959
1,554
Corporation tax at 23.52%
(312)
2,033
1,721
(267)
562
295
Effects of:
Non-taxable (gains)/losses on
investments
–
(2,151)
(2,151)
–
(604)
(604)
Excess management expenses
not utilised in year
312
30
342
267
–
267
Disallowable expenses
–
88
88
–
42
42
Overseas tax
–
–
–
–
–
–
Total tax charge
–
–
–
–
–
–
The Company is not liable to tax on capital gains due to its status as an investment trust. The Company and Group has an
unrecognised deferred tax asset of £963,000 (2022: £600,000) as a result of excess management expenses of £3,853,000
(2022: 2,400,000), based on the long term prospective corporation tax rate of 25%.
This asset has accumulated because deductible expenses exceeded taxable income for the year ended 31 December
2023 and prior periods. No asset has been recognised in the Financial Statements because, given the composition of the
Company and Group’s portfolio, it is not likely that this asset will be utilised in the foreseeable future.
9. Trade and other receivables
31 December 31 December
2023 2022
£’000 £’000
Prepayments
41
37
Other receivables
10
604
51
641
At 31 December 2022 other receivables included £470,000 in respect of costs applicable to the share issuance Circular
and Prospectus (£470,000) published in September 2022 and expiring in September 2023. These costs were reclassified
as abort costs in the Statement of Comprehensive Income in 2023 as no shares had been issued at the Circular and
Prospectus expiry date.
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Company Overview
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Other information
10. Trade and other payables
31 December 31 December
2023 2022
£’000 £’000
Amounts falling due within one year:
Accrued expenses
190
153
190
153
11. Share capital
31 December 2023
31 December 2022
Nominal value of Nominal value of
Allotted, issued and fully paid Ordinary Shares of shares shares
1p each:
No. of shares
(£)
No. of shares
(£)
Brought forward
128,819,999
1,288,199.99
107,350,000
1,073,500.00
Allotted/redeemed following
admission to LSE
Or
dinary Shares issued
–
–
21,469,999
214,699.99
Closing balance as at 31 December
128,819,999
1,288,199.99
128,819,999
1,288,199.99
The Company is permitted to hold Ordinary Shares acquired by way of market purchase in treasury, rather than having
to cancel them. Such Ordinary Shares may be subsequently cancelled or sold for cash. No Ordinary Shares have been
repurchased during the year therefore there were no Treasury shares at the end of the year.
Each Ordinary Share held entitles the holder to one vote. All shares carry equal voting rights and there are no restrictions on
those voting rights.
Costs applicable to the share issuance Circular and Prospectus issued in September 2022 totaling £500,000 were treated
as an other debtor at 31 December 2022 (£470,000) or accrued during the year (£30,000). These costs were reclassified as
abort costs in the Statement of Comprehensive Income for the year ended 31 December 2023 as no shares had been issued
at the Circular and Prospectus expiry date in September 2023.
12. Return per ordinary share
Return per share is based on the weighted average number of Ordinary Shares in issue during the year ended 31 December
2023 of 128,819,999 (2022: 122,878,985).
Year ended 31 December 2023
Year ended 31 December 2022
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
(Loss)/profit for the year(£’000)
(1,328)
8,645
7,317
(1,405)
2,959
1,554
Return per Ordinary Share
(1.03)p
6.71p
5.68p
(1.14)p
2.41p
1.27p
There is no dilution to return per share as the Company has only Ordinary Shares in issue.
13. Net asset value per ordinary share
31 December 31 December
2023 2022
£’000 £’000
Net Asset Value (£’000)
132,670
125,353
Ordinary Shares in issue
128,819,999
128,819,999
NAV per Ordinary Share
102.99p
97.31p
There is no diluted Net Asset Value per share as the Company has only Ordinary Shares in issue.
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Notes to the parent and consolidated
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14. Related party transactions and material contracts
Directors
During the year fees were payable to the Directors at an annual rate of £68,250 to the Chairman (2022: £65,000), £57,750 to
the Chairman of the Audit and Risk Committee (2022: £55,000) and £47,250 to the other Directors (2022: £45,000) with the
exception of Mr Bucknall who is not remunerated for his role as a Non-Executive Director. These fees were effective from
1 January 2023. Details of the Directors remuneration paid during the year is given in note 7. At the year end, the Directors
had the following holdings in the Company:
Ordinary Shares at Ordinary Shares at
31 December 31 December
2023 2022
Simon Hogan
40,000
40,000
Afkenel Schipstra
10,100
10,100
Abigail Rotheroe
10,000
10,000
David Bucknall
–
–
Investment Adviser
Fees payable to the Investment Adviser are shown in the Statement of Comprehensive Income. Fees details of the
Investment Adviser are shown in note 6. At 31 December 2023, the principals of the Investment Adviser, Dr JJ Traynor and
Mr R Hulf, each held 100,000 Ordinary Shares of the Company (31 December 2022: 100,000 Ordinary Shares). Transactions
between the Company and the Investment Adviser during the year are disclosed in note 6.
INEOS Energy
The Relationship and Co-Investment Agreement dated 19 June 2021 between INEOS UK E&P Holdings Limited (“INEOS
Energy”), the Investment Adviser, the Company and the General Partner (acting in its capacity as the general partner of the
Limited Partnership), pursuant to which the parties agreed that: (i) INEOS Energy would subscribe for and/or shall procure
that its associates shall subscribe for at least 25 million Ordinary Shares in the IPO; (ii) such Ordinary Shares subscribed by
INEOS Energy would be subject to a 12 month lock-up from the date of purchase pursuant to which INEOS Energy agreed
that it will not sell, grant options over or otherwise dispose of any interest in any such Ordinary Shares purchased by them
(subject to the usual carve-outs); (iii) INEOS Energy was entitled to nominate one Non-Executive Director for appointment to
the Board; (iv) prior to making any co-investment opportunity in relation to a Private Hydrogen Assets that is a project to any
limited partner of the Limited Partnership, the Company and the Investment Adviser will give INEOS Energy a right of first
refusal to acquire up to 100% of such co-investment opportunity (provided that the ‘related party transaction’ requirements
set out in the Listing Rules are complied with); (v) INEOS Energy are provided with certain information rights relating to
Private Hydrogen Assets and co-investment opportunities; and (vi) INEOS Energy shall be entitled to second one or more
employees to the Investment Adviser from time-to-time. INEOS Energy has agreed that all transactions between INEOS
Energy and its associates and any member of the Company and Group and/or the Investment Adviser are conducted at
arm’s length on normal commercial terms.
At the IPO, INEOS Energy subscribed for and received 25 million Ordinary Shares of the Company. On 31 October 2022,
INEOS Energy transferred its holding of 25 Million Ordinary Shares to its immediate parent, INEOS Offshore BCS Limited. At
31 December 2023, INEOS Offshore BCS held 25 million Ordinary Shares of the Company (2022: 25 million Ordinary Shares).
David Bucknall is currently Chief Executive Officer of the INEOS Energy group of companies and was appointed as the Board
representative of INEOS Energy on 20 May 2022 pursuant to the Relationship and Co-Investment Agreement entered into
between, inter alia, INEOS Energy and the Company at the Company’s launch.
Carried Interest and General Partners
Details of the Carried Interest Parter and General Partner and any applicable fees and unrealised carried interest are shown in
note 6.
Alternative Investment Fund Manager
FundRock Management Company (Guernsey) Limited is appointed to act as the Company’s and the Limited Partnership’s
alternative investment fund manager (the “AIFM”) for the purposes of the UK AIFM Rules. The AIFM has delegated the
provision of portfolio management services to the Investment Adviser. The AIFM, Company Secretary and Administrator are
part of the same Apex Group .
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Company Overview
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Other information
Under the AIFM Agreement between the AIFM and the Company dated 5 July 2021, and with effect from Admission,
the AIFM shall be entitled to receive from the Company a fee of 0.05% of Net Asset Value per annum up to £250 million,
0.03% of Net Asset Value per annum from £250 million up to £500 million and 0.015% of Net Asset Value per annum from
£500 million, in each case adjusted to exclude any Net Asset Value attributable to any Private Hydrogen Assets held through
the Limited Partnership and subject to a minimum annual fee of £85,000.
Under the AIFM Agreement between the AIFM and the Limited Partnership dated 5 July 2021, the AIFM receives from the
Limited Partnership a fee of 0.05% of the net asset value of the Limited Partnership per annum up to £250 million, 0.03% of
the net asset value of the Limited Partnership per annum from £250 million up to £500 million and 0.015% of the net asset
value of the Limited Partnership per annum from £500 million, subject to a minimum annual fee of £25,000. AIFM fees paid
or payable by the Limited Partnership are reflected through the NAV of the Limited Partnership.
The AIFM is also entitled to reimbursement of reasonable expenses incurred by it in the performance of its duties.
Administration and Company Secretarial services fee
The Company has entered into an Administration and Company Secretarial Services Agreement dated 5 July 2021 (the
“Administrator and Company Secretary Agreement”) between the Company and Apex Listed Companies Services (UK)
Limited (formerly Sanne Fund Services (UK) Limited (the “Company Secretary and Administrator”)) pursuant to which the
Company Secretary and Administrator has agreed to act as company secretary and administrator to the Company.
Under the terms of the Administration and Company Secretarial Services Agreement, the Company Secretary and
Administrator receives a fee from the Company of 0.06% of Net Asset Value per annum up to £250 million, 0.05% of Net Asset
Value per annum from £250 million up to £500 million and 0.025% of Net Asset Value per annum from £500 million and
subject to a minimum annual fee of £147,695 plus a further £10,000 per annum to operate the Company’s Liquidity Reserve.
Under the terms of the Limited Partnership Administration Agreement 5 July 2021, pursuant to which the Company Secretary
and Administrator has agreed to act as administrator to the Limited Partnership, the Company Secretary and Administrator
receives an annual fee from the Limited Partnership of £69,151 and of £16,596 (excluding VAT) in respect of the General
Partner. Administration fees paid or payable by the Limited Partnership are reflected through the NAV of the Limited
Partnership. For so long as the Company is the sole Limited Partner, the administration fee in respect of the General Partner
shall be allocated settled by the Company rather than the General Partner.
Custodian fee
The Company has entered into a Custodian Agreement between the Company and The Northern Trust Company (the
“Custodian”) dated 23 June 2021 (the “Custodian Agreement”), pursuant to which the Custodian has agreed to act as
custodian to the Company.
The Custodian is entitled to a minimum annual fee of £50,000 (exclusive of VAT) per annum. The Custodian is also entitled to
a fee per transaction taken on behalf of the Company.
Registrar fee
The Company utilises the services of Computershare Investor Services plc (the “Registrar”) as registrar to the transfer and
settlement of Ordinary Shares. Under the terms of the Registrar Agreement dated 5 July 2021, the Registrar is entitled to
a fee calculated based on the number of shareholders, the number of transfers processed and any Common Reporting
Standard on-boarding, filings or changes. The annual minimum fee is £4,800 (exclusive of VAT). In addition, the Registrar is
entitled to certain other fees for ad hoc services rendered from time to time.
15. Financial instruments and capital disclosures
Risk Management Policies and Procedures
The Board of Directors has overall responsibility for the establishment and oversight of the Company and Group’s risk
management framework. The risk management policies are established to identify and analyse the risks faced by
the Company and Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk
management policies are reviewed regularly to reflect changes in market conditions and the Company and Group’s activities.
The Investment Adviser, AIFM and the Administrator report to the Board on a quarterly basis and provide information to the
Board which allows it to monitor and manage financial risks relating to its operations. The Company and Group’s activities
expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk, liquidity
risk and operational risk. These risks are monitored by the AIFM. Below is a non-exhaustive summary of the risks that the
Company and Group are exposed to as a result of its use of financial instruments.
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The objectives, policies and processes for managing the risks, and the methods used to measure the risks, are set out below:
Market Risks
(i) Currency risk
Foreign currency risk is defined as the risk that the fair values of future cashflows will fluctuate because of changes in foreign
exchange rates. The financial assets and liabilities are predominantly denominated in Pounds Sterling and substantially all
revenues and expenses are in Pounds Sterling. As at the 31 December 2023 and 31 December 2022, the Company and
Group had the following currency exposures, all of which are included in the Statement of Financial Position at fair value
based on the exchanges rates at the year end.
31 December 2023
31 December 2022
Other assets Other assets
Investments Cash & liabilities Total Investments Cash & liabilities Total
Currency £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Danish Krone
180
–
–
180
132
–
–
132
Euro
806
–
–
806
1,246
–
–
1,246
Korean Won
501
–
–
501
667
–
–
667
Norwegian Krone
259
–
–
259
609
–
–
609
Swedish Krona
3
–
–
3
230
–
–
230
US Dollar
213
–
–
213
344
–
–
344
1,962
–
–
1,962
3,228
–
–
3,228
The Company and Group mitigate the risk of loss due to exposure to a single currency by way of diversification of the
portfolio. The Limited Partnership’s non Pound Sterling denominated assets may have currency exposure hedged by Forward
Exchange Contracts so that impact from currency exchange rate movements would be mitigated. At 31 December 2023,
the Company and Group have not hedged the value of non-Pound Sterling denominated investments. This increases foreign
currency risk and may increase volatility of the Company and Group’s net asset value. At 31 December 2022, the Limited
Partnership’s non Pound Sterling denominated assets had currency exposure hedged by Forward Exchange Contracts so
that the impact from currency exchange rate movement was mitigated.
At 31 December 2023, an exchange rate movement of +/-5% against Pounds Sterling, which is a reasonable approximation
of possible changes based on observed volatility during the year, would have increased or decreased net assets and total
return by £98,100 (2022: £161,400).
(ii) Interest rate risk
The Company and Group’s interest rate risk on interest bearing financial assets is limited to interest earned on cash balances.
At the year end, the Company and Group had cash balances of £4,626,000 (£2022: £18,192,000). An increase in interest rates
of 2.0%, which is reasonable based upon changes in interest rates observed in the year, would impact the profit or loss and
net assets of the Company and Group positively by £92,520, with a decrease of 2.0% having an equal and opposite effect
(2022: an increase or decrease of 3% would have had a positive or negative affect of £545,760) .
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Company Overview
Strategic Report Governance Financial statements
Other information
The Company and Group’s interest and non-interest bearing assets and liabilities as at 31 December 2023 and 31 December
2022 are summarised below:
31 December 2023
31 December 2022
Interest Non-interest Interest Non-interest
bearing bearing Total bearing bearing Total
£’000 £’000 £’000 £’000 £’000 £’000
Assets
Cash and cash equivalents
4,626
–
4,626
18,192
–
18,192
Trade and other receivables
–
51
51
–
641
641
Investments held at fair value
through profit or loss – Listed
Hydrogen Assets
–
2,322
2,322
–
3,667
3,667
Investments held at fair value
through profit or loss – Limited
Partnership
–
125,861
125,861
–
103,006
103,006
Total assets
4,626
128,234
132,860
18,192
107,314
125,506
Liabilities
Trade and other payables
–
(190)
(190)
–
(153)
(153)
Total liabilities
–
(190)
(190)
(153)
(153)
(iii) Price risk
Listed Hydrogen Assets
Price risk is defined as the risk that the fair value of a financial instrument held by the Company or Group will fluctuate. Listed
Hydrogen Assets are measured at fair value through profit or loss. As of 31 December 2023, the Company and Group held
Listed Hydrogen Assets with an aggregate fair value of £2,322,000 (2022: £3,667,000).
All other things being equal, the effect of a 10% increase or decrease in the value of the investments held at the year end
would have been an increase or decrease of £232,200 in the Company and Group’s loss after taxation for the year ended
31 December 2023 and the Company and Group’s net assets at 31 December 2023 (2022: £366,700).
At 31 December 2023, the sensitivity rate of 10% is regarded as reasonable due to the actual market price volatility
experienced as a result of the economic impact on the Listed Hydrogen Assets.
Private Hydrogen Assets
The Limited Partnership’s portfolio of Private Hydrogen Assets is not necessarily affected by market performance, however
the valuations may be affected by the performance of the underlying investments in line with the valuation criteria in note 3.
The Private Hydrogen Assets sensitivity analysis in note 4 recognises that the valuation methodologies employed involve
different levels of subjectivity in their inputs primarily driven by changes in discount rate assumptions and weighting of the
techniques employed.
Key variable inputs of Private Hydrogen Assets
The variable inputs applicable to each broad category of valuation basis will vary depending on the particular circumstances
of each Private Hydrogen Asset valuation. An explanation of each of the key variable inputs is provided below and includes
an indication of the range in value for each input, where relevant.
Selection of appropriate discount rates
The selection of an appropriate discount rate is assessed individually for each Private Hydrogen Asset. Publicly disclosed
discount rates in the relevant sector and comparable asset classes, which may be procured from public sources or
independent third-party expert advisers or for comparable market transactions of similar assets are used where available.
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Notes to the parent and consolidated
financial statements
Selection of appropriate benchmarks
The selection of appropriate benchmarks is assessed individually for each Private Hydrogen Asset. The industry and
geography of each Private Hydrogen Asset are key inputs to the benchmark selection, with either one or two key indices or
benchmarks being used for comparison.
Selection of comparable companies
The selection of comparable companies is assessed individually for each Private Hydrogen Asset at the point of investment,
and the relevance of the comparable companies is continually evaluated at each valuation point. The key criteria used in
selecting appropriate comparable companies are the industry sector in which they operate and the geography of the Private
Hydrogen Asset’s operations.
Application of valuation basis
Each Private Hydrogen Asset is assessed, and the valuation basis applied will vary depending on the circumstances of each
Private Hydrogen Asset. DCF will be considered where appropriate forecasts are available. The valuation will also consider
any recent transactions, where appropriate. For those Private Hydrogen Assets where a trading multiples approach can be
taken, the methodology will factor in revenue, earnings or net assets as appropriate for the Private Hydrogen Asset.
Estimated sustainable earnings and cash flows
The selection of sustainable revenue or earnings and cash flows will depend on whether the Private Hydrogen Asset is
sustainably profitable or not, and where it is not then sustainable revenues will be used in the valuation. The valuation
approach will typically assess Private Hydrogen Assets based on the last twelve months of revenue or earnings, as they are
the most recent available and therefore viewed as the most reliable. Where a Private Hydrogen Asset has reliably forecasted
earnings previously or there is a change in circumstance at the business which will impact earnings going forward, then
forward estimated revenue or earnings may be used instead.
Application of liquidity discount
A liquidity discount may be applied either through the calibration of a valuation against the most recent transaction, or by
application of a specific discount.
Credit risk
The Company and Group are exposed to credit risk in respect of trade and other receivables and cash at bank. For risk
management reporting purposes, the Company and Group considers and aggregates all elements of credit risk exposure
(such as individual obligation default risk, country risk and sector risk).
31 December 31 December
2023 2022
£’000 £’000
Trade and other receivables
51
641
Cash and cash equivalents
4,626
18,192
Total
4,677
18,833
The cash and cash equivalents are held with Northern Trust Bank, EFG International Bank, Royal Bank of Scotland and
through the Goldman Sachs- Liquid reserve fund. The Fitch Rating credit rating of Northern Trust Bank is AA (2022: AA),
EFG international Bank is A (2022: A), Royal Bank of Scotland A+ (2022: A+) and the Goldman Sachs Liquid reserve fund is
AAA (2022: AAA).
At the year end there were no trade and receivables past due. The credit risk exposure is minimised by dealing with financial
institutions with investment grade credit ratings.
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Company Overview
Strategic Report Governance Financial statements
Other information
Liquidity risks
Liquidity risk is the risk that the Company or Group may not be able to meet a demand for cash or fund an obligation when
due. The Investment Adviser, AIFM and the Board continuously monitor forecast and actual cashflows from operating,
financing and investing activities to consider payment of dividends, or further investing activities.
Financial assets and liabilities by maturity at the year end are shown below:
31 December 2023
31 December 2022
Less than Less than
1 year 1-5 years Total 1 year 1-5 years Total
£’000 £’000 £’000 £’000 £’000 £’000
Assets
Investments at fair value through
profit or loss – Listed Hydrogen
Assets
2,322
–
2,322
3,667
–
3,667
Investments at fair value through
profit or loss – Limited Partnership
–
125,861
125,861
–
103,006
103,006
Trade and other receivables
51
–
51
641
–
641
Cash and cash equivalents
4,626
–
4,626
18,192
–
18,192
Total assets
6,999
125,861
132,860
22,500
103,006
125,506
Liabilities
Trade and other payables
(190)
–
(190)
(153)
–
(153)
Total liabilities
(190)
–
(190)
(153)
–
(153)
Operational risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the processes,
technology and infrastructure supporting the activities relating to financial instruments, either internally or on the part of
service providers, and from external factors other than credit, market and liquidity risks such as those arising from legal and
regulatory requirements and generally accepted standards of investment management behaviour.
Operational risk is managed so as to balance the limiting of financial losses and reputational damage with achieving the
investment objective of generating returns to investors. The AIFM works with the Board to identify the risks facing the
Company and the Limited Partnership. The key risks are documented and updated in the Risk Matrix by the AIFM. The
primary responsibility for the development and implementation of controls over operational risk rests with the Board.
This responsibility is supported by the development of overall standards for the management of operational risk, which
encompasses the controls and processes at the service providers and the establishment of service levels with the service
providers. The Directors’ assessment of the adequacy of the controls and processes in place at service providers with
respect to operational risk is carried out through having discussions with and reviewing reports, including those on their
internal controls, from the service providers .
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HydrogenOne Capital Growth plc Annual Report 2023
Notes to the parent and consolidated
financial statements
Capital Management Policies and Procedures
The Company and Group’s capital management objectives are to ensure that the Company and Group will be able to
continue as a going concern while maximising the return to equity shareholders.
In accordance with the investment objective, the principal use of cash (including the proceeds of the IPO and placings)
is investing in hydrogen focussed assets, as well as expenses related to the share issue when they occur, ongoing
operational expenses and payment of dividends and other distributions to shareholders in accordance with the Company’s
dividend policy.
The Company and Group considers their capital to comprise share capital, distributable reserves and retained earnings.
The Company and Group are not subject to any externally imposed capital requirements. The Company and Group’s share
capital, distributable reserves and retained earnings are shown in the Statement of Financial Position at a total £132,670,000
(2022: £125,353,000).
16. Subsidiary and related entities
Subsidiary
The Company owns 100% of HydrogenOne Capital Growth (GP) Limited as at 31 December 2023 and 31 December 2022.
Effective Country of Issued share Registered
Subsidiary name ownership
ownership
Principal activity
capital address
General
partner of
HydrogenOne 6th Floor,
Capital Growth
125
London
HydrogenOne Capital Growth United Investments
Wall, L
ondon,
(GP) Limited
100%
Kingdom
(1) LP
£1
EC2Y 5AS
Related entities
The Company holds Private Hydrogen Assets through its investment in the Limited Partnership, which has not been
consolidated as a result of the adoption of IFRS 10: Investment entities exemption to consolidation. There is a cross
guarantee in place between the Company and the Limited Partnership in respect of margin requirements on the Limited
Partnership’s forward currency contracts. At 31 December 2023 the Limited Partnership had no exposure to forward
currency contracts (2022: £1,451,927). There are no other cross guarantees amongst related entities. Below are details of the
unconsolidated Private Hydrogen Asset held through the Limited Partnership.
31 December 2023
Total assets
as at 31
December
Value of 2023 Effective
Purpose of Country of investment (unaudited) ownership Registered
Name the entity Incorporation £’000 £’000 (% rounded) address
Sunfire GmbH
Electrolyzer
Germany
27,068
157,197
5%
Gasanstaltstraße 2
producer
01237
Dresden,
Germany
Elcogen Group plc
Solid oxide fuel
United Kingdom
24,430
51,445
9%
Highdown House,
cell supply Yeoman Way,
Worthing, West Sussex,
BN99 3HH
Strohm Holding BV Supplier of
Netherlands
19,719
62,082
20%
Monnickendamkade
thermoplastic
1, 1976
EC IJmuiden
composite
pipe
HiiROC Limited Supplier
United Kingdom
13,701
14,398
6%
22 Mount Ephraim,
of clean Tunbridge Wells, Kent,
hydrogen
TN4
8AS
production
technology
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Other information
Total assets
as at 31
December
Value of 2023 Effective
Purpose of Country of investment (unaudited) ownership Registered
Name the entity Incorporation £’000 £’000 (% rounded) address
Cranfield Aerospace Aviation United
11,870
17,291
29%
Hanger 2, Cranfield
Solutions Limited design and Kingdom Airport, Cranfield,
maintenance Bedfordshire,
MK43 0AL
Bramble Energy Printed Circuit
United Kingdom
10,621
21,361
12%
6 Satellite Business
Limited Board fuel cell Village, Fleming Way,
solutions Crawley, England,
RH10 9NE
HH2E AG
Supplier
Germany
6,971
11,077
11%
HRB 167243,
Kaiser-
of green Wilhelm-Straße 93,
electrolysis and
20355
Hamburg
energy storage
facilities
NanoSUN Limited
Supplier
United Kingdom
5,428
5,045
22%
Abraham Heights Farm,
of mobile Westbourne Road,
hydrogen Lancaster, LA1 5EF
storage and
refueling
systems
GEN2 Energy AS
Green
Norway
4,443
11,203
7%
Raveien 205, 3184
Hydrogen Borre, Norway
development
HH2E Werk Thierbach Supplier
Germany
1,955
9,389
15%
HRB 167243,
Kaiser-
GmbH of green Wilhelm-Straße 93,
electrolysis and
20355
Hamburg
energy storage
facilities
31 December 2022
Total assets
as at 31
December
Value of 2022 Effective
Purpose of Country of investment (unaudited) ownership Registered
Name the entity Incorporation £’000 £’000 (% rounded) address
Sunfire GmbH
Electrolyzer
Germany
21,763
137,838
4%
Gasanstaltstraße 2
producer
01237
Dresden,
Germany
Elcogen Group plc
Solid oxide fuel
United
20,430
22,306
11%
Highdown House,
cell supply Kingdom Worthing, West Yeoman Way,
Sussex, BN99 3HH
HiiROC Limited Supplier United
12,914
21,423
6%
22 Mount Ephraim,
of clean Kingdom Tunbridge Wells,
hydrogen Kent, TN4 8AS
production
technology
Bramble Energy Printed Circuit United
10,032
33,814
12%
6 Satellite Business
Limited Board fuel cell Kingdom Village, Fleming Way,
solutions Crawley, England,
RH10 9NE
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HydrogenOne Capital Growth plc Annual Report 2023
Total assets
as at 31
December
Value of 2022 Effective
Purpose of Country of investment (unaudited) ownership Registered
Name the entity Incorporation £’000 £’000 (% rounded) address
NanoSUN Limited Supplier United
11,519
7,150
23%
Abraham Heights
of mobile Kingdom Farm, Westbourne
hydrogen Road, Lancaster,
storage and
LA1
5EF
refueling
systems
Cranfield Aerospace Aviation United
6,296
6,248
29%
Hanger 2, Cranfield
Solutions Limited design and Kingdom Airport, Cranfield,
maintenance Bedfordshire,
MK43 0AL
HH2E AG Supplier
Germany
5,134
6,107
11%
HRB
1672
43, Kaiser-
of green Wilhelm-Straße 93,
electrolysis
20355
Hamburg
and energy
storage
facilities
GEN2 Energy AS Green
Norway
3,421
12,065
7%
Raveien 205, 3184
Hydrogen Borre, Norway
development
Strohm Holding BV Supplier of The
11,606
90,257
24%
Monnickendamkade
thermoplastic Netherlands
1, 1976
EC IJmuiden
composite
pipe
The maximum exposure to loss from the unconsolidated entities is the carrying amount of the financial assets held.
During the year the Company did not provide financial support and has no intention of providing financial or other support to
the subsidiary and the unconsolidated Private Hydrogen Assets held through the Limited Partnership.
17. Commitments and contingencies
As at 31 December 2023 the Company had future commitments owing of £0.6m to Cranfield Aerospace Solutions and
£0.6m to HH2E Werk Thierbach.
At 31 December 2023 the Company had outstanding undrawn loan commitments of £3,638,090 to the Limited Partnership
(2022: £16,036,459).
18. Post balance sheet events
Since 31 December 2023, the Partnership has made additional investments in and commitments to Private Hydrogen Assets
amounting to £1.1m and £1.0m respectively. In February 2024, the Company implemented a restructuring of NanoSUN, and
launched a new company named Swift Hydrogen Ltd (‘Swift’). The Company wholly owns Swift and it is led by previous
senior managers from NanoSUN.
In March 2024, Sunfire announced a funding round totalling more than EUR 500 million. The Company exercised its anti-
dilution and conversion rights in this round for £0.3 million. The Board resolved to make a non-material modification to the
Company’s investment restrictions, so that investments in Sunfire, measured at the time of investment, shall not exceed 21%
of the Company’s GAV. The Company’s existing restriction of an investment limit of 20% of GAV at the time of investment is
unchanged for the remainder of the portfolio.
In April 2024, the Company agreed to a restructuring of HH2E, ahead of planned material third party fund raising for green
hydrogen projects in Germany. The Company has exchanged its development rights for five project SPVs, including the
Thierbach SPV for equity in HH2E, in parallel, the Lubmin SPV, which was previously carved out of the Company’s direct
holdings, has also been combined with HH2E, in a non-cash transaction for the Company. The Company’s previously
announced development loan to Thierbach, of which £1.9 million has been drawn, will be reduced to £0.7 million, through a
swap for equity in HH2E. The Company’s resulting equity share of HH2E is unchanged, at around 11%, on an enlarged asset
base and with a simpler corporate structure, and with direct exposure to the Lubmin project.
Notes to the parent and consolidated
financial statements
109
HydrogenOne Capital Growth plc Annual Report 2023
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Other
information
110 Alternative Performance Measures
111 EU SFDR Disclosures
122 Glossary
124 Directors and advisers
125 Report of the Alternative Investment Fund Manager
126 Notice of Annual General Meeting
128 Notes to the notice of Annual General Meeting
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HydrogenOne Capital Growth plc Annual Report 2023
Alternative Performance Measures (“APM”)
APMs are often used to describe the performance of investment companies although they are not specifically defined under
IFRS. APM calculations for the Company are shown below.
(Discount)/Premium
The amount, expressed as a percentage, by which the share price is less/more than the Net Asset Value per Ordinary Share.
At 31 December Page 2023 2022
NAV per Ordinary Share (pence) a 2 102.99 97.31
Share price (pence) b 2 49.65 79.30
(Discount)/Premium (b÷a)-1 (51.8)% (18.5)%
Ongoing charges
A measure, expressed as a percentage of average net assets during the year, of the regular, recurring annual costs of running
an investment company.
Year ended 31 December Page 2023 2022
Average NAV a n/a 129,442,151 116,822,568
Annualised expenses b n/a 3,308,961 2,932,566
Ongoing charges (b÷a) 2.56% 2.51%
The ongoing charges percentage is on a consolidated basis and therefore takes into consideration the expenses of the
Limited Partnership as well as the Company and is calculated in accordance with the methodology set out by the AIC.
Total return
A measure of performance that includes both income and capital returns. This takes into account capital gains and
reinvestment of dividends paid out by the Company into the Ordinary Shares of the Company on the ex-dividend date.
Year ended 31 December 2023 Page Share price
1
NAV
2
Opening at 1 January 2023 (p) a n/a 79.30 97.31
Closing at 31 December 2023 (p) b 2 49.65 102.99
Total return (b÷a)-1 (37.4)% 5.8%
1. Share price total return is based on an opening share price of 79.30p.
2. NAV total return is based on an opening NAV of 97.31p per Ordinary Share.
Year ended 31 December 2022 Page Share price
1
NAV
2
Opening at 1 January 2022(p) a n/a 119.50 95.75
Closing at 31 December 2022(p) b 2 79.30 97.31
Total return (b÷a)-1 (33.6)% 1.6%
1. Share price total return is based on an opening share price of 119.50p.
2. NAV total return is based on an opening NAV after launch expenses of 95.75p per Ordinary Share.
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview
Strategic Report Governance Financial statements
Other information
Template periodic disclosure for the financial products referred to in Article 9, paragraphs 1 to 4a, of Regulation
(
EU
)
2019/2088 and Article 5, first paragraph, of Regulation
(
EU
)
2020/852
Product name: HydrogenOne Capital Growth PLC
(
the Company
)
Legal entity identifier: 213800PMTT98U879SF45
Sustainable investment objective
Did this financial product have a sustainable investment objective?
[tick and fill in as relevant, the percentage figure represents the sustainable investments]

 Yes

 
No
It made sustainable investments
with an environmental objective:
100%
in economic activities that qualify
as environmentally sustainable
under the EU Taxonomy
in economic activities that do
not qualify as environmentally
sustainable under the EU
taxonomy
It made sustainable investments
with a social objective: ___%
It promoted Environmental/Social
(
E/S
)
characteristics and
while it does not have as its objective a sustainable investment, it will
have a minimum proportion of ___% of sustainable investments
with an environmental objective in economic activities that qualify
as environmentally sustainable under the EU taxonomy
with an environmental objective in economic activities that do not
qualify as environmentally sustainable under the EU taxonomy
with a social objective
It promoted E/S characteristics, but did not make any sustainable
investments
To what extent was the sustainable investment objective of this financial product
met?
The Company aims to generate capital appreciation by investing in a diversified portfolio of hydrogen and related assets.
The Company integrates environmental, social and governance
(
‘ESG’
)
principles into its investment process to contribute
to climate change mitigation. In 2023, the Company engaged its material investees to measure and report their greenhouse
gas
(
‘GHG’
)
emissions across scopes 1, 2, and 3, as a step towards emissions reduction. The Company continues working
with portfolio companies to develop and execute decarbonisation strategies. The majority of the firm’s investments displace
fossil fuels either directly or indirectly, avoiding GHG emissions and clearly contributing to achieving the Paris Agreement
goals.
ANNEX V (unaudited)
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HydrogenOne Capital Growth plc Annual Report 2023
l How did the sustainability indicators perform?
January 1st 2023 - December 31st 2023
GHG Emissions
(
tCO2e
)
Scope 1 17.63
Scope 2 80.66
Scope 3 179.77
Carbon Footprint
(
tCO2e/€m of value invested
)
1.92
GHG Intensity
(
tCO2e/€m of revenue
)
60.12
Avoided Emissions 91,116 tCO2e
The Company has assessed its Principal Adverse Impact
(
‘PAI’
)
Indicators for 2023 in compliance with EU Regulation
2022/1288. The Company’s Scope 1, 2, and 3 emissions are calculated by aggregating the emissions from all investee
companies and adjusting for the Company’s equity holding in each project. GHG emissions were quantified in accordance
with the Greenhouse Gas Protocol.
l
and compared to previous periods?
The Company did not report PAIs in 2022.
l
How did the sustainable investments not cause significant harm to any sustainable investment
objective?
The Company engages external consultants to map the economic activity of each investment to the EU Taxonomy. The
consultants assess the investments against the relevant “Do No Significant Harm” and minimum safeguards criteria, including
evaluating alignment with and potential harm to the sustainable investment objective.
How were the indicators for adverse impacts on sustainability factors taken into account?
The Company screens and conducts due diligence on its portfolio to assess potential adverse impacts.
Were sustainable investments aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding
Principles on Business and Human Rights? Details:
The Company’s investments align with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on
Business and Human Rights. The investments were assessed according to the EU Commission’s Platform of Sustainable
Finance final guidance, focusing significantly on social considerations and human rights. All portfolio companies affirm
they have no human rights offense convictions and operate in jurisdictions with labour law compliance obligations. The
review emphasized each company’s policies and procedures for detecting human rights abuses in their supply chains,
leading to recommendations for improvement, such as introducing enhanced supplier due diligence.
ANNEX V (unaudited)
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview
Strategic Report Governance Financial statements
Other information
How did this financial product consider principal adverse impacts on sustainability
factors?
The Company assesses the relevance of the principal adverse indicators outlined in tables 1, 2, and 3 of Annex I of the
Sustainable Finance Disclosure Regulation
(
‘SFDR’
)
regulatory technical standards for each investee company. In 2023,
the Company measured and disclosed the Scope 1, 2, and 3 emissions of its investee companies and the mandatory and
relevant additional indicators.
What were the top investments of this financial product?
Largest investments Sector % Assets Country
NanoSUN Limited Hydrogen Storage Manufacturing 4.1% United Kingdom
Cranfield Aerospace Solutions
Limited
Airlines And Aviation 8.9% United Kingdom
Sunfire GmbH Renewable Energy Equipment Manufacturing 20.4% Germany
Strohm Holding B.V. Pipe Manufacturing 14.9% Netherlands
Bramble Energy Limited Renewable Energy Semiconductor Manufacturing 8.0% United Kingdom
HiiROC Limited Industrial Machinery Manufacturing 10.3% United Kingdom
Elcogen plc Renewable Energy Semiconductor 18.4% Estonia
HH2E AG Renewable Energy Semiconductor 5.2% Germany
Gen2 Energy Renewable Energy Semiconductor Manufacturing 3.3% Norway
Thierbach Renewable Energy 1.5% Germany
What was the proportion of sustainability-related investments?
l What was the asset allocation?
Investments
#1 Sustainable
Environmental
92.1% Taxonomy-
aligned
7.9% Other
91%
100%
96%
0% 20% 40% 60% 80% 100%
OpEx
CapEx
Turnover
Taxonomy-alignment of investments excluding sovereign bonds*
Taxonomy-aligned investments Non Taxonomy-aligned
l In which economic sectors were the investments made?
The Company’s investments are concentrated in hydrogen and complementary hydrogen focused economic activities,
including electrolyzer and fuel cell manufacturers, as well as companies involved in hydrogen production, storage, and
distribution.
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HydrogenOne Capital Growth plc Annual Report 2023
1
Fossil gas and/or nuclear related activities will only comply with the EU Taxonomy where they contribute to limiting climate change (“climate change
mitigation”) and do no significant harm to any EU Taxonomy objective - see explanatory note in the left hand margin. The full criteria for fossil gas and
nuclear energy economic activities that comply with the EU Taxonomy are laid down in Commission Delegated Regulation (EU) 2022/1214.
To what extent were sustainable investments with an environmental objective
aligned with the EU Taxonomy?
The Company’s overall alignment with the EU Taxonomy stands at 92.1%. The remaining 7.9% represents other economic
activities within portfolio companies that may not align but have been assessed as causing no significant harm.
Non-aligning activities within portfolio companies are primarily found in operational expenses and turnover. Operational
expenses that do not align typically include indirect corporate services that cannot be directly linked to a specific aligned
activity, such as professional services. Non-aligned turnover usually stems from pre-existing products or services in portfolio
companies before they developed their hydrogen offerings. All non-aligned activities have been evaluated and determined
to cause no significant harm to the EU Taxonomy’s objectives and the Fund’s sustainable investment objective.
The graph below illustrates the taxonomy alignment of the Fund’s investments, excluding sovereign bonds, as the Fund
does not invest in sovereign bonds.
Investments
#1 Sustainable
Environmental
92.1% Taxonomy-
aligned
7.9% Other
91%
100%
96%
0% 20% 40% 60% 80% 100%
OpEx
CapEx
Turnover
Taxonomy-alignment of investments excluding sovereign bonds*
Taxonomy-aligned investments Non Taxonomy-aligned
l Did the financial product invest in fossil gas and/or nuclear energy related activities complying
with the EU Taxonomy
1
?
No
l What was the share of investments made in transitional and enabling activities?
Enabling Activities – 100%
Transitional Activities – None
The Company’s enabling and transitional activities align with the EU Taxonomy. Enabling activities typically occur in the
supply chain for hydrogen production, such as fuel cell or electrolyzer manufacturing. Currently, the Company has no
transitional activities, but they may be included in the future.
l
How did the percentage of investments aligned with the EU Taxonomy compare with previous
reference periods?
In 2022, 89% of the Company’s investments aligned with the EU Taxonomy.
ANNEX V (unaudited)
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview
Strategic Report Governance Financial statements
Other information
What was the share of sustainable investments with an environmental objective that were not
aligned with the EU Taxonomy?
7.1% of the Company’s investments consist of economic activities within investee companies that do not align with the EU
Taxonomy but cause no significant harm. These activities represent small portions of turnover and operating expenses in
otherwise aligned investments.
What was the share of socially sustainable investments?
The Company does not have socially sustainable investments.
What investments were included under “not sustainable”, what was their purpose and were there
any minimum environmental or social safeguards?
All investments made align with the Company’s sustainable investment objective. Hence none of the investments made
classify as “not sustainable”.
What actions have been taken to attain the sustainable investment objective during
the reference period?
The Company integrated sustainability risk and opportunity processes into its pre-investment stages, including screening
and due diligence, and ensuring compliance with relevant regulations, particularly the EU SFDR. The Company engaged
with and monitored portfolio companies to achieve its sustainability investment objectives, requiring them to report on
critical metrics such as scope 1, 2, and 3 GHG emissions and avoided emissions. The Company also reported on mandatory
and relevant additional PAI indicators.
How did this financial product perform compared to the reference sustainable
benchmark?
n/a – No specific index has been designated.
l
How did the reference benchmark differ from a broad market index?
n/a
l
How did this financial product perform with regard to the sustainability indicators to determine the
alignment of the reference benchmark with the sustainable investment objective?
n/a
l
How did this financial product perform compared with the reference benchmark?
n/a
l
How did this financial product perform compared with the broad market index?
n/a
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HydrogenOne Capital Growth plc Annual Report 2023
Statement on principal adverse impacts
of investment decisions on sustainability
factors (unaudited)
Financial market participant: HydrogenOne Capital Growth plc, 213800PMTT98U879SF45
Summary
HydrogenOne Capital Growth plc (the “Company”), 213800PMTT98U879SF45, considers principal adverse impacts of its
investment decisions on sustainability factors. The present statement is the consolidated statement on principal adverse
impacts on sustainability factors of the Company.
This statement on principal adverse impacts on sustainability factors covers the reference period from 1 January 2023 to
31December 2023, in line with the financial reporting year.
The tables below contain the principal adverse impacts required by regulation and considered material to the Company. The
results show limited adverse impacts in line with the sustainable investment objective. The most significant adverse impact
is scope 2 greenhouse gas emissions. This reflects electricity that is consumed by portfolio companies that the Company
have invested in, imported from the grid. Much of this energy across the portfolio is sourced as renewable but the emissions
reflect the proportion of imported energy that is non-renewable. Work is ongoing to assess whether additional renewable
energy can be sourced as an alternative.
Overall the principal adverse indicators reflect the positive nature of the sustainable investment objective and provide
targeted areas for improvement in the future which the Company is actively engaged in addressing. The nature of the PAI are
designed to be negative in isolation. However, to review the company’s positive attributions please refer to the ESG policy
https://hydrogenonecapitalgrowthplc.com/wp-content/uploads/2023/02/ESG-policy-2023-02-08.pdf
Description of the principal adverse impacts on sustainability factors
See descriptions below table:
Table 1
Indicators applicable to investments in investee companies
Adverse sustainability indicator Metric
Impact
2023
Impact
2022 Unit Explanation
Actions taken and
actions planned
and targets set for
the next reference
period
CLIMATE AND OTHER ENVIRONMENT-RELATED INDICATORS
Greenhouse gas
emissions
1. GHG emissions Scope 1 GHG
emissions
17.63 n/a tCO2e Scope 1 emissions
related to land
transport by vehicles
owned by the
Company and heating
activities
n/a
Scope 2 GHG
emissions
80.66 n/a tCO2e Scope 2 emissions
related to purchased
import electricity.
These emissions
reflect non-renewable
electricity imported, a
significant portion of
the portfolio imports
renewable energy
and does not incur
emissions.
Import data will
continue to be
collected, options
for sourcing more
renewable energy are
being explored.
Scope 3 GHG
emissions
179.77 n/a tCO2e Most of the data
provided from
suppliers was
complete. Some
estimations were
carried out in terms of
land and air transport.
Transparency
regarding the
data used to form
estimates improved
compared to the
previous cycle this
year and the level of
transparency is good.
The Company is
actively engaged in
improving data quality
from suppliers.
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview
Strategic Report Governance Financial statements
Other information
Adverse sustainability indicator Metric
Impact
2023
Impact
2022 Unit Explanation
Actions taken and
actions planned
and targets set for
the next reference
period
Greenhouse
gas emissions
(continued)
Total GHG emissions 278.06 n/a tCO2e GHG emissions
are calculated in
accordance with the
GHG Protocol using
DEFRA emission
factors.
n/a
2. Carbon footprint Carbon Footprint 1.92 n/a tCO2e per
€M
n/a n/a
3. GHG intensity of
investee companies
GHG intensity of
investee companies
60.12 n/a tCO2e per
€M
n/a n/a
4. Exposure to
companies active in
the fossil fuel sector
Share of
investments in
companies active in
the fossil fuel sector
0% n/a The investment
strategy is focused on
assets that contribute
to the sector of clean
hydrogen production.
n/a
5. Share of non-
renewable energy
consumption and
production
Share of non-
renewable energy
consumption and
non-renewable
energy production
of investee
companies from
non-renewable
energy sources
compared to
renewable energy
sources, expressed
as a percentage of
total energy sources
54.87% n/a % No energy generation.
This factor is based on
renewable and non-
renewable energy
consumption from
electricity usage and
heating of facilities.
The strategy will
continue. Options for
sourcing renewable
import electricity are
being explored.
6. Energy
consumption
intensity per high
impact climate
sector
Energy consumption
in GWh per million
EUR of revenue of
investee companies,
per high impact
0.11 n/a GWh per
€M
n/a n/a
Biodiversity 7. Activities
negatively affecting
biodiversity-
sensitive areas
Share of
investments
in investee
companies with
sites/operations
located in or near
to biodiversity-
sensitive areas
where activities
of those investee
companies
negatively affect
those areas
0% n/a % None of the activities
affect biodiversity
sensitive areas.
Biodiversity
improvements will
continue as part of the
overall ESG strategy.
Water 8. Emissions to
water
Tonnes of emissions
to water generated
by investee
companies per
million EUR
invested, expressed
as a weighted
average
0% n/a tonne per
€M
No nitrates,
phosphates and
pesticides are emitted
in operations.
n/a
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HydrogenOne Capital Growth plc Annual Report 2023
Adverse sustainability indicator Metric
Impact
2023
Impact
2022 Unit Explanation
Actions taken and
actions planned
and targets set for
the next reference
period
Waste 9. Hazardous waste
and radioactive
waste ratio
Tonnes of
hazardous waste
and radioactive
waste generated by
investee companies
per million EUR
invested, expressed
as a weighted
average
0.07 n/a tonne per
€M
No hazardous waste
was produced.
n/a
INDICATORS FOR SOCIAL AND EMPLOYEE, RESPECT FOR HUMAN RIGHTS, ANTI-CORRUPTION AND ANTI-BRIBERY MATTERS
Social and
employee matters
10. Violations of UN
Global Compact
principles and
Organisation
for Economic
Cooperation and
Development
(OECD) Guidelines
for Multinational
Enterprises
Share of
investments in
investee companies
that have been
involved in
violations of the
UNGC principles or
OECD Guidelines
for Multinational
Enterprises
0% n/a % n/a n/a
11. Lack of
processes and
compliance
mechanisms
to monitor
compliance with
UN Global Compact
principles and
OECD Guidelines
for Multinational
Enterprises
Share of
investments in
investee companies
without policies to
monitor compliance
with the UNGC
principles or
OECD Guidelines
for Multinational
Enterprises
or grievance/
complaints handling
mechanisms to
address violations of
the UNGC principles
or OECD Guidelines
for Multinational
Enterprises
77% n/a % The Company applies
these policies and the
portfolio companies
are working on
developing and
formalizing policies
and monitor
compliance with the
UNGC principles.
n/a
12. Unadjusted
gender pay gap
Average unadjusted
gender pay gap of
investee companies
47% n/a n/a n/a
13. Board gender
diversity
Average ratio of
female to male
board members in
investee companies,
expressed as a
percentage of all
board members
10% n/a % n/a n/a
14. Exposure to
controversial
weapons (anti-
personnel mines,
cluster munitions,
chemical weapons
and biological
weapons)
Share of
investments in
investee companies
involved in the
manufacture
or selling of
controversial
weapons
0% n/a % n/a n/a
Statement on principal adverse impacts
of investment decisions on sustainability
factors (unaudited)
BL5
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview
Strategic Report Governance Financial statements
Other information
Other indicators for principal adverse impacts on sustainability factors
Table 2
Additional climate and other environment-related indicators
Adverse
sustainability
indicator
Adverse impact
on sustainability
factors
(qualitative or
quantitative Metric
Impact
2023
Impact
2022 Unit Explanation
Actions taken and
actions planned
and targets set for
the next reference
period
Indicators applicable to investments in investee companies
CLIMATE AND OTHER ENVIRONMENT-RELATED INDICATORS
Water, waste
and material
emissions
6. Water usage and
recycling
2. Weighted average
percentage of
water recycled and
reused by investee
companies
0% n/a % n/a Minimal water
quantities are used
on-site by the portfolio
companies. Water is
consumed for daily
operational activities
and water usage
and recycling are
not considered as
major activities for the
portfolio companies.
7. Investments in
companies without
water management
policies
Share of
investments in
investee companies
without water
management
policies
n/a n/a % n/a Minimal water
quantities are used
on-site by the portfolio
companies. Water is
consumed for daily
operational activities
and water usage
and recycling are
not considered as
major activities for the
portfolio companies.
8. Exposure to areas
of high water stress
Share of
investments in
investee companies
with sites located in
areas of high water
stress without a
water management
policy
n/a n/a % n/a Minimal water
quantities are used
on-site by the portfolio
companies. Water is
consumed for daily
operational activities
and water usage
and recycling are
not considered as
major activities for the
portfolio companies.
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HydrogenOne Capital Growth plc Annual Report 2023
Table 3
Additional indicators for social and employee, respect for human rights, anti-corruption and anti-bribery matters
Adverse impact on sustainability
factors (qualitative or quantitative Metric
Impact
2023
Impact
2022 Unit Explanation
Actions taken and
actions planned
and targets set for
the next reference
period
Indicators applicable to investments in investee companies
INDICATORS FOR SOCIAL AND EMPLOYEE, RESPECT FOR HUMAN RIGHTS, ANTI-CORRUPTION AND ANTI-BRIBERY MATTERS
Adverse
sustainability
impact
1. Investments in
companies without
workplace accident
prevention policies
Share of
investments in
investee companies
without a workplace
accident prevention
policy
11% n/a % n/a n/a
Social and
employee matters
2. Rate of accidents Rate of accidents in
investee companies
expressed as a
weighted average
0.03 n/a n/a n/a
3. Number of days
lost to injuries,
accidents, fatalities
or illness
Number of
workdays lost to
injuries, accidents,
fatalities or illness of
investee companies
expressed as a
weighted average
1.26 n/a n/a n/a
4. Lack of a supplier
code of conduct
Share of
investments in
investee companies
without any supplier
code of conduct
(against unsafe
working conditions,
precarious work,
child labour and
forced labour)
n/a n/a % n/a n/a
Description of policies to identify and prioritise principal adverse impacts on sustainability factors
The following policies have been adopted by the Board:
a) The Board approved the Investment Policy in 2021. The ESG policy is published on the website.
b) The Board of Directors is responsible for the Company’s ESG policy and its implementation. The Investment Adviser,
HydrogenOne Capital LLP, is responsible for integrating ESG considerations into the investment process and ongoing
portfolio management.
c) The indicators in Table 2 and 3 have been assessed based on their materiality. That is the likelihood and severity of
occurrence.
d) The assessment is inherently judgmental in nature which incorporates a margin of error. Feedback from stakeholders will
be taken into account when reviewing this selection and amendments made in future reporting cycles if required.
e) Data was almost complete and covered all relevant activities. Data was received from the company and the portfolio
companies.
Data received from portfolio companies was assessed for quality. Estimates were used on data gaps using the data that was
available as a proxy.
Statement on principal adverse impacts
of investment decisions on sustainability
factors (unaudited)
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HydrogenOne Capital Growth plc Annual Report 2023
Company Overview
Strategic Report Governance Financial statements
Other information
Engagement Policies
The Investment Adviser, HydrogenOne Capital LLP, engages with portfolio companies to gather ESG data, monitor their
performance against the ESG KPIs, and drive improvements in ESG practices. The engagement process includes:
a) Regular meetings with portfolio company management teams.
b) Monitoring of ESG KPIs and progress against targets.
c) Encouraging portfolio companies to adopt best practices in ESG management and reporting.
d) Providing guidance and support to portfolio companies to help them improve their ESG performance.
The Company has developed an ESG framework with a set of ESG KPIs to assess and monitor investments. The KPIs cover
various ESG factors, such as:
a) Greenhouse gas emissions
b) Waste management
c) Health and safety
d) Diversity and inclusion
e) Corporate governance
Reference to international standards
As an Article 9 fund with a sustainable investment objective the UN Guiding Principles on Business and Human Rights and
OECD Guidelines for Multinational Enterprises are adhered to.
a) The Company has developed an ESG framework with a set of ESG KPIs to assess and monitor investments, which cover
various ESG factors such as greenhouse gas emissions, waste management, health and safety, diversity and inclusion, and
corporate governance.
b) The Investment Adviser engages with portfolio companies to gather ESG data and monitors their performance against the
ESG KPIs.
c) Climate scenarios are not used in the indicators but they are considered as part of the TCFD reporting, publically available
d) Climate scenarios are used as part of TCFD reporting
Historical comparison
Not Applicable (n/a), this is the first reference period during which the SFDR RTS are in effect. Historical comparisons will be
published in the next PAI statement.
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HydrogenOne Capital Growth plc Annual Report 2023
Glossary
Admission First admission of the Company’s Ordinary Shares to the London Stock Exchange on
30July 2021.
AIC Association of Investment Companies.
Alternative Investment Fund
or “AIF”
An in
vestment vehicle under AIFMD. Under AIFMD (see below) HydrogenOne Capital
Growth plc is classified as an AIF.
Alternative Investment Fund
Managers Directive or “AIFMD”
A European Union directive which came into force on 22 July 2013 and has been
implemented in the UK.
Annual General Meeting or “AGM” A meeting held once a year which shareholders can attend and where they can vote on
resolutions to be put forward at the meeting and ask the Directors questions about the
company in which they are invested.
CCS Carbon Capture and Storage
CLN Convertible Loan Note
the Company HydrogenOne Capital Growth plc (“HGEN”).
Custodian An entity that is appointed to safeguard a company’s assets.
Discount/premium The amount, expressed as a percentage, by which the share price is less/more than the
net asset value per share.
Dividend Income receivable from an investment in shares.
Ex-dividend date The date from which you are not entitled to receive a dividend which has been declared
and is due to be paid to shareholders.
ESG Environmental, Social and Governance (“ESG”) criteria are a set of standards for
a company’s operations that socially conscious investors use to screen potential
investments. Environmental criteria consider how a company performs as a steward of
nature. Social criteria examine how it manages relationships with employees, suppliers,
customers, and the communities where it operates. Governance deals with a company’s
leadership, executive pay, audits, internal controls, and shareholder rights.
Financial Conduct Authority or
“FCA”
The independent body that regulates the financial services industry in the UK.
GCC The Cooperation Council for the Arab States of the Gulf, also known as the Gulf
Cooperation Council.
GHG Greenhouse Gases.
Gross Asset Value or GAV The aggregate value of the total assets of the Company, including the gross asset value
of any investments held in the HydrogenOne Partnership attributable to the Company’s
interest in the HydrogenOne Partnership on a look-through basis from time-to-time,
calculated in accordance with the Company’s valuation policy.
Index A basket of stocks which is considered to replicate a particular stock market or sector.
Investment company A company formed to invest in a diversified portfolio of assets.
Investment Trust An investment company which is based in the UK and which meets certain tax
conditions which enables it to be exempt from UK corporation tax on its capital gains.
The Company is an investment trust.
Liquidity The extent to which investments can be sold at short notice.
Listed Hydrogen Assets Investments in quoted or traded Hydrogen Assets, which will predominantly be equity
securities but may also be corporate debt and/or other financial instruments.
Net assets or net asset value
(“NAV”)
An investment company’s assets less its liabilities.
NAV per Ordinary Share Net assets divided by the number of Ordinary Shares in issue (excluding any shares held
in treasury).
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Company Overview
Strategic Report Governance Financial statements
Other information
Offtaker A purchaser of electricity and/or renewable obligation.
Ordinary Shares The Company’s ordinary shares in issue.
Portfolio A collection of different investments held in order to deliver returns to shareholders and
to spread risk.
Private Hydrogen Assets Investments in unquoted Hydrogen Assets, which may be operational companies or
hydrogen projects (completed or under construction).
Relative performance Measurement of returns relative to an index.
Share buyback A purchase of a company’s own shares. Shares can either be bought back for
cancellation or held in treasury.
Share price The price of a share as determined by a relevant stock market.
TCP Thermoplastic Composite Pipe
Treasury shares A company’s own shares which are available to be sold by a company to raise funds.
Volatility A measure of how much a share moves up and down in price over a period of time.
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Directors and advisers
Directors (all Non-Executive)
Simon Hogan (Chairman)
Afkenel Schipstra
Abigail Rotheroe
David Bucknall
Administrator and Company Secretary
Apex Listed Companies Services (UK) Limited
6th Floor
125 London Wall
London
EC2Y 5AS
Alternative Investment Fund Manager (AIFM)
FundRock Management Company (Guernsey) Limited
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey
GY1 2HL
Broker
Barclays Bank PLC
1 Churchill Place
London
E14 5RB
Solicitors to the Company
Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
Registered office*
6th Floor
125 London Wall
London
EC2Y 5AS
*Registered in England and Wales – No 13340859
Investment Adviser
HydrogenOne Capital LLP
4 Manchester Square
London
W1U 3PD
Custodian
The Northern Trust Company
50 Bank Street
Canary Wharf
London
E14 5NT
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Independent Auditor
KPMG Channel Islands Limited
Glategny Court
Glategny Esplanade
Guernsey
GY1 1WR
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Company Overview
Strategic Report Governance Financial statements
Other information
Report of the Alternative Investment
FundManager
Material change
FundRock Management Company (Guernsey) Limited as AIFM must disclose in the Annual Report, details of material
changes to the information set out under AIFMD. For these purposes, there are no material changes effective during the
period to be noted to the information set out in the Prospectus.
Remuneration disclosures
The Company is categorised as an EU Alternative Investment Fund (“AIF”). The AIFMD seeks to regulate managers of AIFs,
such as the Company. It imposes obligations on AIFMs who manage AIFs in a member state of the European Economic
Area (“EEA state”), or who market shares in AIFs to investors who are domiciled, or with a registered office, in an EEA state.
Under the AIFMD, an AIFM must be appointed and must comply with various organisational, operational and transparency
requirements.
On 5 July 2021, the Company appointed FundRock Management Company (Guernsey) Limited to act as AIFM to the
Company. FundRock Management Company (Guernsey) Limited is responsible for fulfilling the role of the AIFM and ensuring
the Company complies with the AIFMD requirements. Details of the total amount of remuneration for the financial year, split
into fixed and variable remuneration, paid by the AIFM to its staff, and the number of beneficiaries, are made available to
Shareholders on request.
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HydrogenOne Capital Growth plc Annual Report 2023
Notice of Annual General Meeting
Annual General Meeting
In line with the requirements of the Companies Act 2006, the Company will hold an Annual General Meeting of
shareholders to consider the resolutions laid out in the Notice of Meeting below.
Notice of Meeting
Notice is hereby given that the Annual General Meeting of HydrogenOne Capital Growth plc will be held at 6th Floor,
125London Wall, London EC2Y 5AS on 21 May 2024 at 12.00 noon for the following purposes:
To consider and if thought fit pass the following resolutions of which resolutions 1 to 9 will be proposed as ordinary
resolutions and resolutions 10 to 12 will be proposed as special resolutions.
Ordinary Business
1. To receive the Company’s annual accounts for the year ended 31 December 2023.
2. To approve the Directors’ Remuneration Report included in the Annual Report for the year ended 31 December 2023.
3. To re-elect Simon Hogan as a Director of the Company.
4. To re-elect Afkenel Schipstra as a Director of the Company.
5. To re-elect Abigail Rotheroe as a Director of the Company.
6. To re-elect David Bucknall as a Director of the Company.
7. To reappoint KPMG Channel Islands Limited as auditor to the Company.
8. To authorise the Directors to fix the remuneration of the auditor until the conclusion of the next Annual General Meeting
of the Company.
9. That
a. the Directors be generally and unconditionally authorised pursuant to section 551 of the Companies Act 2006 (the “Act”)
to allot shares in the Company, or to grant rights to subscribe for or convert any security into shares in the Company, up to
a maximum nominal amount of £128,819 or, if less, the amount that represents 10% of the nominal value of the Company’s
issued share capital (excluding treasury shares) on the date on which this resolution is passed; and
b. the authority given by this resolution:
i. shall be in addition to all pre-existing authorities under section 551 of the Act; and
ii. unless renewed, revoked or varied in accordance with the Act, shall expire at the conclusion of the Annual
General Meeting of the Company to be held in 2025 or, if earlier, on the expiry of 15 months from the date
of passing of this resolution save that the Company may, before such expiry, make any offer or enter into an
agreement which would or might require the allotment of shares in the Company, or the grant of rights to
subscribe for or to convert any security into shares in the Company, after such expiry and the Directors may allot
shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company in
pursuance of such an offer or agreement as if such authority had not expired.
Special Business
10. That, subject to the passing of resolution 9 set out in this Notice of Annual General Meeting (the “Allotment Authority”),
the Directors be given power pursuant to sections 570 and 573 of the Companies Act 2006 (the “Act”) to allot equity
securities (within the meaning of section 560(1) of the Act) for cash pursuant to the Allotment Authority, and to sell
treasury shares for cash, as if section 561(1) of the Act did not apply to such allotment or sale, provided that such power:
a. shall be limited to the allotment of equity securities or the sale of treasury shares up to an aggregate nominal
amount of £128,819 or, if less, the amount that represents 10% of the nominal value of the Company’s issued share
capital (excluding treasury shares) on the date on which this resolution is passed;
b. shall be in addition to all pre-existing powers under sections 570 and 573 of the Act; and
c. shall expire at the same time as the Allotment Authority, save that the Company may, before expiry of the power
conferred on the Directors by this resolution, make an offer or agreement which would or might require equity
securities to be allotted or treasury shares to be sold after such expiry and the Directors may allot equity securities
or sell treasury shares in pursuance of such an offer or agreement as if such power had not expired.
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Company Overview
Strategic Report Governance Financial statements
Other information
11. That the Company be and is hereby generally and unconditionally authorised in accordance with section 701 of the
Companies Act 2006 (the “Act”) to make market purchases (within the meaning of section 693(4) of the Act) of its
Ordinary Shares of 1p each, provided that:
a. the maximum number of Ordinary Shares hereby authorised to be purchased shall be 19,310,117 (representing
14.99% of the Company’s issued Ordinary Share capital (excluding shares held in treasury) at the date of the notice of
this meeting);
b. the minimum price (exclusive of any expenses) which may be paid for an Ordinary Share is 1p;
c. the maximum price (excluding expenses) which may be paid for an Ordinary Share is not more than the higher
of (i) 5% above the average of the middle market quotations for the Ordinary Shares for the five business days
immediately before the day on which it purchases that share and (ii) the higher of the price of the last independent
trade and the highest current independent bid for the Ordinary Shares;
d. the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company in 2025
or, if earlier, on the expiry of 15 months from the passing of this resolution, unless such authority is renewed prior to
such time; and
e. the Company may make a contract to purchase Ordinary Shares under the authority hereby conferred prior to the
expiry of such authority, which will or may be executed wholly or partly after the expiration of such authority and
may make a purchase of Ordinary Shares pursuant to any such contract.
12. that a general meeting of the Company other than an Annual General Meeting may be called on not less than 14 clear
days’ notice, provided that this authority shall expire at the conclusion of the Company’s next Annual General Meeting
after the date of the passing of this resolution.
By order of the Board
Martin Darragh
For and on behalf of Apex Listed Companies
Services (UK) Limited
Company Secretary
17 April 2024
Registered office:
6th Floor
125 London Wall
London
EC2Y 5AS
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HydrogenOne Capital Growth plc Annual Report 2023
Website address
1. Information regarding the meeting, including the information required by section 311A of the Companies Act 2006,
isavailable from www.hydrogenonecapitalgrowthplc.com.
Entitlement to attend and vote
2. Only those holders of Ordinary Shares registered on the Company’s register of members at 12.00 noon on 17 May 2024
or, if this meeting is adjourned, at 12.00 noon on the day two days prior to the adjourned meeting, shall be entitled to
vote at the meeting.
Appointment of Proxies
3. Members entitled to vote at the meeting (in accordance with Note 2 above) are entitled to appoint a proxy to vote in their
place. It is recommended that shareholders appoint the ‘Chairman of the Meeting’ as their proxy where possible. If you
wish to appoint a proxy, please follow the instructions at note 6 below, if you wish to appoint a proxy through the CREST
electronic proxy appointment service, please follow the instructions at note 7 below. In the case of joint members, only
one need sign the Form of Proxy. The vote of the senior joint member will be accepted to the exclusion of the votes of
the other joint members. For this purpose, seniority will be determined by the order in which the names of the members
appear in the register of members in respect of the joint shareholding.
4. You can appoint the Chairman of the Meeting as your proxy using the voting methods in notes 6 and 7.
5. You can instruct your proxy how to vote on each resolution by marking the resolutions ‘For’ and ‘Against’ using the voting
methods stated in notes 6 and 7. If you wish to abstain from voting on any resolution, please mark these resolutions
withheld. It should be noted that a vote withheld is not a vote in law and will not be counted in the calculation of the
proportion of votes ‘For’ and ‘Against’ a resolution. If you do not indicate how your proxy should vote, he/she can exercise
his/her discretion as to whether, and if how so how, he/she votes on each resolution, as he/she will do in respect of any
other business (including amendments to resolutions) which may properly be conducted at the meeting.
Appointment of proxy
6. You can vote either:
• by logging on to www.investorcentre.co.uk/eproxy and following the instructions;
• by completing a hard copy form of proxy that accompanies this annual report; or
• in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the
procedures set out below.
In order for a proxy appointment to be valid a form of proxy must be completed. In each case the form of proxy must be
received by Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY by no later than
12.00noon on Friday 17 May 2024.
Appointment of Proxy through CREST
7. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may
do so for the meeting to be held on the above date and any adjournment(s) thereof by using the procedures described
in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who
have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be
able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST
message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & International
Limited’s specifications and must contain the information required for such instructions, as described in the CREST
Manual. The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the
instruction given to a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the
Company’s agent (ID: 3RA50) by the latest time(s) for receipt of proxy appointments specified in the Notice of Meeting.
For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the
message by the CREST Applications Host) from which the Company’s agent is able to retrieve the message by enquiry
to CREST in the manner prescribed by CREST. After this time any change of instructions to a proxy’s appointee through
CREST should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear
UK & International Limited does not make available special procedures in CREST for any particular messages. Normal
system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions.
Notes to the notice of
Annual General Meeting
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Company Overview
Strategic Report Governance Financial statements
Other information
It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member
or sponsored member or has appointed a voting service provider(s), to procure that this CREST sponsor or voting service
provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST
system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or
voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations
of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
All messages relating to the appointment of a proxy or an instruction to a previously appointed proxy, which are
to be transmitted through CREST, must be lodged by 12.00 noon on 17 May 2024 in respect of the meeting. Any
such messages received before such time will be deemed to have been received at such time. In the case of an
adjournment, all messages must be lodged with Computershare Investor Services no later than 48 hours before the
rescheduledmeeting.
Appointment of a proxy through Proxymity
8. If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process
which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity,
please go to www.proxymity.io. Your proxy must be lodged no later than 48 hours before the time of the Annual General
Meeting, in order to be considered valid. Before you can appoint a proxy via this process you will need to have agreed
to Proxymity’s associated terms and conditions. It is important that you read these carefully as you will be bound by
them and they will govern the electronic appointment of your proxy. Proxymity will then contract with your underlying
institutional account holder directly to accept their vote instructions through the platform.
Termination of proxy appointments
9. In order to revoke a proxy instruction, you will need to inform the Company. Please send a signed hard copy notice
clearly stating your intention to revoke your proxy appointment to Computershare Investor Services PLC, The Pavilions,
Bridgwater Road, Bristol BS99 6ZY. In the case of a member which is a company, the revocation notice must be
executed under its common seal or otherwise in accordance with section 44 of the Companies Act 2006 or by signature
on its behalf by an officer or attorney whose power of attorney or other authority should be included with the revocation
notice.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified in note 2 above
then, subject to the paragraph directly below, your proxy will remain valid.
If you submit more than one valid proxy appointment in respect of the same Ordinary Shares, the appointment received
last before the latest time for receipt of proxies will take precedence.
Nominated persons
10. If you are a person who has been nominated under section 146 of the Companies Act 2006 to enjoy information rights:
• You may have a right under an agreement between you and the member of the Company who has nominated you
to have information rights (Relevant Member) to be appointed or to have someone else appointed as a proxy for the
meeting.
• If you either do not have such a right or if you have such a right but do not wish to exercise it, you may have a right
under an agreement between you and the Relevant Member to give instructions to the Relevant Member as to the
exercise of voting rights.
• Your main point of contact in terms of your investment in the Company remains the Relevant Member (or, perhaps,
your custodian or broker) and you should continue to contact them (and not the Company) regarding any changes or
queries relating to your personal details and your interest in the Company (including any administrative matters). The
only exception to this is where the Company expressly requests a response from you.
If you are not a member of the Company but you have been nominated by a member of the Company to enjoy
information rights, you do not have a right to appoint any proxies under the procedures set out in the notes to the form of
proxy.
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Questions at the meeting
11. Under section 319A of the Companies Act 2006, the Company must answer any question you ask relating to the
business being dealt with at the meeting unless:
• answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of
confidential information;
• the answer has already been given on a website in the form of an answer to a question; or
• it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.
Issued Shares and total voting rights
12. The total number of shares in issue in the Company is 128,819,999 Ordinary Shares of 1p each. Therefore, the total
number of Ordinary Shares with voting rights is 128,819,999. On a vote by a show of hands, every holder of Ordinary
Shares who (being an individual) is present by a person, by proxy or (being a corporation) is present by a duly authorised
representative, not being himself a member, shall have one vote. On a poll every holder of Ordinary Shares who is
present in person or by proxy shall have one vote for every Ordinary Share held by him.
Communication
13. Except as provided above, members who have general queries about the meeting should use the following means of
communication (no other methods of communication will be accepted):
• Computershare’s helpline on 0370 703 6036 (or +44 370 703 6036 from outside the UK). Lines are open 8:30am to
5:30pm Monday to Friday (excluding public holidays in England and Wales. Charges for ‘03’ numbers are determined
by the caller’s service provider. Calls may be recorded and monitored randomly for security and training purposes);
• in writing to Computershare.
You may not use any electronic address provided either in this Notice of Meeting or in any related documents
(including the Form of Proxy for this meeting) to communicate with the Company for any purposes other than those
expresslystated.
Notes to the notice of
Annual General Meeting
Contents
hydrogenonecapitalgrowthplc.com
Company overview
1
About us
2 Highlights
4 Portfolio at a glance
5 Chairman’s statement
8 Key portfolio milestones 2023
Strategic report
10
About clean hydrogen
12 Hydrogen market and commentary and outlook
14 Q&A with the Investment Advisor
16 Investment objective, policy, process and strategy
19 Strategy, business model and KPIs
22 Investment Adviser’s Report
22 Introduction
23 Portfolio summary
24 Portfolio review, performance and valuation
47 Environmental, Social and Governance
47 Highlights
48 Methodology and Principles of Responsible Investment
49 Stakeholder engagement (Section 172 Statement)
52 Risk and risk management
Governance
57
Board of Directors
58 Directors’ Report
62 Corporate Governance
66 Directors’ Remuneration Policy
67 Directors’ Remuneration Implementation Report
69 Report of the Audit and Risk Committee
71 Statement of Directors’ Responsibilities
72 Independent Auditor’s Report
Financial Statements
79
Parent and consolidated statement of comprehensive income
80 Parent and consolidated statement of financial position
81 Parent and consolidated statement of changes in equity
82 Parent and consolidated statement of cash flows
83 Notes to the parent and consolidated financial statements
Other information
110
Alternative Performance Measures
111 EU SFDR Disclosures
122 Glossary
124 Directors and advisers
125 Report of the Alternative Investment Fund Manager
126 Notice of Annual General Meeting
128 Notes to the notice of Annual General Meeting
hydrogenonecapitalgrowthplc.com
HydrogenOne
Capital Growth plc
ANNUAL REPORT & ACCOUNTS 2023
HydrogenOne Capital Growth plc Annual Report & Accounts 2023